This weeks news includes; Snap posts financial figures, BT to cut 4000 jobs, Dyson wins EU court case, PwC faces record fine.
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.
Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- Sky News looks at why the City can take comfort from insurers’ Brexit plans.
- BBC News explores a report claiming that automation could put 1.2 million UK jobs at risk
- The Telegraph looks at the CBIs warning that stressed the importance of EU immigrants to the UK economy.
1. NHS CYBER ATTACK
NHS services across England and Scotland have been hit by a large-scale cyber-attack that has disrupted hospital and GP appointments. The prime minister said the incident was part of an untargeted wider attack affecting organisations globally.
Some hospitals and GPs have been unable to access patient data, after their computers were locked by a ransomware program demanding a payment worth £230. But there is no evidence patient data has been compromised, NHS Digital said.
The BBC understands about 40 NHS organisations and some GP practices have been hit. The NHS in Wales and Northern Ireland has not been affected.
There is no indication of who is behind the attack yet, but the hackers demanded their payment in the virtual currency Bitcoin, which is harder to trace. Read more here… (BBC News)
2. SNAPCHAT FINANCIAL FIGURES
Snap Inc shares plunged on Wednesday after the owner of Snapchat reported slowing user growth and revenue in its first earnings report as a public company, missing some Wall Street estimates as it competes with copycat messaging apps.
Shares tumbled 23 percent in after-hours trading to wipe some $6 billion from Snap’s market value, a reversal for the company after a red-hot March initial public offering that was the biggest for a U.S. tech company since Facebook Inc’s 2012 debut. The stock fell to $17.66, just above its IPO price of $17.
Some investors were hoping Snap would surprise them with big numbers in its first quarterly report, BTIG analyst Richard Greenfield said.
The performance echoed slides in Facebook and Twitter after they posted debut scorecards following their IPOs. Twitter shares cratered 24 percent the next day, while Facebook’s tumbled 11 percent, still the biggest-ever one-day losses for both.
Snap Chief Executive Evan Spiegel sought to reassure investors during an earnings call, fielding a dozen questions that ranged from strategy to how it would deal with competitors. Read more here…(Reuters)
3. BT TO CUT 4000 JOBS
BT is to shed 4,000 jobs worldwide over the next two years and is stripping the chief executive of his annual bonus. The telecoms giant said the job cuts would fall on back-office and managerial sectors as it simplifies its Global Services operations.
The shake-up follows an accounting scandal at the Italian part of Global Services that cost BT more than £500m. BT boss Gavin Patterson and now-departed finance chief Tony Chanmugam will lose bonuses over the scandal.
Both men understood the decision and would not have accepted a bonus if it had been approved, BT said. According to BT’s 2016 annual report, Mr Patterson was paid a basic salary of £969,000 that year and was awarded bonuses worth £4m.
In January, BT was forced to write down the value of its Italian unit after years of overstating profits. Read more here…(BBC News)
4. UK GOVERNMENT WILL MAKE £500m FROM LLOYDS SHARE SALE
The British government will make at least a 500 million pound profit from its bailout of Lloyds Banking Group, Chief Executive Antonio Horta-Osorio said on Thursday, as the lender nears a return to private hands.
The government’s stake in Lloyds is down to just 0.25 percent, Chairman Norman Blackwell earlier told shareholders at the lender’s annual meeting in Edinburgh, putting the bank on track to be in full private ownership within days.
The estimated 500 million pound profit is higher than the 100 million pounds the bank forecast in March, and contrasts sharply with a similar bailout of Royal Bank of Scotland which is projected to make a loss. Lloyds shares have fallen by 6 percent since the bank’s bailout in October 2008.
The government will make a profit, however, thanks to dividends paid by the bank, the fact that most of the shares were sold for more than the government paid, and a 2.5 billion pound fee Lloyds paid to avoid entering the Asset Protection Scheme that insured bailed-out banks’ riskiest loans.
Britain spent more than 20.3 billion pounds rescuing Lloyds during the global financial crisis of 2007-9, leaving the government with a 43 percent shareholding, which has gradually been sold back into the market over the last five years.
While Lloyds is largely free of the financial damage to its balance sheet sustained during the crisis era, shareholders on Thursday reminded the bank’s management of the reputational damage it still faces. Read more here…(Reuters)
5. DYSON WINS EUROPEAN COURT CASE
Sir James Dyson has won his appeal over a case that argues European suction tests favour his competitors’ vacuum cleaners. In 2015, he lost a major legal battle in his bid to prove the tests gave misleading higher efficiency ratings to rivals’ appliances.
This successful appeal against that ruling will see the claim sent back to the original EU court for judgement.
Sir James, a high profile campaigner for Brexit, had previously argued that EU law discriminated in favour of his company’s rivals, which include Germany’s Bosch and Siemens. His argument rests on the fact that current EU efficiency tests deceive customers because they are conducted when the appliances are operated in “pristine” conditions in laboratories and do not test them in real conditions, where suction may be lost as the bag fills with dust.
The European Court of Justice said rules on the efficiency of vacuum cleaners meant ratings should be based on how the devices were used in practice, not just in laboratories, and that the previous court hearing had not heard all the evidence supplied by Sir James at the time.
