City Link parent Better Capital has revealed it will inject more money into the the parcel carrier in a bid to turn the loss-making business around.
City Link narrowed its deficit by 40% in 2013, posting a £21.1m pre-tax loss (2012: £35.9m loss). This came despite a 10% decrease in turnover from £321m in 2012 to £289m in 2013, as it moved away from loss-making contracts.
The company described the results for the year to 31 December 2013 as a “strong turnaround against a backdrop of difficult trading conditions”.
Documents filed at Companies House also revealed that turnaround investment firm Better Capital would provide additional funding support for City Link on top of the £40m investment it has already put into the firm. Better Capital acquired the business for £1 from former parent Rentokil Initial in April 2013.
City Link did not state how much additional funding it would receive, but said Better Capital would “provide finance sufficient to enable the business to continue as a going concern for the next 12 months."
It said that, given the challenges the business is facing and the operational changes being made, there "remains uncertainty in relation to the group's ability to meet its forecasts".
City Link MD Dave Smith said: “City Link remains a business in turnaround, and our results for 2013 represent a great step forward on that journey.
“We are not there yet but the continued support of Better Capital - both in terms of the investments made so far and in terms of future commitments - means that we will complete our turnaround story and that this business and our customers have a bright future to look forward to together,” added Smith.
During the year, City Link reduced its network from 67 to 61 depots to improve efficiency and improve its ability to meet customer needs.
The operator recently restructured its management team, bringing three new directors into the business.
