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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
AI Claims | LSE:ACS | London | Ordinary Share | GB0009374090 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 24.25 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMACS RNS Number : 3944T AI Claims Solutions PLC 28 September 2010 Ai CLAIMS SOLUTIONS PLC Preliminary Results for year ending 30 June 2010 Group Financial Summary and Highlights +------------------------------------+----+---------+---------+ | | | 2009/10 | 2008/09 | | | | GBP'000 | GBP'000 | +------------------------------------+----+---------+---------+ | | | | | +------------------------------------+----+---------+---------+ | Revenue | | 91,929 | 55,744 | +------------------------------------+----+---------+---------+ | Gross margin | | 18% | 26% | +------------------------------------+----+---------+---------+ | Adjusted profit1 | | 2,722 | 2,016 | +------------------------------------+----+---------+---------+ | Profit before taxation | | 2,630 | 1,874 | +------------------------------------+----+---------+---------+ | Taxation | | (708) | (573) | +------------------------------------+----+---------+---------+ | Profit for the period | | 1,922 | 1,301 | +------------------------------------+----+---------+---------+ | Dividends | | (385) | (368) | +------------------------------------+----+---------+---------+ | Earnings per share ("EPS"): | | | | | - Adjusted basic2 | | 3.29p | 2.36p | | - Basic | | 3.14p | 2.13p | +------------------------------------+----+---------+---------+ | Dividend per share | | 0.66p | 0.60p | +------------------------------------+----+---------+---------+ Financial Highlights Ø Revenue increased by 65% to GBP91.9m from GBP55.7m Ø 35% increase in adjusted profits of GBP2.7m (2008/09: GBP2.0m) Ø Earnings2 before interest, taxation, depreciation & amortisation ("EBITDA") up 27% to GBP4.2m (2008/09: GBP3.3m) Ø Gross margin of 18% (2008/09: 26%) reflecting change in mix of business Ø 3 percentage points increase in the return2 on shareholders' funds ("ROCE - Equity") to 13% (2008/09: 10%) Ø Adjusted basic EPS of 3.29p (2008/09: 2.36p) Ø Proposed final dividend of 0.37p per share (2008/09: 0.34p per share). Interim & final dividend in respect of 2009/10 is increased at 0.66p (2008/09: 0.60p) Operational Highlights Ø Doubled working capital funding facilities agreed from GBP15.0m to GBP30.0m Ø Commenced three new intermediary relationships & are piloting products with a large self insured organisation Ø Retained the business of a large automotive client & continued to work with vehicle manufacturers to develop their branded accident management schemes Ø Significant growth in Ai's BrokerAid product - now a major player in this market sector in under two years Ø Developed & implemented, as part of Ai's operating platform, a first notification of loss ("FNOL") capability Ø Debtor days of 103 days (2008/09: 95 days) are higher than the prior year due to the ever challenging environment but are still considerably better than the industry's averages owing to the strong relationships that Ai maintains with insurance companies 1 "Adjusted profit" represents profit before taxation excluding IFRS 2 share option charges 2 based on profit for the period excluding IFRS 2 share option charges For further information, please contact: +----------+------------------------------------+---------------+ | David | Ai Claims Solutions plc | 0844 571 3108 | | Sandhu | | | +----------+------------------------------------+---------------+ | Peter | Ai Claims Solutions plc | 0844 571 3200 | | Harrison | | | +----------+------------------------------------+---------------+ | Dru | Shore Capital & Corporate Ltd | 0207 408 4090 | | Danford | (NOMAD to the Company) | | | Stephane | | | | Auton | | | +----------+------------------------------------+---------------+ Chairman's Statement Record Revenues, Record Profits & Record Start To New Year I am delighted to announce the results for the year ending 30 June 2010. The key highlights are: · Record revenues of GBP91.9m up 65% (GBP55.7m) · Record adjusted profits of GBP2.7m up 35% (2008/09: GBP2.0m). EBITDA level profits up 27% to GBP4.2m · Earnings per share up 39% · New contract effective from 1 July 2010 has meant a strong start to our new financial year · Extended bank facilities to accommodate working capital for further profitable growth · Improving debtor position with several leading Insurers Market Background Our business model has always been different from those of our leading competitors and whilst we have at times struggled to get that message across to the industry and to investors the evidence of the last 12 months suggests it is a message that is now more clearly understood. In the last year, our share price has performed well relative to our quoted competitors. The credit hire industry is now firmly established, and it is strategically important that companies in the market continue to develop cooperative relationships with insurers who are striving to restore profitability and so are actively managing their claims costs. Ai, by positioning itself as the 'ethical' provider of accident solutions, is perfectly placed in this regard and continues to focus on satisfying the needs of claimants as quickly, efficiently, and cost effectively as possible in order to facilitate timely claims payment by insurers and minimise its claims settlement uncertainty. Results Several new contracts during the year have led to revenues of GBP91.9m which is 65% ahead of last year's performance. This has driven the 35% increase in adjusted profits. Costs in the business were increased by the need to resource for the new contract that began on 1 July 2010. Ai continues to strengthen its presence in the credit hire market with services provided on Mobilisa cases increasing by 34% to 59,000 (2008/09: 44,000); Ai's other products continue to strengthen - non-Mobilisa services now represent 40% of total services on cases (2008/09: 36%), thereby broadening the revenue opportunities available to the company. Ai's debtor days averaged 103 days this year (2008/09: 95 days) which, although higher than the last year end, continues to be substantially better than our quoted competitors as we continue to work closely with the insurance industry to expedite settlement of claims in this challenging environment. There is some evidence that insurers have not staffed their claims departments to meet the increased volumes they are processing; in addition they are resisting claims with excessive hire durations being made by some of our competitors. This has slowed down the process of settling claims and, in turn, has increased the