Supermarket Wars: Tesco Bolsters UK Fightback

Tesco has announced plans to restore customer trust in prices and accelerate its UK turnaround amid the deepening industry battle for shoppers both in-store and online.

In a statement published ahead of an investor and analyst seminar, the country's biggest supermarket chain said its proposals would build on the work already carried out over almost two years to improve its fortunes amid increased competition.

Top of the pile was a £200m investment in additional price cuts and a pledge to end consumer confusion on pricing following a number of critical reports on supermarket industry tactics.

Chief executive Philip Clarke told the meeting: "Prices must get better. They must be more stable. The frivolous promotions must end. Trusted ones should be in place and that's got to start now."

Tesco is to invest more in its online offerings

Tesco also planned to open 150 new convenience stores annually.

Mr Clarke has invested over £1bn in store revamps, more staff, new product ranges and pricing initiatives since admitting 22 months ago that the chain had taken the eye off the ball in its core market.

The key Christmas 2013 trading period saw its UK store sales decline 2.4% as discounters enjoyed a greater slice of the business.

The performance prompted Tesco to confirm on Wednesday that it would step up the pace of its large store revamp programme but cut back further on growing new selling space.

The chain would instead focus on faster online and convenience channel growth, meaning group capital expenditure would be reduced to no more than £2.5bn per year for at least the next three financial years.

In the 2012-13 year Tesco's group capital expenditure was £3bn.

Tesco said its seminar would describe to investors how 'Winning in the new era of retail' would be about "putting the customer first" and deliver "the most compelling offers across all channels" with a focus on increasing loyalty and restoring trust on prices.

The company's efforts to transform its major stores into family-friendly retail destinations, with restaurant and leisure facilities, demonstrate the extent of the pressure on it following its failed foray into the US market.

Its Fresh & Easy brand - now sold off - allowed Tesco to concentrate on the challenges posed by Sainsbury's, Asda and Morrisons.

But the 'Big Four' have seen their own market shares eaten away by the biggest discounters, such as Aldi and Lidl.

The statement did not make clear if Tesco was planning to cut its 5.2% profit margin - as was widely reported ahead of the meeting.

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Flood-Hit Farms To Get Share Of £10m Fund

Flood-hit farmers are to share £10m of Government cash from a fund to help them get back into production.

Farming minister George Eustice revealed details of the fund in a speech to the National Farmers' Union (NFU) Conference in Birmingham.

"We have suffered the wettest winter for 250 years and the impact has led to thousands of properties being flooded and many families' lives being turned upside down," Mr Eustice said.

"As the Prime Minister has said, we understand the hardship and disruption this causes families and businesses and we will do everything in our power to help the recovery operation now under way."

The fund is to help with four key areas of recovery and offer support with uninsured losses.

Aerial pictures of flooded Oxfordshire fields earlier this month

Mr Eustice said it would help with restoring grassland and productive arable and horticultural land which, in turn, would help to restore vehicle access to fields and improve field drainage.

Under the scheme, all farmers affected by the flooding will be able to apply for emergency funding of up to £5,000, covering up to 100% of their business costs.

This will allow them to continue growing crops and grazing livestock.

NFU president Peter Kendall told the conference that the Government needed to find ways to remove red rape around landowners carrying out their own maintenance - such as keeping vegetation cut back and clearing silt from rivers.

"Routine dredging has got to be part of the answer for the Somerset Levels," he said.

"But what's needed on the Levels may be different from what's needed in the Thames Valley or Cumbria - devastated in 2009 - or in North West Wales where there are 1,000 acres awash with saltwater, or along the coast of Lincolnshire - 600 acres of grade one land inundated last December.

"We have to increase budgets and review the balance between capital works and routine maintenance."

Some farmers are afraid they will never recover financially

A second part of the fund will be reserved to help those farms which continue to be affected but where it is too soon to be able to assess the full extent of the damage, Mr Eustice told the conference.

"Once we have a better picture of the scale of the damage we will reassess the upper limit for grants and we will keep the scheme under constant review so that it remains flexible and is targeted at those in greatest need," he said.

Additionally, the £10m Farming and Forestry Improvement Scheme will offer eligible farmers grants of up to £35,000 on schemes designed to make businesses more resilient, he said.

"We want to help farmers affected by flooding and the severe weather to get their businesses back on track as soon as possible.

"The new £10m Farming Recovery Fund has been set up to help farmers directly affected meet short-term costs as the flood waters recede," the minister told the conference.

