Credit hire company takes huge hits with £149m
In the credit hire market, the Helphire story is the one everybody is watching.
Helphire full-year results show a £149m pre-tax loss for the year 2008 and 2009, compared to a £43m profit for 2007 and 2008.
Earlier this year, the company installed Martin Ward as group managing director. His remit: cut costs and get Helphire back in the black.
So what went wrong and can he turn the company around?
The blood on the balance sheet comes from what accountants call ‘exceptional items’, supposed one-off events that can cause huge losses.
The biggest leak comes from outstanding claims with insurance companies. At the beginning of the year, the previous board estimated the cost to be £34.5m.
Looking to wipe the clean the skeletons out the closet, the new board estimated that to be much higher at £62.4m.
Helphire has been badly hit by the recession. Put simply, fewer people can afford to drive about resulting in fewer claims.
Then there are other writedowns on its fleet, restructuring costs and amortisations.
The good news is that Ward and his team are working hard to put the company back on a stable footing.
They’ve sold off part of the fleet, merged the Bristol office into the main Bath office and scrapped costly and expensive projects.
They’re confident debt is under control, cashflow is now okay and the banks are happy for the moment with debt repayments scheduled in tranches until 2012.
It may not be pretty, but they have to keep with their cost-cutting programme and simply keep their fingers crossed the economy picks up and people start driving again.
Crucially however, they will need the co-operation of insurers in settling both past and future claims. Helphire’s new management says no one wants legal action and insurers are onside following clear-the-air meetings.
Whether, that actually happens is another story and one which could decide the fate of the company.
