0 comments on Sterling drops sharply after surprise UK exit poll results

Sterling drops sharply after surprise UK exit poll results

Sterling dropped sharply as a surprise exit poll projected that the Conservative party would fall short of an overall majority in the UK election. The UK currency dropped in the immediate wake of the poll by 2 per cent against the US dollar and the euro and was trading around 1 per cent per cent lower by midnight.

The drop in the currency reflects uncertainty about the shape of the next government and what it will mean for the Brexit talks, which had been due to get underway shortly. Traders will now be monitoring the constituency declarations to see if the polls prove correct, with some recovery in sterling’s value after the early results were declared.

The drop in the value of sterling, which brought the euro to as high as 88p, will – if sustained – come as a concern to Irish exporters to the UK. The trend in the days ahead will depend on the final outcome of the vote and the formation of the new government, along with indications of what it will mean for the Brexit talks.

As well as currency markets, the Irish government will also be closely watching the reaction of stockmarkets on Friday, particularly given the plans to dispose of part of its shareholding in AIB in the next couple of weeks. The impact on the wider Brexit talks will also be monitored from Dublin.

Sterling was trading at around $1.28 at midnight, two hours after the poll, edging up slightly higher after early results from Newcastle and Sunderland. It earlier touched $1.2709, the weakest level since April.Against the euro, sterling was around 87.5p, having broken through 88p earlier,

A Bloomberg survey of 11 banks and brokerages conducted before the exit poll showed that sterling could plunge to as low as $1.20 in the event of a hung parliament, though that was below the median forecast for a level of $1.2350. A slender majority for the Conservatives would push the pound up to $1.3025, according to the survey.

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0 comments on Here’s what SMEs need to know about the new companies act

Here’s what SMEs need to know about the new companies act

The Companies (Accounting) Act 2017 comes into force on Friday and, according to the Department of Jobs, Enterprise and Innovation, it will reduce the financial reporting obligations on small businesses.

One of the more significant changes in the act is the creation of a new category of company called a micro company. To be classified as a micro company, a business must not have a turnover exceeding €700,000, a balance sheet exceeding €350,000 or average employee numbers exceeding 10.

The accounting benefits of being a micro company include exemptions from disclosing directors remuneration and no obligation to prepare or file a directors report.

Small and micro companies will be permitted to file abridged financial statements under the act. Small companies are defined as those with a turnover not exceeding €12 million (up from €8.8 million), a balance sheet not exceeding €6 million (up from €4.4 million) and average number of employees not exceeding 50.

Reclassified

The changes in the thresholds and classification structures mean that some companies that are currently referred to as medium companies will be reclassified and see a reduction in their obligations.

But those companies that are still defined as medium-sized companies can no longer file abridged financial statements. However, the threshold to be defined as a medium company has increased. Turnover can’t exceed €40 million (up from €20 million), the balance sheet total can’t exceed €20 million (up from €10 million) while average employee numbers can’t exceed 250.

While the act reduces obligations for smaller companies, some companies will see an increase in reporting obligations regardless of size.

For example, companies with operations in mining, quarrying and logging of forests have new requirements. Those companies must make available a report on payments made to governments for each financial year.

However, payments of less than €100,000 need not be disclosed in the payment report, but no manipulation of amounts is permitted to avoid reporting, according to law firm Matheson.

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0 comments on Pharmaceutical group Almac records pre-tax profit spike

Pharmaceutical group Almac records pre-tax profit spike

Almac, the Craigavon headquartered pharmaceutical group, has reported pre-tax profits of nearly £27 million (€31 million) for 2016.

The Northern Ireland group’s latest financial statements show its pre-tax profits fell slightly year on year from its record pre-tax profits high of £28 million.

Alan Armstrong, the group’s chief executive said 2016 was a “very successful year” for the privately owned organisation that was established by the late Sir Allen McClay in 2002.

Mr McClay had previously founded Galen Holdings which became the North’s first £1 billion company.

In its latest annual report Almac highlights that its pre-tax profits in 2015 included a $20 million (€17.8 million) payment from out-licensing oncology products and diagnostics tests developed in-house by Almac Diagnostics.

Mr Armstrong said: “We continued to deliver upon our global expansion strategy including investment of around £31 million in new facilities, equipment and resources.

“All our profits are reinvested into the business enabling us to offer best-in-class services and products to our clients.”

Its latest financial report shows the Northern Ireland group enjoyed a 14 per cent jump in its global revenues to £447 million during 2016 and a 12 per cent increase in total employee numbers which grew to 3,975.

Out of its global workforce 2,650 of its staff are based at its facilities in Craigavon, where it recruited an additional 421 people last year.

