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The Lyft logo is seen on a parked Lyft Scooter in Washington, U.S., March 29, 2019. REUTERS/Brendan McDermid
April 23, 2019
(Reuters) – Lyft Inc picked up upbeat ratings from the brokerage arms of its Wall Street underwriters on Tuesday, allowing the ride-hailing company to recover some of the damage done to its share price in the run-up to the debut of larger rival Uber Technologies Inc.
Lyft shares, which as of Monday’s close were down 30 percent from its initial public offering debut on March 29, rose 2.5 pct to $62.49 in trading before the bell. That puts them almost 10 percent up in the past week after hitting lows beneath $56.
At least seven brokerages including Jefferies, JP Morgan and Piper Jaffray initiated coverage of Lyft with “buy” or equivalent to “buy” ratings, even as the stock languishes more than 15 percent below the price set in its heavily-hyped IPO last month.
Piper Jaffray expects “solid near-term top line results”, as the company has been gaining market share in recent quarters, but believes that the path to positive net income will be a “multi-year journey”. The brokerage initiated coverage with an overweight rating and $78 target price.
At Monday’s prices, Lyft had a stock market value of around $17 billion. Both it and Uber have both warned that they may never become profitable, making it difficult for investors to estimate how much they might be worth.
Still, brokerage analysts remained confident of Lyft’s long-term fortunes, despite the competition from Uber both on U.S. streets and among stock market investors.
“Uber’s filing has added pressure, and we acknowledge that the upcoming roadshow could create more near-term uncertainty, but we believe Lyft continues to execute well,” said Doug Anmuth, an analyst at JP Morgan.
Reuters had reported that Uber plans to sell around $10 billion worth of stock at a valuation of between $90 billion and $100 billion. Its IPO is on track for mid-May.
More than 24 brokerages helped underwrite Lyft’s IPO. Industry standards require analysts from those firms to wait until a 25-day cooling off period has ended following the IPO before launching coverage.
At least three of Lyft’s underwriters, Canaccord, Cowen and JMP Securities, are also backing the Uber deal, according to SEC filings.
Some investors give more weight to the opinions of analysts who work at brokerages involved in underwriting a company’s IPO than they do to analysts at brokerages not involved in the IPO.
Including Tuesday’s initiations, 13 analysts now cover Lyft, with five positive ratings, seven neutral ratings and one negative rating. The analysts had a median price target of $74, down from a median price target of $75 on Monday.
Analysts on average expect Lyft’s revenue in 2019 to grow 57.3 percent to $3.39 billion, according to Refinitiv data, a slower pace than in previous years. Lyft’s revenue doubled last year after tripling in 2017.
(Reporting by Noel Randewich in San Francisco and Jasmine I S in Bengaluru; Editing by Bernard Orr)
Source: OANN
Advertisements for 2020 Census Jobs are posted at a restaurant in Concord, New Hampshire, U.S., February 18, 2019. REUTERS/Brian Snyder
April 23, 2019
By Andrew Chung and Lawrence Hurley
WASHINGTON (Reuters) – The U.S. Supreme Court, in one of the most consequential cases of its current term, on Tuesday will hear the Trump administration’s bid to add a citizenship question to the 2020 census, a plan opponents have called a Republican effort to scare immigrants from taking part in the population count.
Lower courts have blocked the question, ruling that the administration violated federal law and the U.S. Constitution in seeking to include it on the census form. The nine Supreme Court justices will hold an extended 80-minute argument session in the administration’s appeal, with a ruling due by the end of June.
The case comes in a pair of lawsuits by a group of states and localities led by New York state, and a coalition of immigrant rights groups challenging the legality of the question. The census forms are due to be printed in the coming months.
The official population count, as determined by the census, is used to allot seats in the U.S. House of Representatives and distribute some $800 billion in federal funds.
Opponents have said inclusion of the question would cause a severe undercount by frightening immigrant households and Latinos from filling out the census, fearful that the information would be shared with law enforcement. This would cost Democratic-leaning areas electoral representation in Congress and federal aid, benefiting Republican-leaning parts of the country, they said.
President Donald Trump, a Republican, has pursued hardline immigration policies. His administration said the citizenship question would yield better data to enforce the Voting Rights Act, which protects eligible voters from discrimination.
Business groups and corporations such as Lyft, Inc, Box, Inc, Levi Strauss & Co and Uber Technologies Inc also opposed the citizenship question, saying it would compromise census data that they use to make decisions including where to put new locations and how to market products.
