NAHL : Final Results 2023

2 May 2024

NAHL Group plc

("NAHL", the "Company" or the "Group")

Final Results

Building on strong foundations to scale the business and outperform the market, growing revenues and

further reducing net debt

NAHL, a leading marketing and services business focused on the UK consumer legal market, is pleased to announce its audited results for the year ended 31 December 2023.

Financial Highlights

• Group Revenue increased by 2% to £42.2m (2022: £41.4m).
• National Accident Law (NAL), the Group's fully integrated law firm, collected £6.0m of cash from settlements, 73% higher than the prior year (2022: £3.5m), a clear sign of its growing maturity.
• Delivered a 27% reduction in net debt to lower than anticipated level at £9.7m (31 December 2022: £13.3m).
• Generated £3.6m of free cash flow, 63% more than last year. Net cash generated from operating activities was also strong, up by 25% to £7.5m (2022: £6.0m), and operating cash conversion increased to 217% (2022: 143%).
• Operating profit for the year was £4.1m (2022: £4.8m) against a backdrop of higher costs and in line with our strategy to invest more in NAL for higher profitability in the medium term.
• Proft before tax was £0.65m (2022: profit before tax of £0.57m).
• Basic Continuing EPS increased 12.5% to 0.9p (2022: 0.8p).

Operational Highlights

• NAHL continued to make strong progress across the business in 2023, standing the Group in good stead for further success.
• Focused on growing the value of personal injury enquires placed into NAL to grow a more profitable and sustainable business:
  o Group placed 8,518 new enquiries into NAL; these were of a higher quality than previous years and it is estimated they will generate £6.6m in future revenue and cash, compared to £5.9m in 2022.
  o 3,633 claims settled, 92% more than 2022, and at year end NAL was processing 9,983 ongoing claims (31 December 2022: 10,860).
  o After expensing marketing and processing costs incurred to date, it is anticipated that NAL's book of ongoing claims will generate: future revenues of £9.9m; future gross profits of £8.6m; and future cash of £13.9m, up 24%. The Board's strategic decision to prioritise investments in NAL rather than in the Group's joint-ventures, enabled it to reduce the profit attributable to members' non-controlling interests in LLPs by 29% to £2.5m (2022: £3.6m).
• National Accident Helpline generated 35,643 enquiries, up 2% on the prior year (2022: 34,905). TV and social advertising resulted in a 7.5% increase in market share and the National Accident Helpline brand remained the "first choice for people who have had an accident and want legal representation".
• The disposal of non-core Homeward Legal in April 2023 successfully removed a drag on growth and allowed management to refocus on their strategic priorities.

• In Critical Care, the strategy to grow market share by broadening the customer base, extending competencies and specialisms and becoming more efficient is working, and the division delivered double digit growth in 2023.
  o Cash from operations in Critical Care increased by 61%.
  o Bush & Co. delivered 11% and 29% growth in revenue and operating profit respectively along with impressive margin expansion to 30%.
  o Bush & Co. Care Solutions had a strong year with revenues growing by 39% to £0.5m (2022: £0.4m) driven by a 40% increase in standalone nurse-led care packages, which generate monthly recurring revenue.
  o A record year for expert witness services, increasing revenues by 37%. The team delivered 1,136 reports to customers, a 17% increase (2022: 974).
  o Critical Care onboarded 76 new associates in 2023 and grew expert witness and case management associate numbers by 22% and 22% respectively.

Post year end

• In February 2024, the Group successfully extended its banking facility with Clydesdale Bank/Virgin Money, reducing the £20m RCF (which was due to expire on 31 December 2024) to a £15m facility which runs to 31 December 2025.
• In March 2024, the UK Supreme Court upheld a court of appeal decision in favour of the claimant in Rabot vs Hassam. The Board considers this a positive development for personal injury claimants and the Group as it will translate into increased average revenues in RTA mixed injury claims being processed by NAL.
• On 5th April 2024, the Company announced that the Board is evaluating a possible sale of Bush & Co. This remains at a very early stage and there can be no certainty a sale will occur.

