The specialist
integrated credit
hire and legal
services provider
Annual Report 2020
Anexo is a specialist
integrated credit hire
and legal services group.
We provide replacement vehicles and
associated legal services to impecunious
customers who have been involved in a
non-fault accident.
These individuals typically do not have the
financial means or access to a replacement
vehicle. This allows the Group to charge
credit hire rather than spot hire rates,
recovering these charges from the at-fault
insurer at no upfront cost to the individual.
Overview
Operational and financial highlights
Our strategy
Financial and operational KPIs
At a glance
Investment case
Executive Chairman’s statement
Market overview
Strategic Report
Our business model
Financial review
Risk management
Principal risks and uncertainties
Governance
Board of Directors
Corporate Governance
Audit Committee report
Remuneration Committee report
Directors’ report
Statement of Directors’ responsibilities
Financial Statements
Independent auditors’ report
Consolidated statement of
total comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company statement of financial position
Company statement of changes in equity
Notes to the Company financial statements
Other Information
Company information
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18
23
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28
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54
80
81
82
87
Our purpose
We look after motorists involved
in non-fault accidents, providing
replacement vehicles and
associated legal services.
For further investor information:
www.anexo.com/investor-relations
Overview
Strategic Report
Governance
Financial Statements
Operational and financial highlights
Operating
profit
£24.6m
Revenue
+39%
Profit
margin
32.3%
Net
assets
£91.7m
Dividend
1.5p
Basic EPS
17p
Overview
2019 has been a year of transition
for the Group. Following the
successful listing on AIM in June
2018, raising £10.0 million of
expansion capital (pre expenses),
the Group initially deployed this
capital to allow management to
take advantage of the significant
opportunities which exist within our
core market: providing replacement
cars and motorcycles to individuals
who have been involved in a non-
fault road traffic accident (“RTA”)
and who would ordinarily not have
access to a replacement vehicle.
Thereafter, focus has very much
been on the legal services business,
with efforts and investment driving
settlement capacity and cash
collections from the recruitment
of a significant number of senior
litigators across both the Liverpool
and Bolton offices.
£1.5 million in the second half of the
year, as cash collections increased
from £36.6 million to £47.5 million,
an increase of 30% between the
first and second half of 2019.
As our results indicate, this
investment has driven value from
within our extensive case portfolio
built over a number of years, and
in doing so is expected to unlock
value from our litigation assets as
settlement levels increase.
Significant steps forward were
made during 2019 and the level of
cash absorption reduced from £7.0
million in the first half of the year to
We have provided certain data
and statistics below and on the
following pages to give further
detail around the trading and
operational performance of the
Group. The measures presented
are those which management
consider provide the best
reflection of performance.
• Revenue increased by 39% to £78.5 million
• Adjusted2 basic EPS at 17.0 pence (2018:
(2018: £56.5 million)
12.0 pence)
• Operating profit reported at £24.6 million
(2018: £15.4 million) – an increase of 60%
• Adjusted1 operating profit before exceptional
items in line with market expectations, rising
by 47% to £25.2 million (2018: £17.2 million)
• Adjusted1 operating profit margin increased
to 32.2% (2018: 30.4%)
• Profit before tax of £22.4 million (2018:
£14.3 million) – an increase of 57%
• Adjusted1 profit before tax and exceptional items
increased to £23.1 million, (2018: £16.1 million) –
an increase of 43%
• Proposed final dividend of 0.5p per share giving a
total dividend for the year of 1.5 pence per share
(2018: 1.5 pence)
• Net assets reported at £91.7 million (2018:
£75.8 million) representing an increase of 21%
• Significant reduction in net cash outflows from
operating activities which reached £0.8 million
in 2019 (2018: net cash outflow: £7.9 million)
• Net debt balance at 31 December 2019 was
£27.7 million (31 December 2018: £17.3 million)
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 18.
1.
Adjusted operating profit and profit before tax: excludes the costs of Admission to AIM in 2018 and share‑based payment charges in
2018 and 2019. A reconciliation to reported (IFRS) results is included in the Financial Review on page 18.
2. Adjusted EPS: adjusted PBT less tax at statutory rate divided by the number of shares on a pro forma basis, i.e. assuming that the
number of shares in issue immediately post‑IPO were in issue through the entire comparative period.
01
Anexo Group plc Annual Report 2020
Our strategy
The Board has concluded that the highest
medium and long-term value can be delivered
to its shareholders through the Company’s
growth strategy.
The focus during 2019 has been on the legal services business, with efforts and investment
driving settlement capacity and increased cash collections, whilst holding the fleet number
steady. Our three strategic pillars are:
1
Maintaining
fleet at
current
levels
2
Increasing
number of
litigators
3
Targeting
net cash
generation
Growth in the credit hire
fleet has been restrained and
consequently the number
of vehicles on hire reduced
during 2019, reaching 1,308 at
the end of 2019, a reduction
of 223 or 14.6% on the prior
year. Credit Hire revenue
increased by 40.9% and
profit before tax in the Credit
Hire division rose by 72%. The
Group continues to monitor
its fleet size and retains the
capacity to respond quickly
and deploy additional
vehicles according to the
Group’s strategic priorities.
The focus has been on
growth in the new Bolton
office, which opened in
December 2018. The level
and calibre of recruitment
have been outstanding
and we have now taken a
further 10,000 sq.ft. of office
space in Bolton to expand
the headcount further. The
number of senior fee earners
grew 43% during the course
of the year and we continue
to recruit high quality staff.
The cap on investment in
fleet expansion has had the
effect of reducing the level of
cash settlements required to
reach an inflexion point and
result in net cash generation.
The number of cases settled
increased during 2019 as
our investment in legal staff
started to bear fruit. Cases
settled rose by 39% from H1
2019 to H2 2019, reaching a
total for the year of 4,938.
We anticipate further growth
in 2020 as the case portfolio
of the new recruits matures.
Strategic outlook
Anexo invested heavily in the legal services business in 2019 and we are now extremely
well positioned to grow our market share and take advantage of the opportunities available
to us during 2020 to ensure that this growth is significantly cash generative. The Board
is confident that the Group strategy will result in increasing claims generation and an
expanding market share for our Credit Hire division.
02
Overview
Strategic Report
Governance
Financial Statements
Financial and operational KPIs
During 2019 we have seen significant improvements in a number of
key performance measures (detailed below). These have resulted in
a significant reduction in the level of cash absorbed by the Group in
the second half versus the first half of the year. Despite this reduction
in cash consumption, the number of claims instigated during the
period increased from 3,392 in H1 2019 to 3,567 in H2 2019. Our
investment in the number of senior fee earners also increased, rising
from 89 at the end of 2018 to 109 at the end of H1 2019 and reaching
127 at the end of 2019.
Most notably the number of
cases settled increased during
2019 as our investment in
legal staff started to bear fruit.
Cases settled rose from 2,066
in H1 2019 to 2,872 in H2 2019
(an increase of 39.0%). We
anticipate further growth in
2020 as the case portfolio of
the new recruits matures.
Financial (£’000s unless otherwise stated)
Total revenues
Gross profit
Adjusted operating profit*
£78.5m +38.9%
(2018: £56.5m)
£62.8m +55.7%
(2018: £40.3m)
£25.2m +47%
(2018: £17.2m)
2019
2018
2019
2018
2019
2018
Adjusted operating
profit margin* (%)
32.2% +5.9%
(2018: 30.4%)
2019
2018
Cash collections
from settled cases
£84.1m +44.8%
(2018: £58.1m)
2019
2018
Operational
People
Vehicles on hire at
the year-end (number)
Average vehicles on
hire for the year (number)
Senior fee earners at
period end (number)
1,308 -14.6%
(2018: 1,531)
2019
2018
Number of hire
cases settled
4,938 +33.1%
(2018: 3,710)
2019
2018
1,454 +25.9%
(2018: 1,155)
2019
2018
New cases funded
(number)
6,959 +17.4%
(2018: 5,930)
2019
2018
127 +42.7%
(2018: 89)
2019
2018
Average number of senior
fee earners (number)
111 +46.1%
(2018: 76m)
2019
2018
* Adjusted operating profit and profit before tax: excludes the cost of Admission to AIM and share-based payment charges.
03
At a glance
Anexo is a specialist integrated credit hire
and legal services group focused on providing
replacement vehicles to consumers who have
been involved in a non-fault accident.
Our clients typically do not have options to access a replacement vehicle which allows the
Group to charge credit hire rather than spot hire rates, recovering these charges from the
at‑fault insurer at no upfront cost to our client.
Our two divisions:
Credit Hire (EDGE)
Our Credit Services division operates under the brands DAMS (cars and commercial vehicles),
McAMS (motorcycles) and CAMS (bicycles). We have a network of around 1,150 introducer
garages across England and Wales which are typically small independent operators. Following
a recommendation from one of our garage partners, a customer claim is vetted by our
experienced team and, if approved, a replacement vehicle is provided on the same or the
following day from one of our four depots strategically located across England.
The garage is visited by an independent court‑appointed engineer who assesses the damage
to the vehicle and either authorises the repair or declares it a write‑off. The client retains
the hire vehicle until the repaired vehicle is returned or a cheque for the value of the write‑
off is received. Returned vehicles are valeted and checked for roadworthiness before being
reallocated to a new customer.
22
in our
sales force
4
depots
1,454
average
vehicles on hire
1,150
introducer garages
in our network
3
brands
04
Anexo Group plc Annual Report 2020 600+
employees
20,000+
cases in progress
7
locations
Legal Services (Bond Turner)
Bond Turner is our wholly‑owned firm of solicitors. We employ both qualified solicitors and
paralegals to facilitate our claim work. In addition to our original office in Liverpool we opened an
office in Bolton in December 2018. This has subsequently doubled in size and we have recently
announced plans to open a third office in Leeds.
Advocacy
In addition to the claims work which forms the majority of our caseload we are also involved in
general advocacy, including professional and clinical negligence cases, complex medical claims,
defamation and wills and estates disputes. We are acting for a number of clients in relation to the
ongoing class action around the VW emissions case.
PALS
PALS is a medical legal agency
and arranges expert third‑
party reports to support the
customer’s claim from either
a credit hire and/or personal
injury perspective.
IGCA
IGCA administers ATE insurance
policies for independent third‑
party insurers which have been
obtained by customers to
ensure that the customer’s risk
of any adverse costs associated
with the claim are reduced or
eliminated.
Been Let Down
Been Let Down are professional
negligence specialists.
111
average senior
fee earners
442
legal staff
employed
172
senior fee earners
05
OverviewStrategic ReportGovernanceFinancial Statements At a glance continued
The lifecycle of a claim
Once a customer has been introduced to us,
we provide an end-to-end service, handling
their replacement vehicle hire and subsequent
recovery of all costs from the other side.
RTA happens to
no fault motorist
Individual put in
touch with EDGE
Direct capture
sources:
• Body shops
• Vehicle workshops
• Recovery agents
+ Anexo sales
representatives
Vetting of claim
Three validation
steps:
1. Establishment
of Liability
2. Customer Statement
3. Witnesses
~50%
of claims result in
a vehicle being issued
Bond Turner
contacts the at-
fault insurer with
credit hire and
repairs claim
Most introduced
RTA cases
also include a
personal injury
claim
Should the at-fault insurer refuse to
settle at an acceptable rate, Bond
Turner issues court proceedings
06
EDGEprovides replacement vehicles at commercial credit hire ratesBond Turnercollects cash from the at fault insurerAnexo Group plc Annual Report 2020 4,938
hire cases settled
7,182
completed vehicle hires
Issue of
vehicle
Upfront
settlement
of repair and
recovery
charges
Client retains
replacement
vehicle until
repair or receipt
of write off
cheque
EDGE refers
claim to Bond
Turner
PALS supports
claims by
arranging third
party medical and
legal reports
The majority of
claims are settled
by negotiation
If no settlement
is agreed, the
case proceeds
to court, the cost
being recoverable
from the third
party insurer
Settlement
07
EDGEprovides replacement vehicles at commercial credit hire ratesBond Turnercollects cash from the at fault insurerOverviewStrategic ReportGovernanceFinancial Statements Investment case
The Board is pleased to confirm that cash
collections have continued to grow. We
believe that our expanded platform provides
the Group with excellent prospects for 2020
and beyond.
Anexo provides a complete
litigated claims process
focused on the recovery of
credit hire and repair costs.
Much of our business is
generated from the significant
proportion of the population
in England and Wales which is
unable to access emergency
liquidity in the event of
unexpected financial demands.
Our direct capture model
enables us to deal with our
customers directly without
recourse to their insurance
provider.
We offer a complete service
to our customers from the
provision of a replacement
vehicle following a non‑fault
accident, through the process
of repair or write‑off, to the
recovery of the cost of repair
or the value of the written‑off
vehicle. We maintain a close
relationship with the customer
throughout the process. By
monitoring the repair process
and progress of the litigation
we are able to manage our
fleet requirements in a timely
and efficient manner.
We maintain four depots
which cover the whole of
England and Wales. Our
Northern and original depot
is based in Ormskirk. We
have two smaller depots in
Solihull and Frome, covering
the Midlands and the West
Country. During 2019 we
moved into our largest depot,
a purpose‑built facility in
Potters Bar which handles
our South, East and London
based customers. Our fleet
managers constantly monitor
location and demand statistics
to ensure that our customers
can take delivery of the
vehicle they need as quickly
as possible.
08
Fourvehicle depots across England4,938hire cases settled in 201995%of Bond Turner cases referred from EDGEUnique Customer PropositionSynergistic Integrated DivisionsEstablished Geographic Presence and FleetAnexo Group plc Annual Report 2020 Our team of 22 sales people
are responsible for defined
areas within England and
Wales. They initiate and
build relationships with
our network of c.1,150
introducer garages, which
are typically sole traders or
small partnerships unaffiliated
with main dealerships or
specific car manufacturers.
This independence allows us
to approach each potential
repair opportunity on an
equal footing, without
restrictions or obligations
to large organisations. The
large number of introducer
garages allows us to minimise
risk exposure to any one
counterparty.
Our Executive Chairman, Alan
Sellers, started the credit
hire business in 1995. Several
members of our staff who
joined at inception continue
to use their experience in
senior roles within EDGE.
The merger with Bond
Turner, formerly known as
Armstrongs Solicitors, in 1996
gave us access to a pool of
experienced litigators. All our
Executive Directors have many
years’ experience within the
consolidated group and our
Non‑Executive Directors bring
with them a wide range of
specialised skills which offer
tangible benefits to the Board.
Anexo maintains excellent
relations with its bankers
and finance providers. We
have established distinct
long‑term financing
arrangements covering
EDGE and Bond Turner. Our
revenue recognition policies
are recognised as extremely
conservative and our constant
monitoring of the capacity
and needs of both the credit
hire and legal divisions means
that we can apply financial
leverage swiftly and effectively
when required.
09
Positive growth in all key financial metrics in 20191,150introducer garages in our network22 in our sales forceActive Network of Sales People and IntroducersExperienced Senior Management TeamRobust Financial BackingOverviewStrategic ReportGovernanceFinancial Statements Executive Chairman’s statement
On behalf of the Board, I am pleased to
report another year of strong financial and
operational performance from the Group.
These results reflect our emphasis
on driving cash generation through
increased case settlements and more
efficient use of working capital. We
believe that our expanded platform
provides the Group with excellent
prospects for 2020 and beyond.
When this investment is excluded,
the Group has reached the
landmark inflexion point from cash
absorption to cash generation
within our core business, an
achievement of which the Board
is very proud.
Group Performance
Anexo delivered a record
performance across all key Group
financial metrics and KPIs in
2019. Trading continued strongly
throughout the year and has
exceeded initial expectations. Both
the Credit Hire and Legal Services
divisions performed robustly,
generating high levels of revenue
growth. As a result, Group revenues
in 2019 increased by 38.9% to
£78.5 million (2018: £56.5 million)
and adjusted profit before tax for
the period increased by 43% to
£23.1 million (2018: £16.1 million).
This adjusted profit before tax
figure is in line with current market
expectations following a series
of upgraded forecasts during the
course of the year.
2019 was always intended to be
a year in which we invested in
the Legal Services division, whilst
restraining growth within the Credit
Hire division. Implementation of
this strategy has contributed to a
significant reduction in the level of
cash absorption during 2019. This
reduced from £7.0 million in the first
half of the year to £1.5 million in the
second half. We were particularly
pleased with our performance in
the second half as during that
period we invested c£1.0 million
in engaging with prospective
claimants in the VW emissions
case, part of a global class action
which is likely to develop further
during the course of this year.
Credit Hire division
Following the Group’s listing in June
2018, a portion of the funds raised
at IPO was used to expand the fleet.
Since then, focus has been primarily
on expanding the legal services
business with the aim of driving
the Group towards increased cash
generation. As part of this strategy,
growth in the credit hire fleet has
been restrained and consequently
the number of vehicles on hire
reduced during 2019, reaching 1,308
at the end of 2019, a reduction
of 223 or 14.6% on the prior year.
The cap on investment in fleet
expansion has had the effect
of reducing the level of cash
settlements required to reach an
inflexion point and result in net
cash generation.
Given the fleet increase during
2018 and therefore an increase
in the average fleet over the year
compared to 2018, Credit Hire
revenue increased by 40.9%, rising
from £34.0 million in 2018 to £48.0
million in 2019. Profit before tax in
the Credit Hire division rose by 64%
to £17.9 million (2018: £10.9 million).
The Group continues to monitor its
fleet size and retains the capacity
to respond quickly and deploy
additional vehicles according to the
Group’s strategic priorities.
Legal Services division
As previously noted, 2019 was
largely focused on developing
capacity within Bond Turner,
our legal services business.
The expanded capacity at Bond
Turner has been supported by
the opening of the Bolton office
in December 2018. Recruitment
in Bolton has progressed better
than expected, both in terms of the
number and quality of the highly
skilled and experienced litigators we
have been able to recruit. In fact, the
level of quality recruitment exceeded
initial expectations and we have
now taken a second floor in Bolton
to allow the Group to continue
the investment in staff. As a result,
we have increased the number of
senior fee earners within the Group
from 89 at the end of 2018 to 127 at
31 December 2019, an increase of
almost 43% during the year.
As announced post‑period end
in January 2020, following the
extremely successful opening of
the Bolton office, the Group intends
to open a new office in Leeds.
Significant additional investment
is planned during 2020, further
enhancing the settlement capacity
of the Group and ultimately the
level of cash recovered from our
significant portfolio of cases.
In addition to increasing legal
capacity to further settlement
rates, the Group has invested
in other cases where we have
identified opportunities to utilise
Bond Turner’s expertise. One of
these opportunities has resulted
in an investment of c£935,000
in 2019 into the VW emissions
claims case. This is a developing
class action being heard globally
with significant progress towards
resolution expected in late 2020 or
early 2021. We note that whilst we
have invested significant value into
the generation and management
of those claims, all costs have
been written off as incurred in
line with our conservative income
recognition policies.
10
Anexo Group plc Annual Report 2020 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.
0.5p
final dividend
making 1.5p
for 2019
38.9%
Group revenues up
a further targeted marketing
campaign, as well as additional
staff to process these leads, which
would lead to a significantly larger
return in the event of a successful
settlement. Further investment is
planned in 2020 to enhance the
number of clients for whom the
Group is engaged.
Dividends
The Board is pleased to propose
a final dividend of 0.5p per share
which, if approved at the Annual
General Meeting to be held on 22
July 2020, will be paid on
21 August 2020 to those
shareholders on the register at
the close of business on 31 July
2020. The shares will become
ex‑dividend on 30 July 2020. An
interim dividend of 1.0 penny per
share was paid on 23 October 2019
and that combined with the final
dividend takes the total dividend
for the year to 1.5 pence per share
(2018: 1.5 pence 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.
Revenues for the Legal Services
division, which strongly converts
to cash, showed an increase of
35.9%, reaching £30.5 million
in 2019 (2018: £22.5 million).
Notwithstanding the significant
investment made during 2019 in
staff, property and IT infrastructure,
profit before tax increased slightly
to £5.9 million in 2019 (2018: £5.9
million). The Board considers this an
excellent achievement, given these
circumstances.
The Board is pleased to report that
during 2019 the Group secured a
comprehensive protocol agreement
with a major insurer, which establishes
parameters around specific
settlement terms and timelines.
VW Emissions Case
A specialist team within the Group’s
Legal Services division is acting on
behalf of a number of individuals
who have registered their
intention to pursue a claim against
Volkswagen AG (“VW”) and its
subsidiaries (the “VW Emissions
case”). The Group is currently
actively engaged on approximately
8,000 cases following a limited
marketing campaign in late
2019 which was predominantly
conducted through social media
channels, the costs of which have
been written off as incurred.
The Board believes that, in the event
of a settlement, the percentage of
potential damages and associated
costs accruing to the Group would
have a significant positive impact
on the Group’s expectations for
profits and cash flow for the
relevant accounting period. Any
revenue from a settlement would
be unlikely to accrue until FY2021
at the earliest. There is no certainty
that a settlement in favour of the
Group’s clients will be reached, nor
is there any guarantee that such a
settlement would include financial
compensation.
The Board believes that there
is an opportunity to increase
significantly the number of claims
handled through investment in
11
OverviewStrategic ReportGovernanceFinancial Statements Executive Chairman’s statement continued
S172 Statement
A Director of a company must act
in a way that they consider, in good
faith, would most likely promote
the success of the company for
the benefit of its members as a
whole, taking into account the
factors listed in section 172 of the
Companies Act 2006.
Engagement with our shareholders
and wider stakeholder groups
plays an essential role throughout
Anexo’s business. We are aware
that each stakeholder group
requires a tailored engagement
approach in order to foster
effective and mutually beneficial
relationships. Our understanding of
stakeholders is then factored into
boardroom discussions, regarding
the potential long‑term impacts
of our strategic decisions on each
group, and how we might best
address their needs and concerns.
