Department for Business, Innovation and Skills
Analysis of Cash Retention Behaviour of PNFCs
March 2015
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1
Do we observe that cash is being “hoarded” in the corporate
sector?
1. How much cash? Per firm, in total?
2. Is the cash increasing? In absolute terms and as a % of turnover?
3. Is the cash concentrated?
We analyse the PNFC population through the lens of company demographics:
1. Company size (turnover, employees)
2. Complexity (group structure)
3. Industry sector (SICs re-grouped by BIS team)
…does this behaviour appear to have an impact on business investment, and thus
on the pace of the recovery?
Given the nature of the granular data, a substantial amount of work was undertaken
jointly with the BIS team to identify and remove outliers, and to re-classify certain
types of records as non-PNFC etc.
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2
The Data Resource
 The analysis draws on the Experian pH database of all UK businesses, the most
comprehensive such dataset available, we focused on the subset of 3 million live,
trading UK-PNFC firms (there are 2 million more but these are either non-PNFC,
or dormant, or foreign records, or very late filers etc; consolidated accounts are
also left out to avoid double-counting, as each separate subsidiary is analysed)
 For purposes of overall quantifications, key values (such as cash) for firms which
do not file accounts are inferred based on the observed values for filers in the
same size band and sector
 In order to adjust the data to real terms, we have applied a deflator based on the
year’s RPI inflation rate across all the analysis in the report.
 By necessity, we focus the analysis, aimed at revealing any correlations and
behavioural patterns, on the sub-universe of firms which do file accounts and
declare cash levels, assets, etc.; they represent nearly half the total firms, but
over 90% of total value, as non-filers are mostly sole traders and small
partnerships
 The types of data attributes used in the analysis include demographic
parameters, financial (where filed), and historical
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3
Selected examples of the top cash holders (and of anomalies):
- some are perennial (e.g. WPP, Vodafone)
- some build up for a specific purposes (e.g. BP at the time of the US oil spill)
- some appear topically (e.g. Easyjet, EDF)
CASH
NAME
Top 5, 2012
WPP Finance Company Ltd
(after outliers exclusions) Vodafone Finance Ltd
Easyjet Airline Company Ltd
EDF Energy plc
Diageo Finance Plc
For ref: Top 5 in 2011
IHS Group Holdings Ltd
BP International Ltd
WPP Finance Company Ltd
Vodafone Finance Ltd
Network Rail Infrastructure Fin.
…and Top 3 2009
Techtronic Industries (UK) Ltd
BP International Ltd
WPP Finance Company Ltd
EXAMPLES OF ANOMALIES NAME
CASH:
Nuclear liabilities fund ltd
CAPEX:
Bow Bells House Ltd Partnership
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LAST
EMPT
N/A
N/A
5000&+
5000&+
N/A
10-19
5-9
N/A
N/A
N/A
100-199
5-9
N/A
CASH (£)
3,921,339,066
3,063,975,660
1,476,935,100
1,105,791,940
1,051,709,900
37,692,512,233
11,254,317,000
4,172,718,542
4,031,330,009
2,428,934,600
4,974,349,723
3,834,880,600
3,271,054,851
STRUCTURE
very complex
very complex
very complex
very complex
very complex
ANOMALY
very complex
very complex
very complex
Independent
very complex
very complex
very complex
£
8,178,000,000,000
53,553,514,092
£8 trillion!
4
CHAPTER 1: CASH
ESTIMATING THE TOTAL UK PNFC CASH HOLDING
Having removed the outliers, we observe total holdings of £231bn; on average, this
equates to £76k per firm, or one month of sales. Within this, the 1.5m reporting firms hold
£210bn of cash, (£140k on average) compared to the 1.6m of much smaller, unregistered
firms (for which cash is inferred) and who hold very little cash (estimate of £21bn).
2012 data
Average
cash
balance
Cash as %
of
turnover
Number
of firms
Total
cash held
Total live firms (excl
outliers)
3.6m
£418bn
£116k
12%
Of which, PNFC * (excl fin,
public, not-for-profit)
3.1m
£231bn
£76k
8%
1.5m
£210bn
£140k
7%
1.6m
£21bn
£12k
10%
Of which, data reported
(mean empl size for all firms = 44*)
Data inferred
(mean empl size for all firms = 6*)
*where reported
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5
VARIABILITY OF CASH HOLDINGS
We observe strong variation by company size, and also by type (independent vs
group), and complexity of corporate structure (no. of subsidiaries). There is a
considerable “group effect” over and above the size effect - complex group companies
hold much larger balances than equally-sized independents.
2012 data
25
Average Cash
Independents
Groups simple
20
Average cash (£m)
Groups medium
15
Groups complex
10
5
0
Employment
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6
CASH RETENTION IS HIGHLY CONCENTRATED
As a result of the impact of firm size combined with structural complexity,
complex groups, with only 3% of the firms, concentrate half of the total cash (51%); very
small independents are 73% of firms, but hold only 16% of the total cash, with 13% for
small-to-large independents and 20% for simple and medium groups.
No of firms at granular level for groups; outliers within “independents” of no reported size resembling cash boxes of
larger groups were re-classified into groups
Independents
Very Small Small Medium Large
(1-4 empl) (5-49) (50-249) (250+)
Group-structured
TOTAL
Simple Medium Complex
See note 3
See note 2
See note 1
No of firms
1.1m
172k
10k
1k
114k
57k
44k
1.5m
Total cash volume
£33bn
£19bn
£7bn
£2bn
£23bn
£19bn
£108bn
£210bn
Average cash balance
£30k
£113k
£629k
£1.7m
£200k
£328k
£2.4m
£140k
Median cash balance
£7k
£21k
£94k
£194k
£21k
£19k
£334k
£9k
Cash as % of sales
14%
9%
8%
7%
9%
9%
6%
7%
(1) Members of complex groups: >5 subsidiaries, and >£100m turnover; average empl size at subs
level 265, but note 24% are under 10 empl.
(2) Medium = >5 subsidiaries but with <£100m turnover, and <5 subsidiaries but with >£100m turnove
(3) Members of simple groups: <5 subsidiaries, and <£100m turnover; average empl size at subs level
30, note 43% are under 10 empl.
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7
THOSE WITH THE LARGEST BALANCES, HAVE GROWN THEM MOST
Since 2008, the larger and/or the more complex the firm, the higher the increase,
in what are already the largest and most concentrated cash holdings to begin with.
- Increasing not just in absolute terms, but also faster than turnover.
- Smaller independents and simple groups hold the only stable (and small) cash balances.
Full period 2008-2013
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8
THE PATTERN HOLDS OVER TIME
Examining the pattern across all the years, there are some ups and
downs but the overall pattern holds: large/complex cash holdings on the
increase, small/simple cash holdings reducing or steady.
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9
INTRODUCING INDUSTRY SECTOR
Highly populated sectors such as agriculture have low average balances per
firm. Sectors with the highest average balances, such as pharmaceuticals,
have few but very large firms and very high average cash balances.
