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A £18m t/o logistics group ran into cash difficulties and took out invoice discounting at the beginning of 2007. The problems were caused principally by the failure of its newly acquired manufacturing arm, and by investment in its US subsidiary. Total funding was almost exactly £1m.
During the year the borrowing requirement reduced to £300k, notwithstanding a 12.5% increase in its stock holding (the group serves as a stockist to its customers). Turnover of the main constituent of the group has grown from £8.6m to £11.4m, margin has declined 2% and overheads have grown by 9%. All this means that profit has risen from £1.3m to £1.9m. The losses of the manufacturing subsidiary have reduced from £650k to £300k.
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