TIDMACS
RNS Number : 0298C
AI Claims Solutions PLC
01 March 2011
Ai CLAIMS SOLUTIONS PLC
Interim Report for the 6 months ended 31 December 2010
6 Months 6 Months
To Dec To Dec Year To
10 09 Jun 10
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue 60,139 38,151 91,929
Gross margin 17.6% 19.2% 18.1%
Adjusted profit(1) 1,715 906 2,722
Profit before taxation 1,685 855 2,630
Taxation (486) (261) (708)
Profit for the period 1,199 594 1,922
Dividends (227) (208) (385)
Earnings per share ["EPS"]: 2.01p 1.06p 3.29p
- Adjusted basic(2) 1.96p 0.97p 3.14p
- Basic
Dividend per share 0.33p 0.29p 0.66p
Financial Highlights
-- Revenue increased by 57% to GBP60.1m from GBP38.2m
-- 89% increase in adjusted profits(1) of GBP1.7m (6M to Dec 09:
GBP0.9m)
-- Earnings(2) before interest, taxation, depreciation &
amortisation ("EBITDA") up 69% to GBP2.7m (6M to Dec 09:
GBP1.6m)
-- Gross margin of 17.6% (6M to Dec 09: 19.2%) reflecting change
in mix of business
-- Adjusted profit(1) margin of 2.9% (6M to Dec 09: 2.4%)
-- 5.9 percentage points increase in annualised return(2) on
shareholders' funds to 14.6% (6M to Dec 09: 8.7%)
-- Adjusted basic EPS of 2.01p (6M to Dec 09: 1.06p)
-- Proposed interim dividend of 0.33p per share, 13.8% up on the
prior year (6M to Dec 09: 0.29p per share)
Notes
(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
Operational Highlights
-- Successful implementation of a major broker based scheme from
1 July 2010
-- Settlement reached with major insurer post period end to
settle GBP4.9m of GTA(3) debt due at 31 December 2010 and also to
enter into a forward payment protocol. The settlement will be
concluded with no diminution to the carrying value of the debt.
-- Work-in-Progress ("WiP") days reduced by 3 days to 36 days
(30 Jun 10: 39 days) as a result of prompter billing.
-- Non GTA(3) debtor days reduced by 4 days to 48 days (30 Jun
10: 52 days).
-- GTA(3) debtor days increased by 10 days to 133 days (30 Jun
10: 123 days). Adjusting for the post period settlement (to date)
with the major insurer (noted above), GTA(3) debtor days, at 31
December 2010, would have been 17 days lower than reported at 116
days (30 Jun 10: 123 days).
-- Contracts renewed with two large referral providers &
piloting products with a 2nd large self insured organisation.
-- Retained the business of a large automotive client &
continued to work with vehicle manufacturers to develop their
branded accident management schemes.
-- Developed & implemented a voice recording solution across
all of Ai's operational and claims departments to further improve
Ai's customer journey and enhance the ability to collect cash
faster than the industry norms.
-- Secured the Investors in People Silver Award.
Note
(3) the Association of British Insurers' General Tariff
Agreement
For further information, please contact:
David Sandhu
Ai Claims Solutions plc
0844 571 3108
Peter Harrison
Ai Claims Solutions plc
0844 571 3200
Dru Danford
Stephane Auton
Shore Capital
0207 408 4090
Chairman's Statement
I am delighted to report a record start to the year. The key
highlights are:
-- Adjusted profit up 89% to GBP1.7m
-- Revenue up 57% to GBP60.1m
-- Adjusted basic EPS up 90%
-- Major new contract implemented successfully from 1 July
2010
-- Settlement post period end with a major insurer covering 9%
of GTA debt and agreement to a forward payment protocol
Results Overview
A significant new scheme, which commenced on 1 July 2010,
together with several smaller contract wins led to revenues
increasing to GBP60.1m from GBP38.2m for the comparative period, a
57% increase. The new schemes were implemented successfully and are
performing well and in line with expectations.
