TIDMANX
RNS Number : 0221L
Anexo Group PLC
11 May 2022
11 May 2022
Anexo Group plc
('Anexo' or the 'Group')
Final Results
"Significant growth in profits driven by increased cash
collections"
Anexo Group plc (AIM: ANX), the specialist integrated credit
hire and legal services provider, announces its final results for
the year ended 31 December 2021 (the 'period' or 'FY 2021').
Financial Highlights 2021 2020 % movement
Total revenues (GBP'000s) 118,237 86,752 +36.2%
Operating profit (GBP'000s) 27,350 18,050 +51.4%
Adjusted(1) operating profit before
exceptional items (GBP'000s) 27,728 18,708 +48.1%
Adjusted(1) operating profit margin
(%) 23.5 21.6 +8.8%
Profit before tax (GBP'000s) 23,746 15,488 +52.9%
Adjusted(1) profit before tax and exceptional
items (GBP'000s) 24,124 16,146 +49.7%
Adjusted(2) basic EPS (pence) 16.8 11.4 +48.2%
Total dividend for the year (pence) 1.5 1.5 -
Equity attributable to the owners of
the Company (GBP'000s) 128,224 110,438 +16.1%
Net cash flow (GBP'000s) -7,300 +200 -
Net debt balance (GBP'000s) 62,000 40,500 +53.1%
Note: The basis of preparation of the consolidated financial
statements for the current and previous year is set out in the
Financial Review on page 14.
1. Adjusted operating profit and profit before tax: excludes
share -- based payment charges in 2020 and 2021. A reconciliation
to reported (IFRS) results is included in the Financial Review on
page 19.
2. Adjusted EPS: adjusted PBT less tax at statutory rate divided
by the weighted number of shares in issue during the year.
Financial and Operational KPIs
-- During 2021, we saw the continued improvement in a number
of key performance measures (detailed below). These have
resulted in a significant improvement in financial performance
for the Group during the period, notwithstanding the continuing
issues faced during 2021 from COVID-19. Opportunities
within the Credit Hire division have never been so strong,
following the introduction of the Civil Liabilities Act
2021, and the Group has deployed increasing working capital
facilities and reinvested significant levels of cash collections
into the new case portfolio. Consequently, the number
of new cases funded rose from 7,535 to 10,265, an increase
of 36.2%. This investment is supported by growth in cash
collections, which rose by 21.5% in the year to reach
GBP119.0 million in 2021.
-- Our ability to fund growth in our core business has been
supported by investment in legal staff. In 2021, the number
of senior fee earners grew by 45% to reach 237 at the
year end. This investment has driven increased cash collections
in the year despite the challenges of the reduced operation
of the court system. Much of the investment will start
to impact during 2022 and beyond, reflecting the life
cycle of a typical credit hire claim and the time a new
starter takes to reach settlement maturity.
KPI's 2021 2020 % movement
Total revenues (GBP'000s) 118,237 86,752 +36.3%
Gross profit (GBP'000s) 91,481 67,952 +34.6%
Adjusted operating profit (GBP000's) 27,728 18,708 +48.2%
Adjusted operating profit margin
(%) 23.5% 21.6% +10.9%
Vehicles on hire at the year-end
(no) 2,366 1,613 +46.7%
Average vehicles on hire for
the year (no) 1,834 1,515 +21.1%
Number of hire cases settled 6,187 5,236 +18.2%
Cash collections from settled
cases (GBP'000s) 119,007 97,977 +21.5%
New cases funded (no) 10,265 7,535 +36.2%
Legal staff at the period end
(no) 634 518 +22.4%
Average number of legal staff
(no) 590 498 +18.5%
Total senior fee earners at
period end (no) 237 163 +45.4%
Average senior fee earners (no) 201 144 +39.6%
Commenting on the Final Results, Alan Sellers, Executive
Chairman of Anexo Group plc, said:
"I am pleased to report that the Group has had a successful
2021, building on the achievements of 2020. The results demonstrate
the resilience of the Group's business model, as we improved on
last year's cash collections, whilst still facing uncertainty due
to the COVID-19 pandemic. Group revenues in 2021 increased by over
a third compared to the previous year.
"Opportunities within the Credit Hire division have never been
so strong. As a result, the Group has focused considerable resource
here and has seen the number of new cases funded rise
substantially.
"The Board remains focused on long term growth, and we are
confident that there are significant opportunities that exist in
2022 to build upon our successful platform. The growth of our
Housing Disrepair Division throughout 2021, as well as our already
resilient business model, presents an exciting outlook for the year
ahead."
Analyst Briefing
A conference call for analysts will be held at 9.30am today, 11
May 2022. A copy of the Final Results presentation is available at
the Group's website: https://www.anexo-group.com/
An audio webcast of the conference call with analysts will be
available after 12pm today:
https://www.anexo-group.com/content/investors/latest-results
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
WH Ireland Limited
(Nominated Adviser & Joint Broker)
Chris Hardie / Darshan Patel / Enzo +44 (0) 20 7220 1666
Aliaj (Corporate) www.whirelandplc.com/capital-markets
Fraser Marshall / Harry Ansell (Broking)
Arden Partners plc
(Joint Broker)
John Llewellyn-Lloyd / Louisa Waddell +44 (0) 20 7614 5900
(Corporate) www.arden-partners.co.uk
Tim Dainton (Equity sales)
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
Chairman's Statement
On behalf of the Board, I am pleased to report a year of
significant growth by the Group in the face of considerable ongoing
nationwide challenges. These results reflect our continued focus on
increasing cash settlements through the expansion of our Legal
Services division, while using our working capital to maximum
effect to ensure growth in our Credit Hire division. This emphasis
on facilitating growth led to significant increases in both cash
collections and vehicle numbers, culminating in record numbers of
vehicles on the road at the end of the year. We have continued to
invest in our advocacy practice, particularly through our Housing
Disrepair Division, and we believe the division will become a
significant contributor to future revenues.
The Board continues its close monitoring of progress in our core
divisions while seeking to take advantage of the significant growth
opportunities which are presenting themselves as we emerge from the
pandemic and believes that the Group is well positioned for further
strong performance in 2022 and beyond.
