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12th October 2021 Press Release from InfolinkGazette

Quarter 3 2021 total unsecured creditor losses are now back above pre-pandemic levels for the first time in 2021. During the 5-year period 2015 to 2019, total unsecured creditor losses averaged around £4 billion per quarter and InfolinkGazette are now reporting a 25% increase in the total losses reported by unsecured creditors in Q3 2021, compared to the pre-pandemic quarterly total loss run rate, which soared to £5.1 billion, more than double the mid-pandemic Q3 2021 total losses of £2.5 billion. Greg Connell, Managing Director of InfolinkGazette said: “Insolvencies are already rising and based on current run rate, there are likely to be 23,000 corporate Liquidations and Administrations over the next 12 months; in August 2021 insolvencies were higher than August 2019 and if insolvencies can exceed the normal pre-pandemic run rate when we were still experiencing the benefit of government sponsored covid support measures, we can see we are in for a torrid time.” Greg added: “unsecured creditor losses generally rise with insolvencies and trade suppliers might want to check their trade credit insurance cover”.

IWG plc, formerly Regus, has allowed another two subsidiaries to file for Administration. Yesterday (09/10/21) both London One Kingdom Street East Centre Limited and London One Kingdom Street West Centre Limited filed notices of intention to appoint an administrator in the High Courts. Greg Connell, Managing Director of InfolinkGazette said: “We’ve seen at least 14 IWG family tree members filing applications for Administration this year.”

International Currency Exchange Limited filed a Notice to appoint an administrator at the High Court on 05/10/2021. Greg Connell, Managing Director of InfolinkGazette said: “Insolvencies are on the rise and likely to exceed 23,000 over the next 12 months; August 2021 insolvencies were higher than August 2019 and if insolvencies can exceed the normal pre-pandemic run rate when we were still experiencing the benefit of government sponsored covid support measures, we can see we are in for a torrid time.”

London listed construction company, NMCN plc filed a Notice of Intention to appoint an administrator today (04/10/21). Greg Connell, Managing Director of InfolinkGazette said: “NMCN issued 4 profit warnings in the last 12 months, starting with a warning in October 2020, that the Company has undertaken a review all our major contracts and concluded that there would be a loss before tax of between £13.5 million and £15.0 million for the year.” Greg added: “that loss became £22 million before increasing to £24 million.”

Public transport operator Go-Ahead announced today (28/09/21) that the Department for Transport has taken back control of the Southeastern franchise. The board went on to explain that the loss of the franchise was as a consequence of ongoing discussions over the historical calculation by London and Southeastern Railway Limited of the profit share over a number of years, amounting to £25 million; the board will provide an update on further liabilities in its full-year results. Greg Connell, Managing Director of InfolinkGazette said: “this looks like having been a very expensive accounting error that will adversely impact profits and will be extremely destructive of shareholder value.”

Another day, another energy supplier goes out of business - PFP Energy Limited filed an Application to appoint an administrator today (24/09/2021). Greg Connell, Managing Director of InfolinkGazette said: “before we begin linking all of the energy company failures to the current crisis, its worth remembering most of them were loss making, uncapitalised, with poor liquidity, and were losing customers. PPF Energy were no exception”.

Power suppliers, People's Energy (Supply) Limited filed a Notice of Intention to appoint an administrator today (23/09/2021).

Renewable electricity supplier Utility Point Limited a notice to appoint an Administrator at HMCourts on 22/09/21. Greg Connell, Managing Director of InfolinkGazette said: “there is a constantly shrinking pool of energy suppliers in the market, which is going to be bad for competition”.

On a bad day for airport car park operators, London Luton Airport Parking Limited, Group First Global Limited, Park First Freeholds Limited, Park First Limited, Help Me Park Gatwick Limited, Paypark Limited, Airport Parking Rentals (Gatwick) Limited, Help-Me-Park.Com Limited, Cophall Parking Gatwick Limited, Park First Management Limited, Park First Skyport Limited and Park First Glasgow Rentals Limited all submitted Applications in the High Court today 21/09/21 for Company Voluntary Arrangements. Greg Connell, Managing Director of InfolinkGazette said: “with the furlough scheme terminating and Covid insolvency protection measures winding down from the end of September, insolvencies will rise sharply.”

Serviced accommodation operator Q International Limited and 4 of its subsidiaries filed Notices to appoint an administrator today (20/09/2021). Greg Connell, Managing Director of InfolinkGazette said: “the group had availed of the Coronavirus Job retention scheme and also secured a long-term funding package under the government-backed CBIL scheme, but still looks to be heading for Administration.”

