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 5 Issue 38
Dated: 14 October 2001
Welcome to the Business Credit News UK.
In this weeks edition you will find the following topics.
UKMANUFACTURING IN ‘CRITICAL CONDITION’ AS SERVICE SECTOR HEALTH DECLINES
UK manufacturing is in a critical condition, with firms reporting huge export losses, declining home sales and orders, stalled investment plans and job cuts, with poorer prospects for the next three months, according to the latest quarterly survey from the British Chambers of Commerce, published on Thursday 11 October.
The survey, the largest and most detailed of its kind, covering 7,385 UK firms employing over 800,000 staff, shows manufacturing export sales plummeted last quarter (+1 down to –16) with further losses expected before the end of the year (+1 down to –21). Home sales continued to decline (-1 down to -3) with orders now at their lowest for almost three years (-5 down to –12).
The survey also shows that the slowdown is denting service sector growth, with UK sales slipping 3 points (+26 down to +23) and orders down 5 points (+19 down to +14), the lowest since the end of 1998. Service firms' export sales performance fell slightly (+3 down to +1) while orders remained stagnant for the second quarter running, at just +1 on balance.
Confidence across both sectors also slipped back last quarter, with fewer manufacturers expecting to improve either turnover (+32 down to +28) or profitability (+24 down to +16), and a similar picture in services (turnover +49 down to +44 / profitability +37 down to +31).
David Lennan, Director General of the British Chambers of Commerce said:
“Manufacturing needs some intensive care, and while the Bank of England’s recent cuts in interest rates offered the right kind of medicine, it may not yet be enough to bring the sector back to health.
“These are tough and uncertain times for the UK and global economy and all the indicators point to the fact there is worse to come. It is essential, in the coming months, that government do all it can to target support at those sizes of firm, sectors and regions worst hit and with the worst prospects.”
The survey shows declining capital investment activity across both sectors, with manufacturers slipping back four points now to zero growth, and the service sector reporting a slide of 6 points (+17 down to +11). Investment in training has also fallen, slightly in services (+26 down to +24) and to its worst ever level in manufacturing (+11 down to +10).
Employment activity in manufacturing also fell back, with more people losing jobs than gaining last quarter (-1 down to -6), and expectations for the next three months also poor (+2 down to –3). The rate of service sector employment growth increased slightly (+15 up to +16), but the outlook is for a falling growth trend (+22 down to +16).
Manufacturers saw a severe deterioration in their cash-flow last quarter (-1 down to –9) with the indicator now at its lowest for nine years. Micro firms (employing 1-19) and large firms (500+) saw the worst falls, down 26 points (+3 down to –23) and 19 points (+8 down to –11) respectively. Service firms’ cash-flow remained steady overall (+9 down to +7), though again, the smallest and largest firms saw the greatest falls (micro: +1 down to 0 / large:+14 down to +10).
Expectations of rising prices for goods and services have eased further in manufacturing (+9 down to +1), with the largest firms (those employing 500+) reporting the greatest fall and now cutting prices (+15 down to –4). Service sector price growth remains steady, falling just two points over the quarter (+18 down to +16)
Price pressures have also eased across most indicators, with pay settlements hitting fewer manufacturers (26 per cent down to 24 per cent) and service sector companies (28 per cent down to 27 per cent). Raw materials prices, though falling, remain the greatest pressure for manufacturers, affecting 40 per cent of respondents, down from 44 per cent last quarter.
Competition is reported to be the main concern for both sectors, cited by 48 per cent of manufacturers and by 40 per cent of service firms. Manufacturers’ exchange rate concerns have eased considerably over the quarter, by 16 per cent (58 per cent down to 42 per cent).
BUY-OUT MARKET PROVES REMARKABLY RESILIANT
The total volume of larger UK management buy-outs (those with values above £10m) held up in the third quarter, bringing the total number of transactions reached so far this year to 99, with a cumulative value of £17.4bn. This compares with 110 deals worth £16.4bn in the first nine months of last year.
Charles Milner, Head of Private Equity at KPMG Corporate Finance, said: "This may be only a modest increase in value year on year, but it is an important one given an extremely tough market."
The buy-out market continues to be driven by deals at the high value end. This quarter's top ten deals totalled £4bn with 23 other deals accounting for the remaining £670m. Deals in the £250m+ range have amounted to £13.3bn so far this year representing a 16% increase on the same period last year.
KPMG Corporate Finance advised on 7 out of the 33 deals this quarter, three of which were in the top ten by value.
The largest deal this quarter was the institutional buy-out of Le Meridien Hotels by Nomura for £1.9bn in July which follows three other £1bn+ deals in the first half of the year. However current market conditions mean that it is less likely in the short term that other similar sized deals, particularly those requiring syndicated debt packages, will close.
Charles Milner remarks: "Earlier this year some commentators speculated that the market would go into free-fall but we have not seen this. Clearly the impact of the horrific events in the United States has still to be determined. We believe there has been a pause for contemplation, although our survey shows that the UK private equity market has, to date, proved remarkably resilient."
Charles Milner continued: "After a bumper fund-raising period in the late 1990s the private equity community still has substantial funds available for investment. There is the ability and indeed pressure to invest. However, the present lack of visibility of earnings, prevailing caution and a reduction in debt multiples, means that private equity houses are spending more time assessing opportunities and closing deals."
