Sofa Giant DFS Gets Comfortable With £1bn IPO

By Mark Kleinman, City Editor

The furniture retailer DFS has drafted in bankers to prepare for a £1bn stock market listing later this year, Sky News has learnt.

Advent International, the private equity firm which owns DFS, has appointed UBS to explore options for its investment, the most likely of which involve a return to the London stock market.

A flotation is unlikely to take place until at least the third quarter of this year, with DFS's financial year ending in July.

A source close to the company, which was founded by the Conservative Peer Lord Kirkham, confirmed that it had begun examining the move amid a deluge of prospective company listings.

DFS is one of many retailers examining flotations as the UK economy continues its recovery, although the mixed fortunes of high-street chains at Christmas suggest that investors may be wary of backing some of those that want to sell shares on the public markets.

Appliances Online, Fat Face, House of Fraser, Pets At Home and Poundland are among those exploring share sales, with strongly performing stock markets offering encouragement to retail executives.

Advent bought DFS, the UK's second-biggest furniture retailer after IKEA, in 2010, netting Lord Kirkham several hundred million pounds.

The company is now chaired by Richard Baker, the former boss of Boots, and who also chairs Virgin Active, the health and fitness chain.

It has performed robustly during difficult economic times. Sales rose 7.4% to a record £671m during the year to July 27, with profit up 5% to £86m.

DFS had positive news last month when the Office of Fair Trading dropped an investigation into the chain's pricing practices.

Spokesmen for Advent and DFS declined to comment.

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Demand For Real Butter Is Spreading

By Vicki Hawthorne, Sky News Ireland Correspondent

The demand for real butter is increasing according to the latest sales figures for the product.

In the last five years sales of butter have risen 7% in the UK, while margarine sales have dropped by 6%.

However, the market for margarine is still bigger with 271 million kilograms sold per year, while butter sells 141 million kilograms.

The increase in demand for butter has helped boost the business of many artisan producers, including Abernethy Butter in County Down in Northern Ireland.

Will and Allison Abernethy started making butter on their farm three years ago, and the enterprise has turned from a hobby into a business producing one tonne of butter a month.

Will Abernethy churning butter at his farm

Mrs Abernethy said: "We didn't realise there was such a demand for butter and the public were saying 'we love butter, we don't like margarine and we're going back to butter'."

Their hand-made product has even melted the hearts of Michelin Star chefs including Heston Blumenthal and Marcus Wareing. They supply butter to their London restaurants as well as high-end retailer Fortnum and Mason.

Even the big producers of margarines are starting to realise there has been a shift towards butter.

Last Autumn consumer goods giant Unilever, which produces Flora margarine, introduced butter into one of its spreads for the very first time.

For decades the health benefits of margarine have been promoted over butter.

Abernethy Butter is used by top chefs

But now the experts say butter isn't that bad for us after all.

Belfast based nutritional therapist Jane McClenaghan has been telling people to convert back to butter for years.

She said: "Not only are people looking for a more natural product but also research actually doesn't really back up the evidence that we should cut saturated fats out of our diet totally so our trends are following what the research says, but it has just taken us a while."

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Lloyds Sets Target For Women Executives

By Mark Kleinman, City Editor

Lloyds Banking Group is to break new ground in the debate about gender diversity in British business by pledging that 40% of its top 5,000 jobs will be occupied by women within six years.

Sky News can reveal this weekend that the taxpayer-backed lender will become the first FTSE-100 company to establish a formal gender target for its most senior management positions.

The pledge, to be outlined by Antonio Horta-Osorio, Lloyds' chief executive, in a speech next week, will come at a time of unprecedented scrutiny of boardroom diversity and governance.

Mr Horta-Osorio is expected to set the target as part of a broader set of objectives aimed at demonstrating Lloyds' awareness of its wider societal role as the UK's biggest high street lender.

Sources said that he was also planning to establish formal annual goals for lending to small and medium-sized businesses (SMEs) and to first-time house-buyers.

Targets for the number of female executives and a commitment to the level of funding for Lloyds' charitable causes would be made over a six-year period, they added.

It is the gender diversity target, which will entail the appointment of an additional 600 women to senior jobs at Lloyds by 2020, that is likely to attract the greatest attention.

Speaking exclusively to Sky News, Fiona Cannon, the bank's director of diversity and inclusion, said the initiative made sound business sense.

Fiona Cannon says the workforce should reflect the diversity of customers

"One of our visions is to be the best bank for customers. As the largest UK bank we are located in communities across the country and our customers are incredibly diverse," she said.

"There is a whole body of research suggesting that where organisations have a diverse senior management team they are much more financially successful than those that do not."

The Lloyds executive said that a 40% target was stretching but achievable. 28% of the bank's top 5000 jobs are currently held by women, a spokesman said.

"Creating an organisation that is meritocratic is good for everyone, not just for women," Ms Cannon said.

Lloyds' pledge comes amid mixed results from a concerted push in recent years to get more women elevated to board positions, with advocates arguing that greater diversity improves the stewardship of major companies.

That argument has acquired more weight in the aftermath of the financial crisis, although empirical evidence backing the superior performance of boards populated by women remains patchy.

The Government has thrown its weight behind a voluntary campaign to ensure that 25% of the directorships of FTSE-100 companies are held by women by the end of next year and has threatened to impose formal quotas if the objective is not met.

Since the initiative was launched by the former Trade Minister, Lord Davies, the proportion of women on boards has grown from 12% to 20%.

