RNS Number:8983U
Claims Direct PLC
29 November 2000
CLAIMS DIRECT PLC
"Excellent maiden interim results from the UK market leader"
Interim Results for the six months ended 30 September 2000
Claims Direct plc ("Claims Direct"), the UK market leader in
personal injury compensation, announces its unaudited results
for the six months ended 30th September 2000:
Highlights
- Underlying operating profits* up 174% to #11.8m (1999:
#4.3m)
- Turnover up 336% to #42.7m (1999: #9.8m)
- Basic earnings per share of 3.9p (1999: 1.9p)
- Maiden interim dividend per share of 0.5p
- First half accepted cases run rate average of 5,065 per
month (1999: 1,857)
- First half number of accepted cases rose 172% to 30,388
(1999: 11,141) greater than last year as a whole
- Number of cases covered by insurance total 25,886 (1999:
592)
*before amortisation and exceptional employee costs
Tony Sullman, Chairman of Claims Direct, commenting on the
interim results, said:
"Our half-year results reflect our market leadership in the
personal injury claims management industry, the success of our
brand, and our marketing drive.
"We are determined to rebuild consumer confidence by continuing
to enable members of the public who have suffered injury or
disability through the fault of another party to have 'Access to
Justice'.
"We are operating in a long term growth market and are confident
that the strong momentum we have demonstrated will continue.
The outlook for the remainder of the current financial year,
although clouded by recent events, continues to be positive."
An analysts' meeting will be held today at 9:30am at Founders
Hall, Cloth Fair, EC1
For further information, please contact:
Claims Direct plc
Colin Poole, Chief Executive 01952 284838
Paul Doona, Finance Director 01952 284938
Web Site www.claimsdirect.com
Golin/Harris Ludgate 0207 253 2252
Reg Hoare/Robin Hepburn
Chairman's Statement
I am pleased to report Claims Direct's maiden set of interim
results since becoming a quoted company, for the six months
ended 30 September 2000.
Operating results
The group has recorded an excellent performance for the period.
Operating profit before exceptional employee costs and
amortisation, the best measure of our underlying performance,
rose 174% to #11.8m (1999: #4.3m). Basic earnings per share were
3.9p (1999: 1.9p).
Balance Sheet
At the end of the period the Group had a robust financial
position, with net assets of #57.8m (1999 #2.1m) and cash at
bank and in hand of #43.2m (1999: #0.6m). #48.5m was raised in
the flotation as proceeds for the Company's use.
Dividend
As a sign of your board's confidence in the progress of your
company, it is proposed to pay a maiden interim dividend of 0.5p
on 14 January 2001 to all shareholders on the register as at 15
December 2000. As indicated in the Company's flotation
prospectus, the Directors intend to adopt a progressive dividend
policy while maintaining an appropriate level of dividend cover.
Operating review
The last six months have been an exciting period for the group,
during which we achieved a successful flotation on the London
Stock Exchange and acquired the vetting business of Poole and
Company for a consideration of #9.75 million. The number of
cases accepted during the period was 30,388 (1999: 11,141), of
which 25,886 were covered by the Claims Direct Protect insurance
policy. Furthermore, substantial progress has been made in
relation to the litigation initiated by certain franchisees who
declined to operate the Claims Direct Protect insurance policy.
Gross payments to potential litigants were #976,000 in the
period, but taking into account the benefit of the cases
returned to Claims Direct from these franchisees, the costs to
the Group are not expected to be material.
The accounts include the estimated cost of ex gratia payments
which the company expected to make to claimants who had
voluntarily transferred to the insurance policy from the
previous percentage fee arrangement, and had not been able to
recover the cost of insurance premiums from third party insurers
on policies taken out before 1 April 2000.
Subsequent to the period end your company suffered damaging
media comment about the issue of premium recoverability pre 1
April 2000. The Board has therefore taken the initiative by
announcing that all clients who have taken out insurance
policies prior to 1 April will be guaranteed that they will
placed in no worse a position than they would have been under
the Company's previous arrangements.
The cost of this guarantee is expected to be approximately #5
million, thus requiring a further provision of #4 million to
that contained in the interim results. This will also be
treated as an exceptional cost in the second half. The Board
believes that this action will arrest and reverse any slow down
in business activity which may result from a reduction in consumer
confidence due to media comment.
Recent comment has also centred on the defendant insurance
industry's apparent reluctance to re-imburse the premiums paid
by claimants for after-event insurance effective since 1 April
2000. We remain confident and will continue to support the Lord
Chancellor's stated objective to protect the client's
compensation in full via the Access to Justice legislation. We
continue to monitor the situation closely and should the need
arise are prepared to refine our business model as we have done
in the past.
