Ryanair Profits Slide 8% Amid Falling Fares

Ryanair has seen an 8% drop in full-year net profit, its first decline for five years.

The airline said earnings for the 12 months to the end of March were €523m (£425m), down from €569m (£465m) a year earlier.

The company had previously warned of its full-year profit forecast, saying intense competition and falling fares in the sector was to blame.

The no-frills airline said it expected a boost in revenue from the coming summer market.

In early trades shares in its key competitor easyJet were up, so too were shares in the owner of British Airways, IAG.

Chief executive Michael O'Leary said: "While disappointing that profits fell 8% to €523m due mainly to a 4% decline in fares, weaker sterling, and higher fuel costs, we reacted quickly to this weaker environment last September by lowering fares and improving our customer experience which caused H2 traffic to grow 4% as load factors rose 1%."

It saw a 17% rise in "ancillary revenue" on costs associated with non-seat items, such as food and drink.

After a series of complaints against Ryanair, the firm amended its ancillary pricing structures last year, including the introduction of allocated seating and a reduction in some baggage charges.

A quarter of its revenue now comes from ancillary charges.

It also expects to carry 84.6 million passengers this financial year, up 4%, amid a forecast 2% rise in fares.

Ryanair remains "very cautious" about the second half of the year, after the lucrative summer trading period ends.

It expects to boost passenger capacity by 6% in the H2 period.

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Buying Latest Apps Helps Web Giants Stay Young

By Tom Cheshire, Technology Correspondent

Twitch.tv and Snapchat may have launched only three years ago, but they're already shaping the internet giants YouTube and Facebook - in different ways.

Twitch is an online video platform that lets its users stream videogaming sessions live to anyone who wants to watch.

And they do: Twitch has 45 million users, and the average user watches the site for 90 minutes each day.

The company says that games broadcasting "is only just getting started".

YouTube wants to tap into that growing audience and is set to pay $1bn (£590m) in cash to acquire the platform, according to Variety.

Facebook failed in its attempt to buy Snapchat

It's a good fit for YouTube, although some will wonder about the valuation.

Another valuation that raised eyebrows last year was $3bn (£1.8bn) – that's how much Facebook offered to buy Snapchat.

Even more surprising, the makers of the ephemeral messaging app turned the offer down.

Facebook didn't like that. So now it's going head-to-head with the start-up.

The FT reports that the social network is working on a video messaging app called Slingshot.

Users will be able to send short video messages with just a couple of taps of a phone's screen.

YouTube is reportedly ready to buy Twitch

The Slingshot app would not be incorporated into any of Facebook's existing mobile products.

Instead it would be another standalone app – alongside Messenger, Paper, Instagram and Whatsapp. Facebook is fast becoming a mobile app conglomerate.

So what do the two stories have in common?

Facebook and YouTube are the decade-old incumbents – and it's hard to see anyone completely dislodging them for some time.

But the internet giants are constantly looking for new audiences. For YouTube, this is gamers. For Facebook, it's teenagers – with whom Snapchat is very popular. It's also a demographic Facebook has been struggling to engage.

Hoovering up smaller apps – or copying them – is becoming the default way for the grand old companies of the internet to stay young.

You're only as old as the last app you bought.

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AT&T Plans To Buy DirecTV For $48.5bn

Telecoms giant AT&T plans to buy DirecTV for $48.5bn (£28.8bn), a bid that highlights the convergence between video and mobile devices.

The combination with DirecTV, the No1 US satellite TV provider with 20 million customers, would beef up AT&T's packages of cellular, broadband, TV and fixed-line phone services.

AT&T is already the largest mobile service provider in America, serving 116 million customers.

AT&T and DirecTV expect the deal to close within 12 months

The combined AT&T-DirecTV would serve 26 million - making it the second-largest pay TV operator.

Comcast-Time Warner Cable would be first, serving 30 million under a $45bn merger proposed in February.

"What it does is it gives us the pieces to fulfil a vision we've had for a couple of years - the ability to take premium content and deliver it across multiple points: your smartphone, tablet, television or laptop," AT&T's Chairman and CEO Randall Stephenson said.

