Service Point UK - on the brink of being sold?

Yesterday, I posted an article – that appeared in PrintWeek, on February 14^th - about SP UK being up for sale.  Last night, I received an e-mail from a SP UK team member indicating that a further article had appeared in PrintWeek on March 7^th.   That further article appears below. 

But, first, a few comments:

First, I’d like to thank the SP UK team member who directed me to this article for taking the time to do so.  In his/her e-mail, he/she said, “I haven't seen the full report, so not sure if headline is out of context, but it's the most negative thing I've seen so far.  Quotes from within the article don't seem to refute the general tone of the piece either. Up until this article, the official line has been 'business as usual'.  I'm not sure if this appeared in the print version or just online, but it's likely to raise the interest of customers, suppliers and rivals alike, and not in a positive way.”

Second, in the article below, you’ll note that PrintWeek speculates that The Color Company (TCC), the same company that purchased SP USA, will likely be the purchaser of SP UK.  To me, that would be an extraordinary turn of events.  If TCC is the eventual purchaser of SP UK, it will be every interesting to see if TCC’s Mr. Robert Feld plays the same role with regard to SP UK’s business that he’s evidently playing with regard to TCC’s acquisition of SP USA’s business.  Mr. Feld’s very interesting, quite colorful background has been well written about in the UK.  That’s not the case here in the U.S., where most of SP USA’s customers have ‘no clue’ as to the very colorful nature of Mr. Feld’s background.

Third, although the article did not state SP UK’s sales for 2013, it did state SP UK’s sales for 2012 and 2011.  At its 2012 sales – £40.4m (which is approximately $66 million USD at the current exchange rate) – SP UK is the largest reprographics business in the U.K. and one of the top five reprographics businesses in the world.  SP UK has long been one of the most highly respected reprographics businesses on planet Earth. 

Okay, here’s the additional story that appeared in PrintWeek on March 7^th.

“”Service Point UK report reveals "significant limitation"”

By Jo Francis, Friday 07 March 2014, writing for PrintWeek

Up-for-sale Service Point UK has filed its overdue financial statements for 2012, with the directors admitting a “significant limitation” on the period over which the directors are able to consider the going concern status of the company, due to events at its parent company.

Resolution to Service Point UK situation anticipated this month

The firm’s parent GPP Capital PLC is in administration and ultimate parent company Service Point Solutions in Spain has sought creditor protection.

Service Point UK provides reprographics and print management services via a nationwide branch network. It employs around 550 staff. Lloyds Bank has a charge over Service Point UK’s assets due to a cross-guarantee given by the Spanish company over its €71.9m (£59.5m) debt with the bank.

The director’s report stated: “… hence the directors are unable to control the strategic future of the business or the manner in which its assets are employed. This fact in itself imposes a significant limitation on the period over which the directors are able to consider the going concern status of the company.”

GPP’s administrator Ernst & Young is marketing the Service Point UK business for sale, with any deal likely to be complicated by its pension deficit, stated as £9.3m in the just-filed accounts.

Ernst & Young said there was no update on the sale process at present, although PrintWeek understands that a resolution to the situation is likely to be put in place this month.

“The going concern issues will drive the timeline on this,” said an industry source.

Service Point UK managing director Michael Barton-Harvey issued a statement, which said: “All parties involved are working exceptionally hard to support the best outcome regards the current situation.”

Competitor The Color Company, which acquired the assets of Service Point’s USA operations after that business was closed down last year, has been tipped as a possible purchaser for all or part of the business. PrintWeek was unable to reach owner Elgin Loane for comment.

In the year to 31 December 2012 Service Point UK posted sales of £40.4m (2011: £44.9m). Although the firm said it maintained its gross margin of 39%, a nominal operating profit of £78,000 was wiped out by charges to the parent undertaking of £989,000 and a £2.2m write-off of intercompany receivables due to the impact of the bank calling in its debt.

The firm also spent £652,000 on restructuring its operations, which included closing three sites and reducing headcount by 70. The bottom-line loss was £3.5m.

However, the report stated that subsequent trading in 2013 has resulted in a £1m-plus improvement in operating profit at the firm.

Comments on this article have been closed following a formal complaint.

This is where I found this article:

http://www.printweek.com/print-week/news/1142575/service-uk-report-reveals-significant-limitation