Litho Supplies calls in administrators following share suspension
By Adam Hooker Tuesday, 22 December 2009
Consumables supplier Litho Supplies has gone into administration with MCR, despite yesterday claiming that it would not call in the administrators.
Philip Duffy and Andrew Stoneman, of MCR, were appointed as administrators of Litho Supplies today (22 December).
Subsidiaries Muro Digital and Graphica Plus, which trades as Anderson's, are also in administration.
At this stage, it unclear how finishing equipment supplier Graphic Arts Equipment is affected, but a spokesman for the subsidiary said yesterday that "it still operates as a separate entity and will continue to trade as normal through these circumstances".
A spokesman for MCR told PrintWeek that none of its 120 staff had been made redundant and that the companies would continue to trade as normal for the time being.
MCR is seeking buyers for the £22m-turnover business as a going concern and any interested parties should contact Ben Wiles.
Duffy added: "The administration of the companies follows the continuing pressure on the printing sector including the flexographic, digital printing and corporate print markets, during the recession.
"This has created an unfortunate situation for the companies and contributed to them entering into administration. The priority is to now identify a suitable purchaser. We will continue to trade all three businesses with a view to achieve a sale as a going concern."
The administration comes as a surprise as yesterday, a spokesman for the company contradicted earlier reports in PrintWeek and insisted that the company would not go into administration.
In a statement to the LSE today, the Breaston, Derbyshire-based company blamed bad debt from failing printers for an application to suspend its shares on the London Stock Exchange (LSE) yesterday.
It also said that it had held discussions with HMRC regarding an arrangement to pay VAT arrears over an extended period in the second half of 2009, but an arrangement had yet to be agreed.
Chief executive Michael Hammond said: "Over the past two years, as one of the largest independent suppliers to the industry, we have suffered many bad debts both in numbers and financial value. The loss of those customers has had an adverse effect on the level of sales particularly in the past 12 months with a reduction in excess of 20% on turnover."
Hammond said that, in this time period, the company had been actively reducing the cost base of the business, but this had also brought cashflow pressures because of redundancies and lieu of notice.
He continued: "A number of our suppliers decided that it was appropriate to reduce our credit terms again affecting the cashflow of the business.
"One of the bonus factors within the sales side of our business has always been the sale of capital equipment, but since the banking crisis it has been almost impossible to obtain finance facilities for customers who wanted to buy capital equipment."
The statement added that "some green shoots" were starting to appear in the third quarter, but said that the increased level of interest "did not live up to expectations". He maintained that results for the second half of the year would be better than the first.
Hammond concluded: "Towards the end of November 2009, we incurred a further raft of bad debts, together with a further tightening of our credit terms from some of our suppliers, which put the company into a position of having to take advice and to ask for a suspension in the trading of shares."
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