Amazon Paid £10m Tax On £4.3bn UK Sales

Online retailer Amazon paid a UK corporation tax bill of £10m last year, despite sales in Britain reaching £4.3bn, it has been revealed.

Amazon.co.uk saw a 56% rise in profit to £17m during 2013, along with a 13% rise in UK revenue.

The company reports most of its European profit through a tax-exempt Luxembourg partnership.

Amazon has faced previous criticism for its complex tax structures, through which sales are logged in the European location despite goods being sourced, stored and sold within Britain.

In a statement to Sky News, the company insisted it paid all applicable taxes in jurisdictions that it operates within.

It said: "Amazon EU serves tens of millions of customers and sellers throughout Europe from multiple consumer websites in a number of languages dispatching products to all 28 countries in the EU.

"We have a single European headquarters in Luxembourg with hundreds of employees to manage this complex operation."

Other large multinationals, including Google and Starbucks, have been grilled alongside Amazon by MPs on the Public Accounts Committee.

Amazon.co.uk is funded by its Luxembourg-based affiliates.

Executies from Amazon, Google and Starbucks were grilled by MPs in 2012

The rates of such inter-company remuneration are usually agreed with the UK tax authority, but HM Revenue and Customs (HMRC) declined to comment on the tax paid by Amazon.

In 2013, intercompany fees paid to Amazon.co.uk Ltd rose 40% to £449m.

This led to Amazon's current tax bill for 2013 being its biggest ever.

"It's possible Amazon may have come under pressure from HMRC to adjust their inter-company agreements," Prem Sikka, Professor of Accounting at Essex University, told Reuters.

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Co-op Group Stake In Its Bank 'Falls To 20%'

Charting The Crisis At The Co-op

Updated: 11:05am UK, Tuesday 11 March 2014

The Co-operative grew from a small shop in Lancashire in the 19th century to a worldwide movement but the future of the modern day Group began to be threatened by a crisis in its banking arm.

:: April 24 2013 - The planned sale by Lloyds of more than 600 branches to the Co-op falls through.

:: May 10 - Co-op Bank rules out Government support after a warning from ratings agency Moody's that it might need taxpayers' money to plug a capital shortfall, which prompts its chief executive Peter Marks to resign. The bank's troubles mainly relate to bad commercial property loans, many acquired through takeover of Britannia Building Society in 2009.

:: June 5 - Co-op Bank appoints veteran banker Richard Pym as chairman to lead the lender's restructuring, replacing the Reverend Paul Flowers.

:: June 17 - Co-op Group unveils plan to force bondholders to help plug a £1.5bn capital hole at Co-op Bank, under which the group will retain a majority stake in the bank while bondholders will end up with at least a quarter of the bank's shares.

:: Oct 21 - Co-op bows to bondholder demands and agrees to hand them control of the bank in order to seal a rescue. The Group is left with a 30% stake.

:: Nov 6 - Reverend Flowers is questioned by Treasury Select Committee on the Lloyds deal and makes mistakes about Co-op Bank's finances. At one point he says it held £3bn of assets when the true figure was £47bn.

:: Nov 17 - Mail on Sunday says Reverend Flowers filmed allegedly arranging to buy cocaine.

:: Nov 20 - Prime Minister David Cameron promises inquiry into how Co-op Bank had been "driven into the wall" and asks why alarm bells had not rung earlier over alleged behaviour of Reverend Flowers.

:: Nov 22 - Police arrest Paul Flowers amid investigation into alleged supply of illegal drugs.

:: Dec 12 - Co-op Group appoints ex-Treasury minister Lord Paul Myners to review its operations for a token £1 salary.

:: Jan 6 2014 - UK financial regulators launch investigation into problems at Co-op Bank, which could lead to fines for the bank and its former directors.

:: Jan 7 - The Financial Conduct Authority (FCA) says it has no regrets about approving the Flowers appointment.

:: Feb 17 - Group chief executive Euan Sutherland launches a public poll on the Co-op's future direction.

:: Feb 26 - Co-op announces plan to sell 15 farms and its pharmacy business.

:: Mar 09 - Observer newspaper publishes leaked details of higher pay awards for Co-op bosses.

:: Mar 11 - Euan Sutherland tenders his resignation.

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The Week's Big Business Stories

Yo! Sushi Exploring Sale Options

Updated: 2:25pm UK, Wednesday 07 May 2014

Yo! Sushi's executive chairman Robin Rowland has told Sky News that the restaurant chain has appointed advisors for a sale.

From the four restaurants the Japanese chain had in central London in 2000, Yo! Sushi now has 1,650 members of staff and a total of 75 restaurants internationally.

Newly appointed chief executive, Vanessa Hall, has a mandate of preparing the eatery for a sale of £120m.

