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Anexo Group PLC Interim Results

13/08/2020 7:00am

UK Regulatory (RNS & others)


Anexo (LSE:ANX)
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From Jul 2020 to Oct 2020

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TIDMANX

RNS Number : 9811V

Anexo Group PLC

13 August 2020

 
 For immediate release   13 August 2020 
 

Anexo Group plc

('Anexo' or the 'Group')

Interim Results

"Increased cash collections lead to milestone of net cash generation"

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 2020 ('H1 2020' or the 'period'). The Board is pleased to report that the Group has attained its target of net cash generation throughout the period. This milestone has been achieved against the backdrop of the COVID-19 pandemic which, despite the Group's two core divisions remaining fully operational throughout, has inevitably affected performance in the latter part of H1 2020. In particular, the number of vehicles on the road fell sharply as the UK went into lockdown, but has since recovered to exceed recent peaks. Anexo has continued to invest in its business and the Board is confident in the outcome for FY 2020.

Financial Highlights

 
                                 H1 2020            H1 2019   Movement 
 Revenue                 GBP36.6 million    GBP36.7 million      -0.3% 
 Adjusted operating 
  profit(1)               GBP7.8 million    GBP11.8 million     -33.9% 
 Adjusted profit 
  before tax(1,2)         GBP6.7 million    GBP10.8 million     -38.0% 
 Net assets             GBP103.9 million    GBP82.9 million     +25.4% 
 Cash collection         GBP48.0 million    GBP36.6 million     +30.9% 
 Basic EPS                     4.5 pence          7.6 pence     -40.7% 
 
 
 --   Net cash inflow from operating activities of GBP6.2 million 
       (H1 2019: net cash inflow GBP2.5 million) 
 --   Overall net cash inflow (excluding the recent fundraise) 
       of GBP2.4 million (H1 2019: net cash outflow GBP7.0 million) 
 --   Significant reduction in cash absorbed into working capital 
       reducing from GBP13.0 million in H1 2019 to GBP4.5 million 
       in H1 2020, supporting the cash generative nature of the 
       Group during the period 
 --   Overall reduction of GBP4.0 million in adjusted operating 
       profit, largely as a result of investment in staff to 
       drive settlements and cash receipts in FY 2021 (GBP2.6 
       million), investment in the VW case acquisition (GBP0.7 
       million) and office and IT costs associated with the headcount 
       increase (GBP0.5 million) 
 --   Proposed interim dividend of 0.5p per share (H1 2019: 
       1 penny per share) 
 --   Net debt balance at 30 June 2020 stood at GBP19.6 million 
       (30 June 2019: net debt of GBP23.4 million) 
 --   The Board expects H2 2020 underlying profit before tax 
       (before investment in VW emissions case acquisition) to 
       recover strongly 
 

(1) Adjusted results exclude share based payments.

(2) After expenditure of GBP4.0m on staff expansion, VW case acquisition and associated costs

Operational Highlights

 
 
     *    Anexo has attained its target of net cash generation 
          throughout the period in line with the strategy set 
          out at IPO 
 
     *    Successful Placing in May 2020 to raise GBP7.0 
          million to expand the advocacy and specialist 
          litigation team with specific emphasis on funding the 
          acquisition and processing of VW emissions cases and 
          support opening of new office in Leeds in FY 2020 
 
     *    The Group raised an additional GBP2.1 million from a 
          litigation funder to allow capital to continue to be 
          deployed into client acquisition in relation to the 
          VW emissions case without detracting from our core 
          business. The Group has further increased its capital 
          base with GBP5.0 million drawn from the Governments 
          CBILS scheme in July 2020 
 
     *    The COVID 19 impact on activity levels in the Credit 
          Hire division was particularly evident in H1 2020 and 
          affected revenue generation, but the number of the 
          Group's vehicles on the road as we enter the second 
          half of the year is ahead of our own internal targets 
          and currently stands at 1,575 vehicles as at 12 
          August 2020 
 
     *    As anticipated, as a result of the COVID 19 pandemic 
          there was a reduction in settlement efficiency for 
          the Legal Services division as staff were 
          transitioned to working from home. This, combined 
          with the costs associated with opening the second 
          floor within the Bolton office and associated staff 
          investment and recruitment, have led to both a 
          reduction in cash receipts and fee income and an 
          increased cost base 
 