The value of public to private (PTP) transactions is three times that of the same quarter last year but substantially down on the second quarter this year, while the number of deals has remained fairly constant over the last 12 months. Three of the eight PTP deals this quarter were in the manufacturing sector and totalled £1.2bn. KPMG Corporate Finance was involved in all three of these deals.
On the outlook for the next six months, Milner commented: "We are seeing heightened caution in the private equity market, which is understandable in current conditions, although there is still activity. There is a further need for a realignment of vendor pricing expectations, but there are cases of vendors re-opening discussions on deals previously put on hold."
He added: "In the past, good private equity returns have been realised from investing around this stage in the economic cycle. The key skill is timing."
ATROCITIES IN AMERICA: CHARITABLE DONATIONS
KPMG Tax News 28 September 2001
Following the terrorist attacks on the World Trade Center and the Pentagon, many people will be wanting to express their grief and sympathy in some tangible form.
The Charity Commission has commended three routes for those wishing to help the victims of the terrorist attacks. Donations may be made through the Salvation Army (0800 028 7744), or through the British Red Cross (020 7201 5038), which will forward these funds to the American Red Cross.
Alternatively, donations may be made to the World Trade Center Disaster Fund, a newly formed charity registered following an application by the Institute of Financial Services Limited, the cross-sectoral representative of the UK financial services industry. This fund has been established to help those in need as a result of the terrorist attacks on the USA, and in particular on the World Trade Center. It will support those affected by the attacks both now and in the future. The World Trade Center Disaster Fund is administered by the Charities Aid Foundation (01732 520 000).
Donations to charity are even more valuable if made in a tax-efficient way.
Individuals can get tax relief on donations to charity in three ways - by Gift Aid, by Payroll Giving, or by donating shares or securities. None of these methods requires a minimum donation in order to qualify for the tax relief.
(Note that non-UK charities cannot benefit from UK tax reliefs - Camille & Henry Dreyfus Foundation Inc v CIR 36 TC 126 - hence the recommendation to route donations through a UK charity.)
Individuals: Gift Aid
Gift Aid donations are made under deduction of basic rate income tax. Suppose, for example, that you are a basic rate tax payer, and you give the charity £78. If you make a Gift Aid declaration to the charity (which can be done in writing or by telephone), the charity can claim from the Revenue a tax refund of £22, receiving £100 in all - ie completing the Gift Aid form boosts the donation by 28%. If you are a higher rate taxpayer, and make a Gift Aid donation of £78, the charity receives a total of £100 as before and you can claim higher rate relief of £18 in your tax return. That is, completing the paperwork means you benefit the charity by £100 at a cost to yourself of only £60 - a tax boost of 67%.
Individuals: Payroll Giving
If your employer operates a Payroll Giving scheme, the tax boost is even higher, because the Government will add a 10% 'top-up' to your donation. Suppose, for example, that you are a basic rate tax payer and you make a donation to charity through your employer's Payroll Giving scheme. You choose how much you give and which charity or charities you benefit; your employer deducts the donation from your pay at source. If you give £100 via Payroll Giving, you receive the tax relief, and your net pay is reduced by £78. The charity receives your donation of £100 topped up by £10 from the Government: £110. Payroll Giving therefore means a tax boost of 41%. If you are a higher rate taxpayer, and give £100 via Payroll Giving, the charity receives £110 as before and your net pay is reduced by £60 - ie Payroll Giving means a tax boost of 83%.
Individuals: shares and securities
Charitable donations of certain shares and securities attract income tax relief at the donor's top rate of tax, as well as being exempt from capital gains tax (CGT). Suppose, for example, that you are a higher rate taxpayer, your investments include quoted shares with a market value of £1,000 which, if sold, would trigger a CGT liability of (say) £250, and you wish to use those shares to benefit charity. If you sell the shares and make a Gift Aid donation of £750, your funds are reduced by the net donation of £750 plus £250 CGT less higher rate income tax relief of £173 (ie 18/78 x £750): a net cost to you of £827. The charity, meanwhile, receives a total of £750 x 100/78 = £961.
If, however, you give the shares to charity instead of selling them in the market, you benefit the charity by £1,000. Your funds are reduced by the donation (worth £1,000) less income tax relief of £400: a net cost of £600. It is therefore clearly advantageous to give the shares directly to the charity.
This is a simplified illustration; in real life, it would be necessary to consider not only the CGT saving and the income tax relief but also the dividends on the shares and, possibly, inheritance tax.
Companies: Gift Aid
Finance Act 2000 simplified the corporate Gift Aid regime. If a company decides to give money to charity, it simply makes the payment through Gift Aid and deducts the amount paid when working out its profits for corporation tax purposes. The payment is made without deduction of tax, and the charity does not claim back any tax on the gift. So, for example, if a company gives £100 to charity, and its marginal rate of tax is 30%, the charity receives £100 and the cost to the company is £70. Companies no longer have to provide a Gift Aid certificate to the charity, nor do they have to provide a new form of declaration.
