Commercial Implications of Budget 2012 on SME s. Funding for Growth Commercial Briefing

Transcription

1 Commercial Implications of Budget 2012 on SME s Funding for Growth Commercial Briefing

2 Budget 2012 Give Take Static Corporation Tax R&D Tax Credits ( 100k milestone, restrictions light touched, employee incentives) Special Assignment Relief Programme (SARP) Foreign Earnings Deduction BRIC & AS Start Up Companies to 2014 International Financial Services Support Measures Static Income Tax - lift in USC earnings threshold Pension funding and exit relief unchanged - but flagged for reform Stamp Duty - Commercial Property (& business assets), Family Transfers Cessation of Employer PRSI Relief on Pension contributions - now 100% PRSI on Investment Income for PAYE worker from 2013(share based remuneration \last year) Relevant Contracts Taxes - new 20% tier Absenteeism tax relief benefits removed Redundancy Rebate Scheme - from 60% to 15% DIRT ARF's & PRSA's imputed distribution CGT - Rates, 7 year relief and Retirement Relief (Shrinking Cap +66 years) CAT - Rates and Child Thresholds VAT & Fuel increases

3 Last Years Measures

4 Strategic Trends Reconfirmed From Individualism to Corporatism Pension Restrictions Late Retirements - continuing payments for services / consultancy Downgrading of a core transition strategy for SME owners = more focus on Succession Sale Hold as passive Points Finger at marked absence of effective transition planning strategy in the past Lock in of capital with pension restrictions Restrictions on Personal Relief's ROI will become a more relevant key indicator of performance - less off balance sheet assets & debt Capital Flight risks Migration of personal business debt to corporate - securitisation and cost issues Future borrowings will favour corporate structure Asset purchases will be corporate - increasing use of special purpose vehicles Continuance of Low CT Relief Capital Growth in a low tax environment in preference to larger annual revenue streams More complexity in debt and equity instruments? Commencement of a post retirement dividend culture? Capital Funding Initiatives Channelling of free capital to corporate investment - EIIS 30% DIRT Unsophisticated investors unable to critically evaluate investment opportunities Requirement for more robust investor ready business plans stress testing and sensitivity analysis

5 Industry Competition Technolog y Budget 2012 Customers Business Environment Stakeholders

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7 Assess Impact on Strategic positioning Numerous Opportunities Need to be careful about taking on risks Selectively Expand Aggressively Develop Positioned to take on higher risk options Critical Weaknesses Shore Up Identify and Develop Core Competence Acquire Major Strengths Exit Defend Diversify Should only consider very low risk options Can pursue higher risks with caution Significant Threats

8 OT Analysis for your Action Portfolio Vision Strategy Structure & Culture/ Shareholder Circumstance + Business Environment Transition Planning Pension Downgrading Plan and manage alternative funding strategy EIIS & Interest Restrictions Implement external stakeholder management system Respond to market demand for private equity perspective Products &Services/ Industry Product / Services development review Optimising & synergising with R&D Relief Outsourcing Evaluation Loosening of Restrictions for Relief Marketing & Sales/ Customers & Competition Develop Pricing & Promotion strategy Retail & End users seeking to have VAT/Overhead hikes underwritten Update International marketing Strategy To leverage the foreign earning exemption opportunity Finance Conduct overhead analysis & strategy (logistics / outsourcing) Increased costs- Fuel, power and transport Remodel MIS Reporting adopt stakeholder perspective EIIS / Banks & Stakeholders (including yourself!) Conduct Cost Benefit Analysis -Commercial Property & Loan Rationalisation Stamp Duty, CGT, Tax Rate leverage Roll Cash Flows & P/L Budget impact assessment development scenarios for all rocket elements People Conduct productivity & HR policy review Absenteeism benefit restrictions Implement recruitment & inward investment study Special assignment relief program leverage Reappraise Remuneration Package Elements Foreign Earning Exemption 60 Days Share Option schemes Systems, Processes & Support / Technology Update share subscription mechanisms and housekeeping Systems review for all Business Model Drivers and Enablers All function areas impacted strategically or operationally i

9 Action Portfolio covers how many Functions? Strategic Management Functions It s all about: Develop Vision and Strategy Plan and Manage Funding Set Policies and Manage Performance Manage External Stakeholders 1. Converting Strategy into Action Value Creating Functions 2. Turning common sense into common practice Design Production Marketing Selling Customer Service Support Functions Accounting and Finance Physical Resource Management People Management Information and Technology Management