TIDMANX
RNS Number : 6482W
Anexo Group PLC
27 April 2021
For immediate release 27 April 2021
Anexo Group plc
('Anexo' or the 'Group')
Final Results
"Continued growth in capacity underpins full year of net cash
generation"
Anexo Group plc (AIM: ANX), the specialist integrated credit
hire and legal services provider, announces its final results for
the year ended 31 December 2020 (the 'period' or 'FY 2020').
Financial Highlights
-- Revenue increased by 10.5% to GBP86.8 million (2019: GBP78.5
million)
-- Operating profit reported at GBP18.1 million (2019: GBP24.6
million), a reduction of 26.6% in line with market expectations
-- Adjusted(1) operating profit before exceptional items in
line with market expectations, declining by 25.9% to GBP18.7
million (2019: GBP25.3 million)
-- Adjusted(1) operating profit margin reduced to 21.6% (2019:
32.2%)
-- Profit before tax of GBP15.5 million (2019: GBP22.4 million),
a reduction of 30.8%
-- Adjusted(1) profit before tax and exceptional items reported
at GBP16.1 million, (2019: GBP23.0 million), a decline of
29.9% after GBP6.5 million of investment in staff, VW case
acquisition costs and IT costs associated with the headcount
increase
-- Adjusted(2) basic EPS at 11.4 pence (2019: 17.0 pence)
-- Proposed final dividend of 1 penny per share giving a total
dividend for the year of 1.5 pence per share (2019: 1.5 pence
per share)
-- Net assets reported at GBP110.4 million (2019: GBP91.7 million)
representing an increase of 20.4%
-- Reduction in net cash outflows from operating activities
reporting a net cash inflow of GBP0.2 million in 2020 (2019:
net cash outflow: GBP0.8 million)
-- Net debt balance at 31 December 2020 was GBP40.5 million
(31 December 2019: GBP36.2 million)
Note: The basis of preparation of the consolidated financial
statements for the current and previous year is set out in the
Financial Review.
1. Adjusted operating profit and profit before tax: excludes
share -- based payment charges in 2019 and 2020. A reconciliation
to reported (IFRS) results is included in the Financial Review.
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 2020 the Group has seen continued improvement in
a number of key performance measures (detailed below).
These have resulted in a transition from cash absorption
to cash generation by the Group, notwithstanding the issues
faced during 2020 from COVID-19. This trend is particularly
pleasing with an increase in the number of new cases funded,
rising from 6,959 to 7,535. This illustrates increased
investment in our portfolio of cases and is supported
by growth in cash collections, which rose by 16.4% in
the year to reach GBP98.0 million in FY 2020.
-- This improvement has been supported by investment in legal
staff. In 2019, the number of senior fee earners grew
by almost 43% to reach 127 at the year end. Further recruitment
in 2020 has resulted in headcount growing by a further
18 staff (an increase of 14%) to end the year at 145 senior
fee earners.
KPI's 2020 2019 % movement
Total revenues (GBP'000s) 86,752 78,510 10.5%
Gross profit (GBP'000s) 67,952 62,807 8.2%
Adjusted operating profit (GBP000's) 18,708 25,250 (25.9%)
Adjusted operating profit margin (%) 21.6% 32.2% (32.9%)
Vehicles on hire at the year-end (no) 1,613 1,308 23.3%
Average vehicles on hire for the year (no) 1,515 1,454 4.2%
Number of hire cases settled 5,236 4,938 6.0%
Cash collections from settled cases (GBP'000s) 97,977 84,140 16.4%
New cases funded (no) 7,535 6,959 8.3%
Senior fee earners at period end (no) 145 127 14.2%
Average number of senior fee earners (no) 140 111 26.1%
Commenting on the Final Results, Alan Sellers, Executive
Chairman of Anexo Group plc, 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.
"The arrival of DBAY Advisors Limited as a significant
shareholder is a major vote of confidence in the Group's strategy
and management and we look forward to working closely with DBAY to
ensure continued expansion of our main business divisions and to
create value for all our shareholders.
"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. The Board is pleased to propose a
dividend of 1 penny."
Analyst Briefing
A conference call for analysts will be held at 9.30am today, 27
April 2021. 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
Arden Partners plc
(Nominated Adviser and Joint Broker)
John Llewellyn-Lloyd / Benjamin Cryer +44 (0) 20 7614 5900
(Corporate) www.arden-partners.co.uk
Tim Dainton (Equity sales)
Panmure Gordon +44 (0)20 7 886 2500
(Joint Broker) www.panmure.com
Daniel Norman/Dominic Morley/Alex
Penney
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 solid
performance by the Group in the face of considerable nationwide
challenges. Despite the difficulties caused by the COVID-19
pandemic, the Group remained fully operational throughout both the
year's national lockdowns and achieved the significant milestone of
net cash generation. These results reflect our policy of 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. The parallel investment
in our advocacy practice will help this to become a major
contributor to future revenues.