In addition, effective engagement
with stakeholders at Board level
and throughout our business is
crucial to fulfilling Anexo’s purpose.
While the importance of giving due
consideration to our stakeholders
is not new, we are taking the
opportunity this year to explain
in more detail how the Board
engages with our stakeholders.
We keep in close contact with
investors, employees, customers,
suppliers and local communities
so we are aware of their views.
This ensures we can appropriately
consider their interests in decision
making. We also engage with a
number of different regulatory
bodies in the course of our
operations, such as the FCA
(Financial Conduct Authority) and
the SRA (Solicitors Regulation
Authority).
Throughout this Annual Report,
we provide examples of how we:
• Take into account the likely
consequences of long‑term
decisions;
• Foster relationships with
stakeholders;
• Understand the importance of
engaging with our employees;
• Understand our impact on
our local community and the
environment; and
• Demonstrate the importance of
behaving responsibly.
This section serves as our section
172 statement and should be read
in conjunction with the Strategic
Report and the Company’s
Corporate Governance Statement.
Section 172 of the Companies Act
2006 requires Directors to take
into consideration the interests
of stakeholders in their decision
making. The Directors continue
to have regard to the interests of
the Company’s employees and
other stakeholders, including
the impact of its activities on the
community, the environment and
the Company’s reputation, when
making decisions. Acting in good
faith and fairly between members,
the Directors consider what is most
likely to promote the success of the
Company for its members in the
long term.
The Board regularly reviews our
principal stakeholders and how we
engage with them. The stakeholder
voice is brought into the boardroom
throughout the annual cycle
through information provided by
management and also by direct
engagement with stakeholders
themselves. The relevance of each
stakeholder group may increase or
decrease depending on the matter
or issue in question, so the Board
seeks to consider the needs and
priorities of each stakeholder group
during its discussions and as part of
its decision making.
12
Anexo Group plc Annual Report 2020 The table below acts as our s172(1) statement by setting out the key stakeholder groups, their interests and how
Anexo has engaged with them over the reporting period. However, given the importance of stakeholder focus,
long‑term strategy and reputation, these themes are also discussed throughout this Annual Report.
Stakeholder
Their interests
How we engage
Our employees
• Training, development and career
prospects
• Health and Safety
• Working conditions
• Diversity and Inclusion
• Human Rights and modern slavery
• Fair pay, employee benefits
• Workforce posters and communications
• Ongoing training and development opportunities
• Whistleblowing procedures
• Publication of Modern Slavery Statement
• Employee benefits packages
• Staff intranet
Our suppliers
• Workers’ rights
• Supplier engagement and management to
prevent modern slavery
• Initial meetings and negotiations
• KPIs and Feedback
• Board approval on significant changes
• Fair trading and payment terms
• Sustainability and environmental impact
• Collaboration
• Long-term partnerships
to suppliers
• Direct engagement between suppliers
and specified company contact
• Comprehensive review of financial
• Regular reports and analysis on
performance of the business
investors and shareholders
Our investors
• Business sustainability
• High standard of governance
• Success of the business
• Ethical behaviour
• Awareness of long-term strategy and
direction
• Timely and informative end to end service
• Ease of access to information
• Legal expertise
• Timeliness
• Safety
• Data security
Our clients
• Compliance with regulations
• Worker pay and conditions
• Gender Pay
• Health and Safety
• Treatment of Suppliers
• Brand reputation
• Waste and environment
• Insurance
• Sustainability
• Road Safety
• Human Rights
• Energy usage
• Recycling
• Waste Management
• Community outreach and CSR
Regulatory
bodies
Community and
environment
• Investor roadshows
• Annual Report
• Company website
• Shareholder circulars
• AGM
• Stock exchange announcements
• Press releases
• Customer support service
• Company reports
• Press engagement
• Marketing and communications
• Customer feedback
• Annual Report
• AGM
• Company Website
• Company website
• Stock exchange announcements
• Annual Report
• Direct contact with regulators
• Compliance updates at Board Meetings
• Consistent risk
• Philanthropy
• Employee matched fundraising for
charity policy
• Oversight of corporate responsibility plans
• Introduction of CSR initiatives
• Workplace recycling policies and processes
13
OverviewStrategic ReportGovernanceFinancial Statements
Executive Chairman’s statement continued
S172 Statement continued
COVID-19 Update
The health and wellbeing of our
people and clients is paramount,
and steps have been 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.
Bond Turner, the Group’s Legal
Services division, has moved most
of its staff to remote working and
continues to be fully operational. The
progression and settlement of cases
is being 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.
Within EDGE, the Group’s Credit
Hire division, vehicles continue
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 Group’s operations are
categorised as essential businesses
and as such are exempted from
current 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
are increasingly active during
the current circumstances) and
other customers such as doctors,
nurses, schoolteachers, nursery
staff, emergency workers and
supermarket personnel.
Current Trading and Outlook
Following the decision to drive an
increase in case settlements relative
to new cases and thus achieve an
increase in cash collections, the
Board is pleased to confirm that
cash collections have continued
to grow and that the credit hire
operation has been net cash
generative for the first four months
of 2020. This milestone has been
achieved as a direct consequence 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 announced on 28 January 2020,
monthly cash collections during
H2‑2019 consistently exceeded
the levels achieved in H1‑2019, and
the Board is pleased to announce
that monthly cash collections for
the first four months of 2020 have
continued this pattern.
Group trading for FY‑2020 to
date has been impacted to some
extent by the effects of COVID‑19
as the number of vehicles on the
road declined immediately post
lockdown and we saw a reduction
in cash collections as our legal
staff transitioned to working from
home. However, the results for
the first four months of FY‑2020
have been in line with revised
management expectations. As the
lockdown has been gradually lifted
and our legal staff have become
more used to working from home
activity levels within the Credit Hire
division and cash collections have
been increasing. 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. The
Group’s policy of driving cash
generation remains a key focus and
the progression of its significant
caseload portfolio by litigators
within Bond Turner is 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 FY‑2020
cannot as 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 has a strong balance
sheet with a conservative gearing
level and good liquidity which has
been recently improved following
the successful placing of 6.0 million
new Ordinary Shares raising £7.5
million for the Company before
expenses. The Group has headroom
within its funding facilities, which
include a revolving credit facility
of £8.0 million with HSBC Bank plc
and an invoice discounting facility
of £18.5 million with Secure Trust
Bank plc. The Group has recently
secured a £2.1 million lending facility
from a litigation funder to support
the proposed investment in the VW
emissions case as well as a term
loan from Secure Trust Bank plc of
£5.0 million under the government
backed CBILS scheme to further
enhance headroom.
With the lockdown being gradually
relaxed, vehicles on the road
rising and efficiencies improving
as the legal teams become more
accustomed to home working
practices 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.
Annual General Meeting
The Group’s Annual General
Meeting will be held on 22 July
2020. The notice of the Meeting
accompanies this Annual Report
and Accounts.
Alan Sellers
Executive Chairman
29 June 2020
14
Anexo Group plc Annual Report 2020 Market overview
We operate in the Road Traffic Accident credit hire
and claims market and differentiate ourselves with our
integrated offering and focus on impecunious customers
The Competition and Markets
Authority (CMA) carried out a
review in 2014 which included
the credit hire market. They found
that the provision of credit hire
vehicles was not detrimental to
the consumer.
Advocacy
Bond Turner operates a separate
in‑house advocacy division.
The division deals with complex
professional and clinical negligence
claims, including high value and
high‑profile cases, some of which
have been ongoing for many years.
It also handles data protection
and defamation actions, as well as
large or catastrophic loss cases
arising from road traffic accidents
and employers’ liability cases.
Some of these actions involve
potential claims for damages
in excess of ten million
pounds.
Anexo is established as a provider
of an end‑to‑end litigated
claims service to predominantly
impecunious non‑fault motorists.
These customers typically do
not have the means to provide
themselves with a replacement
means of transport when they are
deprived of their existing vehicle
through the action of another
party. These replacement vehicle
hires are charged at commercial
credit hire rates.
Our business model is underpinned
by UK case law which has affirmed
the legal right of an impecunious
claimant to recover credit hire costs.
Credit hire and the law
Our business model is based on legal
precedents in common law and is
validated by a number of Supreme
Court decisions. Case law from 1994
to 2015 has specifically established,
among other things, that we
can charge and seek to recover
commercial credit hire rates; that
such rates are reasonable and not
excessive; and that there is no time
limit on the provision of a hire vehicle
for the duration of a claim.
Judgments upheld include the
principle that an impecunious
motorist with no choice but to hire a
replacement vehicle on a credit hire
basis is entitled to the full cost of
such a hire; and that claimants are
entitled to a like‑for‑like vehicle.
15
OverviewStrategic ReportGovernanceFinancial Statements Our business model
Our business model
The Group has created a unique business
model by combining a direct capture credit
hire business with a wholly owned legal
services firm.
What we do
We provide replacement vehicles and associated legal assistance to consumers who have been involved in non‑
fault motor accidents. The Group comprises two synergistic business divisions: Credit Hire and Legal Services.
Credit Hire
(EDGE)
The business provides vehicles to individuals
who have been involved in a non-fault
accident, allowing the recovery of costs from
the at-fault insurer at no upfront cost to the
customer. Sales activities are focused mainly
on the impecunious market, allowing the
Group to charge commercial credit hire rates
which are typically higher than the spot rate
or the rates agreed by the ABI under the GTA.
Legal Services
(Bond Turner)
Bond Turner specialises in road traffic accident
claims that typically involve an element of
credit hire. Bond Turner has been able to
achieve improved recovery rates and periods
compared to external law firms. This impact
has been particularly marked in respect of
credit hire recovery. As a result, Bond Turner
has been responsible for acting on all new
Edge cases since late 2011 and currently
processes all claims generated by EDGE.
95%
of Bond Turner work comes from EDGE
The Group’s business model is underpinned by legal precedent supporting the ability
of impecunious customers to recover higher credit hire rates from at-fault insurers
16
Key areas• Credit hire – 95% of work• Personal injury• Other professional disciplines including professional/clinical negligence and commercial litigationFeatures• 24/7 roadside recovery and storage• Like-for-like replacement vehicle• Garage of your choice• >80% delivered within 24 hoursAnexo Group plc Annual Report 2020 Key differentiators
We are different from other
businesses in the wider RTA credit
hire and claims market.
Value creation
We were established to meet a clear market need,
and our unique model creates value for all of our
key stakeholder groups.
Complementary
divisions providing
end-to-end service
Convenient
geographic reach
No upfront cost for
hire and repair
charges
Quality and capacity
of fleet ensuring
like-for-like vehicle
replacement
Processing of any
associated personal
injury claim
For Customers
Our customers receive swift and efficient service. We provide them
with a replacement vehicle in a timely manner, allowing them to return
to their normal routine without delay. The customer retains the vehicle
throughout the repair and/or litigation process. We also take care of any
associated personal injury or equipment claims which may arise as the
result of a non‑fault accident.
For Partners
Our introducer garages know that they will receive payment in full and on
time, which is especially important for the smaller independent operator.
The use of a court‑appointed engineer to assess vehicle damage means
that the estimate or valuation process is accepted by both sides and the
garage is not put at any risk. We have excellent relationships with our fleet
providers and are well‑respected within the legal community.
For Employees
We offer our employees rewarding careers with multiple opportunities
for personal development, including specialist training where required.
We value the opportunity to nurture and incentivise talent and
consequently our staff retention rates are very high. Our geographic
spread of office locations allows our staff to maximise work/life balance.
For Investors
We have consistently outperformed analyst forecasts, with five earnings
upgrades since listing. We operate a progressive dividend policy to
provide a regular return to our shareholders. Our management team has
proven its ability to deliver on its promises and we maintain excellent
relationships within the investment community.
17
OverviewStrategic ReportGovernanceFinancial Statements
Financial review
On behalf of the Board, I am pleased to
announce that the Group has successfully
increased revenues across both its divisions,
Credit Hire and Legal Services, resulting in a
strong trading performance for 2019.
This strategy resulted in revenues
for the Credit Hire division
increasing to £48.0 million in 2019,
an increase of 40.9% over 2018
(£34.0 million).
Having invested heavily in fleet and
infrastructure in 2018, the focus for
2019 has been primarily on cash
collection. Investment within the
Legal Services division in senior staff
and property has had a significant
impact on the financial performance
of the division. Revenue growth
within the Legal Services division in
2019 reached 35.9%, with revenues
rising from £22.5 million in 2018 to
£30.5 million.
Expansion of headcount in
Bond Turner has been critical to
increasing both revenues and cash
settlements within the Group and
the opening of the Bolton Office in
December 2018 provided a crucial
platform for growth in both factors.
By the end of December 2018, we
employed 267 staff in Bond Turner,
of which 89 were senior fee earners.
This figure rose to 442 staff at the
end of December 2019, including
127 senior fee earners (an increase
of 42.7%), significantly improving
cash collections. We expect
this trend to continue into 2020
reflecting our business model and
collection timeline.
Basis of Preparation
As previously reported, Anexo
Group plc was incorporated on
27 March 2018 and acquired its
subsidiaries on 15 June 2018, then
being admitted to AIM on 20
June 2018 (the ‘IPO’). In order to
provide an understanding of the
trading performance of the Group,
comparative numbers have been
presented on a basis consistent with
the Group being fully incorporated
throughout 2018 and 2019. Further
details are included within the
accounting policies.
In addition, to provide comparability
across reporting periods, the results
within this Financial Review are
presented on an “underlying” basis,
adjusting for the £1.4 million cost of
the IPO transaction, the £0.4 million
charge recorded for share‑based
payments in 2018 and the £0.7m
charge for share‑based payments
in 2019.
A reconciliation between underlying
and reported results is provided
at the end of this Financial
Review. This Financial Review also
incorporates and constitutes the
Strategic Report of the Group.
New Accounting Standards
A new accounting standard has
been issued, IFRS 16 Leases, which
replaced IAS 17 Leases, effective
from 1 January 2019. The new
standard has fundamentally altered
the classification and measurement
of operating leases for lessees,
removing the distinction between
operating and finance leases. The
standard has been adopted in the
consolidated financial statements
for the first time.
A reconciliation between the
reported results for the year ended
31 December 2019, having been
adjusted for IFRS 16, and before
the adjustment is provided at note
28 of the Annual Report. As the
Group has applied the modified
retrospective approach there are no
adjustments to the results reported
for the year ended 31 December
2018, which continue to be reported
under IAS 17.
Revenue
In 2019 Anexo successfully
increased revenues across
both its divisions, Credit Hire
and Legal Services, resulting in
Group revenues of £78.5 million,
representing a 38.9% increase over
the prior year (2018: £56.5 million).
During 2019 EDGE, the Credit Hire
division, provided vehicles to 7,182
individuals (2018: 5,215) an increase
of 37.7%. Much of this growth
has arisen within the motorcycle
division of our business, which
operates under the McAMS brand
name. Following the strategic
decision to expand this division,
the number of motorcycle claims
increased from 2,923 in 2018 to
4,475 in 2019, an increase of 1,552
(53.0%). As part of our continued
investment in the motorcycle
community, our sponsorship of the
McAMS Yamaha team in the British
Superbike Championship continued
into 2019. The McAMS strategy
reflects the fact that, on average,
a motorcycle claim has a take‑on
cost significantly less than that of
a car, allowing the Group to deploy
its resources into the most valuable
claims, growing revenues whilst
preserving working capital.
18
Anexo Group plc Annual Report 2020 the Group now has a significant increase in the availability
of capital to deploy and drive growth across both the core
business and other niche opportunities that may arise.”
32.2%
operating profit
margin
£62.8m
Gross profits in 2019
Operating Costs
Administrative expenses before
exceptional items increased year‑
on‑year, reaching £31.0 million
in 2019 (2018: £21.6 million), an
increase of £9.3 million (43.2%). This
reflects the continued investment in
staffing costs within Bond Turner to
drive settlement of cases and cash
collections. Staffing costs increased
to £13.5 million (2018: £8.7 million),
an increase of £4.8 million. The
balance of the increase reflects
investment in marketing, staff and
infrastructure to allow the Group
to meet its growth aspirations,
as well as its requirements and
responsibilities as a plc.
Gross Profits
Gross profits are reported at £62.8
million (at a margin of 80.0%) in
2019, increasing from £40.3 million
in 2018 (at a margin of 71.4%). Of
the reported year on year increase
(£22.5 million or 55.7%), some
£3.5 million is the result of IFRS 16,
where the costs associated with
the vehicle fleet are included within
cost of sales in 2018 but replaced
with a depreciation charge and
interest cost in 2019. Excluding this
adjustment, the gross profit for
2019 would have been £59.3m (at a
margin of 75.5%), a level above that
of 2018.
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%.
Gross profits for the Credit Hire
division reached £34.3 million in
2019 (at a margin of 71.4%) rising
from £19.9 million in 2018 (at a
margin of 58.5%). The increase
reflects the impact of IFRS 16
(margin would have been 64.0%
pre IFRS 16), reflecting both our
strategy for claims acceptance
which seeks to maximise value
from our available working capital
facilities, as well as savings achieved
within our fleet insurance premiums.
19
OverviewStrategic ReportGovernanceFinancial Statements Financial review continued
EBITDA
Adjusted EBITDA reached £31.9
million in 2019, increasing from £18.7
million in 2018 (70.6%). The result, as
previously announced, was ahead of
initial management expectations and
in line with recent market forecasts.
EBITDA, as with gross profit, is also
impacted by IFRS 16 and in order
to provide a direct comparison
between 2018 and 2019 we have
provided a complete reconciliation
of the primary statements on pages
77 to 79 of the Annual Report,
which highlights the impact of
IFRS 16 on the reported results.
Excluding the adjustments for IFRS
16 adjusted EBITDA for 2019 would
be £27.6 million.
To provide a better guide to the
underlying business performance,
adjusted EBITDA excludes
share‑based payment charges,
professional and other costs charged
to the profit and loss account along
with depreciation, interest and tax
from the measure of profit.
The GAAP measure of the profit
before interest and tax was
£24.6 million (2018: £15.4 million)
reflecting the non‑cash share‑
based payment charge of £0.7
million (2018: £0.4 million) as well
as the professional and other fees
arising from the listing in 2018 (£1.4
million). Where we have provided
adjusted figures, they are after the
add‑back of these two items and a
reconciliation of the underlying and
reported results is included on page
22 of the Annual Report.
EPS and Dividend
Statutory basic EPS is 16.4 pence
(2018: 10.4 pence). Statutory diluted
EPS is 16.0 pence (2018: 10.2 pence).
The adjusted EPS is 17.0 pence
(2018: 12.0 pence). The adjusted
diluted EPS is 16.6 pence (2018:
11.8 pence). The adjusted figures
exclude the effect of share‑based
payments and the fees associated
with the listing in 2018. The detailed
calculation in support of the EPS
data provided above is included
within Note 12 of the financial
statements of the Annual Report.
20
A final dividend of 0.5p per share
has been recommended by the
Board (2018: 1.5 pence) giving a
total dividend for 2019 of 1.5 pence,
having paid a dividend of 1.0 penny
on 23 October 2019. This dividend,
if approved at the Annual General
Meeting to be held on 22 July 2020,
will be paid on 21 August 2020 to
those shareholders on the Register at
the close of business on 31 July 2020.
Trade and other payables, including
tax and social security increased to
£7.9 million compared to £7.2 million
at 31 December 2018, an increase
of 9.0% as additional cash receipts
have been utilised to reduce short
term payables.
Net assets at 31 December 2019
reached £91.7 million (2018:
£75.8 million).
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 and
disbursements paid in advance, and
support of ongoing claims. The value
of the receivables totalled £220.5
million in 2019, rising from £165.2
million in 2018. In accordance with
our income recognition policies,
provision is made to reduce the
carrying value to recoverable
amounts, being £101.0 million
and £76.0 million respectively, an
increase of 33.2%. This increase
reflects the recent trading activity
and strategy of the Group and is in
line with management expectations.
The increase has been primarily
funded from the significant increase
in cash collections seen year on year.
In addition, the Group has a total of
£24.4 million reported as accrued
income (2018: £22.5 million) which
represents the value attributed to
those ongoing hires and claims.
Further investment has been made
in 2019 into the motorcycle fleet as
well as the fit out of the two floors
at the new Bolton office, with total
fixed asset additions totalling £3.1
million in 2019 (2018: £3.5 million).
The fleet continues to be partly
financed with hire purchase. The
application of IFRS 16 has impacted
the Group’s Statement of Financial
Position, resulting in the recognition
of right of use assets of £7.8 million
at the end of 2019 along with
associated lease liabilities of £8.2
million, the net impact on net assets
being £0.3 million.
Cash Flow
During 2018, the Group utilised
the funds raised from the AIM
listing, alongside increases in debt
facilities, to take advantage of the
opportunities in the market and
increase the number of vehicles
on the road. 2019 has seen a shift
in focus to cash generation, as the
Group has held back on growth
within the Credit Hire division and
focused investment on the Legal
Services division where we have
seen a significant investment in the
number of senior staff engaged to
settle cases and recover cash for
the Group. The number of senior
fee earners increased from 89 to 127
during 2019 (an increase of 42.7%)
and continues to rise. The Group’s
success in recruiting high quality
staff, which significantly exceeded
management expectations, led
to the leasing of a further floor
(approximately 10,000 square
feet) within the Bolton office in
October 2019.
Cash collections for the Group
(and excluding settlements for our
clients), a key metric for the Group,
increased from £58.1 million in 2018
to £84.1 million in 2019, an increase
of 44.8%. This is a significant
improvement, given the fact that
many of the new recruits will not
reach settlement maturity until
2020, at which point it is anticipated
that the real financial benefits to the
Group will come through.
