ANX Anexo Group Plc

Anexo Group plc

('Anexo' or the 'Group')

Final Results

"Solid performance across all divisions with strong outlook for the future"

Anexo Group plc (AIM: ANX), the specialist integrated credit hire and legal services provider, announces its final results for the year ended 31 December 2023 (the 'period' or 'FY2023).

Note: The basis of preparation of the consolidated financial statements for the current and previous year is set out in the Financial Review below.

1. Including the impact of the agreement in the Emissions Case.

2. Adjusted operating profit and profit before tax: excludes share‑based payment charges in 2022. A reconciliation to reported (IFRS) results is included in the Financial Review below.

3. Adjusted EPS: adjusted PBT less tax at statutory rate divided by the weighted number of shares in issue during the year.

Overview and Financial and Operational KPIs

Following a year of consolidation for the Group's core business in 2022, the early part of 2023 saw the Group continue its focus on the prudent management of fleet levels within its credit hire division, EDGE, whilst looking to grow the level of cash collections within its legal services division, Bond Turner. Cash collections improved throughout the year, deriving from credit hire claims, the agreement in the VW Emissions Case "Emissions Case", housing disrepair claims and the serious injury and clinical and professional negligence "large loss" teams. The Group thereafter continued its investment in Bond Turner and also increase its activity within credit hire.

Bond Turner has continued to invest in good quality staff and related infrastructure and this is reflected in the overall rise in cash collections, which increased from £146.1 million in 2022 to £163.5 million in 2023. These derived not only from credit hire claims but also from the housing disrepair and large loss claim books. As these expand and claims reach settlement maturity, these additional teams have made meaningful contributions to Group performance in 2023 and will continue to do so into 2024 as investment in new claims and staff continues. Revenues for Legal Services increased from £63.6 million in 2022 to £88.6 million; this figure also reflects the impact of the agreement of the Emissions Case in the year. The growth in cash collections for the Group is more pleasing given the continued delays within the judicial system. The Group continues to experience extended delays, with many claims listed for trial being delayed and/or adjourned; this continues to impact on the cash received and overall profitability of the Group, particularly within Legal Services. It is encouraging to note however that the majority of the costs associated with these claims have already been incurred and expensed and that the conclusion of these claims is simply just held up temporarily due to the Court delays.

During 2023, the Group reached agreement with VW in relation to the diesel emissions case and the results for the year include the impact of this agreement, in which the Group acted for around 12,000 claimants. The terms of the agreement are subject to confidentiality restrictions. The Group announced on 5 June 2023 that the agreement had resulted in a net positive cash position to Anexo of £7.2 million.

Following this agreement, the Group has continued its investment in claims against other manufacturers including Mercedes Benz, Vauxhall, BMW/ Mini, Peugeot/Citroen and Nissan/Renault. During 2023 the Group invested a total of £4.3m in marketing, staff and other costs and at the end of 2023 had secured claims against Mercedes Benz (where court proceedings have been issued) from approximately 12,000 clients, and a further 24,000 claims against other manufacturers. These costs are included within Administrative Expenses in the Income Statement. Settlement of these claims is expected to significantly enhance revenue and profitability and cashflows although the timing of any negotiations remains uncertain.

Staff numbers within Bond Turner continued to grow, driving improvements in performance and cash collections with an increased focus on both developing our own staff but recruiting where necessary to increase settlement capacity. This growth was particularly notable within 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 at the end of 2023 (an increase of 27.8% and 22.2% respectively). Staff numbers in the legal services division reached a total of 702 in 2023, a 3.5% rise from 2022. Overall cash collections rose 11.9% to £163.5 million (2022: £146.1 million). This ongoing growth in staff will underpin further growth in cash collections in 2024, helped by the gradual reduction in the courts backlog.

The Credit Hire Division started 2023 with 1,730 vehicles on the road. This number grew to 1,961 by the end of the first half of the year, with average vehicle numbers over the first half reaching 1,634 as the Group concentrated on the effective management of activity levels. As a result, the Group reported a reduction in net debt in that period. Opportunities for new work continued to be buoyant with the Group accepting an increasing number of claims in the second half of the year, this was particularly evident in the latter months of 2023, traditionally a period of strong seasonality for the Group, where vehicles numbers increased sharply, reaching 2,409 at the end of 2023, with a second half average of 2,144. This had the effect of driving an improvement in profitability for the credit hire division in the second half of the year (profit before tax increased from £2.2 million in the first half year to £4.4 million in the second half year).