2020 also saw a significant change in the ownership structure of
the Group with DBAY Advisors Limited ('DBAY') agreeing to acquire a
minority stake of 29.0% of the issued share capital of the Group
from myself, Samantha Moss and Valentina Slater at a price of 150
pence per share. Whilst the transaction will not result in any
changes operationally, the Group plans to work closely with DBAY to
continue the expansion of its Credit Hire and Legal Services
divisions and is committed to the creation of value for all its
shareholders.
DBAY is an international asset management firm with offices in
the Isle of Man and London. It set up its first investment vehicle
in 2008 and now manages investments on behalf of institutional
investors, family offices, pension funds, trusts and foundations in
various funds. DBAY is owned by members of the firm on a
partnership basis.
With this development and continuing expansion of the core
business in challenging times we believe that the Group is well
positioned for robust growth in 2021 and beyond.
Group Performance
Anexo delivered a strong performance during a period of
sustained investment in our infrastructure. Despite the initial
disruption caused by the national lockdowns in March and November,
trading recovered swiftly and levels of activity across our
divisions remained high. As a result, Group revenues in 2020
increased by 10.5% to GBP86.8 million (2019: GBP78.5 million).
Adjusted profit before tax fell 29.9% to GBP16.1 million (2019:
GBP23.0million), reflecting expenditure of GBP6.5 million on
investment in staff, VW case acquisition and IT costs associated
with the headcount increase. This adjusted figure is in line with
market expectations.
The emphasis in early 2020 was on cash generation. During 2019,
cash absorption reduced from GBP7.0 million in the first half of
the year to GBP1.5 million 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 GBP2.4 million. This
achievement was a milestone for the Group and one of which the
Board 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.
The Board is delighted to announce that, 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 GBP0.2 million (2019: net cash outflow: GBP0.8
million). This position was reached after investment in the VW
Emissions case of GBP2.9 million (2019: GBP0.9 million). Excluding
this expenditure, the Group's core business generated a net cash
inflow from operations of GBP3.1 million in 2020 (2019: GBP0.1
million).
The Group took a series of prudent steps in the second half of
the year to reinforce its balance sheet in the light of the
pandemic. The placing of 6.0 million new shares at the end of June
raised GBP6.9 million of new funds after expenses. In addition, the
Group secured an investment of GBP2.1 million from a litigation
funder to support its investment in the VW emissions class action
and a further GBP5.0 million was drawn down from Secure Trust plc
under the Government-backed CLBILS scheme. These transactions have
resulted in a significant improvement in cash headroom for the
Group.
Credit Hire division
The Group's Credit Hire division, EDGE, saw record performance
in vehicle provision during the year. The number of new vehicle
hires initially saw a sharp decline upon the implementation of the
first national lockdown in March. 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, vehicle numbers recovered
strongly and reached record levels prior to the announcement of the
second national lockdown in October. The number of vehicles on hire
at the end of 2020 rose 23.3% to 1,613 (2019: 1,308) and the
average number of vehicles on hire throughout the financial year
rose 4.2% to 1,515 (2019: 1,454).
Revenues within the Credit Hire division grew by 7.5% to GBP51.6
million (2019: GBP48.0 million). The Group maintains its claims
acceptance strategy of deploying its resources into the most
valuable claims, thereby growing claims while preserving working
capital. This policy, combined with increased costs incurred as a
result of COVID-19 requirements, led to a reduction of 2.3% in
gross profit to GBP33.5 million (2019: GBP34.3 million). The Group
monitors its fleet size constantly, enabling it to respond quickly
to changes in demand and strategic priorities by deploying its
vehicles appropriately. Focus remains firmly on McAMS, the
motorcycle division, reflecting the fact that, on average, a
motorcycle claim has the same value as a car claim with a
significantly lower take-on cost.
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, coupled with
our conservative recognition policies, has had a significant impact
on financial performance. Revenues within the Legal Services
division, which strongly converts to cash, increased by 15.2% to
GBP35.2 million (2019: GBP30.5 million). The continued growth of
the Bolton office, which opened in December 2018, and the opening
of the Leeds office scheduled for the beginning of 2021 have
provided considerable opportunities for recruitment. During the
pandemic, the Group has seen a number of competitors 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 means
that staff numbers have risen at all levels. At the end of December
staff numbers within Bond Turner stood at 518, a 17.2% increase on
the 2019 figure of 442. Of these, a total of 145 were senior fee
earners, up 14.2% (2019: 127).
VW Emissions Case
The marketing campaign around the class action against
Volkswagen AG ('VW') and its subsidiaries (the 'VW Emissions Case')
has continued throughout 2020. 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.
Bond Turner is acting on behalf of a number of individuals who
have registered claims against VW and is currently engaged on
approximately 14,356 cases. The marketing campaign has been largely
conducted via social media channels as well as via the use of
internal customer records. The campaign is ongoing, 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 FY 2021.
