This weeks news includes; A plumber wins important gig economy case against Pimlico, Clifford Chance & HSF pull out of Qatar, Three acquire UK Broadband for £300m and British Gas announce price freeze.
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.
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Opinion articles of the week:
- The Telegraph looks at PwC’s claim Britain will grow faster than any other major advanced economy over the next three decades.
- CNN explores Why investors are very afraid of Marine Le Pen
- City A.M questions whether governments could be the death of Bitcoin.
1. FEDERAL APPEALS COURT REJECTS TRUMPS TRAVEL BAN
A federal appeals court unanimously ruled against President Donald Trump on Thursday, refusing to reinstate his travel ban.
The ruling, issued by a three-judge panel on the San Francisco-based 9th Circuit Court of Appeals, means refugees and citizens of the seven majority-Muslim countries affected by the ban can continue entering the US as the ban makes its way through the court system.
“We hold that the Government has not shown a likelihood of success on the merits of its appeal, nor has it shown that failure to enter a stay would cause irreparable injury, and we therefore deny its emergency motion for a stay,” the panel said in its ruling.
Shortly after the ruling was announced, Trump posted a defiant message to Twitter:
“SEE YOU IN COURT,” Trump tweeted, foreshadowing a legal challenge that is likely to play out in the Supreme Court.
The ruling comes after a lower-court judge in Seattle, James Robart, issued a nationwide hold on the ban last Friday, prompting the US Justice Department to file an emergency stay. Robart’s decision elicited a furious outburst from Trump, who called Robart a “so-called judge” and his opinion “ridiculous.”
The executive order, signed by Trump on January 27, halted for four months all admissions of refugees into the US and froze for 90 days immigration from Iran, Iraq, Syria, Sudan, Somalia, Libya, and Yemen. Its hasty rollout caused chaos at airports across the world, leaving some refugees and visa holders stranded for hours. (Business Insider)
2. GIG ECONOMY LAWSUIT
A plumber has won a legal battle for employment rights that could have implications for thousands of workers across Britain’s booming gig economy.
The Court of Appeal ruled that Gary Smith, who worked for Pimlico Plumbers for six years until 2011, was entitled to basic rights such as sick pay even though he was technically self-employed.
The case is the latest of several that have scrutinised the relationship between independent contractors and companies such as Uber, Deliveroo and parcel delivery firm Hermes.
This is the highest UK court so far to consider such a case and could mean greater protections for thousands of independent contractors working job-to-job with little security and limited employment rights.
The number of gig economy jobs has surged in recent years but campaigners have said it leaves many with no guarantee of earnings and no protection if they cannot work. In some cases workers claim they have been paid less than minimum wage. (The Independent)
3. HERBERT SMITH FREEHILLS & CLIFFORD CHANCE PULL OUT OF QATAR
Two of the world’s largest law firms are set to shut up shop in Qatar. Clifford Chance and Herbert Smith Freehills are both closing their offices in the region in the coming months. Reports state that there will be no redundancies and rather the teams based in Qatar will be offered relocation to other offices in the Middle East or even farther afield in both companies.Clifford Chance moved into its office in Qatar six years ago and Herbert Smith Freehills launched in the country four years ago.
This is not the first closure in the Middle East for either firm. Clifford Chance closed its Saudi Arabia office after a legal battle last year. And Herbert Smith Freehills closed its Abu Dhabi office in 2015. Herbert Smith Freehills will retain two offices in the Middle East in Dubai and Riyadh and Clifford Chance will continue to operate in the region through their Abu Dhabi and Dubai offices. The move follows a number of other high profile law firms closing offices in the Middle East in recent years – US firm Baker Botts closed its Abu Dhabi office in 2015, and Simmons and Simmons its office in 2016. Latham & Watkins also closed offices in both Abu Dhabi and Doha in 2015. (The Global Legal Post)
4. THREE BUY UK BROADBAND FOR £300m
Mobile operator Three has acquired UK Broadband in a £300m deal. The deal comes just months after the European Commission blocked Three’s parent company CK Hutchison from a £10.3bn takeover of O2. UK Broadband, the company behind home broadband service Relish, has 15,000 customers across the UK.
Three will pay £250m for snapping up UK Broadband while a deferred £50m will be made available as a credit towards a mobile virtual network operator (MVNO) agreement on the telecom company’s network. It expects the transaction to “complete mid-year”. The deal will help Three grow its spectrum capacity which might come in handy for launching 5G services in the future.
Dave Dyson, chief executive of Three UK, said: “UK Broadband gives us an opportunity to expand our ambition to provide high quality and great value internet connectivity for UK consumers.”
Kester Mann, principle analyst, operators at CCS Insight, warned that Three “remains in a precarious position as a mobile-only provider in a market evolving to multiplay services”.
