Home Factory Index |
|
|
The Wholesale Tea Department at Cadby Hall first
introduced tea to the Netherlands in 1910. By 1911
vans were operating in Rotterdam, Amsterdam, Paris
and Germany and later other continental countries
were included. In 1920 the newly acquired Overseas
Trading Corporation, based in Jersey, took over the
sale of Lyons tea on the continent. The beginnings
of the European Community date from 9 May 1950 when
Robert Schuman, Foreign Minister of France,
proposed that France and Germany should pool their
coal and steel industries under an independent high
authority in a community open to membership of
other European nations. Belgium, Italy, Luxembourg
and the Netherlands accepted the invitation but
Britain did not join the EEC until 1 January 1973.
During Britain's negotiable period, which started
in June 1970, on joining the Community, Lyons laid
plans for a business expansion into Europe thus
facilitating management's desire to become a global
player in food production. The first reference to
this can be found in the Seventy-Eighth Annual
Report (1972) when the Chairman (Brian Salmon)
said: 'In particular, in the current year and more
so in the years to come the Group will be
developing increasingly as a European business'. By
the mid 1960s Lyons already had subsidiary
operations in Canada, Jersey, Ireland, Kenya,
Malawi, Rhodesia (now Zimbabwe), South Africa and
USA and by the end of the sixties the value of
goods exported by Lyons from the UK amounted to
£2.4 million. Although the unprofitable
Canadian and South African interests were sold off
in 1969 considerable investment was made in hotels
and baking interests and their jointly owned Alpha
Hotel opened in Amsterdam in 1971. De Zwitserse Patisserie Ulrich N.V. (The
Swiss Patisserie) The company's founder Christoph Ulrich, was born in
Switzerland in 1759. As a young baker he worked in
many countries before buying a bakery and making
his home in Rotterdam in 1786. In the early years
of the twentieth century his firm established more
bakeries in the centre and west of Rotterdam and in
1923 on the Straatweg at Rotterdam-Hillegersberg
(Hillegersberg being a district of Rotterdam). Ulrich continued producing high quality cakes for over 30
years. In 1956 the company became part of Sitos,
the largest bakers and confectioners in the
Netherlands. Nine years later (1965) the group
decided to separate its different functions and
Ulrich became specialists in the mass-produced cake
market operating from their factory in Rotterdam
which was on a new industrial estate close to road,
rail, river, canal and air networks linking them
with the rest of the Netherlands and Europe. Ulrich
had a staff of eighty and distribution facilities
throughout the Netherlands. In June 1969 J. Lyons
acquired a 51 per cent holding of Ulrich N.V. who
by now had become Holland's leading brand in the
mass cake market. Lyons had not chosen Ulrich
because of its size but because it had great
potential, offering a springboard into Europe for
the Lyons branded cakes. It also had an excellent
distribution system. Of Ulrich's 22 salesmen, six
were based in Rotterdam. Ulrich also had depots in
Den Haag and Amsterdam. Lyons had been selling Baby
Hostess Rolls in the Netherlands since the
beginning of 1969. They and Battenberg cake were
selling in over 2,500 supermarkets and shops in the
Netherlands by the end of the year. With this
success a wider range of cakes including Orange and
Lemon Cup Cakes, Lemon Souflette, Individual Apple
and Apricot Pies, Jam Tarts, Golden Angel Cake and
Scribona's Majorca Slice were test marketed.
