Nahl Group (LSE:NAH) — Final Results

0:01 Good morning, and welcome to the NAHL GROUP PLC Final Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll.

0:32 I'd now like to hand you over to James Suralis, CEO. Good afternoon good morning, sir. Thank you, Lily. Yes. And good morning, everyone. I'm James Suralis, CEO of NAHL GROUP, and I'd like to welcome you all to NAHL's final results presentation, which covers the twelve months to the 12/31/2022. We released our premiums on Tuesday, Tuesday March 22, and I hope to give you a flavor of those results today and also highlight the progress that we're making in realizing the returns on our strategic investments and building solid foundations for future growth.

1:10 I'm here today with Chris Hyam, the group CFO, and we're going to work through the presentation, which is also available in the investor section of our website. You can see today's agenda on the screen now. I'll start by giving you a flavor of the highlights and review the progress that we've made over the last few years to transform our business into a more sustainable, resilient, higher margin business. I'll then hand over to Chris to present the financial review and explain the great progress that we're making in reducing our net debt. Then we'll dive into the detail on each of the divisions, and I'll provide provide an outlook for the rest of the year at the end. There then should be plenty of time for questions. So if you do want to submit a question, as Lily said, please do so.

1:57 We'll try to answer as many as we can. But if we don't get to them all, then I'll submit a written response. I know that IMC will add that to the meeting on the platform so that you can look at that at your leisure.

2:11 So without further ado, let's get into the highlights. NAHL achieved its financial goals in 2022 and returned the business to growth despite the headwinds across the economy and the specific challenges within our own markets. The results that we announced this week are in line with the recently upgraded market expectations and our trading statement from January. The group increased revenues by 6% and operating profit by 14%, and that's after we continue to invest for future growth in both of our divisions. We delivered strong growth in EPS and free cash flow. And importantly, we've strengthened our financial position, reducing our debt from 15,500,000 at the end of twenty twenty one to 13,300,000 at year end.

3:02 This was a priority given the challenging and unpredictable macroeconomic environments that we're in at the moment and also the high UK interest rates. If I turn to the operational highlights then, We it was great, first of all, I suppose, to see both divisions generating growth and advancing their strategies in the year. In consumer legal services, we've been growing our market share, and we are continuing to rapidly scale our fully integrated law firm, National Accident Law. We returned to TV advertising in 2022, and that helped us to deliver a 9% growth in the number of personal injury inquiries we generated. National Accident Law won 60% more claims than the prior year and generated £3,500,000 in cash from settlements.

3:55 NAHL grew its book of claims by 37%, and that's now worth an estimated 11,200,000 of future cash. In critical care, our investments to drive efficiencies continue and this is helping us to build a more resilient platform for growth. Exper witness services had a very strong year. The reports they issued were up 10%. Our past investments in business development and marketing continue to yield strong results. Expo witness instructions were up 7% and INA instructions, initial needs assessment instructions, they were up 9%. We recruited 61 new associates to support our growth and enhance Bush's proposition, and we grew revenues in our new care proposition, Bush Care Solutions by 24%.

4:44 This enables us to access an adjacent market and I think this is gonna be a key driver for future growth.

4:54 So those are the highlights from our results. But before we go any further, for those of you who aren't familiar with our business or would appreciate a recap, this slide should give you an introduction to who we are. NAHL operates in The UK legal services and catastrophic injury markets. We provide services and products to individuals and businesses through our two divisions which are called consumer legal services and critical care. In consumer legal services, we're The UK's leading provider of personal injury advice, services, and support. We have twenty nine years experience and we've helped more people injured in accidents than anyone else. Through our market leading brand, National Accident Helpline, we guide accident victims through the steps of making a personal injury claim.

5:43 We then triage those claims. And for those that we think have legal merit, we either pass them onto our panel of specialist third party law firms or joint ventures for processing or increasingly, we process those in our own fully integrated law firm, National Accident Law. Also in this division, we operate a small residential conveyancing business called Home Legal and a property searches business called Searches UK. In our critical care division, our Bush and Co business is a leading brand in the market providing expert witness reports, immediate needs assessments, and case management rehabilitation services in The UK. We support children, young people, and adults following a catastrophic injury or clinical negligence.