Championship club, The Derby County Football Club Limited filed a  Notice of Intention to appoint an administrator today (17/09/2021). Greg Connell, Managing Director of InfolinkGazette said: “this is going to be painfully expensive for unsecured creditors”.

Community savings and loan provider Barrow & District Credit Limited made an application to appoint an administrator in the High Court today (16/09/2021). Greg Connell, Managing Director of InfolinkGazette said: as payday lenders are either pulling out of the market, or circling the waggons in an attempt to stave off bankruptcy, the need for community lending has increased, but are Credit Unions operating an outdated financial model that has been seriously weakened by the pandemic?”

Old established construction contractor Henry W. Pollard & Sons Limited went in to liquidation owing £9,078,180 to 337 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, said: “Covid insolvency protection measure wind down from the end of September when creditors can start issuing winding up petitions for debts of more than £10,000, although landlords will still need to wait until March next year to pursue rent arrears.” Greg added: “we expected to see a steady increase in the number of CVLs from companies facing the threat of winding up, and an increase in numbers of CCJ’s because it is the only enforcement option open to landlords”.

London-listed City of London Group plc, a United Kingdom-based investment company point to a grim outlook – “The COVID-19 pandemic has had a material adverse effect on UK economic activity to date, and its influence is likely to be felt for some years. The immediate outlook for the UK economy and in particular the SME market is uncertain as the government withdraws economic assistance to business. Continuing pressure on SME businesses is likely to increase the risk of defaults and may deter capital investment by the sector, which could adversely affect the development of the Group's lending businesses. Uncertain growth prospects for the UK economy may also affect the ability of the Company to raise the capital necessary to deliver its strategy.

Power supply provider MONEYPLUS ENERGY LIMITED filed a Notice of Intention to appoint an administrator on Friday (11/09/2021). Greg Connell, Managing Director of InfolinkGazette, commented: “there will be many more small energy suppliers going out of business this winter as wholesale energy prices have turned against them and the October late payment deadline looms to hand over renewable energy subsidies.” Greg added: “consumers are protected by the Ofgem safety net, but it is a worrying time for trade suppliers”.

London-listed specialist lender PCF Group PLC warned on profits today (10/09/21) stating that the profit downgrade for the year ended 30/09/20 will be greater than previously anticipated. Greg Connell, Managing Director of InfolinkGazette, commented: “PCF issued a warning in March this year, stating that the restatement of profit before impairment of goodwill and tax for the year ended 30 September 2020 would not be more than £750,000, but is now anticipated to be greater than £750,000 and that they are unable to give fresh guidance as to the actual extent of any further reduction.”

PCF had said in March that it would make a number of adjustments to its fiscal 2020 accounts which would result in a net reduction of no more than GBP750,000 against its previously announced profit before impairment and tax of GBP3.9 million.

8th August 2021 Press Release from InfolinkGazette

Yorkshire-based Origin Broadband filed another Notice of Intention to appoint an administrator in the High Court today (07/09/2021), having previously filed on 23/08/2021. Greg Connell, Managing Director of InfolinkGazette, commented: “Clearly the directors were unable to clear all the hurdles and get the Administrator appointment over the line, which normally indicates a problem with creditors, shareholders or charge holders”. Greg added: “ The company is controlled by Faro Capital Ltd, who not surprisingly hold a fixed and floating charge.”

Raw material and labour price inflation are contributory factors in 15% of the last quarters profit warnings from UK Listed companies. Greg Connell, Managing Director of InfolinkGazette, commented: “Companies usually announce a profit warning ahead of an earnings announcement to soften the blow to investors; historically they have mentioned unexpected cyclical downturns resulting in poor performance, or a single challenging incident, either internal to the company like a logistics problem or an external event like Covid. However, raw material price increases and wage inflation are beginning to rival Covid as the reasons behind poor performance. Greg added: “We seem to have several key drivers of inflation firmly established in the economy: demand growing faster than supply; soaring energy cost; rising wages, which are sky rocketing in the logistics sector”.

During a profit warning the company might mention issues related to key growth drivers like sales and margins, its supply chain, new customers, and more. As with regular earnings reports, a profit warning can get into granular detail or can remain more general, noting only a few places in its financial statements where its performance could fall below what shareholders anticipate.