     *    As high-quality new lawyers reach case maturity and 
          staff return to the office Anexo expects a return to 
          previous efficiencies and increases in settlements 
          and cash collections in H2 2020 
 
 
 KPIs                              H1 2020   H1 2019   Movement 
 Number of vehicles on hire 
  at the period end                  1,380     1,571     -12.2% 
 Average number of vehicles 
  on hire for the period             1,286     1,496     -14.0% 
 Completed vehicle hires             2,953     3,363     -12.2% 
 Number of hire cases settled        2,622     2,066     +26.9% 
 Cash collections from settled 
  cases (GBP'000s)                  47,961    36,628     +30.9% 
 Number of new cases funded          3,025     3,392     -10.8% 
 Legal staff employed at period 
  end                                  450       344     +30.8% 
 Number of senior fee earners 
  at period end                        137       109     +25.7% 
 Average number of senior fee 
  earners                              134        98     +36.7% 
 

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

"I am pleased to report that Anexo has hit its target of becoming cash generative in the period. As we set out at IPO in 2018, our strategy was to invest and expand the Group's Legal Services division in order to increase the number of cases settled and therefore boost cash collections and maximise the value from the extensive back log of cases in our portfolio. Our ability to deliver on the strategy sends a clear message about Anexo's ability to deliver results to our shareholders, and will give confidence in the Group as we look to expand our unique business model and make the most of the significant market opportunity.

"The COVID 19 pandemic has undoubtedly impacted the Group in the first six months of the year, but as we see activity levels for our Credit Hire division returning to normal, and the case portfolio of our expanded Legal Services division matures and case settlement efficiency improves, we are confident that both revenue generation and earnings growth should return in the second half.

"As we continue to offer dividends to our shareholders and reinstate market guidance, we look forward to the future with confidence."

- Ends -

Analyst meeting

A conference call for analysts only will be held at 09.30am today, 13 August 2020. A copy of the Interim Results presentation is available at the Group's website: https://www.anexo-group.com/ . Please contact Buchanan if you would like to join the call.

An audio webcast of the conference call with analysts will be available after 12pm today: https://webcasting.buchanan.uk.com/broadcast/5f0eccdb4c167c121579686c

For further enquiries:

 
 Anexo Group plc                                +44 (0) 151 227 3008 
                                                 www.anexo-group.com 
 Alan Sellers, Executive Chairman 
  Mark Bringloe, Chief Financial Officer 
  Nick Dashwood Brown, Head of Investor 
  Relations 
 
   Arden Partners plc 
   (Nominated Adviser and Broker) 
 John Llewellyn-Lloyd / Benjamin Cryer          +44 (0) 20 7614 5900 
  (Corporate)                               www.arden-partners.co.uk 
  Fraser Marshall (Equity Sales) 
 
   Berenberg                                    +44 (0) 20 3207 7800 
   (Joint Broker)                                   www.berenberg.de 
   Mark Whitmore/Yudith Karunaratna 
 
   Buchanan 
   (Financial Communications) 
 Henry Harrison-Topham / Steph Watson           +44 (0) 20 7466 5000 
  / Hannah Ratcliff                            Anexo@buchanan.uk.com 
 

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 2020, a period during in which the Group has achieved its target of becoming net cash generative.

As in 2019, and notwithstanding the issues associated with the COVID-19 pandemic, the Group has continued to focus on the legal services business, with efforts and investment driving settlement capacity and cash collections from the recruitment of a significant number of senior litigators across both the Liverpool and Bolton offices.

This investment has driven value from within our extensive case portfolio, and as a result the Group has reported an overall net cash inflow (excluding proceeds from the recent placing) of GBP2.4 million. This is a milestone for the Group and represents a significant improvement over the position in H1 2019 where GBP7.0 million of cash was absorbed, and that of H2 2019, where a further GBP1.5 million of cash was absorbed.

The most significant contributory factor to this trend remains cash collections from settled cases. Driven by the continued investment in legal staff, these reached GBP48.0 million in H1 2020, an increase of 30.9% on H1 2019 (GBP36.6 million) and a slight increase over that seen in H2 2019, which totalled GBP47.5 million. The cash collections figure should be viewed in the light of the impact of the COVID-19 pandemic. As previously announced, our Legal Services division has remained operational throughout the lockdown period. Many of our staff have transitioned to working from home and the court system has remained open for hearings via video conference or telephone. Notwithstanding the ability of the division to adapt, there were significant logistical challenges for our litigators, as there were for the insurers, the defence law firms and the courts, as they all battled to work through the widespread disruption of normal working practices. This inevitably had an effect on the ability of our staff to agree settlements with their counterparty representatives and to expedite the consequent collection of cash. We are encouraged by the speed with which our staff have returned to normal working practices following the end of formal lockdown.

