Transcript News - Institute of Fundraising

Reading company accounts
possibilities and limitations of
public domain information
sources
Public domain sources
information on individuals is scattered over
several of these
– and within each source
Wealth and income differ
wealth is a ‘stock’ – a snapshot at a particular
moment
a ‘balance sheet’ item
total assets minus total liabilities = ‘net worth’
income is a ‘flow’ over a given period,
typically a year
‘Realisable’ wealth
most assets have to be sold to be ‘realised’
(turned into actual cash)
selling may be restricted (share ‘lock ins’,
legal covenants, market conditions)
the easier and quicker an asset can be realised
the more ‘liquid’ it is
Liquidity of wealth
high – cash deposits, easily marketable
securities (government bonds, ‘blue chip’
shares)
medium (able to borrow against them) – real
estate, insurance policies
low – infrequently traded securities (dot.com
‘millionaires’)
other categories shift (property, precious
metals/stones, works of art) category according
to economic conditions
British official wealth statistics
not current – based on estates of deceased
admitted to probate in a given year
– but worth noting wills are in the public domain
however, aggregate data is available in terms
of asset values
Sources of personal wealth 2006
Non-financial
assets
Residential
buildings
Other
£ billion
% of total wealth
3,696
44.7
772
9.3
thus some 45% of personal wealth is tied up in
bricks and mortar
not easily fully ‘realisable’ – although can be
borrowed against
Land Registries
• official record of land ownership
• www.landreg.gov.uk
What Land Registry records tell you
registered owners of a property or piece of
land
(from 2000) price when last sold or estimated
value if newly registered
name of lender if it is mortgaged
Title number: CS72510
This title is dealt with by Land Registry, Plymouth Office.
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
Registry when this extract was issued.
REGISTER EXTRACT
Title Number : CS72510
Address of Property : 23 Cottage Lane, Kerwick, PL14 3JP.
Price Paid/Value Stated : £128,000
Registered Owners : Peter Andrew Bartram and Susan Helen Bartram of
: 23 Cottage Lane, Kerwick, (PL14 3JP).
Lender : ILKINGHAM BUILDING SOCIETY
The price paid/value stated information has been entered in the register since 1
April 2000.
- and what they don’t
not comprehensive (although effectively so)
current value of property
present size of mortgage outstanding
– residential mortgages often used to raise business
capital
most crucially – what real estate an individual
owns
Sources of personal wealth 2006
Financial assets
£ billion
% of total wealth
Life assurance &
pensions
Currency &
deposits
Securities &
shares
2,110
25.5
996
12.0
584
7.0
112
1.4
Other
Again much remains hidden
life assurance policies not in the public domain
pensions likewise (although some data for
directors of listed companies)
so we’ll concentrate on ‘securities and shares’
– and also directors’ remuneration
‘Securities and shares’
‘securities’ is more commonly used for both
– ‘shares’ confer ownership rights in companies and
are publicly recorded
– ‘securities’ here largely means holdings of ‘bonds’
(loans to governments and companies), which are
not
Business vehicles
Sole trader
Partnership
Company
Partnership forms
Limited Liability Partnerships (LLPs) –
treated like companies for disclosure purposes
and have to file accounts at Companies House
Limited Partnerships – no financial
statements filed
General Partnerships – not recorded at
Companies House
Companies
Private
Public
Listed
Private companies
often difficult to research in detail
exemptions from filing mean that only 1 in 8
of actively trading companies file accounts at
Companies House
less information in private company accounts
– so we’ll concentrate on Public Limited Liability
companies (PLCs)
Sources of data
primary
secondary
for an individual’s shareholdings and
dividends
directors’ remuneration
Primary shareholder data
recorded (along with any changes) in registers held
by company
– although this function outsourced to registrars by larger
firms with many shareholders
Annual Returns (include a full list of shareholders
and the number of shares held) filed at Companies
House
– ‘bulk shareholders lists’
Directors’ Report in annual report and accounts
show ‘substantial’ shareholdings
Notes to accounts show ‘directors’ emoluments’
Directors’ Report data
lists directors
charitable contributions by company
for PLCs only – ‘substantial shareholdings’
defined as 3% or more of total voting share
capital
Substantial Shareholdings
At 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 ordinary
share capital
Wheddon 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 Contributions
During the year the Group made charitable donations of £800 (2006:
£575).
Notes to accounts
‘Directors emoluments’ are shown as a note
however, less detail is available for smaller
companies
– data is shown as bands rather than exact figures
– individual directors’ salaries not identified
Listed companies only
following business scandals of late 1980s
growing emphasis on ‘corporate governance’
‘Cadbury’ and other reports incorporated into
‘Combined Code’ for companies listed on
London Stock Exchange
a ‘Remuneration Report’ for board members
filed with each annual report
n.b. only around 1,800 out of 11,500 PLCs are
listed
Remuneration report
details of holdings (and their share options) in
their company by individual directors is a key
item
RNS announcements
London Stock Exchange’s Regulatory News
Service provides immediate information to
market
any change in a director’s holdings must be
reported through the RNS
also acquisition by any party of a 3% plus
holding (or if existing one falls below this
threshold)
or if these holdings rise or decrease by more
than 1% of total voting share capital
Some good sources
Karen Blakeman’s portal (www.rba.co.uk)
London Stock Exchange itself
(www.londonstockexchange.com)
Hemmington Scott (www.hemscott.com)
Share options
rights given to directors to buy up to a given
number of their company’s shares at a set price
an incentive to push up market share price
director who has exercised their option will
profit if this rises above the ‘exercise price’ of
option
potentially very profitable so included in
Remuneration Report
A complication
shares can be held by ‘beneficial’ owners or by
‘nominees’ on their behalf
primary sources often show holdings in names
of nominees
no legal mechanism to force private companies
to reveal beneficial owners
but PLCs can demand ‘Section 212 Notices’
disclosing this for substantial holdings
Fund Manager
Nominee
Beneficial 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 services
confined to quoted companies
raw data taken from registrars, RNS
announcements, Section 212 notices
combined to allow analysis of both
– a company’s shareholding structure
– holdings by investors (but these are
overwhelmingly institutional rather than personal
investors)
Key UK services
Argus – The Owners Service
Citywatch
see ‘Share Ownership’ in business information
service aggregator Alacra (www.alacra.com)
Value of individual shareholdings
total number of shares held multiplied by
current share price (but check on trends in the
price)
however, shares only realisable if sold!
Dividends
income from shareholdings in those companies
actually paying them
payouts are recorded as ‘Dividends Per Share’ in the
‘profit and loss account’ of the annual report
– not the same as ‘Earnings Per Share’!
multiply this by number of shares held to find total
dividends an individual shareholder receives
Remuneration report
corporate governance debate recognised
salaries of directors are often only part of their
remuneration
so the report covers other elements
–
–
–
–
–
fees paid to them (such as ‘golden hellos’)
share options
bonuses
pension contributions paid by company
benefits (cars, private medical insurance, etc.)
Conclusions
public domain documentation is not sufficient
to research individual wealth
yet it has an useful role to play
just don’t expect assembling it to be quick or
easy!
Finally, a source of help when all else
has failed
Free Pint (www.freepint.com) – a global
community of researchers
the ‘Bar’ allows one to table a question – or
provide the answer or some guidance and
advice
Feel free to get in touch!
• Chris Murphy
• Ravensbourne Research Limited
• [email protected]
• [email protected]
• 020 8658 0487
• 0780 3507753