Repair based service revenue grew by 81% to GBP19.9m (6M to Dec
09: GBP11.0m) for the half year and hire services by 53% to
GBP39.0m (6M to Dec 09: GBP25.5m). Other income lines declined by
GBP0.3m to GBP1.3m (6M to Dec 09: GBP1.6m) due to a decision taken
not to develop a strategic IT solution for a particular product
line. Repair services now represents 33% of revenue (6M to Dec 09:
29%), hire services 65% (6M to Dec 09: 67%) and other income lines
2% (2009: 4%).
Gross margin % reduced from 19.2% to 17.6% due to the change in
business mix towards repair, although it is slightly ahead of the
margin achieved in the 6 months to 30 June 2010 of 17.4%.
The increase in volume has enabled us to leverage our
operational cost base leading to a reduction in the operating cost
ratio from 16.5% to 14.1%. Overall, we achieved a 0.5 percentage
point increase in adjusted profit margin to 2.9% (6M to Dec 09:
2.4%).
Annualised return (post tax, interest and IFRS2) on
shareholders' funds of 14.6% has improved from 8.7% in the
comparative period, an increase of 68% in this measure.
As anticipated, our growth resulted in an increased working
capital funding requirement which led to an operational cash
outflow (i.e. before interest and tax) of GBP2.0m (6M to Dec 09:
GBP2.5m outflow). Net debt stood at GBP23.0m compared to GBP19.4m
at 30 June 2010. The overdraft of GBP21.7m (30 Jun 10: GBP18.1m)
remains comfortably within the GBP30.0m facility. Gearing stood at
132% (30 Jun 10: 120%), in line with our expectations.
We continue to place significant management focus on improving
our level of WiP and trade receivables. WiP days improved by 3 days
during the period to 36 days (30 Jun 10: 39 days). Debtor days on
cases managed under the GTA lengthened to 133 days (30 Jun 10: 123
days). Debtor days on non GTA billings reduced by 4 days to 48 days
(30 Jun 10: 52 days). Total debtor days increased to 114 days (30
Jun 10: 103 days).
I am pleased to report that we have recently achieved a
settlement of all outstanding debt and implemented a forward
protocol to pay our invoices within 15 days with a major insurer.
Had the settlement to date been received by 31 December 2010, GTA
debtor days would have been 17 days lower at 116 days (30 Jun 10:
123 days) at the period end &, likewise, total debtor days
would have been 10 days lower at 104 days (30 Jun 10: 103 days).
This settlement, covering 9% of our total GTA debt at the 31
December 2010 was achieved with no diminution in the carrying value
of the debt.
We continue to see significant variability between insurers with
regard to payment patterns for the same population of claims. It
takes some insurers a lot longer to pay than others but, in Ai's
experience, this does not have a material impact on the level it
ultimately collects at. This means certain insurers are faced with
unnecessarily higher internal claims administration costs,
reserving uncertainty and increased capital requirements than the
more efficient members of their peer group.
Ai is committed to working with Insurers to resolve outstanding
claims. We maintain it is more efficient to manage all claims
through the GTA Protocol, even after the initial 90 day period.
Litigation is used by Ai as a last resort and only after
negotiations break down. In the 6 month period to 31 December 2010,
we have litigated 33 cases (representing 0.07% of Ai's total claims
settled for that period). 13 cases were resolved before trial and
only 1 case has actually been heard at court. Resolved cases have,
on average, achieved 114% of the original debt but it takes about 5
months before we issue proceedings and then a further 5 months to
the trial date. It is, therefore, a relatively slow process and
does not make the recovery process more efficient, in fact it slows
down cash receipts.
Prospects and Dividends
Ai is not immune from the pressures facing the economy, and in
particular the impact on motorists of rising insurance premiums and
fuel prices. We maintain prudent forecasting parameters and are
confident of delivering a full year result comfortably in line with
market estimates.
The Board is pleased to announce an interim dividend of 0.33p
per share (6M to Dec 09: 0.29p), an increase of 13.8%. The dividend
will be paid on 14 July 2011 to shareholders on the register at 17
June 2011.
