Miranda Wadham on 06/08/2015
Interest rates to stay at record 0.5% low
The Monetary Policy Committee have voted to keep interest rates at their record low of 0.5%, by a majority of 8-1 with Ian McCafferty dissenting.
The decision marks the 78th consecutive month of record-low interest rates
Carney maintains plans for “gently rising rates” and said that the time for a rate hike was “drawing closer, but cannot be predicted in advance”.
CPI inflation fell back to zero in June, with the report stating that three quarters of deviation from target was due to low contributions from energy and food sectors.
The report continued that private domestic demand expected to remain robustt, with household spending up and an increase in wage growth. Carney stated that consumer confidence at the highest level in a decade.
The Bank of England remains supportive of bank lending, and business investment remains a key area of aggregate demand. There is “little evidence of deflationary mindset”, according to Mark Carney.
The MPC ended the report by saying that they expect to reach their target level of inflation within the next two years.
RBS finish pricing CoCo bonds
Royal Bank of Scotland (LON:RBS) has announced that it has completed the pricing of two issues of contingent convertible bonds, or CoCos.
The bonds were announced after their positive quarterly results last Thursday, becoming the last of the major UK banks to fofer a bond of this type. The bond will convert into equity if the bank’s CET1 ratio drops below 7%.
The move will raise £1.98 billion to bolster the bank’s capital. The offer is due to close on Aug. 10.
“This is another important step in the road towards becoming a much stronger, safer bank for our customers and shareholders. Improving our capital resilience has been an integral part of our plan and we are well on track to achieve this,” Chief Executive Ross McEwan said in a statement.
The bank also said that they will buy back shares or pay a dividend to shareholders, but not until 2017.
The government began selling off its share in RBS earlier this week, attracting criticism for the decision to sell the shares at a loss.
Miranda Wadham on 06/08/2015
Old Mutual’s African operations bearing fruit
By UK Investor Magazine – 6/8/15
Old Mutual (LON:OML) have reported a 19% increase in adjusted operating profit to £904 million in the six months on 30th June.
The strong performance enjoyed by Old Mutual has been driven by African activities as it builds an ‘African financial services champion.’
African earnings were up 400%, helped by Nedbanks partnership with Ecobank Transnational Incorporated providing broad African exposure.
Having been founded in South Africa in 1845, Old Mutual now services the financial needs of 17 million customer globally.
Although growth has been strong there are some concerns over the impact of rate hikes in the US.
“While we expect the next six months to be challenging for emerging markets, and exchange rate movements will likely temper sterling reported growth, I am confident that by remaining focused on meeting our customers’ needs and improving the operating efficiencies of the business we will continue to make good progress,” said Chief Executive Julian Roberts who is due to be replaced in the coming months.
Old Mutual shares were up 3.3% on Thursday morning at 225p, 16p off its 2015 high.
info@ukinvestormagazine.co.uk
Fitbit beat expectations with first quarterly earnings report
Fitbit (NYSE:FIT) are up 4% this morning, after releasing their first quarterly earnings report and beating expectations.
The company, who make wristbands and devices that track heart rate, calories, steps and sleep pattern, went public in June and stocks have risen nearly 160% since then.
Revenue tripled to $400 million, with net income rising to $17.7 million, up from $14.8 million.
Margins fell as more money was ploughed back into more expensive products, with adjusted margins falling to 47%, down from 52% the previous year.
Fitbit sold 4.5 million of their products in the last quarter and adjusted expectations, saying that it expects revenue for the coming quarter to be slightly lower, in the range of $335m to $365m.
Miranda Wadham on 06/08/2015
FTSE weak before Bank of England announcement
The FTSE 100 is weak this morning as the city prepares for a slew of announcements by Mark Carney at midday today.
Today is being named ‘Super Thursday’ as the Bank of England will announce their interest rate decision and the minutes from the meeting together for the first time, prompting caution in the markets. US non farm payrolls are also due to be released tomorrow.
Mike McCudden, Head of Derivatives at Interactive Investor, said to ThisIsMoney: “As we enter ‘Super Thursday’ investors are treading very cautiously with the prospect of rate hikes sinking in.
“Furthermore, with a mixed bag of corporate earnings and a strong dollar impacting commodities, expect equity indices to be under pressure throughout the session.
“The focus will soon switch back to US employment data so those without the stomach for volatility will be well advised to stay away in the short term.”
Rio Tinto (LON:RIO) rose 0.5% this morning despite reporting a sharp drop in second-quarter profits. Aviva (LON:AV) rose 1.2% after it reported half-year operating profits of £1.17bn, up from £1.07bn last year. RSA (LON:RSA) insurance group beat analysts expectations by disclosing pre-tax profits of £288 million. RSA are currently in the midst of takeover talks with rival Zurich Insurance.Why brands should harness crowdfunding to engage customers
Over the past few years we have seen the rise of crowdfunding. It first started with the crowd donating to entrepreneurs to get projects off the ground and more recently equity crowdfunding to enable investment from angels into startups.