Dividends
The Board is pleased to propose a final dividend of 1.0 pence
per share which, if approved at the Annual General Meeting to be
held on 16 June 2021, will be paid on 20 July 2021 to those
shareholders on the register at the close of business on 25 June
2021. The shares will become ex-dividend on 24 June 2021. An
interim dividend of 0.5 pence per share was paid on 23 September
2020 and that combined with the final dividend takes the total
dividend for the year to 1.5 pence per share (2019: 1.5 pence 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 advent of the COVID-19 pandemic inevitably caused some
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 are
increasingly active during the current circumstances) and other
customers such as doctors, nurses, schoolteachers, nursery staff,
emergency workers and supermarket personnel.
The Group's core businesses have continued to be fully
operational following the reintroduction of a national lockdown.
Activity levels in the Credit Hire Division (EDGE) continue to be
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.
Vehicles continue 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 remain open, as they have done throughout the year,
and notwithstanding a decline in court listings as a result of
COVID, the Group's Legal Services division, Bond Turner, has
continued to reach case settlements via telephone and online
hearings where necessary. The progression and settlement of cases
has been 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. Many staff have returned to
office working while observing social distancing guidelines and
extensive COVID safety measures have been implemented. The Bond
Turner offices have remained accessible 24 hours a day during
recent months and the division has remained fully operational at
all times.
EDGE, the Group's Credit Hire division, has also remained fully
operational throughout 2020. Following the lifting of the first
lockdown, the majority of the Group's introducer garages returned
to normal working practices and any existing backlog of repair work
was cleared. Some introducer garages have once again suspended work
as a result of the second lockdown but fewer delays to repair work
are being experienced.
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 2020, 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. This has
impacted our reported financial performance in 2020 but these
investments have been made to support continued growth into 2021
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.
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.
Alan Sellers
Executive Chairman
27th April 2021
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 2019 and the GBP0.7m charge for share-based
payments in 2020.
A reconciliation between underlying 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
There have been a number of new UK IFRS accounting standards
applicable from 1 January 2020, none of which have resulted in
adjustment to the way in with the Group accounts or presents its
financial information.
Revenue
In 2020 Anexo successfully increased revenues across both its
divisions, Credit Hire and Legal Services, resulting in Group
revenues of GBP86.8 million, representing an 10.5% increase over
the prior year (2019: GBP78.5 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 2020 EDGE, the Credit Hire division, provided vehicles to
7,230 individuals (2019: 7,182) a slight increase on that seen in
the prior year. This constitutes a strong performance given the
restriction imposed during the year. As part of our continued
investment in the motorcycle community, our sponsorship of the
McAMS Yamaha team in the British Superbike Championship continued
into 2020. The season was curtailed but our engagement with the
team was buoyed with an outstanding second place for Jason
O'Halloran in the Championship. 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.
Whilst the number of claims rose only slightly in 2020, the
strategy of deploying capital into the most valuable claims to the
Group resulted in revenues for the Credit Hire division increasing
to GBP51.6 million in 2020, an increase of 7.5% over 2019 (GBP48.0
million).
As a result of spending the majority of 2020 operating within
the ongoing COVID restrictions, we have again been focused on cash
collections and maintaining headroom within our working capital
facilities, whilst maintaining investment for growth in 2021. Given
our conservative income recognition policies, investment within the
Legal Services division in senior staff and property has had a
significant impact on the financial performance of the division.
Revenue growth within the Legal Services division in 2020 reached
15.2%, with revenues rising from GBP30.5 million in 2019 to GBP35.2
million.
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 2020, the Group continued its recruitment campaign,
seeing some high-quality staff in the market 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 2020, we
employed 518 staff in Bond Turner (December 2019: 442), of which
145 (December 2019: 127) were senior fee earners, an increase of
14.2%. With the signing of the lease for the Leeds office,
recruitment and associated training has commenced and as at 14
April 2021 we had secured 14 staff, of which 9 are senior fee
earners. Recruitment is scheduled to continue throughout 2021
across all of our three office locations.
Gross Profits
Gross profits are reported at GBP68.0 million (at a margin of
78.3%) in 2020, increasing from GBP62.8 million in 2019 (at a
margin of 80.4%). 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%.
Gross profits for the Credit Hire division reached GBP33.5
million in 2020 (at a margin of 64.9%) falling from GBP34.3 million
in 2019 (at a margin of 71.4%). The reduction reflects both our
strategy for claims acceptance which seeks to maximise value from
our available working capital facilities, as well as certain
additional costs which were incurred as COVID impacted utilisation
within the fleet.
Operating Costs
Administrative expenses before exceptional items increased
year-on-year, reaching GBP42.6 million in 2020 (2019: GBP31.0
million), an increase of GBP11.6 million (37.4%). 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 GBP16.6 million (2019: GBP13.5 million), an
increase of GBP3.2 million (23.5%). Investment in the VW Emissions
class action (GBP2.9 million) has been expensed against Group
profits in the year (2019: GBP0.9 million), much of this
expenditure being marketing costs. The balance of the increase
reflects the investment in marketing, staff and infrastructure to
allow the Group to meet its growth aspirations, as well as its
requirements and responsibilities as a PLC.
