ICSM Business News: after the biggest collapse since Polestar there’s a call to investigate YM’s disastrous affairs (by one of its FORMER DIRECTORS)
By Harry Mottram: It was one of the worst cases of a slow motion car crash of a company collapse – or so it seems from the outside. When the YM Group took on the Daily Mail’s massive print contract last year industry observers said it would break the company – and so it turned out when YM called in administrators Philip Watkins and Philip Pierce of FRP Advisory earlier this year.
In a report by Jo Francis in the trade publication Print Week one of the former directors of the printing empire has called for an investigation into the group and how it came to hit the buffers.
Dave McGolpin who had left the business in in 2017 and remained a board member until the following year but remained as a shareholder and loan note holder published an open letter on his LindkedIn page laying out his concerns and accusing CEO Stephen Goodman of not being up to the job.
Jo Francis reported: “McGolpin said he, and others, were put under pressure to convert a considerable sum of loan notes into preference shares in return for further funding from Pricoa. He said he refused due to the absence of any operational restructure, or the removal of Goodman, ‘or indeed any consideration of an alternative strategy’.
“He requested his loan notes be repaid, but said the request was ignored. McGolpin said that over the past two years he and Mike Newbould [former YM COO and then non-executive director since the MBO] had repeatedly warned about the inevitable outcome of ‘continuing to go down the same failed route’ of supporting a ‘failed and inept management team and strategy’.”
The warnings were ignored and when the balloon went up Pricoa was owed £51m and many unsecured creditors were owed millions including one supplier who blockaded the main site demanding to be paid.
In the open letter McGolphin begins: “Following the Management buyout of The YM Group in September 2015, in late 2016 an inexperienced and unqualified Steve Goodman took over the running of the highly successful and very profitable Group as CEO. At that point the Group was generating c £ 17+ million EBITDA (earnings before interest, taxes, depreciation, and amortization) and with a history of strong growth and profits in the preceding several years.
“By mid 2019 and less than 2 1/2 years later Mr Goodman had ‘successfully‘ managed to bust the YM Group having exhausted all it’s cash reserves and driven the Group into significant losses. At the same time the Group’s bank RBS had given notice to withdraw their facilities. Similarly the Group’s auditors Deliotte's had also also given notice. It was clear at this point that Mr Goodman was substantially out of his depth.”
Despite these concerns he said the auditors (Grant Thornton) gave the YM Group a “highly questionable and caveated ‘going concern‘ status - a few months later the business went into Administration despite having also received an additional £ 13 million in emergency funding cash injections from Pricoa plus a further c £ 1.5 million from Close Brothers on an asset refinance between June 2021 and March 2022.”
Clearly these are very serious allegations and McGolphin concluded: ““This could and should have been avoided… The whole truth needs to come out and those responsible need to be brought fully to account – morally, legally and ultimately financially.”
Printweek contacted Goodman, Ingram and YM CFO Lee Richardson for comment but they denied there was anything wrong saying the whole affair had been investigated and was given the all clear. Printweek tried to get a response from Pricoa who had lost out considerably but at the time of going to press had not replied.
The trad publication said: “Around 500 people lost their jobs when Pindar Scarborough, York Mailing and YM Chantry abruptly ceased trading. The Lettershop and Go Direct Marketing operations continue under new ownership, while Walstead Group has revived the Elvingdon web offset site as Walstead York.”
ICSM had received and passed on concerns prior to the collapse of YM from suppliers who are members of the business intelligence organisation that monitors late payers and potential bad debts for its subscribers. Some on the advice of ICSM cut their losses but sadly several businesses did lose out when the inevitable happened in what was the largest printing group collapse since Polestar went down in 2016.
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk