Ila Group

SPECULATIVE BUY

10/08/2011 Robert Tyerman

After raising £1.55m, Ila Group is diversifying out of women's security devices into children's toys and other brand areas, backed by ad agency Bartle Bogle Hegarty. Chief executive Simon McGivern says the company, where BBH holds 26%, is launching a new brand of toys, starting with 'Scootrix' with specialist 'mini-scooter' distributors, and seeking appropriate acquisitions, to follow Premium Factory, the promotional manufacturer with a blue-chip customer list bought in Match for £100 and a £400,000 loan.

Predicting a strong performance from previously troubled but now restructured Premium Factory, McGivern, a former investment manager at broker Panmure Gordon, says Ila is talking about brands to Disney, Asda and US-based children's TV channel Nickelodeon. Stressing the importance of BBH's presence and the role of abrasive retail veteran and ex-Marks & Spencer boss Sir Richard Greenbury as an Ila non-executive director since last year McGivern says 'lots of Chinese and Eastern factories are making the stuff, but they cannot handle relations with buyers and we can.'

Gordon Black, ex-chairman of Marks & Spencer footwear supplier Peter Black Holdings, is an adviser to Ila, which cut its losses from £881,000 to £382,000 in the six months to December on sales up 375% to £647,000. According to McGivern, the company's growth is likely to be 'significanty stronger' than previously forecast, expects to reach breakeven 'earlier than previously predicted' and has a large ambitious turnaround takeover in its sights, though it may not be able to pull this particular one off just yet.

He points out that seasoned serial investor Nigel Wray has built up a stake of some 9% in Ila, where Andrew Black, co-founder of Betfair, also has around 4%. They presumably scent a possible bargain in the shares, which have so far performed dismally since floating at 10p in 2006 and now trade at 1.3p, 0.1p above the recent placing price.

If present schemes bear fruit, they could well reward a recovery punt over the medium to long term.

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