Category Archives: Finance

Boots achieves profits from pharmaceuticals

Boots reports rise in profits thanks to pharmaceuticals

Alliance Boots, otherwise known as Boots, reported a rise in pre-tax profits of £637million in the year to March 2011. With the retail industry struggling to cope with tough economic conditions, Boots had to thanks its pharmaceuticals arm to gain these profit figures. The trading profit of pharmaceuticals rose by 36.2pc to £320million. This is a significant chunk of how Boots gained such profits. This put into contrast how well Boots have done to weather the financial storm in retail.

I feel this business news shows what an achievement this is for Boots. This shows that even though the financial crisis is hitting the retail industry the hardest, Boots have still managed to report great profits and show signs of growing. With consumer disposable income becoming a scarcity, Boots have to thank the pharmaceutical division for its success. I feel this is a good sign for the retail industry, but also shows how difficult the retail market is coping with the financial market. 

Below is an article from The Telegraph on this story:

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Nokia: The tech company in decline?

Tech giant sinking as Apple and Google keep growing

Nokia, the Finnish technology company, maybe a corporation which is looking downwards rather than upwards. Back in the late 1990’s, the mobile-phone maker was the leader in mobile devices and even surpassed the then No.1 tech giant, Motorola. The company was worth a mighty £200bn at the time. This showed the ultimate power Nokia had over the technology world. However recently, Nokia has not been able to keep up with the likes of Apple and Google. As these two tech titans keep growing, Nokia seems to be in decline. 

Recently, Google and Apple have dominated the technology world, and seem to give consumers exactly what they want. Innovations such as the Apple iPhone and Google’s Android operating system, seems to be what the people want. However Nokia is losing out, and it shows by just looking at their current market capitalisation. Nokia is worth a mere £21bn now compared to its high of £200bn back in the late 1990’s. This just shows you the decline of the company. Last year, Nokia spent double the amount that Apple did on Research & Development (R&D) on devices. One hope of optimism for Nokia is that they are teaming up with Microsoft to create Nokia smartphones which run the Windows operating system.

I think Nokia is definitely a company in decline and the financial analysis shows that. However, I believe that the joint venture with Microsoft may temporarily boost its hopes and become a real contender in the smartphone market. Nokia’s shares are declining and this shows bad performance, however this is not always a bad thing. An opportunity could arise from such poor performance, and I think the possibility of a potential takeover should not be taken lightly.

Below is the link to a great article from Money Week:

Is it time to buy this bombed-out tech giant?

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Iberian economies could face financial crisis

Spain and Portugal could follow Ireland’s meltdown

Portuguese and Spanish economies have been faced with serious fears that their respective economies could face meltdown. With the recent news that Ireland has been forced to be helped with a EU bailout, the Iberian nations could follow suit.The Spanish government have pledged that their economy will reduce its deficit, but the market is not so confident. Also the Portuguese have announced that they aim to slash their deficit this year by 2 points from 9.3%.

I hope that the Iberian nations do not need a bail-out from the EU, but my gut feeling is that they will follow Ireland’s path and need it. This could be very bad news for not just the EU, but for the global recovery. Many fear that the economically damaged nations will re-enter recession, resulting in double-dip recessions. If one or many re-enter, or are allowed to re-enter, recession again it will result in a setback for the global recovery. As much I hope that the Iberian nations are financially sound, I fear that another bail-out could happen soon.

Below is a link to the BBC News article:

Pressure gets too much for Portugal and Spain

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Liverpool FC closes in on new owners

Hicks & Gillett reluctant to sell as boardroom battle heats up

The past 24 hours have been very lively in Liverpool, as the club announced it has agreed to sell to New England Sports Ventures (NESV). The company, headed by John W Henry, are current owners of the American baseball team the Boston Red Sox. The deal is reported to be worth about £300million. This has caused a lot of anger by current owners’ Tom Hicks and George Gillett.

John W Henry, the owner of New England Sports Ventures

Yesterday evening, an official Liverpool FC statement stated that Hicks and Gillett attempted to remove Managing Director Christian Purslow and Commercial Director Ian Ayre from the Board. This has shown that Gillet and Hicks will fight every battle in order the club is not sold at this price of £300million. The debt owed to Royal Bank of Scotland (RBS) of about £285million has to be paid by October 15th. This will leave Hicks and Gillett with little or no money from the deal.

Today Liverpool FC Chairman, Martin Broughton confirmed the deal has been agreed with NESV, but not finalised. The deal still needs ratification from the Premier League but this isn’t the major hurdle that needs crossing. A legal battle from Hicks and Gillett to block the deal will be the major issue that needs resolving if this deal is to go through.

George Gillett, left, and Tom Hicks will go down fighting in this takeover battle

I feel this is some good news for us Liverpool fans because at least the club’s ownership is becoming a little clearer. I am happy that this deal is close to going through but am wary that the legal battle from Hicks and Gillett will prevent NESV from completing the deal. I am also sceptical about the finances that NESV will use to purchase the club as I would hate for them to burden the club with debt as Hicks and Gillett did.

The main expectations I hope from this deal is that finances will be provided to the manager, and also progress is going to be made on a new stadium. Overall, I feel this is good news; it can only be judged to be great news in the coming years if the club’s finances are healthy and debt-free, and the club is challenging for the major trophies once again! 

This story will continue to unravel and no doubt there is more news to be released in the coming week…..

Below is the link to the BBC Sport article:

Liverpool to be bought by Boston Red Sox owners

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British Airways and Iberia merger moves closer

Airlines clear final hurdle for merger

Today, British Airways and Iberia’s proposed merger passed its final test as the Spanish airline approved BA’s new funding plan of its multibillion pound pension deficit. This final hurdle will hopefully see the merger become final by the end of the year. When this deal goes through, the combined company will be known as International Airlines Group (IAG), where BA will hold 56% of the company and 44% by Iberia.

