Virgin Galactic Has First Rocket Test Flight

Virgin Galactic's passenger spacecraft has completed its first rocket-powered flight in a trial run described by Sir Richard Branson as historic.

SpaceShipTwo flew above California's Mojave Desert at an altitude of 56,000ft after being released from a carrier aircraft.

The rocket-powered portion of the flight lasted 10 minutes and the flight marks the start of the final stage of testing ahead of a full space flight, which is planned for the end of the year.

Virgin says it has so far taken $70m (£45m) in deposits from some 580 individuals hoping to become the first space tourists.

Sir Richard, who founded the project, was on the ground to witness the test flight and said it was "history in the making".

Sir Richard Branson congratulated the flight's test pilots

"The first powered flight of Virgin Spaceship Enterprise was without any doubt, our single most important flight test to date," he said.

"For the first time, we were able to prove the key components of the system, fully integrated and in flight."

As planned, the rockets burned for 16 seconds and propelled SpaceShipTwo to Mach 1.2, Virgin said in a statement.

Similar testing now lies ahead for the aircraft, which promises to take six paying passengers and two pilots on a suborbital space flight, complete with several minutes of weightlessness.

Would-be "astronauts" will have to save hard though - ticket prices are $200,000 (£129,000).

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Jobs Boost At Whitbread As Costa Sales Soar

Hotel and restaurant group Whitbread has outlined expansion plans as it reported strong sales and a rise in annual profits.

The group, which owns Costa Coffee and Premier Inns, said it created 3,000 UK jobs over the last year - and plans to hire 12,000 more people over the next five years.

It said it hoped to increase the number of Premier Inn hotel rooms in the UK by 45% to 75,000 by 2018, and double sales at Costa Coffee to £2bn.

Over the 12 months to February 28, like-for-like sales of at the coffee chain increased by 6.8%, although Whitbread's results did not say whether the success came at Starbucks' expense.

Its US rival has been criticised for the amount of corporation tax it pays in the UK.

Whitbread, which employs 40,000 people, opened 324 new Costa stores over the year - 186 of which were in Britain.

It comes as the group, which also runs the Beefeater and Brewers Fayre pub restaurant chains, reported an 11.4% rise in underlying pre-tax profit to £356.5m.

Chief executive Andy Harrison described the results as "excellent" and outlined the company's expansion plans.

"In April 2011 we established ambitious milestones to grow Premier Inn UK rooms by 50% to 65,000 rooms and to double Costa's worldwide system sales to £1.3bn,"  he said.

"We are well on track to achieve these milestones and have announced new 2018 milestones to grow Premier Inn UK by 45% to around 75,000 rooms and to double Costa's system sales to around £2bn. 

"This exciting organic growth opportunity, together with a clear focus on returns, will continue to create substantial shareholder value."

He added that so far in this financial year, trading has been in line with its plans.

"Premier Inn has maintained its positive momentum," he said. "The unseasonably cold weather has held back sales within restaurants, and benefited Costa."

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Tax: Five To Be Charged Over '£125m Fraud'

Five people are to be charged in connection with a film industry-based tax relief fraud that allegedly cost the public revenue around £125m, the Crown Prosecution Service says.

The CPS confirmed the charges follow an investigation by HM Revenue and Customs (HMRC).

CPS deputy head of fraud Andrew Penhale said: "It is alleged that, between 1 January 2002 and 11 July 2011, a tax relief that allows investors in the British film industry to offset losses against other tax liabilities was abused and dishonestly marketed in order to cheat the public revenue.

"The evidence suggests that the value of allowable losses was falsified, that there was a conspiracy to defraud investors and that documents were falsified for accounting purposes."

"Keith Hayley, Robert Bevan, Charles Savill, Cyril Megret and Norman Leighton will each face three charges: conspiracy to cheat the public revenue, conspiracy to defraud and conspiracy to falsify documents.

The CPS said the charges are contrary to section 1(1) of the Criminal Law Act 1977, section 17 of the Theft Act 1968 and Common Law.

Mr Penhale added: "This decision to prosecute was taken in accordance with the Code for Crown Prosecutors.

