(qlmbusinessnews.com via uk.reuters.com — Tue, 21st May 2019) London, UK —
LONDON (Reuters) – British Steel, the country’s second largest steel producer, is on the brink of collapse unless the government agrees to provide an emergency 30 million pound loan by later on Tuesday, a source close to the situation said.
The steelmaker, owned by investment firm Greybull Capital, employs around 5,000 people, mostly in Scunthorpe, in the north of England, while 20,000 more depend on in its supply chain.
Greybull, which specialises in turning around distressed businesses, paid former owners Tata Steel a nominal one pound in 2016 for the loss-making company which they renamed British Steel.
British Steel had asked the British government for a 75 million pound loan but has since reduced its demand to 30 million pounds after Greybull agreed to put up more money, according to the source close to the negotiations.
If the loan is not approved by Tuesday afternoon, administrators EY could be appointed for British Steel as early as Wednesday, the source said.
“The UK steel industry is critical to our manufacturing base and is strategically important to UK industry. The government must intervene,” said Gill Furniss, Labour’s spokeswoman for steel.
“Administration would be devastating for the thousands of workers and their families who rely on this key industry in a part of the country which has not had enough support and investment from government over decades,” Labour said.
If British Steel goes under it would mark the demise of one of the key parts of what was once a national champion of the British economy.
Unions demanded the government give the loan.
“They must now put their money where their mouth is,” said Ross Murdoch, national officer for the GMB union for steelworkers.
“GMB calls on the Government and Greybull to redouble efforts to save this proud steelworks and the highly skilled jobs,” Murdoch said.
A spokeswoman for Britain’s business ministry declined to comment on the details of British Steel but said: “We are in regular conversation with a wide range of companies.”
British Steel secured a government loan of around 120 million pounds in May to enable it to comply with the European Union’s Emissions Trading System (ETS) rules.
(qlmbusinessnews.com via theguardian.com – – Tue, 21st May 2019) London, Uk – –
Fraudsters use professional-looking websites and promise high returns
Investment scams involving cryptocurrencies such as bitcoin and foreign currency trading have tripled in a year, with the average victim losing £14,600, according to the UK’s Financial Conduct Authority (FCA).
The regulator and the police-run body Action Fraud are warning the public to be wary, with the scams typically promising high returns and carried out via bogus online trading platforms. More than £27m was lost to frauds involving so-called crypto-assets and forex investments in 2018-19, said the FCA.
Crypto-assets is a broad term covering many different types of products. The most popular include tokens such as bitcoin and litecoin. The FCA calls these “exchange tokens,” though they are often referred to as cryptocurrencies, cryptocoins or payment tokens.
The number of such scams reported more than tripled last year to 1,834, from 530 in 2017-18.
Fraudsters often used social media to promote their “get rich quick” online trading platforms, the FCA said. Posts often used fake celebrity endorsements and images of luxury items such as expensive watches and cars, that link to professional-looking websites where consumers are persuaded to invest.
Investors will often be led to believe that their first investment has successfully made a profit. The fraudster will then contact the victim to urge them to invest more money or introduce friends and family, but eventually the returns stop, the customer’s account is closed and the scammer disappears with no further contact.
(qlmbusinessnews.com via bbc.co.uk – – Mon, 20th May 2019) London, Uk – –
Google has barred the world's second biggest smartphone maker, Huawei, from some updates to the Android operating system, dealing a blow to the Chinese company.
New designs of Huawei smartphones are set to lose access to some Google apps.
The move comes after the Trump administration added Huawei to a list of companies that American firms cannot trade with unless they have a licence.
Google said it was “complying with the order and reviewing the implications”.
Huawei said it would continue to provide security updates and after sales services to all existing Huawei and Honor smartphone and tablet products covering those have been sold or still in stock globally.
“We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally,” it added.
What does this mean for Huawei users?
Existing Huawei smartphone users will be able to update apps and push through security fixes, as well as update Google Play services.
But when Google launches the next version of Android later this year, it may not be available on Huawei devices.
Future Huawei devices may no longer have apps such as YouTube and Maps.
Huawei can still use the version of the Android operating system available through an open source licence.
Ben Wood, from the CCS Insight consultancy, said the move by Google would have “big implications for Huawei's consumer business”.
What can Huawei do about this?
Last Wednesday, the Trump administration added Huawei to its “entity list”, which bans the company from acquiring technology from US firms without government approval.
In his first comments since the firm was placed on the list, Huawei chief executive Ren Zhengfei told Japanese media on Saturday: “We have already been preparing for this.”
He said the firm, which buys about $67bn (£52.6bn) worth of components each year according to the Nikkei business newspaper, would push ahead with developing its own parts.
Huawei faces a growing backlash from Western countries, led by the US, over possible risks posed by using its products in next-generation 5G mobile networks.
Several countries have raised concerns that Huawei equipment could be used by China for surveillance, allegations the company has vehemently denied.
