Editor: Pat Williams. E-mail pwilliams@creditman.co.uk
John Arnold. E-mail jarnold@creditman.co.uk
Site: Business Credit Management UK
URL: http://www.creditman.co.uk
Issue: Vol 4 Issue 16
Dated: 23 April 2000
Welcome to the Business Credit News UK.
In this weeks edition you will find the following topics.
What do you get for your money? Information includes: Full legal information, Shareholders, Directors and their addresses and multiple directorships, County Court Judgments, 4 years of profit & loss and balance sheet data, key ratios, industry comparisons, the predictive Graydon UK rating and risk score . This represents excellent value for money.
No up front subscriptions required to qualify for these prices. Payment can be made using our secure credit card server with Secure Trading.
Go to http://www.creditman.co.uk/graydon/home.html - NOW!
UKSERVICE SECTOR PAY AWARDS DECLINE, EASING FEARS OF INTEREST RATE HIKES - CBI
Pay awards have declined in the service sector, easing fears that inflationary pressure could trigger a further interest rate rise. Pay awards in manufacturing have picked up from recent lows.
The latest CBI Pay Data Bank survey, out last Monday, shows that service sector pay awards averaged 3.3 per cent in the first quarter of this year, which compares with 3.7 per cent in the fourth quarter of last year. The average was also 3.7 per cent a year ago.
Manufacturing sector pay awards averaged 2.6 per cent in the first quarter of 2000. This compares with 2.2 per cent in the previous quarter and 2.8 per cent a year ago.
Kate Barker, CBI Chief Economic Adviser, said:
"This data should ease concerns that service sector pay is in danger of spiralling upwards, putting pressure on inflation and triggering another hike in interest rates. It confirms our view that interest rates should not rise again. Settlements overall have been stable in the first quarter and this should feed through to lower earnings growth over the summer."
Forty eight per cent of manufacturers said pay awards have been kept down because they have been unable to put prices up since last August. This was followed in importance by low profit (36 per cent), low cost of living increases (19 per cent) and redundancy risk (15 per cent).
Twenty five per cent of manufacturers said the cost of living has pushed up pay awards since last August compared with 26 per cent over the year to July 1999.
Pressures keeping pay down are less severe in service sector firms. Twenty per cent of service sector firms said low cost of living was important, up from 18 per cent over the year to July 1999.
Thirty six per cent of service sector firms said that the need to recruit and retain labour was a significant pressure pushing pay awards up, followed by the cost of living (25 per cent).
MONETARY POLICY COMMITTEE SHOULD 'HOLD ITS NERVE', SAYS CBI
The Confederation of British Industry last Wednesday urged the Bank of England's Monetary Policy Committee (MPC) to hold its nerve following the publication of the official earnings data.
Kate Barker, CBI Chief Economic Adviser, said: "Although the headline figure is up slightly, the slow increase in February alone is encouraging and the MPC should hold its nerve.
"With inflation firmly under control, and in the light of CBI pay data indicating that settlements were flat in the first quarter, there is no justification for putting up interest rates.
"The employment figures further highlight the fragile nature of manufacturing recovery."
In last weeks edition we published the following question by one of our readers.
Should internet companies be treated differently for credit decisions than traditional businesses, and if so why??
One of the replies received is from Terry Heard of tihconsulting.co.uk at www.tihconsulting.co.uk E-mail Tihconsulting@aol.com
The answer to your question hinges, to a large extent, on what you mean by "Internet Companies". Are we talking here about the internet service providers and facilitators, or the dot.coms, such as "lastminute"? In other words, are we talking about those companies that provide the picks and shovels, or those demonstrating an unseemly haste to join the gold rush bandwagon, only a minimal percentage of which will strike gold?
If you would like to contribute to this 'discussion' please send your e-mail to jarnold@creditman.co.uk and/or Philip G. Parsons, Credit Analyst, IBM UK - Email: PHILIP@uk.ibm.com
WARRANT SALES - the saga continues!
Contributed by Stephen Cowan, Yuill & Kyle, Debt Recovery Lawyers,Scotland, E-mail Stephen Cowan scowan@yuill-kyle.co.uk
The recently published Scottish Law Commission report has recommended the retention of poindings and warrant sales (equivalent to English execution) although with substantial modification. As well as providing debtors with additional safeguards many items have been removed from the list which can be poinded and subsequently sold. Ultimately this will leave only "luxury" items which can be disposed of by way of a warrant sale. For example televisions and radios will now be exempt from poinding along with a microwave oven. In addition computers and accessory equipment will also be exempt should they be reasonably required for educational or training purposes up to a value of £100.00. Included in the list of exempt items will also be motor vehicles should they be required for business up to a value of £1,000.00. Items of a sentimental value having a value up to £150.00 will also be exempt.
