Accidentcare joined Ofex last September to obtain a market for the Company's shares and to raise finance to fund the development of the Group.  Considerable progress has been made in the intervening period and we have significantly expanded our areas of operation.  I am pleased to report pre-tax profits of £119,000 on turnover of £1.87m which compares to last year's pre-tax loss of £277,000 on turnover of £1.4m for the fifteen months ended December 1999. 

Operations

Since Accidentcare was awarded the contract to manage the Mastercover scheme for National Car Rental, in September, our customer base has increased significantly, as at the year end it stood at 65,000 and has since grown to 80,000.  We believe this to be a fraction of the Company's potential market and we have several initiatives underway which will further increase market penetration.  There are 24 million cars in the UK of which an estimated 5 million are involved in road accidents every year.

The membership potential was further enhanced in March when we announced a joint alliance with Policy Master, the AIM listed provider of software solutions to the insurance and financial services markets.  Policy Master's marketing division, Master Plan, will introduce Accidentcare to its 650 insurance intermediaries in the UK, which sell in excess of 1 million motor policies per annum.  The Accidentcare membership will be sold as an integral part of the Policy Master system for ease of marketing.

New initiatives

ABI  Initiative (Association of British Insurers)

Earlier this year, Lumacare, the Accidentcare Group PLC's insurer services division, was appointed on an exclusive basis by National Car Rental to manage the claims process for the new ABI insurance initiative.  This is a huge endorsement for the Company which recognises its efforts over the last seven years and puts the Group in the unique position of being able to work in the interests of the motorist in general whilst still assisting the insurance industry to control claims costs.

Global Telematics

Global Telematics, developers of the worlds leading telematics service, has launched a unique support service in partnership with Accidentcare.  The service, 'Orchid Accidentcare' available for £18.50 per month, provides motorists with a comprehensive range of accident support services including real time traffic information, accident detection, "black box" crash information, immediate dispatch of free car hire, national vehicle recovery and total loss negotiation service following an accident.  This unique service is the first to be launched in the UK and is targeted at the 19 million private motorists.  Accidentcare is now well placed to be considered as the leading motoring customer service company in the market.  As vehicle manufacturers and motor insurers consider the shape of the future, Accidentcare will be very much at the front of their thoughts.

It is envisaged that the ownership costs for 'Orchid Accidentcare', the combined Accidentcare/Global Telematics product, can be offset against the anticipated substantial savings on insurance premiums.  Within the next year, the first motor manufacturer is expected to include a vehicle telematics system as an option available on production line vehicles.

D.C Cook is our chosen motor industry launch partner and will market the product via both D.C.Cook & D.C.Cook Interactive's 30,000+ new and used vehicles supplied every year.

With the development and implementation of e-technology across the business, a new brand has been introduced to reflect the 'Accidentcare Interactive' initiative.  During the third quarter 2000, members will be issued with Accidentcare Interactive Membership Cards which will have total connectivity with our web site and allow data storage of members' own private medical details as well as vehicle and insurance information.

With effect from April 2000, Accidentcare has also entered into a joint venture with iii (interactive investor international) the leading internet personal financial service.  This offers the Company a new distribution opportunity via the internet through which it is estimated over 15% of all personal policies will be sold within the next 3 years.    Ultimately Accidentcare looks to move into other personal areas apart from motor and, with the substantial growth envisaged for the internet in general terms, this, once again, places Accidentcare as a unique company in the market.

There will be further development in the next twelve months, to allow for more interactivity between Accidentcare and its partners.  This will not only have a profound effect on the way in which Accidentcare communicates both internally and externally but it will lead to greater operational efficiencies.

As our business develops, advances in technology continually provide new opportunities; selling via the internet, claim processing via e-mail, other forms of customer care management and joint ventures with partners owning their own proprietary databases. This approach builds a platform for future growth and makes it increasingly difficult for new competitors to enter our market. 

Whilst the existing core business remains ahead of our original forecasts, these new initiatives will require additional investment in recruitment and training.  In the short term, the cost of these new initiatives may have a negative effect on overall profitability but, hopefully, will provide the basis for future growth.

We are in the fortunate position that, having proved ourselves and our products, the market is already asking us to provide these additional services which puts us at a distinct advantage over potential competitors.

Accidentcare's customer service is the cornerstone of our success and nothing we do will prejudice the maintenance and continuing improvements in efficiencies and quality of service provided to our customers.

Listing on the Alternative Investment Market

Your Board has decided that, whilst it remains its firm intention to transfer dealings to the AIM market when the time is appropriate, our priority is ensuring that the current expansion can be properly controlled and profitability exploited.

Outlook

Shareholders should avoid comparing our core business with other companies operating in the sector who simply provide free car hire to those involved in blame free accidents.  Our philosophy is to provide stress free assistance to members involved in motor accidents, regardless of blame.  It is important to remember that the Accidentcare service is an all-embracing total customer care package which guarantees to keep our members mobile regardless of fault.

The future prospects for the Group look excellent.  We have a small but rapidly growing market.  We have put systems in place capable of handling substantially increased volumes and with the various exciting new initiatives currently underway we are confident of a significant increase in volume and subsequent profitability.

ROY S KENT

Chairman & Managing Director