UBS plans to sell more loss-absorbing bonds to meet tougher bank capital rules after the Swiss bank tested investor appetite for these new instruments with an initial $2bn (£1.3bn) deal last week.

The new bonds are designed to help bolster the bank in tough times by absorbing losses. Their value can be written down if the bank’s common equity Tier 1 ratio – a measure of financial strength – falls below 5 per cent.

UBS’s deal attracted $5.5bn of demand from investors, which UBS said included private banks, long-only asset managers, hedge funds and banks investing for their own portfolios, in Asia and Europe.

The bank has maintained it is happy with the issue’s reception, but the take-up highlights that UBS has struggled to make the issue attractive to the big institutional investors the bank will have to tap if it is to sell these bonds in bulk.

It needs to sell roughly $16bn in total of capital instruments, measured by its target for risk-weighted assets, to meet new capital rules.

“(The) deal marks the beginning of an issuance programme as we build our loss-absorbing capital base to meet FINMA and the Basel Committee requirements for systemically important banks well in advance of the regulatory deadlines,” UBS’s financial head Tom Naratil said.

The bank is weighing issues in other regions and currencies for upcoming issues, which are likely to exceed $1bn in size, he said.

But institutional investors are concerned that the loss-absorption features of these bonds potentially put them behind equity investors in creditor rankings.

]]> 1.4274270 Thu, 23 Feb 2012 06:00:00 +0000 http://www.yorkshirepost.co.uk/allam_to_break_240m_turnover_barrier_1_4274536

EGYPTIAN-born Assem Allam was imprisoned and tortured because he opposed the regime of President Nasser in the 1960s.

He fled, initially arriving in Germany before moving on to the UK. He enrolled as a postgraduate in the University of Hull’s Department of Economics and studied for a Masters degree while working as an accountant for a merchant banking group. In 1977, he joined Lincolnshire-based generator manufacturer Tempest Diesel.

He was made managing director within a year. He bought the company in 1981. In 1992, he renamed it Allam Marine and moved to Hull.

POLITICAL heavyweight Ed Balls is the star guest at the next meeting of the Yorkshire Post Business Club, writes Bernard Ginns.

The Shadow Chancellor will meet with Yorkshire business leaders next Friday and tell them about his plans to kickstart growth in the UK economy.

The Business Club is an influential forum for company chairmen, chief executive, owner managers and top advisers to debate the leading issues of the day.

The issue of growth, and where it is going to come from, is top of the agenda for most executives, particularly in Yorkshire, which has been exposed to public sector spending.

Mr Balls, a former close aide to Gordon Brown while Chancellor and Prime Minister, has been calling for “decisive action” to boost economic activity.

He wants to see VAT and income tax cuts, a rise in personal allowances and higher tax credits.

Mr Balls will deliver a speech and then take questions at next Friday’s event, which takes place at DLA Piper in Leeds.

THE boss of recruitment firm Hays said yesterday there was still evidence that bankers were heading overseas as hiring in the sector fell around 10 per cent and pushed its UK division to a £3m loss.

Chief executive Alistair Cox said the recruitment squeeze in the banking industry would persist for “some time” and had spread beyond the UK to markets such as Hong Kong as major players restructure their operations.

The recruiter’s results come as the banking industry faces pressure from all sides, as it battles with volatile markets, weak consumer confidence, increased regulatory heat and criticism over pay.

The slowdown, which was behind a 1 per cent drop in private sector fees, which make up 78 per cent of UK revenues, prompted Hays to close 12 UK outlets, cutting its total headcount by 4 per cent, including a 2 per cent drop in the number of consultants to 2,071.

However, the wider group was supported by a strong performance overseas, particularly in Germany, leading to a 21 per cent increase in overall operating profit to £63.1m. On the banking sector climate, Mr Cox said: “It’s quite uniform worldwide, not just focused on the UK.”

Across the group, net fees rose 11 per cent to £373.8m on a like-for-like basis, driven by 16 per cent fee growth in Asia Pacific region and 27 per cent fee growth in the Continental Europe and Rest of World arm. Hays announced a 55 per cent cut to its interim dividend to 0.83p, after profit growth slowed to 2 per cent between the first six months of the financial year and the previous six months.

SIRIUS Minerals has poached an expat investment banker from Down Under with “outstanding credentials” in fundraising to become chief financial officer.

Jason Murray, a 43-year-old British national, joins the York potash project developer from Bank of America Merrill Lynch, where he has been head of capital markets in Australia for the last five years.

He will replace Andrew Lindsay, who is stepping down from his executive and board roles but will remain as a consultant to the company.

Russell Scrimshaw, chairman of Sirius, said: “We are delighted that someone of Jason’s capability has agreed to join the executive team and board of Sirius.

“Jason brings with him outstanding credentials in fundraising across many sectors and most importantly, the mining sector. In addition, Jason’s background in UK corporate taxation, corporate governance and building high performance teams will add greatly to the depth of the management team of Sirius.

“On behalf of the board and the shareholders I would also like to thank Andrew for his contribution since joining Sirius and wish him well for the future.”

Mr Lindsay helped Sirius Minerals complete two fundraisings to finance the drilling and development programmes in Yorkshire and to further the company’s North American and Australian projects.

Mr Murray comes with two decades’ experience in investment banking, including senior roles at Citigroup and JP Morgan, and has helped companies raise more than $250bn.

A COMPANY which manufactured components for a satellite has won an award and opened a second branch.

B-Tek Precision Engineering, a specialist in wire and spark erosion, or EDM, was handed the award of Most Dynamic Sub-Contractor at the 2012 Manufacturing Industry Awards, after manufacturing components for the Sentinel 2A satellite.

The company, whose original base is in Sheffield, recently saw the opening of its second branch in Beeston. Tony Sitek, managing director, said the premises in Leeds acts as the firm’s head office. He added: “Our longer term plan is to increase our capacity in Leeds which will allow us to increase our headcount as well as looking for opportunities outside the region in line with our objective of creating a national branch network.”

The business started in April 2011 with one employee and it now has four across the two sites. Mr Sitek added: “We plan on opening our next branch later this year, probably in the West Midlands with a view to operating a further three branches throughout the UK by 2014.” On the company’s award win, Mr Sitek added: “This award symbolises all that is good with SMEs and their ability to be able to react quickly and to be dynamic in an increasingly competitive global market.”

BUSINESSES are invited to find out more about doing business in Dubai at World Trade Centre Hull & Humber today.

Fayha Sultan, marketing manager for the Government of Dubai’s tourism, commerce and marketing department, will be speaking about the business opportunities for Yorkshire companies in Dubai at the event, which runs between midday and 3pm.

The presentation is part of a series of seminars, chaired by the Government of Dubai, Department of Tourism and Commerce Marketing (DTCM) around the UK.

Ian Scott, UK and Ireland director for the Government of Dubai Department of Tourism and Commerce Marketing, said: “Dubai is committed to retaining its position as one of the world’s leading business destinations with a diverse offering of unparalleled facilities and amenities for companies both large and small.”

He added: “The Department of Tourism and Commerce Marketing has introduced these seminars with a view to educating members of trade organisations around the UK about Dubai’s unique offering to enterprise and explaining how to go about setting up in the emirate to further stimulate growth in the region and expand UK businesses.”

A study by fDi magazine named Dubai as the ‘Middle East city of the Future 2010/11’. The event is free of charge. Anyone interested in attending is asked to pre-book by calling Ian Archibald at World Trade Centre Hull & Humber on 01482 485202 this morning.

SET top box maker Pace has signed a deal with TiVo, the digital video recorder specialist, to use TiVo’s award-winning software in Pace’s set-top boxes and gateways.

TiVo said the deal will enable operators around the world to use TiVo’s software in a selection of Pace devices.

Tom Rogers, chief executive of TiVo, said: “This global partnership with Pace is another step in achieving our constant goal of providing the TiVo service to an ever-expanding audience.”

Mike Pulli, chief executive of Pace, said: “We are thrilled to be working with TiVo as they have a great solution for operators looking to answer their customers’ increased demand for advanced and hybrid TV capabili- ties.

“We have seen increased interest from all segments of our service provider business to integrate the TiVo solution.”

MOODY’s Investors Services yesterday revealed that it had placed Clydesdale Bank’s deposit and debt ratings under review for a possible downgrade.

The review has been triggered by the announcement that Clydesdale’s parent, National Australia Bank, is to carry out a strategic review.

Clydesdale and its sister bank Yorkshire will announce the outcome in May.

Earlier this month, Yorkshire Bank’s chief executive David Thorburn said that everything is under review as the bank strives to cope with deteriorating economic conditions, a challenging outlook and an increase in bad debts.

It is not clear yet how many jobs will be axed from Yorkshire and Clydesdale’s 8,300 employees, of whom 2,000 are employed in Yorkshire.

NAB chief executive Cameron Clyne said the review will definitely lead to changes.

“The review will assess many options and it’s still too early to determine the recommendation. We can say that retaining the existing business mix and structure will not be an outcome,” he said.

Moody’s placed on review for downgrade the A2 long-term senior debt and bank deposit ratings and the Prime-1 short-term rating of Clydesdale Bank.

Moody’s understands that the strategic review will look to reposition the business mix and structure in a “challenging economic environment” in the UK and improve returns.

Although Moody’s does not expect the outcome of the strategic review to dramatically change Clydesdale’s credit profile, the rating review will focus on the extent to which the strategic review leads to any changes in the shape of Clydesdale and any impact that this will have on profitability and funding.

In a statement, Moody’s said: “At this stage Moody’s does not expect to change its assumptions regarding parental support to Clydesdale from NAB, however the rating agency noted that if the likelihood of a sale of the bank was to increase as a result of the strategic review then this would additionally need to be revisit- ed.

“Currently Moody’s assumption of parental support results in ratings uplift of one notch in the senior ratings of Clydesdale.”

A Clydesdale Bank spokesman said yesterday: “Our ratings have not changed and are only under review at this stage.