Much criticism has been levied at the current system whereby poinded goods did not reduce the principal debt when sold but only went part of the way towards paying the expenses of sale. To get around this the Commission have recommended sales only proceed where all expenses will be met together with 10% of the value of the debt or £50.00 whichever is the lower.
The Commission have also suggested a special warrant to poind should now be required if intended to be carried out in premises which include a house. Such warrant will be refused unless the court is satisfied an arrestment (attachment of earnings) cannot be carried out effectively.
The Scottish Parliament will debate whether the current Private Members Bill, proposing the complete abolition of poindings and warrant sales should be passed. Three of the Parliament's sub-committees have recommended total abolition. The Parliament, of course, is not obliged to take the advice of the Scottish Law Commission. Mr Jim Wallace the Justice Minister, has welcomed the report. He is reported to have said "I want to look very closely at a number of the reforms recommended. It would appear that in practice this report would lift the shadow of poindings and warrant sales from those on lower incomes who simply cannot pay. I will now discuss the recommendations with my ministerial colleagues and aim to give details of how the Scottish Executive intends to take these issues forward before the Parliament debates the "Bill".
ECGD FINANCING FIRST HELPS UK FIRM CONSTRUCT PHARMACEUTICAL PRODUCTION LINE IN CROATIA
Richard Caborn, the Minister for Trade, on the 18 April announced that a financing innovation from ECGD had helped Hampshire-based company Aeromatic-Fielder Ltd win an order to supply and install a pill production line for a pharmaceutical plant in Zagreb, Croatia.
The exporter from Eastleigh will be working with its Swiss-based sister company and various suppliers out of France to fulfil the contract which has been placed by Pliva dd, one of the largest pharmaceutical companies in Central/Eastern Europe.
To help the UK company secure its share of the Swiss franc 20 million contract ECGD has agreed to underwrite loans by the London Branch of Bayerische Hypo-und Vereinsbank AG bank. The French export credit agency, COFACE, will be reinsuring ECGD for the value of the goods being supplied from France in accordance with the co-operation agreement between the two agencies.
This is the first time that ECGD has backed a loan denominated in Swiss francs on a pure cover basis, i.e. where interest is payable at a floating rate with no additional support from ECGD.
Mr Caborn said:
"This is another good example of the work by ECGD making it that much easier for an overseas company to place a valuable order in the UK. I am pleased that Aeromatic-Fielder have been able to take part in this healthcare project in Croatia."
BELFAST COMPANY TO IMPROVE ROADS IN VANUATU WITH ECGD BACKING
Richard Caborn, the Minister for Trade, today announced ECGD backing for a US$3.5 million contract won by Belfast-based Lagan Holdings Ltd. to restore and upgrade urban roads on the Pacific island of Vanuatu.
Lagan Holdings will be taking part in a project, funded by the Asian Development Bank, to improve existing road infrastructure of the island on behalf of Vanuatu's Department of Public Works. The company will be required, amongst other things, to create new drainage channels and to lay a sub-base with road surface dressings.
Lagan Holdings, who are engaged primarily in civil and marine engineering construction projects, and have recently completed the £23 million runway and taxiway surfacing for the new Hong Kong Airport, have taken insurance with ECGD to protect themselves against a range of payment risks.
Mr Caborn said:
"This is yet another good example of a British exporter being chosen to help with an overseas country's developmental needs. It also demonstrates again how vital ECGD support is to give our exporters confidence to tender for contracts in markets outside the OECD which might be unfamiliar to them."
Insurance for this contract is being made available through an ECGD Export Insurance Policy (EXIP) which protects UK exporters against the main political and commercial risks of not receiving payment from abroad once goods have been shipped or contractual services have been performed.
The Asian Development Bank (ADB) was established in 1966 as a multilateral development finance institution. Now owned by 57 member countries, its role is to promote economic and social development in the Asia- Pacific Region by providing financial and technical assistance.
NEW AUDIT EXEMPTION REGULATIONS
AUDIT EXEMPTION THRESHOLD INCREASE
Q. What are these regulations all about?
A. They will increase the turnover limit for small companies which want to claim exemption from audit. They do not apply to charitable companies, which will be the subject of a separate consultation.
Q. When will they come into effect?
A. Implementation date is not yet certain as the regulations have yet to be approved by Parliament. Subject to this, the new provisions will apply to year ends after 31 July.
Q. What are the current turnover limits?
A. Companies that are eligible and have a turnover of not more than £350,000 can claim exemption from the statutory audit of their accounts.
Q. What are the new limits?
A. The turnover threshold will be increased this year so that eligible companies with a turnover of not more than £1,000,000 will be able to claim exemption from having their accounts audited.
