Legal services revenue up at listed firm as credit hire earnings fall

Sellers: Solid performance

Legal services revenue increased by more than a third at the AIM-listed Anexo Group last year, while credit hire earnings fell by over 18%.

The group said its law firm, Bond Turner, increased turnover by over 37% to £89m, boosted by a settlement with VW last summer in the diesel emissions litigation which resulted in a “net positive cash position” of £7.2m.

Announcing its financial results for 2023, Anexo said total group revenue increased by 8% to £149m and gross profits by 12% to £119m.

Following the agreement with VW, in which Bond Turner acted for 12,000 claimants, the law firm had “continued its investment in claims against other manufacturers”, including Mercedes Benz, Vauxhall, BMW/Mini, Peugeot/Citroen and Nissan/Renault.

Having spent £4.3m in marketing, staff and other costs relating to the emissions litigation, by the end of 2023 Bond Turner had secured around 12,000 claims against Mercedes Benz, where proceedings have been issued, and a further 24,000 claims against other manufacturers.

“Settlement of these claims is expected to significantly enhance revenue and profitability and cashflows, although the timing of any negotiations remains uncertain.”

The law firm mainly focuses on personal injury work and, in the courts, it continued to “experience extended delays, with many claims listed for trial being delayed and/or adjourned”. This had an impact on “cash received and overall profitability of the group, particularly within legal services”.

However, the majority of the costs associated with these claims had “already been incurred and expensed” and the conclusion of the claims was “simply just held up temporarily due to the court delays”.

Staff numbers within Bond Turner continued to grow, “with an increased focus on both developing our own staff but recruiting where necessary to increase settlement capacity”.

The growth was “particularly notable” in the housing disrepair and large loss teams, where staff numbers increased from 54 and 63 respectively at the end of 2022 to 69 and 77 a year later. Total legal services staff numbers were up by 3.5% to 702.

While credit hire revenues shrank last year from £75m to £61m, Anexo said “cash generation and our ability to manage claim volumes underlines the robust health of the core credit hire business and the continued demand for non-fault claims”.

Turning to the future, the group said: “The growth in vehicle activity, particularly towards the end of 2023, alongside the significant portfolio of claims within legal services, where much of the associated costs have been incurred and expensed, provide a strong platform for 2024 and beyond.”

Alan Sellers, a barrister and executive chair of Anexo, commented: “I am pleased to report a solid performance across all divisions.

“The housing disrepair and large loss divisions continue to expand and play an increasingly important part in the development of the group.

“We look forward to further developments in the ongoing diesel emissions class actions and continue to focus on effective cash management to maximise cash generation and create value for all our shareholders.”

Mr Sellers said that the housing disrepair team continued its “rapid expansion” last year, with revenues up by over 36% to £12.7m.

By the end of 2023, Bond Turner had a portfolio of around 3,900 ongoing claims, up from around 3,000. Marketing costs increased by a similar amount, from £3m to £3.8m.

As in the previous two years, Anexo is paying a dividend of 1.5p for 2023. Despite its strong performance, the group’s share price has fallen by over a third in the past 12 months and yesterday stood at 62.8p.

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