UK Fintech firms set for a record breaking year of investments

(qlmbusinessnews.com via cityam.com – – Thur, 19 Oct2017) London, Uk – –

Fintech startups in the UK are on track to attract a record amount of investment in 2017 new figures reveal, bucking concerns that Brexit could derail the star sector.

More than $1bn (£760m) has already been ploughed into technology firms hoping to disrupt finance this year by venture capital investors, more than double the amount this time last year according to fresh data from London and Partners and Pitchbook.

Read more: City calls for fintech sector deal to ensure UK remains leader after Brexit

Investment is set to smash 2015 when $1.16bn was invested in UK fintech, cementing London’s position as the fintech capital of Europe and a global hub. It hit a five quarter high in the third quarter, with 37 deals worth $358m separate figures published by CB Insights show.

The data also predicts that investment across Europe could break the $2bn barrier for the first time in 2017, having already hit a record of $1.8bn across 216 deals in the first three quarters of the year.

The already bumper year has been largely driven by the UK, accounting for around half of investment and eight of the 10 biggest deals of third quarter. They include $66m for digital challenger bank Revolut, $50m for accountancy software firm Receipt Bank and $40m for lending platform Prodigy Finance.

Along with investment in China expected to hit new highs, it puts fintech investment globally on track for a record year. So far this year, firms around the world have raised $12.2bn across 818 deals. However, analysts believe the cash going into fintech in the US will be off record highs for a second year in a row. The country’s still expected to grab the lion’s share of cash, followed by China and the UK.

Meanwhile, a separate soon-to-be published report from Investec has noted increasing interest from new investors. “Reaffirming the global appeal of London’s fintech sector, in 2017 we have seen a large number of international investors invest in London fintechs who have not invested in London previously,” said co-head of emerging companies Kevin Chong.

Read more: Open Banking comes another step closer: Fintechs can apply for FCA approval

Deputy mayor for business Rajesh Agrawal said the figures were “yet more proof that global investors believe London will remain a leading fintech hub for many years to come”.

“Clearly, Brexit poses major challenges – but London’s position as a global financial centre and world-class technology hub is built on strong foundations which cannot be replicated anywhere else: access to more software developers than Stockholm, Berlin and Dublin combined, Europe’s largest fintech accelerator Level 39, and the continent’s only truly global financial market.”

He added: “This highlights the need for a Brexit which enables London to maintain its place at the heart of the single market, as Europe’s financial capital.”

By Lynsey Barber

FTSE edges down, Merlin Entertainments suffers collapse on poor summer trading

(qlmbusinessnews.com via uk.reuters.com — Tue, 17 Oct, 2017) London, UK —

LONDON (Reuters) – UK shares edged lower on Tuesday, with a flurry of trading updates animating early deals, such as tourist attractions operator Merlin Entertainments, which saw its shares collapse on disappointing summer sales.

The FTSE .FTSE had retreated 0.20 percent by 0839 GMT, barely moved by fresh data which showed British inflation rose to its highest level in more than five years and could make the Bank of England more likely to raise interest rates next month.

Shares in Merlin (MERL.L) plunged as much as 21 percent, its biggest fall ever, after the operator of Madame Tussauds waxworks blamed a series of attacks in Britain and unfavourable weather for a dip in trading in its key summer period.

“Given all this additional uncertainty we see less and less reasons to own the shares,” Liberum analysts said as the shares, trading at about 355p, touched three years low levels.

Mediclinic (MDCM.L) retreated 3.5 percent after a trading update and there was no bounce back for Convatec, still down 0.8 percent, after a profit warning triggered a sell-off on Monday and a 26.6 percent fall.

“While the market may be quiet, it is currently extremely intolerant of any company that dares to miss forecasts”, Chris Beauchamp, an IG market analyst, wrote about the slump of Convatec on Monday.

British education group Pearson (PSON.L) on the other hand was the FTSE 100 top performer, with a 5.2 percent rise, after it said it expected full-year operating profit to come in at the top half of its forecast range.

British challenger bank Virgin Money (VM.L) also shone after reporting gross mortgage lending of 6.5 billion pounds to the end of the third quarter and said it had seen robust customer demand due to low unemployment and a resilient housing market.

Investec analyst Ian Gordon said he expected the “stunning performance” to lead to new consensus upgrades on the stock.

Golba miner Rio Tinto (RIO.L) was up 0.3 percent after it said it lifted third quarter iron ore shipments by 6 percent after modernising its haulage railway in Australia’s outback.

British online fashion retailer ASOS (ASOS.L) which increased its outlook for sales growth in its 2018 financial year, saw its shares rise by 1 percent.

By Julien Ponthus

CEO of UK wealth management firm warns bond markets creating the biggest financial crisis of our life time

(qlmbusinessnews.com via cnbc.com – – Wed, 11 Oct 2017) London, Uk – –

The CEO of a U.K.-based wealth management firm has warned that an unruly end to monetary stimulus from global central banks could lead to pensioners and retail customers suffering the biggest financial crisis of their lifetimes.

