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6 NEWS Winners and Losers SUMMER HEATS UP HOLIDAYBREAK SHARES The start of the summer holiday period was a good week for Holidaybreak. The Northwichbased company saw its shares rise 7.25 per cent after saying that the business continues to perform well in what is a “more difficult” trading environment. It also said the prospects for the current financial year remain “broadly satisfactory”. Conversely things were not looking so good for those with shares in Enegi Oil. The Manchester-based oil and gas exploration group that listed on AIM in March last week said it had abandoned one of its wells after failing to find any hydrocarbons. The shares fell 31 per cent. Meanwhile shares in insolvency specialist Begbies Traynor rose 8.9 per cent. The Manchesterbased company is one of the few beneficiaries of the negative economic sentiment as this increases the number of companies getting into financial difficulty and in turn boosts Begbies’ business. Last week it said that more than 600 companies in the North West and North Wales faced critical problems in the three months to the end of June, a near 10-fold increase over the number in trouble in the same period a year earlier. About 15 per cent of these are expected to go into formal insolvency. Things were looking up for those with shares in Lookers. The Manchester-based car dealership has struggled in recent weeks after saying that trading was more challenging, but last week the stock climbed 12 per cent to close at 58p on Thursday. Elsewhere shares in Expansys fell 12 per cent. The Manchesterbased online mobile phone retailer revealed a tripling of its pre-tax losses to £2.5m in the year to April. The company said that US and UK sales had been hit by the credit crunch while Europe was more resilient and Asian markets were stronger. It was a good week for Bodycote. Shares in the Macclesfieldbased engineering company climbed 8.9 per cent to close at 183p. The stock has been steadily rising since the company revealed it had made its first foray into France with the acquisition of Centech, a Toulouse-based materials testing laboratory. Bodycote is also currently considering bids for its own thermal testing division, which it put up for sale with a price tag of at least £400m in May. Shares in ServicePower Technologies put in a rare positive performance, climbing 25 per cent after several weeks of heavy losses. Analysts may now be starting to see some value in the Stockport-based company which last month announced plans to move from the main market to Aim and said it had agreed a new loan facility to fund the group’s working capital needs. Individual Restaurant Company again had a bad week, with its shares falling 13 per cent to 55p. There was no company specific news to prompt the decline, but the shares have been under pressure recently amid concerns that a slowdown in consumer spending will mean a fall in the number of people choosing to eat out. ● Closing prices as of Thursday. Taking Stock BY CLAIRE SHOESMITH The rollout of one of its catalogues into Germany next year may be just the tip of the iceberg for Manchesterbased home shopping group N Brown, which has its longer term sights on North America. “Germany is all about learning,” chief executive Alan White told Crain’s, adding that the company hopes by next March it will have adapted its website to enable people from all over the world to order N Brown items online. For the German market it is translating its Spring- Summer Simply Be catalogue. White said he expects the move to add a “few per cent” to group sales, but more importantly to give the company an idea of where future demand growth may come from. John Stevenson, an analyst at Shore Capital in Liverpool, welcomed the development, saying that it required no capital investment and as such was a good way to seek to grow the business. “It’s a relatively easy thing to do,” he said, adding that a similar move into Europe has already been successfully executed by internet clothing retailer Asos. Unsure However, Jonathan Pritchard, an analyst at Oriel is not so sure about the move into the USA. “The American market is a pretty tough market to crack,” he said, adding that there is a long list of UK retailers that have tried and failed. In addition, there are already several big players in the catalogue and online clothes retailing market in the US such as L.L. Bean and Land’s End, which already offer plus-sized clothing. Still, with an estimated 62 per cent of American females and 67 per cent of males classed as overweight, there is no doubting the potential for N Brown’s niche focus on larger, older customers. N Brown is bucking the general