Ulrich's requirements of English cakes were
assessed weekly by their general manager Peter
Erades, aided by the administration manager Peter
Le Brun, and phoned through to Cadby Hall each
Friday. The goods left Cadby Hall the following
Tuesday afternoon and were shipped via Ipswich to
arrive at Ulrich on Thursday morning for immediate
delivery. After acquisition the Company was renamed
Lyons Bakkerijen B.V. and became the holding
company for the planned Dutch bakery operations. Hooimeijer en Zonen N.V. In March 1973 a 99 per cent stake was obtained in
Hooimeijer en Zonen N.V. whose factory and offices
were located at Barendrecht to the south of
Rotterdam. Founded in Rotterdam in 1905 by Arie
Hooimeijer, the business moved to a new modern
factory in Barendrecht in 1933 and specialised in
the manufacture of rusks and biscuits. Before
Hooimeijer became part of the Lyons Group, they had
acquired a number of bakeries and were, by the time
of the Lyons acquisition, a mini bakery group
themselves. The first of their acquisitions came in
1959 when they bought a company called Hille &
Zoon whose factory was situated at Zaandam. A year before, in
1958, Hille & Zoon had acquired the Haust
bakery in Amsterdam. This had been named after its
founder, John Haust, who started his business in
1825 in the centre of Amsterdam. When Haust started
their business it was surrounded by market gardens.
Each morning when their first batch of bread was
ready, the baker blew on his horn to tell the local
market gardeners. Since that time the company's
brand logo featured a horn, and does so to the
present day. John Haust had purchased a bread
bakery with the unlikely name of De Volharding (The
Persistency) where he manufactured toast, pastry
and honey-cake. They became brand leaders in the
Dutch market and in 1924 the company received a
Royal Warrant. Thereafter his bakery became known
as the Royal Haust Factory. After the acquisition
of Haust (and Hille), Hooimeijer closed the Hille
bakery in Zaandam and moved their production to
Barendrecht. The Haust brand was retained and used
by Hooimeijer, not only because it was easier to
pronounce than Hooimeijer, but because the brand
had a well-established reputation. Hooimeijer's next acquisition came in 1957 when they
bought Koek-en Banketfabrieken A.H.O. B.V.
This company had been established in 1884 by
Adrianus Huibregts and his spouse Lucie Ooms and
was based in Tilburg; the company deriving its name
from the (A)drianus (H)uibregts-(O)oms partnership.
The business concentrated on the production of
honey-cake and pastry and in 1957 they opened a new
bakery in Goirle where production concentrated on
biscuits, and particularly, a Dutch spiced biscuit
called Speculaas. By 1966 Hooimeijer were again seeking further expansion of
their business and bought Stereo,
a strong brand name in the field of honey-cake, who
were based in Rotterdam. This plant too was closed
and production transferred to Barendrecht. This,
all together, formed the Hooimeijer bakery group
which Lyons acquired in 1973. Gert van Bergeijk was
appointed managing director, a function he retained
until his retirement in the early 1990s. However
this was not the end of the Hooimeijer expansion. Jb. Bussink's Koninklijke Deventer Koekfabrieken
B.V In May 1973 Lyons acquired (by way of their subsidiary
Hooimeijer) the old Dutch cake business of Jb.
Bussink's Koninklijke Deventer Koekfabrieken B.V.
which celebrated its 400 year history in 1993.
Bussink was world famous for its Deventer honey
cake. The company was founded in 1593 in the city
of Deventer from which the cake takes its name.
Johan Schutte and his brother Gerrit had been
admitted to the Dutch baking guild at this time and
set up their bakery in 1593. The business prospered
during the next 300 years and continued to be owned
and operated by succeeding generations of the
family. In 1886 the Schutte bakery was bought by
another Deventer baking business which had been
founded in 1820 by Jacob Bussink. At the time it
was owned by Lyons, it was the only company making
the famous Deventer cake and one of the few
companies in Holland which could justifiably lay
claim to a 400-year history. By 1977 J. Lyons & Co. had run into financial
difficulties and attempted to sell their Dutch
baking interests to mitigate their losses. Several
potential buyers were approached but after their
scrutiny of the facts all, unanimously, came to the
conclusion that: Hooimeijer lacked strong brand
names and concentrated too much on private label
business. Their products sold in the mid-range
consumer category and were considered to be
down-market. These two factors, private label and
down-market products, created permanent pressure on
margins resulting in low overall profit. Hooimeijer
also had too many factories with the inability to
concentrate production without huge investment and
there was a backlog of essential maintenance. In an
effort to improve profits Hooimeijer again began to
expand by acquisition. Galema B.V. In 1980 Galema B.V. was bought. This was a small
melba-toast bakery in Harlingen but it did not come
up to management expectations. In effect it was a
disappointingly run business which had a number of
shortcomings. There was a continuing dispute with
residential neighbours who complained frequently
about the bad smell and noise emanating from the
factory. It was old, suffered from a lack of
investment, and their were personnel difficulties.
