1 June 2012 – trading update

The group has revealed that although current trading is in line with expectations, it will see a significant reduction in vehicle accident repair work undertaken for Aviva in the second half.  Although the group will still work for Aviva in certain regions, a re-tendering process for other areas led to the group being offered work on terms that are commercially unattractive.  This will result in a shortfall of revenue of some £10m (out of forecast revenues of £170m), although the group is making revenue gains elsewhere.  Although disappointing, the strong cash position of the group provides some protection and the group’s flexible working practices will allow it to reduce costs accordingly.  However, we reduce our recommendation to HOLD.