TIDMANX
RNS Number : 7269L
Anexo Group PLC
10 September 2019
For immediate release 10 September 2019
Anexo Group plc
('Anexo' or the 'Group')
Interim Results
'Successful investment in Legal Services driving case settlement
and cash collection'
Anexo Group plc (AIM: ANX), the specialist integrated credit
hire and legal services provider, is pleased to report its Interim
Results for the six months ended 30 June 2019 ('H1 2019' or the
'period'). The Board is pleased to report another successful six
months of strong growth with management confident in meeting
current market expectations for FY 2019.
Financial Highlights
H1 2019 H1 2018 Movement
Revenue GBP36.7 million GBP23.6 million +55.5%
Adjusted operating
profit(1) GBP11.8 million GBP7.3 million +61.6%
Adjusted profit before
tax(1) GBP11.0 million GBP6.8 million +62.6%
Net assets GBP82.9 million GBP68.6 million +20.8%
Cash collection GBP36.6 million GBP28.2 million +29.8%
Basic EPS 7.6 pence 4.1 pence +85.4%
-- Adjusted(1) operating profit margin increased to 32.2%
(H1 2018: 30.9%)
-- Net cash outflow from operating activities(2) to fund
growth of GBP3.3 million (H1 2018: net cash inflow GBP0.5
million)
-- Proposed interim dividend of 1 penny per share (H1 2018:
Nil)
-- Net debt balance at 30 June 2019 stood at GBP23.4 million
(30 June 2018: net debt post listing of GBP2.4 million)
-- Post period end, Anexo successfully renegotiated its working
capital facilities, securing considerable improvements
in its financing arrangements, and agreed new terms with
fleet insurance providers to deliver enhanced savings
in remainder of FY 2019 and in 2020
-- Anexo on track to meet FY 2019 market expectations of
adjusted profit before tax of GBP23.0 million
(1) Adjusted results exclude certain expenses incurred as part
of the AIM listing, share based payments and the transition to IFRS
16 - Leases.
(2) Cash flows from operations exclude movements in directors'
loans and the impact of IFRS 16.
Operational Highlights
-- Fully stand-alone new legal office in Bolton achieved
break even point within four months. The Bolton office
increased headcount to 63 by 30 June 2019, of which 28
were experienced litigators, increasing the Group's ability
to settle cases and generate cash. As at 30 June 2019,
a further 10 experienced litigators had accepted positions
and not yet started
-- Following a period of significant growth across the Group,
the expansion of the vehicle fleet has been more measured
as the Group seeks to optimise margin and cash collections,
thus underpinning an improvement in financial performance
KPIs H1 2019 H1 2018 Movement
Number of vehicles on hire at
the period end 1,571 1,240 +26.7%
Average number of vehicles on
hire for the period 1,496 912 +64.0%
Number of hire cases settled 2,066 1,730 +19.4%
Cash collections from settled
cases (GBP'000s) 36,628 28,230 +29.7%
Number of new cases funded 3,392 2,588 +31.1%
Legal staff employed at period
end 344 215 +60.0%
Number of senior fee earners
at period end 109 74 +47.3%
Average number of senior fee
earners 98 71 +38.0%
Commenting on the Interim Results, Alan Sellers, Executive
Chairman of Anexo Group plc, said:
"We are pleased to report another strong set of results, with
all key financial metrics and KPIs ahead of the comparative period
last year. At the time of our AIM IPO in June 2018, we outlined a
number of key objectives such as expanding the vehicle fleet,
opening a regional office and further legal recruitment and I am
delighted to report that a year later we have made excellent
progress on these objectives which is reflected in these half year
results.
Anexo remains extremely well positioned to grow its market share
and take advantage of the opportunities available to it. The Board
views the current financial year and beyond with considerable
optimism."
