REG - NAHL Group PLC - Interim Results
24/09/2024 07:00
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RNS Number : 3304F NAHL Group PLC 24 September 2024
Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information for the purposes of
Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310.
With the publication of this announcement, this information is now considered
to be in the public domain.
24 September 2024
NAHL Group plc
("NAHL", the "Company" or the "Group")
Interim Results
First half performance in line with management's expectations - continued
reduction in net debt whilst remaining profitable and cash generative
NAHL (AIM: NAH), a leading marketing and services business focused on the UK
consumer legal market, announces its unaudited interim results for the six
months ended 30 June 2024 (the "Period").
Financial Highlights
· As previously guided, revenue was £19.4m, 7% lower than last year (H1 2023:
£21.0m) due to a reduction in revenues from the Personal Injury business in
what was a challenging and unusually competitive market during the Period.
· Operating profit was in line with the previous year at £1.8m (H1 2023:
£1.8m).
· Borrowing costs on the Group's RCF fell by 10% in the Period, reflecting the
reduction in borrowings as a result of the Group's continued strong cash
generation.
· Profit before tax increased to £0.5m (H1 2023: £(0.0)m) and was almost as
high as for the whole of the previous year (FY 2023: £0.6m).
· Delivered free cash flow of £0.7m in the Period (H1 2023: £1.8m) and
operating cash conversion continued to be very strong at 134% (H1 2023:
270%).
· Further progress made in reducing net debt. At Period end net debt was £9.0m,
down 7% from £9.7m at 31 December 2023 and down 22% from 30 June 2023.
Operational Highlights
Consumer Legal Services
· In Consumer Legal Services revenue decreased by 17% to £11.4m in the Period,
from £13.7m due to a 20% reduction in revenues from the Personal Injury (PI)
business, whilst Residential Property grew by 6%.
· Operating profit was £0.8m (H1 2023: £1.1m), due to fewer PI enquiries being
placed into panel firms and a higher average enquiry acquisition cost largely
as a result of Google's significant organic search algorithm change.
· Our residential search business, Searches UK, traded well and grew operating
profit by £0.2m.
· NAH generated 11,304 total enquiries in the Period (H1 2023: 17,559).
· NAH placed 3,072 new enquiries into NAL in the Period. We estimate these
will be worth £2.9m in future revenues and cash by the time they mature (H1
2023: 4,555 enquiries worth an estimated £3.4m).
· NAL performed well during the first half, settling 1,911 claims in the Period,
10% more than last year (H1 2023: 1,738). These settled claims generated
£4.0m of cash for NAL, 46% higher than last year (H1 2023: £2.7m).
· At 30 June 2024, NAL was processing 9,033 ongoing claims, which was lower than
the previous year (30 June 2023: 10,611 ongoing claims) due to fewer enquiries
being generated. We estimate our book of ongoing claims will generate future
revenues of £8.6m, future gross profits of £7.3m and future cash of £12.8m.
· In light of the challenging market conditions, we have implemented certain
cost saving measures in the Period, these include £0.9m of annualised
savings, primarily in the NAH business, of which £0.4m will benefit FY24.
Critical Care
· The Group's Critical Care business, Bush & Co., had an exceptional six
months, delivering 11% revenue growth to £8.0m (H1 2023: £7.3m), with a
strong performance across all service lines.
· Operating profit grew by 13% to £2.6m (H1 2023: £2.3m).
· Generated £2.1m of cash from operations in the Period (H1 2023: £2.6m) and
cash conversion was strong at 82%.
· Expert witness services had another impressive half year with revenue growth
of 18% versus last year. Bush & Co. also continued to generate a strong
pipeline of future work and new instructions for expert witness reports
increased by 22% to 687 (H1 2023: 562).
· In case management services, the business delivered 261 initial needs
assessment reports ("INAs") in the Period, which was broadly in line with last
year, and 238 new instructions (H1 2023: 275). The business is also servicing
1,388 ongoing case management clients (H1 2023: 1,369) that generate recurring
revenue.
· Bush & Co. Care Solutions grew revenues by 34%.
· Our continued focus on recruiting the best talent meant we increased the
number of expert witness associates by 13% and case management associates by
9%.
Outlook
· The Board remains confident in delivering a full year outturn in line with
market expectations.
· In Consumer Legal Services, trading during Q3 to date in NAH was broadly in
line with Q2. Cash from settlements in NAL continued to grow, with £1.4m
collected in July and August compared to £1.0m in the equivalent period last
year.
· In Critical Care, the number of expert witness reports issued in July and
August was 19% ahead of the equivalent period last year. The number of INA
reports issued was broadly similar and we are pleased with the encouraging
trading delivered to date.
· Cash generation has been strong in H2 to date, with net debt at 31 August 2024
reduced to £8.2m (30 June 2024: £9.0m).
· We are currently negotiating terms with a select number of highly engaged
parties for the potential sale of Bush & Co and hoping to conclude
discussions before the end of the year; potential strategic options and future
strategy for the remainder of the Group now being considered.
James Saralis, CEO of NAHL, commented:
"I am pleased with the first half performance of the Group. Despite the
challenges presented by a volatile personal injury market, the Group was
profitable and cash generative and we made further progress in reducing our
net debt. In Critical Care, Bush & Co. performed very strongly in the
first six months delivering double digit growth in revenue and profits. NAH
faced a more difficult, highly competitive market in the Period but we
continue to take steps to improve performance in this area and we expect to
make progress in the second half. As a result, the Board is confident in
delivering a full year outturn in line with market expectations and I would
like to take this opportunity to thank our fantastic team for their continued
hard work and commitment.
"The Board is encouraged that negotiations for the potential sale of Bush
& Co. are progressing well and it believes now is the right time to
consider the potential strategic options and future strategy for the remainder
of the Group. While this is at an early stage the Board will keep shareholders
updated with further announcements as appropriate."
