REG - Anexo Group PLC - Final Results
01/05/2024 07:15
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240501:nRSA7285Ma&default-theme=true
RNS Number : 7285M Anexo Group PLC 01 May 2024
1 May 2024
Anexo Group plc
('Anexo' or the 'Group')
Final Results
"Solid performance across all divisions with strong outlook for the future"
Anexo Group plc (AIM: ANX), the specialist integrated credit hire and legal
services provider, announces its final results for the year ended 31 December
2023 (the 'period' or 'FY2023).
Financial Highlights 2023 2022 % movement
Total revenues (£'000s)(1) 149,334 138,329 +8.0%
Operating profit (£'000s)(1) 39,773 30,416 +30.8%
Adjusted(2) operating profit (£'000s)(1) 39,773 30,241 +31.5%
Adjusted(2) operating profit margin (%) 26.6 21.9 +21.4%
Profit before tax (£'000s) 23,040 23,918 -3.7%
Adjusted(2) profit before tax and exceptional items (£'000s) 23,040 24,093 -4.4%
Adjusted(3) basic EPS (pence) 12.8 16.5 -22.4%
Total dividend for the year (pence) 1.5 1.5 -
Equity attributable to the owners of the Company (£'000s) 159,699 146,347 +9.1%
Net cash from operating activities (£'000s) 17,391 -3,132 +20,523
Net debt balance (£'000s) 67,942 73,124 +7.1%
Note: The basis of preparation of the consolidated financial statements for
the current and previous year is set out in the Financial Review below.
1. Including the impact of the agreement in the Emissions Case.
2. Adjusted operating profit and profit before tax: excludes share‑based
payment charges in 2022. A reconciliation to reported (IFRS) results is
included in the Financial Review below.
3. Adjusted EPS: adjusted PBT less tax at statutory rate divided by the
weighted number of shares in issue during the year.
Overview and Financial and Operational KPIs
Following a year of consolidation for the Group's core business in 2022, the
early part of 2023 saw the Group continue its focus on the prudent management
of fleet levels within its credit hire division, EDGE, whilst looking to grow
the level of cash collections within its legal services division, Bond Turner.
Cash collections improved throughout the year, deriving from credit hire
claims, the agreement in the VW Emissions Case "Emissions Case", housing
disrepair claims and the serious injury and clinical and professional
negligence "large loss" teams. The Group thereafter continued its investment
in Bond Turner and also increase its activity within credit hire.
Bond Turner has continued to invest in good quality staff and related
infrastructure and this is reflected in the overall rise in cash collections,
which increased from £146.1 million in 2022 to £163.5 million in 2023. These
derived not only from credit hire claims but also from the housing disrepair
and large loss claim books. As these expand and claims reach settlement
maturity, these additional teams have made meaningful contributions to Group
performance in 2023 and will continue to do so into 2024 as investment in new
claims and staff continues. Revenues for Legal Services increased from £63.6
million in 2022 to £88.6 million; this figure also reflects the impact of the
agreement of the Emissions Case in the year. The growth in cash collections
for the Group is more pleasing given the continued delays within the judicial
system. The Group continues to experience extended delays, with many claims
listed for trial being delayed and/or adjourned; this continues to impact on
the cash received and overall profitability of the Group, particularly within
Legal Services. It is encouraging to note however that the majority of the
costs associated with these claims have already been incurred and expensed and
that the conclusion of these claims is simply just held up temporarily due to
the Court delays.
During 2023, the Group reached agreement with VW in relation to the diesel
emissions case and the results for the year include the impact of this
agreement, in which the Group acted for around 12,000 claimants. The terms of
the agreement are subject to confidentiality restrictions. The Group announced
on 5 June 2023 that the agreement had resulted in a net positive cash position
to Anexo of £7.2 million.
Following this agreement, the Group has continued its investment in claims
against other manufacturers including Mercedes Benz, Vauxhall, BMW/ Mini,
Peugeot/Citroen and Nissan/Renault. During 2023 the Group invested a total of
£4.3m in marketing, staff and other costs and at the end of 2023 had secured
claims against Mercedes Benz (where court proceedings have been issued) from
approximately 12,000 clients, and a further 24,000 claims against other
manufacturers. These costs are included within Administrative Expenses in the
Income Statement. Settlement of these claims is expected to significantly
enhance revenue and profitability and cashflows although the timing of any
negotiations remains uncertain.
Staff numbers within Bond Turner continued to grow, driving improvements in
performance and cash collections with an increased focus on both developing
our own staff but recruiting where necessary to increase settlement capacity.
This growth was particularly notable within the housing disrepair and large
loss teams, where staff numbers increased from 54 and 63 respectively at the
end of 2022 to 69 and 77 at the end of 2023 (an increase of 27.8% and 22.2%
respectively). Staff numbers in the legal services division reached a total of
702 in 2023, a 3.5% rise from 2022. Overall cash collections rose 11.9% to
£163.5 million (2022: £146.1 million). This ongoing growth in staff will
underpin further growth in cash collections in 2024, helped by the gradual
reduction in the courts backlog.
The Credit Hire Division started 2023 with 1,730 vehicles on the road. This
number grew to 1,961 by the end of the first half of the year, with average
vehicle numbers over the first half reaching 1,634 as the Group concentrated
on the effective management of activity levels. As a result, the Group
reported a reduction in net debt in that period. Opportunities for new work
continued to be buoyant with the Group accepting an increasing number of
claims in the second half of the year, this was particularly evident in the
latter months of 2023, traditionally a period of strong seasonality for the
Group, where vehicles numbers increased sharply, reaching 2,409 at the end of
2023, with a second half average of 2,144. This had the effect of driving an
improvement in profitability for the credit hire division in the second half
of the year (profit before tax increased from £2.2 million in the first half
year to £4.4 million in the second half year).
Whilst overall Credit Hire revenues for the full year reduced from £74.7
million in 2022 to £60.8 million in 2023, cash generation and our ability to
manage claim volumes underlines the robust health of the core credit hire
business and the continued demand for non-fault claims. A number of factors
contributed to the decrease in revenue including; the weighting of new hires
was heavier towards the end of 2023 meaning that the full extent of the
revenue could not be realised before the end of 2023 as the hires continued
past the year end, contributing revenue into 2024; general movements within
the fleet including the redistribution of the proportion of bikes versus cars
and a reduction in the average hire period between 2022 and 2023. 11,724 new
credit hire claims were funded in 2023 and passed for recovery to the
experienced legal team at Bond Turner, who have shown their strength in
respect of increased cash collections.
The growth in vehicle activity, particularly towards the end of 2023,
alongside the significant portfolio of claims within Legal Services, where
much of the associated costs have been incurred and expensed, provide a strong
platform for 2024 and beyond.
Our ability to fund growth in our hire business has come from improving levels
of cash collections, not only from an increase in credit hire claim
settlements, which increased by 13.2% in the period reaching 8.967 in 2023
(2022: 7,922), but from an increase in case settlements achieved during the
year from the housing disrepair and large loss teams (departments of legal
services). In addition, the Group announced on 5 June 2023 that agreement in
respect of the VW Emissions Case ('Emissions Case') had resulted in a net
positive cash position to Anexo of £7.2 million; this figure takes into
account the value retained in the Group from fees generated and payments
associated with the agreement including the repayment of amounts due to
funders. These movements demonstrate the investment made in both the current
staff in terms of training and development and strategic hires from
competitors. In 2023, the number of senior fee earners grew by 11.9% to reach
283 at the year end.
