Johnston Press, Blancco Technology and Intercede

Companies in difficulties always make for interesting reading, and here’s a brace of them.

Firstly Johnston Press (JPR), a publisher of newspapers. That includes many local ones but also the Yorkshire Post and the Scotsman who cover national business news – the latter is particularly good on the travails of those big banks registered in Scotland such as RBS and Lloyds. The company had more operating losses than revenue last year, debt is way too high and dividends have been non-existant for years. Local newspapers have been shrinking as advertising revenue has moved elsewhere and traditional national newspapers have also been battered by the availability of free news on the internet. It is clearly operating in a sector in sharp decline.

Now it has become the subject of an attempted revolution by its largest shareholder, Norwegian Christen Ager-Hanssen who holds 20% of the equity. He wishes to replace some, if not all, the directors and called an EGM to do so. Removal of the Chairman of Johnston is proposed and the appointment of Alex Salmond, former First Minister in Scotland, and experienced newspaper executive Steve Auckland.

Apparently they feel confident of winning a vote, and would have been even more aggressive in removing directors if the company did not have a “poison pill”. One of their issued bonds includes a provision that if new directors form a majority of the board but were not appointed by the existing directors the debt could become immediately repayable. The company would have little hope of doing that. Mr Ager-Hansen says this mechanism is a “breach of fiduciary duties” and is consulting lawyers as to whether action could be taken against the directors. This writer certainly agrees that this arrangement was and is morally dubious and the sooner the Chairman of Johnston Press Camillia Rhodes, goes then the better. Shareholders should vote accordingly.

Whether a new management team can revive such an ailing business, even if editorial policy and management improves (which is one of the issues apparently) is surely doubtful.

Blancco Technology Group (BLTG) has been in turmoil for a couple of years. Results for the year to June were published today. They changed the nature of the business to focus on software for “erasure” and “mobile phone diagnostics” and new management was put in place a couple of years ago. But today’s announcement makes grim reading. The Chairman, Rob Woodward, spells it out to begin with by saying: “2017 has been a year of substantial challenges for the Group, with the business performing far below our expectations”, But he does say: “However, the underlying strengths of Blancco remain in place and I am confident that these, together with the significant number of remedial actions we are taking, will restore a sustainable growth trajectory and build long-term shareholder value”.

But the detail makes for horrific reading. For example: “During April the Group undertook a review of cash flow forecasts and identified anticipated pressure on the cash position of the Group.  This pressure was caused by the non-collection of £3.5 million of outstanding receivables relating to a sale booked in June 2016 and a sale booked in December 2016, and costs associated with past acquisition activity, including earn-outs and M&A advisory fees”; and “On 4 September 2017 the Group announced the reversal of two contracts totalling £2.9 million booked as revenue during June 2017, following a number of matters being brought to the Board’s attention”. As a result the 2016 accounts have been restated. In addition, the new interim CFO, Simon Herrick, was appointed interim CEO and the former CEO departed.

Last year’s accounts were full of adjustments and the complexity compounded by the number of disposals and acquisitions. This year is not much different, and they even report “adjusted cash flows”. I always thought cash was cash, but apparently not. But the share price perked up somewhat – up 30% at 72p at the time of writing after a long decline. The company does seem to have some interesting technology but whether all the problems have now been revealed we do not know. The Chairman is sticking around after previously announcing his departure but they are still looking for a new CEO.

I would not care to predict the future for this business. But one question worth asking is “what were the auditors doing last year?”. Revenue recognition is often a problem in this kind of company and it looks like a case of sales proving to be fictitious when some questions were asked about them. This is yet another example of the audit profession falling down on the job which we have seen so many times before. Shareholders in Blannco should consider asking for the Financial Conduct Authority (FCA) to undertake an investigation into the audits of this company. The auditors last year were KPMG.

