All posts by Mohammed Junaid

ArticlesFinanceRegulation

Brexit, transferring data and what it all means – Prettys explains…

The House of Commons is yet to vote on the Prime Minister’s Brexit withdrawal agreement and, until then, there are still a number of unanswered questions, including the issue of transferring data internationally post-Brexit.

 

While the government has assured people and businesses in the UK that they will still be able to transfer any data they want into Europe after Brexit, receiving it as easily has not yet been confirmed by the EU. 

Leading Ipswich-based law firm, Prettys, has an expert Data Protection team highly experienced in dealing with a wide range of issues. Matthew Cole heads up the team and explains what could happen following the vote. He also gives advice to organisations on how they should approach their data sharing processes going forward.    

 

What regulations are currently in place? 

Currently with Data Protection law and GDPR regulations, if you’re within the European Economic Area (EEA), you are free to transfer data over national borders.

However, if you are transferring data from within the EEA to outside of the EEA, then you can only do it under certain grounds. These are:

  • If the third party has an adequacy agreement in place
  • If you have explicit consent from the data subjects to transfer their information
  • If permission has been given in a contract with the data subject

If none of these factors apply, then a safeguard is required to transfer the data. And safeguards take one of three forms:

  • Binding corporate rules
  • A contract with European Commission model clauses
  • A code of practice that enables transfers, such as the U.S. Privacy Shield

What happens if the withdrawal agreement is passed?

Should Parliament approve the withdrawal agreement, we will not have to worry about data transfer until 31 December 2020. This is when the transition period comes to an end and the withdrawal agreement works towards the parties getting an adequacy agreement.

The transition period will allow the UK to get to a stage where the EU recognises it as an adequate jurisdiction and data can continue to flow as normal.

This should be fairly straightforward, as our country already has good data protection and information regulations in place following GDPR.

 

What happens if the withdrawal agreement is not passed?

Unless there is any other intervention, such as a second referendum or the Article 50 notification is revoked, it would mean the UK crashes out of the EU and, ultimately, all bets will be off.

We will effectively become a ‘third country’ from 11.00pm GMT on 29 March 2019. This will make things complicated, as there will be no recognition in place from the EU and no adequacy agreement.

This means that we will be able to continue transferring data into the EU but they will find it much more difficult to receive it.     

 

So, what can businesses do in the meantime?

The first thing businesses need to do is get an audit to indicate where they currently share data in Europe and where data is received.

They also need to be aware of:

  • Where their servers are hosted
  • If their websites are maintained in other countries
  • If they’re using cloud services based in other countries 

Once they have established where their data transfers occur, they can then look for any significant data flows between member states and the UK and establish whether they have the ability to continue transferring this data. This may require them to put a safeguard in place.

Binding corporate rules are usually the best option here but, with all the regulatory bodies they need to go through for approval, it would not be possible for a business to get this in place by late March.

Migrating data is another option many businesses are exploring, which means putting all their data in a centre in mainland Europe or vice versa. 

Mathew Cole
FinanceFunds

Young people suffer more with gift guilt at Christmas

Christmas is a time of giving, with the UK spending 821 million pounds on Christmas gifts, it is clear that us Brits are extremely generous. However, worryingly one in four Brits feel pressured to spend a lot more than they can afford, sliding them into debt that can last months after the festive season is over. A truly unwanted Christmas gift.

The research conducted by Peachy, surveyed 2002 people’s Christmas shopping habits and attitudes towards money; lifting the lid on the subtle differences between those of a different gender, age and relationship status. Financial woes are expected to affect a quarter (25%) of Britons due to a costly and pressurising Christmas new research suggests. To ease financial worries and enjoy celebrating the festive season Katre Kaarenperk-Vanatoa from Peachy suggests:
“If you haven’t planned your Christmas costs ahead, you’re left to buy all your gifts in one month. In these circumstances, try to shop wisely by sticking to a budget and creating a gift list. Do not compare your gifts to others and remember that it is sentiment that counts not the price. Sometimes, handmade gifts are more greatly appreciated than expensive gadgets.
Ideally, spread the costs of Christmas shopping as much as possible without adding interest to your financial worries in the New Year”

The research also showed that men spend more money than women, however, men believe they spend too much. Despite this, men still continue to shop at a higher budget. Overall the majority of men (66%) felt relaxed when browsing and buying gifts for their loved ones, felt less pressured to buy a more expensive gift and found it less challenging to stick to a set budget compared to women who were significantly more stressed and less money conscious despite on average spending less of their wages on Christmas gifts than men.

40% of 18-24 year old’s fretted about what others had bought them for Christmas and felt guilty if others had spent more on gifts than they had. Despite this, other age groups (35-44 and 55+) spent more of their wages on Christmas presents in contrast to 18-24 year old’s. Interestingly, 24% of 18-24 year old’s admit to poor budgeting at Christmas time despite 29% feeling the financial pinch in January and struggling with finances. Those 55 years old and over old found Christmas shopping too hectic and only 29% wished they could spend more on Christmas gifts.

Single people find it more difficult to budget and felt that they could not spend as much as they would like on presents in comparison to those in relationships. The study also highlighted that married couples do not enjoy spending time with their loved ones as much single individuals, people in relationships and partners that live together over the festive season. Which could perhaps be to do with the contestant chore of fraternising with your in-laws over the Christmas period! Arguably another unwanted Christmas gift!

FundsGlobal ComplianceTransactional and Investment Banking

The rise of renewable energy

You can’t deny that businesses around the world have taken a greater focus on sustainability — and although this has been damaging for some companies, it has been a great shift for others. One prime example of this is the renewable energy sector; while traditional energy markets are faltering and facing a challenging road ahead, the renewables sector is breaking records.

Although a lot of markets rely on natural resources to operate, the renewables industry use resources that naturally replenish. Collected under the umbrella term of renewables is solar, wind and wave power, alongside biomass and biofuels.

As the market continues to grow, HTL Group, specialists in controlled bolting for the wind energy sector, analyses where the renewables sector is at now:

The market’s performance

The recent years have been successful for the renewables sector. In 2016, 138 gigawatts (GW) of renewable capacity was created, showing an 8% increase on 2015, when 128 GW was added.

Occupying 55% market share and using 138 GW of power, the renewable energy sector is in the lead. Following in second place, coal created 54 GW of power-generating capacity, while gas created 37 GW and nuclear created 10 GW.

Renewables’ huge contribution to the global power-generating capacity accounted for 55% of 2016’s electricity generation capacity and 17% of the total global power capacity, increasing from 15% in 2015.

Research released by the UNEP highlighted that the renewable sector prevented 1.7 billion tonnes of CO2 in 2016 alone. Based on the 39.9 billion tonnes of CO2 that was released in 2016, the figure would have been 4% higher without the availability of renewable energy sources.

Renewable market investment

Regardless of the continued growth of the sector, investments actually decreased in 2016. In 2016, $242 billion was invested in the sector, showing a 23% decrease on 2015’s figures. This reduction can largely be attributed to the falling cost of technology in each sector.

However, this could be down to the alterations made to markets on a country-specific basis. In 2016, Europe was the only region to see an increase in investment in the renewables sector, rising 3% on 2015’s figures to reach $60 billion. This performance is largely driven by the region’s offshore wind projects, which accounted for $26 billion of the total, increasing by over 50% on 2015’s figures.

Across Norway, Sweden, Denmark and Belgium, investment seems to be strong. UK investment slipped by 1% on the previous year, while Germany’s investment dropped by 14%.

Believe it or not, investments made from China decreased from 2015’s $78 billion to $37 billion. Investment from developing nations also dropped in 2016 to a total of $117 billion, down from $167 billion in 2015. In 2016, investment had almost levelled out between developed and developing countries ($125 billion vs $117 billion).

