Major International Business Headlines Brief::: 29 March 2018

Thu Mar 29 10:53:33 CAT 2018

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Major International Business Headlines Brief::: 29 March 2018

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*  Mauritius unemployment falls to 6.7 pct in Q4

*  South African rand steadies ahead of slew of economic data

*  South Africa cuts main interest rate as inflation falls within range

*  Frozen $500 mln in Angolan fraud probe came from central bank account with Standard Chartered

*  Auditors PwC looking to complete Steinhoff inquiry by end of year

*  Shareholders in South Africa's DRDGOLD back Sibanye-Stillwater assets plan

*  Airbnb to give Chinese authorities guest information

*  Decision day for GKN as shareholders vote on its future

*  House price growth subdued in March, says Nationwide

*  Amazon sinks as US tech stocks continue to slide

*  MPs to probe Russian money laundering through UK property

*  Bargain Booze firm Conviviality close to administration

*  Google’s tax bill rises to £50m

*  UK car production falls as domestic demand slumps

*  Shire shares jump after Takeda confirms bid interest

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Mauritius unemployment falls to 6.7 pct in Q4

PORT LOUIS (Reuters) - The unemployment rate in Mauritius fell to 6.7 percent in the fourth quarter of 2017 from 7.0 percent in the previous quarter, Statistics Mauritius said on Thursday.

The Indian Ocean island nation’s annual gross domestic product stands at $13 billion, and it has been trying to diversify an economy traditionally focused on sugar, textiles and tourism towards luxury real estate, offshore banking and medical tourism.

The island’s workforce was estimated at 548,000, out of a population of 1.3 million, in the fourth quarter compared with 542,400 in the preceding quarter.

South African rand steadies ahead of slew of economic data

JOHANNESBURG (Reuters) - The South African rand steadied against the dollar early on Thursday, after suffering losses the previous day after the central bank cut its main lending rate and said its assessment showed the currency was somewhat overvalued.

At 0630 GMT, the rand traded at 11.7600 per dollar, not far off its overnight close of 11.7700.

The South African Reserve Bank on Wednesday cut the repo rate by 25 basis points to 6.5 percent, a move that dented the appeal of local assets versus developed-market peers.

On Thursday, traders awaited a raft of economic data due, including February trade balance figures and producer price inflation numbers, as well as monthly budget balance data.

In fixed income, the yield for the benchmark government bond was up 3 basis points at 7.94 percent, reflecting weaker bond prices.

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South Africa cuts main interest rate as inflation falls within range

PRETORIA (Reuters) - South Africa’s central bank cut its main interest rate to 6.5 percent on Wednesday, in another boost for the economy after ratings agency Moody’s left intact its last investment-grade credit rating.

Traders and economists had expected the 25 basis-point cut in the repo rate after a slowdown in consumer price inflation to 4.0 percent in February, which put price growth well within the central bank’s 3-6 percent target range.

It was the first easing step since July and comes as South Africa rides a wave of investor optimism in the wake of President Cyril Ramaphosa replacing scandal-plagued Jacob Zuma as head of state in February.

The rand fell, however, as the rate cut dents somewhat the appeal of local assets versus developed-market peers. Banking stocks also fell.

South African Reserve Bank Governor Lesetja Kganyago told a news conference that inflation risks had subsided somewhat since January and that the bank had raised its economic growth forecast for this year to 1.7 percent from 1.4 percent.

But he said that the bank had not started “a journey of cutting” and that the future path of the repo rate would depend on data.

Four members of the Monetary Policy Committee voted to cut the rate while three wanted to keep it on hold, Kganyago said. There was no discussion of a more aggressive 50 basis-point rate cut.

Despite the central bank’s broadly upbeat tone, Kganyago said that the growth outlook remained relatively constrained and that the policy-setting committee would prefer to see inflation expectations anchored closer to the midpoint of its target range.

Analysts said they were not expecting to see a flurry of further rate cuts.

Razia Khan, an Africa-focused economist at Standard Chartered, said: “We think that today’s 25 basis-point cut was probably it in terms of South Africa’s easing cycle”.