Q. Are any further increases planned?
A. Any further increases will be made in the light of the outcome of the Company Law Review, which is considering whether companies with a turnover between £1 million and 7pound;4.8 million should have the audit of their accounts replaced by a lighter, less costly form of assurance.
Q. Has the balance sheet total been increased?
A. No.
Q. Have the eligibility criteria changed?
A. No. The rules governing eligibility both for individual companies and groups remain unchanged as set out in sections 249B and 248(2) respectively.
Q. Have the rules about groups of companies changed?
A. No - except that the threshold has also been raised in line with the threshold for individual companies so that the aggregate turnover of the group must be not more than £1,000,000 in order to claim individual exemption for parent and subsidiary companies.
DORMANT COMPANY REGIME
Q. What are these regulations all about?
A. They further simplify the dormant company regime.
Q. When will they come into effect?
A. Implementation date is not yet certain as the regulations have yet to be approved by Parliament. Subject to this, the new provisions will apply to year ends after 31 July.
Q. What changes do they make?
A. The key changes are as follows:
they remove the requirement for the company to pass a special resolution not to appoint auditors; they require dormant companies which act as agents for other companies to disclose that fact in the notes to their balance sheet; they provide that the payment of certain statutory fees does not constitute a significant accounting transaction and can be disregarded for the purposes of claiming dormancy.
Q. Do the shareholders have any way of demanding an audit, if they no longer have to pass a special resolution?
A. Yes. As with other audit exempt companies 10% or more of the shareholders will be able to demand an audit.
Q. Why should dormant companies disclose their agency status?
A. So that anyone examining the accounts can determine that the company is acting in that capacity and make further enquiries if they wish.
Q. Which transactions can a dormant company disregard when claiming dormancy?
SMALL AND MEDIUM COMPANY ACCOUNTING THRESHOLDS
Q. Are there any changes to the small and medium company accounting thresholds?
A. Not under these regulations. Thresholds are likely to be increased to the maxima permitted under EU law, but implementation of that increase should await the outcome of the Company Law Review. The Company Law Review is considering radical changes to the accounting requirements for small companies
Former record bankrupt William Stern and his son Mark Stern were disqualified from acting as directors on the 18 April after the High Court found he and his son are unfit to be company directors. William Stern, whose second property empire went into insolvent liquidation with debts totalling more than £14 million, was disqualified for 12 years and Mark Stern was disqualified for 4 years.
Commenting on the Court's judgement, Minister with responsibility for Insolvency Service, Dr Kim Howells said:
"Directors hold a privileged position in society. It is only fair and reasonable that we expect them to be competent and trustworthy. If they fall below these standards we will take action to disqualify them. This is a message that should be put up in every boardroom."
After being discharged from bankruptcy in 1985 William Stern built up his second property empire. The court heard how Stern and his son traded at the risk of creditors and drew out large sums of money, which appeared to have no basis, between 1990 and 1994 even though creditors of the companies controlled by them were being left unpaid.
The Court also found there had been Phoenix Trading. The failed Kensington Management Services was replaced by Westminster Property Management as management company for the Dollar Land Group and they were found to be basically the same business working in the same manner simply under a different name.
Arriving in the UK as a refugee, William Stern first took control of The Fresh Water Group, Britain's largest private sector landlord', in the 1960s when he took the company over from his father in law. His first property empire collapsed in 1974 with company debts rising to around £143 million. Five years later Stern became the UK's biggest bankrupt (only to be superseded by Kevin Maxwell) with personal debts in excess of £118 million.
William Stern and Mark Stern controlled a property Group owned by Dollar Land Holding Plc (Holdings). Put very simply, Westminster was the management and administration company for the Dollar Land Group. Management and administration services for the Group were initially provided by Kensington Management Services Limited formerly known as Dollar Land Management Ltd in the period from December 1986 until January 1993, then by Westminster from February 1993 until October 1994, and since then have been provided by Piccadilly Property Management Limited. This case is based principally on the Sterns' conduct as directors of Kensington and of Westminster.
Section 6 of the Company Directors Disqualification Act 1986 allows the Court to make a disqualification order of between 2 and 15 years for unfit conduct. This was the section used by the Secretary of State.
Section 13 of the Company Directors Disqualification Act 1986 states that if a person acts in contravention of a disqualification order that person will be liable on conviction on indictment to imprisonment for not more than 2 years or a fine or both, and on summary conviction to imprisonment for not more than 6 months or a fine not exceeding the statutory maximum or both. Any person with information to suggest that anyone has acted in contravention of this provision should telephone the Disqualification Hotline on 0845 601 3546.
