It was a strong first half for Redde (REDD), as double-digit revenue growth for the accident management specialist fed through to the bottom line. Sales were buoyed by a 24.8 per cent rise in the number of credit hire cases, and a marginal increase in the total number of repair cases. The average number of vehicles held during the period rose by 16.8 per cent to nearly 9,000 due to increased demand, partly from new contracts. Even so, the group’s fleet utilisation remained slightly above its 80 per cent target.
That all said, debtor days increased from 90 to 97 year-on-year. This was driven partly by an insurer contract which began in the latter part of 2016, and which has soaked up working capital. Redde also ended a protocol arrangement – a bilateral relationship – with a separate large insurer, and the relevant cases are now being processed through a non-protocol arrangement which is more profitable, but entails slower cash realisations.
The combined effect of these events has been to reduce cash balances from £33.6m to £24.4m. That said, cash was also reduced by share buybacks, which the company then re-issued to satisfy maturing employee options.
Consensus forecasts are for 12p adjusted EPS for the 12 months to June 2018, up from 11p a year earlier.
| REDDE (REDD) | ||||
| ORD PRICE: | 169p | MARKET VALUE: | £ 514m | |
| TOUCH: | 168-169p | 12-MONTH HIGH: | 182p | LOW: 136p |
| DIVIDEND YIELD: | 6.6% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 52p* | NET DEBT: | 14% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 227 | 17.5 | 4.58 | 5.0 |
| 2017 | 253 | 19.9 | 5.65 | 5.5 |
| % change | +12 | +14 | +23 | +10 |
| Ex-div: | 08 Mar | |||
| Payment: | 29 Mar | |||
| *Includes intangible assets of £104m or 30p per share | ||||