Nevertheless management decided to buy the business
believing that it would help revive their fortunes.
It did not. In short it was a disaster and was
closed down two years later in 1982. Brink B.V Also in 1985 Hooimeijer acquired the bakery interests of
Brink B.V. who main products were sandwich biscuits
(Doppel Keks), shortbread rings and wafers. Their
headquarters and one of the factories was located
at Roosendaal, near the Belgian border. Their other
factory was located at Rucphen, about 45 miles of
Rotterdam. Brink's products were sold in a number
of export markets, and they were in fact the
largest exporters of bakery products in Holland,
with 80 per cent of their production going abroad.
The business sold about £8 million worth of
products a year and in 1985 it was still growing.
In the UK their sandwich biscuits and shortbread
rings were sold under the brand names of Brink and
Youpia. One hundred and thirty people worked in the
business and the managing director at the time of
acquisition was Kees Jongmans. He was accountable
to the managing director of Hooimeijer, Gert van
Bergeijk. In turn van Bergeijk was accountable to
Allied-Lyons assistant managing director, Jack
Silverman. In 1991 the Lyons board approved a
£2 million investment application for extra
production facilities at the Rucphen so that Brink
could satisfy a huge demand from Germany having
just won a major supply contract to supply the
discount supermarket group, Aldi, with sandwich
biscuits. During 1990 the Rucphen factory produced
17 million 500g packs of these biscuits and sales
were expected to increase by 30 per cent during the
12 months following investment. Baartmans Wafelfabriek B.V. Baartmans was a subsidiary of Brink B.V. Established in
1910 in Bergen op Zoom, they were a honey-cake
manufacturer who moved to Roosendaal but after two
severe factory fires they moved production to
Rucphen. JOKO B.V. JOKO B.V. was a holding company for Baartmans and Brinks.
In 1985 Will Nijsse, an Accountant with
Allied-Lyons, was approached by an intermediary
regarding a dispute between a Dutch family who ran
the JOKO bakery interests (Baartmans and Brinks) in
Holland. Will Nijsse, after long discussions with
the family, suggested they might like to consider
selling their business and thus solve their
disagreements. This was agreed and subsequently a
recommendation was made to the Lyons management
that they should consider buying this holding
company with its two subsidiaries. It became part
of Hooimeijer in May 1985. It is thought that JOKO
are abbreviations of family names. One is possibly
Kees (JO)ngmans the managing director of Brink and
Paul (KO)uwenberg, Brink's production director. It is worth recording at this point that Gert van Bergeijk
was made an Officer of the Order of Oranje Nassau
by Queen Beatrix of the Netherlands in May 1987.