- Ends -
Analyst meeting
A meeting for analysts will be held at 09.30am today, 10
September 2019, at the offices of Buchanan, 107 Cheapside, London
EC2V 6DN. A copy of the Interim Results presentation is available
at the Company's website www.anexo-group.com
An audio webcast of the analysts meeting will be available after
12pm today:
https://webcasting.buchanan.uk.com/broadcast/5d381ed948a6d52f84f6b009
For further enquiries:
Anexo Group plc +44 (0) 151 227 3008
www.anexo-group.com
Alan Sellers, Executive Chairman
Mark Bringloe, Chief Financial Officer
Nick Dashwood Brown, Head of Investor
Relations
Arden Partners plc
(Nominated Adviser and Broker)
John Llewellyn-Lloyd / Benjamin Cryer +44 (0) 20 7614 5900
(Corporate) www.arden-partners.co.uk
Fraser Marshall (Equity Sales)
Buchanan
(Financial Communications)
Henry Harrison-Topham / Steph Watson +44 (0) 20 7466 5000
/ Hannah Ratcliff Anexo@buchanan.uk.com
Notes to Editors:
Anexo is a specialist integrated credit hire and legal services
provider. The Group has created a unique business model by
combining a direct capture Credit Hire business with a wholly owned
Legal Services firm. The integrated business targets the
impecunious not at fault motorist, referring to those who do not
have the financial means or access to a replacement vehicle.
Through its dedicated Credit Hire sales team and network of over
1,100 active referrers around the UK, Anexo provides customers with
an end-to-end service including the provision of Credit Hire
vehicles, assistance with repair and recovery, and claims
management services. The Group's Legal Services division, Bond
Turner, provides the legal support to maximise the recovery of
costs through settlement or court action as well as the processing
of any associated personal injury claim.
The Group was admitted to trading on AIM in June 2018 with the
ticker ANX.
For additional information please visit: www.anexo-group.com. To
subscribe to our investor alert service and receive all press
releases, financial results and other key shareholder messages as
soon as they become available, please visit:
https://www.anexo-group.com/content/investors/alert.asp.
Executive Chairman's Statement
On behalf of the Board, I am pleased to introduce Anexo's
results for the six month period ended 30 June 2019, a period
during which the Board has concentrated firmly on moving the Group
towards the inflexion point which achieves net cash generation.
Anexo's strategy in the period has been to target a more measured
growth in credit hire in order to focus on the Group's continued
success in the recruitment of high quality litigators, thereby
increasing its ability to settle cases and improve cash generation.
Anexo has performed strongly in H1 2019, with significant growth in
both divisions compared to H1 2018. The solid platform which has
been established since the Group's AIM IPO in June 2018 provides
the Board with considerable confidence in the strong prospects for
the Group for the remainder of FY 2019 and beyond.
The Group has adopted IFRS 16 (effective 1 January 2019) in
these interim results (for further detail see Note 7 in the Notes
to the Interim Statements).
H1 2019 Group performance
Anexo delivered a strong performance across all key Group
financial metrics and KPIs in its first financial year on AIM, and
this has continued into H1 2019. Group revenues in H1 2019
increased by 55.5% to GBP36.7 million (H1 2018: GBP23.6 million)
and adjusted profit before tax for the period increased by 62.6% to
GBP11.0 million (H1 2018: GBP6.8 million).
As announced on 6 August 2019, Anexo successfully renegotiated
its working capital facilities and secured favourable financing
arrangements from both new and existing providers.
Credit Hire division
As previously reported, Anexo deployed an element of the funds
raised at IPO to expand its fleet. The average number of vehicles
on the road reached 1,496 in H1 2019 (H1 2018: 912), a 64.0%
increase on the prior year. The Board has not sought to further
increase the number of vehicles on hire in the last six months, in
order to allow the Group to concentrate on the development of the
litigation division and increasing the Group's rate of cash
collections. However, the like for like increase in vehicles on the
road has resulted in growth in Credit Hire revenue of 80.3%, rising
from GBP12.9 million in H1 2018 to GBP23.2 million in H1 2019.
Profit before tax in the Credit Hire division rose by 152% to
GBP8.3 million in H1 2019 (H1 2018: GBP3.3 million).
