UK economy expanded at its slowest rate in six years in 2018

( via – – Mon, 11th Feb 2019) London, Uk – –

The UK economy expanded at its slowest rate in six years in 2018.

Growth in the year was 1.4%, down from 1.8% last year and the lowest since 2012, the Office for National Statistics (ONS) said.

It blamed slower factory output and car production for the slowdown, among other factors.

It follows forecasts of even slower growth in 2019 as the UK grapples with Brexit uncertainty and a weaker global economy.

According to the ONS, quarterly growth also slowed, falling to 0.2% in the three months to December – down from 0.6% in the three months to September.

Head of GDP at the ONS, Rob Kent-Smith said: “GDP slowed in the last three months of the year with the manufacturing of cars and steel products seeing steep falls and construction also declining.

“However, services continued to grow with the health sector, management consultants and IT all doing well.”

Sports Direct Mike Ashley withdraws Patisserie Valerie bid

( via – – Mon, 11th Feb 2019) London, Uk – –

Sports Direct pulls out of battle for beleaguered cake chain claiming to be at ‘disadvantage’

Sports Direct has pulled out of the bidding for Patisserie Valerie, just two days after emerging as a surprise suitor for the stricken cake chain.

Mike Ashley’s sportswear group walked away from talks on Sunday, ending the prospect that Patisserie Valerie could join House of Fraser, Evans Cycles and in the Sports Direct stable.

The approach, made last Friday, was an unexpected twist in the battle to rescue Patisserie Valerie, which fell into administration in January after a £40m black hole was uncovered in its finances.

It is understood that Ashley made a late bid reportedly worth more than £15m for Patisserie Valerie, but was told the offer was too low.

According to the Financial Times, Sports Direct was unhappy about being shut out of the bidding process, saying it “not been allowed access to a data room, any financial information or meetings with management” to allow it to improve its bid.

Sports Direct argued it was “at a serious disadvantage as a bidder” if it was left to rely on financial information in the public arena, which it claimed was “at best unreliable”.

It is understood Sports Direct was given access to the data room after tabling its first offer but the retailer nevertheless withdrew.

Sports Direct had bid for Patisserie Holdings – the parent company of Patisserie Valerie as well as the Druckers Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City brands. The deadline for first-round bids was 1 February, a week before Ashley entered the fray.

Administrators at KPMG, which is running the company, has closed 71 of Patisserie Valerie’s nearly 200 stores and concessions, as it seeks a buyer for the company. Dozens of bids were received, either for the whole company or some of its stores. Around 900 jobs have been lost, with another 2,800 at risk if a buyer can’t be found.

Several parties are understood to be carrying out due diligence before submitting final-round bids to KPMG, but it is not clear when the bidding process will be concluded.

Coffee chain Costa, which is now owned by Coca-Cola, and a number of other parties are thought to have tabled offers for a parcel of stores but it is not clear if any parties want Patisserie Valerie as a going concern.

Patisserie Valerie blamed its financial plight on “very significant manipulation” of its balance sheet and “extensive” misstatement of its accounts. It suspended finance chief Chris Marsh, who subsequently resigned after being arrested and bailed by police.

The company was valued at £450m before the black hole was discovered. Its collapse into administration has wiped out shareholders, including chairman Luke Johnson.

By Sarah Butler

Victoria’s Secret Rise And Fall As Rival Competition Surge In Popularity On Social Media


When Victoria's Secret entered the market in the 1980s, it revolutionized the retail of women's undergarments. Previously, women viewed their bras on a binary — strictly functional for day-to-day or fancy for special occasions. Victoria's Secret combined the structure and function of day-to-day bras with the fun prints and feel of fancier bras. But 30 years later, the brand is falling behind the times as consumer priorities shift and younger brands like Aerie and Rihanna's Savage x Fenty adapt.

The lingerie brand, owned by L Brands, has reported negative same-store sales for the past three years now, as women steer clear of its bedazzled bras and underwear for comfortable pieces in cooler colors. That's as a new cohort of start-ups like Adore Me, Third Love, Lively, Cuup and Knix are resonating with younger consumers as they surge in popularity on social media channels like Instagram.

Wall Street analysts and investors alike are unsure if L Brands will be successful in reinventing Victoria's Secret's increasingly obsolete bras business. Even a recent slew of heavy promotions doesn't appear to be moving products off of shelves, according to UBS analyst Jay Sole, who's been tracking promotional activity in stores and online.

