Crain's Manchester Business - 12-16 April, 2010 - (Page 3)

Crain’s Manchester Business / April 12, 2010 NEWS 3 Funding stand-off leads to exit of nursery chain boss Wilmslow-based Kidsunlimited failed to deliver plans for nine new site openings in 2009 BY MICHAEL FAHY The chief executive of Wilmslowbased nursery chain Kidsunlimited resigned in frustration at a lack of progress, according to a person familiar with the situation. Lee Pearson quit two years after leading a £45m buyout in which the Manchester office of private equity firm LDC took a 47 per cent stake. He is understood to have become annoyed at a stalemate which developed between LDC and the company’s debt provider, Barclays, over which of them would provide fresh capital needed to continue Kidsunlimited’s roll-out of new openings. “It’s a multi-site business and for that matrix to work you need to continue growth. The only real way of doing that is to open new sites,” said the person. “Without new investment, Lee could see a covenant breach at some stage in the future. Of course, it is the banks’ and VCs’ prerogative to do what they want, but it can leave management teams in a difficult position.” At the time of the investment by LDC in April 2008, Kidsunlimited was operating from 50 sites and was making a pre-tax loss of £1.4m on sales of £30.8m. Sales increased by 7.5 per cent to £36m in the 13 months to April 30, 2009, but losses also climbed to more than £3.3m. This time last year, Pearson told Crain’s that it was planning to add nine new sites in 2009, which would have brought the total to 60, but its website shows that only 53 sites are currently trading. Kidsunlimited was founded by husband and wife Stewart and Jean Pickering in 1983 and had been through a number of private equity investments. It initially received £10.5m in development capital from More News LYMM GASTROPUB GOES DOWN OWING £260,000 The company which owned The Church Green Inn gastropub on Higher Lane in Lymm has gone into liquidation, owing £261,000 to creditors. Bury-based corporate recovery firm Leonard Curtis was appointed in December at Fava Ltd, whose directors were chef Aiden Byrne and Sarah Broadley. Byrne has appeared on a number of television shows, including Masterchef, and is well known on Manchester’s food and drink circuit. In a statement of affairs filed at Companies House, Byrne is named as a creditor owed £20,000. Trade creditors are owed £141,000 and HM Revenue & Customs is owed £100,000. The total deficiency to creditors stands at £257,000. The restaurant is still trading and taking bookings, however and a new company, SAL (Prestbury) Ltd, was set up by Byrne and Broadley in July 2009, registered at the Church Green Inn. SOFTWARE DIRECTOR GRABS MORE SHARES Venture capitalist Hugh FitzwilliamLay has bought 500,000 shares in Stockport-based ServicePower Technologies, where he is a nonexecutive director. The purchase, at 4.5p and 5p per share, takes his holding to 6.2 million or 3.3 per cent of the company, which supplies software for managing field service engineers. Fitzwilliam-Lay was co-founder of Citipost, a logistics company that was sold to Royal Mail in 2000. He is managing partner of BFL&P, an early stage venture capital investor that has stakes in 15 companies. Lee Pearson joined as finance director in 2006 3i, which was replaced by ISIS Equity Partners when it backed an initial buyout in 2001. During its seven-year ownership, sales grew from £8m to £30m and it recruited Pearson in 2006, initially as finance director. ISIS achieved its exit as a result of the LDC-backed secondary buyout. Trading positively Since Pearson’s resignation from the firm in January, Kidsunlimited has appointed a number of new directors, including new chief executive Ros Marshall. She was previously chief operating officer at private education firm Nord Anglia Education. The firm’s chairman, Graham Smith, said Kidsunlimited “is trading ‘Lee left the company in January this year and the management team has been strengthened with a new and highly experienced CEO’ GRAHAM SMITH, KIDSUNLIMITED positively and its roll-out strategy is on track”. He added that the company opened two new sites last year and is planning to open another four within the next financial year ending April 2011. Smith told Crain’s: “Lee left the company