Helphire believes its latest financial results demonstrate the effectiveness of its continuing turnaround plan.
Its preliminary results for the year to June 30 pre-tax profit is at £13.9 million (2009: £5.2m), operating profit £21.4m (£4.7m) with net debt reduced by £77.5m to £162m (£239.5m).
Martin Ward, group managing director, said: "This year's results clearly demonstrate the continued turnaround of the group under the ongoing recovery plan.
“Adjusted operating profit is in line with expectations, debtor cash collection has improved, working capital reduction has exceeded targets and direct operating cash inflow has greatly increased.
"As we approach the conclusion of our restructuring programme, the realigned business is well-positioned to operate profitably and cash positively going forward and to pursue new opportunities, but only where these offer acceptable profit margins and working capital requirements."
He said the group is now smaller and more productive.
“The recovery plan initiated in the early part of 2009 has been very successful thus far and I am delighted with progress to date as evidenced by the reported key performance indicators.
Our focus has been about addressing the legacy issues and making significant changes to restore profitability, generate positive cash flow and prevent a repeat of the past, where these are within management's control.
The group was faced with many issues that needed urgent attention and I am pleased to report that we were able to deliver and execute the recovery plan very quickly. The results this year demonstrate the significant progress the group has made.
As part of the recovery plan, it was necessary to curtail certain partner accounts which were non-value enhancing and we have previously announced these actions when taken. Consequently, we expected turnover to reduce.
Adjusted revenues are £304.2m (2009: £374.1m) and adjusted operating profits have improved to £21.4m (2009: £4.7m) with an adjusted pre-tax profit of £13.9m (2009: £5.2m loss) and a statutory post-tax profit of £3.6m (2009: £135.3m loss).
The group is smaller but now more effective and productive.
In the early part of 2009, we initiated Project Century with the objective of reducing working capital, including fleet, by £100.0m through June 2010. I am pleased to say that this was comfortably exceeded with an overall working capital reduction of £125.8m to 30 June 2010. Consequently, the group has substantially reduced its net debt to £162.0m, which is a reduction of £77.5m since 30 June 2009 (2009: £239.5m).
Our focussed approach to ABI cash collection saw debtor days reducing further to 219 days (2009: 226) against a back drop of reducing revenues. In addressing the legacy issues, the group has seen its open case count reduce by 27,300 cases to 81,700 at 30 June 2010 (2009: 109,000).
Our strategy to litigate on cases where GTA settlement has been unsuccessful means that we have more cases going through to litigation. These cases take longer to settle in the legal process, but our recovery rates demonstrate that this is a successful strategy and one we will continue as long as it is necessary.
We continue to seek productive dialogue with at-fault insurers to address frictional costs on case-handling and align our interests. We previously reported that we had entered into bilateral protocol agreements with certain at-fault insurers representing 13% of our claims market.
These protocols, if successful, remove frictional costs on both sides of the claim and improve indemnity spend for insurers, whilst improving our cash flow and debtor days. Thus far it is too early to report on the success of these protocols, but we remain encouraged by the progress made to date.
The cost benefits will only materialise if the agreements prove themselves over time and as such we continue to monitor this.
We have subsequently expanded our initial protocol base and have added other at-fault insurers on a trial basis to the arrangement now representing a total of 20% of our claims market.
No dividend is declared, however it remains the Board's intention to pay a dividend when possible.
As we are reaching the conclusion of our recovery plan, the business is in an appropriate operational cost structure to support selected growth.
However, we will remain focussed upon the profit margin performance and working capital requirements of such opportunities to avoid a repeat of the past experiences. I am pleased to report that we have exchanged letters of intent to carry out non-fault services for a significant and well known financial services brand to commence in the latter part of this calendar year.
We remain cautious about trading as current market conditions are not favourable. A reducing vehicle parc, record high petrol prices and subdued economic conditions may be the contributing factors to fewer road miles being driven, which results in less road traffic accidents.
Our peak trading occurs in the darker, wetter winter months however, if the prevailing market conditions continue they would have an adverse impact upon the Group's activity levels and expectations for the current financial year.
The group has consolidated its people resources considerably over the last year and is now of a size to better manage the volume of business conducted.
I would like to thank those former employees for their support during this transition and to thank all of our people who have made the business stronger today and who continue to provide an excellent customer service to our partners and their policyholders."