negative trend in the retail sector at the moment thanks to its niche focus and its suc- BY CLAIRE SHOESMITH The share price of Premium Bars & Restaurants’ collapsed after a forced stock sale by troubled banking and property conglomerate Dawnay Day, its second largest shareholder. But analysts familiar with the situation see a silver lining. “It has traditionally been a very illiquid stock, with more than 60 per cent of the shares in the hands of two stakeholders,” said one City analyst who declined to be named. “The forced sale of a near 30 per cent stake should improve the liquidity as the shares are likely to be bought by a series of smaller investors or institutions.” Mark Jones, executive chairman, is also hoping that the increased liquidity will in turn encourage more individual investors to tap into the stock and in the long run make it a more attractive investment. Londonbased property investors the Reuben brothers remain the group’s largest shareholder with a 32.5 per cent stake. Premium Bars, which owns the Living Room and Bel and the Dragon chains, saw its share fall 45 per cent on July 18 when Dawnay Day was N Brown casts its eye on USA Catalogue retailer to try on Germany first cessful adoption of the internet as an advertising and sales channel. Last month it revealed a 12.3 per cent increase in turnover in the 17 weeks ended June 28, citing the strong sunny spell in May which coincided with the mailing of its summer catalogues. It said 31 per cent of total sales came from the internet, a number that White expects to increase to about 45 per cent over the next three years, Left and top, clothing from N Brown forced to offload more than 2m shares after failing to meet margin calls on contracts for difference. “It is not a surprise that the share price took a battering,” said the analyst. “The market just needs to think there is going to be a forced sale and a share price will fall.” The forced sale had nothing to do with the performance of Premium Bars and the disposal was one of a series of investments dumped by Dawnay Day because of its financial difficulties. Jones told Crain’s it was business as usual at the company, which has recently moved its headquarters to although he would like even more. “Among our younger customers — those aged 30-45 — I can see that getting to between 75 and 80 per cent,” he said. Even though the shift into online is proving good news for N Brown, 53year-old White said he would be “very surprised” if the company were to get rid of its catalogues during his tenure. Online orders are on average 24 per cent higher than those made on the telephone and the company is able to tailor its advertising to suit the weather and trends more quickly than in catalogues, which take several months to put together. As a result it is now seeking to increase cross promotion by encouraging catalogue customers to look on line for wider product ranges and reductions. Still, while the outlook is currently Hale from Newcastle upon Tyne. Its finances and future plans remained unaffected by the share price decline, he added. Since the drop, the shares have climbed 3 per cent, and are currently trading at 35.5p — a marginal improvement on the 34.5p they hit on July 18, but well off the 155p level where they stood at the start of the year. “On a day to day basis it does not affect the business,” Jones said, but added: “As far as the share price is concerned we are in completely uncharted territory.” Unfortunately for Jones, the com- Crain’s Manchester Business / July 28, 2008 Alan White rosy — analysts are upbeat on the company’s prospects — there is one blip on the horizon. To cater for the expected growth from the current 5.5m-strong database, N Brown is seeking to expand both its warehouse sites at Shaw, near Oldham, and Hadfield. The initial planning permission for a £20m expansion at Shaw was rejected and the company will resubmit its updated plans in the next month or so. If this were to fail too, White said it could force the group to relocate to a new site. COMMENTS? cshoesmith@crain.com Analysts see silver lining for Premium Bars Premium Bars & Restaurants executive chairman Mark Jones and The Living Room restaurant in London pany is in a close period, meaning that he and the other directors are not able to buy stock themselves in a bid to show support for the company and in turn shore up the share price. As a result all he can do is sit tight and wait to see in whose hands the remaining shares end up. Still, with a usual average of between 10,000 and 20,000 Premium Bars & Restaurants’ shares trading each day, getting rid of several million could prove difficult. Neither Dawnay Day nor the Reuben brothers returned calls for comment. COMMENTS? cshoesmith@crain.com
