FirstGroup Hit By West Coast Rail Shambles

The flawed bid process at the Department for Transport (DfT) which cost FirstGroup (FG) the West Coast Mainline rail franchise will also hit the company's shareholders.

In its first half results announcement FG confirmed it was holding dividend payments at last year's level as a result of the uncertainty sprung on the group by the Government's decision to suspend all franchise competitions while it investigates the botched process.

The bus and rail operator said its underlying pre-tax profits for the period fell 42.4% to £48.7m - largely due to the absence of a one-off exceptional gain made this time last year on its UK Bus pension scheme.

Revenues rose 2.6% to £3.25bn but it was the decision to freeze dividends to shareholders at 7.62p per share that caught the eye among the figures.

The Government tore up a deal last month to award the West Coast contract to FirstGroup in a humiliating U-turn that led to three civil servants being suspended.

FirstGroup's share price has fallen 40% during 2012

Ministers froze the award of other rail franchise competitions after the Department for Transport (DfT) said that "completely unacceptable" flaws had been uncovered in its handling of bids.

The decision was taken after Virgin Trains, the current operator, threatened court action after losing out in the bidding process.

Its founder Sir Richard Branson had labelled the award to FirstGroup "preposterous", claiming it would have threatened FirstGroup's financial future.

Virgin is continuing to run the London to Scotland route for a further nine months while the DfT plans a competition for an interim agreement.

Shares in FirstGroup have fallen more than 40% in 2012 - down 4% in early trading on Wednesday.

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Burberry's Profit Falls After Perfume Hit

Burberry reports a fall of almost 30% in profit in the first half of this year, but its revenue beat expectations despite a slowdown in demand from Asia.

It said pre-tax profit over the six months to the end September was £112m - which includes one-off items worth £61m - compared with £159m for the same period in 2011.  

But the luxury fashion brand's underlying business, if the one-exceptional charges are stripped out, performed better than expected, with pre-tax profit up 6% at £173m.

Last month the luxury fashion firm reassured investors that sales had steadied towards the end of its second quarter after issuing a shock profit warning in September.

Burberry's first-half revenue was up 6% to £883m, but growth slowed to 5% in the second quarter, compared with 11% in the first.

Its retail revenue also grew - up 9% to £577m - despite what chief executive Angela Ahrendts described as a "challenging external environment".

The exception items included a one-off charge related to the termination of a fragrance and beauty licence deal, as Burberry plans to bring its perfume business in-house. 

Ms Ahrendts said this marked a "significant brand and business opportunities".

"Our global teams are excited to partner with long-standing distributors, suppliers and customers to optimise these under-penetrated categories," she said.

"One consistent brand expression, leveraged across all categories, will underpin future growth in the beauty division and our existing core business."

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Riot Police On Alert Ahead Of Austerity Vote

By Anthee Carassava in Athens

With the US presidential elections concluded, markets have shifted attention to Europe's deepening debt crisis, as Greece - the epicentre of the continent's financial woes - prepared to vote for another round of austerity measures.

Faced with the toughest batch of budget cuts yet, crisis-crippled Greeks walked off work for a second day, taking to the streets in a flood of protests as lawmakers prepared for the controversial vote.

From flights to and from the country that were halted for three hours, to schools, shops and government agencies that remained shut, the 48-hour nationwide strike affected both public and private sector, paralysing an already anaemic economy.

Riot police have also been placed on alert as demonstrations are expected to peak in central Athens ahead of the midnight vote. Most anti-austerity protests turn violent.

The 216-page proposed bill includes 11.5bn euros (£9.2bn) of fiscal and structural reforms - the fourth batch of spending cuts to hit Greece since the financial crisis erupted here in late 2009.

While pundits and politicians anticipate the measures to pass, disagreement within the ruling three-party coalition have cast doubts over the outcome of Wednesday's roll call vote.

Failure to rubber-stamp the unpopular slate of measures - including tax hikes, salary and pension cuts, increased retirement ages and contributions - could block international lenders from disbursing a slice of 31bn euros (£24.8bn) in bailout funds to Greece.

That could push the tiny Mediterranean nation of 11 million into bankruptcy, with unforeseen consequences for Europe's single currency and the global financial system.

Prime Minister Antonis Samaras has already warned that Greece only has enough money to pay pensions, salaried and state expenses through to November 16.

Wednesday's parliamentary vote is seen as the biggest test of strength yet for Mr Samaras, scrambling to shore up support and dampen dissent within his shaky coalition.