resource we have needed to apply to chase debt. Of the five leading insurers our discussions have been positive although there have been material difficulties with one insurer. We are generally loathe to pursue claims in court as we expect to reach amicable agreement because we handle claims in an ethical manner. Nonetheless we are prepared to resort to the courts where insurers act unreasonably. Whilst it is taking longer to collect our debt, our experience is that we ultimately recover at least 100% of the amounts we initially recognise in our financial statements; at the balance sheet date we had collected over 100% of income initially recognised prior to 30 June 2008. At the end of June 2010 we had also collected 93% of all income initially recognised prior to 30 June 2009. This collection rate continues to mature by circa 3% per quarter. Whilst market conditions are challenging and insurers are slowing payments and challenging the amounts they pay, it does show that Ai's approach has served it well and we have not therefore seen the periodic write downs that many competitors have witnessed across the last few years. This also demonstrates that Ai's revenue recognition and provisioning policies are robust and realistic. In May 2010, despite the tough credit markets, Ai secured agreement on competitive terms from its bankers to expand its bank facilities from GBP15.0m to GBP30.0m. This was to meet the increased working capital funding requirement of the business from the recent growth in revenues as well as in anticipation of further growth during 2010/11. These facilities will provide Ai with a strong platform going forward and demonstrates the confidence our bank has in both Ai's business model and future prospects. Strategy Our strategy continues to focus on being an ethical provider of accident management services that are based on a low cost and lean balance sheet model, supported by an efficient operating and financial platform. Our GBP4.7m investment in our operating platform is now bearing fruit and is able to deliver scale efficiencies as we expand and ensure our claims are well controlled, which minimises the risk of write offs. We are continuing to invest in our product offering and distribution footprint. To ensure our growth is managed and sustainable, we have strengthened our management team, processes and control environment and also appointed Ernst & Young LLP as our internal auditors. By securing vehicles through strategic partnering with major car rental providers (rather than the industry preference for ownership), Ai also avoids the impact on its results of both the vagaries of the used car market and the costs associated with non utilisation of a car fleet, whilst maintaining a national network of vehicle locations with an extensive range of vehicle types available to meet our customers' requirements rapidly and efficiently. Future Prospects & Dividends Two significant schemes with a major intermediary started in 2009/10 and initial performance on these contracts is promising with the first two months of the financial year, which are traditionally quiet summer holiday months, producing a record start. These contracts should produce substantial growth in hire and repair business within the next year. We expect additional growth opportunities to continue to become available. The year ahead will have its challenges given the current pressures faced across the economy as a whole. I am, however, confident that Ai, with its collaborative approach to the market and lower risk and lean financial model, will continue to deliver an excellent performance for its customers and an attractive return to investors. I would like to take this opportunity to thank all of Ai's employees for their hard work during the last year. The Board is recommending a final dividend of 0.37 pence per share, making a full year dividend of 0.66 pence, an increase of 10.0 per cent over the previous year. This dividend is covered 5 times by the profit for the period. The dividend will be paid on 12 January 2011 to shareholders on the register at 10 December 2010. Chairmanship I assumed the chair in mid 2008 under an incentivisation arrangement under which I took no fees but was remunerated solely by a share incentive scheme based upon an increase in the share price over the period to 2010. I remain confident in the company's ability to create value for shareholders and I have therefore agreed in principle to extend these arrangements for a further two year period. Steve Broughton Chairman 27 September 2010 Operating & Financial Review Ai Claims Solutions manages motor claims from the initial incident through to final resolution, including replacement vehicles and repairs for several of the leading insurance companies, brokers, fleet companies and automotive businesses across the UK. We are ethical, proactive and open in our service delivery providing market leading customer service with an ethos to control claims cost inflation. Business & Commercial Development The successful agreement of additional working capital funding during the financial year has provided a solid foundation to support Ai's future growth plans. Rental of its hire fleet is a key differentiator between Ai and most of the other major players in the credit hire market who own their vehicles so have the added complexity of factoring used car prices and utilisation rates into their business models. During the year we secured the renewal of our main vehicle rental partnership arrangement for a further two years, providing security of supply and pricing for the future. Our migration away from our Legacy IT System is now nearly complete and, except for one broker scheme (which is in run off), all other new business is being written on our new platform. In addition, a number of new modules have been released, in particular the roll out of Ai's automated decision making ("ADS") software which has significantly improved the speed and accuracy of Ai's liability decisions. This provides Ai with a first notification of loss ("FNOL") service which it was unable to offer previously. A new claims strategy has been implemented and we expect this to have a significant impact on our future results, efficiency and performance. We also undertook a full product refresh for both Ai's Reserva and Defenda products which has enhanced our ethical and proactive capabilities and will lead to further savings for our insurer customers. In terms of major contract wins, Ai has successfully negotiated a significant non-fault broker referral source which has expanded our presence in this sector. We have also commenced three new intermediary broker schemes (providing FNOL and non-fault services for both credit