The number of vehicles on the
road was strategically managed
during 2019 so as to preserve
working capital, the focus being
on securing the most attractive
and profitable claims for the
Anexo Group plc Annual Report 2020 These movements have contributed
to the significant steps we have
made during 2019 and as a result
the level of cash absorption
reduced from £7.0 million in the
first half of the year to £1.5 million
in the second half of the year.
Cash collections increased from
£36.6 million to £47.5 million,
an increase of 30% between the
first and second half of 2019. This
performance in the second half was
even more pleasing as we invested
c£935,000 into the VW emissions
case. Excluding this investment the
Group has reached the inflexion
point from cash absorption to
cash generation, the target we set
ourselves for the year.
Net Debt, Cash and Financing
Cash balances reduced during 2019
and at 31 December 2019 reached
£2.3 million (2018: £5.5 million),
reflecting the continued investment
into the Group case portfolio and
settlement capacity.
Borrowings increased during the
year to fund the additional working
capital investment in the Group’s
portfolio of claims, with the balance
rising from £22.8 million in 2018 to
£29.9 million at the end of 2019.
The two principal facilities include
an invoice discounting facility
within Direct Accident Management
Limited (secured on the credit
hire and repair receivables), and a
revolving credit facility within Bond
Turner Limited. An increase in the
facilities for both businesses was
secured during 2019.
As a result of the current economic
climate and in particular the effects
of COVID‑19 on the sector in which
the Group operates, the Board
considered it an opportune time
to look to increase investment so
as to accelerate growth and take
advantage of opportunities to
gain market share from smaller
competitors. As such the Group
concluded on the placing of 6.0
million new Ordinary Shares raising
£7.5 million for the Group before
expenses on 29 May 2020.
In addition, the Group has secured
£2.1 million of additional funding
from a litigation funder to support
the Group’s own investment
into the VW emissions litigation
and has received confirmation
of an additional £5.0 million of
funding from Secure Trust Bank
Plc under the government backed
CBILS scheme to further enhance
headroom.
Having weathered what we hope
to be the worst of the COVID‑19
pandemic, the Group now has
a significant increase in the
availability of capital to deploy
and drive growth across both the
core business and other niche
opportunities that may arise.
Further details are included
on page 53 of the financial
statements.
Group whilst minimising take‑
on costs. Consequently, the
number of vehicles on the road fell
during 2019 from 1,531 to 1,308.
Average overall vehicle numbers
were, however, higher in 2019,
reaching 1,454 (2018: 1,155),
contributing to the strong
performance of the Credit
Hire division.
With the focus firmly on cash
collections in 2019, the Group
reported a significant reduction
in the level of net cash outflow
from operating activities, reducing
to only £0.8 million (2018:
Cash outflow £7.9 million). The
investment made into new cases
across both the Credit Hire and
Legal Services divisions absorbed
a net £26.3 million of funds in 2019
(2018: £20.9 million), this year on
year increase being countered
by the increased level of cash
collections.
With a net cash outflow of £4.8
million resulting from financing
activities (2018: new cash inflow of
£11.7 million following the listing in
that year), the Group has reported
a net cash outflow in 2019 of £8.5
million (2018: net cash inflow of
£0.5 million).
The improvement not only
improved year on year but during
2019, we have reported a significant
reduction in the level of cash
absorbed by the Group in the
second half versus the first half
of the year. This improvement is
after an increase in the number of
hire claims invested in during the
period, (HY1 2019: 3,392, HY2 2019:
3,567) and further investment in the
number of senior fee earners which
rose from 89 at the end of 2018 to
109 at the end of HY1 2019 and to
127 at the end of 2019.
Most notably the number of hire
cases settled increased during
2019 as our investment in legal
staff started to pay dividends (we
anticipate further growth in 2020
as the case portfolio of the new
recruits matures), rising from 2,066
in the HY1 2019 to 2,872 in HY2 2019
(an increase of 39.0%).
21
OverviewStrategic ReportGovernanceFinancial Statements Financial review continued
Reconciliation of Underlying and Reported IFRS Results
In establishing the underlying operating profit, the costs adjusted include £Nil (2018: £1.4 million) related to the
cost of the Company’s Admission to AIM that was completed in June 2018 (the “IPO costs”) and £0.7 million of
costs related to share‑based payments (2018: £0.4 million).
A reconciliation between underlying and reported results is provided below:
Year to December 2019
Underlying
£’000s
IPO Costs
£’000s
Share-based
payment
£’000s
78,510
62,807
(37,557)
25,250
(2,202)
23,048
6,547
31,832
–
–
–
–
–
–
–
–
–
–
(657)
(657)
–
(657)
–
(657)
Year to December 2018
Underlying
£’000s
IPO Costs
£’000s
Share-based
payment
£’000s
56,505
40,337
(23,168)
17,169
(1,090)
16,079
1,574
18,743
–
–
(1,411)
(1,411)
–
(1,411)
–
(1,411)
–
–
(384)
(384)
–
(384)
–
(384)
Reported
£’000s
78,510
62,807
(38,214)
24,593
(2,202)
22,391
6,547
31,175
Reported
£’000s
56,505
40,337
(24,963)
15,374
(1,090)
14,284
1,574
16,948
Revenue
Gross profit
Other operating costs (net)
Operating profit
Finance costs (net)
Profit before tax
Depreciation
EBITDA
Revenue
Gross profit
Other operating costs (net)
Operating profit
Finance costs (net)
Profit before tax
Depreciation
EBITDA
By order of the Board
Mark Bringloe
Chief Financial Officer
29 June 2020
22
Anexo Group plc Annual Report 2020 Risk management
The Board recognises the need for an effective and
well-defined risk management framework. The Board is
responsible for overseeing and regularly reviewing the
current risk management and internal control mechanisms.
The Board
The Board has overall responsibility for the determination of the Group’s risk management
objectives and policies and, retains ultimate responsibility for them.
CFO
The Board receives regular
reports from the CFO
through which it reviews
the effectiveness of
processes put in place and
the appropriateness of the
objectives and policies it sets.
Finance Team
The Board has delegated
the authority for designing
and operating processes
that ensure the effective
implementation of
the risk management
objectives and policies to
the Company’s finance
function.
Audit
Committee
The Audit Committee
also has delegated
responsibility to review
the Company’s internal
financial controls and
monitor the integrity of
the Financial Statements
of the Company (including
Annual and Interim
Accounts and results
announcements).
Risk and
Regulation
Committee
The Risk and Regulation
Committee ensures there
is a robust process in
place for identifying,
managing, and monitoring
risks to the Group.
The Risk Committee will
assess the risk profile of
the Group and how the
risks arising from the
Group’s businesses are
controlled, monitored
and mitigated by
management.
23
OverviewStrategic ReportGovernanceFinancial Statements Principal risks and uncertainties
Anexo conducts a full risk assessment matrix, categorising all its
key risks and outlining the mitigating actions that are in place.
Statutory Risks
Principal Risk
Risk Description
Mitigation
Potential reduction
in fee income from
potential introduction
of changes to
legislation (case law or
statutory changes).
Government actions
and legal developments
leading to decrease in
costs/damage recovery
and negative impact on
turnover/profit.
Any reduction in fee income will directly
affect profit levels.
Education of key staff members regarding risks
and the need to perform.
Keep abreast of changes in case law and statute.
The Group keeps abreast of developments.
The credit hire aspect of the Group is reliant
on the House of Lords ruling that non‑fault
accident victims deemed impecunious have
the right to recover credit hire rates from third
party insurers. It cannot be predicted with
certainty what future legal and regulatory
changes may occur or the resultant effect
that they may have upon the credit hire
aspect of business.
Operational Risks
Principal Risk
Risk Description
Mitigation
New costs within the
business due to the
need to maintain
business levels.
A rise in payment of issue fees (quantum due
to legislative changes and increase in volume
issued) and hearing fees to litigate cases would
directly affect profit levels.
Closely monitor costs and review monthly.
Commercial decision by management to increase
settlement and drive cases to conclusion.
Retention of lawyer.
The Group is heavily reliant on its lawyers to
manage and settle the Group’s claims. If the
Group were to lose the services of key lawyers
with high settlement rates, or cease to be able
to attract new lawyers, this could significantly
impair the strategy, operations and financial
condition of the Group.
Reliance on senior
management.
The current senior management team have
been heavily involved in the Group’s success.
The Group cannot guarantee that it will be able
to recruit suitably qualified staff on a timely
basis to replace those individuals in the event
of the departure of any of the senior
management team.
A failure to do so could have a materially
adverse impact on the Group’s operations
and financial condition.
Maintenance of staff satisfaction levels to help
the Group monitor the risk of losing key
members of staff.
The Group adopts an ongoing recruitment policy.
The Group trains staff from a junior level and
supports staff in training, education and
development to ensure retention.
Key lawyers are incentivised and the firm offers
competitive packages within the market to
ensure staff retention.
The Group adopts an ongoing recruitment policy.
The opening of the Bolton office has opened up
recruitment opportunities for excellent
specialised staff which was previously restricted
due to logistical restraints.
The firm trains staff from a junior level and
supports staff in training, education and
development to ensure staff retention.
Key lawyers are incentivised and the firm offers
competitive packages within the market to
ensure staff retention.
24
Anexo Group plc Annual Report 2020 Operational Risks continued
Principal Risk
Risk Description
Mitigation
Losing case.
The Group invests heavily in cases that are
reliant on a successful outcome for recovery
of money.
Bond Turner works on a no win no fee basis,
DAMS operate on credit hire and PALS and
IGCA 2013 receive no monies up front. Money
is only received upon successful conclusion of
any claim. If the claim is lost, no money will be
received.
Weaknesses in IT
Systems & Cyber
Security.
Disruption to operations impeding work and
risking damage to reputation and customer
relationships.
Review of circumstances around those cases that
are lost.
Consideration of factors that may attribute to
unsuccessful outcomes and pre‑exempt any
unusually high areas of risk in any new business.
Conduct risk/benefit analysis on any potentially
new risky claims.
Consideration of merits of appealing cases and
benefit weighed against wide scale potential
negative consequences.
Ensure that potential claims are properly vetted
and we proceed with cases that are likely to
succeed.
Train and employ staff with excellent technical
skills to increase chance of successful outcome
and use specialised counsel.
Feedback to sales representatives.
Fraud indicators, ongoing dialogue through sales
team and garages.
Ongoing, regular extensive reviews and testing.
Health & Safety Issues.
The activities of certain parts of the Group
involve a range of Health & Safety risks.
All Group subsidiaries operate Health & Safety
management systems appropriate to the nature
and scale of their risks.
Market Risks
Principal Risk
Risk Description
Mitigation
Competition.
Retention of garages
and sources of work.
The Group could face competition from other
companies that offer similar products and
services in the broader credit hire and PI
sector.
Any direct competitor offering the same
service and scale would have to be a new
entrant to the market or a change in existing
business model, which would be unlikely given
very high set up costs.
Garages that advertise DAMS services could
be enticed by other deals from competitors.
Some competitors are offering enhanced deals
that are not LASPO compliant and some lay
individuals can be enticed with the offer of
extra cash.
Monitor the market and continue to offer
competitive product.
Continue to invest in development of the service
and ensure a growing established team of
effective lawyers is constantly maintained.
Nurture garages through education, offer
competitive deals, and train them into
understanding compliance with LASPO,
Code of Conduct and FCA rules.
25
OverviewStrategic ReportGovernanceFinancial Statements Principal risks and uncertainties continued
Regulatory Risks
Principal Risk
Risk Description
Mitigation
Regulatory compliance. Compliance with Code of Conduct, Solicitors
Accounts Rules, any applicable FCA rules,
GDPR, Statute (LASPO) etc.
Ensuring regulatory compliance is monitored
through updated policies, staff training, spot
checks and audits.
Conduct risk assessments to identify any areas
of weakness or potential breach.
Monitor and record any complaints/feedback.
GDPR/ Personal Data Risk
Principal Risk
Risk Description
Mitigation
Introduction of
stringent new laws
regarding the treatment
of personal data,
damages are payable if
breaches occur.
The Group holds and processes a large volume
of sensitive personal data which is inherent in
the Group’s day‑to‑day practices.
Regular staff training on the GDPR legislation.
Random spot checking of processes and staff
practices.
If breaches of personal data occur, damages
can be claimed and large fines are payable.
This has an obvious negative effect on the
Group’s financials as well as causing potential
reputational damage to the firm.
Regular review of processes.
Risk assessment on implementation of new
processes.
Ongoing reviews of systems relating to any
complaints.
Litigation Risk
Principal Risk
Risk Description
Mitigation
Adverse costs arising
from litigation.
The Group is a highly litigious firm. Adverse
costs arising from litigation will negatively
impact the Group’s financial as well as cause
potential reputational damage from losing
cases.
This risk is extensively and continuously
discussed with management and fee earners to
ensure awareness.
Management is satisfied that costs will be kept to
a minimum through maintaining review levels of
adverse costs.
Despite the mitigation, the Group recognises that
some adverse costs cannot be avoided in
entirety due to clients’ inability to reply fully and
in a timely fashion, draconian court orders and
the hostile nature of litigation.
26
Anexo Group plc Annual Report 2020 Financial Risks
Principal Risk
Risk Description
Mitigation
Bank covenants.
Importance of understanding processes and
requirements for bank covenants. Covenants
may not be properly complied with.
Daily, weekly and monthly checks are carried out
by the Group.
Staff awareness training is regularly provided.
Constant review and reporting to the bank on
covenants to ensure that business performance
remains within the expected criteria.
General expenditure
increase.
If the Group’s costs are not effectively
monitored, there could be a general increase in
expenditure, with excess costs causing
financial difficulty.
Costs are closely monitored by the CFO and the
Finance team and reviewed monthly.
Overview of costs is discussed at each Board
meeting.
Cash spend.
The Group must ensure that cash spend is
within facilities and that expenditure is
monitored, eg. monitoring of tax liabilities,
large project spends etc.
Cash spend and costs are reviewed by the CFO
and management regularly to ensure there is a
healthy balance between the Group’s vehicle
fleet and the conservation of financial resources.
Excess spend would cause the Group financial
difficulty and may mean the Group is unable to
achieve its objectives.
New financing options are considered and
reviewed where necessary.
Review the current case load and need for
issuing as case expenditure is front loaded.
Potential for a
significant impact on
both new credit hire
business and cash
collections from the
legal services team.
As with many businesses, the Group has faced
uncertainty in trading as a result of the impact
of the COVID‑19 pandemic from both a credit
hire and legal services perspective, the latter
of which may well impact cash collections and
headroom.
In the ordinary course of business, the Group
monitors the level of new business taken on and
the quantum of cash receipts from at‑fault
insurers on a daily basis and as such the Board
has been able to manage the financial impact on
the Group from both a credit hire and legal
services perspective.
Whilst the Group saw a sharp fall in new business
activity within the credit hire initially post
lockdown, levels have subsequently increased
such that recent introductions are not
significantly less than those seen pre‑lockdown.
Within the legal services team, the Group has
seen a general reduction in cash receipts, as we
and the defendant law firms and at‑fault insurers
transition from wholly office based working to
home working. This transition inevitably impacts
efficiencies from all sides. More recently, as we
have taken appropriate steps to keep our staff
safe in an office environment, more of the senior
fee earners have and will be returning to office
working and that, alongside staff becoming more
used to working from home, has resulted in a
continual improvement in case settlements and
cash collections, albeit we do not anticipate this
returning to normal levels for some time.
Operational Risk
Principal Risk
Risk Description
Mitigation
COVID‑19 – health and
safety of clients,
employees and third
parties.
The health and safety of our staff and clients is
paramount. The business has made operational
adjustments to comply with government
guidelines, which are constantly updating.
Regular risk assessments are undertaken to
ensure that the business is operating within
government guidelines and to ensure that staff,
clients and third parties with whom the business
engages, are protected.
27
OverviewStrategic ReportGovernanceFinancial Statements Board of Directors
The current Board members of Anexo Group plc, all of
whom served throughout the year, are presented below.
Alan Sellers
Executive Chairman
Mark Bringloe
Chief Financial Officer
Samantha Moss
Director
Alan was appointed
Executive Chairman of
Anexo Group plc in March
2018 and was one of the
founders of the business.
He has been instrumental
in forming the Group as
it operates today. Alan
was called to the Bar in
1991 at the Gray’s Inn Bar
and alongside his duties
as Executive Chairman
continues to practise as
one of Anexo’s in-house
team of barristers. Alan is
an expert in civil litigation,
personal injury and credit
hire claims and clinical and
professional negligence,
and he is recognised as
a leading figure in these
fields.
Mark is a qualified
Chartered Accountant and
was appointed as Chief
Financial Officer in May
2018, originally joining
the Group as Finance
Director in 2009. Mark has
previously worked at Ernst
& Young, Robson Rhodes
and most recently BDO
where he was a Director
within the Corporate
Finance team. For the
last 15 years of his career
in professional practice
Mark specialised in the
provision of due diligence
and associated services
for private equity and
other stakeholders as well
as supporting a number of
listings to AIM.
Samantha was appointed
as a Director of Anexo
Group plc in March 2018
and graduated from the
University of Manchester
with a degree in law and
accountancy in 2003
and was subsequently
admitted as a solicitor
in 2008. Samantha
has worked at Bond
Turner since 2004 and
is currently Managing
Director. Samantha is a
specialist in clinical and
professional negligence
and civil litigation,
including personal injury
and credit hire claims.
Samantha also maintains
managerial responsibility
for Bond Turner and
overseas regulatory
compliance, client care,
complex claim, staff
supervision, account and
complaints handling.
Samantha is married to
Alan Sellers.
Committee membership
Experience &
qualifications
28
Anexo Group plc Annual Report 2020 Committee membership key:
Audit Committee
Remuneration Committee
Risk and Regulation Committee
Christopher Houghton
Senior Non-Executive
Director
Roger Barlow
Non-Executive Director
Richard Pratt
Non-Executive Director
Elizabeth Sands
Non-Executive Director
Christopher joined the
Group in May 2018 on
listing and is a fellow of
the Chartered Institute of
Management Accountants.
He joined Park Group plc
in 1986 in a finance role
rising to Finance Director
in 2001. After taking on
operational responsibilities
he became Chief
Executive in 2012 retiring
from the group in 2018.
Richard was called to
the Bar in 1980 and has
practised in Liverpool,
specialising in criminal
law. He was appointed a
QC in 2006 and has been
the head of his chambers
since 2012 and leader
of the Northern Circuit
between 2011 and 2013.
Richard is also a recorder
of the Crown Court and
joined the Group in May
2018.
Roger is a Chartered
Accountant and was
a partner with KPMG
until 2000. Since then
he has held a number
of directorships and
is currently Senior
Independent Non-
Executive Director
and Chair of Audit at a
challenger bank, Bank &
Clients plc and a Non-
Executive Director of
Loughborough Building
Society. He is the
independent member
of the Audit Committee
at the Information
Commissioner’s Office.
He has also been CFO
and Chairman of two AIM
listed companies. Roger
joined the Anexo Group
plc Board in June 2018.
Elizabeth joined the
Group in June 2018 and
is currently Chairman of
Great Bowery, a New York
based fashion agency
backed by Private Equity.
She has also provided
independent advice to a
number of both private
and public companies
including a FTSE100
utilities company and an
international investment
bank. She was previously
Head of Organisation and
Transformation UK at AT
Kearney following which
she was Vice Chair of the
Finance and Investment,
and Workforce
committees at the Devon
Partnership NHS Trust.
29
OverviewStrategic ReportGovernanceFinancial Statements Corporate Governance
Chairman’s Statement on Corporate Governance
Dear shareholder,
I am pleased to present the Corporate Governance Statement of the Board of Directors of Anexo Group plc for
the financial year ended 31 December 2019. As Chairman, it is my responsibility to ensure that Anexo practices
sound corporate governance. The Company has therefore adopted the Quoted Companies Alliance Corporate
Governance Code (“QCA Code”). The QCA Code is a widely recognised benchmark for corporate governance
of smaller quoted companies to which the UK Corporate Governance Code is not considered applicable, due to
Company size.
The Board considers that Anexo complies with the QCA Code so far as is practicable, having regard to the
Company’s current stage of evolution. A statement detailing both how the Company complies with the QCA
Code, and explanation of its areas of non-compliance, is outlined below.
QCA Principles
1
Establish a strategy and business model which promotes long-term value for shareholders
The Board has concluded that the highest medium and
long-term value can be delivered to its shareholders
through the Company’s growth strategy.
As a specialist integrated credit hire and legal services
group, Anexo provides replacement vehicles and
associated legal assistance to consumers who have
been involved in non-fault motor accidents. The
Group provides an integrated end-to-end service to
impecunious customers including the provision of a
credit hire vehicle, upfront settlement of repair and
recovery charges through to the management and
recovery of costs, and the processing of any associated
personal injury claim. The Group comprises four
business units under two reporting divisions; Credit
Hire and Legal Services.
A key proposition for customers is that there is no
upfront cost to the customer (including hire and repair
charges), with Bond Turner seeking to recover costs
from the at-fault insurer, typically through a litigated
claims process on behalf of the customer. The Group’s
business model is underpinned by legal precedent
supporting the ability of impecunious customers to
recover higher credit hire rates from at-fault insurers.
Anexo intends to deliver long-term value to its
shareholders through its growth strategy. The Group’s
plans for growth have been centred on increasing the
number of solicitors and legal assistants to process
the Group’s existing case load and enabling the Group
to take on more cases. In addition, the Group is also
actively seeking to expand the geographic reach of
the Group’s legal operations. Anexo’s strategy also
includes increasing the vehicles available for hire and
the number of sales staff employed, as well as bringing
more barristers in-house.
