China's Online Firm Alibaba Sees Revenue Soar

Net revenue at Chinese e-commerce company Alibaba fell 39% in its second quarter as the business concentrated on more acquisitions and investment in its mobile and marketing side.

However, revenue rose 54% on strong user demand for the company which does not hold stock but links buyers and sellers to each other.

The company was founded by Jack Ma

Alibaba, which operates popular e-commerce platforms Taobao and Tmall in China, went public on the New York Stock Exchange in September in a $25bn (£15.6bn) initial public offering that was the largest ever.

The company's platforms account for some 80% of the fast-expanding Chinese online business.

Video: Alibaba Shares Soar On Market Debut

Chinese shoppers are predicted to have tripled their online spending between 2011 and 2015.

After that, Alibaba says it plans to expand into emerging markets and, eventually, into Europe and the U.S.

For the three months ended 30 September net income after paying preferred dividends fell to $485m (£303m), or 20 cents (12p) per share.

Excluding one-time items, net income, as expected, was 45 cents (27p) per share. 

Video: Alibaba: 5 Things You Didn't Know

Alibaba said the fall was due partly to a $490m (£306) stock-option expenses due to performance-based and retention grants to some executives before its IPO, with vesting periods of four to six years.

Other costs that the company took during the quarter included consolidating newly acquired businesses, investing in its mobile operating system and digital entertainment, and marketing costs.

Revenue, as expected, was strong at $2.74bn (£1.71bn) and above analyst expectations.

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Watchdog Warns Bank Chairmen On IT Resilience

By Mark Kleinman, City Editor

The banking regulator has demanded that Britain's biggest lenders improve the robustness of their IT systems amid concern about a persistent stream of service breakdowns.

Sky News has learned that a letter was sent to the chairmen of the banks by the Prudential Regulation Authority (PRA) last month, asking them to provide more details about the availability, resilience and recovery capabilities of their IT functions.

Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland (RBS) and Santander UK are among those understood to have been contacted by the PRA.

The banks have been given until mid-December to answer questions posed by the regulator, which has powers to instruct them to overhaul their investment plans in order to ensure the continuity of critical services.

It is unclear whether the PRA wrote to the bank chairmen before the Bank of England was itself forced to apologise on 21 October after a glitch in the UK's banking payment system forced the shutdown of key services for several hours.

Two years ago, the then Financial Services Authority challenged the chairs of the nine biggest lenders to set out plans to avoid significant infrastructure failures.

News of the latest letter comes a day after Sky News revealed the Financial Conduct Authority (FCA) is proposing to fine Royal Bank of Scotland a record sum over the IT failure in June 2012 which left customers without access to their money for several days.

The development means that an end to the FCA's enforcement investigation, which began in April 2013, is now in sight, although the precise timing could be delayed if RBS decided to contest the regulator's findings.

RBS could receive a discount of up to 30% on the proposed penalty if it agrees to settle within the 28-day window under FCA rules.

Sources put the scale of the likely fine to be imposed on RBS at "several tens of millions of pounds", which would rank it among the largest ever handed out by the City regulator for offences unrelated to the manipulation of financial markets.

Sky News revealed earlier this year that the FCA was to tackle the robustness of banks' IT systems as one of its priorities for this year.

Last December, RBS suffered another systems outage on the busiest online shopping day of the year, the third time in about 18 months that such a problem had prevented customers from using cards, cash machines and online banking services.

Other banks have also been hit by IT problems which have affected customer-facing services on a regular basis.

RBS has since pledged to invest more than £1bn in its digital capabilities and IT systems during the next three years.

The PRA and the banks declined to comment on the latest letter.

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Primark Posts 'Magnificent' 30% Profit Rise

The chairman of Primark's owner has hailed a "magnificent" year for the discount clothing retailer, with profits rising 30% to £662m.

Associated British Foods (ABF) said the performances of its fashion and grocery divisions offset the adverse impact of lower prices in its sugars business, helping the group to achieve annual profits growth of 6% in the year to 13 September.

It also confirmed that Primark was shrugging off the effects of the current warm autumn weather, which has prompted rivals including Next to warn on profits, with sales for the first six weeks of its new financial year up 10%.

Annual sales at Primark, which now operates in nine countries, were 17% ahead of last year.

The results statement said: "This excellent result was driven by an increase in retail selling space, like-for-like sales growth of 4%, and superior sales densities in the new stores.

Primark opened its first French store in April

"The year was characterised by success for our autumn/winter and spring/summer ranges.

