• News Release •

Redde plc

(“Redde” or “Group”)

Issue Date: 3 September 2015

Results for the Year ended 30 June 2015

A Year of Strong Growth

Financial headlines

• Turnover £248.7m (2014: £197.4m) - Increase of 26%
• Adjusted* EBIT of £22.3m (2014: £11.7m) - Increase of 91%
• Adjusted* profit before taxation of £22.7m (2014: £11.9m) - Increase of 91%
• Adjusted* basic EPS of 8.40p (2014: 7.47p) - Increase of 12.4%
• Statutory basic EPS of 8.97p (2014: 6.84p) - Increase of 31.1%
• Net cash inflow from operating activities of £36.8m (2014: £24.8m)
• Net cash inflow to EBITDA ratio of 116% (2014: 153%)
• Debtor days further reduced to 100 days from 108 days
• Total cash balances of £68.6m (2014: £58.3m)
• Net cash of £39.7m (2014: £41.6m)
• Recommended final dividend for 2015 of 4.25p (2014: 3.50p) - increase of 21.4%
• Total normal dividends for year of 8.25p (2014: 6.85p) - Increase of 20.4%
• In addition, Autofocus Special Dividend of 1.00p paid 30 July 2015

Operational headlines

• 5.4% growth in credit hire cases
• Total hire days increased by 4.1%
• 11.8% growth in repair cases
• Revenue generating fleet utilisation maintained at 82%
• Protocol case settlement agreements with insurers continuing to grow for mutual benefit
• Growing pipeline of new business
• Encouraging recent contract wins
• European IT Award winning customer portal

*Adjusted measures exclude the impact of those items described as exceptional in Note 6.

Commenting on the Group's results and prospects, Martin Ward, Chief Executive Officer, said:

“The Group has continued to make very good progress and remains well positioned, with the funds available, to support further growth. Our 'GPS' strategy (Growth, Profitability and Sustainability), launched in 2013, is gaining further momentum with a growing pipeline of new business. The Group has again exceeded performance expectations delivering a robust, profitable and cash generative result which continues to sustain attractive dividends."                                                    

Enquiries
	Redde plc		Tel: 01225 321134
	Martin Ward – Chief Executive Officer
	Steve Oakley – Chief Financial Officer
	Cenkos Securities plc (Nominated Adviser and Joint Broker)		Tel: 0207 397 8900
	Ian Soanes
	Liz Bowman
	N+1 Singer Capital Markets Limited (Joint Broker)		Tel: 0207 496 3000
	Nic Hellyer
	Alex Wright
	Square1 Consulting		Tel: 0207 929 5599
	David Bick
	Mark Longson

Notes for Editors:

About Redde plc:

Founded in 1992 and working predominantly with insurance companies, insurance brokers and prestige motor dealerships, the Group provides a range of accident management and legal services. The Group also deals directly with large national fleets providing incident management and mobility continuity and the Group's activities also encompass a range of legal services designed to assist claimant parties in partnership with leading insurance companies, brokers and other bodies.

The Group is one of the market leaders in its fields of business; it delivers accident management solutions to motorists ensuring that they remained mobile until their own vehicles were repaired or until they were put in a position to obtain a replacement and it provides legal services ensuring that they are properly compensated for their injuries and losses.

The name Redde is associated, in Latin, with the concept of restoration.

Chairman’s statement

The year to 30 June 2015 has seen significant further progress in the Group with strong profitability and cash flow.

The Group has continued to develop its business model in accordance with its strategic plan, and despite the significant organic growth seen in the business the Group ended the year with new, record low debtor days and substantial cash balances. The strategy of the Board continues to be that of focus on Growth, Profitability and Sustainability.

Consequently, I am pleased to be able to report to shareholders that the Group achieved an adjusted profit before taxation of £22.7 million compared to £11.9 million last year; an increase of 91%.

Results

Revenues were £248.7m (2014: £197.4m), an increase of £51.3m (26.0%) of which 16.9% represents like-for-like growth reflecting a 5.4% growth in credit hire and an 11.8% increase in the volume of business transacted in repairs compared to last year.

The adjusted operating profit for the year was £22.0m, an increase of 89.3% over the £11.6m achieved last year with a much improved total adjusted operating margin of 8.8% (2014: 5.9%) partly reflecting the full year contribution of the NewLaw group of companies acquired last year. On a like-for-like basis operating profits improved by 70.3% and margins improved to 7.4% from 5.1% reflecting the increased sales and resultant contribution mentioned above as well as changes in the mix of business handled, improvements in our supply chain and virtually unchanged overheads. Profits at the NewLaw group of companies were encouraging with the first full year’s contribution meeting our expectations.

Adjusted EBIT (which includes the results of our legal business ABS partnerships) was £22.3m compared to £11.7m last year, an increase of 91.1%.

There was adjusted net interest income in the year of £0.4m compared to £0.2m last year as a result of the increased average cash balances principally as a consequence of the continued strong cash generation of the Group.

Adjusted profit before tax for the year was therefore £22.7m (2014: £11.9m), an increase of 91.3%.

A pre-tax exceptional net credit of £1.6m (2014: charge of £1.4m) was recorded in the year and is detailed in note 6. The net credit for this year included £2.9m from settlements received to date in respect of claims for damages relating to Autofocus resulted in a payment by way of a Special Dividend to shareholders of 1.00 pence per share on 30 July 2015. After exceptional items the statutory profit before tax was £24.3m (2014: £10.5m).

There was a net tax credit of £1.0m, (2014: £4.2m) which was principally in respect of the further recognition of a deferred tax asset relating to prior years’ losses and unused allowances. The statutory profit after tax is £25.3m (2014: £14.7m).

Earnings Per Share (“EPS”)

Statutory basic EPS is 8.97p (2014: 6.84p). Statutory diluted EPS is 8.46p (2014: 5.93p).

The adjusted EPS is 8.40p (2014: 7.47p). The adjusted diluted EPS is 7.92p (2014: 6.48p).

The adjusted figures exclude the impact of those items described as exceptional in Note 6.

Dividends

The Board is pleased to propose a final dividend of 4.25 pence per share, which if approved at the Annual General Meeting to be held on Thursday 29 October 2015 will be paid on Thursday 5 November 2015 to those shareholders on the register at the close of business on Friday 9 October 2015. The shares will become ex-dividend on Thursday 8 October 2015.

An interim dividend of 4.00 pence per share was paid on 26 March 2015 and including this the total dividend for the year is 8.25 pence compared to 6.85 pence last year, an increase of 20.4%.

In addition a Special Dividend of 1.00 pence per share was paid on 30 July 2015 principally reflecting collections made in respect of the settlement of past claims against insurers and others in relation to Autofocus.

