reading company accounts possibilities and limitations of public domain information sources
Post on 23-Dec-2015
231 Views
Preview:
TRANSCRIPT
Reading company accountsReading company accounts
possibilities and limitations of possibilities and limitations of public domain information public domain information
sourcessources
Public domain sourcesPublic domain sources
information on individuals is scattered over information on individuals is scattered over several of theseseveral of these– and within each sourceand within each source
Wealth and income differWealth and income differ
wealth is a ‘stock’ – a snapshot at a particular wealth is a ‘stock’ – a snapshot at a particular momentmoment
a ‘balance sheet’ itema ‘balance sheet’ item
total assets minus total liabilities = ‘net worth’total assets minus total liabilities = ‘net worth’
income is a ‘flow’ over a given period, income is a ‘flow’ over a given period, typically a year typically a year
‘‘Realisable’ wealthRealisable’ wealth
most assets have to be sold to be ‘realised’ most assets have to be sold to be ‘realised’ (turned into actual cash)(turned into actual cash)
selling may be restricted (share ‘lock ins’, selling may be restricted (share ‘lock ins’, legal covenants, market conditions)legal covenants, market conditions)
the easier and quicker an asset can be realised the easier and quicker an asset can be realised the more ‘liquid’ it isthe more ‘liquid’ it is
Liquidity of wealthLiquidity of wealth
high – cash deposits, easily marketable high – cash deposits, easily marketable securities (government bonds, ‘blue chip’ securities (government bonds, ‘blue chip’ shares)shares)medium (able to borrow against them) – real medium (able to borrow against them) – real estate, insurance policiesestate, insurance policieslow – infrequently traded securities (dot.com low – infrequently traded securities (dot.com ‘millionaires’)‘millionaires’)other categories shift (property, precious other categories shift (property, precious metals/stones, works of art) category metals/stones, works of art) category according to economic conditionsaccording to economic conditions
British official wealth statisticsBritish official wealth statistics
not current – based on estates of deceased not current – based on estates of deceased admitted to probate in a given yearadmitted to probate in a given year– but worth noting wills are in the public domainbut worth noting wills are in the public domain
however, aggregate data is available in terms however, aggregate data is available in terms of asset valuesof asset values
Sources of personal wealth 2006Sources of personal wealth 2006
Non-financial Non-financial assets assets
£ billion£ billion % of total wealth% of total wealth
Residential Residential buildingsbuildings
3,6963,696 44.744.7
OtherOther 772772 9.39.3
thus some 45% of personal wealth is tied up in thus some 45% of personal wealth is tied up in bricks and mortarbricks and mortar
not easily fully ‘realisable’ – although can be not easily fully ‘realisable’ – although can be borrowed againstborrowed against
Land RegistriesLand Registries
• official record of land ownershipofficial record of land ownership• www.landreg.gov.ukwww.landreg.gov.uk
What Land Registry records tell youWhat Land Registry records tell you
registeredregistered owners of a property or piece of owners of a property or piece of landland
(from 2000) price when last sold or estimated (from 2000) price when last sold or estimated value if newly registeredvalue if newly registered
name of lender if it is mortgaged name of lender if it is mortgaged
Title number: CS72510 Title number: CS72510 This title is dealt with by Land Registry, Plymouth Office. This title is dealt with by Land Registry, Plymouth Office.
This extract shows information current on [date and time] and so does not take This extract shows information current on [date and time] and so does not take account of any application made after that time even if pending in the Land account of any application made after that time even if pending in the Land Registry when this extract was issued. Registry when this extract was issued.
REGISTER EXTRACT REGISTER EXTRACT Title Number : CS72510 Title Number : CS72510 Address of Property : 23 Cottage Lane, Kerwick, PL14 3JP. Address of Property : 23 Cottage Lane, Kerwick, PL14 3JP. Price Paid/Value Stated : £128,000 Price Paid/Value Stated : £128,000 Registered Owners : Peter Andrew Bartram and Susan Helen Bartram of Registered Owners : Peter Andrew Bartram and Susan Helen Bartram of : 23 Cottage Lane, Kerwick, (PL14 3JP). : 23 Cottage Lane, Kerwick, (PL14 3JP). Lender : ILKINGHAM BUILDING SOCIETY Lender : ILKINGHAM BUILDING SOCIETY
The price paid/value stated information has been entered in the register since 1 The price paid/value stated information has been entered in the register since 1 April 2000. April 2000.