The Group has a number of opportunities for growth in 2024, not only from the
current divisions but from wider opportunities in the legal services sector
including the expansion of EDGE into providing credit hire vehicles to taxi
drivers involved in non-fault accidents. The Board believes there are
significant opportunities to manage the overall Group to ensure it maximises
shareholder value by continuing to seize opportunities for growth as they
present themselves without the need for significant increases in debt funding.
KPI's 2023 2022 % movement
Group
Total revenues (£'000s) 149,334 138,329 +8.0%
Gross profit (£'000s) 118,451 105,776 +12.0%
Adjusted operating profit (£000's) 39,773 30,241 +31.5%
Adjusted operating profit margin (%) 26.6% 21.9% +21.4%
Cash collections from settled cases (£'000s) 163,530 146,090 +11.9%
Credit Hire
Revenues (£'000s) 60,778 74,681 -18.6%
Vehicles on hire at the year-end (no) 2,409 1,730 +39.2%
Average vehicles on hire for the year (no) 1,904 1,892 +0.6%
Number of hire cases settled 8,967 7,922 +13.2%
New cases funded (no) 11,724 9,986 +17.4%
Legal Services
Revenues (£'000s) (1) 88,556 63,648 +39.1%
Legal staff at the period end (no) 702 678 +3.5%
Average number of legal staff (no) 696 646 +7.7%
Total senior fee earners at period end (no) 283 253 +11.9%
Average senior fee earners (no) 257 240 +7.1%
1. Revenues include the impact of the agreement of the Emissions Case.
Commenting on the Final Results, Alan Sellers, Executive Chairman of Anexo
Group plc, said: "I am pleased to report a solid performance across all
divisions. As always, we have managed our vehicle numbers effectively and
sought to utilise our working capital as efficiently as possible. Cash
collections continue to grow as a result of this strategy and we continue to
invest in high quality staff.
The housing disrepair and large loss divisions continue to expand and play an
increasingly important part in the development of the Group. We look forward
to further developments in the ongoing Diesel Emissions class actions and
continue to focus on effective cash management to maximise cash generation and
create value for all our shareholders."
Investor Briefing
Alan Sellers, Executive Chairman, and Mark Bringloe, CFO, will provide a live
presentation relating to the Final Results Presentation via Investor Meet
Company at 09:30 BST today.
The presentation is open to all existing and potential shareholders. Questions
can be submitted at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet ANEXO
GROUP PLC via:
https://www.investormeetcompany.com/anexo-group-plc/register-investor
(https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fwww.investormeetcompany.com%2fanexo-group-plc%2fregister-investor&c=E,1,_PaWm863R7l-XQijDFjGb7Uz2x-wp6J9lqSR6cMeQSU75QVnqC7li7cgljGUrDVRzl4CtRM6Ng3EitklFdaAzmYrWD00reJ5KjeBTZw_mR2K8FQ9Fak,&typo=1)
Investors who already follow ANEXO GROUP PLC on the Investor Meet Company
platform will automatically be invited.
Results presentation is available at the Group's
website: https://www.anexo-group.com/ (https://www.anexo-group.com/)
For further enquiries:
Anexo Group plc +44 (0) 151 227 3008
www.anexo-group.com (http://www.anexo-group.com)
Alan Sellers, Executive Chairman
Mark Bringloe, Chief Financial Officer
Nick Dashwood Brown, Head of Investor Relations
WH Ireland Limited
(Nominated Adviser & Joint Broker)
Hugh Morgan/ Chris Hardie / Darshan Patel (Corporate) +44 (0) 20 7220 1666
Fraser Marshall / Harry Ansell (Broking) www.whirelandplc.com/capital-markets
(https://url.avanan.click/v2/___https:/eu-west
-1.protection.sophos.com?d=whirelandplc.com&u=aHR0cDovL3d3dy53aGlyZWxhbmRwbGMuY29tL2NhcGl0YWwtbWFya2V0cw==&i=NWNkOTc2NmM5OWJhMjAxMDhmN2IyYzQ1&t=SXVCMnArbXpCUWFUR3hiN0dhVjR5Q3d4VDNrTGVJc1JZVXNxWVRpbE8zcz0=&h=0482e68813aa4f569a47aab5cdad04d1___.YXAxZTp3aGlyZWxhbmRwbGMyOmE6bzpjYjY3ZDZhNTE1ZmUwZTA0Zjg3MDFkYTJhYTAxZGMyNDo2OmU0NjA6M2ViNTgwYzkxMmM5NTFlMzUyMzM1ODhlNzcyOGFhMjZhNjI0OTkzOGRkOTkzZjQ5NTUzNjFjYzE5N2UwYTBkNzpoOlQ)
Zeus
(Joint Broker) +44 (0) 20 3829 5000
David Foreman / Louisa Waddell (Investment Banking) www.zeuscapital.co.uk (http://www.zeuscapital.co.uk)
Simon Johnson (Corporate Broking)
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 1,100 plus 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
(http://www.anexo-group.com/)
Chairman's Statement
On behalf of the Board, I am pleased to report a year of solid growth by the
Group, with each division of the Group performing in line with Board
expectations. The results for 2023 include the agreement of the Emissions Case
as reported in June 2023. These results reflect our continued focus on
increasing cash settlements through the expansion of our Legal Services
division, with continued investment and growth not only in credit hire but
more significantly in both the housing disrepair and large loss departments.
The Board continues to invest in diversifying the Group's activities by taking
advantage of the significant growth opportunities which are presenting
themselves and believes that the Group is well positioned for further strong
performance in 2024 and beyond.
Group Performance
Anexo Group plc has shown solid performance during 2023 with Group revenues
increasing in 2023 by 8.0% to £149.3 million (2022: £138.3 million). Gross
profits increased by 12.0% from £105.8 million in 2022 to £118.5 million in
2023. Operating profit increased by 30.8% to £39.8 million in 2023 at a
margin of 26.6% (2022: £30.4 million at a margin of 22.0%), even after the
ongoing investment in staff and marketing costs across both housing disrepair
and diesel emissions claims and the performance of the Credit Hire division.
This investment has provided a strong platform for future growth. Profit
before tax reduced slightly in the year, by 4.4% to £23.0 million (2022:
£24.1 million).
Whilst revenues for Credit Hire reduced from £74.7 million in 2022 to £60.8
million in 2023 reflecting the active management of claims accepted in the
early part of the year, this decline was more than offset within Legal
Services, where revenues increased from £63.6 million in 2022 to £88.6
million. This increase included the impact of the agreement of the Emissions
Case in the year.
During 2023, the Group has focussed on further developing the housing
disrepair and large loss teams whilst recognising that credit hire remains the
mainstream profit generator for the Group. This focus has contributed to an
increased level of case settlements and therefore an increase in cash
collections for the Group, which rose by 11.9% to £163.5 million in 2023
(2022: £146.1 million). This figure excludes the agreement in the Emissions
Case. The terms of the agreement are subject to confidentiality restrictions;
the Group announced on 5 June 2023 that the agreement had resulted in a net
positive cash position to the Group of £7.2 million.
Credit Hire division
The Group's Credit Hire division, EDGE, saw prudent management of fleet
activities during the early part of 2023 to maximise efficient use of the
existing fleet and to manage overall fleet numbers to reflect these
expectations. In the second half of the year, cash collections were such that
the Group could accelerate growth without the need to increase debt facilities
and vehicle numbers rose from 1,730 at the start of the year, falling to a low
of 1,431 in H1, then rising sharply to end the year at 2,409, an increase of
39.2% from the start of the year. As a result, new cases funded increased from
9,986 in 2022 to 11,724 in 2023, whilst the number of hire cases settled
increased by 13.2% from 7,922 in 2022 to 8,967 in 2023, supporting the
increase in cash collections noted above.
