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:

Boots gets profit boost from pharmaceuticals as high street remains difficult

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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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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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Accounting Standards supported by G20

G20 reinforces need for International Standard

Two weeks ago, at the G20 Summit in Toronto, Canada the 20 leaders of the highest-developed countries reiterated the need for International Accounting Standards to be used worldwide in order to strengthen the state of the global financial markets. The need for accounting standard convergence was discussed in Toronto and shows that it could improve the global financial system. International Accounting Standards (IAS) will show more transparency and comparability in the financial system.

I feel that the International Accounting Standards should be introduced worldwide as soon as possible because the convergence will enable the global financial system to find some stability. Currently the USA use US GAAP (Generally Accepted Accounting Principles) and this has proven to be a big barrier in the past. At this G20 meeting the reiteration of international standards can only mean a step in the right direction, not only for the global economy but also the accounting sector in the future. The accounting language should become standardised where all countries use IAS’s. I feel this will only help the accounting sector and eliminate the lack of comparability of financial statements, and create more transparency.

The link to the Ashdown Group article is shown below:

G20 reiterates support for accounting standards convergence

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Accountants should be more aware of bank bias

Management bias needs more attention

Accountants have been urged to pay more attention to the management bias of the banking industry. The Financial Services Authority (FSA) has said that bank auditors need to improve cooperation between themselves, banks and supervisors. Problems in the financial crisis need to be avoided in order to ensure that the future of the banking sector is transparent and to make the banks more accountable.

I feel that if the accountants and auditors’ relationship with the banks are too close, it could provide management bias. In order to provide an independent and unbiased service and opinion, the auditors need to take a more robust approach. This will enable a more transparent banking sector in the future.

With the recent collapses of banks such as the Royal Bank of Scotland (RBS), HBOS, and Northern Rock, the banking sector needed a much needed reform. The accountants can do their bit by making sure an unbiased opinion is offered and the independency in the relationship is maintained. I feel if this continues the banking industry will begin to improve as more trust will be offered by the outsider.

Below is the link to the Bloomberg article:

U.K. Accountants Should Pay More Attention to Bank Bias, Regulators Say

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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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T-Mobile Orange merger in doubt

Mobile network merger may collapse

On Wednesday 3^rd February, the Office of Fair Trading (OFT) announced it will investigate the potential merger between Orange and T-Mobile. Competition issues are being questioned and whether it will dominate the UK mobile network sector. I feel this is the right thing to do because I feel it will dominate the market, therefore controlling the sector.

I think this merger could potentially create a price war between T-Mobile Orange and other operators such as O2 and Vodafone. The OFT should think carefully about the competition that will be created, and whether it will be reduced due to the merger.

Therefore, I personally hope the merger does not happen because less competition results in price wars, leading to dominance from T-Mobile Orange. When one company dominates a particular market, it can harm the growth of the sector, resulting in little attraction of new entrants. As a current O2 customer I think it will affect the services O2 can provide me. This is because T-Mobile Orange could attract future deals due to its dominance, and therefore reducing the future perks O2 can offer me.

Below is the link the BBC News article on this story:

http://news.bbc.co.uk/1/hi/business/8494935.stm

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UK economy may return back to recession

Britain still at risk of a double –dip

On Tuesday 26^th January 2010, the Office for National Statistics (ONS) announced that the UK economy had grown 0.1% in the final quarter of 2009. Britain had been in recession for 18 months, and today’s news may be good news. This is an initial estimate and could be revised upwards or even downwards. This could show the UK could be at risk of a double-dip.

Even though Britain grew in Q4 of 2009, it may not be the end of the misery. The likelihood of a double-dip is predicted by KPMG. Even if Britain shows a revised negative growth in Q4 of 2009, or if there is a double-dip in 2010, I think that the UK will be back on the road to recovery within the calendar year.

This economic downturn should teach lessons to all industries, but especially banks. I think bank’s decision making and risk management will improve and prevent another recession in the near future.

Therefore, the results announced today may not mean good news as there is a risk of a double-dip. However, I feel the future will be more secure when we pull ourselves out of it!

Below is the link to the Accountancy Age article on this subject:

http://www.accountancyage.com/accountancyage/news/2256791/uk-economy-risk-double-dip 

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