Nahl Group (LSE:NAH) — Half year results for the six months ended 30 June 2022

0:02 Good morning, and welcome to the NAHL GROUP PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions at any time 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 of the questions submitted today and publish responses where it is appropriate to do so.

0:32 Before we begin, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, James Good morning, sir. Thank you, Jake, and good morning, everyone. I'm James Ceralis. I'm the CEO of NAHL GROUP, and I'm here today with Chris Haim, the group's CFO. I'd like to welcome you all to NAHL's interim results presentation, which covers the six months ending the June 30. And we released our interims on the September 27, and I hope to give you a flavor of those results today and highlight the progress that we've been making in building a more sustainable and profitable business.

1:15 We're gonna work through the presentation today, which is available, also in the investor section of our website, and you can see the, the short agenda on the screen now. I'm gonna start by giving you a flavor of the highlights, and then I'll hand over to Chris to present the financial review. Then I'll be back to give you an update on each of the two divisions and discuss the outlook for the rest of the year. As Jake said, there should be plenty of time at the end for questions. So if you want to submit a question, please do so. We'll try to answer all these questions at the end. If there's any we don't get to, I'll submit a written response, and I know that the IMC platform will will will put that up after the meeting. But before before we get started, for those of you who aren't familiar with our business or would appreciate a recap, this slide should give you an introduction into who we are.

2:07 So 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. Got twenty nine years of 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. We then triage those claims. And for those that we think have legal merit, we either pass them to one of our panel of third party specialists, solicitors, or joint ventures processing, or increasingly, we process them in our own fully integrated law firm, which is called NAHL In this division, we also operate a residential conveyancing business called Homewood Legal and a property searches business called searches UK.

3:10 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. And these are the most serious injuries often leading to life changing disabilities and include things like acquired brain injuries and spinal cord injuries with claim settlements exceeding £500,000 and usually into the millions. 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 our stakeholders.

4:01 We've been recognized externally for this culture, having been awarded the gold standard by investors and people and included in the best small companies list in recent years. So with that introduction, let's turn to the results for the first half. And I'm not gonna lay with this slide as Chris is gonna go into a lot more detail shortly. But the results that we announced this week are in line with our expectations and our trading statement from the August 1. Revenue for h one was 20,700,000, which was 6% up on h one last year, and it was also 7% higher than the second half of last year. Operating profit was 2,300,000, which was 8% lower than last year at the level we expected because of our planned investments in scaling the group's law firm, National Accident Law.

4:50 I said last time we presented on IMC that we were planning to break even in 2022 because of those investments, and you can see that profit before tax came in at 100,000 as we expected. We generated a million pounds of free cash flow, and we reduced our net debt.

5:10 Turning to the operational highlights, we made good progress in both of our divisions in the first half as we strive to build a more sustainable and profitable business. In consumer legal services, we've consistently gained market share in a subdued market. And our market leading brand, National Accident Helpline, generated 27% more inquiries than last year. We're growing National Accident Law, and we placed 61% more inquiries into the law firm in h one. We're also accelerating our collection of cash from settlements in NAHL. And in the first half, we collected 50% more than last year. And I think this is a real sign of the growing maturity of the law firm. Finally, our book of claims is growing as well and now worth just under £10,000,000 of future cash. That's 17% more than it was at the end of December.

6:02 In critical care, that division had a really strong first half as well. We continue to see good results from our business development activities, and we're growing our market share. We saw an increase in the number of expert witness and initial needs assessment reports issued in the period, and we also made progress with our growth initiatives, which I'll talk more about later on. So overall, I'm pleased with the performance we delivered in the first half, and we expect to meet market forecasts for the full year. I'll now hand over to Chris to talk through the financial performance. Thanks, James. Firstly, I'm pleased to report that we we saw revenue growth in in both divisions, so we're happy with that. In consumer legal services, revenue grew 3,700,000 3.7% to 14,100,000 in the first half of the year, and there's two key drivers behind that. Now the first is the recovery of the inquiry volumes that we generate in that division following what was a COVID interrupted period in the first half of twenty twenty one. The market hasn't fully recovered, so some of that growth that we're seeing is is driven by market share gains that that we're making a bit more on that shortly.