Why Whale Poop Can Garner More Than $7,000 A Pound

Source: Business Insider

A small percentage of sperm whales produce ambergris, a clump of squid beaks and fatty secretions that scientists believe exits through the whales’ bowels Ambergris is coveted by the fragrance industry for a chemical it contains called ambrien, which suspends smells in the air, and for its own unique scent Quality pieces of ambergris, which ambergris hunters snatch up as they wash ashore, can garner more than $7,000 a pound.

Amazon moves to invest in US start-up Aurora self-driving cars

( via – – Fri, 8th Feb 2019) London, Uk – –

Amazon has made its most significant move into driverless cars to date by investing in a company led by the former head of Google's autonomous vehicle unit.

Silicon Valley start-up Aurora said on Thursday it had raised $530m (£408m) from a group of backers including the online retail giant and fund management giant T Rowe Price.

Amazon did not reveal how much it had invested but said it could use driverless car systems in package delivery or in its warehouses.

“Autonomous technology has the potential to help make the jobs of our employees and partners safer and more productive, whether it’s in a fulfillment center or on the road, and we’re excited about the possibilities,” a spokesman said.

T Rowe Price is the second largest shareholder in Tesla behind chief executive Elon Musk and shares in the electric car company fell by more than 4pc after the news was announced. Tesla has been developing its own self-driving technology, with an Autopilot feature which can change lanes and keep its distance in traffic already installed in cars on the road. 

Aurora, which has permission to test its cars in Pittsburgh and in California, has emerged as one of the most prominent self-driving startups in Silicon Valley, in part due to the background and experience of its management team. The deal values the company at $2.5bn.

Chief executive Chris Urmson helped to develop self-driving technology at Google's self-driving car project, now known as Waymo. 

The company's chief product officer Sterling Anderson previously worked at Tesla, leading its autopilot team, and chief technology officer Drew Bagnell was originally on Uber's advanced technologies team, which works on self-driving cars.  

In April 2017 Tesla and Aurora settled a lawsuit after Mr Musk's company accused Mr Anderson of poaching Tesla employees. 

Investors in this funding round also include venture capital firm Sequoia, whose partner Carl Eschenbach will join Aurora's board of directors. 

Mr Eschenbach described the three as the “‘dream team' of self-driving cars”, and said the company's independence – it has partnerships with firms including Hyundai and Volkswagen, but  has no exclusive deals with any corporation – was also a draw. 

“They’ve positioned themselves to work with a variety of partners, from ride-sharing companies to manufacturers to suppliers—which enables them to move more quickly than any one competitor can alone,” he added. 

“This funding and partnership will accelerate our mission of delivering the benefits of self-driving technology safely, quickly, and broadly,” Aurora said. 

“Amazon’s unique expertise, capabilities, and perspectives will be valuable for us as we drive towards our mission.”

By Olivia Rudgard, 

Energy bills to increase for 15m households as Ofgem lifts price cap

( via – – Thur, 7th Feb 2019) London, Uk – –

Ofgem’s decision on default tariffs and prepayment meters down to rising wholesale costs

Around 15m households will see their energy bills increase by more than £100 a year from April after the regulator Ofgem said it was lifting two price caps because of rising wholesale costs.

Big energy suppliers are expected to increase their prices by £117 for 11m customers on default tariffs to a new ceiling of £1,254 a year for a home with typical use, leaving many consumers paying more for their electricity and gas than before the flagship policy took effect on 1 January.

Consumer groups said the rise was “eye-watering” and would be a shock for people who thought the cap would stop their bills from rising.

The significant increase, which wipes out the average saving of £76 from the cap, will be embarrassing for ministers, who promised that people would save money under the flagship policy.

The rise is one of the worst increases in years and on a par with the largest by the big six energy suppliers over the past two years, many of which the government claimed were unjustified.

Comparison sites, which are opposed to the cap, branded the increase “brutal”, “jaw-dropping” and the “worst possible start for the energy cap”.

Ofgem also announced a rise of £106 a year to £1,242 for a further 4m households on prepayment meters, who are typically more vulnerable customers.

Together, the increases in the two caps will add a collective £1.71bn to consumer bills, according to the auto-switching site Look After My Bills.