Directors and Shareholders of small companies continue to call time on their businesses at record levels as the number of England & Wales Members Voluntary Liquidations for the 12 months soars to 14,243 for the 12 months to 31/12/2021, up 24.7% for the same period last year and 71% on the same period ending 2019, in pre-pandemic times. Greg Connell, Managing Director of InfolinkGazette, commented: “these are solvent companies that are able to meet all of their financial commitments and loan repayments but are unable to see a realistic future for their business. Greg added: “because these are solvent companies, the closures are not counted in the insolvency statistics published by the Insolvency Service, but they do demonstrate that business confidence is at a low ebb and these closures will adversely affect jobs and future tax revenues.”

Yorkshire-based Origin Broadband, launched in 2011, filed a Notice of Intention to appoint an administrator in the High Court today (23/08/201). Greg Connell, Managing Director of InfolinkGazette, commented: “Origin are one of many smaller broadband providers that are competing with the big players like BT and Virgin Media, and racked up over £22 million of accumulated losses”.

Europe's biggest maker of retailer own brand household goods, McBride Plc issued a second profit warning today (18/08/2021) only a quarter on from the last profit warning, blaming exceptional price increases, supply availability and distribution challenges. As a consequence, the Board expects adjusted profit before tax for financial year 2022 to be 55% - 65% lower than current market consensus.

AIM listed manufacturer, Tricorn Group plc filed a Notice of Intention to appoint an administrator in the High Court today (19/08/2021). Greg Connell, Managing Director of InfolinkGazette, commented: "Tricorn issued numerous profit warnings over the last few years and in June 2021, warned on margins, due to pressure from price increases and labour productivity. The board also warned stakeholders that they couldn’t fund the investment required to return the Group to profitable cash generation from within the existing borrowing facilities.”

13th July 2021 Press Release from InfolinkGazette

The overall number of company insolvencies has remained lower than pre-pandemic levels since the start of the first UK lockdown in March 2020, with just 1,011 registered company insolvencies in May 2021, compared to historic pre-pandemic averages of around 1,500 per month. However, the May 2021 figure was 7% higher than in the same month in 2020, driven by a higher number of registered CVLs and Companies House have reported a surge in the number of company dissolutions in Q1 2021, up 25% on the same quarter in 2020 and 20% on the same quarter 2019.  

Greg Connell, Managing Director of InfolinkGazette, commented: “we should be concerned about the number of dissolutions because it is likely that some company directors have taken advantage of creditor forbearance during the pandemic and simply opted to go down the voluntary strike off path despite being technically insolvent, meaning creditors are unlikely to be paid and directors won’t be held to account.”

Aside from insolvencies and dissolutions there has been a sharp rise in the number of Members Voluntary Liquidations where Directors and Members have simply called time on their companies, with 14,395 solvent England & Wales companies in the 12 months to 07/07/21 passing a Resolutions for Winding-up, compared to 10,830 in the previous 12 months and 8,226 in the 12 months before that. Greg added: “because these are solvent companies, the closures are not counted in the insolvency statistics, but such steep back-to-back annual rises foretell declining business optimism and the lower than usual number of insolvencies may be giving us a false sense of security.”

Former doorstep lender Non-Standard Finance PLC warn on outlook, stating that the Group is entirely dependent upon concluding the discussions with the FCA, completing the reviews of its two divisions and on the completion of the Capital Raise in the third quarter of 2021. The Board claim that the Capital Raise is the best course of action to safeguard the interests of stakeholders and avoid insolvency. Greg Connell, Managing Director of InfolinkGazette, commented: “if the FCA force all of the subprime lenders out of business, I suspect they’ll be missed; they may be expensive, but it does take imagination and an appetite for risk to have the versality to be able to offer financial services to all”.

Stobart Air liquidation casts doubt over the future of transportation Group ESKEN LIMITED. The board have reported that they are on the hook for a total cash outflow resulting from the liquidation of Stobart Air leases of £82 million if they cannot sublease the aircraft, plus a further £4m of maintenance and up to £8m of other liquidation costs. Greg Connell, Managing Director of InfolinkGazette, commented: “the Group are counting on the willingness of their bankers to continue to allow drawdown from the existing revolving credit facility and to defer certain covenant tests, but if the banks don’t come through for them, the Group may be unable to continue trading.

 

Prestige car hire company Bristol & London Plc filed a Notice of Intention to appoint an administrator in the High Court yesterday afternoon (30/06/2021). Greg Connell, Managing Director of InfolinkGazette, commented: “demand has been so low, car-rental companies have reduced vehicle fleet sizes, and as travel picks up there will be a shortage of inventory and car rental prices will rocket”.

