PI group’s shares continue to rise as it pays down more debt

Saralis: Robust position

Shares in AIM-listed legal services business NAHL jumped 11% yesterday on the back of a positive trading update showing a faster reduction in debt than expected.

NAHL owns personal injury marketing business National Accident Helpline as well as alternative business structure (ABS) National Accident Law, and stakes in two other ABSs, and its fortunes are on the rise.

The share price hit an all-time low of 28.5p in July 2022 but our annual review of listed legal businesses earlier this month recorded a good 2023, jumping 77% to 62p. The shares went from 60p to 67p yesterday.

The unaudited 2023 results indicated a 2% increase in turnover to £42m, with operating profit “slightly ahead of market expectations” at £4.1m – less than in 2022 (£4.8m) but reflecting planned investment in scaling National Accident Law “for greater returns in the medium to long term”.

Profit before tax was expected to be the same as 2022 at approximately £600,000.

The figures also reflected a reduction in revenue and operating profit from NAHL’s joint ventures – we reported in September that it was winding down one of them – and the sale of its residential property arm Homeward Legal last April.

However, the joint ventures still generated £4.4m of cash (2022: £3.3m), after deducting drawings to LLP members.

Bush & Co, the group’s case management and expert witness business, had a strong year, with revenues up 11% at just under £15m and operating profit jumping 29% to £4.4m.

Strong levels of cash flow have allowed NAHL to “significantly reduce net debt, ahead of market expectation”, down 27% compared to 12 months earlier at £9.7m.

National Accident Helpline generated over 35,000 enquiries in 2023, a 2% increase, and 8,518 were passed to the group’s law firm.

“Whilst this is slightly less than the prior year (2022: 8,760), these enquiries comprise a richer mix than 2022 and so are anticipated to generate a higher return on settlement,” investors were told

“The firm ended the year processing 9,983 ongoing claims (31 December 2022: 10,860) and NAL significantly increased cash from settlements by 73% to £6m (2022: £3.5m), demonstrating the growing maturity of the firm and contributing to the group’s overall reduction in net debt.”

Group chief executive James Saralis said: “Whilst the personal injury market remained subdued, we have successfully completed our transformation into an integrated law firm…

“The critical care division has delivered a strong financial and operational performance and there is an exciting opportunity to deliver further market share growth…

“The steps we have taken in recent years to enhance the group have borne fruit and NAHL ended its financial year in a robust position with cause to be optimistic for the future.”

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