The directors present the strategic report for Horwich Farrelly Limited (the ‘Company’) and its subsidiaries (the ‘Group’) for the period ended 31 December 2024.

Results and dividends

The Group made a profit before tax in the period of £8,477,025 (prior year ending 31 December 2023: £4,105,811). The profit after tax is the profit available to shareholders and is the profit generated after all director, partners and employee salaries, and bonuses have been paid (which differs to the presentation of profit in a partnership or LLP structures more commonly found in law firms). The directors did not approve any dividends in the current period (prior year ending 31 December 2023: nil).

The principal activity of the Group is that of the provision of legal and professional services. The Company is regulated by the Solicitors Regulation Authority (SRA). It is not expected that there will be any significant changes in the principal activities.

The Group is a leading provider of legal and claims solutions to the UK & Ireland insurance markets incorporating services including real estate, dispute resolution, restructuring and insolvency, debt recovery, employment, professional indemnity and product liability.

The Group has a forward-thinking approach to innovation and technological solutions built around client needs that has saved millions of pounds for clients and achieved public recognition through several prestigious award wins in the insurance and legal sectors.

The Group has the stated vision to be the most dynamic, customer focused law firm in the UK & Ireland. The core organisational values, chosen with the help of all employees, are:

Together :     We value true partnerships, building lasting relationships internally and externally to work             towards a common purpose.

Dynamic :     We thrive on challenging convention, looking for innovative and better ways to do things.

Driven :         Our focus on successful results – for each other and for our clients – is what drives us every day.

Real :         People, not just lawyers. We’re a diverse, honest and genuine team who don’t hide behind         corporate speak.

With a clear strategy and vision, and an organisational structure with systems and processes fit for the future, HF is set to achieve its growth ambitions in a sustainable, people-focused way. As people, not just lawyers.

The Board monitors both existing and emerging risks. Many of the macroeconomic risks faced by the Group are similar to those risks faced by any business but those risks deemed to be significant to the Group are listed below. Due to the nature of the Group within legal services, many of the risks it faces are continuously ongoing.

Operational Risk

Operational risk refers to the risk of financial, reputational or other loss as a result of failed or inadequate internal processes, people, resources, or from other internal or external events (e.g. internal or external fraud, legal and compliance risks, etc.).

The Group is highly dependent on its IT infrastructure in carrying out its operations and has taken steps to reduce this risk by migrating to Cloud based software.

Liquidity Risk

Liquidity is the amount of cash and cash equivalents available at any given time to meet the Group’s financial obligations as they fall due. Liquidity risk is the risk that the Group is unable to meet these demands in a timely manner which can ultimately result in insolvency.

The collection of outstanding debt and the timely conversion of unbilled WIP to billed fees is a key measure of the Board to ensure that inflows are maintained.

The measures below show the KPIs the Group uses to manage business performance.

                2024                2023

Profit before tax –         £8,477,025            £4,105,811

EBITDA –     £9,828,051            £6,070,156

Billing –         £68,870,994            £51,516,609

LockUp* –         £31,121,114            £24,258,014

*LockUp is a measure of the total value of Work In progress (WIP) plus outstanding client debtors.

The Group continued its trend of growth seeing revenue exceed £60m for the first time. This was aided by a full year of business for the recently opened lines of Aviation, Casualty, Disease and London Markets. Additionally the Group expanded through acquisitions of the By Design Group of companies and Quigg Golden companies entering the employment, construction and procurement law sectors for the first time. This continual diversification allows the Group to present a wider service offering to prospective new clients.

The Board consider that they have acted in the way most likely to promote the success of the company for its shareholders. In doing so the Directors have paid regards to key stakeholders and other matters set out in s172(1) of the Companies Act 2006 when making decisions in the period, including but not restricted to:

• the likely consequences of any decisions in the long term;

• the interests of the Company’s employees;

• the need to foster the company's business relationships with suppliers, customers, and others;

• the impact of the company's operations on the community and the environment,

• the desirability of the company maintaining a reputation for high standards of business conduct, and

• the need to act fairly between shareholders of the company.