"Sales over the Christmas period were excellent and were boosted in the third quarter by warm weather, especially in the spring and early summer.

"We began trading in France in December last year and sales across all five stores have been exceptional.

"Eight years on from our initial entry into Iberia, this year's like-for-like growth achieved by our Spanish stores was particularly strong."

ABF chairman Charles Sinclair added: "We recently announced that the next new market would be in the north-east of the US, with the first stores expected to open late in 2015 and with up to 10 stores by the end of 2016."

Almost 400 people were killed in the Rana Plaza collapse

Primark also confirmed it had committed a total $12m (£7.5m) in compensation and other support to workers and families of the victims following the collapse of the Rana Plaza factory in Bangladesh last year.

The retailer said that while most of its Rana Plaza staff were making garments for its competitors when the building collapsed, it was "committed to meeting its responsibilities in full and to paying long-term compensation to the workers employed by its supplier or their dependants".

"The safety of the staff employed by our suppliers is a high priority," Primark said.

"We have now undertaken structural assessments of all of our supplier factories in Bangladesh.

"We further strengthened our in-country teams of ethical trading specialists who are critical in supporting sustainable improvements within supplier factories, and providing greater visibility across the supply chain.

"We conducted 2,058 audits in the last calendar year, and ethical trade training continues to be provided to every new Primark employee," the company added.

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Virgin Money Flotation Is Back On Track

Virgin Money has confirmed it will go ahead with its stock market flotation, after postponing the listing last month.

The bank confirmed on Tuesday an earlier report by Sky News that it was now satisfied market conditions had settled amid volatility last month on global economic growth worries.

The company, backed by Sir Richard Branson, plans to raise around £150m from the sale of new shares, valuing the firm at up to £2bn.

Virgin Money chief executive Jayne-Anne Gadhia said in a statement that new Bank of England leverage rules set out last week had provided clarity for the UK banking sector, meaning the time was right to push ahead.

She said: "Given this and given more stable market conditions, we now plan to move forward with our IPO (Initial Public Offering) with the aim of being admitted by the end of November.

Ms Gadhia had previously stated that Virgin Money had performed strongly during its third quarter, winning a 4.5% share of new mortgage applications.

"Looking to the future, we have a powerful brand, a strong balance sheet, a strong core business franchise and considerable opportunities to continue to extend our product range," she said.

Virgin Group and WL Ross, a US-based investment vehicle, collectively own just over 90% of Virgin Money.

Bank of America Merrill Lynch, Barclays, Citi, Goldman Sachs and Keeffe Bruyette & Woods are working on the Virgin Money flotation.

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Taylor Swift Pulls All Her Music From Spotify

Taylor Swift has pulled all of her songs from Spotify without giving an explanation - setting up a struggle between the industry's most popular artist and the music streaming giant.

Spotify said the singer's management asked it to take her music off the service late last week - days after the release of her new album 1989.

The move means Swift's five albums and hits including Shake It Off - the most-played song on Spotify last week - are no longer available to the site's 40 million users.

The Swedish firm tried to shake off the snub with a good-humoured statement, saying: "We love Taylor Swift, and our more than 40 million users love her even more - nearly 16 million of them have played her songs in the last 30 days, and she's on over 19 million playlists.

Swift's 1989 is the fastest-selling album of 2014

"We hope she'll change her mind and join us in building a new music economy that works for everyone.

"We believe fans should be able to listen to music wherever and whenever they want, and that artists have an absolute right to be paid for their work and protected from piracy.

Video: Ed Sheeran Backs Spotify

"That's why we pay nearly 70% of our revenue back to the music community.

"PS - Taylor, we were both young when we first saw you, but now there's more than 40 million of us who want you to stay, stay, stay. It's a love story, baby, just say, Yes."

The decision means fans can only listen to Swift's latest album - tipped to sell more than one millon copies in its first week - legally if they download it from services such as iTunes and Google Play.

Swift briefly pulled her 2012 album Red from Spotify around the time it came out, although she did not remove her entire catalogue and it eventually appeared on Spotify.

Video: Taylor Swift Fan Jumps On To Stage

Earlier this year, Swift wrote in the Wall Street Journal that artists should fight to be paid what they are worth.

She wrote: "Music is art, and art is important and rare. Important, rare things are valuable.

"Valuable things should be paid for. It's my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album's price point is.

"I hope they don't underestimate themselves or undervalue their art."

Video: Prince Takes On Bon Jovi Classic

The 24-year-old star has made £178m ($284m) since 2009, according to the Forbes Celebrity 100 list.

