/raid1/www/Hosts/bankrupt/TCREUR_Public/030430.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
Wednesday, April 30, 2003, Vol. 4, No. 84
Headlines
F R A N C E
ALCATEL SA: Urged to Merge Space Unit with EADS' Astrium, Alenia
ALSTOM SA: Siemens Expects Acquisition Completed in Autumn
RHODIA SA: CEO Widely Expected to Survive Shareholders Coup
VIVENDI UNIVERSAL: To Resurrect Business via Cegetel, Canal Plus
G E R M A N Y
BERTELSMANN AG: Faces Lawsuit, Could Pay US$3.5B for Damages
DEUTSCHE TELEKOM: Faces EU Fine for Charging High Prices
INFINEON TECHNOLOGIES: Seriously Considering Ditching Germany
KIRCHMEDIA GMBH: Saban Wants Partners to Fund 3/4 of Price Tag
MUNICH RE: Presents Details of 2003 Annual General Meeting
L U X E M B O U R G
DRESDNER BANK: Luxemburg Unit Posts Loss After Tax EUR 41.6M
N E T H E R L A N D S
GETRONICS N.V.: Reveals More Measures To Restore Profitability
KONINKLIJKE AHOLD: To Divest Its Indonesian Operation To Hero
P O L A N D
BRE BANK: Presents Financial Result of After Q4 2002
S W E D E N
INTENTIA INTERNATIONAL: Presents January-March Interim Report
S W I T Z E R L A N D
SWISS INTERNATIONAL: Govt Asks Bank to Extend CHF500 Mln Credit
SWISS LIFE: Sees Collaboration in Italian Life Insurance Market
VON ROLL: Presents Result of Official Buy-Back Offer
VON ROLL: Presents Updates on Work on a Refinancing Plan
U K R A I N E
KYIVSTAR GSM: S&P Revises Outlook, Affirms 'B-' Ratings
U N I T E D K I N G D O M
ABBEY NATIONAL: Puts Offshore Life Insurance Units Up for Sale
AMEY PLC: Ferrovial Announces Deadline for Approval of Offer
ARC INTERNATIONAL: Shareholders Approved Resolutions at AGM
BOOTS GROUP: Finalizing Cost-cutting Experiment for Warehousing
BUZZ: Ryanair Welcomes Caa Approval For Buzz Stansted Services
CORDIANT COMMUNICATIONS: Allied Domecq Pulls Out Business
ESG RE: Fitch Lowers Ratings To 'B-'; Outlook Negative
IMPERIAL CHEMICAL: Faces Class Action Lawsuit in New York
INVENSYS PLC: Siemens to Wait Until Woes Worsen Before Bidding
MYTRAVEL GROUP: Analysts Believe Firm is Well, But not for Long
OMEC: Receiver Sells Business to Previous Owners
SILVER SHIELD: Kwik-Fit Appoints Administrator to Sell Unit
THISTLE HOTELS: Reiterates Recommendation to Reject BIL Bid
- - - - - - - -
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F R A N C E
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ALCATEL SA: Urged to Merge Space Unit with EADS' Astrium, Alenia
----------------------------------------------------------------
A three-way merger is developing in Europe's space industry,
according to AFX News, which reported Monday that the French
government is allegedly pressing Alcatel Space to merge with the
European Aeronautic Defense and Space Co. (EADS)
Citing La Lettre de l'Expansion, the newswire said Italy's Alenia
Aerospazio SpA could also join the tie-up between Alcatel Space
and EADS' Astrium satellite unit. Accordingly, France's Finance
Minister Francis Mer sent a letter to both EADS co-CEO Philippe
Camus and Alcatel Chairman Serge Tchuruk encouraging a merger.
ALSTOM SA: Siemens Expects Acquisition Completed in Autumn
----------------------------------------------------------
Siemens AG, Europe's largest electronics and electrical
engineering firm, expects the deal it made with Alstom to be
completed in the autumn.
According to a Siemens spokesman, the firm expects "no basic or
significant" objections from the relevant antitrust authorities
to its planned EUR1.1 billion acquisition of Alstom's small and
medium-based gas turbine businesses.
Alstom recently said it agreed to sell its industrial turbine
business to Siemens, indicating that that in the year to the end
of March the unit generated sales of approximately EUR1.25
billion and an EBIT margin of around 7%.
The spokesman revealed that Siemens made cash offer of EUR950
million for the larger turbines. Including debt, the total deal
is valued at EUR1.1 billion.
Siemens is not interested in acquiring any other parts of Alstom,
the spokesman clarified.
Moreover, it divulged that Siemens' Industrial Applications
division -- part of its Power Generation unit -- will have a
business volume of EUR2 billion and some 10,000 employees
following completion of the deal.
The acquisition will also boost the service business of Siemens
Power Generation, an area that Siemens has been growing in order
to compensate for falling gas turbine orders.
The spokesman said: "From our point of view this is a
complementation of our product portfolio ... This is a complete
product portfolio that we have now in terms of products, and in
terms of service agreements of course".
"In addition, the acquisition will further improve PG's prospects
in the oil and gas industry. The expanded customer base for
industrial power generation will also include municipalities and
the chemical industry."
It is reported that although Siemens Power Generation was the
biggest contributor to group earning of its 13 divisions in
fiscal 2002, the division's results are declining.
In the second quarter to end-March this year, sales slumped 35%
to EUR2.2 billion from EUR3.4 billion in the year-earlier period.
Income operations also fell to EUR262 million from EUR450
million, reports say.
CONTACT: ALSTOM S.A.
G. Tourvieille/M. Dowd
Phone: +33 1 47 55 23 15
E-mail: internet.press@chq.alstom.com
Investor relations
E. Rocolle-Teyssier
Phone: +33 1 47 55 25 78
E-mail: investor.relations@chq.alstom.com
or
SIEMENS AG
Wittelsbacherplatz 2
D-80333 Munich, Germany
Phone: +49-89-636-3300
Fax: +49-89-636-342-42
Homepage: http://www.siemens.de
RHODIA SA: CEO Widely Expected to Survive Shareholders Coup
-----------------------------------------------------------
Rhodia SA CEO Jean-Pierre Tirouflet was not expected to lose his
job yesterday during the company's annual meeting in Paris, but
the tally could force him to reconsider his options, the
Financial Times says.
According to the paper, until yesterday Mr. Tirouflet still had a
commanding backing via the 25% stake of former parent, Aventis.
Under a deal with regulators in 1998, Mr. Tirouflet enjoys
"unqualified support" from Aventis. In addition, insiders told
the Financial Times, the "limited involvement" of AXA group
founder, Claude Bebear, is also key to Mr. Tirouflet's survival.
Mr. Bebear is believed to be the unseen hand behind the ouster of
former Vivendi Universal CEO Jean-Marie Messier last year. He is
also a close ally of Jean-Rene Fourtou, the former head of
Aventis, who took over from Mr. Messier.
Nevertheless, minority shareholders led by Albert Frere's holding
company, Groupe Bruxelles Lambert; Edouard Stern, the French
investor; and Hughes de Lasteyrie du Saillant, the Belgian
investor, were expected yesterday to force a vote on Mr.
Tirouflet's continued stay.
"We simply feel that the current chief executive is not competent
for the job," Group Bruxelles Lambert told the Financial Times.
"We need somebody credible and we feel now that he is not."
Mr. Tirouflet has held his position since the company's
floatation in 1998. Since then, however, the company's stocks
have plummeted to EUR6 from a peak of EUR25 in 2000.
VIVENDI UNIVERSAL: To Resurrect Business via Cegetel, Canal Plus
----------------------------------------------------------------
Vivendi Universal will reportedly announce a strategic plan that
will rebuild its empire around French cellphone operator, Groupe
Cegetel, and loss-making pay-TV unit, Canal Plus SA.
According to The Deal, the group will unveil the plan after its
annual general meeting yesterday. The report adds the new
strategy will refocus the erstwhile French behemoth toward
telecommunications and television.
The online business publication says the move, however, could
stymie the plans of Vodafone Group Plc for Cegetel. The British
telecom giant has long sought to take full control of Cegetel,
the No.2 cellphone operator in France. Last year, it almost
succeeded, but got foiled by Vivendi's EUR4 billion offer to buy
BT Group Plc's 25% stake, giving Vivendi 70% control. Vodafone
currently holds 30% of Cegetel after settling for the stake of
San Antonio-based SBC Communications Inc.
The Deal says Cegetel is now the cash cow of Vivendi, providing
revenues of EUR7.1 billion last year, up 11% from a year ago.
But market observers believe Vivendi is holding on to Cegetel
only because it wants Vodafone to offer a premium for its 70%
stake. The British phone company has repeatedly said its
ultimate goal is to snatch Cegetel.
"In the longer term, we are still interested in acquiring Cegetel
or increasing our stake," an unnamed Vodafone spokesman told The
Deal Monday.
The online paper says France is the only large European country
in which Vodafone does not have a controlling stake in a local
operator. A consultant who has advised Vodafone said that
filling this gap was a top priority for the company.
Vodafone "will interpret this [pending announcement] as posturing
by Vivendi," the consultant told The Deal, adding, "Vodafone
wants Cegetel and it is convinced that time is on its side. The
longer they wait, the more pressure will build up on Vivendi to
sell. This is going to be like the spider and the fly."
Meanwhile, in the case of Canal Plus, Vivendi will have no choice
but to hold on to the losing unit because French media laws would
make it politically insensitive to sell. Last month, Vivendi
admitted its bankers had held meetings with John Malone, chairman
of Liberty Media Corp., about "future cooperation."
In 2002 Vivendi cancelled a flotation of Canal Plus on the Paris
stock market due to market conditions. Canal Plus' non-French
assets, however, are on the block, as is Paris Saint-Germain, a
loss-making soccer club in which Canal Plus is the dominant
shareholder. Societe Generale is the lead adviser on this sale,
The Deal says.
In a separate report, Reuters says Vivendi will probably retain
Universal Music, the world's largest recording company. Talks
with Apple Computer over a bid is reportedly going nowhere, as
the American firm only wants technical help and shareholding
ties. This unit has been rumored to be among U.S.-based assets
up for disposal to raise EUR16 billion by the end of 2004.
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G E R M A N Y
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BERTELSMANN AG: Faces Lawsuit, Could Pay US$3.5B for Damages
------------------------------------------------------------
Two former managers of Bertelsmann AG have filed a suit against
the German media giant, claiming US$3.5 billion in damages.
According to an article in Focus magazine, Bertelsmann failed in
its bid to settle out-of-court with the two plaintiffs Jan Henrie
Buettner and Andreas con Blotznitz. The two are demanding a
share of the proceeds from the sale of AOL Europe.
Filed in California, the court case is expected to begin on
September 15 in Santa Barbara and may last 25 days, the report
said.
