Get documents about "Types of company and management structures
Document Sample
Understanding and using
accounts for wealth research
Christopher Murphy
Ravensbourne Research
Limited
Topics
Business vehicles
Types of share
Options
Valuing businesses
Data sources
Business vehicles
Company Partnership Sole Trader
Limited liability
many businesses (and nearly all those of
much size) have limited liability
their owners stand to lose only their
investment in the business if things go
wrong
so their personal assets are safe from
creditors
Business vehicles
Company Partnership Sole Trader
Companies
Unlimited Limited
Limited by Guarantee
Limited by Shares
Limited companies
denoted by word ‘Limited’ or ‘Ltd’ in their
name
warns other parties that the owner’s liability
is limited to their investment in the firm
potential creditors thus know that the
owner’s personal assets cannot be seized if
the company doesn’t pay what it owes
Limited by guarantee
• over 90,000 companies have no share
capital
• the liability of their owners (‘members’) -
‘guarantors' as opposed to
‘shareholders’ -is limited by guarantee
• a popular legal form for charities,
educational bodies
Limited by shares
• far more common (well over 2 million of
them)
• liability of the members – ‘shareholders’ –
is limited to the nominal value of their
shares
• nominal (‘face’ or ‘par’) value of shares is
very different from their market value
• shares with nominal value 10 pence each,
currently being traded on stock market at 643
pence
Partnerships
Ordinary Limited Limited Liability
Limited Liability Partnership
• LLP form available since 2001
• limited liability for non-negligent partners
• but not for those judged negligent
• has proved very popular (over 40,000)
• treated like companies for filing
purposes, thus have to file accounts
LLP ‘Designated Members’
there must be at least two
they are responsible for company
secretary type duties
all members may be designated members
Limited companies
Limited by Shares
Public Private
Public and private companies
• public companies may offer shares to
public
• ‘Public Limited Company’ or ‘PLC’
• private companies may not
• tighter rules apply to PLCs
Exemptions from disclosure
based on company size
• size of PLCs irrelevant - no
exemptions
• nor for large private companies
• medium and small companies get
disclosure exemptions - if they choose
to claim them
Limited by Shares
Public Private
Small
Medium
Large
Disclosure requirements
for small companies
must file a balance sheet
• need not file
• profit and loss account
• directors’ report (though these are usually
filed voluntarily)
Definition of a small company
• meets at least two out of three conditions
• turnover (sales) doesn’t exceed £5.6 million
• balance sheet total (i.e. either total assets or
total liabilities) doesn’t exceed £3.26 million
• average number of employees doesn’t
exceed 50
PROFILE 30/04/2009
12 months
GBP
Turnover
Profit (Loss) before Taxation
Net Tangible Assets (Liab.) 259,715
Shareholders Funds 263,407
Profit Margin (%)
Return on Shareholders Funds (%)
Return on Capital Employed (%)
Liquidity Ratio 5.48
Gearing Ratio (%) 0.12
Number of Employees
Bad news for researchers
full accounts filed by
just 1 in 8 actively
trading companies
Limited by Shares
Public Private
Unquoted Quoted
Listed on LSE
Quoted elsewhere
Listed plcs
• only PLCs may join London Stock
Exchange
• thus becoming a ‘listed company’
• however most Plcs are not listed
• only about 2,000 out of 8,300
Quoted companies
• ‘listed’ and ‘quoted’ used virtually synonymously,
but a distinction can be made
• companies may choose to be quoted on markets
other than the London Stock Exchange, e.g.
• PLUS Markets Group (formerly Ofex) quotes share
prices for over 100 UK companies
• NASDAQ OMX
• while not listed their shares are ‘quoted’ and
more data is available
Business vehicles
Types of share
Options
Valuing businesses
Data sources
Types of share
Ordinary shares Preference shares
• most common type • don’t have voting rights
• also called ‘equity’ • pay a fixed dividend
shares • preference share
• usually carry voting dividends paid before
rights ordinary ones
• last in queue for
dividends
Other types of preference share
cumulative preference share - get missed
dividends from earlier years
participating preference shares - get extra
dividends in very good years
redeemable preference shares
Convertible preference shares
‘convertibles’
can be converted into equity shares
Rewards from shareholding
shares are safer, but upside probably
limited
equity shares more risky, potentially more
rewarding
convertibles offer a two-way bet
Nominal v beneficial owners
nominal owners are those listed in public
records like Annual Returns
– used by large portfolios for administrative
convenience
– and to conceal real owners’ identity
Business vehicles
Types of share
Options
Valuing businesses
Data sources
Options
rights granted to directors to buy a certain
number of shares at a set price within a
limited period
idea is to align individual performance with
company’s fortunes
when actual share price exceeds exercise
price scope for director making a profit
But
usually conditional
‘forfeited options’ – lost by director leaving
or failing to meet performance targets