With the managed start to 2023 in vehicle activity, revenues within the Credit
Hire division fell in 2023 by 18.6% to £60.8 million (2022: £74.7 million).
The Group maintains its claims acceptance strategy of deploying its resources
into the most valuable claims, thereby growing claims while preserving working
capital. The Group monitors its fleet size constantly, enabling it to respond
quickly to changes in demand and strategic priorities by deploying its
vehicles appropriately with focus remaining firmly on McAMS, the motorcycle
division.
Legal Services division
The Group's Legal Services division, Bond Turner, has continued its focus on
cash collections across each of the three principal departments, with growth
in both housing disrepair and large loss contributing to the positive result
in the year. Revenues within the Legal Services division, which strongly
correlates to cash, increased by 37.4% to £88.6 million (2022: £63.6
million), including the agreement in the Emissions Case in June 2023. With
increased opportunities across all divisions the Group has sought to expand
teams with strategic senior hires to support and develop their respective
teams to help drive case settlements. At the end of December staff numbers
within Bond Turner stood at 702, a 3.5% increase on the 2022 figure of 678. Of
these, a total of 283 were senior fee earners, up 11.9% (2022: 253).
The average number of staff rose from 646 in 2022 (of which 240 were senior
fee earners) to 696 in 2023 (including 257 senior fee earners).
Diesel Emissions
During 2023, the Group reached agreement with VW in relation to the diesel
emissions case and the results for the year include the impact of this
agreement, in which the Group acted for around 12,000 claimants. The terms of
the agreement are subject to confidentiality restrictions; the Group announced
on 5 June 2023 that the agreement had resulted in a net positive cash position
to Anexo of £7.2 million.
Following this, the Group has continued its investment in claims against other
manufacturers including Mercedes Benz, Vauxhall, BMW/Mini, Peugeot/Citroen and
Renault/Nissan. By the end of 2023 the Group had secured claims against
Mercedes Benz (where court proceedings have been issued) from approximately
12,000 clients, and a further 22,000 claims against other manufacturers.
Settlement of these claims is expected to significantly enhance profitability
and cashflows although the timing of any negotiations remains uncertain.
In total the Group invested £4.3 million in 2023 (2022: £4.0 million) in
both staffing and emission claims lead generation fees, both of which are
expensed in the income statement as incurred.
Housing Disrepair
The housing disrepair team has continued its rapid expansion during 2023,
where revenues increased to £12.7 million in 2023, an increase of 36.6% over
that report in 2022 (£9.3 million). At the end of the year, the Group had a
portfolio of c3,900 ongoing claims (2022: c.3,000). Some £3.8 million was
invested in marketing costs in 2023 (2022: £3.0 million), all of which was
expensed as incurred, and with further investment planned into 2024, the
housing disrepair team has proven its potential to be a significant
contributor to Group earnings. We look forward to further growth in this
sector.
Dividends
The Board is pleased to propose a final dividend of 1.5p per share (£1.8
million), which if approved at the Annual General Meeting to be held on 18
June 2024 will be paid on 28 June 2024 to those shareholders on the register
at the close of business on 31 May 2024. The shares will become ex-dividend on
30 May 2024 (2022: total dividend 1.5p per share, £1.8 million).
Corporate Governance
Anexo values corporate governance highly and the Board believes that effective
corporate governance is integral to the delivery of the Group's corporate
strategy, the generation of shareholder value and the safeguarding of our
shareholders' long-term interests.
As Chairman, I am responsible for the leadership of the Board and for ensuring
its effectiveness in all aspects of its role. The Board is responsible for
the Group's strategic development, monitoring and achievement of its business
objectives, oversight of risk and maintaining a system of effective corporate
governance. I will continue to draw upon my experience to help ensure that
the Board delivers maximum shareholder value.
Our employees and stakeholders
The strong performance of the Group reflects the dedication and quality of the
Group's employees. We rely on the skills, experience and commitment of our
team to drive the business forward. Their enthusiasm, innovation and
performance remain key assets of the Group and are vital to its future
success. On behalf of the Board, I would like to thank all of our employees,
customers, suppliers, business partners and shareholders for their continued
support over the last year.
Current Trading and Outlook
As our financial performance and KPI's have demonstrated, the Group has
continued to invest in its people, particularly within the Legal Services
division, supporting the growth we have reported in both the number of claims
settled and the underlying level of cash receipts for the Group. Whilst this
investment impacted our reported financial performance in 2023, the continued
growth in headcount supporting ever increasing case settlements will continue
to contribute to growth in 2024 and beyond.
Since year end trading across both Credit Hire and Legal Services has been in
line with management expectations.
Subsequent Events
In the previous emissions action Bond Turner's clients were not part of the
Group Litigation Order ('GLO'), which brought together a number of legal firms
acting for different claimants. In the current action, Bond Turner will form
part of the respective GLOs, which should facilitate a more efficient legal
process to achieve a quicker resolution to the cases.
There was a 5-day case management hearing on 11th March 2024 to consider all
the various manufacturer NOx Emissions claims and provide guidance on how the
cases should progress. The Court was keen to progress these cases as quickly
as possible and has set a rigid timetable to do so. In December 2023
Mercedes was appointed as the 'Lead GLO' case; the Court has further
appointed three other cases to be Additional Lead GLO's ('ALGLOs'). These
are essentially cases which will progress alongside Mercedes to act as reserve
cases, in case Mercedes settles, and to involve additional issues that
Mercedes does not but which are relevant to the Group Litigation as a whole.
The ALGLOs appointed are Ford, Nissan/Renault and Peugeot/Citroën.
Several trial dates have been set with the first being heard in October 2024
involving several manufacturers (Mercedes, BMW, Renault, and Vauxhall),
dealing specifically with the issue of whether decisions by the German
regulatory body (responsible for giving the vehicles 'type approval' to be
manufactured and sold) are binding in England and Wales.
In October 2025 liability will be determined raising legal and factual issues
of whether the vehicles contained prohibited defeat devices. To assist the
Court, this will include the selection and testing of sample vehicles across
several manufacturers including Mercedes, Ford, Renault/Nissan and
Peugeot/Citroën manufacturers.
Finally in October 2026 a trial will address causation and loss issues. This
trial will involve all manufacturers.
Post Balance Sheet Events
On 24 April 2024 Mark Bringloe was appointed as permanent Chief Financial
Officer.
Annual General Meeting
The Group's Annual General Meeting will be held on 18 June 2024. The notice of
the Meeting accompanies this Annual Report and Accounts.
Alan Sellers
Executive Chairman
30 April 2024
Financial Review
Basis of Preparation
To provide comparability across reporting periods, the results within this
Financial Review are presented on an "adjusted basis, adjusting for the £0.2
million credit recorded for share-based payments in 2022, no such credit
arising in 2023 following the vesting of the senior management incentive
scheme for share-based payments in 2022.
A reconciliation between adjusted and reported results is provided at the end
of this Financial Review. This Financial Review forms part of the Strategic
Report of the Group.
Revenue
In 2023 Anexo successfully increased revenues which increased to £149.3
million, an 8.0% increase over the prior year (2022: £138.3 million).
Revenues for Credit Hire reduced from £74.7 million in 2022 to £60.8 million
in 2023 reflecting a number of factors including; the weighting of new hires
was heavier towards the end of 2023 meaning that the full extent of the
revenue could not be realised before the end of 2023 as the hires continued
past the year end, contributing revenue into 2024; general movements within
the fleet including the redistribution of the proportion of bikes versus cars
and a reduction in the average hire period between 2022 and 2023.