Receivables

Trade and other income related receivables were £68.4m, an increase of £4.6m (7.2%) over last year reflecting increased sales but it is pleasing to note that despite the growth of the business debtor days were again reduced to a new record low of 100 days compared to 108 days last year.

Cash and Debt

The Group has continued to over-deliver on its targets for cash collections and improving cash inflow. Total cash balances have been increased by £10.3m since 30 June 2014 to £68.6m notwithstanding dividends of £21.1m being paid during the year and, (net of fleet and other asset financing loans), net cash balances were £39.7m compared to £41.6m last year.

Acquisition

The Group announced on 20 August 2015 that it had agreed to acquire the FMG group of companies, a leading fleet accident management group, comprising FMG Group Holdings Limited (“FMG”) and its subsidiary companies and partnership interests (the “FMG Group”), for approximately £43.2 million in aggregate. The acquisition is subject to the requisite regulatory approvals being received from The Financial Conduct Authority and the Solicitors Regulation Authority. Completion is expected to occur within 3 months.

The FMG Group is being acquired from its management and a number of funds managed by Endless LLP for approximately £43.2 million in aggregate on a debt-free basis and assuming a normalised level of working capital. The consideration for the acquisition of all the shares and other vendor interests in the FMG Group will comprise a number of elements, the effect of which is the payment at completion of approximately £38.2 million in cash and the issue of new ordinary Redde shares ("Redde Shares") with a total value of £5.0 million. The Group will also make a cash payment of £2.5 million in respect of additional working capital balances on completion. 

The new Redde Shares will be issued on completion but the holders have unconditionally and irrevocably waived their entitlement for any dividends with a record date during the 12 months following completion. The Redde Shares will be subject to a 24 month lock in (subject to the customary exemptions) followed by an orderly market arrangement.

In addition to supporting the Group’s strategy of widening its range of services the acquisition is expected to be immediately earnings enhancing and cash generative, and will support the Group’s dividend policy of distributing as much of the Group’s profits by way of dividend as it can, taking account of prevailing circumstances and other requirements and commitments.

Outlook

The new financial year has started well with performance in the first few weeks ahead of our expectations and the corresponding period last year. Additional contracts have been won and work has commenced in the period and this, together with the combination of our recent strategic acquisition, organic growth and further improvements in operational efficiency, gives the Board encouragement for the future.

Our people

There is real momentum in supporting our business partners in their desire to provide excellent customer service and the dedication and commitment shown by our people in delivering this stands out. It is these attributes which make for a good business. Once again we thank our employees for their support, hard work and loyalty during the year and say to them “well done”.

Annual General Meeting

The Group’s Annual General Meeting will be held on Thursday 29 October 2015. The Notice of the Meeting will be sent to shareholders shortly with the Annual Report and Accounts.  

Avril Palmer-Baunack

Chairman

2 September 2015

Operating and Financial Review

Market and Business Models

In accordance with the Group's strategy to Grow its business Profitably and Sustainably (which we refer to as our 'GPS Strategy') the Group's focus has remained on sustainable, profitable, cash generative business, if necessary at the expense of volume and the Group avoids low-margin, high-volume business which relies principally upon price in priority to service quality. In addition, in 2014, the Group acquired businesses that meet the Group's criteria of being profitable, cash generative and supportive of the dividend policy and also provide cross fertilisation of business opportunities within the sectors in which the Group operates. Consequently the Group has continued to employ its assets more effectively and has improved net operating margins.

The continued improvement in the Group’s operational practices and systems over the past few years have enabled us to build excellent working relationships with many insurers and have provided opportunities for new and enhanced business services. In addition the Group has continued the successful implementation of a growing number of bilateral protocol agreements with insurers who have confidence in the representations made on claims to be settled. Increasing business subject to bilateral protocol arrangements has continued to provide further savings in frictional and administrative costs for both insurers and the Group as well as further improvements to the Group's cash collection profiles.

At the end of the period the majority of the Group’s accident management operations were subject to bilateral protocol arrangements and this has contributed to debtor days being reduced to a new record low of 100 days compared with 108 days last year. Agreeing protocol arrangements with insurers is an effective way to help them reduce their combined operating ratios which is a key performance measure for them. As a direct consequence of this successful business model, the proportion of business conducted purely within the GTA process has reduced significantly and therefore on 13 July 2015 the Group informed ABI GTA members that it was withdrawing from the ABI GTA with effect from 15 August 2015. Since then there has been an increase in the number of insurers wishing to explore entering into bilateral protocol arrangements with the Group and a number of new protocol agreements have been concluded.

Over recent years the Group has invested in technology based solutions so it can better manage its operations and also improve the customer journey whilst using the Group's services. The use of telematics and web-based portals accessible to our partners and users of our services has played an increasing part in positioning the Group as a leading partner of choice within our industry. During the year the Group was pleased to note that its online customer portal designed by the Group and built by PureNet beat off a strong field to pick up the Vertical Market Solution award at the 2015 IT Europa Software Excellence Awards. The award was given in recognition of the Group's innovative self-service portal which provides users with around the clock access to details of their claim and allows customers to review and accept key service agreements. The portal also includes dynamic help and FAQ functions to assist customers as well as providing key service contact details.

As the Group has increased its focus on providing a complete customer journey there has been an increase in interest from existing and potential partners with opportunities to provide a complete solution and an expansion of our range of services provided. During the year the Group secured a number of additional and expanded hire and repair contracts. Since the year end the Group has secured further contracts for additional services both in the accident management and legal services sectors and whilst in some cases services will not commence for some months this is an encouraging trend for the Group.

Autofocus

During the year the Group was able to complete its evaluation of the several thousand cases that were identified that may have been compromised as a result of unreliable evidence provided by Autofocus and used by defendant insurers.

We are pleased to report that during the year settlements have been concluded with insurers and self-insured organisations in respect of the significant majority of claims by value. As a result settlements amounting to £2.9m were achieved and a Special Dividend for this amount was paid to shareholders on 30 July 2015. It is worth noting that the Group achieved these settlements without having to litigate and in doing so strengthened its position as a responsible stakeholder in the market.

We still intend to pursue the remaining cases which are of relatively smaller value and, where possible, we will do so without litigation.   

Vehicle fleet

The Group continues to operate highly effective fleet services through a hybrid solution of ownership, contract hire and, during peak periods, cross-hiring from daily rental companies. This combination allows flexibility to dispose of excess fleet in the lower volume summer months or in the event of a downturn and to maximise fleet in short peak periods, without incurring ownership costs.

The average age of the fleet continues to be maintained at less than 12 months with a broad spread of manufacturers and models. Our efforts to achieve a better balance in the make-up of the fleet to meet a changing mix and volume of demand continued to be assisted by advantageous funding programmes and the average number of vehicles held was increased by 1.8% from 5,938 to 6,043. Fleet utilisation continued to be maintained above our 80% target at 81.9% compared to 82.1% last year. Our fleet comprised 6,041 vehicles at 30 June 2015 compared to 5,428 at 30 June 2014.

