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 PartnershipSole 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

CompanyPartnershipSole 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 owners liability
is limited to their investment in the firm
potential creditors thus know that the
owners personal assets cannot be seized if
the company doesnt 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) doesnt exceed 5.6 million
balance sheet total (i.e. either total assets or
total liabilities) doesnt exceed 3.26 million
average number of employees doesnt
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
most common type
also called equity

shares
usually carry voting
rights
last in queue for
dividends

Preference shares

dont have voting rights

pay a fixed dividend
preference share
dividends paid before
ordinary ones

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
companys 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 doesnt 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 companys
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

Holder

%
issued
share
capital

No. of ordinary
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 Authoritys Disclosure and Transparency Rules, had been not
1

ValueAct Holdings, L.P., and ValueAct Holdings GP, LLC

25.74%

140,764,642

5.33%

26,708,863

3.99%

21,868,430

3.02%

16,492,181

Schroders plc on behalf of Schroder Investment Management Ltd,

Schroder Investment Management North America Ltd and Schroder &
Co Ltd

Legal & General Group Plc and its subsidiaries

Lloyds TSB Group plc

Regulatory News Service

London Stock Exchanges 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 Februa
010 that Arredo Pty Ltd is interested in15,000,000 ordinary shares in the Compa
epresenting approximately 6.94 per cent of the issued share capital of the Compa

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

MOUCHEL GROUP PLC

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
(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

responsibilities/director

DAVID TILSTON

4.

State whether notification relates to a person

connected with a person discharging managerial responsibilities/director
named in 3 and identify the connected person

N/A

5.

Indicate whether the notification is in respect of

a holding of the person referred to in 3 or 4
above or in respect of a non-beneficial
interest 1

PERSON REFERRED TO IN 3

6.

Description of shares (including class), debentures or derivatives or financial

instruments relating to shares

ORDINARY SHARES OF 0.25 PENCE

7.

Name of registered shareholders(s) and, if more

than one, the number of shares held by
each of them

N/A

8.

State the nature of the transaction

PURCHASE OF SHARES

9.

Number of shares, debentures or financial

instruments relating to shares acquired

27,000 SHARES

10

Percentage of issued class acquired (treasury shares of that class should not
.
be taken into account when calculating percentage)

0.024%

chrismurphy1999@yahoo.co.uk
020 868 0487
07 525 98 44 32