Manhattan-based U.S. District Judge Jesse Furman on Jan. 15 ruled that the Commerce Department’s decision to add the question violated a federal law called the Administrative Procedure Act. Federal judges in Maryland and California also prohibited the question’s inclusion in subsequent rulings, saying it would violate the Constitution’s mandate to enumerate the population every 10 years.
Furman found that Commerce Secretary Wilbur Ross, whose department includes the Census Bureau, concealed his true motives for his March 2018 decision to add the question.
The Census Bureau itself estimated that households corresponding to 6.5 million people would not respond to the census if the citizenship question is asked, leading to less accurate citizenship data.
Citizenship has not been asked of all households since the 1950 census. It has featured since then on questionnaires sent to a smaller subset of the population. While only U.S. citizens can vote, non-citizens comprise an estimated 7 percent of the population.
For a graphic on the major Supreme Court cases this term: https://tmsnrt.rs/2V2T0Uf
(Reporting by Andrew Chung and Lawrence Hurley; Editing by Will Dunham)
Source: OANN
FILE PHOTO: Headquarters of the People’s Bank of China (PBOC), the central bank, is pictured in Beijing, China September 28, 2018. REUTERS/Jason Lee/File Photo
April 23, 2019
By Kevin Yao
BEIJING (Reuters) – China’s central bank is likely to pause to assess economic conditions before making any further moves to ease lenders’ reserve requirements, after better-than-expected growth data reduced the urgency for action, policy insiders said.
Although the central bank’s easing bias remains unchanged, it sees less room this year for cutting reserve requirement ratios (RRRs) – the share of cash banks must hold as reserves – as fiscal stimulus plays a bigger role in spurring growth, according to government advisers involved in internal policy discussions.
The People’s Bank of China (PBOC) is also worried that pumping too much cash into the economy could reignite bubbles over time, the policy insiders said, and wants to save some of its policy ammunition.
“In the short term, it’s not necessary to use RRR cuts to boost economic growth,” one policy adviser told Reuters. “Monetary policy should leave some room – if economic uncertainties rise or economic conditions deteriorate, the central bank could ease policy.”
The chance of a cut in benchmark interest rates, meanwhile, has further diminished, as the central bank focuses on reforming its interest rate regime this year, the policy insiders said.
LESS ROOM FOR RRR CUTS
China’s economy grew a steady 6.4 percent in the first quarter, defying expectations of a further slowdown, with factory output, retail sales and investment in March all growing faster than expected following a raft of expansion-boosting measures in recent months.
Still, economists do not expect a sharp recovery in the world’s second-largest economy, as many private firms grapple with high funding costs, while external demand may weaken in the coming months as the world economy loses steam.
Optimism is rising, however, that China and the United States will reach a trade deal in coming weeks.
“The possibility of seeing big policy changes is not big. We may maintain the strength of policy support but it could become more structural,” said a second policy source.
The PBOC did not immediately respond to Reuters’ request for comment.
The PBOC has cut RRRs five times since the start of 2018, lowering the ratio to 13.5 percent for big banks and 11.5 percent for small-to medium-sized lenders.
Central bank Governor Yi Gang said in March that there was still some room to cut RRRs, but less so than a few years ago.
The PBOC is likely to cut RRRs for small banks to encourage more lending to small and private firms – which are vital for economic growth and job creation – said the policy insiders, who have penciled in at least one such “targeted” RRR cut this year.
“Monetary policy will maintain counter-cyclical adjustments and keep liquidity ample as interest rates should go lower for the real economy,” said one of the policy insiders.
A Reuters poll, conducted before the first-quarter data release on April 17, showed economists expected the central bank to deliver three more RRR cuts of 50 basis points in each of the remaining three quarters of 2019.
But the stronger-than-expected growth data compelled some economists to trim their forecasts for RRR cuts. UBS now expects another 100 bps cuts this year, with the next one likely in June-July, instead of the 200 bps it had forecast earlier.
ECONOMIC UNCERTAINTIES LINGER
A statement on Friday from the Politburo, a key decision-making body of the ruling Communist Party, said China would maintain policy support for the economy, which still faced “downward pressure” and difficulties.
Authorities would strike a balance between stabilizing economic growth, promoting reforms, controlling risks and improving livelihoods, the Politburo said, adding that China would move forward with structural efforts to control debt levels and prevent speculation in the property market.
First-quarter economic growth was backed by record new bank loans of 5.81 trillion yuan ($865.61 billion) and local government special bond issuance of 717.2 billion yuan, which rocketed ninefold from a year earlier.
Beijing has ramped up fiscal stimulus, unveiling tax and fee cuts amounting to 2 trillion yuan to ease burdens on firms, while allowing local governments to issue 2.15 trillion yuan of special bonds to fund infrastructure projects.