6:29 And these are the most serious injuries often leading to life changing disabilities and include acquired brain injuries and spinal cord injuries. They have claimed settlements exceeding £500,000 and usually into the millions actually.

6:44 We also have a centralized shared services function which provides strategic leadership, funding, and governance to support the divisions. And over the years, we've built an inclusive and supportive culture with a strong focus on employee engagement, which I believe is for the benefit of all of our stakeholders. And we've been recently recognized externally for this culture. We've been awarded the gold standard by investors and people, and we've been included in the best small companies list in recent years. And finally, in this section, I thought it would be helpful to review the progress that we've made over the last few years. I'm aware that it's been a long journey for some of our investors dating back to in 2015, the whiplash reforms were first announced in our market.

7:33 That led in 2019 to us launching NAHL. We started to scale the business. And then in 2020, the COVID pandemic proved a real setback. We had to put our strategy on hold and really refocus on increasing liquidity, which delayed our growth. So it's been a challenging journey, but over the last three years, we've made real progress and we're now firmly on track to deliver on our growth ambitions. We've completed the PI transformation, returning the business to profits and cash generation. In critical care, we've upgraded our technology, our business and developing business development, sorry, and our marketing capabilities. And we've built a strong platform for growth and improved margins.

8:18 And at a group level, we've reduced our net debt from 21,000,000 at the end of twenty nineteen to 13,300,000 at the end of twenty two, and we plan to reduce it further.

8:29 Now we're not content with these results. There's lots more for us to do, and we expect to see profits continuing to grow strongly over the coming years as the business matures and de leverages. Next, I'm gonna hand on to Chris who's gonna take you through the financial review. Thanks, James. Firstly, we're pleased to report that we've a revenue grow by 6.4% to 41,400,000 in the year, and then we've seen growth across both of our divisions. Revenue in consumer legal services grew by 6.3% to 28,300,000. And within this, the personal injury business was up 14% to 24,000,000. The key drivers behind this growth were inquiry volumes that we've seen in increase in the year. That's led to more volume placed with our panel and therefore more panel revenue. But But the the main main driver in in the revenue growth is the maturing revenues that we've seen from our NAHL GROUP PLC business alongside the already mature joint ventures.

9:27 We'll come on to the progress being made on settled cases on a future slide, which demonstrates the momentum we're seeing from cases settling in the law firm. Revenue growth in personal injury was offset slightly by revenue reduction in the residential property business due to headwinds in that market. Revenue in the Critical Care business was up 6.4% to 13,100,000 Within this, Expert Witness revenue grew by 14%, whilst Case Management revenue increased by 3%. This was off the back of ten percent and five percent volume growth, respectively, in reports and initial needs assessments.

10:00 At an operating profit level, operating profit was 4,800,000 in the year. That was an increase of 14.4%. Consumer legal services operating profit grew by 12.2% to 4,200,000, and this was after investing 2,700,000 in new cases for the law firm and a return to TV advertising in the second half of the year, where we invested a further $05,000,000 Residential property generated a small operating profit of $300,000 and Critical Care delivered an operating profit of $3,400,000 up 4.3% compared to 2021. We've continued to invest in people, systems and marketing activity to drive future growth, and we're starting to see that payback through increased inquiry and instruction volumes. Profits attributable to noncontrolling interest were $3,600,000 in the year. That was $100,000 higher than 2021, and this reflects the continued high levels of settlements we're seeing following investment in previous years in those businesses.

10:54 This is also generating strong levels of cash. Interest costs rose to $600,000 in the year despite net debt falling, and that's our interim rising interest rates. As a reminder, our banking facility runs the end of twenty twenty four and is linked to Sonia at plus 2.25, and Sonia has been closely tracking the Bank of England base rate all year. This all all results in a PBT of 600,000. That's up 400,000 on 2021 and in line with the upgraded market expectations put out in January. Moving on to cash and net debt. We generated a free cash flow of 2,200,000 in the year. That was a 159% higher than the previous year, and operating cash conversion was a 143%. We continue to see acceleration in the cash collection cash collected by our wholly owned law firm as it matures.