7:09 The second driver is maturing revenues that we're seeing from the law firm and the joint venture partnerships as an increasing number of cases settle. In critical care, revenue grew by 700,000 to 6.7 with volume growth seen in both expert witness and case management. Expert witness revenues were up by 20%, but in case management, it's a slightly different story. We'll come into that shortly as we cover the divisions in in more detail. And operating profit level, as James has already pointed out, we we generated 2,300,000. That was 0.2 lower than last year. For CLS, operating profit was 2,100,000, 0.3 down on where we were in the first half of last year, but again, was expected due to the the growth in inquiries that we're putting into the law firm as we grow that business. We placed an extra 61% of of inquiries into that business in the first half in first half of twenty twenty two versus last year.

8:00 And the cost of generating those claims was $1,400,000 as opposed to an investment of $1,000,000 this time last year. Critical Care generated an operating profit of $1,600,000 That was 0.1 lower than this time last year, and that reflects the continuing investments we're making in marketing and systems in that business to grow for the future. We're already seeing the benefit of the marketing investment coming through in good volumes. We expect the benefits of the investments in the systems to come through next year. Profits relating to noncontrolling interests, which is the profit we share of our joint venture partnerships, was 17% higher in the period, and that reflects the increased case settlements that we're seeing in those businesses. That's also driving good cash collection. And that resulted in a profit before tax of $100,000,500,000 lower than where we were this time last year, but, again, completely in line with where we expected to be given the investments we're making in the law firm.

8:52 Moving on to cash and net debt. As James pointed out, we've generated 1,000,000 of free cash flow in the period. That was 0.4 lower than this time last year, but again reflects that investment cycle we're in. The cash generated in the period includes 1,500,000 of cash from claims settled in National Extended Law, and that was up 50% from this time last year and compared to a full year cash collection of 2,100,000 in 2021. We continue to see that momentum build as cases settle into the second half. I've already referenced the increased settlements in the JVs that resulted in a cash collection of 1,900,000 in the period, up 46%. At the same time, we continued to grow the number of cases in the law firm. And at the end of June, we had just under 10,000 open cases that we were working on. It's a 25% increase in where we finished 2021.

9:38 Free cash flow of 1,000,000 dropped through to net debt, we've reduced our net debt to 14,500,000 from 15.5 at the end of last year. I'll now hand back to James who will cover each of the businesses in a bit more detail. Yes. Thanks, Chris. So we'll start our business updates with consumer legal services. And our consumer legal services division is dominated by our personal injury business. And our strategy in this business is to create a higher margin integrated law firm underpinned by our flexible placement model. This means that we aim to grow the number of inquiries we generate through National Accident Helpline, and then we can place those inquiries either into our panel of third party law firms for quick profit and cash or into our joint venture or our own law firm, National Accident Law or NALS. I'll I'll talk to it as, this gives us more profit and cash, but the working capital is longer.

10:30 As Chris mentioned earlier, we grew revenues in the division by 4% to 14,100,000 and operating profit fell slightly from 2.4 to £2,100,000 after we spent 1,400,000 on generating new inquiries to grow NAHL's book claims. But within these numbers, the personal injury business actually grew revenues by 14% and operating profit was only marginally down. So this part of the business had a really good six months. I'll dig deeper into the operational results of the next few pages, so I won't reference them from this slide. But I do want to briefly mention our residential property business comprising Homewood Legal and Searches UK, which are also part of this division. They saw revenues fall from 3,300,000 last year to 2,400,000, and they generated a small profit.

11:20 Now you'll be aware that the wider market for residential conveyancing has been slowing recently following two years of increased activity fueled by low interest rates and stamp duty holiday. Now we're not immune to these changes, and we experienced a bit of a slowdown ourselves in quarter two, particularly in Homewood Legal. It'll be interesting to see the impact of the chancellor's increase in stamp duty thresholds, which was announced last week as this has historically been a a key driver of activity. But I think the availability and affordability of mortgages, particularly amongst our key first time buyer market, is gonna continue to be a headwind for this market in the months to come.

12:02 So I mentioned the market earlier, which remains subdued, and this is primarily due to two factors. So firstly, a hangover from the COVID nineteen pandemic. During the lockdown, people stayed at home. They worked from home. They had fewer accidents. When restrictions were lifted, mobility levels grew, but some of those habits stuck. We're now seeing more people working from home or on a hybrid basis than before COVID nineteen, and that had quite a significant impact on employer, public, and occupier liability claims or what we refer to as non RTA, and that's the focus of our business. In the RTA market, the civil liability act, these are the reforms that Chris referred to, was implemented in May 2021. And this took quite a lot of value from claims for both the claimant and the law firms.