James Saralis, CEO of NAHL, commented:

"I am pleased with the solid financial performance that the Group delivered in 2023 and am encouraged that we continued to outperform the market in both Consumer Legal Services and Critical Care while further reducing net debt and building a more sustainable business. I would like to take this opportunity to thank our fantastic team for their continued hard work and commitment, driving our success.

"We demonstrated further improvements in our Personal injury business, which was again profitable and cash generative, and delivered double digit growth in Critical Care. These strong results position us well to maintain our growth and realise the step-change that we have been working towards as our own fully integrated law firm, NAL, matures.

"Building on our strong foundations and proven ability to navigate market conditions, the Board is confident in delivering the growth in profits and reduction in net debt in line with 2024 market expectations."

The Annual Report and notice of Annual General Meeting will be available by the end of May 2024.

NAHL Group plc (AIM: NAH) is a leader in the Consumer Legal Services market. The Group provides services and products to individuals and businesses through its two divisions:

• Consumer Legal Services provides outsourced marketing services to law firms through National Accident Helpline; and claims processing services to individuals through National Accident Law, Law Together and Your Law. In addition, it also provides property searches through Searches UK.
• Critical Care provides a range of specialist services in the catastrophic and serious injury market to both claimants and defendants through Bush & Co.

More information is available atwww.nahlgroupplc.co.uk,www.national-accident-helpline.co.uk,www.national-accident-law.co.ukandwww.bushco.co.uk.

Throughout this document, references to 'joint venture' law firm relate to our law firms Your Law LLP and Law Together LLP which we operate in partnership with a minority member. The term 'joint venture' does not relate to the UK-adopted International Accounting Standards (IFRS) definition. These law firms are accounted for as subsidiary undertakings.

Chair's Report

The Group continued to deliver further progress across the business in 2023. National Accident Law (NAL), our wholly owned law firm, almost doubled the number of cases it settled compared with 2022 and generated £6.0m in cash from those settlements. Each year it becomes a more significant part of our Personal Injury business. Bush & Co had another strong year achieving 11% growth in revenues and improving its operating profit margin to 30%. These strong divisional performances resulted in debt falling by 27%.

Overall, we completed the year with revenues of £42.2m (2022: £41.4m), a profit before tax of

£0.6m (2022: £0.6m) and a further reduction in net debt to £9.7m (2022: £13.3m).

Consumer Legal Services

Revenues in the Consumer Legal Services (CLS) division were marginally lower than last year at £27.6m (2022: £28.3m) due to the disposal of our non-core business Homeward Legal at the beginning of the year, and a reduction in the size of our joint venture LLPs. The Personal Injury business remained profitable and cash positive, growing market share.

NAL generated £6.0m in cash from settlements compared with £3.5m in 2022 and £2.1m in 2021 and is nearing an important inflection point, when the expected value of new claims started is broadly equal to the value of those settled. Investing more enquires into NAL, now that we can see the return, will increase its potential even further.

The Personal Injury business has outperformed the market; the volume of enquiries generated by NAL increased by 2%, against a decline in the overall number of claims in the market. Consequently, our market share grew by 8% compared with 2022.

The vast majority of Road Traffic Accident (RTA) claims are directed to NAL and we continue to screen out the lowest value RTA enquiries as they are not profitable to process. We have also directed our marketing efforts to target higher quality claims. This selective approach is contributing to an improvement in the average value of an RTA claim which is now similar to a non-RTA case, with the benefit of a slightly shorter lifecycle. As a result, the average future value of claims going into NAL improved again in 2023.

NAL ended the year processing 9,983 open claims (2022: 10,860) which have a combined future

cash value (before future processing costs) of £13.9m (2022: £11.2m). The improvement in future value reflects our strategic focus on processing claims that have a better quality mix and higher average values and is proof our strategy is working.

Currently, most of the enquiries we generate are directed to our panel, delivering cash and profit in the short term. Whilst this model does provide cash flow, the Group continues to believe that a better, but longer-term, return can be made by investing those claims in NAL. We continue to monitor the balance between these two options, as we plan the future for NAL.

