OISC At The Great British Business Show

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Featuring some of the biggest names in business, The Great British Business Show took place in London’s ExCel again last week opening its doors to thousands of business owners hungry to learn how to improve their companies. The trade show, which featured seminars and workshops from some of the most revered names in the world including representatives from Google, Lifestyle brand Bulldog and Amazon all ready to give their input and inside advice.

The Great British Business show was set up in order to give the owners of growing businesses impartial advice from the best names in industry, covering everything from business start ups, to finance, legal advice and help with internet marketing – all under one roof. Now one of the largest shows of its kind in the country, the Great British Business Show has risen to be one of the most helpful resources for budding entrepreneurs the UK has to offer.

We at OISC went along to the fair on the Thursday to catch up with the latest developments in the business world. We were particularly impressed by EMC Ad Gifts who decked out their stand to look like an old fashioned sweet shop to showcase their promotional gifts company.

EMC's 2012 Stand

Based on EMC’s recommendation, we also went along to a talk they had arranged from the head of the British Promotional Merchandise Association, Gordon Glenister. Glenister, like many of the speakers over the two day event, emphasised the importance of having your company stand out from the crowd, and measures which can be taken to ensure that fledgling companies don’t get swallowed up by what is becoming an increasingly saturated market.

We also went along to the seminar given by MP for small businesses Mark Prisk, who used his time to answer questions from small business owners who are struggling to compete in a hostile economic environment. The government have been paying lip service to the need for new legislation to be implemented with regards to encouraging lending to small business owners and entrepreneurs for a while now, and economists have been unanimous in their call for business start ups to end the prolonged period of economic stagnation. In this seminar Prisk stuck to the government’s pre-existing rhetoric, and though speaking in a positive manner, there was a certain amount of dissatisfaction in the air amongst those who believe that not enough is being done to safeguard British industry.

One of the most fascinating talks of the two day event came from British lifestyle brand Bulldog’s owner Simon Duffy. Established in 2007, Bulldog has become the biggest national skincare company for men. Duffy gave a fantastic insight into the progression of his company, detailing how he came to find a niche in the market and break into the chain stores. From landing himself into immense personal debt initially to growing to compete with brands like Loréal and Nivea, this was definitely the most hope inspiring talk of the show.

Waterstones Reveals New Alliance With Amazon

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Waterstones have today announced a surprising new alliance with Amazon. In this new move, Waterstones will be selling the Amazon Kindle, as well as offering a new range of in-store free wi-fi services so that customers can browse online content at their leisure. This move, which goes hand in hand with widespread refurbishments across the chain, will mean that customers are free to use brand new online services within a wealth of new coffee shops across the chain.

About the move, Managing Director of the chain, James Daunt stated;

“Digital us very much an adjunct to the reading of physical books…They in no way replace the pleasure from having a bookshelf at home, and the tactile experience of reading a physical book. This will complement and strengthen the traditional attributes of the bookshops to which the company remains fully committed.”

Waterstones, which is the biggest bookchain in the UK with over 300 stores, is believed to have reacted this way in response to the new Barnes and Noble Nook device, which has received substantial investment from Microsoft. Increased competition has meant that Waterstones have had to increase their scope, but they and Amazon remain unlikely bedfellows, with Daunt openly criticising the global marketplace in the past.

Ellesmere Port Plant Saved By General Motors

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There was some positive news for the British car manufacturing industry today as General Motors announced it was saving the Vauxhall car plant in Ellesmere Port from closure. The plant, which currently employs 2,100 members of staff, will remain open to build the next-generation Astra, creating a further 700 jobs.

Production of the vehicle will be split between the Ellesmere Port plant and a site in Gliwice, Poland. The plant which  has been earmarked for closure for a number of months has been the subject of fierce protests and intense lobbying from union officials and politicians.

In a statement, Prime Minister David Cameron commented;

“This is excellent news for Ellesmere Port and for UK manufacturing. Once again we have seen the success of the UK automotive industry and the crucial role it plays in growing and rebalancing our economy…This has been a real team effort with the government, the company, unions and workers all focused on keeping production in the UK.”

The plant has remained safe after 94% of plant workers voted in favour of new pay conditions, allowing the £125m investment to proceed.

General Secretary of Unite, Len McCluckey stated;

“This is extremely good news for Ellesmere Port. The company has made an offer to the workforce, which our members have accepted. From a position of uncertainty earlier this year, there is now a potential future at the plant until 2020 and beyond, and with that, 700 new skilled jobs at Ellesmere Port itself, and possibly hundreds more in the supply chain”

UK Unemployment Falls By 8.2%

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Reports today have revealed that unemployment has fallen by 45,000 between the first three months of this year according to the Office for National Statistics. The number of people claiming JSA fell by 13,700 to 1.50 million in April despite economist’s projections that the UK has fallen back into a recession.

