The law firm owned by listed company Anexo Group is experiencing notable growth, particularly in its housing disrepair and group litigation practices, despite facing significant financial challenges.
Bond Turner, the law firm under Anexo Group, reported a 10% increase in staff from the previous year, with senior fee-earners rising by 18% to 287, according to their recent half-year results. This growth comes despite a sharp decline in legal services revenue by 32% to £34 million, attributed to costs associated with the confidential settlement of the diesel emissions group claim with Volkswagen.
In contrast, the firm’s housing disrepair sector has seen a 14% increase in revenue, with the number of claims rising by 18% over the year to a total of 3,880. Settled claims in this area numbered 1,127 in the first half of 2024, up from 884 in the same period in 2023.
However, profit before tax for legal services saw a significant reduction from £14 million to £3.3 million, impacted by increased staffing costs and the aforementioned settlement. Meanwhile, the credit hire segment of Anexo reported a 22% increase in revenue to £35 million, with profits soaring by 86% to £4.1 million.
Overall, Anexo Group’s revenue fell by 12% to £69 million, with profits dropping dramatically by 61% to £5.9 million, a figure that remains in line with management’s projections. The company anticipates stronger performance in the latter half of the year.
Anexo continues to invest in diesel emissions claims, with substantial client bases established for cases against several major automotive manufacturers, including Mercedes Benz, Vauxhall, BMW/Mini, Peugeot/Citroen, and Renault/Nissan. The potential settlements from these claims are expected to improve profitability and cash flow, although the timing of negotiations is uncertain.
Group net debt rose by 11% to £68 million as of June 30, 2024. To manage financial strain, Anexo has secured a £30 million loan with Callodine Commercial Finance, from which £20 million has been drawn. This move is designed to provide financial flexibility and repay existing loans, significantly reducing the cost of capital for the group.
Secure Trust Bank PLC has also increased funding availability within its previously agreed £40 million facility. According to Alan Sellers, Anexo’s executive chairman, the group’s performance improvement in its core business, excluding impacts from the Volkswagen settlement, is notable. Increases in new vehicle claims and legal staff support this positive outlook.
The firm has chosen to withhold a half-year dividend in light of ongoing investment into the business, with decisions on this matter deferred until the preparation of the full-year results.
The strategic expansion of Anexo’s legal services and credit hire sectors, despite considerable revenue declines due to extraordinary settlements and increased staffing costs, underscores the firm’s resilience and forward-thinking strategy. The upcoming potential settlements in diesel emissions claims represent a pivotal opportunity for future financial enhancement.