AIM listed manufacturer, Tricorn Group plc warn on margins due to pressure from price increases and labour productivity. The board went on to say that they can’t fund the investment to deliver the strategy and return the Group to profitable cash generation from within the existing borrowing facilities. Greg Connell, Managing Director of InfolinkGazette, commented: “a £7 million loss in the last 18 month trading period has considerably weakened what was a fairly strong Balance Sheet”.

NMCN PLC followed a 3rd successive profit warning since October 2020, with a suspension of share trading as it announced today (29/06/2021) that its audited financial statements for year ended 31 December 2020, which were expected to be published by 30 June 2021 are still being audited. Greg Connell, Managing Director of InfolinkGazette, commented: “we have seen expectations for losses drift out from £13.5 million to £24 Million over a period of not much more than 6 months, now followed by an unspecified delay to the publication of 2020 financial statements - investors and creditors are likely to be feeling uneasy”.

Greg Connell, MD of InfolinkGazette, said: unpaid rent is just another form of debt and when the government extended the ban on commercial evictions until 25/03/22, and the moratorium on winding up petitions and statutory demands for another quarter, I doubt if they considered the consequences of engulfing the retail & hospitality sector in even more debt”. Greg added: “I suspect the government didn’t look any further than their own B/S because these measures didn’t cost the government anything, but unpaid rents now top £6 Billion”.

Multinational engineering business and FTSE 250 constituent John Wood Group PLC warned on first half profits in a trading update on Thursday 24th June for the six months ended 30 June 2021. The board commented that Revenue on a like for like basis of c$3.2bn was down c21% on H1 2020 and Adjusted EBITDA will be $255m to $265m, down c12% due to impact of Covid-19. Greg Connell, MD of InfolinkGazette, said: "pandemic pain remains a constant in 2021 profit alerts with companies reporting customers hesitancy resulting in delayed orders, and the rising cost of raw materials”.

Kent property developer AMG CHATHAM LTD filed an Administration Application at the High Court on Wednesday 23/06/2021. Greg Connell, MD of InfolinkGazette, said: "the company originally entered what was to become a long and complex Administration on 27/06/2019, a process that has already been extended once on 01/06/2020”. Greg added: “I don’t expect it has been much fun for the residents of the abandoned unfinished development.”

The government measures extending the ban on commercial evictions until 25/03/22, will also extend the moratorium on winding up petitions and statutory demands for another quarter, until 30/09/21; the total number of days’ outstanding rent required for CRAR will remain at 554. Greg Connell, MD of InfolinkGazette, said: "these measure will at the very least push back the date at which insolvencies begin to rise, but we can expect to see more profit warnings from the commercial property sector”. Greg added: “these measures don’t add to the government’s debt mountain, but they do come at the cost of lasting damage to the commercial property sector, adversely affecting investment in retail and hospitality property for years to come”.

Dr. Martens PLC offer a downbeat assessment of the outlook in their first trading statement since the £3.7bn flotation in January. The boot maker, a favourite of fashionistas commented: “The immediate outlook for the year as a whole is likely to be volatile” and added “our core markets to continue to be negatively impacted by some form of social restrictions through the first year and then slowly recover but we do not plan for a speedy recovery to pre Covid-19 level of economic activity across the period under review” [2022].

IWG PLC, the Jersey registered serviced office provider and owners of Regus warned on profits today 08/06/2021. The board reported on a strong recovery in some markets and positive occupancy momentum in the US, but that the overall improvement in occupancy across the whole Group has been lower than previously anticipated. Underlying Group EBITDA for 2021 is now expected to be well below the level in 2020. Greg Connell, MD of InfolinkGazette, said: "the prolonged impact of COVID-19 control measures, and nervousness over the prospect of continuing restrictions seriously risk delaying the anticipated recovery across all the sectors that are reliant on staff travelling to work.” Greg added: “the worst case will be if restrictions continue as government supports schemes wind down”.

Insurers & Retailers don't see eye to eye on the closure of the government backed Trade Credit Reinsurance (TCR) Scheme. Greg Connell, MD of InfolinkGazette, commented: "the government and the Association of British Insurers (ABI) have said the scheme is no longer required and the Insurers are keen to take back full underwriting control. However, Retailers across the UK are calling on the government to extend the TCR scheme, amid speculation that Retailers with balance sheets battered by the pandemic may lose cover when it ends".https://www.gov.uk/government/news/update-on-the-trade-credit-reinsurance-scheme

London Listed media company, ICONIC LABS PLC filed a Notice of Appointment to appoint an administrator at the High Court on Friday 4th June 2021.

