RNS Number:6579S
Helphire Group PLC
01 December 2003
Date 1 December 2003
Contacts Michael Symons/Mark Jackson
Helphire Group plc 01225 321 000
Chris Steele 07979 604 687
Holborn 020 7929 5599
chris.steele@holbornpr.co.uk
Helphire Group plc
Interim Results
Highlights
* Core business levels increased by 51% (Q1 45% Q2 58%)
* Underlying profitability excluding investment* up by 67%
* Operational capacity enhanced ahead of expected further uplift in
business volumes.
* New account wins likely to significantly enhance volume growth going
forward.
* Interim dividend 2p (net) (2002: nil)
* The incremental investment costs include depreciation of #461,000,
information technology expenditure amounting to #904,000 and a #346,000
advance investment in the new account mentioned.
Commenting on the results Chairman Michael J Symons said:
"We have had another very satisfactory six months. Business volumes have
continued to grow strongly, but we have succeeded in maintaining our high levels
of performance and quality of service. Once again our expectations for the
future are of further progress in both turnover and profitability."
Overview
This is a year of continued growth alongside significant investment in the
infrastructure of the business.
At the AGM we indicated that business volumes had risen by 45% in the first
quarter. Since then there has been an acceleration in growth, hence, despite
the particularly dry weather we had in the first half which resulted in a
relatively low level of claims for motor accidents, levels of business have
grown by 58% in the second quarter and by 51% year on year. This was due to an
increase both in the number of referrers and in the number of cases being
referred.
Our infrastructure programme is necessary to sustain the high level of personal
service delivered to our clients and required by our key accounts. This
includes the acquisition and refurbishment of a new sixty thousand square foot
call centre facility in Bath and investment in both a new telephone system and
an IT development project in conjunction with Oracle UK.
The types of more comprehensive claims handling services being provided to a
number of new key accounts have also required the development of new operational
service products with their associated training and recruitment costs.
Shareholders should note that these incremental costs have to be incurred before
the service delivery commences, contributing to the cost base in advance of
incremental revenue.
Financial results
Turnover for the period was #31.8m, an increase of 34% from the same period last
year (2002: #23.7m), with hire volumes increasing by 51%. Turnover did not grow
at the same rate as business volumes due to a lower proportion of credit repair
cases compared to the same period last year.
Gross profits of #14.2m were generated (2002: #10.8m), giving a margin of 44.6%.
As stated at the full year, we have seen an improvement in margins to the
current level due to the change in the business mix.
Operating profit of #1.9m (2002: #1.9m) reflects the increased depreciation
charge and costs associated with the current infrastructure investments. Aside
from the investment in property and IT infrastructure, we have also incurred
significant first half costs in recruiting and training new employees, and
gearing up generally, for a major source of new business where referrals did not
commence until the beginning of October.
Profit before tax was #1.3m (2002: #1.8m). However, the underlying level of
profitability excluding the effects of investment in infrastructure was over
#3.0m, a 67% increase on 2002. The incremental investment costs include
depreciation of #461,000, information technology expenditure amounting to
#904,000 and a #346,000 advance investment in the new account mentioned.
There have been no exceptional items in the year, and all in-house development
costs have been included in operational expenses.
Cash
Net operating cash flow in the first six months was positive, with #1.7m being
generated (2002: #4.0m). The main differential between the two periods has been
reduced cash flow from claims generated before Helphire's entry into the ABI GTA
protocol in 2001 ('old debt') which has declined as the outstanding balance has
fallen to less than #2m net of provisions (March 2003: #5.0m). Bank borrowings
at the period end were #15.1m (2002: #2.2m). This position reflects borrowings
associated with the freehold purchase and refurbishment of the new call centre
in Bath amounting to #10.9m and additional capital expenditure incurred to
enhance operational capacity.
Operational performance
Core credit hire business levels increased by 51%, despite the driest summer
recorded in the UK since records began, as more referrers increased their
utilisation of our service.
In addition, our individual services have performed strongly:
'One Call', the service which allows first notification of accidents to be
received on behalf of clients such as brokers and insurers, is continuing to
grow strongly. This service is proving very popular and facilitates high levels
of customer service and efficient 'claims capture'. Over one thousand calls a
week are now being taken via this service.