2012 data
Sorted
by:
Sector
Top 3*
Number Total cash Average
of firms
cash
As % of
sales
Pharmaceuticals
1k
£1.4bn
£1365k
4%
Electricity/Gas
3k
£2.3bn
£687k
3%
Aerospace
1k
£0.4bn
£529k
5%
Agriculture
111k
£3.2bn
£28k
11%
Repair services
32k
£0.8bn
£25k
10%
Misc recreational
15k
£1.9bn
16k
15%
Largest 3 by Management Consulting
144k
£14.5bn
£101k
26%
total cash
Computing/IT
174k
£11.0bn
£63k
15%
held
Construction (Buildings)
116k
£11.3bn
£29k
7%
Last 3
*69-way BIS grouping
** not including “Holding Companies”
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10
FULL INDUSTRY SECTOR LIST
Some sectors concentrate more cash, either in absolute or in relative
terms or both – though some of this is driven by differential average company
sizes across the sectors.
2012: Overview of cash behaviour by BIS 69-way classification
Without outliers
Without outliers
Number of
firms
Total cash
(£Bn)
Average
cash (£)
Ratio total
cash/total
turnover
(all)
FINANCE
68,828
K1BNK-Banking
14,913
K2INSP- Insurance and pension funding
8,014
K3AUX- Auxiliary financial services
45,688
K4HLD-Holding companies
153
K5OFI-Other financial instruments
60
PUBLIC
329,503
O-Public administration and defence
13,154
P801-2-Nursery, primary and secondary education
33,778
P853-4-Higher and adult education
74,060
Q851- Human health activities
145,317
Q853-Social work
63,194
RSNPISH
142,574
PNFC
3,058,667
A-Agriculture, forrestry and fishing
111,389
BMQ-Other mining and quarrying
1,755
BOG-Oil and gas
4,405
CHMH244-Pharmaceuticals
1,061
CHMH24other-Chemicals excluding pharma
4,642
CHMH29-Machinery and equipment
20,516
CHMH30to33-Electrical and electronic
29,522
CHMH34-Automotive
5,063
CHMH353-Aerospace
765
CHMH35other-Other transport
2,209
CML23,25-26-Fuels, Rubber and non-metalic products 18,401
CML27-28-Metals and metal products
41,589
CMLother-Other Medium-low technology
2,937
CZL15-16-Food, beverages and tobacco
16,198
CZL17-19-Textiles and clothing
19,948
CZL20-22-Wood, paper and printing
33,623
CZL36-Other Low technology
34,113
D-Electricity and gas
3,324
E-Water and waste
12,347
F4521-Buildings
115,850
F45other-Other construction
293,499
148.7
66.9
33.8
44.3
2.9
0.9
23.6
1.8
4.8
3.9
7.9
5.2
12.9
232.7
3.2
0.7
2.3
1.4
1.5
3.3
5.9
2.2
0.4
0.1
2.5
4.8
0.6
3.2
1.2
2.3
2.3
2.3
2.3
11.3
8.7
2,160,238
4,483,368
4,221,933
968,789
18,717,945
14,399,068
71,536
135,188
142,310
52,233
54,218
82,901
90,226
76,071
28,732
400,344
522,850
1,364,599
318,694
161,344
199,384
433,127
528,921
51,835
134,754
115,470
195,295
194,627
61,622
68,369
66,985
687,270
184,107
97,936
29,496
42%
87%
28%
31%
27%
16%
16%
7%
15%
18%
17%
22%
34%
8%
11%
9%
6%
4%
5%
7%
7%
4%
5%
3%
3%
7%
11%
3%
6%
5%
6%
3%
8%
12%
7%
TBISSIC69
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Number of
firms
Total cash
(£Bn)
Average
cash (£)
Ratio total
cash/total
turnover
(all)
F7011-Real estate development
18,997
G45other-Other motor trades
74,858
G45s501-Sale of motor vehilces
22,380
G46s511-Wholesale agents
18,168
G46s512-3-Wholesale of food products
20,035
G46s514-Wholsesale household goods
27,726
G46s515-9-Wholesale machinery etc
49,457
G47other-Other retail
84,826
G47s5211-Retail supermarkets etc
32,697
G47s524-Retail specialised stores
158,087
H6024-Road Freight transport
31,210
H63-Transport support services
22,709
H64-Postal
7,600
Hother-Other transport
37,499
I551-2-Accommodation
46,004
I553-5-Food services
178,293
J22-Publishing
24,928
J642-Telecoms
16,693
J72-Computer and information services
174,402
J92-Broadcasting
28,791
L7012-Buying and selling of own real estate
27,100
L7020-Letting of own property
70,660
L7030-Real estate on fee or contract basis
56,304
M73-Research and development
7,644
M7411-12-Legal and accounting
76,820
M7414-15-Management consultancy services 143,770
M742-3-Architecture and technical services
96,387
MPother-Other professional services
61,673
N71-Rental of machinery and equipment
24,976
N745-Employment services
26,303
NAmisc-Miscellaneous administrative services
58,941
Naother-Other administrative services
232,165
RS527 and 725-Repair services
32,394
RS926-Sporting and amusement activities
71,157
RS9271-Gambling activities
2,515
RSMisc-Miscellaneous recreational activities
114,641
RSz9305-Other services acticities nec
106,701
Total "live"
3,599,572
3.6
2.2
3.0
1.3
2.5
4.7
7.6
3.6
1.7
8.0
2.0
3.1
1.1
7.7
2.3
5.2
4.0
7.5
11.0
4.1
2.4
7.1
4.0
1.5
2.9
14.5
5.7
4.8
2.5
1.7
4.8
19.5
0.8
2.8
0.6
1.9
6.4
418
191,796
29,370
134,590
73,617
124,068
168,043
153,409
42,087
52,488
50,325
64,355
136,853
146,385
205,049
50,034
29,414
161,465
452,068
63,222
141,095
89,149
100,592
71,351
197,814
37,856
100,526
59,464
78,100
98,371
65,657
81,785
83,918
24,871
38,854
251,050
16,299
60,375
116,068
22%
4%
3%
5%
4%
7%
5%
4%
1%
5%
4%
7%
8%
12%
9%
9%
15%
18%
15%
12%
42%
24%
19%
17%
8%
26%
10%
15%
9%
5%
8%
18%
10%
13%
2%
15%
18%
12%
TBISSIC69
11
AVERAGE CASH PER FIRM (y axis) VS TOTAL CASH HELD, PLUS AVERAGE
CASH NORMALISED BY TURNOVER:
No sector combines both a high average balance and total cash held; the bubbles are
proportional to the % of turnover held in cash, which, for example, is much higher for
management consultancy than pharmaceuticals.
2012 data
Pharmaceuticals
Management consultancy
services
Buildings
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Other administrative
services
12
CHANGES IN VOLUME OF CASH AND AVERAGE CASH OVER TIME,
BY SECTOR:
Water & waste, admin & support services grew in cash the most; mining, real estate and
construction are down the most. For average cash, water & waste, transport, admin & support
services are up the most; mining, energy, real estate and construction are down the most.
