Review of the year

We look back at the highs and lows of 2007 for businesses in the North-East.

JANUARY

A DROP in price was thought to be needed to secure a takeover deal for Newcastle United, after one potential bidder dropped out.

St James’s Park Group, backed by US hedge fund Polygon, said it had ended talks with the major shareholders Sir John Hall and Freddie Shepherd.

Football finance expert Prof Bill Gerrard, of Leeds University, said he was convinced price was the reason for Polygon’s withdrawal – as well as chairman Freddie Shepherd’s desire to remain at the club.

He said other high-profile and high-priced deals for Premiership clubs such as West Ham, Aston Villa and Liverpool might have convinced Sir John and Mr Shepherd they should secure at least £200m for Newcastle.

But he said each of those recent deals had been done by wealthy individuals looking for a “toy” to play with, hence they were prepared to pay over the odds.

THE death knell sounded for centuries of glass manufacturing on Wearside when French company
Arc announced the closure of its factory.

The loss of the Arc centre in Leopold Street in the Deptford area of Sunderland shattered hopes of a revival in an industry which had been part of the city’s life for 1,300 years. Some 240 workers were told they would lose
their jobs when Arc – formerly
Newells – closed its factory in September. Arc said it would retain just 25 staff to distribute its products from the factory’s warehouse. The only other glass manufacturing left in the city was the artistic and creative glass sector through the National Glass Centre and the Cohesion Glassworkers network.

The Arc International Cookware (AIC) factory had been operating at 75% capacity in the months leading to the announcement and made a loss of £760,000 in 2006.

The Gate, Newgate Street

A WEALTHY property investor bought Newcastle leisure complex The Gate for well over its asking price of £72.5m.

Sheffield businessman Glenn Maud was believed to have trumped City fund manager Morley with an £80m bid for the 208,000sqft complex of bars, restaurants, and a multiplex cinema.

Property company Land Securities, which completed the landmark scheme in Newgate Street in October 2002, placed the property on the market the previous month.

Mr Maud is a significant UK and European property player. His company – PropInvest – was close to securing the £600m sale of Swiss Re’s Norman Foster-designed Gherkin office building in the City of London, and owns a £2bn portfolio of mainly retail property.

His firm recently moved into leisure property – the investment market for which reached a record £1.6bn last year – after buying three Total Fitness clubs for £30m in October.

The Gate was Land Securities’ last leisure asset in its £12.9bn portfolio and the sale comes after the FTSE-100 property company converted to a Real Estate Investment Trust (Reit) on January 1.

See page two for a review of February's business news.

FEBRUARY

NEWCASTLE’S Barratt Developments regained its title as the UK’s biggest housebuilder with the £2.2bn purchase of rival Wilson Bowden.

Barratt was said to have grown bigger than York-based Persimmon and entered the FTSE 100 listing of the nation’s most valuable companies.

When the stock market closed, the two companies’ combined value was over £5bn – well ahead of Persimmon’s value of £4.28bn.

Barratt said it would pay 2,257 pence in cash and stock for each Wilson share – 23% higher than Wilson’s closed on November 24, the last day of trading before the company put itself up for sale.

The deal for Wilson Bowden was the largest ever seen in the housebuilding sector and occurred just four months after new Barratt chief executive Mark Clare joined the business.

Barratt said the tie-up gave it a better balanced regional profile, as well as a stronger landbank with more than five years’ supply of plots to develop.

ENERGY efficiency specialist eaga announced plans to float on the stock exchange and was expected to be valued at £400m as one of the region’s biggest plcs.

The Newcastle company had always been owned by its employees, but chief executive John Clough said the float was important for eaga’s future growth.

He said floating on the stock exchange would give eaga access to new ways of raising money, so it could grow both organically, by generating more business for itself, and through buying other companies.

Eaga had already announced plans to grow its workforce to 10,000 – 1,000 in the North-East – and £1bn sales within three years and had been buying up smaller UK companies in recent months.

Mr Clough said: “The proposed flotation will provide the company with the financial flexibility required to fund the next phase of growth. This is about creating a sustainable future for the business. We have built a strong balance sheet, with good growth prospects.”