“As a conservative bank, we have a long-held commitment to maintaining strong capital and funding levels.”

greg.wright@ypn.co.uk

OVER half of companies in the North East plan to boost their marketing budget during 2012, while 30 per cent intend to cut it, according to a survey by MindMetre Research, which also revealed that nationally, larger companies demonstrate a greater inclination to invest more in marketing than SMEs.

The annual MindMetre Marketing Barometer, which canvassed more than 2,000 large and small British companies, found that 54 per cent of companies in the North East plan to boost their marketing budget over 2012, while 30 per cent intend to cut it, with the difference between the two providing the net figure of 24 per cent.

In 2011, a total of 48 per cent of respondents in the North East planned to increase their marketing spend, compared to the 43 per cent which intended to reduce it, leaving a net difference of 5 per cent.

Despite this increase on 2011, however, 2012’s figure is the lowest for any region in Britain.

When it comes to Britain’s largest companies, 61 per cent plan to boost marketing spend while just 15 per cent aim to slash their budgets.

Fifty-six per cent of SMEs intend to raise their marketing budgets while 20 per cent plan to cut their spending. Paul Lindsell, MindMetre’s managing director, said: “These forward-looking survey results augur well for 2012, which, if marketing budget trends are taken as a forward indicator of overall business sentiment, may herald the beginnings of a true upturn for Britain Ltd.

“Unlike other studies, which only track the activities of Britain’s very largest businesses, this study embraces representation from the full range of company sizes.

“2011 may have seemed a year of economic despondency, but it was also a year where weak players went to the wall, and strong businesses survived, even making highly advantageous acquisi-tions.

“Although some sectors may still be suffering from low demand and over-supply, many more may have passed through their bloodletting stage and appear to be gearing up for growth, both at home and in buoyant overseas markets.”

What are the prospects for the property sector in Yorkshire and the Humber?

It will be a difficult market again in 2012 but there will be some specific opportunities particularly from pre-lettings, driven by occupiers with lease expiries.

What is the best project you have been involved in?

In recent years it has been the Advanced Manufacturing Park where my client is Harworth Estates. What goes on there is absolutely mind-blowing and you don’t need to be an engineer to appreciate just how important that sector is to the UK economy.

If I can have another choice I would say, historically, it was Princess Exchange, home of DLA, next to Leeds City Station. The scheme included the refurbishment of the derelict north concourse and now presents Leeds with a true gateway for people travelling into the city by rail.

What is your favourite building in the region and why?

I know it’s a slightly unusual choice, but the Emley Moor transmitter mast, because of its iconic design. You can mention it to almost anyone even if they are not from the area and they will know it.

If you could change one thing to improve the property industry in the region what would it be?

Greater availability of funding for the commercial property sector, particularly in terms of development and refurbishment activity, but also to allow investment by local businesses, which in turn will benefit the property sector.

Whom do you most admire in the property industry?

Kevin McCabe, chairman of the Scarborough Group and Sheffield United. He has demonstrated impeccable timing, in terms of predicting the ups and downs of the property cycle. He was also very early to recognise the potential of the Chinese and Asian economies.

WEALTHY individuals are being sought to invest up to £2m in a company that sheds light on one of Yorkshire’s best-known markets.

Loxa, which is based in Guiseley, near Leeds, wants to raise the cash to create jobs in Yorkshire.

The company, which was founded in April last year, designs and distributes low energy LED lamps.

Loxa recently secured a contract from Leeds City Council to provide lighting for Kirkgate Market, which dates from Edwardian times and is famous for its ornamental dragons.

Cedric Bainbridge, the majority shareholder in Loxa, said the planned fundraising was partly being driven by a lack of bank funding.

He said yesterday: “The target investor will be earning £100,000 a year plus.

“Our idea is to have a few high net worth individuals who will invest in the business.

“The business launched in April 2011 and by December we were suffering from over-demand.

“We have got five staff and £1m turnover. We could turn over twice as much immediately and 10 times as much within two years.”

With extra investment, the company could create up to 10 jobs internally and many more in the local supply chain, Mr Bainbridge said.

He added: “Ninety per cent of our goods are manufactured in China.

“We would like to bring the ‘metal bashing’ side of the business back to Britain.

“We want to develop a UK supply chain – the knock-on effect on metal manufacturing companies would be substantial.”

The company is looking to develop UK production for casings and fittings for its lighting products.

However, local investment is needed to bring these plans to fruition.

According to Mr Bainbridge, who has put around £500,000 into the business, investors can expect to see healthy tax-free returns, over three years as the fundraising is being run as an Enterprise Investment Scheme (EIS).

EIS is designed to help smaller higher-risk trading companies raise finance by offering a range of tax reliefs to investors who buy new shares in those compan- ies.

Mr Bainbridge is a management accountant who has more than 20 years experience of working with SMEs (small and medium-sized enterprises).

In many cases, he has worked with companies that were too small to have their own finance director.

He added: “It’s important to stress that this is a private offer and there are no plans for a flotation.”

Loxa already supplies major national wholesalers, including CEF, Rexel and Edmundson Electrical, but it has the potential to achieve much greater market penetra-tion.

Loxa has set up a new, satellite company, LX Lighting Distributors, which will act as authorised importers of Loxa low energy commercial lighting products.

Lx Lighting Distributors’ sole activity will be the purchase of stocks for resale to Loxa.

LX Lighting Distributors is offering an initial share issue to raise up to 2m ordinary £1 shares, which will make up all the share capital in the company, in blocks of no less than 10,000 shares.

Further information can be found at www.loxa.co.uk

greg.wright@ypn.co.uk

WEALTH advice business Towry has lost a legal battle with Raymond James Investment Services and seven of its advisers over alleged breaches of restrictive covenants.

As well as defending its own case, Raymond James has supported the advisers involved since they joined the firm from Towry.

The advisers included James Chandler, who is the principal at Raymond James’ Investment Services office in Hessle, East Yorkshire. Peter Moores, the chief executive at Raymond James, said: “We are very pleased that the judgment handed down today dismissed the case against Raymond James and the seven advisers affiliated to us.

“The judgment confirms that the advisers did not breach their restrictive covenants, that there was no misuse of confidential information and there was no conspiracy to injure Towry.

“Raymond James is scrupulous in our recruitment process and in providing guidance to wealth managers looking to leave their present employers to join Raymond James where they can build their own client book.”

Mrs Justice Cox DBE in her judgment noted: “Having regard to the whole evidence in this case, the allegations against Raymond James do not withstand scrutiny.”

Andrew Fisher, the chief executive of Towry, said: “We are obviously disappointed that the Court did not find in our fa-vour.

“We did not undertake this action lightly but to protect our legitimate business interests for our clients and shareholders. The judgment does support the efforts of professional services firms like ours, to protect their legitimate business interests, through contractual non-solicitation, non-dealing and confidentiality clauses.

“The contracts of the former Edward Jones employees were materially different to our standard Towry contracts in that they did not contain a ‘non-dealing’ clause and we are confident that our current Towry contracts afford us appropriate commercial protection.”

greg.wright@ypn.co.uk

WEALTHY clients are continuing to flock to wealth manager St James’s Place, which reported a 30 per cent increase in 2011 profits yesterday.

Profits jumped from £84.2m in 2010 to £109.7m in 2011, in what it said had been a “record year” for the group.

The company said it will hand back more of the cash generated from its strong sales in 2011 to shareholders, with a one third increase in the annual dividend and plans for a similar hike next year.

The company, majority owned by Lloyds Banking Group, said that a 10 per cent net inflow of funds under management during 2011 helped boost operating profit by 12 per cent to £371.5m.

The company said that despite the stock market volatility seen in the second half of last year, the growth in cash earnings was strong.

As a result the board has decided to increase the full year dividend by 33 per cent.

It said shareholders can expect a “similarly significant increase in the 2012 dividend”.

Shore Capital analyst Eamonn Flanagan said: “This demonstrates the increasingly cash generative nature of the business model.”

Wealth managers cater to affluent clients, who tend to have over £50,000 to invest.

St James’s Place said there are more than seven million people in Britain who fit into this affluent category.

The company is benefiting from an ageing UK population and rising demand for financial services as more people have to make their own pension provision.

St James’s Place said funds under management grew to £29.5bn at the end of January, up £1bn from the end of 2011.

Chief executive David Bellamy said: “While mindful of the difficult economic conditions that persist, we have a good platform for further growth in new business in 2012 and we remain confident of achieving our medium term growth objectives.

“Market conditions were far from helpful. Last year from about August onwards people were getting very nervous about investing in anything.”

Alongside its annual results, the company announced the appointment of former newspaper editor Patience Wheatcroft as an independent non-executive director.

A SHORTLIST of the best applications made in response to a competition to help regional SMEs go global has been revealed.

The list will be whittled down to a final 10 on Monday via make-or-break auditions.

The overall winner will then be announced in March after a final pitch in front of a live audience of business leaders and an expert judging panel.

The Exporting For Growth initiative is run by UK Trade & Investment in partnership with HSBC and PwC. The overall winner for Yorkshire and the Humber will receive travel grants to global destinations of their choice – an opportunity to develop contacts, build first-person relationships and kickstart expansion in markets where there is a clear demand for their skills, products or services.

Also on offer is access to a range of international resources and research, and dedicated guidance from UKTI, PwC and HSBC.

Shortlisted SMEs include: ProperMaid, Huddersfield; Microlab Devices, Leeds; Innovative Support Systems, Barnsley; Orbis HR, Bradford; Industrial Textiles & Plastics, York; Waterguard Services, Barnsley; Brenmoor, Cross Hills, Craven; Environmental Defence Systems, Huddersfield; Simplytrak, Brough; Tomorrow Options Microelectronics, Sheffield; Bowness & Bowness, York; Doll Haircare, Leeds; Applelec Sign Components, Bradford; and Galglass, Barnsley.

