RNS Number:0509P
Auto Indemnity Group PLC
27 August 2003

                            AUTO INDEMNITY GROUP PLC

                          Interim Results 29 June 2003

                                   HIGHLIGHTS

                            70% Increase in Turnover

      Significant profits compared to loss in the first half of last year

                        Maiden Interim Dividend of 0.25p

               Admin expenses reduced from 38% to 28% of turnover


Charles Good, Chairman, commented:

In the first 6 months of 2003 we achieved market leadership in our industry,
regularly achieving a 10% share of the replacement vehicle market and have seen
a continuation of the excellent progress which became evident in the second half
of last year.  We are now recognised as one of the largest  volume suppliers of
replacement vehicles amongst accident management groups.

Whilst the impact of new business will be less dramatic in the second half of
2003, the volumes from new contracts will build up during 2004, and we expect
growth rates to accelerate again as our business model continues to produce
substantial growth opportunities.

The Board is confident that the Company will continue to build on the firm
foundations established over the last twelve months

HALF YEAR RESULTS

Chairman's Statement

Results Overview

I am pleased to report that Auto Indemnity ("AI") continues to make excellent
progress.  In the six months to 29 June 2003, turnover grew to #9.9 million from
#5.8 million (an increase of 70%) for the same period a year ago. Similarly
profit before tax was #572,000, against a loss of #213,000 a year ago and
operating profit, before goodwill amortisation and taxation, was #713,000
against a loss of #77,000.

Whilst Gross Margins for the latest six months declined to 33.1% from 34.7% in
the same period last year (in line with the Board's expectations),
administrative expenses have been well controlled and now only represent 28% of
turnover compared with over 38% for the same time last year.

The large rise in turnover and the tightening of Gross Margins both reflect the
continuing successful move away from our traditional Credit Hire business to the
high volume lower margin insurer referred business, which is where our future
lies.  Our core vehicle replacement business currently remains the main driver
of growth, nevertheless our additional new services of vehicle repair
management, personal injury management and debt recovery, though currently small
in absolute terms, are a fast growing component of our business.

Dividend and Change of Year End

As we announced at the time of our full year results, the Board has decided to
change our year-end from end-December to end-June; the current financial
reporting period will therefore be for eighteen months. Consequently, we will be
presenting to shareholders two sets of interim results to 29 June 2003 and 28
December 2003 followed by a final six month period to 27 June 2004.

In line with this the Board is pleased to announce a first interim dividend in
respect of the 6 month period to 29 June 2003 of 0.25p per share.  The dividend
will be paid on 26 September to shareholders on the register as at 5 September
with the shares being marked ex-dividend on 3 September. Subject to unforeseen
circumstances, it is the intention of the Board to pay a second interim dividend
of 0.25p for the six months ending in December 2003 to be followed by a final
dividend at an appropriate level, for the six months ending in June 2004.

Finance and Cash Management

Ensuring that AI is paid for the work it conducts remains a major area for
attention. We achieve success here by demonstrating to insurers the high level
of technical skills of our call centre staff which ensures that we only contract
business with insurers, which is ethical and genuinely eligible for the services
provided. This is followed up with keeping insurers actively informed of
progress, with full documentary evidence.

The positive results being achieved through the application of these procedures
can be seen by the reduction in debtor days which are now down to 94 days from
152 days a year ago.  Consequently cash flow generated from operations in the
first half was #1.49 million which has resulted in a further increase in cash
deposited with our bankers, which stood at #2.6 million on 29 June (#1.08
million as at 29 December 2002).  We recently have negotiated two further
bordereau payment agreements with large insurers, bringing the total to five,
further demonstrating the high regard in which AI is held.  As result of all of
these actions our outstanding debtor days will continue to improve, nevertheless
there is still a considerable way to go before we achieve the 30-day payment
period described in the ABI General Terms of Agreement.

New Business

The strategic goal of Auto Indemnity remains to grow our share of the accident
management market by securing commission-free referrals from insurers.  Winning
these contracts is by definition a slow and careful process for both parties.
Whilst the first half has benefited from deals reached with insurers in 2002 and
earlier, this has now been followed by reaching agreement with two new 'top 20'
insurers to provide them with accident management services, including personal
injury management, vehicle repair as well as our core replacement vehicle
management service. These are mainly direct billing contracts that do not depend
on credit hire payment periods. The impact on our trading will increasingly be
felt from the beginning of the last quarter of 2003.

We continue to have active discussions with a number of other top 20 insurers
with the aim of developing full service agreements in due course.

Operations and Claims Management

We continue to make progress in the efficiency of our operation. By the end of
this reporting period the average length of hire of a vehicle had reduced to
between 13 and 14 days down from 16 days in calendar 2002.  We understand that
this is very much lower than the average length of hire of our principal
competitors.  This has been achieved by improving communication between vehicle
repairer, insurance company and policyholder. Our ability to reduce insurers
costs by tight controls in this area is increasingly recognised by the insurance
market and is leading to new business opportunities.

