Interim Results

RNS Number : 0899R
NAHL Group PLC
19 September 2017
 

 

NAHL Group plc

("NAHL" or the "Group")

 

Interim Results

 

NAHL, the leading UK marketing and services business focused on the UK consumer legal market, announces its Interim Results for the six months ended 30 June 2017.

 

Financial Highlights

·      Revenue of £24.9m (2016 H1: £25.8m)

·      Underlying operating profit of £7.3m (2016 H1: £8.8m)

·      Underlying operating profit margin of 29.5% (2016 H1: 34.0%)

·      Profit before tax of £5.3m after £1.0m brand repositioning charge in Personal Injury ("PI") business (2016 H1: £7.5m)

·      Basic earnings per share of 9.0p (2016 H1: 13.2p)

·      Interim dividend of 5.3p per share (2016 H1: 6.35p)

 

Operational Highlights

·      PI division brand relaunch for NAH

·      Successful establishment of Alternative Business Structure ("ABS") venture with NewLaw

·      Strong margin performance from Residential Property division

·      Critical Care division continues to perform well with new strategic business opportunities being pursued

 

Russell Atkinson, CEO of NAHL, commented:

 

"The first half of 2017 has been a busy period for the Group across all of its divisions and performance is in line with our expectations. We have relaunched the National Accident Helpline in our PI division and have been working hard to deliver our first ABS structure, with NewLaw, which began shortly after the period end. Initial signs are encouraging and we are working to deliver the second ABS by the end of the year.

 

"The Group's Residential Property and Critical Care divisions have made good progress year on year and we expect this to continue through the second half.

 

"Second half trading has continued in line with our expectations. We will further develop our PI proposition and explore enhanced PLF arrangements, driving increased volumes with our refreshed marketing plans. As previously reported, we expect both 2017 and 2018 to be years of transition in PI however we expect this to be complemented by growth in both Residential Property and Critical Care."

 

 

Enquiries:

 

NAHL Group plc

Russell Atkinson (CEO)

Steve Dolton (CFO)

 

via FTI Consulting

Tel: +44 (0) 20 3727 1000

Investec Bank plc (NOMAD & Broker)

Garry Levin

David Flin

James Ireland

David Anderson

William Godfrey

 

Tel: +44 (0) 20 7597 5970

FTI Consulting (Financial PR)

Oliver Winters

Alex Beagley

James Styles

 

Tel: +44 (0) 20 3727 1000

 

Notes to Editors

 

NAHL Group plc is a leading UK marketing and services business focused on the UK consumer legal market. The Group comprises three divisions: Personal Injury (National Accident Helpline - NAH), Conveyancing (Fitzalan Partners - Fitzalan) and Ctitical Care (Bush & Company Rehabilitation - Bush). NAH provides outsourced marketing services in the personal injury market, Fitzalan, which includes Searches UK a leading conveyancing search provider, provides marketing services in the property market and Bush provides a range of specialist services in the catastrophic injury market.

More information is available at www.nahlgroupplc.co.uk and www.national-accident-helpline.co.uk

 

Chairman's Statement

 

I am pleased to report the Group's results for the six months ended 30 June 2017.

 

Summary of Financial Performance

 

NAHL Group plc ("NAHL" or "the Group") has performed in line with our expectations, with revenue at £24.9m (2016 H1: £25.8m), delivering underlying operating profit of £7.3m (2016 H1: £8.8m). After a charge of £1.0m for brand repositioning in our Personal Injury ("PI") business, profit before tax is £5.3m (2016 H1: £7.5m), with basic earnings per share of 9.0p (2016 H1: 13.2p).

 

Trading Review

 

National Accident Helpline ("NAH"), the Group's PI division, has performed in line with plan.

 

During the period we have continued to prepare for the regulatory changes previously announced by the Ministry of Justice. These changes are currently scheduled for implementation in October 2018, although we anticipate further delay. However we are satisfied that any delay will not significantly impact on the earnings profile of our business.

 

Our preparation for these changes includes a brand relaunch for NAH, the establishment of our first Alternative Business Structure ("ABS"), continued investment in cases with our strategic Panel Law Firm ("PLF") partners, and work on a second ABS. Good progress has been made on all these initiatives.

 

Our brand relaunch in June 2017 was designed to support NAH's PI market leadership, and help us generate enhanced enquiry volumes as we seek to invest in cases to optimise future earnings. Early indications from the relaunch are positive and we will continue to closely monitor the key metrics going forward.

 

The establishment of the Group's first ABS with NewLaw in July 2017 allows NAHL to have an ownership interest in a company providing legal services. This enables the Group to enter into a form of joint venture agreement to fund that venture and take a share of profit from work processed by the ABS. Whilst this new structure is in its infancy, the Group has delivered the agreed volumes and the initial signs are encouraging and in line with our expectations.

 

Investment in cases with PLFs and through our ABS ventures changes our medium term profit and cash profiles as we build  the number of cases in progress, and is the primary reason behind the reduction in Group profits in the current year.  

 

Both Fitzalan and Bush, the Group's Residential Property and Critical Care divisions, have made good progress year on year and we expect this to continue for the balance of 2017.

 

Fitzalan delivered revenue of £4.5m, down 3.1% on H1 2016 reflecting challenging market conditions, but profit before tax increased 17.9% to £0.8m. Whilst residential property markets remain challenging in volume terms, the division has delivered a strong performance with its mix of conveyancing, surveys and searches, and a focus on cost and efficiency of delivery has improved overall margins.

 

Bush delivered revenue of £5.6m, up 6.3% on H1 2016, with profit before tax of £2.0m, up 10.2%. Enquiry volumes have remained strong and we have a number of interesting strategic business development opportunities. These opportunities reflect the continued delivery of the high quality services for which the business is recognised.

 

Cash Conversion, Balance Sheet and Interim Dividend

 

Cash generation was as expected across the Group, with a 72.8% (2016 H1: 95.7%) cash conversion of underlying operating profit from continuing operations into net cash flows from operating activities before interest and tax. This decline reflects the investment in PI cases, with a corresponding increase in trade receivables on the balance sheet, but is buoyed by continued strong generation in our Residential Property and Critical Care divisions. Increased investment in PI cases in H2 will result in a lower cash conversion in the second half of the year.

 

The Group's balance sheet continues to be healthy and at the period end we had adjusted net debt of £11.5m (including £2.0m of other payables relating to the legacy pre-LASPO ATE product). Since the period end we have refinanced and significantly increased our banking facilities to support our long-term business strategy and in particular to help finance our investment in PI PLF and ABS cases.

 

Our dividend policy of 1.5x cover is unchanged. The Board has declared an interim dividend of 5.3p per share payable on 31 October 2017 to ordinary shareholders registered on 29 September 2017.

 

Outlook

 

Second half trading has commenced in line with our expectations. We will continue to develop our PI proposition and explore enhanced PLF arrangements, driving increased volumes with our refreshed marketing plans. As previously reported, we expect both 2017 and 2018 to be years of transition in PI however we expect this to be complemented by growth in both Residential Property and Critical Care.

 

Steve Halbert

Chairman

 

19 September 2017

 

Consolidated statement of comprehensive income

for the 6 months ended 30 June 2017

 


 

 

 

 

 

Note

Unaudited

6 months

ended 30

June 2017

£000

 

 

Unaudited

6 months

ended 30

June 2016

£000

 

 

Audited

12 months

ended 31

December 2016

£000






Underlying revenue

2

24,930

25,753

49,385

One-off items


-

-

1,250

Total revenue


24,930

25,753

50,635

Cost of sales


(12,014)

(10,991)

(20,809)

Underlying gross profit


12,916

14,762

28,576

One-off items


-

-

1,250

Gross profit


12,916

14,762

29,826

Administrative expenses


(7,504)

(7,034)

(13,665)

Underlying operating profit


7,347

8,750

17,985

Share-based payments


(281)

(433)

(1,052)

Amortisation of intangible assets acquired on business combinations

8

(654)

(533)

(1,327)

One-off items

5

(1,000)

(56)

555

Total operating profit

2

5,412

7,728

16,161

Financial income

3

38

10

43

Financial expense

4

(166)

(209)

(403)

Profit before tax


5,284

7,529

15,801

Taxation


(1,187)

(1,563)

(3,577)

Profit for the year and total comprehensive income


4,097

5,966

12,224

 

All profits and losses and total comprehensive income are attributable to the owners of the Company.

