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OMB Confidence Hits New Highs
Confidence levels amongst owner managed businesses (OMBs) are at their highest level since the “Owner Managed Business (OMB) Barometer” report from Bank of Cyprus UK was launched in early 2013.
More OMBs have a positive outlook than at any other time in the past year, with nearly half of respondents (46%) expecting sales and revenue to grow in the next quarter, compared to less than a third (32%) in our second report in July 2013.
Looking further ahead, more than half (56%) of OMBs expect their sales and revenue to increase over the next 12 months, up from 43% in our second report.
Recent reports that next year’s GDP will return to pre-crisis levels, is reflected in the research findings. Whereas in our second report in 2013, 70% of respondents believed the economy was not in good shape, this figure had
dropped to 50% at the end of the year.
The recent increase in optimism amongst small business owners is more than welcome, as they have had little to celebrate for the last five years. Two in five (39%) OMBs say they have won new contracts in the last six months and over a tenth (12%) have entered new sectors in the UK.
Tony Leahy at Bank of Cyprus UK, commented: “Given the difficulties OMBs have faced since the recession hit, it is encouraging to see small businesses winning new business and actively growing”
“However, there is clearly still a long way to go. It is therefore vital that OMBs and their banks continue to work closely together to ensure this upward momentum is maintained”
Growth in asset-backed pension fun 2014
Asset-backed contributions (ABCs) for pension schemes (where a sponsoring employer uses business assets to secure cash which is paid to the pension scheme) saw a significant increase during 2013, and the rate of new implementations is gathering pace according to the 2014 asset-backed funding survey from the Pensions team at KPMG in the UK.
Twenty three ABCs were made in 2013, nearly doubling the total number in the market, while the total value of transactions grew by nearly £2bn to over £7bn. This acceleration in the rate of new ABCs reflects the continuing challenges facing pension scheme sponsors, and these are expected to drive further growth in 2014.
Based on market conditions and continued high interest from employers, KPMG predicts that the rate of new ABCs will increase further in the next year.
David Fripp, Pensions Partner at KPMG in the UK, said: “Growth in the use of ABCs during 2013 was largely driven by challenging market conditions over recent years. These conditions have persisted into 2014, and we’re finding that increasing numbers of companies and trustees are turning to ABCs to fund part or all of their deficits.”
The main drivers for the 12
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uplift in ABCs predicted by KPMG are:
• Continued pressure
for companies to fund large deficits as quickly as possible: with low current levels of gilt yields many fear that this will lead to trapped surplus in the future as yields return to normal levels.
• Peace of mind: the security inherent in an ABC can provide a more attractive alternative for Trustees to a traditional recovery plan.
• Meeting other objectives: companies are increasingly using ABCs to finance other goals such as merging pension schemes or
facilitating insurance or de- risking.
The Pensions Regulator published guidance on ABCs during November 2013. This brings more clarity to the Regulator’s thinking on these structures, which, according to KPMG, is likely to contribute to growth in 2014. David Fripp explains:
“The Regulator’s guidance highlights a number of risks
for trustees to
consider when assessing an ABC proposal, and largely reflects existing best practice. However, while the guidance may not lead to significant changes in practice, it provides a helpful framework for companies and trustee
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