SHARPEST CONFIDENCE FALL FOR THREE YEARS - SAYS FINANCIAL SERVICES SURVEY
Business confidence amongst financial services companies has fallen more sharply than at any time for three years and business levels are well below normal. Those are the main findings of the latest quarterly survey of firms in the sector published last Monday by the CBI and PricewaterhouseCoopers.
Seven per cent of respondents said they were more optimistic about the overall business situation than three months ago while 47 per cent said they were less. The balance of minus 40 compares with plus three in June 2001 and is the lowest since September 1998.
The level of business is further below normal than in any survey since December 1997. It was below normal according to 35 per cent of companies while 19 per cent said it was above. The balance of minus 16 per cent compares with minus four in June.
Business volumes rose slightly over the past three months. In June the balance was minus 2 per cent, in this survey it is plus four. But compared with six months ago, when the balance was plus 26 per cent, growth in business volumes is still much reduced.
And, while they did rise, business volumes grew much less over the last three months than had been expected. The actual balance of plus four per cent compares with the plus 20 that was expected. There are, though, pronounced differences between sectors. Life insurers, building societies, insurance brokers and banks reported the strongest rises while securities traders and fund managers saw the biggest falls.
A balance of minus two indicates business volumes will be broadly stable in the final quarter of 2001.That is the weakest expectation since December 1991. Again the level of demand is the most likely constraint on business over the next year. The proportion of firms citing that as a factor rose from 77 per cent in the last survey to 81 per cent in this. That is the highest level since June 1996. Domestic competition remains the second most frequently mentioned limiting factor.
Over the last three months overall employment in financial services fell for the first time in almost five years, despite expectations of a rise. Securities traders, banks and fund managers have suffered the biggest falls. That contrasts with general insurers, building societies and insurance brokers, which reported significant rises. In financial services as a whole, more jobs are expected to be lost over the coming three months and at a faster rate.
John Hitchins, Financial Services Partner at PricewaterhouseCoopers said: "With business confidence at a three year low and worries that consumer confidence may be eroded in the wake of the terrorist strikes on America, the UK financial services industry is distinctly nervous.
"A number of sectors, particularly banks, building societies and insurers actually enjoyed strong performances in the last quarter, but the pessimism about the future is shared across the industry and can only have been worsened by recent events in the USA."
In the previous survey overall profitability fell for the first time in six years but during the last three months it remained broadly unchanged. A slight fall is expected in the final quarter of 2001.
Sudhir Junankar, CBI Associate Director of Economic Analysis, said: "This survey shows the sharp slowdown in the world economy had left business confidence suffering even before the attacks on the USA. It is significant that financial services companies are markedly more concerned about future demand than they have been at any time in the last five years.
"The uncertainty in financial markets that followed September 11th may have had some immediate impact on sentiment but the longer-term effects are more difficult to gauge."
Business on the internet is growing more slowly than firms were expecting in the last two quarterly surveys but there is evidence that they are adjusting to that. A balance of 29 per cent of firms said the total value of their internet business had increased. That compares with 39 per cent in March and 41 per cent in June. Just five per cent of those that reported an increase said the increase had been faster than expected, while 21 per cent said it was slower. The balance of minus 16 compares with minus 31 per cent in June.
More financial services firms are saying that the biggest barrier to growth of their e-business is a lack of understanding by consumers and suppliers. In June that was mentioned by 56 per cent of respondents. In this survey the figure is 62 per cent. The speed at which the internet works has replaced fears about internet security as the second most cited barrier. Lack of understanding is expected to continue to be the main barrier over the next three months.
Firms were asked how they are developing their e-business. Seventy-eight per cent said they were putting current business activities online which is down slightly from 83 per cent in June. Fewer firms said they had launched an online brand, Twenty-two per cent in this survey compares with 28 per cent in June, and eight per cent are planning to, compared with 10 per cent in the last survey.
NEW CONSTRUCTION ORDERS: AUGUST 2001
Orders in the year to August 2001 rose by two per cent compared to the previous year but orders in the three months to August 2001 fell by 5 per cent compared to the same period a year earlier, which was exceptionally high following large contracts in June 2000. Orders in the three months to August 2001 rose by 12 per cent compared to the previous three month period, with rises in all sectors.
Private housing orders in the three months to August 2001 rose by 11 per cent compared with the previous three month period and by three per cent compared with the same period a year ago. Orders in the year to August 2001 fell by seven per cent. Public housing and housing association orders in the three months to August 2001 showed a rise of 10 per cent compared to the previous three month period, and of 28 per cent compared to the same period a year earlier. Public housing and housing association orders in the year to August rose by 10 per cent when compared to the previous twelve month period. All comparisons in this sector are affected by large variations due to its relatively small size.
Infrastructure orders in the three months to August 2001 were five per cent higher compared with the previous three month period, but were four per cent lower than in the same period a year earlier. Orders in the year to August 2001 rose by 11 per cent compared with the previous twelve month period.
Public non-housing orders (excluding infrastructure) in the three months to August 2001 were 13 per cent higher compared with the previous three month period, but five per cent lower compared to the same period a year earlier. The recent rise is mainly due to continuing high levels of orders in the schools sector. Orders in the twelve months to August 2001 were two per cent lower when compared with the previous twelve month period.