Group Performance
Anexo experienced strong growth in 2021, despite the ongoing
disruption caused by the ongoing COVID restrictions. Trading across
our divisions has been robust and our core business has proved
extremely resilient. As a result, Group revenues in 2021 increased
by 36.2% to GBP118.2 million (2020: GBP86.8 million). Adjusted
profit before tax rose 49.7% to GBP24.1 million (2020: GBP16.1
million), reflecting the continued investment in staff, IT and
associated infrastructure costs associated with the headcount
increase (investment in 2020: GBP6.5 million). The Group issued a
trading statement on 18 January 2022 stating that profit before tax
would significantly exceed market expectations.
The Group's focus on growth meant that 2021 was a period of cash
absorption to take advantage of the opportunities for new
contracts, as well as the ongoing withdrawal of a number of
competitors from the market and the impact of the introduction of
the Civil Liabilities Act, which severely curtails the ability of
personal injury solicitors to recover substantial legal costs. To
accommodate this growth the Group increased its available working
capital facilities and continued the expansion of staff numbers and
the necessary supporting infrastructure to support increased case
settlements.
Credit Hire division
The Group's Credit Hire division, EDGE, saw further record
performance in vehicle provision during the year. The number of new
vehicle hires continued to be impacted by lockdowns in 2021.
However, a large number of EDGE customers are classed as key
workers, including couriers (who have been extremely active
throughout the pandemic) as well as health professionals, teachers,
nursery staff, emergency workers and supermarket personnel. As a
consequence, and with the backdrop of a reduction in competition in
the market following changes implemented by the Civil Liabilities
Act 2021, vehicle numbers recovered strongly and reached record
levels in the latter part of 2021. The number of vehicles on hire
at the end of 2021 rose 46.7% to 2,366 (2020: 1,613) and the
average number of vehicles on hire throughout the financial year
rose 21.1% to 1,834 (2020: 1,515).
Revenues within the Credit Hire division grew by 38.2% to
GBP71.3 million (2020: GBP51.6 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 and corresponding investment in staff
to drive increased case settlements. This strategy has had a
significant positive impact on financial performance. Revenues
within the Legal Services division, which strongly correlates to
cash, increased by 33.2% to GBP46.9 million (2020: GBP35.2
million). The continued growth of the Bolton office, which opened
in December 2018, and the opening of the Leeds office at the
beginning of 2021 have provided considerable opportunities for
recruitment. During the pandemic, and following the implementation
of the Civil Liabilities Act 2021, the Group has seen a number of
personal injury solicitors withdrawing from the market and
embarking on a run-off strategy. In addition, a number of
high-quality staff at competitor firms were placed on furlough.
Taking advantage of these recruitment opportunities has resulted in
staff numbers rising at all levels, with the ability to retrain
personal injury solicitors in the field of credit hire for suitable
placement within Bond Turner. At the end of December staff numbers
within Bond Turner stood at 634, a 22.4% increase on the 2020
figure of 518. Of these, a total of 237 were senior fee earners, up
46.3% (2020: 163).
MCE Insurance
Towards the end of 2021 we announced the signing of a major
agreement with UK-based broker MCE Insurance ('MCE') to offer
post-accident claims services to all MCE's non-fault insurance
customers. This follows motor insurer Sabre Insurance Group plc
signing an agreement with MCE which will see it become the
exclusive underwriter of MCE's motorcycle policies.
UK-based MCE is independently owned and since its foundation in
1975 has grown to become one of the UK's largest providers of
motorcycle insurance. Under the terms of the agreement, we will
assume responsibility for dealing with claims from customers of MCE
who are victims of non-fault accidents. Replacement motorcycles
will be provided through our credit hire division, Edge, and
customers will be supported in their legal claims against the
at-fault insurer by its legal services division, Bond Turner. Where
appropriate, claims will include personal injury and damage to
possessions and equipment as well as vehicle repair or replacement.
Statistics show that motorcyclists are particularly vulnerable to
personal injury as a result of non-fault accidents.
The contract commenced in November 2021 and generated over 500
claims by the end of the year. We anticipate that the contract will
generate an increasing level of credit hire opportunities for the
Group during 2022, adding to our growth opportunities within the
core business.
VW Emissions Case
The pursuit of the class action against Volkswagen AG ('VW') and
its subsidiaries (the 'VW Emissions Case') has continued during
2021. A judgment announced in the High Court of Justice on 6 April
2020 found that VW had indeed subverted key air pollution tests. VW
was subsequently refused permission to appeal that judgment. Time
limitations for the case expired in September 2021, meaning that no
more claims can be brought against VW.
A court date for the case has now been scheduled for January
2023, prior to which we will seek to negotiate settlement of the
case.
Bond Turner is acting on behalf of a number of individuals who
have registered claims against VW and is currently actively engaged
on approximately 13,000 cases. The marketing campaign has been
largely conducted via social media channels as well as via the use
of internal customer records with all marketing costs being written
off as incurred.
The Board believes that, in the event of a settlement, the
percentage of potential damages and associated costs accruing to
Anexo would have a significant positive impact on the Group's
expectations for profits and cash flow for the relevant accounting
period. There is no certainty that a settlement in favour of Bond
Turner's clients will be reached, nor is there any guarantee that
such a settlement would include financial compensation. The
timeline for progress towards a potential settlement is also
unclear and no assumptions as to revenue have been included in the
Board's internal forecasts for 2022.
Mercedes Benz Emissions Case
Having undertaken our own internal research, which has been
subsequently corroborated by counsel, the Group is to start
actively sourcing claims against Mercedes Benz, as we have
successfully done for VW. To support the case, the Group sourced an
additional GBP3.0 million of funding in November 2021 to cover the
anticipated marketing costs.
Housing Disrepair
During the latter part of 2020 we created a new team within our
legal services division, Bond Turner, to deal with claims arising
from housing disrepair. This team expanded rapidly during 2021.
During the year we successfully settled some 500+ claims. At the
end of the year, we had a portfolio of over 1,500 ongoing claims.
With further investment planned into 2022, the Housing Disrepair
team is expected to generate a significant contribution to earnings
in 2022 and beyond.
Dividends
The Board is pleased to propose a final dividend of 1.0p per
share, which if approved at the Annual General Meeting to be held
on 16 June 2022 will be paid on 24 June 2022 to those shareholders
on the register at the close of business on 20 May 2022. The shares
will become ex-dividend on 19 May 2022. An interim dividend of 0.5p
per share was paid on 22 October 2021 (2020: total dividend 1.5p
per share).
