The directors present the strategic report for the year ended 31 August 2024.
Express Solicitors Limited is a specialist claims handling solicitors practice, principally but not exclusively representing injured customers throughout England and Wales.
The firm does have a number of business-to-business relationships but at its core the firm is a business to consumer model, based on advertising directly to the target consumer groups who then directly engage with the firm through a variety of communication channels, tailored to the needs of the potential customer, including the bespoke needs of vulnerable customers.
The firm’s core areas of activity are organised into five specialist departments, namely:
· Occupiers Liability/Public Liability/Other Personal Injury Claims;
· Employers Liability Personal Injury Claims;
· Road Traffic Accident Personal Injury Claims;
· Clinical Negligence Claims;
· Consumer/Financial Claims
Underpinning the firm’s continued strong growth is the significant increase in marketing investment and attracting and retaining high-quality legal and non-legal talent. No win no fee personal injury work is done upon the basis of payment of fees only when the case is won and concluded. This means that significant cash is invested in personnel and other overheads in carrying out the work before the fees are realised.
There remains continued focus on the efficient progression of claims, which optimise customer service standards, outcomes and cash collections.
The business continues to focus on efficient generation of new cases and continues to examine a healthy range of opportunities to accelerate the future growth based on organic but also further M&A activity.
There is a very high degree of confidence in the firm undertaking further controlled but aggressive growth in the future, underpinned by a strong foundation and continued focus to enhance the governance and decision-making framework, which is ultimately overseen by the Board of directors.
In this financial year, Amelans Solicitors, Jefferies Solicitors, and Michael Halsall Solicitors which were acquired in the previous financial year were hived up into the main Express business in this financial period. Once hived up these businesses were no longer required and as such these investments were written off the balance sheet which has created an overall loss for the business.
Legislation
The Civil Liability Act came into effect from May 2021. The Civil Liability Act produces a lower than previously allowed tariff for most of the lower value road accident whiplash injuries and doesn’t allow for any payment of legal costs other than those from client to solicitor, so doesn’t allow for a payment of any legal costs from the relevant Defendant’s insurers so the only source of income for Claimant solicitors is from the clients themselves.
The Tariff introduced on 31 May 2021, which fixed the level of compensation an injured person receives for a whiplash type injury sustained in a road traffic accident, had a statutory requirement to be reviewed by the Lord Chancellor by 31 May 2024. In February the government issued a call for evidence to support this review.
The review was completed before 31 May 2024 but was not formally announced before the calling of the general election, which halted its progress.
On 21 November 2024, the government confirmed they were supportive of increasing the levels of compensation on an inflationary basis, in the range of 14-15% and further committed to continue to review the appropriate rates every three years to take account of inflation. The increases are expected to take effect in April or October 2025, most likely April.
The business undertakes a limited level of low value RTA claims valued using the Tariff, as such the impact is predicted to be limited but given the business model is in part based upon securing a percentage of legal costs from the customer’s compensation, any increase in the Tariff will only positively improve performance.
These new rules were signposted long in advance and indeed due to Covid-19 and other matters their implementation was delayed, and during all of that time the business has redirected its marketing strategies to avoid those now lower value cases and pivot towards the road accident cases which are exempted, a long list including pedestrians, cyclists, motorcyclists etc. and/or higher value motor accident work, and to increase its volumes of other types of work, for example Employers Liability, Occupiers and Public Liability claims.
That change in marketing strategy has been successful and so whilst the business accepts that that particular strand of RTA work will be done in vastly reduced numbers by the business and will be less profitable, the business’s overall underlying profitability gives us a particular type of work not reliant on that sector and will the Directors believe continue to grow.
The business does not predict any further material legislative reform in the short to medium term and the common industry view is that the new Labour government is more sympathetic to the needs of the consumer who has a legitimate claim for compensation than their predecessors.
Liquidity
The continued investment in the growth of the business has purposefully led to an increase in borrowings. The Revolving Credit Facility stands at £8m post year end with an expiry date of 31 December 2025. It is likely that further funding will be sought to match the firm’s growth ambitions.
Cash flow
Cash flows are actively managed by monthly covenant reporting to the bank including a continual 6 month look forward covenant to ensure future compliance. Cash flows are reviewed on a daily basis and long-term forecasts are prepared to ensure that the firm has adequate cash available at all times. The firm forecasts strong cashflows going into 2025 which it plans to invest further to aid future growth.
Turnover has grown to £49.6m, up by 17%.
EBITDA for the group was £9m. EBITDA for the company was £15m.
Average staff numbers have grown 27% to 670 in the year. (2023: 527). With 716 employees at 31 August 2024.
