Editor: John Arnold. E-mail jarnold@creditman.co.uk
Pat Williams. E-mail pwilliams@creditman.co.uk
Site: Business Credit Management UK
URL: http://www.creditman.co.uk
Issue: Vol 6 Issue 2
Dated: 13 January 2001
Welcome to the Business Credit News UK.
In this weeks edition you will find the following topics.
UKFINANCIAL SERVICES SECTOR HIT BY FALL IN BUSINESS VOLUMES BUT FIRMS FORECAST MODEST BOUNCE-BACK
The financial services sector says that business volumes have fallen at the fastest pace for nine years, forcing firms to cut costs in a bid to sustain profitability.
In a quarterly survey by the CBI and PricewaterhouseCoopers, 42 per cent of companies said business volumes fell over the past three months while 34 per cent said they rose. The resulting balance of minus 8 per cent is the worst figure since December 1992.
Firms expect a modest bounce back over the next three months with a balance of plus 5 per cent saying volumes would increase. This has helped stabilise business confidence, which had fallen at the fastest pace for three years following the September 11 attacks.
But declining global demand has caused the biggest fall in profitability since March 1991. As a result, firms are reducing staff numbers and cutting investment, in particular in marketing and information technology.
Marketing expenditure has now fallen for two consecutive surveys, the first falls since records began in September 1992. This survey's findings also show IT expenditure being cut for the first time since September 1992.
Employment, which had grown steadily since 1997, fell for the second successive survey with the sharpest falls among fund managers, banks and securities traders. Companies expect the pace of job cuts to increase over the next three months.
Firms described the level of business as the most below normal since December 1995. They said business volumes have been hardest hit for securities traders, fund managers and life insurers. But general insurers, insurance brokers and building societies all reported volume growth.
John Hitchins, Financial Services Partner at PricewaterhouseCoopers, said: "It is clear from the survey that the industry remains concerned about the impact of economic slowdown. But confidence has stabilised on the back of declining fears about the UK sliding into recession.
"With a clear focus on cost cutting, the sector looks poised to react according to how markets settle following the launch of the euro and the steady resumption of business activity after the holiday season and post September 11.
"Significantly more firms now list regulation as a potential constraint on their future growth, particularly reflecting the kick in of N2. They are also worried about the rising expectations of the government in respect of the industry's attempts to combat money laundering."
Ian McCafferty, CBI Chief Economic Adviser, said: "These worrying findings show the normally resilient financial services sector counting the cost of the global slowdown. Firms are seeing profit margins squeezed and they are responding by seeking ways to reduce their cost base.
"Encouragingly, there are signs of a modest recovery over the next three months. Confidence remains weak but it has not got any worse following the steep decline reported in September. Nevertheless, conditions will remain difficult for the foreseeable future."
Business over the internet is spreading across the financial services but the pace of growth is slower than expected, the survey shows.
A balance of 28 per cent of firms said the total value of internet business increased in the past three months, compared to 29 per cent in September. Fifty-eight per cent could measure the amount of business with customers over the internet compared to 37 per cent with suppliers.
Firms said the biggest barrier to e-business development is lack of understanding among customers and suppliers (53 per cent). The speed of the internet is the second greatest barrier (35 per cent) followed by lack of security standards (34 per cent).
Sixty-two per cent said they were putting current business activities on-line, down from 78 per cent in September. Thirty-six per cent launched on-line brands, compared to 22 per cent in September. Six per cent planned to launch on-line brands, compared to 8 per cent in September.
LARGER BUY-OUTS HIT LOWEST LEVEL SINCE 1995. MARKET POISED FOR COMEBACK- IT'S ALL ABOUT TIMING
According to KPMG Corporate Finance, the total volume of larger UK management buy-outs (those with values above £10m) fell in the last quarter of 2001 to 22 deals with a total value of £1.4bn. The last time quarterly volumes were this low was during 1995. Despite the dismal end to the year, a total of 124 transactions with a cumulative value of £18.9bn were completed in 2001. This compares with 158 deals worth £20.6bn in 2000 representing a fall of 22% in volume and 8% in value.
Buy-out activity held up well until the final quarter of 2001, which saw a 54% drop in volume and a 67% decline in value compared to Q4 2000. Charles Milner, Head of Private Equity at KPMG Corporate Finance, says: “The normal flurry of activity at the year-end was noticeably absent for well-documented reasons including the global economic slowdown and particularly the tragic events and repercussions of 11th September.”
Milner continues: “Despite this result we believe that 2002 looks more promising as vendor expectations move into closer alignment with prices private equity buyers are willing to pay. This will inevitably lead to more closures – it is simply a matter of timing. The first few months of the year will be crucial in determining the extent of any recovery. A number of private equity buyers believe that 2002 will be an opportunity to acquire quality businesses at realistic prices.”
The buy-out market has been driven for some years by deals at the high value end but these fell away in the last three months of 2001. The top deal for the quarter was £230m – the secondary MBO of Leisure Link Group – in the previous three quarters 4 transactions completed at a value of £1bn or more. Milner commented: “Over the whole year, deals in the £250m+ range held up totalling £13.3bn - only down 4% on 2000. However this was clearly weighted to the first three quarters. Tougher economic conditions biting into company results, less surety in the syndication market and less transparency on future earnings – all these factors caused a pause in larger deal activity.”
The total value of Public to Private (PTP) transactions for the last quarter of 2001 was down 88% on the same period last year. Only two PTPs, WT Foods at £129m and Brockhampton Holdings at £77m, completed in Q4. However PTPs continue to command a significant share of the private equity market generating a third of the value of all deals completed in 2001.