The company recently confirmed that it plans to invest a further £5 million investment at its Craigavon campus to develop more lab and office facilities.

The Northern Ireland group’s latest annual report also shows it has continued to invest heavily at its US headquarters, located in Souderton, Pennsylvania and at other facilities in Asia and Ireland.

Earlier this year Almac confirmed that it had acquired a facility in Dundalk at the IDA Business Park as a “safety net” to safeguard against any fall out from Brexit and to give it easy access to the EU single market.

Almac has said in its 2016 annual report that “further investment is being planned” as part of its global expansion strategy.

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0 comments on European banks gain while investors await UK election

European banks gain while investors await UK election

Banks and utilities supported European stocks on Wednesday, as there was a sense of relief among investors that Spain’s struggling Banco Popular was being rescued by Santander.

European banks were among the standout performers, gaining 0.7 per cent.

Investors were also looking ahead to the UK election on Thursday, as well as the European Central Bank’s policy meeting.

DUBLIN

The Iseq index was little changed. Building materials group CRH finished up 0.6 per cent at €31.90, but this was almost cancelled out by small nudges down for the other big stocks on the Dublin market. Ryanair closed down 0.5 per cent at €17.99, while Kerry finished at €81.06, down 0.3 per cent.

Bank of Ireland declined 3 per cent, despite gains for banks across Europe, while drinks group C&C fell 1 per cent to €3.30.

Hotels group Dalata advanced 1.6 per cent to €5.20. The company announced the sale and leaseback of the Clayton Hotel in Cardiff in Wales to M&G Real Estate, one of the world’s largest property investors.

LONDON

The FTSE 100 Index fell 0.6 per cent ahead of the UK general election. Polls are at odds on how close the election will be, with the Conservatives’ lead over Labour narrowing since the election was announced.

The energy sector took most points off the blue-chip index as oil prices fell sharply following data showing that US stocks of crude oil and gasoline surprisingly rose last week.

Shares in WPP were a top FTSE faller, down 2.6 per cent, after the world’s largest advertising group released a poor trading update.

Financials stocks were the biggest boost to the index, helped higher by relief after the rescue of Spain’s Banco Popular by Banco Santander. Royal Bank of Scotland and Lloyds both rose more than 1 per cent.

AstraZeneca fell 1 per cent, after selling the rights for its migraine drug Zomig to Grunenthal for up to $302 million. Shire also dropped 3 per cent.

UK house prices in May came in 3.3 per cent higher than a year ago, slightly ahead of the forecast by economists in a Reuters poll, giving a boost to housebuilders Persimmon and Taylor Wimpey.

EUROPE

The Stoxx 600 index fell 0.1 per cent, weighed down by a late drop in energy stocks. Germany’s Dax and France’s Cac 40 also both edged down about 0.1 per cent.

Although shares in Santander fell 0.9 per cent in choppy trade and Banco Popular’s were suspended, Santander said it would buy Popular and carry out a capital increase of around €7 billion.

Spain’s Bankia, Italy’s UniCredit and France’s Societe Generale were all up between 1 per cent and 4.9 per cent.

European utilities also gained, led by Germany’s E.ON and RWE. Both rose more than 5 per cent after the country’s highest court declared a nuclear fuel tax illegal, enabling them to claim back €6 billion in cash.

Shares in Swedish biometric firm Fingerprint Cards were the top Stoxx risers, jumping 11.6 per cent, after confirming an order for its sensors.

Covestro dropped 4.6 per cent after Bayer cut its stake in the plastics maker to 44.8 per cent from 53.3 per cent.

US

Wall Street stocks slipped in early afternoon trading on Wednesday, weighed down by a fall in oil prices, while caution reigned ahead of Thursday’s major political and economic events.

Exxon’s 0.7 per cent fall and Chevron’s 1.3 per cent fall were among the biggest drags on the S&P 500 and the Dow Jones.

Shares of Navistar International were down 4.2 per cent at $28.68 after the truck and engine maker posted a quarterly loss.

As well as the UK general election and the ECB’s meeting, the US market will be keeping an eye on former FBI director James Comey’s testimony before a Senate panel on Thursday.

– (Additional reporting: Reuters)

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0 comments on Hung parliament in UK could see sterling hit low of 92p against euro

Hung parliament in UK could see sterling hit low of 92p against euro

A hung parliament result in the UK election could see sterling slide to a new low of 92 pence against the euro, according to analysts, further damaging the position of Irish exporters and accelerating the decline in UK tourist numbers.

The British currency was marginally up against the euro at 87.28 pence on Wednesday ahead of what promises to be a turbulent 24 hours with the British election and European Central Bank’s monthly policy meeting falling on the same day.