The credit hire business has also been affected by the effects of the pandemic. The number of vehicles on the road fell sharply at the end of March 2020 as the UK went into lockdown. At the lowest point during this period our weekly levels of new business fell to around 25% of our normal expected volumes.

It has been pleasing, therefore, to see activity levels recovering quickly. This has been particularly helped by the large element of our business focussed upon the courier market, which predominantly concentrates on smaller motorcycles of 125cc and below. As a consequence, the number of vehicles on the road as we enter the second half of the year is ahead of our own post-pandemic internal targets. The initial drop-off has inevitably impacted H1 2020, with the average number of vehicles on the road falling 14% to 1,286 (H1 2019: 1,496). The number of vehicles on the road drives revenues and performance in the Credit Hire division, as do cash collections for the Legal Services division. Both of these were affected by the pandemic and further details of this impact are given below.

H1 2020 Group performance

Anexo delivered a strong performance across all key financial metrics and KPIs in 2019 and that trend broadly continued into H1 2020. Nevertheless, the reported results for the full six months have been impacted at both a profit and cash perspective by the COVID-19 pandemic. Whilst revenues at a Group level were in line with those reported in H1 2019, reaching GBP36.6 million, they were 12.3% below H2 2019 (GBP41.8 million) as both the number of cases funded reduced and the investment in legal staff continued. The unavoidable reduction in settlement efficiency as staff were transitioned to working from home inevitably meant that the division, despite its increased staffing levels, did not enjoy a corresponding increase in cash receipts and fee income in the short term. Overall wages and salary costs within the Legal Services division, which are expensed as incurred, increased from GBP6.0 million in H1 2019 to GBP8.0 million in H2 2019 to GBP8.8 million in H1 2020. As a result of this and combined with GBP0.4 million of VW marketing costs, which have also been expensed as incurred, alongside an increased investment in office and IT costs (GBP0.5 million), adjusted operating profit reduced in H1 2020 to GBP7.8 million from GBP11.8 million in H1 2019 (H2 2019: GBP13.4 million). This illustrates the impact which the COVID-19 pandemic has had on the Group trading performance but equally shows the division's success in attracting high-quality staff and the commensurate prospects for increased cash collections as settlement efficiencies return and the new recruits reach case maturity.

Credit Hire division

As previously reported in 2019, Anexo has continued to carefully manage growth in the Credit Hire division so as to focus investment on increasing settlement capacity within the Legal Services division. This strategy, alongside the impact of the COVID-19 pandemic, has resulted in a decline in activity levels between H1 2019 and H1 2020. The number of completed vehicle hires reduced from 3,363 to 2,953 respectively during this period and the impact of the COVID-19 pandemic is particularly apparent between H2 2019 (completed hires: 3,819) and H1 2020 where activity fell by 23.0%.

Whilst the average number of vehicles on the road declined by 14.0% period to period to 1,286 in H1 2020 (H1 2019: 1,496), it reached 1,380 at the end of H1 2020, reflecting the sharp recovery in activity levels. The number of vehicles on the road now exceeds the Group's own post COVID-19 expectations, reflecting our strong offering to the market and increased market share due to a number of our competitors reducing or ceasing activity in the sector.

This decline in activity impacted the trading performance of the division with revenues declining by 10.7% to GBP20.7 million in H1 2020 (H1 2019: GBP23.2 million), and profit before tax declining from GBP8.3 million in H1 2019 to GBP6.8 million in H1 2020. However, we have continued to see improvements in the value of each claim taken on as our sales team remains focused on generating the best possible opportunities for us to deploy working capital. We expect this policy and trend to continue as competition reduces.

Legal Services division

As noted above, effort remains focused on growing the claim settlement capacity of the Group and recruitment has continued throughout H1 2020 with the number of senior fee earners rising from 106 at the end of H1 2019 to 127 at the end of FY 2019 to 137 at the end of H1 2020. We have continued to recruit staff during this period and the fact that many of our peers have been making redundancies has provided opportunities for the Group to add to its pool of specialist litigators. It is also worth noting that the Group did not furlough any staff during the period.