Chinese leaders have pledged to ensure economic stability in a year that will mark the 70th anniversary of the founding of the People’s Republic, while vowing not to adopt “flood-like” stimulus that could worsen debt and structural risks.
The government’s target range for 2019 growth is 6-6.5 percent but growth of about 6.2 percent is seen needed this year and the next to meet the party’s longstanding goal of doubling GDP and incomes in the decade to 2020.
China’s growth slowed to a 28-year low of 6.6 percent last year, and further cooling is expected this year.
(Reporting by Kevin Yao; Editing by Alex Richardson)
Source: OANN
FILE PHOTO: A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf, Iran, July 25, 2005. REUTERS/Raheb Homavandi
April 23, 2019
By Henning Gloystein
SINGAPORE (Reuters) – Asian buyers of Iranian crude are well placed to overcome the end of U.S. sanctions waivers as they have demonstrated they can live without it and as global producers have the capacity to make up a shortfall, according to analysts and trade data.
The United States on Monday demanded buyers of Iranian oil stop purchases by May or face sanctions, ending six months of waivers which allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes.
The announcement came amid an already tight market as the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, including Russia, have been curtailing supply since January to prop up prices.
Global benchmark Brent crude futures rose to as high as $74.69 a barrel on Tuesday, the most this year. The surging crude will mean higher fuel costs for Asian economies. Iran’s four-biggest crude buyers are China, India, Japan and South Korea.
Despite the cost surge, supply shortfalls are unlikely.
The end of the waivers should cut Iranian exports by 900,000 barrels per day (bpd), Goldman Sachs said late on Monday. That is more than made up by “immediately available” spare capacity from producers including Saudi Arabia, the United Arab Emirates (UAE) and Russia of about 2 million bpd, which could rise to 2.5 million bpd next year.
In a statement on the end of the waivers, U.S. President Donald Trump said the United States, Saudi Arabia, and the UAE would ensure oil markets are fully supplied.
“The United States have more than proved that they are able to fill any voids left by sanctions,” said Matt Stanley, a broker with Starfuels in Dubai.
Even if U.S. output should fall short, Stanley said, “Saudi and the United Arab Emirates are going to ensure they will increase production to offset any loss in supply from Iran.”
Iran’s four main Asian buyers ramped up imports in March and April in anticipation of the end of the waivers. But before that, all the countries already showed they could dial down their purchases.
Before the sanctions, Iran was OPEC’s fourth-largest producer at almost 3 million bpd, but April 2019 exports have shrunk to around 1 million bpd, according to ship tracking and analyst data in Refinitiv.
(GRAPHIC: Iran seaborne crude oil & condensate exports – https://tmsnrt.rs/2DE8CHt)
THE BIG TWO
Iran’s biggest oil buyers are China and India.
China on Monday criticized the U.S. decision, but trade data shows it can cope with lower Iranian imports.
Ship tracking data in Refinitiv showed China’s crude imports from Iran averaging 500,000 bpd since the start of 2019, down from a 2018 peak of 800,000 bpd, and only 5 percent of its overall crude imports.
Dai Jiaquan, head of the Research Institute of China National Petroleum Corporation (CNPC), said on Tuesday that other suppliers could fill the gaps, particularly U.S. crude.
He noted that estimated U.S. crude output increases this year are between 1.6 million and 1.7 million bpd, that alone would outpace expected global oil demand growth of 1.2 million to 1.3 million bpd.
Adding spare capacity from OPEC means “there will not be short supply in the market,” said Dai.
The United States is now the world’s biggest oil producer, pumping more than 12 million bpd with exports topping 3 million bpd
India has also reduced Iranian purchases, averaging 300,000 bpd this year, around 6 percent of overall imports, down from a peak of 750,000 bpd in mid-2018, Refinitiv data showed.
India’s Oil Minister Dharmendra Pradhan said on Tuesday his country could access supplies from other producers to compensate for Iranian losses.
“Indian refineries are fully prepared to meet the national demand for petrol, diesel and other petroleum products,” he said.
(GRAPHIC: U.S. crude oil production & exports – https://tmsnrt.rs/2ULQiTd)
THE ALLIES
Close U.S. ally Japan halted all Iranian crude imports between November 2018 and January 2019, Refinitiv data showed, and imports since then have averaged below 200,000 bpd, equivalent to 5 percent of demand.
The tighter U.S. sanctions should have only a limited impact on Japan, Hiroshige Seko, the trade and industry minister, said on Tuesday.