NMCN PLC issued a 3rd profit warning since October 2020, with expectations for losses growing from £13.5 million to £24 Million. Greg Connell, Managing Director of InfolinkGazette, commented: “looking at the last balance sheet, a £24 million loss will translate in to a negative net worth and if the board are unable to refinance, the company will be looking very fragile.”

Greensill Capital Management Company (UK) Limited and Greensill Capital (UK) Limited went into Administration owing over £440 million to 226 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “Greensill’s troubles followed its insurer Credit Suisse refusing to renew £2.3 billion of insurance, precipitating a spectacular fall from grace for a business once valued at £3.5 billion”.

Material uncertainty at LSE listed upstream oil and gas company PHOENIX GLOBAL RESOURCES. Announcing a 2020 Operating loss of US$ 219.7 million (2019: loss of US$110.2 million), the company went on to say: “the directors recognise that if financial support over the next 12 months from Mercuria (major shareholder) were not to be available and the Company is unable to restructure the existing loan agreements from Mercuria or obtain funding from alternative sources, this gives rise to a material uncertainty that may cast significant doubt on the Group's and Company's ability to continue as a going concern.

9th June 2021 Press Release from InfolinkGazette

Designer Amanda Wakeley’s eponymous fashion label and celebrity favourite AW Retail Limited has fallen into administration after failing to secure a rescue sale. The company made back-to-back filings at the High Court on the 11th & 13th May, signalling their intention to appoint an Administrator and a Companies House filing on 24th May revealed Colin Hardman and Clare Lloyd had been appointed Joint Administrators. AW Retail Limited had been making monthly furlough claims in the £10,000 to £25,000 bracket during the enforced closures of the flag ship Mayfair store and concessions. Greg Connell, Managing Director of InfolinkGazette, commented: “AW Retail’s balance sheet was weak before the Covid Crisis with £25 million of accumulated losses and a working capital deficit of £5.7 million, meaning they would have been unaffected by the closure of the government backed Trade Credit Reinsurance (TCR) Scheme because they still probably wouldn’t have qualified for insurance cover. However, there are over 1,700 Retailers whose vulnerability to insolvency is largely due to the Covid-19 pandemic control measures, who will now be concerned that there Covid-19 impaired balance sheets will disqualify them from trade insurance cover when the scheme closes at the end of June”. Greg added: “it would be a catastrophe if these retailers were forced in to insolvency for want of access to trade credit, before they had at least 6 months to repair their battered balance sheets.”

IWG PLC, the Jersey registered serviced office provider and owners of Regus warned on profits today 08/06/2021. The board reported on a strong recovery in some markets and positive occupancy momentum in the US, but that the overall improvement in occupancy across the whole Group has been lower than previously anticipated. Underlying Group EBITDA for 2021 is now expected to be well below the level in 2020. Greg Connell, MD of InfolinkGazette, said: "the prolonged impact of COVID-19 control measures, and nervousness over the prospect of continuing restrictions seriously risk delaying the anticipated recovery across all the sectors that are reliant on staff travelling to work.” Greg added: “the worst case will be if restrictions continue as government supports schemes wind down”.

Insurers & Retailers don't see eye to eye on the closure of the government backed Trade Credit Reinsurance (TCR) Scheme. Greg Connell, MD of InfolinkGazette, commented: "the government and the Association of British Insurers (ABI) have said the scheme is no longer required and the Insurers are keen to take back full underwriting control. However, Retailers across the UK are calling on the government to extend the TCR scheme, amid speculation that Retailers with balance sheets battered by the pandemic may lose cover when it ends".https://www.gov.uk/government/news/update-on-the-trade-credit-reinsurance-scheme

London Listed media company, ICONIC LABS PLC filed a Notice of Appointment to appoint an administrator at the High Court on Friday 4th June 2021.

NMCN PLC issued a 3rd profit warning since October 2020, with expectations for losses growing from £13.5 million to £24 Million. Greg Connell, Managing Director of InfolinkGazette, commented: “looking at the last balance sheet, a £24 million loss will translate in to a negative net worth and if the board are unable to refinance, the company will be looking very fragile.”

Greensill Capital Management Company (UK) Limited and Greensill Capital (UK) Limited went into Administration owing over £440 million to 226 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “Greensill’s troubles followed its insurer Credit Suisse refusing to renew £2.3 billion of insurance, precipitating a spectacular fall from grace for a business once valued at £3.5 billion”.

