Friday, 21 December 2012

Abchat Weekly Wrap Up: To believe or not to believe, that is the fiscal questions

It has been a week of yet further uncertainty and indecision surrounding the impending US ‘fiscal cliff’. News came this morning that negotiations are far from nearing the end, as John Boehner’s proposed tax bill has been vetoed. His rejected ‘Plan B’ vote, although generating a $3.9 trillion tax cut and maintaining 99.8% of American’s current tax rates, would have resulted in higher taxes for the high earners, earning more than $1m.

This rejection resurfaces prior fears that the US will fail to strike a deal before the 31st December, and possibly losing its triple A rating. The realization that the country may enter another recession is a gloomy reality. This news has, once again, left the international stock and bond markets open and vulnerable. The FTSE All-World equity index is retracting 0.3% from hear 17-month highs, the Asia-Pacific region dropped 0.6% and most notably, the S&P 500 futures index lost 50 points, or 3.5%, in the 15 minutes following the cancelled ‘Plan B’ vote.

Given that these talks have now been ongoing for almost two years and the global economy’s future teetering on its outcome, has led us to draw one simple conclusion: the White House and the Congress have a majority of Mayan believers, and an urgency to strike a deal is immaterial as the day of the fiscal cliff is never actually going to come to pass! Instead, their meeting-to-meeting deliberations are actually just a mere excuse to watch The Lord of the Rings trilogy back-to-back…

Ofcom names the seven bidders auctioning it out for the 4G mobile bandwidth services. Competing in the auction, due to start in January, are: Everything Everything, two Hong Kong telecoms groups PCCW and Hutchison Whampoa, BT, MLL Telecom, O2 network owners Telephonica and Vodafone.

A report published this week from Standard & Poor suggests big global Pharma companies will remain relatively immune from the effects of the ongoing patent-cliffs facing their lucrative drugs. Moreover, the ratings agency forecast the sector will continue to expand by 3-5% over the next five years.

Failed electronic retailer, Comet, underwent its last day of trading this week after falling into administration last month. Business Security, Vince Cable, has called for an investigation into the Company’s collapse which has resulted in a $50m tax-payers bill.

China looks to relax the rules required for overseas listings to try and clear the backlog of domestic IPOs awaiting approval. The new rules will lower various thresholds, including both net income and net asset values, to allow more small private enterprises to list internationally.

STOCKWATCH: The FT is suggesting 2013 could be the year for contrarian investors. These investors could see their luck change in this forthcoming year, with Japanese equities leading the winning tips. Additional controversial tips include Ghanaian bonds and Ukrainian treasury bills.

We attended the CBBC: China Association Christmas Lunch, featuring Richard Graham MP. We heard many inspiring facts about how the UK is making headway with trade from China, and how UK businesses need to support the government to strengthen trade and investment going forward.

Abchaps attended the brilliant Northland Capital Christmas Party, a great opportunity for a catch up with familiar faces.

Lawyers Dechert announced that their partnership has increased with 12 promotions. The three in London are Abigail Bell and Christopher Gardner from the financial services practice, focus on alternative investment funds, whilst Timothy Lindsay from the International Dispute Resolution practice advises clients on international arbitration matters.

Brokers Westhouse Securities have appointed Harinder Sandhu to its institutional sales desk. Previously asset manager in GLG Partners’ UK alpha select team, Sandhu has also held senior roles at UBS Global Asset Management.

Lawyers SJ Berwin have strengthened their tax and international funds practices with David Huff. Huff spent the last 24 years at 3i, where his most recent position was as director of tax. Other previous posts include chairman of the BVCA, the private equity and venture capital trade body.

Co-opperative Group poaches Euan Sutherland from Kingfisher as their new Chief Executive.

Ho-Ho-Phobia - A profound fear of rotund, bearded men in red suits and black boots; outbreaks of which usually surface in late November.

We Make London are showcasing some of the UK’s most talented designer-makers this Saturday at Old Spitalfields Market, 11am – 5pm, featuring locally produced handmade products of jewellery, fashion, illustration and more.