South Korea also cut all of its Iranian oil imports between August and December 2018. This year, Korea has averaged around 300,000 bpd of imports, mostly of condensate, an ultra-light oil used by many of its refiners to make petrochemicals.
(GRAPHIC: Iran crude oil & condensate exports to Asia’s biggest buyers – https://tmsnrt.rs/2IAUWky)
(Reporting by Henning Gloystein in SINGAPORE; additional reporting by Muyu Xu in BEIJING, Jane Chung in SEOUL and Aaron Sheldrick in TOKYO; editing by Christian Schmollinger)
Source: OANN
FILE PHOTO: Ukrainian presidential candidate Volodymyr Zelenskiy reacts following the announcement of the first exit poll in a presidential election at his campaign headquarters in Kiev, Ukraine April 21, 2019./File Photo
April 23, 2019
By Matthias Williams and Pavel Polityuk
KIEV (Reuters) – Before Ukraine’s new president Volodymyr Zelenskiy was even elected, an opposition leader was plotting to curb his powers and make it easier for him to be impeached.
Andriy Sadovyi, head of the Samopomich party, the second largest opposition group in parliament, announced two days before the vote he was garnering support for a parliamentary bill to weaken the presidency.
The opening salvo is a measure of the hostility that may be in store for Zelenskiy, a 41-year-old comedian who beat incumbent president, Petro Poroshenko, in Sunday’s election despite having no prior political experience or representation in parliament.
Zelenskiy is expected to take office next month. His ability to work with parliament, known as the Rada, will be crucial to meeting the expectations of his voters and passing reforms to keep foreign aid flowing.
Lawmakers from Samopomich and other parties feel the president has too many powers.
“Let him have responsibility like other political players, he cannot stand above the law,” Oksana Syroyid, a Samopomich lawmaker and deputy speaker in parliament told Reuters.
Zelenskiy’s powers will include appointing the head of the state security service, the head of the military, the general prosecutor, the central bank governor and the foreign and defense ministers.
But parliament must confirm each appointment and although Zelenskiy beat the incumbent decisively in the presidential vote and his party could win the largest number of seats in parliamentary elections in October it is unlikely to win an outright majority, opinion polls show.
This means he would need to ally with at least one other party if he is to get his election pledges enacted and his appointments approved. He has not indicated which parties he would be prepared to work with.
Adding to the hostility is his election promise for a bill to strip lawmakers, and himself, of immunity from prosecution.
Volodymyr Ariev, a lawmaker from Poroshenko’s faction, told Reuters it was unlikely that parliament would back that move because lawmakers fret about being prosecuted in political vendettas.
Zelenskiy also needs lawmakers to pass legislation that matters to the International Monetary Fund, Ukraine’s most important foreign backer, such as a bill to criminalize illegal enrichment by officials.
Stuart Culverhouse, Head of Sovereign and Fixed Income Research at Tellimer, said lawmakers might not back that bill until after October. This could lead to delays in IMF tranche disbursements under the $3.9 billion assistance program. The next one is due in May.
“This could be enough to burst the pre-election Zelenskiy market bubble,” he said.
Yields have fallen as investors became more comfortable with Zelenskiy and also because another presidential candidate Yulia Tymoshenko — who was hostile to some major reforms — was knocked out of the running.
POLITICAL PARALYSIS
Samopomich’s Syroyid said her party wants to strip the president of some powers, including the right to appoint the chairman of the National Energy and Utilities Regulatory Commission (NEURC) who sets energy tariffs with the government.
“What do the tariffs have to do with the president? Today he (the president) has influence – he appoints the chairman of the NEURC.”
Tymoshenko, another opposition leader who ran in the election against Zelenskiy, has previously also called for the president’s powers to be curbed.
“It may be necessary to… more clearly define what the president can and cannot do,” Oleksiy Riabchyn, a lawmaker in Tymoshenko’s party told Reuters.
The government is led by Prime Minister Volodymyr Groysman, who was appointed by Poroshenko. He is expected to stay in power until the October election. If Zelenskiy wins enough seats in parliament, he is expected to form a new government.
This means that until those elections, he may struggle to make any significant changes.
“Until the October parliamentary election Mr Zelenskiy’s team will need to secure the support of various factions in the current legislature in order to pass policies,” said Agnese Ortolani, an analyst at the Economist Intelligence Unit.
“This might prove difficult, as part of the political elite is likely to attempt to paralyse Mr Zelenskiy’s presidency.”
Zelenskiy could try and bring forward the parliamentary election now while his popularity may be at a peak. But he would only be able to do that with parliament’s blessing.