Some enquires continue to be directed to our joint venture law firm, Law Together LLP, which provides an important component of our flexible placement model, particularly as the personal injury legal market continues to consolidate reducing the number of panel law firms.

The other component of our Consumer Legal Services division is our searches business. Despite difficult market conditions resulting in transaction volumes falling, Searches UK performed well. The

business was cash positive and generated a profit of £0.2m on revenues of £2.7m.

Critical Care

Bush & Co had another strong year with revenues increasing by 11% to £14.6m (2022: £13.2m) and

operating profit growing by 29% to £4.4m (2022: 3.4m). The operating profit margin also increased

to 30% (2022: 26%). Around 49% of Bush's revenues are recurring.

Case management is the most established part of our business and we have a strong reputation for this amongst all the leading law firms in the catastrophic and serious injury market. Whilst revenues were broadly in line with the previous year, the profitability of this work has been enhanced. This was achieved through our investment in technology and back-office processes, which has now been completed.

Our expert witness offering achieved good growth again this year. It has become an increasingly important part of our Critical Care business and now accounts for 45% of Bush & Co.'s turnover (2022: 36%). We expect to see further growth in this segment of the market and are continuing to recruit associate expert witnesses to meet the strong levels of ongoing demand.

Bush & Co. Care Solutions, which was only launched towards the end of 2021, offers nurse led care management solutions in an adjacent market to case management, generally after settlement of the litigation. It has proved to be a successful and profitable initiative and grew its revenues by 39% to £0.5m (2022: £0.4m). We expect to see growth continue now we have established our position in this additional market.

Our previous investments in improving the infrastructure at Bush & Co. and developing our expert witness and care offerings has created a highly profitable business, with a strong record of growth and a platform for future success.

Summary

I would like to thank all our employees for their continued commitment and hard work. Our people and culture are central to our success.

We have made good progress again this year across the Group and delivered a further significant reduction in debt. The personal injury business remains cash generative and profitable and is winning an increasing share of enquiries in the large RTA market. Our own law firm, NAL, has a strong pipeline of value in its book of claims. It has shown what it can achieve and has the potential to become an even more important part of the Personal Injury business in the future. Critical Care has delivered a good return on the investment we have made with another year of revenue and profit growth and an impressive 30% operating profit margin. In view of its strong performance, this could be an attractive opportunity for a buyer and generate immediate value for shareholders. We are, therefore, at an early stage of investigating a potential sale of Bush & Co., but there is no certainty that a sale will happen.

The Group is in a very different place to a few years ago, and even more strongly positioned as a result. Our strategy is producing substantive results, and I am confident that we are on track for further success.

Tim Aspinall

Chair

CEO Report

We are making good progress across the Group, and in 2023 we grew revenues and earnings, and significantly reduced net debt. Our strategy is working, and we are on track to deliver substantial growth as our business matures.

Overview

In 2023, we continued building on the Group's strong foundations.

Despite the ongoing macroeconomic volatility, increasing cost pressures and high inflation, we grew our revenues and underlying earnings and made a significant reduction to our net debt, further strengthening our balance sheet position. We demonstrated further improvements in our Personal Injury business, which was again profitable and cash generative, and delivered double digit growth in our Critical Care business. The disposal of Homeward Legal, our non-core conveyancing business, in April 2023 successfully removed a drag on our growth and allowed us to refocus on our strategic priorities.

These results position us well to continue our growth and realise the step-change in profitability that we have been working towards, as our own fully integrated law firm, National Accident Law (NAL), matures.

Financial performance

Group revenue increased by 2% in the year, to £42.2m (2022: £41.4m), reflecting a strong performance in our Critical Care division. Revenues in the Consumer Legal Services division were lower than last year because of the disposal of Homeward Legal in April 2023. On a continuing basis, revenues grew by 4% to £41.9m (2022: £40.2m).

Operating profit for the year was higher than anticipated at £4.1m, (2022: £4.8m). The reduction versus prior year is due to the change in placement of work, away from our joint venture partnerships and into NAL to generate higher profits over the medium term.

