Rbg Share Discussion Threads

[quepassa] 20/10/2023 15:05

I guess the recent Axiom/Ince disaster and debacle has further soured sector sentiment.


There is an article together with reader comments about Axiom Ince on Roll On Friday.


ALL IMO. DYOR.
QP

[shep22] 20/10/2023 10:15

"London (October 19, 2023, 5:15 PM BST) -- A former RBL Law partner told a tribunal Thursday that a senior partner threatened to "destroy" him in an expletive-peppered exchange after he resigned over retaliation for blowing the whistle about its lack of disclosure in an employment claim".
Lack of disclosure, a major issue with this company.

[shep22] 18/10/2023 14:41

It would help shareholders if the company indicated whether it still stood over this atatement following a very poor third quarter for both law firms.

[shep22] 16/10/2023 16:07

The company has failed to update shareholders in a timely way up to now.

[adeg] 16/10/2023 12:04

Shep,
Either you are wrong or the company is wrong. Only time will tell.


Current Trading & Outlook

-- The first half of the Company's financial year has historically been the slower of the two halves, and the Board can already see this trend continuing, with a strong start to H2 2023

-- Trading within the Group's Legal Services division was robust in the first half, and the Group has good visibility on revenue and profitability in this division for the second half

-- As a result, the Board is confident that the core Legal Services business will meet full year market expectations

[shep22] 13/10/2023 14:10

Both law firms continue to loose money, increasing costs and declining revenues, only one possible outcome.

[aleman] 30/9/2023 10:28

Debt would be only up slightly without the jump in capex to £2.6m from a figure that is usually near zero. Can't see any comments on capex, though.

[tomtrudgian] 30/9/2023 09:13

Is there a slight lack of transparency by management?

In the H1 2023 unaudited results the CEO states the debt was up to 21m from 17.5m in H1 2022. He continues that this increase was due (not partially due) ‘to the emergence of a number of unforeseen legacy payments that needed settling’. No details of this £3.5m are given, and why was the need for payment ‘unforeseen217;?

He states that £3.5m of the £10m term loan ‘has already been paid back’. True but a misleading comment that would not be allowed if the results were audited. If £3.5m was repaid in a six month period, that would certainly be impressive. However earlier accounts show it was repaid earlier. No debt was repaid in H1 2023, and the loan expires in April 24.

Tom Trudgian

[shep22] 29/9/2023 19:09

Newgate are really trying hard, but facts speak louder than waffle.

[jc1987] 29/9/2023 14:44

I'd like to ask RBGemployee whether they really are an RBG employee and not in actual fact an employee of SEC Newgate? I believe that's the PR firm that RBG uses, and it happens to be run by the founder Ian Rosenblatt's wife, Emma Kane...

[electricmayhem] 29/9/2023 10:41

Full disclosure, I too am an ex employee. Perhaps I have an axe to grind, form your own opinion.

My issue with listed law firms is twofold. Firstly their value comes from the lawyers and, principally, a small number of partners that generate significant fees. Traditionally these partners gain equity and are well renumerated for their efforts. RBG is doesn't have this model, all partners are employees and salary is not determined by reference to their billing. As such there is next to no incentive for any serious partner to join them and any partner with a following can earn more money elsewhere. Case in point, all the Rosenblatt partners were reliant on IR to 'feed' them, and once the MC acquisition happened, any MC partners who were more geared to winning clients (that were not locked in) took their business elsewhere. Look at the quality of partners that have been recruited, not the numbers. Old timers winding down or those that didn't make the cut at traditional firms.
My second issue is tied to the first. All listed companies have an obligation to disclose price sensitive information. In any 'traditional' business, a serious deterioration of the assets would be disclosed. This doesn't happen at listed law firms. Partners with books of 2/3 million and whose reputation carries the firm leave with no disclosure, yet these are big hits to the bottom line. Further as their fees are billed retrospectively the effect of this isn't seen for many months after. MC has seen a huge drop off of the partners that presumably gave the firm its initial value, but there's no disclosure around this and the effect is still worling its way through. This wouldn't happen with any other business.

I appreciate that moral may have steadied (it really couldn't have got much worse) but my issue with this as an investment is that they have their arms tied behind their back when it comes to attracting talent; and investors are not given the full picture.

[quepassa] 29/9/2023 05:59

Not convinced.

Some listed legal firms may or may not be pondering if they wouldn't have a quieter and more productive life if they were back in the private domain and de-listed.

Already shareholders have been sent a forthright message with the latest change to dividend policy "foreseeable future".


