01/08/2017 BBC Business Live


01/08/2017

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This is Business Live from BBC News with Ben Thompson and Sally Bundock.

:00:00.:00:07.

The energy giant BP delivers another strong profit

:00:08.:00:12.

Live from London, that's our top story on Tuesday the 1st of August.

:00:13.:00:32.

With BP's focus moving from old projects to new ones

:00:33.:00:40.

and a massive writedown in Angola profits still came

:00:41.:00:42.

Sony takes it to another level as it look at its biggest

:00:43.:00:51.

The electronics giant has been selling lots of Playstations

:00:52.:00:55.

We have all the details ahead for the trading day. And, do businesses

:00:56.:01:11.

really know their customers? And we'll be getting

:01:12.:01:13.

the inside track on how you build customer loyalty as your business

:01:14.:01:15.

grows with the boss of Enflux, Anthony scurried she is fired after

:01:16.:01:30.

ten days in the job, we want to know what the shortest job you have ever

:01:31.:01:33.

had is... -- Anthony Scaramucci. Keep your comments coming in, use

:01:34.:01:49.

the hashtag. I worked in a garden centre for five hours watering

:01:50.:01:52.

hanging baskets, it was boring, short and paid a little bit of

:01:53.:01:57.

money. Much like that, I was able to reach the top of the hanging

:01:58.:02:00.

baskets. Good morning, let's make a start.

:02:01.:02:01.

In the last hour and a half one of the world's largest energy

:02:02.:02:04.

producers, the London listed BP has been telling us how much

:02:05.:02:07.

money it's been making, and pension funds everywhere will be

:02:08.:02:10.

relieved to see they are in the black.

:02:11.:02:11.

Profits for the three months from April to June

:02:12.:02:14.

came in at $684 million, that's using what's known

:02:15.:02:16.

as the the replacement cost measure - and it's better than expected.

:02:17.:02:23.

But - it's been hit by some big costs too.

:02:24.:02:27.

It wrote off just over $750m for a gas project in Angola

:02:28.:02:30.

that the company decided wasn't worth developing.

:02:31.:02:35.

That tells you a lot about BP's broader strategy.

:02:36.:02:46.

It's being more selective about its investments

:02:47.:02:47.

The price of oil is down 10% compared to last year.

:02:48.:02:51.

And it's also keeping costs down using data.

:02:52.:02:53.

It's invested heavily in sensors to collect five million bits

:02:54.:02:55.

of information from its facilities every single minute -

:02:56.:02:57.

and it's using that to make those facilities run more efficiently.

:02:58.:03:05.

Cailin Birch, Commodities Analyst at the Economist Intelligence

:03:06.:03:09.

Good morning, thank you for coming in. Ben was going through the

:03:10.:03:19.

numbers, give us your take on those results? As you said, they were

:03:20.:03:24.

better than they expected, based on company surveys and market

:03:25.:03:29.

expectations, it will boost BP in the near term, in what is a negative

:03:30.:03:34.

time and uncertain for oil prices coming off quarter to. We have two

:03:35.:03:41.

remember that this is lower than profits in the same quarter of 2016

:03:42.:03:45.

when oil prices were much weaker. Then we were expecting this year. We

:03:46.:03:50.

have seen a significant impact on that right down. And that loss in

:03:51.:03:59.

Angola continues to hurt BP, and whether it will improve

:04:00.:04:03.

significantly? Costs have been going down, they have written off those

:04:04.:04:09.

obligations for five years. What is important to notice is for companies

:04:10.:04:13.

across the sector, efficiency will be key. Cutting down costs and

:04:14.:04:18.

trying to be as efficient as possible, in investment and

:04:19.:04:21.

operation expenditure, BP has a weight of debt to pay off and other

:04:22.:04:27.

companies are not struggling. That is an issue, other oil majors have

:04:28.:04:31.

become leaner and meaner, Shell is making more money and other

:04:32.:04:36.

investors are looking at Shell or others as an alternative to BP? Some

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are concerned that BP cannot stick to promises like dividend payments?

:04:41.:04:46.

