Operator News
UK – JPM to liquidate JPM International
By Phil - 18 October 2013
The JPM Group has announced that its UK manufacturing company, JPM International, has been placed into Voluntary Liquidation.
Simon Herbert, the group’s owner, confirmed that he had been forced to voluntarily liquidate the company as a result of financial pressures associated with the existing pension fund acquired with the company in 2010. It was also confirmed that the JPM Group brand will continue with Synot.
JPM had been a UK based manufacturer and distributor of games and gaming machines since 1972. The company has downsized drastically from the days of 300+ employees and £40m turnover in the late 80’s to the eventual outsource of manufacturing in 2004, following the MBO by the then FD and MD, from Sega of Japan. This lead to the subsequent move of the Cardiff facility to more modest premises in Cardiff Bay. The R&D and administrative function resided at the Head Office in Birmingham during this transition and remained there until this day.
In 2010, Mr Simon Herbert bought the company, and, after some restructuring internally, focused on materials costs and improvement in trade terms which resulted in a return to profit for FY11.
At the beginning of 2012 there was an unforeseen marked decline in demand from major export customers but despite this, JPM International in unison with export customers continued its on-going commitment in development, to overcome the issues in the market, with innovative new products and content.
To complement the export business, Mr Herbert heavily invested in the company’s working capital to pursue the UK market; but disappointingly, limited success was hard won. The successes were not sufficient enough to offset the significant downturn in the export market.
Despite the best efforts of the management, which has lowered fixed costs, improved margins and entered new markets, the root cause for the company’s demise is the legacy liability of the defined benefit pension scheme that has passed down through successive owners.
The company historically made a commitment to monthly contributions to alleviate the deficit, which per the latest FRS17 valuation is in excess of £30m
The top-up contributions have risen year on year from £150,000 per annum in 2011, to their current level of £250,000 per annum in 2013, with an increase of a further £50,000 per annum until 2038.
In light of the downturn in economic conditions this could no longer be realistically sustained. When it became apparent that the company could no longer pay its creditors if and when they fell due, in addition to making the pension top ups, the directors felt they had no option other than to take professional advice about winding up the JPM International.
On October 4 2013 a board meeting was held and FRP Advisory LLP have been instructed to assist management in placing JPM International into Voluntary Liquidation.