Volume of cash (£Bn)
Sector
Indexed volume of cash
Sector
2008
2009
2010
2011
2012
2013
1.8
4.4
1.8
3.2
1.8
3.0
1.7
3.2
1.9
2.9
1.9
2.5
Manufacturing
Electricity and gas
32.1
3.0
39.0
2.6
36.9
3.5
46.8
2.7
29.0
2.1
31.6
2.9
Manufacturing
Water and waste
Construction
1.6
28.9
1.9
26.5
2.3
25.5
2.3
22.9
2.1
21.1
2.3
21.0
Water and waste
Distribution
Transport
Accommodation and food services
34.1
11.8
5.4
31.8
12.5
5.2
35.8
13.8
4.7
32.9
14.3
4.9
30.6
13.0
6.2
31.5
13.0
5.7
Distribution
Information and communication
Real estate
26.3
16.8
21.9
16.1
25.6
15.8
25.1
13.0
24.9
12.5
31.3
12.4
Information and communication
Professional business services
Administrative and support services
26.1
19.7
30.5
24.5
33.0
27.2
28.1
26.2
26.5
26.6
29.8
30.4
Professional business services
Arts, recreation and other services
Total
9.9
222.0
9.7
227.3
9.5
238.3
10.0
234.1
10.6
210.1
11.6
227.9
2008
2009
2010
2011
2012
2013
98,072
94,888
92,823
88,281
92,793
91,455
1,186,305
780,315
700,998
730,734
642,233
504,445
Mining and quarrying
275,460
329,835
319,720
406,358
249,343
265,414
Manufacturing
Agriculture, forrestry and fishing
Mining and quarrying
Average cash (£) (cash>=0)
Sector
Agriculture, forrestry and fishing
Mining and quarrying
Manufacturing
Electricity and gas
2,412,233 1,886,325 2,329,564 1,674,787 1,080,471 1,138,661
2008
2009
2010
2011
2012
2013
100
100
101
73
101
69
98
73
106
66
108
56
100
100
122
87
115
117
146
91
91
70
98
97
100
100
119
92
144
88
143
79
134
73
145
73
100
100
100
93
106
97
105
116
86
96
121
90
90
110
116
92
110
106
100
100
83
96
97
94
95
78
94
75
119
74
100
100
117
124
126
138
108
133
101
135
114
155
100
100
98
102
96
107
101
105
107
95
117
103
2008
2009
2010
2011
2012
2013
100
100
97
66
95
59
90
62
95
54
93
43
100
100
100
120
78
110
116
97
129
148
69
124
91
45
111
96
47
115
100
100
85
91
84
104
76
94
69
84
67
82
100
100
100
92
133
83
137
83
120
99
113
83
100
100
100
78
91
106
91
88
112
86
71
91
79
66
80
90
63
81
Arts, recreation and other services
100
100
118
91
167
88
165
86
166
84
186
83
Total
100
97
106
103
88
90
Agriculture, forrestry and fishing
Mining and quarrying
Electricity and gas
Construction
Transport
Accommodation and food services
Real estate
Administrative and support services
Arts, recreation and other services
Total
Indexed average cash (cash>=0)
Sector
Agriculture, forrestry and fishing
Electricity and gas
Water and waste
345,144
379,378
444,966
426,798
384,691
396,708
Construction
144,778
123,760
122,102
110,070
99,860
96,733
Distribution
186,158
169,270
193,629
174,181
155,871
152,178
Distribution
Transport
248,606
247,748
330,218
340,376
299,043
281,894
Transport
Accommodation and food services
107,525
98,458
88,719
89,495
106,797
89,761
Information and communication
188,026
147,276
170,356
160,798
147,776
169,272
Real estate
157,069
142,894
138,425
111,748
104,176
99,505
Professional business services
146,179
155,205
163,412
133,455
116,755
118,524
Professional business services
78,265
92,392
130,995
129,099
130,005
145,888
Administrative and support services
Arts, recreation and other services
107,860
98,582
94,393
92,965
90,798
89,985
Total
159,210
154,104
169,236
163,372
140,508
143,742
Administrative and support services
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Water and waste
Construction
Accommodation and food services
Information and communication
Real estate
13
CASH-HOARDING RATIO:
On the evidence, since 2008, the mining sector as a whole has been the largest
cash hoarder, followed by the ICT sector, then by manufacturing and water/waste
Ratio cash/turnover
Sector
2008
2009
2010
2011
2012
2013
Agriculture, forrestry and fishing
Mining and quarrying
9.0%
4.4%
6.4%
4.4%
6.4%
5.7%
7.0%
7.4%
6.9%
9.6%
7.1%
10.9%
Manufacturing
Electricity and gas
4.6%
6.9%
5.9%
4.2%
6.5%
5.7%
8.3%
4.0%
5.2%
4.2%
5.7%
4.5%
Water and waste
Construction
Distribution
9.1%
10.1%
3.6%
10.5%
8.7%
3.6%
10.9%
9.7%
4.4%
10.8%
10.7%
4.0%
9.2%
9.7%
3.8%
11.1%
8.9%
3.9%
7.3%
8.7%
7.5%
7.4%
8.7%
7.5%
8.9%
7.7%
9.2%
9.7%
7.9%
9.8%
Information and communication
Real estate
10.7%
26.5%
12.1%
23.2%
11.8%
31.0%
12.8%
21.7%
12.2%
20.7%
15.2%
23.2%
Information and communication
Professional business services
Administrative and support services
11.5%
8.4%
11.5%
8.3%
10.2%
7.9%
10.8%
7.8%
10.5%
8.1%
10.8%
9.0%
Professional business services
Arts, recreation and other services
Total
8.8%
6.6%
7.8%
6.7%
7.9%
7.4%
8.0%
7.6%
7.9%
6.9%
9.5%
7.3%
Transport
Accommodation and food services
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Indexed ratio cash/turnover
Sector
Agriculture, forrestry and fishing
Mining and quarrying
Manufacturing
Electricity and gas
Water and waste
Construction
Distribution
Transport
Accommodation and food services
Real estate
Administrative and support services
Arts, recreation and other services
Total
2008
2009
2010
2011
2012
2013
100
100
71
100
71
129
78
166
77
216
79
246
100
100
126
60
141
83
180
57
111
61
123
65
100
100
100
116
86
101
120
96
122
119
106
110
101
96
106
123
88
107
100
100
103
85
120
87
121
89
126
112
108
113
100
100
114
88
110
117
120
82
114
78
142
88
100
100
100
98
89
94
94
92
91
96
94
107
100
100
88
102
90
111
91
115
90
104
107
111
14
AVERAGE CASH BY INDUSTRY SECTOR (ADDS INSIGHT BEYOND THE SIZE VIEW):
Holding company size constant, there is some variation from one sector to
another in average cash for group firms (e.g. mining consistently above average,
accommodation below average)…although for small/medium independents, most sectors
cluster.
2013 data
Agriculture, forrestry and
fishing
Average cash in 2013 by sectors
6,000,000
Mining and quarrying
Manufacturing
Average cash (£) in 2013 (cash>=0)
5,000,000
Electricity and gas
Water and waste
4,000,000
Construction
Distribution
3,000,000
Transport
Accommodation and food
services
2,000,000
Information and
communication
Real estate
1,000,000
Professional business
services
Administrative and
support services
0
Indep 1-4
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Indep 5-49
Indep 50- Indep 250+
249
Simple
group
Medium
group
Complex
group
Arts, recreation and other
services
15
CHAPTER 2
Bringing debt into the picture to get a more complete view of cash
 How does borrowing behaviour reflect available cash resources? To what extent
do some firms borrow in order to sustain high cash balances?