Bertelsmann, which incurred liabilities after spending USD2.74
billion to buy Zomba Music Group, has net debt of EUR2.7 billion.
It is targeting a debt of not more than 1.5 times cashflow, or
less than EUR2 billion.
CONTACT: BERTELSMANN AG
Carl-Bertelsmann-Strasse 270
D-33311 GA,AAtersloh, Germany
Phone: +49-5241-80-0
Fax: +49-5241-80-9662
Homepage: http://www.bertelsmann.de
Analysts and Investors:
Verena Volpert
Corporate Finance/Treasury
Phone: +49-5241-80 23 42
E-mail: verena.volpert@bertelsmann.de
DEUTSCHE TELEKOM: Faces EU Fine for Charging High Prices
--------------------------------------------------------
Struggling Deutsche Telekom AG may have to pay millions as a fine
for blocking competitors' access to local telephone networks.
A yet to be published Focus magazine article reveals that the
German bank, currently undergoing restructuring, is facing a fine
this June from the European Commission after an investigation
found the Telekom still controls 96% of Germany's telephone
connections despite liberalization.
Deutsche Telekom was found to have blocked competitors' access to
local telephone networks by charging high prices, the report
said.
A spokesman for Telekom said his company is not aware of the
reported fine.
Deutsche Telecom has a debt burden of EUR64 billion. As part of a
drive to lower its net debt of EUR49.5 to EUR52.3 billion by the
end of 2003, Deutsche Telekom is unloading non-strategic business
areas such as real estate, the remainder of the cable business
and other shareholding and business units. Sales from these
assets are expected to generate proceeds of EUR6.2 to EUR8.5
billion.
CONTACT: DEUTSCHE TELEKOM AG
53113 Bonn, Germany
Phone: +49-228-181-0
Fax: +49-228-181-8872
Home Page: http://www.telekom.de
Contact:
Hans-Dietrich Winkhaus, Chairman Supervisory Board
INFINEON TECHNOLOGIES: Seriously Considering Ditching Germany
-------------------------------------------------------------
The decision of Germany to tighten rules on the proportion of
operating losses that can be offset against tax is giving
chipmaker, Infineon, second thoughts about staying in the
country, the Financial Times said recently.
The paper says the company is seriously considering moving to
Switzerland, which in recent years has become attractive as a
headquarters site for multinational companies. Apart from
regularly ranking among the top of the global league tables in
quality of life and competitiveness, the country also offers tax
advantages. The paper says Chairman Ulrich Schumacher was
expected yesterday to tell his supervisory board that the
economics of moving to Switzerland are compelling.
The company has yet to officially confirm the relocation, but
insiders told the Financial Times: "If Infineon moves somewhere,
it will be to Switzerland."
Asked by the Financial Times for one major reason why the
company, if ever, will relocate outside of Germany, an unnamed
senior executive said: "The semiconductor industry relies on
being able to act quickly and invest quickly. Our cash situation
will be hampered if, suddenly, we can only write off half our
losses against tax."
"Infineon's financial performance has suffered painfully as a
result of the deepest trough in global semiconductor demand
anyone can remember," the paper says.
KIRCHMEDIA GMBH: Saban Wants Partners to Fund 3/4 of Price Tag
--------------------------------------------------------------
The smoke has cleared and Saban Capital Group is definitely
taking over KirchMedia. Still, the transaction could take longer
than expected, as the U.S. investment group is only willing to
contribute no more than EUR500 million in an acquisition that
some analysts estimate could cost EUR2 billion, the Financial
Times says.
According to the British newspaper, the group led by U.S.
billionaire, Haim Saban, is still wooing private equity groups --
thought to include Blackstone and Thomas H Lee -- to come aboard
and partially bankroll the acquisition. It is reportedly seeking
a partner who could provide between EUR500 million and EUR800
million more to buy a stake in Germany's largest commercial TV
broadcaster and Europe's largest film library.
In addition, the group is still negotiating with four main
lenders owed EUR1.3 billion to EUR1.4 billion by KirchMedia's
film library business. The center of the talks is a radical debt
restructuring that would halve the borrowings in return for an
equity stake in that division.
"Saban Capital and its new investment partners would also
contribute to a capital increase for both the library and
commercial TV station. The linked debt-for-equity restructuring
and capital increase at the film library would take the total
value of the KirchMedia transaction to almost EUR2 billion," the
Financial Times says.
In addition to asking private equity firms for additional
funding, Saban Capital is also peddling a board seat at the new
holding company owning ProSiebenSAT.1 and the Kirch Library for a
minimum investment of EUR150 million. The group has already
issued a "term sheet" to prospective investors, according to the
paper.
"The final shape of the transaction will depend on whether German
stock market regulators force Saban Capital and its investment
partners to make a mandatory tender offer for the outstanding
shares in ProSiebenSAT.1," the Financial Times says.
A mandatory offer, the paper says, would value the ProSiebenSAT.1
deal at EUR1.2billion to EUR1.3 billion. Without it, the deal
would be worth closer to EUR800 million. The paper says
Freshfields, the UK law firm, has already told bidders that a
mandatory share offer was unlikely.
"The investment vehicle taking control of KirchMedia is likely to
include at least one leading US private equity firm, along with a
EUR100 million to EUR150 million contribution from TF1, the
French commercial broadcaster, and a share stake for some
creditor banks," says the Financial Times, adding, "The shape of
the transaction is due to be unveiled before the end of May."
MUNICH RE: Presents Details of 2003 Annual General Meeting
----------------------------------------------------------
Outcome of the meeting of the Supervisory Board of Munich Re:
Shareholders at the 2003 AGM will be asked to renew
authorizations for capital measures / Ratification elections for
Supervisory Board / Unchanged dividend of EUR1.25 proposed /
Change in chairmanship of the Board of Management at 31 December
2003
1) Motions for the 2003 AGM
One of the items on the agenda for the AGM on 11 June will be the
renewal of the existing authorization to issue convertible bonds
and/or bonds with warrants. In the process, the related
contingent capital is to be increased from EUR30m to EUR100m to
reflect the fall in the share-price level.
The German Code of Corporate Governance recommends that the
remuneration of Supervisory Board members take account of the
membership and chairmanship of Supervisory Board committees. As a
consequence, the Supervisory Board and the Board of Management
will be proposing that each member of such a committee receive a
supplement equivalent to 25% of their remuneration in each case,
and that the chairman of such a committee receive a supplement
equivalent to 50% of his or her remuneration. The Supervisory
Board's emoluments will otherwise remain the same.
In December 2002, after Dr. Breuer and Dr. Schulte-Noelle left
the Supervisory Board, the Munich Registration Court appointed as
their successors Prof. Dr. Hubert Markl, former President of the
Max Planck Society, and Wolfgang Mayrhuber, Deputy Chairman of
the Board of Management of Lufthansa AG. The Supervisory Board
will move that these appointments be ratified by the AGM.
From the balance sheet profit of EUR1.3bn (previous year
EUR221m), Munich Re's Supervisory Board and the Board of
Management will propose that an unchanged dividend of EUR1.25 be
paid on each share entitled to dividend. In addition to this
already announced dividend proposal, which will mean a total
distribution of EUR223.3m, an amount of EUR1.08bn is to be
allocated to the revenue reserves.
2) Change in chairmanship of the Board of Management at 31
December 2003
Dr. Hans-Jrgen Schinzler (62) will of his own accord leave the
Board of Management of the Company at the end of 2003 in line
with longer-term planning. He will have served Munich Re for 35
years, twelve of these as the Board member responsible for
Finance and almost eleven as Chairman of the Board of Management.
The Supervisory Board thanked Dr. Schinzler for his successful
work and acknowledged in particular his initiative and role in
turning Munich Re into a broadly based financial services group
At its meeting Monday, the Supervisory Board appointed Dr.
Nikolaus von Bomhard (46) as successor to Dr. Schinzler as
Chairman of the Board of Management with effect from 1 January
2004. He has been groomed for this task in consultation with the
Supervisory Board. Dr. von Bomhard has been with Munich Re since
1985 in various divisions and functions; at present he has
responsibility on the Board of Management for the regional
divisions covering northern, western and southern Europe as well
as Latin America.
In compliance with the German Code of Corporate Governance and
the Munich Re Supervisory Board rules of procedure regarding
retirement, Rudolf Ficker (70) will leave the Supervisory Board
at the end of this year. The Supervisory Board is pleased to
announce that Dr. Schinzler will then, subject to his appointment
by the Registration Court, be available to join the Supervisory
Board and become its Chairman from 1 January 2004. In this case,
Mr. Ulrich Hartmann has intimated that he will relinquish his
chairmanship of the Supervisory Board. The Supervisory Board will
propose to the 2004 AGM, when new elections are due, that Dr.
Schinzler be elected.
CONTACT: Rainer Kppers
Phone: +49 (0) 89/38 91-25 04
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L U X E M B O U R G
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DRESDNER BANK: Luxemburg Unit Posts Loss After Tax EUR 41.6M
------------------------------------------------------------
Dresdner Bank Luxembourg S.A. closed the financial year 2002 once
again with a loss after tax of EUR 41.6 million. The principal
reason for this was the global economic downturn, accompanied by
the difficulties prevailing on the capital markets. As a result
of lower stock-market prices and the crisis in Argentina, as well
as the continuing weakness of the telecommunications sector,
additional provisions were required for bad and doubtful debts.
Yet despite the weak market environment, the operating result, at
EUR 180.4 million, was again positive.
The volume of business (total assets plus contingent liabilities)
rose compared with the previous year by 6%, to EUR 18.5 billion.
Total assets had risen as at 31 December 2002 by EUR 1.0 billion
to EUR 18.0 billion. The share capital and reserves reported at
the year-end in the Bank's balance sheet totaled EUR 1,015.4
million.
Net interest income, including income from securities, fell due
both to a reduction in volume and to one-off effects by 10.6%, to
EUR 199.2 million. Net commission income, at EUR 60.5 million,
was below the previous year's level of EUR 74.7 million as a
result of the negative market climate. The result from financial
operations, at EUR -9.2 million, reflects the considerable strain
caused by the Argentina crisis.
Over the entire year, Dresdner Bank Luxembourg S.A. took the
opportunity to adjust its structures and capacities to cope with
the declining performance of the markets. The cost-reduction and
restructuring measures introduced are clearly reflected in a
reduction in general administrative expenses by 7% compared with
the previous year. In addition, within the framework of a
redundancy scheme, the volume of the workforce was reduced.
The Bank is confident that it has created a solid basis for
sustained business success over the coming years through its new
structure. A proposal will be submitted to the General Meeting
that the net loss for the year remaining after carrying forward
profit from the previous year, in the sum of EUR 40.5 million,
should be covered by drawing on the free reserves. In the
previous year, net profit of EUR 277.5 million was achieved, to
which, however, proceeds from the sale of an investment holding
made a significant contribution.