11:46 It delivered $3,500,000 in receipts, up 67% on the previous year and actually matched the combined cash collection we'd seen between 2019 and 2021. The joint ventures also contributed heavily to cash in the year, generating $3,300,000 net of drawings to NLP members, and this compared to $3,600,000 last year. The strong cash collection meant that the personal injury business was cash generative in the year, delivering 1,800,000 following the period of investment in previous years and being slightly ahead of breakeven in 2021. The free cash flow resulted in net debt falling from $15,500,000 to 13,300,000 And as James has already outlined, debt reduction the current climate remains a focus, and we'll be utilizing our flexible placement model alongside the growing number of settlements in the law firm to drive down the debt.

12:36 I'll now hand back to James to cover each of the businesses in a bit more detail. Thanks, Chris. So we're gonna start with our consumer legal services division. And I just wanted to remind people of our strategy in this business, first of all. So we aim to build a sustainable, higher margin business, which we're going to do by growing the number of accident victims we can support by leveraging the strength of our National Accent Helpline brand and processing and increasing number of those claims in our integrated law firm, National Accent Law. And we'll fund our growth and also the debt reduction through our agile and scalable placement model. Now I won't go through the highlights on this page because I think Chris has Chris has already mentioned a lot of these.

13:22 But just to say that I was really pleased to see the person into your business return to profit and cash generation. This is a real milestone in our journey, and it's something that I know the team will be working really hard to achieve.

13:37 So turning to the next page then. I wanna talk for a moment about the personal injury market. We know from official data from the Ministry of Justice that claim numbers remain materially lower than before the COVID pandemic. So road traffic accident claims are fifty five percent of 2019 levels and non road traffic accident claims, is really the focus of our business, is sixty nine percent below 2019 levels in 2022. But mobility and traffic levels have returned pre COVID. And the reason for this disparity, we believe, we think it's caused by three factors. So firstly, there are a number of behavioral changes which have become evident since the pandemic. So these are things like the instance of hybrid working and remote working and also the way people use transport.

14:29 That's all led to fewer accidents. Secondly, the impact of the civil liability act or the whiplash reforms on road traffic accident claims. Those reforms removed a lot of value from the market. We've talked about that previously And that's resulted in lower propensity to claim by accident victims. And thirdly and interestingly, we've seen quite a significant reduction in advertising investment by claimant law firms in the market. And as a result of this, there's really been a failure to address accident victims' reluctance to make a claim because of a lack of understanding of the of the legal process. There's been some perception around complexity of the process and and even that it costs consumers to make a claim, which is which is not the case.

15:23 And there there's definitely some stigma around making a claim for consumers. And and and like I said, the lack of investment by firms in this market hasn't really addressed those those points. Our analysis puts the market opportunity at £1,100,000,000 per annum based on the number of claims in a year. But at the end of last year, we commissioned some independent research that suggested that there's actually a further £1,400,000,000 in potential settlements unclaimed by accident victims in 2022. And we think this presents a significant opportunity for a firm with a strong brand presence and a deep understanding of accident victims who can stimulate the market, and we believe that can be us.

16:17 Now according to independent research, which was came out in in March this month, National Accident Helpline is the first choice for people who've had an accident and want legal representation. And in 2022, we generated nine percent more person injury inquiries despite the market remaining subdued. After being off air for two years, we returned to TV in June 2022 for the first time since the pandemic with our tell your story campaign that gave accident victims a chance to speak up and feel listened to. This campaign performed really well. It delivered increased lead volume across all of our channels and improved conversion. And we'd expect to see those improvements continue to build over time as we as we continue our investment.

17:06 Our digital marketing and website also performed well. The number of organic inquiries which are free essentially to us, they increased 9% year on year in 2022. And this all helped us to consistently grow market share since the pandemic, particularly in our key non RTA segment, which you can see on the screen there. Our market share was up to just under 17%, 16.8 at the end of the year from 15% at the start of 2022. I'm now gonna hand back to Chris. He's gonna talk for a bit in a bit more detail about NAHL's performance. Chris? Thanks, James. I'm just gonna spend a few minutes walking through some charts that demonstrate how the law firm is maturing each year.