Private commercial orders in the three months to August 2001 were 18 per cent higher compared to the previous three month period, following several orders in the retail sector, but 13 percent lower than in the same period a year earlier. These falls were mainly due to low levels of office orders in May and July. Orders in the twelve months to August 2001 were three per cent higher than in the previous twelve month period. Private industrial orders in the three months to August 2001 were six per cent higher than in the previous three month period, and eight per cent higher compared to the same period a year earlier, due mainly to recent orders for warehouses. Orders in the year to August 2001 fell by one per cent compared with the previous twelve month period.
International speaker Russell Kennard, MBA AIMC, founder-owner of Kennard & Co, the leading European management consultancy specialising in credit management, will be giving a short presentation on "Credit Management Qualifications: the UK and Beyond" as part of a special ICM Graduate and Student Development evening being held at the Stoke on Trent Branch of the Institute of Credit Management on Monday 12th November. Russell's commitment to Continuing Professional Development is well-known - over the last two years he has presented highly successful credit workshops on three continents and he will be speaking on a fourth at the recently re-scheduled International Credit Event in Singapore next year. The original force behind the start of the MICM (Grad.) course being offered at Stoke on Trent College he was the Credit Management Lecturer for the course's first two academic years, 1991-3 as well as being was one of the original cohort on the world's first M.Sc. (Credit Management) degree launched by the Leeds University Business School last year.
The evening will additionally feature a number of other presentations - e.g. on Credit Management NVQs; Mentoring; MICM (Grad.)s - past and present - in the hope of encouraging the launch of a formal MICM (Grad.) national graduation ceremony and fostering more informed debate about credit qualifications and Continuing Professional Development generally. Several special guests from other ICM branches will be in attendance.
For details please contact the event organiser: Catriona Colerick, MICM (Grad.) on Tel. 01782 28 2430.
LONDON, 8 OCTOBER 2001. THE UNITED KINGDOM, GERMANY, PORTUGAL, HONG KONG AND MEXICO HAVE BEEN PLACED ON RATING WATCH WITH NEGATIVE IMPLICATIONS
UNITED KINGDOM
Grade A1: placed on rating watch with negative implications due to the deterioration in company payment behaviour.
Industry is faced with the high level of the pound, which exposes it to foreign competition, and with declining productivity, which has its origins in under-investment in industry and human resources. Relocations of production facilities are growing in number and are at present affecting various sectors such as cars, telecommunications or metallurgy. Local subcontracting is having a particularly difficult time.
To withstand this competition, companies are squeezing their margins and experiencing liquidity problems while interest rates remain relatively high. Consequently, payment defaults are particularly frequent in the manufacturing sector. Against this background, and if one points to the traditional correlation between the British and American cycles, the American economic slowdown is likely to bring about a downturn in the British economy and to further increase the vulnerability of companies.
GERMANY
Grade A1: placed on rating watch with negative implications, due to the deterioration in company payment behaviour. Company payment behaviour is deteriorating in an unfavourable macro-economic context.
GDP growth is suffering from the slowdown in the world economy. Exports, composed to a greater degree of capital goods, have been particularly affected by the reduction in investment in the United States. Consumption, although sustained by the implementation of fiscal reform, has only risen slightly and has not been able to compensate for the deceleration in foreign demand.
As a consequence the unemployment rate is likely to rise again, after having stabilised at a still high level and German growth is likely to remain one of the lowest in Europe in 2001 and 2002.This deterioration in the economic situation accentuates the fragility of the industrial fabric at a time when small and medium-sized companies are often under-capitalised. The risks of unpaid accounts are growing. The eastern regions are particularly sensitive. The construction and textile sectors are still experiencing the highest probabilities of default, but are no longer the only sectors affected. The most vulnerable supermarket operators could, in particular, experience increased difficulties in the face of this new slowdown in growth.
PORTUGAL
Grade A1: placed on rating watch with negative implications
Company payment behaviour is deteriorating in a less favourable macro-economic context. Economic activity is slowing down sharply. The growth in exports is being curbed by a loss of competitiveness and by the contraction in foreign demand. Household consumption is being kept in check by the high level of its indebtedness, inflation and the lesser rise in their real disposable income. Investment, although sustained by transfers from the European Union and government expenditure, has significantly retracted. Despite the reduction in current expenditure the budget remains in deficit, depriving the government of any room of manoeuvre.
Against this background, companies are faced with a contraction in sales and with a marked increase in production costs, notably for labour. They are all the more vulnerable by virtue of the fact that a number of them were recently established and have just undergone rapid expansion. Textiles/clothing and distribution are the most fragile industries.
HONG KONG
Grade A1: placed on rating watch with negative implications, due to uncertainty related to the effects of the fall in activity.
The downturn in external demand has led to a substantial slowdown this year with the economy now close to recession. Moreover, its high level of foreign trade makes the territory extremely vulnerable to the negative effects of the world economic situation. Some companies, particularly in the electronics sector, have been left fragile.
Nevertheless, this brutal downturn in activity is essentially a cyclical one.
Unlike the situation in 1998, there is no longer any speculation concerning the maintenance of the peg. Asia's second leading financial centre has a number of key factors in its favour, including the healthy state of its public finances, external accounts which remain satisfactory, a low level of foreign debt, large reserves and well capitalised banks.
