Business News 8th August 2017
Markets Round up
Paddy Power’s CEO has announced he will leave the company shortly, he will be replaced by Peter Jackson. The shares closed sharply lower on concerns the new CEO will guide expectations lower in the short term. The news broke a day before Paddy Power reports interims which it has flagged will see interim revenues rise 9%.
Amongst blue chips, UK mining companies were well bid led by Rio Tinto and Anglo American after copper prices approached $2.90/llb. Other base metals, nickel, zinc and lead also saw gains ranging from 1%-2.4%.
AIM listed PLUS 500 announced H1 net profit jumped 104% to $90.7m following a 10% growth in average revenue per user. The shares jumped over 100p
U.S. Shares were higher as the U.S.30 hit an intraday record shortly after opening, adding to last week’s record-setting performance.
European and U.K. Shares were mixed amid nascent optimism over the outlook for global growth and another mixed bag of corporate earnings reports.
UK house prices have recorded a quarter-on-quarter fall for the fourth month in a row for the first time since 2012, according to the Halifax. The mortgage lender said that property prices between May and July were 0.2% lower than the previous quarter. The figures, based on Halifax’s own mortgage data, showed annual house price growth had slowed to 2.1%.
Tesla announced that it is looking to raise approximately $1.5bn via a bond offering in the lead-up to the start of production of its newest vehicle, the Model 3. Elon Musk, chief executive at Tesla is hoping the Model 3, which will become the most affordable of the Tesla vehicles when it hits the road at $35,000 for the baseline model, will become profitable and mass-marketable.
Bitcoin’s value has jumped to a record high, following a month of turmoil. The virtual currency reached $3,451.86 (£2,651) per coin, according to the Coindesk Bitcoin Price Index. It had never crossed the $3,000 mark until the weekend. The market value of all bitcoins in existence has now surpassed $56bn (£43bn). The surge followed the creation of a spin-off crypto-currency, Bitcoin Cash, last week. The new asset is trading well below the peak price of $727.54 (£557) per coin it attained on 2 August.
Oil Prices edged down, on concerns about major oil producers’ wavering commitment to output caps and ahead of a meeting of the Organization of the Petroleum Exporting Countries.
Gold were tilting slightly lower, putting the precious metal on track to notch its longest streak of losses since mid June
Asian Markets
Asian shares turned mixed as disappointing Chinese trade data clouded an otherwise bright outlook for global growth
U.S. Markets
Wall Street carried on with its march higher, starting the new week in the same fashion it ended the last.
Standard Life’s operating profit before tax rose by 6% to £362 million in the first half, with a 5% increase in fee-based revenue to £836 million. The profit for the period attributable to equity holders increased by 29% to £292 million. Assets under administration edged 1% higher to £361.9 billion. Gross inflows rose from £21.8 billion to £20.7 billion but redemptions increased to £24.4 billion from £20.9 billion, resulting in net outflows of £3.7 billion. Standard Life increased its dividend by 8.2% to 7p per share. The company’s proposed merger with Aberdeen Asset Management is expected to be effective on 14 August 2017.
TAX
Brexit provides the perfect prompt to simplify Britain’s tax code
Jo Gilbey, a tax partner at BDO LLP, argues that Brexit provides the perfect opportunity to reform the “verbose, complicated” UK tax code. “Simplicity in doing business will give the UK a competitive advantage that does not breach EU rules,” she asserts. Aligning National Insurance and Income Tax, with an ambition to merge them into one payroll tax, Ms Gilbey says, would remove economic distortions, reduce burdens on business, improve fairness and transparency and help individuals keep track of their tax contributions. The government should resist “tinkering around the edges,” she adds, which increases complexity, and suggests a moratorium on all new business tax policies that do not simplify the system until 2020, or until the Brexit negotiations are finished. “Policymakers must use Brexit as an opportunity for bold thinking. We don’t need to dole out more subsidies or turn Britain into a tax haven. We just need to create a tax system fit for the twenty-first century,” Ms Gilbey concludes.
City AM
Tax panel backs HMRC drive against salaries paid in gold
HMRC is “delighted” by the decision from the GAAR Advisory Panel which deemed that paying salaries in gold was “morally repugnant” tax avoidance. The expert panel has ruled that paying employees in gold is clearly a “contrived” scheme designed to “frustrate the intent of parliament.”
