 |
|
The
group is £9m t/o, and specialises in providing healthcare
and safety products, and also healthcare and safety placements
to industrial users and commercial organisations. The business
splits roughly 50/50 between products and placement (mainly
temporary but also some permanent placements) elements of
the business. There is also a very small safety/healthcare
training business.
After
years of steady growth within its niche market, the company
attempted an acquisition that failed. The acquisition and
assimilation processes were such that the group changed during
the process, and entered a period of losses, culminating in
a period from December 2005 to April 2006 when the company
lost £495k.
I
joined the group on 30th March 2006 as interim FD but with
a mandate to return the firm to profit. During May the group
made £9k profit, and during June £20k profit. The business
is non-seasonal, and we expect to make steady and accelerating
profits over the next six months, at which point the group
will have a striking rate of £400k profit per year.
|
|
Dec-Apr |
May-Jun |
|
|
Before |
After |
|
|
|
per
month |
per
month |
| Sales |
|
|
|
|
Products |
331,025 |
351,306 |
|
Placement |
312,914 |
313,098 |
|
Training |
36,035 |
30,059 |
|
|
|
|
|
Total |
679,974 |
694,462 |
|
|
|
|
| Cost
of sales |
|
|
|
|
Products |
231,716 |
199,418 |
|
Placement |
211,896 |
199,737 |
|
Training |
8,587 |
5,271 |
|
|
|
|
|
Total |
452,199 |
404,426 |
|
|
|
|
| Added
value |
|
|
|
|
Products |
99,308 |
151,888 |
|
Placement |
101,018 |
113,361 |
|
Training |
27,448 |
24,788 |
|
|
|
|
|
Total |
227,774 |
290,036 |
|
|
|
|
| Added
value % |
|
|
|
|
Products |
30% |
43% |
|
Placement |
32% |
36% |
|
Training |
76% |
82% |
|
|
|
|
| Overheads |
|
|
|
|
People
|
184,730 |
169,266 |
|
Other
overheads |
142,143 |
106,409 |
|
Total
|
326,872 |
275,675 |
|
|
|
|
|
Pre-tax
profit |
-99,098 |
14,361 |
The
above table shows that while turnover stayed more or less
the same, the major improvement came from increasing margin.
This happened across all activities within the group, but
principally within products activity.
My
role was:
- To
alert management to their seriously eroding profitability.
- To
highlight the causes of the losses, namely the non-performance
of products division and in particular the margin they were
making
- To
specify appropriate operating ratios, mainly for products
division
- To
provide detailed employee cost information and to use that
to re-specify and reduce the groups overhead costs.
|
|
|