Steve Broughton
Chairman
1 March 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 MONTHS TO 31 DECEMBER 2010
6 Months 6 Months
To Dec To Dec Year To
10 09 Jun 10
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Revenue 60,139 38,151 91,929
Cost of sales (49,555) (30,839) (75,265)
----------- ----------- ---------
Gross profit 10,584 7,312 16,664
Administrative expenses (8,515) (6,281) (13,600)
----------- ----------- ---------
Operating profit 2,069 1,031 3,064
Financial expenses (384) (176) (434)
----------- ----------- ---------
Profit before taxation 1,685 855 2,630
Income tax 4 (486) (261) (708)
----------- ----------- ---------
Profit for the period 1,199 594 1,922
----------- ----------- ---------
Basic earnings per ordinary 3 1.96p 0.97p 3.14p
share
----------- ----------- ---------
Diluted earnings per ordinary 3 1.95p 0.96p 3.11p
share
----------- ----------- ---------
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 FINANCIAL POSITION
AS AT 31 DECEMBER 2010
31 Dec 31 Dec 30 Jun
10 09 10
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 6,726 6,726 6,726
Other intangible assets 3,760 3,376 3,530
Property, plant & equipment 2,443 2,238 2,463
Deferred tax asset 111 28 111
--------- --------- ---------
13,040 12,368 12,830
--------- --------- ---------
Current assets
Trade & other receivables 5 64,368 38,748 55,998
Cash & cash equivalents 50 103 183
--------- --------- ---------
64,418 38,851 56,181
--------- --------- ---------
Total assets 77,458 51,219 69,011
========= ========= =========
Liabilities
Current liabilities
Interest bearing loans & borrowings 6 (22,014) (11,938) (18,582)
Trade & other payables 7 (36,602) (22,575) (32,646)
Income tax liability (592) (715) (479)
--------- --------- ---------
(59,208) (35,228) (51,707)
--------- --------- ---------
Non-current liabilities
Interest bearing loans & borrowings 6 (1,036) (918) (1,001)
--------- --------- ---------
Total liabilities (60,244) (36,146) (52,708)
========= ========= =========
Total assets less total liabilities 17,214 15,073 16,303
--------- --------- ---------
Shareholders' equity
Share capital 6,142 6,142 6,142
Share premium account 1,579 1,579 1,579
Other reserves 201 275 269
Retained earnings 9,320 7,131 8,341
Treasury shares (28) (54) (28)
--------- --------- ---------
Total shareholders' equity 17,214 15,073 16,303
--------- --------- ---------
CONSOLIDATED STATEMENT OF CASH FLOW
6 MONTHS TO 31 DECEMBER 2010
6 Months 6 Months
To Dec To Dec Year To
10 09 Jun 10
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit for the period 1,199 594 1,922
Adjustments for:
Depreciation of property,
plant & equipment 287 225 453
Amortisation of other intangibles 300 292 604
Share compensation charge 30 51 92
Cash settled share options (91) - -
Share options exercise - - 26
Financial expense 384 176 434
Taxation 486 261 708
Increase in trade & other
receivables (8,370) (7,652) (24,687)
Increase in trade & other
payables 3,729 3,539 13,552
Interest paid (384) (176) (434)
Taxation paid (373) - (753)
----------- ----------- ---------
Net cash outflow from operating
activities (2,803) (2,690) (8,083)
----------- ----------- ---------
Cash flows from investing
activities
Purchases of property, plant
& equipment (79) (47) (154)
Purchases of other intangible
assets (531) (545) (1,089)
----------- ----------- ---------
Net cash outflow from investing
activities (610) (592) (1,243)
----------- ----------- ---------
Cash flows from financing
activities
Repayment of borrowings (99) (52) (216)
Finance lease principal repayments (16) (57) (93)
Dividends paid - (160) (385)
----------- ----------- ---------
Net cash outflow from financing
activities (115) (269) (694)
----------- ----------- ---------
Net decrease in cash & cash
equivalents (3,528) (3,551) (10,020)
Cash & cash equivalents at
the start of the period (18,146) (8,126) (8,126)
----------- ----------- ---------
Cash & cash equivalents at
the end of the period (21,674) (11,677) (18,146)
----------- ----------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
6 MONTHS TO 31 DECEMBER 2010
Share Share Other Treasury Retained
capital premium reserves shares earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2009 6,142 1,579 248 (54) 5,944 13,859
Profit & total
comprehensive
income for
the period - - - - 847 847
Share based
payments - - 97 - - 97
Tax on items
charged to
equity - - - - (8) (8)
Dividends to
equity
