5th September 2019 Press Release from InfolinkGazette
Steel stockholders, Mercer & Sons Limited went in to Liquidation owing £2,063,300 to 273 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “on 25th June 2019 a charge was registered in favour of Fixings and Tools Limited, who were one of the beneficial owners of the business.”
Loss making mobile content distributor Mobile Streams PLC has announced its intention to seek shareholder approval to cancel listing of shares on London's junior AIM. Commenting on the reasons behind the delisting, the board said: “In recent years, the revenues have declined significantly, and the Directors consider that the scale of the business is no longer appropriate for that of a publicly quoted company. Additionally, the Directors believe that rebuilding the business as a publicly quoted company will be more challenging due to the management time and the legal and regulatory burden associated in maintaining the Company's AIM listing.”
Meat wholesalers, Nigel Fredericks Trading Limited went in to Administration owing £3,865,240 to 93 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “Nigel Fredricks was pre-packed less than 12 months ago, so this is the second time trade creditors have taken a loss.”
IT Services Company, Hutchinson Networks Limited went in to Administration owing £1,896,980 to 180 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “The company grew rapidly in 2018, almost doubling the number of staff after an injection of new debt and equity but lost money on some of the IT projects undertaken; with no more funding available, the company ran out of cash.”
Manufacturer, Quinn Radiators Limited went in to Administration owing £7,356,770 to 257 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the Administrators report informs creditors that there is significant over capacity amongst European panel radiator manufacturers and Quinn faced stiff competition from Turkish manufacturers who have benefitted from the significant depreciation in the Turkish Lira”.
Harewood Associates Ltd, which offered unregulated investments in property went in to Administration owing £31,838,519 to 878 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the company was selling unregulated loan notes to private investors with typical rates of up to 12% per year, and as the unsecured creditors are mostly private investors, the Administrators have anonymised the list”. Greg Added, “the search for yield in a low interest rate environment is tempting some private investors in to hugely speculative investments that put at risk the majority of their capital”.
Prime Industries Limited went in to Liquidation owing £2,062,770 to 78 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “apart from the usual warning sign of overdue accounts, the Health & Safety Executive (HSE) show 6 breaches for control of hazardous substances and health & safety related issues”. Greg added: “risk managers rarely check the HSE database, but multiple HSE breaches and business failure are correlated”.
The Wiggins Teape Pension Scheme has been left with a £55 million deficit, which is in addition to the 420 Unsecured Creditors who lost over £14M . Greg Connell, MD of InfolinkGazette said: “ the participating employer in the former FTSE 100 constituent showed a net surplus of £73.6 million in the last accounts, which on a solvency basis 18 months later turns out to be a deficit of £55 million.” Greg added: “creditors should ignore pension surpluses shown in company accounts, they are calculated on a flawed basis and even valuations completed in 2018 are out of date”.
SURREY CONSTRUCTION SOUTH EAST LIMITED went in to Liquidation owing £3,618,240 to 112 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “The 2018 accounts have been overdue since 31st May; the parent company Lucas Design & Construction Ltd are also late filing their accounts”. Greg added: the filing history reveals repetitive accounting period adjustments that are a common feature in the history of failed businesses; if the accounts available at Companies House are over 21 months old, trade creditors would be well advised to suspend credit”.
Eddie Stobart Logistics plc issues a second profit warning and is suspended from AIM as it fails to publish interims in time. The Board Announced that: as part of the Group's review carried out in conjunction with the Group's auditors in relation to the interim results, the Board is applying a more prudent approach to revenue recognition, re-assessing the recoverability of certain receivables, as well as considering the appropriateness of certain provisions. While revenue expectations for the first half are broadly in line with previous guidance, the full impact of these items on Adjusted EBIT is unclear, but it is likely to be significantly lower than anticipated at the time of the Half Year Trading Update on 9 July 2019.
Construction giant Shaylor Group Limited went in to Administration owing £34,932,800 to 666 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “Most of the large Credit Reference Agencies were still recommending credit right up until the appointment of Administrators, which serves to demonstrate the benefits of credit insurance, even when the experts are saying all is well”.
Luxury chocolatier Rococo Chocolates Ltd could sweeten the deal for 87 unsecured creditors, when the company went in to Administration owing £905,379 to their UK creditors.
Industrial trading holding company CEPS PLC issues a profit warning, the Board announced that, losses at the CEM group, now including Sampling International, have increased significantly, due in part to the material integration and rationalisation costs. Group trading overall is materially behind expectations for the six months to 30 June 2019.
111 year old Electrical Engineering Company Humber Electrical Engineering Company (heeco) went in to Administration owing £1,920,200 to 157 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the Administrators report claimed that the company was outbid on two contracts worth £2 million, which left the company with a gap in production and an immediate cash flow problem”.
The food supplier linked to a fatal listeria outbreak The Good Food Chain Limited went in to liquidation owing £2,122,250 to 110 unsecured creditors.
Anaerobic digester Grays Biogas Limited sucked the air out of 36 unsecured creditors owed £17,663,200 when the fuel from waste business went in to liquidation. Greg Connell, MD of InfolinkGazette said: “secured charge holders share the pain of unsecured creditors as Land & Buildings with a book value of £10.2 million are reported to have no realisable value by the liquidator”.
Construction firm Venture Construction (Southern) Limited went in to liquidation owing over £3,149,650 to 30 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “in the statement of affairs, the liquidator lists a claim against “Mace Construction” with a book value of £1,250,000, but doesn’t account for any realisable value”.
Fast growing construction firm Bartley Construction Limited went in to liquidation owing over £1,720,000 to 81 unsecured creditors.