What does the future look like?

With greater developments, the future looks bright for the renewable sector. From the falling cost of technology to societal shifts like the 2040 ban to prevent the sale of new petrol- and diesel-fuelled cars, the future certainly looks positive for the sector — even if investment has declined in the past year.

In the future, it is inevitable that the sector will overtake more traditional markets on a global scale, revolutionising how we generate and consume energy.

This article was provided by HTL Group, hydraulic torque wrench suppliers.

ArticlesCorporate Finance and M&A/DealsFunds of Funds

5 ways cognitive assistants are revolutionising banking

Martin Linstrom, Managing Director for UK and Ireland at IPsoft, looks at the next stage in technological evolution of the banking industry and how artificial intelligence (AI) will redefine banking as we know it.

 

The banking industry has made huge strides to drive innovation by investing in new technologies over the last few decades. Commercial banks first adopted telephone banking, then came internet banking and now, for most customers, all your financial services needs can be met via an app. Now, as we enter the conversational era enabled by cognitive AI, customer expectations have evolved once again.

 

Banks have long been ahead of the curve in terms of elevating the user experience for their customers and so, it’s perhaps unsurprising that many are already looking to AI-powered digital assistants and are investing in cognitive solutions to upgrade and scale customer-facing financial management processes. Many banks are also looking at how they can provide the same simple, frictionless service to their own employees. 

 

As AI-powered customer interfaces gain mainstream acceptance, we will once again see a revolution in technological change within the banking industry. So, what functions within banks will cognitive assistants transform?

 

Building a hybrid workforce

Virtual assistants have a twofold capability which is driving innovation in the banking industry. Firstly, they can be implemented in back office functions such as finance or HR and secondly, they can supplement customer service centres. Creating a hybrid workforce of human employees and AI-powered virtual assistants can help drive enormous cost efficiencies and increase staff productivity. Employees in administrative roles can pass their repetitive tasks over to their digital colleague, freeing up their time to focus on more creative or interesting work that requires soft skills whilst customer service agents can pass standard requests through an AI system leaving them with only the most complex of customer queries to deal with.

 

Ubiquitous customer services

One of the most attractive things about AI-powered customer services for banks is its ubiquity. With virtual customer service agents available 24/7 and through a variety of channels such as live message, telephone or email, it’s a win-win situation for both bank staff and customers. From a customer’s perspective, simple requests such as password resets or international transactions can be performed in an instant and there’s no need to visit the bank or spend an hour in a telephone queue to speak to a human agent.

 

Banks adopting customer-facing AI solutions are in fact seeing increased customer satisfaction rates despite removing the human-to-human contact element. For example, since implementing IPsoft’s AI solution, Amelia, SEB, a leading Nordic bank has been able to avoid 544 hours of escalations to customer support with an average handle time of six minutes. What’s more, Amelia has reached an 85% accuracy in immediate intent recognition which has meant a faster service delivery to customers and soaring customer satisfaction. 

 

24/7 banking support

Unlike human agents, digital assistants can work around the clock, seven days a week with no breaks and without tiring. For modern consumers, particularly young digital natives who expect to be able to manage their finances at any time of the day, integrating AI into a bank’s customer service centre will soon become the norm. Chatbots are already an industry standard, therefore at the very least, banks that don’t continue scaling this technology throughout their business will find themselves at a severe competitive disadvantage, trailing behind the market by delivering an inferior customer service experience.

 

Go beyond simple chatbots

Digital assistants with cognitive intelligence capabilities represent the next leap in automation for financial institutions. Digital colleagues like Amelia are now able to perform tasks above and beyond mere transactional ones, digitising more complex financial management processes such as wealth management onboarding and mortgage applications. Unlike simple chatbots, digital colleagues are also able to develop their cognitive abilities through an advanced Natural Language Interface (NLI) which can process customer queries asked in hundreds of different ways, including slang. More importantly for the banking industry, they can handle context switching so that when a customer moves quickly from one request to another, the interface is able to process both requests without starting over.

 

Many banks have already integrated voice capabilities into their finance management solutions. Customers communicate via text or voice to gain quick answers to banking questions, tailored financial advice and can even carry out transactions all from the same channel. Voice-enabled digital assistants can handle payments and transfers, credit card activation, charge disputes and travel alerts for customers at any time, freeing up customer services teams to focus on more complex customer enquiries and giving customers full control and access to their finances. Conversational AI will become more and more widely accepted as banks start to harness the technology to help drive customer engagement and operational efficiencies.

 

Delivering better insights and improved security

Unlocking key business insights is another key driver motivating banks to invest in AI. Sophisticated systems can recognise patterns from the sheer amount of data that they are processing. Thanks to these capabilities, businesses can easily find out the most common types of transactions by customers of a certain demographic and can then retarget this group for specific marketing or sales campaigns, helping to drive revenue. These real time insights can help business leaders make better, more strategic decisions that are informed through concrete data.

 

Real-time data mining can also be applied to improve customer security as many AI tools have built-in privacy and security by design. An AI-powered virtual assistant can pick up on irregular payments immediately, flagging potential “phishers” to a human agent for additional authentication. What’s more, advanced machine learning solutions can improve over time so that banks can continue to scale up their services. Virtual assistants like Amelia can go one step further by ‘learning on the job.’ Essentially, when Amelia does not understand a request or query she can pass it on to a human colleague but remains in the conversation to learn how to resolve the issue next time.

 

The future of retail banking

The financial services industry has long been at the forefront of technological innovation. Whilst many businesses are still debating whether to invest in AI, major banks are very much leading the way to invest in the technology and are thriving as a result. As virtual assistants become increasingly more intelligent and their cognitive abilities develop, the expectations for banks and the services they offer will be elevated. Banks that rest on their laurels and refuse to acknowledge this risk falling behind permanently, particularly with the slew of challenger fintech companies that are appearing on the market, offering dynamic and tailored financial services at a lower price. 

 

 

Cash ManagementRisk Management

Why Are Investor Relations So Important?

Following the implementation of GDPR, consumers, investors and businesses around the world are becoming increasingly aware of every communication they receive from a company.

As such, compliance, in all its forms, is now even more important to businesses than ever before, and in the financial and investment space this is as vital as it always has been, if not more so. Whilst it has always been crucial to success in the investment market, now compliance, and assuring investors of compliance, has been bought to the fore.

For example, the recent announcement that the UK Government is suspending its Tier-One Investment Visa Programme, with a view to making important changes to this to combat the risk of money laundering. Bruno L’ecuyer, Chief Executive Officer of the Investment Migration Council, made the below comment on the changes and how these would affect investors.

“The UK government may not have much influence with the European Parliament these days, but it has provided an object lesson in how to manage investor migration sensibly and for the benefit of its citizens.

“According to reports, potential investors will have to agree to undergoing a thorough audit of their financial assets, proving they have control of the required capital for at least two years, and will require audits to be undertaken by suitably regulated UK firms.

“Most notably, it appears the UK government recognises the value of investment migration and desires any investment made by individuals to have a greater impact on the UK economy, which is why it is apparently looking at scrapping its own government bond option in favour of directing investment into active and trading UK companies.”

As Bruno highlights, the importance of audits and transparency in this space is as vital as ever, and firms need to be able to prove to both their investors and the authorities that they are acting properly and are fully compliant with all relevant regulations to ensure their continued success.

This is why investor relations have, over recent years, become a vital aspect of any company, fund or asset manager. Many multinational companies, such as Hitachi, Etsy and the Coca Cola Company all operate their own investor relations departments, showcasing the increasing focus companies are putting on the role.