Whilst overall Credit Hire revenues for the full year reduced from £74.7 million in 2022 to £60.8 million in 2023, 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. A number of factors contributed to the decrease in revenue including; the weighting of new hires was heavier towards the end of 2023 meaning that the full extent of the revenue could not be realised before the end of 2023 as the hires continued past the year end, contributing revenue into 2024; general movements within the fleet including the redistribution of the proportion of bikes versus cars and a reduction in the average hire period between 2022 and 2023. 11,724 new credit hire claims were funded in 2023 and passed for recovery to the experienced legal team at Bond Turner, who have shown their strength in respect of increased cash collections.

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.  

Our ability to fund growth in our hire business has come from improving levels of cash collections, not only from an increase in credit hire claim settlements, which increased by 13.2% in the period reaching 8.967 in 2023 (2022: 7,922), but from an increase in case settlements achieved during the year from the housing disrepair and large loss teams (departments of legal services). In addition, the Group announced on 5 June 2023 that agreement in respect of the VW Emissions Case ('Emissions Case') had resulted in a net positive cash position to Anexo of £7.2 million; this figure takes into account the value retained in the Group from fees generated and payments associated with the agreement including the repayment of amounts due to funders. These movements demonstrate the investment made in both the current staff in terms of training and development and strategic hires from competitors. In 2023, the number of senior fee earners grew by 11.9% to reach 283 at the year end.

The Group has a number of opportunities for growth in 2024, not only from the current divisions but from wider opportunities in the legal services sector including the expansion of EDGE into providing credit hire vehicles to taxi drivers involved in non-fault accidents. The Board believes there are significant opportunities to manage the overall Group to ensure it maximises shareholder value by continuing to seize opportunities for growth as they present themselves without the need for significant increases in debt funding.

Commenting on the Final Results, Alan Sellers, Executive Chairman of Anexo Group plc, said: "I am pleased to report a solid performance across all divisions. As always, we have managed our vehicle numbers effectively and sought to utilise our working capital as efficiently as possible. Cash collections continue to grow as a result of this strategy and we continue to invest in high quality staff.

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."

Investor Briefing

Alan Sellers, Executive Chairman, and Mark Bringloe, CFO, will provide a live presentation relating to the Final Results Presentation via Investor Meet Company at 09:30 BST today.

The presentation is open to all existing and potential shareholders. Questions can be submitted at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet ANEXO GROUP PLC via:

https://www.investormeetcompany.com/anexo-group-plc/register-investor

Investors who already follow ANEXO GROUP PLC on the Investor Meet Company platform will automatically be invited.

Results presentation is available at the Group's website: https://www.anexo-group.com/ 

For further enquiries:

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 1,100 plus active introducers 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

Chairman's Statement

On behalf of the Board, I am pleased to report a year of solid growth by the Group, with each division of the Group performing in line with Board expectations. The results for 2023 include the agreement of the Emissions Case as reported in June 2023. These results reflect our continued focus on increasing cash settlements through the expansion of our Legal Services division, with continued investment and growth not only in credit hire but more significantly in both the housing disrepair and large loss departments.

The Board continues to invest in diversifying the Group's activities by taking advantage of the significant growth opportunities which are presenting themselves and believes that the Group is well positioned for further strong performance in 2024 and beyond.

Group Performance

Anexo Group plc has shown solid performance during 2023 with Group revenues increasing in 2023 by 8.0% to £149.3 million (2022: £138.3 million). Gross profits increased by 12.0% from £105.8 million in 2022 to £118.5 million in 2023. Operating profit increased by 30.8% to £39.8 million in 2023 at a margin of 26.6% (2022: £30.4 million at a margin of 22.0%), even after the ongoing investment in staff and marketing costs across both housing disrepair and diesel emissions claims and the performance of the Credit Hire division. This investment has provided a strong platform for future growth. Profit before tax reduced slightly in the year, by 4.4% to £23.0 million (2022: £24.1 million).

Whilst revenues for Credit Hire reduced from £74.7 million in 2022 to £60.8 million in 2023 reflecting the active management of claims accepted in the early part of the year, this decline was more than offset within Legal Services, where revenues increased from £63.6 million in 2022 to £88.6 million. This increase included the impact of the agreement of the Emissions Case in the year.

