DAC Beachcroft issues £10m cash call and raises facility to £40m

DAC Beachcroft has issued a £10m cash call to the firm’s LLP members while increasing its rolling credit facility to £40m as it pushes toward a revenue target of £200m for the 2013/14 year end.

Minster Court

Senior partner Simon Hodson said the firm had been overhauling the funding arrangements for the last six months, a year after Davies Arnold Cooper merged with Beachcroft to create the entity (31 October 2011).

He said: “The firm needed a full year’s trading as DAC Beachcroft to work out the rhythms of the business. At the time of the merger you put in place an overdraft facility because you know what you want, but not precisely. We needed a whole year under our belts, when we could start planning out working capital requirements going forward.”

Previously the firm relied more heavily on retained earnings and a smaller overdraft facility to fund the running of the business. Hodson said the emphasis was now on capital contributions while the £40m banking facility, which will run for four years, would enable borrowing without the fear of the banks recalling the loan at short notice.

DAC Beachcroft managing partner Paul Murray said: “The legacy arrangements for working capital that Davies Arnold Cooper and Beachcroft had in place were no longer fit for purpose.”

He added that the cash call would “bring [member contributions] more in line with businesses of our size”.

According to the firm’s LLP accounts for 2011/12, the most recent accounts available, DAC Beachcroft had a £7.8m capital increase between 2011 and 2012, taking the total to £22.6m 18 months ago.

At that time the firm’s overdraft facility with HSBC and Lloyds stood at £29.6m. The same banks have agreed to increase the loan facility.

Murray commented: “Despite widespread speculation around the difficulties of raising finance in the current economic climate, both banks were pleased to provide additional facilities.”

Revenue at the firm in the first half of 2013/14 stood at £90m, a 7 per cent increase compared to the same period last year.

In July, the firm announced a revenue of £188.2m for the financial year 2012/13, up by 14 per cent from £164.8m in the audited accounts for 2011/12 (15 July 2013). It is aiming to break the £200m barrier at the end of the current financial year.

Commenting on the growth Murray said: “With sound financial management and a continued focus on billing and cash collection right throughout the year, I’m confident that we will see an end-year result that will justify the considerable faith the banks and the members have shown in our business.”

The firm’s members’ agreement has been altered to reflect the changes. Partners are currently in the process of making equal contributions while the banking facility it already available.