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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Nahl Group Plc | LSE:NAH | London | Ordinary Share | GB00BM7S2W63 | ORD GBP0.0025 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -1.00 | -1.47% | 67.00 | 66.00 | 68.00 | 3,759 | 16:35:01 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Advertising Agencies | 41.42M | 385k | 0.0082 | 82.93 | 31.89M |
From Apr 2019 to Apr 2024
TIDMNAH
RNS Number : 0302B
NAHL Group PLC
18 September 2018
18 September 2018
NAHL Group plc
("NAHL" or the "Group")
Interim Results
Earnings in line with expectations
NAHL (AIM: NAH), the leading UK consumer marketing business focused on the UK legal services market, announces its Interim Results for the six months ended 30 June 2018.
Financial Highlights
-- Revenue of GBP24.9m (2017 H1: GBP24.9m) -- Underlying operating profit of GBP6.4m (2017 H1: GBP7.3m)
-- Profit before tax of GBP5.3m after exceptional costs relating to the establishment of wholly owned small claims ready law firm or Alternative Business Structure ("ABS") (2017 H1: GBP5.3m)
-- As anticipated, basic earnings per share of 8.2p (2017 H1: 9.0p)
-- Interim dividend of 3.2p per share (2017 H1: 5.3p) as Group adopts more prudent dividend policy in light of investment plans
Operational Highlights
-- Personal Injury division performing in line with plan, with strong enquiry volumes
-- Encouraging performance from two joint venture ABS partnerships, giving Group confidence to launch in H1 2019 a wholly owned small claims ready law firm
-- Continued strong progress from Critical Care division, with increased revenue and profit
-- Residential Property division performance reflective of continuing difficult wider market conditions
Russell Atkinson, CEO of NAHL, commented:
"We are pleased to have delivered Group earnings in line with expectations, having made good progress in adapting our Personal Injury (PI) division to capture the opportunity to deliver materially enhanced profits over the long-term.
"2018 represents a year of transition for our PI division. The Government's reforms will have no bearing on the number of accidents that occur but it is clear that there is an opportunity for a new type of law firm to help consumers with genuine claims to obtain access to justice. NAH, with its market leading brand and focus on its consumers' experience, is well placed to seize this opportunity. We have been encouraged by the performance of our two joint venture ABS law firms and are excited about the launch of our third, wholly owned law firm in the first half of 2019. This will give us full economic interest in the success of the whole claim, helping to deliver greater value for our shareholders.
"We are pleased with the performance of our Critical Care division, which has continued to win new business and gain market share. The difficulties facing the housing market have been well documented and this has inevitably impacted our Residential Property division. We have made a leadership change and the division remains well placed to benefit from market recovery.
"As we move forward, our focus is on investing in our PI division to deliver long term growth. As previously indicated we anticipate continued challenges with panel demand for enquiries as a result of regulatory change. As an example, we are in discussion with one of our major PLFs about leaving our panel in H1 2019. We have well developed plans for such a situation which involves placement of enquiries through a combination of PLFs and our joint ventures. We expect to deliver full year earnings in line with the Board's expectations."
For further information please call:
NAHL Group PLC via FTI Consulting Russell Atkinson (CEO) Tel: +44 (0) 20 James Saralis (CFO) 3727 1000 finnCap Ltd (NOMAD & Broker) Tel: +44 (0) 207 Julian Blunt 220 0500 James Thompson Andrew Burdis FTI Consulting (Financial PR) Tel: +44 (0) 20 Alex Beagley 3727 1000 James Styles Laura Saraby
Notes to Editors
NAHL Group plc is a leading UK consumer marketing business focused on the UK legal services market. The Group comprises three companies: National Accident Helpline (NAH), Fitzalan Partners (Fitzalan) and 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 2018.
Summary of Financial Performance
NAHL has performed in line with our expectations, with revenue unchanged at GBP24.9m (2017 H1: GBP24.9m), delivering underlying operating profit of GBP6.4m (2017 H1: GBP7.3m). After exceptional costs, related to the establishment of our third ABS, profit before tax is unchanged at GBP5.3m (2017 H1: GBP5.3m, after exceptional brand repositioning costs). In the first half of 2018 we have seen contributions from our first two ABS joint ventures, so consequently have charges for minority interests, meaning that basic earnings per share reduces, as anticipated, to 8.2p (2017 H1: 9.0p).
Trading Review - Personal Injury ("PI")
National Accident Helpline (NAH), part of our PI division, is a leading marketing services business and offers outstanding consumer service. Combining these capabilities with the regulatory changes impacting the sector creates the opportunity for the Group to develop additional earnings streams. So far this has been achieved through joint ventures but in H1 2019 we will launch a wholly owned, modern, digitally enabled, purpose built, small claims ready law firm.