Milner comments: “PTP activity fell off in Q4 in line with the market recording the lowest level of PTP activity since 1996. However, PTP transactions are now a recognised feature of the marketplace and will remain so. We will see more PTP activity when the market picks up.”
In summary Milner notes: “Overall, 2001 held up well despite some predictions of an early free fall. The total value of deals only dropped 8% from £20.6bn in 2000 to £18.9bn in 2001 which, considering market uncertainty as we started the year, showed great resilience especially compared to the decline in overall M&A activity. It can be no great surprise that continued economic slowdown and the horrific events of 11th September finally took their toll. Despite this, the average deal value increased by 18% from £130m in 2000 to £153m in 2001, due to some £1bn+ deals completed earlier in the year.”
Looking forward he adds: “As a number of companies come under pressure from banks or look to restructure, 2002 could well be a vintage year for private equity buyers looking to acquire quality businesses with strong management teams. Unlike many other potential buyers, the private equity firms have substantial resources available to invest.”
FURTHER RATE CUT STILL POSSIBLE, SAYS CBI
The CBI said today last Thursday that business understands why the Bank of England decided to hold interest rates steady this month, but that rate cuts are not necessarily at an end.
Ian McCafferty, Chief Economic Adviser, said: "Fears of imminent interest rate rises have been exaggerated. It would be wrong to overstate the inflationary impact of strong Christmas sales figures.
"Even with consumers enjoying a good Christmas, there is extremely keen price competition so there is little danger of inflation. Healthy retail sales must not overshadow the weakness of other parts of the economy. Manufacturing is likely to remain in a painful recession into the second half of the year.
"Until the Christmas and New Year sales period is over it will be difficult to assess the underlying strength of the domestic economy. It is likely that consumer spending will slow into 2002, and the lack of inflationary pressure makes a further cut possible in the months to come."
CHAMBERS COMMENT ON INTEREST RATES
Reacting to the Bank of England's decision to hold interest rates at 4.00 per cent, Ian Fletcher, Chief Economist at the British Chambers of Commerce said:
"This is an understandable pause, which reflects the very divergent nature of our economy. Against a very benign inflation environment the MPC has the luxury of time to judge whether current levels of consumer spending is simply Christmas indulgence or something more persistent.
“Time will also allow it to judge better the extent of any recovery in the global economy and its likely impact on the UK’s hard-pressed manufacturing sector. The current strength of consumer spending may cool of its own accord and the MPC would therefore be premature to contemplate raising interest rates at this juncture.”
GLOBAL M&A MARKET FEELS THE SQUEEZE
UK Activity at the bottom - next move will be up
KPMG Corporate Finance reports that the total value of global M&A activity for the year 2001 has fallen 52% from $3,292 billion in 2000 to $1,595 billion*. In the UK activity declined still further, from $797 billion in 2000 to $221 billion, a 72% fall. Deal volumes were also down on last year but by a less severe 26% globally and 30% in the UK.
The report shows a marked reduction in total deal values during the second half of 2001 continuing a deteriorating trend that started mid-2000. Globally, there was a 30% fall from $941 billion in June to $654 billion today. However, UK deal values dropped by over 40% during the same period - from $139 billion to just $82 billion. September and November proved the low spots in worldwide deal activity interspersed with a brief rally in October.
John Griffith-Jones, head of KPMG Corporate Finance, commented: "While the events of September 11th exacerbated sentiment, the fundamentals were clearly there already and, as yet, there are no signs of a quick recovery. In the current climate, most activity is centred on distressed disposals and defensive consolidation while some cash-rich buyers are taking advantage of low prices."
The normally robust mid-market (deals of $50 million - $1 billion) did not escape the downward trend this year. During the second half of 2001, it took by far its steepest fall globally and in the UK. Across the world, the value of these deals fell 46% from $300 billion in June to $163 billion today. In the UK the decline was similar at 49%, deal values dropping from $41 billion to $21 billion.
Cross border deals continued to dominate total UK M&A activity with the proportion increasing to 74% by value this year. However, the absolute value of overseas acquisitions by UK companies fell 81%, from $336 billion in 2001 to $64 billion. The value of deals where UK companies were the target also fell - by 53% - from $211 billion last year to $99 billion in 2001.
According to the report, very few sectors escaped the downward spiral during 2001. In the UK, there were very significant declines by value in manufacturing, information and financial services. This collapse is due mainly to some very large deals in 2000 (including Vodafone/Mannesmann, Glaxo Wellcome/SmithKline Beecham, Royal Bank of Scotland/NatWest and CGU/Norwich Union) not being matched in the current year. The services sector was close to maintaining its value levels this year with a fall of just 8% over 2000 - from $50 billion to $46 billion.
John Griffith-Jones expects the long-term trends of globalisation and sector consolidation to reassert themselves in due course. "After six quarters of decline, I believe we are at the bottom and that the M&A markets will recover. We expect to see a significant recovery in M&A activity when three conditions are met. The first is a more stable stock market, which we now seem to have. The second is clarity on the real state of the UK economy and the third is company results for Q1 of 2002 meeting analysts expectations. Once these are met the acquisition finance market should reopen for serious business. The question is when?" he said.
British mining and underground construction specialist Cementation Skanska has won part of a £102 million project to construct a new coal mine in Iran with help from ECGD, Minister for Trade and Investment Baroness Symons announced on the 7 January 2002.
It is the first project to be supported by the Export Credits Guarantee Department (ECGD) following the resumption of its medium term insurance cover for Iran in October 2000.