At the end of the financial year the firm’s net asset value amounted to £11.8m.
Case numbers at the end of the financial year were in excess of 24,000.
The business currently has a 4.0 Google rating and 4.7 Trust Pilot rating for customer satisfaction as well as achieving a top 70 position in the coveted The Lawyer’s UK top 200.
The business onboarded in excess of 15,000 new cases in FY24.
Key stakeholders and Section 172 Statement by the Directors in performance of their statutory duties in accordance with section 172(1) Companies Act.
During the year ended 31 August 2024, The Board of Express Solicitors Limited considers, as individuals and collectively, that it has acted in a way it considers to, in good faith, would most likely promote the success of the Company for the benefit of its members as a whole, by having regard, among other matters, to the:
· likely long-term consequences of any decision;
· interests of the Company's employees;
· need to foster the Company's relationships with its clients, suppliers and others;
· impact of the Company's operations on the community and environment;
· desirability of the Company maintaining its reputation for high standards of business conduct and;
· need to act fairly as between members of the Company Stakeholder engagement
It is important to the Board that we develop strong and positive relationships with our employees, clients, suppliers and funding partners as well as government and regulators. We also strive to make a positive contribution to the environment and local communities in which we operate. A summary of some key activities is below.
Employees
At Express Solicitors, we rate skill and ability above all else and therefore our recruitment policy encourages applications from all. Our employees are our most important asset and it’s our employees who have made Express Solicitors the success it is today. Our recruitment process consolidates that success. We notify candidates as part of the interview joining process about accessibility and the ground floor meeting rooms and enquire about reasonable adjustments during the process. We work with individuals to accommodate their needs and are a flexible and responsive employer. We have a monthly internal newsletter to all staff to keep them updated on the company’s activities.
The Directors of the Company are active and engaged with employees.
The Directors actively consult the Management Information (MI) on a regular / daily basis. There is always a finger on the pulse in terms of reporting metrics daily, weekly and monthly. There is a weekly meeting with the HR Partner where a full job list is reviewed and actioned each week which is documented and decisions regarding employment, employee welfare etc is taken. There is a strong understanding of staff interests by the Board.
The Board promotes effective communication with our employees. On a regular basis the Board meets with Partners in the Company to update them on key new initiatives and provide a platform for discussion.
Every year a staff survey is conducted to capture staff feedback and views - this is reviewed and considered by the Board. In addition, regular wellbeing initiatives are promoted and supported by the Board.
Customers
The Board mainly engages indirectly with clients through the Partners who provide information about case progression and also by utilising the extensive suite of management information reports to monitor overall service delivery.
In addition, the Board regularly reviews customer feedback on TrustPilot and liaises with the Complaints Partner to better understand any material customer concerns.
Suppliers
Information regarding key suppliers is provided to the Board by the Partners responsible to managing those relationships. The Board continually reassesses its relationships with key marketing providers and approved engagement with additional providers as well as investigating opportunities to buy full firm caseloads or entities. The Board is committed to fair treatment and payment of suppliers.
Investors and funders
The shareholders of the business are also members of the Board. As such they are fully aware of and actively involved in all decisions made.
In addition, the Board recognises the key relationships with the external funders of the business. The funders are provided with monthly updates on the Company's performance and activities.
Data management
The Company's IT infrastructure is managed by a Board Member who works closely with the Data Protection Officer with regards to data security and management.
The members of the Board are provided with regular updates on any changes or developments in the IT infrastructure or data protection framework.
The security and confidential handling of client data is core to the operations of a law practice and an encrypted, industry standard application, Proclaim, is used to store all our client data. This is hosted by the Company, within its data security perimeter.
The Board also ensure that our staff are regularly trained on the Company's procedures to comply with the requirements of GDPR and other key elements of the Company's data security framework.
The business is also working towards LOCS:23 Certification. The Legal Services Operational Privacy Certification Scheme (LOCS) is designed to assist legal service providers demonstrate compliance with UK data protection law when processing client’s personal data. This alongside work on Cyber Essentials (the Government backed scheme created as a cost-efficient solution to strengthening the cyber security of businesses) shows the businesses commitment to provide a secure data environment.
Environmental, Social and Governance.
The Board promotes active engagement with our local communities and is conscious of its responsibilities to the environment.
The business has invested heavily in heat pumps for the headquarters, removing old inefficient gas boilers, as well as promoting a cycle to work scheme, and company electric car scheme.
The Board supports employee engagement and invests and promotes it’s employee Diversity & Inclusion Group. The business has a number of close connections with a number of charities, including Burning Nights, The Maggie Oliver Foundation, Headway and Forever Manchester, a charity that raises money to fund and support community activity across Greater Manchester.
