Annual pre-tax profits at one of the leading claims firms dropped from almost £4.5m to just £13,000 in the space of a year, it has emerged.

Audited financial statements for Liverpool-based Carpenters Limited for the year ended 31 December, published earlier this month, showed that turnover also fell 15% to £47.6m as the effects of Covid-19 and personal injury reforms kicked in.

Carpenters is one of the biggest claims firms in the country, employing more than 1,000 people across six offices and serving both claimant and insurer clients.

Established in 1994 as a niche commercial practice by John Carpenter, it is jointly led by former Motor Accident Solicitors Society chair Donna Scully, who has been a vocal critic of the government’s personal injury reform agenda.

In her notes on the financial statements, chief executive and third director Donna Richards said the 2021 results were in line with expectations given the continuing impact of the pandemic and challenges of integrating to the RTA portal.

Richards continued: ‘The company has invested heavily in time and resource to ensure it has a sustainable platform and model for continued and future growth. In addition investment and growth in the defendant and recoveries areas of the business will bring future benefits. The strength of the business and balance sheet ensure a sustainable future for the business.’

Whiplash reforms were announced in 2015 but implemented only in May 2021 as the government enacted the Civil Liability Bill. This imposed a tariff on RTA whiplash compensation and stopped firms recovering costs from the defendant in claims worth less than £5,000.

Richards said Carpenters had successfully integrated with the Official Injury Claim portal for handling low-value cases, but added: ‘There have been and continue to be issues with the external OIC portal, however the company’s continued reinvestment in technology and an in-house development team ensures it has the agility to adapt.’

The directors’ report notes that a final dividend of £13 per share will be paid for 2021, making a total distribution of £650,000.

The amount owed to creditors within one year rose around 50% to £12.6m, although the company’s net current assets remained at around £28m.

The number of employees at Carpenters Limited fell from 743 to 707 during the years, with the wage bill coming down from £24.5m to £22.6m. The highest paid director received £359,740 (down from around £387,000).

Speaking to the Gazette this week, Richards said the company's model of financial sustainability, with constant re-investment from the owners, had provided the stability to 'weather the storm' of Covid and the whiplash reforms. The 2021 results, she added, reflected the position seven months into the portal with few early settlements in that period.

'As we emerge from the pandemic, and as the technical issues with the portal start to improve, our solid base means that we are well placed to consolidate our position as the leading, most reliable, partner in the sector,' she added. 'We are, by far, the biggest operator on the new OICP.  We are seeing new people joining us every week and we have a lot of new work in the pipeline.'

The company had outstanding directors loans payable to Carpenter and Scully of £334,591 as of 31 December, up from £125,293 a year before.

 

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