Kreston International Annual Review
October 30, 2017
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October 30, 2017
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October 27, 2017
“May you live in interesting times” goes the Chinese expression. In fact, it’s actually more of a subtle barb to denote disorder and uncertainty. And right now, it would appear that we live in just such a period of history. In the US, we have an “unorthodox” presidency that has a more isolationist outlook, Brexit negotiations seem to be at an impasse, and the push for Catalonian independence threatens a political crisis in Spain. And that’s not to mention the continuing conflict in the Middle East and tension in North Korea. All of these issues have repercussions for the global economy. But what might they mean for SMEs? How can they thrive in the midst of all this uncertainty?
Firstly, we need to outline some of the core difficulties facing businesses. In the interest of simplicity, I am drawing on facts and figures from the UK economy but many of the general difficulties – and certainly the sense of uncertainty – apply throughout the world. There’s the problem of wage stagnation, with a report in The Guardian citing the think tank The Resolution Foundation, which stated that “the 2010s are on course to be the worst decade for wage growth since the one that included the Battle of Trafalgar in 1805.” Also, much has been made of a skills deficit. According to Lloyds Bank’s Business in Britain report, more than half of British companies are struggling to recruit the staff they need. On top of this, we also have higher global rates of inflation and low interest rates. City A.M. published an article entitled Low interest rates and high public spending drag down productivity. It includes the damning statistic that “output per hour in the UK has averaged just 0.2 per cent per annum growth. This is one tenth of its long-term average.”
But is it all really doom and gloom? The Economist had a different perspective on rising inflation. It commented that “The story for 2017 is not of inflation running too hot but rather of a welcome easing of fears of deflation.” It also noted other positive economic indicators such as the revival of commodity prices. A weaker pound has led to a boon for exporters with forecasts revised for factory output for this year and next year to 1.3% and 0.5% – up from 1% and 0.1% respectively. So, although there’s an element of UK low productivity holding back wage growth and some uncertainty around Brexit, the UK economy continues to show sustained resilience. It has as good as full employment and has just posted GDP growth of 0.4%. And although the needs of every business differ, at Kreston, we’re here to help our clients navigate their way through the uncertainty. Here are just a few of the areas we can help:
• Guide you through the risks and opportunities in a changing environment
• Provide business planning to help maximise profits
• Implement efficient structures to manage your commercial and tax risk
• Review your successions plans to protect the future of your business
Looking forward, the most successful businesses will always be the ones that embrace change rather than shy away from it. In an article in Forbes, Linda Peia analyses how entrepreneurs cope with uncertainty. Out of her five points, the one that stood out the most for me is to “face uncertainty with a strong sense of pragmatism and resilience”. And that’s exactly what we try to do here at Kreston. When we sign off with “Knowing You”, we’re underlining our understanding of the pressures and aspirations you have – because we’re right there with you, providing you with the knowledge and skills to help take your business to the next level.
October 23, 2017
Earlier this month, the Slovenian Prime Minister, Miro Cerar, stated that he “want[s] to position Slovenia as the most recognised blockchain destination in the European Union.” [1] Such grand declarations shows just how far the cryptocurrency public ledger has come in a short period of time. But it’s not just blockchain that’s reshaping industry; there’s a whole range of emerging technology that has the same kind of revolutionary potential. The Internet of Things, augmented and virtual reality, artificial intelligence, 3D printing, robots and drones have all garnered plentiful column inches because of their disruptive capabilities. In fact, many of these topics were covered at our Asia Pacific conference in Kuala Lumpur this August, where Patrick Schwerdtfeger from Trend Mastery talked about “Being a Leader in a Data-Driven World”. But what do of all these emerging techs mean for SMEs?
It’s my opinion that SMEs should be open to these new and emerging technologies. In fact, they could even lead the way. In the case of artificial intelligence, The Financial Times stated, “…there is no reason why SMEs should not welcome these advantages with open arms. The winners in the automation race will be the fastest, nimblest and hungriest, not the big beasts.” I believe that emerging tech should be thought of not just as an operating expense or capital investment, but as a strategic enabler to drive scalability, competitiveness and growth. In fact, according to a new survey-based whitepaper by technology company Insight Enterprises Inc., 69% of small and medium-sized businesses are devoting part of their IT budget for 2016 to newer and emerging technologies. These included 3D printers and wearable devices, as well as dashboard and data visualization software applications.