At the year ended 31 December 2019, Anexo’s strategy
achievements included the rapid growth and success of
the new regional office for Bond Turner, which became
operational on 3 December 2018. Located in Bolton, as
of 31 December 2019 the office houses a team of thirty
fee earners including qualified solicitors, qualified legal
executives and litigation specialists. Bolton continues
to be an abundant recruitment location for high calibre,
experienced legal professionals.
In 2020, the Group intends to continue its strategy
through maintaining staffing levels and continuing to
recruit as necessary in Bolton. The Group, post recent
fundraise, is to open an office in Leeds during 2020
and is considering further potential regional expansion,
and will seek to take advantage of opportunities which
may arise following the anticipated introduction of the
Civil Liability Bill.
Challenges to delivering the Company’s strategy
include changes to legislation that the credit-
hire aspect of the Group relies upon, retention of
advertisements in key garages, retention of key lawyers
and adverse costs arising from litigation. These key
challenges, as well as mitigating actions, are outlined
in the Risk Report section of the Strategic Report on
pages 23 to 27.
30
Anexo Group plc Annual Report 2020 2
Seek to understand and meet shareholder needs and expectations
Anexo places a great deal of importance on
communication with its stakeholders and is committed
to the development and maintenance of constructive
relationships with current and potential investors to
develop an understanding of their views. The Company
is open to receiving feedback from key stakeholders
and will take action where appropriate, recognising its
wider stakeholder and social responsibilities and their
implications for long-term success.
The key contact for shareholder liaison is Nick
Dashwood Brown, the Company’s Head of Investor
Relations.
Company’s investor alert service to ensure that they
receive all press releases, financial results and other key
shareholder messages directly from the Company as
soon as they become available.
The Company’s Annual General Meeting provides
an opportunity for the Board to meet shareholders.
The Chairman of the Board, each of the Committee
Chairmen and Directors (both Executive and Non-
Executive) will be available to respond to any
shareholder questions regarding Board or
Committee activities.
The Company seeks to provide effective communication
through Interim and Annual Reports, Regulatory
News Service announcements and information on the
Company website. Shareholders can also sign up to the
The Company also engages the services of an
independent Research Analyst, Progressive
Equity Research, who publish regular research on
the Company. This research is made available to
shareholders free of charge on the Company’s website.
3
Take into account wider stakeholder and social responsibilities
and their implications for long-term success
The Board recognises that the long-term success of
the Company is reliant upon the efforts of employees,
regulators and other key stakeholders. The Board
has put in place a range of processes and systems to
ensure that there is close oversight and contact with
its key resources and relationships. The Company
prepares an annual strategic plan and detailed budget
which takes into account a wide range of key resources
including solicitors, sales staff and barristers.
All employees within the Group are valued members
of the team, and the Company seeks to implement
provisions to retain and incentivise its employees.
The Group offers equal opportunities regardless of
race, gender, gender identity or reassignment, age,
disability, religion or sexual orientation. The Board
recognises the importance of ensuring that the
management of the Group are effectively motivated
and their interests are aligned with those of the Group.
The Company has a Whistle Blowing Policy in place in
order to discourage unethical business conduct, thus
ensuring its employees are protected.
Anexo has no significant environmental or community
impact, but will continue to monitor and will take action
if this changes in the future.
31
OverviewStrategic ReportGovernanceFinancial Statements Corporate Governance continued
QCA Principles continued
4
Embed effective risk management, considering both
opportunities and threats, throughout the organisation
The Board recognises the need for an effective and
well-defined risk management process and it oversees
and regularly reviews the current risk management
and internal control mechanisms. Principal Risks and
Uncertainties are outlined in the Risk Report section of
the Strategic Report on pages 23 to 27.
Furthermore, the Company’s Audit Committee
also has delegated responsibility to review the
Company’s internal financial controls and monitor the
integrity of the financial statements of the Company
(including annual and interim accounts and results
announcements).
The Board has overall responsibility for the
determination of the Group’s risk management
objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority
for designing and operating processes that ensure
the effective implementation of the risk management
objectives and policies to the Company’s finance
function. The Board receives regular reports from the
Chief Financial Officer through which it reviews the
effectiveness of the processes and policies put in place
and the appropriateness of the objectives it sets. The
overall objective of the Board is to set policies that
reduce risk as far as possible without unduly affecting
the Company’s competitiveness and flexibility.
The Company maintains a full risk assessment matrix
and categorises all its key risks and outlines the
mitigating actions that are in place. This matrix is
updated as changes arise in the nature of risks or the
mitigating actions are implemented or amended. The
matrix is distributed regularly to all Board members
and the Board reviews risks on a frequent basis.
An internal audit function is not yet considered
necessary as day-to-day control is sufficiently
exercised by the Company’s Executive Directors.
However, the Board will continue to monitor the need
for an internal audit function as the Company grows
and evolves.
Anexo also has a Risk and Regulation Committee
to ensure that there is a robust process in place for
identifying, managing, and monitoring risks to the
Group. The Risk Committee continually assesses the
risk profile of the Group and how the risks arising from
the Group’s businesses are controlled, monitored and
mitigated by management.
5
Maintain the Board as a well-functioning, balanced team led by the Chair
The Board comprises three Executive Directors, Alan
Sellers, Mark Bringloe and Samantha Moss, and four
Independent Non-Executives, Christopher Houghton,
Richard Pratt, Roger Barlow and Elizabeth Sands.
Alan Sellers is the Company’s Chair. Alan Sellers is
not considered Independent due to his Executive
position however the Board considers Alan’s role
to be appropriate as he has driven, and continues
to drive the strategy of the Group. In light of this, a
Senior Independent Non-Executive Director (“SID”),
Christopher Houghton, has been appointed to deal
with matters including shareholder communication.
Board meetings are open and constructive, with every
Director participating fully. Senior management can
also be invited to meetings, providing the Board with
a thorough overview of the Company. The Board aims
to meet at least six times in the year and a calendar
of meetings and principal matters to be discussed is
agreed at the beginning of each year. In order to be
efficient, the Directors meet formally and informally both
in person and by telephone. Board document authors
are made aware of proposed monthly deadlines through
the calendar of meetings assembled at the beginning
of the year. Board papers are collated, compiled into a
Board Pack, and circulated with sufficient time before
meetings, allowing time for full consideration and
necessary clarifications before the meetings.
32
Anexo Group plc Annual Report 2020 5
Maintain the Board as a well-functioning, balanced team led by the Chair continued
During the financial year ended in 31 December 2019, the Board met on seven occasions.
Director
Alan Sellers
Mark Bringloe
Samantha Moss
Position
Executive Chairman
Chief Financial Officer
Bond Turner Managing Director
Christopher Houghton
Senior Independent Non-Executive Director
Richard Pratt
Roger Barlow
Elizabeth Sands
Non-Executive Director
Non-Executive Director
Non-Executive Director
Board Meetings / Attended in 2019
7 / 7
7 /7
7 / 7
7 / 7
6 /7
7 / 7
6 / 7
Dawn O’Brien, Company Secretary, also attended seven Board meetings. Nick Dashwood Brown, the Company’s
Head of Investor Relations, attended three meetings.
The Company has three Committees, an Audit Committee, a Remuneration Committee and a Risk and Regulation
Committee. The Board believes that the Committees have the necessary skills and knowledge to discharge
their duties effectively. As with Board papers, Committee papers are drafted and circulated to members of the
Committee with sufficient time before the meeting.
All Directors of the Board have sufficient time, availability, skills and expertise to perform their roles and this is
regularly reviewed by the Board.
The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware
of the other commitments and interests of its Directors, and changes to these commitments and interests are
reported to and, where appropriate, agreed with the rest of the Board.
6
Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities
The Non-Executive Directors have a breadth and depth
of skills and experience across many different sectors,
from finance to fashion and from private to public
companies, enabling them to provide the necessary
guidance, oversight and advice for the Board to
operate effectively. The Company believes that the
current balance of skills in the Board as a whole
reflects a very broad range of personal, commercial
and professional skills, providing the ability to deliver
the Company’s strategy for the benefit of shareholders
over the medium and long-term. The Board is not
dominated by any person or group of people. The Non-
Executive Directors meet without the presence of the
Executive Directors during the year, and also maintain
ongoing communications with Executives between
formal Board meetings.
Biographical details of the Directors can be found on
pages 28 and 29.
Dawn O’Brien is Anexo’s Company Secretary and
Anexo has further engaged the services of ONE
Advisory Limited to assist with ensuring that Board
procedures are followed and that the Company
complies with all applicable rules, regulations and
obligations governing its operation, as well as helping
the Chairman maintain excellent standards of corporate
governance. ONE Advisory also provides additional
Company Secretarial support and assistance with MAR
compliance and shareholder meetings.
Christopher Houghton is the Company’s Senior
Independent Non-Executive Director and assists
the Chair, particularly in relation to dealing with
shareholder related matters.
If required, the Directors are entitled to take independent
legal advice and if the Board is informed in advance, the
cost of the advice will be reimbursed by the Company.
33
OverviewStrategic ReportGovernanceFinancial Statements Corporate Governance continued
QCA Principles continued
6
Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities continued
In addition to their general Board responsibilities,
Non-Executive Directors are encouraged to be
involved in specific workshops or meetings, in line
with their individual areas of expertise. The Board shall
review annually the appropriateness and opportunity
for continuing professional development, whether
formal or informal. All the Directors have had recent
AIM Rules and Directors Responsibilities training as
part of the IPO process.
The Remuneration Committee is responsible for
reviewing the composition of the Board, including
evaluating the skills, knowledge and experience of
Board members. The Committee will seek to take into
account any Board imbalances for future nominations.
7
Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement
Although the Board and Committees are working well,
areas highlighted for improvement include the need to
spend more time on developing a long-term business
strategy with specific targets, and more formal updates
from the senior management of the two arms of Anexo.
These matters will be addressed during the 2020
financial year.
Succession planning is designed to consider the
planned process of transition to new leadership over
time and also the potential for unforeseen change over
a shorter timeframe. Board and Senior Management
succession planning is discussed at Board meetings
and will be a focus of attention for the Company in
2020. The Board is committed to ensuring effective
succession and will continue to proactively engage with
senior management to assess the executive talent pool.
These discussions will ensure that the Non-Executive
Directors can develop a deeper understanding of the
strength of the management team.
The Remuneration Committee is responsible for
reviewing the structure, size and composition
(including the skills, knowledge and experience) of
the Board and giving full consideration to succession
planning. It also has responsibility for recommending
new appointments to the Board.
The Chairman annually assesses the individual
contributions of each of the members of the team
to ensure that:
• Their contribution is relevant and effective.
• They are committed.
• Where relevant, they have maintained their
independence.
The Senior Independent Non-Executive Director
reviews the performance of the Chairman against
the same objectives as above. At the end of 2019, the
Company conducted an in-depth review and evaluation
of the performance of the team as a unit to ensure that
the members of the Board collectively function in an
efficient manner, as well as reviewing the effectiveness
of each Committee. The areas covered were structure
and skills, operating effectiveness and efficiency,
quality of information and ongoing development. The
Board evaluation exercise identified several positive
areas including content of meetings, Board constitution
and the progress within the first full year of operations.
34
Anexo Group plc Annual Report 2020 8
Promote a corporate culture that is based on ethical values and behaviours
The Board recognises that its decisions regarding
strategy and risk will impact the corporate culture of
the Company as a whole and that this will impact the
performance of the Company. The Board is aware
that the tone and culture set by the Board will greatly
impact all aspects of the Company as a whole and the
way that employees behave. The corporate governance
arrangements that the Board has adopted are designed
to ensure that the Company delivers long term value
to its shareholders, and that shareholders have the
opportunity to express their views and expectations
for the Company in a manner that encourages open
dialogue with the Board.
A large part of the Company’s activities are centred
upon an open and respectful dialogue with employees,
consumers and other key stakeholders. Therefore, the
importance of sound ethical values and behaviours is
crucial to the ability of the Company to successfully
achieve its corporate objectives. The Board places
great importance on this aspect of corporate life and
seeks to ensure that this flows through all that the
Company does.
The Directors consider that at present the Company
has an open culture facilitating comprehensive dialogue
and feedback and enabling positive and constructive
challenge. An example of this is the Company’s Whistle
Blowing Policy, aimed to prevent illegal activity and
unethical business conduct through encouraging
Directors, officers and employees to report any
wrongdoing or suspected violations. The Company also
has an Anti-Bribery Policy in place to ensure the highest
standards of personal and professional ethical behaviour
are adhered to.
Moreover, Bond Turner, the Group’s Legal Services
division, promotes nine core values which shape the
firm’s corporate culture, approach to client service and
professional standards. The values are entrenched and
are considered at every stage of the employee lifecycle,
from recruitment to training.
The Company has also adopted a Share Dealing
Policy regulating trading and confidentiality of inside
information for the Directors and other persons
discharging managerial responsibilities (and their
persons closely associated) which contains provisions
appropriate for a company whose shares are admitted
to trading on AIM (particularly relating to dealing
during closed periods which will be in line with the
Market Abuse Regulation (EU) No 596/2014). The
Company will take all reasonable steps to ensure
compliance by the Directors and any relevant
employees with the terms of that Share Dealing Policy.
9
Maintain governance structures and processes that are fit for purpose
and support good decision-making by the Board
The Board is committed to, and ultimately responsible
for, high standards of corporate governance, and has
chosen to adopt the QCA Code. The Board reviews
the Company’s corporate governance arrangements
regularly and expects to evolve these over time, in
line with the Company’s growth. The Board delegates
responsibilities to Committees and individuals as it
sees fit.
The Independent Non-Executives are tasked with
constructively challenging the decisions of executive
management and satisfying themselves that the
systems of business risk management and internal
financial controls are robust.
All Directors participate in the key areas of decision-
making, including the following matters:
The Chairman’s principal responsibilities are to ensure
that the Company and its Board are acting in the best
interests of shareholders. His leadership of the Board is
undertaken in a manner which ensures that the Board
retains integrity and effectiveness, creates the right
Board dynamic and ensures that all important matters,
particularly strategic decisions, receive adequate time
and attention at Board meetings.
• Review, formulate and approve the Company’s
strategy;
• Review, formulate and approve the Company’s
budgets;
• Review, formulate and approve the Company’s
corporate actions; and
• Oversee the Company’s progress towards its goals.
The day-to-day management of the Company’s two
key divisions is carried out by the management board,
which reports to the Anexo Board.
The Board delegates authority to three Committees
to assist in meeting its business objectives whilst
ensuring a sound system of internal control and risk
management. The Committees meet independently
of Board meetings.
35
OverviewStrategic ReportGovernanceFinancial Statements Corporate Governance continued
QCA Principles continued
9
Maintain governance structures and processes that are fit for purpose
and support good decision-making by the Board continued
Audit Committee
Remuneration Committee
The Audit Committee has three members, Roger
Barlow (Chair), Christopher Houghton and Richard
Pratt. The Audit Committee is responsible for:
• ensuring that the financial performance of the
The Remuneration Committee has three members,
Christopher Houghton (Chair), Richard Pratt and
Elizabeth Sands. The Remuneration Committee is
responsible for:
Company is properly reported on and reviewed;
• determining, within the agreed terms of reference,
• monitoring the integrity of the financial statements
of the Company (including annual and interim
accounts and results announcements);
• reviewing internal control and risk management
systems;
• reviewing any changes to accounting policies;
• reviewing and monitoring the extent of the non-
audit services undertaken by external auditors; and
• advising on the appointment of external auditors.
The Audit Committee is expected to meet formally at
least two times a year and otherwise as required.
Risk and Regulation Committee
The Risk and Regulation Committee has four members,
Richard Pratt (Chair), Christopher Houghton, Roger
Barlow and Elizabeth Sands. The Risk and Regulation
Committee is responsible for:
• ensuring that there is a robust process in place for
identifying, managing, and monitoring risks to the
Group;
• assessing the risk profile of the Group and how
the risks arising from the Group’s businesses
are controlled, monitored and mitigated by
management; and
• ensuring that the business of the Group is regulated
by the SRA and it also offers credit hire products
which the Risk Committee monitor to ensure
regulatory observance.
the Company’s policy on the remuneration packages
of the Company’s Chairman, the Executive Directors,
senior managers and such other members of
the executive management as it is designated to
consider;
• determining (within the terms of the Company’s
policy and in consultation with the Chairman of
the Board and/or the Chief Executive Officer as
appropriate) the total individual remuneration
package for each Executive Director and other
designated senior executives (including bonuses,
incentive payments and share options or other
share awards). (The remuneration of Non-Executive
Directors will be a matter for the Chairman and
Executive Directors of the Board. No Director
or manager will be allowed to partake in any
discussions as to their own remuneration);
• reviewing the structure, size and composition
(including the skills, knowledge and experience) of
the Board and giving full consideration to succession
planning; and
• recommending new appointments to the Board.
The Remuneration Committee is expected to meet as
required.
The Board has elected not to establish a Nominations
Committee, preferring instead that the Board itself
should deal with such matters, with the assistance of
the Remuneration Committee, including succession
planning and the balance of the Board.
The Committee will be assisted by Dawn O’Brien,
a director of Bond Turner, in ensuring regulatory
compliance. The Risk and Regulation Committee is
expected to meet formally at least two times a year
and otherwise as required.
The Chair and the Board continue to monitor and
evolve the Company’s corporate governance structures
and processes, and maintain that these will evolve
over time, in line with the Company’s growth and
development.
36
Anexo Group plc Annual Report 2020 10
Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant stakeholders
The Board is committed to maintaining effective
communication and having constructive dialogue
with its shareholders, consumers and other relevant
stakeholders. The Company intends to have ongoing
relationships with both its private and institutional
shareholders (through meetings and presentations) as
well as shareholder analysts, and for them to have the
opportunity to discuss issues and provide feedback at
meetings with the Company.
In addition, all shareholders are encouraged to attend
the Company’s Annual General Meeting. The Board
already discloses the result of general meetings by
way of announcement and discloses the proxy voting
numbers to those attending the meetings. In order
to improve transparency, the Board has published
proxy voting results from its inaugural Annual General
Meeting on its website and will continue to do so in
future. The Board maintains that, if there is a resolution
passed at a GM with 20% votes against, the Company
will seek to understand the reason for the result and,
where appropriate, take suitable action.
Resolutions 1–12 and Resolution 14 at the Company’s
2019 AGM were passed with 100% of votes in favour
of each resolution. Resolution 13 was passed with 97%
in favour and 3% against. The proxy votes received in
respect of all resolutions were released via RNS and are
available on the Company’s website.
Information on the Investor Relations section of the
Group’s website is kept updated and contains details of
relevant developments, press and corporate news and
presentations. As noted above, shareholders can also
sign up to receive investor alerts to ensure that they
receive all press releases, financial results and other key
shareholder messages directly from the Company as
soon as they become available.
Alan Sellers
Executive Chairman
29 June 2020.
Chairman’s Statement on
the Prevention of Modern Slavery
Remuneration Committee
At Anexo Group plc, we do not tolerate any form
of modern slavery or human trafficking in any part
of our business.
Adequate resources will be made available to
ensure slavery and human trafficking are not taking
place within our organization or to the best of our
knowledge within our supply chains.
Anexo Group plc and any of its subsidiary or
associated companies (Anexo Group) acknowledges
global responsibility and is committed to driving out
acts of modern-day slavery and human trafficking
from within its own business and supply chains. The
Anexo Group acknowledges its responsibility under
relevant modern slavery legislation and will ensure
transparency is achieved within the organisation to
ensure that awareness of modern slavery legislation
is achieved on a consistent basis.
Anexo Group will make reasonable endeavours
to ensure all employees and agents within our
supply chains are not subject to any form of forced,
compulsory/bonded labour or human trafficking by
implementing Group’s modern slavery policy.
The Board of Directors of Anexo Group plc is
responsible for the ongoing review of the Group’s
modern slavery policy. This will be carried out
annually or as and when organisational changes
impact the way the Company works.
Approved by the Board of Directors of Anexo Group
plc on 29 June 2020.
Alan Sellers
Executive Chairman
29 June 2020
37
OverviewStrategic ReportGovernanceFinancial Statements Audit Committee report
As Chairman of Anexo’s Audit Committee, I present
my Audit Committee Report for the year ended 31
December 2019.
The Committee is responsible for reviewing and
reporting on the Company’s financial performance,
monitoring the integrity of the Company’s financial
statements (including Annual and Interim Accounts
and results announcements), reviewing internal control
and risk management, and reviewing/monitoring the
performance, independence and effectiveness of the
external auditors.
Since the date of my last report, the Committee’s
primary activities comprised meeting with the external
auditors, considering the audit approach, scope and
timetable, and reviewing the key audit matters for the
2019 audit.
In addition to the Committee’s ongoing duties, in the
coming year the Committee plans to:
• To review the Group’s internal financial controls and
risk management systems;
• To review any changes to accounting policies;
• To make recommendations to the Board in relation
to the appointment of the external auditors;
• To make recommendations to the Board concerning
the approval of the remuneration and terms of
engagement of the external auditors;
• To review and monitor the extent of the non-audit
services undertaken by external auditors;
• To review and monitor the external auditors’
independence and objectivity; and
• To consider any matter specifically referred to the
Committee by the Board.
The Terms of Reference are reviewed annually and are
available on the Company’s website www.anexo-group.
com/index.asp.
• Regularly review the need for an internal audit
function, having regard to the Company’s strategy
and resources
• Review and record approval of any analyst briefings
and investor presentations
Audit Committee Effectiveness
The Committee performed an assessment of its
effectiveness in late 2019, the conclusions of which
were that the Committee is competent and carries
out its function effectively.
