AI Claims Solutions Share Discussion Threads

[masurenguy] 01/3/2006 12:09

"Since June 2005 AI has won three new contracts. We have significantly improved
the terms of a fourth contract with effect from 1 March 2006 and commenced the
winding down of an older contract. As a result of these changes our revenue mix
will move towards higher margin vehicle replacement services in the second half
year."

Nailbiter: Thanks for the update.
Here is an extract from the A1 Interims. If the 'winding down' older contract is Highway do you have any information on any of the 3 new contracts or know the identity of the 4th contract where 'terms have significantly improved' ?

[alexacj] 01/3/2006 11:50

Thanks for the info nailbiter....any idea on numbers?

[nailbiter] 01/3/2006 11:48

Just some background that is doing the rounds. The account thats mentioned in the interim statement as being in wind down is Highway Insurance which was one of their earlier and cornerstone accounts after Direct Line. The business is currently being tendered elsewehere. Lord Orphan, any further info?

[alexacj] 01/3/2006 10:57

I wonder whether that 100,000 buy is a director....we'll have to wait and see!

[trixter] 01/3/2006 10:41

alex - thanks for the update. The broker's figures are encouraging and leave scope for revision to the upside (!) The news on the divi is welcome too. A long term hold that one does not need to worry about (ok, relative to some stocks), with good prospects for steady growth.

[alexacj] 01/3/2006 10:05

EVO have maintained their ADD recommendation and trimmed back 2006 PBT to £1.5million with a p/e of 9ish but increased their final divi to 0.3p and also trimmed back 2007 PBT to £2million giving a p/e of 7ish but increased the full year divi outlook to 0.6p.......so imho this remains an undervalued stock....but the board needs to prove it can produce SUSTAINABLE profits.To value the business on a par with their competitors p/e ratios the current share price should be around 40p rising to 60p for 2007 figures!

[scburbs] 28/2/2006 09:58

Solid results, but bad news that they won't meet expectations. I will continue to hold as they are cheap and as Alexacj says there are some bullish statements, although they need to start backing these up with results.

Let's hope to see some decent directors buys in the next couple of days to back up those bullish statements.

[alexacj] 28/2/2006 09:15

Not too surprised......the market needs to see the proof that there is a sustainable recovery here.....so far everything looks pretty good......£700k for the first half (which is the weaker half) then bodes well for at least £1 million second half.....that will then put us on a p/e of about 8......BUT the insertion of the phrase "perhaps might not meet market expectations" puts a bit of a dampner on what are a very good set of results and a pretty bullish forward statement...."more contracts,higher margins,acceptance by insurers of outsourcing etc etc".....so whilst this share remains undervalued it will take time for the city/market to accept that they should trade on a p/e higher than single digits...in my mind we are moving ever closer to sustainable significantly higher earnings......I have to say that if I were a director that did not believe in the company being able to achieve it's goals then it would be fairly easy to alter the business model(to copy HHR & ACS....their's certainly appear to work!) and increase hire rates to match HHR levels....pay commissions to brokers main dealer groups and cut staff numbers and overheads....this I think would dramatically improve PBT virtually overnight.....they haven't done that.....actions speak louder than words!

[wiganer] 28/2/2006 09:08

Which is what they deserve.

[masurenguy] 28/2/2006 08:59

11,000 sold at 21.38 just after the market opened. Results seemed to have been met with dynamic indifference !

[elmfield] 28/2/2006 08:30

Price well supported by these results but how soon we move up is another question.

[trixter] 28/2/2006 08:25

Nice set of interims. Well positioned for future growth. Good to be a holder at these levels.

[alexacj] 28/2/2006 08:10

Agree that the results are pretty good.....even if they just virtually replicate the first half we will see pbt of £1.1 ish ......these comments in my mind are particularly interesting....

"Since June 2005 AI has won three new contracts. We have significantly improved
the terms of a fourth contract with effect from 1 March 2006 and commenced the
winding down of an older contract. As a result of these changes our revenue mix
will move towards higher margin vehicle replacement services in the second half
year."

"Your directors believe that we are finally witnessing a change in the insurance markets approach to servicing policy holders, with a greater willingness to embrace change. This we believe will result in a significant opportunity for us to grow our outsource service offering to the marketplace."


"Our business development team continues to be very busy and is in high-level
discussions with a number of new potential referrers."

So looks like the insurance industry has accepted outsourcing as a enhancement to their business and that margins will continue to grow in the second half.....the only blot on the copy book is the reference to "perhaps" not meeting the £2million pbt.....£1.5 - £1.7 would still put them on a p/e of about 9 and with the margins increasing and volume growth continuing....I actually agree with you Scots that we may well see an uplift in 2007 estimates at year end....aimho!

[scotswhaehae] 28/2/2006 07:45

H1 turnover good

Blended margin usefully up

Divi, putting the (growth) company on 2% yield...which is good

Contract wins...and ever improving confidence in the business model...

OK ...very best estimates will be slightly undershot THIS half year but 2007 estimates MAY WELL RISE imho...

All in all...move to 30p plus likely imho...

Great stuff!

Good luck all!

[masurenguy] 28/2/2006 07:16

Well some good progress is being made but there is STILL a kicker that comes out of left field "delays in the commencement of new contracts may cause full year results to be slightly below market expectations"

Hopefully this will not negatively impact the share price which is already based upon a very modest PE ratio !


