30 April 2024
RBG Holdings
plc
("RBG",
the "Group", or the "Company")
Audited results for the year
ended 31 December 2023
RBG Holdings plc (AIM: RBGP), the
legal services group, today announces its audited results for the
year ended 31 December 2023.
Highlights:[1]
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Revenue down 12.6% to £39.2m
(2022: £44.9m, excluding proceeds on disposal of damages based
assets)
o Revenue (including discontinued operations) down 13.4% to
£41.4m (2022: £47.9m)
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Adjusted[2]
EBITDA down 62.5% to £4.6m[3] (2022:
£12.4m)
o Adjusted EBITDA (including discontinued operations) down
54.3% to £4.0m (2022: £8.7m)
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Adjusted2 loss before tax of £0.7m (2022:
£7.6m)
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Non-recurring costs of £10.6m (2022:
£9.7m)
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Loss before tax £11.4m (2022:
£2.1m)
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Loss from continuing operations of
£11.0m (2022: £1.6m)
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Loss on discontinued operations
(including goodwill impairment), net of tax £12.9m (2022: loss
£3.1m)
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Loss for the year (including
discontinued operations) of £23.9m (2022: £4.7m)
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Free cashflow outflow £3.1m (2022:
inflow £4.0m)
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Net debt of £22.9m (2022: £19.2m).
Cash at Bank on 26 April 2024 was £1.4m
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RBG Legal Services fee earner
utilisation of 70% (2022: 76%)
RBG Legal Services fee earner
realisation of 87% (2022: 90%)
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Strategic highlights:
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Appointment of a new Chief
Executive Officer, Jon Divers, and a new Chief Financial Officer,
Kevin McNair
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Disposal of LionFish, the Group's
litigation finance operation
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Renewing the Group's banking
facilities totalling £24.0m on terms deemed favourable by the
Board
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Implementation of a new Enterprise
Resource Planning 'ERP' management information system
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Scaling back from unfunded Damages
Based Agreements
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A full comprehensive review of all
aspects of the accounting treatment of work in progress and
debtors
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Events after reporting date:
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On 22 February 2024, the Group
raised £0.9 million before expenses through the issue of new
ordinary shares. A further £2.1 million before expenses was raised
through the issue of new ordinary shares on 12 March 2024. The
fundraising, which took place at a tight discount to the prevailing
share price, was strongly supported by existing institutional
shareholders, including certain directors who subscribed for £1.0
million of shares as part of the fundraise. The purpose of the
raise was to provide additional working capital to the Group and to
reduce the use of the Group's banking facilities
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On 28 March 2024, the Group
completed the disposal of Convex Capital to a joint venture led by
its management team for an initial consideration of £2.0 million,
with up to £600,000 of contingent consideration payable on
completion of certain subsequent transactions. Following the
disposal, the Group is focused purely on legal services, its core
business
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Following the completion of the
disposal of Convex Capital, Ian Rosenblatt stepped down from the
Board. Ian remains the Group's largest shareholder and
largest generator of revenue.
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Outlook:
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Trading during the first quarter
of 2024 has been in line with expectations. Ignoring the impact of
the unusually large piece of work that ran during mid and late 2022
into January 2023, Legal Services has traded slightly ahead in Q1
2024 compared to Q1 2023 on a like for like basis;
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Management is focused on specific
areas of legal services which they believe offer the best
opportunities for organic growth. Some of these are existing
practices within the Group, others are complementary where the
Group has recently recruited new partners and is looking to add
additional resource;
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The seven new partners that have
joined in the past nine months have made an encouraging start. They
are closely aligned to the areas which management believe offer the
best growth and margin opportunities;
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There is, and there always will
be, a heavy focus on cost reduction wherever possible across the
Group although management are conscious of the need to maintain
scalability within the support functions of the
business;
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The Board is optimistic that 2023
marked the end of the pivot from the Group's previous strategy and
that there are opportunities for the Group to grow.
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Marianne Ismail, Chair, RBG Holdings plc, said:
"We recognise that 2023 was a very challenging
year for the Group. However, the significant progress in realigning
the business gives the Board confidence that the Group is on a much
stronger footing than it has been for some time. The new Executive
team, led by CEO Jon Divers, has made difficult decisions to reduce
the Group's risk profile, its cost base, and to refocus RBG on its
core legal activities, similar to the business that floated in
2018, where the Board believes profits will be
maximised."
Jon
Divers, Chief Executive Officer, RBG Holdings plc, added:
"We have made significant
improvements to the business in 2023 and we are now in a better
position to deliver the Board's strategy of building a high margin,
cash-generative, legal services group delivering sustained
shareholder value. We have enhanced our operations which will lead
to sustained margin improvements and have also added more fee
earners. This, along with our actions to derisk the business, drive
organic growth, and to simplify and strengthen the Group's balance
sheet, give us a greater confidence about the performance of the
Company as the market improves."
Enquiries:
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RBG
Holdings plc
Jon Divers, Chief Executive
Officer
Kevin McNair, Chief Financial
Officer
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Via SEC Newgate
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Singer Capital Markets (Nomad and Broker)
Rick Thompson / Alex Bond / James
Fischer (Corporate Finance)
Tom Salvesen (Corporate
Broking)
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Tel: +44 (0)20 7496 3000
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SEC
Newgate (for media/analyst enquiries)
Robin Tozer / Molly
Gretton
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Tel: +44 (0)7540106366
rbg@secnewgate.co.uk
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About RBG Holdings plc
·
Further information about RBG Holdings plc is
available at: www.rbgholdings.co.uk
·
Further information about Rosenblatt (founded in
1989) is available at: www.rosenblatt.co.uk
·
Further information about Memery Crystal (founded
in 1979) is available at: www.memerycrystal.com
Chair's
statement
Overview
We recognise that 2023 was a
challenging year, but it was also a year of inflexion for the Group
and the significant progress in realigning the business gives the
Board confidence that the Group is on a much stronger footing than
it has been for some time. The new Executive team, led by CEO Jon
Divers, has made difficult decisions to reduce the Group's risk
profile, its cost base and to refocus RBG on its core legal
activities, similar to the business that floated in 2018, where the
Board believes profits can be maximised.
It was clear that the strategy and
approach adopted by the previous management which deviated from the
original strategy presented at IPO, was no longer appropriate. The
required resources to reorient to a new strategy drained the
business of profit and working capital, at a time when there have
been significant macro-economic challenges impacting the Group. Two
significant changes to derisk and strengthen the balance sheet were
the 2023 disposal of LionFish Litigation Finance Limited
("LionFish"), and the post-period end disposal of Convex Capital
Limited ("Convex Capital").
Today, the business is much closer
to the one that floated in 2018 and in the view of the Board is
stronger. At IPO, we floated the law firm, Rosenblatt, to which in
2021 we added Memery Crystal to form RBG Legal Services Limited
("RBGLS"). Rosenblatt and Memery Crystal are aligned to contentious
and non-contentious services to reflect their brand position within
the market, resulting in London's premier mid-tier law firm
providing quality advice to corporates, entrepreneurs and high net
worth individuals.
Rosenblatt was ranked in Tier 1 in
The Legal 500 (Legalease) in 2024 for commercial litigation. Memery
Crystal was ranked in 12 categories in The Legal 500 (Legalease)
directory in 2024.
Both brands have over 30 years'
proven trading history and the ability to deliver solid revenues
and profits. Driving the organic growth of these businesses is at
the heart of our strategy, and we believe that by focusing on our
core strengths, with a simpler balance sheet, and reduced levels of
debt, the market will be able to recognise the underlying value of
the Group.
Financials[4]
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Revenue of £39.2m (2022: £44.9m, excluding gains
on litigation assets)
·
Adjusted EBITDA of £4.6m (2022:
£12.4m)
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Loss before tax £11.4m (2022: £2.1m)
·
Loss from continuing operations £11.0m (2022:
£1.6m)
·
Loss on discontinued operations (including
goodwill impairment), net of tax £12.9m (2022: loss
£3.1m)
The numbers we have reported for the
12-months to 31 December 2023 highlight the headwinds the business
has faced. Revenue and profit from our continuing operations has
reduced, largely due to lower corporate spend on legal services, in
particular relating to transactions such as IPOs and M&A. We
also had to make provisions in relation to the legacy the previous
management left in terms of unfunded Damaged Bases Agreements
(DBAs) and historic debtors.
As we progress through 2024, we do
so with noticeably improved operating processes that will begin
feeding through in terms of improved margins. We have taken steps
to reduce our cost base, including the
consolidation of our property portfolio, and we have a much simpler balance sheet that will give greater
clarity to investors.
Our new agreement with HSBC and
recent successful fundraise gives the management team the
operational headroom to deleverage the business more quickly as it
brings operational performance back up to acceptable levels.
At 31 December 2023, our net debt position was £22.9m (2022:
£19.2m). The Group has a £17.5m revolving credit facility and a
£10.0m five-year term loan taken to fund the Memery Crystal
acquisition which has already been paid down to £6.5m. In
addition to this, the Group has two short term facilities that were
obtained in the current year of £0.3m and £0.5m. These respective
facilities have been paid down to £0.2m and £0.4m at year end. We
are committed to reducing debt as a core part of our
strategy.
Strategy
The Group's strategy is to build a
high margin, cash-generative, legal services group with diversified
revenue and profit streams to deliver organic growth and sustained
shareholder value.
The successful acquisition of Memery
Crystal in 2021 diversified our legal services revenue, which
remains evenly split across three main practice areas; Dispute
Resolution, Corporate and Real Estate. While the prevailing
economic environment has been challenging, we see considerable
opportunity in these core business areas, as the economic outlook
improves, and operational improvements take hold. These
improvements include the recruitment of seven new partners, the
implementation of a new ERP management information system to
enhance workflow across the different practices and focusing on
improving the performance of all fee earners through providing more
timely and robust key performance indicators (KPIs) pertaining to
fee earner performance, such as utilisation rates, recovery rates,
and fee cost ratios.
Our emphasis will be on driving
organic growth by recruiting and developing new fee earners. In
2023, we added seven new partners, and as at 31 December 2023, RBG
Legal Services had 128 fee earners overall.
To ensure the Business remains
absolutely focused on its goal, the Board took the decision to
divest LionFish where litigation matters are run by third-party
solicitors and reduce the Group's exposure to third-party
litigation funding commitments. The proceeds from the sale were
used for working capital purposes. The Group will not participate
in unfunded Alternative Billing Arrangements due to their
unpredictability.
After the period-end in March
2024, we also sold Convex Capital to its management for a total
consideration of up to £2.6 million, comprising an initial cash
consideration of £2.0 million paid on completion and an earn
out contingent on the completion of
certain subsequent transactions. Convex
Capital is an excellent business, but the unpredictable nature of
the M&A market meant it was hard to forecast revenue flows in
any one year. Convex Capital also required working capital from the
Group, which we believe can be better deployed to support the core
legal services business and to help reduce debt.
Following the disposals, the Group
is focused purely on legal services, and we expect to go from
strength to strength as a result.
Board Changes
On 31 January 2023, the employment
contract of Nicola Foulston, CEO, was terminated. The Group
subsequently settled a claim from her and her management company,
Velocity Venture Capital Limited, which settles all outstanding
matters between the parties.
Jon Divers, the Group COO, was
appointed to the Board as CEO. The Board
was further strengthened with the appointments of Tania MacLeod
(Senior Partner, Rosenblatt), Nick Davis (Senior Partner, Memery
Crystal) and Ian Rosenblatt OBE (largest shareholder and individual
revenue generator) as Executive Directors.
In November, Kevin McNair, Interim Finance
Director, was appointed to the Board as Chief Financial Officer.
Kevin replaced Suzanne Drakeford-Lewis, who resigned from her role
in June 2023, to take a six-month sabbatical for personal reasons,
and subsequently confirmed to the Board of her decision not to
return in 2024. Following the disposal of Convex Capital, Ian
Rosenblatt resigned from the Board. He joined the Board to support
the restructuring and refocusing of the business to legal services.
Ian remains fully committed to the Group and has circa four years
remaining on his restrictive covenants.
The Board now consists of four
executive directors and three non-executive directors, providing a
blend of different experiences and backgrounds. All non-executives
are considered independent. We are in the process of recruiting
another independent non-executive director to strengthen the
independence of the Board and to ensure strong corporate
governance. I Board hopes to complete this process prior to the
Company's 2024 Annual General Meeting expected to be held in (or
around) June 2024.
People
The strength of the Group is in
our ability to retain and attract high-quality people. Despite the
challenging year, we have retained and added to our key staff. I
would like to sincerely thank everyone for their hard work and
thanks are also due to our shareholders for their continued
support.
Sustainability, Equality, Diversity and
Inclusion
We aim to build an organisation
that delivers long-term value to our shareholders, successful
outcomes for our clients, and is a responsible employer that
supports its employees and has a positive impact in the communities
in which it operates. For example, this year we have partnered with
the Sutton Trust to run work experience and mentoring programs for
university students. We also elected KEEN London as our Charity of
the Year for 2023.
While the nature of the business
means the Group does not have a significant environmental impact,
the Board believes that good environmental practices, such as the
recycling of paper waste and conservation of energy usage, will
support its strategy by enhancing the reputation of the Group. For
example, our Fleet Street address has 100% renewable power supply, and the
waste is 100% recycled or waste converted to energy (no
landfill).
We want to go further and are
looking at ways we can improve as an employer, and as a member of
the business community to address the challenges society is
facing.
Outlook
We have made significant
improvements to the business in 2023 and we are now in a better
position to deliver the Board's strategy of building a high margin,
cash-generative, legal services group delivering sustained
shareholder value. With much of the restructuring completed, and a
better economic outlook, the Group is in a much-improved position.
The business has returned to its roots, and is built around two
highly successful law firms, with proven track records across the
whole economic cycle. We are continuing to reduce our cost base and
are making significant operational improvements to increase revenue
and improve margin. We look forward to the coming years with
renewed confidence.
Marianne Ismail
Chair
30
April 2024
Chief Executive Officer's
statement
Overview
2023 has been a year of significant
change in the business as we work to deliver the Board's strategy
of building a high margin, cash-generative, legal services group
delivering sustained shareholder value.
We have focused on reducing the risk
profile of the Group by disposing of non-core assets such as
LionFish and Convex Capital and scaling back from unfunded DBAs. We
have also strengthened the balance sheet through a successful
fundraise and renewed banking facilities and there has been a
comprehensive review of all aspects of the accounting treatments of
work in progress and debtors.
Additionally, we are implementing
significant operational improvements in our core legal services
business, RBGLS, to meet the goal of being a high margin,
cash-generative group. These changes will leave the Group in a far
stronger position than at the start of 2023, especially as the
macro-economic environment improves.
RBG
Legal Services ("RBGLS"): Rosenblatt and Memery
Crystal
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Revenue down 12.6% to £39.2m (2022: £44.9m)
reflecting reduced corporate spend relating to transactions such as
IPOs and M&A
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RBG Legal Services fee earner utilisation of 70%
(2022: 76%)
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RBG Legal Services fee earner realisation of 87%
(2022: 90%)
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At 31 December 2023, RBGLS employed 183 people,
including 128 fee earners
Our legal services business trades
under two leading mid-tier law firm brands - Rosenblatt and Memery
Crystal, which have their own brand identities and operate as two
separately branded law firms. The two brands are aligned to
contentious (Rosenblatt) and non-contentious (Memery Crystal) legal
services to reflect their distinct position within the legal
services market. RBGLS has a balanced offering across the three
main legal areas - Dispute Resolution (via Rosenblatt), and
Corporate and Real Estate (through Memery
Crystal).
The organic growth of the two firms,
primarily through accretive hires, is key to our future success. We
are focused on strengthening and growing in all areas we work in,
by improving the performance of all fee earners, and adding seven
new partners during 2023. Some strengthen our existing practices,
and others add new areas of expertise as we look to build a
full-service law firm. The recruitment has added two new areas so
far, insolvency, and international arbitration. The partners in
these areas are already gaining traction in their specific markets
and are generating new revenue streams.
One of the keys to sustained
operational improvement has been the implementation of a new ERP
management information system in May, and we are already seeing the
benefits. Ensuring all partners have access to the same document
and time management systems, not only enhances the workflow across
the different practices, but it also provides more timely and
robust key performance indicators (KPIs) pertaining to fee earner
performance, such as utilisation rates, recovery rates, and fee
cost ratios. This consolidated approach eliminates the
inefficiencies associated with managing separate systems, allowing
for a more seamless flow of information, and enabling the Group to
make data-driven decisions that optimise resource allocation and
drive operational excellence.
As we enter 2024, the two businesses
are fully integrated and based at one office on Fleet Street in
London, with work ongoing to rationalise our property portfolio to
reduce cost.
Discontinued Operations
LionFish Litigation Finance Limited
("LionFish")
On 12 July 2023, the Group completed
the disposal of the non-core business, LionFish, to Blackmead
Infrastructure Limited ("Blackmead") which reduced the Group's
exposure to litigation funding commitments.
Convex Capital Limited ("Convex Capital")
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Completed three deals during 2023 delivering
£2.2m of revenue (2022: 6 deals, £5.3m)
Convex Capital, the specialist
sell-side corporate finance advisory business based in Manchester,
was acquired by the Group in September 2019, to broaden the Group's
exposure to the wider professional services sector and was sold in
March 2024 via a management buyout (MBO) of the
business.
As with the sale of LionFish, the
disposal was in line with the Group's strategy to reduce its risk
profile and to refocus on and invest in 'BG's established legal
services business-s - Rosenblatt and Memery Crystal - where the
Board believes it can best maximise profits.
The management of Convex Capital
acquired the business from the Group for a total consideration of
up to £2.6 million, comprising an initial cash consideration of
£2.0 million paid on completion and an earn out. Under the terms of
the earn out, post completion of the disposal, the Company will
receive 38% of any gross fees received upon completion of four
existing and named Convex projects up to a maximum of £0.6 million
in cash. The disposal will result in a non-cash loss of £13.3
million.
While Convex Capital is an excellent
business, its future is better served in the hands of its
management team. As with LionFish, its sale will mean concentrating
the resources of the Group on its core legal services businesses to
maximise profits, using the released cash to reduce RBG's net debt
and to invest in organic growth.
The disposal will reduce the demands
on the Company's working capital, through a reduction of circa
£2.2million per annum in ongoing costs in relation to
Convex.
In the 12-months to 31 December
2023, Convex Capital generated revenues of £2.2 million (FY22: £5.3
million) and losses after tax of £0.2 million (FY22: profit of £0.9
million).
Jon Divers
Group Chief Executive Officer
30
April 2024
Financial Review
Key
Performance Indicators (KPIs)[5]
·
Revenue down 12.6% to £39.2m (2022: £44.9m,
excluding proceeds on disposal of damages based assets)
o Revenue (including discontinued operations) down 13.4% to
£41.4m (2022: £47.9m)
·
Adjusted EBITDA down 62.5% to £4.6m (2022:
£12.4m)
o Adjusted EBITDA (including discontinued operations) down
54.3% to £4.0m (2022 restated: £8.7m)
·
Adjusted loss before tax of £0.7m (2022: profit
£7.6m)
·
Non-recurring costs of £10.6m (2022:
£9.7m)
·
Loss before tax £11.4m (2022: £2.1m)
·
Loss from continuing operations
of £11.0m (2022: £1.6m)
·
Loss on discontinued operations (including
goodwill impairment), net of tax £12.9m (2022: loss
£3.1m)
·
Loss for the year (including discontinued
operations) of £23.9m (2022: £4.7m)
·
Free cashflow outflow £3.1m (2022: inflow
£4.0m)
·
Net debt of £22.9m (2022: £19.2m)
·
RBG Legal Services fee earner utilisation of 70%
(2022: 76%)
·
RBG Legal Services fee earner realisation of 87%
(2022: 90%)
2023 was a challenging year for the
Group. However, the significant progress in realigning the business
gives the Board confidence that the Group is on a much stronger
footing than it has been for some time.
The Group has now noticeably
improved operating processes that have begun feeding through in
terms of improved margins in 2024. Our new agreement with HSBC
alongside the recent successful fundraise gives the Group
operational headroom to de-leverage the business while Group
performance begins to improve.
There are early signs of recovery in
some of the key areas of legal services that were badly impacted in
2023. We expect revenue and profit to improve in 2024. Continuing
to focus on the Group's operational efficiency, expanding margins
and generating cash are the key priorities for the
Board.
Revenue
Group revenue for the period was
£39.2m compared to £44.9m in 2022, representing a 12.6% decrease.
As Convex is treated as an asset held for sale, the Group revenue
reflects the performance of Legal Services.
Revenue across the Legal Services
departments was impacted by different factors. Dispute Resolution
(42% of total revenue) was down 9.5%. This department
benefited from an unusually large case in H2 2022 so its
performance in 2023 was broadly in line with
expectations.
Corporate revenue (38% of total
revenue) was down 12.1%, reflecting the depressed state of the
equity capital markets and lower M&A activity. M&A activity
began to pick up in Q4 of 2023 and this continued in Q1 2024.
There are early signs of improvement in the equity capital markets
in 2024 but this is unlikely to turn into revenue growth until
H2.
Real Estate (20% of total revenue)
was down 22.2%. This reflects the historically low levels of
activity across all parts of the commercial real estate
sector. Although there are early signs of recovery in parts
of the sector, management expectations for revenue growth in 2023
are cautious.
Other operating income
Other operating income of £0.9m
(2022: £0.2m) relates to net interest earned on client monies
held.
Disbursement asset revenue and expenditure
Disbursement asset revenue and
expenditure relates to funds invested in disbursements on RBGLS'
Damages based agreement ('DBA') cases. Due to an error identified
in accounting policies, these cases are now accounted for under
IFRS 15. Refer to notes 2 and 8 for further explanation.
Staff costs[6]
Total staff costs in 2023 were
£26.9m (2022: £27.2m), which includes £25.7m for legal services.
The average number of employees for the Group was 200 (2022:
211).
