8th July 2020 Press Release from InfolinkGazette
Delays to the UK government's £10 billion trade credit insurance scheme create a real risk to supply chains. InfolinkGazette has advised that between the furlough scheme, CIBLS, bounce back loans and the forthcoming UK government's £10 billion trade credit insurance scheme, there are sufficient government stimulus measures in place to delay the day of reckoning, in terms of rising insolvencies, at least until October or November 2020. However, all of these measures are time-critical. Whether the trade credit insurance guarantee is being delayed by EU state aid objections, or for any other reason, InfolinkGazette's Managing Director, Greg Connell, stressed that: "the delay creates a very real risk to supply chains because businesses won't be able to get the cover they need." Initially, this hit the retail and hospitality sector hardest.
8 July: A sharp increase in UK insolvencies - but not straight away. InfolinkGazette has warned that the constraints put in place by the UK government to manage the pandemic will have a significant impact on profitability and cash flow for the majority of companies in the UK, and ultimately, this will lead to a sharp increase in Insolvencies - but not necessarily straight away. Greg Connell, Managing Director of InfolinkGazette, commented: "It is likely that UK banks will demonstrate a degree of forbearance, creditors are generally less keen to force businesses into insolvency during a crisis that is likely to pass, and government stimulus measures have the potential to make a big difference." These measures will delay "the day of reckoning, in terms of rising insolvencies, at least until October or November 2020.
Chrome (Services) Limited went in to liquidation owing £2,719,410 to 300 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “there was a floating charge to a company associated with one of the directors. Creditors trading on open credit terms should always be aware of who is entitled to preferential claims in the event of an insolvency”. Greg added: “if companies associated through the directors are not lending on open terms should 3rd party creditors be granting open credit”.
Analysts assessing the Covid-19 risk by industry need to look beyond the most obvious hard hit sectors - British multinational medical equipment manufacturing company headquartered in Watford, SMITH & NEPHEW PLC issued a profit warning today confirming that trading performance across the first and second quarters was substantially down on the prior year. Greg Connell, MD of InfolinkGazette said: “in common with many companies in the medical and pharmaceutical sector, Smith and Nephew are suffering the consequences of an unprecedented decline in elective surgery”.
Unsecured Creditors of NMC Health PLC got away relatively lightly when the former FTSE 100 Group went in to Administration with losses of £2,111,410, but up to 80 international banks look set to be big losers after NMC Health’s debt ballooned from $2.1 Billion to $6.6 Billion in the space of 9 months. Greg Connell, MD of InfolinkGazette said: “if we are going to expect audit firms to detect accounting fraud, maybe we need them to have the capital buffers to be able to cover the losses associated with their errors and omissions rather than relying entirely on professional indemnity cover”.
Casual dining chain Carluccio’s went in to Administration owing £6,756,920 to 304 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the ownership details were very opaque in Companies House filings, but the ultimate owner was Dubai based Landmark Group, which is one of the largest retail and hospitality organizations in the Middle East, Africa and India. What remains of Carluccio’s is now owned by Boparan Restaurant Group (BRG), who also own the Giraffe and Ed’s chains. A subsidiary of BRG paid £3.2 for the UK restaurant and another £125K for the 1 restaurant based in Dublin”.
NHS Nightingale joinery firm J & P Carpentry and Joinery Limited went in to Administration owing £2,655,860 to 120 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “possibly with an eye on a future that involved a pre-pack, a previously dormant company, with common directors, changed its name to JPC CONSTRUCTION (MIDLANDS) LTD on 4th April 2020. Greg added: despite the extra time to file, resulting from a 6 month extension to the accounting period, J & P Carpentry and Joinery Limited were 5 months overdue on their accounts filing by the time Administrators were appointed and also had faced a First Gazette notice for compulsory strike-off”.
The punishing cost of High St failure falls on Unsecured Creditors – Eponymous retailer Laura Ashley Limited went in to Administration owing £68,405,100 to 549 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the brand, which began in the 1950s, quickly becoming famous for its unique printed fabrics, but will now be opening its doors for one final sale; if there is to be a future, it will be on-line only”.
Oasis Fashions Limited went in to Administration owing £7,117,970 to 227 UK Unsecured Creditors. Greg Connell, MD of InfolinkGazette said: “the online businesses of Oasis and Warehouse has been purchased by Boohoo, who raised nearly £200 million in May through a share placing, stating that company planned to use the proceeds to take advantage of any suitable merger and acquisition opportunities that may arise in the coming months”.
Environmental Consultants HOLMES ENVIRONMENTAL SERVICES LIMITED went in to liquidation owing £2,234,730 to 120 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “The company had debts of almost £1.5 million from a 2015 CVA; continuing to trade on open credit terms with a company subject to a CVA is fraught with risk for trade suppliers”.
Celebrity Chef backed Cookeze Ltd T/A Patisserie by Nigel Smith, the Lancashire based event catering business went in to Administration owing £1,486,250 to 67 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the events industry has been one of the worst effected sectors of the Covid-19 pandemic control measures, due to the complete suspension of sporting events.” Greg added: “this sector will see a second wave of failures when the government stimulus measures are withdrawn.”
High Speed 2 (HS2) bidder Van Elle issued a profit warning – such is the adverse impact of the Covid-19 outbreak on the final six weeks of the year the Van Elle board expects to report an underlying pre-tax loss for the year. Greg Connell, MD of InfolinkGazette said: “Balfour Beatty, HS2 Engineers with a combined total contract value of £5 Billion also issued a profit warning earlier this week”.