Brian Raven, group chief executive at Tavistock Investments, believes that bond markets will be the source of the problem and are primed for a sharp reversal.

“This is the biggest financial crisis of our lifetime, because it affects the average person,” Raven told CNBC over the phone. Tavistock is focused on the U.K. but Raven said the problem could be felt more broadly around the world. He argued that bond markets are in a state “never seen before” which could soon trigger a financial shock bigger than in 2008.

Bonds — pieces of paper that companies, governments and banks sell to raise money — have seen three decades of price gains and are perceived to be a safe haven in times of economic stress. They also traditionally perform poorly in times of rising inflation. In the last 10 years, central banks have been busy buying up bonds in an effort to boost the global economy and increase lending. This has further accentuated the move higher for bond prices and many economists now believe the market has become distorted.

With central banks preparing to put an end to ultra-loose monetary stimulus, and with inflation recently seeing a pickup, there are concerns that bonds could lose value quickly in a market that is not very liquid. There are also concerns that bondholders aren’t fully aware of the risks.

“The more conservative central banks ( e.g. Bundesbank ) that have been skeptical of quantitative easing have long warned that long periods of low interest rates can sow the seeds of the next crisis by smothering relative prices in the financial markets — but it is difficult to tell where ahead of time because of the ‘fog’ created,” Jan Randolph, director of sovereign risk at IHS Markit, told CNBC via email.

“There is a risk of a sharp rebound in prices as monetary policies tighten and liquidity problems if investors stampede out these more risky markets when risks start to crystallize,” he added.

While there’s been many gloomy forecasts for the bond market, not everyone agrees that they’ll definitely see significant losses as central banks reduce their bond-buying programs. Mike Bell, a global market strategist at JPMorgan Asset Management, told CNBC Monday that this monetary tightening creates a risk but believes that the recent economic recovery should be enough to offset the impacts of lower bond prices.

“Eventually tighter monetary policy could tip the U.S. economy into recession, but we believe that the economy and equity markets can withstand at least the next year’s worth of monetary policy tightening,” he said.

“We certainly don’t expect the next bear (negative) market to be as bad as the financial crisis in 2008 as banks are much better capitalized than they were in 2008. We therefore expect the next bear market to be a more classic recession rather than a full-blown financial crisis,” he added.

Central banks are unlikely to change their strategy and so investors will be likely face higher interest rates and higher inflation. Therefore, Tavistock’s Raven told CNBC that investors should adapt and diversify their investments. Bonds with short durations, high-yielding bonds and emerging market bonds are all potential options for investors, according to Raven.

By Silvia Amaro

“Angry Birds” Finnish company’s shares got off to a flying start

qlmbusinessnews.com via uk.reuters.com — Tue, 3 Oct 2017) London, UK —

HELSINKI (Reuters) – Rovio (ROVIO.HE), the maker of hit mobile game “Angry Birds,” will look to buy up other players in the gaming industry following its listing on Friday, its main owner Kaj Hed said.

The Finnish company’s shares got off to a flying start on their stock market debut, trading up as much as 7 percent from their initial public offering price (IPO) of 11.50 euros.

Hed, who cut his stake from 69 percent to 37 percent in the IPO, said Rovio now had more muscle to do deals in a gaming sector he believes is ripe for consolidation.

“We have a clear will to be a consolidator, and we are in a very good position to do that,” he told Reuters at Rovio’s headquarters by the Baltic Sea.

“Many good (gaming industry) players face the question of whether they should go public, or whether they should consolidate. Going public is expensive and requires hard work, so finding a partner could be easier.”

Analysts have long urged Rovio to do more to reduce its reliance on the “Angry Birds” franchise.

Hed, the uncle of Rovio’s co-founder Niklas Hed, said he remained strongly committed to the company.

“The reason that I sold shares was to give the company the liquidity, because that is very important. My intention is to remain as a long-term investor in the company.”

Rovio saw rapid growth after the 2009 launch of the original “Angry Birds” game, but it plunged to an operating loss and cut a third of its staff in 2015 due to a pick up in competition and a shift among consumers to freely available games.

But the 2016 release of 3D Hollywood movie “Angry Birds”, together with new games, have revived the brand and helped sales recover.

In the first half of this year, Rovio’s sales almost doubled from a year earlier to 153 million euros, while core profit increased to 42 million euros from 11 million.

Rovio’s market valuation of around 950 million euros ($1.12 billion), looks high based on Rovio’s historical profit, said Atte Riikola, an analyst at research firm Inderes.

“There seems to be initial demand for (the stock). But given that the IPO was multiple times oversubscribed, the share price reaction is not too dramatic,” he added.

“Profit growth is priced in, so they need to keep up the good performance which they had in the first half of the year.”

