19/12/2017 BBC Business Live

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

accounting scandal.

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

Steinhoff?

Why is there such interest in

Steinhoff?

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

invested there.

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

worldwide.

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

anti-virus products.

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

this attack.

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,

taking advantage

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

pound.

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?

You're

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

income?

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

so.

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.

And

as you have said it is a win-win for

shareholders.

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.

Good morning.

Good morning.

Is this

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?

Demand is

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

leveraged.

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

Brexit?

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

the world.

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.

You too.

Let

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?

Indeed.

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.

I saw

my dad growing up entertaining and I

moved into cinema, putting bums on

seats, shall we say, in the

cinematic world.

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.

We were

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

money?

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

Instagram-led cinema.

But hang on,

there are a few issues with this.

First off it rains, a lot in the UK!

Yes.

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.

Yes.

I imagine

some are already being used as bars

and restaurants. How do you

negotiate to find the rooves?

Also

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?

Seasonal

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.

Good luck

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

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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

streaming?

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

something different.

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.

The

thing in the battery?

Yes. Actually

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.

It's so

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

wine.

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.

Brilliant.

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.

Is that

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.