Fiona, Paula and Claire Ross of James Ross & Son

HISTORIC family pickle company James Ross & Son was sold to its Yorkshire rival Greencore with the loss of 37 jobs.

Production of the company’s ranges, which dated back to 1918, was to shift to the home of the company’s new owner in Selby, North Yorkshire.

Charles Penn, marketing director of Ross’s, which went into administration the week before, said it had been unable to compete with tough supermarket pricing. It was a main supplier to chains including Asda, Tesco and Sainsbury’s.

The company faced rising raw material and energy prices coupled with a refusal by supermarkets to allow it to increase product prices. It had tried to diversify its business with the launch of gourmet and international ranges under its own brand, but it was not enough.

Several bidders had expressed an interest in buying Ross’s, including some North-East entrepreneurs.

THE three-month-old company formed by former Reg Vardy bosses went from a standing start to buying a motor group with sales of £580m. Newcastle-based Vertu Motors, which only floated on the Stock Market in December 2006, agreed to snap up Bristol Street Group – one of Britain’s best known car dealers – for £40m.

The deal was to take Vertu from zero to 32 dealerships, three used car hypermarkets and 500 staff overnight and see its directors return to the forecourt for the first time since Sunderland-based Reg Vardy was sold to Pendragon for £500m the previous year.

Vertu said it would pay £31m in cash and up to £9m in shares for the Worcestershire-based group and Vertu’s legal advisers described the deal as an “extraordinary achievement”.

See page three for a review of March's business news.

MARCH

OVER 300 North-East jobs were threatened after department store operator Owen Owen went into administration.

Bosses at the company, which ran Robbs of Hexham and the 200-year-old Joplings store in Sunderland, blamed cash flow problems. The firm bought the two North-East department stores in January 2005 for £8m.

Hexham’s Conservative MP Peter Atkinson said the announcement was “very worrying” and Sunderland City Council leader Bob Symonds called it “a big shock”.

Owen Owen’s chief executive David Thompson said it was “business as usual for the stores” but conceded it was a “concerning time”.

Joblings bought Robbs of Hexham in 1981 and both stores were sold to Owen Owen in 2005.

PAINT and adhesives specialist Tor Coatings was sold to a US industry giant in a multi-million pound deal – which brought big payouts for many of its staff.

Birtley-based Tor was bought by Ohio-based RPM International Group, which employs over 9,000 staff worldwide and operates in 15 countries.

The multi-national said it wanted to expand the 21-year-old Wearside business as it invested more in its UK operations. And since 35 of Tor’s 193 staff took a stake in Tor when it was bought from its previous owners in 2002, they made substantial profits from their initial investment.

While RPM and Tor did not reveal the price paid for the company, it was known that the Birtley company cost £13.5m in 2002, when sales stood at £11.5m, and the company had since moved on to generate sales of £23m.

Mike Porritt, managing director, CarShock

MOTOR dealership chain CarShock went out of business and was placed in the hands of administrators.

The managing director of the Gateshead-based budget car company, Mike Porritt, said his Porritt Motor Holdings company, which trades as CarShock, was not in administration but soon afterwards BDO Stoy Hayward was appointed as joint administrator.

BDO blamed tightening margins for the demise of the business, which has seen 50 staff made redundant, stock from seven sites across the North towed away, and a flippant message reading “Thanks for the memories! R.I.P. 2001-2007” posted on its website. Barry Birkitt, the London estate agent who was Mr Porritt’s opposite number in the Channel 4 show Boss Swap, echoed that he was amazed the business had lasted this long. Mr Burkitt said: “I bet the man on national television that he would go bust within a year, so this is of no surprise to me whatsoever.”

CLOTHING retailer Penny Plain was bought out of administration by a trio of well known North-East businessmen.

The Newcastle company ran up sizeable debts after opening more shops and buying the Wealth of Nations fashion chain at the end of 2005 and went into administration the previous week.

But then it was taken over by Guy Readman, who had just sold Birtley-based Tor Coatings, Gerald Stern – best known for the Alfas sealants company he sold in 2003 – and Jeremy Middleton, a Tyneside entrepreneur and co-founder of FTSE 250 listed water company Homeserve.

The trio aimed to rapidly expand Penny Plain’s web-based business, as well as focusing on its conventional mail order business, and its 10 shops around the country.