MEXICO
Grade A4: placed on rating watch with negative implications, due to the downturn in activity in the United States and a deterioration in payment behaviour of Mexican companies.
The extreme dependence of the Mexican economy upon the economic outlook in the United States (as this country accounts for almost 90% of Mexican exports) is leading to a sharp economic downturn. The reduced growth in exports should, among other things, lead to deterioration in the external accounts, even if long term resources (bond issues and foreign direct investment) should easily ensure coverage of financing requirements.
Mexico also remains vulnerable due to the high level of companies' short-term debts.
About Coface
Rated AA by Fitch, The Coface Group is the world leader in export credit insurance and number one in insurable ratings with @rating via www.cofacerating.com. In France, it is the leading credit-information provider and manager of the Government's export guarantee programme. Listed on the Paris Bourse, the Group's shares are included in the SBF 120 and Euronext 150 stock indices.
The Coface Group's services and guarantees foster development of business-to-business commerce worldwide. It provides 78,000 customers in 99 countries with credit solutions, drawing on the Group's expertise in domestic and international credit insurance, guarantee insurance, prospecting and credit information, receivables management and collection. Customers enjoy access to two global networks, CreditAlliance and InfoAlliance, which are based on a common risk system for credit information and the use of common products and standards worldwide.
About Coface UK
Coface UK's range of credit insurance products includes Open Trader (for comprehensive cover) and Top Trader (for key clients), both designed for UK companies with turnover of over £3 million. For SMEs, Managed Trader and Cashflow Trader provide cost-effective cover for domestic and export trading, with the latter offering a unique, fully integrated credit management solution which guarantees payment of invoices at 65 days from the due date. Other insurance related financial products include single risk cover, duty deferment guarantees and travel bonds.
For further information about Coface UK, please contact:
Suzanne Teo
T: 020 7325 7548
Email: suzanne_teo@cofaceuk.com
Website: www.cofaceuk.com
Country risk @rating Methodology
The country rating measures the average corporate payment default risk in a given country and indicates to what extent a company's financial commitments are affected by the local business, financial and political outlook. However, as people involved in international trade know, there are credit-worthy companies in high-risk countries and companies with poor payment records in low-risk countries. The overall risk depends on both the company's and the country's specific characteristics. The @rating country rating therefore compliments the @rating company rating by giving a more comprehensive view of transaction risks.
Coface continuously monitors 140 countries through indicators used to assess the political factors, the risk of a currency shortage, the State's ability to meet its commitments abroad, the risk of a sudden devaluation following heavy capital withdrawals, the risk of a systemic crisis in the behaviour for short-term transactions.
Coface has leveraged its dual expertise to develop these ratings:
Macroeconomic expertise in assessing country risks, using a series of macroeconomic indicators. Microeconomic expertise gained by tracking 35 million companies worldwide and from 50 years of experience in monitoring payment defaults for Coface-guaranteed trade flows, which represent more than 140 billion a year.
Indicators
Coface continuously tracks a series of individually rated indicators for 140 countries. Each indicator is classified into one of seven subsets. The first three subsets are used to assess:
The next three subsets are designed to measure the probability of further manifestations of country risk in the light of experience gained from recent market crises:
The last subset combines Coface's experience with existing or past guarantees and that of its credit insurance partners to assess:
Payment behaviour for short-term transactions.
On the basis of these subsets, an aggregate rating is assigned to each of the 140 countries monitored.
As in the approach used by credit rating agencies, there are seven different rating grades, from A1 to A4 for investment grade risks and B, C and D for below-investment grade risks.
ONLINE IDENTITY CHECKING SYSTEM COMBATS MONEY LAUNDERING
Experian, one of the world's leading providers of fraud prevention solutions, has launched a new web-based consumer identification checking system - e-identity - to help financial service providers combat the growing problem of money laundering in the UK.
According to estimates by the Financial Action Task Force on Money Laundering (FATF), money laundering could be worth anywhere between $590 billion and $1.5 trillion worldwide and is considered a major threat to global economic stability. In the UK, the problem is thought to be worth as much as 2% of GDP.
Launching the new money laundering service at Experian's annual Client Conference at the Celtic Manor Hotel in South Wales, Richard Fiddis, Chief Operating officer at Experian, said: "The whole issue of money laundering has become even more acute following recent incidents in the US, with authorities across the world examining proposals to increase international co-operation and impose tougher requirements on banks and other financial institutions to report suspicious transactions. UK legislation already requires banks to report such suspicions promptly to the authorities but the Proceeds of Crime bill, likely to be introduced during this Parliament, will widen the offence of banks failing to report money laundering.
"Money laundering must not be seen as a 'harmless, victimless crime'. It constitutes a serious threat to the integrity of financial institutions beyond the banking system: for example, last year, about 600 cases were reported as suspicious to the National Criminal Intelligence Service by the insurance industry and such activity is expected to increase in the run-up to the introduction in January 2002 of euro notes and coins as criminals seek to dispose of legacy currencies."
