Finance Week articles from September 2005

Finance Week archives from September 2005

Smiths turns pension deficit into surplus.
September 28, 2005... Smiths Group has returned a surplus on its UK pension fund in its preliminary annual results, a turnaround of almost #80m within the year. Active management and a well-timed return to the equities market has seen the defence and...

E&Y threatens Equitable with defamation lawsuit.
September 28, 2005... Ernst & Young (E&Y) is considering legal action against Equitable Life over the insurer's continued claims that its audit work was negligent. Following the collapse of Equitable's case last week, chairman Vanni Treves has continued to...

E&Y faces tribunal over Equitable audit role.
September 28, 2005... Following Equitable Life's announcement that it has discontinued its claim against auditors Ernst & Young (E&Y), the accountancy firm is now facing a disciplinary tribunal from the Joint Disciplinary Scheme (JDS). The tribunal will...

Regent Inns seeks non-executive to join board.
September 28, 2005... Troubled bar operator Regent Inns is looking to recruit a new non- executive director to bring it into line with the Combined Code on Corporate Governance. Group financial controller Mike Foster tells Finance Week: "I believe another...

BA promotes group treasurer to finance chief.
September 28, 2005... British Airways (BA) is promoting group treasurer Keith Williams as replacement for the company's outgoing chief financial officer, John Rishton, early in 2006. Williams joined BA as head of tax in 1998, becoming group treasurer in...

Informa secures funding for acquisitions.
September 28, 2005... Informa, the specialist publisher and conferences company, has completed a review of its financing arrangements, putting in place a new five-year, #1.25bn revolving credit facility. It will be used to fund the #768m acquisition of IIR,...

Technical Update: Proving the case for auditor negligence.
September 28, 2005... Equitable Life's decision to drop its #2.6bn negligence claim against Ernst & Young has been called the 'biggest climbdown in English legal history'. And there are lessons for finance directors. There are two gross over-simplifications...

Northgate defends termination bonus.
September 28, 2005... Northgate Information Systems has hit back at concerns raised by Pensions Investment Research Consultants (Pirc) over termination bonuses for Northgate executives and the role of the company's auditors KPMG. David Somerlinck, corporate...

Mining execs continue to enjoy boom benefits.
September 28, 2005... Board members of mining companies are reaping record pay increases as a result of a global commodities boom. BHP Billiton finance chief Chris Lynch received a 25 per cent rise in pay in 2004-05, taking his total remuneration package to...

Burren Energy to drop oil hedging programme.
September 28, 2005... Burren Energy is to discontinue its hedging programme after hedging losses wiped $14.3m (#8m) off its revenues under IFRS for the six months to June 30 2005. The group hedged forward 2,740 barrels of oil per day for the first half of...

Enterprise plans share buy-back.(Enterprise Inns)(buy-back programme)(Brief Article)
September 28, 2005... Enterprise Inns is close to announcing plans to return #150m to #200m to shareholders through a share buy-back programme. The pub owner's finance director, David George, reveals to Finance Week that the reason for the cash return is...

Alea drops capital raising plans after downgrade.
September 28, 2005... Alea Group Holdings (Bermuda) has dropped plans to raise additional capital following the decision by US credit rating agency AM Best to downgrade its financial strength rating to B++ (very good) from A- (excellent) and its issuer credit...

MWB aims to pay back #100m of debt after gearing reduction.
September 28, 2005... Property company Marylebone Warwick Balfour (MWB) says it will continue to reduce debt next year after nearly halving gearing and cutting debt to #377m from #468m. Andrew Blurton, joint finance director, tells Finance Week that the...

Technical Update: Improving due diligence efficiency.(commercial due diligence)(high- profile banks)
September 28, 2005... The UK transactions market has evolved significantly in the past 20 years and the role of commercial due diligence (CDD) has changed accordingly. The seeds of CDD were planted in the late 1980s when a number of high- profile, highly...

Paladin plans acquisitions as cash position turns positive.
September 28, 2005... Oil explorer and producer Paladin Resources is on the hunt for acquisitions after announcing it expects to be debt free by early next year. The Scottish producer says net debt of #115m at June 30 2005 will turn into a net positive cash...

ITV searches for finance director replacement.
September 28, 2005... ITV, the UK's largest commercial broadcaster, has begun the search for a new finance chief after ousting its long-standing finance director, Henry Staunton, from the role as part of a management shake-up announced last week. Staunton,...

Cairn refinances to develop Indian fields.
September 28, 2005... Cairn Energy is to initiate a major refinancing in the next six months to fund future development and production at its key Indian oil fields. Last week, the Scottish oil explorer said its three largest discoveries in northern...