 



Unaudited 6 months ended

30 June 2017

Unaudited 6 months

ended

30 June

2016

Audited 12 months

ended 

31 December 2016

Basic earnings per share (p)

11

9.0

13.2

27.0

Diluted earnings per share (p)

11

8.9

12.9

26.5

 

Consolidated statement of financial position

At 30 June 2017

 


Note

Unaudited 6 months ended 30 June 2017

£000

Unaudited 6 months ended 30 June 2016

£000

Audited 12 months ended  31 December 2016

£000

Non-current assets





Goodwill

7

60,362

60,362

60,362

Intangibles

8

7,783

8,780

8,474

Property, plant and equipment


290

339

327

Deferred tax asset


38

68

38



68,473

69,549

69,201

Current assets





Trade and other receivables


14,142

9,235

10,287

Cash and cash equivalents


799

6,522

4,814



14,941

15,757

15,101

Total assets


83,414

85,306

84,302

Current liabilities





Other interest-bearing loans and borrowings


(3,693)

(3,693)

(3,693)

Trade and other payables


(9,360)

(9,557)

(7,631)

Other payables relating to legacy pre-LASPO ATE product

2

(2,026)

(3,167)

(1,912)

Deferred tax liability


(1,914)

(1,916)

(1,914)

Tax payable


(1,432)

(1,909)

(1,937)



(18,425)

(20,242)

(17,087)

Non-current liabilities





Other interest-bearing loans and borrowings


(6,550)

(9,243)

(7,396)

Total liabilities


(24,975)

(29,485)

(24,483)

Net assets


58,439

55,821

59,819

Equity





Share capital

9

114

113

113

Share option reserve


2,220

1,554

1,939

Share premium


14,507

14,271

14,507

Merger reserve


(66,928)

(66,928)

(66,928)

Retained earnings


108,526

106,811

110,188

Total equity


58,439

55,821

59,819

 

 Consolidated statement of changes in equity

for the 6 months ended 30 June 2017

 


Share

capital

£000

Share

option

reserve

£000

Share

premium

£000

Merger

reserve

£000

Retained

earnings

£000

Total

equity

£000

Balance at 1 January 2017

113

1,939

14,507

(66,928)

110,188

59,819

Total comprehensive income for the period







Profit for the period

-

-

-

-

4,097

4,097

Total comprehensive income

-

-

-

-

4,097

4,097

Transactions with owners, recorded directly in equity






Issue of new Ordinary Shares (note 10)

1

-

-

-

-

1

Share-based payments

-

281

-

-

-

281

Dividends paid

-

-

-

-

(5,759)

(5,759)

Balance at 30 June 2017

114

2,220

14,507

(66,928)

108,526

58,439















Balance at 1 January 2016

113

1,121

14,262

(66,928)

106,503

55,071

Total comprehensive income for the period







Profit for the period

-

-

-

-

5,966

5,966

Total comprehensive income

-

-

-

-

5,966

5,966

Transactions with owners, recorded directly in equity







Issue of new Ordinary shares (note 10)

-

-

9

-

-

9

Share-based payments

-

433

-

-

-

433

Dividends paid

-

-

-

-

(5,658)

(5,658)

Balance at 30 June 2016

113

1,554

14,271

(66,928)

106,811

55,821















Balance at 1 January 2016

113

1,121

14,262

(66,928)

106,503

55,071

Total comprehensive income for the year







Profit for the year

-

-

-

-

12,224

12,224

Total comprehensive income

-

-

-

-

12,224

12,224

Transactions with owners, recorded directly in equity







Issue of new Ordinary Shares (note 10)

-

-

160

-

-

160

Exercise of share options (note 10)

-

(85)

85

-

-

-

Share-based payments

-

903

-

-

-

903

Dividends paid

-

-

-

-

(8,539)

(8,539)

Balance at 31 December 2016

113

1,939

14,507

(66,928)

110,188

59,819

 

Consolidated cash flow statement

for the period ended 30 June 2017

 


Note

Unaudited 6 months ended 30 June 2017

£000

Unaudited

6 months ended 30 June 2016 £000

Audited

12 months ended  31 December 2016

£000

Cash flows from operating activities





Profit for the period/year


4,097

5,966

12,224

Adjustments for:





Depreciation and amortisation


808

619

1,522

Financial income

3

(38)

(10)

(43)

Financial expense

4

166

209

403

Share-based payments


281

433

1,052

Taxation


1,187

1,563

3,577



6,501

8,780

18,735

Increase in trade and other receivables


(3,822)

(823)

(1,876)

Increase in trade and other payables


1,713

364

(1,868)

Decrease in other payables relating to legacy pre-LASPO ATE product


114

(434)

(1,689)

Cash generation from operations

2

4,506

7,887

13,302

Interest paid


(121)

(209)

(346)

Tax paid


(1,692)

(1,735)

(3,692)

Net cash from operating activities


2,693

5,943

9,264

 

Cash flows from investing activities





Acquisition of property, plant and equipment


(80)

(151)