The disclosures set out below are some examples of how the Directors have had regard to the matters above when discharging their duties and the effect of that on certain decisions taken by them.

The Group’s business plan is to drive sustainable growth in the long term, which is in the interest of all stakeholders and this has been a key consideration to the Board in its decision making in establishing and approving the 2025 budget.

The Board takes time to consider the interests of the Group’s employees and engage with people through the use of surveys. The Board use the results from these surveys to develop action plans to assist in developing a workplace and culture to help employees reach their full potential and in turn help the Group to achieve its plans for sustainable growth.

The Group continues to invest in technology to ensure it remains ahead of the competition when it comes to innovation and added value. This was most notable in the work performed within HighFive Powered by HF Limited, a Group subsidiary and a dedicated technology solution company working to develop AI solutions for the Legal industry. The Group’s IT department were recognised in three prestigious categories this year at the British Legal Technology Awards (BLTA); Information Security Team of the Year, Technology Team of the Year and Alliance of the Year. The Group’s standing as a leader in the legal technology field has helped win work from new and existing clients.

Impact on the community and environment

The Board recognises the impact of the Group’s operations on the communities and environments in which is operates and that this is an increasing concern to stakeholders. This has shaped some of the recent considerations made within our infrastructure as detailed in our ESG statement.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2024.

The principal activity of the company and its subsidiaries continued to be that of the provision of legal and professional services.

The results for the year are set out on page 11.

No ordinary dividends were paid. The directors do not recommend payment of a dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The group's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).

The group's current policy concerning the payment of trade creditors is to:

• settle the terms of payment with suppliers when agreeing the terms of each transaction;

• ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and

• pay in accordance with the company's contractual and other legal obligations.

The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.

The group is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans.

Investments of cash surpluses and borrowings are made through banks and companies which must fulfil credit rating criteria approved by the Board.

All customers who wish to trade on credit terms are subject to credit verification procedures. Trade Receivables are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company's continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.

Information of matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.

The business has an employee share scheme as a means of further encouraging the involvement of employees in the group's performance.

The group is actively looking for expansion opportunities through winning new customers in existing lines, expansion into alternative lines of legal services and through the acquisition of firms that fit well with the business model.

The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

We present our Greenhouse Gas (GHG) Emissions Statement in line with the Companies Act 2006 and Streamlined Energy and Carbon Reporting (SECR) requirement. The table below discloses our emissions for the reporting period, annualised for comparison with prior year, and separated our into the following scopes as defined by the Environmental Reporting Guidelines. The items within each scope that are analysed are:

Scope 1 – Emissions from the combustion of fuel, namely gas consumption

Scope 2 – Indirect emissions from electricity consumption, purchased by the Company at our office premises

Scope 3 – Indirect emissions from transmission and distribution (T&D) factors associated with grid losses (the energy loss that occurs in getting the electricity from the power plant to the organisations that purchase it).

The table below outlines the emissions for Horwich Farrelly Limited, parent company only, as the subsidiary companies are outside the scope of SECR due to their company size. The methodology used in the creation of this report is the EMA SECR Methodology. This methodology is publicly available through the EMA website and has elected to use the intensity metric of Full-time equivalent (FTE) employees as an output. As a services company this is the most relevant driver of our business energy consumption.

2024 was the second year for the Group in its new head office location at MediaCity UK in Salford, Manchester. The office space has higher environmental standards and improved energy efficiency than former premises. It was also the first year that sustainability initiatives had been fully bedded in. As a result, 2024 saw a large reduction in the Group’s Scope 1 and 2 emissions, though it should be noted that the drivers of emissions, primarily number of offices and head count of employees, will likely lead to fluctuations in this measure in the future.

Scope 3 emissions from business travel continued to rise due to an increase in headcount, the expansion of the Group through acquisitions and the onboarding of new clients, all of which necessitated an increase in business travel. Continual efforts are made to reduce travel where possible and seek technological alternatives.

