Posted on

Poor financial reporting

Poor financial reporting by banks and other financial institutions can be seen as a core contributor to the financial crisis and the lack of trust in the financial sector that ensued. Despite the lessons of a decade ago, we are still hearing of accounting scandals today – Tesco, BT, Carillion to name but a few.

Financial reporting is critical to trust in business. Misleading accounts will undermine the confidence of investors and other stakeholders to the point where financial support can dry up and the franchise is lost.

Most accounting involves judgment and all judgment contains an ethical dimension.  Fund managers should always remember that International Financial Reporting Standards (IFRS) are principles-based; therefore, financial statements which are prepared in accordance with IFRS reflect judgments and assumptions made by boards.

Bearing in mind that shareholders are the primary users of financial statements, they should provide feedback – both positive and critical – to boards of investee companies about the quality of their financial reporting, especially their consistency and comprehensibility.  Indeed, those who are signatories to the UK Stewardship Code have a responsibility to consider the quality of a company’s reporting and they should not shirk from fulfilling this.  Their views should be seen as invaluable and should be listened to and evaluated carefully by independent non-executive directors.

Posted on

South East of England office market at highest volume

Investment  in the South East of England office market reached £1.3 billion in the third quarter of 2017, the highest quarter on record since 2013, the latest index shows.

Despite a slow first half of the year, this takes total office investment in the South East in 2017 to 2.3 billion, some 60% higher than the 10 year average for the period from the first to the third quarters.  Overseas buyers were the source of the majority of investment in the third quarter, with foreign equity accounting for 67% of volumes, according to the index report from real estate firm Knight Frank.

The report shows, however, that occupier activity in the South East has by contrast, not been as brisk. Take-up reached 544,400 square feet in the third quarter, bringing the 2017 total so far this year to 2.1 million square feet, some 11% short of the 10 year average for the period.

It also shows that average deal size has been lower in 2017, with only three deals over 50,000 square feet completed in comparison to nine by the third quarter of last year. Nonetheless, the M4 corridor, which has been the subject of significant development activity in the past 12 to 18 months, has held its respective long term take-up trend with 1.2 million square feet transacted in 2017.

Demand from the Telecoms, Media and Technology (TMT) sector has been particularly strong this year, with the sector accounting for 37% of take-up. Of the office space under offer in the South East, 54% is located along the M4 corridor; suggesting a strong end to the year.

Posted on

TMF Group to float on London Stock Exchange

Services firm TMF Group is set to announce a £1bn float on the London Stock Exchange this week, shunning a listing in Amsterdam in favour of the City.

The business services firm could announce its IPO as early as tomorrow.

The float, which could raise as much as £200m or more, will be the third biggest London IPO this year after Allied Irish Banks and Charter Court Financial Services.

The company, which provides tax, admin and legal support services, already boasts more than half of all FTSE 100 companies as clients.

TMF is headquartered in Amsterdam, and was reportedly considering listing on the Dutch market but its private equity owner DH has now settled on London.

It is thought the complexity of Brexit will provide opportunities for the company as firms turn to its services for extra support.

The firm employs more than 7,000 people, and has more than 50,000 clients. City A.M.understands that around 80 per cent of TMF’s business is predictable at the start of every year, because its services are necessary rather than discretionary.

TMF’s biggest client accounts for just one per cent of revenue.

Goldman Sachs and HSBC were leading advisors on the deal, with a syndicate of other banks.