Intercede (IGP) issued a profit warning yesterday in a Trading Update. A large order for its identity software solution that was expected will not now be received until the next financial year. Other orders are also apparently being delayed. As a result, revenue growth this year will be below market expectations. The share price fell yesterday and today and is 34p at the time of writing.

I first commented on Intercede back in 2011 when ShareSoc ran a campaign against the remuneration scheme in the company. The share price then was about 60p. It briefly went over 200p in 2014, on hopes of real growth in revenue and profits but then steadily declined before this latest announcement. In reality this company is a consistent under-performer. It operates in what should be a hot sector (personal id security) but never seems able to capitalise on its interesting technology in a growing market. Change is made difficult as Richard Parris runs it as “Executive Chairman”, assisted by his wife who is also employed in the business. An example of a “lifestyle” business, not uncommon on AIM, where the directors extract signficant sums while the business goes nowhere in particular.

This company would probably be worth a lot more than the current market cap to a trade buyer who could exploit the technology and improve the sales and marketing. What’s the chance of that happening? Not much I would guess.

Note: the writer has trivial holdings in Blancco and Intercede.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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On-Line AGMs and City of London IT

I mentioned in a previous article the growing concerns about the use of “virtual” Annual General Meetings (AGMs) in the USA. There are not many on-line AGMs yet in the UK but yesterday there was a good example at the City of London Investment Trust (CTY). I actually had to complain to the company last year about the defects when I attempted to attend it on-line rather than in person – it did not work on the day, plus a later recording that was available had all the Q&A part cut out.

This year it was better, but a long way from perfect. Parts of fund manager Job Curtis’s presentation could not be heard. But at least it gave shareholders the opportunity to attend in person, or attend on-line. Questions could be submitted on-line.

Here’s a brief report on the company and the AGM:

The City of London IT is probably the most boring holding in my portfolio. It invests mainly in large cap UK listed companies. Top ten holdings are British American Tobacco, Royal Dutch Shell, HSBC, Diageo, Unilever, Vodafone, Prudential, GlaxoSmithKline, Lloyds Banking Group and BP, totalling 32% of the portfolio. It’s in the “UK Equity Income” sector for trusts. So you can see it’s not going to be any racehorse as these are quite defensive stocks. However the performance over many years has been good and it tends to outperform its benchmark. Not last year though where it underperformed the benchmark but still managed to achieve a total return of 14.5% (All-Share was up 18.1% for example with growth and smaller cap stocks more in fashion in a buoyant market). The current yield is 3.9%.

Here’s a few comments from fund manager Job Curtis from his presentation who has been with the fund management company (Henderson) for 26 years. He mentioned the fact that dividends have grown every year for more than 50 years. They manage this by keeping some cash back in revenue reserves in good years, which are then used to pay dividends in the bad years.

They use gearing and last year moved up the gearing to 7% by taking advantage of the very low interest rates – they are now borrowing at 2.4% over 32 years. (Note: have mentioned before how astonishing it is that such trusts can borrow at rates lower than inflation and for long periods).

Job Curtis said their on-going charge figure was now 0.42% which is the lowest in the equity income sector.

Positive contributors to performance last year were housebuilders (they hold three – Persimmon, Taylor Wimpey and Berkeley) and pharmaceuticals (Glaxo and AstraZeneca, but they also hold Merck, Johnson & Johnson and Novartis). They also benefited from a below average exposure to oil and gas producers. Detractors from performance were banks, mining companies and a holding in Provident Financial which they have now sold.

There were few questions in the Q&A session (a good indication that shareholders are happy), and you can hear those and the rest of the event by going to this web site: www.janushenderson.com/trustslive .

