Sky report revenue rise as advertising dips

Nicole Jeary
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Sky report revenue rise as advertising dips

Sky reported a rise in revenue on Thursday, accompanied by news of a slowdown in advertising income.

Like-for-like revenues – which mitigate the impact of currency movements – rose 5 percent in the last quarter to September. Subscriber numbers increased by 106,000 over the same period, a decrease on last year’s increased figure of 134,000.

However, advertising revenue in both the UK and Ireland fell around 3 percent. In a statement, Sky reiterated that these were still competitive figures in a tough market.

Sky, which generates about a third of its business in Europe in countries such as Italy, Germany and Austria, has said that its group revenues had also seen gains. This was seen to be as a result of the stronger euro against the pound sterling, as European sales in euros are recalculated into sterling. As a result of continuing pound weakness against the Euro, Sky saw group revenues rise by 13 percent to £3.1 billion.

The company continue to generate strong viewership and revenue numbers for sporting channels, particularly football. Whilst Sky have paid a supplementary £600 million for its Premier League broadcasting rights, it has reassured that they were already seeing strong returns on the investment, ultimately the move was improving efficiency, with operating costs for the quarter notably lower than the previous year.

These figures follow a 19 percent plunge in the company’s shares the last 12 months, as investors worry about the broadcaster’s ability to compete with digital streaming services such Netflix and the cost of investing in expensive sporting rights.

Sky Chief executive, Jeremy Darroch commented: “We finished the quarter strongly after a slower start against the backdrop of the Rio Olympics and Uefa Euro 2016.

“We are on track financially in a year of investment on screen.”

The company emphasised that the released figures showed that growth had been promising “across all territories and categories”.

Hargreaves Lansdown issue warning over investor confidence

Nicole Jeary
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Hargreaves Lansdown issue warning over investor confidence
Hargreaves Lansdown issued a profit warning on Thursday, after a slowdown in new business growth. According to figures, net new business intake in the September quarter stood at 1.1 billion, down 22 percent from the 1.4 billion recorded in the first quarter of the year. The total number of active client numbers increased by 20,000, down 17 percent from 24,000 in the first quarter of 2016. However, assets under administration rose 9.5 percent from August to the end of September to a record £67.6 billion, stimulated by stock market rallies. The firm had also benefited from increased client trade demand following the June Brexit vote. In a statement, the firm said: “Despite the higher stock market levels, investor confidence has fallen and there remains much uncertainty about the future economic environment weighing on investors’ minds,” it said in a statement. “Future stock market levels and investor confidence will have a significant part to play during the remainder of our financial year.” Following the warning, Hargreaves Lansdown’s shares fell 2.8 percent. This marks a decrease of around 20 percent since the start of the year. The FTSE All Share index was up 6.8 percent during September, according to figures by Reuters. This was attributed to boosts in profits for companies with overseas income, as a result of a the continued devaluation of sterling in the wake of the U.K’s decision to leave the European Union.

Tesco and Unilever row sparks #Marmitegate

Miranda Wadham
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Tesco and Unilever row sparks #Marmitegate
British supermarket Tesco are running short of products after a row with food and grocery manufacturer Unilever. Unilever have moved to increase the prices of their products by 10 percent after sterling’s recent devaluation. Tesco have so far resisted moves from the company to up the prices of their products, causing a shelf shortage of several items. However, the bosses of both Unilever and Tesco have said they are sure the situation will be resolved “quickly”. Marmite, PG Tips tea and Pot Noodles are among the brands taken off the Tesco online store on Thursday. Tesco have thus far refused to up prices, with many analysts agreeing with their position; producers tend to operate with a 20 percent – 30 percent margin, whereas supermarkets struggle with a margin of between 2 and 3 percent. Both Tesco and Unilever warned on the possibility of increased food prices ahead of the referendum. However, according to a poll by YouGov, it appears that the current goods deficit will hit both Remainers and Leavers alike. According to the survey, Leavers favour Unilever brands such as PG Tips, with Remainers favouring Ben & Jerry’s. 4a810e00-48d1-49af-896a-22ebeb1a9b70 The row has hit the share prices of both Unilever (LON:ULVR) and Tesco (LON:TSCO), dragging the FTSE down from last week’s highs. Unilever is currently down 3.96 percent at 3,576, with Tesco faring slightly better down 2.40 percent (1346GMT). 
13/10/2016
 

Small businesses still planning to grow in post-Brexit economy

Miranda Wadham
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Small businesses still planning to grow in post-Brexit economy

Three quarters of small businesses in the UK are looking to expand within the next two years, showing a generally optimistic mood in the business sector post-Brexit.