In particular, the Group has witnessed considerable growth in
its motorcycle business, facilitated by the Board's strategic
investment in the fleet. We have also sought to target the most
valuable claims for the Group, the effect of which has been to
improve individual claim performance and thus further drive growth
in revenues and profitability over and above the number of vehicles
on the road.
As announced on 6 August 2019, the Group agreed new terms with
its existing fleet insurance provider which will continue to
deliver enhanced savings against original forecasts for the
remainder of FY 2019 and throughout FY 2020.
Legal Services division
A significant portion of the IPO funds was targeted at
increasing capacity within Bond Turner, the Group's legal services
business. This was to facilitate increased cash generation, which
continues to improve month on month. Cash collections increased by
GBP8.4 million or 29.7% between H1 2018 and H1 2019, rising to
GBP36.6 million from GBP28.2 million. This strong trend continued
post period end with cash collections in July 2019 going on to be a
monthly record for the Group.
Revenues for the Legal Services division, which strongly
converts to cash, showed an increase of 26.2%, reaching GBP13.5
million in H1 2019 (H1 2018: GBP10.7 million). Profit before
taxation declined to GBP2.3 million (H1 2018: GBP3.8 million),
reflecting the significant investment in the new Bolton office and
associated staff recruitment costs. Within the working capital
cycle of a typical case and the timeline for settlement inherent in
the court process, an experienced litigator will not reach capacity
from a settlement and cash collection position for at least nine to
twelve months. Consequently, the considerable benefits to cash
collections from the Group's investment in recruitment are expected
to be realised in late FY 2019 and into FY 2020.
The Board's focus in 2019 has been to expand capacity at Bond
Turner, with the opening of the Bolton office being key to this
strategy. Both in number and quality of litigators targeted for
recruitment, Bolton has out-performed management's expectations. At
30 June 2019, the number of highly skilled and experienced
litigators has increased within the Group from 74 at 30 June 2018
to 89 at 31 December 2018, and to 109 by the end of H1 2019, an
increase of 38% from that seen at 30 June 2018.
With further investment planned for the remainder of FY 2019,
these additional staff are expected to continue to drive an
increase in the number of cases settled and ultimately the level of
cash recovered from Bond Turner's considerable portfolio of
cases.
As previously outlined at the time of the Group's AIM IPO, Bond
Turner also operates an in-house advocacy and specialist litigation
team which handles complex professional and clinical negligence
claims. Many of these constitute high value and high profile cases,
some of which have been ongoing for many years; one example is the
class action concerning historic abuse at Aston Hall psychiatric
hospital. The Board intends to expand this specialist team in H2
2019 and FY 2020 and is exploring opportunities to secure new
business in professional and compensation claims through both
targeted recruitment and digital marketing and direct capture.
Dividends
The Board stated at the time of the Group's AIM IPO that its
intention was to adopt a progressive dividend policy and commenced
this with the payment of final dividend of 1.5 pence per share for
the period from Admission to 31 December 2018. The Board is
therefore pleased to propose an interim dividend of 1 penny per
share which will be paid on 23 October 2019 to those shareholders
on the register at the close of business on 20 September 2019. The
shares will become ex-dividend on 19 September 2019.
Trading Outlook
The outlook for the remainder of FY 2019 is positive and the
Board remains confident that the decision to hold steady the number
of vehicles on the road within the Credit Hire division, as the
Group continues to expand its Legal Services division, will allow
Anexo to demonstrate its ability to generate yet further cash from
its significant case portfolio.
Recruitment continues to progress better than anticipated within
the Legal Services division and the Group has recently finalised
the terms of a lease for a further floor in Bolton, doubling the
office space to 19,490 sq.ft. The Board is also considering
additional locations for a further regional office and will make a
separate announcement as and when appropriate. The additional
capacity secured to date has already positively impacted cash
collections and settlement numbers and rates. The Board will
continue to review this strategy to ensure that Anexo continues to
leverage its case book and consequently realises the potential of
the investment as a significant cash generating asset.
Anexo remains extremely well positioned to grow its market share
and take advantage of the opportunities available to it. The Board
views the current financial year and beyond with considerable
optimism.