Moody’s said on Friday that it expected to see a strengthening of South Africa’s institutions under Ramaphosa which could translate into greater economic and fiscal strength.

S&P Global, another of the “big three” ratings agencies, said it wanted to see stronger per capita growth before it would consider raising its credit rating.

Frozen $500 mln in Angolan fraud probe came from central bank account with Standard Chartered

LUANDA/LONDON (Reuters) - The $500 million at the centre of an alleged fraud involving the son of Angola’s former president was transferred out of a Standard Chartered account held by Angola’s central bank, the British bank told Reuters on Wednesday.

The Angolan prosecutor general’s office said on Monday it had charged Jose Filomeno dos Santos, the former president’s son, and Valter Filipe da Silva, the former governor of the central bank known as Banco Nacional de Angola, with fraud over the case.

Britain’s National Crime Agency said last week that $500 million had been frozen in the UK as part of an investigation into a potential fraud against Angola’s central bank and could be returned to the southern African country.

“We are aware that our client, Banco Nacional de Angola (BNA), was the victim of an attempted fraud in Angola which involved the transfer of funds from their Standard Chartered Bank account,” Standard Chartered said in an emailed response to questions.

The bank did not respond to a question on how the transaction appeared to bypass security mechanisms.

The Angolan central bank, which has so far made no public statement about the case, did not immediately respond to a request for comment.

Dos Santos is the highest profile figure charged since President Joao Lourenco succeeded longtime leader Jose Eduardo dos Santos last September pledging to tackle an endemic culture of corruption in the oil-producing country.

Reuters was unable to immediately contact Jose Filomeno dos Santos. He said in a statement circulated in Angolan media on Tuesday that he was cooperating with the investigation and had handed his passports in to the prosecutor general’s office.

Reuters has also been unable to reach Da Silva for comment.

Standard Chartered said it is closely cooperating with Angola’s central bank and British law enforcement.

A source familiar with the matter told Reuters on Wednesday that HSBC had frozen a bank account in connection with the alleged fraud.

The Financial Times, which reported the HSBC bank freeze earlier, said documents purporting to be from Swiss bank Credit Suisse were also used in the fraud.

The documents were fake and Credit Suisse was not involved in the transaction, a source familiar with the matter told Reuters.

Britain’s National Crime Agency said the funds were frozen after the transaction raised suspicions, without naming the banks involved.

Standard Chartered, which has operations across Asia and Africa, ended its dollar-clearing operations with commercial banks in Angola in Dec. 2015 because it deemed it too risky.

Singapore said last week its central bank had imposed penalties of nearly $5 million on Standard Chartered Bank and Standard Chartered Trust (Singapore) for breaching money laundering rules and terrorism financing safeguards.

HSBC’s move to freeze the accounts and work with authorities to return the funds will reinforce the lender’s assertion that its efforts to improve financial controls are bearing fruit.

The bank paid $1.9 billion in fines to U.S. authorities in 2012 and agreed to install an independent monitor to improve its anti-money laundering controls, after it was used to launder Mexican cartel drug money.

A five-year period in which the bank faced criminal prosecution if it breached U.S. compliance rules again ended in December.

Auditors PwC looking to complete Steinhoff inquiry by end of year

CAPE TOWN (Reuters) - Auditors PricewaterhouseCoopers (PwC) hope to finalise a forensic investigation into the affairs of crisis-hit retailer Steinhoff International by the end of the year, a senior investigator said on Wednesday.

Steinhoff, which has more than 40 retail brands that include France’s Conforama and British chain Poundland, is fighting for survival after admitting “accounting irregularities” in December, wiping about 85 percent off its market value and triggering a liquidity crisis.

Louis Strydom, who heads PwC’s African forensic services unit told a joint committee meeting of parliament looking into the Steinhoff scandal, that the auditing firm was dealing with a conglomerate consisting of more than 700 individual entities operating in 32 jurisdictions.

“This is complex, it’s not simple. We are working with a team of people across seven countries in the world,” he said.

“Our aim is, between now and the end of the year, to package this and put it in a box and conclude our investigation,” said Strydom.

Around 3.3 million records, such as emails, have so far been sent for analysis as the contents of laptops and mobile phones are copied by investigators, he said.

