NAHL plc is set to sell its residential conveyancing business as it looks to focus on growing its personal injury law firm in the wake of a difficult Covid-affected year for the business.
Its results for 2020, released today, show that revenue dropped 20% to £41m, with underlying operating profit nearly half, at £5.7m. However, the company reduced its net debt from £21m to £16m.
Investors would appear reasonably positive about the outlook, with the shares up marginally today at 45p.
At its worst, in April 2020, personal injury enquiry volumes dropped to 30% of 2019 levels. NAHL said it helped 36,000 customers with new personal injury claims in 2020, compared with 56,000 in 2019.
Its critical care division, Bush & Co, issued 1,148 expert witness reports and initial needs assessments (down from 1,325), and provided over 1,200 clients with case management to support their rehabilitation (1,294 in 2019).
The group declared itself ready for next week’s whiplash reforms, having “completed the transformation of personal injury business into a modern, technologically enabled law firm”.
Chief financial officer James Saralis, who now runs the group following the departure last year of chief executive Russell Atkinson, predicted that many injured people would need the help of law firms to navigate the Official Injury Claim portal – the users guide has been criticised for being difficult for litigants in person to understand.
National Accident Law – the group’s wholly owned law firm subsidiary – will run all personal injury small claims that come in and charge consumers up to 35% of their damages, and will also increase the number of non-road traffic claims it handles.
The group placed over 1,600 enquiries into its law firm in the first four months of this year (compared to just 100 in the same period in 2020), meaning fewer went to its two joint venture law firms run with NewLaw Solicitors and Horwich Cohen Coghlan. The three firms between them converted 70% of enquiries, against a 67% target.
During the worst of the lockdown impact, NAHL flexed its model by prioritising the placement of enquiries into its panel to maximise cash flow.
Though fewer claims proportionately will be going to the joint venture and panel firms, the plan is to increase the overall number of enquiries in the coming year. Mr Saralis said the “appetite” for work from panel firms was stronger than it had been for the past couple of years.
National Accident Law continues to grow rapidly since its launch in April 2019 and now has 108 staff. Mr Saralis said NAHL would consider law firm acquisitions as “we intend to scale up our business quite considerably over the next few years”.
NAHL entered the conveyancing market in 2015 by acquiring lead generation business Fitzalan Partners. It has “streamlined” its brand proposition, culminating in the re-launch of the Homeward Legal brand earlier this year, “which enjoys strong support from first-time buyers and is well placed to exploit the paid search market in the future”.
Mr Saralis told investors: “The business has performed well through the pandemic and we believe is now positioned to grow profitably in the years to come due to its strong marketing and lead generation capabilities and full suite search business.
“However, the market for conveyancing and residential property services continues to consolidate with several large acquisitive platforms emerging.
“Having observed these trends and in light of several in-bound enquiries, the board has decided to formally investigate a potential sale of the residential property business and will be launching this process in the coming weeks.”
NAHL chair Tim Aspinall, the one-time managing partner of law firm DMH Stallard – said he was “confident” that the focus on processing claims rather than referring them “will result in a sustainable and profitable business, albeit with a longer profit and cash cycle”.
He added: “We are optimistic about the future and, notwithstanding any further setbacks with Covid-19, we expect to see profits in 2021 exceed those in 2020.”