Financial Highlights 

Following the positive trading update in August, revenue for the period increased 32% to 48.3 million with operating profit increasing 38% to 10.4 million with EPS increasing 35% to 6.1p. 

Net cash inflow from operating activities was 1.5m Vs 6.2m in the corresponding period last year illustrating the impact of the first set of lockdowns. 

Net debt as of the 30th of June 2021 was £44.4m Vs is £40.5m as of 31st of December 2020 

Given the improving financial outlook for the Company the board has proposed an interim dividend of 0.5p per share.

Operational Highlights 

Credit Hire 

The average number of vehicles on the road during H1 2021 reached 1,461, a 13.6% increase on the prior year, driving profit before tax in the Credit Hire division 17.0% higher to £7.97m. 

Importantly to reinforce the improving outlook, completed vehicle hires rose by 38.2%.

Legal Services 

The number of senior fee earners employed at the end of H1 2021 rose by 27.8% 175 with the overall number of legal staff increasing from 450 in H1 2020 to 578 in H1 2021. This investment has underpinned continued growth in cash collections, which rose 18.1% to a total of £56.67m, with revenues increased by 38.2% to £22.01m. Profit before taxation rose from £0.84m to £2.59m, an increase of 209%. 

The Group expects this revenue trend to continue as more of our staff reach maturity from a cash collection and settlement position.

Commenting on the Interim Results, Alan Sellers, Executive Chairman of Anexo Group plc, said: “I am pleased to report that the Group has performed robustly during the first half of the year, notwithstanding the considerable challenges posed by the COVID-19 pandemic.  

Business activity in both our credit hire and legal services divisions have recovered strongly. We continue to put record numbers of vehicles on the road and to maximise cash collections by carefully managing hire periods and increasing the overall number of case settlements. 

The rise in vehicle demand and our continued focus on cash collections provide an excellent opportunity to further implement the Group's fundamental growth strategy.”

View from Vox 

Whilst much of the positive news in todays’ results were flagged in the trading update released in August, it is reassuring for investors to see the trends as much as the end points to 30 June with all KPIs heading upwards as the market continues to improve towards pre-lockdown levels. 

We note analysts at Arden upgraded their forecasts + 4-5% at the time of the August TU, to reflect the higher levels of activity and reiterate their BUY investment thesis that Anexo trades on a PE of just 9.6x and 7.1x EBITDA and consider a P/BV of 1.2x is too low for an a company with over 20,000 case backlog and potential returns now coming through the Legal Services division post several periods of investment. 

Obviously, the cessation of the offer from DBAY Advisors provides investors somewhat of a backstop from here, and provides the Company with breathing space to focus on concluding negotiations with existing finance providers who have offered increased facilities. 

These new funds will enable the Company to increase the deployment of its fleet and accelerate the number of new cases, while enabling ongoing investment in high quality litigators. We expect such positive news to prompt the re-rating towards Arden’s target price of 280p while the fundamentals of the Company continue to improve.