Thursday 28 October 2010

Government warns that private sector must pick up the slack from public spending cuts.

The Government has said that the public spending cuts announced by George Osborne could bring 490,000 public sector job losses to the UK and the private sector should benefit.

Along with the cuts, the Chancellor announced that businesses would see a £7bn tax cut in the budget with hopes to instil the promise that taxes will be lower in future.

The Telegraph reported that chief economic advisor to the Ernst & Young ITEM Club, Peter Spencer said: “The Government has bent over backwards to produce business-friendly policies…Companies now have to step up to the plate.”

Forecasting a positive economy, Spencer added: “Large companies are in excellent shape, with plenty of opportunities for investment and employment and the financial strength to exploit them.”

General secretary of the TUC, Brendan Barber disagreed, claiming that regions with weak private sectors will suffer from the cuts as they struggle to provide the resources.

Barber said: “Public sector job losses are likely to occur in some of the UK’s more depressed regions where private sector job creation is already extremely poor. Job losses will depress local economies even further.”

The UK Advertising Agencies industry – a review of 2010

As we approach the end of a turbulent 2010 for UK Advertising Agencies, Plimsoll have taken a look back at the highs and lows of the last 12 months and looked forward to the threats and opportunities facing the market in 2011.

203 agencies are finishing the year in financial difficulty according to the latest Plimsoll Analysis examining the health and prospects of the top 708 companies in the market. Having clung on through the bad times many of these struggling agencies are running out of time and will fail unless a sustained recovery takes hold. Sadly, some of them are just too weak to carry on and there will be a spike of failures in the New Year. On the flipside, their demise will bring a welcome reduction in competitive pressure for those left.

However, there are still some good stories in the market despite the persistent gloom. We have picked 345 strong companies that prove success can still be achieved in the market despite difficult trading conditions. They also prove that bad companies fail in a recession; good companies simply do not. These companies will lead the industry out of recession with some smart acquisitions to help maintain their recent success.

The market is due further consolidation with the number of companies in trouble leading to heightened takeover activity. With too many companies chasing weakened demand it is inevitable that there are likely to be a number of high profile mergers and takeovers. Further consolidation is needed to sort out the remaining dead wood. We have named 59 companies as the best acquisition prospects in the market.

In addition, a band of reckless companies continue to chase sales despite mounting losses, 137 serial loss makers are operating in the market. For the 2nd and even 3rd year running these companies have made a loss. While the rest have taken painful but necessary decisions to refocus on the bottom line, these reckless companies have continued to chase sale regardless. These companies have to cut their cloth accordingly or face the consequences.

The new Plimsoll Analysis shows a buffeted market emerging from recession with 1 in 3 of its participant companies in financial difficulty. If you are going to make a success of 2011, you need to learn the lesson of the last 12 months. There are going to be lots of takeovers, a number of high profile failures and even the odd surprise or two along the way.

Click here for more information about the Plimsoll Analysis - Advertising Agencies

Wednesday 27 October 2010

Feeling the strain of competitors, Nokia announces plans to cut 1,800 jobs.

The mobile phone maker announced the extensive cuts in a bid to push out smartphone competitors. New boss, Stephen Elop has made his intentions to reassess the business known within the company with the job slash. 

With plans to focus on customer demands rather than introducing new products into the market, HR boss Juha Akras said: “We are committed to managing these changes in a way that reflects Nokia’s values, and will support affected employees with alternative solutions, such as helping them find new positions within the company.”

In terms of smartphones, sales may have risen by 61% compared to last year, but Nokia is up against fierce competition with Apple’s iPhone and the introduction of Google’s Android. 

Meanwhile, Apple has seen profits soar by 70% as the iPhone remains stable in the smartphone market.

Tuesday 26 October 2010

September’s figures show Britain sinking deeper into debt.

Hours before George Osborne’s announcement of the massive spending cuts across the UK, figures revealed the UK borrowed over £16bn in September.