ECGD is providing £28 million reinsurance cover for the British goods and services needed for this multi-million pound project. It includes the £10.85 million sub-contract won by Cementation Skanska to provide a wide-range of specialist mining services including engineering expertise. Fifteen new jobs have been created directly as a result of this deal at the Doncaster-based company.
Further contracts - worth £17.15 million - are expected to be placed shortly with other British manufacturers to provide mining equipment for the coal mine project which is located in Tabas, close to the eastern border of Afghanistan.
Baroness Symons said:
"I am delighted that British exporters are playing a key role in this project which will create Iran's first mechanised underground mine.
"As well as creating 15 new British jobs, the coal mine - which will produce 1.5 million tonnes of coal annually for steel-making as part of Iran's drive to boost economic performance - will also provide employment for up to 900 people in Tabas."
The project will also help to introduce both modern mining methods and equipment through technology transfer and western health and safety regulations and practices.
Cementation Skanska's Managing Director, Stewart Keeble said:
"The Tabas project has been a target for Cementation Skanska for over ten years and the re-introduction by ECGD of medium-term cover for Iran has been fundamental to the company ultimately securing this contract."
The project - which is financed by an Italian bank loan - is backed by export credit insurance cover from the Italian export credit agency SACE. ECGD is providing reinsurance to SACE for the UK part of the project following the successful completion of detailed negotiations over several months.
The coal is required by the National Iranian Steel Corporation to feed their steel plants in Esfehan, replacing coal which is currently imported.
This is one of three contracts that have so far benefited from the reinsurance arrangements under the Anglo-Italian Co-operation Agreement which was signed between ECGD and SACE in May 2000. This agreement provides a one-stop shop for British and Italian exporters working together on a project.
In this case, SACE is providing insurance cover for the entire project while ECGD is reinsuring SACE for the part of the project involving UK exporters.
The first contract under this agreement was the Blue Stream gas pipeline project from Russia to Turkey on which a press release was issued in October 2000.
ECGD, Britain's official export credit agency, is a separate Government Department responsible to the Secretary of State for Trade and Industry.
One of ECGD's main functions is to underwrite bank loans to enable overseas buyers to purchase capital and project related goods and services from the UK, and to insure the return on investments made by UK companies in overseas enterprises.
EQUIFAX FOURTH QUARTER RESULTS TO MEET ESTIMATES, BEFORE RESTRUCTURING CHARGES 2002 EARNINGS GROWTH EXPECTED AT 10 PERCENT
ATLANTA, January 10, 2002 - Equifax Inc. (NYSE:EFX), confirmed today that it expects to report solid fourth quarter results driven by its North American consumer reporting business. Fourth quarter earnings are expected to meet analysts' estimates of 32 cents per share, excluding restructuring charges taken in the quarter to align Equifax's cost structure following the spin-off of Certegy and to improve results internationally.
The restructuring and other one-time charges are expected to total $60 million or 25 cents per share on an after-tax basis. The charges consist of approximately $37 million for employee severance and facilities consolidation and $23 million to write-down several technology investments. The restructuring results in a workforce reduction of approximately 700 employees, the vast majority of whom are located outside of the United States. Ongoing cost savings resulting from the restructuring are expected to total approximately $20 million in 2002.
2002 Outlook. Based on its current outlook, Equifax expects operating earnings per share growth of 10 to 11 percent, or $1.38 to $1.40 in 2002, including the impact of SFAS 142, which eliminates the amortization of goodwill. Revenue growth for the year is expected at 4 to 6 percent.
Equifax will report fourth quarter and year-end results on January 24 and will host a teleconference that day to discuss the results at 9:00 a.m. (ET). The live audio Webcast of the speakers' presentations will be available at www.equifax.com. Please note that Microsoft Media Player is required to access the audio webcast. This can be downloaded from www.microsoft.com/windows/mediaplayer.
ECGD ANNUAL REPORT AND ACCOUNTS 2000/01 - UK EXPORTERS GET £5.6 BILLION IN NEW SUPPORT
UK exporters and investors benefited from increased insurance support worth £5.6bn from the Government's Export Credits Guarantee Department (ECGD) over the last fiscal year according to new figures published on the 10 January 2002.
The Annual Report and Accounts for the financial year 2000/01 reveal that ECGD provided £5.6bn of new export credit guarantee and investment insurance support, a three per cent increase on the previous year.
The Annual Report also contains the first report from the Export Guarantees Advisory Council, which covers the Department's progress in implementing corporate social responsibility through its Business Principles. And for the first time, in the interests of greater transparency, the Annual Report contains a list of export credit guarantees issued to UK exporters.
Minister for Trade and Investment Baroness Symons said:
"ECGD has once again played an important role in contributing to our commitment to UK exporters and investors and supporting jobs throughout the country. These results show the good financial position from which ECGD will be able to continue supporting UK exporters, whilst protecting the interests of the taxpayer, in what is a difficult period for the global economy."
Vivian Brown, ECGD's Chief Executive, added:
"The Annual Report and Resource Accounts show ECGD has provided significant export credit guarantees and insurance to UK exporters last year. They show ECGD has returned an overall surplus of £204 million. This consists of a surplus of £267.5 million on underwriting activities, partly offset by a deficit of £63.2 million on export finance activities. Overall, ECGD made a net contribution to the Exchequer of £205 million during the year, with premium income, net recoveries and interest exceeding expenditure."
Mr Brown explained that ECGD is now working to put in place a dedicated relationship management program for its customers and on further developing existing market, sector and customer expertise.