Regulators from South Africa, Germany and the Netherlands are combing for clues and possible culpability in the spectacular fall from grace of the sprawling retail empire.

On March 1 the Johannesburg Stock Exchange suspended trading in Steinhoff’s bonds and preference shares after the company failed to submit its annual reports on time.

Steinhoff’s executive officials did not attend parliament on Wednesday and were instead at a strategic meeting in Britain to discuss its restructuring and liquidity, a company lawyer said.

“It has to make crucial decisions in regard to this restructuring, it has to meet with its global and local lenders,” Robert Driman told parliament.

POLICE INQUIRY

The scandal led to the resignation of senior executives including CEO Markus Jooste on Dec. 5 and chairman Christo Wiese, who helped oversee the company’s rapid expansion over almost two decades.

The former CEO has not made a public statement since and could not immediately be reached for comment on Wednesday.

On Tuesday, Jooste sent a letter via his lawyers saying he would not attend the parliamentary inquiry over fears it could prejudice possible criminal investigations against him.

Steinhoff has reported Jooste to South Africa’s elite Hawks police unit over suspected corruption and Jooste would likely be subpoenaed to appear in parliament, the joint committee decided.

Wiese has not been accused of wrongdoing.

On Wednesday, the Hawks said they were investigating three separate strands regarding Steinhoff.

“The DPCI (Directorate for Priority Crime Investigation) is currently engaged in the investigation of three matters regarding the Steinhoff debacle,” major general Alfred Khana, the head of serious commercial crimes division, told the parliamentary inquiry.

He said the Hawks were investigating fraud and allegations of misrepresentation “which would have led to billions of rands” being lost.

Shareholders in South Africa's DRDGOLD back Sibanye-Stillwater assets plan

JOHANNESBURG (Reuters) - South Africa’s DRDGOLD said on Wednesday its shareholders voted in favour of all resolutions relating to the firm’s proposed acquisition of assets from Sibanye-Stillwater.

Sibanye-Stillwater in November announced plans to exchange some surface gold processing assets and tailings storage facilities (TSF) for a 38 percent stake in DRDGOLD worth 1.3 billion rand ($111.13 million).

“This transaction is a step-change for DRDGOLD. We have doubled our reserves and secured infrastructure to access these very quickly. After many years of consolidation this is a major advance towards growing our company,” DRDGOLD Chief Executive Niël Pretorius said in a statement.

($1 = 11.6984 rand)

Airbnb to give Chinese authorities guest information

Airbnb is to start sending the Chinese government information about customers who book accommodation in China.

Data shared with the authorities will include passport details and the dates of bookings.

Hosts listing accommodation in China will also have their details passed on once they start accepting bookings.

The online home-sharing giant said the move meant it was now complying with local laws and regulations, "like all businesses operating in China".

Airbnb China - the firm's local operation - has about 140,000 listings.

'Appropriate rules'

Hotels in China are already required to share their guest information with the government and local police.

And tourists and travellers staying in private homes are also technically supposed to register their accommodation details with the police within 24 hours of arriving at a destination.

Airbnb said it was simply falling in line with the traditional hospitality industry in China.

"The information we collect is similar to information hotels in China have collected for decades," an Airbnb spokesperson told the BBC.

"[It is] one step we are taking as we explore ways to help our hosts and guests follow the appropriate rules and regulations [in China]."

De-listing option

Unlike most countries, before customers can confirm an Airbnb China accommodation booking, they have to provide their passport information.

Airbnb said its local entity in China already stored this information and would share it with authorities on request.

But now it will be proactively sharing that data once bookings are made.

Information on new hosts on the site would only be sent to the government once that host started accepting bookings, Airbnb said.

The company sent an email to its China-based hosts on Thursday advising them that their information would be shared with the government from Friday.

It said hosts who were unhappy about the changes had the option of de-listing their accommodation offerings.

Airbnb has been focused on growing its Asia operations, especially in China, which is one of the fastest growing markets for the firm.

It launched Airbnb China in 2016 to facilitate bookings on the Chinese mainland.

Airbnb said it made it clear then to users and hosts that any information collected in China would be kept in the country and shared.

