Sony Books $1.3bn Loss Despite Strong Sales

Record Playstation and strong smartphone sales were not enough to prevent Sony recording a $1.26bn loss for its last financial year.

The Japanese electronics firm blamed costs associated with its restructuring for the performance, reforms which included the sale of its Vaio-brand PC division to a Japanese investment firm.

The company saw revenue rise almost 15% in the year to March - helped by a weak yen, sales for its new PlayStation 4 (PS4) video games console and the Xperia smartphone.

Last month, the firm said it had sold seven million PS4 consoles worldwide since its launch in late 2013 - ahead of Nintendo's Wii U and the Xbox One. 

Sony's smartphone sales have pleased investors

But the results statement highlighted a tough year for Sony's movie business.

"Sales for Motion Pictures decreased significantly year-on-year due to lower theatrical and home entertainment revenues as the previous fiscal year benefited from the strong performances of Skyfall, The Amazing Spider-Man and Men in Black 3," Sony said.

The results were released a day after Sony admitted it was not paying executive bonuses for a third consecutive year.

Sony's TV business has suffered from intense competition

It forecast a reduced loss for the current 2014/15 financial year having previously announced a further 5,000 job losses in its struggling computer and television units.

Sony President Kazuo Hirai's restructuring efforts included the $1bn (£600m) sale of the company's New York headquarters.

He has ruled out abandoning the ailing television unit, which he insists remains central to Sony's core business, despite the business suffering from razor-thin margins because of stiff competition from rivals.

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East European Migrant Influx Fails To Emerge

By Anushka Asthana, Political Correspondent

The number of Romanians and Bulgarians working in the UK has fallen by 4,000 since transitional controls on immigration were lifted on January 1.

Figures from the Office of National Statistics show 140,000 people born in one of the two countries were employed between January and March this year.

That is down from 144,000 between October and December, suggesting concerns about mass immigration following the New Year have been unfounded.

East European migrant numbers fell after border restrictions were relaxed

However, the long-term trend has been marked by an increase, with the figures up 28,000 compared to the same period last year.

Employment Minister Esther McVey said: "People were predicting the influx, we can see that has not happened."

Instead there has been a gradual increase, she said.

The Prime Minister has previously said that the numbers coming in since January have been "acceptable".

Last Autumn, he laid out a raft of tough new measures to curb immigrants' access to benefits amid fears of the increasing numbers.

UKIP have been benefitting electorally from fears around the issue.

The Conservatives will be relieved about the latest figures just weeks before European and local elections in which UKIP is expected to do well.

UKIP have seized on the overall trend in immigration - arguing that there are 292,000 extra people not born in Britain working in the UK since January last year.

That is a 7% rise and includes 168,000 more from the EU.

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Pfizer Boss: 'Merger Not A Risk To Lives'

Pfizer-AstraZeneca Takeover Explained

Updated: 4:04pm UK, Tuesday 13 May 2014

Pfizer has expressed an interest in taking over AstraZeneca but what does that mean for Britain and British jobs, and what can the Government do about it?

:: So is there a bid or isn't there?

It's more of a proposal than a bid, really. Pfizer has made it clear it wants to buy British-based AstraZeneca and that it will pay £63bn for it but there's no official bid.

AstraZeneca has made it plain it's not interested, at least not for that amount, and the management haven't even held talks.

:: If it doesn't want to be bought isn't that the end of the story?

No. Pfizer can raise its bid or launch a hostile takeover offer in which it appeals directly to AstraZeneca's shareholders to sell up – which they may do thinking it is a better deal. Kerching.

:: Why does Pfizer want AstraZeneca so much?

It's made it pretty clear that buying AstraZeneca would allow it to be domiciled in the UK so it can pay tax to the British Government.

Corporation tax in the UK is 20% from next year but in the US companies pay 38% of profits in similar taxes.

:: What will it mean for the 6,700 British AstraZeneca staff?

Uncertainty and potentially job losses - Pfizer's boss has admitted this.

There are real fears Pfizer will asset strip AstraZeneca leading to significant redundancies and substantial damage to British scientific research capabilities.

:: But I read Pfizer had guaranteed jobs

No, it has guaranteed it will base 20% of its worldwide research and development staff in Britain – not quite the same thing.