"We hope that the extent and quality of ECGD's experience will be of crucial importance in the year ahead, not least in providing UK exporters and investors with confidence in the wake of the terrorist attacks of September 11. Whilst these attacks will inevitably affect our financial position, we believe this to be manageable.
"This Report also reflects the expanded expertise and remit of the Export Guarantees Advisory Council. As well as monitoring the competitive position of UK exporters, Council members also monitor the application of ECGD's Business Principles, and the Council reports on its activities in this Annual Report, and finds ECGD has operated in accordance with its Business Principles for 2000/01."
Britain's official export credit agency, benefits the UK economy by helping exporters of UK goods and services win business by providing export credit guarantees, insurance and reinsurance against loss.
One of ECGD's main functions- through its export credit guarantees - is to underwrite bank loans to enable overseas buyers to purchase capital and project related goods and services from the UK, and to insure the return on investments made by UK companies in overseas enterprises.
ECGD's Annual Report and Resource Accounts 2000/01 is published by The Stationery Office and is available from all Stationery Office Bookshops and the Parliamentary Bookshop.
ANNEX A - BULLET POINT SUMMARY
2000/01 1999/00
Overall value of
guarantees and insurance
policies issued £5,662m £5,504m
Of which Overseas
Investment Insurance £939m £797m
Premium Income £109m £102m
Of which Overseas
Investment Insurance £7m £5m
Claims Authorised £298m £296m
Recoveries and Interest £435m £358m
Net contribution to the
Exchequer £205m £128m
REGIONAL ROUND-UP West Midlands - Export Bridges: ECGD provided underwriting support for a £14.9 million contract won by a UK consortium of Kier International and Mabey and Johnson. Mabey and Johnson supplied the steelwork for six flyover and twenty rural bridges from their two factories in Chepstow and Lydney, Gloucestershire, safeguarding 200 jobs in the UK and creating another 50 in Jamaica.
Lincoln - Generating Employment: ALSTOM UK's Lincoln factory supplied the firm's rolling contract to supply gas turbines, spares, parts and associated services to the Mexican state oil company, PEMEX using an ECGD-backed line of credit with HSBC. Over thirty guarantees were issued under the scheme in support of £9.8 million worth of business under this contract.
North East - Marine Specialists: Duco Ltd's factory in the heart of Newcastle, produced submarine cables and equipment for export to South East Asia with insurance support from ECGD.
West Yorkshire - UK Firefighters: a family firm based in Batley, Angloco Ltd, won a £2.5 million contract to provide specialist fire-fighting vehicles, including three front-line airport fire-fighting vehicles, to the Government of Barbados, with a guarantee from ECGD securing the finance. Though a smaller company, Angloco holds an enviable reputation for the quality and reliability of its fire engines, which it began building in 1974.
South Yorkshire - Mining Specialists go East: Doncaster-based British mining and underground construction specialist Cementation Skanska has won part of a £102 million project to construct a new coal mine in Iran. ECGD is supplying £28 million of reinsurance cover for the British goods and services needed including the £10.85 million sub-contract won by Cementation Skanska.
South East - Small is Beautiful: Cort Ltd was the smallest firm ECGD supported in the year with just seven employees. ECGD investment insurance was taken out for security on a US$900,000 investment in the A.S. Makrill processing plant at Harju Maakond in Estonia. Subsequently, the firm has almost doubled its production and is ready to meet growing crabstick demand in Russia and Eastern Europe.
Surrey - University Challenge: Surrey Satellite Technology (SSTL) was another smaller firm to benefit from ECGD support in 2000/01, after the department underwrote a £7.4m loan to help finance an £8.7m contract to supply a micro-satellite system to the Middle East Technical University in Turkey's Scientific and Technical Research Council.
Scotland North East - Fast-stream from Russia: Sonsub Ltd in Aberdeen was one of the firms to benefit from the first major project ECGD has been able to underwrite in Russia since 1998, after they won a US$123m contract alongside Saipem UK to provide goods and services towards the 'Blue Stream' gas pipeline in Russia - a 1,160 km Black Sea pipeline which will take gas from Russia to Turkey.
Scotland South West - Lighting up the Caribbean: Motherwell Bridge Engineering Ltd clinched a US$25m contract with help from an ECGD guarantee as part of the construction of the San Pedro de Macoris power station in the Dominican Republic, a contract which the firm calculated provided full- time work for people in the Motherwell area for 18 months. The company provided offshore mooring and fuel unloading facilities, onshore bunkering, and pipelines connecting to the 300MW power station.
TRADE DEBTS WRITTEN BACK
The Inland Revenue has revised its view of the correct tax treatment of trade debts written back to the profit and loss account. (A trade debt, for this purpose, is a debt which has been allowed as a deduction for tax purposes; it does not include debts incurred for capital or non-allowable purposes, or amounts covered by the loan relationships rules.)
The previous position
Previously the Revenue considered that such a write-back should be treated as a receipt of the trade, profession or vocation only to the extent that it was formally released by the creditor. If an amount was written back but not formally released it was not treated as taxable (so an adjustment was required in the tax computation to deduct the amount concerned). This practice was based on the Revenue's understanding of the 1932 case of British Mexican Petroleum Company Ltd v Jackson; the Revenue will continue to apply it for accounting periods starting on or before 31 December 2001.
The new position
For accounting periods which start after that date the Revenue has revised its interpretation. Amounts written back will be taxed (ie, no deduction will be allowed in the tax computation) whether or not they are formally released - with the exception of debts released as part of a voluntary arrangement.
Voluntary arrangements
Under specific statutory provisions there is no charge to tax when a trade debt is released as part of a voluntary arrangement under the Insolvency Act 1986 or s425 Companies Act 1985. This will remain the case.