To see figures: http://bankrupt.com/misc/Dresdner_Bank.pdf
CONTACT: Gesa Schulte
Phone: +352 4760-477
Jacqueline Jrss
Phone: +352 4760-432
=====================
N E T H E R L A N D S
=====================
GETRONICS N.V.: Reveals More Measures To Restore Profitability
--------------------------------------------------------------
Following on from its previously announced Entrepreneurial
Solution, Getronics has decided to implement further
restructuring and cost-effectiveness measures to match its
operating costs to current market conditions and anticipated
revenues. These measures are being taken to ensure that the
Company can recover its profitability levels following its
divestiture of non-core assets.
The measures will be implemented in the next few months and will
consist of the following components:
A reduction of approximately 1000 to 1200 employees in the
overall workforce, of which, approximately 40% will be from
overhead functions the initiation of a global re-skilling program
including an intake of approximately 250 young graduates to
further strengthen our capabilities in innovative technologies
such as security, voice over IP, and Microsoft .Net software
developments consolidation of the Company's global data and
helpdesk facilities and supporting IT-infrastructure, resulting
in a more cost-efficient and effective support of our customers'
needs the closure of over 20 redundant offices and associated
facilities/infrastructures the closure or disposal of
approximately 10 under-performing assets, including stakes in
under-performing joint ventures
The one-off costs for these additional restructuring and cost-
effectiveness measures are expected to be in the range of EUR 50-
60 million, and will not exceed the cash proceeds anticipated
from the sale of the remaining basket of non-core assets
announced as part of the Entrepreneurial Solution, nor affect the
EUR 300 million to be set aside for the repayment of the
subordinated Bonds.
CONTACT: GETRONICS N.V.
Investor enquiries
Phone: +31 20 586 1964
Fax: +31 20 586 1455
E-mail: investor.relations@getronics.com
KONINKLIJKE AHOLD: To Divest Its Indonesian Operation To Hero
-------------------------------------------------------------
Ahold announced it has reached agreement for the sale of its
Indonesian operation to PT Hero Supermarket Tbk for approximately
Euro 12 million, excluding proceeds from the sale of store
inventory. This asset purchase agreement is subject to the
approval of Hero's shareholders and is expected to be finalized
in the third quarter of 2003. Hero is a prominent food retail
group listed on the Jakarta stock exchange with 200 outlets
throughout Indonesia.
The transaction involves 22 stores plus one under construction,
and two distribution centers. The actual transfer of the stores
and both distribution centers will take place following the
approval of Hero shareholders. Staff at Ahold's Indonesian
headquarters and operations staff of the stores to be closed are
not included in the transaction, although Ahold is committed to
meeting its obligations to these associates.
The divestment of Ahold's activities in Indonesia is part of the
company's strategic plan to restructure its portfolio to focus on
high-performing businesses and to concentrate on its mature and
most stable markets.
Ahold first entered the Indonesian market through a technical
service agreement with the PSP group in 1996. That agreement
ended in 2002 and Ahold Tops Indonesia became a wholly-owned
subsidiary. Unaudited net sales in 2002 amounted to approximately
Euro 37 million. Ahold employs approximately 1,600 people in
Indonesia.
CONTACT: ROYAL AHOLD N.V.
P.O. Box 3050 1500
HB Zaandam
Netherlands
Phone: +31 (0)75 659 57 20
Fax: +31 (0)75 659 83 02
Homepage: http://www.ahold.com
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P O L A N D
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BRE BANK: Presents Financial Result of After Q4 2002
----------------------------------------------------
According to earlier publications, due to a number of unfavorable
macroeconomic factors and the resulting internal business
decisions of the Bank, despite measures taken by the Management
Board to optimize the financial results, the negative financial
result of BRE Bank after Q4 grew and amounted to PLN 200,077
thousand for the Bank alone and PLN 379,221 thousand including
the (equity method) valuation of subsidiaries. The negative
financial result of the Group was PLN 381,102 thousand after Q4
2002 while the consolidated total assets grew to PLN 27,516,068
thousand. The Bank started a new year with a reorganized
structure and increased provisions providing an incentive for
further growth in 2003.
Selected financial data at the end of Q4 2002 and Q4 2001 are
shown in the table below [PLN'000]:
End of Q4 2002 End of Q4 2001
BANK BANK
I. Interest income 1,472,137 1,807,514
II. Commission income 227,000 242,434
III. Profit on banking operations 814,025 903,949
IV. Gross profit (loss) (299,045) 411,720
V. Net profit (loss) 336,180
Bank alone: (200,077)
including valuation
of subsidiaries
(379,221)
VI. Assets 24,849,566 24,804,960
VII. Own funds (incl. subordinated loan)
2,337,286 2,432,684
VIII. Equity at the end of the period (closing balance)
1,582,497 2,432,684
IX. Book value per share - PLN 68.89 105.90
X. Solvency ratio [%] - % 10.0% 12.05%
Particularly notable in the Bank's results is its profit on
banking operations and its fee and commission income. These
figures are not much different than those recorded in the
profitable year 2001. This proves that the Bank continues to
generate high income and confirms that after recession when the
provisions are reduced the Bank is more than likely to regain
profitability. Equally importantly, the Bank has kept all its
regulatory ratios at a high level: the Bank's liquidity remains
safe and its solvency ratio was 10.0%, much above the floor limit
set in the Banking Law. In addition, the Bank's supplementary
capital was gradually increased in 2002 and helped to keep the
equity at a level comparable to 2001; including the subordinated
loan, the equity actually grew.
Determinants of the Results
The strong ratios and the good results on the core business prove
that the weak financial results in 2002 were brought about by
macroeconomic and market determinants. The material deterioration
of the results in Q4 2002 was mainly caused by the re-rating of
the credit and investment portfolios based on very strict
criteria in late 2002, as well as high provisions (the provisions
stood at ca. PLN 495 million at the Bank and PLN 528.5 million at
the Group as at 31 December 2002), including rebuilt general risk
provisions (PLN 103 million in Q4 2002). The Bank's Management
Board believe that those measures helped to use the worst year in
the history of the Bank, when the entire banking sector was hit,
to carry out internal reform resulting in restored profitability
of the Bank already in 2003 and ROE (return on equity) at 15% in
2005.
The Bank's results in 2002 were affected by many other
unfavorable factors, including:
-- very difficult economic conditions affecting the financial
standing of many companies, including bank clients (additional
provisioning required, especially in late 2002);
-- legislative change, especially change in accounting rules for
equity investment in subsidiaries (charged more heavily against
the Bank's P&L);
-- material decrease in the value of securities in the Bank's
portfolio (bearish conditions on the Warsaw Stock Exchange);
necessary investment in the growth of strategic companies of the
BRE Bank Group;
-- necessary further investment in the growth of the retail
banking business;
-- postponed finalization of several capital transactions
(including the sale of a package of shares of PTE Skarbiec-
Emerytura, shares in ITI), deferring expected gains until a later
time;
-- decision not to spin off and sell a package of shares of
mBank.
In 2002, BRE Bank made several decisions to counteract the impact
of the said negative conditions in the market environment on the
Bank's financial results. In addition to, among others, a strict
cost regime, workforce restructuring, and amended rules of
remuneration of employees, the Bank's investment strategy was
updated by reducing the risk profile and disposing of high-risk
investments in the capital markets. The equity investment of BRE
Bank was reduced by ca. PLN 200 million in H2 2002 and is planned
to be further reduced by another PLN 300 million in H1 2003.
However, the overarching principle followed by the Bank in
closing its positions is to optimize the rate of return on
investment. Although this is not easy under the prevailing market
conditions, the Bank has confirmed in the past weeks that very
difficult capital investments can be closed at a profit, for
instance the sale of Elektrim SA shares providing the Bank with
capital gains of over PLN 20 million. The Bank will release
provisions for loans secured with Elektrim SA shares in Q1 2003.
In the coming months, the Bank plans to finalize the sale of
Telbank shares at a profit; the Bank is also working to reduce
its investment in ITI.
Business Areas and Group Companies in 2002
In 2002, BRE Bank achieved good results in its money and capital
market operations. The Bank took the lead in an NBP ranking of
money market dealers. According to Fitch Polska, the Bank was the
second largest issuer of mid-term debt and the third largest
issuer of short-term debt (moving up to the second position in
late January 2003). The Bank is a leading arranger of municipal
bond issues (third position). BRE Bank is a renowned derivative
player, distinguished by the prestigious Risk Magazine.
Due BRE Bank's huge investment in its retail banking business,
both mBank, the unquestionable leader in Poland's Internet
banking, and MultiBank are growing their market share. In 2002,
mBank reported an impressive growth rate in the number of new
clients (up 131%) and deposits (up 76%). As at 26 February 2003,
over 360 thousand clients deposited nearly PLN 2 billion in over
PLN 435 thousand accounts. Thus, mBank is moving fast to break
even (projected at the turn of 2003 and 2004).
The product offer of MultiBank attracts growing interest of
clients. In 2002, MultiBank opened 17 new Financial Service
Centres and now has a network of 28 branches; another 4 will open
in 2003. Under the state-of-the-art offer of financial plans,
MultiBank clients have submitted over 2,000 credit applications
for more than PLN 360 million since May 2002.
In 2002, the Bank was a very active partner of corporate clients.
The Bank reported a 3% growth in receivables from clients and
governmental institutions; it was a significant provider of
borrowing for companies. The share of irregular receivables in
the Bank's portfolio was 19.9% under the NBP methodology, less
than the market average (21.4%). The portfolio of debt overdue
for more than 90 days (the default portfolio under Basel II) was
only 4% and was fully secured and provisioned. In 2002, the value
of Bank's portfolio of loans and guarantees grew, among others
for such sectors as financial intermediation (excluding insurers
and pension funds - up 23%), banks (up 24%), production of
foodstuffs and beverages (up 50%), production of vehicles (up
96%). BRE Bank developed an extended product package for SMEs
facilitating access to and use of most popular bank products. In
addition, BRE Bank was very active in servicing Poland's foreign
trade. BRE Bank's share in this market grew to 17.1% in 2002
(from 16.4% at the end of 2001) and amounted to over US$ 13
billion.
Companies of the BRE Bank Group also achieved good results in
2002. Rheinhyp-BRE Bank Hipoteczny reported a 30% growth in the
loan portfolio (PLN 1,334.95 million) and a 160% growth in its
financial result (PLN 7,684 thousand net). In 2002, Rheinhyp-BRE
strengthened its position as the leading issuer of mortgage
bonds; the Bank's share in this market in Poland is 89.5%. BRE
Leasing remained in the strong second position in the leasing
market in Poland. The company made a fast entry into the
passenger car-leasing market in 2002 (portfolio at PLN 77
million) and reinforced its position in traditional sectors:
leasing of industrial machinery and real estate. In addition, BRE
Corporate Finance, a leading consultant in the Polish market of
mergers and acquisitions and strategic consulting, was an advisor
(together with Commerzbank) in the acquisition of 85% shares of
STOEN SA by RWE Plus. The Intermarket Bank Group is the leading
factor in Central Europe; Intermarket Bank AG alone had a 55%
share in the Austrian market.