“If parliament does not support the president’s initiatives it will be very hard to explain to Ukraine’s voters why not,” Dmytro Razumkov, an adviser to Zelenskiy’s campaign, told Reuters.
“It’s up to lawmakers. I hope their political survival instincts will dominate.”
(Additional reporting by Polina Ivanova; editing by Anna Willard)
Source: OANN
FILE PHOTO: A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf, Iran, July 25, 2005. REUTERS/Raheb Homavandi
April 23, 2019
BEIJING (Reuters) – China’s Foreign Ministry said on Tuesday it has lodged representations with the United States over Washington’s plan to end waivers for Iranian oil imports.
“The decision from the U.S. will contribute to volatility in the Middle East and in the international energy market,” ministry spokesman Geng Shuang told a news briefing.
Washington has announced that all Iran sanction waivers will end by May, sending crude oil prices higher and pressuring importers to stop buying from Tehran.
(Reporting by Michael Pollard and Beijing Monitoring Desk; editing by Darren Schuettler)
Source: OANN
A security personnel observes three minutes of silence as a tribute to victims, two days after a string of suicide bomb attacks on churches and luxury hotels across the island on Easter Sunday, near St Anthony Shrine in Colombo, Sri Lanka April 23, 2019. REUTERS/Dinuka Liyanawatte
April 23, 2019
By Marius Zaharia and Vidya Ranganathan
HONG KONG/SINGAPORE (Reuters) – Sri Lanka faces a likely collapse in tourism following Easter Sunday bomb attacks on churches and hotels, which would deal a severe blow to the island’s economy and financial markets, and potentially force it to seek further IMF assistance.
The International Monetary Fund extended last month a $1.5 billion loan for an extra year into 2020, a key step in keeping foreign investors involved in what so far this year has been a top-performing frontier debt market.
But with growth, and therefore state revenues, now likely to slow significantly, the budget targets agreed with the IMF may have to be reviewed, and the government is expected to resist pressure for any spending cuts before elections expected later this year.
There is even a possibility that more IMF money may be needed if foreign investment falls, adding to the hard currency gap left by plunging tourism receipts.
“If growth slows a lot more and the budget deficit assumptions need to be reassessed, then they’ll have to sit down and negotiate something more feasible,” said Alex Holmes, Asia economist at Capital Economics.
The Sri Lankan stock index dived 2.6 percent on Tuesday in its first day of trading after the attacks that killed more than 300 people, while the heavily-managed rupee held steady.
Tourism is Sri Lanka’s third-largest and fastest growing source of foreign currency, after remittances and garment exports, accounting for almost $4.4 billion or 4.9 percent of gross domestic product (GDP) in 2018.
A fall in tourism receipts is bound to weaken the rupee over time. The central bank, whose coffers are too light to defend the currency through interventions, is likely to have to raise interest rates.
This, in turn, would choke lending, hurting consumers and the investment plans of local businesses, while also making it more costly for the government to seek funding from foreign investors via bond markets.
“The central bank may be forced to hike rates again this year,” said Win Thin, global head of currency strategy at Brown Brothers Harriman (BBH).
“With foreign reserves very low right now, the central bank cannot actively support the rupee.”
After falling 16 percent against the U.S. dollar last year to record lows, the rupee had gained 4.6 percent this year as of last week.
Sri Lankan bonds have been among the best performing globally, only bettered by Argentina and Chile. But the main stock index has lost about 10 percent.
WEAK FINANCES
Sri Lanka’s external position was already precarious.
To help fund a record $5.9 billion in foreign loans this year, the country successfully sold $2.4 billion in five-year and 10-year U.S. dollar bonds last month, but that was right after the IMF extension and amid bets of looser monetary policy.
(GRAPHIC: Sri Lanka’s precarious balance of payments – https://tmsnrt.rs/2IAqHKj)
In January, Sri Lanka used its reserves to repay debt worth $1 billion. It had about $5 billion left in February, the least since April 2017, and only enough to cover two months of imports and about two-thirds of its short-term external debt, according to BBH calculations.
Colombo also needs to finance a current account deficit of about 3 percent of GDP.
Prime Minister Ranil Wickremesinghe is already facing heavy criticism domestically for higher taxes, and tight monetary and fiscal policies that have crimped growth to a 17-year low.
Having emerged from a 51-day political crisis in which President Maithripala Sirisena sacked and replaced him with pro-China former president Mahinda Rajapaksa – a decision which was later reversed – Wickremesinghe set an ambitious fiscal deficit goal of 4.4 percent of GDP, compared with 5.3 percent in 2018.