"If you reside outside of China and do not have a listing in China, nothing will change for you," the firm said in a 2016 blog posting.

"If you reside outside China and have existing listings in China, your information related to such listings will only be transferred to, stored, used or processed by Airbnb China upon your acceptance of our revised terms of service."

Airbnb said at the time the change was in line with the way China's traditional hospitality industry handled stays in hotels.

Airbnb China faces tough competition from the country's biggest player in the market - Tujia.com - an online home sharing site that says it has more than 400,000 listings.

In an effort to attract more users in China, in March last year, Airbnb unveiled its new Chinese name - Aibiying (爱彼迎) - meaning welcome each other with love - which is easier to pronounce for Mandarin speakers.

On Thursday, the firm announced the launch in Shanghai of Airbnb Plus - a system that offers guests accommodation options that have been inspected and verified for cleanliness and comfort against a 100 point checklist.

It also unveiled its Airbnb Host Academy for China - a program to help hosts offer the best experience they can to guests, and to become so-called super hosts.

Airbnb has said it is aiming to have one billion annual guests worldwide by 2028.

The firm is one of Silicon Valley's most valuable companies and is already worth an estimated $30bn.--BBC

Decision day for GKN as shareholders vote on its future

By one o'clock this afternoon the fate of Britain's biggest engineering group, GKN will be decided.

Investors will have voted on whether it is to stay independent or come under the control of turnaround specialist Melrose Industries.

It is the biggest UK hostile takeover bid since Kraft took over Cadbury's in 2010.

Several investors have already said which way they will jump. But they appear evenly divided.

Why is GKN important?

GKN is about as good an advertisement for British engineering as you can get.

Its roots lie in the 18th century industrial revolution and there's not much it hasn't had a hand in making, from cannonballs for Wellington's army to Spitfires, Minis and the Ariane 5 rocket.

Why the the GKN bid battle matters

Its Driveline business makes systems for roughly half the world's passenger cars and light trucks. VW, General Motors and Fiat Chrysler are all customers.

And it is big in defence, a major supplier to the US military and a key partner on defence programmes such as the F-35 joint strike aircraft in which the UK government has a stake.

However, it's not quite as British as it looks. Its head office is in Redditch in Worcestershire, but of GKN's 58,000 employees, only 6,000 work in Britain. The rest are spread around 30 countries.

Why does Melrose want to buy it?

At the end of last year GKN seemed to have got itself into a mess.

In October it warned profits would be lower than expected, and there was another warning in November. The company announced there was going to be "detailed review" of its US aerospace business and the division's head, Kevin Cummings, would resign.

In the end the results came in better than expected, but there was still an underlying problem - GKN simply wasn't as profitable as it ought to have been. Margins had fallen to 6.4% from 8.2%, and Melrose believed it could do better.

So in January Melrose launched its bid, initially at £7bn, increased this month to £8.1bn, with up to another billion offered to help out the pension fund.

It says it will keep the business together - for now. Its target, it says, is "to re-energise and re-purpose GKN's operations". It says it can beat GKN's own 10% target when it comes to profit margins.

What is Melrose Industries?

Melrose Industries is a British-based "turnaround specialist", listed on the London Stock Exchange with a market capitalisation over £4bn.

Its strategy is to find "good manufacturing businesses with strong fundamentals" and then "buy, sell, improve" them within three to five years.

Its string of turnaround successes has been hugely profitable. If you had invested £1 in Melrose in 2005 it would be worth £18 today.

Executive chairman of Melrose, Christopher Miller wrote to GKN shareholders explaining his strategy and insisting his firm was not an asset-stripper. "Unlike private equity companies, we do not rely on debt to boost returns and use only modest and prudent levels of leverage, well within UK industrial norms."

But Melrose's record has been tarnished of late by problems at the manufacturer Brush, which it bought eight years ago and where it has invested some £96m. Earlier this month it started negotiations with unions to lay off over a third of its British workforce in Leicestershire.

GKN has proposed far more drastic changes than anything Melrose is suggesting. It will, it says, split itself in two, sell non-core businesses, concentrate on its aerospace division and take steps to revive its margins.

