AI Claims Solutions Share Discussion Threads

[alexacj] 15/2/2006 12:33

"AI's business has high operational gearing and whilst this operated negatively
in the first quarter from this point forward it is now operating strongly in our favour as the new business volumes come through. Therefore, despite the comment in relation to market expectations, the Board continues to look forward with confidence to the second half of the current financial year, ending in June 2005, followed by a period of sustained expansion thereafter."

I took this from the November 2004 trading statement(which ironically proved to be correct meaning that the 3 following updates that showed us ahead ,then behind and then ahead again were completely unnecessary!)....this to me is the interesting bit "AI's business has high operational gearing " .....therefore as the additional volume flows through a greater proportion will flow to the bottom line....and so far the statements are reflecting further volume increases with additional contract wins!

[wiganer] 15/2/2006 12:00

FWIW scostwaehae normally posts bullishly and sensibly, usually about value/bounce plays like AFC or WHI. I'd be very interested to hear his reasoning behind post 535.

Also FWIW I suspect ACS may continue to glide down a bit, though would be surprised by a "plummet".

[masurenguy] 15/2/2006 11:55

Agree alexacj.
Best to ignore morons who suddenly appear and announce that a stock is about to take off or plummet without any attempt to try a substantiate their view.
Their IQ is usually in single digits !

[alexacj] 15/2/2006 11:09

Not sure why they should unless another adverse trading update arrives....if it doesn't it may just be a buying opportunity....you can buy very little on line at the moment....if it goes sub 20p then I will be topping up subject to no unwelcome news!!!!......Bestinvest have just added 400 000 and the directors just issued themselves a fairly large slug of share options prior to close all at higher prices than today!
If you look back over the past 4 months of trading there are more buys than sells.....so far only institutional buying and no selling.....may just prove to be MM manipulation during a closed period on a share that trades very thinly at the best of times......currently on a forecast p/e for this year of about 8 and then dropping to about 5 next year.....so IF they make their targets, and so far they have indicated that they are comfortable with them,then this will be a VERY cheap share as their peers trade on p/e's in excess of 18....the problem I see here is one of credibility.....their RNS history seems to show them trading well one minute followed by a profits warning followed by a trading well again announcement....let's hope that sort of cr@p is behind them!

[scotswhaehae] 15/2/2006 09:46

Ready to plummet??

[alexacj] 24/1/2006 09:19

LOL...sure is.....(that's why I put the date at the start....to avoid confusion!)....I really only posted it for those(if any)that are interested in the history of how the company began and the people involved in starting it.....you never know it may give a clue to what may happen in the future!

[masurenguy] 24/1/2006 09:03

alexacj "A bit of late night reading for those that like a bit of history(from 2002)!"

Errr - this information is somewhat out of date isn't it - we are in 2006 !

[alexacj] 24/1/2006 00:18

A bit of late night reading for those that like a bit of history(from 2002)!
Thought I'd better add(after being rightly reminded that this is an old article!) that I posted this ONLY to show the history of the company from it's early days as Millenium.......for anyone wishing to trace the company's and people involved at the start that has lead to AI Claims today!

Auto Indemnity: a vehicle for the long haul

THE BUSINESS

Auto Indemnity (AI), provider of accident management services to individuals and companies whose cars are involved in road accidents through no fault of their own, has suffered losses and faced controversy in recent years. But it has got to grips with its problems and is poised to embark on a profitable future.

Deals with insurers and key affinity groups are swelling its business. Together with a move from commission work to direct referrals, these changes are producing a virtuous circle after nearly three years' of crisis.





The company is the product of a merger in late 1999 between Ofex-traded Millennium and the original group. Millennium, whose former boss Adrian Palmer – one-time chief executive of car maker Group Lotus – became chief executive of the combined group, started life as a would-be mining company. It tried its hand at car dealing, thought better of it and became a shell company.





Auto Indemnity was set up in 1991 by Blackpool solicitor Andrew Gorton to obtain temporary hire cars for no-fault accident victims and finance for repairs.





It was a fast-growing sector of the market, offering abundant opportunities for efficient operators to quickly expand through a growing network of franchisees. Efficiencies and cost-savings could be achieved through centralised vehicle fleet management – AI had 450 cars – and cashflow enhanced through services such as invoice discounting.