Alan Sellers
Executive Chairman
10 September 2019
Consolidated Statement of Comprehensive Income
For the unaudited period ended 30 June 2019
Unaudited Unaudited Audited
Half year Half year
ended ended Year ended
Jun-19 Jun-18 Dec-18
Note GBP'000s GBP'000s GBP'000s
Revenue 36,717 23,588 56,505
Cost of sales (7,225) (6,880) (16,168)
---------- ---------- -----------
Gross profit 29,492 16,708 40,337
Depreciation (1,192) (606) (1,574)
Depreciation on right of use
assets (2,849) - -
Administrative expenses (13,638) (8,801) (21,594)
Operating profit before exceptional
items 11,813 7,301 17,169
---------- ---------- -----------
Share based payment charges (329) - (384)
Non-recurring administrative
expenses - (1,438) (1,411)
Operating profit 11,484 5,863 15,374
---------- ---------- -----------
Finance costs (762) (525) (1,090)
Lease finance costs (292) - -
Total finance costs (1,054) (525) (1,090)
Profit before tax 10,430 5,338 14,284
Taxation (2,045) (790) (2,879)
Profit and total comprehensive
income for the year attributable
to the owners of the company 8,385 4,548 11,405
---------- ---------- -----------
Earnings per share
Basic earnings per share (pence) 7.6 4.1 10.4
---------- ---------- -----------
Diluted earnings per share (pence) 7.4 4.1 10.2
---------- ---------- -----------
The above results were derived from continuing operations.
Consolidated Statement of Financial Position
Unaudited at 30 June 2019
Unaudited Unaudited Audited
Half Year Half Year
Ended ended Year Ended
Jun-19 Jun-18 Dec-18
Assets GBP'000s GBP'000s GBP'000s
Non-current assets
Property, plant and equipment 3,233 1,918 3,270
Right-of-use assets 9,815 - -
---------- ---------- -----------
13,048 1,918 3,270
---------- ---------- -----------
Current assets
Trade and other receivables 116,841 81,174 101,445
Cash and cash equivalents 491 11,121 5,532
117,332 92,295 106,977
---------- ---------- -----------
Total assets 130,380 94,213 110,247
---------- ---------- -----------
Equity and liabilities
Equity
Share capital 55 55 55
Share premium 9,235 9,310 9,235
Share based payment reserve 713 - 384
Retained earnings 72,862 59,191 66,127
---------- ---------- -----------
Equity attributable to the owners
of the Group 82,865 68,556 75,801
---------- ---------- -----------
Non-current liabilities
Other interest-bearing loans
and borrowings - 5,566 870
Lease liabilities 5,150 - -
Deferred tax liabilities 20 20 -
5,170 5,586 870
---------- ---------- -----------
Current liabilities
Bank overdraft 14,532 5,080 12,536
Other interest-bearing loans
and borrowings 9,382 2,835 9,402
Lease liabilities 4,927 - -
Trade and other payables 9,118 6,439 7,223
Corporation tax liability 4,386 5,717 4,415
42,345 20,071 33,576
---------- ---------- -----------
Total liabilities 47,515 25,657 34,446
---------- ---------- -----------
Total equity and liabilities 130,380 94,213 110,247
---------- ---------- -----------
Consolidated Statement of Changes in Equity
For the unaudited period ended 30 June 2019
Share
based
Share Share payment Retained
capital premium reserve earnings Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January 2019 55 9,235 384 66,127 75,801
Profit for the year
and total comprehensive
income - - - 8,385 8,385
Share based payments - - 329 - 329
Dividends - - - (1,650) (1,650)
At 30 June 2019 55 9,235 713 72,862 82,865
--------- ----------- ----------- ---------- ---------
At 1 January 2018 50 40 - 55,542 55,632
Profit for the year
and total comprehensive
income - - - 4,548 4,548
Issue of share
capital 5 - - - 5
Increase in share premium - 9,270 - - 9,270
Adjustment - - - (79) (79)
Dividends - - - (820) (820)
At 30 June 2018 55 9,310 - 59,191 68,556
Profit for the year
and total comprehensive
income - - - 6,857 6,857
Movement in share premium - (75) - - (75)
Creation of share
based payments
reserve - - 384 - 384
Adjustment - - - 79 79
At 31 December
2018 55 9,235 384 66,127 75,801
--------- ----------- ----------- ---------- ---------
Anexo Group Plc
Consolidated Statement of Cash Flows