holders - - - - (159) (159)
-------- -------- --------- -------- --------- ---------
At 30 June
2009 6,142 1,579 345 (54) 6,624 14,636
Profit & total
comprehensive
income for
the period - - - - 594 594
Share based
payments - - (70) - 121 51
Dividends to
equity
holders - - - - (208) (208)
-------- -------- --------- -------- --------- ---------
At 31 December
2009 6,142 1,579 275 (54) 7,131 15,073
Profit & total
comprehensive
income for
the period - - - - 1,328 1,328
Share based
payments - - (6) 26 47 67
Tax on items
charged to
equity - - - - 12 12
Dividends to
equity
holders - - - - (177) (177)
-------- -------- --------- -------- --------- ---------
At 30 June
2010 6,142 1,579 269 (28) 8,341 16,303
Profit & total
comprehensive
income for
the period - - - - 1,199 1,199
Share based
payments - - (68) - 7 (61)
Dividends to
equity
holders - - - - (227) (227)
-------- -------- --------- -------- --------- ---------
At 31 December
2010 6,142 1,579 201 (28) 9,320 17,214
-------- -------- --------- -------- --------- ---------
NOTES TO THE INTERIM STATEMENT: 6 MONTHS TO 31 DECEMBER 2010
1. Basis Of Preparation
The results for the six months to 31 December 2010, which are
unaudited, have been prepared on a basis consistent with the
recognition and measurement principles of International Financial
Reporting Standards (IFRS); this is consistent with the accounting
policies set out in the audited annual accounts.
The financial information set out in this interim report does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The Group's statutory financial statements for
the year to 30 June 2010 have been filed with the Registrar of
Companies. The auditor's report on those financial statements was
unqualified and did not contain statements under Section 498(2) or
Section 498(3) of the Companies Act 2006.
2. Segmental Reporting
The Group operates in one operating segment, being the delivery
of accident management and other solutions to the automotive and
insurance sectors, conducted wholly in the United Kingdom.
Accordingly no segmental information for operating segments is
disclosed.
3. Earnings Per Share
Basic Earnings Per Ordinary Share
The calculation of basic earnings per ordinary share at 31
December 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 period, calculated as
follows:
6 Months 6 Months
To Dec To Dec Year To
10 09 Jun 10
Unaudited Unaudited Audited
Profit for the period attributable
to ordinary shareholders GBP1,199,000 GBP594,000 GBP1,922,000
Weighted average number of ordinary
shares 61,274,522 61,116,189 61,151,965
Basic earnings per share 1.96p 0.97p 3.14p
Diluted Earnings Per Ordinary Share
The calculation of diluted earnings per ordinary share at 31
December 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 period including share
options with a dilutive effect, calculated as follows:
6 Months 6 Months
To Dec To Dec Year To
10 09 Jun 10
Unaudited Unaudited Audited
Profit for the period attributable
to ordinary shareholders GBP1,199,000 GBP594,000 GBP1,922,000
Weighted average number of ordinary
shares - diluted 61,515,091 61,676,769 61,709,295
Diluted earnings per share 1.95p 0.96p 3.11p
Adjusted Basic Earnings Per Ordinary Share
The calculation of adjusted basic earnings per ordinary share at
31 December 2010 is based on the profit for the period attributable
to equity holders of the parent(1) and a weighted average number of
ordinary shares outstanding during the period, calculated as
follows:
6 Months 6 Months
To Dec To Dec Year To
10 09 Jun 10
Unaudited Unaudited Audited
Profit for the period attributable
to ordinary shareholders(1) GBP1,229,000 GBP645,000 GBP2,014,000
Weighted average number of ordinary
shares 61,274,522 61,116,189 61,151,965
Adjusted basic earnings per share 2.01p 1.06p 3.29p
(1) excluding IFRS 2 share option charges
4. Taxation
6 Months 6 Months
To Dec To Dec Year To
10 09 Jun 10
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Current period tax charge 486 261 708
---------- ---------- --------
The tax charge is based on the estimated expected tax rate for
the period. The effective tax rate for the 6 months to 31 December
2010 is 28.8% (6M to 31 Dec 2009: 30.5%). The effective rate of tax
for the year to 30 June 2010 was 26.9%. The basic rate of
corporation tax for both the 6 months to 31 December 2010 & the
6 months to 31 December 2009 was 28.0%. The effective rate used
varies from this due to non-deductible expenditure.
