CML Group Ltd (ASX:CGR) will exit its non-core payroll business, Lester Associates by selling it for $3.5 million in cash and focus on the growth of its receivables finance business.
The sale of Lester Associates to Ayers Management Pty Ltd is expected to be completed by 31 July 2016.
CML is gaining traction in its factoring business of financing up to 80% of a client’s invoice to assist businesses overcome the cash pressure of delivering goods and services on credit.
The company’s revenue from its finance division increased 172% to $4.6 million in 1H2016, from $1.7 million in 1H2015.
CML funded $162 million worth of invoices in 1H2016, a growth of 314% compared to 1H2015.
The transformation of CML from a payroll focused business to a finance business has been driven by the recent acquisition of receivables financier CashFlow Finance Australia.
The sale of Lester Associates forms part of CML’s business simplification program, aimed at exiting non-core businesses to free management time and working capital for growth of its business finance brands.
CML had closed an underwritten non-renounceable pro-rata rights Issue last month to raise about $3.25 million.
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