A major claims management company saw profits nosedive by 32% in the last financial year, accounts have revealed.
Huddersfield-based First4Lawyers reported £1.5m profit before tax for the year ending 31 March 2016 – down from £2.2m the previous year.
It was the second year in succession of falling profits – the company recorded £2.6m profits in 2013/14 – as the changes in the personal injury sector continue to affect balance sheets.
Turnover also fell for a second year in a row, this time by 2.5% to £11.2m.
Director Qamar Anwar said this year’s fall in profits was a consequence of the business trying to diversify and expand beyond personal injury.
Anwar said: ‘The decrease in profitability reflects the significant but prudent investment into the continued development of our products and services and the systems required to enhance the customer journey.
‘This has directly resulted in increased operating costs as we mitigate potential risks in certain sectors of the industry whilst ensuring that we are well placed to attract and meet the needs of a more diverse range of consumers and law firm clients in the years ahead.’
Anwar said he expects changes affecting the personal injury sector to come into force no earlier than April 2018. These include whiplash reforms and also the potential extension of the fixed costs regime.
‘Regardless of any uncertainty that may exist in the market, the period leading up to April 2018 will see an ever-increasing number of law firms rely more heavily on us as a leading marketing collective,’ added Anwar.
The two directors drew dividends totalling £600,000 for the year – the same figure as in 2015 – and the highest-paid director received remuneration of £187,358, a small increase year-on-year.
Headcount grew from 19 to 24 as new work streams were opened during the year.
The company has continued to advertise widely in the past year, with its most recent ad stressing that it works only with the most experienced lawyers. Marketing has previously featured appearances from former tennis professional Andrew Castle.