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/raid1/www/Hosts/bankrupt/TCREUR_Public/030822.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, August 22, 2003, Vol. 4, No. 166 Headlines C Z E C H R E P U B L I C UNION POJISTOVNA: Expected to File for Bankruptcy Soon VITKOVICE AS: Lahvarna Buys 67.3% Govt Stake as Part of Bailout F R A N C E ALSTOM SA: Govt Discloses Details of State Aid ALSTOM SA: Union Claims Redundancies Could Actually Number 1,300 BRICOUT: Court Approves Sale to Vranken-Pommery Monopole G E R M A N Y BRAU UND BRUNNEN: HVB Stake Likely to be Sold Next Year DEUTSCHE TELEKOM: Inquiry into Alleged Overstatement Continues ENERGIE BADEN-WUERTTEMBERG: Cancels Secondary Share Offering HVB GROUP: Units' Ratings Remain on CreditWatch Pending Spin-Off N E T H E R L A N D S ROYAL PHILIPS: Sells Production Site in Stadskanaal to PLANTIN-Q N O R W A Y PETROLEUM-GEO: Court OKs Arntzen de Besche as Norwegian Counsel S W E D E N OM AB: Shares to Trade on Main List of Helsinki Exchanges SCANDINAVIAN AIRLINES: Modernizes Invoice Processing to Cut Cost S W I T Z E R L A N D ABB LTD.: Aims to Corner U.S. Power Grid Upgrade Contracts ZURICH FINANCIAL: Reports First-half Net Income of US$701 Mln U N I T E D K I N G D O M AES DRAX: MMC Not Bidding Despite Admitting Interest in Firm BOLTON GROUP: Disposes Subsidiary Companies to Hill Finance CARPETS INTERNATIONAL: Falls into Administrative Receivership COMPASS GROUP: Japanese Subsidiary Sells Shares in Yoshinoya DAWSON INTERNATIONAL: Chief Executive Paul Munn Resigns JETCAM INTERNATIONAL: Cancels AIM Trading; Plans Share Buy-back LONDON FORFAITING: Urges Shareholders to Accept FIMBank's Offer MARCONI PLC: Moves Headquarters to Cheaper Office in West End MARCONI CORPORATION: Sells Gamma Telecom Holdings Ltd. Stake NORTHUMBRIAN WATER: Plays Down Credit Rating Concerns PO NA NA: Avanti Capital Offers GBP8 Million for Half of Bars POWERHOUSE: Falls into Administrative Receivership ROYAL MAIL: Urges Workers to 'Talk, Not Walk' SPORTSPLEX LIMITED: Joint Administrators Offer Business for Sale TOPNOTCH HEALTH: Requests Suspension of AIM Trading UNITED MILK: Farmers Offer to Take Firm out of Receivership VOCALIS GROUP: Begbies Traynor Specialists Named Administrators ********* =========================== C Z E C H R E P U B L I C =========================== UNION POJISTOVNA: Expected to File for Bankruptcy Soon ------------------------------------------------------ Insurance company Union Pojistovna, currently under forced administration, will have to give up its clients and file for bankruptcy, the Finance Ministry said according to Czech Happenings. The ministry has discovered that losses of the insurer exceeded its share capital by CZK300 million. Czech Happenings, citing Mlda fronta Dnes, said the official receiver Zdenek Petricek is now looking for an insurance company to purchase or at least take over 70,000 policies within a month. Deputy Finance Minister Jaroslav Sulc confirmed the information saying, "The most important thing now is the transfer of the portfolio of insurance contracts. It can be put up for auction but there are also other ways." He refused to say more about the financial straits of the insurer. The receiver also did not make a comment. However, the report says big insurance companies are not interested in Union Pojistovna. Allianz head Miroslav Tacl was quoted as saying: "We've got no information at the moment. If we are addressed and if it is attractive for us we will express interest." Ceska Pojistovna's Richard Kapsa also says no talks are under way at the moment and that it will depend on the value of the portfolio of contracts. Union pojistovna is part of Union Group. CONTACT: UNION POJISTOVNA, A.S. Havlickova 15 110 00 Praha 1 Phone: +420 296 332 881 Fax: +420 296 332 883 E-mail: sekretariat_praha@unionpoj.cz VITKOVICE AS: Lahvarna Buys 67.3% Govt Stake as Part of Bailout --------------------------------------------------------------- The National Property Fund, bailout agency CKA and bottling firm Lahvarna Ostrava have signed documents on the sale of holding company Vitkovice A.S, according to Interfax. Press departments of the National Property Fund and CKA said the deal could see the sale of the state's 67.3% stake in the engineering holding to Lahvarna Ostrava. The bottling company will also acquire claims worth CZK2.768 billion from state-run CKA. The transaction will be completed after Lahvarna Ostrava pays the offered price, which amounts to CZK401.65 million. CKA claims are worth CZK320 million and the shares are valued at CZK81.65 million. Financial resources for the purchase will be taken from the company's partner GBI Investments, from its own resources and banks. After completing the payments, National Property Fund's subsidiary Osinek will stop financing Vitkovice's operations. Lahvarna Ostrava noted earlier it hopes to complete the takeover by the end of September, the report said. Vitkovice is a key metallurgical and machine engineering company of a holding type serving as an umbrella for subsidiary companies. In the first half of this year, it posted a loss of CZK234 million, which is about CZK120 million more than the management presumed. More than 60% of the mentioned increase is related with the staff restructuring and fulfillment of complex program on support of the employees Vitkovice Strojirenstvi A.S. The other negative influences that the management had to solve were privatization going on and recession on the mechanical engineering market. Lahvarna Ostrava, Europe's fourth largest producer of steel bottles, won Vitkovice in a tender. It plans to incorporate all Vitkovice subsidiaries into one unit, wherein staff numbers at Vitkovice will decrease, and Lahvarna Ostrava will appoint its representatives to Vitkovice's management and some of its subsidiaries. CONTACT: VITKOVICE, a.s. Ruska 2887/101 706 02 Ostrava-Vitkovice Ceska republika Phone: +420 595 951 111 Fax: +420 596 633 213 FNM CR Rasinovo nabrezi 42 128 00 Praha 2 Phone: +420-2-24991111 =========== F R A N C E =========== ALSTOM SA: Govt Discloses Details of State Aid ---------------------------------------------- The French government has submitted the required information regarding its rescue plan for engineering company Alstom, according to the European Union Commission. "We received notification of the French intervention last Friday which we are now examining rapidly with a view to take a decision," said Commission spokesman Amelia Torres, according to Dow Jones Newswires. Ms. Torres said the Commission will "rapidly" initiate an inquiry once it finds out that the planned subsidies constitute an illegal state aid. France plans to subscribe to a planned EUR2.8 billion capital increase in Alstom that would give it a 31.5% stake in the company. Relationship between France and the Brussels authority were tensed after the former failed to immediately notify the regulators about its planned injection of billions of euros into Alstom as advised. There are also reports that said the French government has already started paying out some of the aid before the authorities can determine whether the reorganized company would operate profitably after the end of the subsidies. But it is noted that governments usually do not wait approval from the regulators since any E.U. penalties rarely outweigh the benefits of rescuing an ailing company. ALSTOM SA: Union Claims Redundancies Could Actually Number 1,300 ---------------------------------------------------------------- Unions are expecting redundancies at Alstom's facility in Birmingham to be more than the 1,000 previously estimated, according to Birmingham Post. The group believes there will be 1,300 redundancies in September next year. The company did not put a specific figure on the job-cuts, but it also did not deny the 1,000-figure, the union said. Alstom employs 1,500 people in the U.K. "The 1,000 job losses the management did not deny is only a ball park figure," Tom Keogh, Amicus regional officer, said. Employees at the Alstom plant at Washwood Heath are keeping their present work until the last contract to build the high speed tilting trains for Virgin is completed. Alstom's market value collapsed by over 90% in the past two years as a result of costly problems with its heavy gas turbines, the bankruptcy of a major cruise ship client and more recently, accounting irregularities at a U.S. business. BRICOUT: Court Approves