12:50 This has resulted in a reduced propensity for accident victims to claim. Now the results of these two trends is that we're seeing less stimulation of the market by law firms and claims management companies as they cut back on their marketing spend to manage their profits. And the number of claims in the market is flat despite gradually increasing mobility levels, and you can see that on the chart on the left. If you look at the chart on the right, what's pleasing to see is that our trusted brands, NAHL has outperformed the market, and we've been able to grow our market share consistently over the past eighteen months to a position where we believe we now hold a 19% share of the non RTA market.

13:37 If we look at inquiry generation next through National Accident Helpline, in the first half of the year, we generated just under 18,000 inquiries, which is an increase of 27 on last year. It would have been more, but for our decision earlier in the year to stop processing the lowest value RTA claims to allow us to focus our resources on higher value claims. This resulted in a strong mix of inquiries with about 22% of our total inquiries being RTA, but of a higher average value, and 49% being non RTA, is our focus. This growth gave us the confidence to return to TV advertising, which we stopped with the onset of the pandemic. Our new campaign entitled tell your story commenced in June, and we're also on air in July, August, and we'll be back on in October.

14:28 We'll be carefully analyzing the results of this campaign as we plan for next year, but so far, the results are encouraging. We were expecting three things from TV. Firstly, for TV to drive inquiry volume growth. Secondly, to see a reduction in the cost of acquisition on non TV channels. And thirdly, for the impact of these features to build over time. Well, it's early days as the campaign is ongoing, but what we've seen so far has been positive. The non RTA volume has consistently grown, and we're gaining market share. RTA, where we have a much smaller market share, is also starting to trend upwards. The cost of acquisition has been trending downwards as volume builds on lower cost channels. A good example of this is the number of inquiries that we generate through organic search, which is up about 10% since the start of the TV campaign.

15:19 And lead conversion has improved across all channels. Turning to the performance in National Accent Lawden, a key element of our strategy is to process an increasing number of claims in NAL. And the chart on the left shows our progress with this. We placed 4,531 inquiries into NAL in the first half, which was 61% more than last year. You can't compare directly with h two last year as there were about 1,500 tariff only small claims included. But if you strip those out, we'll have increased placement. And we've scaled the law firm to cope with this growth, growing the number of fee owners by around 56% in the last twelve months. The chart on the right illustrates the performance of each cohort over the last six months.

16:09 For example, the 2019 cohort, which is the one on the left hand side, represents the total revenue and cash value of all the inquiries placed into NAHL during 2019, many of which have now settled or abandoned, but some are still being worked on. The gray bar shows what we've collected in cash in each cohort, and the magenta bar shows the cash that's still to collect. What this chart shows is that we've made further progress in each cohort over the last six months. Across all cohorts, we collected £1,500,000 from cash from settlements, and our valuation of the cohorts has generally held up pretty well. We've upgraded the total value of the twenty nineteen and twenty twenty cohorts in the period by point £1,000,000 each, and we've downgraded the value of 2021 by about point 3,000,000.

17:06 I mentioned earlier that our book of work in NAHL has grown to just under 10,000 ongoing claims at the end of June, 9884, in fact. And at any point in time, these claims have an embedded value that represents the future revenue and cash that we can generate from those claims that's not represented in the financial statements. And this is because each of our claims will be at different stage of the process, and we have a quite a prudent revenue recognition policy such that we don't recognize any revenue for a claim until liability has been admitted by the defendant's insurer. And we don't recognize all the revenue or the collect collect the cash, in fact, until final settlement. And this page is intended to summarize how we've grown the embedded value since we created the law firm in 2019.

17:54 The dash box that you can see shows what happened in the first half of twenty twenty two, and you can see that we added four and a half, four and a half thousand claims, which we think are worth about £2,900,000 of future revenue in cash. We also collected in 1,500,000 in cash, which is about 50% more than the first half of last year and compares very favorably with the 2,100,000 that we collected in the whole of 2021. In fact, I can say that more recently, in September 2022, this month, we've surpassed the 2,100,000 of cash from settlements that we collected for the whole of last year. And finally, I just want to point to the last bullet on this slide because I think that's important as we previously haven't provided an estimate of how profitable we think the book is.

18:41 We estimate that the 9,800,000 of cash still to collect from our ongoing claims will result in 7,500,000 of revenues that are still to be booked. And we anticipate that translating into 6,500,000 of future gross profit. So for me, the key takeaways on NAHL are threefold. Firstly, we're making progress in scaling the law firm, and we're accelerating cash collections all the time. Secondly, the assumptions have been pretty accurate to date, not overly aggressive, and we're refining the assumptions all the time. And thirdly, not only do we have visibility of future revenues, but the book is profitable over the cycle. Now for those of you who are particularly interested in the law firm, we have further analysis in the appendix of this presentation and also on the presentation on our website that shows more detail on the performance of each of the cohorts. So I'd encourage you to have a look at that.

