Legal challenges by solicitors against the accident management company’s terms and conditions led to a huge jump in debtor days, leading to a refinancing of the group through securing a £45 million working capital provision and an issue of £50 million in convertible notes.
Nevertheless, 41% growth in revenue is an indication of the strong relationships with its credit hire referrers, including franchised dealers, bodyshops and vehicle manufacturers, said non-executive chairman David Galloway.
He said the group is confident of further growth and improving cashflow.
“The demand for the services we offer continues to grow and we see further opportunities working more closely with existing referrers, vehicle manufacturers and other referral sources and from new product initiatives that are being marketed for the first time.
“We have a strong management team, a market place which is continuing to grow and a strong balance sheet,” Galloway added.
New focus is on recovering debts. The legal challenges affected cashflow, leading debtor days to climb to 227 as at April 30. However, now any claims exceeding 120 days are automatically referred to the group’s legal team for litigation.
Cash collected from insurers during the period grew to £133 million from £87 million in the previous year.
Rentals increased by 10,000 to 41,000 customers. Rental days increased to 1.1 million from 700,000 the previous year, although a growing proportion of these were for less profitable mainstream vehicles as opposed to higher margin prestige rentals.
“Operationally we are now expecting to see the benefits of scale come through in reduced vehicle costs, for example, as manufacturers increase their level of support and also in terms of a lower rate of headcount increase, “ said Galloway.
“The leadership skills of the senior management team, together with in-house IT system enhance-ments, have improved processes in the key operational aspects of the business in the year. The benefits of this, particularly in cash collection processes, are now starting to be seen.”