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Valuing data on balance sheets vital for European businesses, economies

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SAS, Cebr study: To reflect true value of big data and analytics, European businesses need new accounting practices

In the wake of the financial crisis and subsequent regulatory and compliance initiatives across Europe, businesses have discovered the importance of big data and analytics to their short- and long-term success. Yet using current accounting methods, these businesses struggle to reflect data as a valued asset on their balance sheets.

According to a new report, “Data on the Balance Sheet” recognizing the value of data goes beyond company interests; it is vital in valuing national economies. Current accounting methods do not capture its importance, and the lack of awareness of data’s potential hampers policy decision-making.

The report is from the Centre for Economics and Business Research (Cebr), a London-based economic and business consultancy, and SAS, the leader in business analytics. The report discusses European companies’ ability to use the insight gained from big data analytics to improve customer relations, streamline production and develop new products. Because data provides potential future economic benefits, it should be regarded as a company asset.

Businesses already account for the cost of collecting, storing and analyzing data. Yet they do not adequately account for the value of data, nor for the potential from its development and use.

Cebr CEO Graham Brough says what’s required is a forward-looking integrated accounting framework that shows investors a comprehensive view of a company’s value, including how they value their data.

“There are three ways to assess the value of data: on its market value, via the cost of collecting it and by the income derived from it where markets do not exist and value is sensitive to external competitive and regulatory factors. These three ways have limitations when it comes to depreciation, so we need to find systems outside traditional accounting practices that not only take into account financial and physical capital but also human, social, relationship and knowledge capital. We need forward-looking reports that include a company’s future prospects and not just a review of its past performance.”

A new framework that better accounts for the value of data will provide a stronger macro-economic platform for policy-makers across Europe. The need for such a framework is further supported by SAS-sponsored research across Europe on the potential of big data analytics:

  • Data equity: Unlocking the value of big data, showed that big data had the potential to add £216 billion ($327 billion) and 58,000 jobs to the UK economy by 2017. This Cebr report showed three main drivers for this growth: business creation through the emergence of new small and medium-sized businesses; efficiency gains through better use of customer intelligence and supply-chain improvements; and innovation through development of new products and markets.
  • A similar Cebr study on the Irish economy, released earlier this month, revealed that Ireland could add €27 billion ($35 billion) and 6,000 deep analytical jobs to its economy by 2017 if it realised the full potential value of its big data.
  • Of the 110 French companies and public authorities interviewed by Markess International, a third were actively seeking to manage big data within their organizations with a specific focus on insights revealed by analytics.
  • A study conducted by the University of Potsdam, Analytics as a competitive factor, indicated that 90 percent of German public sector decision-makers felt the strategic use of business data impacts the success of an organisation.

“What Europe needs to jumpstart its economy is inclusive growth enabled by three pillars: increasing employment via the digital economy, unleashing its service economy and enabling innovation in its traditional economy,” said Mikael Hagstrom, SAS Executive Vice President for Europe, Middle East and Africa, and Asia Pacific. “Better use of big data and analytics delivers big value and can play an important role in achieving each of these pillars. If accomplished, these pillars would provide the funds needed for Europe to invest 3 percent of its GDP in R&D – a strategy expected to create 3.25 million new jobs and have a tremendous impact on Europe’s economic recovery.”

For a free download of Data on the Balance Sheet, visit http://www.sas.com/apps/sim/redirect.jsp?detail=SIM110688_5082.

Today’s announcement came at The Premier Business Leadership Series event in Amsterdam, a business conference presented by SAS that brings together more than 700 attendees from the public and private sectors to share ideas on critical business issues.

About SAS
SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions, SAS helps customers at more than 65,000 sites improve performance and deliver value by making better decisions faster. Since 1976 SAS has been giving customers around the world THE POWER TO KNOW®.

SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are trademarks of their respective companies. Copyright © 2013 SAS Institute Inc. All rights reserved.

 

 

 

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UK’s Sunak extends COVID rescue plan but companies to pay more tax from 2023

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UK's Sunak extends COVID rescue plan but companies to pay more tax from 2023 1

By David Milliken and William Schomberg

LONDON (Reuters) – Finance minister Rishi Sunak announced a costly extension of his emergency aid programmes to see Britain’s economy through its current coronavirus lockdown, but announced a tax hike for many businesses as he began to focus on fixing the public finances.

Delivering an annual budget speech on Wednesday, Sunak said the economy will regain its pre-pandemic size in the middle of 2022, six months earlier than previously forecast, helped by Europe’s fastest COVID-19 vaccination programme.

But it will remain 3% smaller in five years’ time than it would have been without the damage wrought by the coronavirus crisis and extra support is needed now as the country remains under coronavirus restrictions, he said.

Among the new support measures was a five-month extension of his huge jobs rescue plan and more help for the self-employed, the continuation of an emergency increase in welfare payments, and an extension of a VAT cut for the hospitality sector.

A tax cut for home-buyers was also extended until the end of June.