Plastic product manufacturer Braitrim (UK) Limited went in to liquidation owing £2,264,090 to 72 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “Braitrim UK was owned by Braitrim Group Limited, who are late filing their accounts”.
28th May 2020 Press Release from InfolinkGazette
UK regional carrier Flybe Limited went in to Administration owing £22,947,900 to 297 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the biggest losers were ST Engineering along with the main UK airport regional hubs in Southampton, Birmingham, Belfast and Manchester”.
Boohoo group plc became the latest UK retailer to come under attack from short-sellers claiming that the group had overstated its free cash flow. The leading online fashion group issued a statement to the market vigorously refuting the allegations believed to have been made in a research note from Shadowfall. Greg Connell, MD of InfolinkGazette said: “nothing was disclosed in yesterday’s short-selling report published by the FCA, but we should be able to see the size of the net short positions in the report published tomorrow”. Greg added: it will be interesting to see who gets burned, the owners of the shares, or the borrowers with their short positions”.
Fit out specialists Styles & Wood Limited and its parent company went in to Administration owing over £90 million to 641 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the company had been racking up trading losses since 2016, which were exacerbated by £12 million of losses on the India Buildings contract in Liverpool, plus £7 million of losses on the Mosley St and St Ann’s contacts”. Greg added: “the Administrator stated that the losses had not been fully recognised at the time they were incurred”.
What future for the Harry Fairclough Group now? Harry Fairclough Limited went in to Administration owing £7,426,400 to 21 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the company was part of the Harry Fairclough Group of companies and was the principal asset holding of the group, owning the freehold premises in Warrington, from which the group companies operated”.
London Steel fabricators A13 Steel Ltd went in to liquidation owing £2,329,330 to 96 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “A13 Steel was extremely highly geared before the Covid-19 business disruption; taking on more debt could never have been part of the solution”. Greg added: “this same scenario will play out thousands of times over the remainder of the year, as overly leveraged companies realise more debt is not going to part of the solution to getting beyond the covid-19 disaster”.
What’s in a name - £10 million actually, that is what Eddie Stobart Limited has paid Stobart Group Limited for the ‘Eddie Stobart’ brand. Stobart Group Ltd is required to change its name by February 2021. Greg Connell, MD of InfolinkGazette said: “£10 million sounds pretty cheap when the annual licencing agreement was £3 million a year”.
Mechanical engineers Hullmatic Engineering Limited went in to liquidation owing £2,631,240 to 121 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “creditors could be excused for wondering what was the point of the CVA, which only completed in October 2019”.
Five subsidiaries of County Tyrone construction Group MC ALEER & RUSHE PROPERTIES LIMITED have recently entered Creditors Voluntary Liquidation, reporting combined unsecured losses of over £40 million to a mixture of internal group company creditors and HMRC. Greg Connell, MD of InfolinkGazette said: “MC ALEER & RUSHE PROPERTIES is a holding company filing unaudited total exemption accounts, making it difficult to see the consolidated financial position of the group”.
WILL NIXON CONSTRUCTION GROUP LIMITED went in to Administration owing £3,276,290 to 266 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “The beneficial owners held a charge over the properties, so Will Nixon Construction's unfortunate suppliers may be asking themselves why they extended open credit, when even the owners wouldn’t operate on an unsecured basis”.
Gelert Group Limited has allowed motor insurance broker STAVELEY HEAD LIMITED to go in to Administration owing £9,825,290 to 24 unsecured creditors, including £9,740,000 to its appointed representative PolicyPlan Limited (also a subsidiary of Gelert Group). Greg Connell, MD of InfolinkGazette said: “Staveley’s gross written premiums was around £9.5 million in 2019, with an average commission of 18.1%, so the £9.8 million in liabilities is a puzzle?”
This is a difficult time for the aerospace & defence industry - Tods Aerospace Limited went in to Administration owing £13,950,300 to 417 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “Tods was owned by AGC AEROSPACE LIMITED and if the 2018 accounts are anything to go by, they are in deep financial trouble.”
UPVC window & door manufacturer, Aperture Trading Limited went in to Administration owing £3,275,120 to 262 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “£12 million of assets were only expected to realise £2 million, with over £7 million of stock written down to less than £1 million”. Greg added: “unfortunately, trade creditors would never have known about the woefully inadequate capital base revealed by the statement of affairs, because in Aperture’s short history, it never filed a set of accounts”.
12th May 2020 Press Release from InfolinkGazette
Tips for understanding and maintaining your company credit score
Credit Reference Agencies (CRAs) offer their clients universal coverage on company credit scores, which are used by banks, credit insurers, alternative finance providers and trade suppliers to arrive at the terms under which they are prepared to do business with a company.
Credit scoring assumes that experience can be used as a guide in predicting credit worthiness and the process of developing a credit score generally relies on the analysis of historical data and or, the experience of credit risk professionals. In other words, what did companies that failed have in common, and how were they different to companies that did not fail.
The most common approach amongst CRA's is to adopt statistical models where the choice of factors to be scored and weighted is determined by mathematical to identify the relevant trade-offs among factors and assigns the statistically derived weights used in the model. The statistical scoring model predicts the probability that a case would become insolvent within a given timeframe, incurring losses for creditors. These statistical models will often be complemented with other judgmental, such as payment performance or adverse news media.