Driveline would merge with the American car components group Dana to create a new company. GKN would get a 47% stake in it and $1.8bn (£1.28bn) in cash from Dana.

This new business would be listed on the New York and London stock exchanges. That, says GKN, would give it the wherewithal to hand shareholders £700m "as soon as practicably possible".

Over the next three years it hopes to return in total £2.5bn cash to investors.

In answer to Melrose's bid GKN said: "Melrose is not the right owner for GKN. It lacks experience in relevant high technology businesses and of investing for the long-term. GKN is a much larger and more complex business than anything acquired by Melrose in the past."

Melrose said GKN's reaction was "panicked and fraught with contradictions".

Who else is worried by the bid?

The Unite union is not happy. In a letter to GKN shareholders it said: "GKN is a major tier one supplier in the automotive and aerospace sectors.

"This means that the company needs to work closely both with manufacturers and with government and make significant investments in innovation for the future.

"These are cyclical industries, and Melrose's experience with Brush has not demonstrated that they have the ability to react to these cycles."

Some of GKNs customers are also worried. Airbus said it would be "practically impossible" to give new business to GKN if the takeover went ahead because it damaged long-term investment prospects in GKN, which could reduce research and development (R&D) budgets and limit innovation.

The government has also stepped in.

Greg Clark, the Business Secretary, wrote a letter to Melrose asking for "commitments, which would need to be binding in the event that your bid was successful". These include maintaining the workforce, headquarters and R&D in the UK, and not selling defence businesses off in the short term.

In reply Melrose said it agreed with the Business Secretary's requests and added: "Melrose has offered a legally binding commitment to the secretary of state to stand behind its intention to hold the GKN aerospace business as it delivers the improvement necessary to unlock its potential."--BBC

House price growth subdued in March, says Nationwide

Annual house price growth remained subdued in March, according to the Nationwide building society.

The increase of 2.1% was down slightly from February's rate of 2.2%.

Nationwide said "subdued consumer confidence" and wage growth failing to keep up with the rise in the cost of living had offset healthy employment gains and low borrowing costs.

But it expects house prices to hold steady in 2018 due to low unemployment and lack of properties on the market.

Robert Gardner, Nationwide's chief economist, said: "Looking ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates."

The building society is continuing to predict a 1% rise in house prices during 2018.

The regional breakdown in Nationwide's figures show a marked contrast between London and other areas of the UK.

The capital was the only part of the country to record a fall in house prices when comparing the first quarter of the year with the same period of 2017. Prices in London fell by 1%.

Jonathan Hopper, managing director of Garrington Property Finders, said: "London's property market shows no sign of giving up its wooden spoon, as the slowdown in the capital worsens.

"What began as a cooling of prices in the capital's prime and super-prime postcodes is turning into an ever more widespread frost."

However, London still remains the most expensive area, and a typical home in the south of England costs £331,047 - twice as much as the typical price of £163,138 in the north of England, the Nationwide said.

"These trends have so far made only small inroads in narrowing the North-South divide," Mr Gardner said.

Price rose the fastest in Northern Ireland, increasing by 7.9% in first three months of the year compared with the same period a year earlier. Prices in Northern Ireland still remain well below their 2007 peak.

House prices rose by 6.1% in Wales over the same period, the Nationwide said, and there was a 0.2% increase in Scotland.

Where can you afford to live? Try our housing calculator to see where you could rent or buy

This interactive content requires an internet connection and a modern browser.

View affordability data by UK region

View affordability data by local authority area--BBC

Amazon sinks as US tech stocks continue to slide

Technology shares, which helped power the rise of the US stock market last year, are pulling it lower now.

The tech-rich Nasdaq index dropped 0.85% or almost 60 points to 6,949.2 on Wednesday, driven by declines in firms such as Amazon, Tesla and Broadcom.

It continued a multi-week sell-off spurred by calls for tighter regulation of tech firms, competition concerns and questions over autonomous driving.

The S&P 500 lost 0.3% to 2,605 while the Dow was flat at 23,848.4.

Shares see-sawed throughout the day, extending a streak of sharp swings in prices that have rocked markets in recent weeks.