With the active management of claims accepted in the early part of the year,
this decline was more than offset within Legal Services, where revenues
increased from £63.6 million in 2022 to £88.6 million, the Legal Services
division continuing to display its strength for the realisation and conversion
of funded claims and opportunities into cash and revenue. This movement
included the impact of the agreement of the Emissions Case in the year.
During 2023 EDGE, the Credit Hire division, provided vehicles to 11,724
individuals (2022: 9,986) Much of the increase over the figure reported in
2022 arose in H2 2023. Our strategy, as previously reported, remains to
concentrate investment within McAMS, the part of the business which supplies
motorcycles. To continue to grow case settlements in the post Covid period,
where the court system has yet to recover, the Group has been successful in
negotiating a number of key protocol arrangements with insurers. These
arrangements allow the insurer, the Group and its clients to benefit by
agreeing early settlement.
With investment in all areas of Bond Turner continuing into 2023, and the
continued maturity of the housing disrepair department, including more
recently the large loss department, the Legal Services division reported
significant revenue growth of 39.1%, with revenues rising from £63.6 million
in 2022 to £88.6 million in 2023. The result for 2023 was also impacted by
the agreement in the Emissions Case in June 2023, the impact of which is
subject to confidentiality restrictions.
The Group has benefitted from continued investment in the housing disrepair
team during 2023, and as a result revenue increased from £9.3 million in 2022
to £12.7 million in 2023. This revenue is reported within the data noted
above for the Legal Services Division.
Gross Profits
Gross profits for the Group are reported at £118.5 million (at a margin of
79.4%) in 2023, increasing from £105.8 million in 2022 (at a margin of
76.5%). The result for 2023 including the impact within Bond Turner of the
agreement of the Emissions Case. It should be noted that staffing costs within
Bond Turner are reported within Administrative Expenses.
The Credit Hire Division reported gross profits of £42.1 million (at a margin
of 69.2%), reducing from £45.3 million (at a margin of 62.1%). The net
reduction reflects the reduction in revenues reported in the period.
Operating Costs
Administrative expenses increased slightly year-on-year, reaching £69.2
million in 2023 (2022: £65.0 million), an increase of £4.2 million (6.5%).
Staffing costs for Bond Turner increased to £25.7 million (2022: £23.1
million), an increase of £2.6 million (11.3%). Following the establishment of
our housing disrepair team in late 2020, some £3.8 million was invested in
marketing costs in 2023 (2022: £3.0 million), all of which has been expensed
as incurred. We have in addition, invested in further emissions marketing
costs of £2.9 million (2022: £2.2 million).
Depreciation, amortisation and profit and loss on disposal totalled £9.5
million in 2023, a slight reduction from that seen in 2022 (£10.6 million).
Finance Costs
Finance costs reached £16.7 million in 2023, increasing from £6.3 million in
2022 (165%). In part, this increase reflects the full year effect of the
additional facilities secured in 2022 from Blazehill Capital Finance Limited
(£15.0 million) to support the continued investment into the housing
disrepair team and our investment in diesel emissions claims and the growth in
interest rates seen globally. Finance costs in 2023 also included payment due
to funders in respect of emissions cases.
Profit Before Tax
Profit before tax reached £23.0 million in 2023, falling slightly from the
level reported in 2022 (£24.1 million). This reflects the investment in staff
and marketing costs noted above as well as a general increase in finance costs
as interest rates impacted the cost of capital to the Group, these additional
costs more than offsetting the benefit arising from the agreement in the
Emissions Case.
Where we have provided adjusted figures, they are after the add-back of the
share-based payment credit in 2022; a reconciliation of the adjusted and
reported results is included in the Annual Report.
EPS and Dividend
Statutory basic EPS is 12.8 pence (2022: 16.6 pence). Statutory diluted EPS is
12.8 pence (2022: 16.6 pence). The adjusted EPS is 12.8 pence (2022: 16.5
pence). The adjusted diluted EPS is 12.8 pence (2022: 16.5 pence). The
adjusted figures exclude the effect of share-based payments. The detailed
calculation in support of the EPS data provided above is included within Note
12 of the financial statements of the annual report.
The Board is pleased to propose a final dividend of 1.5p per share (£1.8
million), which if approved at the Annual General Meeting to be held on 18
June 2024 will be paid on 28 June 2024 to those shareholders on the register
at the close of business on 31 May 2024. The shares will become ex-dividend on
30 May 2024 (2022: total dividend 1.5p, £1.8 million).
Group Statement of Financial Position
The Group's net assets position is dominated by the balances held within trade
and other receivables. These balances include credit hire and credit repair
receivables, together with disbursements paid in advance which support the
portfolio of ongoing claims. Following continued improvements in the level of
cash collected in the year, the gross claim value of trade receivables
totalled £386.3 million in 2023, falling from £393.6 million in 2022. In
accordance with our income recognition policies, a provision is made to reduce
the carrying value to recoverable amounts, the net balance reducing to £160.7
million (2022: £165.4 million) giving a portfolio of claims for settlement
into 2024 and beyond for which the associated acceptance costs have been
written off as incurred.
In addition, the Group has a total of £68.9 million reported as accrued
income (2022: £54.7 million) which represents the value attributed to those
ongoing hires and claims at the year end, alongside growth in the number of
ongoing claims within the housing disrepair and large loss teams where
investment has increased year on year as have the ongoing number of claims,
noting value is only attributed to those claims where we have secured an
admission of liability.
The focus on motorcycle claims continued during 2023, and a refresh of certain
aging assets resulted in total additions of property, plant, equipment and
right of use assets of £11.6 million in 2023 (2022: £7.8 million). The fleet
continues to be largely externally financed.
Trade and other payables, including tax and social security increased to
£14.8 million compared to £13.2 million at 31 December 2022.
Net assets at 31 December 2023 reached £159.7 million (2022: £146.3
million).
Net Debt, Cash and Financing
Net debt reduced to £67.9 million at 31 December 2023 (31 December 2022:
£71.3 million) and comprised cash balances at 31 December 2023 of £8.4
million (2022: £9.0 million), plus borrowings which reduced during the year,
following the agreement of the Emissions Case and a continued focus on growth
at levels that are sustainable without the need for additional working capital
investment.
The total debt balance fell from £82.2 million in 2022 to £76.3 million at
the end of 2023; these balances include lease liabilities including those
recognised in line with IFRS16 (2023: £14.3 million, 2022: £13.6 million).
The Group has a number of funding relationships and facilities to support its
working capital and investment requirements, including an invoice discounting
facility within Direct Accident Management Limited (secured on the credit hire
and repair receivables) and a loan from Blazehill Capital Limited, which is
non amortising and committed for a three year period, lease facilities to
support the acquisition of the fleet and a revolving credit facility within
Bond Turner Limited which is due for renewal in August 2024 and currently
reported within borrowing due within one year. Further details are included in
Note 20 of the financial statements of the annual report.
Having considered the Group's current trading performance, cash flows and
headroom within our current debt facilities (further details of additional
facilities secured post year end are included in the annual report), maturity
of those facilities, the Directors have concluded that it is appropriate to
prepare the Group and the Company's financial statements on a going concern
basis. Further details are included in the annual report.
Cash Flow
Notwithstanding the continued delays in the court system, we have continued to
invest in talent and grow our settlement capacity throughout Bond Turner,
across each of the Credit Hire, housing disrepair and more recently the large
loss teams. As we have previously reported, increasing numbers of senior fee
earners drives increased settlement and cash collections into the Group as it
is mainly these staff that negotiate and settle claims on behalf of the Group.
