Royal Bank of Scotland reports first profit in Ten years


morebyless/flickr.com

(qlmbusinessnews.com via bbc.co.uk – – Fri, 23 Feb 2018) London, Uk – –

Royal Bank of Scotland has returned to profit for the first time in a decade as it continues its recovery.

Chief executive Ross McEwan told the BBC it was “a really symbolic moment.”

The bank, which is majority-owned by the taxpayer, made an annual profit of £752m compared with a £6.95bn loss the year before.

RBS still faces a potentially massive fine from the US Department of Justice over the sale of financial products linked to risky mortgages.

The bank had expected to settle the case in 2017, but is now hoping it will reach an agreement this year.

RBS set aside an extra £492m for US litigation, taking the total set aside for US court action around the sale of those products to £3.2bn.

The issue complicates government plans to start selling down its stake in RBS.

“We have been constantly hit with the sins of the past with conduct and litigation issues and I’ve been heavily restructuring the business to bring it back to the UK,” Mr McEwan said.

The bank, which is 71%-owned by the taxpayer, has spent the past decade restructuring itself.

Mr McEwan said that 10 years ago RBS was the largest bank in the world, with a balance sheet of £2.2 trillion. This has now sunk to about £750bn.

“We’ve been restructuring the bank to being a really good UK/Republic of Ireland business,” he told the BBC.

“It’s taken time but it’s also taken a lot of cost to come out of countries and businesses that we just didn’t want to be in.

“We are now operating in 12 countries as opposed to what was 38, so very focused on the UK.”

For the first time, RBS published the average pay gap between men and women in the bank, which it said was at 37.2%.

“Our gender pay gap reflects an under-representation of women at senior levels,” the bank said in its annual report. “That is not a satisfactory position and we know that we still have much to do to narrow the gap.”

When will the taxpayer recoup its RBS investment?

Analysis: BBC economics editor Kamal Ahmed

After nine years when accumulated losses totalled £58bn pounds – today a symbolic profit for RBS.

Does it mean the government can start planning more confidently about selling the 71% stake it holds on behalf of the taxpayer?

The fact the share price went down this morning by nearly 5% suggests not.

Investors are still nervous about the multi-billion pound fine the bank is expecting from the US.

At 269p, the RBS share price is still a long way below the 502p a share the government would need to break even on the billions of pounds it spent bailing out the bank a decade ago.

It has already sold some of its stake at a loss – and will have to continue on that path for a long period yet, in the hope that eventually the share price will rise above that 502p and, overall, a profit can be made.

Ross McEwan told me it would take three to five years before the government would have a “much smaller” level of ownership.

Selling the taxpayers’ stake in RBS has proved a much tougher and longer process than anyone imagined a decade ago.

Critical report

On Tuesday, after months of wrangling, MPs released a report by regulators into the mistreatment of small business customers by the bank.

Mr McEwan said the report “did make for really tough reading”.

“We did not get it right for customers at the time they needed us when their businesses were struggling,” he said.

“We just didn’t look after them well enough”.

The bank has now put in place a complaints process overseen by a former high court judge, Mr McEwan added.

 

 

 

Persimmon housebuilder to cut controversial bonuses to top three executives

(qlmbusinessnews.com via theguardian.com – – Fri, 23 Feb 2018) London, Uk – –

Housebuilder cuts controversial bonuses to top trio following public outcry

Persimmon is reducing bonus payouts to three top executives by £51m, including a £25m cut for its chief executive, after the UK’s second largest housebuilder was strongly criticised over its huge payout plans.

The FTSE 100 firm said a bonus of £100m for its chief executive, Jeff Fairburn, would be cut to £75m under the company’s long-term incentive bonus plan.

Finance director Mike Killoran will receive £24m less than the £78m he was originally due, and managing director Dave Jenkinson will see his bonus cut by £2m to £38m.

Persimmon has come under intense pressure both publicly and privately from politicians and shareholders for planning record-breaking bonus payouts to bosses after the company benefitted from the taxpayer-backed help-to-buy scheme.

This week the company’s sixth-largest shareholder, Aberdeen Standard Investments, labelled Fairburn’s bonus as “grossly excessive”, and said it remained “a huge concern” despite the executive’s recent pledge to donate some of his package to charity.