Music streaming services and file sharing have sharply cut into profits for artists, with album sales down 14% this year, according to Nielsen Soundscan.

Some bands, such as The Beatles and AC/DC have kept their music off Spotify and others, including Radiohead's Thom Yorke and the Black Keys have complained that the fees Spotify pays to record labels and music publishers are too small.

Spotify insists the money for artists improves as more users sign up to premium paid-for subscriptions.

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Greene King Downs Spirit In £774m Takeover

Greene King is on track to become a bigger player in the dining market after reaching agreement on a recommended offer for Spirit Pub Company.

The UK's largest pub retailer and brewer said the offer values Spirit at £774m, or 115p per share, and the proposed deal would result in Spirit shareholders owning about 28.9% of the combined new Greene King.

The company, whose current brands include Hungry Horse, Old English Inns and Loch Fyne, had faced a rival in the race for Spirit from C&C Group - the maker of Magners cider.

Spirit's 790 managed pubs include the Chef & Brewer, Flaming Grill and Taylor Walker names.

It was spun out of Punch Taverns in 2011.

Greene King said the combined group could expect to achieve cost savings of at least £30m annually and said it would also benefit from a larger exposure to the economically-stronger London and south west regions of Britain.

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Holiday Pay Should Include Overtime

Overtime should be taken into account when holiday pay is calculated, the Employment Appeal Tribunal has ruled.

The tribunal ruled on two cases against Hertel UK and BEAR Scotland, which related to the UK's interpretation of the Working Time Directive.

Workers for these companies claimed their holiday pay was less than it should have been because their employers did not factor in voluntary overtime completed in the period prior to time off.

Brian Gordon, managing director BEAR Scotland, said they were "disappointed" by the decision.

"We believe that this interpretation of the Working Time Directive is significant for all UK employers, public and private, and we will reflect on our position before considering how to respond," he said

But unions welcomed the ruling, with Unite executive director Howard Beckett saying: "Up until now some workers who are required to do overtime have been penalised for taking the time off they are entitled to.

"This ruling not only secures justice for our members who were short changed, but means employers have got to get their house in order."

Business groups have described the ruling as a "blow" to business, with Confederation of British Industry director-general John Cridland warning of "punitive costs potentially running into billions of pounds".

"Not all will survive - which could mean significant job losses," he said.

"These cases are creating major uncertainty for businesses and impacting on investment and resourcing decisions.

"We need the UK Government to step up its defence of the current UK law, and use its powers to limit any retrospective liability that firms may face."

Tim Thomas, head of employment policy for manufacturers' organisation EEF, said firms will have little option but to factor the additional costs in to future pay negotiations and to reduce overtime, while one in four could cut jobs.

Some businesses had already prepared for the worst, with John Lewis setting aside £40 million to reimburse workers. 

Business Secretary Vince Cable said: "Government will review the judgement in detail as a matter of urgency."

He said a taskforce has been set up to discuss how to limit the impact of the decision for businesses, adding: "Employers and workers can also contact the Acas helpline for free and confidential advice."

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Rolls-Royce To Cut 2,600 Jobs Over 18 Months

Rolls-Royce says it plans to cut 2,600 jobs over the next 18 months, mainly in its aerospace division.

Chief executive John Rishton said: "We are taking determined management action and accelerating our progress on cost.

"The measures announced today will not be the last, however they will contribute towards Rolls-Royce becoming a stronger and more profitable company."

It was also announced that chief financial officer Mark Morris will be replaced by former Jaguar Land Rover chief financial officer David Smith, who took up the role of finance director at its aerospace division earlier this year.

The restructuring is expected to cost £120m over the next two years but the company said it should see cost benefits of £80m annually.

Sky sources say the job losses are due to general market conditions and are part of a series of cost cutting measures.

Shares in Rolls-Royce leapt 2.63% after the announcement.

Last month, the company warned that its underlying revenues for 2014 would be between 3.5% and 4% lower than expected, blaming the shaky economy and the effect of Russian trade sanctions.

Rolls-Royce grew from the electrical and mechanical business established by Henry Royce in 1884 but it now employs more than 55,000 people in 45 countries and its customers include 160 armed forces, 70 navies and more than 380 airlines and leasing firms.

Its UK employee base numbers 12,000 people at four locations in the East Midlands, as well as 1,500 at five sites in the North West and 2,400 employees at six locations in Scotland.

It has not been revealed which offices are most likely to be affected.

Rolls-Royce is best known for its aero engines which power some of the world's most advanced passenger jets, such as the new Airbus A350 and the Boeing 787 Dreamliner.

