Top 10 Stories of the Week! 07/11/16

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.

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This week’s news includes;  Trump wins U.S. presidency, HSBC profits fall by over 80%,  UK Construction sector falls into recession and Lego stops all advertising in Daily Mail newspaper.

 Opinion articles of the week:

  • Markets will snap up Snapchat because it’s different to Facebook and Twitter. Click here for more.
  • HSBC: President Trump’s policies will ‘likely put the economy into a recession after a year or two’. Click here for more.
  • TPP: How Optimistic Should We Be About the Deal? Click here for more.

 1. TRUMP WINS U.S. ELECTIONS

Donald Trump will become the 45th president of the United States, CNN projects, a historic victory for outsiders that represents a stunning repudiation of Washington’s political establishment.

The billionaire real estate magnate and former reality star needed an almost perfect run through the swing states — and he got it, winning Ohio, North Carolina and Florida.

The Republican swept to victory over Hillary Clinton in the ultimate triumph for a campaign that repeatedly shattered the conventions of politics to pull off a remarkable upset. Clinton conceded to Trump in the early hours of Wednesday morning. (CNN)

How will a Trump presidency affect UK politics? Click here for more.

Some Silicon Valley companies are exploring a potential move to London after the election results. Click here for more.

Donald Trump won the Presidency but lost the popular vote with over 600,000 less votes than Hillary Clinton. To find about the electoral college system works, have a look at our insight article; “Understanding The Electoral College: How The President Of The United States Is Elected.”

2. VIRGIN CARE WINS £700M CONTRACT TO RUN 200 NHS AND SOCIAL CARE SERVICES

Sir Richard Branson’s health firm, Virgin Care, has won a £700m contract to deliver 200 types of NHS and social care services to more than 200,000 people in Bath and north-east Somerset.

The contract, which was approved on Thursday, has sparked new fears about private health firms expanding their role in the provision of publicly funded health services.

Virgin Care has been handed the contract by both Bath and North East Somerset NHS clinical commissioning group and Conservative-led Bath and North East Somerset council. It is worth £70m a year for seven years and the contract includes an option to extend it by another three years at the same price.

It means that from 1 April Virgin Care will become the prime provider of a wide range of care for adults and children. That will include everything from services for those with diabetes, dementia or who have suffered a stroke, as well as people with mental health conditions. It will also cover care of children with learning disabilities and frail, elderly people who are undergoing rehabilitation to enable them to go back to living at home safely after an operation.

NHS campaigners warned that the history of previous privatisations of NHS services in other parts of England may mean the quality of care patients receive drops once Virgin takes over. (The Guardian)

3. RBS TO PAY SME’S £400 MILLION

Britain’s financial watchdog on Tuesday said Royal Bank of Scotland was guilty of “systematic” mistreatment of distressed small businesses that came to it for help, but cleared the bank of the most serious allegation that RBS forced businesses into default for its own benefit.

RBS announced alongside the report’s findings that it will automatically refund complex management fees worth £400 million to small and medium-sized enterprises (SMEs) that went through its controversial restructuring process.

CEO Ross McEwan says the bank is “very sorry” for what happened to businesses that went through RBS’ restructuring arm between 2008 and 2013, and insists that: “The culture, structure and way RBS operates today is fundamentally different from the period under review.”

The FCA has been investigating allegations of wrongdoing at its Global Restructuring Group (GRG) since 2014. RBS’s GRG was accused of artificially engineering small businesses into default on their debts so that the bank could extract cash from them.

The allegations date back to 2013 but were recently resurrected when documents were leaked to Buzzfeed and the BBC. The publications claimed that “staff were asked to search for companies that could be restructured, or have their interest rates bumped up,” in a project known as “Dash for Cash.”

The Financial Conduct Authority (FCA) announced on Tuesday that it has concluded RBS “did not set out to artificially engineer” SMEs to fall into the GRG and “there was not a widespread practice of identifying customers for transfer for inappropriate reasons, such as their potential value to GRG.”

But the regulator says it did find some “widespread” inappropriate practice, including “failure to support SME businesses in a manner consistent with good turnaround practice,” “placing an undue focus on pricing increases and debt reduction without due consideration to the longer term viability of customers,” and serious communication failings. (Business Insider)

 4. HSBC PROFITS DOWN 86%

HSBC has reported an 86% fall in pre-tax profits for the third quarter, as it felt the strain of adverse currency movements and accounted for a £1.4bn loss on the sale of its Brazilian unit.

