LON:NAH | NAHL Plc - Pre- Close Trading Statement. Accidents Waiting To Happen!

19th Jul '17 by Dearg Doom

8 comments 6270 reads

NAHL (LON:NAH)

Market Cap £66 million

Share Price 129.4p Up 2.8% (so far this morning)

Bid/Offer 128p - 131p Normal Market Size 2,00

Pre-Close Trading Statement Released Today 19th July 2017.

About the Company

Divided into three main divisions, the Personal Injury, Residential Property and Critical Care. The two smaller divisions are the Critical Care and Residential Property divisions. The Personal Injury division which is the largest looks like facing at least a 33% decline in revenue before returning to growth. Of course, this largely depends on management plans succeeding.

Alternative Business Structure ( ABS)

National Accident Helpline (NAH), the Group's Personal Injury division, continues to make good progress in dealing with enquiries through alternative commercial and structural arrangements and concluded its first Alternative Business Structure (ABS) during the period with NewLaw.

This ABS structure commenced from July 1st, 2017 with a signed agreement with a subsidiary of Redde called NewLaw and trades under the name Your Law. Possibly too early to say how overall this will work out. In the meantime, it is expected to see the profits of circa 4 million that would have been expected in 2017 being returned in later years. Legal cases are settled normally 18 months later.

Relaunched NAH Brand

Reflecting our drive to grow market share through increased enquiry volumes, we relaunched the NAH brand in June 2017, under the theme "If it feels wrong, we can help make it right".This will be supported by six new television adverts, alongside an extensive digital and social media campaign allowing consumers to interact directly with NAH online.

Can't say I have seen the adverts. I don't watch adverts if I can help it. I'm normally watching pre-recorded programmes, put the mute button on when adverts appear or engage in pointless channel hopping. I do see 153 videos available on Youtube for NAHL if one is motivated to watch. Presumably, a lot of these are out of date in any case

Critical Care and Residential Property Division

Our Critical Care division, Bush & Company, has again performed strongly, showing year on year growth and contributing positively to the Group's overall performance as a result of our continued focus on business development and quality of care.

Our…

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Asagi

19th Jul '17

Hi Dearg,

Going forward we intend to maintain our dividend policy of 1.5x cover.
https://www.investegate.co.uk/nahl-group-plc--nah-/rns/final-results/201703210700070089A/

supporting Dearg's claim above that the dividend payout ratio will be two thirds.

Asagi (long NAH)

VegPatch

Hi Dearg
How about thinking about it another way?
The conveyancing arm which provides marketing leads to conveyancing professionals was purchased for £28m, profits have risen since the 2 businesses were bought in 2015. Lets be conservative and say its worth 70% of what NAHL paid for it. = c£20m
The critical care business, Bush, which generates mainly fixed fee consultancy revenues, is not very volatile.
Revenues and operating profits have grown since acquisition in October 2015 for £25m. EBIT was £3.8m in 2016 and it sounds like profits will rise in 2017. Lets say this is worth the £25m that was paid nearly 2 years ago.
That gets us to £45m

The market Cap is £66m plus net debt c£18m = Enterprise value of £84m
So take off the £45m
leaves roughly £40m for the value of the Accident helpline

In 2016 revenues were £30m and operating profits £14m

It looks to me like the market is implying a reduction in EBIT from £14m to say £6m
(ie tax the £6m number = £5m and put it on a PE of 8x = £40m)

Feels harsh !

I am looking at this the other way. What has to go wrong from here for me to lose money ?

I think River and Mercantile, a big holder, have been selling. not sure what their rationale is, but maybe this explains the weak price...

Famous last words but I wonder if there is value here?

Dearg Doom

Hi VegPatch,

Your analysis is spot on.

The risk, however, not to be underestimated is the execution risk. That risk deserves a discount in the share price. That discount is now overdone. I favour the odds that the company will succeed. At the current price, I think I will be well rewarded in the future.

Regards

Dearg Doom

Oops a mistake in my maths. Apologies!

The conveyancing businesses were acquired for a total spend of £6.3m

Lets say they are worth £4m

To redo the maths...

Critical Care £25m
Conveyancing £4m
Call it £30m

Mkt Cap £66
Net Debt £18
EV £84

Minus non NAH businesses = £84-£30 = £54

2016 EBIT £14

And as I understand it, only 30% of the NAH business is affected by the changes to the small claims court. I am led to believe the other 30% should be unaffected.

