AIM-listed ABS eyes future benefits after law firm acquisition dents profits

Print This Post

By Legal Futures

5 September 2013


Davison: encouraging signs

Lewis Hymanson Small (LHS) – the earlier this year – made a small dent in the company’s profits during a “tough” initial period, Abbey’s half-year results have shown.

The purpose of the acquisition was to expand Abbey’s legal services offering and in the first four months of being part of the group, LHS contributed £760,000 of revenue and a loss of £55,000.

The interim report said that Abbey’s investment in the opportunities afforded by its alternative business structure licence is “yet to bear fruit”.

Chief executive Colin Davison said: “Trading in this initial period has, as expected, been tough as we have been undertaking the necessary re-structuring to ensure that LHS is well positioned to take advantage of the opportunities in front of us. I am pleased to say that the signs are encouraging.”

Overall the legal arm of Abbey, which includes LHS and its legal advice call centre, saw revenue grow nearly 3% to £5.1m, although profits were flat at £1.2m.

The report also revealed that Abbey paid £946,000 for a controlling interest in the Manchester practice, made up of £296,000 cash and £650,000 in deferred consideration.

Included within the latter is contingent consideration with a fair value of £266,000. This arrangement requires Abbey to pay the former owners a percentage in excess of an annual profit target, in respect of the period from acquisition on 28 February 2013 to 31 December 2015.

The report said: “The potential undiscounted amount of future payments that the group could be required to make under the contingent consideration arrangement is between nil and £750,000.”

The valuation of LHS included goodwill of £1.36m, which is “largely attributable to the anticipated profitability of the group’s products in the new markets and the anticipated future operating synergies from the combination”.

Group revenue was up 8% to £20.7m for the first six months of 2013, with profit after tax up 6% to £4.2m – although pre-tax profits remained stable at £5.2m.

Abbey’s after-the-event insurance division more than doubled its profit contribution to £500,000 with a “sales boom” in March ahead of implementation of the Jackson reforms. The historic Accident Line scheme is now in run-off, but Abbey remains “active” in the market.

Tags: ,



Leave a comment

* Denotes required field

All comments will be moderated before posting. Please see our Terms and Conditions

Legal Futures Blog

The rise of the multi-disciplinary lawyer: A challenge for legal education

Catrina Denvir

The legal profession has been on the receiving end of much hype regarding the impact of technology. Recent commentators purport that the aspiring lawyer must be a triple threat, possessing knowledge of the law, coding expertise, and in-depth knowledge of legal technology. Yet, focusing on legal technology risks overlooking the need for skills that transcend latest fads. Legal technology is a means by which to handle data: to organise it, record it, extract it, analyse it, predict from it and leverage it. Quantitative and statistical literacy – the ability to understand, apply, visualise and infer from data – underpins technological literacy and yet receives very little attention from those who encourage innovation in the legal curriculum.

May 26th, 2017