In a trading update,Anexo Group (ANX ) said 1H21 trading remains ahead of expectations, with monthly cash collections from Legal Services exceeding those from the 1H20 period.
Anexo said it expects this trend to continue as the process of re-opening the courts gathers pace and that in the meantime, it continues to recruit high quality legal staff in line with its policy of expanding its headcount to drive increased case settlements and cash collection.
The Company told investors that EDGE, the Group's Credit Hire division, has continued to see a rise in average vehicle hire numbers following the lifting of the national lockdown.
‘In a pattern similar to the end of the first lockdown in mid-2020,’ the Group reported, ‘the number of vehicles on the road has increased sharply, and vehicle numbers have once again reached record levels, with a corresponding increase in further opportunities for the Group.’
‘As always, the Group monitors vehicle numbers carefully to maximise cash collections,’ it said. The Group highlighted to investors that it will publish its 1H21 results next month.
Alan Sellers, Executive Chairman, said: “The Group’s activities continue to accelerate as UK lockdown measures ease, especially with the imminent release of pent-up case settlements as the UK Courts system begins to open. Cash collections remain consistently high and, with road users increasing, the number of vehicles on the road is reaching record levels.”
In a research note, analysts at UK-based institute Arden Partners said they believe that ongoing investment into both Anexo’s credit hire and legal services divisions ‘will support growth and the capturing of excellent opportunities for the Company in the market.’
As a result of this forecast, analysts have ‘nudged up’ their 2021/2022 earnings forecasts by around 4-5% which they say reflects ‘higher levels of credit hire activity vs. previous expectations, resulting in higher debt levels due to investment in working capital.’
Analysts said they expect momentum in the business and the acceleration of housing disrepair to underpin earnings and provide scope for upgrades as 2H21 progresses.
Within its trading update, Anexo also confirmed to its shareholders that DBay Advisors will no longer be making an offer for the London-listed credit hire and legal services provider.
Sellers explained: “The Group’s relationship with DBAY has been amicable throughout our lengthy discussions and DBAY remains a supportive shareholder. Saki Riffner remains a Non-Executive Director of the Group, and along with the rest of the Board I look forward to working with DBAY to continue to deliver value and growth for all our shareholders.”
Commenting on the relationship between DBAY and Anexo, analysts at Arden Research stated: “We believe DBAY recognises the inherent value and opportunities in Anexo’s business, remaining a key shareholder, and supporting Anexo’s growth strategy and capital allocation plans which will benefit from increased funding given Anexo’s prospects.”
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