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NEW YEAR, NEW YOU: A CHALLENGE TO CONSIDER… 

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NEW YEAR, NEW YOU: A CHALLENGE TO CONSIDER…

By Niels Turfboer, managing director of online lender Spotcap.

The beginning of the year is a great time to evaluate how we run our business and service our clients. It’s a natural time to improve, learn, and raise the bar.

If we are honest with ourselves – sure – most things we set out to change at the beginning of the year remain undone at the end. But New Year’s resolutions are essentially goals, and we all know that goal setting is important to help us grow.

In 2017 UK accounting firms will need to prepare for a string of challenges: new technologies, changing accounting rules and political developments. Faced with these disruptive forces it is a good idea to be armed with a tangible focus and positive perspective.

The Institute of Chartered Accountants in England and Wales (ICAEW), whose membership advises over 1.5m businesses accurately points out that “these aren’t challenges, they’re opportunities, but only if we adapt and innovate.” Furthermore, they also they also give us an indication of where we should focus our energy and efforts in 2017, stating what we all know “basic services are being commoditised.” The central question of course is: What can I do differently this year that will allow me to provide a higher-quality differentiated service?

To tackle this accountants need to take a more customer-centric approach. Clients today want to have an ongoing discussion with their accountant about their business and receive information on the latest tools and resources available. What are financing options available to me? How can I use cloud technology to streamline my payroll? What areas of my businesses should I invest in to grow?

Access to finance is one of the areas that has gone through a lot of change in the past few years. In post-Brexit Britain businesses – in particular SMEs – are aware that change is coming their way. They know they will need to be flexible both when it comes to business strategy and funding needs, but often lack awareness of the options available.

Today there are multiple funding alternatives to traditional bank loans. According to a report by the Cambridge Centre for Alternative Finance the UK online finance sector grew 84 percent in the past year, and now accounts for 12 percent of total business lending.  The main categories to be aware of are:

  • Credit Unions: a non-profit institution with several economic deposit funds in a member-owned space. It is lending by entrepreneurs for entrepreneurs, and is comparable to a small bank.
  • Government support: there are a few options available to SMEs and entrepreneurs based in the UK. For instance, the UK government Innovative department offers the Smart Grant Scheme with funding available from £25,000 up to £250,000. The UK government also support small businesses with unique programs such as the Seed Enterprise Investment Scheme (SEIS), the e-Business Grant Scheme and the Business Development Scheme Grant for expansion. However, these grants are often sector-specific and typically available on a region-by-region basis.
  • Crowdfunding: online crowdfunding platforms are cropping up all over the world. These platforms provide entrepreneurs with the opportunity to connect with thousands of potential investors in the form of loans, shares or even a donation. Crowdfunding is the ultimate test of whether the public believes enough in a product to invest in it. However, these campaigns can take a great deal of preparation and time to execute.
  • Unsecured business loans: a loan that isn’t backed up by any asset. Instead it is backed up by a business’s trading position.  The ideal candidate for this type of setup is a company that has a long trading history, provable growth, and a balance sheet.  The loans work well for short term working capital purposes, where funding is required in a matter of days. Today there are an increasing number of players offering unsecured business loans online in various formats e.g. a free credit line that only gets activated once a drawdown is made.

Thoughtful information sharing on financing options, such as the ones mentioned above, new technologies or regulation are all opportunities for accountants to show that they have adopted a customer-centric and value-added mind-set.

Outside the UK, European accountants are finding that this approach is helping strengthen existing relationships as well as win new clients.

JeroenHollewijn, senior adviser 216 accountants, a spin-off of KPMG Netherlands, said “We met Spotcap on the local fintech scene and recognised that it could be a win-win relationship. By being able to offer both our advice and alternative finance solutions we have been able to differentiate ourselves from our competitors and improve the relationships with our clients. Banks have long dominated the financial market and we think that the new alternative finance providers on the market can make a big difference for our clients’ businesses.”

In closing, accountants can add a huge amount of value. Unfortunately, as we well know, the reality is that is all too easy to be buried under a mountain of everyday processes and compliance issues. As aWanda result, finding ways to add value in a strategic sense gets pushed to the side. In 2017 make a change. Set aside time to brainstorm ideas what the client can do to grow their business. Be the trusted adviser your client needs. Not only will the relationship thrive, I would be so bold as to bet that you will find the shift fulfilling as well.

Are you up for the challenge?

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Sky’s concerns about O2-Virgin Media merger in UK addressed, says O2 CEO

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Sky's concerns about O2-Virgin Media merger in UK addressed, says O2 CEO 1

By Paul Sandle

LONDON (Reuters) – Sky’s concerns about a planned merger between British mobile operator O2 and Virgin Media have been addressed, the chief executive of Telefonica UK’s O2 unit said, clearing one objection to the $38 billion deal expected to close mid-year.

Sky said in a submission to the Competition and Markets Authority (CMA) made in February it was concerned the merger could have a significant adverse impact on competition by harming Sky Mobile. The submission was published on Wednesday.

“Since that time I can confirm that both organisations have reached an agreement which addresses their concerns in full, and the CMA is fully aware of that situation,” O2 CEO Mark Evans said in an interview after Telefonica published full-year results.

Virgin Media is a direct competitor to Sky’s pay-TV and broadband business, while Sky uses O2’s network to provide mobile services to its customers.