Mark Robson, UKTI international trade director for Yorkshire and Humber, said: “The calibre of the submissions we’ve received has been hugely impressive, with a glut of truly innovative products, services and ideas that all deserve international recognition and success.

“It demonstrates once again that Yorkshire SMEs truly have the potential to stand out from the crowd in their respective markets.”

The competition attracted more than 40 applications from across Yorkshire and the Humber. Monday’s audition event takes place at the HSBC conference centre in Huddersfield.

OIL giant Royal Dutch Shell has made an agreed £992.4m bid for Mozambique-focused Cove Energy, offering a full price to open up a new gas frontier for the Anglo-Dutch oil major in East Africa.

Cove’s main asset is an 8.5 per cent stake in the Rovuma Offshore Area 1, in Mozambique, where operator Anadarko said recoverable reserves could top 30 trillion cubic feet of natural gas.

The project partners plan to build plants to freeze the gas into liquefied natural gas (LNG) and ship it to Asian markets.

Analysts said the small size of the stake meant Shell would likely approach other parties in the project and offer to buy part of their stakes.

“As the number one LNG player, Shell absolutely must be in East Africa... we should assume that 8.5 per cent is too small for them,” said Irene Himona, oil analyst at Societe Generale.

Shell said it had a “firm intention” to make a 195p per share cash bid, which Cove’s directors said yesterday they would recommend to shareholders.

Financial analysts at Citigroup agreed the deal made sense for Shell but said the “valuation looks stretched”.

Richard Savage, at Mirabaud, said in a research note that the price suggested that Shell expected the declared reserves to be increased in time.

Shell’s proposed bid is an over 70 per cent premium to Cove’s closing share price on January 4, when Cove announced plans to sell, although investors were already betting on a bid at that point.

Himona said other bidders could yet emerge and analysts at Westhouse tipped the Korea National Oil Corp, India’s GAIL, and Chinese state-controlled oil groups such as CNOOC as potential deal spoilers.

Any deal to buy Cove, which also has interests in Tanzania and Kenya, is subject to Mozambique government approval.

SHEFFIELD is planning to launch a £30m investment fund to kickstart economic development schemes in the city and surrounding region.

The city council plans to borrow against some of its property assets to help pay for infrastructure improvements, which it hopes will encourage more private sector investment.

John Mothersole, chief executive, met with Cities Minister Greg Clark yesterday to discuss the ambitious scheme.

Mr Mothersole told the Yorkshire Post: “My message was that Sheffield city region actually has strong demand for growth.

“We don’t need to stimulate growth – what we need to do is invest to make it happen.

“There is a chance for bigger, better, faster growth now. The country needs it. That’s what we can offer.”

He gave the example of the Lower Don Valley, where he said development is being held back because more investment in road infrastructure is needed.

“In a buoyant market, the private sector would invest in that. But the market is not sufficiently buoyant,” he said.

The Sheffield fund investment would bring land forward for development, create jobs and increase land values, he added.

Mr Mothersole said: “What the council will be wanting to do is to unlock potential where the money can be paid back once the success is achieved.

“In buoyant markets, the banks are sufficiently confident to invest in that.

“At the moment, across the whole country, bank finance is hard to find but there are still a lot of schemes that need to be brought forward.

“Sheffield, like many Northern cities, has viable schemes but they are not fundable at the moment.

“This is about breaking that log-jam. This is not about grants; this is about investment to keep Sheffield economy going forward.”

A new council report said the fund would “use the city’s asset base more effectively to deliver sustainable economic growth and increased prosperity for Sheffield, engaging the private sector more widely”.

Mr Mothersole said the council would not “underpin” the fund with core assets like schools, libraries or elderly care centres.

Instead, he said the council would use non-core assets as “internal security” to raise money.

He was in London yesterday to press for Sheffield to win more powers from Whitehall under the Government’s new ‘City Deals’ initiative.

The city wants more power over training cash to help close the skills gap, greater control over its transport system, support for technological innovation and backing to develop Rotherham’s Advanced Manufacturing Research Centre.

Coun Bryan Lodge, deputy council leader, said: “We believe in innovation and forward thinking and that is why the council is taking steps to create a fund to invest in economic growth.”

@bernardginns

1. Tenacity – so many new and even established SME businesses fail because the owners and managers give up. The ones who succeed, succeed against the odds. Whatever your size or turnover, business is not for quitters.

2. Advice – listen to good people who know what they are talking about. The SME business community offers many business owners who are willing to offer advice and help and who can save you making expensive mistakes. Find trusted mentors who are willing to offer impartial advice and be a critical friend.

3. Flexibility – no one gets it bang on right first time and within the SME sector it is vital to move with the ever changing times and adapt your business model to deliver what the customer now needs.

4. Networks – make business friends. It’s easy to feel isolated as an SME but you’d be amazed how many other business owner/managers feel the same. Connecting, sharing and communicating your values is the lifeblood of any business.

5. Staffing – A smaller workforce means there’s nowhere to hide and every person is accountable for the future of the business – which is empowering in the right hands. You need to be selfless as a boss and a great inspiration, setting examples on good work practices and a good work ethic.

6. Systems – no matter how small your business, formalise your working practices. Being unified in procedures leads to good quality service so get your systems right. From taking orders to delivery to handling enquiries and dealing with complaints.

7. Business Plan – even established SMEs need to know where they’re going, how they’ll get there and what they’ll need on the way. Without it, chances are you won’t make it.

8. Finances – the biggest weakness in the SME world! Get your numbers right from day one. Employ a book-keeper or an accountant, but do it straight away. If you can’t afford then learn yourself through a book-keeping course.

9. Access to Finance – this remains one of the biggest SME hurdles. There is hope for aspiring businesses who have trouble sourcing their finance from the banks through CDFIs (community development finance institutions) of which there are eight across the region and through organisations like Finance Yorkshire.

10. And the final one is tenacity – I wonder why?

AN ONLINE pet supplies retailer is planning on nearly doubling its headcount this year as part of its plans to capture 10 per cent of the UK’s £2.7bn market over the next 18 months.

Leeds-based Monster Pet Supplies was founded in 2010 by Jonny Gould, and is now approaching its first full year of trading with turnover forecast to hit £1m. Mr Gould predicts sales will increase by 300 per cent to £3m in the next financial year.

In the last 12 months, Google has ranked Monster Pet Supplies as the number one searched for company in the UK and number two in the world when searching for ‘pet supplies’. Monthly sales increased by 40 per cent to around £150,000 from December to January.

The company sells general merchandise, from dog beds to cat food, as well as medication for pets. It sells brands including Royal Canin and Hills, as well as sourcing from local suppliers.

Mr Gould said: “In my opinion we are just scratching the surface. The market value of pet food, pet medication and pet accessories in the UK is £2.7bn.”

The company is currently re-investing in warehouse management systems, is planning to move to a larger warehouse and has plans for recruitment. At the moment the team is working from about 3,000 sq ft at Barkston House in Croydon Street, Leeds, but Mr Gould said he’s looking for somewhere of about 15,000 sq ft. He added: “We have eyeballed a place very nearby. We are running out of space.”

Mr Gould said: “In 2010/2011 there were four of us. Now, there’s 12 of us. We are looking for two more as we speak and I expect to take on another 10 more, including those two, by the end of 2012.”

The firm is introducing an automated ‘picking, packing and putting away system’ for the warehouse, explained Mr Gould, who added: “At the moment it’s a bit ad hoc. This new system will improve efficiency. We are also introducing an automated reordering capability to the website for customers so people can easily set up the reordering of pet supplies.”

The website also allows customers to get repeat prescriptions when ordering medication, which Mr Gould said gives the firm “an edge over other online pet pharmacies”.

Mr Gould added: “Being online gives you the ability to sell a wider range of products and also bulk products like big sacks of dog food which are one of our most popular products because we can sell cheaper than the traditional retailers and we can deliver to the door. Customers are after a wider choice of merchandise now and we’ve probably got 300 types of dog beds which you would struggle to have on display.

“It’s really down to choice, price, efficient delivery and convenience.”

Monster Pet Supplies also wants to invest in a trade counter to create a retail presence for people in the Yorkshire area.

And it has placed emphasis on building an online community, Mr Gould said.

“We engage with customers through social media, Facebook, Twitter, and we constantly keep engaged through our blog.”

He explained that Search Engine Optimisation (SEO) plays a key role in boosting the firm’s online presence, adding: “A lot of attention is spent on SEO but it’s a continuous process.

“It’s not something you just pay for and turn on. It’s all about Google recognising you as a quality site.”

Mr Gould said he is not expecting to make a profit this year as everything has been re-invested back into the business, but he said by the end of this calendar year he hopes to be turning over a profit.

Mr Gould owns the business. His brother, Adam Gould, left his job as a lawyer to join the company as operations director. Mr Gould’s wife, Sarah Gould, is product manager at the firm.

suzan.uzel@ypn.co.uk

Young offenders are being given the opportunity of a career in the property industry with the launch a new initiative by Caddick Construction.

The firm, which is based in Knottingley, West Yorkshire, has joined forces with the charity Construction Youth Trust and taken on its first teenager on a six-month work placement.

The 17-year-old, who is serving a sentence at Wetherby Young Offenders’ Institution, will work four days a week on the £2.9m construction of The HUT, a youth centre in Castleford, which will feature a sports hall and bowling alley as well as a computer lab, cinema, and conference areas.

WALSH Taylor, the ambitious insolvency and business support group, has hired Yorkshire Bank’s former director for small business, Gary Lumby MBE, as a non-executive director to further its expansion plans.

The Guiseley-based firm offers corporate and personal insolvency services and advises businesses on refinancing and turnaround situations.

Mary Taylor, managing director, said: “We are delighted to have attracted someone of Gary’s calibre and reputation to the firm and I am certain that he will help us to continue our growth strategy and help guide the firm and our clients in the right direction.”

COMPANIES with growth potential that want to raise investment can take advantage of Connect Yorkshire’s Investment Readiness Programme, a series of six free-of-charge workshops.

