FTSE 100 records best daily gain for five weeks as Royal Bank of Scotland recovers from recent falls
FTSE 100 records best daily gain for five weeks as Royal Bank of Scotland recovers from recent falls
Leading shares boosted by reasonable economic figures from UK, eurozone and US despite Chinese dip. Read more…
Banks move higher as FTSE gains ground ahead of US Federal Reserve meeting
Investors await news from Fed chairman Ben Bernanke on extent of its bond buying programme. Read more…
FTSE falls for third day to seven week low on takeover tales and Greek woes
Leading shares hit by corporate and eurozone worries, as well as continuing central bank concerns. Read more…
Survey shows all FTSE 100 companies’ final salary pension schemes could be shut within a decade
More than a quarter of FTSE 100 companies have shut their final salary pension schemes to all their workers, and the pace of closure could mean they are all closed within a decade, pensions consultants have warned.
A survey of the UK’s biggest companies by consultancy firm Towers Watson found 34% of them had no employees earning final salary pensions (including 27% that have closed schemes to both new and existing members). This compares with 4% in 2010.
Final salary, also known as defined benefit, schemes are under pressure as a combination of increased life expectancy and low gilt yields have made it increasingly expensive to provide the retirement incomes promised.
Many already have large deficits, and changes in the rules around national insurance contributions, set to come in when the flat-rate state pension is introduced in 2016, will add to the cost of running a scheme.
Recent weeks have seen a number of warnings over the future of the schemes, with the pensions minister Steve Webb saying the next year would be critical.
Will Aitken, senior consultant at Towers Watson, said: “Closing to existing members too is not yet the norm but we are quickly getting there. If the pace of hard closure seen in recent years continued, all FTSE 100 companies’ schemes would be completely closed within a decade.
“Bigger than expected deficits and the loss of national insurance rebates from 2016 may lead more employers to do this sooner rather than later.”
Since October, the largest firms in the country have been obliged to ensure everyone has access to a workplace pension and to enrol employees into a scheme automatically. Towers Watson said 72% of those that had done so had reported that more than 90% of employees had stayed in the scheme. Towers Watson asked FTSE 100 companies about the level of contributions they were making to pensions on behalf of their members. Where employees paid in the same amount for all members, contributions averaged 9.3% of pay – more than the 3% they will eventually be obliged to pay to workers who are automatically enrolled.
The FTSE 100 has come within striking distance of its all-time high as global stock markets continue to rise on a wave of investor optimism, buoyed by recent upbeat economic news out of the US and Asia and hopes that central banks will keep up their support for the recovery.
Index closes at 6803.87 – just 130 points below peak reached on 30 December 1999 at height of the dotcom boom
The London stock market is within sight of its all-time closing high after another surge in share prices on Tuesday.
After drifting for much of the day, the FTSE 100 index of Britain’s top companies made a late rally to close 48.24 points higher at 6803.87. This marked its best level for more than 13 years and left the index just 130 points below the peak reached on 30 December 1999 at the height of the dotcom boom. Since the beginning of the year the index has risen 906 points or more than 15%.
A revival in mining shares and positive reaction to updates from the likes of Marks & Spencer and Vodafone helped push the market higher on Tuesday.
But, as has been the case since the rally began last summer, the driving force was the expectation that central banks would continue to take action to boost the global economy through low interest rates, bond buying programmes and quantitative easing. Recent data has shown a pick-up in the economy, suggesting the measures are having the desired effect.
In the UK, better-than-expected inflation figures, which showed the consumer price index falling from 2.8% in March to 2.4% last month, left the way open for further easing from the Bank of England, particularly when new governor Mark Carney takes over in July.
Concerns that the US central bank might begin to ease off its bond buying programme had been growing ahead of testimony by US Federal Reserve chairman Ben Bernanke on Wednesday. The Fed has been helping to support global markets by buying $85bn of bonds every month, and meets next month to decide its next move.
But just before the UK market closed, Federal Reserve member James Bullard seemed to allay fears of an imminent end to quantitative easing in a speech delivered at Goethe University in Frankfurt. He said the Fed should keep buying bonds while adjusting the pace of purchases depending on economic conditions. He said: “Quantitative easing… involves clear action and has been effective.”
