Preliminary Results for the
Year Ended 31 January 2006
Sustained Sales Growth Anticipated
Financial Highlights
- Turnover increases 13% from £7.74 million in 2005 to £8.71 million in 2006
- Profit before tax increases 15% from £1.17 million in 2005 to £1.35 million in 2006
- Net debt reduced by £0.7 million to £9.5 million giving Bristol & London one of the lowest risk profiles in the sector
- Recommended final dividend of 1.15p per share and represents an increase in the previously stated dividend policy from 66.67% to 75% of available profits
Operations Highlights
- New personal injury referral commission business up and running
- Closer matching of car specifications to customers’ expectations has enhanced profitability
- Recent extraction of low margin business should yield further profitability improvements
- Continued benefits from expansion in Scotland
Bob Woods, Chairman of Bristol & London PLC, comments:
“We have emerged from a period of restructuring as the leading premium credit hire company. The sales force is now structured to address corporate business and retail activities separately. Such a focus has driven sales and profitability. Our ability to understand the needs of these separate groups is the platform for expected sustained future sales and profit growth.”
For further information:
PGA & Company Limited
Peter Gaze – 0777 589 2544 / 020 7808 7676
Westhouse Securities LLP
Richard Morrison – 020 7601 6100
CHAIRMAN’S STATEMENT
Overview
I am delighted to report that whilst the year to 31 January 2006 has continued to be challenging in what is a very competitive market place, turnover has increased by 13% from £7.74m to £8.71m with profit before tax increasing by 15% from £1.17m to £1.35m.
In achieving these strong results we have introduced a new profit stream of personal injury referral commission and rationalised our overall business strategy.
During the early part of 2005 we acknowledged that we were over-specifying on the purchase of our prestige vehicle hire fleet. The inability to reflect these higher than necessary specifications in our pricing, coupled with a highly competitive market place impacted upon our profitability. This has now been comprehensively addressed by reducing the purchase price of our fleet through better specification providing us with vehicles more in line with our customers’ demands.
We have also taken the initiative to remove an element of higher volume but very low margin sales from our business. The impact of these decisions has and will continue to be extremely positive although the full benefits will be more reflected in the coming year.
Business levels in Scotland have also increased and earlier in the year we entered into an agreement with the Eastern Western Motor Group to provide their accident management programme. This group is Scotland's largest privately owned prestige dealer group with 25 outlets. To enable us to service the demand for credit hire in Scotland we expanded our presence there by recruiting a regional manager and support staff.
Credit Hire
Bristol & London continues to be the largest specialist prestige credit hire company in the UK and we will maintain this focus. Our research suggests that this sector is worth up to £500m per annum.
I have already highlighted its competitive nature, but the market also remains relatively fragmented. We therefore perceive further opportunities to grow our business as we focus on the quality we provide our customers in combination with the continuing benefits expected to flow from improved fleet utilisation and better vehicle purchasing.
Insurance Companies
The substantial majority of Bristol & London's credit hire claims fall within independently negotiated protocol agreements. This has resulted in a continued reduction in debtor days, which have steadily improved throughout the year and as at 31 January 2006 stood at 150 days compared to 182 as at 31 January 2005. This has produced a fall in outstanding debt in spite of increased sales levels and, more encouragingly, a reduction in debt more than 12 months old which now represents just 14% of our overall debtor book.
This has been a significant achievement during a year that has seen several of our competitors suffering an increasing number of debtor days and aged debt.
Personal Injury Referral Commission
We are now benefiting from this new revenue stream, which was introduced during the year. The commission comes from our own client base alone and will continue to grow in line with expanding business levels.
Outlook
During the year we have taken the necessary steps to both improve and increase the number of sales staff. In doing so we have also separated out major corporate business accounts from our core retail activities, enabling each part of the business to become more focused and effective. The results of these improvements have been extremely encouraging giving us not only a much better understanding of our customer needs but a platform from which to obtain sustained future growth.
Dividend
The board is recommending the payment of a final dividend of 1.15p per share to be paid on 2 May 2006 to shareholders on the register at the close of business on 18 April 2006. This represents an increase in the previously stated dividend policy from 66.67% to 75% of available profits. Such an increase has been due to our excellent relationships with insurance companies and our sector-leading ability to collect cash.
29 March 2006
Robert Woods
Executive Chairman
FINANCE DIRECTOR’S REVIEW
Results
Turnover for the year to 31 January 2006 amounted to £8.71m, representing a 13% increase over the previous year of £7.74m.
Cost of sales for the year amounted to £4.21m compared to £3.89m in 2005 an increase of 8%. This reflects the fact that costs were well controlled in the period despite the effect of increased charges incurred on commission arrangements inherent in a more competitive environment.
Administration costs for the year amounted to £2.46m compared with £2.06m in 2005. A significant element of this increase was the loss on vehicle disposals resulting from the rationalisation of the fleet during year.
Profit before tax increased 15%, up from £1.17m in 2005 to £1.35m in 2006.
Earnings per share for 2006 rose 6% to 3.6p per share from 3.4p per share in 2005.
Dividends
The recommended final dividend for the year is 1.15p per share and represents an increase in the previously stated dividend policy from 66.67% to 75% of available profits. Future dividends will consequently be covered one and a third times and in accordance with FRS 21 will be incorporated in the accounts when paid, rather than when proposed.
Cash and Debt
A reduction in debtor days has continued to be derived from improved cash collection processes with debtor days having reduced to 150 days at 31 January 2006 from 182 days at 31 January 2005. Net cash inflow from operations for the year was £4.49m compared to £4.18m in 2005.
Net debt on all borrowings at 31 January 2006 stood at £9.48m, having reduced from £10.15m at 31 January 2005.
Efficiency
Efficiencies within the business are beginning to show significant improvement both through better cash collection procedures and the implementation of a fleet management software system enabling greatly improved management and control of the entire hire process from the initial referral to final receipt of payment.
Interest rate risk
The Company borrows in sterling at floating rates of interest. No interest rate caps or swaps are used to manage exposure to interest rate fluctuations.
Liquidity risk
The Company policy is to finance all new vehicle purchases by way of hire purchase contracts and the number of vehicles acquired by contract hire is now minimal. The Company does not “cross hire” vehicles on short term contracts from hire companies since this could damage the Company’s reputation for quality.
29 March 2006
Lewis Ross
Finance Director
Full Results - 31 January 2006