The vogue line from politicians of all colours at the moment is “we need to get banks lending to business again”. Well, at the risk of siding with the banks, many of the companies that are seeking loans and overdrafts are just not a viable risk.
Plimsoll, the leading financial analysts, contests that the reason companies such as Goldtrail Travel Ltd, and more recently Rok Plc, got into trouble was they existed on micro thin profit margins and the first serious bump in the road crippled them. Without the ability to borrow and paper over the cracks at what had become a barely profitable business model, they failed.
But, why should the banks be there to save unprofitable (or barely profitable) businesses? They have been quite correctly vilified for their reckless lending in the property market yet now they are being unfairly criticized for being prudent. Politicians, business leaders and the wider public must decide – either the banks are to lend responsibly or not, you can’t have it both ways.
It is up to business owners to build a “rainy day fund” to get them through the tough times and if they can’t then the bank is not to blame. Would you lend money to a company that exists on wafer thin margins and has to borrow money just to survive a slow couple of years?
Banks were wrong to lend to high risk individuals so recklessly - but refusing credit to risky businesses is what they must do if they are to fulfill government and electorate demands to lend more responsibly.
Showing posts with label uk business news. Show all posts
Showing posts with label uk business news. Show all posts
Wednesday, 10 November 2010
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.”
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.”
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.”
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.
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.
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.
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, 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.
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
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
Wednesday, 29 September 2010
United Biscuits – Are Bright Foods set to pay too much for their Jaffa Cakes?
United Biscuits – Are Bright Foods set to pay too much for their Jaffa Cakes?
With Bright Foods, the Chinese food giant in talks to acquire United Biscuits we have to ask one pertinent question - Is United really worth the reported £2bn?
According to our calculations, the company is probably worth closer to £1.5bn. After its assets and liabilities have been taken into account its equity value is probably closer to £1.2bn. So, while United has increased in value in each of the last 2 years, the current owners, it is worth considerably less than the rumoured price – the current owners are getting a good deal.
Clearly, Bright Foods are after United for its portfolio of brands rather than for short term financial gain and they are prepared to pay a premium for it. Hopefully, the jobs and investment will stay in the UK and not be moved overseas like in other takeovers of this type. Will new owners at United Biscuits do the same thing that Kraft did at Cadburys?
Click here to see which of the UK’s Food Manufacturers is likely to be the next big takeover story
With Bright Foods, the Chinese food giant in talks to acquire United Biscuits we have to ask one pertinent question - Is United really worth the reported £2bn?
According to our calculations, the company is probably worth closer to £1.5bn. After its assets and liabilities have been taken into account its equity value is probably closer to £1.2bn. So, while United has increased in value in each of the last 2 years, the current owners, it is worth considerably less than the rumoured price – the current owners are getting a good deal.
Clearly, Bright Foods are after United for its portfolio of brands rather than for short term financial gain and they are prepared to pay a premium for it. Hopefully, the jobs and investment will stay in the UK and not be moved overseas like in other takeovers of this type. Will new owners at United Biscuits do the same thing that Kraft did at Cadburys?
Click here to see which of the UK’s Food Manufacturers is likely to be the next big takeover story
Wednesday, 15 September 2010
The union representing British Airways cabin crew, Unite, has threatened to increase the intensity of their dispute with the airline.
Earlier this year, BA cabin crew went on strike for a total of 22 days costing the airline approximately £150m. Although facing tremendous losses as well as having to cancel hundreds of flights, BA tried to make the best of a bad situation by bringing in employees from other parts of the company to take over cabin crew duties.
Unite has now warned that any further strike action would include any ground staff currently working for BA, including check-in workers and baggage handlers. Introducing these members of BA staff to strike action could potentially be catastrophic to the company.
The union needs to accept that conditions in the post recession industry are such that the airline simply cannot sustain the level of reward its members have become accustomed to. For example, salaries as a percentage of sales for British Airways are 26% compared to 14% at Virgin and 10% at Ryanair. Without a plausible alternative, the board have to cut staff, remuneration and perks if the airline is to survive.
To see how British Airways compares to other Airlines click here and read the following analysis on the Global Airlines
Unite has now warned that any further strike action would include any ground staff currently working for BA, including check-in workers and baggage handlers. Introducing these members of BA staff to strike action could potentially be catastrophic to the company.
The union needs to accept that conditions in the post recession industry are such that the airline simply cannot sustain the level of reward its members have become accustomed to. For example, salaries as a percentage of sales for British Airways are 26% compared to 14% at Virgin and 10% at Ryanair. Without a plausible alternative, the board have to cut staff, remuneration and perks if the airline is to survive.
To see how British Airways compares to other Airlines click here and read the following analysis on the Global Airlines
Monday, 13 September 2010
Acquisition activity in the UK could be the way to move forward in the current economy
BBC News reported this summer as having a record number of mergers and acquisitions and with so many companies feeling the heat after the economic downfall, it seems that this is the best way to ride out the storm.
This doesn’t just open doors for those that were hit hard recently. As the recession forced company spending to slow and brought on a newfound reluctance to agree any new deals, some UK businesses have now found themselves with an agreeable budget for opening new doors.
After experiencing such negativity in the business world in recent months it must be a warming feeling to know that there may be a bright side for all those months spent counting company pennies.
David Pattison, senior analyst at Plimsoll said, "Anyone on the acquisition trail needs to look first at the companies that have a decent gross margin but whose overall financial strength is compromised or has declined in recent years. These types of companies usually have solid fundamentals but their current owners have lost control of costs. They are often undervalued and with a little restructuring have big potential for their new owners.
If you want help finding these types of companies click here".
This doesn’t just open doors for those that were hit hard recently. As the recession forced company spending to slow and brought on a newfound reluctance to agree any new deals, some UK businesses have now found themselves with an agreeable budget for opening new doors.
After experiencing such negativity in the business world in recent months it must be a warming feeling to know that there may be a bright side for all those months spent counting company pennies.
David Pattison, senior analyst at Plimsoll said, "Anyone on the acquisition trail needs to look first at the companies that have a decent gross margin but whose overall financial strength is compromised or has declined in recent years. These types of companies usually have solid fundamentals but their current owners have lost control of costs. They are often undervalued and with a little restructuring have big potential for their new owners.
If you want help finding these types of companies click here".
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