For further information:
NAHL Group PLC via FTI Consulting
James Saralis (CEO) Tel: +44 (0) 20 3727 1000
Chris Higham (CFO)
Allenby Capital (AIM Nominated Adviser & Broker) Tel: +44 (0) 20 3328 5656
Jeremy Porter/Liz Kirchner (Corporate Finance)
Amrit Nahal/Stefano Aquilino (Sales & Corporate Broking)
FTI Consulting (Financial PR) Tel: +44 (0) 20 3727 1000
Alex Beagley NAHL@fticonsulting.com
Amy Goldup
Notes to Editors
NAHL Group plc (AIM: NAH) is a leader in the Consumer Legal Services market.
The Group provides services and products to individuals and businesses in the
through its two divisions:
· Consumer Legal Services provides outsourced marketing services
to law firms through National Accident Helpline and claims processing services
to individuals through National Accident Law, Law Together and Your Law. In
addition, it also provides property searches through Searches UK.
· Critical Care provides a range of specialist services in the
catastrophic and serious injury market to both claimants and defendants
through Bush & Co.
More information is available at www.nahlgroupplc.co.uk
(http://www.nahlgroupplc.co.uk/) , www.national-accident-helpline.co.uk
(http://www.national-accident-helpline.co.uk/)
, www.national-accident-law.co.uk (http://www.national-accident-law.co.uk/)
and www.bushco.co.uk (http://www.bushco.co.uk/) .
Interim Management Statement
I am pleased to report NAHL's Interim Results for the six months ended 30 June
2024.
Overview
NAHL made good progress with its strategic priorities in the first half of
2024. Performance in the Group's fully integrated law firm, National
Accident Law (NAL), has continued to improve, driving growth in settlements
and cash generation. The Group's Critical Care business, Bush & Co., had
an exceptional six months, delivering double digit growth in revenue and
profits. However, as previously outlined, the Group's Personal Injury lead
generation business, National Accident Helpline (NAH), faced a more
challenging market environment that was highly competitive in the Period. We
continue to take steps to improve results in this area and we anticipate
making progress in the second half.
The Board have also made good progress in exploring the future structure and
strategy for the Group.
Group results
As previously guided, revenue for the Period was £19.4m, 7% lower than last
year (H1 2023: £21.0m). The reduction was due to lower revenues in the
Group's Consumer Legal Services division, which has been addressing challenges
in lead generation and lower levels of panel placement in its Personal Injury
business. The Group's Critical Care division grew revenues by 11%, with a
strong performance across all service lines.
Operating profit for the Period was £1.8m, in line with last year (H1 2023:
£1.8m). In Consumer Legal Services, operating profit was £0.8m, which was
lower than last year (H1 2023: £1.1m) due to fewer Personal Injury enquiries
being placed into the panel and a higher average enquiry acquisition cost.
Operating profit in Critical Care grew by 13%, with particularly strong growth
from the division's expert witness service.
Profit attributable to members' non-controlling interests in LLPs fell by a
third to £0.9m (H1 2023: £1.4m), reflecting the continued run-off of the
Group's first joint venture LLP, Your Law. The Group's only remaining joint
venture LLP, Law Together, has continued to perform well.
Borrowing costs on the Group's revolving credit facility fell by 10% in the
Period, reflecting the reduction in borrowings as a result of the Group's
continued strong cash generation. In February 2024, the Group reduced the
size of its revolving credit facility from £20m to £15m and we aim to
continue reducing our net debt and borrowing costs.
Profit before tax increased to £0.5m (H1 2023: £(0.0)m) and was almost as
high as for the whole of the previous year (FY 2023: £0.6m). After taxation
of £0.2m (H1 2023: £0.0m) the Group returned a profit and total
comprehensive income for the Period of £0.3m, £0.4m higher than last year.
The Group delivered free cash flow of £0.7m in the Period (H1 2023: £1.8m)
and operating cash conversion continued to be very strong at 134% (H1 2023:
270%).
Due to this strong cash generation, net debt at the half year was £9.0m, down
7% from £9.7m at 31 December 2023 and down 22% from 30 June 2023. In H2, net
debt at 30 August 2024 reduced to £8.2m.
Consumer Legal Services
In our Consumer Legal Services division, revenue decreased by 17% to £11.4m
in the Period, from £13.7m. This was due to a 20% reduction in revenues
from the Personal Injury businesses, whilst Residential Property grew by 6%.
Operating profit decreased by 25% to £0.8m (H1 2023: £1.1m). Operating
profit in Personal Injury was £0.6m, which was £0.5m lower than last year
(H1 2023: £1.1m). This reduction was due to challenges in lead generation in
NAH, while NAL performed well in the Period. Residential Property delivered
growth in operating profit from approximately breakeven in H1 2023, which
included the contribution from Homeward Legal up until its disposal in April
2023, to a profit of £0.2m in the Period.
The division generated £1.5m of cash from operations in the Period (H1 2023:
£3.0m), and after deduction of drawings paid to LLP partners both the
Personal Injury (H1 2024: £0.4m; H1 2023: £0.7m) and Residential Property
(H1 2024: £0.2m; H1 2023: £0.2m) businesses were cash generative. Cash
conversion was179% (H1 2023: 274%), although this measure is before drawings
paid to LLP members.
Our strategy for growth in the personal injury market remains unchanged and is
to increase the number of customer enquiries that we attract through our
National Accident Helpline brand and then process more of those enquiries
through our own integrated law firm, NAL. By doing this we are creating a
higher margin, sustainable business and we can fund our growth through our
agile and scalable placement model. This is designed to balance the work we
place with our panel of third-party law firms and joint venture partners for
in-year profit and cash, with the work we process ourselves for greater, but
deferred profit and cash.
