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 3
Dated: 20 January 2001
Welcome to the Business Credit News UK.
In this weeks edition you will find the following topics.
UKCBI EXPRESSES "SERIOUS DOUBTS" ABOUT COMMITMENT OF SOME TO EU ECONOMIC REFORM
The CBI on Tuesday said British business leaders have "serious doubts" about the commitment of some EU countries to economic reform.
Its comments follow publication of a progress report on the Lisbon summit and a consultation paper on corporate restructuring, both from the European Commission.
John Cridland, CBI Deputy Director-General, said: "It is clear that many nations are dragging their feet on economic reform. We have to persuade the EU that failure to implement legislation will limit the ability to weather economic problems.
"Introduction of euro notes and coins will increase competition and that means companies will need more flexibility, not less. It is vital that the EU focusses on job creation, not just job protection. We have some way to go before winning this argument."
Mr Cridland said CBI members would be sceptical about EU proposals on corporate restructuring. "The document talks about identifying best practice but many employers will fear that this could be a slippery slope to legislation.
"We are committed to promoting a range of best practice approaches, but we do not want new laws that would further erode a manager's ability to manage. There is already a raft of stringent regulation covering the area with the ink barely dry on employee consultation laws."
MANUFACTURERS CONTINUE TO STRUGGLE AS JOBS SLIDE
Reacting to the latest labour market data released last Wednesday by the Office of National Statistics showing a rise in unemployment claimants in December, Ian Fletcher, Chief Economist at the British Chambers of Commerce said:
"This is possibly just the tip of an iceberg and continues the disappointing trend of recent months. Manufacturing reports heavy job losses almost daily and services are no longer compensating, with job creation in the sector stalling.
"The greatest misfortune to hit our economy could yet turn out to be not consumer spending growing too rapidly, but the opposite, it slowing too quickly, and the MPC should remain vigilant to the risk."
SMALL BUSINESSES OFFERED MAKEOVER TO ATTRACT BIG BUSINESS INVESTORS
David Irwin invites bids for pilot programmes
Small firms looking for big financial backers could soon get the makeover they need to attract the right investor following the launch of a new Small Business Service bidding round announced on the 15 January 2002.
Organisations can bid for funding to develop pilot projects that will look at the best ways of setting up `business salons´. The funding will be taken from the £180 million Enterprise Fund established in 1998. By addressing the issue of why small businesses find it hard to take advantage of the various equity capital schemes currently available it is hoped more small firms will get the investment they need to grow and prosper.
Pilot projects will use workshops, diagnostic reviews and "investment grooming" sessions. Help will be tailored to the needs of geographical areas and individual businesses, and the most successful models are likely to be rolled out to a wider audience.
Head of the Small Business Service David Irwin said:
"In the last few years there has been a huge growth in the supply of risk capital to small firms. But it is clear that many small businesses with growth potential are missing out on these opportunities because they do not know how to turn their business proposals into attractive investment propositions.
"The SBS is looking to bridge that gap by supporting a small number of pilot projects aimed at testing the best ways to improve SMEs´ investment readiness. This means that in time, these opportunities will become available to a much wider range of small firms."
A recent Canadian study of investors highlighted the main reasons why small businesses fail to find investors. These include:
lack of expertise to turn an idea into a viable business;
uninspiring business plan;
lack of focus; and
absence of a Unique Selling Point.
Copies of the bidding guidance can be obtained from Bill Barrott, SBS Investment Directorate, St Mary´s House, C/o Moorfoot, Sheffield S1 4PQ, Tel: 0114 259 7325, email Bill.Barrot@SBS.gsi.gov.uk
The guidance can also be accessed through the following websites: www.businessadviceonline.org and www.sbs.gov.uk
A consultation exercise was held earlier this year, and identified a variety of potential approaches to helping SMEs become investment ready.
The closing date for bids is 31 January 2002.
LARGER BUY-OUTS HIT LOWEST LEVEL SINCE 1995
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."
Graydon UK providers of credit risk management services, are preparing to launch a new product with their new web-decisioning credit application processing solution that will be available to businesses involved in B2B e-commerce via the Internet.
"XSellence" was recently developed by Graydon with the aim to enable its customers - which include Web shops, portals and traditional businesses - to improve their customer relationships, sales process, credit checking efficiencies and to boost e-commerce sales. All these aims are achieved by digitally identifying and validating clients, checking their credit worthiness and recommending payment options in real-time in a secure online environment.
"Early interest in XSellence will come from a variety of business sectors, including large distributors and wholesalers wishing to sell to other businesses via the Internet," - notes Gordon Skaljak, Marketing Director for Graydon UK Ltd. "With this new development, Graydon is helping its customers to quickly and easily migrate traditional paper-based transactions to the Internet with complete confidence. XSellence will allow Graydon to offer a complete solution that provides the necessary security framework to conduct trusted transactions on the Internet."