19:42 So let's turn our attention to our other division for the moment, which is called critical care. In this business, our strategy is to grow by appealing to a broader customer base by extending our competencies and specialisms to be more efficient through the use of technology. And I think in the first six months of the year, we can demonstrate progress against each of those objectives. Our revenue increased by 12% to £6,700,000, and we grew market share. And our operating profit was only marginally down at £1,600,000 due to our investments, which will drive future growth. We recruited 41 new associates and broadened our specialisms, including adding to our expertise in the area of caring for children and young people.

20:28 And we started to see progress with our growth initiatives. Looking at the detail, our expert witness, business performed strongly. We saw an 11 increase in number of reports that we issued, and that resulted in a 20% increase in revenues. Our business development and marketing activities resulted in an 11% growth in the number of new instructions exceeding pre COVID levels. And that ensures that we've got a strong pipeline of future work to take into the rest of the year. We also saw good progress in case management. We benefited from a 12% increase in the number of initial needs assessments in the first half, which helped to grow the number of ongoing case management clients to 1,248 at June 30.

21:18 And maintaining the number of these ongoing case management clients is really important to us as they generate recurring revenue each month. We also saw strong levels of new business with instructions for INAs up 19%, also exceeding pre COVID instructions. So volumes in case management were very strong. However, we continue to see lower levels of average billing in case management. This has been the case since the start of the pandemic when, service delivery moved to a mix of face to face and online as required by our clients. And we can't charge as much for online work, and as a result, our revenues fell by 3%. The division is also making progress with the growth initiatives that it announced last year. Bush Care Solutions, was launched in August 2021, provides nurse led care management services and it's been growing the number of clients that it supports resulting in incremental recurring revenue.

22:16 Whilst it's still quite a small contributor at present, I can definitely see it becoming much more meaningful over the next few years. Previously, we also talked about our hubs proposition, which is where we apply our case management services to lower value claims with a more cost effective solution. Progress in this section of the market has been more challenging. And whilst we've signed agreements to work with a few insurers, progress has been slower than we expected. However, an interesting opportunity coming off the back of hubs is our use of employed case managers, of which we currently have about eight in the business. Whilst the hubs opportunity grows, we've been utilizing our employed case managers on catastrophic work to great success. We control we have more control over how we deploy them, and that helps us to generate higher gross profit margins.

23:07 So whilst we'd never want to replace our skilled and experienced self employed case managers, and we couldn't replicate the breadth of specialisms that they offer, I do think that there could be more of a balance between employed and self employed case managers in the future, which could lead to margin expansion in this business.

23:29 So to summarize then, the performance of the group in the first half was in line with our expectations. I'm pleased with the progress we've made in both of our divisions. In consumer legal services, we generated more inquiries and we grew market share. We placed more inquiries into NAHL and accelerated our cash collection. And we grew the value of our book of ongoing claims, is now worth just under £10,000,000 of future cash. In critical care, we grew volumes in both expert witness and case management leading to double digit revenue growth. Our business development initiatives are delivering strong results, and we're seeing early progress on our growth initiatives. Finally, at the group level, we reduced our net debt further in the period.

24:22 So turning to the outlook finally. Well, we're well aware of the uncertain macroeconomic environment that UK businesses are operating in at present. But so far, in NAHL, we've continued to trade in line with our forecasts, and we expect to meet market expectations for the full year.

24:41 In July and August, National Accident Helpline delivered 4% more inquiries than in the same period last year, But we're yet to see any sustained growth in the market. I'm hopeful that this might pick up as we go through the autumn and more people go back to the workplace, but we should be in a better position to judge the medium term in the new year. Also, I said earlier, we continue to accelerate cash collections in the law firm. In critical care, July and August were good months for our case management business, and we completed 26% more INA assessments than last year. But we issued 24% fewer expert witness reports over the holiday season. We're thinking this is down to timing, and we expect to see a return to growth for the remainder of the year.

25:28 As a group, we're maintaining our cost discipline whilst continuing to invest for growth in both of our divisions. And finally, we continue to manage our levels of net debt and anticipate a further reduction by the year end.

