Wednesday January 1st 2020

News about 10 UK growth companies and/or accelerators (turnover in brackets) in the GRID marketplace, 27th March – 2nd April 2016:

Mamas & Papas - £131m | Mayborn | House of Britannia | Talking Tables - £9.7m | Sweet Squared - £16m | Network Locum | Forterra - £290m | AG Barr - £258.6m | Straightline Aviation | Soho House - £280m


MAMAS & PAPAS: sitting pretty after revamp | The Sunday Times. March 27
DZ profile:

Business: Pram and babywear retailer
ICB Classification: 5379 Specialty Retailers
Founders: Luisa and David Scacchetti still hold a minority stake
Staff: Derek Lovelock, executive chairman
Financials: due to report underlying earnings of about £6m for the year to March, compared with a loss of £5.7m two years ago. Total sales are expected to have fallen from £138m to £131m because of store closures, but like-for-like sales are under­stood to have grown by 21%. Is set to return to profit 18 months after a severe restructuring.
Investment: BlueGem Capital, owner
News: The firm went through a company voluntary arrangement (CVA) in 2014 after struggling with its rent bill. The move allowed it to renegotiate rents and close some shops. It has shed almost half its 63 properties since then.


MAYBORN: Tommee Tippee in takeover scrap | Daniel Dunkley, The Sunday Times.
DZ profile:

Business: baby products company - exports plastic feeding bottles to more than 70 countries. Owns the Tommee Tippee brand.
ICB Classification: 3722 Durable Household Products
Location: Cramlington, Northumberland
Investment: owned by the FTSE 100 buyout giant, British investment firm 3i, which took the business private for £137m nearly a decade ago. Mayborn is worth about £280m but could fetch up to £300m.
News:
1. 3i put the company up for sale last year, bringing in advisers at Baird to run an auction, and has courted several Chinese buyers as it attempts to cash in on its holding. Is set to complete the sale in the next few weeks.
2. Final-round bids:
:: CDH, a Chinese private equity firm, which has little presence in Britain, but held talks about a bid for retailer New Look last year.
:: Wall Street investor Carlyle, which has taken stakes in several prominent British businesses, including the RAC and NBTY, owner of retailer Holland & Barrett.


HOUSE OF BRITANNIA: Royal glovemaker grabs chance to list | Oliver Shah, The Sunday Times.
DZ profile:

Business: set up in to invest in British luxury goods. Last year it took a 51% stake in the Queen’s glovemaker - Cornelia James - which has a royal warrant, and a 5% holding in Digby Fine English, a maker of sparkling wines. It has an agreement to sell a range of accessories being developed by Cornelia James in House of Fraser department stores. It also struck a marketing deal with Benson & Clegg, which has two royal warrants - one of them to supply Prince Charles with badges, buttons and military neckwear.
ICB Classification: 8985 Equity Investment Instruments
Launched: 2014
Staff: chief executive is Simon Petherick, a former government copywriter who ran the Savile Row tailor Hardy Amies between 2001 and 2003.
Financials: House of Britannia said it had not yet filed a set of accounts because it was not incorporated until February last year. Funds raised from ISDX will “be used for working capital” and to buy into more “brands that are relatively unknown to the international luxury consumer”.
Investment: 30% is now owned by its management team, including chairwoman Lady Rona Delves Broughton, a Lloyd’s of London underwriter. The rest is held by friends and former GXG investors.
News:
1. Until last year, House of Britannia was traded on GXG, a Danish exchange. GXG voluntarily surrendered its licence and shut down last August after the Danish regulator said it had uncovered gross negligence. House of Britannia delisted and its shareholders took stakes in the private company.
2. Now plans to raise £6m through a listing on the Icap Securities & Derivatives Exchange, a market for small companies. ISDX is home to Arsenal Football Club and provides secondary listings for companies on the main market such as Laura Ashley and Majestic Wine

TALKING TABLES: Break out the party poppers, sales are soaring | Laura Onita, The Sunday Times.
DZ profile:

Business: sells high-end decorations, games and accessories for all occasions. Selfridges and Fortnum & Mason are among her customers, as well as Sainsbury’s and Tesco. John Lewis was the first customer, ordering sparklers and party poppers made in Harris’s living room. designs are made in China and Poland. Britain accounts for 80% of sales, with the rest from America, Germany, France and Spain.
ICB Classification: 5379 Specialty Retailers
Launched: 1999
Location: Clapham, south London
Founder: Clare Harris, 55,
Staff: 52
Financials: sales of £9.7m and pre-tax profits of £791,083. saw a 34% rise in sales in 2012. She hopes to hit £12m this year.
Investment: used £25,000 of savings to get the business started. She owns 100% of the business with her partner Mark McCormack , 53
News: Plans for overseas expansion: “Our long-term goal is to have America count for half of our sales,” said the founder.