NAH has to date had two options for placement of enquiries. Firstly, its traditional panel law firms (PLFs) who operate on a mix of commercial terms; and, secondly, its joint venture partnerships (technically, an Alternative Business Structure, or ABS), which benefit from working capital and expertise provided by our partners, who share in the ultimate profit of the joint venture. This placement strategy in part reflects reducing PLF appetite, caused by lower operating margins together with increased working capital requirements, compounded by uncertainties surrounding the small claim reforms. These reforms, first announced in November 2015, are now expected to be implemented in April 2020, at the earliest.
We have invested heavily into these partnerships both in terms of finance and know-how and continue to accelerate this investment. With our expertise, we are in the process of setting up a third placement option and, from H1 2019, some enquiries will be placed with a new ABS which will be 100% owned by the Group. The set up of this third ABS (reflected in the exceptional costs as part of our previously announced GBP4m commitment) is on schedule and on budget. This new ABS will manage the whole cycle of a PI legal case, with marketing and legal processing profits accruing to the Group. This will continue to change the Group's financial profile as both profit recognition and cash realisation are deferred until case settlement. With our passion for customer service, combined with our process and management capabilities, we expect to earn materially enhanced profits and cash flow as the profile of our cases matures, likely to be from 2021.
The PI division has performed in line with plan in H1 2018. Following our 2017 investment in the NAH brand, enquiry volumes remain strong. PI revenue increased by 4.3% to GBP15.5m, reflecting the consolidation of GBP1.7m of ABS revenue, which includes revenue from the launch of the Group's second ABS in Q4 2017. Operating profit was 13.9% lower at GBP4.6m, as a result of the later profit recognition when we invest in PI case processing, and from expensing GBP0.6m of enquiry origination costs related to our second ABS. We have continued to increase investment in PI cases, through both PLFs and ABSs, with an extra GBP5.3m invested in net working capital in the first half, and GBP10.2m in the last 12 months.
Our first ABS, in conjunction with NewLaw, is operating well, and our second ABS, working with Lyons Davidson, is beginning to show comparable levels of processing capability. We will commit further funds to the ABS as we are confident of their execution capability and economic performance.
As previously outlined, we expect to experience decline in PLF demand as a result of forthcoming regulatory changes. As an example, we are in discussion with one of our major PLFs about leaving our panel in H1 2019. We have well developed plans for such a situation which involves placement of enquiries through a combination of PLFs and our joint ventures. The impact on our overall profit per enquiry is unlikely to be material, although this defers an element of profits from 2019.
Trading Review - Critical Care
Bush, our Critical Care division, has made good progress year on year and is has performed in line with our plans. We expect this to continue for the rest of 2018. Revenue increased 7.3% to GBP6.0m, and operating profit was up 4.4% to GBP2.1m.
Trading Review - Residential Property
Our Residential Property division has had a disappointing first half delivering revenue of GBP3.4m, down 24.5%, with operating profit down 27.0% at GBP0.6m, reflecting continuing difficult market conditions. We have made leadership changes aimed at capitalising on opportunities to grow share in a shrinking market.
Cash Conversion, Balance Sheet and Interim Dividend
As we continue to invest in PI cases and working capital, our cash generation declines, as planned, with underlying cash conversion down at 20.3% compared with 54.8% for H1 2017. We expect a low conversion, albeit improved from the first half, for the rest of 2018, with some recovery in 2019 as our earlier investment in PI cases starts to mature.
We have bank facilities of GBP25m in place and at 30 June 2018 had net bank borrowings of GBP17.4m. Our Rolling Credit Facility, which matures in December 2021, supports our investment plans.
As we previously reported, the level of our investment means that we have adopted a more prudent dividend policy until our PI investment cycle matures. Our dividend policy is 2.0x cover, before exceptional costs and non-cash charges.
We are declaring an interim dividend of 3.2p per share payable on 31 October 2018 to ordinary shareholders registered on 28 September 2018.
Current Year Outlook
As expected, 2018 is part of a transitional phase for our PI division as we respond to changing market conditions and evolve our enquiry placement strategies. We continue to invest in our joint ventures and develop our own law firm which are progressing well. We are enthused about building a market leading PI volume law firm to complement our market leading PI marketing services brand, National Accident Helpline.
We expect progress in Critical Care in the second half, although we expect further challenges in Residential Property where market volumes continue to be disappointing.
We currently anticipate 2018 earnings to be in line with the Board's expectations for the Group as a whole.
