Cardiff haulier Rhys Davies suffered a 50% fall in revenue with losses mounting to £3.5m in the year after it was bought by Cathay Investments, motortransport.co.uk has learnt.
The haulier went into administration earlier this month just one year after its acquisition by Cathay Investments, after accruing “significant and unsustainable” losses.
Joint administrators Ian Vickers and Philip Harris of FRP Advisory said the losses had been exacerbated by the impact of the Covid-19 pandemic.
This week, potential bidders for the assets of the firm revealed that between October 2019, when the company was bought by Cathay Investments, and September 2020, revenue at the firm was halved and staff numbers reduced from 400 to 200.
One haulier said: “Rhys Davies was losing around £100,000 a month pre-Covid but post-Covid-19 that ballooned to a total of £3.5m for the year to the end of September.”
An industry source added: “Rhys Davies was already losing money before it was bought by Cathay but Covid-19 accelerated those losses with the firm losing around £3,000 a month and staff numbers down to around 200.”
A spokesman for SIA Group, which has been hired by FRP Advisory to locate the company’s assets and dispose of the fleet, told motortransport.co.uk there has been no offers to buy the company to date.
He said: “It is in quite a bad position and its substantial losses make it an unattractive proposition.
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“The timing was unfortunate for Cathay Investments. They were trying to turn the company round and then ran into Covid-19 pandemic.”
Announcing the administration last week FRP advisory partner Steve Baluchi said: “The impact of the pandemic has resulted in unsustainable losses for the company and left the directors with no option but to place the business into administration.
“We will now be focused on the orderly wind-down of the business and returning customers’ goods to them as quickly as possible.
“We are also working with staff to support them and help make any claims to the Redundancy Payments Service during what we recognise will be a difficult time.”
A request to FRP Advisory for an update on the wind-down of Rhys Davies has yet to receive a response.
Rhys Davies operated a fleet of 170 vehicles, including 150 trailers, and had more than 560,000sq ft of warehouse space across nine UK sites. It employed around 400 staff.
After being hit by the loss of two major contracts in 2017 and suffering serious operational disruption during the 'Beast from the East' storms in March 2018, the company reported losses of £8m in the 18-month period to 28 February 2019, on turnover of £55.3m.
In October that year Rhys Davies was bought by Cathay Investments for an undisclosed sum, as part of the Croydon-based investment firm’s strategy to expand into the UK logistics sector.