Material uncertainty at LSE listed upstream oil and gas company PHOENIX GLOBAL RESOURCES. Announcing a 2020 Operating loss of US$ 219.7 million (2019: loss of US$110.2 million), the company went on to say: “the directors recognise that if financial support over the next 12 months from Mercuria (major shareholder) were not to be available and the Company is unable to restructure the existing loan agreements from Mercuria or obtain funding from alternative sources, this gives rise to a material uncertainty that may cast significant doubt on the Group's and Company's ability to continue as a going concern.

 

Celebrity favourite AW Retail Limited owned by fashion designed Ms Amanda Jane Wakeley  made back-to-back filings at the High Court on the 11th and 13th signalling their intention to appoint an Administrator. AW Retail Limited had been making monthly furlough claims in the £10,000 to £25,000 bracket but recently reduced their monthly claim value to less than £10,000. Greg Connell, Managing Director of InfolinkGazette, commented: “the company hadn’t filed accounts since 2018, but with £25 million of accumulated losses and a working capital deficit of £5.7 million, they had a significant vulnerability to insolvency, well before the impact of the pandemic”.

 

At 2,384, Q1 2021 corporate insolvencies were the lowest on record. Greg Connell, Managing Director of InfolinkGazette, commented: “there might be one more quarter of near record lows, but eventually, the companies that started 2020 with a vulnerability to insolvency but were saved by pandemic related government stimulus measures are going to fail”. Greg added: “Even if the hospitality and non-essential retailers that only became vulnerable as a consequence of the pandemic survive, we are still going to see the majority of the 14,000 deferred insolvencies come through, probably in the 12 months after furlough ends”.

 

Europe's biggest maker of retailer own brand household goods, McBride Plc issues a profit warning today. Cautioning that in recent weeks there has been rapid, significant, and sustained price escalation for many of their raw materials, particularly core chemicals and plastics. McBride expect to see further double-digit increases on average across these materials and packaging items by June 2021 and don’t see the prices returning to normal. With revenue volatility in most markets, the Group now expects second half revenues to be approximately 6% lower year on year and the final quarter of trading for the current financial year ending 30 June 2021 is expected to be significantly weaker than the first nine months of the financial year. Full year profits are now expected to be approximately 15% lower than the previous year. Greg Connell, Managing Director of InfolinkGazette, said: “we are seeing construction and manufacturing companies reporting higher costs, so inflation may come sooner than expected”.

12th May 2021 Press Release from InfolinkGazette

Figures released today by InfolinkGazette show the sharpest fall in in the number of profit warnings ever recorded. In the first 4 months of 2021, the number of profit warnings issued by UK listed companies was down from 404 in the first 4 months of 2020 to 122, a fall of almost 70%. Greg Connell, Managing Director of InfolinkGazette, said: “the spectacular fall shouldn’t be interpreted as resilience in the face of the Covid crisis; many listed companies simply suspended issuing guidance after the first couple of profit warnings”.

Material uncertainty at London listed Technology company AIQ Limited. The company warned on profits stating that the COVID-19 pandemic has had a profound impact on Alchemist Codes, acquired in March 2020 with the roll-out of its e-commerce platform and consultancy business being met with severe headwinds, leaving  revenues significantly below the Board's expectations. Trading conditions have deteriorated further and Alchemist Codes' sales activity has been negligible.

FTSE 250 listed aerospace, defence, and energy company Meggitt PLC warned on profits, reporting that  the start of the year has been marked by ongoing travel restrictions across a number of regions with international activity remaining weak, leading to a to a slight softening in expectations of the extent of the recovery in the second half. Greg Connell, Managing Director of InfolinkGazette, said: “for Q1 2021, the group reported revenue down 29% against the same period last year, but this was an improvement on Q4 2020, where revenue was down 35% on the corresponding quarter in 2019”.  Greg added: “the rate of civil aviation decline seems to be slowing, but the recover has yet to take off”.

Jet2 plc, the UK’s 3rd largest scheduled airline has issued a profit warning, stating that: “as a result of the Covid-19 pandemic, the Board expects to report a Group loss before FX and tax for the year to 31 March 2021 of between £375m & £385m. The board added: “for the year ending 31 March 2022 the impact and duration of the proposed Covid-19 travel restrictions for Summer 21 remain difficult to determine. Jet2 made the decision to extend the suspension of flights and holidays from 17 May to 24 June 2021.” Greg Connell, Managing Director of InfolinkGazette, said: “the projected loss represents a huge reversal of fortune for a company with a pre-pandemic pre-tax profit of £148m.”