During the year the Group submitted to the Science Based Targets Initiative and have successfully committed to being net zero by 2050. Additionally the Group focused on improvements in data collection meaning consumption figures are more accurate and based less on estimates. There are still advances to be made leading to the recruitment of a dedicated Sustainability Manager.

Despite an increase in headcount, the large decreases in electricity and gas consumption resulted in the Company reducing its intensity ratio from 0.10 tCO2e per FTE to only 0.07 tCO2e per FTE demonstrating progress for the Group to be 100% renewable energy consumers by 2028.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.

In preparing these financial statements, International Accounting Standard 1 requires that directors:

• properly select and apply accounting policies;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

• provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

• make an assessment of the company's ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Each director in office at the date of approval of this annual report confirms that:

• so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and

• the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of any relevant audit information and to establish that the company's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

We have audited the financial statements of Horwich Farrelly Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2024 which comprise the group statement of comprehensive income, the group and parent company statement of financial position, the group and parent company statement of changes in equity, the group and parent company statement of cash flows and the group and parent company notes to the financial statements, including significant accounting policies.

The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.

In our opinion:

• the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2024 and of the group's profit for the year then ended;

• the financial statements have been properly prepared in accordance with UK adopted international accounting standards; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 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

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

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.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

• Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud; 

• Reviewing minutes of meetings of those charged with governance;

• Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection; 

• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

• Performing audit work over the risk of management bias and 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 indicators of potential bias. 

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 of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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.

Horwich Farrelly Limited is a private company limited by shares incorporated in England and Wales. The registered office is Orange Tower, 11th Floor, Media City UK, Salford, M50 2HF. The company's principal activities and nature of its operations are disclosed in the directors' report.

The group consists of Horwich Farrelly Limited and all of its subsidiaries.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) in conformity with the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.

The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.

Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.

The consolidated group financial statements consist of the financial statements of the parent company Horwich Farrelly 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 December 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.

The directors have at the time of approving the financial statements, a reasonable expectation that the truegroup has adequate resources to continue in operational existence for the foreseeable future.

The directors have prepared financial forecasts, taking into account a severe but plausible change, on the future trading performance of the business and expect the company to operate within its facilities available, which are deemed sufficient to meet the Group's liabilities as they fall due. From these forecasts and sensitivities, the directors are confident that the Group continues to be cash generative for a period greater than 12 months of signing these financial statements.

Furthermore, the Group entered into a £12m revolving credit facility during the period to utilise a flexible, longer term source of financing to support the future growth of the Group, as well as maintain the overdraft facility which is unutilised at the balance sheet date.

Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The group recognises revenue when it transfers control of a product or service to a customer.

It has been determined that no significant financing component exists in respect of the provision of legal and professional services because the period between when the entity transfers its services to a client and when the client pays for that service will generally be one year or less.

Consideration for services provided under contingent or variable fee arrangements may be paid after a longer period. In these cases, no signifcant financing component exists because the consideration promised by the customer is variable subject to the occurrence or non-occurrence of a future event that is not substantially within the control of the client or the company.

Revenue from contracts for the provision of professional services is recognised over time in the accounting period when services are rendered as the company has an enforceable right to payment for work performed to date under its client terms of engagement.

The company's contracts with clients each comprise of a single distinct performance obligation, being the provision of legal and professional services in relation to a particular matter and the transaction price is therefore allocated to this single performance obligation.

A receivable is recognised when a bill has been issued to the client, as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

Unbilled revenue is recognised as contract assets.

Contract liabilities are recognised in respect of consideration billed in advance of satisfying the performance obligation under the contract.

The group recognises revenue from the following major sources:

• Fixed fee arrangements

• Hourly rate arrangements

• Contingent arrangements

The nature, timing of satisfaction of performance obligations and significant payment terms of the group's major sources of revenue are as follows:

For fixed fee arrangements, revenue is recognised based on the stage of completion with reference to the actual services provided as a proportion of the total services expected to be provided under the contract. The stage of completion is tracked based on an average life cycle of each type of contract.

In hourly rate contracts, revenue is recognised up to the amount of fees that the company is entitled to bill for services performed to date based on contracted rates.