- and what they don’t- and what they don’t
not comprehensive (although effectively so)not comprehensive (although effectively so)
current value of propertycurrent value of property
present size of mortgage outstandingpresent size of mortgage outstanding– residential mortgages often used to raise business residential mortgages often used to raise business
capitalcapital
most cruciallymost crucially – what real estate an individual – what real estate an individual ownsowns
Sources of personal wealth 2006Sources of personal wealth 2006
Financial assets Financial assets £ billion£ billion % of total wealth% of total wealth
Life assurance & Life assurance & pensionspensions
2,1102,110 25.525.5
Currency & Currency & depositsdeposits
996996 12.012.0
Securities & Securities & sharesshares
584584 7.07.0
OtherOther 112112 1.41.4
Again much remains hiddenAgain much remains hidden
life assurance policies not in the public domainlife assurance policies not in the public domain
pensions likewise (although some data for pensions likewise (although some data for directors of directors of listedlisted companies) companies)
so we’ll concentrate on ‘securities and shares’so we’ll concentrate on ‘securities and shares’– and also directors’ remunerationand also directors’ remuneration
‘‘Securities and shares’Securities and shares’
‘‘securities’ is more commonly used for bothsecurities’ is more commonly used for both– ‘‘sharesshares’ confer ownership rights in companies and ’ confer ownership rights in companies and
are publicly recordedare publicly recorded– ‘‘securities’ here largely means holdings of ‘securities’ here largely means holdings of ‘bondsbonds’ ’
(loans to governments and companies), which are (loans to governments and companies), which are notnot
Business vehicles
Sole trader Partnership Company
Partnership formsPartnership forms
Limited Liability PartnershipsLimited Liability Partnerships (LLPs) – (LLPs) – treated like companies for disclosure purposes treated like companies for disclosure purposes and have to file accounts at Companies Houseand have to file accounts at Companies House
Limited PartnershipsLimited Partnerships – no financial – no financial statements filedstatements filed
General PartnershipsGeneral Partnerships – not recorded at – not recorded at Companies HouseCompanies House
Companies
Private Public
Listed
Private companiesPrivate companies
often difficult to research in detailoften difficult to research in detailexemptions from filing mean that only 1 in 8 exemptions from filing mean that only 1 in 8 of actively trading companies file accounts at of actively trading companies file accounts at Companies HouseCompanies Houseless information in private company accountsless information in private company accounts
– so we’ll concentrate on Public Limited Liability so we’ll concentrate on Public Limited Liability companies (PLCs)companies (PLCs)
Sources of dataSources of data
primaryprimary
secondarysecondary
for an individual’s shareholdings and for an individual’s shareholdings and dividendsdividends
directors’ remunerationdirectors’ remuneration
Primary shareholder dataPrimary shareholder data
recorded (along with any changes) in registers held recorded (along with any changes) in registers held by companyby company– although this function outsourced to registrars by larger although this function outsourced to registrars by larger
firms with many shareholdersfirms with many shareholders
Annual ReturnsAnnual Returns (include a full list of shareholders (include a full list of shareholders and the number of shares held) filed at Companies and the number of shares held) filed at Companies HouseHouse– ‘‘bulk shareholders lists’bulk shareholders lists’
Directors’ ReportDirectors’ Report in annual report and accounts in annual report and accounts show ‘substantial’ shareholdingsshow ‘substantial’ shareholdingsNotesNotes to accounts show ‘directors’ emoluments’ to accounts show ‘directors’ emoluments’
Directors’ Report dataDirectors’ Report data
lists directors lists directors
charitable contributions by companycharitable contributions by company
for PLCs only – ‘substantial shareholdings’ for PLCs only – ‘substantial shareholdings’ defined as 3% or more of total voting share defined as 3% or more of total voting share capitalcapital
Substantial ShareholdingsAt the date of this report, the directors are aware of the following interests which represent a 3% or greater interest in the issued share capital of the Company in addition to those of the directors referred to in note 25 to the financial statements.