She takes over from Robin Rowland, chief executive at the sushi company for 14 years, who has now become executive chairman. He confirmed to Business Live presenter Dharshini David that stockbrokers Canaccord Genuity had been appointed as advisors for the future sale.

If a buyer is found at that price tag, it would mean a significant profit for the restaurant's parent group, Quilvest, which took over Yo! Sushi in 2008 in a £51m acquisition.

Vanessa Hall joined the company in September 2013 as chief operating officer. In her previous role at M&B, she was responsible for over 170 restaurants.

Last year, Yo! Sushi delivered earnings before interest of £9.2m, with like-for-like sales for the year up 4.6%.

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Powers To Seize Unpaid Tax Criticised By MPs

Plans to give HM Revenue and Customs (HMRC) the power to seize money directly from the bank accounts of those who owe the taxman money have been criticised by an influential group of MPs.

The Treasury Committee said it has "considerable concern" about the idea, which it warns could result in innocent people having cash taken from them.

HMRC estimates 17,000 people a year will be affected, and says money will only be taken after four demands for payment have been ignored.

The cross-party group wants further scrutiny of Chancellor George Osborne's debt collection proposals before they are implemented, describing a "lengthy and full consultation" as "essential".

Compensation and disciplinary action are suggested by the committee as extra safeguards.

Sky's Chief Political Correspondent Jon Craig, who described the report as "damning", said the criticism could mean the policy is delayed until after next year's election. 

George Osborne announced the plans in this year's Budget

The concerns are contained in a report on this year's Budget.

In the report, the MPs say the change could be akin to the reintroduction of the discredited Crown Preference Rule by stealth.

This gave HMRC priority access to assets when companies went out of business.

"Giving HMRC this power without some form of prior independent oversight - for example by a new ombudsman or tribunal, or through the courts - would be wholly unacceptable," the MPs said.

The Chancellor argues the Department for Work and Pensions has similar powers for chasing child maintenance payments.

But the committee said: "The parallel is not exact: in those cases, DWP is acting as an intermediary between two individuals."

"HMRC would be acting not as an intermediary between two individuals but rather in pursuit of its own objective of bringing in revenue for the Exchequer."

The chance of fraud and errors occurring is also highlighted, with the MPs warning this would be a "serious detriment" to taxpayers.

The report says: "This policy is highly dependent on HMRC's ability accurately to determine which taxpayers owe money and what amounts they owe, an ability not always demonstrated in the past."

A Treasury spokesperson said it was "important people pay the tax they owe on time", and added: "The proposed powers will give HMRC another tool to collect tax debt owed. 

"The current consultation includes a range of safeguards to ensure the power is tightly targeted."

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Co-op Group Stake In Its Bank 'Falls To 20%'

Charting The Crisis At The Co-op

Updated: 11:05am UK, Tuesday 11 March 2014

The Co-operative grew from a small shop in Lancashire in the 19th century to a worldwide movement but the future of the modern day Group began to be threatened by a crisis in its banking arm.

:: April 24 2013 - The planned sale by Lloyds of more than 600 branches to the Co-op falls through.

:: May 10 - Co-op Bank rules out Government support after a warning from ratings agency Moody's that it might need taxpayers' money to plug a capital shortfall, which prompts its chief executive Peter Marks to resign. The bank's troubles mainly relate to bad commercial property loans, many acquired through takeover of Britannia Building Society in 2009.

:: June 5 - Co-op Bank appoints veteran banker Richard Pym as chairman to lead the lender's restructuring, replacing the Reverend Paul Flowers.

:: June 17 - Co-op Group unveils plan to force bondholders to help plug a £1.5bn capital hole at Co-op Bank, under which the group will retain a majority stake in the bank while bondholders will end up with at least a quarter of the bank's shares.

:: Oct 21 - Co-op bows to bondholder demands and agrees to hand them control of the bank in order to seal a rescue. The Group is left with a 30% stake.

:: Nov 6 - Reverend Flowers is questioned by Treasury Select Committee on the Lloyds deal and makes mistakes about Co-op Bank's finances. At one point he says it held £3bn of assets when the true figure was £47bn.

:: Nov 17 - Mail on Sunday says Reverend Flowers filmed allegedly arranging to buy cocaine.

:: Nov 20 - Prime Minister David Cameron promises inquiry into how Co-op Bank had been "driven into the wall" and asks why alarm bells had not rung earlier over alleged behaviour of Reverend Flowers.

:: Nov 22 - Police arrest Paul Flowers amid investigation into alleged supply of illegal drugs.

:: Dec 12 - Co-op Group appoints ex-Treasury minister Lord Paul Myners to review its operations for a token £1 salary.

:: Jan 6 2014 - UK financial regulators launch investigation into problems at Co-op Bank, which could lead to fines for the bank and its former directors.

