Football’s coming home
Football has not only hit the headlines this month due to the World Cup, but also due to the wealth of football across Europe. It has been reported that the football industry in Europe is worth a record breaking amount of £22 billion according to auditing consultancy Deloitte.
Figures released by Deloitte have revealed that the five largest leagues in Europe have generated between them a record amount of €14.7 billion (£12.6 billion) during the 2016-17 season, showing an increase of 9% annually.
The Premier League in England headed the lead previously with a revenue of £4.5 billion, with each of the 20 Premiership Clubs setting their own revenue records annually. The Premier Leagues’ nearest competitor is the Spanish La Liga. Figures have revealed that the Premier League is 86% larger than La Liga. A “new era” of improvements with financial stability and profitability have been reflected in the financial results according to Deloitte.
Rolls-Royce to axe 4,600 jobs
4,600 jobs are set to be axed by engineering firm Rolls-Royce following a massive reorganisation over the next two years, with middle management and back-office staff bearing the brunt. Most of the cuts will be taking place at Rolls-Royce’s Derbyshire base. The company has confirmed that a third of the cuts will take place by the end of 2018, with the final staffing reduction completed by mid-2020.
Rolls-Royce are taking steps to re-focus their business in the fields of civil aerospace, defence and power systems. The staff reductions are set to cost Rolls-Royce £500 million, which will cover those redundancies. The programme is expected to save the company £400 million per annum by the end of 2020.
Rolls-Royce engineers will be continuing work on the Trent 100 engines and modification that will be needed to ensure longer life of the engines parts. This work is expected to be carried out over several years to ensure that no further planes are grounded.
Warren East became Chief Executive of Rolls-Royce during its recent troubles, when the company saw profit warnings on 5 separate occasions leading to shareholders questioning the company’s management. Following East taking the helm, his main objective was to reassure the City and investors at large that the firm was stable and was not heading into a downward spiral.
Since then, East has since moved his plans forward by starting to cut staff numbers to ensure Rolls-Royce can become more profitable. “We have too complex a management and support organisation and we need to simplify that so that we can remain competitive.”
East went on to explain that it had been a very difficult decision to have to cut jobs, but “inevitable redundancies” would need to take place, with many being made compulsory due to the timescales involved. He did however confirm that the firm would honour any union agreements and the commitments that needed to be adhered to.
Labour MP for Derby North, Chris Williams described the job cuts as a ‘damning indictment’ of the government’s ‘hands-off’ industrial policy. He explained that private shareholders seem to direct the destinies of major UK firms, whilst disregarding the UK’s economy.
The Department for Business later said in a statement that the government continues to be in regular contact with Rolls-Royce and their plans with staff reductions, and the support that is in place for their workforce throughout the restructuring programme.
Equity Analyst, Nicholas Hyett from Hargreaves Lansdown believes that a smaller, improved Rolls-Royce will benefit from better efficiency and long-term improvements for the UK aerospace industry. Rolls-Royce earnings exceeded their expectations in 2017, seeing profits before tax amounting to £4.9 billion.
These earnings followed a disastrous 2016, when they experienced a £4.6 billion loss caused by corruption cases and the so-called “currency hedges”. Rolls-Royce sealed a deal in June 2017 to safeguard 7,000 engineering positions on the front line based in the East Midlands with unions including investments in UK aerospace facilities.
House of Frazer downsizes
It was announced earlier this month that high streets are set to see Department Store chain The House of Fraser closing 31 stores across the United Kingdom, leaving just 18 stores nationwide. The closures are a drastic move to rescue the troubled department store, affecting 6,000 jobs.
Stores including their flagship store in Oxford Street are expected to stay open for business until early 2019. The household retailers require 75% approval from its creditors for the closures to go ahead. A meeting as been scheduled for the 22nd June, when the creditors will vote on the planned insolvency plans and any Company Voluntary Arrangements (CVAs) in place.
Nearly 170 years ago, the United Kingdom first saw House of Fraser appear on the high street with a shop in the centre of Glasgow. Their empire grew to over 100 departments stores across the UK, which included London’s iconic luxury store Harrods in 1959, Kendals in Manchester and Rackhams in Birmingham.
Hugh Fraser, the founder of House of Fraser handed over his dynasty over to his son also named Hugh who in turn expanded the stores portfolio with another 50 stores across the United Kingdom, until 1985 when the firm was taken over by Mohamed al-Fayed.
It was only in May this year that firm’s current Chinese proprietors made a ‘conditional’ agreement to sell 51% of their business to the Chinese owner of Hamleys, the world famous London toy store. Plans to restructure the business depend on the sale being finalised.