Steve Halbert
Chairman
18 September 2018
Consolidated statement of comprehensive income
for the 6 months ended 30 June 2018
Hot Features
Premium
Audited
Unaudited Unaudited 12 months
6 months 6 months ended 31
Note ended 30 ended 30 December 2017
June 2018 June 2017 GBP000
GBP000 GBP000
Underlying revenue 2 24,865 24,930 51,037
Exceptional items - - 875
---------------------------------------------------------------- ------- ----------- ------------ ----------------
Total revenue 24,865 24,930 51,912
Cost of sales (12,217) (12,014) (25,224)
---------------------------------------------------------------- ------- ----------- ------------ ----------------
Underlying gross profit 12,648 12,916 25,813
Exceptional items - - 875
---------------------------------------------------------------- ------- ----------- ------------ ----------------
Gross profit 12,648 12,916 26,688
Administrative expenses (7,269) (7,504) (14,086)
---------------------------------------------------------------- ------- ----------- ------------ ----------------
Underlying operating profit 6,360 7,347 14,491
Share-based payments (191) (281) (182)
Amortisation of intangible assets acquired on business
combinations 7 (648) (654) (1,307)
Exceptional items 5 (142) (1,000) (400)
Total operating profit 2 5,379 5,412 12,602
Financial income 3 98 38 150
Financial expense 4 (206) (166) (331)
---------------------------------------------------------------- ------- ----------- ------------ ----------------
Profit before tax 5,271 5,284 12,421
Taxation (953) (1,187) (2,467)
---------------------------------------------------------------- ------- ----------- ------------ ----------------
Profit for the period and total comprehensive income 4,318 4,097 9,954
---------------------------------------------------------------- ------- ----------- ------------ ----------------
Profit and total comprehensive income is attributable to:
Owners of the company 3,758 4,097 9,876
Non-controlling interests 560 - 78
---------------------------------------------------------------- ------- ----------- ------------ ----------------
4,318 4,097 9,954
---------------------------------------------------------------- ------- ----------- ------------ ----------------
Unaudited 6 months ended Unaudited 6 months Audited 12 months
30 June 2018 ended ended
30 June 31 December 2017
2017
-------------------------------- --- ------------------------- ------------------- ------------------
Basic earnings per share (p) 10 8.2 9.0 21.7
-------------------------------- --- ------------------------- ------------------- ------------------
Diluted earnings per share (p) 10 8.0 8.9 21.6
-------------------------------- --- ------------------------- ------------------- ------------------
Consolidated statement of financial position
At 30 June 2018
Unaudited 6 months ended Unaudited 6 months ended Audited 12 months ended
30 June 2018 30 June 2017 31 December 2017
Note GBP000 GBP000 GBP000
--------------------------- ----- -------------------------- -------------------------- --------------------------
Non-current assets
Goodwill 6 60,362 60,362 60,362
Intangibles 7 6,647 7,783 7,217
Property, plant and
equipment 225 290 267
Deferred tax asset 34 38 34
--------------------------- ----- -------------------------- -------------------------- --------------------------
67,268 68,473 67,880
--------------------------- ----- -------------------------- -------------------------- --------------------------
Current assets
Trade and other
receivables (including
GBP9,538,000 (June 2017:
GBP2,041,000, December
2017:
GBP7,280,000) due in
greater than one year) 29,978 14,142 22,261
Cash and cash equivalents 939 799 858
30,917 14,941 23,119
--------------------------- ----- -------------------------- -------------------------- --------------------------
Total assets 98,185 83,414 90,999
--------------------------- ----- -------------------------- -------------------------- --------------------------
Current liabilities
Other interest-bearing - (3,693) -
loans and borrowings
Trade and other payables (14,770) (9,360) (12,415)
Other payables relating to
legacy pre-LASPO ATE
product 2 (865) (2,026) (676)
Deferred tax liability (1,500) (1,914) (1,662)
Tax payable (1,290) (1,432) (1,513)
(18,425) (18,425) (16,266)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Non-current liabilities
Other interest-bearing
loans and borrowings (18,334) (6,550) (12,922)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Total liabilities (36,759) (24,975) (29,188) --------------------------- ----- -------------------------- -------------------------- -------------------------- Net assets 61,426 58,439 61,811 --------------------------- ----- -------------------------- -------------------------- -------------------------- Equity Share capital 8 115 114 115 Share option reserve 2,312 2,220 2,121 Share premium 14,595 14,507 14,507 Merger reserve (66,928) (66,928) (66,928) Retained earnings 110,756 108,526 111,893 --------------------------- ----- -------------------------- -------------------------- -------------------------- Total equity attributable to the owners of NAHL Group plc 60,850 58,439 61,708 Non-controlling interests 576 - 103 --------------------------- ----- -------------------------- -------------------------- -------------------------- Total equity 61,426 58,439 61,811 --------------------------- ----- -------------------------- -------------------------- --------------------------
Consolidated statement of changes in equity
for the 6 months ended 30 June 2018
Share
Share option Share Merger Retained Non-controlling Total