It won't say how many people or where in the UK they will be based, although it has said it will keep AstraZeneca's new Cambridge research facility.

:: Are the guarantees worth the paper they are written on?

In a way yes, in a way no. Under the Takeover Panel rules the guarantee is legally binding for one year although Pfizer insists it will honour its pledges for five years.

However, crucially, there is a clause that says these obligations could be changed "should circumstances significantly change" ie plenty of wriggle room.

In addition it takes 10 years for a drug to get from the lab to the doctor's surgery so a five-year guarantee means little to Britain's scientific researchers.

:: Can't the Government do something?

Ultimately no. The Enterprise Act only allows it to step in under the public interest test ie if it affects national security or financial stability – which it doesn't.

Business Secretary Vince Cable has suggested the law could be changed to include scientific research and development as public interest.

In any event the final say goes to the European Commission and it will make the decision based on competition.

:: And what about competition?

Don't forget while Pfizer is bigger than AstraZeneca, neither are small concerns. A merger will create a huge firm. It will represent the biggest ever takeover of a British firm by a foreign company.

There are very real concerns such big "big pharma" will completely ruin small science research outfits.

Remember AstraZeneca and Pfizer have sites all over this world, this is not just about the UK and US politicians have also raised concerns over jobs.

:: So what are the positives of a takeover?

Well Pfizer will be paying tax to the Government and investing in Britain - all good.

And it says that the combined power of both companies will bring improved treatments for conditions such as cancer, heart disease and diabetes.

In addition, it is investment in science, which is key to the Government's economic strategy.

:: What next?

MPs on House of Commons committees have been hearing from the firms and from unions worried about job cuts but ultimately that is just talk.

Under Takeover Panel rules having indicated its interest on April 26, Pfizer has until May 26 to make an official bid.

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British GSK Executive Accused Of China Bribery

By Mark Stone, China Correspondent, In Beijing

The British former head of GlaxoSmithKline's (GSK) China unit has been accused of bribery.

Chinese investigators claim Mark Reilly ordered his salespeople to bribe doctors and hospital officials to use the drug company's products.

A statement released by police in the central city of Changsha said that resulted in "illegal revenue" of more than £100m.

Mr Reilly and two Chinese executives have also been accused of bribing government officials in Beijing and Shanghai.

A Ministry of Public Security official told a news conference in Beijing that GSK departments "offered bribes to hospitals and doctors as well as personnel to boost their sales".

GSK responded to the developments with a short statement: "We take the allegations that have been raised very seriously.

"They are deeply concerning to us and contrary to the values of GSK.

"We want to reach a resolution that will enable the company to continue to make an important contribution to the health and welfare of China and its citizens."

The company's share price fell when the FTSE 100 opened for business on Wednesday.

Mr Reilly, who left China in July last year only to return in September to assist the investigation, has since been prevented from leaving the country.

A spokesman from the Chinese Public Security Bureau told Sky News that he remained in China but would not be drawn on whether Mr Reilly would now be arrested.

The British Embassy in Beijing, which has been across the allegations against GSK since they first emerged, referred all questions to GSK.

"We are aware of recent developments in the case but cannot comment whilst it is still ongoing.  We are in close contact with GSK". an embassy spokesman said.

China is a key growth market for large drug-makers, which are counting on the country's swelling middle class to offset declining sales in Western countries.

Before the scandal, GSK's China sales had risen 14% year-on-year in the three months to end-June, but revenue in the country plunged 61% in the third quarter and 29% in the final quarter of 2013.

The crackdown reflects a growing determination by Chinese authorities to stamp out corporate bribery and corruption, which can drive up prices for consumers.

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Property Boom Leaves Many Unable To Buy

By Ed Conway, Economics Editor

The proportion of English and Welsh homes selling for over £1m has more than doubled during the Great Recession, in the latest evidence of the property market boom.

In London a record 7% of all home sales listed by the Land Registry in the year to March were for £1m or more - a sharp increase from the 3% level when Britain slid into recession in 2008.

Overall, the number of homes sold for £1m or more over the past year has surpassed 10,000 for the first time - with just over 11,000 £1m sales in the year to March.

This compares to around 9,000 at the peak of the pre-crisis boom.