This investment continues to drive growth in cash collections, despite the impact on growth levels caused by transitioning our staff to work from home and the impact of the COVID-19 pandemic on the insurers, their legal representatives and the courts. Cash collections increased by GBP11.3 million or 30.9% between H1 2019 and H1 2020, rising to GBP48.0 million from GBP36.6 million. The figure for H1 2020 was slightly above that seen in H2 2019 (GBP47.5 million) and, while positive in itself, this demonstrates the impact of the COVID-19 pandemic on our ability to settle cases and generate cash for the Group.

With our offices remaining open throughout the period, a large proportion of our staff have now returned to their office locations. We have introduced a fully flexible 24-hour working day alongside measures to ensure our staff are operating in as safe an office environment as they can. These measures are expected to result in a return to previous efficiencies and increases in settlements and cash collections into H2 2020.

Revenues for the Legal Services division, which strongly converts to cash, showed an increase of 17.8%, reaching GBP15.9 million in H1 2020 (H1 2019: GBP13.5 million). Profit before taxation declined to GBP0.6 million (H1 2019: GBP2.3 million), reflecting the significant investment in the new Bolton office and associated staff recruitment costs. As noted above, staffing costs within the Legal Services division increased from GBP6.0 million in H1 2019 to GBP8.8 million in H1 2020. As a result of the slowdown caused by the COVID-19 pandemic, the full effect of this investment has yet to be seen. Nevertheless, the number and quality of the senior staff we now have as well as our existing backlog of quality cases, puts the Group in a strong position to benefit as we return to more normal times. Noting the working capital cycle of a typical case and the timeline for settlement inherent in the court process, an experienced litigator will not reach capacity from a settlement and cash collection position for at least nine to twelve months, a period which has been extended in some cases due to COVID-19. Consequently, the considerable benefits to cash collections from the Group's investment in FY2019, initially expected in early FY2020, are expected to be seen later in the cycle.

With Bolton out-performing management's expectations, property negotiations continue to ensure the Leeds office is open and operational in FY 2020.

As previously outlined, Bond Turner also operates an in-house advocacy and specialist litigation team which handles complex professional and clinical negligence claims. Many of these constitute high value and high profile cases, some of which have been ongoing for many years; one example is the class action concerning historic abuse at Aston Hall psychiatric hospital. The case was settled for the clients in 2019 and negotiations regarding our associated legal fees continue.

More recently the advocacy team commenced action on behalf of a number of individuals who have registered their intention to pursue a claim against Volkswagen AG ("VW") and its subsidiaries (the "VW Emissions case"). The Group is currently actively engaged on approximately 10,700 cases following a limited marketing campaign in late 2019 and mid 2020 which was predominantly conducted through social media channels, the costs of which have been expensed as incurred. Approximately GBP935,000 was invested and expensed in H2 2019 in marketing, IT and staffing costs, with an additional GBP689,000 being invested in H1 2020 to drive additional claimants to the Group.

The Board notes the decision by the Court of Appeal, announced on 7 August 2020, to refuse Volkswagen permission to appeal against the High Court judgement of 6 April 2020. This decision reinforces the Board's belief that a settlement is both desirable and necessary. In the event of any settlement, the percentage of potential damages and associated costs accruing to the Group would have a significant positive impact on the Group's expectations for profits and cash flow for the relevant accounting period. Any revenue from a settlement would be unlikely to accrue until FY 2021 at the earliest. There is no certainty that a settlement in favour of the Group's clients will be reached, nor is there any guarantee that such a settlement would include financial compensation.

However, the current state of the proposed litigation process has led the Group to raise GBP2.1 million from a litigation funder to provide capital for further client acquisition without detracting from our core business. As explained in note 2 to the accounts, we have expanded our segmental reporting disclosures to provide transparency into the underlying level of performance of the core business and areas of investment.

Dividend

The Board is pleased to propose an interim dividend of 0.5p per share which will be paid on 23 September 2020 to those shareholders on the register at the close of business on 28 August 2020. The shares will become ex-dividend on 27 August 2020. The Board intends to maintain its progressive dividend policy over the full year but with a greater weighting towards the second half.

