Author: Helen Barklam

A CFD is a ‘contract for difference’. It is a leveraged derivative product which allows you to speculate on the price movements of securities (e.g. shares, indexes, forex, commodities) without ever owning the underlying asset. Using CFDs, it is possible to generate a profit not only when securities rise in value, but also when they fall. If you think a security will increase in value, you ‘buy’ (also known as ‘going long’). If you think the security will decrease in value, you ‘sell’ (also known as ‘going short’). The buy price exceeds the current market value, whereas the sell price…

Kuflink is a UK-based peer to peer lender, which exclusively offers bridging/development loans secured against UK property (first or second charges). Prior to entering the peer to peer lending market in 2017, Kuflink’s sister company operated as a specialist bridging loan provider since 2011. Over £100m has been invested on the platform since launch, with Kuflink boasting on its homepage that no lender has lost capital to date. However, as with all investments, historical success is no guarantee of future performance. Be sure to read our full Kuflink review to understand more about the type of underlying loans Kuflink offers…

The Pension Lifetime Allowance is the maximum pension pot you can build before an additional tax charge will apply on lump sum withdrawals or income drawdowns. The Pension Lifetime Allowance must be an important consideration for any pension saver in the UK who believes that they are likely to reach this level by retirement. Why? Because significant tax charges apply where this limit is exceeded. How big is the Pension Lifetime Allowance? The Pension Lifetime Allowance peaked in 2010-11 at £1.8m but has gradually been reduced by successive governments in a bid to increase tax receipts for the treasury. In…

The Enterprise Value to Equity Value bridge is the most important concept in transaction purchase price calculations. The key point to understand is that transactions take place on a cash-free debt-free basis and with a normal level of working capital. This means that the headline price agreed for the business is: Uplifted pound for pound by cash and cash-like items held by the business Reduced pound for pound by debt and debt-like items held by the businessAdjusted for the difference between reported working capital and ‘normal’ working capital Enterprise value The enterprise value (‘EV’) is the headline price agreed for…

Adjusted EBITDA is calculated by taking Reported EBITDA and adjusting for any one-off or exceptional items. It is commonly used in acquisitions with enterprise value (headline price) often based on a multiple of Adjusted EBITDA. The multiple of Adjusted EBITDA paid can vary significantly depending on the desirability of the target company and the sector in which it operates. For example, many technology companies can be subject to offers in excess of 30x Adjusted EBITDA, whereas perhaps a plumbing services business might attract a multiple of 8x. Given buyers pay based on a multiple, fairly small EBITDA adjustments can have…

How to use your pension pot is an important decision which should not be taken lightly. It is important not to rush your decision making and to fully understand and contemplate the various options available. Following pension reforms made in April 2015, the British public have significantly more freedom when deciding how and when to utilise their pension savings. From this point on, anyone aged 55 or over could access their Defined Contribution pension schemes and could choose from five different withdrawal options (or a mixture of some/all options). The five pension withdrawal options Leave pension untouched, letting it…

Mergers and acquisitions (‘M&A’) is a term used to describe the purchase or consolidation of companies or trade and assets. Types of acquisitions Acquisitions either involves the purchase of shares or trade and assets. In a share purchase acquisition, the target entity retains its preexisting assets and liabilities. A trade and assets purchase differs in that the vendor remains the legal owner of the entity, whilst the acquirer takes ownership of some or all of its assets. Depending on the acquisition structure, either a share purchase agreement (‘SPA’) or an asset purchase agreement (‘APA’) is drawn up to facilitate the…

Accrued revenue arises because of the accruals basis of accounting, which states that revenue should be recorded in the profit and loss across the period to which is relates. Where revenue should be recognised but the customer has not yet been billed, accrued revenue arises. The most common example of where accrued revenue might arise would be when providing professional services to a customer, where milestone billing in arrears has been agreed. Accrued revenue is a contract asset. This is because it represents the value of the goods/services that you have already delivered to a customer. It is the value…

Deferred revenue arises because of the accruals basis of accounting, which states that revenue should be recorded in the profit and loss across the period to which is relates. Where a customer is invoiced in advance of when it is appropriate to recognise revenue for goods or services, deferred revenue arises. Deferred revenue is a contract liability. This is because it represents the obligation you have to deliver the goods or service to the customer. Deferred revenue example – accounting double entry To create a deferred revenue balance once an invoice has been raised, the accounting entry is Cr Deferred…