A changing business model

Anexo has announced impressive H1 22 results, with 42% revenue growth and 53% PBT growth underpinned by strong demand in the Credit Hire business and a doubling of revenue and profit in the Housing Disrepair division. Continued investment in the Legal Services division resulted in 20% growth in cash collections. The Board has highlighted that the emissions opportunity warrants significantly increased investment and that shareholders’ interests would be better served by Anexo paying an annual dividend after announcement of FY22 results. Our 1.5p dividend forecast for FY22 is unchanged. Reductions in PBT and EPS for FY22 (-5%) and FY23 (-6%) reflect a lower year-end vehicle count in Credit Hire and higher finance costs, partially offset by revenue upgrades in Housing Disrepair.

A changing business model

Against a background of continued economic uncertainty, DF Capital has today published an encouraging trading update, demonstrating strong growth in new loan origination, loan balances and loan facilities. The company appears on course to achieve our 2022 forecast loan book growth of 80% to £449m. DF Capital will provide a full update in its interim results release scheduled for 20 September.

Trading update underpins 2022 loan book forecast

finnCap announced this morning a proposed new CEO and the appointment of new directors. Sam Smith, finnCap’s CEO, has announced her intention to step down from the position and move into an advisory role within the group. John Farrugia, currently Managing Partner of finnCap Cavendish, will become a director of the group and then CEO after Sam Smith steps down.

Change of CEO and appointment of new directors

Ahead of today’s AGM, Anexo has issued a confident trading statement covering the first four months of FY22. The update follows last month’s announcement of strong FY21 results, including a 53% growth in pre-tax profit to £23.7m, underpinned by a 36% revenue increase. The investment made by Anexo generated strong growth in 2021, which has continued into the first four months of 2022.

Investment continuing to pay off

Anexo has announced a strong set of results for FY21. Revenue of £118.2m was 8% above our forecast and underpinned 53% pre-tax profit growth to £23.7m. Management’s decision to invest in challenging markets is reaping rewards. The Credit Hire and Legal Services divisions produced strong results and the Housing Disrepair Team has had a strong start.

The rewards of investment

Following a positive trading update, finnCap has made an interesting move into a fast-growing advisory market, taking a 50% interest in Energise, a Net Zero and sustainability consultancy. The £2.1m consideration comprises £1.9m cash and 902,090 new finnCap shares. The shares will be admitted on or before 29 April, after which finnCap will have 180,818,177 shares in issue. Of the shares issued, 50% are subject to a 12-month lock-up and 50% to a 24-month lock-up. The impact of the investment will be incorporated in new FY23 forecasts when FY22 results are announced in July.

Investment in a high-growth advisory market

DFCH has reported impressive results for 2021 against a challenging background of supply chain issues and macroeconomic uncertainty. The company has already updated the market on its strong start to 2022, with record originations in Q1 2022. Potential participation in the British Business Bank’s ENABLE scheme and/or the issue of Tier 2 capital should enable DFCH to achieve an £800m loan portfolio without the need for further equity issuance. We forecast substantial loan growth throughout the forecast period and a 12.9% Return on Tangible Equity in 2025.

Poised for accelerated growth and profitability

finnCap Group PLC has provided an impressive full-year (to 31 March 2022 year-end) revenue update, ahead of its July results announcement. Total revenue (unaudited) was £52.4m, 12% up on FY21, driven by a doubling of revenue in finnCap Cavendish to £24.1m. This is £1.4m above our previous forecast (£51m) and comfortably above management’s (pre-March update) £45-50m guidance. The company has guided to adjusted pre-tax profit remaining in line with market expectations.

Further upgrade to FY22 revenue guidance

Following a strong January trading update and forecast upgrades, Anexo has issued a confident trading statement ahead of its 2021 full-year results announcement on 11 May. Trading is in line with management’s expectations. Continued focus on quality claims, service standards and success rates in its Credit Hire division has reduced vehicles on the road from the record levels seen in H2 21 to 1,955. Anexo’s legal division continues to benefit from the reopening of the courts. Anexo has announced an additional debt facility plus an increase in its debt facility with Secure Trust to £40m.

Confident trading update and increased debt facilities

Distribution Finance Capital Holdings plc (DFCH) has published a brief trading update ahead of its 2021 full-year results announcement on 13 April 2022. We summarise the key points from the trading update in this note and will review our forecasts for 2023 and 2024 following the results announcement. The company’s capital review announced today could lead to additional non-equity capital issuance that may support a loan book of up to £0.8bn.

Capital review could create further loan book growth

finnCap Group PLC has released a very encouraging and impressive trading update, ahead of its full-year results announcement in July 2022. Revenue (unaudited) for the financial year to 31 March 2022 will exceed the top end of its £45-50m guidance range. This demonstrates a strong performance in challenging markets where capital market transactions have been delayed or cancelled. We now forecast full-year revenue of £51m, a 5% uplift from our previous forecast of £48.5m. Management commented that with further potential deals to close, the group is set to deliver record revenue for FY22. finnCap is seeing the real benefits of diversifying its products and customer base.

Impressive trading update in a tough market

DFCH has published a trading update ahead of its December 2021 results publication in April. The update confirms that the operating model is proving highly effective. DFCH has had a record year for loan origination (£690m) and the 2021 loan book has more than doubled to around £250m, fully funded by retail deposits that stood at £295m at year-end 2021. Strong cost management and low arrears underpin our reduced pre-tax loss estimate of £4.1m. DFCH commented that whilst Covid-related supply chain issues are easing, the Board remains realistic about near-term loan book growth. We have therefore reduced 2022 estimates based on more moderated loan book growth which reduces average loan balances and pretax estimates. The Board continues to target full-year profitability for 2022.