Sterling gained as much as 4 per cent after prime minister Theresa May called a snap election seven weeks ago with polls suggesting a landslide win for her Conservative party would give her a stronger hand in Britain’s negotiations on leaving the EU.

But recent polls predicting outcomes ranging from a majority for the Conservatives to a hung parliament have seen the pound shed some of these gains.

“It’s now universally agreed that a hung parliament would be the very worst case scenario for the pound with some analysts predicting the single currency to spike as high as £0.92 on the news,” Investec’s Irish arm said in a note to investors.

“An outright Labour win would probably be slightly less negative for the pound, while a smaller Tory majority (of 17 seats) would be less again,” it said.

“At the other side of the spectrum a Tory majority of about 40 seats should see the pound strengthen although not markedly as this outcome is partly priced in.”

Brexit referendum

Since the Brexit referendum last June, sterling’s value against the euro has ranged between 77p and 91p, damaging the competitiveness of Irish exports, denting UK tourist numbers, and eroding the profitability of companies that report in euro but generate revenue in the UK.

Alongside the outcome of the UK election, investors are also awaiting the European Central Bank’s policy announcement on Thursday for clues on its stance towards tapering its stimulus programme.

Despite holding on to recent gains, sterling has fallen 2.5 per cent in trade-weighted terms in less than four weeks since polls first suggested a narrowing lead for the Conservatives.

US positioning data shows speculative investors have flipped back to betting more against the pound; many hedge funds expect any recovery in sterling will be short-lived, regardless of the election result.

“Large majorities are no guarantee that sterling will sustain its gains, and with UK growth stalling, market complacency over the start of Brexit negotiations and positioning now broadly neutral, our bias would be to sell sterling rallies,” Bank of America currency strategist Kamal Sharma wrote in a research note.

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0 comments on Dublin airport passenger numbers jump but domestic traffic dips

Dublin airport passenger numbers jump but domestic traffic dips

Dublin airport passenger numbers have jumped 5 per cent in May compared to the same month in 2016.

In total, 2.6 million passengers travelled through Ireland’s largest airport with transatlantic traffic witnessing the largest percentage increase. Almost 321,000 passengers travelled to and from North America in May, an increase of 18 per cent.

Domestic traveller numbers dropped by 9 per cent in the period as only 8,000 passengers flew on domestic flights in May.

Amid ongoing Brexit fears UK traffic increased marginally – by 1 per cent – in the period with more than 843,000 passengers travelling to UK destinations in May. Meanwhile, passenger volumes to continental Europe rose by 4 per cent with almost 1.4 million passengers travelling to European destinations in the month of May.

The airport has seen a substantial jump in the number of passengers using it as a hub to connect to other destinations. A total of 330,000 passengers connected through Dublin airport in the year to date – that represents an increase of 51 per cent.

In the first five months of 2017 over 10.9 million passengers travelled through Dublin airport, a 6 per cent increase on the same period last year.

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0 comments on British Airways’ explanations for IT failures far from convincing

British Airways’ explanations for IT failures far from convincing

So now we know: the computer crash suffered by British Airways was caused by an engineer pulling out a plug. Or, to be more precise, putting the plug back in.

That, at least, is the explanation put forward by Willie Walsh, head of BA’s owner, International Airlines Group. Walsh said on Monday that the unnamed technician had switched off power to BA’s data centre and then reconnected it, causing the “power surge” that had so perplexed observers of the chaotic meltdown last month.

Speaking from the annual air travel industry conference in Cancun, Mexico, Walsh told reporters the person responsible was “authorised to be in the room, but wasn’t authorised to do what he did”.

The IAG boss didn’t say whether the technician is still employed but that seems somewhat unlikely, given that his action left 75,000 passengers stranded over one of the busiest travel weekends of the year.

It also leaves BA with a bill approaching £150 million, according to latest estimates, and an incalculable hit to its reputation and future bookings.

As we all know from the advice so frequently given by IT departments, turning something off, then on again, usually does the trick, although not in this instance – if BA is to be believed.

Admitting that human error was behind the catastrophic systems failure is certainly an embarrassment for Britain’s flagship carrier – but not quite as embarrassing as having to admit that cost-cutting was the cause, as some have claimed.

Denying once again that job cuts were behind the computer mayhem, Walsh said it was the “uncontrolled and uncommanded fashion” in which the power was restored that did the damage. “You could cause a mistake to disconnect the power; it’s difficult for me to understand how you can mistakenly reconnect the power,” he said.

Had power been restored in a controlled way, the shutdown would have lasted only a couple of hours, according to the IAG boss, and cancellations would have been avoided.