Ofgem insisted consumers were paying a fair price for their energy despite the increases. The regulator said it had to raise the caps because wholesale costs facing energy firms had increased by 17% and other costs had climbed, too.

“We can assure these customers that they remain protected from being overcharged for their energy and that these increases are only due to actual rises in energy costs, rather than excess charges from supplier profiteering,” the regulator’s chief executive, Dermot Nolan, said.

The regulator said its analysis suggested without the cap people would be “paying significantly more even after the increase” of the cap in April.

The government said the higher caps reflected sharp increases in electricity and gas costs.

Claire Perry, the energy minister, said: “We were clear when we introduced the cap that prices can go up but also down.”

Gillian Guy, the chief executive of Citizens Advice, a consumer group that backs the cap, said: “As unwelcome as this news is, it’s likely that prices would be higher still without the cap and there are steps people can take to ease the strain on their bills.”

Industry body Energy UK said suppliers of all sizes were facing “drastically rising costs”.

One of the big six companies, npower, last week blamed 900 job cuts on the cap and competition.

The caps dictate the maximum suppliers can charge per unit of energy and for a standing charge, so higher energy users will pay more.

By Adam Vaughan

Thomas Cook willing to sell airline to raise cash

( via — Thur, 7th Feb 2019) London, UK —

LONDON (Reuters) – Travel group Thomas Cook said it was willing to sell its profitable airline business to raise cash and fund its fight back from a torrid 2018 and signs of a tough year ahead.

The oldest travel company in the world stumbled badly last year when a heatwave in northern Europe deterred holiday makers from booking lucrative last minute deals, leading to two major profit warnings and talk of a need to raise funds.

The British group, which had a market valuation of 540 million pounds ($695 million) and net debt of 1.6 billion pounds, said rather than launch a rights issue it would consider all options for the most successful part of the business.

“Thomas Cook doesn’t need to own an airline outright to be a successful holiday company, so long as we retain a strong relationship to provide our customers with the… service they need for their journey,” Chief Executive Peter Fankhauser said.

A sale would enable the company to invest more in its own hotels, improve its digital sales offering and drive further cost savings.

Its airline, which fared much better last year than the tour operator business, consists of Germany’s Condor, and UK, Scandinavian and Spanish divisions. Operating 103 aircraft, it had 3.5 billion pounds of revenue and a 37 percent rise in operating profit to 129 million pounds in 2018.

The airline was insulated as the tour operator pledges to fill many of the airline’s seats and makes up the difference if prices have to be slashed to fill them.

It flies from airports such as Gatwick, Stansted and Manchester in Britain, and Frankfurt and Munich in Germany.


Fankhauser said the review was at an early stage and would include all options. Its shares surged 12 percent.

Analysts at Credit Suisse said that easyJet could be interested in Thomas Cook’s airport slots in Britain and Germany, as well as its Airbus sub-fleet.

Credit Suisse said that Thomas Cook’s airline business could be worth between anything between 1.8 and 3.2 billion pounds, and that Lufthansa, IAG and Ryanair could all also be interested.

Thomas Cook said it had made progress in managing its cost base and cut capacity to prop up prices, but that summer bookings reflected consumer uncertainty, especially in Britain.

Last year’s winter trading was also affected by the long hot summer, with fewer customers willing to book holidays, meaning that average selling prices were down 10 percent. For this summer, tour operator bookings are down 12 percent although pricing was slightly higher.

The turmoil at Thomas Cook reflects wider problems in the industry. Rival TUI on Wednesday slashed its earnings guidance for its fiscal full year as it too suffered from last summer’s hot weather, while holiday airline Germania collapsed earlier this week.

Budget airline Ryanair this week reported its first quarterly loss since 2014, while Norwegian Air scaled back its capacity growth plans for this year.Slideshow (2 Images)

As well as the hangover from last year, Fankhauser said that uncertainty over Brexit was impacting British consumer confidence, saying that a page on Thomas Cook’s website addressing questions around Brexit had 800 hits a day.

Thomas Cook’s underlying loss from operations in the three months to the end of December expanded to 60 million pounds and it said it had met its bank covenant tests. It reiterated its full-year outlook.