The Claims Direct Protect policy still, however, remains central
to our business. It is a means of protecting our clients from
paying legal costs, or even the cost of the insurance premium
itself, if they lose their case. It ensures that we can
continue to provide access to justice for all, no matter their
means, on a 'no win, no fee' basis.
As we had predicted competition has increased with the emergence
of new entrants into the market. We believe that this acts as a
spur to growth as well as to our own aim of maintaining our
market leadership. We operate a network of claims managers
providing nationwide coverage in support of more than 300 firms
of solicitors. This unique and expensive infrastructure has
taken years to build - and encompasses considerable experience
backed by full training and accreditation through the law
industry's leading training organisation, Central Law Training.
Our direct response TV advertising has been and will remain our
principal marketing tool as evidenced by the fact that Claims
Direct is the UK's leader by reference to rate card spend.
Advertising expenditure in the first half totalled approximately
#7m. We intend to refresh the campaign in the second half and to
use advertising to support our position as UK market leader.
As the increase in administrative costs show, staff numbers have
increased to cope with the demands of a growing business. In
particular, we have invested in well-proven senior managers at
operational board level.
During the last 12 months we have developed a retail presence of
some 20 shop-units. We will closely monitor progress before
making a decision about further expansion next year, but we are
encouraged by the results to date.
New developments
We are in the process of finalising arrangements for the launch
of Accident Assist, a unique form of work in progress funding
for solicitors which we are arranging through a leading UK bank.
The importance of this initiative lies not only in freeing up
solicitor capacity, but also in providing an additional route to
market, as it encourages solicitors, both panel and non-panel,
to refer claims to the Company.
While we build our share of the UK market, we are also looking
to develop the "Claims Direct" brand overseas and have appointed
an International Business Development Director to explore master
licensing agreements in Europe, the USA and Australasia.
Overseas development is an area of the business which I intend
to concentrate upon in the second half of the year.
We are also developing an advanced computerised claims
management system. This will not only ensure rapid co-
ordination between claims managers, central office and
solicitors, but will also enable insurance companies to proceed
more rapidly to settlement. The system is due to be in place by
the middle of next year.
Outlook
Our half-year results reflect our market leadership in the
personal injury claims management industry, the success of our
brand, and our marketing drive.
We are determined to re-build consumer confidence by continuing
to enable members of the public who have suffered injury or
disability through the fault of another party to have 'Access to
Justice'.
We are operating in a long term growth market and are confident
that the strong momentum we have demonstrated will continue.
The outlook for the remainder of the current financial year,
although clouded by recent events, continues to be positive.
Tony Sullman
Chairman
29 November 2000
Consolidated profit and loss accounts
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2000 30 Sept 1999 31 Mar 2000
Note #'000 #'000 #'000
----------- ----------- -----------
Turnover - continuing
operations 42,710 9,796 39,964
------- ------- -------
Cost of sales
- before exceptional costs (24,249) (2,369) (22,215)
- exceptional costs 1 (1,913) -- --
------- ------- -------
(26,162) (2,369) (22,215)
------- ------- -------
Gross profit 16,548 7,427 17,749
------- ------- -------
Administrative expenses
- before amortisation of goodwill
and exceptional costs (4,705) (3,142) (6,027)
- amortisation of goodwill (612) (68) (968)
- exceptional employee
costs 1 (1,611) -- (350)
------- ------- -------
(6,928) (3,210) (7,345)
------- ------- -------
Operating profit-continuing
operations 9,620 4,217 10,404
Net interest receivable/
(payable) 689 (82) (297)
------- ------- -------
Profit on ordinary activities
before taxation 10,309 4,135 10,107
Tax on profit on ordinary
activities 2 (3,435) (1,171) (3,457)
------- ------- -------
Profit on ordinary
activities after taxation 6,874 2,964 6,650
Dividends (963) (216) (2,858)
------- ------- -------
Profit for the period 5,911 2,748 3,792
------- ------- -------
Earnings per ordinary share
- before exceptional employee
costs, amortisation of
goodwill and
interest 3 4.7p 1.9p 5.1p
- basic 3 3.9p 1.9p 4.2p
- diluted 3 3.8p 1.9p 4.2p
Dividend per ordinary share* 0.5p 2.3p 47.8p
There were no recognised gains and losses in the period other
than those arising in the profit and loss account.