:: Jan 7 - The Financial Conduct Authority (FCA) says it has no regrets about approving the Flowers appointment.

:: Feb 17 - Group chief executive Euan Sutherland launches a public poll on the Co-op's future direction.

:: Feb 26 - Co-op announces plan to sell 15 farms and its pharmacy business.

:: Mar 09 - Observer newspaper publishes leaked details of higher pay awards for Co-op bosses.

:: Mar 11 - Euan Sutherland tenders his resignation.

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Apple 'Set To Buy Dr Dre's Firm For $3.2bn'

Apple is set to buy headphone maker Beats Electronics for $3.2bn (£1.9bn), it has been reported.

The Financial Times says the deal could be announced as early as next week, marking Apple's largest ever acquisition.

Founded by rapper Dr Dre and music producer Jimmy Iovine in 2008, the firm produces 'Beats by Dr Dre' headphones and also runs a music streaming service.

Beats Electronics received $500m (£295m) investment from Carlyle Group last September, valuing the company at more than $1bn.

It has been reported that Apple is contemplating a Spotify-like on-demand music service.

Apple is reportedly planning to take on music streaming service Spotify

Some technology analysts have speculated that the purchase plans are motivated by acquiring Beats' streaming arm rather than the headphones division.

Apple is sitting on a $133bn (£78bn) cash pile, and chief executive Tim Cook has said the firm has "no problem" with spending large sums of money to acquire top companies.

Apple and Beats have not commented on the reports.

Dre, a former member of NWA, compared his company to Apple in an interview in 2011.

He said: "We're trying to eventually be second to Apple. And I don't think that's a bad position."

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Thousands Of Cars Stolen Using Hi-Tech Gadgets

By Thomas Cheshire, Technology Correspondent

Tens of thousands of cars are being stolen or broken into every year by thieves using electronic hacking equipment, a Sky News investigation has found.

Last year half of all car thefts and vehicle break-ins in London alone were carried out without the use of force, according to the Metropolitan Police.

Instead criminals are believed to have used hi-tech devices originally designed for locksmiths to gain access to vehicles.

Commonly, the thieves use easily obtainable equipment that can intercept the signals from key fobs to get into cars or that plug into a car's on-board computers remotely.

Modern cars contain about 50 low-powered computers which criminals have learnt to take advantage of to steal vehicles in as little as 10 seconds without causing any damage.

Sky News has established that the devices can be bought cheaply online, from websites based mainly in Bulgaria. Video tutorials posted online can teach criminals how to gain access to popular models.

One of the sophisticated car-hacking devices

The problem was first exposed several years ago in certain models. But now police are warning that all modern makes are potentially vulnerable.

And for the first time, the Met has disclosed the growing nature of the threat. About 21,000 cars were stolen in the capital last year, according to the latest figures. A further 68,000 were broken into.

"Recent analysis of crime data suggests that almost half the total number of vehicles stolen in London are taken using this method, which can affect all manufacturers," the force said in a statement to Sky News.

"High-end vehicles are becoming more and more sophisticated. In turn so are criminals.

"Some organised criminals have access to technology that avoids the need to (physically break in). Vehicles are becoming more technologically advanced and the criminals are becoming more savvy towards that technology and they will develop."

The Met said it was working with manufacturers to protect drivers from having their cars stolen or broken into.

Car crime has fallen in recent years as manufacturers create even more secure vehicles.

But in countries closer to Bulgaria, like Sweden, Germany and the Netherlands, the crime rate has started to rise after years of decrease.

Hacking has led to increases in car crime on the continent

"We have every reason to believe that other European countries will be following suit this year and next," Mike Parris, head of the secure car division at SBD security, told Sky News.

"It is getting worse," he added. "The tools are becoming much more readily available. The price of them is falling. And they're operating much more quickly - you can re-program a key in a matter of seconds.

"All vehicle manufacturers are aware of the problem. It's fair to say some are doing more than others.

"Car manufacturers are acutely aware of the need to constantly make their vehicles more secure because they know criminals will adapt and develop."

The Met advises car owners to leave their cars in well-lit areas, to consider using steering, gear shift and pedal locks, as well as tracking devices.

One website found to be selling the devices did not respond to a request to comment from Sky News. Its homepage says: "All devices are sold for official use only!!! If you use them for any illegal purposes, this is your own responsibility!!!"

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Morrisons Reports 7.1% Plunge In Sales

Morrisons has reported a huge fall in sales - a day after its share price took a hit of more than 5% on the FTSE 100.

Like-for-like sales excluding fuel tumbled 7.1% in the 13 weeks to May 4.

The fall extended to 8.2% when fuel sales were included.

Total sales were down 4.2%.

The performance sparked further declines in its market value when the FTSE 100 opened.