However, amid additional pressure from Brussels for the introduction of legally-binding quotas, there are concerns that the pace of change has been insufficiently rapid.

Vince Cable supports voluntary targets for women on boards

Vince Cable, the Business Secretary, said he supported Lloyds' work and hoped it would become a template for other major businesses.

"We are not tapping into the talents of half the population. If we are going to get proper balanced representation in companies, it has got to start with senior executives, working up to chief executive level," he said.

Mr Cable has been a supporter of voluntary rather than mandatory targets for women on boards, saying there was little evidence that more female leadership of financial institutions would have averted the 2008 banking crisis.

"I don't buy into that stereotype one way or the other," he said.

"All the evidence we have suggests that companies which do make use of the female labour force do very well at the top end. We need to make sure that becomes standard practice in the UK."

Lloyds' plan to announce the gender target is understood to have been signed off by the bank's board on Friday, less than two weeks before it reports full-year results for 2013.

The company, which provoked a row with Mr Cable by axing more than 1000 jobs this week, is preparing for a return to full private sector ownership in the coming months.

Ms Cannon dismissed the idea that Lloyds' proposals could be labelled as a publicity stunt, although critics of gender targets have argued that they are tokenistic and risk promoting mediocrity at the expense of genuine talent.

The 'gene pool' of available women to fill senior positions is questioned

Only four FTSE-100 companies - Burberry, easyJet, Imperial Tobacco and Royal Mail - have female bosses. Severn Trent, the water company, has also named a woman as its next chief executive, although Angela Ahrendts, the boss of Burberry, has resigned to take up a role with Apple.

Even fewer companies have a female chairman, with reform-minded businesspeople urging the pipeline of executives to be bolstered in order to facilitate future boardroom appointments.

Speaking to Sky News, Ruth Lea, an economist and director of Arbuthnot Banking Group, said doubts remained about the "gene pool" of available women to fill senior positions.

"I don't think positive discrimination is the best way forward for women. It breathes tokenism and suggests that somehow women cannot make it on their own merits," she said.

"It isn't a matter of discrimination. There simply isn't the gene pool of qualified and experienced women in comparison with the number of men. Men and women make different choices about their lifestyles and careers."

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US Growth Hits 3.2% In Last Quarter Of 2013

America's economy grew at a annual rate of 3.2% in the last three months of 2013, according to official figures.

The healthy growth was recorded despite the October government shutdown, the Commerce Department said.

Gross domestic product (GDP) was primarily boosted by exports and domestic consumer spending.

The figure beat forecasts of 3% GDP growth and follows the 4.1% recorded in the third quarter.

The slight dip in Q4 growth was blamed on a 12.6% decrease in government spending, weaker business investment and slowing house purchases.

But consumers opened their wallets and purses, spending 3.3% more than in Q3, up from the 2% rise in the previous three months.

Data showed goods and services exports leapt by 11.4% in the final quarter, up from the 3.9% recorded in Q3.

The Commerce Department said the total impact of the federal shutdown from October 1 to 16 "could not be quantified".

However, US property slowdown may further affect ongoing growth, as used home sales dropped 8.7% in December, according to the National Association of Realtors.

Last week, the group said sales of previously occupied homes reached 5.1 million in 2013, the highest level in seven years.

The Fed's decision to taper quantitative easing by another $10bn (£6bn) a month, down to $65bn (£40bn), is also feared to adversely affect domestic output in the coming months.

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Living Standards 'Will Not Recover By 2015'

Living standards are unlikely to have recovered to their pre-crash levels by the general election in 2015, a think tank has warned.

The Institute for Fiscal Studies (IFS) said that while the fall in household incomes has now probably come to a halt, living standards are "dramatically" down on where they were before the global financial crisis in 2008.

In its latest analysis, the IFS said families on low incomes could lose the most from the years of recession, with the prospect of fresh cuts to benefits and tax credits adding to the squeeze.

With average household incomes at their lowest level for almost a decade, the IFS said there was "little reason" to expect a strong recovery in the next few years.

Real earnings are not expected to return to their 2009/10 levels until 2018/19, according to the Office for Budget Responsibility.

The IFS report found poorer families, who spend a higher proportion of their income on food and fuel, had suffered more as a result of inflation.

Between 2008 and 2013, energy prices rose by 60% while food was up 30% - compared to a 20% increase in prices overall.

At the same time those on low incomes were less likely to have benefited from cuts in mortgage rates.

The report said: "Average living standards have fallen dramatically since the recession, as income growth has failed to keep pace with the rate of inflation.

"This fall in average incomes has largely been driven by declines in real earnings.

"Looking forward, however, the combination of recovering real earnings and further cuts to benefits and tax credits is likely to mean that nominal income growth will be lower towards the bottom of the distribution.

"Unless differences in inflation are reversed, this could mean that low-income households will see the largest falls in living standards over the period of recession and fiscal consolidation as a whole."

Labour Treasury spokeswoman Catherine McKinnell said: "These worrying figures show those on lower incomes have been hardest hit by price rises, particularly food and energy bills.

"And on current forecasts real earnings are not expected to get back to the level they were in the final year of the last Labour government until 2018/19."

Chancellor George Osborne said that while the report showed how much poorer the country was as a result of "Labour's great recession" it also indicated that the fall in household incomes had probably come to a halt.

He said: "Only by continuing to work through our long-term plan will we secure a better economic future for hard-working people."