The launch in the UK is planned for January 2002. "Our plan is to continue to enhance the service by offering merchants the opportunity of selling to businesses throughout Europe as XSellence becomes a pan-European solution." - adds Gordon Skaljak. "It is anticipated that UK-based merchants will be able to transact business over the Internet with other UK, Dutch, Irish and Belgium businesses before the end of 2002, thanks to Graydon's membership of Eurogate network."
About Graydon UK
Graydon UK is one of the leading database information providers in credit risk management. The company helps clients reduce the uncertainty of doing business by providing a complete, differentiated and high-quality package of credit risk management services and decisioning solutions.
Graydon is a founder member of the Eurogate Network, a pan-European alliance of information providers that offer a wealth of real-time management information on the current financial standing of companies throughout Europe.
The Graydon group is owned by Gerling NCM, Coface and Hermes, three of Europe's leading credit insurance organisations. With its network of branch offices, partnerships and alliances, Graydon today services the world of commerce from more than 130 offices worldwide.
You can obtain Graydon UK Comprehensive Reports for £20.00 by going to http://www.creditman.co.uk/graydon/home.html
International Reports from £47.00 can be obtained by going to http://www.creditman.co.uk/graydon/international.html
CHORLEY USED CAR DEALER LOSES APPEAL TO RETAIN CONSUMER CREDIT LICENCE
An appeal by Edward Frank Joynt, a Chorley used car dealer, against the decision to revoke his licence under the Consumer Credit Act 1974, has been refused by the Secretary of State for Trade and Industry following advice from an independent tribunal. My Joynt trades as Joycraft at Swansey Car Sales, 350 Preston Road in Clayton-le-Woods, Chorley.
Mr Joynt appealed to the Secretary of State after the Director General of Fair Trading (DGFT) informed him in May 2001 that he had decided that Mr Joynt was not a "fit person" to hold a consumer credit licence.
The Secretary of State appointed a tribunal to hear the appeal and the parties to the appeal put their case at a public hearing in Manchester on 15 November 2001. The tribunal, in its report, recommended that the appeal should not be allowed.
My Joynt was granted a licence under the Consumer Credit Act in March 1999, but the tribunal found that Mr Joynt is not now a fit person to hold such a licence. The tribunal's finding is based in particular on:
- Mr Joynt's convictions in 1996 and 2000 (including on each occasion a conviction involving supplying a car in an unroadworthy condition);
- the fact that the convictions in 2000 followed a warning letter from the DGFT; and
- other evidence of conduct falling below standards expected of a licence holder.
Accordingly, the tribunal recommended that the appeal should not be upheld. It is the policy of the Secretary of State to accept the recommendations of the tribunal, unless she considers that they are wrong in law.
The Consumer Credit Act 1974 sets up a licensing regime for individuals, companies and firms carrying on regulated consumer credit or consumer hire business. Licences are issued by the DGFT, and it is a criminal offence to engage in regulated consumer credit or consumer hire business without one.
The DGFT will not issue a licence to anyone he considers is not a "fit person" to engage in the business activities which the licence would cover. If he considers that the licensee is no longer a "fit person", the DGFT has the power to revoke the licence he has issued or to refuse to renew an expired licence. The DGFT makes this assessment taking into account all the relevant circumstances. There are a number of matters which the Consumer Credit Act particularly requires him to take into account, among which are evidence that the trader has contravened provisions of the Consumer Credit Act or other legislation regulating transactions with individuals, or has engaged in deceitful, oppressive or otherwise unfair or improper business practices.
Before the DGFT makes a final decision to revoke or renew a licence or to refuse an application for a licence, the trader concerned can put his or her side of the story to an Adjudication Officer at the Office of Fair Trading who acts on behalf of the DGFT.
If the DGFT decides to revoke a licence or to refuse the application for a licence or the renewal of an existing one, he tells the trader formally of his decision. The trader then has the opportunity to appeal to the Secretary of State for Trade and Industry.
Appeals to the Secretary of State under the Consumer Credit Act are heard by a tribunal of independent persons, appointed for that purpose by the Secretary of State. Both the DGFT and the trader can argue their case before the tribunal. The tribunal then decides whether it thinks the trader is a "fit person" to hold a licence under the Act and submits a detailed report to the Secretary of State with a recommendation about whether the Secretary of State should allow or dismiss the appeal. It is the policy of the Secretary of State to accept the recommendations of the tribunal, unless they are wrong in law.
