Anexo Group (ANX ), announced this morning interim results for the 6 months ended 30 June 2022 (H1 2022). Anexo is a specialist integrated credit hire and legal services group, focused on providing replacement vehicles to consumers who have been involved in non-fault accidents.
Financial results
Anexo reported strong double digit growth across its balance sheet.
Revenue increased 42% to £68.8m, compared to £48.3m in H1 2021, driven by increased vehicles on hire and growth in in legal fee earners.
Similarly, operating profit jumped 55% to £16.1m compared to £10.4m in H1 2021, on improved cash collections, leverage of overhead, maximising opportunities within credit hire, and an improved vehicle mix, the company said.
Anexo saw cash collections from settled cases increase 20% to £67.9m compared to £56.7m in H1 2021, with strong sales growth driving an increase in Trade Receivables to £209.8m, compared to £160.5m a year ago.
Basic earnings per share also jumped 52.5% to 9.3p, compared to 6.1p in H1 2021. Anexo said it would pay its annual dividend following announcement of full-year results.
Operational Highlights
Anexo said vehicle numbers grew rapidly in H1, and are now being carefully managed to maximise efficient use of operating capital. The company had 1,828 vehicles on the road on 31 August 2022, with an increasing proportion of motorcycles following an agreement with MCE insurance in Q4 2021.
Anexo reported good progress with its Volkswagen emissions case ahead of a scheduled court date in early 2023. Additionally, the company said it has committed £2m of funding towards acquisition of Mercedes emissions cases. Total cumulative investment across Mercedes and VW cases stood at £5.8m, all expensed, including £1.3m in H1 2022.
Anexo reported its new House Disrepair (HDR) business is off to a good start with 2,300 cases overall, of which 600 were settled in H1 2022. HDR revenue doubled in H1 to £4.7m compared to £2.2m in 2021, including profit of £2.4m, more than double last year's £1.1m.
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Anexo recorded robust growth across both its divisions (Legal Services and Credit Hire) with a significant 40% increase in vehicle numbers. Continued progress in the HDR division and in emissions litigation is expected to sustain growth in the company's core business in H2 and beyond. Anexo should therefore meet full-year market expectations.
Anexo believes there is a significant short-term opportunity to accelerate growth in emissions and HDR claims. Therefore, the company has negotiated an increase in its loan agreement with Blazehill Capital from £7.5m, to £15m, to be drawn down immediately. Investors should look forward to regular updates on emissions expenditures.
Anexo has stayed focused on its strategy of increasing claim settlement capacity, thus maximising cash collections. It reported an increase in the number of senior fee earners employed at the end of H1 2022 of 41% year-on-year to 247 and an increase in the number of legal staff of 10% to 633. Strategically identifying hire opportunities has allowed the company to manage working capital more efficiently and increase its number of case settlements.
In short, Anexo's priorities in the near-term are improving its vehicle mix, building on the strong initial performance of the HDR division, and further maximising emissions opportunities.
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