The Accident Exchange Group - An ACE Investment (ACE)

Accident Exchange is a provider of replacement vehicles to
motorists involved in accidents where they are not at fault. It
specialises in the high margin prestige end of the market, and
appears to be gaining market share in a growing marketplace.

Key Points are:

• Full-year results show the company is growing
rapidly, albeit from a small base. Sales rose fivefold
during the year to £4.1m, and pre-tax profits registered
a near six-fold increase to £1.14m.

• The current financial year has got off to a very good
start, with activity levels exceeding management
expectations by a significant margin.

• Net debt at the year-end of £3.9m, giving a gearing
figure of 212% relates almost entirely to spending on
new vehicles so is asset backed. We expect gearing to
be down to 161% at end-April 2005 and to 107% at
end-April 2006.

• Almost two-thirds of the company’s business is with
company’s that subscribe to the ABI GTA terms of
agreement, reducing the overall risk profile.

On the key financial metrics of fleet utilisation, gross margin
and ROC, Accident Exchange ranks at or near the best of its
peer group. On a PER of 9 times for the current y/e April 2005
falling to under 7 times 2006 earnings, based on conservative
estimates, the company looks attractively priced in comparison
to its peer group.

The current financial year has got off to a very good
start with excellent activity levels. Fleet numbers are
up to 330 vehicles, against our y/e April 2005
forecast of 385, the annualised run rate on sales is
currently £10m, and the annualised run rate on pretax
profit is £3m.

This company clearly has a very promising future
ahead of it.