capital reserve premium reserve earnings Total interest equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- --------- --------- --------- --------- ---------- --------- ------------------- --------
Balance at 1
January 2018 115 2,121 14,507 (66,928) 111,893 61,708 103 61,811
Total comprehensive
income for the
period
Profit for the
period - - - - 3,758 3,758 560 4,318
-------------------- --------- --------- --------- --------- ---------- --------- ------------------- --------
Total comprehensive
income - - - - 3,758 3,758 560 4,318
-------------------- --------- --------- --------- --------- ---------- --------- ------------------- --------
Transactions with owners,
recorded directly in equity
Issue of new
Ordinary Shares
(note 9) - - 88 - - 88 - 88
Share-based
payments - 191 - - - 191 - 191
Dividends paid - - - - (4,895) (4,895) - (4,895)
Non- controlling
interest member
drawings - - - - - - (87) (87)
Balance at 30 June
2018 115 2,312 14,595 (66,928) 110,756 60,850 576 61,426
-------------------- --------- --------- --------- --------- ---------- --------- ------------------- --------
Balance at 1
January 2017 113 1,939 14,507 (66,928) 110,188 59,819 - 59,819
Total comprehensive
income for the
period
Profit for the
period - - - - 4,097 4,097 - 4,097
-------------------- --------- --------- --------- --------- ---------- --------- ------------------- --------
Total comprehensive
income - - - - 4,097 4,097 4,097
-------------------- --------- --------- --------- --------- ---------- --------- ------------------- --------
Transactions with
owners, recorded
directly in equity
Issue of new
Ordinary shares
(note 9) 1 - - - - 1 - 1
Share-based
payments - 281 - - - 281 - 281
Dividends paid - - - - (5,759) (5,759) - (5,759)
Balance at 30 June
2017 114 2,220 14,507 (66,928) 108,526 58,439 - 58,439
-------------------- --------- --------- --------- --------- ---------- --------- ------------------- --------
Balance at 1
January 2017 113 1,939 14,507 (66,928) 110,188 59,819 - 59,819
Total comprehensive
income for the year
Profit for the year - - - - 9,876 9,876 78 9,954
-------------------- --------- --------- --------- --------- ---------- --------- ------------------- --------
Total comprehensive
income - - - - 9,876 9,876 78 9,954
-------------------- --------- --------- --------- --------- ---------- --------- ------------------- --------
Transactions with
owners, recorded
directly in equity
Issue of new
Ordinary Shares
(note 9) 2 - - - - 2 - 2
Member capital - - - - - - 25 25
Share-based
payments - 182 - - - 182 - 182
Dividends paid - - - - (8,171) (8,171) - (8,171)
Balance at 31
December 2017 115 2,121 14,507 (66,928) 111,893 61,708 103 61,811
-------------------- --------- --------- --------- --------- ---------- --------- ------------------- --------
Consolidated cash flow statement
for the 6 months ended 30 June 2018
Audited
Unaudited 6 months ended Unaudited 12 months ended 31
30 June 2018 6 months ended 30 June December 2017
Note GBP000 2017 GBP000 GBP000
--------------------------- ----- -------------------------- -------------------------- --------------------------
Cash flows from operating
activities
Profit for the period 4,318 4,097 9,954
Adjustments for:
Depreciation and
amortisation 810 808 1,608
Financial income 3 (98) (38) (150)
Financial expense 4 206 166 331
Share-based payments 191 281 182
Taxation 953 1,187 2,467
--------------------------- ----- -------------------------- -------------------------- --------------------------
6,380 6,501 14,392
Increase in trade and
other receivables (7,621) (3,822) (11,974)
Increase in trade and
other payables 2,340 1,713 4,963
Increase/(decrease) in
other payables relating
to legacy pre-LASPO ATE
product 189 114 (1,236)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Cash generation from
operations 2 1,288 4,506 6,145
Interest paid (154) (121) (178)
Tax paid (1,338) (1,692) (3,139)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Net cash from operating
activities (204) 2,693 2,828
--------------------------- ----- -------------------------- -------------------------- --------------------------
Cash flows from investing
activities
Acquisition of property,
plant and equipment (42) (80) (111) Acquisition of intangible assets (156) - (305) Interest received 2 5 12 Non-controlling interest member capital - - 25 Net cash used in investing activities (196) (75) (379) --------------------------- ----- -------------------------- -------------------------- -------------------------- Cash flows from financing activities New share issue 88 1 2 Repayment of borrowings - (1,875) (11,250) New borrowings acquired 5,375 1,000 13,125 Bank arrangement fees for new borrowings - - (111) Dividends paid (4,895) (5,759) (8,171) Non- controlling interest (87) - - member drawings --------------------------- ----- -------------------------- -------------------------- -------------------------- Net cash used in financing activities 481 (6,633) (6,405) --------------------------- ----- -------------------------- -------------------------- -------------------------- Net increase/(decrease) in cash and cash equivalents 81 (4,015) (3,956) Cash and cash equivalents at beginning of period 858 4,814 4,814 --------------------------- ----- -------------------------- -------------------------- -------------------------- Cash and cash equivalents at end of period 939 799 858 --------------------------- ----- -------------------------- -------------------------- --------------------------
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 2017 were approved by the Board of Directors on 19 March 2018 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 17 September 2018.
