Made £4m profit H2 2021 while most of companies in negative |
Company making profit & pays good dividend |
I'm working way through their materials but probably wont post everything here as its a small punt on my part. So far not too worried and the debt doesn't put me off.
Will see what comes out. |
I'm not so sure loglorry.
New here and can see a path to better times. |
I can see a bid for Bush but as I've explained above nobody will bid for an indebted business which is impossible to value. Unless they explain how their business model generates cash in sufficient detail a bidder would be mad to take a punt on the legal side. |
What chance they receive a bid? |
Covid had an early affect and NAH did use it as an early excuse. Quite early on driving movility data showed driving was back to normal as ppl avoided public transportation.
Clearly during furlough less at work so less work accidents. Also probably slower to settle cases. Again if they published claims book size this would all be visible. |
@loglorry1 If I remember rightly FEN were saying it would be a reverse takeover which implies an implied premium, but probably not the 80p-£1 figure that could be argued for. |
Thanks Bully. I have read reports and watched presentations. The bottom line is that when a corp doesn't make simple metrics about its business clear it's always because it's because in so doing it shows poor performance. If the underlying metrics were good they'd be crowing like mad.
personally thinks legal is ok but since legislative changes, it's become far less profitable. Buying leads has become v expensive and sadly the % of RTA which comes from them now produce little to no profits. Maybe the lead costs will drop but I'm not convinced. I sincerely hope your profit ramp-up is correct but I have my doubts.
@johnhemming that's precisely the same as saying FEN couldn't recover the costs of paying up for the legal business they didn't want by selling it on. |
>Wonder why?
I would think that FEN were not willing to offer enough.
Covid clearly has some effect on case numbers as well. |
 I can appreciate it has been a difficult business to stick with given the results over the past few years. I’m a fairly new investor in the company but I do think the business is on a positive path. I would definitely recommend going back over the past few years reports, interims and presentations (particularly the most recent investor presentation) to try to reassess the future outlook and earnings power of the legal business 2-3 years from now, most of the info you are looking for can be pieced together from available info, but you’re right that it is not clearly laid out by management. In general I think you will find that a combination of large amounts of capital being invested into developing NAL as well as minority payments to their JV firms is a large part of why the profits you talk about haven’t materialised yet, but as they faze out the JV partnerships completely and now that the capital investment into NAL is now complete, once the book matures from 2023 onwards and the law firm works up to max, the results will come through in the Income statement as much more cash is thrown off. Sorry for the long message, I don’t normally post on these boards but I thought it might be useful to offer a different perspective on their legal business which I feel is misunderstood, over Bush which is usually the main focus in discussions I see. Good luck and all the best |
 Bully I've held quite a few NAH for many years (to my cost). The story is always that there is latent value in the claims book and that it takes 1-3 years to materialise. They are not starting from a standstill and they are still sending a lot of claims to panel law firms. So I fail to see why the claims book is not throwing off more cash as claims roll off the end and new ones are added? This is not a company going from an empty claims book building it up.
Further we were always told in the past that the debt was "covered" by the value of the claims book and if marketing spend was stopped and leads not generated (apart from organic) the claims book could be run down to pay off debt. Clearly with 17m of net debt that is begging to look less than truthful.
I really do hope you are right and the market cap is so low now I do still see value here but the message from directors is far from clear.
I wish the would just tell us the following :
* How many leads do they generate
* How much does on average does it cost to generate a lead.
* What split from that is RTA/Non RTA/Specialist
* From that split what is the value in each case and how long does that take to settle.
* Currently in the claims book what value (using the metrics above) exists if we were to just put it in run off.
Perhaps you know the answer to these basic questions but whenever I try to find out I just get obfuscated or partial answers.
Lastly, if the legal business was valuable then FEN would have taken NAH and flogged it off to a buyer and kept BUSH. That transaction failed. Wonder why? |
The business is not currently recognising the profits from the transition of the National accident law business, hence why it’s hidden and not currently reflected in the market value.
You have to look at it as a transition, they have been handling all RTA cases in house for the past year or more now (I.e not through a JV or passing on to a panel). They are going to increase the number of cases handled through NAL over the next 1-2 years up to 50% of all leads.