Sale to Vranken-Pommery Monopole -------------------------------------------------------- The French commercial court in Reims allowed Champagne house Vranken-Pommery Monopole to purchase the assets of the Martin Bricout Delbeck group, which is currently in receivership, according to Just-drinks.com. The acquisition includes the buyout of six hectares of vineyards, and the takeover of the group's nine-year supply contracts for in excess of 150 hectares of vineyards. Also included is the purchase of a specialized production unit, 5 million bottles in stocks and the Bricout brand portfolio. The acquisitions are expected to increase Vranken-Pommery Monopole's sales by around 10%. The 20 production staff and 68 administrative staff of Bricout will also be moved under the transaction. Pierre Martin, ex-president of Groupe Martin, which owns the Bricout and Delbeck Champagne brands, together with finance director Louis Fariello and wine broker Luc Lhermite, were previously involved in a scandal that involved liabilities worth EUR100,000. The executives were questioned early this year over bankruptcy, fraud and breach of trust, liabilities incurred through non-payment for Champagne, non-delivery of Champagne and double invoicing. ============= G E R M A N Y ============= BRAU UND BRUNNEN: HVB Stake Likely to be Sold Next Year ------------------------------------------------------- HVB Group AG, the German bank that has been trying to divest its 55.6% stake in German brewer Brau und Brunnen AG, is likely to complete the sell-off next year at the earliest. Just-drinks.com, citing Focus Money magazine, said five buyers were lining up for the stake. However, they were also looking at a possible acquisition of Holsten-Brauerei, indicating that the completion of the sale of the Brau und Brunnen stake may last until next year. Among the interested parties in the asset are the world's top major brewing groups: SABMiller PLC, Scottish & Newcastle PLC, Interbrew SA and Carlsberg AS. The latter two have been cited as denying any interest, TCR-Europe recently reported. HVB banking group seeks to sell the stake to return to profit this year. It said it wants to strengthen its equity capital by EUR1.7 billion by the end of 2003, in order to maintain a Tier 1 ratio of at least 7% and prevent further downgrades by ratings agencies. CONTACT: BRAU UND BRUNNEN Sitz der Verwaltung Rheinische Strabe 2 44137 Dortmund Phone: (0231) 1817-0 Fax: (0231) 1817-30 DEUTSCHE TELEKOM: Inquiry into Alleged Overstatement Continues -------------------------------------------------------------- The Bonn public prosecutor continues to investigate Deutsche Telekom over an alleged overstatement in the valuation of the company's real estate assets, according to Ireland Online. The prosecutor said the company was cleared of charges of false accounting and investment fraud on its 1995 and subsequent balance sheets, but the inquiry into the overstatement in the value of real estate assets on its balance sheets and in the company's prospectuses for its IPO and subsequent listings remains. Deutsche Telekom was also accused early in the year to have failed to give an accurate picture of the its personnel costs, other costs, sinking profit margins and risks related to its U.K. mobile unit One2One, now known as T-Mobile U.K. in its May 2000 prospectus. The company was already cleared of the charges, the prosecutors said. Small shareholders lobby group Deutscher Schutzvereinigung fuer Wertpapierbesitz took the recent news as a "positive signal." ENERGIE BADEN-WUERTTEMBERG: Cancels Secondary Share Offering ------------------------------------------------------------ Energie Baden-Wuettemberg canceled a secondary share offering on financial and market risks concern, according to Dow Jones Newswires. The offering was scheduled for the end of 2004 but the company withdrew because its financial numbers and the risks in the market make the expected gains from an offering less attractive than when it was originally planned. Energie Baden-Wuerttemberg recently made a first half net loss of EUR945.5 million. The result of the first half-year of 2003 reflects one-off burdens on earnings before taxes of approximately EUR1.1 billion. According to the company a further drain on earnings of nearly EUR200 million is expected for the second half year. HVB GROUP: Units' Ratings Remain on CreditWatch Pending Spin-Off ---------------------------------------------------------------- Standard & Poor's Ratings Services commented on the CreditWatch placement of four subsidiaries of Germany-based Bayerische Hypo- und Vereinsbank AG (HVB; A-/Negative/A-2). The ratings on these entities remain on CreditWatch with various implications pending their spin-off from Bayerische Hypo- und Vereinsbank, an important step in HVB's restructuring. The ratings were placed on CreditWatch on March 31, 2003. Upon completion of the spin-off, which is to become effective on October 1, 2003, Standard & Poor's will resolve the CreditWatch placements and -- from today's perspective -- expects to revise its ratings as: (a) The 'BBB' long-term counterparty credit and senior unsecured debt ratings on HVB Real Estate Bank AG (HVB REB) and Westfaelische Hypothekenban k AG (WestHyp) are expected to be removed from CreditWatch with negative implications and affirmed. The 'A-3' short-term counterparty credit and senior unsecured debt ratings are expected to be affirmed. The outlook is expected to be negative. This anticipates the merger of WestHyp into HVB REB in November 2003. (b) The long-term counterparty credit and senior unsecured debt ratings on Wurttembergische Hypothekenbank AG are expected to be raised to 'A-' from 'BBB+' and removed from CreditWatch with positive implications. The 'A-2' short-term ratings are expected to be affirmed. The outlook is expected to be negative. (c) The 'BBB+' long-term and 'A-2' short-term counterparty credit and senior unsecured debt ratings on Pfandbrief Bank International SA (PBI) are expected to be removed from CreditWatch with negative implications and affirmed. The outlook is expected to be negative. PBI will be wholly owned by Hypo Real Estate Bank International PUC. (d) Standard & Poor's also expects to assign its 'A-' long-term counterparty credit ratings to HVB Bank Ireland (--/--/A-2). The outlook is expected to be negative. The bank will be renamed to Hypo Real Estate Bank International PUC and assume HVB's international real estate business. "Standard & Poor's CreditWatch update follows further discussions with the banks' managements on details of the spin-off, and reflects the expectation that the spin-off will progress and related measures be implemented as anticipated," said Standard & Poor's credit analyst Stefan Best. "Failing this, ratings might be revised." ===================== N E T H E R L A N D S ===================== ROYAL PHILIPS: Sells Production Site in Stadskanaal to PLANTIN-Q ---------------------------------------------------------------- Royal Philips Electronics N.V., the Dutch diversified technology group currently suffering from low demand and tight competition, will sell its production site in Stadskanaal, the Netherlands. According to AFX News Dutch company PLATIN-Q Electronics would acquire the site, with a view to cutting personnel by 55-204. As part of a restructuring of the site in recent years, Philips transferred the production of chips and components to Asia. Financial details on the upcoming sale were not released. Last month, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Philips to 'BBB+' from 'A-', following a review. It also time, lowered its senior unsecured debt rating to 'BBB+' from 'A-', as well as affirmed its 'A-2' short-term debt rating. Credit analyst Michael O'Brien said: "The rating actions reflect the fact that Philips' credit protection measures, adjusted for operating leases and unfunded pension and postretirement liabilities, are insufficient to sustain a 'A-' long-term rating." "Furthermore, the group's cash flow generation has been below Standard & Poor's expectations, particularly due to the sluggish performance in some of the group's core businesses," he added. =========== N O R W A Y =========== PETROLEUM-GEO: Court OKs Arntzen de Besche as Norwegian Counsel --------------------------------------------------------------- Petroleum Geo-Services ASA sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to retain and employ Arntzen