Responsibility and accountability
The Board is responsible and accountable for decisions made with regards to the management of the Company.
As Express Solicitors provides legal services to our clients, The Board ensures that the Company's procedures comply with the expectations and requirements of the Solicitors Regulatory Authority and the Board regularly reviews and evaluates key processes and controls in this area.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 August 2024.
The results for the year are set out on page 14.
Ordinary dividends were paid amounting to £414,100. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The business continues to invest in the development of its own website in order to drive direct customers
to the business. The business also invests heavily in the continued development of its claim management
system ‘Proclaim’. The in house Proclaim development team continually looks to streamline processes and
increase the efficiency and usability of the system in order to aid the ever-growing workforce and
caseload.
Details of how the board have consulted and interacted with employees can be found within the section
172 paragraph within the strategic report.
MHA MHA were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per full time employee.
The owners and employees at Express take climate change issues and the business’s and the employees’
personal responsibility seriously. The topic is regularly reviewed at Board level and suggestions from staff
and staff committees are encouraged and regularly reviewed/implemented.
Specific Initiatives over the last few years include:
• Heavy investment in the refurbishment of the newly acquired Headquarters included stripping out the entire gas boiler and heating system and replacing them with modern, efficient reverse-cycle air conditioning (air source heat pumps). This is a much more efficient form of heating and cooling. As well as being more environmentally friendly, it is also more cost effective for the business long term.
• As part of Headquarters refurbishment, a large number of single glazed windows were replaced with double glazed windows. Preventing unnecessary heat loss through old uninsulated glazing.
• All of the buildings’ lighting have been changed from fluorescent to more efficient LED units. All of the business’s computer monitors are energy efficient, modern LCD type.
• Driven of course by the response to the Covid pandemic, and the high growth over past few years we have expanded the number of days that people can permanently work from home. The vast majority of employees work a 3/2 pattern, i.e. in the office 50% of the time and working from home 50% of the time. This has obviously had a corresponding reduction in travel to work journeys and therefore a lowering of the carbon footprint.
We have audited the financial statements of Express Solicitors Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 August 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, is detailed below:
- Enquiry of management and those charged with governance around actual and potential litigation and claims;
- Enquiry of entity staff in compliance functions to identify any instances of non-compliance with laws and regulations;
- Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias;
- Reviewing minutes of meetings of those charged with governance;
- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the financial statements is located on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £3,845,312 (2023 - £8,210,177 profit).
Express Solicitors Limited (“the company”) is a private company limited by shares domiciled and incorporated in England and Wales. The registered office is South Court, 1 Sharston Road, Manchester, M22 4SN.
The group consists of Express Solicitors Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include certain financial liabilities at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where
the parent of that group prepares publicly available consolidated financial statements, including this
company, which are intended to give a true and fair view of the assets, liabilities, financial position
and profit or loss of the group. The company has therefore taken advantage of exemptions from the
following disclosure requirements for parent company information presented within the consolidated
financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: The disclosure requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Express Solicitors Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 August 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for the provision
of legal services provided in the normal course of business, and is shown net of VAT and other sales
related taxes. Revenue is recognised as earned at the point, and to the extent that, the respective
group company obtains a fair right to consideration in exchange for its performance under the
contract.
Fee income that is contingent on events outside the control of the firm is recognised when the contingent event occurs.
Turnover in respect of services provided to clients which have been recognised but not invoiced by
the balance sheet date is included in debtors as 'Amounts recoverable on contracts'.
Interest received from defendants is recognised upon receipt.
Commission and other income is recognised as earned when the company obtains a right to
consideration.
The property included within leasehold land and buildings has not been depreciated as refurbishments have been ongoing during the year enhancing the value of the property.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is 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.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Determination of whether any provision should be included in the financial statements in respect of any ongoing insurance or other claims against the company.
A specific provision is made against certain debts where the directors are not of the opinion that the debt is not fully recoverable.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The value of unbilled revenue is derived on the basis of estimates and assumptions regarding the fair value of unbilled time recorded to matters at the year end. The valuation of unbilled revenue involves significant judgement and affects the amount of revenue recognised. The valuation is based on an estimate of the amount expected to be recoverable from clients on unbilled items based on such factors as time spent per the system multiplied by average recovery rates over historic cases closed.
In assessing whether accrued income is recognised as amounts recoverable on contracts, management are required to make judgements in determining the point at which the contingency is resolved and when the fair value can be measured reliably. Where a case is contingent at the balance sheet date, no revenue is recognised, where an entitlement to income is certain, it is recognised at selling price or estimated selling price based on an analysis of historic recovery rates. The directors review historical trends to ensure that the method for accounting for the amounts recoverable on contracts is the most accurate for each claim group.