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 2017, which have been prepared in accordance with IFRSs as adopted by the European Union.
New and amended standards adopted by the Group
The following new or amended standards became applicable for the current reporting period:
IFRS 9 - Financial Instruments
IFRS 15 - Revenue from Contracts with Customers
The Group has considered its accounting policies with reference to the new or amended standards and concluded that the existing accounting policies adopted by the Group adhere to the new or amended standards. There are therefore no retrospective adjustments to be made to amounts previously reported.
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 2017.
Significant accounting policies
The accounting policies used in the preparation of these interim financial statements for the 6 months ended 30 June 2018 are the accounting policies as applied to the Group's financial statements for the year ended 31 December 2017.
Use of non-GAAP measures
The Directors believe that underlying operating profit, underlying revenue and underlying operating cash provide additional useful information for shareholders on underlying trends and performance. These measures are used by management 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 exceptional 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 operating profit, underlying revenue and underlying operating cash are not defined by IFRS and therefore may not be directly comparable to other companies' adjusted profit, revenue, cash or debt measures. They are not intended to be a substitute for, or superior to IFRS measurements.
The adjustments made to reported revenue are:
Exceptional revenues - fees related to exceptional revenues in relation to release of the pre-LASPO 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 statement of comprehensive income 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.
Other exceptional costs/income - these relate to certain exceptional costs associated with the Group's acquisition activities including any costs in relation to aborted acquisitions, reorganisation costs associated with exceptional projects that are not related to the core operations of the business, set up costs of new Group entities including new alternative business structures and exceptional 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.
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.
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 to 5 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 Critical Residential Underlying Pre-LAPSO Other
Injury Care Property Group operations ATE GBP000 items Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- -------------- --------- ------------- -------- ------------- ------------- -------- ---------
6 months ended
30 June 2018
Revenue 15,489 5,970 3,406 - 24,865 - - 24,865
Depreciation
and
amortisation (94) (18) (50) - (162) - (648) (810)
Operating
profit/(loss) 4,622 2,087 588 (937) 6,360 - (981) 5,379
Financial
income 97 - - 1 98 - - 98
Financial
expenses - - - (206) (206) - - (206)
Profit/(loss)
before tax 4,719 2,087 588 (1,142) 6,252 - (981) 5,271
Trade
receivables 14,572 4,655 795 - 20,022 - - 20,022
Segment
liabilities (12,492) (1,003) (569) (706) (14,770) (865)(1) - 15,635
Capital
expenditure 21 20 157 - 198 - - 198
--------------- -------------- --------- ------------- -------- ------------- ------------- -------- ---------
6 months ended
30 June 2017
Revenue 14,854 5,564 4,512 - 24,930 - - 24,930
Depreciation
and
amortisation (91) (32) (31) - (154) - (654) (808)
Operating
profit/(loss) 5,371 2,000 805 (829) 7,347 - (1,935) 5,412
Financial
income 36 - - 2 38 - - 38
Financial
expenses - (2) - (164) (166) - - (166)
Profit/(loss)
before tax 5,407 1,998 805 (991) 7,219 - (1,935) 5,284
Trade
receivables 4,117 4,210 499 - 8,826 - - 8,826
Segment
liabilities (6,884) (885) (984) (492) (9,245) (2,026)(1) (115) (11,386)
Capital
expenditure 33 27 20 - 80 - - 80
--------------- -------------- --------- ------------- -------- ------------- ------------- -------- ---------
12 months
ended 31
December 2017
Revenue 31,660 11,037 8,340 - 51,037 875 - 51,912
Depreciation
and
amortisation (178) (49) (74) - (301) - (1,307) (1,608)
Operating
profit/(loss) 11,033 3,882 1,385 (1,809) 14,491 800 (2,689) 12,602
Financial
income 143 5 - 2 150 - - 150
Financial
expenses (1) (4) - (326) (331) - - (331)
Profit/(loss)
before tax 11,175 3,883 1,385 (2,133) 14,310 800 (2,689) 12,421
Trade
receivables 11,442 4,386 419 - 16,247 - - 16,247
Segment
liabilities (10,453) (806) (506) (600) (12,365) (726)(1) - (13,091)
Capital
expenditure 53 47 191 - 291 - - 291
--------------- -------------- --------- ------------- -------- ------------- ------------- -------- ---------
1. Pre-LASPO ATE liabilities include the balance of commissions received in advance that are due to be paid back to the insurance
provider of GBP865,000 (June 2017: GBP2,026,000, December 2017: GBP676,000 plus associated accrued costs of GBP50,000).