Sky News analysis has also uncovered the affordability gap between different local authorities has reached unprecedented levels, driven up by a combination of high house prices and falling real wages.

Darker areas show the higher house price to earnings ratios in England

The numbers come as the Bank of England governor warns its Financial Policy Committee will not target house prices but will tackle risks to stability within the housing market.

With the economy recovering faster than many had expected and house prices pushing ever higher, the Bank is widely expected to lift interest rates within a year - and may add further checks on housing market lending as early as next month.

Across the country as a whole, some 1.4% of homes sold in the past year went for £1m or over, another record, and more than double the 0.7% at the beginning of 2008.

Analysts said even these Land Registry figures may understate the extent of the £1m-plus property market, since they exclude many properties bought through corporate vehicles.

The vast majority of these sales - 7,692 of the 11,341 properties sold for £1m or over in England and Wales over the past year - were in London.

However, because wages have not kept pace with rising house prices, the capacity of families to afford bricks and mortar has diminished.

Although one closely-watched measure of housing affordability - house prices vs earnings - remains below its pre-crisis peak, it has risen to unprecedented levels in London.

In Kensington & Chelsea, average property prices hit 22 times the average earnings of local residents last year - a doubling in the past decade.

They are also at 20 times earnings in Westminster, and 12 times earnings in inner London as a whole.

By contrast, prices in Burnley remain 2.9 times the average earnings in the local area, down sharply from the 4 times earnings peak reached in 2007.

The statistics, which are derived from Land Registry and Office for National Statistics data, illustrate the scale of differences in house price performance throughout the country.

Although London boroughs dominate the top of the unaffordability rankings, there are exceptions.

For some tenants, the prospect of buying a property is ever less likely

Elmbridge in Surrey is Britain's sixth most unaffordable district, with prices 12.3 times local earnings.

Sitting at ninth and tenth in the rankings are Hackney and Brent, where although absolute prices are lower than many other parts of the capital, local earnings are also comparatively lower.

The upshot is that for many of those renting in such areas, the prospect of buying a property is becoming ever less likely.

The most affordable homes are primarily in Wales and in northern parts of England.

The figures underline the suspicion among economists that although ever less affordable house prices pose a serious social threat, they are not yet widespread enough to prompt a broad-based economic crisis in the UK.

The Bank has warned that, left unchecked, this could yet be a risk.

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Fans' Anger As Xbox One Drops Kinect Feature

Early adopters of Microsoft's Xbox One have reacted angrily after the firm slashed the price of the console by stripping out a major feature.

Sales of the device are flagging in comparison to the PlayStation 4, partly due to the console's higher price tag.

Microsoft had always justified the cost by pointing to the Kinect 2.0 motion sensor device, which until recently it called "integral to the Xbox One experience".

But soon it will offer a stripped-down version of the original Xbox One without the Kinect functionality. A version including the Kinect feature will still be available.

However, some fans fear that developers will no longer prioritise making use of the motion sensor features.

The Kinect hardware allowed users to control games using motion gestures

On the Xbox One forum on Reddit, one gamer said: "This is a slap in the face to early Kinect 2.0 adopters who were sold on the fact that every Xbox One owner would have one."

Another said: "So the Xbox One is on an equal footing in terms of price with the PS4 now, but with weaker hardware and nothing to set itself apart? How is this a good idea?"

One added: "They said over and over that there would never be one without the Kinect. I feel pretty betrayed."

The Kinect-less version of Xbox One will be available around the world from June 9.

In the UK the price will fall from £399 to £350, having originally launched with a price tag of £430.

Sales have lagged behind Sony's PS4, which had sold seven million units by mid-April, at least two million units ahead of the Xbox One.

Microsoft has also announced it will make it possible to watch Netflix and YouTube via the console without the need for a paid Xbox Live account.

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Sports Direct To Shed Pounds With LA Fitness

By Mark Kleinman, City Editor

It has changed the face - and economics - of high street sports goods retailing.

Now Sports Direct International is preparing to take on the health and wellbeing industry by snapping up dozens of gyms from LA Fitness.

Sky News has learnt that Sports Direct's ebullient founder, Mike Ashley, has sanctioned a move to acquire the leases on approximately 30 LA Fitness sites which were put up for sale as part of a restructuring of the troubled gym operator's finances.