The year 2002 brought a breakthrough for BRE Bank Group
operations in the asset management market. The formation of
Skarbiec Asset Management Holding was completed. The Holding
comprises SKARBIEC TFI, SKARBIEC Serwis Finansowy, SKARBIEC
Investment Management, BRE Agent Transferowy and - on the
operating level - PTE Skarbiec-Emerytura. SAMH's major
achievement is the integration of asset management, sales,
marketing, and customer service operations, cutting the overheads
of the Group by as much as 20%. The assets of the Holding were
PLN 3.3 billion as at 31 December 2002; it had 700 thousand
clients. Among SAMH companies, Skarbiec TFI merits particular
mention: it reported a nearly 50% growth in assets of the
investment fund in 2002 (from PLN 1.27 billion to PLN 1.88
billion at 31 December 2002) while the results of several of its
funds were the best in their class in the market. In 2002,
Skarbiec was the fourth largest investment fund company in the
market and for the first time reported a net profit of PLN 1.26
million. Moreover, Skarbiec Investment Management reported an
impressive 69% growth in proprietary assets under management
(excluding the assets of Skarbiec TFI); Skarbiec IM manages PLN
2.5 billion in assets (including PLN 1.8 billion of Skarbiec TFI
assets). In addition, after the merger of PTE Skarbiec-Emerytura
and PTE BIG BG, Skarbiec moved up to the fifth position in the
market in terms of the value of assets (PLN 1.22 billion) and the
number of subscribers (639 thousand); it also cut its operating
costs by 70%.
Outlook for 2003
Improving financial results of BRE Bank Group companies,
optimised income of the Bank's businesses (in particular the
investment banking business) and relatively satisfactory results
of the core business in 2002 give ground for moderate optimism in
the context of the Bank's return to the profitability track in
2003. With significant provisions set up in 2002 (including
general risk provisions), the Bank is in a position to better
mitigate risks, which may arise in 2003, including catastrophic
risks. Significant reduction of the allowed risk of equity
investment has curbed investment in long-term high-risk
transactions. In addition, with GDP growth at 3% projected by BRE
Bank's Chief Economist Janusz Jankowiak, the Bank expects to grow
its lending to Polish companies and consequently to earn more
interest income.
In this context, the Management Board of BRE Bank believe that
the annus horribilis witnessed in 2002 in terms of financial
results will be a one-off exception from the rule whereby BRE
Bank generates above-average profits and a high return on equity
(15% in 2005). Equally importantly, the Bank will continue its
policy of allocating ca. 30% of profits to the shareholder
dividend (while no dividend will be paid out for 2002, the
"premium" paid to the shareholders in 2001-2002 was several times
the average dividend paid out by listed banks in that period,
proving that long-term investment in BRE Bank stocks is
profitable). The conviction that the Bank's results will soon
improve is realistic as the Bank entered the year 2003 with
cleaned-up books and higher provisions, without a burden accrued
in previous years, and is now ready for further growth at a
dynamic pace recorded in the past.
CONTACT: Malgorzata Ciesielska-Stefanczyk,
Deputy Spokesperson, BRE Bank,
Phone: (022) 829-02-98,
Fax: (022) 829-02-97,
E-mail: rzecznik.prasowy@brebank.com.pl
===========
S W E D E N
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INTENTIA INTERNATIONAL: Presents January-March Interim Report
-------------------------------------------------------------
Orders received increased considerably and cash flow improved
during the quarter. As expected, operating earnings were affected
by severance costs.
-- Agreements with 27 new customers were signed during the
quarter. License orders received rose by 78 % to SEK 263 million
(148).
-- Cash flow from operations amounted to SEK 155 million (-126).
Cash flow after investing activities improved by SEK 342 million
to SEK 108 million (-234).
-- The break-even point for the entire year has been reduced from
SEK 3,887 million during the first quarter of 2002 to SEK 3,642
million during the first quarter of 2003. As part of Intentia's
ongoing cost effectiveness efforts, 222 employees received
notices of termination during the quarter.
-- License revenue declined by 2 % to SEK 207 million (211).
-- Consulting revenue was down by 19 % to SEK 545 million (673).
-- Consulting costs and indirect costs continued to decrease.
Adjusted for severance costs amounting to SEK 26 million,
consulting costs and indirect costs declined by SEK 118 million
to SEK 802 million (920).
-- Operating earnings for the period were SEK -87 million (-33),
while earnings after financial items were SEK -106 million (-35).
Group Progress
Customers' Investment Decisions Were Negatively Affected by
Prevailing Uncertainty
Along with general uncertainty, persistently weak global economic
trends had a negative impact on the enterprise applications
market, which is also reflected in what other leading players on
the market have been saying. This continues to make it difficult
to predict when and how particular contracts will ultimately be
signed. Despite the slow, challenging market, many companies
regard the current business climate as a good opportunity to take
decisive steps aimed at revamping their operations and making
them more cost effective. The biggest difference between the
situation a couple of years ago and now is that companies are
investing almost exclusively to generate greater cost
effectiveness.
Despite the weak economy, industry is today facing a significant
need for change due to the substantial increase in business
transaction costs over the past few years.
As a result, companies are investing primarily to make the value-
added chain from supplier to end customer more efficient, while
at the same time they are reviewing relevant internal processes.
Thanks to its longstanding concentration on delivering solutions
with state-of-the-art technology and functionality that meet the
needs of manufacturers and distributors, Intentia can continue
capturing a greater share of that market. Simultaneously, the
company has maintained its focus on carrying out top-quality
projects.
Given the current market, which is characterized by fierce
competition, few companies have the resources or determination to
make investments that can advance their positions. Thus,
companies have a greater need to continue investing on the basis
of their previous investments. Such an approach benefits
suppliers such as Intentia that have a well-established customer
base. Companies are also continuing to focus on project
implementation. Given the current state of the market, that
orientation has become a decisive factor in the choice of
supplier. The concentration on forging long-term relationships
(strategic partnerships) with customers often proved to be a
vital consideration when Intentia was chosen as supplier during
the first quarter.
P U R S U I N G P E R F E C T I O N
License and Consulting Revenue During the Period
License orders received increased by 78 % to SEK 263 million
(148) during the quarter. Second only to 2001, license orders
received were the highest that Intentia has ever posted during
the traditionally slow first quarter.The company received a large
number of major orders during the period, some of which will be
recognized in earnings in 2003 and 2004. As a result, license
revenue was less than orders received. License revenue totaled
SEK 207 million (211), a decrease of 2 %. New customers accounted
for 25 % of all license revenue, and Intentia acquired 27 new
customers during the quarter.
Consulting revenue declined by 19 % to SEK 545 million (673). The
decrease reflected a number of developments, both temporary and
structural. Lower orders received in late 2002 had a negative
impact on the demand for consulting services associated with new
projects. Demand has decreased among Intentia's existing group of
customers because of budgetary constraints within many companies,
which has led to the consequent postponement of system and
process upgrades.
In addition, downward price pressure persisted and customers took
an increasingly demanding approach to contractual terms. Costs
for Java skills development remained high and thereby had a
negative impact on consulting revenue during the quarter.
Intentia carried out a series of measures to become more cost
effective. These have, among other things, included serving
employees with notices of termination, renegotiating wage
agreements and resetting individualized targets for 2003.
Demand within the consulting organization is expected to improve
during the remainder of the year as a result of the increase in
orders received during the first quarter. However, the decline
from the first quarter will have a negative effect on consulting
revenue for the year. Nevertheless, Intentia believes that it can
make up for some of the shortfall during the rest of the year.
As a result of lower consulting revenue, net revenue fell by 16 %
to SEK 760 million (903) for the quarter. Exchange-rate effects
upon consolidation negatively affected the change in net revenue
by 3 %age points.
Substantial Cost Reductions Will Have a Positive Impact on
Intentia's Operations in Upcoming Quarters
As planned, Intentia is revamping its internal processes and
adapting its organization to ensure greater cost effectiveness.
As a result, Intentia can streamline its organization and thereby
lower its costs without lessening its ability to serve current
and prospective customers. The break-even point for the entire
year has, compared to the first quarter of 2002, been reduced
from SEK 3,887 million to SEK 3,642 million for the first quarter
of 2003.The break-even point is expected to continue to be
reduced. Staff and payroll model changes, along with other cost
effectiveness measures, were expected to generate savings in
excess of SEK 150 million during 2003. Based on the development
of these measures during the first quarter, Intentia now expects
cost effectiveness measures to generate full-year savings at
least as great as what has previously been announced.
As part of the effort to lower costs, Intentia began reducing its
staff and costs during the second half of 2002. Consulting and
indirect costs declined by an additional SEK 95 million to SEK
828 million (923) in the first quarter. The total number of
employees decreased by 124 to 3,195 at the end of the period,
which represents a reduction of 197 since March 31, 2002.
Intentia served notices of termination to 222 employees during
the quarter. Of all staff cutbacks announced in 2002 and 2003, a
total of 126 employees had left the company by the end of the
period and 115 will do so during the second quarter. Severance
costs of SEK 26 million (3) in connection with cost effectiveness
measures was charged to first quarter earnings.After severance
costs, the staff cutbacks carried out during the period are
expected to boost Intentia's 2003 earnings by close to SEK 80
million.The corresponding figure for staff cutbacks throughout
the year is estimated to reach nearly SEK 150 million.
Furthermore, the cutbacks implemented in the second half of 2002
will reduce 2003 costs by more than SEK 50 million. Total
personnel expenses decreased by SEK 70 million to SEK 539 million
(609) for the first quarter. Consulting revenue was down by SEK
71 million, or 13 %, to SEK 478 million (549). SEK 16 million (1)
in severance costs during the quarter was for the consulting
organization. Adjusted for these severance costs, costs decreased
by 16 % on a comparable basis. The consulting margin was 12 %
(18) including, and 15 % excluding, severance costs. Indirect
costs were down by SEK 25 million to SEK 349 million (374). Sales
and marketing expenses amounted to SEK 210 million (214), product
development expenses to SEK 72 million (92) and administrative
expenses to SEK 67 million (68). While SEK 45 million (27) of
product development expenditures was capitalized, SEK 16 million
(3) in product development previously capitalized was
depreciated. Depreciation and amortization totaled SEK 46 million
(40), of which SEK 15 million (17) was for amortization of
goodwill and SEK 15 million (20) for depreciation of tangible
fixed assets.