The most predictive financial ratios tend to revolve around liquidity and gearing, and most importantly, movements in those ratios; in most circumstances, the trend is as important as the absolute ratio.
All of the CRAs have their own models but they are all using the same basic scientifically proven techniques and they are all likely to be coming out with similar results and be influenced by similar factors, such as:
Liquidity Ratio - calculated from the balance sheet by deducting stocks and work in progress from the current assets and dividing by the current liabilities. Businesses are more likely to fail because they run out of cash, rather than of a failure to generate profits and the liquidity ratio is one of the sternest test of a company's ability to convert current assets into cash. A lower liquidity ratio is an indication of potential cashflow/liquidity problems.
Current Ratio - used an absolute ratio, or as a percentage change on prior year, this figure is calculated from the balance sheet by dividing the current assets by the current liabilities and is generally regarded as the benchmark liquidity ratio. Retail businesses will generally have a lower current ratio because they purchase stock on credit and sell for cash but a current ratio of less than 1 is generally regarded as having an elevated risk of incurring cash flow problems.
Shareholders' Funds Total Asset Ratio (or similar) - used as an absolute ratio, or as percentage change on prior year, this figure is calculated from the balance sheet by dividing the shareholders’ funds by the total assets. The higher the number the better because a higher number indicates a higher proportion of shareholder investment and a lower proportion of loan capital or alternative sources of finance, which might be interest bearing.
Statistical scoring models will normally contain between 7 and 10 factors, or attributes and will often take account of whether any debt is secured/unsecured, plus compliance factors such as adherence to public registry filing deadlines, and detrimental data, such as judgments, insolvency events, adverse auditor opinions; news feed content etc.
The ability to manage your own company’s credit score will depend on the company’s specific circumstances and not all of the tips can be applied by companies materially affected by COVID-19:
avoid taking on too much debt too soon, the more highly leveraged the company, the greater the probability of failure and the lower the score;
don’t allow default money judgments (CCJs etc) to be registered against your company, even if the company can’t pay, try and work out an informal arrangement with the creditor, or defend the judgment, but don’t let CCJs happen by default because the adverse effect on your company’s credit score could be disproportionate;
never file your accounts late, even if the financial situation doesn’t look good, file the accounts on time, because the credit scoring algorithms will pick up on late filings, the CRAs scoring models recognise it is a sure sign something is wrong;
don’t make more than 1 change in accounting periods in an attempt to buy more time to file accounts, you might avoid the fines imposed by Companies House, but again the scoring models will have identified multiple accounting reference date changes as a precursor to insolvency and it will hit the score; and,
as for CCJs, never let a debt get to the stage that a Winding up Petition (WUP) is presented, even if you successfully defend the WUP and avoid being wound up, the petition will adversely impact your companies score for years to come.
For partnerships, the financial factors don’t apply because they are not available, but one additional factor that will make a difference is the number of partners; firms with 4 or more partners are less likely to go into bankruptcy than firms with 3 or less, and the number of directors can make a difference in the early days before accounts have been filed.
It is also worth bearing in mind information the UK CRAs would love to have from HMRC, like payment data, VAT and CT returns etc, but it isn’t made available; there are only a handful of items release by HMRC, like for instance the basic VAT registration details, and the deliberate tax defaulters, but the government doesn’t release the abundance of data they own, or allow it to be shared, such as the plaintiffs in CCJ’s, late or skipped filings of VAT/CT returns and payments etc. So, your company may have filed its VAT return, or CT return but been unable to make the payment, and the CRAs won’t have any visibility on the missed payment, and may never have any visibility on the missed payment, unless it is clearly signalled in your company accounts, or results in HMRC issuing as WUP. Be careful if you are reading this in Ireland because most of this type of data is available in the Republic of Ireland, and it is definitely included in the scoring algorithms.
Some of the CRAs over emphasise the importance of their own proprietary payment data where they are trying emulate what happens in the consumer credit industry sharing payment data, but for the most part, they have sufficient critical mass, to make a meaningful difference to the performance of their scoring algorithms. For every case where they predict a failure using payment data that wasn’t predicted by other factors, there will be a false positive.
Finally, make sure you know your credit score, and don’t just check with one CRA, check them all: Dun & Bradstreet, Experian, Graydon, Creditsafe, Red Flag Alert, Equifax, Company Watch, & Vistra.
Harrogate-headquartered Pure Collection went in to Administration owing £5,101,630 to 197 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the statement of affairs blames Covid-19, but the company was obviously in deep trouble well before the start of the pandemic in China”.
Quarterly revenues down 7% to £694m at ITV impacted by restrictions on working practices due to COVID-19; advertising revenues from April were down 42%. Greg Connell, MD of InfolinkGazette said: “advertising spend is a barometer for the nation’s economic health with spending rising or falling with economic well-being”.
Net Communications Limited went in to liquidation owing £2,538,840 to 88 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the liquidation was preceded by several Gazette strike-off notices and a £6,300 County Court Judgment.”
Aerospace component supplier AIM Design Co Limited, went in to liquidation owing £4,636,180 to 27 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “from a glance at the latest accounts, it was obvious that the company was in deep trouble when they delayed filing their March 2018 accounts until April 2019, the 2019 accounts were never filed at Companies House.”