(232)

Consideration paid for the acquisition of subsidiaries


-

(2,091)

(2,090)

Intangible assets acquired


-

(14)

(393)

Cash acquired from business combinations


-

293

295

Interest received


5

10

43

Net cash used in investing activities


(75)

(1,953)

(2,377)

 

Cash flows from financing activities





New share issue


1

9

160

Repayment of borrowings


(1,875)

(1,875)

(3,750)

New borrowings acquired


1,000

-

-

Dividends paid


(5,759)

(5,658)

(8,539)

Net cash used in financing activities


(6,633)

(7,524)

(12,129)

 

Net decrease in cash and cash equivalents


(4,015)

(3,534)

(5,242)

Opening cash and cash equivalents


4,814

10,056

10,056

Cash and cash equivalents at period/year end


799

6,522

4,814

 

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 2016 were approved by the Board of Directors on 20 March 2017 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.

 

Having made due enquiries the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  For this reason, they continue to adopt the going concern basis in preparing the condensed set of financial statements.

 

The condensed set of financial statements was approved by the Board of directors on 18th September 2017.

 

Basis of preparation

 

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 as adopted by the EU 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 2016, which have been prepared in accordance with IFRSs as adopted by the European Union.

 

Use of judgements and estimates

The preparation of financial statements in conformity with IFRSs 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.

 

The preparation of the condensed set of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates.

 

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 2016.

 

Significant accounting policies

The accounting policies used in the preparation of these interim financial statements for the 6 months ended 30 June 2017             are the accounting policies as applied to the Group's financial statements for the year ended 31 December 2016.

 

Use of non-GAAP measures

 

Underlying operating profit

The directors believe that underlying revenue, underlying operating profit, underlying operating cash and adjusted net debt provide additional useful information for shareholders on underlying trends and performance. These measures are used for performance analysis and are considered useful as they relate to the core underlying trading activities of the Group i.e. they reflect the current ongoing activities of the Group and do not include any items that relate to significant one-off projects that are not expected to recur or any items that relate to activities that are outside the normal course of trading (e.g. acquisitions or share based costs that are not directly related to the current operating performance of the Group). Underlying revenue, underlying operating profit, underlying operating cash and adjusted net debt are not defined by IFRS and therefore may not be directly comparable to other companies' adjusted revenue, profit, cash or debt measures. They are not intended to be a substitute for, or superior to, IFRS measurements of operating profit.

 

The adjustments made to reported revenue are:

 

One-off revenues - fees related to one-off revenues in relation to release of the ATE liability that are not expected to recur and are not related to the continuing core operations of the business.

 

The adjustments made to reported operating profit are:

 

IFRS 2 Share Based Payments - non-cash Group Income Statement charge for share based payments and related national insurance costs. IFRS 2 requires the fair value of equity instruments measured at grant date to be spread over the period during which the employees become unconditionally entitled to the options. This is a non-cash charge and has been excluded from underlying operating profit as it does not reflect the underlying core trading performance of the Group.

 

IFRS 3 (Revised) Business Combinations - intangible asset amortisation charges and costs arising from acquisitions. Under IFRS 3 intangible assets are required to be amortised on a straight-line basis over their useful economic life and as such this is a non-cash charge that does not reflect the underlying performance of the business acquired. Similarly, the standard requires all acquisition costs to be expensed in the Group Income Statement. Due to their nature, these costs have been excluded from underlying operating profit as they do not reflect the underlying core trading performance of the Group.

 

One-off costs - these relate to certain one-off costs associated with the Group's acquisition activities including any costs in relation to aborted acquisitions, reorganisation costs associated with one-off projects that are not related to the core operations of the business and one-off income for the release of previously recognised liability for pre-LASPO ATE. These have been excluded from underlying operating profit as they do not reflect the underlying core trading performance of the Group.

 

Adjusted net debt

The directors believe that the adjusted net debt provides additional useful information for shareholders on underlying trends and performance. This measure is used for performance analysis. Adjusted net debt is not defined by IFRS and therefore may not be directly comparable with other companies' adjusted debt measures. It is not intended to be a substitute for, or superior to, IFRS measurements of net debt. Adjusted net debt comprises cash and cash equivalents, borrowings and other payables relating to a discontinued pre- LASPO product.

 

Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. The Group measures goodwill as the acquisition-date fair value of the consideration transferred, less the net of the acquisition-date fair values of the identifiable assets acquired and liabilities assumed, including contingent liabilities as required by IFRS 3.