“First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis,” Sunak told parliament.

“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And, third, in today’s Budget we begin the work of building our future economy.”

Announcing forecasts by the Office for Budgetary Responsibility (OBR), Sunak said the economy was likely to grow by 4% in 2021, slower than a forecast of 5.5% made in November, reflecting the current lockdown which began in January.

Looking further ahead, the OBR forecast gross domestic product would grow 7.3%, 1.7% and 1.6% in 2022, 2023 and 2024 respectively. In November, the OBR had forecast growth in those years of 6.6%, 2.3% and 1.7%.

Sunak promised to do “whatever it takes” to steer the economy through what he hopes will be the final months of pandemic restrictions.

He has already racked up Britain’s highest borrowing since World War Two, which hit an estimated 17% of GDP in the 2020/21 financial year that is about to end and should fall to a still historically high 10.3% in 2021/22.

In a first move to raise taxes, Sunak announced he would raise corporation tax to 25% from 19% from 2023, by which time the economy should be past the pandemic crisis.

“Even after this change the UK will still have the lowest corporation tax rate in the G7 – lower than the United States, Canada, Italy, Japan, Germany and France,” he said.

Businesses with profits of 50,000 pounds or less would pay a new Small Profits Rate, maintained at the current rate of 19%.

Sunak also said he would freeze the amount of money that people can earn tax-free and the threshold for the higher rate of income tax until 2026.

(Writing by William Schomberg; Editing by Catherine Evans)

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Renewable diesel boom highlights challenges in clean-energy transition

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Renewable diesel boom highlights challenges in clean-energy transition 2

By Rod Nickel, Stephanie Kelly and Karl Plume

(Reuters) – For 17 years, trucker Colin Birch has been hitting the highways to collect used cooking oil from restaurants.

He works for Vancouver-based renderer West Coast Reduction Ltd, which processes the grease into a material to make renewable diesel, a clean-burning road fuel. That job has recently gotten much harder. Birch is caught between soaring demand for the fuel – driven by U.S. and Canadian government incentives – and scarce cooking oil supplies, because fewer people are eating out during the coronavirus pandemic.

“I just have to hustle more,” said Birch, who now sometimes travels twice as far across British Columbia to collect half as much grease as he once did.

His search is a microcosm of the challenges facing the renewable diesel industry, a niche corner of global road fuel production that refiners and others are betting on for growth in a lower-carbon world. Their main problem: a shortage of the ingredients needed to accelerate production of the fuel.

Unlike other green fuels such as biodiesel, renewable diesel can power conventional auto engines without being blended with diesel derived from crude oil, making it attractive for refiners aiming to produce low-pollution options. Refiners can produce renewable diesel from animal fats and plant oils, in addition to used cooking oil.

Production capacity is expected to nearly quintuple to about 2.65 billion gallons (63 million barrels) over the next three years, investment bank Goldman Sachs said in an October report.

Rising demand is creating both problems and opportunities across an emerging supply chain for the fuel, one small example of how the larger transition to green fuels is upending the energy economy. A renewable diesel boom could also have a profound impact on the agricultural sector by swelling demand for oilseeds like soybeans and canola that compete with other crops for finite planting area, and by driving up food prices.

Local and federal governments in the United States and Canada have created a mix of regulations, taxes or credits to stimulate more production of cleaner fuels. President Joe Biden has promised to move the United States toward net-zero emissions, and Canada’s Clean Fuel Standard requires lower carbon intensity starting in late 2022. California currently has a low-carbon standard that provides tradable credits to clean fuel producers.

But the feedstock supply squeeze is constraining the industry’s ability to comply with those efforts.

‘SPINNING FAT INTO GOLD’

Demand and prices for feedstocks from soybean oil to grease and animal fat is soaring. Used cooking oil is worth 51 cents per pound, up about half from last year’s price, according to pricing service The Jacobsen.

Tallow, made from cattle or sheep fat, sells for 47 cents per pound in Chicago, up more than 30% from a year ago. That’s boosting the fortunes of renderers such as Texas-based Darling Ingredients Inc and meat packers such as Tyson Foods Inc. Darling shares have about doubled in the last six months.

“They’re spinning fat into gold,” said Lonnie James, owner of South Carolina fats and oil brokerage Gersony-Strauss. “The appetite for it is amazing.”

Clean fuels could be a boon for North American refiners, among the pandemic’s hardest-hit businesses as grounded airlines and lockdowns hammered fuel demand. Refiners Valero Energy Corp, PBF Energy Inc and Marathon Petroleum Corp all lost billions in 2020.

Valero’s renewable diesel segment, however, posted a profit, and the company has announced plans to expand output. Marathon is seeking permits to convert a California refinery to produce renewable fuels, while PBF is considering a renewable diesel project at a Louisiana refinery.

The companies are among at least eight North American refineries that have announced plans to produce renewable fuels, including Phillips 66, which is reconfiguring a California refinery to produce 800 million gallons of green fuels annually.