($1 = 0.7754 pounds)

By Alistair Smout

Interserve agrees rescue plan with creditors to prevent collapse

( via – – Wed, 6th Feb 2019) London, Uk – –

Interserve – one of the UK's largest providers of public services – has reached a deal with creditors to prevent its collapse.

The rescue plan involves cutting its debts from over £600m to £275m by issuing new shares.

Chief executive Debbie White said it was “a significant step forward in our plans to strengthen the balance sheet”.

Interserve sells services, including probation, cleaning and healthcare, and is involved in construction projects.

“The board believes that this agreement will secure a strong future for Interserve,” Ms White added.

The firm – a major government contractor – plans to issue £480m worth of new shares, which will be swapped with creditors for debt, leaving existing shareholders with virtually nothing.

Under the rescue deal, Interserve will also keep its most profitable division, its RMD Kwikform construction business, loading £350m of debt onto its balance sheet.

The firm had considered spinning the unit off to its lenders to raise money.

Interserve has a market value of £17m, down from £500m in 2017, and a turnover of £3.2bn. About 70% of Interserve's turnover comes from government contracts.

Stephen Rawlinson, an analyst at Applied Value, said that Interserve's woes are not as bad those of fellow outsourcer Carillion, which collapsed in January 2018 and put thousands of jobs at risk and cost taxpayers £148m.

“For existing shareholders, they're between a rock and a hard place, they have been for the last six to 12 months, so there's no difference, but now there is hope,” he told the BBC.

“I don't think another Carillion is likely, as the government has realised that to put these companies into liquidation is a very foolish thing to do.”

However, he warned that the deal had not yet been approved by shareholders, and that it would probably take up to seven years before Interserve returned to profitability.

This is the second rescue deal for Interserve, with the company refinancing its debt in March last year.

Its troubles have been blamed on cancellations and delays in its construction contracts as well as struggling waste-to-energy projects in Derby and Glasgow.

The firm's shares have plunged over the past year, currently trading at around 13p each. Just over a year ago, the shares were worth 100p each.

Following Carillion's collapse, the government launched a pilot of “living wills” for contractors, so that critical services can be taken over in the event of a crisis. Interserve is one of five suppliers taking part.

In a separate statement, shareholder Coltrane Master Fund, which holds over a 5% stake in Interserve, has asked the firm to remove eight directors.

It requested two other individuals be appointed as directors, but reiterated its support for Ms White as chief executive of the outsourcing provider.

What does Interserve do?

From its origins in dredging and construction, the company has diversified into wide range of services, such as health care and catering, for clients in government and industry.

At King George Hospital in east London, for instance, Interserve has a £35m contract for cleaning, security, meals, waste management and maintenance.

Its infrastructure projects include improving the M5 Junction 6 near Worcester, refurbishing the Rotherham Interchange bus station in Yorkshire, and upgrading sewers and water pipes for Northumbrian Water.

But Interserve is also the largest provider of probation services in England and Wales, supervising about 40,000 “medium-low risk offenders” for the Ministry of Justice.

UK economy stalls as Brexit nears, services sector report job cuts – PMI

( via — Tue, 5th Feb 2019) London, UK —

LONDON (Reuters) – Britain’s economy risks stalling or contracting as Brexit nears and the global economy slows, with firms in the dominant services sector reporting job cuts for the first time in six years and falling orders, a survey showed on Tuesday.

A closely watched gauge of the world’s fifth-biggest economy, the IHS Markit/CIPS UK Services Purchasing Managers’ Index, fell to 50.1 in January from 51.2 in December — its lowest level since July 2016 and barely above the 50 mark that separates growth from contraction.

A Reuters poll of economists had expected a reading of 51.0.

Britain’s economy defied forecasts from some economists that it would go into recession after the 2016 referendum vote to leave the European Union. But growth slowed sharply in late 2018 as worries mounted about an abrupt, no-deal Brexit.

Overall, the survey suggested Britain’s economy is flat-lining after losing momentum late last year.

Tuesday’s figures are likely to worry Bank of England officials ahead of their latest interest rate decision announcement and new forecasts for the economy on Thursday.

“The latest PMI survey results indicate that the UK economy is at risk of stalling or worse as escalating Brexit uncertainty coincides with a wider slowdown in the global economy,” said Chris Williamson, chief business economist at survey compiler IHS Markit.