It is a real risk, BP has obligations to pay off and in the

:04:47.:04:50.

medium term it will weigh on profitability which is why we see

:04:51.:04:54.

the strategy we are looking at where BP has been shedding a lot of

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profitable assets and the right thing in Angola is on the bottom

:04:59.:05:05.

line -- the writedown. Every time they get a project which would

:05:06.:05:09.

further add to their spending bill in the medium to long-term, they

:05:10.:05:14.

become more efficient. Thank you very much indeed, an analysis of BP,

:05:15.:05:16.

their shares are up over 2% on the news. And we

:05:17.:05:22.

will take a full look at what the markets are doing later in the

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programme. Let's take a look at some

:05:24.:05:23.

of the other stories How prepared are banks

:05:24.:05:26.

and insurance firms for Brexit? The newly-appointed head

:05:27.:05:29.

of the UK parliament's Treasury Select Committee has

:05:30.:05:31.

demanded the information, in one of her first moves

:05:32.:05:32.

since taking on the role. In a letter to the bank's

:05:33.:05:36.

Prudential Regulatory Authority, she asked for the key risks facing

:05:37.:05:39.

the industries if there's no deal with the EU -

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the so-called 'hard brexit'. Toshiba's shares have been

:05:43.:05:56.

demoted to the second tier of the Tokyo Stock Exchange

:05:57.:05:58.

because the value of everything it Toshiba, originally known

:05:59.:06:01.

for its consumer electronics products, has faced a series

:06:02.:06:04.

of financial difficulties, with the biggest the huge losses

:06:05.:06:06.

at its US nuclear power division. Apple and Google have removed over

:06:07.:06:10.

300 so-called binary trading applications

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from their online stores. That's after intervention

:06:13.:06:15.

by the Australian Securities Investments Commission,

:06:16.:06:16.

which said it made the request to the companies after numerous

:06:17.:06:18.

cases of fraud involving unlicensed The apps encourage consumers to make

:06:19.:06:21.

bets on whether shares A really busy day for earnings and

:06:22.:06:43.

among them is the Japanese technology giant Sony.

:06:44.:06:48.

period, leaving it on course for its highest annual

:06:49.:06:53.

It's interesting, we have talked about their woes for so long.

:06:54.:06:56.

It is really interesting, so many well-documented problems for Sony

:06:57.:07:06.

and now it appears that they are on the up again? It is a first for the

:07:07.:07:14.

Japanese company, they beat analyst expectations with a threefold jump,

:07:15.:07:20.

with operating profits of almost $1.5 billion, due to its strong

:07:21.:07:25.

demand for smartphones, healthy sales of the PlayStation for

:07:26.:07:29.

consoles and games, and in the box office they see success with

:07:30.:07:34.

Spiderman Homecoming, so hopes that earnings will be strong for the film

:07:35.:07:40.

division. As you mention, this comes after a tough year for the company

:07:41.:07:45.

including an earthquake which crippled camera chip production and

:07:46.:07:51.

a $1 million writedown of the film division. We will keep an eye on

:07:52.:07:57.

that, on track for their best figures in nearly 20 years, whether

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it will play out we will find out. Those good figures from Sony -

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and a similar update from Panasonic wasn't enough

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to keep their shares afloat. Toshiba down 2.2%, after reporting

:08:04.:08:07.

a rise in profits, but sales fell But the overall market

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ended the session higher as earnings season picked up -

:08:11.:08:19.

and investors reassured that there's Earnings season too in the UK -

:08:20.:08:22.

engine maker Rolls-Royce telling investors that engine deliveries

:08:23.:08:33.

rose sharply helping it report a pre-tax profit of ?1.94 billion

:08:34.:08:38.

for the six months to June, that's a reversal of a loss

:08:39.:08:41.

of #2.15 billion loss over In the US later, we'll hear

:08:42.:08:43.

from Apple and Pfizer - Samira has those

:08:44.:08:55.

details from New York. The big news for Tuesday will

:08:56.:09:08.

certainly be Apple, due to report earnings after the bell and the key

:09:09.:09:11.

metric investors will be looking at our sales of the iPhone. Sales for

:09:12.:09:16.

the iPhone seven and seven plus have been really strong which is likely

:09:17.:09:20.

to boost revenue for the company. But there is some worry that

:09:21.:09:23.

customers may delay upgrading their phones in favour of the next device.

:09:24.:09:28.

