Cleanzine: your weekly cleaning and hygiene industry newsletter 11th April 2024 Issue no. 1109

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Surplus cash: what to do with it?

Awash with cash, 114 of the UK's leading cleaning equipment & materials companies face a strategic dilemma, according to a new report from industry analyst Plimsoll Publishing, which says that an abundance of unused cash is "sitting on these companies' books."

However David Pattison, senior analyst, advises that this "cash asset" needs to be out to work. "It sounds strange, but putting this cash to good use for the development of the company can be a very difficult problem," he says. "Just letting it sit in the bank - although comforting, is not going to have a huge benefit on the business.

"Do you make an acquisition, make a large capital investment, or return it to the shareholders through dividends? These are not easy decisions for these companies (with improving cash) to make. I look forward to seeing what they do in the coming months.

"Many of the 661 companies researched have improved their liquidity and have increased their cash levels, which is a surprise given that margins are still under severe competitive pressure."

Findings from the study highlight the split between rich and poor and concluded:

- 362 of the 661 firms can be considered has having improving cash reserves
- These 362 firms have seen their cash volumes rise by 42% on average
- 15 firms are now holding more than £5 million of cash
- 299 of the 661 firms have seen their cash levels fall
- These 299 firms have seen their cash volumes fall by 38 % in 12 months
- 71 firms are running dangerously low levels of cash cover

Copies of the report are available via:

T: 01642 626 419
E: [email protected]
W: www.plimsoll.co.uk

10th April 2014