"We have determined that there is a realistic prospect of conviction and that a prosecution is in the public interest.

The CPS said all five defendants are due to appear before Birmingham Magistrates' Court on June 18.

"Hayley, Bevan, Savill, Megret and Leighton are now the subject of criminal proceedings and have the right to a fair trial," Mr Penhale said.

He added: "It is extremely important that nothing should be reported which could in any way prejudice these proceedings."

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Lloyds Shares Shoot Up As Profit Rises

The chief executive of Lloyds has said the bank made "substantial progress" in the first quarter, as it reported a sharp rise in profit.

The bank, which is 39%-owned by the Government, said underlying profit hit £1.48bn in the first three months of the year - up from £497m a year ago.

It did not put aside any further provisions to cover the costs of mis-selling payment protection insurance, and bad loan charges fell over the period.

Lloyds' shares rose by 5% after the results were published, and by lunch time were over 4% higher.

Antonio Horta-Osorio becamse head of Lloyds Bank in March 2011

The bank also said it was pushing ahead with plans to float 630 of its branches, after a deal to sell them to the Co-operative fell through last week.

But it added that the bill for offloading the branches - which is already close to £1bn - was expected to hit £1.3bn.

Lloyds is being forced to sell off the network - known as Project Verde - by European regulators in return for the £20bn of state aid it received at the height of the 2008 banking crisis.

The bank said it cut costs in the first quarter by 6%, and expected to reduce costs to about £9.15bn in 2014 - a reduction of £2bn from 2010.

Lending returned to growth in the first quarter, the bank added, as demand from businesses increased.

The bank said lending to small and medium sized businesses was up by 4%, and it lent £1.5bn to over 13,000 first time buyers over the three month period.

Lloyd's boss Antonio Horta-Osorio, said: "We made substantial progress again in the first quarter.

"Underlying and statutory profits improved significantly, and our core loan book returned to growth earlier than expected.

"Margin increased, and costs and impairments continued to fall rapidly, with this progress underpinned by a further strengthening of our balance sheet."

He added that the bank is delivering "real benefits" to customers and shareholders, and was "further ahead" with its transformation plan.

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Airport Charges To Be Reduced In Shake-Up

Three London airports have been told to reduce the amount of money they charge airlines in take-off and landing fees.

The move by the aviation regulator should limit the fare rises imposed on passengers using Heathrow, Gatwick and Stansted airports.

The Civil Aviation Authority (CAA)'s proposals will see airlines charged much less for using the airports between 2014 and 2019 than they were between 2009 and 2014.

The regulator said that over the period the charges should be capped at the RPI rate of inflation minus 1.3%.

This is significantly less than Heathrow's charges between 2009 and 2014, which were RPI plus 7.5%.

Heathrow's rise in profit was boosted by an increase in its airline fees

The airport's bosses had proposed an increase in fees from £19.33 per passenger in 2012/13 to as much as £27.30 in 2018/19.

It comes after Heathrow - which is controlled by Spain's Ferrovial - reported a 12% rise in profit in 2012 to £1.3bn - driven mostly by an increase in the fees it charges airlines.

But the CAA said it had "found clear evidence of substantial market power" at Heathrow and "after a decade when prices have risen ... is now looking to encourage further investment whilst improving value for passengers in other ways".

The regulator proposed a more flexible system for Gatwick, but said that if the airline did not make acceptable proposals itself, charges would be capped at RPI plus 1%.

This is lower than the RPI plus 2% regime that has been in place at the West Sussex airport between 2009 and 2014.

And at Stansted, the CAA said its regulation would take the form of monitoring charges and service quality - but would become stricter "unless prices at Stansted reduce over time".

Gatwick bosses said the CAA's proposals were "too demanding"

The chief executive of CAA, Andrew Haines, said protecting consumers was the "core focus" of the proposals.

"Few passengers flying from Heathrow, Gatwick and Stansted fail to notice their differences, so it should be no surprise that our regulatory approach also differs at each airport," he said.

