Kennedys' net debt doubled in 2011/12 as result of tax loan

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  • In this climate its good to be able to pay tax.

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  • I agree with Anon 2:35 - as an EP of a large firm, news of Cobbetts sent a shudder down my spine. Thankfully, my firm is run on a prudent financial basis, but it does call into question the strategy of chasing turnover and L100 rankings at any cost. Average PEP of £390k is all well and good, but this firm really shouldn't need to pay it's tax bill through loans...

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  • But is it good in this climate to borrow to pay tax.
    What happens when the Lenders say "No"?

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  • Is it good to be taking on so much debt to pay a tax bill? Looks to me that Kennedys are involved in a high risk strategy. Will it pay off? Let's hope they continue to maintain cash flow and have supportive banks and it could do.

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  • Oh dear! This doesn't look good. Borrowing to pay the tax man is the equivalent of borrowing to pay the partners - the cardinal sin of law firm management. £15.7m of debt against £18.8m of profit is an awful debt:profit ratio at 84% - second only to Beachcrofts at 150% and third to Clydes at 69%. What is it with these 'expansion at all costs' insurance firms. It's a race to the bottom ...

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  • Their cash decreased by £9m over the previous year - that includes £3.7m less cash generated by the business and £6.5m more cash paid out to the partners. That's why a further £10m was borrowed. That's not a cashflow blip - it's rescue funding. Because if you don't pay the partners, they walk. A dangerous situation, to be watched very closely.

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