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Hennessey Venom GT Sets New Speed Record

A supercar has become the world's fastest production model after hitting 270.49mph on Nasa's space shuttle landing runway.

The Hennessey Venom GT's run at Kennedy Space Center in Florida just pipped the previous two-seat sports car record of 269.86mph, set by Bugatti's Veyron Super Sport in 2010.

Powered by a 7.0-litre twin-turbo GM-sourced V8 engine, the car powered from 20mph to 120mph in 7.71 seconds and was still accelerating at 1mph per second between 260mph and 270mph.

Former racing driver and Michelin tyre test engineer Brian Smith was at the wheel of the vehicle, which uses a highly-modified Lotus Exige chassis, on the 3.2-mile stretch of runway.

He said he believed the car could have reached even faster speeds if the runway had been longer.

Brian Smith was held aloft after steering the car to more than 270mph

He said: "It was still pulling. If we could run on an eight-mile oval we could go faster than that.

"On the very top end there was a little wandering but hey, we're going 270mph."

But the performance is not eligible for a Guinness World Record, which uses an average speed taken from two runs as the official record.

Hennessey Performance Engineering (HPE) boss John Hennessey said: "I wanted to be an astronaut when I was a kid. Neil Armstrong was my childhood hero.

The jubilant Hennessey team celebrate their success at Kennedy Space Center

"Even though the astronaut thing didn't work out for me, I am humbled to have had the opportunity to set our speed record on the hallowed grounds of the American space programme." 

So far HPE has built and delivered just 11 Venom GTs to owners around the world.

Each vehicle costs $1.2 million (£720,000) plus shipping and optional extras.

It is built to order, takes six months to complete and the production run consists of just 29 units worldwide.

The car already holds the record for world's fastest from 0-300kmph (13.63 seconds) and 0-200mph (14.51 seconds).

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Names Emerge For RBS Job As Revamp Looms

By Mark Kleinman, City Editor

A former boss of the insurer Standard Life and an ex-KPMG executive are emerging as early contenders to become the next chairman of Royal Bank of Scotland (RBS).

Sky News understands that Sir Sandy Crombie and Brendan Nelson, who sit on the taxpayer-backed lender's board as non-executive directors, are being discussed as possible successors to Sir Philip Hampton.

The post, which Sir Philip is likely to vacate by the bank's annual meeting in 2015, will be a crucial one as RBS's chief executive, Ross McEwan, tries to implement the new strategy that he will unveil later this week.

A senior RBS source said that some members of the board were keen for Sir Sandy, who has been a director since 2009, to put himself forward for the role once a formal process gets underway.

That would contravene best practice in the City, since the senior independent director is by convention the board member who organises the search for a new chairman.

The most significant clue as to whether he wishes to be considered for the role will therefore be whether Sir Sandy steps aside and allows the search to be led by a boardroom colleague.

Sir Philip Hampton is expected to vacate the chair in 2015

An insider said that Sir Philip's departure was unlikely to be announced until RBS had identified his replacement.

Sir Sandy, who stepped down from running Standard Life in 2009, is also a former director of the Association of British Insurers, which exerts significant influence over corporate governance issues in UK boardrooms.

Mr Nelson also serves on the board of BP, the oil major, having retired from KPMG in 2010.

RBS's unique status as a ward of the state means that UK Financial Investments (UKFI), which manages taxpayers' 81% stake in RBS, and the Treasury will play an active role in identifying the next chairman.

Sir Philip, who took over in 2009, said last summer that periods of between five and seven years were a natural tenure for chairman and chief executives.

Sir Philip led the recruitment of Mr McEwan as Stephen Hester's successor last year.

On Thursday, the new chief executive will outline a new strategy which will involve further shrinking its investment bank and substantial cost cuts, as well as an estimated £8bn annual loss for 2013.

Ross McEwan was recruited as CEO of RBS in 2013

Sky News revealed last week that RBS is preparing to shed tens of thousands of jobs from its workforce of 120,000 by selling or closing a number of its divisions.

These will include the withdrawal from dozens of the 38 countries in which it still has a presence.

The reductions will include 18,500 staff employed by Citizens, the US retail bank which RBS has already announced that it will offload through a stock market listing.

Another 4,500 jobs will be transferred as part of the sale of more than 300 branches to a consortium which includes the Church of England's pension fund.

Mr McEwan plans to emphasise his focus on serving customers through greater automation of banking services, which will also mean thousands of jobs going over time.

In addition, central functions at RBS will also face job cuts similar to those implemented by Mr McEwan while he was running its retail bank.

