The failure of Headley Brothers appears likely to result in a £6m hit for the former family owners of the business.
Accounts filed by holding company Lithecat Holdings, formerly Headley Brothers (Holdings), show that the firm posted a loss of £2.95m after writing down the value of the print operation’s assets and liabilities when it restructured the group into separate print and property/publishing businesses.
Prior to the demerger of the historic Kent magazine printer in September 2016, the print firm had been wholly owned by the Pitt and Carlton families. They retained a 40% stake in the demerged business, with managing director Simon Bingham holding 60%, according to the subsequent Headley Brothers administrators’ report.
In an unusual accounting move, Lithecat Holdings has treated the printing business as if it had been disposed of at the beginning of its 2014-2015 financial year, in its recently-filed results for the year ending 6 December 2015.
The company stated: “The directors have concluded that the effective date of the disposal of the print business was earlier than the date of legal completion, due to the existence of severe long-term restrictions which substantially hindered the group to be able to exercise its rights over the assets and management of the entities which comprised the print business.
“This has been evidenced by the group’s lack of representation in the management of the print business, and the inability by the management of the print business to provide timely and adequate financial information necessary for the group’s management to adequately assess the performance of the print business,” it said.
Roger Pitt was listed as a director of Headley Brothers until 17 May 2016, while Jon Pitt was listed as company secretary until 19 February 2016.
Lithecat Holdings retained the land and property interests, including the print site in Ashford, but is now in the process of selling that site in order to cover the additional multimillion pound liabilities that were crystalised when the Headley Brothers printing operation went into administration in March.
A subsidiary of the holding company, Lithecat Properties, provided financial support in the form of guarantees to major creditors IGF Business Credit and Denmaur Independent Papers, which Lithecat said were “estimated to be in the region of £3m”.
It is currently in the process of marketing the historic Invicta Press site for sale. “The proceeds of which are expected to be sufficient to meet these obligations and any tax due on the sale,” director Jon Pitt stated in the accounts.
Lithecat Holdings had net assets of £6.86m at the balance sheet date of 6 December 2015, including the freehold property known as the Invicta Press, which is valued at £4.1m.
Despite this, and the directors’ confidence that the sale of the property would allow it to meet its obligations, auditors Kreston Reeves placed a note on the Lithecat Holdings accounts citing a material uncertainty over the firm’s ability to continue as a going concern due to the obligations.
PrintWeek was unable to reach directors Jon Pitt or Roger Pitt for further comment at the time of writing.
The printing business was sold to fresh owners after it went into administration and now trades as Stones Ashford.
Richard Walsh, chief executive of Stones Ashford and Henry Stone in Banbury, said the firm was close to finalising a new lease on the Ashford site and the property sale would simply involve the firm dealing with a new landlord.
“The web offset side has been a real breath of fresh air for us and is going really well. We have invested in maintenance and rebuilding some of the equipment, as well as in some additions to the team there,” he said.