Huawei has said its work does not pose any threats and that it is independent from the Chinese government.
However, some countries have blocked telecoms companies from using Huawei products in 5G mobile networks.
So far the UK has held back from any formal ban.
“Huawei has been working hard on developing its own App Gallery and other software assets in a similar manner to its work on chipset solutions. There is little doubt these efforts are part of its desire to control its own destiny,” said Mr Wood.
Short-term damage for Huawei?
By Leo Kelion, BBC Technology desk editor
In the short term, this could be very damaging for Huawei in the West.
Smartphone shoppers would not want an Android phone that lacked access to Google's Play Store, its virtual assistant or security updates, assuming these are among the services that would be pulled.
In the longer term, though, this might give smartphone vendors in general a reason to seriously consider the need for a viable alternative to Google's operating system, particularly at a time that the search giant is trying to push its own Pixel brand at their expense.
As far as Huawei is concerned, it appears to have prepared for the eventuality of being cut off from American know-how.
Its smartphones are already powered by its own proprietary processors, and earlier this year its consumer devices chief told German newspaper Die Welt that “we have prepared our own operating systems – that's our plan B”.
Even so, this move could knock its ambition to overtake Samsung and become the bestselling smartphone brand in 2020 seriously off course.
What about the US-China trade war?
The latest move against Huawei marks an escalation in tensions between the firm and the US.
The company is facing almost two dozen criminal charges filed by US authorities. Washington is also seeking the extradition of Huawei executive Meng Wangzou from Canada, where she was arrested in December at the behest of American officials.
It comes as trade tensions between the US and China also appear to be rising.
The world's two largest economies have been locked in a bruising trade battle for the past year that has seen tariffs imposed on billions of dollars worth of one another's goods.
Earlier this month, Washington more than doubled tariffs on $200bn of Chinese goods, prompting Beijing to retaliate with its own tariff hikes on US products.
The move surprised some – and rattled global markets – as the situation had seemed to be nearing a conclusion.
The US-China trade war has weighed on the global economy over the past year and created uncertainty for businesses and consumers.
(qlmbusinessnews.com via news.sky.com– Mon, 20th May 2019) London, Uk – –
Subpostmasters have seen their income reduced as more government services move online and many are now struggling to stay afloat.
The Post Office network is at “tipping point” and 2,500 branches could close in a year, the subpostmasters' federation has warned.
It says the effect on communities – where sometimes the post office is the only shop – could be catastrophic.
The National Federation of Subpostmasters (NFSP) told the government's business committee its members' morale and the viability of post offices had been “eroded to the extent that the network's resilience is extremely limited”.
“We believe a tipping point has been passed and the consequences of this are now being realised,” it said.
“Subpostmasters are resigning in high numbers because it is increasingly difficult to make a decent living. The closure of 2,500 post offices in a year would be a catastrophic loss to communities.”
The NFSP says more than a fifth of postmasters – who run their branches as private businesses – are thinking of shutting up shop, downsizing or trying to get someone to take over.
Three-quarters of them end up earning less per hour than the National Living Wage, according to a recent poll by the federation.
One in five also say they or their partner have to do another job to make ends meet.
As of March 2018 there were around 11,500 post offices in operation.
As the move to online continues, the money post offices make from providing government services has plunged from £576m in 2005 to £99m in 2018.
The NFSP says its members feel “relegated to the bottom of the food chain” by the government and Royal Mail and it wants the subsidy of post offices – due to end in 2021 – to be extended.
The number of post offices has been relatively stable since 2009, though the overall network size has declined since the 1980s. The Post Office was separated from Royal Mail in 2012.
The business, energy and industrial strategy committee is investigating the state of the Post Office network and on Tuesday will hear evidence from the NFSP, as well as the Communication Workers Union, WH Smith and other groups.
The first thing you should know about Palm Beach is that it's an island (unto itself) – the most exclusive town in America, and (according to writer Laurence Leamer) America's first “gated community.” Mo Rocca takes a tour of the city that rose from Florida's tropical wilderness, which today features one of the richest commercial strips in America, and is home to Mar-a-Lago, the “Winter White House” resort of President Donald Trump.
As the decline of brick and mortar retail rolls on, commercial real estate developers are left with massive abandoned properties. Who will fill that underutilized space? A series of recent acquisitions by associates of Amazon in Northeastern Ohio provides some clues.
China has the world’s fastest and largest high-speed rail network — more than 19,000 miles, the vast majority of which was built in the past decade. Japan’s bullet trains can reach nearly 200 miles per hour and date to the 1960s. They have moved more than 9 billion people without a single passenger causality. casualty France began service of the high-speed TGV train in 1981 and the rest of Europe quickly followed. But the U.S. has no true high-speed trains, aside from sections of Amtrak’s Acela line in the Northeast Corridor. The Acela can reach 150 mph for only 34 miles of its 457-mile span. Its average speed between New York and Boston is about 65 mph. California’s high-speed rail system is under construction, but whether it will ever get completed as intended is uncertain. Watch the video to see why the U.S. continues to fail with high-speed trains, and some companies that are trying to fix that.