The royal decoration was presented by the
Burgomaster of Barendrecht, where Hooimeijer had
their headquarters. Gert van Bergeijk had been
active in trade association work and helped to form
a bakery products trade association called
Verbisko, becoming its first secretary and later
its chairman. He was also chairman of the rusk
section of the association and in that role made
important contributions to the restructuring of the
rusk industry in Holland. He was also chairman of a
federation of manufacturers in the sugar products
industry, was chairman of a Rotterdam hospital and
was also active in local church affairs. When he
had completed 25 years with the company, in
September 1991, and just prior to his retirement, a
special event was held in an old fort near Breda to
commemorate his anniversary. Almost the entire
workforce of Hooimeijer watched as he descended
from the ceiling amid billowing smoke and
mysterious music. One of the unusual features of
the event involved a giant jigsaw puzzle. During
the evening each factory and office presented a
piece of the puzzle until the whole company was
represented. When complete, the puzzle was reversed
to show an idyllic countryside scene featuring
birds (Gert was a keen ornithologist) and two Haust
characters which featured in Hooimeijer's
best-selling toast product. Two powered bicycles
were presented to Mr and Mrs van Bergeijk for their
retirement. Tecribel N.V. In 1988 Hooimeijer acquired the Belgium company Tecribel
N.V. which made rice cakes. The company was started
in 1981 in Buizingen, near Brussels, by Michel
Dekeyser and quickly became market leader in
Belgium, Holland and Luxembourg, their trading
figures doubling year on year since incorporation.
This success was followed by the development of a
wider export market in several Middle East
countries. In 1987 the company set up a plant at
Meximieux (near Lyon), France, to better service
markets in southern Europe. This French subsidiary
was called Exfran. One of Tecribel's customers was
Symbol Biscuits in Blackpool, who marketed Tecribel
products in the UK under the name SliceaRice. This
was a rice cake aimed at the growing crisp-bread
and savoury biscuit market, and could be eaten as
the base of an everyday snack with a savoury or
sweet topping or as a biscuit/crisp-bread
accompaniment. The product was gluten free, had no
artificial additives and a low calorie count of 25
per slice. The manufacturing process consisted of
grains of rice which were subjected to high
compression and heat, a combination which exploded
each grain, causing it to adhere to its neighbours
and from which a round disc of blown rice was
produced. The flavour was said to be similar to
that of popcorn. Michel Dekeyser joined Hooimeijer
and all Tecribel's commercial, production and
marketing activities were integrated into
Hooimeijer. Marina Kuchen G.m.b.H. The entire issued share capital of the German company was
purchased by Lyons on 24 May 1973 of which 12.5
percent was disposed of on 13 September 1973. Its
purchase established a base for developing cake
interests in Germany and the company absorbed the
former Grotemeyer manufacturing and Altmann
distribution businesses in Westphalia, near
Dortmund. The business manufactured a large range
of cake amongst which was Weihnachtsstollen, the
well-known German Christmas cake. Their products
were low value intended for the cheap market
position. The business had no contact with the
other continental bakeries and were not very
profitable. The managing director was Michael
Jowett, who had stayed on in Germany after the
Second World War. He married a German girl and his
grasp of the language was excellent. Hig Hubert Hagemann Hagemann was the largest importer and distributor of
biscuits and long shelf-life bakery products in
Germany in which Lyons had an interest. As well as
product manufactured by Hooimeijer and Lyons
Biscuits, it also handled the sales and marketing
of Krombach's range. A. Krombach & Sohne Krombach & Sohne, a biscuit manufacturer, was acquired
in July 1993. The business was located in Solingen
near Dusseldorf, and manufactured a range of
quality sweet biscuits, including half coated
chocolate and seasonal coconut macaroons. The
business became part of Continental Bakeries under
Hooimeijer. Schmidt & Schneemilch In 1987 J. Lyons & Co. acquired this tea packing and
distribution company based in Hamburg, Germany.
This operation was closed in March 1991 and moved
to the UK. The Greenford factory continued to
supply black tea and herbal infusion products under
the company's Windsor Castle trademark. Picard SA (Auga) Picard's Auga brand was number two in France and the
company was frequently referred to as Picard-Auga.
