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


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

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Reports

Our latest special report, produced in association with Temple Legal Protection, looks at the role of after-the-event (ATE) insurance in commercial litigation post-LASPO. We are at a time when insurers, solicitors, clients and litigation funders work ever more closely to create funding packages that work for all of them, with conditional fee and even damages-based agreements now part of many law firms’ armoury.

Blog

21 January 2020

Childcare obligations should not be impacting careers

As a single parent, I am keenly aware of the constant challenge balancing work and family life, something which can at times feel difficult to navigate in the legal profession.

Read More

Loading animation