Existing managing director Nick Oliver was to remain in day-to-day charge of the company, with commercial director Lisa Lockey, while Mr Readman and Mr Stern would join its board of directors.

See page four for a review of April's business news.

APRIL

A TYNESIDE company said it hoped to lead the world developing microchips made with diamonds instead of silicon for commercial use.

Newcastle University-owned Inex said it was making the new chips, which are expected to be able to operate in much greater extremes of temperature, and will go into technology mobile phone base stations and satellites.

The fast-growing company, which was forecasting a £3.5m turnover, had won a £500,000 contract for its innovative work with a company owned by world famous diamond business De Beers, and semiconductor maker Filtronic for its plant in Newton Aycliffe, County Durham.

Inex had signed a contract which gave De Beers subsidiary DMD the rights to exploit the work created. But Inex retained the right to sell the chips for biomedical use.

A NEW seafood processing plant was announced for County Durham and was expected to create dozens of jobs.

Cumbrian Seafoods, based in Maryport in southern Cumbria, agreed terms to open a 125,000sqft factory – the size of two football pitches – in Seaham on the Durham coast.

The company said it would move its shellfish and coated fish business, known as Glendawn, away from its west coast headquarters in Maryport, near Workington, to fill the Seaham facility.

The existing Cumbrian factory employs around 50 staff but it is not clear how many staff would be required in Seaham, or whether workers from Cumbria would get the opportunity to transfer to the North-East.

OUTDOOR clothing company Berghaus unveiled an ambitious plan to double its sales to £100m in five years, and so become one of the top five outdoor companies in the world. The Sunderland-based business had been growing rapidly in the previous few years, doubling sales to £50m since 2002 as more people headed for the great outdoors for leisure. And it outlined plans to do the same again.

Brand president Richard Cotter launched a worldwide push for growth, starting with Japan, but also set to take in the US, Australia, New Zealand, China and Taiwan.

Another key plank in the strategy was a new look for the Berghaus brand in shops – with the company set to open its first UK store at the MetroCentre, and then the look created for that store would be implemented everywhere Berghaus trades around the globe.

Malcolm Young, chairman, e-Therapeutics

THE drug discovery company which claimed to have found a cure for killer hospital superbug MRSA announced it was considering a stock market flotation.

Since it was spun out of Newcastle University in 2005, e-Therapeutics had made breakthroughs in MRSA, asthma, depression, cancer, cholesterol, diabetes and pain control.

The Fenham-based company said it was looking at how it could raise future cash to ensure its ground-breaking work could continue.

e-Therapeutics chairman Malcolm Young, a Newcastle University professor, said: “We are thinking quite seriously about raising money on the Stock Market.

“We have a plan for the next five and 10 years, we have a good platform and programme of development that we know works.The next step is to go systematically at it – we already have an idea of how much money we are going to need to get there.”

The company had just raised a seven-figure, undisclosed sum from backers Katalyst Ventures, Novotech Investment and NorthStar Equity Investors.

See page five for a review of May's business news.

MAY

JAMES Ramsbotham of the North-East Chamber of Commerce proposed that a sales academy should be set up to help regional businesses improve their sales skills.

This followed a survey by economic development consultancy ERS, which showed there was a need to enhance the sales skills of businesses in the region, despite the fact that this did not appear to be reflected in key economic and skills policy thinking.

Responding to the call, Lesley Calder, from One NorthEast, warned North-East businesses were not recognising £5.4m worth of funding provision that had been made available to them 2007 through bodies such as Business Link North-East and One NorthEast.

THE founding family of Sunderland’s Storey Carpets shared almost £20m after announcing the sale of the 86-year-old group to national chain Carpetright.

The Heptinstall family owned the vast majority of the business and were paid £18.5m up front. The company’s 30 stores continued to trade on the same basis as before, with Essex-based Carpetright saying it wanted them to compete with its existing estate of more than 500 outlets.

Storeys was headed by Simon Heptinstall, grandson of founder Paul Heptinstall, who launched the firm under his wife’s family name in 1921.

Karl Watkin

NORTH entrepreneur Karl Watkin bolstered his Chinese mining interests by acquiring a nickel mining company China Base Metals, with had an estimated $5bn in reserves.