The information technology sector, which includes firms such as Apple, Microsoft and Intel, has fallen more than 6% this month, mostly in the last two weeks.

Analysts said the decline reflects a confluence of factors, including a desire to lock in gains notched last year when technology stocks surged.

A host of other factors - many of them political - is fuelling uncertainty, including trade tension between the US and China, where many technology companies have ties.

The Trump administration has also shown a willingness to intervene in the private sector, calling for anti-trust scrutiny of AT&T's purchase of Time Warner and moving to block Broadcom's takeover of Qualcomm in the name of national security.

Amazon sinks

A report that US President Donald Trump wants to use anti-trust law or another government power to limit Amazon's expansion added to the worries on Wednesday.

News portal Axios reported that President Donald Trump is "obsessed" with regulating the e-commerce giant.

Tuna Amobi, senior media analyst at CFRA Research, said he thinks some of the reaction to the Amazon report is "overdone" but reflects wider unease about the current market.

"You kind of put all these pieces together and it gives you a sense of a little bit more trepidation out there in the tech space in general," he said.

Amazon shares closed Wednesday down 4.4%, continuing Tuesday's slide. The firm's stock is still up more than 60% from a year ago.

Chipmaker Broadcom sank more than 3%, extending declines from recent weeks.

Tesla shares fell another 7%, a day after US safety regulators said they were investigating a recent crash. A decision by ratings agency Moody's to downgrade its credit rating also had an impact.

The electric car maker's shares have lost close to 27% in March.

Bottoming out?

Conversely Facebook shares ended Wednesday on a positive note, eking out a 0.5% gain.

The social media firm's stock has fallen by almost 20% in recent weeks, following allegations that leaked user data was exploited for political purposes.

In another reversal of fortunes, shares of traditional retailers - which were hammered by doubts last year - were among the winners. Macy's gained 4.3%, while Walmart rose 2%.--BBC

MPs to probe Russian money laundering through UK property

MPs are to probe the scale of money laundering in the UK, including property bought with suspected Russian "dirty money".

It follows claims that £4.4bn of UK property may have been bought with suspicious wealth, with more than a fifth, or £880m, purchased by Russians.

UK and Russia relations are at a low point after a nerve agent attack on British soil.

The Treasury Select Committee inquiry will also look at terrorist financing.

Treasury committee chair Nicky Morgan said: "It has been claimed that the UK, particularly the London property market, is becoming a destination of choice to launder the proceeds of overseas crime and corruption - so-called 'dirty money'.

"Given the threats that face the UK, the effectiveness of the regimes that we use to protect our financial system from misuse have never been more important."

A report by anti-corruption group Transparency International in March alleged that London "has routinely been the choice destination for Russians with suspicious wealth to move and they have had little trouble doing so, taking advantage of lax regulation and offshore secrecy".

In response to the MPs' probe, Duncan Hames, director of policy at Transparency International UK, said:

"Recent events seemed to have propelled some much needed new impetus into the UK's fight against dirty money and we very much welcome the Treasury Committee holding this inquiry."

Consumer fraud

The Treasury Committee will also look at sanctions, and how money laundering regulations have affected "individuals, firms and the wider economy".

In addition, the committee will try to gauge "the scale and nature of economic crime faced by consumers", how banks deal with economic crime, and consumer data security.

Relations between the UK and Russia have been at a low ebb since the attempted murder of former Russian agent Sergei Skripal and his daughter in Salisbury using the Novichok nerve agent.--BBC

Bargain Booze firm Conviviality close to administration

Conviviality, the owner of Bargain Booze, has announced plans to file for administration within two weeks.

The firm also owns Wine Rack and supplies more than 25,000 restaurants, hotels and bars.

It has issued profit warnings in recent weeks and revealed a £30m tax bill. The company sought £125m from investors but said it had been unable to raise those funds.

Conviviality employs about 2,500 staff and their jobs are now in jeopardy.

Earlier this month, the company slashed its forecast for underlying earnings this year to £55m from £70m.

Just days later, on 14 March, it revealed a £30m tax bill that had to be paid by the end of the month.

Those revelations prompted the resignation of chief executive Diana Hunter, who had been in charge since 2013, the year Conviviality listed on the London Stock Exchange.