Number of Percentage of ordinary shares issued ordinaryshare capitalWheddon Limited 33,999,999 29.8%OMX Securities Nominees Limited 7,177,033 6.3%Pershing Keen Nominees Limited 5,996,808 5.3%
Charitable ContributionsDuring the year the Group made charitable donations of £800 (2006: £575).
Notes to accountsNotes to accounts
‘‘Directors emoluments’ are shown as a noteDirectors emoluments’ are shown as a note
however, less detail is available for smaller however, less detail is available for smaller companies companies – data is shown as bands rather than exact figuresdata is shown as bands rather than exact figures– individual directors’ salaries not identifiedindividual directors’ salaries not identified
Listed companies onlyListed companies only
following business scandals of late 1980s following business scandals of late 1980s growing emphasis on ‘corporate governance’growing emphasis on ‘corporate governance’‘‘Cadbury’ and other reports incorporated into Cadbury’ and other reports incorporated into ‘Combined Code’ for companies listed on ‘Combined Code’ for companies listed on London Stock ExchangeLondon Stock Exchangea ‘Remuneration Report’ for board members a ‘Remuneration Report’ for board members filed with each annual reportfiled with each annual report
n.b. only around 1,800 out of 11,500 PLCs are n.b. only around 1,800 out of 11,500 PLCs are listedlisted
Remuneration reportRemuneration report
details of holdings (and their share options) in details of holdings (and their share options) in their company by individual directors is a key their company by individual directors is a key itemitem
RNS announcementsRNS announcementsLondon Stock Exchange’s Regulatory News London Stock Exchange’s Regulatory News Service provides Service provides immediateimmediate information to information to marketmarket
any change in a director’s holdings must be any change in a director’s holdings must be reported through the RNSreported through the RNS
also acquisition by any party of a 3% plus also acquisition by any party of a 3% plus holding (or if existing one falls below this holding (or if existing one falls below this threshold)threshold)
or if these holdings rise or decrease by more or if these holdings rise or decrease by more than 1% of total voting share capitalthan 1% of total voting share capital
Some good sourcesSome good sources
Karen Blakeman’s portal (Karen Blakeman’s portal (www.rba.co.ukwww.rba.co.uk))
London Stock Exchange itself London Stock Exchange itself (www.londonstockexchange.com)(www.londonstockexchange.com)
Hemmington Scott (www.hemscott.com)Hemmington Scott (www.hemscott.com)
Share optionsShare options
rights given to directors to buy up to a given rights given to directors to buy up to a given number of their company’s shares at a set pricenumber of their company’s shares at a set pricean incentive to push up market share pricean incentive to push up market share pricedirector who has exercised their option will director who has exercised their option will profit if this rises above the ‘exercise price’ of profit if this rises above the ‘exercise price’ of optionoptionpotentially potentially veryvery profitable so included in profitable so included in Remuneration ReportRemuneration Report
A complicationA complication
shares can be held by ‘beneficial’ owners or by shares can be held by ‘beneficial’ owners or by ‘nominees’ on their behalf‘nominees’ on their behalfprimary sources often show holdings in names primary sources often show holdings in names of nomineesof nomineesno legal mechanism to force private companies no legal mechanism to force private companies to reveal beneficial ownersto reveal beneficial ownersbut PLCs can demand ‘Section 212 Notices’ but PLCs can demand ‘Section 212 Notices’ disclosing this for substantial holdingsdisclosing this for substantial holdings
Fund ManagerFund Manager
NomineeNominee Beneficial OwnerBeneficial Owner
MULTI-MANAGED
CHASE NOMINEES LIMITED REQUIRES 212 REPLY
RBSTB NOMINEES LIMITED REQUIRES 212 REPLY
VIDACOS NOMINEES LIMITED REQUIRES 212 REPLY
BT GLOBENET NOMINEES LIMITED REQUIRES 212 REPLY
