Jameson Smith & Co Ltd

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Friday, 27 April 2012

Double-Dip Recession?


According to official data the UK has slid, albeit slightly, back in to a double-dip recession for the first time since the ‘70’s. Whilst I’m sure the opposition politicians will make political capital out of this and the economists will argue how accurate the statistics are, the real danger is that potential consumers and ‘blue chip’ companies will simply hang on to cash. With a very fragile revival and little sign of the banks coming to the rescue for small to medium sized businesses any time soon, this gloomy news will only add to depressing outlook for small companies when thinking about the double-dip recession.  

The government can argue that there is conflicting evidence that recent surveys have showed manufacturing, services and even construction all enjoyed decent growth in the first quarter of 2012. To my mind it does not really matter what the figures are saying, the bottom line is the historic figures by their very nature are telling us where we have been and not where we are now. It’s what happens next that will really matter for businesses across the UK. The banks who market themselves as being friendly to businesses are as usual nowhere to be seen and the vast majority of companies we have to assist could be helped with something as simple as an overdraft.  The banks are simply not lending, not to business and not for residential mortgages and they appear to be looking for any reason not to lend. It is no wonder why we are entering recession once more.

From a business' perspective, we should not be surprised, however, as the vast majority of banks have rarely been a supporter of businesses in the UK as generally speaking, the percentage of a banks profits that are generated by business lending is minimal, always has been.

Not lending for residential mortgages is extremely serious and this is new as the chaotic financial services regulations are making matters worse and frankly being used by the banks as a reason not to lend. Only a few years ago it was estimated that the property market generated around 38% of all financial services gross revenue; 33% of all building and construction and the smaller the company the more likely you are to get hit. More worryingly around 64% of all small builders, decorators, electricians, plumbers, carpenters depended on extensions and small build projects. Residential lending has fallen off a cliff and there is unlikely to be a recovery from this double-dip recession until the banks want to start lending again and stop building cash reserves driven by the concerns in Europe.

There is also a real problem with confidence or more importantly the lack of it. It’s estimated that the large corporates in the UK Top 100 are sitting on around £175 billion in cash, a problem that has also contributed to the recent double-dip recession. There is no hint that they are going to start investing in infrastructure, research and development, or shelved expansion plans. The lack of confidence does not stop there as you only have to look at the number of pubs, restaurants and retailers we help to know there is still very little spending going on too.

Unless we can find a way to encourage these large corporates to start investing and the average consumer to start spending we cannot depend on the banks to come to the rescue in the recession the second time around. Dr Adam Posen of the Bank of England’s Money Policy Committee has stated that he believes the economy will struggle until the banks start lending again. Until the situation in Europe is resolved I would not hold your breath as far as banks are concerned.

I wish there was a magic want to solve the problems in Europe and improve consumer and corporate confidence, but there isn't one. My advice is, ‘batten down the hatches’ and expect things to get worse this year. Streamline and focus on your strengths in your business as you will find little in the way of external support from the banks and although the news about the double-dip recession is gloomy, try not to focus on what the press are saying and spend that time thinking about how you can fortify your business model.

If you have tried to trade on, but for one reason or another business just has not improved pick up the phone for genuine help and support through times of insolvency. Speak with one of the team on 08000 746 757.

Thursday, 26 April 2012

Double-dip recession?

Despite entering a double-dip recession that was announced yesterday and the gloomy response from the media there are businesses all over the UK that are treating each day with a 'business as usual' mind-set. While this is great, we would recommend focussing your attention on your businesses strengths and streamline to make sure you come out of this recession in the best possible shape. There are plenty of businesses that are turning a profit after struggling for some time and when the economy takes a turn for the worst it can be a good idea to consider certain tools and solutions to help strengthen your company for the long-term. Some powerful business rescue tools such as a company voluntary arrangement or CVA which is allowing businesses to carry on trading through more financially challenging periods such as a double-dip recession!

To find out more about how a company voluntary arrangement can help your company to trade on get visit www.companydebt.com

Barclays bank makes £2.45 billion profit

In the first #quarter of this year #Barclays made a #profit of around £2.45 billion which is well ahead of their expectations.

#Barclays took a £300m hit to cover payment protection mis-selling claims, which has become a major cost in recent moths for most #banks.

In a bid to deal with the problem, it set aside a £1.3 billion cushion after a rise in #PPI claims.
It said the unexpected success were largely down to the UK's retail #banking division and Barclaycard, which both performed well.
Barclays chief executive Bob Diamond has been criticised over his £17.7 million pay package for 2011, which is expected to come under increased scrutiny at the bank's annual meeting on Friday despite recent moves to subdue a #shareholder rebellion.


Friday, 20 April 2012

Debenhams battles against "difficult" retail climate as profits edge up

High street retailer Debenhams overcame a “difficult” retail climate to post a 1.4% rise for its group like-for-like sales.
The retailer added it had reduced net debt by around £71.9m during the half-year period.
14 new stores are to be built while it is on target to complete around 45 stores modernisations within the next two years.
Chief executive Michael Sharp admitted that the business was “pleased” with results despite some of the previous challenges of a difficult autumn/winter period.
Debenhams has 164 stores in the UK and Ireland and they believe that there are opportunities for up to 240 stores in the not-too-distant future.
This all comes as a pleasant surprise after previous months on 'tender hooks', given the fragile environment within the retail industry recently. Many retail businesses are failing due to the growing pressure of insolvency for most across the UK.
For more information on how to tackle the threat of insolvency and what to do if your company is having cash flow problems visit www.companydebt.com.