Chris Grayling, Minister for Employment welcomed the news stating that it was a “welcome step in the right direction”

Clearly though there is still a long way to go before the government can claim any victory over employment rates. Although youth unemployment has also fallen to 1.02 million, the ONS have also shown that the number of people who remained unemployed for over a year has increased by 27,000 to 887,000 – the worst since the Tories were last in power in 1996. The number of people unemployed 5,000 to 428,000.

Grayling continued; “For a number of months now, employment has been growing and this is starting to feed through into improving unemployment figures. However, we still face significant international uncertainty so we need to fold firm on our current economic strategy and continue to do everything we can to ensure unemployment continues to fall”

These figures have been bolstered by an improvement in private sector hire, which has picked up considerably in the last quarter.

O2 See Fall in Profitability

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Bad news for O2 today as they announced a fall of 33% in profits. The company, owned by Telefónica mobile network is now struggling to keep it’s hold of the lucrative iPhone market as customers are now free to go to other networks.

Because of this, the company has started to subsidise the cost of new smartphones in an attempt to hold on to customers.

In a statement O2 said: “The company’s efforts in retaining the customer base have shown positive signs in contract churn which will translate into higher retained value going forward.”

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Retail News

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Sainsbury’s today have announced a rise in profits for the last financial year – reporting an increase of 7.1% to £712m. The supermarket, which is the third biggest in the country with over 1,000 stores has seen sales rise by 6.8% to £24.5bn, bucking the current retail trend.

In a statement, Chief Executive of the company, Justin King stated;

“[We have] continued to deliver good sales and profit performance, and to increase [our] share of the market”

Phil Dorrell at Retail Remedy commented,

“Sainsbury’s is delivering firstly because it is doing the basics well, but secondly because its main competitor in the race is limping…This simple approach to running a supermarket is something that Tesco could learn from. Sainsbury’s is first and foremost a British supermarket, not a global megalomaniac.”

Shares in Sainsbury’s have gone up by over 3% this morning following the announcements – currently standing at 309.40p – and now has a market share of 16.6% – the largest in around a decade.

However, the company has also announced that it will begin to slow down its store expansion this year from 7% to around 5%.

In other news today, Clinton Cards has just announced that it will go in to administration later today putting 4,800 jobs at risk. The company, which operates 139 Birthday’s stores and 628 Clinton Cards has reported losses of £3.7m before tax and have stated that the rest of the financial year will fall below previous expectations.

Stock market trading has been suspended, and although at present it looks as though administrators will attempt to look for buyers whilst continuing to run some stores, it is believed that many will be forced to close.

Wetherspoons Hit Out At “Unfair” Taxation

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JD Wetherspoon has this week hit out against what they believe are unfair tax rates. The highly successful chain pub has been weathering the economic storm considerably better than most, and has consistently announced profits where smaller pubs are calling time all over the country. They are also still gradually expanding, and continue to hire more people. Founder and chairman of the chain Tim Martin warned that if taxes continue to rise, expansion will be significantly slower, resulting in the creation of fewer jobs, and that new pubs will be less likely to be opened in poorer areas:

“The economic impact of adding tax to beer – say 10 pence on a pint – has more impact in less affluent areas where a pint costs £1.90 than in places where it costs £3.”

He added that this will act to increase the North-South divide, as companies will seek to open pubs in the wealthier South of the country, where prices tend to be higher.

He revealed that Wetherspoon’s tax bill was set to soar 11% next year, reaching £500m and added; “The extra taxes on fruit machines and the late-night levy are not applicable to supermarkets, so the tax disparity between supermarkets and pubs has been further increased” He also stated that Wetherspoons created 3000 jobs in the past year “but all of the economic benefits of our expansion are currently being levied by the Government as taxes, an unsustainable situation”

The company opened 29 new pubs last year, and closed two and claim they are planning to open between 20 and 30 new premises throughout 2012 – a figure which has dropped by half of what was previously pledged.

A detailed breakdown of their tax bill showed that it paid £250.1m in the first half of this year, compared to £225.7m in the first six months of last year.

The chain is also set to be hit by a new late night levy being introduced in October this year which could reach up to £4,440 a year per bar – a tax that has enraged publicans throughout the country. In reaction to the uproar, Home Office Minister Lord Henley said;

“Where there is a vibrant late-night economy, with premises remaining open into the early hours, then the local authority should have the flexibility to charge for a contribution towards any extra policing that it generates”

Police authorities have backed up this claim, but publicans feel that they have been unfairly ostracised.