In effect, AI, which had 13 franchises covering the entire UK, was reversed into Millennium. The deal, which was accompanied by a £3.7 million placing at 42p a share, valued the combined group at £10 million.





A company with AI's nationwide coverage looked ideally placed to reap the benefits. Business was easier to obtain and charges not queried because, almost invariably, it was motorists' insurers rather than motorists themselves who footed the bill.





In the year to March 1997, AI made £904,000 pre-tax on £4.9 million turnover. Although increased bad debts in 1997-8 cut the pre-tax surplus to £519,000, the fundamentals still appeared attractive.





Then the worm turned. Insurance companies had long resented paying the credit terms fixed between accident management companies and car hire companies and repair garages. Matters came to a head when a test case, Dimond versus Lovell, went to the House of Lords.





AI was not in the front line of this dispute. That unenviable position was occupied by Helphire, whose shares took a battering. But the judgment forced AI to make a £1.2 million provision against debtors, which translated into a £1.1 million loss for 1998-9.





With the year-end changed to December, the company in 2000 lost £962,000 on its basic business. Goodwill write-offs and other balance-sheet nasties turned this into a deficit of no less than £4.9 million.





Palmer and his co-directors realised they had to bite the bullet. If they could not beat the insurers, they had better join them, so they did.





AI decided to subscribe to the Association of British Insurers' general terms of agreement. Credit car hire rates fell, but volume soared. By early 2001 weekly hirings had risen by nearly 400 per cent. More insurance firms were referring motorists to AI. There was a side benefit, too. It had previously relied on referrals from brokers or garages, which took commissions. Direct referrals cut out commissions.





In February last year the firm raised £2.5 million to help fund an internal reorganisation, at a depressed 10p a share. The shares have trebled to 30p, valuing the enlarged company at £18 million.





Analysts have predicted 2001 profits of more than £850,000, before tax and exceptionals.



MANAGEMENT, CULTURE & RISKS



At nearly 50, Palmer became a director of Lotus Cars in the early 1990s, and managing director of Group Lotus in 1993. After that, he ran The Hansom Group, a London radio circuit and taxi fleet operator, before joining Millennium at the end of 1997.



He is seen as an astute operator, and showed his adaptability by coping with the challenges that forced the firm to radically alter its business model.



It is crucial AI comes to terms with insurers and leading car hire groups, and he has grasped this nettle.



Non-executive chairman Charles Good joined the Millennium board seven years ago. The managing director of Ely Fund Managers graces the boards of a range of firms including The Incepta Group and English Trust, providing a link with the City.



The management has a range of skills and experience. The experience of recent years has been chastening, but this has not restrained the pursuit of growth and deals – provided they are shown to make financial sense.


GROWTH PROSPECTS

After the Dimond versus Lovell case, Palmer realised the company would have to do business differently to remain a lead player. One of the most important steps he took was to end the feud with insurers.

Among other benefits, this noticeably sped up the process of collecting cash from insurers.

It also set about forging direct links with insurance companies and other groups. The company has signed cross-referral deals with the RAC and telephone-based insurer Direct Line, among others.

Cost-cutting has been a priority. The company's direct referral arrangements have cut out many (expensive) middlemen. Moreover, running a fleet of cars now makes much less sense than it did following changes to the tax rules, so AI has disposed of its 450 vehicles.

Instead, it has an agreement with giant car hire group Avis that guarantees a replacement hire car for a no-fault accident victims anywhere in the UK within four hours. AI now has the means to win wider recognition on the back of a household name. In the process, it has brought welcome relief to its own balance sheet.

It is a business where cashflow is pivotal. On this front, the arrangements AI has in place have dramatically improved the outlook.

As Growth Company Investor went to press, AI's final results for 2001 had not been published. Stephen Thomas, an analyst at the broker Teather & Greenwood, that reckons the firm will report £870,000 pre-tax profit before exceptionals, falling to £560,000 pre-tax after, producing earnings per share of 1.54p pre-exceptionals and 0.9p post.

Thomas's estimate for 2002 is £1.4 million pre-tax. This would produce earnings of 2.32p, putting the company on a forward p/e of 12.9.

This makes Auto a medium- to long-term 'buy'.