EBITDA
Adjusted EBITDA reached GBP25.4million in 2020, reduced from
GBP31.8million in 2019 (20.0%). To provide a better guide to
underlying business performance, adjusted EBITDA excludes
share-based payments charged to profit and loss along with
depreciation, amortisation, interest and tax from the measure of
profit.
The GAAP measure of the profit before interest and tax was
GBP18.1 million (2019: GBP24.6 million) reflecting the non-cash
share-based payment charge of GBP0.7 million (2019: GBP0.7
million). Where we have provided adjusted figures, they are after
the add-back of this item and a reconciliation of the underlying
and reported results is included on page 16 of the Annual
Report.
EPS and Dividend
Statutory basic EPS is 10.8 pence (2019: 16.4 pence). Statutory
diluted EPS is 10.6 pence (2019: 16.0 pence). The adjusted EPS is
11.4 pence (2019: 17.0 pence). The adjusted diluted EPS is 11.2
pence (2019: 16.6 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 4.
A final dividend of 1 penny per share has been recommended by
the Board (2019: 0.5 pence) giving a total dividend for 2020 of 1.5
pence, having paid a dividend of 0.5 pence on 23 September 2020.
This dividend, if approved at the Annual General Meeting to be held
on 16 June 2021, will be paid on 20 July 2021 to those shareholders
on the Register at the close of business on 25 June 2021.
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 value of the receivables totalled GBP262.6 million in 2020,
rising from GBP220.5 million in 2019. In accordance with our income
recognition policies, provision is made to reduce the carrying
value to recoverable amounts reflecting an initial settlement
adjustment, being GBP126.4 million and GBP100.8 million
respectively, an increase of 25.4%. 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
2020 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 increase in cash collections
seen year on year.
In addition, the Group has a total of GBP27.1 million reported
as accrued income (2019: GBP24.4 million) which represents the
value attributed to those ongoing hires and claims.
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 2020 into the
motorcycle fleet so as to meet the demand from our significant pool
of introducers. Total fixed asset additions totalled GBP11.2
million in 2020 (2019: GBP15.1 million); the fleet continues to be
largely leased.
Trade and other payables, including tax and social security
increased to GBP9.5 million compared to GBP7.9 million at 31
December 2019, an increase of 20.0%, reflecting the timing of
certain payments to HMRC in line with the provisions associated
with COVID-19.
Net assets at 31 December 2020 reached GBP110.4 million (2019:
GBP91.7 million).
Cash Flow
During 2018, the Group utilised the funds raised from the AIM
listing, alongside increases in debt facilities, to take advantage
of the opportunities in the market and increase the number of
vehicles on the road. 2019 saw a shift in focus to cash generation,
as the Group held back on growth within the Credit Hire division
and focussed investment on the Legal Services division where we saw
a significant investment in the number of senior staff engaged to
settle cases and recover cash for the Group. This trend continued
into 2020, notwithstanding the impact of COVID-19 on the Business
(further details provided earlier). The number of senior fee
earners increased from 127 to 145 during 2020 (an increase of
14.2%) and continues to rise across each of our offices, the third
of which opened in Leeds in February 2021. The Group's success in
recruiting high quality staff continues, particularly while other
firms are seen to be reducing headcount and utilising the
Government's Furlough Scheme. Recruitment has continued throughout
2020 and into 2021, thereby investing in case settlement for the
future.
Cash collections for the Group (and excluding settlements for
our clients), a key metric for the Group, increased from GBP84.1
million in 2019 to GBP98.0 million in 2020, an increase of 16.4%.
This is a significant improvement, given the fact that many of the
new recruits will not reach settlement maturity until late
2021/early 2022. Furthermore, with settlements impacted by the
capacity within the court system arising from the impact of COVID,
this growth is testament to the quality of staff within the
Group.
Having strategically managed vehicle numbers during 2019 so as
to preserve working capital, and with the focus being on securing
the most attractive and profitable claims for the Group whilst
minimising take-on costs, the number of vehicles on the road fell
during 2019 from 1,531 to 1,308. During 2020, 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, 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 2020, reaching 1,515 (2019: 1,454). 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. As we came out of the national lockdown in
the summer of 2020, vehicles numbers on the road peaked in excess
of 1,900, before dropping back to 1,613 at the end of the year as
further restrictions were imposed at a regional and subsequently a
national level.
Whilst conscious of investing for the future in 2020, the
requirement to monitor our cash position and the headroom within
our working capital facilities meant that focus remained on driving
settlements and cash collections. This balance assures that growth
within the core business is not at such a level as to impact
headroom significantly. Moreover, investment in the generation of
claims within the VW Emissions class action case has been made in
the context of the specific facility drawn down during the year
(contributing funds of GBP2.1 million) alongside the overall
capacity within our facilities.
The Group reported a further improvement in the conversion of
profits to cash flows from operating activities, reducing a cash
outflow of GBP0.8 million in 2019 to a cash inflow of GBP0.2
million in 2020. This position was reached after investment in the
VW Emissions case of GBP2.9 million (2019: GBP0.9 million).