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Online Hotel Booking Prices Face 'Overhaul'

Wider online hotel booking discounts are to offered to consumers, after an investigation by the Office for Fair Trading (OFT).

The announcement comes after the regulator investigated competition concerns that two large online travel agents (OTAs) had separate agreements with the InterContinental Hotels group, which allegedly restricted discount offers.

The OFT said Expedia and Booking.com were limited in offering room-only hotel accommodation to consumers.

It is now expected that more online firms will be able to enter the market and offer discounts.

OFT Services, Infrastructure and Public Markets Group senior director Ann Pope said: "The travel industry, fuelled by the internet, has seen significant changes in recent years, and we want to ensure those changes continue to work in consumers' interests.

"That is why we are pleased to have secured this outcome which, by allowing OTAs and hotels to offer discounts, should increase competition and mean travellers across Europe can benefit from reductions on hotel accommodation throughout the UK.

"By shopping around, people can compare the different discounts offered by hotels and OTAs, and ensure they get the best deal."

The commitments mean that all online travel agents and hotels that deal with the three investigated businesses will be able to offer discounts off headline room-only rates.

But the cheaper price offers must follow certain conditions.

Consumers must sign up to a membership scheme of an online travel agent or hotel to be able to view specific discounts, and they must make at least one non-discounted booking to be eligible for future discounts.

More follows...

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Google Sells Motorola To Lenovo For $2.9bn

Google has announced it is selling its Motorola Mobility smartphone business to Lenovo in a $2.9bn (£1.75bn) deal.

The technology firm bought the company less than two years ago for $12.5bn (£7.54bn) as a way of boosting its Android operating system.

It has since slashed its workforce from 20,000 to less than 4,000 and racked up losses of nearly $2bn (£1.2bn).

Larry Page, chief executive of Google, described the deal with Lenovo, which is best known for its range of computers, as an "important move for Android users".

He also said his company would retain most of Motorola's patents.

"The smartphone market is super competitive and to thrive it helps to be all-in when it comes to making mobile devices," Mr Page said.

"We believe that Motorola will be better served by Lenovo, which has a rapidly growing smartphone business and is the largest and fastest-growing PC manufacturer in the world.

"This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere."

Under Google, Motorola launched a number of value smartphones, including the Moto G and the Moto X.

It also makes baby monitors, corded and cordless phones and fitness accessories.

The Lenovo deal is yet to be approved in either the US or China and Mr Page warned this "usually takes time".

"Until then, it's business as usual," he said.

"I'm phenomenally impressed with everything the Motorola team has achieved and confident that with Lenovo as a partner, Motorola will build more and more great products for people everywhere."

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Sainsbury's Shares Drop As Justin King Quits

What Has Justin King Done As CEO?

Updated: 11:17am UK, Wednesday 29 January 2014

The outgoing chief executive of Sainsbury's, Justin King, has been credited with turning the retailer around during the last 10 years, with an impressive list of achievements and awards racked up by company and staff.

• Around 24 million transactions a week in 2014 (vs 14 million in April 2005)

• Winner of 14 of 30 Mystery Shopper customer service awards for Service & Availability in 2013/14 (The Grocer)

• Supermarket of the Year 2013 (6th time in eight years – Retail Industry Awards)

• Brand of the Year 2013 (Marketing Society)

• FTSE100 Business of the Year 2013 (National Business Awards)

• Incremental sales up £9.5bn, up from £16.1bn in 2004/5 to £25.6bn for 2012-13

• Seventh biggest clothing retailer in the UK by volume and the 11th by value

• It is the seventh biggest general merchandise retailer in the UK by value

• Now has over 400 stores with full general merchandise range, with 33% of the population within a 15-minute drive

• Convenience stores numbers up 127% to 596 since 2004-5

• Awarded Convenience Chain of the Year (4th consecutive year – Retail Industry Awards)

• £1bn online grocery business with over 190,000 orders each week

• Online Retailer of the Year 2013 (2nd consecutive year – Grocer Gold Awards)

• Five consecutive years of profit growth for Sainsbury's bank

• Acquisition of remaining 50% stake from Lloyds Bank Group completes on 31 January 2014

• Leading positions on nutritional labelling, British sourcing, Fairtrade, RSPCA Freedom Foods and MSC

• £136m worth of Active Kids equipment donated since 2005

• First sole-sponsor of the Paralympic Games, in 2012

• Record levels of employee - known as colleagues - engagement (as measured by its annual Talkback survey)

• Only food retailer accredited to Gold Standard by Investors in People

• £520m given to employees in bonuses between 2005-6 to 2012-13)

• Employer of the Year 2013 (Retail Week Awards)

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Product Growth Helps BSkyB Beat Forecasts

Strong growth in on-demand and home communication products helped BSkyB beat City forecasts despite growing competition for pay-television viewers, the company said.

Reporting results for the six months to the end of December, BSkyB said that adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) were flat at £813m, compared to the same period a year earlier.

Adjusted revenues, which stripped out sales from the discontinued retailing of ESPN sports channels, rose by 7.6% to £3.751bn.

The announcement included news that total net product growth across the company's TV, telephony, broadband and other services grew by 873,000 during the second quarter - more than 100,000 more than analysts had predicted.

Underlining its diversification beyond its founding pay-TV subscription product, it said that on-demand usage had trebled during the second quarter and that 1 million Sky+HD boxes had been connected for the delivery of services.

BSkyB, the owner of Sky News, now has more than 5.1 million broadband customers and more than 33.3 million paid-for products in total, with mobile and on-demand services such as Sky Go and NOW TV also seeing strong growth.