Sector:Support Services



Share price now:30p



Mkt Cap:£18m



Listing:Aim



12 month high/low:33.75p/9.25p

[alexacj] 16/1/2006 16:05

I noticed that.....no movement whatsoever in L2....still very weak at 1 v 4.....don't know what this is all about....would have said it might be directors buys but they are in a closed period so can't be....I'm still of the opinion this could just possibly turn out to be the steal of the century...I hope!....but patience required!

[elmfield] 16/1/2006 15:39

Good size trade are we about to move?

[alexacj] 05/1/2006 11:38

Afraid not.....we are about to see a drop down of at least 0.5p....there is only 1 mm left on the bid and true to the form over the past few weeks/months we are due a drop followed by a small rise.....just let it drop and if anyone is thinking about buying.....don't just yet until the share price is lower....it's the MMs New Year sale!

[elmfield] 05/1/2006 09:23

Is it time yo have another few days of blue here, one to watch and hold imv.

[alexacj] 30/12/2005 16:46

Not too sure either....but if I'm reading your theory correctly then the directors were trying to get their options granted prior to the closed period and left it to the last minute to do so...can't really fathom why they would do that unless they want to do so now because they feel the share price may well be higher after results so they can in effect get a "better" deal on the options....I guess if I were a director about to issue a tranch of options I would do so at the time I felt was optimum in terms of the share price being at the lowest point.....so if I felt there was bad news ahead I would delay the grant....however if I felt the opposite then I would award the options now.......all pie in the sky thinking I know....but that's about the limit of my thinking on the options awards....can't see too much downside from that and can't really see anything sinister either......the trading update last year on the 16th was probably made in the belief that the company's fortunes had altered to a large degree from the downbeat trading statement issued in November and the market had to be informed.... had there been no change then they probably wouldn't have issued it.(and with the benefit of hindsight I bet they wished they hadn't done so!)AIMHO!& good luck for 2006!

[nailbiter] 30/12/2005 14:18

The significance of the announcement arriving late is that it was slipped into the market when the market was effectively closed and had it been delayed another day it could not have been made because they would have been in a closed period.

In terms of the pre-close update, you tend to look for consistency on the basis that anything irregular needs explaining. Last year they gave a pre-close update on 16th December, in spite of the update they gave in November. this year we get an update in November and nothing pre-close and the Directors get a million share options after the market closes for Christmas. Not sure if that is that good or bad?

Happy New year.

[alexacj] 30/12/2005 09:59

Sorry to be a little slow here....but what is the significance of this announcement arriving after trading on 23rd....why does it matter?....in terms of the performance conditions I would agree that this information should (and probably is if you write/phone the company)be available to shareholders.
Wasn't particularly expecting a further update unless trading had declined or got significantly better than the trading update given at the AGM....having said this it can sometimes arrive a few days/weeks after close of period so we may well still have one.....I think that the company needs to be VERY careful on the accuracy of any trading updates and must avoid at ALL costs the debacles we have seen in the past where one minute we are "trading ahead" to be followed a month or so later by "we are significantly behind"......the management team have changed a little since then and I would think that they will be working hard to re-establish credibility and trust with the city....In fact if you look at the results that they put out in 2004 where they warned that the first six months to Dec 2004 would not be profitable but would recover strongly in the second half have proved to be right and had they just kept to that line credibility would be intact!
The fact that AI has won 2 further contracts and has had virtually no change in share price tells the story that we are all waiting for the proof that they can deliver the profits.....once this is shown then we should begin to see an share price that is reflective of the huge potential (imho)of this company and the market in which it operates.Business should be brisk for them at the moment with adverse weather......if my memory is correct HHR had a great November due to the poor road conditions......so at the moment we have no reason to think that AI are not also benefiting.You can currently buy virtually zero shares on line but can sell about 20000 at 0.65p above the bid(on the 29th).....might just be MM games but seems to suggest that they are not in a hurry to offload any stock or have heard any adverse trading rumours.....aimho & dyor!.....and have a great new year....let's hope that this is the year for ACS!

[masurenguy] 30/12/2005 09:04

Be very interesting to know what those "certain performance conditions" really are ! As shareholders I think that we have a right to know, don't you ?

[nailbiter] 30/12/2005 07:51

I got it wrong...the RNS came out 7 minutes after the markets closed on December 23rd.

