Today's business and finance round up 9th February 2022
🔥BP posts highest profits in 8 years amid calls for windfall tax
9th February 2022
Bite-sized business news from the UK and beyond
Good morning Awards season has officially kicked off. Last night, in the first ever gender-neutral Brits, Adele was the standout winner walking away with three awards. While yesterday's Oscar announcement saw 'Fear of the Dog' lead the way with 12 nominations.
BP posts highest profits in 8 years amid calls for windfall tax
£1.5bn takeover delayed by…paper supply shortage
ENERGYBP posts highest profits in 8 years amid calls for windfall tax
What’s going on?Yesterday BP reported a profit of $12.8bn for 2021, from a loss of $5.7bn the year before on the back of rising oil and gas prices. The energy giant has played down calls for it to pay a one-off tax to help families struggling to pay their energy bills.
Why is this important?
In a month when a record energy price cap has been announced, reports of rocketing profits from an oil and gas company is bound to draw attention.The oil and gas industry has been a huge beneficiary of the soaring energy prices in the past year. Wholesale gas prices quadrupled in 2021 and after plummeting to $20 in the first lockdown, oil prices have rebounded to $90 a barrel.This enabled BP to record its best profit since 2014, meaning that shareholders will be in line for a $1.5bn payout. At a time when it’s estimated that 6m families will be pushed into fuel poverty – whereby they spend 10% of their income on energy bills – the Labour party says that a windfall tax on the energy sector on bumper profits is needed to support households.While it may seem like a no-brainer to redistribute cash from one area of the economy to another, BP and oil experts insists that it’s not that simple and won’t solve the underlying issue in the global energy markets. BP says that to reduce the world’s dependence on fossil fuels, major investment and not taxation, is needed in renewable industries.Oil and gas companies already pay a higher tax rate than other sectors and due to their global operations, they pay taxes in several countries not just the UK.
Oil companies have had a rollercoaster two years. At the height of the pandemic BP was forced to cut 10,000 employees as oil demand fell and it posted its largest loss in its history. Last week the chancellor dismissed calls for a windfall tax pointing to the higher tax paid by the oil sector and that profits are needed for investment in low-carbon energy generation.
INVESTMENTS£1.5bn takeover delayed by…paper supply shortage
It must be one of the strangest reasons for delaying a major takeover. Abrdn, one of the UK’s largest fund managers, has had to delay the vote for its £1.5bn acquisition of DIY investing platform Interactive Investor due to paper supply issues.Abrdn planned to print and deliver a 120-page memo explaining the deal to all 1.1m of its shareholders this week but due to the soaring global demand for paper it hasn’t able to get enough supplies to print sufficient copies. Deal backgroundLast year the FTSE 100 firm underwent a major rebrand when it ditched the vowels in its original name - that was widely mocked - in an attempt to modernise.The company wants to move away from mainly selling investment funds and towards the fast growing sector of wealth management for individuals also known as retail investors.The UK retail investor market has grown by a third in the past year fuelled by the extra disposable income created by the pandemic along with the near 0% interest rates. There are now 8.6m DIY investors.The acquisition of Interactive Investor would give Abrdn direct access to retail investors.Interactive has almost 500,000 clients who use the platform to pick stocks. If the deal is approved by shareholders then Abrdn could start selling its funds on the Interactive platform. Interactive generates revenue through a fixed fee of customer portfolios. The customer base is affluent with an average account size of more than £100,000.But surely there has to be another way?The deal was announced last November and Abrdn wanted to do the shareholder vote in mid-March before it released its annual results but this will now have to be postponed.In a world of email it seems crazy that a paper shortage could impede a major corporate deal. But UK law says companies must send printed copies to all shareholders before large deals.
Stat of the day
A record 1.3m people in the UK are living with long Covid - more than 2% of the population
Other stories to keep you in the loop
Retail sales surge despite inflation
Energy crisis: Around £200m in credit balances 'missing' after supplier failures
British chip maker Arm eyes US float after Nvidia deal falls apart
Pfizer accused of pandemic profiteering as profits double
Peloton boss to step down as firm axes 2,800 jobs
Ocado hit by labour shortages but insists it is holding down prices
Apple’s 'Tap to Pay' feature lets newer iPhones accept contactless payments
Primark and Greggs team up to launch clothing collection
Interesting links from around the web
Why is Jeff Bezos such a terrible dresser?
Meal deals: which UK shops are the best value for lunch?
Why you might be radically underpaid