This weeks award for the most entertaining Outlook Statement in a Trading Update goes to Grafenia plc for the following board statement: “The road to economic recovery looks a little hazy. Are those sunlit uplands? Or did someone start a fire in the top field? Tricky to say. There's lots of reason to believe our clients will reopen to increased demand. Events will restart. Diners will feast. Drinkers will sip, or gulp. And when they do, we'll be ready. In hundreds of neighbourhoods, ready to design. To make. To ship. All using our software platform to smooth the process.

14th April 2021 Press Release from InfolinkGazette

A sharp rise in UK insolvencies is expected later this year. New data from InfolinkGazette has demonstrated that UK insolvencies have, so far, remained well below normal levels and aren’t showing any signs of picking up in the near term. The extension of the statutory ban on commercial evictions to 30 June 2021, ongoing forbearance from HMRC, easy access to government underwritten loans and the furlough scheme have all combined to ensure that even the businesses that weren’t viable before the pandemic are avoiding insolvency. However, InfolinkGazette expects to see insolvencies begin to move upwards in July 2021 when landlords are able to resume enforcement action but notes that the real surge may not begin until after furlough ends in October 2021. Greg Connell, Managing Director of InfolinkGazette, commented: "Even if post-pandemic trading profits replaces the reliance on government stimulus measures for the majority, there are still between 5,000 and 10,000 companies with a pre-pandemic vulnerability to insolvency, where the reprieve has only been temporary.

Jessops Europe Limited, owned by one of the multimillionaire dragons obviously didn’t get the first Administration application across the line, because they have filed another Notice of Intention to appoint an administrator in the High Court today (07/04/2021). Jessops filed the original application on 26/03/2021. Greg Connell, Managing Director of InfolinkGazette, said: “maybe the secured charge holder is playing hardball.”

Tasty PLC, the operators of the Wildwood chain of restaurants looks towards avoiding a formal CVA. The board confirmed the Group has successfully achieved consensual lease concessions and rent reductions to March 2021 on more than two-thirds of the estate. However, given the current third lockdown and the moratorium expected to end in June 2021, anticipate requiring further landlord support. The board stated: “with continued creditor assistance, a more formal procedure such as a company voluntary arrangement ("CVA") may be avoided but we continue to consider all options.”

Pushing the Envelope – Greensill Capital

Greensill Capital (UK) Limited and Greensill Capital Management Company (UK) Limited, both filed Administration Applications in the High Court on 8th March 2021, following its insurer Credit Suisse refusing to renew $4.6 billion of insurance. Signalling a spectacular fall from grace for a business once valued at £3.5 billion.

Greensill claimed to be the market-leading provider of working capital finance for companies, promising to: “unlock capital so the world can put it to work”. Founded in 2011 by Lex Greensill, the company headquartered in London provided Supply Chain Finance to customers across Europe, North America, Latin America, Africa and Asia and worked with a host of banks and institutional investors that underpinned the companies claims to “provide solid funding streams”.

To the casual observer Greensill’s Supply Chain Finance business was essentially a factoring business with a fintech makeover, where the creditor relationship had been switched. But Greensill believed they were about much more than Supply Chain Finance. Greensill’s claims included harnessing the power of financial markets to: “unlock capital on terms that fit the precise requirements of our clients, from 20 days to 20 years and beyond”. With the benefit of hindsight, these claims look like they were underpinned by daring financial manoeuvres breaching risk limits that cannot be exceeded safely.

Before the fintech makeover, Supply Chain Finance was a simple low risk business with most banks offering it to blue-chip customers with investment grade credit limits. Where the process begins to get complicated, and risk starts to rise is when customers decide to delay making payments to the Bank. Whereas supplier invoices are normally settled in 60 days, users of supply chain finance can push back payments to 180 days. It is attractive to the supply chain finance provider because it increases margins, and there’s no shortage of overly indebted companies that see the attraction of this type of finance because it doesn’t appear on the balance sheet as debt. Carillion and NMC Health were major user of supply chain finance.

Greensill ratcheted up the risk a notch or two with customers availing of both supply chain finance and receivable financing, especially when the risk was so concentrated, with a reported $5 billion of receivables financing for companies associated with the GFG Alliance Group. Embracing ever higher levels of risk, Greensill pioneered turning future receivables/sales in to cash. This is probably fine with the likes of Tesco Mobile Ltd, with hundreds of thousands of customers on annual contracts, but lending cash to companies associated with GFG Alliance on the basis of several years of projected future steel sales must have created completely unpredictable levels of risk.