(qlmbusinessnews.com via bbc.co.uk – – Fri, 17th May 2019) London, Uk – –
Online giant Amazon has announced a big investment in food courier Deliveroo.
The exact figure was not given, but Amazon is the biggest investor in Deliveroo's latest round of fund raising, which in total raised $575m (£450m).
Deliveroo said it would use the money for international expansion, improving its service and to grow its delivery-only kitchens business.
Several existing US investors also contributed to the fund raising.
The amount of capital invested in Deliveroo since it was founded in 2013 now totals more than $1.5bn, and the firm is one of Europe's fastest growing technology companies.
Deliveroo founder and chief executive Will Shu said he was looking forward to working with “such a customer-obsessed organisation” like Amazon.
Amazon said it was attracted by Deliveroo's “innovative technology service”.
The backing from Amazon gives Deliveroo a boost against rivals such as JustEat and Uber Eats.
The online retailer briefly had its own UK food delivery venture, Amazon Restaurants UK, which it started in 2016 but closed just two years later.
“They [Amazon] weren't able to compete within the market so they've gone for the buying option instead. They've got the money behind them to do that,” Louise Dudley, fund manager at investment firm Hermes, told the BBC's Today programme.
“It [Deliveroo] is not just a food delivery company it's very much a tech company. They have this tech platform that is seen is very attractive. They are able to expand into new areas and think about how people's tastes are evolving and be able to predict what stores will be successful. That predictive growth is very attractive to Amazon”.
Amazon had previously been reported to have made approaches to buy Deliveroo outright. Uber also reportedly had talks with Deliveroo over buying it.
Rory Cellan-Jones Technology correspondent
It was already a fierce contest – now the battle to dominate the food delivery business in the UK just moved to a whole new level.
In a rare failure Amazon decided last year to pull its Restaurants food service out of a UK market where Deliveroo, Just Eat and Uber Eats were scrapping to be top dog. Now it's put its firepower behind Deliveroo, which was already confident that its technology platform gave it the edge.
The company will now use some of its extra cash to build more of its “super kitchens” expanding its offering beyond traditional restaurants and invest more in machine learning to speed up delivery times.
Whether the market for food deliveries is quite as big as all the firms believe – and whether it stretches far beyond London twenty-somethings – remains to be seen but they all seem prepared to spend big money to win the lion's share.
The question is why did Amazon not just buy the whole business? Perhaps the ecommerce giant wanted to sample a starter before swallowing the whole three course meal.
Deliveroo now operates in more than 100 towns and cities across the UK, but has a much smaller share of the market than rival Just Eat which dominates the food delivery sector.
Just Eat's shares fell 8% in early trading, but analysts at Liberum said that despite the extra funding, Deliveroo was unlikely to become a serious competitor.
“Just Eat's market leading position will be incredibly difficult to overcome, especially given its strength in smaller towns.
“In the UK, it has an estimated 3-4 times greater share than Uber Eats and Deliveroo combined and, crucially, 60%+ of its customers are in small towns where it is effectively the only option for restaurants and where the Uber Eats/Deliveroo model just doesn't work because of the economics,” Liberum said.
Mr Shu came up with the idea for the firm after he moved from New York to London as a banking analyst. He was working long hours and was frustrated by the fact so few restaurants delivered, a service he had used daily in the US.
In the firm's early days, Mr Shu delivered all the food himself on a motorbike, while Greg Orlowski, his co-founder who has since left the business, developed the booking technology from his home in the US. Mr Shu still claims to get on his bike once a week to deliver an order to customers in London, as a way of staying in touch with riders.
As well as the UK, Deliveroo now operates in Australia, Belgium, France, Germany, Hong Kong, Italy, Ireland, Netherlands, Singapore, Spain, the United Arab Emirates and Taiwan.
Global sales at the firm more than doubled in 2017, jumping to £277m, but its losses continued to increase, doubling to nearly £185m as it invested in global expansion.
The firm uses more than 60,000 couriers – mostly using bikes or moped – to deliver food from restaurants to customers.
Deliveroo does not employ its riders directly, but pays them per delivery.
Last year, a group of 50 UK Deliveroo couriers won a six-figure payout after claiming they had been unlawfully denied holiday and minimum wages.
(qlmbusinessnews.com via theguardian.com – – Fri, 17th May 2019) London, Uk – –
Jets have been grounded since March after being involved in two fatal crashes
Boeing has completed a software update for its 737 Max jets, which have been grounded worldwide since March after they were involved in two fatal crashes.
The planemaker said it was in the process of submitting a pilot training plan to the US Federal Aviation Administration and would work with the regulator to schedule its certification test flight.
The FAA is planning a meeting on 23 May in Fort Worth, Texas, with regulators from around the world to update them on reviews of Boeing’s software fix and on pilot training.
