Leapfrog falls flat in 'difficult year'

FINANCIAL problems are mounting at Leapfrog, one of the country's largest day nursery chains. Founder and chief executive Derek Mapp blamed the deficit on costs associated with last year's failed attempt to float the business on the stock market.

Mapp aims to make a decision on the company's future before the end of the year. A refinancing package was completed ten days ago.

'The financial markets were very difficult last year and the flotation didn't happen, so we've spent the past nine months consolidating the 39 nurseries we have,' he said.

'We want to keep growing, but we have a very loyal set of venture capitalists who have been with the business for five-and-a-half years. The market is recovering but we can't make a decision based on that. It's about the valuation of the company you can achieve.'

Accounts to be filed shortly at Companies House will show that the company's total deficit for the year to March 2003 reached £5.7m.

Sales rose by £6m, reaching £18m, and pre-tax losses fell slightly to £3.8m.

Mapp founded the Leapfrog chain after he sold the Tom Cobleigh pub chain to leisure group Rank for £96m in 1996.

This month's refinancing follows Leapfrog's failure to find new backers this year when existing investors, which include UBS Capital and European Acquisition Capital, could not agree a price for the company.

Leapfrog had hoped to raise up to £75m in a flotation to fund its expansion plans.

Three non-executive directors brought in to bolster the board ahead of going public resigned after the float was pulled.