However, there are potential anti-competitive hurdles to clear.

Unlike the cable company tie-up, the AT&T-DirecTV merger would effectively cut the number of video providers from four to three for about 25% of US households.

AT&T and DirecTV expect the deal to close within 12 months.

Under the terms announced Sunday, DirecTV shareholders will receive $28.50 (£16.9) per share in cash and $66.50 (£39.5) per share in AT&T stock.

The total transaction value is $67.1bn (£39.9bn), including DirecTV's net debt.

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French Rogue Trader Kerviel Behind Bars

A French rogue trader convicted for his role in the near collapse of Societe Generale bank has been detained after spending two months on a protest walk.

Jerome Kerviel journeyed from Rome to the Italian border town of Ventimiglia to demonstrate against "the tyranny of the markets", portraying himself as a simple soul caught up in an orgy of greed.

He said his protest march was inspired by the Pope, who he met at the Vatican in March.

Kerviel denied he was a fugitive as he arrived at the border in Menton

The 37-year-old made the journey while awaiting the outcome of a legal appeal against a three-year prison term for unauthorised trading.

French authorities had earlier warned that if he did not show up to begin his sentence by midnight on Sunday "he will be considered a fugitive" and a Europe-wide warrant would be issued for his arrest.

Kerviel denies accusations he absconded.

"I have never been a fugitive; I have always taken responsibility for my actions," he said after leaving his hotel in Ventimiglia dressed in hiking clothing and a backpack.

"I am walking and I am going back to France."

As he approached the French-Italian border accompanied by supporters and journalists he said: "I will present myself to the first police officer I see.

The former trader says he has been made a scapegoat in "an orgy of greed"

"I have not lost, I've spent a beautiful day with people close to me, I'm happy, I'm free. I'll turn myself in to the police and the authorities."

Kerviel had spent the last two nights in Ventimiglia, refusing to return to France to begin his sentence until President Francois Hollande intervened in his case.

But as the midnight deadline approached he continued on towards the Riveria border town of Menton, where he was apprehended by police and driven away.

After an overnight stay in a police station there, he was transferred to a prison in the nearby city of Nice on Monday morning.

Kerviel told reporters he was not seeking a pardon but wanted to reveal "the serious failings" that led to his conviction and to ask for immunity for potential witnesses who could testify in his favour.

The former junior trader was sentenced in 2008 for bringing his employer Societe Generale to the verge of bankruptcy following a series of risky trades which involved up to 50 billion euros (£40.7bn) of the bank's money.

Kerviel insisted his bosses were just as much to blame for the scandal and that he was just "an ordinary person".

"I am not crazy," he told officials investigating the trades, adding: "I didn't earn millions (in salary) and I didn't drive a Porsche."

Kerviel has become something of a cause celebre in France. He has won support from prominent left-wingers and leading figures in the Catholic Church who believe he has been unfairly made a scapegoat for the shortcomings of a corrupt financial world.

But finance minister Michel Sapin described Kerviel as a criminal.

"The crook is caught, the crook is convicted, the crook should of course serve his sentence," Mr Sapin said on LCI television.

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The Clock Ticks On Pfizer's Bid For AstraZeneca

By Ian King, Business Presenter

In an industry in which a decade can pass in the twinkling of an eye - that is generally how long it takes for a drug to be developed in a laboratory, approved by regulators and made available to patients - the board of AstraZeneca have shown themselves to be pretty nimble in the short term, too.

Leif Johansson, the chairman of AstraZeneca and Pascal Soriot, his chief executive, wasted no time this morning in rejecting a £55-a-share offer from Pfizer that the US drugs giant had declared to be its 'final' offer.

In doing so, they confounded many City observers, who had suspected that £55-a-share was the price Pfizer would need to put on the table to get the AstraZeneca board to open the company's books to its American suitor.

Pfizer will be feeling disappointed and not just because its latest offer contains an increased cash component. While the previous offer comprised only 32% cash, it is now 45% cash.

