Anexo Group plc

('Anexo' or the 'Group')

Interim Results

"Strong post-lockdown recovery offers new opportunities for growth"

Anexo Group plc (AIM: ANX), the specialist integrated credit hire and legal services provider, is pleased to report Interim Results for the six months ended 30 June 2021 ('H1 2021' or the 'period'). The Board is pleased to report that the Group continued its robust recovery throughout the gradual lifting of the third lockdown. Anexo has continued to invest in its business and the Board is confident in the outcome for FY 2021.

Financial Highlights

Operational Highlights

Commenting on the Interim Results, Alan Sellers, Executive Chairman of Anexo Group plc, said:

"I am pleased to report that the Group has performed robustly during the first half of the year, notwithstanding the considerable challenges posed by the COVID-19 pandemic. Business activity in both our credit hire and legal services divisions have recovered strongly. We continue to put record numbers of vehicles on the road and to maximise cash collections by carefully managing hire periods and increasing the overall number of case settlements.

"The rise in vehicle demand and our continued focus on cash collections provide an excellent opportunity to further implement the Group's fundamental growth strategy. Our existing finance providers have offered increased facilities, the details of which are currently being finalised. These will allow us to increase the deployment of our fleet and accelerate the number of new cases we take on, while enabling ongoing investment in high quality litigators; thereby ensuring we maintain the relationship between new business and settlement capacity which has been the focus of the Group since listing.

"Following the amicable cessation of exploratory takeover talks, DBAY Advisers Ltd retains a seat on the Board as a major supportive shareholder. We believe that our growth strategy offers the best possible opportunity to create significant value for all our shareholders. We remain committed to our stated dividend policy and we look to the future with confidence."

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Results Conference Call

An analyst conference call will be held at 09:30 BST today, 13 September 2021. Retail investors will also be able to listen to the call but will not be eligible to ask questions. A copy of the Interim Results presentation is available at the Group's website: https://www.anexo-group.com/. Please contact Nick Dashwood Brown, Head of Investor Relations, at nick@anexo-group.com if you would like to join the call.

An audio webcast of the conference call with analysts will be available after 12:00 BST today on the Company's website: www.anexo-group.com

For further enquiries:

Notes to Editors:

Anexo is a specialist integrated credit hire and legal services provider. The Group has created a unique business model by combining a direct capture Credit Hire business with a wholly owned Legal Services firm. The integrated business targets the impecunious not at fault motorist, referring to those who do not have the financial means or access to a replacement vehicle.

Through its dedicated Credit Hire sales team and network of over 1,100 active introducers around the UK, Anexo provides customers with an end-to-end service including the provision of Credit Hire vehicles, assistance with repair and recovery, and claims management services. The Group's Legal Services division, Bond Turner, provides the legal support to maximise the recovery of costs through settlement or court action as well as the processing of any associated personal injury claim.

The Group was admitted to trading on AIM in June 2018 with the ticker ANX.

For additional information please visit: www.anexo-group.com. To subscribe to our investor alert service and receive all press releases, financial results and other key shareholder messages as soon as they become available, please visit: https://www.anexo-group.com/content/investors/alert.asp.
 

Executive Chairman's Statement

On behalf of the Board, I am pleased to introduce Anexo's results for the six-month period ended 30 June 2021, a period during which the Group has shown a robust recovery from the restrictions imposed by the COVID pandemic. The increase in traffic levels following the easing of lockdown has led to record numbers of vehicles on the road, while increased case settlements within the legal services division have ensured a significant rise in cash collections.

The continuing demand for vehicles and the ongoing growth in staff levels within legal services combine to provide excellent opportunities for significant growth. The Board has considerable confidence in the prospects for H2 2021 and beyond.

H1 2021 Group Performance

Anexo has delivered a strong performance across all key Group financial metrics and KPIs over the first six months of the year, following a resilient performance during the COVID-19 related lockdowns. Group revenues in H1 2021 increased by 31.9 per cent to £48.3 million (H1 2020: £36.3 million) and profit before tax rose by 40.5 per cent to £8.9 million (H1 2020: £6.3 million).