OK

£14m * 70% = £10m

Lets discount the other 30% for the moment and say its worth nil

Implies the NAH business is worth 5.4x EBIT...

hmm again still seems to low?

apologies for the maths error...

AnonymousUser252054

18th Sep '17

Nahl reports the half year tomorrow. Their RNSs are usually pretty poorly written and never informative enough so what may even be good news is unlikely to result in any benefit to shareholders. As for those new ads, they are unbelievably poor. You start to wonder if senior management has any competence after watching them. The Underdog character was the work of an advertising genius in comparison.

I've lost a lot here but (think I) am hanging on for the possible recovery over the next year or so. To comfort myself I tell myself Bush critical care must be worth the market cap in their own right, while accepting that the conveyancing division is just struggling along (maybe they can sell it?), and the PI is still through-putting decent amounts of business. If you keep an eye on Trustpilot there does not appear to be any let-up in people falling over stuff and being very happy with Nahl for advising if they have a claim.

But I don't see the price coming good anytime soon, unless proposed proceedural changes are dropped. I say this as interestingly there was a surprise reverse for the government in the appeal court over Tribunals fees, which impinged upon 'access to justice', a key plank of our legal system. Changes to PI claims proceedures could perhaps be similarly challenged in the courts. Obviously due to the eventual timescale of a challenge it would mean the Nahl story would have played out one way or the other by then anyway - but if those changes were simply kicked into the long grass it would be another matter entirely.

Of course the insurance companies were significant donors to the Tory party before the last election and it is hardly a coincidence that the recent Ogden rate change which benefitted victims of the most life-changing injuries has quickly been reversed. Therefore there's still a good chance that the justification of an 'explosion in fake whiplash claims' may yet be persued to steer through measures which deter claims generally.

As Stockopedia rightly says about Nahl, speculative and contrarian.

12th Nov '17

Strangely Stockopedia now describes Nah as a 'superstock'. Blimey. It may actually sort itself out one day but I eventually sold due to the dismal re-branding campaign and these recent RNS announcements:

28 September 2017
The Board of NAHL, the leading UK marketing and services business focused on the UK consumer legal market, today announces that as part of a review of succession plans for the role of Chief Financial Officer, Steve Dolton will step down as CFO and from the Board on 31st December 2017.

Oh oh. Followed by:

4 October 2017
NAHL (AIM: NAH), the leading UK marketing and services business focused on the UK consumer legal market, was informed on 4 October 2017 by Steve Dolton, Chief Financial Officer that he exercised share options over 237,501 ordinary shares of £0.0025 each in the Group ("Ordinary Shares") at an exercise price of £0.0025.

The SP actually rose on that! But not only is the FD heading for the door he bags over a quarter of a million shares at quarter of a penny each (if I'm reading all those zeroes after the £ sign right). I can't find any mention of those being EPS or SP rise related options.

But not to be outdone:

24 October 2017
NAHL (AIM: NAH), the leading UK marketing and services business focused on the UK consumer legal market, was informed on 23 October 2017 by Russell Atkinson, Chief Executive Officer that he exercised share options over 312,501 ordinary shares of £0.0025 each in the Group ("Ordinary Shares") at an exercise price of £0.0025.

Hm. And, finally (so far, anyway):

1 November 2017
NAHL (AIM: NAH), the leading UK marketing and services business focused on the UK consumer legal market, announces that on 31 October 2017 it granted awards in the form of share options over ordinary shares of 0.25 pence each ("Ordinary Shares") under the NAHL Group Share Option Plan to the following Director:
Mr Russell Atkinson Chief Executive Officer 87,552 @ 0.25p

A fairly modest amount in comparison, but these have some conditions attached, so may never be acquired anyway. There is an upside case but at the mo it's not for me.

vik2001

24th Dec '17

has there been some news on £NAHL. seems to be breaking out? momentum is rising and if it goes past 165p could be a futher uptrend....

3rd Jan '18

up 4.5%, broken it resistance level for first time in over 1.5 years - could be further upside to come. no news that im aware of but looks like some sort of recovery is in progress. I don't hold.

NAHL plc - Pre- Close Trading Statement. Accidents Waiting to Happen!

NAHL (LON:NAH)

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Dearg Doom

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