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This is Business Live from BBC
News with Ben Thompson
and Victoria Fritz.
The future of a global retail giant
hangs in the balance.
It might not be a household
name but Steinhoff is
mired in a multi-billion
dollar accounting scandal.
Live from London, that's our
top story on Tuesday
the 19th of December.
Steinhoff is a global retail
empire in 30 countries,
but today, investors and creditors
meet in London to decide
whether they'll throw the firm
a financial lifeline.
Also in the programme.
The Trump administration points
the finger at North Korea
for the WannaCry cyber attack that
hit organisations across the globe.
And US markets hit record highs,
as President Trump's tax plans look
set to get the green light.
We'll assess the possible impact.
And we'll be getting
the inside track on the changing
world of cinema.
The global audience for traditional
theatres is dwindling,
so will new ways of watching movies
lure us back to the silver screen?
Today we want to know, are you a fan
of the cinema experience
or is streaming your movie
the only way to go?
Let us know.
Just use the hashtag BBCBizLive.
Hello and welcome to Business Live.
Lots to fit in today.
The future of the South African
retail group, Steinhoff,
hangs in the balance.
It's battling a huge
Today, the retailer is meeting
its lenders here in London,
to find out whether those
that it owes money to will
throw them a lifeline.
Its origins are in the furniture
business in Germany in the '60s.
But it's now a global giant,
with brands across Europe and the US
such as Conforama and Poundland.
Reflecting the global deal-making,
the company has at least 200
subsidiaries and affiliates
and is Dutch-registered and listed
in Frankfurt and Johannesburg.
Alarm bells were ringing last week
when it failed to publish
its financial results.
What we did learn is that it's
grappling with a $7 billion
hole in its finances.
Little wonder that the regulators
are now taking a look.
The value of shares is down 80%
since the news broke,
as investors stampeded for the exit.
The scandal has claimed the scalps
of both the billionaire chairman
and the chief executive.
Both men are among
the best-known members
of the "Stellenbosch mafia" -
a close-knit group of wealthy
businessmen who have
properties in the exclusive
winelands around Cape Town.
They themselves have lost millions.
But that is dwarfed
by the amount to which creditors
are out of pocket - $21 billion.
Lerato Mbele has been following
the story from Johannesburg.
Why is there such interest in
Why is there such interest in
There's a lot of interest
in Steinhoff in the South African
context because it blows the lid on
private sector corruption, when you
note to a large extent in South
Africa, the issues around in
fractions and mismanagement and
maladministration have always been
attached to government and now we
are seeing that actually, it is not
exclusively so. Also, as you rightly
said, Steinhoff has two very
significant South African entities
as shareholders, will and the recent
chairperson had the single biggest,
South Africa's richest man and also
the public investment Corporation,
which is the largest pension fund in
the African continent. With a 10%
take that the PIC has, there is
exposure now that ordinary men and
women have to this saga. People who
are just saving for retirement,
those who might even be going into
retirement and having their savings
wiped away. It then becomes a
national tragedy that has the
financial services board getting
involved, the South African Finance
Minister getting involved and when
you look at it in terms of the
global repercussions, German
regulators now getting involved and
concerns about the 130,000 people
worldwide who work for Steinhoff
subsidiaries. It is a big story not
just because of the alleged
accounting irregularities but
because of how it touches and impact
the lives of ordinary men and women,
the pensioners whose savings are
The huge amount at
stake for a lot of people right
across the world but briefly, do you
think the company can survive this
or will it implode?
At the moment it
is being called alleged financial
irregularities. That stems from the
fact that earlier this year, when
they did their unaudited half-year
results, we could see an increase in
revenue of 48% and yet the company
was having liquidity problems. The
numbers simply didn't stack up.
Going forward, the bankers want to
see whether or not it is truly a
case of maladministration, even
fraud, or simply a case of just
making bad acquisitions here and
there and needing to reschedule the
debt. What Steinhoff has to do today
when it meets with the bankers is
come clean, open the books and let
everybody see whether they have been
cutting the numbers or whether it is
a question of complex mathematics in
mergers and acquisitions and if the
situation can be salvaged. The
European Central Bank is a bond
holder of corporate bonds so there
is a lot at stake here and everyone
wants to make sure that the
repercussions are not felt
Absolutely, and thank you
for joining us, we will keep across
the story on BBC News and BBC World
News today. The implications will be
felt far and wide.
Let's take a look at some
of the other stories
making the news.
The Russian cybersecurity firm
Kaspersky Labs has filed a lawsuit
against the Trump administration
over a ban on its
Kaspersky says the US has
harmed its reputation without any
credible evidence, after it banned
the company's software
from government agencies.
