Redde

Description

Redde provides accident management support, legal services, fleet management and policy fulfilment services. Previously known as Helphire, the company saw a period of rapid growth in the years leading up to the financial crisis as vehicle replacement services for not-at-fault drivers became more common-place. However, its business model of funding the cost of the replaced vehicle from inception to settlement of a case, put increasing pressure on its balance sheet, as the claims handling process started to lengthen. A new management team has down-sized, restructured and successfully returned the business to a stable, profitable and sustainable growth trajectory.

Investment case summary

Redde’s investment case remains very strong: the company continues to grow at a double-digit rate, it has a market-leading position and continues to grow ahead of the overall market. Furthermore, it has a strong balance sheet with minimal debt, it has a 100% dividend payout ratio and trades at an attractively low valuation. Technology investments continue to entrench the competitive advantage of the business, helping to reinforce its reputation as the “leading partner of choice” in its industry. Meanwhile, the company continues to execute its GPSii strategy (Growth, Profitability and Sustainability), making excellent progress towards a core “one stop shop” offering.

Ask a question about our investment in Redde

Fund exposure
Income Focus Fund 4.50%
Equity Income Fund 2.12%

As at 30 November 2018

Segmentation
Geography United Kingdom
Industry Financials
Themes UK domestic exposure

Source: Woodford

Share Price

Market Quotes by TradingView

Commentary

Exceptional full-year results

Today, Redde reported a very good set of full year results, demonstrating strength across the board. Its revenues were up 11.6%, helped by growth in the number of cars hired on credit and in the number of repairs undertaken. Also, the company’s adjusted earnings per share increased by 17.8%, while its final dividend grew by nearly 10%. That said, a less positive aspect was the slight increase in debtor days, suggesting that cash is being collected from debtors over a longer time frame than in 2017.

Overall, we view this set of results as very robust and it reflects just how well managed the business is – its GPSii strategy (Growth, Profitability and Sustainability) continues to deliver in spades. Importantly, the company has numerous irons in the fire to sustain the levels of growth we have become accustomed to. Whether gaining share in existing claims management, vehicle repair or car hire services, the evolution to a core “one stop shop” offering continues apace. Its valuation however does not reflect these attractive qualities, with its shares continuing to offer a very attractive 6.8% estimated dividend yield, at the time of writing.

Stephen Lamacraft
6 September 2018

Continued double-digit growth

A good set of financial results from Redde today, which confirms the continued delivery of double-digit growth in revenue, operating profit, earnings and dividend. The company has seen particularly strong growth in credit hire, driven primarily by a large new contract, won in late 2016. Even excluding this contract, the company is growing at a faster rate than the market, indicating continued market share gains.

The significant new contract win in late 2016 has also distorted working capital and cash conversion (down from 89% last year to 47%) for the time being, but this should normalise through the rest of 2018. The company’s outlook statement, which confirms that underlying growth rates have so far been maintained into the second half of its financial year, is encouraging in this respect.

With a dividend yield of more than 7% based on current year’s forecasts, the shares continue to look very attractively valued.

Alex Correia
1 March 2018

Woodford Investment Management Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 745433). Incorporated in England and Wales, company number 10118169. Registered address 9400 Garsington Road, Oxford OX4 2HN.

Woodford Patient Capital Trust plc is incorporated in England and Wales, company number 09405653. Registered as an investment company under section 833 of the Companies Act 2006. Registered address Beaufort House, 51 New North Road, Exeter, EX4 4EP.

The Woodford Funds (Ireland) ICAV (the “Fund”) has appointed as Swiss Representative Oligo Swiss Fund Services SA, Av. Villamont 17, 1005 Lausanne, Switzerland. The Fund’s Swiss paying agent is Neue Helvetische Bank AG. All fund documentation including, Prospectus, Key Investor Information Documents, Instrument of Incorporation and financial reports may be obtained free of charge from the Swiss Representative in Lausanne. The place of performance and jurisdiction for all shares distributed in or from Switzerland is at the registered office of the Swiss Representative. Fund prices can be found at www.fundinfo.com.

© 2019 Woodford Investment Management Ltd.
All rights reserved.

Are you sure?

By disagreeing you will no longer have access to our site and will be logged out.

Privacy Preference Center

Experience Tracking

Lets our analytics service track you across our different websites and enables data sharing among our different marketing tools.

AMCV_[Tracker ID]@AdobeOrg (Adobe), [Tracker ID]@AdobeOrg (Adobe)
Adobe Analytics (helps us provide you with more relevant experiences and content based on your likely interests). Cookies: demdex, dextp, dpm, DST, DSTJS
Twitter personalisation (by better understanding how devices are related, Twitter can use information from one device to help personalize the Twitter experience on another device). Cookies: personalization_id
Heap Analytics (provides metrics on user behaviour and actions throughout the site). Cookies: _gid, _hp2_id.[Tracker ID],_hp2_props.[Tracker ID], _ga, _mkto_trk, optimizelyBuckets, optimizelyEndUserId, optimizelySegments, raygun4js-userid, _attribution_referrer, _csrf
Adobe Analytics (provides you with more relevant experiences and marketing messages based on your likely interests). Cookies: _tmae ,ev_sync_dd,ev_sync_yh,everest_g_v2,gglck

Traffic Metrics

Allows Woodford to aggregate information on website usage and popular content

_ga, _gid
Google Analytics (tracks and reports website traffic and user behaviour): Cookie: CONSENT
New Relic (application and server performance monitoring – allows us to spot problems with our website code and improve them to keep things running smoothly). Cookie: JSESSIONID
Adobe Analytics (provides you with more relevant experiences and marketing messages based on your likely interests). Cookies: __qca,__smToken, _ga, _mkto_trk, _rtbmedia

Search History

Populates the 'recent searches' section of the website navigation.

wf__recent_searches_untracked

Close your account?

Your account will be closed and all data will be permanently deleted and cannot be recovered. Are you sure?