Under variable or contingent fee arrangements, fees may be earned only in the event of a successful outcome of a client's claim. Fees under these arrangements may be fixed or may be variable based on a specified percentage of damages awarded under a claim.

For variable or contingent fee arrangements management makes a detailed assessment of the amount of revenue expected to be received and the probability of success of each case. Variable consideration is recognised over the duration of the matter only to the extent that it is highly probable that the amount recognised will not be subject to significant reversal when the matter is concluded based on the expected amount recoverable at that point in time. In such circumstances, a level of judgement is required to determine the likelihood of success of a given matter, as well as the estimated amount of fees that will be recovered in respect of the matter. Where the likelihood of success of a contingent fee arrangement is less than highly probable, the value recognised in contract assets is further reduced to reflect this uncertainty.

Goodwill represents the excess of the cost of acquisition of businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less impairment losses.

The gain on a bargain purchase is recognised in profit or loss in the period of the acquisition.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not subsequently reversed.

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

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 income statement.

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the parent company. 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 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). Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

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.

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.

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within current liabilities.

Financial assets are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

Contract assets and trade receivables which are receivable within one year are initially measured at fair value. These assets are subsequently measured at amortised cost, being the transaction price less any amounts settled and any impairment losses.

Financial assets, other than those measured at fair value through profit or 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 of the investment have been affected.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

The group recognises financial debt when the group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.

Equity instruments issued by the parent company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer payable at the discretion of the company.

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 income statement 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 is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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 income statement, 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 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.

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 inventories or non-current 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 group 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.

At inception, the group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the group's estimate of the amount expected to be payable under a residual value guarantee; or the group's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will be received.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

Employee benefit trust

Assets and liabilities held in the Horwich Farrelly Limited Employee Benefit Trust are recognised as assets and liabilities of the Company, with the loan contributions made by the company to the Trust being included as a separate equity reserve. When the assets are disposed of, or vested through a share based payment, a transfer is made between other reserves and retained earnings to recognise a realised gain or loss on those investments.

At the date of authorisation of these financial statements, the following standards and interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the United Kingdom):

The adoption of all the above standards is not expected to have any impact on the Group's financial statements.

In the application of the company’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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

A level of judgement is required to determine the likelihood of success of a given matter for contingent fee arrangements. This is determined on a contract-by-contract basis after considering the relevant facts and circumstances surrounding each matter. The valuation exercise is conducted by experienced fee earners with detailed understanding of the cases. The carrying value of contingent fee arrangements at 31 December 2024 was £1,137,922 (2023: £800,953).

Management make judgements regarding the date of control and the fair value of an acquisition in accordance with IFRS 10. The judgement considers the individual legal agreements on each transaction and the date at which the company starts to exercise control over the activities of the subsidiary, usually the date of exchange of contracts. Financial performance of the acquisitions are included in the consolidated group results from the deemed date of control.

The group estimated the minimum present value of lease payments using assumptions for the implicit interest rate in the leases. If the implicit rate of interest is not readily available, the group estimates this rate to be that of the incremental cost of borrowing to reflect an interest rate that the group would have to borrow to obtain an asset of similar value to the right of use asset in a similar economic condition.

The group's estimate of cost of borrowing is 5%, being the cost of borrowing at the inception of the leases.

The valuation of amounts recoverable on contracts ("AROC") involves the use of estimates of the likely recovery rate which will be made on the gross value of chargeable time recorded to each matter.

This percentage represents management's best estimate of future value. The estimation process takes into account past histories of billing and stage of completion. The amount recognised in AROC at the year end was £11,360,268 (2023: £9,080,782).

The average monthly number of persons (including directors) employed by the group during the year was:

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2023: 3).

The charge for the year can be reconciled to the profit per the income statement as follows:

Goodwill is tested annually for impairment. It is allocated to cash generating units as follows:

The additions in year relate to the acquisition of Law By Design Limited, HR Solutions by Design Limited and Investigations by Design Limited on 31 July 2024 and the Doon Limited group on 31 October 2024. The group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The directors have reviewed the goodwill for impairment as at 31 December 2024 and do not consider there to be any any indicators that the value may be impaired.