Another week, and yet another listed company discloses an Accounting error - Advertising agency M&C Saatchi discloses accounting issues and warns on profits, stating: the Board has made the decision to take a one-off exceptional charge of £6.4m to the Company's 2019 results. This equates to £4.9m of specific issues identified in the review. We believe we have discovered the full extent of the issues, but to be doubly sure, the Board is appointing independent advisors to undertake a review of all the Group's accounts and accounting systems, as well as setting aside an extra £1.5m as a conservative measure to provide for any potential further items arising. We expect the independent review to be completed by November this year. In addition, as part of the Company's ongoing assessment of its assets, it has decided to make an adjustment of £1.4m in respect of its property-related assets as it is in the middle of an office refurbishment
Power tool manufacturers took a hammering when building supplies retailer Marshall & Parsons Limited went in to liquidation owing over £760,000 to 41 unsecured creditors.
Online mobile phone retailer GPSK Limited went in to liquidation owing over £1 million to 22 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “all of the usual precursors to insolvency were present in the filing history: April 2017 accounts; a change of control; and an accounting period extension.”
Securities traders SHIRE WARWICK LEWIS CAPITAL LIMITED went in to liquidation owing £8.8 million to unsecured creditors. Greg Connell, MD of InfolinkGazette said: “Czech investor Consult II SRO is owed £ £3,976,060, and according to Law360, Consult II were alleging that Shire Warwick Lewis Capital misused its funds in a bogus foreign exchange trade, because that transaction was carried out in euros. The asset manager rejected the allegations, calling them “unreal” and implausible.”
Digital agency Chalk Global Limited went in to liquidation owing over £1 million to 24 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the latest accounts were for the period ending 30 September 2017, and the 2018 accounts were not overdue because the previous accounting period had been extended”. Greg added “although there are legitimate reasons for extending accounting periods, it happens so frequently on companies that subsequently go out of business, creditors should see it as a warning sign”.
Affordable cosmetics business Warpaint London PLC issues a profit warning, blaming a number of factors including the geographic mix of sales, adverse exchange rate movements and the Group's investment in its strategy for future growth.
UK engineering group Senior PLC avoid issuing a profit warning but highlights concern over Boeing’s 737 Max grounding. The board stated: “we continue to monitor the developments on the 737 MAX situation closely and have yet to receive definitive information from Boeing about how long rate 42 per month build rate will be in place. Looking ahead, the Group is working to minimise the impact of the risk associated with the challenges.
Corporate pension deficits are set to rise for schemes that are not already fully hedged against changes in interest rates and inflation, as the UK benchmark 10-year gilt yield dropped below 0.50%; 10-year gilt yields have fallen from 1.7% in September 2018.
Greg Connell, MD of InfolinkGazette said: “falling bond yields are a direct result of the vast asset purchase schemes introduced by central banks to stimulate the economy, but pension funding gaps must be paid for by the sponsoring company and the negative cash flow impact of deficit contributions can cause financial distress”. Greg added, “trade suppliers should be mindful that they are generally making credit decisions based on 2018 accounts when the company’s pension scheme liability might have been much lower”.
Posh frock retail L K Bennett Limited went in to liquidation owing over £31 million to 219 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the company had been trading at a loss and ran out of cash around February 2019, when Wells Fargo reduced funding after the discovery of significant variances between recorded stock and physical stock”.
Unauthorised investment scheme operator, Xcore Capital Limited went in to liquidation owing over £1 million to unsecured creditors. Greg Connell, MD of InfolinkGazette said: “The UK financial services watchdog, the Financial Conduct Authority (FCA) had a £1 million enforcement order against the firm; the money would have been used to repay unfortunate investors”.
Death defying profit warnings – Funeral Directors, Dignity PLC issued a second profit warning over the number of deaths. The board stated that deaths in the first half of the year are 7% lower than the same period last year. Historical data over the last 20 years indicates that the number of deaths in 2019 is likely to be within three per cent of the previous year. The outlook for the full year therefore remains dependent on a greater number of deaths in the second half of this year than the previous year.
Greg Connell, MD of InfolinkGazette said: “that’s bad news for funeral directors, and bad news for Pension Plans, but good news for the rest of us”
FX traders Fixi PLC went in to liquidation owing £1,137,150 to 38 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “Fixi was still raising £2.2 million up to March 2018 but shut down operations in December 2018 after consulting with the FCA. UK Clearing House Limited were the largest single creditor, with losses of £420,000.
Liverpool based meter operator provider, Access Install Limited went in to liquidation owing £4,918,110 to 82 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the challenger energy supply sector has been a major blackspot for trade suppliers and alternative finance providers, but the blight now seems to have spread to the broader energy distribution sector”.
Cloud software provider, the AIM listed i-nexus Global plc issued a revenue warning but stopped short of warning on profits. The software solutions provided warned that the pipeline of opportunities is not converting at the rate required to meet the Board's revenue expectations for the financial year. Greg Connell, MD of InfolinkGazette said: “cloud spending has been the main focus of IT investment since 2017, and cloud service providers and technology vendors have seen rapid revenue growth. The market is still growing, but the rate of growth would appear to be slowing.”
Old established grain & seed merchants Isaac Poad & Sons Limited went in to liquidation owing £1,316,780 to 75 unsecured creditors.
Specialist printers Colour Five Ltd went in to liquidation owing £896,699 to 89 unsecured creditors.
When is a dormant company not really dormant - APRIL NUMBER 3 LIMITED formerly F W Evans, where Eci Partners Llp (the 2015 buyers of Evans Cycles) are listed as the person of significant control, has just filed a liquidator’s statement of affairs, showing £2.9 million owed to HMRC (no other creditors), after filing dormant accounts for the last 3 years.
Luxury car maker Aston Martin has slashed sales and profit forecasts in a trading update, with a revised outlook, ahead of its half-year results, blaming the challenging external environment and worsening macro-economic uncertainties.
The Volume of County Court Judgments (CCJs) against businesses in England and Wales rose 4% in the first half of 2019, according to figures released (July 24) by Registry Trust. Year-on-year volumes have risen for the past three years and that is despite the total value of business CCJs having dropped since 2018.