The number of senior fee earners increased from 253 to 283 during 2023 (an
increase of 11.9%) with strategic recruitment of high-quality staff a
continued focus. More recently this investment has sought to continue to
diversity the activities of the Group and headcount with the housing disrepair
team, where the number of staff increased in number from 54 at 31 December
2022 to 69 at 31 December 2023 (an increase of 27.8%); and the large loss
team, where the number of staff increased in number from 63 at 31 December
2022 to 77 at 31 December 2023 (an increase of 22.2%).
Notwithstanding the delays faced in the court system, which continues to
impact settlements, cash collections for the Group (excluding settlements for
our clients and the contribution from the agreement of the Emissions Case), a
key metric for the Group, increased from £146.1 million in 2022 to £163.5
million in 2023, an increase of 11.9%, of which £7.9 million was generated
from growth in settlements secured from the housing disrepair and large loss
teams.
These improvements resulted in a significant improvement in net cash from
operating activities, which was reported as a net cash inflow of £17.4
million in 2023 (2022: net cash outflow: £3.1 million), an improvement of
£20.5 million, the primary difference being the level of funds invested in
trade and other receivables which reduced by £22.0 million (2023: cash
outflow £12.1 million, 2022: cash outflow: £34.1 million) reflecting the
improvement in cash collections in the period supported by a strong legal team
within Bond Turner.
Improved cash collections and operating cash flows have allowed the Group to
reduce debt, reporting a net cash outflow of £17.4 million from financing
activities in 2023. The Group reported a net cash inflow in 2022 of £4.2
million as additional facilities were secured in 2022 from Blazehill Capital
Limited alongside an increase in availability from Secure Trust Bank Plc.
Reconciliation of Adjusted and Reported IFRS Results
In establishing the adjusted operating profit, the adjusted results for 2022
included a credit of £0.2 million related to share-based payments which
vested in the year.
A reconciliation between adjusted and reported results is provided below:
Year to December 2023
Adjusted Share-based payment £'000s Reported
£'000s £'000s
Revenue 149,334 - 149,334
Gross profit 118,451 - 118,451
Other operating costs (net) (78,678) - (78,678)
Operating profit 39,773 - 39,773
Finance costs (net) (16,733) - (16,733)
Profit before tax 23,040 - 23,040
Year to December 2022
Adjusted Share-based payment £'000s Reported
£'000s £'000s
Revenue 138,329 - 138,329
Gross profit 105,776 - 105,776
Other operating costs (net) (75,535) 175 (75,360)
Operating profit 30,241 175 30,416
Finance costs (net) (6,323) - (6,323)
Profit before tax 23,918 175 24,093
On behalf of the board
Mark Bringloe
Chief Financial Officer
30 April 2024
Consolidated Statement of Total Comprehensive Income
for year ended 31 December 2023
2023
2022
Note £'000s £'000s
Revenue 149,334 138,329
Cost of sales (30,883) (32,553)
Gross profit 118,451 105,776
Depreciation & profit / loss on disposal of property, plant and equipment 4 (9,439) (10,436)
Amortisation 4 (69) (117)
Increase in provision for impairment of trade receivables 4 (3,489) (5,422)
Other administrative expenses before share based payments (65,681) (59,560)
Total Administrative expenses before share based payments (78,678) (75,535)
Operating profit before share based payments 4 39,773 30,241
Share based payment credit - 175
Operating profit 4 39,773 30,416
Finance costs 9 (16,733) (6,323)
Profit before tax 23,040 24,093
Taxation (7,919) (4,616)
Profit and total comprehensive income for the year attributable to the owners 15,121 19,477
of the company
Earnings per share
Basic earnings per share (pence) 5 12.8 16.6
Diluted earnings per share (pence) 5 12.8 16.6
The above results were derived from continuing operations.
Consolidated Statement of Financial Position
as at 31 December 2023
2023
2022
Assets Note £'000s £'000s
Non-current assets
Property, plant and equipment 6 1,813 2,072
Right of use assets 6 13,886 12,657
Intangible assets 7 34 71
Deferred tax assets 112 112
15,845 14,912
Current assets
Trade and other receivables 8 234,409 222,272
Corporation tax receivable - 606
Cash and cash equivalents 8,443 9,049
242,852 231,927
Total assets 258,697 246,839
Equity and liabilities
Equity
Share capital 59 59
Share premium 16,161 16,161
Share based payments reserve - -
Retained earnings 143,479 130,127
Equity attributable to the owners of the Company 159,699 146,347
Non-current liabilities
Other interest-bearing loans and borrowings 9 15,000 25,000
Lease liabilities 9 7,968 7,176
Deferred tax liabilities 32 32
23,000 32,208
Current liabilities
Other interest-bearing loans and borrowings 9 47,070 43,594
Lease liabilities 9 6,347 6,403
Trade and other payables 14,811 13,225
Corporation tax liability 7,770 5,062
75,998 68,284
Total liabilities 98,998 100,492
Total equity and liabilities 258,697 246,839
The notes on pages 76 to 109 form an integral part of these consolidated
financial statements.
The financial statements were approved by the Board of Directors and
authorised for issue on 30 April 2024. They were signed on its behalf by:
Mark Bringloe
Chief Financial Officer
30 April 2024
Consolidated Statement of Changes in Equity
for the year ended 31 December 2023
Share Capital Share Based Payments Reserve Retained Earnings Total
Share Premium
£'000s £'000s £'000s £'000s £'000s
At 1 January 2022 58 16,161 2,077 109,928 128,224
Profit for the year and total comprehensive income - - - 19,477 19,477
Issue of share capital 1 - - - 1
Share based payment credit - - (175) - (175)
Transfer of share-based payment reserve - - (1,902) 1,902 -
Dividends - - - (1,180) (1,180)
At 31 December 2022 59 16,161 - 130,127 146,347
Profit for the year and total comprehensive income - - - 15,121 15,121
Dividends - - - (1,769) (1,769)
At 31 December 2023 59 16,161 - 143,479 159,699
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
2023
2022
Note £'000s £'000s
Cash flows from operating activities
Profit for the year 15,121 19,477
Adjustments for:
Depreciation and profit / loss on disposal 4 9,439 10,436
Amortisation 4 69 117
Financial expense 4 16,733 6,323
Share based payment credit 4 - (175)
Taxation 7,919 4,616
49,281 40,794
Working capital adjustments
Increase in trade and other receivables (12,138) (34,138)
Increase in trade and other payables 1,586 590
Cash generated from / (used in) operations 38,729 7,246
Interest paid (16,733) (5,722)
Tax paid (4,605) (4,656)
Net cash from / (used) in operating activities 17,391 (3,132)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 757 1,579
Acquisition of property, plant and equipment (1,277) (1,186)
Investment in intangible fixed assets (32) -
Net cash (used in) / from investing activities (552) 393
Cash flows from financing activities
Proceeds from new loans 20,409 24,430
Repayment of borrowings (26,932) (8,749)
Lease payments (9,153) (10,275)
Dividends paid (1,769) (1,180)
Net cash (used in) / generated from financing activities (17,445) 4,226
Net (decrease) / increase in cash and cash equivalents (606) 1,487
Cash and cash equivalents at 1 January 9,049 7,562
Cash and cash equivalents at 31 December 8,443 9,049
Notes to the Financial Information
for the year ended 31 December 2023
1. Basis of Preparation and Principal Activities
The financial information set out herein does not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006.