Ipswich-based container haulier Go Freight Transport, which operated 42 trucks and 62 trailers went in to liquidation owing £2,920,170 to 82 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “a quick look at the balance sheet reveals that the business was woefully under capitalised for the size of the undertaking”.
Iconic carpet manufacturer Axminster Carpets Limited went in to Administration owing £1,748,030 to 88 unsecured creditors. Axminster Carpets Limited changed its name to ACL 2020 Limited shortly after entering Administration. Greg Connell, MD of InfolinkGazette said: “at the time of the insolvency, the 2019 accounts were 3 months overdue and it doesn’t look like there will be any dividend for unsecured creditors”.
The drop of in retail sales is faster and steeper than anticipated – That is the latest warning from Next plc in a trading statement issued today. Greg Connell, MD of InfolinkGazette said: we review all of the UK profit warnings and hadn’t seen any other UK public company make a better job of Covid-19 sales scenario planning, so the latest news from Next is alarming“. Greg added: “ the worst-case scenario for Next is now a 40% drop in sales”.
Trilandium LLP was building the luxury 191-apartment X1 residential block in Manchester and went in to liquidation owing £2,767,870 to 120 unsecured creditors. Trilandium LLP changed its name to Manchester Dev One LLP shortly before entering liquidation. Greg Connell, MD of InfolinkGazette said: “when Trilandium should have been filing their 2019 accounts, which would have presumably have revealed the perilous state of the business, they shortened their accounting period twice, which perversely gives them six more months to file accounts”.
Architectural Ironmongers Laidlaw Ltd went in to Administration owing £1,842,001 to 153 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “unsecured creditors will share the prescribed part, which will be £91,000 at best, but the owners of the business held a secured charge and are set to receive up to £460,000”. Greg added: “trade creditors may feel a little aggrieved about the respective distributions, but suppliers should think twice about trading with a business when the owners have a secured charge; if the owners won’t lend to their own business on an unsecured basis, why would anyone else”.
Fashion retailer, Blux Limited t/a House of Hanover Ltd went in to liquidation owing £25,120,500 to 9 unsecured creditors, including £15,872,216 to NH Finance. Greg Connell, MD of InfolinkGazette said: “between 2017 and 2018, Blux Ltd made 4 accounting period adjustments and between 2018 and 2019 there were 3 compulsory strike-off notices; at the time of the insolvency, the 2018 accounts were 12 months overdue ”. Greg added: “the liquidators statement of affairs showed assets of £17,750,000 expected to realise just £14,000.”
Care providers, Safe Hands Group Limited went in to liquidation from receivership owing £6,370,230 to 15 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “with assets subject to a fixed charge realising no value what so ever, Clydesdale Bank became an unsecured creditors and were owed £6,311,504”. Greg added: “the owner, also a director of Safe Hand Group held a debenture”.
Diageo Plc the world’s largest spirits maker discarded its market guidance for the year and called a halt to its £4.5 billion share buyback programme in response to the coronavirus pandemic. The board statement said: “Given the global nature of the COVID-19 pandemic, and the uncertainty around the severity and duration of the impact across multiple markets, we are not in a position to accurately assess the impact of this on our future financial performance.” Greg Connell, MD of InfolinkGazette said: “having already wasted £1.25 billion via share buybacks, despite an adjusted net debt to EBITDA ratio of 2.8 times, the company has now had to commit to the issuance of new euro and sterling bonds totalling approximately £1.9 billion”.
The Bank of England's Prudential Regulation Authority wrote to UK banks advising them to cancel dividends, but PCF Group plc the AIM-quoted parent of PCF Bank Limited has announced that the final dividend will go ahead. In a statement issued on 07/04/20 the company claimed: “the final dividend approved by shareholders at the Company's AGM represents a debt due to shareholders and, having taken legal advice, the Board has concluded that the Company is legally bound to pay it”. Greg Connell, MD of InfolinkGazette said: “this may fuel the discontent of other bank shareholders where the banks have complied with the regulators request and cancelled the dividend.”
7th April 2020 Press Release from InfolinkGazette
Many of us are wrestling with the dilemma of whether the treatment for COVID-19 will produce a worse net result than the disease; the lockdown will slow down the rate at which a human tragedy unfolds, helping the health services cope, but at great risk to the economy. Without the lockdown, the human tragedy would unfold more quickly, overwhelming the health service but with less lasting damage to the economy. Thousands of distressed companies will fail as a consequence of the lockdown, but many thousands of viable companies will also decide to call time by placing their companies in to Members Voluntary Liquidation (MVL). Company directors are grappling with the quandary of whether to risk family homes, pensions, and savings by investing more money into a business that might not survive a prolonged lockdown. The longer this goes on the more likely it will be that more viable companies will cease trading immediately to protect their personal assets and retained earnings by placing the company into a MVL, with the consequent loss of jobs and tax receipts.
Acquisitive business information company Crif acquires FinTech company Strands, specialists in Big Data, AI and Machine Learning. Strands also offer an open banking solution.
RTA claims management company Instant Assist uk Limited went in to liquidation owing £4,200,320 to 17 unsecured creditors, including over £2million to firms of local solicitors based in the North West. Greg Connell, MD of InfolinkGazette said: “the latest accounts for Instant Assist were dire and there was an unsatisfied CCJ outstanding; if solicitors believe they are immune to bad debt, and wouldn’t benefit from the services of a CRA, or a Trade Credit Broker, that is evidently not the case.”
