REG - Anexo Group PLC - Final Results
11/05/2022 07:00
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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 (£'000s) 118,237 86,752 +36.2%
Operating profit (£'000s) 27,350 18,050 +51.4%
Adjusted(1) operating profit before exceptional items (£'000s) 27,728 18,708 +48.1%
Adjusted(1) operating profit margin (%) 23.5 21.6 +8.8%
Profit before tax (£'000s) 23,746 15,488 +52.9%
Adjusted(1) profit before tax and exceptional items (£'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 (£'000s) 128,224 110,438 +16.1%
Net cash flow (£'000s) -7,300 +200 -
Net debt balance (£'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 £119.0 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 (£'000s) 118,237 86,752 +36.3%
Gross profit (£'000s) 91,481 67,952 +34.6%
Adjusted operating profit (£000'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 (£'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/ (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
(https://www.anexo-group.com/content/investors/latest-results)
For further enquiries:
Anexo Group plc +44 (0) 151 227 3008
www.anexo-group.com (http://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 Aliaj (Corporate) +44 (0) 20 7220 1666
Fraser Marshall / Harry Ansell (Broking) www.whirelandplc.com/capital-markets
(https://url.avanan.click/v2/___https:/eu-west
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Arden Partners plc
(Joint Broker) +44 (0) 20 7614 5900
John Llewellyn-Lloyd / Louisa Waddell (Corporate) www.arden-partners.co.uk (http://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
(http://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 £118.2 million (2020: £86.8
million). Adjusted profit before tax rose 49.7% to £24.1 million (2020:
£16.1 million), reflecting the continued investment in staff, IT and
associated infrastructure costs associated with the headcount increase
(investment in 2020: £6.5 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 £71.3 million
(2020: £51.6 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 £46.9 million (2020: £35.2
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 £3.0 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 £43.0 million. In
addition to this increase the Group secured a loan of £7.5 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
£0.7 million charge recorded for share-based payments in 2020 and the £0.4
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 £118.2
million, representing a 36.2% increase over the prior year (2020: £86.8
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 £71.3 million in 2021, an
increase of 38.2% over 2020 (£51.6 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 £35.9 million in 2020 to £46.9
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 £1.7 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 £91.5 million (at a margin of 77.4%) in 2021,
increasing from £68.0 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 £55.1 million in 2021 (2020: £42.6 million), an increase of £12.5
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 £20.5 million (2020: £16.6 million), an
increase of £3.9 million (23.5%) which, together with significant investment
in staff within the Credit Hire division (2021: £12.4 million, 2020: £8.1
million) to ensure we maintained our high standards of service to an
increasing number of clients, accounted for a total increase of £8.2 million.
Following the establishment of our Housing Disrepair team in late 2020, some
£1.7 million was invested in marketing costs in 2021 (2020: £0.1 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 £24.1 million in 2021, increasing
significantly from £16.1 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 £23.7 million (2020: £15.5
million) reflecting the non-cash share-based payment charge of £0.4 million
(2020: £0.7 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 £3.6 million in 2021, increasing from £2.6 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 £325.3 million in 2021, rising from £262.6 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
£146.4 million (2020: £119.6 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 £39.4 million reported as accrued
income (2020: £27.1 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
£13.1 million in 2021 (2020: £11.2 million), the fleet continues to be
largely externally financed.
Trade and other payables, including tax and social security increased to
£12.6 million compared to £9.5 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 £128.2 million (2020: £110.4
million).
Net Debt, Cash and Financing
Net debt increased to £62.0 million at 31 December 2021 (31 December 2020:
£40.5 million) and comprised cash balances at 31 December 2021 of £7.6
million (2020: £8.2 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 £48.7 million in 2020 to £69.6 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 £7.5 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
£43.0 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 £98.0 million in 2020 to £119.0
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 £11.1 million of new debt, provided by an
increase in facilities from Secure Trust Bank plc (£3.6 million) and
Blazehill Capital Finance Limited (£7.5 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 £7.3
million (2020: cash inflow of £0.2 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 £7.2 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 £3.0 million to
fund the Mercedes Benz emissions claim, (2020: net cash inflow of £4.9
million), the Group reported a net cash outflow in 2021 of £0.7 million
(2020: net cash inflow of £6.0 million).
Reconciliation of Adjusted and Reported IFRS Results
In establishing the adjusted operating profit, the costs adjusted include
£0.4 million of costs related to share-based payments (2020: £0.7 million).
A reconciliation between adjusted and reported results is provided below:
Year to December 2021
Adjusted Share-based payment £'000s Reported
£'000s £'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 payment £'000s Reported
£'000s £'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 £'000s £'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 19,148 12,315
of the company
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 £'000s £'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 Capital Share Based Payments Reserve Retained Earnings Total
Share Premium Merger Reserve
£'000s £'000s £'000s £'000s £'000s £'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 £'000s £'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 £15.0 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 £10.0 million with HSBC Bank plc (due for
repayment in October 2024), an invoice discounting facility of £40.0
million with Secure Trust Bank plc (due for renewal in December 2023) and a
loan facility of £7.5 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 (£71.3 million and £143.0 million respectively) by £2.3
million. (2020: by £1.9 million, credit hire revenue being £51.0 million and
trade receivables and accrued income £110.9 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
Credit Hire Legal Services Consolidated
Group & Central Costs
Housing Disrepair VW Class
Action
£'000s £'000s £'000s £'000s £'000s £'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 7,205 1,436 - - - 8,641
equipment
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
Credit Hire Legal Services Consolidated
Group & Central Costs
Housing Disrepair VW Class
Action
£'000s £'000s £'000s £'000s £'000s £'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 5,492 1,173 - - - 6,665
equipment
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
£'000s £'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
£'000s £'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: £'000s £'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 £0.4 million (2020: £0.7
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 of Property fittings & Office
use assets improvements Equipment equipment Total
£'000s £'000s £'000s £'000s £'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 Total
Buildings vehicles
£000 £000 £000
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
£'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
£'000s £'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
£'000s £'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
£'000s £'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
£'000s £'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 £1.3 million (2020: £2.2 million).
In July 2020 Direct Accident Management Limited secured a £5.0 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 £8.0 million to £10.0 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 (£29.3 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 £2.1m 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 £3.0 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 facility £'000s
Lease liabilities £'000s Other borrowings £'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 £11.7 million (2020: £11.0 million) of new leases
entered into during the year.
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