But what has let Pfizer down is the 7% fall in its own share price since it went public with its interest in AstraZeneca. This, all other things being equal, reduces the worth of its offer - quite apart from signalling that some of Pfizer's own shareholders are sceptical about this approach.

All of this means that, when Pfizer privately put a £53.50-a-share offer to the AstraZeneca board over the weekend, the board felt confident enough to say no.

It told Pfizer it would be looking for an extra 10% - in other words, a total of £58.85 a share - before it would be willing to engage.

In responding with its £55-a-share offer, which was made public without telling the AstraZeneca board, Pfizer is now gambling that AstraZeneca's shareholders - who were not consulted before the latest offer was rejected - will speak out and urge the board to come back to the table.

To that end, Monday's precipitous decline in shares of AstraZeneca may help its cause.

Pfizer CEO Ian Read was questioned by MPs last week

And Pfizer's insistence that this offer is "final" is another negotiating tactic. It can now only sweeten its terms if the AstraZeneca board recommends an improved offer or in the unlikely event of a counter-bidder emerging.

But it is by no means certain that shareholders will demand the board returns to the table.

For example, Anne Richards, the chief investment officer of Aberdeen Asset Management, one of AstraZeneca's largest shareholders, has already said that Pfizer "could do better" on price.

There are other considerations for Pfizer. If it walks away on Monday next week, which is the deadline set by the Takeover Panel for it to "put up or shut up", it will not be able to come back with another offer for a further six months.

That means it could not bid again until the end of November.

A deal of this size and complexity would take many months to complete which, in such circumstances, would leave it open to the risk of an incoming Labour government blocking the deal on public interest grounds.

A second risk is that the US government may, in the interim, act to prevent American companies from re-domiciling for tax purposes via foreign takeovers - "inversion" in the jargon - which, of course, is a major motivation for Pfizer here.

So, for Pfizer, time is of the essence.

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Van Gaal Named Manchester United Manager

Manchester United have confirmed Louis Van Gaal is their new manager.

The Netherlands national coach has been linked with United since the departure of David Moyes towards the end of last season.

Van Gaal will join United after the Dutch complete their World Cup campaign in Brazil and he has signed a three-year deal.

Ryan Giggs, who ended the season in interim charge at Old Trafford, will be van Gaal's assistant and he is also bringing assistant coaches Frans Hoek and Marcel Bout with him.

Van Gaal said: "It was always a wish for me to work in the Premier League. To work as a manager for Manchester United, the biggest club in the world, makes me very proud.

"I have managed in games at Old Trafford before and know what an incredible arena Old Trafford is and how passionate and knowledgeable the fans are.

"This club has big ambitions; I too have big ambitions. Together I'm sure we will make history."

Chief executive Ed Woodward added: "In Louis van Gaal, we have secured the services of one of the outstanding managers in the game today.

"He has achieved many things in his career to date and Old Trafford provides him with a fitting stage on which to write new chapters in the Manchester United story." 

And the club's owner Joel Glazer said: "I am delighted that Louis will be our next manager.

"He has an outstanding pedigree as a coach, both as a man who motivates his teams to win trophies and as someone who believes in giving young players a chance to prove their worth. I am sure he will make a big impression on the club, the players and the fans."

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Facebook 'Is Building App To Rival Snapchat'

Facebook is building an app to rival Snapchat just months after it failed in an attempt to buy the photo-sharing service.

The Financial Times reported that Facebook has been working on the app - known internally as Slingshot - for several months.

Mark Zuckerberg's firm offered $3bn (£1.8bn) for Snapchat late last year, but was turned down.

The Snapchat app allows users to send picture and video messages which self-destruct after a short period of time.

Slingshot is thought to be similar, although primarily focused on video.

Facebook is unbundling its features into various apps

When released, the service is likely to be a standalone app, rather than incorporated into the main Facebook app.

Facebook attempted to take on Snapchat directly in December 2012 with an app called Poke.

However it was not as popular, and was removed from the app store earlier this month.

Earlier this year, Facebook bought messaging service WhatsApp - which boasts 500m users - for $14.6bn (£8.7bn) in cash and stock.

