Atkinson: Focus on Covid-19
Profits at NAHL plc – the company that owns National Accident Helpline – tumbled by nearly 80% in 2019 as it was hit by uncertainty in the personal injury and property markets.
The group is testing whether to start handling conveyancing matters itself, however – at the moment, it offers law firms marketing services and property searches.
The group saw revenue increase by 4.8% to £51m, but profit before tax fell from £9.8m in 2018 to £2.2m last year. Underlying operational profit was static at £12.2m.
The drop was due to a series of exceptional costs: £1.3m of restructuring costs for the group’s strategic transformation; a £1.2m write-down following the termination of its joint venture alternative business structure (ABS) with Bristol law firm Lyons Davidson, National Law Associates; and a £5.3m impairment charge in respect of residential property.
Net debt at 31 December 2019 was higher than anticipated at £21m, up from £15.5m, which group chair Caroline Brown said it would work to reduce in 2020 “whilst investing carefully in processing claims in our ABS law firms”.
Personal injury is NAHL’s main business – it accounted for £32m of turnover – and it now has three ABSs as part of the strategic move away from delivering leads to law firms and towards processing cases itself: National Accident Law, which it wholly owns, and joint venture ABSs Your Law, with NewLaw Solicitors in Cardiff, and Law Together, with Manchester firm Horwich Cohen Coghlan.
The results said the profit going to the joint venture partners increased from £1.7m to £4.5m.
NAHL has built up claim volumes in its ABSs, from 10,274 ongoing claims at the start of 2019 to 15,005 at the end.
“This represents a store of value, much of which has yet to be recognised in the financial results but will deliver growth in future years,” it told investors.
With double-digit growth, the critical care business Bush & Company Rehabilitation was the best performing part of the business (revenues were £13.6m), while the residential property division “disappointed” with revenues of £6m and an underlying operating loss of £300,000.
The company booked the impairment charge “in light of the obvious weaknesses in the UK housing market, further evidenced by the recent impact of Covid-19”.
But NAHL told investors: “In residential property we are conducting a small-scale test on processing our own work in conjunction with a partner.
“Unlike personal injury claims, conveyancing instructions do not require any significant working capital investment but should enable us, over time, to offer consumers a better end-to-end service which will strengthen our marketing proposition.”
Chief executive Russell Atkinson said: “Having started 2020 with confidence that the group’s strategic growth plans were progressing well and early signs of market improvement in residential property, we have completely switched our focus on channelling our resources to tackle the business challenges posed by the spread of the Covid-19 virus…
“Since the emergence of the virus in the UK, we have taken various measures to reduce our costs and ensure we have sufficient liquidity to run the business through a prolonged period.”
This has included furloughing around a third of staff as personal injury enquiries have fallen.
NAHL’s shares crashed in February after it said uncertainty in the PI market would significantly affect its performance in 2020, meaning it had to suspend paying any dividends.
NAHL’s share price ended 2019 on 100p, down 7% on the year, and a long way from its 2015 peak of 404p. It then fell to 56p on the back of the February announcement and went as low as 34p as the whole market dived in response to the pandemic. The price closed up 1p at 38p yesterday.
Mr Atkinson said he believed NAHL was undervalued by the market, but understood that “investors are somewhat nervy” because of the uncertainty around the personal injury and conveyancing parts of the business.
