The Business: Tuesday 21 May 2013
Company news, markets and financial talking points, available from 8am Monday to Friday
A Senate committee has accused Apple of using a "a complex web of offshore entities" to avoid paying billions of dollars in US income taxes, reports The Times. The computer giant "sought the Holy Grail of tax avoidance”, claimed the committee, placing it "among America's largest tax avoiders". The committee said there was no indication Apple had done anything illegal but its elaborate loopholes allowed it to save US tax on $44bn in “otherwise taxable offshore income” over the past four years. Apple said its subsidiary 'Apple Operations International' in Ireland does not reduce its US tax liability and the company will pay more than $7 billion in US taxes in 2013.
Marks & Spencer has posted a significant fall in profits, reports the BBC. Pre-tax profits fell to £564.3m, down from £658m last year, despite group sales rising 1.3% to £10bn for the year to 30 March. Although underlying sales of food rose 1.7%, sales of general merchandise – a sector dominated by clothing - fell 4.1% in the year. Chief executive Marc Bolland described the current state of the market as "challenging". Last week, M&S launched its new autumn/winter clothing collection, which it hopes will win back lost customers. However, the retailer is under fire over the way it structures its tax arrangements.
Goldman Sachs has warned that a UK exit from the EU would be loss/loss scenario in which both the UK and the rest of the bloc would be damaged, reports the Daily Telegraph. Kevin Daly, part of the investment bank’s economic team, said a withdrawal would “come with a significant economic cost to the UK” because it is “highly integrated” with the bloc. The EU would be damaged too, he added, since the UK is the eurozone’s largest trading partner, accounting for 4% of the bloc’s GDP. However, he said he does not anticipate a referendum on the EU because the Conservatives first need to win an outright majority and, he feels, “at this stage, this doesn’t appear likely”.
Elvis Presley’s Graceland mansion is on the market as part of a package carrying a potential price tag of more than $200m, reports the Financial Times. Core Media Group, the entertainment group behind TV programmes such as American Idol, has begun approaching potential bidders from Asia, Europe and the US for the package, which includes the rights to the images of Presley and Muhammad Ali. The assets generate revenues of about $60m a year, according to a briefing document sent to potential bidders. People familiar with the Graceland estate see potential for significant business expansion, including an Elvis-themed hotel.
Shares in the budget airline Ryanair soared to a record high yesterday as it posted its best-ever profits, reports Sky News. Shares in the airline were up 5.8% in early trading on Monday morning as the group announced its annual profits rose 13% to £481m on revenues also up 13% to £4.1bn. Growing demand from business travellers and cuts in routes run by rivals helped it to thrive inspite of higher fuel costs and the continued recession on the continent. Colourful chief executive Michael O’Leary said the group’s performance was “testimony to the strength of its ultra-low cost model”. However, the airline expects a slowdown in the coming year due to demand weakness in Europe.
Nick Buckles, boss of security giant G4S, is to step down at the end of this month after overseeing a staffing fiasco at last year's London Olympics. Profits at the company slumped by a third last year after it bungled the amount of security needed at the games, forcing the army to step in. Last year Buckles told the Commons' Home Affairs select committee his firm's reputation was in "tatters" after the security shambles, which cost it £70m. He will be replaced by the company's chief financial officer Ashley Almanza, the BBC notes.
A bullish mood in the City saw London’s leading share index close at its highest level in almost 13 years yesterday, sparking hopes that it will break through the 7,000 point barrier for the first time by the end of 2013. The FTSE 100 reached 6,755.63 points, putting it within a whisker of the 6,798.06 it reached in September 2000, reports the BBC. The latest rally is being driven by central bank intervention as well as low interest rates and falling yields on government debt. Banks were big gainers, with RBS up 4.5% after a broker upgrade. Easyjet rose 4%, and BT was 2.6% higher. The German stock market and Wall Street's S&P 500 index also soared yesterday.
FTSE-100: up +0.48 to 6755.63
Dow Jones: down -0.12 to 15335.28
Dax: up +0.69 to 8455.83
Cac-40: up +0.54 to 4022.85
Nikkei: down -0.05 to 15352.65
Hang Seng: down -0.49 to 23377.83
US dollar: buys €0.77590 and £0.65550
Sterling: buys $1.5254 and €1.18340
Oil: Brent crude futures $104.77 up +0.1 percent