Business Information: Latest Reports and Business Shorts
China's next wave of global business giants. ACCA (the Association of Chartered Certified Accountants) has published a report, 'China's Next 100 Global Giants', which identifies 100 fast-growing Chinese businesses that have the right mix of characteristics to emerge as global giants over the next three to five years. Companies such as film and record company Huayi Brothers Media Corp – China's equivalent of Warner Bros – are amongst the top 100. The report, authored by Professor Andrew Atherton, deputy vice chancellor at Lancaster University, also points to four case studies of Chinese companies and looks at how they have got to the cusp of global growth. Ada Leung, head of ACCA China, commented: “It's not just about their balance sheets, it's about growth. These companies' future growth trajectories are based on sustained annual levels of growth from 2008-2012. The majority of the top 100 companies we have identified have doubled in size and in some cases quadrupled. They are clearly doing something right.” View the full China's Next 100 Global Giants list and report at ACCA's website - http://www.accaglobal.com/gb/en/technical-activities/technical-resources-search/2014/september/chinas-next-100-global-giants.html.
Despite accounting for less than 1% of all UK firms, mid-market companies generate over £1 trillion in revenue every year. According to new research from BDO LLP, despite accounting for less than 1% of all UK firms, mid-market companies generate over £1 trillion in revenue every year. This amounts to nearly a third (31.3%) of all private sector turnover, and one in four private sector jobs (over 6.2 million) across the UK. However, according to BDO, the UK's mid-market is caught in a 'policy and profile' gap: too large to benefit from policies tailored to small business, but too small to win the attention that FTSE firms command from the media and policy makers. Simon Michaels, Managing Partner at BDO, said: "Compared to other European nations, Britain's middle-market is undervalued and overlooked. Despite already contributing a remarkable amount to UK GDP and jobs, these businesses have the potential to deliver even more." To view BDO's news release go to http://www.bdo.co.uk/press/undervalued-and-overlooked-uks-1-trillion-mid-sized-businesses-need-more-support,-says-bdo. To access the full report with BDO's ideas on how the mid-market can contribute even more go to http://midmarketmanifesto.com/.
CBI reports that UK manufacturers' export books are at their weakest since January 2013. According to the CBI's latest Industrial Trends Survey, the UK's manufacturers had a mixed month in September, with production continuing to rise steadily but order books deteriorating. The survey of 488 manufacturers across the UK was carried out between 20th August and 10th September and revealed that output growth remained solid in the last quarter and is expected to strengthen further in the coming three months. But firms saw total order books fall below “normal” levels, and export order books worsened significantly, and are now at their weakest since January 2013. Katja Hall, CBI Deputy Director-General, said: “Against a backdrop of acute political uncertainty at home and abroad, exports orders for UK manufacturers are faltering, which is disappointing. To view the CBI's news release go to http://www.cbi.org.uk/media-centre/press-releases/2014/09/uk-manufacturing-growth-holds-up-but-orders-weaken-cbi/.
Economic recovery comes with cash flow woes for some UK businesses. The number of businesses just paying the interest on their debts – a key characteristic of ‘zombie businesses’ – has jumped from 103,000 in November 2013 to 154,000 now, according to research by R3. This is the highest number of businesses in this position in eighteen months. But rather than a return of the ‘zombie business’ phenomenon, insolvency practitioners suspect that late payment and over-trading problems associated with economic recovery are behind the rise. Giles Frampton, president of R3, commented: “Businesses will get into trouble if they’re trying to run before they can walk and don’t get paid quickly enough for the work they’re doing. Access to new finance is still tight so businesses low on cash have limited options to give themselves some breathing room.” The R3/BDRC research also shows that 135,000 businesses are currently negotiating payment terms with their creditors, up from 74,000 in February 2013. To view R3's news release go to http://www.r3.org.uk/index.cfm?page=1114&element=20196&refpage=1008.
Cash position and margins are not sustainable for the future of the UK construction industry, says KPMG report. According to a new report published by KPMG, analysis of the largest UK construction contractors indicates that despite greater deal-flow, the financial position of many contractors remains weak, with cash balances and margins down. The report 'Construction Barometer: Recovery in Sight?' analyses the operating margins, cash balances and order books of 14 Tier 1 contractors from 2007 through to 2013. The detailed analysis revealed that net cash balances declined in 2013 and are now close to half their 2010 peak. Operating margins in construction also continue to be squeezed: from a high of 2.8% across the industry in 2010 to an average of just 1.2% in 2013. Richard Threlfall, KPMG UK's Head of Infrastructure, Building and Construction, commented: “Construction contractors have been struggling with some of the most difficult market conditions ever encountered and even now – with all evidence pointing to sustained recovery – the industry faces real profitability challenges." To view KPMG's news release go to http://www.kpmg.com/uk/en/media/Pages/default.aspx. To view the full report go tohttp://www.kpmg.co.uk/creategraphics/09_2014/Construction_Barometer/index.html.