Trading Outlook

Having seen a decline in activity levels and cash collections in H1 2020 as a result of the global pandemic, recent activity levels indicate a strong second half performance for the Credit Hire division. The outlook for the Legal Services division is also positive with recruitment continuing as the market remains challenging for many competing legal businesses. Recovery to the levels originally envisaged in cash collections is expected to be somewhat slower to recover than credit hire activity; however, the return of our staff to the office and recent trends indicate positive momentum in what is traditionally a slower period during the summer months.

The recent fundraise, generating GBP7.0 million of funds after expenses, alongside the GBP2.1 million secured to support the investment in VW and GBP5.0 million drawn from Secure Trust Bank Plc in July 2020, under the Government backed CBILS scheme, has resulted in a significant improvement in cash headroom for the Group. This will allow us to continue to take advantage of growth opportunities in the market whilst pursuing our core strategy of increasing cash generation from the Group's significant case portfolio.

Anexo has weathered the unprecedented storm of the COVID-19 pandemic extremely well and the Board is very proud of the fact that both its core divisions remained operational throughout. The Board is confident of the Group's ability to continue on its growth trajectory and, mindful of the significant possible opportunities which may arise from the current disruption, looks to the future with considerable optimism.

While uncertainty remains on the future economic impacts of the COVID-19 pandemic, with seven months of trading completed the Board is pleased to provide the following guidance to the market.

-- Despite a challenging H1 2020, the Board notes the rebound in vehicle numbers within the Credit Hire division and is confident that H2 2020 should recover strongly.

-- The Group is anticipating significantly increased planned investment in staff and marketing in relation to the VW emissions case of circa GBP4.0 million for H2 2020. The Group takes the prudent accounting approach of expensing all these costs in full at the time of spend.

-- This investment, which will be separately disclosed by the Group going forward, will be funded through both a portion of the funds raised in May 2020 and the newly agreed facility of GBP2.1 million from a litigation funder.

-- While this investment will impact overall cash flow, the Board expects the core credit hire and legal services business to continue to be cash generative in H2 2020.

Alan Sellers

Executive Chairman

13 August 2020

Consolidated Statement of Comprehensive Income

For the unaudited period ended 30 June 2020

 
                                                Unaudited   Unaudited      Audited 
                                                Half year   Half year 
                                                    ended       ended   Year ended 
                                                30-Jun-20   30-Jun-19    31-Dec-19 
                                        Note     GBP'000s    GBP'000s     GBP'000s 
 
 Revenue                                           36,625      36,717       78,510 
 Cost of sales                                    (7,560)     (7,225)     (15,703) 
                                               ----------  ----------  ----------- 
 Gross profit                                      29,065      29,492       62,807 
 
 Depreciation & gain on sale 
  of fixed assets                                 (1,122)     (1,192)      (2,327) 
 Depreciation on right of use 
  assets                                          (2,041)     (2,849)      (4,220) 
 Amortisation                                        (44)           -         (35) 
 Administrative expenses                         (18,044)    (13,638)     (30,975) 
 Operating profit before exceptional 
  items                                             7,814      11,813       25,250 
                                               ----------  ----------  ----------- 
 
 Share based payment charges                        (329)       (329)        (657) 
 Non-recurring administrative 
  expenses                                              -           -            - 
 Operating profit                                   7,485      11,484       24,593 
                                               ----------  ----------  ----------- 
 
 Finance costs                                      (965)       (762)      (1,801) 
 Lease finance costs                                (176)       (292)        (401) 
 Total finance costs                              (1,141)     (1,054)      (2,202) 
 
 Profit before tax                                  6,344      10,430       22,391 
 Taxation                                         (1,374)     (2,045)      (4,403) 
 Profit and total comprehensive 
  income for the year attributable 
  to the owners of the company                      4,970       8,385       17,988 
                                               ----------  ----------  ----------- 
 
 Earnings per share 
 Basic earnings per share (pence)                     4.5         7.6         16.4 
                                               ----------  ----------  ----------- 
 
 Diluted earnings per share (pence)                   4.4         7.4         16.0 
                                               ----------  ----------  ----------- 
 

The above results were derived from continuing operations.