'Release'
For these purposes the 'release' of a debt is taken to mean a contractual agreement, with consideration given by the debtor to the creditor (unless the agreement is under seal). It includes a formal waiver of remuneration. A release is not treated as having been given where the creditor merely writes off the debt, fails to send an invoice or fails to present a cheque for payment. Neither is it deemed to be released because the debtor is bankrupt or in liquidation.
The Revenue indicates that: 'Intra-group debt may be released as part of a sale agreement involving a change of control of a company. These transactions usually have to be examined in detail to ascertain what amounts are trade debts and whether there has been a release.'
UK BUSINESSES FIND RESPITE, BUT FOR HOW LONG?
Negative announcements show 458 businesses experienced problems during October
August-October figures represent 23 % increase on previous three months
UK businesses breathed a slight sigh of relief during October but experts remain concerned that the full impact of September 11 is yet to be felt.
KPMG's latest quarterly figures on struggling businesses - extended by one month especially to assess the impact of September 11 - show that 458 businesses across the UK reported difficulties during October, compared to 501 in August and 499 in September. However, the August - October total still represents a sizeable 23% rise on the total of the previous three months.
Despite the sign of some respite, there is concern that further increases are on the way. Certain sectors are now feeling the impact of the events in New York - namely transport, hotels and tourism - and the knock-on effects of this may shortly be felt in other sectors.
The figures are compiled for KPMG by Mandis Information Services Ltd in Nottingham and report the numbers of businesses, whether quoted or unquoted, making negative announcements of any kind on subjects such as profit warnings, redundancies and significant restructurings.
Philip Davidson, Head of Restructuring at KPMG, commented: "While it is pleasing to see some reduction in the Mandis statistics for October the figures are still high. As expected, the `end-user` industries such as travel and leisure are feeling the pinch and others may well now follow."
"For example, there are signs in regions such as the West Midlands, with its high concentration of component manufacturers and precision engineers, that they are now experiencing the knock-on effect of the problems blighting the airlines. The sad irony of that particular situation is that so many firms, having seen the problems in the automotive sector, decided to diversify into higher value, precision engineering aerospace sectors and there was no way they could have foreseen what would happen in September. Many are now having to prepare for life with a reduced order book."
The Mandis figures paint a stark picture of the problems in the national leisure and tourism industries. Having reported only 11 struggling businesses in August, the figures rose to 20 in September and still further to 31 in October. Similar rises were reported by transport and distribution and by the vehicles and associated equipment sectors. Around a quarter of all the announcements made in those sectors throughout the whole of 2001 have been reported in the last two months.
Telecommunications reported its highest figures of the year during August (45) and September (53) before dropping back a little in October. However, this seems to have had a knock-on effect in the electronics sector which rose to its year-long high of 59 in October. Another struggler was the chemicals and pharmaceuticals sector. The number of announcements has risen steadily in recent months - a rise related to the fall in oil prices which is forcing their own product prices down.
Philip Davidson continued: "Another interesting area to look at is retail. The number of struggling businesses in that sector has been very inconsistent on a month-by-month basis. Falling interest rates have boosted people's spending power yet a spate of recent mass redundancies has obviously made some people reconsider their spending plans. While September 11 has resulted in less tourists passing through our shops, it has also resulted in more UK residents spending money on `big ticket` items as they cancel their foreign travel plans. With most forecasts pointing towards consumer confidence remaining strong for Christmas and through until February, we must still be concerned about what will happen in that sector in the New Year. It is vital that retailers put in place contingency plans now to deal with any downturn."
"Overall, it is clear that several service industry sectors are taking the brunt of the September 11 effect but we must be aware that this has not yet fully reverberated down the supply chain. While we can be proud of the resilience that the economy has shown by producing heartening October figures, businesses must be well prepared for whatever lies ahead."
DEBT GUIDELINES TO PROMOTE FAIR DEBT RECOVERY PRACTICE
Water's national consumer body last week welcomed publication of Ofwat's revised debt guidelines as promoting fairer and more sensitive ways of recovering debt. The new guidelines are for public consultation until 31 March 2002.
Ofwat National Customer Council (ONCC) and the ten regional Customer Service Committees (CSCs) have worked with Ofwat in developing the guidelines by building on issues that emerged from a debt seminar held in May 2001.
ONCC Chairman Maurice Terry said: "We want to ensure that the debt guidelines reflect best practice and allow companies flexibility in pursuing unpaid bills: but customers' interests must be fully protected at all stages in the debt recovery process. It is a major issue which has an impact on all customers' bills, not just those in debt.
"We expect water companies to deal with debt recovery in a fair and sensitive way - and third party debt collection agencies engaged by the companies must follow the same principles."
Customers can contact their local CSCs, who will respond to the consultation, with any comments they have on the draft guidelines.
Copies of Ofwat's revised debt guidelines will be available free of charge from the Ofwat library on 0121 625 1373 and on the Ofwat website.
The Ofwat National Customer Council (ONCC) is an independent body, set up by the Director General of Water Services (the Director) to strengthen the representation of water customers' interests. The Council's role is to formulate the views of water customers in England and Wales on matters of national importance and to represent these effectively to the Director, the Government, the European Commission, the media and other interested parties.
ONCC comprises the Chairmen of the ten regional Customer Service Committees (CSCs), statutory bodies set up and maintained by the Director to represent water and sewerage customers in their regions.
http://www.ofwat.gov.uk
Richard Heis and Steve Treharne of KPMG Corporate Recovery on the 18 December 2001 were appointed joint liquidators to undertake the solvent liquidation of The New Millennium Experience Company Limited ("NMEC"), the company which built and operated the Millennium Dome.