Aviation regulators from other countries will have to assess Boeing’s proposed fixes and clear the aircraft to fly in regions independently of the FAA.
It is unclear when the 737 Max aircraft will return to service but US airlines have said they hope the jets will fly this summer.
Southwest Airlines and American Airlines, the two largest US operators of the Max, pulled the planes from their schedules until 5 August and 19 August respectively.
The airlines, which must still decide on pilot training, have said they would use the jets as spare planes if they are approved for flight before those dates.
The FAA said on Thursday that Boeing had not yet submitted its final software package for approval.
The 737 Max was grounded after an Ethiopian Airlines crash in March killed all 157 on board. It happened five months after a similar crash of a Lion Air flightkilled 189 people.
Boeing said it hoped the software upgrade and associated pilot training would add layers of protection to prevent erroneous data triggering a system called MCAS, which was activated in both the planes before they crashed.
It said it had completed simulator testing and engineering test flights as well as developed training and education materials, which were being reviewed by the FAA, global regulators and airline customers.
To date, Boeing had flown the 737 Max with the updated software for more than 360 hours on 207 flights, the company said.
(qlmbusinessnews.com via uk.reuters.com –Thur, 16th May 2019) London, UK —
BRUSSELS (Reuters) – EU antitrust regulators on Thursday fined Barclays, Citigroup, JPMorgan, MUFG and Royal Bank of Scotland a total of 1.07 billion euros ($1.2 billion) for rigging the spot foreign exchange market for 11 currencies.
Swiss peer UBS was not fined as it alerted the two cartels to the European Commission. The financial industry has been hit with billion euro fines worldwide in the last decade for rigging key benchmarks.
(qlmbusinessnews.com via cityam.com – – Thur, 16th May, 2019) London, Uk – –
Just Group shares fell more than seven per cent this morning after it revealed a plunge in sales.
The retirement group said retirement income sales for the three months to 31 March were 59 per cent lower than for the previous quarter, which it said was a result of a lower level of completed defined benefit de-risking sales.
Defined benefit sales were down 90 per cent year-on-year to £26m which it said was due to a temporary reduction in activity levels in its target segment.
The company said that in the second quarter so far it had completed a series of transactions with a value in excess of £300m and said its run rate is returning to that of the second half of 2018.
“The pipeline remains full and market pricing is attractive,” it added.
Guaranteed income for life (Gifl) sales were down 23 per cent year-on-year to £145m.
Lifetime Mortgage advances of £79m were down 47 per cent, which it said was a result of a focus on capital efficiency.
Interim chief executive David Richardson said: “Today’s update reflects our disciplined approach to the management of our capital in the new regulatory regime. Our GIfL price increases and DB pricing standards have been implemented rigorously, ensuring that we deliver to shareholders a new business internal rate of return in line with our targeted mid-teen levels. The continued growth in our markets gives us confidence that there remains a considerable opportunity to deploy capital in a disciplined and profitable manner.”
The company said it would close its US business as it aimed to bolster its capital position.
“Our capital position has been much improved by the £375m raised in March, and we are absolutely focused on achieving capital neutrality by 2022. We have a plan in place to ensure we achieve this target, which includes a number of actions we will be taking over the course of this year. These include a renewed focus on cost control, the closure of loss making operations such as the US, reductions in new business LTM backing ratios and a shift towards more capital efficient assets,” Richardson said.
At the end of April chief executive Rodney Cook resigned following a turbulent year that included cancelling its dividend and raising £375m in fresh capital in March.
(qlmbusinessnews.com via bbc.co.uk – – Wed, 15th May 2019) London, Uk – –
Asda could be listed on the stock market after its merger with supermarket rival Sainsbury's was blocked by the competition authorities.
Judith McKenna, chief executive of Asda's owner Walmart, has told staff such a listing is being considered.
But, she told managers at an event in Leeds – where Asda is based – any listing could “take years”.
It comes after the Competition and Markets Authority blocked its merger with rival Sainsbury's.
The CMA was concerned the tie-up would raise prices for consumers, raise prices at the supermarkets' petrol stations and lead to longer checkout queues.
It has left the giant US retailer Walmart looking at options for the supermarket chain it bought twenty years ago.
“While we are not rushing into anything, I want you to know that we are seriously considering a path to an IPO – a public listing – to strengthen your long-term success,” Ms McKenna said.
Walmart would have kept a 42% stake in the enlarged Sainbury's-Asda business if the £15bn tie-up had gone ahead.
The remarks by Ms McKenna are the first time that Walmart has spoken about the future of its UK operations since the CMA blocked the deal.
Asda is traditionally a value supermarket but had come under pressure from discounters Aldi and Lidl, which have rapidly expanded their market share in recent years.
Walmart, often described as the world's largest retailer, has already listed its Mexico operations and has been buying smaller companies, such as online shopping Jet.com, as well as brands such as Bonobos and Bare Necessities, to expand into new areas.
