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Helphire warns of slower growth

Created:
7 July 2008
Written by:
Jonas Crosland

Shares in Helphire fell nearly 15 per cent to 110p after the company warned that its UK market is starting to mature. Helphire provides replacement vehicles for drivers involved in road accidents that are not their fault, but nearly all motor insurers are now using some or all the services of accident management companies like Helphire so there's less scope for growth than there used to be.

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Pre-tax profits for the year to 30 June 2008 are expected to meet consensus estimates of £48.5m and EPS of 24.8p, and hire cases handled grew by 20 per cent in the second half of the year, giving overall growth of 29 per cent for the full year.

However, if fuel costs remain high, motorists will cut back on their mileage, and this will inevitably reduce accident numbers and demand for car hire replacement vehicles. Helphire is now hoping to improve cash flow with a new claims handling system, Expedite. Cost savings from that are expected to kick in during the new financial year.

IC VIEW:

HighEnough

Having fought hard to gain recognition among motor insurers, Helphire has in a way become a victim of its own success, and only diversification or a lot more road accidents will provide continued growth. Given the highly geared balance sheet, shares in Helphire are high enough at 108p.

Last IC View: Fairly priced, 197p 29 February 2008

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