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 consistent with those reported last year.
Personal Injury - Revenue from the provision of enquiries to the PLFs, based on a cost plus margin model, plus commissions received from providers for the sale of additional products by them to the PLFs and in the case of the ABSs, revenue receivable from clients for the provision of legal services.
Pre-LASPO ATE - Revenue is commissions received from the insurance provider for the use of after the event policies by PLFs. 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 homebuyers and sellers in England and Wales, offering lead generation services to PLFs and surveyors in the conveyancing sector and the provision of conveyancing searches for solicitors and licensed conveyancers.
Group - Costs that are incurred in managing Group activities or not specifically related to a product.
Other 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, 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 underlying operations (comprising cash flows associated with Personal Injury, Critical Care, Residential Property and other segments), the Pre- LASPO ATE product segment and other items.
Reconciliation of operating profit to net cash flows from operating activities
Pre-LASPO
Underlying operations ATE Sub-total Other items Total
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------------------- ---------------------- ---------- ---------- ------------ --------
6 months ended 30 June 2018
Operating profit 5,521 - 5,521 (142) 5,379
Amortisation of intangible assets acquired on
business combinations 648 - 648 - 648
Equity-settled share-based payments 191 - 191 - 191
---------------------------------------------- ---------------------- ---------- ---------- ------------ --------
Underlying operating profit 6,360 - 6,360 (142) 6,218
Depreciation and amortisation 162 - 162 - 162
(Increase) in trade/other receivables (7,621) - (7,621) - (7,621)
Increase/(decrease) in trade/other payables 2,390 (50) 2,340 - 2,340
Increase in liabilities relating to pre-LASPO
ATE product - 189 189 - 189
---------------------------------------------- ---------------------- ---------- ---------- ------------ --------
Net cash flows from operating activities
before interest and tax 1,291 139 1,430 (142) 1,288 ---------------------------------------------- ---------------------- ---------- ---------- ------------ -------- Interest paid (154) - (154) - (154) Tax paid (1,338) - (1,338) - (1,338) ---------------------------------------------- ---------------------- ---------- ---------- ------------ -------- Net cash from operating activities (201) 139 (62) (142) (204) ---------------------------------------------- ---------------------- ---------- ---------- ------------ -------- 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 ----------------------------------------------------------------- ------------ ----- -------- -------- -------- 12 months ended 31 December 2017 Operating profit 13,002 800 13,802 (1,200) 12,602 Amortisation of intangible assets acquired on business combinations 1,307 - 1,307 - 1,307 Equity-settled share-based payments 182 - 182 - 182 ------------------------------------------------------- --------- -------- --------- -------- --------- Underlying operating profit 14,491 800 15,291 (1,200) 14,091 Depreciation and amortisation 301 - 301 - 301 (Increase) in trade/other receivables (11,974) - (11,974) - (11,974) Increase/(decrease) in trade/other payables 5,120 (20) 5,100 (137) 4,963 Decrease in liabilities relating to pre-LASPO ATE product - (1,236) (1,236) - (1,236) ------------------------------------------------------- --------- -------- --------- -------- --------- Net cash flows from operating activities before interest and tax 7,938 (456) 7,482 (1,337) 6,145 ------------------------------------------------------- --------- -------- --------- -------- --------- Interest paid (178) - (178) - (178) Tax paid (3,139) - (3,139) - (3,139) ------------------------------------------------------- --------- -------- --------- -------- --------- Net cash from operating activities 4,621 (456) 4,165 (1,337) 2,828 ------------------------------------------------------- --------- -------- --------- -------- ---------
3. Financial income
Unaudited 6 months ended 30 Unaudited 6 months ended 30 Audited 12 months ended 31
June 2018 June 2017 December 2017
GBP000 GBP000 GBP000
----------------------- ------------------------------ ------------------------------ -----------------------------
Bank interest income 2 5 6
Other interest income 96 33 139
Investment income - - 5
Total finance income 98 38 150
----------------------- ------------------------------ ------------------------------ -----------------------------
4. Financial expense
Unaudited 6 months ended 30 Unaudited 6 months ended 30 Audited 12 months ended 31
June 2018 June 2017 December 2017
GBP000 GBP000 GBP000
---------------------------- ---------------------------- ---------------------------- ----------------------------
Interest on bank loans 169 135 257
Amortisation of facility
arrangement fees 37 31 74
---------------------------- ---------------------------- ---------------------------- ----------------------------
Total finance expense 206 166 331
---------------------------- ---------------------------- ---------------------------- ----------------------------
5. Exceptional items
Unaudited 6 months ended 30 Unaudited 6 months ended 30 Audited 12 months ended 31
June 2018 June 2017 December 2017
GBP000 GBP000 GBP000
---------------------------- ---------------------------- ---------------------------- ----------------------------
Set up costs for new ABS(1) (142) - -
Personal Injury
reorganisation costs(2) - (1,000) (1,200)
Release of pre-LASPO ATE
liability and associated
costs(3) - - 800
Total (142) (1,000) (400)
---------------------------- ---------------------------- ---------------------------- ----------------------------
1. Set up costs for new ABS include legal and professional fees, consultancy fees, IT costs and other directly attributable costs that
are wholly necessary to bring the new alternative business structure into operational existence.