Worrying news for Pension Trustees! As part of a general COVID-19 response many companies are cancelling dividends and terminating wasteful share repurchasing programmes, but some are also seeking to revisit pension deficit contribution commitments. In a trading statement today, Scapa, the diversified Healthcare and Industrial group said that it was exploring all necessary contingency plans, had commenced discussions with lenders and had also entered discussions with the pension trustee regarding the bi-annual contributions. Greg Connell, MD of InfolinkGazette said: “tPR have up to date advice on their website offering guidance for DB scheme trustees whose sponsoring employers are in corporate distress.”
COVID-19 has caused disruption and uncertain times for businesses and as of today, businesses will be able to apply for a 3-month extension on filing their accounts. All companies who apply for an extension as a result of COVID-19 will automatically be granted the extension without needing to provide evidence. Greg Connell, MD of InfolinkGazette said: “companies should think twice before they avail of the 3-month extension because there is no guarantee that the Credit Reference Agencies will apply a 3-month extension to their credit scoring algorithms.”
Recyclers, Energy 10 Huntingdon Limited went in to liquidation owing £5,536,840 to 17 unsecured creditors, including £4million to Standard Gas Limited. The liquidator served the property owner with a notice of disclaimer. Greg Connell, MD of InfolinkGazette said: “a disclaimer is a formal notice issued by a liquidator in respect of onerous property (forming part of the estate, which is unsaleable). It has the effect of removing from the liquidator all responsibility for the property disclaimed.”
any property, forming part of the estate, which is unsaleable, or not readily saleable or which may give rise to a liability to pay money or perform any other onerous act.
As part of its COVID-19 response, IWG plc (formerly Regus) has cancelled payment of the final dividend and suspended the £100m share repurchase programme that was announced on 3 March 2020. £27.5m had already been spent on this programme. Greg Connell, MD of InfolinkGazette said: “Companies buy back shares when they think the price is undervalued, hoping to boost their price by increasing earnings per share, but every pound paid out on the share buyback is a pound less in shareholder equity, so there is no logic in the belief that it drives shareholder value.”
The FCA has written to all public companies planning to publish preliminary financial statements requesting them to delay forthcoming announcement of preliminary financial accounts, stating that: “the unprecedented events of the last couple of weeks mean that the basis on which companies are reporting and planning is changing rapidly. It is important that due consideration is given by companies to these events in preparing their disclosures. Observing timetables set before this crisis arose may not give companies the necessary time to do this.” Greg Connell, MD of InfolinkGazette said: “whilst this measure will give companies more time to consult and prepare the appropriate disclosures under unparalleled circumstance, it will considerably slow down the flow of price sensitive information”.
T W Construct Limited went in to liquidation owing £3,482,470 to 149 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “at the time of the last filed accounts, the liquidity looked fine, but the shareholders' funds/total assets ratio was 0.09, and trade suppliers who were not deterred by the eye watering high level of gearing probably didn’t see the warning signs until payments slowed”. Greg added: “Registry Trust Ltd published a CCJ for £6,472 one week before the meeting of creditors was called, and CCJs are always a useful warning sign, but unfortunately on this occasion, didn’t come soon enough for suppliers to bail out”.
In the post covid-19 environment of uncertainty over demand and supply, automotive distributors Inchcape plc have joined a growing number of public companies announcing the temporary suspension of share buybacks . Inchcape have suspended the £150m share buyback programme that was launched in February; £25m had already been spend with £125m to go. Greg Connell, MD of InfolinkGazette said: “share buybacks divert investment away from the future growth of companies and those that continue to invest in share buybacks before more is known about the severity and duration of the Covid-19 impact may be jeopardising much more than their future growth”.
REM Engineering Limited went in to liquidation owing £5,533,340 to 79 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the company entered a CVA in July 2019, which was approved in August 2019, but clearly didn’t improve the outlook for unsecured creditors, who won’t be receiving any dividend”.
The board of Shoe Zone joined the growing trend of public companies taking the decision to defer the payment of dividends already approved at the AGM. The Shoe Zone board will propose a further resolution to cancel the 2019 Final Dividend. Greg Connell, MD of InfolinkGazette said: “with the full extent of the coronavirus on the short to medium term environment still unclear, companies are taking steps to conserve cash balances in the face of potentially prolonged challenging trading conditions.”
Global Ports Holding Plc the world's largest independent cruise port operator suspend the dividend for full year 2019 on Covid-19 impact. Global Ports were careful to stop short of warning on profits, but acknowledge the spread of Covid-19 has had a significant impact on the cruise industry, with a number of cruise calls cancelled in Asia and Europe and several 2020 cruise itineraries in Asia also cancelled.
The board and management team remain alert to the fact that the situation is still evolving, and the company continues to monitor the situation closely. In light of this unprecedented level of disruption to global trade and the cruise industry and the associated short term uncertainty, the Board of GPH has decided that it is prudent and in the best interests of all stakeholders to temporarily suspend the dividend for full year 2019, until the situation becomes clearer.
Online gaming software provider GAN PLC announced an upbeat trading update in Italy following the imposition of movement restrictions in Italy. Year-to-date the Company had experienced an 8.4% increase in bets online in the Italian regulated market, but since 23/02/20, the increase has leapt to a 13.9% increase. Greg Connell, MD of InfolinkGazette said: “the coronavirus will create few economic winners in what looks set to be a rout.”