Market conditions made progress difficult in the first half as the UK personal
injury market contracted further. According to statistics from the Claims
Compensation Recovery Unit of the Ministry of Justice and the Official Injury
Claim portal for small claims, the number of road traffic accident ("RTA")
claims in the preceding 12 months was 4% lower by the end of the Period, and
the number of employer's, public and occupier liability claims ("non-RTA")
fell by 5%. It is, however, worth noting that since the end of the first
half, there was some improvement in the July figures for RTA claims.
During the Period and as previously reported, Google completed a significant
organic search algorithm change. Whilst NAH adapted well to the change and
held its search ranking position, several competitors responded by investing
heavily in paid search. This led to an extremely competitive paid search
environment which made lead acquisition disproportionally expensive, and as a
result NAH acquired fewer enquiries and experienced significantly elevated
enquiry acquisition costs. The paid search environment remains competitive
albeit there have been some signs of improvement.
In total, NAH generated 11,304 enquiries in the Period (H1 2023: 17,559).
The mix of work comprised 28% RTA (H1 2023: 25%), 43% non-RTA (H1 2023: 48%)
and 29% specialist (H1 2023: 27%).
Of these enquiries, 3,072 were passed to NAL for processing. Whilst this
represented a slightly higher proportion of the total than last year, the
number of enquiries was lower overall (H1 2023: 4,555) due to fewer total
enquiries being generated. As announced in our 2023 Final Results, we
continued to experience a reduction in panel demand in the Period, which
resulted in lower in-year profits and cash. Excluding specialist claim
types, 3,011 enquiries were placed into the panel in the Period (H1 2023:
7,007). However, demand from Law Together LLP, our joint venture law firm,
remained strong and we increased placement to 1,946 enquiries in the Period
(H1 2023: 1,234 enquiries).
NAL performed well during the first half. The 3,072 claims acquired cost
£1.1m in marketing (H1 2023: £1.4m). Whilst many of these enquiries will
not translate into winning claims this financial year, they further strengthen
the embedded value of NAL's book of claims, which will lead to future profits
and cash. We estimate that these enquiries will be worth £2.9m in future
revenues and cash by the time they mature (H1 2023: 4,555 enquiries worth an
estimated £3.4m).
NAL settled 1,911 claims in the Period, which was 10% more than last year (H1
2023: 1,738). Our teams continue to deliver improvements in performance,
reducing processing timescales and increasing productivity. These settled
claims generated £4.0m of cash for NAL, which was 46% higher than last year
(H1 2023: £2.7m).
At 30 June 2024, NAL was processing 9,033 ongoing claims (30 June 2023: 10,611
ongoing claims). These claims represent an embedded value to the business,
being the future profits and cash to be generated by processing them through
to settlement. We estimate that after expensing the marketing costs to
generate these claims and the processing costs to date, our book of ongoing
claims will generate future revenues of £8.6m, future gross profits of £7.3m
and future cash of £12.8m.
In light of the challenging market conditions which have impacted the revenues
generated by the Personal Injury business, we have implemented certain cost
saving measures in the Period. This includes £0.9m of annualised savings of
which £0.4m will benefit FY24 (net of implementation costs). These savings
are primarily in the NAH business and we continue to explore further cost
saving opportunities that will lead to further operating efficiencies.
Critical Care
Our Critical Care division has continued to trade well. Revenues increased
by 11% in the Period to £8.0m (H1 2023: £7.3m), of which around 46% was
recurring. Operating profit increased by 13% to £2.6m (H1 2023: £2.3m) and
operating profit margins increased from 31.2% last year to 31.8% (FY 2023:
30.0%). The business generated £2.1m of cash from operations in the Period
(H1 2023: £2.6m).
Expert witness services had another strong half year with revenue growth of
18% versus last year. The number of expert witness reports completed and
issued to customers increased by 10% to 636 (H1 2023: 580 reports). Bush
& Co. continued to generate a strong pipeline of future work and new
instructions for expert witness reports increased by 22% to 687 instructions
(H1 2023: 562 instructions).
In case management services, revenues were 5% higher than last year. The
business delivered 261 initial needs assessment reports ("INAs") in the
Period, which was broadly in line with last year, and 238 new instructions (H1
2023: 275). The business is also servicing 1,388 ongoing case management
clients (H1 2023: 1,369) that generate recurring revenue.
Bush & Co. Care Solutions also delivered another impressive performance,
growing revenues by 34%. This service provides a range of support solutions
for clients who directly employ support workers or care nurses and it has
grown consistently since its launch in 2021. The number of ongoing care
packages, which result in monthly recurring income, increased from 14 at 30
June 2023 to 28 at the end of the Period.
Last year, the business made a strategic investment in its recruitment
processes which resulted in a significant growth in the number of associates
that choose to work with us, and I am pleased to report that this benefit has
carried forward into the first half of 2024. In the Period, we increased the
number of expert witness associates by 13% and case management associates by
9%. We also added three new employed case managers to the team. We will
maintain our focus on attracting talented healthcare professionals to support
our growth in the second half.
Our people
We employed 282 people at 30 June 2024 which was broadly in line with the end
of 2023 (December 2023: 280).
Our focus on making NAHL a great place to work was recognised in July with our
best ever results in our annual staff engagement survey, which returned an
overall engagement score of 82% (2023: 81%). This was significantly higher
than Gallup's UK average of 10%, and the 70% average across their
best-practice organisations.
Update on potential sale of Bush & Co and Group strategy
As announced in April 2024, the Board is continuing to explore a potential
sale of Bush & Co. Whilst there can be no certainty that a sale will
occur, the Board has experienced strong levels of interest from a wide variety
of potential buyers and is currently negotiating terms with a select number of
highly engaged parties. The Board hopes to conclude these discussions before
the end of the year and will update shareholders as appropriate.
