RNS Number:0509P
Auto Indemnity Group PLC
27 August 2003
AUTO INDEMNITY GROUP PLC
Interim Results 29 June 2003
HIGHLIGHTS
70% Increase in Turnover
Significant profits compared to loss in the first half of last year
Maiden Interim Dividend of 0.25p
Admin expenses reduced from 38% to 28% of turnover
Charles Good, Chairman, commented:
In the first 6 months of 2003 we achieved market leadership in our industry,
regularly achieving a 10% share of the replacement vehicle market and have seen
a continuation of the excellent progress which became evident in the second half
of last year. We are now recognised as one of the largest volume suppliers of
replacement vehicles amongst accident management groups.
Whilst the impact of new business will be less dramatic in the second half of
2003, the volumes from new contracts will build up during 2004, and we expect
growth rates to accelerate again as our business model continues to produce
substantial growth opportunities.
The Board is confident that the Company will continue to build on the firm
foundations established over the last twelve months
HALF YEAR RESULTS
Chairman's Statement
Results Overview
I am pleased to report that Auto Indemnity ("AI") continues to make excellent
progress. In the six months to 29 June 2003, turnover grew to #9.9 million from
#5.8 million (an increase of 70%) for the same period a year ago. Similarly
profit before tax was #572,000, against a loss of #213,000 a year ago and
operating profit, before goodwill amortisation and taxation, was #713,000
against a loss of #77,000.
Whilst Gross Margins for the latest six months declined to 33.1% from 34.7% in
the same period last year (in line with the Board's expectations),
administrative expenses have been well controlled and now only represent 28% of
turnover compared with over 38% for the same time last year.
The large rise in turnover and the tightening of Gross Margins both reflect the
continuing successful move away from our traditional Credit Hire business to the
high volume lower margin insurer referred business, which is where our future
lies. Our core vehicle replacement business currently remains the main driver
of growth, nevertheless our additional new services of vehicle repair
management, personal injury management and debt recovery, though currently small
in absolute terms, are a fast growing component of our business.
Dividend and Change of Year End
As we announced at the time of our full year results, the Board has decided to
change our year-end from end-December to end-June; the current financial
reporting period will therefore be for eighteen months. Consequently, we will be
presenting to shareholders two sets of interim results to 29 June 2003 and 28
December 2003 followed by a final six month period to 27 June 2004.
In line with this the Board is pleased to announce a first interim dividend in
respect of the 6 month period to 29 June 2003 of 0.25p per share. The dividend
will be paid on 26 September to shareholders on the register as at 5 September
with the shares being marked ex-dividend on 3 September. Subject to unforeseen
circumstances, it is the intention of the Board to pay a second interim dividend
of 0.25p for the six months ending in December 2003 to be followed by a final
dividend at an appropriate level, for the six months ending in June 2004.
Finance and Cash Management
Ensuring that AI is paid for the work it conducts remains a major area for
attention. We achieve success here by demonstrating to insurers the high level
of technical skills of our call centre staff which ensures that we only contract
business with insurers, which is ethical and genuinely eligible for the services
provided. This is followed up with keeping insurers actively informed of
progress, with full documentary evidence.
The positive results being achieved through the application of these procedures
can be seen by the reduction in debtor days which are now down to 94 days from
152 days a year ago. Consequently cash flow generated from operations in the
first half was #1.49 million which has resulted in a further increase in cash
deposited with our bankers, which stood at #2.6 million on 29 June (#1.08
million as at 29 December 2002). We recently have negotiated two further
bordereau payment agreements with large insurers, bringing the total to five,
further demonstrating the high regard in which AI is held. As result of all of
these actions our outstanding debtor days will continue to improve, nevertheless
there is still a considerable way to go before we achieve the 30-day payment
period described in the ABI General Terms of Agreement.
New Business
The strategic goal of Auto Indemnity remains to grow our share of the accident
management market by securing commission-free referrals from insurers. Winning
these contracts is by definition a slow and careful process for both parties.
Whilst the first half has benefited from deals reached with insurers in 2002 and
earlier, this has now been followed by reaching agreement with two new 'top 20'
insurers to provide them with accident management services, including personal
injury management, vehicle repair as well as our core replacement vehicle
management service. These are mainly direct billing contracts that do not depend
on credit hire payment periods. The impact on our trading will increasingly be
felt from the beginning of the last quarter of 2003.