Certainly this format provides a good approach for those investors who cannot easily get to AGMs, while not prejudicing those who wish to attend in person and chat to the directors. They do need to iron out the technical glitches though.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Lloyds Case Impressions, Ideagen AGM and Return on Capital

Yesterday I attended the Annual General Meeting of Ideagen (IDEA) at 12.00 noon in the City of London – see below – and afterwards spent an hour in the High Court listening to one of the witnesses being cross-examined in the Lloyds Banking Group case. What follows is just an impression of the scene because the whole case is running for months so in no way can this be considered a comprehensive report. I have covered some more details of the case in previous articles, but to remind you the litigants are suing Lloyds and the former directors of the company over the takeover of HBOS which they declare was contrary to their interests as shareholders in Lloyds TSB. Lloyds deny liability.

The case is being heard in the Rolls Building in New Fetter Lane – a modern building very different to the ultra Victorian main Courts of Justice building in the Strand. See this link for a video tour of the building: https://www.judiciary.gov.uk/you-and-the-judiciary/going-to-court/high-court/the-rolls-building/virtual-tour/

The witness being cross-examined on the day was Tim Tookey, the former Finance Director of Lloyds TSB. Richard Hill QC was undertaking the task for the litigants under the eyes of a single judge, Mr Justice Norris (sans wig). It was a pretty impressive scene with at least 6 barristers in wigs and gowns plus about another 10 supporting legal staff. Why do barristers still wear wigs? To quote from the web: “The courts didn’t officially add wigs to the legal dress code until the 18th century when they became culturally chic. … They continue to wear them because nobody has ever told them to stop”.

It was a pretty impressive scene, somewhat lost on the few members of the public present – half a dozen litigants and members of the press. But the court was digitally up to date with every desk holding a screen on which the written evidence was displayed as it was invoked. However the witness being cross examined still referred to a paper copy, extracted from 150 large A4 binders stored in shelves on the left hand side of the court – filling almost the whole wall.

Mr Tookey gave his responses to questions firmly and without emotion. A confident witness giving clear answers. He was questioned about the events leading up to the announcement of the acquisition of HBOS and over how much capital Lloyds anticipated would be required to ensure the deal was “bullet-proof” (i.e. not creating unacceptable risks if the economic circumstances worsened). He was questioned about the extent the risks had been considered and whether enough due diligence on HBOS had been done before the decision was taken to proceed. Apparently it came down to a decision at 4.00 am on a Monday morning to proceed. They we being forced to decide to proceed or not by the Government before the markets opened on Monday. But he said that he thought all the risks had been considered and the board was supportive of the deal because of the strategic advantages of the HBOS takeover in the longer term. Recapitalisation involving the Government was necessary because there was no way it was possible to raise even £3 billion (underwritten) by the Monday, which was the minimum requirement. Government involvement “de-risked” the deal. The case continues….. for another dozen weeks.

One can see from the above exactly why the costs of such cases are so enormous.

Ideagen AGM

Ideagen (IDEA) is a software company in the Governance, Risk and Compliance sector. I have held the shares for some years when it has grown revenue and profits considerably, both from acquisitions and organic growth. They have a strong emphasis on the importance of recurring revenue. They are presenting at the ShareSoc Seminar on the 8th November, although that event is fully booked I understand.

There were fewer sharesholders at the Ideagen AGM than members of the public at the Lloyds hearing, but that’s not exceptional for small companies. But it was still a useful event – a brief report follows.

One question I raised was about return on capital. Now you might think this was prompted by an interesting article on that subject by Leon Boros in the latest ShareSoc Newsletter, but I did not get around to reading that until later in the day so it’s somewhat of a coincidence. Leon compared the return on capital at Bioventix (one of his favourite stocks which he likes to talk about regularly), and YouGov. He pointed out that not only are measures such as Return on Equity (ROE), Return on Capital Employed (ROCE) and Return on Assets (ROA) better at Bioventix calculated on the headline numbers, but that those for YouGov are somewhat doubtful because they capitalise and amortise the cost of recruitment of their survey panels. Plus they capitalise and amortise software development costs. But they then produce adjusted earnings figures that excluded the amortisation of both those costs, effectively pretending they are not real costs. He has a point.

