Redde (AIM:REDD), which provides a range of accident management, incident management and legal services, issued excellent results recently. However, like many companies it seems very eager to categorise any unwanted costs as ‘adjustments’, unreasonably so in our opinion.
Whereas reported profit for the full year came in at £38.8m, a commendable rise of 22%, adjusted profit came in some 18% higher than this at £46m. In addition to the usual adjustment for ‘amortisation of acquired intangibles’ (which we reluctantly accept) the Group also chose to adjust for share based payments (£1.8m) and Leasehold provisions (£2.0m), both of which occur with regularity, are a normal cost of the business and a real cost to shareholders. We struggle to understand how they justify an adjustment. Redde’s operating cash flow of £39.7m is probably a better reflection of the true performance of this business and is highly encouraging, supporting a mighty dividend payout with the dividend yield more than 6%. You can…
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