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Does it matter if the swimmers are naked or not?

During the summer holidays at university I was lucky enough to have a temporary job as a life guard at the local swimming pool. Thankfully there were no emergencies and the most exciting thing that happened was when a locker became jammed.

businessman-in-poolI graduated from university and now I’m an accountant. My job now involves looking at figures on spreadsheets rather than figures in the pool.

In Austria, the management of Vienna’s public swimming pools carried out a survey and found that bathers were consuming on average 5,000 litres of chlorinated pool water a day.

5,000 litres of water a day is a significant amount of water. Looking at this from a finance point of view this in turn means that this is a significant amount of cost in replacing the water. In addition, the authorities have to spend £20 per day to replace the chlorine that disappears with the water.

How come so much water is being lost? Surely the swimmers are not drinking the water and it would take an awful lot of splashing to lose that amount of water.

The answer is that apparently a lot of water gets removed from the pool via the material of the swim wear. When a person wearing Boardshorts for example leaves the pool 2.5 litres of chlorinated water is trapped in the material and is removed from the pool.

So, picture the scene. You’re an accountant at a sports complex and are attending a meeting to discuss cost saving initiatives for the year ahead.

Given the above findings then would a cost saving solution be to suggest that swimwear should be banned?

Now whilst this would save the cost of chlorinated water being replaced I think the number of swimmers would decline dramatically.

Importantly though I think they would save on the cost of your salary as you probably wouldn’t be in the job for much longer after that suggestion.

Fancy nipping down the pub for a quick pint and maybe grab a latte and a croissant?

When I was in my teenage years, pubs in England were a very distinctive place; dark, smoky, slightly smelly, overwhelmingly male and mostly shut.

A legacy of previous societal norms meant that women rarely went into pubs unless they were with men.

A legacy of World War One legislation meant that drinks could not be served after 10.30pm or 11pm.  This generally meant a few hours of seriously intensive binging from about 8pm to 11pm, mostly on two nights per week.

croissantThis state of affairs was not great for earning a commercial return.  Pubs often occupy prime sites at expensive rental.  Trying to recover the operating costs of a business when the assets are only utilised for 10% of the time is a challenge and a half.

The first marketing innovation was to make pubs far more female friendly.

Curtains over windows were abolished in favour of plate glass windows.  Pubs started to sell a choice of wines.  The smoking ban came in.

Women were far now more likely to go to a bar with friends because the environment seemed less intimidating.  Unsurprisingly, where groups of young women went, groups of young men followed.

Doctors worried about the effects of all this on the nation’s health, but the tills kept ringing.

Laws governing opening hours were relaxed a few years ago, with some predictable, but probably transitional, issues of overindulgence, as a nation used to nanny closing the bar at 11pm now continued to serve, as people continued to drink at the, erm, efficient rate the previous law had dictated.

JD Wetherspoon runs a chain of bars in the UK, mostly in sites that previously were not bars. Car showrooms are a particular favourite choice of location because of the big windows that attract passing impulse customers.

They have started to open their city centre bars early in the morning, in an attempt to attract an extra crowd.

Some chains have slightly different staff uniforms in daytime and the evening; pseudo-Parisian coffee bar by day; unfussy drinking den by night.

The result is that JD Wetherspoon claims to sell 400,000 breakfasts per week (only McDonalds are bigger, with 600,000).

A recessionary environment means that customers have become open to the idea of hanging out in Wetherspoons with a cheap latte instead of a more expensive option in Starbucks.  It has achieved this growth remarkably quickly, as it only started to open for breakfast last year.

It’s a wonderful example of innovative business change, asset utilisation and absorption costing.

So, what’s this all about? Are things changing? Is it a load of bear or a load of bull?

The major stock markets around the world have been bear markets for the last couple of years but with the end of the recession looking like it’s here we should soon see a switch to a bull market.

Analysts around the world will be arguing one way or another on the timing of the recovery but where do the terms “bear market” and “bull market” come from?

There are two main views on the origin of these terms.

The first view is based on the methods with which the two animals attack.  A bear for example will swipe downwards on its target whilst a bull will thrust upwards with its horns. A bear market therefore is a downwards market with declining prices whilst a bull market is the opposite with rising prices.