Overhead costs6
During 2022, the Group incurred
overheads of £46.5m (before depreciation and amortisation) (2022:
£44.0m), of which staff costs were £26.9m (2022:
£27.2m).
Other overhead costs were £19.6m
(2022 restated: £15.0m), of which non-recurring costs, represented
£10.6m (2022: £9.7m). Other costs included insurances of £1.4m
(2022: £1.8m), rates £0.7m (2022: £0.9m), and training and
recruitment £0.7m (2022 £0.6m).
Operationally, there remains a
significant focus on IT and we have invested sensibly over recent
years and further enhanced both our internal and client facing
experiences of IT usage.
EBITDA and Adjusted EBITDA6
In assessing performance, the Group
uses EBITDA and adjusted EBITDA as important KPIs. EBITDA loss was
a loss of £5.1m, including £10.6m of non-underlying items (2022:
EBITDA £2.7m including non-underlying items of £9.7m).
Adjusted EBITDA for 2023 was £4.6m
(11.8% of revenue) (2022 restated: £12.4m, 27.5%). Legal Services
adjusted EBITDA margin of 17.0% (2022: 33.2%) was impacted by a
decline in revenue, due to lower corporate spend on legal services,
in particular relating to transactions such as IPOs and
M&A.
In the trading update announced on
18 December 2023, the Group indicated that Adjusted EBITDA would be
approximately £4.0m for the year. As part
of the audit process, it was concluded that certain assets relating
to Damages Based Agreements should be treated under IFRS 15, rather
than IFRS 9. While a number of factors impacted the final Adjusted
EBITDA, the principal one was the change in accounting treatment.
The impact of this change in treatment is one off in
nature.
Profit before tax
Loss before tax for 2023 was £11.4m,
(2022: £2.1m); this includes £10.6m of non-underlying items (2022:
£9.7m).
Adjusted loss before tax was £0.7m,
(2022: profit £7.6m).
Corporation tax
The Group's tax benefit for the
year is £0.3m with an effective tax rate of 2.8% (2022 restated:
£0.5m, 22.2%).
Discontinued operations
On 12 July 2023, the Group completed
the disposal of the non-core business, LionFish to Blackmead
Infrastructure Limited ("Blackmead") which reduced the Group's
exposure to litigation funding commitments.
Convex has been classified as held
for sale and has been excluded from our headline performance
measures. Operating losses before non-underlying items for Convex
were £0.2m (2022: operating profit £1.2m). Total losses after tax
for the business for 2023 totalled £0.2m (2022: profit after tax
£0.9m)
Details on discontinued operations
are shown in Note 13.
Earnings Per Share (EPS)[7]
The weighted average number of
shares in 2023 was 95.3 million which gives a basic earnings per
share (EPS) on continuing operations for the year of (11.58p)
(2022: restated (1.73p)) and diluted earnings per share (EPS) on
continuing operations for the year of (11.56p) (2022:
(1.72p)).
Balance Sheet
|
|
2023
|
2022[8]
|
|
|
£'m
|
£'m
|
|
|
|
|
|
Goodwill, intangible and tangible
assets
|
55.1
|
55.3
|
|
Current Assets
|
19.1
|
27.9
|
|
Current Liabilities
|
(13.8)
|
(12.2)
|
|
Assets held for
sale7
|
3.3
|
22.5
|
|
Liabilities held for sale
|
(1.0)
|
(7.5)
|
|
|
62.7
|
86.0
|
|
|
|
|
|
Net debt7
|
(22.9)
|
(19.2)
|
|
Non-Current Liabilities
|
(11.4)
|
(14.1)
|
|
|
|
|
|
Net
assets
|
28.4
|
52.7
|
The Group's net assets as at 31
December 2023 decreased by £24.3m on the prior year as a result of
the losses recognised in 2023 as well as impairment in Convex
intangible assets.
Goodwill, Tangible and Intangible
Assets8
During the year, the management team
took the decision to write off all remaining litigation assets from
the balance sheet. This was tied to the Board's decision to
step back from significant Damages based agreement (DBA) cases
similar to those the Group had undertaken in the
past.
Previously, disbursements incurred
on these DBAs were held on the balance sheet as litigation assets
and measured under IFRS 9 at fair value through profit or
loss.
Based on the substances of the
underlying agreements for the two damages based agreements, the
recovery from the client of disbursements represents a revenue
stream arising from costs to fulfil a contract with a customer and
therefore falls within the scope of IFRS 15, not IFRS 9. This is
because IFRS 9 states that it does not apply to "rights and
obligations within the scope of IFRS 15 that are financial
instruments, except for those that IFRS 15 specifies are accounted
for in accordance with IFRS 9".
Refer to notes 2, 3, 22 and 32 for
further information on this prior period adjustment.
Included within tangible assets is
£12.4m (2022: £14.4m) which relates to IFRS 16 right of use assets
for the Group's property leases.
Total intangible assets of £40.5m
(2022: £38.7m) incorporate the goodwill and intangible assets
acquired on the acquisitions of the Rosenblatt, and Memery Crystal
businesses. During the year, the Group extended Ian Rosenblatt's
restrictive covenant, refer to note 18 for further information. The
Group has considered the amounts at which goodwill and intangible
assets are stated on the basis of forecast future cash
flows and concluded that that these assets have not been materially
impaired.
Working capital10
Management of lock up and cash
generation has continued to be a key focus of the Group over the
year. For the Legal Services business, lock up days is a measure of
the length of time it takes to convert work done into cash. It is
calculated as the combined debtor and WIP days.
Lock up days at 31 December 2023
were 127 (2022 restated: 137), with debtor days being 49 (2022: 58
days) and WIP days being 77 days (2022: 79 days). Lock up has
decreased from the previous year due to the increase in provision
made against trade receivables. This is an area of significant
focus for management.
Trade debtors less provision for
impairment at the end of the year were £8.0m (2022: £9.9m) and
contract assets (work in progress) at the year-end were £8.2m
(2022: £9.7m).
Net
debt[9]
We have a revolving credit facility
(RCF) of £17.5m and an acquisition term loan of £10.0m, of which, a
total of £3.5m had been repaid at 31 December 2023. Our net debt
position at the year end was £22.9 million (2022: £19.2
million).
Cash Conversion
|
|
2023
|
2022[10]
|
|
|
£m
|
£m
|
|
Cash flows from operating
activities
|
(5.1)
|
12.8
|
|
Movements in working
capital
|
4.3
|
0.5
|
|
Increase in litigation
assets
|
(0.3)
|
(7.8)
|
|
Net
cash (used in)/generated from operations
|
(1.1)
|
5.4
|
|
Interest
|
(1.7)
|
(1.3)
|
|
Capital expenditure
|
(0.3)
|
(0.2)
|
|
Free cash flow
|
(3.1)
|
4.0
|
|
Underlying loss after tax
|
(10.2)
|
(4.7)
|
|
Cash conversion
|
30%
|
(84%)
|
The cash conversion percentage
measures the Group's conversion of its underlying profit after tax
into free cash flows. Cash conversion was 30% in 2023 (2022:
(84%)).
Summary
We have made significant changes to
the business in 2023 and we are now in a better position to deliver
the Board's strategy of building a high margin, cash-generative,
legal services group delivering sustained shareholder
value.
Kevin McNair
Chief Financial Officer
30
April 2024
|
Consolidated statement of
comprehensive income
For the year ended 31
December 2023
|
|
|
|
|
|
|
|
Note
|
|
1 January
to
|
|
1 January
to
|
|
|
|
|
31 December
2023
|
|
31 December 2022[11]
Restated
|
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Revenue
|
5
|
|
39,209,854
|
|
44,873,908
|
|
|
|
|
|
|
|
|
Proceeds on disposal of
damages based agreements
|
5
|
|
-
|
|
2,021,700
|
|
|
|
|
|
|
|
|
Other
operating income
|
7
|
|
885,422
|
|
156,046
|
|
|
|
|
|
|
|
|
Disbursement asset revenue
|
8
|
|
1,221,854
|
|
2,847,487
|
|
|
|
|
|
|
|
|
Disbursement asset expenditure
|
8
|
|
(827,834)
|
|
(3,241,507)
|
|
|
|
|
|
|
|
|
Personnel
costs
|
10
|
|
(26,878,460)
|
|
(27,184,117)
|
|
Depreciation and amortisation expense
|
|
|
(3,251,607)
|
|
(3,432,764)
|
|
Other
expenses
|
|
|
(19,606,276)
|
|
(16,816,487)
|
|
(Loss) from
operations
|
9
|
|
(9,247,048)
|
|
(775,734)
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
(5,995,440)
|
|
2,657,030
|
|
Non-underlying
items
|
6
|
|
|
|
|
|
Costs of
acquiring subsidiary
|
|
|
25,000
|
|
367,303
|
|
Contract
assets - damages based agreement asset impairment
|
|
|
-
|
|
6,670,481
|
|
Release
of onerous contract provision
|
|
|
301,727
|
|
562,979
|
|
Trade
receivables - provision against damages based agreement
receivable
|
|
|
920,127
|
|
1,296,470
|
|
Costs
associated with disposal of LionFish
|
|
|
5,648,109
|
|
-
|
|
Costs
associated with re-financing project
|
|
|
787,193
|
|
-
|
|
Other
one-off costs
|
|
|
2,081,890
|
|
-
|
|
Trade
receivables provision change
|
|
|
1,038,163
|
|
-
|
|
Restructuring (release)/costs
|
|
|
(168,167)
|
|
803,631
|
|
Adjusted
EBITDA
|
|
|
4,638,602
|
|
12,357,894
|
|
|
|
|
|
|
|
|
Finance
expense
|
11
|
|
(2,170,109)
|
|
(1,333,663)
|
|
Finance
income
|
11
|
|
51,318
|
|
14,509
|
|
Loss on
sale of associate
|
21
|
|
-
|
|
(21,643)
|
|
(Loss) before
tax
|
|
|
(11,365,839)
|
|
(2,116,531)
|
|
|
|
|
|
|
|
|
Tax
income/(expense)
|
12,13
|
|
322,721
|
|
469,118
|
|
(Loss) from continuing
operations
|
|
|
(11,043,839)
|
|
(1,647,413)
|
|
|
|
|
|
|
|
|
Profit/(Loss) on discontinued operations, net of
tax
|
13
|
|
818,932
|
|
(3,073,351)
|
|
Impairment associated with discontinued operation
|
20
|
|
(13,694,754)
|
|
-
|
|
(Loss) for the
year
|
|
|
(23,918,940)
|
|
(4,720,763)
|
|
|
|
|
|
|
|
|
Total (loss) and
comprehensive income attributable to:
|
|
|
|
|
|
|
Owners of
the parent
|
|
|
(23,918,940)
|
|
(4,335,201)
|
|
Non-controlling interest
|
|
|
-
|
|
(385,562)
|
|
|
|
|
(23,918,940)
|
|
(4,720,763)
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to the ordinary equity holders of the
parent
|
14
|
|
|
|
|
|
Basic
(pence) from continuing operations
|
|
|
(11.58)
|
|
(1.73)
|
|
Diluted
(pence) from continuing operations
|
|
|
(11.58)
|
|
(1.73)
|
|
Basic
(pence) from total operations
|
|
|
(25.09)
|
|
(4.55)
|
|
Diluted
(pence) from total operations
|
|
|
(25.09)
|
|
(4.55)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no elements of other
comprehensive income for the financial year other than those
included in the income statement.
The
attached notes form part of these financial statements.
|
Consolidated statement of
financial position
As at 31 December
2023
|
|
|
|
|
|
|
|
Company registered number:
11189598
|
|
Note
|
|
31 December
2023
|
|
31 December 2022[12]
Restated
|
|
1 January
2022
Restated
|
|
|
|
|
|
£
|
|
£
|
|
£
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
Trade and
other receivables
|
|
22
|
|
18,374,752
|
|
27,214,577
|
|
19,330,914
|
|
Current
tax asset
|
|
22
|
|
725,723
|
|
656,982
|
|
-
|
|
Cash and
cash equivalents
|
|
|
|
2,262,750
|
|
2,588,240
|
|
4,736,546
|
|
|
|
|
|
21,363,225
|
|
30,459,799
|
|
24,067,460
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
16
|
|
2,047,706
|
|
2,208,091
|
|
2,582,911
|
|
Right-of-use assets
|
|
17
|
|
12,390,892
|
|
14,419,414
|
|
15,913,008
|
|
Intangible assets
|
|
18
|
|
40,488,453
|
|
38,693,983
|
|
55,859,230
|
|
Deferred
tax
|
|
26
|
|
216,445
|
|
-
|
|
-
|
|
Litigation assets
|
|
32
|
|
-
|
|
-
|
|
-
|
|
Trade and
other receivables
|
|
22
|
|
-
|
|
-
|
|
6,402,444
|
|
Investments in associates
|
|
21
|
|
-
|
|
-
|
|
101,643
|
|
|
|
|
|
55,143,496
|
|
55,321,488
|
|
80,859,236
|
|
|
|
|
|
|
|
|
|
|
|
Assets
held for sale
|
|
13
|
|
3,369,134
|
|
22,882,556
|
|
4,922,385
|
|
Total
assets
|
|
|
|
79,875,854
|
|
108,663,843
|
|
109,849,081
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
Trade and
other payables
|
|
23
|
|
11,593,485
|
|
9,642,454
|
|
10,099,544
|
|
Leases
|
|
17
|
|
2,224,373
|
|
1,979,578
|
|
2,150,440
|
|
Current
tax liabilities
|
|
23
|
|
-
|
|
-
|
|
1,002,637
|
|
Provisions
|
|
25
|
|
75,000
|
|
605,556
|
|
164,291
|
|
Loans and
borrowings
|
|
24
|
|
2,624,407
|
|
2,205,640
|
|
2,129,592
|
|
|
|
|
|
16,517,264
|
|
14,433,228
|
|
15,546,504
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
Loans and
borrowings
|
|
24
|
|
22,687,488
|
|
20,000,000
|
|
17,000,000
|
|
Deferred
tax liabilities
|
|
26
|
|
-
|
|
229,361
|
|
850,042
|
|
Provisions
|
|
25
|
|
150,000
|
|
150,000
|
|
150,000
|
|
Leases
|
|
17
|
|
11,344,768
|
|
13,713,932
|
|
13,698,661
|
|
|
|
|
|
34,182,255
|
|
34,093,293
|
|
31,698,703
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities held for sale
|
|
13
|
|
958,476
|
|
7,528,822
|
|
2,053,440
|
|
Total
liabilities
|
|
|
|
51,657,996
|
|
56,055,344
|
|
49,298,647
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS
|
|
|
|
28,217,858
|
|
52,608,500
|
|
60,550,434
|
|
|
|
|
|
|
|
|
|
|
|
Issued capital and reserves
attributable to owners of the parent
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
27
|
|
190,662
|
|
190,662
|
|
190,662
|
|
Share
premium reserve
|
|
28
|
|
49,232,606
|
|
49,232,606
|
|
49,232,606
|
|
Retained
(losses)/earnings
|
|
28
|
|
(21,205,410)
|
|
3,185,232
|
|
10,840,271
|
|
|
|
|
|
28,217,858
|
|
52,608,500
|
|
60,263,539
|
|
Non-controlling interest
|
|
|
|
-
|
|
-
|
|
286,895
|
|
TOTAL
EQUITY
|
|
|
|
28,217,858
|
|
52,608,500
|
|
60,550,434
|
The attached notes form part of
these financial statements
|
Consolidated statement of
cash flows
For the year ended 31
December 2023
|
|
|
|
|
|
|
|
|
|
Note
|
|
2023
|
|
2022[13]
|
|
|
|
|
|
|
|
restated
|
|
|
|
|
|
£
|
|
£
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
(Loss) for the year before tax
from:
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
(11,365,839)
|
|
(2,116,531)
|
|
Discontinued operations
|
|
|
|
673,594
|
|
(3,772,086)
|
|
Adjustments for:
|
|
|
|
|
|
|
|
Depreciation of property, plant and
equipment
|
|
|
|
500,559
|
|
556,403
|
|
Amortisation of right-of-use
assets
|
|
|
|
2,138,917
|
|
2,153,585
|
|
Amortisation of intangible fixed
assets
|
|
|
|
738,611
|
|
837,413
|
|
Fair value movement of litigation
assets net of realisations
|
|
|
|
(1,168,566)
|
|
5,218,176
|
|
Impairment of contract assets
(damages based agreement asset)
|
|
|
|
-
|
|
6,670,481
|
|
Release of onerous contract
provision
|
|
|
|
301,727
|
|
562,979
|
|
Trade receivables - provision
against damages based agreement receivable
|
|
|
|
920,127
|
|
1,296,470
|
|
Finance income
|
|
|
|
(51,646)
|
|
(32,739)
|
|
Finance expense
|
|
|
|
2,213,795
|
|
1,361,514
|
|
Loss on sale of equity accounted
associate
|
|
|
|
-
|
|
21,643
|
|
|
|
|
|
(5,098,721)
|
|
12,757,308
|
|
|
|
|
|
|
|
|
|
Decrease/(increase) in trade and
other receivables
|
|
|
|
3,788,638
|
|
(3,600,176)
|
|
Increase in trade and other
payables
|
|
|
|
1,083,815
|
|
3,609,645
|
|
(Increase) in litigation
assets
|
|
|
|
(325,488)
|
|
(7,781,846)
|
|
(Decrease)/increase in
provisions
|
|
|
|
(530,556)
|
|
441,265
|
|
Cash generated from operations
|
|
|
|
(1,082,312)
|
|
5,426,196
|
|
|
|
|
|
|
|
|
|
Tax paid
|
|
|
|
(899,649)
|
|
(601,569)
|
|
Net
cash flows (used in)generated from operating
activities
|
|
|
|
(1,981,961)
|
|
4,824,627
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
Purchase of property, plant and
equipment
|
|
|
|
(326,941)
|
|
(199,741)
|
|
Sale of associate
|
|
|
|
-
|
|
80,000
|
|
Purchase of other
intangibles
|
|
|
|
(2,500,000)
|
|
-
|
|
Disposal of discontinued operations
litigation assets
|
|
|
|
1,821,800
|
|
|
|
Consideration received (litigation
assets)
|
|
|
|
3,782,098
|
|
-
|
|
Payment of deferred
consideration
|
|
|
|
-
|
|
(2,248,319)
|
|
Interest received
|
|
|
|
51,646
|
|
32,739
|
|
Net
cash generated from/(used in) investing
activities
|
|
|
|
2,828,604
|
|
(2,335,321)
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
Dividends paid to holders of the
parent
|
|
|
|
(471,702)
|
|
(4,736,071)
|
|
Proceeds from loans and
borrowings
|
|
|
|
3,249,950
|
|
5,000,000
|
|
Repayment of loans and
borrowings
|
|
|
|
(718,888)
|
|
(2,000,000)
|
|
Repayments of lease
liabilities
|
|
|
|
(1,841,233)
|
|
(1,211,829)
|
|
Interest paid on loans and
borrowings
|
|
|
|
(1,197,725)
|
|
(756,768)
|
|
Interest paid on lease
liabilities
|
|
|
|
(509,019)
|
|
(528,698)
|
|
Net
cash (used in) financing activities
|
|
|
|
(1,488,617)
|
|
(4,233,366)
|
|
|
|
|
|
|
|
|
|
Net
(decrease) in cash and cash equivalents
|
|
|
|
(641,974)
|
|
(1,744,060)
|
|
Cash and cash equivalents at
beginning of year
|
|
|
|
3,012,083
|
|
4,756,143
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
|
|
2,370,109
|
|
3,012,083
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents -
continuing operations
|
|
|
|
2,262,750
|
|
2,588,240
|
|
Cash and cash equivalents -
discontinued operations
|
|
|
|
107,359
|
|
423,843
|
|
Cash and cash equivalents per consolidated balance
sheet
|
|
|
|
2,370,109
|
|
3,012,083
|
The attached notes form part of
these financial statements.
|
Consolidated statement of
changes in equity
For
the year ended 31 December 2023
|
|
Current
year
|
|
Share
Capital
|
|
Share
Premium
|
|
Retained
Earnings
|
|
Total attributable to equity
holders of parent
|
|
Non-controlling
interest
|
|
Total
equity
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at 1 January 2023 as originally presented
|
|
190,662
|
|
49,232,606
|
|
11,996,470
|
|
61,419,738
|
|
-
|
|
61,419,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Correction of error (refer to note 32)
|
|
-
|
|
-
|
|
(8,811,238)
|
|
(8,811,238)
|
|
-
|
|
(8,811,238)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January
2023
|
|
190,662
|
|
49,232,606
|
|
3,185,232
|
|
52,608,500
|
|
-
|
|
52,608,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the
year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for
the year
|
|
-
|
|
-
|
|
(23,918,940)
|
|
(23,918,940)
|
|
-
|
|
(23,918,940)
|
|
Total comprehensive loss for
the year
|
|
-
|
|
-
|
|
(23,918,940)
|
|
(23,918,940)
|
|
-
|
|
(23,918,940)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions by
and distributions to owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
-
|
|
-
|
|
(471,702)
|
|
(471,702)
|
|
-
|
|
(471,702)
|
|
Total contributions by
and distributions to owners
|
|
-
|
|
-
|
|
(471,702)
|
|
(471,702)
|
|
-
|
|
(471,702)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December
2023
|
|
190,662
|
|
49,232,606
|
|
(21,205,410)
|
|
28,217,858
|
|
-
|
|
28,217,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year
|
|
Share
Capital
|
|
Share
Premium
|
|
Retained
Earnings
|
|
Total attributable to equity
holders of parent
|
|
Non-controlling
interest
|
|
Total
equity
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at 1 January 2022 as originally presented
|
|
190,662
|
|
49,232,606
|
|
11,113,365
|
|
60,536,633
|
|
286,895
|
|
60,823,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Correction of error (refer to note 32)
|
|
-
|
|
-
|
|
(273,094)
|
|
(273,094)
|
|
-
|
|
(273,094)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2022
(restated, refer to note 32)
|
|
190,662
|
|
49,232,606
|
|
10,840,271
|
|
60,263,539
|
|
286,895
|
|
60,550,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the
year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
for the year (restated, refer to note 32)
|
|
-
|
|
-
|
|
(4,335,201)
|
|
(4,335,201)
|
|
(385,562)
|
|
(4,720,763)
|
|
Total comprehensive Income
for the year
|
|
-
|
|
-
|
|
(4,335,201)
|
|
(4,335,201)
|
|
(385,562)
|
|
(4,720,763)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions by
and distributions to owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
-
|
|
-
|
|
(4,736,071)
|
|
(4,736,071)
|
|
-
|
|
(4,736,071)
|
|
Purchase
of NCI share capital
|
|
-
|
|
-
|
|
(98,767)
|
|
(98,767)
|
|
98,667
|
|
(100)
|
|
Reversal
of call option over shares of associate
|
|
-
|
|
-
|
|
500,000
|
|
500,000
|
|
-
|
|
500,000
|
|
Reversal
of put option over shares of subsidiary
|
|
-
|
|
-
|
|
1,015,000
|
|
1,015,000
|
|
-
|
|
1,015,000
|
|
Total contributions by
and distributions to owners
|
|
-
|
|
-
|
|
(3,319,838)
|
|
(3,319,838)
|
|
98,667
|
|
(3,221,171)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December
2022
|
|
190,662
|
|
49,232,606
|
|
3,185,232
|
|
52,608,500
|
|
-
|
|
52,608,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
attached notes form part of these financial statements.