BSkyB CEO Jeremy Darroch said the interim dividend was up 9%

Unveiling a new content deal lasting until 2020 with US media group HBO, BSkyB announced extensions to long-running broadcast rights agreements covering cricket, football and rugby union.

Sky Sports channels had recorded their biggest audiences for six years during the period, the company said, aided by a compelling Premier League season and England's back-to-back Ashes series against Australia.

Reflecting on the company's performance, BSkyB chief executive Jeremy Darroch said: "We had a very good first six months of the year as we reaped the benefits of our broader-based approach to growth.

"In a consumer environment that remains challenging, customers continued to choose to take Sky products in ever greater numbers in the run-up to Christmas, with Q2 growth up by over 40% on last year.

Mr Darroch added: "We are moving through a year of investment in which we are absorbing the one-off step up in Premier League costs well, with adjusted EBITDA flat thanks to a continued focus on operating efficiency.

"The 9% increase in the interim dividend to 12p, the tenth consecutive year of growth, reflects our confidence in the strength of our business and the progress we are making."

BSkyB said operating profit during the half-year fell 8% to £595m, slightly better than City analysts had predicted.

That decline was largely the consequence of the hike in the cost of live Premier League broadcasting rights and investment in new connected-TV services.

BT has waded into the top-flight football broadcasting market in recent months, and analysts believe that price inflation is likely to continue to accelerate in future rights auctions.

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Lloyds Cuts 1,390 Jobs Amid Strategic Review

Lloyds Banking Group is cutting 1,080 jobs and outsourcing another 310 roles, the company has confirmed.

It said the losses are part of the strategic review, previously announced in 2011.

The cuts affect the retail, risk, operations and commercial banking divisions.

The company said 90 new roles would be created within the risk, operations and commercial departments.

The taxpayer-backed group hoped a number of roles would be shed through natural wastage.

Voluntary redundancy would be an option and compulsory cuts taken where necessary as a "last resort".

Lloyds said that since the strategic review about a third of job losses have resulted in redundancies.

The bank said in a statement: "Lloyds Banking Group is committed to working through these changes with employees in a careful and sensitive way.

"All affected employees have been briefed by their line manager today. The Group's recognised unions Accord, Unite and LTU were consulted prior to this announcement and will continue to be consulted."

The Unite union slammed the job losses and said nearly 35,000 people have been affected at the bank since 2008.

Unite national officer Rob MacGregor said: "While staff at Lloyds Banking Group continue to work hard to deliver half year profits of £2.1bn, management has confirmed it is to give 1,390 staff another kick.

"Lloyds Banking Group is well on the road to recovery, with the CEO being recently rewarded handsomely with a share bonus in the region of £2.5m, yet staff are being made redundant.

"Unite will continue to oppose these job losses and has sought an urgent meeting with Lloyds to outline the union's concerns."

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Economy Grows At Fastest Rate Since Crash

The British gross domestic product (GDP) figure for the fourth quarter of 2013 stood at 0.7%, with growth for the full year reaching 1.9%.

Output for 2013 reached its fastest annual rate of growth for six years, according to the Office for National Statistics (ONS).

The figures were in keeping with forecasts made by economists.

The preliminary result shows the important service sector - which accounts for around three-quarters of the economy - was up 0.8%.

The ONS said construction was 0.3% down on the previous three months, due to weak figures being recorded in November.

Agriculture was up 0.5% in the October to December period, while production was up 0.7% in the same three months.

Manufacturing was up 0.9% in the quarter, which was its biggest quarter-on-quarter rise since Q3 in 2010.

ONS chief economist Joe Grice said the service sector is now above the pre-recession levels, but both production and construction are still below that level overall.

Mr Grice said: "We have now seen four successive quarters of significant growth and the economy does seem to be improving more consistently.

"Today's estimate suggests over four-fifths of the fall in GDP during the recession has been recovered, although it still remains 1.3% below the pre-recession peak."

The latest figures have given a boost to the Chancellor and come just weeks after the International Monetary Fund (IMF) did a U-turn on its forecast for the UK economy.

George Osborne told Sky News: "I think these numbers represent a real boost to the economic security of hard-working families.

"And the good news is the recovery is broadly balanced with manufacturing growing the fastest of any sector, so there's evidence that our long-term economic plan is working, but I am the first to say the job isn't done and the biggest risk to the recovery would be to come off that economic plan, and that would damage job creation and mean we don't have such bright economic prospects."

He added: "Where I have had the opportunity I have focused the effort on those on low and middle incomes.

"That's my priority, that's where my tax-cutting priorities lie becaue I want to help those hard-working families who have got more economic security because jobs are being created, but of course have had a very dififcult time because our country went through such a terrible economic period."

The IMF now forecasts growth in 2014 of 2.4%, a figure which is in line with the Office for Budget Responsibility.

The Bank of England's current forecast is for growth of 2.8% in 2014.

Shadow chancellor Ed Balls told Sky News: "This is not yet the strong and balanced recovery we need.

"It's not a recovery driven by business investment - that's still very flat - or by exports - they've been weak -  what's going on at the moment is consumers are saving less and consumer spending is picking up somewhat.

"That's happening because housing demand and house prices are going up.

"We're not building the houses we need to match that that's why construction output is still falling. There's a lot more to do."

Mr Balls added: "For working people facing a cost-of-living crisis this is still no recovery at all."