The report adds to other signs that Brexit, scheduled in less than two months’ time, is taking its toll on businesses and consumers.

Prime Minister Theresa May, under pressure from her own Conservative Party, wants to reopen her withdrawal agreement with the European Union to replace a contested Irish border arrangement, something Brussels has rejected.

Investors are urging the government to ensure an orderly exit from the club Britain joined in 1973.

On Monday, a Deloitte survey of chief financial officers showed appetite to take on financial risk had fallen to its lowest level in nearly a decade due to fears of “the hardest of Brexits” and rising U.S. protectionism.

That caution was evident in Tuesday’s survey, covering the bulk of Britain’s private sector economy.

New orders fell for only the second time since the financial crisis, while employers cut jobs for the first time since late 2012 — around the last time Britain flirted with recession.

“The survey results indicate that companies are becoming increasingly risk-averse and eager to reduce overheads in the face of weakened customer demand and rising political uncertainty,” Williamson said.

New export orders contracted at the fastest pace since records for this part of the PMI began in September 2014.

The composite PMI for December, combining the manufacturing, construction and service sectors, fell to 50.3 from 51.5 in November, the lowest level since July 2016.

(The story corrects Reuters poll figure in 3rd paragraph to 51.0 from 51.1.)

Reporting by Andy Bruce

HMV rescued from administration by Canada’s Sunrise Records

( via– Tue, 5th Feb 2019) London, Uk – –

Enterpreneur Doug Putman has pipped retail tycoon Mike Ashley to the purchase of the collapsed music retailer.

HMV has been bought out of administration by Canada's Sunrise Records in a deal which will save 100 stores but result in 27 closing.

The rescue will see 1,487 employees transferred to the new ownership but 455 made redundant, with 122 workers kept on in warehouse functions to assist in winding down operations.

HMV collapsed into administration in December for the second time in six years, after weak Christmas trading and a collapse in demand for CDs and DVDs amid the rise in streaming.

It became a takeover target for Sports Direct boss Mike Ashley – who Sky News revealed had demanded a six-month rent holiday from landlords if he were to buy the chain, to add to a slew of acquisitions over the last year including House of Fraser and Evans Cycles.

Instead, HMV has now come under the control of 34-year-old Sunrise owner and chief executive Doug Putman, who has bought the business for an undisclosed sum.

Stores will continue to trade under their current name, including four Fopp sites.

Mr Putman said: “We are delighted to acquire the most iconic music and entertainment business in the UK and add nearly 1,500 employees to our growing team.

“By catering to music and entertainment lovers, we are incredibly excited about the opportunity to engage customers with a diverse range of physical format content, and replicate our success in Canada.

“We know the physical media business is here to stay and we greatly appreciate all the support from the suppliers, landlords, employees and most importantly our customers.”

Will Wright, partner at KPMG and joint administrator, said: “We are pleased to confirm this sale which, after a complex process, secures the continued trading of the majority of the business.

“Our immediate concern is now to support those employees that have unfortunately been made redundant.”

Sunrise, founded in 1977, was acquired by Mr Putman in 2014 and went on to take over stores vacated by HMV Canada when it went bust.

By John-Paul Ford Rojas

Ryanair post first quarterly loss since March 2014

( via – – Mon, 4th Feb 2019) London, Uk – –

Ryanair posted a net loss of €19.6m (£17.2m) for the last three months of the year, its first quarterly loss since March 2014.

The airline carried 32.7 million passengers compared with 30.4 million for the same period a year earlier as revenue rose 9% to €1.53bn.

But the airline said “excess winter capacity in Europe” cut its profit.

Ryanair said chairman David Bonderman will leave in the summer of 2020.

While the company blamed too many airlines chasing too few passengers, costs may be the real problem, industry experts said.

The company's fuel bill leapt 32% and its staff costs rose 31%. In total, Ryanair's operating costs rose 20% to €1.54bn.

“The heart of the big drop in their profitability is that their fuel costs are very high this year,” HSBC transport analyst Andrew Lobbenberg told the Today programme.

Role shift

Chief Executive Michael O'Leary – who suggested last year that he could step down in the next five years – has agreed a new five-year contract, the firm said.

But his role will change slightly, in that Mr O'Leary will become group CEO and will manage chief executives for each airline brand: Ryanair, Laudamotion, Ryanair Sun and Ryanair UK.