Apple usually releases a new smartphone in September but that

:09:29.:09:35.

could be delayed until October. Also reporting on Tuesday, pharmaceutical

:09:36.:09:46.

giant Pfizer, demand for breast cancer treatment and rheumatoid

:09:47.:09:48.

arthritis drugs will lift earnings for the company but the looming

:09:49.:09:50.

patent exploration of drugs like Viagra has investors focusing on

:09:51.:09:52.

plans to resuscitate the great engine and whether deals are on the

:09:53.:09:54.

table. Some era patent expiring on Viagra, write

:09:55.:10:03.

your Aston 's please!? Joining us is Richard Fletcher,

:10:04.:10:06.

business editor at The Times. It's good to see you. Let's talk

:10:07.:10:14.

about a couple of stories in the news, British American Tobacco, this

:10:15.:10:20.

Serious Fraud Office are launching an investigation? A long-running

:10:21.:10:27.

enquiry, Panorama had a programme about what the business and some of

:10:28.:10:32.

its agents in Africa were up to, with internal investigations they

:10:33.:10:35.

tried to play down allegations at the time that there was an

:10:36.:10:38.

announcement at the time that the Serious Fraud Office is going to

:10:39.:10:42.

look at this, a lot of UK companies have been caught up by what has

:10:43.:10:47.

happened overseas but it is another blow for the business. The FDA and

:10:48.:10:53.

the US announced on Friday that they want to reduce nicotine to

:10:54.:10:57.

nonaddictive levels in cigarettes, they cannot ban them but they can

:10:58.:11:01.

reduce the levels of nicotine which hit producers around the world,

:11:02.:11:06.

including VAT, they continue to sell off yesterday. I looked a moment ago

:11:07.:11:12.

and they are up a fraction -- BAT, but it is another blow. The White

:11:13.:11:17.

House saga continues in America, we love the drama but the dollar

:11:18.:11:22.

doesn't? The president was tweeting yesterday about a record high.

:11:23.:11:26.

Markets, but not the dollar. A fifth monthly decline for the dollar, the

:11:27.:11:33.

worst since April 20 11. The markets are split by two things, the chaos

:11:34.:11:37.

in the White House and what it means not only for his reform and

:11:38.:11:44.

infrastructure spending and tax reform... This is the firing of

:11:45.:11:48.

Anthony Scaramucci, the communications director? It is the

:11:49.:11:54.

latest in chaos, and they are spooked by the fact it looks like

:11:55.:12:00.

the Fed isn't going to do reforms and we will not get a rise in

:12:01.:12:04.

September. Some in government like a weaker dollar, that is a good thing?

:12:05.:12:10.

It is 10% down on the year. What is the shortest job you have ever had?

:12:11.:12:16.

I got a tryout for the milkman, I did a paper round, the milkman said

:12:17.:12:22.

that he would pay me more, I did today, I dropped too mini bottles, I

:12:23.:12:26.

was never invited back! We've heard about yours... There is a food theme

:12:27.:12:33.

going... Mine was five hours doing hanging

:12:34.:12:36.

baskets! We have some brilliant tweets from

:12:37.:12:41.

you, Christian, not even a day in a cheese factory, I was sick on the

:12:42.:12:45.

shop floor, straight out the door and never to return. I agree! And

:12:46.:12:50.

another Ben, two days of Strawbridge picking with my leg in plaster as a

:12:51.:12:57.

teenager -- strawberry picking. My mum said I could not laze around for

:12:58.:13:02.

the summer. And Stevie, putting the colour labels on lipsticks when I

:13:03.:13:07.

was a teenager, I lasted two hours until tea break. Where is your

:13:08.:13:13.

staying power? Send us in more! Thank you so much for coming in

:13:14.:13:14.

today, Richard. Do businesses really know their

:13:15.:13:27.

customers? We get the inside track. How do they keep customers loyal?

:13:28.:13:34.

The firm Enflux claim they have 18,000 sources of information about

:13:35.:13:37.

us. You're with Business

:13:38.:13:38.