Mr Watkin said he planned to merge the company, which has mines on the Chinese border with Kazakhstan and Afghanistan, with his existing copper mining businesses in the country to create a new company, China Base Metals.

The entrepreneur also has business interests in Middlesbrough-based biodiesel firm D1 Oils, which he founded in 2000 alongside a number of other ventures.

DEVELOPERS Clugston and Wilton struck a deal with Nissan to build a new business park next to the Japanese car plant in Washington, which would create around 4,000 jobs.

The £4.5m proceeds from the land sale helped Nissan push ahead with a new logistics centre within its factory.

The developers acquired 45 acres of land from Nissan next to the A1231, close to the junction with the A19, where they plan to build offices, a hotel, industrial buildings, warehouses, a motor dealership, shops and leisure facilities.

Plans for the developments were drawn up by the developers working with Nissan, Sunderland Council and regional development agency One NorthEast.

A STUDY warned that soaring energy prices made North business leaders the most pessimistic in the country and could push some firms to the wall.

The study revealed that the North-East was the only region in the country where most bosses expected business conditions to deteriorate from May to the end of 2007. The report, published by The CBI and regional development agency One NorthEast, also showed that skill levels and problems with the transport infrastructure were also constraining the region’s economy.

See page six for a review of June's business news.

JUNE

A GROUND-BREAKING deal between house builder Persimmon and construction company and developer Esh Group would see work on the Newcastle Great Park business development begin in the summer.

Persimmon, which owns the site, has contracted County Durham-based Esh Group’s construction arm – Lumsden & Carroll Construction – to build on 120,000sqft of office buildings over the following 18 months at the park three miles north-west of the city.

This is the first commercial development on the 1,200 acre business park since software firm Sage moved its headquarters there nearly three years ago.

The site will eventually see 2,000 homes, 3m sqft of offices, as well as a town centre, hotel and fitness club, with the promise of 30,000 jobs.

MORE than 1,000 staff of North-East insulation company eaga saw the value of their new shares leap 17% – an average of more than £13,000 each – after the company launched on the London Stock Exchange.

Shares in the Newcastle-based company rose as high as 226p in early trading on its first day as a plc, before closing at 211p.

The biggest beneficiary from the windfall was founder and chief executive John Clough. The former British Coal manager, who set up the firm in 1990 after he shut the state-owned company’s coke works in Hebburn, personally benefited from cash and shares worth £20m.

The float saw Eaga become the 11th largest quoted company in the North-East just behind Newcastle-based retail baker Greggs. It said it would use the £30m raised from the placement of new shares with investors for expansion.

BAR equipment company Brulines unveiled plans to double its workforce to 200 as it posted a 27% profit rise in its maiden results. The Stockton company toasted a strong rise in business over the year to the end of March 2007 with pre-tax profits up to £3.23m for the year from £2.71m in the same period in 2006, on sales of £16.7m, up from £12m.

It later invested £3m in a move to the 15,400 sq ft Surtees Business Park in Stockton, which can house double the current numbers in its Preston Farm Business Park base. It currently has 180 staff nationwide, with more than half those in Stockton.

ALTERNATIVE fuel producer Biofuels Corporation’s business was taken over by its bankers and, as a result, would cease to be a publicly-traded company.

The Billingham-based company sought shareholder approval to swap 94% of the equity in the company’s main subsidiary – Biofuels Corporation Trading Ltd – to Barclays in return for cancellation of debts worth up to £106m.

See page seven for a review of July's business news.

JULY

OILRIG builder SeaDragon Offshore has confirmed a £500m deal which will bring at least 600 jobs to the North-East.

The company secured a lease deal with Mexican company Pemex for the first of two oilrigs to be built at the Haverton Hill yard on Teesside, with a third hoped to follow.

The company also said it would try to raise £120m to £175m in a flotation in the next three months to fund the rigs, which would value it at about £500m.

Stockton North MP Frank Cook reacted excitedly to the news, saying he was like a “dog with three tails”.

Wellstream

FURTHER good news for the region’s oil and gas sector came when pipeline company Wellstream won a £100m contract with its joint venture partner, just weeks after they started working together.