Price cuts loom
Ms McKenna told the 1,200 managers at the meeting: “Walmart does not have a one-size-fits-all approach to operating its international markets, but a consistent focus on strong local businesses powered by Walmart”.
Even before the CMA formally blocked the deal, there had been reports that private equity house KKR could consider an offer for Asda and install former Asda chief executive Tony De Nunzio to run the operation.
The current Asda chief executive Roger Burnley also spoke to the managers at the meeting, which took place on Tuesday, and told them that there would be no change in strategy.
Asda, which calls its staff “colleagues”, intends to make £80m of price cuts during the rest of this year and trial new technology.
A “scan and go” initiative was launched in 25 stores last week and more “click and collect” towers will be installed in stores.
(qlmbusinessnews.com via news.sky.com– Wed, 15th May 2019) London, Uk – –
The travel operator is counting the cost of a weak consumer environment as well as the grounding of Boeing 737 MAX aircraft.
Travel operator TUI has reported widening half-year losses and a fall in summer bookings as it counts the cost of weak consumer confidence and Brexit uncertainty.
The group reported an underlying loss of €301m (£261m) for the six months to the end of March, up from €170m (£148m) in the same period a year ago.
It has also been knocked by the grounding of Boeing's 737 MAX aircraft, which it has previously warned could cost up to €300m (£261m) as it leases more aircraft to cover its routes.
TUI said the decline in its first-half performance was partly due to the knock-on impact of last summer's heatwave holding back bookings and because it had too much capacity in Spain as holidaymakers opted for cheaper destinations such as Turkey.
For this summer, bookings in its package holiday and airlines business are down 3% while selling prices are up by only 1% amid a competitive market – not enough for TUI to cover rising costs.
TUI said that for this part of its business “weak demand environment persists”, putting pressure on profit margins.
“This is driven by a number of factors – reduced demand due to last year's extraordinary hot summer, slowdown of consumer confidence, Brexit uncertainty, shift in demand to the eastern Mediterranean coupled with overcapacity to Spain, as well as the 737 MAX grounding,” TUI said.
However, the group said its hotels and cruise ships business, where it has been investing in expansion over recent years, continued to perform well.
The results come after two profit warnings from TUI earlier this year – one blamed on the weak UK market and the other on the Boeing issue.
TUI's fleet of 150 aircraft includes 15 currently grounded 737 MAX aeroplanes, with a further eight scheduled for delivery after the lifting of the grounding.
It has warned investors that it faces a €200m (£174m) hit from the grounding of the aircraft, assuming flights resume by mid-July.
If it does not become clear by later this month that flying will re-start by that time, it will have to extend measures to cover for this until the end of the summer season, adding a further impact of up to €100m (£87m).
TUI chief executive Fritz Joussen said the company was “on track, both strategically and operationally” and that medium and long term growth forecasts were intact. Shares rose 3%.
The company is not the first travel firm to warn of a Brexit impact on demand, with easyJet saying last month that the uncertainty was having an impact.
Meanwhile, TUI's rival Thomas Cook has been seeking new debt funding from lenders and has been looking to sell its airline business.
(qlmbusinessnews.com via uk.reuters.com — Tue, 14th May 2019) London, UK —
LONDON (Reuters) – Britain’s unemployment rate fell to its lowest since the mid-1970s in early 2019 as employers hired in the run-up to the original date for Britain’s EU departure, but there were signs that Brexit was beginning to weigh on the jobs boom.
The rate edged down to 3.8% in the first quarter, its lowest since the three months to January 1975, the Office for National Statistics said on Tuesday. Unemployment dropped by 65,000, the most in more than two years.
But employment growth slowed to 99,000, well below a median forecast of 135,000 in a Reuters poll of economists, and wage growth lost momentum too.
“It is possible to see the shadow of Brexit in some of these figures,” Mike Jakeman, an economist at accountancy firm PwC, said. “March was the month when Brexit anxiety was at its most acute and it might have been the case that firms were more reticent to offer higher wages and advertise new positions.”
The numbers could just as easily be a minor blip in the recent run of strong jobs and earnings growth, he also said.
Britain’s labour market has remained resilient as Brexit has neared, helping households whose spending has driven an otherwise fragile economy.
However, the jobs boom may well reflect how employers have opted to take on workers – who can be laid off quickly during a downturn – rather than commit to longer-term investments while they wait for uncertainty over the conditions of Britain’s departure from the European Union to lift.
Brexit was originally due on March 29. Last month it was delayed for a second time until Oct. 31 to give Prime Minister Theresa May more time to break an impasse over its implementation in parliament and in her own Conservative Party.
The strength of the labour market has pushed wages up more quickly than the Bank of England has forecast, leading some economists to think it might raise interest rates faster than investors expect once the Brexit uncertainty clears.
The ONS said that in January-March, total earnings including bonuses rose by an annual 3.2%, slowing from 3.5% in the three months to February and weaker than a Reuters poll forecast of 3.4%.