de Besche Advokatfirma as special Norwegian insolvency, corporate, tax and employment law counsel to perform the legal services. AdB has served as the Debtor's insolvency, corporate, tax and employment law counsel on matters of Norwegian law during the months leading up to the Petition Date. The Debtor continues to employ AdB to provide such necessary legal services and on those matters that AdB has been performing for the Debtor. AdB advises the Debtor on Norwegian insolvency legal issues, including challenges related to cross border insolvencies and the interplay between Norwegian insolvency laws and US chapter 11 proceedings. AdB also advises the Debtor with respect to other corporate, commercial, tax, and employment law questions under Norwegian law arising from the Debtor's financial status. Specifically, the Debtor will employ Mr. Stale Gjengset, as General Counsel. Mr. Gjengset's salary is NOK210,000 (approximately US $26,850) per month. Mr. Gjengset will devote 90% of his time assisting the Debtor and 10% of his time assisting other AdB clients. In his capacity as General Counsel, Mr. Gjengset assists the Debtor with: (i) Advice on Norwegian law issues related to the reorganization process; (ii) Management of the reorganization process; (iii) Coordinating with the Debtor with respect to international civil law issues arising from the various jurisdictions whereby the Debtor conducts its business and/or the jurisdictions where the Debtor is otherwise obliged to comply with applicable law; (iv) Coordinating with legal and financial advisors; (v) Negotiating with various creditors, lessors and other contract parties; (vi) Drafting and advising the Debtor on various documents related to the Debtor's reorganization; (vii) Meeting with the Board of Directors to keep them informed at all stages of the reorganization process; (viii) Advising the Debtor on Norwegian law issues related to the day-to-day business of the PGS Group; (ix) Producing various general corporate documents; (x) Managing the divestment of PGS Production Group and Atlantis Holding, former non-debtor subsidiaries; and (xi) Handling various legal disputes, claims and lawsuits. Petroleum Geo-Services ASA, headquartered in Lysaker, Norway is a technology-based service provider that assists oil and gas companies throughout the world. The Company filed for chapter 11 protection on July 29, 2003 (Bankr. S.D.N.Y. Case No. 03-14786). Matthew Allen Feldman, Esq., at Willkie Farr & Gallagher represents the Debtor in its restructuring efforts. As of May 31, 2003, the Debtor listed total assets of $3,686,621,000 and total debts of $2,444,341,000. =========== S W E D E N =========== OM AB: Shares to Trade on Main List of Helsinki Exchanges --------------------------------------------------------- Helsinki Exchanges has decided to admit to listing the shares of OM Aktiebolag on the Helsinki Exchanges' main list, subject to the completion of OM's offer to the shareholders and warrant holders of HEX Plc. Subject to completion of the Offer, the OM shares will be traded on Helsinki Exchanges under the trading code OMH1V. OM (Other OTC:OMGPF) is a world-leading provider of transaction technology to the financial services and energy industries. Developing and marketing IT solutions that boost the efficiency of markets worldwide, OM has over 300 customers in 20 countries. OM also owns and operates exchanges and clearing organizations and has operations in 10 countries. OM is listed on Stockholmsborsen. For more information please visit http://www.om.com ***** OM AB revealed in its interim report for January to June 2003 loss after financial items of SEK521 million, operating loss of SEK513 million, and loss after tax of SEK457 million. It is implementing a cost reduction program, which is estimated to lower the company's costs by SEK578 million and result in lower revenues of SEK105 million on a yearly basis. These measures aim to achieve sound profitability and create a stronger company in preparation for the merger with HEX. CONTACT: OM AB Jakob Hakanson Vice President, Investor Relations Phone: +46 8 405 60 42 SCANDINAVIAN AIRLINES: Modernizes Invoice Processing to Cut Cost ---------------------------------------------------------------- The Scandinavian airline group SAS decided to implement ReadSoft's software for electronic invoice processing. The INVOICES software will enable SAS to cut down on invoice handling costs and increase invoice processing efficiency. The new agreement concerns implementing the INVOICES technology within the SAS group. Always looking to increase efficiency, SAS has decided to implement electronic invoice handling by using ReadSoft's patented technology. In the initial stage, INVOICES will process some 200,000 invoices per year. The software will be connected to an account authorization system from Component Software and thereafter integrated with a business system from Oracle. "Airlines are like many other businesses depending heavily on paper which makes our solution very suitable. It is very rewarding to be able to help SAS strengthen their business processes by this group agreement. We will monitor the roll-out of INVOICES within SAS carefully to assure customer satisfaction," says Jan Andersson, MD at ReadSoft. ReadSoft has almost 600 INVOICES customers all over the world. Some of them have been able to cut down on their invoice processing costs by as much as 50%. Ulla Edlund, Vice President Corporate Accounting at SAS, explains why they chose INVOICES: "There is a great potential for efficiency increases, especially if you consider that we previously handled our invoices manually. Electronic invoice processing has many advantages and it is a great relief to finally get rid of the piles of paper invoices. Choosing ReadSoft came naturally as it is a well-reputed company which has helped us taking a leap forward with this new way of working." What is INVOICES? The software INVOICES is designed to recognize unstructured invoice documents and capture data such as sender, invoice number and invoice amount from anywhere on the invoice. At the same time, the software checks the data against information in the customer's business system. ReadSoft, is the world's leading supplier of software for document automation and associated information processing. The company develops and markets a broad range of products based on our own products FORMS, INVOICES and EZ-OUT, and supplementary systems developed for them. Since its founding in 1991, ReadSoft has developed into a global group with 11 subsidiaries in Europe, North and South America and Australia, and a large number of local and global partners. ReadSoft is headquartered in Helsingborg, Sweden, and its primary R&D facility is in Stockholm. ReadSoft has been listed on the Stockholm stock exchange, since 1999. CONTACT: READSOFT AB Jan Andersson, MD ReadSoft Phone: +46-(0)708 - 37 66 00 Olof Engvall, Head of Information Phone: +46-(0)708 - 37 66 70 E-mail: olof.engvall@readsoft.com ===================== S W I T Z E R L A N D ===================== ABB LTD.: Aims to Corner U.S. Power Grid Upgrade Contracts ---------------------------------------------------------- ABB Ltd. said it is poised to benefit from the expected changes in the U.S. power market after last week's blackout, according to Dow Jones. The power outage highlighted the need to upgrade the U.S. power grid -- an investment some estimated at around US$100 billion. ABB spokesman Thomas Schmidt told Dow Jones Newswires: "We already see that some projects are accelerating. But it is difficult to say now how many new contracts will materialize in the future. But we can say that we are very well positioned." According to the report, dealers and analysts are expecting ABB to profit sharply from new orders out of the U.S. The contracts would help the company turn around and increase operating profitability. ABB is currently selling its oil, gas and petroleum division in a bid to reduce its US$8 billion debt to around US$6 billion by the end of the year. ZURICH FINANCIAL: Reports First-half Net Income of US$701 Mln ------------------------------------------------------------- Zurich Financial released this first-half results recently. These are the highlights: (a) Business Operating Profit increased by 56% to US$1.3 billion from US$812 million; (b) Operating cash flow of US$4.5 billion, an improvement of 25% (c) Premium growth of 29% in Non-life