The second view on the origin is based around the “short selling” of bearskins several hundred years ago by traders. Traders would sell bearskins before they actually owned them in the hope that the prices would fall by the time they bought them from the hunters and then transferred them to their customers. These traders became known as bears and the term stuck for a downwards market. Due to the once-popular blood sport of bull and bear fights, a bull was considered to be the opposite of a bear so the term bull market was born.

Whatever the actual origin of the terms though I’m sure most people will be relieved when we return to a bull market.

Who earns the most out of the Top Gear presenters?

BBC Worldwide has just published its latest annual report and for any fans of the TV programme Top Gear there are some interesting figures.

top-gear-magazineTop Gear is an incredibly successful TV programme. The programme which is so loved by car addicts around the world is the world’s most widely watched factual television programme and is shown in 174 territories. That’s pretty impressive and shows what a global success the programme has become.

It stars Jeremy Clarkson, Richard Hammond (the Hamster) and James May (Captain Slow) but who earns the most out of the 3 presenters?

It will probably come as no real surprise to find out that Jeremy Clarkson received the most last year.

Interestingly though the majority wasn’t from his salary but rather from dividends and a sale of shares.

5 years ago a company called Bedder 6 was set up with the aim to exploit the commercial opportunities of the Top Gear brand.

Top Gear Magazines, live shows and DVDs followed.

So who were the original shareholders of Bedder 6 when it was set up?

Well, the BBC was a 50% shareholder whilst Top Gear executive producer Andy Wilman had a 20% stake and Jeremy Clarkson had a 30% shareholding.

Alas for poor Hamster and Captain Slow the other 2 presenters didn’t hold any shares.

The recently released BBC accounts show that the BBC bought out the shareholdings of Clarkson and Wilman.

How much did Clarkson receive in total from the BBC last year?

He received a salary of £1 million, dividends of £4.86 million from Bedder 6 and £8.4 million for selling his shares in Bedder 6 to the BBC.

In total, he received £14 million from the BBC.

That’s not a bad amount is it?

To be fair to the guy though he’s been instrumental in building the Top Gear brand into a global success with millions of viewers around the world so arguably he deserves the financial rewards that go with it.

With that amount of money hitting his bank account in the last year though one thing he can definitely do is to buy any car that he wants.

Is it better to be loyal or disloyal?

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We’ve all heard of the big coffee chains such as Starbucks and Costa Coffee and with their growth over recent years it’s become more and more difficult for the smaller independent coffee shops to compete.

Over in Singapore though a novel approach to competing with these “coffee shop big boys” has just been introduced.

Lots of businesses have a “loyalty card” programme whereby people earn various points each time they spend money with a company. They can then use these points to buy various items with the company.

The giant Tesco supermarket chain for example has one of the largest loyalty card schemes in the UK whereby “Tesco points” can be used to purchase Tesco products. Most international airlines also have loyalty programmes such as Sky team and Star Alliance where the points earned can be exchanged for free flights.

Antic Studios, a creative agency in Singapore has just come up with a new concept and it’s a “disloyalty card”.

The aim is to help a group of 8 smaller independent coffee shops in Singapore develop.

The idea is that an individual picks up a disloyalty card at one of the independent coffee shops. If they then visit the other 7 independent shops they get their card stamped and can then return to the original coffee shop to claim their free drink.

It’s a novel way of smaller companies who are in effect in competition with each other joining together to create awareness of themselves and encouraging people to try them out instead of staying with the big guys.

Smaller competitors working together to create stronger competition against the big coffee chains – a nice idea and well worth discussing over a cup of coffee.

So are they top or bottom of the league?

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In most industries if a company had revenue of £153m and a wage bill of £174m there would be serious questions asked.

Manchester City are the current leaders of the Premier league in the UK and they have just released their annual financial results.

The figures show that as well as being top of the league in terms of football they are also bottom of the league in terms of their financial results.

Their income was £153m and their expenses £348m. The resulting loss of £195m is the largest loss ever reported in English football history.

A loss of £195m on sales of £153m would have alarm bells ringing for most companies but Manchester City have got wealthy investors.

Sheikh Mansour of Abu Dhabi has so far invested over £460m on players since 2008 and has plenty of cash to invest.