For the unaudited period ended 30 June 2019
Unaudited Unaudited
Half year Half year Audited
ended ended Year ended
Jun-19 Jun-18 Dec-18
GBP'000s GBP'000s GBP'000s
Cash flows from operating
activities
Profit for the year 8,385 4,548 11,405
Adjustments for:
Depreciation and amortisation 4,041 606 1,574
Financial expense 1,054 525 1,090
Taxation 2,045 795 2,879
---------- ---------- ------------
15,525 6,474 16,948
Working capital adjustments
Increase in trade and other
receivables (15,211) (1,012) (20,524)
Increase in trade and other
payables 2,225 1,581 1,466
---------- ---------- ------------
Cash generated from operations 2,539 7,043 (2,110)
Interest paid (762) (525) (1,090)
Tax paid (2,240) (1,013) (4,738)
Net cash from operating
activities (463) 5,505 (7,938)
---------- ---------- ------------
Cash flows from investing
activities
Proceeds from sale of property,
plant and equipment 195 104 170
Acquisition of property, plant
and equipment (1,349) (1,107) (3,493)
Net cash from investing
activities (1,154) (1,003) (3,323)
---------- ---------- ------------
Cash flows from financing
activities
Net proceeds from the issue
of
share capital - 9,325 9,250
Proceeds from new loan - 609 4,016
Dividends (1,650) (1,015) (820)
Repayment of borrowings (210) (81) (1,931)
Lease payments (2,879) - -
Payment of finance lease
liabilities (681) (524) (1,362)
New finance lease arrangements - 712 2,590
Net cash from financing
activities (5,420) 9,026 11,743
---------- ---------- ------------
Net increase / (decrease) in
cash and cash equivalents (7,037) 13,528 482
Cash and cash equivalents
at 1 January (7,004) (7,486) (7,486)
Cash and cash equivalents
at period end (14,041) 6,042 (7,004)
---------- ---------- ------------
Anexo Group Plc
Notes to the Interim Statements
For the unaudited period ended 30 June 2019
1. Basis of preparation and significant accounting policies
The condensed consolidated financial statements are prepared
using accounting policies consistent with International Financial
Reporting Standards and in accordance with International Accounting
Standard ('IAS') 34, 'Interim Financial Reporting'.
The information for the year ended 31 December 2018 does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor's
report on these accounts was not qualified and did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying the report and did not contain
statements under Section 498 (2) or (3) of the Companies Act
2006.
The condensed unaudited financial statements for the six months
to 30 June 2019 have not been audited or reviewed by auditors
pursuant to the Auditing Practices Board guidance on Review of
Interim Financial Information.
The condensed consolidated financial statements have been
prepared under the going concern assumption.
The Directors have assessed the future funding requirement of
the Group, and have compared them to the levels of available cash
and funding resources. The assessment included a review of current
financial projections to December 2020. Having undertaken this
work, the Directors are of the opinion that the Group has adequate
resources to finance its operations for the foreseeable future and
accordingly, continue to adopt the going concern basis in preparing
the Interim Report.
New accounting standards
The Group has adopted IFRS 16 (effective 1 January 2019) in
these interim financial statements (for further details see Note
7).
The results presented are after the adoption of IFRS 16 -
Leases, effective 1 January 2019, which fundamentally altered the
classification and measurement of operating leases for lessees,
removing the distinction between operating and finance leases. The
effect on the Group's reported results is to enhance gross profit
as the lease costs associated with the vehicle fleet are
effectively removed and replaced by an increase in depreciation and
interest costs. The resulting net effect on profit before taxation
is modest. A detailed reconciliation of the Group's primary
financial statements is provided in Note 7 below.