After all, as client satisfaction and feedback become buzzwords within the corporate space, it makes sense that investor relations should also increase in importance, and many companies and investors are now embracing this side of their business. Through strong communication and specialist support, companies, investors and fund managers can ensure that their investors remain on-side and that they understand that their money is in safe hands.

Cash ManagementFinanceFunds of FundsHedgeWealth Management

BUY YOURSELF A HORSE WITH BITCOIN

Equinox Racing is a London based horse racing syndicate like no other. Focused on delivering immersive experience to its members, Equinox Racing recently opened its horse’s shares to cryptocurrency. From now on, you can use your Bitcoins to buy yourself the thrill of horse racing and the privilege of horse ownership.

 

Rob Edwards, co-founder of Equinox Racing, commented: “There is a huge amount of capital in the crypto world, and not too many tangible opportunities out there. A lot of the people who invested in crypto, particularly in the early days, are punters. They are our kind of people!” 

 

Equinox Racing believes horse racing should not be limited to the chosen few but made available to enthusiasts and new audiences on a wider scale. Having nine horses and about 100 club members and owners to date, Equinox Racing offers a range of exciting experiences. Visit your horse at the stables, speak with the trainer and the jockey, follow his evolution on social media and support him at the race!

 

D Millard from Norwich, Norfolk (horse owner), commented: “Equinox Racing delivers fantastic days out, real prize money winning opportunities, and its stable of horses just continues to grow.” 

 

For the equivalent of £34,99 per month in crypto, which is the average price for gym memberships, Equinox Racing enables you to be part of something greater than a pair of weights. And ownership is available from £150 pounds (in crypto as well)! Thrill, suspense, joy, grace, excitement, exclusivity, are the words that describe the emotions experienced during a horse race.

 

J MacLeod from Ayr (horse owner) commented: “Simply amazing.  My passion for racing has grown now that I have affordable ownership.  I never thought I would be able to own any part of a horse with such a stunning pedigree.” 

 

Equinox Racing is currently expanding its horse’s portfolio and looking at new acquisitions. It is now the perfect time to get involved!

 

More information on: https://equinox-racing.co.uk

BankingFinanceFundsWealth Management

WisdomTree launches Artificial Intelligence ETF (WTAI)

WisdomTree, the exchange traded fund (“ETF”) and exchange traded product (“ETP”) sponsor, has partnered with Nasdaq and the Consumer Technology Association (CTA) to launch an ETF providing unique exposure to the Artificial Intelligence (AI) sector. The WisdomTree Artificial Intelligence UCITS ETF listed on the London Stock Exchange today, with a total expense ratio (TER) of 0.40%.

 

The ETF will provide investors with liquid and cost-effective access to this exponential technology megatrend that is driving efficiencies and new business capabilities across all industries globally and redefining the way we live and work.

 

Christopher Gannatti, WisdomTree Head of Research in Europe says, “We are delighted to partner with Nasdaq and CTA, who are experts in AI and technology markets. We have worked together, leveraging our combined expertise, to re-define the AI investment landscape.”

 

“To capture the full economic value of AI we place companies in three categories; Engagers, Enablers and Enhancers*. When investors think of what this can bring to a portfolio, they should be thinking over a long time horizon and about how advances like autonomously driven cars, a digital workforce, mass facial recognition and other applications of intelligent machines could change the world,” Gannatti added.

 

Rafi Aviav, WisdomTree Head of Product Development in Europe comments, “AI is a revolutionary technology and the market for AI products and services is expected to more than triple over the next three years[1]. This fund offers a unique approach to capturing this expected growth, which is the result of a year-long collaboration between WisdomTree, Nasdaq and CTA.”

 

“The fund broadly represents the upstream[2] and midstream[3] parts of the AI value chain and so balances diversification with a focused exposure on those parts of the AI value chain that stand to gain the most from growth in the AI market,” Aviav added.

 

There is no commonly used classification system that allows one to automatically choose companies engaged in the emerging AI space, so the research for the selection of index portfolio companies is conducted by experts with deep familiarity of the AI value chain and the technology markets more broadly. This ensures the portfolio remains focused on AI opportunities rather than becoming just another broad tech fund.

 

We believe the fund’s unique approach offers the best of both the active and passive investment worlds in accessing the AI megatrend. The fund’s portfolio companies are already capitalising on the AI opportunity across industries and are well positioned for AI’s growth,” Aviav commented.

 

“AI is one of the key ‘ingredient technologies’ over the next decade – deployed everywhere from factory floors and retail stores to banks and insurance offices, creating new opportunities,” said Jack Cutts, senior director of business intelligence and research, CTA. “We’ll see this play out in January at CES® 2019 – the most influential tech event in the world – where AI will be a dominant theme, showcasing the massive potential AI has to change our lives for the better. We’re excited to partner with Nasdaq and WisdomTree to make AI investible.”

 

“Artificial Intelligence is at an inflection point to drive further economic growth and create new areas of opportunity,” said Dave Gedeon, Vice President and Head of Research and Development for Nasdaq Global Indexes.  “The Nasdaq CTA Artificial Intelligence Index serves as an important benchmark for tracking the adoption of AI across a broad range of economic sectors as this influential technology hastens advancements in productivity and capacity.”

 

WisdomTree Artificial Intelligence UCITS ETF: Under the hood

The WisdomTree Artificial Intelligence UCITS ETF tracks the Nasdaq CTA Artificial Intelligence Index.  This enables investors to gain diversified exposure which is focused on companies that stand to gain the most from growth in AI adoption and performance. The index can evolve as new AI trends and companies come on stream through a semi-annual update. The Index is currently comprised of 52 constituents globally with stringent eligibility criteria:

  • Define Universe: Companies must be listed on a set of recognized global stock exchanges and satisfy minimum liquidity criteria and market capitalization criteria to be included in the index.
  • Identify and Classify: Companies are identified as belonging to the AI value

chain and classified into the following categories: Enhancers, Enables and Engagers (see below for definitions.)

  • Determine AI Exposure: The AI exposure for each individual stock is investigated and scored.
  • Top Selection: Only companies with the top 15 scores in each category (Enhancers, Enablers and Engagers) are selected for inclusion, and their weight is allocated evenly in each category.
  • Allocate Weight: In total Engagers comprise 50% of index exposure, Enablers comprise 40%, and Enhancers comprise 10% of index exposure.

*Engagers: Companies whose focus is providing AI-powered products & services.

Enablers: Companies who are key players in this space, with some of their core products and services enabling AI. They include component manufacturers (including relevant CPUs, GPUs etc.), and platform and algorithm providers that power the development and running of AI processes.

Enhancers: Companies who are a prominent force in AI but whose relevant product or service is not currently a core part of their revenue. They include chip manufacturers, and platform and algorithm providers that power the development and running of AI-powered products & services.

 

Share Class Name

TER

Exchange

Trading Ccy

Exchange Code

ISIN

WisdomTree Artificial Intelligence UCITS ETF – USD Acc

0.40%

 

LSE

USD

WTAI

IE00BDVPNG13

WisdomTree Artificial Intelligence UCITS ETF – USD Acc

0.40%

 

LSE

GBx

INTL

IE00BDVPNG13

ArticlesBankingFinanceFundsMarkets

Finding finance from start-up to listing

Mark Brownridge, Director General of the Enterprise Investment Scheme Association:

Securing funding as a start-up is often one of the biggest challenges that new businesses face in the primary stages of set-up. Not only is it often difficult to secure the funding itself, it is even more so when trying to get the right kind of funding for what the specific needs of the business are. Having structures in place to make it as easy as possible for innovative ideas to flourish and become fully-fledged is not only to the advantage of entrepreneurs and innovators.