The workshops are delivered by experienced professionals across the legal, financial, intellectual property and marketing sectors and run over a six-week period, comprising early morning and evening events, with the first starting on March 5, running until April 25.

Organisations involved in helping Connect Yorkshire deliver the programme include Garbutt and Elliott, PKF Corporate Finance, 3volution LLP, Clarion Solicitors, Knowles Warwick Accountants and Ward Hadaway Solicitors.

Connect Yorkshire is a not-for-profit organisation which has helped over 300 high-growth local companies raise £45m over the last decade.

Companies wishing to join the programme can find out more from.connectyorkshire.org or by calling 0113 384 5640.

Building materials giant Travis Perkins forecast solid progress in 2012, after reporting a 37 per cent rise in full-year profit to £297m.

Travis Perkins, also a home improvement retailer, said it expected its markets to remain tough in 2012. Turnover rose 52 per cent to £4.78bn, up six per cent on a like-for-like basis.

“Whilst the private sector is growing quite healthily, the amount of activity that it is creating is not quite enough to offset the fall in public sector construction,” said chief executive Geoff Cooper.

The company forecast a low single-digit decline in trade market volumes, reflecting a fall in the number of housing transactions in 2011 and a contraction in public sector expenditure as the government moves to cut its budget deficit.

Travis Perkins, whose brands include City Plumbing, Keyline, Tile Giant and Wickes, also predicted a more substantial decline in the consumer sector.

BUILDERS’ merchant and home improvement retailer Travis Perkins posted a better than expected 37 per cent rise in year profit as it won share from rivals and forecast more growth in 2012.

The firm, which trades as Travis Perkins, Keyline, CCF, City Plumbing, Benchmarx, Tile Giant, Wickes and BSS, and has branches across Yorkshire, said it made an underlying pre-tax profit of £297m in 2011.

That compares with analysts’ consensus forecast of £287m and £217m made in 2010.

Turnover rose 52 per cent to £4.78bn and was up 6 per cent on a like-for-like basis as the firm gained market share. Like-for-like sales were up 1.8 per cent in the first seven weeks of its new financial year.

Travis Perkins said it expected another year of solid progress in 2012 even though it expects its markets to remain subdued.

The firm, which ended 2011 with net debt of £583m raised its total dividend 33 per cent to 20 pence.

THE boss of recruitment firm Hays said there was still evidence that bankers were heading overseas as hiring in the sector fell around 10 per cent and pushed its UK division to a £3m loss.

Chief executive Alistair Cox said the recruitment squeeze in the banking industry would persist for “some time” and had spread beyond the UK to markets such as Hong Kong as major players restructure their operations.

The recruiter’s results come as the banking industry faces pressure from all sides, as it battles with volatile markets, weak consumer confidence, increased regulatory heat and criticism over pay.

The slowdown, which was behind a 1 per cent drop in private sector fees, which make up 78 per cent of UK revenues, prompted Hays to close 12 UK outlets, cutting its total headcount by 4 per cent, including a 2 per cent drop in the number of consultants to 2,071.

However, the wider group was supported by a strong performance overseas, particularly in Germany, leading to a 21 per cent increase in overall operating profit to £63.1m.

HOUSEBUILDER Barratt Developments reported a return to profit in its first-half results, and said the second half of the year had got off to a positive start.

Barratt, one of the larger listed housebuilders, posted an upbeat performance despite a wider stagnant property market, helped by its strategy of an increased focus in building homes in higher-margin areas.

The company reported pre-tax profit in the six months to December 31, 2011, of £22m versus a loss of £4.6m in the same period the year before.

Revenue increased by 8.6 per cent to £953m, against weak comparative figures impacted by bad weather last year.

“Over the last six months we have continued to improve the performance of the business, despite the wider economic uncertainty,” Barratt chief executive Mark Clare said in a statement.

“We have seen a strong start to 2012 and over the first seven weeks private reservations are running 21.8 per cent ahead of this time last year.”

The average price for Barratt properties rose 3.1 per cent to 181,000 pounds in the six months to the end of December.

Barratt operated from around 400 sites at the end of December last year. It plans to open about 20 Yorkshire sites during 2012, including in Hull, Howden, Whitby, Castleford and Wakefield. The sites will create close to 2,000 new homes.

WEALTH management group St James’s Place has announced the appointment of financial journalist Baroness Wheatcroft as an independent non-executive director.

The group, which has a Leeds base, said the appointment will take effect from April 2.

Baroness Wheatcroft, a member of the House of Lords, was previously editor-in-chief at the Wall Street Journal, Europe.

She is the former editor of the Sunday Telegraph and was business and City editor of The Times between 1997 and 2006. She has been a non-executive director of Barclays Group and Shaftesbury.

The company also announced that Roger Walsom, a non-executive director since 2005, will be retiring.

Charles Gregson, chairman, said in a statement: “I am delighted to welcome Baroness (Patience) Wheatcroft to the Board of SJP as an independent non-executive director.

“Patience brings a wealth of business, board and senior management experience and her appointment is an important further step in the ongoing development of the SJP board. On behalf of the board, I would also like to thank Roger for his substantial contribution over the last seven years.”

The London Stock Exchange is to provide real-time market data to Google, bolstering the search-engine’s Google Finance offering with free access to London prices previously only available with a delay.

The move, aimed at retail investors, demonstrates the growing power of the internet to deliver data available to subscribers of specialist services such as those provided by Thomson Reuters and Bloomberg LP.

The deal only covers the last price traded.

PET drugs firm Dechra Pharmaceuticals said half-year revenues and profits continue to grow, driven by its pharmaceuticals business, as people continue to treat their pets despite the downturn.

The group, which makes drugs for animals and humans, said turnover in the six months to the end of December grew nine per cent to £209.5m.

Underlying pre-tax profits were £14.3m, up three per cent from £13.9m in 2010.

“People are still spending the money on their animals,” said chief executive Ian Page, adding discretionary spending is weaker.

“In our key subsidiaries we are still getting about three per cent growth, but the pharmaceutical side is the strong driver.”

Dechra’s Dales Pharmaceuticals plant in Skipton won US regulatory approval late last year, in an “absolutely massive” coup for the business, according to Mr Page.

“We can wave flags and shout about it,” he said. “It’s not just the financial benefit it will have. It’s the badge of honour that it gives to third party manufacturing contracts.”

The plant can now make Vetoryl 120mg capsules, used to treat Cushings disease, for the US market, after winning approval from the US Food and Drug Administration (FDA).

Mr Page said Dechra is now looking to win approval for other types of pet drugs and new dosage varieties at Dales.

The site has seen a 9.4 per cent increase in contract manufacturing versus a year earlier.

The group said its sales of specialist pet diets were flat in the period, due to phasing of orders.

Its NVS services business per formed “strongly”, delivering a 7.3 per cent sales increase.

However, margins declined at its services business due to tough competition and changes in the mix of products it sells.

Dechra said the results were in line with its expectations and it continues to trade “robustly”.

“The overall economic environment will continue to pose challenges, especially in our services segment, however overall market growth continues to exceed pre-year expectations,” it said.

Dechra increased its interim dividend by 10.8 per cent to 4.1p per share.

Charles Stanley analysts said: “We expect a better second half which will benefit from product launches in new jurisdictions and the first contribution for the latest acquisition.

“However, the shortfall in NVS has led us to reduce our estimates for this and next year.”

Shore Capital analysts added: “It is clear that the company has suffered from a continuation of competitive pressures which have necessitated further discounting to hold market share.”

NATURAL chemicals firm Croda International reported record annual results yesterday as consumers splash out on beauty and anti-ageing creams despite the economic downturn.

The Snaith-based company, which is poised to join the FTSE 100, said pre-tax profits rose 26 per cent to £242.2m in the year to December 31, driven by strong growth in health and personal care products.

New chief executive Steve Foots said that despite the economic hardship, people are still spending money on making themselves feel better about their appearance.

“We’re not seeing any sign of trading down anywhere,” he said. “People are still spending money on beauty and anti-ageing creams, lotions, shampoos and conditioners.”

Mr Foots believe that consumers are more willing to trade down on food than beauty products.

“People want to look good,” he said. “It’s the feelgood factor, like lipstick during the war.”

Croda’s best performance was in Latin America where sales grew by 11 per cent and Europe, where sales grew by nine per cent.

Sales in North America grew by a more modest four per cent after the group parted company with a major distributor.

In Asia, a deliberate decline in marketing in the industrial specialities business held sales back to an increase of three per cent.

Mr Foots said the Latin American market is keen on high end personal care products.

“In Brazil women apply products far more often than in India and China,” he said. “It’s a question of disposable income. In India and China they have less, but that will change.”

At the moment Europe accounts for 44 per cent of Croda’s business, North America is 24 per cent and emerging markets account for 32 per cent.

Mr Foots believes that emerging markets could make up half the business in the next six years.

Croda is famous for its innovative new product launches and this year these will include anti-ageing product Resistem, which uses plant stem cell technology to reduce wrinkles, redness and promote a glowing complexion.

Croda, which supplies companies such as L’Oreal, Chanel, Clarins, Estée Lauder, Boots and Procter and Gamble, said all the big major cosmetics industries are looking at Resistem.

Another new product is Crodasone Cystine which straightens hair without the need for high temperature hair straighteners.

“You apply it and it gives you smooth, sleeker hair. You also have to reapply it – we like that,” said Mr Foots.

Croda, which is very cash-generative, raised its final dividend by 20 per cent to 30.25p, taking its total dividend to 55p per share.

Mr Foots said the company is looking at small acquisitions of between £5m to £10m and up to £40m, particularly companies that have technologies that Croda lacks.

BUILDING firm Morgan Sindall yesterday said its decision to rescue parts of the collapsed social housing firm Connaught was paying off.

Public spending cuts and economic turbulence squeezed margins at two of its biggest divisions, leading to a 12 per cent fall in profits to £45.3m.

