The personal injury compensation specialist, which is issuing its first annual results since flotation in June last year, has been experiencing a loss in revenue and has issued two profit warnings since listing.
In March, the company said its results for the second half of the current financial year would fall below forecasts, with an underlying operating profit of £6m. It added ‘the company is expected to report a pre-tax loss for the year of approximately £20m’.
In the autumn, the company received bad press coverage after it was unable to recover premiums from insurance companies for some of its clients.
A drop in customer levels followed and Claims Direct said it expected to take a £5m charge in its first and second half results to make extra payments to clients.
The company blamed a change in the law for this inability to be able to recover compensation, but added it ‘intends to seek a constructive settlement of this issue with the defendant insurance industry while continuing to recommend that its solicitors pursue full recovery, if necessary by commencing test cases in higher court.’
In an attempt to reverse negative publicity, the company launched a high-profile television advertising campaign.
However in March it admitted it had been unable to restore former case levels, with 2,500 cases per month compared to 4,000 the previous quarter.
At its maiden interim results the company paid shareholders a dividend of 0.5p, but at the end of the year, the board is expected to advise against payment of a dividend.
In response to these adversities, the company is restructuring its management and revamping its business. The first person to benefit from the restructure was finance director Paul Doona.
The chartered accountant was promoted to managing director at the beginning of June, but will also continue his work as at the head of the finance department.
Before working at the compensation recovery company, Doona was FD of property company St Modwen Properties and Clarke Securities. He began his career at Deloitte Haskins and Sells in 1974, where he became audit manager. Doona also worked in audit at Grant Thornton and was financial controller at Miller Homes.
He replaced Colin Poole, former chief executive and managing director, who remained with the company as non-executive deputy chairman, to assist and evaluate new business opportunities. A spokesman said: ‘These changes reflect the continuing evolution of the existing business, allowing greater focus to be brought on operational issues while retaining the ability to consider future strategic opportunities.’
Company and sales information can be found at www.claimsdirect.com
Interim results to 30 September 2000
Executive directors: Tony Sullman, non-executive chairman; Colin Poole, non-executive deputy chairman;
Paul Doona, MD and FD; David Gravell, chief operating officer
Company profile: The firm was founded in 1996 in the spare bedroom of a country house by non-executive chairman Tony Sullman.
Claims Direct is run through franchisee claims managers in the UK, linking claimants and solicitors. The company floated on the London Stock Exchange in July 2000.
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