REG - NAHL Group PLC - Trading Update and Revised Banking Facility

NAHLAnnouncement

19/01/2022 07:05

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RNS Number : 8781Y  NAHL Group PLC  19 January 2022

19 January 2022

NAHL Group PLC

 

("NAHL" or the "Group")

 

Pre-Close Trading Update and Revised Banking Facility

 

NAHL (AIM: NAH), a leader in the UK consumer legal services market, is today
providing a trading update for the year ended 31 December 2021.

 

Trading Update

 

Group revenue for the year is anticipated to be in line with the Board's
expectations at £38.9m, slightly below the prior year (2020: £40.9m).
Underlying operating profit is expected to be at least £4.0m (2020: £5.7m),
and also in line with the Board's expectations.

 

COVID-19 continued to have an impact on the Group's markets, with Government
restrictions and cautious consumer behaviour supressing accident numbers.
The results for 2021 reflect a full year of COVID-19 impact.  The Group
continues to invest in case processing in its own law firm, National Accident
Law (NAL), in order to generate higher margins in the medium-term.  During
2021, the number of personal injury enquiries placed into NAL increased by
130%, and there was a reduction in profits attributable to joint venture law
firm partners of approximately 15% (2020: £4.1m).  There were no exceptional
costs in 2021 (2020: £1.4m).  As a result, the Board expects the Group to
report a small profit before tax for the year (2020: a loss of £0.2m).

 

The Group's strategic decision to prioritise increasing the number of
enquiries placed into NAL resulted in a reduction in free cash flow to £0.8m
for the year, compared to £6.1m in 2020 when the Group's focus was on
increasing liquidity in response to the pandemic. Net debt at 31 December 2021
was £15.5m (31 December 2020: £16.3m).

 

Divisional Performance

 

Revenue in the Consumer Legal Services division was £26.6m (2020: £29.5m)
and underlying operating profit is expected to be at least £3.5m (2020:
£5.4m).  National Accident Helpline generated 32,132 enquiries in the year
compared to 36,214 in 2020, albeit the comparator year benefitted from a first
quarter that was largely unaffected by COVID-19.  Volumes trended positively
in the second half of 2021 with a 27% increase in enquiries generated compared
to the first half.

 

The Group progressed its strategy to create a higher margin Personal Injury
business by increasing placement of enquiries into NAL by 130% in the year.
NAL processed 26% of all enquiries generated in 2021, a significant increase
over the 10% of enquiries it processed in 2020.  At 31 December 2021, NAL was
processing just under 8,000 ongoing claims, which was an increase of 166% on
the previous year.  The division also reduced placement of enquiries into
joint-venture law firms by 73% in the year.

 

In the Critical Care division, Bush & Co. delivered revenue of £12.4m for
the year (2020: £11.3m) and operating profit is expected to be at least
£3.2m (2020: £3.6m).  Ongoing investments in business development resulted
in a 23% increase in expert witness instructions and a 5% increase in
instructions for initial needs assessments.  The business grew the number of
expert witness reports issued in the year by 21% and marginally increased the
number of ongoing case management cases, both contributing to the 9% increase
in revenues.

 

Operating costs increased in 2021 because of investments in people, systems
and marketing activity to grow the business, as well as changes to commercial
agreements intended to secure associate resource.

 

Revised Banking Facility

 

The Board is pleased to announce that it has successfully extended the term of
its Revolving Credit Facility (RCF) by two years to 31 December 2024.  The
limit on the facility has been reduced from £25m to £20m to appropriately
reflect the Group's medium-term plans and the covenants have been reset and
aligned with latest Board forecasts.  The interest rate that the facility is
linked to was migrated from LIBOR to a new risk-free reference rate (SONIA).

 

Outlook

 

COVID-19 continues to present headwinds to the Group's two divisions, but the
Board is pleased that activity levels since the start of 2022 have grown
broadly in line with its planning assumptions.

 

The Board expects enquiry volumes in the Personal Injury business to continue
to gradually recover, as the UK emerges from the pandemic and the population
becomes more mobile.  Management plans to continue to increase the placement
of enquiries into NAL, by processing all RTA and an increasing number of
higher margin non-RTA claims this year.

 

In Critical Care, Bush & Co. has a strong pipeline of work and a number of
new initiatives that are expected to generate growth in 2022.

 

The Board continues to explore a divestiture of its conveyancing business and
remains engaged with potential acquirers of the business.  The Board will
provide a further update as and when appropriate.

 

NAHL intends to announce its final results for the year ended 31 December 2021
on 29 March 2022.

 

James Saralis, CEO of NAHL, commented:

 

"While our business continued to experience headwinds throughout 2021, I am
pleased with the progress we were able to make on our strategic objectives of
creating a higher margin personal injury business and delivering growth in our
catastrophic injury business.  We grew the book of ongoing personal injury
claims in National Accident Law by 166% and grew revenues in Bush & Co. by
9%, driven by our investments in business development.

 

"During the period, we were pleased to successfully extend our RCF with
Yorkshire Bank through to December 2024, providing our business with the
liquidity to continue to grow NAL. Finally, I would like to take this
opportunity to thank all of our people who have continued to work tirelessly
throughout the period to strive for the best results for all of our
stakeholders."

 

 

Notes:

 

1)   All full year 2021 numbers remain subject to audit.

2)   Underlying operating profit is operating profit before exceptional
items.

 

 

For further information please call:

 NAHL Group PLC

 James Saralis (CEO)             via FTI Consulting

 Chris Higham (CFO)

 Peel Hunt (NOMAD & Broker)

 Ed Allsopp                      Tel: +44 (0) 20 7418 8890

 Ben Harrington

 FTI Consulting (Financial PR)

 Alex Beagley                    Tel: +44 (0) 20 3727 1000

 Sam Macpherson                  NAHL@fticonsulting.com

 

Notes to Editors

NAHL Group plc (AIM: NAH) is a leader in the Consumer Legal Services ("CLS")
market. The Group provides services and products to individuals and businesses
in the CLS market through its two divisions:

·      Consumer Legal Services provides outsourced marketing services
to law firms through National Accident Helpline and Homeward Legal; and claims
processing and conveyancing services to individuals through National Accident
Law, Law Together and Your Law.  In addition, it also provides property
searches through Searches UK.

·      Critical Care provides a range of specialist services in the
catastrophic and serious injury market to both claimants and defendants
through Bush & Co.

 

More information is available at www.nahlgroupplc.co.uk
(http://www.nahlgroupplc.co.uk/) , www.national-accident-helpline.co.uk
(http://www.national-accident-helpline.co.uk/) ,
www.national-accident-law.co.uk (http://www.national-accident-law.co.uk)  and
www.bushco.co.uk (http://www.bushco.co.uk/) .

 

 

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