You need to go outside the capital to find women at the helm of fast-growing companies | Kiki Lizou, The Sunday Times.

SWEET SQUARED
DZ profile:

Business: Nail and beauty business, which distributes products to beauty salons and professionals and trains therapists through contractors.
ICB Classification: 3767 Personal Products
Launched: 2006
Location: headquarters in Leeds and bases in Dublin, Edinburgh and Glasgow
Founder: Samantha Sweet, 47, started with her husband
Staff: 60
Financials: revenues have hit £16m. Profits have been growing for six years.

NETWORK LOCUM
DZ profile:

Business: a venture tackling one of the NHS’s biggest problems — recruitment. The platform lets self-employed locum doctors find work at GPs’ practices and helps surgeries to find cover when they need it. The service is up and running in London, Birmingham and Coventry.
ICB Classification: 2793 Business Training & Employment Agencies
Launched: 2012
Location: Hoxton Square in north London
Founder: Melissa Morris
Staff: 40
Investment: is in the process of rounding up investors to fund ambitious expansion plans.



FORTERRA: Brickmaker plans £450m IPO | Gill Plimmer, FT. March 30
DZ profile:

Business: Britain’s second-biggest brickmaker, formerly the UK building products division of Hanson, controls 29 per cent of the British market. Owns 17 factories and 12 clay quarries in the UK. It is the sole producer of Fletton bricks, which are used to build about a quarter of all British houses and sold under the London Brick brand. New residential homes and home improvements accounted for about 95 per cent of revenue last year. The rest came from the commercial construction market.
ICB Classification: 2353 Building Materials & Fixtures
Staff: 1,600. Stephen Harrison, chief executive.
Financials: Last year revenue rose 8 per cent to £290m; while earnings before interest, taxes, depreciation and amortisation increased 29 per cent to £71m.
Investment: owned by Lone Star, the US private equity business, which acquired it last March from HeidelbergCement in a £990m deal. Lone Star is planning to sell roughly 25 per cent of its holding to institutional investors in the UK and abroad. This would give the company an enterprise value of about £600m including debt, or £450m with debt stripped out, based on rival Ibstock’s current market valuation.
News:
1. Is planning a £450m float on the London stock market as it seeks to capitalise on the housebuilding boom. Credit Suisse, Deutsche Bank and Citigroup are managing the share sale.
2. Forterra cut domestic production by a fifth to about 2bn bricks between 2008 and 2013 but has since reinstated previously mothballed plants amounting to about 50m bricks a year. It is planning to expand capacity at its Claughton, Accrington and Desford facilities. It also has permission to develop a manufacturing facility at Clockhouse in Surrey, but is unlikely to make a final decision until 2020.
3. Even despite an increase in housebuilding, supported by government incentives, the number of housing starts are still 28 per cent below that in the first quarter of 2007. Construction activity overall is 4.1 per cent below its pre-recession peak but Forterra said that the growing UK population combined with a structural undersupply would “underpin future demand for new housing and, therefore, building products”.


AG BARR: Sugar tax to hit a third of products | Aliya Ram, FT. March 29, 2016 4:52 pm
DZ profile:

Business: Soft drinks company. Maker of Irn-Bru, Scotland’s favourite fizzy drink, which accounts for just over 40 per cent of AG Barr’s revenues. Counts Rubicon and Snapple among its brands
ICB Classification: 3537 Soft Drinks
Staff: chief executive Roger White
Financials: revenues fell £2.3m to £258.6m; pre-tax profits rose 7 per cent to £41.3m, largely due to cost-cutting measures. International sales grew by more than 40 per cent on a constant currency basis in the year to January 30.
News:
1. The UK chancellor last month unveiled plans for a tax on drinks with more than 5 grams of sugar per 100ml, to be introduced from April 2018. The move includes a higher tax band for drinks with more than 8g of sugar per 100ml.
2. Around two-fifths of AG Barr’s drinks contain more than the 5g of sugar per 100ml at which the lower tier of the levy would apply. Irn-Bru contains 10g per 100ml, well above the 8g threshold for higher tier tax.
3. In response AG Barr said it will reduce the proportion of sugary drinks that it sells but could still see up to a third of its portfolio hit by the new levy.