Money laundering is the process of obscuring the source of illegally obtained funds through a succession of transfers, typically originating from drugs, prostitution, people trafficking, arms dealing, black market goods and corruption. It has prompted a series of European and UK legislation ensuring financial service providers take proper measures to validate the identity of their customers and investigate any unusual account transactions.
E-identity, which is available via the Internet, accesses Experian's vast consumer databases and public information sources to return an 'authentication score' so that organisations can have sufficient confidence that a consumer is genuine before proceeding with a financial transaction, opening a bank account or other commercial agreement. E-identity is already in use as a consumer identification tool in the retail and travel industry sectors where it is currently consistently detecting up to 90 per cent of fraudulent online credit card transactions.
The online service removes the need for current manual paper based methods of identification such as presenting passports, driving licences or utility bills, which can be fraudulently altered and are not reliable proof of true identity. E-identity confirms not only that a person exists but also that the consumer is who they claim to be and provides a rapid authentication solution for remote channels - such as the Internet, phone or WAP - enabling financial service providers to conduct their online business with greater confidence.
The system references extensive public and proprietary data sources to 'score' the authenticity of the consumer and meets new Money Laundering Guidelines requiring financial institutions to adopt a ‘risk based approach’ to customer identification, dependent on the level of money laundering risk within both the product and channel of introduction. It also ensures that the vast majority of consumers will be rapidly approved for financial service products because they can be easily recognised through their genuine financial history.
Richard Fiddis concluded by saying: "E-identity as a solution for money laundering provides financial organisations with a scientific, proven solution to the problem of consumer verification to enable them to quickly identify possible money laundering attempts, while offering a fast-track online approval service to their genuine customers. This leaves them with the time and resources to concentrate their underwriting efforts on the minority of suspicious individuals."
E-identity as a solution for money laundering proves particularly effective in detecting cases of impersonation. It is powered by Experian’s proven Detect application fraud checking system, in use by around 50 mainstream banking and credit institutions.
NOTIFICATION RESCHEDULE - INTERNATIONAL CREDIT EXHIBITION & CONFERENCE 2001 SINGAPORE.
Please be informed that the International Credit Conference has been rescheduled to next year, 09 October to 11 October 2002., as a result of the 11 September 2001 terrorist attacks on the WTC in New York and Pentagon in Washington DC. and current on-going US military strikes against terrorism.
The venue for the reschedule International Credit 2002 remains unchanged:
International Credit Exhibition & Conference
09 to 11 October, 2002 Wednesday to Friday
Raffles City Convention Centre, Level 4
Swissotel Singapore, The Stamford
Singapore
With the rescheduling to year 2002, there are no changes to the Credit Conference & Seminar Program, and its correct at the time of printing. For general enquiries, email address remained unchanged till year 2002. For any changes, and information of event, this will be adjusted accordingly and updated progressively at www.internationalcredit001.com
We appreciate your kind support, patience, and understanding for the unforeseen temporary disruption, in the rescheduling of the International Credit 2001 to 2002.
London – Sunday 7 October 2001: Alan Bloom, Chris Hill, Scott Martin and Mike Rollings of Ernst & Young LLP were appointed joint special railway administrators of Railtrack PLC ("the Company") on the making of a Railway Administration Order in the High Court under the provisions of the Railways Act 1993.
The application was made by the Secretary of State for Transport.
The purposes for which the order was made are:-
Operations
The joint special railway administrators are retaining the directors who will continue to be involved in managing operational issues on a day-to-day basis.
The Government has made funding available to the joint special railway administrators to ensure the continuation of the operations of the rail network. Suppliers who are creditors of the Company, and whose invoices are approved for payment by the Company in the normal way, will continue to be paid. Orders will continue to be issued by the Company's staff. There will be a review of the larger contracts and in the meantime the contractors will be requested to work on these contracts in line with existing work schedules.
Suppliers who provide goods and services during the Railway Administration will be paid from the Company's operating cash flow.
Safety
The joint special railway administrators state that safety will retain its existing priority during the Railway Administration.
A first day order has been issued by the High Court, the effect of which is that responsibility for safety remains with the Company's directors.
It has been agreed with the Health & Safety Executive that the Safety Case will be reviewed and revised as necessary over the next 28 days. The Company's directors, officers and staff dealing with safety will be operating this review.
Staff
The joint special railway administrators are keen to reassure all staff that their pay and conditions will not be affected by the Railway Administration Order. The legal requirements to continue the operations of the rail network also means that at this stage there will be no plans for redundancies as a direct result of the appointment of Administrators. The railway unions are being contacted and notified of the appointment of the joint special railway administrators.
Financial Creditors
The Government has committed to provide sufficient funds to pay non default interest, lease rentals and scheduled principal repayments (mainly commercial paper) and all other non default debt service obligations for an initial period of 45 days.
This arrangement will continue for financial creditors who have signed up to certain standstill arrangements until a transfer scheme is proposed.
Railtrack Group PLC Shareholders
The financial consequences of today's actions for shareholders in Railtrack Group PLC will depend on the terms of any scheme proposed by the joint special railway administrators for the transfer of Railtrack PLC business and assets out of administration as a going concern.
JOBS SALVAGED AT HATFIELD COAL COMPANY
Employees at independent colliery Hatfield Coal look set to recoup their jobs following the sale of the business and assets to Coalpower Limited by KPMG Corporate Recovery.