Legal Services

NewLaw and its associated businesses have made an encouraging contribution during the first full year since acquisition and have performed in line with our expectations. During the year NewLaw was awarded the contract to manage an ABS structure with the British Medical Association under the name of BMA Law. A number of additional ABS opportunities with insurer and other prestigious brands are in the pipeline and in the process of delivery. This together with the growth in cases sourced directly by NewLaw gives the Board confidence for the future in this area.

Principia Law, our other legal services business, has continued to make good progress as it emerges from its start-up phase in the area of personal injury cases and has also provided the Group with additional opportunities in relation to credit hire recoveries, particularly those cases requiring more specialist attention.

Acquisitions

During the period the Group continued to examine opportunities to expand the range and scale of its activities by way of acquisition. The Group has been cautious whilst seeking opportunities that satisfy its criteria of being profitable, cash generative and supportive of the dividend policy and that also provide cross fertilisation of business opportunities within the sectors in which we operate. Where, upon detailed examination, potential acquisitions did not meet the Group's criteria the opportunities were aborted and the cost expensed as an exceptional item.

In accordance with the Group’s acquisition criteria, the Group announced on 20 August 2015 that it had agreed to acquire the FMG group of companies, a leading fleet accident management group, comprising FMG Group Holdings Limited (“FMG”) and its subsidiary companies and partnership interests (the “FMG Group”), for approximately £43.2 million in aggregate. The acquisition is subject to the requisite regulatory approvals being received from The Financial Conduct Authority and the Solicitors Regulation Authority. Completion is expected to occur within 3 months.

Financial Review

Performance

Certain items have been reported and disclosed as exceptional on the face of the Income Statement and these items are commented on separately as appropriate further in this Financial Review. The Income Statement captions excluding these exceptional items more properly reflect the comparable operating performance of the business and for ease of reference are referred to as ‘adjusted’.

For the year, the Group recorded an adjusted operating profit of £22.0m (2014: £11.6m) together with an adjusted profit before tax of £22.7m (2014: £11.9m) and a statutory profit before tax of £24.3m (2014: £10.5m).

The financial results for the year to 30 June 2015 also reflect:

	12 months ended	12 months ended	Change
	30 June 2015	30 June 2014
Financial KPIs
Revenue (£’000)	248,671	197,419	26.0%
Gross profit (£’000)	76,588	52,192	46.7%
Gross margin	30.8%	26.4%	4.4pt
Adjusted profit before taxation	22,727	11,878	91.3%
Adjusted operating profit* (£’000)	21,972	11,608	89.3%
Adjusted operating margin*	8.8%	5.9%	2.9pt
EBITDA (£'000)	31,585	16,215	94.8%
EBITDA/Operating cash flow conversion %	116%	153%	(37)pt
Debtor days	100	108	(8) days

* Adjusted measures exclude the impact of the items described as exceptional in Note 6.

Revenue

Revenues were £248.7m (2014: £197.4m), an increase of £51.3m (26.0%) of which 16.9% represents like-for-like growth with a 5.4% growth in credit hire and an 11.8% increase in the volume of business transacted in repairs compared to last year. In addition NewLaw saw an increase in the number of cases being handled compared to last year.

The total number of hire cases was 3.4% higher with hires in respect of our core credit hire operations increasing by 4.6% whilst hires in relation to lower margin direct hires showed a continued, managed reduction of 5.3% in line with our aim to reduce lower value and lower margin activity.

Average hire length, which is a major driver in the Group’s profitability, was almost unchanged at an average of 17.3 days for the year, compared to the average of 17.2 days for last year.

Gross profit, adjusted operating profit and adjusted EBIT

Gross profit was £24.4m higher than last year and overall a gross margin of 30.8% was achieved compared to 26.4% last year. The Group’s adjusted operating profit for the period increased by 89.3% to £22.0m with a much improved net operating margin of 8.8% (2014: £11.6m and 5.9%), principally reflecting the full year effect of the acquisition of the NewLaw group of companies.

On a like-for-like basis the net operating margin improved to 7.4% (2014: 5.1%) reflecting the increased sales and resultant contribution mentioned above as well as changes in the mix of business handled and improvements in our supply chain whilst overheads were contained at a level similar to last year.

Including the income from our associated ABS legal businesses adjusted EBIT was £22.3m compared to £11.7m last year, an increase of 91.1%.

Adjusted operating profit is reconciled to the Income Statement as follows:

		Audited	Audited
		12 months ended	12 months ended
		30 June 2015	30 June 2014
		£m	£m
Adjusted operating profit – continuing operations		22.0	11.6
Adjustments:
Surplus property restructuring credit		-	0.4
Acquisition and abortive acquisition costs		(0.4)	(0.9)
Share based payments		(0.4)	(0.9)
Statutory operating profit		21.2	10.2

The adjusted operating profit margin was 8.8% (2014: 5.9%). EBITDA was £31.6m (2014: £16.2m).

Income from associates

Income from associates represents the Group's share of the profits in relation to NewLaw’s membership of several Limited Liability Partnerships providing legal services in association with certain business partners (subject to regulation by the Solicitors Regulation Authority) and amounted to £0.3m (2014: £0.1m).

Net finance income

There was net adjusted interest income in the period of £0.4m compared to £0.2m last year as a result of the increased average cash balances principally held as a consequence of the strong cash generation by the Group.

Adjusted profit before tax

Adjusted profit before tax of £22.7m (2014: £11.9m) is an increase of £10.8m (91.3%) over the prior year and is due to the improvement of £10.4m in adjusted operating profit together with £0.2m increased income from associates and a £0.2m increase in the net interest income as detailed above.

Exceptional items

A pre-tax exceptional net credit of £1.6m was recorded in the year (2014: charge of £1.4m) reflecting:

• A credit of £2.9m in respect of recoveries made in respect of Autofocus related claims for damages.

• Costs of evaluating possible acquisitions in the year amounting to £0.4m, that have been charged to profits in accordance with IFRS3.

• A charge of £0.4m recorded under IFRS2 under share-based payments on executive incentive share schemes.

• Finance charges of £0.5m in respect of the unwinding of discount charges on deferred consideration.

The net charge of £1.4m in 2014 was principally in respect of £0.9m of acquisition costs in relation to the NewLaw group of companies, a credit of £0.4m in respect of the exit from surplus properties and a share based payment charge of £0.9m.

Statutory profit before and after taxation

The statutory profit before tax was £24.3m (2014: £10.5m). There was a net tax credit of £1.0m (2014: £4.2m) which was principally in respect of the further recognition of an increased deferred tax asset relating to prior years’ losses and unused allowances and therefore the statutory profit after tax is £25.3m (2014: £14.7m).

