Maiden results ahead of expectations for credit hire and legal services group

Anexo, the Liverpool-based integrated credit hire and legal services group, beat market expectations with its maiden full year results today.

Executive chairman Alan Sellers said: “We have done exactly what we said we were going to do on the tin.”

The firm announced revenues for the year to December 31, 2018, of £56.5m, a 24.7% increase on the 2017 figure of £45.3m, although pre-tax profits of £14.3m represented a 2% fall on the previous year.

However, in an interview with TheBusinessDesk.com Mr Sellers said the group’s financial figures should now start to accelerate, with a focus on capturing cash from their operations.

He admitted: “People were nervous in the IPO that we could not get our cash back because there were companies that have failed to deliver on cash collection.

“We have massively accelerated the accident management company during 2018 and during 2019 we got to a point where we are settling more cases than we are taking on.

“Now we have over 300 people in Bond Turner in our buildings in Liverpool and Bolton allowing us to focus on cash collection and unleash the value as we move forward.”

He added: “Our focus for 2019 suggests double digit growth. We always aim to be in the position where we are over-delivering on promises that we make.”

Anexo raised £25m, before expenses, and was admitted to trading on AIM in June last year. It will offer shareholders a proposed final dividend of 1.5 pence per share.

It boasts net assets of £75.8m, which is a 36.3% improvement on 2017 levels of £55.6m, while a net cash balance of £5.5m at December 31, 2018, compared with £200,000 the previous year.

Net debt balance at the year end was £17.3m, up from £15m a year ago.

The firm is a mixture of a credit hire, claims management and claimant lawyer company, and is focused on providing replacement vehicles and associated legal services to “not at fault” motorists involved in accidents.

Anexo comprises credit hire company, Edge, and legal services provider, Bond Turner.

It opened a Bolton office on December 3 last year and by the end of the year had recruited 20 experienced litigators, significantly increasing capacity within Bond Turner.

During the year the number of new cases funded increased 31.2% to 5,930.

Cash collections from settled cases rose 7.6% to £58.1m, while the number of vehicles the business had on hire jumped 87.9% to 1,531.

Executive chairman Alan Sellers said: “We are delighted to report such a strong set of maiden final results which, as announced earlier in January 2019, are ahead of market expectations.

“Anexo has successfully demonstrated that the cash raised at IPO has enabled the strategic investment outlined upon admission, expanding the credit hire fleet and growing Anexo’s high quality legal team in order to increase the number of processed claims, whilst increasing cash generation from cases settled.”

He added: “The investment is clearly supporting near-term profitable growth across the business with the strong financial performance, coupled with the ever-increasing UK credit hire and legal claims market, giving the board confidence in our ability to scale and generate near-term returns for our shareholders as demonstrated by the maiden proposed final dividend in line with the board’s stated intention at admission.

“Anexo remains extremely well positioned to grow its market share and take advantage of the opportunities available to it. The board views the current financial year with considerable optimism.”

Stockbroker Arden Partners reiterated its Buy notification on Anexo’s stock after today’s figures.

Broker Michael White said: “Results have come in marginally ahead of our expectations, having upgraded forecasts in December and January.

“Perhaps more importantly, though, the trend in KPIs points towards a transformational 2019 for the group as it drives both its credit hire and legal services divisions in unison, generating significant cash returns on investment in the process.”

He added: “We believe this changing dynamic, above 30% margins and double-digit earnings growth, are currently overlooked by the market and not represented in the 9.8x CY19 P/E rating. Following forecast upgrades, we increase our target price to 235p and reiterate our Buy rating.”

At 11.35am today Anexo’s shares were 4.15% ahead at 138p per share.