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What a load of rubbish. This is a solid company with year on year revenue growth and high future prospects.
I take it your not in business yourself........
In a case like this the debt holders will need to be satisfied first and I cant see any way the shareholders will get a look in for at least a year. The debt of the company you hold might reduce but that's not likely to show up in the sp by any worthwhile amount.
A long term hold for those unwillingly ro bite the bullet and move on to better pastures.
GLA.
The revenue to ANX is underwhelming and it's clear why DBAY didn't take this private. Avoid, even as a bounce scenario in my opinion. Not worth the risk and the debt situation is a real concern that's not going away and they will be working to pay that down for ages. Whatever the final sum from the case to ANX it ain't heading to the investors but the debt holders.
Have some of yesterday's threads been removed? Wasn't there some supposed correspondence with ANX about the share price drop?
I think £1 is too low. There could be an element of selling down to try and make any offer look better on paper. There have been some positive developments since 2021 and concentrating on cash collection and paying down debt may not be a bad thing (I'd say it was overdue). The judicial backlog is not helping us.
Yep - I have a gut feeling they could pinch this for £1. The post results profit guidance for this year was £18. The VW £7m drops through to the bottom line, meaning £25m profit. Don't forget the lowered £18m guidance was on the basis of a focus on cash generation and paying down debt with free cash flow... No idea what is going on here but the market is pricing Anexo like its about to go bust! No director buys (and no material shareholder buys) smacks of a cheap takeover by DBAY. Ludicrous market cap of £80m
Auctioned off to Dbay perhaps?!
Remember Dbay's £1.50/share bid was ultimately rejected in 2021. Back in 2021 - when housing disrepair was just beginning, no emissions cases had been won, competition in impercunious hire was stronger than now and prospects for ANX didn't look as rosy as they do now.
It's true the market was a tad more optimistic back then.
GLA
I think a cheap premium takeover is on the cards now - £1 could probably maybe just about do it.
The RSI is 9! Not sure I’ve ever seen that before except for companies that are going bust!
Ok guys, I'll leave you to your excellent investment - good luck.
I agree with Agricore. Expect new broker notes in the next week or so, which will confirm. Expecting a rerate to at least £1 after
Shear, I think you've got it wrong. Or at least I'm reading it very differently. A net positive of £7.7m is net of expenses surely? Otherwise what it is "net" of?! (I admit it is a badly worded RNS).
Accrued expenses relating to VW were £5.8m H1 FY2022 and £3.1m H2 FY2022. So I believe the move in debt is actually £16.6m. On a forecast net debt of £73m for 2023 that reduces forecast 2023 net debt to just £56.4m.
Meanwhile the forecast FY2023 earnings are £18.1m so adding net £7.7m brings PBT to circa £25.8m on a market cap of £87.3m the adjusted PE is 3.4x ..... not 11.2x.
When speaking of PE I think you are getting rather confused with EV/EBITDA (which does include debt). So 2023 forecast EV is £87.3m+£56.3m = £143.6m. Then forecast PBT £25.8m adding back interest, depreciation, amortization adds back about £8m (based on prior accounts) to arrive at a forecast EBITDA of £33.8m. So this is on a FY2023 forecast EV/EBITDA of 4.2.
A forecast FY2023 EV/EBITDA of 4.2 is CHEAP! CHEAP! CHEAP!
FCF was forecast at £11.7m for FY2023 so that's now £19.4m for FY2023 - that's great!
Moreover the 1st emission case win is the hardest. The Mercedes case will be less risky (proven capability), and less expensive (because of the learning curve), so the very fact there's a win is a positive. For the share price to not move one iota on the simple fact of this is in itself reflective of a general pessimism hanging over ANX.
Why? Losing their CFO in April seems to have caused the drop in market price. I didn't really understand this. I appreciate there were lots of comment about "no smoke without fire" but the guy was in post for just 9 months! The new CFO has been with the business a longer time and has a much more relevant past track record so who knows what the truth of Fryer's departure was? Jumped? Or pushed! Anyway for me the real brains in the business is Alan Sellers and listening to him present on a number of occasions I think he's a very pragmatic, realistic leader who's got his head screwed on. So I find the change of CFO making this somehow 30% cheaper quite baffling.
I conclude by asking: Did a badly worded RNS cause a rerate not to happen today?
Trendz, at 31/12 they had net debt of £70m, you can't calculate a P/E ratio and ignore debt like that. Add that to the current £87m market cap and you have an enterprise value of £157m, which would be equivalent to a £1.33 share price. Forecast earnings in 2023 are 11.8p, so it's currently trading at an 'adjusted' PE of 11.2x. Given their balance sheet & inability to collect receivables I'd say that's very generous.