|
Company statement of
financial position
As at 31 December
2023
|
|
Company registered number:
11189598
|
|
Note
|
|
31 December
2023
|
|
31 December
2022
|
|
|
|
|
|
£
|
|
£
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Trade and
other receivables
|
|
22
|
|
4,394,018
|
|
14,204,102
|
|
Cash and
cash equivalents
|
|
|
|
340,549
|
|
413,635
|
|
Current
tax assets
|
|
22
|
|
145,364
|
|
-
|
|
|
|
|
|
4,879,931
|
|
14,617,737
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
Trade and
other receivables
|
|
22
|
|
40,412,117
|
|
39,554,433
|
|
Property,
plant and equipment
|
|
16
|
|
-
|
|
45
|
|
Investments in subsidiaries
|
|
20
|
|
13,806,624
|
|
27,501,378
|
|
|
|
|
|
54,218,741
|
|
67,055,856
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
|
59,098,672
|
|
81,673,593
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Trade and
other payables
|
|
23
|
|
4,219,262
|
|
4,290,801
|
|
Loans and
borrowings
|
|
24
|
|
2,624,407
|
|
2,205,640
|
|
|
|
|
|
6,843,669
|
|
6,496,441
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
Loans and
borrowings
|
|
24
|
|
22,687,488
|
|
20,000,000
|
|
Deferred
tax liabilities
|
|
26
|
|
199,505
|
|
635,334
|
|
|
|
|
|
22,886,993
|
|
20,635,334
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
|
29,730,661
|
|
27,131,775
|
|
|
|
|
|
|
|
|
|
NET ASSETS
|
|
|
|
29,368,011
|
|
54,541,818
|
|
|
|
|
|
|
|
|
|
Issued capital and reserves
attributable to owners of the parent
|
|
|
|
|
|
|
|
Share
capital
|
|
27
|
|
190,662
|
|
190,662
|
|
Share
premium reserve
|
|
28
|
|
49,232,606
|
|
49,232,606
|
|
Retained
earnings
|
|
28
|
|
(20,055,257)
|
|
5,118,550
|
|
|
|
|
|
29,368,011
|
|
54,541,818
|
|
|
|
|
|
|
|
|
The Company has taken advantage of
the exemption contained in S408 Companies Act 2006 and has not
presented a separate income statement for the Company. The Company
recorded a loss after tax of £24,702,105 for the year ended 31
December 2022 (2022: profit £4,419,482).
The attached notes form part of
these financial statements.
Company statement of cash
flows
For the year ended 31
December 2023
|
|
|
|
|
Note
|
|
2023
|
|
2022
|
|
|
|
|
|
£
|
|
£
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
(Loss)/Profit for the year before
tax
|
|
|
|
(25,137,934)
|
|
3,491,188
|
|
Adjustments for:
|
|
|
|
|
|
|
|
Depreciation of property, plant and
equipment
|
|
16
|
|
45
|
|
1,038
|
|
Impairment of investment in
discontinued operation
|
|
|
|
13,694,754
|
|
-
|
|
Finance income
|
|
|
|
(10,648)
|
|
(14,164)
|
|
Finance expense
|
|
|
|
1,666,894
|
|
811,352
|
|
|
|
|
|
(9,786,889)
|
|
4,289,414
|
|
|
|
|
|
|
|
|
|
(Increase)/decrease in trade and
other receivables
|
|
|
|
(445,778)
|
|
1,329,641
|
|
Increase in trade and other
payables
|
|
|
|
575,785
|
|
379,823
|
|
Cash (used in)/generated from operations
|
|
|
|
(9,656,882)
|
|
5,998,878
|
|
|
|
|
|
|
|
|
|
Tax paid
|
|
|
|
(145,362)
|
|
-
|
|
Net
cash flows (used in)/ generated from operating
activities
|
|
|
|
(9,802,244)
|
|
5,998,878
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
Sale of associate
|
|
|
|
-
|
|
80,000
|
|
Purchase of NCI share
capital
|
|
|
|
-
|
|
(100)
|
|
Amounts repaid by/ (loaned to)
subsidiaries
|
|
|
|
9,398,176
|
|
(7,435,942)
|
|
Interest received
|
|
|
|
10,648
|
|
14,164
|
|
Net
cash flows generated from/(used in) investing
activities
|
|
|
|
9,408,824
|
|
(7,341,879)
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
Dividends paid to holders of the
parent
|
|
15
|
|
(471,702)
|
|
(4,736,071)
|
|
Amounts (repaid to)/borrowed from
subsidiaries
|
|
|
|
(647,324)
|
|
1,767,522
|
|
Proceeds from loans and
borrowings
|
|
|
|
3,249,950
|
|
5,000,000
|
|
Repayment of loans and
borrowings
|
|
|
|
(718,888)
|
|
(2,000,000)
|
|
Interest paid on loans and
borrowings
|
|
|
|
(1,091,703)
|
|
(735,304)
|
|
Net
cash flows generated from/(used in) financing
activities
|
|
|
|
320,334
|
|
(703,853)
|
|
|
|
|
|
|
|
|
|
Net
(decrease) in cash and cash equivalents
|
|
|
|
(73,086)
|
|
(2,046,854)
|
|
Cash and cash equivalents at beginning of
year
|
|
|
|
413,635
|
|
2,460,489
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
|
|
340,549
|
|
413,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The attached notes form part of
these financial statements.
|
Company statement of changes
in equity
For the year ended 31
December 2022
|
|
Current
year
|
|
Share
Capital
|
|
Share
Premium
|
|
Retained
Earnings
|
|
Total
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2023
|
|
190,662
|
|
49,232,606
|
|
5,118,550
|
|
54,541,818
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive profit for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
-
|
|
-
|
|
(24,702,105)
|
|
(24,702,105)
|
|
Total comprehensive profit for the year
|
|
-
|
|
-
|
|
(24,702,105)
|
|
(24,702,105)
|
|
|
|
|
|
|
|
|
|
|
|
Contributions by and distributions to
owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
-
|
|
-
|
|
(471,702)
|
|
(471,702)
|
|
Total contributions by and distributions to
owners
|
|
-
|
|
-
|
|
(471,702)
|
|
(471,702)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December
2023
|
|
190,662
|
|
49,232,606
|
|
(20,055,257)
|
|
29,368,011
|
|
|
|
|
|
|
|
|
|
|
|
Prior year
|
|
Share
Capital
|
|
Share
Premium
|
|
Retained
Earnings
|
|
Total
|
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January
2022
|
|
190,662
|
|
49,232,606
|
|
5,435,139
|
|
54,858,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive profit for the
year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
-
|
|
-
|
|
4,419,482
|
|
4,419,482
|
|
|
Total comprehensive profit
for the year
|
|
-
|
|
-
|
|
4,419,482
|
|
4,419,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions by and
distributions to owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
-
|
|
-
|
|
(4,736,071)
|
|
(4,736,071)
|
|
|
Total contributions by and
distributions to owners
|
|
-
|
|
-
|
|
(4,736,071)
|
|
(4,736,071)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December
2022
|
|
190,662
|
|
49,232,606
|
|
5,118,550
|
|
54,541,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
attached notes form part of these financial statements.
Notes to the consolidated
and company financial statements
1. Basis of
preparation
RBG Holdings plc is a public limited
company, incorporated in the United Kingdom. The principal activity
of the Group is the provision of legal and professional services,
including management and financing of litigation
projects.
The Group and Company financial
statements have been prepared in accordance with UK adopted
international accounting standards and those parts of the Companies
Act 2006 applicable to companies reporting under UK adopted
international accounting standards. These financial statements
consolidate those of the Company and its subsidiaries (together
referred to as the "Group"). The Company has taken advantage of the
exemption contained in S408 Companies Act 2006 and has not
presented a separate income statement for the Company.
The financial statements have been
prepared for year ended 31 December 2023, with a comparative year
to 31 December 2022 (restated), and are presented in Sterling,
which is also the Group's functional currency.
The principal accounting policies
adopted in the preparation of the consolidated financial statements
are set out in Note 2. The policies have been consistently applied
to the year presented, unless otherwise stated.
The preparation of financial
statements in compliance with UK adopted international accounting
standards requires the use of certain critical accounting
estimates. It also requires Group management to exercise judgment
in applying the Group's accounting policies. The areas where
significant judgements and estimates have been made in preparing
the financial statements and their effect are disclosed in Note
3.
Basis of measurement
The consolidated financial
statements have been prepared on a historical cost
basis.
Discontinued
operations
During the year, the Board
approved plans to dispose of the Group's interests in Convex.
Convex is classified as held for sale at the balance sheet date.
The net results of Convex have been presented as discontinued
operations in the Group statement of comprehensive income (for
which the comparatives have been restated). See Note 13 for further
details.
Going concern
The Group has prepared financial
projections to April 2025, the going concern review period. The
Board recognises that the Groups' financial performance in 2023
included a decline in revenue and a total reported loss (including
discontinued operations) after tax of £23,918,941. This loss
included an impairment of Convex Capital intangible assets of
£13,694,754 and one-off costs that are considered to be exceptional
totalling £10,634,042. After the reporting date, the Group raised a
total of £3.0 million before expenses through the issue of new
ordinary shares and completed the disposal of Convex Capital for an
initial consideration of £2.0 million.
The Directors are confident that
much of these losses were attributable to factors that will not
impact the Group going forward.
The financial projections performed
form part of a three-year plan which shows positive earnings and
cash flow generation and projected compliance with banking
covenants at each testing date.
The Board confirm that they have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for at least 12 months from the
date of signing the financial statements.
This confirmation is made after
reviewing assumptions about the future trading performance. This
process included a reverse 'stress test' used to inform downside
testing which identified the break point in the Group's
liquidity.
Whilst the sensitivities applied do
show an expected downside impact on the Group's financial
performance in future periods, for all scenarios modelled, the
Board have identified appropriate mitigating actions, including
lowering capital expenditure, reductions in personnel and overhead
expenditure and other short-term cash management activities within
the Group's control as part of their assessment of going
concern.
Changes in accounting
policies
a. New standards, interpretations and amendments
effective from 1 January 2023
New standards that have been
adopted in the annual financial statements for the year ended 31
December 2023 but have not had a significant effect on the Group
are:
·
Disclosure of Accounting Policies (Amendments to
IAS 1 Presentation of Financial Statements and IFRS Practice
Statement 2 Making Materiality Judgements);
·
Definition of Accounting Estimates (Amendments to
IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors);
·
Deferred Tax related to Assets and Liabilities
arising from a Single Transaction (Amendments to IAS 12 Income
Taxes); and
·
International Tax Reform - Pillar Two Model Rules
(Amendment to IAS 12 Income Taxes) (effective immediately upon the
issue of the amendments and retrospectively)
b. New standards, interpretations and amendments
not yet effective
There are a number of standards,
amendments to standards, and interpretations which have been issued
by the IASB that are effective in future accounting periods that
the Group has decided not to adopt early.
The following amendments are
effective for the period beginning 1 January 2024:
·
Liability in a Sale and Leaseback (Amendments to
IFRS 16 Leases);
·
Classification of Liabilities as Current or
Non-Current (Amendments to IAS 1 Presentation of Financial
Statements);
·
Non-current Liabilities with Covenants
(Amendments to IAS 1 Presentation of Financial Statements);
and
·
Supplier Finance Arrangements (Amendments to IAS
7 Statement of Cash Flows and IFRS 7 Financial Instruments:
Disclosures)
The Group is currently assessing
the impact of these new accounting standards and amendments and
does not expect that they will have a material impact on the
Group.
The following amendments are
effective for the period beginning 1 January 2025:
·
Lack of Exchangeability (Amendments to IAS 21 The
Effects of Changes in Foreign Exchange Rates)
c. Prior year restatement
During the current financial year,
it was identified that previous accounting policy to capitalise
Rosenblatt disbursements (including counsel fees) associated with
its Damages Based Agreement ("DBA") matters as litigation assets
and measure the assets under IFRS 9 at fair value through profit
and loss was incorrect.
These disbursements constitute
payments of costs to fulfil a contract under IFRS 15 that could be
reimbursed in the future depending on the outcome of the case. They
should be capitalised to the extent that they are expected to be
recovered.
There are two specific cases that
this error impacts and each is treated differently based on the
terms of the agreement.
For the first case, the
disbursements are payable to the Group, only if the case wins or
where the client or the Group terminates the engagement. Under IFRS
15, this case is treated as a contract asset and an impairment
assessment is performed under IFRS 15. During the year ended 31
December 2022, the probability of success was reduced from 90% to
50%, at this point, the contract asset was written off and the case
became an onerous contract and costs to fulfil the contract were
provided for.
For the second case, the
disbursements are recoverable in a win or lose situation. As such,
the revenue recognition point is the point at which the expense is
incurred by the Group. IFRS 15 requires the presentation of any
unconditional rights to consideration as a receivable separately
from contract assets and an expected credit loss (ECL) assessment
is performed at year end.
Refer to Note 32 Restatement of
prior year for further information.
2. Accounting
policies
Revenue
Revenue comprises the fair value of
consideration receivable in respect of services provided during the
year, inclusive of recoverable expenses incurred but excluding
value added tax.
Legal services revenues
Where fees are contractually able to
be rendered by reference to time charged at agreed rates, the
revenue is recognised over time, based on time worked charged at
agreed rates, to the extent that it is considered
recoverable.
Where revenue is subject to
contingent fee arrangements, including where services are provided
under Damages Based Agreements (DBAs), the Group estimates the
amount of variable consideration to which it will be entitled and
constrains the revenue recognised to the amount for which it is
considered highly probable that there will be no significant
reversal. Due to the nature of the work being performed, this
typically means that contingent revenues are not recognised until
such time as the outcome of the matter being worked on is
certain.
The Group has two cases under
Damages Based Agreements.
For the first case, the
disbursements are recoverable either in the case of a win, or where
the client or the Group terminates the engagement. The recovery of
the disbursements are recognised as revenue under IFRS 15 to the
extent it is highly probable that a significant reversal in the
amount will not occur in the future. Under IFRS 15, this case is
treated as a contract asset, and an impairment assessment is
performed in line with the standard.
For the second case, disbursements
are recoverable in a win or lose situation. As such, the revenue
recognition point is the point at which the expense is incurred by
the Group, when a disbursement is incurred, the Group recognises
the expense incurred in the profit or loss and the associated
revenue in relation to the recovery of the disbursement. IFRS 15
requires the presentation of any unconditional rights to
consideration as a receivable separately from contract assets. At
each reporting date, the Group performs an expected credit loss
(ECL) assessment on the receivable line with IFRS 9, and where
applicable, an impairment is recognised.
Bills raised are payable on delivery
and until paid form part of trade receivables. The Group has taken
advantage of the practical exemption in IFRS 15 not to account for
significant financing components where the Group expects the time
difference between receiving consideration and the provision of the
service to a client will be one year or less. Where revenue has not
been billed at the balance sheet date, it is included as contract
assets and forms part of trade and other receivables.
Corporate finance
revenues
Corporate finance revenue is
contingent on the completion of a deal and is recognised when the
deal has completed. Bills raised are payable on deal completion and
are generally paid at that time.
Interest received on client
monies
Interest is recognised on client
monies held, this is recognised in the profit or loss based on the
effective interest rate during the period. This forms part of other
income as this is driven by the ongoing operations of the
business,
Adjusted EBITDA and
exceptionals
The Group presents adjusted EBITDA
as an operating KPI utilised by management to monitor
performance.
EBITDA is adjusted for one-off
costs that are considered to be exceptional, being:
·
One-off costs connected to
acquisitions
·
Contract assets - damages based agreement asset
impairment
·
Release of onerous contract provision
·
Trade receivables - provision against damages
based agreement receivable
·
Group costs associated with discontinued
operations
·
Costs associated with re-financing
project
·
Release of restructuring costs
·
Trade receivables provision change
These costs are considered to be
exceptional because they do not relate to the ongoing trade and
performance of the business. Without presenting adjusted EBITDA,
the EBITDA would not be consistent as it would be subject to
fluctuations that do not reflect underlying performance of the
Group.
Basis of consolidation
Where the company has control over
an investee, it is classified as a subsidiary. The company controls
an investee if all three of the following elements are present:
power over the investee, exposure to variable returns from the
investee, and the ability of the investor to use its power to
affect those variable returns. Control is reassessed whenever facts
and circumstances indicate that there may be a change in any of
these elements of control.
The consolidated financial
statements present the results of the company and its subsidiaries
("the Group") as if they formed a single entity. Intercompany
transactions and balances between group companies are therefore
eliminated in full.
The consolidated financial
statements incorporate the results of business combinations using
the acquisition method. In the statement of financial position, the
acquiree's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the
acquisition date. The results of acquired operations are
included in the consolidated statement of comprehensive income from
the date on which control is obtained. They are deconsolidated from
the date on which control ceases.
Goodwill
Goodwill represents the excess of
the cost of a business combination over the Group's interest in the
fair value of identifiable assets, liabilities and contingent
liabilities acquired.
Cost comprises the fair value of
assets given, liabilities assumed, and equity instruments issued,
plus the amount of any non-controlling interests in the acquiree
plus, if the business combination is achieved in stages, the fair
value of the existing equity interest in the acquiree. Contingent
consideration is included in cost at its acquisition date fair
value and, in the case of contingent consideration classified as a
financial liability, remeasured subsequently through profit or
loss. Direct costs of acquisition are recognised immediately as an
expense.
Goodwill is capitalised as an
intangible asset with any impairment in carrying value being
charged to the consolidated statement of comprehensive income.
Where the fair value of identifiable assets, liabilities and
contingent liabilities exceed the fair value of consideration paid,
the excess is credited in full to the consolidated statement of
comprehensive income on the acquisition date.
Impairment of non-financial assets
(excluding inventories, investment properties and deferred tax
assets)
Impairment tests on goodwill and
other intangible assets with indefinite useful economic lives are
undertaken annually at the financial period end. Other
non-financial assets are subject to impairment tests whenever
events or changes in circumstances indicate that their carrying
amount may not be recoverable. Where the carrying value of an
asset exceeds its recoverable amount (i.e., the higher of value in
use and fair value less costs to sell), the asset is written down
accordingly.
Where it is not possible to estimate
the recoverable amount of an individual asset, the impairment test
is carried out on the smallest group of assets to which it belongs
for which there are separately identifiable cash flows; its cash
generating units ('CGUs'). Goodwill is allocated on initial
recognition to each of the Group's CGUs that are expected to
benefit from a business combination that gives rise to the
goodwill.
Impairment charges are included in
profit or loss, except to the extent they reverse gains previously
recognised in other comprehensive income. An impairment loss
recognised for goodwill is not reversed.
Foreign currency
Transactions entered into by Group
entities in a currency other than the currency of the primary
economic environment in which they operate (their "functional
currency") are recorded at the rates ruling when the transactions
occur. Foreign currency monetary assets and liabilities are
translated at the rates ruling at the reporting date. Exchange
differences arising on the retranslation of unsettled monetary
assets and liabilities are recognised immediately in profit or
loss.
Financial assets
The Group classifies its financial
assets under the amortised cost category, the Group's accounting
policy is as follows:
Amortised cost
These assets arise principally
from the provision of goods and services to customers (e.g., trade
receivables), but also incorporate other types of financial assets
where the objective is to hold these assets in order to collect
contractual cash flows and the contractual cash flows are solely
payments of principal and interest. They are initially recognised
at fair value plus transaction costs that are directly attributable
to their acquisition or issue and are subsequently carried at
amortised cost using the effective interest rate method, less
provision for impairment.
Impairment provisions for current
and non-current trade receivables are recognised based on the
simplified approach within IFRS 9 using a provision matrix in the
determination of the lifetime expected credit losses. During this
process the probability of the non-payment of the trade receivables
is assessed. This probability is then multiplied by the amount of
the expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded
in a separate provision account with the loss being recognised in
profit or loss. On confirmation that the trade receivable will not
be collectable, the gross carrying value of the asset is written
off against the associated provision.
From time to time, the Group
elects to renegotiate the terms of trade receivables due from
customers with which it has previously had a good trading history.
Such renegotiations will lead to changes in the timing of payments
rather than changes to the amounts owed and, in consequence, the
new expected cash flows are discounted at the original effective
interest rate and any resulting difference to the carrying value is
recognised in the consolidated statement of comprehensive income
(operating profit).