Greg Connell, MD of InfolinkGazette said: “trade creditors can take a crumb of comfort from lower value CCJ, but the rise in volumes is a indicator of higher levels of financial distress”.
Hyped fintech failure Loot Financial Services has left 32 UK unsecured creditors owed £1,200,000. Greg Connell, MD of InfolinkGazette said: “Shareholders of the 5 year old fintech company lost over £12 million”.
Car retailer Motorpoint Group Plc joined Lookers and Pendragon, by issuing a profit warning. Motorpoint has achieved revenue growth over the first three months of the financial year, but gross margin is below last year, which Motorpoint blamed on unusually high supply levels.
Bond holders in Four Seasons Healthcare holding company, Elli Finance (UK) Plc lost £218 million.
Piling specialist Van Elle issues third profit warning of 2019, stating: as part of the year end process, the Board has determined it necessary to adjust a small number of specific balance sheet items and contract accruals. Whilst the results remain subject to completion of the audit, these adjustments will adversely impact FY2019 adjusted profit before taxation by a total of c.£0.5m.
ASOS PLC issue second Profit Warning, the fashion retailed stated: we have absorbed and offset the profit impact associated with the warehouse transformation issues encountered in both higher transition costs and lost sales. However, we now expect the temporary lack of stock availability in Europe and more limited width in USA to continue to impact growth levels for the remainder of the financial year which when combined with extra costs to get our warehouses into a position to operate at the right capacity and efficiency has led to reduced expectations for this financial year. As a result, we now expect sales growth for this financial year to be broadly in line with year to date performance. The impact of the lower sales, higher warehouses transition costs and costs associated with organisational restructuring are set to impact our overall profit which is now anticipated to be in the range of £30m-£35m.
Irn-Bru maker, A.G. BARR plc. Issues a profit warning, stating: Revenue for the 26 weeks to 27 July 2019 is estimated to be in the region of £123m, representing a c.10% decline on the prior year and despite our strong second half plan it is not expected that we will recover fully from the volume impact in the first 5 months of this year and the current trading we are experiencing. As a result, we expect our profit performance for the full year to decline versus the prior year by up to 20%.
Qila Biogas Limited, licensed by Ofgem as a Gas Shipper, went in to liquidation owing £4,846,000 to 90 unsecured creditors. Agrivert Ltd, Evercreech Renewable Energy Limited, and SGN Commercial Services Ltd lost almost £1.8M between them.
Strike Off Action discontinued against potential buyers of Oddbins - The Compulsory strike-off action against European Food Brokers was discontinued on 13/07/2019 but the company remains overdue with their account’s filings at Companies House, with the most recent accounts dated 31 January 2017.
European Food Brokers, which bought Oddbins out of administration in 2011; appointed administrators for its retail operation; and, now seeks to rescue the stores. Greg Connell, MD of InfolinkGazette said: “trade suppliers shouldn’t have to operate in this information void and should be looking for suitable assurances or guarantees”.
Proposed recapitalisation of Thomas Cook Group will not impact trade creditors. Thomas Cook announced that it is in advanced discussions with the Group's largest shareholder, Fosun Tourism Group and Thomas Cook's core lending banks on the key commercial principles on which they would make a substantial new capital investment as part of a proposed recapitalisation and separation of the Group. Under the proposal, the Group is targeting an injection of £750 million of new money which would provide sufficient liquidity to trade over the Winter 2019/20 season and the financial flexibility to invest in the business for the future. At completion, the new money would comprise a capital injection and new financing facilities. The recapitalisation proposal is subject to certain conditions including performance conditions, due diligence, further discussions and reaching agreement with a range of company stakeholders (including the pension trustees, bondholders, other financial creditors and Fosun's shareholder approval), and receipt of any regulatory and anti-trust clearances or approvals.
Car dealers Lookers PLC issue Profit warning – Lookers stated: “Whilst the period began satisfactorily, trading during the three months ended 30 June 2019 ("Q2"), against strong comparatives, has proved increasingly more challenging. During Q2 the UK new car market continued to decline with registrations down -4.6% (Q1: -2.4%) versus the comparable period last year. In addition, weaker demand and the resulting margin pressure in the used car market has significantly increased, notably during the month of June in which we took a disciplined approach to managing stock. Throughout H1 and in line with general retail sector trends the Group has continued to experience cost inflation pressures. As a result, underlying profit before tax for H1 is expected to be approximately £32m* compared to £43m* in the comparable period last year.”
Eddie Stobart Logistics PLC, the UK logistics and haulage group, is to cut its profit from last year by about £2m, and the current year by £1.6m after the new CFO identified accounting issues.
7th July 2019 Press Release from InfolinkGazette
Funding Circle warns on revenue but not on profits, 2019 EBITDA performance is expected to improve on 2018. The CEO said: "The uncertain economic environment has reduced demand from small businesses and led us to proactively tighten lending criteria. As a result, revenue growth will be impacted.” Greg Connell, MD of InfolinkGazette said: “trade creditors should interpret this warning as signalling higher levels of risk across the SME sector and a good time to review credit insurance cover.”
In the Joint Administrators’ proposals for Debenhams PLC, unsecured creditors lost over £1.2 billion; 4 unsecured intercompany creditors lost £636 million; 8 Irish landlords lost £106 million; and, trade creditors lost £527 million.
Greg Connell, MD of InfolinkGazette said: “the unsecured trade creditors were predominately the bond holders, and the revolving credit facility lenders; unlike House of Fraser, traditional suppliers of products & Services seem to have got away lightly, so far.” Greg added, “Irish Landlords seem to have taken the hit in the Administration, and we can expect UK landlords to take the hit in the CVA.”