 

One of the routes that allows this to happen in the UK is through the Seed Enterprise Investment Scheme, which offers investors tax reliefs in order to offset the higher risks involved in investing capital into start-ups. SEIS represents an alternative to start-ups from traditional finance routes such as banks that may not be willing to lend. This is especially useful for those of the small businesses that base their proposition on intellectual property as opposed to physical assets or products. These IP rich companies often have trouble finding support without physical collateral to offer as security.

 

Individuals looking to invest through SEIS can then make decisions based upon individual cases and potential rather than being held back by regulation or corporate policy. Of course, the risk still exists but with tax and loss reliefs, it is much more likely that the risk will be seen to be worth it in the eyes of an investor. Getting ideas off the ground is arguably the most important part of encouraging new businesses and creating new jobs as they grow and expand.

Luke Davis, CEO and Founder of IW Capital: Growing a business from start-up to listing is a hugely challenging proposition at each and every stage of the process. One of the most important points of this is growing and scaling the business from start-up level into a more fully-fledged entity. This jump can seem daunting for even the most prepared of start-ups and this is in no small part due to the challenges in securing funding for expansion.

Knowledge-intensive SMEs that struggle to secure funding without assets to use as collateral for loans, can benefit from schemes such as SEIS and EIS. With an industrial focus on research and development this will be key moving forward with the Governments plans to grow the tech industry. This is reflected in the increased EIS limit for knowledge-intensive companies of £2 million per year, this change has been introduced to provide further encouragement to investors to support IP-rich businesses.

Clearly supporting SMEs is hugely important for the UK economy as they represent the employment of around 16 million people, depending on who you ask, in the UK with this number currently growing at a rate that is three times faster than for big corporations. Fuelling this growth will be key moving into a post-EU economic landscape that will rely even more heavily on domestic business and job creation.

Jonathan Schneider, Executive Chairman of Capital Step: According to a nationwide study titled – A State of the Nation – The UK Family Business Sector 2017-18- family-run businesses account for 88% of all UK firms. They operate in every industrial sector across all of the UK’s regions, employing almost half of the UK’s private-sector workforce. In no small part, the UK’s family and regional businesses represent a significant proportion of Britain’s bottom line.

Family-run and regional businesses form the life-blood of the UK’s entrepreneurial landscape, and to see so many believe that the Government is not looking after this vital sector of the UK’s business community is concerning. Equally – it is apparent that the funding options available to established family-run enterprise seem to be eclipsed – in local communities – by corporate entities who have greater exposure to the most appropriate funding options. The role of the family enterprise, community SMEs and bricks and mortar productivity across the length and breadth of the British Isles must be considered a firm priority for the UK government – deal or no deal.

As both investors and entrepreneurs, we have witnessed countless examples of business owners having to give up control of their companies in exchange for funding. In many instances, even successful founders end up with a disproportionately small reward for their hard work upon exit as a result of having sacrificed too much ownership and control along the way. The Capital Step model is specifically designed to address this issue, by providing flexible capital solutions without existing shareholders having to give up ownership or independence in exchange.

Jenny Tooth, CEO of the UK Business Angel Association: We as trade bodies, policy makers and commentators bear a significant responsibility to assist UK SMEs in what will be one of the most critical periods in their business life, ensuring contingency plans, scalability options, growth strategies and immediate resilience responses to ensure their successful navigation of the seismic impact of Brexit

The UK possesses multiple geographical regions that have blooming industries outside of the capital city, something which makes the UK incredibly unique. In spite of this, a lack of accessibility to and education surrounding finance and opportunities outside of London is creating a gap between what these regions are capable of and how much they’re utilised. As 63% of all Angel Investors within the UK are based in London and the South East, it is undeniable that there is a geographically skewed funding deficit that is hindering the growth of SMEs who are positioned outside of the capital. While potential investors of differing regional demographics may feel isolated from the investing arena, the repercussions for regional SMEs reliant on this kind of funding may limit innovation and employment growth outside of the capital.
 
The UKBAA has focused a significant amount of attention on increasing regional investment, with the implementation of many angel hubs throughout the UK, especially in Northern regions. However, there is still a long way to go to fully utilise the untapped potential found within these areas. This can only be done when it is popularly recognised that there are significant investment opportunities outside of London. 

ArticlesBankingFinance

Fast growing asset based finance sector presents clear opportunities for challenger banks

Author: Kevin Day, CEO, HPD LendScape

ABF sector is growing fast

Asset Based Finance (ABF) has seen record levels of lending in recent years, with more firms than ever choosing to use this funding option. This trend is a sign of how ABF is increasingly taken seriously as a viable source of finance, which is becoming more widely accepted among businesses. Driving this growth in ABF are the larger, more established banks, but they have been increasingly focusing on large corporates. This provides an opportunity for challenger banks to expand their operations into the mid-market, and although the varying quality of credit among SMEs means it’s an exercise they should do with care, the potential returns are well worth it.

Funding record set last year

Last year set a lending record for the ABF, which largely comprises invoice financing and asset-based lending (ABL), with funding reaching £22.2 billion, an increase of around 5% compared to 2016, itself a previous record. The total number of businesses accessing ABF was 40,333 in 2017, while the number of clients with a turnover of more than £10 million increased to over 5,000, up 7% on last year. In total ABF finance now supports companies with total turnover of around £300bn.

Big banks freeing up the mid-market

Catalysts for the growth of the sector are the big lenders, major banking groups and other established financial institutions. However, a feature of their expansion is that they are moving up the credit scale, with a shift of focus to those companies with a more secure, conservative financial profiles. Many of the big banks are no longer willing, or perhaps even able, given the capital requirements, to lend to small and mid-cap size firms. But the move of these mainstream lenders up the credit quality spectrum has not reduced the needs of SMEs, many of which have limited financing options for common growth challenges, such as the need for investment into new products or moves into new markets.  

Clear opportunity for challenger banks….

Some challenger banks are already active in the ABL sector. For instance, asset finance accounts for over 20% of Aldermore’s lending portfolio, with a further around 4% accounted for by invoice financing. Secure Trust is another challenger that has been building its business in the ABL sector. However, the retreat from providing ABL to SMEs, gives challenger banks an opportunity to target the corporate mid-market and further accelerate their expansion in ABF.

…But they should proceed with care

Although the prospects are promising for challenger banks to boost ABF to SMEs, they should proceed with care. Credit quality is more variable in the mid-market and companies’ revenues, cash flow and costs can be a little more unpredictable as they are more sensitive to changes in market direction or client losses. So challenger banks should be sure that their due diligence and research on businesses looking for ABF is rigorous, including closely examining the credit quality of the accounts receivables, sales concentration and the aging of the accounts receivables.

Private equity-backed businesses offer further potential

Another area challenger banks and other alternative lenders should consider targeting are private equity backed companies. The flexibility that asset-based lending provides to a private equity borrower, such as scalability, works well for acquisitions. Additionally, what ABF can offer which is compelling for those needing finance as well as financial sponsors, such as private equity, is the flexible but limited covenant structure, greater debt capacity, and often a lower price. In the private equity arena, innovative transaction structures involving ABF have the potential to provide sponsors with an alternative to more typical and complex approaches, such as those involving Revolving Credit Facilities.

SMEs seeking to refinance from new lenders

Typically, businesses already using ABF as part of their funding strategy would typically refinance using the same lender. However, in the last few years there has been a trend for borrowers to turn away from their incumbent lenders and explore alternative options, including challenger banks, which can often offer more sophisticated and attractive financing terms. Challenger banks should capitalise on this trend by SMEs to consider a greater variety of re-financing options to further expand their ABF operations.