Now I always look at returns on capital when I am investing in new companies because I consider it one of the most important measures of a company’s performance – as I told the directors of Ideagen. Hence at the Ideagen AGM I asked a question on that subject. On page 18 of their Annual Report they give the “Key Performance Indicators”, 9 of them, that the directors use to monitor the performance of the company. They all look good, but none of them measure return on capital. Should they not include a return on capital measure?

In reality the headline figures for ROE, ROCE and ROA reported by Stockopedia for Ideagen are all less than 2%, and that ignores even the large number of shares under option that the company has that would dilute the earnings. The reason for this is partly the fact that the profit measures used are “unadjusted” and as the company has very substantial amortisation of goodwill from past acquisations, and £1.2 million of share-based payment charges, these distort the numbers. The CEO David Hornsby, responded with “what measure would I like to use?” to which I responded that I did not mind so long as it was consistent from year-to-year. Companies often publish such figures, which are frequently based on “adjusted” profits. I also suggested cash return on assets might be a good measure, something I also look at.

The company actually generated Net Cash From Operating Activities of £8.3m last year which on Net Assets of £30m at the start of the year is very respectable, although technically one should probably write back the cost of past acquisitions that have been written off. In addition some of the cash generated was spent on contingent consideration on past acquistions and on “development costs” which they class as “investing activities”. This demonstrates that for some businesses, looking at headline return on capital figures or those reported by financial web sites can be misleading. One needs to look at the detail to get a real understanding on what is going on in such a business.

A short debate on the issue followed. Otherwise after a couple of other questions, the CEO mentioned the half year for the company ends today, and shareholders should be very pleased with the results.

In summary, a short AGM meeting, but a useful one. And the ShareSoc newsletter is well worth reading – it even includes some articles from me.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Why I Still Won’t Invest in Banks

I do not hold any bank shares at present, and have no plans to change that policy. But I thought it would be worthwhile to look at the results announced by Lloyds Banking Group (LLOY) yesterday for the third quarter. That particularly is so now that the revelations about the HBOS takeover are coming out on a daily basis.

The announced results were positive. The prospective dividend yield on Lloyds is now near 6% and the p/e is about 9, which is all that some investors look at. But I learned from my experience of investing in Lloyds and RBS before the financial crisis of 2008 to look at the balance sheet.

The latest figures for Lloyds Banking Group show total assets of £810 billion and liabilities of £761 billion, which you might consider safe. But if you look at the asset side there is £161bn in “trading and other financial assets at fair value”, i.e. presumably marked to market. They have £27bn in “derivative financial instruments”, which Warren Buffett has called “weapons of mass destruction”, and £480bn of “loans and receivable”, again probably marked to market.

Shareholders equity to support the £810bn of assets is £49bn. Which does not strike me as particularly safe bearing in mind what happened in the financial crisis. For example, that small bank HBOS, which Lloyds bailed out, eventually wrote off £29.6bn alone on their property loans after everyone suddenly realised that their lending had been injudicious and the loans were unlikely to be recovered in full.

In addition, banks can conceal their assets and liabilities as we learned at RBS and more recently in the Lloyds case. Indeed tens of billions of loans from Lloyds and others to HBOS were concealed and hidden from shareholders in the prospectus with apparently the consent of the FSA.

So I follow the mantra of Terry Smith of Fundsmith who said in 2013: “We do not own any banks stocks and will never do so” having learned from my own experience that it is a very risky, and cyclical sector. I am not convinced that improved regulation, and better capital ratios have made them “investable” when one can invest in other companies with far fewer risks.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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ADVFN Results and More on Lloyds

ADVFN Plc (AFN) published their results for the year to June yesterday. I have a very small holding in the company (acquired for reasons I won’t go into). ADVFN are information providers on the stock market, primarily to private investors. Many people monitor their bulletin boards although like many such boards frequented by private investors, they are somewhat of a curate’s egg so far as serious or sophisticated investors are concerned.