insurance to US$19.3 billion and 20.9 percentage point improvement in the combined ratio to 98.8%; (d) Growth in Life insurance premiums of 31% to US$6.4 billion, while gross new business premiums increased by 22% to US$1.1 billion; (e) Net Non-life and reinsurance reserves increased by US$3.2 billion to US$32.8 billion since December 31, 2002; the Centre balance sheet was strengthened by US$474 million; (f) Total shareholders' equity of US$18.7 billion, up from US$16.8 billion at December 31, 2002; (g) Divestments on target and Global Profit Improvement Program on track with improvements of US$540 million in the first six months; Zurich Financial Services reported continuing operating improvements and a return to profitability with a net income of US$701 million for the first six months 2003. This unaudited net income compared with a loss of US$2.0 billion in the same period of 2002. The result of the previous year included special provisions of US$2.7 billion. In the first half of the current year, results benefited from better claims and expense management in our core businesses as well as from firm prices in most non-life markets. Net investment income increased by 12% to US$3.6 billion, while the total return on the portfolio of US$177.6 billion climbed to 3.3%, an improvement of 2.4 percentage points over last year. The underlying improvement in operations is also reflected in Business Operating Profit (BOP), which rose by 56% to US$1.3 billion. In line with the action program to restore the Group's profitability, Zurich has achieved some major milestones in the first six months of 2003: (a) Operating improvements: Underwriting discipline and continuing efforts to increase profitability led to expense reductions and a combined ratio in Zurich's Non-life operations of 98.8%, an improvement of 20.9 percentage points over the previous year (including special provisions). Operating cash flow increased by 25% to US$4.5 billion. (b) Focus on core businesses sharpened: Zurich continued to exit peripheral markets and activities considered non-core or not aligned with performance goals. Transactions announced in the first six months include the sale of Zurich Life in the U.S. to Bank One, the sale of Threadneedle to American Express, and a framework agreement for the transfer of certain ZCM transactions and assets to BNP Paribas. In July, the closure of Zurich Life Assurance in the U.K. and its sale to Swiss Re was announced. Most of these transactions are expected to close in the second half of 2003. (c) Balance sheet strengthened and management of capital base improved: Available capital was increased by more than US$5 billion since June 30, 2002. This total includes more than US$1 billion of capital released from divestments. Net Non-life and Reinsurance reserves increased by US$3.2 billion to US$32.8 billion since December 31, 2002; the Centre balance sheet was strengthened by US$474 million. The share of equities in the investment portfolio was reduced from 8.3% at December 31, 2002 to 6.1% in line with the program to de-risk the investment portfolio by selling or hedging equities. Performance by Business Segment The analysis of the results by business segment for the first half of 2003 is made against the prior period results before the 2002 special provisions unless explicitly stated otherwise. The results are unaudited but have been reviewed by the Group's external auditors. Non-life Insurance Driven by the strong market gross written premiums and policy fees in the Non-life Insurance segment increased US$4.3 billion, or 29% (19% in local currency), from US$15.0 billion for the first half of 2002 to US$19.3 billion for the same period of 2003. This result was supported by increases in all geographic segments. Total benefits, losses and expenses increased b y US$2.9 billion, or 27%, from US$10.5 billion for the first half of 2002 to US$13.4 billion in 2003. Disciplined underwriting and continued efforts to increase profitability led to expense reductions and a combined ratio in Non-life operations of 98.8%, an improvement of 4.5 percentage points over the same period in the previous year and an improvement of 20.9 percentage points including special provisions. The net loss ratio improved by 3.1 percentage points to 74.0% in the first half of 2003. Net income rose from US$132 million to US$766 million, while Business Operating Profit increased US$680 million from US$249 million to US$929 million for the same period in 2003. Life Insurance Life Insurance gross written premiums, policy fees and insurance deposits increased by US$1.2 billion, or 13%, to US$10.4 billion for the first half of 2003. In local currency, we experienced a 1% decline in gross written premiums and policy fees and insurance deposits. Net income was US$391 million, compared with US$446 million in the previous year, while Business Operating Profit increased by 49% from US$368 million to US$550 million. Embedded value operating profit was US$583 million in the first half of 2003, corresponding to an operating return on embedded value of 5.8%. Gross new business premiums, measured on an annual premium equivalent (APE) basis, increased by 22% to US$1.1 billion. This increase is primarily due to including the results of the former Deutsche Bank insurance operations, acquired in the spring of 2002, for the full six months of 2003. The acquisition contributed US$212 million of APE during the first half of 2003, compared with US$95 million in the previous year. Farmers Management Services The Farmers Management Services segment continued to show strong earnings growth in the first half of 2003. Farmers Group, Inc. and its subsidiaries (FGI) provide management services to the Farmers P&C Group Companies. While premiums are written and claims are paid by the Farmers P&C Group Companies, which we do not own, FGI provides management services to the Farmers P&C Group Companies and receives management fees for these services. Such fees and other related revenue, which primarily consists of management fees from the Farmers P&C Group Companies, increased 6% from US$885 million to US$935 million for the same period of 2003, due mainly to a 4.1% increase in gross earned premiums of the Farmers P&C Group Companies. Net income increased by US$44 million, or 16%, from US$269 million to US$313 million, reflecting strong revenue growth and successful expense reductions. Business Operating Profit improved US$68 million, or 15%, from US$445 million to US$513 million. Other Businesses Net earned premiums and policy fees recorded in the Other Businesses segment have declined slightly by US$3 million to US$656 million for the first half of 2003, with Center being the only operation with significant net earned premiums in both the first half of 2003 and 2002. As a result of the sale of Zurich Scudder Investments in April 2002, management fees have declined by US$331 million, or 94%, to US$20 million. Net investment result has increased by US$128 million to US$692 million for the first half of 2003. Reserve strengthening of US$474 million impacted the result at Center. It was primarily related to the life and disability business as well as to certain asset-backed transactions in the leisure, transportation, and health care sectors whose collateral values have declined. Net income in the Other Businesses segment has shifted from a net income of US$354 million to a loss of US$304 million. However, the 2002 result includes gains of US$373 million after tax primarily from the sale of Zurich Scudder Investments. Business Operating Profit has also shifted from a net profit of US$45 million to a loss of US$478 million in 2003. Because this measure includes the impact of realized capital gains from our Zurich Capital Markets operations, the Business Operating Profit is lower than the net income for the Other Businesses segment. Corporate Center The Corporate Center segment includes Group holding companies, central expenses at headquarters in Zurich, central financing vehicles and certain businesses in run-off. In spite of the unfavorable exchange rate movement, net expenses at the headquarters in Zurich are down by US$37 million, or 48%. The segment reported net expenses of US$465 million for the first half of 2003, an improvement of US$53 million from the US$518 million in the first half of 2002. Business Operating Profit improved from a loss of US$295 million to a loss of US$249 million for the