Good morning! Fridays are normally quiet for company results, but not today - there are lots to look through. The first one I'm checking out is Helphire (LON:HHR). Regulars will know that this is a favourite of mine, having bought in at 3.5p and explained why here on 20 Jun 2013.
Helphire management pulled off a remarkable turnaround, somehow persuading the Bank to write off a large chunk of the bank debt, plus they have drastically reduced debtor days, and pretty much fixed all the other legacy issues (e.g. surplus properties), and even resumed dividends. I was expecting about £7.5m underlying profit, but they have delivered £8.0m, so these results are good.
With 1.561m shares in issue by the year end, following a Placing, you need to be careful when looking at EPS, because that has been calculated using a weighted average number of shares of 653.8m for basic EPS, and 780.1m for diluted. So you cannot just take the 1.25p basic EPS and say that it's on a PER of 4.5, at 5.6p per share, since that would give a misleading result for the future, given the larger number of shares now in issue.
I cannot find any broker forecasts for the current year, so it's not the easiest share to value at the moment. However, the way I look at it, is that in a turnaround year they made an underlying profit of £8.0m, so there should be upside on that figure going forwards. Also, it is now completely debt-free, including vehicle finance, and paying dividends again, so taking that all into account the market cap of £87m at 5.6p per share doesn't look expensive to me.
Debtor days are at a record low of 126 days, since Helphire now work collaboratively with insurance companies. Indeed I note that their largest shareholder is Aviva. Another dividend has been declared, for 0.11p which goes ex-divi on 9 Oct 2013. The strength of the Bal Sheet is now such that I would expect another special dividend in due course.
There is further upside from the eventual settlement of the Autofocus dispute, where insurers relied on false data on hire pricing rates, and are now liable to pay compensation to companies such as HelpHire. I am not sure of the likely amount there, but it's just icing on the cake, and some of the figures being talked about are pretty substantial. So all in all, it looks like a solid hold to me, although I am keen to see some up-to-date broker research, if anyone has any.
Judging by the price movements this morning, it seems the market doesn't really know how to value HelpHire either! It started strongly up, briefly going above 6p, but is now down to 5.36p. I might well go in for a top-up if it drops below 5p. The other thing I forgot to mention, is that HelpHire are in the process of setting up their own in-house solicitors, which is of course following in the footsteps of Quindell Portfolio (LON:QPP) - who are, so I am told, raking it in (temporarily anyway) from personal injury claims for whiplash - many of which are either exaggerated or completely false. For some reason we have developed a culture in the UK whereby otherwise perfectly respectable people consider it fine & dandy to commit insurance fraud, in that a fake whiplash claim is somehow seen as a perfectly acceptable way of financing a holiday, or other luxury.
I'm not saying that all personal injury claims are false, but just that many of them are. That's not even a contentious point, it's widely known & accepted that many/most whiplash claims are fictitious. The rest of us pay for it through inflated insurance premiums of course.