UPDATE: Fizzically fit Irn Bru's health kick helps gird AG Barr sales | Joanna Bourke, The Evening Standard. February 1, 2017. Irn-Bru Xtra, a new no-sugar version of Scotland’s favourite soft drink have helped put manufacturer AG Barr on track to meet City forecasts, the firm’s boss Roger White said today. The group, which is facing a government tax on sugar-sweetened fizzy drinks, expects sales for the year to January 28 to hit £257 million. … added it will meet profit forecasts, around £42.3 million, aided by cost cutting, including around 100 redundancies it made in the final quarter.

STRAIGHTLINE AVIATION: Branson’s balloonist signs airship deal | Peggy Hollinger, FT. March 30
DZ profile:

Business: energy-efficient air cargo operator - “the world’s first owner operator of new Hybrid, hi-tech, heavy-lift aircraft, manufactured in the USA by Lockheed Martin and in the UK by Hybrid Air Vehicles”. Airships’ attraction to businesses is their ability to transport heavy goods and equipment to remote locations. Oil and mining groups operating in places where there are no roads or airstrips are seen as potential customers. Manufacturers say the latest airships can set down on any terrain — land, sea or ice — and use only one-third of the fuel of a conventional aircraft, allowing them to fly for weeks without refuelling.
ICB Classification: 2713 Aerospace
Founder: Mike Kendrick, chief executive, and two former Virgin Group colleagues. For 16 years MK ran Sir Richard Branson’s Airship and Balloon Company, before the entrepreneur sold it on.
Investment: backed by a group of private investors and debt financing
News: has just signed a letter of intent to buy 12 new airships from Lockheed Martin’s Hybrid Enterprises – “a completely new breed of hi-tech, heavy-lift aircraft that offers a dramatically less expensive and environmentally friendly alternative to traditional modes of cargo and passenger transportation.” Plans to take delivery of its first $40m cargo airship next year.


SOHO HOUSE: feels strain of its appetite for growth | Josh Noble, FT. April 2
DZ profile: Soho House Uk Limited

