Helphire, which supplies credit hire vehicles as well as supplying cars to short-term hire companies, has announced that it will close its Spanish operations and concentrate only on its UK operations.

It has also been advised by one of its “significant referrers” that it expects to end referrals to the group within months.

The company is reported to be Acromas, the combined business of the AA and Saga, but this has not been confirmed.
Helphire’s shares dropped 16.7% as a result.

Martin Ward group managing director said: "We have enjoyed a long relationship with this particular referrer.

"However, over time maintaining this relationship has led to a level of profitability that would have become unsustainable in the near term."

The company has cut its working capital requirement by £63.5 million in the past four months, thanks to a reduction of its fleet and increased residual values, which were higher than predicted.

Fleet utilisation has also been increased considerably from a low of 63.6% in March to 80.1% last month.

The results show that following a fundraising exercise in April and the creation of a new executive team, headed by Ward, the company has succeeded in turning itself around.

“Whilst trading conditions remain challenging, particularly in the area of credit hire rental length, solid progress has been made in the key areas of focus making a positive difference to the business,” said the report.

Since the company’s last update in early May, there has been a “significant improvement” in cash resources and a commensurate reduction in its working capital requirement.

“Operating cash flow has been strong, particularly in the last two months, and as a result the group generated £44.5m of operating cash flow (unaudited) in the second half of the year compared with £24.9m in the comparable period last year,” it said.

The company had set a target of reducing its working capital requirement by £100m (from a baseline taken in February 2009) in the period to June 2010, under its Project Century plan.

Between February and June, it managed to achieve a reduction of £63.5m.

At the end of June, the group's net indebtedness, with the benefit of the April fundraising, and excluding fleet related funding was £99.9m, compared to £151.2m at the end of last year.

Fleet related funding was £142.1m, compared to £196.4m at the end of 2008.

"There is still a significant task ahead of us to restore previous levels of profitability in the group, but I have been encouraged by the amount of progress that has been made over a short period of time,” said Ward.

“The immediate focus of the business will remain cash, costs and its customers and putting the group in the best shape to respond to the challenging trading conditions that persist."