current year. Investment performance The Group's investment portfolio (excluding unit-linked assets) increased by 8% to US$177.6 billion at June 30, 2003. The total return of this portfolio was US$5.6 billion, corresponding to a return of 3.3% (after excluding investment expenses of US$142 million), an increase of 2.4 percentage points from the same period of 2002. The return on debt securities, which comprise approximately two thirds of the total investment portfolio, was 4.0%, while the yield on equities was 3.0%. This equities result includes US$943 million of impairments, which were recognized in the first quarter 2003. Net investment income increased by 12% to US$3.6 billion. Balance sheet, reserves, and capital base management Total assets were US$309.7 billion at June 30, 2003, an increase of 8% compared with US$285.9 billion at December 31, 2002. The Group has reduced its exposure to common stock for which it bears investment risk to 6.1% of the total investment portfolio at June 30, 2003 from 8.3% at December 31, 2002. At June 30, 2003, total insurance reserves, net of reserves ceded to reinsurers, were US$148.2 billion. This compares with total net reserves of US$135.3 billion at December 31, 2002. Shareholders' equity was US$18.7 billion at June 30, 2003 as compared with US$16.8 billion at December 31, 2002. The increase primarily reflects net income of US$701 million as well as the result of a net increase in unrealized gains on investments and translation adjustments due to the decline of the US dollar against the euro and the Swiss franc. Additional information including the financial statements and the Half-Year 2003 Results presentation for analysts and media is available on our website at http://www.zurich.com The Zurich Financial Services Group (http://www.zurich.com)provides its customers solutions in the areas of financial protection (non-life insurance and structured solutions) and asset gathering (life insurance and asset management). The Group focuses its activities on its key markets of North America, U.K. and Continental Europe. Founded in 1872, Zurich is headquartered in Zurich, Switzerland. It has offices in more than 60 countries and employs approximately 70,000 people. CONTACT: ZURICH FINANCIAL SERVICES 8022 Zurich, Switzerland Phone: +41 (0)1 625 21 00 Fax: +41 (0)1 625 26 41 Homepage: http://www.zurich.com =========================== U N I T E D K I N G D O M =========================== AES DRAX: MMC Not Bidding Despite Admitting Interest in Firm ------------------------------------------------------------ U.S.-based vulture fund MMC, which is being tipped as possible bidder for Yorkshire-base AES Drax, is out to buy "distressed" companies not bid, Karl Miller, partner at MMC said. The Telegraph quoted Mr. Miller saying his group had never planned to make a rival rescue bid for power plant. Instead, it was seeking to buy several "distressed" U.K. power stations. He said: "We have been working on a plan to buy several U.K. assets for six months now." MMC is rumored together with mining giant BHP to possibly have an interest in lodging a competing offer alongside that of Goldman Sachs and International Power. But David Riddell of Close Brothers, adviser to AES' creditors, revealed at a meeting of Drax bondholders, there are no other offers except that of International Power and Goldman Sachs. "Initially, we avoided Drax because it had a convoluted management structure, but now AES [the previous owner] has been removed we are interested. But we are certainly not obliged to bid by Friday," Mr. Miller said. Mr. Riddell refused to comment regarding the rumors, according to the report. AES directors are due to decide whom to allow exclusivity in pursuing the transaction before the deadline set on Friday. BOLTON GROUP: Disposes Subsidiary Companies to Hill Finance ----------------------------------------------------------- Bolton Group (International) Limited announces the disposal of two of its subsidiary companies, Urania Securities Ltd. and Bolton Group Plc, to Hill Finance Ltd. for a consideration of GBP160,000. Urania Securities Ltd. has experienced difficulty in letting its commercial office property, the market for this space having diminished dramatically in the past 12 months. After losing its major tenant in March 2002, it suffered substantial losses and the property has continued to be a drain on the Group's resources. Bolton Group Plc has accumulated losses over recent years and the Board believes that it is unlikely to provide any benefit to the Group in the future. The Board of Bolton Group (International) Limited has actively been seeking to diversify into new areas, offering greater potential growth. The disposal of these two subsidiary companies removes ongoing losses and liabilities from the Group's balance sheet, to provide a leaner and more focused base from which to attract new investment and to fulfill the Board's ongoing strategy. CONTACT: BOLTON GROUP (INTERNATIONAL) LIMITED Phone: 020 7499 7922 Peter Derby, Chairman CARPETS INTERNATIONAL: Falls into Administrative Receivership ------------------------------------------------------------- Britain's largest carpet manufacturer Carpet International took workers union by surprise with its fall into administrative receivership, according to BBC. Peter Booth, Transport and General Workers Union National Organiser said: "The news broke this afternoon [Wednesday] as members were called to meetings and informed that the company has gone into receivership." Joint receiver Garth Calow from PricewaterhouseCooopers has been appointed as receiver for the Bradford-based company that trades under the Kossett, Wilton Royal and Abingdon brands. Unions fear the 1,190 workers employed in Northern England, Wales and Scotland could be left jobless. Carpets International has facilities in Hartlepool, Hull, Bradford, Abingdon and in Donaghadee and Killinchy in Northern Ireland. The company first complained of its difficulties in 2001 when it said it is being affected by severe competitive pressures. COMPASS GROUP: Japanese Subsidiary Sells Shares in Yoshinoya ------------------------------------------------------------ Compass Group PLC announces that its Japanese subsidiary Seiyo Food Systems has participated in a buy-back of shares carried out by Yoshinoya D & C Ltd, selling 61,400 of its shares in Yoshinoya. This represents total proceeds to Seiyo of JPY11 billion (approximately GBP58 million). The company confirms that its shareholding in Yoshinoya has therefore reduced to 72,140 shares, representing 12.7% of the equity of Yoshinoya. CONTACT: COMPASS GROUP PLC Phone: 01932 573000 Sarah Ellis, Director Investor Relations BRUNSWICK Phone: 0207 404 5959 Timothy Grey Pamela Small DAWSON INTERNATIONAL: Chief Executive Paul Munn Resigns ------------------------------------------------------- Dawson International PLC announced the resignation of its Chief Executive Paul Munn with effect from the end of August 2003. Paul Munn, who leaves to pursue other business interests, has been with the Group for over seven years as Head of Corporate Development, Finance Director and, since January 2000, as Chief Executive. The business is taking this opportunity to review its management structure to better fit with the needs of the Group going forward. Mike Hartley who recently joined the Board will assume the role of Executive Chairman and the Group will seek to appoint a Chief Operating Officer to support him in that position. Mike Hartley brings considerable textile and retail experience to the Group gained most recently with Coats Viyella. Commenting on the changes, Mike Hartley said: "I am sorry to see Paul leave as he has been the key driver in the strategy to restructure Dawson International PLC as a cashmere business. On behalf of the Group I want to wish Paul well in his future career." ***** Dawson International PLC's chairman, Ian Irvine, in May said the losses the company incurred during 2002 were very disappointing. He warned that the business will not return to profit in the current year despite the progress of its reorganization. CONTACT: DAWSON INTERNATIONAL PLC LOCHLEVEN MILLS KINROSS KY13 8GL Mike Hartley, Chairman Phone: 01577 867000 Gordon Beattie, Beattie Media Phone: 07768 588163 JETCAM INTERNATIONAL: Cancels AIM Trading; Plans Share Buy-back --------------------------------------------------------------- The directors of JETCAM announce that the