buyers, including Fosun, a Chinese conglomerate, are circling Britain’s oldest
package holiday operator. The company could be split up in a move that could
lead to its high street stores and package deals being taken over by one of its
Cook has been struggling with a dip in demand for package holidays and
cut-throat online competition. Potential bidders are now gearing up for either
a partial or full takeover of the struggling company which has already
announced that it is closing 21 high street stores and many more to come.
of interest in its Tours business began when it was first reported on Sky News
that it was seeking to offload its airline business. But it has since announced
a string of profit warnings, including an 80% drop in its share value. Fosun, a
Chinese company which is also the largest Thomas Cook shareholder, is among a
number of investors that have expressed interest in its business.
Cook has said that it is seeking to focus more into increasing investments in
directly-owned hotels which are now more profitable. It will also evaluate all
the options and consider all the bids. A source close to the company said that
it is unsurprising that even rivals are making speculative approaches for other
parts of the company’s business.
has a 17% stake in Thomas Cook and already runs a joint venture with the
178-year old firm back in China. Mr. Guo Guangchang, Fosun’s chairman, rose
from rural poverty and is now one of China’s richest men.
a bid from such a private investor with deep pockets could prove quite
attractive for Thomas Cook after a troubled year, EU rules banning majority
foreign ownership could get in the way of a lucrative deal. The rules could
prevent Fosun from running the airline arm of the tour operator.
May 2018, Thomas Cook’s shares traded above £1.40. But they have since dropped
to 25.4p before the bank holiday which left its market value at £376m as
compared to a net debt of £1.6bn. The tour operator is trying to tackle its
huge debt pile and has taken up restricting specialists, Alix Partners, to work
on its balance sheet and its cost reduction plans. The company was recently
compelled to call for a meeting of its shareholders to support an extension of
its debt limits which had been “inadvertently broken.”
analysts have already warned that the tour operator may have to ask its
investors for more cash even though it has surpassed the period in which cash
reserves are at their lowest for many of the highly seasonal tour operators.
things are not looking too good for the entire holiday sector which is in the
midst of a fierce price war. Thomas Cook’s biggest rival in Europe, Tui, has
already issued profit warnings. Budget airline Easyjet has also issued a
significantly downbeat outlook.
online marketplace is also proving to be brutal for Thomas Cook. More
holidaymakers are now opting for the internet rather than visiting high street
branches. While 64% of Thomas Cook’s sales are through its website, this rising
preference has mostly benefited online travel agencies.
company announced the closure of 21 stores last month, including the loss of
321 jobs. As the company adjusts itself to the online spending revolution,
analysts believe there will be many more closures across its 566-store network.
Cook is named after its founder who was a cabinet maker and who operated day
trips from Leicester to Loughborough. The company has recently issued two
profit warnings in two months towards the end of last year. In its most recent
profit warning, the company blamed the “disappointing year” on the prolonged
heatwave in the summer across Europe for killing consumers’ appetite for
budget airlines have gone belly up in recent months. These include the British
regional carrier Flybmi which collapsed in February, Iceland’s Wow Air which
folded last month, and Indian Jet Airways which grounded all its flights this
spinning off its airline arm could be an attractive source of cash for Thomas
Cook. This is not the first time the tour operator has faced concerns about its
survival. Similar doubts were raised back in 2012 when it was forced to dispose
of hotels and part of its airline business. The company even carried out a
rights issue in 2013 in what seemed like a desperate attempt to shore up its
Figures released by business information company CRIF
Vision-Net show that the entrepreneurship spirit continues to flourish in
Ireland despite Brexit uncertainty.
An average of 71 companies were set up every day
within the first three months of 2019 against an average insolvency rate of two
Within the first quarter of 2019, a total of 6,413
companies were formed in Ireland. These are the best figures of Q1 in the last
13 years and a 14% increase on the previous record-breaking Q1 of 2018.
The biggest contributors to these figures were
professional firms, which accounted for 1,448 new start-ups in the first three
months of the year, a 22% increase from the same period last year. Social and
professional services recorded an impressive 50% growth (949 new firms) over
the same period in 2018.
However, the financial sector, which is the third
largest sector, decreased by 1% to record 708 new start-ups as compared to 715
in Q1 of 2018 while the construction industry showed a modest 1% growth.
Releasing the figures, Christine Cullen, Managing
Director of CRIF Vision-Net, said that “the buoyant entrepreneurial spirit in
Ireland continues to weather the continued uncertainty across the water.”
Cullen further commented that “the first quarter of 2019 has been the best in
13 years for start-ups in Ireland,” and that “industries including professional
services and social and personal services saw significant growth.” Meanwhile,
much-discussed sectors such as construction and finance have again shown strong
Ms. Cullen also observed that, other than the concerns
over a slowdown in the global economy, Brexit remains the greatest challenge of
2019. It now sits at the top of all business agendas, in both big and small
companies. And the concern is particularly acute for many of the companies that
are susceptible to supply chain disruptions, costly tariffs and border checks
on the horizon.