This deal comes as some good news to British Airways where the past few months have seen many of its staff unsettled resulting in industrial action. The recent staff strikes along with the volcanic ash cloud, have affected British Airways a lot in the past few months. This news from Iberia comes as some form of relief and hopefully British Airways can move onwards and upwards from here. I hope British Airways can recover from its past issues and this merger can help them become a bigger and better airline.

Below is the link to The Guardian’s article:

BA and Iberia merger cleared for takeoff

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Bankers face more taxes

Financial Activity Tax comes to Banks

Just weeks after George Osborne’s budget, where it looked good for banks, a new financial activity tax is to be implemented. This new tax is expected to raise £2.5bn and will be implemented upon bank’s profits and pay. On June 22nd 2010, the Chancellor outlined in the budget that the banks would benefit from taxes; however this news comes to a surprise and shows that it could raise more money to help reduce the deficit.


I feel the banks should face more scrutiny in the future, but this second levy shows that Mr Osborne is trying to lead the way in banker’s tax. As mentioned in the article, the Chancellor is hoping other countries follow suit in introducing such a bank tax. I know that banks need to pay the penalty for the current global financial crisis, but I feel this bank levy will not work and raise enough finances to help reduce the deficit. I feel Mr Osborne’s budget was unclear and does not show any transparency, which is currently needed by banks.

The link to the Guardian article is shown below:

Bankers warned of further tax on profits and pay

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G20 summit – the shakeup in and out of Toronto

Deficit cuts, earthquake and city troubles

I am currently holidaying in Toronto, and I experienced two major events all the space of a few days. On 24th June 2010, I experienced an earthquake tremor whilst visiting family in Waterloo, ON. This felt strange as this was not the major talking point of the weekend. Many may have evacuated buildings in Canada, but the main topic on the agenda was the G20 summit.

Leaders from the 20 biggest countries in the world descended on the largest city in Canada to discuss many things, but most importantly the economic situation and how to resolve it.  The deficit cuts are the main areas of concern that were discussed. I hope this summit will be a spring board for economic recovery in the near future.

Whilst the summit was taking place in the heart of Toronto, many troubles were being witnessed on the streets. Whilst watching CBC News (a Canadian news channel) I witnessed a police car being broken into and set on fire. This along with many store fronts being vandalised were the actions of many protestors. The last time I saw anything of the sort was at the last G20 summit in London 15 months ago. I feel these kind of actions need to be expressed, but should be expressed in a civilised way that ensures real action and not more trouble.

Below is the link to a Guardian news article: 

G20 summit has major implications for the UK’s economic recovery

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Banks look to profit after Osborne’s Budget

Budget looks favourable to banks

Chancellor of the Exchequer, George Osborne’s first Budget looks to help the financial stricken banks. The cut in corporation tax from 28% to 24% for higher rate tax firms will help business save a lot of tax expenses. The banks in particular will benefit as it will help them return to higher profits, or even turn their losses into profits.

I feel this is a good decision by George Osborne, as it will help in the short term by helping business and banks find their feet again and hopefully this will see some stability in the financial sector. The only negative to this is that KPMG believe that the VAT rise from 17.5% to 20% will cost banks £500m. This could prove to be a tough balancing act played by Mr Osborne, by outweighing the loss in revenue of corporation tax, and the potential increase in revenue from VAT. I feel this decision could help in the short term, but in the long term it could affect the government’s finances, especially due to the 4% cut in the higher rate of corporation tax.

Below is the link to The Guardian article:

George Osborne’s tax changes good for banks, say analysts

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Vantis suspends shares on AIM

Accounting firm fears for its future

Vantis, a top 13 UK accountancy firm has suspended its shares on the Alternate Investment Market (AIM) due to funding fears. The lack of its finances has resulted in them to withdraw from trading on AIM. The drop in revenue of its tax and advisory division has been affected due to the recession.

I feel this story could affect the accountancy industry because it shows that accountancy firms are not immune from being affected by the recession. Many may assume that accountancy and advisory firms are not affected by global financial troubles, but this story shows that all industries are affected. I feel that Vantis, a well established accounting firm, will return back to financial stability in the form of a new investor, or bank funding.

Below is the link to The Guardian article:

Shares in accounting firm Vantis suspended on funding fears  

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Only if Ambani & Roy take over Liverpool FC

Indian billionaires dismiss Liverpool takeover

On Tuesday 9th February 2010, there were rumours that insisted Indian billionaires Mukesh Ambani and Subrata Roy were to preparing a takeover bid for Liverpool FC. The rumours suggested they wanted a 51% controlling stake in the club to pay off the £237million debt. These rumours were dismissed by Ambani, and also Liverpool FC has denied making contact.

As an avid Liverpool fan I wish we get some new investors soon. The quicker we find investors, the quicker the club can be financially stable. Manager Rafael Benitez has had to sell players to buy new ones in recent times. Therefore if new investors are found, Rafa can invest in the squad freely without the worry of debt.

Mukesh Ambani is India’s wealthiest man and one of two tycoons competing to buy a stake in Liverpool

I feel if the Indian billionaires take over the club, it will be good times ahead, and we can put the Hicks and Gillett era behind us. Ambani and Roy are very wealthy businessmen and their investment would be very welcome on Merseyside. I feel an investment deal (if not this one) is close to happening, and hope the club can enjoy a minimized debt future off the field.

Below is the link to The Times article which broke the rumours:

Ambani sets his sights on takeover deal for Liverpool 

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