Technology can play a key role

For both challenger banks and other boutique financial institutions seeking to enter the market, as well as SMEs looking to access ABF, the influx of new technologies is a definite plus. These new technology options mean ABF is increasingly accessible for even the smallest SMEs as increased speed of service allows companies to receive the funds they need quickly due to sophisticated data capture and analysis techniques. For institutions such as challenger banks solutions such as the HPD LendScape® platform help to automate and streamline ABF processes, making it easier for banks to lend and enabling businesses to manage their loans and provide their collateral data for analysis via a single platform, making the process easier to manage for resource-pressed SMEs.

ABF market in the UK is evolving 

ABF is maturing fast in the UK, both in terms of invoice financing and asset based lending and this is likely to continue. An increasing range of companies are seeking to access the funding, while an ever expanding range of lenders is targeting the sector. Challenger banks could play a key role in this trend, with their more innovative, flexible tech-driven approach. With 33% of UK GDP coming from SMEs, if challengers were to significantly expand their ABF finance that would give a considerable funding boost for businesses and a growth uplift for the economy.

 

Website: https://www.hpdsoftware.com/

Funds

OMGTea founder reveals what happened when she faced TV’s Dragons

Katherine Swift, founder of OMGTea, went head-to-head with a panel of millionaire investors in BBC’s Dragons’ Den on Sunday night to try to secure a £50,000 investment for 7% of her green tea company.

The entrepreneur fought her way through over an hour of challenges and thorny questions, having been invited to apply for the hit TV show.

OMGTea sources the highest quality powdered Japanese green tea, which is known as Matcha and can be enjoyed hot or cold. Katherine presented the Dragons with samples of the emerald green product and told them about Matcha’s benefits – it is packed with nutrients and provides ‘clean’ energy without the jitters.

There were sticky moments when one of the Dragons opened their bottles of OMGTea Iced Matcha without following instructions, and questions arose over the green tea’s health benefits. But, undeterred, Katherine describes the whole experience as “amazing and beneficial”.

Katherine says, “To be invited to apply for the programme was wonderful”. It was a tough process but also extremely valuable to be able to talk about our OMGTea products and a market that is on the brink of exploding. The global Matcha market is already valued at £2 billion and is expected to reach a staggering £4.1 billion by 2023.

“That said, Matcha tea is a relatively new product in the UK and three of the five dragons didn’t know what it was or grasp the difference between it and other teas, so it was a tall order to expect them to invest in a business that specialises in a product they were unfamiliar with. 

And she smiles, “When Touker spilled his drink, I did hold my breath but I promise this won’t happen if you twist then press and then shake as you should, before removing the cap. The bottles are easy to use and are a fabulous way to drink on the go, which is what more and more people wish to do.

“Also, Deborah questioned me about Matcha’s health benefits and my personal story. To be clear, I’m passionate about robust evidence-based health benefits and we are doing what we can to help validate these and whilst early independent research into Matcha tea potentially halting the growth of breast cancer stem cells is extremely promising, we are committed to going to the next stage to validate the results further. I am extremely proud of what I have achieved”

Indeed, the research carried out at the University of Salford shows that Matcha green tea may have significant therapeutic potential, by mediating the metabolic reprogramming of cancer cells. Studies are ongoing and OMGTea will continue to work closely with one of the world’s leading micro cell biologists, Professor Michael Lisanti.
The scientific team at Salford University, led by Professor Michael Lisanti, has been working on a breast cancer study for over two years. Katherine Swift met Michael whilst project managing a major UK breast cancer research appeal back in 2010, spurred on by her mother’s stage 3 breast cancer diagnosis. OMGTea supplied the high grade Japanese Matcha tea for the purposes of the study. 
Katherine has been dedicated to supporting research for the disease which affects one in eight women in the UK*, and founded the charity Healthy Life Foundation to raise funds to support ground-breaking research into age related diseases. 

“Katherine was the driving force behind this study and donated the necessary product for testing,” said Michael Lisanti, Professor of Translational Medicine at Salford University. “I have always been interested in natural products for cancer prevention and/or treatment so to finally have this positive research which confirms the effects of Matcha green tea on breast cancer stem cells is a very important first step forward. 

“Matcha green tea fits very well with our interest in natural products. Our finding could also help explain why lifespan in Japan is among the highest in the world. I was very surprised that the Dragon’s had little to no knowledge about the potential health benefits of this natural compound that is growing massively in popularity as people’s interest in ‘naturally healthy’ explodes”.

Research aside, the market for healthy drinks is booming. Leading retail trade magazine The Grocer notes that tea is now the only sector of the hot beverages market in growth, with sales soaring by 3.5% to £641.7m in the past year (Kantar Worldpanel 52 w/e 21 May 2017). This is down to the premiumisation of the category, with green, herbal and fruit teas being the only growth segments in the overall tea category.

The Grocer also points out that there’s been an 8% increase in the past two years in the number of people who will pay more for quality tea, now standing at 31%. Among 25 to 34-year-olds, the figure rises to an impressive 44%. 

This is no surprise to Katherine, as naturally healthy drinks have been sharply rising in popularity since she founded the business in 2014. Euromonitor research (Naturally Healthy Beverages in the United Kingdom, May 2017) from last year shows that there is an ongoing health and wellbeing trend in the UK, with consumers focused on products that are free from sugar and artificial ingredients.

Katherine comments, “Naturally healthy ‘other’ hot drinks, which OMGTea falls under, recorded the highest growth of 37% in value sales in 2016. And the consumption of naturally healthy beverages is set to increase at a compound annual growth rate (CAGR) of 4% in value sales at constant 2016 prices over the forecast period to reach sales of £3.5 billion in 2021.

Among the largest categories, Naturally Healthy Tea will record the highest growth rate of 10% in value sales. Within Naturally Healthy Tea, naturally healthy green tea will be the main growth driver, with sales stimulated by the increasing popularity of RTD green tea in helping to control weight.

“I may not have walked away with the investment but I am confident that OMGTea has a very strong future – since filming the show we have launched in several new retailers including Harvey Nichols and Caviar House and we are launching in Ocado imminently. Having survived the Dragons’ Den, I now feel I can do anything and am excited about the future. “As for the Dragons? I think they will be kicking themselves in future…”

ArticlesFinanceRisk ManagementWealth Management

IVA or bankruptcy: what is the best solution for your debts?

If you are suffering from severe cash flow issues, you may be considering both bankruptcy or an individual voluntary arrangement (IVA). Bankruptcy and IVAs are both legally-binding and formal insolvency options between you and your creditors. However, while they might appear similar, there are some vast differences to consider before entering into one of the procedures. Most importantly, you should always seek insolvency advice before doing so to ensure you are not impacting your future finances.

 

With that in mind, Business Rescue Expert – a licensed insolvency practitioner firm – is sharing the difference between the two and what you can expect from both insolvency procedures.

 

Choosing an IVA or bankruptcy

Recently, both insolvency procedures have hit the news due to a number of high-profile celebrities suffering cash flow issues. Katie Price is the most recent victim, with her bankruptcy woes documented in the media. However, she is certainly not the only to face cash flow issues, with the total number of individual insolvencies continuing to rise in 2018. The Q2 Insolvency Service report made for particularly tough reading, with the number of individual insolvencies at its highest since Q1 2012. IVAs accounted for 62% of the total, with bankruptcy behind a further 14%.