Excluding this expenditure, the Group's core business generated a
net cash inflow from operations of GBP3.1 million in 2020 (2019:
GBP0.1 million). Notwithstanding a decline in case settlements as a
result of COVID-19, we have continued to invest in new cases and
increase market share across both the Credit Hire and Legal
Services divisions. This investment absorbed a net GBP20.7 million
of funds in 2020 (2019: GBP26.3 million); however, this year on
year increase has been countered by the increased level of cash
collections.
With a net cash inflow of GBP4.9 million resulting from
financing activities, reflecting the fund raise in May-20 where
GBP6.9 million was raised after expenses, (2019: net cash outflow
of GBP1.8 million), the Group reported a net cash inflow in 2020 of
GBP6.0 million (2019: net cash outflow of GBP3.3 million). This
constitutes a significant improvement on that seen in 2019,
particularly given the challenging operating circumstances in
2020.
Net Debt, Cash and Financing
Cash balances improved during 2020 and at 31 December 2020
reached GBP8.2 million (2019: GBP2.3 million). This figure reflects
the funds raised from the placing in May-20 (GBP6.9 million after
expenses) as well as the improvement in cash collections year on
year. These increased by GBP13.8 million (16.4%) although they were
countered by the continued investment into the Group case portfolio
and settlement capacity.
Borrowings increased during the year to fund the additional
working capital investment in the Group's portfolio of claims and
support the investment by the Group in the VW emissions claim and
expansion of the vehicle fleet. The total balance rose from GBP38.5
million in 2019 to GBP48.7 million at the end of 2020. 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.
In addition, during 2020 the Group secured GBP2.1 million of
additional funding from a litigation funder to support the Group's
own investment into the VW emissions litigation as well as an
additional GBP5.0 million of funding from Secure Trust Bank Plc
under the government backed CLBILS scheme to further enhance
headroom.
Having weathered what is hoped to be the worst of the COVID-19
pandemic the Group now has a significant increase in the
availability of capital to deploy and drive growth across both the
core business and other niche opportunities that may arise.
Having considered the Group's current trading performance, cash
flows and headroom within our current debt facilities and the
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.
Reconciliation of Underlying and Reported IFRS Results
In establishing the underlying operating profit, the costs
adjusted include GBP0.7 million of costs related to share-based
payments (2019: GBP0.7 million).
A reconciliation between underlying and reported results is
provided below:
Year to December 2020
-----------------------------
Underlying 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
Depreciation & Amortisation 6,663 - 6,663
Year to December 2019
-----------------------------
Underlying Share-based Reported
GBP'000s payment GBP'000s
GBP'000s
----------------------------- ------------- -------------- -----------
Revenue 78,510 - 78,510
Gross profit 62,807 - 62,807
Other operating
costs (net) (37,557) (657) (38,214)
Operating profit 25,250 (657) 24,593
Finance costs (net) (2,202) - (2,202)
Profit before tax 23,048 (657) 22,391
Depreciation & Amortisation 6,582 - 6,582
By order of the board
Mark Bringloe
Chief Financial Officer
27th April 2021
Consolidated Statement of Total Comprehensive Income
for year ended 31 December 2020
Restated
2020 2019
Note GBP'000s GBP'000s
Revenue 3 86,752 78,510
Cost of sales (18,800) (15,703)
---------- ------------
Gross profit 67,952 62,807
Depreciation & profit / loss on disposal (6,571) (6,547)
Amortisation (92) (35)
Administrative expenses before share
based payments (42,581) (30,975)
Operating profit before share based
payments 4 18,708 25,250
---------- ------------
Share based payment charge (658) (657)
---------- ------------
Operating profit 4 18,050 24,593
Net financing expense (2,562) (2,202)
---------- ------------
Profit before tax 15,488 22,391
Taxation (3,173) (4,403)
Profit and total comprehensive income
for the year attributable to the owners
of the company 12,315 17,988
---------- ------------
Earnings per share
Basic earnings per share (pence) 5 10.8 16.4
---------- ------------
Diluted earnings per share (pence) 5 10.6 16.0
---------- ------------
The above results were derived from continuing operations.