*** Forthcoming Creditors Meetings ***
Contributed byhttp://www.insolvency.co.uk
For more detailed information and ALL the British Isles insolvency's (liquidation's, receiverships, administrations, dividends, creditors) please visit http://www.insolvency.co.uk
From 24/04/2000 to 02/05/2000 Number of Creditor meetings : 159 Section Company Time Venue 138 Scotland - Interim Liquidator calling Creditors Meeting 26/04/2000 McArthur of Scotland Ltd 12.00 pm Glasgow 27/04/2000 Glenbarr Construction Ltd 12.00 pm Campbeltown Perm-A-Clad Roofline Ltd 12.00 pm Glasgow 23 Administrator Calling a meeting of Creditors 25/04/2000 Jems Holdings Ltd 02.00 pm Manchester Wardell Security Ltd 12.20 pm Manchester Wardell Warehousing Services Ltd 12.10 pm Manchester Warrington Distribution Centre Ltd 12.00 pm Manchester 28/04/2000 Cobex Ltd 10.00 am Leeds Kedgeworth Ltd 11.00 am Shaftesbury Storehaven Ltd 11.00 am Shaftesbury 02/05/2000 Booth Equipment Ltd 03.00 pm Sheffield Booth Plant & Equipment Ltd 03.30 pm Sheffield 48 Receiver calling unsecured Creditors Meeting 25/04/2000 Matrice Ltd 10.00 am London Robert Michaels Holding Plc 10.00 am London 26/04/2000 Island Court Healthcare Ltd 12.00 pm Wolverhampton 27/04/2000 Batchelor Joiners & Contractors Ltd 10.30 am Leeds 28/04/2000 Heathmoore Ltd 11.00 am Leeds Nostalgia Distribution Ltd 10.00 am London PFY Group Ltd 10.00 am London Reducta of Quill Street Ltd 10.00 am London 02/05/2000 Curbishley Foundations Ltd 10.30 am Manchester Curbishley Holdings Ltd 10.30 am Manchester Curbishley Joinery Ltd 10.30 am Manchester Curbishley Ready Mixed Concrete Ltd 10.30 am Manchester Curbishley Transport Ltd 10.30 am Manchester Pickmere Labour Services Ltd 10.30 am Manchester 67 Scotland - Receiver calling Meeting of unsecured Creditors 02/05/2000 Peter Thompson (Wheelchairs) Ltd 11.00 am Glasgow 98 Creditors Voluntary Liquidations 25/04/2000 A & C Highland Leather Ltd 10.30 am London Afterglow Systems Ltd 10.15 am Bately BEB & D Electrical Engineers Ltd 12.00 pm Manchester Canon Engineering (Bury) Ltd 11.45 am Manchester Contract Business Services Ltd 11.00 am Uckfield Customer Analysis Retention Serv Ltd 11.00 am Bristol DSL Insurance Personnel Ltd 11.00 am London David Knox Textiles Ltd 10.30 am London Eco-Gas Ltd 10.30 am London Eldec Ltd 10.30 am Manchester Factorcode Ltd 10.30 am Leicester Forestwood Foods Ltd 10.00 am London Global Pipeline Supplies Ltd 11.00 am Manchester Import Development Ltd 10.30 am Weybridge Insight IT Management Ltd 03.00 pm Chandlers Ford Madeace Ltd 12.00 pm London Mike Everett & Sons Transport Ltd 10.00 am Brentwood Monet Designs Ltd 10.30 am Birmingham Omni Consumer Products Ltd 10.15 am Bately Westchurch Enterprises Ltd 11.30 am Preston Winterski Holidays Ltd 02.30 pm Milton Keynes Yachtmaster Services (Q Y A) Ltd 12.00 pm Royston 26/04/2000 A1 Damproofing & Cavity Wall Ties Ltd 11.30 am Preston Accessability Ltd 12.00 pm London Bluelake Trading Ltd 12.00 pm Leicester Corsi F I T (UK) Ltd 10.30 am Liverpool David Barnett Machinery Ltd 10.30 am Leeds Flying High Holidays Ltd 11.00 am Manchester Glopec Holdings Ltd 12.00 pm London Henley Marketing Consultants Ltd 11.45 am London Hooton Precision Engineering Ltd 10.15 am Newcastle-u-Lym Kingfisher Kent Ltd 02.30 pm Tunbridge Wells L G International Ltd 12.00 pm London Mainline Industrial Products Ltd 10.00 am Southampton Moss Decorators Ltd 12.00 pm Glasgow Nationwide Site Services Ltd 11.15 am Southampton Peakhirst Ltd 10.30 am Droitwich Spa Positive Income (0001) Ltd 10.30 am Holmfirth Positive Income (0002) Ltd 10.45 am Holmfirth Positive Income (0003) Ltd 11.00 am Holmfirth Positive Income (0004) Ltd 11.15 am Holmfirth Positive Income (0005) Ltd 11.30 am Holmfirth Positive Income (0006) Ltd 11.45 am Holmfirth Positive Income (0007) Ltd 12.00 pm Holmfirth Positive Income (0008) Ltd 12.15 pm Holmfirth Positive Income (0009) Ltd 12.30 pm Holmfirth