A major claims business has written off almost £40 million amid a massive fall-off in the number of enquiries from panel firms.
Directors of listed group NAHL said ‘volatility’ in the personal injury sector in recent years had prompted the company to adopt an impairment charge of £39.9m.
The write-off caused an operating loss for the full year in 2024 of £36.5m. Without this extra charge, underlying operating profit was down by 4% to £3.9m, based on turnover which had fallen by 8% to £38.8m.
The company said the ‘prudent approach’ was to write down the value of the goodwill in the PI cash generating unit from £39.9m to nil. This followed a slowdown in the market during the pandemic which has yet to recover to pre-Covid levels.
The annual report said: ‘These challenges exacerbated throughout 2024 as further market consolidation was witnessed towards the end of the year and manifested themselves in the personal injury CGU [cash generating unit] as lower demand from panel firms, lower enquiry volumes overall and increased competition leading to higher marketing costs.
‘Whilst there has been some success in addressing some of these challenges, the directors anticipate that the supply of enquiries will recover more slowly and that no meaningful recovery in panel demand will be seen.’
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Revenue in the consumer legal services division decreased by 17% to £22.9m, primarily driven by the PI business which reduced 21% year-on-year due to a 70% reduction in enquiries placed into its panel of third-party law firms.
National Accident Helpline was originally formed as a claims management company and became one of the biggest players in the market during the sector’s mid-2000s boom. But the service generated just 19,744 enquiries in 2024 compared with 35,643 in 2023.
The long-term strategy is now to grow NAH into a ‘mature, efficient’ law firm. The business settled 3,558 claims in the year – down on the previous 12 months but with the average revenue per claim higher than in 2023.
The company has been able to reduce net debt by 27% to £7.1m. In February 2024, the group successfully extended its banking facility with Clydesdale Bank/Virgin Money. The existing £20m revolving credit facility, which was due to expire on 31 December 2024, was reduced to a £15m facility running to 31 December 2025. Post year-end, in April 2025, the group further extended its facility to 31 December 2026 and reduced it again, to £11m.
James Saralis, chief executive, said 2024 was 'a challenging year' for NAHL, citing 'a difficult marketing environment hampering lead generation' and a lack of demand for work from panel firms. ‘Despite these challenges, and thanks to the hard work of our people and resilience of our business model, the group delivered growth in underlying profit before tax and another significant reduction in net debt,' he said.
‘Throughout the year, the board remained focused on exploring options to accelerate growth in value for shareholders and we continue to actively progress the potential sale of our critical care division,' he said. The board 'has been encouraged by trading in the first quarter of FY25'.
No dividend was paid in 2023 and none is proposed for the 2024 financial year. Shares in NAHL Group plc were unchanged on Wednesday at 60p.
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