Failed retailer Pretty Green Limited, founded by former Oasis front man, Liam Gallagher has left 229 UK unsecured creditors owed £3,100,000.
Greg Connell, MD of InfolinkGazette said: “Pretty Green were an unsecured trade creditor of House of Fraser and lost £522,000 when the store entered administration last year.” Greg added: “it isn’t always possible to bounce back from that scale of loss”. Greg added: credit insurance cover isn’t always available, but when it is obtainable, can avert the disastrous consequences of becoming an unsecured creditor”.
Costain Group PLC issues a profit warning, blaming a number of delays to the timing of contract start dates and new awards, including the M6 Smart Motorway, Preston distributor road and HS2 Southern Section main works. Additionally, the M4 Corridor around Newport project was cancelled by the Welsh Government earlier this month. Revenue for FY2019 will be lower than previously anticipated and underlying operating profit for the full year is expected to be in the range of £38.0 million to £42.0 million.
Manchester based Commercial Builders Freemont Ltd went in to liquidation owing £1,600,000 to 93 unsecured creditors; Travis Perkins were the biggest single unsecured trade creditor, owed £174,000. Greg Connell, MD of InfolinkGazette said: “Travis Perkins have been an unsecured trade creditor 2150 times in the last 5 years, and are one of the most frequently occurring unsecured creditors”.
Ubercasual Limited (Trading As Jack & Jones) went out of business owing £1,600,000 to 11 unsecured trade creditors.
Failed entertainment park operator Boing Zone Limited, left 18 unsecured creditors, who were owed £750,000. Boing Zone Limited had a history of overdue filings at Companies House, accompanied by compulsory Strike-off notices.
Greg Connell, MD of InfolinkGazette said: “any creditor who checked out the event history at Companies House, would have been much more cautious about extending credit on open terms”.
Liquidated builders Blenheim Homes North East Limited, left 22 unsecured creditors, owed over £1.2 million. Blenheim Homes North East Limited were the respondent in an employment tribunal in December 2018, ordered to pay the claimant the sum of £11,926 as compensation for unlawful discrimination.
Ashley House Plc, the health and social care scheme provider warns on profits saying it might fail to meet market expectations due to uncertainty over achieving financial close on three care schemes operated through its Morgan Ashley joint venture.
Greg Connell, MD of InfolinkGazette said: “in February this year, Ashley House changed their accounting period and it looks like they specifically extended their accounting period from 30 April 2019 to 30 June 2019, to capture these transactions in the current financial year.”
Carnaby Street’s Spanish fashion brand El Ganso (Acturus Retail (UK) Ltd) went out of business owing 23 unsecured creditors £684,000, and with an Associated creditor owed £4.4 million, distribution to unsecured creditors are likely to be less than 5%.
European Food Brokers, which bought Oddbins out of administration in 2011; appointed administrators for its retail operation; and, now seeks to rescue the stores are overdue with their account’s filings at Companies House. The latest accounts filed are dated 31 January 2017.
Falling smartphones sales are hitting profits - IQE plc the semiconductor company expects to deliver Adjusted Operating Profit margin significantly below the previous guidance of over 10%; and, Dixons Carphone plc said: the UK mobile market is changing in the way we described in December, but doing so faster.
Greg Connell, MD of InfolinkGazette said: “trade suppliers need to be mindful of the elevated risk across the broader mobile market and would be advised to review credit exposure and trade insurance cover.”
Workplace equipment supplier H C Slingsby PLC blames profit warning on Brexit – claiming that the Group has suffered variability in its level of order intake since the decision to extend the Brexit date. The group also stated that sales in the five months to 31 May 2019 were 3.5% higher when compared to the same period in the prior year, operating profit in the four months to the end of April 2019 are lower than the same period to April 2018.
The Administrators failed to find a buyer for Better Bathrooms and 169 UK unsecured creditors have lost £3.3M; worldwide unsecured creditors lost over £8m, and floating charge holders have been wiped out.
Failed airline British Midland Regional Limited t/a Flybmi left 235 unsecured creditors over £20M out of pocket. Greg Connell, MD of InfolinkGazette said: “unsecured creditors will be nursing big losses, the only distribution to them will be the prescribed part, which is capped at £600,000”.
Make or break for 7digital Group PLC – In a stock Exchange Announcement today, the directors warned that if the £1.3 million proposed Debt for Equity Swap doesn’t proceed, the Group would only have sufficient working capital to trade through to late June 2019. Accordingly, based on the projected cash flows of the Group, it is highly likely the Company would need to be placed into administration.
10th June 2019 Press Release from InfolinkGazette
Engineering services management company George Birchall Service Limited has left 568 unsecured creditors over £7.3 million out of pocket. Commenting on the failure and the losses incurred by unsecured creditors, Greg Connell, MD of InfolinkGazette said: “like a lot of outsourced services companies, Birchall operated on a tiny margins that didn’t cover the overheads. “ Greg added: margins are so low in this sector; these types of outsourced service business represent a significant risk for unsecured creditors trading without credit insurance. ”
Dudson Ltd, in Administration, was one of Englands oldest china manufacturers and left substantial debts, with 199 UK unsecured creditors owed over £6.5 million. Commenting on the failure and the losses incurred by unsecured creditors, Greg Connell, MD of InfolinkGazette said: “Churchill China Picked up the business in a pre-pack for £2.1 million, but with uncertainty over the prescribed amounts, unsecured creditors without credit insurance could be left with nothing”.
Loss making Modern Water plc seeks additional working Capital – Modern Water, the water and wastewater treatment company announced today that cash flows have been slower than anticipated from the Membranes Division and, consequently, additional working capital will be required in the short-term to meet the Group's requirements. The Board is engaged with a number of potential funding parties with a view to providing the working capital needed, which may or may not include a new equity issue.