Ashtead Group breaks into FTSE 250.(Brief Article)
September 28, 2005... Ashtead Group has broken into the FTSE 250 for the first time following the company's refinancing programme. Last week, the international rental group released its quarterly results, the first since the refinancing was completed, showing...

NEWS DIGESTS: New finance chief joins Compass Finance.
September 28, 2005... Compass Finance, the secured loan and mortgage broker and packager, has appointed Mark Walker as finance director as part of a full senior management restructure. Compass executive Micheal Fort, who has had overall responsibility for finance...

NEWS DIGESTS: New non-executive director for Informa.
September 28, 2005... Yell Group's chief financial officer, John Davis, has been appointed as independent non-executive director of Informa, the specialist publisher and conferences company. He was previously finance director of the Pearson-owned FT Group and...

NEWS DIGESTS: Reuters appoints Maughan as non-exec.
September 28, 2005... Reuters Group has named Citigroup International's former chairman and chief executive Sir Deryck Maughan as an independent non-executive director. Maughan has served as a member of HM Treasury in London and was most recently chairman and...

NEWS DIGESTS: TfL audit chairman joins Misys board.
September 28, 2005... Misys has added John Ormerod to its board as a non-executive director and chairman of the group's audit committee. Ormerod had a 30-year career with Andersen UK before joining Deloitte in London as a senior partner, a role he held until...

NEWS DIGESTS: Atlantic Global searches for new chairman.
September 28, 2005... Atlantic Global, the software company, has begun the search for a new 'financially orientated' chairman after David Cox resigned from the role last week. The company has named non-executive director Steve Allen as interim chairman until a...

NEWS DIGESTS: Ultra Electronics strengthens finance team.
September 28, 2005... Ultra Electronics is bolstering the company's finance function, appointing two finance managers to share the role vacated by outgoing financial controller Amitabh Sharma. The aerospace and defence manufacturer is dispensing with the...

NEWS DIGESTS: Kingfisher ratings switch.
September 28, 2005... In last week's issue, we referred to Fitch and Standard & Poor's switch of Kingfisher's ratings outlook to negative as a 'downgrade'. A ratings agency switch is, of course, very different to a downgrade. We apologise for any confusion this...

Capital & Regional targets doubling of market share.
September 28, 2005... Capital & Regional chief executive Martin Barber expects to double the group's share of the UK in-town covered shopping centre market in the next five years after interim results revealed a 2 per cent increase in footfall across its...

ACCA clashes with ICAEW over standards implementation.
September 28, 2005... The Association of Chartered Certified Accountants (ACCA) has hit back at calls for a delay in the programme of convergence with international accounting standards in the UK. Last month, the Institute of Chartered Accountants in England...

Mowlem to write down #70m after review.
September 28, 2005... Mowlem is set to lose #70m off its balance sheet as a result of changes to the way it accounts for contract income. New finance director Paul Mainwaring has conducted a detailed review of the construction group's accounting problems...

NEWS ANALYSIS: Power giant puts its foot back on the gas.
September 28, 2005... Energy supply company Centrica is investing heavily in new gas reserves and power stations as it returns its focus to its core business, after selling off stakes in the likes of the AA and credit card company Goldfish. Perry Williams...

INTERVIEW - BRIAN WALLACE: Power shifter.
September 28, 2005... In almost his first act as finance director of Hilton Group, Brian Wallace began a process of ceding much of his decision-making responsibilities to a team of regional finance chiefs. He talks to Matthew Martin about his preference for...

COMMENT: ITV needs to stop living in the past.
September 28, 2005... The problem for ITV is not a lack of organic growth but that it has failed to move with the times, as its competitors have done, and still relies on a single, dwindling revenue source Last week, ITV's chief executive, Charles Allen,...

COMMENT: Tesco must learn to cope with continued success.
September 28, 2005... RICHARD NORTHEDGE Tesco's attempts at expanding its brand into all areas of everyday life have led to record results for the company. But is ubiquity could well bring about a consumer backlash Can a company be so successful that...

BUSINESS TRAVEL: Business travellers pay for rising oil prices.
September 28, 2005... As major consumers of fuel, airlines have been hit hard by the increase in the price of oil this year. But business travellers, who use the airlines most frequently and often have no choice but to fly, are also feeling the pinch in the...

BUSINESS CONTINUITY: Make sure your business is prepared for the worst.
September 28, 2005... As the events of September 11 2001 and July 7 2005 have shown, all companies need to have a well-thought-out continuity plan in place for when a catastrophe occurs or risk spending months unable to trade. Sam Samaratung explains what steps...