VIDACOS NOMINEES LIMITED REQUIRES 212 REPLY
CHASE NOMINEES LIMITED REQUIRES 212 REPLY
MELLON NOMINEES UK LIMITED BOSTON SAFE CUSTODIANS
CHASE NOMINEES LIMITED REQUIRES 212 REPLY
BANK OF NEW YORK NOMINEES LIMITED REQUIRES 212 REPLY
KAS NOMINEES LIMITED REQUIRES 212 REPLY
BT GLOBENET NOMINEES LIMITED REQUIRES 212 REPLY
NORTRUST NOMINEES LIMITED REQUIRES 212 REPLY
MELLON NOMINEES UK LIMITED BOSTON SAFE CUSTODIANS
NORTRUST NOMINEES LIMITED REQUIRES 212 REPLY
BANK OF IRELAND NOMINEES LIMITED REQUIRES 212 REPLY
RBSTB NOMINEES LIMITED ELECTRICITY SUPPLY PENSION SCHEME
Secondary shareholding servicesSecondary shareholding services
confined to quoted companiesconfined to quoted companiesraw data taken from registrars, RNS raw data taken from registrars, RNS announcements, Section 212 noticesannouncements, Section 212 noticescombined to allow analysis of bothcombined to allow analysis of both– a company’s shareholding structurea company’s shareholding structure– holdings by investors (but these are holdings by investors (but these are
overwhelmingly overwhelmingly institutionalinstitutional rather than personal rather than personal investors)investors)
Key UK servicesKey UK services
Argus – The Owners ServiceArgus – The Owners Service
CitywatchCitywatch
see ‘Share Ownership’ in business information see ‘Share Ownership’ in business information service aggregator Alacra (www.alacra.com)service aggregator Alacra (www.alacra.com)
Value of individual shareholdingsValue of individual shareholdings
total number of shares held multiplied by total number of shares held multiplied by current share price (but check on trends in the current share price (but check on trends in the price)price)
however, shares only realisable if sold!however, shares only realisable if sold!
DividendsDividends
income from shareholdings in those companies income from shareholdings in those companies actually paying themactually paying them
payouts are recorded as ‘Dividends Per Share’ in the payouts are recorded as ‘Dividends Per Share’ in the ‘profit and loss account’ of the annual report‘profit and loss account’ of the annual report– not the same as ‘Earnings Per Share’!not the same as ‘Earnings Per Share’!
multiply this by number of shares held to find total multiply this by number of shares held to find total dividends an individual shareholder receivesdividends an individual shareholder receives
Remuneration reportRemuneration report
corporate governance debate recognised corporate governance debate recognised salaries of directors are often only part of their salaries of directors are often only part of their remunerationremunerationso the report covers other elementsso the report covers other elements– fees paid to them (such as ‘golden hellos’)fees paid to them (such as ‘golden hellos’)– share optionsshare options– bonusesbonuses– pension contributions paid by companypension contributions paid by company– benefits (cars, private medical insurance, etc.)benefits (cars, private medical insurance, etc.)
ConclusionsConclusions
public domain documentation is not sufficient public domain documentation is not sufficient to research individual wealthto research individual wealth
yet it has an useful role to playyet it has an useful role to play
just don’t expect assembling it to be quick or just don’t expect assembling it to be quick or easy!easy!
Finally, a source of help when all else Finally, a source of help when all else has failedhas failed
Free Pint (Free Pint (www.freepint.comwww.freepint.com) – a global ) – a global community of researcherscommunity of researchers
the ‘Bar’ allows one to table a question – or the ‘Bar’ allows one to table a question – or provide the answer or some guidance and provide the answer or some guidance and adviceadvice
Feel free to get in touch!Feel free to get in touch!
• Chris MurphyChris Murphy• Ravensbourne Research LimitedRavensbourne Research Limited
• ravensbourneresearch@tiscali.co.ukravensbourneresearch@tiscali.co.uk• chrismurphy1999@yahoo.co.ukchrismurphy1999@yahoo.co.uk• 020 8658 0487020 8658 0487• 0780 35077530780 3507753
top related