Business: membership business with 15 clubs across the globe dedicated to hosting the elite creative classes, offering fine dining, glitzy bars and somewhere to work, sleep and relax. The company has developed into a luxury brand synonymous with style and celebrity. Facts and figures - 2015:
-- Global membership of 56,000 paying members, added 13,000 members with a further 33,000 members on the waiting list. It’s membership attrition rates remain extremely low.
-- Added 3 “houses” and 13 restaurants Recent additions include a vast new London base on Soho’s Dean Street and a farmhouse set in 100 acres of Oxfordshire countryside, where facilities include stables, a cinema and a boathouse with outdoor and indoor heated pools.
-- Property portfolio market value reached £333m
-- Served more than 4.1m meals
-- 216,000 staying guests
Launched: 1995
Location: Global
Founder: Nick Jones
Staff: Peter McPhee, joined as chief financial officer in February
Financials: 40% increase in annual turnover. Revenue is expected to have risen more than a third to £280m for 2015
Investment: YUCAIPA, the private equity vehicle of US billionaire Ron Burkle, owns 60 per cent of Soho House, while British entrepreneur Richard Caring owns a further 30 per cent. The remaining tenth belongs to Mr Jones, Soho House’s founder and chief executive.
News:
1. EXPANSION STRAIN. Soho House’s finances are increasingly under strain as revenue — though rising fast — struggles to match the cost of its ambitious capital expenditure plans. The aim is to open four or five houses a year. This year Barcelona, Mumbai, Malibu and New York’s Lower East side are all set to join the Soho House network, with Amsterdam and a new Los Angeles venue planned for 2017. But with costly new locations typically taking three years to reach maturity, margins are under pressure. Already Soho House has come close to tapping out its revolving credit facility and analysts warn it is running low on cash, while the ratio of debt to EBITDA has risen above 14 times, according to rating agency Standard & Poor’s. The aggressive expansion is not just geographic. Soon members will be able to recreate that Soho House feel in their own homes by buying a replica of their favourite club sofa or bedspread, part of a new homeware line. The group is also expanding its restaurant business (membership not required) and its office spaces, which include workshops for those keen to whittle their own furniture rather than buy it.
2. CONCERNS OVER FINANCES were heightened by a failed £200m bond issue in December. The company blamed market conditions, but investors spoke of more specific concerns around debt levels at Soho House. Two months after the pulled bond, S&P; downgraded its rating for the group’s outstanding debt to CCC from B-, warning that the capital structure had become “unsustainable”. Moody’s also has Soho House on review for a downgrade, and says it is consuming more cash than it generates.
3. EQUITY INFUSION. Soho House management hopes that these concerns will be alleviated by a two-stage equity infusion from its shareholders, expected to begin early this month. The shareholders will inject £30m into the company, considerably more than the £20m required to increase its revolving credit facility. Analysts remain sceptical, expecting any new funds to go straight into capex.
4. ASSET APPRECIATION. Part of the plan to boost margins involves taking a greater share of the physical property in which it operates, says the group. Though it requires more capital outlay at the start of a project, the aim is to gain exposure to any asset appreciation caused by the opening of a Soho House. It will own outright its Miami location, and have freehold interest in others, such as Barcelona and LA.
5. PRICING. Soho House has a few other options to improve the bottom line, say analysts, beyond some of the basic cost-cutting already under way. It could monetise its lengthy waiting list, slow its expansion or bring outside investment into new developments. But the quickest way to bring in extra cash, they say, is also the simplest: increase the cost of membership.
UPDATE: 
Soho House secures £275m refinancing to ease growing pains | Murad Ahmed, FT. April 26 2017
6. On Tuesday, Soho House said it had signed a £275m refinancing agreement with PERMIRA DEBT MANAGERS for a secured loan that will mature over five years, with the option of a further £100m of potential financing. The new loan will enable the company to immediately repay £152.5m in existing bonds and £40m in payment-in-kind notes. Concerns for the group’s finances were heightened by a failed attempt in December 2015 to tap the bond market. Soho House blamed market conditions for the pulled £200m issue, but investors spoke of more specific concerns around debt levels at the company.
7. …the group has 65,000 members and a 40,000-strong waiting list, according to recent reports.
8. The group aims to open three to four houses a year, with plans for clubs in Brooklyn in New York, Mumbai, Amsterdam and Hong Kong in the next couple of years. 
9. ..latest Companies House filing for its UK division: revenues in the 53 weeks to January 3 2016 were £103.9m, but the business recorded a pre-tax loss of £7.5m.
Soho House considers New York flotation | Murad Ahmed and Arash Massoudi, FT. February 3, 2018
10. Soho House is considering a stock market flotation in New York that would value the global network of private clubs at about $2bn, as it seeks new funds to continue expansion plans even as its finances have come under strain. The UK company has hired investment banks Goldman Sachs and JPMorgan to review fundraising options, with the current preference being for an initial public offering later this year, according to two people with knowledge of the conversations. However, the person added it was also evaluating alternatives, including selling stock to a private investor in Asia.

11. In the year to January 1, 2017, revenues increased 3.4 per cent to £294.6m, while global membership had increased 23.9 per cent to almost 70,000, helping to increase membership dues by 44 per cent. Its UK division lost £8m that year. The privately held company remained unprofitable.

12. In 2017 it opened The Ned, a hotel and club in the City, a £200m conversion of the old Midland Bank building with nine restaurants and 250 bedrooms. All 2500 memberships - at £,3000 a year - have been taken up at The Ned.
Soho House inks deal for major new Soho Works building in London | Joanna Bourke, The Evening Standard. February 9, 2018
13. Sources said the property empire has agreed to take about 85,000 sq ft at 180 The Strand, a stone’s throw from Temple station, for its Soho Works workspace arm it plans to grow. The building already hosts creative events, and Soho House's new space could be used by more than 1000 people. Soho Works is a workspace with a standalone membership from Soho House. Start-ups and entrepreneurs pay from £400 per month for 24-hour access to desks, meeting rooms and studios.  There is currently a 16,000 sq ft Soho Works site in Shoreditch, and one set to open in Los Angeles. The new lease is with a private UK landlord and the site is expected to open before the end of 2018.