The Newcastle company, which listed on the stock exchange last April, agreed to supply 60 kilometres of pipe through the Seastream joint venture it formed last June with Sea Trucks Group from Nigeria.

The £100m of new business compared with Wellstream overall generating £80m of contracts during the six months to June 30.

The pipeline will be made at the company’s riverside factory at Walker in Newcastle.

The 60km of pipes, known as flexible risers and flowlines, are scheduled for delivery in the last quarter of next year.

BREWER Camerons sold half its £75m operation to the UK’s second largest brewer Coors.

Nine depots in the North, from Hartlepool to Scarborough, supplying more than 1,000 freehold pub customers changed ownership and the Hartlepool brewer said all of its 85 depot staff would transfer to Coors.

The deal was seen as a statement of intent from Camerons, which was looking to finance the expansion of its tenanted pub estate from 55 to at least 200, quadrupling sales to £20m in two years.

Camerons chairman David Soley said: “This is an excellent opportunity for both companies.

“It will allow us to invest in extending our own retail estate and contract brewing operations providing a great platform for the growth of the company going forward.”

GARLANDS call centres announced plans to create up to 1,000 jobs in the region by opening a huge new
contact centre on South Tyneside.

The centre, based on the waterfront at Market Dock North, will join the company’s eight other centres at Hartlepool Marina, Middlesbrough and Stockton.

The news will bring the total number of people employed by Garlands to 4,400.

HOLIDAY park operator Parkdean Holidays revealed plans to double in size by 2009 after its £80m takeover of South-West group Weststar Holidays.

The Newcastle firm, which now owns 24 UK holiday parks after its latest acquisition, set out plans to buy another 20 sites in the next two years.

Parkdean’s two-year expansion could create up to 50 jobs at its Gosforth headquarters and the company expects to see annual revenue climb from £93m this year to £125m in 2008.

Exeter-based Weststar Holidays has 1,447 hire fleet pitches and 625 touring pitches. It employs 300 people, with two parks in Cornwall and one each in Dorset and Hampshire.

Parkdean chief executive John Waterworth said: “We are trying to add further parks to the group. We would like to grow the group via acquisition of up to 40 parks in the next two years and we are looking to double in size.

“This is a really quality business that we have had our eyes on for some time.”

See page eight for a review of Augusts business news.

AUGUST

NEWCASTLE Building Society announced an 80% climb in profits in the first half of this year as it started to reap the benefits of its merger with Universal.

Pre-tax profits at the enlarged Newcastle firm soared 80.6% to £6.5m, thanks to increased financial services income and better-than-expected cost savings from the deal.

Chief executive Colin Seccombe said he was proud no redundancies had resulted from the merger with the Universal Building Society, which was also founded in Newcastle in the 1860s, and 100 additional jobs were created in the first half.

The merger was well received by members and borrowers who shared £8.3m when the two societies came together in December.

Mr Seccombe said: “All the Universal staff have been integrated into the enlarged society and the cost savings have come from eliminating some of the duplicated costs in insurance, audit fees and support costs.

Tavistock Hotel

TWO major developments were announced which could help boost the region’s reputation as a conference and hospitality hotspot.

Tavistock Leisure revealed proposals to build the biggest hotel and conference centre in the North-East near the finish line of the Great North Run in South Shields.

The local company said it wanted to invest £15m in the four-star development which would feature a grassed roof to blend the building into the landscape.

The hotel, proposed for the site of Gypsies Green Stadium on the seafront, would house 1,400 conference delegates or 800 banqueting guests, as well as 104 bedrooms, a “holistic” spa, a restaurant and bars.

Meanwhile, plans were revived to bring a convention centre to Newcastle with the hope it could generate £20m for the city every year.

Newcastle City Council was looking at ways to create a centre after the city lost out to Manchester in its bid for a super casino and the plan for an adjoining conference venue was dashed at the same time. The council had commissioned a study to look at the feasibility of redeveloping a site west of Central Station, which would have a centre with space for 1,500 conference delegates.

THE region’s largest ice hockey team  said it was set to skate into the black for the first time in its 12-year history.

Newcastle Vipers revealed it was on target to record an annual profit for the first time since ice hockey was launched at Newcastle Arena by Sir John Hall in 1995.