Profit is not recognised on the income statement until the case is one, it takes from 1-3 years for a case to be processed and won. So they are building up a book in the company at the moment (currently £6m+ in unrecognised profits). Since they have been investing for larger future revenue and profit, working capital investment has increased and profits have been reduced. But this covers over the actual change happening in the underlying legal services business. That they are transitioning to a law firm, and are building up a store of profits and value which will mature in 2023 and will then grow on going as the number of cases in NAL is increased.
So to answer your question, the numbers are not reflected in the income statement and debt reduction. When the book matures in 2023 ongoing I would expect to see debt reduced, dividends paid and all other metrics (revenue, profit etc..) shoe the fruit of the past 3-4 years or investment. You will be left with 2 very solid businesses, BUsh and the new legal division.
At which point the cash flow provided by Bush to fuel the transition will no longer be needed and the company could arguably consider selling the division. But to do so now would be a mistake from a strategic / financial perspective and a valuation perspective. As the company should be far more valuable one 2023 than it is now and on going.
So my advice with NAHL I guess is look beyond the obvious in Bush and co (and talk about selling Bush etc.. which is a distraction), dig deeper and if you have some patience it is very likely to be rewarded. |
Bully, thanks for this, can you tell me where you get your numbers from exactly?
I dont see debt being reduced by anything like the numbers you suggest, currently, so where is the £8m in opp profit plus Bush profits going? |
I personally think the focus around Bush within NAHL is misplaced. Bush is as Mills said a solid business, but the main underlying / hidden value of NAHL is its legal division, specifically National accident law it’s wholly owned law firm. The management team did a good job in their recent investor presentation of outlining the journey it’s legal division has been on over the past few years and will go on over the next 2-3 years as it moves away from being a lead producer for a panel of firms to a leading fully integrated law firm for RTA and Non RTA cases. The role of Bush and its vale to NAHL has been as a way to help fund that growth.
The breakdown in leads produced by NAHL is
25% RTA ( the lower value leads post reform)
50% Non RTA (the main part of the business, higher value cases and unaffected by the reforms)
25% specialist claims (these are passed on as cannot be processed in house)
The company is now ramping up its wholly owned law form NAL, and will process roughly 50% of all the claims it receives now within their own law form for greater profits and revenue.
In an average non COVID year the company takes about 55,000 leads, so roughly 22,500 will be processed in house. Of those around 45% will turn into an active claim (though not all will be successful). Revenue aside taking into account a mix of 50/50 RTA and non RTA claims, each successful claim is worth roughly £1000 processing profit (profit not revenue, after all costs except general overheads). That’s roughly £11.2 million in processing profit from National accident law, once other overheads are taken out they should be turning out £6m+ in operating profit from NAL. Then they are still going to sell on 50% of the leads to panel firms which they don’t process themselves (these are all higher value non RTA leads) typically this would generate an additional £1.8m in operating profit.
So overall the legal division (not taking into account their conveyancing business) should be turning over c£8m in operating profit, once the transformation is complete.
The question then is what sort of value should be ascribed to their legal business based on those numbers? My guess is it’s much more that the £15m mills talks about and I’d wager much more than the value of Bush. |
Clearly, mills wanted FEN to take Bush but the legal business is the sticking point. FEN can't own it and it can't be sold off intil it pays off debt.
I still don't get how NAH can make money and avoid low value whiplash. They basically have to sift out the whiplash and process them via the small claims supported channel. Is that profitable though? Are they not having to pay for leads many of which are v low or no margin. |
This may work better.
I think it is behind today's movements anyway. |
crummy both links don't work any idea how to access his comments-any chance oft and paste |
Christopher Mills talks positively about NAHL (44:05) here.
www.linkedin.com/feed/update/urn:li:activity:6879354290515841026/
www.youtube.com/watch?v=cG7_82WZdmc&t=2135s |
10% rise today; any news? |
Indeed a buying opportunity. |
Downbeat results but did the share price deserve such a pasting? The message I saw was a slow recovery from low levels. Topped up. |
Daily chart, I think that it's still within its horizontal channel which may, at the moment, disguise a breakout waiting in the wings. |
If you compare it to other listed solicitors it is quite cheap. |
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