Excluding bonuses, pay growth also slowed, rising by 3.3%, in line with the Reuters poll.
The BoE this month said it expected wage growth of 3% at the end of this year.
Many people in Britain have however seen no increase in their living standards since before the financial crisis more than a decade ago, and a Nobel Prize-winning economist said on Tuesday that Britain risked tracking the rise in inequality seen in the United States.
The recent hiring surge, while good for workers in the short term, has weighed on Britain’s weak productivity growth – a major fault line in the economy – raising concerns about the long-term prospects for growth and prosperity.
The ONS said output per hour fell by an annual 0.2% in the first quarter of 2019, its third consecutive fall. In quarterly terms, output per hour dropped by 0.6%, its biggest fall since the end of 2015.
The ONS data also showed the number of EU workers in the United Kingdom rose by an annual 58,000 after three consecutive falls. The number of non-EU workers in the country grew more strongly, up by 124,000.
(qlmbusinessnews.com via theguardian.com – – Tue, 14th May 2019) London, Uk – –
Chain joins John Lewis in employee ownership as staff get £1,000 for each year they have worked
The founder of Richer Sounds is handing control of the hi-fi and TV retail chain to staff, in a move that will also give employees large cash bonuses.
Julian Richer will announce to staff on Tuesday that he has transferred 60% of his shares into a John Lewis-style trust. Richer, who recently turned 60, said the “time was right” to pass the baton to the chain’s 531 employees.
“My father dropped down dead at 60 so I am very keen for this to happen in my lifetime,” explained Richer. “I felt the time was right, rather than leaving it until I’m not around, to ensure the transition goes smoothly and I can be part of it. I still really, really care but it is time for the next generation.”
The company will pay Richer an initial £9.2m for the stake but the businessman is giving £3.5m of that back to staff, who will receive £1,000 for every year they have worked for the retailer.
The average payout will be £8,000 but there are 39 employees with more than 20 years’ service who stand to receive substantial windfalls. The company’s nine directors, who Richer said earn six-figure salaries, are not included in the bonus pool: “This is to thank loyal, hardworking colleagues.”
With annual sales of nearly £200m, Richer Sounds is one of the biggest UK companies to embrace employee ownership in recent years.
The Employee Ownership Association (EOA) says more than 350 businesses have now adopted the model, with at least 50 more preparing to follow suit. Recent converts include Riverford, the organic vegetable box company and Aardman, the Bristol-based animation studio behind Wallace & Gromit.
An unorthodox business figure, with his long hair and sideline as the drummer in funk band Ten Millennia, Richer is lauded for the success of Richer Sounds which he founded in 1978 at the age of 19. His business philosophy, set out in his 2001 management book The Richer Way, champions providing secure, well-paid jobs with a happy workforce as being key to business success over the long term.
Richer Sounds, which has 53 stores, refuses to use zero-hours contracts and is one of the 14% of companies with a pay gap that favours women. Employee perks include access to company holiday homes around the world, including in European cities such as Paris, Venice and Barcelona. It donates 15% of profits, which last year stood at £9.6m, to charity.Advertisement
Richer will stay on as managing director for the time being. Day-to-day operations are already overseen by the chief executive, Julie Abraham, who will eventually succeed him. Richer and the retailer’s chairman David Robinson are two of four trustees of the newly established Richer Sounds Trust.
Robinson, who has worked for the company for 35 years, said the ownership change would make colleagues feel even more connected to the company: “They have a real stake in the success of the business and can take pride in knowing they are shareholders, building for the future.”
Richer, who has no children, had written the plan into his will but began preparations two years ago to avoid his wife Rosie having to oversee the process. “I think it’s the adult thing to do and, psychologically, passing control is important because I’ve been on this gold-plated treadmill for 40 years,” he said.
The trust will operate according to a set of principles designed to ensure it continues to follow the course set by Richer over the past 40 years. A colleague advisory council will be established to represent the interests of employees and shape the company’s future.
Richer said the arrangement meant the company would avoid an “aggressive” outside investor “changing the strategy”.
If Richer Sounds continues to be successful Richer will receive additional payments over a 15 year period but would have raked in more cash if he had hoisted a for sale sign. His 100% ownership accounted for just over half his £160m fortune in the annual Rich List survey.
“I feel an incredible loyalty to my hard working colleagues and they should receive any benefit from running the business once my time is up as opposed to just selling to the highest bidder,” said Richer. “They know the business, and especially our rather unusual culture, extremely well, and the business is therefore far more likely to flourish under their own steam because of this.”
The changes at Richer Sounds do not mean the Yorkshire-based entrepreneur, who is currently advising Marks & Spencer on how to change its dysfunctional business culture, is about to retire.
He is financing Taxwatch, a non-profit organisation which pores over the opaque finances of multinational companies, and is considering funding a test case against zero-hours contracts.
The EOA chief executive, Deb Oxley, suggested employee ownership was reaching a tipping point: “We’re delighted to see Richer Sounds secure its future independence with a focus on its people and an eye on the future world – a world with a more inclusive economy and where more businesses are a force for good.”
