26 finance


Business confidence improves but growth remains elusive


Business confidence is improving, as the BDO Optimism Index increased by 1.7 points this month following its 21-year low reading in January, according to the latest Business Trends report by Southampton- based accountants and business advisers BDO LLP. Despite this increase, businesses still do not anticipate growth in the next two quarters and a sharp increase in the BDO Inflation Index points to further pressure on businesses bottom lines.


BDO‘s Optimism Index, which predicts business performance two quarters ahead, increased to 90.6 in February from a reading of 88.9 in January, the biggest increase in the index for five months.


In spite of this


increased optimism, the overall picture remains bleak, with the Optimism Index remaining well below the 95.0 mark which indicates growth, as it has been since May 2012.


BDO‘s Inflation Index, which measures inflationary expectations one quarter ahead, increased from 100.4 in January to 101.5 in February, its highest level since September 2012. These added inflationary pressures could hamper business performance over the coming three months.


In addition, BDO‘s Output Index, which predicts short-run turnover expectations, saw a decrease from 92.3 last month to 92.1 this month, suggesting that economic conditions will remain tough in three months time.


In particular, the services


sector continues to struggle, with a reading of 91.5, significantly below the 95.0 mark


which indicates growth. This is a cautionary sign for the UK economy, as the services sector accounts for roughly three quarters of total output.


Malcolm Thixton (pictured), lead partner, BDO Southampton, commented: ”We encourage the MPC to increase its Quantitative Easing programme, but the Government needs to take further action to ensure that funding goes to where it is most needed – to British business and to the housing market.


”Not only has the UK got the most consolidated banking market in the G7, it also has the smallest corporate bond market. Action needs to be taken both to address these issues and to help the banks to accelerate economic recovery.”


Wine estate reopens after MBO


Wickham Vineyard, which entered administration in December, reopened last month following a management buyout. Five of the original management team organised the buyout and have taken over sales and production as well as the Vineyard Restaurant.


The new company, Wickham Wine Estates, is headed by director Wilhelm Mead with Jonathan Rogers, who was estate manager and will now look after sales and marketing. The others are Julien Miran (production), Paulo Silva (IT) and Paul Dive, who has returned as restaurant manager and chef from Le Manoir aux Quat‘Saisons.


Wickham Vineyard entered administration after a failed attempt to expand into retail. It bought the leases to 14 former Threshers wine shops in 2011, and had plans to use them to enhance direct sales to customers


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while additionally selling local beer, however, the outlets were loss-making. The vineyard had also suffered two poor harvests. Yield fell from 105,000 bottles in 2010, to 40,000 bottles in 2011, then 5,000 bottles in 2012, where 115,000 had been expected.


Wickham Wine Estates purchased the wine owned by the old company Wickham Vineyard. It will lease the vines, land and buildings privately from Nitin Parekh, the owner of Wickham Vineyard. The shops, named Wine Shak, are not included in the deal and have been liquidated.


Rogers said: ”There are a few of us who actually care about this vineyard and we could not let it just fall apart, especially when we know how good it can be, even supplying wine for the Queen at a Jubilee lunch celebration last year.”


Time for more robust fund management


Before the financial crash, when returns were higher, investors felt comfortable with exercising little direct control over fund managers, writes Guillaume Fiastre, CEO of Taliance. But now, with a dramatic downturn in returns, investors are calling for tighter control over strategic and operational decisionmaking; they require predictable performance, accurate risk management and a relationship with a fund manager that is based not only on trust but also on qualified data and forecasts.


In response to these demands and to protect against a repeat of 2008, governments across the world are driving forward regulations that ensure there is more control over investment activity. To increase investor confidence and comply with regulations such as Alternative Investment Fund Manager Directive (AIFM), Solvency II and Basel III, fund managers will have to place a stronger emphasis on liquidity, transparency and accuracy. The more regulated real estate market requires frameworks that have clear financial modelling, while the availability of robust, well-qualified and up-to-date data will be critical. Reporting that previously had to be done yearly is now required monthly and even weekly.


The challenge is that until now, cumbersome spreadsheet-based analytical models have been the most widely embraced asset management solution. But as reporting has to be completed more regularly, the traditional use of spreadsheets has become arduous, particularly as data is siloed and has often to be manually keyed in. Continuing to work in this way means the risk of calculation errors and data security will only increase as the regulatory environment continues to become more complex and the volumes of data increase.


However, with the release of a new generation of decisionmaking software, that is not only a decisionmaking aid and simulation tool but is also user friendly, fund managers can build on top of their current systems capabilities – to collate, analyse and consolidate complex and disparate information in real time via one centralised system. With their multi- dimensional calculations engines and strong databases, the tools allow fund managers to get up-to-date information for a chosen asset across a range of comparative scenarios. With greater data control and transparency and the ability to securely share information with another user, fund managers can manipulate data to better inform decisionmaking without losing any of the functionality and friendliness of the current spreadsheet approach.


The future belongs to forward-thinking fund managers that are able to meet investor and regulatory requirements in a robust way, with many already reassessing their IT approach in order to do this. IT preparation and knowledge are the factors that will separate those able to meet future challenges from those that fall short – it‘s time to get ahead of the game.


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – APRIL 2013


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