Sector Insights – Franchised Fast Food Retail
Fast food operators have faced challenging operating conditions over recent years, exacerbated by the COVID-19 outbreak and the Russian invasion of the Ukraine.
Pandemic lockdowns split the sector fortunes between those that were already equipped, or
could adapt quickly, to the booming food delivery platforms, drive thrus and “click & collect” formats. Brands such as Domino’s benefitted hugely but, overall, the severe trading limitations of the pandemic lockdowns were the main contributor to a 0.3%pa overall decline in fast food operators’ revenue over the five years through 2021-22, to £10.1billion.
Our report below provides an in-depth analysis of the sector, covering:
- Market overview
- Recent trends
- Current challenges
- Sector M&A activity
- Sector and M&A outlook
If you would like advice about disposals, acquisitions, or fundraising opportunities in the sectors, please get in touch with our knowledgeable corporate finance team for a conversation about your options.
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Deal Dispatch – Issue 39
Welcome to our Corporate Finance division’s regular deal round-up.
Market overview
Market-wide prophecies are inevitably sounding loud notes of caution across the economy as a whole, but now that number 10 has a new tenant with a “grip on the controls”, let’s hope that this begins to repair the dents in consumer confidence.
At PKF we continue to see good levels of deal flow and new prospects, with particular acquisition interest from overseas buyers and private equity-backed businesses. A good example is our recently completed disposal of Wrekin Products to a French buyer – which benefitted from our PKF International network. We are delighted to have been nominated in multiple categories in the imminent Insider Midlands Awards, including one for the Wrekin deal as International Deal of the Year.
Looking forward to 2023, our view is that good quality businesses in resilient sectors, that are now delivering performance that fully reflects post COVID recovery, will continue to be in high demand.
We believe buyers will remain active and that the plentiful availability of capital will enable well-structured deals, possibly financially-engineered to accommodate some uncertainties in future trading, will enable a decent level of completions. Our confidence is reflected in our recent addition to the CF team, more of which in the next issue.
The looming headwinds are certainly driving pragmatism in deal-doers’ strategy and objectives. For many that means realising value sooner rather than later.
It’s never too early to start planning your exit so please get in touch if you’d like an initial discussion.
– James Ward, Corporate Finance Director
Click below to read issue 39 of Deal Dispatch. Our corporate finance team have a wealth of knowledge and experience providing services to a variety of businesses. Please do not hesitate to get in touch today.
Download the PDFCharity News – Spring 2022
Our Charity News includes the latest guidance and support available for the not-for-profit sector as COVID-19 restrictions come to an end and trustees start planning for the future.
We also consider the impact of recent legislative, reporting and tax developments and other pertinent issues, giving you the inside track on the sector’s current hot topics and latest guidance.
The newsletter is applicable to the whole of the United Kingdom and makes reference to the three UK charity regulators:
- The Charity Commission for Northern Ireland (CCNI)
- The Office of the Scottish Charity Regulator (OSCR)
- The Charity Commission for England and Wales (CCEW)
At PKF Smith Cooper, we focus on developing strong and trusting relationships with our clients, becoming a trusted adviser. Read our Charity News below or find out more about the specialist services we offer within the charities and not-for-profit sector.
Sector Insights – Fire and security
Protecting ourselves against danger or loss is a fundamental objective for all of us, and companies that help to deliver that protection will always be in high demand.
The building safety sector provides that vital service to companies and homeowners alike – often by way of the installation and maintenance of fire and security systems. This report explores some of the drivers behind that demand which in turn has led to significant mergers and acquisitions (M&A) activity. We have also canvassed opinion and insight from a few of our key sector contacts.
If you would like advice about disposals, acquisitions, or fundraising opportunities in the fire and security sector, please get in touch with our knowledgeable corporate finance team for a conversation about your options.
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Corporate Finance Annual Deals Book 2020 – 2021
It’s been a busy and exciting year for UK mergers and acquisitions with near-record high levels of activity. At the same time, Smith Cooper joined PKF International, one of the world’s largest accountancy networks, which has provided our team with unprecedented access to global purchasers.
Locally, the Midlands PKF team completed 23 deals worth £144m and we were recognised by our peers for the Insider Dealmakers Award ‘East Midlands Deal of the Year Under £10m’. This was for Fabrikat, a manufacturer of street furniture, led by David Crump and John Farnsworth. We have also received multiple nominations for the forthcoming Insider Dealmakers Awards in May 2022.