But executive chairman John Morgan described the performance as resilient. Mr Morgan said the company was particularly pleased with a 15 per cent rise in operating profits at its Lovell affordable housing division following the Connaught acquisition.

The purchase of some of the assets of the social housing specialist at the end of 2010 saved around 2,500 jobs and opened up a range of opportunities for Lovell, which achieved profits of £18.5m in the year to December 31.

Morgan Sindall’s Yorkshire operation, which is based in Garforth, near Leeds, secured a number of major contracts last year.

Key project wins for the Leeds office included a £6.7m contract to extend Europe’s largest soft drinks factory for Coca-Cola Enterprises (CCE) in Wakefield, West Yorkshire, as part of a £30m investment in the site.

The company has also completed a £15m civic office building for English Cities Fund (ECF) and Wakefield Council.

The four-storey, 123,000 sq ft building forms a key part of the second phase of the £140m Wakefield Merchant Gate Masterplan, a project which aims to create an urban quarter covering 17 acres of land between Westgate Railway Station and the city centre.

Graham Shennan, the managing director of Morgan Sindall, said: “Morgan Sindall will focus on growing market share and maintaining and improving our market-leading positions throughout 2012.

“The depth and breadth of our skills as well as those of our supply chain and joint venture partners, combined with our ability to offer a fully integrated service on complex projects, will continue to allow us to capitalise on our strong pipeline of opportunities throughout the year.”

Morgan Sindall’s construction and infrastructure division grew revenues by one per cent to £1.3bn but its profits declined 22 per cent to £21.1m because of “extremely challenging and competitive” trading conditions.

The Rugby-based division’s forward order book fell to £1.6bn from £2bn but key projects in the roads, rail and energy distribution sectors have offset dwindling demand from the public sector.

Across the group, 50 per cent of Morgan Sindall’s work was generated from public projects in 2011, compared with 70 per cent in 2009.

The London-based company, which employs more than 7,000 people, pegged its dividend at 42p a share yesterday.

greg.wright@ypn.co.uk

ASDA, the UK’s second biggest grocer, reported a slowdown in sales growth in the run-up to Christmas as shoppers reined in spending amid continuing gloom about the future of the UK economy.

Launching a new quarterly piece of research called ‘Mumdex’, based on a survey of 4,000 Asda mums, Leeds-based Asda said that 43 per cent of mothers believe the UK economy will never be the same again.

In its findings, Asda said: “Asda mums are gloomy about the future of the UK economy, with a significant number worrying that things will never fully recover.

“Mums’ pessimism is driven by a lack of faith in the Government’s ability to alleviate the economic situation and a belief that politicians are not representing their best interests.”

Asda, the UK’s second-biggest supermarket chain after market leader Tesco, said like-for-like sales excluding fuel and VAT sales tax, rose 1.0 per cent in the 14 weeks to January 7.

This was down from a 1.3 per cent increase in the third quarter, but compared favourably with many of its rivals.

The performance prompted chief executive Andy Clarke to say: “We won Christmas. We were the clear winners.

“Customers trusted us and shopped with us at Christmas. In 2012 we’ll focus on price leadership.

“It will be tough, but we’re optimistic.”

Asda said like-for-like sales rose just 0.1 per cent in the last three months of 2011.

This meant that the 1.0 per cent increase was mostly achieved in the first week of January during the sales.

Asda’s festive figures soundly beat Tesco’s 2.3 per cent fall in UK like-for-like sales for the six weeks to January 7.

However, they came in below Sainsbury’s 1.2 per cent increase for the 14 weeks to January 7.

Bradford-based Morrisons reported a 0.7 per cent increase in like-for-like sales in the six weeks to January 1, but these figures didn’t include the first week of the January sales.

Asked about recent economic statistics that show a pick-up in the economy, Mr Clarke said it was good to see growth in the general economy, but customers are still finding life challenging. He added it was too early to say if the positive recent data represents a turning point or is merely a blip.

Asda said it expects to benefit this summer from celebrations to mark the Queen’s Diamond Jubilee, the Euro 2012 soccer championships and the London Olympics.

“Last year activity in events drove behaviour,” said Mr Clarke.

“When we have events in place our customers shop with us because the extra personality that Asda offers brings people in.”

The supermarket group, which trades from around 540 stores, lagged Britain’s grocery market in 2010 but fought back in 2011, helped by its purchase of smaller format Netto stores and a re-launch of its own-brand food range under the ‘Chosen By You’ name.

But the real differentiator has been Asda’s ‘price guarantee’ scheme, which refunds customers if their shopping isn’t 10 per cent cheaper than rivals.

More than one million customers checked their receipts every week in December, before coming back down to settle at around 500,000 a week.

Asda’s finance director Rob McWilliam said that the number of receipts checked has risen by over 500 per cent since Asda launched the ‘price guarantee’ scheme at the start of the year.

“It’s driving increased loyalty,” he said.

“The Asda ‘price guarantee’ represents a promise to be 10 per cent cheaper. We’ve tried to incentivise customers to take that challenge.”

In addition to the scheme and the relaunch of the own-brand label as ‘Chosen by You’, Asda reported strong growth at its ‘Extra Special’ brand, which was launched in partnership with Leiths.

Asda said that ‘Extra Special’ was the fastest growing premium own label brand in December.

The group also pointed to strong growth at its online business. Sales through asda.com rose by almost 20 per cent during the last three months of 2011.

Analysts at retail research agency Conlumino said: “After some difficulties last year, Asda now seems to be successfully straddling the quality-price equation and will, in our view, be one of the major beneficiaries from Tesco’s current difficulties.”

Tesco kicked off a price war last October when it unveiled its £500m ‘Big Price Drop’, with Sainsbury’s launching its ‘Brand Match’ scheme shortly after.

But Tesco recently admitted its pricing strategy had failed after a disappointing Christmas per- iod.

Asda is to invest over £500m this year, opening 25 new stores and three depots and creating up to 5,000 jobs.

Separately, Asda’s American parent company Wal-Mart, the world’s biggest retailer, posted fourth quarter sales and profit that fell short of Wall Street expectations.

ros.snowdon@ypn.co.uk

TRANSPORT technology group Tracsis expects to beat market expectations for its full year results after securing a lucrative contract.

Tracis revealed yesterday that it had received a “significant” order for its data-logging and condition monitoring equipment.

Tracsis has grown steadily since it was spun out of the University of Leeds’ School of Computing in 2004.

The company’s products allow transport operators to computerise staff and crew scheduling through ‘smart planning’. Its MPEC subsidiary, bought in June last year, allows remote monitoring of trackside equipment, reducing costs of maintenance for operators. The latest order comes from an existing UK client and has a total value of £2.9m.

In a statement, Tracsis said: “As a result of this win, and continued successful trading across the group, the company advises that its revenue and profit expectations for the year ending July 31, 2012 are expected to be ahead of current analyst expectations.”

John McArthur, the chief executive, said: “We are delighted to have won this further order, which is testament to the quality of the product we offer.”

engineer AMEC is still looking for a big acquisition, even after announcing a £400m share buyback programme and hiking its 2011 dividend by 15 per cent.

“The key thing about the buyback is it leaves us with ample capacity to continue to pursue, quite aggressively, acquisitions and there’s plenty of opportunity out there,” chief financial officer Ian McHoul said.

AMEC, which serves customers such as ConocoPhillips, GDF Suez and Centrica across the mining, oil and gas, nuclear power and renewable energy industries, said it was looking for deals in all of its sectors, as well as in Asia, Latin America and the Middle East.

Investors have been waiting for news on a cash return after AMEC said last March it would consider a buyback or one-off cash return should a major acquisition not materialise within 12 months, something which has not happened.

“Even after returning £400m, we will still have cash on the balance sheet. We don’t feel constrained in any way. We’ve got the ability to take debt on board to finance acquisitions,” Mr McHoul said.

AMEC does not have any debt and McHoul was confident of being able to borrow “significant sums” from a large number of banks. He said he was already in touch with lenders.

AMEC, which said the buyback would take place over a 12-month period, also said it planned to lift its full year dividend to 30.5p per share from the 26.5p in 2010.

AMEC posted full-year earnings before interest, tax and amortisation (EBITA) of £299m, 12 per cent higher than in 2010, and slightly higher than an average forecast of £297m in a company supplied poll of 16 analysts.

A strong performance in the North Sea, a contract win on the decommissioning of the Sellafield nuclear plant, plus a 21 per cent jump in earnings in the part of AMEC’s business which provides consulting and engineering for environmental and water projects, helped boost profits.

The company said it was targeting earnings per share of more than 100p by 2015, topping the 100p goal it announced in 2009.

]]> 1.4270286 Wed, 22 Feb 2012 06:00:00 +0000 http://www.yorkshirepost.co.uk/albemarle_enjoying_the_gold_rush_1_4269835

One of the UK’s biggest pawnbrokers unveiled higher profits yesterday after it said its business benefited from a lack of lending by high street banks.

Reading-based Albemarle & Bond, which has 174 stores and around 40 gold-buying pop-up shops, said its area of the market, which also includes payday loans, had been helped by the volatile and tough economic climate.

Albemarle, which has offered gold-buying services alongside traditional pawnbroking since 2009, said the gold-buying division saw an 88 per cent surge in gross profits to £12m as volumes bought increased by 57 per cent in the six months to December 31.

The wider group saw pre-tax profits increase 12 per cent to £12.1m, as the gold-buying division was also helped by the strong price of gold, which broke the 1,900 US dollars an ounce barrier last September and is currently at 1,740 US dollars.

Chief executive Barry Stevenson said: “We have been helped by the recent market environment which has seen traditional high street banks reduce the levels of consumer credit they offer as well as the general economic environment.”

Albemarle, which also trades as Herbert Brown, is two years into a five-year growth plan, which includes increasing the number of stores. The group opened 14 stores in the first half of the financial year and is on track to open 25 across the full year.

Its pawnbroking business recorded a 14 per cent rise in gross profit to £17.2m, as the pledge book for the division increased by 7 per cent to £38.3m.