In September, at the firm's annual meeting, almost 30% of shareholders voted against the re-election of Mr Bonderman as chairman after a summer of flight cancellations. He has spent 23 years in the job.

Who is Michael O'Leary?

Michael O'Leary, the outspoken boss of low-cost airline Ryanair, has been no stranger to controversy.

Mr O'Leary, who has agreed to stay on for another five years, is well-known for not being shy about expressing his views, famously excoriating his staff, his customers, competitors, regulators, governments, and groups such as environmentalists and scientists.

He once said of passengers looking for a refund: “We don't want to hear your sob stories. What part of ‘no refund' don't you understand?” and has said he doesn't believe in man-made climate change.

The new company structure is similar to that of IAG, the company that owns British Airways.

Mr O'Leary will oversee costs, aircraft purchases and buying rival airlines. It could be good for industrial relations after a series of strikes over the summer, said transport analyst Mr Lobbenberg.

“It puts more distance between him and the unions,” he said.

Mr O'Leary, who has been chief executive for 24 years, told September's annual meeting he had concerns about committing to a new five-year contract telling shareholders: “I'm not sure Mrs O'Leary would be happy.”

He said the airline's loss was “disappointing”, but “we take comfort that this was entirely due to weaker than expected air fares”.

While higher oil prices and lower fares reduced the firm's profitability, they were creating even bigger problems for rivals, Ryanair pointed out.

Firms like Wow, Flybe and Germania are seeking buyers.

Could SpaceX’s BFR Earth to Earth Travel Replace Traditional Airliners

Source: Primal Space

With SpaceX announcing the BFR's first official mission to the moon, the possibility of Earth to Earth travel seems a little bit closer. In this video, we look at what needs to be done before Earth to Earth rocket travel can replace the traditional airliners that we use today. We also compare the dawn of passenger rocket travel to the early days of airplanes.

How Disney is putting the pressure on Netflix to change streaming

Source: The Verge

By late 2019, Disney has promised to launch its own online streaming service, further complicating the options for viewers who just want to watch their favorite films and TV online. The competition between streaming services has been great for consumers, so far. Outlets like Netflix, Hulu, Amazon Prime Video, Shudder, and Filmstruck have been ramping up content and giving us a lot for very little money, but they have the power to take it away too (password lockdowns, pull content). As corporate consolidation heats up, that deal may get a lot worse — and fast.

Amazon reveals record profits as employees wage increase pays off

( via – – Fri, 1st Feb 2019) London, Uk – –

Amazon has revealed a record profit as a jump in Christmas sales meant it shrugged off the impact of a hefty pay increase for its staff.

The online retail giant said revenues in the final three months of 2018 grew by 20pc to $72.4bn, while profits surpassed $3bn for the first time.

The figures were the latest evidence that the company, which has long shunned profits as it focuses on growing its online empire, is finally producing reliable returns.

While growth in Amazon's maturing North American business slowed, the company’s international sales picked up steam after it threw resources behind markets such as India and Australia.

The results were the first to show the impact of Amazon’s pay rise for hundreds of thousands of workers in the US and the UK. In November, the company raised minimum pay for warehouse staff from £8 to £9.50 in the UK, and more in London, and to $15 in the US.

However, the company appeared to swallow the increase comfortably, with profits increasing by 63pc. Amazon has now reported a profit of $2bn or more for the last three quarters, having previously swung between losses and marginal profits.

The company’s shares fell towards the end of last year when a muted Christmas forecast raised fears that a slowing economy could limit growth. However, Wall Street had become more optimistic about its prospects amid signs of a resilient US economy, and Amazon now vies with Microsoft for the position of world’s largest company.

Jeff Bezos, Amazon’s chief executive, remains the world’s richest person, although the billionaire’s recently-announced divorce has raised the question of who will control his stake and his majority voting power in the company.

The company has expanded beyond its online shopping website, most notably in its cloud computing enterprise, Amazon Web Services (AWS), and the US supermarket chain Whole Foods, which it bought for $13.7bn in 2017. Sales at AWS, which provides remote computing services to businesses, rose by 45pc.

Amazon’s shares wavered in late trading. Despite the company’s revenues being better than Wall Street had expected, it warned of a slowdown of growth in the next quarter, saying sales would increase by between 10pc and 18pc.