Consolidated Statement of Financial Position

Unaudited at 30 June 2020

 
                                          Unaudited   Unaudited     Audited 
                                          30-Jun-20   30-Jun-19   31-Dec-19 
 Assets                           Note     GBP'000s    GBP'000s    GBP'000s 
 Non-current assets 
 Property, plant and equipment                4,056       3,233       3,673 
 Right-of-use assets                          7,129       9,815       7,821 
 Intangible assets                              191           -         175 
                                         ----------  ----------  ---------- 
                                             11,376      13,048      11,669 
                                         ----------  ----------  ---------- 
 Current assets 
 Trade and other receivables                132,379     116,841     127,768 
 Cash and cash equivalents                   11,211         491       2,270 
                                            143,590     117,332     130,038 
                                         ----------  ----------  ---------- 
 
 Total assets                               154,966     130,380     141,707 
                                         ----------  ----------  ---------- 
 
 Equity and liabilities 
 Equity 
 Share capital                                   58          55          55 
 Share premium                               16,180       9,235       9,235 
 Share based payment reserve                  1,370         713       1,041 
 Retained earnings                           86,334      72,862      81,365 
                                         ----------  ----------  ---------- 
 Equity attributable to the owners 
  of the Group                              103,942      82,865      91,696 
                                         ----------  ----------  ---------- 
 
 Non-current liabilities 
 Other interest-bearing loans 
  and borrowings                              2,712           -         393 
 Lease liabilities                            4,885       5,150       5,029 
 Deferred tax liabilities                         -          20          32 
                                              7,597       5,170       5,454 
                                         ----------  ----------  ---------- 
 
 Current liabilities 
 Bank overdraft                              17,320      14,532      17,784 
 Other interest-bearing loans 
  and borrowings                             10,813       9,382      12,144 
 Lease liabilities                            2,599       4,927       3,124 
 Trade and other payables                     7,726       9,118       7,915 
 Corporation tax liability                    4,969       4,386       3,590 
                                             43,427      42,345      44,557 
                                         ----------  ----------  ---------- 
 
 Total liabilities                           51,024      47,515      50,011 
                                         ----------  ----------  ---------- 
 
 Total equity and liabilities               154,966     130,380     141,707 
                                         ----------  ----------  ---------- 
 
 

Consolidated Statement of Changes in Equity

For the unaudited period ended 30 June 2020

 
                                                       Share 
                                                       based 
                                 Share      Share    payment    Retained 
                               capital    premium    reserve    earnings      Total 
                              GBP'000s   GBP'000s   GBP'000s    GBP'000s   GBP'000s 
 
 At 1 January 2020                  55      9,235      1,041      81,365     91,696 
 Profit for the year 
  and total comprehensive 
  income                             -          -          -       4,970      4,970 
 Issue of share 
  capital                            3      6,944          -           -      6,947 
 Share based payments                -          -        329           -        329 
 Dividends                           -          -          -           -          - 
 
 At 30 June 2020                    58     16,179      1,370      86,335    103,942 
                             ---------  ---------  ---------  ----------  --------- 
 
 At 1 January 2019                  55      9,235        384      66,127     75,801 
 Profit for the year 
  and total comprehensive 
  income                             -          -          -       8,385      8,385 
 Share based payments                -          -        329           -        329 
 Dividends                           -          -          -     (1,650)    (1,650) 
 
 At 30 June 2019                    55      9,235        713      72,862     82,865 
 Profit for the year 
  and total comprehensive 
  income                             -          -          -       9,603      9,603 
 Creation of share 
  based payments 
  reserve                            -          -        328           -        328 
 Dividends                           -          -          -     (1,100)    (1,100) 
 
 At 31 December 
  2019                              55      9,235      1,041      81,365     91,696 
                             ---------  ---------  ---------  ----------  --------- 
 
 
 

Anexo Group Plc

Consolidated Statement of Cash Flows

For the unaudited period ended 30 June 2020

 
                                     Unaudited   Unaudited 
                                     Half year   Half year       Audited 
                                         ended       ended    Year ended 
                                     30-Jun-20   30-Jun-19     31-Dec-19 
                                      GBP'000s    GBP'000s      GBP'000s 
 Cash flows from operating 
  activities 
 Profit for the year                     4,970       8,385        17,988 
 Adjustments for: 
 Depreciation and amortisation           3,163       4,041         6,574 
 Amortisation                               44           -            35 
 Financial expense                       1,141       1,054         2,202 
 Taxation                                1,374       2,045         4,403 
                                    ----------  ----------  ------------ 
                                        10,692      15,525        31,175 
 Working capital adjustments 
 Increase in trade and other 
  receivables                          (4,611)    (15,211)      (26,294) 
 Increase in trade and other 
  payables                                 137       2,225         1,351 
                                    ----------  ----------  ------------ 
 Cash generated from operations          6,218       2,539         6,232 
 