hire and repair) and are piloting products with a large self insured organisation. We have implemented a full outsource scheme for an insurer in run off, handling FNOL (fault and non-fault) claims. This scheme has delivered repair volumes in excess of those initially anticipated and has also resulted in increased demand from existing key referral sources. Ai has also been selected as a bilateral partner for a large insurer. Ai has retained the business of a large automotive client and continues to work with vehicle manufacturers to develop their branded accident management schemes. We also continue to develop relationships and products with car dealer groups to increase Ai's penetration in that sector. People Our headcount grew to an average of 375, from 368 in the previous year, a 2% increase. This reflects underlying business growth together with efficiency improvements realised from the roll out of our CARS system and also improvements to other key efficiency drivers, such as attrition and sickness. We have been able to continue to make improvements to our attrition rate, reducing this by 3 percentage points to 23% this year. Since the year end, Ai has been able to grow its workforce to over 460 employees in line with its continuing growth. We continue to invest in providing effective training and a wealth of opportunities for all our staff. This has been recognised by the inclusion of our "Getting Connected" course in the shortlist for the "Best Training Programme" in the North West Contact Centre 2010 Awards. This follows on from the success in 2007 when Ai won this award for its industry leading "Talent Academy" programme. Principal Risks & Uncertainties +-------------+----------+--------------------------+----------+--------------------------+ | | | Impact | | Mitigation | +-------------+----------+--------------------------+----------+--------------------------+ | | | | | | +-------------+----------+--------------------------+----------+--------------------------+ | Customers | | The group services motor | | The group operates with | | and | | claims. Economic and | | a highly variable cost | | reduction | | environmental factors | | base with no fixed | | in demand | | may impact on the number | | investment being | | | | of vehicles on the road | | required for a vehicle | | | | and their accident | | fleet infra-structure or | | | | frequency, which may | | a repair garage | | | | impact revenues and | | infra-structure. | | | | profitability. | | Volumes are monitored | | | | | | closely to understand | | | | | | any shortfall against | | | | | | expectations. | +-------------+----------+--------------------------+----------+--------------------------+ | Bought in | | The cost of bought in | | The group contracts with | | costs in | | supplies has a direct | | suppliers, principally | | managing | | effect on gross margins. | | hire companies and | | a claim | | | | repairers. The company | | | | | | seeks to match its | | | | | | revenue and cost | | | | | | exposure and secures | | | | | | rental rates over a 2-3 | | | | | | year period. | +-------------+----------+--------------------------+----------+--------------------------+ | Competition | | The group operates in a | | The group seeks to | | | | competitive sector. | | develop long term | | | | | | relationships with | | | | | | customers and protect | | | | | | these with contracts and | | | | | | the development of | | | | | | innovative products. | | | | | | The group also reviews | | | | | | the performance of its | | | | | | accounts to ensure it | | | | | | remains competitive. | | | | | | Financial and | | | | | | operational barriers to | | | | | | entry exist to develop a | | | | | | significant market | | | | | | presence. | +-------------+----------+--------------------------+----------+--------------------------+ | Access to | | The group requires | | Bank covenants are | | capital | | capital to fund working | | modelled and stress | | | | capital and to support | | tested against the | | | | the investment in | | groups business plan. | | | | infra-structure. In | | Covenants are reviewed | | | | order to continue to | | on a monthly basis to | | | | access its credit | | ensure ongoing | | | | facilities the group | | compliance. If there | | | | needs to remain | | was a shortfall in cash | | | | compliant with its bank | | generated from | | | | covenants. Bank | | operations the group | | | | facilities consist of a | | would reduce its capital | | | | property loan and | | requirement | | | | overdraft. They are | | | | | | reviewed each year and | | | | | | will next be reviewed at | | | | | | the end of September | | | | | | 2011. Failure to remain | | | | | | within covenants or | | | | | | extend bank facilities | | | | | | beyond September 2011 | | | | | | could potentially | | | | | | materially affect the | | | | | | prospects of the group. | | | +-------------+----------+--------------------------+----------+--------------------------+ | Interest | | The group borrows to | | When pricing for | | Rate Risk | | principally fund its | | contracts, headroom is | | | | working capital needs. | | built into funding rate | | | | Interest rates are at a | | estimates. The group | | | | low level currently and | | has hedged its part of | | | | the company's | | its exposure to | | | | profitability would be | | significant increases in | | | | affected by an increase | | rates. | | | | in rates. | | | +-------------+----------+--------------------------+----------+--------------------------+ | Settlement | | The realisable values of | | The group makes an | | estimation | | credit hire and repair | | initial estimate of | | of claims | | claims can be subject to | | receivable amounts based | | | | dispute, which may | | on relevant experience | | | | result in a loss to the | | and settlement trends. | | | | group. | | | +-------------+----------+--------------------------+----------+--------------------------+ | Credit | | Credit risk arises if a | | Debts are due from | | Risk | | party paying the group's | | insurance companies. | | | | debt was unable to meet | | The capitalisation of | | | | its obligations | | insurers is regulated by | | | | | | the FSA. The insurance | | | | | | industry operates a | | | | | | policy holders | | | | | | protection scheme to | | | | | | alleviate the impact of | | | | | | the failure of an | | | | | | insurance company. | +-------------+----------+--------------------------+----------+--------------------------+ | Maintenance | | The GTA is a voluntary | | The group takes an | | and | | code of conduct between | | active part in the GTA | | compliance | | companies providing | | development and | | with | | credit hire and repair | | compliance and maintains | | General | | services, and insurance | | positive and productive | | Tariff | | companies. Vehicle | | relationships with | | Agreement | | rates and terms of | | insurance companies. | | ("GTA") | | payment are covered in | | Internal controls | | | | this code. | | support the group's | | | | | | compliance with the GTA. | +-------------+----------+--------------------------+----------+--------------------------+ | IT | | The group's business | | The group seeks to | | systems | | involves a high volume | | minimise the risk of | | | | of transactions, | | business interruption | | | | supported by diligent | | through controls over | | | | and detailed case notes. | | change and operating an | | | | Reliance is placed on | | effective IT general | | | | the availability and | | control environment. | | | | proper functioning of IT | | Reviews are carried out | | | | systems for the | | by Internal Audit and | | | | effective running of the | | external consultants as | | | | operation. Any | | appropriate. | | | | interruption would have | | Additionally the Group | | | | a material impact on the | | has a disaster recovery | | | | business. | | plan. | +-------------+----------+--------------------------+----------+--------------------------+ Key Performance Indicators +--------------------------+----------+--------------------+----------+-----------------+ | Indicator | | Performance | | Target | +--------------------------+----------+--------------------+----------+-----------------+ | | | | | | +--------------------------+----------+--------------------+----------+-----------------+ | ROCE - Equity | | 13% | | > 15% | | In a capital intensive | | ROCE is maximised | | | | business, post tax | | through a | | | | return on capital is a | | combination of | | | | more important measure | | managing net | | | | of performance than | | margin and working | | | | profitability alone. | | capital | | | | | | requirement within | | | | | | banking facilities | | | | | | and a sustainable | | | | | | gearing level. | | | +--------------------------+----------+--------------------+----------+-----------------+ | EPS | | 3.14p | | The target is | | Basic EPS is a key short | | Basic EPS of 3.14p | | to maximise | | term measure of | | compares to 2.13p | | shareholder | | performance used by | | in the previous | | value by | | shareholders. | | year. | | increasing EPS | | | | | | in the short | | | | | | term alongside | | | | | | ROCE - Equity. | +--------------------------+----------+--------------------+----------+-----------------+ | Referrals | | 158,000 | | To best utilise | | Key driver of growth and | | This represents a | | the skills of | | business mix and capital | | 10% increase on | | our experienced | | requirement. | | the previous year | | staff & IT | | | | (2008/09: | | platform, the | | | | 143,000). | | target is to | | | | | | maximise | | | | | | opportunities | | | | | | for converting | | | | | | leads. | +--------------------------+----------+--------------------+----------+-----------------+ | Conversion into service | | 80% | | > 80% | | Key customer service | | A 4 percentage | | | | indicator and revenue | | points increase | | | | generator. | | compared to last | | | | | | year (2008/09: | | | | | | 76%). | | | +--------------------------+----------+--------------------+----------+-----------------+ | Customer service index | | 83% | | > 85% | | Key measure of overall | | Where Ai's service | | | | customer satisfaction. | | has been rated as | | | | | | 'Very Good' or | | | | | | 'Excellent'. | | | +--------------------------+----------+--------------------+----------+-----------------+ | Claims Recovery Ultimate | | 100% | | > 100% | | Estimated ultimate | | | | | | recovery is a key driver | | | | | | in a longer cash cycle | | | | | | business for converting | | | | | | initially reported | | | | | | revenue into cash. | | | | | +--------------------------+----------+--------------------+----------+-----------------+ | WIP Days | | 39 days | | < 45 days | | A key controllable | | | | | | working capital | | | | | | investment driver. | | | | | +--------------------------+----------+--------------------+----------+-----------------+ | Debtor Days - GTA | | 123 days | | < 90 days | | Not fully controllable | | | | | | as dependent upon | | | | | | insurers payment | | | | | | efficiency in a claimant | | | | | | situation. | | | | | +--------------------------+----------+--------------------+----------+-----------------+ | Debtor Days - Other | | 52 days | | < 60 days | | More controllable as | | | | | | debt should be payable | | | | | | within agreed payment | | | | | | terms. | | | | | +--------------------------+----------+--------------------+----------+-----------------+ | Hire duration | | 17 days | | < 18 days | | Key customer service | | | | | | indicator and indicator | | | | | | of control of cases. | | | | | +--------------------------+----------+--------------------+----------+-----------------+ Operational Performance The majority of referrals still come from insurance companies - twelve of the top twenty motor insurers are served by Ai - but to expand its distribution platform, our commercial team have started to put more emphasis on building relationships with insurance brokers, car body shops, car manufacturers and fleet operators. Referrals in the year were up 10% to 158,000 cases (2008/09: 143,000 cases). Ai provided 126,000 core services (hire, repair, personal injury ("PI") or service fee) on cases referred, up 16% on the previous year (2008/09: 108,000). This represents a service conversion of 80%, up from 76% in the previous year. Average revenue per service increased from GBP516 to GBP729 during the year due to changes in business mix. Ai continues to report below-average hire durations - Ai's average hire period on credit hire is 17 days compared to an industry average of 21 days. This, together with Ai's policy to avoid, wherever possible, costly litigation to secure payment of claims by insurers, reinforces Ai's ethical stance on claims management - key differentiators between Ai and its competitors, who generally view hire periods as a source of revenue and profit. Although our debtor days increased from 95 days to 103 days this largely reflects payment backlogs witnessed at most insurers. Debt collection performance continues to be significantly better than most credit hire organisations and this is down to Ai's ethical approach to working in partnership with the insurance sector and the effective control of claims submitted for payment. Ai's claims remain very well controlled and our average hire