Pop-up Screens are running a festive series of classic Christmas films over the weekend at the Dray Walk Gallery off Brick Lane, complete with oodles of snow, santa’s grotto and a full bar.

Buckingham Palace are again opening their doors for public tours of their State Rooms tomorrow. Open until the 3rd January, the ticket includes a festive glass of champagne.

There are plenty of free carol services over the next few days, including a Family Carol Service at St Paul’s Cathedral on Saturday at 1pm and a midday Christmas Eve Crib Service at Westminster Abbey.

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Friday, 14 December 2012

Abchat Weekly Wrap Up: Pride Comes Before a Call

It has been a week since the suicide of the nurse at the centre of the ‘Kate Hoax’ and in that time, the name Jacintha Saldanha has been in the news far more than the Duchess of Cambridge herself. While public figures must make their peace with media scrutiny, in the wake of the Leveson report on the ethics of the press, the whole incident is proof that the heavy weight of the media can be fatal to vulnerable individuals who have no wish for the spotlight.

The media quickly homed in on the fact that such poor imitations of the Royals fooled the nurses, leaving them open to ridicule and humiliation – but at that point still anonymous. The breach of confidence was embarrassing for the hospital but no individuals were named and shamed and details about Catherine were largely in the public domain already. Aside from being a morally questionable prank using a hospital patient for entertainment, can the DJs actually be blamed for the death? Neither the presenters, nor anyone else could reasonably have predicted the tragedy that unfolded. Both the media and public certainly have experience of inappropriate prank calls; the voicemail Russell Brand and Jonathon Ross left for Andrew Sachs in 2008 was both incredibly personal and offensive. How far do prank calls need to go before broadcasters learn their lesson?

Jacintha’s death was in no way targeted or premeditated, but it was also no accident. It is difficult to say where the blame lies and it certainly doesn’t lie squarely with one party. Both the media and the public, who reacted so strongly to the hoax on social networks, surely had a hand.

Perhaps without the increasingly competitive nature of the media and its hunger for any snippet relating to the Duchess of Cambridge, the story of the Australian hoax may not have come at such a high cost.

Abchaps were in Moscow this week for a site visit with our newest Russian resources client.

We attended the EV Investor Club breakfast, hosted by K&L Gates LLP featured key note speaker Lord Drayson and presentations from some exciting companies in the EV sector, and had a number of electric vehicles on display. Read more on the Electric Vehicle event.

Our Life Sciences team participated in the 12th annual Genesis 2012, hosted by One Nucleus and SCRIP Intelligence, which featured some great talks from Rt Hon David Willetts MP, SCRIP Editor Mike Ward and Baroness Susan Greenfield. #genesis2012

Abchaps also enjoyed a Clay Shoot Day with Crow Clarke Whitehill.

UBS faces $1 billion fine to settle allegations that it manipulated Libor.

The UK Government gives fracking the backing as Ministers approve Cuadrilla’s request to resume their shale gas exploration in Lancashire.

HMV announces the Group is in talks with banks to discuss its future following a tough first half year of trading. The Group, who reported losses of £36.1m and a 10% slump in like-for-like sales, hold £176m of debt but claim that administration is not “part of [their] plan”.

Diageo called time on its potential acquisition of the tequila brand, Jose Cuervo earlier this week. Speculation now shifts towards a potential buy-out of Beam, the bourbon whiskey producer and owner of the Sauza tequila brand, from the Japanese brewer Suntory.

STOCKWATCH: FTSE 100 company Whitbread plc, saw shares jump over 4% to 2530p following the reporting of strong interim figures on Monday morning. Their coffee house brand, Costa, saw sales continue to out perform its previous trading period and growth continued to be forecast; aided by the mis-fortunes currently faced by rival Starbucks.

Robert Finlay has joined Westhouse Securities this week from Canaccord Genuity. He has been appointed Head of Corporate Finance and Corporate Broking and joins along with Finlay Thompson who boosts the company’s sales team and specializing in oil and gas.