But he also boosted spending on state employees, pensioners and the armed forces and promised more funds for rural infrastructure, leading economists to doubt the targets. A presidential vote is expected later this year followed by a general election in 2020.
“Given the fact they have repayments coming up for sovereign bonds, it could lead to more pressure on foreign currency reserves. So, it’s a near term negative for the tourism sector and also market sentiment as well,” said Ruchir Desai, fund manager at Asia Frontier Capital, who co-manages the $16 million AFC Asia Frontier Fund.
“Valuations are cheap, no doubt… but until they get some kind of political unity which can result in stable policy-making, we will probably remain underweight (equities) until the elections.”
(Reporting by Marius Zaharia in HONG KONG, Vidya Ranganathan in SINGAPORE and Daniel Leussink in TOKYO; Writing by Marius Zaharia; Editing by Kim Coghill)
Source: OANN
FILE PHOTO: A BT (British Telecom) company logo is pictured on the side of a convention centre in Liverpool northern England, April 9, 2016. REUTERS/Phil Noble
April 23, 2019
By Emilio Parodi
MILAN (Reuters) – A criminal investigation into accounting fraud inside British Telecom’s Italian unit has uncovered more evidence of what prosecutors say was the involvement of senior executives in artificially inflating the division’s financial performance.
Emails seized by the police and reviewed by Reuters show for the first time why Italian prosecutors allege that top BT employees were at the heart of the problem, contrary to the company’s assertions that managers at head office knew nothing about the misconduct.
“A series of emails between the top financial executives of BT Plc and managers of the (Italian) unit point to the existence of ‘insistent’ requests by the leadership of the parent company aimed at achieving ambitious economic targets, even using aggressive, anomalous and knowingly wrong accounting practices,” Italy’s financial police said in a 353-page report.
The report has not been made public and its contents have not previously been reported.
The report contains emails from Brian More O’Ferrall, currently finance director at BT Wholesale, the company’s business-to-business division, in which he asks colleagues in Italy to find ways of adjusting their accounts to boost profits.
At the time, O’Ferrall was chief financial officer (CFO) for BT Europe, the European part of Global Services, one of the company’s biggest businesses.
O’Ferrall did not respond to Reuters’ requests for comment. BT declined to make O’Ferrall or group Chief Executive Philip Jansen available for interview.
“We cannot comment on ongoing legal proceedings,” spokesman Richard Farnsworth said.
In the past, BT has blamed former executives in Italy for the bookkeeping irregularities, saying they had kept their bosses in London in the dark about what was going on. The scandal required the company to take a 530 million pound charge in early 2017. For a timeline click on.
In a complaint filed in April 2017 with Milan prosecutors against the conduct of its former managers, BT said the company itself was a victim of any fraud found to have taken place.
Italian prosecutors named three top BT executives among an expanded list of 23 suspects allegedly involved in the debacle, Reuters exclusively reported in February. O’Ferrall was not on that list.
Prosecutors are not investigating O’Ferrall because he was not on BT Italy’s board and did not sign off on the division’s accounts in the four years, 2013-2016, under scrutiny, according to a source familiar with the probe.
O’Ferrall was appointed chairman of BT Italy in February 2017, taking up the post after an internal investigation was launched into the unit’s bookkeeping. He stepped down from that role in November 2018.
Prosecutors in Milan allege that three former senior BT executives, Luis Alvarez, Richard Cameron and Corrado Sciolla, set unrealistically high business targets and were complicit in false accounting at BT Italy.
Alvarez and Cameron, were respectively the former chief executive and former chief financial officer of BT Global Services and Sciolla was the former head of continental Europe for BT. The three men, two of whom were based in London, left the company in 2017.
Reuters tried to contact Alvarez and Cameron via social media and email but they did not respond to those requests for comment. Sciolla declined to comment.
“AN URGENT REQUEST”
Allegations of fraudulent bookkeeping are part of a range of suspected wrongdoing at BT Italy. Italian prosecutors allege that a network of people at the unit exaggerated revenues, faked contract renewals and invoices and invented bogus supplier transactions in order to meet bonus targets and disguise the unit’s true financial performance.
The company has publicly disclosed that it uncovered a complex set of improper sales, leasing transactions and factoring at the division. Factoring is a way in which firms sell future income to financiers for cash.
Several BT shareholders have filed a class-action lawsuit in the United States alleging the group misled investors and failed to promptly disclose the financial irregularities. BT has moved to have the case dismissed.
In their report, Italy’s financial police reference an email dated Aug. 5, 2016, from O’Ferrall in which he says that Cameron wanted operating profit to increase by 700,000 euros and suggests to Luca Sebastiani, then CFO at BT Italy, along with other colleagues across Europe, that they capitalize labor costs as a solution.