• Carry out a self-assessment of the Committee
• Review the effectiveness of the external audit
Audit Committee and Attendance
Anexo’s Audit Committee is chaired by Roger Barlow
and its other members are Christopher Houghton
and Richard Pratt. The Board considers that Roger
has sufficient, relevant financial experience to chair
the Audit Committee given that he is a chartered
accountant with extensive experience and numerous
Board positions outside of Anexo (including Chief
Financial Officer and Chair of Audit Committee).
The Committee is required by its Terms of Reference to
meet at least twice in each financial year and otherwise
as required by the Committee Chairman to properly
fulfil its duties. Since admission, the Committee
met twice and both meetings were attended by all
members. With the exception of Samantha Moss and
Elizabeth Sands, all other Directors attended both
meetings, with Samantha and Elizabeth attending one
Committee meeting each. The external auditors and
Dawn O’Brien also attended both Committee meetings
at the invitation of the Committee Chairman.
Objectives and Responsibilities
The Audit Committee’s main responsibilities can be
summarised as follows:
• To report on and review the Group’s financial
performance;
• To monitor the integrity of the Group’s financial
statements and any formal announcements relating
to the Group’s financial performance;
38
Financial Reporting
During the year, the Committee concluded that the
Annual Report and Financial Statements, taken as
whole, were fair, balanced and understandable and
provided the information necessary for shareholders
to assess the Group’s business model, strategy and
performance.
The Committee considered the budget for 2020 and the
debt financing arrangements at year end and concluded
that the going concern basis is appropriate. The
Committee reviewed the full-year and half-year results
announcement, Annual Report and Financial Statements
and considered reports from the external auditors
identifying accounting or judgmental issues requiring its
attention. The Committee also reviewed the Strategic
Report and concluded that it presented a useful and fair,
balanced and understandable review of the business.
External Audit
The Committee will assess the external auditors’
performance and effectiveness for the current year
through a questionnaire to be completed by Audit
Committee members and the Group’s senior finance
team. The output from the process will be reviewed and
discussed by the Audit Committee and with the external
auditors in 2020.
Roger Barlow
Chairman of the Audit Committee
29 June 2020
Anexo Group plc Annual Report 2020 Remuneration Committee report
Directors’ remuneration policy
The Group’s remuneration policy is formulated to
attract and retain high-calibre executives and motivate
them to develop and implement the Group’s business
strategy in order to optimise long-term shareholder
value. It is the intention that this policy should conform
to best practice standards and that it will continue
to apply for 2020 and subsequent years, subject to
ongoing review as appropriate.
The policy is framed around the following key
principles:
• total rewards will be set at levels that are sufficiently
competitive to enable the recruitment and retention
of high-calibre executives;
• total incentive-based rewards will be earned
through the achievement of performance conditions
consistent with shareholder interests;
• the design of long-term incentives will be prudent
and will not expose shareholders to unreasonable
financial risk;
• in considering the market positioning of reward
elements, account will be taken for the performance
of the Group and of each individual Executive
Director; and
• reward practice will conform to best practice
standards as far as reasonably practicable.
When formulating the scale and structure of
remuneration, the Remuneration Committee takes
account of a number of different factors including
market practice and external market data of the level
of remuneration offered to Directors of similar type and
seniority in other companies whose activities and size
are similar.
In addition, the pay and employment conditions of
employees are also considered when determining
Directors’ remuneration. The Remuneration Committee
may also seek advice from external consultants where
appropriate. No Director was involved in deciding the
level and composition of their own remuneration.
The Executive Directors receive an amount of fixed pay
made up of a base salary, and in some cases a benefits
package and pension contribution.
Short-term performance for senior executives is
incentivised using an annual bonus scheme based on
the achievement of profitability targets. Long-term
performance is incentivised by way of a long-term
incentive plan (‘LTIP’) based on the achievement of
performance goals aligned to the Company’s business
strategy and measured over a three-year period. These
various schemes provide the Board with tools to help
it to continue to strengthen the alignment of employee
and shareholder interests.
Basic Salary
Executive Directors’ salaries are reviewed annually, any
movement will be determined by the Remuneration
Committee. Executive Directors’ contracts of service
(which include details of their remuneration) will be
available for inspection at the Annual General Meeting.
In addition to their Basic Salary, Executive Directors
receive certain benefits comprising a car and fuel card
(or cash allowances in lieu), private medical, life, critical
illness and permanent health insurances and pension
contributions (or cash in lieu of such contributions).
Annual bonus payments
The Executive Directors are entitled to participate in
the annual bonus scheme. The bonuses are payable
subject to the achievement of challenging targets
which, for the current year, were based on achieving
the forecast profit before taxation for 2019. The
maximum bonus potential for meeting all of the targets
is between 50% and 100% of salary depending on the
contractual terms agreed at the time of listing, but the
Remuneration Committee has discretion if the target is
not met.
39
OverviewStrategic ReportGovernanceFinancial Statements Remuneration Committee report continued
Share-based incentives
On Admission, a number of participants, including
Mark Bringloe, were able to subscribe for C Ordinary
Shares in Edge Vehicles Rentals Group Limited, the
intermediate holding company of the Group. Upon the
satisfaction of applicable performance targets, which
included the achievement of the Group’s profit targets
for each of 2018, 2019 and 2020, or at the discretion
of the Board if failure to achieve such targets was due
to unforeseen circumstances, these C shares may be
exchanged for cash or shares in Anexo Group plc.
The Company may, at its discretion, offer to purchase
the MIP Shares for cash or by issuing Ordinary Shares
in the Company. The number of Ordinary Shares
which would be acquired under such an offer would
be based on the MIP Share value and the share price
of the Ordinary Shares on the MIP Exercise Date. If the
Company chooses to settle the MIP Shares by issuing
Ordinary Shares in the Company, the MIP Participants
will be restricted from selling 50 per cent. of the
Ordinary Shares they receive for a period of 12 months
from the date they are issued or before the fourth
anniversary of the date of the MIP Shares being issued,
whichever earlier.
The value of the Shares on vesting will increase (or
decrease) by reference to the value of the Ordinary
Shares in Anexo at such time. The aggregated value
of the Share Entitlement on listing was £2,200,000, of
which £500,000 related to Mark Bringloe and £Nil to
both Alan Sellers and Samantha Moss.
Directors’ contracts
In accordance with general practice, and the
Company’s policy, Executive Directors have contracts
with an indefinite term and a notice period of six
months. The contracts of Alan Sellers, Mark Bringloe
and Samantha Moss were entered into on 12 June 2018.
The Executive Directors’ contracts have no express
provision for the payment of compensation in the
event of early termination. In the event of termination
of an Executive Director’s service contract, when
determining the compensation payable to the
Executive Director, it is the policy of the committee to
take account of the principles of mitigation of loss.
All Non-Executive Directors have specific terms of
engagement and are appointed subject to periodic re-
election. Their fees are disclosed in the audited section
of this report and are set by the Board as a whole. Non-
Executive Directors cannot participate in any of the
Company’s share incentive schemes.
Dates of the current Non-Executive Directors’ original
letters of appointment are set out below:
Director
Date of appointment Contract end date
Christopher Houghton 22 May 2018
21 May 2021
Roger Barlow
14 June 2018
13 June 2021
Elizabeth Sands
14 June 2018
13 June 2021
Richard Pratt
22 May 2018
21 May 2021
Pension arrangements
The Executive Directors receive Company
contributions to personal pension schemes
of 3% of their basic salaries.
40
Anexo Group plc Annual Report 2020 Total Directors’ Remuneration for 2019
Director
Alan Sellers
Samantha Moss
Mark Bringloe
Christopher Houghton
Roger Barlow
Elizabeth Sands
Richard Pratt
Total
Salaries
and fees
£’000s
Annual
bonus
£’000s
Other
benefits
£’000s
Long term
incentives
£’000s
375
324
200
40
40
36
40
375
120
100
–
–
–
–
1,055
595
24
29
24
–
–
–
–
77
–
–
–
–
–
–
–
–
Total Directors’ Remuneration for 2018
Director
Alan Sellers
Samantha Moss
Mark Bringloe
Christopher Houghton
Roger Barlow
Elizabeth Sands
Richard Pratt
Total
Salaries
and fees
£’000s
Annual
bonus
£’000s
Other
benefits
£’000s
Long term
incentives
£’000s
188
150
100
20
20
18
20
516
375
120
100
–
–
–
–
16
16
160
–
–
–
–
595
192
–
–
–
–
–
–
–
–
Note: Data for 2018 presented above relates to the period from listing (20 June 2018) until the year end.
By order of the Board
Christopher Houghton
Chairman of the Remuneration Committee
29 June 2020
Total
£’000s
774
473
324
40
40
36
40
1,727
Total
£’000s
579
286
360
20
20
18
20
1,303
41
OverviewStrategic ReportGovernanceFinancial Statements Directors’ report
The Directors present their Annual Report and the
audited financial statements for the year ended 31
December 2019. The Corporate Governance section
set out on pages 30 to 45 forms part of this report.
There were a number of changes in the interest of
Directors between 31 December 2019 and the date of
this report. The beneficial interests of the Directors in
the Ordinary Shares of the Company on 22 June 2020
are set out below:
Principal Activities
The Group is a specialist integrated credit hire and
legal services group focused on providing replacement
vehicles and associated legal services to impecunious
customers who have been involved in a non-fault
accident.
Director
Alan Sellers
Samantha Moss
Mark Bringloe
Elizabeth Sands
Shares
35,114,320
36,079,793
15,000
4,290
%
30.27
31.10
0.0134
0.004
Corporate Status
Anexo Group plc (the ‘Company’) is a public limited
company domiciled in the United Kingdom and was
incorporated in England & Wales with company
number 11278719 on 27 March 2018. The Company has
its registered office at 5th Floor, The Plaza, 100 Old Hall
Street, Liverpool, Merseyside, United Kingdom, L3 9QJ.
The principal places of business of the Group are its
offices in Liverpool, Ormskirk, Potters Bar and Bolton.
Details of the Directors’ long term incentive plans are
contained in the Directors’ Remuneration Report on
pages 40 and 41.
Directors’ Indemnities
The Company has agreed to indemnify its Directors
against third party claims which may be brought
against them and has put in place a Directors’ and
officers’ insurance policy.
Directors
Details of the Directors of the Company who served
during the year, their dates of appointment, their titles,
roles, and committee memberships and chairmanships
are set out in the Remuneration Committee Report
on pages 40 and 41 of this Annual Report. The names
and biographies of the Directors appear on pages 28
and 29.
Directors Interests
In accordance with the Articles of Association, all
Directors will retire by rotation and being eligible
offer themselves for re-election at the Company’s
forthcoming AGM. The beneficial interests of the
Directors in the Ordinary Shares of the Company
on 31 December 2019 are set out below:
Director
Alan Sellers
Samantha Moss
Mark Bringloe
Elizabeth Sands
Shares
37,675,004
38,675,003
15,000
4,290
%
34.30
35.16
0.014
0.004
Substantial Shareholdings
At 22 June 2020, the Directors have been notified of
the following beneficial interests in excess of 3% of the
issued share capital of the Company:
Shareholder
Valentina Slater
AXA
Gresham House
Charles Stanley
Premier Miton
Legal and General
Shares
7,105,897
5,290,000
4,333,333
4,200,000
4,000,000
3,989,930
%
6.13
4.56
3.74
3.62
3.45
3.44
Risk Management Objectives and Policies
The Board has ultimate responsibility for determining
the nature and extent of major risks facing the Group
as well as establishing a risk management framework
and related objectives and policies. It has delegated the
authority for designing and operating processes that
ensure the framework’s effective implementation to the
Group’s finance function. The Board receives regular
reports from the Chief Financial Officer through which
it reviews the effectiveness of the processes in place
as well as the appropriateness of the objectives and
policies it sets. The overall objective of the Board is to
set policies that seek to reduce risk as far as possible
without unduly affecting the Group’s competitiveness
and flexibility.
42
Anexo Group plc Annual Report 2020 Equal Opportunities
It is our policy to ensure equal opportunity in
recruitment, selection, promotion, employee
development, training and reward policies and we have
an equal opportunities and diversity policy in place. It
is a key objective to ensure that successful candidates
for appointment and promotion are selected taking
account of individual ability, skills and competencies
without regard to age, gender, race, religion, disability
or sexual orientation.
Employee Consultation
The Group places considerable value on the
involvement of its employees and has continued to
keep them informed on matters affecting them as
employees and on the various factors affecting the
performance of the Group. This is achieved through
presentations and the Company intranet. The
Group regularly communicates with employees on
a wide range of matters affecting their current and
future interests.
Strategic Report
The Company has chosen in accordance with
Companies Act 2006, section 414C (11) to set out in
the Company’s strategic report information required
to be contained in the Directors’ report by Large and
Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008, Sch. 7, where not already
disclosed in the Directors’ report.
Principal Risks and Uncertainties
The principal risk and uncertainties facing the Group
are included within the Risk and Regulation Committee
report on pages 23 to 27, which also includes details of
the mitigating factors employed to minimise the effects
to the Group.
The Risk and Regulation Committee also helps
to ensure there are robust processes in place for
identifying, managing and monitoring risks to the
Group. The Group’s risk register is reviewed at each
Risk and Regulation Committee meeting and is
updated as changes arise in the nature of risks or the
mitigating actions implemented. The Committee will
assess the risk profile of the Group and how the risks
arising from the Group’s businesses are controlled,
monitored and mitigated by management. Risk
and Regulation Committee meetings are arranged
circumstantially if specific events arise that require the
Committee’s attention. The risk register is distributed
regularly to all Board members and the Board reviews
risks on a frequent basis.
The Board has delegated responsibility for reviewing
the Company’s internal financial controls to the Audit
Committee. The Audit Committee is also responsible
for monitoring the integrity of the Group’s financial
statements, including Annual and Interim Accounts
and results announcements. An internal audit function
is not yet considered necessary as day-to-day control
is sufficiently exercised by the Company’s Executive
Directors. However, the Board will continue to monitor
the need for an internal audit function.
Further details of the Group’s financial risk
management objectives and policies are set out in note
27 of the consolidated financial statements. The key
non-financial risks that the Group faces are set out on
pages 23 to 27 of the Strategic Report.
Related party Transactions
Details of the Group’s transactions and year end
balances with related parties are set out in note 24 of
the consolidated financial statements.
Disabilities and Diversity
Applications for employment by disabled persons are
always fully considered, bearing in mind the aptitudes
of the applicant concerned. In the event of members of
staff becoming disabled, every effort is made to ensure
that their employment with the Group continues and
that appropriate training is arranged. It is the policy
of the Group that the training, career development
and promotion of disabled persons should, as far as
possible, be identical with that of other employees.
The Group is committed to encouraging diversity,
promoting a diverse culture where everyone is treated
with respect and valued for their individual contribution
and creating a work environment free of bullying,
harassment, victimisation and unlawful discrimination.
It is a key objective to ensure that all employees are
helped and encouraged to fulfil their potential.
43
OverviewStrategic ReportGovernanceFinancial Statements Directors’ report continued
Auditor
RSM UK Audit LLP were appointed as auditor for the
year ended 31 December 2019 and have indicated
their willingness to continue in office. A resolution to
reappoint RSM UK Audit LLP as auditor will be put to
the forthcoming Annual General Meeting.
Disclosure of Information to Auditor
The Directors who held office at the date of approval
of this Directors’ report confirm that, so far as they
are each aware, there is no relevant audit information
of which the Company’s auditor is unaware; and each
Director has taken all the steps that he ought to have
taken as Director to make himself aware of any relevant
audit information and to establish that the Company’s
auditor is aware of that information.
Annual General Meeting
The Annual General Meeting will be held on
22 July 2020. The Notice convening the meeting
and information about the proposed resolutions
accompanies this Annual Report and Accounts.
By order of the Board
Dawn O’Brien
Company Secretary
29 June 2020
44
Anexo Group plc Annual Report 2020 Statement of Directors’ responsibilities
The Directors are responsible for preparing the
Strategic Report, the Directors’ Report and the
financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Group
and Company financial statements for each financial
year. The Directors are required by the AIM Rules
of the London Stock Exchange to prepare Group
financial statements in accordance with International
Financial Reporting Standards (“IFRS”) as adopted
by the European Union (“EU”) and have elected
under company law to prepare the Company financial
statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law).
The Group financial statements are required by law and
IFRS adopted by the EU to present fairly the financial
position and performance of the Group; the Companies
Act 2006 provides in relation to such financial
statements that references in the relevant part of that
Act to financial statements giving a true and fair view
are references to their achieving a fair presentation.
Under company law the Directors must not approve
the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of
the Group and the Company and of the profit or loss of
the Group and the Company for that period.
In preparing each of the Group and Company financial
statements, the Directors are required to:
a. select suitable accounting policies and then apply
them consistently;
b. make judgments and accounting estimates that
are reasonable and prudent;
c. for the Group financial statements, state whether
they have been prepared in accordance with IFRSs
adopted by the EU and for the Company financial
statements state whether applicable UK accounting
standards have been followed, subject to any
material departures disclosed and explained in
the Company financial statements;
d. prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group and the Company will continue
in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group’s and the Company’s transactions
and disclose with reasonable accuracy at any time the
financial position of the Group and the Company and
enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group
and the Company and hence for taking reasonable
steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Anexo Group plc website.
Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
45
OverviewStrategic ReportGovernanceFinancial Statements Independent auditor’s report to
the members of Anexo Group plc
Opinion
We have audited the financial statements of Anexo
Group Plc (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 31 December 2019
which comprise the consolidated statement of total
comprehensive income, consolidated and company
statements of financial position, consolidated
and company statements of changes in equity,
consolidated statement of cash flows and notes to the
financial statements, including a summary of significant
accounting policies. The financial reporting framework
that has been applied in the preparation of the group
financial statements is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by
the European Union. The financial reporting framework
that has been applied in the preparation of the parent
company financial statements is applicable law and
United Kingdom Accounting Standards, including
Financial Reporting Standard 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted
Accounting Practice).
In our opinion:
• the financial statements give a true and fair view of
the state of the group’s and of the parent company’s
affairs as at 31 December 2019 and of the group’s
profit for the year then ended;
• the group financial statements have been properly
prepared in accordance with IFRSs as adopted by
the European Union;
• the parent company financial statements have
been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice;
and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
standards are further described in the Auditor’s
responsibilities for the audit of the financial statements
section of our report. We are independent of the
group and the parent company in accordance with
the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities and
we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following
matters in relation to which the ISAs (UK) require us to
report to you where:
• the directors’ use of the going concern basis of
accounting in the preparation of the financial
statements is not appropriate; or
• the directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about the group’s or the
parent company’s ability to continue to adopt the
going concern basis of accounting for a period of at
least twelve months from the date when the financial
statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in our
audit of the group financial statements of the current
period and include the most significant assessed risks
of material misstatement (whether or not due to fraud)
we identified, including those which had the greatest
effect on the overall audit strategy, the allocation of
resources in the audit and directing the efforts of the
engagement team. These matters were addressed
in the context of our audit of the group financial
statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on
these matters.
Group key audit matters:
Going concern disclosure
(Refer to the basis of preparation – going concern on
pages 54 and 55)
The risk
The going concern assessment of the Group, which
considers the impact of the current Covid-19 pandemic
on the expected performance of the business, may not
be appropriately disclosed in the financial statements.
Our response
We have assessed the cash flow forecasts, committed
funding, together with the resulting expected
headroom. We have challenged the assumptions used
by management.
We have considered management’s sensitivities against
current trading performance and the resulting potential
impact on headroom.
46
Anexo Group plc Annual Report 2020 In considering the disclosures within the financial
statements in respect of the impact of Covid-19, we
have reviewed the recent trading performance and the
financial resources available to the group including the
recent fund raise and the agreed debt facilities.
We are satisfied with the adequacy of the going
concern disclosures within the financial statements.
Revenue recognition and accrued income
(Refer to accounting policy on page 57 regarding
revenue and accrued income for credit hire and legal
services, the accounting policy on pages 60 and 61
regarding estimation uncertainty for accrued income
and revenue, note 4 regarding revenue and note 15
regarding trade and other receivables)
The risk
Appropriate and accurate income recognition is
required to be applied by the Directors to ensure that
revenue is fairly stated in the financial statements. For
credit hire there is a risk that revenue is recognised
inappropriately and not at a supportable percentage
of the hire rate for the vehicle. The settlement rates
applied rely on estimates and management judgment.
For legal services there is a risk that accrued income
does not reflect the stage of the case and the costs to
be recovered
Our response
Substantive analytical review has been performed
on revenue and accrued income. Detailed testing,
sensitivity analysis and reasonableness checks have
been performed on settlement rates. Management’s
judgments were then challenged over the inputs and
settlement rates used, including a comparison with
historical actual settlement rates. For revenue and
accrued income we verified the appropriateness of the
recognition policy applied for a sample of claims.
Trade debtor recoverability
(Refer to accounting policy on page 57 regarding trade
receivables and disbursements, the accounting policy
on page 57 regarding recoverability of receivables,
note 15 regarding trade and other receivables and the
credit risk and impairment section of note 27 regarding
financial risk management and impairment of financial
assets)
The risk
The group has a significant number of aged trade
receivables, due to the time required to settle
legal claims and recover costs of credit hire and
legal services. Management’s assessment of the
recoverability of debts with their customers is
inherently judgmental. There is a risk that the net trade
receivables will be recovered at amounts materiality
different to the value recognised.
Our Response
The methodology utilised by management to calculate
the provision was reviewed, including the treatment of
older claims. The impairment provision was considered
through a combination of substantive analytical
review and tests of detail. Management’s estimate of
the impairment provision was recalculated and the
key recovery assumptions were compared against
historical settlement information.
Our application of materiality
When establishing our overall audit strategy, we set
certain thresholds which help us to determine the
nature, timing and extent of our audit procedures.