 

Consideration transferred includes the fair values of assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, equity interests issued by the Group, contingent consideration, and share-based payment awards of the acquiree that are replaced in the business combination. Any contingent consideration payable is recognised at fair value at the acquisition date. Subsequent changes to the fair value of contingent consideration that is not classified as equity are recognised in the income statement.

 

Transaction costs that the Group incurs in connection with a business combination, such as finder's fees, legal fees, due diligence fees, and other professional and consulting fees, are expensed as incurred.

 

Goodwill

Goodwill represents the excess of the fair value of the consideration given over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is not amortised but is tested for impairment annually and again whenever indicators of impairment are detected and is carried at cost less any provision for impairment. Any impairment is recognised in the statement of comprehensive income.

 

Other intangible assets

Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.

 

Cost or valuation

Intangible assets arising from a business combination are recognised at fair value, amortised over their estimated useful lives and subject to impairment testing.

 

Amortisation

Intangible assets are amortised on a straight-line basis over their estimated useful lives as follows:

•               Technology related intangibles               -               5 to 10 years

•               Contract related intangibles                    -               3 to 10 years

•               Brand names                                           -               3 to 10 years

•               Other intangibles assets                         -               3 years

No amortisation is charged on assets under construction as these are not yet in use.

 

Depreciation

Depreciation is calculated to write off the cost, less estimated residual value, of property, plant and equipment by equal instalments over their estimated useful economic lives as follows:

•               Office equipment                     -               3 to 5 years

•               Computers                               -               3 years

 

2. Operating segments

 


Personal Injury

£000

Pre-LASPO ATE

£000

Critical

Care

£000

Residential Property

£000

Other segments

£000

One-off

  items

£000

Total

£000

Period ended 30 June 2017








Revenue

14,854

-

4,512

-

-

24,930

Depreciation and amortisation

(91)

-

(31)

-

(654)

(808)

Operating profit/(loss)

5,371

-

805

(829)

(1,935)

5,412

Financial income

36

-

-

2

-

38

Financial expenses

-

-

-

(164)

-

(166)

Profit/(loss) before tax

5,407

-

805

(991)

(1,935)

5,284

Trade receivables

4,117

-

499

-

-

8,826

Segment liabilities

(6,884)

(2,026)*

(984)

(492)

(115)

(11,386)

Capital expenditure

33

-

27

20

-

-

80









Period ended 30 June 2016







Revenue

15,864

-

4,655

-

-

25,753

Depreciation and amortisation

(39)

-

(84)

(478)

-

(619)

Operating profit/(loss)

7,005

-

685

(755)

(1,022)

7,728

Financial income

10

-

-

-

-

10

Financial expenses

-

-

(2)

(205)

-

(209)

Profit/(loss) before tax

7,015

-

683

(960)

(1,022)

7,529

Trade receivables

2,217

-

541

130

-

6,398

Segment liabilities

(6,508)

(3,167)*

(1,298)

(620)

-

(12,724)

Capital expenditure

131

-

15

5

-

-

151









Year ended 31 December 2016







Revenue

30,011

1,250

9,021

-

-

50,635

Depreciation and amortisation

(89)

-

(147)

-

(1,242)

(1,522)

Operating profit/(loss)

14,112

1,155

1,391

(1,304)

(2,979)

16,161

Financial income

14

-

-

10

-

43

Financial expenses

(1)

-

-

(397)

-

(403)

Profit/(loss) before tax

14,125

1,155

1,391

(1,691)

(2,979)

15,801

Trade receivables

1,935

-

343

-

-

6,207

Segment liabilities

(5,227)

(1,982)*

(765)

(503)

(31)

(9,543)

Capital expenditure

608

-

96

46

-

-

750

*Pre-LASPO ATE liabilities include the balance of commissions received in advance that are due to be paid back to the insurance provider of £2,026,000 (June 2016: £3,167,000, December 2016: £1,912,000) and accruals for associated costs of £nil (June 2016: £nil, December 2016: £70,000).

 

Geographic information

All revenue and assets of the Group are based in the UK.

 

Operating segments

The segments used in reporting by the CODM and considered relevant to the business are segmented on a product basis. These

segments are:

 

Personal Injury

Revenue from the provision of enquiries to the Panel Law Firms, based on a cost plus margin model, plus commissions received from providers for the sale of additional products by them to the Panel Law Firms.

 

Pre-LASPO ATE

Revenue is commissions received from the insurance provider for the use of after the event policies by Panel Law

Firms. From 1 April 2013, this product was no longer available as a result of LASPO regulatory changes. Included in the balance

sheet is a liability that has been separately identified due to its material value. This balance is commissions received in advance

that are due to be paid back to the insurance provider. No interest is due on this liability.