The financial information for the year ended 31 December 2023 has been
extracted from the Company's audited financial statements which were approved
by the Board of Directors on 30 April 2024 and which, if adopted, will be
delivered to the Registrar of Companies for England and Wales.
Statutory accounts for the years ended 31 December 2023 and 31 December 2022
have been reported on by the auditor. Their reports for both years (i) were
unqualified; (ii) did not include a reference to any matters which the auditor
drew attention by way of emphasis without qualifying their audit report and
(iii) did not contain a statement under section 498(2) or 498 (3) of the
Companies Act 2006.
The information in this preliminary statement has been extracted from the
audited financial statements for the year ended 31 December 2023 and as such
does not contain all the information required to be disclosed in the financial
statements prepared in accordance with UK adopted International Accounting
Standards ('IAS').
The Company is a public limited company incorporated and domiciled in England
and whose shares are quoted on AIM, a market operated by The London Stock
Exchange.
The address of its registered office is 5(th) Floor, The Plaza, 100 Old Hall
Street, Liverpool, L3 9QJ.
Going concern
With activity levels being maintained in line with forecast in the early part
of FY24 and focus upon growth in revenue and performance without the need for
additional debt funding the Group is currently performing in line with
management expectations. Where funding allows, the Group continues to invest
across all business streams, albeit additional focus is currently on expanding
the number of diesel emissions claims reflecting limitation in mid 2024, the
Group forecasting a spend in that year of £4.5 million on marketing costs.
The Group has secured funding from a number of funders, the most significant
being Secure Trust Bank plc, HSBC Bank Plc and Blazehill Capital Finance
Limited. Following receipt of additional funding of £15.0 million from
Blazehill Capital Limited in 2022, the Group ended 2023 with a strong balance
sheet with a conservative gearing level and good liquidity with headroom
within its funding facilities and associated covenants. At the end of 2023 the
Group's facilities included a revolving credit facility of £10.0 million with
HSBC Bank plc (due for repayment in October 2024), an invoice discounting
facility of £40.0 million with Secure Trust Bank plc (due for renewal in
December 2024) and a loan facility of £15.0 million from Blazehill Capital
Finance Limited.
With the significant level of opportunities open to the Group and to improve
overall headroom into 2024 and beyond, the Group is considering a number of
options for additional funding, and will report in due course as matters
progress.
Each of the Group's banking arrangements are subject to monitoring through
financial performance measures or covenants. Other than during the first few
months of 2023, where one specific measure, surrounding the average hire
period which increased above the measure included within the Secure Trust
facility, all other performance measures and covenants have been met including
in the period to date in 2024. The variance arose in that the average hire
period extended beyond that incorporated within the Secure Trust facility and
whilst extended hire periods are positive for the Group's financial
performance, formal waiver was received from Secure Trust and the measure
varied accordingly. The performance measures incorporated within the Secure
Trust facility are there for monitoring purposes and aid as a guide for the
Group to engage on a regular basis around general financial performance and
headroom, both from a cash and operational perspective. All covenants were met
during 2023 and to date in 2024 within both the Blazehill Capital and HSBC
facilities. Further details are included in note 20.
The continued management of claims activity against claim settlements,
alongside the additional headroom created from the recent refinancings set out
above, means that the Board remains confident that the Group is in a strong
financial position and is well placed to trade into 2024.
The Directors have prepared trading and cash flow forecasts for the period
ended December 2026, against which the impact of various sensitivities have
been considered covering the level of cash receipts (we have sensitised cash
collections by 5% and 10% with and without management intervention which
included a reduction in the volume of work taken on). We note earlier that
there is no certainty that a settlement in favour of Bond Turner's clients
will be reached in any of the emissions class actions currently ongoing, nor
is there any guarantee that such a settlement would include financial
compensation. The timeline for progress towards conclusion of the litigation
is also unclear and no assumptions as to revenue have been included in the
Board's internal forecasts for 2024 or 2025.
Working capital management is considered to be the most critical aspect of the
Group's assessment. The Group has the ability to improve cash flow and
headroom from a number of factors that are within the direct control of
management, examples of which could be by limiting the level of new business
within EDGE, managing the level of investment in people and property within
Bond Turner or by limiting the investment in the portfolio of emissions claims
currently ongoing. These factors allow management to balance any potential
shortfall in cash receipts and headroom against forecast levels, something the
Directors have been doing for many years, such that the Group maintains
adequate headroom within its facilities. It is in that context that the
Directors have a reasonable expectation that the Group will have adequate cash
headroom.
The Group continues to trade profitably and early indications for growth in
the current year are positive. Accordingly, the directors continue to adopt
the going concern basis in preparing the consolidated and the company
financial statements.
2. Critical Accounting Judgements and Key Sources of Estimation
Uncertainty
In the application of the Group's accounting policies, management is required
to make judgements, estimates and assumptions about the carrying value of
assets and liabilities that are not readily apparent from other sources. The
estimates and underlying assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of revision and prior periods if the revision affects both current and prior
periods.
The key sources of estimation uncertainty that have a significant effect on
the amounts recognised in the financial statements are described below.
Credit Hire
Due to the nature of the business, there are high levels of trade receivables
and accrued income at the year end, and therefore a risk that some of these
balances may be impaired or irrecoverable. The Group applies its policy for
accounting for impairment of these trade receivables and accrued income as
well as expected credit losses whereby debts are assessed and provided against
when the recoverability of these balances is considered to be uncertain and
hence the balances reported at the year-end are at risk of change. This
requires the use of estimates based on historical claim and collection
information.
Revenue is accrued on a daily basis, after adjustment on a portfolio basis for
an estimation of the recovery of credit hire charges based on historical
settlement rates. While historical settlement rates form the basis, these are
then considered in light of expected settlement activity. This policy also
assumes that claims which have settled historically are representative of the
trade receivables and accrued income in the balance sheet. This assumption
represents a significant judgement. The overall settlement adjustment is made
to ensure that revenue is only recognised to the extent that it is highly
probable that a significant reversal of revenue will not occur upon settlement
of a customer's claim. Revenue recognised is updated on settlement once the
amount of the claim recovered is known.
Due the factors described above, determining the settlement adjustment to
revenue, accrued income and trade receivables involves a high degree of
estimation uncertainty which could result in a range of values of adjustment
which vary by multiples of materiality. The settlement percentages are
sensitive to these estimates. If the settlement percentages applied in
calculating revenue were reduced by 1% it would reduce credit hire revenue and
trade receivables and accrued income (£63.1 million and £157.8 million
respectively) by £2.6 million. (2022: by £2.7 million, credit hire revenue
being £74.7 million and trade receivables and accrued income £144.1
million). The Board consider that these estimates are subject to variation
which may vary from between 1% and 6% (at 6% credit hire revenue and trade
receivables and accrued income would reduce by £15.8 million). A 6% reduction
is an approximation that is consistent with the period over the pandemic where
settlements were lower due to courts being closed. This is considered to be a
cautious downside based on more recent settlement experience and operational
changes to the business to facilitate improvements in settlement rates and
period.
Legal Services
The Group carries an element of accrued income for legal costs, the valuation
of which reflects the estimated level of recovery on successful settlement by
reference to the lowest level of fees payable by reference to the stage of
completion of those credit hire cases. Where we have not had an admission of
liability no value is attributed to those case files.
Accrued income is also recognised in respect of serious injury and housing
disrepair claims, only where we have an admission of liability and by
reference to the work undertaken in pursuing a settlement for our clients,
taking into account the risk associated with the individual claim and expected
future value of fees from those claims on a claim-by-claim basis.