Earnings per share – Basic and Diluted

Statutory basic EPS is 8.97p (2014: 6.84p). Statutory diluted EPS is 8.46p (2014: 5.93p).

The adjusted EPS is 8.40p (2014: 7.47p). The adjusted diluted EPS is 7.92p (2014: 6.48p).

Adjusted figures exclude the effect of those items described as exceptional in Note 6.

Dividends

An interim dividend of 4.00 pence per share was paid on 26 March 2015 and a Special Dividend of 1.00 pence per share was paid on 30 July 2015.

A final dividend of 4.25 pence per share has been recommended by the Board (2014: 3.50 pence); an increase of 21.4%. This dividend, if approved at the Annual General Meeting to be held on 29 October 2015, will be paid on Thursday 5 November 2015 to those shareholders on the register at the close of business on Friday 9 October 2015 making a total dividend of 8.25 pence per share for the year as a whole compared to 6.85 pence last year; an increase of 20.4%.

Including the Special Dividend above these dividends make a total of 9.25 pence declared for the year.

Balance sheet

Notwithstanding the increase in sales and the resultant increase in income related receivables from £63.8m to £68.4m, debtor days have continued to be reduced as a result of improved settlement levels and associated cash collection following an increase in the number of protocol arrangements and now stand at a record low of 100 days (2014: 108 days).

Net assets at 30 June 2015 were £157.4m.

Net cash and financing

Total net cash at 30 June 2015 (net of financing loans) was £39.7m (2014: net cash of £41.6m). Total cash balances were £68.6m (2014: £58.3m).

Cash flow

Cash generated from operating activities was £37.2m (2014: £25.4m). After other net operating outflows of interest and taxation, net cash flow from operating activities was £36.8m (2014: £24.8m).

Net cash flow to EBITDA was 116% (2014: 153%).

Principal risks and uncertainties

The principal risks and uncertainties facing the Group are set out in note 18 to this announcement.

Martin Ward                                                                   Stephen Oakley
Chief Executive Officer                                                                      Chief Financial Officer

2 September 2015                                                                              2 September 2015

Consolidated income statement
For the year ended 30 June 2015

		Year ended 30 June 2015 Adjusted*	Year ended 30 June 2015 Exceptional items*	Year ended 30 June 2015	Year  ended 30 June 2014 Adjusted*	Year ended 30 June 2014 Exceptional items*	Year ended 30 June 2014
	Note	£’000	£’000	£’000	£’000	£’000	£’000
Total Revenue		248,671	-	248,671	197,419	-	197,419
Cost of sales		(172,083)	-	(172,083)	(145,227)	-	(145,227)
Gross profit		76,588	-	76,588	52,192	-	52,192
Administrative expenses	6	(54,616)	(770)	(55,386)	(40,584)	(1,360)	(41,944)
Operating profit – continuing operations		21,972	(770)	21,202	11,608	(1,360)	10,248
Other income		-	2,890	2,890	-	-	-
Income from associates	11	314	-	314	53	-	53
EBIT		22,286	2,120	24,406	11,661	(1,360)	10,301
Net finance income /(costs)	7	441	(502)	(61)	217	-	217
Profit before taxation		22,727	1,618	24,345	11,878	(1,360)	10,518
Taxation	8	957	-	957	4,232	-	4,232
Profit for the period		23,684	1,618	25,302	16,110	(1,360)	14,750
Profit for the period attributable to:
Equity holders of the Company		23,622	1,618	25,240	16,179	(1,360)	14,819
Non Controlling Interests		62	-	62	(69)	-	(69)
Profit for the period		23,684	1,618	25,302	16,110	(1,360)	14,750
Earnings per share (pence)
Basic	1	8.40	0.57	8.97	7.47	(0.63)	6.84
Diluted	1	7.92	0.54	8.46	6.48	(0.55)	5.93
* Adjusted profit excludes the impact of those items described as exceptional. See Note 6 for further details.

Condensed Consolidated Statement of Comprehensive Income
For the year ended 30 June 2015

			Year ended 30 June 2015	Year Ended  30 June 2014
Unaudited			£’000	£’000
Profit for the period			25,302	14,750
Other comprehensive income			-	-
Total comprehensive income for the period, attributable to:
Equity holders of the Company			25,240	14,819
Non-controlling interests			62	(69)
Total comprehensive income for the period			25,302	14,750

Consolidated Statement of Changes in Equity
For the year ended 30 June 2015

	Share Capital £’000	Share Premium Account £’000	Shares To be issued £’000	Retained Earnings £’000	Total £’000	Non Controlling Interests £’000	Total £’000
Balance at 01 July 2013	166	-	-	76,842	77,008	-	77,008
Profit for the year	-	-	-	14,819	14,819	(69)	14,750
Total comprehensive income for the year	-	-	-	14,819	14,819	(69)	14,750
Issue of Ordinary Shares	117	60,253	-	-	60,370	-	60,370
Expenses on issue of Ordinary Shares	-	(2,449)	-	-	(2,449)	-	(2,449)
Dividends paid in the year	-	-	-	(8,468)	(8,468)	-	(8,468)
Credit to equity for settled Share-Based Payments	-	-	-	883	883	-	883
Balance at 30 June 2014	283	57,804	-	84,076	142,163	(69)	142,094
Profit for the year	-	-	-	25,240	25,240	62	25,302
Total comprehensive income for the year	-	-	-	25,240	25,240	62	25,302
Issue of Ordinary Shares	13	7,299	(1,716)	-	5,596	-	5,596
Shares to be issued	-	-	5,155	-	5,155	-	5,155
Dividends paid in the year	-	-	-	(21,109)	(21,109)	-	(21,109)
Credit to equity for settled Share-Based Payments	-	-	-	408	408	-	408
Balance at 30 June 2015	296	65,103	3,439	88,615	157,453	(7)	157,446

Consolidated Statement of Financial Position
as at 30 June 2015

					2015	2014
				Note	£’000	£’000
Non-current assets
Goodwill					59,231	59,231
Property, plant and equipment (including vehicles)					31,682	20,075
Interest in associates				11	232	56
Deferred tax asset					10,850	9,200
					101,995	88,562
Current assets
Trade and other receivables				12	84,331	82,766
Cash and cash equivalents					68,626	58,338
					152,957	141,104
Total assets					254,952	229,666
Current liabilities
Trade and other payables				13	(65,025)	(56,939)
Deferred consideration					-	(6,679)
Obligations under finance leases					(14,663)	(7,912)
Short-term borrowings					-	(350)
Provisions					(1,689)	(2,447)
					(81,377)	(74,327)
Net current assets					71,580	66,777
Non-current liabilities
Deferred consideration					-	(3,200)
Obligations under finance leases					(14,288)	(8,519)
Deferred tax liability					(1,022)	(297)
Long-term provisions					(819)	(1,229)
					(16,129)	(13,245)
Total liabilities					(97,506)	(87,572)
Net assets					157,446	142,094
Equity
Share capital				14	296	283
Share premium account				14	65,103	57,804
Shares to be issued				14	3,439	-
Retained earnings					88,615	84,076
Equity attributable to owners of the company					157,453	142,163
Non Controlling Interests					(7)	(69)
Total Equity					157,446	142,094