In the accountancy industry, I’ve seen first-hand the effect of what emerging tech can do. Automation means it’s now possible to free up manpower from administrative tasks and to streamline our processes. This leaves us more resources on to focus on consultative areas, providing our clients with essential expertise to help them thrive and expand, perhaps embracing tech-based opportunities of their own. But it’s also worth noting the reverberations that these technological advancements can have on the wider economy. Research by YouGov estimated that robots could take the jobs of 4 million UK private sector jobs in 10 years, with the finance and accounting, transportation, distribution and manufacturing industries the most affected. [2]
There’s always inherent risk whenever a business chooses to adopt a new technology. Recent history is littered with examples of lauded tech that failed to live up to the hype. Even the biggest and most successful companies don’t always get it right. Prime examples include “Google Glass” and Apple’s doomed PDA device – the “Newton”. However, on the other side of the bitcoin, businesses that fail to acknowledge change can soon find themselves consigned to the past, Blockbuster Video being a case in point. It’s a tough balancing act to marry immediate business with that of the future, and especially so for SMEs. There’s no right answer, but for me, the acclaimed futurist Roy Charles Amara hit the nail on the head when he said, “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
1. CoinDesk
2. The Guardian
October 20, 2017
Kreston Iberaudit, Kreston’s member network with over 400 professionals in offices across Spain, Portugal and Andorra held its 2017 national conference in Granada recently. Over 70 Partners and professionals were in attendance.
The conference was opened by host Pedro Maza, Managing Partner from Kreston Iberaudit’s Granada office and then Mercè Martí, Chairwoman and CEO at Kreston Iberaudit, presented on the company’s performance this year. Mercè also reinforced Kreston Iberaudit’s expansion strategy for the coming months.
The meeting was also attended by Jon Lisby, Kreston CEO who, in his report this year, emphasised brand and the importance of members to “Be more Kreston”.
Key note was Andrés Navarro Galera, University Professor and Director of the Department of Financial Economics and Accounting at the University of Granada, who analysed current trends in the Public Sector. José Antonio Rodríguez Salas, Mayor of Jun, presented on the importance of social media and Alberto Garau, a member of the Technical Committee of Kreston Iberaudit explained audit independence. Tax Committee member Jorge Borrajo hosted a technical tax session. The conference was closed by Juan Luis Gomeza, Executive Vice President of Kreston Iberaudit.
During the Conference, the Partners of Kreston Iberaudit reappointed Mercè Martí, Partner in Barcelona, as Chairwoman and CEO. Arturo Diaz, Partner of Gijón, retains his position as Executive Vice President.
October 16, 2017
The firms will join Exco Afrique, the African network of Kreston member Exco France.
Both firms offer audit, tax advisory and consulting services from offices in Casablanca.
Senior Partner of AB Partners, Mr. Saad Belfakir said:
“Exco Africa is pursuing its ambition to expand and build an effective and strong network in Africa. We are proud to join Exco Africa and the Kreston network and are committed to building the presence of the Kreston brand both regionally and internationally and to work collaboratively to ensure mutual success”
Senior Partner of ACDEN, Mr. Mohamed Khalid Ben Otmane added:
“Exco Africa is a cohesive network that comprises numerous African countries between them employing more than 450 talented, dedicated and knowledgeable professionals.
The admittance of ACDEN gives our clients with business interests in North Africa additional support from talented, dedicated and quality counsellors who can help our clients, both individuals and organisations to thrive, helping to secure long-term business sustainability for future generations.”
Youssoupha Diallo, Chairman of Exco Africa commented:
“The admittance of AB Partners and ACDEN completes Kreston’s coverage in North Africa. We now have quality member firms in Morocco, Mauritania and Tunisia. Together, this grouping will be instrumental in building a strong dynamic and powerful brand”.
(Left to right standing are Exco President Pierre Vieillard and Mohamed Khalid Ben Otmane and left to right seated is Saad Belfakir and Exco Africa CEO, Youssoupha Diallo).
October 12, 2017
In the UK, they’re known as Generation Y, in Germany Generation Maybe, and China has labelled them as the generation that eats the old. Millennials, people born between 1980 and the mid-1990s, have many names, and few of them are complimentary. They’re often described as lazy, entitled and narcissistic, but is this really the case? That was certainly not my experience of the Kreston members who attended our recent Future Leaders Conference in Berlin. What I found was a group of people who were dynamic, collaborative, and passionate. They were full of ideas on how to push the business forward and find new ways to help our clients. It inspired me and highlighted the importance of understanding this generation. In fact, our upcoming conference being held in Cambodia in November features a talk called “Making the Most of the Millennials: engaging the digital native generation as clients and employees”. Our guest speaker, Graeme Codrington, will be outlining how best to maximise the potential of Millennials and the massive rewards that can come from understanding this generation.
The transfer of wealth (the Y you need to care)
In the US, it’s estimated that a staggering $30 trillion of financial and non-financial assets[1] will be passed from Baby Boomers to Millennials. However, such a colossal transfer of wealth does not come without its difficulties – and this is where Kreston can help. From asset protection to family wealth and trust planning, our experts across the globe can help ensure that your money finds its way to your loved ones in the most tax-efficient way possible. But looking ahead, what will this great shift in Millennial spending power mean for the wider economy and your business? To answer this question, we need first need to know what constitutes a Millennial.
