Top 10 Stories of the Week 29/08/16


Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Click on the links for full stories.

This week’s news includes; Apple‘s Tax Troubles, Samsung‘s exploding phones, the TeslaSolar City merger, Uber‘s legal battle , Southern Rail profits and the acquisition of Gourmet Burger Kitchen.

Opinion articles of the week:

Britain’s Remainers should move on to arg
ue the case for the closest possible relationship with the EU. Click here for more. (Financial Times)

Analysts are worried that London’s role at the heart of the global forex markets is under threat after its market share has been falling for the past 3 years. Click here for more.

Do companies that are more M&A active perform better financially? Click here for the debate.


The Republic of Ireland’s cabinet has agreed to appeal against the European Commission’s ruling that Ireland granted undue tax benefits of up to €13bn (£11bn) to Apple. Taoiseach Enda Kenny said he made no apology for defending the Irish government’s right to appeal. The decision to appeal was agreed by the Irish cabinet on Friday morning.

Speaking after the cabinet meeting, Mr Kenny said: “This is about Ireland, it is about our people, it’s about us as a sovereign nation, actually setting out what we consider our appropriate policies”. The cabinet first met on Wednesday but decided to adjourn until Friday for “further time to reflect on the issues and to clarify a number of legal and technical issues”.

Apple intends to appeal the European Commission’s ruling demanding it pays €13bn in taxes to Ireland

This is a minority Fine Gael government that includes independents. It is dependent on the support of the main opposition party, Fianna Fáil. Fianna Fáil has indicated that it wants to see an appeal of the commission’s ruling, if only to see who is right – Brussels, or Dublin – on whether or not the Irish government had a secret deal with Apple. Also at stake is the credibility of the independent tax authority in the Republic, the Revenue Commissioners.

For the government to turn down 13bn euros, equivalent to the country’s annual health budget, is a huge political ask. The government’s view is that it is in Ireland’s long-term interest not to be seen as a tax haven, but to be seen as transparent regarding its taxation. (BBC News)

For the Financial Times’ analysis on the ruling, click here.


Senior doctors are urging the government and junior doctors to restart negotiations to avoid a series of five-day strikes in England. While some medical colleges have said the planned strikes are disproportionate, others say they support the junior doctors’ stance.

The British Medical Association (BMA) announced four five-day walkouts between now and mid-December.

Junior doctors are striking over a new contract which is being imposed. The row over their pay and conditions has escalated into the worst industrial relations dispute in the history of the NHS.

The Academy of Medical Royal Colleges, which represents 22 royal colleges, issued a statement saying it was “disappointed” and said the proposed strikes were disproportionate.

It added: “Five days of strike action, particularly at such short notice, will cause real problems for patients, the service and the profession.”

But, separately, the Royal College of Radiologists and the Royal College of Paediatrics and Child Health, said they could not support the statement, revealing a split in the views of medical leaders. (BBC News)

For an overview explaining the junior doctors’ row click here for Sky News’ Q & A on the issue.


Two pillars of Elon Musk’s empire are facing financial crunches as the entrepreneur seeks to combine the two companies through a controversial acquisition.

Tesla Motors Inc., which makes electric cars, disclosed in a securities filing Wednesday that it has to pay $422 million to its bondholders in the third quarter, and that it will raise additional money by the end of the year. The purpose of the additional capital, among other things, is to support its proposed merger with home-solar company SolarCity Corp. Mr. Musk is the chairman of both companies.

The filing also revealed that in recent weeks, 15 institutional investors passed on either acquiring SolarCity or injecting equity into it. The company is having difficulty tapping the public markets amid the proposed merger and is facing a liquidity squeeze, the filing indicated. SolarCity’s cash declined to $146 million on June 30, from $421 million a year earlier.

Mr. Musk ignited controversy in June when he proposed combining the two companies. Detractors characterized the proposal as a bailout for SolarCity. Mr. Musk said the deal will save money and create a more diverse company focused on batteries, solar energy, automobiles and heavier vehicles. Mr. Musk said that he had envisioned Tesla’s role in solar energy back in 2006 when he laid out his initial plan for the auto maker.