 

Critical Care 

Revenue from the provision of expert witness reports and case management support within the medico-legal framework for multi-track cases.

 

Residential Property 

Revenue from the provision of online marketing services to target home buyers and sellers in England and Wales, offering lead generation services to Panel Law Firms and surveyors in the conveyancing sector and the provision of conveyancing searches for solicitors and licensed conveyancers.

 

Other segments

Costs that are incurred in managing Group activities or not specifically related to a product.

 

One-off items

Costs associated with the acquisition of subsidiary undertakings, reorganisation costs associated with one-off projects that are not related to the core operations of the business, release of ATE liability and including share based payments and amortisation charges on intangible assets recognised as part of business combinations.

 

Cash flows from operating activities

A reconciliation of operating profit to cash generation from operations has been presented below separately identifying net cash flows relating to Continuing operations (comprising cash flows associated with Personal Injury, Critical Care, Residential Property and other segments), the Pre- LASPO ATE product segment and one-off items.

 

Reconciliation of operating profit to net cash flows from operating activities

               


Continuing operations

£000

Pre-LASPO

ATE

£000

Sub-total

£000

Non underlying

items

£000

Total

£000

6 months ended 30 June 2017






Operating profit

6,412

-

6,412

(1,000)

5,412

Amortisation of intangible assets acquired on business combinations

654

-

654

-

654

Equity-settled share-based payments

281

-

281

-

281

Underlying operating profit

7,347

-

7,347

(1,000)

6,347

Depreciation and amortisation

154

-

154

-

154

(Increase) in trade/other receivables

(3,822)

-

(3,822)

-

(3,822)

Increase/(decrease) in trade/other payables

1,668

(70)

1,598

115

1,713

Increase in liabilities relating to pre-LASPO ATE product

-

114

114

-

114

Net cash flows from operating activities before interest and tax

5,347

44

5,391

(885)

4,506

Interest paid

(121)

-

(121)

-

(121)

Tax paid

(1,692)

-

(1,692)

-

(1,692)

Net cash from operating activities

3,534

44

3,578

(885)

2,693

 







6 months ended 30 June 2016






Operating profit

7,784

-

7,784

(56)

7,728

Amortisation of intangible assets acquired on business combinations

533

-

533

-

533

Equity-settled share-based payments

433

-

433

-

433

Underlying operating profit

8,750

-

8,750

(56)

8,694

Depreciation and amortisation

86

-

86

-

86

(Increase) in trade/other receivables

(823)

-

(823)

-

(823)

Increase in trade/other payables

364

-

364

-

364

Decrease in liabilities relating to pre-LASPO ATE product

-

(434)

(434)

-

(434)

Net cash flows from operating activities before interest and tax

8,377

(434)

7,943

(56)

7,887

Interest paid

(209)

-

(209)

-

(209)

Tax paid

(1,735)

-

(1,735)

-

(1,735)

Net cash from operating activities

6,433

(434)

5,999

(56)

5,943

 







12 months ended 31 December 2016






Operating profit

15,606

1,155

16,761

(600)

16,161

Amortisation of intangible assets acquired on business combinations

1,327

-

1,327

-

1,327

Equity-settled share-based payments

1,052

-

1,052

-

1,052

Underlying operating profit

17,985

1,155

19,140

(600)

18,540

Depreciation and amortisation

195

-

195

-

195

(Increase) in trade/other receivables

(1,876)

-

(1,876)

-

(1,876)

(Decrease)/Increase in trade/other payables

(1,969)

70

(1,899)

31

(1,868)

Decrease in liabilities relating to pre-LASPO ATE product

-

(1,689)

(1,689)

-

(1,689)

Net cash flows from operating activities before interest and tax

14,335

(464)

13,871

(569)

13,302

Interest paid

(346)

-

(346)

-

(346)

Tax paid

(3,692)

-

(3,692)

-

(3,692)

Net cash from operating activities

10,297

(464)

9,833

(569)

9,264

 

3. Financial income


Unaudited 6 months ended 30 June 2017

£000

Unaudited 6 months ended 30 June 2016

£000

Audited 12 months ended  31 December 2016

£000

Bank interest income

5

10

25

Other interest income

33

-

-

Investment income

-

-

18

Total finance income

38

10

43

 