He is said to have agreed to offer a parent company guarantee to LA Fitness landlords in order to fend off interest from rivals, and a deal is understood to be imminent, although one insider said on Wednesday that it could still fall apart.

If completed, it would mark the fulfilment of a long-held ambition of Mr Ashley, the owner of Newcastle United FC, to break into the lucrative health and fitness sector.

It is unclear how he plans to brand the sites that he takes on, but LA Fitness's continuing operation at just under 50 other locations means Mr Ashley is likely to choose to operate them.

Sources said that Sports Direct was attracted to the complementary nature of gym operations and sports goods retailing given its ownership of brands such as Dunlop, Everlast and Slazenger. It owns LA Gear, a Californian fashion and fitness brand.

If the LA Fitness deal is successful, Mr Ashley is likely to pursue an aggressive expansion of the business through other acquisitions, they added.

A transaction could be announced within days, although it will not be material from the perspective of Sports Direct's finances and the company may opt not to make a public statement.

LA Fitness, which had been owned by Mid Ocean Partners, a private equity firm, since 2005, has endured a difficult period amid the rapid growth of lower-priced competitors.

Earlier this year, two of these rivals, The Gym Group and Pure Gym, agreed a merger that created a nationwide chain with more than 100 sites.

Fitness First, another mid-market player, agreed a financial overhaul with its lenders last year, while LA Fitness undertook a series of company voluntary agreements (CVAs) with landlords, allowing it to revise the terms of its club leases.

Martin Long, LA Fitness's chief executive, said when approval for the restructuring was obtained in March: "We are pleased that the CVAs have been approved with strong support from landlords.

"We are now able to focus on the long-term future of LA fitness as we create a leaner, more operationally efficient business with the financial strength and operational flexibility to continue investing in facilities, equipment and technology across our retained portfolio of clubs to enhance the experience for our members."

The deal included a debt-for-equity swap which resulted in partial ownership of LA Fitness passing to lenders including the state-backed Royal Bank of Scotland.

A Sports Direct spokeswoman declined to comment.

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Interest Rate To Remain Low For 'Some Time'

Affordability Gap: Figures In Detail

Updated: 11:45pm UK, Tuesday 13 May 2014

The 10 most affordable and least affordable areas to buy a property in England and Wales.

They are listed by their affordability gap - the ratio between average house prices and average earnings of locals in each area.

The first figure is the average house price in that area, the next is the average local earnings, and the third is the affordability gap - calculated by dividing the first figure by the second...

Top Ten    

Kensington and Chelsea £935,000 £42,957  21.8  

Westminster £748,500   £38,355  19.5  

Camden £595,000   £37,372  15.9  

Hammersmith and Fulham £550,000 £34,778  15.8

Islington £450,100 £34,876  12.9 

Elmbridge £444,500 £36,161  12.3 

Wandsworth £450,000   £36,618  12.3 

Richmond upon Thames £475,000   £38,860  12.2 

Hackney £378,500   £31,023  12.2 

Brent £340,000  £27,950  12.2 

Bottom Ten   

Wigan £105,000   £25,589  4.1

Neath Port Talbot £93,750   £23,462  4.0

Stoke-on-Trent £88,000   £22,620  3.9

Merthyr Tydfil £86,000   £22,396  3.8   

Rhondda, Cynon, Taff £93,000   £24,872  3.7

Pendle £85,000   £22,932  3.7

Barrow-in-Furness £92,500   £27,794  3.3

Blaenau Gwent £70,000   £21,034  3.3

Copeland £115,000   £35,105  3.3

Burnley £71,500   £24,612  2.9 

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Quarterly Jobs Growth Hits 43-Year High

The unemployment rate has hit its lowest level since February 2009, helped by a record number of people finding work over the quarter.

The figures - released by the Office for National Statistics (ONS) - showed a record 283,000 people secured a job in the three months to March, with self-employment driving the performance.

According to the ONS, more than 30.4 million people are now in work - the highest since records began in 1971.

It helped total unemployment fall by 133,000 to 2.21 million during the period, giving the UK an unemployment rate of 6.8%.

The total number of self-employed rose to a record 4.5 million. 

But there was disappointing news on pay in the figures.

