Co-operative Legal Services has vowed to be profitable by next year, despite confirming a £9.1m loss for 2013.

In annual accounts filed with Companies House, the alternative business structure confirmed its previous announcement that losses increased by 60% last year compared with 2012.

That was on the back of turnover increasing marginally year-on-year to £32.6m for the year to 4 January 2014.

The losses can be partly attributed to staff costs rising almost £6m last year as the CLS headcount increased from 408 in January 2013 to 516 in January 2014. This figure is likely to have been reduced by a subsequent programme of around 60 redundancies.

The highest paid director received £277,000, an increase of almost 32% on the previous year.

Revenue from personal injury claims took a hit as the Jackson reforms came into force, with income down from £21.7m to £15.2m. However, probate fees rose by almost £6m over the same period.

Writing in the strategic report accompanying the financial statement, CLS secretary Caroline Sellers said the business has ‘managed’ the decline in personal injury income and is in the process of a restructuring plan to reduce staff numbers.

‘This will bring the cost base into line with the levels of income expected from the business,’ Sellers said. ‘This control of costs, combined with continued development of the existing revenue streams, is expected to return the business to profitability in 2015.’

The directors’ report confirmed they have met with the directors of the Co-operative Group about the future availability of funding.

Based on these discussions, the report noted, the legal subsidiary’s management have a ‘reasonable expectation’ that the company has access to ‘adequate resources’ to continue for the foreseeable future.

CLS did manage to reduce bank loans and overdrafts from £11.6m to £3.6m, although debts to trade creditors more than doubled to £9.7m.

The CLS management team experienced a major overhaul in 2013-14, with directors Martyn Wates, Rodney Bulmer and Robert Labadie all resigning during the year. In addition four more directors, Steven Round, Christina Blacklaws, Ian Mackie and Rodger Pannone have all since also left the board.

CLS was one of the first three alternative business structures licensed by the SRA and was seen to be the pioneer for the new wave of non-legal entrants attracted to the sector following the Legal Services Act and subsequent liberalisation of the market.