10th March 2020 Press Release from InfolinkGazette
Old established commercial printers Taylor Bloxham Group Ltd, went in to Administration owing £4,697,000 to 302 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the latest financial statements revealed a serious deterioration in the company’s liquidity.” Greg added, the dividend prospects for unsecured trade creditors look dismal, except for those with trade credit insurance”.
Clugston Construction Limited went in to Administration owing £14,283,200 to 538 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “when Clugston should have been filing their 31st January 2019 accounts, they deployed the all too common ruse of reducing their accounting period by a single day, which illogically gives a company another three months to file their accounts”. Greg added: “this effectively meant that trade creditors never got to see how a sub optimal financial situation had become dire”.
Manchester based construction firm Bardsley Construction Limited went in to Administration owing £14,170,300 to 486 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “contractual issues from 2018 adversely impacted profits to the tune of £2.6 million, which meant the company did not have the cashflow to see through its current order book”.
The Coronavirus might not always be bad news for corporate profits - mobile payments platform provider Boku reported larger than expected volume increases in countries that are most affected by Coronavirus; much higher than in those countries where the virus has had a more limited impact, so far. Correlation doesn’t always mean causation, but, in general, the more time people spend indoors, the more Boku’s platform is utilised and if large numbers of people are forced to self-isolate, as seen in China, this would lead to an increase in the usage of online games and streaming services.
JR Prop Limited, which was controlled by Peter Jones and Jessops Europe Limited went in to Administration owing £2,038,480 to 88 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the company’s only assets were leaseholds, so there will be no dividend payable to unsecured creditors”.
THE BOOK PEOPLE LIMITED went in to Administration owing £14,196,400 to 236 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “suppliers wouldn’t have seen accounts beyond 2017, because the Book People were able to hide the perilous state of the finances by filing a six month accounting period extension.”
Agri-services group, Origin Enterprises issued a second profit warning in three months, blaming a significant drop in winter crop planting after heavy sustained rainfall, the fifth wettest on record. Greg Connell, MD of InfolinkGazette said: “agricultural suppliers should be wary of the knock-on effect of the significantly reduced output from the winter growing season.”
Builders, Broadley (Group) Limited went in to liquidation owing £14,721,500 to 445 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the boom in student housing in Leeds helped the group almost double turnover between 2016 and 2017”.
The 17 Carlauren Group companies that ran care homes and hotels, went in to Administration owing £11.2 million to 244 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “investors might have lost as much as £75 million, lured by the prospect of 10% returns in what was perceived to be a lucrative business caring for the wealthy elderly.” Greg added, “if an investment is offering to guarantee 10% returns, the capital investment risk is not going to be for the faint-hearted”.
Diversified engineering business 600 Group PLC have issued back to back profit warnings and now expect profits to be significantly below the Board's previously revised expectations. The company claims to have been hit by three major setbacks: the General Motors strike in USA plants at the end of last year; the suspension of manufacture by Boeing of its 737 MAX in January this year impacting hundreds of thousands of suppliers across the company’s core markets; and the Coronavirus is causing disruption to shipping from the Far East. Greg Connell, MD of InfolinkGazette said: “the longer the 737 max remains out of production, the harder it will become to re-establish the supply chain; skilled laid off workers will have found other jobs, and suppliers will have decommissioned production lines”.
C.D.S. (Oil & Gas Services) Limited went in to liquidation owing £3,789,650 to 25 unsecured creditors Greg Connell, MD of InfolinkGazette said: “the 2017 accounts revealed a catastrophic decline from 2016; presumably the 2018 accounts were dire, but no creditors got to see them, because on the day they were due to be filed, the accounting period was extended for 6 months.”
Tekmar Group PLC, a provider of technology and services to the global offshore energy markets became the third UK listed company to warn on profits, specifically linked to the impact of the Coronavirus, All of the Group's projects scheduled for shipment to China have been delayed and the supply of components from China has ceased. Tekmar will source replacement components from Europe but this will affect margins on affected projects; and, the Group's office in Shanghai, which services the whole of APAC has been placed on official shutdown, as have many of Tekmar’s suppliers in the region. Greg Connell, MD of InfolinkGazette said: “we are expecting the trickle of coronavirus profit warnings to become an outpouring, but there should be some upside for UK and EU component suppliers as the China supply chain grinds to a halt”.
Cathay International Holdings Limited, an investor and operator in the growing healthcare sector in China, became the second UK listed company to warn on profits, specifically linked to impact of the Coronavirus. The majority of Cathay’s operations are based in China and at all their plants are either on hold or preparing to gradually resume production within the next 7-10 days, subject to the further development of the epidemic and government advice or restrictions, which may limit production and sales of Cathay products and have an adverse impact on results for 2020. Greg Connell, MD of InfolinkGazette said: “not only do we expecting to see a surge in coronavirus related profit warnings, the lost sales are likely to result in widespread cash flow issues.”