 

Individual voluntary arrangements were, originally, intended as a better alternative to bankruptcy. IVAs are, generally, considered the more suitable option for those with assets they wish to protect. The procedure is defined as ‘less extreme’ than bankruptcy and also provides moratorium for the individual, with the breathing space helping to regain control of the issue and get to the root cause of the cash flow problems. However, an IVA is a much longer procedure than bankruptcy, and you could be tied up in the process for up to seven years.

 

Bankruptcy, on the other hand, is often considered as it is much shorter than an IVA – typically lasting no longer than 12 months. Unlike an IVA, however, your assets will be forfeit, and that could include your vehicle and house.

 

There are both advantages and disadvantages to each and, if you are not particularly savvy as to those, we suggest seeking advice to ensure you go down the right path.

 

Can the procedures affect my home?

The effect of the procedures on your home is a common cause of worry for many. If you do enter an IVA procedure, you will not be forced to sell your home. However, if it is highly possible that you could be asked to remortgage six months prior to the end of your IVA to free up any capital to repay your debts. This will only ever happen, though, if it is affordable for you. If not, an additional 12 months may be added to your IVA.

 

In the case of bankruptcy, however, your home will likely be affected. If there is any equity tied up in the house, your creditors may ask you to sell to repay their debts. Either way, you should seek advice at the earliest possible opportunity.

 

What about my car?

Another major cause for concern is your vehicle. IVAs ae much longer procedures than bankruptcy and, as such, you are likely to be able to keep your car. The same, unfortunately, cannot be said for bankruptcy, as the sale of your car could offer a large contribution to your debts. However, if you do require your car/van for your trade and rely on the vehicle to make money and repay your debts, you will, likely, be able to keep it. If this is the case, you must speak to your bankruptcy trustee immediately.

 

Could my job be impacted?

When you do enter insolvency or bankruptcy, the details will be made public. While that doesn’t mean a front page story in your local newspaper, your details will be placed on the Insolvency Register. Similarly, a notice will be placed in The Gazette for your creditors to find. If you work in the finance industry or are a director of a company, both procedures can significantly affect your standing.

 

If you file for bankruptcy, you cannot act as a director of a limited company. However, there is no such prohibition with an IVA. But, there is likely to be restrictions on handling client’s funds and some companies may have stipulations in their contracts for hiring those who have entered or are in the procedures.

 

Why choose an IVA?

There are many reasons to choose an IVA – especially as the consequences appear less severe than bankruptcy. The IVA will be completed after no more than seven years and you can then begin building your credit. Whilst you are in the procedure, your creditors cannot make further demands for repayments or take legal action against you for the debts. Similarly, your assets are afforded more protection, with also far less consequences on your future career – particularly if you are hoping to act as a director for a company.

It’s also important to note the disadvantages, however. If you are looking for a short arrangement with your creditors, you must be aware than an IVA can last up to seven years. Your credit rating will also be affected due to the procedure, meaning you will have to work to build your credit report once complete.

 

Why choose bankruptcy?

Filing for bankruptcy does come with advantages, especially for those that are looking to repay their debts quickly. It is completed in around 12 months. However, if there is any evidence of fraud – such as hiding your assets or not detailing all finances – the trustee could apply for a bankruptcy restriction order, meaning you could be deemed bankrupt indefinitely.

 

Similarly, if you don’t have many belongings/assets or equity tied up in your house, bankruptcy could prove a suitable option. Creditors cannot also demand anymore payments while in the procedure.

 

Like an IVA, bankruptcy does have its disadvantages. The procedure will, almost certainly, affect your ability to work in the finance sector and will stop you from acting as director of a company.

 

Ultimately, there are many differences between the two and any advice you can obtain can only help to ensure you choose the correct option.

ArticlesTransactional and Investment Banking

The rise of ‘quantamental’ investing: where man and machine meet

Asset managers adopt new approach in era defined by automation, algorithms and big data

As soon as the financial crisis started to recede, Jordi Visser knew something had to change. Algorithms were starting to rule markets, and hedge funds like the one he managed were confronting a tougher era. 

So Mr Visser, chief investment officer of Weiss Multi-Strategy Advisers, started to rethink how the $1.7bn hedge fund could survive in a less hospitable environment. The solution was to evolve and meld man and machine. “We are competing against computers these days, so we had to become more efficient,” Mr Visser said. Mr Visser and Weiss are not the only ones making some adjustments— with varying degrees of gusto — to a new investing era defined more by automation, algorithms and big data.

Analysts have dubbed marrying quantitative and fundamental investing “quantamental”, an admittedly ugly phrase, but one that many think will define the future of the asset management industry. These initiatives are proliferating across the investing world, from small boutiques to sprawling asset management empires. In January, JPMorgan’s $1.7tn investment arm set up a new data lab in its “intelligent digital solutions” division to try to improve its portfolio managers, rather than replace them entirely with algorithms. “It augments existing expertise. We don’t just . . . try to come up with strategies out of thin air,” said Ravit Mandell, JPMorgan Asset Management’s chief data scientist. “There’s stuff that happens in the human brain that is so hard to replicate.”

The 18-strong unit focuses on everything from automating and improving humdrum tasks such as pitch books and digital tools for customers, to more high-end demands such as product creation and improving JPMorgan’s investing prowess. The data unit has already used a form of artificial intelligence known as a neural network to analyse years of corporate earnings call transcripts to identify which words are particularly sensitive for markets, or might augur trouble.

That frequent uses of “great” and “congratulations” are generally good for a stock price, and talk of debt covenants and inventory overhangs are bad, might be obvious to any human fund manager, but they can only listen to or read a limited number of transcripts. A machine can scour thousands.
JPMorgan Asset Management’s data scientists are creating an alert system that will ping its portfolio managers whenever transcripts are particularly positive or negative, and voice analytics that mean they can even detect worrying signals in someone’s intonation.

Some investment groups are starting to use technology to spot well-known behavioural biases. For example, Essentia Analytics crunches individual trading data and looks for common foibles, such as fund managers’ tendency to over-trade when on a losing streak, or hang on to poor investments for too long to avoid crystallising losses. When that happens, fund managers get sent an automated but personalised email signed “your future self” reminding them to be aware of these pitfalls.

“A computer can remind you to follow your own process,” said Clare Flynn Levy, Essentia’s founder. “It’s like a little light on your car dashboard flickering to remind you you’re running out of oil.” Weiss’s chief data scientist Charles Crow has built something similar for the hedge fund: a digital “baseball card” system that analyses and ranks its portfolio managers according to 17 parameters, such as stale positions or movements in correlations, and alerts them to any issues.
In parallel, Weiss’s top managers have a dashboard to allocate money to various teams, showing which ones are good at timing, but poorer at portfolio construction, or are expert stockpickers but have sectoral biases. This helps Mr Visser monitor for hints of crowded trades. There are plenty of “quantamental” sceptics. Many pure quants are doubtful that traditional asset managers can master anything but the rudimentary, commoditised parts of their craft. Meanwhile, many traditional investors argue that it is an overhyped fad that is feeding shorttermism.

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Even fans admit that the cultural shift needed to fully embrace these new techniques by largely middle-aged investors is so significant that it could take years before the full potential of “quantamental” investing is realised.

“Behavioural change is the hardest part,” said Ms Flynn Levy, herself a former money manager. “I think an entire generation of fund managers have to age out of the industry before we really see big changes.”

Nonetheless, few money management executives doubt that technology will play an everincreasing role, and many are hopeful about the potential to invigorate the industry’s often patchy investment results.

For example, it appears to have helped Weiss last month, when many hedge funds were clobbered after having been sucked into technology stocks. Mr Visser declined to comment on performance, but an investor document seen by the Financial Times indicates that Weiss’s main fund sidestepped most of October’s torrid markets, and is up 6.3 per cent so far this year.