In light of these negotiations, the Board is now considering the potential
strategic options and future strategy for the remainder of the Group should a
disposal of Bush & Co proceed. With support from its advisers, the Board
will explore all the options available to the Company to maximise value from
the Consumer Legal Services division, including, without limitation, the
medium to long term strategy to scale NAL and an evaluation of assets,
structure and market outlook. This review is at an early stage and further
announcements will be made as appropriate.
Summary and outlook
In summary, the results for the first half of the year were in line with the
Board's revised expectations. Despite the challenges caused by a volatile
personal injury market, the Group was profitable and cash generative in the
Period. Our Critical Care business, Bush & Co., traded particularly well
and delivered double digit growth in revenue and profit.
In Consumer Legal Services, trading during Q3 to date in NAH has been broadly
in line with Q2 albeit the average acquisition cost in July and August was
marginally lower than in the previous quarter. Cash from settlements in NAL
continued to grow, with £1.4m collected in July and August compared to £1.0m
in the equivalent period last year.
In Critical Care, the number of expert witness reports issued in July and
August was 19% ahead of the equivalent period last year. The number of INA
reports issued was broadly flat. Instruction levels and engagement with our
customers remains high and we are pleased with the strong trading delivered to
date.
Cash generation has been strong in H2 to date with net debt at 31 August 2024
reduced to £8.2m (30 June 2024: £9.0m).
Based on these results, the Board remains confident in delivering a full year
outturn for the Group in line with market expectations.
James Saralis
Chief Executive Officer
1. Free cash flow is defined as net cash generated from operating
activities less net cash used in investing activities less payments made to
partner LLP members and less principal element of lease payments. This measure
provides management with an indication of the amount of cash available for
discretionary investing or financing after removing material non-recurring
expenditure that does not reflect the underlying trading operations.
Unaudited Unaudited 6 months Audited 12 months
6 months ended ended
ended 30 June 31 December 2023
30 June 2023
2024
Statutory measure - net cash generated from operating activities 1.9 4.2 7.5
Net cash used in investing activities (excluding disposal of subsidiary) (0.1) (0.1) (0.3)
Principal elements of lease payments (0.2) (0.2) (0.3)
Drawings paid to LLP members (0.9) (2.1) (3.3)
Net cash used in financing activities (before borrowings) (1.1) (2.3) (3.6)
Free Cash Flow 0.7 1.8 3.6
2. Operating cash conversion is calculated as cash generated from
operations divided by operating profit. This measure allows management to
monitor the conversion of underlying operating profit into operating cash.
Unaudited Unaudited 6 months Audited 12 months
6 months ended ended
ended 30 June 31 December 2023
30 June 2023
2024
Statutory measure - cash generation from operations 2.4 4.9 8.9
Statutory measure - operating profit 1.8 1.8 4.1
Operating cash conversion 134.0% 269.6% 216.7%
3. Net debt is defined as cash and cash equivalents less interest-bearing
borrowings:
Unaudited Unaudited 6 months Audited 12 months
6 months ended ended
ended 30 June 31 December 2023
30 June 2023
2024
Cash and cash equivalents 2.2 2.4 2.0
Interest bearing borrowings (11.2) (13.9) (11.7)
Net debt (9.0) (11.5) (9.7)
Consolidated statement of comprehensive income
for the 6 months ended 30 June 2024
Unaudited
6 months
ended 30
June 2024 Audited
£000 Unaudited 12 months
Note 6 months ended 31
ended 30 December 2023
June 2023 £000
£000
Revenue 2 19,394 20,951 42,193
Cost of sales (10,284) (12,021) (23,480)
Gross profit 9,110 8,930 18,713
Administrative expenses (7,295) (7,110) (14,595)
Operating Profit 1,815 1,820 4,118
Profit attributable to members' non-controlling interests in LLPs (916) (1,360) (2,506)
Financial income 107 57 158
Financial expense 3 (505) (560) (1,121)
Profit/(Loss) before tax 501 (43) 649
Taxation 4 (168) (45) (265)
Profit/(Loss) and total comprehensive income for the period 333 (88) 384
Profit/(Loss) from discontinued operations for the period 10 - (49) (49)
Profit/(Loss) from continuing operations for the period 333 (39) 433
Earnings per share (p) - Continuing operations Unaudited Unaudited 6 months Audited 12 months
6 months ended ended
ended 30 June 31 December 2023
30 June 2023
2024
Basic earnings per share 7 0.7 (0.1) 0.9
Diluted earnings per share 7 0.7 (0.1) 0.9
Earnings per share (p) - Discontinued operations Unaudited Unaudited 6 months Audited 12 months
6 months ended ended
ended 30 June 31 December 2023
30 June 2023
2024
Basic earnings per share 7 - (0.1) (0.1)
Diluted earnings per share 7 - (0.1) (0.1)
Consolidated statement of financial position
At 30 June 2024
Note Unaudited as at 30 June Unaudited as at Audited
2024 30 June as at 31 December 2023
£000 2023 £000
£000
Non-current assets
Goodwill 55,489 55,489 55,489
Other intangible assets 1,262 2,238 1,784
Property, plant and equipment 343 365 328
Right of use assets 1,620 1,883 1,751
Deferred tax asset 25 49 25
58,739 60,024 59,377
Current assets
Trade and other receivables (including £2,651,000 (June 2023: £5,174,000; 5 30,423 30,890 30,526
December 2023: £5,312,000) due in more than one year)
Cash and cash equivalents 2,194 2,422 2,011
32,617 33,312 32,537
Total assets 91,356 93,336 91,914
Current liabilities
Trade and other payables 6 (15,818) (15,896) (16,246)
Lease liabilities (248) (238) (244)
Member capital and current accounts (3,685) (3,763) (3,692)
Current tax liability (315) (110) (210)
(20,066) (20,007) (20,392)
Non-current liabilities
Lease liabilities (1,352) (1,600) (1,478)
Other interest-bearing loans and borrowings (11,184) (13,954) (11,719)