Morrisons' share price performance is difficult for Dalton Philips

The supermarket chain recently embarked on aggressive price cuts of £1bn over three years - announced on March 13 - to take on the flight to discounters which has affected sales at the so-called 'big four' chains.

Its market share - along with that of Tesco and Sainsbury's - was measured yesterday to have fallen further while the likes of Aldi and Lidl continued to build business.

Morrisons was said to have had 11% of the grocery market at the end of April and Kantar Worldpanel, which compiles the figures, concluded the chain was the biggest loser among major grocers in terms of market share.

Upmarket operators Waitrose and Marks & Spencer have been gaining share too.

Chief executive Dalton Philips said: "The plans we set out at our results in March are on track.

"The reaction of our customers to the 1,200 'I'm Cheaper' price cuts we announced last week has been very positive.

Although it will take time for their full impact to be felt, we are confident that these meaningful and permanent reductions in our prices will enable our clear points of difference to resonate strongly with consumers."

More follows...

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Barclays: 20,000 Job Cuts In New Strategy

Barclays has confirmed around 20,000 job cuts under a new strategy building on its aim to become the 'go-to' bank.

The details - as reported by Sky's City Editor Mark Kleinman on Wednesday evening - were revealed following a review which aimed to reduce risk in its investment operation and cut excessive costs.

The bank's update pleased investors - with its share price rising more than 3% when the FTSE 100 opened for business.

Barclays confirmed 14,000 positions would be axed across the Group during 2014 - around half of them in the UK.

Barclays share price has failed to recover from the financial crisis

A further 7,000 positions will go in the investment bank up to 2016 - but 2,000 of those had been previously announced.

In addition to the job losses, the bank's chief executive Antony Jenkins confirmed the creation of Barclays Non-Core - a unit to house "assets which do not fit the strategic objectives" of the group.

Barclays said it would look to run down or exit Risk-Weighted Assets worth £115bn from the new unit.

Mr Jenkins said: "This is a bold simplification of Barclays. We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage".

He added that Barclays would become "leaner, stronger, much better balanced and well positioned to deliver lower volatility, higher returns, and growth".

More follows...

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Alibaba Confirms New York Share Sale Plans

Chinese online powerhouse Alibaba has filed for a public share sale in the United States - a flotation that could become one of the biggest seen in the country.

The company, which currently makes more money than Amazon and eBay combined, said its Initial Public Offering (IPO) in New York would seek to raise at least $1bn but the figure was seen by analysts as a random sum given its ambitions.

Market experts believe the target would more likely surpass the $16bn that Facebook and its early investors raised two years ago.

Alibaba did not say whether it would use the New York Stock Exchange or the tech-based Nasdaq for the listing.

The Group is a privately-owned firm which incorporates a search engine, business-to-business web portals, online retail sites, payment service platforms and cloud computing services.

It was started in 1999 with just $60,000 in the apartment of Jack Ma, a former English school teacher with no previous experience in business or technology.

Its growth matches that of China's own economy in terms of scale.

Alibaba enjoyed profits of $2.9bn on revenue of nearly $6.5bn through the first nine months of its last fiscal year ending in March.

That topped the combined earnings of $2.4bn posted during the same April-December stretch by eBay and Amazon.

A 40% investment by Yahoo! - since reduced to 26% - aided Alibaba's competitive position in China to the extent that eBay abandoned the country in 2006, just four years after breaking into the Chinese market.

Alibaba's success has provided a financial lifeline for Yahoo!, whose stake in the Chinese company is the main reason its own stock price has more than doubled in the past two years.

It is expected to sell more than 200 million shares at the time of the IPO - a core reason why many analysts believe the flotation will seek to the raise close to the record $18bn enjoyed by Visa.

However, the timing of the listing will be seen as crucial, with several high profile IPOs falling flat in recent times amid pressure on tech stocks over fears some service-based firms are overvalued.

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Sainsbury's Posts Slowest Growth For A Decade

The pressure on the major supermarket chains from discounters were underlined by Sainsbury's annual results which showed the slowest profits growth for a decade.

Underlying profit before tax at the chain rose 5.3% to £798m in the year to March 15 though like-for-like sales for the period were almost flat, edging up just 0.2%.

While the performance capped nine years of profits growth for outgoing boss Justin King, he warned conditions in the food sector were likely to remain challenging for the foreseeable future as consumers remained cautious.

Sainsbury's, which trails market leader Tesco and is battling Asda to be the country's second-largest supermarket chain, has credited a focus on quality and affordable own-brand products for its ability to grow sales.

Tesco, Asda and Morrisons recently announced big price cut campaigns in a bid to arrest sliding market shares and profits.

Discounters Aldi and Lidl have benefited at their expense while upmarket chains Waitrose and Marks & Spencer are also gaining
share.