Mr Visser admitted that not all the hedge fund’s portfolio managers were thrilled at the new measurements, tools and expectations, but argued that the quantitative tools were fair, objective and necessary. “They either want to get better and embrace it, or they fight it,” he said. “But it’s a case of adapt or die.”

Copyright The Financial Times Limited 2018. All rights reserved 

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FAIR CREDIT PROVIDER FAIR FOR YOU REACHES £10 MILLION LENDING HIGH

Flexible credit provider Fair For You has provided a total of £10 million loans since it was established in 2015. Approximately £650,000 in loans has been issued in October 2018 alone, the highest amount ever issued in a single month. 32,000 loans have been granted by the company overall.

 

Fair For You was founded by Angela Clements to combat high-cost weekly payment stores. Through providing fair, flexible and affordable credit, the company ensures vulnerable, low-income families never have to go without essential household items.

 

The not-for-profit company has had an immeasurable social impact. According to an independent calculation by the Centre For Responsible Credit, Fair For You’s work has led to a £16 million poverty premium saving.

 

Fair For You’s work has garnered the attention of celebrities and business professionals alike, who are keen to make a stand against universal credit. Actor and founder of End High Cost and Credit Alliance, Michael Sheen, and MoneyMagpie Director, Jasmine Birtles, are just two of the company’s supporters.

 

On hearing about Fair For You’s financial success, Michael said:

 

I’ve just heard the excellent news about Fair For You providing a total of £10 million in loans since the company was founded. That’s £10 million of fairly and responsibly distributed finance to those who otherwise might have been trapped by a high cost credit provider to buy essential items for their homes. I’m a huge supporter of Fair For You, their values and the fantastic work the team does to combat unfair high cost lending and protect the financially vulnerable. The social impact of Fair For You is immeasurable, and I look forward to seeing the company grow and their work continue long into the future.’

On average, customers save £527 per item when choosing Fair For You over rent-to-own providers. Not only does Fair For You save people money, but it reduces the crippling stress and anxiety felt by those facing financial strain. Jasmine Birtles has witnessed first-hand the great work Fair For You does:

 

I’ve met many Fair For You customers who need an alternative to high-cost credit, particularly in emergencies; from the washing machine breaking to their child sleeping on a mouldy bed. Fair For You helps thousands of families every month and more people should know about their service, and avoid the debt trap that high-cost credit providers put them into.’

 

Speaking of Fair For You’s success, founder Angela Clements said:

 

This is the first time in a generation that a lower income consumer-led, unique credit solution has been created. Off the back of our Firm of the Year win at the Consumer Credit Awards, we’ve secured a partnership with Dunelm, who joins the likes of Hotpoint in backing our organisation. This is an exciting milestone for us, and I anticipate more growth as we continue our goal of creating a mainstream alternative to high cost credit in the UK.

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BORROWING £50 MORE FOR A CAR LOAN COULD SAVE YOU UP TO £1600 IN INTEREST

Borrowing more for a car loan could save you money, according to research by What Car? 

 

 

Borrowing just £50 more for a new car loan can make it cheaper than taking out a smaller loan according to new research by What Car?, the UK’s leading consumer advice champion.

Analysis of the UK’s leading high street lenders suggests that borrowing the extra amount could save motorists up to £1600 over the course of the repayment period.*

Loans of £5000 typically have lower interest rates than smaller loans. For example, the repayment total of a £5000 loan from TSB over four years comes in around £1300 cheaper than the repayment of a £4950 loan over the same period.

Similarly, at Lloyds the repayment on a £7500 loan over four years is £1601 less than the repayment for borrowing £7450.

What Car? editor Steve Huntingford said: “We would always recommend borrowing as little as possible, but where the loan amount is close to the threshold for a lower interest rate, borrowing as little as £50 extra could save you 10 times that amount, so borrowers should do their homework.”

This trend was most commonly seen when analysing borrowing of amounts between £4500 and £8000.

Research shows that UK motorists are increasingly using finance options to aid with the purchase of cars. Within the first six months of 2018 there was a rise of 8% in car finance lending, with it topping £10 billion.**

However, while taking out a slightly bigger loan can save you money, there is a cut-off point, with loans of more than £8000 costing the borrower more the more they borrow.Savvy shoppers are able to capitalise on these trends by not only borrowing smartly, but by using the What Car? Target Price on What Car? New Car Buying to ensure they get the best deal. 

Car finance top tips: 

Shop around – compare the types of finance available and choose the best option available to you

Don’t stretch yourself – only borrow within your means, making sure you can afford the repayments

Additional charges – be aware of additional charges and always read the small print of your loan to be sure you don’t end up with any nasty surprises

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Vodafone signals reassuring performance as it maintains fundamental dividend

  • Shares trading up 7% in early trading despite first half loss of €7.8bn as investors share relief at dividend upkeep

  • Still too early to evaluate new CEO’s performance but signs are encouraging as digital transformation accelerates and demand is high

  • We currently recommend Vodafone as a ‘buy’ for medium risk investors

As Vodafone updates the market, Helal Miah, investment research analyst at The Share Centre, explains what the news means for investors:

“After a terrible share price performance since the start of the year, Vodafone provided a more reassuring set of half year results today. As expected, it reported lower group revenues and a reported loss of €7.8bn (which was significantly lower compared to last year) as a result of asset impairments and the loss on disposal of various businesses, mainly Vodafone India, while there were also foreign exchange headwinds. There was the issue of higher levels of competition in Italy and Spain during the period however, investors should appreciate that the organic and adjusted figures were quite encouraging. Organic service revenues headed higher by 0.8%, while there was good momentum in fixed broadband.  Demand from the emerging markets and Internet of Things helped to keep data demand heading higher. Overall, these numbers were better than what the market had anticipated and investors will be somewhat relieved to see that the share price this morning is trading higher by roughly 7%.

 

“Nonetheless, the rally in the shares may be better explained by the fact that the dividend has been maintained, which many investors felt could have been chopped given the reported losses and the tough trading conditions the group has faced in various regions this year. The interim dividend was upheld at 4.84 eurocents while management intends to pay 15.07 cents for the full year.  Investors will also have been further reassured as the management narrowed their adjusted organic EBITDA growth to +3%. However, investors should acknowledge that the dividend for the time being is unlikely to grow further as the management have stated that it will only be raised when the net debt to EBITDA reaches 2.5-3x, currently it stands at roughly 4.5x.

 

“We are still in the early days of Nick Read’s tenure as CEO, so it will be hard to judge his performance just yet. He has though, made some encouraging signs as he stated his focus will be on greater consistency of commercial executions, accelerating digital transformation, radically simplifying the operating model to generate better returns from the group’s assets. Together he expects this to drive revenue growth and lower operating costs by at least €1.2bn by 2021.

 

“For investors in Vodafone, this morning’s results will have provided a little relief to the downward pressure on the shares we have seen this year. It will also have eased worries of the dividend which is very attractive, currently in excess of 8%.  With the shares this low, we take the view that the shares are attractive priced for some investors taking a contrarian approach and seeking income while willing to accept a low to medium level of risk.”

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Mobeus invests £9M in fast-growth customer experience specialists, Ventrica

Ventrica, a European, award-winning, outsourced contact centre, has attracted a £9 million investment from Mobeus Equity Partners. Ventrica provides intelligent, multi-lingual and omni-channel outsourced customer service to a range of global ‘blue-chip’ brands.