Impairment provisions for
receivables from related parties and loans to related parties,
including those from subsidiary companies, are recognised based on
a forward looking expected credit loss model. The methodology used
to determine the amount of the provision is based on whether there
has been a significant increase in credit risk since initial
recognition of the financial asset. This annual assessment
considers forward-looking information on the general economic and
specific market conditions together with a review of the operating
performance and cash flow generation of the entity relative to that
at initial recognition. For those where the credit risk has not
increased significantly since initial recognition of the financial
asset, twelve month expected credit losses along with gross
interest income are recognised. For those for which credit risk has
increased significantly, lifetime expected credit losses along with
the gross interest income are recognised. For those that are
determined to be credit impaired, lifetime expected credit losses
along with interest income on a net basis are
recognised.
The Group's financial assets
measured at amortised cost comprise trade and other receivables and
cash and cash equivalents in the consolidated statement of
financial position. Cash and cash equivalents includes cash in
hand, deposits held at call with banks, and other short term highly
liquid investments with original maturities of three months or
less.
Financial liabilities
The Group classifies its financial
liabilities depending on the purpose for which the liability was
acquired.
Other financial liabilities
All the Group's financial
liabilities are classified as other financial liabilities, which
include the following items:
Bank borrowings are initially
recognised at fair value net of any transactions costs directly
attributable to the issue of the instrument. Such interest bearing
liabilities are subsequently measured at amortised cost using the
effective interest rate method, which ensures that any interest
expense over the period to repayment is at a constant rate on the
balance of the liability carried in the consolidated statement of
financial position. For the purposes of each financial liability,
interest expense includes initial transaction costs and any premium
payable on redemption, as well as any interest or coupon payable
while the liability is outstanding.
Trade payables and other short-term
monetary liabilities, which are initially recognised at fair value
and subsequently carried at amortised cost using the effective
interest method.
Defined contribution
schemes
Contributions to defined
contribution pension schemes are charged to the consolidated
statement of comprehensive income in the year to which they
relate.
Short-term
benefits
Short-term employee benefit
obligations are measured on an undiscounted basis and are expensed
as the related service is provided. A liability is recognised for
the amount expected to be paid under short-term cash bonus or
profit-sharing plans if the Group has a present legal or
constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be
estimated reliably.
Share-based payments
Where equity settled share options
are awarded to employees, the fair value of the options at the date
of grant is charged to the consolidated statement of comprehensive
income over the vesting period. Non-market vesting conditions are
taken into account by adjusting the number of equity instruments
expected to vest at each reporting date so that, ultimately, the
cumulative amount recognised over the vesting period is based on
the number of options that eventually vest. Non-vesting conditions
and market vesting conditions are factored into the fair value of
the options granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether market vesting
conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition or where a
non-vesting condition is not satisfied.
Where the terms and conditions of
options are modified before they vest, the increase in the fair
value of the options, measured immediately before and after the
modification, is also charged to the consolidated statement of
comprehensive income over the remaining vesting period. Where
equity instruments are granted to persons other than employees, the
consolidated statement of comprehensive income is charged with the
fair value of goods and services received.
Leased assets
Identifying leases
The Group accounts for a contract,
or a portion of a contract, as a lease when it conveys the right to
use an asset for a period of time in exchange for consideration.
Leases are those contracts that satisfy the following
criteria:
(a) There is an identified
asset;
(b) The Group obtains
substantially all the economic benefits from use of the asset;
and
(c) The Group has the right
to direct use of the asset
The Group considers whether the
supplier has substantive substitution rights. If the supplier does
have those rights, the contract is not identified as giving rise to
a lease.
In determining whether the Group
obtains substantially all the economic benefits from use of the
asset, the Group considers only the economic benefits that arise
from use of the asset, not those incidental to legal ownership or
other potential benefits.
In determining whether the Group has
the right to direct use of the asset, the Group considers whether
it directs how and for what purpose the asset is used throughout
the period of use. If there are no significant decisions to be made
because they are pre-determined due to the nature of the asset, the
Group considers whether it was involved in the design of the asset
in a way that predetermines how and for what purpose the asset will
be used throughout the period of use. If the contract or portion of
the contract does not satisfy these criteria, the Group applies
other applicable IFRSs rather than IFRS 16.
All leases are accounted for by
recognising a right-of-use asset and a lease liability except
for:
·
Leases of low value assets; and
·
Leases with a term of 12 months or
less
Lease liabilities are measured at
the present value of the contractual payments due to the lessor
over the lease term, with the discount rate determined by reference
to the rate inherent in the lease unless this is not readily
determinable, in which case the Group's incremental borrowing rate
on commencement of the lease is used. Variable lease payments are
only included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial measurement
of the lease assumes the variable element will remain unchanged
throughout the lease term. Other variable lease payments are
expensed in the period to which they relate.
On initial recognition, the carrying
value of the lease liability also includes:
·
amounts expected to be payable under any residual
value guarantee
·
the exercise price of any purchase option granted
in favour of the Group if it is reasonably certain to assess that
option
·
any penalties payable for terminating the lease,
if the term of the lease has been estimated on the basis of the
termination option being exercised
Right-of-use assets are initially
measured at the amount of the lease liability, reduced for any
lease incentives received, and increased for:
·
lease payments made at or before the commencement
of the lease
·
initial direct costs incurred and
·
the amount of any provision recognised where the
Group is contractually required to dismantle, remove or restore the
leased asset
Subsequent to initial measurement
lease liabilities increase as a result of interest charged at a
constant rate on the balance outstanding and are reduced for lease
payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining
economic life of the asset if this is judged to be shorter than the
lease term.
When the Group revises its estimate
of the term of any lease, it adjusts the carrying amount of the
lease liability to reflect the payments to make over the revised
term, which are discounted using a revised discount rate. The
carrying value of lease liabilities is similarly revised when the
variable element of future lease payments dependent on a rate or
index is revised, except the discount rate remains unchanged. In
both cases an equivalent adjustment is made to the carrying value
of the right-of-use asset, with the revised carrying amount being
amortised over the remaining lease term.
The lease calculations have been
prepared up to the end of the lease term as defined in the lease
agreements. Where there has been a remeasurement or
rent-free-period, the lease calculations are adjusted
accordingly.
For contracts that both convey a
right to the Group to use an identified asset and require services
to be provided to the Group by the lessor for a variable amount,
the Group has elected to account for the right-of-use payments as a
lease and expense the service charge payments in the period to
which they relate.
Externally acquired intangible
assets
Externally acquired intangible
assets are initially recognised at cost and subsequently amortised
over their useful economic lives.
Intangible assets are recognised on
business combinations if they are separable from the acquired
entity or give rise to other contractual/legal rights. The amounts
ascribed to such intangibles are arrived at by using appropriate
valuation techniques.
The significant intangibles
recognised by the Group, their useful economic lives and the
methods used for amortisation and to determine the cost of
intangibles acquired in a business combination are as
follows:
|
Intangible asset
|
Useful economic life
|
Remaining useful economic life
|
Amortisation method
|
Valuation method
|
|
|
|
|
|
|
|
Brand
|
20 years
|
14 - 19 years
|
Straight line
|
Estimated discounted cash
flow
|
|
|
|
|
|
|
|
Customer contracts
|
1 - 2 years
|
Nil
|
In line with contract
revenues
|
Estimated discounted cash
flow
|
|
|
|
|
|
|
|
Restrictive covenant
extension
|
5 years
|
4 years
|
Straight line
|
Cost
|
Non-current investments
Investments in subsidiary
undertakings are stated at cost less amounts written off for
impairment. Investments are reviewed for impairment where events or
circumstances indicate that their carrying amount may not be
recoverable.
Dividends
Dividends are recognised when they
become legally payable. In the case of interim dividends to equity
shareholders, this is when declared by the directors. In the case of final dividends, this
is when approved by the shareholders at the AGM.
Income tax
Income tax expense represents the
sum of the tax currently payable.
The tax currently payable is based
on taxable profit for the year. Taxable profit differs from profit
as reported in the statement of comprehensive income because it
excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are not taxable
or tax deductible.
The Group's liability for current
tax is calculated using tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the financial
year.
Deferred taxation
Deferred tax assets and liabilities
are recognised where the carrying amount of an asset or liability
in the consolidated statement of financial position differs from
its tax base, except for differences arising on:
·
the initial recognition of goodwill
·
the initial recognition of an asset or liability
in a transaction which is not a business combination and at the
time of the transaction affects neither accounting or taxable
profit, and
·
investments in subsidiaries and joint
arrangements where the Group is able to control the timing of the
reversal of the difference and it is probable that the difference
will not reverse in the foreseeable future
Recognition of deferred tax assets
is restricted to those instances where it is probable that taxable
profit will be available against which the difference can be
utilised.
The amount of the asset or liability
is determined using tax rates that have been enacted or
substantively enacted by the reporting date and are expected to
apply when the deferred tax liabilities/assets are settled
/recovered.
Deferred tax assets and liabilities
are offset when the Group has a legally enforceable right to offset
current tax assets and liabilities and the deferred tax assets and
liabilities relate to taxes levied by the same tax authority on
either:
·
The same taxable group company, or
·
Different group entities which intend either to
settle current tax assets and liabilities on a net basis, or to
realise the assets and settle the liabilities simultaneously, in
each future period in which significant amounts of deferred tax
assets or liabilities are expected to be settled or
recovered.
Property, plant and
equipment
Items of property, plant and
equipment are initially recognised at cost, and subsequently stated
at cost less any accumulated depreciation and impairment losses. As
well as the purchase price, cost includes directly attributable
costs and the estimated present value of any future unavoidable
costs of dismantling and removing items. The corresponding
liability is recognised within provisions.
Depreciation is provided on all
items of property, plant and equipment so as to write off their
carrying value over their expected useful economic lives. It is
provided at the following rates:
|
|
Leasehold improvements
|
-
|
Straight line over the life of the
lease
|
|
|
Plant and equipment
|
-
|
33% per annum straight
line
|
|
|
Fixtures and fittings
|
-
|
25% per annum straight
line
|
|
|
Computer equipment
|
-
|
33% per annum straight
line
|
Share Capital
Ordinary shares are recorded at
nominal value and proceeds received in excess of nominal value of
shares issued, if any, are accounted for as share premium. Both
ordinary shares and share premium are classified as
equity.
Provisions
Professional indemnity provision
A provision is recognised when the
Group has a present legal or constructive obligation as a result of
a past event, that can be reliably measured, and it is probable
that an outflow of economic benefits will be required to settle the
obligation. Where material, the impact of the time value of money
is taken into account by discounting the expected future cash flow
at a pre-tax rate, which reflects risks specific to the
liability.
Insurance cover is maintained in
respect of professional negligence claims. This cover is
principally written through insurance companies. Premiums are
expensed as they fall due with prepayments or accruals being
recognised accordingly. Expected reimbursements are recognised once
they become receivable. Where outflow of resources is considered
probable and reliable estimates can be made, provision is made for
the cost (including related legal costs) of settling professional
negligence claims brought against the Group by third parties and
disciplinary proceedings brought by regulatory authorities. Amounts
provided for are based on Management's assessment of the specific
circumstances in each case. No separate disclosure is made of the
detail of such claims and proceedings, as to do so could seriously
prejudice the position of the Group. In the event the insurance
companies cannot settle the full liability, the liability will
revert to the Group.
Dilapidations provision
The Group recognises a provision for
the future costs of dilapidations on leased office space. The
provision is an estimate of the total cost to return applicable
office space to its original condition at the end of the lease
term.
Onerous contracts
The Group recognises a provision for
the unavoidable costs of meeting a contract where the obligations
of the contract exceed the economic benefits to be received under
it.
Restatements
The 2022 comparative numbers have
been restated for the following corrections which is described
fully in Note 32:
A prior period adjustment has been
made for incorrect accounting policies that were previously adopted
in relation to disbursements incurred on two damages based
agreements. The disbursements were previously held on the balance
sheet as Litigation Assets and measured the assets under IFRS 9 at
fair value through profit and loss.
Based on the substances of the
underlying agreements for the two damages based agreements, the
recovery from the client of disbursements represents a revenue
stream arising from a costs to fulfil a contract with a customer
and therefore falls within the scope of IFRS 15, not IFRS 9. This
is because IFRS 9 states that it does not apply to "rights and
obligations within the scope of IFRS 15 that are financial
instruments, except for those that IFRS 15 specifies are accounted
for in accordance with IFRS 9".
For the first case, the
disbursements are payable to the Group, only if the case wins or
where the client or the Group terminates the engagement. Under IFRS
15, this case is treated as a contract asset and an impairment
assessment is performed under IFRS 15. Management has reassessed
the probability of success during the year ended 31 December
2022and has reduced this from 90% to 50%, at this point, the
contract asset was written off the case became an onerous contract
and costs to fulfil the contract were provided for.
The reassessment made for
probability of success was based on management's assessment of the
information available at the time and hindsight has not been
applied in assessing the impact of the prior period adjustment. The
write off of the contract asset at the point of probability of
success reducing was £6,670,481. At that point, a provision for the
onerous contract of £956,999 was recognised. £562,979 of this
provision was released during the remaining months of the year
ended 31 December 2022.
For the second case, the
disbursements are recoverable in a win or lose situation. As such,
the revenue recognition point is the point at which the expense is
incurred by the Group. IFRS 15 requires the presentation of any
unconditional rights to consideration as a receivable separately
from contract assets and an expected credit loss (ECL) assessment
is performed at year end. The Group performed an ECL assessment at
each year end for this case and determined that the disbursements
are not recoverable if the case were to lose and therefore have
been provided for.
The assessment on the ECL has been
made based on management's knowledge of the case and the parties
involved, hindsight has not been applied for the of assessing the
impact of the prior period adjustment. The impact of this ECL
assessment was that opening reserves were reduced by £273,094 for
the provision recognised against the receivable. The provision for
receivables was increased at 31 December 2022 for £1,296,470, and
an additional £920,127 recognised against the receivable at 31
December 2023.
The 2022 comparative numbers have
been restated to reflect Convex being disclosed as a discontinued
operation in the current year, refer to Note 13.
3. Critical
accounting estimates and judgements
The Group makes certain estimates
and assumptions regarding the future. Estimates and judgements are
continually evaluated based on actual experience and other factors,
including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The
estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial period are discussed
below.
Judgements, estimates and assumptions
Estimated impairment of intangible
assets including goodwill
Determining whether an intangible
asset is impaired requires an estimation of the value in use of the
cash generating units to which the intangible has been allocated.
The value in use calculation requires the entity to estimate the
future cash flows expected to arise from each cash generating unit
and determine a suitable discount rate. A difference in the
estimated future cash flows or the use of a different discount rate
may result in a different estimated impairment of intangible
assets.
Revenue recognition
Where the group performs work that
is chargeable based on hours worked at agreed rates, assessment
must be made of the recoverability of the unbilled time at the
period end. This is on a matter by matter basis, with reference to
historic and post year-end recoveries. Different views on
recoverability would give rise to a different value being
determined for revenue and a different carrying value for unbilled
revenue.
Where revenue is subject to
contingent fee arrangements, the Group estimates the amount of
variable consideration to which it will be entitled and constrains
the revenue recognised to the amount for which it is considered
highly probable that there will be no significant reversal. Due to
the nature of the work being performed, this typically means that
contingent revenues are not recognised until such time as the
outcome of the matter being worked on is certain. Factors the Group
considers when determining whether revenue should be constrained
are whether: -
a) The amount of
consideration receivable is highly susceptible to factors outside
the Group's influence
b) The uncertainty is
not expected to be resolved for a long time
c) The Group has
limited previous experience (or limited other evidence) with
similar contracts
d) The range of
possible consideration amounts is broad with a large number of
possible outcomes
Different views being determined for
the amount of revenue to be constrained in relation to each
contingent fee arrangement may result in a different value being
determined for revenue and also a different carrying value being
determined for unbilled amounts for client work.
Disbursements incurred in
association with DBAs are recognised initially under IFRS 15 as
they constitute payments for costs incurred as part of the
provision of legal services to the Group's client that could be
reimbursed in the future depending on the outcome of the
case.
The Group has two DBA cases which
are recognised as follows:
For the first case, the
disbursements are payable to the Group, only if the case wins or
where the client or Group terminates the engagement. Under IFRS 15,
this case is treated as a contract asset and an impairment
assessment is performed under IFRS 15 regarding the probability of
success of the case, when it becomes probable that the case will
not be successful, an impairment is required, and the contract
becomes onerous. Different views on the probability of success
could impact whether an impairment is recognised. This change in
accounting estimate has resulted in an impairment of nil in the
current year (2022: £6,670,481).
For the second case, the
disbursements are recoverable in a win or lose situation. As such,
the revenue recognition point is the point at which the expense is
incurred by the Group. IFRS 15 requires the presentation of any
unconditional rights to consideration as a receivable separately
from contract assets and an expected credit loss (ECL) assessment
is performed by management at year end. Different views on the
ability to recover the receivable could impact the amount of
provision required. This change in accounting estimate has resulted
in an increase in the provision of receivables for disbursements on
this case of £920,127 (2022: £1,296,470).
The change in accounting estimate as
a result of the above prior period adjustment has resulted in a
material change from the amounts published in the 2023 interim
results. The interim results recorded a write off of £11.0m
associated with these DBA cases within 2023. The prior period
adjustment identified above, has resulted in the first disbursement
asset case being recorded as a contract asset and impaired within
the year ending 31 December 2022, the second case is recorded as a
trade receivable and has been assessed for expected credit loss
impairment at each year end. Refer to notes 22 and 32 for further
information.
Where non-contingent fees as well as
contingent revenue are earned on DBAs, the group must make a
judgement as to whether non-contingent amounts represent revenue or
a reduction in funding, with reference to the terms of the
agreement and timing and substance of time worked and payments
made. Where non-contingent revenue arises, the Group must match it
against the services to which it relates. This requires Management
to estimate work done as a proportion of total expected work to
which the fee relates. Different views could impact the level of
non-contingent revenue recognised.
Impairment of trade
receivables
Receivables are held at cost less
provisions for impairment. During the year ended 31 December 2023,
the Group changes it's accounting for impairment provisions, they
are now recognised based on the ageing of invoices with invoices
over 270 days being fully provided for, management also make an
assessment for invoices under 270 days old to determine their
collectability.
This change in accounting estimate
has resulted in an impairment provision against trade receivables
for legal services of £3,787,379 (2022: £745,523).
Claims and regulatory
matters
The Group from time to time receives
claims in respect of professional service matters. The Group
defends such claims where appropriate but makes provision for the
possible amounts considered likely to be payable, having regard to
any relevant insurance cover held by the Group. A different
assessment of the likely outcome of each case or of the possible
cost involved may result in a different provision or
cost.
In the year ending 31 December 2021,
the Company was informed that HMRC had started an inquiry into the
valuation of employee related securities issued by the Company in
April 2018 prior to the IPO, this inquiry is on-going. For full
details, refer to Note 33.
4. Financial instruments - Risk
Management
The Group is exposed through its
operations to the following financial risks:
·
Credit risk
·
Interest rate risk and
·
Liquidity risk
In common with all other businesses,
the Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group's objectives, policies
and processes for managing those risks and the methods used to
measure them. Further quantitative information in respect of these
risks is presented throughout these financial
statements.
There have been no substantive
changes in the Group's exposure to financial instrument risks, its
objectives, policies and processes for managing those risks or the
methods used to measure them from the previous period unless
otherwise stated in this note.
(i) Principal financial
instruments
The principal financial instruments
used by the Group, from which financial instrument risk arises, are
as follows:
·
Trade receivables
·
Cash and cash equivalents
·
Trade and other payables
·
Floating-rate bank loans
(ii) Financial instruments by
category
|
Financial assets -
Group
|
|
Fair value through profit or
loss
|
|
Amortised
cost
|
|
|
|
31 December
2023
|
|
31 December
2022
|
|
31 December
2023
|
|
31 December
2022
|
|
|
|
|
|
restated
|
|
|
|
restated
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
-
|
|
-
|
|
2,262,750
|
|
2,588,242
|
|
Trade and
other receivables
|
|
-
|
|
-
|
|
17,354,918
|
|
25,701,508
|
|
|
|
|
|
|
|
|
|
|
|
Total
financial assets
|
|
-
|
|
-
|
|
19,617,668
|
|
28,289,750
|
|
|
|
|
|
|
|
|
|
|
On 31
December 2023, financial assets held at fair value through profit
or loss of £nil were transferred to assets held for sale (2022:
£4,895,514). Financial assets held at amortised cost of £103,173
were transferred to assets held for sale (2022: £5,167,655). Refer
to note 13 for further details.
|
Financial assets -
Company
|
|
Fair value through profit or
loss
|
|
Amortised
cost
|
|
|
|
31 December
2023
|
|
31 December
2022
|
|
31 December
2023
|
|
31 December
2022
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
-
|
|
-
|
|
340,549
|
|
413,635
|
|
Trade and
other receivables
|
|
-
|
|
-
|
|
44,806,135
|
|
53,758,535
|
|
|
|
|
|
|
|
|
|
|
|
Total
financial assets
|
|
-
|
|
-
|
|
45,146,684
|
|
54,172,170
|
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities - Group
|
|
Fair value through profit or
loss
|
|
Amortised
cost
|
|
|
|
|
|
|
|
|
|
31 December
2023
|
|
31 December
2022
|
|
31 December
2023
|
|
31 December
2022
|
|
|
|
|
|
|
|
|
|
Restated
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables and
accruals
|
|
-
|
|
-
|
|
9,291,151
|
|
7,381,930
|
|
Loans and borrowings
|
|
-
|
|
-
|
|
25,311,894
|
|
22,205,640
|
|
Other payables
|
|
-
|
|
-
|
|
108,261
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities
|
|
-
|
|
-
|
|
34,711,306
|
|
29,587,670
|
|
|
|
|
|
|
|
|
|
|
On 31 December 2023, financial
liabilities carried at amortised cost of £103,972 were transferred
to liabilities held for sale (2022: £1,340,455), refer to note
13.
|
Financial Liabilities - Company
|
|
Fair value through profit or
loss
|
|
Amortised
cost
|
|
|
|
|
|
|
|
|
|
31 December
2023
|
|
31 December
2022
|
|
31 December
2023
|
|
31 December
2022
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables and
accruals
|
|
-
|
|
-
|
|
4,219,262
|
|
4,290,801
|
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities
|
|
-
|
|
-
|
|
4,219,262
|
|
4,290,801
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables are due
within twelve months.
