Italian Accounting Scandal Hurts BT

Due to technical difficulties on Tuesday evening, the blog is being posted on the morning of Wednesday 25th.

Tuesday, 24th January: Just after 9.30 this morning the Supreme Court ruled that Prime Minister Theresa May can’t start Brexit negotiations without  the approval of Parliament. May has previously stated her aim to trigger Article 50 by the end of March, and today’s ruling doesn’t look to delay that deadline. The opposition party said after the judgement that they wouldn’t be looking to stop Brexit from happening, only trying to amend any bill introduced by May on triggering the process. The ruling comes from an 8-3 majority against the government. However the court rejected arguments that the Scottish, Welsh and Northern Irish assemblies should get to vote on Article 50 before it is triggered, although Nicola Sturgeon has pledged to go “toe-to-toe” with the UK governments, even threatening of a fresh bid for independence.

BT plunged to the bottom of the blue chip index after revealing an Italian accounting scandal will cost substantially more than the £145m initially anticipated. £145m seems to have been quite an under-estimate in hindsight as the firm has been forced to write down the value of the Italian unit by £530m, subsequently leading to the group warning it would affect results over the next 2 years.  The activity in Italy involved improper sales, purchase, factoring and leasing transactions, leading BT to overstate Italian profits. The Italian scandal though isn’t BT’s only issue; the division only contributed to c.1% of BT’s core earnings last year. Today’s comments from BT also indicated to a deterioration in its core corporate and public sector business.  BT closed the day lower by 20.79%

easyJet joined BT at the root of the FTSE 100 as the low-cost airline warned that the weak pound, combined with rising fuel costs, would weigh on profits more than they first expected. As they continue to compete in Europe’s short-haul travel market, they said ticket prices were down 8.2% in the 3-months to end of December. easyJet closed Tuesday trade lower by 8.83%.

Almost trying to slip the news through the net HSBC have today said they plan to close 117 branches, cutting 380 roles in the UK in order to reduce costs. 180 of these jobs will be from the final round of branch cuts whilst a further 200 jobs will be cut from IT, with the role being transferred to India, China and Poland. HSBC claim the number of customers using branches has fallen about 40% over the last 5 years.