During 2023, the Group has focussed on further developing the housing disrepair and large loss teams whilst recognising that credit hire remains the mainstream profit generator for the Group. This focus has contributed to an increased level of case settlements and therefore an increase in cash collections for the Group, which rose by 11.9% to £163.5 million in 2023 (2022: £146.1 million). This figure excludes the agreement in the Emissions Case. The terms of the agreement are subject to confidentiality restrictions; the Group announced on 5 June 2023 that the agreement had resulted in a net positive cash position to the Group of £7.2 million.

Credit Hire division

The Group's Credit Hire division, EDGE, saw prudent management of fleet activities during the early part of 2023 to maximise efficient use of the existing fleet and to manage overall fleet numbers to reflect these expectations. In the second half of the year, cash collections were such that the Group could accelerate growth without the need to increase debt facilities and vehicle numbers rose from 1,730 at the start of the year, falling to a low of 1,431 in H1, then rising sharply to end the year at 2,409, an increase of 39.2% from the start of the year. As a result, new cases funded increased from 9,986 in 2022 to 11,724 in 2023, whilst the number of hire cases settled increased by 13.2% from 7,922 in 2022 to 8,967 in 2023, supporting the increase in cash collections noted above.

With the managed start to 2023 in vehicle activity, revenues within the Credit Hire division fell in 2023 by 18.6% to £60.8 million (2022: £74.7 million). The Group maintains its claims acceptance strategy of deploying its resources into the most valuable claims, thereby growing claims while preserving working capital. The Group monitors its fleet size constantly, enabling it to respond quickly to changes in demand and strategic priorities by deploying its vehicles appropriately with focus remaining firmly on McAMS, the motorcycle division.

Legal Services division

The Group's Legal Services division, Bond Turner, has continued its focus on cash collections across each of the three principal departments, with growth in both housing disrepair and large loss contributing to the positive result in the year. Revenues within the Legal Services division, which strongly correlates to cash, increased by 37.4% to £88.6 million (2022: £63.6 million), including the agreement in the Emissions Case in June 2023. With increased opportunities across all divisions the Group has sought to expand teams with strategic senior hires to support and develop their respective teams to help drive case settlements. At the end of December staff numbers within Bond Turner stood at 702, a 3.5% increase on the 2022 figure of 678. Of these, a total of 283 were senior fee earners, up 11.9% (2022: 253).

The average number of staff rose from 646 in 2022 (of which 240 were senior fee earners) to 696 in 2023 (including 257 senior fee earners).  

Diesel Emissions

During 2023, the Group reached agreement with VW in relation to the diesel emissions case and the results for the year include the impact of this agreement, in which the Group acted for around 12,000 claimants. The terms of the agreement are subject to confidentiality restrictions; the Group announced on 5 June 2023 that the agreement had resulted in a net positive cash position to Anexo of £7.2 million.

Following this, the Group has continued its investment in claims against other manufacturers including Mercedes Benz, Vauxhall, BMW/Mini, Peugeot/Citroen and Renault/Nissan. By the end of 2023 the Group had secured claims against Mercedes Benz (where court proceedings have been issued) from approximately 12,000 clients, and a further 22,000 claims against other manufacturers. Settlement of these claims is expected to significantly enhance profitability and cashflows although the timing of any negotiations remains uncertain.

In total the Group invested £4.3 million in 2023 (2022: £4.0 million) in both staffing and emission claims lead generation fees, both of which are expensed in the income statement as incurred.

Housing Disrepair

The housing disrepair team has continued its rapid expansion during 2023, where revenues increased to £12.7 million in 2023, an increase of 36.6% over that report in 2022 (£9.3 million). At the end of the year, the Group had a portfolio of c3,900 ongoing claims (2022: c.3,000). Some £3.8 million was invested in marketing costs in 2023 (2022: £3.0 million), all of which was expensed as incurred, and with further investment planned into 2024, the housing disrepair team has proven its potential to be a significant contributor to Group earnings. We look forward to further growth in this sector.

Dividends

The Board is pleased to propose a final dividend of 1.5p per share (£1.8 million), which if approved at the Annual General Meeting to be held on 18 June 2024 will be paid on 28 June 2024 to those shareholders on the register at the close of business on 31 May 2024. The shares will become ex-dividend on 30 May 2024 (2022: total dividend 1.5p per share, £1.8 million).

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.