The revised RBS strategy will cement the final retrenchment from the empire-building of Fred Goodwin, its former chief executive, and create a significantly more modest operation than the one envisaged by Mr Hester.

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Samsung Offers 'Pay By Finger' With Galaxy S5

The latest version of Samsung's flagship mobile phone will allow users to shop online using only their fingerprint to pay.

The Galaxy S5, unveiled at the Mobile World Congress in Barcelona, Spain, features a fingerprint scanner among a number of new features.

Much like with the Apple iPhone 5S, the scanner can be used to unlock the handset.

However, Samsung has taken the biometric technology one step further, teaming up with PayPal to allow users to buy goods and services using only their fingerprint, rather than a traditional username and password.

Hill Ferguson, chief product officer at PayPal, said security is of "utmost importance" and insisted biometric details are not stored on its servers.

"The only information the device shares with PayPal is a unique encrypted key that allows us to verify the identity of the customer," he said.

"Consumers don't need to sacrifice convenience to increase security. With a simple swipe of a finger, they can securely log into their PayPal account to shop and pay with the convenience mobile devices afford."

The Galaxy S5 also has a heart rate monitor and pedometer

JK Shin, president of Samsung's mobile communications division, said the company had gone "back to basics" with its latest phone.

As well as the fingerprint scanner, the Galaxy S5 comes with a number of new health and fitness features, including a built-in heart rate monitor, a pedometer, and a diet and exercise tracker.

It can also be synched up to Samsung's latest Gear smartwatches for "real-time fitness coaching".

Although it looks similar to its predecessor, the Galaxy S5 features an improved 16 megapixel camera with a "selective focus" feature that allows users to select a specific object and simultaneously blur out the background.

The device also receives a subtle facelift, with a perforated pattern on the cover.

The S5 goes on sale in April, with PayPal's fingerprint authentication due to go live in 26 countries, including the UK and the United States, at around the same time.

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Bank Levy Damaging City, BBA Warns Osborne

By Mark Kleinman, City Editor

The UK Government's bank levy undermines both its own desire for a stable tax regime and the City's status as a leading financial centre, the industry's main lobbying group has warned George Osborne.

In its submission to the Treasury ahead of next month's Budget, the British Bankers' Association (BBA) has launched its strongest broadside to date against the tax, which was introduced by the Chancellor after the 2010 General Election.

In a copy of the document, which has been leaked to Sky News, the BBA said that regulatory change introduced since the 2008 banking crisis had already reduced the riskiness of banks' activities.

"When the bank levy was introduced, the stated aims were to 'encourage banks to move to less risky funding profiles', and to ensure banks provide 'a fair contribution in respect of the potential risks they pose to the UK system and the wider economy'," it said.

"Many regulatory developments, augmented by banks' own initiatives, have altered the structure and culture of banks by reducing risk-taking in the sector, reducing the likelihood of bank failure and by creating firebreaks through ring-fencing.

"However, the bank levy rate has been increased eight times since (it) was first announced at Budget 2010, and many of those increases have been implemented with minimal advance notice."

The BBA's decision to attack the Treasury over the levy comes at a delicate time for relations between the industry and the Treasury, with pressure still being applied to the Chancellor by Labour to impose a new tax on bank bonuses.

In last year's autumn statement, Mr Osborne pledged to broaden the base of the bank levy and said: "I can also announce, from January 1 next year, the rate of the bank levy will rise to 0.156% and its base will be broadened in ways we have consulted on.

"The levy will raise £2.7bn in 2014-15 and £2.9bn each year from 2015-16. The country stood behind the banks in the crisis and now it is right that they support the country in recovery."

HSBC, which reported annual results on Monday, said that it had to pay $916m (£551m) as its contribution to the bank levy last year, the highest level of any of the eligible UK lenders despite being regarded as the least risky bank in terms of its funding profile.

The BBA said that the frequency of the levy rate changes had "not resulted in a stable tax environment for the banking industry and is inconsistent with the Government's desire for the UK to have a competitive, stable and predictable tax regime for business which encourages inward investment and supports the UK's place as the world's leading international financial centre", it said in its submission.

It argued that Mr Osborne should reduce the emphasis placed on a specific collection target in order to better inform public debate on the issue.

The levy "adversely affects the competitive landscape and the UK's position as a financial centre," it said.

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Ladbrokes Blames Online Upgrade For Profits Dive

Ladbrokes has reported a 66% slump in annual profits as it invests heavily on improving its online business.

Britain's second biggest bookmaker admitted its brand had "underperformed" for a couple of years, with profits for 2013 coming in at £67.6m.

