CML Group Ltd (ASX:CGR) expects to save over $2.5 million pre-tax annually after completing the repayment of an 8%, $40 million corporate bond.
The repayment reduces the average cost of debt, which lowers interest payments and hence saves the $2.5 million annually.
CML Group is the #2 in its sector
CML Group’s core business is invoice factoring or debtor finance.
It has established itself as the clear number two in the non-bank invoice factoring business in Australia.
What this means is that it provides its clients with access to cash while they are waiting for their clients to pay invoices.
The company charges an admin fee of around 1.2% of the total invoice amount and interest on the invoices funded at around 10% per annum.
READ: CML Group secures $13 million to continue growth initiatives
In March 208, CML raised $13 million through the issue of 26 million shares priced at $0.50.
Proceeds from the placement were to be used to strengthen the company’s balance sheet post the acquisition of Thorn Group’s (ASX:TGA) trade and debtor finance business.
Integration of new business ahead of schedule
The integration of the acquired business is progressing ahead of schedule, business volumes are ahead of forecast, the cost base adjustment has been completed and associated costs absorbed.
The acquired business is expected to make a positive contribution to CML Group’s earnings in FY18 and a more significant contribution in FY19.