73 percent of businesses with over five employees have plans to grow dramatically or moderately over the next two years, according to a new report by Albion Ventures. However half of the 1,000 SMEs surveyed said that finding skilled staff to fill positions is one of the biggest challenges, an issue that may grow worse post-Brexit. Businesses in the manufacturing, construction, medical and healthcare sectors are the most affected, relying on candidates with job-specific training to fill the roles.

On a sector basis, manufacturing companies remains the most bullish about growth and the most relaxed about Brexit. Small businesses are largely split on the impact of Brexit, with 36 percent unworried by the referendum result, and 41 percent expecting it to be a hindrance. However, this opinion varies greatly depending on demographic – those in London are the most concerned, and over half of businesses owned by Millenials expect Brexit to cause problems in the long run.

Patrick Reeve, Managing Partner at Albion Ventures, commented on the report: “Against a backdrop of profound change, one element that has remained reassuringly unchanged is the optimism underlying the UK’s small businesses. Firms are looking to grow their headcount and productivity is on the increase. The biggest barrier to growth, finding skilled staff, is generated by success rather than failure.

“The downside is that the economy is coming under capacity constraints at a time of considerable political uncertainty. While many of the pressures on growth we have seen in recent years have eased, the skills that enable us to compete are in short supply.”

12/10/2016

Brexit may affect National Living Wage, report says

Nicole Jeary
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Brexit may affect National Living Wage, report says
 

Brexit may have a detrimental effect upon future growth of the National Living Wage, according to a report by The Resolution Foundation.

The think-tank’s latest research indicates that leaving the European Union will detrimentally impact the anticipated growth of the national wage boundaries in coming years. The report stated that weak pay growth rates, as a result of such developments, would ultimately see around a 10p decrease in the projected figures for living wages. Specifically, the foundation’s report predicts that the National Living Wage in 2020 will hit around £8.20, less than previous estimations.

However, the report said the expected 10p-an-hour increase will still deliver annual rises of up to £600 for over 4 million workers in the U.K. In addition, it also calculated that subsequent increases in wages will help conditions for many, with around 800,000 individuals set to be out of low pay by 2020.

Conor D’Arcy, a policy analyst at The Resolution Foundation, said: “While there is much uncertainty over Britain’s long-term economic outlook, most economists agree that wage growth in the next few years is likely to be weaker than expected prior to the referendum.

“That means we’re unlikely to see the £9 national living wage that George Osborne talked about in this parliament. As we approach the autumn statement we’ll soon learn what the [national living wage] will be next year. An increase to around £7.50 will deliver a welcome annual pay rise of up to £600 for full-time staff.

“Though that’s less than the £800 raise previously forecast, it’s sensible that the size of the rise adjusts in line with wages of typical workers. This flexibility means that calls from some businesses to scale back the wage even further are wide of the mark.”

The National Living Wage initiative was introduced in April of 1999 by Tony Blair’s government, and has been steadily increasing since. The current rate was set in April 2016 and stands at £7.20, or £6.20 for under 25 year olds.

Previously, an increase in living wages for under 25’s was regarded as the centrepiece of the former Chancellor, George Obsorne’s economic budget targets that were set out earlier in 2015. However, this report raises serious questions about the viability of these targets in the post-Brexit economic climate.

Monarch secure £165 million loan

Nicole Jeary
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Monarch secure £165 million loan

Monarch have secured an £165 million investment from majority shareholder Greybull Capital, after concerns the airline would be unable to renew its ATOL membership.

The struggling budget airline had faced troubles earlier this year after rumours that they were unable to renew its membership of the Air Travel Organisers’ Licensing (Atol) scheme, which ensures costumers can receive refunds should a participating airline collapse.

Earlier this summer, Monarch had stated that more funding would be necessary, warning in its annual report that it needed to obtain around £35 million in funding from its majority owner Greybull Capital or alternatively, an external lender.

The airline had been participating in negotiation talks with its major stakeholder Greybull Capital and Boeing earlier in the week to secure the necessary financial assistance. The increased investment from Greybull Capital will allow Monarch to be in a position to comply with the Civil Aviation Authority’s (CAA) financial health check-list and ultimately renew its Atol membership.

Greybull Capital purchased a majority 90 percent stake in the company in 2014, with an initial investment of £125 million. Greybull Capital are also major investors in Scunthorphe’s Steelworks.
“It is testament to the extensive effort by all parties, over the past weeks and months, that we are able to announce the largest investment in our 48-year history, as well as the renewal of our Atol licences,” said Andrew Swaffield, chief executive of Monarch Group.

Monarch were able to renew their license just hours before the CAA deadline earlier in September. The CAA had agreed to initially extend its license for 12 days until the 12th of October. The CAA has nonetheless said that it would “continue to monitor the company” in its “period of extension”.

This latest investment will ease the mounting pressure on Monarch and ensure that securing further CAA licensing will prove an easier feat.