Kier Group PLC Profit Warning – Kier surprised the market with a £25 million profit warning today, blaming volume pressures within its Highways, Utilities and Housing Maintenance businesses, and lower than previously forecast revenue growth in the Buildings business.
Greg Connell Managing Director of InfolinkGazette said: “the doomed outsourcers Carillion PLC and Interserve PLC all failed to achieve their forecast, and were forced to issue profit warnings before their eventual demise”, Greg added, Kier’s 2018 accounts reveal a company that is cash flow negative, with a working capital deficit and a negative net worth (after deduction of intangibles).”
Chamberlin hit by Bad Debt - the specialist castings and engineering group, announced it is in the process of finalising the results for the year to 31 March 2019 and following a final review with its auditors the Company now expects to report an operating loss before non-underlying items some £0.3m worse than previously indicated, mainly reflecting a specific bad debt.
Profit Warning - Money Supply M2 in the United Kingdom increased to an all-time high of 2,415,570 GBP Million in March of 2019, but it is the wrong type of money for De La Rue Plc, who issued a profit warning today, stating: “The banknote print market is anticipated to become increasingly competitive as the strong demand driven by overspill in the last few years starts to normalise. Overall, the Board expects operating profit for FY20 to be somewhat lower than the current year.”
Hargreaves Services PLC have become the first listed company to issue a profit warning on the back of the demise of British Steel, stating that the potential impact on Hargreaves cannot be fully determined, but that the Board estimates that the Group has a current net exposure of approximately £4.5m to British Steel comprising trade debt and work-in-progress balances, some or all of which may prove to be irrecoverable were British Steel to be unable to continue trading.
Redundancy and other associated employment costs may result in a further non-recurring charge of up to £3.0m against Group profits. Potential asset write downs and leasing obligations amount to an additional £1.5m, resulting in a possible total exceptional charge of £9.0m. Additionally, if British Steel ceases to trade, this could reduce the Group's revenue in the next financial year by approximately £11m and its profit before tax by about £1.3m.
Energy supplier Brilliant Energy Supply Limited left 68 UK unsecured creditors owed over £1.7 million (£6.3m including overseas suppliers) when it was forced into insolvency after receiving 8 Statuary Demands. Commenting on the failure and the losses incurred by unsecured creditors, Greg Connell, MD of InfolinkGazette said: “according to Companies House filings, Brilliant had no capital and no reserves, like so many energy supply companies, they were doomed from the moment wholesale energy prices turned against them”.
British Steel & the Big Short - Warren Buffet once said It's only when the tide goes out that you learn who has been swimming naked; well the tide is out for the owners of British Steel, who sold all of their carbon credits in what now looks like a badly timed trade, before carbon credits doubled in price. That wouldn’t normally have been a problem because any short positions would have been covered by new credits from the EU, but in the light of Brexit, the carbon credit gravy train has ground to a halt, and with it, hopes for UK steel production.
Greg Connell Managing Director of InfolinkGazette said: “it makes you wonder if the British Steel short was out of the ordinary or are we about to see similar problems across the energy-intensive sector”.
Monarch Aircraft Engineering Limited the engineering arm of collapsed airline Monarch, went out of business owing almost £6 million to 410 unsecured creditors.
Greg Connell Managing Director of InfolinkGazette said: “Monarch Aircraft Engineering Limited didn’t go into Administration when the airline collapsed but never really recovered from losing its biggest customer, which had contributed over 50% of revenues.”
Textile processor and AIM listed Leeds Group Plc issues a profit warning today, the 2nd in 2 months, cautioning that market conditions have deteriorated further since March 2019, and the Board now expects the Group's revised expectations for the current financial year to be significantly below last year.
Trade Credit Risk Up for Q1 2019 as County Court Judgments (CCJs) Volumes Rocket.
England & Wales Business CCJ Volumes increased 12% to 35,779 in the first quarter of 2019, according to figures released today by Registry Trust. The total value of business CCJs was £107.2million, up 6% on the same period in 2018.
Greg Connell Managing Director of InfolinkGazette said, “the volumes and values have been rising for 3 years but we can only speculate over the factors driving the increase because the Ministry of Justice won’t provide the names of the CCJ claimants.” Greg added: “what we do know, is that the majority of CCJs are either finance or trade credit defaults, and that means the risks faced by unsecured creditors are on the increase”.
Death is not as certain as previously believed - Dignity PLC the funeral directors have issued a profit warning as a result of the significantly lower than expected number of deaths.
The absolute number of deaths decreased by approximately 12 per cent to 159,000 from 181,000 in the comparative period last year.
7th May 2019 Press Release from InfolinkGazette
Cleaning Product manufacturer McBride PLC issue second profit warning of 2019, stating “following a weak third quarter trading period, the Group now anticipates that its full year earnings will be modestly lower than current market expectations, primarily as a result of weaker than expected sales activity in Germany, France and Italy.”
British Ceramic Tiles Ltd the UK’s largest manufacturer of ceramic wall and floor tiles had debts of over £17 million and 296 unsecured creditors listed in the Administrators Statement of Affairs. The top 5 creditors lost over £12 million. Commenting on the losses, Greg Connell, MD of InfolinkGazette said, “British Ceramic had assets of over £64 million, which realised less than £25 million; secured creditors were owed over £30 million, leaving just the Prescribed Part (£600,000) for distribution to unsecured creditors”.
After issuing a profit warning earlier this month, the Board of Tex Holdings plc has asked for the shares to be suspended, stating that the company had been unable to supply audited accounts for the year to 31st December 2018, within the permitted four month period. After initially believing that a change to accounting standard IFRS15 had been partially responsible for the breach of bank covenants, it is now evident that the cause of the breach had been weak trading in the second half of the year.
Chintzy retailer Laura Ashley have issued a fresh profit warning, stating: "trading conditions have been very demanding over the third quarter. The Board of the Company have reviewed the revised full year forecasts for the year ending 30 June 2019 and expect the results to be significantly below market expectations."