For both credit hire and legal services, the historical settlement rates used
in determining the carrying value may differ from the rates at which claims
ultimately settle. This represents an area of key estimation uncertainty for
the Group.
3. 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, which
includes the large loss department and any balance or trading associated with
emissions.
Management monitors the operating results of business segments separately for
the purpose of making decisions about resources to be allocated and of
assessing performance.
Year ended 31 December 2023
Credit Hire Other Legal Services * Consolidated
Group & Central Costs
Housing Disrepair *
£'000s £'000s £'000s £'000s £'000s
Revenues
Third party 60,778 75,875 12,681 - 149,334
Total revenues 60,778 75,875 12,681 - 149,334
Profit before taxation 6,580 13,048 6,416 (3,004) 23,040
Net cash (used in) / generated from operations 11,434 5,642 3,067 (2,752) 17,391
Depreciation, amortisation and gain on disposal of property, plant and 8,076 1,432 - - 9,508
equipment
Non current assets 10,595 5,250 - - 15,845
Segment assets 177,346 68,131 12,454 766 258,697
Capital expenditure 872 405 - - 1,277
Segment liabilities 58,223 38,261 - 2,514 98,998
Year ended 31 December 2022
Credit Hire Other Legal Services * Group & Central Costs Consolidated
Housing Disrepair *
£'000s £'000s £'000s £'000s £'000s
Revenues
Third party 74,681 54,311 9,337 - 138,329
Total revenues 74,681 54,311 9,337 - 138,329
Profit before taxation 8,887 13,220 4,694 (2,708) 24,093
Net cash from operations (2,310) 1,210 258 (2,290) (3,132)
Depreciation, amortisation and gain on disposal of property, plant and 9,271 1,282 - - 10,553
equipment
Non current assets 9,896 5,016 - - 14,912
Segment assets 174,503 58,562 8,084 5,690 246,839
Capital expenditure 980 206 - - 1,186
Segment liabilities 66,507 33,985 - - 100,492
* Other Legal Services, housing disrepair and large loss, are subsets of Legal
Services. We have however, distinguished the performance of housing disrepair
from within Legal Services as this department of the Legal Services segment is
an area where the Group is investing heavily, is a focus for the Group at
present and into the future and allows readers of the financial statements to
understand the contribution housing disrepair has to the overall Group
performance. The housing disrepair division continues to grow and as the
results become more significant to the overall Group performance this division
may well become a reportable segment, in accordance with IFRS 8, in its own
right, this could be reported in the 2024 financial statements.
4. Operating Profit
Operating profit is arrived at after / (crediting):
2023 2022
£'000s £'000s
Depreciation on owned assets 810 750
Depreciation on right of use assets 7,915 9,981
Amortisation 69 117
Increase in provision for impairment of trade receivables 3,489 5,422
Share based payment credit - (175)
Loss / (gain) on disposal of property, plant and equipment 714 (295)
There were no non-recurring costs in the year ended 31 December 2023 or 2022.
Included in the above are the costs associated with the following services
provided by the Company's auditor:
2023 2022
£'000s £'000s
Audit services
Audit of the Company and the consolidated financial statements 90 70
Audit of the Company's subsidiaries 220 170
Total audit fees 310 240
All other services - -
Total fees payable to the Company's auditor 310 240
5. Earnings Per Share
2023 2022
Number of shares: No. No.
Weighted number of ordinary shares outstanding 117,990,294 117,492,721
Effect of dilutive options - -
Weighted number of ordinary shares outstanding - diluted 117,990,294 117,492,721
Earnings: £'000s £'000s
Profit basic and diluted 15,121 19,477
Profit adjusted and diluted 15,121 19,302
Earnings per share: Pence Pence
Basic earnings per share 12.8 16.6
Adjusted earnings per share 12.8 16.5
Diluted earnings per share 12.8 16.6
Adjusted diluted earnings per share 12.8 16.5
The adjusted profit after tax for 2023 and adjusted earnings per share are
shown before share‑based payment credit of £Nil million (2022: Credit of
£0.2 million). The Directors believe that the adjusted profit after tax and
the adjusted earnings per share measures provide additional useful information
for shareholders on the underlying performance of the business. These measures
are consistent with how underlying business performance is measured
internally. The adjusted profit after tax measure is not a recognised profit
measure under IFRS and may not be directly comparable with adjusted profit
measures used by other companies.
6. Property, Plant and Equipment
Fixtures,
Right of Property fittings & Office
use assets improvements Equipment equipment Total
£'000s £'000s £'000s £'000s £'000s
Cost
At 1 January 2022 29,644 494 3,125 629 33,892
Additions 7,026 143 319 289 7,777
Disposals (8,684) - - - (8,684)
At 31 December 2022 27,986 637 3,444 918 32,985
Additions 10,920 - 401 273 11,594
Disposals (12,148) (409) (160) (408) (13,125)
At 31 December 2023 26,758 228 3,685 783 31,454
Depreciation
At 1 January 2022 12,748 322 1,418 437 14,925
Charge for year 9,981 35 596 119 10,731
Eliminated on disposal (7,400) - - - (7,400)
At 31 December 2022 15,329 357 2,014 556 18,256
Charge for the year 7,915 36 634 140 8,725
Eliminated on disposal (10,372) (333) (121) (400) (11,226)
At 31 December 2023 12,872 60 2,527 296 15,755
Carrying amount
At 31 December 2023 13,886 168 1,158 487 15,699
At 31 December 2022 12,657 280 1,430 362 14,729
Motor Vehicles are all financed and as such are included in the right of use
assets column above.
Property, plant and equipment includes right-of-use assets with carrying
amounts as follows:
Land and Motor Total
Buildings Vehicles
£000 £000 £000
Right-of-use assets
At 1 January 2022 4,150 12,746 16,896
Depreciation charge for the year (820) (9,161) (9,981)
Additions to right-of use assets - 7,026 7,026
Disposals of right-of-use assets - (1,284) (1,284)
At 31 December 2022 3,330 9,327 12,657
Depreciation charge for the year (1,095) (6,820) (7,915)
Additions to right-of-use assets - 10,920 10,920
Disposals of right-of-use assets - (1,776) (1,776)
At 31 December 2023 2,235 11,651 13,886
Intangibles
Intangible Assets
Software licences
£'000s
Cost
At 1 January 2022 452
Additions -
At 31 December 2022 452
Additions 32
At 31 December 2023 484
Amortisation
At 1 January 2022 264
Charge for year 117
At 31 December 2022 381
Charge for the year 69
At 31 December 2023 450
Carrying amount
At 31 December 2023 34
At 31 December 2022 71
Software licence assets relate to investments made in third-party software
packages, and directly attributable external personnel costs in implementing
those platforms.
The amortisation charge is recognised in administration costs in the income
statement.
7. Trade and Other Receivables
2023 2022
£'000s £'000s
Gross claim value (invoiced) 386,286 393,560
Settlement adjustment on initial recognition (205,937) (203,518)
Trade receivables before impairment provision and expected credit loss 180,349 190,042
Provision for impairment of trade receivables (20,812) (24,674)
Net trade receivables 159,537 165,368
Accrued income 70,091 54,778
Prepayments 1,407 1,603
Tax and social security 449 -
Other receivables 2,925 523
234,409 222,272
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 27. When measuring revenue, an adjustment is made to the gross value of a
claim to reflect the expected settlement which is supported by historical and
relevant forward-looking data. Whilst credit risk is considered to be low, the
market risks inherent in the business pertaining to the nature of legal and
court cases and ageing thereof is a significant factor in the valuation of
trade receivables. Accrued income, which is stated net of allowances for
credit loss, includes the value of hires that have not yet been invoiced,
legal fees in respect of hires that have not yet reached a conclusion and fees
in respect of other client cases where liability has been admitted and
collection of revenue is considered probable. The increase in the year
reflects the increase in claim volumes accepted in respect of credit hire,
housing disrepair and large loss.
