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Accident Exchange motors on

• FROM: July 2006 |
• TAGS: support services, accident exchange |
• COMMENTS: Add yours

• Accident Exchange motors on
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Since reversing into shell company Xecutive Research more than two years ago non-fault accident management services provider Accident Exchange has become one of the best performers on AIM. More than doubled profits in the year to April 2006 indicates why.

Accident Exchange provides replacement vehicles when an insured driver is involved in an accident that is not their fault. The cost is recovered from the insurer. AIM-quoted credit hire companies such as AI Claims Solutions and Bristol & London provide similar services but Accident Exchange has grown much faster. Accident Exchange gains and maintains business by building relationships with car dealers and manufacturers. It has just signed an exclusive relationship with Audi UK and entered an agreement with European Motor Holdings, one of the most successful upmarket franchise dealers.

Profit before amortisation, share option charges and property disposal gains jumped 120% to £16.3m on turnover 147% ahead at £53.5m. The company has bought a new head office which will allow it to bring all its head office people on to one site. The sale and leaseback of this property led to a £2.6m profit.

Software has always been an important element of Accident Exchange’s offering and its own efficiency. At the end of April it bought DCML for up to £12m. DCML provides software that helps dealers to control their fleet of courtesy cars. It also helps manufacturers run test drive campaigns.

The relationship between insurers and the sector has historically been poor but it appears to be improving. As insurers look to cut costs it should mean that they will appreciate the benefits of Accident Exchange’s services.

The 3p a share total dividend is covered nearly six times by earnings. Accident Exchange is more lowly rated than fully listed rival Helphire, although the latter has a much higher dividend yield. Management believes that a transfer to the full list later in the year will help to narrow that gap in valuations. In reality the fact that the shares are tightly held, with chief executive Steve Evans owning 48.5% and five other significant shareholders holding nearly 29%, is probably a major reason for the lower rating.

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