'Total Accident Management', the company within the Group which manages fleet
customers' claims, is now fully operational following its launch in June.
Increasing numbers of fleet clients and personal lines customers are now
utilising this service and a pipeline of additional business has also been
established.
'e-register', the jewellery database and valuation service, has successfully
entered the jewellery claims replacement market and has now handled
approximately 100 claims through 34 insurance companies and 36 jewellers. In
addition, two major outsourcing pilots are already underway with leading UK
insurers.
The Group continues to position itself as the leading supplier of services to
accident victims in cooperation with insurers. The process of management of
claims under the terms of the ABI GTA protocol is continuing to be refined as
relationships with insurers evolve, and relationships with insurers not party to
the protocol continue to be developed successfully.
Infrastructure
Phase one of the development of the new Pinesgate call centre, which was
acquired in February, has now been completed and one of the two 30,000 square
feet units is fully operational. Refurbishment of the second unit will commence
shortly, and it is anticipated that it will be fully operational by June 2004.
The first phase of IT development work in conjunction with Oracle Corporation
will be completed by January 2004. This has included a complete analysis of our
operational business processes.
Dividends
Dividend payments were resumed at the end of the last financial year and I am
pleased to announce that the Board is recommending an interim dividend payment
of 2p per share (2002 interim: nil and 1.5p for the year as a whole). This
decision reflects both the strength of the underlying results in the first half
and the Boards confidence in the prospective profitability of the Group.
Employees
Rapid growth combined with the significant infrastructure changes taking place
have made great demands on all our staff and I would like to take this
opportunity to thank them all for their hard work in the last six months.
Outlook
The Group is very well positioned to benefit from the continued expected growth
of the business. We are expecting significantly higher volumes in the second
half compared to the first half, as is usual for the Group, and believe that the
business is well positioned to ensure that service standards are maintained,
despite this rapid growth, as this is critical to maintaining key account client
satisfaction. Customer satisfaction levels are monitored each month and have
consistently been at a level of 99% of clients 'happy overall' with the service
throughout the year.
As indicated at the time of the AGM, the normal division between first and
second half profits for the full year will be exaggerated due to the
infrastructure investments made in the first half and new account wins which did
not materially impact the first half but which will have a significantly bigger
impact in the second half.
Trading in the second half has started well with turnover in October 40% ahead
of the same month last year.
Michael J Symons
Executive Chairman
1 December 2003
Consolidated Profit and Loss Account
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 September 30 September 31 March
2003 2002 2003
Total Total Total
Note #'000 #'000 #'000
Turnover 2 31,770 23,729 55,791
Cost of sales (17,594) (12,978) (30,238)
Gross profit 14,176 10,751 25,553
Administrative expenses (12,312) (8,901) (20,847)
Other operating income - - 771
Operating profit 1,864 1,850 5,477
Finance charges (571) (44) (224)
Profit on ordinary activities before taxation
1,293 1,806 5,253
Tax on profit on ordinary activities - - 2,000
Profit after taxation, being profit
for the period 1,293 1,806 7,253
Dividends paid and proposed as equity shares (2,318) - (1,717)
Retained (loss)/profit for the year (1,025) 1,806 5,536
Earnings per share
Basic 5 1.12p 1.57p 6.33p
Diluted 1.05p 1.48p 5.94p
The turnover and operating profit for each period arose from continuing
operations.
The accompanying notes are an integral part of this consolidated profit and loss
account.
There were no recognised gains and losses other than the profit for each period.
Accordingly a statement of total recognised gains and losses has not been
presented.
