Spotlight on Torex

2:31pm Thursday 1st February 2007

It was "business as usual", according to a spokesperson for Witney-based Torex Retail. But the water coolers must have been buzzing following the news that its chief executive and chairman had quit after three homes were raided by police and the Serious Fraud Office. Both chief executive Neil Mitchell, of Leckford Road, Oxford, and chairman Chris Moore, of Hook Norton, stepped down from their roles a day after fraud officers and City of London police swooped on two homes in Oxfordshire and one in Warwickshire. Neither the SFO nor the company is saying whose homes were raided.

Torex Retail employs 65 people at its headquarters in Range Road, Witney, and 53 workers in Banbury, making and selling software for cash registers at retailers such as Monsoon, McDonalds and Tesco.

'As far as the employees are concerned, it is business as usual'

GINNY PULBROOK, Torex Retail

Last Friday it shook the stockmarket by suspending its shares and warning that profits would be lower than expected, just eight days after unveiling a raft of new contracts. The London Stock Exchange is investigating Torex and its stockbrokers for breaking rules on financial disclosure.

Iain Lynam, a specialist in turning around struggling companies, has been appointed to lead the restructuring and day-to-day running. He will also be supported by Torex's finance director Marcus Leek, 31, who lives in Warwickshire.

Mr Moore, of Hayway Lane, Hook Norton, will be replaced by Geoffrey Forster, former head of Lloyds TSB's corporate division in Oxfordshire, who lives in Uffington, near Wantage. Mr Forster, 65, who specialised in Oxfordshire technology companies and is a former manager of Lloyds bank in Wantage, will act as chairman, "with the full authority to carry on the management of the company," a statement said.

Mr Moore, a charismatic figure who became Oxfordshire Businessperson of the Year in 2000, joined Oxford Instruments in 1982 after qualifying as an accountant. He led a management buyout of a company called Smart Terminals and set up Torex at his home village of Stonesfield, near Witney, in 1996. It started out making software for Argos, then set up a healthcare software division.

Mr Moore, who was briefly chairman of Oldham Athletic Football Club, became chief executive of the enlarged Torex, and hosted Princess Anne when she opened a new Torex headquarters in Banbury in 2003.

Torex then split into two, with Isoft taking over the healthcare software, and Torex Retail remaining to sell software for cash registers. Mr Moore resigned from Torex in early 2004 and in November of that year rejoined Torex Retail.

Last September, he brought in Mr Mitchell, 42, who previously worked for BAE Systems and IBM Global Services before becoming corporate adviser to Enron, Severn Trent and United Utilities. Mr Mitchell is thought to have been looking for buyers for the company. When he took over, he said he would aggressively grow the "business of the new Torex Retail". He and Mr Moore retain their position on the board of Torex Retail.

Torex said earlier this week that it was advised by Mr Leek, who took over last year, to suspend the shares after warning that full-year results were likely to be "significantly below market expectations".

The share suspension came just a week after the group issued an upbeat statement boasting of "significant" new contract wins worth more than £100m over the second half of its financial year.

It said that it had secured "major" contracts with Wyevale Garden Centres, Argos owner Home Retail Group and Swarovski, but did warn that some new and continuing contracts in the hospitality sector were delayed until early 2007.

In a review published in November, Torex Retail said it was in "robust health" and forecast a year-end net debt of £180m. However, in its statement last Friday, it said it now expected net debts to rise by £23m on the back of the contract delays.

It has spent £400m over the past few years buying up smaller rivals.

Torex Retail serves more than 50 blue-chip customers across 15 countries and was valued in the City at about £175m.

The company claims its products handle more than 25 million transactions a week, accounting for more than 45 per cent of all UK retail sales by value.

Mr Mitchell told the market in November that he believed the software company was "in robust health" and continued to provide "a platform for sustainable organic growth".

Nevertheless, he said at the time that he had discovered a "small number" of "very specific" items in the accounts that required "re-alignment" at a cost of £4.8m.

The shares remain suspended at 41.75p.

In November, Mr Mitchell had moved to reassure the City over the health of the business, saying he had "scrubbed" the accounts of his new company and was satisfied that there were no problems on the scale experienced by Isoft, its former parent.

"I have worked tirelessly to completely review the financial and commercial trading activities of Torex Retail and to my delight I have found a solid business platform," he said at the time.

"The management team is delivery-focused and the respective operating divisions are absolutely attuned to the delivery of the 2006 targets."

He then spent £200,000 buying shares at 47p each. Mr Leek and the heads of the company's five divisions spent a further £300,000.

Mr Leek, 31, joined the group last year from the Caudwell Group, the owner of the Phones4U mobile phone retailer, where he held the position of finance director.

Torex spokeswoman Ginny Pulbrook, explaining the suspension earlier this week, said: "It is a bit drastic, as it is the first time people have been told that forecasts are not in line.

"But the finance director decided that rather than issue something in haste, he needed to be given time to give a fuller breakdown. It is not to do with a lack of orders, and as far as the employees are concerned, it is business as usual."

Ms Pulbrook added that there was no suggestion of there being anything wrong with the company accounts, and the company would be re-listed within a few weeks.