The collapse of Evolution Holdings and its retail chain Silica marksenced its ultimate demise. the end of a long history, which has seen three separate attempts to revive the operation.
Sidcup-based Evolution Holdings went into creditors' voluntary liquidation with a debt of about #1 million. Evolution first stepped into the picture in February when it bought an operation which consisted of SDL's distribution arm and the retail chain of shops which traded as Silica. Evolution had bought Anglo Corporation, which collapsed in 1995 with debts of #5 million. Anglo entered the retail market when it bought Prodis - the original parent company of SDL and Silica, but that too plunged into administration.
With a history like that, it's surprising that any firm would want to have another go at making the business work. Unfortunately, this has now come true for Evolution, but it puts an end to the days when operations can consist of being both a distributor and retailer. The collapse of the business of SDL and Silica marks the end of traditional players that were in the market long before the likes of Ingram Micro and Computer 2000. SDL was largely responsible for the success of the Commodore console, which was also its downfall when the manufacturer went into bankruptcy - it had no other supplier to rely on.
But let's take Evolution Holdings on its own. The company was struggling to survive since the failure of its fund-raising effort on the Ofex list.
Ofex is an alternative UK list of shares to the traditional Stock Exchange or AIM. To be listed on the trading facility, a company must produce a prospectus detailing how much it wants to raise. Evolution wanted to raise between #1 million and #1.5 million - it managed only #700,000 and could not be listed. This affected the confidence of other potential investors.
According to sources close to Ofex, the problem was the Stock Exchange's as much as Evolution's. Ofex suffered a crisis of confidence after publicity surrounding the massive growth of Display IT, followed by its collapse.
Prior to the collapse, Display was one of the first companies to float on the Stock Exchange and had a rocketing share price. This cast a spell over Ofex and Evolution as it was seen as a similar business, and Evolution suffered the consequences of this perception.
From this failure to raise extra funding, the day to day problems came to the fore. Some ex-employees blamed suppliers for the crisis. It lost the little credit it had in the early summer. Without credit, it could not realistically trade - without trading, it could not raise credit.
A more generous attitude from suppliers would have helped. As a result, Evolution was forced to trade on the stock and had taken money from sales to fund purchases of new stock. The situation was unsustainable.
Other sources say the collapse shows the power of gossip in what remains an incestuous industry. Once the good standing of the company had been lost, it was all but impossible to regain. Without this it became impossible to get credit and, so, trade effectively.
The retail side of the business has been blamed for offering nothing different from other retailers. The overheads were high, with rent on the head office alone costing about #250,000 a year. Towards the end, the company was surviving on cash from customer sales to buy components to build more machines.
Some have accused Martin Hodgson, Evolution MD, of knowing from the start what was going to happen. He took a reported salary of #100,000 in exchange for very little hands-on work. With no experience of the computer industry or retail, he supposedly offered investment raising experience, but his experience was not sufficient to save the business.
One ex-employee said: 'Hodgson was seen as a knight in shining armour when he arrived, but he was arguably no more than a sophisticated asset stripper.'
Hodgson denied this claim, maintaining he had taken steps to stop the company from collapse. He made 30 per cent of staff redundant, closed six shops and reduced overheads by moving the HQ to Sidcup.
Despite these actions, nothing could save Evolution. With so much history attached to it, only a strong and dynamic organisation could have made it work.
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