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.

Current Trading and Outlook

As our financial performance and KPI's have demonstrated, the Group has continued to invest in its people, particularly within the Legal Services division, supporting the growth we have reported in both the number of claims settled and the underlying level of cash receipts for the Group. Whilst this investment impacted our reported financial performance in 2023, the continued growth in headcount supporting ever increasing case settlements will continue to contribute to growth in 2024 and beyond.

Since year end trading across both Credit Hire and Legal Services has been in line with management expectations.

Subsequent Events

In the previous emissions action Bond Turner's clients were not part of the Group Litigation Order ('GLO'), which brought together a number of legal firms acting for different claimants. In the current action, Bond Turner will form part of the respective GLOs, which should facilitate a more efficient legal process to achieve a quicker resolution to the cases.

There was a 5-day case management hearing on 11th March 2024 to consider all the various manufacturer NOx Emissions claims and provide guidance on how the cases should progress. The Court was keen to progress these cases as quickly as possible and has set a rigid timetable to do so.  In December 2023 Mercedes was appointed as the 'Lead GLO' case;  the Court has further appointed three other cases to be Additional Lead GLO's ('ALGLOs').  These are essentially cases which will progress alongside Mercedes to act as reserve cases, in case Mercedes settles, and to involve additional issues that Mercedes does not but which are relevant to the Group Litigation as a whole.  The ALGLOs appointed are Ford, Nissan/Renault and Peugeot/Citroën.

Several trial dates have been set with the first being heard in October 2024 involving several manufacturers (Mercedes, BMW, Renault, and Vauxhall), dealing specifically with the issue of whether decisions by the German regulatory body (responsible for giving the vehicles 'type approval' to be manufactured and sold) are binding in England and Wales.

In October 2025 liability will be determined raising legal and factual issues of whether the vehicles contained prohibited defeat devices. To assist the Court, this will include the selection and testing of sample vehicles across several manufacturers including Mercedes, Ford, Renault/Nissan and Peugeot/Citroën manufacturers.

Finally in October 2026 a trial will address causation and loss issues. This trial will involve all manufacturers.

Post Balance Sheet Events

On 24 April 2024 Mark Bringloe was appointed as permanent Chief Financial Officer.

Annual General Meeting

The Group's Annual General Meeting will be held on 18 June 2024. The notice of the Meeting accompanies this Annual Report and Accounts.

Alan Sellers

Executive Chairman

30 April 2024

Financial Review

Basis of Preparation

To provide comparability across reporting periods, the results within this Financial Review are presented on an "adjusted basis, adjusting for the £0.2 million credit recorded for share-based payments in 2022, no such credit arising in 2023 following the vesting of the senior management incentive scheme for share-based payments in 2022.

A reconciliation between adjusted and reported results is provided at the end of this Financial Review. This Financial Review forms part of the Strategic Report of the Group.

Revenue

In 2023 Anexo successfully increased revenues which increased to £149.3 million, an 8.0% increase over the prior year (2022: £138.3 million). Revenues for Credit Hire reduced from £74.7 million in 2022 to £60.8 million in 2023 reflecting a number of factors including; the weighting of new hires was heavier towards the end of 2023 meaning that the full extent of the revenue could not be realised before the end of 2023 as the hires continued past the year end, contributing revenue into 2024; general movements within the fleet including the redistribution of the proportion of bikes versus cars and a reduction in the average hire period between 2022 and 2023.

With the active management of claims accepted in the early part of the year, this decline was more than offset within Legal Services, where revenues increased from £63.6 million in 2022 to £88.6 million, the Legal Services division continuing to display its strength for the realisation and conversion of funded claims and opportunities into cash and revenue. This movement included the impact of the agreement of the Emissions Case in the year.

During 2023 EDGE, the Credit Hire division, provided vehicles to 11,724 individuals (2022: 9,986) Much of the increase over the figure reported in 2022 arose in H2 2023. Our strategy, as previously reported, remains to concentrate investment within McAMS, the part of the business which supplies motorcycles. To continue to grow case settlements in the post Covid period, where the court system has yet to recover, the Group has been successful in negotiating a number of key protocol arrangements with insurers. These arrangements allow the insurer, the Group and its clients to benefit by agreeing early settlement.