10th February 2020 Press Release from InfolinkGazette
Burberry Group PLC have become the first UK listed company to issue a trading updated, warning the market on profits, specifically linked to the impact of the coronavirus. 24 of Burberry’s 64 stores in Mainland China are closed with remaining stores operating with reduced hours and seeing significant footfall declines. This is impacting Burberry’s retail sales in both Mainland China and Hong Kong. The spending patterns of Chinese customers in Europe and other tourist destinations have been less impacted to date but given widening travel restrictions, Burberry anticipate these to worsen over the coming weeks. Greg Connell, MD of InfolinkGazette said: “we are expecting to see a surge in coronavirus related profit warnings and expect the outbreak will overtake Brexit as one of the most common reasons offered as an explanation for the profit warning." Greg added: “some already vulnerable UK businesses with a major dependency on China will almost certainly go out of business as a consequence of the sales and supply chain impacts of the virus.
Burford Capital, a London-listed litigation financing specialist, and target of US short-seller Muddy Waters, has warned 2019 profit will fall, stating: we can neither predict nor control the timing of the generation of litigation returns.
Broadcaster BOXING CHANNEL MEDIA LTD went in to liquidation owing £14,745,500 to 19 unsecured creditors, including £2,583,000 to Queensberry Promotions Limited. Greg Connell, MD of InfolinkGazette said: “the B/S for Queensberry Promotions Limited doesn’t look strong enough to be able to stand that size of unsecured loss”.
Joyce Construction & Civils Ltd went in to Administration owing £4,064,420 to 178 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “90% of the Current Assets were classified as Gross amount due from contract customers, up from 78% the year before, so it sounds like there should have been a substantial provision for doubtful debtors”.
Hairdressers, Regis UK Limited, with over 200 branches, trading under the Supercuts brand, went in to Administration owing over £1 million to 117 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “apart from reduced footfall in the shopping centres, legislative changes like auto enrolment and minimum wage increases have created serious challenges for a lot of consumer service businesses”.
Fevertree Drinks plc loses some of its sparkle as it warns on profits. The board released a statement reporting: softer trading than expected in the final months of the year; margins ended the year behind our expectations; and earnings to decline by circa 5% when compared to 2018.
Cleaning product maker McBride warns on profits for a third time in a year, blaming a slow down in the UK. Greg Connell, MD of InfolinkGazette said: “In what seems to be a sector wide problem, one of McBride's Competitor’s Reckitt Benckiser have also issued two profit warnings this year”.
Clintons (AG Retail Cards Limited) went in to Administration owing £74,830,900 to 97 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “secured creditors should be covered but there will be nothing other than the prescribed part (up to a maximum of £600,000) for unsecured creditors”.
Superdry Plc have issued a new profit warning claiming that the benefit of strong gross margins and cost initiatives will not fully offset the profit impact of the aggregate shortfall in sales. Greg Connell, MD of InfolinkGazette said: “if you placed your bets on Superdry, they have ‘four of a kind’ but 4 straight profit warnings is unlikely to be a winning hand.”
Sales are down 4.5% at Fashion retailer Joules Group Plc and the company has warned that profits will be significantly below expectations. Greg Connell, MD of InfolinkGazette said: “it looks Like a self-inflicted injury with inadequate stock available for the most important selling season of the year; watch out for some senior management departures in the near term.”
7th January 2020 Press Release from InfolinkGazette
Luxury Car maker Aston Martin Lagonda Global Holdings plc issues a 2nd profit warning expecting adjusted EBITDA to be £130m-£140m and blaming higher than anticipated retail and customer financing support; weaker core model mix weighing on average selling price, with a shift towards Vantage; Lower than expected wholesale volumes; Incremental fixed marketing spend to support retail campaigns, particularly in the US, leading to lower cost savings than originally planned and; the late December rally in Sterling. Greg Connell, MD of InfolinkGazette said: “this is below City forecasts of around £196m and the £247m in adjusted earnings in 2018.”
The failure of Glasgow Chiropractic Limited will have been a pain in the neck for 45 unsecured creditors who collectively lost over £1 million when the company went in to liquidation.
The soaring cost of High St failure - Bonmarche Limited went in to Administration owing £14,511,500 to 763 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “There are a two or three large retailers in perilous financial positions (users of the InfolinkGazette Profit Warning analysis will know who they are) and suppliers trading without credit insurance will rack up significant losses when these troubled retailers disappear in 2020.”
The 17th challenger energy supplier to go out of business unfavourably, Toto Energy Ltd went in to Administration owing £15,943,300 to 126 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “creditors wouldn’t have seen any financial statements beyond the dire April 2017 accounts because Toto first extended their accounting period and then shortened it by a day.” Greg added, it's time Insurers, Creditors and HMRC all called time on companies who play fast and loose with accounting periods to avoid filing their accounts”.
Tomlinsons Dairies Limited went in to Administration owing £6,676,060 to 150 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “Tomlinson had been fooling around shortening and then extending their accounting period when they should have been filing accounts; creditors wouldn’t have seen accounts beyond March 2017”.
Ambulance chasers, NAHL Group PLC, issued a profit warning today, stating that: “underlying earnings for the year are now anticipated to be between 5% and 10% below Board expectations. Greg Connell, MD of InfolinkGazette said: “this is the second profit warning of the year, In January NAHL reported a disappointing end to the year and reduced profit expectations by between 5% and 10%.
Odessa Print Group, reprised as Odessa UK in a pre-pack went in to Administration owing £1,879,690 to 135 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “there wouldn’t be much demand for printed outdoor products like billboards since the advent of digital advertising screens; unsecured creditors wont’ be receiving any dividend”.