“All, I have an urgent request from Richard to find another €700K,” O’Ferrall wrote to Sebastiani and his counterparts in Germany, Benelux, France, Spain, Hungary as well as Simon Whittle, then finance manager, reporting and consolidation, at Global Services Europe.
“Please can you look at all opportunities and come back to me and Simon asap. Labour capitalization? Regards Brian,” says the email, whose subject line reads “Another €700K EBITDA needed in P4.”
P4 refers to the month of July.
Reuters tried to reach Whittle via social media but he did not respond to requests for comment. The other finance officers O’Ferrall contacted did not respond to Reuters requests for comment.
Sebastiani’s lawyers, Giammarco Brenelli and Federico Riboldi, told Reuters the email was significant because “along with many others, it shows the constant and unrelenting pressure the parent company was putting on European subsidiaries with regards to accounting policies.”
Sebastiani is among the 23 suspects in the case.
In another email, dated April 8, 2016 and sent to Sebastiani’s predecessor Alessandro Clerici and Rosa Ronda Andres, CFO for BT Global Services in Spain, O’Ferrall says he has received a request “to find another €1 million of capitalization for 15/16.
“Can either of you accommodate this? €500K each?” the e-mail says.
Clerici and Andres did not comply with the request, according to a source familiar with the matter.
Andres did not respond to Reuters’ requests for comment. Clerici declined to comment. He is among the 23 suspects in the case.
Capitalizing costs is an accounting method that allows companies to amortize a cost related to an asset over time as opposed to book it as an expense in the income statement when the cost was incurred. The technique allows companies to smooth out expenses over time, and therefore boost profits.
“You can’t capitalize labor costs to improve earnings ex post (after the event), just to boost your accounts,” said Gian Gaetano Bellavia, an accounting expert who has in the past worked as a consultant for the Milan prosecutors. He is not involved in the BT Italy investigation.
Bellavia said it was common for top executives of a parent company to ask managers of subsidiaries to “always do more.” But he said some of the BT emails, which Reuters showed him a copy of, constituted “significant evidence” of wrongful accounting.
“EBITDA measures how much a company is earning. But to go up it needs actual income.”
Bellavia said another email, dated September 2016, in which Sebastiani says he has been told that Cameron would not accept an earnings estimate for the fiscal year 2016/17 below a certain amount, was less problematic because it could be interpreted as an aspiration and not a forecast communicated to investors.
The police report says the alleged accounting irregularities could have had an impact on the price of BT shares and this may justify adding market manipulation to the list of alleged crimes being investigated.
However, Milan prosecutors decided not to take this step on jurisdiction grounds, a source with direct knowledge of the probe said, since BT shares are listed in London and such allegations would have to be investigated by UK authorities.
Britain’s Serious Fraud Office (SFO) which investigates and prosecutes complex and often multinational fraud and corruption, declined to comment on whether it was investigating BT.
Britain’s accounting regulator, the Financial Reporting Council (FRC), said it was continuing to investigate PricewaterhouseCoopers’ (PwC) audits of BT from 2015 to 2017. BT dropped PwC as its auditor in 2017.
A spokesman for the accounting firm said it would continue to cooperate fully with the FRC in its enquiries.
(Additional reporting by Paul Sandle and Kirstin Ridley in London. Writing by Silvia Aloisi, editing by Carmel Crimmins.)
Source: OANN
FILE PHOTO: A girl broadcasts live from a phone as she holds a selfie stick with a sign of the live-streaming platform DouYu during an event celebrating the new year in Wuhan, Hubei province, China, December 31, 2018. Picture taken December 31, 2018. REUTERS/Stringer
April 23, 2019
By Julia Fioretti
HONG KONG (Reuters) – China’s largest live-streaming platform DouYu International Holdings Limited, backed by social media and gaming giant Tencent Holdings Ltd, has filed for a U.S. initial public offering (IPO) of up to $500 million.
DouYu, which primarily focuses on the live-streaming of games, is one of several Chinese start-ups in the growing market for live-streaming in China, along with U.S.-listed rival Huya Inc and Huajiao.
The rapid growth of the live-streaming sector has seen China’s tech heavyweights – Tencent, Alibaba Group Holding and Baidu Inc – open their wallets to back a slew of firms in the hope it can boost existing services in e-commerce, social networking and gaming.
DouYu has exclusive streaming rights to 29 major tournaments in China, including League of Legends, PlayerUnknown’s Battlegrounds, and DOTA2, according to the draft prospectus which was uploaded to the U.S. Securities and Exchange Commission website overnight on Monday.