Mr Samaras needs a majority of 151 votes from the 300-member Greek parliament to pass the controversial bill.

It comes as the European Commission (EC) forecast a 6% decline in Greece's economic output in 2012.

The EC added that by 2014, total Greek debt will reach 188.9% of GDP – although the country should have exited its seven-year recession, recording 0.6% growth.

Earlier this week though, Democratic Left, Mr Samaras' junior coalition partner, said it would vote against radical labour reforms that slash wages further and wipe out severance fees.

The Socialist Pasok party, also part of the coalition, faced rising dissent in its ranks with at least four lawmakers saying they would vote down the punishing measures.

"Eventually Mr Samara will get his victory," George Kirtsos, a leading political commentator in Athens, said.

"But implementation (of the measures) will be a problem. The government will have been seriously impaired."

With unemployment hovering at 25%, incomes declining by 35% and the country heading into a sixth year of severe recession, the measures have been an impossible sell for the government.

"They can vote for all the austerity they want," Dimitris Iakovou, a state paid electrical engineer said as he marched before parliament on Tuesday.

"But when they turn to us to adopt the measures, we won't. We simply cannot."

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Microsoft Ditches Chat Tool After Skype Deal

Microsoft has announced that its instant message chat tool is to be "retired" in favour of Skype's messaging service.

The software giant, which bought Skype for $8.5bn (£5.3bn) in May 2011, said Windows Live Messenger (WLM) would be turned off by March 2013, although it would remain available in China.

The move comes as Microsoft re-focuses its efforts on the software communications developer.

WLM, originally called MSN Messenger, was launched in 1999. Since then, photo messaging, video calls and games have been added to the basic text messaging package.

In a post on his Skype blog, Tony Bates, president of the Skype Division at Microsoft, wrote: "Skype and Messenger are coming together. We will retire Messenger in all countries worldwide in the first quarter of 2013 (with the exception of mainland China where Messenger will continue to be available)."

According to Tech Crunch, user numbers have been dwindling over the years.

In 2010, it had 300 million users, falling to 100 million currently, the website reported Microsoft as confirming. Meanwhile, Skype has reached 280 million users, according to Microsoft's latest earnings report.

News of the changes was confirmed by Skype on Twitter, saying: "Messenger and Skype are coming together as one. Update to Skype and your Messenger contacts will be there."

Mr Bates wrote in his blog: "Millions of Messenger users will be able to reach their Messenger friends on Skype. By updating to Skype, Messenger users can instant message and video call their Messenger friends.

"This effort started with the release of Skype 6.0 for Mac and Windows a few weeks ago, which allows you to sign into Skype using a Microsoft account. Now Messenger users just need to update to the latest version of Skype, sign in using a Microsoft account, and their Messenger contacts will be there."

The statement promised Messenger users who update to Skype the following features:

:: Broader device support for all platforms, including iPad and Android tablets.

:: Instant messaging, video calling, and calling landlines and mobiles all in one place.

:: Sharing screens.

:: Video calling on mobile phones.

:: Video calling with Facebook friends.

:: Group video calling.

Mr Bates added the changeover would be carried out over the next few months, and offered "information and help along the way". 

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Dixons 'May Hire Comet Staff This Christmas'

Dixons has postponed hiring temporary staff for over the festive period, to enable those employed by embattled rival Comet to apply.

Comet went into administration last week, raising questions about the future of its 6,000 jobs across 236 stores.

As such, Dixons Retail - which owns Currys and PC World - delayed for a week the process of hiring around 3,000 Christmas staff.

It has now posted a job advertisement for temporary sale advisors on its website.

Successful applicants will be required to "provide great customer service" and help customers "find the right products for them".

The chain said it had already had over 500 enquiries - both in store and online - about the positions from Comet staff.

"We have been amazed by how many Comet employees have already come to talk to us," Dixon's chief executive Sebastian James said.

A company spokesman added: "Clearly this is going to be a difficult Christmas for them and their families - we'd like to offer some hope."

Dixons said it hopes "a good number" of the jobs will become permanent positions in the long-run.

Comet's collapse comes a month after fellow high street stalwart JJB Sports closed down, resulting in 2,200 job losses.

If Deloitte fails to find a buyer for Comet, it will become one of the biggest retail casualties since Woolworths in 2008.

The chain was bought by investment firm OpCapita in February for a nominal £2.

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Bus And Tube Fares To Rise Above Inflation

London mayor Boris Johnson was today accused of trying to bury bad news as he confirmed above-inflation increases in tube and bus fares.