company intends to implement a share buy-back and give notice to cancel the admission of its Ordinary Shares from AIM. The resolution for cancellation will be placed before shareholders at the special general meeting which is being convened for September 11, 2003. Application has been made for the cancellation of admission from AIM and, subject to the passing of the resolution at the special general meeting, cancellation is expected to become effective at the close of business on September 18, 2003. Background JETCAM was admitted to AIM in May 1999. At the time of admission, the Company only raised GBP100,000 (net of expenses), because the primary reason for becoming a publicly quoted company was to create the ability to finance acquisitions through the issue of publicly quoted shares at an attractive valuation, with the intention of placing the company in a position to be a consolidator in a fragmented industry. At the same time, it was hoped that sales in general would improve through JETCAM's raised profile as a publicly quoted company and that, over time, there would be increasing liquidity in the company's shares. Since 1999, however, the commercial environment for JETCAM's core business has become more competitive, resulting in a reduction in the company's margins and operating profits. In the aftermath of the 'dot-com' era, JETCAM, like many other publicly quoted companies, has experienced a dramatic reduction in its share price and, therefore, its market capitalization. Trading in the company's shares is minimal and the percentage spread between the bid and offer prices is significant. Despite having reduced the costs of being publicly quoted to the minimum, the Directors feel that these costs remain unacceptably high for a business of JETCAM's size and financial performance. The company's ambition to be a consolidator in the sheet metal CNC programming system sector has, in practice, proved elusive, due to a combination of unrealistic valuation expectations of potential acquisition targets and a rapidly declining share price. The only acquisition that was successfully made, that of Camtek Limited in November 1999, opened new markets outside JETCAM's traditional sector, but this took JETCAM into another specialized area, where the scope for diversification and expansion presents its own challenges. The company's low market valuation is a matter of concern to the Directors. It does not enhance the company's standing with its business partners and does nothing to enhance future growth. The low valuation makes it impractical to implement further fund raisings by an issue of Ordinary Shares, or acquisitions where Ordinary Shares provide the consideration, and the Directors believe this situation may continue to be the case for the foreseeable future. At the same time, the trading history in the Ordinary Shares shows very limited liquidity and the Directors do not see any factors likely to change this situation materially in the short to medium term. Current Trading and Prospects Interim Results for the Six Month Period ended June 30, 2003. The interim results for the period are in the course of preparation and are expected to be announced on September 1, 2003. Prospects Unaudited sales for the first six months of the current year of GBP1,413,000 (2002: GBP1,426,000) have continued to exhibit an essentially flat performance which has continued on from 2002, following the significant declines in turnover which had preceded this. Underlying operating expenses are similar to those for the same period last year. The second half of the current year has started weakly and this makes the results for the year as a whole, therefore, difficult to predict. The U.K. machine tool industry in particular, shows little sign of recovery from the poor performance of recent years. The Proposals The Directors now believe that, taking into account all the above factors, the disadvantages of maintaining the company's trading facility on AIM outweigh the advantages. They have been considering options for delisting from AIM, giving Shareholders the opportunity to sell their shares if they wish to realize their shareholdings while also maintaining a mechanism for trading in the Ordinary Shares. The executive Directors have examined a variety of options including the making of a formal offer to acquire the Ordinary Shares that they do not already own. However, taking account of the level of costs involved, both in terms of fees and of financing, and uncertainty as the extent to which the offer would be accepted, this was not seen by them to be a viable option. The Directors now consider that the simplest and most cost effective way of providing an opportunity to Shareholders to realize their shareholdings is to utilize the company's own resources to purchase its Ordinary Shares in a share buy-back. Under Bermudan Law and the company's Bye-Laws, the company is able to do this without the need for a capital reorganization to eliminate its deficit on distributable reserves and without requiring the approval of Shareholders. Under Bermudan Law, purchases can only be made if they do not impair the Company's ability to meet its liabilities as they fall due. On July 25, 2003, The London Stock Exchange announced a consultation period on a proposed change in the AIM Rules which, if confirmed following the end of the consultation period on September 19, 2003, would require companies seeking to cancel their admission from AIM to obtain the consent of 75% of shareholders voting at a general meeting. The Directors wish to observe the spirit of the new rule, even though it has not yet been confirmed. Accordingly set out at the end of this document is a notice of the Special General Meeting, which has been convened for 11.30 a.m. on September 11, 2003. The meeting will consider one resolution seeking approval to cancel the Company's admission from AIM, which will be an ordinary resolution requiring the approval of over 50% of the votes cast at the meeting. The company has undertaken to John East & Partners, to initiate, as soon as practicable following the publication of the interim results for the six months ended 30th June, 2003, a share buy back program to allow any Shareholder (other than a Shareholder who is a Director or connected with a Director) who so wishes, to sell his Ordinary Shares to the company at a price of 4.5p per share. This is a discount of 7.69% to the middle market price of an Ordinary Share at close of business on August 19, 2003, the latest practicable time prior to the announcement of the Proposals. However, the Directors do not wish existing Shareholders to feel compelled to realize their investment at a time when they might feel that valuations are low, and your Board has made arrangements with ShareMark which will enable buyers and sellers to continue to conduct trades in the Ordinary Shares on a matched bargain basis. Subject to compliance with Bermuda Law, the buy-back program will be conducted on AIM, following the announcement of the Interim Results for the six month period ended on June 30, 2003, until the cancellation of admission from AIM becomes effective and will then be maintained on ShareMark for a period of one month at which time the Directors may, at their discretion, continue to operate the buy-back. In summary, the Proposals are designed to address the dilemma, which the Directors have faced for some time. If the Resolution is passed, Shareholders will be given the opportunity to sell their Ordinary Shares at a price of 4.5p per share, which would allow Shareholders, particularly those with large shareholdings, to realize their investment at a price and in a size not available in the market. Shareholders who wish to retain their shareholding will be able to do so and utilize the ShareMark trading facility under which trades can be conducted on a matched bargain basis. The company will reduce its overheads by approximately GB 22,000 per annum, due to the cancellation of the Company's admission on AIM, which would only have been implemented in connection with the Proposals as a whole. Irrevocable undertakings The Directors and interests associated with the Directors have given irrevocable undertakings not to sell Ordinary Shares to the Company under the share buy-back mentioned above in respect of 16,093,152 Ordinary Shares, representing 67.6% of the issued share capital of the company. Accordingly, the maximum amount payable