* The dividend per ordinary share declared in the six month
period to 30 September 1999 and the year to 31 March 2000 are
not comparable with that declared in the six month period.
These being dividends paid in the run up to flotation to a
significantly smaller shareholder base.
Consolidated balance sheets
Unaudited Unaudited Audited
at at at
30 Sept 2000 30 Sept 1999 31 Mar 2000
Note #'000 #'000 #'000
----------- ----------- -----------
Fixed assets
Intangible assets 4 12,610 572 3,472
Tangible assets 1,180 189 466
Investments 5 623 -- --
------- ------- -------
Total fixed assets 14,413 761 3,938
------- ------- -------
Current assets
Debtors 30,311 10,691 19,103
Investments 6 10,535 -- --
Cash at bank and in hand 43,210 611 5,059
------- ------- -------
Total current assets 84,056 11,302 24,162
------- ------- -------
Creditors: amounts falling
due within one year (33,784) (8,620) (17,450)
Net current assets 50,272 2,682 6,712
Total assets less current
liabilities 64,685 3,443 10,650
Creditors: amounts falling
due after more than one year -- (13) --
Provisions for liabilities
& charges (6,868) (1,375) (7,296)
------- ------- -------
Net assets 57,817 2,055 3,354
------- ------- -------
Capital & reserves
Called up share capital 1,926 94 94
Share premium account 48,222 -- --
Merger reserve 333 644 401
Profit & loss account 7,336 1,317 2,859
------- ------- -------
Equity shareholders' funds 57,817 2,055 3,354
------- ------- -------
The interim financial statements were approved by the Board of
Directors on 29 November 2000.
Consolidated cash flow statements
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2000 30 Sept 1999 31 March 2000
#'000 #'000 #'000
----------- ----------- -----------
Net cash inflow/(outflow)
from operating activities 6,160 (1,294) 4,813
------- ------- -------
Returns on investments and
servicing of finance
Interest received 764 -- 44
Interest paid (341) (82) (341)
------- ------- -------
Net cash inflow/(outflow) from
returns on investments and
servicing of finance 423 (82) (297)
Taxation (2,074) -- (76)
Capital expenditure and
financial investment -
Purchase of tangible fixed assets (903) (59) (426)
Purchase of fixed asset
investments (623) -- --
Acquisitions
Poole & Company vetting
operation (9,750) -- --
Deferred consideration
in relation to acquisition
in previous period (1,000) -- --
Equity dividends paid
to shareholders (590) (33) (1,605)
------- ------- -------
Net cash (outflow)/inflow
before use of liquid
resources and financing (8,357) (1,468) 2,409
------- ------- -------
Management of liquid resources
Increase in short-term
restricted deposits
with banks (4,003) -- (4,259)
Current asset investments (10,535) -- --
Financing
Issue of ordinary
shares (net of costs) 48,552 -- --
(Decrease)/increase
in bank loans (5) 4 (8)
Capital element of
finance lease payments (3) (3) (9)
Increase in invoice
discounting facility 8,572 2,629 3,144
------- ------- -------
Net cash inflow from financing 57,117 2,630 3,127
------- ------- -------
Increase in cash in the period 34,222 1,162 1,277
------- ------- -------
Reconciliation to net cash/(debt)
Net cash/(debt) at 1 April 1,131 (1,278) (1,278)
Increase in net cash 34,222 1,162 1,277
Movement in liquid resources 14,538 (9) 4,259
Movement in financing (8,565) (2,630) (3,127)
------- ------- -------
Net cash/(debt) at period end 41,326 (2,755) 1,131
------- ------- -------
Supplementary statements to the consolidated cash flow statement
Reconciliation of operating profit to operating cash flow
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2000 30 Sept 1999 31 March 2000
#'000 #'000 #'000
----------- ----------- -----------
Operating profit 9,620 4,217 10,404
Depreciation charge 189 23 89
Loss on sale of fixed assets -- -- 15
UITF 17 charge -- -- 255
Amortisation of goodwill 612 68 968
Increase in debtors (10,942) (6,437) (15,197)
Increase in creditors 6,109 1,376 6,756
Increase/(decrease) in
provisions 572 (541) 1,523
------- ------- -------
Net cash inflow/(outflow)
from operating activities 6,160 (1,294) 4,813
------- ------- -------
Reconciliation of movement in net debt
At 1 April At 30 Sept
2000 Cash flow 2000
#'000 #'000 #'000
----------- ----------- -----------
Cash at bank and in hand 800 34,148 34,948
Overdrafts (74) 74 --
------- ------- -------
726 34,222 34,948
------- ------- -------
Debt due within one year (3,848) (8,568) (12,416)
Finance leases (6) 3 (3)
------- ------- -------
(3,854) (8,565) (12,419)
------- ------- -------
Liquid Resources
- restricted cash balances 4,259 4,003 8,262
- current asset investments - 10,535 10,535
------- ------- -------
4,259 14,538 18,797
------- ------- -------