As would be expected in a business at the forefront of change, IT and management
systems are continually undergoing upgrading and improvement. During the last
six months we have put in a number of processes to improve further the manner in
which we manage risk and recovery within the business. We have undertaken a
review of our IT systems to ensure that they will be capable of accommodating
both existing and future growth rates, at the same time keeping our
market-leading customer service levels, for which we are already recognised.

Procurement

During the first six months of the year we completed a comprehensive tender
process for the provision of replacement vehicles. This will ensure that we have
adequate forward supplies to meet our expected growth and at the same time
secure the most favourable rates in the market.

The outcome of the tender process was most satisfactory and we welcome National
Car Rental as a supply partner; they will complement the service we currently
enjoy from AVIS. Both suppliers are governed by comprehensive supply level
agreements to ensure complete customer satisfaction.

In order to be sure that we can accommodate the continuing high levels of growth
we anticipate, we are in the final stages of negotiation to purchase a further
15,000 sq ft call centre and head office facility in Blackpool next to our
current offices. Given the present circumstances of our cash position, it is
intended that this building will be purchased out of internal cash flow at a
likely cost of around #2 million, including infrastructure, and should meet our
space requirements for the next two to three years, based on our current
projections for growth.

Prospects

In the first 6 months of 2003 we achieved market leadership in our industry,
regularly achieving an 8% share of the replacement vehicle market and have seen
a continuation of the excellent progress which became evident in the second half
of last year.  We are now recognised as one of  the largest  volume suppliers of
replacement vehicles amongst accident management groups.

Whilst the impact of new business will be less dramatic in the second half of
2003, the volumes from new contracts will build up during 2004, and we expect
growth rates to accelerate again as our business model continues to produce
substantial growth opportunities.

The Board is confident that the Company will continue to build on the firm
foundations established over the last twelve months

Charles Good

Chairman

26 August 2003.


CONSOLIDATED PROFIT AND LOSS ACCOUNT
                                                                  Six months        Six months     
                                                                  to 29 June        to 30 June       Year to
                                                                        2003              2002   29 Dec 2002
                                                     Note          Unaudited         Unaudited       Audited
                                                                       #'000             #'000         #'000

Turnover                                                               9,932             5,845        14,752

Cost of sales                                                        (6,642)           (3,819)       (9,853)

Gross profit                                                           3,290             2,026         4.899

Administrative expenses                                              (2,743)           (2,245)       (4,565)

Group operating profit/(loss):
Before amortisation of goodwill                                          713              (77)           642
Amortisation of goodwill                                               (166)             (142)         (308)

Group operating profit/(loss):                                           547             (219)           334

Interest receivable and similar income                                    25                7             21
Interest payable and similar charges                                       -               (1)          (14)

Profit/(loss) on ordinary activities before                              572             (213)           341
taxation

Tax on profit on ordinary activities                    2               (82)                 -           451

Profit/(loss) after taxation                                             490             (213)           792

Dividends proposed                                      3              (153)                 -         (153)

Profit/(loss) for the period                                             337             (213)           639

Basic and diluted earnings per share                    1              0.80p           (0.35)p         1.30p            
            

Basic and diluted eps before taxation and               
amortisation of goodwill                                1              1.21p           (0.13)p         1.06p            
                                         
Dividend per share                                      3              0.25p                 -         0.25p            
                                                   

All operations are continuing. There were no recognised gains and losses other
than the results above.


CONSOLIDATED BALANCE SHEET
                                                                                                       29 Dec
                                                       Note     29 June 2003     30 June 2002            2002
                                                                   Unaudited        Unaudited         Audited
                                                                       #'000            #'000           #'000
Fixed assets
Intangible assets                                                      5,648            5,964           5,814
Tangible assets                                                          278              344             306

                                                                       5,926            6,308           6,120

Current assets
Debtors                                                                6,633            5,879           6,997
Cash at bank and in hand                                               2,559              553           1,082

                                                                       9,192            6,432           8,079
Creditors: amounts falling due within one year                       (4,204)          (3,018)         (3,625)

Net current assets                                                     4,988            3,414           4,454
                                                                    
Total assets less current liabilities                                 10,914            9,722          10,574

Capital and reserves
Called up share capital                                                6,109            6,107           6,107
Share premium account                                                  1,552            1,551           1,551
Merger reserve                                                           690            1,003             847
Profit and loss account                                                2,563            1,061           2,069

Shareholders' funds                                       4           10,914            9,722          10,574


CONSOLIDATED CASH FLOW STATEMENT
                                                                  Six months                         Year to
                                                                  to 29 June   Six months to          29 Dec
                                                                        2003    30 June 2002            2002
                                                                   Unaudited       Unaudited         Audited
                                                                       #'000           #'000           #'000

Reconciliation of operating cash flow
Operating profit/(loss)                                                  547           (219)             334
Goodwill amortisation                                                    166             142             308
Depreciation of fixed assets                                              69              70             149
Profit on disposal of fixed assets                                         -            (10)            (12)
Decrease / (increase) in debtors                                         282             461           (206)
Increase in creditors                                                    426             317             944
Net cash inflow from operating activities                              1,490             761           1,517