Under her leadership the company expanded rapidly.

Its core business had been selling popular alcohol brands at rock bottom prices, but in 2015 Ms Hunter took the firm into the wholesaling of drinks with the purchase of Matthew Clark.

It also went upmarket with the purchase of wine specialist Bibendum.

However, the first sign of trouble came a little over a month later, on 8 March. The company warned that profits would be 20% below market expectations. It blamed an error in its forecasts and weaker profit margins.

Then, on 14 March, it revealed a £30m tax bill that had to be paid by the end of the month. It entered discussions with its lenders and looked at raising funds on the stock market.

By 28 March the game was up. An effort to raise £125m from shareholders failed. A day later Conviviality announced its intention to call in the administrators.

>From the first sign of trouble to failure took just 21 days.

High Street stress

Conviviality had been trying to raise £125m to keep the business going, but on Wednesday it announced that those attempts had failed.

In its latest update, the company said: "Unless circumstances change, and in accordance with statutory requirements, the Board intend to appoint administrators within 10 business days.

"The secured creditors can, however, appoint administrators without the requirement for notice."

Conviviality said it would continue to trade and was exploring "a number of inbound enquiries regarding a potential sale of all or parts of the business".

The collapse of Conviviality is the latest sign of stress in the retail and hospitality sectors.

Last week, fashion chain New Look said it would close 60 stores and cut 1,000 jobs, and restaurant chain Prezzo announced that a third of its restaurants would close.--BBC

Google’s tax bill rises to £50m

Google will pay nearly £50m in tax to the Treasury this year.

The technology giant's annual accounts show that the company will pay corporation taxes of £49.3m on UK profits of £202.4m.

Although the tax figure is the highest the company has paid - and up on the £36.4m it paid last year - it will be likely to reignite the debate about taxation and digital firms.

The total value of Google's sales in the UK is about £5.7bn a year.

It only makes a profit on a small proportion of that activity because most of the intellectual value of its business - the software engineering - is created in America, where Google pays the vast bulk of its taxes.

Google UK also operates as a marketing and sales arm of its European operation which is headquartered in Dublin, where corporation taxes are lower.

It pays a substantial "administration fee" to its European parent to operate across Britain.

"As an international business, we pay the majority of our taxes in our home country, as well as all the taxes due in the UK," a spokesman said.

"We are investing significantly in the UK, including starting work on new offices in King's Cross [London] for 7,000 staff."

The accounts say that at present, Google employs 3,280 people in the UK, an increase of 340.

The government and the European Union are both looking at increasing the amount of tax that companies such as Facebook and Google pay.

Pierre Moscovici, the European Commissioner for tax affairs, told me last week that digital giants did not pay enough tax.

A Commission proposal published at the same time said that a new tax on revenues should be levied, raising up to £4bn across the EU.

A substantial proportion of that could come to Britain, which has one of the highest usage rates of digital companies.

A tax on revenues is also supported by the Treasury.

Mel Stride, the Treasury minister, told the BBC that it was the government's "preferred option".

"Double taxation" problems

Google's 2017 accounts show that it had revenues of £1.27bn a year in the UK between June 2016 and 2017, up from £1.03bn between 2015 and 2016.

A tax on those revenues would raise substantially more in the UK than the present £50m tax bill on its UK profits.

Technology companies make clear that they abide by all the tax laws and that extra taxes on their activities could lead to "double taxation" problems - taxes being charged in different countries for the same activity.

The US government has also made it clear that it takes a dim view of efforts in Europe to make a special case of large technology firms, many of which are based in Silicon Valley.

The Organisation for Economic Co-operation and Development, the international body charged with proposing new global tax rules for companies, has also warned about the dangers of "tax wars" as different countries apply different tax rates to companies.

Mr Moscovici said that he wanted EU agreement on the new revenue tax "by the end of the year", which many people believe is over-ambitious, given that countries such as Ireland have opposed the move.

The UK's policy could be announced in the Budget in the autumn.--BBC

UK car production falls as domestic demand slumps

The number of cars made in Britain fell in February as domestic demand slumped by "double digit figures", industry figures suggest.