Consolidated Statement of Financial Position
as at 31 December 2020
Restated
2020 2019
Assets Note GBP'000s GBP'000s
Non-current assets
Property, plant and equipment 6 2,187 1,637
Right of use assets 6 13,081 9,857
Intangible assets 6 234 175
Deferred tax assets 112 112
15,614 11,781
------------ ------------
Current assets
Trade and other receivables 8 147,931 127,656
Corporation tax receivable 439 -
Cash and cash equivalents 8,220 2,270
156,590 129,926
------------ ------------
Total assets 172,204 141,707
------------ ------------
Equity and liabilities
Equity
Share capital 58 55
Share premium 16,161 9,235
Share based payments reserve 1,699 1,041
Retained earnings 92,520 81,365
------------ ------------
Equity attributable to the owners
of the Company 110,438 91,696
------------ ------------
Non-current liabilities
Other interest-bearing loans and borrowings 9 3,681 -
Lease liabilities 9 8,945 5,422
Deferred tax liabilities 32 32
12,658 5,454
------------ ------------
Current liabilities
Other interest-bearing loans and borrowings 9 31,294 28,167
Lease liabilities 9 4,753 4,885
Trade and other payables 9,505 7,915
Corporation tax liability 3,556 3,590
49,108 44,557
------------ ------------
Total liabilities 61,766 50,011
------------ ------------
Total equity and liabilities 172,204 141,707
------------ ------------
The financial statements were approved by the Board of Directors
and authorised for issue on 27 April 2021. They were signed on its
behalf by:
Mark Bringloe
Chief Financial Officer
27th April 2021
Consolidated Statement of Changes in Equity
for the year ended 31 December 2020
Share Merger Share
Premium Reserve Based
Share Payments Retained
Capital Reserve Earnings Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January 2019 55 9,235 - 384 66,127 75,801
Profit for the
year and total
comprehensive
income - - - - 17,988 17,988
Issue of share
capital - - - - - -
Increase in share
premium - - - - - -
Share based payment
charge - - - 657 - 657
Dividends - - - - (2,750) (2,750)
At 31 December
2019 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
------------ -------------- ------------ -------------- --------- -----------
Consolidated Statement of Cash Flows
for the year ended 31 December 2020
Restated
2020 2019
Note GBP'000s GBP'000s
Cash flows from operating
activities
Profit for the year 12,315 17,988
Adjustments for:
Depreciation and profit /
loss on disposal 6 6,571 6,547
Amortisation 92 35
Financial expense 2,562 2,202
Share based payment charge 658 657
Taxation 3,173 4,403
-------------- ----------
25,371 31,832
Working capital adjustments
Increase in trade and other
receivables (20,686) (26,294)
Increase in trade and other
payables 1,588 694
-------------- ----------
Cash generated from operations 6,273 6,232
Interest paid (2,422) (1,797)
Tax paid (3,646) (5,230)
-------------- ----------
Net cash from operating activities 205 (795)
-------------- ----------
Cash flows from investing
activities
Proceeds from sale of property,
plant and equipment 853 374
Acquisition of property,
plant and equipment (223) (802)
Investment in intangible
fixed assets (150) (210)
Receipt of directors loan
receivable 415
Net cash from investing activities 895 (638)
-------------- ----------
Cash flows from financing
activities
Net proceeds from the issue
of share capital 6,929 -
Proceeds from new loans 12,924 18,355
Repayment of borrowings (6,257) (10,920)
Lease payments (7,586) (6,514)
Dividends paid (1,160) (2,750)
-------------- ----------
Net cash from financing activities 4,850 (1,829)
-------------- ----------
Net increase/(decrease) in
cash and cash equivalents 5,950 (3,262)
Cash and cash equivalents
at 1 January 2,270 5,532
Cash and cash equivalents
at 31 December 8,220 2,270
-------------- ----------
Notes to the Consolidated Financial Statement
for the year ended 31 December 2020
1. Basis of Preparation and Principal Activity
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 at 31 December
2020, 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 2020 or 2019 but is
derived from those financial statements.
Statutory financial statements for 2019 have been delivered to
the registrar of companies and those for 2020 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 functional currency of the Group, generally rounded to the
nearest thousand.
The annual financial statements have been prepared on the
historical cost basis.
The principal activity of the Group is the provision of credit
hire and associated legal services.
The Company is a public limited company, 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 5(th) Floor, The Plaza, 100 Old Hall Street,
Liverpool, L3 9QJ.
Going concern
The health and wellbeing of our people and clients is paramount,
and steps have been 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.
Bond Turner, the Group's Legal Services division, initially
moved most of its staff to remote working whilst remaining fully
operational, most staff returning to the office in July 2020 having
undertaken and implemented the Group's COVID-19 risk assessment and
office adaptations. The progression and settlement of cases being
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, albeit we initially saw reductions in cash
collections against our original forecasts pre COVID, however,
these reductions have not been as significant as first envisaged
and remain significantly ahead of the same period last year.
Within EDGE, the Group's Credit Hire division, vehicles continue
to be delivered and collected by staff who are protected in line
with government guidelines, and whilst the Group saw a sharp fall
in new business activity immediately post lockdown, levels have
subsequently increased, as the number of vehicles on the road has
risen, reaching record levels in the summer and autumn of 2020.
Thereafter, vehicle numbers have declined as further regional and
national measures have been implemented by the Government,
impacting activity levels, albeit a reduction in competition during
2020 has led to an increase in our introducer base which is
expected to generate additional opportunities for the Group into
2021.
Group trading for FY-2021 continues to be impacted by the
effects of COVID-19 as the number of vehicles on the road declines
during a period of lockdown and cash collections have yet to return
to the level we would expect in normal circumstances given the
investment made in our legal services business. However, the
expansion of the vaccination programme and release of national
lockdown in April 2021 has resulted in an increase in opportunities
and vehicles on the road, consistent with the trends seen in 2020.