Richard Heis, KPMG Corporate Recovery partner and joint liquidator commented:
"We have been appointed to carry out a members' voluntary liquidation, a process which is commonly used to bring to a conclusion the orderly wind-down of a solvent company's affairs. We have worked with the directors in the weeks leading up to the commencement of the solvent liquidation and have every confidence that there will be a smooth and orderly process."
A members' voluntary (solvent) liquidation is a winding-up procedure commonly applied to solvent companies which have completed their purpose. The company's directors initiate the process once they have concluded that its debts can be paid in full and the solvent liquidation commences by shareholder resolution. The Liquidator's role is to realise any remaining assets and settle all remaining liabilities. In the private sector, the decision to place a company into solvent liquidation may be prompted by tax planning considerations within groups of companies or as part of group or company reorganisations or reconstructions.
PRICEWATERHOUSECOOPERS APPOINTED ADMINISTRATIVE RECEIVERS TO NORQUIP LIMITED
Stephen Oldfield and Richard Rees of PricewaterhouseCoopers were appointed on the 9 January 2002 as joint administrative receivers of Norwich-based Norquip Limited.
The directors of Norquip, a manufacturer of Highlifts for the aircraft industry, invited the appointment of administrative receivers following the impact of 11 September on its orderbook, including the loss of an order in excess of £1m.
Joint Administrative Receiver, Stephen Oldfield, of PricewaterhouseCoopers, said:
"Norquip's 56 employees have been informed that the level of orders in hand mean that some immediate redundancies will be necessary. Norquip had about £6m sales last year, and has a dominant market position in the UK for the production of airport Highlifts with a strong reputation worldwide. We will be making strenuous efforts in the very short term to find a buyer for the business as a going concern to preserve the remaining employees' jobs."
John Wayling, Managing Director at Norquip, said:
"The loss of the existing order is a devastating blow just as the market is showing signs of a recovery. We have made strenuous efforts to find new markets for our products in the past few months, but were eventually left with no choice but to call in the Receivers."
Stephen Oldfield also commented that, since the last recession, much of his work has been on business recovery with very few receivership appointments. However, the market conditions for Norquip had turned so dramatically following 11 September that the Directors were left with no alternative but receivership.
Prospective purchasers for the business should contact Sharon D Peryer at PricewaterhouseCoopers on 01603 883267.
VIASYSTEMS TYNESIDE LIMITED SOLD TO CIRCATEX LIMITED
Viasystems Tyneside Limited, which went into administrative receivership on 20 September 2001, has been sold.
Business turnaround specialists from KPMG Corporate Recovery have sold the business and assets at the South Shields factory to Circatex Ltd.
The directors of Viasystems Tyneside Limited requested the appointment of administrative receivers following a slump in the electronics market which had resulted in the company's turnover dropping by 80%.
Peter Terry of KPMG, one of the joint administrative receivers, said: "We are pleased to have secured a future for the business and preserved quite a number of jobs in the process. This is a very good outcome for those concerned."
PRICE GRANT PLC
On 19 December 2001 in the Brighton County Court, Douglas Patrick Price of Trees, Chestnut Avenue, Chichester, West Sussex, PO19 4QD was disqualified for 8 years for his conduct as director of the company.
Price Grant PLC carried on business as consultant engineers from Two Temple Bar Business Park, Strettington Lane, Strettington, Chichester and was wound up by the Court on 10 May 2000 with an estimated deficiency of £195,229.
The matter of unfit conduct found by the court was that:
Mr Price failed to comply with an Order of Brighton County Court dated 26 January 2001 for him to comply with his duties under the Insolvency Act 1986 and co-operate with the Official Receiver.
Mr Price caused Price Grant PLC to adopt a policy of treating the Inland Revenue and HM Customs & excise differently to other classes of creditors and failing to make payments as required in regard to PAYE Income Tax, National Insurance Contributions and Value Added Tax.
The Official Receiver becomes liquidator when a company is compulsorily wound up by the court and has a duty under the Insolvency Act 1986 to investigate the causes of failure and report misconduct under the Company Directors Disqualification Act 1986. Insolvency Practitioners acting as voluntary liquidators, administrative receivers and administrators have a duty to report unfit conduct to The Insolvency Service.
Section 6 of the Company Directors Disqualification Act 1986 allows the court to make a disqualification order of between 2 and 15 years for unfit conduct. This is the section used by The Insolvency Service.
Section 13 of the Company Directors Disqualification Act 1986 states that if a person acts in contravention of a disqualification order that person will be liable on conviction on indictment to imprisonment for not more than 2 years or a fine or both, and on summary conviction to imprisonment for not more than 6 months or a fine not exceeding the statutory maximum or both. Any person with information to suggest that Douglas Patrick Price has acted in contravention of this provision should contact "The Insolvency Service Hotline" on 0845 6013546.
JUST GROUP PLC: IN ADMINISTRATION
Allan Graham and Mick McLoughlin of KPMG Corporate Recovery have today been appointed Administrators to Just Group plc.
The AIM-listed children's media entertainment company based in London, employs 78 staff in the UK in three locations including London, Oldham and Bakewell, Derbyshire.
Just Group plc has four key areas of activity, namely licensing and exploitation of children's character rights, publishing, toy sourcing and the distribution of children's video and audio products. The group has interests in intellectual property rights to a number of children's characters, including Butt Ugly Martians. The publishing division consists of two separate businesses. Included in this are Marshall Editions (a publisher of reference books) and a children's comic publisher.