Crowdfunding, or democratised alternative finance, has seen phenomenal growth of about 150% year on year for the past few years – depending on how you measure it. Regardless of the number it is a clear trend within our society that not only reflects the rebuilding of the financial service sector but embraces a more decentralised transparent way of living.
Crowdfunding is not just about the money for startups and crazy projects; now much more sophisticated financial products are available that suit larger well established companies. Established brands are turning to crowdfunding more and more, not because of a financial need but because it allows them to engage their customers in a way like never before. Brands are able to truly make their customers part of their company through allowing them to lend or purchase part of the company.
This is an excellent mechanic for established businesses as it builds a team of brand evangelists, and we all know that getting your customers to sell for you is the key to marketing success. Crowdfunding also allows brands to reach out to new audiences while executing a crowdfunding campaign whether its members of the platform or people caught in the crossfire of an exploding crowdfunding campaign.
Now, a little about why the finances work for brands better than traditional sources of finance – because investors and lenders are buying into brands they love the interest rate is often less important to a lender (in comparison to mechanics where the interest rate is the only element in a deal) and therefore very attractive rates for businesses can be achieved. Also – by offering rewards for investments it allows the brands to leverage their products to achieve more attractive interest rates from their customers. And the customers are still generally getting better returns than traditional investments.
Crowd2Fund is a platform specifically designed for established brands to allow them to harness the power of their crowd in a way like never before, so it’s a win win situation for all.
Ruroc, possibly the world leading snow sports safety gear brand, are currently raising a loan on Crowd2Fund. They are ‘mobilising the Ruroc army’ to raise a loan on the terms that suit their business and truly build an army of global brand ambassadors who are genuinely financially wedded to their business.
For more information on investing in Ruroc, visit their crowdfunding page here. Their campaign is now overfunded, and ends today.
This guest post was written by Chris Hancock, CEO of Crowd2Fund, the only crowdfunding site in the UK to offer a revenue-based model. He has developed the platform over two years with the help of a team that includes entrepreneur Sarah Jane Thomson, founder of AIM-listed consultancy Ebiquity, and former HSBC Private Bank chief investment officer Nigel Webber.
SEIS: what you need to know
The Seed Enterprise Investment Scheme (SEIS) was introduced in 2012 to encourage investment in small businesses and start-ups. The scheme provides tax incentives to investors, and upon introduction was hailed as a key driver of entrepreneurship and small business growth; however, figures say that 40% of business owners are still unaware it exists. If you’re interested in investing in seed businesses, or indeed you are one – it’s well worth knowing about the scheme’s benefits.
Overview
The Seed Enterprise Investment Scheme (SEIS) was designed to complement the existing Enterprise Investment Scheme, but is geared towards helping small and early-stage companies rather than high risk enterprises. It aims to help seed businesses raise equity finance and offers Income Tax Relief for those who subscribe for qualifying shares in companies that meet the SEIS requirements.
For investors
Under the SEIS scheme, investors have the opportunity to invest up to £100,000 each year into small businesses.
Tax relief is available at 50% of the cost of the shares, reducing investors’ tax liability in return for putting money into the start-up sector.
Exemption from Capital Gains Tax on the earnings from your shares so long as you have held them for a minimum of three years
You can also receive Capital Gains Relief of up to 50% of the profits if you sell within three years and reinvest the profit into SEIS companies.
To take advantage of the scheme, you don’t need to be a UK resident – but you do need to paying tax in the UK.
The scheme also includes loss relief in the event that the company fails. The amount you receive in loss relief is equal to your investment minus the 50% you received back multiplied by your tax rate
Investors may NOT control more than a 30% stake in any company invested in through SEIS.
For businesses
The SEIS scheme covers the first £150,000 of external investment in to a seed business.
To qualify, your company must be based in the UK, have traded for no more than two years, have fewer than 25 employees and net assets of less than £200,000.
Make sure you consider how much capital you need – especially if its more than the £150,000 cap. The EIS scheme may be better for you.
If any of the conditions needed for your business to qualify for the scheme fall short during that period, investors will be liable to have their relief withdrawn. It is well worth covenanting to protect its SEIS status to encourage potential investors.
For further information and how to list your company with SEIS, visit the SEIS website.
Miranda Wadham on 05/08/2015
What does Fintech 2020 mean for bitcoin?
The UK has been leading the way with the fintech revolution, creating enough new technology companies to rival Silicon Valley. Increasingly, it looks as if Britain’s booming technology industry goes hand in hand with cryptocurrencies; but while the future looks bright for fintech, what does it hold for bitcoin?
The UK government have loosely given their stance on digital currencies, with the last government making a statement just before the election that they “intend to apply anti-money laundering regulation to digital currency exchanges in the UK, to support innovation and prevent criminal use”.
This positive stance has been reinforced by the current government; on David Cameron’s first trade mission since re-election in South East Asia, he brought a significant delegation of fintech firms – as well as, surprisingly, the British bitcoin company Blockchain. Bringing a bitcoin company to a trade mission is yet another sign that the U.K. wants to play an important role when it comes to welcoming bitcoin startups and becoming a bitcoin hub.