Consolidated statement of cash flows
for the year ended 30 June 201

				2015		2014
		Note	£’000	£’000	£’000	£’000
Cash flows from operating activities
Profit for the year			25,302		14,750
Tax credit			(957)		(4,232)
			24,345		10,518
Income from associates		11	(314)		(53)
Finance income		7	(441)		(217)
Fleet finance lease interest		7	1,054		772
Depreciation, amortisation and impairment charges		16	6,109		3,898
Losses on sale of property, plant and equipment			424		414
Share-based payment charge		6	408		883
EBITDA			31,585		16,215
(Increase) /decrease in receivables			(1,947)		10,522
Increase in payables			8,695		1,847
Decrease in provisions			(1,168)		(3,220)
Cash generated from operating activities				37,165		25,364
Bank interest received			490		292
Bank and loan interest paid			(27)		(93)
Fleet finance lease interest			(1,054)		(733)
Interest element of non-fleet finance lease rentals			(22)		(22)
				(613)		(556)
Taxation received				241		-
Net cash from operating activities				36,793		24,808
Cash flows from investing activities
Acquisitions of business combinations			-		(23,479)
Distributions from associates			138		42
Purchase of property, plant and equipment			(1,503)		(852)
Proceeds from sale of plant and equipment			7,386		13,183
Net cash from investing activities				6,021		(11,106)
Cash flows from financing activities
Proceeds from issue of share capital		14	465		60,370
Expenses of share issue			-		(2,449)
Dividends paid		9	(21,109)		(8,468)
Repayment of borrowings		16	(350)		(15,416)
Finance lease principal repayments		16	(11,532)		(10,600)
Net cash used in financing activities				(32,526)		23,437
Net increase in cash and cash equivalents				10,288		37,139
Cash and cash equivalents at beginning of year				58,338		21,199
Cash and cash equivalents at end of year				68,626		58,338
Cash and cash equivalents consist of:
Cash at bank and in hand				68,626		58,338
Bank Overdrafts				-		-
Total				68,626		58,338

Notes to the Financial Information

1          Earnings per share

The calculation of the basic and diluted earnings per ordinary share is based on the following share volume information:

				2015 Number	2014 Number
Number of shares
Weighted average number of shares for the purposes of EPS				281,330,456	216,727,173
Effect of share options scheme shares				2,163,239	4,853,739
Effect of SAYE scheme				1,506,053	1,501,810
Effect of B shares in issue				10,409,785	10,409,036
Effect of shares to be issued as deferred consideration				2,885,544	16,242,390
Weighted average number of shares for the purposes of diluted EPS				298,295,077	249,734,148

There were 285,390,229 ordinary shares of 0.1p each in issue as at 30 June 2015.

2          Segmental information

The activities of the Group are managed by the executive board (which is deemed to be the Chief Operating Decision Maker) as a single operating platform. The entities within the Group contribute as part of the whole operation of the Group to provide services for the core business. The Board of Redde plc considers the performance of the business by reference to contributions from all activities of the Group as a whole, and reviews requirements of the total Group when determining allocations of resources. IFRS8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Board in order to allocate resources to the segment and to assess its performance. The Group continues to identify that there is a single operating, and therefore reportable, segment being that of accident management and consequential related services, conducted in the United Kingdom.

3          Status of audit

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 June 2015 or 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.

4          Basis of preparation

The financial statements have been prepared on the historical cost basis in accordance with International Financial Reporting Standards (IFRSs) adopted in compliance with Article 4 of the EU IAS Regulation.

There are no newly adopted standards that have a material impact upon the accounts.

5            Going concern

The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group has adequate resources to continue in operational existence for the foreseeable future.

6            Exceptional items

Exceptional items are items which due to their size, incidence or non recurring nature have been classified separately in order to draw them to the attention of the reader of the accounts and, in the opinion of the Board, to show more accurately the underlying results of the Group. Such items are disclosed separately on the face of the consolidated income statement.

Adjusted profit

As discussed in the Operational and Financial Review, in order to provide a comparable view of the underlying performance of the Group, the adjusted profit has been presented in the condensed consolidated income statement. Adjusted profit excludes the impact of those items described as exceptional, as discussed in more detail below.

			2015 £’000		2014 £’000
Exceptional items comprise the following:
a) Surplus property restructuring credit			-		462
b) Acquisition costs			(362)		(939)
c) Share-based payments			(408)		(883)
Impact on administrative costs			(770)		(1,360)
d) Other Income - Autofocus and similar settlements			2,890		-
e) Finance costs - Unwind of discount on provisions and deferred consideration				(502)	-
Impact on profit before tax			1,618		(1,360)
Tax effect of exceptional items			-		-
Impact on profit for the financial year			1,618		(1,360)

a) Surplus property restructuring costs

Last year the Group was able to negotiate the exit from its residual liability in respect of the lease of an empty property no longer used by the Group by way of making a payment for surrender. The excess of the residual liability compared to the surrender value amounted to £0.5m and was credited as an exceptional item.

b) Acquisition costs

During the year the Group evaluated a number of potential acquisition opportunities. The charge for this year of £0.4m principally reflects fees and costs incurred during these processes. The charge for last year, in accordance with the requirements of IFRS3, comprises acquisition costs, mostly relating to legal and professional fees, incurred during the acquisition of the NewLaw group of companies and amounted to £0.9m.

c) Share-based payments

The Group has a number of share incentive schemes. In accordance with IFRS2 the calculated charge in respect of options issued and outstanding amounts to £0.4m for the year (2014: £0.9m).

d) Other Income - Autofocus settlements

Activity in pursuing claims for damages against insurers and other parties in respect of Autofocus and other historical claims was largely completed in the year and a considerable number of negotiated settlements were achieved. An amount of £2.9m has accordingly been recorded as non recurring other income.

e) Finance Costs - Unwind of discount on Deferred Consideration and provisions

The carrying amount of deferred consideration and provisions against properties are included in the balance sheet net of the appropriate discount reflecting the cost of relevant capital or funding. The charge of £0.5m represents the unwinding of this discount during the year. 