Last year, the Guardian revealed that Fairburn’s pay deal could be used to provide a council house for every homeless family in Yorkshire where Persimmon is based.

Announcing the bonus reduction, the company said its remuneration committee was “fully supportive” of the decision. Persimmon’s chairman, Nicholas Wrigley, resigned in December over his role in orchestrating the pay scheme.

Fairburn said earlier this month he decided some time ago to give some of his bonus awaybut that he had wanted to take an “old-fashioned approach” and keep the decision private.

Speaking this month, he said: “It’s now clear that this belief was misplaced and so I am making my plans public and recognise that I should have done so sooner. I am setting up a private charitable trust which I plan to use to benefit wider society over a sustained period of time by supporting, in a very meaningful way, my chosen charities.”

By Angela Monaghan

Uk’s GDP growth weaker than expected in the last quarter of 2017

(qlmbusinessnews.com via news.sky.com– Thur, 22 Feb 2018) London, Uk – –

The figures were down on the 0.5% expected, with a slowdown in household spending and flat business investment among the factors

The UK economy grew by 0.4% during the final quarter of 2017, according to the Office for National Statistics.

The result was weaker than the expected 0.5% and was blamed on a slowdown in consumption and business investment.

Household spending grew by 1.8% between 2016 and 2017 – its slowest rate of annual growth since 2012 – in part reflecting the increased prices faced by consumers.

In year-on-year terms, downwardly revised growth of 1.4% was the weakest in more than five years.

Among the figures was a 0.6% growth in services. Between the third and fourth quarters, transport, storage and communication grew by 1.1%; business services and finance were up by 0.9%; and government and other services increased by 0.2%.

On the other hand, distribution, hotels and restaurants decreased by 0.2%.

There was no growth in business investment, which remained at £46bn in the fourth quarter. But, compared to the same quarter in 2016, it grew by 2.1%.

Construction output was estimated to have decreased by 0.7% in the fourth quarter and agriculture, which makes up the smallest proportion of of total output, decreased by 0.9%.

The ONS also revised its 2017 growth estimate down 0.1% to 1.7%, confirming the British economy cooled off somewhat in the year after Britons voted to leave the European Union.

This compares to the EU economy growing by 0.6% in the fourth quarter – the 19th consecutive quarter that the bloc showed positive growth.

The G7 countries (Canada, France, Germany, Italy, Japan, the UK and the US) saw economic growth of 0.5% during the same period.

Chris Williamson, chief business economist at IHS Markit, said: “Survey evidence indicates that investment and construction are being subdued by heightened business uncertainty, generally linked to Brexit, while consumer spending is being hit by high inflation.

“The depreciation of sterling meanwhile showed few signs of benefiting the economy in terms of trade, with exports in fact acting as a drag on the economy in the fourth quarter.

“However, manufacturing continued to expand at a solid pace in the fourth quarter, as did business and financial services and transport and communications, helping drive the upturn in GDP.

“The worry is that, with the exception of financial services, survey data hint at these sectors also losing steam in January.”

Pablo Shah, economist at the Centre for Economics and Business Research, said he expects the UK economy to “expand by 1.6% in 2018, as domestic uncertainty looks set to persist and monetary conditions tighten both in the UK and across the world”.

By Sharon Marris, Business Reporter

 

 

British gas owner Centrica to axe 4,000 jobs as profits dive

(qlmbusinessnews.com via telegraph.co.uk – – Thu, 22 Feb 2018) London, Uk – –

The boss of British Gas owner Centrica has attacked the Government’s cap on energy tariffs this morning as the company revealed plans for 4,000 job cuts following a customer exodus and a drop in annual profits.

Centrica lost 1.4m UK domestic customers in 2017 but blamed its declining earnings on problems in its commercial division, particularly in North America.

The energy provider has already scrapped 6,000 roles in a battle to remain profitable in the face of tighter regulation, mounting competition and rising costs.

The FTSE 100 company’s chief executive Iain Conn said a combination of “political and regulatory intervention in the UK and the profits slump in North America had “created material uncertainty around Centrica”, he said, adding: “Although we delivered on our financial targets for the year, this resulted in a very poor shareholder experience

“We regret this deeply, and I am determined to restore shareholder value and confidence,” he added.

The Government announced plans towards the end of last year to cap so-called standard variable tariffs, which customers are forced to pay if they fail to switch providers or negotiate a new tariff once their fixed deal expires.