in January this year and the management team has been strengthened with a new and highly experienced CEO with a background in childcare and education. Like any business, it continues to have a regular dialogue with its banking partners.” The firm employs more than 1,500 people across its nurseries and at its Wilmslow headquarters. In its most recent set of accounts, earnings before interest, tax, depreciation and amortisation increased by 31 per cent on the prior year to £4.8m. However, interest charges were £4.7m and the company finished the period with net debt of £40.8m. SEE OUR VIEW PAGE 8 STUDENT SHOWS BOTTLE WITH WATER BUSINESS A University of Manchester student has started a new business based on converting bottled water drinkers to tap water. Edwin Broni-Mensah, who is doing a PhD in mathematics, devised a branded GiveMeTap bottle and persuaded 26 cafés and restaurants to offer users free refills. He ordered 500 bottles from China and has sold 33 at £7 each in the first three weeks. His sales pitch is that users can save up to £300 per year while cafés get more footfall. Broni-Mensah said £1,200 had been invested into the business, including his own money and cash from social enterprise charity UnLtd. He has got most of this back already by winning £1,000 from the Shell LiveWIRE Grand Ideas Awards for young entrepreneurs. “Some people say they like the taste of bottled water, but others only drink it because when they’re on the go, they don’t have access to anything else,” he said. COMMENTS? mfahy@crain.com Taxman winds up Maxbox but Egan is undaunted BY SIMON BINNS Interactive kiosk promoter Maxbox Digital Retail Ltd is being wound up by HM Revenue & Customs, two years after owner Andy Egan tried to revive the business. Egan bought the assets from AIMquoted Felix Group for £175,000 in January 2008 and took ownership of 95 per cent of the new business, which he rebranded as MaxBox Digital Retail. A winding-up petition was presented to the High Court last November, and the order was made on March 10. Altrincham-based Egan said difficulty in raising finance was behind the latest setback, although it had not dampened his enthusiasm for the business. The digital Maxbox kiosk allows customers to top up their mobile phones, order flowers or print photos. “Unfortunately MaxBox Digital Retail Ltd has gone into liquidation at the hands of HMRC,” he told Crain’s. “There is still Maxbox UK and Maxbox International, however. “We were hindered by two delays; we invested a lot of money in the Middle East and it has taken a lot longer to come to fruition and produce a return for us and also after Felix, the timing to raise money was a nightmare, so we just had to muddle through hand to mouth and never got ahead. “It’s been very painful for us all and the team have made big sacrifices to try and get through. Even with signed orders, we’ve run out of time and so were not able to contest the HMRC’s action. Banks will not lend against signed orders, just the results of them. WHAT YOU SAY What will do most for economic recovery? A: The Conservative Party wins the General Election B: The Labour Party wins the General Election C: England wins the World Cup World first “I’m now more confident than I ever was that we can fulfil what we started and finish the MaxBox story. Interestingly, the applications that are working best are bill-paying, mobile top-up, and we are about to vend Visa and MasterCards, which will be a world first. “Apart from HMRC, the companies’ debts are relatively small and we still need to work with our suppliers, so in time hopefully everyone will be happy.” In March 2008, Egan unveiled plans to launch the world’s first flying casino on the world’s biggest airship, the SkyCat, above the Nevada desert. Those plans were never developed past the ideas stage, however. COMMENTS? sbinns@crain.com 39% Go for the Tories — but only on penalties 10 20 30 40 50 60 70 80 90 100 10 20 30 40 50 60 70 80 90 100 A B C THIS WEEK’S QUESTION How will cuts in public spending affect your business? Vote and post comments at: www.crainsmanchesterbusiness.co.uk Andy Egan with a Maxbox kiosk http://www.crainsmanchesterbusiness.co.uk

Table of Contents for the Digital Edition of Crain's Manchester Business - 12-16 April, 2010

Crain's Manchester Business - 12-16 April, 2010