The team is set to increase its turnover from £650,000 to £1m in the next five years and deliver a profit for 2007.

Last year the club, which was rescued from administration in 2005, cut annual losses from £200,000 to £100,000. Vipers general manager Jaimie Longmuir said: “For the first time it looks as though the business will turn a profit.”

THE North-East’s oldest taxi company revealed that it was being pursued by two potential buyers.

Noda Taxis, which is based in Newcastle’s Westgate Road and has a kiosk at the city’s Central Station, confirmed it had had two offers – in the region of £750,000 – for the business.

Newcastle’s Metro City Taxis and LP Construction, which is registered in Edinburgh but is owned by Lee Porter, of Chapel Park, Newcastle, have both made offers for the 60-year-old firm.

See page nine for a review of September's business news.

SEPTEMBER

Gordon Banham, Hargreaves Services

RAPIDLY growing mining-to-haulage group Hargreaves Services announced plans to drive annual sales up by half to £400m by 2009.

The County Durham company revealed its ambitions after it announced an impressive 71% rise in revenue for the past financial year.

It saw annual revenue rise from £155m to £265.3m in the year to May 31 and it expects this to soar to £350m this year with annual profits jumping from £10.4m to £16m by 2008.

Hargreaves said it planned to expand its headquarters in West Terrace, Esh Winning, or move to a larger base in the North-East to accommodate its growing workforce.

AN INVESTMENT programme worth £2m was ploughed into fashion chain The Officers Club as owner Dave Charlton plotted a recovery from seven-figure losses over the previous three years.

A new, more upmarket trading style was adopted by The Officers Club as it attempted to move away from its history as a “pile it high, sell it cheap” retailer.

About 100 of the company’s stores around the country were fitted out with a more modern look with extra space for customers to browse.

NEWCASTLE Building Society announced plans to create more than 500 jobs on Tyneside as part of its huge expansion drive.

The society is due to move much of its operation to a new home on the Cobalt Business Park, North Tyneside, creating 500 positions over five years.

It currently has more than 1,000 staff across its HQ and 37 branches. The society, founded in the city more than 140 years ago, insisted its HQ would remain in its current position in Newcastle, with the eventual plan to consolidate its operation between these two sites and close its secondary premises in Wideopen and at Universal House, Kings Manor, Newcastle.

A GREEN-FINGERED couple who spent more than 25 years cultivating one of the region’s best known garden centre chains sold their firm to Scotland’s richest tycoon.

Newcastle couple Peter and Angela Barratt sold the Peter Barratt’s chain to Wyevale Garden Centres, owned by entrepreneur Sir Tom Hunter.

The business, which has annual revenue in excess of £20m, retained the Peter Barratt’s brand name at its three centres in Gosforth, Newcastle, Beverley in East Yorkshire and Stockton.

Peter Barratt, 52, said he was too young to retire but planned to take a well-earned break before eventually making a return to the business world.

BAR and nightclub owner Ultimate Leisure – which has since changed its name to Premium Bars and Restaurants – reported flat sales and profit in a difficult year, but said
last July’s smoking ban had helped food
sales.

The Tyneside company, with a portfolio including Blu Bambu nightclubs in Newcastle and Sunderland, reported a 1% rise in like-for-like sales and a 73% fall in pretax profit to £400,000 for the year to June 30.

Turnover at the AIM-listed business climbed 11.8% to £36.3m and the company said it remained on target to achieve profit forecasts of £2.2m next year.

The Newcastle firm, which bought the Living Room chain for £28m last June, said it would not be making any more acquisitions in 2007 after investing heavily on revamping its current stock during the year.

NORTHERN Rock, the largest financial institution based in the North-East, applied for emergency financial support.

The Newcastle-based mortgage lender became the first British bank to turn to the Bank of England asking for it to be the “lender of last resort”, after difficulties raising cash from the commercial markets.

Its millions of customers were urged to stay calm as analysts assessed the move as being the result of a short-term cash flow problem sparked by the drying up of the world money markets.

See page 10 for a review on October's business news.

OCTOBER

HARTLEPOOL-based Stadium Plastics , which makes moulded parts mainly for the car industry, fell into receivership, putting the jobs of its 360 workers in doubt.