But the firm, which has struggled to keep pace with rival William Hill, said the operating profit took a hit due to upgrades to its online service.

It says it expects its digital operations to pick up in the second half of 2014 - in time for the football World Cup.

Ladbrokes chief executive Richard Glynn said the figure was disappointing but insisted progress was being made on improving its online offering.

Its mobile app has been upgraded while other improvements will allow a customer to have a single wallet for sport and casino products.

Its in-store gaming machines are also due for a revamp following a slowdown in growth.

Ladbrokes confirmed a story on Sunday by Sky News that it was to do more to crack down on problem gambling.

Ladbrokes is Britain's second biggest bookmaker

Amid calls for the use of the fixed-odds betting terminals - dubbed the "crack cocaine of gambling" - to be banned or limited, Ladbrokes said it would link the pay of its top executives to its efforts in ensuring the responsible use of gaming machines.

Mr Glynn said: "Responsible gambling is not a passing regulatory issue but a fact of life for all operators and an issue we take very seriously.

"Problem gamblers, contrary to popular myth, are not good for business."

The company's corporate affairs director, Ciaran O'Brien, told Sky News: "This week we are launching new software and tools on the machines to ensure that people take breaks and set their own limits.

"You'll see every shop window in the country devoted to messaging about that. We're going to have 20% of our advertising devoted to responsible gambling messages and we're putting it at their heart of our business by tying executive pay to responsible gambling." 

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Boohoo Lures Ex-Asos Director For £500m IPO

By Mark Kleinman, City Editor

A former director of the online fashion retailer Asos is to become chairman of rival Boohoo.com as it finalises plans for a stock market flotation valuing it at £500m.

Sky News has learnt that Peter Williams, a retail veteran who stepped down from the Asos board last year, is to spearhead the listing of another major internet venture.

Mr Williams' appointment as Boohoo.com's chairman is likely to be confirmed in a statement signalling the company's intention to float, which could come as soon as this Friday, according to insiders.

A successful listing of Boohoo.com would cement a remarkable success for the Manchester-based Kamani family, which is understood to control the majority of the business.

Founded in 2006 by Mahmud Kamani and Carol Kane, who had previously worked together as wholesalers to the fashion market, Boohoo.com sells its own brand of "trend-led clothing" to what the company describes as "fashion forward females" around the world.

It has won several major industry awards, including the 2012 Lorraine High Street Fashion Awards, beating more established competitors including Next and Asos in the Best Online Retailer category.

The company is expected to pitch itself to potential investors as having superior margins to Asos because its range of more than 8,000 products is sold using its own brand, and because of the speed of its supply chain.

Boohoo.com, which also recently launched a menswear range, operates a system called Test and Repeat, enabling it to access initially smaller product quantities at high-volume prices.

Nevertheless, a £500m valuation for a company which recorded profits of just £3.2m last year is likely to prompt suggestions of a bubble in the prices being attributed to businesses with a strong digital growth story.

An insider pointed to a recent restructuring of Boohoo.com, which was likely to result in a substantial jump in this year's profitability.

Asos has been a stock market darling since listing a decade ago

Boohoo.com's sales grew from £29m in 2012 to £67.3m, with pre-tax profits soaring £0.2m to £3.2m during the same period.

Mr Williams' appointment as chairman will provide added credibility as Boohoo.com attempts to sell itself to City investors.

A non-executive director of Sprtech, the gaming firm, Cineworld, the multiplex operator, and Rightmove, the online estate agent, Mr Williams is among the UK's most experienced public company directors.

He was finance director of Selfridges, chairman of JJB Sports and Blacks Leisure Group, and was also on the board of Capital Radio and Silverstone Holdings, operator of the Northamptonshire racing circuit.

It was unclear on Tuesday how much Boohoo.com, which is being advised by Zeus Capital, would seek to raise by selling existing and new shares. Preliminary meetings with institutions are taking place this week.

Boohoo.com will seek to emulate the success of Asos, which has been a stock market darling since listing a decade ago.

Asos, which has expanded around the world, has become one of the UK fashion industry's biggest success stories. The company now has a market value of almost £6bn.

Brian McBride, the chairman of Asos, recently joined AO.com, the online electrical goods retailer, which is also in the process of floating.

Bricks-and-mortar retailers including Pets At Home, Poundland and House of Fraser are among the other high street names which are trying to raise funds by going public.

A Boohoo.com spokesman declined to comment.