Once new renewable diesel production capacity comes online, feedstocks are likely to become more scarce, said Todd Becker, chief executive of Green Plains Inc, a biorefining company that helps produce feedstocks.

Goldman Sachs estimates that an additional 1 billion gallons of total capacity could be added if not for issues with feedstock availability, permitting and financing.

“Everybody in North America and around the world are all trying to buy low carbon-intensity feedstocks,” said Barry Glotman, chief executive of West Coast Reduction.

His customers include the world’s biggest renewable diesel maker, Finland’s Neste. A spokesperson for Neste said the company sees more than enough feedstock supply to meet current demand and that development of new feedstocks can ensure supply in the future.

SOYBEAN, CANOLA BOOM

Renewable diesel producers are increasingly counting on soybean and canola oil to run new plants.

The U.S. Agriculture Department (USDA) is forecasting record-high soybean demand from domestic processors and exporters this season, largely because of soaring global demand for livestock and poultry feed.

Crushers who produce oil from the crops are also scouring Western Canada for canola, helping to drive prices in February to a record futures high of C$852.10 per tonne. Soybeans reached $14.45 per bushel in the United States last week, the highest level in more than six years.

Rising food prices are a concern if the predicted demand for crops to generate renewable diesel materializes, said USDA Chief Economist Seth Meyer. U.S. renewable diesel production could generate an extra 500 million pounds of demand for soyoil this year, Juan Luciano, chief executive of agricultural commodities trader Archer Daniels Midland Co, said in January. That would represent a 2% year-over-year increase in total consumption.

Greg Heckman, CEO of agribusiness giant Bunge Ltd, in February called the renewable diesel expansion a long-term “structural shift” in demand for edible oils that will further tighten global supplies this year.

By 2023, U.S. soybean oil demand could outstrip U.S. production by up to 8 billion pounds annually if half the proposed new renewable diesel capacity is constructed, according to BMO Capital Markets.

That same year, Canadian refiners and importers will face their first full year complying with new standards to lower the carbon intensity of fuel, accelerating demand for renewable diesel feedstocks, said Ian Thomson, president of industry group Advanced Biofuels Canada.

Manitoba canola grower Clayton Harder said it is hard to envision a vast expansion of canola plantings because farmers need to rotate crops to keep soils healthy. Farmers may instead have to raise yields by improving agronomic practices and sowing better seed varieties, he said.

British Columbia refiner Parkland Corp is hedging its bets on feedstock supplies. The company is securing canola oil through long-term contracts, but also exploring how to use forestry waste such as branches and foliage, said Senior Vice President Ryan Krogmeier.

The competition to find new and sustainable biofuel feedstocks will be fierce, said Randall Stuewe, chief executive at Darling, the largest renderer and collector of waste oils.

“If there is a feedstock war, so be it,” he said.

(Reporting by Rod Nickel in Winnipeg, Stephanie Kelly in New York and Karl Plume in Chicago; editing by David Gaffen, Simon Webb and Brian Thevenot)

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UK fishing sector sees more job losses if post-Brexit export troubles not tackled soon

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UK fishing sector sees more job losses if post-Brexit export troubles not tackled soon 3

By Maytaal Angel

LONDON (Reuters) – Britain could lose more jobs in its fishing sector if the current delays and increased costs involved in exporting to the EU post-Brexit are not ironed out soon, industry groups told British government officials on Tuesday.

Speaking at an Environment, Food and Rural Affairs (EFRA) select committee inquiry, representatives of Britain’s fishing sector said small to medium-sized enterprises were especially at risk and called on the government to urgently negotiate new export rules with the EU.

“(Even) if we get (export) systems sorted, we will still have cost implications. In the medium term, small companies will stop trade to Europe and it may even be their demise,” said Donna Fordyce, chief executive of Seafood Scotland.

“It’s a real worry. These people can’t see a future.”

Under a Brexit deal reached late last year, British trade with the EU remains free of tariffs and quotas. But the establishment of a full customs border means goods must be checked and paperwork filled in, damaging express delivery systems.

Fresh food sectors like fishing and meat have been particularly hard hit, with export paperwork costs soaring and delivery delays prompting EU buyers to reject British produce or to pay less for it.

Sarah Horsfall, co-chief executive of the Shellfish Association of Great Britain, said some British shellfish companies had already shut their doors, buckling under the pressure of the COVID-19 pandemic, and then Brexit.

She said paperwork costs per consignment have increased by 400-600 pounds. On top of that, companies often need to hire two or three extra staff just to fill in the paperwork, adding to costs.

Another point of contention for the British seafood sector is that EU exporters are currently not facing increased costs or delays in sending goods to Britain because the UK has postponed introducing reciprocal customs checks by three to six months.

“Exporters we deal with are considering relocating to the EU. We have to address this urgently if we want to grow, because at the moment we are at the risk of doing the opposite,” said Martyn Youell, senior manager of fisheries and quotas at fishing company Waterdance.

(Reporting by Maytaal Angel; Editing by Sonya Hepinstall)

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