At 1135 GMT, Rovio shares were trading at 11.77 euros, off a high of 12.34 euros/

By Jussi Rosendahl

Additional reporting by Tuomas Forsell

Lloyd’s of London to expect net losses of $4.5 billion from hurricanes Harvey and Irma

Phil Holker/flickr

(qlmbusinessnews.com via uk.reuters.com — Thur, 28 Sept 2017) London, UK —

LONDON (Reuters) – Lloyd’s of London SOLYD.UL expects net losses of $4.5 billion from hurricanes Harvey and Irma, which analysts said would eat into the insurer’s capital and hit its profitability.

Although losses from natural catastrophes have been low in recent years, including in the first half, that is set to change in the second half of the year, Lloyd’s chief executive Inga Beale said following Thursday’s results.

“There was limited major claim activity in the first half. There’s a very different second half emerging – it’s not only the hurricanes but we’ve got the Mexican earthquakes, floods in Asia, typhoons in Asia,” Beale told Reuters.

“The hurricane season is still in play, earthquakes can happen at any time,” Beale said as Lloyd’s reported a 16 percent profit fall in the first half of 2017.

Lloyd’s 80-plus syndicates have already paid out more than $160 million in claims from Harvey and more than $240 million from Irma, Beale said. The $4.5 billion net loss estimate was based on modeling of “known exposures”, she added.

“Given that the Lloyd’s of London market typically produces earnings of 2.1-3.5 billion pounds, it is highly likely that the market faces a capital loss,” Jefferies analysts said in a note.

Modeling firm RMS estimates total insured losses from Harvey and Irma of up to $80 billion.

Meanwhile, Beale said it was too early to assess losses from Hurricane Maria, which devastated Puerto Rico last week and which some analysts have predicted will lead to greater insurance losses than Harvey and Irma.

Lloyd’s made 1.22 billion pounds ($1.63 billion) in profit before tax in the six months to the end of June, down from 1.46 billion pounds a year earlier, although Beale said part of the drop in profit was related to currency fluctuations.

Insurance rates have been falling for the world’s largest specialist insurance market and other insurers for several years due to strong competition.

Lloyd’s return on capital worsened to 8.9 pct from 11.7 pct, due to pressure on returns from low interest rates.

Gross premiums rose to 18.9 billion pounds from 16.3 billion pounds last year, and its combined ratio improved to 96.9 pct from 98 pct in 2016. A combined ratio is a measure of underwriting profitability, with a level below 100 percent indicating a profit.

Jefferies said recent natural catastrophes meant that a combined ratio for the year of 112.5 percent for Lloyd’s “is now a possibility”, indicating higher underwriting losses than 2011, which it said was “the last major catastrophe year”.

Lloyd’s was on track to open its planned EU subsidiary in Brussels by the middle of next year, Beale said, adding the new hub would employ “tens” of people and the firm would be submitting its formal license application “very shortly”.

More than 20 insurers have announced plans for EU hubs in the event that Britain loses access to the single market as a result of its departure from the European Union.

By Emma Rumney and  Carolyn Cohn

JD Wetherspoon shares jumped 9% after reported rise in full year sales and profits.

(qlmbusinessnews.com via bbc.co.uk – – Fri, 15 Sept 2017) London, Uk – –

Shares in JD Wetherspoon have jumped 9% after the pub group reported a rise in full-year sales and profits.

In the year to 30 July, profits before exceptional items rose 27.6% to £102.8m with total sales up 4.1% to £1.66bn.

Like-for-like sales – which strip out the impact of pub openings and closures – rose 4%, and are up 6.1% since the start of August.

However, Wetherspoon chairman Tim Martin said the recent pace of sales growth would not continue.

“Comparisons will become more stretching – and sales, which were very strong in the summer holidays, are likely to return to more modest levels,” he said.

Wetherspoon was the biggest riser on the FTSE 250 index, although the index was down 78.91 points at 19,445.03.

The benchmark FTSE 100 index dropped 32.19 points to 7,263.20. Cruise firm Carnival was the biggest faller on the index, down 3.4%, after Credit Suisse cut its rating in the company to “neutral”.

On the currency markets, the pound hit a year-high against the dollar as traders continued to react to Thursday’s comments from the Bank of England which suggested interest rates could rise later this year.

In early trade the pound was up a further 0.25% against the dollar at $1.3432, and was 0.2% higher against the euro at 1.1264 euros.

 

John Lewis profits slides to 53% over the past six months

Roberto Herrett/flickr

(qlmbusinessnews.com via telegraph.co.uk – – Thu, 14 Sept 2017) London, Uk – –

Profits at John Lewis Partnership have more than halved in the past six months as the group behind the department store chain and Waitrose has been hit by costs associated with overhauling the business and weakened customer demand from inflationary pressures and political uncertainty.

Pre-tax profits tumbled by 53.3pc to £26.6m during the six months to 29 July after it had to absorb £56.4m of costs from making a number of redundancies related to restructuring staff roles at Waitrose and John Lewis as it adapts to changing shopping behaviours.

At John Lewis, total sales grew by 2.3pc, helped by the launch of its new exclusive brand AND/OR, while like-for-like sales edged 0.1pc higher. Operating profits before the exceptional items jumped by 38.7pc to £50.2m.