During the year, we welcomed on board Harnil Motivaras, Senior Executive, from PwC and Tom Joy was promoted to Manager. We are now recruiting at all levels across all our offices as we
continue to push for growth. The higher percentage of sell-side opportunities seen in FY21
was maintained in FY22, driven by higher valuations across most sectors in the current market.
From a sector perspective:
- Our largest sector in the Midlands was in one of our key specialisms – telecommunications and technology. This included the acquisition of Alan Dick Communications Limited, a specialist in mission critical communications, by Mutares from Panasonic. It represented Mutares’ first investment in the UK
- We also continued to develop our specialism in the self storage sector with the acquisition of an operating site in Darlington for Quick Self Storage
- Despite the food and drink sector being impacted by Covid, our specialism in this sector continued to yield more deals including the sale of Amsric, a Starbucks franchise, which was sold to Southern Co-op
- In the professional services sector we are proud to have sold Olivehorse Consulting, a supply chain consultancy practice, to PwC
- We also completed the sale of TIS, a fire and security business, to Key Capital Partners
- On the back of joining the PKF network, and increasing our international reach, we sold Commercial Vehicle Hydraulics to OMFB, an Italian group that operates across Italy, France, Spain, Australia, China and India
Our reach
During 2021 we joined PKF International, which has had a dramatic impact on our business. Our pooled knowledge on potential purchasers, deal multiples and sector intelligence dramatically increased, providing a significant benefit to our clients.
Across the whole of the UK and Ireland, our combined team completed almost 140 deals, making us one of the largest M&A providers in the UK (ranked 6th nationally by volume of deals).
Outlook
The outlook for corporate finance is exceedingly optimistic for FY23 and we expect it to be a record-breaking year despite inflation and the political environment. We would like to thank all the clients and professionals that have supported us in the last financial year. It’s a privileged role that we hold as advisers, which we never lose sight of. Our team are ready, willing and able to deliver more exceptional results in the next financial year.
Read our 2020-2021 annual deals book below, or find out more about our corporate finance services here.
Download the PDFImportant payroll changes from April 2022
A number of important payroll changes are coming into force from April 2022, which may affect you and your employees.
These include:
- National Minimum Wage increase
- Changes to National Insurance contribution rates
- Increase to statutory payments
- Employment Allowance increase
- Changes to student loan repayment thresholds
To read a comprehensive list of the changes, and find out what actions you need to take, download our PDF guide below.
Further payroll support
If you would like more advice on how the payroll changes may affect you or your business, please get in touch with our dedicated payroll service experts today.
Download the PDFSpring Statement 2022
On Wednesday 23rd March, the Chancellor announced the Spring Statement against a backdrop of rising inflation.
In his Spring Statement, the Chancellor announced a cut in fuel duty for petrol and diesel as he
sought to ease the impact of rising prices for households and businesses.
The Chancellor will lift the starting thresholds for National Insurance contributions (NICs). He
also pledged a cut to income tax in 2024. However, the Health and Social Care Levy will still be
implemented in April 2022.
For businesses, there is an increase to the Employment Allowance, as well as relief from
business rates on a range of green technologies and help with training and the adoption of
digital technology.
Highlights
Increase in the National Insurance threshold and Lower Profit Limit
Chancellor Rishi Sunak announced an increase in the annual National Insurance Primary Threshold and the Lower Profits Limit in his 2022 Spring Statement. Primary Class 1 contributions are paid by employees. To align the starting thresholds for income tax and National Insurance contributions (NICs) the threshold will increase from 6 July 2022 from £9,880 to £12,570.
The Lower Profits Limit is the point where the profits of the self-employed become subject to Class 4 NICs. From 6 April 2022 the Lower Profits Limit is increased to £11,908 and from 6 July 2023 the
limit is increased further to £12,570.
In addition, there will be no Class 2 NICs on profits between £6,725 and £11,908. £3.15 per week is payable where profits are over £11,908.
Temporary increase in National Insurance rates
From April 2022, there will be a temporary increase in the rates of NICs payable for employees, employers and the self-employed as a transitional provision in readiness for the introduction of the Health and Social Care Levy from April 2023.