They were acquired in October 1992 as a key element
in the company's pan-European strategic design;
described by Gordon Jenkins as: 'by the year 2000
the European Bakery's aim was to have developed a
profitable position as a leading European sweet
baked snack producer supported by a range of
complimentary products to meet local needs'. Thus
the acquisition of Picard-Auga gave J. Lyons, for
the first time, a manufacturing facility and
national branded sales and distribution
organisation in France. The company had been
founded in 1951 and had grown steadily to become
the second largest manufacturer of rusks, toasted
bread, toast and crisp rolls in France. Its
turnover in 1991 was £45 million. Toasted
bread products, which have a shelf life of between
six and nine months, were big business in France
with consumption put at 113,000 tonnes a year. They
were eaten for breakfast with butter and jam and as
a bread substitute. Other products in the Auga
range were savoury and eaten during the day. Picard
employed approximately 600 staff with its
headquarters at Chateauroux. There were three
production centres at Epinal, Reims and St-Etienne
producing 24,000 tonnes a year. The company
manufactured also for private label and catering
outlets as well as in the branded sector. Each
production centre was capable of making all product
ranges with the exception of crisp rolls; these
were only made at St-Etienne. Fifteen per cent of
Picard's production was exported. Industrie Riunite del Panforte di Siena S.p.A. Sapori, as it was more generally known, was purchased by
Lyons on 1 July 1972 when they acquired the entire
share capital. Subsequently, In January 1973,
Sapori purchased the Park Hotel Marzocchi in Siena.
This Italian company specialised in the manufacture
of Panforte, a famous spiced Siena speciality cake
as well as various other speciality cakes and
confectionery products. The business had been
founded by Virgil Sapori in 1832 making the now
famous Panforte cake of honey, candied fruit and
nuts. However, the history of Panforte can be
traced back to the thirteenth century, when monks
of a monastery near Siena received tithes from
their tenants of sweetmeats made with fruit, nuts
and honey. One of the company's advertising slogans
became a popular saying in Italy: 'When you talk
about the Palio you say Siena, when you talk about
Panforte you say Sapori'. Since the Second World
War the company grew to become a brand leader in
traditional Sienese products as well as
diversifying into the manufacture of chocolates,
Easter eggs and some traditional bakery items.
Between the time of their acquisition by Lyons in
1972 and their 150th anniversary in 1982, some
small acquisitions were made; Delicia in northern
Italy and Pepi a local Siena bakery. These two
companies added boiled sweets, chewing gum,
biscuits and Sienese specialities to Sapori's
product range. In the summer of 1991 Sapori was
sold to the Dutch company Chocolade Groder. The
sale included the biscuit subsidiary Pepi. The
reason put forward by management said: 'Sapori,
with its range of highly seasonal products and
specialised distribution network, had no role in
developing the types of pan-European products and
markets that the sector intended to concentrate
on'. Dolciaria In preparation Panrico S.A. , Panificio Rivera-Costafreda S.L. &
Panifcadora Guixolense Lyons interests in European markets had tended to be
concentrated on the EEC and until 1973 they had not
involved themselves to any great extent in Spain
(Spain did not become a member of the EEC until
1986). Nevertheless, with a population of nearly 40
million, management were impressed with the rate of
industrial growth and the commercial prospects in
that country and accordingly, in November 1973,
they acquired a 50 per cent interest in two linked
enterprises, Panrico S.A. and Panificio
Rivera-Costafreda S.L. both of which were engaged
in the business of cake and biscuit related
products including the long-life products of:
Grissini (bread sticks) Biscotti Fetine (toast),
packaged cakes and creme caramel. In January 1974
Lyons subsequently made a further move by the
acquisition of a 50 per cent interest in each of
six doughnut manufacturing companies all of which
operated under a franchise of the Groups DCA
subsidiary. The companies were: Donut Corporation de Barcelona SA Donut Corporation de Malaga SA Donut Corporation del Norte SA Donut Corporation de Sevilla SA Donut Corporation de Valencia SA Panificadora Guixolense SA Although the Spanish businesses were slow to show profit
they did accelerate far faster than the UK bakery
market and were in much better shape than their UK
counterparts by the 1980s. Lyons' largest
joint-venture with Panrico went from strength to
strength achieving a notable 35 per cent compound
increase in profits over five years. By the early
1990s Panrico was the bakery sector's main source
of profit outstripping those based in the UK. Their
doughnut business had 85 per cent of the Spanish
market and Bollycao (a bread roll with chocolate
filling) 90 per cent. So great was demand for
sliced bread that a new bread-making plant had to
be installed in Madrid and Barcelona while another
opened in Portugal. The Spanish acquisitions had
delivered up what management anticipated in 1973. The French, German and Dutch baking interests were merged
into a single group known as Continental Bakeries
in the Autumn of 1994 with new logos and products.