Deferred tax liability (160) (367) (263)
(12,696) (15,921) (13,460)
Total liabilities (32,762) (35,928) (33,852)
Net assets 58,594 57,408 58,062
Equity
Share capital 119 117 117
Share option reserve 5,182 4,803 4,985
Share premium 14,595 14,595 14,595
Merger reserve (66,928) (66,928) (66,928)
Retained earnings 105,626 104,821 105,293
Capital and reserves attributable to the owners of NAHL Group plc 58,594 57,408 58,062
Consolidated statement of changes in equity
for the 6 months ended 30 June 2024
Share Share Share Merger Retained Total
capital option premium reserve earnings equity
£000 reserve £000 £000 £000 £000
£000
Balance at 1 January 2024 117 4,985 14,595 (66,928) 105,293 58,062
Total comprehensive income for the period
Profit for the period - - - - 333 333
Total comprehensive income - - - - 333 333
Transactions with owners, recorded directly in equity
Issue of share capital 2 - - - - 2
Share-based payments - 197 - - - 197
Total transactions with owners recorded directly in equity 2 197 - - - 199
Balance at 30 June 2024 119 5,182 14,595 (66,928) 105,626 58,594
Balance at 1 January 2023 116 4,628 14,595 (66,928) 104,909 57,320
Total comprehensive income for the period
Loss for the period - - - - (88) (88)
Total comprehensive income - - - - (88) (88)
Transactions with owners, recorded directly in equity
Issue of share capital 1 - - - - 1
Share-based payments - 175 - - - 175
Total transactions with owners recorded directly in equity 1 175 - - - 176
Balance at 30 June 2023 117 4,803 14,595 (66,928) 104,821 57,408
Balance at 1 January 2023 116 4,628 14,595 (66,928) 104,909 57,320
Total comprehensive income for the year
Profit for the year - - - - 384 384
Total comprehensive income - - - - 384 384
Transactions with owners, recorded directly in equity
Share-based payments - 357 - - - 357
Issue of share capital 1 - - - - 1
Total transactions with owners recorded directly in equity 1 357 - - - 358
Balance at 31 December 2023 117 4,985 14,595 (66,928) 105,293 58,062
Consolidated cash flow statement
for the 6 months ended 30 June 2024
Note Unaudited 6 months ended 30 June 2024 Unaudited 6 Audited
£000 months ended 12 months ended 31 December 2023
30 June 2023 £000 £000
Cash flows from operating activities
Profit/(Loss) for the period 333 (88) 384
Adjustments for:
Profit attributable to members' non-controlling interests in LLPs 916 1,360 2,506
Property, plant and equipment depreciation 56 69 126
Right of use asset depreciation 132 144 276
Amortisation of intangible assets 582 586 1,177
Financial income (107) (57) (158)
Financial expense 505 560 1,121
Share-based payments 197 175 357
Taxation 168 45 265
2,782 2,794 6,054
Decrease in trade and other receivables 79 1,896 2,297
(Decrease)/Increase in trade and other payables (428) 218 569
Cash generation from operations 2,433 4,908 8,920
Interest paid (455) (520) (1,090)
Interest received 72 20 84
Tax paid (165) (201) (402)
Net cash generated from operating activities 1,885 4,207 7,512
Cash flows from investing activities
Acquisition of property, plant and equipment (71) (42) (62)
Acquisition of intangible assets (60) (110) (247)
Disposal of subsidiary 59 (30) (30)
Net cash used in investing activities (72) (182) (339)
Cash flows from financing activities
Repayment of borrowings (500) (2,000) (4,250)
Loan arrangement fees (65) - -
Issue of share capital 2 1 1
Principal element of lease payments (144) (174) (266)
Drawings paid to LLP members (923) (2,084) (3,301)
Net cash used in financing activities (1,630) (4,257) (7,816)
183 (232) (643)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period 2,011 2,654 2,654
Cash and cash equivalents at end of period 2,194 2,422 2,011
Notes to the financial statements
1. Accounting policies
General Information
The half year results for the current and comparative period to 30 June have
not been audited or reviewed by auditors pursuant to the Auditing Practices
Board guidance of Review of Interim Financial Information.
These half year results do not comprise statutory accounts within the meaning
of Section 434 of the Companies Act 2006. Statutory accounts for the year
ended 31 December 2023 were approved by the Board of Directors on 1 May 2024
and delivered to the Registrar of Companies. The report of the auditors on
those accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of the Companies
Act 2006.
In preparing the half year results, the Board has considered the Group's
ability to continue as a going concern. This assessment included a review of
management's financial forecasts, covering a range of potential scenarios. The
going concern assessment focuses on two key areas being the ability of the
Group to meet its debts as they fall due and being able to operate within its
banking facility. The Group has access to a £15.0m revolving credit facility
('RCF') with its bankers. In all of the scenarios the Group has modelled it
would have sufficient liquidity within its current RCF to meet its liabilities
as they fall due and would not need to access additional funding.
The condensed set of financial statements was approved by the Board of
Directors on 23 September 2024.
Basis of preparation
Profit or loss and other comprehensive income of subsidiaries acquired or
disposed of during the year are recognised from the effective date of
acquisition, or up to the effective date of disposal, as applicable.
Statement of compliance
The half year results for the current and comparative period to 30 June have
been prepared in accordance with IAS 34 Interim Financial Reporting applied in
conformity with the requirements of the Companies Act 2006 and the AIM Rules
of UK companies. They do not include all of the information required for
full annual financial statements and should be read in conjunction with the
financial statements of the Group for the year ended 31 December 2023, which
have been prepared in accordance with International Financial Reporting
Standards ("IFRS") in conformity with the requirements of the Companies Act
2006.