Productivity in terms of revenue per employee decreased by 12 %
in relation to the first quarter of 2002 to SEK 234 thousand
(266). The decline reflected lower total consulting revenue,
whereas license revenue per sales representative increased during
the period. Costs per employee were 8 % lower.
Reduced Costs Only Partially Offset Severance Costs and Lower
Consulting Contributions Gross earnings of SEK 256 million (335)
represented a gross margin of 34 % (37). Lower consulting
contributions accounted for SEK 57 million and lower license
contributions for SEK 21 million of the decline in gross earnings
compared to the first quarter of 2002.The operating loss was SEK
-87 million (-33). Severance costs accounted for SEK 26 million
of the SEK 54 million decrease.
Net financial income totaled SEK -19 million (-2). Translation
differences related to convertible notes had a negative impact of
SEK 2 million, and the write-down of financial receivables
related to a previous distributor had a negative impact of SEK 11
million, on net financial income. While earnings after financial
items were SEK -106 million (-35), the loss for the period
amounted to SEK -116 million (-39).
Development by Region
Northern Europe: License orders received rose by 76 %, while
license revenue of SEK 62 million (54) represented an increase of
14 %, from the first quarter of 2002. Among the new customers
with which the region signed agreements were Spendrups Bryggeri
AB and Oy KWH Pipe Ab. Consulting revenue declined by 14 % to SEK
260 million (301). Due to the poorer consulting revenue, net
revenue was down by 11 % to SEK 326 million (366). Since lower
operating costs only partially offset the decline in revenue,
operating earnings decreased by 29 million to SEK -15 million
(14). At 1,206 (1,248), the total number of employees at the end
of the quarter was 42 fewer than at the end of the first quarter
the previous year.
Central Europe: License orders received were up by 130 % from the
first quarter of 2002. License revenue increased by 12 % to SEK
32 million (28). The region signed agreements with new customers
such as Amigon FmbH, Baumgartner Papiers SA, Olma A.S. and
Michelin.The agreement with Michelin had a positive impact on the
Southern European region as well. Consulting revenue declined by
20 % to SEK 75 million (94). Operating costs decreased by SEK 11
million to SEK 117 million (128). The operating loss was SEK -8
million (1). At 379 (422), the total number of employees at the
end of the quarter was 43 fewer compared to the end of the first
quarter 2002.
Northwestern Europe: License orders received were up by 85 % from
the first quarter of 2002. License revenue rose by 11 % to SEK 30
million (27). Among the new customers with which the region
signed agreements during the quarter were St. Regis Paper Company
Ltd., Anglo Beef Processors Ltd., Scott Bader Company Ltd. and
Ricoh Europe.
Consulting revenue declined by 30 %. Particularly in the United
Kingdom, consulting revenue was affected by a temporary decrease
in demand, which is expected to improve. As a result of improved
orders received, sales are expected to increase in the second
quarter. A substantial SEK 29 million reduction in operating
costs to SEK 93 million (122) made a major contribution to the
improvement in operating earnings to SEK 6 million (0). The
region employed 259 people (321) at the end of the period, down
62 from the same period last year.
Southern Europe: License orders received were up by 189 % from
the first quarter of 2002. License revenue declined by 26 % to
SEK 44 million (59) during the period. The region signed
agreements with companies such as Orefi and Martec. Consulting
revenue declined by 26 % to SEK 96 million (130). Operating costs
decreased by SEK 39 million to SEK 127 million (166), while
operating earnings declined by SEK 11 million to SEK 14 million
(25). At 426 (467), the total number of employees at the end of
the quarter was 41 fewer than at the end of the same period 2002.
Americas: License orders received were up by 229 %, while license
revenue declined by 11 % to SEK 14 million (16). Among the new
customers with which the region signed agreements during the
quarter were D.R.L. Enterprises Inc. and Foresbec Inc. Consulting
revenue declined by 38 % to SEK 29 million (47). The decrease was
partially attributable to the completion of a number of large
implementation projects in the autumn of 2002. Operating costs
were down by SEK 38 million to SEK 56 million (94). The operating
loss continued to decrease and was SEK -13 million (-31) for the
period. The region employed 100 people (144) on March 31, which
is a reduction of 44 employees compared to the first quarter of
2002.
Asia Pacific: License orders received were unchanged from the
first quarter of 2002. The SARS virus had a negative impact on
business activities within the region, and expectations are that
it will continue to do so. License revenue was down by 20 % to
SEK 22 million (28).The region signed new agreements with
companies such as MSP Group Pty. Ltd., Takisada-Osaka Co. Ltd.,
THK Co. Ltd. and SMC. Consulting revenue increased by 37 % to SEK
58 million (42). The improvement reflected higher license orders
and a growing number of customers in recent years. Due to ongoing
expansion in the region, operating costs were up by SEK 11
million to SEK 93 million (82). Operating earning of SEK -10
million were unchanged compared to the same period the previous
year. At 326 (259), the total number of employees at the end of
the quarter was 67 greater than at the end of the first quarter
2002.
Cash Flow Was Positive Due to the Expected Decrease in Accounts
Receivable Accounts receivable on December 31, 2002 were
negatively affected by the reluctance of customers to pay before
the end of the year. Accounts receivable decreased during the
first quarter to a level that was more in line with the second
half of 2002, with the exception of December. Accounts receivable
at the end of the period totaled SEK 801 million (1,106), or 23 %
of rolling 12-month revenue. That represents an improvement of 5
%age points from March 31, 2002 and 8 %age points from December
31, 2002.
The accounts receivable trend, along with lower payments of
variable salaries, boosted working capital by SEK 303 million to
SEK 200 million (-103). As a result, cash flow from operations
amounted to SEK 155 million (-126). Investments reduced cash flow
by SEK -47 million (-109). The smaller impact of investments on
cash flow reflected lower investments in tangible fixed assets,
as well as acquisitions of subsidiaries during the previous year.
The effect was partially reduced by greater capitalization of
product development in 2003. Cash flow after investing activities
improved by SEK 342 million to SEK 108 million (-234). Borrowings
increased by SEK 20 million during the period, as opposed to a
reduction of SEK 160 million in the first quarter of 2002. Cash
and bank balances and short-term investments were SEK 510 million
(310), thereby exceeding borrowings (excluding convertible notes)
by SEK 117 million (24). The proportion of risk bearing capital
was 48 % (48), while the equity/assets ratio was 22 % (26).
Progress from April 2002 through March 2003
License orders received totaled SEK 1,094 million (1,092) and
license revenue SEK 1,053 million (1,174) for April 2002 through
March 2003. Consulting revenue declined by 14 % to SEK 2,411
million (2,804). The lower consulting revenue was the main reason
for net revenue for the period decreasing by 13 % to SEK 3,506
million (4,037). The consulting margin was down by 1 %age point
to 16 % (17). Consulting and indirect costs declined by SEK 244
million to SEK 3,577 million (3,821). Adjusted for severance
costs in late 2002 and the first quarter of 2003, costs were down
for the full-year period by SEK 280 million. Operating earnings
declined to SEK -161 million (83). Earnings after financial items
totaled SEK -222 million (-10), while the loss for the period was
SEK -220 million (-53).
Cash flow from operations amounted to SEK 366 million (157),
while cash flow after investing activities was SEK 162 million (-
170). Average accounts receivable for the past four quarters
amounted to 22 % (29) of the period's revenue.
Parent Company
Net revenue totaled SEK 9 million (11) for the Parent Company,
while earnings after financial items were SEK -28 million (-11).
The Parent Company's investments totaled SEK 0 million (0). While
liquidity at the end of the quarter amounted to SEK 124 million
(213), borrowings excluding convertible notes were SEK 0 million
(287).
Outlook for 2003
Consulting revenue was lower than expected in the first quarter.
Intentia believes that it can make up for some of the shortfall
during the rest of the year. Due to ongoing procurement projects,
the outlook for license revenue is somewhat brighter than was
previously the case. Furthermore, the cost adjustments carried
out in early 2003 are likely to generate greater savings for the
year than initially anticipated.
Nevertheless, the uncertainty in the market can lead to both
upward and downward fluctuations in consulting and license
revenue, which will have a significant impact on Intentia's
earnings. Thus, no earnings forecast is being given for the full
year.
Bjrn Algkvist
President and Chief Executive Officer
Accounting Principles
This interim report has been prepared in accordance with
Recommendation 20 of the Swedish Financial Accounting Standards
Council. As of January 1, 2003, the following recommendations are
being employed for the first time: presentation of financial
statements (RR 22), segment reporting (RR 25), events after the
balance sheet date (RR 26), and financial instruments,
recognition and measurement (RR 27). Compliance with these
recommendations has not had any significant impact on the
company's earnings or position. Otherwise, the same accounting
principles have been used as in the 2002 annual report.
This report has not been audited by the Company's auditors.
To see financials: http://bankrupt.com/misc/Intentia.pdf
CONTACT: Bjrn Algkvist, President and Chief Executive Officer
Phone: +46 8 5552 5605
Fax: +46 8 5552 5999
Hkan Gyrulf, Vice President and Chief Financial
Officer
Phone: +46 8 5552 5825
Mobile phone: +46 733 27 5825
Fax: +46 8 5552 5999
Thomas Ahlerup, Head of Corporate and Investor
Relations
Phone: +46 8 5552 5766
Mobile phone: +46 733 27 5766
Fax: +46 8 5552 5999
Intentia International AB (publ)
Vendevgen 89
Box 596
SE-182 15 Danderyd
Sweden
Phone: +46 8 5552 5000
Fax: +46 8 5552 5999
Homepage: http://www.intentia.com
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S W I T Z E R L A N D
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SWISS INTERNATIONAL: Govt Asks Bank to Extend CHF500 Mln Credit
---------------------------------------------------------------
The Swiss government is again asking banks that helped resurrect
the country's national flag carrier to be lenient with the
troubled airline, now named Swiss International Airlines.
"The Swiss government is fulfilling the spirit and purpose of the
principle agreement and expects the banks to do likewise," Swiss
Treasury Department Spokesman Daniel Eckmann was quoted as saying
recently.
But, according to AFX News, banks are insisting they have also
adequately delivered on their side of the bargain. The rescue
package, reached in 2001, expired at the end of last year, the
newswire says. The airline, on the other hand, believes the
CHF500 million credit didn't have a time limit.
The newswire says Swiss could experience liquidity problems by
the end of year, if banks won't agree to extend the financing
further. The carrier's liquidity has already slipped to CHF1
billion from CHF1.2 billion at the beginning of the year, on
losses of roughly CHF250 million in the first quarter. The
outlook for the second quarter is bleak.
The carrier is expected to unveil a new business plan called
"Target Turnaround" at its next annual meeting on next month.
The plan reportedly includes a fleet reduction of 28 planes and
redundancies of 1,000, on top of shorter working hours, which is
expected to save CHF600 million, AFX News says.