Once the Secretary of State decides that an appeal should be dismissed or allowed, she notifies the trader and the DGFT of her decision. The trader then has a further right of appeal, on a point of law, to the High Court.
SCOTTISH SHERIFF OFFICERS NEW IMAGE?
Sheriff Officers were severely criticised when the enforcement debate was taking place before the Scottish parliament. Was this justified and was their image tarnished?
It is this body of individuals, appointed by the Court but operating independently, who are charged with Scottish Judgment enforcement. As such their role is “key” within the judicial system. Indeed, without them it is hard to conceive how the process could function at all.
Unlike in England where there are Certificated Bailiffs, Bailiffs and High Court Sheriffs the Scottish Sheriff Officer enforces all Sheriff Court Decrees, (Judgments). This effectively means as a matter of routine they carry out diligence (the generic term for Scottish judgment enforcement) on their clients’ instructions for all types of debt, including consumer and commercial. In England the Under Sheriffs regard themselves as being quite far apart from their Certificated Bailiff cousins – in fact they may even deny being related at all! Indeed they not even “sully their hands” with the types of debt the Certificated Bailiff deals with and often distance themselves from this body –possibly because of the type of debt and , perhaps, the possible unwarranted reputation associated with Certificated Bailiffs.
The Scottish Sheriff Officer, however, does not have this luxury and is obliged to enforce all types of debt; “the good, the bad and the ugly”.
In particular some of the Sheriff Officers have responsibility to enforce Council Tax arrears.
This type of debt enforcement would have been put out to tender by the various councils to selected Sheriff Officers firms. Those charged with its enforcement ,having successfully won the tender, would have entered into private contractual arrangements with the various councils.
Historically many Scottish councils have a dreadful records with their credit control procedures. What many credit controllers would consider basic credit control filtering procedures, such as profiling debtors and telephoning debtors prior to judgment enforcement or court action ,are simply not carried through or, perhaps, not even recognised. This may be part of the reason why many councils have dreadful Council Tax arrears which politically are unacceptable.
It is to the Sheriff Officers to whom the councils turn to have these arrears reduced. Put simply the more the Sheriff Officers collect the greater the tax arrears are reduced which will obviously be good news for the councils. Sheriff Officers enforce council tax by way of Summary Warrant. This type of procedure bypasses the normal court process. In effect councils are not obliged to traverse the long and complex route through the Sheriff Court to achieve Judgment. Basically the councils apply for a form which the court will automatically provide. The Summary Warrant is a virtually automatic path to enforcement.
During the poinding and warrant sale debate many examples of unadvisable and totally ineffective enforcement were given to the Parliament’s Social Inclusion Committee. For example, shortly before the debate, evidence was given of an unfortunate woman with Council Tax arrears whose washing machine had been poinded. This lady was on benefit and apparently should not have been paying Council Tax at all. Nevertheless the poinding caused an outrage particularly because she was a single mother with an incontinent child.
With Tommy Sheridan’s Members Abolition Bill having been passed by the Parliament (but not to be implemented until December 2002), the Parliament’s Justice Minister, Jim Wallace, invited a Working Group to come up with an alternative to the current system. This forms the recommendations contained in the report “Striking the Balance”. In effect this report calls for targeted enforcement with compulsory sale orders only being granted by the court in respect of those individuals who are clearly able to pay their debts with sufficient assets but simply refuse to do so. Those debtors having financial difficulties will have adequate opportunity to disclose this prior to and after judgment with the result that compulsory sale orders will be rare indeed.
Throughout the entire abolition debate the criticism levelled at Sheriff Officers solely related to Council Tax collection. There was never any mention of Sheriff Officers being heavy handed in relation to a commercial debt. However, there is no doubt their reputation had been tarnished. Despite their best efforts at public relations their professional body, the Society of Messengers at Arms and Sheriff Officers, were unable to remedy the situation.
One of the Sheriff Officers’ main arguments was that they were simply carrying out the council’s instructions. The councils, in turn, were trying to recover an unacceptably large volume of Council Tax arrears. It emerged throughout the enforcement debate that the councils were not separating the “wheat from the chaff” before the Summary Warrants were being passed to the Sheriff Officers. In effect the Sheriff Officers were being instructed to enforce the Warrants against many of those who simply were not in a position to satisfy the sums due to the Council. To put it simply the debt had not been profiled.
Those castigating the Sheriff Officers quickly pointed out they were only too keen in accepting instruction and attempting enforcement in any kind because they had a financial incentive to do so. This was because each time diligence was carried out a fee would be payable. So it was put to the Sheriff Officers that they had every incentive to enforce the debt whether or not the recovery prospects were good, bad or indifferent. Coupled with this that they had, in effect, standing orders to operate in this fashion did nothing to enhance their reputation in the publics' eyes..