Although a rise of £0.7bn in comparison to the same month last year, it saw Britain’s net dept reach a total of £842.9bn. While the figure is still a decrease from September 2009, economists had predicted the amount to be lower.

IHS Global Insight Economist, Howard Archer said that although the increase in borrowing was disappointing, it was still a “modest” overall improvement for the financial year.

Archer also said: “The government will highlight this as a key reason to why there should be no delay in enacting measures to improve the public finances.”

Are UK companies missing out on the Wind Energy gold rush?

“I want us to be a world leader in offshore wind energy,” said David Cameron as his government estimates that 70,000 jobs will be created in this sector and announces support to the tune of hundreds of millions of pounds. The problem is - UK companies appear to be missing out of what promises to be something of a "gold rush" in the market.
Of the 120 UK registered Wind Energy companies involved in the market:
  • 64 are in trouble
  • 78 are vulnerable to takeover
  • A third are making a loss
Are these companies being squeezed out of the market by larger foreign competitors enticed here by generous government subsidies and grants or are native companies in this market just not dynamic enough to compete? This week Skycon, a Swedish based manufacturer failed with the loss of 120 jobs in Kintyre - all after receiving a £10m cash from the Scottish Assembly.

With the UK economy so desperate for growth sectors and job creation is the government better using tax payers money to entice big foreign companies to the UK market or use development grants to give UK companies a chance to compete?

Click here for more information about Plimsoll's latest assessment of UK Wind Energy companies

Thursday 21 October 2010

More worries for UK economy – are we heading for a double dip recession?

A worrying report from the British Chambers of Commerce (BCC) warned that UK economic growth in the third quarter of this year was “considerably” slower than the previous quarter and businesses could still face trouble in months ahead.
With Christmas fast approaching and the VAT increase being introduced in January, it was thought that shoppers would try and get their festive purchases early but it seems the report has rejected the assumption.

A survey from the British Retail Consortium (BRC) revealed similarly concerning results showing that growth in the UK retail market slowed from 1% in August to 0.5% in September.

Although of course, these figures could change very quickly, it is a clear sign that the UK is not out of the water just yet.

Director general of the BRC, Stephen Robertson said: “We’ve now had six straight months of low growth thanks to persistently weak consumer confidence and worries about the future.”

He added: “It’s clear people are cautious and major spending is largely on hold.”

Tuesday 19 October 2010

Which region in the UK is the most dangerous to do business in?

Companies based in the Northern Home Counties are the most likely to be in financial difficulty according to research from market analysts Plimsoll. Almost a third of companies across all areas of the UK economy that were based in this region were rated as Danger by Plimsoll.

Perhaps most surprisingly, the same research flagged unfashionable regions such as West Midlands, Yorkshire and the North East as having the least percentage of companies in trouble - averaging just over a quarter. Are directors based in these much maligned regions better at running their companies than their counterparts in more fashionable areas?

Here is the full breakdown of the number of companies analysed per region:

Plimsoll assessed 240,000 as part of this UK wide study. We produce over 1,500 specific UK market reports. Click here for more information about Plimsoll and the reports and services we provide.

Friday 15 October 2010

More bad news for UK Retailers - 1 in 4 are already in dire financial trouble

Plimsoll's latest analysis of the UK Retail sector echoes the sentiment of accountants BDO recent assessment that thousands of UK shops will close by 2015. Such is the dire state of many UK Retailers, we would even contest that it needs to happen sooner.

Our research shows that 1 in 4 major British Retailers are in already in a precarious financial state and with demand predicted to fall as consumers make drastic cuts in spending, things can only get worse.

Our latest research shows:

- A third of Retailers are already making a loss
- 1 in 4 are are already in dire financial trouble
- Half are struggling to improve their position
- Consolidation is long overdue with most exposed to takeover

However, for those Retailers that come through the other side, the difficulties of the next few years could actually turn out to be a good thing. The specialist niches that most retailers serve means that the failure of a close competitor often means they have something a monopoly on the High Street.