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.
COVID-19 Update
The COVID-19 pandemic has inevitably caused some continued
disruption to the Group's operations. The Group's operations are,
however, categorised as essential businesses and as such have been
exempted throughout from government restrictions. Its businesses
supply and service a broad range of customers who are involved in a
non-fault accident and who would otherwise be unable to access the
mobility they need. Among these, the Group provides replacement
vehicles to many key workers, including couriers (who have been
increasingly active throughout the pandemic) and other customers
such as doctors, nurses, schoolteachers, nursery staff, emergency
workers and supermarket personnel.
The Group's core businesses continued to be fully operational
following the reintroduction of a national lockdown at the end of
2020. Activity levels in the Credit Hire Division (EDGE) have
remained high. The COVID-19 pandemic has led to a number of the
Group's competitors withdrawing from the market and, as a result,
Anexo has been approached by a number of high-quality introducer
garages looking for new partnerships. The Group has taken advantage
of this unprecedented opportunity to expand its introducer network.
Notwithstanding the relaxation of restrictions, vehicles have
continued to be delivered and collected by staff who are protected
in line with government guidelines. All returned vehicles are
valeted as a matter of course before being allocated to a new
customer and comprehensive cleaning procedures are being rigorously
enforced.
The courts began to return to normal working practices during
2021, while remaining open for remote working. A backlog of those
cases requiring physical attendance has inevitably arisen, but the
Group's Legal Services division, Bond Turner, has continued to
reach case settlements via telephone and online hearings where
possible. The progression and settlement of cases was aided by
moves from the Ministry of Justice (MOJ), supported by the
Judiciary, to allow the remote operation of courts through online
and telephone hearings. All our staff returned to office working as
quickly as practicable; social distancing guidelines have been
observed in all our office locations and extensive COVID safety
measures have been implemented.
EDGE, the Group's Credit Hire division, has also remained fully
operational throughout 2021.
Due to the unprecedented global impacts of COVID-19, the Company
has continually re-assessed and analysed its business strategy with
the key focus being minimising the impact on critical work streams,
ensuring business continuity and conserving cash flows. As such,
increased stakeholder engagement and open communication have become
increasingly important in decision making for the Board.
While the COVID-19 crisis has interrupted our regular physical
face to face interactions with various stakeholders internally and
externally, we do consider them to be important in maintaining open
communications and team cohesion and will be reintroducing these
gradually, provided it is safe to do so in line with Government
guidelines and the needs of individual attendees. In the meantime,
we have taken advantage of various video conferencing platforms
where appropriate.
Current Trading and Outlook
As our financial performance and KPI's have demonstrated, the
Group has continued to perform throughout a period of significant
uncertainly, improving vehicle numbers and cash collections to
record levels during 2021, demonstrating the strength and
resilience of the Group during the current COVID-19 crisis. Whilst
others have made redundancies, furloughed staff and withdrawn from
the credit hire market, we have continued recruitment throughout
the period. This impacted our reported financial performance in
2020 but these investments have resulted in the growth seen in 2021
and will continue to contribute to growth in 2022 and beyond.
As a Board we developed a plan for managing the Group during
this ever-changing year and continue to react to take advantage of
opportunities as they arise. The expansion of the national
vaccination programme and the relaxation of national lockdown from
April 2021 has resulted in an increase in opportunities and
vehicles on the road, consistent with the trends seen in 2020. As
previously announced, however, since year end the Group has
modified its approach to vehicle funding. We have adopted a
targeted approach. This has led to a reduction in the number of
vehicles on the road since the beginning of FY22 to a level which
best facilitates management of the Group's working capital
requirements. The Group remains focused on quality claims, high
service standards and high success rates.
While uncertainties remain given the current environment, I
continue to have great confidence in the strategy post COVID and
look to the future with continued optimism.
Subsequent Events
In March 2022, the Group secured an increase in facilities from
Secure Trust Bank plc, increasing the overall draw rate on the
invoice discounting facility alongside an increase in the overall
facility limit to GBP43.0 million. In addition to this increase the
Group secured a loan of GBP7.5 million from Blazehill Capital
Finance Limited. The loan, which is non amortising and is committed
for a three year period was also drawn in March 2022.
Alan Sellers
Executive Chairman
11(th) May 2022
Financial Review
Basis of Preparation
As previously reported, Anexo Group Plc was incorporated on 27
March 2018, acquired its subsidiaries on 15 June 2018, and was
admitted to AIM on 20 June 2018 (the 'IPO'). Further details are
included within the accounting policies.
To provide comparability across reporting periods, the results
within this Financial Review are presented on an "underlying"
basis, adjusting for the GBP0.7 million charge recorded for
share-based payments in 2020 and the GBP0.4 million charge for
share-based payments in 2021.
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.
New Accounting Standards
As reported on page 73 there have been a number of new UK IFRS
accounting standards applicable from 1 January 2021, none of which
have resulted in adjustment to the way in with the Group accounts
or presents its financial information.
Revenue
In 2021, Anexo successfully increased revenues across both its
divisions, Credit Hire and Legal Services, resulting in Group
revenues of GBP118.2 million, representing a 36.2% increase over
the prior year (2020: GBP86.8 million). This growth is particularly
pleasing given the fact that we have all been operating under
restrictions imposed by the Government to limit the impact of the
COVID-19 pandemic.
During 2021 EDGE, the Credit Hire division, provided vehicles to
10,265 individuals (2020: 7,535) a significant increase on that
seen in the prior year (36.2%). This constitutes a strong
performance given the restrictions imposed during the year. Our
strategy remains, as previously reported, to focus investment
within the McAMS business. This reflects the fact that, on average,
a motorcycle claim has a similar value to that of a car with a
take-on cost significantly less, allowing the Group to deploy its
resources into the most valuable claims, thereby growing revenues
whilst preserving working capital. This investment led to the award
of our first insurance contract in November 2021. The Group secured
an exclusive contract with MCE to support their non fault customers
with replacement vehicles.
With the number of claims rising significantly in 2021, the
strategy of deploying capital into the most valuable claims to the
Group resulted in revenues for the Credit Hire division increasing
to GBP71.3 million in 2021, an increase of 38.2% over 2020 (GBP51.6
million).
