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(Alliance News) - Redde PLC on Wednesday said trading in its second half has aligned with board expectations and announced good news regarding its hire and repair contract.
Shares in Redde were up 3.5% at 110.73 pence in morning trade.
The accident management and legal services company said trading in the second half of its year to June 30 was line with board expectations in terms of revenue and adjusted operating profit.
In March, Redde disclosed that it had been unsuccessful in renewing its hire and repair contract with and undisclosed "large insurer". The original contract was set to run out at the end of July, but a new agreement has been reached.
Redde will continue the higher margin non-fault hire and non-fault repair services through to November this year, though lower margin work will still end July 31.
"As a result of this extension the previously announced impact on the numbers will be further mitigated and the positive effect on working capital is now expected to gain traction later in the financial year 2020 to accommodate this extension," said Redde.
In March, Redde had been expecting to suffer a net sales reduction of GBP111.9 million to its consensus market expectations, a drop of 18%. It had also been forecasting an 8.7% or GBP4.7 million decline in adjusted operating profit from consensus.
However, in addition to the contract negotiation, Redde has also won a number of new contracts and secured a renewal from a "major insurer" so that the company is now confident in its financial 2020 expectations.
As at June 30, the company cash balance stood at GBP11.9 million, up from GBP11.6 million on December 31. Net debt included that cash balance was around GBP34.7 million at the end of June compared to GBP41.2 million at the end of December.
Redde also revealed that a "large insurer which had previously participated in a protocol agreement" that had been terminated by Redde " has now agreed to take up a protocol agreement again".
"The group is pleased that the benefits delivered via protocol agreements are valued by insurers who recognise the lower costs of settling claims under these agreements," said Redde.