Small wonder Tommy Sheridan, whose Members Bill introduced the abolition measure, was able to say this type of enforcement was a means of punishing the poor and that the Sheriff Officers were “Rottweillers in Suits” and “Bully Boys”.
In an attempt to change their image the Sheriff Officers are now attempting to fight back. They say their job title has been “tarnished in the eyes of the Scottish public”. The Sheriff Officers’ Society say they are concerned about “unreasonable and unjustified criticism”. What they want to do is to change their name. They have suggested as a new designation possibly “Officer of Court”.
It was reported on January 17th in the Herald newspaper that the Sheriff Officers were concerned the criticisms levelled against them were unreasonable and without foundation and “had only served to lessen their standing in the eyes of the public”.
Saying that “Sheriff Officers have a difficult and key role to play within the Scottish judicial system” the Sheriff Officers have said they had not been given an adequate opportunity to respond to the criticisms levelled against them. They are concerned such unjustified comments and incorrect media reporting have merely served to make the work of the Sheriff Officer even more difficult and has led to individuals who find themselves interfacing with the Sheriff Officers holding a “pre-conceived erroneous idea” of them.
Whether or not a change of title will make any difference to their image has to be seen. After all “a rose is a rose” by any other name. Certainly Tommy Sheridan is unimpressed and is reported to have said “these guys make a living from the despair and poverty of pensioners and lone parents, many of whom feel threatened and harassed by the individuals more concerned with extracting their pound of flesh than acting as independent Officers of Court. If they want a new label then they ought to wind up the debt collection companies attached to all of these firms so that there can be genuine independence and not a financial interest in pursuit of those in debt.
On a wider note, perhaps those involved with the English Judgment review can appreciate that the Scottish review is entirely politicised. In England what is being attempted is to have a more effective enforcement regime. In contrast in Scotland political criticism was levied because the system was seen to be “too effective”.
In saying that the body politic in Scotland does appreciate the requirement for there to be an effective means to ensure that those entering into legally binding obligations who simply refuse to honour them must be subject to a judicial process obliging them to pay their debts. It is recognised this can only be achieved by a fair and reasonable system of judgment enforcement which will have to be carried out by some body of persons – no matter what they are called.
Contributed by Stephen Cowan
Yuill & Kyle,
Debt Recovery Lawyers, Scotland.
Tel 0141 572 4251
www.debtscotland.com
Email scowan@yuill-kyle.co.uk
BUSINESSES MUST MANAGE THE CONFIDENCE OF LENDERS DURING UNCERTAIN TIMES ADVISES KPMG RESTRUCTURING
Significant uncertainty in the economic climate and market volatility are forcing management to re-think their agendas. With the sustainability of consumer spending, the scale and timing of a US upturn, interest rate movements and the impact of the Euro occurring at once, there are many factors causing increased unpredictability for business managers.
Instead of confidently building for growth, many should be focusing on staying in control and retaining the confidence of key stakeholders, most commonly their banks and bond holders. Philip Davidson, head of KPMG Restructuring, says that a high level of uncertainty can result in fire-fighting actions rather than proactive management of problems.
Here, Philip Davidson gives the following key words of advice to businesses on managing in uncertain times:
Before you can manage your future, you must understand where you are – Objectively and in depth. This requires an understanding of the business’ current position in terms of strategy, finance and the concerns of lenders. Before you can address any problems, you must understand how big they are.
Lead, don’t follow – Individual sectors can be hit by a variety of external uncertainties. Unrest about a sector can cause bankers and investors to lose confidence in the future of all companies in that sector. Management have a choice – accept that they can do nothing very different from others in the sector or reject the status quo and develop strategies that shape their own future. Lenders are much more likely to support individual businesses that are taking a lead and being proactive.
Communicate with your bank and investors – As uncertainty increases, management often adopt a ‘head in the sand’ mentality and hide issues from their lenders. A business which fails to communicate properly will be misunderstood and in the absence of proactive, clear messages, lenders will form their judgments on the basis of incomplete or inaccurate information.
Adopt a ‘no surprises’ culture – Lenders and investors do not like broken promises or unwelcome surprises. Understand your stakeholders’ perspectives and ensure you address their concerns. Be proactive in talking to them and ensure that a ‘no surprises’ culture is embedded within the business. Good communication is vital to managing perception and dispelling rumours.
Build robust plans and forecasts – This includes detailed weekly or even daily cash flow forecasts. Understand the key drivers of profitability and the factors that influence them. It’s vital to recognise your business’s capabilities and generate plans which are realistic. Communicate these plans to your lenders and show them that you’ve built your plans in a different, more thorough way than previously. However, beware – overly optimistic or unrealistic forecasts severely damage management credibility.