Slingshot is said to resemble TapTalk, a new video-messaging app from Berlin where users tap a profile picture to instantly send a photo or short video, which can be viewed only once by the recipient.

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Dallas-Based Hedge Fund Buys Co-op Bank Stake

By Mark Kleinman, City Editor

A Dallas-based hedge fund boss who made millions of dollars from the 2007 US housing crash has snapped up a stake in the struggling Co-operative Bank.

Sky News has learnt that Hayman Capital Management is one of a group of City and Wall Street investors which were assigned shares in the Co-op Bank as part of a £400m fundraising aimed at shoring up its finances.

Hayman Capital is headed by Kyle Bass, whose prominence in the US financial sector is partly a consequence of his foresight in predicting - and profiting from - the crisis in the US housing market which was among the causes of the wider global economic slump.

It is understood to be acquiring a small number of shares in the Co-op Bank, which have become available because some existing investors such as the Co-op Group have elected not to take up their full allocation in the new fundraising.

The Co-op Group owned the entirety of its banking arm until last year, when the discovery of a £1.5bn black hole in the lender's balance sheet forced it to shrink its ownership interest, ceding control to bondholders such as the US hedge funds Perry Capital and Silver Point.

Until the £400m cash call, the Group owned 30% of its banking arm, but that stake has now fallen to just over 20% as the troubled mutual seeks to conserve funds to resolve its broader problems.

Although the bank's principles are enshrined in a new constitution, the emergence of further hedge funds on its share register underlines the extent to which it is now removed from its original ownership.

At the weekend, representatives of the Co-op's regional boards and independent societies voted unanimously to back reforms of its governance and management proposed by the former City minister Lord Myners.

The Group still owes more than £250m to the bank as part of its earlier initial fundraising, and is examining the sale of assets including its pharmacies business to raise money.

The bank's ability to continue using the Co-op name could be jeopardised if the Group's stake fell below 20%.

The need to raise an additional £400m emerged in March as the legacy of past insurance mis-selling, IT glitches and other problems continues to haunt the mutual.

A report published last month by Sir Christopher Kelly, a former civil servant, castigated the former management of the Co-op Bank, pinning much of the blame for its £1.3bn loss in 2013 on the decision to merge with the Britannia Building Society in 2009.

A string of other inquiries are also under way into the crisis, although the Financial Conduct Authority and Prudential Regulation Authority are unlikely to complete their reports for some time.

Up to £5m in bonuses owed to former Co-op Bank directors have been withheld, although its ability to claw back money already paid to them is severely restricted.

A Co-op Bank spokesman declined to comment.

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AstraZeneca Boss Says No Deal Before Deadline

AstraZeneca Rejects Pfizer: Full Statement

Updated: 8:09am UK, Monday 19 May 2014

The Board of AstraZeneca PLC ("AstraZeneca" or the "Company") notes the announcement by Pfizer Inc. ("Pfizer") of its final proposal (the "Final Proposal"), comprising £24.76 in cash (45%) and 1.747 Pfizer shares (55%) per AstraZeneca share, representing a value of £55.00 per AstraZeneca share (based on the closing price of Pfizer shares on 16 May 2014).

This proposal undervalues the Company and its attractive prospects and has been rejected by the Board of AstraZeneca.

Leif Johansson, Chairman of AstraZeneca said: "Pascal Soriot, Marc Dunoyer and I had a lengthy discussion with Pfizer over the weekend about the proposal Pfizer made on Friday evening at a value of £53.50 per share.

"During this discussion, Pfizer said that it could consider only minor improvements in the financial terms of the Friday Proposal. In response, we indicated, even assuming that other key aspects of any proposal had been satisfactory, that the price at which the Board of AstraZeneca would be prepared to provide a recommendation would have to be more than 10% above the level contained in Pfizer's Friday Proposal.

"The Final Proposal is a minor improvement which continues to fall short of the Board's view of value and has been rejected."

"Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation.

"From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case.