Despite the recent rally, the FTSE 100 is still lagging other global markets such as the US S&P 500 and Germany’s Dax which have already reached record levels.
But the FTSE All-Share index, a broader measure, is at an all-time high having closed 24.80 points higher at 3587.85, its 14th daily rise in a row. Economist Ian Williams of City broker Peel Hunt pointed out that this run had only been beaten once – over the 1986 and 1987 new year period – since the index began to be calculated in the late 1960s.
The buoyant market is good news for the chancellor, George Osborne, as he tries to persuade voters his emphasis on public spending cuts is working. On Wednesday he will face a new test when the International Monetary Fund delivers its verdict on his austerity programme after two weeks of examining the UK economy. Last month the IMF called on Osborne to moderate the pace of deficit reduction.
Many analysts believe the FTSE 100 could soon break through its previous high and breach the 7000 level shortly after. But others sounded a note of caution. Alex Young, senior sales trader at CMC Markets UK, said: “In a technical sense markets are beginning to look a little over extended, and the potential for profit taking to trigger a market correction has to be a consideration for even the most fervent bulls. That said, as the cliché goes, markets can remain over extended for a lot longer than retail traders can remain solvent. As ever, caution is advised when fighting the trend.”
Research has found that the UK’s biggest public companies have more than 8,000 subsidiaries or joint ventures in tax havens – but which businesses have the most?
Which major UK corporations keep subsidiaries in tax havens? The short answer, according to updated research by development charity ActionAid, appears to be almost all of them.
The research found 98 of the 100 companies in the FTSE 100 – the hundred biggest publicly listed UK corporations – had subsidiaries, associates, or joint ventures in countries defined by the charity as tax havens.
These included well-known offshore tax havens, such as the British Virgin Islands and Cayman Islands, as well as larger “onshore” countries which have been criticised for low taxes, lax regulatory regimes, or stringent corporate secrecy rules. The charity has provided a full rationale for its list of havens here.
The figures were collated through a months-long process began in September 2012 (and using the FTSE 100′s composition at that date), using official corporate documentation.
In their extensive annual reports, many companies list a small number of “principal” subsidiaries – but buried in further filings, or in documents submitted to US authorities, lie dozens or hundreds more, scattered across the world. However, even once the existence of the offshore subsidiaries is known, no further information can be obtained, due to strict secrecy rules in most offshore jurisdictions.
Of course, a company’s presence in a given jurisdiction doesn’t itself demonstrate tax avoidance in any country, and there is no suggestion any of the listed companies have any offshore structures not permitted under UK law – and many of the FTSE 100 companies are keen to note they are major UK taxpayers.
However, given the renewed focus on offshore secrecy, and pressure on tax havens for greater transparency and accountability, an insight into the extent of the jurisdictions’ usage is telling.
The top ten companies by offshore usage are listed below (note WPP’s list is based on a 2011 SEC filing, and as in more recent submissions the company has taken advantage of an exemption allowing it to list only a small number of “principal” subsidiaries)
The research also shows which sectors make the most use of tax havens. Four out of five overseas companies operated by real estate companies are located in tax havens, compared with about one in three travel and leisure businesses.
We’ve included a summary table showing the total number of subsidiaries each FTSE 100 company has in tax havens, and how many of those are in countries with ties to the UK (Crown dependencies like Jersey and Guernsey, or British overseas territories like the BVI) – and the full country-by-country data is in the linked spreadsheet at the foot of this post.
Do you spot anything of interest in this data – or have you got thoughts on visualising it? Let us know what you make in the comments, or via Twitter @GuardianData
Download the data
• Only two of FTSE 100 have no subsidiaries in havens
• Big four banks and Tesco among biggest users
• ActionAid findings described as shaming by Lib Dem peer
The UK’s 100 biggest public companies are running more than 8,000 subsidiaries or joint ventures in onshore and offshore tax havens, according to research published on Monday, raising fresh concerns about the full extent of corporate tax avoidance.
