Pelikan Hardcopy Scotland’s hefty pension bill
January 22, 2018
(Credit: SBNN)
The UK’s Pension Protection Fund could be left with a £21.4Million (€24.3 million) bill following the sale of the lossmaking Pelikan Hardcopy Scotland’s sale to Lothian Shelf (731) Limited, a company owned by the China-based Zhuoli Imaging Technology Co. Ltd.
Following the insolvency and sale of the Pelikan Hardcopy Scotland’s (PHS) assets, there is a deficit in the company’s pension fund that impacts on retired, former and the current employees of PHS. The PHS pension fund is currently being assessed by the UK’s Pension Protection Fund (PPF).
As early as 2004 the auditors were reporting uncertainties that may affect the company’s ability to continue as a going concern relating to the company pension scheme. In the PHS 2016 filed accounts there was a shortfall in the company’s pension funds of £21.4Million (€24.3 million) and that more than £4.65Million (€5.281 million) of pension fund contributions and administrative fees had not been paid. In 2007 Malaysia based Pelikan International Corporation Berhad acquired PHS and in 2008 agreed to a ten-year guarantee to provide financial support for the Pelikan Hardcopy Scotland’s pension contributions.
PHS produced MICR and TTR ribbons in their Scottish plant. Despite the acquisition and several reorganisations and continued investment of more than £20 million (€22.714 million) PHS continued to make multi-year losses and in 2016, the last year accounts are filed, they recorded a loss of £3.4 Million (€3.861 million) and had year on year net liabilities amounting to £40 Million (€45.432 million) by the end of December 2016.
David Connett, a partner at Connett & Unland GbR, said “There are three main players in the MICR and TTR business and despite over £20 million of ongoing investment PHS could never achieve the economies of scale and market share to compete. It is incredible that the group supported PHS for so long and to such a high level. Just reading their filed accounts the writing has been on the wall for several years.”
In 2014 the Independent Auditor emphasised in his report concern about the viability of PHS, stating “The Company is loss-making and is also committed to funding a significant deficit in its pension scheme. It is therefore reliant on the ongoing support of its parent company. An element of support promised by the parent company has not been forthcoming and, as a result, during 2013 the company has defaulted on three quarterly payments of pension contributions” [£622,500/€706,830]. The Independent Auditor said further “These conditions indicate the existence of material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.”
The PPF was set up in April 2005 to protect millions of people who belong to defined benefit, e.g. final salary, pension schemes in the United Kingdom. If their employers fail, and their pension schemes cannot afford to pay what they promised, the PPF will pay compensation for their lost pensions.
The PPF is funded through levies on eligible pension schemes, income from the PPF’s own investments, taking on the assets of schemes that transfer to the PPF – and recovering money, and other assets, from insolvent employers of the schemes the PPF, takes on. Around 900 pension schemes have transferred to the PPF from small outfits to formerly FTSE-listed organisations.
According to the PHS website “the company was placed in administration on the 12th January 2018. On the 15th January 2018, Zhuorim TTR UK Ltd. purchased the Pelikan Hardcopy Scotland Ltd. Assets/Business.
The new company Zhuorim TTR UK Ltd. will take over production and servicing of all existing accounts, and it is Zhuorim’s intention to make this adjustment as seamless as possible.
Zhuorim will invest in the Scottish plant to secure its future with continued investment and expansion of our current range of TTR/MICR and Ink products.”
The new owners will also have to tackle an ongoing land contamination issue at the plant that is estimated to cost £150,000 (€170,320) to resolve.?
Categories : Around the Industry
Tags : Pelikan Hardcopy Scotland PHS Sale UK