We continue to have active discussions with a number of other top 20 insurers
with the aim of developing full service agreements in due course.
Operations and Claims Management
We continue to make progress in the efficiency of our operation. By the end of
this reporting period the average length of hire of a vehicle had reduced to
between 13 and 14 days down from 16 days in calendar 2002. We understand that
this is very much lower than the average length of hire of our principal
competitors. This has been achieved by improving communication between vehicle
repairer, insurance company and policyholder. Our ability to reduce insurers
costs by tight controls in this area is increasingly recognised by the insurance
market and is leading to new business opportunities.
As would be expected in a business at the forefront of change, IT and management
systems are continually undergoing upgrading and improvement. During the last
six months we have put in a number of processes to improve further the manner in
which we manage risk and recovery within the business. We have undertaken a
review of our IT systems to ensure that they will be capable of accommodating
both existing and future growth rates, at the same time keeping our
market-leading customer service levels, for which we are already recognised.
Procurement
During the first six months of the year we completed a comprehensive tender
process for the provision of replacement vehicles. This will ensure that we have
adequate forward supplies to meet our expected growth and at the same time
secure the most favourable rates in the market.
The outcome of the tender process was most satisfactory and we welcome National
Car Rental as a supply partner; they will complement the service we currently
enjoy from AVIS. Both suppliers are governed by comprehensive supply level
agreements to ensure complete customer satisfaction.
In order to be sure that we can accommodate the continuing high levels of growth
we anticipate, we are in the final stages of negotiation to purchase a further
15,000 sq ft call centre and head office facility in Blackpool next to our
current offices. Given the present circumstances of our cash position, it is
intended that this building will be purchased out of internal cash flow at a
likely cost of around #2 million, including infrastructure, and should meet our
space requirements for the next two to three years, based on our current
projections for growth.
Prospects
In the first 6 months of 2003 we achieved market leadership in our industry,
regularly achieving an 8% share of the replacement vehicle market and have seen
a continuation of the excellent progress which became evident in the second half
of last year. We are now recognised as one of the largest volume suppliers of
replacement vehicles amongst accident management groups.
Whilst the impact of new business will be less dramatic in the second half of
2003, the volumes from new contracts will build up during 2004, and we expect
growth rates to accelerate again as our business model continues to produce
substantial growth opportunities.
The Board is confident that the Company will continue to build on the firm
foundations established over the last twelve months
Charles Good
Chairman
26 August 2003.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months Six months
to 29 June to 30 June Year to
2003 2002 29 Dec 2002
Note Unaudited Unaudited Audited
#'000 #'000 #'000
Turnover 9,932 5,845 14,752
Cost of sales (6,642) (3,819) (9,853)
Gross profit 3,290 2,026 4.899
Administrative expenses (2,743) (2,245) (4,565)
Group operating profit/(loss):
Before amortisation of goodwill 713 (77) 642
Amortisation of goodwill (166) (142) (308)
Group operating profit/(loss): 547 (219) 334
Interest receivable and similar income 25 7 21
Interest payable and similar charges - (1) (14)
Profit/(loss) on ordinary activities before 572 (213) 341
taxation
Tax on profit on ordinary activities 2 (82) - 451
Profit/(loss) after taxation 490 (213) 792
Dividends proposed 3 (153) - (153)
Profit/(loss) for the period 337 (213) 639
Basic and diluted earnings per share 1 0.80p (0.35)p 1.30p
Basic and diluted eps before taxation and
amortisation of goodwill 1 1.21p (0.13)p 1.06p
Dividend per share 3 0.25p - 0.25p
All operations are continuing. There were no recognised gains and losses other
than the results above.
