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“You won't be surprised to hear there are a limited number of buyers willing to pay actual money for a loss-making, structurally uncompetitive, sub-scale business operating in a declining sector,” wrote Victoria PLC executive chairman Geoff Wilding barely a month ago.


He was referring to Westwood Yarns, the specialist £12m turnover Holmfirth business that was placed into administration through KPMG yesterday, citing cash flow problems.


Between 1989 and September this year, Westwood had been a subsidiary of the Victoria PLC group. All bar £1.4m of its turnover was generated through sales to Victoria Carpets.


On 25th November, as the Victoria released its interim results, Mr Wilding wrote: “The new Board recognised quite early on that the mill, which had been loss-making for a number of years, had a permanent competitive disadvantage to its lower cost Eastern European competitors and large scale UK competitor and there was little prospect of it returning to sustained profitability.


“Furthermore, although there will always be a place for wool carpets, there is an undeniable consumer migration towards synthetic carpets and this reducing demand for wool will eventually make operation of the Westwood mill unviable and the cash closure costs would have been very high.


He added that Victoria decided to sell Westwood Yarns to free up capital to pay down debt.


“Deciding to sell and achieving a sale are two very different things. Nevertheless the business was sold in September and, although we are taking a loss of £1.46m on the asset's carrying value (importantly, a non cash item), we received nearly £1m cash on completion and have freed-up another £1m previously tied up in working capital.”


Barely three months on from its sale, KPMG says cash-flow problems were behind Westwood’s rapid fall into administration. That tends to be a catch-all phrase used by administrators, so the full reasons for its failure are yet to emerge. What is not in doubt is that 130 people face an uncertain future, at the worst time possible.


Related: Offloaded carpet yarn supplier placed into administration



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