Mr King, who will hand over the reins to commercial director Mike Coupe in July after 10 years in charge, warned: "While the general economic outlook is showing some signs of improvement, conditions in the food retail sector are likely to remain
challenging for the foreseeable future as customers continue to spend cautiously."

But the chain insisted it was confident its differentiated offer, which includes a focus on own brand products, the "Brand Match" pricing scheme and the Nectar loyalty card, would allow it to outperform peers in the year ahead.

Though Sainsbury's 16.8% market share is its highest for a decade, there are worrying signs for the firm after its nine year run of quarterly sales growth came to an end in its fourth quarter, when like-for-like sales fell 3.1%.

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Co-op Reform Critics Must Back Overhaul: Myners

Former City minister Lord Myners has warned the Co-operative Group will not survive unless members get behind his recommendations for reforming its governance structure.

His review's findings - which include the abolition of the group's 21-member board to be replaced by a slimmed-down body containing more corporate figures - will be put before the Co-op's AGM in Manchester on May 17.

The damning 184-page report seeks to win over traditionalists "stuck in denial" over the need for change after regional membership boards and independent societies voiced opposition to his interim proposals in March.

Lord Myners argues the Co-op is "not fit for purpose"

Lord Myners later quit as a Co-op director after just four months.

The review followed a tide of pain for the Group, which recently revealed an annual loss of £2.5bn - the bulk of that being put down to the continuing problems at the Co-op Bank now in the clutches of US hedge funds after its rescue from a near collapse.

Lord Myners said: "I have no doubt that the Co-operative Group can over the next five years reverse a decline that started over 50 years ago. But I am less confident that it will choose to do so.

"Much will depend on the small number of 'elected democrats', less than one in 10,000 of the group's entire membership.

"Will they put their self-interest to one side for the greater good, acknowledging the collective failure of the current board and the crippling deficiencies of the entire governance system?

"I would say that the Group board and many on the regional boards are still stuck in denial over this near ruinous failure of governance, whereas the vast majority of ordinary members feel justified anger."

Lord Myners said the resistance from traditionalists reflected a culture of entitlement within a small but highly active proportion of the membership.

He added: "This has undoubtedly created strong vested interests and a reluctance to rethink existing ways of doing things.

"I have myself witnessed repeated instances where there has been denial of responsibility, corrosive suspicion, deliberate delay and a practice of hiding behind 'values' in order to deflect or stifle criticism and protect self-interest."

He slammed the fact that the 15 lay directors on the current board were drawn from a total eligible pool of only 35 regional board members including an engineer, a plasterer and a retired deputy head teacher.

He said that apart from the lack of relevant skills and experience "this has not even been genuine democracy at work".

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Balfour Beatty Boss Quits On Profit Warning

The boss of infrastructure firm Balfour Beatty has resigned amid a profit warning that centred on the performance of its UK construction business.

Andrew McNaughton quit with immediate effect after a £30m shortfall was discovered in the UK operation - blamed on significant operational issues in its mechanical and electrical engineering businesses.

The statement - brought forward from a planned trading statement due next week - also cited delays in some of its major building projects.

As a result of the problems, the company said it now expected overall pre-tax profits for 2014 to be in the range of £145m to £160m.

The developments sparked a 16% fall in its share price in early trading on Tuesday.

Balfour, which operates in over 80 countries employing over 40,000 people, said it had conducted a strategic review and was looking into the possible sale of its engineering consultancy business, Parsons Brinckerhoff.

Steve Marshall, Balfour Beatty's Non-Executive Chairman, has taken over as Group executive chairman until a successor to Mr McNaughton is appointed.

Mr Marshall said: "Andrew has served the Group for the last 17 years in a wide variety of roles. I would like to thank Andrew personally and on behalf of the Board for his major contribution.

"We wish him well for the future", he concluded.

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Mystery As Apple Hires Top Medical Experts

Apple has hired a raft of senior medical experts, stoking speculation about what its next big product could be.

An analysis of LinkedIn profiles by the Reuters news agency found that the tech giant has been on a hiring spree for the past year.

It found that at least six top experts in biomedicine had been signed up by the company in that time, with more tipped to join the company.

Apple has also been hiring experts in sensor technology, an area which chief executive Tim Cook said is primed to "explode".

Some industry insiders believe the company will use an anticipated "iWatch" wearable device to move into areas such as nutrition and the monitoring of blood sugar levels.

Malay Gandhi, from venture capital firm Rock Health, said: "This is a very specific play in the bio-sensing space."

Mr Cook has promised new product categories this year.

Several Apple patents point to wrist-worn devices, and in February, Apple filed a patent for a smart earbud patent that could track steps and detect gestures of the head.

One mobile health executive, who asked not to be named, told Reuters that Apple is considering a full health and fitness services platform modelled on its app store.