25:45 So that brings us to the end of our formal presentation. If you want to know more about the group, our broker, Allenby Capital, has published several research notes which are available to everyone from their website. There's also a link to those from our website from the investor relations section. So for anyone new to the story, I'd really recommend the initiation note from March this year, which is very comprehensive. But we've got lots of time for questions so I'm gonna hand back to Jake for the Q and A. James, Chris, that's great and thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would 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 your investor dashboard.

26:38 Chris, James, we did receive a number of pre submitted questions ahead of today's event as well as you can see in the q and a tab, a number of questions that have come in throughout today's presentation itself. So firstly, thank you to all of those on the call for taking the time to submit their questions. And Chris James, if I could just hand back to you to run through the q and a tab to respond to those questions where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. That's great. Thanks, Jake. So the first question we've had is we've seen a number of interest rate rises recently. Are you concerned about your ability to service your debt? So, Chris, do want to comment on that one? Yeah. Sure. So you you may recall at the back end of last year that we extended our debt facility with Yorkshire Bank. This is a this is a 20,000,000 revolving credit facility through to the end of twenty twenty four.

27:29 And just as a reminder, our net debt at the end of June was 14,500,000. So we've got a fair bit of headroom in that in that within that facility at the moment. Our rate our our rate on that debt is is linked to the sterling overnight rate, Sonya, plus a margin of 2.25%. But therefore, not immune to rate rises, and it's fair to say that the recent rises haven't been welcomed. Sonia has been tracking fairly close to the base rate, and so our overall cost of debt at the moment is around four and a half percent. And the current debt level is every 1% increase cost is around 140 k a year. So it's something we're having to manage as things things in the market settle down. In terms of settling the debt, our relationship with the bank remains strong, and we have headroom against our covenants. And we've also shown during COVID that we can use our flexible business model to generate quick cash by diverting more volume to the panel should we need to.

28:19 That's obviously not something we want to do as it interrupts our our growth path, but it is at all at our disposal should rates continue to rise. Okay. Thanks, Chris. The next question is is a simple one. When will the law firm mature? So I'll take that one. And I I'll probably actually go back to a previous slide just to illustrate a point. Just bear with me. Here we go. This slide here. So when the law firm reaches maturity, you'd expect the cash collected from settlements to closely match the value of the new inquiries that we put in. And you can see you can see on this chart that that's getting a bit closer each year, but we've still got quite a way to go yet. And when that happens depends, I suppose, on how quickly we settle claims as well as the timing and the number of claims that we put into the law firm. So on the former of those, I think the law firm is becoming more efficient all the time.

29:15 And over the previous nine months, I know the team has been working extremely hard to improve the processes, enhance the technology, and to recruit some top talent to really help, help us improve on that.

29:26 On claim numbers going in, I think a lot of that depends on what happens with the market, really, and how many inquiries that we can generate. Our broker, Allenby, has put an expectation out into the market that suggests that the law firm will mature around 2025. And based on our current trajectory, I think that sounds reasonable, but that's just one possible scenario. So I think that it it sort of remains to be seen what's what's what's ahead of us. So hopefully, answers that question.

29:54 The next question, do you think you'll ever process tariff only claims? So I think this this is referring to the comments that we we stopped processing those. We announced that earlier on in the year to focus on higher value claims. And since since the changes in the RTA small claims went through last May, the revenues that we could generate from these claims reduced really quite significantly. So as a result, we have to be we'd have to be extremely efficient in the way that we process these claims in order to make any profits at all. So one example of of how we'd have to be really efficient is that we'd have to interact with the customer online only. But what we were finding on those claims is the customer was spending more time talking to us than we planned, So we weren't gonna make as much profit as as we'd hoped.

30:44 So what we've done is we've adjusted our marketing to try and avoid attracting those claims in the first place. A few of them slipped through the net still, and where we do attract them, we're passing them on to a panel firm to service them. So we're able to offer the customer a solution, but we're not making we're not making much back on these claims, essentially. So we're gonna monitor this approach in the future. It may be that at some time, we can have a bigger influence on the customer behavior or our processing costs come down more significantly. That might make it economically viable to process those claims, but I don't think that's on on the agenda in the short term. Instead, I think it's much better for us to focus our resources on the higher value claims, which are much more profitable for us.