Nothing ever goes totally to plan! - Management actively need to track future performance and have control mechanisms in place to ensure that they can react quickly if things start to go wrong. Speed to react and agility are vital, especially when times are uncertain. Contingency plans must ensure that you can always deliver your promises.
Rebuild performance – Accelerated profit improvement can rapidly ensure confidence with your lenders and help you cope with unexpected hiccups. Adopt a ‘lean’ approach throughout the business. Businesses must start to think about identifying ways of protecting margins and cutting costs, as well as finding ways of achieving greater output from existing resources. Again beware – don’t chase turnover at the expense of margins. Agility is more important than size.
Seek expert professional advice as soon as possible – As uncertainty increases, shareholder confidence in the future of the business can decline. Seeking professional help at an early state can help you maintain control and rebuild confidence with key lenders and investors. Advisers can guide management through discussions with stakeholders, provide help to plan and manage cash and help build and implement a credible restructuring strategy. Philip Davidson continues: “Many companies have built management and financial and control structures based on previous growth strategies. Unless early action is taken to adapt these structures to the new uncertainties in the market, businesses could be facing potential cash flow difficulties and increased scrutiny from their lenders.
“Business advisers can help build strategies and plans that allow management to adapt to an increase in uncertainty. It’s important to ensure these plans are robust to open access to alternative funding sources and maintain the support of existing lenders.”
The High Court, on the petition of the Financial Services Authority (FSA), granted an order on the 17 January 2002 for the compulsory winding-up of an authorised Independent Financial Adviser, Albion Management Services Limited (Albion). The Official Receiver London was appointed liquidator.
The FSA asked the Court to wind up Albion compulsorily on the grounds that Albion was insolvent because it did not have the means to make up a shortfall of about £1million in client assets. Albion had been holding assets, such as shares, on behalf of its clients, some of which now appear to be missing. In addition, the FSA alleged in the High Court that Albion had misrepresented the true position to clients over a period of many years.
Earlier regulatory actions by the FSA and the FSA's then subsidiary, the Personal Investment Authority (PIA), to protect investors' interests included suspending Albion's authorisation to conduct investment business on 15 November 2001. Albion was also prohibited from dealing with assets and the FSA took possession of certain valuable securities for safekeeping. On the FSA's application, the High Court appointed the Official Receiver London as Provisional Liquidator on 30 November 2001. Creditors of Albion should make their claims to The Official Receiver, for attention of Mr Marc Symons, Public Interest Unit, Insolvency Service, 21 Bloomsbury Street, London WC1B 3SS. In due course, once the full extent of losses is known, investors may apply for compensation to the Financial Services Compensation Scheme.
From an early stage in its investigation the FSA has maintained close liaison with the Northumbria police, which is continuing.
The petition for the compulsory winding-up was made under section 72 of the Financial Services Act 1986 on 30 November 2001 before the Financial Services and Markets Act came into full force at midnight on the same day. The Personal Investment Authority was the regulator for Albion Management Services Ltd until midnight 30 November 2001.
Albion Management Services Ltd's address was 19 Olive Street, Sunderland SR1 3PE. Albion Management Services was previously known as Albion Investment Management Ltd.
The Financial Services Compensation Scheme is located at 7th floor, Lloyds Chambers, 1 Portsoken Street, London, E1 8BN. It can be contacted on: 020 7892 7300. The maximum level of compensation that the Scheme can pay out on a claim against an investment firm is currently £48,000 (100% of £30,000 and 90% of the next £20,000).
The Official Receiver is always appointed as liquidator following a compulsory winding-up order for a company. The Official Receiver's Office is part of the Insolvency Service, a government agency.
The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000; maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.
The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.
Public: FSA Consumer Helpline 0845 606 1234
Website: http://www.fsa.gov.uk
LAND ROVER : KPMG PUSHES FOR NEW TALKS
Receivers at KPMG Corporate Recovery (appointed 3 December 2001) on the 14 January confirmed their desire to negotiate with Land Rover to secure UPF's future and safeguard the continued production of the Land Rover Discovery.
KPMG's legal requirement as receiver is to achieve maximum value for the assets of UPF, including UPF's supplier relationship with Land Rover Group. Mark Orton, KPMG Corporate Recovery Partner and administrative receiver of UPF, commented:
"As receiver to UPF, I have a duty to obtain the best price for the assets of the business, including treating Land Rover's reliance on UPF as a valuable asset. We are also trying to protect the future of the business, and the people who work there.