Positive Income (0010) Ltd 12.45 pm Holmfirth Positive Income (0011) Ltd 01.00 pm Holmfirth Positive Income (0012) Ltd 01.15 pm Holmfirth Positive Income (0013) Ltd 01.30 pm Holmfirth Positive Income (0014) Ltd 01.45 pm Holmfirth Positive Income (0015) Ltd 02.00 pm Holmfirth Positive Income (0016) Ltd 02.15 pm Holmfirth Positive Income (0017) Ltd 02.30 pm Holmfirth Positive Income (0018) Ltd 02.45 pm Holmfirth Positive Income (0019) Ltd 03.00 pm Holmfirth Positive Income (0020) Ltd 03.15 pm Holmfirth Rising Sun (Swanmore) Ltd - The 11.30 am Boscombe East Roger Williams (Furnishers) Ltd 12.00 pm Llandudno S O S Site Services Ltd 11.00 am London Skymag Ltd 11.00 am London Steve Maxwell Associates Ltd 11.30 am Bexley Streeter Plant Ltd 02.30 pm London Studio One Print Ltd 11.30 am Luton Twelve Horton St Management Co Ltd 11.00 am Harpenden Unimoor Ltd 10.30 am Southend-on-Sea Wimbourne Ltd 11.00 am Birmingham Writtle Steel Traders Ltd 02.15 pm Southend-on-Sea 27/04/2000 AA Services Ltd 11.30 am Leicester Bahl Ltd 11.20 am London Balletech Ltd 11.00 am Manchester Base Clothing Ltd 02.00 pm London Books Direct (UK) Ltd 11.30 am London Calmtek Ltd 12.30 pm Eastbourne City FM Ltd 04.00 pm London Conix Site Machining Ltd 12.00 pm Cardiff Coventry Commercials Ltd 10.30 am Coventry Crash (Preston) Ltd 11.30 am St Annes Crown GB Construction Ltd 12.00 pm London D3 Scaffolding Ltd 11.00 am Southend-on-Sea Euro-Veynor Ltd 10.30 am Birmingham Friend of Friends Ltd 11.00 am London Furniture People Ltd - The 02.30 pm London Grand Ltd 10.00 am Bolton Greytree Trust - The 11.00 am Hereford Halfpenny Self Drive Ltd 12.00 pm London Haverhill Commercial Ltd 12.00 pm Impington Intermedia Vision Ltd 12.00 pm London La Cuisine Ltd 11.30 am Birmingham Oberman Associates Ltd 12.00 pm Nottingham P & P Property Maintenance Ltd 11.00 am Egham Press & Publishing Agency Ltd - The 11.15 am Liverpool R M Curtains (Maidstone) Ltd 11.45 am London Reads Cafe Bars Ltd 11.00 am Rugby SFL Management Ltd 02.00 pm Moorehouse Shep Associates Ltd 11.00 am Harpenden Space Division Ltd 11.00 am Runcorn St Giles Enterprise & Access Ctre Ltd 11.30 am Lincoln Star-Tex UK Ltd 12.00 pm Warrington Transhaul Transport Ltd 10.30 am Newcastle-u-Tyn Witcomb-Bell Ltd 11.00 am London 28/04/2000 Business Furniture Ltd 11.00 am Bristol Cafe Fidel Ltd 12.00 pm London Clyde Investments Ltd 11.00 am Glasgow Dew Systems Ltd 10.30 am Barnwood Eclipse Internet Ltd 02.30 pm Altrincham Euromedical Ltd 12.00 pm Birmingham Fastrack Finance Ltd 11.00 am Bristol Gladstone Commercial Property Serv Ltd 12.00 pm Woodford Green Globalrange Trading Ltd 02.00 pm London H K W Security Services Ltd 11.30 am Altrincham Hodgsons Upholstery Ltd 10.30 am Warrington Jon Simon (Boyswear) Ltd 11.30 am London Michael & Sons Ltd 11.30 am London Milton Mills Engineering (Dorset) Ltd 10.30 am Salisbury Property Shop Ltd 03.00 pm East Grinstead R V B B Ltd 10.30 am Caerphilly Rees & Dee Ltd 11.30 am Southampton South Pacific Trading Co Ltd 03.00 pm Bristol Vale of Neath Coal Co Ltd 12.00 pm Swansea Video Entertainment Ltd 03.00 pm London W J Donovans Ltd 11.00 am Southend-on-Sea 02/05/2000 Design Partners (Cornwall) Ltd 11.45 am Plymouth Dollwood Ltd 02.30 pm Newcastle Eurotech Cambridge Ltd 11.30 am London Future Leisure Ltd 12.00 pm Manchester Goldstock Associates Ltd 11.00 am Sheffield Jayclass Systems Ltd 10.30 am London Oxgate Joinery Ltd 10.00 am London Prompots Ltd 11.00 am Plymouth Streetbetter Enterprises Ltd 11.00 am Sheffield Tomkinson Construction Ltd 12.00 pm Liverpool
TW LW TW LW
USA 1.58 1.59 Canada 2.35 2.32
Austria 22.98 22.95 Portugal 334.84 334.41
France 10.95 10.94 Belgium 67.37 67.28
Finland 9.93 9.91 Italy 3233.95 3229.83
Germany 3.26 3.26 Sweden 13.84 13.83
Holland 3.68 3.67 Switzerland 2.61 2.62
Spain 277.90 277.54 Ireland 1.31 1.31
Australia 2.67 2.66 Denmark 12.41 12.42
Hong Kong 12.34 12.40 Euro 1.67 1.66