Pre-tax profits fell to $843m (£678m) in the September quarter, down from $6.1bn (£5bn) for the same period last year, and much lower than the £2bn that analysts had forecast.

However, increased revenue from HSBC’s global banking and markets business helped adjusted pre-tax profits.

They beat expectations, rising 7% for the quarter to $5.6bn (£4.5bn) compared with the same period in 2015. The results, which are worse than expected, come after Lloyds, Barclays and RBS all showed signs of coping better than expected in the aftermath of Britain’s vote to leave the EU.

In August, the bank reported its core profit for the first half of the year had fallen 29% below estimations.

CEO Stuart Gulliver said he remained optimistic and that the lender’s core capital ratio, a key measure of financial strength, increased to 13.9% at the end of September, from 12.1% at the end of June.

In a statement, HSBC said its £2bn share buyback scheme that it announced in August was now 59% complete, and it expected to finish this by the end of this year, or in early 2017. (Sky News)

5. UK CONSTRUCTION FALLS INTO RECESSION

Latest figures from the Office for National Statistics reveal the sector has slipped into recession for the first time since 2012. Britain’s construction sector endured its worst quarter for four years after June’s vote to leave the EU, official figures have shown.

The sector shrank by 1.1% in the July-September period, according to the Office for National Statistics (ONS). Within this, house building was flat in the third quarter, highlighting the challenge faced by the Government as it admitted was on course to miss its target of building a million homes by 2020.

The figures confirmed that Britain’s builders are experiencing a recession with a second successive quarter of decline after shrinking by 0.1% in the April-June period.

ONS statistician Kate Davies said: “Construction output has remained broadly flat in the last year, both before and after the recent referendum.”

The quarterly figure was a little better than the 1.4% decline pencilled in when the ONS published its preliminary third quarter gross domestic product (GDP) estimate last month.

For September alone the sector grew slightly, against expectations that it would shrink. Britain’s construction industry makes up about 6% of the economy.

GDP overall grew by a better-than-expected 0.5% in the third quarter as predictions of a sharp slowdown after the EU referendum failed to materialise.

But ministers have acknowledged that more needs to be done to encourage the construction of new homes, and last month launched a £5bn house building stimulus package. (Sky News)

6. LEGO ENDS ADVERTISING WITH DAILY MAIL

Lego will stop advertising its products in the Daily Mail, following a public campaign calling on big companies to drop adverts from newspapers accused of promoting “hatred, discrimination and demonisation”, the company has announced.

The Danish firm, which has previously run free giveaways in the newspaper, responded to social media campaigners Stop Funding Hate by tweeting: “We have finished the agreement with the Daily Mail and are not planning any future promotional activity with the newspaper.”

Stop Funding Hate urges advertisers to rethink their ‘support’ for rightwing newspapers over what it sees as misleading headlines about child refugees, and the recent ruling by High Court judges that Parliament must be consulted before Article 50 is triggered.

A spokesperson for the campaign said: “Stop Funding Hate welcomes the decision from Lego. We are asking brands to listen to their customers when they tell them they want to stop funding hate, and that is what they’ve done. ”

Lego is the first big company to agree to the campaigners’ demands. The Co-Op Group has said it is ‘reviewing’ its advertising but other companies have, until now, refused to withdraw their adverts.

John Lewis, another key target of the campaign said: “We fully appreciate the strength of feeling on this issue but we never make an editorial judgement on a particular newspaper.” Waitrose and Marks & Spencer are also being urged to drop their Christmas advertising in certain tabloids. (The Independent)

7. M&S CLOTHING & HOMEWARE STORE CLOSURES

M&S has announced it will close 30 UK clothing and homeware shops and convert dozens more into food stores. Chief executive Steve Rowe’s turnaround plans will also see it open 200 new Simply Food stores as it shifts away from disappointing fashion sales.

He said M&S also planned to close loss-making shops in 10 international markets, including China and France.

The announcements came as M&S reported falling sales and profits in the six months to the end of September. Mr Rowe said of the UK store closures: “This is about building a sustainable, more profitable business that’s relevant for our customers in a digital shopping age.”

He would not be drawn on job losses or which stores would close, amid warnings from trade unions that staff would be “extremely concerned” about where the axe will fall. In total M&S said it would have about 60 fewer clothing and homeware stores in five years’ time.