With investment in staff continuing as other firms made
redundancies and furloughed staff, the Legal Services division
reported significant revenue growth of 30.6%, with revenues rising
from GBP35.9 million in 2020 to GBP46.9 million in 2021.
Expansion of headcount in Bond Turner has been critical to
increasing both revenues and cash settlements within the Group and
the continued growth of the Bolton office, supported by expansion
into Leeds, has provided a crucial platform for growth in both
factors. During 2021, the Group continued its recruitment campaign,
as a number of high-quality staff became available as a result of
competitor firms either entering a run-off plan or simply
furloughing staff to remain viable.
We have taken advantage of these opportunities, taking the
decision to continue to recruit throughout the year, thereby
investing in the future settlement capacity of the Group and
consequently driving cash collections and the number of new cases
we can fund without the need for additional working capital
facilities. By the end of December 2021, we employed 634 staff in
Bond Turner (December 2020: 518), of which 237 (December 2020: 163)
were senior fee earners, an increase of 31.6%.
Investment in this new department, following the implementation
of the Extension of the Homes (Fitness for Human Habitation) Act
2019, expanded significantly in 2021. With GBP1.7 million being
invested in marketing for the generation of new claims, we secured
c 2,000 new claims in 2021, settling c 500 in an average of 180 to
200 days, significantly less than the working capital cycle of an
average Credit Hire claim. As such, and following the significant
investment in staff in 2021, further recruitment is planned into
2022 to enhance performance and improve cash flow for the Group as
a whole.
With the signing of the lease for the Leeds office, recruitment
and associated training has continued and as at the end of 2021 the
office held 24 staff. Recruitment is scheduled to continue
throughout 2022 across all of our three office locations.
Gross Profits
Gross profits are reported at GBP91.5 million (at a margin of
77.4%) in 2021, increasing from GBP68.0 million in 2020 (at a
margin of 78.3%). It should be noted, furthermore, that staffing
costs within Bond Turner are reported within Administrative
Expenses. Consequently, gross profit within Bond Turner is in
effect being reported at 100%.
Operating Costs
Administrative expenses before exceptional items increased
year-on-year, reaching GBP55.1 million in 2021 (2020: GBP42.6
million), an increase of GBP12.5 million (29.3%). This reflects the
continued investment in staffing costs within Bond Turner to drive
settlement of cases and cash collections. Staffing costs for Bond
Turner increased to GBP20.5 million (2020: GBP16.6 million), an
increase of GBP3.9 million (23.5%) which, together with significant
investment in staff within the Credit Hire division (2021: GBP12.4
million, 2020: GBP8.1 million) to ensure we maintained our high
standards of service to an increasing number of clients, accounted
for a total increase of GBP8.2 million. Following the establishment
of our Housing Disrepair team in late 2020, some GBP1.7 million was
invested in marketing costs in 2021 (2020: GBP0.1 million), all of
which has been expensed as incurred. The balance of the increase
reflects the investment in marketing and infrastructure to allow
the Group to meet its growth aspirations.
Profit Before Tax
Adjusted profit before tax reached GBP24.1 million in 2021,
increasing significantly from GBP16.1 million in 2020 (49.7%). To
provide a better guide to underlying business performance, adjusted
profit before tax excludes share-based payments charged to profit
and loss.
The GAAP measure of the profit before tax was GBP23.7 million
(2020: GBP15.5 million) reflecting the non-cash share-based payment
charge of GBP0.4 million (2020: GBP0.7 million). Where we have
provided adjusted figures, they are after the add-back of this item
and a reconciliation of the adjusted and reported results is
included on page 19 of the Annual Report.
Finance Costs
Finance costs reached GBP3.6 million in 2021, increasing from
GBP2.6 million in 2020 (38.5%), reflecting the increased level of
financing facilities held within the Group to support its growth
strategy.
EPS and Dividend
Statutory basic EPS is 16.5 pence (2020: 10.8 pence). Statutory
diluted EPS is 16.2 pence (2020: 10.6 pence). The adjusted EPS is
16.8 pence (2020: 11.4 pence). The adjusted diluted EPS is 16.5
pence (2020: 11.2 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 1.0p per
share, which if approved at the Annual General Meeting to be held
on 16 June 2022 will be paid on 24 June 2022 to those shareholders
on the register at the close of business on 20 May 2022. The shares
will become ex-dividend on 19 May 2022. An interim dividend of 0.5p
per share was paid on 22 October 2021 (2020: total dividend 1.0p
per share).
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 debtors, together with disbursements
paid in advance which support the portfolio of ongoing claims. The
gross claim value of trade receivables totalled GBP325.3 million in
2021, rising from GBP262.6 million in 2020. In accordance with our
income recognition policies, a provision is made to reduce the
carrying value to recoverable amounts, the net balance increasing
to GBP146.4 million (2020: GBP119.6 million). This increase
reflects the recent trading activity and strategy of the Group and
is in line with management expectations given that throughout the
majority of 2021 the legal services teams have been operating
within COVID-19 restrictions and there have been periods when
capacity within the court system has been significantly hampered.
The increase has been primarily funded from the significant rise in
cash collections seen year on year as well as additional facilities
secured from our two principal working capital funders.
In addition, the Group has a total of GBP39.4 million reported
as accrued income (2020: GBP27.1 million) which represents the
value attributed to those ongoing hires and claims at the year end,
the number of vehicles on the road in particular increasing
significantly during the year.
The increases in both trade receivables and accrued income
reflect an increase in net volume of new cases funded which
increased to 4,078 in 2021 (having funded 10,265 hire cases and
settled 6,187 in the year) from 2,299 in 2020 (having funded 7,535
hire cases and settled 5,236 in that year).
Whilst activity levels have risen and fallen in line with the
local and national lockdowns, impacting the number of vehicles on
the road and hence opportunities for new claims for the Group,
further investment has been required and made in 2021 into the
motorcycle fleet so as to meet the demand from our significant pool
of introducers. Total fixed asset additions totalled GBP13.1
million in 2021 (2020: GBP11.2 million), the fleet continues to be
largely externally financed.
Trade and other payables, including tax and social security
increased to GBP12.6 million compared to GBP9.5 million at 31
December 2020, the Group utilising additional cash availability to
reduce the balance over and above the general increase in trading
activity.
Net assets at 31 December 2021 reached GBP128.2 million (2020:
GBP110.4 million).