duration on credit hire remains around 17 days (2008/09: 16 days). We are making progress in our engagement with insurers to ensure they have sufficient resources to deal with our claims and this is bringing tangible results. During the year, we agreed terms with a top 4 insurer to bring their account up to date and accelerate payment at no diminution to the value of Ai's debt. Similar discussions continue to be held with other companies. Financial Review Revenue of GBP91.9m (2008/09: GBP55.7m) increased by 65% over the previous year due to growth in Ai's core vehicle replacement & repair services. The group has witnessed a change in business mix during the year, which has increased the revenue generated from cases managed, as noted above. Hire revenue from cases increased by GBP20.5m (53%) to GBP59.1m (2008/09: GBP38.6m) and repair revenue increased by GBP16.0m (117%) to GBP29.6m (2008/09: GBP13.6m). PI related revenue increased by GBP0.6m (86%) to GBP1.3m (2008/09: GBP0.7m). Service only based income reduced by GBP0.9m (32%) to GBP1.9m (2008/09: GBP2.8m). The increase in hire, repair and PI income is attributable to growth in both Non Fault and Fault related business. The reduction in service only based income is attributable to the cessation of certain pilot schemes and the group's decision not to develop a strategic IT solution for another product. Repair income now represents 32% of revenue (2008/09: 24%) and hire income accounts for 64% of revenue (2008/09: 69%). The change in mix towards lower margin fault and non fault repair work contributed to a reduction in gross margin from 26% to 18%. As noted above, referrals and service volumes increased by 10% and 16% respectively. This growth was managed with a relatively modest increase in full time employees and staff costs which increased by 2% and 8% respectively. The increase in volume has been transacted on the new IT platform, bringing efficiency benefits, and the increased scale enables greater leverage of central costs. Administrative expenses increased by GBP1.4m (11%) to GBP13.6m (2008/09: GBP12.2m). Operating margin (based on EBITDA) reduced by 1 percentage point from 6% to 5%. EBITDA profit per employee increased by 25% to GBP11,200 (2008/09: GBP9,000). The Group generated a pre-tax profit of GBP2.6m in the year (2008/09: GBP1.9m). Profit before tax & IFRS 2 charge was GBP2.7m (2008/09: GBP2.0m). Despite the slow settlement of debts in this sector, Ai's experience shows that it recovers the amounts it initially recognises in its financial statements when it bills insurers. Over 100% of income initially recognised prior to 30 June 2008 has been collected to date. 93% of all income initially recognised prior to 30 June 2009 has been settled and, as this data continues to mature by circa 3% per quarter, we expect to recover the remaining 7% in due course. Financing Financial expenses increased by 95% to GBP0.4m as a result of additional working capital to fund the growth in revenue. Financial expenses are covered 7 times by operating profit (2008/09: 9 times). Taxation The effective tax rate was 27% (2008/09: 31%). The effective rate benefits from enhanced Research and Development relief being agreed by the Inland Revenue for prior periods. Earnings Per Share Basic EPS increased by 1.01p to 3.14p (2008/09: 2.13p). Adjusted EPS, which measures EPS before the IFRS 2 share option charge, increased by 0.93p to 3.29p (2008/09: 2.36p). Dividends The dividend charge of GBP385,000 relates to the payment of a final dividend in respect of the year ended 30 June 2009 of 0.34p per share (GBP208,000) together with the payment of an interim dividend in respect of this financial year of 0.29p per share (GBP177,000). The Board have proposed the payment of a final dividend for the year of GBP227,000 (0.37p per share) payable on 12 January 2011 to shareholders on the register at 10 December 2010. The total dividend in respect of the financial year ended 30 June 2010 of GBP404,000 is covered 5 times by the profit for the period. Return on Capital Employed Return on shareholder's funds, post tax, was 13% (2008/09: 10%). The Group was able to secure additional borrowing facilities to service increased working capital resulting from growth. Balance Sheet Total assets less total liabilities at 30 June 2010 were GBP16.3m (2008/09: GBP14.6m), equivalent to 26.5p per share (2008/09: 23.8p per share). Intangible assets increased by GBP0.6m to GBP3.5m during the year, in respect of new modules added to the CARS system less amortisation. A further GBP0.6m was invested in property, plant and equipment, primarily computer equipment. Net debt increased by GBP10.3m from GBP9.1m to GBP19.4m predominantly as a result of new business growth. Whilst there has been an extension to debtor days, this has been mitigated by a reduction in work in progress days from 48 days to 39 days. The net overdraft of GBP18.3m remains comfortably within the recently extended facility of GBP30.0m. Cashflow Net cash outflow from operating activities was GBP8.1m (2008/09: GBP5.0m). This was driven by growth in revenue of 65% and an increase in debtor days from 95 days to 103 days. Capital Structure & Financing Gearing at 30 June 2010 was 119% (2008/09: 62%), as additional working capital funding was provided through increased borrowing facilities. New financing arrangements with Yorkshire Bank came into effect in September 2009 when the committed secured overdraft facility was increased from GBP10.0m to GBP15.0m and again in April 2010 when the limit was increased by a further GBP15.0m to GBP30.0m. The facility is reviewed annually and this is next scheduled for review on or after 30 September 2012. At 30 June 2010, the net overdraft was GBP18.3m (30 Jun 09: GBP8.2m). The committed overdraft available for drawdown is limited to 80% of trade receivables less than 240 days. In addition to the committed overdraft facility the group has a mortgage loan with Yorkshire Bank secured over freehold property. At 30 June 2010, the remaining loan was GBP1.0m (30 Jun 09: GBP1.2m). The borrowing facilities are subject to financial covenants as follows: 1. Interest cover ratio A minimum cover ratio of PBIT to interest of 1.75, tested monthly and on a rolling annual basis. Interest cover for the year ended 30 June 2010 was 7.1. 2. Mortgage loan to property value A maximum loan to property value of 70% must be maintained. At 30 June 2010, the loan to property value was 49%. 