Credit hire and legal services group significantly raises profit forecast

Alan Sellers

Anexo Group, the Liverpool-based specialist integrated credit hire and legal services provider, said that annual pre-tax profits will “significantly exceed current market expectations of £20m” in a trading update today.

Covering the year to December 31, the group said it has recently successfully renegotiated its working capital facilities and has secured considerable improvement in its financing arrangements from both new and existing providers.

The group, headed by executive chairman Alan Sellers, has also agreed new terms with its existing fleet insurance provider which are expected to deliver enhanced savings against the group’s original forecasts for the remainder of the financial year 2019 and for 2020.

It said: “These achievements highlight the growing strength of the group’s negotiating position as well as the quality of the systems in place to mitigate risk.

“Furthermore, the targeting of specific claims types from the impecunious market place has allowed the group to deploy capital into the most valuable claims, enhancing its average claim statistics and underlying profitability.”

It reported that the growth of the new regional office of Bond Turner, the group’s legal services division, continues to result in increased levels of case settlements, cash collection and overall legal fee income.

The board said that the increased capacity generated by its expansion has achieved a record level of cash collection for the month of July 2019.

Today’s statement said: “Taking these matters together, the board now confirms that profit before tax will significantly exceed current market expectations of £20m.”

Anexo will announce its interim results for the six months ended June 30, on Tuesday, September 10.

London-based stockbroker Arden Partners issued a ‘buy’ call on Anexo’s stock after today’s update.

It said: “This morning’s trading update provides yet more positive news flow; the legal division is generating record cash inflows, average revenue per hire is improving in the credit hire division and insurance costs have been reduced by £1.8m annualised.

“As such, earnings are expected to ‘significantly exceed’ market expectations and we upgrade profit before tax by 15.2% and 13.9% for FY19 and FY20, respectively.

“The scale of growth in high margin earnings and cash collections remains considerably underappreciated.”

It raised its share price target for Anexo from 300p to 345p. By mid-morning Anexo’s share price had improved 8.44% to 191.4p per share.

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