Credit Hire Division

Demand for vehicles remained strong throughout the lockdown period and continued to increase steadily throughout the various stages of lockdown easing which began on 8 March 2021. The average number of vehicles on the road during H1 2021 reached 1,461 (H1 202: 1,286), a 13.6 per cent increase on the prior year. The rising rate of the recovery in demand is illustrated by the number of vehicles on hire at the period end, which stood at 1,740 as at 30 June 2021, a rise of 26.1 per cent on the same date last year.

This increase led to growth in Credit Hire revenue of 27.1 per cent, rising from £20.7 million in H1 2020 to £26.3 million in H1 2021. Profit before tax in the Credit Hire division rose by 17.0 per cent to £7.97 million in H1 2021 (H1 2020: £6.81 million). Completed vehicle hires rose by 38.2 per cent to 4,081 in H1 2021 (H1 2020: 2,953). This increase has been supported by a number of new protocols with insurance companies and by ongoing investment in technology and staff within the Group's legal subsidiary, Bond Turner. Consequently, the average hire period in H1 2021 fell by 15.9 per cent to 69 days (H1 2020: 82 days).

The Group's active hire fleet currently divides into roughly one third cars and commercial vehicles and two thirds motorcycles. Further strategic investment in the fleet is likely to maintain this ratio. We seek to target the most valuable claims for the Group, which has the effect of improving individual claim performance and driving growth in revenues and profitability over and above the number of vehicles on the road.

Legal Services Division

The Group's longstanding policy is to grow its claim settlement capacity and consequently recruitment has continued throughout the lockdown period, including the opening of the Leeds office in Q1 2021. The number of senior fee earners employed at the end of H1 2021 rose by 27.8 per cent to 175 (H1 2020: 137) and the overall number of legal staff rose from 450 in H1 2020 to 578 in H1 2021, an increase of 28.4 per cent.

This investment has underpinned continued growth in cash collections, which rose 18.1% in H1 2021 to a total of £56.67 million (H1 2020: £47.96 million). Revenues from the Legal Services division, which strongly converts to cash, increased by 38.2 per cent to £22.01 million in H1 2021 (H1 2020: £15.92 million). Profit before taxation rose from £0.84 million in H1 2020 to £2.59 million in H1 2021, an increase of 209 per cent. The Group expects this revenue trend to continue as more of our staff reach maturity from a cash collection and settlement position.

The advocacy team continues to act on behalf of a number of individuals in the pursuit of a claim against Volkswagen AG ("VW") and its subsidiaries (the "VW Emissions case"). Following a marketing campaign in FY 2020 conducted mainly via social media, the Group announced on 27 April 2021 that it was engaged in approximately 14,356 cases. Given the strong recovery in credit hire demand as the lifting of lockdown accelerated, the Board took the decision to concentrate its working capital on maximising fleet utilisation and corresponding capacity within the Legal Services division. Consequently there has been no marketing spend on the VW Emissions case in H1 2021 and the number of cases remains broadly unchanged. The Group anticipates further developments in the case during H2 2021.

Dividend

The Board is pleased to propose an interim dividend of 0.5p per share which will paid on 22 October 2021 to those shareholders on the register at the close of business on 24 September 2021. The shares will become ex-dividend on 23 September 2021. The Board intends to maintain its stated dividend policy.

Trading Outlook

Current activity levels indicate a strong second half performance for the Credit Hire division. The number of vehicles on the road is consistently reaching record levels and, as of 7 September 2021, stands at 2,023. The outlook for the Legal Services division is also strongly positive, with case settlements and consequent cash collections set to increase as the courts re-open fully and the backlog of cases diminishes.

The Group's finance providers have proposed increases in our debt facilities and the Board anticipates that agreements will be concluded shortly. Current market conditions offer significant opportunities and the Board believes that reaffirming its growth strategy will benefit both the Credit Hire and Legal Services divisions and contribute to the creation of value for all our shareholders. The Board looks to the second half of 2021 and beyond with renewed optimism.

