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Anexo Group defers dividend decision, opening of Leeds branch

By Josh White

Date: Friday 03 Apr 2020

Anexo Group defers dividend decision, opening of Leeds branch

(Sharecast News) - Credit hire and legal services provider Anexo Group updated the market on its final results, as well as the impact of the Covid-19 coronavirus pandemic, on Friday, saying that following Financial Conduct Authority and Financial Reporting Council guidance, its audited results for 2019 would be delayed.
The AIM-traded company said its profit before tax for the year was in line with its expectations, adding that its key performance indicators demonstrated "strong" performance.

It said it had a "strong" balance sheet, conservative gearing and sufficient financial headroom, and confirmed its 2019 dividend payment would be deferred, along with the proposed opening of an office in Leeds.

Looking at the impact of the coronavirus pandemic, Anexo said the health and wellbeing of its people and clients was "paramount", adding that steps had been taken to allow its 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 its client service.

Bond Turner, the Group's legal services division, has moved most of its staff to remote working and continued to be fully operational.

The progression and settlement of cases is being aided by moves from the Ministry of Justice, supported by the judiciary, to allow the remote operation of courts through online and telephone hearings, it confirmed.

Within EDGE, the group said its credit hire division, vehicles continued to be delivered and collected by staff who were protected in line with government guidelines.

All returned vehicles were valeted as a matter of course before being allocated to a new customer, and comprehensive cleaning procedures were being "rigorously" enforced.

The company said its operations were categorised as essential businesses, and as such were exempted from current government restrictions.

Its businesses supply and service a "broad range of customers" who were involved in a non-fault accident, and who would otherwise be unable to access the mobility they needed.

Among those, Anexo said it provides replacement vehicles to many key workers, including couriers - who were increasingly active during the current circumstances - and other customers such as doctors, nurses, schoolteachers, nursery staff, emergency workers and supermarket personnel.

On the current trading front, the company said its decision to drive an increase in case settlements relative to new cases, and thus achieve an increase in cash collections, had seen collections continue to grow, and that the credit hire operation had been net cash generative for the first two months of the 2020 financial year.

That milestone was achieved as a direct result of the Board's strategy in 2019 to focus on investment in the legal services division, and to hold back growth in credit hire numbers to support the transition to cash generation.

As it announced on 28 January, monthly cash collections during the second half consistently exceeded the levels achieved in the first half, with the board "pleased" to announce that monthly cash collections for January, February and March had continued that pattern.

"Group trading for 2020 to date has been in line with management expectations, with no apparent adverse effects on the group's performance due to Covid-19 currently being experienced," the board said.

"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."

Anexo said its policy of driving cash generation remained a key focus, adding that the progression of its significant caseload portfolio by litigators within Bond Turner was 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 2020 cannot yet be fully assessed.

"Accordingly, the board believes it would be inappropriate to provide forward looking financial guidance to investors and analysts at this time."

The group said it had a "strong" balance sheet, with a conservative gearing level and good liquidity.

It had headroom within its funding facilities, which included a revolving credit facility of ?8.0m with HSBC, and an invoice discounting facility of ?18.5m with Secure Trust Bank.

The board said it was maintaining regular contact with the group's funding partners, which reportedly remained "wholly supportive" of the business.

"In line with the board's prudent approach to the evolving economic outlook, the payment of any final dividend relating to 2019 will be determined later in the year when the outlook for the group has been considered by the board and a date for the release of the final audited results has been established," the board added.

"Similarly, the payment of certain performance-related cash bonuses due to senior executive directors has been deferred pending this review."

Anexo's directors said they were keeping capital expenditure under constant review and, in light of the current situation, the proposed opening of its Leeds office - previously announced on 28 January - had been deferred without any lease commitments having been made.

"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."

At 1445 BST, shares in Anexo Group were up 10.87% at 121.4p.

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