sometimes they lapse before end of
exercise period
Option terminology
‘vesting’ – delay between award of option
and them being exercisable
‘partial vesting’ – vested in stages
‘cliff’ – no shares vested in first period
‘submerged’ options – exercise price
below option price
‘deemed’ – director doesn’t actually own
individually (pension scheme)
Business vehicles
Types of share
Options
Valuing businesses
Data sources
Many valuation techniques
Market Capitalisation (market cap)
Earnings and Dividend payout multiples (PER &
DPS)
Total Shareholder Returns (TSR)
Net Asset Value (NAV)
Discounted Cash Flow (DCF)
acquisition prices paid for comparable
companies (comps)
sectoral ‘rules of thumb’
EV/EBITDA
Even for quoted companies
valuation is a judgement, not a purely
objective science
Price earnings ratio
probably most common ratio used
relates the earnings (profits) a company
delivers to the share price (the price for
those earnings)
Definition of PER
current share price divided by earnings
per share
i.e. £5/25 pence= PER of 20
jargon –’PE’,’20 times earnings’,’multiple
of 20’
Private companies
even more difficult
– no share price quotations to help us
traditional discount of a private company’s
value compared with a quoted one
PER for private companies
‘earnings’ are post-tax profits
‘price’ is what a comparable company is
sold for
BDO
Private Company Price Index (PCPI)
measures trends in prices
www.bdo.co.uk/library
But differences in PERs
private company discount usually higher
for smaller companies
PERs vary between sectors
best to look at closest comparators
‘Bottom line’
‘earnings attributable to equity shareholders’
could all be paid out (‘distributed’) to the
shareholders as dividends
but management often ‘retain’ (reinvest in
the business) part or all of the profit
Earnings Per Share (EPS)
Earnings attributable to ordinary
shareholders
– divided by number of issued ordinary shares
Dividends
depends on size of ‘earnings attributable
to ordinary shareholders’
and dividend policy chosen by board
measured by ‘Dividends Per Share’ (DPS)
individual dividend pay-outs determined by
DPS multiplied by number of shares they
hold
Business vehicles
Types of share
Options
Valuing
Data sources
Shareholders
individual holdings shown in ‘Annual
Return’
but may be hidden behind nominees
– no mechanism for identifying beneficial
owners in private companies
Directors’ report
shows holdings by individual directors
in quoted companies lists all shareholders
holding over 3% of total voting share
capital
%
issued
share No. of ordinary
Holder capital shares
VA Partners I, LLC, ValueAct Capital Management, L.P.,
eholdings
ValueAct Capital Management, LLC, ValueAct Holdings, L.P.,
he voting interests shown below in the ordinary share capital of the Company, disclosable under the Financial Services Authority’s Disclosure and Transparency Rules, had been notif
ValueAct Holdings, L.P., and ValueAct Holdings GP, LLC1
25.74% 140,764,642
Schroders plc on behalf of Schroder Investment Management Ltd,
Schroder Investment Management North America Ltd and Schroder &
Co Ltd
5.33% 26,708,863
Legal & General Group Plc and its subsidiaries
3.99% 21,868,430
Lloyds TSB Group plc
3.02% 16,492,181
Regulatory News Service
London Stock Exchange’s RNS shows
purchases or sales of over 3% of voting
share capital
above this movements of 1% up or down
in a holding
any acquisitions/disposals by a director
RNS Number : 9195H
Leyshon Resources Limited
02 March 2010
Leyshon Resources Limited
Holding in Company
Leyshon Resources Ltd. ("Leyshon") (AIM & ASX: LRL) was informed on 26 February
2010 that Arredo Pty Ltd is interested in 15,000,000 ordinary shares in the Company,
representing approximately 6.94 per cent of the issued share capital of the Company.
For further information contact:
Leyshon Resources
Paul Atherley - Managing Director
Tel: +86 137 1800 1914
Mob: +61 417 475 038
1. Name of the issuer 2. State whether the notification relates to (i) a
transaction notified in accordance with DTR 3.1.2 R,
(ii) a disclosure made in accordance LR 9.8.6R(1) or
MOUCHEL GROUP PLC (iii) a disclosure made in accordance with section 793 of the Companies Act (2006).
(I) A TRANSACTION NOTIFIED IN ACCORDANCE WITH DTR 3.1.2 R
3. Name of person discharging managerial 4. State whether notification relates to a person
responsibilities/director connected with a person discharging managerial responsibilities/director named in 3 and
identify the connected person
DAVID TILSTON
N/A
5. Indicate whether the notification is in respect of a 6. Description of shares (including class), debentures or derivatives or financial instruments
holding of the person referred to in 3 or 4 above relating to shares
or in respect of a non-beneficial
interest 1 ORDINARY SHARES OF 0.25 PENCE
PERSON REFERRED TO IN 3
7. Name of registered shareholders(s) and, if more than 8. State the nature of the transaction
one, the number of shares held by each of them
PURCHASE OF SHARES
N/A
9. Number of shares, debentures or financial 10 Percentage of issued class acquired (treasury shares of that class should not be taken
instruments relating to shares acquired . into account when calculating percentage)
27,000 SHARES 0.024%
chrismurphy1999@yahoo.co.uk
020 868 0487
07 525 98 44 32