2. 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, and
-- Group and central costs.
Management monitors the operating results of business segments
separately for the purpose of making decisions about resources to
be allocated and of assessing performance.
Half year ended 30 June 2019
Group and
Central
Credit Hire Legal Services Costs Consolidated
GBP'000s GBP'000s GBP'000s GBP'000s
Revenues
Third party 23,197 13,520 - 36,717
Total revenues 23,197 13,520 - 36,717
------------ --------------- ---------- ---------------
Profit before taxation 8,348 2,322 (240) 10,430
------------ --------------- ---------- ---------------
Depreciation 3,693 348 - 4,041
------------ --------------- ---------- ---------------
Segment assets 89,785 40,498 97 130,380
------------ --------------- ---------- ---------------
Capital expenditure 1,007 342 - 1,349
------------ --------------- ---------- ---------------
Segment liabilities 31,940 15,295 280 47,515
------------ --------------- ---------- ---------------
Half year ended 30 June 2018
Group and
Central
Credit Hire Legal Services Costs Consolidated
GBP'000s GBP'000s GBP'000s GBP'000s
Revenues
Third party 12,865 10,723 - 23,588
Total revenues 12,865 10,723 - 23,588
------------ --------------- ---------- -------------
Profit before taxation 3,318 3,830 (1,809) 5,338
------------ --------------- ---------- -------------
Depreciation 568 38 - 606
------------ --------------- ---------- -------------
Segment assets 52,894 33,750 7,569 94,213
------------ --------------- ---------- -------------
Capital expenditure 995 112 - 1,107
------------ --------------- ---------- -------------
Segment liabilities 12,873 12,686 98 25,657
------------ --------------- ---------- -------------
Year ended 31 December 2018
Group and
Central
Credit Hire Legal Services Costs Consolidated
GBP'000s GBP'000s GBP'000s GBP'000s
Revenues
Third party 34,042 22,463 - 56,505
Total revenues 34,042 22,463 - 56,505
------------ --------------- ---------- -------------
Profit before taxation 10,889 4,988 (1,593) 14,284
------------ --------------- ---------- -------------
Depreciation 1,489 85 - 1,574
------------ --------------- ---------- -------------
Segment assets 73,896 35,164 1,187 110,247
------------ --------------- ---------- -------------
Capital expenditure 3,005 488 - 3,493
------------ --------------- ---------- -------------
Segment liabilities 21,346 12,539 561 34,446
------------ --------------- ---------- -------------
3. Property, Plant and Equipment
Fixtures,
fittings
Property & Motor Office
improvement equipment vehicles equipment Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Cost or valuation
At 1 January 2018 341 308 2,234 669 3,552
Additions - 110 972 25 1,107
Disposals - - (103) - (103)
------------ ----------- --------- ---------- ----------
At 30 June 2018 341 418 3,103 694 4,556
Additions - 376 1,973 37 2,386
Disposals - - (619) - (619)
------------ ----------- --------- ---------- ----------
At 31 December
2018 341 794 4,457 731 6,323
Additions - 338 983 28 1,349
Disposals - - (751) (30) (781)
At 30 June 2019 341 1,132 4,689 729 6,891
------------ ----------- --------- ---------- ----------
Depreciation
At 1 January 2018 248 180 1,008 596 2,032
Charge for year 5 28 551 22 606
Eliminated on disposal - - - - -
------------ ----------- --------- ---------- ----------
At 30 June 2018 253 208 1,559 618 2,638
Charge for the
year 5 38 901 24 968
Eliminated on disposal - - (553) - (553)
------------ ----------- --------- ---------- ----------
At 31 December
2018 258 246 1,907 642 3,053
Charge for the
year 5 84 1,086 17 1,192
Eliminated on disposal - - (559) (28) (587)
At 30 June 2019 263 330 2,434 631 3,658
------------ ----------- --------- ---------- ----------
Carrying amount
At 30 June 2019 78 802 2,255 98 3,233
------------ ----------- --------- ---------- ----------
At 31 December
2018 83 548 2,550 89 3,270
------------ ----------- --------- ---------- ----------
At 30 June 2018 88 210 1,544 76 1,918
------------ ----------- --------- ---------- ----------
4. Trade and Other Receivables
Jun-19 Jun-18 Dec-18
GBP'000s GBP'000s GBP'000s
Trade receivables 193,971 163,257 165,195
Provision for impairment of
trade receivables (104,039) (101,996) (89,205)
---------- ---------- ---------
Net trade receivables 89,932 61,261 75,990
Prepayments and accrued
income 24,868 18,126 22,989
Other debtors 2,041 1,787 2,466
116,841 81,174 101,445
---------- ---------- ---------
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.