Meanwhile, at Waitrose, total sales grew by 2.3pc to £3.2bn while like-for-like sales inched 0.7pc higher. Waitrose’s operating profits before exceptional items fell by 17.4pc to £100.8m after the upmarket grocer absorbed the higher costs associated with the weaker pound, rather than passing it on to customers in the ongoing intensely competitive supermarket price war.

Sir Charlie Mayfield, chairman, said: “As we anticipated in our full year results in March, the first half of the year has seen inflationary pressures driven by exchange rates and political uncertainty. These have dampened consumer demand, especially in categories connected to the housing market.”

By  Ashley Armstrong

Dairy Crest set for £125m windfall from pension deal

(qlmbusinessnews.com via uk.reuters.com — Fri, 8 Sept 2017) London, UK —

(Reuters) – Britain’s Dairy Crest Group (DCG.L) will report an exceptional gain of 125 million pounds ($164 million) in the current financial year after a change in the way in which its pension liabilities are calculated.

The company, which makes Cathedral City cheese, said a change to link future annual increases of pension payments to the CPI measure of inflation had resulted in a reduced deficit of 100 million pounds as of March, 2016.

Dairy Crest said it would have to pay 12 million pounds less than previously expected into the company pension fund over the next two financial years, potentially freeing up more cash for other operations.

Its contributions will then rise to 20 million pounds annually until 2022 by when the intention is for the scheme to be self-funding.

The fund consisted of 8,255 pensioners at the end of 2016.

Jaguar Land Rover cars to be available in electric or hybrid version from 2020

(qlmbusinessnews.com via uk.reuters.com — Thur, 7 Sept, 2017) London, UK —

LONDON (Reuters) – All new Jaguar Land Rover cars will be available in an electric or hybrid version from 2020, Britain’s biggest carmaker said on Thursday, as it speeds up plans to electrify its model range.

Last year, the company, owned by India’s Tata Motors, said it would offer greener versions of half of its new line-up by 2020, but it has now ramped up its plans.

Demand for electric models continues to rise sharply and in July Britain said it would ban the sale of new petrol and diesel cars from 2040 to cut pollution, replicating plans by France and cities such as Madrid, Mexico City and Athens.

RELATED COVERAGE

North Sea oil and gas job losses worse than expected

(qlmbusinessnews.com via bbc.co.uk – – Wed, 6 Sept 2017) London, Uk – –

The number of job losses in the UK oil and gas sector was worse than expected last year, a major report has said.

Trade body Oil & Gas UK’s annual report said 60,000 direct and indirect jobs were lost across the industry in 2016, more than the 40,000 it had predicted.

The report said the sector could lose another 13,000 jobs in 2017.

However, it suggests that while some companies are still reducing headcount “the largest reductions may now be behind us”.

The oil and gas industry still supports more than 300,000 jobs across the UK but that is 150,000 less than the peak in 2014, the report said.

According to the trade body report: “There are tentative signs that investor confidence is starting to return to the sector.

It highlights the fact that almost $6bn (£4.6bn) was invested in UK continental shelf assets and acquisitions in the first half of 2017.

“More needs to be done to drive any upturn and secure long-term employment,” the report says.

“Up to £40bn worth of potential investment opportunities currently sit in company business plans.”

Figures in the report break down employment in UK offshore oil and gas into three types:.

  • Direct employment – provided by companies involved in the extraction of crude oil and natural gas and supply chain companies who directly support this activity
  • Indirect employment across the extensive supply chain which also exports goods and services overseas
  • Induced jobs created by the sector’s spending in the wider economy, such as in hotels, catering and taxis

It said there were 28,300 people employed in direct oil and gas activities, down from 41,300 in 2014.

Indirect jobs fell from 206,100 to 141,900, the report said, and induced employment dropped from 216,500 in 2014 to 132,000 this year.

According to the report, the current low level of exploration activity “remains a serious concern” as it is vital to replenish production with new development opportunities.

Elsewhere in the report, Oil & Gas UK modelled scenarios for the impact of Brexit on tariffs for the oil and gas industry.

The report said Brexit could cost the industry £1.1bn a year if the UK was unable to negotiate new trade deals and reverted to WTO rules.

It said this would be an “unhelpful” additional cost.

Oil & Gas UK chief executive Deirdre Michie said: “There are still serious issues facing our industry which has suffered heavy job losses since the oil price slump. But we are hopeful that the tide is turning and expect employment levels to stabilise if activity picks up.”

She added: “Despite our difficulties, we’ve got more reasons to be positive and some great stories to tell that demonstrate the real progress that we are now making.”

Ms Michie said the sector was successfully re-positioning itself through efficiency and cost improvements.

“Although we are getting to a much better place, we still need further investment to generate new activity and sustain hundreds of thousands of UK jobs,” she said.