Robert Johnson, managing director of Craftsman Tools, an engineering firm in Otley, West Yorkshire told Sky News: "I think the growth is real.

"We have seen a 10% growth last year and we are predicting growth of 30% over the next three years."

But one of the biggest problems his firm faced was getting skilled workers.

Mr Johnson said: "We feel we have got to invest in advanced machinery and equipment which we can do, but getting skilled people is the hardest thing.

"We have had to start our own apprentice school two years ago, and we are training our own apprentices to fill the skills gap."

And a skills shortage risked holding the economy back, he warned.

"It's a mixture of skilled people and advanced machinery that will help us go forward," said Mr Johnson.

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Report: Average House Price Up 8.8% In 2013

UK house prices climbed by an annual rate of 8.8% in January, extending the fastest pace of increase since 2010.

According to the Nationwide, values climbed 0.7% month-on-month, making the average home worth £176,491.

The high street lender said it was the 13th continuous monthly rise as confidence in the economy returns.

The results come just a day after the Office for National Statistics revealed UK economic growth in 2013 reached 1.9%, with four quarters of growth.

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iPhone Sales Drive Record Apple Revenue

The release of Apple's iPhone 5s and iPhone 5c have helped drive record revenue figures for the tech giant, the company's quarterly results show.

Apple's revenues rose to $57.6bn (£34.7bn) for the last three months of 2013, which is a new quarterly record.

The figures reveal that Apple also made profits of $13.1bn (£7.9bn) over the same period on the back of strong iPhone sales - matching record profits set a year ago.

Tim Cook: 'We continue to invest heavily in our future'

Last year also saw the release of the iPad Air and iPad mini, products which have helped the tech giant reverse a recent profit slump.

The company sold some 51 million iPhones over the period, and a further 26 million iPads.

Apple also sold 4.8 million Macs, compared with 4.1 million over the same quarter in 2012.

Tim Cook, Apple chief executive, said: "We are really happy with our record iPhone and iPad sales, the strong performance of our Mac products and the continued growth of iTunes, software and services.

"We love having the most satisfied, loyal and engaged customers, and are continuing to invest heavily in our future to make their experiences with our products and services even better."

Despite the strong performance, Apple has forecast revenue below analysts' predictions for the current quarter, amid concerns that it will be squeezed by competition from devices running Google's Android software.

Apple's share price fell 8% to $505.05 in extended trading.

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'Red Knight' Shorts Manchester United Shares

By Mark Kleinman, City Editor

A hedge fund headed by one of the financiers who failed to buy Manchester United four years ago is betting against the club's New York-listed shares.

Sky News can exclusively reveal that Marshall Wace, one of the world's biggest hedge funds, stands to reap a profit worth millions of pounds if Manchester United continues to perform as poorly on the stock market as it is doing at its Old Trafford home.

The emergence of Marshall Wace's position in United's shares comes as the Premier League champions struggle to avoid their most ignominious season for more than two decades.

Already out of the League Cup and FA Cup competitions, they trail the Premier League leaders Arsenal by 14 points and face a tough task to progress further in the Champions' League.

Paul Marshall was a member of the Red Knights consortium

Paul Marshall, one of the founders of Marshall Wace, was a member of the Red Knights consortium which in 2010 launched a campaign to persuade Manchester United's owners to sell the club.

The American Glazer family refused to engage with the Red Knights, who were led by Jim O'Neill, the former chief economist at Goldman Sachs. In August 2012, the Glazers floated the club on the New York Stock Exchange.

Since then, United have continued to enjoy reasonable success on the pitch, winning the Premier League title last season in Sir Alex Ferguson's final campaign at the helm.

His successor, David Moyes, has endured a torrid start to his Old Trafford career, however, with a series of home defeats culminating in last week's League Cup exit to Sunderland.

The size of Marshall Wace's short position in Manchester United's shares is unclear, with a spokesman for the hedge fund declining to comment on Monday.

Under US rules, hedge funds do not have to disclose the extent of their short positions in publicly-traded stocks.

However, insiders said that Marshall Wace had placed a "not immaterial" bet on a further decline in the club's shares, which have fallen nearly 14% during the last 12 months.

Mr Marshall is understood to have sanctioned the investment decision, adding a further layer of intrigue to the club's ownership.

Marshall Wace is far from the only investor expecting to make money from an ongoing fall in its share price.

Odey Asset Management, the hedge fund led by Crispin Odey, a prominent City financier, was disclosed in December as holding a short position worth approximately $5m.

Malcolm Glazer refused to entertain a Red Knights approach in 2010

Last week, it emerged that Manchester United had been relegated from the leading trio of the world's wealthiest football clubs after being usurped by Barcelona, Real Madrid and Bayern Munich.

The annual list compiled by the accountancy firm Deloitte revealed that the English club had slipped into fourth place with annual revenues of £347.7m.

That figure will slide further next year if Manchester United fail to finish in the top four of this season's Premier League.

On Monday, the club's shares were trading down roughly 1.6% at $14.78, valuing it at just under $2.5bn.

Mr Marshall is one of the City's most successful money-makers, amassing a vast fortune from the firm he set up with his business partner, Ian Wace.

A Manchester United fan, he has argued more broadly for supporter-based ownership of football clubs, criticising the Glazers in an article for The Times last year.

"In 2005, United became perhaps the most famous UK victim of the excesses that led to the global financial crisis, when they were taken over by a family of US-based real estate developers with no connection to the city.