 We use total liabilities as the metric, to encompass reliance on trade debt etc, not
just bank debt; this is banded, then cross-tabulated against cash held (also
banded), to look for concentrations (see next page, p17).
 To facilitate the visualisation of these granular cross-tabulations of numbers, the
« bubble charts » (e.g. p19) represent each cell in the table, by a circle whose
size is proportional to the number in that cell – in this way, concentrations
become very easily apparent.
 Bubble charts are especially useful when comparing the relative concentrations
of two separate populations: by overlaying two transparent bubble charts, cohorts
which weigh more in one population (e.g. small independents), and differentiate it
from another (e.g. the overall population), are immediately apparent (see pp20
and 21).
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16
- INTRODUCING THE GRANULAR DATA DEBT NOT GENERALLY FINANCING OVERALL CASH HOLDINGS, BUT SOME EVIDENCE OF
THE CONTRARY AMONGST FIRMS WITH LARGE CASH HOLDINGS (>£10m) (2008 similar to 2013)
Overall, in 2013 only 29% of all firms have over £100k of total liabilities (down from 34% in
2008), and only 11% of firms have over £100k of cash. Even focusing on the 21,675 firms in
2013 with over £10m liabilities, a majority of these firms (52%) have under £200k of cash; but
9% of this group show evidence of contrary behaviour with over £10m cash...
2013 - Number of firms
Cash (£)
N/A
0
<50k
50-100k
100-200k
200-500k
500k-1m
1-2m
2-5m
5-10m
10-20m
>20m
Total
<10k
293
46,633
299,638
6,256
3,022
1,545
381
174
55
8
2
3
358,010
10-20k
106
17,795
178,522
9,149
3,302
1,242
209
92
42
4
2
1
210,466
20-50k
154
27,014
219,761
29,159
13,075
4,850
718
204
54
13
4
2
295,008
50-100k
94
19,038
112,758
23,095
12,110
6,200
1,123
295
80
7
5
7
174,812
Liabilites (£)
100-500k
131
30,909
157,433
31,364
29,006
23,198
5,901
1,828
425
47
12
9
280,263
500k-1m
19
8,115
33,770
6,607
6,648
8,443
4,530
1,542
456
54
13
3
70,200
1-2m
17
5,642
19,417
4,065
4,286
5,420
3,542
2,361
727
111
20
8
45,616
2-5m
12
4,787
11,584
2,789
2,930
3,985
2,717
2,276
1,621
245
52
22
33,020
5-10m
5
2,339
3,470
969
1,173
1,588
1,217
1,081
1,063
390
86
27
13,408
>10m
8
6,125
3,321
812
1,023
1,732
1,520
1,755
2,126
1,315
920
1,018
21,675
0
<10k
10-20k
20-50k
50-100k
Liabilites (£)
100-500k
500k-1m
1-2m
2-5m
5-10m
>10m
1,791
58,091
30,944
366
184
120
45
24
20
14
11
17
866
102,445
209,702
4,684
2,404
1,322
308
60
23
5
3
3
328
17,377
117,958
6,008
2,339
1,071
268
93
17
6
1
0
427
26,469
158,600
18,955
8,890
3,610
717
250
94
13
1
2
251
19,907
93,597
20,573
10,121
5,272
1,120
304
95
12
3
0
375
37,268
147,514
29,408
27,239
22,158
5,942
1,839
539
74
19
5
65
10,726
34,162
6,353
6,700
8,567
4,582
1,616
488
77
17
7
39
7,611
20,573
3,966
4,094
5,585
3,900
2,388
804
105
22
13
29
6,275
13,161
2,822
3,094
4,091
3,024
2,549
1,787
324
69
16
11
3,127
4,074
967
1,169
1,634
1,281
1,192
1,226
428
98
15
77
6,619
3,634
840
1,070
1,767
1,573
1,705
2,180
1,398
938
1,042
91,627
321,825
145,466
218,028
151,255
272,380
73,360
49,100
37,241
15,222
22,843
0
279
42,373
40,088
548
340
160
64
33
17
11
5
10
83,928
Total
1,118
210,770
1,079,762
114,813
76,915
58,363
21,922
11,641
6,666
2,205
1,121
1,110
1,586,406
2008 - Number of firms
Cash (£)
N/A
0
<50k
50-100k
100-200k
200-500k
500k-1m
1-2m
2-5m
5-10m
10-20m
>20m
Total
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Total
4,259
295,915
833,919
94,942
67,304
55,197
22,760
12,020
7,273
2,456
1,182
1,120
1,398,347
17
The granular data enables us to search still closer for
“unusual” types of behaviour among the firms with the
largest debt and/or cash figures
…Of the 21,675 firms in the previous chart, with over £10m total liabilities in 2013:
 52% of these have <£200k cash; so clearly not a “hoard”, and at the other extreme “only”
1,938 (11%) also have >£10m cash
 But this 1,938 with large debts are the vast majority of the cash “piggybanks” (87% out of
the total 2,231 firms with >£10m cash – so the largest “piggybanks” are also
simultaneously big borrowers, which suggests possible hoarding.
 However, the evidence of hoarding is not conclusive: the case studies below illustrate how
the debts of many of these 1,938 firms may still be much larger than their cash balance and
therefore is likely to relate to real investment needs, i.e. “normal” behaviour:
Cash (£m)
Company Name
Network Rail Infrastructure Finance plc
Tesco Stores Ltd
Jaguar Land Rover Holdings Ltd
Heathrow Airport Ltd
The London Organising Committee of the
Olympic
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Liabilities (£m)
Stock
(2013)
1,778
679
1,851
34
Change
(20122013)
1,112
34
1,172
31
Stock
(2013)
30,016
22,084
5,741
12,511
Change
(20122013)
3,123
11,060
1,206
826
287
263
11,493
1,467
18
Now for an overall view of the market - methodological note
The following analyses (p20-23) are “bubble charts”, which are simply large tables
of numbers mapping out all the firms in the market, made more visual for ease of
interpretation.
In each case, the number in every cell of the table (which here is the number of
firms contained within that cell) has been graphed as a circle which is proportional
to that number.
In this way, it is easy to immediately identify the concentrations within the
populations, as well as to infer possible correlations between the dimensions
portrayed by the table (in this case, the amount of cash and liabilities held by the
individual firms, banded).
This data-visualisation technique is especially useful when comparing two different
populations (for example, spotting concentrations which make large independents
different from the overall population, then similarly for large groups against the
overall, etc). As shown in p21-22, this is done by overlaying one population (e.g.
large independents, in red, on top of the overall, in clear), revealing at a glance
areas where they are over-represented (the red exceeds the clear bubbles), and
those where they are under-represented (the red is smaller than the clear).
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19
THERE IS NO OBVIOUS MASS BEHAVIOUR OF BORROWING PURELY TO
SUSTAIN HIGHER CASH BALANCES… in fact the bubbles show that the bulk
of firms hold under £50k or 0 cash (68% + 13%), most of which also hold <£50k liabilities.