17:52 You may have seen these charts in earlier presentations that we put out. What what these show is the anticipated revenue from claims in the year that the claim was taken on, and we refer to these as as cohorts. And these cohorts are illustrated by the pink bars on the on the chart. I'll cover each of these cohorts in more detail on the coming slides. And what we what we do is we track the we track the cash generated in the year the cash was received alongside alongside those cohorts and to show how the law firm is maturing. These are the gray bars. These cases typically have a two to two to three year life cycle, and you'll see that the cash we're collecting each year is growing each year. And once the law firm reaches full maturity, we'd expect the cash generated in the year to closely match the expected value of new claims being taken on by the law firm.

18:39 You'll see that GROUP maturity in the in the dotted box where in 2022, we added 8,760 new claims into the law firm, and we expect those to be worth a revenue of 5,900,000 when they settle. Now and in 2022, we generated 3,500,000 from settled claims from from open claims that we had coming into the year. This was up 67%, and the settled number of 1,894 was up to 60%. The total value of all the claims we've taken on since inception is now £18,200,000 and we've already collected £7,000,000 of cash against this. At the end of the year, we had 10,860 claims still open, and we expect those to generate future cash of $112,000,003,000,000 dollars of this has already been recognized against cases where we've received an admission of liability, so that leaves an anticipated future revenue of $8,200,000 And these ongoing claims are expected to drive future gross profit of $7,100,000 It's also worth drawing out the adjustments column.

19:38 These are the cumulative adjustments that we've made against our original cohort assumptions as they mature. This anticipated value has been uplifted by $200,000 and this gives us confidence that the underlying assumptions of the caseload are robust.

19:56 And I'll cover a couple of the cohorts in more detail. So 2019 is our most mature and it's now largely mature as a cohort. So we placed 2,415 inquiries into this cohort. And at the time, we expected to deliver 2,300,000 of revenue. Since then, we've won 1,085 claims, and we've actually collected cash totaling 2,300,000 already. At the end of the year, we still had 293 claims ongoing. So we've adjusted the expected value of this cohort now upwards to 2,600,000 to reflect this.

20:26 There's actually a wording error on this slide. The the one with the naught 100,000 remaining value should actually read naught 300,000 of remaining value. And of this, naught naught 200,000 has already been recognized on the liability admitted cases that we have open. For 2020, it's a similar picture, although or or be it bigger big bigger numbers on the on the volumes that went in. So we placed 3,587 inquiries into the law firm, and we expected that to generate a revenue of 3,800,000. This cohort is obviously younger than the previous one, but we've also already collected 2,700,000 of the cash. And at year end, had $8,891 claims ongoing.

21:07 Again, we've upgraded this cohort value to to 3,900,000, and we have future expected cash of $1,300,000 to come from the open cases and the future expected revenue of $800,000 as those cases settle.

21:24 In 2021, we expected this cohort to generate 6,000,000 of revenue from the 8,249 cases we took on by the law took into the law firm. We've collected 1,700,000 of cash against this already from 1,358 settlements. And this cohort is actually expected to be worth slightly less than originally thought of $5,700,000 At the end of the year, had 3,759 ongoing claims, these are expected to generate future cash of $4,100,000 and future revenue of $1,300,000 We haven't shown the 2022 cohort due to its immaturity, but we've already collected $400,000 against this and have $1,000,000 of accrued revenue or billed income against the total expected value of $5,900,000 Overall, we're continuing to see cash from settlements accelerate, and we're starting to see the cash inflows from starting to see the cash inflows catch the value of new claims placed into the law firm.

22:18 Alongside that, yeah, the accuracy of our initial revenue assessments is holding up well, and this gives us confidence that the model is working. And I'll pass you back to James to update on Critical Care. Yeah. Thanks, Chris. Really encouraging results from our personal injury business there, growing market share, and also scaling NAHL GROUP rapidly.

22:41 So turning next to our critical care business then, I wanna start again by reminding ourselves of our strategy in in the critical care division. There's three elements to this. So we aim to grow share by appealing to a broader customer base. So this part of the strategy is all about business development. We're looking to extend our competencies and specialisms. So this is all about the services that we provide and the markets that we operate in. And we want to become more efficient through the use of technology. This is aimed at maximizing our capacity and to expand our margin. And I think we can demonstrate progress in each of these areas. For example, when it comes to business development, over the next couple of pages, you'll see how we're growing the number of instructions we're generating in both case management and expert witness, having developed stronger relationships with our law firm customers and brought on board a few new customers in the year two.