“It does not have the share of spectrum or scale of operation to challenge bigger rivals such as BT and Vodafone. UK Broadband has a tiny customer base of just 15,000, a fraction of the more-than-20m it would have gained had its bid to acquire O2 been successful last year,” Mann added. (City A.M)
5. BP POST $999m LOSS
BP has reported an annual loss of $999m (£808m) for 2016, although an increase in the oil price helped it enjoy an improvement in the last three months of the year. Results were short of analysts’ forecasts though the full-year loss was smaller than 2015’s record $5.2bn (£3.7bn) shortfall. Shares in the oil giant – a staple of many UK pension funds – fell 3%.
BP has continued to be dogged by the cost of the deadly Gulf of Mexico Deepwater Horizon disaster in 2010, though it says these charges, totalling $63bn so far, are now “substantially” behind it.
Stripping out these and one-off costs, annual profits were well down on 2015 as BP battled the “challenging” price environment for oil – which averaged $44 a barrel for the year. But for the fourth quarter, underlying profits doubled to $400m (£323m) – as plans by oil-producing nations to limit production saw the price of a barrel of Brent crude climb above $50.
BP chief executive Bob Dudley said: “We have delivered solid results in tough conditions – and are well prepared for any volatility in oil pricing.”
The company has, like other oil giants, been cutting billions in costs and investment to reflect the weakness in the oil price which had peaked at more than $100 a barrel in the summer of 2014. Last month, Sky News revealed that the company was facing a renewed showdown with investors over Mr Dudley’s multi-million pound pay package, a year after an embarrassing investor revolt.
BP’s results come a week after rival Royal Dutch Shell reported a 44% dip in earnings. (Sky News)
6. GLAXOSMITHKLINE PROFITS UP DUE TO WEAK POUND
GlaxoSmithKline (GSK) has reported core profits of £7.8bn on full year revenues of £27.9bn in 2016, a rise of six per cent and 14 per cent respectively year-on-year.
In the three months to December, GSK saw sales increase by 21 per cent to £7.59bn, beating analysts’ expectations. The reported core earnings per share were 102.4p for 2016, up 12 per cent on the year.
But Glaxo’s shares fell by 1.22 per cent on Wednesday afternoon as the company warned on the potential threat to earnings from competitors to their highly profitable Advair drug, which is used to treat asthma attacks.
“Clearly, this year we face some uncertainty as to the level of our earnings performance, given the possibility of substitutable generic competition to Advair in the US,” GSK CEO, Sir Andrew Witty said.
Glaxo has advised that it expects revenue from Advair could fall from £3.5bn in 2016 to £1bn in 2017. Advair lost patent protection back in 2010 but serious competitors to the popular respiratory drug has yet to emerge until now.
The unveiling of last year’s results represent Witty’s swansong as CEO. Emma Walmsley, currently GSK’s consumer and healthcare lead, is due to take over from him on 31 March this year. Witty faced a challenging tenure as CEO but has won plaudits in some circles for cutting back GSK’s drug costs in the world’s poorest countries to no more than 25 per cent of their value in the UK. (City A.M)
7. BRITISH GAS FREEZE ENERGY PRICES
British Gas is keeping its current gas and electricity prices on hold until August. The company said it was able to hold tariffs in the face of higher wholesale prices by cutting its costs.
However, Scottish Power has said it is raising its dual fuel prices by an average of 7.8% from 31 March. It blamed smart meters and low carbon energy costs for the rise.
Energy regulator Ofgem urged customers to shop around for a better deal. Scottish Power’s move makes it the third of the UK’s big six energy suppliers to announce price rises. Scottish Power’s standard electricity prices will increase by an average of 10.8% and gas prices by 4.7%. About one third of its customers – 1.1 million people – will be affected by the change. Npower is raising its standard tariff electricity prices by 15% from 16 March, and gas prices by 4.8%. EDF Energy cut its gas prices by 5.2% in January, but its electricity prices are due to rise by 8.4% on 1 March
This decision will be a relief to five million British Gas customers – but that may only be temporary. With rumours swirling of a British Gas price rise, the company has now effectively said no increase will occur for four spring and summer months.
Yet with other suppliers changing their tariffs, there will be a chorus among government, the regulator and others urging householders to switch.
Is the message getting through after years of repetition? A recent report by the competition authorities found that a third of the 7,000 people it asked did not realise that switching was an option. (BBC News)
8. NORTON ROSE TO MERGE WITH CHADBOURNE & PARKE
Norton Rose Fulbright and the smaller, New York City based Chadbourne & Parke, are in late stage merger talks, one source involved in the process said, highlighting the latest signal that the legal market hasn’t yet had its fill of blockbuster merger activity.
Both firms confirmed discussions about the possible combination Thursday afternoon, although leaders did not specify where the talks stood.