Joe Kiani, from medical device firm Masimo Corp, said: "Some of the talent (Apple recruited) has access to deep wells of trade secrets and information.

"They are just buying people. I just hope Apple is not doing what we're doing."

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Barclays Investment Bank Drags On Profits

Barclays has reported a 5% fall in adjusted pre-tax profits for its first quarter, dragged down by a 28% drop in income at its investment bank.

It confirmed profits of almost £1.7bn as its Fixed Income, Currencies and Commodities (FICC) operation, contained within the investment bank, delivered a 41% fall in income on the same period last year.

The bank blamed the decline on subdued client activity and changes to its business mix - reforms that are due to be announced on Thursday when the results of a strategic review are made public.

The review of the investment operation could include thousands of job losses and the creation of an internal 'bad bank'.

However, in its results statement on Tuesday the bank said its retail, cards and corporate banking franchises all generated higher returns in the last quarter while operating expenses fell to their lowest level since 2009.

Group chief executive Antony Jenkins said "a continued strong momentum" in those areas was offset by a "significant decline" in FICC income.

"As previously announced, I will update the market on Barclays strategy to deliver improved and sustainable returns and growth for our shareholders on May 8", he said.

"This plan will address issues underlying the performance challenges we have recently experienced, including positioning the investment bank for the new operating and regulatory environment." 

The bank's share price fell almost 4% when the FTSE 100 opened for business on Tuesday morning.

Barclays did not make any new provisions for compensating customers who were mis-sold payment protection insurance (PPI) - saying its pot of money set aside for redress stood at £689m and overall complaint volumes had fallen.

Earlier this year, Barclays announced a 32% fall in annual profits to £5.2bn but stoked controversy by raising its bonus pool by 10% to £2.38bn.

The bank - like many of its UK competitors - has argued it has had to pay to retain staff that are crucial to future shareholder value.

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Miliband Urges Caution On Pfizer Takeover Bid

AstraZeneca: The Key Statistics

Updated: 11:23am UK, Friday 02 May 2014

American pharmaceutical giant Pfizer, which makes Viagra, has until May 26 to confirm its intentions in what could be Britain's biggest ever takeover. Here are some key statistics and history about AstraZeneca:

:: Pfizer's original bid earlier this year for AstraZeneca valued the company at just under £60bn.

:: Its boosted bid on May 2 valued it at £63bn.

:: AstraZeneca operates in more than 100 countries and employs 51,500 people worldwide.

:: Around 9,000 of its staff work in research and development (R&D).

:: It attracted £15.6bn of annual sales in year ending December 31, 2013, however this was down 24% in two years - from £20.4bn in 2011.

:: Reported operating profits have fallen from £7.8bn to £2.2bn, a fall of 71% over the same period.

:: Key to these falling sales and profits is the loss of exclusivity on some of its blockbuster drugs including Arimidex, Atacand, Crestor, Nexium and Seroquel IR. In 2013, the loss of exclusivity directly reduced revenues by £1.3bn.

:: The group forecast that, with new drugs coming online and its extensive acquisition activity, revenues will be back in line with its 2013 figures by 2017.

:: In the three years to 2013, it has completed more than 150 acquisitions including Pearl Therapeutics and Omthera Pharmaceuticals.

:: In 2013, it bought Amplimmune for £700m to help the group secure future products.

:: Analysts see the group battling to sustain itself in a more competitive industry, where cheaper generics eat into the profits on successful drugs post exclusivity.

:: The R&D cost and difficulty of developing new equivalent blockbuster drugs keeps growing.

:: Pfizer's previous proposal on January 5 included a combination of cash and shares which represented an indicative value of £46.61 per AstraZeneca share.

:: The bid included a substantial premium of approximately 30% to AstraZeneca's closing share price of £35.86 on January 3.

:: AstraZeneca was formed in 1999 when Sweden's Astra - which was formed in 1913 - merged with the UK's Zeneca.

:: Zeneca was created in 1993 following a de-merger from ICI.

:: Pfizer's revenues were $51.6bn (£30.7bn) in 2013.

:: Pfizer employs 78,000 people worldwide including 900 in Britain.

:: It makes Viagra and Chap Stick.

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Royal Mail Plots Bond Issue As Row Rages On

By Mark Kleinman, City Editor

Royal Mail is weighing a move into the bond markets to raise hundreds of millions of pounds even as the row over the postal operator's privatisation looks set to continue.

Sky News understands that the company has been holding talks with banks in recent weeks about a sizeable bond issue, which would be its first since last autumn's controversial stock market flotation.

Insiders said that discussions about the bond financing were at an early stage and that no decisions had been taken, but analysts predicted that the proceeds could be anywhere between £500m and £1bn.

The proceeds of a bond issue are likely to be used for general corporate purposes, and would allow Royal Mail to take advantage of favourable debt markets.