But they certainly have a large following – they say they have 4 million registered users. Does this enormously large mailing list ensure they have a profitable business? In reality no.

Indeed last year they barely managed to break even (£47k operating profit) on £8.2 million of turnover. That is however a massive improvement on the previous year when they lost £650k on similar revenues.

At least they showed postive cash flow but the net assets of the company are £1.7 million so they have a long way to go before they show a decent return on the capital employed. Current liabilities also exceed current assets. At least they have changed their strategy so as to stop further investing with a focus on “profits rather than growth”.

Regretably this kind of business model just shows that private investors are reluctant to pay money for good information provision. Folks can sign up a lot of “free subscribers”, which is no doubt ADVFN’s customer base, by spending money on marketing but monetising those eyeballs is another matter altogether. Relying on advertising to do so is also getting more difficult as Google and social media platforms are tending to dominate that market.

The other moral of this story is that one needs to be wary of investing in companies with unproven business models. It’s easy to spin a good story about the enormous demand for a given service, but the real proof of the pudding is when the model generates profits (and cash as well of course). Companies like Uber and Deliveroo appear to be chasing the same mirage. Lots of people like the services and are willing to pay their low prices, but whether they can compete profitably is another matter.

Lloyds TSB/HBOS case. My previous blog post was on the topic of the current legal case being heard in the High Court. One of the witnesses called in the case is Hector Sants, former head of the Financial Services Authority (FSA) at the time of the takeover of HBOS by Lloyds. His evidence is to be heard in secret, for reasons unknown. Indeed, even the fact that this was to be so, was kept secret until challenged by media organisations.

Why is this relevant? Because it was suggested at the time that without the takeover of HBOS, Lloyds would not have had to raise extra capital (and it was that which diluted shareholders interests). But the FSA told them they would still have to raise more capital even if they did not proceed with the takeover. Some shareholders allege that this was a forceful encouragement by the Government to go ahead, regardless of the interests of their shareholders. Perhaps that might have been in the public interest, as was similarly argued on the re-capitalisation of the Royal Bank of Scotland (RBS) and other banks, which was effectively a partial nationalisation. But many shareholders are more concerned with their own immediate interests rather than the public interest although it could possibly be argued that ensuring no melt-down of the UK financial sector took place was also in their interests. So Mr Sants evidence might be very revealing about the motives and actions of the Government, but the public may not learn much about it, even at this late date.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Lloyds Litigation, Collective Redress, and CLIG AGM

I went to the High Court in London this morning to hear the grilling of witnesses in the case brought by shareholders over the acquisition of HBOS by Lloyds. But I was disappointed to find when I got there that the first session was to be held in private – presumably the judge wants to discuss some legal issues with counsel for both sides. So I went to the AGM of City of London Investment Group (CLIG) instead where I hold shares.

The aforementioned legal case will be running for some weeks yet to hear various witnesses – it’s being held in Court 15 at the Rolls building in Fetter Lane if anyone cares to drop in. I shall try to visit another day when I am in London.

This was the first opportunity I had to attend the Lloyds hearing but the national media have reported the opening submissions by the respective QCs. To remind you this is a case where disgruntled former Lloyds TSB shareholders are suing the former directors (Sir Victor Blank, Eric Daniels, Truett Tate, et al), and Lloyds Banking Group as a company, over the takeover of HBOS in 2008. This resulted, directly or indirectly, in a massive share price decline and the cessation of dividends. The commercial loan book of HBOS turned out to be very poor quality, and Lloyds had to take on more capital to meet its capital ratio requirements.

