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NAHL shares crash amid personal injury market uncertainty

Stock exchange: NAHL suspends dividend

Shares in NAHL plc – owner of National Accident Helpline – crashed today after it said uncertainty in the personal injury (PI) market would significantly affect its performance in 2020, meaning it had to suspend paying any dividends.

The share price was down more than 40% in mid-afternoon to 56p following publication of a full-year trading update.

NAHL ended 2019 on 100p, down 7% on the year, and a long way from its 2015 peak of 404p.

It said: “As previously noted, 2019 was a challenging year. The UK property market contracted further and the group’s residential property division made a small loss.

“Despite performing marginally ahead of expectations, the PI division faced competitive pressures and continued panel volatility during the period. This resulted in a higher cost of generating new claims and impacted total volumes and placement, resulting in fewer claims being passed through to the group’s ABS structures [sic].

“The group confirms that its guidance for 2019 underlying earnings will be within the range previously announced and is likely to be between 7.5% and 10% lower than board expectations.”

Just before Christmas, NAHL announced that one of its law firm joint venture alternative business structures had come to an end [1].

Looking ahead to 2020, the company said “there remains considerable uncertainty surrounding key elements of the government’s personal injury reforms”, which are planned for April – although it emerged last week that ministers were considering [2] whether this remains viable.

The announcement went on: “This continues the volatility in the group’s panel law firm relationships and is expected to delay growth in case processing within the group’s wholly owned law firm, National Accident Law.

“The board is encouraged by the progress made in transforming the business. However, in order to de-risk the group in the light of market circumstances, the board has decided to slow the deployment of working capital in the PI business and to suspend the company’s dividend.

“Consequently, the board’s outlook for 2020 performance is now significantly lower than previous expectations.”

PI is by far the biggest part of the NAHL business. It said the critical care division traded well in 2019 and this was expected to continue into 2020.

“Despite the difficult backdrop for the UK property market, the Board expects its residential property division to grow, albeit from a smaller base,” it added.

Both chief executive Russell Atkinson and chief financial officer James Saralis bought 17,000 and 18,000 shares respectively in the wake of today’s price slump. Mr Atkinson now has 549,000 shares (1.2% of the total) and Mr Saralis 45,000.