SWISS LIFE: Sees Collaboration in Italian Life Insurance Market
---------------------------------------------------------------
Swiss Life, Fondiaria-SAI and Milano Assicurazioni have signed a
memorandum of understanding to explore a strategic partnership in
the Italian life insurance market.
The Swiss Life Group, Fondiaria-SAI S.p.A. and Milano
Assicurazioni S.p.A. have signed a memorandum of understanding on
a possible strategic partnership in the Italian life insurance
market. The memorandum envisages a feasibility study on the
creation of a joint venture in Italy, which would combine the
life activities and distribution capabilities of the Fondiaria-
SAI Group with the products and proven expertise of the life
sector of the Swiss Life Group. The parties will mutually agree
on the size of their respective stakes in the new company at the
appropriate time.
The parties will jointly analyze the feasibility of the joint
venture and its possible activities, define the deal structure,
and determine the new company's strategy and targets. The
feasibility analysis is expected to be completed by the end of
2003, with the possible establishment of the joint venture
following in early 2004, subject to its approval by the
regulatory authorities. With this memorandum of understanding the
two groups look forward to strengthening their strategic
cooperation.
Rolf Drig, CEO of the Swiss Life Group, stated: "The life
insurance market in Italy is attractive. We didn't designate it
as one of our core markets because we only have a very small
Italian operation, which would have meant considerable investment
if we wanted to develop a sustainable market position. But
leveraging on the Fondiaria-SAI Group's strong distribution
network to market our products could open up interesting
prospects for profiting from the growth opportunities in the
Italian market without establishing a physical presence of our
own."
In the words of Fausto Marchionni, CEO of the Fondiaria-SAI
Group: "This is an opportunity to further increase our presence
in the life insurance and pension funds business by leveraging on
the expertise of one of the leading European players in this
market and is an opportunity to strengthen our strategic
partnership with the Swiss Life Group, in which we have a
significant stake."
Fondiaria-SAI Group
The Fondiaria-SAI Group is one of the top three insurance
companies in Italy with over 8 million clients and a premium
volume of approximately EUR 8 billion in 2002. Life premiums
written by the Group in 2002 totaled over EUR 2 billion, with net
technical reserves standing at approximately EUR 12.5 billion as
of 31 December 2002.
Swiss Life
The Swiss Life Group is one of Europe's leading providers of
long-term savings and protection and life insurance. The Swiss
Life Group offers individuals and companies comprehensive advice
and a broad range of products via agents, brokers and banks in
its domestic market, Switzerland, where it is market leader, and
selected European markets. Multinational companies are serviced
with tailor-made solutions by a network of partners in over fifty
countries.
The Swiss Life Group, registered in Zurich, was founded in 1857
as the Swiss Life Insurance and Pension Company. Shares of Swiss
Life Holding are listed on the SWX Swiss Exchange (SLHN). The
company employs around 12 000 persons.
CONTACT: General-Guisan-Quai
40, P.O. Box, 8022 Zurich
Investor Relations
Phone: +41 1 284 52 76
E-mail: investor.relations@swisslife.ch
Homepage: http://www.swisslife.com
VON ROLL: Presents Result of Official Buy-Back Offer
----------------------------------------------------
Result of the official buy-back offer made to the bondholders in
respect of Von Roll Holding Ltd., Gerlafingen, 1998 - 2005 4.125%
loan (CHF 100 million)
Final result
Following the offer published on 11 April 2003, owners of bonds
to the nominal value of CHF 8,990,000-- notified acceptance of
the redemption buy-back scheme by the end of the offer on 25
April 2003, 12.00 noon. This represents 8,99 % of the bonds
covered by the offer.
Payment at the offer price for the bonds for which acceptance was
registered within the offer date will be made with value date 2nd
of May 2003.
VON ROLL: Presents Updates on Work on a Refinancing Plan
--------------------------------------------------------
As the Von Roll Group announced on 5 November 2002, at its 2003
General Meeting of Shareholders it will be unveiling a
refinancing plan to its shareholders and bondholders.
Work on the accounts for 2002 has not yet been concluded, so the
Group's final results are not yet available. Nonetheless, it is
clear that the Group's assets after the close of the 2002
financial year will cover less than 50% of its share capital and
legal reserves. This balance-sheet structure makes the Group's
financial restructuring indispensable and means that in line with
Article 725, paragraph 1 of the Swiss Code of Obligations the
Board of Directors must submit measures to the General Meeting of
Shareholders that are designed to improve the Group's balance
sheet.
The Von Roll Group has duly submitted proposals regarding a
comprehensive concept for reorganizing its balance sheet to its
banks. That concept, based on equal treatment, also includes
bondholders. The Von Roll Group is currently engaged in
constructive talks about this concept with its banks.
Once those talks draw to a close, probably by 10 April 2003, the
Von Roll Group will release information about its definitive
restructuring plan and its 2002 annual accounts before proceeding
to publish the motions that the Board of Directors will submit to
the General Meeting of Shareholders and bondholders.
CONTACT: VON ROLL MANAGEMENT AG
Corporate Communications
CH-8045, Zurich
E-mail: press@vonroll.ch
Contact: Dr. Thomas Bogli, Investor Relations
Phone: +41 1 204 30 63
Fax: +41 1 204 30 64
==============
U K R A I N E
==============
KYIVSTAR GSM: S&P Revises Outlook, Affirms 'B-' Ratings
-------------------------------------------------------
Standard & Poor's Ratings Services said Monday it revised its
outlook on Ukraine-based mobile telecommunications operator CJSC
Kyivstar GSM (Kyivstar) to positive from stable, primarily
reflecting the company's improved financial profile and continued
strong business performance. At the same time, Standard & Poor's
affirmed its 'B-' long-term ratings on Kyivstar, including its
'B-' long-term rating on the company's loan-participation notes
issued by Dresdner Bank AG (A/Negative/A-1).
"The positive outlook reflects Kyivstar's improved liquidity and
debt maturity profile following its recent $100 million notes
issue in November 2002 and $60 million tap issue in March 2003,
both maturing in November 2005," said Standard & Poor's credit
analyst Michael O'Brien. "This has enabled Kyivstar to extend its
debt maturity profile, repay existing short-term secured vendor-
financing debt, and expand its network to ensure sufficient
capacity to meet growing demand for mobile services and maintain
its market position."
Furthermore, the outlook revision reflects the company's ability
to improve its profitability in a challenging service area and
regulatory environment. Importantly, Kyivstar generated positive
free operating cashflow of $44 million in 2002. The level at
which Kyivstar will remain self financing in the medium term,
however, will depend on market developments and the level of
investment made by the company in its network.
The ratings are constrained by an uncertain political environment
and regulatory risk related to the unknown number of spectrum
licenses that the government could issue to newcomers, potential
changes in tax legislation, and forthcoming changes in the
communications law banning charges for incoming calls. Up to 20%
of the company's revenues are exposed to this regulatory
decision, if fully implemented. It is expected, however, that the
company will take appropriate action to mitigate this potential
risk to revenues and profitability.
"The company is expected to defend its strong market position as
competition and penetration rates gradually increase, proceed
with its network rollout according to plan, maintain
profitability levels and subscriber growth, and grow further into
its balance sheet," added Mr. O'Brien. "A meaningful improvement
in Kyivstar's financial and business position could bring about a
ratings upside, although the ratings will continue to be
influenced by political and economic developments in
Ukraine."
Complete ratings information is available to subscribers of
RatingsDirect, Standard & Poor's Web-based credit analysis
system, at http://www.ratingsdirect.com.All ratings affected by
this rating action can be found on Standard & Poor's public Web
site at http://www.standardandpoors.com;under Fixed Income in
the left navigation bar, select Credit Ratings Actions.
Alternatively, call one of Standard & Poor's Ratings Desks:
London (44) 20-7847-7400; Paris (33) 1-4420-6705; Frankfurt (49)
69-33-999-223; or Stockholm (46) 8-440-5916. Members of the media
may contact the Press Office Hotline on (44) 20-7826-3605 or via
media_europe@standardandpoors.com.
CONTACT: STANDARD & POOR'S RATING SERVICES
E-mail: CorporateFinanceEurope@standardandpoors.com
Michael O'Brien, London
Phone: (44) 20-7826-3561
E-mail: michael_obrien@standardandpoors.com
Leandro de Torres Zabala, London
Phone: (44) 20-7826-3821
E-mail: leandro_detorreszabala@standardandpoors.com
===========================
U N I T E D K I N G D O M
===========================
ABBEY NATIONAL: Puts Offshore Life Insurance Units Up for Sale
--------------------------------------------------------------
Abbey National PLC, which is currently disposing non-core parts
to concentrate on core U.K. personal financial services, has
reportedly put its three offshore life insurance businesses up
for sale with a price tag of around STG 100 million.
An unsourced report of the Sunday Telegraph said the planned
disposal is part of Abbey's strategy to concentrate on its core
retail banking and personal financial services businesses -- a
strategy announced last November by chief executive Luqman
Arnold.
Boutique investment bank Hawkpoint was appointed by the UK's
largest bank to divest the businesses, which sell a variety of
investment bonds, insurance and pensions policies to both UK and
international investors, the report said.
The three offshore businesses are Scottish Provident Ireland,
Scottish Provident International and Scottish Mutual
International and are thought to have a total of around STG5
billion in funds under management.
Moreover, Focus revealed that a group of potential bidders has
been contacted in the past few weeks, though no formal sale
document has been issued.
Abbey National recently said it would issue its interim results
on 30 July, which will provide a formal update of financial
trading performance in 2003 and progress on the new strategy of
focusing solely on UK Personal Financial Services.
CONTACT: ABBEY NATIONAL
Investor Relations
Jon Burgess
Phone: 020 7756 4182
Rob Askham
Phone: 020 7756 4181
Home Page: http://www.abbeynational.com
AMEY PLC: Ferrovial Announces Deadline for Approval of Offer
------------------------------------------------------------
The initial deadline for shareholders of the UK services company
to accept the tender offer is 16 May
The operation, which has a major strategic component, strengthens
Ferrovial's services area and his international strategy
Last Friday, 25 April, Ferrovial filed the prospectus (offer
document) for its bid to take over Amey, one of the UK's leading
services companies.
This marks the beginning of the period in which shareholders of
Amey can accept the offer; the initial deadline is 16 May.
The offer establishes other deadlines for compliance with other
conditions, the final date being 6 June. If the offer is declared
to be unconditional, the shareholders will be paid 14 days later.
The operation, which is supported and recommended unanimously by
the Board of Directors of Amey, is conditional upon obtaining
offer acceptance of at least 90% of the share capital.
Ferrovial is offering Amey shareholders 32 pence per share (0.47
euros per share), which is a 19% premium over the share price on
the day the offer was announced and a 37% premium over the
average market price in the previous three months.
Consequently, the total value of the offer for 100% of Amey is 81
million pounds sterling (117.7 million euros).
