Revenue and profits were down last year at NAHL plc, the company behind National Accident Helpline and owner of three alternative business structures (ABSs), its annual results showed today.
Confirming the profit warning issued in January after a poor last quarter, NAHL recorded revenue of £49m, down from £52m in 2017, with underlying profits down 16% to £12m.
Attributing the lower profits to the “transformation strategy” in its personal injury (PI) division, NAHL said it was confident that it was building a business that could thrive in the post-Civil Liability Act world.
“Through a combination of our panel, our joint-venture partnerships and our own market-leading law firm, we aim to be the number one personal injury specialist in the UK,” it told investors.
Chair Caroline Brown said: “The group’s strategy requires investment in both working capital and infrastructure and as such, during this transitional period, profits and cash flow will be lower.
“This deferral in profits will support future earnings and provide the basis for a sustainable and growing earnings stream in our PI division.
“Our strategy is to become the leading provider in our chosen consumer legal services markets by leveraging our trusted brands; forging strategic partnerships that create mutual value; and embracing developing technologies to reach and interact with our consumers and customers.”
NAHL currently has two ABS joint ventures, which act as regular panel firms: Your Law, in association with NewLaw Solicitors, and National Law Partners, in partnership with Lyons Davidson. Its wholly owned ‘small claims ready’ firm, National Accident Law, opens for business next month.
Chief executive Russell Atkinson said: “As anticipated, the PI division has seen an ongoing decline in panel law firm demand as a result of the forthcoming regulatory changes.
“From a marketing perspective, heightened competitor activity depressed enquiry volumes in November and December and a significant Google algorithm change increased consumer acquisition cost.
“Encouragingly, our ABS operations scaled well and are already making a positive contribution to the group’s results.”
He stressed, however, that the panel “remains a central part of our ongoing strategy” – even though “as demand has eroded for our existing model, we have seen the panel shrink in size”.
“We also have strong panel demand for our medical negligence claims and other specialist enquiry types. As long as demand exists, we will continue to support our panel partners with high-quality enquiries.”
But movement in the market – with firms already announcing that they are withdrawing from the PI market or moving away from lower-value claims – “clearly validates our long-term strategy of developing our own processing capability to run alongside our existing panel model allowing us to capture more value and grow market share”, said Mr Atkinson.
“Without the ability to place enquiries into different distribution models, we would undoubtedly have a much smaller and less profitable PI business. Clearly, changing our operating model in the current environment is challenging but it is a challenge that we have adapted to well.”
NAHL has two other divisions. Mr Atkinson said: “Our critical care division continued to perform strongly, growing profits by 16.4% year on year. Strong underlying trading growth was supported by contributions from our commercial relationships with the Spinal Injuries Association and the Child Brain Injuries Trust.
“Although residential property continued to be impacted by a persistently difficult housing market, it continues to trade profitably and in combination with critical care, these two divisions make an important contribution to our overall results.”
NAHL’s share price has suffered in recent years. Back in October 2015, it reached a peak of 404p, but closed 2018 at 107.5p. It has since slid further – in the wake of the profit warning – and closed yesterday at 89p.