Africa Com 10.47 10.49 Saudi Arabia 5.94 5.97
India 69.15 69.50 Malaysia 6.02 6.05
Singapore 2.69 2.73 Norway 13.65 13.59
Japan 165.39 168.58
TW This week LW Last week.
Lynx, the software and computer systems group, announced pre-tax profits of 1.79 million pounds, on turnover of 111 million, for the six months ending 31st March 2000. Earnings per share stand at 1p.
W. H. Smith, announced pre-tax profits of 101 million pounds on turnover of 1,355 million, for the six months ending 29th February 2000. Earnings per share stand at 29.2p.
St. Ives, the printing group, announced pre-tax profits of 32 million pounds, on turnover of 239 million, for the six months ending 28th January 2000. Earnings per share stand at 21.3p.
Time Products, the watch distributor, announced pre-tax profits of 7.41 million pounds, after exceptional charge, on turnover of 64.4 million, for the year ending 31st January 2000. Earnings per share stand at 10.3p.
MERGER CLEARANCE
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 to the Monopolies and Mergers Commission under the provisions of the Fair Trading Act 1973:Proposed acquisition by Robert Wiseman Dairies plc of the liquid milk and cheese business of Unigate plc
COMPETITION COMMISSION CLEARS VIVENDI ACQUISITION OF AN INTEREST IN B SKY B
Stephen Byers, Secretary of State for Trade and Industry, on the 18 April published the report of the Competition Commission on the acquisition by Vivendi SA (Vivendi) of an interest in British Sky Broadcasting Group plc (BSkyB).
He announced that the Competition Commission has cleared the merger between Vivendi and BSkyB. The Commission found that Vivendi had acquired a material interest in BSkyB but that the resulting merger may not be expected to operate against the public interest Where the Competition Commission clears a merger, the Secretary of State has no power to take any action other than to publish the Commission's report.
Mr Byers said:
"The Competition Commission reports that concerns expressed to them by third parties over the merger related mainly to the acquisition of broadcasting rights for sports and films and the supply of conditional access technology. The Competition Commission considers these concerns to be understandable given the position of BSkyB and Vivendi in the market.
However, the Commission takes the view that there are insufficient grounds to expect the merger adversely to affect competition or consumers in the UK, and concludes that the merger may be expected not to operate against the public interest."
Vivendi is a public company listed on the Paris Stock Exchange, its main areas of activity being utilities and communications. It has a 49 per cent shareholding in Canal+, which operates pay-TV services in France and a number of other EC countries. BSkyB is the leading supplier of pay-TV services in the UK. It accounts for about 50 per cent of pay-TV subscribers, and also has a strong position in supply of content, particularly as a result of having acquired rights to premium sport and films, a position in the market it has built up through its innovation and investment.
In July 1999 Vivendi acquired 24.44 per cent of the shares in BSkyB and the right to appoint a director to its board. The largest shareholder in BSkyB is News International plc (News International) with almost 40 per cent of its shares, and with the right to appoint five of its 14 directors. The Competition Commission concluded, notwithstanding the degree of control which News International is able to exercise over the policy of BSkyB, that Vivendi acquired the ability materially to influence the policy of BSkyB during the four months preceding the date of the reference. The Commission also concluded that Vivendi was to be treated as having thereby acquired control of BSkyB for the purpose of the Fair Trading Act 1973, and that a merger situation qualifying for investigation had been created.