Paul Compton has left WH Ireland and Richard Killingbeck, Head of Private Wealth Management, will assume the duties of acting Chief Executive.

Ken McMeikan will be joining private equity owned Brakes Group as Chief Executive, leaving his post as Chief Executive at Greggs, the bakers.

- drilling down whilst injecting water, sand and chemicals to create mini explosions to shatter and crack hard shale rocks to release the gas from within.

Popular landscape photographer Ansel Adams’ exhibition: Photography from the Mountains to the Sea at the National Maritime Museum is causing quite a stir. It is on until April 2013 and is definitely worth the £7 visit.

Get festive with
Carols by Candlelight at Union Chapel in Upper Street, free entry on Sunday evening.

Do your Christmas stocking shopping at the pop-up
Kilburn to Kensal Winter Market at the Albert which finishes on Sunday.

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Electric vehicles are the new black

The electric vehicle market is changing rapidly. Previously, they have tended to conjure images of boxy, plastic-looking automobiles reserved for eco-friendly motorists. But the electric vehicle industry is revamping its image and is now a fast-growing market of attractive cars, which the top automotive manufacturing names are tapping into.

Electric vehicles are not purely about saving money on fuel. Climate change is also a critical issue for many drivers, with July 2012 being the hottest month in US history, and hurricane Sandy another extreme weather condition. Electric vehicles are also essential for the UK consumer market, since 25% of the UK’s generating capacity of non-renewable energy sources will come to an end over the next 10 years.


Lord Paul Drayson, an entrepreneur and former Minister of Science, who spoke at this week’s EV Investor Club’s breakfast conference on cleantech technology, was emphatic that if electric vehicles are to have a future, they must be more glamorous and exciting to all motorists but crucially, the younger generation. This is why he has come up with the FIA Formula-E Championship. In May 2014, 100% electric cars will race on city circuits across the globe in “a street racing festival that leaves no trace.” The event is targeted at a younger market. The races, short but intense, will be streamed live on social media sites and involve what Lord Drayson described as ‘tag-racing’, where in each race the driver takes a pit stop, running 100m to the next car, so the first one can be recharged. In the final race there will be a ‘tweet to boost’ competition running alongside it, where each car will get a power boost in accordance to the size of its twitter support. These electric car races will be going to cities across the globe. First stop will be Rome where the cars will be showcased on a circuit around the Colosseum. With pictures of racing cars to rival McLaren’s, electric cars look set to become a powerful force in the market.

What about the price tag?

Electric supercar Lightning CarsFurther illustrations of the evolving electric vehicle market came from Iain Saunderson of Lightning Cars, cars which he described as ‘reassuringly expensive’ due to the high-tech technology involved. Although each car comes with an eye-watering €350,000 price tag, they were obviously attractive enough for an audience member to ask Saunderson whether there was an order book, after the presentation. Michael Boxwell’s Bluebird supercar was equally popular with the audience, and is even a contender for the 2013 UK land speed record, a further testimony to just how far technology for electric cars has come.

Beyond the UK market, thriving Australian based electronic scooters business VMoto is now dual listed on the AIM market in London and the ASX market in Australia, and now the number one selling brand in Europe. VMoto’s Michel Fulton explained how prices have come down so they are almost on a par with petrol scooters, with the added benefit that they run at one tenth of the cost.

Chargemaster Charging Points

But what will enable the electric vehicle industry to really take off is accessible charging for consumers. David Martell of Chargemaster described how his charging-point business has grown to be the biggest provider in Europe. Having recently sealed a transaction with Electromotive, Chargemaster now has a 48% share of the European market. Its charging-points are being installed in car parks, shopping centres, hotels, train stations and supermarkets such as Asda and Waitrose, ready for a market which Martell estimates is growing at a rate of 40% per annum.