Not everyone is convinced by this latest explanation. The unions maintain that the outsourcing of hundreds of IT jobs to India last year is at the root of the problem.

And they are not impressed by the group’s latest attempt at communicating with passengers, staff and shareholders and have criticising IAG for what they called “selective dribbling out” of information.

“The travelling public, BA employees and IAG investors deserve a clear explanation of what went on and why,” said Mick Rix of the union GMB.

That should come, in time. Walsh has confirmed there will be an independent inquiry into the debacle. He gave no further details of the investigation, such as who would carry it out or the proposed time frame, but said it would be “peer-reviewed” and that he would be “happy to disclose details”.

Figures just released by IAG showed just how hard BA’s schedule was hit, with almost 60 per cent of flights scrapped by BA on the Saturday of the meltdown and more than one in five cancelled the following day, 672 in total.

Fred off the hook

Put the popcorn back; it won’t be needed. Formal confirmation is expected on Wednesday morning that Fred Goodwin, Britain’s most reviled banker, is finally off the hook for his much-anticipated high court appearance.

The former Royal Bank of Scotland boss had initially been due to take the stand on Thursday in the long-running legal battle launched by disgruntled shareholders over the bank’s £12 billion rights issue.

RBS launched its cash call in 2008, but six months later had to be bailed out by taxpayers, with shareholders suffering huge losses. In the legal action – one of many launched by shareholders – investors said they had been misled about the bank’s true financial position.

Other investors had already settled with RBS, but one group, consisting of 9,000 shareholders and some institutional investors, had been holding out for a better deal.

For some, it wasn’t about the money, even though they have managed to squeeze around 82 pence a share out of RBS – double the figure accepted by other shareholders.

The real diehards were determined to put “Fred the Shred” on the stand and make him account for his actions during the financial crisis. Goodwin has not been seen in public since he was roasted by MPs at Westminster in 2009, and the case would have been explosive.

Alas, they have failed to find backers to fund their legal costs and, with the majority of shareholders voting to accept the deal, the case has been abandoned. If only the diehards could have organised their own cash call to pay the legal bills.

  • Fiona Walsh is business editor of theguardian.com

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0 comments on RBS settles landmark lawsuit over 2008 cash call

RBS settles landmark lawsuit over 2008 cash call

A group representing thousands of shareholders has reached a £200 million settlement with Royal Bank of Scotland over its 2008 rescue funding, sparing former chief executive Fred Goodwin an appearance in court.

A person close to the RBS Shareholder Action Group, which represents about 9,000 retail investors, said it had accepted the bank’s offer of 82p per share on behalf of its members.

The group has “accepted legal advice, and the matter will not now go to court”, he said. “If we had proceeded to trial there would have been a risk that we could win and not achieve the 82p per share for our members.”

The case centred on shareholders’ claims that RBS misrepresented the state of the bank’s health at the time of its rights issue in 2008. When RBS subsequently required the UK’s largest bank bailout at £45.5 billion, shareholders who had invested in the rights issue lost most of their investment.

RBS doubled its offer to the shareholders to 82p a fortnight ago, one day before a trial on the matter was due to open. Since then the two sides have been in intense talks, causing the trial to be adjourned three times.

Investors claimed the prospectus for the rights issue contained misleading information about RBS’s financial position under Mr Goodwin’s leadership and sought compensation. RBS and the directors denied any wrongdoing.

Some fight on

Mr Goodwin, who served as chief executive of RBS at the time, was due to appear in court, along with other former senior RBS bankers.

A small subset of shareholders within the action group, resolute on holding Mr Goodwin to account, pushed to raise extra funding last night to proceed with the court case. They claimed to have gathered £7 million.

The bank and investors were locked in a stalemate at the end of last week after a meeting was held with Ross McEwan, RBS chief executive, and no conclusion was reached, according to people briefed on the issue. RBS refused to raise its offer from 82p, one banker said.

RBS has over the past few months settled with groups representing various other shareholders. It set aside £800 million at the end of last year for such payments and not all of it has been used.

The settlement deal reached on Monday is expected to cost £100 million on top of the £800 million, one banker involved in the process said.

Mr Goodwin, who was stripped of his knighthood in 2012, has rarely been seen in public since RBS’s near collapse. He agreed to reduce a £700,000 annual pension only following a very public battle. He still lives in Edinburgh.

RBS and the shareholder action group declined to comment.

  • Copyright The Financial Times Limited 2017

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0 comments on Ireland faces battle to win Brexit insurance business

Ireland faces battle to win Brexit insurance business

An influx of financial investment into Ireland has been seen as one of the key positives of Brexit, offsetting at least some of the downside risk for Ireland. However recent months have shown just how fierce the competition is, as Dublin vies with Luxembourg, Brussels, Paris and other Continental financial centres.

