Corporate finance in Deloitte in Scotland
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By Craig Cosham, Partner, Financial Services for Scotland, Deloitte
Innovation has been part of the fabric of Scotland’s financial services (FS) scene throughout its long and rich history. With customer expectations changing, possibly more in the last decade than ever before, it’s just as well.
The oil price drop has been severe, with a profound effect on the industry. Almost every business is reassessing how it operates and looking for ways to respond – cutting costs and discretionary capex, all the while enhancing production volumes to keep their head above water.
Collaboration is a buzzword in the North Sea these days. At a time when the industry is striving to restore competitiveness, improve efficiency and bring down costs it has seldom been more important. Oil and Gas UK’s most recent Activity Survey found that operating costs have dropped from around $30 per boe to $17 since 2014, but measures still need to go further.
Scratch the surface though, and you quickly realise that there’s little clarity over what collaboration actually means. That lack of understanding was one of the main drivers behind our report: Making the most of the UKCS: Collaborating for success. Surveying the UK Continental Shelf’s (UKCS) operators and supply chain companies, respondents told us that they collaborate to a high degree with their suppliers and customers in initiatives mainly aimed at cutting costs.
The recovery from the financial crisis of 2008 barely got going before we were talking about a sovereign debt crisis in Europe. Nevertheless, stock markets rose and economic indicators started to head in the right direction from around November 2011.
Now that’s morphed into an oil price slump, precipitated in part by a slowdown in emerging markets; most notably China. If the experience of the last few years tells you anything, it’s that there are always challenges to be overcome.
The transatlantic partnership between the US and UK has long been heralded as one of the pinnacles of international relations – politicians often refer to it as the “special relationship”. And in neo-functionalist tradition, that’s brought about “spillover” into other areas; in this case, the world of business.
Analysing one of these spillover areas, we have launched our inaugural US/UK M&A Deal Monitor – an insight document which quantifies various aspects of the largest bilateral cross-border deal corridor in the world including, by deal values and volume.
The festive period is a time of reflection. And looking back over the last 12 months, I can safely say 2015 was a big year for Deloitte and for me.
This will be my first Christmas as Senior Partner for Deloitte in Scotland and Northern Ireland; a role I’m honoured to hold. I’ve inherited a fantastic team, which has helped make the transition that bit easier, and I’ve been inspired by the brilliant clients the firm gets to work with every day.
The economic indicators are mostly good. Scottish corporate insolvencies continue to drop: thanks at least in part to a recent period of low interest and low inflation. UK CFOs remain relatively optimistic – although our latest survey found that uncertainty is on the rise with weakness in emerging and global equity markets.
Many businesses will have confidence; but, they need to remain wary. To paraphrase a well-used extract from Sun Tzu’s Art of War: in times of plenty, prepare for scarcity. In times of scarcity, prepare for plenty.
We all have to make choices every day of our lives. Some are simple, routine, snap judgements, others have a more profound impact on our lives, how they take shape, and the professional and personal interests we end up pursuing.
The failure of a key customer can cause businesses a great deal of damage – but you can take out insurance against that eventuality. Less considered is the potential effect a failed supplier could have on a company.
It’s an issue that could affect any type of business. Whether that’s an engineering firm which can’t get hold of materials to complete an order, or a ferry operator relying on the delivery of a new ship: managing supply chain risk is ever-present and complex.
The last 12 months have been one of the best periods for Initial Public Offerings (IPOs) since the financial crisis began in 2007. Returns from newly-listed companies beat many analysts’ expectations and equivalent investor earnings from stakes in the FTSE-100. But can this performance be sustained into 2015?