Goodwill has been assessed by determining a value in use using a discounted cash flow model based on forecasted post-tax free cash flows, and comparing this to the carrying value of the goodwill. Where the carrying value exceeds the value in use the asset is not impaired.

The discount cash flow has been calculated with projections based on financial budgets. The discount rate has been based on the group's cost of capital at 10%.

The key assumptions used are that turnover will grow organically, driven by the acquisitions allowing the company to offer additional services from their existing service lines. Gross profit margins are also expected to grow driven by the organic growth again. The value in use calculations indicate a significant headroom in excess of carrying value.

Due to the large headroom in the calculations and sensitivity analysis performed, it is the directors' opinion that no individual assumption is materially sensitive.

Details of the company's subsidiaries at 31 December 2024 are as follows:

The following subsidiaries consolidated within these financial statements have claimed audit exemption under section 479A of the Companies Act 2006:

• Law by Design Limited

• Investigations by Design Limited

• HR Solutions by Design Limited

• Quigg Golden Limited

• Quigg Golden NI Limited

Except as detailed below, the carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the group's maximum exposure to credit risk.

The group does not hold any collateral or other credit enhancements to cover this credit risk.

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

Trade receivables are stated net of provision for credit losses. To measure this, trade receivables are split between insurance and non insurance clients, and then provided against 1% of these losses. This is based on a mixture of historical loss rates as well as an estimate made by management for future losses. The loss allowance for the group at year end is £254,057 (2023: £299,717).

No significant receivable balances are impaired at the reporting end date.

Contract assets consist of unbilled revenue in respect of legal and professional services performed to date.

Contract assets in respect of hourly rate agreements and fixed fee arrangements are billed at appropriate intervals, in line with the performance of the services. Where such matters remain unbilled at the period end the asset is valued on a contract-by-contract basis at its expected recoverable amount, based on work completed to date or a percentage completion basis in the case of fixed fees.

The company undertakes some matters based on contingent fee arrangements. These matters are billed when the claim is successfully settled. For matters ongoing at the period end, each matter is valued based on its specific circumstances.

If the liability of a matter has been admitted and performance obligations satisfied, such that it is no longer contingent, these matters are valued based on the expected recoverable amount. Due to the complex nature of these matters, they can take a considerable time to be finalised therefore performance obligations may be settled in one period but the matter not billed until a later financial period.

If the performance obligations for contingent matters have not been satisfied at the reporting date, these assets are valued on a contract-by-contract basis taking into account the expected recoverable amount and the likelihood of success. Where the likelihood of success of a contingent fee arrangement is less than highly probably, the amount recognised in contract assets has been reduced to reflect this uncertainty.

Trade receivables

Trade receivables are recognised when a bill has been issued to a client, as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. Trade receivables also includes disbursements.

Contract liabilities

When matters are billed in advance, this is recognised in contract liabilities and released over time when the services are performed.

The following table details the remaining contractual maturity for the group's financial liabilities with agreed repayment periods. The contractual maturity is based on the earliest date on which the group may be required to pay.

Liquidity risk arises from the company's management of working capital. The company manages this risk and its cash flow requirements through detailed annual and monthly cash flow forecasts. These forecasts are reviewed regularly to ensure that the company has sufficient working capital to enable it to meet all of its short term and long term cash flow needs.

In the prior year, the non-current liabilities incurred an interest charge of 2% plus base rate per annum, set by the Bank of England.

Post year end, the non-current liabilities of £7m were settled and therefore has been classified as a current liability at the balance sheet date.

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

The bank overdraft is secured by way of a fixed and floating charge from the company over all assets, as well as a cross guarantee from the company and its subsidiaries.

In the current year, the Group entered into a new financing facility which expires in 2026.

The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period.

In common with all comparable practices, the company is involved in a number of disputes in the ordinary course of business which may give rise to claims. Provision is made in the financial statements, within provisions for all claims where costs are likely to be incurred. This represents the cost of defending and concluding claims and any excesses that may become payable. The company carries professional indemnity insurance and no separate disclosure is made of the cost of claims covered by insurance as to do so could seriously prejudice the position of the company.

