Video report: Business leaders see no quick recovery

THERE will be no rapid recovery from the recession, a panel of leading North West business people has said.

Meeting in Manchester to discuss “Recession Proofing Your Business”, the consensus of opinion was that it will be at least 12 to 18 months before there is any significant upturn.

The debate, sponsored by Lloyds TSB Corporate Markets, heard from Peter Halpin, chief executive of Manchester-based insurer Swinton; Peter Cowgill, executive chairman of retail chain JD Sports Fashion; Vernon Lord, finance director of the Individual Restaurant Company; Gordon Oliver, finance director of listed flooring manufacturer James Halstead; Dan Wright, chairman of textile group Vision Support Services; and Mohsin Issa, director at fast-growing Lancashire-based petrol station operator Euro Garages.

The executives were joined by Dave Allanson, director and head of large corporate for the North West at Lloyds TSB Corporate Markets and Dave Walton, regional director for financial markets; Chris Fletcher, deputy chief executive of Greater Manchester Chamber; Nigel Dale banking partner from Eversheds; and
Simon Allport, Manchester office managing partner at accountants Ernst & Young.

Sharing best practice on their experiences of this recession there was broad agreement from the panel that businesses need to: pay close attention to cashflow; improve management information systems; keep tight control on costs and maintain a close relationship with bankers and other professionals and of course manage debt effectively.
The discussion moves on to currency fluctuations and predictions for the future

 [VIDEO: 36]

Mr Cowgill said: “It has been a case of good housekeeping really – we’ve made huge developments to our analytics and management information. We now have a counter for the number of people coming into our stores and also the conversion rate of what they spend.

“We’ve also not extended ourselves and taken on too much debt.”

Vernon Lord of IRC, which operates the casual dining brands Piccolino and Restaurant Bar & Gril, said: “We set our forecasts for 2008 the year before and then everything changed and each week we were looking at negatives, and that can really consume you and affect morale.”

He said the AIM-listed company had scaled back its expansion plans, cut costs, for example by removing fresh flowers from restaurant tables – which saved £100,000 a year.

At the same time the business resisted cutting prices to woo consumers:
“Discounting would undervalue the brand, and once you go down that route there’s no return, ” he said.

Mohsin Issa, Peter Halpin and Dan Wright, whose businesses have all made acquisitions in the last year, agreed that the recession had unlocked some more realistic asset values.

Peter Halpin said: “Values had previously risen to unacceptable levels and we had to be prepared to walk away if the deal was not right for us. Prices have been coming down recently and we are seeing one or two more opportunities.

“We have made a lot of acquisitions and we always try and create value from day one and have a very clear idea on what return we are going to get.”

Moshin Issa said: “We have been cautious when looking at acquisitions, though pricing expectations have been tough for us.”

Dave Allanson said when he was backing companies doing deals the track record of the management team was all-important.

“At the end of the day it is they who will make or break the acquisition. Having the courage to walk away from a deal too is a very important ability in this market,” he said.

The panel discussed the banking crisis and its effect on corporate borrowing, Government spending, the private equity sector before looking ahead to prospects for the next 12 months.

Dan Wright raised fears over the long-term implications of the Government’s rescue of the banks – warning that the “politicisation of the banks” could become a “national disaster”.

Peter Cowgill said the financial crisis had done huge reputational damage to bankers’ credibility with their customers, and there was a perception in the business of “Why should we pay more for their cock -ups” – in terms of higher fees and higher personal taxation.

Vernon Lord said pre-pack administrations “look almost immoral”, while insolvency expert Simon Allport of Ernst & Young said the system does suffer from a “terrible perception”, but that pre-packs were a useful tool in saving some viable businesses and protecting jobs.