Crain’s Manchester Business / July 28, 2008 NEWS 7 New academy to take more students BY SIMON BINNS The British Telecom-sponsored Communication Academy planned for the Harpurhey district of North Manchester is to take 300 more students than expected. The new school, to be built at the corner of Rochdale Road and Queens Road, is set to open in September 2010 and will now have 1,200 places. The reason for the increase is to absorb the overspill from two new single-sex Creative and Media Academies being built to replace the North Manchester High School for Boys and the North Manchester High School for Girls. It was originally planned to offer places for 900 pupils at each academy, but this number has been reduced to 750. The academies will also open in 2010 and are sponsored by Manchester College. Mike Blackburn, BT’s North West regional director, based in Manchester, said: ““BT’s vision is that the Academy will transform access to learning for students, their families and their communities with the support of BT, Manchester City Council and Manchester College of Arts and Technology.” Blackburn said the Academy would work “collaboratively” with schools across the city to ensure pupils learn directly from communications industries. There will also be opportunities for students to get experience within BT. Three sites have been short-listed for the Creative and Media Academies; the existing site of the North Manchester High School for Boys; land fronting Victoria Avenue East and existing school playing fields; land between a proposed realigned public footpath and the existing North Manchester High School for Boys playing fields. COMMENTS? sbinns@crain.com BY SIMON BINNS Manchester-based AGP Architects, which has gone into liquidation with the loss of 12 jobs, is being marked down as another victim of the stalled city centre apartments market. Administrator Lyndsey Cooper, recovery and restructuring partner at the Manchester office of Baker Tilly, who was appointed in June after the firm hit cash flow problems, said in her report that the overall deficiency was £210,739. AGP, which had traded from its offices at Albion Wharf since 1993, owed £372,791 to unsecured creditors, including £110,553 to employees. Larger creditors include the Profits at Pataks up £5m after £100m sale to ABF BY JAMES CHAPELARD Pre-tax profits at chutney and curry paste manufacturer Patak’s Foods shot up by more than £5m in the year the founding Pathak family sold out to Associated British Foods for £100m. Newly filed accounts for the 11 months to last September reveal that the main reason for the increase was a big reduction in boardroom pay and administration costs. The accounts also reveal that the company’s snack foods operation, Patak’s Chilled Foods Ltd, which made onion bhajis and other products at a factory in Bellshill, Lanarkshire, lost more than £3.6m in the two years before it was finally closed down. Wigan-based Patak’s Foods Ltd, the largest company in the group, paid out £500,000 to directors during the period, compared with £1.7m previously. Four directors — Sven Straub, Andrew Mayhew, Kirit Kumar Pathak and Neeraj Kirit Pathak — resigned on the day the sale to ABF completed. David Page left the company in March 2007. The highest paid director saw his total package fall by £966,400 to £327,800 in the year. Total administrative expenses fell from £15.3m in 2006 to £11.3m. The company, which has now changed its name to AB World Foods, posted pre-tax profits of £5.5m compared to a £7,000 loss the previous year. Turnover was £48.7m in the 11 months, a rise of £224,000, but stripping out the effects of the change in Inland Revenue, owed £57,226; and founder and managing director Anton Rodgers, who will lose £21,621, and his wife Judith, who is owed £13,950. The firm carried out commercial work on office, retail and industrial units, as well as residential apartments. Its turnover peaked at around £1m in 2005/06. Cooper said the firm’s demise was hastened by problems in the residential property market. “AGP has suffered from a number of unfortunate circumstances in the last few years,” she said. “In addition to a major commercial contract not going ahead in 2007, the business has been badly affected by the decline in the residential prop- year end this was equivalent to an increase of £4.3m on a 12-month basis. “The increase is derived principally from sales and listing of new products with existing customers and by extending distribution. Gross margins achieved on sales remain relatively steady,” said former director Sven Straub, writing in the accounts. The company makes pickles, pastes and chutneys while three sister