Major sugar beet haulier M and J Haulage collapsed into administration due to a heavy reliance on finance to fund investments, low margins and the prospect of less work from British Sugar, according to KPMG.
The Lincolnshire company appointed administrators on 12 October after it was informed by British Sugar of a “significant reduction in the contract volumes”, which was to take effect in April 2018.
The move compounded the financial problems M and J Haulage was already experiencing, raising concerns about the viability of the long term business model.
Administrators said it was already straining under cash flow pressures following a weak trading performance and increased interest costs associated with HP finance for plant and machinery purchased following high levels of growth.
They said: “The company operated in a competitive and typically low margin industry. Whilst turnover increased in line with the increasing volumes, the company’s margins from the underlying business remained low.”
The firm’s administration last October sparked concerns among growers that they’d struggle to find another haulier to deliver the crops.
However, trading of the sugar beet division continued until 28 October when the harvest and delivery of M and J Haulage’s sugar beet was completed.
The company held a licence authorising up to 34 HGVs out of six depots in Lincolnshire.
KPMG said it anticipated that employees made redundant should receive a dividend of 100p in the pound and that unsecured creditors should also receive a dividend, although the amount remains unknown.