ALL IMO. DYOR.
QP

[qs99] 29/9/2023 05:35

well said.....I think the boss will turn this around and quicker than people think. New partners joining says it all, they don't jump to failing firms! So nice organic growth for 12 months will do nicely, get paying down the debt, increase confidence in management and forecasts and share price will recover IMO....DYOR

[rbgemployee] 28/9/2023 20:58

and so it all starts again.....people with not one single clue as to what is going on pontificating about the state of the business. I can't comment on Convex, I couldn't pick the staff out in a room. I don't know about the financials except what I can read in an RNS. What I can tell you is that I was in the office today - it was what we call a hub day. It was buzzing - good morale, good feelings, very busy, new trainees welcomed, newly qualified's congratulated at "Thirsty Thursday". Trust me, there's far worse firms to be in, I should know. Is this where I put DYOR?

[se81] 28/9/2023 16:07

FYI full year estimates are for £10-12m EBITDA (these come with risk though as rely on Convex completions)

Funny snippet from the IMC presentation from Divers...

"took the decision to write off 13 million of litigation assets incorrectly sat on our balance sheet"

Says it all re how the company was run under former CEO

[catabrit] 28/9/2023 15:32

What you are missing is that this is a price vs valuation business. I have no view on the business, whether it is good, bad or downright ugly. But I do have a view on the valuation versus the type of business this is (a service one) and that view isn’t positive. Reduce the price to a much lower EBITDA multiple and I’ll say fine. It’s priced in. But today it’s not vs alternatives, peers and the risk free rate.

[tv123] 28/9/2023 15:06

What these posts are missing is that this is a people business- my experience is that people are staying at RBG because actually people like working there and Jon is a popular CEO.

[tomtrudgian] 28/9/2023 14:22

Agreed shep22. I am sorry you have been vindicated so late. Sometimes after rude postings. Probably not terminal however, or worthwhile the costs of administration. For two reasons:
1/ HSBC have few saleable assets to foreclose upon without a large HSBC loss. There is nothing, including future revenues and even teapots, that they do not already have a charge against.
2/ Solicitors from my personal experience, and also most other professional firms, have an extraordinary ability to gain business from old clients they may not have heard of for a decade. That may help in 2026.

So the share price may fall very much further. More fee earners may leave - why should they stay? Bottom fishing may be worthwhile in 2026, not before.

The acrimony is so sad. I was one of the very few (none?) who admired Foulston’s sheer drive, ambition, public relations skills, superb web site and of course organising the IPO. Not remotely popular, but why should a good CEO be popular?

[shep22] 28/9/2023 13:18

In terminal decline I am afraid, it gives me no pleasure to mention that I predicted this a long time ago.

[jonny_wright] 28/9/2023 11:11

No reason to buy or hold this

[tomtrudgian] 28/9/2023 08:29

On 1 Sept I posted best case scenarios for 2025 - none for 2024 imo. I undertook some research, so reread them if you can bear to.

Apart from lease dilapidations (item 9) which was based on freeholder hearsay only, they now all seem poor scenario for 2025:

Rosenblatt Law and Memory Crystal results are surprisingly underwhelming.
Convex Capital is probably finished. (market conditions, nobody’s fault).
Ian Rosenblatt is stated to be the ‘largest revenue generator’ but without evidence. If so his shares may well not be foreclosed upon or the £500,000 pay reduced. Both are now the bank’s decision, not the board’s.
Any loans repaid or extended? Nope, despite being due April 2024.
The grossly overstated ‘intantangible assets’ written down? Nope.
Fee earners can be replaced? Nope, total staff numbers down 8%.
As to Nicola Foulston, negotiations continue. She will win a payoff.

[catabrit] 28/9/2023 08:07

So no yield anymore. Twenty million of net debt or double the market cap so basically forty million enterprise value on run rate group EBITDA of what, four to six million? Ok so there’s some optionality on the claims or cases that have been written down to zero but for a sub scale firm the valuation isn’t anywhere near low enough.

This could be dead money for years.

If you just ignore the plunge in the share price which was clearly make believe anyway, on a fundamental valuation basis this isn’t cheap.

It should be like two to three times EBITDA max so in my opinion this has a long way to fall.

And the cost of that debt will be high when they need to re finance it.

I just don’t see why you’d buy this at the minute.

Anyway, good luck if you have.

[weaverbeever] 28/9/2023 07:42

Nothing about the previous CEO claiming wrong dismissal via courts

[quepassa] 28/9/2023 07:25

"Following feedback from significant shareholders about the importance of reducing borrowings, the Board announced it was suspending the Group's dividend policy for the foreseeable future".


Foreseeable future.


all imo. dyor.
qp

[aleman] 28/9/2023 06:59

Better than I was expecting and clear recovery potential in H2.