23:40 Competencies and specialisms, we've recruited 61 new associates in the year in key specialisms including 14 in children and young people which is a growth area for us. I'd also point to the growth in Bushcare Solutions and our trial of employed case managers as good examples of us developing into new markets and competencies to grow the business and better support our customers. And on technology, we've implemented a new finance system in the year and improved our processes, which should help us become more efficient and that should drop down to the bottom line. There's more of all that to come in 2023 as well. So if I turn first of all to case management and care then.

24:27 Well, case management remains the largest revenue set stream in critical care. In 2022, we grew our revenues by 3% and we issued 529 initial needs assessment reports. That's 5% more than in 2021. The number of ongoing clients that we service has increased by 11%. That's important because these clients generate recurring revenue for Bush and Co as we continue to support them over an average lifespan of about three years. I mentioned two examples of us growing our competencies and specialisms a moment ago. Last year, we conducted a successful trial of employed case managers to service less complex cases. We had three of these case managers at the start of the year and we grew that to seven by the 30.

25:18 And the proposition proved to be very successful. So we're looking to recruit more of those in 2023 and and and we'll watch this this space carefully. From a commercial perspective, the employee team complement our self employed specialists and through managing higher utilization rates of our employee team, we can drive margin expansion in this business.

25:40 Secondly, we continue to invest in Bushcare Solutions since its launch in 2021. This proposition provides a support and management service for employing care staff, which not only complements our existing case management services, but it also attracts standalone work. It's been really well received by our customers and it was actually nominated for an award at the PI Awards in its first year of operation, which is fantastic and pleasingly grew its revenues by 24% in the year. Turning to expert witness services then. Well, this business had another strong performance in 2022. It grew its revenues by 14% in the year. That comes off the back of 17% growth in the previous year.

26:27 And this was driven by 10% growth in the number of reports issued. Plus, we had a favorable mix and some more additional work from customers.

26:37 We continued to invest in technology in this business, building on our proprietary templating tool to help us to become more efficient. And we've seen a strong return from our marketing and business development investments over the past eighteen months. This resulted in a 7% growth in instructions. That's our pipeline of future work. And that was actually in addition to 9% growth I didn't mention on the last slide in case management instructions. So a very strong year for Expert Witness and our critical care division more generally. So we'll move before we move on to questions then, I'll summarize our presentation. In 2022, NAHL delivered its financial goals, and we returned the business to growth despite the challenges in the economy and in our markets.

27:32 We increased free cash flow by a 159% and strengthened our balance sheet, reducing net debt by 14% to 13,300,000. We grew our revenues and profit with both divisions achieving growth and continue to invest for the future. In consumer legal services, we returned the personal injury business to profit and cash generation and we grew market share. We collected 67% more cash from settlements in our law firm and grew the value of our claims book by a third. In critical care, we built a strong platform for growth and increased revenues in case management and expert witness. We also successfully expanded into adjacent markets and developed our specialisms.

28:23 Finishing with the outlook then. Well, we ended 2022 strongly and that momentum has carried through into 2023. In the first two months this year, in consumer legal services, the number of personal injury inquiries we generated continues to grow and that increased by 3%. As planned, we've been increasing our TV advertising spend. We're back on TV in the first couple of months of the year. And importantly, we've continued to accelerate the cash from settlements that we've been collecting in NAHL. That's a sign of growing maturity.

28:58 In the first two months, we collected 600,000 cash, which is up 89% year on year. And then in critical care, in the first two months of the year, we made a solid start. We continued our good performance in case management with the number of INA reports issued up 8%. Our expert witness services continues to go from strength to strength with the number of reports issued in this business up a significant 21%. And instruction numbers, which is essentially our pipeline of future work, remains strong. The number of INA instructions was leveled year on year. We actually had a bit of a slow start to the year in January but has improved since. And the number of expert witness instructions we had grew by 18%.

