Redde (REDD) saw full-year revenue rise by a quarter (see table), with a higher number of contracts, a 14.3 per cent increase in the number of all repair cases and improved like-for-like growth in credit hire cases, which command a higher margin. The top line included a contribution of £98.2m from the fleet management activities of FMG, acquired in 2015.
However, while sales grew, the gross margin fell from 25.9 per cent to 24.6 per cent. This reflects an increase in the volume of repairs, which offer lower margins than credit hires. The latter entails providing goods and services such as a replacement car ahead of receiving payment, while a claim is pursued against the party at fault or their insurer.
There was good progress on the operational side. Debtor days were reduced by three days to 91, as Redde continues to fix protocols with insurance companies which serve to reduce costs for both parties.
Chief executive Martin Ward notes that including the latest proposed dividend, the group will have returned £105m to investors since 2013. He anticipates “good levels of growth supported by strong cash flow generation”.
Analysts at N+1 Singer forecast pre-tax profit of £42.7m and EPS of 11.3p per share for the year to June 2018, up from £40m and 10.9p in 2017.
| REDDE (REDD) | ||||
| ORD PRICE: | 172p | MARKET VALUE: | £521m | |
| TOUCH: | 171.5-172p | 12-MONTH HIGH: | 210p | LOW: 136p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 52p* | NET DEBT: | 6.1% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 205 | 32.4 | 55.6 | 1.65 |
| 2014 | 197 | 10.5 | 6.8 | 6.85 |
| 2015 | 249 | 24.3 | 9.0 | 8.25 |
| 2016 | 379 | 31.3 | 8.7 | 9.65 |
| 2017 | 472 | 31.8 | 8.9 | 10.60 |
| % change | +25 | +2 | +3 | +10 |
| Ex-div: | 5 Oct | |||
| Payment: | 2 Nov | |||
| *Includes intangible assets of £104m, or 35p a share | ||||