In response, Centrica and its fellow “Big Six” suppliers E.on and Scottish Power said they would scrap the tariffs altogether.

Its adjusted operating profit, stripping out those and other one-off costs, was down 17pc to £1.25bn, while revenues grew 3pc to £28bn.

Centrica’s shares have been in decline since 2013, falling to their lowest point since 1999 earlier this month, but were up 2.6pc to 136p in morning trade.

Neil Wilson, an analyst at ETX Capital, said: “While this mea culpa from Conn looks bad, it was all fairly well guided in November, hence why the shares are responding positively this morning to news that Centrica plans to ramp up its cost-savings programme.”

The company also maintained its dividend at 12p per share.

By 

 

 

UK unemployment rate up for the first time in two years

(qlmbusinessnews.com via bbc.co.uk – – Wed, 21 Feb  2018) London, Uk – –

UK unemployment has increased slightly for the first time in two years.

The rate of unemployment rose from 4.3% to 4.4% for the three months to the end of December, the Office for National Statistics said.

Despite the slight increase in the unemployment rate, the total number of those in work increased by 88,000.

Wages grew by an average of 2.5%, up from 2.4% the previous month, although the increase remained below inflation.

The number of unemployed people rose by 46,000 to 1.47 million for the final quarter of the year, compared to the previous three months.

 

 

 

Lloyds Banking Group report record pre-tax profit of 5.3 billion pounds

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(qlmbusinessnews.com via uk.reuters.com — Wed, 21 Feb 2018) London, UK —

LONDON (Reuters) – Lloyds Banking Group reported its highest pre-tax profit since 2006 on Wednesday, announcing a share buy-back of up to one billion pounds and 3 billion pounds of strategic investment over the next three years.

The 24 percent rise in profit to 5.3 billion pounds beat last year’s record of 4.2 billion but fell short of the 5.73 billion expected by analysts in a poll provided by the bank.

Chief Executive Antonio Horta-Osorio said 2017 had been a “landmark year” for the group, which returned to full private ownership for the first time since 2008, when it was the subject of a bailout by taxpayers worth some 20.5 billion pounds.

“We have delivered another year of strong financial performance with improved profits and returns… and have now built the largest and top rated digital bank in the UK,” Horta-Osorio said in the statement.

The bank’s planned 3 billion pounds in strategic investment will be spent largely on digital technology and staff, although the bank said it remained committed to its branch network, which has seen scores of closures since the financial crisis.

The strategy responds to new regulation forcing big banks to open up their customers’ data to rival lenders and financial technology firms, enabling them to compete more effectively for customers.

The bank said it will revamp its app and digitise 70 percent of its processes by 2020, enabling it to lower its cost income ratio to the low 40s from 46.8 percent in 2017.

It also plans to ramp up its financial planning and retirement business, increasing open book assets by 50 billion pounds by 2020 and expanding its corporate pension customer base by 1 million.

By Emma Rumney

 

 

William Hill fined £6.2m over money laundering failures by Gambling Commission


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(qlmbusinessnews.com via news.sky.com– Tue, 20 Feb, 2018) London, Uk – –

Ten customers were allowed to deposit large sums of money linked to criminal offences, the Gambling Commission said.

William Hill has been fined £6.2m by regulators over money laundering and problem gambling failures.

It is the second biggest penalty ever levied by the Gambling Commission and the largest in relation to money laundering.

The regulator said 10 customers were allowed to deposit large sums of money linked to criminal offences.

It said William Hill did not seek information about the source of the funds or establish whether they were problem gamblers.

The commission said senior management at William Hill “failed to mitigate risks and have sufficient numbers of staff to ensure their anti-money laundering and social responsibility processes were effective”.

Gambling Commission executive director Neil McArthur said: “This was a systemic failing at William Hill which went on for nearly two years and today’s penalty package reflects the seriousness of the breaches.

“Gambling businesses have a responsibility to ensure that they keep crime out of gambling and tackle problem gambling – and as part of that they must be constantly curious about where the money they are taking is coming from.”

The regulator identified failures taking place between November 2014 and August 2016.

On one occasion, a customer who was funding his gambling habit by stealing from his employer was allowed to deposit £541,000 over 14 months.

