HOW TO SURVIVE AN ECONOMIC DOWNTURN

Presented by Simon Glyn

20 January 2009

About Vantis

Vantis plc is the AIM listed UK top 13 accountancy, business & tax advisory group

Our objective is to be the provider of choice for ambitious organisations (from owner-managed businesses to listed companies and not for profit organisations), high worth individuals and other professionals

Vantis have specialist industry groups as well as individual experts across the organisations

Locations

- Hartlepool

- Middlesbrough

- Darlington

- Manchester

- Beaconsfield - Marlow - Sidcup - Epsom

- St Albans - Hornchurch

- Tonbridge - London

- Wokingham - Loughton

- Worthing

- Jersey

- Leicester & Birmingham

Vantis operates from offices based in 19 locations:

HLB International

100 Countries

450 Offices

1,800 Partners

11,600 Personnel

International Billing US$1.3billion

International Ranking – 12th

Vantis plc is a member of HLB International

Accounting, Tax & Consultancy

• Bespoke tax planning• International tax planning• Personal tax including IHT

planning• Tax investigations &

enquiries• VAT advice & planning• Customs duty recovery &

advisory services• Outsourced accounting

solutions• Payroll & HR solutions• Year end & management

accounts

• Business recovery • Business reviews• Corporate insolvency• Personal insolvency• Pre-lending reviews• Refinancing• Restructuring• Turnaround management

Recovery / Restructuring

BusinessSupport Services

• Business coaching• Commercial asset finance &

leasing solutions• Company secretarial services• Executive recruitment, training &

development• HR compliance advice• Internal audit & risk

management• Interim management placement

services• Stocktaking, internal audit &

investigation services• Training

Services we provide to private & corporate clients

Independent Financial Advice

• Employee benefit schemes & consultancy

• Financial advice for businesses & private individuals

• Investment advice• Life assurance for business &

family protection• Mortgages & remortgages• Pension planning• Retirement counselling

Business Growth & Succession

• Buying & selling businesses• Commercial advice, strategy &

business planning• Due diligence• Exit planning• Flotations• Management buy-ins & buy-

outs• Management consultancy• Raising finance• Sports consultancy

Forensic Accounting & Dispute Resolution

• Alternative dispute resolution• Breach of contract disputes• Business interruption• Fraud & corporate

investigations• Personal injury & clinical

negligence• Professional negligence• Share valuations

Presentation Content

What are the Early Warning Signs?

Fundamentals of Bank Lending

Main issues facing the “real economy”

Bank behaviour in this environment

Practical tips to survive the economic downturn

Early Warning Signs

Death

Divorce

Disaster

Disease

Dinosaur

Dispute

Banks lend money to SME’s on 3 bases:

Ability of Management to have a strategy/run a business plan/stay close to their forecasts

Security given by the business and/or owners’ guarantees (which will impact the pricing of risk)

Ability to repay interest (serviceability)

Bank Lending Principles

What factors are affecting the “real economy”?

Consumer reduction in disposable income

Debtor days increasing (The ruthless “Multiple”) Availability of credit (particularly new money

requests)

SME lack of confidence to proceed with plans

Accuracy of forecasting-wider sensitivities

No hiding place for poor management!

How are the Bank’s reacting? 10-15% of all Bank Customers are in their Early

Watch/Business Support Department

Circa 3% (increased from <1%) anticipated to fail in the recession IF: • Banks remain generally “supportive” of their customers

(particularly in a declining property market)

In order to be “supportive”, the Bank will want to:

1. Prove Viability 2. Ensure ongoing serviceability of Bank debt (even interest only)3. Be comfortable that Management is willing to

change/make difficult and timely decisions

Practical tips

Financial

Manage the business for cash (even at the expense of margin or profit)

Prepare rolling 13 week cash flow forecasts

Think ahead by stress testing the business model to understand the pressure points (realistic sensitivities!)

Explore all ways to release cash and value from the business (e.g. robust credit control function)

Practical tips (cont)

Strategic

Fully understand your market and customer- the importance of perceived value

Anticipate stakeholder behaviour (eg. Credit insurers pulling out)

Seek professional advice early/don’t leave it all to the last minute!

Ensure you have robust “contingency plans” in place to deal with that unexpected, possibly terminal event

Management must make decisive and timely decisions however difficult or emotional they may be

Remember to understand what “Success” is during the recession

Contact details

Simon GlynClient Partner – Business Recovery ServicesP O Box 265366 Wigmore StreetLondonW1A 3RTDDI: 0207 467 4262Mobile: 07768 467042  Email: simon.glyn@vantisplc.com

Beverley MarshClient Partner - Business Recovery Services 104-106 Colmore RowBirmingham B3 3AG DDI: 0121 710 1682Mobile: 07801 901772Email: beverley.marsh@vantisplc.com

Jonathan PerrinClient Partner – Head of Hospitality and Leisure Sector66 Wigmore StreetLondonW1U 2SBDDI: 0207 467 4169Mobile: 07867 978089  Email: jonathan.perrin@vantisplc.com

www.vantisplc.com