"The Board is firm in its conviction as to the appropriate terms to recommend to shareholders."

"AstraZeneca has created a culture of innovation, with science at the heart of its operations, which will continue to create significant value for patients, shareholders and all stakeholders of AstraZeneca."

"As an independent company, the entire value of AstraZeneca's pipeline will accrue to our shareholders. Under Pfizer's Final Proposal, this value would be significantly diluted."

"We have rejected Pfizer's Final Proposal because it is inadequate and would present significant risks for shareholders, while also having serious consequences for the Company, our employees and the life-sciences sector in the UK, Sweden and the US."

Background

After the close of business on 16 May 2014, the Board received a letter containing a revised non-binding proposal from Pfizer comprising £21.57 in cash (40%) and 1.845 Pfizer shares (60%) per AstraZeneca share, representing a value of £53.50 per AstraZeneca share (based on the closing price of Pfizer shares on 16 May 2014) (the "Friday Proposal").

Pfizer's letter did not provide detail about other key aspects of its proposal, several of which are of importance to the Board's evaluation.

The Board of AstraZeneca met on 17 May 2014 and concluded that the financial terms of the Friday Proposal substantially undervalued the Company and its attractive prospects. Accordingly, the Friday Proposal was rejected.

The Board wrote to Pfizer on the evening of 17 May 2014 to confirm that the Board had rejected the Friday Proposal.

The Board offered to hold a meeting with Pfizer to explain its views around the substantial shortfall in value of the Friday Proposal.

The Board also offered Pfizer the opportunity to explain the key aspects of its proposal that were not described in Pfizer's letter, in particular four points central to the Board's concerns relating to value for AstraZeneca's shareholders. These are:

· The business operating model and segmentation which would allow AstraZeneca to deliver on its research and development pipeline and prospects; and which would protect and preserve its culture of science and innovation, especially given the likelihood of material cost savings and research and development reductions;

· The details of Pfizer's plans for cost savings, including around research and development, pipeline delivery and employment;

· Transaction execution risks, in particular Pfizer's proposed tax inversion and regulatory clearances; and

· Pfizer's plans for protecting the certainty of delivery of the value of any offer at closing.

Pfizer requested that this meeting be held by conference call. This conference call, between Leif Johansson (Chairman), Pascal Soriot (Chief Executive Officer) and Marc Dunoyer (Chief Financial Officer) of AstraZeneca and Ian Read (Chairman and CEO) and Frank D'Amelio (Chief Financial Officer) of Pfizer, took place on the afternoon of 18 May 2014.

The Chairman of Pfizer said that Pfizer could consider only minor improvements to the financial terms of the Friday Proposal.

The Chairman of AstraZeneca responded that, even if the other key aspects of the Friday Proposal had been satisfactory, the price at which the Board of AstraZeneca would be prepared to provide a recommendation would have to be more than 10% above the level contained in Pfizer's Friday Proposal. Pfizer stated that its Friday Proposal was final and would not be amended.

As a consequence the discussion ended.

The Board of AstraZeneca met on 18 May 2014 after this telephone discussion and reconfirmed its rejection of Pfizer's Friday Proposal.

A few hours later, without prior notice to AstraZeneca and contrary to its previous statement, Pfizer announced its Final Proposal to the market. The Board of AstraZeneca met again and rejected Pfizer's Final Proposal for reasons set out below.

The Board believes Pfizer's proposals fail to recognise the transformation of AstraZeneca and its attractive long term prospects as an independent science-led company

As set out in the presentation to shareholders on 6 May 2014:

· AstraZeneca has a growing and accelerating late stage pipeline, with aggregate risk-adjusted pipeline peak year sales potential of around $23 billion and non risk-adjusted pipeline peak year sales potential of around $63 billion;

· AstraZeneca's five key growth platforms are sustaining near-term growth, AstraZeneca remains confident that 2017 revenues should be broadly in line with 2013;

· AstraZeneca is targeting strong and consistent revenue growth from 2017, leading to annual revenues of greater than $45 billion by 2023; and

· AstraZeneca's core earnings growth is expected to be in excess of revenue growth during the period from 2017 to 2023 as a result of operating leverage.