What is employee ownership?
Employee-owned businesses are entirely or significantly owned by their workforce. Shares can be held by individuals or collectively through an employee trust – or a mixture of both. A company will also have a mechanism to represent their views, such as a council, board or employee representative. Decisions are still made by a board but employees have a say on operational and strategic matters. The model is said to allow companies to plan investment and growth over a longer horizon rather than having to satisfy the short-term demands of external shareholders.
Other examples of employee-owned companies
The John Lewis Partnership, which owns the eponymous department stores and Waitrose, is the UK’s biggest employee-owned business with 83,900 employees or “partners”. Pioneering businessman John Spedan Lewis signed away his ownership rights in 1929 to allow future generations to take forward an “experiment in industrial democracy”.
Riverford Organic Farmers made the switch last year when founder Guy Singh-Watson gave over a 76% stake to a trust. Its 650 employees will share 10% of annual profits generated by the £60m turnover business, which delivers nearly 50,000 boxes of produce a week. The company is paying Singh-Watson £6m over four years.
Last year the owners of Aardman, the Bristol-based animation studio behind Wallace & Gromit, Shaun the Sheep and Morph, used a trust to pass a 75% stake to 140 employees and freelancers. The move was designed to protect the company’s independence and its animators will continue to receive a share of profits.
Employees of 134 year-old Essex jam-maker Wilkin & Sons own almost half the company through a trust. Many staff live in company accommodation on the estate surrounding the Tiptree factory, with trading profits used to buy back shares for the trust. Profits also go to support local projects including sports and arts organisations.
(qlmbusinessnews.com via bbc.co.uk – – Mon, 13th May 2019) London, Uk – –
Metro Bank's share price has fallen another 4% in early trading as concerns persist over its financial health.
The bank's shares have lost three-quarters of their value since January, when it announced it needed money to plug a funding gap left by an accounting error.
It said it was in “final discussions” with shareholders and new investors over its plans to raise £350m.
“Feedback continues to be positive,” it added.
The bank said it expected to raise the money by the end of June.
It said it would raise the money via a share placing, with additional shares created and offered to new and existing investors.
How important is Metro Bank?
If you live outside London and the South East of England, it might be entirely unfamiliar to you.
It has no branches north of Peterborough and none west of Bristol and Bath.
However, inside that restricted area, it now has 67 branches and is arguably the best-known of the “challenger” banks that sprang up in the wake of the financial crisis, taking on the established names such as Lloyds, Barclays, HSBC, RBS and Santander.
When it opened its first branch in London's Holborn in 2010, it was the first High Street Bank to set up in the UK in more than 100 years.
It now has 1.7 million customer accounts.
Its founder and chairman is billionaire American Vernon Hill. Mr Hill shook up the US banking scene in 1973, when at the age of 26 he founded the US chain Commerce Bank with just one branch.
By the time he sold it in 2007 for $8.5bn (£6.5bn), he had built it into a major player across the US with 440 stores.
So what went wrong at Metro Bank?
“They misclassified a whole host of commercial property loans and buy-to-let loans, giving them the incorrect risk rating,” said Michael Hewson, chief market analyst at CMC Markets.
“Commercial property generally is a slightly more risky form of loan than a buy-to-let.”
Mr Hewson told the BBC's Today programme that incorrectly categorising those commercial property loans as buy-to-let loans meant that “they weren't holding enough capital on their balance sheet as a result”.
The bank's new share placing is aimed at making up for the shortfall on its books.
What were the knock-on effects?
Last week, the bank said pre-tax profits in the three months ended 31 March 2019 had halved, from £8.6m to £4.3m compared with the same time last year.
The bank also said it had lost key clients in the wake of the mistake.
“Adverse sentiment following January's update impacted deposit growth in the quarter, with a small number of large commercial and partnership customers making withdrawals,” said Metro Bank's chief executive, Craig Donaldson.
Mr Donaldson has said there are “absolutely no question marks” over the bank's future.
He said he had offered to resign when the accounting error was first discovered, but he had the confidence of the board to carry on. However, he was foregoing his bonus as a result.
What does this mean for customers?
Over the weekend, queues formed at some bank branches in the west London area, after a WhatsApp message advised customers to check their safety deposit boxes.
“We're aware there were increased queries in some stores about safe deposit boxes following false rumours about Metro Bank on social media and messaging apps,” a spokesperson said.
“There is no truth to these rumours and we want to reassure our customers that there is no reason to be concerned.”
Customers with up to £85,000 in their account are covered by the Financial Services Compensation Scheme, which guarantees that if a bank runs into trouble, depositors will get their money back up to that level.
What is distinctive about the bank's branches?
On its website, Metro Bank bills itself as a “different kind of High Street bank”, with branches open seven days a week, from 08:00 to 20:00 on weekdays, where no appointment is necessary and you can open an account and get a debit card straightaway.