Bezos pointed to the success of its voice recognition system Alexa, saying its Echo Dot speaker was the best selling item on Amazon over Christmas.

By  James Titcomb

TSB’s computer glitch last year caused £105.4m loss

( via – – Fri, 1st Feb 2019) London, Uk – –

TSB's computer meltdown pushed the bank into a £105.4m loss last year, from a £162.7m profit in 2017.

The disastrous IT upgrade resulted in £330.2m in costs, to be partly offset by £153m that TSB said it expected to recover from computer provider Sabis.

About 80,000 customers switched their bank account away from TSB in 2018 – 30,000 more than 2017 – after some people went weeks without services.

There was also the cost of customer compensation and fraud.

TSB said it had resolved about 90% (181,000) of the 204,000 customer complaints received since the IT chaos.

Of the £330m in extra costs, about £125m was for customer compensation and sorting out their problems, £49m was due to fraud and operational losses, £122m for extra help and advice to sort out the IT problems, and £33m in lost income from waived fees and charges.

In recognition of the extra work for its employees, the bank said it had awarded staff – excluding executives – £1,500 each in December. No bonuses are being paid to executives for 2018.

Richard Meddings, TSB executive chairman, said in a statement: “Last year was TSB's most challenging year. But we enter 2019 with renewed ambition to re-emerge as the leading challenger bank in the UK – firmly on the side of the customer.”

Now the losses, next the blame

Analysis: Kevin Peachey, personal finance reporter

The management of TSB are talking up 2019 and attempting to move on from the IT failure that ruined last year for the bank.

It also disrupted weddings and house moves, as well giving fraudsters opportunities to exploit TSB customers.

This moment only marks a comma, rather than a full stop, in the saga as three inquiries into the meltdown are still open.

MPs on the Treasury Committee still have an open inquiry. TSB itself commissioned an independent review from lawyers Slaughter and May to detail what went wrong and what lessons need to be learned. The results are expected in the next few weeks.

But the most significant of all is an inquiry by the Financial Conduct Authority, the City regulator, which has powers to issue fines of many millions of pounds. Last summer it was critical of TSB's response to the crisis, but its in-depth investigation – undertaken jointly with the Bank's of England's Prudential Regulation Authority – could take months to complete.

TSB, owned by Spanish banking giant Sabadell, was stung by the IT crisis last April that left up to 1.9 million users of its digital and mobile banking locked out of their accounts.

The tech troubles were triggered by the movement of customer data from former owner Lloyds' IT system to a new one managed by Sabadell.

Chief executive Paul Pester stepped down in the wake of the fiasco. Nicky Morgan, chair of the Treasury Committee, said at the time that Mr Pester “set the tone for TSB's complacent and misleading public communications”.

The bank announced his replacement, former CYBG chief operating officer Ms Debbie Crosbie in November. She will join the business in the spring.

TSB also said that customer deposits fell by 4.7% to £29.1bn last year, which the bank said was due to planned changes in savings products. Customer lending also decreased by 2.7% to £30bn.

Despite customers switching away at the height of the crisis, a total of 140,000 customers opened a new account with TSB.

The bank said that economic and market conditions remained uncertain for a number of reasons, including Britain's impending departure from the European Union.

But it maintained that it was “one of the most strongly capitalised banks in the UK and, with a healthy liquidity reserve, is well positioned to weather economic uncertainty or shocks”.

TSB's Common Equity Tier 1 capital ratio – a key measure of financial strength – stands at 19.5% and is among the strongest of UK banks.

BT boss Gavin Patterson signs off with better-than- expected third quarter profit forecast

( via – – Thur, 31st Jan 2019) London, Uk – –

Outgoing BT boss Gavin Patterson signed off today by beating revenue and profit expectations in the telecom giant’s third quarter.

Analysts said Patterson was leaving on “an upbeat note” on the back of today’s trading update.

The broadband giant reported a three per cent year-on-year decline in core earnings to £1.88bn. Over the nine months to the end of 2018, adjusted profit before tax dropped one per cent to £2.49bn.

Revenue dipped one per cent to £5.98bn for the three months to the end of December as it recorded a one-off £180m charge in regulated broadband price reductions at Openreach.