29:47 At a group level, we expect higher borrowing costs to continue this year due to the higher UK interest rates, but the board remain committed to managing net debt and we expect it to reduce further in 2023. Overall, the group is well placed to continue its growth and strong cash generation. And with that, I'm gonna hand back to Lily to start Q and A. James, Chris, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via investor dashboard.

30:34 You can see, we have received a number of questions throughout today's presentation, and thank you to all investors for submitting their questions. James, could I please ask you to read out the questions and give responses where appropriate to do so? And I'll pick up from you at the end. Yes. Thanks, Lily. So, yep, we've got a number of questions coming through. So thank you very much for those. We'll try and and run through those. I think we've got time to answer most of those. So the first question says, with regards to the debt, when does your current facility run to? When will you need to go back to the bank to refinance? How strong is the support from the bank? And what do you expect to get the debt down to when you renegotiate? So a number of elements to this question. So, Chris, I'll probably ask you to take this question, please. Sure. So, yeah, I I outlined earlier on. So the the facility runs to the end of December twenty twenty four.

31:26 Although as part of any audit process, we have to demonstrate that we have funding in place for at least twelve months into the future at the point we sign the accounts. With that in mind, we'd expect to engage with the bank later on this year. We have regular dialogue with bank. We speak with them regularly, and we have a strong relationship with them that now extends over ten years. They understand the business really well and have been pleased with the progress we've made. So, again, with that in mind, we don't envisage or anticipate any issues in continuing to have funding facility available. Although, as we've as we pointed out a few times in the presentation, it's it's it's our intention to continue to reduce those debt levels. In terms of where debt in terms of likely debt levels, and we have a forecast in the market, which suggests that the business will generate $3,000,000 of free cash flow this year, and that would reduce the debt position to $10,300,000 by year end.

32:14 Okay. Thanks, Chris. The next question is in the prelims, you talked about moving an increasing number of leads into the panel for short term cash to manage cash flow and pay down the debt quicker. How do you expect that to impact the growth of National Accident Law and the time it will take to become mature and self funded? Well, just to just to recap, first of all, our strategy in personal injury is to create a high margin sustainable business by growing the number of customers that we help and also growing the number of claims that we process ourselves in National Accident Law. And we look to fund that through our agile and flexible placement model, which I think this question is getting at with a number of distribution channels. And each each one of those has their own profit and cash dynamics.

33:01 In line with that ambition, then I would say that we plan to continue to grow NAHL and put an increasing number of inquiries into the law firm this year. This is gonna help us to build a self sustaining bank of profits for the future. In parallel, we also plan to increase the number of inquiries we put into the panel, which will help us to drive cash flow and accelerate our our debt reduction, which is a priority as we've said. But of course, all of this is dependent on our ability to continue to grow the number of total inquiries that we generate through our marketing and it's also dependent on continued demand for inquiries from panel. Both of those things are currently strong. In terms of the maturity of NAHL, what you can see from the chart, I think it was on page 16 that Chris talked to earlier on that the cash that we're generating each year is growing rapidly and it's getting closer to the value of the inquiries that we're putting in.

33:57 We the point at which those two those two sort of boxes equalize, that's when the law firm is essentially mature. We we still expect that to happen around 2025. Our personal injury business is already self funded, so we reached that point in 2022. The business generated £1,800,000 of cash after paying the LLP partners their share of the profits, And we expect that to grow further in 2023. So the next question is about inflation. This is a very topical question. Inflation continues to be high. How is this impacting you as a business? Do you wanna take that one, Chris? Yeah. Sure.

34:43 Yeah. So the high inflation is obviously an an unwelcome challenge for us, but it's one we're alive to and one we continue to manage where we can. In terms of cost, people people is the biggest cost we have across the business, and we regularly track our salary bands against similar roles both locally and nationally depending on where our particular roles are based, and we adjust accordingly. Alongside that, we can we constantly update adapting our culture to make an NAHL a great place to work. And this is reflected in both the personal injury and critical care businesses, having investors in people, gold accreditation. In addition to that, adoption of a hybrid working model following on from COVID is further helping us to attract some retained staff. From a revenue from a revenue perspective, we look at pricing where we can when when where we feel the particular businesses can carry that whilst ensuring we continue to remain competitive in the marketplace.