UK manufacturing hits four month high hinting at stronger growth

(qlmbusinessnews.com via uk.reuters.com — Fri, 1 Sept 2017) London, UK —

LONDON (Reuters) – Britain’s factories grew a lot more strongly than expected in August as work flowed in from home and abroad, a survey showed on Friday, suggesting the economy might be picking up speed after a slow first half of 2017.

The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) jumped to 56.9 from 55.3 in July, higher than any forecasts in a Reuters poll of economists.

Manufacturing accounts for only around 10 percent of the British economy. But Rob Dobson, a director at IHS Markit, said the strong performance last month, after a good July, should help support overall growth in the third quarter.

That could “add fuel to hawkish (Bank of England) policymakers’ calls for higher interest rates,” he said. The BoE’s rate-setters voted 6-2 against a rate hike in August with most policymakers expressing concern about the impact of last year’s Brexit vote on the economy.

Dobson said it looked likely that manufacturing would keep up its growth in the near term because the pick-up was being felt across the sector and among small and large firms alike.

While there were some signs of shortages of workers and material, “at the moment, the survey data suggest that the manufacturing economy remains in good health despite Brexit uncertainty,” he said.

However, there has been a marked discrepancy in recent months between the PMI readings of the manufacturing sector and official data which has painted a weaker picture.

IHS Markit said manufacturing output growth in August hit a seven-month high and new orders rose at the fastest pace in three months.

Growth in exports eased off only slightly from a seven-year high in July, helped by stronger demand from key markets in Europe, the United States and elsewhere and by the fall in the value of the pound since the Brexit vote.

 

M&S in talks to offload Hong Kong and Macau Franchises

Simon D/Flickr.com

(qlmbusinessnews.com via telegraph.co.uk – – Wed, 30 Aug 2017) London, Uk – –

Marks & Spencer is taking further steps to overhaul its overseas businesses by starting talks to sell its shops in Hong Kong and Macau to a Dubai-based conglomerate.

The British retailer has been in Hong Kong for almost three decades and now has 27 shops in the region and Macau.

Marks & Spencer said that the talks with Al-Futtaim follow its strategic review of its international businesses last year, which signalled a greater focus on franchise and joint ventures rather than wholly-owned stores.

Al-Futtaim, which already operates 43 M&S shops across seven markets in the Middle East, Singapore and Malaysia, is expected to purchase and enter into a franchise contract to continue running the Hong Kong and Macau stores.

The move follows Marks & Spencer’s announcement last November that it would close 53 loss-making international stores and exit 10 markets, including mainland China, after boss Steve Rowe announced that he would be switching focus to a franchise overseas business.

Mr Rowe last year sought to soothe shoppers in Hong Kong, where there is a strong British expat community,who feared that shops in the region would be closed and commented on the regions “loyal” customer base. However, this year’s annual report reveals that sales in Hong Kong were affected by its move to reduce the level of discounting while it had to invest heavily in refurbishing some stores .

 “In November we set out our plans to create a more sustainable, profitable and customer-centric international business for M&S by focussing on our established partnerships”, said Paul Friston, Marks & Spencer’s international director.


M
r Friston said that Al-Futtaim was a “key partner to M&S”. In April the Dubai-based conglomerate which has retail, property, financial and automative investments, opened a giant flagship M&S store in Doha, which includes a table-waited cafe serving fish and chips and afternoon tea to Qatari customers.

“With significant scale and retail expertise in the region, we are looking forward to discussing the potential extension of our partnership to Hong Kong and Macau as we continue to grow and develop our business together”, he added.

Marks & Spencer currently has 454 international stores across 55 countries.

By Ashley Armstrong

Uk Housing Market Shows Decline Amid Concerns over Cooling Economy

(qlmbusinessnews.com via theguardian.com – – Tue, 29 Aug 2017) London, Uk – –

UK house prices dipped this month, dragging down the annual growth rate, in further evidence of a cooling market.

The average price of a home fell 0.1% between July and August to £210,495, according to Nationwide, Britain’s biggest building society. Prices rose in July and June but fell between March and May, the first time this had happened since the financial crisis.

The latest monthly price drop took the annual growth rate back down to 2.1%, a level last seen in May, which was the lowest rate in four years, from 2.9% in July.

Robert Gardner, Nationwide’s chief economist, said: “The slowdown in house price growth to the 2-3% range in recent months from the 4-5% prevailing in 2016 is consistent with signs of cooling in the housing market and the wider economy.”

He noted that economic growth had halved from last year to about 0.3% per quarter in the first half of this year and that the number of mortgages approved for house purchase hit a nine-month low in June, while surveyors had reported softening in the number of new buyer inquiries.

He said in some respects the slowdown in the housing market was surprising, given the strength of the labour market, while mortgage rates have remained close to all-time lows.

Household finances are under mounting pressure, with the cost of living rising steadily as the weak pound bites, and wage growth stagnating.

Samuel Tombs, chief UK economist at the consultancy Pantheon Macroeconomics, said the slowdown in house price growth reflected the squeeze on real wages (adjusted for inflation) and the slowdown in the pace that mortgage rates are falling.