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Bitcoin Turmoil After Mt Gox Exchange 'Theft'

The Bitcoin exchange industry has moved to reassure holders of the virtual currency amid reports 6% of Bitcoins in circulation, worth roughly $375m (£225m), have been stolen.

The once-mighty Mt Gox exchange reportedly lost them in a cyber attack, with an apparent internal document suggesting more than 740,000 Bitcoins are missing.

The Mt Gox website is currently offline with trading suspended and withdrawals have been frozen.

The Tokyo-based exchange has not commented on the claims but its chief, Mark Karpeles, quit the board of the Bitcoin Foundation - an advocate for the virtual currency - on the eve of the shutdown.

He has not been seen in public since and his whereabouts remain unknown but in an email to the news agency Reuters he purportedly said: "We should have an official announcement ready soon-ish.

"We are currently at a turning point for the business. I can't tell much more for now as this also involves other parties."

Some 740,000 Bitcoins are reportedly missing from the exchange

The firm's Tokyo office is said by witnesses to be largely bare while a handful of angry investors are camped outside demanding news of their money and questioning whether the business remains solvent.

One of them, Bitcoin trader Kolin Burgess, said he had picketed the building since February 14 after flying in from London, hoping to get back $320,000 he had tied up in Bitcoins with Mt Gox.

"I may have lost all of my money. It hasn't shaken my trust in Bitcoin, but it has shaken my trust in Bitcoin exchanges."

The fate of his holding is unclear as Bitcoins are traded in an unregulated, decentralised marketplace.

But news of Mt Gox's apparent collapse prompted six other Bitcoin exchanges to release a joint statement distancing themselves from Mt Gox - insisting it should not be considered a reflection of the value of Bitcoin or the digital currency industry.

It said: "This tragic violation of the trust of users of Mt Gox was the result of one company's actions.

"As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.

"Mt Gox has confirmed its issues in private discussions with other members of the Bitcoin community.

"There are hundreds of trustworthy and responsible companies involved in Bitcoin.

"These companies will continue to build the future of money by making Bitcoin more secure and easy to use for consumers and merchants."

The signatories - Coinbase, Kraken, Bitstamp, BTC China, Blockchain and Circle - released their statement two days after the reported cyber attack on Mt Gox.

Bitcoin's value - which has fluctuated wildly in recent times - fell 20% amid the shutdown at Mt Gox and is about two thirds below its peak of $1,100 at just above $410.

At its height, analsyts say Mt. Gox accounted for 80% of Bitcoin trading but its dominance started to slip a year ago as rumours circulated about the strength of its security protocols.

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Travelex Courts Buyers As It Pursues Listing

By Mark Kleinman, City Editor

Travelex, the foreign exchange provider, is reaching out to potential buyers even as it pursues a stock market listing likely to value it at more than £1bn.

Sky News has learnt that Goldman Sachs has in recent weeks approached companies including American Express and a number of Asian banks to gauge their interest in a potential takeover of Travelex.

The process remains at an early stage and it is unclear whether any of those being sounded out have expressed a serious interest in further discussions.

Among the other parties understood to have been sounded out is Industrial & Commercial Bank of China, the state-owned Chinese lender.

Travelex and its shareholders are pursuing an initial public offering (IPO) as their preferred option, and have engaged headhunters to recruit additional board members as the company prepares to go public.

Insiders said on Tuesday that Ridgeway Partners, a leading search firm, had been hired to identify a deputy chairman who would act as the voice of independent investors in the event of a stock market flotation.

Travelex was set up in 1976 by Lloyd Dorfman, who remains its chairman and second-largest shareholder.

Mr Dorfman, one of Britain's most successful entrepreneurs, would remain as chairman if Travelex opts for a listing, probably in the third quarter of this year.

Apax Partners, the private equity group, has owned a controlling stake in Travelex since 2005 and is keen to offload its stake, on which it will reap an already handsome profit.

City sources told Sky News last month said that JP Morgan was focusing on an IPO, while Goldman had been asked to field approaches from potential buyers of the company.

Rothschild was brought in last autumn to help evaluate options for the business.

A stock market listing would probably see Travelex join the FTSE-250 index of the public companies ranked between 101 and 350 by size on the London markets.

Travelex has been reshaped since Peter Jackson, its chief executive, was recruited from Lloyds Banking Group in 2010, with the sale of its card management and global payments operations for an aggregate total of nearly £1bn.

Mr Jackson said last year that trading during the crucial summer period had been strong, and the business is understood to have continued to perform well since then.

A Travelex spokesman declined to comment.

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