Pound rallies as May favours “maximum” access to single market

Miranda Wadham
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Pound rallies as May favours “maximum” access to single market
The British Pound gained against the dollar this morning after Theresa May said Britain would seek “maximum possible access” to the single market when Brexit negotiations begin. Sterling has fallen dramatically over the past ten days, after Theresa May appeared to favour a ‘Hard Brexit’ in a speech at the Conservative party conference. This would mean prioritising immigration control over continued access to the single market, sparking alarm for investors. However, May told parliament in a speech on Wednesday that she would be negotiating for “maximum possible access” to the European market. “What we are going to do is be ambitious in our negotiation, to negotiate the best deal for the British people.” She added that the deal must also include increased control over immigration. The Pound also rallied on reports that May would give British lawmakers a chance to vote on the Brexit agreement. It rose as high as 1.6 percent against the dollar to $1.2326, but has now steadied to around 1 percent up. 
12/10/2016

Sterling drops to post-Brexit lows, FTSE hits intraday high

Miranda Wadham
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0
Sterling drops to post-Brexit lows, FTSE hits intraday high
Sterling dropped further on Tuesday, slipping beneath $1.23 to its lowest level since the days just after the European Referendum result in June. The Pound fell over 10 percent on Friday in a ‘flash crash’ on fears that the British government may be gunning for a ‘Hard Brexit’. It continued to slide yesterday and, after a steadying slightly, fell further 0.8 percent further on Tuesday pushing the Bank of England’s trade-weighted index to a nearly-eight-year low of 74.0. However, Tom Elliott, International Investment Strategist at deVere Group, warned of the repercussions of knee-jerk reactions by investors. He said: “recent economic data from the UK has been stronger than had been expected in the wake of the 23 June referendum. Doom and gloom forecasters may continue to be proved wrong as a hard Brexit is negotiated.”

Elliott put the Pound’s downward spiral down to Theresa May’s ‘Hard Brexit’ strategy, in which single market membership may be sacrifice for immigration control, the UK’s oversize current account deficit and the possibility of lower interest rates.

FTSE hits record intra-day high

The FTSE has benefitted heavily from sterling’s drop rising 0.5 percent on Tuesday to a record intraday high of 7,129.83 points.

The FTSE 100 is currently trading up 0.04 percent at 7,100.24 (1332GMT).

11/10/2016

Samsung shares down after halting Note 7 production

Miranda Wadham
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0
Samsung shares down after halting Note 7 production
Samsung shares plummeted on Tuesday after it announced it would no longer be producing its flagship phone, the Note 7. The electronics firm have ceased production of its high-end Note 7 model after even reports that even those models it had deemed safe began catching fire. The firm had already reduced Galaxy Note 7 production after complaints of exploding batteries in September sparked safety concerns. Samsung recalled devices with battery problems, replacing them with different devices. However, these were later found to have issues after a domestic flight in the US was evacuated after a Samsung phone started smoking. On Tuesday Samsung announced its decision to halt production of the Note 7 phone altogether, and owners are expected to be able to swap it in store for another Samsung device. Its shares fell dramatically on Tuesday as investors worried over the long-term impact of the problem. Greg Roh, from HMC Investment Securities, told the BBC Samsung could suffer “a considerable loss of consumer faith.” “The reason consumers prefer brands like Samsung and Apple is because of product reliability. So in this case, brand damage is inevitable and it will be costly for Samsung to turn that around again.” Samsung (KRX:005930) shares are currently down 7.5 percent at 1,554,000 (1303GMT). 
11/10/2016

William Hill and Amaya confirm merger talks

Miranda Wadham
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0
William Hill and Amaya confirm merger talks
British bookmaker William Hill has confirmed it is in merger talks with Canadian gambling group Amaya, a deal that may be the perfect solution for the two troubled companies. Both groups have been seeking a deal for months, with William Hill rejecting takeover bids from both 888 Holdings and Rank Group earlier this year. Amaya has struggled with the expansion of its sports betting business, and William Hill has faced competition from online competitors and increased regulation in the UK market. On Saturday, the companies confirmed they were beginning negotiations for a £4.6 billion all-share “merger of equals”, saying that the potential merger would “be consistent with the strategic objectives of both William Hill and Amaya and would create a clear international leader across online sports betting, poker and casino.” The multinational company would combine their online betting, which would account for 60 percent of the business, with “land-based business”. The enlarged company would have 60 per cent of its revenues from online betting, and 40 per cent in “land-based” business and would be fully diversified across all gambling sectors. The cost savings are estimated to be over £100 million. Investors reacted positively to the news, with Amaya shares up nearly 10 percent on at 23.41 and William Hill up 2.07 percent (1307GMT). 
10/10/2016
 
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