The main concerns expressed to the Commission about the merger situation related to the acquisition of broadcasting rights for sports and films, and the supply of conditional access technology. The availability of programme rights, particularly for sport and films, is of great importance to the ability of different systems and channel providers to compete. Conditional access systems, which allow programmes to be unscrambled only for subscribers, are also essential for the operation of pay-TV systems.
In relation to sports rights, the Commission considered that the merger situation was unlikely to result in any significant enhancement of the position of BSkyB, which is already a strong one. The key national rights are unlikely to be affected by collaboration, and the Commission found that there was insufficient reason to expect that the merger situation would materially impact on BSkyB's acquisition of rights to international events if joint bidding occurred. Further, there was the prospect that any anti-competitive effects of collaborative bidding could give rise to intervention from the national or EU competition authorities. The Commission did not therefore expect that the merger situation would have an adverse effect on the acquisition of sports rights in the UK or on competition between pay-TV operators. For similar reasons, the Commission did not expect that the merger situation would have an adverse effect on the acquisition of film rights.
NDS Group plc (NDS), in which News Corporation owned the majority of shares, and SECA, in which Canal+ has a 50 per cent shareholding, are the main suppliers of digital conditional access technology in the UK. The Commission reported that there was concern from third parties about the effect of the merger situation on competitors to BSkyB, in particular ONdigital, which is supplied by SECA. However, the Commission found insufficient evidence to expect that SECA would restrict support for ONdigital, or abuse the information to which it would have access, since either action could damage SECA and possibly Canal+, and given the contractual provisions currently in place. The Commission recognized the potential for a degree of convergence between the NDS and SECA systems, but there was a general consensus that consumers might benefit from convergence or interoperability between systems and it was far from certain what form such convergence might take. The Commission did not therefore expect that there would be adverse effects of the merger situation on the supply of conditional access technology.
The Commission concluded that this merger situation may not be expected to operate against the public interest. However, the Commission noted that the pay-TV market was currently evolving rapidly as a result of technological and other developments, and would merit continued scrutiny by the regulatory authorities.
PROPOSED ACQUISITION BY NABISCO GROUP HOLDINGS CORP OF UNITED BISCUITS PLC AND THE HORIZON BISCUIT COMPANY LIMITED
Stephen Byers, Secretary of State for Trade and Industry, has decided, in accordance with the advice of the Director General of Fair Trading, to request the European Commission to refer to the UK authorities the proposed acquisition by Nabisco Group Holdings Corp of United Biscuits (Holdings) PLC and The Horizon Biscuit Company Limited under Article 9 of the EC Merger Regulation. This is currently being considered under the EC Merger Regulation.
Stephen Byers said;
"The Director General of Fair Trading has advised that the proposed merger appears to give rise to competition concerns in the UK which warrant further investigation. I agree and am therefore requesting the European Commission to refer the case to UK."
If the Commission refers this merger to the UK authorities, it will be considered under the merger provisions of the Fair Trading Act.
The proposed merger between Nabisco Group Holdings Corp, United Biscuits (Holdings) Plc and The Horizon Biscuit Company Limited was notified to the European Commission on 22 March 2000 under the terms of the EC Merger Regulation (Council Regulation 4064/89 as amended by Council Regulation 1310/97). In accordance with Article 19 of the Regulation the UK received a copy of the notification on 27 March 2000.
Under Article 9 (2)(a) of the EC Merger Regulation a Member State may inform the EC Commission that a merger threatens to create or to strengthen a dominant position as a result of which effective competition will be significantly impeded on a market within that Member State, which presents all the characteristics of a distinct market.
If the Commission considers that a merger threatens to create or to strengthen a dominant position as a result of which effective competition would be significantly impeded on a distinct market within that Member State it shall either:-
deal itself with the case in order to restore effective competition on the market concerned; or
refer whole or part of the case to the Member State concerned with a view to the application of the Member State's competition law.
The UK has previously made seven Article 9 requests to the Commission for a case to be referred to the UK authorities. These requests were in the cases of Hanson plc/Pioneer International Limited, Anglo American plc/Tarmac plc, Exxon Corporation/Mobil Corporation (1999), Electricite de France/London Electricity PLC (1999), Redland plc/Lafarge S.A (1997), GEHE and Lloyds (1996) and Tarmac/Steetley (1992).
MERGER OF THE CONSUMER RENTAL BUSINESSES OF GRANADA GROUP PLC AND RENTAL HOLDINGS LTD TO FORM BOX CLEVER
Stephen Byers, Secretary of State for Trade and Industry, announced on the 19 April that he has decided not to refer the merger of the consumer rental businesses of Granada and Rental Holdings (forming Box Clever) to the Competition Commission, provided the parties give undertakings to remedy competition concerns raised by the merger. Mr Byers' decision is in accordance with the advice of the Director General of Fair Trading (DGFT).