Boeing and Bombardier have
appeared before the US
International Trade Commission
in the latest round
of their bitter row.
Boeing accuses Bombardier of harming
sales of its 737 aircraft and has
asked the commission to impose
tariffs on its Canadian rival.
London stock exchange shareholders
will vote later to decide whether to
remove the Company's chairman Donald
Brydon. The vote was proposed by one
of the biggest investors, which
accused Mr Bryden of forcing out the
LSE's former chief executive.
The US government has
publicly blamed North Korea
for the WannaCry random-ware attack.
That attack crippled hospitals,
banks and other companies
across the globe earlier this year
and cost the US billions.
Sharanjit Leyl is in
Singapore with more on this.
And we're talking about
the Lazarus Group aren't we?
That is right, according to a source
really but I will get to that
because obviously this was a huge
malware attack that had massive
repercussions, you mentioned
billions of dollars being impacted
but it was about 300,000 computers
in about 150 countries that were
affected and essentially, the source
is saying the US government has
assessed with a very high level of
confidence the hacking entity known
as the Lazarus Group which works on
behalf of the North Korean
government carried out this
particular attack. This group is
widely believed by many researchers
and US officials to have been
responsible for the 2014 hack that
you might recall of the Sony
pictures entertainment which
destroyed lots of files, leaked
corporate Communications online and
led to the departure of several top
studio executives. But what is
interesting is this is the first on
the US has officially blamed North
Korea for this particular attack and
we know it is not a new accusation
because the UK Government said
pretty much the same thing in
November, that it was all but
certain that North Korea carried out
Thank you for joining
us. It is a story that will run and
run, the war of words between the
two sides or three sides as
President Trump has outlined those
who he thinks could be at risk.
It makes a change to see numbers
like that, record highs in the US,
everything finishing at record
highs. The Nasdaq and the SNP doing
particularly well, touching about
7000 for the first time ever.
That's after more and more
Republican senators came
out and publicly backed
President Trump's tax reform plans.
The vote on the plans could be
passed later today that would see
corporate tax rates cut heavily.
It would be from about 35% down to
21%, a huge cut.
It's designed to boost spending
and investment in the US and lure
some businesses back to the US.
Will it work? Will it be enough? We
will discuss in a moment.
European markets also
on the rise in this final full
trading week of 2017,
of the boost from the US.
The pound also had a fairly decent
day yesterday after the latest CBI
manufacturing survey showed that
industrial orders stayed
at a 30-year high in December
as well as exports.
That is partly to do with the weak
More on all that in a moment,
but let's head to the US
where Yogita has the details
about what's ahead
on Wall Street today.
The big focus of the day will be
the Republican tax bill.
The House is expected to vote
on the final draft today.
If the bill passes, it will be
the first major overhaul of the
US tax system in more
than 30 years and also,
President Trump's first legislative
win since taking office.
The corporate tax rate is to be
cut from 35% to 21%.
The government hopes
companies will reinvest the
money they have saved
and that will create more
jobs and drive growth.
There will also be some indication
of how the economy is performing.
Numbers of how many housing projects
were started in November will be out
and they are expected to show
a slight decrease over October.
Among major firms
releasing earnings data
is package delivery company FedEx,
which is expected to report a rise
in profit and revenue.
Joining us is Remi Olu-Pitan,
multi-asset fund manager
at Schroders - what is driving
the market sentiment at the moment?
Ben touched on it a little bit. The
tax cuts, and we're expecting more
about that. As traders been drinking
the Kool-Aid or is this the real
thing, is it going to benefit the
world? Is that why we are seeing the
global rally in equities?
right, it is a long time coming, we
have been waiting for this since
last year. I think it is very good
news, a significant tax cut, very
significant and important and
beneficial for US corporate. I think
the markets reacted positively to it
because it is certainly going to
lead to better earnings next year.
Good news for business and the jury
is out about whether it will bring
business back, whether firms will
spend and invest more and take on
more staff but would it not be
better to give a tax cut on personal
Typically we are seeing a
tax cut on personal income although
it is a lot lower than the reduction
in the corporate tax cuts. I guess
the advantage right now, what Trump
is trying to do is generate more
jobs in the US and the view is that
it needs to come from the corporate
side. One can only hope that
corporations will employ more people
and I guess what we are seeing right
now is an incentive for them to do
The cynic in me says they will
just rub their hands with glee and
said is wonderful because they can
give more money to shareholders by
the question is whether it goes back
into the pockets of the people.
as you have said it is a win-win for
Thank you for joining
us. You will join us later to talk
through the papers.