However, with new food outlets opening, the company will have more stores overall and “more towns will have an M&S”, Mr Rowe told the BBC. The retailer has over 300 full-range sites, which sell clothing, homeware and food, and nearly 600 Simply Food shops in the UK. (BBC News)

8. SAINSBURY’S WARNS OVER INCREASING COSTS AS PROFITS FALL 10%

Argos owner Sainsbury’s has posted a 10% fall in half-year profits and warned of an even tougher second half for its supermarket chain in the face of surging costs. The group said it would continue to cut prices for shoppers, but cautioned that the impact of the plunging pound on prices was “uncertain” as it braces for an increase in costs over its second half.

Sainsbury’s reported underlying pre-tax profits of £277 million for the six months to September 24, down from £308 million a year earlier. Bottom line pre-tax profits rose 9.7% to £372 million.

It said second-half profits excluding Argos and Habitat owner Home Retail Group – snapped up earlier this year for £1.4 billion – were expected to be lower due to “continued price investment and a step-up in cost inflation in the second half”.

Full-year results overall are set to be in line with market expectations thanks to a boost of between £55 million and £75 million from Home Retail in the second half. Sainsbury’s saw profits come under pressure after like-for-like supermarket sales dropped 1% in the first half, with the sector still battling an intense price war.

The falling pound is putting even more pressure on the big players as suppliers begin to demand price increases, with Tesco and Marmite group Unilever embroiled in a recent spat over prices.

Sainsbury’s said it was on track to make savings of £500 million by 2017/18 and set a new three-year target to slash costs by another £500 million from 2018/19. The group already has 22 Argos digital stores in its supermarkets and plans to extend this to 30 by Christmas as well as creating a further 30 Argos digital collection points in its supermarkets. It hopes to ultimately roll out 200 new digital collection points overall across its stores, where customers can collect Tu clothing, eBay and DPD parcels. (Business Reporter)

9. DELOITTE FINED A RECORD £4M BY ACCOUNTANCY WATCHDOG

Deloitte has been fined a record £4m by the accountancy watchdog for misconduct in its audit of AIM listed Aero Inventory in the run up to its administration in 2009.

In particular, the Financial Reporting Council (FRC) claims the accountancy giant, along with partner John Clennett, fell short of the standard expected when auditing the company in the years ending June 2006, 2007 and 2008.

As well as fining Deloitte, the watchdog slapped Clennett with a £150,000 penalty and ordered the professional services giant to pay for the costs of the proceedings against it, including an interim payment of £2.3m.

“This fine of £4m is the highest recorded by the FRC for misconduct on a firm and was imposed on Deloitte by the tribunal following a five week hearing,” said Gareth Rees QC, executive counsel to the FRC. “It is a clear indication of the importance of the highest standards being maintained in all audits and the seriousness of the failure to perform an adequate audit of these financial statements which led to misleading information about the profits and turnover of the company being made to the market.”

A Deloitte spokesperson said: “We accept the findings of the tribunal and regret that in this instance our audit did not meet professional standards. Our audit quality processes have evolved significantly since these audits were performed between 2006 and 2008, and we are relentless in our focus to ensure all our audits are of the highest quality.” (City A.M)

10. ITV WARNS OF FALL IN TV ADVERTISING REVENUE 

Broadcasting giant ITV has warned over a slump in television advertising amid recent “political and economic uncertainty”.

The group – home to shows including The X Factor and comedy drama Cold Feet – said TV ad revenues fell 4% in the third quarter and are expected to tumble by around 7% in the final three months of the year.

This will see net advertising revenues fall 3% over the full year, meaning annual profits will be left “broadly” in line with last year. But ITV said its recent push to boost other revenue streams, such as with content from its production arm ITV Studios, will help offset the ad blow.

ITV revealed that net advertising revenues dropped as much as 11% in October as it also came up against tough comparisons from a year earlier, when the Rugby World Cup was held. It is forecasting ad revenues to fall around 6% this month and around 4% in December.

But turnover is surging elsewhere, with non-advertising revenues leaping 15% higher to £1.3 billion in the first nine months of the year and total external revenues ahead by 5%. The group also boosted viewing figures, with main ITV channel’s share of viewing up 3% and held flat for the ITV family. Its online viewing jumped 49% year on year in the first nine months.

ITV Studios saw nine-month revenues rise 18% to £923 million, boosted by acquisitions, such as The Voice creator Talpa Media last year. The group is slashing costs and focusing spending on content, with aims to make savings of £25 million in 2017.

The group has also sold around 60 shows worldwide so far this year, such as This Time Next Year, The Voice, Hell’s Kitchen and Love Island. (Business Reporter)

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