Using the definitions detailed above, the Directors do not consider it necessary to recognise a provision as at the current year end.

The group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund. There was £305,906 owing at the balance sheet date (2023: £209,031).

The Ordinary shares carry voting and distribution rights, whereas the A Ordinary shares and B Ordinary shares carry distribution rights but not voting rights.

On 18 June 2024, the company issued 400 £0.01 ordinary B shares.

On 19 June 2024, the company issued 38,100 £0.01 ordinary B shares.

On 20 June 2024, the company issued 1,800 £1 ordinary A shares.

On 29 September 2024, the company repurchased 200 £1 ordinary A shares.

On 04 October 2024, the company repurchased 100 £0.01 ordinary B shares.

The capital redemption reserves arises from a purchase of its own shares by the company. This balance represents the par value of shares repurchased by the company.

On 31 July 2024 the group acquired 100 percent of the issued capital of By Design group of companies. See note 13 for list of companies acquired. Also on 31 October 2024, the company has purchased 100 percent of the issued capital of the 'Doon Group' (consisting of Doon Limited and its wholly owned subsidiaries; Quigg Golden Limited, Quigg Golden NI Limited and Quigg Golden Ireland Limited) as well as the trade and assets of Quigg Golden Solictors Limited and Quigg Golden Solicitors LLP, a limited liability partnership registered in the Republic of Ireland.

The goodwill arising on the acquisition of the businesses are attributable to the anticipated profitability of the distribution of the company's ability to service new markets and the future operating synergies from the combination.

The group's capital management objectives are to ensure that it can continue as a going concern, and to keep cash flows adequate for the aims of the business, including aquisitions and organic growth. This is largely managed by an RCF facility and overdraft, through which the business has significant headroom.

To meet these objectives, the group reviews budgets and forecasts on a regular basis to ensure there is sufficient capital to meet the needs of the group.

The capital structure of the group consists of borrowings and equity of the group (comprising issued share capital, reserves, and retained earnings as disclosed in the Statement of Changes in Equity).

The group is not subject to any externally imposed capital requirements.

In March 2025, the company was acquired by a group headed by HF Topco Limited. The ultimate controlling party became CBPE Capital Partners LLP by virtue of their shareholding of HF Topco Limited.

The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

Disclosed in the company balance sheet are amounts owing to and from related parties. These balances represent balances with wholly owned subsidiaries and have been removed on consolidation.

As permitted by trues408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s profit for the year was £6,274,599 (2023 - £3,191,458 profit).

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

Except as detailed below the directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.

Details of the company's principal operating subsidiaries are included in note 13.

Contract assets consist of unbilled revenue in respect of legal and professional services performed to date.

Contract assets in respect of hourly rate agreements and fixed fee arrangements are billed at appropriate intervals, in line with the performance of the services. Where such matters remain unbilled at the period end the asset is valued on a contract-by-contract basis at its expected recoverable amount, based on work completed to date or a percentage completion basis in the case of fixed fees.

The company undertakes some matters based on contingent fee arrangements. These matters are billed when the claim is successfully settled. For matters ongoing at the period end, each matter is valued based on its specific circumstances.

If the liability of a matter has been admitted and performance obligations satisfied, such that it is no longer contingent, these matters are valued based on the expected recoverable amount. Due to the complex nature of these matters, they can take a considerable time to be finalised therefore performance obligations may be settled in one period but the matter not billed until a later financial period.

If the performance obligations for contingent matters have not been satisfied at the reporting date, these assets are valued on a contract-by-contract basis taking into account the expected recoverable amount and the likelihood of success. Where the likelihood of success of a contingent fee arrangement is less than highly probably, the amount recognised in contract assets has been reduced to reflect this uncertainty.

Trade receivables

Trade receivables are recognised when a bill has been issued to a client, as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. Trade receivables also includes disbursements.

Contract liabilities

When matters are billed in advance, this is recognised in contract liabilities and released over time when the services are performed.