THE BOTTOM LINE: Big shoes to fill.(retirement)(Brief Article)
September 28, 2005... Alan Thomson will be a hard act to follow when he retires from Smiths Group next year. After the announcement of the group's preliminary annual results last week, analysts and investors were queuing up to praise the finance director's...

THE BOTTOM LINE: Legal benefit.
September 28, 2005... According to reports, the champagne corks have already been popping at Ernst & Young following the collapse of Equitable Life's #700m claim against the firm. But as Equitable continues to pursue 15 of its former directors for #1.7bn, the...

THE BOTTOM LINE: Vital signs.(appointments)
September 28, 2005... The announcement by Regent Inns that the company is seeking to appoint a new non-executive director to bring it into line with the Combined Code on Corporate Governance is the latest signal of confidence from the company. Since...

THE BOTTOM LINE: Coming clean.
September 28, 2005... With commodity prices continuing to rise and China still recording impressive growth, UK mining companies have announced record profits this year. Accordingly, finance directors across the sector are in line for sizeable hikes in their...

Travis Perkins struggles to repay Wickes debt.(Brief Article)
September 21, 2005... Travis Perkins has been forced to rethink plans to pay back #500m of debt from the #950m acquisition of Wickes in four years due to the effect of weak consumer spending on the company's cash flow. In the six months to the end of June...

Kingfisher hits back over credit rating downgrade.
September 21, 2005... Kingfisher's group finance director, Duncan Tatton-Brown, has criticised the ratings agencies that downgraded the FTSE 100 retailer from stable to negative, claiming they only focused on one narrow aspect of the business. The...

SFI looks to recoup #54m from former auditor.
September 21, 2005... SFI Group, the collapsed bar operator, is considering suing former auditors Horwath Clark Whitehill (HCW) for #54m. HCW had worked as SFI's accountants for 10 years before the relationship was severed in 2002 upon discovery of a #23m...

Sarbox sparks 18 per cent hike in finance costs.
September 21, 2005... Sarbanes-Oxley has forced the biggest jump in finance costs at public companies for 13 years, with the majority of companies listed in the US now spending up to 1.26 per cent of profits on the finance function, according to new research....

Autologic restructures financing in stability bid.(Autologic Holding PLC)(Brief Article)
September 21, 2005... Vehicle logistics group Autologic is seeking to stabilise its finance function as it overhauls its business in Europe. The company produced a mixed set of figures at its interim results, with operating profit dropping from #7.2m to #5.1m...

Abbot Group triples gearing in 18-month acquisitions spree.
September 21, 2005... Abbot Group, the oil services company, has almost tripled its gearing ratio in just 18 months following the acquisition of several contracting businesses. The FTSE 250 group increased its net debt by #25.6m to #69.4m for the half year...

Technical update: ASB exposure draft.
September 21, 2005... Board to increase the scope of existing standards Vedanta Resources plans to issue $500m (#277m) of bonds in the next few weeks, with the expectation that it may lead to an upgrade of the company's senior unsecured rating from Moody's....

Luminar to create new finance team.(Brief Article)
September 21, 2005... Luminar's finance director is planning to create a new commercial finance team to boost the company's finance function and improve financial discipline. Nick Beighton, who took on the finance director role at Luminar just six weeks...

Wood Group share placing raises capital to fund acquisition drive.
September 21, 2005... Wood Group plans expansion projects and acquisitions after successfully raising $92.5m (#51.3m) through a share placing last week. The Aberdeen-based oil services company sold the shares in just three hours but the group's chief...

AWG aims to reduce debt with #402m bond issue.
September 21, 2005... Water utility Anglian Water Group (AWG) has completed an innovative refinancing as part of a restructuring to lower its debt, which stands at nearly #4bn. AWG utilised a special-purpose vehicle through its lead bank, HSBC, issuing a...

Provident looks to sell struggling Yes.(Provident Financial )(Brief Article)
September 21, 2005... Provident Financial is seeking a buyer for its loss-making motor division, Yes Car Credit, according to a source close to the company. Provident has claimed that an improvement plan initiated by the new management team is beginning to...

LMA includes compensation in par trading contracts.
September 21, 2005... The Loan Market Association (LMA) has introduced a compensation clause as an option in par trading documents, to cover delays in loan settlements. The clause aims to give banks recourse to compensation should settlement of a loan be...

Finance directors' pay rises buck trend.
September 21, 2005... Base salary increases for FTSE 350 finance directors were higher in the year to June 30 2005 than 12 month's previously, compared with an overall slowdown in pay increases for executive directors. The average basic salary increase for...