With the increase to the thresholds announced in the Spring Statement, from 6 July 2022 employees earning between £242 (£190 from 6 April to 5 July 2022) and £967 per week will pay NICs at 13.25%. Earnings over £967 will attract a 3.25% charge. Employers will pay 15.05% on their employees’ earnings over £175 per week.
Although employees’ NICs only become payable once earnings exceed £242 per week, any earnings between £123 and £242 per week protect an entitlement to basic state retirement benefits without incurring a liability to NICs.
For the self-employed, where their profits exceed £11,908 per annum, they will pay 10.25% on the profits up to £50,270 and 3.25% on profits over that upper profits limit.
Income tax reduction
The Chancellor announced the reduction in the basic rate of income tax for non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland to 19% from April 2024. This reduction
will not apply for Scottish taxpayers because the power to set these rates is devolved to the Scottish Government. The change will be implemented in a future Finance Bill.
Fuel duty
In a measure announced in the Spring Statement to help all motorists – individuals, small businesses and hauliers – fuel duty for petrol and diesel is cut by 5 pence per litre across the whole of the
UK. This measure took effect from 6pm on 23 March 2022 and is in place for 12 months.
Increased Employment Allowance
Employers are able to claim the Employment Allowance which reduces their employer Class 1 NICs each year. In the Spring Statement, the Chancellor announced an increase from April 2022 of £1,000 for eligible employers to reduce their employer NICs by up to £5,000 per year.
The allowance can be claimed against only one PAYE scheme, even if the business runs multiple schemes. Connected businesses, such as companies under the control of the same person or persons, are only entitled to one Employment Allowance between them.
VAT on energy saving materials
The Chancellor announced a UK wide, time-limited zero rate of VAT from April 2022 for the installation of energy saving materials. This will apply to installations such as rooftop solar panels. This is in addition to the extension of the VAT relief to include additional technologies and the removal of complex eligibility conditions.
Green reliefs for business rates
The government is introducing targeted business rates exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon
heat networks with their own rates bill. It was announced in the Spring Statement, that these measures will now take effect from April 2022, a year earlier than previously planned.
Download our publication below to see a detailed overview of the announcements made in the Chancellor’s speech which look beyond the key headlines – including a timeline of upcoming changes that may impact your business and/or your personal finances.
If you have any questions regarding any of the topics mentioned in the Chancellor’s Statement, or would like further clarity regarding how the changes might affect you, please do not hesitate to get in touch with a member of our dedicated team.
Download the PDFDeal Dispatch – Issue 38
Welcome to our Corporate Finance division’s regular deal round-up.
Market overview
As we anticipated in our previous edition, 2021 saw near-record highs in deal activity, and although the market saw a slowdown in the Q4 of the year, I am pleased to report that PKF has continued to see high levels of deal activity in the early part of 2022.
That said, there are various macro factors at play which may have an impact on the M&A market. Whilst the early months of 2022 have demonstrated continued economic recovery, we are now facing inflationary pressures with prices rising faster than at anytime in the past 30 years – not least driven by energy price rises. The stock markets, already down since the start of the year, have dropped significantly further in the wake of Russia’s invasion of Ukraine. And whilst Rishi Sunak seems to have temporarily side-lined any changes to capital gains tax, we feel this is likely to come back into focus once he feels the economy is strong enough.
Despite these headwinds, we are seeing no shortage of buyers with plentiful liquidity; we have an equally good pipeline of sellers who are keen to exit to ringfence wealth and avoid any uncertainties which may lie ahead.
– David Crump, Corporate Finance Director
Click below to read issue 38 of Deal Dispatch. Our corporate finance team have a wealth of knowledge and experience providing services to a variety of businesses. Please do not hesitate to get in touch today.
Download the PDFYear-end tax planning guide 2021-2022
With the end of the tax year approaching, it’s important to make sure that you have made the most of the reliefs, allowances and exemptions available to you.
Planning ahead now will help ensure you are in the best financial position to protect and grow your future wealth. Our year-end tax planning guide provides you with details of the key allowances and reliefs available to you and includes tax planning tips to consider ahead of the tax year-end on 5 April 2022 and beyond.
Our tax team help a multitude of clients navigate the complexities of personal tax, and work to establish an effective strategy that minimises tax liability. If you would like to seek more advice, please get in touch with your usual PKF Smith Cooper contact or get in touch online here.
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