The figures, published by the charity ActionAid, show that only two of the companies listed on the UK’s FTSE 100 have no subsidiaries in tax havens – while companies such as Barclays and Tesco own hundreds.
Corporate use of offshore subsidiaries has been roundly criticised by tax campaigners as a tactic to legally reduce corporate tax bills, with Vodafone, Starbucks and Amazon attracting widespread protests and criticism from MPs.
David Cameron has pledged to put tackling the issue of tax avoidance and offshore secrecy at the heart of next month’s G8 summit, which Britain chairs this year.
Speaking after Saturday’s meeting of F7 finance ministers, the chancellor, George Osborne, said international action was needed, adding it was “incredibly important that companies and individuals pay the tax that is due”.
However, many of the offshore jurisdictions used by the FTSE 100 have close ties to the UK, illustrating the challenge facing Cameron and Osborne ahead of negotiations with other G8 leaders.
In total, FTSE 100 companies have 1,685 subsidiaries in UK Crown dependencies such as Jersey, or overseas territories such as the British Virgin Islands (BVI), Bermuda and Gibraltar.
The Treasury recently secured a deal to share more information on potential income-tax evaders operating out of British overseas territories. But campaigners warn that agreements so far do little to tackle offshore corporate secrecy and structures.
The research also compiled data covered by a wider definition of tax haven, including onshore jurisdictions such as the US state of Delaware – accused by the Cayman islands of playing “faster and looser” even than offshore jurisdictions – and the Republic of Ireland, which has come under sustained pressure from other EU states to reform its own low-tax, light-tough, regulatory environment.
By this measure, the UK’s biggest public companies keep a total of 8,311 subsidiaries in tax havens – more than one in three of all the FTSE100′s 22,042 foreign subsidiaries, associates and joint ventures.
The figures show that banks are the most prolific user of havens with the big four – Barclays, HSBC, the Royal Bank of Scotland, and Lloyds – among the top 10.
Barclays said in 2011 it was working to cut the number of its offshore subsidiaries in the Caymans, but the research shows it still had more than 120 subsidiaries in the Caribbean territory, along with dozens of others in other overseas jurisdictions with low tax rates or limited disclosure rules to other tax authorities.
Lord Oakeshott, the Liberal Democrat peer, who resigned as the party’s Treasury spokesman after criticising the government’s deal on banking regulation as “pitiful”, said the research showed new measures on tax havens were needed.
He said: “Tax transparency must start at home. ActionAid’s devastating research makes us ashamed to be British. Far too many of Britain’s top companies wash billions of profits through pipelines of British tax havens to vanish behind shiny brass plates in shady places.
“Cameron and Osborne can’t strut the world stage as fair tax crusaders until they end this tax abuse, starting with the banks we own, RBS and Lloyds.”
But use of offshore jurisdictions extends far beyond the banking world. Food manufacturers, retailers, and drinks firms were among the FTSE 100 companies using offshore jurisdictions.
The retailer with the most subsidiaries in countries dubbed tax havens was Tesco, which had 107, often tied to its financial services provisions. These included eight firms based in Jersey, nine in the BVI, and 14 in the Cayman Islands.
Particular concern is expressed by campaigners about the cost of offshore tax deals to the populations of developing countries.
For instance, Tullow Oil, which describes itself as “Africa’s leading independent oil company” draws 84% of its revenues from the continent, but only four of the 81 companies it lists as subsidiaries are registered in African countries. By contrast, more than half (47) are registered in tax havens including the BVI, St Lucia, the Channel Islands and Netherlands.
Three-quarters of these tax haven companies refer to developing countries, such as Liberia, Kenya, Malawi and Sierra Leone, in their names.
While the countries highlighted by the ActionAid study have been targeted because of their rules on secrecy or tax management, a company’s presence in such countries does not mean they are necessarily engaging in such practices.
There is no suggestion that any of the FTSE 100 firms have engaged in practices in contravention of tax laws.
Mike Lewis, ActionAid’s tax justice policy adviser, who did the research, called tax havens “one of the biggest hidden obstacles” in the fight against global poverty.