The company is not affiliated with the Rolls-Royce automobile brand, which is owned by Germany's BMW.

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Are Fears Over Holiday Pay Ruling Exaggerated?

A lot of assumptions have swirled around the Employment Appeal Tribunal's ruling on whether to allow overtime into the calculations for holiday pay rates.

There have been claims that it would cost businesses billions in backdated reimbursement pay-outs, it would see small and medium-sized businesses fold under the financial pressure, and millions of workers would suddenly be in the money.

None of this is true, but the ruling will change the relationship between employers and their staff regardless.

Even though this issue will likely spend at least a year or two stuck in the courts before any money changes hands, the Confederation of British Industry says businesses should start preparing now.

John Lewis, a company always ahead of the game, reviewed its policies in the summer and has already set aside £40m to compensate its workers.

Video: Is Ruling Good For Britain?

Smaller businesses won't face such a big bill, but may find themselves owing some workers thousands of pounds.

The Government sided with employers in the debate, fearful the impact that Tuesday's ruling would have on British firms struggling to emerge from the recession. It is yet to exercise its right to appeal the decision.

Business Secretary Vince Cable has stalled for time by setting up a taskforce to ponder the ruling, and is waiting for employers themselves to launch the first appeals.

Failing that, the Government could enact emergency legislation to help businesses pay their employees over a more affordable time period.

Workers shouldn't get their hopes up for a windfall. Those who regularly work overtime, but have holiday pay based on basic salary rates, should get in touch with their unions to learn about their options.

The ruling hasn't backdated the payouts to 1998, but rather imposed a clause of three-month periods between holidays. If you've taken longer between holidays, that's the time your backdated claims stop.

In the next few months, a similar tribunal will rule on how much commission can be counted into holiday pay rates.

If that decision is also in favour of the workers, then we'll really mark a shift in the way they're treated when it comes to taking time off.

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Former Phones 4U Directors Face Legal Probe

By Mark Kleinman, City Editor

Former directors of Phones 4U, the mobile phone retailer which collapsed earlier this year with the loss of thousands of jobs, face a probe into their conduct led by one of America's top law firms.

Sky News has learnt that Quinn Emanuel Urquhart and Sullivan, which has been appointed by the chain's administrator, will also examine the conduct of two mobile phone networks which severed their ties with Phones 4U in the weeks leading to its demise.

The appointment of Quinn Emanuel by PricewaterhouseCoopers (PwC) could lead to legal action against former bosses if there is deemed to be a legitimate claim against them for breaching their fiduciary duties as company directors.

PwC is understood to have appointed the law firm late last week, although progress in assessing any action against former directors or suppliers is likely to be painstaking.

There is not thought to be any evidence at this stage that the directors of Phones 4U neglected their obligations under companies law.

Video: Sept 15: Plan To Save Phones4U Jobs

Among the former directors were two representatives of BC Partners, the private equity firm which owned the retailer at the time of its collapse.

Phones 4U fell into administration in September after EE, the chain's last remaining network partner, informed it that it would not be renewing their distribution agreement. Vodafone had terminated its own deal with Phones 4U just weeks earlier.

Bondholders owed hundreds of millions of pounds were furious at the nature of the collapse, arguing that administrators should have been called in earlier in order to conserve cash, while John Caudwell, Phones 4U's founder, accused the mobile networks of "ruthless" behaviour.

After PwC's appointment, Vodafone, EE and Dixons Carphone struck deals to acquire various Phones 4U assets, preserving more than 2,000 jobs, but close to 3,000 employees have been made redundant and several hundred shops have been closed.

Approximately 520 staff continued to work at Phones4U last month on the wind-down of the company's operations.

Sky News revealed in September that Vodafone had held brief talks about a takeover of Phones 4U just two months before it pulled the plug on their relationship.

Documents seen by Sky News show that, on 8 July, while discussions were taking place about extending Vodafone's distribution contract with Phones 4U, the mobile network's UK executives made a presentation to group colleagues entitled "Phones 4U - Partner of Choice".

Several weeks later, Vodafone notified Phones 4U that it would not be renewing their agreement, while no further talks about a takeover of the company were held.

The networks denied attempting to profiteer from the retailer's collapse.

A PwC spokesman confirmed Quinn Emanuel's appointment, which adds to the ranks of leading law firms involved in one of the biggest UK company collapses of the year.

Brown Rudnick, another firm, was appointed by a group of bondholders, while Allen & Overy worked for PwC on potential claims.

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