Average gross debtor days calculated on a count back basis were 475 at 31
December 2023 and 464 at 31 December 2022.
Age of net trade receivables
2023 2022
£'000s £'000s
Within 1 year 84,652 92,497
1 to 2 years 42,406 39,606
2 to 3 years 19,258 18,259
3 to 4 years 9,976 12,251
Over 4 years 3,245 2,755
159,537 165,368
Average age (days) 475 464
The provision for impairment of trade receivables is the difference between
the carrying value and the present value of the expected proceeds taking into
account the credit risk associated with non-collection. The Directors consider
that the fair value of trade and other receivables is not materially different
from the carrying value.
Movement in provision for impairment of trade receivables
2023 2022
£'000s £'000s
Opening balance 24,674 27,360
Increase in provision 3,489 5,422
Utilised in the year (7,351) (8,108)
Closing Balance 20,812 24,674
8. Borrowings
2023
2022
£'000s £'000s
Non-current loans and borrowings
Lease liabilities 7,968 7,176
Revolving credit facility - 10,000
Other borrowings 15,000 15,000
22,968 32,176
Current loans and borrowings
Lease liabilities 6,347 6,403
Invoice discounting facility 27,858 30,562
Revolving credit facility 10,000 -
Other borrowings 9,212 13,032
53,417 49,997
Total borrowings 76,385 82,173
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. At the end of
December 2023, Direct Accident Management Limited has availability within the
invoice discounting facility of £2.3 million (2022: £0.9 million).
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 and fully repaid during 2023.
Direct Accident Management Limited is also party to a number of 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, with a cross company
guarantee provided by Anexo Group Plc. The loan is structured as a revolving
credit facility which is committed for a three-year period, until 13 October
2024, with no associated repayments due before that date. Interest is charged
at 3.25% over the Respective Rate. The facility was fully drawn down as at 31
December 2023 and 2022.
In July 2020 Anexo Group Plc secured a loan of £2.1m from a specialist funder
to support the investment in marketing costs associated with the Emissions
Case. The terms of the loan are that interest accrues at the rate of 10% per
annum and on successful settlement the funders receive a share of the
proceeds, with maturity three years from the date of receipt of funding. The
loan, interest and a share of the settlement proceeds were repaid during the
year, the total balance outstanding at 31 December 2023 was £Nil (2022: £2.8
million).
In November 2021 a further £3.0 million loan was sourced from certain of the
principal shareholders and directors of the Group to support the investment in
2023 of the Mercedes Benz emissions claim. The terms of the loan are that
interest accrues at the rate of 10% per annum, with maturity two 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. Having reached an agreement in the Emissions
Case, the loan, interest and share of proceeds was repaid in the period to 30
June 2023 with any residual amount due upon successful conclusion of the
Mercedes Benz Emissions Claim.
In March 2022 the group secured a loan of £7.5 million from Blazehill Capital
Finance Limited, with an additional £7.5 million drawn in September 2022, the
total balance drawn at 31 December 2022 and 2023 was £15.0 million. The loan
is non amortising and committed for a three-year period. Interest is charged
and paid monthly at 13% above the central bank rate. The facility is secured
by way of a fixed charge dated 29 March 2022, over all present and future
property, assets and rights (including uncalled capital) of Direct Accident
Management Limited, with a cross company guarantee provided by Anexo Group
Plc.
In October 2022, the Group secured a loan of £4.7 million from Premium
Credit, the loan is unsecured and amortising over a 12-month period, the loan
was fully repaid during 2023.
In June 2023 a loan of £2.8 million was sourced from a specialist funder and
certain of the principal shareholders and directors of the Group to support
the ongoing investment in 2023 in emissions opportunities. The terms of the
loan are that interest accrues at the rate of 10% per annum, with maturity two
years from the date of receipt of funding. In addition to the interest charges
the loan attracts a share of the proceeds generated for the Group. The total
balance outstanding at 31 December 2023 was £2.8 million (2022: £Nil).
In August 2023, the Group secured a loan of £4.6 million from Premium Credit,
the loan is unsecured and amortising over a 12-month period. At 31 December
2023 the amount outstanding was £2.8 million (2022: £Nil).
The loans and borrowings are classified as financial instruments and are
disclosed in the financial instruments note.
The Group's exposure to market and liquidity risk; including maturity
analysis, in respect of loans and borrowings is disclosed in the financial
risk management and impairment of financial assets note.
The Group's banking arrangements provided by Secure Trust Bank Plc, HSBC Bank
Plc and Blazehill Capital Limited are subject to monitoring through financial
performance measures or covenants.
The Secure Trust facility include the following covenants, all of which are
tested monthly:
· A number of individual measures focussed on the relationship between
cash collections and funding levels
· Settlement rates
· Hire periods
· Disbursement spending
· Vehicle numbers and utilisation
The Blazehill facility includes the following covenants, all of which are
tested monthly:
· Group EBITDA to be not less than 80% of forecast
· Cash collections to be not less than 80% of forecast
· Investment in group capex to not exceed 120% of forecast (testing
over a rolling twelve months)
· Minimum group liquidity to exceed £2.8 million at any time
The HSBC facility includes the following covenants, which are tested quarterly
for a rolling 12-month period on the results for Bond Turner Limited:
· Interest cover (the relationship between EBITDA and finance charges)
to exceed 4 times
· Leverage (being the relationship between EBITDA and net debt) to
exceed 2 times
In the early part of the year, one particular measures and covenant within the
Secure Trust facility surrounding the average hire period, was breached, the
average period extended beyond the measure, a positive for the Group. Formal
waiver was received and the measure increased from that date. A facility from
Secure Trust of £40.0 million at 31 December 2023 (2022: £40.0 million) was
already classified as repayable on demand so was not impacted. There we no
such breaches within either of the Blazehill or HSBC facilities, all such
covenants being met during the year.
Changes in liabilities arising from financing activities
Invoice discounting facility £'000s
Lease liabilities £'000s Other borrowings £'000s Total borrowings £'000s
Balance at 1 January 2022 29,258 17,263 23,055 69,576
Cash flows
Proceeds from new loans 1,304 - 23,126 24,430
Repayment of borrowings - - (8,749) (8,749)
Capital element of lease payments - (10,275) - (10,275)
Non-cash changes * - 6,591 600 7,191
Balance at 31 December 2022 30,562 13,579 38,032 82,173
Cash flows
Proceeds from new loans - - 20,409 20,409
Repayment of borrowings (2,704) - (24,228) (26,932)
Capital element of lease payments - (9,153) - (9,153)
Non-cash changes * - 9,888 9,888
Balance at 31 December 2023 27,858 14,314 34,213 76,385
* This balance includes £9.9 million (2022: £6.6 million) of new vehicle
leases entered into during the year and included in debt under IFRS 16.
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR EAASFEAALEEARecent news on Anexo
See all newsREG - Anexo Group PLC - Notice of AGM
AnnouncementREG - Anexo Group PLC - Final Results
AnnouncementREG - Anexo Group PLC - Appointment of CFO and Notice of Results
AnnouncementRCS - Anexo Group PLC - Supreme Court Judgment on Damages for Injuries
AnnouncementREG - Anexo Group PLC - Director/PDMR Shareholding
Announcement