Interim Results 31 December 2005

*Turnover growth of 23% to £20.9m for the half year.
*Operating profit, before amortisation of goodwill, increased by £1.1m to
£0.7m.
*Gross profit margin increased from 18.3% to 21.3%.
*Operational cash flow of £0.7m compared to outflow of £3.6m for the
comparative period.
*Total number of new referrers increased by 2 in the period to date since
the year end.
*Investment in senior management team at board and senior management
level.
*Good progress on the development of the new claims systems and
implementation of a new finance system.
*Results for the year will be weighted towards the second half year, on
the back of new business, but delays in the commencement of new contracts
may cause full year results to be slightly below market expectations.
*Payment of Interim dividend resumed at 0.20p per share.


CHAIRMAN'S STATEMENT

I am pleased to report that the Group has made good progress over the last 12
months and the opportunities for profitable growth continue to improve.

RESULTS OVERVIEW

6 months to 31 6 months to 26 Year ended 26
December 2005 December 2004 June 2005
Unaudited Unaudited Audited
£'000 £'000 £'000

Turnover 20,943 17,044 36,945
-------- ------ ------

Operating profit/(loss)
- before amortization
of goodwilland
exceptional operating
costs 709 (206) 539

Exceptional operating
costs - (178) (178)

Operating profit/(loss)
- after amortization of
goodwill and exceptional
operating costs 440 (647) (178)

Net interest payable (205) (111) (290)

Profit/(loss) before
taxation 235 (758) (468)

Taxation (charge)/credit (213) - 19

Profit/(loss)
after taxation 22 (758) (449)


Adjusted Profit Before Tax (before exceptional costs and amortisation) of
£504,000 compared to a loss of £317,000 for the comparative period, an
improvement of £821,000.

Turnover grew by £3.9m (23%) to £20.9m and it is pleasing that gross margins
have consolidated at 21.3% up from 18.3% a year ago. As reported previously, our margins are impacted by the level of repair volume undertaken as part of our comprehensive range of services to insurers. We balance this through income
earned from vehicle replacement services and personal injury case management. We believe our business model, which is focussed on servicing insurers, gives us stronger growth prospects and more sustainable margins in the longer term.

Operational cash inflow of £701,000 showed a significant improvement from the
prior period outflow of £3.6m. We changed our banking arrangements in September
2005 moving from HSBC to Yorkshire Bank. As at the end of December our overdraft stood at £5.3 million. Since then strong cash flow receipts have further improved the position, which we believe will provide the Company with the flexibility and headroom to grow its turnover.

Overheads grew by £428,000 compared with the corresponding period last year,
reflecting volume growth. We have also continued to invest in our management
team, absorbing this cost and severance costs for senior employees within the
operating result.

Our new building in Blackpool is now fitted out and gives us the capacity to
double our number of employees without further investment in premises. We have
also invested heavily in our IT infra-structure both in readiness for the new
claims system currently being implemented and to increase the capacity and
resilience of our current systems.

PROSPECTS AND DIVIDENDS

The commencement of certain new contracts is likely to be later than anticipated during the second half year. These contracts will have a positive impact on our second half trading, weighting our full year result in favour of the second half. However, we anticipate that delays to the commencement of certain of our contracts may cause full the year results to be slightly below market expectations.

Whilst we have previously highlighted the uncertainties in forecasting the
timing of new contract awards, your directors believe that we are finally
witnessing a change in the insurance markets approach to servicing policy
holders, with a greater willingness to embrace change. This we believe will
result in a significant opportunity for us to grow our outsource service
offering to the marketplace.

Since June 2005 AI has won three new contracts. We have significantly improved
the terms of a fourth contract with effect from 1 March 2006 and commenced the
winding down of an older contract. As a result of these changes our revenue mix
will move towards higher margin vehicle replacement services in the second half
year.

Our business development team continues to be very busy and is in high-level
discussions with a number of new potential referrers. Your directors are
therefore confident that AI will continue to build on its recently improved
financial performance. In light of this your directors are very pleased to
declare an interim dividend of 0.20p per share to be paid on 18 May 2006.

Charles Good
Chairman

[elmfield] 27/2/2006 20:50

Good luck holders, see you bright and early.

[scburbs] 27/2/2006 14:57

Afternoon All, Nice to see a strong pre-results day rise today. Let's hope the momentum reversal is now formed and will gather pace tomorrow morning.

[alexacj] 27/2/2006 11:51

LOL Scots......IF the management begin to deliver here then this stock is severely undervalued......with turnover targeted at around 50 million and PBT earnings of £2 million that places this share on a p/e of just over 7.5 in a sector where competitors are on p/es of about 20!What will be of interest is the blended margin as this could potentially turn any forecasts on their head....a tweak of 2% will make a huge difference to the bottom line.Remember that 2007 earnings are currently forecasting a p/e of 5!!!!!!!!!As Scots says "good luck all"....tomorrow should be interesting!

[scotswhaehae] 27/2/2006 10:16

Indeed...if u guys are right about the EPS outlook then 30p plus is on the cards...

Interesting hoovering of all available stock in the last few days...

Good luck all!


ps another great turnaround/fundamental value stock imho is TIN !

[elmfield] 27/2/2006 09:48

Good morning, a nice start to the week.

[nailbiter] 25/2/2006 06:54

It's probably a director who doesn't realise they're in close...just kidding

[scotswhaehae] 24/2/2006 20:56

Interesting purchase today...hoovering up all the loose shares of recent days...

Someone (knowledgeable?) is getting ready for Tuesday!

Good luck all!

[masurenguy] 23/2/2006 12:28

scotswhaehae - get a life !