Wednesday, 19 October 2011

Community Enterprise Reaches the High Street

We have both ends of the business scale here. One is a massive food manufacturer with brands that most of us have on our shelves and the other is a small community baker based in Dunbar.

First up is Premier Foods, better known for such store-cupboard favourites as OXO, Hovis, Mr Kipling and Bisto, to name but a few. They warned at the start of October 2011 that its full-year trading profit will fall below expectations. The UK’s biggest food manufacturer described current trading as “disappointing” with both sales and market share having declined over the last 12 months.

In the same week an article about a small community bakery in Dunbar, East Lothian caught my eye. Three hundred local residents have all invested a small amount of money in an attempt to revive their high-street. They hope to provide a new source of employment and training eventually developing a wholesale market as well as sales through the shop.

Now some of you will argue that Premier Foods has a raft of investors but I think we’re missing the whole point of why Dunbar Community Bakers can be successful. It’s about delivering a quality product to local people who care about what they are getting and who will actually use the product.

If you look down the list of executive directors for Premier, do we really believe that David Beever or Charles Smith are coming home and cracking open a jar of Loyd Grossman’s Thai Green Curry?

I wish them well and hope that we can see more social enterprises making it onto the high-street. As an aside, one of the 5 key priorities that the new chief executive of Premier, has identified is agreeing a refinancing plan. I wonder if he can learn something from a lesser known Scottish bakery?

You can check out Premier Foods latest financials at and if you want to monitor any credit/filing changes visit

Friday, 14 October 2011

Valuing a Company Using Its Abbreviated Accounts

You’re probably aware of the requirements for filing at Companies House [] and certainly with smaller companies, you have limited data to make any informed financial decision.

For those who want to value their own business or are looking to purchase another can look at the assets and liabilities to come up with a figure. A solvent company should be able to shut down all its operations, sell any assets, and pay creditors. The cash remaining establishes a floor value for the company. This approach is known as the net asset value or cost method valuation.

Watch out for weak performing companies that have strong tangible assets as this will skew your calculations.

Friday, 7 October 2011

How does Calculate Risk Score

We’ve had a few enquiries this week wanting to know about how the risk scores are calculated. We do have some pretty extensive help pages on at but just to answer this specific question, here’s what we do.

Companies are analysed over a 12 month period, hence why for newer companies we can’t always append a credit score. The below listed variables are run against our entire database of companies.

  • Age of Company
  • Company Size (separate calculations are used for SME’s and large PLC’s)
  • Financial Performance (figures from Companies House)
  • Age of Company Accounts
  • Ratio Analyses
  • Auditor Comments
  • Director History
  • Group Influence (if company is part of a group)
  • Demographics
  • Industry Insolvency Trends
  • Number, Value & Frequency of CCJ’s
  • Time Critical Filings

We are then able to assign an appropriate risk weighting and through statistical analyses generate the credit score.

Given the current economic climate, we are now applying SIC code insolvency statistical analyses to ensure successful businesses in certain sectors maintain their credit score.