Therefore, it seems businesses are doing everything
they need to do to prepare themselves for the unknown and the potentially messy
post-Brexit period. Cullen pointed out that, “in the meantime, it is critical
that the Irish Government continue to provide assistance to safeguard the
economy from the worst effects of a No-Deal Brexit.”
Twelve counties made double-digit growth rates in the
total number of start-ups in Quarter One, with Dublin recording the highest
number of start-ups among all the counties. There were 3,089 start-ups
established in the capital within the first quarter of the new year, which is
close to half of all the start-ups in the entire country within the period.
Cork recorded the second highest number of start-ups
with 690 new businesses being established in Q1 of 2019 – a 13% increase over
the same period in 2018. Galway came in a distant third with 236 new start-ups
– a 1.2% drop while Limerick was fourth with 210 new start-ups which was a 7.7%
improvement on Q1 of 2018.
It is also worth noting that this growth in start-ups
wasn’t confined to the counties with the highest urban populations. Louth
recorded a 21% increase while Donegal had a 16.5% increase in the number of
companies formed. Kerry was up by 7%, Wicklow was up by 14%, and Wexford saw a
38% increase in new company start-ups.
However, data from business and credit risk analyst
CRIF Vision-net also shows that the rate of insolvencies in 2019 has remained
relatively low as compared to the previous year. There was an almost 26%
year-on-year drop in insolvencies in 2018 versus 2017. Quarter One of 2019
recorded 192 insolvencies as compared to 186 in the same period for 2018.
The wholesale and retail sectors were the most
insolvent, with a total of 31 recorded insolvencies, which is a 34.8% increase
on the Q1 figures for 2018. The professional services sector also had the same
figures, 31 insolvencies, which was a 10.7% increase in the while the
construction sector recorded 25 insolvencies – a 13.8% reduction.
Dublin was, unsurprisingly, the most insolvent county
followed by Galway and Cork. Clare, Waterford, Carlow Mayo, Westmeath,
Tipperary, Laois, and Kilkenny all recorded less than five insolvencies each in
Q1 of 2019 as compared to Q1 of 2018.
Sara Constatini, CRIF’s Regional Director for the UK
and Ireland, pointed out that the continued growth in the number of Irish
start-ups in Q1 is very encouraging. She indicated that international data
shows that Ireland is on course to outperform even some of Europe’s biggest
economies, such as Germany, in 2019.
However, while the domestic economy is thriving,
external challenges continue to cause several concerns. Other European
economies are also feeling the cloud of uncertainty and the next couple of
weeks will be crucial in determining the European market confidence in 2019 and
Following several corporate collapses, including the
collapse of Carillion and BHS, the UK competition watchdog has made proposals
that could split up the big four accounting firms.
The proposals also include compelling the big
accountancy firms to work with their smaller rivals. While the CMA (Competition
and Markets Authority) resisted calls for a split of the big four,
PricewaterhouseCoopers, EY, Deloitte and KPMG, it has said it might be an
option five years down the line if there are no significant improvements in the
Following its fundamental review of what it termed
“serious competition problems in the sector,” CMA’s final report recommended
that the UK government pass new laws that will compel big accounting firms to
put some distance between their auditing operations and their more lucrative
consulting divisions. Such laws, it says, would prevent conflict of interest.
To stoke competition, the CMA also called for
corporations across the UK to be forced to hire smaller “challenger” auditing
firms to analyse their books along with the big four. However, it proposed that
the largest and most complex organizations be excluded from this requirement.
But accounting firms have raised concerns and even
severely criticized some elements of these proposals. Business lobby group,
Confederation of British Industry, indicated that this move could undermine the
confidence in corporate Britain.
Marcus Scott, the chief operating officer of
TheCityUK, which represents financial services and professional firms, also
criticized the proposals. He said that such recommendations may make for good
headlines but are poorly focused. He further stated that “there was no evidence
that they would lead to genuinely enhanced audits.”
The CMA still insists that its blueprint will improve
the profession. Andrew Tyrie, CMA chair and former Tory MP supported the
blueprint and said that “people’s livelihoods, savings, and pensions all depend
on the auditors’ job being done to a high standard.” He pointed out that “too
many fall short – more than a quarter of big company audits are considered
sub-standard by the regulator. “This,” he said, “cannot be allowed to
Lord Torie also indicated that the government had also
received similar recommendations from three separate reports. This was a
reference to the recent Kingman review of audit regulation and the Brydon
review of audit quality and effectiveness, which, he said, “In large part, they
come to similar conclusions.” He further pointed out that “conflicts of interest
cannot be allowed to persist; nor can the UK afford to rely on only four firms
to audit Britain’s biggest companies any longer.”