The brands of the three companies Picard (Auga) of
France, Krombach (HIG) of Germany and Hooimeijer
(Haust) of the Netherlands were strengthened.
However, this 'marriage' also involved the
inauguration of new automated production and
logistic systems designed to improve distribution
and increase levels of service. The system was
based around a software package called Prism, which
linked the sales, distribution and production
departments of all company's. Prism enabled order
processing staff to see current and future stock
levels. It also indicated the timing and length of
promotional campaigns and any price changes which
were made as a result. Prism went live on 30 May
1994 after nearly two years of preparation by
Hooimeijer's logistic automation project team and
enabled customers to order by Electronic Data
Exchange. Dutch Meat Processing Interests Homburg N.V. The meat processing expansion into Europe started in 1972
when J. Lyons Netherlands Holdings B.V. acquired a
99.8 per cent interest in the share capital of
Homburg N.V. whose main factory was situated in the
south-east of the Netherlands. Simon Homburg was
made chairman of the supervisory board and his son,
Bill Homburg, managing director. The company was
described at the time as one of the major pork meat
processing businesses in western Europe which had
developed a high degree of technology in its field
having complete control of all pig processing from
breeding to numerous finished products. It was
alleged that the only components of the pig not
used were the eyes and the grunt. The company had
been founded in 1932 by Simon Homburg who retired
in 1977. The business started in Haarlem, at first
producing sausages but later a wide range of canned
goods were produced. In 1949 the factory at Cuyk in
the south-east of the Netherlands was acquired
including a slaughterhouse. Subsequently other
plants in Wilp, Olst, Goor and Wijhe were bought
and the company grew to become a major force in the
port meat trade in the Netherlands. In August 1972
Homburg acquired the entire share capital of
Vleeswarenfabriek Beckers N.V. and thus it became a
fully owned subsidiary. Beckers was the largest
manufacturers in the Netherlands of speciality
products for the catering trade, notably
frikadellen (a skinless sausage). Homburg had a number of smaller subsidiaries namely, Kips,
B. Linthorst, Jongmans and Mulfric but most
importantly Fomeva B.V., a pig breeding station
about three miles from the main factory. Prior to
1963 all the pigs required by the factory were
purchased at market or direct from farmers but
supplies tended to fluctuate in both quantity and
quality. To overcome these difficulties Homburg
decided to establish their own pig breeding station
(Fomeva) to produce about 200 fattened pigs per
week to help keep supplies regular. Fomeva also
acted as a research station where the company were
able to test different breeds to determine all that
could be understood about pigs from the perspective
of profitable long-term production. By the time
that Lyons acquired Homburg the Fomeva breeding
station had acquired an international reputation.
It no longer supplied pigs for factory processing
but had evolved its own special breed of pig which
it sold to sub-breeders. The job of the
sub-breeders, mostly farmers in different parts of
the Netherlands, was to raise high quality gilts
(young females) which were then sent to other
farmers called multipliers. The multipliers, with
boars supplied by Fomeva, raised pigs which
ultimately were destined for the factory. Between
multipliers and factory there was one other stage,
that of fattening. The young pigs were sent by the
multipliers to yet more farmers who raised them
under strictly controlled routines to the Formeva
prescribed weights, when the animals were ready for
slaughter. Every stage of this process was
carefully supervised by the Fomeva specialists to
ensure their high standards were met throughout.
