Pre-tax profit soars at NewLawBy Storm Rannard, Digital Staff Writer
Pre-tax profits surged by millions at Cardiff-headquartered law firm NewLaw Solicitors, with its directors hailing a "strong" performance in terms of income, profitability and cash flow.
The results cover the period before the firm was snapped up by Bath-based accident management service Helphire in a deal potentially worth £40m.
NewLaw Solicitors, the trading arm of NewLaw Legal Ltd, was established in 2004 to provide personal injury legal services and employs more than 300 staff at its Cardiff practice.
Accounts filed for the year to 31 December 2013 revealed that pre-tax profit at NewLaw Legal increased to £2.8m from £232,999 a year earlier.
Operating profit also grew to £3.2m from £398,192, despite an amortisation of goodwill totalling £3.8m during the period. NewLaw said the charge was down to the transfer of the business from NewLaw Solicitors LLP to NewLaw Legal Ltd.
Turnover dipped moderately to £27m from £28.6m.
"Our top line income has decreased from FY13 to FY12 in the face of a legislative reduction in fees and a transition to a more sustainable outsourcing business model," said NewLaw's finance director Nick Wrigley.
"Despite the legislative challenges and market pressures, NewLaw has continued to grow in terms of new cases received, clients' cases settled and number of employees.
"Whilst the changes did lead to a decrease in overall income, they also led to an increase in underlying profitability. Internally we use EBITDA as a measure of profitability as this strips out our goodwill amortisation. Our EBITDA increased from £5.2m in FY12 to £7.4m in FY13."
In February 2014, Helphire bought NewLaw through a combination of cash, shares and debt.
The company paid about £24.5m in cash on completion and will issue new Helphire share worth up to £10.5m if NewLaw meets its targets for 2013 and 2014. Helphire also agreed to acquire net external capital debt and shareholder loans valued at £8.2m.
Speaking at the time, Helen Molyneux, chief executive of NewLaw, said that the firm chose Helphire as a partner because of its "established quality credentials" and "a shared vision of the future".
"The legal services market has undergone enormous change over the last two years which has opened up new opportunities for different businesses to work together in this sector," she added.
In May, Helphire hailed the firm's performance after trading results for March 2013 showed the company was trading better than it expected.
Headcount at NewLaw was boosted to 365 staff from about 280 during the period, after the firm secured £156,690 in government funding in October 2013 to expand its Cardiff operations.
NewLaw has additional branches in Bristol and Basingstoke, with an associate office in Glasgow.