Chaotic energy firm Utilitywise PLC left behind substantial debts, with 162 unsecured creditors owed over £26 million. Commenting on the failure and the losses incurred by unsecured creditors, Greg Connell, MD of InfolinkGazette said: “Utilitywise were late filing a very heavily qualified 2017 annual report and accounts at Companies House; the auditors raised a number of revenue recognition issues and retrospective covenant breaches”. Greg added, "there is hardly a month in between Energy Firms failures, and suppliers should be carefully managing exposure, monitoring risk and securing credit insurance where it is available".
420 Unsecured Creditors of Arjo Wiggins lose over £14M - The Administrators for renowned paper product manufacturers Arjo Wiggins (Wiggins Teape) filed a Statement of Affairs (SOA) at Companies House showing 420 UK unsecured creditors lost over £14M as a result of the Insolvency. Wiggins was once listed on the London Stock Exchange and used to be a constituent of the FTSE 100 Index. Commenting on the losses, Greg Connell, MD of InfolinkGazette said, “Balance Sheet assets of over £123 Million are expected to realise less than £20 million, which demonstrates how value can simply melt away in an insolvency situation”. Greg added, "the fortunate few with credit insurance cover can expect to cover 90% of their losses; those unsecured creditors supplying without credit insurance cover, will only receive their share of the £600,000 Prescribed Part".
Figures released by InfolinkGazette, revealed a huge Deliberate Tax Defaulter, published by HMRC in March 2019. JKL (Wakefield) Ltd incurred a penalty of £16.4M on unpaid taxes of almost £22.9M. The company is in Liquidation and both directors are subject to disqualification orders.
8th April 2019 Press Release from InfolinkGazette
Trade Credit Risk on the Increase across all sectors in the UK
Figures released in April by InfolinkGazette, revealed 76 London Stock Exchange Profit Warnings during Q1 2019, a 13% increase on the number of profit warnings in the final quarter of 2018. Businesses in all sectors of the economy issued profit warnings, with a small majority in the retail sector. The listed retailers who started the year with a profit warning in Q1 included: the 3rd profit warning from distressed retailers Debenhams and Bonmarché; plus, a 2nd profit warning from Footasylum. Bonmarché and Footasylum have both found new owners, but the future at Debenhams remains uncertain. Other retailers issuing profit warnings were: Next; Halfords; QUIZ; and, Patisserie Holdings (now in Administration); Laura Ashley; and, Kingfisher.
Figures published by InfolinkGazette reveal that 107 unsecured creditors owed £29M were the biggest losers after top 50 International Law Firm Ince went in to Administration. The business was sold as part of a pre-pack to AIM listed Law Firm Gordon Dadds.
Commenting on the outcome for creditors, Greg Connell, MD of InfolinkGazette, said "lenders and trade creditors might have believed a law firm wouldn’t enter into commitments they couldn’t see their way to fulfil, but this is the 2nd high profile law firm to become insolvent in the last 6 months; personal Injury Solicitors, DBS Law Ltd, left 88 unsecured creditors with losses of almost £3.5M.”
Corporation Tax debt increases 22% to almost £2.4 billion - Figures compiled by business information company InfolinkGazette reveal further evidence of corporate distress, and even higher risks for unsecured trade creditors. Between January 2018 and January 2019, Corporation Tax debt has increased by 22% to almost £2.4 billion and the number of debts has increased in volume by 10% to 498,079. Over the same period, VAT debt has increased 20% to £3.5 billion and the number of debts has increased by 13% to over 1.6 million.
Greg Connell Managing Director of Business Information providers, InfolinkGazette said, “Retail is clearly the highest profile risk sector for creditors, but we are seeing evidence of distress across all sectors. Creditors can expect to see an increase in the number of HMRC winding up petitions as part of their enforcement procedures, and Trade Credit Insurance, together with reliable business information offers the best protection against unsecured losses.”
11th March 2019 Press Release from InfolinkGazette
Women's fashion retailer Quiz fails the profit warning test with two retakes on the profit forecast, less than two months apart. Blaming an uncertain consumer spending backdrop for the fall in sales and increased discounting, the Board now anticipates Group EBITDA will be £4.5m for FY 2019, and not the of £8.2m anticipated in January. Greg Connell Managing Director of Business Information providers, InfolinkGazette said, “Quiz’s 2018 audited balance sheet looked strong, but expect to see that deteriorate with write downs & restructuring costs; it might be time for trade suppliers to check trade credit insurance availability”.
The upmarket slipper brand Mahabis, once dubbed “the Nike of downtime” went in to Administration owing £2.2M to unsecured trade creditors. Greg Connell Managing Director of InfolinkGazette said, “two of the largest unsecured creditors were Facebook and Google, with combined losses of £1M, which is not surprising for a firm that used pop-up ads to sell up to 1m pairs of slippers”. Greg added, “the Mahabis insolvency was totally unexpected, the B/S looked great, with strong liquidity, low gearing, and it appeared to be profitable; this is they type of failure that perfectly illustrates the benefits of trade credit insurance”.
The combined unsecured losses of Hawk Plant Ltd and Hawk Plant Hire Ltd topped £82M, but figures from InfolinkGazette reveal that 504 trade creditors lost just over £17M after stripping out the intercompany balances. Greg Connell Managing Director of InfolinkGazette said, “the majority of the Carillion losses would have been covered by credit insurance, but the group had significant finance and lease commitments, which can put pressure on cashflow, especially if there is a lull in utilisation of the financed assets, as was the case in the immediate aftermath of the Carillion collapse”.
The 2018 Accounts for PARAGON INTERIORS GROUP PLC were 2 months overdue, but the 2017 accounts show almost £18M owed to trade creditors, most of which will be sub-contractors and suppliers. Greg Connell, Managing Director of InfolinkGazette said, "with PARAGON INTERIORS GROUP PLC entering administration, unsecured creditors will always be the biggest losers, averaging pay-outs of less than 9 pence in the pound for the creditors without trade credit insurance."