The other way to look at it is that we can pay down the debt sooner and get an immediate saving on legal costs and interest payments. By my estimates, we’re now looking at 25-30m profit this year, meaning ANX is trading at 3-4 p/e. Another settlement with Mercedes and the focus on cash generation from receivables makes this a potentially great turnaround play. Good price to buy in IMO
Agree - pretty underwhelming! May as well have taken it to court and got a much higher payout, given it was basically a guaranteed win with the precedents set elsewhere. That's about half what I was expecting and like you say doesn't help the debt situation a great deal. Market not particularly impressed.
VW case settlement nothing to write home about;
"The terms of the agreement are subject to confidentiality restrictions, however the Group can announce that it will have a net positive cash position to Anexo of £7.175 million."
Doesn't even cover half of the extortionate Blazehill capital principal debt...
Forward p/e of 5, excluding VW case. Must be one of the cheapest profit making stocks on the London market…
Hey shearclass - we’ve spoken before over at tinybuild…always like your input.
I must admit, this has been a painful watch for me as lost 20%…but fundamentally do think there is value here. It’s a cash hungry model but there collection rates are also growing a lot and are very substantial. They had a difficult year in credit hire with the court delays and the insurance contract going wrong which was not their fault. I’m looking beyond credit hire here….the housing disrepair segment is highly attractive, has much quicker pay back and returns on capital of +50%. It’s a hated stock at the moment but I think the VW case will come good and you gave that added upside as well.
Always just about assessing risk and reward but I think there is good upside here. Agree though that VW must be used to get rid of that horrendous expensive funding got last year - that was silly.
Why has the market suddenly dropped shares 20%? Part of the reason is surely the terms of their latest debt funding.
On 7th April 2022 they issued a trading statement that said; "The Group is pleased to announce an increase in its overall debt facilities. New debt facilities of £7.5 million have been secured from a new lender on regular commercial terms"
Note the phrase 'regular commercial terms'
An increase to £15m was then disclosed in the half year accounts, but no mention was made of the terms.
It wasn't until the final results landed last Wednesday that the market found out what these 'regular' terms were;
"In March 2022 the group secured a loan of £7.5 million from Blazehill Capital Finance Limited, with an additional £7.5 million drawn in September 2022, the total balance drawn at 31 December 2022 was £15.0 million. The loan is non amortising and committed for a three year period. Interest is charged and paid monthly at 13% above the central bank rate."
13% above the central bank rate = 17.5% interest rate on a £15m loan, which is quite staggering.
Now why would a company booking profit of £24m need to take a £15m loan at 17.5% interest rate?
This is a textbook example of why you have to read & ideally understand what all of a companies financial statements tell you. Sure, the P&L shows a whopping great profit of £24m & EPS of 16p, however the balance sheet & cash flow statement tell you this apparent profitability is nothing more than superficial.
Revenue is being booked to the P&L but never feeds through to the cash flow statement. Instead it sits on the balance sheet in an ever growing pile of trade receivables, which tallied an incredible £222m at 31/12/22, an increase of some £34m year on year. Because this cash isn't being collected, they need to increase their borrowings to finance new cases, so debt grows year on year too.
The result is a gradually expanding house of cards. They'll reach a point where they can't borrow any more & won't be able to invest in new cases, this will lead to a collapse in revenue & unless they can cash in a chunk of those £222m trade receivables to repay the debt, likely lead to insolvency.
Anyone who sold as the FD resigned would have saved themselves a few bob in losses and more pain.
Just look at the debt increase and funding. Amazing. At this point in the debt cycle it should be priority to get it down. FD probably made his opinion clear and had no choice but to walk as he didn't want to be associated with it, wasn't listened to and its very career limiting to be on the bridge of a sinking ship. Doesnt matter to an old captain but really bad for anyone under 60.
FDs know the state and the score and he resigned, wasn't fired.
Good luck.
As soon as you see an FD resign at short notice before results, runaway. A basket case. No excuses can cover up for the debt increases. It is nothing more than a mess but, hey, VW will make it all better and get it back towards £1.10 perhaps.
A real avoid.
I think you will find it is MCE - announced early in the year as a big business win, it then went into administration causing hire numbers to drop by 27% at year end. This cost money to set up for the anticipated demand and further money being lost flowing through numbers being hit going through 2023 as this business is now lost and gone!
Trendz, I'm like you, scratching my head over this one. I ignore revenue increase and focus on profits and eps; and eps really hasn't increased although the company is making money. This is put down to further investment in staff, I imagine this also explains increased level of debt. This is also has been put forward as reason for not increasing the meagre dividend (although this is covered x11!), it's argued better to maintain cash levels in the company.
Can't understand reason for fall, can only think it's a knee jerk reaction and price will stay around a £1... But if this continues for too long perhaps it will come under scrutiny from possible purchaser