The original court ruling in 2015 did accept that “the suction performance and energy efficiency of a vacuum cleaner with a dust-loaded receptacle will be reduced due to dust accumulation” but threw out the case because Sir James could not suggest a new test with which he was happy. Since September 2014, all vacuum cleaners sold in the EU have been subject to energy labelling requirements.
Click on the hyperlink to read more about the case. Read more here…(BBC News)
6. PWC FINED RECORD £5m OVER AUDIT
Accounting firm PwC has been fined a record £5m and severely reprimanded over its auditing of collapsed property services group Connaught. Social housing specialist Connaught, which employed 10,000 people, had £220m of debt when it went bust in 2010.
The Financial Reporting Council (FRC), which imposed the fine, spent five years investigating PwC’s audit of Connaught in 2009. It found evidence of misconduct by PwC and retired partner Stephen Harrison.
Mr Harrison was fined £150,000 and also reprimanded.PwC was ordered to pay the FRC’s legal costs and make an interim payment of £1.5m. The FRC said the auditors had committed misconduct in three areas: mobilisation costs, long-term contracts and intangible assets.
Exeter-based Connaught was a FTSE 250 company. At one stage, it had a market value of more than £500m. It ran into serious difficulties after it emerged that a series of contracts would be loss-making. Despite the management’s efforts to put together a rescue plan, its creditors decided instead to put the business into administration under UK insolvency procedures. Read more here…(BBC News)
7. AUSTRALIA BANKS FACE NEW LEVY
The heads of Australia’s biggest lenders have slammed the government’s A$6.2 billion ($4.6 billion) bank levy, saying the cost will be borne by shareholders and customers.
Treasurer Scott Morrison announced the levy — charged at 6 basis points on liabilities over A$100 billion — to help fund a A$75 billion nation-building infrastructure program, in the budget Tuesday in Canberra. Defending the impost, Prime Minister Malcolm Turnbull on Wednesday said the banks are the most profitable in the world and can afford to pay.
However, the surprise move evoked a furious response from the heads of the nation’s biggest banks. Australia & New Zealand Banking Group Ltd. said it was too early to estimate the financial impact of the levy. Macquarie Group Ltd. said the impact of the plan is unclear.
Bank shares fell, having slumped Tuesday when news of the levy leaked. Read more here…(Bloomberg)
8. UK HOLIDAY OPERATORS IN £12m DEAL
Holiday operator On the Beach Group acquired rival Sunshine.co.uk for £12 million. Shares in On the Beach Group rose by 5.5% according to City A.M.
Set up in 2004, Cheadle-based On the beach group sold a majority stake in its business to Livingbridge in 2007 in a deal worth £36m. In October 2013, Inflexion Equity Partners acquired a majority stake in the group from Livingbridge for £73m.
On the beach group debuted on the London Stock Exchange in a £240m listing in September 2015. Read more here…(City A.M)
9. SUPERDRY PROFIT FROM BREXIT & IDRIS ELBA
Superdry has emerged as one of the winners from the Brexit vote, as the weakness of the pound boosted the clothing brand’s performance overseas.
SuperGroup, the owner of Superdry, said sales had jumped 27% to £750.6m in the past year, with currency moves behind about a third of the increase.
The pound has fallen by about 12% against the US dollar since Britain’s vote to leave the EU last June. But this has been a boon for Superdry, which rings up 60% of its sales overseas, creating a large natural currency hedge.
Superdry, best known for its logo-bearing hooded tops, jogging bottoms and checked shirts, has been enjoying a purple patch thanks to expansion overseas and a high-profile collaboration with the actor Idris Elba.
The growth was particularly impressive at the brand’s wholesale arm, which includes its 319 franchise outlets, where sales jumped 42.9% to nearly £250m. Retail sales rose 20.6% to £501.6m.
Despite the upbeat picture, the shares fell almost 5% as the management team, led by chief executive Euan Sutherland, juggles higher sourcing costs (in common with other retailers, SuperGroup sources its clothing in dollars) and the runaway growth of its wholesale business, which has lower profit margins than retail.
As a result, the sales surge did not shift the dial on annual profits, with Sutherland confirming they would be in line with existing City forecasts of between £86m and £87m. Read more here…(The Guardian)
10. O2 TO SCRAP ROAMING CHARGES
Customers of mobile operator O2 will be able to use their phones abroad without fear of racking up huge bills this summer after the company announced it will scrap roaming charges.
Starting from 15 June, O2’s pay monthly and business customers will be able to make and receive calls and texts as well as use their data allowances in 47 countries – including popular holiday destinations France, Greece and Spain – at no extra cost, the company announced on Tuesday.
The company said it will inform customers about the changes from 15 May adding that users would not need to take any action to take advantage of the benefits.
The move follows similar initiatives from rivals Vodaphone, EE and Three. It comes as the European Union is expected to abolish roaming charges for its 28 member’s states in June.
However, it remains unclear if UK operators will be able to reintroduce roaming fees from 2019, when the country is expected to exit the EU. Read more here…(The Independent)