4. Financial expense


Unaudited 6 months ended 30 June 2017

£000

Unaudited 6 months ended 30 June 2016

£000

Audited 12 months ended  31 December 2016

£000

On bank loans and overdrafts

135

209

340

Bank charges

31

-

63

Total finance expense

166

209

403

 

5. One-off items


Unaudited 6 months ended 30 June 2017

£000

Unaudited 6 months ended 30 June 2016

£000

Audited 12 months ended  31 December 2016

£000

Personal Injury reorganisation costs1

1,000

-

522

Legal and professional fees relating to acquisitions 2

-

56

78

Release of pre-LASPO ATE liability and associated costs3

-

-

(1,155)

Total

1,000

56

(555)

 

1.   Personal Injury reorganisation costs relate to costs associated with one-off projects that are not related to the core operations of the   
 business.

2.   Legal and professional fees paid in relation to the acquisitions of Searches UK including due diligence costs and stamp duty.

3.     Previously recognised liabilities for pre-LASPO ATE commissions received in advance of £1,250,000 were released in 2016 as a result of more favourable settlements. These have been offset by associated costs of £95,000.

 

6. Acquisitions

 

Acquisition of Searches UK Limited

On 11 January 2016 the Group acquired the entire share capital of Searches UK Limited. The company is a leading conveyancing search provider in England & Wales predominantly for residential property transactions.

 

 

Fair values

The acquisitions had the following effect on the Group's assets and liabilities:

 

 


Unaudited 6 months ended 30 June 2017

£000

Unaudited 6 months ended 30 June 2016

£000

Audited 12 months ended  31 December 2016

£000

Intangible assets


-

881

881

Tangible assets


-

6

6

Trade and other receivables


-

367

369

Cash and cash equivalents


-

293

295

Trade and other payables


-

(415)

(419)

Deferred tax liability


-

(176)

(176)

Net assets acquired


-

956

956

Goodwill arising on acquisition


-

1,124

1,124

Fair value of net assets acquired and goodwill arising


-

2,080

2,080






Cash consideration


-

2,080

2,080

Fair value of net assets acquired and goodwill arising


-

2,080

2,080

 

 

The Group incurred acquisition related costs of £78,000 for full year 2016 (H1 2016: £56,000) related to professional fees paid for due diligence, general professional fees and legal related costs. These costs have been included in one-off items in the Group's consolidated income statement.

 

For all acquisitions made in the year, fair values remain provisional, but will be finalised within 12 months of acquisition.

 

7. Goodwill

 


Personal Injury

£000

Residential property

£000

Critical Care

£000

Total

£000

Cost





At 30 June 2016

39,897

4,873

15,592

60,362

At 30 December 2016

39,897

4,873

15,592

60,362

At 30 June 2017

39,897

4,873

15,592

60,362

Impairment





At 30 June 2016

-

-

-

-

At 30 December 2016

-

-

-

-

At 30 June 2017

-

-

-

-

Net book value





At 30 June 2016

39,897

4,873

15,592

60,362

At 30 December 2016

39,897

4,873

15,592

60,362

At 30 June 2017

39,897

4,873

15,592

60,362

 

8. Intangibles

 


Technology related

£000

Contract related

£000

Brand names

£000

Other

£000

Assets under construction

£000

Total

£000

Cost







At 30 June 2016

167

8,466

885

57

8

9,583

At 31 December 2016

167

8,466

885

549

20

10,087

Additions

-

-

-

-

23

23

At 30 June 2017

167

8,466

885

549

43

10,110

Amortisation







At 30 June 2016

32

688

72

11

-

803

At 31 December 2016

42

1,286

258

27

-

1,613

Amortisation charge on business combinations

10

538

106

-

-

654

Amortisation charge for the period

-

-

-

60

-

60

At 30 June 2017

52

1,824

364

87

-

2,327

Net book value







At 30 June 2016

135

7,778

813

46

8

8,780

At 31 December 2016

125

7,180

627

522

20

8,474

At 30 June 2017

115

6,642

521

462

43

7,783

 

The intangible assets recognised were acquired as part of the acquisitions of Fitzalan, BVC, Bush and Searches UK.

 

9. Share capital

 


30 June 2017

30 June 2016

31 December 2016

Number of shares




'A' Ordinary Shares of £0.0025 each

45,511,088

45,270,937

45,349,629






£000

£000

£000

Allotted, called up and fully paid




'A' Ordinary Shares of £0.0025 each

114

113

113





Shares classified in equity

114

113

113

 

10. Transactions with owners, recorded directly in equity

 

On 29 June 2017, 161,459 new ordinary shares with a par value of £0.0025 were issued due to the exercising of equity settled share based payments in respect of the LTIP scheme. These raised an additional £404 of funds for the Company, resulting in an increase to share capital of £404.

