SP Group has been placed into administration by its new owner just four months after the business was purchased from St Ives.
The Redditch-based point-of-sale specialist was acquired by investment company SelmerBridge in early March, in a £6m cash deal that included sister large-format exhibition and display graphic business Service Graphics, as well as field marketing agency Tactical Solutions and its subsidiary Flare.
Together, the businesses turned over more than £105m and employed around 1,000 staff, with 371 of those currently employed at SP.
Allan Graham and Matt Ingram of Duff & Phelps were appointed as joint administrators at the business today. Service Graphics and Tactical Solutions are unaffected.
The administrators have warned that a large number of job losses are likely, and PrintWeek understands that clients have been informed that production is likely to cease at the end of the month.
Graham stated: “SP Group has suffered from a significant decline in turnover following the loss of key customer contracts last autumn and a further decline in customer support since the business was acquired this spring.
“This has created a challenging financial situation for SP Group and has adversely impacted the cashflow and performance of the business in what is already a highly competitive market. This, combined with the increasing uncertainty impacting both the retail and hospitality sectors, is a contributing factor in why SP Group has gone into administration.”
Landry Kouakou, the French investor behind SelmerBridge, appointed former Watmoughs and Jarvis Porter executive Declan Salter to oversee the businesses, with SelmerBridge pledging to revitalise the operations under its ownership.
However, SP Group had lost a major contract with Sainsbury’s and a large amount of its work for Marks & Spencer under St Ives prior to the change of ownership.
In the year to the end of July 2017 SP Group had sales of £66.3m and posted an operating loss of £5.2m, which included £3.9m of write-down, restructuring and redundancy charges.
SelmerBridge announced at the end of March that it planned to cut the night shift and circa 100 jobs out of around 450 at the site, although it also pledged fresh investment in HP Indigo digital printing equipment for the business.
At the time the firm said the restructuring had been accounted for as part of its scenario planning prior to the acquisition.
The site also runs a range of other large-format litho and digital printing kit.
One industry source commented: “They’ve lost a great big chunk of turnover and the overhead in Redditch is just too big. How it got to this point is the sad bit, this business has effectively failed 18 months ago, not now.”
PrintWeek understands that the company had also been given notice by Whitbread, another major customer, while a source close to the situation said that other clients have also moved their work, with JD Sports switching to HH Global and Spar to Inspired Thinking Group.
Kouakou pledged that despite the events in Redditch the future of both Service Graphics and Tactical Solutions was “secure”.
In a statement, he said: “Since the acquisition from St Ives in March this year SelmerBridge has been reviewing the day-to-day operations of the three companies within the group as well as making a £2m investment in new digital printing and finishing machinery. SP Group itself has faced a number of on-going challenges not least a dramatic decline in sales in what is a highly competitive market with the loss of a number of key accounts both before and after the acquisition from St Ives.”
“This is not the picture at Service Graphics and Tactical Solutions where current sales are strong and the order book is robust.”
He said neither business would be impacted by the administration of SP Group, “so the message for customers, suppliers and employees is one of business as usual”.
“It is our belief that through this restructuring process SelmerBridge and the remaining companies within the Group will be able to offer the right people, in the right numbers offering the best in terms of product and service for our customers moving forward,” the statement concluded.
St Ives bought SP Group in a deal worth up to £36.9m in 2004, when the company made a pre-exceptionals profit of £4.3m on sales of £35.4m. The business was formed in 1999 from the merger of a group of family-owned print-related businesses in Birmingham.
Kouakou’s previous industry involvement was at Aylesford Newsprint, which was acquired by his Martland Holdings investment company in October 2012. Aylesford went into administration in February 2015.