The manager of this station was A. H. C. Kuipers
who was brought in by Simon Homburg in 1962 to set
up the pig farm. Kuipers trained and practised as a
veterinary surgeon, later he became manager of a
slaughtering business, and then director of a
co-operative artificial insemination unit. The
total staff employed by the Fomeva unit was
approximately 75. The Homburg Board of Directors were: L. de Wijze, G. Mol,
H. Janssen, M. Broere, A. Heun and S. van der
Oosterkamp. In 1988 Beckers acquired a meat snack
business in the Netherlands called Tappaz Beheer
B.V. Tappaz and its subsidiaries had two plants
producing fricandels, hamburgers and sauces, one in
Bocholt, Belgium ad the other in Someron, the
Netherlands. In Belgium sales were mainly to
catering establishments and in the Netherlands to
retail outlets. Tappaz was placed under the overall
control of Wim Andriessen, managing director of
Beckers, making the combined operation one of the
largest meat snack producers in the Netherlands. In
1990 the Beckers business was sold to a management
buyout led by Wim Andriessen. It included sales
depots in France, the UK, Spain and Germany as well
as the Benelux countries. Vleeswarenfabriek Beckers N.V. See Homburg. Le Rosemont S.A. On 29 September 1972, 80 per cent of this company was
acquired. Le Rosemont in Besancon, was said to be
the leading Charcuterie firm of its region. Societe Nouvelle des Ets. Reybier A major shareholding in this company was made on 24
January 1973. Based in Lyon they were one of the
leading branded meat and charcuterie businesses in
France. Its business was divided between a meat
wholesale division and a retail division. By 1976
the small profits it had made since acquisition
began to dissipate. Management decided to
concentrate on the larger wholesale side of the
business and the retail division was sold off in
1975. Despite this corrective action the
organisational and control problems continued to
affect the company's performance in what was
described as 'a difficult market'. Added to the
trading difficulties was a tax demand of 19.4
million Francs. This subsequently had no substance
when it was appealed against. However, by 1977 the
Annual Report to shareholders said: ' the Reybier meat business in Lyons seriously
underperformed'. As a result the loss-making fresh
meat business was discontinued, two of the
factories were sold and another closed. Following
this decision, £2 million of the Reybier
goodwill was written off. The company was sold in
November 1979 (along with Henry Telfer) to Unigate. This obscure and anomalous Dutch
registered company was a vehicle for buying and
selling currencies on the foreign exchange markets
to hedge currency exposure with any profits treated
as a bonus. In 1972 and 1973 when Lyons made their
Continental acquisitions, mainly in the Netherlands
but also in France, Italy and Germany, they were
faced with, until then, unexpected difficulties
associated with overseas trading and the
complexities of currency control. In order to
better manage this dilemma the Lyons Board
recruited a Treasurer (Vernon Cull) who took up his
responsibilities at Cadby Hall on 1st October 1975.
Additionally John Baxter, (previously with Bowater
Inc. U.S.A.) was appointed Financial Coordinator
for the Lyons' American interests and in the
Netherlands Will Nijsse (also previously with the
Bowater Group), was appointed to the same position
for the Netherlands. At this time it was decided to
create a central financial function for forward
buying and selling of foreign currencies in order
to minimize the currency risks for the whole Lyons
Group of Companies. It made use of computer
technology, developed for Lyons in the period
before they became part of the Allied Breweries
group. Under the direction of Cliff Robinson (and
Maureen O'Rourke as analyst/programmer) computer
programs were specified which were able to
forecast, with some moderate reliability, when
exchange rates might alter and were thus, able to
foretell when to buy or sell currency on the best
terms. It was so successful that management used it
speculatively, not just to buy currency for normal
trading purposes, but to treat currency
transactions as a business activity. However, Lyons bankers, and the Bank
of England, were not captivated with these
ambitions and for this reason the new LIF company
was incorporated. Because of the hostile stance of
UK banks the new company was based in the
Netherlands under Dutch management. The Central
Bank of the Netherlands took a more liberal
attitude and LIF B.V. was incorporated on 31
December 1975. It was originally planned to name
the new company Lyons International Finance, but
for political reasons it was thought better to
operate furtively beneath a name that disclosed
nothing of the company's activities. The official
documents at the Chamber of Commerce in The Hague
declares that 'Willem J.Nijsse is the Managing
Director' and the Supervisory Board show the names
of 'Eric M.Asher ( Lyons Company Secretary)
,Christopher L. R. Salmon ( Lyons' Director)
responsible for the Netherlands, and John. N.
