New board confident Celtic Linen will return to profit after examinership
The new directors of Celtic Linen are confident that the business can return to profit following the firm's successful exit from examinership, a cut in costs and further investment.
That is according to new accounts filed by Celtic Linen, which show that pre-tax losses at the Co Wexford firm increased threefold to €1.2m in the 12 months to the end of February 29th last.
Losses increased at the firm as revenues decreased by 10pc going from €24.33m to €21.85m.
The firm - which employs over 430 people - entered examinership last September because of mounting debts.
In December, it exited examinership after receiving fresh investment of €1.39m and striking a deal with creditors to reduce debts.
The directors said there were concerns about the high level of over-capacity in the market and the continuing downward price pressure. Causeway Capital through its entity, Harkglade has agreed to invest €1.39m into the business that will discharge the examiner's expenses and remuneration together with dividends to be paid. Causeway Capital was established last year by David Raethorne and Matt Scaife, who were previously involved in a number of businesses, including Helix Health and Smiles Dental.
As part of the investment, the remaining members of the board of Celtic Linen resigned last December on the approval of the firm exiting examinership.
The business, based at Drinagh in Co Wexford, has been in operation since 1926 and had been supplying bed linen, towelling and table linen to the hospitality sector, and scrub suits, patient wear and ward linen to the healthcare sectors.
The accounts show that entering examinership already followed the business carrying out restructuring in the 12 months to the end of February 2016. As part of the restructuring, the company exited the workwear, hygiene rental and direct sale business.
Further changes also include the outsourcing of logistics and changing to a seven-day-a-week operation.
As part of restructuring tThe company made 63 people redundant and sold a property asset in Wexford.
When it entered examinership last September, the firm had liabilities of €14m and a deficit of liabilities over assets of €2.7m. The company has a 19pc market share in the healthcare linen sector, and 15pc in the hospitality linen market, and annually supplies 41 million pieces of linen from its facility at Drinagh.
The loss in fiscal 2016 takes account of non-cash depreciation costs of €1.62m. Staff costs reduced from €10.29m to €9.49m. Remuneration to directors declined from €317,004 to €290,060.