Trading Statement

For immediate release						  24 November 2000


CLAIMS DIRECT PLC 

EXCEPTIONAL CHARGE IN SECOND HALF

ENHANCEMENT OF CLAIMS DIRECT PROTECT 
INSURANCE POLICY 

INTERIM RESULTS PROFIT FORECAST

Claims Direct, the UK market leader in personal injury compensation, which floated on the London Stock Exchange in July, is today announcing a trading update ahead of its interim results (due to be reported next Wednesday, 29th November 2000). 

Exceptional charge in second half

Since the publication of its upbeat trading statement on 29 September 2000, Claims Direct has recently been affected by adverse media coverage, reporting that in some cases incepted prior to 1 April 2000, damages received by its clients have been substantially reduced by the client's inability to fully recover insurance premiums from defendants.  Although the Access to Justice Act passed in 1999 accepted the principle of premium recoverability, it only became clear in February 2000 that this would be in respect of cases incepted after 1 April 2000.  Accordingly a number of successful claims have been affected by this problem.  

The Company has been responding to a rising number of enquiries relating to this issue on a case by case basis. A provision of £1.0m has as a result been included in the interim results for the six months to 30 September 2000, to cover any resulting ex-gratia payments made by the Company to claimants. Despite this, the results are above market expectations (see below). 

In light of the above events and in order to take a more proactive approach towards protecting claimants' 'Access to Justice', the Board of Claims Direct has decided to take a further charge in the second half of approximately £4.0m.  This will ensure that no claimant will be worse off than would have been the case under Claims Direct's previous percentage fee arrangement.  The Company is confident that this new provision, together with the amount provided for in the interim accounts, will be sufficient to cover all future ex-gratia payments relating to this issue. 



Enhancement of Claims Direct Protect insurance policy

Claims Direct has for some months been working with its underwriters to improve the terms of its after the event insurance policy - Claims Direct Protect.  We are expecting shortly to be able to announce the introduction of enhanced insurance cover designed to ring fence a minimum amount of compensation for the claimant.  In such event, existing policyholders would be encouraged to transfer to this new policy. A further announcement will be made in due course.

Interim results profit forecast

Pre-tax profits for the six months ended 30 September 2000, before amortisation, interest credits and exceptional items, to be reported next Wednesday 29th November, will be above £11.5m (1999: £4.3m), ahead of market expectations, on turnover of above £42.0m (1999: £9.8m).  An update on current trading conditions will be given next week.

Commenting on today's announcement, Chief Executive, Colin Poole said: 

'We believe by today's action that we will end damaging media comment, particularly since the end of October, concerning some of our clients who purchased policies before 1 April 2000.

'Furthermore, the enhanced Claims Direct Protect insurance policy will provide additional comfort to clients who have taken out policies since 1 April, as well as new clients, who may be concerned about the defendant insurance industry's apparent reluctance to accept recoverability as laid out in the Access to Justice Act.

'We look forward to announcing our maiden interim results next Wednesday, which will demonstrate the significant progress being made by the company.'


- Ends -


For further information, please contact:

Claims Direct plc								
Colin Poole, Chief Executive							01952 284838
Paul Doona, Finance Director							01952 284938
Web Site							             www.claimsdirect.com

Golin/Harris Ludgate							0207 253 2252
Reg Hoare




Notes to Editors

Claims Direct manages compensation claims for individuals who have suffered a personal injury and wish to recover damages from a third party.  The service covers the entire process of recovering damages taking each claimant from initial enquiry, through expert legal and medical assessments, to the goal of compensation.  

The company generates the majority of its cases from advertisements on national television.  Individuals who call Claims Direct are put in touch with a Claims Manager who assists the individual in completing a detailed questionnaire relating to the proposed claim.  The questionnaire is then reviewed by a vetting solicitor to assess the likelihood of success.  If the chance of success is considered to be above 50 per cent the claim is passed on to an independent, qualified solicitor who formally accepts the case.  The solicitor then represents the client throughout the duration of the case until its conclusion gathering medical evidence and seeking barristers' opinions where appropriate.  

Claims Direct operates on a 'no win, no fee' basis.  The primary product offered by Claims Direct is the Claims Direct Protect post-event insurance policy.  Under this policy, which the claimant purchases with a loan arranged by the Group, the claimant is insured against the costs of the process if the claim fails. 

The Company was launched in 1995 and last year handled 28,917 new cases.  In the year ended 31 March 2000 it reported revenues of £40m, with profit before tax of £10.1m.  In July 2000 the Company floated on the London Stock Exchange raising £50 million of new money by way of a placing with institutional and other investors at 180p, valuing the company at £338 million.