Click here for more information on Plimsoll's latest assessment of UK Retailers

Wednesday 13 October 2010

77,828 UK companies are now rated as "Zombies"

77,828 UK companies are classed as “Zombie” businesses. These companies, have seen their performance deteriorate to such as extent that they now exist merely to pay off their debts and survive.

Every corner of the UK economy is blighted by Zombie companies. They are posting growing losses and, despite the freeze in the credit markets, increasing their debts. A Zombie company typically has debts of 51% of their turnover – they merely exist to service their out of control liabilities. Many are also using their suppliers to finance their growing losses, by taking an average of 149 days to pay their bills.

They are falling behind the rest in their respective markets. They are extremely unproductive and their cost base is just too high. As a result, investment plans have been mothballed meaning their aging assets are further restricting their ability to remain competitive.

So can these Zombies be saved? The first thing they need to do is sort out their immediate finances. They have to convince their banks and suppliers to keep supporting them or not pull the plug. If they can pull that off then the hard work really starts. They urgently need to stem their losses and control costs. The longer it takes them to address these issues, the harder and less likely it is they will ever fix them.

However, there are some attractive takeover targets hidden among the Zombies and canny investors are seeing an opportunity to pick up a bargain. Some of these companies, stuck in a zombie state because of their balance sheet, have lots of potential for new owners to turn it around. Across the whole of the UK economy we have flagged 40,614 such companies.

Tuesday 12 October 2010

Punch Taverns set to sell 1300 pubs - Which other operators will follow suit?

Punch Taverns has made the bold move of selling off the parts of its business that are no longer profitable. In the face of difficult trading conditions and falling profitability across the group, the board have taken the necessary steps needed to get their business back into good shape.

But Plimsoll has asked the questions - Which other operators need to follow suit and how many pubs will be lost as a result. The Plimsoll Analysis has picked out the following findings that point to the depth of the issues facing pub operators in Britain today:

- The average profit margin is down to just 0.4%
- 372 operators have posted a loss for at least 2 years running
- 265 companies have seen the value fall by over 30% in the last year

With so many pubs and their operating companies in difficulty it seems inevitable that the speed with which to good old British pub is disappearing will increase in 2011. The question is - which pub will be next?

Monday 11 October 2010

How many of the UK's Public Sector Recruitment Agencies will survive 2011

Recruitment in the Public Sector is set to be hit particularly hard over the next couple of years as Government cuts really bite. As a result Recruiters servicing this sector are in for a very rough ride in the next few years.

With this in mind, market analysts Plimsoll have looked at how prepared each of the UK's 298 Public Sector Recruitment Agencies are for a difficult 2011. We looked at how each agency is currently performing and how resilient they will be in the face of a massive downturn in their market. Here's what they found:

- 75 are rated as Strong and are best placed to come through the next few years in tact

- 58 others are in dire trouble already and will be the first to fail when demand slows

- A marked fall in demand will accelerate consolidation in the market with
96 agencies exposed to takeover

Click here to see how Plimsoll's latest report will show you which UK Public Sector Recruiters could disappear in 2011 and who is set to survive

Friday 8 October 2010

What effect will the Thomas Cook & Cooperative Travel merger have on the market?

The merger of Thomas Cook and Cooperative Travel is a further sign that there are too many companies chasing too little market.

This move will allow the new group to dominate a sector of the economy which analysts predict could be heading for another difficult year in 2011. Their ability to streamline operations, reduce cost and expand their collective reach on the High Street will see them dominate in a market where profit margins are still barely above zero and growth is uncertain. Sadly, there will be job cuts but on the whole its a positive move.

So how will this affect the rest of the market? There are still some excellent independent businesses in this sector. Companies like Southall Travel are a great example of companies that have performed well in recent years. However, if predictions are correct and demand remains subdued into next year how many of industry's weaker agents will be survive?