Frank Slevin, the current Chairman of The House of Fraser announced that the retail industry was facing essential changes and that House of Fraser needs to take steps to adapt to the changes. If restructuring the business was not to take place, the company would see itself faced with “existential threats”.
Slevin expressed how difficult it was to make the decision to close stores, but at the same time described the move as essential to protect the company’s future. Increasing pressure from high street competitors and escalating rent costs have caused House of Fraser bosses to make the decision. House of Fraser are looking to reduce some costs by up to 25% at 10 of their premises that are remaining to stay open, with a further 70% for a period of 7 months at the 31 stores that are set to close.
The high street chain has faced many financial ups and downs over the years, and it has also seen many new faces as its owners. Unfortunately, it has not been strong enough in the market, has since lost its credibility and has suffered from a lack of investment.
Carillion aftershocks continue
According to the National Audit Office, construction giant Carillion’s collapse will cost UK taxpayers approximately £148 million, not including extra costs to the economy, customers, staff, creditors and supply chains. The company went into liquidation in January 2018, leaving liabilities of £7 billion, and affecting 420 public sector contracts spread across the United Kingdom.
It is estimated that 64% of the 11,638 Carillion workforce have since found new employment with 2,332 (13%) facing or having faced redundancy, with the remaining 3,000 currently still employed by Carillion by the administrators. Estimated losses of £148 million have been made following a range of uncertainties that have including the timing and the amount of assets to sell according to the NAO. These costs should be covered by money that was provided by the Cabinet Office who has helped cover the costs of the liquidation process.
The NAO have said that services provided by Carillion have continued to run without interruption following the announcement of the firms collapse, however, work has ceased on some projects, including building work on two hospitals that had been funded by Private Finance Initiatives.
It has been reported that non-government creditors will be very unlikely be able to recover their investments – in additional to this, it is believed that £2 billion in pension liabilities will need to be funded through the Pension Protection Fund.
Member of Parliament Frank Field, who chairs the Work and Pensions Committee, has described the recent reports as “invaluable”, adding new weight to the situation. He believes that Carillion have deceived the UK government and feels that the directors of Carillion have been “extraordinarily negligent”.
Money Transfer apps pave the way for smarter global transfers
Money transfer apps are expanding and becoming more widespread, offering lifelines to families who rely on money being transferred from abroad. Technology has made transferring large amounts of cash easier and cheaper. There are a vast range of services now available worldwide in many countries with some additional extra choices of where you can send your money, whether it be directly to another bank account or to pay a bill direct by direct bank transfer.
Many migrants across the globe have encountered issues when attempting to send money home including facing high costs; issues have been intensified by the lack of basic financial services. International migration is at an all time high, with over 250 million migrant workers based world-wide. It is estimated that migrants send over $600 billion to their families, making the money transfer industry a huge investment.
The money transfer industry was originally dominated by money giants Western Union and MoneyGram. These traditional companies are now encountering competition, with disruptive new companies using up to date methods. New firms are introducing cheaper, faster and less inconvenient methods and services.
Migrants that want to send money home can often face many complications. The main issue is that of not being able to open a bank account in their new country. Migrants are on many occasions not in a position to open a bank account once they enter a new country, and many of their families can also find themselves in the same predicament in their home countries.
Families in this position often get around this situation by taking hard cash and using a money transmission agent who would then “wire” the money to a local office based in their home country. This traditional method would often require both parties to travel to an office, and also incur costs that could at times be up to 10% of the total amount.
The introduction of Smartphones around the globe has changed the way that people are sending money. Migrants now are able to use their own personal mobile phone to make payments or send cash directly to their loved ones or recipients. Migrants also often use this facility to pay utility and grocery store bills.
Former NatWest banker, Dakshesh Patel explains his “Zympay” service that operates in South Africa, Zambia, Nigeria and India. He explains “We simplify the process and minimise the costs for people sending money to relatives.” Patel’s business has recently joined new start-up Pip iT, a company that helps migrant workers who have no bank account by creating transferable online vouchers.
Migrants can take cash to a post office in Britain, Canada or 10 African countries to obtain a voucher for a stated amount. Once they have their voucher, this can be read by their phone and the amount can then be added into their Pip iT wallet. Once activated, the user can then transfer money to settle bills in their home country using payment services such as Zeepay, Swifin or Impalapay.
Ollie Walsh, the co-founder of Pip iT based the notion on his own experiences when he had to wait 7 months before being able to open a bank account when he arrived in the UK, moving from Ireland. He said “It is very difficult for migrants to open a bank account in their new country, as I discovered when I moved to England from Ireland. “It took me seven months to open an account so imagine how much longer it takes for someone from Ghana.”