He announced a 4.2% average increase from January 2 2013 - and said the figure would have been higher had he not managed to secure additional funding of £96m.

The rise is 1% above the rate of RPI inflation when it was measured in July and used as a benchmark for the planned increase and matches the average rises facing national mainline season ticketholders.

Oyster card tube payments were to be frozen but that did not prevent a furious attack from Manuel Cortes, the leader of the TSSA rail union, who said: "Boris deserves a gold medal in cynicism. Not only does he try to bury bad news on the back of Obama's victory, he also jacks up fares at twice the rate of inflation.

"He also manages to break two election pledges into the bargain, by hiking charges for bikes as well as inflation-busting fare increases. He is the Pinocchio of British politics."

The mayor had also confirmed that charges for his "Boris bike" Barclays Cycle Hire scheme would double.

Such a move would see daily hire going up from £1 to £2, weekly access rising from £5 to £10 and yearly membership going up from £45 to £90.

The bike project has suffered financially as the majority of trips are made within the free 30-minute usage charge period but it was confirmed there would be no additional penalties for late return, non-return and bicycle damage.

Mr Johnson said: "Before the end of the year I will spell out further investment on the transport network that will help us to provide faster, more frequent and reliable journeys for Londoners, which is crucial to the economic development and growth that is so vital to our great city.

"This fares package is hugely important to our millions of passengers and I am very pleased to have secured nearly £100m that will help to keep fares as low as possible, and protect the important concessions that we offer the most vulnerable Londoners."

But Bob Crow, general secretary of the RMT transport union, said the mayor should have announced a fare freeze.

He explained: "This increase shows that we are still paying off a heavy price for the expensive failure of the PPP (public-private partnership) privatisation disaster.

"It also means that the mayor has no excuse for cutting staff and closing ticket offices as he's lumping on above-inflation fare rises.

"We believe there should be a policy of freezing fares to recognise the tough times people are facing, to increase the use of public transport and to help boost the economy."

His words were backed by Richard Hebditch, campaigns director at Campaign for Better Transport.

He said: "Earlier this week, Boris Johnson rightly received plaudits for his support for a living wage in the capital. His position on public transport is in stark contrast.

"By putting fares up above inflation, he is hitting hard-pressed families in the pocket simply for travelling to work."

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EU Budget: PM Defiant Over Planned Increase

David Cameron has attacked a "ludicrous" rise in the European Union budget ahead of showdown talks with Angela Merkel.

The Prime Minister will meet the German Chancellor at Downing Street - less than three weeks before a crunch summit to determine the next long-term spending plans for Brussels, and after suffering a backbench rebellion in the Commons over Europe.

Mr Cameron, who wants to stay in the EU, backs a real-terms budget freeze - a view shared by Mrs Merkel.

She was among European leaders to sign a letter in 2010 backing a real-terms freeze.

The PM said the arguments were now "even more powerful" for greater EU spending controls.

The Prime Minister is due to head to Brussels for EU budget negotiations

He vowed to demand "with vigour" that Mrs Merkel "stick to" her promise to freeze the budget and said British taxpayers should not have to foot the bill for the problems of the eurozone.

Speaking ahead of the talks during a Middle East trade tour, Mr Cameron said he was looking forward to "frank" discussions with Mrs Merkel.

"I understand the difficulties of the euro but the European Union budget is for all 27 members of the EU and we shouldn't be using the European Union budget to make up for difficulties and problems in the eurozone," he said.

"If the eurozone wants to have its own budget, it should have its own budget. And if they want to have fiscal transfers they can have fiscal transfers, if they want to channel more money to euro members that have difficulties, they can channel more money to euro members that have difficulties. But they shouldn't be using the European Union budget as a proxy for that."

MPs await the EU budget vote result in the House of Commons

On the pending EU summit, the PM said he would make "very robust and strong arguments" for a deal in Britain's interests, but added it was unrealistic to expect to get agreement.

He said: "They are proposing a completely ludicrous 100bn euro (£80bn)increase in the European budget.

"I'll be arguing for a very tough outcome. I never had very high hopes for a November agreement because you have got 27 different people round the table with 27 different opinions."

He continued: "I have always wanted at best a cut, at worst a freeze.

"I feel I am in there fighting for Europe's taxpayers, particularly British taxpayers.

"We have a rebate, we are keeping that rebate. But over and above that rebate I also want to see a good budget outcome for the UK."

