January 2013

Foreign acquisitions in UK food and beverage industry up in 2012

UK food and beverage companies were a hot commodity in 2012, with the proportion of acquisitions by foreign buyers increasing 7 percent on 2011 figures, to 14%. The industry in general has seen an increased volume of deals over the past year, while deal value has risen by 64%, according to Grant Thornton’s recent report. This is a promising indicator of the current health of the sector.

Further activity is expected for 2013, with involvement from the BRIC countries (Brazil, Russia, India and China) expected, as consumer tastes evolve in response to the growth of the middle classes in these regions. British and Irish companies are seen as stable and sustainable suppliers in the global food and beverage market, a reputation that will aid their success over the coming year.

Demand in screen-entertainment industries ripe for UK

According to a report from PwC that was commissioned by Pinewood Studios, demand in the UK film, gaming and TV industries is growing.

Growth for high-end productions is being driven by the rise in consumer demand for home entertainment channels such as Netflix and Lovefilm, together with the drawing power of franchise entertainment that includes sequels, prequels and spin offs. Furthermore, casual gaming has become increasingly popular with the proliferation of mobile devices.

Stronger demand has prompted calls for the UK to take advantage of the potential for growth in these industries and exploit domestic talent and technology accordingly.

£200m to be invested through the Business Growth Fund in 2013

Following on from the successful funding of more than 30 UK companies in 2012, a total of £120m, the Business Growth Fund (BGF) has announced plans to invest £200m this year. 

The BGF is managed by a group of banks and aims to help small and medium sized companies access equity funding, enabling them to continue growing in spite of current economic challenges. It looks to support businesses with significant potential for growth in a wide range of sectors.

Britain halfway to triple-dip recession as manufacturing sector stalls

Britain faces the threat of falling into a triple-dip recession as government attempts to rebalance the economy, away from financial services, falter.

According to the Office for National Statistics (ONS) the economy shrank by 0.3 percent in Q4 2012. A decline in manufacturing productivity between October and December forced the economy to contract and offset a rise in construction output.

The fall was attributed to poor levels of exports to the recession-laden eurozone; bad weather that dampened the operations of shops and farmers; and a temporary dip in oil and gas production in the North Sea.

Government releases £600m for technology investment

The Minister for Universities and Science, David Willetts, yesterday unveiled plans for boosting key areas of technological research in the UK. £600m has been allocated to companies, research institutes and universities that are conducting R+D activities in fields such as big data, space, agri-science, robotics, high performance alloys and telecommunications.

This initiative is intended to help commercialise innovative technologies, by bridging the gap between the R+D stage and the marketplace. It is by neglecting this step in the process that Willetts believes the UK’s high-tech sector has been held back in the past.

£2billion surge in UK mortgage lending

2012 saw an expansion in mortgage lending, which rose by approximately £2bn to £143bn. While the Council of Mortgage Lenders expects the value to increase to £156bn for 2013 the new lending has failed to reach credit starved businesses. 

According to the Bank of England (BoE), business lending contracted by around £4bn in the three months to November when compared to the same period for 2011. The BoE indicated that this was likely the result of businesses attempting to reduce their debt burden. However, it has been a concern that banks chose to reduce business lending because of a drive to improve the health of their balance sheets and are averse to the potential risks involved. 

Still, the BoE expects that the level of lending to SME’s will improve throughout 2013 as it remains positive about its Funding for Lending scheme – banks can borrow a percentage of what they lend at lower interest rates from the BoE.

SMEs facing threat from HMRC tax clampdown

In line with the economic realities of the recession, the 2011–12 tax year saw the number of petitions to liquidate companies with outstanding tax bills rise by 57% on the previous year.

What is more concerning however is the evidence that suggests that HMRC is adopting a less tolerant stance towards late tax payments, which has potentially serious repercussions for SMEs struggling with cash-flow problems. For instance, HMRC has reported a doubling of the use of distraint, the process of seizing a company’s assets to be re-sold in 5 days if tax is not paid. In addition, accountants complain that applications for lenience on tax payments for struggling companies, under the Time to Pay scheme, are now more likely to be rejected.

Some argue that this strict attitude is necessary to weed out the so-called ‘zombie companies’ (companies that require constant bailouts to operate) that are hindering the recovery of a competitive economic environment. The danger is that the SMEs with the potential to grow into tomorrow’s large tax-paying corporations may be thrown out with the bathwater.

High Street suffers as shopper numbers fall

Despite a temporary boost in Christmas sales the number of shoppers fell by 1.2 per cent in December 2012 when compared to December 2011, according to the British Retail Consortium.

The decline in custom is another symptom of the problems that afflict high street retailers, which also comprises of competition from online stores such as Amazon and has recently led to a string of high profile administrations that includes established firms like HMV, Jessops and the UK arm of Blockbuster

In addition, figures released by the Office for National Statistics added to the gloom as they exposed a worse-than-estimated 0.1 per cent drop in sales volumes month-on-month in December.

SEIS – CGT re-investment relief clarification and investing by 31 Jan 2013

CGT (Capital Gains Tax) re-investment relief:

There has been significant confusion regarding CGT reinvestment relief. The HMRC has now confirmed that the CGT reinvestment relief HAS NOT been extended for another year – so only gains made in the current 2012/2013 tax year are eligible for the tax relief.

“Carry-back” is still available for both the income tax reliefs and Capital Gains tax reliefs. Effectively this means that you have more time to invest – for example, you can invest into an SEIS company in 2013/2014 and use capital gain in 2012/2013.

Pick a clean energy winner

UK companies that are developing low carbon technologies are struggling to find investors willing to back them.

You’d think that the UK is ideally placed for clean energy technology – plenty of wind, wave and tidal power and a strong science base (all we lack is sunshine!)

In fact, a recent report from PA Consulting has found that the UK ranks 5th among 14 European nations in terms of attractiveness for investment into clean tech – behind Austria, Norway, Denmark and Sweden.