Live from BBC News. Energy giant British Gas is to raise

:13:39.:13:42.

electricity prices by 12.5% from mid-September -

:13:43.:13:45.

but gas prices will be kepy on held. from mid-September -

:13:46.:13:50.

but gas prices will be kept on held. It means the average annual bill

:13:51.:13:52.

for a typical household will go Ian Conn is the Chief Executive

:13:53.:13:55.

of parent company Centrica, he explained why to our business

:13:56.:14:02.

editor, Simon Jack. The reason for this is the

:14:03.:14:13.

transmission and distribution costs have been going up, as well as the

:14:14.:14:18.

environmental and social policy costs, and recently we have actually

:14:19.:14:23.

been selling electricity at a loss. Those are the reasons we've had to

:14:24.:14:27.

put up prices, beginning in the middle of September. The overall

:14:28.:14:30.

impact for the average dual fuel bill is 7.3%. Or, ?76. This will

:14:31.:14:40.

affect 3.1 million of our customers, out of a total of 8.4 million.

:14:41.:14:48.

Defending that 12.5% rise in electricity prices, business editor

:14:49.:14:51.

Simon Jack joins us from our business newsroom. What did you make

:14:52.:14:55.

of what was said and why they are rising prices? We are used to

:14:56.:14:59.

hearing energy companies say that the main reason they raise prices is

:15:00.:15:05.

because of the price they pay, the wholesale markets for electricity,

:15:06.:15:08.

that has gone up and they are passing it along. They acknowledged

:15:09.:15:13.

this time that since they put on this freeze in prices back in

:15:14.:15:16.

December, wholesale costs have gone down. They say, it is not our fault

:15:17.:15:22.

but the fault of renewables and government policy. Renewable energy

:15:23.:15:26.

at the moment costs a little more than gas generating electricity and

:15:27.:15:31.

that has been passed on, and also connecting renewable sources to the

:15:32.:15:34.

grid which brings gas and electricity into our homes, costing

:15:35.:15:40.

money and the government's historic policy of allowing people to

:15:41.:15:42.

generate their own electricity and sell it back to the great takes

:15:43.:15:48.

administering and that costs money too. They say it isn't their fault,

:15:49.:15:51.

they are selling at a loss but this will be a big blow to 3.1 million

:15:52.:15:56.

customers but could push up inflation as it is a big component

:15:57.:16:01.

of many household bills. Simon Jack, thank you. More on that story on the

:16:02.:16:03.

website. House price inflation continues to

:16:04.:16:12.

rise. UK house prices up just 0.3% month on month. Full details, as you

:16:13.:16:17.

can see, on the BBC Business Live page.

:16:18.:16:23.

You're watching Business Live. Our top story:

:16:24.:16:27.

Shares in BP are on the up. They posted a second quarter profit of

:16:28.:16:36.

$684 million. A quick look at what the wider markets are doing.

:16:37.:16:39.

Reporting season is well under way. We have had a whole raft of figures

:16:40.:16:44.

this morning as Sally said from BP. We've heard from Toshiba and Sony

:16:45.:16:47.

and from Rolls-Royce. If you're a small business,

:16:48.:16:51.

getting to know your customers is pretty easy, but as firms grow -

:16:52.:16:56.

that gets more and more difficult. But knowing your customers helps

:16:57.:16:59.

firms build loyalty, So companies are turning to social

:17:00.:17:02.

media sites like Twitter, Facebook and Instagram to predict

:17:03.:17:08.

what their customers want. One of the tools to do

:17:09.:17:12.

that is called Enflux. It says it analyses millions

:17:13.:17:16.

of social media posts and brings together 18,000

:17:17.:17:18.

different sources of data. It's just one of many

:17:19.:17:22.

firms that do the same including Simply Measured,

:17:23.:17:27.

Brandwatch and Social Bakers Joining us is Avery Booker,

:17:28.:17:29.

the Chief Executive of Enflux. Good morning. Good morning. So just

:17:30.:17:43.

tell us a bit about the background here. This company, which you've

:17:44.:17:47.

started, has been running for a few years. Prior to that you were

:17:48.:17:50.

working in the luxury goods market. Just talk us through how this all

:17:51.:17:55.

materialised? Sure. So, one thing I saw as a consultant was that most of

:17:56.:18:00.

the companies in the world were spending millions and didn't know

:18:01.:18:03.

the full effects of what they were doing. They were using gut instinct

:18:04.:18:07.