"The proposals we publish today reflect their individual circumstances, ensure passengers are protected when they travel, and allow for continuing improvements in service and competition."

But Heathrow bosses questioned whether the proposals were "a risk worth taking".

"To stay competitive with overseas hubs like Amsterdam, Paris, Frankfurt and Dubai, Heathrow has invested £11bn over the last 10 years ..."

"Over the same period returns to shareholders have fallen well below the level anticipated by the regulator," a company statement said.

British Airways' Willie Walsh said the proposals did not go far enough

"Our first impression is that a 5.35% return on capital will put passenger service at risk by not attracting the necessary investment in Heathrow for the short, medium and long term."

Gatwick said the suggested RPI plus 1% formula was "too demanding and based on unrealistic assumptions".

"The CAA must not hold us back through imposing heavy-handed regulation, red tape in the form of a licence and an inflexible price control, but should allow us to build on this success (of the last three years)," chief executive Stuart Wingate said.

Stansted said it would study the details of the CAA's plans before responding.

The proposals - to be finalised next year - were broadly welcomed by airlines, which have been arguing against what they see as excessive charges.

The Board of Airline Representatives - which represents 80 airlines - said it was encouraging that the CAA has listened to industry concerns over the need for a more flexible approach.

"We are cautiously optimistic that the final regulation will better meet the needs of consumers and the airline industry," chief executive Dale Keller said.

But Willie Walsh, the chief executive of British Airways parent company IAG, said the proposals did not go far enough.

"Heathrow airport is over-priced, over-rewarded and inefficient and these proposals, which will result in an increase in prices, fail to address this situation," he said.

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US To Probe Profit From Twitter Hack Hoax

The Securities and Exchange Commission (SEC) is investigating the hacking of the Associated Press (AP) Twitter account, which temporarily wiped $136bn (£88bn) from the New York Stock Exchange.

The probe will examine whether anything "nefarious" took place in the markets before and after the chaos.

The hoax tweet was sent from the official AP account to two million followers which reported explosions in the White House and that President Barack Obama had been injured.

The message was re-tweeted 3,000 times and the Dow Jones plummeted 150 points within three minutes.

The hoax tweet claimed explosions had been reported in the White House

Almost immediately AP journalists warned their account had been hacked by posting a message on their corporate Twitter feed.

But it took another three minutes for enough investors to discover the tweet was false and the markets to recover.

The SEC and the Commodity Futures Trading Commission (CFTC) will conduct an investigation to discover whether anyone had inside knowledge of the hack and made a profit as a result.

"We're looking at who was trading right before and right after that (hoax tweet)," Bart Chilton, a member of the CFTC, told The New York Post.

"This is a full-fledged effort to look at this period of time to make sure that nothing nefarious in markets took place."

Responsibility for the hack was initially claimed by a group calling itself the Syrian Electronic Army (SEA) though they were unable to supply proof they were behind the attack.

The SEA has previously claimed credit for hacking the websites of Sky News Arabia and Al Jazeera Mobile, the websites of Fifa and Fifa president Sepp Blatter.

The FBI has confirmed it is looking into the AP hack and financial experts predict America's National Security Agency and Department of Homeland Security will also open inquiries.

Hackers regularly target the Twitter accounts of news organisations, with online activists backing the regime of Syrian President Bashar al Assad claiming responsibility for hacking an AFP Twitter account in February.

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WPP To Cut Sorrell Pay After Investor Talks

By Mark Kleinman, City Editor

Sir Martin Sorrell, the chief executive of WPP Group, was paid a total of £17.6m in 2012, reflecting a jackpot reward for the marketing services provider's resurgent share price performance.

The package, which was disclosed in the company's annual report today, includes an £11.4m award from a long-term co-investment incentive plan that paid out for the period 2008-2012, and which was announced several weeks ago.

Sir Martin's package will cement him as one of the best-paid bosses in Britain's blue-chip share index in 2012, a year in which WPP made record profits and saw the company's share price reach an all-time high.

The payouts are, though, likely to spark opposition from some shareholders, who will be keen to digest the overhauled incentive structures on offer to Sir Martin and his senior executive colleagues.