Supporters of Royal Mail's privatisation suggested on Sunday that the move was likely to be made easier by the fact that the company was no longer fully state-owned.

The Government continues to hold a 30% stake in the company, which at Friday's closing share price was worth approximately £1.8bn.

Last week was arguably the most uncomfortable for the Coalition since October's flotation.

Ed Miliband, the Labour leader, accused David Cameron of handing a select group of investors a "golden ticket" to reap profits from the privatisation at taxpayers' expense.

The Government disclosed the names of 16 so-called priority investors which influenced the decision to price the shares at 330p and which received larger allocations of stock through the IPO.

Sky News revealed that the sovereign wealth funds of Kuwait and Singapore were among these core shareholders, while the disclosure that Lazard Asset Management was also among them prompted further criticism.

That was because the advisory arm of Lazard had been retained by ministers to provide independent advice on the flotation. Its fund management operation was among those which sold shares almost immediately after they started trading, allowing it to claim an £8m profit.

There was, however, no suggestion of wrongdoing, and Lazard's UK chief executive, who testified before two select committees last week, insisted that the share trades were evidence that so-called 'Chinese walls' within investment banks were watertight.

The chief executive of the City watchdog said last week that the 38% rise in Royal Mail's share price on its first day of trading did not warrant an investigation.

A spokeswoman for the Department for Business, Innovation and Skills said the majority of the 16 core investors were still shareholders in Royal Mail.

"There was no agreement - gentleman's or otherwise - on the holding of Royal Mail shares by priority investors.

"As is standard practice for any flotation, we did not seek to lock any investors in as they would have paid less for a stock they could not trade."

Vince Cable, the Business Secretary, told MPs that he would not apologise for the pricing of Royal Mail's shares and repeated his assertion that the sell-off had been a success for taxpayers.

Royal Mail declined to comment on its prospective bond issue.

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Animal Testing Campaign Causing Industry Crisis

By Joe Tidy, Sky News Reporter

An international campaign to get airlines to stop transporting monkeys for drugs testing is causing a crisis in the research industry.

Every year more than 2,000 monkeys are flown to Britain to be tested on in over 3,000 procedures for illnesses like Parkinson's and dementia.

High-profile protests backed by celebrities including Chris Packham and Carol Royle have led to only one airline - Air France - willing to fly the animals from breeding farms including those in Mauritius.

The European Animal Research Association says the action has led to "a monopoly" and already pushed the price of research up.

Actress Carol Royle has joined the celebrity-backed campaign

Kirk Leech, from the organisation, says it is a "national embarrassment" that no British airlines are willing to fly the animals and says pressure on Air France is of great concern.

"The pharmaceutical industry is a sensitive one and if you can't get animals into Europe for research then those studies will move to other parts of the world," he said.

"There will be a flight of industry to the east and that will not benefit the European economy or the UK economy, and it certainly won't benefit UK university and other researchers that do this kind of work. An artificial ban on the importation of primates will do nobody any good."

Testing on primates is highly controversial

Testing on primates is a very small part of the animal research carried out in Britain  - less than 1% of the four million procedures involve monkeys - but it is extremely controversial.

Undercover filming at a monkey breeding farm in Mauritius has formed a major part of campaigns to convince airlines to stop transporting the animals.

The National Anti-Vivisection Society filmed monkeys being swung by their tails and tattooed in what they describe as "brutality".

Fleur Dawes, from the charity, said: "We would like to see Air France stop transporting primates altogether. It's completely unnecessary when we have advanced scientific techniques that can provide much better human data."

Researchers argue that biomedical alternatives are not as accurate or effective as primates.

Air France has defended its position

Air France said in a statement: "The transport of live animals is an activity assigned to Air France Cargo. With its wide experience in this field, the company holds an authorisation to transport animals issued by the Ministry of Agriculture certifying that Air France complies with current regulations.

"Meanwhile the company has established strict standards in terms of comfort and well-being to ensure animals optimal conditions of transport.

"Primates travel to private research laboratories as well as public research laboratories. This highly supervised activity is paramount in the development of research and medicine in France and Europe. As such, Air France management has received numerous letters of support from various public or private research institutes."

Today, drugs companies and scientists are meeting at the 2014 Animal Transportation Association Conference to discuss the issue - which is already having major implications on their work.

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US Jobless Drops To Lowest Rate Since 2008

The jobless rate in the United States fell to 6.3% in April, its lowest level since September 2008.

A total of 288,000 new jobs were created last month, more than a third up on the figure forecast by economists.

The Labor Department said job creation was picking up after the country's long winter freeze.

It said the upsurge in jobs has sent the unemployment rate down to 6.3% from 6.7% previously.

But the drop occurred because the number of people working or seeking work fell sharply.

In the US, people not seeking work aren't counted as unemployed.