"On Friday, I reaffirmed my desire to meet with Land Rover or Ford at any time, either in the UK or the US. Whilst I understand Ford's concern, I hope they will understand our legal duties and therefore take us up on our offer to reach a negotiated settlement."
While attempts are being made to find a settlement, UPF is still being traded as normal, and supply of parts to Land Rover Group is being maintained for the time being.
A precedent for this kind of dispute was set two years ago following the demise of Transtec when receivers asked Ford to agree to a new five year contract and a 60% price increase. In that case, Mr Justice Jacobs ruled that, "It is his (a receiver's) job to get in as much money as he can". He stated that the receivers had acted entirely properly as they were entitled to exploit a customer's vulnerability since their prime responsibility was to raise money to repay creditors.
KPMG Corporate Recovery has over 400 professional staff in 22 offices around the UK and provides two distinct types of service: advice and assistance to insolvent companies, their creditors, and their other stakeholders (known as Insolvency Services); and restructuring advice to companies who are underperforming or experiencing liquidity problems (known as Restructuring Services).
JAMES THIN LTD (UNDER INTERIM MANAGEMENT)
Interim Managers from PricewaterhouseCoopers appointed to James Thin Limited have completed an initial assessment of the business and have announced details of the proposed restructuring.
Bruce Cartwright, PricewaterhouseCoopers partner, commented:
"Following our initial review we remain of the opinion that there is a substantial core business with an established brand and reputation. However, it is necessary to take immediate action to preserve the core business and this will unfortunately result in certain shop outlets being sold or closed. As a result a total of 60 people will be made redundant with immediate effect.
"The company currently operates 30 outlets in the UK. The staff have been advised that seven of these outlets (including five shops) have been identified for immediate sale or closure. In the event that it is not feasible to sell these five shops then they will be closed by early February with a further 68 employees based at these shops facing redundancy.
"The 60 employees based at both the company's head office in Edinburgh and retained trading sites are to be made redundant with immediate effect.
"The staff have been advised of the current position and we would like to thank them all for the co-operation and understanding they have shown during this time. We would also like to thank the customer base who have continued to actively support the company at all locations."
The following shops face immediate disposal or closure: Ilford - 10 staff, Uxbridge - 16 staff, Norwich - 11 staff, Hounslow - 14 staff and Carlisle - 17 staff.
The call centre and web site sales outlets will also be suspended and the number of staff employed at these outlets is included in the Head Office redundancy figure.
*** 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
TW LW TW LW
USA 1.43 1.44 Canada 2.31 2.31
Austria 22.47 22.32 Portugal 327.45 325.24
France 10.71 10.64 Belgium 65.89 65.44
Finland 9.71 9.64 Italy 3162.65 3141.24
Germany 3.19 3.17 Sweden 15.14 14.94
Holland 3.59 3.57 Switzerland 2.39 2.40
Spain 271.77 269.93 Ireland 1.28 1.27
Australia 2.80 2.76 Denmark 12.13 12.05
Hong Kong 11.22 11.27 Euro 1.63 1.62
Africa Com 16.69 16.75 Saudi Arabia 5.39 5.42
India 69.45 69.95 Malaysia 5.46 5.49
Singapore 2.63 2.66 Norway 12.88 12.91
Japan 190.24 191.70
TW This week LW Last week.
Budgens, the supermarket chain, announced pre-tax profits of 9.76 million pounds, after exceptional charge, on turnover of 260.3 million, for the twenty eight weeks ending 11th November 2001. Earnings per share stand at 4.1p.
Spring announced pre-tax losses of 8.25 million pounds, after exceptional charge on turnover of 171.5 million, for the six months ending 31st October 2001.
Tadpole Technology announced pre-tax losses of 7.78 million pounds, after exceptional charge, on turnover of 24.6 million, for the year ending 30th September 2001.
Tomkins, the engineering group, announced pre-tax profits of 136.5 million pounds, on turnover of 1,762 million, for the six months ending 31st October 2001. Earnings per share stand at 9.4p, on reduced capital.
J.P. Morgan Chase announced a fourth-quarter loss of $332m, compared with a profit of $708m a year earlier. Much of the loss was due to Enron and Argentina.
Ford announced a fourth-quarter loss of $5.1 billion, bringing losses for the year to $5.5 billion.
General Motors said that profits for the fourth quarter were down by 58% to $225m from a year earlier.
General Electric reported a 9% rise in profits for the fourth quarter to $3.9 billion.
The online auctioneer, Ebay, made record profits in the fourth quarter and operating profits jumped by 56% over a year ago, to $42m.
AMR, the parent company of American Airlines, reported losses for the fourth quarter of $798m.
