Helphire has announced an operating loss of £52m for the year to March 31 2001, following exceptional expenses of £48.9m, although the credit hire company expects to return to profit in the second half of 2001.
The group's turnover fell to £47.2m from £69.6m in 2000, when it achieved a profit of £7.9m. The £48.9m exceptional expenses included £42.5m of bad debt charges arising from Helphire's bulk settlements with insurance companies.
Chief executive Michael Symons said: “Reduced volumes, a relatively high fixed cost base and the write-offs associated with bulk settlements have placed the business in a loss-making position during the course of the last financial year.”
However, he added the company had changed its business model towards a higher volume, lower gross margin service. It had also reduced its volume of credit repair business and diversified into other forms of replacement vehicle provision. Symons said Helphire had seen its credit hire business revive after it signed the Association of British Insurers' (ABI) protocol.
Staff numbers have been reduced by 300 from a peak of 800 in July 2000, following Helphire's absorption of First Automotive and Countrywide.
The company has, to date, agreed bulk settlements with insurers for more than 75% of its historic debt and said cash collection was running ahead of schedule.
However, it remains in dispute with a small number of insurers who continue to challenge the legal basis of Helphire's charges. If the courts decide these cases are irrecoverable, it could cost the group up to £19m.
Earlier this year, the group renegotiated its banking facilities and raised a net £17.7m through a share placing on the stock market.