When evaluating whether misstatements, both
individually and on the financial statements as a whole,
could reasonably influence the economic decisions of
the users we take into account the qualitative nature
and the size of the misstatements. During planning
materiality for the group financial statements as a
whole was calculated as £1,520,000, which was not
significantly changed during the course of our audit.
Materiality for the parent company financial statements
as a whole was calculated as £1,150,000, which was not
significantly changed during the course of our audit.
We agreed with the Audit Committee that we would
report to them all unadjusted differences in excess of
£57,500, as well as differences below that threshold
that, in our view, warranted reporting on qualitative
grounds.
An overview of the scope of our audit
The financial information of Direct Accident
Management Limited and Bond Turner Limited
have been audited using component materiality.
The financial information of IGCA 2013 Limited and
Professional and Legal Services Limited have been
audited using group materiality. These represent
100% of the group’s revenue, profit before tax and
gross assets/liabilities. We have specified risk-focussed
audit procedures covering specific risk areas and
including those identified within this report to all
components. We did not rely on the work of any
component auditors.
47
OverviewStrategic ReportGovernanceFinancial Statements Independent auditor’s report to
the members of Anexo Group plc continued
Other information
The Directors are responsible for the other information.
The other information comprises the information
included in the Annual Report, other than the financial
statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the
other information and, except to the extent otherwise
explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements
or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify
such material inconsistencies or apparent material
misstatements, we are required to determine whether
there is a material misstatement in the financial
statements or a material misstatement of the other
information. If, based on the work we have performed,
we conclude that there is a material misstatement of
this other information, we are required to report that
fact. We have nothing to report in this regard.
Matters on which we are required to report
by exception
In the light of the knowledge and understanding of the
Group and the parent company and their environment
obtained in the course of the audit, we have not
identified material misstatements in the Strategic
Report or the Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept
by the parent company, or returns adequate for our
audit have not been received from branches not
visited by us; or
• the parent company financial statements are not in
agreement with the accounting records and returns;
or
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
• the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities
statement set out on page 45, the Directors are
responsible for the preparation of the financial
statements and for being satisfied that they give a
true and fair view, and for such internal control as
the Directors determine is necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors
are responsible for assessing the Group’s and the
parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related
to going concern and using the going concern basis
of accounting unless the Directors either intend to
liquidate the Group or the parent company or to cease
operations, or have no realistic alternative but to do so.
48
Anexo Group plc Annual Report 2020 Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for
the audit of the financial statements is located
on the Financial Reporting Council’s website at:
http://www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than
the Company and the Company’s members as a body,
for our audit work, for this report, or for the opinions
we have formed.
Ian Wall (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP,
Statutory Auditor
Chartered Accountants
3 Hardman Street
Manchester, M3 3HF
29 June 2020
49
OverviewStrategic ReportGovernanceFinancial Statements Consolidated statement of total comprehensive income
for year ended 31 December 2019
Revenue
Cost of sales
Gross profit
Depreciation & loss on disposal
Depreciation on right of use assets
Amortisation
Administrative expenses before exceptional items
Operating profit before exceptional items
Share based payment charge
Non–recurring administrative expenses
Operating profit
Lease finance costs
Finance costs
Net financing expense
Profit before tax
Taxation
Profit and total comprehensive income for the
year attributable to the owners of the Company
Earnings per share
Basic earnings per share (pence)
Diluted earnings per share (pence)
Note
4
6
6
7
18
7
7
8
8
11
12
12
2019
£’000s
78,510
(15,703)
62,807
(2,327)
(4,220)
(35)
(30,975)
25,250
(657)
–
24,593
(401)
(1,801)
(2,202)
22,391
(4,403)
2018
£’000s
56,505
(16,168)
40,337
(1,574)
–
–
(21,594)
17,169
(384)
(1,411)
15,374
–
(1,090)
(1,090)
14,284
(2,879)
17,988
11,405
16.4
16.0
10.4
10.2
The above results were derived from continuing operations.
The notes on pages 54 to 86 are an integral part of these consolidated financial statements.
50
Anexo Group plc Annual Report 2020
Consolidated statement of financial position
as at 31 December 2019
Assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Share based payments reserve
Retained earnings
Equity attributable to the owners of the Company
Non-current liabilities
Other interest-bearing loans and borrowings
Lease liabilities
Deferred tax liabilities
Current liabilities
Bank overdraft
Other interest-bearing loans and borrowings
Lease liabilities
Trade and other payables
Corporation tax liability
Total liabilities
Total equity and liabilities
Note
2019
£’000s
2018
£’000s
14
14
14
15
16
17
17
18
19
19
20
19
19
19
23
3,673
7,821
175
11,669
127,768
2,270
130,038
141,707
55
9,235
1,041
81,365
91,696
393
5,029
32
5,454
17,784
12,144
3,124
7,915
3,590
44,557
50,011
141,707
3,270
–
–
3,270
101,445
5,532
106,977
110,247
55
9,235
384
66,127
75,801
870
–
–
870
12,536
9,402
–
7,223
4,415
33,576
34,446
110,247
The notes on pages 54 to 86 form an integral part of these consolidated financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 29 June 2020.
They were signed on its behalf by:
Mark Bringloe
Chief Financial Officer
29 June 2020
Company Number 11278719
51
OverviewStrategic ReportGovernanceFinancial Statements Retained
earnings
£’000s
Total
£’000s
55,542
55,632
11,405
11,405
–
–
–
5
9,195
384
(820)
(820)
–
–
–
–
384
–
384
66,127
75,801
–
–
–
657
17,988
17,988
–
–
–
–
–
657
–
(2,750)
(2,750)
1,041
81,365
91,696
Consolidated statement of changes in equity
for the year ended 31 December 2019
Share capital
£’000s
Share
premium
£’000s
Merger
reserve
£’000s
Share based
payment
reserve
£’000s
At 1 January 2018
Profit for the year and total comprehensive income
Issue of share capital
Increase in share premium
Creation of share based payment reserve
Dividends
50
–
5
–
–
–
40
–
–
9,195
–
–
At 31 December 2018
55
9,235
Profit for the year and total comprehensive income
Issue of share capital
Increase in share premium
Creation of share based payment reserve
Dividends
–
–
–
–
–
–
–
–
–
–
At 31 December 2019
55
9,235
–
–
–
–
–
–
–
–
–
–
–
–
–
52
Anexo Group plc Annual Report 2020 Consolidated statement of cash flows
for the year ended 31 December 2019
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation and loss on disposal
Amortisation
Financial expense
Taxation
Working capital adjustments
(Increase)/decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from operations
Interest paid
Tax paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Investment in intangible fixed assets
Net cash from investing activities
Cash flows from financing activities
Net proceeds from the issue of share capital
Proceeds from new loan
Repayment of borrowings
Payment of finance lease liabilities
Lease payments
New finance lease arrangements
Dividends paid
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Note
2019
£’000s
2018
£’000s
17,988
11,405
14
14
8
6,547
35
2,202
4,403
31,175
(26,294)
1,351
6,232
(1,797)
(5,230)
(795)
374
(3,104)
(210)
(2,940)
–
13,107
(10,920)
(2,225)
(4,289)
2,302
(2,750)
(4,775)
(8,510)
(7,004)
1,574
–
1,090
2,879
16,948
(20,871)
1,828
(2,095)
(1,090)
(4,738)
(7,923)
170
(3,493)
–
(3,323)
9,235
4,016
(1,931)
(1,362)
–
2,590
(820)
11,728
482
(7,486)
Cash and cash equivalents at 31 December
16
(15,514)
(7,004)
53
OverviewStrategic ReportGovernanceFinancial Statements Notes to the consolidated financial statements
for the year ended 31 December 2019
1. Basis of Preparation and Principal Activity
These financial statements for the year ended 31 December 2019 have been prepared in accordance with the
recognition and measurement criteria of International Financial Reporting Standards as adopted by the European
Union (“Adopted IFRS”), IFRS IC interpretations and those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
Anexo Group plc was incorporated on 27 March 2018. On 15 June 2018 the Company acquired 100 per cent of
the issued share capital of Direct Accident Management Limited, Bond Turner Limited, Professional and Legal
Services Limited, IGCA 2013 Limited and AMS Legal Services Limited.
Prior to becoming subsidiaries of the Company, each Company in the Group operated under the close control
of a common management team and shareholders. Management decisions were taken in consideration of the
development of all the companies operating in concert throughout all the preceding periods.
The Directors considered the accounting policies that should be applied in respect of the consolidation of the
Group formed in anticipation of Admission to AIM. It was concluded that the transactions described above
represented a combination of entities under common control and therefore outside the scope of IFRS 3 Business
Combinations, which the Directors believe reflects the economic substance of the transaction. Under common
control accounting, assets and liabilities have been recorded at book value, not fair value, intangible assets and
contingent liabilities have been recognised only to the extent that they were recognised previously, no goodwill is
recognised and comparative amounts have been restated as if the combination had taken place at the beginning
of the earliest accounting period presented.
Therefore, although the Group reconstruction did not take place until 15 June 2018, these financial statements
are presented as if the Group structure had always been in place, using merger accounting principles.
The historical financial information has been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union. The financial statements are presented in Pounds Sterling, being
the functional currency of the Group, generally rounded to the nearest thousand.
The annual financial statements have been prepared on the historical cost basis, except for certain financial
assets and liabilities and share based payments which are carried at fair value.
The preparation of financial statements in conformity with International Financial Reporting Standards adopted
by the European Union requires the use of estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reported period. Although these estimates
are based on management’s best knowledge of current events and actions, actual results ultimately may differ
from those estimates.
The principal activity of the Group is the provision of credit hire and associated legal services.
The Company is a public limited company, 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
The health and wellbeing of our people and clients is paramount, and steps have been 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.
Bond Turner, the Group’s legal services division, has moved most of its staff to remote working and continues to
be fully operational. The progression and settlement of cases is being 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,
albeit we have seen reductions in cash collections against our original forecasts pre COVID, however, these
reductions have not been as significant first envisaged and remain significantly ahead of the same period last year.
54
Anexo Group plc Annual Report 2020 Within EDGE, the Group’s credit hire division, vehicles continue to be delivered and collected by staff who are
protected in line with government guidelines, and whilst the Group saw a sharp fall in new business activity within
the credit hire immediately post lockdown, levels have subsequently increased, as the number of vehicles on the
road has risen, to the extent that recent introductions are not significantly less than those see pre-lockdown.
Group trading for FY-2020 to date has been impacted to some extent by the effects of COVID-19 as the number of
vehicles on the road declined immediately post lockdown and we saw a reduction in cash collections as our legal
staff transitioned to working from home. However, the results for the first four months of FY-2020 have been in
line with revised management expectations. As the lockdown has been gradually relaxed and our legal staff have
become more used to working from home activity levels within the Credit Hire division and cash collections have
been increasing. 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. The Group’s policy of driving cash generation remains a key focus and the
progression of its significant caseload portfolio by litigators within Bond Turner is 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 as yet
be fully assessed. However, these uncertain times are resulting in opportunities for the Group to both grow market
share within the core business and take advantage of opportunities as they arise in other areas within the legal
services arena.
The Group has a strong balance sheet with a conservative gearing level and good liquidity having on 29 May
2020 completed a placing of 6.0 million Ordinary Shares, raising approximately £7.0 million of funds for the
Group after expenses.
With headroom within its funding facilities, which include a revolving credit facility of £8.0 million with HSBC Bank
plc (due for repayment in September 2022) and an invoice discounting facility of £18.5 million with Secure Trust
Bank plc (due for renewal in September 2021), the Group has sought additional capital to support growth and on
16 June 2020 secured a loan facility of £2.1 million from a litigation funder to support the development of the VW
emissions class action. Further, the Group has received confirmation from Secure Trust Bank Plc of approval for
a loan of £5.0 million, backed by the governments CBILS scheme, for which the Board expects to be available to
draw in July 2020.
These recent matters, alongside the core business being cash generative, 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 a period of one year from the date of approval
of these financial statements. These have been subject to sensitivity analysis and consequent adjustment
where appropriate to allow for such possible effects of COVID-19 on Group performance as may be considered
reasonable. 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 financial statements.
2. Accounting Policies
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of the Financial Statements are set out below.
These policies have been consistently applied, unless otherwise stated.
Changes in accounting policy
The following standards have been applied in preparing the Financial Statements:
55
OverviewStrategic ReportGovernanceFinancial Statements 2. Accounting Policies continued
IFRS 16 Leases
A new accounting standard has become effective, IFRS 16 Leases, which replaced IAS 17 Leases, from 1 January
2019. The new standard fundamentally altered the classification and measurement of operating leases for
lessees, removing the distinction between operating and finance leases.
This new standard has had the following impact on the Group’s accounts:
• The Group currently holds two contractual arrangements deemed to satisfy the conditions of a lease, and
which do not fall into the exceptions of the standard. These are the contractual arrangements in relation to
rental of the vehicle fleet and the rental of various office and other buildings.
• Previously these leases were accounted for in the income statement on an accruals basis under IAS 17. Under
the new standard, these two assets are now held on the balance sheet as “right of use” assets measured at
cost (deemed to be the initial measurement of the lease liability plus any set up costs). The lease has initially
been measured as the total payments required under the terms of the lease, discounted by the incremental
borrowing rate (as per the contract) to account for time value of money.
• This cost includes the lease element only, excluding any maintenance costs. Maintenance costs remain in the
income statement, as under the previous treatment.
• The payments made under the lease contracts are no longer charged to the income statement; instead they
are offset against the liabilities on the balance sheet.
• Monthly depreciation of the assets is charged to the income statement.
• Interest on the liabilities, calculated at the incremental borrowing rates (vehicle fleet: 7.00%, office and other
properties: 3.50%), is charged to the income statement monthly. Upon transition to IFRS 16, the Group applied
the modified retrospective approach and will therefore not restate comparative information in the 2019
financial statements.
A reconciliation between the reported results for the year ended 31 December 2019, having been adjusted for
IFRS 16, and before the adjustment is provided at note 27. As the Group has applied the modified retrospective
approach there are no adjustments to the results reported for the year ended 31 December 2018 and continues
to be reported under IAS 17.
The following standards have not been applied in preparing the Financial Statements:
• IFRIC 23 Uncertainty over Income Tax Treatments
• Amendments to IFRS 9 Financial Instruments
• Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures
• Annual Improvements to IFRSs – 2015-2017 Cycle
• Amendments to IAS 19 Employee Benefits
After initial consideration, we would not expect any of these standards to have a material effect on the
Financial Statements compared to the previous accounting policies of the individual group entities and at a
consolidated level.
Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that
are subject to risks and returns that are different from those of other business segments. There is only one
geographical segment, being the United Kingdom.
The Executive Directors are of the opinion that the Group has two distinct reportable segments which include
those of credit hire and legal services.
56
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020 Revenue
The Group provides the following key services to customers:
• provision of a credit hire vehicle to a client involved in a non-fault accident; and
• provision of associated legal services to support that client’s claim.
Revenue derived from the supply of credit hire vehicles is recognised over time from the date a vehicle is placed on
hire, exclusive of VAT. Vehicles are only supplied and remain on hire after a strict validation process that assesses
to the Group’s satisfaction that liability for the accident rests with a third party. 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.
Revenue from the rendering of legal services to customers is recognised upon delivery of the service to the
customer. The legal practice operates on the basis of No Win – No Fee conditional fee arrangements, whereby
fees are earned only in the event of a successful outcome of a customer’s claim. In some cases, fees may be fixed
and determined depending on the stage at which the matter concludes. For the majority of claims, fees are fixed
at a specified sum plus a percentage of damages recovered. Any uncertainty around the fees receivable under a
No Win – No Fee contract are generally only resolved when a matter is concluded, revenue is constrained to the
amount of the minimum fee that the Group is entitled once an admission of liability has been confirmed. Revenue
recognised is updated on settlement once the amount of fees that will be recovered is known.
Trade Receivables
Trade receivables are amounts due from clients for services performed in the ordinary course of business. Trade
receivables are initially measured at fair value less transaction costs and subsequently carried at amortised cost
less any allowance for discounts and impairment. The Group has material trade receivables. Judgment is required
in determining the extent of any provision for expected credit losses. The specific circumstances of individual
balances and historical trends are used in the calculation of this provision.
Accrued Income – Credit Hire
Revenue from credit hire is accrued on a daily basis, after adjustment on a portfolio basis for an estimation of the
recovery of those credit hire charges. As a result of credit hire turnover being recognised in the period the hire is
provided, accrued income is recognised for credit hire, together with the costs and associated services provided
that it has not yet been invoiced or is still on hire at the year-end date. Upon conclusion of an individual hire, the
claim is invoiced and accrued income associated with that hire written back to nil.
Accrued Income – Legal Services
Accrued income represents client cases which have not yet reached a conclusion and is carried at a value that
includes profit of prescribed fixed fees at the earliest stage post issue of proceedings. The reasoning behind this
is that credit hire claims are litigious and require the issue of court proceedings prior to settlement. The value
measured only includes the base fixed fee and does not provide for any percentage uplift which will be payable
in addition in every case that settles. Value is only attributed to cases which are less than three years old.
Disbursements
Disbursements paid in support of an ongoing claim are reported within trade receivables. A provision for
the expected irrecoverability of disbursement balances is made by reference to the duration since the last
transaction posted to the individual ledgers, plus any other necessary provision for balances considering post
period end information. Provisions for disbursements written off is charged to administration expenses in the
income statement.
57
OverviewStrategic ReportGovernanceFinancial Statements 2. Accounting Policies continued
Taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement,
except that a change attributable to an item of income or expense recognised as other comprehensive income is
also recognised directly in other comprehensive income.
The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively
enacted by the reporting date in the countries where the Group operates and generates taxable income.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the historical financial information and on unused tax losses or tax credits available to
the Group. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted
by the reporting date.
The carrying amounts of deferred tax assets are reviewed at each reporting date and a valuation allowance is set
up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than
not to be recovered based on current or future taxable profit.
Property, plant and equipment
Property, plant and equipment is stated in the statement of financial position at cost, less any subsequent
accumulated depreciation and subsequent accumulated impairment losses. The cost of property, plant and
equipment includes directly attributable incremental costs incurred in its acquisition and installation.
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment assets
to determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any).
Depreciation
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, as follows:
Asset class
Motor vehicles
Property improvements
Computer equipment
Fixtures and fittings
Right of use assets
Intangible assets
Depreciation method and rate
50% straight line
10% straight line
20% to 33% straight line
20% straight line or reducing balance
Over the life of the associated lease, straight line
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured
at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised so
as to write off the cost or valuation of assets less their residual values over their estimate useful lives on the
following bases:
Asset class
Software licenses
Depreciation method and rate
33% straight line
58
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020 Financial instruments
The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset,
a financial liability or an equity instrument in accordance with the substance of the underlying contractual
arrangement. Financial instruments are recognised on the date when the Group becomes a party to the
contractual provisions of the instrument. Financial instruments are initially recognised at fair value. Financial
instruments cease to be recognised at the date when the Group ceases to be party to the contractual provisions
of the instrument.
Financial assets are included on the Statement of financial position as trade and other receivables or cash and
cash equivalents.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of
changes in value.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Accounts payable are classified as current liabilities if the Company does not have an
unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve
months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months
after the reporting date, they are presented as non-current liabilities. Trade payables are initially recognised at
fair value including transaction costs and subsequently carried at amortised cost.
Borrowings
All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings
are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs,
and the amount due on redemption being recognised as a charge to the income statement over the period of the
relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting date.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it
is probable that the entity will be required to transfer economic benefits in settlement and the amount of the
obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position
and the amount of the provision as an expense.
Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting
date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the
amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised
are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When
a provision is measured at the present value of the amount expected to be required to settle the obligation, the
unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
59
OverviewStrategic ReportGovernanceFinancial Statements 2. Accounting Policies continued
Leases
Policy applicable from 1 January 2019
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration.
To assess whether a contract is a lease, the Group assesses whether:
• the contract involves the use of an identified asset;
• the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout
the period of use; and
• the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making
rights that are most relevant to changing how and for what purpose the asset is used.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component on the basis of their relative stand-alone prices.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date
to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated
useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment.
The lease liability is initially measured at the present value of the lease payments, discounted using the interest
rate implicit in the lease, or if that rate cannot be readily determined, the Group’s incremental borrowing rate
(vehicle fleet: 7.00%, office and other properties: 3.50%). Lease payments included in the measurement of the
lease liability comprise the contracted fixed payments.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate or if the Group changes its
assessment of whether it will exercise an extension or termination option. When the lease liability is remeasured
in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in
profit or loss if the carrying amount of the right-of-use asset has been reduced to £nil.
Short term leases and leases of low-value assets
The Group has elected to recognise right-of-use assets and lease liabilities for short-term leases and leases of
low value assets that have a lease term of 12 months or less where that lease is associated with an element of
the vehicle fleet. Where the lease does not relate to the vehicle fleet the Group has elected to not recognise
leases of low-value assets which the Group considers to be any lease with an annual cost of less than £5,000.
The Group recognises the lease payments associated with these leases as an expense on a straight-line basis
over the lease term.
Policy applicable before 1 January 2019
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases are charged to the income statement on a straight line
basis over the lease term.
Assets held under finance leases and hire purchase contracts are recognised in the statement of financial
position as assets and liabilities at the lower of the fair value of the assets and the present value of the minimum
lease payments, which is determined at the inception of the lease term. Any initial direct costs of the lease are
added to the amount recognised as an asset.
Lease payments are apportioned between the finance charges and reduction of the outstanding lease liability
using the effective interest method. Finance charges are allocated to each period so as to produce a constant
rate of interest on the remaining balance of the liability.
60
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020 Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other
resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred
and the time value of money is material, the initial measurement is on a present value basis.