The cohort of firms with >£500k cash and >£1m liabilities, i.e. where significant hoarding could
perhaps be taking place (and which we will investigate in more detail later), is very small.
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20
FOR EACH OF THE 4 CHARTS, THE CLEAR BUBBLES REPRESENT THE OVERALL MARKET
FROM THE PREVIOUS PAGE:
Large independents (in red) are strongly represented among firms with over £2m liabilities, especially
when they also hold over £500k cash (i.e. in the bottom right corner); however they are under-represented among firms
with £50k cash, especially if holding less than £500k in liabilities. Small independents are of course the mirror image.
Mid-sizes display intermediary behaviour. Note nonetheless how non-trivial numbers of small firms have high cash
and/or liabilities, and similarly for large firms with very low values – i.e. the behaviour is very dispersed.
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21
SIMILAR PROCEDURE FOR COMPARING THE 3 GROUP COHORTS TO THE
OVERALL MARKET:
Simple and medium groups (yellow and orange) look very similar to the mid-sized independents of the previous
page. Large/complex groups look very different: 45% of the firms have no cash at all (top row), as
this is often concentrated by the parent, while the large liabilities are often concentrated in those 0-cash entities
(right-most column, the biggest bubble of which is at the top).
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22
GOING FROM THE STATIC TO THE DYNAMIC VIEW:
Do changes in borrowing match changes in cash held? Again, there is no visible
correlation overall. If anything firms concentrate along the diagonal, i.e. exhibiting similar
trends in both liabilities and cash; increasing liabilities by no means imply an increase in
cash (bottom of chart), or vice-versa...
This finding is confirmed for each of the individual market segments (e.g. small independents, large groups, etc)
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23
Finally, we combine cash and debt in order to define a
“net cash” position (and take dividends paid into account)
Net cash = cash - liabilities
How many firms borrow even though they have plenty of cash (i.e. net cash >£0)?
As is detailed in the following slide, only 1 in 7 firms has positive net cash* (for only
1 in 25 does it exceed £70k); for over 60% of firms, it is negative**. Since many
firms do not even borrow at all***, this suggests that only a very small minority
borrow just to artificially support cash balances.
Looking for potentially “unusual behaviour”, we can for example isolate 1,105 firms
each with >£5m cash and net cash >£70k; these weigh 12% (£26bn) of total PNFC
cash, having already paid dividends of £29bn (i.e. “gross cash” of £55bn; their
liabilities being £13bn****).
By contrast, 3,270 firms, also with cash of >£5m but with net cash <-£500k,
concentrate £87bn of cash (net of £77bn dividends paid, so “gross cash” £164bn),
and liabilities of £946bn**** – i.e. potentially “normal” behaviour, since the cash held
is a small proportion of total borrowing?
We discuss under next steps the possibility of zooming in on these small but very
cash-rich cohorts. See the detail in the next table.
*: in LHS panel, the top 3 cohorts as a proportion of the total; **: in the same panel, the last 3 cohorts; ***: the majority of firms which file
accounts declare nil bank debt (not shown in chart); ****: total liabilities for this population is £4.5 trillion
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24
DETAIL UNDERLYING THE “NET CASH” VIEW
Combined view: cash compared with debt, also quantifying dividends paid, and
“investment” (= modified Capex, as defined on the next page)
Number of companies
Cash minus
liabilities
Total amount of cash (2012) £m
Cash (£m)
N/A
0
<50k 50-100k 100-500k 500k-5m
>70k
>5m
Total
Cash minus
liabilities
3,949
44,006
15,673
1,105
64,733
>70k
Cash (£m)
N/A
0
<50k 50-100k 100-500k 500k-5m
>5m
Total
351
10,148
19,002
26,051
55,552
817
2,435
2,292
591
92
6,227
20k - 70k
21,576
34,585
13,652
676
12
70,501
20k - 70k
5k - 20k
65,484
8,668
3,579
247
2
77,980
5k - 20k
1,499
581
623
262
27
2,993
-5k - 5k
71,608 288,562
5,814
2,711
218
13 368,926
-5k - 5k
1,934
392
500
217
139
3,183
-50k - -5k
57,450 327,198
13,665
8,131
658
14 407,116
-50k - -5k
2,544
943
1,509
629
220
5,844
-500k - -50k
52,209 231,146
26,869
29,240
4,291
72 343,827
-500k - -50k
2,356
1,905
5,950
4,260
860
15,330
<-500k
28,618
13,610
27,985
17,093
3,270 162,252
835
983
6,647
25,159
9,986
7,590
27,669
50,119
114,736
210,100
<50k 50-100k 100-500k 500k-5m
>5m
Total
N/A
Total
71,676
1,520
1,520
1,520
209,885 1,005,642
107,160
129,304
38,856
4,488 1,496,855
Total investment (2012) £m
Cash minus
liabilities
<-500k
87,347 120,972
N/A
Total
Total dividends paid (2012) £m
Cash (£m)
N/A
0
<50k 50-100k 100-500k 500k-5m
>70k
>5m
Total
-15
-383
-1,108
-821
-2,327
Cash minus
liabilities
Cash (£m)
N/A
0
>70k
48
631
1,515
28,857
31,051
20k - 70k
-75
-90
-83
-28
0
-275
20k - 70k
139
121
47
44
4
354
5k - 20k
-107
-16
-2
-10
0
-136
5k - 20k
715
27
11
6
0
758
-6,807
-298
-22
-54
-23
-4
-7,209
-5k - 5k
39,942
948
17
8
16
21
40,952
-50k - -5k
-295
-453
-41
-28
-16
0
-832
-50k - -5k
3,410
568
31
82
23
4
4,118
-500k - -50k
-998
-1,270
-131
-525
-219
-32
-3,176
-500k - -50k
2,103
781
77
355
288
50
3,653
-17,259
-5,317
-1,966
-2,814
2,304
91,918
14,906
17,684
8,378
34,389
-5k - 5k
<-500k
N/A
-31
Total
-31
-1,744 -26,795
-31
-25,360
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-7,520
-2,280
-3,889
900
-2,602
-40,781
<-500k
N/A
12
Total
12
76,875 244,149
12
137,372
18,057
18,004
9,511
36,280
105,811
325,048
25
CHAPTER 3
TURNING TO PROPENSITY TO INVEST BY PNFCs:
Has « investment » increased or decreased recently, and if so, is there a correlation with
cash behaviour?
For purposes of this analysis, we define « investment » in year t, as:
 Tangible assets(*) in year t, minus tangible assets in year (t-1), in constant prices by
deflating(**) using the RPI inflation rate between t and t-1
 I.e. CAPEX, but without adding back the depreciation term. (We found that adding back
depreciation induced additional volatility in the data set.)
 So, we compare the book values of capital stock for years t and t-1 and the information is
aggregated for all firms who report it at Companies House.
This provides us with a “net” view of capital investment activity each year, since tangible
assets reported in the accounts for a given year contain (but do not break down): the preexisting stock of tangible assets, plus new investment during the year, minus retired assets
during the year.
This is an alternative view to ONS figures, which are based on survey results
and focus on the actual, new-in-year investment figures (without reference to
retirements of capital where no sale is recorded).