However, the higher price of gold did not benefit all divisions as its retail arm was hit by weaker sales of jewellery, leading to a drop in profits to £2.7m, from £4.1m.

Leeds Building Society posted a record operating profit yesterday following an increase in customers and savings but its chief executive warned the UK economy would be “subdued” in 2012.

The UK’s fifth largest building society said operating profit for 2011 increased by 21 per cent to an all-time high of £102.4m, while pre-tax profit rose by 19 per cent to £50.2m.

Savings balances grew by £329m to a record level of £7.4bn and the society attracted 58,000 new members, taking total membership to a record 691,000.

Profits were also boosted by a 25 per cent increase in mortgage lending to £1.23bn.

The average loan to value was 51 per cent compared to 53 per cent in 2010. However, Leeds said 4,000, or one in three, of its mortgages were sold to first-time buyers. The number is expected to rise in 2012 following the launch of its 95 per cent mortgage last month.

Chief executive Peter Hill told the Yorkshire Post: “A lot of the mortgages we sold in 2011 were shared ownership and higher loan-to-value but it was a broad mix.”

He added: “I expect to see lending up in 2012 but our figures won’t be a dramatic double-digit growth. The environment will be fairly tough and there are a number of challenges we will have to contend with, including the increased cost of funding.”

Meanwhile, its cost income ratio reduced to 31 per cent from 34 per cent, which it said was the best of any building society in 2010. Capital and reserves increased by eight per cent to a record £572m, up from £531m in 2010.

Mr Hill, who took up his post last August, said: “I’m very pleased, we’ve had an excellent year.

“We have always tried to think long term. When the market was booming we did well but we didn’t go mad. It means we are strongly capitalised and can afford to be pretty steady. Big banks are finding it difficult because they are not in such a strong position.”

He added: “I think this year will be tough for the economy. We won’t see much growth but I don’t think we will fall off a cliff either. For lenders in a good position it will mean opportunities but others will look at shoring up their balance sheets. The net impact will be subdued.”

sausage-skin maker Devro posted a better than expected rise in full-year profit and said it continued to invest in new facilities, reflecting its optimism on the back of rising meat consumption in emerging markets.

The company, which each year makes enough collagen casing to stretch to the moon and back several times, is also benefiting as its alternative to increasingly expensive sheep gut casings allows meat processors in the developed world to cut costs.

Devro, which is listed on the FTSE 250 index of mid-sized companies and makes casings for everything from German bratwurst to breakfast bangers, estimates that global collagen consumption grew 10 per cent in 2011.

“The volume growth is the key to this story,” said Investec analyst Nicola Mallard, who upped Devro’s target price to 335p from 315p following full-year results published yesterday.

“They’ve got access to developing and emerging markets – places like Latin America and eastern European markets have been particularly strong for them.”

Shares in the company fell 4 per cent, however, as analysts pointed to a strong rally in the run-up to the results and worries over rising energy and raw materials costs.

Devro said it was also positive about the coming year after a strong finish to 2011 that helped it overcome disruption earlier in the year caused by earthquakes, floods and poor weather in a number of its markets.

The Scotland-based company said it hoped to build on sales growth in Latin America and Russia.

]]> 1.4269834 Wed, 22 Feb 2012 06:00:00 +0000 http://www.yorkshirepost.co.uk/businesstalk_top_us_economist_irwin_stelzer_on_europe_s_greek_bailout_1_3134233

IT’S only a matter of time before Greece goes bankrupt and leaves the euro, the leading US economist Irwin Stelzer tells us. Hear his views and listen to informed debate in your weekly business programme from the Yorkshire Post.

HOW TO LISTEN:

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Dr Stelzer, a senior fellow and director of Hudson Institute’s economic policy studies group, warns that Greece would be in better shape if it had its own currency and in turn it would strengthen the value of the euro.

Speaking to the Yorkshire Post during a visit to Leeds, he says: “It’s only a matter of time before they (Greece) go bankrupt. They are bankrupt now, it’s only a question of how you recognise it and what you call it. “

Also in the programme:

• Is this the time to start dabbling again in the stock market?

• Fulcrum: Taking a public company private.

Digital Editor David Behrens is joined in the studio by the Yorkshire Post’s deputy business editor Greg Wright and business reporter Lizzie Murphy.

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]]> 1.3134233 Tue, 21 Feb 2012 13:20:49 +0000 http://www.yorkshirepost.co.uk/profile_xavier_woodward_1_4268164

Isis is poised to invest in Yorkshire’s financial services. Deputy Business Editor Greg Wright met Xavier Woodward.

FEW budding accountants would have relished life in St Petersburg during the topsy-turvy days of the early 1990s.

At the time, Russia was no place for the faint-hearted, or those with a passion for order and neat balance sheets. The Berlin Wall had gone, but calm and economic growth were in short supply, to say the least.

Boris Yeltsin had been forced to hop on a tank to send hardline Communist plotters packing in the summer of 1991, and, when Xavier Woodward arrived the following year, it was hardly the calmest place on the planet.

But where there’s real estate, even in a country emerging from Communism, there’s brass.

Mr Woodward arrived as a student from, Merton College, Oxford, and fell in love with Russia. He liked it so much, he took the bold step of setting up a business there.

The lessons he learned in the chaotic post-Communist world are helping him to make investment decisions in his new role at Isis Equity Partners. These insights could bring jobs to Yorkshire.

He recalled: “I spent a year in Russia as part of my university course. Initially, I went to Moscow and attended the university there. Rather than go to France, which had been my original plan, for the second half of the year, I decided that I liked Moscow so much that I went back on spec.

“I managed to get myself a job setting up a real estate business in St Petersburg, which was fantastic. It was a lovely city and it was really exciting being in Russia when everything was changing.

“My parents would ring me up having seen Russia on the news and they would, by turns, be excited or worried about what was happening.”

St Petersburg’s fortunes had reflected the ebb and flow of world history. The former imperial capital of Russia had changed its name twice – to Petrograd and Leningrad – over the previous century. In 1992, the Russian economy was on its knees and food rationing had been re-introduced.

Mr Woodward recalled: “I learned a lot about how difficult it is to set up a business. It was interesting seeing a number of people struggle with new found freedoms. A lot of people relished having the ability to do pretty much what they wanted. Some people took that too far. It was a real awakening for lots of people.

“Partnership is a really strong word with Isis. You need to have some empathy with the management teams and how they might be looking at life, which might be different to you.

“That understanding has been helped by spending a year in a very different culture.”

Two decades after his Russian adventure, Mr Woodward is hoping to make significant investments in Yorkshire’s financial services and technology sectors on behalf of Isis Equity Partners.

Although he’s based in Isis’ Manchester office, he lives near Leeds and has deep-rooted ties with Yorkshire’s business community. After graduating from Oxford, Mr Woodward trained as an accountant and spent 13 years as a corporate finance adviser at Societe Generale and KPMG. Last year, he decided it was “time to stop advising and start doing”. The move to Isis seemed a natural one. Since 1995, Isis has invested in more then 100 unquoted UK businesses, and currently has £658m funds under management.

The Isis portfolio includes the wine importer Enotria, and the online retailer gettingpersonal.co.uk.

Mr Woodward helped to bring jobs and investment to Yorkshire last year, when Isis announced an investment worth £42m in technology provider the Onyx Group, in conjunction with the Onyx management team.

As well as funding the £27m purchase price, Isis committed a further £15m to fund strategic acquisitions.

Last year Onyx had three staff at its Sheffield site, but it is expected to expand.

“We are currently looking at helping the business with a substantial investment to expand that (Sheffield) data centre,’’ Mr Woodward said. “It’s poised to grow very strongly, because it’s in easy reach of the business centres of Sheffield and Leeds. We’ve got great hopes for how that will benefit the local economy. We feel the way to do good deals is to spend a lot of time developing relationships with management teams and businesses.

“Isis invests across a number of sectors. The key theme is that they are businesses that have the ability to scale up and protect their margins while they are doing so. That usually means they are doing something better or different from the competition.

“We don’t invest in a ‘me too’ business.”

The private equity market has been relatively quiet of late, and much of the focus has been on deals with eye-watering debts attached that were completed during the boom years.

Isis aims to calmly invest in good long term bets, according to Mr Woodward.

He said: “Some of the large buyouts have hit difficulties because of the levels of debt. We’ve always been pretty cautious when it comes to leverage.

“When you’re investing in a business that’s going to grow, it might have a greater working capital requirement. It might need to recruit new people and move to new premises.

“The last thing you want to do is constrain a business by putting an enormous weight of debt around its neck. We’ve had a pretty good experience within our portfolio, over the past few years, because of that cautious approach. That remains a key part of our deal structuring philosophy.”

So where are we likely to see deal activity this year? The financial services sector has taken a kicking, but, it seems, there are strong investment opportunities out there.

“Isis is not going to invest in a bank, or an insurance company, but the banks and insurance companies and building societies in Yorkshire have spawned a whole range of businesses around them to help distribute products and services,” said Mr Woodward. “There are a lot of really great businesses and management teams in that financial support services arena. I’m really keen to put some of our clients’ money to work investing in those sorts of quality businesses.”

Apart from his stint in Russia, other aspects of Mr Woodward’s CV suggest he was hardly a dour student, with his nose in a ledger book.

He recalled: “I was the guitarist in a band called the Electric Penguins who made one or two appearances in Halifax in a pub called The Star which has recently been demolished. I don’t think there was any connection with the fact we played there!”

Before the year is out, Isis could announce Yorkshire investments that will bring hope to parts of the economy that have been reeling from the long-term effects of the credit crunch.

Xavier Woodward Factfile

Name: Xavier Woodward

Title: Investment Director, Isis Equity Partners

Date of birth: September 28 1972

First job: I worked as a real estate agent in St Petersburg

Education: Bradford Grammar School and Merton College, Oxford

Favourite song: The Boxer, by Simon & Garfunkel

Favourite holiday destination: Ireland or France

Favourite film: Jesus of Montreal

Last book read: Skippy Dies by Paul Murray

Car driven: VW Passat Estate

What is the thing you are most proud of? My family

Jenni Dobbs is a building surveyor at GVA in Leeds

What was your first job?