An operator had made the assumption, after a chat with the customer, that he was earning as much as £365,000 a year – when in fact he was on a salary of £30,000, the commission said.

In another instance, a customer deposited £653,000 over 18 months, during which he triggered an “amber risk” alert which should have seen his file passed to managers for review.

This did not occur due to a “systems failure” and the customer was allowed to gamble for a further six months despite continuing to activate financial alerts, the regulator said.

William Hill will pay a penalty of £5m plus return £1.2m – the amount it gained through the rule breaches – to people affected by crime linked to the breaches.

Chief executive Philip Bowcock said the company had fully cooperated with the commission and introduced “new and improved policies and increased levels of resourcing” as well as launching an independent review of its processes.

He added: “We are fully committed to operating a sustainable business that properly identifies risk and better protects customers.”

Online gambling firm 888 was handed a £7.8m penalty last year for “significant flaws” in its safeguarding of customers.

By John-Paul Ford Rojas, Business Reporter

 

 

HSBC pre-tax profit more than double to $17.2bn

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(qlmbusinessnews.com via theguardian.com – – Tue, 20 Feb 2018) London, Uk – –

Holdings’ pre-tax profit for 2017 has more than doubled to $17.2bn (£12.3bn), due largely to the absence of hefty restructuring costs, but the figure still lagged behind expectations as the bank took a writedown to take in US tax changes.

On the chief executive Stuart Gulliver’s last day in the job, Europe’s biggest lender by market capitalisation also announced plans to bolster its capital base by raising up to $7bn in the first half of 2018.

The pre-tax profit for 2017 compared with $7.1bn the year before but below the $19.7bn average estimate of 17 analysts polled by Thomson Reuters.

Those estimates did not all take into account the tax writedown, triggered by cuts in the US corporate tax rate that meant banks had to book losses on deferred tax assets built up during loss-making years.

HSBC said its 2017 financial results included a charge of $1.3bn relating to the “remeasurement of US deferred tax balances” to reflect the reduction in the US federal tax rate to 21% from 2018.

Banks including Credit Suisse and UBS have already reported multibillion-dollar writedowns from the tax change, while Barclays has said it expects a £1bn hit on its annual post-tax profit.

HSBC’s profit for 2016 reflected a $3.2bn impairment of goodwill in the global private banking business in Europe and the impact of its sale of operations in Brazil.

HSBC plans to boost its capital base with a $7bn fundraising.

 

 

 

Energean Oil and gas explorer plans £360m London listing

(qlmbusinessnews.com via telegraph.co.uk – – Mon, 19 Feb, 2018) London, Uk – –

Oil and gas explorer Energean plans to raise $500m (£357m) with a listing on the London Stock Exchange, as it hopes to capitalise on increasing demand for energy supplies from the eastern Mediterranean.

The firm plans to use $395m of the money raised to develop its offshore Israel Karish and Tanin gas fields and a further $10m would go to the company’s founders. The remaining $95m would be spent on fees, capital expenditure and other costs.

Mathios Rigas, chief executive of Energean, said the company had “advanced plans for the development of the Karish and Tanin fields, offshore Israel, together with the significant development programme for the Prinos licences in Greece”.

He said that the listing would help the firm to grow its pipeline of “attractive exploration projects”.

Chairman Simon Heale, who has previously served as chair of copper miner Kaz Minerals, said that the eastern Mediterranean was attracting interest from oil and gas majors.

Energean, which was founded in 2007, operates five projects in Greece, as well as others in Motenegro and Israel.

The eastern Mediterranean region has become an increasingly active exploration and production region, with recent discoveries the Zohr gas field in Egypt and the Leviathan site in Israel attracting investment in the region.

Exxon Mobil, Total, Edison and Repsol have already acquired or expressed interest in acquiring hydrocarbon interests in Greek exploration areas. These would help Greece to reduce its reliance on Russia, which currently provides about 60pc of its oil supplies.

“As an independent, locally based exploration and production company, the directors believe the group is well positioned to compete and move swiftly on opportunities in the region,” the company said.

 

KFC forced to close a number of branches across the UK due to chicken shortage


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(qlmbusinessnews.com via bbc.co.uk – – Mon, 19 Feb, 2018) London, Uk – –

Fast-food chain KFC has closed a number of outlets across the UK after they ran out of chicken.

