Redde rockets as forces upgrades

What's in a name? Well, about £205 million if you're Redde - the name in Latin is linked to the concept of restoration. That's how much the provider of accident management and legal services to motorists has gained in value since changing its name from Helphire Group in May 2014 following years of problems. It's not only Redde's reputation that's been restored.

Management said in April that Redde had made an "encouraging start" to the second half, and that third-quarter operating profit had exceeded forecasts. Now, after a decent final quarter, underlying operating results for the year to June are tipped to beat the top end of City forecasts, forcing analysts to upgrade forecasts.

N+1 Singer now thinks that Redde will make a pre-tax profit of £21.9 million in the year to 30 June, 5% more than before.

"With a cost light model and a strong net cash position, we see scope for organic growth and additional M&A to drive earnings and the dividend," says analyst Andrew Watson. "We believe that there is more to come, providing upside potential."

And the company has net cash at £38.8 million net of fleet financing, and progress has been made in pursuing claims against insurers and other parties in respect of Autofocus and other historical claims. A number of negotiated settlements have been achieved.

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We'll get the exact numbers in the annual report and accounts - results are published "in the early part of September" - but clearly there's enough for a special dividend of 1p a share, costing £2.85 million. The ex-dividend date is 9 July. Expect a final dividend of 4p a share, giving a full-year payout of "not less than 8p" excluding the special.

Redde shares currently trade on 16.4 times earnings estimates both for this year and next. Strip out forecast year-end net cash of £40.4 million for 2015, worth 14p a share, and 15p a share for 2016, that multiple drops to 14.7 and slightly less for next year.

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