Published: 03 July 2021
Location: London, UK
By Suzanne Evans, Director, Political Insight
The Organisation for Economic Co-operation and Development (OECD) said yesterday that officials from 130 countries have backed a proposed minimum corporate tax rate of at least 15%. US Treasury Secretary Janet Yellen said: "Today is an historic day for economic diplomacy." However, the Paris-based organisation confirmed that Ireland and Hungary - countries with low corporate taxes - had not joined the deal on the global minimum. All G20 countries backed the agreement.
Chancellor Rishi Sunak admitted yesterday that the equivalence deal with the EU for financial services giving City regulation parity with Europe has not happened. In his Mansion House speech he said: "Our ambition has been to reach a comprehensive set of mutual decisions on financial services equivalence. That has not happened”. The City was largely excluded from the Brexit trade deal with the EU, and had been pushing for an equivalence deal, meaning each would recognise the other’s legal standards for good service, so they could get wide-ranging access to the bloc. Sunak said Britain will use "our new freedoms to follow a distinctive approach founded on UK law, protected by independent UK regulators, designed to strengthen UK markets". He insisted the EU would “never have cause” to deny the UK access because of poor regulatory standards.
Darren Jones MP, the chairman of Parliament's business, energy and industrial strategy committee has raising questions about private equity interest in British supermarkets after the purchase of Asda and a bid for Morrisons by buyout firms. He expressed concern that regulators did not have enough powers to intervene when new owners are irresponsible, as previous purchases of high street brands had resulted in administration, job losses and pension fund shortfalls, Sharecast News reports. Private equity firms are snapping up UK listed companies they see as undervalued and have turned their attention to leading supermarkets. TDR Capital has bought Asda from Walmart with the billionaire Issa brothers and on 21 June Morrisons rejected a £5.5bn offer from Clayton, Dubilier & Rice. "I am keen to understand what regulatory oversight is in place to ensure any future transactions protect consumers and workers. I'm therefore asking the Competition and Markets Authority and the Financial Reporting Council for their views on this issue," Jones said.
It seems Richard Branson is planning to become the first billionaire entrepreneur in space, announcing his intention to join Virgin Galactic Holdings Inc's test flight on July 11, nine days ahead of a planned trip by rival Jeff Bezos. Branson will make the trip on Virgin's VSS Unity spaceplane. Bezos plans to fly into space on 20th July with his rival space tourism venture Blue Origin. An as yet unknown bidder sealed a seat with him in an online auction for $28m.
In the latest ‘bloody nose’ for executive pay shareholder revolts, the chair of JD Group’s remuneration committee has been forced out of his job after 11 years on the board. Andrew Leslie was ousted at yesterday’s AGM after it emerged boss Peter Cowgill was paid almost £6m in bonuses since February last year, despite the company accepting more than £100m in government support. Although a new remuneration policy to determine future pay, bonuses and share awards received more than 80% of votes placed, thanks in no small part to support from sportswear specialist Pentland Group, which owns more than half the group’s shares, as controlling shareholder Pentland was excluded from the independent shareholder vote which saw Leslie lose his board role. This year, Foxtons, Cineworld and Morrisons have all seen shareholder protests over pay schemes for top bosses running into millions of pounds, the Guardian reports. JD Group owns Blacks Leisure, Millets and Size? as well as the JD Sports chain.
The BBC reports that over 100 workers at Clarks shoes are considering strike action as the company threatens to dismiss them and rehire them on worse terms. Clarks has been losing money for years and was taken over by a Hong Kong-based private equity firm in February. A company spokesperson confirmed it is consulting with employees about employment terms. The new contracts reportedly reduce pay by around 15%, offer three fewer days' holiday, worse sickness terms, and eliminate 10-minute breaks and complimentary hot drinks. Clarks will file official paperwork to begin a 45-day consultation this week, after which it could dismiss all its workers and offer to rehire them on the new contracts. Community, the trade union representing employees, has said all options are being considered to fight the move, which could include strike action.
Building materials distributor and DIY retailer Grafton said yesterday it has agreed to sell its traditional merchanting business in Great Britain to independent builders' merchant Huws Gray for £520m. The business being sold comprises the Buildbase, Civils & Lintels, PDM Buildbase, The Timber Group, Bathroom Distribution Group, Frontline and NDI brands. In the year to 31 December 2020, it reported revenue of £828.2m and adjusted operating profit of £18.8m. Grafton said it will retain freehold properties with development potential that have a market value of around £25m.
Vehicle retailer Lookers reported revenue of £3.7bn in its preliminary results yesterday, down from £4.8bn a year earlier. The board put the fall down to the impact of lockdowns and trading restrictions. The London-listed firm said underlying profit before tax totalled £14.1m for the year ending 31 December, rising from £4m year-on-year, with "strong performance" in the second half more than offsetting a challenging first half. Statutory profit before tax came in at £2m, swinging from a loss before tax of £45.7m in 2019.
Online electricals retailer AO World reported a jump in full-year profits and revenue yesterday, having benefitted from a shift to online shopping during the pandemic. In the year to the end of March 2021, pre-tax profit surged to £20m from just £1m the year before, with total group revenue up 62% at £1.6bn. UK revenues increased 59% to £1.4bn, with sales of major domestic appliances up 61%, driven by demand for larger fridges, chest freezers and other home appliances. In Germany, revenues rose 81% to £226m. AO said group adjusted earnings before interest, tax, depreciation and amortisation were 191% higher at £64m, driven by strong product sales.
Swedish fashion giant H&M has seen a 23% drop in sales in its second 2021 quarter in China, following a Chinese boycott of the company after it raised concerns over alleged human rights abuses against Uyghur Muslims in China's Xinjiang province. Chinese celebrities cut ties with H&M and e-commerce platforms dropped the brand. China accounted for around 5% of the retail group's sales last year and is one of its biggest suppliers.
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