13th December 2018 Press Release from InfolinkGazette
Sports Direct might have purchased bike retailer Evans Cycles for £8 million, out of administration, but figures released today from InfolinkGazette, reveal that the 341 Unsecured Creditors of the old defunct business will be left back pedalling, with losses of over £19 million after the retailer went in to Administration.
The three largest unsecured creditor were Specialized (UK) LTD, Cycling Sports Group UK and Trek Bicycle Corporation LTD, with unsecured losses of £3.9m, £2.9m & £1.9m respectively. Other well-known brands with six figure losses include: Zyro PLC, Endura Ltd, Raleigh Uk Ltd, Extra (UK) Ltd, Saddleback Ltd, and Brompton Bicycle Ltd. Secured lenders are expected to lose in the region of £55 million.
Commenting on the outcome for unsecured creditors, Greg Connell, MD of InfolinkGazette said, “This wasn’t just another case of High Street woes and competition from the Internet (38% of Evans sales were via the web), this was a very thinly capitalised business with exceptionally high debt leverage, and always represented a significant risk for creditors and stakeholders”. Greg added, “the largest single secured creditor, were in fact the owners of the business ECI, with over £33 million of guarantee obligations and loan notes”.
Greg added, “when the credit insurers are withdrawing cover, it normally means the risk of business failure is far too high, and existing trade suppliers with open credit should be looking to manage down their exposure”. And concluded ”with so many heavily indebted, thinly capitalised businesses trading on the UK High Street, together with an uncertain economic outlook, and HMRC about to take greater priority in UK insolvencies from 2020, now would be a good time for suppliers to the retail sector to seek to maximise credit insurance cover.”
16th October 2018 Press Release from InfolinkGazette - London Stock Exchange (LSE) Profit Warnings for September 2018
Figures released today By Business Information Publisher InfolinkGazette, revealed 19 London Stock Exchange Profit Warnings during September 2018. The listed companies issuing profit warnings in September included: utility, SSE PLC, blaming the weather and higher than expected gas prices; luxury drinks company Diageo PLC, who blamed Emerging Market FX; the retailer MOSS BROS GROUP PLC, where efforts to mitigate footfall issues haven’t delivered; tour operator Thomas Cook Group PLC, citing over capacity; and, Insurer, RSA Insurance Group PCL, who reported an underwriting loss in the UK market
Greg Connell, Managing Director of InfolinkGazette commented, “despite the increasing media coverage on the subject of macro-economic uncertainty, profit warnings volumes, remain fairly constant” Greg added, “the majority of Trading Updates to the London Stock Exchange contain a ‘Brexit Uncertainty’ caveat, but most listed companies continue to expect to meet or beat earnings expectations”.
4th September 2018 Press Release from InfolinkGazette - London Stock Exchange (LSE) Profit Warnings for August 2018
Statistics released today by InfolinkGazette, revealed only 11 LSE Profit Warnings for August 2018. The listed companies issuing profit warnings during the month included: Spire Healthcare, the 2nd largest provider of private healthcare in the UK; retailers Card Factory and Crawshaw Group (Butchers), blaming lower footfall; plus, luxury goods manufacturer Mulberry, pointing the finger at House of Fraser stores.
Greg Connell, Managing Director of InfolinkGazette commented, “The August profit warning volumes are below half the normal monthly totals; CEOs don’t make profit warnings when they are away on holiday.”
Press Release from InfolinkGazette on 03/08/2018 - London Stock Exchange (LSE) Profit Warnings for July 2018
Statistics released today by InfolinkGazette, revealed 27 LSE Profit Warnings for July 2018. The listed companies issuing profit warnings during the month included retailers: Dunelm Group plc, who blamed losses at the Worldstores businesses; Ocado Group PLC, despite rising sales; DFS Furniture PLC, blaming the arrival of products from the Far East; and McColl's Retail Group plc who blamed intense cost pressures.
Greg Connell, Managing Director of InfolinkGazette commented that “Retail was the most prominent sector for profit warnings in July, but profit warnings are being issued in most sectors, including: Utilities, Pharmaceuticals, Building Supplies, Manufacturing, and Technology.
1st July 2018 Press Release
LSE Profit Warnings for June 2018
Statistics released today by InfolinkGazette, revealed nineteen London Stock Exchange Profit Warnings for June 2018 - almost 1 profit warning per working day. The listed companies issuing profit warnings included hard pressed high street retailer Debenhams PLC, builders McCarthy & Stone, and estate agents Berkeley and Countrywide.
25th June 2018 Press Release
A Debt Laden Distribution Sector Piles on the Misery for Unsecured Creditors
A preview of the half yearly statistics from InfolinkGazette reveals that in the first half of 2018, unsecured creditors have racked up the equivalent of almost 3 full quarters worth of losses, with unpaid/unsecured credit losses of almost £2.7 billion from UK insolvencies.
Unsecured creditors losses are up an astonishing 26% on the corresponding period in 2017, leaving each creditor with average debts of £33,500, up 19.6% on the running average of £28,000.
Preferred Creditors and Secured Charge holders are the priority creditors in any insolvency and after they have been paid, the average asset shortfall for unsecured creditors was £514,000, up 3% on the running average of £499,000.
Commenting on the statistics, Greg Connell, Managing Director of InfolinkGazette, said “these figures include a number of high profile failures in the distribution sector, most notably: Maplin; Toys R Us; Palmer & Harvey McLane, but even without these high-profile cases, there is discernible upward trend in the value of creditors losses in insolvency situations.”