According to the CMA, the fact that large accountancy
corporations are engaged to scrutinize companies’ book while at the same time,
earning huge fees for advising on corporate matters such as takeovers and tax
issues, has fueled several conflict of interest allegations.
To avoid conflict of interest, the CMA has proposed
that the auditing and consulting functions should be “operationally” separated,
with different leadership, management teams, accounts and even pay policies.
That means the two functions would no longer share profits or staff promotions.
Even bonuses would now have to be on audit quality.
The current accounting regulator, the Financial
Reporting Council, will perform a five-year progress review, even though the
Kingman review had recommended its replacement with a tougher successor.
According to the CMA, the option of a full, structural
split, which will compel accounting firms to split into two, entirely
independent outfits, should remain under discussions during this review period.
The CMA also said that any corporation that engages any of the big four
accountancy firms should also hire a “challenger” audit firm to spur
competition in the sector and help the smaller accounting firms grow.
The huge and most sophisticated corporations in the
UK, which would likely include banks such as Barclays and HSBC, would be exempt
from this requirement. However, EY, one of the big four firms has severely
criticized the proposals and said that they were a missed opportunity and
“risked the UK’s attractiveness for business.”
As far as EY is concerned, splitting up auditing and
accounting functions would undermine the quality of auditing since the firms
would then not be able to draw from critical skills, capabilities, and
investments in the company. It would effectively diminish the resilience of the
Commenting on the proposals by CMA, EY said that, “at
a time when the FRC [Financial Reporting Council] is reviewing corporate
reporting, and the Brydon review may change the scope of audit, it appears
ill-timed for the CMA to restrict the skills needed to deliver high-quality
audit now and in the future.”
KPMG also criticized the proposals for joint audits
and said that “shareholders, audit committees and the regulator must have total
confidence in the ability of these firms to complete this work before the
market can move ahead with this recommendation.”
With more customers worried about problems with their
orders, delivery costs, and increasingly preferring to choose fresh produce
themselves, online grocery shopping is set for slow growth in the UK, analysts
from Mintel have revealed. It seems many consumers remain reluctant to order
fresh produce online.
In a survey of 2,000 internet users, the private London-based
market research firm also found that at least 42% of older internet users have
never bought groceries online and had no intentions of doing so, at least not
in the immediate future.
Nick Caroll, the associate director of retail research
at Mintel indicated that alongside food discounters, online grocery shopping is
one of the fastest growing sectors in the overall grocery sector. But research
now shows that the number of online grocery shoppers is plateauing, and that
retailers are struggling to entice new customers to use their services.
Mintel revealed that online grocery deliveries
comprised around 7% of the whole sector, valued at £12.3 billion and with a
projection of 10% by 2023. According to the forecasts, sales were expected to
rise to £19.8 billion. However, if the research is anything to go by, this is
unlikely to materialize. 45% of consumers polled said they had shopped for
groceries online, down from 49% in the previous year.
Mintel found some evidence of disparity between the
younger, more enthusiastic people and the older more sceptical shoppers who
regarded online grocery shopping with suspicion. Only 35% of shoppers aged 45
and above had ever used online shopping for their groceries. It is now emerging
that the older shoppers are getting more reluctant to join the online grocery
shopping revolution, and that their reluctance is now growing. The number of UK
shoppers aged 45 and above who have never bought groceries online and have no intention
to do so has now increased from 34% in 2015 to 42% in 2018.
But there may be other potential issues as well. About
1 in 4 reluctant shoppers thought the delivery charges for online shopping were
too high. 18% quite disliked being subjected to minimal order quantities or
values, a common requirement for most online stores. Further complaints
revolved around missing products, receiving goods that were so close to their
expiry dates, incorrect substitutions, and late deliveries.
According to the research, online shoppers in the UK (63%)
said that they have had at least one issue with an order in the past one year. For
online stores who also operate traditional brick and mortar stores would not be
too worried about this because grocery shoppers are likely to go back to the
store if they run into challenges with their orders.
Mintel’s research indicated that a great majority of
shoppers (73%) said they just preferred heading out to the store and picking
out fresh groceries for themselves. This might be a great concern moving
forward given the thin margins that traditional brick and mortar stores now
Big food retailers have increasingly relied on online
grocery shopping as an important element of their business strategy. Most
notably in recent days, Marks and Spencer £750 million deal to acquire a 50%
share of Ocado’s retail business. It was a clear indication that Marks and
Spencer, which has struggled in recent times, wanted an immediately scalable,
rough and ready platform to strengthen its online business and grow its sales.
