Celtic Linen back in profit even as revenues fall 14%

Celtic Linen returned to profit last year, after emerging from examinership with a net gain of €5.42m, writes Gordon Deegan.

New accounts show that Celtic Linen Ltd posted a pre-tax profit of €521,867 in the 12 months to the end of February even as revenues dropped 14% to €18.82m.

It had posted a loss of €1.25m in the previous year.

In December 2016, the firm exited examinership after a fresh investment of almost €1.4m and after the striking of a deal with its creditors.

Causeway Capital through its Harkglade Ltd unit had agreed to invest in the business to cover the examiner’s expenses and dividend payouts.

Causeway Capital was established in 2016 by David Raethorne and Matt Scaife, who were previously involved in a number of businesses, including Helix Health and Smiles Dental.

Celtic Linen is based at Drinagh in Co Wexford and has been in operation since 1926.

It supplies clean bed linen, towelling and table linen to hotels and pubs, as well as scrub suits, patient wear and ward linen to hospitals.

The company’s exceptional gain last year included a €10.93m from an examinership write back, which was offset by €1.64m in reorganisation costs and a €3.86m non-cash impairment fixed asset cost.

The directors state that the company is concerned about the high level of over-capacity in the market and the continuing downward pressure on prices but are nonetheless confident that profitability can be sustained.

Staff numbers have fallen to 300 from 430.

The accounts show that the biggest area of the company hit by job losses last year was in distribution and sales, where the staff count fell from 51 people to only three.

Numbers employed in production fell to 270 from 338, while the numbers in administration fell to 27 people from 48.

Staff costs last year fell from €9.49m to €8.89m.

Directors’ pay at the company almost doubled going from €290,060 to €546,386.

Accumulated profits at the company last year increased from €2m to €2.53m.

The company’s cash pile increased sharply from €3,207 to €2.65m.