Chairman steps down after £35.5m loss

Credit hire firm Helphire’s stock price rose 29% yesterday following the announcement of a board overhaul and a hefty full-year loss.

Helphire’s stock price closed at 3.03p yesterday, compared with Wednesday’s closing price of 2.34p. The stock continued to rise after the open this morning and is currently trading around the 3.16p mark.

Helphire made a £35.5m after-tax loss for the year ended 30 June 2011. This followed a £12.4m loss in the 2009/2010 financial year.

Following the announcement of the results, executive chairman Richard Rose stepped down. In addition Lord Howard of Lympne and Andrew Cripps resigned as non-executive directors.

Autologic Holdings chief executive Avril Palmer-Baunack replaced Rose as chairman, though on a non-executive basis.

The main driver of Helphire’s heavy 2010/2011 loss was a £25.7m goodwill impairment. The company also paid £6.2m in restructuring expenses.

Helphire also revealed that it had overstated ABI receivables by a total of £29.2m during the 2008/2009 and 2009/2010 financial years. £26.8m of the overstatement related to credit hire, while the £2.4m balance was attributed to credit repair.

The company took a $4.2m charge to the 2010/2011 results relating to the prior-year overstatement.

In addition, the company has suffered from challenging market conditions. Total revenue dropped 18.5% to £234.8m from £288.2m.

Helphire said the trading environment in credit hire experienced a downturn because economic factors and high fuel prices led UK motorists to cut back on car journeys, resulting in fewer road accidents.

Also, hire length, which Helphire says is a major contributor to its profitability, declined during the financial year to an average of 18.7 days from an average of 21.5 days in 2009/2010. The company attributed this to body shop capacity facilitating shorter vehicle repair times.

On a positive note, Helphire said it continues to generate cash from operations and pay down debt. Net debt for the 2010/2011 financial year was £133.7m, £28.3m lower than the level reported in 2009/2010.

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