Approximately 220 employees were made redundant from the Doncaster-based colliery back in August this year after the company was forced to enter compulsory liquidation.
Corporate recovery specialist Allan Graham of KPMG has now secured a successful sale of the business and assets to Coalpower Limited, a company owned and managed by Richard Budge, former Chief Executive of RJB Mining.
The company's deep mining operation has continued on a care and maintenance basis throughout the period of liquidation and is set to resume full operation in the near future. It is expected that a substantial number of the employees made redundant in August will be offered new contracts.
Allan Graham, partner with KPMG in Nottingham, commented: "This sale is of particular importance for the local community. Hatfield Coal Company was a major employer in the area and it is very pleasing to note that a large number of the previous employees will be taken back on."
"In addition, the development of the substantial coal reserves should allow for continued production for many years to come. This is very important for the local economy which provides numerous supply services to the colliery."
*** 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 1.46 1.48 Canada 2.28 2.33
Austria 22.00 22.33 Portugal 320.54 325.36
France 10.48 10.64 Belgium 64.49 65.46
Finland 9.50 9.64 Italy 3095.82 3142.37
Germany 3.12 3.17 Sweden 15.41 15.80
Holland 3.52 3.57 Switzerland 2.37 2.40
Spain 266.03 270.03 Ireland 1.25 1.27
Australia 2.92 3.01 Denmark 11.89 12.06
Hong Kong 11.38 11.55 Euro 1.59 1.62
Africa Com 13.57 13.36 Saudi Arabia 5.47 5.55
India 70.21 71.01 Malaysia 5.54 5.62
Singapore 2.64 2.61 Norway 12.77 13.11
Japan 175.90 178.04
TW This week LW Last week.
Marconi's chief executive is to receive a pay-off of some GBP2.8m in cash and pension rights including GBP1M from previous employers. The not so happy shareholders have seen their shares fall by 99% from the highest value of GBP12.50.
Air Partner, the aircraft charter brokers, announced pre-tax profits of 2.18 million pounds, on turnover of 89.2 million, for the year ending 31st July 2001. Earnings per share stand at 14.4p.
Incepta, the communications company, announced pre-tax profits of 10.2 million pounds, after exceptional charge, on turnover of 146.5 million, for the year ending 31st August 2001. Earnings per share stand at 1.2p.
JJB Sports, the sportswear retailer, announced pre-tax profits of 40.2 million pounds, on turnover of 347.9 million, for the six months ending July 2001. Earnings per share stand at 11.1p.
Sportsworld Media announced pre-tax profits of 8.76 million pounds, on turnover of 35.6 million, for the year ending 30th June 2001. Earnings per share stand at 9.1p.
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:There is no merger news this week.
HILTON GROUP PLC AND BRITISH SKY BROADCASTING GROUP PLC: COMPETITION COMMISSION INVITES EVIDENCE
Patricia Hewitt, Secretary of State for Trade and Industry, has asked the Competition Commission to inquire into a proposed joint venture between Hilton Group plc and British Sky Broadcasting Group plc. The venture aimed to develop a fixed-odds betting business linked to Sky Sports channels on the digital satellite platform.
The Commission has been asked to report to the Secretary of State by 11 February 2002. The report will be published later.
The Commission would like to hear from all interested parties, in writing, by 31 October 2001. To submit evidence please either write to:
David Peel
Reference Secretary
Room 503
Competition Commission
New Court
48 Carey Street
LONDON WC2A 2JT
or e-mail: hiltonbskyb@competition-commission.org.uk
Professor Paul Geroski, a Deputy Chairman of the Commission, will chair the inquiry. The other members of the group will be appointed shortly.
Professor Paul Geroski has been Professor of Economics at the London Business School since 1991, and was Dean of the MBA programme from 1995-98 and a Governor from 1999-2001. He previously held a number of academic appointments. His recent research interests have focused on innovation, technological change and determinants of corporate performance. He was President of the European Association for Research in Industrial Economics from 1995 to 1997, President of the Industrial Organisation Society in 1997 and is currently a Member of the Council of the Royal Economic Society. Professor Geroski was born and grew up in the USA before settling in the UK in 1975.
Further information about this inquiry can be obtained from the Commission's website at www.competition-commission.org.uk
Regional Funds to extend Broadband use
Douglas Alexander, E-Commerce Minister, on the 8 October announced a £30m package of regional funds to boost the delivery of fast internet services through broadband technology to all parts of the UK.
Mr Alexander announced the funding during E-Business week.
He said:
"Broadband services will bring benefits to businesses and consumers alike. We are working to extend access to these services in every part of the UK. This funding will help stimulate action across the country.
"Today's announcement marks the latest step as Government along with industry face the challenge of building a Broadband Britain."
Regional Development Agencies and Devolved Administrations are being requested to put forward innovative schemes for the funds to extend broadband networks and the use of broadband by business and consumers. Schemes are likely to include:
Funds have been allocated from a formula based on the number of residents who do not yet have affordable access to broadband services and are as follows:
Internet users with traditional connections spend an estimated one third of their time waiting. Faster internet connections using broadband technology is the next leap forward in the communications revolution, providing fast access and `always-on´ connection to the internet. With broadband users can order movies on demand, play computer games against opponents on the other side of the world, hold video conferences, access interactive TV and rapidly transfer large amount of information. The UK has 160,000 broadband users with some 13 million homes connected to a BT broadband-enabled exchange.
