The proposal to enter a CVA was approved at a meeting on Wednesday 9 March, with 99% of creditors taking part in the vote electing to support a CVA, allowing the 39-year-old business to keep trading and securing around 154 jobs.
A statement issued by the company said it had enlisted the services of accounting advisory firm Grant Thornton “following the identification of discrepancies in its accounting function, which had led to the under-reporting of losses in the business”.
It said: “The board has now appointed a new financial director, a new financial controller and implemented a range of measures to reduce costs and return the business to profitability. Now the CVA has been approved, the directors are extremely positive about the future.
“The company has the full support of its bank and shareholders and has the necessary finance to allow the business to continue with its trade and growth plans."
A report by Grant Thornton insolvency practitioners Richard Lewis and Nigel Morrison, reveals a creditors list totaling £7.76m, including £2.92m to unsecured creditors, £2.65m to secured creditors, £140,425 to preferential creditors and £2.05m listed under “other creditors” including £831,529 in employee claims and £1.22m to SPS parent company SPS Martin Holding. Of the unsecured creditors, HMRC is owed £807,000.
Under the CVA the company will make 48 monthly contributions - £30,000 per month for eight months followed by 40 monthly payments of £35,000 – to enable payments to be made to creditors. Contributions will total £1.64m and will provide a yield to creditors of 53p in the pound over the duration, compared to an estimated 2p in the pound if the business were to be liquidated.
SPS Group’s accounts show that in the 18 months to 31 October 2015 the business made a net loss of £2.38m on a turnover of £20.98m. The business made net losses of £156,273 and £786,051 in 2012 and 2013 respectively but turned this around in 2014 (the most recent 12-month trading period) to post a profit of £146,146 on a turnover of £13.7m.
The CVA report states that annual savings of around £640,000 have been identified at the company which have already been put in place, while further savings will be implemented across the first year that are anticipated to save around £250,000 annually.
The profit and loss forecast for the company for the next two years shows predicted a loss of £135,333 in the 2016/17 financial year on a turnover of £13.54m and a return to profit in 2017/18 with a forecasted £102,704 profit before tax on turnover of £14.4m.