Returns on investments and servicing of finance                           25               6               7

Capital expenditure                                                     (41)            (41)            (80)

Acquisitions & disposals                                                   -           (708)           (892)

                                                                       1,474              18             552

Financing                                                                  3               -             (7)
                                                                       
Increase in cash                                                       1,477              18             545



NOTES TO THE INTERIM REPORT TO 29 JUNE 2003 
     
1    EARNINGS PER SHARE
                                                                                   Six months         Year to
                                                                Six months to      to 30 June          29 Dec
                                                                 29 June 2003            2002            2002
                                                                    Unaudited       Unaudited         Audited
                                                                        #'000           #'000           #'000

These have been calculated on earnings of:                                490           (213)             792

The weighted average number of shares used was:-                         '000            '000            '000

Basic                                                                  61,069          60,559          60,800
Share option adjustment                                                   247               -               -
Fully diluted                                                          61,316          60,559          60,800
     
2    TAXATION

     The tax charge of #82,000 is based on an estimated effective tax rate on 
     profit for the 18 month period to 27 June 2004 of 14%. The charge arises 
     from a reduction in the deferred tax asset held on the balance sheet of the 
     Group to #369,000 as at 29 June 2003 which is included in debtors. The rate 
     is lower than the standard UK corporation tax rate due to the utilisation 
     of brought forward losses not previously recognised as an asset in the 
     balance sheet. The recoverability of the possible deferred tax asset 
     attributable thereto was not assessed as sufficiently certain to warrant 
     recognition in the financial statements under accounting standard FRS 19 
     'Deferred Tax'.
     
3    DIVIDENDS

     The Company proposes to pay an interim dividend of 0.25 pence per share to
     shareholders on the share register at 5 September 2003. On the number of 
     shares currently in issue this amounts to #153,000.
     
4    MOVEMENT IN SHAREHOLDERS' FUNDS
                                                                                   Six months         Year to
                                                                Six months to      to 30 June          29 Dec
                                                                 29 June 2003            2002            2002
                                                                    Unaudited       Unaudited         Audited
                                                                        #'000           #'000           #'000

Profit/(loss) for the period                                              337           (213)             639
Issue of share capital (net of issue costs)                                 3             300             300
Net addition to shareholders funds                                        340              87             939
Opening shareholders' funds                                            10,574           9,635           9,635
Closing shareholders' funds                                            10,914           9,722          10,574

5    INTERIM REPORT

     This interim report was approved by the Board on 26 August 2003. It has 
     been prepared using accounting policies that are consistent with  those  
     adopted in the statutory accounts for the year ended 29 December 2002.

     The figures for the year ended 29 December 2002 were derived from the 
     statutory accounts for that year. The statutory accounts for the year 
     ended 29 December 2002 have been delivered to the Registrar of Companies  
     and received an audit report which was unqualified and did not contain 
     statements under sections 237 (2) or (3) of the Companies Act 1985.
     
6    DESPATCH OF DOCUMENTS

     Copies of the interim results will be despatched to shareholders and the 
     AIM Team. Copies will also be available to the public at the company's 
     registered office; Indemnity House, Sir Frank Whittle Way, Blackpool, FY4 
     2FB

INDEPENDENT REVIEW REPORT TO AUTO INDEMNITY GROUP PLC

Introduction

We have been instructed by the Company to review the financial information,
which comprises the Profit and Loss account, the Balance Sheet, the Cash Flow
Statement, the Reconciliation of Shareholders' Funds and the related notes that
have been reviewed. We have read the other information contained in the interim 
report and considered whether it contains  any  apparent misstatements or 
material inconsistencies with the financial information.  This report is made  
solely to the company in accordance with guidance contained in Bulletin 1999/4 
'Review of interim financial information' issued by the Auditing Practices 
Board. To the fullest extent permitted by law, we do not accept or assume 
responsibility to anyone other than the company, for our work, for this report, 
or for the conclusions we have formed.

Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors 
are responsible for preparing the interim report in accordance with the AIM 
Rules. The directors are also responsible for ensuring that the accounting 
policies and presentation applied to the interim figures are consistent with 
those applied in preparing the preceding annual accounts except where any 
changes, and the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999
/4 issued by the Auditing Practices Board for use in the United Kingdom. A  
review consists principally of making enquiries of group management and 
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied, unless otherwise disclosed. A 
review excludes audit procedures such as tests of controls and verification of 
assets, liabilities and transactions. It is substantially less in scope than an 
audit performed in accordance with United Kingdom Auditing Standards and 
therefore provides a lower level of assurance than an audit. Accordingly we do 
not express an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 29 June 2003.

RSM Robson Rhodes LLP
Chartered Accountants
Manchester, England

26 August 2003

For further information please contact:

Adrian Palmer - Auto Indemnity Group PLC - 0870 889 2200

Peter Ward - Insinger de Beaufort  - 0207 377 6161


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