Allan Graham, Administrator and KPMG Corporate Recovery Partner commented:
"The group has made substantial losses in recent periods. However, despite this, the business is a potentially attractive proposition going forward due to the strength of the intellectual property rights to a number of brands it holds. These include Butt Ugly Martians, Macdonald's Farm, Pinky & Perky and Wide Eye.
"We are aiming to realise the value of the assets by either securing a sale of the business as a whole or as a partial sale, and we will also consider other options to maximise returns to creditors."
PRICEWATERHOUSECOOPERS TO ASSIST IN RESTRUCTURING OF JAMES THIN LIMITED
Bruce Cartwright and Iain Bennet, partners in PricewaterhouseCoopers, were appointed Interim Managers of James Thin Limited by the Edinburgh Court of Session today. The appointment follows the presentation of a petition by the Directors of the Company.
James Thin Limited is a well-known bookseller with its origins in Edinburgh. It currently trades from 32 stores across the UK and employs some 450 people.
Ainslie Thin, Chairman of James Thin Limited stated:
"Adverse trading conditions in some locations have required the Board to review its forward strategy for the business.
"To safeguard the interests of creditors, customers and employees the Board has on 10 January 2002 applied to the Court of Session for an Administration Order. In the meantime, the Court has appointed Iain Bennet and Bruce Cartwright of PricewaterhouseCoopers to be Interim Managers of the company.
"The Board is satisfied that this step offers the best opportunity for creditors to receive payment and for the business of James Thin to be continued, so far as possible. We can assure customers that the James Thin shops remain open for business."
Following the appointment, the Interim Managers commented:
"The Directors have requested our assistance in formulating restructuring proposals for the company which will seek to achieve the preservation of a significant part of the business. Although a number of stores are underperforming and will be closed there appears to be a substantial core business with an established brand and reputation. Our aim is to continue to trade this core business and to sell it as a going concern, preferably in a single transaction.
"To achieve these aims the Directors have sought the protection of an Administration order."
James Thin has 32 UK outlets including 12 in Edinburgh and seven others in Scotland; plus Carlisle, Huddersfield (2), Basingstoke, Canterbury, Fareham, Guildford, Harlow, Hounslow, Ilford, Lakeside, Norwich, Portsmouth, Southsea, Uxbridge, Weston, Wimbledon, Woking and Worthing in England. The company also trades on the Internet and has a call centre.
James Thin Limited employs approximately 450 members of staff.
The current turnover is in the region of £26 million.
The family firm was established by James Thin at 14 Infirmary Street, Edinburgh and opened for business at 8.30am on Monday 3 April 1848.
*** FORTHCOMING CREDITORS MEETINGS ***
For detailed information on the British Isles insolvency's (liquidation's, receiverships, administrations, dividends, creditors) please visit http://www.insolvency.com/cgi-bin/gazette/liq/nots.pl
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Springhealth announced pre-tax losses of 0.629 million pounds, on turnover of 11.8 million, for the year ending 31st August 2001.
Compaq Computer, the world's second-largest PC maker, said that surprisingly strong fourth-quarter sales, particularly in Europe, would produce a modest profit rather than the expected loss.
SAP, Europe's leading software company, said that sales in the fourth quarter had exceeded analysts' expectations.
America's Justice Department confirmed that it was pursuing a criminal investigation into events surrounding the bankruptcy of Enron, the erstwhile energy-trading giant.
AOL Time Warner is to write off as much as $60 billion in the first quarter thanks to new rules over accounting for “goodwill”.
AT&T is to take a provision of $1 billion in the latest quarter, mainly to pay for 10,000 job cuts.
EasyJet the UK's budget airline showed the bullishness of Europe's low-cost airlines with plans to buy 75 new passenger jets worth some $4 billion.
Club Mediterranée, a French resort group, said it would report losses for 2001 of euro70m ($62m).
The Detroit motor show was dominated by gloom over expected job cuts at Ford, the world's second-biggest car maker.
Vizzavi, a European Internet portal that came rather late to the game, said its chief executive and 100 other staff would go.
Alcoa, the world's biggest aluminium firm, launched a bid for the 60% that it does not yet own of Norway's number two aluminium concern, Elkem, valuing the company at some $850m.
Yves Saint Laurent said that he would hang up his hat.
MERGER NEWS
The Secretary of State for Trade and Industry has decided, on the information at present before him, and in accordance with the recommendation of the Director General of Fair Trading, not to refer the following merger/s to the Monopolies and Mergers Commission under the provisions of the Fair Trading Act 1973:Proposed acquisition by Tarmac Ltd of the Durox Building Products business from RMC Group plc
Daiwa Bank Group joint venture between The Daiwa Bank Limited, The Kinki Osaka Bank Limited, The Nara Bank Limited and The Asahi Bank Limited
LINPAC GROUP LIMITED/MCKECHNIE PAXTON HOLDINGS LIMITED: COMPETITION COMMISSION INVITES EVIDENCE
Melanie Johnson, Competition Minister, has asked the Competition Commission to look into the acquisition by Linpac Group Limited of McKechnie Paxton Holdings Limited.
The Commission will look at all aspects of the merger's likely effects on the public interest, including the market for the supply of returnable transit products, such as bulk and customised packaging, bakery and supermarket trays, in the UK. The Commission has been asked to report to the Secretary of State for Trade and Industry by 10 April 2002. The report will be published later.