Net Debt, Cash and Financing
Net debt increased to GBP62.0 million at 31 December 2021 (31
December 2020: GBP40.5 million) and comprised cash balances at 31
December 2021 of GBP7.6 million (2020: GBP8.2 million), plus
borrowings which increased during the year to fund the additional
working capital investment in the Group's portfolio of claims,
support the investment by the Group in the VW and Mercedes Benz
emissions claims and facilitate expansion of the vehicle fleet.
The total debt balance rose from GBP48.7 million in 2020 to
GBP69.6 million at the end of 2021; these balances include lease
liabilities recognised in line with IFRS16. 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), lease
facilities to support the acquisition of the fleet and a revolving
credit facility within Bond Turner Limited.
Subsequent to the year end, the group secured an increase in
facilities from Secure Trust Bank plc alongside a loan of GBP7.5
million from Blazehill Capital Finance Limited. Secured Trust Bank
plc increased both the overall draw rate on the invoice discounting
facility as well as the overall facility limit to GBP43.0 million.
The loan from Blazehill Capital Finance Limited is non amortising
and committed for a three year period; both were available to be
drawn from March 2022.
Having considered the Group's current trading performance, cash
flows and headroom within our current debt facilities, 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
on page 73 of the financial statements.
Cash Flow
Notwithstanding the impact of COVID-19 on the Business (further
details provided earlier), whilst other businesses have furloughed
staff and made redundancies, particularly within the personal
injury legal market, we have continued to invest in talent and grow
our settlement capacity throughout Bond Turner. The number of
senior fee earners increased from 163 to 237 during 2021 (an
increase of 45.4%) and continues to rise across each of our
offices, the third of which opened in Leeds in February 2021.
Cash collections for the Group (and excluding settlements for
our clients), a key metric for the Group, increased from GBP98.0
million in 2020 to GBP119.0 million in 2021, an increase of 21.4%.
This is a significant improvement, given the fact that many of the
new recruits will not reach settlement maturity until 2022.
Furthermore, with settlements impacted by the reduction in capacity
within the court system arising from the impact of COVID, this
growth is testament to the quality of staff within the Group.
During 2020 and 2021, we have seen a number of competitors furlough
staff and withdraw from the market leading to increases in market
opportunities; we have sought to take advantage of this and
increase market share. Despite the noticeable decline in road
traffic during the various periods of lockdown, with the overall
number of vehicles on the road visibly lower than in a typical year
and many people working from home, we have actually seen the
average number of vehicles on the road rise in 2021, reaching 1,834
(2020: 1,515). This contributed to the strong revenue performance
of the Credit Hire division.
This growth correspondingly impacted cash flows in the second
half of the year with vehicle numbers peaking at over 2,500 in the
later part of the year, culminating in the award of our first
insurance contract with MCE (further details have been provided
above).
With such a raft of growth opportunities, the Board approved an
increase in availability of approximately GBP11.1 million of new
debt, provided by an increase in facilities from Secure Trust Bank
plc (GBP3.6 million) and Blazehill Capital Finance Limited (GBP7.5
million), to take advantage of these opportunities, whilst ensuring
the relationship between the number of new claims taken on within
EDGE is balanced with the settlement capacity of Bond Turner. These
additional facilities were secured in March 2022.
As growth opportunities within the Credit Hire division expanded
significantly during 2021, the Group reported an outflow from
operating activities of GBP7.3 million (2020: cash inflow of GBP0.2
million), this position being impacted not only from the
significant increase in hire cases funded (which increased by 2,730
(36.2%) to 10,265) but continued delays and adjournments within the
court system. However, we successfully reduced the average working
capital cycle from c520 days in 2020 to c460 days in 2021 as the
level of claims processed under protocol type arrangements with a
number of at fault insurers increased to cover approximately 15% of
our claims taken.
With a net cash inflow of GBP7.2 million resulting from
financing activities, having secured additional facilities from our
two primary funders (Secure Trust Bank Plc and HSBC Bank Plc)
alongside an additional GBP3.0 million to fund the Mercedes Benz
emissions claim, (2020: net cash inflow of GBP4.9 million), the
Group reported a net cash outflow in 2021 of GBP0.7 million (2020:
net cash inflow of GBP6.0 million).
Reconciliation of Adjusted and Reported IFRS Results
In establishing the adjusted operating profit, the costs
adjusted include GBP0.4 million of costs related to share-based
payments (2020: GBP0.7 million).
A reconciliation between adjusted and reported results is
provided below:
Year to December 2021
---------------------
Adjusted Share-based Reported
GBP'000s payment GBP'000s
GBP'000s
--------------------- ----------- -------------- -----------
Revenue 118,237 - 118,237
Gross profit 91,481 - 91,481
Other operating
costs (net) (63,149) (378) (63,527)
Operating profit 27,728 (378) 27,350
Finance costs (net) (3,604) - (3,604)
Profit before tax 24,124 (378) 23,746
Year to December 2020
---------------------
Adjusted Share-based Reported
GBP'000s payment GBP'000s
GBP'000s
--------------------- ----------- -------------- -----------
Revenue 86,752 - 86,752
Gross profit 67,952 - 67,952
Other operating
costs (net) (49,244) (658) (49,902)
Operating profit 18,708 (658) 18,050
Finance costs (net) (2,562) - (2,562)
Profit before tax 16,146 (658) 15,488
By order of the board
Mark Bringloe
Chief Financial Officer
11 May 2022
Consolidated Statement of Total Comprehensive Income
for year ended 31 December 2021
2021 2020
Note GBP'000s GBP'000s
Revenue 3 118,237 86,752
Cost of sales (26,756) (18,800)
---------- ------------
Gross profit 91,481 67,952
Depreciation & profit / loss on disposal 4 (8,504) (6,571)
Amortisation 4 (137) (92)
Administrative expenses before share
based payments 4 (55,112) (42,581)
Operating profit before share based
payments 4 27,728 18,708
---------- ------------
Share based payment charge 4 (378) (658)
---------- ------------
Operating profit 4 27,350 18,050
Finance costs (3,604) (2,562)
---------- ------------
Profit before tax 23,746 15,488
Taxation (4,598) (3,173)
Profit and total comprehensive income
for the year attributable to the owners
of the company 19,148 12,315
---------- ------------
Earnings per share
Basic earnings per share (pence) 5 16.5 10.8
---------- ------------
Diluted earnings per share (pence) 5 16.2 10.6
---------- ------------
The above results were derived from continuing operations.