(*) tangible assets = all assets which have physical form, such as machinery/plant & vehicles, buildings &
land, fixtures & fittings (excluding dwellings)
(**) In line with the analysis in the rest of the report, a deflator was applied to put the investment data into
real terms. Extra analysis of the investment data was carried out in nominal terms and this did not alter the
findings throughout the chapter.
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26
USING THE DEFINITION ON THE PREVIOUS PAGE, FIRMS’
INVESTMENT BEHAVIOUR IS NEGATIVE
The next 2 pages break out the quantum of investment (or disinvestment) by size
and complexity cohort, then examine the change over the period 2008 to 2013:
 Overall, we observe net disinvestment by PNFCs of -£49bn in 2013 (net of
outliers).
 The average amount per firm only exceeds £50k (whether positive or negative)
for independent firms with >50 employees, or medium-to-complex groups (under
8% of the population).
 As with cash, the volumes are highly concentrated in the large/complex groups
(-£44bn of the -£49bn overall); other groups add -£5.5bn, whilst all independents
together are just barely in positive territory (+£0.5bn; with some size bands
positive, some negative).
 In 2008, large/complex groups were more negative (-£120bn vs -£44bn; similarly
but to a lesser extent for medium groups), while independents were positive in all
size bands.
 Although large/complex groups seem to be improving by 2013 (not as negative
as in 2008), the continued disinvestment is occurring even as cash has continued
to steadily increase. Mid-to-large independents perform best.
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27
…THOUGH THERE ARE POCKETS OF POSITIVE
INVESTMENT BEHAVIOUR
The observed net disinvestment by PNFCs of -£49bn in 2013 is not generalised:
21% of all firms actually show positive investment (on average £270k), while 53%
show negative investment (on average -£170k); and 26% firms show a neutral
profile.
Zooming on the 1 in 5 firms with positive investment:
 Only 5,000 of these are large/complex groups (13% incidence)
 Vs. 191,000 very small Independents (20%)
 …Or 4,000 medium-large Independents (32%)
 However these large/complex groups weigh 61% of the total invested by this
“positive” cohort: so the large/complex group segment is bipolar, as overall it is
“negative” (next chart).
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28
CAPEX SUMMARY BY COHORT:
Persistent and high disinvesting activity is observed among the groups cohort
(even if less virulent in 2013 than in 2008); in contrast, independents, especially larger
ones, are exhibiting positive investment behaviour.
V. Small
______
No of firms*
2013 Total invt (net)
2008
2013 Avg net invt
2008
933k
-£0.2bn
£0.5bn
-£0k
£0k
Independents
Group-structured
Small Medium Large Simple Medium Complex
_____ ______ ______ _______ ________ _______
160k
10k
1k
109k
54k
43k
£1.0bn -£0.5bn
£1.1bn £1.0bn
£0.2bn -£2.0bn
£0.4bn -£1.5bn
-£3.5bn
-£9.8bn
-£44.0bn
-120.0bn
£6k
£4k
£212k
£486k
-£145k
-£162k
-£820k
-£1.6m
-£55k
£93k
-£15k
-£20k
* No of firms with tangible assets available; at granular level for groups; outliers within unknown-size independents re-classified in groups. Note
less firms report this data than earlier in the report.
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29
INVESTMENT PERFORMANCE SINCE 2008 BY COHORT:
Visualising the data confirms how much disinvestment is concentrated in the large
groups; and the continued disinvestment is occurring even as cash has continued to steadily increase
(see dotted lines)
“Available” in the chart below refers to firms that have reported the data
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30
INVESTMENT SINCE 2008 BY COHORT CONT.:
In fact, whether in 2008, 2012 or 2013, large/complex groups concentrate the overwhelming
majority (even up to 93%) of the overall PNFC disinvestment, although they represent only 3% of all
firms; note that this high disinvestment in the large complex group has “improved” since the levels of
2008, though it is down on 2012.
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31
FOCUSING ON INVESTMENT PERFORMANCE BY FIRMS THAT INVEST:
Zooming in on the 273,000 firms with positive investment behaviour (1 in 5 of all firms), medium to large
independents are much more likely (1 in 3) to be positive investors than groups (1 in 6), though this reflects
in part the fact that within groups, investment may be done just by certain subsidiaries within the group.
Note that groups concentrate 82% of the total value of investment, 61% for the complex groups alone.
Note: % incidence = proportion that positively investing firms account for all firms in each size cohort
No. of firms
Investment (£m)
Average investment
(£)
% incidence
Indep 1-4
190,829
7,381
38,681
20%
Indep 5-49
46,004
3,113
67,665
29%
3,240
2,184
674,487
32%
320
955
2,985,788
32%
19,537
7,216
369,380
18%
Medium group
7,365
7,938
1,077,895
14%
Complex group
5,339
45,039
8,443,767
13%
272,634
73,826
270,799
21%
Size
Indep 50-249
Indep 250+
Simple group
Total
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32
Unfortunately these 270k positively-investing firms fail to outweigh the 703k
dis-investing firms, not just in number but also in total invested (+£70bn vs.
-£112bn), and in total cash (£53bn vs. £105bn). The 39k firms with highest cash increase,
yet simultaneously disinvesting, concentrate £53bn cash while “disinvesting” by -£23bn…
Cash evolution is an analysis of the stock of firms in 2012, and then examining their change 2013/2012


But there is a “goldilocks” cohort as well: the
23k firms that are in the highest cash-increase
band, yet are investing (see top-right table) –
concentrate +£30bn of investment (bottom
right), and £29bn of cash (bottom left)!
In incidence terms, stepping away from these
small-but-weighty cohorts, there is however
very little overall correlation between the trend
in cash holdings, and whether firms have
invested (top-right).
Cash (£m)
Change in
average cash
per firm 12-13
Number of companies
Change in
average cash
per firm 12-13
De-invest
Stable
Investment
N/A
Total
703
1,022
350
182,851
184,926
>-60k
40,542
11,027
19,954
86
71,609
-60k - 10k
92,585
24,520
37,505
368
154,978
-10k - 1k
135,663
49,580
44,775
804
230,822
-1k - 1k
194,617
174,512
52,304
1,389
422,822
1k - 10k
116,096
42,370
47,702
637
206,805
10k - 60k
84,580
23,530
45,050
382
153,542
>60k
38,707
9,730
22,808
106
71,351
Total
703,493
336,291
270,448
186,623
1,496,855
De-invest
Stable
Investment
N/A
Total
-794
0
279
0
-515
-48,687
0
18,671
0
-30,016
N/A
Investment (£m)
Change in
average cash
per firm 12-13
De-invest
Stable
Investment
N/A
Total
26
85
21
5,800
5,933
33,129
20,761
16,071
18
69,979
-60k - 10k
5,560
1,335
2,298
14
9,207
-60k - 10k
-6,118
0
4,226
0
-1,892
-10k - 1k
2,281
623
843
11
3,758
-10k - 1k
-3,479
0
2,058
0
-1,421
-1k - 1k
685
263
248
3
1,199
-1k - 1k
-22,906
0
10,833
0
-12,073
1k - 10k
2,644
635
1,044
10
4,333
1k - 10k
-2,669
0
1,613
0
-1,057
10k - 60k
-4,198
0
2,827
0
-1,371
N/A
>-60k
10k - 60k
N/A
>-60k
7,534
1,553
3,504
25
12,615
>60k
53,463
20,255
29,281
78
103,077
>60k
-22,988
0
29,675
0
6,687
Total
105,322
45,510
53,311
5,958
210,100
Total
-111,839
0
70,182
0
-41,657
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33
Profitability
 This did not prove to be a fertile ground for analysis:
 Very low fill-in rate (only 10% of firms overall declare their profits)
 …Even if we try to approximate profit by "change in net worth"
 …Still relatively disappointing for large firms (e.g. 38% of the >250 empl
independents do not declare their profits)
 …Moreover, when the data is reported, it is given to many outliers
 …Not to mention that profits is a highly manipulated number, for tax
exposure management purposes!