and data here and there, but they didn't know what was going to be the

:18:08.:18:12.

next trnd. Really, not knowing the next thing to come will always keep

:18:13.:18:17.

you one step behind. The started the company to really not use

:18:18.:18:22.

retrospective data, but to take the data in real-time and shape the

:18:23.:18:26.

predictions and say this is what we expect to happen in three months or

:18:27.:18:30.

six months. What your predictions provide for quite a few of your

:18:31.:18:35.

clients is not just information about what somebody might buy next,

:18:36.:18:42.

ie the next handbag, it's, they use this data to decide where the next

:18:43.:18:46.

store be or where they should expand? We have done everything from

:18:47.:18:53.

telling a company that they have under served markets in America. So

:18:54.:19:00.

we found six, served under served markets that like your product, but

:19:01.:19:05.

don't have it. Where should be the next store be? Where should the next

:19:06.:19:10.

event be? Where does this data come from. We talk about social media, is

:19:11.:19:16.

it as simple as that person says this person says they want to buy a

:19:17.:19:21.

bag in Paris. We take all the context that somebody puts out in

:19:22.:19:24.

the world and it is all public data. So we take the information and put

:19:25.:19:29.

it in this data engine and we can infer this person lives in Paris and

:19:30.:19:33.

wants to go shopping in London. How do you make the distinction between

:19:34.:19:37.

what is maybe wishful thinking? We know social media is always about

:19:38.:19:40.

presenting a better version of ourselves. So maybe I have lots of

:19:41.:19:47.

money and I want to buy lots of handbags in Paris. That's not always

:19:48.:19:51.

the reality? We try to do what we can to see what matters to the

:19:52.:19:56.

consumers and the brands can put it out in the world. It is the brand's

:19:57.:20:01.

job to make that sale. Are you going to move into the area of artificial

:20:02.:20:05.

intelligence as well? Are you already working in that area? We are

:20:06.:20:09.

already working in that area. A lot of, we need a lot of that because we

:20:10.:20:15.

are pulling in this real-time data. We can't do that without AI. We are

:20:16.:20:20.

not doing it in any way that's spooky. That is what worries me. I

:20:21.:20:25.

have got one of these things in my kitchen and I make sure she is

:20:26.:20:28.

switched off, from my point of view, she is listening to what everything

:20:29.:20:33.

I say. We do a bit of that, but not the spooky stuff. We are used to

:20:34.:20:37.

firms tracking our spending habits and behaviour, be it with loyalty

:20:38.:20:40.

cards, club cards, credit cards, where does the next ten years take

:20:41.:20:44.

us? That relationship has changed significantly over the last decade.

:20:45.:20:47.

I imagine there is huge changes on the way. The companies are going to

:20:48.:20:52.

know much more about us in ten years than they do today, that's the

:20:53.:20:55.

spooky part. What is going to happen, right now companies are

:20:56.:20:59.

using this data, but in ten years, consumers will use this data, if

:21:00.:21:02.

they want to get in shape, they will be using more big data to figure out

:21:03.:21:08.

where should I go, what should I do? Do you have to do the same technique

:21:09.:21:12.

on your own business to make sure you're still around in ten years? We

:21:13.:21:15.

are taking a bit of our own medicine, that's true. There are a

:21:16.:21:20.

lot of companies like that you that offer Burberry the same service? I

:21:21.:21:24.

think that services are a bit different. A lot of people use the

:21:25.:21:29.

data to shape today, but we use today's data to shape what we expect

:21:30.:21:33.

to happen tomorrow and that's a more difficult proposition. Thank you for

:21:34.:21:37.

coming in. Your shortest job? I painted fences for a week in Texas

:21:38.:21:41.

in the summer time. That must have been... That was a rough one. It was

:21:42.:21:46.

pretty boring. That sounds pretty rough to me. I will reveal mine in a

:21:47.:21:50.

few minutes. Stay with us. Stay tuned for that!

:21:51.:21:53.

The UK Government is challenging the likes of Facebook,

:21:54.:21:55.

Twitter and Google to do more to remove online extremist content

:21:56.:21:57.

online which it says is fuelling terrorism.

:21:58.:21:59.