Share-based payments
Share-based payment arrangements in which the Group receives goods or services as consideration for its own
equity instruments are accounted for as equity-settled share-based payment transactions, regardless of how the
equity instruments are obtained by the Group.
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at
the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the
determination of the fair value of equity-settled share-based transactions are set out in note 18.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will
eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments
expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of
the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to equity reserves.
Where the Company grants options over its own shares to the employees of its subsidiaries it recognises, in its
individual financial statements, an increase in the cost of investment in its subsidiaries equivalent to the equity-
settled share-based payment charge recognised in its consolidated financial statements with the corresponding
credit being recognised directly in equity.
Dividends
Dividends are recognised as a liability and deducted from equity at the time they were declared. Otherwise
dividends are disclosed if they have been proposed or declared after the year end and before the relevant
Financial Statements are approved.
Defined contribution pension obligation
Contributions to defined contribution plans are recognised as an expense in the period in which the related
service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead
to a reduction in future payments or a cash refund.
When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in
which the employees render the related service, the liability is measured on a discounted present value basis.
The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
3. Critical Accounting Judgments and Key Sources of Estimation Uncertainty
In the application of the Group’s accounting policies, management is required to make judgments, 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 future periods if the revision affects both current and future periods.
The key sources of estimation uncertainty that have a significant effect on the amounts recognised in the
historical financial information are described below.
61
OverviewStrategic ReportGovernanceFinancial Statements 3. Critical Accounting Judgments and Key Sources of Estimation Uncertainty continued
Trade Receivables (Accrued Income and Revenue)
Credit Hire
Due to the nature of the business, there are high levels of trade receivables at the year end, and therefore a
risk that some of these balances may be irrecoverable. A review of the Company’s policy for accounting for
impairment of these trade receivables is carried out where debts are assessed and provided against when the
recoverability of these balances is considered to be uncertain.
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 and the age of the debt. 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.
Legal Services
The Group carries an element of accrued income, the valuation of which reflects the estimated level of recovery
on successful settlement by reference to historical recovery rates or the lowest level of fees payable by reference
to the stage of completion of those cases. Where we have not had an admission of liability no value is attributed
to those case files.
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.
4. Revenue
The Group’s principal activities, separated by reportable segments, are described below. For more detail about
reportable segments see Note 5.
Credit Hire
The Group provides vehicle hire for individuals who have had a non-fault accident. Revenue is recognised over time
based on the days of hire provided to the customer. Revenue recognition is limited under the variable consideration
guidance using an estimate of the recovery of credit hire charges based on historical settlement rates.
Legal Services
Legal services revenue comprises of a number of obligations including; legal services in relation to accident
claims (personal injury, clinical negligence etc.), medical and engineer consultations and arrangement of after
the event insurance contracts. Revenue from the rendering of legal services to customers is recognised upon
delivery of the service to the customer. Due to the No Win – No Fee nature of these legal contracts, revenue
recognition is constrained to the minimum fee until the amount of settlement is known.
The Group’s revenue for the year from continuing operations is disaggregated into the following segments:
Credit Hire
Legal Services
2019
£’000s
47,981
30,529
78,510
2018
£’000s
34,042
22,463
56,505
In accordance with IFRS 8, no single customer, whether that be a client or insurer, represented more than 10 per
cent of revenue for any of the years ended 31 December 2018 or 2019. The whole of the revenue is attributable to
activities carried out in the United Kingdom.
62
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020 The collection of cash for performance of the Group’s obligations does not occur until after settlement of the
related claim. This causes a timing difference between the performance and receipt of cash resulting in the
Group recognising the following contract related balances:
Net Trade Receivables (see note 15)
Accrued Income
2019
£’000s
100,984
18,396
119,380
2018
£’000s
75,990
22,457
98,447
The contract assets primarily relate to the Group’s consideration for on-hire vehicles and legal services for work
completed where the case is still outstanding. These balances are transferred to receivables once a vehicle
becomes off-hire or a legal claim settlement is agreed.
5. 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.
Revenues
Third Party
Total revenues
Profit before taxation
Depreciation and loss on disposal
Segment assets
Capital expenditure
Segment liabilities
Revenues
Third Party
Total revenues
Profit before taxation
Depreciation and loss on disposal
Segment assets
Capital expenditure
Segment liabilities
The year ended 31 December 2019
Credit Hire
£’000s
Legal Services
£’000s
Group and
Central Costs
£’000s
Consolidated
£’000s
47,981
47,981
17,915
5,767
97,177
2,131
30,765
30,529
30,529
5,922
780
44,351
973
18,935
–
–
(1,446)
–
179
–
311
78,510
78,510
22,391
6,547
141,707
3,104
50,011
The year ended 31 December 2018
Credit Hire
£’000s
Legal Service
£’000s
Group and
Central Costs
£’000s
Consolidated
£’000s
34,042
34,042
10,889
1,489
73,896
3,005
27,791
22,463
22,463
5,875
85
35,348
487
6,658
–
–
(2,480)
–
1,105
–
99
56,505
56,505
14,284
1,574
110,349
3,492
34,548
63
Interest income/expense and income tax are not measured on a segment basis.
OverviewStrategic ReportGovernanceFinancial Statements 6. Expenses by Nature
Cost of sales are comprised of:
Staff costs
Operating lease expense
Other cost of sales
Administrative expenses are comprised of:
Staff costs
Operating lease expense
Other administrative expenses
7. Operating Profit
Operating profit is arrived at after charging:
Depreciation expense
Depreciation on right of use assets
Amortisation
Operating lease expense
Non-recurring administrative costs
Share based payments
(Gain)/loss on disposal of property, plant and equipment
2019
£’000s
2,158
690
12,855
15,703
2019
£’000s
19,155
90
11,730
30,975
2019
£’000s
2,435
4,220
35
780
–
657
(108)
2018
£’000s
1,831
3,794
10,543
16,168
2018
£’000s
13,326
427
7,841
21,594
2018
£’000s
1,563
–
–
4,221
1,411
384
11
Non-recurring administrative costs in the year ended 31 December 2018 of £1.4 million related to Placing and
Admission to AIM by the Company and the Group reorganisation undertaken in preparation of this process.
There were no non-recurring costs in the year ended 31 December 2019.
Included in the above are the costs associated with the following services provided by the Company’s auditors:
Audit services
Audit of the Company and the consolidated financial statements
Audit of the Company’s subsidiaries
Total audit fees
Fees relating to the Admission to AIM
All other services
Total fees payable to the Company’s auditors
64
2019
£’000s
2018
£’000s
30
78
108
–
16
124
29
62
91
180
20
291
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020 8. Finance Costs
All financing income arises from financial assets and liabilities measured at amortised cost.
Finance costs
Interest on bank overdrafts and borrowings
Interest on obligations under finance leases
Interest expense on other financing liabilities
Interest on lease liabilities
Other interest payable
Total finance costs
9. Staff Costs
The aggregate payroll costs (including Directors’ remuneration) were as follows:
Wages and salaries
Social security costs
Pension costs, defined contribution scheme
Split as follows:
Cost of sales
Administrative costs
2019
£’000s
2018
£’000s
1,014
295
478
401
14
2,202
2019
£’000s
19,104
1,900
309
21,313
2,158
19,155
21,313
605
161
253
–
71
1,090
2018
£’000s
13,698
1,324
135
15,157
1,831
13,326
15,157
The average number of persons employed by the Group (including Directors) during the year, analysed by
category was as follows:
Distribution staff
Administrative staff
2019
No
72
507
579
2018
No
66
345
411
65
OverviewStrategic ReportGovernanceFinancial Statements 10. Directors’ and Key Management Personnel Remuneration
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the Group, including the Directors of the Group. The Directors’ and key management
remuneration for the year was as follows:
Wages and salaries
Social security costs
Pension costs, defined contribution scheme
Total short terms employee benefits
2019
£’000s
2,634
339
17
2,990
2018
£’000s
1,791
176
9
1,976
Wages and salaries in 2018 above included a total bonus of £300,000 paid to certain members of key
management on the successfully listing of the Group in June 2018 (2019: £Nil).
In respect of the highest paid Director:
Remuneration
2019
£’000s
852
2018
£’000s
579
Further details are included within the Remuneration Committee Report on pages 39 to 41.
11. Corporation Tax
Tax charged in the income statement is as follows:
Current taxation
UK corporation tax
UK corporation tax adjustment to prior periods
Deferred taxation
Arising from the origination and reversal of temporary differences
Tax expense in the income statement
2019
£’000s
2018
£’000s
4,497
(96)
4,401
2
4,403
2,934
19
2,953
(74)
2,879
The actual tax charge is higher than the standard rate of corporation tax in the UK applied to the profit before
tax (2018: 19%).
The differences are reconciled below:
Profit before tax
Corporation tax at standard rate
Effect of expenses not deductible for tax purposes
Effect of capital allowances and depreciation
Over / (under) provision of tax charge
Over / (under) provision of tax charge in prior year
Total tax charge
66
2019
£’000s
22,391
4,253
206
40
–
(96)
2018
£’000s
14,284
2,714
116
2
19
28
4,403
2,879
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020 12. Earnings Per Share
Number of shares:
Weighted number of Ordinary Shares outstanding
Effect of dilutive options
Weighted number of Ordinary Shares outstanding – diluted
Earnings:
Profit basic and diluted
Profit adjusted and diluted
Earnings per share:
Basic earnings per share
Adjusted earnings per share
Diluted earnings per share
Adjusted diluted earnings per share
2019
No.
2018
No.
110,000,000
110,000,000
2,200,000
2,200,000
112,200,000
112,200,000
£’000s
17,988
18,645
£’000s
11,405
13,200
Pence
Pence
16.4
17.0
16.0
16.6
10.4
12.0
10.2
11.8
The adjusted profit after tax for 2019 and adjusted earnings per share are shown before non-recurring costs
(net of tax) of £Nil (2018: £1.4 million) and share-based payment charges of £0.7 million (2018: £0.4 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.
13. Dividends
Dividends reported in 2019 totalled £2.75 million and in 2018 totalled £0.8 million. The figure reported for 2018
included drawings from Alan Sellers’ barristers’ business prior to its incorporation in June 2018 and dividends
paid by Bond Turner Limited before the group restructure was completed and Anexo Group plc incorporated.
The Board is pleased to propose a final dividend of 0.5 penny per share which, if approved at the Annual General
Meeting to be held on 22 July 2020, will be paid on 21 August 2020 to those shareholders on the register at the
close of business at 31 July 2020. The shares will become ex-dividend on 30 July 2020. An interim dividend of 1.0
penny per share was paid on 23 October 2019 (2018: total dividend 1.5p per share).
67
OverviewStrategic ReportGovernanceFinancial Statements 14. Property, Plant and Equipment, Intangibles
Right of
use assets
£’000s
Property
improvement
£’000s
Fixtures,
fittings &
equipment
£’000s
Motor
vehicles
£’000s
Office
equipment
£’000s
Cost or valuation
At 1 January 2018
Additions
Disposals
At 31 December 2018
Additions
Disposals
At 31 December 2019
Depreciation
At 1 January 2018
Charge for year
Eliminated on disposal
At 31 December 2018
Charge for the year
Eliminated on disposal
At 31 December 2019
Carrying amount
At 31 December 2019
At 31 December 2018
–
–
–
–
12,041
–
12,041
–
–
–
–
4,220
–
4,220
7,821
–
341
–
–
341
112
–
453
248
10
–
258
15
–
273
180
83
308
486
–
794
987
–
1,781
180
66
–
246
214
–
460
1,321
548
2,234
2,944
(721)
4,457
1,921
(1,243)
5,135
1,008
1,441
(542)
1,907
2,168
(976)
3,099
2,036
2,550
669
62
–
731
85
(29)
787
596
46
–
642
38
(29)
651
136
89
Total
£’000s
3,552
3,492
(721)
6,323
15,146
(1,272)
20,197
2,032
1,563
(542)
3,053
6,655
(1,005)
8,703
11,494
3,270
Finance leases and hire purchase contracts
Included within the carrying value of property, plant and equipment are the following amounts relating to assets
held under finance leases or hire purchase agreements (primarily motorbikes):
At 31 December 2019
At 31 December 2018
Motor vehicles
£’000s
2,036
2,550
68
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020 Intangible Assets
Cost or valuation
At 1 January 2018
Additions
At 31 December 2018
Additions
At 31 December 2019
Amortisation
At 1 January 2018
Charge for year
At 31 December 2018
Charge for the year
At 31 December 2019
Carrying amount
At 31 December 2019
At 31 December 2018
15. Trade and Other Receivables
Trade receivables
Provision for impairment of trade receivables
Net trade receivables
Accrued income
Prepayments
Directors loan account
Other debtors
Deferred taxation
Software licenses
£’000s
–
–
–
210
210
–
–
–
35
35
175
–
2019
£’000s
220,463
(119,479)
100,984
24,416
842
415
999
112
2018
£’000s
165,195
(89,205)
75,990
22,457
532
463
1,922
81
127,768
101,445
Any expected credit losses under IFRS 9 are considered immaterial. 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.
Trade receivables stated above include amounts due at the end of the reporting period for which an allowance
for doubtful debts has not been recognised as the amounts are still considered recoverable and there has been
no significant change in credit quality. Average gross debtor days calculated on a count back basis were 408 at
31 December 2019 and 418 at 31 December 2018.
69
OverviewStrategic ReportGovernanceFinancial Statements 15. Trade and Other Receivables continued
Age of trade receivables that are not impaired
Within 1 year
1 to 2 years
2 to 3 years
3 to 4 years
Over 4 years
Average age (days)
2019
£’000s
62,508
22,422
9,564
5,972
518
2018
£’000s
45,727
17,285
7,977
4,293
708
100,984
75,990
408
418
The provision for impairment of trade receivable 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.
16. Cash and Cash Equivalents
Cash
Invoice discounting facility
Net debt balance
17. Share Capital and Reserves
Share capital – allotted, called up and fully paid
110 million Ordinary Shares of 0.05 pence each
Share premium
Share capital
2019
£’000s
2,270
(17,784)
(15,514)
2019
£’000s
55
9,235
2018
£’000s
5,532
(12,536)
(7,004)
2018
£’000s
55
9,235
On 20 June 2018 the Company was admitted to trading on AIM. On this date the Company issued 10 million
Ordinary Shares of 0.05 pence each with a nominal value of £5,000. Prior to this date the Company had issued
100 million Ordinary Shares of 0.05 pence each with a nominal value of £50,000 in relation to the incorporation
of the Company and the purchase of its subsidiaries, Edge Vehicles Rentals Group Limited, Bond Turner Limited,
Direct Accident Management Limited, IGCA 2013 Limited, Professional and Legal Services Limited and AMS
Legal Services Limited. As a result of these transactions the issued share capital at 31 December 2018 and 2019
comprised 110 million Ordinary Shares of 0.05 pence each with a nominal value of £55,000.
Share premium
The share premium reserve contains the premium arising on the issue of equity shares, net of issue expenses
incurred by the Company. The 10 million Ordinary Shares of 0.05 pence each with a nominal value of £5,000
were issued at a price of 100 pence per share on 20 June 2018 giving rise to share premium of £10.0 million
against which expenses of £765,000 were written off giving rise to a balance of £9,235,000 (net of expenses).
Share-based payment reserve
Share-based payment reserve represents the cumulative share-based payment expense for the Group’s share
option schemes.
70
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020
Retained earnings
The movement on retained earnings is as set out in the statement of changes in equity. Retained earnings
represent cumulative profits or losses, net of dividends and other adjustments.
18. Share Based Payments
The movement in awards during the year was:
Opening balance
Charge arising during the year
Closing balance
Executive Growth Share Plan (“MIP”)
2019
£’000s
384
657
1,041
2018
£’000s
–
384
384
The Group granted MIP awards on 20 June 2018 to key employees, via its subsidiary, Edge Vehicles Rentals
Group Limited (EVRGL). Under this scheme, these employees have been granted C Ordinary Shares in EVRGL
which can be converted to Anexo Group plc shares or converted to cash if the Group achieves set profit after tax
targets as follows: £9.9 million for 31 December 2018, £11.9 million for 31 December 2019 and £13.9 million for 31
December 2020. Assuming the profit targets are met 50% of the awards will vest on 31 December 2021 and the
remaining 50% vest on 31 December 2022. Management intend to settle the scheme in Anexo Group plc shares.
As at 31 December 2019 there were 2.2 million MIP awards outstanding (2018: 2.2 million).
The MIP awards were valued using the Black-Scholes model. Expected volatility was determined by
management, using comparator volatility as a basis. The expected life of the award was determined based on
management’s best estimate. The expected dividend yield was based on the anticipated dividend policy of
the Company over the expected life of the awards. The risk-free rate of return input into the model was a zero-
coupon government bond with a life in line with the expected life of the options.
The inputs to the model based on the awards being equity settled were as follows:
Award
Settlement
Valuation date
Award date
Vesting date
Expected settlement date
Expected term
MIP -Vest 1
Equity-settled
20 June 2018
20 June 2018
1 March 2021
1 March 2021
2.7
Model used for valuation
Black Scholes
Share price at valuation date
Exercise price
Risk-free rate
Dividend yield
Expected volatility
Fair value of one share (£)
1.00
N/A
0.82%
1.59%
24.75%
0.96
MIP -Vest 2
Equity-settled
20 June 2018
20 June 2018
1 January 2022
1 January 2022
3.5
Black Scholes
1.00
N/A
0.89%
1.59%
23.48%
0.95
The Group recognised a total expense of £657,000 during the year (2018: £384,000) relating to equity-settled
share-based payments.
71
OverviewStrategic ReportGovernanceFinancial Statements 19. Borrowings
Non–current loans and borrowings
Bank loans and overdrafts
Obligations under finance lease and hire purchase contracts
Lease liabilities
Other borrowings
Current loans and borrowings
Bank loans and overdrafts
Revolving credit facility
Obligations under finance lease and hire purchase contracts
Lease liabilities
Other borrowings
2019
£’000s
2018
£’000s
–
393
5,029
–
5,422
17,784
8,000
1,761
3,124
2,383
33,052
–
851
–
19
870
12,536
5,000
1,640
–
2,762
21,938
Direct Accident Management Limited uses an invoice discounting facility which is secured on the trade
receivables of that company, the balance outstanding being reported within bank loans and overdrafts. 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.
Direct Accident Management Limited is also party to the number of finance 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 27 September 2022, with no associated
repayments due before that date. Interest is charged at 3.25% over LIBOR.
The loans and borrowings classified as financial instruments 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.
20. Deferred Tax
The following is an analysis of the deferred tax liabilities, net of deferred tax assets:
Total
Balance brought forward
Credit / (charge) to the income statement
Total deferred tax asset / (liability) at end of period
2019
£’000s
2018
£’000s
81
(1)
80
7
74
81
72
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020 The deferred tax included in the statement of financial position is as follows:
Included in debtors
Credit / (charge) to the income statement
There is no unrecognised deferred tax in the current period for the Group (2018: £Nil).
2019
£’000s
112
(1)
2018
£’000s
81
74
21. Leases
Lease liabilities
As noted within our accounting policies, the Group has adopted the modified retrospective approach with
respect to leases for the year ended 31 December 2019 which has resulted in certain leases being reported as
right of use assets on the balance sheet as well as the associated lease liability within borrowings. Interest on the
liabilities, calculated at the incremental borrowing rates (vehicle fleet: 7.00%, office and other properties: 3.50%),
is charged to the income statement monthly. This approach does not result in any adjustments to the results
reported for the year ended 31 December 2018 which continues to be reported under IAS 17.
The Group lease a number of office and other premises as well as a proportion of the motor vehicle fleet under
non-cancellable lease agreements. The total future value of minimum lease payments is as follows:
Operating leases
Not later than 1 year
Later than 1 and not later than 5 years
Over 5 years
Finance leases
Not later than 1 year
Later than 1 and not later than 5 years
Lease liabilities – right of use assets
Not later than 1 year
Later than 1 and not later than 5 years
Over 5 years
Total lease liabilities
Not later than 1 year
Later than 1 and not later than 5 years
Over 5 years
The carrying value of those assets reported as right of use and finance leases are reported in note 14.
2019
£’000s
2018
£’000s
–
–
–
–
1,761
393
2,154
3,821
3,107
803
7,731
1,544
947
2,491
2019
£’000s
2018
£’000s
3,124
2,651
2,378
8,153
4,885
3,044
2,378
10,307
–
–
–
–
5,365
4,054
803
10,222
73
OverviewStrategic ReportGovernanceFinancial Statements 21. Leases continued
The following expenses relating to lease liabilities were recognised in the year ended 31 December 2019 as a
result of IFRS 16.
Depreciation charge
Interest expense
Total cash outflows
Finance leases
£’000s
Lease liabilities
£’000s
2,168
295
2,225
4,220
401
4,289
Total
£’000s
6,388
696
6,514
22. Pension and Other Schemes
The Group operates a defined contribution pension scheme. The pension cost charge for the year represents
contributions payable by the Group to the scheme and amounted to £309,000 (2018: £135,000).
23. Trade and Other Payables
Trade payables
Accruals and deferred income
Social security and other taxes
Other creditors
2019
£’000s
4,090
2,142
1,339
344
7,915
2018
£’000s
3,293
2,323
1,025
582
7,223
The fair value of the trade and other payables classified as financial instruments are disclosed in the financial
instruments note. The Directors consider that the fair value of trade and other payables is not materially different
from the carrying value. The Group’s exposure to market and liquidity risks related to trade and other payables
is disclosed in the financial risk management and impairment of financial assets note. The Group pays its trade
payables on terms and as such trade payables are not yet due at the balance sheet dates.