1,131 40,195 41,326
------- ------- -------
Supplementary statement
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2000 30 Sept 1999 31 Mar 2000
#'000 #'000 #'000
----------- ----------- -----------
Reconciliation of movements
in shareholders' funds
Profit attributable to
shareholders 6,874 2,964 6,650
Dividends (963) (216) (2,858)
UITF 17 charge -- -- 255
------- ------- -------
5,911 2,748 4,047
New share capital (net of costs) 48,552 -- --
------- ------- -------
Net addition to shareholders'
funds 54,463 2,748 4,047
Opening shareholders' funds 3,354 (693) (693)
------- ------- -------
Closing shareholders' funds 57,817 2,055 3,354
Notes to the accounts
1. Exceptional costs
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2000 30 Sept 1999 31 Mar 2000
#'000 #'000 #'000
----------- ----------- -----------
(a) Included in cost of sales
- ex-gratia payments
and provision 937 - -
- gross payments to potential
litigants 976 - -
------- ------- -------
1,913 - -
------- ------- -------
(b) Included in administrative
expenses
- flotation bonuses 481 - -
- national insurance paid on
share options exercised 654 - -
- national insurance provided
on share options not
exercised 476 - -
- UITF 17 charge - - 350
------- ------- -------
1,611 - 350
------- ------- -------
3,524 - 350
------- ------- -------
2.Taxation
The taxation charge for the six months to 30 September 2000
has been calculated by applying the estimated tax rate for
the current financial year ending 31 March 2001.
3.Earnings per ordinary share
Earnings per ordinary share before amortisation of goodwill,
interest and exceptional employee costs is calculated by
adjusting the profit attributable to ordinary shareholders by
the after tax effect of those items (#1,257,000) and then
dividing the adjusted earnings by the weighted average number
of ordinary shares (174,103,729).
Basic and diluted earnings per ordinary share, the latter of
which allows for the impact of the exercise of outstanding
share options, are calculated by dividing the profit
attributable to ordinary shareholders of #6,874,000 (1999:
#2,964,000) by the weighted average number of ordinary
shares.
In the case of basic earnings per share, the weighted average
number of ordinary shares, excluding the shares held by the
long-term share incentive scheme which are owned by the
company, totals 174,103,729 (1999: 159,706,993); and for
diluted earnings per share, totals 181,576,271 (1999:
160,043,146).
4.Intangible fixed assets
Intangible fixed assets comprise goodwill arising on
consolidation and on acquisitions. During the period goodwill
of #9,750,000 arose on the acquisition of the vetting
business of Poole & Co. This and other goodwill arising has
been capitalised and is being amortised over its estimated
useful economic life, being five years for past acquisitions.
5.Fixed assets investments
Fixed assets investments comprise investment in own shares
held within an Employee Trust and relate to the long-term
incentive scheme for executive directors. The costs of shares
acquired are amortised over the performance period to which
they relate.
6.Current assets investments
Current assets investments comprise loans to claimants and
were made to facilitate the movement from the company's
previous to present funder.
7.Contingent liabilities
As disclosed in the annual report for the year ended 31 March
2000, the group had become aware of the intentions of a
number of current and former franchises to initiate
proceedings against the group. As commented upon in the
Chairman's statement, substantial progress has been made
towards settling these disputes.
The Directors, accordingly, remain confident that the
resolution of outstanding disputes, will not have a
significant impact on the group's financial position.
8. Other information
(a) The figures for the year to 31 March 2000 have been
extracted from the full group accounts for that period on
which an unqualified report was made by the group's auditors
and which have been delivered to the Registrar of Companies.
(b) The interim financial statements for the six months ended
30 September 2000, whilst not constituting statutory accounts
within the meaning of section 240 of the Companies Act 1985,
are prepared in accordance with applicable accounting
standards, using the same accounting policies as set out in
the group accounts for the year ended 31 March 2000.
(c) A copy of this interim statement will be sent to all
shareholders on 6 December 2000 and copies will be available
at the company's registered office, Grosvenor House, Central
Park, Telford, TF2 9TU from that date
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