The new proposals will see Sir Martin's target pay return to that of the period 2007-2010, a company spokesman said. Between 2011 and 2013, his potential total pay will have been reduced by a third, the spokesman said.

The WPP chief has agreed to a £150,000 cut to his annual salary of £1.3m, while the annual report shows that the company has also cut the prospective reward from short-term bonuses and axed a contentious long-term plan, known as LEAP. Pension contributions made to him by WPP are also being reduced.

Under the new schemes, Sir Martin will be eligible for a maximum annual bonus of £5m, down from £6.5m last year. He will also be eligible for a maximum long-term award of almost ten times his basic salary, equating to a total of roughly £50m every five years but equating to a reduction of 23% on the earlier scheme. The maximum would only pay out if WPP outperforms over a five-year period and delivered substantial returns to all shareholders.

The measures through which WPP's remuneration committee will determine future payouts to Sir Martin and colleagues are being tightened, with return on equity and earnings per share targets being added to the long-term plan.

At last year's annual meeting, approximately 60% of shareholders refused to back the remuneration report after Sir Martin received a near-£12m pay package in 2011. The figures just published show that his total remuneration rose 47% in the ensuing 12 months, although a spokesman said the new proposals reflected the consensus views which emerged from the consultation process.

As Sky News revealed last night, WPP is also recruiting a quartet of new non-executive board members in response to investors' requests for a refreshment of the board. Jeffrey Rosen, the non-executive director who chairs the remuneration committee, is stepping aside from that role after nearly nine years in accordance with corporate governance guidelines.

Mr Rosen and Philip Lader, WPP chairman, have led negotiations with shareholders who own roughly 40% of the company, and many of them are understood to have been broadly supportive of the outcome.

"The socialist in me asks what Martin is playing at, while the capitalist in me recognises that he has done a phenomenal job," one leading shareholder told Sky News today. "I'm afraid it's the capitalist that wins out."

As the owner of roughly 1.5% of WPP's shares, Sir Martin will also benefit from an anticipated increase in the company's dividend payout ratio.

The company also published data showing that over a 20-year period WPP has outperformed the FTSE 100 index on total returns to shareholders – comprising share price performance and dividends – by 8.4-to-one. It has also outperformed its major international competitors, such as Publicis of France by 1.8-to-one, and Omnicom of the US by 2.36-to-one, on this benchmark.

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Matalan To Support Factory Collapse Victims

Matalan has said it will provide "financial and other support" to those affected by the collapse of a factory in Bangladesh which killed over 380 people.

The fashion chain said it was not using any suppliers based in the building when the disaster occurred last Wednesday.

Uniform-maker Premier Clothing also said it would provide financial assistance to the victims and their families.

At least 386 people were killed and 2,500 people were injured when the eight-storey Rana Plaza building collapsed - and many are still missing.

A statement from Matalan said: "We offer our condolences to all those affected by this tragic event and our thoughts and prayers are with the whole community.

Protesters have demanded the death sentence for the owner of the building

"Whilst we were not using any suppliers based in the building, as soon as we heard the news, we started working with our key contacts in Bangladesh to explore how we could support those involved.

"We can confirm that we are working closely with the Bangladesh Garment Manufacturers & Export Association (BGMEA) and our local team in Bangladesh to provide financial and other support to help those affected."

A Premier Clothing spokesperson said: "We were shocked and deeply saddened to hear about the terrible tragedy involving one of our suppliers, New Wave, which was a tenant in the collapsed building in Dhaka.

"Our thoughts are with the victims and their families.

"We remain in close contact with our agents in Dhaka who liaise with New Wave on our behalf and will look to provide both practical and financial assistance via this local team."

Many people are missing and thought to be trapped in the rubble

On Monday, low-cost retailer Primark said it would pay compensation to the victims of the event who worked for its supplier.

The Ireland-based company - which is a subsidiary of British company ABF - confirmed that one of its suppliers occupied the second floor of the affected building in the Dhaka suburb of Savar.

It said a team in Bangladesh was working "to put in place immediate and long-term help" for the victims.