ALEXANDER WELCOMES E-NABLED UK BUSINESS
Douglas Alexander, E-commerce minister, today published a study showing that over half a million UK companies are trading online. He welcomed the findings that show the UK continuing to lead the world in the use of e-commerce, along with countries like Sweden, Canada and Germany.
Mr Alexander, speaking during E-Business week at Interforum's "E-connect 2001: Beyond the website", revealed that the UK is increasing its use of e-commerce, and that UK companies in every region are harnessing technology to improve performance. The findings, published in the UK online for business International Benchmarking Study 2001, measure the UK's performance against ten other leading countries, and against Government targets.
Mr Alexander said:
"The study confirms we are making progress towards our primary aim of making the UK the best place in the world to do e-business. We have set demanding targets and must continue the e-revolution and help UK business get to the future first.
"UK business is feeling the benefits of using technology to improve its communications, efficiency and productivity. The UK continues to be among the world leaders in making more sophisticated use of technology to transform their business processes."
E-Business week takes forward the work of UK online for business, aiming to help UK companies climb up the e-business adoption ladder. Other key findings of the study include:
The study also shows that e-commerce technology is transforming the way UK business works. The UK ranks second in terms of the number of companies that say that this technology has changed or transformed their sales and marketing, logistics and delivery and operations, and processing and assembly.
On a local level, all regions of the UK are making positive progress in getting online. Nearly every UK region has at least 75% of businesses with a website.
The International Benchmarking Study was commissioned by the DTI. It is the fifth in the series examining the use of e-commerce in leading countries. Its main focus is to assess the extent to which UK business is using Information and Communication Technologies (ICTs) and to compare it with Australia, Canada, France, Germany, Italy, Japan, the Republic of Ireland, Sweden and the US. The Republic of Ireland and Australia are included for the first time in this study. The study is based on the results of 7,658 telephone interviews with businesses of all sizes. Copies can be obtained at http://www.ukonlineforbusiness.gov.uk
The study counts a business as "online" if it has a website or EDI or makes frequent use of external e-mail.
AFGHANISTAN
With the recent air strikes launched by US and British forces within Afghanistan, a lot of you may be interested in learning more about Afghanistan, its people, culture, history, topography, and current events.
Following are a few links of interest:
Afghanistan Maps / Topography / Demographics: http://www.odci.gov/cia/publications/factbook/geos/af.html
Afghanistan Current Events: http://afghanistannews.net/
Monday 15 October Wessex Branch of the ICM Retention of Title - Speaker/Sponsor Fanshawe Lofts Venue - Royal Southampton Yacht Club 1 Channel Way, Ocean Village, Southampton SO14 3QF Time : 7.00 pm for 7.30 pm Refreshments provided Wednesday and Thursday 17-18 October Softworld Finance and Accounting Exhibition, NEC, Birmingham http://www.softworld.co.uk/af2001a/register.html Thursday 18 October Magazines in Credit 2001 Conference and Awards Grosvenor House Park Lane, London W1 Telephone Justin Barry on 020-7400-7534 for more information or e-mail justin.barry@ppa.co.uk or visit the website at www.ppa.co.uk/events/credit2001 Tuesday 30 October Collections 2001 Credit Today National Motorcycle Museum, Birmingham The inaugural Credit Today conference for the UK on Debt Management, Collections Procedures as well as the political issues and regulatory changes affecting your work For more details contact Carleen Bennett on 020 7407 4700 or visit www.credittoday.co.uk Tuesday 6 November ICM Credit Scotland 2001 The National Stadium, Hampden Park, Glasgow, G42 9BA Cost #50.00 including Buffet Luncheon and Refreshments E-mail carol_myers@hotmail.com Monday 12 November Wessex Branch of the ICM European Credit Checking - Speaker/Sponsor ICC Information Ltd Venue - Royal Southampton Yacht Club 1 Channel Way, Ocean Village, Southampton SO14 3QF Time : 7.00 pm for 7.30 pm Refreshments provided Monday 12th November Stoke on Trent Branch of the ICM "Credit Management Qualifications: the UK and Beyond" Presented By Russell Kennard, MBA AIMC, founder-owner of Kennard & Co For details please contact the event organiser: Catriona Colerick, MICM (Grad.) on Tel. 01782 28 2430 Thursday 22 November Sussex & Surrey Branch of the ICM Factoring/Invoice Discounting/Asset Finance Speaker: To be advised Venue - HSBC, Farncombe Road, Worthing Time: 7.00 for 7.30 p.m. Sponsored by HSBC 23 November 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 4-6 December Online Information 2001 Olympia Grand Hall, London Monday 10 December Wessex Branch of the ICM Quiz Night - Sponsor Virtual Mailroom Ltd Venue - Royal Southampton Yacht Club 1 Channel Way, Ocean Village, Southampton SO14 3QF Time : 7.00 pm for 7.30 pm Refreshments provided 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. 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