The Co-operative Group’s half-year results, released today (4 September), show a £5.1m loss in the 26 weeks up to 5 July for the legal services arm.
According to the latest financial report the half-year results reflect the costs of restructuring the business and the knock-on effect of sales being down to £13m from £18m the previous year.
CLS was cited as a “fledgling business” where the focus of the last six months had been on addressing “underlying issues, reducing the cost base, and restructuring the business to ensure it is the right size and shape for the future”.
Co-operative Legal Services managing director Matt Howells said that the probate practice was up 4 per cent year-on-year and said there had been a 100 per cent uptick in the performance of the family law business in the last six months.
However, the impact of the Jackson reforms has taken its toll, particularly with the loss of Admiral as a client last year. The FTSE100 insurer secured two of its own ABS joint ventures, with Bristol-based claims specialist Lyons Davidson and Cardiff-based compensation firm Cordner Lewis (8 April 2013).
The report projects a “positive contribution” from CLS as it moves into 2015, having completed restructuring to bring The Co-op’s legal services, funeral care and insurance divisions under one umbrella led by consumer services chief executive office Rod Bulmer.
CLS financial director Caoilionn Hurley said prior to restructure the cost-base had been growing in anticipation of higher growth than the business achieved. As such, she said the cost base for both family and probate now matched anticipated revenue.
She said the business employs around 400 people at present, with around 75 per cent of that number fee earning.
She projected revenue of £22 to £24m in the core business at the end of the current financial year and for it to start turning a profit next year.
CLS reported revenue of £33m at the end of the 2013 financial year, alongside an underlying operating loss of £9.1m, which rose to £22m after a “goodwill impairment”.
CLS was the first ABS to be approved by the SRA in January 2012 (28 March 2012), but has seen performance plummet compared to the months after it was established when it turned a profit of £700,000.
The group results came alongside the announcement that Richard Pennycook has been appointed group chief executive, with immediate effect. Pennycook was previously interim group chief executive, a role he took up in March. He joined in June 2013 as finance director, before being appointed chief operating officer.