3. Average Debt turn ratio The bank calculates debt turn on a 3 monthly rolling annual basis. The debt turn should not exceed 135 days. At 30 June 2010 the calculated debt turn was 106 days. The consequence of failing this covenant would be for the bank to reduce their advance percentage from 80% by 1% for each 1 day by which the debt turn exceeds 135 days. 4. Achievement of internal forecasts for adjusted profit The group submits annual budgets and periodic re-forecasts to Yorkshire Bank. The covenant requires the Group to operate above 85% of budgeted or re-forecast adjusted profit on a year to date basis. The Group met this covenant at 30 June 2010. 3net debt as a percentage of closing shareholders' funds Capital Management The group's objective is to maintain a balance sheet structure that is efficient in terms of providing long term returns to shareholders and safeguards the group's financial position through economic cycles. The group's business model allows for the procurement of services required to service claims without owning a vehicle fleet and infra-structure or repair businesses. Its capital structure is geared towards funding working capital and fixed asset investment. The Group can choose to adjust its capital structure by varying the scale and mix of its trading activities to reduce the requirement to fund trade debtors. The Board believes that it would be able to convert tranches of trade debtors into cash by agreement with insurance company debtors, although there is likely to be a cost in the form of discount. It can also choose to vary the amount it pays by way of dividend to shareholders, by issuing new shares or adjusting the level of capital expenditure. Liquidity and Funding The Group has sufficient funding to meet its normal funding requirements in the medium term to fund its business plan. Covenants attached to those facilities are not restrictive to the group's operations. Outlook Ai's reputation and standing in the credit hire and repair markets continues to go from strength to strength whilst others are falling by the way side, struggling within the current economic climate or are finding operating conditions tough. We believe Ai, even given the tough challenges the whole economy is facing, will continue to capitalise on its industry leading hire durations, strong debtor collection performance and recently introduced claims strategy (supported by its technologically advanced workflow software) to make further inroads in all the markets it operates in. Ai is well positioned with its unique and flexible operating model to meet the needs of the diverse range of both current and potential customers who require hire, repair and claims management services and we are continuing to develop our product offerings to make Ai the partner of choice in these markets. +-------------------------------+------------------------------------+ | David Sandhu | Peter J Harrison | | Chief Executive Officer | Chief Financial Officer | +-------------------------------+------------------------------------+ 27 September 2010 Consolidated Statement of Comprehensive Income Year ended 30 June 2010 +------------------------------------------+------+----------+----------+----------+ | |Note | 2009/10 | | 2008/09 | | | | GBP'000 | | GBP'000 | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Revenue | | 91,929 | | 55,744 | +------------------------------------------+------+----------+----------+----------+ | Cost of sales | | (75,265) | | (41,470) | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Gross profit | | 16,664 | | 14,274 | +------------------------------------------+------+----------+----------+----------+ | Administrative expenses | | (13,600) | | (12,178) | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Operating profit | | 3,064 | | 2,096 | +------------------------------------------+------+----------+----------+----------+ | Financial expenses | | (434) | | (222) | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Profit before taxation | | 2,630 | | 1,874 | +------------------------------------------+------+----------+----------+----------+ | Income tax | | (708) | | (573) | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Profit for the period | | 1,922 | | 1,301 | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Basic earnings per ordinary share | 1 | 3.14p | | 2.13p | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Diluted earnings per ordinary share | 1 | 3.11p | | 2.11p | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ All income arises from continuing operations. There are no items to be recognised in a separate consolidated statement of comprehensive income and, accordingly, this statement has been combined with the consolidated statement of income in this preliminary announcement. The profit for the period is fully attributable to the owners of the parent. Consolidated Statement of Changes in Equity Year ended 30 June 2010 +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | | Share | | Share | | Other | | Treasury | | Retained | | Total | | | capital | | premium | | reserves | | shares | | earnings | | GBP'000 | | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | At 1 July 2008 | 6,142 | | 1,579 | | 271 | | - | | 5,631 | | 13,623 | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | Profit & total | - | | - | | - | | - | | 1,301 | | 1,301 | | comprehensive | | | | | | | | | | | | | income for the | | | | | | | | | | | | | year | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | Share based | - | | - | | 74 | | - | | 68 | | 142 | | payments | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | Purchase of | - | | - | | - | | (54) | | - | | (54) | | treasury shares | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | Tax on items | - | | - | | - | | - | | (8) | | (8) | | charged to equity | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | Dividends to | - | | - | | - | | - | | (368) | | (368) | | equity holders | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | At 30 June 2009 | 6,142 | | 1,579 | | 345 | | (54) | | 6,624 | | 14,636 | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | Profit & total | - | | - | | - | | - | | 1,922 | | 1,922 | | comprehensive | | | | | | | | | | | | | income for the | | | | | | | | | | | | | year | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | Share based | - | | - | | (76) | | 26 | | 168 | | 118 | | payments | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | Tax on items | - | | - | | - | | - | | 12 | | 12 | | charged to equity | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | Dividends to | - | | - | | - | | - | | (385) | | (385) | | equity holders | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | At 30 June 2010 | 6,142 | | 1,579 | | 269 | | (28) | | 8,341 | | 16,303 | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ | | | | | | | | | | | | | +--------------------+---------+----------+---------+----------+----------+----------+----------+----------+----------+----------+---------+ Consolidated Statement of Financial Position As at 30 June 2010 +---------------------------------------+------+----------+----------+----------+ | |Note | 30 Jun | | 30 | | | | 10 | | Jun | | | | GBP'000 | | 09 | | | | | | GBP'000 | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | Assets | | | | | +---------------------------------------+------+----------+----------+----------+ | Non current assets | | | | | +---------------------------------------+------+----------+----------+----------+ | Goodwill | | 6,726 | | 6,726 | +---------------------------------------+------+----------+----------+----------+ | Other intangible assets | | 3,530 | | 2,894 | +---------------------------------------+------+----------+----------+----------+ | Property, plant & equipment | | 2,463 | | 2,463 | +---------------------------------------+------+----------+----------+----------+ | Deferred tax asset | | 111 | | 27 | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | | | 12,830 | | 12,110 | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | Current assets | | | | | +---------------------------------------+------+----------+----------+----------+ | Trade & other receivables | | 55,998 | | 31,096 | +---------------------------------------+------+----------+----------+----------+ | Cash & cash equivalents | 2 | 183 | | 130 | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | | | 56,181 | | 31,226 | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | Total assets | | 69,011 | | 43,336 | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | Liabilities | | | | | +---------------------------------------+------+----------+----------+----------+ | Current liabilities | | | | | +---------------------------------------+------+----------+----------+----------+ | Interest bearing loans & borrowings | 2 | (18,582) | | (8,379) | +---------------------------------------+------+----------+----------+----------+ | Trade & other payables | | (32,646) | | (18,988) | +---------------------------------------+------+----------+----------+----------+ | Income tax liability | | (479) | | (454) | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | | | (51,707) | | (27,821) | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | Non-current liabilities | | | | | +---------------------------------------+------+----------+----------+----------+ | Interest bearing loans & borrowings | | (1,001) | | (879) | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | Total liabilities | | (52,708) | | (28,700) | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | Total assets less total liabilities | | 16,303 | | 14,636 | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | Shareholders' equity | | | | | +---------------------------------------+------+----------+----------+----------+ | Share capital | | 6,142 | | 6,142 | +---------------------------------------+------+----------+----------+----------+ | Share premium account | | 1,579 | | 1,579 | +---------------------------------------+------+----------+----------+----------+ | Other reserves | | 269 | | 345 | +---------------------------------------+------+----------+----------+----------+ | Retained earnings | | 8,341 | | 6,624 | +---------------------------------------+------+----------+----------+----------+ | Treasury shares | | (28) | | (54) | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ | Total shareholders' equity | | 16,303 | | 14,636 | +---------------------------------------+------+----------+----------+----------+ | | | | | | +---------------------------------------+------+----------+----------+----------+ Consolidated Statement of Cash Flow Year ended 30 June 2010 +------------------------------------------+------+----------+----------+----------+ | |Note | 2009/10 | | 2008/09 | | | | GBP'000 | | GBP'000 | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Cash flows from operating activities | | | | | +------------------------------------------+------+----------+----------+----------+ | Profit for the period | | 1,922 | | 1,301 | +------------------------------------------+------+----------+----------+----------+ | Adjustments for: | | | | | +------------------------------------------+------+----------+----------+----------+ | Depreciation of property, plant & | | 453 | | 432 | | equipment | | | | | +------------------------------------------+------+----------+----------+----------+ | Amortisation of other intangibles | | 604 | | 503 | +------------------------------------------+------+----------+----------+----------+ | Gain on sale of property, plant & | | - | | (2) | | equipment | | | | | +------------------------------------------+------+----------+----------+----------+ | Share compensation charge | | 92 | | 142 | +------------------------------------------+------+----------+----------+----------+ | Share options exercise | | 26 | | - | +------------------------------------------+------+----------+----------+----------+ | Financial expense | | 434 | | 222 | +------------------------------------------+------+----------+----------+----------+ | Taxation | | 708 | | 573 | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Increase in trade & other receivables | | (24,687) | | (13,650) | +------------------------------------------+------+----------+----------+----------+ | Increase in trade & other payables | | 13,552 | | 5,762 | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Interest paid | | (434) | | (222) | +------------------------------------------+------+----------+----------+----------+ | Taxation paid | | (753) | | (51) | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Net cash outflow from operating | | (8,083) | | (4,990) | | activities | | | | | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Cash flows from investing activities | | | | | +------------------------------------------+------+----------+----------+----------+ | Proceeds from the sale of property, | | - | | 3 | | plant & equipment | | | | | +------------------------------------------+------+----------+----------+----------+ | Purchases of property, plant & equipment | | (154) | | (286) | +------------------------------------------+------+----------+----------+----------+ | Purchases of other intangible assets | | (1,089) | | (718) | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Net cash outflow from investing | | (1,243) | | (1,001) | | activities | | | | | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Cash flows from financing activities | | | | | +------------------------------------------+------+----------+----------+----------+ | Purchase of treasury shares | | - | | (54) | +------------------------------------------+------+----------+----------+----------+ | Proceeds of borrowings | | - | | 215 | +------------------------------------------+------+----------+----------+----------+ | Repayment of borrowings | | (216) | | (82) | +------------------------------------------+------+----------+----------+----------+ | Finance lease principal repayments | | (93) | | (50) | +------------------------------------------+------+----------+----------+----------+ | Dividends paid | | (385) | | (368) | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Net cash outflow from financing | | (694) | | (339) | | activities | | | | | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Net decrease in cash & cash equivalents | | (10,020) | | (6,330) | +------------------------------------------+------+----------+----------+----------+ | Cash & cash equivalents at 1 July | | (8,126) | | (1,796) | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ | Cash & cash equivalents at 30 June | 2 | (18,146) | | (8,126) | +------------------------------------------+------+----------+----------+----------+ | | | | | | +------------------------------------------+------+----------+----------+----------+ Notes to the Preliminary Announcement 1. Earnings Per Share Basic Earnings Per Ordinary Share The calculation of basic earnings per ordinary share at 30 June 2010 is based on the profit for the period attributable to equity holders of the parent and a weighted average number of ordinary shares outstanding during the year, calculated as follows: +------------------------------------------+--+--------------+----------+--------------+ | | | 2009/10 | | 2008/09 | | | | GBP'000 | | GBP'000 | +------------------------------------------+--+--------------+----------+--------------+ | | | | | | +------------------------------------------+--+--------------+----------+--------------+ | Profit for the year attributable to | | GBP1,922,000 | | GBP1,301,000 | | ordinary shareholders | | | | | +------------------------------------------+--+--------------+----------+--------------+ | Weighted average number of ordinary | | 61,151,965 | | 61,201,394 | | shares | | | | | +------------------------------------------+--+--------------+----------+--------------+ | Basic earnings per share | | 3.14p | | 2.13p | +------------------------------------------+--+--------------+----------+--------------+ Diluted Earnings Per Ordinary Share The calculation of diluted earnings per ordinary share at 30 June 2010 is based on the profit for the period attributable to equity holders of the parent and a weighted average number of ordinary shares outstanding during the year including share options with a dilutive effect, calculated as follows: +------------------------------------------+--+--------------+----------+--------------+ | | | 2009/10 | | 2008/09 | | | | GBP'000 | | GBP'000 | +------------------------------------------+--+--------------+----------+--------------+ | | | | | | +------------------------------------------+--+--------------+----------+--------------+ | Profit for the year attributable to | | GBP1,922,000 | | GBP1,301,000 | | ordinary shareholders | | | | | +------------------------------------------+--+--------------+----------+--------------+ | Weighted average number of ordinary | | 61,709,295 | | 61,761,908 | | shares - diluted | | | | | +------------------------------------------+--+--------------+----------+--------------+ | Basic earnings per share | | 3.11p | | 2.11p | +------------------------------------------+--+--------------+----------+--------------+ Adjusted Basic Earnings Per Ordinary Share The calculation of basic adjusted earnings per ordinary share at 30 June 2010 is based on the profit for the period attributable to equity holders of the parent and a weighted average number of ordinary shares outstanding during the year, calculated as follows: +------------------------------------------+--+--------------+----------+--------------+ | | | 2009/10 | | 2008/09 | | | | GBP'000 | | GBP'000 | +------------------------------------------+--+--------------+----------+--------------+ | | | | | | +------------------------------------------+--+--------------+----------+--------------+ | Profit for the year attributable to | | GBP2,014,000 | | GBP1,443,000 | | ordinary shareholders | | | | | +------------------------------------------+--+--------------+----------+--------------+ | Weighted average number of ordinary | | 61,151,965 | | 61,201,394 | | shares | | | | | +------------------------------------------+--+--------------+----------+--------------+ | Basic earnings per share | | 3.29p | | 2.36p | +------------------------------------------+--+--------------+----------+--------------+ 2. Cash & Cash Equivalents In The Consolidated Statement of Cash Flow +--------------------------------------------+--+----------+----------+---------+ | | | 2009/10 | | 2008/09 | | | | GBP'000 | | GBP'000 | +--------------------------------------------+--+----------+----------+---------+ | | | | | | +--------------------------------------------+--+----------+----------+---------+ | Cash at bank & in hand | | 183 | | 130 | +--------------------------------------------+--+----------+----------+---------+ | Bank overdrafts3 | | (18,329) | | (8,256) | +--------------------------------------------+--+----------+----------+---------+ | | | | | | +--------------------------------------------+--+----------+----------+---------+ | Cash & cash equivalents in the | | (18,146) | | (8,126) | | consolidated statement of cash flow | | | | | +--------------------------------------------+--+----------+----------+---------+ 3 included within "Current liabilities: Interest bearing loans & borrowings" 3. Preliminary Announcement This unaudited preliminary statement, which has been agreed with the auditors, was approved by the Board of Directors on 27 September 2010. It is not the Company's statutory accounts within the meaning of Section 434 of the Companies Act 2006. Copies of the Group's audited statutory accounts for the year ended 30 June 2010 will be despatched shortly to shareholders. The auditors have not yet reported on these accounts. Copies will also be available to the public at the Company's registered office: Indemnity House, Sir Frank Whittle Way, Blackpool Business Park, Blackpool FY4 2FB. The statutory accounts for the year ended 30 June 2009 received an unqualified audit report and did not contain statements under Section 498(2) or Section 498(3) of the Companies Act 2006. The statutory accounts for the year ended 30 June 2009 have been delivered to the Registrar of Companies. This information is provided by RNS The company news service from the London Stock Exchange END FR PGUCPBUPUGMM
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