The combined entity, if approved by a vote of the firms’ partnerships, would staff around 3,600 lawyers around the world with approximately $2 billion in revenue, according to the latest financial figures reported in The American Lawyer’s 2016 list of top law firms, which reported the firms’ 2015 financials. This would make the law firm rank the no No. 6 top grossing law firm in the United States according to The American Lawyer’s 2016 figures, although the pecking order will likely shift in 2017.
In the deal, Chadbourne would fit into Norton Rose Fulbright’s Swiss verein structure — a model used by some large firms that operate as profit centers by region, but under a common brand. Chadbourne, with much of its presence in the Northeast, in New York and Washington, D.C., would fit into Norton Rose’s U.S. operations: Chadbourne has around 300 lawyers, while Norton Rose has nearly 700 lawyers in the country.
The discussions have taken place for at least a month, according to the source involved in the talks, although the discussions have been relatively limited, mainly to meetings of management committee members and practice leaders. The deal has not yet gone to a partner vote at either firm. The source was reluctant to provide a date for the vote, saying that the green or red light would come in a matter of weeks rather than months, but stressed that nothing would be finalized in the next day or two.
Norton Rose, with around 3,400 lawyers in offices in North American, Europe, Asia, Africa, Latin America and India, is the product of a 2012 merger between the Houston-based law firm Fulbright & Jaworski and the British firm Norton Rose. It is one of a small set of firms that have expanded globally, with the thinking that a more diverse range of services in different geographies will land lawyers more business. It is a full-service firm, with corporate transactions, commercial litigation practices, with a strength in the energy industry with Fulbright’s Houston roots.
Chadbourne is well-known for its energy and project finance practice, litigation, and government affairs, staffing the prominent lawyer Abbe Lowell, who has represented political figures such as Jack Abramoff and John Edwards and has close ties to the Clintons. (Bloomberg Big Law Business)
9. NEW CAR SALES REACH 12 YEAR HIGH
The number of new cars that hit British roads surged to a 12-year high in January, this figure has been particularly boosted by vehicles not fuelled by diesel or petrol.
According to the Society of Motor Manufacturers and Traders, 174,564 new cars registered on British roads last month, a 2.9 per cent increase on the same month last year and the highest number since 2005.
The market for alternatively-fuelled vehicles – or those powered by anything but petroleum and diesel – grew by 19.9 per cent to take it to a record 4.2 per cent market share. Diesel registrations, by contrast, fell 4.3 per cent. New petrol car registrations increased by 8.9 per cent.
“The year got off to a good start in the new car market, buoyed by a great range of new models which are safer and cleaner than ever before,” said Mike Hawes, chief executive of the SMMT. “It’s encouraging to see alternatively fuelled vehicles benefiting from this positive growth, reaching a record market share.”
He said that, following record growth in 2016, he expects to see some cooling in the market over the coming months, but added: “Provided interest rates remain low and the economy stable, the market is in a good position to withstand its short-term challenges”. (The Independent)
10. WONGA TO SELL EUROPEAN OPERATIONS
Wonga, Britain’s best-known payday lender, announced the sale of a big chunk of its European operations, underlining its continuing international retrenchment in the wake of a torrid period for the business.
Sky News has learnt that Wonga will confirm that it has decided to offload BillPay, one of its most valuable units, to Klarna, a Swedish provider of e-commerce solutions. Sources said on Sunday that Wonga had agreed to sell Klarna – which operates in Austria, Germany, the Netherlands and Switzerland – for about £60m.
Talks between Wonga and Klarna have been taking place for several months, although they had appeared to falter several weeks ago owing to a number of domestic issues faced by the Swedish purchaser.
One insider said that a deal was scheduled to be announced early this week. The sale of BillPay will be the most significant international disposal undertaken by Wonga, which is striving to rebuild its business in the wake of a string of scandals and a regulatory crackdown in the UK.
Wonga continues to trade in countries including Canada, Poland, South Africa and Spain. The payday lender’s board, led by chairman Andy Haste, is confident that it can re-establish itself as a sustainable business in the UK, having recently reshuffled its senior management team.
A flexible loan product has been launched with some success as the company seeks to diversify away from the short-term lending activity that sparked political and public controversy.
Executives are targeting a return to the black this year after several years of losses triggered by spiralling regulatory and restructuring costs. Wonga’s losses have totalled nearly £120m in the last two years following a string of scandals and costs associated with cutting hundreds of jobs. Income was also hit by the introduction of a cap on the amount that lenders can charge consumers for short-term loans.
Last year, Wonga, which is in the final year of a deal to sponsor Newcastle United, the Championship club, secured a £25m debt package to fund new loans and provide additional working capital. In 2015, it was ordered by the City watchdog to pay more than £2.5m in compensation to 45,000 customers who were sent letters purporting to be from law firms but which in fact did not exist. (Sky News)