Chancellor George Osborne has also spoken in favour of cryptocurrencies are part of the UK’s financial future.
“These alternative payment systems are popular because they are quick, cheap, and convenient – and I want to see whether we can make more use of them for the benefit of the U.K. economy and British consumers. With the right backing from the government, I believe we can make London the Fintech capital of the world.”
One thing that is clear is that the government is likely to move towards regulating bitcoin. Regulation will initially apply to exchanges, which trade fiat and digital currencies, and include ‘know-your-customer’ requirements that will make bitcoin less anonymous. Existing anti-money laundering frameworks are likely to be used are law enforcement will likely have the ability to confiscate bitcoin used for criminal purposes.
Blockchain is the world’s most popular Bitcoin wallet, and home to the most widely used Bitcoin APIs; it is recognized as the strongest, most trusted brand in Bitcoin. Nicolas Cary, Blockchain co-founder, is optimistic about the future of bitcoin in the UK:
“London has been the home of financial innovation for hundreds of years. It would be a historical mistake not to make this the home of digital currencies. There’s an incredible amount of talent and experience here.”
FinTech 2020, the initiative started by George Osborne and the London mayor Boris Johnson, is aiming to challenge the status quo and attract a large number of financial technology companies to the country. These recent events have shown that digital currencies may well be integral to the UK’s leading position in fintech – however, plans for regulation may put that in danger.
Government officials drafting bitcoin regulation would do well to keep an eye on the progress of recent attempts to regulate crytocurrency in New York.The state’s regulator announced finalised plans last month for a BitLicense, needed for all digital currency companies operating in the area. It has been criticised for being too restrictive; for example, the “the identity and physical addresses of the parties involved, the amount or value of the transaction, including in what denomination purchased, sold, or transferred, the method of payment, the date(s) on which the transaction was initiated and completed, and a description of the transaction” is required for every transaction, which somewhat negates the whole point of using cryptocurrency.
Adam Draper, CEO of Boost VC, heavily criticised the proposals, stating: “The rules don’t include a significantly flexible on-ramp for small startups to build and innovate their products, killing potentially disruptive technology before it can even start.”
He also estimates that the cost of compliance for a startup is $2m, making using the currency prohibitive for the young start-up companies it is designed to benefit.
If the UK government truly wishes to “create a world-leading environment”, it would make sense for it to monitor closely the impact that the BitLicense has on US companies. Regulation of Bitcoin seems inevitable – but whether it will help on hinder the industry remains to be seen.
Miranda Wadham on 05/08/2015
Travel app Peopletrip seeks investors on Seedrs
Based in London’s tech hub, Silicon Roundabout, the Peopletrip app is a brand new platform hoping to help travellers simplify their lives.
The aims of the app are twofold. Firstly, to make travel planning easier and quicker, without having to spend hours online or buying expensive guides. The app will have a section for travellers to share their routes, advice and top tips for each trip. Secondly, the creators recognise that it can be difficult to find people to travel with. Whilst going it alone may seem appealing for some, it can be a daunting thought; however, they may not always want to go to the same places, or go at all – which can mean people don’t always get to travel when they have the chance. The app will intelligently match travellers looking for a trip partner, and operate as an instant messaging system to get to know each other and discuss plans.
The business is currently crowdfunding for investment on Seedrs, looking for a £70,000 investment in return for 12% equity. The campaign has only been running a few days and has already raised £20,000 of the target.
The creators, Paolo Dotta, Luca Comunian and Gabriele Pigoli, have done extensive market research on their idea. They see their target market smartphone users between 20 and 34 years old, unmarried and with an average salary of £20,000 plus. They estimate that around 200 million people worldwide represent this total market; meaning there’s plenty of potential users out there.
Furthermore, the company point to the fact that roaming charges will be abolished in all 28 countries of the EU by December 2015, making it even easier for Peopletrip users to stay connected and interact during their journeys.
They have a complete marketing strategy to put the money raised through crowdfunding to best use, combining PR activities, flyers in main square, clubs and universities in London and Milan with paid social media marketing campaigns, including Facebook, Twitter, Instagram. A further incentive for investors is that the ap is eligible for SEIS tax relief, providing individuals with 50% of their investment back in income tax relief.
For further information on investing in Peopletrip, visit their campaign page on Seedrs.
Miranda Wadham on 05/08/2015
LSE reports strong half-yearly profits
The London Stock Exchange (LON:LSE) reported a 21 percent jump in its first-half profit after tax.
The profits were driven by robust growth in its global indexes business, FTSE-Russell, who own Borsa Italiana, MillenniumIT, Russell Investments and the London Stock Exchange. FTSE-Russell rose 2.9 percent this morning to become one of the biggest gainers in the FTSE 100.
The exchange group said it would pay an interim dividend of 10.8 pence, up from 9.7 pence last year.
The London Stock Exchange is currently trading up 2.17 percent this morning at 2634 pence per share.