“Ventrica is right in the sweet spot for the growing outsourcing contact centre market”

Southend-based Ventrica was founded in 2010 by Dino Forte and has undergone rapid growth, doubling in size over the last two years. Ventrica is an innovation leader in the changing sales and customer service sector. As e-commerce continues to grow, especially in the retail space, and customers expand their communication channels from the phone to email, social media and webchat, companies are increasingly looking to specialists to provide around the clock customer-facing support. Ventrica works closely with its clients, leveraging its people, technology (including support for Artificial Intelligence and Automation) training and resourcing expertise to provide a high quality service, across multiple channels, that supports their brand and their values. 

Ventrica is already one of Essex’s top employers and now plans European expansion

Ventrica is a key employer in Southend and in 2017 the company launched a second site in the town. Employing over 450 staff, and growing to 600 this year, it is one of the town’s major private employers. With support from Mobeus, the company plans further investment to expand its footprint in the UK and Europe to support its growing multi-lingual client base that serve customers across global markets. However the strategy is to remain medium-sized.

Danielle Garland, Mobeus Investment Manager, said, “Ventrica is right in the sweet spot for the growing outsourcing contact centre market – it is large enough to deliver multilingual and leading-edge technology solutions to its blue-chip clients but small enough to be dynamic and innovative and to provide the personalised service its clients require. As more clients onshore back to the UK, Ventrica is very well placed to continue to deliver very strong growth.”

Dino Forte, Ventrica CEO, added, “Mobeus stood out as the right partner because of the team’s immediate enthusiasm for, and deep understanding of, our offering at Ventrica. We have a significant market opportunity and are winning new customer contracts at an increasing rate and of an increasing scale. With Mobeus as a partner, we are well positioned to strengthen our team to support our significant growth whilst also allowing us to better focus on our existing clients which will be our key priority moving forward. 

Mobeus Partner Ashley Broomberg worked with Danielle Garland who sourced and led the transaction on behalf of Mobeus. Guy Blackburn, Mobeus Portfolio Director, has joined the board to support Ventrica in achieving its full potential. Dino Forte was advised by Sarah Moores and Rob Dukelow-Smith (Forward Corporate Finance). 

ArticlesCash ManagementFX and PaymentLegalStock Markets

Keeping your Payment options open, by Anderson Zaks

EPOS, MobilePOS, Pin on Glass, Pin on Mobile – there’s a lot to choose from for today’s merchant. Adina Ahmed, Chief Technology Officer at Anderson Zaks explains some of the latest options.

“In many emerging economies, people are by-passing traditional bank and card accounts altogether and adopting mobile payments”

Mobile phones have revolutionalised the way we live today. The way we communicate, watch TV and other online entertainment, and, the way we shop. The next obvious step, is the way that we manage our money and pay for goods and services. But these days, it isn’t just settling the bill in a restaurant, or buying something enticing in the sales, with contactless people are paying for their morning coffee, and with PSD2 and the associated deregulation, they will soon be able to make direct payments to each other. In many emerging economies, people are by-passing traditional bank and card accounts altogether and adopting mobile payments in much the same way that they have missed out broadband landlines – it’s a whole layer of infrastructure that they simply don’t need. 

The payment market in China is a prime example where most people don’t have a credit or debit card, or plastic of any kind. They have leapfrogged straight to mobile apps and user friendly ecosystems that seamlessly blend social media, ecommerce, payment and other finance functions. Consumers in China now rarely carry a wallet or cash, and even buskers display a QR code so that people can leave tips. 

Consumers in the UK, particularly younger people that are now coming into the workplace (millennials) expect to pay for everything contactless, many don’t carry cash. This presents a problem for the smaller retailer or merchant. How do they take payments without a full blown EPOS system? There are a whole range of options now opening up to merchants in the UK, and as evidenced in China, they don’t need a heavy IT implementation with all its associated costs, nor are they tied into long contracts with banks or card providers. 

PIN on Glass (POG) solutions are already available in the UK. As the name suggests, PIN on Glass has evolved from the traditional PIN pad so that merchants can now use a touchscreen device to capture the PIN. There are a range of versatile devices, referred to as SmartPOS, that have been designed for this very purpose. Typically run on Android, they have additional security features baked in, a scanner for bar codes and QR codes, and can print receipts. The beauty of these devices is that they can run with a user-friendly app, enabling smaller merchants to operate using the device as a standalone solution, without the need to have a full blown EPOS solution.

These purpose built POG terminals connect directly to a bank, to accept payment. They are sleek and modern, and the apps that run on them are intuitive and easy to use for both staff and the consumer. The devices run with all current card technologies including swipe and contactless, providing an all in one solution so that the merchant doesn’t need a computer in the shop or at whatever location they need to take payments. 

For independent software vendors (ISV), POG devices enable them to migrate their existing POS solutions to a smaller, portable device, opening up the market to much smaller merchants than they might have otherwise targeted. 

At Anderson Zaks we are already working with several ISVs to incorporate our payment platform into their PIN on Glass solution. 

High Net-worth IndividualsWealth Management

Under the radar cyber attacks costing financial services companies $924,390 and getting worse

EfficientIP’s DNS Threat Report reveals alarming 57% attack cost rise in last 12 months

Global DNS Threat Report, shared by EfficientIP, leading specialists in network protection, revealed the financial services industry is the worst affected sector by DNS attacks, the type cyber attackers increasingly use to stealthily break into bank systems. 

Last year, a single financial sector attack cost each organization $588,200. This year the research shows organizations spent $924,390, to restore services after each DNS attack, the most out of any sector and an annual increase of 57%.

The report also highlights financial organizations suffered an average of seven DNS attacks last year, with 19% attacked ten times or more in the last twelve months. 

Rising costs are not the only consequences of DNS attacks. The most common impacts of DNS attacks are cloud service downtime, experienced by 43% of financial organizations, a compromised website (36%), and in-house application downtime (32%). 

DNS attacks also cost financial institutions time. Second to the public sector, financial services take the longest to mitigate an attack, spending an average of seven hours. In the worst cases, some 5% of financial sector respondents spent 41 days just resolving impacts of their DNS attacks in 2017.

While 94% of financial organizations understand the criticality of having a secure DNS network for their business, overwhelming evidence from the survey shows they need to take more action. Failure to apply security patches in a timely manner is a major issue for organizations. EfficientIP’s 2018 Global DNS Threat Report reveals 72% of finance companies took three days or more to install a security patch on their systems, leaving them open to attacks. 

David Williamson, CEO, EfficientIP, comments on the reasons behind the attacks. “The DNS threat landscape is continually evolving, impacting the financial sector in particular. This is because many financial organizations rely on security solutions which fail to combat specific DNS threats. Financial services increasingly operate online and rely on internet availability and the capacity to securely communicate information in real time. Therefore, network service continuity and security is a business imperative and a necessity.”

Recommendations
Working with some of the world’s largest global banks and stock exchanges to protect their networks, EfficientIP recommends five best practices:

Enhance threat intelligence on domain reputation with data feeds which provide menace insight from global traffic analysis. This will protect users from internal/external attacks by blocking malware activity and mitigating data exfiltration attempts.

Augment your threat visibility using real-time, context-aware DNS transaction analytics for behavioral threat detection. Businesses can detect all threat types, and prevent data theft to help meet regulatory compliance such as GDPR and US CLOUD Act.

Apply adaptive countermeasures relevant to threats. The result is ensured business continuity, even when the attack source is unidentifiable, and practically eliminates risks of blocking legitimate users.

Harden security for cloud/next-gen datacenters with a purpose-built DNS security solution, overcoming limitations of solutions from cloud providers. This ensures continued access to cloud services and apps, and protects against exfiltration of cloud-stored data.

Incorporate DNS into a global network security solution to recognize unusual or malicious activity and inform the broader security ecosystem. This allows holistic network security to address growing network risks and protect against the lateral movement of threats.