Receivers Grant Thornton addressed the workforce at the plant on Tofts Farm Industrial Estate and said its priority was to stabilise the business.

The receiver also said the business had suffered losses in recent years as the amount its customers were prepared to pay for products had declined.

Stadium saw its pre-tax profits plummet from £400,000 in 2004 to a loss of £667,000 in 2005, with this figure remaining in the red last year, albeit climbing to a loss of £256,000.

Meanwhile, the firm’s turnover dropped from around £33m in 2004 to £31m last year while its tangible assets fell from £4.9m to £3.8m in the same period.

HOUSEBUILDER Bellway posted record results and said it remained confident despite concerns about the fragility of the economy amid the present credit crunch.

The Newcastle company recorded pre-tax profits of £234.8m for the year to July 31, an increase of 6.4% on a year earlier after selling 7,638 homes in the year to July 31.

Turnover was also up a healthy 9.2% to £1.35bn.

And while chief executive John Watson said Bellway would have to watch market conditions carefully in the months ahead, he said the company was well positioned with an order book of some £667m – up £20m on the same time last year.

Mike True, managing director, SONHOE Development Company

PLANS were unveiled for a £2bn crude oil plant which could create up to 4,400 jobs in region.

London-based SONHOE Development Company announced plans for a processing facility on a former ICI site on Teesside which would create up to 400 operating jobs, 2,500 construction jobs and 1,500 associated jobs over the next seven years.

The project, which would be the biggest ever industrial investment on Teesside, will be followed by a number of other significant investments into the region’s energy sector, said Tees Valley Regeneration (TVR).

TVR chief executive Joe Docherty said: “The proposal underpins the future of the region’s energy industry and is as significant as the original decision by ICI to set up in the region.

“We are currently in discussions with a number of other major investors who are looking at the Tees Valley area. They are investors who are looking to grow their businesses in energy related sectors. We are confident there will be more companies like SONHOE coming here in the future.”

MORE than 300 workers at a cable maker which was bought by an Indian firm were told their jobs were safe in the short-term but may not be so certain further down the line.

AEI Cables, which employs 314 people at its plant in Birtley, Gateshead, was sold for £13.3m to New Delhi-based cable maker Paramount Communications.

Paramount retained the Birtley firm’s management team but hinted at staff cutbacks in coming months as it aims to turn AEI into a profitable firm by the end of the next financial year.

Surrey-based plc TT Electronics sold the loss-making firm at a discount to reduce its borrowings and the deal follows the closure of its power cable division in 2005.

SIR Richard Branson's Virgin Group emerged as an interested party in a Northern Rock takeover.

Virgin was one of five major financial players who wanted to invest “substantial new equity” to keep the Newcastle lender trading in its entirety, rather than break up the bank.

See page 11 for a review of Nowvember's business news.

NOVEMBER

SOFTWARE firm Sage posted a 14% rise in profits, and nearly doubled its annual dividend payout.

The Newcastle company posted pre-tax profits of £251.3m for the year to September 30, and decided to reward its investors with a dividend of 7p a share, up 95% on last year.

The increase surprised the City and caused the company’s share price to reach 213p during the day’s trading, up from 193.7p when the stock market opened.

Sage also reached and comfortably surpassed the billion pound sales mark, with annual turnover up 30% to
£1.157bn.

Alistair Arkley, chairman, New Century Inns

THE chairman of North pubs group New Century Inns vowed to maintain a significant operation in the region despite selling the firm for £32.6m.

The Billingham-based operator of 49 pubs across the North-East, Yorkshire and Derbyshire, was sold to Suffolk brewer Greene King, which was looking to increase its presence in the North.

However, chairman Alistair Arkley said a new company called New Century Enterprises would be formed which would remain committed to the North-East.

Mr Arkley, who is also chairman of the Passionate Pubs Company and Chameleon Pubs, said New Century’s Billingham office would remain as the headquarters of his other pub ventures and operate as a consultancy and accounting firm under the new banner.

BUILDING services and supplies company Northern Bear announced plans to double its annual sales in a year after making a multi-million pound acquisition. The County Durham group made its first foray outside the North-East by snapping up Leeds-based Jennings Roofings for around £5m.