DouYu was the largest game-streaming platform by average total monthly active users (MAUs) on both mobile and PC during the fourth quarter of 2018, according to the prospectus. The company had 159.2 million MAUs in the first quarter of 2019, representing year-on-year growth of 25.7 percent.
It set a placeholder sum of $500 million for the IPO, which is used to calculate registration fees. The final IPO size could be different, though sources have previously told Reuters DouYu was looking to raise around $500 million.
DouYu’s IPO could be one of the largest this year by a Chinese company in the United States, together with that of Starbucks challenger Luckin Coffee which also filed overnight.
Chinese companies have raised $271 million through U.S. IPOs so far this year, with the biggest deal being that of Ruhnn Holding Limited which raised $125 million, Refinitiv data showed.
LOSS MAKING
China is the world’s largest game streaming market, with approximately 4.9 times the monthly active users of the U.S. market in 2018, the prospectus said.
DouYu’s active users spent an average of 54 minutes per day on the platform in the fourth quarter of 2018.
DouYu is still loss-making and reported a net loss of $127.4 million in 2018, up from $91.33 million in 2017. Revenues jumped 94 percent to $531.5 million last year.
The company significantly increased its sales and marketing expenses – which jumped 73 percent in 2018 – as well as its research and development expenses which increased 55 percent.
Most of DouYu’s revenues come from live-streaming through the sale of virtual gifts, accounting for 86.1 percent of its revenues, with the rest coming from advertisements and some revenue sharing with game developers and publishers, the prospectus showed.
Bank of America Merrill Lynch, JPMorgan and Morgan Stanley are the underwriters for DouYu’s IPO.
(Editing by Jacqueline Wong)
Source: OANN
Director Anthony Russo, Disney CEO Robert Iger and director Joe Russo (L-R) at the world premiere of movie Avengers: Endgame in Los Angeles, California, U.S., April 22, 2019. REUTERS/Monica Almeida
April 23, 2019
By Lisa Richwine
LOS ANGELES (Reuters) – Marvel’s star-studded Avengers superhero team descended on Los Angeles on Monday at a lavish premiere to celebrate the final chapter in a 22-movie saga that ranks as the movie industry’s highest-grossing franchise of all time.
Hundreds of industry VIPs, cast members, fans and media watched the first showing of “Avengers: Endgame,” the three-hour action spectacle that has been held tightly under wraps.
The movie begins rolling out in theaters around the world on Wednesday.
Robert Downey Jr. (Iron Man), Chris Hemsworth (Thor), Scarlett Johansson (Black Widow), Chris Evans (Captain America), Brie Larson (Captain Marvel) and others walked a purple carpet underneath a giant, spinning Avengers logo set up inside the Los Angeles Convention Center.
“I’m excited that I’m finally going to get to see the movie,” said Paul Rudd, who plays Ant-Man and, like other cast members, had not seen the finished film due to Marvel’s secrecy around the project.
Rudd said he had been traveling the world to promote the movie and “trying to talk about it the best we can, and to do all of that without having seen the film is a strange experience. So now, to finally see the movie is great.”
Other A-list stars packed the premiere, including Chris Hemsworth’s brother Liam and his wife Miley Cyrus.
“Endgame” concludes the story of the six original Avengers in Marvel’s cinematic universe – Iron Man, Captain America, Black Widow, Hawkeye, Hulk and Thor.
It picks up after last year’s “Avengers: Infinity War” left fans hanging when many of the Marvel heroes seemed to turn to dust at the hand of the villain Thanos, played by Josh Brolin.In “Endgame,” the surviving superheroes plot to kill Thanos and try to undo his damage.
After the screening, the film’s stars gathered on stage and hugged. Evans said he “cried like six times” while watching the film. “I cried more than six times, Chris,” Hemsworth said.
Mark Ruffalo, who plays the Hulk, said working on the films had been “the trip of a lifetime.”
The 21 previous movies from the Walt Disney Co-owned Marvel studio are the highest-grossing franchise in film history, generating more than $18.6 billion at global box offices since 2007.
“Endgame” may set an opening weekend record in the domestic market, according to box office analysts. “Infinity War” holds the current record of $257.7 million over its first three days in the United States and Canada.
While the film wraps up the “Avengers” story, some characters will live on in future movies. Spider-Man, for example, returns to the big screen in July in “Spider-Man: Far from Home.”
A “Black Panther” sequel is also in the works.
(Reporting by Lisa Richwine and Rollo Ross; Editing by Paul Tait)
Source: OANN
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