He added: “Poor countries lose three times more money to tax havens than they receive in aid each year. .
“Tax haven structures are almost universal amongst the UK’s biggest multinationals and becoming ever more common for investments in developing countries.
“When David Cameron chairs the G8 summit in Northern Ireland next month he must deliver on his promise to call time on tax havens for the benefit of all countries, rich and poor.”
The two FTSE 100 companies found to have no subsidiaries in tax havens were the mining group Fresnillo and the financial advice business Hargreaves Lansdown.
A spokesperson for Tullow Oil said the company did not avoid tax and did not use companies in tax havens to avoid tax, adding: “Our clear aim in tax planning is to ensure that the appropriate amount of tax is paid in the jurisdiction in which the activities are undertaken.
“As such, no country in which we operate is losing out because some of the companies that we own are located in tax havens.”
Seven of its subsidiaries were dormant with no profits and were scheduled for elimination while five were holding companies with minimal activity, he added.
A Barclays spokesperson said the company was among the UK’s top taxpayers and acted ethically.
She said: “This story is based on misconception and is misleading. Delaware is not a low-tax jurisdiction. Profits in the state are subject to US corporate tax at 35%, as well as Delaware state tax.
“Barclays has substantial businesses in many of the jurisdictions mentioned.
“In the Caymans virtually all of the profits generated in these companies are subject to corporate tax at the UK corporate tax rate. “The number of Barclays’ entities in low-tax jurisdictions reduced from 339 in 2009 to 252 by February 2013 – a 26% reduction. We plan to make further reductions in 2013.”
A Tesco spokesperson said: “We are one of the largest payers of tax in the UK. In the year ended February 2012 we contributed £1.5bn directly, including £519m in corporation tax. We do have a number of companies within low-tax jurisdictions, but these are all either holding companies, dormant, registered for UK tax, or subject to controlled foreign company regulations and agreed with HMRC.”
While measures have been taken already to crack down on the separate issue of tax avoidance by individuals, campaigners have repeatedly said that without steps to tackle corporate activities in havens action will be futile.
Central bank action, reasonable economic data and upbeat company results continued to support the market
Leading shares rose for the seventh day in a row on Friday, with the FTSE 100 index closing above 6600 for the first time since October 2007.
A combination of central bank action, reasonable economic data and upbeat company results continued to support the market as investors sought returns amid low interest rates.
In the wake of the rate cut by the European Central Bank earlier this month, a number of other countries followed suit last week in continuing efforts to boost the global economy, including Australia, Poland, Korea and Vietnam. The Bank of England however, as expected, refrained from further action after Thursday’s meeting.
Meanwhile signs of life in the eurozone, including positive German manufacturing figures, also helped sentiment.
So the FTSE 100 finished at 6624.98, up 0.5% on the day but off its best levels following a weak start on Wall Street. At the beginning of the shortened bank holiday week, the index stood at 6521. Since the turn of the year, it has climbed around 12% to its current five-and-a-half year high.
During the week both the Dow Jones Industrial Average and Germany’s Dax reached new peaks, while the Nikkei also hit its highest level since 2007.
Back in the UK, BT soared 12.3%, or 33.8p, to 309.5p on Friday after better than expected full year profits of £6.2bn, up 2%. TUI Travel also pleased investors, adding 6.3p to 346.9p as it forecast a profit rise of 10% for the year driven by strong trading in the UK and the Nordic region. It said 58% of its mainstream summer holiday programme was sold. The news came as it reported a first half operating loss of £289m, down from £317m as the winter season closed ahead of expectations.
Shire rose 85p, or 4.4%, to £20.19 following news late on Thursday that the drugmaker had won a patent trial against US group Actavis related to a generic version of its ulcerative colitis treatment.
Analyst Peter Verdult at Morgan Stanley said:”This news provides a much needed tonic, given the weak first quarter performance, and lack of significant pipeline data until 2014.Shire is committed to delivering revenue growth of more than 5% per annum, whilst moving to a flatter/more scalable operating structure involving five units (Rare Diseases, CNS, GI, Regenerative & Internal Medicine – ophthalmology) and a single R&D organisation. Efforts to bolster the mid/late stage pipeline are set to intensify.