35:34 We're a little more limited in what we can do on the PI processing side given that we operate within a fixed cost environment. Customer damages, they will naturally go up with the impact of inflation, and some of that will drop through to us and benefit us. Fixed costs on the fast track work, they they haven't been changed since they haven't been uplifted since 2013, but there is some pressure now from from within the profession to upgrade these. And we do expect that to come through at some point in the future. Okay. Thanks, Chris, and thank you for that question. The next question is with regards to your advertising strategy. You've talked about opportunities to take share in in the personal injury market. How do you plan to allocate your marketing budgets in NAHL GROUP PLC this year, and how do you see your campaigns changing compared to when you were on TV several years ago? So I'll I'll try and answer that one.

36:27 So prior to last year, we were on TV at the start of 2020. And then like a lot of companies, we pulled our campaigns when COVID struck to try and manage our costs. Last year, as we started to grow market share, we saw an opportunity to return to TV, TV which we did in June 2022. We spent £500,000 in the second half of the year. That campaign was successful. It helped to support the 9% growth in inquiries that I talked about and also the improved conversion across all of our channels and the 9% growth in organic inquiries on the website that I I referenced as well. While the market remains subdued since COVID, we believe that there's a large latent demand that can be unlocked by a firm with a strong brand presence who can stimulate the market.

37:15 And and that along with the results of our previous campaign has given us confidence to double our TV spend in our budgets in 2023. So this year, in addition to TV, we're also looking to add complimentary above the line advertising. This includes investing more in YouTube, social, and what's called out of home displays. So this is things like billboards and bus stop displays. We're trialing some of that, we're hoping to roll out more investment later in the year. Our analysis suggests that this this blended approach cuts through to our market much better than the traditional TV only media campaigns. So hopefully, that answers that question. The next question from Leo is why didn't the final results include a balance sheet? Do you have any plans to disclose your balance sheet? And if so, when?

38:13 Well, I think I think that you're referring to the presentation that we've been through today. So the presentation today is just an extract of our final results. The full results went out as an announcement on Tuesday. They include a balance sheet and all the notes to the balance sheet to go with that. So there's sort of full disclosure there. Our accounts have been audited extensively by our auditors, and been given a clean bill of health. And so you can you can read those, including all the balance sheets, by going to investor section on our website. If you have a look at the announcements and reports, just look for the most recent announcement, which is called final results, and all the details are in there. So we certainly weren't intending trying to sort of hide that today. It was just we we have a limited amount of time, so we focus on what we think the key points that investors want to hear are.

39:12 But thank you for the question. Next question is from David. With the positive results of TV advertising, what return on spend do you see? What's your digital strategy, and what is the correlation here from advertising to new cases? So I think I think we've actually covered a lot of that in in a previous question that that came through. So in terms of return from spend, so when we invest in TV, it it's not necessarily a direct response sort of campaign. So what used to happen years ago is we used to advertise on TV. We used to have a special phone number on on the TV adverts and you used to see straight off the back of that TV, you used to see calls coming through to that number. And so you could monitor and and and record the response to that TV and therefore the the sort of the return on investment if you like. That's not how consumers work nowadays.

40:09 So they they see the TV advert, but it's more about build building long term brand awareness. And what what users tend to do is then after seeing the TV adverts, hopefully, that stays in their mind. They remember the brand. And then in the future, they search they tend to search for us online and find us online and and and come to us that way. So it's a lot more difficult to track the results of the TV, but we did some we commissioned some econometrics modeling last year in advance of going on on TV just to help us build that business case. And and that takes into account all of the data. I mean, we've got a strong heritage in this market. It's been going for almost thirty years and and and did a lot of advertising on TV. So we put all that into that model and that that tells us that we would expect to get payback on TV investment in in year, so in year one effectively.