Millennial traits (the who they are)
Though the descriptions of Millennials vary from region to region, they are set to become the largest generation in history. According to the US Census Bureau, the 75.4 million US Millennials now outnumber the 74.9 million Baby Boomers. And on top of that, they are the most educated generation in history. Roughly 79% of US Millennials have at least a bachelor’s degree, compared to 69% for Generation X and 62% for Baby Boomers.[2] They are tech savvy and more health conscious than previous generations but they are also beset with money issues. More than 40 million US Millennials have student loan debt, owing an average of $29,000 each and a combined total of more than $1tn.[3] They also marry later and are opting to stay at home longer with their parents. Yet Millennial attitudes towards home ownership could change. The sheer numbers of this generation and an increased desire to settle down could spark a wave of home sales in the future.[4]
Access and the double-bottom line (the what they want)
For Millennials, it’s not about buying goods or services – it’s about accessing them. Brands such as Airbnb, Uber and Spotify have come to typify what is now known as the “sharing economy”. Quite simply, they want to have the goods or services they want without the high fixed costs or hassle of ownership. This is already turning numerous industries on its head, and at Kreston, we have been at the forefront of helping companies adjust to this shifting landscape.
Furthermore, if you want your business to remain relevant to a Millennial workforce, you need to know what they want. Today, it’s not enough for a business to be profitable, it must also have social impact. This is what’s known as the “double-bottom line”. A study by The Society for Human Resource Management revealed that “94% of Millennials want to use their skills to benefit a cause”.[5] It’s no surprise then to see the biggest brands take Corporate Social Responsibility (CSR) extremely seriously. Lego, Google and Microsoft took the top three spots in the Forbes list of the 10 Companies with The Best CSR Reputations In 2017.[6] And as part of our own CSR initiative here at Kreston, I’m proud to say that we’re adhering to four of the UN Sustainable Development Goals which are: Good Health and Well-being, Quality Education, Decent Work and Economic Growth, and Responsible Consumption and Production.
I believe that understanding this generation is fundamental to the success of your future business. Millennials are often on the receiving end of negative press. They are characterised by a selfish attitude and having their eyes glued to their smartphones, but I for one have great faith in their potential. As the founder of Alibaba, Jack Ma, put it, “Trust the young people; trust this generation’s innovation. They’re making things, changing innovation every day. And all the consumers are the same: they want new things, they want cheap things, they want good things, they want unique things. If we can create these kinds of things for consumers, they will come.”
Jon Lisby, Kreston CEO
Sources:
October 3, 2017
Knowing Future Leaders
Kreston held its first Future Leaders conference in the centre of cultural and vibrant Berlin recently, attracting 60 delegates from 14 countries.
Following a welcome reception at the Hotel NH Collection, the one day business event opened with an introduction to Kreston by Kreston Chairman, Bent Kofoed and European Regional Director Dagmar Brösztl-Reinsch. Kreston CEO Jon Lisby then offered attendees an overview of Kreston, its history and strategy to date, emphasising Kreston’s brand values and the importance of forging new and lasting working relationships.
Split into groups, the icebreaker to the conference “Around the World Challenge” had a sailing theme and was presented by global yachtsman Alex Alley and his team from Eventus Training. Through a variety of fun and, at times, tricky tasks, the teams competed to sail a circumnavigation of the World, with a prize for the winning team.
The main session was presented by Tim Sayers from PDW Group and through a range of media, visuals, exercises and activities, Tim and his team facilitated an excellent mix of professional acting and coaching to cover:
Social aspects of the conference included dinner at Berlin’s famous and chic Sage Restaurant and a fun morning safari self-drive tour of Berlin in a Trabant, the iconic cardboard car. The conference closed with a traditional lunch at Zollpackhof, a 300 year old restaurant with a distinctive Bavarian flair.
CEO, Jon Lisby commented:
“We are delighted at the success of this Conference which was challenging for the participants but also great fun. I am sure we shall make it an annual event. It was excellent to meet our future leaders and for each of them to have the opportunity to meet colleagues from around the network – I’ve no doubt of the future value these conferences will generate”.
October 2, 2017
53 delegates from over 34 companies attended a recent VAT seminar at the Ritz Carlton Hotel in Dubai. The event, hosted by Kreston member Awni Farsakh, and supported by UK member firm Mitchell Charlesworth covered Financial Reporting and changing Regulations and Laws in the UAE.
The participants represented many sectors including Trading, contracting, manufacturing, real estate, education, hospitality, professional services and healthcare.
The sessions included presentations covering the legal implications of new bankruptcy laws and liquidations; litigation processes and complications and an update on the UAE’s VAT laws.
Alison Birch, VAT Director at UK firm Mitchel Charlesworth, discussed the approach to VAT readiness and then presented several UK VAT case studies.
A Q & A session concluded the event.
Managing Partner of Awni Farsakh, Mr Eyad Farsakh said:
“This was an excellent seminar. We would like to offer special thanks to Alison and Mitchell Charlesworth for her and her firms support and cooperation and, going forward, we hope to develop a strong working relationship with regards to VAT services in the UAE”
Jon Lisby, Kreston CEO added:
“This was clearly a very successful event and is an excellent example of how Kreston firms can work together to achieve outstanding results”