(iii) Financial instruments
not measured at fair value
Financial instruments not measured
at fair value includes cash and cash equivalents, trade and other
receivables, trade and other payables, loans and
borrowings.
Due to their short-term nature, the
carrying value of cash and cash equivalents, trade and other
receivables, and trade and other payables approximates their fair
value.
General objectives, policies
and processes
The Board has overall responsibility
for the determination of the Group's risk management objectives and
policies and, whilst retaining ultimate responsibility for them, it
has delegated the authority for designing and operating processes
that ensure the effective implementation of the objectives and
policies to the Group's finance function. The Board receives
monthly reports from the Group Finance Director through which it
reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets.
The overall objective of the Board
is to set policies that seek to reduce risk as far as possible
without unduly affecting the Group's competitiveness and
flexibility. Further details regarding these policies are set out
below:
Credit risk
Credit risk is the risk of financial
loss to the Group if a client or counterparty to a financial
instrument fails to meet its contractual obligations. The Group is
mainly exposed to credit risk from credit sales. It is Group policy
to assess the credit risk of new and irregular clients before
entering contracts and to require money on account of work for
these clients. The Group reviews, on a regular basis, whether to
perform further work where clients have unpaid bills. The Group
works with a broad spread of long-standing reputable clients to
ensure there are no significant concentrations of credit
risk.
Credit risk also arises from cash
and cash equivalents and deposits with banks and financial
institutions. Cash and cash equivalents are invested with banks
with an A+ credit rating.
Interest rate risk
The Group is exposed to cash flow
interest rate risk from borrowings under the Term Facility and
Revolving Credit Facility at variable rate. The Board reviews the
interest rate exposure on a regular basis.
During 2023 and 2022, the Group's
borrowings at variable rate were denominated in sterling. At 31
December 2023, if interest rates on sterling denominated borrowings
had been 150 basis points higher/lower with all other variables
held constant, profit after tax for the year would have been
£291,600 lower/higher, mainly as a result of higher/lower interest
expense on floating-rate borrowings. The directors consider that
150 basis points is the maximum likely change in sterling interest
rates over the next year, being the period up to the next point at
which the Group expects to make these disclosures.
Liquidity risk
Liquidity risk arises from the
Group's management of working capital and the finance charges and
principal repayments on its debt instruments. It is the risk that
the Group will encounter difficulty in meeting its financial
obligations as they fall due. The Group's policy is to ensure that
it will always have sufficient cash (or agreed facilities) to allow
it to meet its liabilities when they become due and to take
advantage of business opportunities.
The Board reviews the projected
financing requirements annually when agreeing the Group's budget
and receives rolling 12-month cash flow projections for the Group
on a regular basis as well as information regarding cash
balances.
In December 2023, the Group renewed
and extended its existing borrowing facilities with
HSBC.
The renewed facility which runs
until 31 December 2025, total £24.0 million and consists of a £17.5
million revolving credit facility and a £6.5 million term loan. The
renewed facility replaces the facilities which were due for renewal
in April 2024. The interest rate on the renewed facility will
remain the same as for the previous facilities, paying a margin of
2.4% - 3.15% over the Sterling Overnight Index Average (SONIA),
resulting in a current effective rate of 8.3%.
The facility is secured by the
debenture which grants first ranking fixed and floating security of
the property and assets of the Group as referenced in Notes 16 and
18.
Additionally, the Group drew down
£0.8m from two short term loans that are repayable over two
years.
At the year end the Group had £2.3
million in cash, and so a net debt position of £22.9 million (2022:
£19.2 million).
At the end of the financial year,
cash flow projections indicated that the Group expected to have
sufficient liquid resources to meet its obligations, including
scheduled lease payments (Note 17), under all reasonably expected
circumstances.
Capital Management
The Group monitors "adjusted
capital" which comprises all components of equity (i.e., share
capital, share premium, non-controlling interest and retained
earnings).
The Group's objectives when
maintaining capital are:
·
to safeguard the entity's ability to continue as
a going concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders, and
·
to provide an adequate return to shareholders by
pricing products and services commensurately with the level of
risk
5. Segment information
The Group's reportable segments are
strategic business groups that offer different products and
services. Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker, which has been identified as the Board of Directors
of RBG Holdings plc.
The following summary describes the
operations of each reportable segment:
·
Legal services
- Provision of legal advice, by
RBGLS (trading under two brands, Rosenblatt and Memery
Crystal)
·
Professional
Services - Provision of sell-side
M&A corporate finance services, (professional services are
provided by Convex and have been reclassified to discontinued
operations, Note 13)
|
2023
|
Legal
services
|
|
|
Total
|
|
|
£
|
|
|
£
|
|
|
|
|
|
|
|
Segment
revenue
|
39,209,854
|
|
|
39,209,854
|
|
|
|
|
|
|
|
Disbursement asset revenue
|
1,221,854
|
|
|
1,221,854
|
|
Disbursement asset expenditure
|
(827,834)
|
|
|
(827,834)
|
|
|
|
|
|
|
|
Segment
contribution
|
17,180,771
|
|
|
17,180,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs not allocated to
segments
|
|
|
|
|
|
Personnel
costs
|
|
|
|
(3,569,936)
|
|
Depreciation and amortisation
|
|
|
|
(3,251,607)
|
|
Other
operating expense
|
|
|
|
(19,606,277)
|
|
Net
financial expenses
|
|
|
|
(2,118,791)
|
|
|
|
|
|
|
|
Group loss for the year
before tax on continuing operations
|
|
|
|
(11,365,839)
|
|
2022
(restated)
|
Legal
services
|
|
Third party participation
rights
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Segment
revenue
|
44,873,908
|
|
-
|
|
44,873,908
|
|
|
|
|
|
|
|
|
Segment gains on litigation
assets comprising:
|
|
|
|
|
|
|
Proceeds on disposal of damages based assets
|
-
|
|
2,021,700
|
|
2,021,700
|
|
|
|
|
|
|
|
|
|
-
|
|
2,021,700
|
|
2,021,700
|
|
|
|
|
|
|
|
|
Disbursement asset revenue
|
2,847,487
|
|
|
|
2,847,487
|
|
Disbursement asset expenditure
|
(3,241,507)
|
|
|
|
(3,241,507)
|
|
|
|
|
|
|
|
|
Segment
contribution
|
22,461,803
|
|
-
|
|
22,461,803
|
|
|
|
|
|
|
|
|
Segment gains on litigation
assets
|
-
|
|
2,021,700
|
|
2,021,700
|
|
|
|
|
|
|
|
|
Costs not allocated to
segments
|
|
|
|
|
|
|
Personnel
costs
|
|
|
|
|
(5,035,073)
|
|
Depreciation and amortisation
|
|
|
|
|
(3,432,764)
|
|
Other
operating expense
|
|
|
|
|
(16,791,399)
|
|
Net
financial expenses
|
|
|
|
|
(1,319,155)
|
|
Loss on
sale of equity accounted associate
|
|
|
|
|
(21,643)
|
|
|
|
|
|
|
|
|
Group profit for the year
before tax on continuing operations
|
|
|
|
|
(2,116,531)
|
Total assets and liabilities by
operating segment are not reviewed by the chief operating decision
makers and are therefore not disclosed.
A geographical analysis of revenue
is given below:
|
|
Revenue
by location of clients
|
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
restated
|
|
|
|
|
|
|
United Kingdom
|
28,976,058
|
|
37,960,608
|
|
Europe
|
1,838,158
|
|
1,528,152
|
|
North America
|
2,514,385
|
|
567,170
|
|
Other
|
5,881,253
|
|
4,817,978
|
|
|
|
|
|
|
|
39,209,854
|
|
44,873,908
|
Revenues from Legal Services clients
that account for more than 10% of Group revenue was £5,326,686
(2022: £6,632,334).
|
|
Contract assets - work in
progress
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
Group
|
£
|
|
£
|
|
|
|
|
|
|
|
|
At 1
January
|
9,703,812
|
|
5,976,258
|
|
|
Transfers
in the period from contract assets to trade receivables
|
(5,059,785)
|
|
(3,039,106)
|
|
|
Impairment of contract assets
|
(733,191)
|
|
(412,125)
|
|
|
Excess of
revenue recognised over cash (or rights to cash) being recognised
during the year
|
4,332,502
|
|
7,178,785
|
|
|
|
|
|
|
|
|
At 31
December
|
8,243,338
|
|
9,703,812
|
|
|
|
|
|
|
Contract assets are included within
"trade and other receivables" on the face of the statement of
financial position. They arise when the Group has performed
services in accordance with the agreement with the relevant client
and has obtained right to consideration for those services, but
such income has not been billed at the balance sheet
date.
6. Material profit or loss
items
The Group has identified a number of
items which are material due to the significance of their nature
and/or amount. These are listed separately here to provide a better
understanding of the financial performance of the Group.
The below items have been identified
as non-underlying and therefore are adjusted for in the calculation
of adjusted EBITDA.
|
|
|
Notes
|
|
2023
|
|
2022
|
|
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
Non-underlying items
|
|
|
|
|
|
|
|
Costs of acquiring
subsidiary
|
|
a
|
|
25,000
|
|
367,303
|
|
Contract assets - damages based
agreement asset impairment
|
|
b
|
|
-
|
|
6,670,481
|
|
Release of onerous contract
provision
|
|
b
|
|
301,727
|
|
562,979
|
|
Trade receivables - provision
against damages based agreement receivable
|
|
c
|
|
920,127
|
|
1,296,470
|
|
Costs associated with discontinued
operations
|
|
d
|
|
5,648,109
|
|
-
|
|
Costs associated with re-financing
project
|
|
e
|
|
787,193
|
|
-
|
|
Other one-off costs
|
|
f
|
|
2,081,890
|
|
-
|
|
Trade receivable
provision
|
|
g
|
|
1,038,163
|
|
-
|
|
Restructuring
(release)/costs
|
|
h
|
|
(168,167)
|
|
803,631
|
|
|
|
|
|
|
|
|
6a
Cost of acquiring subsidiary
Costs associated with the failed
acquisition of a subsidiary within 2022. The cost incurred within
2023 relates to additional invoice received within the year,
relating to the project from 2022.
6b
Contract assets - damages based agreement
impairment
Damages based agreement assets are
initially recognised as revenue under IFRS 15 to the extent it is
highly probable that a significant reversal in the amount will not
occur in the future and a disbursement asset will be recognised in
the balance sheet. The Group has two cases under damaged based
agreements.
For the first case, disbursements
are recoverable either in the case of a win or where the client or
the Group terminate the agreement. Under IFRS 15, this case is
treated as a contract asset and an impairment assessment is
performed under IFRS 15.
During the year ended 31 December
2022, the probability of success of this case was reduced from 90%
to 50% and the value of the contract asset at this point in time
(£6,670,481) was written off. At this point in time, the contract
became onerous and the Group recognised a provision for costs to
fulfil the contract.
6c
Trade receivables - provision against damages based
agreement
For the second damages based
agreement asset that the Group has, the disbursements are
recoverable in a win or lose situation. As such, the revenue
recognition point is the point at which the expense is incurred by
the Group. IFRS 15 requires the presentation of any unconditional
rights to consideration as a receivable separately from contract
assets and an expected credit loss (ECL) assessment is performed at
year end.
As a result of the ECL assessment,
the Group has fully provided against the receivable for this
damages based agreement.
6d
Costs associated with disposal of LionFish
During the year ended 31 December
2023, the Group disposed of its subsidiary LionFish Litigation. As
a result of this disposal, the Group wrote off a portion of the
intercompany balance owed by LionFish.
Additionally, as part of the
consideration received for the sale of LionFish, the Group retained
Litigation Assets relating to previous cases which LionFish had
invested in and had lost at point of sale, so the remaining balance
sheet value associated with these cases was written off.
6e
Costs associated with re-financing project
During the year ended 31 December
2023, the Group carried out and completed a re-financing project
which result in the extension of its existing facilities. The Group
engaged with a third-party consultancy Group to assist with the
management of this project.
6f
Other one-off costs
During the year ended 31 December
2023, the Group has incurred a number of one-off or non-recurring
costs, they have been classified as non-underlying as they do not
represent costs incurred in the normal course of business. These
costs include legal fees for settlement claims, costs associated
with settlements and public relation costs associated with these
settlements.
6g
Trade receivables provision - estimate change
During the year ended 31 December
2023, the Group reviewed the accounting estimate for expected
credit losses on trade receivables and determined there was not
sufficient coverage. As a result, an amount has been recognised as
non-underlying items that represents the change in provision as at
31 December 2023.
6h
Restructuring (release)/costs
During the year ended 31 December
2022, there were restructuring costs incurred by the Group, the
release within the year ended 31 December 2023 represents the
portion of the 2022 cost that was not incurred/paid out and
therefore required the accrual to be released.
7. Other operating income
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Other
income
|
-
|
|
159,280
|
|
|
Bank
interest on client monies
|
885,422
|
|
(3,234)
|
|
|
|
885,422
|
|
156,046
|
|
|
|
|
|
|
8. Disbursement asset
revenue/expenditure
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Disbursement asset
revenue
|
|
1,221,854
|
|
2,847,487
|
|
|
|
|
|
|
|
Disbursement asset
expenditure
|
|
|
|
|
|
Costs incurred
|
|
1,221,854
|
|
2,847,487
|
|
Provision
(released)/recognised
|
|
(394,020)
|
|
394,020
|
|
|
|
(827,834)
|
|
(3,241,507)
|
|
|
|
|
|
|
The costs relate directly to the
contract, the first case met the definition of an onerous contract
at the end of 2022, therefore a provision was made within 2022 for
costs to meet the obligations of the contract. During the year
ended 31 December 2023, the provision was released against the
costs incurred. This case lost during the current year and
therefore no asset was recognised for these costs. The costs
associated with the second case were recognised as an asset from
costs to fulfil a contract, this asset was reviewed for ECL and was
impaired based on the Group's assessment that the costs would not
be recoverable from the client.
9. Profit from operations and auditor's
remuneration
|
|
|
2023
|
|
2022
|
|
|
|
|
|
restated
|
|
|
|
£
|
|
£
|
|
Profit from operations is stated
after charging:
|
|
|
|
|
|
Fees payable to the company's
auditors:
|
|
|
|
|
|
Audit fees
|
|
351,765
|
|
290,000
|
|
Other services - pursuant to
legislation/regulation
|
|
3,035
|
|
36,684
|
|
Depreciation of property, plant and
equipment
|
|
484,412
|
|
530,529
|
|
Amortisation of right-of-use
assets
|
|
2,028,585
|
|
2,064,823
|
|
Amortisation/impairment of
intangible assets
|
|
738,610
|
|
837,412
|
For the year ended 31 December 2023,
depreciation of property, plant and equipment of £12,091 (2022
restated: £25,874) was transferred to discontinued operations.
Amortisation of right of use assets of £110,332 (2022: £88,762) was
transferred to discontinued operations.
The Alternative Performance Measures
used by Management are shown below:
|
|
|
2023
|
|
2022
restated
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Operating (loss)/profit
|
|
(9,247,048)
|
|
(775,734)
|
|
Depreciation and amortisation
expense
|
|
3,251,607
|
|
3,432,764
|
|
Non-underlying items
|
|
10,634,043
|
|
9,700,864
|
|
Adjusted EBITDA
|
|
4,638,601
|
|
12,357,894
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
Restated
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
(Loss)/Profit before tax
|
|
(11,635,839)
|
|
(2,116,531)
|
|
Non-underlying items
|
|
10,634,043
|
|
9,700,864
|
|
Adjusted Profit before tax
|
|
(731,797)
|
|
7,584,333
|
10. Employees
Group
|
|
|
2023
|
|
2022
restated
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Staff costs (including directors) consist
of:
|
|
|
|
|
|
Wages and salaries
|
|
19,639,680
|
|
20,060,891
|
|
Short-term non-monetary
benefits
|
|
265,217
|
|
254,585
|
|
Cost of defined contribution
scheme
|
|
762,278
|
|
695,206
|
|
Share-based payment
expense
|
|
-
|
|
6,244
|
|
Social security costs
|
|
2,394,358
|
|
2,619,683
|
|
|
|
23,061,533
|
|
23,636,609
|
Personnel costs stated in the
consolidated statement of comprehensive income includes the costs
of contractors of £3,816,927 (2022 restated:
£3,547,508).
Staff costs transferred to
discontinued operations during the year of £324,474 (2022 restated:
£3,654,197)
Contractors' costs transferred to
discontinued operations during the year of £866 (2022 restated:
£356,986)
The average number of employees
(including directors) during the year was as follows:
|
|
|
2023
|
|
2022
|
|
|
|
Number
|
|
Number
|
|
|
|
|
|
|
|
Legal and professional
staff
|
|
136
|
|
138
|
|
Administrative staff
|
|
64
|
|
73
|
|
|
|
200
|
|
211
|
Defined contribution pension schemes
are operated on behalf of the employees of the Group. The assets of
the schemes are held separately from those of the Group in
independently administered funds. The pension charge represents
contributions payable by the Group for continuing operations to the
funds and amounted to £762,278 (2022 restated:
£693,157).
Contributions amounting to £189,132
(2022: £256,340) were payable to the funds at year end and are
included in Trade and other payables.
Company
The average number of employees
(excluding directors) during the period was four (2022: nine); all
other personnel are employed by subsidiary undertakings.
Details of the Directors'
remuneration payable in the year is set out below:
|
|
|
Basic Salary and/or
Directors Fees
|
|
Employer Pension
Contributions
|
|
Total
|
|
|
|
£
|
|
£
|
|
£
|
|
31
December 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M Ismail
|
|
85,000
|
|
-
|
|
85,000
|
|
P Baker
|
|
40,000
|
|
-
|
|
40,000
|
|
D Wilkinson
|
|
40,000
|
|
-
|
|
40,000
|
|
N Davis (appointed 3 Mar
2023)
|
|
288,845
|
|
13,083
|
|
301,928
|
|
T MacLeod (appointed 3 Mar
2023)
|
|
298,254
|
|
8,648
|
|
306,902
|
|
I Rosenblatt (appointed 27 Jul
2023)
|
|
2,258,834**
|
|
-
|
|
2,258,834
|
|
J Divers (appointed 3 Mar
2023)
|
|
372,593
|
|
12,500
|
|
385,093
|
|
K McNair (appointed 28 Nov
23)
|
|
20,833
|
|
938
|
|
21,771
|
|
K Hamill (resigned 22 Jun
2023)
|
|
45,000
|
|
-
|
|
45,000
|
|
S Drakeford-Lewis (resigned 30 Jun
2023)
|
|
127,500
|
|
3,825
|
|
131,325
|
|
N Foulston (terminated 31 Jan
2023)
|
|
37,152
|
|
-
|
|
37,152
|
|
|
|
3,614,011
|
|
38,994
|
|
3,653,005
|
|
|
|
|
|
|
|
|
** Of this amount, £637,500 remained
payable as at 31 December. Ian Rosenblatt subsequently agreed to
receive this amount in shares as part of the equity that was
announced in February 2024.
|
|
|
Basic Salary and/or
Directors Fees
|
|
Employer Pension
Contributions
|
|
Total
|
|
|
|
£
|
|
£
|
|
£
|
|
31
December 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S Drakeford-Lewis[14]
|
|
-
|
|
-
|
|
-
|
|
N Foulston (terminated 31 Jan
2023)
|
|
445,820
|
|
(333)
|
|
445,487
|
|
K Hamill
|
|
90,000
|
|
-
|
|
90,000
|
|
M Ismail
|
|
40,000
|
|
-
|
|
40,000
|
|
R Parker (resigned 31 Dec
2022)
|
|
611,000
|
|
24,000
|
|
635,000[15]
|
|
P Baker
|
|
37,737
|
|
-
|
|
37,737
|
|
D Wilkinson
|
|
37,737
|
|
-
|
|
37,737
|
|
|
|
1,262,294
|
|
23,667
|
|
1,285,961
|
|
|
|
|
|
|
|
|
Directors who have an interest in
the shares of the Company will benefit through dividend
payments.
|
During the year the following
bonuses were received by directors and are included within Basic
Salary and/or Directors' Fees.
|
|
31 December 2023
[16]
|
|
31 December
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
J Divers
|
|
122,593
|
|
-
|
|
N Davis
|
|
17,178
|
|
-
|
|
S Drakeford-Lewis
|
|
25,000
|
|
-
|
|
R Parker
|
|
-
|
|
50,000
|
Details of the transactions with
Directors are included in Note 30. The directors are considered to
be the key management personnel.