UK SME growth hampered by cash flow concerns. One in five (21%) UK SMEs cite cash flow as a major challenge to growth, according to a new study by Albion Ventures. Albion’s research shows that cash flow concerns are far higher among firms that are increasingly confident about the future and have attempted to raise finance for growth, suggesting that it is a problem of success rather than failure. According Albion's report, cash flow concerns were the most acute among firms in the cash-hungry production sector. These firms recorded the highest level of business confidence with 84% predicting growth over the next two years versus an average of 62% among all SMEs polled. Sole traders are particularly sensitive to cash flow problems with one in four (24%) citing this as a major challenge compared to just 12% among larger SMEs with over 50 employees. Regionally, businesses in the South West and Wales were most affected by cash flow problems. For further information go to http://www.albion-ventures.co.uk/about/growth/2014/index.html.
S&P Capital IQ indicates that the United Kingdom has low corporate credit risk, but concerns remain elsewhere in Europe. In the latest issue of its report, Credit Market Pulse, S&P Capital IQ finds that Scotland’s mapped credit score and those of the UK both including and excluding Scotland are within one notch – a relatively small difference. However, the research suggests, that on a sector by sector basis, corporate credit risk is less balanced. The current issue of Credit Market Pulse also finds a striking alignment between corporate credit risk levels and sovereign ratings for troubled Mediterranean European countries. The median credit risk scores of large financial and non-financial corporations either match or are just one notch off the sovereign rating of their domestic markets. According to the report, Portuguese companies exhibit the greatest volatility and credit risk in Greece remains very high. To view S&P Capital IQ's news release go to bit.ly/1B3lfke. The latest issue of Credit Market Pulse can be downloaded atbit.ly/1mqysSO.
Credit Managers anticipate improved cashflow to the end of 2014 according to Tinubu Square. Tinubu Square has carried out independent research which has found that 60% of the credit managers it interviewed anticipate improvements in their cash flow situation now that the UK economy is improving. 54% said that they envisaged a change in the credit period taken by their customers in the current year, whilst 43% felt that it would remain the same. Only a quarter reported that the value of their bad debt had increased, whilst the rest said it had gone down or stayed the same. The positive outlook is also reflected in the most recent Credit Managers Index, published by the Institute of Credit Management and sponsored by Tinubu Square. The Index for Q2 2014, shows that actual levels of business are increasing and companies are demonstrating a broader appetite for risk. To view Tinubu Square's news release go tohttp://www.tinubu.com/app/webroot/tinubu_research.pdf.
QBE research reveals one in two businesses struggle to demonstrate the value of risk management. Recent research by QBE has revealed that 54% of businesses have taken on a range of completely new risk exposures over the last two years and 68% recognised a need to strengthen, enhance and support their approach to managing risk. While no single activity dominated in terms of requiring improvement, the ability to demonstrate return on investment was cited by the largest number of respondents (50%) as in need of development. In addition, 29% of risk decision makers felt that the overall level of risk had increased in the last six months, while over half (54%) of the businesses surveyed felt they had gained exposure to one or more completely new areas of risk in the last two years. Click here to view QBE's news release.About this issue's sponsor: XL GroupXL Group plc (NYSE:XL), through its subsidiaries, is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises throughout the world. XL Group’s 4000 employees are deployed across 60 offices in 22 countries. The company maintains an A+ (stable) rating from S&P and as of year-end 2013 had more than $11 billion in consolidated shareholder’s equity and annual premiums in excess of $7.4 billion. XL is the company clients look to for answers to their most complex risks and to help move their world forward.
XL Group is a market leader in the provision of Political Risk and Trade Credit products with dedicated underwriting teams in New York, London and Singapore. In 2013 the group established a Trade Receivable Insurance (“TRI”) practice, headquartered in Baltimore, Maryland and supported by underwriters in London and New York and a risk and operations team in Gurgaon, India offering coverage on short-term receivables residing with single or multiple private sector buyers on trade-related transactions. Policy limits of liability of up to $100 million can be supported with individual buyer limits of up to $50 million. The XL TRI team underwrites whole-turnover and named buyer programs on a direct basis and works with other carriers to support syndications, top-up and excess layer coverages.
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