American employers also added more jobs during February and March than those previously estimated.

The job totals for those two months were revised upwards by a combined 36,000.

A number of sectors in the US economy have been affected over winter, including construction and retail.

But job creation is now accelerating.

Official data showed employers added an average of 238,000 jobs during the past three months.

The figure was up more than 40%, from 167,000 in the previous three months.

Job creation also appeared to be widely spread across various sectors.

Hirings last month were broad-based and included higher-paying jobs.

The Labor Department said manufacturing gained 12,000 positions, construction added 32,000 while professional roles including accounting, engineering and technical services, were boosted by 25,100.

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Samsung Told To Pay Apple $119m In Patent Row

Samsung has been ordered to pay $119.46m (£70m) in damages to Apple after the South Korean company was found guilty of violating two patents on smartphone features.

In the latest lawsuit involving the two tech giants, a jury in a federal court in San Jose, California, ruled that Samsung had copied key features of the iPhone in creating its own line of smartphones, including universal searching and slide to lock.

But the verdict was a far cry from the $2.2bn Apple sought and the $930m it won in a separate 2012 trial making similar patent infringement claims against Samsung products, most of which are no longer for sale in the US.

In a counter-claim, the jury found that Apple had infringed one of Samsung's patents in creating the iPhone 4 and 5.

The jury awarded Samsung $158,400 - a fraction of the $6m sought by Samsung.

Brian Love, assistant professor at Santa Clara University's school of law, said: "Though this verdict is large by normal standards, it is hard to view this outcome as much of a victory for Apple.

"This amount is less than 10% of the amount Apple requested, and probably doesn't surpass by too much the amount Apple spent litigating this case.

"Apple launched this litigation campaign years ago with aspirations of slowing the meteoric rise of Android phone manufacturers. It has so far failed to do so, and this case won't get it any closer."

Apple said the ruling reinforced its stance that "Samsung willfully stole our ideas and copied our products."

Samsung representatives were not immediately available for comment.

The verdict marks the latest intellectual property battle between the world's top two smartphone makers.

For over three years, Apple and Samsung have sued each other in courts and trade offices around the world.

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Ex-Trade Minister Queries Pfizer Bid Pledges

By Mark Kleinman, City Editor

The trade minister in the last Labour government has questioned the integrity of a pledge by Pfizer to protect British jobs if it acquires AstraZeneca and suggested that a dedicated panel should be established to rule on takeovers of strategically important companies.

Speaking to Sky News, Lord Davies said Pfizer's commitment to locate at least 20% of its research and development workforce in the UK may be little more than a "chocolate promise".

The phrase was a reference to the takeover of Cadbury, the British confectionery group, by Kraft Foods of the US while Lord Davies was minister for trade and investment in 2010.

"Promises often not kept by chief executives are not enough," he said.

"The undertakings made by large corporations have to be legally watertight…One really has to question whether this type of bid should be allowed, when such critical UK research and scientific capability is at risk."

Lord Davies, a respected City figure who now holds seats on the boards of companies including Diageo and Chime Communications, also criticised the Coalition for negotiating directly with Pfizer executives about future jobs and tax commitments.

"My question would be: shouldn't their first port of call be to speak to AstraZeneca, not an international hostile bidder?"

Dozens of important UK-based companies were taken over by foreign rivals during the three Labour administrations which governed between 1997 and 2010.

They included BAA (now Heathrow Airport Holdings), P&O, Scottish Power and Thames Water.

But the former minister said that Pfizer's desire to reap tax benefits from an AstraZeneca takeover raised questions about whether the deal was "more about financial engineering rather than industrial logic".

"Is there a danger that Pfizer makes lots of chocolate promises? Kraft made promises which they did not fulfil, were rebuked, but (there were no consequences)."

Lord Davies said there was already too much "intrusion" into business by governments and that more would be damaging.

However, he added that the UK needed to "reflect on whether certain industries, certain research capability, certain companies, certain clusters are of such national importance that the country should have a view".

He said that one solution could be to establish a small board comprising politicians and business people, who in cases like AstraZeneca would provide their views about the merits of a foreign takeover.

"Either way we must protect ourselves and yet be open. That is the nature of the dilemma.  Leaving it just to the shareholders and boards may not be enough."

On Friday, Sir Roger Carr, the former chairman of Cadbury, who oversaw the takeover by Kraft, told Sky News that management and shareholders should usually be left to decide the fate of takeover bids unless there was a clear national interest and basis for politicians to be involved.

Pfizer's latest offer for AstraZeneca, worth £63bn, was rejected by the British company, which said on Friday that the proposal had "substantially undervalued" it.

Major City shareholders appear to be broadly supportive of the AstraZeneca board's stance, leaving Pfizer with the prospect of raising its bid again or going hostile with its existing offer.

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