"The Glazers could not afford the asking price but a banker from JPMorgan named Ed Woodward came up with the wheeze of 'payment in kind' notes, effectively a form of very high interest-bearing loans that enabled the Glazers to acquire the club by putting £500m of debt on to its balance sheet, turning it overnight from the wealthiest club in the country to the most debt-laden."

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GDP Figures Expected To Show Strong UK Growth

Official figures are expected to show the best pace of growth since before the global financial crisis - indicating that Britain's economic fightback is continuing.

Economists predict that data from the Office for National Statistics will show a fourth consecutive quarter of gross domestic product (GDP) growth in 2013.

The rate of economic expansion may be shown to have slowed to 0.7% from 0.8% the previous quarter - but that would still mean overall growth of 1.9% in 2013, up from 0.3% the previous year.

That figure would amount to the fastest growth since 3.4% in 2007 - before the worldwide economy went into meltdown.

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The GDP update is expected to give a boost to Chancellor George Osborne - just a year after the UK was gripped by fears of a "triple dip" recession.

It comes after the International Monetary Fund set aside its warnings about Britain "playing with fire" with its austerity policies and again upgraded its forecast for UK growth.

GDP growth of 0.5% in the first quarter of 2013 was followed by 0.8% in the second and third quarters of the year.

Some experts believe the latest figures will come in just under the 0.9% forecast by the Bank of England for the fourth quarter.

A good Christmas for retailers is not predicted to boost growth by much as the festive 2.6% sales increase came after a weak October and November.

Chancellor George Osborne is hoping for further vindication of his policies

The manufacturing sector slowed in November, while construction slumped by 4%, despite Government schemes such as Help to Buy.

Labour's shadow chancellor Ed Balls said claims that the UK economy is surging ahead are "cloud cuckoo land".

He told BBC2's Newsnight that three years of economic "flatlining" on Mr Osborne's watch had left the UK lagging behing France, which has recovered to its pre-crisis peak.

He said: "Do you really think up and down the country at the moment when most people are seeing their living standards fall and in most parts of the country there isn't new business investment coming through, do you think that is an economy that is doing really, really well? That is cloud cuckoo land."  

The IMF predicts the UK economy will grow by 2.4% in 2014 - matching the independent Office for Budget Responsibility's forecast.

The Bank of England most recently estimated 2014 growth at 2.8%.

Investec economist Philip Shaw expects a 0.7% GDP growth figure for the fourth quarter of 2013, but said this should not be seen as a disappointment even though it would be a slight slowing from the third quarter.

He said: "There is no evidence whatsoever that the recovery is petering out."

He said a slightly lower figure could ease fears that policymakers may be persuaded to lift interest rates this year.

Experts at Capital Economics and Scotiabank both predicted growth of 0.8%.

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Virgin Money Spears New Director Before Float

By Mark Kleinman, City Editor

Sir Richard Branson's banking arm is appointing a former Deutsche Bank executive as part of a move to strengthen its board ahead of a medium-term stock market listing.

Sky News understands that Virgin Money will this week name Marilyn Spearing as a non-executive director, joining a board populated by heavyweight City figures such as Sir David Clementi, the bank's chairman.

Ms Spearing, who will attend her first board meeting this week, has also worked for Barclays and HSBC, principally in areas such as payments and cash management.

Her arrival will come as Virgin Money prepares to mount an assault on the UK current account market against a backdrop of growing political hostility to the dominance of the country's five major high street lenders.

Ed Miliband, the Labour leader, will ask competition regulators to recommend a legal market share cap for banks if he wins the next general election, which he argues would pave the way for the likes of Virgin Money to mount a more effective challenge.

Sir Richard Branson celebrates buying Northern Rock in Newcastle

Jayne-Anne Gadhia, the Virgin Money chief executive, recently began trialling a current account among the bank's staff, with early indications understood to have been positive.

The planned public launch of the product later this year could mark a potentially-significant phase in efforts to bolster competition in the current account market.

More than 80% of accounts are supplied by the five biggest lenders: the state-backed Lloyds Banking Group, owner of HBOS, and Royal Bank of Scotland, which owns NatWest; Barclays, HSBC and Santander UK.

Once the staff trial has been completed, Virgin Money will target consumers who are underserved by the major lenders, offering a basic account with no fees or charges and free access to the UK ATM network of cash machines.

It is also likely to be aided by the new seven-day switching system for current account providers which came into effect during the autumn.

Barclays and the Co-operative Bank are among those which have seen net losses of customers, the latter as a result of the adverse publicity over its £1.5bn capital hole and allegations about the behaviour of its former chairman, Paul Flowers.

During the last year, Virgin Money sold more than 1.5 million new products to customers, having established a significant market share in loans, insurance and savings.

Its takeover of Northern Rock in 2011 was a crucial moment in its expansion, but the length of time between that deal and the current account launch reflects both Virgin Money's determination to develop the right products and the pitfalls of associating its brand with the poor service that has blighted British banking.

Sir Richard is targeting a stock market listing of the bank within a couple of years, although a firm date has not yet been decided.

Aldermore, Metro Bank, Santander UK and TSB also intend to sell shares publicly between now and 2016.

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Lloyds Banking Group 'Sorry' Over IT Glitch

Lloyds Banking Group has apologised after customers were unable to withdraw money from cashpoints or pay for goods with their debit cards.

The group - made up of Lloyds, Halifax, Bank of Scotland and TSB - has 30 million UK account holders, and became aware of the difficulties on Sunday afternoon.

It later said the problems - which lasted for several hours and were blamed on a "server failing" - had been fixed.

