BHETA merger must overcome joining fee hurdle

The British Home Enhancement Trade Association’s plans to join the British Jewellery, Gift and Finishing Federation as a full member still have some way to go.

At a BHETA meeting in Birmingham on January 14 members learned that while there seems to be general agreement about the benefits of joining in terms of cost savings and member services, the two organisations appear to be some distance apart over the structural issues.

The key sticking point is the proposed joining fee, estimated to be around £1.2m. The exact fee will be calculated at the point of joining, based on the valuation of the BJGFF’s assets at that date, divided by the number of BJGFF members and then multiplied by the number of BHETA members at that date.

Members at the meeting expressed concern over whether the joining fee would be returnable in the event of the BHETA board subsequently deciding to withdraw from membership – in other words whether it would be ring-fenced. That would require BJGFF to amend Article 12 of its Articles of Association.

BJGFF CEO Krys Zalewska said that because BJGFF is owned by its members, such a change could only take place with the approval of the BJGFF board and members, but thought it unlikely that there would be enthusiasm for such a change.

However, BHETA CEO David French said: “The non-return of the joining fee is a deal-breaker. If [Article 12] is not changed then I won’t recommend the deal.”

Furthermore, it emerged at the meeting that BHETA’s current assets will not be sufficient to cover the £1.2m, and that the sum would be raised by taking an estimated £300,000 charge against Brooke House, its former office in Northampton. Members speaking at the meeting were not unhappy with this proposal, but were concerned that it had not been made clearer.

Whether the merger goes ahead or not, BHETA’s recent move to the BJGFF office Birmingham appears to be paying off. David French said that although 2009 accounts had not been finalised, they showed a substantial operating loss, whereas the 2010 budget was for a return to breakeven. In full federation with the BJGFF, he said, that position would improve to an operating surplus of £135,000.

And he confirmed that the 2010 budget includes three job losses: one from the operating team, the financial controller and himself. The plan is for the two new sector directors – Will Jones on the housewares side and Peter Stone on the DIY side – to take a larger commercial role, reporting directly to the BHETA board and to the two members of the BHETA board who will join the BJGFF board should the federation plan go ahead.

Another EGM is planned for the end of March, though there may also be a further consultation meeting for members at the Spring Fair in February.