AI Claims Solutions - Award of Share Options
RNS Number:1917W
AI Claims Solutions PLC
23 December 2005


AI Claims Solutions PLC ('the Company')

Award of Share Options

The Company announces the grant of options over Ordinary shares of 10p each in
the capital of the Company ('shares') to the following directors of the Company; these options were granted at the mid market price of 24.25p per share at close of business on 22 December 2005, and their exercise is subject to the achievement of certain performance conditions:

DB Sandhu 350,000 options

PJ Harrison 250,000 options

DB Bergenroth 250,000 options

Following the above award, DB Sandhu holds 800,833 options. PJ Harrison and DB Bergenroth each hold 250,000 options.

Options over a further 250,000 shares were awarded to senior managers at the
same time; these options were granted without performance conditions.

[nailbiter] 30/12/2005 07:37

Has anyone noticed the pre and post Christmas issues here?

6 minutes after the markets closed on the Friday before Christmas (1236 I think) an RNS is released announcing the grant of share options to directors. No one has mentioned it because, I guess, we never saw it! I honestly think it's a bit of a strange thing to do after close and on what is really the last business day before they enter a close period. Not exactly 'best practice' for a Company that bills itself as the ethical face of the credit hire industry. But from the Company where the non exec bought shares during last years closed period and then had to sell them shortly afterwards I suppose anything is possible.

Second issue is there has been no pre-close trading update. That said, based on the quality of previous communications it probably would not have been that reliable a piece of news.

Anyone fancy ringing the Company? I tried yesterday to see if there was going to be a late trading update but was told that the Managing Director was away until New Year.

[alexacj] 20/12/2005 13:21

LO many thanks for the response....my belief is that the lower margin repair business is the "test" for the insurers to see if ACS continue to deliver....if they do then I would anticipate more hire referals being directed their way as the trust builds.

[lord orphan] 20/12/2005 12:38

Alexacj: ACS lost the Direct Line contract because their owner RBS, shortly after buying Churchill, insisted on outsourcing car hire to one company in the belief that this would cut costs. The tender was won by Enterprise, the daily rental company.

ACS does not own its own fleet, instead it cross-hires cars from daily rental companies. Therefore it has lower fixed costs and higher variable costs than a company like HHR.

I still own shares in ACS. I bought them when I thought they could survive the loss of Direct Line. Judging by their last results, they seem to be doing very well in the lower margin repair business but less well in hire. Therefore they will not benefit as much as I thought from the lower hire costs until the business builds up again.

The frustration with ACS is that the free float is very small and the share price can move a long way on tiny volume. I think, if you're patient, that you will make money in this stock.

[alexacj] 19/12/2005 19:16

FAO LORD ORPHAN.......Hi L.O....hope you don't mind me asking but going back over the threads of HHR & AUT & ACS you appear to have a very good understanding of this sector and also appear to "hear" the news before it's announced.....both for ACS & HHR.....what are your sources they appear good!....many of your earlier posts appear very positive such as :-

Lord Orphan - 17 May'05 - 16:24 - 370 of 518


Heard on the grapevine that car hire costs are going to come down significiantly for AI perhaps adding £2m to next year's profits. Based on exisiting forecasts they are due to make about £1.7m PBT and are on 8x earnings. This could be the steal of the century.

You said this in May and lo & behold the announcement was duly made that their hire costs would be lowered!.....Are you still positive on ACS as your more recent posts do not appear as bullish?.....I've tried to find out why ACS lost the Direct Line contract.....if you can help would be most grateful.....I'll post this on the HHR thread as well as you seem to post there too....even identifying a new huge contract for HHR that does not appear to have been announced yet!

[alexacj] 15/12/2005 14:07

Looks like a 10k buy moved the price.....there was only 1 mm offering 24p.....this imho is all just MM manipulation as there is no real buying.....in fact over the past couple of months I think that the trades amount to net sells....until any real news we will drift up and down on whatever whim the MMs think is in fashion....bless them!

[alexacj] 15/12/2005 12:25

I notice that Teather and Greenwood have moved their recommendation from sell to hold yesterday.....not a resounding vote of confidence but better than it was....can't access the research note so don't know why they moved.EVO still recommends buy!