Technical update: Capital allowances.
September 21, 2005... Changing the tax treatment of long-term leases The current tax treatment of leases generally follows the legal form of the underlying transaction. A lease of plant and machinery is treated for tax purposes as the hire of an asset. The...

Bloomsbury expands finance team into US.
September 21, 2005... Bloomsbury Publishing has extended its finance function into the US as part of the ongoing integration of US-based book company Walker Media, which it acquired for #3.44m in December last year. Bloomsbury has appointed a new chief...

Bentley tipped for top job at Centrica.
September 21, 2005... Phil Bentley, group finance director of Centrica, is among the favourites to become the next chief executive of the embattled energy group after Sir Roy Gardner last week announced plans to step down next summer. Bentley is seen as one...

Stagecoach takes share in Citylink.(Brief Article)
September 21, 2005... Stagecoach is forming a joint venture with the Singapore-based ComfortDelGro Corporation to operate Scottish Citylink Coaches, Megabus.com and Motorvator. The agreement is a non-cash transaction, with ComfortDelGro issuing Stagecoach...

NEWS DIGEST: PPF at risk of funding shortfall.
September 21, 2005... The Pension Protection Fund (PPF) has underestimated the number of companies at risk of collapse, potentially leading to a funding shortfall, according to actuary firm Hymans Robertson. Last month, Dun & Bradstreet (D&B) was appointed to...

NEWS DIGEST: Barclays finance chief moves to Barclaycard.(Colin Wilkin )(Brief Article)
September 21, 2005... Barclays group finance director Colin Wilkin has moved across to Barclaycard, the group's credit card arm, as finance director. Prior to joining Barclays, Wilkin was group head of finance at Standard Chartered. Meanwhile, Gerald Kitchen, who...

NEWS DIGEST: Domino's appoints group financial controller.(Michael Botha )(Brief Article)
September 21, 2005... Domino's Pizza has appointed Michael Botha as group financial controller to help run the day-to-day functions of the finance department as the company looks to grow to 800 stores in the UK and Ireland. Finance director Lee Ginsberg says that...

NEWS DIGEST: Orient Express replaces finance chief.
September 21, 2005... Orient Express has appointed Paul White as chief financial officer, to replace James Struthers. White joined Orient Express in 1991 as financial controller, before spending the past seven years as vice- president of the hotels business in...

NEWS DIGEST: Cookson considers deregistering from SEC.
September 21, 2005... Cookson Group is considering deregistering from the US Securities and Exchange Commission to save administrative and audit costs. The company has already decided to terminate its depository receipt programme in the US to save money after...

NEWS DIGEST: ClearSpeed appoints chief financial officer.
September 21, 2005... ClearSpeed Technology, the semiconductor company, has appointed Paul Andrew Webb as chief financial officer. Webb joins the company from Surface Technology Systems, where he worked in various roles including interim finance director and...

Cobham overhaul to provide platform for aggressive 2nd-half expansion.
September 21, 2005... Cobham plans aggressive expansion in the second half of its financial year after completing a major refinancing and strategic overhaul of the business. The defence group made #178m worth of acquisitions during the first half, funded by...

Chime undergoes structure review in bid to keep down costs.
September 21, 2005... Chime Communications is undertaking a formal internal review of its corporate structure for the first time in an effort to limit costs across the business after completing a major overhaul of its marketing services division. Chime...

Financial services sector offshoring to double.
September 21, 2005... Offshoring activity in the global financial services sector is set to double by 2008, despite the fact many companies fail to see initial cost benefits due to a lack of planning, according to a survey by PricewaterhouseCoopers. Around...

NEWS ANALYSIS: Insurers set to clean up in the wake of the hurricane.
September 21, 2005... Although some UK insurers will suffer substantial losses as a result of Hurricane Katrina, with the total cost of the damage estimated to be anything up to $60bn, demand for cover is likely to increase and they will take the opportunity to...

INTERVIEW - IAIN LOUGH: Reflective thinker.
September 21, 2005... After looking at the methods of the credit rating agencies, Pilkington finance director Iain Lough drew up a strategy that has enabled the glassmaker to pay off #348m of debt and improve its rating. Matthew Martin talks to him about this...

COMMENT: Centrica pays price for losing focus.
September 21, 2005... Centrica's attempts at diversifying from its core British Gas business proved that trading on the back of a well-known name is not enough; a sound financial strategy is also needed Nine years ago, British Gas launched the Goldfish card....