5. Borrowings
Jun-19 Jun-18 Dec-18
GBP'000s GBP'000s GBP'000s
Non-current loans and borrowings
Bank loans and overdrafts - 5,000 -
Obligations under finance lease
and hire purchase contracts - 491 851
Other borrowings - 75 19
Lease Liabilities 5,150 - -
5,150 5,566 870
----------- ----------- -----------
Current loans and borrowings
Bank loans and overdrafts 14,532 5,080 12,536
Revolving credit facility 5,000 - 5,000
Obligations under finance lease
and hire purchase contracts 2,337 997 1,640
Other borrowings 2,045 1,838 2,762
Lease Liabilities 4,927 - -
28,841 7,915 21,938
----------- ----------- -----------
The company uses an invoice discounting facility which is
secured on the trade debtors of Direct Accident Management Limited.
The revolving credit facility is secured by way of a fixed charge
dated 25 January 2017, 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 until July 2020, with no associated repayments due before
that date. Interest is charged at 3.75 per cent. over LIBOR.
6. Obligations under Lease and Hire Purchase Agreements
Finance leases
The total future value of minimum lease payments under finance
leases and hire purchase contracts are as follows:
Jun-19 Jun-18 Dec-18
GBP'000s GBP'000s GBP'000s
Not later than 1 year 7,264 997 1,640
Later than 1 and not later
than 5 years 3,905 491 851
Over 5 years 1,245 - -
2,337 1,488 2,491
--------- --------- ---------
7. Effect of changes in accounting policies
IFRS 16 Leases
A new accounting standard has been issued, IFRS 16 Leases, which
replaced IAS 17 Leases, effective 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 half year
ended 30 June 2019, having been adjusted for IFRS 16, and before
the adjustment is provided below. As the Group has applied the
modified retrospective approach there are no adjustments to the
results reported for either the half year ended 30 June 2018 or the
year ended 31 December 2018.
Impact of IFRS 16 on the Consolidated Statement of Comprehensive
Income
Unaudited at 30 June 2019
Half year ended
Pre IFRS
Reported IFRS 16 16 Year ended
Jun-19 Jun-19 Jun-19 Jun-18 Dec-18
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Revenue 36,717 - 36,717 23,588 56,505
Cost of sales (7,225) (2,573) (9,798) (6,880) (16,168)
--------- ----------- ----------- ------------ -----------
Gross profit 29,492 (2,573) 26,919 16,708 40,337
Depreciation (1,192) - (1,192) (606) (1,574)
Depreciation on right
of use assets (2,849) 2,849 - - -
Administrative expenses (13,638) (306) (13,944) (8,801) (21,594)
Operating profit
before exceptional
items 11,813 (30) 11,783 7,301 17,169
--------- ----------- ----------- ------------ -----------
Share based payment
charges (329) - (329) - (384)
Non-recurring administrative
expenses - - - (1,438) (1,411)
Operating profit 11,484 (30) 11,454 5,863 15,374
--------- ----------- ----------- ------------ -----------
Finance costs (762) - (762) (525) (1,090)
Lease finance costs (292) 292 - - -
Total finance costs (1,054) 292 (762) (525) (1,090)
Profit before tax 10,430 262 10,692 5,338 14,284
Taxation (2,045) - (2,045) (790) (2,879)
Profit after tax 8,385 262 8,647 4,548 11,405
--------- ----------- ----------- ------------ -----------
Earnings per share
(pence)
Basic earnings per
share 7.6 N/A 7.9 4.1 10.4
--------- ----------- ----------- ------------ -----------
Diluted earnings
per share 7.4 N/A 7.7 4.1 10.2
--------- ----------- ----------- ------------ -----------