 Interest paid                           (965)       (762)       (1,797) 
 Tax paid                                 (27)     (2,240)       (5,230) 
 Net cash from operating 
  activities                             5,226       (463)         (795) 
                                    ----------  ----------  ------------ 
 
 Cash flows from investing 
  activities 
 Proceeds from sale of property, 
  plant and equipment                      476         195           374 
 Acquisition of property, plant 
  and equipment                        (1,981)     (1,349)       (3,104) 
 Investment in intangible fixed 
  assets                                  (59)           -         (210) 
 Net cash from investing 
  activities                           (1,564)     (1,154)       (2,940) 
                                    ----------  ----------  ------------ 
 
 Cash flows from financing 
  activities 
 Net proceeds from the issue 
  of 
  share capital                          6,947           -             - 
 Proceeds from new loan                  3,324           -        13,107 
 Dividends                                   -     (1,650)       (2,750) 
 Repayment of borrowings               (2,706)       (210)      (10,920) 
 Lease payments                        (2,193)     (2,879)       (4,289) 
 Payment of finance lease 
  liabilities                          (1,098)       (681)       (2,225) 
 New finance lease arrangements          1,469           -         2,302 
 Net cash from financing 
  activities                             5,743     (5,420)       (4,775) 
                                    ----------  ----------  ------------ 
 
 Net increase / (decrease) in 
  cash and cash equivalents              9,405     (7,037)       (8,510) 
 Cash and cash equivalents 
  at 1 January                        (15,514)     (7,004)       (7,004) 
 Cash and cash equivalents 
  at period end                        (6,109)    (14,041)      (15,514) 
                                    ----------  ----------  ------------ 
 
 

Anexo Group Plc

Notes to the Interim Statements

For the unaudited period ended 30 June 2020

   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 2019 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 2020 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 2021. 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 2020

 
                                                            VW Class   Group and 
                                                              Action     Central 
                             Credit Hire   Legal Services                  Costs   Consolidated 
                                GBP'000s         GBP'000s   GBP'000s    GBP'000s       GBP'000s 
 Revenues 
 Third party                      20,702           15,923          -           -         36,625 
 Total revenues                   20,702           15,923          -           -         36,625 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Profit before taxation            6,812              837      (689)       (616)          6,344 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Net cash from operations          4,553            1,931      (689)       (569)          5,226 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Depreciation                      2,802              361          -           -          3,163 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Segment assets                  107,511           44,363          -       3,092        154,966 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Capital expenditure               1,657              324          -           -          1,981 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Segment liabilities              29,905           18,813      2,022         284         51,024 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 
 
 
 
 
 
 

Half year ended 30 June 2019

 
                                                            VW Class   Group and 
                                                              Action     Central 
                             Credit Hire   Legal Services                  Costs   Consolidated 
                                GBP'000s         GBP'000s   GBP'000s    GBP'000s       GBP'000s 
 Revenues 
 Third party                      23,197           13,520          -           -         36,717 
 Total revenues                   23,197           13,520          -           -         36,717 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Profit before taxation            8,348            2,322          -       (240)         10,430 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Net cash from operations          (405)              287          -       (345)          (463) 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Depreciation                      3,693              348          -           -          4,041 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Segment assets                   89,785           40,498          -          97        130,380 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Capital expenditure               1,007              342          -           -          1,349 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Segment liabilities              31,940           15,295          -         280         47,515 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 
 

Year ended 31 December 2019

 
                                                            VW Class   Group and 
                                                              Action     Central 
                             Credit Hire   Legal Services                  Costs   Consolidated 
                                GBP'000s         GBP'000s   GBP'000s    GBP'000s       GBP'000s 
 Revenues 
 Third party                      47,981           30,529          -           -         78,510 
 Total revenues                   47,981           30,529          -           -         78,510 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Profit before taxation           17,915            6,857      (935)     (1,446)         22,391 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Net cash from operations        (1,360)            2,427      (935)       (927)          (795) 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Depreciation                      5,767              780          -           -          6,547 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Segment assets                   97,177           44,351          -         179        141,707 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Capital expenditure               2,131              973          -           -          3,104 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 Segment liabilities              30,765           18,935          -         311         50,011 
                            ------------  ---------------  ---------  ----------  ------------- 
 