Accountancy firms enjoy cost of regulation.
September 21, 2005... On the cynical side, the Sarbanes-Oxley Act could not have come at a better time for the world's largest accountancy firms. After several years in a revenue ditch, with the assurance lines particularly suffering, 2004-05 has proved yet...

Railtract case could set an unwelcome precedent.
September 21, 2005... While the blame culture has made class-actions the norm in the US, in this country, they are yet to reach the same level of frequency. Unfortunately, this may be about to change Corporate history will be made next month when Mr Justice...

ANALYSIS: KPMG will take time to get over its blips.
September 21, 2005... KPMG's admission that the selling of its tax shelter schemes, Blips, was tantamount to assisting with tax evasion, and its subsequent settlement with the Government, leaves those who bought the schemes out of pocket and still facing the...

TECHNICAL ANALYSIS: Taking care over drafting will limit deal disputes.
September 21, 2005... Transaction disputes can arise for a number of reasons. Such disagreements are often the result of rushed deals in which the drafting of the sale and purchase agreement is done without due care. John Fisher explains why taking a little bit...

OPINION: FSA money laundering proposals make sense.
September 21, 2005... The Financial Services Authority has been much criticised for excessive regulation but with money laundering, it has often taken a more sensible line than some of its detractors, notably the Government. Matthew Rutter assesses its proposals...

ASSET-BACKED FINANCE: Freeing up cash to grow your business.
September 21, 2005... Companies looking to expand their business have a number of options for raising the necessary finance before going cap in hand to their banks. Nat Mankelow assesses the merits of a range of finance conduits including leasing, factoring and...

THE BOTTOM LINE: Stunted growth.(Travis Perkins )(Brief Article)
September 21, 2005... News that Travis Perkins will fail to reach its target of paying back #500m of debt in four years may not cause any surprises to those who felt that it paid far too much for Wickes. But its strategy of concentrating on further growing the...

THE BOTTOM LINE: Ratings war.
September 21, 2005... Duncan Tatton-Brown's assertion that Kingfisher needs to set aside time to explain the group's economic strategy to the credit rating agencies that downgraded it last week following the group's interim results begs the question: how hard...

THE BOTTOM LINE: Fighting fit.
September 21, 2005... Cobham has had a difficult 2005, with disagreements between the management and a severe setback when the group was excluded from a US Department of Defense list of preferred suppliers. In the process, the company has fallen behind rival UK...

THE BOTTOM LINE: Pension scheming.
September 21, 2005... The Pension Protection Fund (PPF) saga rolls on: a new survey from actuary Hymans Robertson suggests the fund's risk rating system needs some major tweaks. With Dun & Bradstreet's (D&B) ratings measures to be used by the PPF to assess...

LCI plans 10 per cent limit on shareholdings.(London Clubs International PLC)(Brief Article)
September 14, 2005... Casino operator London Clubs International (LCI) is proposing changes to its articles of association that would allow it to force shareholders with a 10 per cent stake to sell down their shares to prevent risks to the company's ability to...

Rentokil pension deficit threatens Robinson's bid.
September 14, 2005... Sir Gerry Robinson's proposals to install himself as executive chairman of Rentokil could be derailed by the trustees in charge of the company's #286m pension deficit. The pension trustees have the power to refer the bid to the Pensions...

Retail banks hit by compliance staff departures.
September 14, 2005... UK retail banks are struggling to retain key compliance staff just as market regulation increases. Royal Bank of Scotland's head of retail compliance, Alan Brener, has left to join Abbey as compliance director. He will report to Abbey...

IFRS forces Group 4 to reconsider share options.(Group 4 Securicor )(Brief Article)
September 14, 2005... Group 4 Securicor is understood to be planning to stop issuing share options from October next year after booking a #1.5m drop in profits under International Financial Reporting Standards (IFRS). Under IFRS 2, share-based payments,...

Xansa faces backlash over finance chief remuneration.
September 14, 2005... Xansa, the support services company, could face a shareholder revolt over the remuneration package received by its finance director, Gordon Stuart. Pensions Investment Research Consultants says that Stuart's bonus makes a mockery of...

Johnston Press cuts numbers in bank syndicate renegotiations.
September 14, 2005... Johnston Press has renegotiated its banking facilities, cutting back the number of banks involved in the former 20-strong syndicate by almost three quarters. Stuart Paterson, finance director at Johnston Press, says the former...

Technical update: Tax planning.
September 14, 2005... Senior executives need to create transparency Tax has historically been seen predominantly as a cost issue for European companies. However, recent developments in corporate governance, regulation and the political climate mean that how...