Still to come, films in fresh air.
We talk to the man bringing rooftop
movies to the masses. Keep your
comments about that coming in, lots
of them already. Stay with us, you
with Business Live BBC News.
UK businesses are feeling more
optimistic about creating jobs,
with over half asked by the CBI
planning to expand their
workforce in the New Year.
But worries over a lack of skills
and access to overseas workers
are overshadowing plans.
Let's speak to Neil Carberry,
a managing director at the CBI,
the business lobby group that
carried out the study.
a change of tune? There seems to be
a bit more optimism than we're used
to from business.
I think we've had
a really good record on job creation
in the UK over the last few years.
The survey we have done this morning
shows that is going to continue
through 2018. It reflects the fact
the is still growing, relatively low
and slow but enough to create some
jobs through next year. The big
issue in the survey is looking
further on, post Brexit, as to how
the UK looks for investment then.
This will surprise a lot of people
because a lot of the headlines we
read, we are told that all the
uncertainty means businesses are
putting off making decisions about
expanding or taking on new staff.
Why are they so confident? What is
giving cause rock to miss?
relatively good and the global
economy, as you reports this morning
on the programme have said already,
is doing pretty well. Companies,
particularly exporters, are both
boosted a bit by the fall in the
pound but there is genuinely good
global growth that companies can
What did business tell
you it would like to see next?
Clearly, the survey suggest things
are relatively good but what would
help even more to keep things on an
even keel during the uncertainty of
Real progress on two things,
one, skills and making sure we do a
lot more to invest in the skills of
young people in the UK to create a
more highly skilled jobs that we
need. And secondly, we need
certainty through the Brexit
process. The CBI has been clear
about beginning a traditional deal
on Brexit quickly is important. And
after that, a clear deal that
acknowledges we will need labour
from across the EU in years to come.
Good to talk to you. Thank you for
joining us. Neil Carbury of the CBI.
Quickly, Word coming in from the
Today programme that Toys R Us with
its American owner is in deep
trouble, it says it is in chapter 11
bankruptcy protection in the US
which puts its UK arm, with 106
stores, in jeopardy. Plenty more on
the website. Check it out.
You're watching Business Live.
Our top story, a day of reckoning
for retail group Steinhoff
as the company meets
with its creditors over a gaping
black hole in its finances.
It owns businesses in 60 countries
around the world. Investors are
meeting to discuss the black hole
and they are asking creditors for
more time to pay the money back.
Repercussions could be felt around
A quick look at how
markets are faring.
They have mixed a bit more modestly
than we saw over the last few
sessions. The European markets are
by and large following the US
markets a little higher. This is, as
we were discussing, because we are
seeing the likelihood of a tax cut
coming into force just a little bit
more likely and we think that might
be rubber stamped before Christmas
by President Donald Trump.
Millennials might have a reputation
for splashing cash on experiences,
rather than buying things,
but not when it comes
to the cinema it seems.
In the US for example,
between 2012 and 2015 the number
of young people regularly
going to the movies fell
by more than a third.
So how do cinemas entice
the younger generation?
Well the Rooftop Film Club was setup
in 2011 showing films
on top of buildings.
It now has four sites here
in the UK, it's also in New York,
Los Angeles and Miami and thinks
turnover will reach $6m this year.
Gerry Cottle Jnr is the founder of
the Rooftop Film Club.
Gerry, nice to see you.
us get into some of the film stuff
in a moment. You have got a very
interesting family history as well.
Talk us through that because some
may recognise your name?
Obviously my father ran away, did
the old adage and ran away to join
the circus many years ago. That was
over 50 years ago. I was born into
the entertainment world, I grew up
clowning around, fire-breathing,
bungees and trapeze, but I've turned
my focus from circus to still
selling popcorn, still you know...
You never know when you might need
to do a bit of fire-breathing.
my dad growing up entertaining and I
moved into cinema, putting bums on
seats, shall we say, in the
Before the bums hit
the seats, you are getting them to
buy a lot, that is where you are
making your money, the add-ones
before we sit down and watch a film?
That is right. With Roof Top Film
Club, we have be born out of the
mundane Multiplex and we are putting
the social and celebration back into
cinema. It's a whole night out.
People only to us, they have drinks,
food, you know, entertainment, bands
playing, stuff like that. It's about
that experience before the film. A
cinema is a glorified swat shop. For
us it's a whole night out. For the
consumer, it's value for money
because they get to come and spend
three or four hours on a roof top
and have a great evening and watch
their favourite film.
discussing earlier, if you go to a
regular cinema, you arrive late,
miss the trailers then get straight
out. So your model is that you want
people to get there early and spend
You got it, yes. We are the
antithesis to the Multiplex. This is
different to the normal cinema by
the fact we have themed cocktails,
street food, imMacrat service, you
get your ticket from a Smiley human.