Thursday, 19 April 2012

Tesco's second hand car venture fails

The recent failed venture into the second hand car business has taken a step for the worst as Tesco were not able to make a success of the new company.

Auto Online and Carsite, which traded as Tesco Cars collapsed this morning as the decision was made to pull the plug. Although the new website for the second hand car company was receiving around 80,000 hits a week the decision was made by Tesco that they would drop the idea. The change in direction was because Tesco did not feel that it was the right way to go.

In today's economy it may have been a good decision to not launch this new venture before it grew too large. Considering their options Tesco are likely to have thought about this opportunity in great depth.

For some companies, however, the resources are not there to be able to micro-analyse a business model before deciding to commit to it for many years. We help many directors that have found themselves in financial difficulty whether it was due to lack of support from their bank or pressure on cash-flow caused by the recession.

For company insolvency advice, business debt solutions and director support contact Jameson Smith & Co on 08000 746 757 or visit our website at: www.companydebt.com.



Wednesday, 18 April 2012

Hotels in Yorkshire due for tough time?

Almost a quarter of the region’s hotel businesses need to act fast to avoid failure, according to research by R3, the trade body for insolvency professionals.
The organisation found Yorkshire and Humber had the second highest levels in the UK of hotels at risk of failing in the next year, based on their QuiScore on Bureau Van Dijk’s Fame database.
In York, the figure rose to 28 per cent, with 36 out of 128 hotels and similar accommodation recording a Quiscore in the ‘caution’ and ‘high-risk’ bands, with seven per cent in the high risk bracket.
In Yorkshire and Humber, 101 out of 444 – 23 per cent – were considered at risk, with 5.8 per cent falling into the high-risk band.
Andrew Walker, chair of R3 in Yorkshire and partner at Irwin Mitchell, said: “The hotel industry is a vital to the regional economy, with York providing a major tourist destination and cities such as Leeds and Sheffield traditionally benefiting from business travel.
“Not only are hotels a major employer, the additional spend by visitors also provides a much-needed boost to other local businesses, supporting shops, restaurants and bars all of which have been suffering from the reduction in consumers’ disposable income.”

Tuesday, 17 April 2012

Retail Sector Challenge:

The retail sector must master multi-channel shopping to survive recession according to industry experts.

Big-name retailers will emerge from the current economic slump with bright prospects if they tailor their businesses to suit consumers' shopping habits. This comes with the knowledge that the number of retailers entering insolvent has recently increased.

www.companydebt.com

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Food Companies Struggling:

Premier Foods is one of the lowest-rated financially healthy retail companies in the UK, according to newly compiled research from Company Watch.

The owner of the Hovis and Mr Kipling brands came in with a H-Score of 14 out of 100, which is judged on aspects such as a business’ balance sheets and the prevalence of intangible assets. Premier Foods has also been in Company Watch’s Warning Area consistently for the past five years, with a health rating score of 25 or below.

The analysis is based on each company’s last five years’ published accounts, as processed through the Company Watch H-Score risk assessment model.

The average H-Score across the whole retail manufacturers sample was 52 out of a maximum 100.

Nick Hood, head of external affairs at Company Watch, said: “Our survey highlights the problems facing retail suppliers. They, like the retailers themselves, are suffering a knock-on effect from a fall in consumer confidence and reduced disposable incomes of shoppers. At a time when like-for-like sales are falling and consumers are demanding evermore value for money through deep discounts, retailers are inevitably making most suppliers share the pain.

“The accounts we examined are mainly for periods ending during the latter part of 2010 and early 2011, which means that these figures do not yet reflect fully the upward pressure on manufacturers’ costs from rising energy and commodity prices. Once these feed through, we can expect the financial health of the sector to deteriorate further, with more manufacturing companies falling into our Warning Area and becoming vulnerable to insolvency or restructuring.”

In total, 173 companies (25%) out of 681 of the UK’s largest food, non-alcoholic beverage and clothing manufacturers, were currently in its Warning Area, with health ratings of 25 or below out of 100.

Dairy Crest, producer of Cathedral City cheese, Utterly Butterly and Clover spreads, fell into the Warning Area category after its March 2011 results with an H-Score of 20 and was pushed deeper when its interim figures to September 2011 produced a lower H–Score of 16.

Drinks manufacturer Britvic, owner of the Robinsons, Tango and 7Up brands, also appeared in the Warning Area with a current H-Score of just 17 out of 100 – a financial rating partially driven by the high level of intangible assets, which are almost 15 times the company’s net worth.

Statistics on all UK companies for the past 14 years show that one in four companies in this ‘red danger zone’ have either gone on to file for insolvency or have undergone major financial restructuring.

With many industries hit hard with the economic situation it is no wonder why some are struggling to keep afloat. A large portion of some of the largest businesses in the UK are turning to insolvency solutions such as company voluntary arrangements (CVA's), pre pack administration and even liquidation as a way out of their current financial struggles.

www.companydebt.com