FOR a company that was so bullish about the positive benefits of acquiring local advertising and marketing leader Wallace Barnaby just two years ago, Ekay plc was surprisingly reluctant to discuss yesterday what really led it to close the operation with the loss of 30 jobs and an as yet unknown number of creditors.

In a statement on 24 November 2006, Ekay said that integration of the company and Wallace Barnaby ‘will add significantly to Ekay’s turnover and profit’.

That, perhaps, was not surprising.

For the six months ended 30 September 2006, Wallace Barnaby had sales of £15,204,000, a gross profit of £813,000 and its audited figures for the full year ended in March 2005 showed that it made a pre-tax profit of £1,215,000 on sales of £21,598,000.

Ekay’s announcement also said that WB had net cash of £954,000 as at 30 September 2006.

To put those figures into context, Ekay in its preliminary release of annual results to 30 June this year had gross revenues of £44.5m. and had increased its gross profits to just under £3.5m.

That performance was enough to take it from a loss-making operation the year before.

Interestingly, however, the company also told investors that significant cost savings would help to protect the ongoing profitability of the enlarged group, which might mean it already had its CI subsidiaries in mind for closure.

Much of Wallace Barnaby’s impressive sales figures were based on international media buying for clients.

Yet the year after having being acquired by Ekay, Wallace Barnaby’s next published turnover figure had plummeted to £627,000, unaudited net profit was down to £30,700 and cash on account had been reduced to £30,000.

If, as it now appears, WB’s earlier success was based on virtually a single client, Ekay’s acquisition was clearly a risky venture and perhaps surprising for a plc.

In any event, its Guernsey staff and customers who have been left in the lurch by the sudden liquidation would have expected much earlier and effective intervention to try to safeguard the business. Ekay still has questions to answer about the way it has handled this.