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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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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Free School Cash Checks 'Not Good Enough'

Checks on how taxpayers' cash is spent on the Government's flagship free schools are not good enough, a Commons watchdog has warned.

In a damning report, the Public Accounts Committee (PAC) said the system relied too heavily on whistleblowers to expose problems.

The committee said standards of financial management and governance in some free schools were "clearly not up to scratch".

MPs pointed out that less than half of free schools submitted their financial accounts for 2011/12 on time to the Education Funding Agency (EFA), as they are required to do.

Problems at Al-Madinah School in Derby were among those highlighted by MPs

The committee highlighted recent problems at Al-Madinah School in Derby, Discovery New School in Crawley, West Sussex, which was closed down last month, and Kings Science Academy in Bradford.

These cases indicated the Department for Education (DfE) and EFA's systems for overseeing free schools "are not yet working effectively to ensure that public money is used for the proper purpose", according to the report.

It adds that both the DfE and the EFA "seem overly reliant on whistleblowers when problems should have been identified through their own audit and review processes".

PAC chairman Margaret Hodge said: "The department and agency have set up an approach to oversight which emphasises schools' autonomy, but standards of financial management and governance in some free schools are clearly not up to scratch."

Ms Hodge said that the Government needs to improve its systems for scrutinising free schools "so that we can follow the taxpayer's pound and satisfy ourselves that public money is being used appropriately".

According to latest figures, there are now 174 free schools open, with around 116 in the pipeline. It is estimated that around £1.1bn had been spent on the initiative by March this year.

The Department for Education said many of the committee's concerns were "misplaced", insisting oversight arrangements are more robust for free schools, with the Government intervening quickly to deal with failure.

A spokesman said there is a "clear expectation" for free schools to submit their accounts on time and if they do not do so without a good reason, they could face being served with an official Financial Notice to Improve.

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BA Owner IAG Stems First Quarter Loss

The owner of British Airways and Iberia said it has reduced first quarter losses through improved performance and cost-cutting.

International Airlines Group (IAG) said losses before exceptional items stood at €150m (£123m) in the three months to the end of March.

This compared to a loss after tax of €278m (£227m) in the first quarter of 2013.

Meanwhile, it saw revenue grow 6.7% to €4.2bn (£3.45bn) compared to the same period last year.

"Iberia has almost halved its losses from quarter one last year," IAG chief executive Willie Walsh said in a statement.

"The airline continues to benefit from restructuring and these figures don't reflect the impact of recent pay and productivity agreements which took effect in April," he added.

BA made an operating loss of €5m (£4m) in the first quarter compared to a €72m (£60m) loss a year ago.

"The airline has increased capacity within a controlled cost environment and benefited from the efficiency of its new Airbus A380 and Boeing 787 aircraft," the statement said of BA.

IAG also revealed a €30m (£24.5m) operating loss at its Veuling airline - the Spanish budget carrier it acquired last year.

IAG said that it expects to improve operating profit for the 2014 full year by at least €500m (£410m).

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When Did The Great Recession Really End?

The Great Recession is over. In fact, it probably came to an end last year - possibly even before that.

Now, I'll admit that the above isn't yet borne out by the official, or even unofficial, numbers.

According to the Office for National Statistics (ONS), by the end of the first quarter of this year UK gross domestic product (GDP) was still a few fractions of a percentage short of where it was at the start of the crisis in 2008.

As a result, most independent economists think we will almost certainly regain the pre-crisis peak this quarter - in other words, round about now.

So on this basis it's fair to say that in practical terms we are probably there or thereabouts already.

UK gross domestic product and non-oil output since the 2008 first quarter

In fact, if one looks at economic growth excluding the oil sector (itself a volatile element of GDP usually unrelated to broader macroeconomic trends), the pre-crisis peak was already regained last quarter.

But these early estimates of GDP are really only a rough approximation of how much income the economy is generating.

As fresh evidence comes to light in future months and years, the ONS will revise these early estimates.

And in most downturns the subsequent revisions have been upwards rather than downwards, often quite considerably.

The upshot is that it seems likely - extremely likely - that the ONS has overstated the scale of the economic downturn that happened in previous years.

So when the story of the 2008 recession is told a decade from now, the numbers will probably show that it was shorter and shallower than the initial terrifying numbers suggested.

Consider the 1990s recession. The initial ONS numbers suggested it involved a total 4% fall in national income, and that it took 15 quarters for the UK to regain its previous size.

Years later the ONS revised the picture, such that the downturn was about 2% deep, and lasted only 10 quarters.

The 1990 recession and the original vs ultimate official estimates

The fact that in recent years a whole range of unofficial indicators - consumer confidence, employment, activity as shown by purchasing managers indices - have been suggesting growth has been far stronger than the official data suggests that the same pattern is at play this time around as well.

Official GDP simply seems to be a lot lower than most other yardsticks of growth would suggest.

Now, none of this changes the fact that in terms of sheer severity the recent recession and depression - the National Institute classifies a "depression" as the period for which a country's output is below the pre-crisis peak - is the worst in modern history.

It has been a whopping 25 quarters - more than six years - since the recession began.

The previous record for longest slump was the recession which began in 1979 - where it took four years for the economy to regain its previous size. It would take an upwards revision of almost unprecedented scale to make this current downturn look better than that.

So while we will have to wait a little bit longer until the fat lady sings and the ONS declares the depression that began in 2008 to be at an official end, the likelihood is that that moment came quite a while ago.

But you'll have to wait another decade or so to see that confirmed!