Recruitment giant Staffline Group PLC have ended a torrid year with a 4th profit warning, mentioning “challenges to trading in Q4”. Greg Connell, MD of InfolinkGazette said: PWC, one of the big four audit firms cited material uncertainty concerns in the 2018 accounts and promptly resigned as the firm’s auditors”.
Transport & Logistics company Dooley Rumble Group Limited lost a big contract on its export packing side and went in to Liquidation owing £2,503,390 to 197 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the parent company JAMES DOLAN LIMITED has just come out of a CVA that started in March 2019.”
Tiger Timber (NW) Limited went in to Liquidation owing £2,673,530 to 41 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “Tiger Timber had a very poor record of compliance with filing requirements; they were late filing the last 3 sets of accounts and the 31/03/19 accounts were 11 months overdue by the time the liquidator was appointed”.
Teen fashion retailer, Forever21 (UK) Limited went in to Administration owing £9,449,790 to 32 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “The company never traded profitably from the outset and was always dependent on support from its US parent and when support was no longer forthcoming, insolvency was inevitable.”
After a catastrophic fall in orders, Welsh Furniture maker Triumph Furniture Limited went in to Administration owing over £6,176,040 to 496 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “The IP and Goodwill was sold for £60,000.”
Goals Soccer Centres PLC went in to Administration owing over £1 million to 205 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the AIM listed company issued numerous profit warnings in the first half of the year, as the full extent of financial accounting misstatements and under declaration of VAT became clear; there should be consequences for the directors.”
Plastic production company Total Polyfilm Ltd suffered a serious fire in 2016 and went in to Administration owing £6,738,930 to 201 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “ Total Polyfilm Ltd had already racked up a £41 million P&L Account Reserve deficit in the years before the fire”.
2019 has been a year of elevated risk for trade suppliers, driven by questionable accounting practices revealed in a stream of quoted company profit warnings that have placed in to doubt the future viability of many businesses presumed to be low risk (we are on pace for 350 profit warnings in 2019), plus surprise insolvencies that were not predicted by the mainstream Credit Reference Agencies, resulting in unprecedented volumes of unsecured creditors incurring median losses of over £40,000. In just the last few months, M&C Saatchi, Ted Baker, Goals Soccer Centres, Aggregated Micro Power Holdings, and Eddie Stobart Logistics have all announced accounting anomalies. Construction giant Shaylor Group surprised the Credit Reference Agencies when it went in to Administration owing £34,932,800 to 666 unsecured creditors; and, the otherwise healthy Proline Group lost its fight for survival after being left with over £1M of unpaid bills when Herbert T Forrest went in to Administration; Proline Group’s 225 unsecured creditors lost a total of £5.5M. Aspin Group who provided civil engineering products and services, looked to have been the most recent Carillion victim when it went in to Administration owing £4,179,450 to 238 unsecured creditors; Aspin had been experiencing margin problems since 2015 but attempts to restructure wouldn’t have been helped by the £800,000 bad debt resulting from the Carillion liquidation.
Such is the contagion effect of insolvency that unsecured creditors are 3.5 times more likely to become insolvent than the general corporate population. Greg added. Against a backdrop of rising insolvencies, unreliable financial statements, unpredictable events, and contagion, trade suppliers who have decided against using trade credit insurance as part of a broader risk management strategy, might be advised to reconsider.
Questionable accounting decisions dating back to 2014 resulted in the 3rd profit warning inside 5 months for M&C Saatchi who announced today that, following the findings of an independent review by PwC, the Company will make adjustments of £11.6 million to its results, to be apportioned between its 2018 and 2019 financial results. Greg Connell, MD of InfolinkGazette said: “M&C Saatchi also made a separate announcement on its current trading and expectations for the full year 2019, confirming that like for like profits will be 22% - 27% below 2018.
Struggling fashion retailer Ted Baker has revealed a £20m to £25m hole in its balance sheet (B/S) after identifying an overstatement in the value of inventory held on its B/S. Greg Connell, MD of InfolinkGazette said: “Correcting the B/S will inevitably result in a profit restatement, making this the 4th profit warning from the embattled retailer in less than a year”.
11th November 2019 Press Release from InfolinkGazette
Mechanical, Electrical, Public Health and Fit-out specialists, Holmes Metrotech Ltd, who abruptly left a £19m hotel fit-out job in Shoreditch, east London leaving unpaid bills to its supply chain, went in to Administration owing £3,548,920 to 105 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the accounts filed at Companies House, took advantage of all the exemptions and were therefore totally lacking in transparency”. Greg added, Creditors probably wouldn’t have seen this coming until the invoices stopped being paid and is a good example of the benefits of trade credit insurance”.
Metal coating specialists, Orion Coil Coating Limited went in to Liquidation owing £1,732,720 to 24 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “Orion Coil Coating Limited legitimately filed micro company accounts, but this form of filing is so opaque, trade suppliers can’t make informed lending decisions”. Greg added, in this case, the only indication that anything might have been amiss, was that the financial trend was down; if the working capital, or net worth have fallen over prior year, prospective trade suppliers should request sight of the unabridged accounts before extending credit”.
According to statistics from InfolinkGazette, Kier Group Plc have issued 2 profit warnings this year. Greg Connell, MD of InfolinkGazette said: “even before the profit warnings, the troubled construction firm revised up its net debt by £50m after a change in accounting policy (code for accounting error) in relation to the group's hed