Ferrovial has already obtained commitments to accept the offer
from shareholders representing 32.6% of share capital, including
the shares held by the company's directors.
Strengthening the services division and expanding internationally
The operation, which has a major strategic component, strengthens
Ferrovial's services area and his international strategy.
Amey's activities involve comprehensive management of
infrastructure (roads and railways and underground rail) and
facility management (maintenance and integrated management of
buildings and facilities).
Amey is one of the leading players in the area of private
financing and management of infrastructure and services for
government under PFI (Private Finance Initiative) and PPP (Public
Private Partnership) formulas.
Amey currently has an option to acquire 33% of Tube Lines, the
company, which holds the maintenance concession for London
Underground (Jubilee, Northern and Piccadilly Lines).
Ferrovial was already present in the British Isles through its
ownership of Bristol Airport and the recent concession for a toll
road in Ireland.
Ferrovial is currently present in Canada, Poland, Australia, the
United Kingdom, Portugal, Ireland and Latin America. In 2002,
international activities provided 28% of group revenues and 42%
of operating profit.
CONTACT: GRUPO FERROVIAL, S.A.
Principe de Vergara, 135
28002 Madrid, Spain
Phone: +34-91-586-25-00
Fax: +34-91-586-26-77
Homepage: http://www.ferrovial.es
ARC INTERNATIONAL: Shareholders Approved Resolutions at AGM
-----------------------------------------------------------
ARC International plc (LSE: ARK) announces that, at the Annual
General Meeting of the company held earlier, all of the
resolutions proposed to shareholders were passed without
amendment by the requisite majorities.
Please click to view the Proxy Totals Report:
http://bankrupt.com/misc/ArcInternational.pdf
Note:
ARC International PLC recently announced its unaudited financial
results for the first quarter ended 31 March 2003.
It reported a pre-exceptional net loss of GBP4.4 million.
WestLB Panmure Ltd. Was appointed as joint corporate broker and
financial adviser to review the loss-making company's capital
structure.
For six months, the company's major shareholders have been trying
to return most of the company's GBP108 million cash reserve. Arc
International, which has a stock market value of o76 million, has
lost more than GBP12 million since January.
CONTACT: ARC INTERNATIONAL
Monica Johnson
Phone: 408/437-3470
E-mail: monica.johnson@arc.com
or
Buckmaster-Wilson & Assoc.
Donna Wilson
Phone: 510/413-4994 x 101
E-mail: donna@bwapr.com
BOOTS GROUP: Finalizing Cost-cutting Experiment for Warehousing
---------------------------------------------------------------
In a preview of what could become of its warehousing operations,
British high street chemist, Boots Group Plc, bared recently it
is close to finalizing a deal with Unipart.
The deal with the Oxford-based logistics company only involves
one warehouse, the identity of which is still unknown, according
to DataMonitor. Only the management of the warehouse will be
outsourced.
Already, the company is using third party contractors to run 90%
of its lorry fleet, but until the announcement recently the
company has kept its warehousing activities in-house.
DataMonitor says this management outsourcing is only an
experiment that could very well be replicated in the entire
warehousing operations. Accordingly, this is part of the
company's plan to trim down costs by as much as GBP100 million a
year. Earlier, Boots withdrew from its Wellbeing services and
curtailed overseas operations to concentrate on core business
areas.
An unnamed spokeswoman for Boots recently told DataMonitor: "We
recognize that we are good at running stores and where things can
be more efficient and cost-effective we will look at outsourcing
them."
Boots will not be the first British firm to outsource warehousing
operations, as others in the competitive retail sector have long
been focusing their eyes on supply chains to cut costs. Marks &
Spencer recently shook up its warehousing operations in a move
expected to cut its logistics costs by around GBP20 million a
year.
BUZZ: Ryanair Welcomes Caa Approval For Buzz Stansted Services
--------------------------------------------------------------
Ryanair, Europe's No. 1 low fares airline, confirmed Monday that
the Civil Aviation Authority (CAA) had approved and issued the
AOC (Aircraft Operations Certificate) which will allow Buzz
Stansted Ltd to restart flights on Thursday, 1st May next as
planned on behalf of Ryanair.
John Osborne, CEO, Buzz Stansted Ltd, said:
"We are delighted to confirm that we have received the necessary
approvals and Operating Licence for Buzz Stansted Ltd from The
CAA.
"This means that Buzz Stansted will commence flying the 11 routes
for and on behalf of Ryanair on Thursday next, 1st May 2003 on
schedule.
"The demand to date for these low fare routes to France, Spain
and Germany has been phenomenal and already we have over 130,000
passengers booked to fly on these 11 routes during May alone.
"We would like to thank the CAA for all their help and assistance
in securing the future of Buzz Stansted, and also thank our staff
for all their hard work in successfully preparing Buzz Stansted
to start flying on Thursday, 1st May as part of the Ryanair Group
- Europe's largest low fares airline group".
BUZZ STANSTED ROUTES COMMENCING 1ST MAY 2003:
LONDON-STANSTED to:
GERMANY BERLIN (SCHONEFELD) - DUSSELDORF (NIEDERRHEIN) -
FRANKFURT
HAHN)
FRANCE TOURS - BERGERAC - POITIERS - LIMOGES - LA ROCHELLE -
BREST
SPAIN MURCIA - JEREZ
CORDIANT COMMUNICATIONS: Allied Domecq Pulls Out Business
---------------------------------------------------------
Cordiant Communications Group plc (NYSE:CDA) (LSE:CRI): Cordiant
was notified on Friday, April 25, 2003 by one of its major
clients, Allied Domecq plc, of its intention to terminate its
contract with Cordiant with effect from October 2003.
In the current financial year Cordiant had budgeted for revenue
from this global contract of approximately 18 million Pounds,
some 3.4% of the Group's revenue in 2002. The direct impact of
this client loss on revenue in 2003 will not be material,
although the Group will incur associated restructuring costs in
the current year. However, there will be a substantial impact on
operating profit from 2004 onwards.
The Board of Cordiant had expected to announce its audited
preliminary results on 30 April, for the year to 31 December
2002, in line with the headline figures announced on 20 February
2003, following the expected agreement of new financing terms
with its lenders. In the light of recent developments, Cordiant
is now evaluating whether it can issue its preliminary results by
1 May 2003. Cordiant recognizes that, in accordance with the
normal practice of the UK Listing Authority, trading in its
shares will be suspended in the event that it is unable to issue
its results by then.
Following Allied Domecq's decision, and particularly with the
interests of the Group's clients in mind, the Board of Cordiant
is actively investigating alternative strategic options for the
Group, in addition to the disposal program previously announced,
which is progressing well. Cordiant continues to have the support
of a co-coordinating committee of its banks and noteholders, and
is working constructively with its lenders to amend the financing
terms.
CONTACT: CORDIANT COMMUNICATIONS GROUP PLC
David Hearn, Chief Executive Officer
Andy Boland, Finance Director
Phone: +44 (0) 20 7262 4343
College Hill
Adrian Duffield
Alex Sandberg
Phone: +44 207 457 2020
ESG RE: Fitch Lowers Ratings To 'B-'; Outlook Negative
------------------------------------------------------
Fitch Ratings, the international rating agency, has lowered the
Insurer Financial Strength Ratings of ESG Reinsurance Bermuda
Limited, ESG Reinsurance Ireland Limited and European Specialty
Ruckversicherung AG, the principal reinsurance subsidiaries of
ESG Re Limited, Bermuda to 'B-' (B minus) from 'B'. At the same
time, the ratings have been removed from Rating Watch Negative
and assigned a Negative Outlook.
On 4 December 2002, Fitch lowered the ESG group ratings from
'BB'- to 'B' and placed the ratings on Rating Watch Negative.
This rating action reflected the announcement that Deloitte &
Touche (D&T) had resigned as the company's auditor with effect
from 22 November 2002, had withdrawn their audit report for 31
December 2001, and review reports for the quarters ending 30
September 2001, 31 March 2002 and 30 June 2002. D&T subsequently
advised of seven accounting disagreements with the group and one
reportable event in respect of the accounting treatment of a co-
reinsurance contract.
On 9 December 2002, the group's Board of Directors approved the
appointment of BDO International as its auditors. The group
subsequently received an unqualified audit in respect of the
financial statements for the year ended 31 December 2002.
Despite the positive development regarding the audit of ESG's
financial statements, the rating action reflects the group's poor
operating performance in Q4 2002, weakened capitalisation,
constrained liquidity and limited financial flexibility.
Partially offsetting these negative rating factors is remedial
action taken by the group's management team.
Fitch views 2003 as a defining year for ESG. Successful execution
of the business plan will ultimately result in enhanced liquidity
and capitalisation measures. However, if the business plan proves
unsuccessful, ESG is likely to require additional funding to
continue to trade into the future. Fitch will maintain close
contact with the group's senior management team over the coming
months to monitor ESG's actual performance against the plan.
Poor Operating Performance
The company reported very poor fourth quarter results
significantly below Fitch's expectations. The after-tax loss for
this period was substantial at USD24.7 million and was largely
derived from the negative run-off of business originally
underwritten in 1998, 1999 and 2000 together with the need to
establish specific legal provisions. This poor performance took
the full 2002 year after-tax loss to USD51.2m which is clearly
unsustainable.
Weakened Capitalization
Following the substantial loss reported in 2002, the group's
capital position has deteriorated with shareholders' funds
declining to USD46.7m from USD95.1m in 2001. Risk-based capital
measures continue to remain supportive of the group's current
rating level, although at significantly reduced levels from those
reported in previous years. As part of the group's strategic plan
for 2003, management has indicated "significant increases in net
written premium over 2002". This increase is likely to place
additional stress on the group's capital adequacy demonstrated
through reduced risk-based capital ratios. However, based on the
group's current business plan, Fitch believes that capital
adequacy will remain compatible with the current rating level.
Constrained Liquidity
Lack of liquidity and poor cash flow have become a major issue
for the group. As operating losses have been recognised, the
company has been forced to sell bonds to meet short-term cash
flow requirements. As a result, the bond portfolio declined from
USD144.8m in 2001 to USD82.3m at the end of 2002 and the current
liquidity ratio fell to 30.1% from 44.2%. In an attempt to
enhance liquidity, ESG's management team is in the process of
identifying contingent cash flows. These contingent cash flows
include the possible sale of its strategic investment in 4Sigma.
Weak Financial Flexibility
ESG's financial flexibility is constrained. Fitch believes that
in view of the group's operating track record, ESG may find it
difficult to access additional short-term financing from current
shareholders or third parties should the need arise.
Remedial Action Taken By Management Team
From September 1999, the group's new senior management team has
aggressively set about exiting unprofitable lines of business and
imposed strict underwriting criteria and controls. This strategy
appears to have been effective with 2001 and 2002 underwriting
years currently showing a technical profit although at a
relatively early stage in their development. Fitch acknowledges
that ESG has taken appropriate action to manage the problems of
the past through a programme of commutations and legal actions.