On Tuesday, insurer QBE, a big international player based in Sydney, said it was to follow Lloyds and set up its EU base in Brussels. RSA and CNA Hardy have both this week chosen Luxembourg.

Following a few other recent loses – notably the decision by Lloyds of London to favour Brussels over Dublin – this raises questions about just how significant the Brexit influx will be for Dublin. A vital few months now lie ahead as the remaining major players finalise their plans.

Passporting rules

Insurers and other financial services firms can currently serve markets across the EU from London under so-called “passporting” rules. With the Conservative government – which most commentators feel is heading for re-election – saying it will take Britain out of the EU single market, these rights will end, though no one is yet sure what will replace them. Faced with the likelihood of needing bases within the EU to service European markets, insurers, banks and others are moving ahead of the Brexit talks to safeguard their position.

Dublin has had its insurance “ wins” in recent months. Standard Life has chosen Dublin as its base to serve EU customers, Legal & General is boosting its investment management operations here and Aviva will reinstate its Irish operation as a fully-fledged subsidiary. A number of other smaller players are also upping their presence here.

First choice

However we are in a battle. AIG’s decision to choose Luxembourg and the call by Lloyds of London – the big insurance syndicate – to choose Brussels were both blows. Hopes that Dublin would be the de facto first choice for most insurers now based in London and looking for an EU base now look misplaced. Our closeness to London, the fact we speak English and the established international insurance sector here were seen as key factors in our favour. But the big European centres have powerful cards to play, too.

On the flipside, there are also challenges for the international insurers already based here. If their parent groups decide to invest more in, say, Brussels or Luxembourg, then they may have to fight to hold existing investment here. An Insurance Ireland survey of senior executives here in April showed more seeing challenges from Brexit than opportunities.

What are the key issues, as firms choose where to locate? One is the location of their existing operations, with Dublin clearly doing better when companies already have Irish bases.

Promises of a soft touch

A second is regulation. The head of QBE said the Belgian regulator had been “very pragmatic.” Some sources in the sector here believe that the Belgian regulator was also a key factor in the Lloyds decision. There is clearly some push and pull in the background in Dublin, with the Central Bank playing a straight bat on regulatory issues, while some in the industry believe it should be more flexible and proactive. Minister of State Eoghan Murphy has said that other EU countries were engaged in “regulatory arbitrage” – in other words promising soft regulation in return for investment.

And third there is infrastructure and the much advertised shortage of accommodation for re-locating employees and soaring rents. It is hard to know how significant this is, but in tight decisions everything counts. Regulatory factors and infrastructure were identified as the key issues in attracting and holding investment here in the Insurance Ireland survey.

Have we got all our ducks in a row in seeking the Brexit investment dividend in the financial sector? The evidence so far suggests we are in a dogfight for every project

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0 comments on Netflix’s ‘House of Cards’ still punches above its estimated weight

Netflix’s ‘House of Cards’ still punches above its estimated weight

Democracy is so overrated, according to the Twitter bio of the Netflix show @HouseofCards, which has 1.7 million followers. That’s almost one follower for every column inch the political drama collected as its fifth season debuted last week.

It’s also fewer followers than the official accounts for Game of Thrones (5.4 million), The Big Bang Theory (4.4 million), Pretty Little Liars (4.1 million), Grey’s Anatomy (3.8 million) and quite a few other programmes not made by Netflix.

Social media popularity is a far from a perfect proxy for actual viewership, or even a useful or accurate one. The only reason to mention it at all is because proper data for Netflix shows is as elusive as a straight answer from Theresa May.

There are no official ratings for House of Cards or any Netflix originals. The company sometimes offers quasi-information, such as which shows are watched at breakfast and which are binged at bedtime, while the falling axe on Sense8 and The Get Down is as clear an indicator as any that these shows have underperformed.

But like Amazon Prime – which apparently didn’t even tell Jeremy Clarkson how many people watched The Grand Tour – Netflix never releases pure audience numbers. Because it has no advertisers, it is not obliged to share viewing data with a soul. To shareholders, it insists the important metric is subscriber numbers, and these continue to swell.

Tight lips

Netflix’s tight lips don’t stop others from being curious. Several audience research companies have taken stabs at estimating how many viewers its original shows attract. Some use social mentions as a predictor of success – one company, Ticker Tags, has forecast an acceleration in second-quarter US subscriber growth based on nothing more than the social buzz around controversial teen suicide drama 13 Reasons Why.

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