With the cost of electric vehicles reducing (Renault now offering an electric car priced comparably to their popular Clio model), new marketing initiatives are ensuring that they will become increasingly desirable to a younger target market. As the market grows, electric vehicles will make a real difference to our environment, save consumers money on running costs, and offer another exciting global sporting competition.

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Friday, 7 December 2012

Abchat Weekly Wrap-Up: Britain is open for Business

City chatter this week has centred on the Chancellor’s Autumn Statement with just about every group of people, from the richest and poorest to the much maligned ‘squeezed middle’ claiming to bear the brunt of the spending cuts. Mr Osborne was forced to admit that the period of austerity (buzz word of 2012?) will continue for the next six years, way into the next government, and that overall the economy has actually contracted again this year.

While banks were hit with yet more tax, it was not all doom and gloom; the majority of businesses, and particularly SMEs, should welcome the statement. In a bid to make Britain a more competitive and attractive place to do business, companies will benefit from reduced corporation tax and an increase in the annual investment allowance, which should hopefully encourage capital investment through stocks and shares ISAs. As those who work with SMEs will know, any moves to encourage investment in small companies will be extremely welcome. With the introduction of the Business Bank, there should (eventually) be funds in place to improve lending to small businesses also.

We must hope that the result of these measures will do what the government intends – kick start the economy, stimulating the growth and confidence this country so desperately needs.

The Government’s Autumn Statement was unveiled this week and George Osborne has placed business at the centrepiece for economic recovery. The aim is to harness the private sector’s £750bn cash pile to stimulate growth through a range of incentives; including corporation tax cuts, a 10-fold increase in the small businesses annual investment allowance and a £5bn boost to capital projects.

Large multinational businesses came under scrutiny this week as it emerged that many were paying little or no corporate tax. Famous firms revealed to be funnelling UK generated profits offshore include Starbucks, Amazon and Google.

Cineworld splashed out £47.3 million this week to snap up the arthouse group’s Picturehouse. Despite the concerns over the movie giant spoiling the quirkiness and ‘local’ vibe of the Picturehouse’s cinemas, the Group stresses that nothing would change under the new ownership.

As Japan’s government revealed its new energy policy, the DPJ has pledged to reduce the country’s reliance on nuclear energy following their Fukushima plant disaster last year. For now, the forecast for Japan could see it rise to being the next frontier in innovative energy efficiency and renewable technologies.

STOCKWATCH: Apple’s market value was slashed by £35bn as the Company suffered it’s biggest one-day drop in 4 years. Wednesday saw shares plummet 6.4pc amid concerns of losing market share in China.

Abchaps hosted a fantastic Christmas Future Faces party this week, entertaining a great mix of the City’s Future Faces with live music from the Robbie Boyd Band and delicious canapés including mini Abchurch logo Christmas cakes.

We held a brilliant China Market Lunch, where industry specialists discussed China’s manufacturing rebound and the audit crackdown by the US SEC.

Other festive networking events Abchaps enjoyed this week include Seymour Pierce and Moore Stephens Corporate Finance Mines & Money event; Daniel Stewart Christmas party; Baker Tilly’s Young Professionals drinks and Bates Wells & Braithwaite’s Caribbean themed Christmas Party.

At our Christmas Party this week, the team were treated to an evening at Jamie Oliver’s recently opened Recipease in Notting Hill. We learnt how to make Jamie’s American green chili before sitting down to eat our own delicious (and some not so!) interpretations.

As the City starts to wind down for Christmas, rumour has it that Hector Sants, former head of the FSA, has been offered a job by Barclays just a few months after it was fined almost £60m by the FSA for the libor rigging scandal. Sants is keeping his options open as Reuters reports he is also in talks with Deloitte to join as a Partner.

BlackRock has announced the appointment of Olivier Defaux to its financial institutions group in its London office while Westhouse Holdings has appointed Simon Pettitt to head up the stockbroker’s fixed income business. Last week Canaccord Genuity appointed Adrian Haxby as Head of European Investment Banking.