However, the prior-year losses relate to business that is already
on the group's books and therefore ESG's management has only
limited ability to control these losses.
CONTACT: Chris Waterman, London
Phone: +44 (0)20 7417 6328
E-mail: chris.waterman@fitchratings.com
David Wharrier, London
Phone: +44 (0)20 7417 6327
E-mail: david.wharrier@fitchratings.com
IMPERIAL CHEMICAL: Faces Class Action Lawsuit in New York
---------------------------------------------------------
The Law Firm of Ademi & O'Reilly, LLP announced that it filed a
class action on April 9, 2003 in the United States District Court
for the Southern District of New York, located at 500 Pearl
Street, NY, NY 10007, on behalf of purchasers of Imperial
Chemical Industries PLC (NYSE:ICI) American Depositary Shares,
each representing 1 pound Sterling Ordinary Share, during the
period between August 1, 2002 to March 24, 2003, inclusive. A
copy of the complaint filed in this action is available from the
Court, or can be viewed on the firm's website at
http://www.ademilaw.com/cases/ICI.pdf.
The Complaint alleges that defendants violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between August 1, 2002 and March
24, 2003, thereby artificially inflating the price of ICI
securities. Throughout the Class Period, as alleged in the
Complaint, defendants issued numerous press releases in which
they stated that they had resolved the Company's distribution and
software problems that the Company had experienced at its Quest
division's Fragrance & Food businesses. Defendants further stated
that the Company was on track to report strong financial results,
that the Company had cleared its backlog of customer orders and
that the Company had not lost any customers as a result of its
production problems. The Complaint alleges that these statements
were materially false and misleading because they failed to
disclose and/or misrepresented the following adverse facts, among
others: (a) that ICI's software, distribution and production
problems at its Quest division were not "temporary" problems or
"unique" to the Naarden, The Netherlands location, but impacted
company-wide operations and profitability; (b) that ICI's
software, distribution and production problems at its Quest
division had not been "essentially" or "largely" "resolved" or
"rectified"; and (c) that contrary to ICI's representations that
it had cleared its backlog of orders and not lost any customers
as a result of the software, distribution and production problems
at Quest, ICI's customers were, in fact, obtaining new sources of
supply and discontinuing their relationships with ICI.
On March 25, 2003, before the open of trading, ICI shocked
investors when it issued a profit warning with respect to its
fiscal 2003 first quarter. Defendants announced that its first
quarter profit would drop approximately 24%, as a result of,
among other things, "business lost following the customer service
problems in 2002." Following this announcement, shares of ICI
fell from a close of $9.60 per share on March 24, 2003 to a close
of $5.60 per share on March 25, 2003, or a single-day decline of
more than 36%, on nearly twenty times normal trading volume.
If you bought ICI ADSs between August 1, 2002 to March 24, 2003,
inclusive, and you wish to serve as lead plaintiff, you must move
the Court no later than June 9, 2003. If you are a member of this
class, you can join this class action online at
http://www.ademilaw.com/cases/ICI.php.
Any member of the purported class may move the Court to serve as
lead plaintiff through Ademi & O'Reilly or other counsel of their
choice, or may choose to do nothing and remain an absent class
member. If you have any questions about how you may be able to
recover for your losses, or if you would like to consider serving
as one of the lead plaintiffs in this lawsuit, you are encouraged
to call or e-mail the Firm or visit the Firm's website at
www.ademilaw.com
CONTACT: ADEMI & O'REILLY LLP
Guri Ademi, Esq.
Phone: 1-866-264-3995
Fax: 1-414-482-8001
E-mail: gademi@ademilaw.com
INVENSYS PLC: Siemens to Wait Until Woes Worsen Before Bidding
--------------------------------------------------------------
Siemens CEO Heinrich von Pierer is prepared to wait until
troubled control and automation group, Invensys Plc, agrees to
sell the divisions it wants to retain during its transformation.
Mr. von Pierer, in an interview with the Financial Times, drew a
comparison with his 13-year wait to take over the industrial
turbine division of French engineering company, Alstom, which
finally agreed to take Siemens' EUR1.1 billion offer Monday.
Two weeks ago, Invensys put up for sale two-thirds of its
business, including energy management and appliance controls.
Siemens, however, only wants the process automation part of the
US-based Foxboro division and the rail-signaling unit, two units
that Invensys wants to retain.
Mr. von Pierer told the British daily Invensys would likely be
forced by further difficulties to listen to offers for those
parts it planned to keep long after its impending transformation.
The Alstom purchase includes the French group's small gas
turbines division in the UK, its medium-sized gas turbines
business in Sweden and its industrial steam turbines businesses
in Germany, Sweden and the Czech Republic.
MYTRAVEL GROUP: Analysts Believe Firm is Well, But not for Long
---------------------------------------------------------------
MyTravel Group Plc CEO Peter McHugh denied Monday any truth to
reports that the company is about to lose its license as tour
operator, the Financial Times said.
"All the things that have been written up to this point about the
Civil Aviation Authority (CAA) and the Department of Transport
are wild speculation. In fact, nothing has happened," Mr. McHugh
told the Financial Times.
"We have ongoing, detailed conversations with the CAA, and our
relationship is very constructive. We are still licensed and we
still expect to do well over the summer," he adds.
The company, which sends about six million Britons to the
Mediterranean a year became the subject of nasty speculations,
especially after March figures showed a 16% drop in travel,
largely caused by the war in Iraq and worries over the SARS
epidemic. In addition, the company has been in close season
ahead of its figures and therefore restricted in its ability to
release market-sensitive information. By remaining mum, despite
the global slump in travel, the company became easy prey to
speculations, the paper says.
Analysts interviewed by the Financial Times believe the company
is still afloat, but not for long. Oriel Securities' Mark Brumby
told the paper: "They are now into the period of maximum cash
inflow and that cash will go towards repaying debt, so they
should be well protected. However, structurally you would expect
that cash to flow out again over the winter."
Last year the company issued several profit warnings and cut its
workforce by 2,000 during the winter. It also had to parry the
effects of the discovery of accounting irregularities.
OMEC: Receiver Sells Business to Previous Owners
------------------------------------------------
The West Yorkshire-based engineering business that makes
equipment for the mining industry has recently been bought out of
administrative receivership by its previous owners.
Yorkshire Today reported that more than 80 jobs were saved at
OMEC after receiver Paul Whitwam, of Leeds corporate recovery
specialists Begbies Traynor, sold the assets back to a company
controlled by the existing directors.
Whitwam said the company had been struggling against slim margins
and the decline of the mining industry. It was put into a "pre-
packaged receivership", which enabled the company to shed around
GBP4 million of debt.
The largest single creditor is one of the directors who invested
GBP1.7 million of his own money.
Mr Whitman said they sold the business assets "back to a company
controlled by the existing directors".
"If we hadn't done it we would have closed the business on day
one," he added.
He further said: "We need to look at these kind of deals in
situations where it's a question of taking that route or closing
the business. We wouldn't have had any time to market the
business for sale because the customers would have pulled the
contracts."
The owners planned to make changes at the company but had no
intention of making any of the 85 staff redundant, Whitman said.
SILVER SHIELD: Kwik-Fit Appoints Administrator to Sell Unit
-----------------------------------------------------------
Vehicle repair chain, Kwik-Fit Group, will put under
administration Silver Shield Windscreens, a subsidiary with 40
depots in the UK and garages in Glasgow, Stirling, Aberdeen and
Edinburgh, The Scotsman learned Monday.
The paper says more than 200 jobs will be lost, while franchisees
could lose a substantial amount, if not all, of their investments
while the group is broken up and sold. Kwik-Fit has already
appointed Jeff Jones of BDO Stoy Hayward as administrator.
Mr. Jones told The Scotsman he is unsure of the legal position of
the franchisees, adding that he is still taking further advice.
Some franchisees claim they are still owed GBP250,000 in unpaid
fees. David Conquer, who owns the SSW franchise for Edinburgh,
Lothians and Fife, told The Scotsman over the weekend he stands
to lose GBP30,000 to GBP50,000 as his company is wound down.
"I'm shocked and stunned that we have not heard anything from
Kwik-Fit. I feel like I have had the rug pulled out from under
my feet," he said. "The money owed to me is for work that has
been carried out within the last 60 days and old debts that have
accumulated from Kwik-Fit."
Mr. Jones said the company had tried to sell its business, but a
firm deal never materialized: "We have sought to sell the company
in its entirety on Friday and over the weekend. However, we have
been unable to conclude such a deal thus far."
"Negotiations are continuing to take place with interested
parties as we seek to sell the business and protect as many jobs
as possible. What I would say is that Kwik-Fit has paid all the
employees for the month of April, something they were under no
obligation to do," Mr. Jones told The Scotsman.
Kwik-Fit, Europe's largest vehicle repair chain, took over Silver
Shield in 1999. The subsidiary had turnover of GBP15 million
last year.
THISTLE HOTELS: Reiterates Recommendation to Reject BIL Bid
-----------------------------------------------------------
The Board of Thistle* is posting a circular to shareholders in
response to BIL International Limited's document dated 23 April
2003. The Board of Thistle* continues to believe that BIL's offer
significantly undervalues Thistle and reiterates its
recommendation that shareholders should reject BIL's offer and
urges shareholders not to complete any form of acceptance.
* The Board of Thistle for these purposes comprises all of the
directors of Thistle other than Tan Sri Quek Leng Chan and Mr
Arun Amarsi, who in view of their positions as Chairman and CEO,
respectively, of BIL have not participated in the deliberations
of the board in relation to BIL's offer to acquire all of the
shares in Thistle not already owned by BIL.
Merrill Lynch International and Deutsche Bank AG are acting for
Thistle Hotels Plc and for no-one else in connection with BIL's
offer for Thistle Hotels Plc and will not be responsible to
anyone other than Thistle Hotels Plc for providing the
protections afforded to clients of Merrill Lynch International or
Deutsche Bank AG or for providing advice in relation to such
offer.
CONTACT: THISTLE HOTELS PLC
Phone: 020 7895 2304
Ian Burke, Chief Executive Officer
MERRILL LYNCH INTERNATIONAL
Phone: 020 7995 2000
Simon Mackenzie-Smith, Managing Director
Richard Nourse, Managing Director
DEUTSCHE BANK
Phone: 020 7545 8000
Charles Wilkinson, Managing Director
FINANCIAL DYNAMICS
Phone: 020 7831 3113
Andrew Dowler
Ben Foster
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-
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USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam,
Larri-Nil Veloso, Ma. Cristina Canson, and Laedevee Gonzales,
Editors.
Copyright 2003. All rights reserved. ISSN 1529-2754.
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