24. Related Party Disclosures
During the year the following Directors entered into the following advances and credits with the Company:
S Moss – 2019
S Moss – 2018
A Sellers – 2019
A Sellers – 2018
Balance
brought forward
£’000s
Advances/
(credits) to
the Director
£’000s
Amounts
repaid
£’000s
Balance
outstanding
£’000s
35
1,434
428
3,210
–
657
–
211
(35)
2,056
(13)
(2,993)
–
35
415
428
The following related party transactions were undertaken during the period:
The Group has entered into formal leases and occupies premises owned by a Director. Rent and service charges
of £172,500 (2018: £172,500) were charged under these arrangements. At the balance sheet date the amounts
due under these lease arrangements to the shareholder were £125,000 (2018: £95,000).
During the year the Group received funds of £260,000 as way of repayment of a loan (2018: loaned £348,710)
from a company related by common control. The Group paid expenses of £29,558.16 (2018: £222,450) on behalf
of that company and was invoiced £160,000 (2017: £215,000) for services provided. As at the year end the
Group was owed £724,858 (2018: £1,115,300).
74
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020 25. Financial Instruments
In common with other businesses, the Group is exposed to risks that arise from its use of financial instruments.
This note describes the Group’s objectives, policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect of these risks is presented throughout these
financial statements.
The significant accounting policies regarding financial instruments are disclosed in note 2.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from previous years
unless otherwise stated in this note.
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
Loans and receivables
Cash and cash equivalents
Trade and other receivables
Accrued income
Financial liabilities
Trade and other payables
Borrowings
Held at amortised cost
2019
£’000s
2,270
102,510
24,416
129,196
2018
£’000s
5,532
78,374
22,457
106,363
Held at amortised cost
2019
£’000s
5,773
38,474
44,247
2018
£’000s
6,198
22,808
29,006
There is no significant difference between the fair value and carrying value of financial instruments.
26. Subsequent Events
On 29 May 2020 the Group completed a placing of 6.0 million Ordinary Shares, raising approximately £7.0
of funds for the Group after expenses.
In addition, on 16 June 2020 the Group secured a loan facility of £2.1 million from a litigation funder to support
the development of the VW emissions class action. Further, on 25 June 2020 the Group received confirmation
from Secure Trust Bank Plc of approval for a loan of £5.0 million, backed by the governments CBILS scheme, for
which the Board expects to be available to draw in July 2020.
27. Financial Risk Management and Impairment of Financial Assets
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies
and, while retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Company’s finance
function. The board receives regular reports from the Finance Director through which it reviews the effectiveness
of processes put in place and the appropriateness of the objectives and policies it sets.
75
OverviewStrategic ReportGovernanceFinancial Statements 27. Financial Risk Management and Impairment of Financial Assets continued
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly
affecting the Company’s competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk and impairment
Credit risk arises principally from the Group’s trade and other receivables. It is the risk that the counter party fails
to discharge its obligation in respect of the instrument. The maximum exposure to credit risk equals the carrying
value of these items in the financial statements. Credit risk with cash and cash equivalents is reduced by placing
funds with banks with high credit ratings. A financial asset is in default when the counterparty fails to pay its
contractual obligations.
The Group is not significantly exposed to credit risk due to the nature of the counterparties from which it collects
it trade receivables and contract assets; cash is primarily collected from insurance providers after settlement of
a customer’s accident claim. The Group monitors its exposure to credit risk by reviewing outstanding debtors by
insurance provider. The majority of the collection risk for trade receivables and contracts assets arises from the
uncertainty of settlement for each claim, which is considered as part of the revenue accounting, rather than in
the expected credit loss assessment. Based on past history management does not have a significant history of
writing off receivables due to default.
For Director and Shareholder loans the Group has no history of writing-off these balances due to default of the
borrower. The Group has no evidence to suggest that these loans will not be collected in full and considers that
there is no significant credit risk. Any expected credit loss provision is expected to be immaterial and therefore
no expected credit loss provision has been recognised against these financial assets.
Liquidity risk
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they
become due. The Board receives cash flow projections on a regular basis which are monitored regularly. The
Board will not commit to material expenditure in respect of its ongoing development programme prior to being
satisfied that sufficient funding is available to the Group to finance the planned programmes or from headroom
within its existing facilities. The following table sets out the contractual maturities (representing undiscounted
contractual cash-flows) of financial liabilities:
At 31 December 2019
Trade and other payables
Loans and borrowings
Total
At 31 December 2018
Trade and other payables
Loans and borrowings
Total
Up to
12 months
£’000s
Between
1 and 2 years
£’000s
Between
2 and 5 years
£’000s
5,773
25,052
30,825
–
393
393
–
13,029
13,029
Up to
12 months
£’000s
Between
1 and 2 years
£’000s
Between
2 and 5 years
£’000s
4,900
21,938
26,838
–
870
870
–
–
–
Total
£’000s
5,773
38,474
44,247
Total
£’000s
4,900
22,808
27,708
Interest rate risk and fair value risk
There is no significant interest rate risk in respect of temporary surplus funds invested in deposits and other
interest-bearing accounts with financial institutions as the operations of the Group are not dependent on the
finance income received.
76
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020 Capital risk management
The Group considers its capital to comprise its ordinary share capital and retained profits as its equity capital. In
managing its capital, the Group’s primary objective is to provide return for its equity shareholders through capital
growth and future dividend income. The Group’s policy is to seek to maintain a gearing ratio that balances risks
and returns at an acceptable level and also to maintain a sufficient funding base to enable the Group to meet
its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve
these aims, either through new share issues or the issue of debt, the Group considers not only its short-term
position but also its long-term operational and strategic objectives.
Details of the Group’s capital are disclosed in the Statement of Changes in Equity.
There have been no other significant changes to the Group’s management objectives, policies and procedures in
the year nor has there been any change in what the Group considers to be capital.
Currency risk
The Group is not exposed to any significant currency risk. The Group also manages its currency exposure by
retaining its cash balances in Sterling.
28. Effect of Changes in Accounting Policies
Impact of IFRS 16 on the Consolidated Statement of Comprehensive Income
For the year ended 31 December 2019
Revenue
Cost of sales
Gross profit
Depreciation
Depreciation on right of use assets
Amortisation
Administrative expenses
Operating profit before exceptional items
Share based payment charges
Non–recurring administrative expenses
Operating profit
Finance costs
Lease finance costs
Total finance costs
Profit before tax
Taxation
Profit after tax
Earnings per share (pence)
Basic earnings per share
Diluted earnings per share
Reported
Dec–19
£’000s
78,510
(15,703)
62,807
(2,327)
(4,220)
(35)
(30,975)
25,250
(657)
–
24,593
(401)
(1,801)
(2,202)
22,391
(4,403)
17,988
16.4
16.0
Year ended
IFRS 16
Dec–19
£’000s
–
(3,539)
(3,539)
–
4,220
–
(750)
(69)
–
–
–
401
–
401
332
–
332
Pre IFRS 16
Dec–19
£’000s
Year ended
Dec–18
£’000s
78,510
(19,242)
59,268
(2,327)
–
(35)
(31,725)
25,181
(657)
–
24,524
–
(1,801)
(1,801)
22,723
(4,403)
18,320
56,505
(16,168)
40,337
(1,574)
–
(21,594)
17,169
(384)
(1,411)
15,374
(1,090)
–
(1,090)
14,284
(2,879)
11,405
16.7
16.3
10.4
10.2
77
OverviewStrategic ReportGovernanceFinancial Statements 28. Effect of Changes in Accounting Policies continued
Impact of IFRS 16 on the Consolidated Statement of Financial Position
At 31 December 2019
As Reported
£’000s
IFRS 16
Adjustments
£’000s
Pre IFRS 16
Adoption
£’000s
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible fixed assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Share based payment reserve
Retained earnings
Equity attributable to the owners of the Group
Non-current liabilities
Other interest-bearing loans and borrowings
Lease liabilities
Deferred tax liabilities
Current liabilities
Bank overdraft
Other interest-bearing loans and borrowings
Lease liabilities
Trade and other payables
Corporation tax liability
Total liabilities
Total equity and liabilities
78
3,673
7,821
175
11,669
127,768
2,270
130,038
141,707
55
9,235
1,041
81,365
91,696
393
5,029
32
5,454
17,784
12,144
3,124
7,915
3,590
44,557
50,011
141,707
–
(7,821)
–
(7,821)
–
–
–
(7,821)
–
–
–
332
332
–
(5,029)
–
(5,029)
–
–
(3,124)
–
–
(3,124)
(8,153)
(7,821)
3,673
–
175
3,848
127,768
2,270
130,038
133,886
55
9,235
1,041
81,697
92,028
393
–
32
425
17,784
12,144
–
7,915
3,590
41,433
41,858
133,886
Notes to the consolidated financial statements continuedfor the year ended 31 December 2019Anexo Group plc Annual Report 2020 Impact of IFRS 16 on the Consolidated Statement of Cash Flows
For the year ended 31 December 2019
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation and amortisation
Financial expense
Taxation
Working capital adjustments
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Interest paid
Tax paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Investment in intangibles
Net cash from investing activities
Cash flows from financing activities
Net proceeds from the issue of share capital
Proceeds from new loan
Repayment of borrowings
Payment of finance lease liabilities
Lease payments
New finance lease arrangements
Dividends paid
Net cash from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at year end
Note
As Reported
£’000s
IFRS 16
Adjustments
£’000s
Pre IFRS 16
Adoption
£’000s
17,988
332
18,320
6,582
2,202
4,403
31,175
(26,294)
1,351
6,232
(1,797)
(5,230)
(795)
374
(3,104)
(210)
(2,940)
–
13,107
(10,920)
(2,225)
(4,289)
2,302
(2,750)
(4,775)
(8,510)
(7,004)
(15,514)
(4,220)
(401)
–
2,362
1,801
4,403
(4,289)
26,886
–
–
(4,289)
–
–
(4,289)
–
–
–
–
–
–
–
–
4,289
–
–
4,289
–
–
–
(26,294)
1,351
1,943
(1,797)
(5,230)
(5,084)
374
(3,104)
(210)
(2,940)
–
13,107
(10,920)
(2,225)
–
2,302
(2,750)
(486)
(8,510)
(7,004)
(15,514)
79
OverviewStrategic ReportGovernanceFinancial Statements Company statement of financial position
as at 31 December 2019
Assets
Non-current assets
Investments in subsidiaries
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Merger reserve
Share based payment reserve
Retained earnings
Equity attributable to the owners of the Company
Current liabilities
Borrowings
Trade and other payables
Corporation tax liability
Total liabilities
Total equity and liabilities
Note
2019
£’000s
2018
£’000s
5
6
8
8
8
8
7
91,041
91,041
17,592
48
17,640
108,681
55
9,270
89,924
1,041
8,080
108,370
–
290
21
311
311
100,384
100,384
7,187
952
8,139
108,523
55
9,270
99,924
384
(1,209)
108,424
–
99
–
99
99
108,681
108,523
The Company’s profit and total comprehensive income for the year ended 31 December 2019 was £9.3 million
(Period from incorporation on 27 March 2018 to 31 December 2018 was a loss after taxation of £1.2 million).
The notes on pages 82 to 86 form an integral part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 29 June 2020.
They were signed on its behalf by:
Mark Bringloe
Chief Financial Officer
29 June 2020
Company Number 11278719
80
Anexo Group plc Annual Report 2020
Company statement of changes in equity
for the period ended 31 December 2019
At 27 March 2018
Arising on Group reorganisation
Loss for the year and total comprehensive income
Stamp duty paid in Group reorganisation
Issue of share capital
Creation of share premium
Creation of share based payment reserve
At 31 December 2018
Arising on Group reorganisation
Profit for the year and total comprehensive income
Stamp duty paid in Group reorganisation
Payment of dividend
Creation of share based payment reserve
Impairment in investments
Share
Capital
£’000s
Share
Premium
£’000s
Merger
Reserve
£’000s
50
–
–
–
5
–
–
–
–
–
–
–
9,270
–
–
100,000
–
(76)
–
–
–
Share
Based
Payment
Reserve
£’000s
–
–
–
–
–
–
384
Retained
Earnings
£’000s
–
–
Total
£’000s
50
100,000
(1,209)
(1,209)
–
–
–
–
(76)
5
9,270
384
55
9,270
99,924
384
(1,209)
108,424
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(10,000)
–
–
–
–
657
–
–
–
9,289
9,289
–
(2,750)
–
–
–
–
657
(10,000)
At 31 December 2019
55
9,270
89,924
1,041
8,080
108,370
81
OverviewStrategic ReportGovernanceFinancial Statements Notes to the Company financial statements
for the year ended 31 December 2019
1. Significant Accounting Policies
The separate financial statements of the Company are presented as required by the Companies Act 2006. As
permitted by that Act, the separate financial statements have been presented in accordance with FRS 101. The
parent company financial statements here together with the Group financial statements, the Company is taking
advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement
and related notes that form part of these approved financial statements.
The financial statements have been prepared on a historical cost basis. The principal accounting policies adopted
are the same as those set out in note 1 to the consolidated financial statements except that investments in
subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Reduced disclosures
The figures presented in relation to the Company’s financial statements have been prepared in accordance with
FRS 101 Reduced Disclosure Framework (“FRS 101”).
In accordance with FRS 101 the following exemptions from the requirements of IFRS have been applied in the
preparation of the Company financial statements and, where relevant, equivalent disclosures have been made in
the consolidated financial statements of the Company:
• presentation of a Company Cash Flow Statement and related notes;
• disclosure of the objectives, policies and processes for managing capital;
• inclusion of an explicit and unreserved statement of compliance with IFRS;
• disclosure of Company key management compensation;
• disclosure of the categories of financial instrument and nature and extent of risks arising on these financial
instruments;
• related party disclosures in respect of two or more wholly owned members of the Group; and
• disclosure of the future impact of new International Financial Reporting Standards in issue but not yet
effective at the reporting date.
The financial statements of the Company are consolidated within these financial statements which will be publicly
available from Companies House, Crown Way, Cardiff, CF14 3UZ following their approval by shareholders.
2. Operating Profits
The auditor’s remuneration for audit services to the Company was £30,000 (2018: £29,000).
3. Staff Costs
The aggregate payroll costs (including Directors’ remuneration) were as follows:
Wages and salaries
Social security costs
Pension costs, defined contribution scheme
2019
£’000s
2018
£’000s
576
63
8
647
308
20
–
328
The average number of persons employed by the Company (including Directors) during the year, analysed by
category was as follows:
Administrative staff
82
2019
No
6
6
2018
No
5
5
Anexo Group plc Annual Report 2020 4. Directors’ and Key Management Personnel Remuneration
Key management personnel are those persons having authority and responsibility for planning, directing
and controlling the activities of the Company, including the Directors of the Company. The Directors’ and key
management remuneration for the year was as follows:
Wages and salaries
Social security costs
Pension costs, defined contribution scheme
Total short terms employee benefits
In respect of the highest paid Director:
Remuneration
2019
£’000s
2018
£’000s
578
63
8
649
178
20
–
198
2019
£’000s
340
2018
£’000s
100
5. Details of Related Undertakings
All of the subsidiaries have been included in the consolidated financial statements. The subsidiaries held during
the year are set out below:
Subsidiary
Principal Activity
Registered Office
Edge Vehicles Rentals
Group Limited
Intermediate holding
company
Mauran Governance Services
(Jersey) Limited, 22 Grenville Street,
St. Helier, Jersey, JE4 8PX
Country of
Incorporation
Jersey
% shares
100%
Bond Turner Limited
Legal practice
Direct Accident
Management Limited
Professional and Legal
Services Limited
IGCA 2013 Limited
Credit hire business
Medico legal business
Administrators for
ATE insurers
AMS Legal
Services Limited
Dormant
The Plaza, 100 Old Hall Street,
Liverpool, Merseyside, L3 9QJ
139 New Court Way, Ormskirk,
Lancashire, L39 2YT
20 New Court Way, Ormskirk,
Lancashire, L39 2YT
Rosemary Farm Rosemary Lane,
Downholland, Ormskirk, Lancs,
England, L39 7JP
Halton Green House Green Lane,
Halton, Lancaster, Lancashire,
United Kingdom, LA2 6PB
UK
UK
UK
UK
UK
100%
100%
100%
100%
100%
All shares held by the Company are ordinary equity shares, the percentage holding representing voting rights.
83
OverviewStrategic ReportGovernanceFinancial Statements Notes to the Company financial statements continued
for the year ended 31 December 2019
5. Details of Related Undertakings continued
Investments in subsidiaries during the year was as follows:
£’000s
–
100,384
100,384
657
101,041
–
–
–
10,000
10,000
91,041
100,384
2018
£’000s
7,074
50
63
7,187
2019
£’000s
17,501
91
–
17,592
2019
£’000s
2018
£’000s
65
81
144
290
–
18
81
99
Cost
At 27 March 2018
Additions
At 31 December 2018
Additions
At 31 December 2019
Impairment
At 27 March 2018
Impairment in the year
At 31 December 2018
Impairment in the year
At 31 December 2019
Net Book Value
At 31 December 2019
At 31 December 2018
6. Trade and Other Receivables
Amounts due from subsidiary undertakings
Other debtors
VAT recoverable
7. Trade and Other Payables
Trade payables
Other tax and social security
Accruals
84
Anexo Group plc Annual Report 2020 8. Share Capital and Reserves
Share capital – allotted, called up and fully paid
110 million Ordinary Shares of 0.05 pence each
Share premium
Share capital
2019
£’000s
2018
£’000s
55
9,270
55
9,270
On 20 June 2018 the Company was admitted to trading on AIM. On this date the Company issued 10 million
Ordinary Shares of 0.05 pence each with a nominal value of £5,000. Prior to this date the Company had issued
100 million Ordinary Shares of 0.05 pence each with a nominal value of £50,000 in relation to the incorporation
of the Company and the purchase of its subsidiaries, Edge Vehicles Rentals Group Limited, Bond Turner Limited,
Direct Accident Management Limited, IGCA 2013 Limited, Professional and Legal Services Limited and AMS
Legal Services Limited. As a result of these transactions the issued share capital at 31 December 2018 and 2019
comprised 110 million Ordinary Shares of 0.05 pence each with a nominal value of £55,000.
Share premium
The share premium reserve contains the premium arising on the issue of equity shares, net of issue expenses
incurred by the Company. The 10 million Ordinary Shares of 0.05 pence each with a nominal value of £5,000
were issued at a price of 100 pence per share on 20 June 2018 giving rise to share premium of £9,270,000 (net
of expenses).
Merger reserve
The merger reserve arose on the purchase of the subsidiaries, Edge Vehicles Rentals Group Limited, Bond Turner
Limited, Direct Accident Management Limited, IGCA 2013 Limited, Professional and Legal Services Limited and
AMS Legal Services Limited. The merger reserve represents the difference between the cost value of the shares
acquired less the cost value of the shares issued for the purchase of each company and the stamp duty payable
in respect of these transactions.
Share-based payment reserve
Share-based payment reserve represents the cumulative share-based payment expense for the Group’s share
option schemes.
Retained earnings
The movement on retained earnings is as set out in the statement of changes in equity. Retained earnings
represent cumulative profits or losses, net of dividends and other adjustments.
85
OverviewStrategic ReportGovernanceFinancial Statements Anexo Group plc Annual Report 2020
Notes to the Company financial statements continued
for the year ended 31 December 2019
9. Financial Instruments
The Company follows the same accounting policies and manages its capital and risks in the same way as the
Group. Please refer to note 25 in the Group accounts for further details.
Loans and receivables
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Held at amortised cost
2019
£’000s
48
17,592
17,640
Held at amortised cost
2019
£’000s
290
–
290
2018
£’000s
952
7,187
8,139
2018
£’000s
81
–
81
There is no significant difference between the fair value and carrying value of financial instruments.
10. Related Party Transactions
Details of the Company’s interests in subsidiaries, who are regarded as related parties, are provided in note 5.
Transactions during the year with subsidiaries are summarised below:
2019
2018
Management
charges
£’000s
Interest charges
£’000s
1,200
600
–
–
Charges to the
Company from
subsidiaries
£’000s
–
–
Amounts due from subsidiaries at 31 December 2019 and 31 December 2018 are included in note 6.
11. Ultimate Controlling Party
The ultimate controlling party is A Sellers by virtue of his shareholding, which is held in consort with his wife.
12. Contingent Liability
The Company has guaranteed a loan drawn by Bond Turner Limited, a subsidiary. The value of the loan at the
year-end was £8,000,000.
86
86
Overview
Strategic Report
Governance
Financial Statements
Company information
Directors
Alan Sellers
Mark Bringloe
Samantha Moss
Christopher Houghton
Roger Barlow
Richard Pratt
Elizabeth Sands
Secretary
Dawn O’Brien
Assistant Company Secretary
ONE Advisory Limited, 201 Temple Chambers, 3-7 Temple Avenue, London, EC4Y 0DT
Company Number
11278719
Registered Office
5th Floor, The Plaza, 100 Old Hall Street, Liverpool, Merseyside, United Kingdom, L3 9QJ
Nominated Advisor
Arden Partners plc, 5 George Road, Edgbaston, Birmingham, B15 1NP
Joint Brokers
Arden Partners plc, 5 George Road, Edgbaston, Birmingham, B15 1NP
Joh. Berenberg, Gossler & Co. KG
60 Threadneedle Street, London EC2R 8HP
Bankers Royal Bank of Scotland plc, 38 Mosley Street, Manchester, M61 0HW
Solicitors
King & Spalding International LLP,125 Old Broad Street, London, EC2N 1AR
Independent Auditor
RSM UK Audit LLP, Chartered Accountants, 9th Floor, 3 Hardman Street, Manchester, M3 3HF
Registrars
Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
Website
www.anexo-group.com
87
Anexo Group plc
5th Floor, The Plaza,
100 Old Hall Street,
Liverpool, Merseyside,
United Kingdom, L3 9QJ
www.anexo-group.com