31:31 The next question is Michael's asking how big is the company in terms of employees and how many sites do you operate from? Any plans to consolidate these and other any plans to increase headcount? So taking those in turn, so at the moment, we've got about 300 employees across the group. We operate from three sites. Our Kettering site is where our our personal injury business is based. That's our head office as well. We also have a site in Daventry, which is where Bush and Co, our critical care business is. And we have a site in Shoreham on the South Coast, which is where our searches UK business is, which is in residential property. There there's no plans to consolidate these sites. They

32:16 the businesses to some extent work independently, and those locations work well with our existing workforce. But what we what we have seen actually over the last last well, since primarily since COVID hit us really is we are doing far more work remotely with employees. So we we're attracting quite a lot of talent, legal talent, technical legal talent in the Northwest where there's there's an abundance of of those people. And because of the systems that we put in place, those those individuals were able to work from home and work remotely with full efficiency. So that's working really well because it's it's meaning that we're able to cast our net beyond our our traditional centers to get the best talent in the industry.

33:02 Any plans to increase headcount? Yes. We're increasing headcount all the time in in our areas that we're growing, particularly in the law firm. As we scale the law firm, we're looking to bring in more people to to help us with that growth.

33:17 The next question is it's good to see the momentum in critical care. What further investment is required here? What's the plan to continue the growth here and advance market share? So I think the the investments that we've been making in people and systems and technology are in different stages. So for example, some of our technology investments, we've been putting the investment in and and and we haven't got the full benefits from that yet. We should see that dropping in over the next twelve months or so, and that should lead to further efficiencies. And and and and and we're looking to grow the margin as a result from that. So I think that's happening all the time. There's no there's no significant further investment planned at the moment.

34:07 The next question from David said, I think this covers what we've we've said before, but that seems to be the issue for realizing value. Do you have any way to accelerate the the repayment of debt? And are you open to are you open to rate rises? Chris, anything further to say on that? No. Just to reiterate, really. Yeah. We can accelerate the repayment of debt by diverting more inquiries into the panel and generating quick cash. It comes at the cost of long term growth, essentially. So yeah. It's it's not something we want to do, but it is something at our disposal should should rate rate rises continue to to to come through and that cost of debt increase. The next question, what are your thoughts regarding performance of the group's residential property business? Do you see things improving here?

34:56 As I said earlier on, we we we've sort of followed the market a little bit, and we we've seen the business become more challenging in the second quarter of this year, and I think that's continued since period end as well. Obviously, hear in the media about mortgages becoming more difficult to access and and rates interest rates going up. Obviously, that's gonna be a headwind for our customers in this market. In particular, our our focus in that business is on the the first time buyer market in Homewood Legal, and that's obviously particularly tight because of the cost of living increases. It's making it more difficult for people to to afford homes. So it's something we're monitoring very closely.

35:41 We're monitoring our our costs in that business very closely, and and and we'll continue to do that. It'd be interesting to see, like I said, about the the the changes to stamp duty rates thresholds, sorry. In the past, that's been a driver for growth in this market. I think conditions are slightly different now, so we'll and see what happens with that. But we're, yeah, we're monitoring things very carefully. The next question, Chris, maybe this is one for you. Cash conversion. How do you manage with cost of the cases if is inflation impacting this much? It's something we're mindful of. Yeah. That I mean, the whole country's being impacted by a quite inflationary pressures.

36:29 It's something that hasn't we're not we're not seeing huge pressure at the moment on on that line. In terms of the cash well, in terms of the the working capital cycle of the cases, the two two key areas really is the marketing to generate the claim at the front end, and then it's people costing processing those claims. And and it's, I I guess, that working capital cycle will be eased. The the the more mature we get as a business and become increasingly self funding as some of the historic cases we've been working on begin to settle. In terms of the cost inflation, yeah, we have to navigate like that navigate that like the rest of the economy and something we're mindful of. We're trying to make improvements and efficient efficiency gains where we can in the system to to help us with that, but, yeah, one we keep under review. Okay.

37:15 So I think I think that's all the questions that we've had in. So if there's any more questions, feel free to submit them now. Other than that, Jake, I'll probably hand back to you. James, Chris, thank you very much indeed for addressing all of those questions that came in from investors today. And of course, if there are any further questions that come through, we'll make these available to you immediately after the presentation has ended for you to review and then add any additional responses where it's appropriate to do so. James, perhaps before redirecting those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that would be great. Yeah. Of course. Thanks, Jake. Look. I'd like to thank thank you all for dialing in and for listening to us today and also for your questions.

38:04 Our next scheduled update is the full year trading update, which is in January, and we'll be back on the IMC platform in March for our prelims. So hopefully, I'll see you all again then. James, that's great. And Chris as well, thank you once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of NAHL GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.