Last week Mr Cameron suffered a humiliating Commons defeat when Tory eurosceptic rebels joined forces with Labour to back a non-binding motion demanding a cut to the EU budget.

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Taylor Wimpey Assembles Offer For Rival

Taylor Wimpey, one of Britain's biggest housebuilders, is poised to wade into the auction of Cala Homes, a Scottish rival, amid a revival of the sector's fortunes and a renewed appetite for consolidation.

I understand that Taylor Wimpey, which unveiled a three-fold rise in half-year profits in August, is considering tabling an offer for Cala, which during the 19th century became the first Scottish company to list on the London Stock Exchange.

Cala has been put up for sale by the taxpayer-backed Lloyds Banking Group, which was left with enormous exposure to the declining fortunes of the British housing market when Lloyds TSB rescued HBOS at the height of the 2008 banking crisis.

Lloyds owns a large chunk of Cala's shares, with the rest held by employees.

The company, which returned to the black last year for the first time since 2007, is valued at approximately £250m, insiders say.

Expressions of interest in Cala, whose footprint is predominantly in Scotland and the Midlands, are understood to be due next week.

The auction is expected to draw interest from a number of other rival housebuilders as well as private equity groups.

Cala is one of several housebuilders in which Lloyds is attempting to shed an ownership stake.

The bank, which is 41%-owned by taxpayers, has also put Countryside up for sale, and last year sold its shares in Crest Nicholson to Varde Partners, a distressed investment fund.

Crest is now being prepared for a return to the stock market.

Taylor Wimpey's interest in Cala reflects the transformation in housebuilders' fortunes, prompted partly by an array of Government measures to stimulate the sector. Analysts expect a flurry of takeover activity in the sector during the next 18 months.

The auction of Cala is being overseen by bankers at Rothschild.

Taylor Wimpey declined to comment.

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Pay Gap In Reverse As Women Work 'For Free'

The gender pay gap is so large at almost 15% that women will effectively work the rest of the year for free, it is claimed.

A study by the campaign group Fawcett Society suggests that, rather than improving, the pay and jobs prospects of women are going into reverse amid the Government's austerity measures.

Chief executive Ceri Goddard said: "At the same time, women's unemployment stands at a 24-year high and growing numbers of women have been forced into low paid, part-time and insecure employment - underemployment.

"Far from slowly moving forward, we now face going into reverse. If Government wants to avoid an unprecedented backwards step on its watch, they must take more action."

The conclusions were released as separate research for the Chartered Management Institute (CMI) found the average female company executive earns more than £400,000 less than a male counterpart over her career.

According to the institute, the average gender pay gap for UK executives is more than £10,000 annually.

It also claimed that women receive less than half the bonus payments given to men and 4.3% of female executives were made redundant in the past year, 1.1 percentage points more than male bosses.

It found that, while women now make up 57% of company executives, only 40% are departmental heads and fewer than one in four are chief executives.

The survey of more than 38,000 executives revealed a "substantial" gender pay gap at the higher end of the executive career ladder, the institute said.

"A lot of businesses have been focused on getting more women on boards but we've still got a lot to do on equal pay and equal representation in top executive roles," said CMI chief executive Ann Francke.

"Women make up almost three out of four at the bottom of the ladder but only one out of four at the top."

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World Stock Markets Fall After Obama Victory

World stock markets fell sharply on Wednesday afternoon amid concerns for the US and eurozone economies.

The Dow Jones in New York dropped 1.3% on opening - and fell over 2.4% in morning trading - in its first trading session since the re-election of President Barack Obama was confirmed.

Market analysts suggested there was concern among investors that he would struggle to thrash out a budget deal with a divided Congress with the looming so-called 'fiscal cliff' the most pressing problem.

A combination of higher taxes and government spending cuts will automatically take effect unless Congress agrees a new budget by January 1.

Economists warn that a failure to reach a concrete decision will push the world's largest economy back into recession.

The other major factor in the market falls was economic growth forecasts from the European Commission (EC) which were revised down on previous predictions.

The EC said it now expected GDP in the 17-country eurozone to contract by 0.4% this year and to grow by only 0.1% next year.

There was also bad news in the report for Britain in that it suggested UK output would decline by 0.3% in 2012.

The FTSE 100 closed down 1.58%, while the falls were steeper on the continent.

Germany's DAX lost 1.96%, the CAC 40 in Paris fell 1.99% - while Spain's IBEX was 2.26% down.

The turnaround in stocks markets was evident in currencies too as the euro lost ground against the dollar, trading a full cent lower.

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