Yahoo Finance Green Flag hits record profit after price hikes for breakdown customers
Breakdown recovery firm Green Flag saw its revenue leap last year as additional fees for customers helped to boost its bottom line, according to newly-published results.
The Leeds-headquartered business, which is part of Direct Line Group, grew its revenue to £20.6m in 2023, up from £15.6m in the year before, with the company attributing the growth to “improving pricing” following the introduction of arrangement and administration fees.
The extra charges were introduced midway through 2022, so last year was the first full period they had been in operation.
On top of these contracted services Green Flag also started selling tyres and batteries at the roadside, as well as through its website, which it said helped boost its income.
As a result Green Flag’s pre-tax profit also increased, hitting £4.9m in 2023 compared to £3.7m in the year before.
The company has made a strong comeback over the past four years after Covid-19 dented its sales.
Its revenue almost doubled from £8.6m in 2021 to £15.6m the following year, exceeding its 2019 figure of £10.3m.
In a business report published to Companies House, the company said: “Revenue increased by £4.995m during the year ending December 31, 2023, with the year-on-year increase largely due to improving pricing and customer journeys which delivered higher arrangement and administrative fee income, partially as a result of 2023 being the first full year in which this has been in operation.
“The Green Flag patrol service also expanded during 2023, and began the sale of tyres and batteries at the roadside, as well as facilitating sales through its online store.
“Cost of sales increased by £4.25m to £15.648m (2022: £11.432m) mainly as a result of expense costs associated with the expanded patrol service.
“Operating expenses increased by £624,000 to £1.526m (2022: 902,000) primarily due to an increase in management charges.”
How did Green Flag’s owner Direct Line Group perform?
In 2023 Direct Line Group, which also owns insurance brands Churchill, Privilege and Darwin, grew its revenue from insurance to £3.6bn, up from £3.2bn the year before.
The London-listed company also boosted its finances enough to pull it out of the red from a pre-tax loss of £301m in 2022 to a pre-tax profit of £277m in 2023.
During the year Direct Line Group sold its brokered commercial business to UK-insurer RSA Insurance Group for an initial cash consideration of £520m, with potential for up to a further £30m contingent payment.
In its annual report 2023, CEO Adam Winslow, who started the role in August last year, said: “The last few years have been challenging and the group has not always delivered the best value for its shareholders.
“We need to significantly improve our performance and I joined both to acknowledge these challenges and seek to solve them.
“I believe we have a strong platform to build from. The group has some of the most recognisable brands in the market, over nine million customers and a diverse portfolio of assets.
“In addition, the management actions taken during 2023 have been the right ones. We believe that Motor has turned a corner, and with business outside Motor performing well during 2023, we expect overall performance to improve in 2024.
“We have one clear agenda, an unrelenting focus on driving shareholder value by serving our customers well.
“We believe that through a combination of quick wins, alongside medium-term strategic opportunities, we can deliver a net insurance margin of 13 per cent in 2026.
“I have transformed legacy businesses before and understand what it takes to win in general insurance.”
In a first quarter 2024 trading update published on May 8, 2024, Green Flag’s owner reported it had hit gross written premium and associated fees of £892m – an increase of 10 per cent on the same period in 2023 when the figure hit £805.7m.