Consolidated Statement of Financial Position
as at 31 December 2021
2021 2020
Assets Note GBP'000s GBP'000s
Non-current assets
Property, plant and equipment 6 2,071 2,187
Right of use assets 6 16,896 13,081
Intangible assets 7 188 234
Deferred tax assets 7 112 112
19,267 15,614
---------- ----------
Current assets
Trade and other receivables 8 188,134 147,931
Corporation tax receivable - 439
Cash and cash equivalents 7,562 8,220
195,696 156,590
---------- ----------
Total assets 214,963 172,204
---------- ----------
Equity and liabilities
Equity
Share capital 58 58
Share premium 16,161 16,161
Share based payments reserve 2,077 1,699
Retained earnings 109,928 92,520
---------- ----------
Equity attributable to the owners
of the Company 128,224 110,438
---------- ----------
Non-current liabilities
Other interest-bearing loans and borrowings 9 13,814 3,681
Lease liabilities 9 8,430 8,945
Deferred tax liabilities 32 32
22,276 12,658
---------- ----------
Current liabilities
Other interest-bearing loans and borrowings 9 38,499 31,294
Lease liabilities 9 8,833 4,753
Trade and other payables 12,635 9,505
Corporation tax liability 4,496 3,556
64,463 49,108
---------- ----------
Total liabilities 86,739 61,766
---------- ----------
Total equity and liabilities 214,963 172,204
---------- ----------
The financial statements were approved by the Board of Directors
and authorised for issue on 10 May 2022. They were signed on its
behalf by:
Mark Bringloe
Chief Financial Officer
11 May 2022
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Share
Based
Share Share Merger Payments Retained
Capital Premium Reserve Reserve Earnings Total
GBP'000s 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 - - - - 12,315 12,315
Issue of share
capital 3 - - - - 3
Increase in share
premium - 6,926 - - - 6,926
Share based payment
charge - - - 658 - 658
Dividends - - - - (1,160) (1,160)
At 31 December
2020 58 16,161 - 1,699 92,520 110,438
Profit for the
year and total
comprehensive
income - - - - 19,148 19,148
Share based payment
charge - - - 378 - 378
Dividends - - - - (1,740) (1,740)
At 31 December
2021 58 16,161 - 2,077 109,928 128,224
------------ -------------- ------------ -------------- --------- -----------
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
2021 2020
Note GBP'000s GBP'000s
Cash flows from operating
activities
Profit for the year 19,148 12,315
Adjustments for:
Depreciation and profit /
loss on disposal 4 8,504 6,571
Amortisation 4 137 92
Financial expense 3,604 2,562
Share based payment charge 4 378 658
Taxation 4,598 3,173
----------------- ------------
36,369 25,371
Working capital adjustments
Increase in trade and other
receivables (40,224) (20,686)
Increase in trade and other
payables 3,131 1,588
----------------- ------------
Cash generated from operations (724) 6,273
Interest paid (3,364) (2,422)
Tax paid (3,219) (3,646)
----------------- ------------
Net cash from operating activities (7,307) 205
----------------- ------------
Cash flows from investing
activities
Proceeds from sale of property,
plant and equipment 941 853
Acquisition of property,
plant and equipment (1,439) (223)
Investment in intangible
fixed assets (91) (150)
Receipt of directors loan
receivable - 415
Net cash from investing activities (589) 895
----------------- ------------
Cash flows from financing
activities
Net proceeds from the issue
of share capital - 6,929
Proceeds from new loans 25,039 12,924
Repayment of borrowings (7,951) (6,257)
Lease payments (8,110) (7,586)
Dividends paid (1,740) (1,160)
----------------- ------------
Net cash from financing activities 7,238 4,850
----------------- ------------
Net (decrease)/increase in
cash and cash equivalents (658) 5,950
Cash and cash equivalents
at 1 January 8,220 2,270
Cash and cash equivalents
at 31 December 7,562 8,220
----------------- ------------
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
1. Basis of Preparation and Principal Activities
Whilst the financial information included in this preliminary
announcement has been prepared on the basis of the requirements of
International Accounting Standards in conformity with the
requirements of the Companies Act 2006 and effective as at 31
December 2021, this announcement does not itself contain sufficient
information to comply with International Accounting Standards.
The financial information set out in this preliminary
announcement does not constitute the group's statutory financial
statements for the years ended 31 December 2021 or 2020 but is
derived from those financial statements.
Statutory financial statements for 2020 have been delivered to
the registrar of companies and those for 2021 will be delivered in
due course. The auditors have reported on those financial
statements; their reports were (i) unqualified and (ii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
The financial statements are presented in Pounds Sterling, being
the presentation currency of the Group, generally rounded to the
nearest thousand. Pounds Sterling is also the functional currency
for each of the Group entities.
The annual financial statements have been prepared on the
historical cost basis.
The principal activities of the Group are the provision of
credit hire and associated legal services.
The Company is a public company limited by shares, which is
listed on the Alternative Investment Market of the London Stock
Exchange and incorporated and domiciled in the UK. The address of
its registered address office is 5th Floor, The Plaza, 100 Old Hall
Street, Liverpool, L3 9QJ.
Going concern
Throughout the year, ensuring the health and wellbeing of our
people and clients was paramount, and steps were taken to allow our
staff to be able to work on an agile basis in order to follow
social distancing, lockdown and self-isolation measures and to
mitigate the impact on client service.
During 2021, the vast majority of staff within Bond Turner, the
Group's Legal Services division, operated from within the office
under certain measures detailed within the Group's COVID-19 risk
assessment which included certain office adaptations. Progress
continues to be made for the transition from virtual to face to
face court hearings, supporting an ever-improving level of case
settlements and cash collections for the Group.
Within EDGE, the Group's Credit Hire division, vehicles have
been delivered and collected by staff who are protected in line
with government guidelines. our need for vehicle delivery increased
during the pandemic and the trend towards increasing opportunities
within our motorcycle business also expanded during 2021 as many
courier and motorcycle delivery businesses recruited thousands of
new riders to keep up with public demand. The number of vehicles on
the road reached record levels in the autumn of 2021, coinciding
with the award of the contract from MCE. Vehicle numbers are now
returning to lower levels in order to manage growth within EDGE and
remain within the capacity of Bond Turner.