High street retailers will for the first time get at
home delivery service. Overall sales in the high streets have fallen in recent
times due to the overall challenging conditions. The lack of a reliable online
delivery system has been chief among the challenges. This is hardly surprising
as Mintel’s research revealed that more than two thirds of online shoppers in
the UK have had an issue with at least one of their orders in the past year.
However, Mintel now points out that not all retail
shopping trends are working in favour of the internet. Online shopping services
are best suited to some of the traditional big basket weekly shopping routines,
especially at a time where many consumers are shopping on a top-up basis or
Large, basket-style shopping, which online grocery
shopping best supports does not quite fit with the current shopping habits.
Other innovative service offerings such as same-day delivery targeted towards
immediate meal solutions could drive growth in the sector. Once hailed as a growth
area for many retailers, online grocery shopping may be losing its shine after
all, at least in the UK.
Paschal Donohue, Ireland’s minister for finance, has
declined to comment on emerging reports that the European Commission is taking
a closer look at Google’s Irish tax regime.
Sources familiar with the matter indicated that the EU
is now scrutinizing how the technology giant uses its operations in Ireland to
help cut down its corporate tax obligations within the trade bloc.
Sources close to the matter say the review was only
preliminary and may not necessarily lead to a full-scale investigation into the
firm’s Irish operations. An EU investigation, it seems, is not quite imminent
and Irish authorities are bullish that the preliminary conversations are
sufficient to avoid a more in-depth probe of Google’s tax arrangements.
Google declined to issue a statement on the matter as
did the European Commission. But a source revealed that Margrethe Vestager, the
EU Competition Commissioner, discussed a potential issue with Pascal Donohue,
Ireland’s minister for finance. “I can’t comment on any matters in relation to any
particular company. That is the role of the European Commission to comment on
any investigations they may or may not be considering,” said Mr. Donohoe.
Mr. Donohoe was speaking in Washington where he was
attending the World Bank Spring meetings. He indicated that the Irish
government has had a good relationship with the European Commission and that
and that it was up to them to determine what kind of probes they feel are
required across the EU.
Last year, Bloomberg reported that officials from the
European Commission had held in-depth talks with Irish authorities on whether
Alphabet Inc, Google’s internet-search unit complies with rules limiting tax
perks provided by individual governments of member states in the trade bloc.
While no formal investigations have been launched as
yet, the report comes amid a clamp-down at the EU and OECD level on some of the
tax practices of digital companies. Mr. Donohoe indicated that the issue of tax
was something that was always contested and that Ireland was also engaging in
the debate. “It is a debate we are participating in,” said the minister for
finance, adding that he expected to see “further change take place in relation
to the taxation of the digital sector.”
Mr. Donohue particularly pointed out OECD’s forthcoming
work on digital taxation. The intergovernmental economic organization
headquartered in Paris will, by the end of the year, publish its roadmap on
taxing the digital economy. It is also expected to come forward with more
details of its plans before the summer.
The EU had previously made unsuccessful attempts at
introducing EU-wide digital tax policies. According to the finance minister,
the move could have resulted in reciprocal measures from other parts of the
world if the European Union had acted unilaterally.
Several big technology giants, including Apple,
Google, and Facebook, have their European operations’ base in Ireland which
provides a lower basic corporate tax rate as compared to other EU member
states. Ireland has continually resisted efforts by other EU member states to
align tax rates and tax calculations across the trade bloc.
Therefore, Vestager’s probes have opened up other
avenues for the EU to intensify pressure on low-tax member states, including
Ireland, Netherlands, and Luxembourg. The risk is that these states may lure
firms away from other member states.
Until recently, Google has seen little scrutiny of its
Irish operations, and whether they violate the EU’s state-aid arrangements. The
EU has also targeted Amazon.com for its tax deals with Luxembourg. However,
Apple has received more scrutiny in recent times, with the technology giant
ordered to pay around €13 billion for its deals with Ireland that helped reduce
its effective corporate tax rate. Ireland and Apple have appealed the decision.
Google’s European is in Dublin and its sprawling
campus, which is dubbed Googletown, is located close to the south docks. Google
landed in Ireland back in 2003, and with only 100 employees. The firm now
employs about 7000 people in Ireland.
According to company records, the firm recorded a
profit of €1.2 billion from revenues of €32.2 billion. Therefore, it paid about
€167 million in corporate tax.
Ms. Margrethe Vestager, EU’s competition commissioner,
has been at the forefront of Google’s regulatory woes in Europe. She even
stepped up an anti-trust probe as soon as she took office back in 2014 which
her predecessor had been willing to bring to an end.
Mr. Donohue is due to present an update to his cabinet
counterparts on the latest economic forecasts for the country when he returns
to Dublin on Tuesday. He will also outline the Department of Finance’s
projections for both this year and the coming year.