The stockmarket-listed company which owns mid-tier corporate firms Rosenblatt and Memery Crystal today insisted it is on a ‘much stronger footing’ after announcing a hefty annual trading loss.
In the year to 31 December RBG Holdings recorded a pre-tax deficit of £11.4m (2022: £2.1m), a sum which includes £10.6m of non-recurring costs (£9.7m).
Adjusted loss before tax was £700,000, compared with a profit of £7.6m in 2022.
Like-for-like income dipped 12.6% on 2022, to £39.2m.
RBG issued a profit warning last December following a year marked by boardroom turmoil. In 2023 the business disposed of litigation finance business LionFish at a loss and also settled litigation with former chief executive Nicola Foulston.
Legal services income was impacted by different factors, RBG said. Dispute resolution, which accounted for 42% of total revenue, was down 9.5%. This department ‘benefited from an unusually large case in H2 2022, so its performance in 2023 was broadly in line with expectations’.
Corporate revenue (38% of the total) was down 12.1%, reflecting the ‘depressed state’ of the equity capital markets and lower M&A activity. ‘M&A activity began to pick up in Q4 of 2023 and this continued in Q1 2024. There are early signs of improvement in the equity capital markets in 2024 but this is unlikely to turn into revenue growth until H2,’ RBG said.
Real estate (20% of total revenue) was down 22.2%, ‘reflecting historically low levels of activity across all parts of the commercial real estate sector’.
RBG said it expects revenue and profit to improve in 2024. Since the year end, the company has raised £3m in additional working capital through the issue of discounted shares. At the end of March the company sold corporate finance advisory business Convex Capital to a joint venture led by its management team for up to £2.6m. RBG is therefore now wholly focused on legal services.
Ian Rosenblatt, who remains the company’s biggest shareholder – and rainmaker – resigned from the board following the Convex sale. He received £2,258,834 in salary and fees for 2023, but agreed to take £637,500 of that sum in shares as part of this year’s fundraising.
The company has a revolving credit facility of £17.5m, and a £10m five-year term loan taken to fund the Memery Crystal acquisition which has been paid down to £6.5m. Net debt at the year end was £22.9m (2022: £19.2m).
Marianne Ismail, chair of RBG Holdings, said: ‘We recognise that 2023 was a very challenging year for the group. However, the significant progress in realigning the business gives the board confidence that the group is on a much stronger footing than it has been for some time. The new executive team, led by CEO Jon Divers, has made difficult decisions to reduce the group’s risk profile, its cost base, and to refocus RBG on its core legal activities, similar to the business that floated in 2018, where the board believes profits will be maximised.’
The company’s share price slipped 14% today to 10.5p, close to a record low. A year ago the shares were trading at 53.5p.