Impact of IFRS 16 on the Consolidated Statement of Financial
Position
Unaudited at 30 June 2019
Pre IFRS
IFRS 16 16
As reported Adjustments adoption
Assets GBP'000s GBP'000s GBP'000s
Non-current assets
Property, plant and equipment 3,233 - 3,233
Right-of-use assets 9,815 (9,815) -
------------ ------------ ---------
13,048 (9,815) 3,233
------------ ------------ ---------
Current assets
Trade and other receivables 116,841 - 116,841
Cash and cash equivalents 491 - 491
117,332 - 117,332
------------ ------------ ---------
Total assets 130,380 (9,815) 120,565
------------ ------------ ---------
Equity and liabilities
Equity
Share capital 55 - 55
Share premium 9,235 - 9,235
Share based payment reserve 713 - 713
Retained earnings 72,862 262 73,124
------------ ------------ ---------
Equity attributable to the owners
of the Group 82,865 262 83,127
------------ ------------ ---------
Non-current liabilities
Other interest-bearing loans
and borrowings - - -
Lease liabilities 5,150 (5,150) -
Deferred tax liabilities 20 - 20
5,170 (5,150) 20
------------ ------------ ---------
Current liabilities
Bank overdraft 14,532 - 14,532
Other interest-bearing loans
and borrowings 9,382 - 9,382
Lease liabilities 4,927 (4,927) -
Trade and other payables 9,118 - 9,118
Corporation tax liability 4,386 - 4,386
42,345 (4,927) 37,418
------------ ------------ ---------
Total liabilities 47,515 (10,077) 37,438
------------ ------------ ---------
Total equity and liabilities 130,380 (9,815) 120,565
------------ ------------ ---------
Impact of IFRS 16 on the Consolidated Statement of Cash
Flows
For the unaudited period ended 30 June 2019
Pre IFRS
IFRS 16 16
As reported Adjustments adoption
Note GBP'000s GBP'000s GBP'000s
Cash flows from operating
activities
Profit for the year 8,385 262 8,647
Adjustments for:
Depreciation and amortisation 4,041 (2,849) 1,192
Financial expense 1,054 (292) 762
Taxation 2,045 - 2,045
------------ ------------ ---------
15,525 (2,879) 12,646
Working capital adjustments
Increase in trade and other
receivables (15,211) - (15,211)
Increase in trade and other
payables 2,225 - 2,225
------------ ------------ ---------
Cash generated from operations 2,539 (2,879) (340)
Interest paid (762) - (762)
Tax paid (2,240) - (2,240)
Net cash from operating
activities (463) (2,879) (3,342)
------------ ------------ ---------
Cash flows from investing
activities
Proceeds from sale of property,
plant and equipment 195 - 195
Acquisition of property, plant
and equipment (1,349) - (1,349)
Net cash from investing
activities (1,154) - (1,154)
------------ ------------ ---------
Cash flows from financing
activities
Net proceeds from the issue
of
share capital - - -
Proceeds from new loan - - -
Dividends (1,650) - (1,650)
Repayment of borrowings (210) - (210)
Lease payments (2,879) 2,879 -
Payment of finance lease
liabilities (681) - (681)
New finance lease arrangements - - -
Net cash from financing
activities (5,420) 2,879 (2,541)
------------ ------------ ---------
Net increase / (decrease) in
cash and cash equivalents (7,037) - (7,037)
Cash and cash equivalents
at 1 January (7,004) - (7,004)
Cash and cash equivalents
at period end (14,041) - (14,041)
------------ ------------ ---------
- Ends -
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END
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September 10, 2019 02:00 ET (06:00 GMT)
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