The drop-offs were partly offset as both revenue and earnings grew in BT’s consumer unit, with core profits up 15 per cent to £648m and revenue growing four per cent to £2.78bn.

The revenue boost came from higher prices and increased handset costs for customers.

However, BT’s other areas of enterprise, Openreach and global services all fell compared to the same period last year.

A steeper than expected decline in landline calls knocked enterprise revenue down six per cent, while global services fell five per cent as BT reduced its low margin businesses. Openreach profits plunged 19 per cent as a result of the regulatory charge.

Patterson signalled that despite the marginal declines, BT is on track to deliver underlying profit towards the top end of guidance for the current financial year of around £7.4bn.

He added: “We continue to expect regulation, market dynamics, cost inflation and legacy product declines to impact in the short term before being more than offset by improved trading and cost transformation by our 2020/21 financial year.

“I am handing over the business with good momentum behind its ongoing transformation programme and wish my colleagues all the best for the future.”

On a call with analysts, he added: “There have been some ups and downs no doubt but I think the business is more resilient better placed overall.”

Patterson also warned about potential disruption from a no-deal Brexit, saying: “A disorderly exit could damage consumer and business confidence although it’s too early to assess any potential impact.”

Shares fell around four per cent on the back of the update as analysts reeled off the list of pressures facing BT in 2019.

George Salmon, equity analyst at Hargreaves Lansdown, said: “Outgoing chief executive Gavin Patterson has had his critics in recent years, but these results mean he’s leaving on an upbeat note.

“BT’s drive to reduce costs is well underway, but there’s more to this positive performance than just cost cutting. The consumer business is again strong, and improvements in BT’s global operations are coming faster than expected.

“That’s not to say BT is out of the woods though. Competition is fierce in mobile and broadband, and falling profits at Openreach are a timely reminder that regulation has the potential to limit progress at any time.” With the combined pension and net debt position a rather daunting £16.1bn, it’s hard to see the new CEO raising the dividend in May’s full years.”

Lee Wild, head of equity strategy at Interactive Investor, added: “In the short term, expect BT to have its hands full dealing with increased regulation, fierce competition, rising costs and a drop off in contribution from legacy products. Add the threat of a no-deal Brexit to that list.

“For now, though, a pick-up in trading and heavy cost-cutting is offsetting headwinds, and restructuring put in place by Patterson continues to feed through.

“There’s a lot for BT to cope with both near and long-term, and questions about the dividend will not go away. Profit is steady over the past nine months at £5.55bn but huge investment in its fibre network reduced free cash flow by 11 per cent.”

By Joe Curtis

Barclays to transfers £170bn in assets to Dublin over no-deal Brexit fears

( via – – Thur 31st Jan, 2019) London, Uk – –

Plan involves transferring assets linked to 5,000 clients to protect bank’s EU business

Barclays is to move €190bn (£166bn) worth of assets from the UK to Ireland as the bank readies itself for a possible no-deal Brexit.

The high court on Wednesday approved the lender’s Brexit contingency plans that include transferring the assets linked to about 5,000 of its clients to a Dublin-based unit.

“Barclays will use our existing licensed EU-based bank subsidiary to continue to serve our clients within the EU beyond 29 March 2019 regardless of the outcome of Brexit,” the bank said. “Our preparations are well advanced and we expect to be fully operational by 29 March 2019.”

Barclays will boost its Dublin headcount by about 150 to 300 as a result of the EU divorce.

The court approval came less than two months after Royal Bank of Scotland applied to transfer a third of its own investment bank clients and assets worth billions out of Britain to Amsterdam in preparation for Brexit.

The Dublin and Amsterdam moves safeguard the banks’ businesses against a no-deal Brexit, allowing them to continue serving European customers even if Britain fails to strike a trade deal that covers financial services contracts.

A no-deal Brexit would leave banks without a replacement for EU passporting rights, which currently allow firms to do cross-border business throughout the bloc.

In approving Barclays’ application, Mr Justice Snowden said in his judgment: “Due to the continuing uncertainty over whether there might be a ‘no-deal’ Brexit, the Barclays Group has determined that it cannot wait any longer to implement the scheme.”

He added that the Irish operation “must be legally and operationally ready to conduct all relevant regulated business with the in-scope clients by no later than 29 March 2019, which is the date currently set for Brexit.”

By Kalyeena Makortoff