Profit before tax was £0.6m (2022: profit before tax of £0.6m). Basic earnings per share on continuing operations

(EPS) increased to 0.9p (2022: 0.8p).

Last year, I said that continuing to reduce borrowing levels whilst balancing investment in both divisions to enable future growth was a strategic priority for the Group, and I'm pleased to report that our results exceeded our expectations. The Group generated £3.6m of free cash flow in the year, which was 64% more than last year. Improvements came from increased cash from settlements in NAL, a higher return from our joint-ventures, and from a 61% increase in cash generation in Critical Care. Importantly, our Personal Injury business was cash generative again this year. Net cash generated from operating activities was also very strong, increasing 24% to £7.5m (2022: £6.0m) and operating cash conversion increased to 217% (2022: 143%).

As a result of this strong cash performance, net debt at 31 December 2023 was lower than anticipated at £9.7m, down 27% in 12 months (31 December 2022: £13.3m).

Divisional performance

Consumer Legal Services

The personal injury market remained subdued in 2023, but our Consumer Legal Services division performed well - growing the number of enquiries that we generated, increasing the value of our book of claims, and improving cash generation.

Revenue in the division reduced by 2% to £27.6m (2022: £28.3m) as a result of the disposal of our non-core conveyancing business, Homeward Legal, in April 2023. Excluding the discontinued business, the underlying revenues grew by 1% and the Personal Injury business increased its revenues by 3%. Operating profit decreased by 33% to £2.8m (2022: £4.2m). This reduction was a consequence of our strategic decision to prioritise investing new claims into NAL thereby reducing the flow of work to our joint-venture firms. This will help us to create a more profitable and sustainable firm in the medium term.

The division generated £2.1m of cash from operations in the year (2022: £2.2m). After deducting drawings paid to

LLP members, both the Personal Injury (2023: £1.6m; 2022: £1.8m) and Residential Property (2023: £0.5m; 2022: £0.3m) businesses were cash generative.

Personal Injury

The UK personal injury market contracted further during 2023. According to official figures from the Claims Compensation Recovery Unit of the Ministry of Justice, the number of personal injury claims fell by 3% in the year, driven by a 5% decrease in road traffic accident claims (RTAs). Whilst smaller in quantum, employer liability, public liability and clinical negligence claims increased by 2%, 11%, and 3% respectively. Our internal analysis puts the value of the claimant-side personal injury market to be around £1.1bn, so whilst the trend for slowly contracting claims numbers has returned to its pre-pandemic trend, and we believe that this trend is set to continue, this remains a large and attractive market.

Our priorities during 2023 were threefold.

1. Firstly, we wanted to grow the number of personal injury accident victims we supported by increasing the number of enquiries we generated. We did this successfully and the results for 2023 showed that National

Accident Helpline generated 35,643 enquiries in the year, which was 2% more than the prior year (2022: 34,905). The mix of enquiries generated changed slightly from last year, with RTA making up 25% of the total (2022: 22%), non-RTA 47% (2022: 50%) and specialist enquiries remaining consistent at 28%. In the first half of the year, the business did not have any placement options on its panel for RTA enquiries which meant that all of these were placed into NAL. These were higher quality claims than we anticipated, which will generate a lifetime return akin to non-RTA, but the additional volume limited our capacity to grow our non-RTA book during the year.

Our enquiry generation was achieved with a 2% increase in our direct media marketing spend, including a £0.5m investment in TV advertising in the first half of the year. Whilst our brand advertising on TV generated a positive return, subsequent analysis showed that given the prevailing market dynamics, we would generate a higher return by pivoting to social media advertising, which is what we successfully executed in the second half of the year.

Our marketing efforts resulted in an 8% increase in market share during the year and independent research revealed that the National Accident Helpline brand remained the "first choice for people who have had an accident and want legal representation". In RTA claims, NAHL increased its market share to its highest level since the Government's whiplash reforms, growing from 1.5% in December 2022 to 1.9% in December 2023, on a trailing 12-month basis. Our share of the non-RTA market (excluding industrial disease) held broadly level at 17%.