Greg added, “many businesses in this sector are not just ill-fated by their inadequate response to changes in consumer purchasing trends, they are doomed by the way they were funded, with debt instead of equity. Investors are often able to continue to extract returns through interest charges, instead of relying on dividends from profits, or increases in the overall value of the enterprise, whilst unsecured creditors, and institutional investors, who are the property owners, take the hit at the point of insolvency.
Commercial, County Court Judgments (CCJs) are also on the increase. Q1 2018 figures released from RTL, show a surge in England & Wales Business CCJs. The 2018 volumes are up 8% over Q1 2017 to 33,010; and, the total value is up 25% to £105.1m; the average value of a business CCJ is up 16% to £3,183.
Creditors in England & Wales have faced the first adverse trend in County Court Judgments (CCJs) for eight years, during 2017, and that trend looks set to continue in the 2018.
Greg commented, “there is more widespread evidence of increasing levels of financial distress, and risk professionals are paying much closer attention to how their debtors are financed and looking to reduce exposure to highly leveraged debtors, and, or, where the holders of the debt, the de facto owners of the business are only extending finance on secured terms.
Greg added, “If a director & shareholder, or a Person of Significant Control (PSC) held a debenture over the assets of their private limited company, suppliers would think twice about extending open credit, when the owners, who run and control the business, won't take the same risk; so, why treat VC funded enterprises any differently?”
8th May 2018 Press Release
Dark clouds on the horizon that could settle over the UK
The first quarter 2018 statistics from InfolinkGazette show a 40% increase in the total claim value of unsecured creditors in UK company liquidations and administrations.
The average first quarter total claim value over the last 5 years has been £1 billion, but leaped £0.4 billion to £1.4 billion in Q1 2018. The number of unsecured creditor claimants remained consistent with the running average quarterly norm at 44,000.
Commenting on the quarterly figures, Greg Connell, Managing Director of InfolinkGazette, said “This is the first significant Q1 variance since we started collecting the data in 2012, and the first time the average unsecured creditor claim value has exceeded £32,000.”
Creditors in England & Wales faced the first adverse trend in County Court Judgments (CCJs) for eight years, during 2017, according to figures from Registry Trust (RTL), and that trend looks set to continue in the first quarter of 2018. Commenting on the trend, Greg Connell, said “although there are no official figures yet from RTL, early estimates from the Credit Reference Agencies (CRAs), who use CCJs in their credit risk scorecards, indicates another increase in both the value and volume of CCJs, so far in 2018, and consequently, more financially distressed businesses”.
In 2017, 105,633 CCJs were registered against businesses in England and Wales, up 30 percent on 2016 and the first year-on-year increase since 2009. The average value of a business CCJ fell 16 percent to £2,983, but the total value of business CCJs rose 10 percent to £315 million, reversing an eight-year downward trend.
Greg Connell, commenting on the adverse CCJ trend said, “this correlates with the trend from UK insolvencies and we believe trade creditors will incur higher levels of losses and credit insurers will see a higher value and volume of claims because the number of financially distressed businesses are on the increase.”
Figures released by the Office for National Statistics (ONS) on 27/04/2018 showed UK gross domestic product (GDP) was estimated to have increased by 0.1% in Quarter 1 (Jan to Mar) 2018, compared with 0.4% in Quarter 4 (Oct to Dec) 2017. UK GDP growth was the slowest since Quarter 4 2012, with construction being the largest downward pull on GDP, falling by 3.3%. Production increased by 0.7%, with manufacturing growth slowing to 0.2. The services industries were the largest contributor to GDP growth, increasing by 0.3% in Quarter 1 2018, although the longer-term trend continues to show a weakening in services growth.
Commenting on the ONS release, Greg Connell said, “we seem to be entering a new risk climate, and when you add a stall in economic growth, together with an adverse trend in commercial CCJs, and a pronounced adverse increase in the value of unsecured creditor claimants, the reasons for taking out trade credit insurance begin to crystallise.”
The ending of cheap loans taken on by Britain’s banks hasn’t had sufficient time to affect the Q1 results, but the closure of the Term Funding Scheme (TFS) could make business finance harder to find and more expensive.
Banks borrowed £127bn under the Term Funding Scheme (TFS), which closed on 01/03/2018, according to Bank of England data.
The scheme delivered a stream of almost interest-free loans to banks to aid the pass-through of interest rate cuts to the real economy.
Rating agency Moody’s estimated that banks would have to pay more than £800m in extra interest costs to make up for the loss of funding, with challenger banks the most severely affected.
Greg commented, “The end of the scheme is expected to prompt a rise in borrowing costs for businesses, which will mean more business debtors will be unable to pay their bills when they fall due - bad news for lenders, and trade suppliers.”
14th March 2018 Press Release
Businesses in England and Wales faced the first adverse trend in County Court Judgments (CCJs) in eight years, during 2017, according to figures released this week by Registry Trust. In 2017, 105,633 CCJs were registered against businesses in England and Wales, up 30 percent on 2016 and the first year-on-year increase since 2009. The average value of an adverse business CCJ fell 16 percent to £2,983, but the total value of business CCJs rose 10 percent to £315 million, reversing an eight year downward trend.
Greg Connell, Managing Director of InfolinkGazette commenting on the Registry Trust Statistic said, “an increase in the volume and overall value of Business Judgments is an indicator of higher levels of financial distress, which means more risk for trade creditors and potentially more claims for credit insurers to pay out on.”
Greg added, “It’s also a timely reminder, if there hadn’t been enough already, with the recent high profile insolvencies, and over £4 billion of unpaid creditors - of the reasons for taking out trade credit insurance, if judgments are on the increase that means more businesses debtors have been unable to pay their bills when they have fallen due, which is bad news for lenders, and trade suppliers.”
10th January 2018 Press Release
Annual statistics from InfolinkGazette show that there were 180,000 unpaid and unsecured creditors from UK company Liquidations and Administration in 2017, with total