Archive

Archive for May, 2015

Late payments continue

Further evidence from ABFA that late payments are increasingly prevalent. Construction is again cited as a desperately difficult sector with average days increasing from 88 to 107 days since 2008

http://www.cityam.com/216398/invoice-delays-top-107-days-construction-firms-taking-hit

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A “blind bit of difference” if we left Europe?

eurozone_2140474bWith a referendum coming up, one question will be very much to the fore. What will be the effect on trade if we left the EU?

How about this viewpoint? From a business that certainly knows how to trade

Or to extract

Asked if it would be better for the UK to quit an unreformed EU, he said: “I think it would be, because I really don’t think it would make a blind bit of difference to trade with Europe. There has been far too much scaremongering about things like jobs. I don’t think it’s in anyone’s interest to stop trade. I don’t think we or Brussels will put up trade barriers.”

The Uk is the EU’s biggest export market. They need our trade and we need theirs. It is quite simple.

Whilst my personal view is towards remaining in situ but with an agenda to roll back integration rather than roll out, it is hard to disagree with his conclusions

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Thomas Cook. Clueless?

Talking of a the value of a good name, what on earth is going on at Thomas Cook? I am sure most of you are already aware of this story

This is a classic case of a corporation suffering from little or simply malign leadership and leaving all decision making to the desperately narrow view of the “professionals”. When it came to actually taking a humane stance it was clear that the advice from lawyers was “you don’t have to” and from the accountants “think of the bottom line”

The clear headline story here is that Thomas Cook profited to the tune of £3.5m from the deaths of two children. That is not exactly good PR

This was a tragic dreadful story and TC should have pulled out all the stops to do the right thing. Someone with more intelligence and experience should have grasped this, slammed to door on the near autistic “advice” and simply “done the right thing”

What a horrible company. The quicker the internet booking services bring this seedy organisation to a close the better.

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The value of a good name

Screen-shot-2014-11-25-at-14.35.04This fascinating article highlights how a declining reputation can severely affect the value of a business and can actually be measured.

They have certainly picked a very good example and consider this

“At its peak in late 2011, Tesco’s market cap was around £32.2bn, half of which – £16.6bn – was the value of its reputation. By September 2014, its cap had dropped to £18.6bn, only £2.6bn of which was the value of its reputation”.

That is quite extraordinary but you can certainly see the basis of the measurement. In effect it is the residue value of the shares once the tangibles have been stripped out (I am assuming). This does in fact make perfect sense because a share price is a bet on the future and analysis of Tesco’s future is generally less than flattering. Not perhaps unexpected but what is significant is the sheer scale of the fall

In a roundabout way this does lead us to consider the most controversial of balance sheet items. Intangible assets, which are frequently little more than the perceived value of the brand. Clearly it could be argued that there is a direct link between a stock market valuation and the a book valuation, simply because the number is precisely what an independent source is telling us its value is. But is this so? And what of businesses that are not publicly quoted?

However the main lesson is how fragile a business’s reputation is. Tescos are rightly held up as a bad example but they are hardly alone whilst on the other hand certain businesses have fight to maintain a good name be it relatively fashionable and forward looking such as Apple or maybe Zara or established but strongly ethical such as GE or Sony maybe.

The one certainty is that there is certainly value in doing so

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Freedom for Clydesdale and Yorkshire?

1414663819164_wps_20_CT1GC7_Scotland_Branch_ofNo I am not talking about the election but the two banks who are set to be sold off and perhaps given some long overdue freedom. They have both had a seemingly difficult time under the NAB umbrella and the linked article will give some of the reasons why

From the invoice financing perspective, neither lender has been at all enthusiastic for new business, which is disappointing. Both have been very reluctant to engage with brokers such as myself. Hopefully this will now change. But it is the banking which is perhaps more significant. As has been repeated on these pages many times, the uk desperately needs more meaningful competition on the high street. Both of these two entities have a network to build on and names that are not tarnished.

And maybe not least because the respective regions they are aligned to have a well deserved reputation for… thrift…shall we say

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