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PM Defends Powers To Seize Unpaid Tax

Failing to collect unpaid tax would mean rates having to be hiked, David Cameron has told Sky News as he backed plans for cash to be seized directly from bank accounts.

The Prime Minister said non-payment of tax was "unacceptable", and insisted the move would have safeguards.

He was speaking after 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.

George Osborne announced the plans in this year's Budget

In their report on this year's Budget, 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.

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."

But Mr Cameron told Sky's Political Editor Adam Boulton: "I think we have a choice here. If we don't collect taxes properly and make sure pople pay their taxes properly, we look at the problems of having to raise tax rates. I don't want to do that."

"So I support the changes the Chancellor set out in the Budget, which is to really say that not paying your taxes is not acceptable."

He argued the move would be governed by "rules and regulations", and added: "The general principle, do we want to pursue every avenue of making people pay their taxes that they are meant to pay before we put up taxes - because that's the alternative - absolutely yes we do."

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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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Apple 'To Buy Dr Dre's Beats 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 and music producer Dr Dre and fellow music producer Jimmy Iovine in 2008, the firm produces 'Beats by Dr Dre' headphones and also runs a music streaming service.

Beats Electronics received a $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.

However, in a video posted by singer Tyrese Gibson, Dr Dre boasts that he is "the first billionaire in hip hop".

He then laughs as Gibson says: "Billionaire boys club for real, homie. The Forbes list just changed."

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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Crunch Time For Fox's As Burton's Eyes Merger

By Mark Kleinman, City Editor

Some of Britain's best-known food brands could be heading for common ownership as part of a merger of Burton's and Fox's, two of the country's biggest biscuit producers.

Sky News has learnt that Burton's Biscuits has approached the owner of Fox's about a potential takeover deal that would create a bigger rival to United Biscuits (UB), the UK's biggest manufacturer of the snacks.

Initial discussions between the two sides are already understood to have taken place, although they are at a very preliminary stage and may not lead to a deal, one source indicated on Friday.

A merger would bring together products such as Wagon Wheels and Jammie Dodgers, which are owned by Burton's, and the large portfolio branded using the Fox's name.

Securing a deal could appeal to the management of 2Sisters, the parent company of Fox's, which is seeking ways to reduce its significant debt burden, including through potential asset sales.

The value attributed to Fox's, which was formerly part of Northern Foods, is unclear.

The approach from Burton's comes six months after it was acquired by the Ontario Teachers' Pension Plan (OTPP), a giant Canadian pension fund, in a deal understood to have been worth approximately £350m.

At the time of that deal, the OTPP executive who led the Burton's takeover, Jo Taylor, said it had been carried out with a view to future takeover opportunities.

"We look forward to supporting Burton's outstanding management team to grow the business in the UK and further into overseas markets.  There are also many strategic acquisitions to consider in those territories that can enhance these ambitious growth plans."

OTPP has become a voracious acquirer of British companies in recent years, taking over Camelot, the National Lottery operator, and Busy Bees, the nursery chain.

Burton's is Britain's second-largest biscuits manufacturer by sales, behind UB, which is also owned by two private equity groups, Blackstone and PAI Partners.

UB will itself be put up for sale later this year, with Goldman Sachs and JP Morgan, the Wall Street banks, poised to be formally engaged to run an auction that will not begin before the autumn.

Based in Hertfordshire, Burton's traces its roots back to the mid-1800s when it was founded by George Burton.

It employs more than 2,200 people around the UK in three manufacturing facilities in Llantarnam, Edinburgh and Blackpool, a chocolate refinery in Moreton and a central distribution hub in Liverpool.

Burton's also produces Cadbury Biscuits, Lyon's and Maryland cookies, which compete with UB brands such as McVitie's digestives, Jaffa Cakes and Penguin.

If merger talks between Burton's and Fox's prove unsuccessful, OTPP is likely to draw up plans to bid for part or all of UB, although it would probably be prevented for competition reasons from doing so if a deal with Fox's goes ahead.

Spokesmen for Burton's, 2Sisters and UB all declined to comment on Friday.

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'Zombie Bank Accounts Cost Savers £4bn A Year'

Savers are losing more than £4bn pounds a year by having their money in poor-paying accounts, according to consumer group Which?

The group found more than a third of accounts closed to new customers, dubbed 'zombie accounts', paid 0.5% interest or less.

This compares with the best-paying Isa savings accounts which offer up to 2.75%.

Three-quarters of people surveyed thought banks did not do enough to help savers get a good deal.

Which? also found more than a third of people had not switched their main savings account because they did not think it would make a difference.

The group's analysis suggested there was a difference of £4.3bn a year between the amount savers would have received if they were all paid the average interest rate and the amount they would have received if they all had money in a top-paying account.

According to Which?, 82% of the 1,999 easy access savings accounts and cash Isas on the market in March were zombie accounts.

Nearly four in 10 (39%) of those accounts paid 0.5% interest or less and 16% paid 0.1% or less.

Which? said the savings market could be "confusing", with some accounts paying very different rates of interest despite having similar names.

It wants banks to move people's money into one default easy access or Isa account at the end of fixed terms.

Which? executive director Richard Lloyd said: "With many savers never switching because they don't think it will make a difference, savings providers should do more to help their customers get the best deal.

"They need to be clear about interest rates, let people know when bonus rates come to an end and make it easier for people to switch Isas."

Andrea Leadsom, the economic secretary to the Treasury, said: "The Chancellor announced a number of measures to help and support savers, notably increasing the cash Isa limit to £15,000, at this year's Budget.

"These changes will give savers more flexibility and choice."

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