What’s the legal basis of the claim? Simply that the prospectus issued to Lloyds TSB shareholders at the time was defective. Among other things that it failed to disclose the true position of HBOS and the fact that the company had received emergency funding in the form of secret loans from the Bank of England, the US Federal Reserve and Lloyds. A prospectus needs to be honest, not misleading and not omit significant information. The litigant’s QC, Richard Hill, said that “shareholders were indeed mugged”. He also argued that Lloyds was under pressure from the Government to conclude the deal, otherwise HBOS would have had to be nationalised because it was on the verge of collapse, when the directors of Lloyds loyalties should have been to their shareholders.

The defendents QC argued the claims have no merit because it was in the best interest of shareholders. In addition, that they would have voted for it regardless if they had been aware of the aforementioned loans. Bearing in mind that a lot of institutional investors held both Lloyds and HBOS, you can understand that point perhaps. The usual defence of the directors having taken expert advice on the matter from a host of advisors has been invoked, but how they can overcome the defective prospectus argument remains to be seen.

Now one topical item of news today is the disclosure that the EU is looking at establishing a pan-European framework for collective redress. See this press release from shareholder representative organisation Better Finance for more details: http://betterfinance.eu/fileadmin/user_upload/documents/Press_Releases/en/Financial_services_users/PR_-_COLLECTIVE_REDRESS_-_231017.pdf

There are many difficulties in the way of shareholders pursuing litigation or enforcement action over investment abuses. One just has to look at the HBOS/Lloyds case and the Royal Bank of Scotland (RBS) cases to see how difficult and expensive they are. The RBS case, which was a similar claim over the prospectus issued in 2008, has recently been settled. But only a minority of shareholders affected are likely to get compensation, and it will only be a small proportion of their losses. Legal and other costs will consume a large proportion. One only has to look at the time these cases have taken to get into, or near, a Court (nine years) that tells you there is something seriously defective in the process. Many of the claimants are likely to have died in the meantime as the shares of these banks were typically purchased by pensioners for retirement income.

The problem is the UK has no direct equivalent of a US “class action”, or the arrangements for collective cases as operates in Holland. There are “Group Litigation Orders” in the UK, but these are not directly equivalent and the Lloyds and RBS cases have relied on a representative group of litigants. Many other European countries have similar problems. So this initiative looks potentially useful, although if Brexit proceeds, the UK might miss out on participating in this concept, albeit that it might be many years before it progresses into reality because changing legal systems in a country can be complex and is often resisted by vested interests. Simplifying legal processes is not always in the interests of lawyers for example.

The complexity and length of the legal processes, and the difficulty in raising funds to finance such cases, as evidenced by the Lloyds and RBS cases, surely demonstrates that reform is necessary. But it will be interesting to see the outcome of the Lloyds case.

Just brief coverage of the CLIG AGM follows. There were about half a dozen shareholders present, but the company was also holding a seminar for investors (current and potential) in the afternoon so I presume most people would have gone to that instead.

CLIG is an investment company that specialises in holding closed end investment companies (e.g. investment trusts), with a large exposure to the far-east. The CEO is long standing director Barry Oliff who is finally planning to retire in a couple of years time, so one question raised was about succession planning – it is in motion apparently. As one shareholder intimated, it will be important to maintain the culture that Barry Oliff has established where there is great openness about the performance of the company (comprehensive disclosure of the business model and the likely outcome of profit trends). Barry even tells shareholders at what price he will be selling some of his large shareholding and when.

This company regularly gets substantial votes against its Remuneration Report, and it was no different this year. Two million proxy votes against, no doubt by institutions prompted by proxy advistors because they have a bonus scheme which does not follow the normal rules. It is more group performance related, than individual person related. They choose to be “different”. Barry explained that he thought individual targets provided the wrong incentives and that group bonuses encourage staff and customer retention. Another director said it was more like a traditional “partnership”.

Anyway the shareholders are probably happy because the share price has increased over the last year and the dividend (already high) has been increased for the first time in five years.