New and amended standards adopted by the Group
The following new or amended standards are applicable to the Group for the
current reporting period:
Amendments to IAS 1 - Classification of Liabilities as Current or Non-current
Amendments to IAS 1 - Non-current Liabilities with Covenants
Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback
Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements
None of the amendments above have had a material effect on the amounts
reported or disclosures included in the 2024 interim financial statements.
Use of judgements and estimates
The preparation of financial statements in conformity with IFRS requires
management to make judgements and estimates that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates. Estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the year in which the estimates are
revised and in any future years affected.
In preparing the condensed set of financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were of the same type as those that
applied to the financial statements for the year ended 31 December 2023.
Significant accounting policies
The accounting policies used in the preparation of these interim financial
statements for the 6 months ended 30 June 2024 are the accounting policies as
applied to the Group's financial statements for the year ended 31 December
2023.
Financial assets and liabilities
The Group's principal financial instruments comprise cash and cash
equivalents, trade and other receivables, trade and other payables
and interest-bearing borrowings.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent
to initial recognition, trade and other receivables are stated at amortised
cost using the effective interest method, less any impairment losses
calculated in line with IFRS 9.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to
initial recognition, trade and other payables are stated at
amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances. Cash and cash equivalents
are repayable on demand and are recognised at their
carrying amount.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost using the effective
interest method, less any impairment losses.
Recoverable disbursements and disbursements payable
Disbursement payables represent the balance of disbursements incurred in the
processing of personal injury claims. These disbursements will ultimately be
billed on settlement of a case or recovered from insurance if a case should
fail and so the recoverable disbursements represents the value of
disbursements still to be billed. Disbursement payables and receivables are
recognised initially at fair value and subsequent to initial recognition, are
stated at amortised cost using the effective interest method.
Member capital and current accounts
Member capital and current accounts represent the balances owed to
non-controlling members' in the LLPs. These consist of any capital advances
and unpaid allocated profits as at the period end. Members capital and current
accounts are classified as financial liabilities and are recognised initially
at fair value. Subsequent to initial recognition, members capital and current
accounts are stated at amortised cost using the effective interest method.
2. Operating segments
Geographic information
All revenue and assets of the Group are based in the UK.
Operating segments
The activities of the Group are managed by the Board, which is deemed to be
the Chief Operating Decision Maker (CODM). The CODM has identified the
following segments for the purpose of performance assessment and resource
allocation decisions. These segments are split along product lines and are
consistent with the prior year.
Consumer Legal Services - Revenue derived from two divisions being Personal
Injury and Residential Property. Within Personal Injury, revenue is generated
from a) Marketing services - revenue from the provision of marketing
activities to generate enquiries which are panelled to our panel law firms,
based on a cost plus margin model; b) Product Provision - consisting of
commissions received from product providers for the sale of additional
products by them to the panel law firms; c) Service provision (legal services)
- in the case of our ABS law firms and self- processing operation, National
Accident Law, revenue receivable from clients for the provision of legal
services. Within Residential Property, revenue is generated from: a) Marketing
services - up until April 2023, Homeward Legal provided marketing services to
generate residential conveyancing and survey enquiries for solicitors and
surveyors. This revenue line ceased from April 2023; b) Expert Reports -
Searches UK provides search reports.
Critical Care - Revenue from the provision of expert witness reports and case
management support within the medico-legal framework for multi-track cases.
Shared Services - Costs that are incurred in managing Group activities or not
specifically related to a product.
Other items - Other items represent share-based payment charges and
amortisation charges on intangible assets recognised as part of business
combinations.
Consumer Critical Care Shared services Other items Eliminations(2) Total
Legal Services £000 £000 £000 £000 £000
£000
6 months ended 30 June 2024
Revenue 11,368 8,026 - - - 19,394
Depreciation and amortisation (110) (76) (171) (413) - (770)
Operating profit/(loss) 830 2,551 (894) (672) - 1,815
Profit attributable to members' non-controlling interests in LLPs (916) - - - - (916)
Financial income 99 - 8 - - 107
Financial expenses - - (505) - - (505)
(Loss)/profit before tax 13 2,551 (1,391) (672) - 501
Trade receivables 2,344 6,394 - - - 8,738
Total assets(1) 25,333 7,830 75,699 - (17,506) 91,356
Segment liabilities(1) (16,639) (1,602) (2,862) - - (21,103)
Capital expenditure (including intangibles) (20) (51) - - - (71)
6 months ended 30 June 2023
Revenue 13,688 7,263 - - - 20,951
Depreciation and amortisation (127) (82) (177) (413) - (799)
Operating profit/(loss) 1,099 2,266 (924) (621) - 1,820
Profit attributable to members' non-controlling interests in LLPs (1,360) - - - - (1,360)
Financial income 52 - 5 - - 57
Financial expenses - (1) (559) - - (560)
Profit/(loss) before tax (209) 2,265 (1,478) (621) - (43)
Trade receivables 2,840 5,617 - - - 8,457
Total assets(1) 27,086 6,874 76,882 - (17,506) 93,336
Segment liabilities(1) (16,912) (1,564) (3,021) - - (21,497)
Capital expenditure (including intangibles) (36) (116) - - - (152)
12 months ended 31 December 2023
Revenue 27,582 14,611 - - - 42,193
Depreciation and amortisation (251) (154) (348) (826) - (1,579)
Operating profit/(loss) 2,805 4,421 (1,924) (1,184) - 4,118
Profit attributable to non-controlling interest members in LLPs (2,506) - - - - (2,506)
Financial income 145 - 13 - - 158
Financial expenses - (1) (1,120) - - (1,121)
Profit/(loss) before tax 444 4,420 (3,031) (1,184) - 649
Trade receivables 2,446 5,728 - - - 8,174
Total assets(1) 25,935 7,262 76,223 - (17,506) 91,914
Segment liabilities(1) (17,021) (1,479) (3,160) - - (21,660)
Capital expenditure (including intangibles) (77) (232) - - - (309)
1. Shared services and Other items do not form part of
the operating segments of the Group. They include expenses incurred that
cannot be attributable to an operating segment.
