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Spicerhaart warns the company could breach its debt covenants in ‘worst case scenario’

Company says this would only happen if its 'worst-case downside scenario' planning for Covid were to take palce and that it had back-up cash reserves to cover a shortfall.

Nigel Lewis

The latest results from Essex-based estate agency giant Spicerhaart reveal that the company believes it will emerge as a ‘stronger and leaner’ business but has warned that it could breach its covenants in March next year if the ‘worst case scenario’ Covid outcome takes place.

Spicerhaart has made the comments within its latest results which cover 2019 but also look forward from now until December 2021.

Although the company says it has good levels of cash resources to survive the pandemic and ‘sufficient levels of headroom over its debt covenants’ up until the end of 2021, it has prepared a ‘severe but plausible downside scenario’ that would see the company breach its covenants in March 2021.

But the company says that, despite this, net cash headroom of £14m will be in place to enable the ‘safe repayment of the outstanding facility at that time if necessary’.

“For all other periods there was no noted breach of covenants identified,” the company says.

Turnover increase

Its results also show that it made a loss last year even though it increased turnover by 3% or £3.2 million to £126.7 million.

The company, which owns eight brands including Haart, made a £100,000 loss last year compared to a £1.7 million profit the year before, as increased costs of £4.7 million hit the bottom line. Spicerhaart says the losses were down to investments in its growth businesses outweighing the cost savings it made in estate agency.

“Overall profitability was further reduced by the amortisation of our new estate agency operating system which went live during the year,” the company says.

Spicerhaart says the effects of the Brexit vote on the housing market last year, which now seem like a distant memory, saw a decline in sales revenue made up for by strong growth in the rest of business including its financial services division.

It saw a 32% increase in revenue while lettings turnover increased by 2% last year despite the impact of the fees ban. But after tax, the group reported a loss during 2019 of £1.6 million compared to a profit the year before of £800,000.

Read its latest results in full.

Read more about Spicerhaart.

October 8, 2020

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