Carpet maker buys out 3i stake after 30-year investment

BURY-based carpet maker Greenwood & Coope has bought out a long-term minority stake which had been held in the business by 3i since the 1970s.

Newly-filed accounts for the business show an exceptional charge of £2.3m which was used to buy-out 3i’s shares. This meant that although the company, which is owned by the Cormack family, increased operating profits to £2.7m in the year to September 30, 2010, profits at the pre-tax level fell to £687,000, compared with £2.7m a year earlier.

Finance director Robert Barker said the sale marked the end of a “longstanding relationship” with 3i, which had stretched back more than 30 years. However,  in recent years 3i has adopted a strategy of divesting of minority stakes in some of its smaller portfolio companies to concentrate on fewer, bigger buyout deals.

Turnover at Greenwood & Coope rose by 11% to £70.3m. Barker told TheBusinessDesk.com: “In a market like this which is really tough we’re continuing to keep the machines turning and we’re making a profit.

“When you take the market into account, things are not too bad.”

He added that the sales increase could be attributed to increased activity within the market, including investment in new product ranges. At any one time, the firm carries around 15 or so different types of tufted carpets, replacing less popular models with new styles.

“We’re focusing on what sells well. It can take significant investment to get a new range out into the market.

“We’ve got over 3,000 accounts and we have to get samples out to them all.

“Some of the retailers expect not to pay for them.”

The firm said that the weakness in sterling somewhat protects the UK market from cheaper imports, but it also means that raw materials costs have increased – particularly wool.

“We’re  just keeping our heads down and trying to work hard to keep the company going in strong headwinds. Since the year end, we’ve continued to do the same but it is a tough market.”

Despite this, he argued that the company remains in a healthy financial position. Net assets (including pension liabilities) fell by £1.8m to £18.6m as a result of the shares buy-back, but it finished the period with net cash of £3.4m.

“We like to have cash in the bank and keep things simple,” said Barker.