1. Our second priority was to grow the value of personal injury enquiries processed in our own consumer- focused law firm, National Accident Law, which will enable us to create a more profitable and sustainable business over time. Whilst the results show that we placed slightly fewer new claims into NAL in 2023, the value of these claims was substantially higher. Furthermore, as at 31 December 2023, the value of the book of claims that the firm was working on was 24% higher than 12 months prior.
   In 2023, the Group placed 8,518 new enquiries into NAL which cost £3.0m in marketing investment (2022: £2.7m). Whilst this was slightly fewer in number than the prior year (2022: 8,760), these enquiries were of a higher quality and are anticipated to generate a higher return over their lifecycle. Such claims can take several years to process, and not all will be won and result in settlement. However, we estimate that the new claims introduced in 2023 will be worth £6.6m in future revenue and cash by the time they mature, compared to new claims worth £5.9m in 2022.
   NAL settled 3,633 claims during the year, which was 92% more than the 1,894 settled in 2022, demonstrating the rapid scale up of operations within the firm. Throughout the year, NAL consistently improved its performance levels, reducing timescales for admissions and settlements, and the team implemented several improvements to processes and systems to help make the firm more efficient.
   At 31 December 2023, NAL was processing 9,983 ongoing claims (31 December 2022: 10,860 ongoing claims). These claims represent an embedded value to the business, being the future profits and cash to be generated by processing them through to settlement. In the second half of the year, we conducted a detailed assessment of the book including previous settlement results, which resulted in an upgrade to the value of the book by £2.1m. We estimate that after expensing the marketing costs to generate these claims and processing costs to date, our book of ongoing claims will generate future revenues of £9.9m, future gross profits of £8.6m, and future cash of £13.9m. This is 24% more than the £11.2m of future cash that we estimated the book to be worth a year ago.
2. Our final priority for 2023 was to ensure that the Personal Injury business was self-funding and that we paid for the investment in new enquiries in NAL by leveraging our agile and scalable placement model. This was also achieved as the Personal Injury business generated a net cash flow, after deduction of drawings paid to LLP members, of £1.6m (2022: £1.8m).

NAL collected £6.0m of cash from settlements in 2023, which was 73% higher than in 2022 (2022: £3.5m), a clear sign of the growing maturity of NAL and the focus on cash collection that has been embedded in the firm.

Our panel of third-party law firms continued to provide a good service for our customers and an important source of cash flow to support our growth. In total, approximately 24,500 enquiries were placed into our panel, across all enquiry types (2022: approximately 23,500 enquiries).

Our joint-venture law firms performed well during the year. Law Together LLP, which launched in 2019, is mature and received approximately 2,500 new enquiries in the year (2022: approximately 3,000 enquiries). Our first joint- venture, Your Law LLP, is in run off and took no new enquiries in either period. Both of these partnerships are profitable for the Group and they delivered a combined £4.4m of cash in the year (2022: £3.3m) after deducting drawings to LLP members, reflecting the investment that we have made in these partnerships over a number of years. We plan to continue to utilise the flexibility that this arrangement provides us.

Residential Property

The division's Residential Property businesses, which comprised Homeward Legal and Searches UK, generated revenues of £2.9m (2022: £4.3m) and operating profit of £0.1m (2022: £0.3m).

As previously announced, Homeward Legal was sold during the year and has been shown in the financial statements as a discontinued operation. The UK residential property market proved to be challenging in 2023, caused by high interest rates resulting in a reduction in the number of new mortgages agreed, consequently Homeward Legal made a small loss. The business was sold in April 2023 for £0.1m, which equated to the net asset value at the time of disposal. Details of the sale are presented in note 9 to the financial statements.

Searches UK, the Group's other Residential Property business which prepares property search reports for homebuyers, also experienced challenging conditions. Its revenues contracted by 13.5% to £2.7m but it reduced its costs, and it returned a profit of £0.2m (2022: £0.3m). The business also remained cash generative during the year.

Critical Care

In the Group's Critical Care division, Bush & Co. had a very strong year, delivering double-digit growth in revenue and profit, along with impressive margin expansion.