The Commission would like to hear from all interested parties in writing by 16 February. If you wish to submit evidence please write to:
The Reference Secretary (Linpac)
Competition Commission
New Court
48 Carey Street
London WC2A 2JT
Or email: linpac@competition-commission.gsi.gov.uk
Denise Kingsmill, a Commission Deputy Chairman, will chair the inquiry. The other members of the group are currently being appointed.
JOHNSON REFERS NEOPOST'S PROPOSED ACQUISITION OF ASCOM HOLDING
The proposed acquisition by Neopost SA of Ascom Holding AG was referred to the Competition Commission (CC) today by Competition Minister, Melanie Johnson. Her decision was in accordance with the advice of the Director General of Fair Trading (DGFT).
Miss Johnson said:
"The DGFT has advised me that this acquisition may raise competition concerns in the market for postal franking machines in the UK. The transaction would bring together the second and third largest market players in the UK.
"The DGFT has highlighted concerns regarding increased scope to exercise market power in a sector which is considered to have high barriers to entry and modest buyer power. Whilst the DGFT recognises that there may be competitive benefits arising from the creation of the merged company he has concluded that a more in-depth investigation is necessary. He has therefore recommended reference to the CC.
"I have carefully considered the advice and agree with the conclusions. I am therefore referring the proposal to the CC so that it can be fully investigated."
The decision to make a reference to the CC does not in any way prejudge the question of whether or not the merger would be against the public interest. It is for the CC to report on this after investigation.
The CC will report by 17 April 2002.
Neopost SA has proposed the acquisition of Ascom (UK) Holding Ltd and its subsidiaries, Mailing Systems Ltd and Ascom Leasing Ltd. Neopost is also acquiring the assets of Ascom in Germany and the US.
Monday 14th to Thursday 17th January 2002 ICM Examinations Thursday 24 January 2002 Sussex & Surrey Branch of the ICM Annual General Meeting Followed by Dinner. Speaker: To be advised Venue - The Imperial Hotel, Hove Time: 7.00 for 7.30 p.m. 27 - 29 January 2002 FCIB - A Global Association of Executives in Finance, Credit & International Business 108th International Conference & Workshop In Europe Amsterdam Marriott Hotel The Netherlands For further information Telephone: + 44 (0) 1865 481 630 Fax: + 44 (0) 1865 481 482 Email: timlane@fcib-europe.org Website: www.fcibglobal.com 18 - 22 February Advanced Credit Analysis FT Knowledge Course 80 Strand, London For further details tel 020 7010 2508 Website www.nyif.com/emea Email finlearn@ftknowledge.com Friday 22 February 2002 Debt Sale & Purchase Credit Today, Savoy Hotel, London The second annual debt sale and purchase conference chaired by Rob Levick. For details e-mail carleen@credittoday.co.uk 6 - 7 March 2002 Softworld Accounting & Finance Software and E-business event. Grand Hall, Olympia, London Register in advance at http://www.softworld.co.uk/afs2002/register.html 11-13 March 2002 BCR's 2002 Receivables Finance International Conference Four Seasons Hotel, Singapore Website http://www.factorscan.com/static/asianpacific.htm Tel: +44 208 466 6987 Fax: +44 208 466 0654 Email mb@bcrpub.co.uk Wednesday 13 March 2002 ICM National Conference and Exhibition Heritage Motor Centre, Gaydon near Warwick For full details tel 01780-722907 or e-mail training@icm.org.uk 4 April Credit Today Awards 2002 Grosvenor House Park Lane London Black Tie Single Booking 120.00 plus vat. 10% discount to Credit Today subscribers Telephone 01403-786-726 or 020-7407-4700 E-mail sgc@mag-subs.demon.co.uk or awards@credittoday.co.uk or visit www.credittoday.co.uk 7 - 13 April The Credit Academy, 7 day Residential Course FT Knowledge Financial Learning London, 80 Strand, WC2R 0RL Contact Jane Lees - E-mail jane.lees@nyif.com +44 (0)20 7010 2568 17 and 18 April Credit 2002 - The Definitive Event for the Commercial and Consumer Credit Industry Brompton Hall, Earls Court, London For more information contact vtolson@advanstar.com 22 - 28 April The Credit Academy, 7 day Residential Course FT Knowledge Financial Learning Venue - Hong Kong, location tbc Time: 08.30 Contact Jane Lees - E-mail jane.lees@nyif.com Tel +44 (0)20 7010 2568 10 - 16 June The Credit Academy, 7 day Residential Course FT Knowledge Financial Learning Venue - New York, location tbc Contact Jane Lees - E-mail jane.lees@nyif.com Tel +44 (0)20 7010 2568 21 June The ICM Fellows Luncheon Churchill Room, The House of Commons Westminster, London Guest Speaker Norman Lamb MP Cost 49.50 GBP inc of vat and all drinks Contact ICM Training Department on 01780-722907 E-mail sheila@icm.org.uk 3 to 5 July Receivables Finance International Europe (2002) Marriott Hotel, Prague Tel: +44 208 466 6987 Fax: +44 208 466 0654 Email mb@bcrpub.co.uk Wednesday to Friday 9 to 10 October International Credit Exhibition & Conference Raffles City Convention Centre Level 4 Swissotel Singapore , The Stamford Singapore Website http://www.internationalcredit001.com/ E-mail info@internationalcredit001.com If you have an event coming up which is credit management related and you would like us to make an entry in the Diary section please e-mail the details to jarnold@creditman.co.uk
Alternatively you may use the email interface. email creditman-request@mailing-list.cyberstrider.net with the word Help in the subject line for details.
Business Credit Management UK: John Arnold jarnold@creditman.co.uk
Business Credit News UK: Pat Williams pwilliams@creditman.co.uk