Nonetheless, there must remain uncertainty as to the eventual
impact over an extended period of time. Whilst there will
inevitably be fewer vehicles on the road whilst government
restrictions remain in place, key workers (who form a significant
proportion of the Group's customers) and other road users will
continue to require the services of the Group. The Group's policy
of driving cash generation remains a key focus and the progression
of its significant caseload portfolio by litigators within Bond
Turner is being fully maintained following the successful
transition to remote working.
The current situation is unprecedented and the overall economic
impact is currently unknown. While the Board is encouraged by the
resilience shown by the Group and its employees to date, the impact
on FY-2021 cannot as yet be fully assessed. However, these
uncertain times are resulting in opportunities for the Group to
both grow market share within the core business and take advantage
of opportunities as they arise in other areas within the legal
services arena.
The Group has a strong balance sheet with a conservative gearing
level and good liquidity with headroom within its funding
facilities, which include a revolving credit facility of GBP8.0
million with HSBC Bank plc (due for repayment in September 2022)
and an invoice discounting facility of GBP18.5 million with Secure
Trust Bank plc (due for renewal in December 2022).
The refinancing activities and placing in the year described in
the Financial Review within the Strategic Report, alongside the
core business being cash generative, 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 2022, against which the impact of various
sensitivities have been considered covering the level of cash
receipts and the volume of work taken on. 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 VW 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 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 at the year end, and therefore a risk that some
of these balances may be irrecoverable. A review of the Group's
policy for accounting for impairment of these trade receivables as
well as expected credit losses is carried out where debts are
assessed and provided against when the recoverability of these
balances is considered to be uncertain.
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 and the age of
the debt. 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 judgemental and revenue and trade receivables are
sensitive to these judgements. If the settlement percentages
applied in calculating revenue were reduced by 1% it would reduce
credit hire revenue and receivables (GBP51.6 million and GBP91.8
million respectively) by GBP1.9 million.
Legal Services
The Group carries an element of accrued income, the valuation of
which reflects the estimated level of recovery on successful
settlement by reference to historical recovery rates or 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 2020
VW Class Group and
Action Central
Credit Hire Legal Services Costs Consolidated
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Revenues
Third party 51,591 35,161 - - 86,752
Total revenues 51,591 35,161 - - 86,752
------------ --------------- --------- ---------- -------------
Profit before taxation 17,892 2,817 (2,906) (2,314) 15,488
------------ --------------- --------- ---------- -------------
Net cash from operations (15) 3,287 (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 45,789 - 1,360 172,204
------------ --------------- --------- ---------- -------------
Capital expenditure 4,238 900 - - 5,138
------------ --------------- --------- ---------- -------------
Segment liabilities 39,521 16,886 2,251 3,108 61,766
------------ --------------- --------- ---------- -------------
Year ended 31 December 2019
VW Class Group and
Action Central
Credit Hire Legal Services Costs Consolidated
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Revenues
Third party 47,981 30,529 - - 78,510
Total revenues 47,981 30,529 - - 78,510
------------ --------------- --------- ---------- -------------
Profit before taxation 17,915 6,857 (935) (1,446) 22,391
------------ --------------- --------- ---------- -------------
Net cash from operations (1,360) 1,227 (935) 273 (795)
------------ --------------- --------- ---------- -------------
Depreciation, amortisation
and gain on disposal
of property, plant
and equipment 5,767 815 - - 6,582
------------ --------------- --------- ---------- -------------
Segment assets 97,177 44,351 - 179 141,707
------------ --------------- --------- ---------- -------------
Capital expenditure 2,527 1,175 - - 3,702
------------ --------------- --------- ---------- -------------
Segment liabilities 30,765 18,935 - 311 50,011
------------ --------------- --------- ---------- -------------
Interest income/expense and income tax are not measured on a
segment basis.
4. Operating Profit
Operating profit is arrived at after charging:
2020 2019
GBP'000s GBP'000s
Depreciation on owned assets 474 267
Depreciation on right of use assets 6,333 6,388
Amortisation 91 35
Share based payments 658 657
Gain on disposal of property, plant
and equipment (236) (108)
There were no non-recurring costs in the year ended 31 December
2020 or 2019.
Included in the above are the costs associated with the
following services provided by the Company's auditor:
2020 2019
GBP'000s GBP'000s
Audit services
Audit of the Company and the consolidated
financial statements 40 30
Audit of the Company's subsidiaries 89 78
Total audit fees 129 108
All other services - 16
Total fees payable to the Company's
auditor 129 124
---------- ----------
5. Earnings Per Share
2020 2019
Number of shares: No. No.