Determination of the valuation of goodwill requires the directors' view of the key underlying factors that affect the valuation of the business including future performance levels, cost of capital and cost of replacing such assets.
Tangible and intangible fixed assets are depreciated and amortised over their useful economic lives respectively. The actual useful lives of assets are assessed annually and will vary depending on a number of factors. In assessing the lives of all assets, factors such as technological advancement and current trading levels are taken into account.
Provisions are made for dilapidations in respect of leased premises. The recognition and
measurement of these provisions require estimates to be made in respect of uncertain events and amounts, with the key sources of estimation uncertainty and the judgement that has the most significant effect on the amounts recognised being in relation to the amount and timing of future cash flows required to settle any restoration obligation, and to a lesser extent the discount rate applied to those estimated cash flows. Any difference between expectations and the actual future liability will be accounted for in the period when such determination is made.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2023 - 1).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
More information on impairment movements in the year is given in note 13.
The amortisation is recognised in administrative expenses in the statement of comprehensive
income.
Tangible fixed assets with a carrying amount of £1,681,093 (2023 - £807,494) have been pledged to secure borrowings of the company.
During the year, the company hived up the trade of all its subsidiaries, and impaired the cost.
Details of the company's subsidiaries at 31 August 2024 are as follows:
The registered office addresses of the above subsidiaries are the same as the registered office for this company.
The Revolving credit facility of £8,000,000 (2023: £8,000,000) included in bank loans is secured against the assets of the company.
Included in bank loans is £3,205,490 (2023: £3,300,000) secured by a legal mortgage over the company's registered office.
The dilapidations provision reflects the anticipated costs associated with potential rectification of leased sites under the terms of the lease or licence agreement.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Each class of shares has full voting rights, the right to receive dividends and no right to participate in a distribution of capital, except on winding up.
The capital redemption reserve includes any share redemptions out of distributable profits.
Profit and loss reserves
Retained earnings includes all current and prior period retained profits and losses, less dividends payable to shareholders.
The capital contribution reserve is the difference arising on the initial recognition of interest free loans where loans are measured at the present value of future cashflows, discounted at the market rate of interest for similar loans.
The company has provided a guarantee of £450,000 (2023: £450,000) to an unincorporated partnership under common ownership in respect of a loan for the purchase of property.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The business has signed a new four year £16m facility agreement with NatWest bank, this facility replaces the £8m agreement which was set to renew in December 2025. These additional funds are there to help the business continue on its growth trajectory through both organic and a buy and build strategy.
Following the year end, all the subsidiaries shown in note 17 have entered voluntary liquidation.
During the year the group received income of £1,838,540 (2023 - £2,227,787) in respect of Ontime Reports Limited, a company in which Mr J T Maxey has a controlling interest. Of this, management and support costs received of £660,000 (2023 - £660,000) is reported within 'Other Operating Income' and the balance representing directly recharged wages and employers social security contributions, consultancy and other operating costs are netted off against expenditure incurred.
All recharges were made on an arms length basis. At the year end, £3,019,152 (2023 - £2,183,783) was owed to Ontime Reports Limited.
The company occupies premises where the directors have a personal interest. At the year end, £5,978 (2023 - £5,990) was owed from RP & JM Property Partnership.
During the year the group received income of £20,426 (2023 - £nil) and incurred expenditure of £1,499 (2023 - £369) in respect of Express Solicitors Partnership, a company in which Mr J T Maxey has a controlling interest.
At the year end, £240,235 (2023 - £180,148) was owed from Express Solicitors Partnership.
During the year the group received income of £370,672 (2023 - £nil) and incurred expenditure of £109,203 (2023 - £nil) in respect of Injury Lawyers 4U Limited, a company in which Mr J T Maxey has a controlling interest.
At the year end, £984,390 (2023 - £nil) and £1,100,000 (2023 - £1,100,000) was owed to Right Shield Insurance Limited and High Ocean Limited respectively. These companies are registered in Guernsey in which Mr J T Maxey's close family and Mr D A Slade have controlling interests.
At the year end, the company owed a director £2,344,833 (2023 - £2,742,240) in respect of a directors' loan to the company £1,943,999 included in long term creditors, the balance of £500,834 included in creditors due in less than 1 year
The directors have concluded that some prior period intra group dividends were not removed upon consolidation, with the difference included within negative goodwill. Therefore a prior period adjustment has corrected this error.
The directors have concluded that some of the loans included within "bank loans" within both the prior period parent and group financial statements within creditors due within less and after more than one year were not loans with banking institutes. Therefore a prior period reclassification of these balances to "other borrowings" has corrected these errors.