Bonmarche, another big brand that acknowledged supplier production at the site, said it was deciding how it could best offer support to those affected.

In a statement it said: "Whilst we have always implemented supplier processes in line with retail industry standards, there are lessons to be learned from this tragic event right across the retail sector. 

"We will be reviewing the information emerging from Bangladesh and responding accordingly.

"The Bangladesh Fire and Safety Agreement aims to prevent further tragedies such as this and we support its goals.

"We are looking into it in more detail and will confirm our decision once we have completed our investigations into the situation."

Meanwhile, a Bangladesh court ordered the government to "immediately" confiscate the property of the collapsed building's owner.

Thousands of protesters took to the streets of Dhaka to demand the death sentence for Mohammed Sohel Rana.

Two High Court judges also said the central bank should freeze the assets of the owners of the five clothing factories in the building, and use the money to pay the salaries and other benefits of their workers.

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Dubai Property Group Damac Eyes London Float

By Mark Kleinman, City Editor

A Dubai-based luxury real estate developer renowned during the Gulf state's boom for handing out sports cars and yachts to clients is plotting a listing on the London Stock Exchange.

I understand that Damac Properties has appointed Deutsche Bank to prepare what would be the first flotation of a major developer from the United Arab Emirates since the global financial crisis engulfed it in 2009.

The listing plans are at an early stage, but Damac has also appointed the London office of the public relations firm FTI Consulting to work on the proposals, according to people close to the company.

Established in 2002, Damac has expanded from its Dubai base into North Africa, Jordan, Lebanon, Qatar and South Africa. Its name is prominently displayed throughout Dubai and, as the partner of the luxury consumer products brand Versace in major residential developments in Beirut and Saudi Arabia, symbolises the flamboyance of the Middle East's property boom.

Earlier today, Damac unveiled plans for a 28m square feet resort called Akoya By Damac, which it claims will be "the most luxurious golf community in Asia".

The company's controlling shareholder, the Sajwani family, is understood to be attracted to the liquidity of London's capital markets, although one insider cautioned today that no final decision about the listing location had been taken. A flotation is unlikely to take place before the first quarter of next year, insiders said.

London has seen a modest revival in the demand for listing activity in recent months, with prominent flotations including the insurance company esure, the estate agency chain Countrywide, and Crest Nicholson, the housebuilder, all of which have so far performed strongly.

Damac, which is expected to raise tens of millions of pounds if it proceeds with a London listing, declined to comment on its plans.

Like many of its peers, it has recovered since Dubai's near-default on its sovereign debt obligations in 2009 spooked investors in the state and contributed to a plunge in property prices.

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Eurozone Unemployment Hits New Record High

Eurozone unemployment reached 12.1% in March, official figures have shown, as the region's recession continues to hit its economy.

Some 19.2 million people were out of work in the 17-nation bloc last month, with the jobless rate climbing for the 23rd month in a row.

Data also showed that inflation fell in the region - to 1.2% in April, its lowest level since February 2010.

Italy's new prime minister Enrico Letta

The combination of easing inflation and rising unemployment is likely to put more pressure on the European Central Bank to cut interest rates on Thursday.

The figures come as Italy's new prime minister won a vote of confidence - boosting hopes of a strong coalition after a period of political uncertainty in the eurozone's third-largest economy.

Enrico Letta - who was sworn in on Sunday - plans to push ahead with his agenda of easing the country's unpopular austerity measures.

The government was confirmed with a vote of 233 in favour, 59 against and 18 abstentions, a day after it won the backing of the lower house.

In the meantime, Cypriot MPs debated the country's controversial 10bn euro (£8.48bn) bailout deal - with the government warning a rejection would be "catastrophic" for the island's troubled economy.

"Every MP needs to be aware that today marks a historic landmark for our homeland," spokesman Christos Stylianides said.

"A 'no' from the house today would have catastrophic consequences."

Hundreds of people gathered outside the Parliament to demonstrate against the bailout, which has forced Cyprus to shrink its banking sector, raise taxes and cut public spending.

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