11. Finance income and expense
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
Recognised in profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
|
|
|
Interest received on bank
deposits
|
|
51,318
|
|
14,509
|
|
Net finance income recognised in profit or
loss
|
|
51,318
|
|
14,509
|
|
|
|
|
|
|
|
Finance expense
|
|
|
|
|
|
Interest expense on financial
liabilities measured at amortised cost
|
|
(1,687,122)
|
|
(811,352)
|
|
Interest expense on lease
liabilities
|
|
(482,987)
|
|
(522,311)
|
|
|
|
(2,170,109)
|
|
(1,333,663)
|
|
|
|
|
|
|
|
Net finance (expense) recognised on profit or
loss
|
|
(2,118,791)
|
|
(1,319,154)
|
|
|
|
|
|
|
The above financial income and
expense include the following in respect of assets/(liabilities)
not at fair value through profit or loss:
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Total interest income on financial
assets
|
|
51,318
|
|
14,509
|
|
Total interest expense on
financial liabilities
|
|
(1,687,122)
|
|
(811,352)
|
|
|
|
(1,635,804)
|
|
(796,843)
|
12. Tax expense
|
|
|
2023
|
|
2022
restated
|
|
|
|
£
|
|
£
|
|
Current tax expense
|
|
|
|
|
|
Current tax on profits for the
year
|
|
-
|
|
-
|
|
Adjustment for under provision in
prior years
|
|
-
|
|
(443,490)
|
|
Total current tax
|
|
-
|
|
(443,492)
|
|
|
|
|
|
|
|
Deferred tax expense
|
|
|
|
|
|
Origination and reversal of
temporary differences in current period (Note 26)
|
|
(445,317)
|
|
(747,939)
|
|
Origination and reversal of
temporary differences in prior period (Note 26)
|
|
-
|
|
23,575
|
|
Total tax expense
|
|
(445,317)
|
|
(1,167,854)
|
|
|
|
|
|
|
|
Tax charge attributable
to:
|
|
|
|
|
|
Profit from continuing
operations
|
|
(322,720)
|
|
(469,118)
|
|
Profit/(loss) from discontinued
operations
|
|
(122,597)
|
|
(698,736)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense excluding share of tax
of equity accounted associate
|
|
(455,317)
|
|
(1,167,854)
|
|
|
|
(455,317)
|
|
(1,167,854)
|
|
|
|
|
|
|
|
|
|
|
|
|
The reasons for the difference
between the actual tax charge for the period and the standard rate
of corporation tax in the United Kingdom applied to profits for the
year are as follows:
|
|
|
2023
|
|
2022
restated
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
(Loss) for the year from:
|
|
|
|
|
|
Continuing operations
|
|
(11,043,119)
|
|
(1,647,413)
|
|
Discontinued operations
|
|
(12,875,822)
|
|
(3,073,350)
|
|
|
|
(23,918,941)
|
|
(4,720,763)
|
|
|
|
|
|
|
|
Income tax expense (including income
tax on associate) attributable to:
|
|
(445,317)
|
|
(1,167,854)
|
|
Continuing operations
|
|
(322,720)
|
|
(469,118)
|
|
Discontinued operations
|
|
(122,597)
|
|
(698,737)
|
|
|
|
|
|
|
|
Profit before income
taxes
|
|
(24,364,258)
|
|
(5,888,617)
|
|
|
|
|
|
|
|
Tax using the Company's domestic tax
rate of 23.5% (2022: 19%)
|
|
(5,725,601)
|
|
(1,118,837)
|
|
Fixed asset differences
|
|
91,463
|
|
(675)
|
|
Expenses not deductible for tax
purposes
|
|
3,480,519
|
|
91,370
|
|
Income not taxable for tax
purposes
|
|
(350,666)
|
|
-
|
|
Timing differences not recognised in
the computation
|
|
(42,036)
|
|
-
|
|
Adjustments in respect of prior
periods
|
|
-
|
|
8,341
|
|
Adjustments in respect of prior
periods (deferred tax)
|
|
-
|
|
23,575
|
|
Remeasurement of deferred tax for
changes in tax rates
|
|
(32,552)
|
|
(171,627)
|
|
Movement in deferred tax not
recognised
|
|
2,133,556
|
|
-
|
|
Total tax expense
|
|
(445,317)
|
|
(1,167,854)
|
Changes in tax rates and factors affecting the future tax
charge
On 1 April
2023, the UK corporation tax rate increased from 19% to 25%. The
effect of the new rate on the Group's tax charge has been applied
to the financial statements.
13. Discontinued
operations
Convex Capital Limited
During the year ended 31 December
2023, the Board made the decision to dispose of Convex Capital
Limited ("Convex").
Financial performance and cash flow
information
The financial performance and cash
flow information presented are for the 12 months ending 31 December
2023 and 31 December 2022
Summary of discontinued operations -
reconciliation to profit or loss
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Revenue
|
|
2,221,674
|
|
956,050
|
|
Expenses other than finance
costs
|
|
(2,871,945)
|
|
(4,609,684)
|
|
Finance costs
|
|
(43,358)
|
|
(6,387)
|
|
Non-underlying items
|
|
1,490,928
|
|
(112,066)
|
|
Impairment of intangible
assets
|
|
(13,694,754)
|
|
-
|
|
Tax credit/(expense)
|
|
122,597
|
|
698,737
|
|
Loss from selling discontinued
operations after tax
|
|
(90,964)
|
|
-
|
|
|
|
|
|
|
|
Profit/(Loss) for the
year
|
|
(12,875,822)
|
|
(3,073,350)
|
|
|
|
|
|
|
Reconciliation to statement of cash
flows
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Net cash (outflow)/inflow from
operating activities
|
|
(796,422)
|
|
1,388,283
|
|
Net cash (outflow) from investing
activities
|
|
(2,586)
|
|
(12,964)
|
|
Net cash inflow/(outflow) from
financing activities
|
|
482,524
|
|
(1,139,753)
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash
generated
|
|
(316,484)
|
|
235,566
|
|
Cash and cash equivalents at
beginning of period
|
|
423,843
|
|
188,277
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of
period
|
|
107,359
|
|
423,843
|
|
|
|
|
|
|
Breakdown of discontinued operations
by entity:
|
|
|
2023
|
|
2022
|
|
Discontinued operations -
Convex
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Revenue
|
|
2,234,800
|
|
5,274,075
|
|
Expenses
other than finance costs
|
|
(2,539,273)
|
|
(4,109,076)
|
|
Finance
costs
|
|
(26,220)
|
|
(6,387)
|
|
Non-underlying items
|
|
-
|
|
(31,177)
|
|
Tax
credit/(expense)
|
|
122,597
|
|
(215,899)
|
|
|
|
|
|
|
|
(Loss)/Profit for the year
|
|
(208,096)
|
|
911,536
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
Equity
holders of the parent
|
|
(208,096)
|
|
911,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
Cash flow
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Net cash
(outflow)/inflow from operating activities
|
|
(893,119)
|
|
1,396,086
|
|
Net cash
(outflow) from investing activities
|
|
(2,586)
|
|
(12,575)
|
|
Net cash
inflow/(outflow) from financing activities
|
|
590,626
|
|
(1,139,753)
|
|
Net
(decrease)/increase in cash generated
|
|
(305,079)
|
|
243,758
|
|
|
|
|
|
|
Assets and liabilities of disposal group held for
sale
The following major classes of
assets and liabilities in relation to Convex have been classified
as held for sale in the consolidated statement of financial
position.
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
10,661
|
|
21,867
|
|
Right-of-use assets
|
|
544,386
|
|
654,718
|
|
Intangible assets
|
|
2,600,000
|
|
16,327,834
|
|
Trade and other
receivables
|
|
106,728
|
|
118,582
|
|
Cash and cash equivalents
|
|
107,359
|
|
412,438
|
|
Assets held for sale
|
|
3,369,134
|
|
17,535,439
|
|
|
|
|
|
|
|
Trade and other payables
|
|
240,181
|
|
(176,486)
|
|
Leases
|
|
541,610
|
|
654,452
|
|
Amounts due to parent
company
|
|
82,692
|
|
-
|
|
Tax liabilities
|
|
93,944
|
|
587,799
|
|
Liabilities held for sale
|
|
958,476
|
|
1,065,765
|
|
|
|
|
|
|
Lionfish Litigation Finance Limited
In December 2022, the Board
announced its intention to dispose of LionFish Litigation Finance
Limited ("LionFish").
On 12 August 2020, the Company
agreed put options over the shares of LionFish held by the
non-controlling interest. Under this agreement, the holder of the
shares could require the Company to buy the shares in LionFish,
with consideration based on a multiple of LionFish profits, settled
by the issue of ordinary shares in the Company. On 8 December 2022,
the minority shares were transferred to the Group for £nil and this
agreement was terminated, during the year ended 31 December 2022
the present value of the put option was released through the
Statement of Changes in Equity.
In July 2023 the Group completed its
disposal of LionFish to Blackmead Infrastructure
Limited.
The post-tax loss on disposal of
discontinued operation was determined as follows:
|
|
|
31-Dec-23
|
|
|
|
£
|
|
|
|
|
|
Cash consideration
received
|
|
1,074,734
|
|
Other consideration
received
|
|
3,782,098
|
|
Total consideration received
|
|
4,856,832
|
|
|
|
|
|
Cash disposed of
|
|
4,000
|
|
|
|
|
|
Net cash inflow of disposal of
discontinued operation
|
|
4,852,832
|
|
|
|
|
|
Net assets disposed (other than cash):
|
|
|
|
Property, plant and
equipment
|
|
(742)
|
|
Trade and other
receivables
|
|
(1,136)
|
|
Litigation assets
|
|
(5,603,898)
|
|
Trade and other payables
|
|
661,980
|
|
|
|
(4,943,796)
|
|
|
|
|
|
Pre-tax loss on disposal of
discontinued operation
|
|
(90,964)
|
|
Related tax benefit
|
|
22,741
|
|
Loss on disposal of discontinued
operation
|
|
(68,223)
|
|
|
|
|
Financial performance and cash flow
information
The financial performance and cash
flow information presented are for the 12 months ending 31 December
2023 and 31 December 2022
|
|
|
2023
|
|
2022
|
|
Discontinued operations -
LionFish
|
|
£
|
|
£
|
|
|
|
|
|
|
|
(Loss) on
litigation assets
|
|
(23,126)
|
|
(4,318,025)
|
|
Expenses
other than finance costs
|
|
(332,672)
|
|
(500,608)
|
|
Finance
costs
|
|
(17,138)
|
|
-
|
|
Non-underlying items
|
|
1,490,928
|
|
(80,889)
|
|
Tax
credit/(expense)
|
|
-
|
|
914,635
|
|
Loss from
selling discontinued operation after tax
|
|
(90,964)
|
|
-
|
|
|
|
|
|
|
|
Profit/(Loss) for the year
|
|
1,027,028
|
|
(3,984,887)
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
Equity
holders of the parent
|
|
1,027,028
|
|
(3,599,325)
|
|
Non-controlling interests
|
|
-
|
|
(385,562)
|
|
|
|
1,028,028
|
|
(3,984,887)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
Cash flow
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Net cash
inflow/(outflow) from operating activities
|
|
96,697
|
|
(7,803)
|
|
Net cash
outflow from investing activities
|
|
-
|
|
(389)
|
|
Net cash
outflow from financing activities
|
|
(108,102)
|
|
-
|
|
Net
(decrease) in cash generated
|
|
(11,405)
|
|
(8,192)
|
|
|
|
|
|
|
Assets and liabilities of disposal group held for
sale
The following major classes of
assets and liabilities in relation to LionFish have been classified
as held for sale in the consolidated statement of financial
position.
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
-
|
|
2,770
|
|
Litigation investments
|
|
-
|
|
5,331,698
|
|
Trade and other
receivables
|
|
-
|
|
1,244
|
|
Cash and cash equivalents
|
|
-
|
|
11,405
|
|
Assets held for sale
|
|
-
|
|
5,347,117
|
|
|
|
|
|
|
|
Trade and other payables
|
|
-
|
|
1,283,883
|
|
Amounts due to parent
company
|
|
-
|
|
4,766,624
|
|
Tax liabilities
|
|
-
|
|
412,551
|
|
Liabilities held for sale
|
|
-
|
|
6,463,058
|
|
|
|
|
|
|
14. Earnings per
share
|
|
|
Total
|
|
Total
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Restated
|
|
Numerator
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Profit
for the year and earnings used in basic and diluted EPS:
|
|
|
|
|
|
From
continuing operations
|
|
(11,043,118)
|
|
(1,647,413)
|
|
From
discontinued operations
|
|
818,932
|
|
(2,687,789)
|
|
|
|
|
|
|
|
Non-Underlying
items
|
|
|
|
|
|
Costs of
acquiring subsidiary
|
|
25,000
|
|
367,303
|
|
Contract
assets - damage based agreement asset impairment
|
|
|
|
6,670,481
|
|
Release
of onerous contract provision
|
|
301,727
|
|
562,979
|
|
Trade
receivables - provision against damages based agreement
receivable
|
|
920,127
|
|
1,296,470
|
|
Group
costs associated with discontinued operations
|
|
5,648,109
|
|
-
|
|
Costs
associated with re-financing project
|
|
787,193
|
|
-
|
|
Other
one-off costs
|
|
2,081,890
|
|
-
|
|
(Release)/accrual of restructuring costs
|
|
(168,167)
|
|
803,631
|
|
Trade
receivable provision change
|
|
1,038,163
|
|
-
|
|
|
|
|
|
|
|
Less: tax
effect of above items
|
|
(2,658,511)
|
|
(1,824,410)
|
|
Profit
for the year adjusted for non-underlying items from continuing
operations
|
|
(3,067,586)
|
|
6,229,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
Number
|
|
Number
|
|
|
|
|
|
|
|
Weighted
average number of shares used in basic EPS
|
|
95,331,236
|
|
95,331,236
|
|
Impact of
share options
|
|
188,392
|
|
188,392
|
|
Weighted
average number of shares used in diluted EPS
|
|
95,519,628
|
|
95,519,628
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
Pence
|
|
Pence
|
|
|
|
|
|
Restated
|
|
|
|
|
|
|
|
Basic
earnings per ordinary share from continuing operations
|
|
(11.58)
|
|
(1.73)
|
|
Diluted
earnings per ordinary share from continuing operations
|
|
(11.58)
*
|
|
(1.73)
*
|
|
|
|
|
|
|
|
Basic
earnings per ordinary share from discontinued operations
|
|
0.86
|
|
(2.82)
|
|
Diluted
earnings per ordinary share from discontinued operations
|
|
0.86
|
|
(2.82)
*
|
|
|
|
|
|
|
|
Basic
earnings per ordinary share from total operations
|
|
(25.09)
|
|
(4.55)
|
|
Diluted
earnings per ordinary share from total operations
|
|
(25.09)
*
|
|
(4.55)
*
|
|
|
|
|
|
|
|
Basic
earnings per ordinary share adjusted for non-underlying items from
continuing operations
|
|
(3.22)
|
|
6.53
|
|
Diluted
earnings per ordinary share adjusted for non-underlying items from
continuing operations
|
|
(3.22)
*
|
|
6.52
|
|
|
|
|
|
|
* The
potentially dilutive instruments were anti-dilutive during 2022 and
2023.
On 22
February and 12 March 2024, the Group issued shares of 9,533,125
and 23,814,521 respectively. Following the Second Admission (12
March 2024), it issued share capital comprised 128,678,882
shares.
Earnings
per share have been recalculated based on a weighted average of the
number of shares at 31 December 2023 and following the Second
Admission on 12 March 2024.
|
Denominator
|
|
Number
|
|
|
|
|
|
|
|
Weighted
average number of shares used in basic EPS
|
|
112,005,059
|
|
|
Impact of
share options
|
|
188,392
|
|
|
Weighted
average number of shares used in diluted EPS
|
|
112,193,451
|
|
|
|
|
|
|
|
|
|
2023
|
|
|
|
|
Pence
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per ordinary share from continuing operations
|
|
(9.86)
|
|
|
Diluted
earnings per ordinary share from continuing operations
|
|
(9.86)
*
|
|
|
|
|
|
|
|
Basic
earnings per ordinary share from discontinued operations
|
|
0.73
|
|
|
Diluted
earnings per ordinary share from discontinued operations
|
|
0.73
|
|
|
|
|
|
|
|
Basic
earnings per ordinary share from total operations
|
|
(21.36)
|
|
|
Diluted
earnings per ordinary share from total operations
|
|
(21.36)
*
|
|
|
|
|
|
|
|
Basic
earnings per ordinary share adjusted for non-underlying items from
continuing operations
|
|
(2.74)
|
|
|
Diluted
earnings per ordinary share adjusted for non-underlying items from
continuing operations
|
|
(2.76)
*
|
|
* The
potentially dilutive instruments were anti-dilutive during
2023.
15. Dividends
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Interim dividend of 0.5p (2022: 3p)
per ordinary share proposed and paid during the year relating to
the previous year's results
|
|
471,702
|
|
2,832,898
|
|
|
|
|
|
|
|
Interim dividend of nil (2022: 2p)
per ordinary share paid during the year
|
|
-
|
|
1,903,173
|
|
|
|
471,702
|
|
4,736,071
|
|
|
|
|
|
|
16. Property, plant and equipment
Group
|
|
|
Leasehold
improvements
|
|
Fixtures and
fittings
|
|
Computer
Equipment
|
|
Total
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
2,710,279
|
|
251,294
|
|
779,546
|
|
3,741,119
|
|
Additions
|
|
7,471
|
|
87,883
|
|
103,998
|
|
199,352
|
|
Transferred to assets held for
sale
|
|
(20,197)
|
|
(10,602)
|
|
(56,552)
|
|
(87,351)
|
|
At
31 December 2022 (restated)
|
|
2,697,553
|
|
328,575
|
|
826,992
|
|
3,853,120
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2023 (restated)
|
|
2,697,553
|
|
328,575
|
|
826,992
|
|
3,853,120
|
|
Additions
|
|
-
|
|
3,713
|
|
320,314
|
|
324,027
|
|
At
31 December 2023
|
|
2,697,553
|
|
332,288
|
|
1,147,306
|
|
4,177,147
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
487,148
|
|
116,989
|
|
554,071
|
|
1,158,208
|
|
Charge for the period
|
|
285,370
|
|
109,399
|
|
157,536
|
|
552,305
|
|
Transferred to assets held for
sale
|
|
(17,216)
|
|
(7,847)
|
|
(40,421)
|
|
(65,484)
|
|
At
31 December 2022 (restated)
|
|
755,302
|
|
218,541
|
|
671,186
|
|
1,645,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2023 (restated)
|
|
755,303
|
|
218,540
|
|
671,186
|
|
1,645,029
|
|
Charge for the year
|
|
246,723
|
|
89,439
|
|
148,250
|
|
484,412
|
|
At
31 December 2023
|
|
1,002,026
|
|
307,979
|
|
819,436
|
|
2,129,441
|
|
|
|
|
|
|
|
|
|
|
|
Net
book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
2,223,131
|
|
134,305
|
|
225,475
|
|
2,582,911
|
|
At 31 December (restated)
|
|
1,942,250
|
|
110,035
|
|
155,806
|
|
2,208,091
|
|
At
31 December 2023
|
|
1,695,527
|
|
24,309
|
|
327,870
|
|
2,047,706
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
transferred to held for sale at 31 December 2023 of £10,661 (2022:
£24,637).
The Group
has no contractual commitments for the acquisition of property,
plant and equipment.
Company
|
|
|
Computer
Equipment
|
|
Total
|
|
|
|
£
|
|
£
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January
2022
|
|
18,750
|
|
18,750
|
|
Additions
|
|
-
|
|
-
|
|
At 31 December
2022
|
|
18,750
|
|
18,750
|
|
|
|
|
|
|
|
At 1 January
2023
|
|
18,750
|
|
18,750
|
|
Additions
|
|
-
|
|
-
|
|
At 31 December
2023
|
|
18,750
|
|
18,750
|
|
|
|
|
|
|
|
Accumulated depreciation and
impairment
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January
2022
|
|
17,667
|
|
17,667
|
|
Charge
for the year
|
|
1,038
|
|
1,038
|
|
At 31 December
2022
|
|
18,705
|
|
18,705
|
|
|
|
|
|
|
|
At 1 January
2023
|
|
18,705
|
|
18,705
|
|
Charge
for the year
|
|
45
|
|
45
|
|
At 31 December
2023
|
|
18,750
|
|
18,750
|
|
|
|
|
|
|
|
Net book
value
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2023
|
|
45
|
|
45
|
|
At 31 December
2023
|
|
-
|
|
-
|
|
|
|
|
|
|
Under a debenture signed and
registered on 19 April 2021, HSBC UK Bank plc have a fixed charge
over the property, plant and equipment of the Group.
The Company has no contractual
commitments for the acquisition of property, plant and
equipment.
17. Leases
The Group leases its business
premises in the United Kingdom. The lease contracts either provide
for annual increases in the periodic rent payments linked to
inflation or for payments to be reset periodically to market rental
rates.
The percentages in the table below
reflect the current proportions of lease payments that are either
fixed or variable. The sensitivity reflects the impact on the
carrying amount of lease liabilities and right-of-use assets if
there was an uplift of 5% on the balance sheet date to lease
payments that are variable.
|
At
31 December 2023
|
|
Lease
Contract
|
|
Variable
Payments
|
|
Sensitivity
|
|
|
|
Number
|
|
%
|
|
£000
|
|
|
|
|
|
|
|
|
|
Property leases with payments linked
to inflation
|
|
1
|
|
38.7%
|
|
+/-
174
|
|
Property leases with periodic
uplifts to market rentals
|
|
1
|
|
61.3%
|
|
+/-
574
|
|
|
|
2
|
|
100.0%
|
|
+/- 748
|
The percentages in the table below
reflect the proportions of lease payments that are either fixed of
variable for the comparative period.
|
At
31 December 2022
|
|
Lease
Contract
|
|
|
Variable
Payments
|
|
Sensitivity
|
|
|
|
Number
|
|
|
%
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
Property leases with payments linked
to inflation
|
|
1
|
|
|
78.3%
|
|
+/-
218
|
|
Property leases with periodic
uplifts to market rentals
|
|
1
|
|
|
21.7%
|
|
+/-
653
|
|
|
|
2
|
|
|
100.0%
|
|
+/- 872
|
Right-of-use Assets
|
|
|
Land and
buildings
|
|
|
Total
|
|
|
|
£
|
|
|
£
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
|
15,913,008
|
|
|
15,913,008
|
|
Amortisation
|
|
(2,153,585)
|
|
|
(2,153,585)
|
|
Variable lease payment
adjustment
|
|
1,314,709
|
|
|
1,314,709
|
|
Transferred to assets held for
sale
|
|
(654,718)
|
|
|
(654,718)
|
|
At
31 December 2022 (restated)
|
|
14,419,414
|
|
|
14,419,414
|
|
|
|
|
|
|
|
|
At
1 January 2023
|
|
14,419,414
|
|
|
14,419,414
|
|
Amortisation
|
|
(2,028,522)
|
|
|
(2,028,522)
|
|
At
31 December 2023
|
|
12,390,892
|
|
|
12,390,892
|
|
|
|
|
|
|
|
Lease liabilities
|
|
|
Land and
buildings
|
|
|
Total
|
|
|
|
£
|
|
|
£
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
|
15,849,101
|
|
|
15,849,101
|
|
Interest expense
|
|
528,698
|
|
|
528,698
|
|
Variable lease payment
adjustment
|
|
1,314,709
|
|
|
1,314,709
|
|
Lease payments
|
|
(1,740,524)
|
|
|
(1,740,524)
|
|
Transferred to assets held for
sale
|
|
(258,474)
|
|
|
(258,474)
|
|
At
31 December 2022 (restated)
|
|
15,693,510
|
|
|
15,693,510
|
|
|
|
|
|
|
|
|
At
1 January 2023
|
|
15,693,510
|
|
|
15,693,510
|
|
Interest expense
|
|
472,410
|
|
|
472,410
|
|
Lease payments
|
|
(2,596,779)
|
|
|
(2,596,779)
|
|
At
31 December 2023
|
|
13,569,141
|
|
|
13,569,141
|
|
|
|
|
|
|
|
At 31
December 2023, lease liabilities were falling due as
follows:
|
Group
|
Up to 3
months
|
Between 3 and 12
months
|
Between 1 and 2
years
|
Between 2 and 5
years
|
Over 5
years
|
Total
|
|
|
£
|
£
|
£
|
£
|
£
|
£
|
|
|
|
|
|
|
|
|
|
Lease
liabilities
|
546,845
|
1,677,528
|
2,318,301
|
4,183,776
|
4,842,691
|
13,569,141
|
The aggregate undiscounted
commitments for low-value leases as at 31 December 2023 was £nil
(2022: £nil).