Things were not so finger-licking good for disappointed fried chicken fans after problems with a new distribution system forced the closures.

Last week, KFC switched its delivery contract to DHL, which blamed “operational issues” for the supply disruption.

KFC has about 900 UK restaurants, with more than 80% run by franchisees.

Closures have been reported in areas including London and the South East, the Midlands, East Anglia, the North East and Wales.

Until last Tuesday, KFC’s chicken was delivered by South African-owned distribution group Bidvest, which describes itself as “the leading supplier of logistical and supply chain solutions to the UK hospitality and restaurant sector”.

But after the change in the contract, many of the food giant’s outlets began running out of chicken products.

“We’ve brought a new delivery partner onboard, but they’ve had a couple of teething problems – getting fresh chicken out to 900 restaurants across the country is pretty complex!” it added, apologising to customers for the inconvenience.

“We won’t compromise on quality, so no deliveries has meant some of our restaurants are closed, and others are operating a limited menu or shortened hours.”

The statement listed KFC restaurants that were still open despite the problems.

DHL said: “Due to operational issues, a number of deliveries in recent days have been incomplete or delayed. We are working with our partners to rectify the situation as a priority and apologise for any inconvenience.”

Disgruntled KFC customers have been taking to Twitter to express their dismay at the shortages.

 

The Wisdom of Old School Self-Made Billionaires

 

Billionaire advice motivational video on the wisdom of old school self-made billionaires; rare and priceless advice that can change your life and the way you do your business! Very informative video!

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Mid-earners 25 to 34-year-olds ‘locked out of Home-ownership’

(qlmbusinessnews.com via bbc.co.uk – – Fri, 16 Feb, 2018) London, Uk – –

The extent to which young people are locked out of the British housing market has been revealed in new figures from economists.

The biggest decline in home ownership in the last 20 years has been among middle-income 25 to 34-year-olds, the Institute for Fiscal Studies said.

In 1995-96, 65% of this group owned a home, but just 27% do in 2015-16, with the biggest drop in south-east England.

Middle earners are defined as having take-home pay of £22,200 to £30,600.

This can be either as an individual or as a couple.

A third of them are university graduates, while 30% left school at 16. Three-quarters of them live with a partner, and around 60% have children.

The proportion of these middle earners owning a home (27%) has moved closer to the likelihood of those with a low income (8%) than those on a high income (64%).

‘Money down the drain’

Tom Bourlet pays £535 per month to rent a room in a flat in central Brighton.

“I’ve been renting it for two-and-a-half years. It really is money down the drain,” the 30-year-old says.

“I don’t really see much for it – it’s not the biggest room.”

The location is handy for work, and is close to the railway station, but Mr Bourlet would prefer to have somewhere “to be proud of, and build up myself”, he adds.

However, buying somewhere is “completely beyond budget at the moment”.

“It’s absolute Mission Impossible,” he says.

“From rent, to paying for trains… all the utility bills keep shooting up. I mean, I’m nowhere near, I’m not even slightly close. I’m saving every month, but the deposit is so high that it just seems beyond reach at the moment.”

Andrew Hood, a senior research economist at the IFS, said: “Home ownership among young adults has collapsed over the past 20 years, particularly for those on middle incomes.

“The reason for this is that house prices have risen around seven times faster in real terms than the incomes of young adults over the last two decades.”

Property price rises were significant in the South East of England. As a result, the region has seen the proportion of homeowners among 25 to 34-year-olds fall from 64% to 32% in two decades.

Every region of Britain had seen a 10 percentage point drop over the same period, the IFS said. This will lead to some tough decisions for today’s 20 to 30-somethings, according to Iona Bain, founder of the Young Money blog.

“It is really hard to see how we can make this better when we are still seeing a huge demand for housing and that housing demand is not being met with the right number of houses,” she said.

“Individuals are having to decide for themselves: do I want to rent and have the flexibility but pay more for it, or do I want make a lot of difficult decisions to get on the property ladder sooner and potentially stay put for many, many years to come?”

Housing minister Dominic Raab said that schemes such as Help to Buy and the removal of stamp duty for most first-time buyers had helped people to buy their first home.

He also said that £45m would be invested into community projects that would help kick-start the building of thousands of new homes.