Stephen Byers said : "Box Clever brings together the two largest providers of electrical goods for rent, particularly TVs and VCRs. Although it forms a small part of the overall market for the supply of TVs and VCRs, rental is an important option for particular groups in our society, including the elderly, who may not wish to buy their equipment outright and who rent for long periods of time. There may be scope for Box Clever to exploit this customer group and I want to ensure they are protected against this.
"I have therefore asked the DGFT to seek undertakings from the parties requiring Box Clever:
- not to increase rental charges (except to cover any tax increase) for all existing contracts and for new customers who rent for more than five years without upgrading their equipment;
- not to charge an administration fee for upgrading equipment (except in respect of direct to home rental where the fee will be capped at the current level);
- to make a one-off offer under which, in appropriate circumstances, all renters of more than five years who have not previously upgraded or added to their equipment will be offered the opportunity to upgrade to more modern equipment at no extra charge; and
- to adopt a minimum rental period of 12 months for all customers."
Interested parties are invited to make any comments on the principle of the undertakings outlined above in writing to the Office of Fair Trading by 4 May. A second consultation will take place on draft undertakings and a further announcement made after the DGFT has provided further advice following the consultation period.
A study of issues that could affect the development of e-commerce in the UK has been published on the 17 April by OFTEL and the OFT. The consultation, entitled "Competition in e-commerce" is in response to the Government PIU report "e-commerce@its.best.uk". The report asked OFTEL and the OFT to identify any emerging barriers to competition in electronic markets and make recommendations to ensure that they are addressed.
In the near future it is anticipated that people will access the Internet at much higher speeds and use a range of devices other than PCs to carry out e-commerce transactions. The study looks at the way markets are likely to develop as a result and at how companies could evolve to take advantage of these new technologies.
Preliminary conclusions of today's study include:
David Edmonds Director General of Telecommunications said today:
"For e-commerce to develop in the UK to its full potential, it is vital that companies, and small businesses in particular, can take full advantage of new technologies to provide innovative services to customers.
"Competition in the mechanisms through which e-commerce will be delivered is key to achieving this aim. This will ensure that both businesses and home users enjoy maximum choice of e-commerce services through the medium of their choosing at competitive prices."
Margaret Bloom, the OFT's Director, Competition Policy, added:
"Today's study promotes the primary objective of both OFT and OFTEL which is to ensure the consumer receives maximum benefit from new e-commerce developments.
"We will however take action where necessary to prevent anti-competitive behaviour whilst promoting innovation and competition in the e-commerce marketplace."
The OFT has commissioned two other studies on: whether the established competition policy methodologies are applicable to the assessment of retail e-commerce markets and: market definition.
The OFT is also working with other bodies to promote a secure web environment where consumers can easily identify trustworthy businesses working to high standards of consumer care.
The study does not address issues such as consumer information, security and encryption, which are being looked at elsewhere in Government.
The joint study is available on both OFTEL and OFT websites - www.oftel.gov.uk or www.oft.gov.uk
26th April 2000 Companies House Seminar Pine Lodge Hotel Kidderminster Road Bromsgrove B61 9AB Registration 5.30pm - 6.00pm Seminars include a question and answer session and buffet 6.00pm - 9.00pm Cost 37.60 pounds Contact Tamara Bent tbent@companieshouse.gov.uk +44 (0)29 20380911 23 May 2000 The ICM National Conference and Exhibition Cumberland Hotel, Marble Arch, London W1 Credit Management in the Electronic Age For more details of the Conference or to exhibit phone the ICM Training department on 01780-722907 16 June 2000 The ICM Fellows Luncheon Royal Air Force ClubPiccadillyly, London W1Ticketses are #39.50 plus vat each. To reserve tickets contact the ICM Training Department on 01780-722907 fax 01780 721271 e-mail training@icm.org.uk 20 June 2000 The ICM AGM at 3.30pm The Water Mill, Station Road, South Luffenham, Oakham, Leics, LE15 8NB 5 July 2000 E-Commerce for the Credit Manager New ICM Conference Kenilworth, Warwickshire Contact the ICM Training Department on 01780-722907 e-mail training@icm.org.uk Tuesday 3 October 2000 ICM Credit Scotland 2000 (Conference and Exhibition) Hampden Park Football Stadium, Glasgow Anyone interested in attending (or exhibiting) should contact David Ancliffe on (0131 200 8686). Friday 20 October 2000 Millennium Annual Dinner of the ICM Drapers Hall, City of London.
To unsubscribe to this list please send e-mail addressed to jarnold@creditman.co.uk as follows:
unsubscribe credit-news your e-mail name and address
Business Credit Management UK: John Arnold jarnold@creditman.co.uk
Business Credit News UK: Pat Williams pwilliams@creditman.co.uk