Helphire sees slowdown
Article Date: Feb 29 2008Acquisitive Helphire, which hires vehicles to no-fault road accident victims and helps with insurance claims and repairs, lifted pre-tax profits a modest 7.2 per cent to £19.4 million in the six months to December on turnover up 45 per cent to £184 million. The fully listed company handled 92,000 cases, an increase of 41 per cent, and argues the margin attrition is a product of its fast growth.
Costs rose as Helphire had to adapt its systems to handle a new streamlined bulk collection process. This is expected to enhance profitability in the long term. Chief executive Mark Jackson says Helphire added new cases faster than existing cases were being settled, which caused the value of debtors to rise, but warns the benefits of a more rapid claims settlement will not be seen until the next financial year.
Jackson warns that organic growth will slow over the next two to three years, because of structural market changes, and argues this makes it important for the company to ‘maintain its rapid increase in market penetration’. This implies that there will be more acquisitions for Helphire, which derived £5.4 million of first-half turnover from companies purchased and in November agreed to pay up to £5.2 million for the Cab-Aid group.
Short-term borrowings and overdrafts almost doubled year on year to £92.3 million and finance lease obligations rose 20 per cent to £152.7 million, but net assets edged up to £135 million and the company ended the half-year with doubled cash of £9.8 million.
The stock market has reacted savagely to the margin squeeze and market slowdown warning, knocking 100p off the price at one point to 190.5p. That compares with a 450p peak as long ago as 1998, almost matched by 448p a year ago, and, though still above 2001’s 75p low, is down from previous Growth Company Investor recommendation.
In today’s climate, the way back looks arduous.
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