Revenues increased by 11% to £14.6m (2022: £13.2m), of which around 49% was recurring. Operating profit

increased by 29% to £4.4m (2022: £3.4m) and operating profit margins increased by 4 percentage points from 26.0% to 30.0%. The business generated £4.9m of cash from operations, an increase of 61% on the prior year (2022: £3.1m).

Bush & Co. operates in the catastrophic injury and care markets, with most work arising from injuries suffered in serious RTAs or through medical negligence. Statistics from the Department of Transport show that the number of serious RTAs reduced by 1%1 in 2023 and returned to their pre-pandemic trend of a slow decline. Conversely, data from NHS Resolution shows that the medical negligence market has been growing steadily since 2018/19. Whilst their most recent report shows the number of new claims registered in 2022/23 was down 10% on the prior year, this was still more than each of the preceding eight years, and so the trend remains positive.

In Critical Care, our strategy is to grow market share by broadening our customer base, extending our competencies and specialisms and becoming more efficient at what we do. In 2023, we successfully delivered against each of those objectives.

Expert witness services had its best year ever, continuing its strong growth and increasing revenues by 37%. The team delivered 1,136 reports to customers, an increase of 17% on the prior year (2022: 974), and there was more demand for follow up work.

In case management services, revenues were flat year-on-year. The business delivered 539 initial needs assessment (INA) reports, which was 2% higher than last year. This business is servicing 1,406 ongoing case management clients (2022: 1,354) that generate recurring revenue for the Group through our claimant, defendant and insurer relationships. These services are billed on a regular basis depending on the level of support required.

We grew and strengthened our customer base in the year, leveraging our previous investments in marketing and business development to continue to grow our pipeline of new work. Overall, instruction numbers were up 4%, with expert witness instructions up 9% to 1,142. INA instructions were down 5% to 530 but this is against the backdrop of an exceptional year in 2022 when INA instructions grew by 14%.

Our investment in the recruitment of new associates has proven key to the growth in revenue in this division. We onboarded 76 new associates in the year and grew expert witness and case management associate numbers by 22% and 22% respectively. We ended the year with 158 expert witness associates and 117 case management associates.

We also continued to grow our team of employed case managers, which enables us to process less complex work at a higher utilisation rate, thereby increasing margins. The team increased from seven employees at the start of the year to nine by the end. We will continue to build in this area through 2024.

In 2021, we launched Bush & Co. Care Solutions to complement our case management proposition and expand into the adjacent care market. This initiative has performed well in the year, with revenues growing by 39% to £0.5m (2022: £0.4m). This growth was driven by a 111% increase in the number of standalone nurse-led care packages from December 2022 to December 2023, which generate monthly recurring revenue. This service is regulated by the Care Quality Commission (CQC) and in December 2023 the CQC carried out an inspection, rating our services as Good across all areas of the inspection.

Over the past couple of years, the business has been investing in new systems and people in order to become more efficient and the benefits of this work became evident in 2023. We previously implemented a new finance system and through 2023 the team have been upgrading the back-office systems and processes to enhance our capabilities. As a result, the team are now able to issue invoices and statements sooner in the month, with less resource, and better analyse the debt owed from customers. As a result, debts continue to be recovered quicker and this contributed to the 61% improvement in cash from operations in the year.

Due to the efficiencies achieved, the team have been able to operate with a lower level of variable costs, resulting in improved operating leverage and the margin expansion noted above.

Our sustainable culture

At NAHL, we are creating a sustainable business for the long-term gain of all our stakeholders. To us, this starts with a focus on maintaining a progressive, inclusive culture so that we can attract and retain the very best people, whilst also being mindful of the planet and local communities. This enables us to provide a great service to our customers, in addition to creating long-term value for our shareholders. The Group's values of Driven, Curious, Passionate and Unified continue to guide how we do things at NAHL.