CONSOLIDATED BALANCE SHEET
29 Dec
Note 29 June 2003 30 June 2002 2002
Unaudited Unaudited Audited
#'000 #'000 #'000
Fixed assets
Intangible assets 5,648 5,964 5,814
Tangible assets 278 344 306
5,926 6,308 6,120
Current assets
Debtors 6,633 5,879 6,997
Cash at bank and in hand 2,559 553 1,082
9,192 6,432 8,079
Creditors: amounts falling due within one year (4,204) (3,018) (3,625)
Net current assets 4,988 3,414 4,454
Total assets less current liabilities 10,914 9,722 10,574
Capital and reserves
Called up share capital 6,109 6,107 6,107
Share premium account 1,552 1,551 1,551
Merger reserve 690 1,003 847
Profit and loss account 2,563 1,061 2,069
Shareholders' funds 4 10,914 9,722 10,574
CONSOLIDATED CASH FLOW STATEMENT
Six months Year to
to 29 June Six months to 29 Dec
2003 30 June 2002 2002
Unaudited Unaudited Audited
#'000 #'000 #'000
Reconciliation of operating cash flow
Operating profit/(loss) 547 (219) 334
Goodwill amortisation 166 142 308
Depreciation of fixed assets 69 70 149
Profit on disposal of fixed assets - (10) (12)
Decrease / (increase) in debtors 282 461 (206)
Increase in creditors 426 317 944
Net cash inflow from operating activities 1,490 761 1,517
Returns on investments and servicing of finance 25 6 7
Capital expenditure (41) (41) (80)
Acquisitions & disposals - (708) (892)
1,474 18 552
Financing 3 - (7)
Increase in cash 1,477 18 545
NOTES TO THE INTERIM REPORT TO 29 JUNE 2003
1 EARNINGS PER SHARE
Six months Year to
Six months to to 30 June 29 Dec
29 June 2003 2002 2002
Unaudited Unaudited Audited
#'000 #'000 #'000
These have been calculated on earnings of: 490 (213) 792
The weighted average number of shares used was:- '000 '000 '000
Basic 61,069 60,559 60,800
Share option adjustment 247 - -
Fully diluted 61,316 60,559 60,800
2 TAXATION
The tax charge of #82,000 is based on an estimated effective tax rate on
profit for the 18 month period to 27 June 2004 of 14%. The charge arises
from a reduction in the deferred tax asset held on the balance sheet of the
Group to #369,000 as at 29 June 2003 which is included in debtors. The rate
is lower than the standard UK corporation tax rate due to the utilisation
of brought forward losses not previously recognised as an asset in the
balance sheet. The recoverability of the possible deferred tax asset
attributable thereto was not assessed as sufficiently certain to warrant
recognition in the financial statements under accounting standard FRS 19
'Deferred Tax'.
3 DIVIDENDS
The Company proposes to pay an interim dividend of 0.25 pence per share to
shareholders on the share register at 5 September 2003. On the number of
shares currently in issue this amounts to #153,000.
4 MOVEMENT IN SHAREHOLDERS' FUNDS
Six months Year to
Six months to to 30 June 29 Dec
29 June 2003 2002 2002
Unaudited Unaudited Audited
#'000 #'000 #'000
Profit/(loss) for the period 337 (213) 639
Issue of share capital (net of issue costs) 3 300 300
Net addition to shareholders funds 340 87 939
Opening shareholders' funds 10,574 9,635 9,635
Closing shareholders' funds 10,914 9,722 10,574
5 INTERIM REPORT
This interim report was approved by the Board on 26 August 2003. It has
been prepared using accounting policies that are consistent with those
adopted in the statutory accounts for the year ended 29 December 2002.
The figures for the year ended 29 December 2002 were derived from the
statutory accounts for that year. The statutory accounts for the year
ended 29 December 2002 have been delivered to the Registrar of Companies
and received an audit report which was unqualified and did not contain
statements under sections 237 (2) or (3) of the Companies Act 1985.
6 DESPATCH OF DOCUMENTS
Copies of the interim results will be despatched to shareholders and the
AIM Team. Copies will also be available to the public at the company's
registered office; Indemnity House, Sir Frank Whittle Way, Blackpool, FY4
2FB
INDEPENDENT REVIEW REPORT TO AUTO INDEMNITY GROUP PLC
Introduction
We have been instructed by the Company to review the financial information,
which comprises the Profit and Loss account, the Balance Sheet, the Cash Flow
Statement, the Reconciliation of Shareholders' Funds and the related notes that
have been reviewed. We have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information. This report is made
solely to the company in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices
Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our work, for this report,
or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the AIM
Rules. The directors are also responsible for ensuring that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999
/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied, unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than an
audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 29 June 2003.
RSM Robson Rhodes LLP
Chartered Accountants
Manchester, England
26 August 2003
For further information please contact:
Adrian Palmer - Auto Indemnity Group PLC - 0870 889 2200
Peter Ward - Insinger de Beaufort - 0207 377 6161
This information is provided by RNS
The company news service from the London Stock Exchange
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