Credit hire and legal services group hits net cash generation milestone
Annual revenues rose, although profits fell, at AIM-listed Anexo, during the year to December 31, 2020.
The Liverpool-based specialist integrated credit hire and legal services provider reported turnover of £86.752m, compared with £78.510m the previous year, while pre-tax profits of £15.488m fell from £22.391m in 2019.
The fall in profits reflects expenditure of £6.5m on investment in staff, case acquisition in its legal action against Volkswagen over car emissions – which is currently running at around 14,356 cases – and IT costs associated with the headcount increase.
The recommended final dividend of 1.5p per share is the same as last year.
Anexo, which is focused on providing replacement vehicles and associated legal services to customers involved in a non-fault accident, said the emphasis in early 2020 was on cash generation.
During 2019, cash absorption reduced from £7m in the first half of the year to £1.5m in the second half. This trend continued over the first half of 2020 and at the interim stage the group was able to report an overall net cash inflow of £2.4m.
This achievement was a milestone for the group and one of which the board said it remains very proud, particularly in light of the disruption caused by the COVID-19 pandemic.
The second half of the year saw a number of competitors withdrawing from the market and the group took this opportunity to expand its network of introducer garages.
At the same time the group continued the expansion of staff numbers and the necessary supporting infrastructure. As a result of this ongoing investment in both divisions, the period was one of cash absorption rather than generation.
However, notwithstanding the impact of the two national lockdowns and the programme of investment expenditure, the group achieved a net cash inflow for the year of £0.2m, against a cash outflow of £0.8m in 2019.
This position was reached after investment in the VW emissions case of £2.9m (2019: £0.9m). Excluding this expenditure, the group’s core business generated a net cash inflow from operations of £3.1m in 2020, up from £0.1m the previous year.
Executive chairman, Alan Sellers, said: “I am delighted to report that the group has achieved the milestone of net cash generation throughout the financial year. This achievement is especially notable given the disruption we experienced throughout the year as a result of the COVID-19 pandemic.
“We continue to focus on increasing cash settlements through the expansion of our legal services division while using our working capital to underpin growth in our credit hire division. Vehicle numbers were very robust, particularly in the second half of the year, despite the pandemic.
“Both our business divisions have remained fully operational throughout the 2020 and into 2021 and the group has demonstrated considerable resilience. Ongoing investment into our advocacy practice is forming a solid foundation for our strategy of building this into a major contributor to future revenues.”
He added: “The board remains confident of the group’s capacity for organic growth.
“We believe that we have proved the resilience of our business in the difficult circumstances we continue to experience.
“Given our strong financial position we believe that Anexo is well positioned to continue its growth trajectory and deliver profitable growth to our shareholders.”