The Group employed 280 people at 31 December 2023, which was broadly consistent with the prior year (31 December 2022: 283), and we invested across the business, particularly in areas such as litigation, marketing and Bush & Co. Care Solutions. We have embraced the benefits of remote working at NAHL, which provide us with greater access to highly skilled colleagues from across the UK. 39% of our workforce operate on a hybrid basis, 30% work on a fully remote basis and 31% operate permanently from one of our offices. We are mindful of the challenges that working from home can present, and so in 2023 we launched our Fit for Work programme, aimed at improving working relationships, productivity and collaboration between our people. Our employees value the support and flexibility that we offer and this helped to reduce our staff turnover by 8 percentage points in the year.

Our people are recruited to join our teams from a diverse range of backgrounds and experience as we believe that makes us better able to serve our customers; and we expect our leaders to engender trust with all our stakeholders by demonstrating their ability, integrity and benevolence. When we surveyed our people during the year, 93% said that they believed that everyone in our business is treated fairly regardless of race, gender, ethnicity, disability, sexual orientation or other differences, a result I am very proud of and we remain committed to further improvements in this area.

As at 31 December 2023, the gender split across the Group was 70% female and 30% male, and on the Board it was 20% female and 80% male.

Development of our people is a key part of our employee proposition, and we invested in almost 14,000 hours of training and development across the Group in 2023. This included internally delivered courses on Strengths, Self- Confidence and Imposter Syndrome, as well as our very successful Pathway to Leadership programme for aspiring managers. In 2023, we also launched our new Commercial Leadership Academy which is designed to develop the next generation of leaders for the Group, and we were thrilled with the results that it delivered.

Our employees are passionate about our business and also the communities in which we operate. The Group and its employees raised over £8,500 for charity in 2023, and our people volunteered 450 hours of their time to working in our local communities.

Every year we measure the engagement levels of our people through a survey which is based on the Gallup2 Q12 Survey. I'm proud to report that in 2023, we achieved our highest ever score of 81% engagement (2022: 78%). This is an outstanding result that sets us apart from other employers. According to Gallup2, the average engagement score of other UK companies is just 10%; and in Gallup2's best performing cohort of companies globally, who are awarded Exceptional Workplaces, the average is still lower than NAHL at 72%.

Extended banking facilities

Since the year-end, the Group has successfully extended its banking facility with Clydesdale Bank/Virgin Money. In February 2024, we reduced our £20m revolving credit facility, which was due to expire on 31 December 2024, to a £15m facility which runs to 31 December 2025. The Board has determined that this lower facility should be adequate for the Groups needs as it continues to deleverage, and it will enable us to save on finance costs.

Current trading and outlook

The Group has demonstrated its ability to scale and outperform its markets in both of its divisions and we have significantly reduced net debt from a peak of over £21.0m in 2019 to under £9.7m by the end of 2023. We remain on track to deliver against our strategy in both of our divisions in 2024.

In Personal Injury, we are growing the value of claims processed through NAL, which will lead to higher future profits and cash as claims mature. In Critical Care, we have created a platform for growth with new systems, a new care proposition and an enhanced business development capability that will enable us to win further share in a fragmented and consolidating market. Our strategy remains to build on these strong foundations, and the Board is confident in delivering the growth in profits and reduction in net debt in line with market expectations.

In March 2024, the UK Supreme Court ruled in favour of the claimant in Rabot vs Hassam, which the Board considers a positive development for personal injury claimants and the Group. This case determined the approach to valuing mixed-injury RTA cases that settle in the small claims track. Mixed injury cases are those where the claimant has suffered a minor whiplash injury and a non-whiplash injury. The judges ruled that the overall award cannot be lower than the value of the non-whiplash injury alone. Non whiplash injuries generally have a higher value than whiplash injuries as they were not affected by the civil justice reforms. This important judgement will result in an increase in the average level of damages awarded in mixed-injury claims, and should reduce settlement timescales, both of which will be welcome news for accident victims. This will also translate into increased average revenues in RTA mixed-injury claims being processed by NAL, which should help to offset the broader market challenges described above.