“Prices likely will continue to struggle to rise much, given that inflation still has further to rise, consumer confidence has deteriorated sharply since June and lenders intend to reduce the supply of unsecured credit.

“From February, new lending also will not generate borrowing allowances from the Bank’s term funding scheme, raising the costs of credit significantly. Accordingly, we still think that prices will be up just 1.5% year-over-year in December.”

A shortage in the number of homes on the market is underpinning house price growth, with the number of properties on estate agents’ books close to 30-year lows. Nationwide expects prices to rise by 2% over 2017 as a whole. It says house prices across the country are still 12% above their 2007 peak.

After increases in stamp duty in spring 2016, revenues from the tax have reached all-time high highs, rising to £12.8bn in the 12 months to June, well above the £10.6bn peak recorded in late 2007.

By Julia Kollewe

Dixons Carphone shares plunge 30% after shock profit warning

(qlmbusinessnews.com via uk.reuters.com — Thur, 24 Aug 2017) London, UK —

LONDON (Reuters) – Shares in Britain’s Dixons Carphone dived as much as 30 percent after the retailer cut its full-year profit forecast on Thursday, blaming tougher conditions in the mobile market as customers keep their handsets longer.

Dixons Carphone, which trades as Currys, PC World and Carphone Warehouse in Britain and Ireland, said the weakness of the pound was also making new devices more expensive at a time when technical innovation has been limited.

A market leader in both the electricals and mobile phone market, Dixons Carphone said headline pretax profit for the year was expected to be in a broad range of 360 million pounds to 440 million pounds.

The group reported profit of 501 million pounds in the year to 29 April, and analysts had expected a similar number this year. On average they had forecast 495 million pounds, according to Thomson Reuters data.

Chief Executive Seb James said that customers were taking their time before upgrading their phones to the latest model.

“The cause of that really is that people are holding on to handsets longer, on average we are seeing four to five months longer,” he said.

The shares traded 24 percent lower at 179p at 0945 GMT. They had already fallen by a third this year as investors feared Britain’s biggest electricals retailer would suffer from the growing inflationary pressures on consumers.

Analysts said the fact the group was trading well in its electricals business, which sells more expensive items, suggested the problem had its roots in a lack of innovation in the mobile phone market.

“Unfortunately that’s not something Carphone Warehouse can do a great deal about,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

“The forthcoming generation of Samsung Galaxy and iPhone handsets claim to make big steps forward, but recent history hasn’t delivered much that’s revolutionary. Seb James will be hoping (Apple boss) Tim Cook has something big up his sleeve.”

The share fall was the latest in a series of dramatic declines this week with WPP and Provident Financial tumbling after company statements.

ALL EYES ON APPLE

James said he believed there was a group of phone owners who were ready for an upgrade.

But he said the company was assuming that the longer upgrade cycle, which has lengthened to 29 months from 23 months, was here to stay.

New phones coming to the market include Samsung Electronics Galaxy Note 8 “phablet”, and a widely expected 10th anniversary iPhone from U.S. rival Apple Inc, set to be unveiled next month.

“We know that for half of the premium market, which is the bit that we like, the Apple base more or less rejected the iPhone 7,” he said.

“We are optimistic, without betting the farm in anyway, that iPhone 8 will be a good release for Apple, significantly better than 7.”

“Demand is very much there and we think it will come back,” he told analysts, adding that most customers would choose to buy the devices with a long-term contract with an operator.

The group has also been hit by the removal of roaming fees in Europe.

It shares the lifetime value of a customer contract with the mobile operator, and so it will lose some of the revenue it previously received from customers using their phones abroad.

It expects this to have a negative impact of between 10 and 40 million pounds this year.

By Paul Sandle

 

Rail Fares Hit by Biggest Annual Increase in Five Years

David Baldock/Flickr

(qlmbusinessnews.com via theguardian.com – – Tue, 15 Aug, 2017) London, Uk – –

Rail fares for commuters in England and Wales will increase by 3.6% from next year, adding pressure to incomes already squeezed by higher prices.

The rise, the biggest annual increase in five years, is set by the government and linked to July’s retail price index (RPI) measure of inflation announced by the Office for National Statistics on Tuesday. The higher fares will take effect from January.

Economists had expected RPI to increase to 3.5% in July, while rail fares rose by 2.3% at the start of 2017 based on last year’s figures.

The change applies to about 40% of rail fares, including season tickets on many commuter journeys, some off-peak return tickets on long-distance journeys and anytime tickets around major cities. So-called regulated fares are set by the government but normally provide the benchmark for rises across the network.

Unions and campaigners have been holding protests against the rises at railway stations around the country.

The RMT general secretary, Mick Cash, said government policies of holding down wages while allowing fares to rise was a “toxic combination”. He said: “The private operators and government say the rises are necessary to fund investment but the reality is that they are pocketing the profits while passengers are paying more for less with rail engineering work being delayed or cancelled, skilled railway jobs being lost and staff cut on trains, stations and at ticket offices.”

