CASH – A SCARCE RESOURCE &
ALTERNATIVE SOURCES?

Rod Holdsworth
CFO, OCS Group Limited
CASH – A SCARCE RESOURCE &
ALTERNATIVE SOURCES?

• A Scarce Resource

• Alternative Sources
• How have OCS responded
Bank lending

1400

Western European Loans Issuance: 1997 - 2013

1400

1200

1000

1000

800

800

600

600

400

400

20...
Cost of Bank borrowing
Pricing (Libor+bps)

250

European Investment Grade Loan Pricing (multi-year)

200
150
100
50
0

A
...
1,200

Euro Capital Markets Pricing Indices

Issuance Spread to Benchmark (bps)

1,000
800
600
400
200
0
Mar 05

Sep 05

M...
Bank lending – what's changed
•
•
•
•
•
•
•
•

Bank lending volumes have nearly halved since 2007
Banks much more choosy
A...
Funding alternatives
• Private Placements

• Bonds – Public, Retail, Convertible bonds
• Suppliers
• Customers
Company response
•
•
•
•
•
•

Reduced investment (capex, acquisitions)
Asset finance (fixed assets and stock/debtors)
Oper...
The Future
•
•
•
•
•

UK base rates set to stay low – 2015-2016
But long term rates expected to increase
QE unwind
Be prep...
Workshop Discussion -20mins
• How has your company responded to the
changes in the global banking market?
• What alternati...
Workshop Close
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Rod Holdsworth, Group Finance Director at OCS Group - Cash – A scarce resource - Alternative funding options

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Rod Holdsworth, Group Finance Director at OCS Group - Cash – A scarce resource - Alternative funding options spoke at the CFO Event UK 2013

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Rod Holdsworth, Group Finance Director at OCS Group - Cash – A scarce resource - Alternative funding options

  1. 1. CASH – A SCARCE RESOURCE & ALTERNATIVE SOURCES? Rod Holdsworth CFO, OCS Group Limited
  2. 2. CASH – A SCARCE RESOURCE & ALTERNATIVE SOURCES? • A Scarce Resource • Alternative Sources • How have OCS responded
  3. 3. Bank lending 1400 Western European Loans Issuance: 1997 - 2013 1400 1200 1000 1000 800 800 600 600 400 400 200 200 0 0 Total Loans Volume (LH scale) No. of Issues (RH scale) Source: EY New Issue Review; Bloomberg No. of issues Amount ($bn) 1200
  4. 4. Cost of Bank borrowing Pricing (Libor+bps) 250 European Investment Grade Loan Pricing (multi-year) 200 150 100 50 0 A BBB Source: EY New Issue Review; Bloomberg
  5. 5. 1,200 Euro Capital Markets Pricing Indices Issuance Spread to Benchmark (bps) 1,000 800 600 400 200 0 Mar 05 Sep 05 Mar 06 Sep 06 Mar 07 Sep 07 Mar 08 iTraxx EUR 5yr Investment Grade Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 iTraxx EUR 5yr High-Yield Source: EY New Issue Review; Datastream Mar 11 Sep 11 Mar 12 iTraxx EUR 5yr Mid-Cap Sep 12 Mar 13 Sep 13
  6. 6. Bank lending – what's changed • • • • • • • • Bank lending volumes have nearly halved since 2007 Banks much more choosy Ability to repay capital and not just ‘service the debt’ Charges/Fees have increased The extra ‘wallet’… Asset based lending vs. cashflow lending ‘Relationship management’ tested and failed Future for bank lending?
  7. 7. Funding alternatives • Private Placements • Bonds – Public, Retail, Convertible bonds • Suppliers • Customers
  8. 8. Company response • • • • • • Reduced investment (capex, acquisitions) Asset finance (fixed assets and stock/debtors) Operating leases Increase cash ‘reserves’ Disposal of non-core operations Cost control, low/no pay rises, reduced overtime and increased parttimers • Stretching creditors • Ensure contract pricing reflects the cost of any extended credit terms • Focus on credit control and cash collection – debtor days
  9. 9. The Future • • • • • UK base rates set to stay low – 2015-2016 But long term rates expected to increase QE unwind Be prepared for next global financial ‘shock’ Keep funding options open - Diversify funding - And….. reduce debt dependency
  10. 10. Workshop Discussion -20mins • How has your company responded to the changes in the global banking market? • What alternative sources of funding have you considered? • What has your company done to preserve or maximise cash
  11. 11. Workshop Close

×