18. Intangible assets
Group
|
|
|
Goodwill
|
|
Customer
Contracts
|
|
Brand
|
|
Other
|
|
Total
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
51,862,168
|
|
1,706,578
|
|
3,360,474
|
|
1,000,000
|
|
57,929,220
|
|
Additions
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Transferred to assets held for sale
|
|
(15,775,039)
|
|
(1,167,673)
|
|
(661,596)
|
|
-
|
|
(17,604,308)
|
|
At 31 December 2022
(restated)
|
|
36,087,129
|
|
538,905
|
|
2,698,878
|
|
1,000,000
|
|
40,324,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2023
|
|
36,087,129
|
|
538,905
|
|
2,698,878
|
|
1,000,000
|
|
40,324,912
|
|
Additions
|
|
-
|
|
-
|
|
-
|
|
2,500,000
|
|
2,500,000
|
|
At 31 December
2023
|
|
36,087,129
|
|
538,905
|
|
2,698,878
|
|
3,500,000
|
|
42,824,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation and
impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January
2022
|
|
-
|
|
1,466,599
|
|
270,058
|
|
333,333
|
|
2,069,990
|
|
Amortisation charge
|
|
-
|
|
169,389
|
|
168,024
|
|
500,000
|
|
837,413
|
|
Transferred to assets held for sale
|
|
-
|
|
(1,167,673)
|
|
(108,801)
|
|
-
|
|
(1,276,474)
|
|
At 31 December
2022
|
|
-
|
|
468,315
|
|
329,281
|
|
833,333
|
|
1,630,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January
2023
|
|
-
|
|
468,315
|
|
329,281
|
|
833,333
|
|
1,630,929
|
|
Amortisation charge
|
|
-
|
|
70,590
|
|
134,940
|
|
500,000
|
|
705,530
|
|
At 31 December
2023
|
|
-
|
|
538,905
|
|
464,221
|
|
1,333,333
|
|
2,336,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
51,862,168
|
|
239,979
|
|
3,090,416
|
|
666,667
|
|
55,859,230
|
|
At 31
December 2022 (restated)
|
|
36,087,129
|
|
70,590
|
|
2,369,597
|
|
166,667
|
|
38,693,983
|
|
At 31
December 2023
|
|
36,087,129
|
|
-
|
|
2,234,657
|
|
2,166,667
|
|
40,488,453
|
|
|
|
|
|
|
|
|
|
|
|
|
Under a
debenture signed and registered on 19 April 2021, HSBC UK Bank plc
have a fixed charge over the intangible assets of the
Group.
During
the year, intangible assets with an opening net book value of
£16,327,834 relating to Convex Capital were transferred to assets
held for sale. Further amortisation of £33,080 was charged to these
intangible assets during the year ended 31 December 2023. An
impairment assessment was performed on these intangible assets
where it was determined that an impairment of £13,694,754 was
required.
19. Impairment of goodwill and other intangible
assets
The Group is required to test, on an
annual basis, whether goodwill and other intangible assets have
suffered any impairment. The recoverable amounts are determined
based on value in use calculations. The use of this method requires
the estimation of future cash flows and the determination of a
discount rate in order to calculate the present value of the cash
flows. The recoverable amounts were determined to be higher than
the carrying amounts and so no impairment losses were
recognised.
The recoverable amounts have been
determined from value in use calculations based on an extrapolation
of the cash flow projections from the formally approved budget.
Values assigned to the key assumptions represent management's
estimate of expected future trends and are as follows:
·
A pre-tax discount rate of 25% was applied in
determining the recoverable amount. The discount rate is based on
the average weighted cost of capital
·
Growth rates over the longer term of between 0-3%
are based on management's understanding of the market opportunities
for services provided
·
Increases in costs are based on current inflation
rates and expected levels of recruitment needed to generate
predicted revenue growth
·
Cash flows have been assessed over ten years with
the assumption that the business will be ongoing at the end of that
period
The review demonstrated sufficient
headroom such that the estimated carrying values from continuing
operations are not sensitive to changes in assumptions. Having
reviewed the key assumptions used, the Directors do not believe
that there is a reasonably possible change in any of the key
assumptions that require further disclosure.
An impairment in relation to Convex
Capital goodwill and intangible assets was made during the
financial year.
20. Subsidiaries
The principal subsidiaries of RBG
Holdings plc, which are incorporated in England and Wales and have
been included in these consolidated financial statements, are as
follows:
|
Name
|
Principal Activity
|
Registered Number
|
Proportion of ownership
interest
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
RBL Law Limited
|
Legal Services
|
09986118
|
100%
|
100%
|
|
RBG Legal Services
Limited
|
Legal Services
|
13287062
|
100%
|
100%
|
|
Convex Group (Holdings)
Limited
|
Holding Company
|
11490871
|
100%
|
100%
|
|
Convex Capital Limited
|
Professional Services
|
11491052
|
100%
|
100%
|
|
LionFish Litigation Finance
Limited[17]
|
Litigation Finance
|
12165991
|
-
|
100%
|
|
Islero Assignments
Limited
|
Dormant
|
12754244
|
-
|
100%
|
|
Memery Crystal Limited
|
Dormant
|
13600674
|
100%
|
100%
|
|
Rosenblatt Limited
|
Dormant
|
13601148
|
100%
|
100%
|
The principal place of business of
Convex Group (Holdings) Limited and Convex Capital Limited is Bass
Warehouse, 4 Castle Street, Manchester, M3 4LZ. The principal place
of business and registered office of RBG Legal Services Limited is
165 Fleet Street, London, England, EC4A 2DY. The principal place of
business of the other subsidiaries and the registered address of
each subsidiary is 165 Fleet Street, London, England, EC4A
2DY.
For the year ending 31 December
2023, the principal subsidiary companies, set out above, were
exempt from the requirements of the Companies Act relating to the
audit of individual accounts by virtue of section 479A of the
Companies Act 2006. RBG Holdings plc, has given a statement of
guarantee under the Companies Act 2006 section 479C, whereby RBG
Holdings plc will guarantee all outstanding liabilities to which
the respective subsidiary companies are subject as at 31 December
2023.
Company
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
Cost and net book value
|
|
|
|
|
|
At 1 January
|
|
27,501,378
|
|
27,501,278
|
|
Investments in
subsidiaries
|
|
-
|
|
100
|
|
Impairment in subsidiary held for
sale
|
|
(13,694,754)
|
|
-
|
|
At
31 December
|
|
13,806,624
|
|
27,501,378
|
|
|
|
|
|
|
Impairment in subsidiary held for sale relates to Convex
Capital Limited which was classified as a discontinued operation at
31 December 2023 and subsequently sold in March 2024.
This
impairment has been arrived at by reviewing intangible assets held
in Convex, less consideration received.
21. Investments in associate
In June 2022, the Group sold its 40%
interest in Adnitor Limited. The post-tax loss on disposal of
investment in associate was determined as follows:
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Cash consideration
received
|
-
|
|
80,000
|
|
|
Total consideration received
|
-
|
|
80,000
|
|
|
|
|
|
|
|
|
Net assets disposed (other than cash):
|
|
|
|
|
|
Investment in associate
|
-
|
|
101,643
|
|
|
Loss on disposal of discontinued
operation, net of tax
|
-
|
|
(21,643)
|
|
|
|
|
|
|
22. Trade and other receivables
Group
|
|
|
Group
|
|
|
Group
|
|
Group
|
|
|
|
31 Dec
2023
|
|
|
31 Dec
2022
|
|
1 Jan 2022
|
|
|
|
|
|
|
Restated
|
|
Restated
|
|
|
|
£
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
14,131,346
|
|
|
12,229,829
|
|
10,456,340
|
|
Less: provision for impairment of
trade receivables
|
|
(6,170,819)
|
|
|
(2,315,087)
|
|
(828,694)
|
|
Trade receivables - net
|
|
7,960,527
|
|
|
9,914,742
|
|
9,627,646
|
|
|
|
|
|
|
|
|
|
|
Contract assets
|
|
8,243,338
|
|
|
9,703,812
|
|
12,378,702
|
|
Amounts due from discontinued
operations
|
|
82,692
|
|
|
4,766,624
|
|
760,081
|
|
Corporation tax
receivable
|
|
725,723
|
|
|
656,982
|
|
-
|
|
Other taxes and social
security
|
|
-
|
|
|
-
|
|
-
|
|
Other receivables
|
|
1,068,361
|
|
|
659,347
|
|
1,003,079
|
|
Total financial assets other than
cash and cash equivalents classified as amortised cost
|
|
18,080,641
|
|
|
25,701,508
|
|
23,769,508
|
|
|
|
|
|
|
|
|
|
|
Prepayments
|
|
1,019,834
|
|
|
2,170,051
|
|
1,963,850
|
|
|
|
|
|
|
|
|
|
|
Total trade and other
receivables
|
|
19,100,475
|
|
|
27,871,559
|
|
25,733,358
|
|
|
|
|
|
|
|
|
|
|
Due within one year or
less
|
|
19,100,475
|
|
|
27,871,559
|
|
19,330,914
|
|
Due after more than one
year
|
|
|
|
|
-
|
|
6,402,444
|
|
|
|
19,100,475
|
|
|
27,871,559
|
|
25,733,358
|
|
|
|
|
|
|
|
|
|
At 31 December 2023, trade and
other receivables of £106,728 (2022: £119,806) were transferred to
assets held for sale - discontinued operations.
Trade
receivables are made up of the following:
|
|
|
Group
|
|
Group
|
|
Group
|
|
|
|
31 Dec
2023
|
|
31 Dec
2022
|
|
1 Jan 2022
|
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
Trade
receivables for legal services revenue a
|
|
11,641,655
|
|
10,660,265
|
|
10,183,246
|
|
Trade
receivables for damages based agreement b
|
|
2,489,691
|
|
1,569,564
|
|
273,094
|
|
|
|
14,131,346
|
|
12,229,829
|
|
10,456,340
|
|
|
|
|
|
|
|
|
a Trade receivables from legal
services revenue relates to balances due on work invoiced for the
supply of legal services.
b Trade receivables for
damaged based agreement relates to a case the Group has entered
into and the disbursements are recoverable from the client whether
the case wins or loses. At each reporting date, an ECL assessment
is performed on the asset in line with IFRS 9 and an impairment is
recognised as appropriate.
The Group
have performed an ECL assessment at each year end and have
determined that in the event of a loss, the disbursements are not
recoverable and have therefore impaired the asset.
Contract assets are made up of the
following:
|
|
|
Group
|
|
Group
|
|
Group
|
|
|
|
31 Dec
2023
|
|
31 Dec
2022
|
|
1 Jan 2022
|
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
Work in progress
a
|
|
8,243,338
|
|
9,703,812
|
|
5,976,258
|
|
Damages based agreement assets
b
|
|
-
|
|
-
|
|
6,402,444
|
|
|
|
8,243,338
|
|
9,703,812
|
|
12,378,702
|
|
|
|
|
|
|
|
|
a Work in progress relates to time recorded by fee earners that
has not been billed at balance sheet date.
b Where revenue is subject to contingent fee arrangements,
including services provided under Damages based agreements (DBAs)
the Group recognises an asset for the disbursements on these cases.
The Group has two cases that fall under damages based
agreements.
For the first case, disbursements
are recoverable either in the case of a win or where the client or
the Group terminate the agreement. Under IFRS 15, this case is
treated as a contract asset and an impairment assessment is
performed under IFRS 15. During the year ended 31 December 2022,
the probability of success was reduced from 90% to 50%, at this
point, the case became an onerous contract and costs to fulfil the
contract were provided for.
The table below provides analysis
of the movements in damages based agreement assets:
|
|
|
2023
|
|
2022
|
|
|
|
|
|
restated
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
At 1 January
|
|
-
|
|
6,402,444
|
|
Additions
|
|
-
|
|
988,037
|
|
Realisations
|
|
-
|
|
(720,000)
|
|
Write off of damages based agreement
asset
|
|
-
|
|
(6,670,481)
|
|
At 31 December
|
|
-
|
|
-
|
|
|
|
|
|
|
The carrying value of trade and
other receivables classified at amortised cost approximates fair
value.
The Group does not hold any
collateral as security.
The Group applies the IFRS 9
simplified approach to measuring expected credit losses using a
lifetime expected credit loss provision for trade receivables and
contract assets. To measure expected credit losses on a collective
basis, trade receivables and contract assets are grouped based on
similar credit risk and aging. The contract assets have similar
risk characteristics to the trade receivables for similar types of
contracts.
The expected loss rates are based
on the Group's credit losses experienced over the period since
incorporation, adjusted for current and forward-looking information
on macroeconomic factors affecting the Group's customers. The Group
has identified the gross domestic product (GDP), unemployment rate
and inflation rate as the key macroeconomic factors in the
countries where the Group operates.
The
lifetime expected credit loss provision for trade receivables and
contract assets is as follows:
|
|
Current
|
More than 30 days past
due
|
More than 60 days past
due
|
More than 120 days past
due
|
Total
£
|
|
31
December 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected loss rate
|
18.0%
|
3.9%
|
7.9%
|
52.4%
|
|
|
Gross carrying amount - trade
receivables
|
2,536,027
|
1,247,100
|
1,664,689
|
6,193,839
|
11,641,655
|
|
Gross carrying amount - contract
assets (Work in Progress)
|
8,243,338
|
-
|
-
|
-
|
8,243,338
|
|
Gross carrying amount - trade
receivables - DBA assets
|
2,489,691
|
-
|
-
|
-
|
2,489,691
|
|
|
|
|
|
|
|
|
Loss provision
|
2,507,392
|
48,029
|
131,270
|
3,484,129
|
6,170,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
December 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected loss rate
|
10.2%
|
2.7%
|
3.8%
|
18.6%
|
|
|
Gross carrying amount - trade
receivables
|
4,733,325
|
1,832,694
|
820,647
|
3,273,600
|
10,660,265
|
|
Gross carrying amount - contract
assets (Work in Progress)
|
9,703,812
|
-
|
-
|
-
|
9,703,812
|
|
Gross carrying amount - trade
receivables - DBA assets
|
1,569,564
|
-
|
-
|
-
|
1,569,564
|
|
|
|
|
|
|
|
|
Loss provision
|
1,626,725
|
49,528
|
30,947
|
607,887
|
2,315,087
|
|
|
|
|
|
|
|
None of the trade receivables and
contract assets have been subject to a significant increase in
credit risk since initial recognition.
Movements in the impairment
allowance for trade receivables are as follows:
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
At 1 January
|
|
2,315,087
|
|
828,694
|
|
Increase during the year
|
|
4,008,754
|
|
1,544,896
|
|
Receivable written off during the
year as uncollectible
|
|
(62,595)
|
|
(24,247)
|
|
Unused amounts reversed
|
|
(90,427)
|
|
(34,257)
|
|
At 31 December
|
|
6,170,820
|
|
2,315,087
|
|
|
|
|
|
|
Included in other receivables is
£17,872 (2022: £12,475) which is owed by the Employee Benefit
Trust.
Company
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
Amounts
due from group companies
|
|
43,934,885
|
|
53,167,678
|
|
Corporation tax receivable
|
|
145,364
|
|
-
|
|
Other
taxes and social security
|
|
347,822
|
|
-
|
|
Other
receivables
|
|
361,110
|
|
403,633
|
|
Total financial assets other
than cash and cash equivalents classified as amortised
cost
|
|
44,789,181
|
|
53,571,311
|
|
|
|
|
|
|
|
Prepayments
|
|
162,318
|
|
187,224
|
|
|
|
|
|
|
|
Total trade and other
receivables
|
|
44,951,499
|
|
53,758,535
|
|
|
|
|
|
|
|
Due
within one year or less
|
|
4,539,382
|
|
14,204,102
|
|
Due after
more than one year
|
|
40,412,117
|
|
39,554,433
|
|
|
|
44,951,499
|
|
53,758,535
|
The loans
due from RBG Legal Services and LionFish Litigation Finance are on
demand and interest free.
Management considers that there is no increase in credit risk
on the related party loans. Given that the loans are on demand,
lifetime credit losses and 12-month credit losses will be the same.
Having considered different recoverability scenarios which
incorporated macroeconomic information (such as market interest
rates and growth rates), current and forward-looking information,
management consider the expected credit losses to be close to
nil.
23. Trade and other payables
|
|
|
Group
|
|
Company
|
|
Group
|
|
Company
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
|
|
|
|
|
|
restated
|
|
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
4,911,641
|
|
547,550
|
|
3,927,448
|
|
-
|
|
Corporation tax payable
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Other taxes and social
security
|
|
2,194,073
|
|
-
|
|
2,260,424
|
|
-
|
|
Amounts due to discontinued
operations
|
|
-
|
|
-
|
|
647,324
|
|
|
|
Amounts due to group
companies
|
|
-
|
|
2,318,419
|
|
-
|
|
2,873,359
|
|
Derivative financial
liabilities
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Other payables
|
|
108,261
|
|
100
|
|
100
|
|
100
|
|
Accruals
|
|
4,379,510
|
|
1,353,193
|
|
2,807,158
|
|
1,417,342
|
|
At
31 December
|
|
11,593,485
|
|
4,219,262
|
|
9,642,454
|
|
4,290,801
|
|
|
|
|
|
|
|
|
|
|
|
Due within one year or
less
|
|
11,593,485
|
|
4,219,262
|
|
9,642,454
|
|
4,290,801
|
|
Due after more than one
year
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
11,593,485
|
|
4,219,262
|
|
9,642,454
|
|
4,290,801
|
|
|
|
|
|
|
|
|
|
|
The carrying value of trade and
other payables classified as financial liabilities measured at
amortised cost approximates fair value.
At 31 December, trade and other
payables of £334,175 (2022 restated: £2,107,747) were transferred
to liabilities held for sale - discontinued operations (refer to
note 13).
24. Loans and borrowings
The book value and fair value of
loans and borrowings which are all denominated in sterling are as
follows:
|
|
|
Book value
|
|
Fair value
|
|
Book value
|
|
Fair value
|
|
|
|
31 Dec 23
|
|
31 Dec 23
|
|
31 Dec 22
|
|
31 Dec 22
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
Bank loans
|
|
|
|
|
|
|
|
|
|
Secured
|
|
22,687,488
|
|
22,687,488
|
|
20,000,000
|
|
20,000,000
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Bank loans
|
|
|
|
|
|
|
|
|
|
Secured
|
|
2,624,407
|
|
2,624,407
|
|
2,205,640
|
|
2,205,640
|
|
At
31 December
|
|
25,311,894
|
|
25,311,894
|
|
22,205,640
|
|
22,205,640
|
|
|
|
|
|
|
|
|
|
|
The rate at which Sterling
denominated loans and borrowings are payable is 3.15% above SONIA
(2022: 2.90%).
The bank loans are secured by fixed
and floating charges over the assets of the Group. The bank loans
are repayable over four years, during the year ending 31 December
2023, the Group signed an amendment and restatement deed which
postponed the termination date. The Group has £nil undrawn
committed borrowing facilities available at 31 December 2023 (2022:
£nil).
25. Provisions
Group
|
|
|
Leasehold
dilapidations
|
|
Legal
disputes
|
|
Onerous
contracts
|
|
Total
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
At
1 January 2022
|
|
150,000
|
|
164,291
|
|
-
|
|
314,291
|
|
Charged to profit or loss
|
|
-
|
|
47,245
|
|
956,999
|
|
1,004,244
|
|
(Released) through profit or
loss
|
|
-
|
|
-
|
|
(562,979)
|
|
(562,979)
|
|
At
31 December 2022
|
|
150,000
|
|
211,536
|
|
394,020
|
|
755,556
|
|
|
|
|
|
|
|
|
|
|
|
At
1 January 2023
|
|
150,000
|
|
211,536
|
|
394,020
|
|
755,556
|
|
(Release) through profit or
loss
|
|
-
|
|
(136,536)
|
|
(394,020)
|
|
(530,556)
|
|
At
31 December 2023
|
|
150,000
|
|
75,000
|
|
-
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
Due within one year or
less
|
|
-
|
|
75,000
|
|
-
|
|
75,000
|
|
Due after more than one
year
|
|
150,000
|
|
-
|
|
-
|
|
150,000
|
|
|
|
150,000
|
|
75,000
|
|
-
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
Leasehold dilapidations relate to
the estimated cost of returning a leasehold property to its
original state at the end of the lease in accordance with the lease
terms. The main uncertainty relates to estimating the cost that
will be incurred at the end of the lease.