 
 
   3.                  Property, Plant and Equipment 
 
                                          Fixtures 
                                          fittings 
                              Property           &      Motor      Office 
                           improvement   equipment   vehicles   equipment      Total 
                              GBP'000s    GBP'000s   GBP'000s    GBP'000s   GBP'000s 
 Cost or valuation 
 At 1 January 2019                 341         794      4,457         731      6,323 
 Additions                           -         338        983          28      1,349 
 Disposals                           -           -      (751)        (30)      (781) 
                          ------------  ----------  ---------  ----------  --------- 
 At 30 June 2019                   341       1,132      4,689         729      6,891 
 Additions                         112         649        938          58      1,757 
 Adjustment / Disposals              -           -      (492)           -      (492) 
                          ------------  ----------  ---------  ----------  --------- 
 At 31 December 
  2019                             453       1,781      5,135         787      8,156 
 Additions                          23         289      1,633          52      1,997 
 Disposals                           -           -    (1,571)           -    (1,571) 
 At 30 June 2020                   476       2,070      5,197         839      8,582 
                          ------------  ----------  ---------  ----------  --------- 
 
 Depreciation 
 At 1 January 2019                 258         246      1,907         642      3,053 
 Charge for year                     5          84      1,086          17      1,192 
 Eliminated on disposal              -           -      (559)        (28)      (587) 
 At 30 June 2019                   263         330      2,434         631      3,658 
 Charge for the 
  year                              10         130      1,082          20      1,242 
 Adjustment / disposals              -           -      (417)           -      (417) 
                          ------------  ----------  ---------  ----------  --------- 
 At 31 December 
  2019                             273         460      3,099         651      4,483 
 Charge for the 
  year                              16         177      1,044          20      1,257 
 Adjustment / disposals              -           -    (1,214)           -    (1,214) 
 At 30 June 2020                   289         637      2,929         671      4,526 
                          ------------  ----------  ---------  ----------  --------- 
 
 
 Carrying amount 
 At 30 June 2020                   187       1,433      2,268         168      4,056 
                          ------------  ----------  ---------  ----------  --------- 
 
 At 31 December 
  2019                             180       1,321      2,036         136      3,673 
                          ------------  ----------  ---------  ----------  --------- 
 
 At 30 June 2019                    78         802      2,255          98      3,233 
                          ------------  ----------  ---------  ----------  --------- 
 
 
 
   4.         Trade and Other Receivables 
 
                                    Jun-20      Jun-19      Dec-19 
                                  GBP'000s    GBP'000s    GBP'000s 
 
 Trade receivables                 241,395     193,971     220,463 
 Provision for impairment of 
  trade receivables              (127,291)   (104,039)   (119,479) 
                                ----------  ----------  ---------- 
 Net trade receivables             114,104      89,932     100,984 
 Prepayments and accrued 
  income                            17,347      24,868      24,948 
 Other debtors                         816       2,041       1,414 
 Deferred taxation                     112           -         112 
 
                                   132,379     116,841     127,768 
                                ----------  ----------  ---------- 
 
 

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 
 
 
                                        Jun-20     Jun-19     Dec-19 
                                      GBP'000s   GBP'000s   GBP'000s 
 Non-current loans and borrowings 
 Bank loans and overdrafts                   -          -          - 
 Obligations under finance lease 
  and hire purchase contracts              691          -        393 
 Other borrowings                        2,021          -          - 
 Lease liabilities                       4,885      5,150      5,029 
                                     ---------  ---------  --------- 
                                         7,597      5,150      5,422 
                                     ---------  ---------  --------- 
 
 Current loans and borrowings 
 Bank loans and overdrafts              17,320     14,532     17,784 
 Revolving credit facility               8,000      5,000      8,000 
 Obligations under finance lease 
  and hire purchase contracts            1,605      2,337      1,761 
 Other borrowings                        1,208      2,045      2,383 
 Lease liabilities                       2,599      4,927      3,124 
                                        30,732     28,841     33,052 
                                     ---------  ---------  --------- 
 
 
 

Direct Accident Management Limited uses an invoice discounting facility which is secured on the trade receivables of that company, the balance outstanding being reported within bank loans and overdrafts. 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. 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.

 
 
 

- Ends -

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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August 13, 2020 02:00 ET (06:00 GMT)

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