The Aslef general secretary, Mick Whelan, called for the system to be reformed, saying: “The government must intervene to make fares simpler, fairer and cheaper in Brexit Britain. Passengers and taxpayers will rightly be asking what they are paying for.”

He said fares should at the least be linked to the consumer price index (CPI), which rose by 2.6% in July, rather than RPI.

Stephen Joseph, the chief executive of Campaign for Better Transport, called for a fares freeze: “[The government’s] frozen fuel duty for the last seven years and we think rail fares should be given the same treatment.”

Joseph also said it was unacceptable that the government continued to use the higher RPI rate to calculate rail fare rises. “Passengers would be forgiven for thinking they are being taken for a ride when RPI has been dropped as an official measure for most other things.”

The rail industry defended the steep increase. Paul Plummer, the chief executive of the Rail Delivery Group, representing train companies and Network Rail, said: “Money from fares pays to run and improve the railway, making journeys better, boosting the economy, creating skilled jobs and supporting communities across Britain. It’s also the case that many major rail industry costs rise directly in line with RPI.”

Inflation had been expected to rise again after an unexpected fall in June, helped by falling fuel prices, which offset the rising costs of food, clothing and household goods.

Although CPI did not resume its upward trajectory last month, it is still running above the government’s 2% inflation target and outstripping the pace of wage rises. That has led to a rising cost of living, heaping pressure on households. Consumers are using credit cards to fund spending and the Bank of England has expressed alarm about the increase in personal debt.

Chris Williamson, the chief business economist at data company IHS Markit, said there were still risks “skewed towards inflation rising in coming months”, while wage growth is expected to remain below 2%.

ames Tucker, the head of CPI inflation at the Office for National Statistics, said RPI was not seen as a good measure by the statistics authority. However, the Treasury said the use of RPI was “consistent with the general approach adopted across the rail industry”, while the measure is used to account for inflation in the cost of running train services.

“Although inflation is likely to start falling next year, we understand some families are concerned today about the cost of living,” a Treasury spokesperson added.

Labour said the latest rise meant the average commuter will be paying £2,888 for their season ticket in January, £694 more than they paid in 2010. Some are paying over £2,500 more to travel to work than in 2010, it added.

A Virgin Trains season ticket between Birmingham and London Euston will now cost £10,567, while season tickets on some routes have risen by more than 40% since 2010. Andy McDonald, the shadow transport secretary, said the rises were “truly staggering”, adding: “The truth is that our fragmented, privatised railway drives up costs and leaves passengers paying more for less. The railways need serious reform.”

In Scotland, the blow for some rail travellers will be eased slightly as the Scottish government plans to limit regulated off-peak fares to an increase of 1% below RPI, or 2.6%, although season tickets will rise at the RPI rate.

By Richard Partington and Gwyn Topham

Standard Life and Aberdeen Asset 11bn Merger

(qlmbusinessnews.com via bbc.co.uk – – Tue, 15 Aug, 2017) London, Uk – –

The £11bn merger between Standard Life and Aberdeen Asset Management has completed, creating Europe’s second-biggest fund manager.

A Stock Exchange announcement confirmed the deal’s conclusion, following court approval for the merger last week.

The enlarged company, which will trade as Standard Life Aberdeen, will hold £670bn under management.

Co-chief executive Keith Skeoch described the move as the “beginning of a new chapter” in the firms’ history.

Mr Skeoch said: “Our leadership team is in place and we have full business readiness from day one.”

The merger, which was agreed in March, is targeting cost savings of £200m a year, with about 800 jobs expected to be lost over three years from a global workforce of 9,000.

The new company will be jointly led by Mr Skeoch and Aberdeen boss Martin Gilbert.

Mr Gilbert said: “As ever our priority remains the delivery of strong investment performance and the highest level of client service.

“The merger deepens and broadens our investment capabilities and gives us a stronger and more diverse range of investment management skills as well as significant scale across asset classes and geographies.”

Overall, Standard Life Aberdeen will have offices in 50 cities around the world, servicing clients in 80 countries.

Rolls-Royce interim results delivered a forecast-beating performance

Warren East Rolls-Royce chief executive

(qlmbusinessnews.com via telegraph.co.uk – – Tue, 1 August 2017) London, Uk – –

Rolls-Royce chief executive Warren East has delivered a forecast-beating performance with the company’s interim results as he continues to deliver a turnaround of the blue-chip engineering group.

Half-year results for the six months to the end of June showed reported revenue of £7.57bn, up from £6.46bn a year ago. Pre-tax profit soared to £1.94bn, reversing last year’s loss of £2.15bn.

However, the company conceded that the improvement in profit was heavily influenced by currency movements. Rolls has a huge “hedge book” of foreign exchange deals aimed at protecting it from currency fluctuations and the strengthening of the pound since the start of the year meant these assets got a £1.4bn boost, compared with a £2.2bn charge last time round. Rolls noted that this was the “principal reason” for the strong results at a headline level.