2. Eliminations represents the difference between the
cost of subsidiary investments included in the total assets figure for each
segment and the value of goodwill arising on consolidation.
3. Total assets and segment liabilities exclude
intercompany loan balances as these are not included in the segment results
reviewed by the chief operating decision maker. Segment liabilities comprise
trade and other payables (June 2024: £15,818,000, June 2023: £15,896,000,
Dec 2023: £16,246,000), current lease liabilities (June 2024: £248,000, June
2023: £238,000, Dec 2023: £244,000), non-current lease liabilities (June
2024: £1,352,000, June 2023: £1,600,000, Dec 2023: £1,478,000) and member
capital accounts (June 2024: £3,685,000, June 2023: £3,763,000, Dec 2023:
£3,692,000).
3. Financial expense
Unaudited 6 months ended 30 June 2024 Unaudited 6 months ended 30 June 2023 Audited 12 months ended 31 December 2023
£000 £000 £000
Interest on bank loans 454 520 1,043
Amortisation of facility arrangement fees 29 15 31
Interest on lease liabilities 22 25 47
Total 505 560 1,121
Interest on bank loans consists of interest incurred in respect of a revolving
credit facility of £15m which is due to terminate on 31 December 2025.
Interest is payable at 2.25% above SONIA per annum. There have been no changes
to the terms of the revolving credit facility agreement since the year ended
31 December 2023 and details of the amounts outstanding in respect of this
facility are given in Note 9.
4. Taxation
Unaudited 6 months ended 30 June 2024 Unaudited 6 months Audited 12 months ended 31 December 2023
£000 ended 30 June 2023 £000
£000
Current tax expense
Current tax on income for the year 275 148 462
Adjustments in respect of prior years - - (14)
Total current tax 275 148 448
Deferred tax credit
Origination and reversal of timing differences (107) (103) (183)
Total deferred tax (107) (103) (183)
Total expense in statement of comprehensive income 168 45 265
Total tax charge 168 45 265
Reconciliation of effective tax rate:
Unaudited 6 months ended 30 June 2024 Unaudited 6 months Audited 12 months ended 31 December 2023
£000 ended 30 June 2023 £000
£000
Profit/(Loss) for the period 333 (88) 384
Total tax expense 168 45 265
Profit/(Loss) before taxation 501 (43) 649
Tax using the UK corporation tax rate of 25.0% (June 2023: 19.0%/25.0%, 125 10 161
December 2023:19.0%/25.0%)
Non-deductible expenses 62 35 154
Adjustments in respect of prior years - - (14)
Share scheme deductions (19) - (56)
De-recognition of deferred tax assets - - 20
Total tax charge 168 45 265
The Group's tax charge of £168,000 (June 2023: £45,000, December 2023:
£265,000) represents an effective tax rate of 33.4% (June 2023: 104.7%,
December 2023: 40.9%). The effective tax rate is higher than the standard
corporation tax rate of 25.0% for the reasons as set out above.
5. Trade and other receivables
Unaudited 6 months ended 30 June 2024 Unaudited 6 months Audited 12 months ended 31 December 2023
£000 ended 30 June 2023 £000
£000
Trade receivables: receivable in less than one year 7,272 7,138 6,546
Trade receivables: receivable in more than one year 1,466 1,319 1,628
Accrued income: receivable in less than one year 10,076 9,925 8,706
Accrued income: receivable in more than one year 1,185 3,855 3,684
Other receivables 87 103 134
Prepayments 769 781 798
Recoverable disbursements 9,568 7,769 9,030
Total 30,423 30,890 30,526
A provision against trade receivables and accrued income of £470,000 (June
2023: £464,000, December 2023: £502,000) is included in the figures above.
Trade receivables and accrued income receivable in greater than one year are
classified as current assets as the Group's working capital cycle is
considered to be up to 36 months as extended credit terms are offered as part
of some commercial agreements.
6. Trade and other payables
Unaudited Unaudited Audited 12 months ended 31 December 2023
6 months ended 30 6 months £000
June 2024 ended 30
£000 June 2023
£000
Trade payables 1,985 1,662 1,723
Disbursements payable 6,554 5,813 6,559
Other taxation and social security 1,243 1,763 1,376
Other payables, accruals and deferred revenue 5,752 6,201 6,131
Customer deposits 284 457 457
Total 15,818 15,896 16,246
7. Earnings per share
The calculation of basic earnings per share at 30 June 2024 is based on a
profit attributable to ordinary shareholders of the parent company of
£333,000 (June 2023: loss of £88,000, December 2023: profit of £384,000)
and a weighted average number of Ordinary Shares outstanding of 47,047,306
(June 2023: 46,450,977, December 2023: 46,674,661).
