The fortunes of a North East cable maker in the midst of a Company Voluntary Arrangement (CVA) look set to turn around as new opportunities present themselves for the company to grow sales and customers,
In 2011, AEI cables, which employs around 190 people at its factory in Birtley, could have faced administration if the agreement had not been put in place. In August last year, then, it had to ask creditors to accept a slowdown in the rate it pays off its debts.
Financial statements released on Friday for the year ended March 31, 2013, show turnover dropped from £28.8m to £23.9m. However, the firm had a strong order book – £10.7m compared to £6.7m the year before – and was simply unable to execute orders on a timely basis due to working capital restraints.
A loss after taxation and exceptional items of around £2.4m was also recorded, compared to £377,000 in 2012, but a director’s report attributed this to the fact that the firm’s overheads were largely fixed at a level to support sales of £30m or higher, with the customer base wishing current levels of expertise to be maintained. Now, the future looks brighter, with turnover forecasted to rise to £30.7m in 2013/14.
Chairman Sanjay Aggarwal said: “2012/13 has been a challenging year for the business, but one in which good progress has been made in a number of areas. The market for industrial cables has seen a substantial amount of change and consolidation and we firmly believe that these changes present some very good opportunities for AEI Cables to grow our sales and increase our customer base.
“We fully intend on taking these opportunities by delivering a world-class product at competitive prices from our manufacturing facility in the North East of England.”
The company, he added, had restructured while maintaining its sole focus on serving industrial markets. Payments for the CVA had been maintained throughout the year and some customers had shown support through improved payments terms and helping secure material purchases for the company.
“In response to the working capital restraint, the company successfully negotiated additional bank funding in the period,” the report said.
“This will enable the company to achieve critical sales momentum and execute the orders at a rate which leads to an ongoing profitable and therefore viable business. The directors have therefore prepared forecasts showing significant growth leading to profitability.”