On an underlying basis, Rolls’s preferred measure and which strips out currency movements, revenue was £6.87bn, up 6pc. Pre-tax profit was £287m, a gain of 148pc. The weaker pound has inflated Rolls’s figures, as the bulk of the aviation industry’s deals are done in US dollars.

The news was welcomed by traders, with shares in the company up more than 6pc in early dealing, rising 54p to 947.5p.

City forecasts were much more downbeat. Analysts had been expecting the FTSE 100 business would report underlying revenue of £6.58bn and underlying pre-tax profit of £193m.

Free cash flow – the measure of how much money the company generates after expenses and a key figure for Mr East – was negative £339m, meaning the company is spending more than it is making. However, this was still an improvement on the figure a year ago, which was negative £414m.

Mr East has repeatedly said that he wants Rolls to be generating £1bn of positive free cash flow by 2020.

Rolls has tried to rein back expectations, describing the £1bn figure as an “ambition ” rather than a clear target.

“Rolls-Royce delivered encouraging year-on-year operational progress in the first six months,” said Mr East, who was appointed two years ago to turn around the business after it issued a series of profit warnings that saw its share price halve.

The chief executive said Rolls’s plans to increase the number of jet engines it makes for airliners and at a lower cost were working, with deliveries up 27pc and “good further progress” improving the economics of making the engines.

Mr East added that cost savings from his “simplification” restructuring “were ahead of plan” and a better than expected boost from accounting measures meant the company had delivered “a good set of results, with financial performance ahead of our expectations for the first half”.

However, Mr East cautioned analysts and investors not to get ahead of themselves, holding guidance at previous levels and warning that “execution and delivery of a number of important milestones across our businesses will be key to achieving our full-year expectations”.

Analysts have said that as Mr East has deliberately been downbeat about the company’s performance to mange expectations.

“Warren is being smart by under-promising and over delivering,” said one.

The order book at the end of the six months stood at £82.7bn, up from £79.5bn at the same point a year ago.

The dividend was held at 4.6p.

By Alan Tovey

Trade Secretary Liam Fox to start talks on post-Brexit trade deal with the US

Chatham House/Flickr

(qlmbusinessnews.com via bbc.co.uk – – Mon, 24 July 2017) London, Uk – –

The UK is to hold its first talks with the US to try to sketch out the details of a potential post-Brexit trade deal.

International Trade Secretary Liam Fox will spend two days in Washington with US counterpart Robert Lighthizer.
EU rules mean the UK cannot sign a trade deal until it has left the bloc.

EU rules mean the UK cannot sign a trade deal until it has left the bloc.
Mr Fox said it was too early to say exactly what would be covered in a potential deal. Firms and trade unions have both warned of the risks of trying to secure an agreement too quickly.

The Department for International Trade said discussions were expected to focus on “providing certainty, continuity and increasing confidence for UK and US businesses as the UK leaves the EU”.

Mr Fox added: “The [UK-US trade and investment] working group is the means to ensure we get to know each other’s issues and identify areas where we can work together to strengthen trade and investment ties.”
‘Small practical things’

The British Chambers of Commerce (BCC) director general Adam Marshall said the US’s experience at such negotiations would make it difficult for the UK to secure a good deal.

“We’re just getting back into the game of doing this sort of thing after 40 years of doing it via the EU,” he told the BBC’s Today programme.

“So I think early on in the process, it would be concerning if the UK were to go up against the US on a complex and difficult negotiation.”

Mr Marshall said while the BCC’s business group’s members would welcome the US and the UK talking about how to increase trade between them, the focus should be on improving “small practical things” such as custom procedures rather than a comprehensive trade deal.

Trade unions the TUC and Unite have also expressed disquiet over a rushed US trade deal.

“Ministers should be focused on getting the best possible deal with the EU, rather than leaping into bed with

Donald Trump,” TUC boss Frances O’Grady told the Guardian.
US President Donald Trump and UK PM Theresa May at the G20

But independent economist Michael Hughes told the BBC’s World Business Report that talking to the US at this stage was important.

“To have some preliminary ideas and get some basic principles out is a sensible thing to do,” he said.
He said currently talks were expected to focus on financial services and farming.

“In both cases it is likely that the UK would have to water down some of the standards it currently has, either in terms of genetically modified food or in terms of regulation of financial services firms operating in the UK, in order to get a deal, so it’s a delicate one,” he added.

Earlier this month, US President Donald Trump said he expected a “powerful” trade deal with the UK to be completed “very quickly”.

At the time, a UK government official said Mr Trump and UK Prime Minister Theresa May had agreed to prioritise work on a post-Brexit trade deal.

Trade between the two countries is already worth over $200bn (£150bn) a year
In 2015, US exports of goods and services to the UK were $123.5bn, up by 4% from 2014, according to the Bureau of Economic Analysis

The US is the single biggest source of inward investment into the UK
Together the UK and US have around $1 trillion invested in each other’s economies
The trading relationship between the UK and the US supports over a millions jobs in both countries

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