 

New car tax rules coming in April 2018 – here’s how much more you could pay

 

(qlmbusinessnews.com via uk.finance.yahoo.com — Fri, 16 Feb 2018) London, Uk —

New car tax rules come into force in a couple of months – and they will see thousands of motorists paying hundreds of pounds more.

Owners of new diesel cars are set to be hardest hit by the changes – but drivers who have bought a new hybrid car in the past year are also set to be clobbered.

And for many others who bought new in the last few months, they will also be hit in the pocket as second-year charges apply to them for the first time.

MORE: Petrol prices will keep on rising, say experts, and here’s why

The changes, which come into effect on April 1, has left the motoring industry claiming many drivers will be caught out.

How does the car tax system operate?
It’s all based on your vehicle’s CO2 emissions. Tax is charged depending on how high the level of CO2 is.

Since last April, the charge for the first year – dubbed showroom tax – is still based on CO2 emissions, with big polluters paying more.

The tax rate ranges from zero (for all-electric, zero polluters) to as high as £2,000.

For the second and subsequent years, petrol and diesel vehicles – though not diesel vans – incur a £140 tax, while it’s £130 for alternative fuel vehicles such as hybrids, bioethanol and LPG.

Second-year vehicles with zero emissions escape the tax.

But now it’s getting even more complicated
Cars costing more than £40,000 have to pay an additional rate of £310 a year for the first five years.

This will be the case even for zero emission, pure electric cars, such as Tesla’s Model S.

And, the annual cost for many popular cars is rising substantially.

For instance, a car registered between 1 March 2001 and 31 March 2017 that emits between 111-120g/km of CO2, was incurring £30 in road tax.

MORE: Personal details of 1.7m drivers sold by DVLA at £2.50 a time to parking firms

From this April, however, the new rules mean it will cost the owner £140 to tax his or her car – up more than 350%.

‘Dirty’ diesels are in the headlights
It’s in the diesel car market that the biggest – and most painful – changes are being seen.

In the Autumn Budget, chancellor Philip Hammond announced that all new diesel cars from 1 April 2018 will face going up a VED (vehicle excise duty) band if they fail to meet the latest Euro 6 standards under real-world testing.

Experts say a new Ford Focus might see an increase of £20 in the first-year rate while a Porsche Cayenne will see a rise of £500.

The changes only apply to new diesel cars, not vans, and do not impact the subsequent £140 yearly fees all car owners have to pay after the first year.

The most efficient diesels cost no more than an additional £20 to tax for the first 12 months.

However, any model that emits between 191 and 225g/km CO2 is subject to an increase from £1,200 for the first year to £1,700 – the biggest financial leap of any of the bands.

By Mark Dorman

 

 

Laura Ashley shares fall on profit warning

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(qlmbusinessnews.com via theguardian.com – – Thur, 15 Feb 2018) London, Uk – –

Weaker pound also blamed for steep fall in profits at fashion and home furnishings firm

Laura Ashley has warned profits will fall short of City forecasts after taking a hit from the weak pound and slumping demand for furniture and wallpaper in the UK.

The home furnishings and womenswear firm, known for its floral prints, reported a steep drop in pretax profits to £4.3m in its first half to 31 December from £7.8m a year earlier. It warned full-year profits would miss market expectations of £9m and ditched its interim dividend. Last year it made a profit of £8.4m.

The shares plunged 18% in early trading and were later flat at 6p, giving the firm a market value of £44m.

Seán Anglim, Laura Ashley’s finance director, talked of an “overall toughening of the market” with like-for-like sales declines of 4.4% in furniture and 3.9% in decorating products such as fabrics, curtains and wallpaper.

This was partially offset by 4% growth in home accessories including lights, bed linen and rugs and a 1.2% rise in fashion sales. Clothing makes up 17% of the business.

The company pointed to the decline in the pound as the most significant single factor behind the fall in profits. It has also been hit by the closure of 22 Homebase stores that had Laura Ashley concessions.

Other furniture retailers are also struggling, as the housing market has almost ground to a halt. The bedmaker Warren Evans has just gone into administration and will close if a buyer cannot be found. Another furniture maker, Multiyork, filed for administration in November

Laura Ashley has 161 stores in the UK and has ventured into hotels and tearooms. It owns a hotel in Elstree and has licensed its brand to the Belsfield hotel in the Lake District

 

Aribus profits triple despite charge on troubled A400M military plane

(qlmbusinessnews.com via telegraph.co.uk – – Thu, 15 Feb 2018) London, Uk – –

Aribus’s profits took off last year, despite the aviation giant booking a “substantial” further €1.3bn (£1.15bn) charge on its troubled  A400M military transporter plane.