7          Finance income and finance costs

	2015 £’000	2014 £’000
a) Finance income
Interest receivable	(490)	(292)
b) Finance costs
Interest and similar charges on bank loans	-	58
Interest on obligations under finance leases	1,076	755
Loan issue costs amortised/charged in the year	27	34
	1,103	847
Transfer of interest on obligations under finance leases and fleet loans to cost of sales	(1,054)	(772)
Finance costs payable before exceptional costs	49	75
Net finance income before exceptional costs	(441)	(217)
c) Exceptional Finance Costs
Unwind of discount on provisions and deferred consideration (note 6 (e))	502	-
Total net finance cost / (income)	61	(217)

8          Tax

	2015 £’000	2014 £’000
Current tax
UK corporation tax on profit for the year	–	–
Adjustments in respect of prior years	92	438
Total current tax credit	92	438
Deferred tax
Previously unrecognised tax losses	2,180	4,722
Origination and reversal of temporary differences	(1,284)	(256)
Adjustments in respect of prior years	(31)	–
Impact of change in tax rate	-	(672)
Tax credit on profit on ordinary activities	957	4,232

The tax credit for the year arises due to an increased recognition of the deferred tax asset relating to prior period losses and a reduction in the tax creditor in relation to prior period issues.

At the balance sheet date the Group had unused trading losses and other timing differences of £88.2m (2014: £106.9m) available for offset against future trading profits. A deferred tax asset has been recognised in respect of £54.0m (2014: £46.0m) of this amount to reflect the foreseeable forecast utilisation of tax losses and capital allowances carried forward. No deferred tax asset has been recognised in respect of the remaining £34.2m (2014: £60.9m) due to the risks associated with future taxable profits.

Deferred tax asset/(liability) not provided in full on temporary differences under the liability method using a tax rate of 20.0% (2014: 20.0%).

	Asset/(Liability) Tax losses Carried forward		Asset/(Liability) Accelerated tax depreciation	Asset/(Liability) Other Timing  differences	(Liability) Total	Asset Total
	£’000		£’000	£’000	£’000	£’000
At 30 June 2014		3,532	8,638	–	–	12,170
At 30 June 2015		1,648	5,195	–	–	6,843

9          Dividends

Ordinary share dividends paid in the year to 30 June 2015 can be summarised as follows:

			2015 £’000	2014 £’000
Special dividend for 2013 of 1.65 pence paid on 24 July 2013			-	2,577
1st interim dividend for 2014 of 1.10 pence paid on 25 October 2013			-	1,729
2nd Interim dividend for 2014 of 1.71 pence paid on 10 January 2014			-	2,690
3rd Interim dividend for 2014 of 0.54 pence paid on 27 March 2014			-	1,472
Final dividend for 2014 of 3.50 pence paid on 06 November 2014			9,838	-
Interim dividend for 2015 of 4.00 pence paid on 26 March 2015			11,271	-
Total dividends paid in the year			21,109	8,468

The above does not include the recommended final dividend of 4.25 pence per share for 2015 which if approved at the AGM to be held on 30 October 2015 will be paid on 05 November 2015 or the Special dividend of 1.00 pence per share declared on 29 June 2015 paid on 30 July 2015

10          Goodwill

	£’000
Cost
At 01 July 2013,	73,268
Additions on acquisitions of business combinations (note 15)	40,281
At 30 June 2014 and 30 June 2015	113,549
Accumulated impairment losses
At 01 July 2013, 30 June 2014 and 30 June 2015	(54,318)£
Net book value
At 30 June 2015	59,231
At 30 June 2014	59,231

11          Investments in associates

The Group's interest in associates comprises of minority participations in five Limited Liability Partnerships ("LLP'") registered and situated in the United Kingdom. All of the LLPs are engaged in the processing of legal claims and are regulated by the Solicitors Regulation Authority. The LLPs are businesses over which the Group is deemed to have significant influence over but does not control.

	2015 £’000	2014 £’000
Carrying amount of interests in associates	232	56
Group's share of:
Profit from continuing operations	314	53
Other Comprehensive income	-	-
Total profits	314	53

The accounting period ends of the associated companies consolidated in these financial statements range from September to December. The accounting period end dates of the associates are different from the Group as they are more aligned to the accounting reference dates of the majority partners. The above Information has been obtained from management accounts of the entities concerned as at 30 June 2015.

12         Trade and other receivables

Net trade receivables comprise claims due from insurance companies and self insuring organisations and amounts invoices for the provision of services to customers. The Group’s debtor days at 30 June 2015 were 100 days (2014:108 days). This measure is based upon net trade receivables, other receivables and accrued income as a proportion of the related sales revenue multiplied by 365 days.

			2015 £’000	2014 £’000
Net trade receivables			67,229	62,637
Other receivables			144	177
Accrued income			1,047	999
Total receivables for debtor day calculation purposes			68,420	63,813
Disbursements recoverable in Legal Businesses			10,924	11,964
Amounts due from associates			13	24
Taxation recoverable			13	214
Prepayments			4,961	6,751
			84,331	82,766

13         Trade and other payables

			2015 £’000	2014 £’000
Trade payables			24,938	20,893
Other taxation and social security			3,164	3,003
Accruals and deferred income			27,297	22,482
Disbursements payable in Legal Businesses			7,926	9,876
Other creditors			1,700	685
			65,025	56,939

Trade payables represent amounts payable for goods and services. The average credit period taken for trade purchases is 34 days (2014: 34 days).

14         Share capital and share premium account

Changes in the share capital or share premium account during the year are summarised in the Consolidated Statement of Changes in net Equity and reflect:

Date	Reason	Number	Average price	Total £'000	Share Capital £'000	Share Premium £'000
4 August 2014	NewLaw 1st tranche deferred consideration	8,425,860	60.90p	5,131	8	5,123
	Total 1st tranche deferred consideration	8,425,860		5,131	8	5,123
30 April 2015	NewLaw 2nd tranche deferred consideration	480,924	118.99p	572	1	571
31 May 2015	NewLaw 2nd tranche deferred consideration	480,924	118.99p	572	1	571
30 June 2015	NewLaw 2nd tranche deferred consideration	480,924	118.99p	572	1	571
	Total 2nd tranche deferred consideration	1,442,772		1,716	3	1,713
	Total for deferred consideration	9,868,632		6,847	11	6,836
18 November 2014	Exercise of Executive Share Options	63,657	20.74p	13	0	13
17 December 2014	Exercise of Executive Share Options	288,858	20.89p	60	0	60
15 January 2015	Exercise of Executive Share Options	257,030	20.90p	54	0	54
20 January 2015	Exercise of Executive Share Options	63,656	20.74p	13	0	13
18 March 2015	Exercise of Executive Share Options	1,878,842	14.10p	265	2	263
20 April 2015	Exercise of Executive Share Options	63,656	16.74p	11	0	11
18 June 2015	Exercise of Executive Share Options	242,158	20.42p	49	0	49
	Total shares issued for cash	2,857,857		465	2	463
	Total shares issued	12,726,489		7,312	13	7,299