The reported results for 2021 demonstrate the resilience shown
by the Group, our business model and our employees. The
introduction of the Housing Disrepair division supported a
shortening of our working capital cycle, an area with significant
capacity for growth during 2022 and beyond. The pandemic and the
changes in the Civil Liabilities Act have created opportunities for
the Group to both grow market share within the core business,
including the opportunity to secure our first insurance contract
with MCE, and to take advantage of opportunities as they arise in
other areas within the legal services arena.
Following the recent announcement of additional facilities from
Secure Trust Bank plc and Blazehill Capital Finance Limited, which
are expected to provide additional funding of GBP15.0 million into
2022, the Group has a strong balance sheet with a conservative
gearing level and good liquidity with headroom within its funding
facilities and associated covenants, which include a revolving
credit facility of GBP10.0 million with HSBC Bank plc (due for
repayment in October 2024), an invoice discounting facility of
GBP40.0 million with Secure Trust Bank plc (due for renewal in
December 2023) and a loan facility of GBP7.5 million from Blazehill
Capital Finance Limited.
Measures implemented to maintain a stable relationship between
EDGE and Bond Turner, alongside the additional headroom created
from the recent refinancing, means that the Board remains confident
that the Group is in a strong financial position and is well placed
to weather the current worldwide uncertainty and to take advantage
of further opportunities in a more stable future environment.
The Directors have prepared trading and cash flow forecasts for
the period ended December 2023, against which the impact of various
sensitivities have been considered covering the level of cash
receipts and the volume of work taken on. 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 Mercedes Benz emissions case. 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 as well as expected credit
losses whereby debts are assessed and provided against when the
recoverability of these balances is considered to be uncertain.
This requires the use of estimates based on historical claim and
settlement information.
Revenue is accrued on a daily basis, after adjustment on a
portfolio basis for an estimation of the recovery of those credit
hire charges based on historical settlement rates. This 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 fees that
will be recovered is known.
The settlement percentages applied and expected credit loss
provisions are based on historical settlement information, revenue,
accrued income and trade receivables are sensitive to these
estimates. This 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. If the settlement percentages applied in calculating
revenue were reduced by 1% it would reduce credit hire revenue and
trade receivables and accrued income (GBP71.3 million and GBP143.0
million respectively) by GBP2.3 million. (2020: by GBP1.9 million,
credit hire revenue being GBP51.0 million and trade receivables and
accrued income GBP110.9 million).
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
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 2021
Group
Housing VW &
Credit Legal Disrepair Class Central
Hire Services Action Costs Consolidated
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Revenues
Third party 71,338 41,823 5,076 - - 118,237
Total revenues 71,338 41,823 5,076 - - 118,237
--------- ------------ ------------- --------- --------- -------------
Profit before taxation 19,811 4,423 2,592 (819) (2,261) 23,746
--------- ------------ ------------- --------- --------- -------------
Net cash from
operations (10,654) 5,637 (568) (819) (903) (7,307)
--------- ------------ ------------- --------- --------- -------------
Depreciation,
amortisation
and gain on disposal
of property, plant
and equipment 7,205 1,436 - - - 8,641
--------- ------------ ------------- --------- --------- -------------
Segment assets 161,578 49,545 3,648 - 192 214,963
--------- ------------ ------------- --------- --------- -------------
Capital expenditure 998 441 - - - 1,439
--------- ------------ ------------- --------- --------- -------------
Segment liabilities 55,415 25,413 - 5,501 410 86,739
--------- ------------ ------------- --------- --------- -------------
Year ended 31 December 2020
Group
Housing VW &
Credit Legal Disrepair Class Central
Hire Services Action Costs Consolidated
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Revenues
Third party 51,591 34,419 742 - - 86,752
Total revenues 51,591 34,419 742 - - 86,752
-------- ------------ ------------- --------- --------- -------------
Profit before taxation 17,891 2,476 341 (2,906) (2,314) 15,488
-------- ------------ ------------- --------- --------- -------------
Net cash from
operations (15) 3,455 (168) (2,906) (161) 205
-------- ------------ ------------- --------- --------- -------------
Depreciation,
amortisation
and gain on disposal
of property, plant
and equipment 5,492 1,173 - - - 6,665
-------- ------------ ------------- --------- --------- -------------
Segment assets 125,055 45,280 509 - 1,360 172,204
-------- ------------ ------------- --------- --------- -------------
Capital expenditure 4,238 900 - - - 5,138
-------- ------------ ------------- --------- --------- -------------
Segment liabilities 39,521 16,886 - 2,251 3,108 61,766
-------- ------------ ------------- --------- --------- -------------
Interest income/expense and income tax are not measured on a
segment basis.
4. Operating Profit
Operating profit is arrived at after charging:
2021 2020
GBP'000s GBP'000s
Depreciation on owned assets 653 474
Depreciation on right of use assets 8,039 6,333
Amortisation 137 91
Share based payments 378 658
Gain on disposal of property, plant
and equipment (188) (236)
There were no non-recurring costs in the year ended 31 December
2021 or 2020.
Included in the above are the costs associated with the
following services provided by the Company's auditor:
2021 2020
GBP'000s GBP'000s
Audit services
Audit of the Company and the consolidated
financial statements 50 40
Audit of the Company's subsidiaries 120 89
Total audit fees 170 129
All other services - -
Total fees payable to the Company's
auditor 170 129
---------- ----------
5. Earnings Per Share
2021 2020
Number of shares: No. No.