Glass collecting at my local pub when I was 14.

If not in your present job, what would you like to do?

I’d love to own my own restaurant by the sea in the south of France.

What would be your ideal day away from the office?

Visiting my sister in Brighton, walking down the seafront to The Lanes, sunbathing in Pavilion Gardens, getting some dinner and topping the day off with a show at Komedia.

Name one person you would most like to have dinner with?

Malcolm X because his autobiography is the most powerful book I’ve ever read.

What was your best subject at school?

English language because it was fascinating to learn about how language has evolved.

What are your hobbies?

When I’m not at work I want to be outdoors, so I really enjoy skiing and walking.

What would you do if you won the lottery?

I’d still work until I pass my APC (Assessment of Professional Competence). Then I’d set up a charity and employ individuals from the world’s poorest regions, learning what they most need.

What is your top time-saving tip?

I plan what I want to achieve in a specific time scale and it drives me to work more efficiently.

What is your favourite time of day and why?

8am because there’s the whole day ahead of you.

What is your favourite garment?

My hand-knitted alpaca gloves I bought when I volunteered in Peru last year.

What is the best thing about being in Yorkshire?

My friends and family are here.

What would you like your epitaph to be?

Well, that was fun.

Jodie Marshall, managing director of the Sheffield-based social enterprise A Mind Apart Theatre Company, talks about her passion for Brazil.

In 2004 I spent six months of my gap year in Brazil, where I worked with street children and children at risk. Inspired by my dad visiting the same project when I was 14, I wanted to understand why he was always so moved when he spoke of his experiences there. My first memory of the country is waiting for two hours in Recife airport for our hosts. Standing there with someone I was paired with by the agency, we stood out a mile with our milky white skin and very little understanding of Portuguese.

I remember a family watching our every mood as we tried to ring England for our host’s number, while wondering if every person that looked at us was waiting for us. A young man from this family approached us and asked if we needed help in pretty good English. We explained we were waiting for someone, but could not get in touch with them. After lending us his phone he then offered to take us to a family friend’s house who my travel partner knew. This was my first encounter of the true Brazilian hospitality, and after this it only got better.

We eventually got in touch with our hosts and got picked up. Although they had got their dates mixed up (very Brazilian), they went out of their way to make sure we had places to stay. I have travelled to many countries and stayed with many people, but I have never experienced hospitality like I have in Brazil. Working in one of the poorest communities in Recife and Olinda, I learnt what it was to have nothing, but to still have joy through living in simplicity.

Working in a community next to a rubbish dump, the smell was intense but it never stopped me from spending days in the favela (Brazilian shanty town) and working with the local community. People would offer me food and drink even though they had nothing. We would laugh and joke together and I learnt to speak the language. The community was my favourite place to be, and still is.

The love of the country and the community didn’t stop there. It has continued to today, and at the beginning of February it will be eight years since I first set foot in Brazil. I try to visit the community that I also call ‘home’ every year, and have learnt Portuguese through teaching myself and regularly visiting. I have lifelong friends and a surrogate Brazilian ‘family’ there, who have taught me so much.

My passion has naturally spilled over into my work, when I volunteer my services for performing arts training when I am visiting. This year my theatre company, A Mind Apart, is working with the organisation I link with in Brazil to launch a volunteer programme aimed at increasing understanding, respect and fostering an exchange of culture for students from both countries.

Diary likes to applaud a business that does what it says on the tin.

We can all think of some terrible names devised by marketing gurus. Remember Consignia?

So hats off to Barnsley-based promotions company Burn Down the Disco which is going from strength to strength as it celebrates its sixth birthday. Now there’s a company with a name you won’t forget in a hurry.

It’s birthday celebrations begin this Friday with a headline gig from the Tiny Giants.

Last year, Burn Down the Disco joined forces with Barnsley Council, and helped to deliver concerts at Elsecar’s Building 21.

A press release which landed in Diary’s inbox proclaimed: “At the same time, Burn Down, ever aware that freshness is imperative in the music business, moved its town centre location to The Cedar Room, which can only be described as Barnsley’s answer to The Boardwalk.”

Well, we’ve heard Barnsley compared to a Tuscan hill village, so it can’t take a vast poetic leap to imagine Bruce Willis strutting through the town.

Airport’s pet subject

Pets in Yorkshire have the travel bug, it seems.

Robin Hood Airport Doncaster Sheffield has reported a record number of pets arriving and taking off from its site. In fact, the airport is more than half way to matching 2011’s total figure in just one month. More than 30 cats and dogs were imported and exported last month along with rabbits, budgies, guinea pigs and even goldfish.

Transport and airfreight business Anglo European carries out the import and export of domestic pets in conjunction with the airport under the DEFRA/Animal Health Pets Travel Scheme.

Steve Gill, airport director, said: “Anglo European does a fantastic job bringing everything from horses for the St Leger annual race meeting to Nemo the goldfish from Jersey. January was a great month for the company and they are already creeping up on last year’s figure of 66 pets being imported and 18 furry friends exported from destinations around the world.”

Gary Winterman, managing director of Anglo European, said: “Our pet service in conjunction with Air Bridge International has really taken off this year. We now collect animals from 12 countries across the globe including Cyprus, Jersey, Alicante, Corfu, Gran Canaria, Malaga, Majorca and Tenerife.

“We are already taking bookings for the rest of the year and hope to attract new destinations in the coming months, making 2012 a record breaking year for the company and the airport alike.”

Travels and travails

Keeping with this week’s pet theme, pet drugs company Animalcare’s chief executive Stephen Wildridge has been taking some of his own medicine.

Well, to be more accurate, his former feral cat Tiger has.

Tiger, a much loved feline who returned with the Wildridge family after a trip to France 20 years ago, has been suffering from renal problems.

Tiger was treated at by the local veterinary surgeons and Diary readers will be pleased to hear the treatment went well and he’s soldiering on.

However Mr Wildridge was not doing nearly so well after he was presented with a whopping £140 vet’s bill to treat Tiger’s ailments.

But he soon came round when he saw that the pet medicines used to treat Tiger were in fact York-based Animalcare’s own drugs, including wonderdrug benazecare which is used to treat renal insufficiency.

Apparently Tiger, a well travelled cat who most recently went on a trip to Canada, is now considering where he next wants to go on holiday. However Mr Wildridge has plans to limit Tiger to the UK and Western Europe – Animalcare doesn’t operate outside these markets.

CV printed for free

In these hard times, it’s a smart move to polish up your CV. In an attempt to help local job seekers, the Cartridge World store in Grimsby, is offering to print up to 10 copies of each customer’s CV free of charge until March 31.

With official UK unemployment figures totalling more than 2.6 million and experts predicting this figure will hit almost three million by 2016, Cartridge World has launched the ‘CV Sorted’ campaign to help the nation’s unemployed find work.

Garry Winton, store manager at Cartridge World in Grimsby, told Diary: “We recognise that the job market is tough, with fierce competition for most vacancies and that people looking for work need all the help they can get, which is why we’re offering our customers this free service.

“Local residents have been overwhelmingly receptive to the campaign so far.”

EUROZONE governments finally came to the rescue of Greece today, approving a second massive bail-out after months of wrangling and a last round of more than 12 hours of talks in Brussels.

Haggling over figures, financial targets and Greek government belt-tightening pledges went on through the night in a last-ditch attempt to rally markets and put crisis-hit Athens back on the path to economic recovery.

But the deal is based on long-range forecasts of Greek’s best-case-scenario debt reduction chances over the next eight years, with some pundits instantly dismissing the deal as undeliverable.

In return for the latest 130bn euro (£110bn) bail-out and a private creditor debt write-off worth about another 100bn euros (£84bn), the Greek government is pledged to implement fully a severe austerity package of pay, pension and jobs cuts, as well as finding savings of 325m euros (£270m) in this year’s national budget.

The deal nearly came unstuck over a requirement on Athens to get the Greek projected debt level down to around 120 per cent of national wealth by 2020.

Extra hours of financial juggling brought eurozone negotiators close - at least on paper - by massaging the figures to deliver a theoretical 121% GDP level by 2020.

Greece had only offered 129%, which was rejected as inadequate, although nothing like as bad as the current unsustainable 160% of GDP Greece is grappling with.

Pundits predicted short-term rallying of markets followed by a fall-back when the continuing massive scale of the debt mountain Greece has to climb becomes clear.

The Greek economy received a 110bn euro (£91bn) bail out from the EU and IMF in 2010 but it was not enough to lift Greece out of crisis.

Ahead of the overnight talks some critics were warning against “throwing good money after bad”, but the price of letting Greece default and be forced out of the euro currency was seen as a worse option.

Instead the talks concentrated on tying Greece as tightly as possible to austerity measures which will chip away at its debt and deficit levels.

Political parties on all sides were even pressed to promise no easing of the austerity package in forthcoming Greek elections.

]]> 1.4267814 Tue, 21 Feb 2012 08:54:50 +0000 http://www.yorkshirepost.co.uk/business_events_1_4267808

February 22

Quest PR will host a workshop to show business professionals how to handle – and profit from – print, radio and TV interviews at its Harrogate-based office, 9.30am -12.30pm. Price: £80+VAT. For further information, contact Charlotte Hird on 01423 564192 or at charlotte@quest-pr.com

Bradford Chamber of Commerce – Members’ Lunch. Time: Noon to 2.30pm at Bradford Chamber of Commerce, Devere House, Vicar Lane, Bradford, BD1 5AH. Free to members. For further information, contact Heather George on events@bradfordchamber.co.uk or call 01274 206660.