A spokeswoman said: "We apologise that earlier today, between 3pm and 6pm, some customers were unable to complete their debit card transactions.

"Although the majority of transactions were unaffected, we are very sorry for the inconvenience that this will have caused.

"At the same time, some customers encountered problems at approximately half of our 7,000 ATMs.

"This was resolved by 7.30pm, and all of our ATMs are now working."

Online and telephone banking were unaffected by these issues, and customers were still able to withdraw cash from other ATMs.

TSB admits problems with its ATMs

Customers earlier used Twitter and other social media to vent their anger at the failure, which has left many stranded without cash.

TSB customer Nicky Kate said: "Really embarrassed to get my card declined while out shopping, never had any problems with lloyds then they changed my account."

Hannah Smith tweeted: "I am a TSB customer with a Lloyds card still (like everyone else). And I've been embarrassed three times today re: card declined."

Another customer, Julia Abbott, ‏said: "Lloyds bank atm and card service down. 20 mins on hold to be told this. Nothing even on website. Shoddy lloyds. ... shoddy."

Another Twitter user wrote: "This problem is also affecting Halifax debit cards as I found out trying to pay for lunch with my wife!"

And Jane Lucy Jones tweeted Halifax, saying: "Why can't I get any money out of any cashpoints, what is going on?

TSB - which has more than 630 branches across England, Scotland and Wales - said it "unreservedly apologised" for the problem.

Its chief executive Paul Pester had said in a tweet: "My apologies to TSB customers having problems with their cards.

"I'm working hard with my team now to try to fix the problems."

Lloyds customer services said the problem affected debit cards and not credit cards.

The glitch is the latest technology meltdown for the UK's high street banks.

Last month, all of RBS and NatWest's systems went down for three hours on one of the busiest shopping days of the year.

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Business Bosses Slam Labour's 50p Tax Rate

A group of senior business leaders have written an open letter criticising Labour's plan to raise the top rate of tax.

Shadow chancellor Ed Balls last week confirmed his party would restore the 50p tax rate if it gets into power at the next general election.

Business figures have continued to criticise the plans, and today the heads of 24 of Britain's most successful companies have warned in a letter to The Telegraph that it would halt the economic recovery and cost jobs.

The letter's signatories - including Ocado chairman Sir Stuart Rose and Kingfisher chief Sir Ian Cheshire - label the proposal a "backward step" that "will have the effect of discouraging business investment in the UK".

Pimlico Plumbers founder Charlie Mullins said it would be "suicidal".

He warned it could trigger an exodus of investors, pointing to the example of France under President Francois Hollande, who raised the top rate of tax to 75 per cent.

"Business people aren't against paying tax, just not at such a punitive rate," he said.

The head of the London Stock Exchange Group, Xavier Rolet, also raised concerns at the weekend about its potential impact.

"The right tax rate for entrepreneurs is what motivates investments," he told Sky News on Sunday.

"There are worries and certainly concerns that we do share that increasing the taxation, reversing if you want, the measures that have been taken in the last few years, could impact not only foreign but also domestic investments."

A former Labour minister also accused the party of choosing to "kick" Britain's wealth creators over the 50p tax rate proposal.

Former Labour City minister Lord Myners, now a crossbench peer, suggested the plans would not even get "a pass at GCSE".

"In the last few months we've got, oh, if it creates wealth let's kick it - really go for energy companies, really go for house-building, bankers, this time it's going to be the high-earners," he told the BBC.

But Mr Balls has the backing of Alistair Darling, who introduced the 50p rate when he was chancellor.

He told the Sky News Murnaghan programme: "It's part of the deficit reduction plan that he set out and I thought Ed Balls delivered a very good speech yesterday."

The 50p - or 50% - "additional rate" tax, which is payable on income above £150,000, was cut to 45% on April 6 last year.

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AT&T Courts Europe Over £60bn Vodafone Bid

By Mark Kleinman, City Editor, in Davos

US telecoms giant AT&T is courting European regulators as it accelerates work on a possible £60bn takeover bid for Vodafone.

Sky News has learnt that Randall Stephenson, AT&T's chairman and chief executive, met the EU Telecoms Commissioner Neelie Kroes at the World Economic Forum in Davos to discuss his ambition to become a major player in the European market.

Insiders said that Mr Stephenson and Ms Kroes discussed a number of issues including the Commission's receptiveness to a potential takeover bid for a major European operator such as Vodafone.

The AT&T boss is also said to have held talks with Joaquin Almunia, the EU Competition Commissioner, in recent days, although an insider at the US company denied that they had "met formally" in Davos.

A combination of AT&T and Vodafone, which has been speculated about for months, would create a global behemoth in the telecoms sector with a market value of well over £150bn.

The talks between Mr Stephenson and EU politicians come as Vodafone prepares to hand over a £54.3bn ($84bn) windfall to its shareholders from the sale of its stake in Verizon Wireless to Verizon Communications.

The majority of that sum will be in the form of Verizon stock and the remaining $24bn in cash.

Vodafone and Verizon will both hold shareholder meetings next Tuesday to approve the $130bn deal, which was the largest announced corporate transaction in the world last year.

AT&T has yet to make an approach to Vodafone but has begun discussing options for financing what would be one of the world's biggest takeover deals in recent times.

City sources said that AT&T had been urged by some of its leading shareholders to delay an approach to Vodafone until after its US deal had closed.