2. Personal Injury reorganisation costs relate to costs associated with exceptional projects that are not related to the core operations
of the business.
3. Previously recognised liabilities for pre-LASPO ATE commissions received in advance of GBP875,000 were released in 2017 as a result of more favourable settlements. These have been offset by associated costs of GBP75,000.
6. Goodwill
Residential Critical
Personal Injury property Care Total
GBP000 GBP000 GBP000 GBP000
--------------------- ---------------- ------------ --------- --------
Cost
At 30 June 2017 39,897 4,873 15,592 60,362
At 30 December 2017 39,897 4,873 15,592 60,362
--------------------- ---------------- ------------ --------- --------
At 30 June 2018 39,897 4,873 15,592 60,362
--------------------- ---------------- ------------ --------- --------
Impairment
At 30 June 2017 - - - -
At 30 December 2017 - - - -
At 30 June 2018 - - - -
--------------------- ---------------- ------------ --------- --------
Net book value
At 30 June 2017 39,897 4,873 15,592 60,362
--------------------- ---------------- ------------ --------- -------- At 30 December 2017 39,897 4,873 15,592 60,362 --------------------- ---------------- ------------ --------- -------- At 30 June 2018 39,897 4,873 15,592 60,362 --------------------- ---------------- ------------ --------- --------
7. Intangibles
Assets under
Technology related Contract related Brand names Other construction Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- ------------------- ----------------- ------------ -------- --------------------- --------
Cost
At 30 June 2017 167 8,466 885 549 43 10,110
--------------------- ------------------- ----------------- ------------ -------- --------------------- --------
At 31 December 2017 167 8,466 885 670 79 10,267
--------------------- ------------------- ----------------- ------------ -------- --------------------- --------
Additions - - - 32 124 156
At 30 June 2018 167 8,466 885 702 203 10,423
--------------------- ------------------- ----------------- ------------ -------- --------------------- --------
Amortisation
At 30 June 2017 52 1,824 364 87 - 2,327
At 31 December 2017 62 2,363 468 157 - 3,050
--------------------- ------------------- ----------------- ------------ -------- --------------------- --------
Amortisation charge
on business
combinations 10 538 100 - - 648
Amortisation charge
for the period - - - 78 - 78
At 30 June 2018 72 2,901 568 235 - 3,776
--------------------- ------------------- ----------------- ------------ -------- --------------------- --------
Net book value
At 30 June 2017 115 6,642 521 462 43 7,783
At 31 December 2017 105 6,103 417 513 79 7,217
--------------------- ------------------- ----------------- ------------ -------- --------------------- --------
At 30 June 2018 95 5,565 317 467 203 6,647
--------------------- ------------------- ----------------- ------------ -------- --------------------- --------
The intangible assets recognised were acquired as part of the acquisitions of Fitzalan, BVC, Bush and Searches UK.
8. Share capital
30 June 2018 30 June 2017 31 December 2017
--------------------------------------- ------------- ------------- -----------------
Number of shares
'A' Ordinary Shares of GBP0.0025 each 46,178,716 45,511,088 46,061,090
--------------------------------------- ------------- ------------- -----------------
GBP000 GBP000 GBP000
--------------------------------------- ------------- ------------- -----------------
Allotted, called up and fully paid
'A' Ordinary Shares of GBP0.0025 each 115 114 115
Shares classified in equity 115 114 115
--------------------------------------- ------------- ------------- -----------------
9. Transactions with owners, recorded directly in equity
During 2017, 711,461 share options were exercised which resulted in the issue of 711,461 new ordinary shares with a par value of
GBP0.0025. The exercising of these options raised funds of GBP1,779 for the Group.