178 agents are already struggling and another bad year could see a bigger wave of consolidation. Who will be buying and who will be desperately selling?

Thursday 7 October 2010

Liverpool FC - the start of a takeover tidal wave in British football?

Liverpool FC looks set to be bought out in the coming days but what about the rest of Britains football clubs - could we be set for a tidal wave of takeovers and maybe even further administration sagas?

Many of our treasured clubs are a house of cards - a web of shell companies, often based in tax havens that hide the true extent of the debt. Many owners, both foreign and home based, have gambled with the future of their clubs for either prestige, ego or personal financial gain.

Plimsoll has released a hard hitting report into the health and acquisition attractivenss of all the leading British football clubs and the results should act as a wake up call to the game and its boardrooms. Some of the eye opening findings include:

Many clubs are exposed to takeover and would struggle to repel potential suitors. Many need new owners to bring new capital and ideas into the business to get it back on an even keel

Over half of clubs have been given a Danger rating - they have aspects of their performance that should concern both the fans and the owners. Most of these clubs will struggle to trade their way out of the mess

Post your thoughts on the health of your club below:

Wednesday 6 October 2010

After the collapse of Crown Currency Exchange - should consumers stick to buying currency from the bank or post office?

The collapse of Crown Currency Exchange this week highlights the dangers of operating in a speculative market whilst existing on wafer thin margins. Any fluctuation in exchange rates or other minor blips can spell disaster - the company has an inherent inability to respond to adversity.

Crown Currency Exchange was a high profile, heavily marketed business that existed on high volume transactions. It generally offered the best exchange rates in the market. However, for a company that processed £150m worth of currencies transactions in the last 5 years it had almost £200,000 worth of deficit in its shareholders funds. Clearly an unsustainable position.

With Plimsoll issuing a health warning for 22 Bureaux de Changes companies it begs the question - Should travellers forego the slightly better exchange rates and get their travel money from the bank or post office?

Click here to see Plimsoll's current assessment of the Bureaux de Changes industry

Tuesday 5 October 2010

Which UK Food Manufacturer will sell out next?

With its famous brands seemingly in demand from overseas suitors, undercapitalization still prevalent and profit margins remaining squeezed, a wave of takeovers is set to change the UK’s Food Manufacturing sector forever.

The ongoing story of United Biscuits being courted by prospective new owners suggests that British brands remaining in high demand from major overseas players. Overall, UK based Food Manufacturers are facing weak growth and the prospect of a double dip recession. So, should UK based manufacturers be openly courting the attentions of buyers now to get the best value for their shareholders?

For example, should other major players such as Northern Foods (who posted their half year results today) also explore the possibility of attracting outside investment into the company to help it prosper in a difficult market?

93 UK based manufacturers would benefit from being taken over – Click here to find out who.

Monday 4 October 2010

UK Food Brands - How many more will be lost to overseas suitors?

With news that Premier Foods is open to offers for Quorn (its meat free brand) as part of a debt reduction strategy, it poses the question, "Are UK's Food Manufacturers set to clean out their cupboards?"

Plimsoll has identified 153 of the UK's leading food manufacturers that need to to take urgent and radical steps need to be taken. With so many manufacturers in difficulty, there is a growing sense that we will see some famous brands changing hands as companies try to get debts back under control.

How many of these brands will be lost to overseas suitors is difficult to say but the recent flirtations between United Biscuits and Bright Foods seems to indicate a serious appetite for western brands among eastern groups. Plimsoll has also identified 93 other UK companies that are vulnerable to takeover. In many cases, whole companies will be acquired rather than just individual brands.

The latest Plimsoll Analysis has analysed the 500 largest Food Manufacturers in Britain and rated each one on its performance, likelihood of being taken over and what its future prospects are.

Click here to find out which companies could be bought out, those set to fail and those powering ahead