Weighted number of ordinary shares
outstanding 113,550,685 110,000,000
Effect of dilutive options 2,200,000 2,200,000
------------ ------------
Weighted number of ordinary shares
outstanding - diluted 115,750,685 112,200,000
------------ ------------
Earnings: GBP'000s GBP'000s
Profit basic and diluted 12,315 17,988
------------ ------------
Profit adjusted and diluted 12,975 18,645
------------ ------------
Earnings per share: Pence Pence
Basic earnings per share 10.8 16.4
------------ ------------
Adjusted earnings per share 11.4 17.0
------------ ------------
Diluted earnings per share 10.6 16.0
------------ ------------
Adjusted diluted earnings per share 11.2 16.6
------------ ------------
The adjusted profit after tax for 2020 and adjusted earnings per
share are shown before share -- based payment charges of GBP0.7
million (2019: 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,
fittings
Right of Property & Office
use assets improvements equipment equipment Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Cost
At 1 January 2019 4,457 341 794 731 6,323
Additions 13,962 112 987 85 15,146
Disposals (1,243) - - (29) (1,272)
At 31 December 2019 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
Depreciation
At 1 January 2019 1,907 258 246 642 3,053
Charge for year 6,388 15 214 38 6,655
Eliminated on disposal (976) - - (29) (1,005)
At 31 December 2019 7,319 273 460 651 8,703
Charge for the 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
Carrying amount
At 31 December 2020 13,081 195 1,816 176 15,268
At 31 December 2019 9,857 180 1,321 136 11,494
Amounts previously categorised within Motor Vehicles are all
financed and as such have been recategorized and 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 2019 - 2,550 2,550
Depreciation charge for
the year (728) (5,660) (6,388)
Additions to right-of use
assets 5,547 8,415 13,962
Disposals of right-of-use
assets - (267) (267)
---------- --------- -------
At 31 December 2019 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
---------- --------- -------
7. Intangibles
Intangible Assets
Software
licenses
GBP'000s
Cost
At 1 January
2019 -
Additions 210
At 31 December
2019 210
Additions 151
At 31 December
2020 361
----------
Amortisation
At 1 January
2019 -
Charge for year 35
At 31 December
2019 35
Charge for the
year 92
At 31 December
2020 127
----------
Carrying amount
At 31 December
2020 234
----------
At 31 December
2019 175
----------
8. Trade and Other Receivables
2020 2019
GBP'000s GBP'000s
Trade receivables - gross claim
value 262,575 220,463
Settlement adjustment on initial
recognition (121,967) (100,001)
Provision for impairment of trade
receivables (21,016) (19,478)
Net trade receivables 119,592 100,984
Accrued income 27,100 24,416
Prepayments 596 842
Directors loan account - 415
Other debtors 643 999
147,931 127,656
---------- ----------
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.
Trade receivables stated above include amounts due at the end of
the reporting period for which an allowance for doubtful debts has
not been recognised as the amounts are still considered recoverable
and there has been no significant change in credit quality. Average
gross debtor days calculated on a count back basis were 428 at 31
December 2020 and 408 at 31 December 2019.
Age of net trade receivables
2020 2019
GBP'000s GBP'000s
Within 1 year 67,361 62,508
1 to 2 years 32,049 22,422
2 to 3 years 12,791 9,564
3 to 4 years 6,709 5,972
Over 4 years 682 518
119,592 100,984
---------- ------------
Average age (days) 428 408
---------- ------------
The provision for impairment of trade receivable 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
2020 2019
GBP'000s GBP'000s
Opening balance 19,478 17,669
Increase in provision at gross
value 6,448 5,129
Utilised in the year (4,910) (3,320)
21,016 19,478
---------- ----------
9. Borrowings
Restated
2020 2019
GBP'000s GBP'000s
Non-current loans and borrowings
Lease liabilities 8,945 5,422
Other borrowings 3,681 -
12,626 5,422
---------- ----------
Current loans and borrowings
Revolving credit facility 8,000 8,000
Lease liabilities 4,753 4,885
Invoice discounting facility 16,341 17,784
Other borrowings 6,953 2,383
36,047 33,052
---------- ----------
Direct Accident Management Limited uses an invoice discounting
facility which is secured on the trade receivables of that company,
the balance outstanding being reported within other borrowings.
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 2020, Direct Accident Management Limited has
availability within the invoice discounting facility of GBP2.2
million (2019: GBP0.7 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, GBP2.0 million of which was to be paid as a
final instalment.
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 27
September 2022, with no associated repayments due before that date.
Interest is charged at 3.25% over LIBOR. The facility is fully
drawn down as at 31 December 2020 and 2019.
The Group's banking arrangements are subject to monitoring
through financial performance measures or covenants. During the
COVOD 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. As a result
the revolving credit facility (GBP8.0 million as at 31 December
2020) is classified as being repayable on demand. A facility from
Secure Trust (GBP16.3 million as at 31 December 2020) is 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 at the earlier of settlement of the claim and receipt
of the proceeds or three 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.
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.
10. Restatement of Disclosures
There are a number of classification and disclosure restatements
for the comparative period which are explained more fully in the
Annual Report and Financial Statements. These adjustments affect
the presentation and classification of amounts disclosed and do not
result in a net adjustment to either profit or total equity.
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END
FR PPUUGCUPGGBQ
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April 27, 2021 02:00 ET (06:00 GMT)
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