(Loss)/profit attributable to ordinary shareholders
Unaudited Unaudited Audited
6 months ended 30 June 2024 6 months ended 30 June 2023 12 months ended
£000 £000 31 December 2023
£000
Profit/(Loss) for the period from continuing operations 333 (39) 433
Profit/(Loss) for the period from discontinued operations - (49) (49)
Profit/(Loss) for the period attributable to the shareholders 333 (88) 384
Weighted average number of Ordinary Shares
Number
Unaudited 6 months ended Unaudited 6 months ended 30 June 2023 Audited 12
30 June 2024 months ended
31 December 2023
Issued Ordinary Shares at start of period 46,894,697 46,325,222 46,325,222
Weighted average number of Ordinary Shares at end of period 47,047,306 46,450,977 46,674,661
Basic earnings per share (p)
Unaudited 6 months ended 30 June 2024 Unaudited 6 months ended 30 June 2023 Audited 12
months ended
31 December 2023
Group (p) - continuing operations 0.7 (0.1) 0.9
Group (p) - discontinued operations - (0.1) (0.1)
Group (p) - total 0.7 (0.2) 0.8
The Company operates share-based payment schemes to reward employees. As at 30
June 2024 and 31 December 2023 , there were potentially dilutive shares
options under the Group's share option schemes. The total number of options
available for these schemes included in the diluted earnings per share
calculation as at 30 June 2024 was 2,014,070 and as at 31 December 2023 was
2,672,4761. There are no other diluting items. As at 30 June 2023, in line
with IAS 33, as the Group had a negative earnings per share, it is assumed
there are no dilutive shares.
Diluted earnings per share (p)
Unaudited 6 months ended Unaudited 6 months Audited 12
30 June 2024 ended months
30 June 2023 ended
31 December 2023
Group (p) - continuing operations 0.7 (0.1) 0.9
8. Dividends
No dividends were paid in 2023 and the Directors have recommended an interim
dividend in respect of 2024 of nil p (2023: interim dividend of nil p).
9. Changes in liabilities arising from financing activities
Net debt comprises cash and cash equivalents and secured bank loans. Secured
bank loans consist of a revolving credit facility of £15m which is due to
terminate on 31 December 2025. Repayments are made periodically depending on
the level of free cash flow generated by the Group. Interest is payable at
2.25% above SONIA per annum. There have been no changes to the terms of the
revolving credit facility agreement since the year ended 31 December 2023.
Set out below is a reconciliation of movements in interest-bearing loans and
borrowings arising from financing activities:
Unaudited Unaudited Audited
as at 30 as at 30 as at 31 December 2023
June 2024 June 2023 £000
£000 £000
Net decrease from repayment of debt and debt financing 565 2,000 4,250
Movement in net borrowings resulting from cash flows 565 2,000 4,250
Non-cash movements - net release of prepaid loan arrangement fees (29) (15) (30)
interest -bearing loans and borrowings at beginning of period (11,719) (15,939) (15,939)
Interest-bearing loans and borrowings at end of period (11,183) (13,954) (11,719)
Set out below is a reconciliation of movements in lease liabilities during the
period:
Unaudited Unaudited Audited
as at 30 as at 30 as at 31 December 2023
June 2024 June 2023 £000
£000 £000
Net outflow from decrease in lease liabilities 144 174 312
Movement in net borrowings resulting from cash flows 144 174 312
Non-cash movements arising from initial recognition of new (22) (25) (47)
lease liabilities, revisions and interest charges
Lease liabilities at beginning of the period (1,722) (1,987) (1,987)
Lease liabilities at end of period (1,600) (1,838) (1,722)
Set out below is a reconciliation of movements in member capital during the
period:
Unaudited Unaudited Audited
as at 30 as at 30 as at 31 December 2023
June 2024 June 2023 £000
£000 £000
Movement in member capital liabilities resulting from cash flows 923 2,084 3,301
Non-cash movement: allocations of profits for the year (916) (1,360) (2,506)
Member capital liabilities at beginning of period (3,692) (4,487) (4,487)
Member capital liabilities at end of period (3,685) (3,763) (3,692)
10. Discontinued Operations
On 25 April 2023, the Group announced the sale of its wholly owned subsidiary
Homeward Legal Limited. Homeward Legal utilises online marketing to target
homebuyers and sellers in England and Wales to generate leads and instructions
which it then passes to panel law firms and surveyors in the conveyancing
sector for a fixed cost. The subsidiary is considered to be non-core to the
Group's principal operations.
Consideration for the sale was finalised at £117,000 which was equivalent to
the net asset value of Homeward Legal at the date of sale. The Group incurred
legal and consultancy costs amounting to £55,000 in respect of the sale. The
consideration is payable in two annual instalments and additionally, the Group
is entitled to receive contingent consideration in each of the two years
following completion, contingent upon Homeward Legal achieving certain
performance milestones. The contingent consideration will be based on a share
of profits and trade debtors recovered above certain amounts. The Board
believes that the contingent consideration will not be material and has
estimated the fair value as nil.
At the date of disposal, the carrying amounts of Homeward Legal's net assets
were as follows:
£000
Property, plant and equipment -
Deferred tax asset 1
Trade and other receivables 255
Cash and cash equivalents 30
Total assets 286
Trade and other creditors (169)
Total liabilities (169)
Net assets 117
The gain on disposal is calculated as:
£000
Consideration received or receivable:
Cash 117
Fair value of contingent consideration -
Total disposal consideration 117
Carrying amount of net assets sold (117)
Gain on sale before income tax -
Income tax expense on gain -
Gain on sale after income tax -
The results of these discontinued operations were included in the 2023 interim
and final results up to the date of disposal, and are presented as follows:
Consolidated statement of comprehensive income:
Unaudited Unaudited Audited
as at 30 as at 30 as at 31 December 2023
June 2024 June 2023 £000
£000 £000
Revenue - 269 269
Expenses - (318) (318)
(Loss)/profit before taxation - (49) (49)
Taxation - - -
(Loss)/profit after taxation attributable to owners of the parent company - (49) (49)
Consolidated cash flow statement:
Unaudited Unaudited Audited
as at 30 as at 30 as at 31 December 2023
June 2024 June 2023 £000
£000 £000
Cash flows from operating activities - 23 23
Cash flows from investing activities - - -
Cash flows from financing activities - - -
Net cash inflow - 23 23
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