At the end of the night you share
this experience with your friends.
We show a lot of cult movies, it's a
shared experience, for people hope
to new content. We are putting a new
generation on to film. That is the
beauty of it. The film industry is
recognising that. We are in fact
bringing the millennials into film
with Instagram. We are an
But hang on,
there are a few issues with this.
First off it rains, a lot in the UK!
How does that work? I
understand that you don't have
insurance to cover the fact that you
might have to call the thing off?
It's very tough. It's an issue with
being in Britain but this is what
happened. We used to cancel. We sent
e-mails out saying, rain or shine,
you know, anyone wants their money
back let us know and 3,000 people
were going, six people came back. So
people were willing to embrace it.
It's very British, ponchoes and
blankets, don't get me wrong, heavy
rain, we cancel.
Let us talk about
where you get the Roof Tops from. It
sounds simple, find a roof top, but
you want a good view.
some are already being used as bars
and restaurants. How do you
negotiate to find the rooves?
safe ones as well.
Yes, you think it's easy. When we
went to New York two years ago, the
home of the Room Top, we knocked on
doors for two years. If they are
good roof tops, you normally use
them, if they are under-yew newsed,
you need permits and toilets, so
what we have started doing, it takes
a while to find the roof tops. In
the US we are starting to use car
parks -- under-used. We are using
the under-used car parks, Houston
and Texas next year and we are
turning them into roof top spaces
and it's a great use of space in the
city that's not being used for much
else, especially when it's hot in
these climates, people don't want to
park their cars there but we want to
put a cinema there.
This is a very
seasonal business. How do you cope
with the off-season?
business absolutely in. The winter,
we have got other experiences
economy activity so this year we
have got curling in London so we
have got six curling lanes and
igloos and put them on the roof
tops. We are heading to Dubai and
Miami and that will mean we can run
12 months a year as an operation so
that's exciting for us, it will fill
up the winter periods.
with it, it's interesting, Gerry,
thank you for coming in, founder of
Roof Top. Thank you.
In a moment we'll take a look
through the Business Pages but first
here's a quick reminder of how
to get in touch with us.
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you need to know.
Let's see what stories are being
talked about on social media.
I want to talk about cinemas because
loads of messages as a result of
that interview we have just had
there. Phil says, I pay extra to
watch a Manifesty in a cinema where
food is not allowed, otherwise I'll
stay at home and stream. Ryan says I
use Netflix. A lot suggesting going
to the cinema isn't as fun as it
used to be. Are you cinema or
It's less about watching
the movie, it's the add-ones, one of
the big strendz going to bars and
binding, if you can offer that
social environment, that offers
It says a lot
about people that are tweeting and
texting, they're cyber savvy so
maybe that suggests they're more
streamers. A lot of other news
around today. The car story, this is
a story about what needs to change
in our every day lives to make cars
and electric cars one of the key
things for the future?
Yes. That is
really interesting. There is a lot
happening, a lot of manufacturers
are really trying to move into the
electric vehicle market. I think the
real important thing is that it
needs to be affordable. We need to
get prices down. In order for
manufacturers to do that, they have
to have access to the resources, so
what I love about this story is how
do you access that. Lithium.
thing in the battery?
the problem is, you can only really
get it from China or Chile. The
price has increased rapidly so if we
are going to get electric cars
cheaper, we really need the
resources to fall in price.
interesting isn't it because on one
hand the technology allows it, but
actually there are so many
infrastructure things that need to
change about charging points and
road spaces and all that sort of
thing. Yes, it's 8.54 in London,
it's about time we talked about
Absolutely, never too early to
talk about wine.
I've been here
since 3am so definitely! This is a
story in The Independent. Today is
the busiest wine-buying day of the
year and we are seeing a big rise in
the sales of UK wine.
That is a good story. Particularly
when it's related to wine, sparkling
wine for that matter. There's been a
huge surge in demand for UK wine,
particularly sparkling wine.
because of the weakness of the pound
making it cheaper abroad, or are
there other things?
Makes it cheaper
but there is a value aspect as well.
The quality has increased massively
in the UK. I feel like I need to go
and have one.
On that note! Let's
all go for wine. Thank you very
much. Have a lovely Christmas.
That is it. Plenty more later on
throughout the day. Bye. See you
very soon. Bye.