The European footballing body Uefa though have introduced “Financial Fair Play rules” which come into full effect in 2013-14 and require clubs to break even over three years.

The reason for this is that Uefa are keen to prevent football becoming a rich man’s toy and these new rules will prevent wealthy backers from simply throwing money at a team to make it successful without caring about the loss that arises.

After all, if you’ve got a personal wealth of several billion then what does the odd hundred million here and there matter?

Manchester City have stated that they are confident that they will achieve a break even position over a 3 year time period and one of their recently announced revenue streams is a lucrative 10 year sponsorship deal worth £400m with Etihad Airways.

Press reports though have pointed out that Etihad Airways is based in Abu Dhabi, the home of Sheikh Mansour who is a member of the emirate’s ruling Al-Nahyan family and questions have been asked as to whether the £400m sponsorship deal was higher than would normally have been the case and was simply undertaken at an inflated price to artificially reduce the loss to get to the required breakeven point.

As a lifelong supporter of Bristol City (struggling in the division below the Premier League) I sometimes question whether it’s good for the sport of football if only a handful of clubs get huge amounts of money pumped into them.

It’s worth noting however that I would of course quickly change my mind should a wealthy backer invest in Bristol City…

Are the young ones always smaller?

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I’m willing to bet that nearly all of you have used a Microsoft product. Probably an equally high proportion have used Google and a reasonably significant number of you will own an Apple product.

What about LinkedIn? Most of you have no doubt heard of it and a number of you will be registered with the website.

But did you know that Microsoft currently has one of 9.40, Apple has one of 13.61, Google has one of 20.30 and LinkedIn has one of well, … well, you’ll just have to wait a moment to hear the figure as it’s rather impressive.

So, what figures am I talking about?

The figures mentioned above refer to the PE ratio or the Price Earnings ratio.

In an attempt to astound you with my knowledge, the Price Earnings ratio measures… (wait for it)… the ratio of Price to Earnings (a round of applause please for that brilliant explanation).

In other words, the share price of Microsoft for example is such that the market is currently prepared to pay 9.40 times the earnings to own it.

The PE ratio is also sometimes known as the “price multiple”, “earnings multiple” or simply “multiple” and whilst share prices can be affected by a number of different things, a high PE ratio generally implies that the market is expecting earnings to rise in the future.

If we round up the PE ratios of the companies above we get:

Microsoft: 9

Apple: 14

Google: 20

That other tech giant on the market, LinkedIn currently has a PE ratio of 1,498 (yes, 1,498).

Wow – that’s not bad is it?

So hang on. A PE ratio this high implies that the market has factored in an expectation of significant growth in earnings for LinkedIn.

This really is an expectation of pretty significant growth as at the moment for every $1 of current earnings an investor gets he or she has to pay $1,498.

So, for the sake of the LinkedIn shareholders let’s hope that in the future more people become linked in.

Is this a children’s fairy tale or an adult horror story?

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Forget about the Eurozone crisis that is currently dominating the news and instead, here’s a nice bedtime story to tell your children…

So children, are you feeling tired and ready for your story?

Once upon a time, in a land far far away there was a man called Gordon Reece (or Mr G.Reece).

Now Mr G.Reece was enjoying himself in the sunshine when suddenly everyone in the world started feeling happy and some wealthy friends and banks offered to lend him as much money as he wanted.

Mr G.Reece shielded his eyes from the sun and shook his head in disbelief. He couldn’t believe it but he gladly accepted the loans and with all that money he decided to treat himself.

He bought some houses, cars and a new Sony Playstation.

He even employed a couple of people to help him keep his house and garden tidy.

Things were going well but suddenly people around the world started becoming unhappy and didn’t buy as many things as they used to.

Mr G.Reece suddenly realised he had spent all of the money he had borrowed and didn’t have any money left to pay the interest on the loans.

He had an idea though. He could surely just go to another bank and get a new loan so that he could pay the interest.

Alas for Mr. G.Reece the banks didn’t want to lend him any more money as they knew he couldn’t afford to pay them back.

He then had another idea. To reduce his outgoings he would get rid of one of his employees and pay the other one a lower salary.

His employees were so upset that they messed up his house and garden and told him that they would carry on messing up his house and garden until he reinstated the job and the previous salary.