In Q1 2024, we continued to scale NAL and the business has settled 26% more claims than in the equivalent period last year and generated £2.0m of cash from settlements, 67% more than prior year. Simultaneously, we proactively reduced the number of enquiries that we generated in National Accident Helpline by 30% to match a short-term reduction in panel demand whilst protecting cases going into NAL. This led to lower revenues in the first quarter than we anticipated, offset in part by a 45% reduction in marketing spend. Pleasingly, demand is returning, and we have increased marketing spend to grow enquiry numbers accordingly. In Critical Care, expert witness services continued its excellent performance, issuing 4% more reports in the first quarter than last year. Case management performance was largely flat year-on-year and Care Solutions continued its strong growth, increasing revenues by 40% in the first quarter.

As a Board, we are pleased with the progress that Bush & Co is making in growing its revenues and profits and continue to believe that there is an exciting opportunity for that business in its market. The Board is always considering strategic options that seek to accelerate growth in value for shareholders and consequently we are currently investigating the potential sale of Bush & Co. As advised in our announcement on 5 April 2024, whilst an adviser has been appointed to support us in this matter, we are at a very early stage and there can be no certainty that a sale of Bush & Co will occur, nor as to the terms or timing of such sale. The Board will provide an update to shareholders as and when appropriate.

Finally, I'd like to pay tribute to our fantastic team of people without whom we could not have delivered these strong results. I'm proud of our achievements in 2023 and I look forward to working together to deliver our future goals in 2024.

James Saralis

Chief Executive Officer

References

1.https://www.gov.uk/government/statistics/reported-road-casualties-in-great-britain-provisional-estimates-year-ending-june-2023/reported-road-casualties-in-great-britain-provisional-estimates-year-ending-june-2023

2. Gallup state of the workforce report, 2023.

CFO Report

The year saw the Group continue to grow, reduce its net debt further and dispose of the non-core Homeward Legal business. This was despite continued headwinds in the broader personal injury market, which remained subdued.

National Accident Law (NAL) is now approaching maturity on current volume levels being placed and is generating significant cash receipts. Meanwhile the investments made within the Critical Care division are starting to pay back through revenue and margin growth.

Revenue grew by 2% to £42.2m (2022: £41.4m), and 4% on a continuing basis. Operating profit fell

by 13% to £4.1m (2022: £4.8m). This was offset by lower profits attributable to non-controlling

interests which reduced to £2.5m (2022: £3.6m).

Review of income statement

Consumer Legal Services

Revenue in the Consumer Legal Services division fell by 2% to £27.6m (2022: £28.3m), however

when excluding the disposal of Homeward Legal, revenue grew by 1% to £27.3m (2022: £27.1m).

Operating profit fell by 33% to £2.8m (2022: £4.2m). This was expected as the business continues to grow NAL. This profit takes longer to come through as cases settle but ultimately generates a higher return than placing with the joint ventures and panel. The division remained profitable after deducting non-controlling interests, generating profits of £0.3m (2022: £0.6m).

Enquiry numbers grew by 2% to 35,643 (2022: 34,905) arising from market share gains as the market continued to shrink slightly year on year (-3%). 8,518 enquiries were passed across to NAL during the year (2022: 8,760). This is slightly lower than the previous year but represented a higher value mix of cases following the decision to stop processing tariff only soft tissue cases in early 2022.

By the end of the period, NAL was processing 9,983 open cases (2022: 10,860). These ongoing

cases are expected to contribute c.£9.9m (2022: £8.2m) in future revenue and c.£13.9m of future cash receipts. The estimated value of these open cases was uplifted by £2.1m in the year following a review of historical cases which showed that cases are settling on average at higher values than originally expected.

NAL is moving closer to maturity based on the current volumes being placed each month and this can be seen from the cash being generated from settled cases. Cash receipts from settled cases grew by 73% in the year to £6.0m (2022: £3.5m) from 3,633 settled cases (2022: 1,894). This compares to £6.6m of expected revenue across the life cycle of the new cases added during the year (2022: £5.9m). Cash collected since inception now totals £13.0m.

Profit attributable to non-controlling interests fell by 29% in the year to £2.5m (2022: £3.6m).