With investment in all areas of Bond Turner continuing into 2023, and the continued maturity of the housing disrepair department, including more recently the large loss department, the Legal Services division reported significant revenue growth of 39.1%, with revenues rising from £63.6 million in 2022 to £88.6 million in 2023. The result for 2023 was also impacted by the agreement in the Emissions Case in June 2023, the impact of which is subject to confidentiality restrictions.

The Group has benefitted from continued investment in the housing disrepair team during 2023, and as a result revenue increased from £9.3 million in 2022 to £12.7 million in 2023. This revenue is reported within the data noted above for the Legal Services Division.

Gross Profits

Gross profits for the Group are reported at £118.5 million (at a margin of 79.4%) in 2023, increasing from £105.8 million in 2022 (at a margin of 76.5%). The result for 2023 including the impact within Bond Turner of the agreement of the Emissions Case. It should be noted that staffing costs within Bond Turner are reported within Administrative Expenses.

The Credit Hire Division reported gross profits of £42.1 million (at a margin of 69.2%), reducing from £45.3 million (at a margin of 62.1%). The net reduction reflects the reduction in revenues reported in the period.  

Operating Costs

Administrative expenses increased slightly year-on-year, reaching £69.2 million in 2023 (2022: £65.0 million), an increase of £4.2 million (6.5%). Staffing costs for Bond Turner increased to £25.7 million (2022: £23.1 million), an increase of £2.6 million (11.3%). Following the establishment of our housing disrepair team in late 2020, some £3.8 million was invested in marketing costs in 2023 (2022: £3.0 million), all of which has been expensed as incurred. We have in addition, invested in further emissions marketing costs of £2.9 million (2022: £2.2 million).

Depreciation, amortisation and profit and loss on disposal totalled £9.5 million in 2023, a slight reduction from that seen in 2022 (£10.6 million).

Finance Costs

Finance costs reached £16.7 million in 2023, increasing from £6.3 million in 2022 (165%). In part, this increase reflects the full year effect of the additional facilities secured in 2022 from Blazehill Capital Finance Limited (£15.0 million) to support the continued investment into the housing disrepair team and our investment in diesel emissions claims and the growth in interest rates seen globally. Finance costs in 2023 also included payment due to funders in respect of emissions cases.

Profit Before Tax

Profit before tax reached £23.0 million in 2023, falling slightly from the level reported in 2022 (£24.1 million). This reflects the investment in staff and marketing costs noted above as well as a general increase in finance costs as interest rates impacted the cost of capital to the Group, these additional costs more than offsetting the benefit arising from the agreement in the Emissions Case.

Where we have provided adjusted figures, they are after the add-back of the share-based payment credit in 2022; a reconciliation of the adjusted and reported results is included in the Annual Report.

EPS and Dividend

Statutory basic EPS is 12.8 pence (2022: 16.6 pence). Statutory diluted EPS is 12.8 pence (2022: 16.6 pence). The adjusted EPS is 12.8 pence (2022: 16.5 pence). The adjusted diluted EPS is 12.8 pence (2022: 16.5 pence). The adjusted figures exclude the effect of share-based payments. The detailed calculation in support of the EPS data provided above is included within Note 12 of the financial statements of the annual report.

The Board is pleased to propose a final dividend of 1.5p per share (£1.8 million), which if approved at the Annual General Meeting to be held on 18 June 2024 will be paid on 28 June 2024 to those shareholders on the register at the close of business on 31 May 2024. The shares will become ex-dividend on 30 May 2024 (2022: total dividend 1.5p, £1.8 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 receivables, together with disbursements paid in advance which support the portfolio of ongoing claims. Following continued improvements in the level of cash collected in the year, the gross claim value of trade receivables totalled £386.3 million in 2023, falling from £393.6 million in 2022. In accordance with our income recognition policies, a provision is made to reduce the carrying value to recoverable amounts, the net balance reducing to £160.7 million (2022: £165.4 million) giving a portfolio of claims for settlement into 2024 and beyond for which the associated acceptance costs have been written off as incurred.

In addition, the Group has a total of £68.9 million reported as accrued income (2022: £54.7 million) which represents the value attributed to those ongoing hires and claims at the year end, alongside growth in the number of ongoing claims within the housing disrepair and large loss teams where investment has increased year on year as have the ongoing number of claims, noting value is only attributed to those claims where we have secured an admission of liability.

The focus on motorcycle claims continued during 2023, and a refresh of certain aging assets resulted in total additions of property, plant, equipment and right of use assets of £11.6 million in 2023 (2022: £7.8 million). The fleet continues to be largely externally financed.