The branches are open-plan, with no glass barriers between the customers and staff.
There are also giant “Dogs rule” posters featuring Mr Hill's Yorkshire terrier, Sir Duffield – officially the bank's chief canine officer – advertising its policy of welcoming dog owners.
Each branch is stocked with bowls of dog biscuits and water and there are even canine-sized, logo-emblazoned neckerchiefs.
The branches are also customer-friendly in other ways, with lollipops for children and free pens prominently displaying the Metro brand.
(qlmbusinessnews.com via news.sky.com– Mon, 13th May 2019) London, Uk – –
Centrica said it lost 234,000 UK home energy supply accounts at the start of 2019, adding to 742,000 shed in 2018.
British Gas owner Centrica has revealed a fresh customer exodus at the start of the year and warned that a “challenging trading environment” will put further pressure on its annual performance.
The FTSE 100 company said it lost 234,000 UK home energy supply accounts in the first four months of 2019, partly blamed on changes to the government's energy price cap.
Centrica said in a trading update that its performance was hit by a “specific set of external factors” including the price cap as well as warmer than usual weather and falling UK natural gas prices.
It said: “While a number of the factors leading to the challenging trading environment are temporary in nature, they will impact financial performance in the first half of 2019 and have also put some further pressure on the outlook for the full year.”
Meanwhile, Centrica said it is continuing to target efficiency savings and the disposal of “non-core” parts of its business, as well as pressing ahead with a previously-announced programme of job cuts which will see its workforce reduced by 1,500 to 2,000 this year.
It kept its full-year outlook for cash flow and debt unchanged, helping shares rise 2% in early trading.
British Gas is Britain's largest energy supplier.
More from British Gas
Its loss of 234,000 UK customers at the start of the year adds to the 742,000 it shed in 2018.
Centrica blamed the latest decline partly on a “spike in customer churn in March and April following the announcement of a significant increase in the level of the default tariff cap”.
The introduction of the cap, designed to prevent millions of UK energy customers from being ripped off, has had a major impact on the biggest providers Centrica and SSE – the latter partly blaming the policy for a round of job cuts announced last week.
Centrica has already said the cap would have a £70m impact on profits for the first quarter of 2019 and also weigh on its performance for the year as a whole.
The initial level of the cap, which came into force at the start of January is set by regulator Ofgem, was increased by £117 after only three months.
This hike was then passed on to customers by many of the energy providers.
Centrica's trading statement came hours ahead of its annual general meeting.
Its chief executive Iain Conn said: “Although operational performance has been largely in line with our plans, external factors have presented challenges for Centrica during the first four months of 2019, in the form of the default tariff cap, warm weather, and falling gas prices.”
The AGM comes a month after Centrica's annual report revealed a 44% annual pay hike to £2.42m for Mr Conn in 2018.
Profits at Centrica's UK home energy supply division fell 19% last year but the overall group's headline measure of operating profit rose 12% to £1.39bn.
The top 15 richest countries around the globe! These are the world's highest ranking nations. Which nations make most of their billions off of fish sales? What country hosts the gambling capital of the world? Find out as we look at the 15 Richest Countries In The World. #15 San Marino One of the smallest nations around the world, the Republic of San Marino only has a population of a little more than 33 and a half thousand people. The expanse of the country is small as well at just 24 square miles. But size isn’t everything, as San Marino ranks among the strongest economies today. With a GDP per capita of 50.9 thousand dollars, it’s no wonder this rich little country is the only nation in the world with more cars than there are people! #14 Austria The nation of Austria boasts a strong, well-developed social market economy that has elevated the country’s wealth among the elite. Thanks to the work of labour movements, the citizens of this European country have enjoyed moderate wages since the 1940s with more than half of the country’s salary and wage earner’s belonging to unions. Tourism also plays a major part in Austria’s economy, accounting for at least ten percent of the country’s gross domestic product, or GDP. Making a majority of its products to trade with surrounding EU countries, nearly 66% of Austrian imports and exports are made within their home continent. At a GDP per capita of 51.7 thousand dollars and a population of 8.75 million people, Austria maintains its hold with one of the most stable and successful economies worldwide. #13 Netherlands The Dutch have led Europe as one of the most consistent producers in the agricultural, fishing, shipping and trading industries since the 16th century. A population of 17 million people inhabit the Netherlands and the country churns out a GDP per capita of 52.9 thousand dollars! In addition to its seaward domination, the Dutch people have also been fortunate to have generated huge revenue from the discovery of natural gas resources in 1959. The Netherlands have an open trade economy that allows them to prosper by relying on foreign trade. Their economy is notable across the globe for its low unemployment levels, decent surplus and stable industrial relations. The Netherlands expects to have hit a budget surplus of .8 percent in 2018 and its unemployment rates are definitely below 5 percent. Numerous other factors like the countries social programs and well protected employee rights keep Dutch workers happy and the nation of the Netherlands near the top of the world’s wealthiest.