He then suddenly remembered his wealthy friends that had lent him money (a Mr F.Rance and Mrs G.Ermany). He gave them a call, explained the situation and they kindly agreed to write off some of the debt he owed them and also gave him a bit of cash to help him through the next few weeks.

His interest payments were now lower which was good but he was still struggling to pay the interest and the wages of his employees.

He decided that maybe this time he should actually go and visit his wealthy friends Mr F.Rance and Mrs G.Ermany and persuade them to write off even more of the debt and maybe give him some more money.

He jumped on a plane and headed to see them. He was feeling fairly positive when he arrived to meet his wealthy friends but then his face suddenly dropped.

There, heading to see the wealthy friends were none other than Mr P.Ortugal, Mrs S.Pain and Mr I.Taly. Three of his poorer friends who were also hoping to be given some money.

The problem though is that the wealthy friends don’t have enough money to give to all of the poor friends.

So children, what can they do?

Well, it’s time to go to sleep now kids and the story will be continued another night so sleep well, sweet dreams and don’t have any nightmares…

Sorry to break the news to you but Christmas is cancelled…

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3 years ago in the middle of the financial crisis when some of the best known banks in the world were on the verge of collapsing, the Royal Bank of Scotland (RBS) was rescued by the British tax payers to the tune of £45 billion.

Since then the bank has been under a lot of scrutiny. Not just from the point of whether it would survive but also when it would turn things around so that the business became profitable and the tax payer would start to get their money back.

Along with lots of other companies that have suffered in the crisis, RBS has undertaken a cost cutting exercise over the last couple of years.

Chris Kyle, the CFO of the Investment Banking division of RBS yesterday announced some additional cut backs to his staff.

An internal memo to his staff told them amongst other things that:

– No-one will be given a new Blackberry phone or other handset.

– There will be no magazine or newspapers subscriptions (I guess this now means that they won’t be able to do the daily FT crossword over morning coffee in the office)

– People working late in the office will not be able to claim a taxi expense to take them home unless they are working past 10pm (it used to be a 9pm cut off)

The bank has also banned all staff entertaining for the rest of the year so there will be no bank funded Christmas party for the RBS investment bankers and instead the bankers will have to pay for their office Christmas party themselves.

Now, whilst some people will think this is good cost control some others may feel that this is just “window dressing” to give the impression that the investment bankers’ excessive remuneration and benefits are being stopped.

Some of the RBS employees may well be a bit upset about having to pay for their Christmas party but last year over 300 key staff within the bank reportedly shared a bonus pot of £375 million which equals an average bonus of over £1.1 million each.

I guess these particular individuals are quite relaxed about buying their own Christmas drinks…

Can I have a skinny latte, a blueberry muffin and a corporate loan please?

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One of the real challenges facing a lot of companies at the moment is access to funds.

The economic turmoil over recent years has led to the loan markets largely drying up and without access to suitable cash reserves a number of firms have hit cashflow problems and have gone out of business.

Similarly, a lot of businesses that have wanted to start up in the recession haven’t had access to loan funds to enable them to do so.

The end result is that jobs have been lost.

The global coffee chain Starbucks though think that they may have an answer to some of the funding problems.

They have just launched a campaign to try to stimulate job growth in America by launching a “Create Jobs for the USA” initiative.

They are partnering in this initiative with Opportunity Finance Network (OFN), a group of private financial institutions that provide affordable loans to certain parts of the American population including low-income people and communities.

As well as donating $5 million to get the project off the ground Starbucks are also covering the admin expenses of OFN as well as paying for the manufacture of wristbands which will be given to any of their customers who donate $5 in one of their coffee shops.

Starbucks Chairman and CEO Howard Schultz said “Small businesses are…employing more than half of all private sector workers – but this critical jobs engine has stalled. We’ve got to thaw the channels of credit so that community businesses can start hiring again.”

100% of the donations made will go to OFN to help fund loans to community businesses including small businesses, microenterprises and nonprofit organizations.

Starbucks themselves though have also been a victim of the recession with several hundred stores being closed in the US alone in recent years and some sceptics may argue that this is just a PR initiate by them.

My personal view though is that if this initiative helps to create jobs then it can only be a good thing.