Net profit nearly tripled to €2.87bn in 2017 from €995m a year earlier, boosted by increased deliveries, windfall gains from divestments and favourable exchange rates.

Full-year sales held steady at €66.8bn.

“We overachieved on all our 2017 key performance indicators thanks to a very good operational performance, especially in the last quarter,” said chief executive Tom Enders.

“Despite persistent engine issues on the A320neo, we continued the production ramp-up and finally delivered a record number of aircraft.

A net capital gain of €604m resulting from the divestment of its defence electronics business and “a strong positive impact” from exchange rate developments also helped the group’s bottom line.

But Airbus took a new one-off charge of €1.3bn against its A400M turboprop military transport, which has been plagued by delivery problems and technical problems.

“On A400M, we made progress on the industrial and capabilities front and agreed a re-baselining with government customers which will significantly reduce the remaining programme risks. This is reflected in a substantial one-off charge,” Mr Enders said.

Airbus had already booked a charge of €2.2bn on the A400M in 2016.

Nonetheless, given the “strength of our 2017 achievements”, Airbus would propose lifting its dividend to €1.50 per share for last year from €1.35 a year earlier, Mr Enders said.

“This also endorses our earnings and cash growth story for the future,” he said.

 

UK businesses plan to increase wages by 3.1 percent in 2018: BoE survey


James Stringer/Flickr

(qlmbusinessnews.com via uk.reuters.com — Wed, 14 Feb 2018) London, UK —

LONDON (Reuters) – British businesses plan to offer staff bigger pay rises this year due to a higher minimum wage and staff shortages, according to a Bank of England survey which is likely to feed the central bank’s concern about growing domestic inflation pressures.

Firms plan to offer average pay settlements of 3.1 percent compared with 2.6 percent last year, the BoE said on Wednesday, with the biggest increases in consumer services businesses with a high number of staff paid close to the minimum wage.

“Companies also reported an increased tendency to pay above the National Living Wage, due to competitive pressures. However, many firms were planning to limit management pay increases to 1-2 percent in order to hold down their overall pay settlement,” the BoE said.

The BoE survey was based on replies from 368 businesses employing 845,000 staff in Britain.

By David Milliken

 

 

GKN to sell core parts of business and return £2.5bn to shareholders

qlmbusinessnews.com via bbc.co.uk – – Wed, 14 Feb 2018) London, Uk – –

Engineering giant GKN says it will sell off non-core parts of its business and return £2.5bn in cash to its shareholders over the next three years.

The plans are part of its defence against a £7.4bn hostile takeover bid from Melrose Industries.

GKN’s new strategy and transformation plan includes the sale of various businesses over the next 12-18 months.

Last month, GKN rejected the bid from Melrose, saying it “fundamentally undervalued” the firm.

GKN chief executive Anne Stevens said: “The new strategy brings clarity, accountability and focus to GKN’s world class businesses and will allow the group to attain world class financial performance.”

“Too often we pursued growth at the expense of returns, this will no longer be the case. The new strategy brings discipline, both financial and operational.”

However Melrose has argued that it could “deliver significantly greater benefits” to GKN’s shareholders than the current management team.

GKN makes parts for the Boeing 737 jet and Black Hawk helicopter, as well as components for Volkswagen and Ford cars.

Last month, it said it would split the aerospace an automotive divisions into separate companies.

Outlining its transformation plan, it said “operational separation” had already begun and the “formal” separation would take place “when it maximises shareholder value”.

‘Significant cash’

Last year, lower profit margins and cash generation prompted GKN to conduct a wide-ranging review of its business. The company also warned on profits after uncovering problems at its aerospace division.

In January, it said a new two-year strategy called Project Boost would significantly increase cash flow by cutting costs and expenditure, along with tighter pricing control.

“This strategy is expected to generate significant cash for shareholders in the short term and meaningful sustainable cash flows over the mid to long term,” said Ms Stevens.

Both GKN and Melrose saw their shares rise following publication of the turnaround plan.