15        Acquisitions in 2014

On 26 February 2014 the Group agreed to acquire the entire share capital of NewLaw Legal Limited (“NewLaw”) and various associated companies and partnership interests (together “the NewLaw group”) and completion took effect on 28 February 2014. The NewLaw group is a group of high quality legal services firms operating primarily in the area of road traffic personal injury and providing other consumer-related services including wills and probate. The NewLaw group also includes companies involved in costs drafting and advice in relation to employment law. NewLaw has entered into a number of ABS arrangements with various insurance and fleet management partners and the Group intends that this part of the business model will continue to be expanded in conjunction with its own strategy to develop its legal services offering to a larger customer group. The aggregated provisional fair value of the identifiable assets and liabilities of the NewLaw group at the acquisition date are set out below:

	Carrying Value £’000	Fair  Value £’000
Tangible fixed assets	898	898
Intangible assets (including acquired Goodwill)	23,158	0
Investment in associates	45	45
Trade and other receivables	15,581	15,526
Cash and cash equivalents	523	523
Trade and other payables	(14,555)	(14,569)
Unsecured Loans	(8,135)	(8,135)
Finance leases	(415)	(415)
Deferred tax liabilities	(272)	(272)
Net assets acquired	16,828	(6,399)
Consideration:
Cash paid on completion		21,950
Deferred consideration payable in cash		2,053
Deferred consideration payable in shares		9,879
Net consideration		33,882
Goodwill arising from the acquisition		40,281

The deferred share consideration is subject to the achievement of certain performance related conditions and the amounts shown represent the maximum additional consideration that might be payable. Deferred cash is held in escrow by a third party primarily as a retention against possible warranty claims. Acquisition costs of £915,000 were incurred and expensed in 2014 as exceptional costs within administrative expenses. The deferred consideration payable has now been finalised and is payable wholly in shares as follows:

	2015 £’000	2014 £’000
Within 12 months	-	6,679
After 12 months but before 24 months	-	3,200
	-	9,879

The first tranche amounting to £5,131,000 before discount was satisfied by the issue on 29 July 2014 of a total of 8,425,860 ordinary shares at a price of 60.9 pence each. The second tranche amounting to £5,155,000 before discount, is being satisfied by the issued of a total of 4,332,646 ordinary shares at a price of 118.99 pence each in nine monthly instalments commencing on 30 April 2015. As at 30 June 2015 at total of 2,889,974 ordinary shares with a value of £3,439,000 was still to be issued and is shown in the Consolidated Statement of Changes in Equity.

16        Cash flow information

a) Analysis and reconciliation of net debt

	01 July 2014	Acquisitions in year	Cash flow		Non cash changes		30 June 2015
	£’000	£’000	£’000		£’000		£’000
Net cash and cash equivalents	58,338	-	10,288		–		68,626
Debt due within one year	(350)	-	350		-		-
Debt due after more than one year	-	-	-		-		-
	(350)	-	350		-		-
Finance leases	(16,431)	-	11,532		(24,052)		(28,951)
	(16,781)	-	11,882		(24,052)		(28,951)
Net cash / (debt)	41,557	-	22,170		(24,052)		39,675
				2015 £’000		2014 £’000
Increase in cash and cash equivalents in the year				10,288		37,139
Cash inflow from decrease in borrowings and lease financing				11,882		26,016
Change in net cash / debt resulting from cash flows				22,170		63,155
New finance leases				(24,052)		(14,179)
Debt on acquisitions				-		(8,550)
Movement in net cash / debt in the year				(1,882)		40,426
Net cash /(debt) at start of the year				41,557		1,131
Net cash at end of the year				39,675		41,557
b) Depreciation and amortisation				2015 £’000		2014 £’000
Depreciation of property, plant and equipment				6,109		3,898
				6,109		3,898

c) Cash impact of exceptional items

The net cash flow impact of the exceptional items explained in Note 6 was a net cash inflow of £2.5m comprising of an outflow in respect of abortive acquisition costs and a cash inflow in respect of other income; (2014: £0.9m outflow, comprising acquisition costs).

17.       Subsequent Event

The Group announced on 20 August 2015 that it had agreed to acquire the FMG group of companies, a leading fleet accident management group, comprising FMG Group Holdings Limited (“FMG”) and its subsidiary companies and partnership interests (the “FMG Group”), for approximately £43.2 million in aggregate. The acquisition is subject to the requisite regulatory approvals being received from The Financial Conduct Authority and the Solicitors Regulation Authority. Completion is expected to occur within 3 months.

The FMG Group is being acquired from its management and a number of funds managed by Endless LLP for approximately £43.2 million in aggregate on a debt-free basis and assuming a normalised level of working capital. The consideration for the acquisition of all the shares and other vendor interests in the FMG Group will comprise a number of elements, the effect of which is the payment at completion of approximately £38.2 million in cash and the issue of new ordinary Redde shares ("Redde Shares") with a total value of £5.0 million. The Group will also make a cash payment of £2.5 million in respect of additional working capital balances on completion. 

The new Redde Shares will be issued on completion but the holders have unconditionally and irrevocably waived their entitlement for any dividends with a record date during the 12 months following completion. The Redde Shares will be subject to a 24 month lock in (subject to the customary exemptions) followed by an orderly market arrangement.

In addition to supporting the Group’s strategy of widening its range of services the acquisition is expected to be immediately earnings enhancing and cash generative, and will support the Group’s dividend policy of distributing as much of the Group’s profits by way of dividend as it can, taking account of prevailing circumstances and other requirements and commitments.

18.       Principal risks and uncertainties

The Group faces a range of risks and uncertainties. The processes that the Board has established to safeguard both shareholder value and the assets of the Group are described more fully in the Corporate Governance report in the Annual Report and Accounts. Set out here are those specific risks and uncertainties that the directors believe could have the most significant adverse impact on the Group’s business. The risks and uncertainties described below are not intended to be an exhaustive list.

Economic conditions

The Group’s operating and financial performance is affected by the economic conditions in the United Kingdom. Adverse changes in economic conditions in the United Kingdom and globally and the volatility of international markets could result in continued or further changes to driving patterns, car usage and ownership and this may result in fewer miles driven and lower numbers of accidents and therefore reduced business volumes. Any such adverse effects on the Group’s business might affect its relationships and/or terms of business with, and ultimately even the loss of, some key business partners. Economic uncertainty might also affect its key business partners and referrers and/or generally have an adverse impact on the insurance or other industries in which the Group’s key trading partners operate. This in turn could lead to more onerous terms of business or the inability of the Group’s debtors to pay monies due. Economic uncertainty may also have an adverse effect on the banking industry generally which may affect the Group’s ability to obtain or maintain finance on suitable terms when needed.