The Home Secretary Amber Rudd has been meeting the companies

:22:00.:22:02.

at a technology summit in San Francisco from

:22:03.:22:04.

Organised police say with the help of social media.

:22:05.:22:15.

So companies here in Silicon Valley are being told they must do more

:22:16.:22:19.

to prevent the spread of extremist content online.

:22:20.:22:22.

What I need them to acknowledge is that the enemy, who is really

:22:23.:22:26.

trying to move swiftly online, to radicalise people

:22:27.:22:28.

in their own homes, are really stepping their game up

:22:29.:22:30.

and we need our response stepped up as well.

:22:31.:22:35.

And there is also a concern that new measures might mean a loss

:22:36.:22:39.

It's not possible to say we're going to monitor

:22:40.:22:47.

all communications on our platforms, but still preserve users privacy.

:22:48.:22:50.

They may attempt to minimise the impact on users privacy.

:22:51.:22:55.

They have to face up, people who might oppose this,

:22:56.:22:58.

They're trying to weaponise people at home.

:22:59.:23:05.

Another worry as security experts will tell you is that terrorists

:23:06.:23:08.

could simply move to harder to reach parts of the internet.

:23:09.:23:16.

Nice to see you Dominic. So the papers, online media, all over the

:23:17.:23:29.

firing of Scaramucci after just ten days as communications director in

:23:30.:23:33.

the White House. Your thoughts? Well, the wider impact is, of

:23:34.:23:37.

course, about the end of the Trump bump and how business is losing

:23:38.:23:40.

confidence in Trump's ability to deliver. Turmoil in the White House

:23:41.:23:44.

is not good for the dollar. The dollar had its worst run of the year

:23:45.:23:51.

in the last week because this turmoil speaks to turmoil's ability,

:23:52.:23:56.

make America great, reinvestment in the US manufacturing base. People

:23:57.:23:59.

now doubt that those things can actually happen. That those prom us

:24:00.:24:04.

will be made good and the departure of Scaramucci is another example of

:24:05.:24:08.

this turmoil and it has hurt the dollar. The conspiracy theorists

:24:09.:24:16.

would have it is just a distraction. The problem is what's the evidence

:24:17.:24:20.

of that? Although there is the other school of thought is that Trump is

:24:21.:24:24.

all and in his business life has been destruction to create the

:24:25.:24:28.

other. You go in and you shape things up and change the way of

:24:29.:24:33.

doing things and build again the way you want it and it pays off. That

:24:34.:24:36.

might be true in the business world, if you are a new Chief Executive,

:24:37.:24:42.

you can sack everybody. It is not as if he inherited these people in the

:24:43.:24:47.

White House. He built them up. There is the new Chief-of-Staff who says

:24:48.:24:51.

you're fired. It wasn't Trump, remember. We think that. Your

:24:52.:24:58.

shortest job? A couple of weeks in a bakery job. Why a few weeks? There

:24:59.:25:08.

were issues with management! LAUGHTER

:25:09.:25:10.

Did buns fly around in the rage? Buns were flying! What's yours? I

:25:11.:25:16.

was the boss's daughter. So, of course... Oh, here we go. I never

:25:17.:25:21.

got the sack. He ran his own printing factory. He could have

:25:22.:25:24.

sacked me many, many times, but I stayed fort duration. It cost him, I

:25:25.:25:30.

think, his earnings were lower than expected due to bad issues, family

:25:31.:25:35.

issues! Let's take some more from the viewers. Simon, "One shift in a

:25:36.:25:40.

chicken factory. The smell was sickening, I didn't go back." I

:25:41.:25:45.

lasted one day at a call centre. I saw the supervisor mooching around

:25:46.:25:50.

so I thought I was allowed to and I was not! " Dominic, thank you for

:25:51.:25:56.

your time. Nice to see you. Thanks for your company and thanks for your

:25:57.:26:00.

comments. We will see you tomorrow. Have a really good day. Bye-bye.

:26:01.:26:06.

Good morning. It is the first day of August and the weather is looking

:26:07.:26:12.

pretty unsettled for the first week of the month. Low pressure is in

:26:13.:26:16.

charge of our weather. There is another area of low pressure pushing

:26:17.:26:19.

in tomorrow bringing more wet and windy

:26:20.:26:20.

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