The Group is currently involved in a
number of legal disputes. The amount provided represents the
directors' best estimate of the Group's liability having taken
legal advice. Uncertainties relate to whether claims will be
settled out of court or if not whether the Group is successful in
defending any action. Because of the nature of the disputes, the
directors have not disclosed further information on the basis that
they believe that this would be seriously prejudicial to the
Group's position in defending the cases brought against
it.
The Group
recognises a contract asset in line with IFRS 15 for one of its
damages based agreement cases. Management re-assessed the
probability of success of the case based on the information
available at the time and the probability of success was reduced
from 90% to 50% during the year ended 31 December 2022 and the
contract asset associated with this was impaired. At this point in
time, the case became an onerous contract and as such, a provision
was made for costs to fulfil the contract.
26. Deferred Tax
Deferred tax is calculated in full
on temporary differences under the liability method using a tax
rate of 25% (2022: 25%).
On 1 April 2023, the UK corporate
tax rate increased from 19% to 25% on 1 April 2023. As IFRS
requires deferred tax to be measured at tax rates that have been
substantively enacted at the reporting date, the Group's deferred
tax balances have been re-measured accordingly and the impact has
been reflected within the consolidated financial
statements.
The movement on the deferred tax
account is as shown below:
|
|
|
Group
|
|
Company
|
|
Group
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
restated
|
|
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January
|
|
229,361
|
|
635,333
|
|
729,985
|
|
660,270
|
|
Recognised in profit or loss
|
|
|
|
|
|
|
|
|
|
Tax expense
|
|
(323,209)
|
|
(435,828)
|
|
(682,668)
|
|
(24,937)
|
|
Transferred to held for sale -
discontinued operations
|
|
(122,597)
|
|
-
|
|
182,044
|
|
-
|
|
At
31 December (asset)/liability
|
|
(216,445)
|
|
199,505
|
|
229,361
|
|
635,333
|
|
|
|
|
|
|
|
|
|
|
Details
of the deferred tax liability and amounts recognised in the profit
or loss are as follows:
|
Group
|
|
Accelerated capital
allowances
|
|
Business
combinations
|
|
Other temporary and
deductible differences
|
|
Total
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
Balance 1
January 2022
|
|
55,230
|
|
832,599
|
|
(37,787)
|
|
850,042
|
|
Charges/(credited) to profit or loss
|
|
1,657
|
|
(84,353)
|
|
(641,668)
|
|
(724,364)
|
|
Transferred to held for sale - discontinued
operations
|
|
103,683
|
|
-
|
|
-
|
|
103,683
|
|
Balance 31 December
2022
|
|
160,570
|
|
748,246
|
|
(679,455)
|
|
229,361
|
|
|
|
|
|
|
|
|
|
|
|
Balance 1
January 2023
|
|
160,570
|
|
748,246
|
|
(679,455)
|
|
229,361
|
|
Charges/(credited) to profit or loss
|
|
52,003
|
|
(322,993)
|
|
(174,327)
|
|
(445,317)
|
|
Transferred to held for sale - discontinued
operations
|
|
(489)
|
|
-
|
|
-
|
|
(489)
|
|
Balance 31 December
2023
|
|
212,084
|
|
425,253
|
|
(853,782)
|
|
(216,445)
|
|
Company
|
|
Accelerated capital
allowances
|
|
Reversal of deferred
consideration
|
|
Other temporary and
deductible differences
|
|
Total
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
Balance 1
January 2022
|
|
270
|
|
660,000
|
|
-
|
|
660,270
|
|
Charges/(credited) to profit or loss
|
|
(260)
|
|
-
|
|
(24,677)
|
|
(24,677)
|
|
Balance 31 December
2022
|
|
10
|
|
660,000
|
|
(24,677)
|
|
635,333
|
|
|
|
|
|
|
|
|
|
|
|
Balance 1
January 2023
|
|
10
|
|
660,000
|
|
(24,677)
|
|
635,333
|
|
Charges/(credited) to profit or loss
|
|
-
|
|
-
|
|
(435,828)
|
|
(435,828)
|
|
Balance 31 December
2023
|
|
10
|
|
660,000
|
|
(460,505)
|
|
199,505
|
|
|
|
|
|
|
|
|
|
|
27. Share capital
|
|
|
Authorised
|
|
|
|
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
|
|
Number
|
|
£
|
|
Number
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares of 0.2p
each
|
|
95,331,236
|
|
190,662
|
|
95,331,236
|
|
190,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allotted, issued and fully
paid
|
|
|
|
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
|
|
Number
|
|
£
|
|
Number
|
|
£
|
|
Ordinary shares of 0.2p each
|
|
|
|
|
|
|
|
|
|
At 1 January
|
|
95,331,236
|
|
190,662
|
|
95,331,236
|
|
190,662
|
|
Other issues for cash during the
year
|
|
-
|
|
-
|
|
-
|
|
-
|
|
At
31 December
|
|
95,331,236
|
|
190,662
|
|
95,331,236
|
|
190,662
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares rank equally as
regards to dividends, other distributions and return on capital.
Each ordinary share carries the right to one vote.
28. Reserves
Financial instruments issued by the
Group are classified as equity only to the extent that they do not
meet the definition of a financial liability or financial
asset.
The following describes the nature
and purpose of each reserve within equity:
|
Reserve
|
Description and purpose
|
|
|
|
|
Share capital
|
Amount subscribed for share capital
at nominal value.
|
|
Share premium
|
Amount subscribed for share capital
in excess of nominal value less transaction costs.
|
|
Retained earnings
|
All other net gains and losses and
transactions with owners (e.g., dividends) not recognised
elsewhere.
|
29. Share-based payment
The Group operates two equity
settled share-based remuneration schemes: a United Kingdom tax
authority approved scheme and an unapproved scheme. Under the
schemes the only vesting condition is that the individual remains
an employee of the Group over the vesting period.
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
|
|
Weighted average exercise
price
|
|
|
|
Weighted average exercise
price
|
|
|
|
|
|
£
|
|
Number
|
|
£
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding 1 January
|
|
-
|
|
285,953
|
|
-
|
|
153,437
|
|
Granted during the year
|
|
-
|
|
-
|
|
0.11
|
|
1,264,977
|
|
Forfeited during the year
|
|
-
|
|
-
|
|
0.04
|
|
(1,132,461)
|
|
Exercised during the year
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Outstanding at 31
December
|
|
0.36
|
|
285,953
|
|
0.35
|
|
285,953
|
|
|
|
|
|
|
|
|
|
|
The exercise price of options
outstanding at 31 December 2023 ranged between £nil and £1.05
(2022: £nil and £1.03) and their weighted contractual life was 8
years (2022: 9 years). Of the total number of options outstanding
at 31 December 2023, 23,437 had vested and were exercisable (2022:
20,000). No options were exercised in the year. No options were
granted during the year (2022: fair value of each option granted
was £0.92).
No options were granted during the
year ended 31 December 2023, The following information is relevant
in the determination of the fair value of options granted during
the year ended 31 December 2022 under the equity settled
share-based remuneration schemes operated by the Group.
|
|
|
|
|
2022
|
|
Option pricing model
used
|
|
|
|
Black-Scholes
|
|
|
|
|
|
|
|
Weighted
average share price at date of grant
|
|
|
|
£1.18
|
|
Contractual life (in days)
|
|
|
|
3,653
|
|
Expected
volatility
|
|
|
|
24%
|
|
Expected
dividend yield
|
|
|
|
5%
|
|
Risk-free
interest rate
|
|
|
|
1%
|
The share-based remuneration expense
disclosed in Note 10 relates entirely to equity settled schemes.
The Group did not enter into any share-based payment transactions
with parties other than employees during the year.
30. Related party transactions
Group
During the year, Group companies
entered into the following transactions with related parties who
are not members of the Group:
|
Related
party
|
Supply of
services
|
Purchase of
services
|
Supply of
services
|
Purchase of
services
|
|
|
2023
|
2023
|
2022
|
2022
|
|
|
£
|
£
|
£
|
£
|
|
|
|
|
|
|
|
Velocity Venture Capital
Ltd[18]
|
-
|
-
|
(713)
|
222,733
|
|
Motorsport Circuit Management
Ltd14
|
-
|
-
|
11,250
|
-
|
|
N Davis[19]
|
654
|
-
|
-
|
-
|
|
SEC Newgate[20]
|
13,323
|
315,920
|
-
|
-
|
|
Oliver Rosenblatt
|
1,534
|
-
|
-
|
-
|
|
Senbla Limited
|
668
|
-
|
-
|
-
|
|
Winros[21]
[22]
|
-
|
3,229,543
|
-
|
794,458
|
|
|
|
|
|
|
In addition, at 31 December 2023,
the Group owed £375,000 to Nicola Foulston as part of the
settlement agreement (total settlement was £500,000, £125,000 was
paid before year end).
In addition, during the year, £8,687
of contingent work was performed by the Group in relation to a
Conditional Fee Agreement with Winros (2022: £19,480).
At 31 December, amounts due to
related parties were as follows:
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
SEC Newgate
|
|
150,620
|
|
-
|
|
Winros
|
|
102,412
|
|
-
|
|
|
|
|
|
|
At 31 December, amounts due from
related parties were as follows:
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
SEC Newgate
|
|
5,285
|
|
-
|
|
N Davis19
|
|
163
|
|
-
|
|
Senbla Limited
|
|
668
|
|
|
|
|
|
|
|
|
Sales and purchase of services to
related parties were conducted on an arm's length basis on normal
trading terms.
Total remuneration of Key Management
Personnel during the year was £3,653,005 (2022: £1,285,916).
Further details of directors' remuneration are given in the
Directors' Report.
|
30.
|
Related party transactions (continued)
|
Company
In addition to the amounts disclosed
in the Directors' Report, the Company has entered into the
following transactions with related parties.
During 2023, the Company reimbursed
fees and expenses paid on its behalf by RBGLS totalling £642,109
(2022: £2,571,884). At 31 December 2023, the company was owed
£43,532,103 by RBGLS (2021: £48,401,054) and owed £2,318,419 to RBL
Law (2022: £2,226,035).
During 2023, Convex Capital Limited
reimbursed fees and expenses paid on its behalf by the Company
totalling £887,016 (2022: £571,264). At 31 December 2023, the
company was owed £82,692 by Convex Capital Limited (2022: £647,324
owed to Convex Capital Limited).
During 2023, LionFish Litigation
Finance Limited reimbursed fees and expenses paid on its behalf by
the Company totalling £564,203 (2022: £1,067,602). At 31 December
2023, there were no amounts owing to or from LionFish Litigation
Finance Limited (2022: £4,766,624 owed by LionFish Litigation
Finance Limited).
31. Notes supporting statement of cash
flows
Non-cash transactions from financing
activities are shown in the reconciliation of liabilities from
financing transactions below:
|
|
|
Non-current loans and
borrowings
|
|
Current loans and
borrowings
|
|
Total
|
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
At
1 January 2022
|
|
17,000,000
|
|
2,129,592
|
|
19,129,592
|
|
Cash flows (net)
|
|
3,000,000
|
|
-
|
|
3,000,000
|
|
Non-cash flows
|
|
|
|
|
|
|
|
Interest accruing in year
|
|
-
|
|
76,048
|
|
76,048
|
|
At
31 December 2022
|
|
20,000,000
|
|
2,205,640
|
|
22,205,640
|
|
|
|
|
|
|
|
|
|
At
1 January 2023
|
|
20,000,000
|
|
2,205,640
|
|
22,205,640
|
|
Cash flows (net)
|
|
2,687,488
|
|
(156,425)
|
|
2,531,063
|
|
Non-cash flows
|
|
|
|
|
|
|
|
Interest accruing in year
|
|
-
|
|
575,191
|
|
575,191
|
|
At
31 December 2023
|
|
22,687,488
|
|
2,624,406
|
|
25,311,894
|
|
|
|
|
|
|
|
|
32. Restatement of prior year
The 2022 comparatives have been
restated in these financial statements to include the effect of the
adjustments as stated in Note 2. The following table presents the
impact of these restatements.
Restatement to 2022 opening balances
|
|
|
31 December
2021
|
|
|
|
1 January
2022
|
|
|
|
As originally
presented
|
|
Adjustment
(i)
|
|
Restated
|
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
Trade and other
receivables[23]
|
|
6,675,538
|
|
(273,094)
|
|
6,402,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Retained earnings
|
|
11,113,365
|
|
(273,094)
|
|
10,840,271
|
|
|
|
|
|
|
|
|
Restatement to 2022 statement of comprehensive
income:
|
|
|
31 December
2022
|
|
|
|
31 December
2022
|
|
|
|
As originally
presented
|
|
Adjustment
(i)
|
|
Restated
|
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
Gains on litigation
assets
|
|
3,821,700
|
|
(1,800,000)
|
|
2,021,700
|
|
|
|
|
|
|
|
|
|
Disbursement asset
revenue
|
|
-
|
|
2,847,487
|
|
2,847,487
|
|
|
|
|
|
|
|
|
|
Disbursement asset
expenditure
|
|
-
|
|
(3,241,507)
|
|
(3,241,507)
|
|
|
|
|
|
|
|
|
|
Non-underlying items:
|
|
|
|
|
|
|
|
Contract assets - damage based
agreement asset impairment
|
|
-
|
|
(6,670,481)
|
|
(6,670,481)
|
|
Release of onerous contract
provision
|
|
-
|
|
(562,979)
|
|
(562,979)
|
|
Trade receivables - provision
against damages based agreement receivable
|
|
-
|
|
(1,296,470)
|
|
(1,296,470)
|
|
Tax expense
|
|
1,932,586
|
|
(2,401,704)
|
|
(469,118)
|
|
|
|
|
|
|
|
|
|
Breakdown of tax adjustment
|
|
|
|
|
|
|
|
Transferred to assets held for sale
(Note 13)
|
|
|
|
(215,898)
|
|
|
|
Restatement (i)
|
|
|
|
(2,185,806)
|
|
|
|
|
|
|
|
(2,401,704)
|
|
|
|
|
|
31 December
2022
|
|
|
|
31 December
2022
|
|
|
|
As originally
presented
|
|
Adjustment
(i)
|
|
Restated
|
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to
the ordinary equity holders of the parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (pence) from continuing
operations
|
|
8.18
|
|
(9.91)
|
|
(1.73)
|
|
Diluted (pence) from continuing
operations
|
|
8.17
|
|
(9.89)
|
|
(1.72)
|
|
|
|
|
|
|
|
|
|
Basic (pence) from total
operations
|
|
4.41
|
|
(8.96)
|
|
(4.55)
|
|
Diluted (pence) from total
operations
|
|
4.40
|
|
(8.94)
|
|
(4.54)
|
Restatement to 2022 statement of financial
position:
|
|
|
31 December
2022
|
|
|
|
1 January
2023
|
|
|
|
As originally
presented
|
|
Adjustment
(i)
|
|
Restated
|
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
Trade and other
receivables[24]
|
|
10,603,024
|
|
(10,603,024)
|
|
-
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Provisions
|
|
(211,536)
|
|
(394,020)
|
|
(605,556)
|
|
Tax liabilities
|
|
(1,601,655)
|
|
2,258,637
|
|
656,983
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
Deferred tax
|
|
(744,328)
|
|
514,967
|
|
(229,361)
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Retained earnings
|
|
11,996,470
|
|
(8,811,238)
|
|
999,426
|
|
|
|
|
|
|
|
|
|
Breakdown of tax
adjustments
|
|
|
|
|
|
|
|
|
|
Tax
liabilities:
|
|
|
|
|
Transferred to assets held for sale (Note 13)
|
|
690,559
|
|
|
Restatement (i)
|
|
1,568,079
|
|
|
|
|
2,258,637
|
|
|
|
|
|
|
|
Deferred
tax:
|
|
|
|
|
Transferred to assets held for sale (Note 13)
|
|
(102,760)
|
|
|
Restatement (i)
|
|
617,727
|
|
|
|
|
514,967
|
|
|
|
|
|
|
|
|
|
|
|
(i) A
prior period adjustment has been made for incorrect accounting
policies that were previously adopted in relation to disbursements
incurred on two damages based agreements.
The
disbursements were previously held on the balance sheet as
Litigation Assets and measured the assets under IFRS 9 at fair
value through profit and loss.
Based on
the substances of the underlying agreements for the two damages
based agreements, the recovery from the client of disbursements
represents a revenue stream arising from a costs to fulfil a
contract with a customer and therefore falls within the scope of
IFRS 15.
For the
first case, the disbursements are payable to the Group, only if the
case wins or where the client or the Group terminates the
engagement. Under IFRS 15, this case is treated as a contract asset
and an impairment assessment is performed under IFRS 15. Management
have reassessed the probability of success in this case and
determined that during the year ended 31 December 2022, the
probability of success reduced from 90% to 50%, this reassessment
is based on the information available at that point in time,
hindsight was not applied when making this reassessment. The
reduction in the probability of success resulted in a write off of
the contract asset at that time.
Additionally, the reduction in probability of success from
90% to 50% resulted in this case becoming an onerous contract and
as such, the costs to fulfil the contract were provided
for.
For the
second case, the disbursements are recoverable in a win or lose
situation. As such, the revenue recognition point is the point at
which the expense is incurred by the Group. IFRS 15 requires the
presentation of any unconditional rights to consideration as a
receivable separately from contract assets and an expected credit
loss (ECL) assessment is performed at each year end.
The Group
has performed an ECL assessment as each period end and based on
management's knowledge of the case and parties involved at each
period end, hindsight has not been applied in making this
assessment. The receivable associated with this damages based
agreement has been fully provided for at each year end.
33. Contingent liabilities
The Company has been informed that
HMRC has started an inquiry into the valuation of employee related
securities issued by the Company in April 2018 prior to the IPO.
HMRC have queried the issue of shares between 4 April 2018 and 16
April 2018 at a par value. A valuation of the shares at above the
issue price could result in a liability to the recipient of the
issued shares which would be required to be collected by the
Company and paid to HMRC. Any liability would be re-imbursed in
full by the recipient. The directors' belief is that the
investigation is without merit.
The Group is involved in two claims
from current or previous employees. The claim related to a previous
employee has gone to a tribunal and the Group is awaiting the
outcome of that tribunal. The claim related to a current employee
has not yet reached a tribunal. Based on legal advice taken,
management is confident that both claims are without merit and
await a successful outcome to both. As such, no contingent
liability has been recognised during the period in relation to
them.
34. Events after the reporting date
On 22 February 2024, the Group
raised £0.9 million before expenses through the issue of new
ordinary shares. A further £2.1 million before expenses was raised
through the issue of new ordinary shares on 12 March 2024. The
fundraising was strongly supported by existing institutional
shareholders. Additionally, certain directors subscribed for £1.0
million of shares as part of the fundraise. The purpose of the
raise was to provide additional working capital to the
Group.
On 28 March 2024, the Group
completed the disposal of Convex Capital to a joint venture led by
its management team. Under the terms of the agreement, the Group
received initial consideration of £2.0 million with up to another
£600,000 payable on completion of certain subsequent
transactions.
Following the completion of the
disposal of Convex, Ian Rosenblatt stepped down from the Board. Ian
remains the Group's largest shareholder and largest revenue
earner.
[1] All measures apart
from net debt and including prior year comparatives are shown on a
continuing operations basis unless otherwise stated (Convex Capital
and LionFish Litigation Finance are treated as discontinued
operations)
[2] The Group presents
adjusted EBITDA and loss before tax as an operating KPI, they are
adjusted for one off costs that are considered to be exceptional,
refer to Note 1 for further information
[3] In the trading
update announced on 18 December 2023, the Group indicated that
Adjusted EBITDA would be approximately £4.0m for the year. As part
of the audit process, it was concluded that certain assets relating
to Damages Based Agreements should be treated under IFRS 15, rather
than IFRS 9. While a number of factors impacted the final Adjusted
EBITDA, the principal one was the change in accounting treatment.
The impact of this change in treatment is one off in
nature.
[4] All measures apart
from net debt and including prior year comparatives are shown on a
continuing operations basis unless otherwise stated (Convex Capital
and LionFish Litigation Finance are treated as discontinued
operations)
[5] All measures apart
from net debt are shown on a continuing operations basis unless
otherwise stated. Prior year comparatives are also shown on a
continuing operations basis. Further details on discontinued
operations can be found in Note 13.
[6] All measures apart
from net debt are shown on a continuing operations basis unless
otherwise stated. Prior year comparatives are also shown on a
continuing operations basis. Further details on discontinued
operations can be found in Note 12.
[7] All measures apart
from net debt are shown on a continuing operations basis unless
otherwise stated. Prior year comparatives are also shown on a
continuing operations basis. Further details on discontinued
operations can be found in Note 13.
[8] Comparatives have
been restated to present Convex as a discontinued operation. Refer
to Notes 1 and 13 for further details.
[9] All measures apart
from net debt are shown on a continuing operations basis unless
otherwise stated. Prior year comparatives are also shown on a
continuing operations basis. Further details on discontinued
operations can be found in Note 13.
[10] Comparatives have been restated to present Convex as a
discontinued operation. Refer to Notes 1 and 13 for further
details.
[11] Comparatives have been restated to present Convex Capital as a
discontinued operation. Refer to Note 13 for further
details.
[12] Comparatives have been restated to present Convex as a
discontinued operation. Refer to Note 13 for further
details.
[13] Comparatives have been restated to present Convex as a
discontinued operation. Refer to Note 13 for further
details.
[14] No remuneration disclosed as
S Drakeford-Lewis was appointed on 31 December 2022
[15] £292,500 of the total
related to termination payment
[16] Bonuses paid during
the year ended 31 December 2023 relate to 31 December 2022
results.
[17] LionFish Litigation
Finance Limited was sold in July 2023.
[18] A company controlled
by Nicola Foulston
[19] Invoice raised during
2023, relating to services supplied during 2022, invoice paid post
year end
[20] Included within
purchase of services is £103,920 relating to non-underlying
items
[21] A partnership in which
Ian Rosenblatt is a partner
[22] Included within
purchase of services is £209,456 relating to
disbursements
[23] Damages based
agreements originally presented as "litigation assets"
[24] Damages based
agreements originally presented as "litigation assets"