companies made frozen and chilled food and speciality bread, supplying Indian restaurants, supermarkets and wholesalers, and also making own-label items for retailers. Combined turnover for the four Patak’s companies was £67.5m compared with £69.6m in 2006. Accounts for Worldwing Investments Ltd, the parent company, have not yet been erty market. Many of its clients have suffered financial difficulties and in turn struggled to pay AGP’s outstanding fees. Liquidation “The company’s management team carefully explored the various options available, but having considered the present economic conditions and the likely recovery timescales in the property market, and the immediate lack of third party funds, the directors had no option other than to place the company into a Creditors’ Voluntary Liquidation.” Former employee Geoffrey Gillman, an associate partner at AGP released but across the other three other divisions 2007 was a mixed picture. Patak’s Frozen Foods Ltd posted pre-tax profits of £165,000, compared with losses of £396,000 the previous year, on turnover 7.6 per cent up at £6.5m. Turnover at Patak’s Chilled Foods Ltd dropped from £6.2m to £4.7m, although a pre-tax loss of £2.6m was cut to £1.05m. “Turnover has declined due to continued poor trading with some principal customers and eventual cessation of trading activities in August 2007,” the accounts state. The failure of the business, which led to 80 job losses, meant that the group had to pay back £40,000 worth of grants to the Scottish Executive. Patak’s Breads Ltd also saw turnover fall from £8.8m to £7.6m but pre-tax Apartments slump killed off architects’ firm BY SIMON BINNS Bolton-based property developer Charles Topham has been forced to make staff redundant because of the pressures of a slowing property market. It is understood that poor sales and lettings across a number of schemes are behind the reason to shed jobs. In a statement issued to Crain’s, the company said: “The Charles Topham Group can confirm that following a review of operations, it has Directors at curry firm took pay cut to £500,000 from £1.7m Charles Topham joins firms cutting jobs taken the decision to make a number of posts redundant. “We feel these measures are a sensible response to the current economic climate and we are working to assist those affected in finding alternative employment.” It is understood that approximately half of the office and site staff have been made redundant, although the company declined to confirm exact numbers. Recently completed developments include the Merchant’s Place and Springfield Court office schemes in Bolton Town centre. The company is the latest in a long line of development and construction firms to have made redundancies in the region, joining the likes of Ask Developments, Rok Development and Artisan Holdings, all based in Manchester, in restructuring operations. National housebuilders including Taylor Wimpey, Barratt, Redrow Homes, Bovis and Persimmon have been forced to shed thousands of jobs collectively. COMMENTS? sbinns@crain.com and an employee since the company’s inception, is owed around £18,000 in unpaid salary and holiday pay. He told Crain’s: “I was told on May 15 that I was being made redundant and haven’t been paid since the end of April. “We hadn’t been told it was difficult previously, but the writing had been on the wall for a while. Fees Meena Pathak, left, and Kirit Pathak and below, a sample dish from AB World Foods profits leapt to £89,000 compared with a £579,000 loss the previous year. “The company has improved profitability by cutting staff costs,” the accounts say. Accounts for Patak’s Foods Ltd, which employs 335 at a factory in Leigh, also show that it sourced nearly £4m worth of raw materials from four Indian companies associated with former director Kirit Kumar Pathak. Patak’s spent £3.8m with Shree Balaji Gums & Spice Stuff Pvt Ltd, Patak Food India Pvt, Oracle Trading Co and Laxmi Enterprises, a rise from £3.1m the previous year. It is unclear whether ABF has continued to trade with the companies since it took control. SEE OUR VIEW PAGE 8 COMMENTS? jchapelard@crain.com weren’t coming in as quickly as they had been compared to 12 months ago. As a senior member of staff you tend to know about it, and I’d been asked to take a shortfall on my salary. I’m trying to be philosophical about it. Some of the younger members of staff were a little bitter.” Gillman said there were no ill feelings between himself and Rodgers. “I’ve known Anton for more than 20 years,” he said. “He’s been feeling bad about the whole thing and it’s a hard decision to have to make. “ COMMENTS? sbinns@crain.com
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