The Society of Motor Manufacturers and Traders (SMMT) said that 145,475 vehicles were built during the month - 4.4% fewer than a year previously.

It blamed a 17% fall in production for the UK market, where consumers are holding back on big ticket purchases.

Boss Mike Hawes said the figures were of "considerable concern".

More than eight out of ten cars made in Britain are exported, with demand in this market dipping only slightly in February, according to the figures.

What's gone wrong in the UK car market

New car sales 'to fall 5.5% in 2018'

However, it was domestic demand that suffered, falling from 34,143 to 28,336 units - the seventh consecutive month of decline at home.

According to analysts, new car sales have been falling in the UK as Brexit-related uncertainty weighs on consumer spending decisions.

They also blame the weaker pound since the Brexit vote, which has made imported vehicles more expensive, and confusion over the future of diesel.

Last week, ratings agency Moody's said it expected new car registrations to fall 5.5% in 2018, following a 5.7% drop in 2017.

The SMMT says the steep decline in production destined for the UK market is of considerable concern. But the bigger worry lies elsewhere.

British car manufacturing is heavily reliant on exports. Eight out of every ten cars built in the UK are now sold abroad, more than half of them in the European Union.

While the Brexit transition deal should allow business as usual to continue for the moment, car companies still don't know what the future holds long term.

With major investment decisions due this year - such as where Vauxhall's parent PSA Group will build the new Astra - there's a risk uncertainty could make it harder for UK factories to compete with plants in other countries.

The UK will have the "worst performing" car market of any big European economy, it added.

Commenting on the February production figures, Mike Hawes, said: "Another month of double digit decline in production for the UK is of considerable concern, but we hope that the degree of certainty provided by last week's Brexit transition agreement will help stimulate business and consumer confidence over the coming months.

"These figures also highlight the scale of our sector's dependency on exports, so a final deal that keeps our frictionless trade links with our biggest market, the EU, after December 2020 is now a pressing priority."--BBC

Shire shares jump after Takeda confirms bid interest

Takeda, Japan's largest drugs firm by sales, has said it is considering a possible offer for the UK's Shire.

The Takeda announcement sent shares in the UK pharmaceuticals company up as much as 25% in morning trading.

Big drugs names have long been rumoured to have been circling Shire after a takeover by US firm Abbvie fell through in 2014.

In mid-December last year, speculation on a possible takeover bid sent Shire shares to the top of the FTSE 100.

Takeda said its offer "is at a preliminary and exploratory stage and no approach has been made to the board of Shire".

However, Takeda said it was interested in the firm to strengthen its cancer, stomach and brain drugs offerings.

Takeda must announce that it intends to make a firm offer for Shire by the end of 25 April.

Bigger picture

CMC Markets analyst Michael Hewson said the interest in Shire "is part of a wider story" in the pharmaceutical industry.

He said plans by Amazon, investor Warren Buffett and JPMorgan Chase to create a company to provide employees with affordable healthcare had helped prompt further consolidation in the pharmaceutical sector.

Shire is incorporated in Jersey, and has its headquarters in Dublin. However, most of its 24,000 employees are located in the US.

It was started in 1986 by a small group of entrepreneurs who started selling calcium treatments for osteoporosis.

Two years ago Shire bought Baxalta, a specialist in treatments for rare diseases, for $32bn.

Japan's Takeda was founded in 1781 and employs 30,000 people. It operates in more than 70 countries.--BBC

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

Zimplow

final dividend 0.13c per share record

23/03/2018 

TSL

AGM

28 Simon Mazorodze Road, Southerton

27/03/2018 12pm

Willdale

AGM

19.5km peg, Lomagundi Road, Mount Hampden

29/03/2018 11am

Good Friday

30/03/2018 

Easter Monday

02/04/2018

Zimbabwe

Independence Day

Zimbabwe

18/04/2018

Workers’ Day

01/05/2018

Africa Day

25/05/2018

Zimbabwe

Heroes’ Day

Zimbabwe

13/08/2018

Zimbabwe

Defence Forces Day

Zimbabwe

14/08/2018

 <mailto:info at bulls.co.zw> 

DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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