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NAHL agrees new covenants after tough first half
23rd Jul 2020 15:43
(Sharecast News) - Consumer legal services company NAHL Group updated the market on its first half on Thursday, saying the results were "significantly impacted" by Covid-19.
The AIM-traded firm said revenue for the period was expected to be £20.4m, down from £25.8m year-on-year, with underlying earnings anticipated to be between £1m and £1.2m, compared to £3.4m a year earlier.
It said it had made "good progress" with its restructure, merging its personal injury and residential property businesses into a new consumer legal services division.
That, along with other actions taken to reduce costs, resulted in the identification of more than £1m of annualised savings.
Personal Injury enquiry volumes were said to be "gradually recovering", although they were still at between 50% and 60% of prior year levels.
The number of conveyancing instructions, which came to a standstill during April and May, recovered quickly during June as the volumes in the UK housing market returned to pre-Covid levels.
While the government's changes to stamp duty were described by the board as "welcome", the long-term outlook for the sector remained uncertain.
The group said its critical care division had demonstrated a reasonable level of resilience through the period, although there had been a "noticeable slowing" of new enquiries as a result of a reduction in road traffic accidents and medical negligence incidents.
Since the impact of the pandemic became clearer, NAHL said its management had proactively taken steps to manage its balance sheet and maximise liquidity.
As at 30 June, net debt had been reduced to £18.6m, which was better than its own expectations.
That, the board said, provided the group with £6.4m of liquidity in its £25m revolving credit facility - the highest level of liquidity in the last 12 months.
In its 2019 final results, the group highlighted that it could breach its banking covenants from the second quarter of 2020, and that it was in positive discussions with its lender, Yorkshire Bank, to remedy that.
On Thursday it said those discussions had now concluded successfully, with new covenants that provided "reasonable levels" of headroom agreed.
It said that importantly, the group had remained in full covenant compliance throughout the period, with that set to continue through to the end of the facility term.
As part of the agreement, Yorkshire Bank also agreed to extend the facility term for a further 12 months to 31 December 2022.
"The first half of the year has been the most challenging in the group's history, following the emergence of the Covid-19 pandemic in the UK in late February," said chief executive officer Russell Atkinson.
"Despite the operational and demand challenges that this situation imposed, the group's swift response enabled us to continue to support customers and clients across the group while keeping our employees safe."
NAHL said it would announce its results for the six months ended 30 June on 22 September.
At 1129 BST, shares in NAHL Group were up 6.51% at 40.9p.
The AIM-traded firm said revenue for the period was expected to be £20.4m, down from £25.8m year-on-year, with underlying earnings anticipated to be between £1m and £1.2m, compared to £3.4m a year earlier.
It said it had made "good progress" with its restructure, merging its personal injury and residential property businesses into a new consumer legal services division.
That, along with other actions taken to reduce costs, resulted in the identification of more than £1m of annualised savings.
Personal Injury enquiry volumes were said to be "gradually recovering", although they were still at between 50% and 60% of prior year levels.
The number of conveyancing instructions, which came to a standstill during April and May, recovered quickly during June as the volumes in the UK housing market returned to pre-Covid levels.
While the government's changes to stamp duty were described by the board as "welcome", the long-term outlook for the sector remained uncertain.
The group said its critical care division had demonstrated a reasonable level of resilience through the period, although there had been a "noticeable slowing" of new enquiries as a result of a reduction in road traffic accidents and medical negligence incidents.
Since the impact of the pandemic became clearer, NAHL said its management had proactively taken steps to manage its balance sheet and maximise liquidity.
As at 30 June, net debt had been reduced to £18.6m, which was better than its own expectations.
That, the board said, provided the group with £6.4m of liquidity in its £25m revolving credit facility - the highest level of liquidity in the last 12 months.
In its 2019 final results, the group highlighted that it could breach its banking covenants from the second quarter of 2020, and that it was in positive discussions with its lender, Yorkshire Bank, to remedy that.
On Thursday it said those discussions had now concluded successfully, with new covenants that provided "reasonable levels" of headroom agreed.
It said that importantly, the group had remained in full covenant compliance throughout the period, with that set to continue through to the end of the facility term.
As part of the agreement, Yorkshire Bank also agreed to extend the facility term for a further 12 months to 31 December 2022.
"The first half of the year has been the most challenging in the group's history, following the emergence of the Covid-19 pandemic in the UK in late February," said chief executive officer Russell Atkinson.
"Despite the operational and demand challenges that this situation imposed, the group's swift response enabled us to continue to support customers and clients across the group while keeping our employees safe."
NAHL said it would announce its results for the six months ended 30 June on 22 September.
At 1129 BST, shares in NAHL Group were up 6.51% at 40.9p.