Weighted number of ordinary shares
outstanding 116,000,000 113,550,685
Effect of dilutive options 2,200,000 2,200,000
------------ ------------
Weighted number of ordinary shares
outstanding - diluted 118,200,000 115,750,685
------------ ------------
Earnings: GBP'000s GBP'000s
Profit basic and diluted 19,148 12,315
------------ ------------
Profit adjusted and diluted 19,526 12,973
------------ ------------
Earnings per share: Pence Pence
Basic earnings per share 16.5 10.8
------------ ------------
Adjusted earnings per share 16.8 11.4
------------ ------------
Diluted earnings per share 16.2 10.6
------------ ------------
Adjusted diluted earnings per share 16.5 11.2
------------ ------------
The adjusted profit after tax for 2021 and adjusted earnings per
share are shown before share -- based payment charges of GBP0.4
million (2020: GBP0.7 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 fittings
of Property & Office
use assets improvements Equipment equipment Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Cost
At 1 January 2020 17,176 453 1,781 787 20,197
Additions 10,176 39 894 91 11,200
Disposals (2,659) - - - (2,659)
At 31 December 2020 24,693 492 2,675 878 28,738
Additions 12,607 2 450 85 13,144
Disposals (7,656) - - (334) (7,990)
At 31 December 2021 29,644 494 3,125 629 33,892
----------- ------------- ---------- ---------- ---------
Depreciation
At 1 January 2020 7,319 273 460 651 8,703
Charge for year 6,333 24 399 51 6,807
Eliminated on disposal (2,040) - - - (2,040)
At 31 December 2020 11,612 297 859 702 13,470
Charge for the year 8,039 25 559 69 8,692
Eliminated on disposal (6,903) - - (334) (7,237)
At 31 December 2021 12,748 322 1,418 437 14,925
----------- ------------- ---------- ---------- ---------
Carrying amount
At 31 December 2021 16,896 172 1,707 192 18,967
----------- ------------- ---------- ---------- ---------
At 31 December 2020 13,081 195 1,816 176 15,268
----------- ------------- ---------- ---------- ---------
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
Buildings vehicles Total
GBP000 GBP000 GBP000
Right-of-use assets
At 1 January 2020 4,819 5,038 9,857
Depreciation charge for the year (920) (5,413) (6,333)
Additions to right-of use assets 1,201 8,975 10,176
Disposals of right-of-use assets - (619) (619)
At 31 December 2020 5,100 7,981 13,081
Depreciation charge for the year (950) (7,089) (8,039)
Additions to right-of-use assets - 12,607 12,607
Disposals of right-of-use assets - (753) (753)
At 31 December 2021 4,150 12,746 16,896
---------- --------- -------
7. Intangibles
Intangible Assets
Software
licences
GBP'000s
Cost
At 1 January
2020 210
Additions 151
At 31 December
2020 361
Additions 91
At 31 December
2021 452
----------
Amortisation
At 1 January
2020 35
Charge for year 92
At 31 December
2020 127
Charge for the
year 137
At 31 December
2021 264
----------
Carrying amount
At 31 December
2021 188
----------
At 31 December
2020 234
----------
8. Trade and Other Receivables
2021 2020
GBP'000s GBP'000s
Gross claim value 325,260 262,575
Settlement adjustment on initial
recognition (151,507) (121,967)
Trade receivables before impairment
provision 173,753 140,608
Provision for impairment of trade
receivables (27,360) (21,016)
Net trade receivables 146,393 119,592
Accrued income 39,431 27,100
Prepayments 1,849 596
Other debtors 461 643
188,134 147,931
---------- ----------
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. 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.
Average gross debtor days calculated on a count back basis were
432 at 31 December 2021 and 428 at 31 December 2020.
Age of net trade receivables
2021 2020
GBP'000s GBP'000s
Within 1 year 83,166 67,361
1 to 2 years 34,931 32,049
2 to 3 years 19,716 12,791
3 to 4 years 7,524 6,709
Over 4 years 1,056 682
146,393 119,592
---------- ------------
Average age (days) 432 428
---------- ------------
The provision for impairment of trade receivables is the
difference between the carrying value and the present value of the
expected proceeds. 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
2021 2020
GBP'000s GBP'000s
Opening balance 21,016 19,478
Increase in provision 10,635 6,448
Utilised in the year (4,291) (4,910)
27,360 21,016
---------- ----------
9. Borrowings
2021 2020
GBP'000s GBP'000s
Non-current loans and borrowings
Lease liabilities 8,430 8,945
Revolving credit facility 10,000 -
Other borrowings 3,814 3,681
22,244 12,626
---------- ----------
Current loans and borrowings
Revolving credit facility - 8,000
Lease liabilities 8,833 4,753
Invoice discounting facility 29,258 16,341
Other borrowings 9,241 6,953
47,332 36,047
---------- ----------
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 2021, Direct Accident Management Limited has
availability within the invoice discounting facility of GBP1.3
million (2020: GBP2.2 million).
In July 2020 Direct Accident Management Limited secured a GBP5.0
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.
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. 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
increased in the year from GBP8.0 million to GBP10.0 million and
was fully drawn down as at 31 December 2021 and 2020.
The Group's banking arrangements are subject to monitoring
through financial performance measures or covenants. During the
COVID pandemic, certain of these measures and covenants came under
pressure and required action by the Group which included a regular
dialogue between all parties to ensure that the reasons behind the
breaches were fully understood, agreed and ultimately waived. All
the required waivers were fully in place post year end. A facility
from Secure Trust (GBP29.3 million as at 31 December 2021) was
already classified as repayable on demand so was not impacted.
In July 2020 Anexo Group Plc secured a loan of GBP2.1m from a
specialist litigation funder to support the investment in marketing
costs associated with the VW Emissions Class Action. The terms of
the loan are that interest accrues at the rate of 10% per annum,
with maturity three years from the date of receipt of cunding with
an option to repay early without charge. 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.
In November 2021 a further GBP3.0 million loan was sourced from
certain of the principal shareholders and directors of the Group to
support the investment in 2022 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 with an option to repay early without charge. 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.
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.
Changes in liabilities arising from financing activities
Invoice
discounting Lease liabilities Other borrowings
facility GBP'000s GBP'000s
GBP'000s
Balance at 1 January 2020 17,784 10,307 10,383
Cash flows
Proceeds from new loans - - 12,924
Repayment of borrowings (1,443) - (4,814)
Lease payments - (7,585) -
Non-cash changes * - 10,976 141
------------- -------------------- -------------------
Balance at 31 December 2020 16,341 13,698 18,634
Cash flows
Proceeds from new loans 12,917 - 12,122
Repayment of borrowings - - (7,971)
Lease payments - (8,110) -
Non-cash changes * - 11,675 270
------------- -------------------- -------------------
Balance at 31 December 2021 29,258 17,263 23,055
------------- -------------------- -------------------
* This balance includes GBP11.7 million (2020: GBP11.0 million)
of new leases entered into during the year.
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END
FR EAFSEFEPAEAA
(END) Dow Jones Newswires
May 11, 2022 02:01 ET (06:01 GMT)
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