Mendelssohn' (Lyons' Finance Director ). From the
outset LIF operated successfully and the number of
currency transactions grew gradually. The internal
controls were very strict, they had to be because
of the £ millions which passed through the
books. If the management of the Dutch companies
wished to buy or sell forward foreign currency,
they could do so with LIF and they were no longer
allowed to enter into currency transactions with
their own bankers. In January 1978, a situation
arose predicting that, if LIF were to close-out all
outstanding currency contracts they would make an
one day profit of Dfl 5.3 million which was close
to £2 million. But the computer programs said:
Hold! Nevertheless after hours of discussion it was
decided to override the computer's advise, the
potential profit was too compelling, and all
outstanding contracts were closed on 5 January
1978. There was an additional advantage following
this closure. LIF's tax year ended on 31 December
1977 and the Dfl 5.3 million had to be declared in
the tax year 1978. Consequently the Dutch group
could use the full Dfl 5.3 million for at least
one-and-a-half years and in this way saved more
than Dfl 0.5 million on overdraft interest. In time
the Bank of England changed their rules and it
became more practical to centralise currency
transactions in London. After Allied Breweries had
absorbed J. Lyons & Co, Vernon Cull left Cadby
Hall and joined the new Head Office where the
currency transactions continued from 1979. In the
meantime a large acquisitions was made in Canada
(Hiram-Walker) and their Finance Director, Cliff
Hatch, became the Finance Director of the larger
group. By now the computer currency programs had
been improved further and the Group started to
speculate in foreign currency. In a news release of
May 1991 the Charman claimed that £10 million
per annum was being made from these activities.
From June 1989 the treasury department diversified
into trading in foreign currency options in the
volatile derivatives market, a high risk activity.
The scale of trading, notably in put-options, grew
substantially during 1990 and became increasingly
disproportionate to foreign currency cash-flow
requirements. The group finance director, Cliff
Hatch, received warnings from internal and external
sources that exposure limits had been breached. The
corrective action taken failed and became critical
when the US dollar rapidly strengthened giving rise
to a £147 million loss. Lyons' bankers took
action to close-out the positions and were able to
mitigate further losses as the dollar surged
forward. It was the largest corporate loss of its
kind at that time representing 20 per cent of the
trading profit in 1992 causing the shares to fall
25p. Such was the magnitude of the crisis that the
Chairman and Finance Director were obliged to
resign. Meanwhile in 1980 LIF B.V .(with Will
Nijsse) was transferred from The Hague to Allied's
premises in Breda. From time to time LIF was used
for financial transactions and still does so today.
It could be that LIF is the last company carrying
the Lyons name, albeit in disguise, but I wonder if
anybody cares! On 28 February 2005, Allied Domecq
plc closed the offices of the Dutch Holding and
Financing Companies ( including LIF B.V.). The
Companies continued to operate unchanged but were
managed from Madrid (Spain), where Allied Domecq
had an administrative centre. The Allied Domecq
premises in Etten-Leur were put up for sale. The 45
persons remaining, mainly salesmen, were moved to
rented accommodation in Breda.
Will
J.Nijsse Peter
Bird February
2005
|
|||||||||||||||||||
|
|