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 Global Air Movement (Luxembourg) Sarl of the air handling equipment business of ABB Handels Und Verwaltungs AG
Acquisition by Queensmere Holdings Ltd of Queensmere Shopping Centre
JOHNSON RELEASES BAE FROM UNDERTAKING RELATING TO DESIGN OF GROUND-BASED RECONNAISANCE VEHICLE
DTI Competition Minister Melanie Johnson has announced that she has released BAE Systems plc ('BAE') from an undertaking it gave on 28 March 2000. This undertaking applied to the UK/US jointly funded competition to design a ground-based reconnaissance vehicle.
Melanie Johnson said: 'Since the competitive phase of the programme covered by the undertaking in question is now effectively at an end, and representatives of the UK and US governments have stated that they will not proceed with future phases of this programme, this undertaking is no longer appropriate'.
Undertaking 3 of the undertakings given by BAE on 28 March 2000 applied to the UK/US jointly-funded competition to design a ground-based reconnaissance vehicle. Two contracts were awarded for this competition: one to SIKA International Limited (SIKA), a 50:50 joint venture between subsidiaries of BAE Systems and Lockheed Martin Corporation; and the second to MES.
It was envisaged that at the conclusion of the first (product definition and demonstration) phase the two governments would jointly select the winning bid and award the contract for the next (project development) phase.
The purpose of undertaking 3, therefore, was to address the competition concerns arising from the fact that BAE Systems and MES were members of competing teams bidding for the same contract. The undertaking sought to establish separate operational and financial control between the competing teams; a pre-agreed maximum spend; and the erection and maintenance of 'firewalls' restricting the flow of Program Information both between the competing teams and also between the teams and the senior management of BAE Systems. The undertaking also required that BAE Systems preserve and maintain all records relating to the two teams for a period of 6 years following the execution of the contract for the development phase.
Given the nature of the programme competition, the wording of undertaking 3 provided that it would remain in force - subject to the preserving of records - only until the execution of the contract for the development phase of the programme.
However, representatives of the UK and US governments have recently informed the two competing teams that, following a review of the future of the programme, and in the light of emerging and changing national requirements of both nations, it had been decided not to proceed with future phases of the programme beyond the end of the current demonstration phase. As a result, the competition element of the current phase of the programme should be considered at an end. Since a contract for the development phase of the programme will not now be awarded, the termination provision within undertaking 3 will never be triggered automatically.
COLOPLAST A/S / SSL INTERNATIONAL: COMPETITION COMMISSION INVITES EVIDENCE
Melanie Johnson, Competition Minister, has asked the Competition Commission to look into the acquisition by Coloplast A/S of the continence care business of SSL International.
The Commission will look at all aspects of the merger's likely effects on the public interest, including the impact on the market for certain continence care products in the UK. The Commission has been asked to report to the Secretary of State for Trade and Industry by 13 May 2002. The report will be published later.
The Commission would like to hear from all interested parties in writing by 31 January 2002. If you wish to submit evidence please write to:
The Reference Secretary (Coloplast)
Competition Commission
New Court
48 Carey Street
London WC2A 2JT
Or email: coloplastssl@competition-commission.gsi.gov.uk
Arthur Pryor CB will chair the inquiry. The other members of the group are currently being appointed.
JOHNSON REFERS LALLEMAND'S PROPOSED ACQUISITION OF LHS (FININGS) LTD
The proposed acquisition by Lallemand UK Limited of LHS (Finings) Limited was referred to the Competition Commission (CC) last week by Competition Minister, Melanie Johnson. Her decision was in accordance with the advice of the Director, Legal Division of the Office of Fair Trading (OFT).
Miss Johnson said:
"The OFT has advised me that this proposed acquisition raises competition concerns in the market for the supply of isinglass, an essential ingredient for cask conditioned ales in the UK. The proposed merger would create a monopoly in the supply of dry isinglass, and the merged company would supply 90% of the market for hydrolysed isinglass.
"The OFT has highlighted concerns about the strength of the merged company in the market and has recommended that these concerns warrant 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.
Lallemand UK Ltd proposes to acquire LHS (Finings) Ltd, bringing together the two major suppliers of brewing aids to the UK brewing industry. The merger has not yet been completed.
The CC will report by 1 May 2002.
JOHNSON RELEASES GRANADA FROM TWO UNDERTAKINGS RELATING TO MOTORWAY SERVICE AREAS
Competition Minister Melanie Johnson last week announced that she has released Granada Group plc ('Granada') from two undertakings it gave in lieu of merger references to the then Monopolies and Mergers Commission in 1995 and 1996.