The AIM-listed business, which spent around £6.8m in 2007 on takeovers, revealed it had raised £11m for acquisitions through an arrangement with Yorkshire Bank.

ONE of the North-East’s best known motor dealerships announced ambitious expansion plans after turning down a tempting takeover offer.

The Washington-based Springfield Motor Group, which has six dealerships and a body shop in the region, unveiled an ambitious 50% growth target over the next five years.

It followed a prolonged period of uncertainty earlier this year when Springfield chairman Ron Price mulled over a tempting offer to buy the business.

Mr Price said that when the books were being examined during the takeover approach a number of areas were identified for improvement.

CONCERNS were raised after it emerged that 47,000 jobs had been created in the North-East’s public sector in the last five years – as the number of jobs in the private sector fell by 12,000.

However, job creation bodies said the expansion could act as a catalyst for the growth of the commercial sector.

The growth in the public sector – primarily health and education – was identified a “major weakness of the North-East economy” in a report by the Tyne and Wear Research and Information for the North-East Regional Skills Partnership.

DETAILS of two firm bids for Northern Rock emerged.

An offer from private equity firm JC Flowers would see the estimated £24bn borrowed from the Bank of England paid back by the end of 2010.

A second bid also emerged from American private equity firm Cerberus, which was earlier believed to have pulled out of the race.

See page 12 for a review of December's business news.

DECEMBER

NEWCASTLE College became a national brand after buying an employment skills training provider.

The purchase of Training West Lancashire Ltd (TWL) will see Newcastle College provide the Skelmersdale-based company with a wealth of administration support to help it attract larger private sector contracts. The £750,000 deal sees TWL change its name to TWL Training and provides the foundations to help it to add to its 27 sites throughout the country and significantly increase its £12m turnover.

Swan Hunter owner Jaap Kroese

THE boss of Swan Hunter held up his hands to say he took full responsibility for its last ship contract which came in £130m over budget.

A damning report on the massive cost increases suffered on the last vessels built at Swan Hunter has condemned both the company and the Ministry of Defence. But Swan Hunter owner Jaap Kroese admitted full responsibility for the debacle on the Landing Ships Dock (Auxiliary) – LSD(A) – project saying his company was out of its depth

AMBITIOUS electric vehicle maker Tanfield Group revealed plans to tackle the US market saying it expects to hit sales of 10,000 a year by 2010.

The Washington-based company, which is fast outgrowing its base next to the A1(M), recently acquired a factory in Fresno, California. Tanfield believes US cities offer a massive opportunity to grow its business with carbon reduction at the top of the agenda.

THE fight against international terrorism was boosted by a North-East company which said its ground-breaking X-ray product may eventually be used by every airport in the world.

Durham Scientific Crystals (DSC), based in NETpark, near Sedgefield, won £350,000 of investment from the Home Office to develop scanning devices which detect explosive and dangerous materials in baggage and small items at airports. The company, which aims to have both devices market ready within 18 months at a total cost of £1.5m, believes its new technology will be adopted by airports across the world as part of the global fight against terrorism.

OIL and gas pipeline maker Wellstream topped off a highly successful year with the top prize at a national awards dinner.

The Newcastle company won the Business of the Year accolade at the British Chambers of Commerce (BCC) awards in London.

The annual Chamber Awards were a fitting end to a year which has seen Wellstream go from strength to strength, through a stock market float and the opening of a new production plant in Brazil.

THE Treasury made a fresh move to shore up Northern Rock , as Bank of England Governor Mervyn King warned of more gloom for banks across the world.

The Government’s help for the stricken lender extended taxpayer guarantees across virtually all of the bank’s balance sheet – adding hundreds of millions of pounds to the public’s exposure.

Northern Rock had already borrowed around £25bn from the Bank of England since the run on the bank in September, while the Treasury has also assured an estimated £16bn in savers’ deposits.

Meanwhile the race to buy the firm suffered a setback after finance group Olivant was reportedly told its rescue plans were up to £300m short.

The Bank of England, the Treasury and Northern Rock’s board were believed to be concerned that the investment group’s plans risk undermining the future financial strength of the bank.

Journalists

David Whetstone
Culture Editor
Graeme Whitfield
Business Editor
Mark Douglas
Newcastle United Editor
Stuart Rayner
Sports Writer