Debt weighs down LBM
THE CHIEF executive of Altrincham-based contact centre business LBM said that the firm is in better shape despite the fact that it declared a £4.3m loss on turnover of £45.6m in the year to May 31.
The firm narrowed pre-tax losses from £6.m a year earlier, largely by increasing earnings before interest, tax, amortisation and other exceptional costs to £2.8m from £1.1m a year earlier.
Bates said that LBM had enjoyed “significant growth” not only in profit levels, but also in investment. Staff numbers increased by more than 60 to over 2,200, it adopted a new brand identity being and it invested in technology such as new prize sites set up to gather customer data and a voice analytics system.
“There’s no denying that a few years ago this business had a difficult time but I feel confident now that we’re on the right track,” he said.
LBM is owned by private equity firm ISIS, which took a majority stake in 2004 when it backed a management buy-out from founder Paul Beck.
The company handles outbound calls for clients in the mobile, utilities, insurance and financial sectors, but Bates added that the firm is now “a technology company” as opposed to a call centre operator, responding to more customer enquiries submitted via email, text and social media platforms.
“There are a lot of companies operating in this arena and from outside we all look the same. We provide a total solution.”
The company’s losses are largely a result of interest payments due on loan notes owed to ISIS, but Bates insists that the business is not overgeared.
“We don’t pay interest on the loan notes. It’s like equity – if the company was sold it would trigger repayments, but we’ve paid off the senior debt and we owe very little to our bankers.”
Accounts show that LBM Holdings’ net debt at May 31 increased slightly to £47.6m but the bulk of this debt is loan notes due to ISIS – £29.6m of which are secured against the fixed and floating assets of the company. It company owes £3.2m by way of a mezzanine loan to its bank, which was refinanced in February this year and attracts an annual interst rate of 4.25% over Libor. The loan notes attract interest rates of 8% a year.
“We’re in the middle of a tough economic climate and it will get a lot tougher, but we’ve been working very hard to make sure that we look after our clients and that should stand us in good stead.
“We think we’re in a part of the economy where spending will continue and which will not be hugely affected by spending cuts.”
He said that the business would continue to invest in new technology and people to help its growth, arguing that ISIS has been “an excellent owner and very supportive”.
“This business is nothing like the firm it was seven years ago and the results are beginning to feed through. They’re better than they were the previous year and we hope – and expect – that they will be even better this year.”