 However, large independents have good data fill-in rates and are without
the complexities of balance sheets being linked to mother-daughter
balance-sheets, and so we analyse large independents’ profitability in the
next table.
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34
PROFITABILITY AND INVESTMENT OF LARGE INDEPENDENTS (250+):
For the 624 firms with known data, profitability and investment are not correlated – a fairly
even spread of investment levels is observed for unprofitable firms, similarly for profitable ones (top
table). The great bulk of the net £585m investment made by this cohort does however come, in value,
from the most profitable (bottom table), in line with the Pareto (80/20) rule.
Number of companies
Investment
(£)
N/A
<-500k
1
-500k - -20k
41
-20k - -10k
25
-10k - 0
162
0 - 50k
174
50k - 500k
20
>500k
5
Total
428
Investment (£k)
Investment
(£)
<-500k
-500k - -20k
-20k - -10k
-10k - 0
0 - 50k
50k - 500k
>500k
Total
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N/A
-26,816
-3,104
-357
-367
1,011
2,817
7,570
-19,245
<-200k
19
12
1
0
9
6
20
67
<-200k
-33,214
-2,873
-10
0
146
1,459
52,614
18,121
-200k - 0
4
8
3
9
18
2
0
44
Pretax profit (£)
0 - 50k 50k - 200k 200k - 1m
2
6
19
19
13
53
3
3
8
7
9
8
31
12
31
3
12
36
1
2
20
66
57
175
1m - 5m
33
30
1
3
13
21
35
136
>5m
28
7
0
2
8
11
23
79
Total
112
183
44
200
296
111
106
1,052
-200k - 0
-3,060
-1,670
-48
-14
7
502
0
-4,281
Pretax profit (£)
0 - 50k 50k - 200k 200k - 1m
-3,794
-6,593
-22,683
-2,943
-1,427
-8,764
-44
-39
-117
-27
-38
-29
65
113
529
159
2,369
7,884
0
982
53,727
-6,585
-4,632
30,547
1m - 5m
-105,224
-5,617
-14
-14
26
3,556
276,347
169,061
>5m
-91,908
-1,994
0
-5
0
2,694
493,453
402,239
Total
-293,291
-28,392
-629
-494
1,897
21,441
884,693
585,225
35
CONCLUSIONS
Over the 2008-2013 period, we observe 3 distinct
and even opposite behaviours within PNFCs
Very small independents as a segment (1.1m firms out of 1.5m analysable) have
reduced their investment levels overall (from +£574 to -£229 in 2013 on average,
accounting only for -£226m total).
 However their cash position has also dropped (median of under £10k each), by
4% in the same period, as have liabilities…
 …Net of small dividends paid (which have been dropping 75%...).
Thus, small independents seem on the whole to have experienced a slight overall
contraction. Inversely, large independents (>250 empl) on the other hand are the
only cohort to have positively invested:
 Even as their cash has increased significantly
 Along with (and net of) high and increasing dividends paid, and increasing debt.
These seem on the whole to have been able to achieve several goals at once
(investing, but also saving for a rainy day and rewarding shareholders).
Unfortunately there are only 1,052 of them (total invested just over £1bn).
Note that small/medium independents (5 to 250 empl) form an intermediary
behaviour in terms of investment, with intermittent positive contribution (either
investing in 2012 or 2013 but not both).
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36
CONCLUSIONS
Depending on the year, 67% to 93% of the total PNFC disinvestment is
down to a single segment of just a few thousand firms – the same one
which also dominates the cash hoard
By contrast, the large/complex group cohort (only 3% of all firms) appears to show
high dis-investing overall; this was true in 2008, remained true in 2012 (by which
time the situation had “improved” to a -£28bn disinvestment level, 67% of total), and
also in 2013 (when it fell back, to -£44bn, or 90% of total);
 But this cannot be attributed to a precarious cash position: they concentrate a
dominant £108bn of cash, half the PNFC total (£2.4m each on average)
 Which they have increased by 14% from 2008 to 2013
 NET of dividends paid, which themselves have more than doubled.
On the other hand, this cohort also concentrates a dominant proportion of all PNFC
liabilities (£3.6tn out of total £4.3tn, £82m on average and stable), with a negative
overall net cash position.
In fact, within the L/C group cohort, this behaviour is attributable to an even less
numerous sub-cohort, as many L/C groups actually show positive investment and
net cash profiles. In principle, we should therefore focus deeper on this small but
key population (a few thousand CEOs at most, as the 44,000 firms in the entire L/C
group segment, which are mostly subsidiaries, concentrate into a much smaller
number of corporate groups).