Trade and other payables, including tax and social security increased to £14.8 million compared to £13.2 million at 31 December 2022.

Net assets at 31 December 2023 reached £159.7 million (2022: £146.3 million).

Net Debt, Cash and Financing

Net debt reduced to £67.9 million at 31 December 2023 (31 December 2022: £71.3 million) and comprised cash balances at 31 December 2023 of £8.4 million (2022: £9.0 million), plus borrowings which reduced during the year, following the agreement of the Emissions Case and a continued focus on growth at levels that are sustainable without the need for additional working capital investment.

The total debt balance fell from £82.2 million in 2022 to £76.3 million at the end of 2023; these balances include lease liabilities including those recognised in line with IFRS16 (2023: £14.3 million, 2022: £13.6 million). The Group has a number of funding relationships and facilities to support its working capital and investment requirements, including an invoice discounting facility within Direct Accident Management Limited (secured on the credit hire and repair receivables) and a loan from Blazehill Capital Limited, which is non amortising and committed for a three year period, lease facilities to support the acquisition of the fleet and a revolving credit facility within Bond Turner Limited which is due for renewal in August 2024 and currently reported within borrowing due within one year. Further details are included in Note 20 of the financial statements of the annual report.

Having considered the Group's current trading performance, cash flows and headroom within our current debt facilities (further details of additional facilities secured post year end are included in the annual report), maturity of those facilities, the Directors have concluded that it is appropriate to prepare the Group and the Company's financial statements on a going concern basis. Further details are included in the annual report.

Cash Flow

Notwithstanding the continued delays in the court system, we have continued to invest in talent and grow our settlement capacity throughout Bond Turner, across each of the Credit Hire, housing disrepair and more recently the large loss teams. As we have previously reported, increasing numbers of senior fee earners drives increased settlement and cash collections into the Group as it is mainly these staff that negotiate and settle claims on behalf of the Group. The number of senior fee earners increased from 253 to 283 during 2023 (an increase of 11.9%) with strategic recruitment of high-quality staff a continued focus. More recently this investment has sought to continue to diversity the activities of the Group and headcount with the housing disrepair team, where the number of staff increased in number from 54 at 31 December 2022 to 69 at 31 December 2023 (an increase of 27.8%); and the large loss team, where the number of staff increased in number from 63 at 31 December 2022 to 77 at 31 December 2023 (an increase of 22.2%).

Notwithstanding the delays faced in the court system, which continues to impact settlements, cash collections for the Group (excluding settlements for our clients and the contribution from the agreement of the Emissions Case), a key metric for the Group, increased from £146.1 million in 2022 to £163.5 million in 2023, an increase of 11.9%, of which £7.9 million was generated from growth in settlements secured from the housing disrepair and large loss teams.

These improvements resulted in a significant improvement in net cash from operating activities, which was reported as a net cash inflow of £17.4 million in 2023 (2022: net cash outflow: £3.1 million), an improvement of £20.5 million, the primary difference being the level of funds invested in trade and other receivables which reduced by £22.0 million (2023: cash outflow £12.1 million, 2022: cash outflow: £34.1 million) reflecting the improvement in cash collections in the period supported by a strong legal team within Bond Turner.

Improved cash collections and operating cash flows have allowed the Group to reduce debt, reporting a net cash outflow of £17.4 million from financing activities in 2023. The Group reported a net cash inflow in 2022 of £4.2 million as additional facilities were secured in 2022 from Blazehill Capital Limited alongside an increase in availability from Secure Trust Bank Plc. 

Reconciliation of Adjusted and Reported IFRS Results

In establishing the adjusted operating profit, the adjusted results for 2022 included a credit of £0.2 million related to share-based payments which vested in the year.

A reconciliation between adjusted and reported results is provided below:

On behalf of the board

Mark Bringloe

Chief Financial Officer

30 April 2024

Consolidated Statement of Total Comprehensive Income

for year ended 31 December 2023

The above results were derived from continuing operations.

Consolidated Statement of Financial Position

as at 31 December 2023

The notes on pages 76 to 109 form an integral part of these consolidated financial statements.

The financial statements were approved by the Board of Directors and authorised for issue on 30 April 2024. They were signed on its behalf by:

Mark Bringloe

Chief Financial Officer

30 April 2024