AstraZeneca has excellent momentum in the delivery of its clearly defined strategy, underpinning the Board's confidence in long term revenue targets and profitability

AstraZeneca continues to demonstrate strong momentum across all elements of its strategy, as evidenced by multiple recent significant pipeline developments in its core therapy areas.

These pipeline developments, announced in 2014 after completion of the Company's 2013 Long Range Plan, underpin the Board's confidence in AstraZeneca's revenue targets due to increased probabilities of success for key oncology and other specialty franchise pipeline assets.

As a result, AstraZeneca's margins are expected to benefit from this improved revenue mix.

Given that AstraZeneca is at a point of inflection, the Board believes that selling AstraZeneca at the final price proposed by Pfizer would deprive shareholders of the value from potential future pipeline success.

Accordingly, the Board believes short term metrics, including premia over historical share prices, as referenced by Pfizer regarding the attractiveness of its proposals are not appropriate bases for assessing the value of AstraZeneca.

Pfizer's Proposals and Business Model Bring Uncertainty and Risk

The majority of the consideration is in Pfizer shares which many AstraZeneca shareholders will be forced to sell. Further, for those AstraZeneca shareholders able to hold Pfizer shares, the Board believes Pfizer's proposals would materially alter the investment case and create risks and uncertainties.

In particular the Board believes:

· Pfizer's proposals are predicated on the delivery of significant cost reductions and imply a meaningful reduction in research and development potential and capabilities;

· The associated integration would risk significant disruption to the delivery and value of AstraZeneca's pipeline;

· Pfizer's previous large scale acquisitions have highlighted the challenges around the negative impact of integration on research and development productivity and output; and

· Pfizer's announced business segmentation, if it were applied to AstraZeneca's business, would likely lead to value destruction.

In the context of the above, AstraZeneca notes the recent decline in Pfizer's share price, which has fallen by 5.3% since the release of Pfizer's Q1 2014 results.

The tax-driven inversion structure remains a key part of Pfizer's proposals. The inversion structure has already been the subject of intense public and governmental scrutiny, particularly in the US, as a result of Pfizer's possible offer for AstraZeneca. The Board believes this structure brings increased uncertainty as regards the delivery of value for AstraZeneca shareholders.

Rejection of the Final Proposal

The Board believes that Pfizer's Final Proposal, in relation to price, form of consideration and the four particular points that are central to the Board's concerns around value, remains inadequate. Accordingly, the Board has rejected the Final Proposal.

This statement is being made by AstraZeneca without prior agreement or approval of Pfizer.

There can be no certainty that an offer will be made nor as to the terms on which any offer might be made. Shareholders are strongly advised to take no action. 

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Cyber-Spying Charges Against China Officials

The US has charged five Chinese military officials in Beijing with economic espionage and trade secret theft - allegations that China says are "made up".

The indictment accuses the five hackers of targeting US nuclear power, metals and solar products industries.

Six American companies, including Alcoa and Westinghouse, and one labour union were cited as victims of the hacking attacks.

US Attorney General Eric Holder said the case "represents the first ever charges against a state actor for this type of hacking".

"The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response," he told a news conference.

Barack Obama and Xi Jinping have discussed cyber-security issues

China's foreign ministry decried the charges, and said the "so-called prosecution" would damage China-US relations.

"China is a staunch defender of network security, and the Chinese government, military and associated personnel have never engaged in online theft of trade secrets," Foreign Ministry spokesman Qin Gang said in a statement.

Mr Holder called the indictment a "ground-breaking" step forward in addressing the threat of cyber-security.

"For too long, the Chinese government has blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries," said FBI Director James Comey.

The US believes China stole military trade secrets costing American businesses billions of dollars a year.

Sky News Correspondent Dominic Waghorn in Washington says the charges are "unprecedented".

Last September, President Barack Obama discussed cyber-security issues with his Chinese counterpart Xi Jinping when the two met on the sidelines of a summit in St Petersburg, Russia. 

More follows...

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