Melanie Johnson said:
"Following its de-merger from Compass Group plc, Granada, the company which gave the two sets of undertakings, is now a media company. Neither it nor the other companies within the Granada group have interests relevant to the competition concerns addressed in these undertakings. There has thus been a change in circumstances such that the undertakings are no longer appropriate"
The Pavilion Undertakings
Granada gave undertakings on 5 October 1995 in lieu of a merger reference in connection with its acquisition of Pavilion Services Group. The undertakings were accepted in order to prevent the adverse effects which were expected to arise from an increase in Granada's ownership of MSAs. These undertakings required Granada to divest and not reacquire MSAs at Magor and Rivington.
The Forte Undertakings
Granada gave undertakings on 8 July 1996 in lieu of a reference in connection with its acquisition of Forte Plc. The undertakings to divest and not reacquire the Welcome Break business were likewise accepted in order to prevent the adverse effects which were expected to arise from an increase in Granada's ownership of MSAs, including possible effects relating to budget hotels located at these sites.
Having complied with the undertakings to divest, Granada is now only subject to the prohibitions on re-acquisition in these undertakings.
Restructuring of Granada
In July 2000, Granada merged with Compass Group plc. Subsequently the merged businesses were re-organised to create two focused groups: 1) a hospitality group ('Compass Hospitality') which included all of the interests of Compass and Granada in hotels and MSAs; and 2) a media group ('Granada Media'). These two groups were subsequently de-merged with effect from 1 February 2001 and are now completely independent entities.
Since the de-merger of the two groups, the undertakings do not apply to Compass.
JOHNSON ACCEPTS UNDERTAKINGS FROM FIRSTGROUP PLC RELATING TO THE ACQUISITION OF SB HOLDINGS LIMITED (SBH)
Competition Minister Melanie Johnson last week announced that she has accepted undertakings from Firstgroup PLC (Formerly Firstbus) relating to its acquisition of S B Holdings Limited.
This follows a report into this merger published by the (then) Monopolies and Mergers Commission (MMC) on 24 January 1997, and subsequently an extensive review carried out by the Office of Fair Trading into the Scottish bus market.
Melanie Johnson said:
"I accept the advice of the Director General of Fair Trading (DGFT) that these undertakings meet the requirements set out by the Secretary of State for Trade and Industry in 1998, following the publication of the MMC report. The parties have indicated that they are content with the terms of the undertakings and have signed them in advance to indicate commitment to them."
This merger was completed in June 1996 and brought together the two major bus operating companies in central and southeast Scotland. The merger was referred to the MMC on 23 September 1996, who reported in January 1997 that the merger operated against the public interest.
Following an extensive review of the Scottish bus market carried out by the Office of Fair Trading, the Secretary of State announced on 31 July 1998 that she had decided to seek behavioural undertakings from Firstgroup. These undertakings were intended to regulate prices and minimum service levels, and included restrictions on fare and frequency changes, journey intervals and competition against tendered services. The Director General of Fair Trading was asked to negotiate undertakings to this effect.
Prime Minister's pledge delivered
E-Commerce Minister Douglas Alexander announced last week that a new team is now working to establish the most effective way of buying broadband for the public sector - ensuring hospitals, schools and libraries can access high speed data rich internet services.
The newly created team is based in the Treasury's Office of Government Commerce (OGC).
Last November at the CBI conference the Prime Minister stated:
"We spend millions every year on IT and communications. It is clear that if we can manage our role as purchaser better we can both improve value for money and have a significant impact on the availability of broadband.
"So we are asking the Office of Government Commerce to look at whether there is more that can be done to help Government departments and others buy broadband more effectively."
The public sector spends an estimated £1.7 billion on ICT each year.
The OGC team will meet with potential broadband suppliers and work with public sector buyers to identify and evaluate procurement options. There are a wide range of potential users in the public sector, including Local Authorities, schools, emergency services and the National Health Service, in addition to central government departments.
In addition, work will be done with Government departments on their demand for broadband services, by analysing the impact of different procurement models on competition, and their likely impact on the availability of broadband.
Speaking at the Europe21 conference in London, Mr Alexander said:
"The OGC's specially created broadband procurement team will play an integral part in making our vision for Broadband Britain a reality.
"As a high spending organisation, the Government wields enormous purchasing power. The OGC team will identify the most effective means for the public sector to buy broadband services so ensuring that schools, hospitals and libraries can have better access to state of the art internet services.
"Widening the broadband network has the potential to revolutionise the way we work. It has the ability to transform the way we provide our public services, the way we run our businesses, the way we communicate - in all, it could transform much of the way we live.
The Government's Broadband Strategy was published by Douglas Alexander on 3 December and can be found at http://www.e-envoy.gov.uk/ecommerce/broadband/bbsgrep_menu.htm
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