to Shareholders holding the remaining issued Ordinary Shares under the share buy-back would be approximately GBP347,000, which compares to cash balances held by the company as at 18th August, 2003 of approximately GBP450,000. August 20, 2003 CONTACT: JETCAM INTERNATIONAL HOLDINGS LIMITED John Wright (Business Development Director) Phone: 00377 97 97 16 40 LONDON FORFAITING: Urges Shareholders to Accept FIMBank's Offer --------------------------------------------------------------- Recommended cash offer by WestLB on behalf of FIMBank (U.K.) Limited, a wholly owned subsidiary of First International Merchant Bank p.l.c., for London Forfaiting Company Plc Level of Acceptances and Offer Extension On July 22, 2003, the Boards of London Forfaiting and FIMBank (U.K.) announced a recommended cash offer for the entire issued and to be issued share capital of London Forfaiting. The Offer was made by WestLB on behalf of FIMBank (U.K.) by means of the Offer Document, which was posted on 22 July 22, 2003. FIMBank (U.K.) announces that as at 3.00 p.m. (London time) on Tuesday August 19, 2003, being the second closing date of the recommended cash offer, valid acceptances of the Offer had been received from the holders of, in aggregate, 67,819,743 London Forfaiting Shares, representing approximately 64.7% of the London Forfaiting Shares to which the Offer relates. Prior to making the Offer, FIMBank (U.K.) had received irrevocable undertakings to accept (or procure the acceptance of) the Offer in respect of, in aggregate, 38,970,897 London Forfaiting Shares, representing approximately 37.2% of the issued share capital of London Forfaiting. Valid acceptances of the Offer have been received in respect of all of the London Forfaiting Shares, which were the subject of such irrevocable undertakings and are included in the total number of valid acceptances referred to above. The Offer has been extended and will remain open for acceptance until 3.00 p.m. on August 26, 2003. London Forfaiting Shareholders who have not yet accepted the Offer are urged to do so as soon as possible. London Forfaiting Shareholders, holding London Forfaiting Shares in certificated form, who wish to accept the Offer should complete the Form of Acceptance enclosed with the Offer Document and return it, together with supporting documents, to the receiving agents to the Offer, Capita IRG Plc, at Corporate Actions, PO Box 166, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TH as soon as possible but, in any event, so that their acceptances are received not later than 3.00p.m. on Tuesday 26 August, 2003. Additional Forms of Acceptance are available from Capita IRG Plc, by telephoning 0870 162 3100 (if calling from within the U.K.) or +44 20 8639 2157 (if calling from outside the U.K.). London Forfaiting Shareholders, who hold their London Forfaiting Shares in uncertificated form, wishing to accept the Offer should do so using the procedure set out in the Offer Document. Save as disclosed in this announcement or in the Offer Document, neither FIMBank, FIMBank (U.K.) nor any persons acting or deemed to be acting in concert with them, held any London Forfaiting Shares (or rights over any London Forfaiting Shares) prior to the Offer Period and neither FIMBank, FIMBank (U.K.) nor persons acting or deemed to be acting in concert with them have acquired or agreed to acquire any London Forfaiting Shares (or rights over any London Forfaiting Shares) since the commencement of the Offer Period. Terms used in this announcement shall have the meaning given to them in the Offer Document, save where the context requires otherwise. CONTACT: FIMBANK Margrith Lutschg-Emmenegger Phone: +356 23 280 180 WESTLB Ian Soanes Phone: 020 7020 4000 BELL POTTINGER David Rydell Phone: 020 7861 3865 MARCONI PLC: Moves Headquarters to Cheaper Office in West End ------------------------------------------------------------- Telecom company Marconi Corporation is moving its headquarters from Euston to 32-34 Grosvenor Square in the West End, according to the Telegraph. The new 6,000 sq. ft. office is near the residence of its founder Lord Weinstock. It has been sub-let by the Union Bancaire Privee. Marconi has a contract to lease the property until November 2006 at GBP180,000 a year, significantly cheaper than the GBP730,000 it is paying Regus for its current serviced offices. The change of address comes as the company hires Douglas McWilliams, an economist, to its board. MARCONI CORPORATION: Sells Gamma Telecom Holdings Ltd. Stake ------------------------------------------------------------ Marconi Corporation plc (London: MONI) announces that it has sold its entire stake of 2,249,000 shares in Gamma Telecom Holdings Ltd. for approximately GBP5.6 million. In accordance with the provisions of Marconi Corporation's new Junior and Senior Notes, the Group is entitled to deduct transaction costs and certain related liabilities and, as a result, net proceeds of approximately GBP4 million will be transferred to Marconi Corporation plc's Redemption Escrow Account. This will be used in due course to fund a further partial redemption of the Group's Junior Notes. About Gamma Telecom Holdings Ltd. Gamma Telecom Holdings Ltd. acquired certain assets of Atlantic Telecommunications Ltd. (in administration) in December 2001. About Marconi Corporation plc Redemption Escrow Account (MREA) When the balance of the MREA reaches US$30 million, this triggers a mandatory partial redemption of Marconi's Junior Notes at 110% of par value. About Marconi Corporation plc Marconi Corporation plc is a global telecommunications equipment, services and solutions company. The company's core business is the provision of innovative and reliable optical networks, broadband routing and switching and broadband access technologies and services. The company's customer base includes many of the world's largest telecommunications operators. The company is listed on the London Stock Exchange under the symbol MONI. Additional information about Marconi Corporation can be found at http://www.marconi.com CONTACT: MARCONI CORPORATION PLC Investor enquiries Heather Green Phone: + 44 207 306 1735 E-mail: heather.green@marconi.com NORTHUMBRIAN WATER: Plays Down Credit Rating Concerns ----------------------------------------------------- Northumbrian Water assured Ofwat it is on track to have a full stock market listing next month as the water industry regulator echoes concern regarding its credit rating. The company is currently listed in AIM. When Suez sold the utility to a consortium led by Deutsche Bank and Ecofin earlier this year Ofwat expressed worries about the company's ability to tap capital markets following a reduction in its credit rating. Standard & Poor's downgraded Northumbrian's ratings after it took a GBP536 million in debt in addition to the GBP1.2 billion it had when it was sold. According to Ofwat, a number of investors had questioned whether the rating would ensure continued access to capital markets. They are wary that "Northumbrian would have to pay over the odds to raise extra finance," according to the Telegraph. Northumbrian said it is considering undertaking a financial restructuring program that could include raising debt against revenues generated by its Kielder reservoir. It assured it can improve its credit rating before the next Ofwat review in June. The regulator has given the company nine months to restore confidence among financial markets after its sale. PO NA NA: Avanti Capital Offers GBP8 Million for Half of Bars ------------------------------------------------------------- Private equity group Avanti Capital plans to acquire more than half of the bars of Po Na Na Group, the failed bar and nightclub operator, according to The Times. The transaction involving 28 of Po Na Na's 45 bars is estimated at between GBP6 million and GBP8 million. It is understood to have the backing of David Phelps, a former Po Na Na director. Po Na Na was placed under administration three months ago after its shares were suspended at the company's request. This was after the cash-strapped company encountered delays in selling a package of about 15 underperforming sites, many of which were poorly located. The transaction to buy Po Na Na will be the first acquisition of Avanti since it listed in the AIM through a reverse takeover of E-capital Investments, an Internet and technology firm, in December 2001. POWERHOUSE: Falls into Administrative Receivership -------------------------------------------------- PowerHouse, U.K.'s largest independent electrical goods retailer, has gone into administrative receivership, a spokeswoman said, according to AFX. The future of the company was placed into uncertainty following the pullout of trade insurers from PowerHouse suppliers on fears that the company's risk profile had become doubtful. "I can confirm that Powerhouse has gone into administrative receivership and that Deloitte & Touche have been appointed to manage that," the unnamed source said. Nick Dargan, partner at Deloitte & Touche, commented: "We are carrying out a rapid assessment of the company's operations with a view to selling the business as a going concern." Powerhouse had 223 stores, but it decided to close 93 of them on August 29. It has yet to identify which outlet to close, but it is expected that 813 employees will be made redundant under the move. An employee briefing is expected this week. PowerHouse reported post-tax profit for the financial year ended March 2003 of GBP300,000, down from GBP5.2 million from last year's, despite a rise in sales. PowerHouse declined to disclose its current cash reserves, according to the Financial Times, but its report noted that during the firm's last full financial report in March 2002, net cash stood at GBP8.5 million (US$13.5 million). Powerhouse operates from leasehold retail units throughout the U.K., mostly in out-of-town retail parks. Its sales in the year to end March 2003 totaled GBP398.6 million. ROYAL MAIL: Urges Workers to 'Talk, Not Walk' --------------------------------------------- Royal Mail said that the Communication Workers Union decision to start balloting for strike action over the company's 14.5% pay offer took the U.K. 's postmen and women and their customers to a watershed. Chief Executive Adam Crozier said, "Postmen and women have shown that they can help to turn Royal Mail's fortunes around. We cut losses to GBP611 million last year -- still a big loss, but nonetheless, a huge achievement. Now the minority of activists is planning to throw it all away." "We've got one simple aim -- we want to give everyone at least GBP300 a week in their pocket." Royal Mail needs to make simple changes to modernize its operations. Those changes unlock the cash to increase basic pensionable pay by 14.5% over 18 months. They had been negotiated and agreed with the union's leadership, who had recommended them to their conference in June this year. "We have a longstanding agreement with the union to go to mediation on pay issues and we expect them to honor it", Mr. Crozier re-iterated. "Mediation is the best way to move forward." CONTACT: ROYAL MAIL 148 Old Street LONDON EC1V 9HQ Home Page: http://www.royalmail.com SPORTSPLEX LIMITED: Joint Administrators Offer Business for Sale ---------------------------------------------------------------- Geoff Carton-Kelly & Colin Haig of Baker Tilly, Joint Administrators of Sportsplex (Canary Wharf) Limited offer for sale a luxury 100,000 sq. ft. Health Fitness & Sports Club at Canary Wharf London Docklands for sale as a fully operational leasehold trading entity. CONTACT: COLLIERS CRE Neil Richmond Phone: 020 7487 1657 Fax: 020 7487 1805 E-mail: nrichmond@collierscre.co.uk TOPNOTCH HEALTH: Requests Suspension of AIM Trading --------------------------------------------------- As shareholders are aware, over the past few months the company has been going through a major restructuring program in order to secure its future viability. Trading conditions remain difficult and the company continues to trade at a loss. The company is in advanced negotiations regarding the sale of one of its clubs which, if successful, will reduce the company's indebtedness. This restructuring program has involved a number of asset disposals to reduce debt and negotiations with certain major creditors (including Esporta plc in relation to the debt remaining from the acquisition of Espree leisure and the landlords of certain potential new clubs which the company does not have the funds to develop) alongside discussions to reschedule the company's bank debt. To date the Company's bankers, National Westminster Bank plc, have remained supportive of this program, despite the continued uncertainty. The negotiations with creditors have now reached a crucial stage. While your board believes that it may be possible to reach agreement with these creditors, such that the requirements of National Westminster Bank plc can also be met, the outcome of these negotiations remains uncertain. In the meantime the company is reliant on the continued support of National Westminster Bank plc whose facilities are repayable on demand. Your board hopes to bring the negotiations to a conclusion in the next few weeks. Pending the outcome of these negotiations and clarification of the company's financial position, the company has requested the suspension of the trading of its shares on AIM. CONTACT: TOPNOTCH HEALTH CLUBS PLC Phone: 020 7381 7501 Matthew Harris, Chief Executive BEATTIE FINANCIAL Phone: 020 7398 3300 Brian Coleman Smith / Amanda Sheehy UNITED MILK: Farmers Offer to Take Firm out of Receivership ----------------------------------------------------------- A group of Britain's major farmer-owned, milk-buying co-operatives are ready to rescue United Milk from receivership, according to Yorkshire Today. The country's largest farmer-controlled milk processor called in that receivers PricewaterhouseCoopers LLP after the GBP45 million-operation hit the buffers. The report quoted Paul Gibson, a spokesman for Dairy Farmers of Britain saying: "We have indicated to the receivers that we are preparing an offer, although we cannot disclose the details at this point - it's still early days." He added: "Dairy Farmers of Britain is working together with the First Milk and Milk Link co-operatives to secure the future of the factory in Westbury." The National Farmer's Union blamed the failure to obtain and ensure a sufficient supply of milk to cover the costs at the United Milk for the company's troubles. Joint receiver Roger Marsh promised to hold urgent talks with suppliers in the next few days to save the plant. The state-of-the-art United Milk dairy is owned by 400 dairy farmers and is backed by more than GBP10 million of their own money. It is designed to give farmers a secure future by providing them with a direct route to market for their milk, processing 800 million liters of milk a year into skimmed milk powder, cream and butter. It employs 125 people and has an annual turnover of GBP100 million. VOCALIS GROUP: Begbies Traynor Specialists Named Administrators --------------------------------------------------------------- Further to the announcement on August 15, 2003 that the Board of Vocalis was in exclusive discussions regarding the potential sale of Vocalis Limited (the Group's principal trading subsidiary) to Netdecisions Holdings Limited, on August 19, 2003 the Directors of Vocalis requested the High Court to grant an administration order for Vocalis Group plc. This request has been granted and Mr. Paul Davis and Mr. Timothy Dolder, both of Begbies Traynor, have been appointed administrators of Vocalis Group plc. At the same time, following discussions with the Directors, Messrs Davis and Dolder and Netdecisions Holdings Limited, agreement has been reached for the acquisition of Vocalis Limited by Netprofessions Limited, a subsidiary of Netdecisions Holdings Limited, for a consideration of GBP1, together with the assignment of the Group's inter-company loan to Vocalis Limited. This, together with the assumption of certain liabilities of Vocalis Group plc, has resulted in Vocalis Group receiving an aggregate value of approximately GBP510,000 from the transaction. Vocalis shareholders will be informed in due course of the amount of the return (if any) to them in respect of their shareholding in Vocalis Group plc. In addition, it is announced that Paul Wright has entered into a compromise agreement regarding the termination of his employment by Vocalis. Accordingly, both Paul Wright and Richard Watrasiewicz, who has also resigned from the board, are no longer directors of Vocalis Group plc. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Larri-Nil Veloso, Ma. Cristina Canson, and Laedevee Gonzales, Editors. Copyright 2003. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. 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