The future for the pub remains unclear at the moment, and is certainly set to be turbulent. Martin closed his commenting by stating; “We continue to be slightly more cautious about the potential outcome for the current financial year”

Lloyd’s Announces £375m Extra PPI Provisions

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Lloyd’s Banking Group has been forced to make provisions of an extra £375m for PPI compensation reports released to day have stated.
Amidst falling profits, Chief Executive of the group António Horta-Osório has hit out against those fraudulently claiming PPI compensation, claiming that 25% of the claims were not legitimate, and blaming claims management companies for their part in the debacle.
Last week, Barclay’s also announced that they were making an extra £300m provision.

Pre-tax profit for the Lloyd’s group for the first quarter of 2012 is down 9% from last year at £288m and reflects the “subdued economic environment” according to Osório. Lloyd’s now have £3.6bn put aside to deal with PPI costs, and are said to be looking at an extensive cost cutting scheme and looking to axe around 15,000 jobs now that the integration with HBOS is complete which should save the company a projected £325m per year.

The Lloyd’s boss has also stated that they are on track with their forced sale of 632 branches across Europe. The sale, which was imposed by the EU regulatory authorities must be completed by November 2013. After the sale of these branches, Lloyd’s will continue to have a 19% stake of small business banking and has promised £12bn in lending throughout 2012 in an attempt to push on with ongoing attempts to stimulate the economy. They have already lent around £3.25bn in the first quarter and net lending is up 4% at a time when there has been a contraction of 4% throughout the rest of the industry.

In a statement, Osório stated “We have made substantial progress against our strategic objectives in the first quarter of the year.”

Last week Lloyd’s also ended exclusive discussions with the Co-operative group regarding sales, although Co-op are still reportedly the preferred buyer. In a statement, Lloyd’s said that it was taking other offers into consideration but is also working on the option of “spinning off the branches as a separate group and selling shares in it on the stock market.”

Soaring Crude Oil Prices Send Shell Profits Sky High

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The soaring price of crude oil has today led Shell to announce a huge 11% rise in earnings in the first quarter of 2012 compared to the start of January last year, reaching a massive £4.74bn.

As a result shares in the company have risen 2.4% to £21.71 as investors reacted positively to the announcements.The company, whose profits bring them in £2m an hour, are confident that this news will benefit both investors and customers as the money made will be used to keep up dividend payments and cover investments in new schemes with the intent to stabilise petrol supplies.

In a statement, Pete Voser, the company’s chief executive commented;

“Our profits pay for Shell’s dividends and substantial investments in new energy projects, to ensure affordable, reliable energy supplies for our customers, which create value for our shareholders”

In an attempt to squeeze even more profit from the company, Shell has also announced that it will be cutting some of their less profitable enterprises, selling off around $4bn worth of assets including offshore stakes in Brazil and Australia and petrol stations in North America which will, according to Voser, enhance their “financial flexibility and capital efficiency, and unlocking new growth potential”

On top of this, the company have also announced that they have received the support of Cove Energy in their bid to take over that has an 8.5% stake in a huge gas find off the coast of Mozambique and has spent $600 million on new offshore acreage, focusing particularly in Southern Africa which has been revelling in its recent oil boom.

Liquified natural gas has also been an increasing focus for Shell, with sales volumes rising by 17% in the first quarter with new supplies coming from Qatar and Nigeria, reflecting the desire for cleaner substitutes to coal in power stations.

Strong Performance From Primark Helps Buck Retail Gloom

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Associated British Foods have today announced a trend-bucking rise in profitability, declaring a 3% rise in earnings over the last half-year. These pre-tax earnings have brought the business £329m compared to £319m last year and group sales have risen by 11% to £5.8bn.

The group, which includes discount high street chain Primark and sugar company Silver Spoon is said to have been aided by economic uncertainty amongst consumers. As employment prospects continue to look bleak, people are looking to save money wherever they can but are not willing to give up buying completely, leading to a 15% rise in revenue for the chain, aided by a 2% rise in like-for-like sales.

This has led ABF to forecast a “substantial” rise in full-year earnings and look set to carry on rolling out the brand, continuing to push on with its store expansion programme and opening six new stores across Spain, Germany and Britain.

Sales in the sugar business have risen by 17% and high prices have also benefited the group, and with profits for sugar businesses rising significantly as prices increased in Spain, Britain and Africa, leading the group to increase production in China from 210,000 last year to 291,000 beets this year.

In a statement, George Weston, Chief Executive of AB Foods said; “The group delivered good growth in revenue and profit. AB Sugar and Primark both performed strongly, demonstrating continuing momentum. We expect substantial growth in both adjusted operating profit and adjusted earnings per share for the group for the full year”

They warned however that the end of sugar quotas by 2015 as proposed by the European Commission could have a devastating effect for the company that has shown considerable growth during a time of continuing dismal performances from other areas of the British retail sector, jeopardising further investment in British industry. Attacking what they have said to be “premature” proposals, the group will continue to lobby policymakers to reach an agreement and “explore alternative options for sugar reform”.