Alan Sellers

Executive Chairman

13 September 2021

Consolidated Statement of Comprehensive Income

For the unaudited period ended 30 June 2021

The above results were derived from continuing operations.

Consolidated Statement of Financial Position

Unaudited at 30 June 2021

Consolidated Statement of Changes in Equity

For the unaudited period ended 30 June 2021

Anexo Group Plc

Consolidated Statement of Cash Flows

For the unaudited period ended 30 June 2021

Anexo Group Plc

Notes to the Interim Statements

For the unaudited period ended 30 June 2021

1.         Basis of preparation and significant accounting policies

The condensed consolidated financial statements are prepared using accounting policies consistent with International Financial Reporting Standards and in accordance with International Accounting Standard ('IAS') 34, 'Interim Financial Reporting'.

The information for the year ended 31 December 2020 does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  A copy of the statutory accounts for that year has been delivered to the Registrar of Companies.  The auditor's report on these accounts was not qualified and did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain statements under Section 498 (2) or (3) of the Companies Act 2006.

The condensed unaudited financial statements for the six months to 30 June 2021 have not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

The condensed consolidated financial statements have been prepared under the going concern assumption.

The Directors have assessed the future funding requirement of the Group, and have compared them to the levels of available cash and funding resources.  The assessment included a review of current financial projections to December 2022.  Having undertaken this work, the Directors are of the opinion that the Group has adequate resources to finance its operations for the foreseeable future and accordingly, continue to adopt the going concern basis in preparing the Interim Report.

2.         Segmental Reporting

The Group's reportable segments are as follows:

·      the provision of credit hire vehicles to individuals who have had a non-fault accident, and

·      associated legal services in the support of the individual provided with a vehicle by the Group and other legal service activities, and

·      investment in the Volkswagen class action, and

·      Group and central costs.

Management monitors the operating results of business segments separately for the purpose of making decisions about resources to be allocated and of assessing performance.

Half year ended 30 June 2021

Half year ended 30 June 2020

Year ended 31 December 2020

3.                  Property, Plant and Equipment

4.         Trade and Other Receivables

The Group's exposure to credit and market risks, including impairments and allowances for credit losses, relating to trade and other receivables is disclosed in the financial risk management and impairment of financial assets note.

Trade receivables stated above include amounts due at the end of the reporting period for which an allowance for doubtful debts has not been recognised as the amounts are still considered recoverable and there has been no significant change in credit quality.

5.         Borrowings

Direct Accident Management Limited uses an invoice discounting facility which is secured on the trade receivables of that company. Security held in relation to the facility includes a debenture over all assets of Direct Accident Management Limited dated 11 October 2016, extended to cover the assets of Anexo Group Plc and Edge Vehicles Rentals Group Limited from 20 June 2018 and 28 June 2018 respectively, as well as a cross corporate guarantee with Professional and Legal Services Limited dated 21 February 2018.

In July 2020 Direct Accident Management Limited secured a £5.0 million loan facility from Secure Trust Bank Plc, under the Government's CLBILS scheme. The loan was secured on a repayment basis over the three year period, with a three month capital repayment holiday, £2.0 million of which was to be paid as a final instalment.

Direct Accident Management Limited is also party to the number of finance leases which are secured over the respective assets funded.

The revolving credit facility is secured by way of a fixed charge dated 26 September 2019, over all present and future property, assets and rights (including uncalled capital) of Bond Turner Limited. The loan is structured as a revolving credit facility which is committed for a three-year period, until 27 September 2022, with no associated repayments due before that date. Interest is charged at 3.25% over LIBOR.

In July 2020 Anexo Group Plc secured a loan of £2.1m from a specialist litigation funder to support the investment in marketing costs associated with the VW Emissions Class Action. The terms of the loan are that interest accrues at the rate of 10% per annum, with maturity at the earlier of settlement of the claim and receipt of the proceeds or three years from the date of receipt of funding. In addition to the interest charges the loan attracts a share of the proceeds to be determined by reference to the level of fees generated for the Group.

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