41:06 And on a mature campaign spending a million pounds plus, you'd expect to get a 100 to a 150% return on investments on that. So it's it's an expensive medium, but it's it's a great medium for building long term brand awareness and helping us to to grow market share in in our markets. So that's that's what we intend to do. I hope you've answered that question. The next question is what are the factors that impact the speed of a settlement? Chris, do want to take that one? Yeah, sure. Essentially, it's the merits of the individual claim that that that influence the the kind of time it takes for that claim to settle. And with all claims, there's two two kind of key hurdles that we need to overcome. One is one is proving liability. So essentially establishing fault of the other side that that the injury was caused by them. And the second is agreeing the the quantum or the value of the claim.

42:02 And it is possible for some relatively straightforward cases where liability is obvious for those to settle in a in a small number of months. But where the where it's a bit more complex or where particularly where the case is a higher value, the insurer may want to contest that. And at that point, we're into the into the litigation process. So we we would issue proceedings and potentially take it all the way to trial, and that's what can extend the extend the life of the case. Yeah. As I say, it it it really depends on the on the type of claims that are coming through. But, yeah, the more the more valuable they are, the longer they tend to take. Okay. Thanks, Chris. And the last question that we currently have, so if there's any more questions, feel free to to type them in now.

42:50 That the next question last question is, is the property business about which you say very little a distraction from the main strategy, and could it be divested to assist in a debt reduction? So it's a very good question. The if I look at the market, I suppose, for residential property at the moment, it's everyone will be aware it's a very challenging market facing a number of headwinds. Not least, of course, the very high interest rates we've got at the moment, making it difficult and and very expensive to for for our customers to access a mortgage. We did have a difficult year last year. The business contracted in size.

43:38 In particular, our Homewood Legal business. We've got two businesses in this in this area, a conveyancing business Homewood Legal and a search business, Searches UK. Searches UK business spared a bit better. They brought in a number of new customers. They've got very strong relationships with their customers. But overall, the that residential property, those businesses delivered profit, small profit, which I think is no mean feat, to be honest, in in the environment they're in at the moment. So we were pleased with that. In terms of whether it's a distraction, it's something we have said in the past that it's not it's not a core part of our business, so our focus is very much on personal injury and critical care.

44:23 Those are the areas where we see really great opportunities to grow. They're the injuries the areas where we've got scale in in those markets and we've got a very strong brand presence in those markets. So residential property is is not core, but divesting businesses is is difficult in in the environment we're in at the moment. So, you know, we we'd always be alive to any opportunities. We're we're we're very, focused on profitability in those businesses at the moment, and we I won't allow those businesses to become a distraction to our our main objectives of growing in personal injury and and and critical care. So we're we're we're sort of all over that. Keep a very close eye on it. They're generating cash and profit at the moment, not to to So So question is what percentage of operating income do you expect to do go to non controlling interest in the future?

45:33 So obviously, it's we we don't put forecast out ourselves as as a business. We've got an there's an analyst forecast in the marketplace from Allenby, which you can access if you go to the Allenby website. There's a link via our investor page as well. But Chris, do you want to make any comments about sort of directionally what's what you think non controlling interest is gonna look like in the future? Yeah. Sure. Well, essentially, we do expect it to start coming down now. So we've we've been reducing over the last couple of years the number of inquiries that we've put into those businesses. Yeah. As we've already pointed out, they're quite they're mature now. They they are settling cases, but that that book of open work will start to reduce over the coming years now. Yeah. The the only forecast that that James refers to, there's there's actually quite helpful chart in there that that that that kinda shows the direction of travel.

46:25 We would expect '23 to be lower than lower than '22, given what we've just said in terms of the the lower volume that's been going through that business. James, Chris, thank you. And I think you have addressed all those questions you can from investors today. And, of course, the company will review all questions submitted today, and we will publish those responses on the Investor Meet company platform. Perhaps before redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company, James, could I please just ask you for a few closing comments? Yes. Thank you, Lily. And thank you again to everyone who's joined us this morning. So what I would say in closing is that NAHL delivered a good set of results for 2022.

47:10 We significantly reduced our net debt and returned our personal injury business to profit and continued our growth in critical care despite the turbulence in the economy and our markets. That momentum has continued into this year in 2023, and I look forward to 2023 as we continue to build a more profitable and sustainable business. Thank you. James, Chris, thank you for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of NAHL GROUP PLC, we'd like to thank you for attending today's presentation.

47:55 Good morning to you all.