Tag 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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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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Taxpayers may have a ‘get out clause’

HMRC may have exceeded time limit

Over the weekend, it was announced that about 6 million people have paid the incorrect amount of tax. Under the Pay As You Earn (PAYE) system, about £2bn was underpaid and £1.8bn was overpaid to HMRC.

Letters to taxpayers have begun to arrive today stating that they have paid the wrong amount of tax. However, taxpayers could find a way to not pay the underpaid tax. Under new tax rules, HMRC must issue demands for underpaid tax within 12 months of the end of the tax year in which it became aware that people had underpaid. This shows that incorrect tax due for the tax year ending in April 2009 may not be claim worthy due to exceeding the time limit. This could be a hurdle for HMRC and may need to be crossed if they are to receive their tax revenues.

                                                       

I feel that the tax system needs to be cleaned up and kept up to date sooner rather than later, because if these incorrect tax revenues are not settled it could cause problems for using the planned revenues for the current coalition government. The tax codes and amounts of tax need to be corrected to ensure this type of problem does not occur again. Tax payers need to ensure they are issued the correct tax codes and check their pay slips to ensure their employer and themselves are paying the correct amount of income tax every week/month. This will help keep them up to date and ensure they are not over or underpaying their tax.

Below is the article regarding this story:

HMRC may have missed time limit on tax bills

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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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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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Double-dip recession is feared

Financial concerns fear finance directors

Today, finance directors have feared that a double-dip recession could occur. In a survey by Deloitte, the probability of a double-dip recession rose from 33% to 38%. With volatility in the financial markets, the threat of returning to recession has sparked fears with many finance directors. 

I feel that a double-dip recession will occur because of the instability in the financial sector and the lack of predictability in the economic future. The UK only escaped the recession in January 2010, but since then GDP growth figures have been very small and may show that they could return to negative growth in the future. I feel if a double-dip recession occurs, this could lead another financial meltdown and could take the UK many more years to find its feet in the financial sector. I hope that a double-dip recession does not occur, but with many experts predicting a double-dip, it raises fears as to whether to the UK can cope with another decline. 

Below is the link to the Financial Times article

Finance directors fear double-dip recession

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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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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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