How much is your business worth?: Dealmakers Strategic Corporate Finance give free advice to business owners on attracting potential buyers. Venue: Holiday Inn Rotherham-Sheffield, off J33 M1. For further details, contact Marriane Martin on 0114 324 0430 or marianne.martin@strategiccf.co.uk

February 23

The Company Of Merchant Adventurers Of The City of York, The Hall, Fossgate are holding the fourth Annual Business Leaders Forum. This event is for 100 of York’s business leaders, sponsored by HPH, Chartered Accountants. For further information, contact Mike Clarke, Media Giants PR Ltd on mike@mediagiants.tv

February 24

Bradford Chamber of Commerce – Free taster: Lean Leadership Programme. Time: 9.30am to 1pm at Bradford Chamber, Devere House, Vicar Lane, Bradford, BD1 5AH . This free half-day course is designed to provide participants with a broad understanding of lean principles, methods and practices. For further information, contact Heather George on events@bradfordchamber.co.uk or call 01274 206660.

JCI (Junior Chamber International) Sheffield is hosting an event about ‘media engagement’ with Yorkshire Post deputy business editor Greg Wright from Noon to 2pm. The event will be held in Brown’s Bar & Brasserie in St Paul’s Chambers, St Paul’s Parade, Sheffield. For further information email info@jcisheffield.org. uk

February 27

The Met Club host Green Energy Seminar at The Old Corn Mill, Bullhouse Mill, Lea Lane, Millhouse Green, Sheffield. For further information, contact by email: lorraine@themetclub.co. uk

Bradford Chamber of Commerce are holding a Negotiation Skills Training Workshop. Time: 9am to 5pm. Venue: Bradford Chamber, Devere House, Vicar Lane, Bradford, BD1 5AH. Cost: £200 + VAT. For further information, contact Heather George on events@bradfordchamber.co.uk or call 01274 206660.

February 28

The Met Club host the Business Lunch with guest speaker Gary Verity, chief executive of Welcome Yorkshire. Venue: Doubletree by the Hilton Hotel, formerly the Mint Hotel, Leeds. Price: Members, £29 + VAT and non-members, £39 + VAT. For further details, contact Lorraine on 01423 525622 or email: lorraine@themetclub.co.uk

BRITISH chemicals firm Croda International reported a better-than-expected full-year pre-tax profit, boosted by higher sales to health and personal care product makers.

The FTSE 250 company, which supplies chemicals used in cosmetics and pharmaceuticals, raised its final dividend by 20 percent to 30.25 pence, taking the total dividend to 55 pence.

“Trading in January was encouraging and this positive trend has continued,” the company said in a statement, adding that exposure to the growing economies of Asia and Latin America gave it confidence in its future prospects.

January to December pre-tax profit rose to £242.4m beating analyst estimates of £236.3m, according to Thomson Reuters I/B/E/S.

Revenue for the year rose nearly seven per cent to £1.06bn.

The company said it completed the sale of its 60 per cent holding in Korean joint venture, Croda Woobang, last month, for a consideration of £2.2m.

Croda shares closed at 2031 pence on Monday on the London Stock Exchange, valuing the business at £2.74bn.

]]> 1.4267784 Tue, 21 Feb 2012 08:47:04 +0000 http://www.yorkshirepost.co.uk/pawnbroker_lifted_by_gold_rush_1_4267756

One of the UK’s biggest pawnbrokers unveiled higher profits today after it said its business benefited from a lack of lending by high street banks.

Reading-based Albemarle & Bond, which has 174 stores and around 40 gold-buying pop-up shops, said its area of the market, which also includes payday loans, had been helped by the volatile and tough economic climate.

Albemarle, which has offered gold-buying services alongside traditional pawnbroking since 2009, said the gold-buying division saw an 88 per cent surge in gross profits to £12m as volumes bought increased by 57 per cent in the six months to December 31.

The wider group saw pre-tax profits increase 12 per cent to £12.1m, as the gold-buying division was also helped by the strong price of gold, which broke the 1,900 US dollars an ounce barrier last September and is currently at 1,740 US dollars

Leeds Building Society today revealed plans to increase lending after delivering “very strong” results for 2011.

Pre-tax profit rose by 19 per cent to £50.2m, while 58,000 new members were attracted, taking total membership to a record 691,000.

Operating profit increased by 21 per cent in 2011 to a record £102.4m.

The chief executive, Peter Hill, said: “Leeds Building Society has again delivered an excellent set of financial results and provided even more capacity in the UK mortgage market, especially to first-time-buyers (FTBs).

“I am particularly pleased that my first results as chief executive saw record operating profit, and our membership and savings balances reached their highest ever levels.

“We also saw new mortgage lending increase by 25 per cent, to £1.23bn, which is one and half times our natural market share.

“This significant increase in new residential lending represents £442m above our CML market share. Furthermore, £290m of this, almost 24 per cent, has helped 4,000 first time buyers onto the property ladder.

“We intend to increase lending further in 2012, and this will include more availability of 95 per cent loans, which we see as an important contribution to supporting home ownership, the housing market and the wider economy.

“Our prudent approach to underwriting continued and, even when taking into account our lending to FTBs, the average LTV on our new lending was only 51 per cent in 2011.”

“Savings balances rose by £329m to a record £7.4bn. This represents £156m above our natural building society market share, with 41,000 new saving customers attracted by the security and value we provide.

“Our success in attracting deposits means that all of the society’s residential mortgage balances are funded entirely by members’ savings.”

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Drax, the operator of Britain’s largest coal-fired power station, reported a smaller-than-expected fall in full-year core earnings, as tighter cost controls helped it offset the impact of volatile commodity markets.

Drax, whose coal-fired power station in North Yorkshire supplies about seven per cent of Britain’s electricity, said earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 15 per cent to £334m but beat analysts’ estimates of about £326.2m.

The company said coal prices moved within a relatively narrow range throughout the year, but noted that carbon prices reached their lowest point for two years amid the euro zone crisis.

“Looking ahead, the introduction of the carbon price support mechanism by the UK government from April 2013 is likely to erode the competitive position in the market of our coal-fired generation business, but at the same time it strengthens the case for biomass generation,” Drax said in a statement.

However, the company said it continued to operate at less than installed biomass capacity, but added that it could transform into a predominantly renewable generator if given appropriate regulatory support.

Shares in Drax closed at 526 pence on Monday, valuing the company at £1.92bn.

]]> 1.4267708 Tue, 21 Feb 2012 08:18:38 +0000 http://www.yorkshirepost.co.uk/cpp_group_shocked_by_city_watchdog_demands_1_4267642

CPP Group warned its future is at risk after the City watchdog demanded what the credit card insurer said is a “disproportionate” review of past sales.

CPP has been under investigation by the Financial Services Authority for about a year over its sales tactics. It warned a “significant adverse financial impact” is likely as it could have to recompense customers who were mis-sold policies.

The York-based group said it cannot yet predict the full impact on its finances and requested the suspension of its shares at 103p.

CPP sells credit card protection to customers of many of Britain’s big lenders, including Yorkshire Bank, Nationwide and NatWest. Barclaycard, one of its biggest customers, decided not to renew its contract last week. Analysts fear other firms may follow.

CPP said the FSA has requested it review “certain past business sales” and make “certain changes” to renewals.

The company declined to elaborate on the FSA’s specific demands, but chief executive Paul Stobart said he was “deeply shocked by their extent and scope”.

“Its requirements are disproportionate and threaten the viability of the business,” said the firm.

CPP added its 1,969-strong workforce – which includes about 1,000 in York – is at risk.

“We are acutely aware of our responsibility locally,” said Mr Stobart. “There are a lot of people in York who are very worried.

“We cannot discount the possibility of a restructuring. We will need to reshape the business in line with what we can afford.”

The City regulator has come down hard on consumer finance products such as payment protection insurance and packaged accounts in recent months, and its tough line on CPP and its low-cost insurance reflects an increasingly active approach.

A review of CPP’s past sales could stretch back to 2005 – the date from which the FSA took over regulating insurance products.

“The FSA has serious concerns about the manner in which customers were being sold identity theft and card protection policies by the firm,” said the watchdog.

“It is likely that the firm will be required to carry out a past business review of the direct sales it made for both products and, if appropriate, pay redress. The FSA is committed to ensuring consumers are protected and that the firm treats its customers fairly.”

The group, which is still majority owned by founder Hamish Ogston, held six board meetings over the weekend after receiving the FSA’s recommendations.

“We were shocked, perplexed, bewildered and very concerned,” said Mr Stobart, the former Sage executive who joined in October. “In the three to four months I have been at the helm I know the changes in behaviour, the changes in customer experience that are already happening on the ground. We made a lot of progress.”

He insisted CPP’s business model is “perfectly viable”. “We have lot of competitors supplying the same space,” he said, adding its latest customer feedback underlines the “importance of, and need for” its services.

CPP said talks will continue with the FSA over the next two weeks with the hope of fixing a “mutually agreeable” review of past sales and renewal policies. But the group said it “cannot predict the scale or consequences” of the review on its finances.

CPP’s core card protection product costs £36.99 annually, and the policy renews automatically after a year unless the customer opts out. Mr Stobart insisted FSA is “perfectly happy with auto-renewal”, and making customers opt into renewal would be hugely expensive. “Any fundamental shift from where we are on auto-renewal is a big, big issue,” he said.

Citigroup analysts said: “This announcement/uncertainty is likely to lead to further disruption and could, we believe, result in further partners leaving the business.”

Share price suffers

CPP Group’s shares floated on the London Stock Exchange in March 2010 priced at 235p.

Founder Hamish Ogston made nearly £120m from the float, with CPP raising another £30m to pay down debt.

When CPP revealed the Financial Services Authority probe in March 2011, its shares fell more than 50 per cent. Yesterday its shares were suspended at 103p. Mr Ogston, a major benefactor to York Minster, founded the firm as Card Protection Plan Ltd in 1980. During the 1990s it expanded into Germany, Spain and Ireland. In 2000, CPP opened its York HQ. During the next decade it embarked on a series of acquisitions.