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37
Summary: behaviour in 2013, compared to 2008
Segment
Cash
Very small
independents
(1.1m firms)
Slightly down
(£30k on avg)
Med/large
independents
(>50 empl;
12k firms)
Way up
(£600k on avg)
Large/complex
groups
(44k firms)
Up
(£2.7m on
avg)
Debt
Down
Up
Stable
Net Cash
Dividends
Investment
Conclusion
Up
Way down
(and very
small: under
£1k on avg)
Down
"Contracting,
and deleveraging"
Down
Mostly up
(and £50k on
avg)
Down
"Positive
momentum"
Stable
Very negative in
Way up (and
2013, though up
£12m avg)
from 2008
"WHY"?*
* Note that a sub-cohort concentrates this behaviour
(many other firms in this segment are positively
investing)
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38
Summary-2: underlying data for the overall analytical universe
- data used for stock views
indep
1-4
indep
5-49
indep
50-249
indep
250+
group
simple
group
medium
group
complex
Total
1,098,832
961,639
171,812
186,760
10,484
10,864
1,052
895
113,728
120,633
56,863
67,437
44,084
50,119
1,496,855
1,398,347
Total amount of Cash (2012) M£
Average cash (2012) £
Average cash (2008) £
33,190
30,205
30,624
19,393
112,872
106,190
6,586
628,151
399,593
1,824
1,733,483
957,489
22,731
199,871
225,674
18,662
328,225
331,222
107,716
2,445,589
2,352,660
210,100
140,366
158,725
Total amount of Investment (2012) M£
Average Investment (2012) £
Average Investment (2008) £
-3,832
-4,106
574
-396
-2,471
4,334
621
62,007
92,658
585
589,350
486,302
-3,580
-32,855
-20,046
-7,128
-133,157
-161,780
-27,927
-652,665
-1,589,076
-41,657
-31,795
-71,034
Total amount of liabilities (2012) (M£)
Average Total liabilities (2012) £
Average Total liabilities (2008) £
179,467
163,325
150,391
72,553
422,282
397,583
46,993
4,482,323
2,402,968
14,504
13,786,809
8,958,329
194,706
1,712,048
1,918,312
333,840
5,871,472
6,431,524
3,635,607
82,543,018
79,493,081
4,477,669
2,991,477
3,505,744
Total amount of Cash minus liabilities (2012) (M£)
Average Total Cash minus liabilities (2012) £
Average Total Cash minus liabilities (2008) £
-146,277
-133,120
-119,767
-53,160
-309,411
-291,393
-40,407
-12,680
-3,854,172 -12,053,326
-2,003,375 -8,000,840
-171,975
-1,512,177
-1,692,638
-315,178 -3,527,891
-5,543,247 -80,097,429
-6,100,302 -77,140,421
-4,267,569
-2,851,111
-3,347,019
1,532
1,394
3,603
804
4,681
5,921
Analytic pool
Number of companies (2012)
Number of companies (2008)
Total amount of Dividend paid (2012) (M£)
Average Total Dividend paid (2012) £
Average Total Dividend paid (2008) £
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1,186
113,111
43,455
348
330,764
114,255
6,422
56,469
51,578
6,710
118,016
265,158
308,046
6,993,882
5,164,519
325,048
217,160
206,021
39
Summary-2: underlying data for the overall analytical universe
- data used for time trends
indep
1-4
indep
5-49
indep
50-249
indep
250+
group
simple
group
medium
group
complex
Total
1,172,614
961,639
176,395
186,760
9,624
10,864
808
895
122,730
120,633
60,185
67,437
44,050
50,119
1,586,406
1,398,347
34,501
29,422
30,624
-3.9%
19,365
109,782
106,190
3.4%
4,656
483,763
399,593
21.1%
1,422
1,760,161
957,489
83.8%
28,185
229,651
225,674
1.8%
21,202
352,288
331,222
6.4%
118,542
2,691,072
2,352,660
14.4%
227,873
166,624
158,725
5.0%
Total amount of Investment (2013) M£
Average Investment (2013) £
Average Investment (2008) £
% change in average Investment (2008-2013)
-226
-229
574
-139.9%
1,010
6,099
4,334
40.7%
-511
-55,331
92,658
-159.7%
165
211,920
486,302
-56.4%
-2,006
-15,445
-20,046
23.0%
-3,527
-144,568
-161,780
10.6%
-43,975
-820,411
-1,589,076
48.4%
-49,071
-32,363
-71,034
54.4%
Total amount of liabilities (2013) (M£)
Average Total liabilities (2013) £
Average Total liabilities (2008) £
% change in average Total liabilities (2008-2013)
156,605
133,552
150,391
-11.2%
63,878
362,128
397,583
-8.9%
24,280
8,990
2,522,869 11,126,278
2,402,968 8,958,329
5.0%
24.2%
249,448
2,032,495
1,918,312
6.0%
306,889 3,513,796
5,099,088 79,768,354
6,431,524 79,493,081
-20.7%
0.3%
4,323,885
2,725,586
3,505,744
-22.3%
Total amount of Cash minus liabilities (2013) (M£)
-122,104
Average Total Cash minus liabilities (2013) £
-104,130
Average Total Cash minus liabilities (2008) £
-119,767
% change in average Total Cash minus liabilities (2008-2013)13.1%
-44,513
-252,346
-291,393
13.4%
-19,624
-2,039,106
-2,003,375
-1.8%
-7,568
-9,366,117
-8,000,840
-17.1%
-221,263
-1,802,844
-1,692,638
-6.5%
-285,686 -3,395,254
-4,746,800 -77,077,283
-6,100,302 -77,140,421
22.2%
0.1%
-4,096,013
-2,581,945
-3,347,019
22.9%
635
3,599
5,921
-39.2%
394
40,904
43,455
-5.9%
112
138,485
114,255
21.2%
5,329
43,420
51,578
-15.8%
29,452
521,494
489,366 11,838,673
265,158 5,164,519
84.6%
129.2%
558,459
352,028
206,021
70.9%
Analytic pool
Number of companies (2013)
Number of companies (2008)
Total amount of Cash (2013) M£
Average cash (2013) £
Average cash (2008) £
% change in average cash (2008-2013)
Total amount of Dividend paid (2013) (M£)
Average Total Dividend paid (2013) £
Average Total Dividend paid (2008) £
% change in average Total Dividend paid (2008-2013)
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1,044
890
3,603
-75.3%
40
Potential next steps: focussing on the “apparently ineffective”
sub-cohort within the large, complex group segment
A combination of desk and field research should be undertaken to:
 Confirm we are not missing legitimate aspects of the behaviour peculiar to that
cohort
 Delve deeper into the likely reasons for the behaviours.
We would thus take the preceding analysis to a more granular level: in particular,
we should recognize that for this cohort, intangibles (as opposed to tangible assets
only) could represent an important quantum of investment, which may well have
increased in the period and could possibly make up for the dip in intangible assets:
 Goodwill on acquisitions
 Capitalised R&D
 Patents, Brand value, etc.
Liabilities could also usefully be split into working capital debt and long-term debt, in
case this reveals differentiated patterns.
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41
Going to the fully granular level, for both field and desk
research
Who are the top UK firms/groups, which simultaneously combine:
 Very high (and increasing) cash balances (say >£10m), with
 High (and increasing) debt,
 …but the cash exceeds the debt significantly,
 And the cash represents a higher-than-normal % of sales,
 And we simultaneously observe a negative investment profile?
There will only be a relatively small number of them, and patterns may emerge from
a close examination of their actual identities and of the industry sectors they
populate, ideally combined with some field research:
 Providing clues as to the likely reasons for the choices made
 For example, M&A activity has been notoriously down since 2008; would a return
to normal levels account for the investment gap, and for the cash build-up?
 Is it not rational for groups to load up on cheap debt now, while it is available?
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42
Appendices
The following slides (44-59) are appendices,
containing more background data to the main results.
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43
List of the largest cash-balances, across PNFC - 2013
Many unknown-size at the top – these are specialised “piggybank” subsidiaries of
complex groups
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44
Continued…
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45
Continued…
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46
2011 1/3
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47
2011 2/3
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48
2011 3/3
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Experian Public.
49
2009 1/3
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50
2009 2/3
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51
2009 3/3
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52
Breakdown by the BIS 19-way SIC cut: the core £233bn cash is fairly
evenly distributed; average cash/firm is highest by far for the two
sectors with the lowest populations: Mining, elec & gas (though they also have
the highest average turnover per firm).
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53
Detailed Industry Sector View (64-way BIS cut), by size band
First - number of firms
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54
Continued…
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55
Now total cash…
Four sectors out of 57 concentrate £56.3bn of the total £233bn cash:
Buildings, computer/IT, management consultancy, admin services.
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56
Continued…
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57
Now average cash/firm…
within the >1000-empl, several sectors exceed £40m/firm;
note anomalies within the small (similar to the N/A)
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58
Continued…
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59