Case Study Apollo - ABN AMRO Commercial Finance

Challenge

When the UK went into lockdown in March, a nation of gardeners was suddenly stuck at home – which meant plenty of attention was lavished on lawns and flower beds. But with garden centres and DIY stores shut, the list of jobs they could complete was limited. And for Sheffield-based Apollo Gardening, the leading supplier of gardening and DIY products (from landscape fabrics to incinerators; wire netting to greenhouse heaters), the main route to market vanished overnight.

Even though Finance Director Ben Leary and the rest of the management team hoped that the lockdown was creating a pent-up demand for supplies to improve homes and gardens, it was a worrying moment. “Everything shut down at the end of March, traditionally one of the business’s busiest months,” he says. “In April all retailers were shut. The impact was a loss of almost half the business sales. We furloughed many staff – and it was only me and one other person in the office for most of April.”

What the business needed was a financial wingman – a partner who could see their trajectory before the crisis hit, understand what they needed, and that had the ability to provide solutions to get them back on their flightpath. Above all, Apollo had to keep suppliers on-side, knowing that good relationships with them once lockdown lifted would be key to satisfying growing consumer demand; and enough working capital to nurse those retailers that were still open through the toughest weeks of the crisis.

 

Solution

ABN AMRO Commercial Finance had been working with Apollo for 11 years, so we knew the business and the team. With a turnover touching £13m and a forward order book of around £1m when the crisis hit, we knew this was a strong company – and that we could adapt our existing solutions to meet the extraordinary conditions in March and April.

The confidential invoice discounting (CID) package we’d been running for Apollo was the perfect foundation. In the past Apollo has tended to use a seasonal top-up to manage the big fluctuations in cashflow – booming in spring and summer when there’s strong demand for gardening products, then declining in winter. We looked at the Covid-19 crisis as seasonal hit.

In addition to a £2.9m line in the CID package, which would flex up instantly as businesses reopened, we arranged a CBILS top-up loan of £725,000 for 12 months to ensure Apollo could keep their suppliers happy and maintain the skeleton staff in the warehouses, to serve the retailers who did remain open.

“The funding solution from ABN AMRO was such a relief – we weren’t sure what sales were going to be like for the rest of the year, or whether we could pay suppliers,” says Ben. “It’s strengthened relations with them. It was a very simple process – no real difference to what we’ve arranged in the past. From having the initial conversation at the start of lockdown to having the sign off to be able to draw down funds was around four weeks.”

 

Result

April and May were tense months. But the solution – and Apollo’s business – were robust enough to see them through. Apollo was delighted to be able to pay everything owed to suppliers. And by June, demand had come back so fast that the full capacity of the package wasn’t required. But back in April no one knew whether this would have been the case – and we don’t know any Finance Director who wants to take risks with critical supplier and customer relationships.

“Since shutdown was reversed, there’s been incredible demand for gardening products, so Apollo has seen a complete turnaround on customers,” says Ben.  “It’s been a huge relief. “No one could have predicted what post shutdown demand was going to be like, or how long things would remain shut for, so we never felt we could rest on our laurels. ABN AMRO was really supportive during that time.”