As I intimated in another recent blog post, it is always useful to attend AGMs, and this one was no different. According to a report in the FT, a number of US companies are moving to “virtual” AGMs, but are getting some objections from shareholders. Surely the best solution is to combine the physical meeting with an on-line equivalent so you get the best of both worlds. A virtual on-line meeting can be usefui for those shareholders who have difficulty in attending in person, but certainly actually meeting the directors is more useful in many ways.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Brexit, and the Finances of the Young

The national media continue to try to turn news into controversy. Their words are often incendiary and designed to provoke debate and therefore attention – as a means no doubt of promoting their publications. So their headlines become “verbal click-bait”.

As most people now read news on the internet, the publishers could be considered as acting as “trolls”. Here is the definition in Wikipedia of an internet troll: “In Internet slang, a troll is a person who sows discord on the Internet by starting quarrels or upsetting people, by posting inflammatory, extraneous, or off-topic messages in an online community with the intent of provoking readers into an emotional response or of otherwise disrupting normal, on-topic discussion…….”

Written words are not the only example. Laura Kuenssberg of the BBC has adopted a similar verbal approach in her reporting. It’s not just Labour party members who should be complaining about her hysterical style.

There were a couple of news items this week that caught my attention in this area. There were several comments on the report issued by the FCA on family finances. The report indicated that half of UK adults were “financially vulnerable” and that those in their 20s and 30s were reliant on borrowing (personal loans and credit card debt). It reported that one fifth of 25-34 year olds have no savings at all with many struggling to pay bills. But this was interpreted by some of the media as the new “generational divide”.

But was it not always so? I certainly don’t recall having much in the way of savings at the age of 30 and lived from month to month, sometimes using credit card debt. In other words, I doubt that the situation has been changing over time; although the elderly have become better off lately due to rising state pensions I am not convinced the young have been getting poorer. But the media like to put a “spin” on any news item to grab attention.

As the report shows, the elderly do have more savings as one might expect but they are not evenly distributed. One amusing statement in the report is “A high proportion of retirees do not know how much savings they have”.

It’s a report well worth reading although rather long at almost 200 pages. Here is one useful titbit of information from it: “Around one in five (22%) 45‑54 year olds hold a stocks and shares ISA and the same proportion hold shares or equities directly”. It would have been good to obtain more detail information on that but it just shows there are a lot of shareholders out there.

Another example of media hysteria is the reporting on the Brexit negotiations. Will it be a hard or soft Brexit? Will the bill be £20 billion or £100 billion? Are Tories threatening to quit if there is any compromise, or revolt against the rule of Theresa May? Will Jeremy Corbyn scupper the whole affair by underming the Bill going through Parliament to support it? Who really knows, but it all makes for good headlines.

The Financial Times has become one of the leaders in scare mongering over Brexit with regular articles of a polemic nature by Martin Wolf and Simon Kuper on the topic. The latest example was by Martin Wolf in yesterdays FT. Now I have never thought much of Mr Wolf’s opinions on financial matters since he supported the nationalisation of Northern Rock, but his latest article (headlined “Zombie ideas about Brexit that refuse to die”) is pure hysteria. I don’t mind the occasional editorial opinion piece on Brexit, or some reporting on the potential technical difficulties if not slanted, but this piece was just propoganda in essence. It pointed out all the difficulties associated with a “hard” Brexit where no trade deal is agreed beforehand, but that is well known and most folks do not think that is likely. It certainly did not give a balanced view of the arguments for or against Brexit and what our negotiating stance should be. In reality there is likely to be a compromise of some kind – that is what politics usually ends up being about – compromise after compromise. Indeed it is one of the frustratations of anyone in the political world that achieving revolutions, rather than compromise, is not just difficult but exceedingly time consuming.

It is certainly regrettable that the Financial Times, since its takeover by Nikkei in 2015 has become much more politicised, and there is less factual reporting and more opinion. Perhaps it is just pandering to the views of most of its readers (the London-centric financial players and international businessmen) but if they expect to influence politicians or the wider community they will be disappointed.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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