 

During 2016 84,629 share options were exercised which resulted in the issue of 84,629 new Ordinary Shares with a par value of

£0.0025. The exercising of these options raised funds of £160,508 for the Group. A charge of £85,093 has been reclassified from

the share option reserve to share premium to reflect the crystalisation of previous charges in respect of these options.

 

11. Basic earnings per share

 

The calculation of basic earnings per share at 30 June 2017 is based on profit attributable to ordinary shareholders of £4,097,000 (H1 2016: £5,966,000; Full Year 2016: £12,224,000) and a weighted average number of Ordinary Shares outstanding of 45,350,071 (June 2016: 45,266,598; December 2016: 45,294,877).

 

Profit attributable to ordinary shareholders (basic)


 

Unaudited 6 months ended 30 June

2017

£000

 

Unaudited 6 months ended 30 June

2016

£000

 

 

Audited 12 months ended  31 December  2016

£000

Profit for the period / year attributable to the shareholders

4,097

5,966

12,224

 

Weighted average number of Ordinary Shares (basic)

Number

 

 

 

 

 

Unaudited 6 months ended

30 June 2017

 

Unaudited 6 months ended 30 June 2016

Audited 12 months ended  31 December 2016

Issued Ordinary Shares at start of period


45,349,629

45,265,000

45,265,000

Weighted average number of Ordinary Shares at end of period


45,350,071

45,266,598

45,294,877

 

Basic earnings per share (p)


Unaudited 6 months ended 30 June 2017

Unaudited 6 months ended 30 June 2016

Audited 12 months ended  31 December  2017

Basic earnings per share (p)

9.0

13.2

27.0

 

The Company has in place share-based payment schemes to reward employees. At the 30 June 2017, all necessary targets have been met and the LTIP scheme is at a value that would reasonably result in the options being exercised. The incremental shares available for these schemes included in the diluted earnings per share calculation are 602,503 (June 2016: 969,707; December 2016: 775,746). There are no other diluting items.

 

Diluted earnings per share (p)


Unaudited 6 months ended 30 June 2017

Unaudited    6 months ended 30 June 2016

Audited 12 months ended  31 December

 2016

Diluted earnings per share (p)

8.9

12.9

26.5

 

12. Financial risk management

 

The Group's financial risk management objectives and policies are consistent with those disclosed in the financial statements for the year ended 31 December 2016. At 1 January 2017 and 30 June 2017 the Group held all financial instruments at Level 3 (as defined in IFRS 7 Financial instruments: disclosures) and there have been no transfers of assets or liabilities between levels of the fair value hierarchy.

 

13. Net debt

 

Net debt includes cash and cash equivalents, secured bank loans, loan notes and preference shares.

 


 30 June 2017

£000

 30 June

2016

£000

31 December 2016

£000

Cash and cash equivalents

799

6,522

4,814

Other interest-bearing loans and loan notes

(10,243)

(12,936)

(11,089)

Net debt

(9,444)

(6,414)

(6,275)

 

Set out below is a reconciliation of movements in net cash during the period.


30 June 2017

£000

30 June 2016

£000

31 December 2016

£000

Net decrease in cash and cash equivalents

(4,015)

(3,534)

(5,242)

Cash and cash equivalents net inflow from increase in debt and debt financing

846

1,846

3,693

Movement in net borrowings resulting from cash flows

(3,169)

(1,688)

(1,549)

Movement in debt in period

(3,169)

(1,688)

(1,549)

Net debt at beginning of period

(6,275)

(4,726)

(4,726)

Net debt at end of period

(9,444)

(6,414)

(6,275)

 

During 2017 the Group made an initial drawdown of £1.0m on its rolling credit facility. The Group refinanced its bank facilities on the 8th September 2017 and as a result, it is the Group's intention to repay this in more than 12 months time and hence the £1.0m is deemed to be a non-current liability.

 

14. Related parties

 

Transactions with key management personnel

 

Key management personnel in situ at 30 June 2017 and their immediate relatives control 4.1 per cent (June 2016: 4.7 per cent, December 2016: 4.4 per cent) of the voting shares of the Company.

 

Key management personnel are considered to be the directors of the Company as well as those of National Accident Helpline Limited, Fitzalan Partners Limited, Bush & Company Rehabilitation Limited, Searches UK Limited and any other management serving as part of the executive team.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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