Consolidated Balance Sheet
Unaudited Unaudited Audited
30 September 30 September 31 March
2003 2002 2003
#'000 #'000 #'000
Fixed assets
Goodwill 1,659 1,890 1,754
Tangible assets 17,196 3,473 13,263
18,855 5,363 15,017
Current assets
Debtors 43,281 34,546 44,140
Cash at bank and in hand 2,584 3,267 3,069
45,865 37,813 47,209
Creditors:
Amounts falling due within one year (20,958) (13,277) (21,133)
Net current assets 24,907 24,536 26,076
Total assets less current liabilities 43,762 29,899 41,093
Creditors:
Amounts falling due after
more than one year (10,948) (676) (8,108)
Net assets 32,814 29,223 32,985
Capital and reserves
Called-up share capital 5,792 5,731 5,733
Share premium account 22,065 65,840 21,270
Profit and loss account 4,957 (42,348) 5,982
Equity shareholders' funds 32,814 29,223 32,985
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 September 30 September 31 March
2003 2002 2003
#'000 #'000 #'000
Net cash inflow from operating activities 1,655 3,952 2,645
Returns on investments and servicing of
finance (2,288) (44) (224)
Taxation - 6 -
Capital expenditure and financial (1,037) (810) (10,828)
investment
Acquisitions and disposals - (936) (574)
Cash (outflow)/inflow before financing (1,670) 2,168 (8,981)
Financing 1,185 (482) 10,469
(Decrease)/increase in cash in the period (485) 1,686 1,488
Notes to the Consolidated Cash Flow Statement
A Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 September 30 September 31 March
2003 2002 2003
#'000 #'000 #'000
(Decrease)/increase in cash in the (485) 1,686 1,488
period
Cash (outflow)/inflow from reduction
in debt and lease financing (331) 2,652 (8,290)
Change in net debt resulting from cash
flows (816) 4,338 (6,802)
New finance leases (4,228) (589) (1,407)
Movement in net debt in the period (5,044) 3,749 (8,209)
Net debt at beginning of period (15,594) (7,385) (7,385)
Net debt at end of period (20,638) (3,636) (15,594)
B Reconciliation of operating profit to operating cash flow
Operating profit 1,864 1,850 5,477
Depreciation and amortisation charges 1,473 1,018 2,257
Gain on sale of tangible fixed assets (46) (34) (50)
Decrease in debtors 794 1,867 (5,690)
Decrease in creditors (2,430) (749) 651
Net cash inflow from operating activities 1,655 3,952 2,645
Notes to the Financial Information
1 Basis of preparation
The financial information contained within this statement does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The Company's unaudited consolidated balance sheet, profit and loss account and
cash flow statement for the six months ended 30 September 2003 and 30 September
2002 have been prepared on a basis consistent with the Group accounts for the
year ended 31 March 2003. The 2003 full year figures have been extracted from
the accounts for the year ending 31 March 2003 which included an unqualified
audit report, did not contain a statement under Section 237(2) or (3) of the Act
and have been filed with the Registrar of Companies.
2 Segmental analysis of turnover
Turnover, which arises wholly from the principal continuing activities of the
Group within the United Kingdom, is classified as follows:
Half year ended Half year ended Year ended
30 September 30 September 31 March
2003 2002 2003
#'000 #'000 #'000
Accident management assistance and
related services, primarily vehicle 21,870 15,022 36,564
hire
Vehicle repairs 9,900 8,707 19,227
31,770 23,729 55,791
The Directors consider that the principal activities of the Group represent a
single business segment, being accident management services. However, analysis
of turnover is given for additional information.
3 Taxation
No taxation charge has been provided for the six months ended 30 September 2003,
because the effective tax rate for the year ending 31 March 2004 is expected to
be nil.
4 Dividends
Your Board has declared an interim dividend of 2p per ordinary share. This will
be paid on 12 January 2004 to shareholders on the Register at the close of
business on 12 December 2003.
5 Earnings per share
The calculation of basic earnings per share is based on the profit after tax of
#1.3m (2002: #1.8m) and 115,319,440 ordinary shares being the weighted average
number of ordinary shares in issue during the six months ended 30 September
2003. The comparative figures for the six months ended 30 September 2002 and the
year ended 31 March 2003 are 114,419,437 and 114,526,270 respectively. The
calculation of diluted earnings per share is based on 122,796,471 (2002:
121,979,951) potential ordinary shares. The comparative figure for the period
ended 31 March 2003 is 122,192,128.
6 Circulation and enquiries
Additional copies of this report are available from the Company Secretary at the
registered office. Administrative enquiries concerning shareholdings should be
made to the Company's Registrars.
Independent Review Report to Helphire Group plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 September 2003, which comprises the consolidated profit
and loss account, consolidated balance sheet, consolidated cash flow statement
together with the notes to the cash flow statement and related notes one to six.
We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purposes. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not
express and audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2003.
Deloitte & Touche L.L.P
Chartered Accountants
Reading
1 December 2003
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