5. Trade & Other Receivables
31 Dec 31 Dec 30 Jun
10 09 10
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Trade receivables 48,812 24,492 40,956
Other receivables 1,514 2,763 1,617
Prepayments and accrued income 14,042 11,493 13,425
---------- ---------- --------
64,368 38,748 55,998
---------- ---------- --------
6. Financial Liabilities - Borrowings
31 Dec 31 Dec 30 Jun
10 09 10
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Current liabilities
Current portion of secured bank
loans 99 104 103
Current portion of finance lease
liabilities 191 54 150
Bank overdraft 21,724 11,780 18,329
---------- ---------- --------
22,014 11,938 18,582
---------- ---------- --------
31 Dec 31 Dec 30 Jun
10 09 10
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Non-current liabilities
Bank loans 740 826 776
Finance lease liabilities 296 92 225
---------- ---------- --------
1,036 918 1,001
---------- ---------- --------
7. Trade & Other Payables
31 Dec 31 Dec 30 Jun
10 09 10
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Current liabilities
Trade payables 18,380 7,439 12,914
Other taxation and social security 8,098 3,717 5,822
Other payables 714 407 609
Dividend declared 227 208 -
Accruals and deferred income 9,183 10,804 13,301
---------- ---------- --------
36,602 22,575 32,646
---------- ---------- --------
8. Interim Report
This interim report was approved by the Board on 1 March
2011.
INDEPENDENT REVIEW REPORT TO AI CLAIMS SOLUTIONS PLC
Introduction
We have been engaged by the Company to review the financial
information in the half-yearly financial report for the six months
to 31 December 2010 which comprises the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of Financial
Position, the Consolidated Statement of Changes in Equity and the
Consolidated Statement of Cash Flow and the related Notes 1 to 8.
We have read the other information contained in the half-yearly
financial report which comprises the Group Financial Summary &
Highlights and the Chairman's Statement and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with
guidance contained in ISRE (UK and Ireland) 2410, 'Review of
Interim Financial Information performed by the Independent Auditor
of the Entity'. Our review work has been undertaken so that we
might state to the Company those matters we are required to state
to them in a review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusion we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The AIM rules of the London
Stock Exchange require that the accounting policies and
presentation applied to the financial information in the
half-yearly financial report are consistent with those which will
be adopted in the annual accounts having regard to the accounting
standards applicable for such accounts. As disclosed in Note 1, the
annual financial statements of the Group are prepared in accordance
with IFRSs as adopted by the European Union. The financial
information in the half-yearly financial report has been prepared
in accordance with the basis of preparation in Note 1.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the financial information in the half-yearly financial report based
on our review.
Scope of Review
We conducted our review in accordance with ISRE (UK and Ireland)
2410, 'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity' issued by the Auditing Practices
Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the financial information in the
half-yearly financial report for the six months to 31 December 2010
is not prepared, in all material respects, in accordance with the
basis of preparation described in Note 1.
Grant Thornton UK LLP
Registered Auditor, Manchester, United Kingdom
1 March 2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
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