O2 expanded its customer base by 4.8% in 2020 to 36.2 million connections and added 80,000 new contract customers in the final quarter, Telefonica’s results showed.

Full-year operating income before depreciation and amortisation (OIBDA) fell 1.1% year on year to 1.834 billion pounds, it said, reflecting the drop in revenue caused by the COVID-19 pandemic.

But cost control and an increase in direct sales helped increase the margin by 1 percentage point to 30.8%, beating analysts’ expectations.

Evans said he was confident the merger would be cleared. “It is a pro-competitive move, that will benefit customers and the UK economy alike,” he said.

Evens said Telefonica and Liberty would wait until the regulatory process had advanced further before announcing details such as the leadership.

Asked if he and finance director Patricia Cobian wanted to lead the new company, he said: “There’s a real appetite to play whatever role we can in forming that organisation and taking it to the next level.”

(Reporting by Paul Sandle; Editing by Estelle Shirbon and Edmund Blair)

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Commodity prices boost Anglo American in 2020 after COVID-19 hit

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Commodity prices boost Anglo American in 2020 after COVID-19 hit 2

By Zandi Shabalala

LONDON (Reuters) – Anglo American beat forecasts with a small fall in 2020 earnings and boosted its dividend after strong commodity prices helped the diversified miner recover from coronavirus disruptions in the first half of the year.

The company’s shares were 4.5% higher in London at 1025 GMT, the second biggest gain on the benchmark FTSE 100.

Anglo was the worst hit among its peers by coronavirus lockdowns, including in countries such as South Africa and Botswana, and also had operational problems at its platinum unit.

But a rebound in commodity prices and a change in operational fortunes helped deliver its best second half since 2011.

“It was certainly a year of two halves,” Chief Executive Mark Cutifani told reporters.

Price for many metals have jumped due to tight supply and higher demand. Copper and iron ore are trading at 10-year highs, while platinum hit its highest in six years.

This has also benefitted Anglo’s larger rivals Glencore, Rio Tinto and BHP, which all beat market expectations for profits and dividends.

“Let me reassure you, whilst the fundamentals for the industry are strong, we aren’t being seduced by good prices,” Cutifani said, adding Anglo would continue to remain disciplined on costs.

The miner is, however, investing in the Quellaveco copper mine in Peru, one of the few large scale copper projects globally. First production is on track for next year.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 2% to $9.8 billion last year, beating a forecast of $9.4 billion from nine analysts compiled by consensus platform Vuma.

Anglo declared a final dividend of 72 cents per share, in line with its 40% payout policy and up 53% from a year earlier, beating the consensus forecast.

Finance director Stephen Pierce said Anglo would consider a “special return above the base” as part of its normal six-monthly consideration of shareholder returns and if prices keep up.

Net debt at the end of December was $5.6 billion, up from $4.6 billion a year earlier, but down from $7.6 billion at the half year.

Cutifani said the miner would complete the demerger of its South African thermal coal assets within the next two years if they are spun off, currently the preferred exit route.

Bidders have approached Anglo to buy the assets, however, so a sale is still a possibility, he said, adding Anglo also expected to exit its Cerrejon coal mine in Colombia in two to three years.

Miners beat wider market

 

Commodity prices boost Anglo American in 2020 after COVID-19 hit 3

“Anglo’s differentiated growth strategy is continuing to, literally, pay dividends as the group is able to benefit both from higher prices while still investing at a rate ahead of peers,” said RBC Capital Markets analyst Tyler Broda.

(Reporting by Zandi Shabalala; Editing by Emelia Sithole-Matarise and Mark Potter)

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Primark owner warns of 1.6 billion pound sales hit from lockdowns

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Primark owner warns of 1.6 billion pound sales hit from lockdowns 4

By James Davey

LONDON (Reuters) – Primark-owner AB Foods warned that lost sales from COVID-19 lockdown store closures would amount to 1.58 billion pounds ($2.23 billion) but said it expected strong trading when they reopened.

The group, which does not trade online, said it estimated Primark’s lost sales would be 1.1 billion pounds in the first six months of its financial year to Feb. 27 and 480 million pounds in its second half as restrictions loosened up.

Primark, which has outlets in Britain and several other European states, had 77 stores open on Thursday, or 22% of its retail selling space. By the end of April, it aims to have 310 stores open, or about 83% of its retail space.

“We know that people will welcome us back when we reopen,” finance chief John Bason said. “There is pent-up demand.”

In the past few weeks, Primark stores in Austria, Poland and Slovenia had reopened and were delivering like-for-like sales ahead of last year’s pre-COVID levels, he told Reuters.

Shares in AB Foods were up 0.4% at 0952 GMT, valuing the group at 19.2 billion pounds.

The group expects Primark’s first half sales to be about 2.2 billion pounds, down from 3.7 billion pounds, and adjusted operating profit to be marginally above break-even versus a profit of 441 million pounds.

Primark’s performance meant the overall group’s first half sales and earnings would be lower than the previous year, the company said.

AB Foods has a grocery division, with brands that include Kingsmill bread and Twinings tea, as well as major sugar, agriculture and ingredients businesses.

It forecast revenue and profit in all of these units to be ahead of both expectations and the first half of last year.

Despite the pandemic, the group has continued to open new Primark stores. Six opened in the first half and nine are planned for the second half.

($1 = 0.7070 pounds)

(Reporting by James Davey; Editing by Kate Holton and Edmund Blair)

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