In its 10-year history, SolarCity has notched total revenue of just $1.5 billion, while amassing $3 billion in debt. Because the company’s operating costs are high and its profit margins are thin, it depends on issuing debt. SolarCity has a $250 million term loan due Dec. 31, and $55 million in bonds coming due between Sept. 3 and the end of the year.

Tesla’s core business has burned more than $3 billion in cash dating back to late 2014. It has issued equity or convertible debt every year since its initial public offering in 2010. (Wall Street Journal)


English test legal challenge

Uber has won the right to take Transport for London (TfL) to court over new rules which would require its drivers to pass English tests.

TfL wants all private-hire drivers to undergo reading, writing and listening tests from 1 October, which the High Court has accepted. However, Uber has been permitted to challenge if exemptions can be put in place for some drivers.

It also wants to implement regulations which require Uber to provide a call centre service for passengers to contact during a journey if required, which the High Court has also agreed in principle. However, the Ireland-based transport company will challenge whether that service has to be in London, before any form of that regulation can be introduced by TfL.

Uber had initially supported the test, but now argues the requirement that drivers provide a certificate showing they have an intermediate level of reading and writing is unnecessary and costly. It has more than 30,000 drivers in London and estimates thousands would be affected by the change. (BBC News)

Uber’s electric cars go live in London

Fully electric cars will now be available on the Uber app as the taxi firm tries to help tackle air pollution in London.

With the first battery-powered vehicles hitting the capital’s roads from Wednesday, the company said more than 50 fully electric cars will be available on the app in the capital by the end of September. Uber said it also has plans to introduce the vehicles to at least one other UK city this autumn.

More than 60% of Uber journey miles in London already take place in hybrid cars, and the car-sharing service UberPOOL which launched in the city last year has saved more than 98,000 litres of petrol. The new Uber option has been been brought to the roads in partnership with car manufacturers BYD and Nissan. (Business Reporter)


Profits up 27%

Southern Rail stakeholder Go-Ahead Group has apologised to customers for a disrupted service as it reported a 27 per cent growth in pre-tax profits.

The results came at the end of a summer filled with disruptions for users of Southern rail. Go-Ahead shares rocketed more than seven per cent on Friday morning.

Go-Ahead has reported a statutory pre-tax profit for the year ending 2 July of £99.8m – up from £78.7m in 2015. Revenue came in at £3.36bn, up 4.5 per cent year-on-year from £3.22bn. The company also announced a proposed dividend of 95.85p, up 6.5 per cent from 90p in 2015.

It’s been quite a summer for Southern, with the busy commuter service beset by delays, cancellations and strikes in a long-running dispute over the role of guards.

Earlier this week, City A.M. revealed Southern has been forced to overhaul the way it compensates passengers affected by poor services. Southern’s customers are entitled to apply for compensation for delays to their journeys greater than 30 minutes but, in the past, few have done so.

Southern Rail has committed to automatically refund delayed commuters from 2017. (City A.M)

£20 million funding

A new £20m fund has been unveiled to improve Southern rail services and “get to grips” with problems on the beleaguered network.

The Government announced a series of measures including the appointment of a “project board” after months of disruption to Southern services following a bitter dispute over the role of guards and staff shortages.

It came as strike misery facing commuters was partially eased as part of the industrial action planned for next week was called off. The package includes £2m to be spent on rapid response teams to fix faults located close to known hotspots; £2.5m on accelerated train maintenance and an £800,000 investment in extra signal supervisors. (Sky News)


Samsung Electronics is recalling its flagship Galaxy Note 7 smartphone and said that battery problems were behind phones catching fire. The decision follows reports in the US and South Korea of the phone “exploding” during or after charging.

The South Korean company said customers who had already bought the phone would be able to swap it for a new one. Samsung said it had been difficult to work out which phones were affected among the 2.5 million Note 7s sold.

The firm said it would take about two weeks to prepare replacement devices. According to Samsung, the phone has been launched in 10 countries so far but with different companies supplying the batteries.

