Nahl Share Discussion Threads

[bully15] 22/12/2021 19:58

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.

[loglorry1] 22/12/2021 19:23

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?

[bully15] 22/12/2021 17:57

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.

[loglorry1] 22/12/2021 15:27

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.

[johnhemming] 22/12/2021 14:08

This may work better.


I think it is behind today's movements anyway.

[ali47fish] 22/12/2021 13:02

crummy both links don't work any idea how to access his comments-any chance oft and paste

[brummy_git] 22/12/2021 11:16

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

[deadly] 17/11/2021 17:22

10% rise today; any news?

[johnhemming] 28/9/2021 17:54

Indeed a buying opportunity.

[grahamg8] 28/9/2021 17:32

Downbeat results but did the share price deserve such a pasting? The message I saw was a slow recovery from low levels. Topped up.

[casholaa] 03/8/2021 17:19

Daily chart, I think that it's still within its horizontal channel which may, at the moment, disguise a breakout waiting in the wings.

[johnhemming] 03/8/2021 16:44

If you compare it to other listed solicitors it is quite cheap.

[sphere25] 03/8/2021 16:25

Had a quick look into serial disappointer NAH and it has been unusually well bid.

Is something about to happen here?

Just a normal market move as per the chart or some form of corporate activity (FEN won't come back) on its way?

"Since the Group announced that it intended to investigate a possible sale of its Residential Property business in May 2021, the Board has been encouraged by the level of interest received. A further update will be made when appropriate."

Warning:

- Highly illiquid share.

- Watch with popcorn from the sidelines.

All imo
DYOR

[al101uk] 20/7/2021 18:51

Harwood are listed as a significant shareholder at 13.3% here...



The Frenkel shares would take them to about the right level on that basis (6.1%).

[ali47fish] 20/7/2021 17:40

Harwood Capital LLP invests 19.4 pc from no holding- what'sall this about?

[casholaa] 22/6/2021 11:12

Come on, get up there you slag!

[florence141414] 26/5/2021 09:43

Yeah that’s a good point, bringing work in house will mean more of the profits are retained but total profits should decrease. It will be interesting to see if they maintain the partnerships so that they can still palm work off at times when NAL is operating at full capacity. They could also make up some of the lost total operating profit if critical care continues on it’s pre pandemic growth trajectory.

[brileyloucan] 26/5/2021 08:16

Thanks for the response. I guess that's the hope - with my positive hat on I'd say exceptional items should be less than this as they are, well, exceptional; cost-savings may increase this slightly; and at least the share count hasn't been diluted.

To balance this the future business may not look very much like the past so not sure if makes sense to use that £12m starting point and residential (trying) to be sold.

I am happy to hold for a couple more years.

[florence141414] 26/5/2021 07:43

I emailed them yesterday on this very point. The reply effectively said yes although it will take 2/3 years to filter through to results as that is how long it willl take for cases put through NAL to come to fruition. If they are able to execute this plan successfully I could see a scenario in a couple of years time in which they return to 2019 operating profits of around 12m and the profit attributable to non-controlling interests is cut in half from yesterday’s 4.1m to around 2m as NAL cases conclude. Deduct another 1.5m for exceptional items and NAHL would be producing around 8.5m of cash flow. I am a holder though so that could be a somewhat rose tinted view.

[brileyloucan] 25/5/2021 08:05

Results seem reasonably resilient, though not sure if it can get back to previous profits. Cost savings may help 2021 figures and hopefully lose some of the extraordinary items.

A lot of underlying profits go out the door to non-controlling interests, does anyone know if this will decrease over the next year due to more cases being put to NAL, rather than panel firms? Do they have significant JV's with law firms left?

BL

[johnhemming] 23/5/2021 12:37

A while ago they told me they were issuing results on 25th May.

[ali47fish] 23/5/2021 12:37

will nahl publish an agm statement on tuesday

[scepticalinvestor] 13/1/2021 16:45

Let's just say that I am pleased that I sold out in Dec

[scepticalinvestor] 13/1/2021 08:37

Yes, according to their last RNSI expect an update probably after trading hours today