During 2018, 117,626 share options were exercised from the LTIP and SAYE schemes which resulted in the issue of 117,626 new ordinary shares with a par value of GBP0.0025. The exercising of these options raised funds of GBP88,356 for the Group and resulted in an increase to the share premium account of GBP88,062.
10. Earnings per share
The calculation of basic earnings per share at 30 June 2018 is based on profit attributable to ordinary shareholders and a weighted average number of Ordinary Shares outstanding at the end of the period as follows:
Profit attributable to ordinary shareholders (basic)
Unaudited 6 months ended Unaudited 6 months ended
30 June 30 June Audited 12 months ended 31
2018 2017 December 2017
GBP000 GBP000 GBP000
---------------------------- ---------------------------- ---------------------------- ----------------------------
Profit for the period
attributable to the
shareholders 3,758 4,097 9,876
---------------------------- ---------------------------- ---------------------------- ----------------------------
Weighted average number of Ordinary Shares (basic)
Unaudited 6 months ended Unaudited 6 months ended Audited 12 months ended
Number 30 June 2018 30 June 2017 31 December 2017
---------------------------- --------------------------- --------------------------- ---------------------------
Issued Ordinary Shares at
start of period 46,061,090 45,349,629 45,349,629
----------------------------- --------------------------- --------------------------- ---------------------------
Weighted average number of
Ordinary Shares at end of
period 46,100,876 45,350,071 45,548,243
----------------------------- --------------------------- --------------------------- ---------------------------
Basic earnings per share (p)
Unaudited 6 months ended 30 June Unaudited 6 months ended 30 June Audited 12 months ended 31
2018 2017 December 2017
----------- ---------------------------------- ---------------------------------- ---------------------------------
Group (p) 8.2 9.0 21.7
----------- ---------------------------------- ---------------------------------- ---------------------------------
The Company has in place share-based payment schemes to reward employees. The incremental shares available for these schemes included in the diluted earnings per share calculation are 958,388 (June 2017: 602,503; December 2017: 205,303). There are no other diluting items.
Diluted earnings per share (p)
Unaudited 6 months ended 30 June Unaudited 6 months ended 30 June Audited 12 months ended 31
2018 2017 December
2017
----------- --------------------------------- ---------------------------------- ----------------------------------
Group (p) 8.0 8.9 21.6
----------- --------------------------------- ---------------------------------- ----------------------------------
11. 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 2017. At 1 January 2018 and 30 June 2018 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.
12. Net debt
Net debt includes cash and cash equivalents, secured bank loans, loan notes and preference shares.
30 June 2018 30 June 31 December 2017
GBP000 2017 GBP000
GBP000
------------------------------------------------ -------------- --------- -----------------
Cash and cash equivalents 939 799 858
Other interest-bearing loans and loan notes(1) (18,334) (10,243) (12,922)
Net debt (17,395) (9,444) (12,064)
------------------------------------------------ -------------- --------- -----------------
1. Other interest-bearing loans and loan notes are stated after deducting facility arrangement fees of GBP166,000 (June 2017: GBP132,000, December 2017: GBP203,000). These fees are being amortised over the term of the facility.
Set out below is a reconciliation of movements in net debt during the period.
30 June 2018 30 June 31 December 2017
GBP000 2017 GBP000
GBP000
-------------------------------------------------------------------------- ------------- -------- -----------------
Net increase/(decrease) in cash and cash equivalents 81 (4,015) (3,956)
Cash and cash equivalents net inflow from increase in debt and debt
financing (5,412) 846 (1,833)
-------------------------------------------------------------------------- ------------- -------- -----------------
Movement in net borrowings resulting from cash flows (5,331) (3,169) (5,789)
Movement in net debt in period (5,331) (3,169) (5,789)
Net debt at beginning of period (12,064) (6,275) (6,275)
-------------------------------------------------------------------------- ------------- -------- -----------------
Net debt at end of period (17,395) (9,444) (12,064)
-------------------------------------------------------------------------- ------------- -------- -----------------
The Group refinanced its bank facilities on the 8 September 2017. During the first half of 2018 the Group made further drawdowns of GBP5,375,000 on its rolling credit facility. It is the Group's intention to repay the balance on the rolling credit facility in more than 12 months time and hence the gross balance of GBP18,500,000 is deemed to be a non-current liability.
13. Related parties
Transactions with key management personnel
Key management personnel in situ at 30 June 2018 and their immediate relatives control 3.1 per cent (June 2017: 4.1 per cent, December 2017: 4.5 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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR EAKNXFALPEFF
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September 18, 2018 02:00 ET (06:00 GMT)
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