Average earnings increased by 1.7% in the year to March, slightly ahead of the latest CPI inflation rate of 1.6% but below the expectations of economists.

The figure is closely-watched by the Bank of England for evidence people will be able to absorb rising mortgage costs when it begins to raise bank rate - currently expected in Spring 2015.

The ONS also confirmed the 18th consecutive monthly reduction in Jobseeker's Allowance claimants - by 25,100 in April to 1.12 million. 

The performance was welcomed by the Government.

Minister for Employment Esther McVey said: "As the recovery takes hold, more people are able to get a job or set up their own business and become the employers of tomorrow.

"Each and every person who has made a new start or hired someone new is helping to make Britain a more prosperous and confident place to be.

"We will continue to support those in and out of work who want to get on and fulfil their ambitions for a more secure future."

Prime Minister David Cameron tweeted:  "There's more to do, but it's welcome unemployment is down again. More jobs means more financial security for people."

GMB general secretary Paul Kenny argued people were yet to feel the effects of recovery.

He said: "GMB members welcome the continuing recovery but recognise that there is a very long way to go to climb out of the
hole caused by the recession.

"There is a growing recognition that, as a result of demographic factors, GDP (gross domestic product) per head is still 5.8%
below 2007 levels.

"That is the root cause of average earnings being down 13.8% in real terms since then. The pay of the bottom half of the workforce is still being squeezed.

"Public sector workers' pay is being frozen or increasing less than inflation."

Shadow work and pensions secretary Rachel Reeves added: "While this fall in overall unemployment is welcome, today's figures show that young people and the long-term unemployed are being left behind.

"Under David Cameron over 850,000 young people are unemployed and there are still over 100,000 more people out of
work for two years or more than in 2010."

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Banks Warn Regulator On 'Illegal' Bonus Rules

By Mark Kleinman, City Editor

New rules that would force bankers to wait more than a decade to get their hands on bonuses would breach "the principle of natural justice" and leave lenders exposed to costly legal challenges, a trade body has warned.

In a document obtained by Sky News, the British Bankers' Association (BBA) argued that plans to apply clawback provisions retrospectively would be illegal in Brazil, France, Germany and Mexico, countries in which UK-based lenders such as HSBC have a substantial presence.

The BoE's proposals would force banks to reclaim variable compensation from senior employees for up to six years after it has been handed over and spent.

Critics argue that they would amount to the toughest regime in the world for governing bank pay and would go well beyond the remit recommended by last year's Parliamentary Commission on Banking Standards, the BBA said.

The PRA already has the power to force firms to cancel unvested bonuses through a system known as malus.

The body's submission to the BoE's Prudential Regulation Authority, which has been consulting on clawback since March, added that even in the UK, where they would not technically be illegal, they would still be subject to challenge.

"Whilst [it] may be legally possible the actual ability to enforce clawback will be dependent on the decision of a court to enforce clawback clauses in employment contracts.

"For instance it could be argued that such repayment provisions are unenforceable on legal grounds because they are a 'penalty clause'; and/or a restraint on trade; and/or counter to the doctrine on forfeiture," the BBA said.

The BBA said that courts may not be willing to enforce the new rules where an employee had only been "tenuously involved" in wrongdoing, or where the reclamation of bonuses was the result of a broader failure of risk management at a bank.

In such cases, it added, the costs of legal challenges could exceed the value of the bonuses which banks were attempting to claw back.

"For this reason we think a de minimis amount should be established, probably by the firm but subject to the PRA's agreement, below which clawback should not be sought," the BBA said.

The UK also risked exacerbating the perception of an "unlevel playing field" between British banks and their international counterparts, increasing the likelihood that star performers would defect.

"Claw-back and indeed malus are not practices that are prevalent in many markets and there is little prospect of other regulators in, say, Asia adopting claw-back provisions" the document said.

To reduce disparities, the regulator should amend its plans to start the 'clawback clock' ticking at the point at which bonuses are awarded, rather than the point at which they vest.

Some lenders have five-year deferral periods for variable pay, meaning that under the new rules recipients would not be sure that the money could not be taken from them for eleven years.

The BoE consultation process closed earlier this week, and will lead to the publication of  during the next few months.

Both the BBA and the BoE declined to comment.

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