Vodafone's sale of its Verizon Wireless stake is scheduled to complete on February 21. The UK company's shares will begin trading without the US mobile group's asset priced into them three days later, with investors receiving cash and shares on March 4.

Vodafone is to offer a free dealing facility for holders of up to 50,000 of its shares to trade their new Verizon shares.

Coincidentally, Mr Stephenson and Vittorio Colao, Vodafone's Italian chief executive, are both due to speak at the Mobile World Congress, a key industry conference, in Barcelona on February 24.

AT&T's board has not formally approved an offer for Vodafone but the regulatory, financing and legal work being undertaken by the US company suggests that an approach is likely this year.

Mr Stephenson has spoken publicly of the 'huge opportunity' in Europe to exploit the growth of mobile broadband across the Continent.

A takeover of Vodafone would give AT&T instant scale in major European markets such as the UK, Germany, Italy, Spain and Turkey.

Even after the Verizon Wireless deal closes, analysts expect Vodafone to be valued by the stock market at more than £50bn and possibly as high as £70bn, preserving its status in the ranks of the UK's ten biggest public companies.

Mr Colao has been examining strategic options for Vodafone's post-Verizon future, and he has already spent more than £6bn on the German cable company Kabel Deutschland.

He has also outlined plans for a £6bn network investment programme to take place over the next three years.

Reports have suggested that AT&T could pursue EE, the UK mobile group, as an alternative option to expand in Europe if a pursuit of Vodafone does not pay off.

AT&T declined to comment on Mr Stephenson's discussions with Commissioner Kroes, while Vodafone declined to comment.

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Nestlé Chair Warns Over UK Exit From Europe

By Mark Kleinman, City Editor, in Davos

The consumer goods giant Nestle would be forced to re-evaluate the extent of its presence in the UK if Britain decided to leave the European Union, its chairman has told Sky News.

In an interview during the World Economic Forum in Davos, Peter Brabeck-Letmathe said the company was committed to its business in the UK but that he could not envisage a separation from its biggest trading partner being in the country's interest.

Nestle, which makes Nespresso coffee capsules and Kit-Kat chocolate bars, employs approximately 8,000 people in the UK and accounts for exports worth roughly £400m. Its other brands include Nescafe, Smarties and Yorkie.

"From a purely economic point of view, I can't see that the withdrawal of the UK [from the EU] would be favourable for any UK industries," Mr Brabeck-Letmathe, an Austrian, said.

"It would isolate the UK economically. Every company would be forced to re-evaluate the implications of investing in the UK. It would no doubt have an impact on its ability to supply European markets."

The warning, ahead of a likely referendum on Britain's EU membership in 2017, echoes the views of many of the multinational business leaders gathered in Davos.

Prime Minister David Cameron told Sky News on Thursday that he did not believe the Government's stance on EU membership was jeopardising inward investment, saying that companies had been "voting with their feet".

He said: "The argument I make with these business leaders is that the best thing for Britain would be to secure our place within a reformed European Union.

"Simply saying 'let's hope this issue goes away, let's hope that Europe sorts itself out', without doing anything, won't work.

"We need to get in there, change Europe, make it work better, make it more competitive, make it more flexible - help make Britain more comfortable with its membership, have that referendum and then settle this issue."

Mr Brabeck-Letmathe, who also chairs the parent company of Formula One motor racing, said the EU and its single currency had been "an incredible success".

"The EU is full of failures and weaknesses like any large institution, but its achievements are greater. We have to work to strengthen the internal market."

He suggested that the trading bloc's governing mechanisms required reforms such as shrinking the number of EU Commissioners.

"The current system is not an efficient way to run it," he said.

In addition to his corporate roles, Mr Brabeck-Letmathe has also been a leading advocate of water stewardship in large companies, and unveiled new measures this week aimed at improving global water sustainability.

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Non-EU Banks Slip Through Bonus Cap Loophole

By Mark Kleinman, City Editor in Davos

Major global banks such as Morgan Stanley and Nomura are benefiting from a loophole in new European pay rules that could leave British rivals at a big disadvantage.

Sky News understands that banks based outside the European Union (EU) are able to approve bigger bonuses for employees of their subsidiaries in the trading bloc without recourse to external shareholders.

That means Wall Street and Asian banks can instantly consent to variable pay for senior staff worth double the level of their salaries, the maximum permissible under the new EU cap.

However, Barclays, HSBC and other British banks will have to put the same measure to their annual investor meetings. Without approval, they will not be able to award bonuses worth more than 100% of salaries in any one year.

UK banks such as Barclays may be left at a disadvantage over bonuses

Sources said that banks including Bank of America Merrill Lynch and Goldman Sachs had formally discussed the issue at their group remuneration committees "to ensure appropriate corporate governance". Both had already given approval for the 200% cap, they added.

In practice, the UK banks will not be disadvantaged if shareholders back motions at this year's AGMs allowing them to pay bonuses at the higher level.

However, the fact that international rivals have already been able to give staff certainty about their pay from this year onwards was proving to be a valuable recruitment tool, bankers say.

Sky News has revealed in recent weeks the details of plans by Barclays, Goldman, HSBC and Morgan Stanley to raise base salaries through monthly or quarterly allowances for senior staff.

George Osborne, the Chancellor, is aware of the loophole benefiting non-EU banks, aides said on Friday.

Mr Osborne is fighting the ratio cap in the courts, and one senior Treasury official said that while the Government is confident that it has "a decent legal case", recent defeats to Brussels had left it only mildly optimistic about emerging victorious.

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