Financial Times The Guardian, Page: 17
KPMG expert advises on stamp duty requirements
Sean Randall, head of stamp taxes at KPMG, advises on a case involving separated elderly “tenants-in-common,” on ways to avoid being hit by the stamp duty surcharge when purchasing another property. Mr Randall proposes gifting half of the property to a child, or children, so as not to attract the surcharge on any subsequent purchase.
The Daily Telegraph
Time to cut out cash?
The Times’ Philip Aldrick argues that stamping out cash in hand payments is a price worth paying in the battle against crime. He notes that HMRC estimates that the hidden economy costs the UK £6.2bn a year in uncollected tax.
The Times, Page: 37
INDUSTRY
ICAEW legal services regulator role positively received
The Legal Services Board (LSB) decision to recommend to the Lord Chancellor that ICAEW should become an approved regulator of conduct of litigation, rights of audience, reserved instrument activities, notarial services, administration of oaths, has been positively received. Duncan Wiggetts, ICAEW’s Executive Director of Professional Standards, said: “The recommendation by the LSB is a positive step for consumers looking for reserved legal services who want to use appropriately qualified ICAEW Chartered Accountants firms as an alternative to traditional providers. The LSB’s decision is evidence of the role that it is playing in transforming the provision of legal services and giving more choice to the consumer”.
ICAEW
Accountancy bodies agree to collaborate in Ireland
Two accountancy bodies in Ireland have agreed a collaboration which will see the number of representative organisations in the industry in the country fall to eight. The Institute of Certified Public Accountants (CPA) has agreed to regulate and support members of the smaller Institute of Incorporated Public Accountants who choose to join the CPA from next month.
Irish Times
PERSONAL FINANCE
Household wealth tops £10trn
The estimated household wealth in the UK rose above £10trn last year – meaning the average family is more than £140,000 richer than a decade ago, according to new statistics. Research from Lloyds Bank Private Banking shows that the total household wealth nationwide reached an estimated £10.5trn in 2016. This is an increase of £892bn, or 9%, from £9.6trn in 2015. The past decade has seen wealth held by households increase by £3.9trn, the equivalent of 59%, from £6.6trn in 2006. The rise over a decade works out as £143,059 per household since 2006, meaning the value of household wealth has grown faster than the Retail Price Index and gross household disposable income over 10 years.
The Guardian, Page: 16 Yorkshire Post, Page: 2 Daily Mirror, Page: 42
SMEs
Construction SMEs resort to self-funding
The directors of small British construction businesses are lending them more money to plug a funding gap as banks set tighter lending criteria, focusing on larger players, and major contractors delay payments. A survey of traders including electricians, plumbers and decorators, by online finance market Funding Options, found directors lent the companies £38m in 2015/16, up from £29.7m. Funding Options warned that subcontractors that fail to find secure funding solutions could face insolvency.
Daily Mail
Rates cut for football’s richest
Research from the business rates specialists CVS shows that at a time when many small firms are facing major hikes in rates, a number of the Premier League’s richest football clubs will kick off the season with a business rates cut.
Independent I, Page: 39 The Times, Page: 35
ECONOMY
House prices and retail sales slow down
New data from the Halifax shows that annual house price growth slowed last month to 2.1% with the average house now worth £219,266. Meanwhile, separate figures from KPMG reveal that retail sales growth slowed last month as households reined in their spending amid mounting pressure on their finances. KPMG found that like-for-like sales grew by 0.9% in July, down from 1.1% recorded in the same month last year.
The Sun, Page: 43 Independent I, Page: 38
FIRMS
Global Blue eyes listing
Global Blue, the tax refund payment firm, is planning a £3.6bn flotation, in the new year, possibly in London.
The Daily Telegraph, Page: 29
OTHER
Fix up, look sharp – smart accountants enjoy dress codes
Most accountants would not like to see corporation dress codes ruled out, according to research from the job board CV-Library, which revealed 66.7% of accounting professionals think businesses should keep dress codes. Of the 1,200 surveyed, 72.9% disagreed with the statement that the traditional dress codes are outdated and said they enjoy following a dress code, while almost half (48.6%) of accountants thought that dressing smartly made them appear more professional to clients.
Economia
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Business News 3rd August 2017
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