Competition

Barriers to entry into the general credit hire and credit repair markets at a local level are low. Although barriers to establishing a national or specialist business in this sector are higher, there is no certainty that these barriers will remain or will deter new entrants or existing competitors. In addition, there is the potential for local operators to overcome these barriers and establish national networks by forming alliances. Furthermore, competition could be intensified due to the activity of the Group’s competitors or if insurance companies, brokers and/or providers of services to motorists or other consumer groups entered the market, either alone or in collaboration with existing providers. Increased competitive pressures such as these could result in a fall in the Group’s revenues, margins and/or market share which could cause an adverse impact on its business, financial condition and operating results.

Customer and referrer relationships

Business is referred to the Group from a number of sources including insurance companies, insurance brokers, dealerships and body shops. The Group has agreements in place with many of these referrers which govern the flow of credit hire cases and the terms and commissions on which such cases are introduced. These agreements are subject to periodic review, and once out of initial term can be terminated with short notice periods of typically 3 to 6 months. In the past, commission rates for new credit hire business have risen sharply increasing the costs of acquiring such new business. Commission increases could adversely affect the Group’s business and operating results. A significant proportion of the Group’s business is referred from insurance companies. If insurance companies were to withhold business from the Group or credit hire providers generally or increase their credit hire referral commissions, whether alone or on a concerted basis, the operating results, business and prospects of the Group could be adversely impacted. Based upon profit contribution analysis, the Group may decide that renewal terms for certain existing contracts are uneconomic for the Group and consequently gross revenues may decline.

Insurance industry protocols

Up until 31 July 2015 the Group was a subscriber to the voluntary agreement developed by accident management companies and the ABI known as the General Terms of Agreement (GTA) but withdrew from this agreement with effect from 15 August 2015. This decision was taken due to the considerable number of bilateral protocol arrangements that the Group has with insurers and the residual element of business still conducted under the GTA was considered to be less significant. There is no guarantee that non-protocol insurers will continue to conduct their business with the Group on terms (including payment terms) similar to those pertaining to the GTA and they may also seek alternative strategies to dealing with claims submitted. Since announcing the Group's withdrawal from the GTA the Group has been approached by a number of non-protocol insurers seeking to enter into protocol arrangements.

Regulation

Certain of the Group’s activities and arrangements are subject to regulation. Whilst the Group seeks to conduct its business in compliance with all applicable regulations, there remains a residual risk that regulators will find that the Group has not complied fully with all such regulations. Failure by the Group to comply with regulations may adversely affect its reputation (which could in turn lead to fewer referrals), may result in the imposition of fines or an obligation to pay compensation or may prevent the Group from carrying on a part of its business and could have a materially adverse effect on the Group’s business, financial condition and operating results.

Legal

In the past, legal challenges have been brought on various grounds (mainly by insurance companies) seeking weaknesses in the legality of credit hire agreements and the hire rates and the periods of hire that can be recovered by credit hire companies. A number of historical legal cases relating to the provision of credit hire and related services have provided a precedent framework which has remained broadly stable for several years. The majority of the Group’s claims are now initially pursued under the terms of bilateral protocols with individual insurers and the Group believes that it operates its business within the parameters laid down by the reported decisions of the courts such that its credit hire and repair arrangements are enforceable. However fresh challenges to the legality of credit hire and repair arrangements or the rates payable continue to be brought.

The government continues to look at the overall costs of litigation.  It may bring in legislation or amend or create new rules of court which further reduce the costs recoverable in certain types of actions and/or changing the criteria for litigation to fall within the small claims track (where legal costs (except the most basic) are not generally recoverable) which might have an impact on the profit costs of the Group’s legal businesses and/or increase the cost of recovering credit charges.

Recovery of receivables

The business of credit hire involves the provision of goods and services on credit. The Group generally receives payment for the goods and services it has provided after a claim has been pursued against the party at fault (and the relevant third party insurer). This can mean that the Group can endure a long period before payment is received. Whilst significant progress has been made recently in obtaining prompt settlement of claims there is a risk that the Group will not be able to improve or maintain the pace of settlement of claims. In addition, third party insurers may seek to delay payments further in an attempt to achieve more favourable settlement terms for outstanding claims or, ultimately, to force the Group and other credit hire providers out of the market. If the Group is unable to maintain existing settlement periods, if there are further delays in the receipt of payments or if settlement terms with insurers worsen, its business, financial condition and operating results could be adversely impacted.

Fleet costs and residual values

The cost to the Group of holding vehicles for hire is dependent upon a number of factors, including the availability of vehicle finance, the purchase price of those vehicles, the level of discounts available from dealers and manufacturers, financing costs (represented by LIBOR and applicable margins) and the expected residual value at the date of disposal. There is a risk that changes in any of these factors could mean that the Group’s fleet costs are increased.

Operational risks and systems

Operational risks are present in all of the Group’s businesses, including the risk of direct and/or indirect loss resulting from inadequate or failed internal and external processes, systems, or infrastructure from fraud or human error or from external events. The Group’s business is dependent on processing a large number of claims and vehicle hires. There could be a failure, weakness in, or security breach of, the Group’s systems, processes or business continuity arrangements.

Liquidity and Financial

The Group has made the decision not to have any committed working capital facilities at the present time and therefore manages its existing cash balances and operational cash flow surpluses to provide working capital headroom. The Group is also dependent upon the continued availability of both committed and uncommitted fleet finance facilities to finance replacement vehicle purchases. In addition the principal financial risks and uncertainties include capital risk, interest rate risk and credit risk.

Going concern

The Group’s business activities, analysis of its financial performance and position, and factors likely to affect its future development, are set out in the Operational and Financial Review above. The financial resources available to the Group are also discussed in detail in the Operational and Financial Review above. The forward risks faced by the Group are also discussed in the section on principal risks and uncertainties above.

The directors have assessed the future funding requirement of the Group and the Company, and have compared them to the sources and levels of working capital resources available including cash balances. The assessment included a review of current financial projections to June 2017, and a review of the financial resources available by way of cash balances and facilities. Recognising the considerable uncertainty surrounding financial projections in the current economic environment, in particular with regard to the demand for the Group’s services and the cash collection profiles from insurers, the directors considered a number of scenarios and the mitigating actions the Group could take to limit any adverse consequences.

Having undertaken this work, the directors are of the opinion that the Group has access to adequate resources to fund its operations for the foreseeable future and so determine that it is appropriate for the financial statements to be prepared on a going concern basis.

19. Full financial statements

The Group’s full financial statements for the year ended 30 June 2015 will be posted to shareholders shortly and will be delivered to the Registrar of Companies in due course. A copy will be available shortly on the Group’s website:  http://www.redde.com/investors/reports-and-presentations.aspx