“We see scope for Shire’s 15% discount [to the sector] to narrow sharply, given market confidence is likely to quickly rebound on the back of the near-term growth outlook improving.”
Brian White at Shore Capital said: “With sales of $400m, Lialda represented 8.5% of sales, and along with Pentasa, represents the cornerstone of the gastro-intestinal franchise. We had previously taken the view that, while there was a potential headline risk from a negative outcome, that the new FDA guidance requirements for generic mesalamine based products were so onerous that they would be difficult for the generic industry to overcome.
“Following the settlement with Actavis regarding Intuniv, success in this dispute with Actavis over Lialda does remove another drag on sentiment for Shire. Hopefully, we can now focus on the growth strategy that new chief executive Flemming Ornskov has recently articulated.”
Earlier in the week Shire was the subject of renewed bid talk. It has previously been linked with Bristol-Myers Squibb, Pfizer and AstraZeneca.
News that ArcelorMittal, the world’s largest steelmaker, had defied fears of a profit warning and kept its earnings forecast for this year helped lift Russian rival Evraz, controlled by Chelsea owner Roman Abramovich, 0.5p to 171.4p.
Controversial Kazakh miner Eurasian Natural Resources Corporation recovered a little ground after recent falls, and closed up 2.4p at 293.9p. Earlier in the week its two brokers resigned, while it also reported a disappointing production update, with iron ore extraction hit by a severe winter in Kazakhstan.
Among the mid-caps, Centamin slumped 7.7p, or 17%, to 37.9p, after the gold miner said a report on its Sukari mine in Egypt was not positive. A court questioned the miner’s right to operate Sukari in October, and now a report from the Egyptian State Commissioner’s office with non-binding recommendations has not helped its case. But Centamin said the recommendations do not address the merits of its appeal, which will be heard on 19 June, and it would continue to defend its rights.
Aim-listed Monitise added 4p, or 11.8%, to 38p after US hedge fund manager Leon Cooperman named the mobile payment group as one of his favourite stocks at SkyBridge Alternatives Conference in Las Vegas on Thursday.
Finally Quindell Portfolio, an acquisitive outsourcing and claims management business whose customers include the RAC, fell another 1.3p, or 18.3%, to 6p. After investors learned of a £13m derivatives contract revealed in its results this week, related to its purchase of Accident Advice Helpline, the shares slumped from 12p. The deal was financed by placing £17m worth of shares, with the derivatives contract designed to offer protection against a fall in the share price. As the market closed on Thursday, Quindell tried to stem the tide of selling by issuing a statement saying it knew of no valid reason for the share price drop. It said it had a strong balance sheet, the equity swap was not material in relation to the size of the company and was not likely to be exercised until the share price was substantially higher. So far these comments seem to have had little effect.
Campaigners hope appointments signal reversal in slowing rate of women hired to Britain’s top corporate roles
Three new female non-executive directors were appointed to FTSE 100 boards on Wednesday, in moves campaigners hope signal a reversal in the slowing rate of women hired to Britain’s top corporate roles.
A trio of announcements unveiled Susan Rice, managing director of Lloyds Banking Group in Scotland, as a new director of the grocer J Sainsbury; Jo Harlow, vice president of mobile group Nokia, as a non-executive of software firm Sage; and Jill McDonald, who runs the northern Europe division of burger chain McDonald’s, as the latest director of InterContinental Hotels Group.
Last month the business secretary, Vince Cable, conceded that the momentum of women winning top posts “appears to be slowing”, despite a surge in the wake of the 2011 report by former banker Lord Davies that recommended women should fill 25% of FTSE 100 board roles by 2015.
While the figure has since increased from 12.5% to 17.4%, in the past two months just 12% of FTSE boardroom vacancies have gone to women, compared with about 50% at the same time last year.
Jane Scott, a director of the Professional Boards Forum which compiles the statistics, said: “[The appointments are] really good news. It has been a terribly slow year.”