The Covid-19 Pandemic created new uncertainties and risks, but also new opportunities for Greensill. After being admitted to the Coronavirus Large Business Interruption Loan Scheme in June 2020, Greensill seem to have breached their £50 million loan cap with £200 million of loans to companies linked to GFG Alliance, which will invalidate the 80% government guarantee on the loans, leaving Greensill on the hook for the loans.

The “solid funding streams” now look distinctly soft and as those Greensill clients that had become reliant on Supply Chain Finance scramble to arrange alternatives, they can expect to be subject to higher levels of scrutiny than would have been the case at Greensill. And the 40 to 50 Greensill customers who pledged assets by way of a secured charge are likely to find it hardest of all to replace the lost financing.

 

The US owned retailer Brooks Brothers UK Limited, filed a notice to appoint an administrator on 31/03/2021. Greg Connell, Managing Director of InfolinkGazette, said: “with the Icon & Westfield stores closed, the retailer made a furlough claim in the £10K to £25K band in December and the £50K to £100K band in January.”

Jessops Europe Limited, owned by one of the multimillionaire dragons has filed a Notice of Intention to appoint an administrator in the High Court today (26/03/2021). Greg Connell, Managing Director of InfolinkGazette, said: “creditors might have seen the writing on the wall when they reviewed the 29 April 2018 accounts, but the  April 2019 accounts, which should have been filed by January 2020 are still conspicuous by their absence, making it something of a record for days overdue accounts filing.”

Ward Recycling Limited went in to liquidation owing £11,780,300 to 63 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, said: “Ward Recycling were clearly very heavily dependent on their bank, HSBC, who took a £ 5,187,000 hit”

Jersey registered BETINDEX LIMITED filed an Administration Application in the High Court on 18/03/2021 following the Gambling Commission deciding to suspend the operating licence of BetIndex Limited (t/a Football Index). Greg Connell, Managing Director of InfolinkGazette, said: “The The Gaming Commission had concerns that activities may have been carried on that were not in accordance with a condition of the licence, and that Football Index may not be suitable to carry on with licensed activities.”

Civil Engineers Mecx Group Limited went into liquidation owing £7,202,830 to 126 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, said: “the last Balance Sheet looked strong enough, but with no accounts filed since the September 2018 in February 2019, trade creditors would have been left completely in the dark.”

The extension of the statutory Ban on commercial evictions to 30 June 2021 might save some companies but it might create another Intu type failure. What chance of a commercial property company focused on the retail & hospitality sector getting another rights issue away now? Even if we avoid another high-profile failure in the property sector, will the legacy of the statutory prohibition on enforcement action cause lasting damage to the sector, adversely affecting investment in retail and hospitality property for years to come? Greg Connell, Managing Director of InfolinkGazette, said: “Looking at the profit warnings of listed property companies, and the statements of affairs from failed retailers, we believe that between 60% and 80% of non-essential retail and hospitality are between 2 and 4 quarters behind on the rent and with the latest extension that could become 3 to 5 quarters behind.” Greg added: when Landlords are permitted to act, the insolvent retailers and restaurateurs will head for the exit via a pre-pack, which will take care of around 20% of the arrears, but that might stiffen the resolve of landlords to deal very firmly with those that can pay.”

Robin Hood Energy Limited, went in to Administration owing £62,325,600 to 95 unsecured creditors, including £ 37,082,652 to Nottingham City Council. Greg Connell, Managing Director of InfolinkGazette, said: “Robin Hood Energy Limited  was 1 of 3 companies issued with final orders by Ofgem in October 2020, for failing to pay £15 million in Renewables Obligation and Feed-in Tariff payments. Nabuh Energy Limited, and Symbio Energy Limited were the other 2 late payers.”

Greensill Capital (UK) Limited and Greensill Capital Management Company (UK) Limited, both filed Administration Applications in the High Court today, signalling a spectacular fall from grace for a business once valued at £3.5 billion. Greg Connell, Managing Director of InfolinkGazette, commented: “Greensill's collapse is being represented as a huge blow to the UK's fintech sector, and though there is a very real threat to jobs in sectors it supported through supply chain finance, was Greensill really much more than a factoring company that grew too quickly with lapse governance and inadequate risk management?”

Subprime lender Non-Standard Finance needs to raise new capital to avoid covenant breaches and address material uncertainties about its going concern status. Greg Connell, Managing Director of InfolinkGazette, commented: “the capital raise has the support of major shareholder Alchemy, so should raise the required funds but there must be some uncertainty over how the loan book will be imp

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