In the professional services space, Deloitte has brought in Angus Wildblood as analytics partner in its enterprise risk services practice and KPMG this week appointed senior M&A investment banker Rama Ayman to head its global Metals & Mining Corporate Finance practice. BDO has strengthened its international private wealth team with three appointments.

City veteran Tony Nutt, a central figure at Jupiter Asset Management, head of the UK equities desk and runner of two of its best known funds, has announced his desire to step down and retire from the industry.

In a Media Move, Gerard Baker was named as Editor in Chief at Dow Jones and the Wall Street Journal.

"Fungibility" - The ability to exchange or substitute a security for another security of the same type.

Feast festival at Islington Square is underway, following their sold-out summer event they are now getting festive. They have transformed a Victorian sorting office into a festive Christmas banquet which brings together some of London’s most exciting chefs including HIX, Mishkin's, Ceviche, Gordon Ramsay’s York and Albany, alongside our Capital’s street food heroes, all accompanied by some brilliant live music.

Head to the Southbank Centre to see Art of Change: New Directions from China on until Sunday, presenting groundbreaking Chinese art. The first of its kind, the exhibition is entirely focused on large-scale contemporary installation and performance art from China, over the last 30 years.

Everyman Cinema has relocated to the Old Vic Tunnels under the streets of London for fully festive snow-capped screenings of classic films including The Princess Bride, Back to the Future, It’s A Wonderful Life and more. There’s plenty of Christmas food and cocktails to accompany your visit to the alpine forest of Christmas cinematic magic.

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Starbucks needs to do more than sell coffee; it needs to pay its taxes!

Global giants Starbucks, Google and Amazon have recently been accused by a committee of MPs, of an ‘immoral’ use of complex company structures to avoid paying tax on profits generated in Britain. As the saying goes, “turkeys don’t vote for Christmas” so unless the many loopholes in the tax system are closed and public pressure on such multi-nationals continues, firms will continue this trend of tax avoidance. Given the austerity measures and the fact that everyone is being asked by the Government to tighten their belts, this is extremely unpalatable to the public.

Loss making Starbucks

Despite the fact that Starbucks represents almost one third of the UK coffee shop market, it has paid corporation tax only once in the past 15 years. The worlds biggest coffee chain and the second biggest café-restaurant chain in the world has only paid £8.6m tax on £3bn sales since 1998 McDonald’s by comparison, had a tax bill of over £80m on £3.6bn of UK sales and KFC, the 3rd largest global café-restaurant chain by market cap, incurred taxes of £36m on £1.1bn pounds in UK sales.

One of the key ways in which Starbucks has dodged corporation tax is that on paper, it makes a loss in the UK, so over the past three years, technically the company has reported no profit, and therefore paid no income tax, on sales of £1.2bn.

The company can do this because of a particular scheme in which the UK unit pays a royalty fee amounting to six per cent of total sales for the use of its ‘intellectual property’ to European headquarters in the Netherlands. This results in the UK division being left to report annual “losses”.


Starbucks is now in talks with HMRC and the Treasury about how it can improve its position, "We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more. As part of this we are looking at our tax approach in the UK” an official statement said. Campaign group UK Uncut said this announcement was "a blatant admission of guilt" that Starbucks had intentionally avoided tax.

Certainly HMRC and the Treasury need to be more assertive towards closing these loopholes that allow companies to hide profits. Margaret Hodge, Chairwoman of the Public Accounts Committee voiced popular opinion, stating “these global companies are making money in the UK. All we are saying is that if you have economic activities in the UK you are making profits and tax is payable on that".

In his Autumn Statement, while George Osborne dangled some carrots in front of British Businesses, he also had a huge stick, promising to clamp down on those not playing by the rules.

Kris Engskov, managing Director of Starbucks UK, announced that they would pay “a significant amount of tax during 2013 and 2014, regardless of whether the company is profitable.” I think this offer to pay corporation tax amounting to £20 million over the next two years has no legal grounding and is just a stunt. The only real answer is to close the tax loopholes that allow Starbucks to get away with this in the first place.