The recall comes just one week ahead of an expected presentation of a new iPhone model from its main rival Apple. (BBC News)


Shares in Slater and Gordon (S&G) fell 15 per cent on the ASX 200 after the Australian law firm posted a chunky net loss today. The group, which is based in Sydney, announced a net loss of AU$1.02bn (£590m) in the 12 months to June – down from a profit of AU$62.4m last year.

The results – which S&G’s managing director Andrew Grech described as “disappointing” – were due in part to a AU$879.5m impairment charge. The law firm also incurred AU$33.3m in restructuring costs associated with its UK business.

S&G’s revenue rose from AU$598.2m last year to AU$908.2m this year.

The loss for the troubled firm is not too surprising; the results come after the acquisition of insurance claims processor Quindell. Most of S&G’s impairment charge comes from that deal.

The firm was also hit by George Osborne’s Autumn Statement last November, when he announced he would make it more difficult to claim for injuries caused by road traffic accidents. (City A.M)

The UK legal sector as a whole has been slightly suffering this year as combined revenues at the largest 100 UK law firms fells by 2% this year from £20.6 billion down to £20.2 billion. (City A.M)


Snacks giant Mondelez International is abandoning its takeover bid for American confectioner Hershey after its $23bn (£18bn) offer was rejected. The deal would have created the world’s biggest maker of confectionery, but Hershey turned down the cash and stock offer in June.

Hershey shares tumbled by as much as 12% in late US trading on the news. Mondelez shares rose by almost 4%.

Mondelez brands include Cadbury chocolate and Trident chewing gum. Cadbury’s, which was started in 1824, became part of the Mondelez group in 2010

Hershey raked in nearly 90% of its revenue from North America last year, mostly from chocolate sales. The Pennsylvania-based company had reportedly looked for at least $125 per share before agreeing to any takeover talks. Mondelez had initially offered $107 per share.

Complicating matters further is Hershey’s company structure. The maker of Reese’s peanut butter cups is majority-controlled by the Hershey Trust, a charity which has prevented previous sales of the company. The Hershey Trust is revamping its board and management rules after coming under scrutiny for its spending practices. The changes at Hershey don’t come into effect until next year and its shareholders are said to have been averse to any transactions before then. (BBC News)


Wimpy owner Famous Brands has swallowed UK chain Gourmet Burger Kitchen, as the fashion for upmarket burgers in the UK shows no signs of slowing down. South African firm Famous Brands signed a £120m deal to buy the chain from Nando’s owner, Capricorn Ventures.

Gourmet Burger Kitchen, founded in 2001, was a “pioneer of the premium burger revolution”, Famous Brands said. The company says that it wants to open 10 to 15 more burger restaurants a year in the UK.

The mass-market burger giants, McDonalds and Burger King, first opened in the UK in the 1970s. While those brands have continued to expand, by the end of the 1990s a new fashion for more expensive burgers had arrived, again from the US.

Upmarket burger brands in the UK now include Byron, Shake Shack and Five Guys, as well as an increasing number of independents. According to analysts Mintel, the premium burger market now accounts for sales worth more than £3bn a year.

Famous Brands plans to double Gourmet Burger Kitchen’s 75 UK stores in the next five years and said Brexit uncertainty would not affect its plans.  (BBC News)



Contactless cards have overtaken cheque books as a payment method for the first time.

Figures from analysts Mintel showed cheques had been used by 31% of Britons in the three months to April. That put them behind contactless debit cards, used by 39%, and contactless credit cards (34%). Use of each of these has risen since last year while the use of cheque books has fallen. However, cash remains the most common payment method, with 97% having used it for payments.

Rich Shepherd, financial services analyst at Mintel, said contactless cards had become much more widely accepted. “They’ve moved beyond coffee shops and sandwich bars and are now entirely commonplace.”

Contactless cards were first launched in 2007 but payment habits had been slow to change, Mr Shepherd added, as shown by “the cheque’s stubborn refusal to disappear”. Figures last month from the UK Cards Association showed contactless payments accounted for 18% of sales in the first half of 2016 – up from 7% a year before. (Sky News)

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