Live Blog

October 22, 2014, 11:33pm
ViiV Healthcare could generate one of the biggest IPOs in history, if GSK decides to go ahead and make it a spin-off company.
The pharmaceutical firm was created in 2009 as a joint venture between GSK and US firm Pfizer. It specialises in developing therapies for HIV and operates in 16 countries.
With revenues at £1.03bn and operating profit at £675m during the first nine months of 2014, it is thought that ViiV could be valued at up to £15bn, making it bigger than M&S and Sainsbury's combined.
Its most recent HIV medicines, Trumeq and Tivicay, became available in the last year as "one of the most successful new product launches in the category,” according to chief executive Sir Andrew Witty. 
Past spin off success stories
If the spin off goes ahead and is successful, it could join ranks with the following companies, all of which gained great success after flying their parent company nests. 
Marathon Petroleum
Spun off from Marathon Oil Corp in June 2011, its first-quarter dividend soon increased by 25 per cent. Low crude oil prices helped to bring up margins, and the company's 2012 revenues went up by 6.5 per cent. With lots of free cash available, it remains an attractive prospect for investors.
The $36bn snack food company Mondelez was spun off by Kraft Foods. Major brands under the Mondelez umbrella include Oreos, Ritz and Trident. The first quarter following the split was not easy, with snack revenues going down by two per cent. But it soon started to perform well, reaching double-digit revenue growth in a matter of months. 
Huntington Ingalls
The defence contractor and military shipbuilder was spun off from Northrop Grumman in March 2011. Northrop made the move so that it could concentrate on information systems, aerospace and technical services. Initially, Hntington Ingalls did not perform as well as investors hoped because of the damage caused by hurricane Katrina to some shipyards in Mississipi and Louisiana.
But once the company had closed down some poorly performing facilities and won a ship rebuilding contract worth £2.6bn from the US Navy, revenues started to grow. 
Hillshire Brands 
Spun off from consumer goods corporation Sara Lee in 2012, HillShire Brands quickly benefited from the strong performance of brands such as Ball Park hot dogs and Jimmy Dean sandwiches. Stock rose sharply after the split, delivering a premium of more than 15 per cent to shareholders. The baked goods and beverages division left behind was rolled into the D.E. Master Blenders 1753.
Phillips 66
Phillips 66 was spun off by refining company ConocoPhillips. A drop in crude oil prices and an increase in refiners' margins allowed earnings to reach $5.4bn in 2012, up from $3.6bn the year before. This meant Phillips 60 could return $400m worth of capital to its shareholders in 2012, through dividends and share purchases. 
Euan Sutherland
October 22, 2014, 9:13pm
Euan Sutherland is being given a golden handshake of almost 200,000 shares by SuperGroup, following his appointment to the role of chief executive earlier today. 
He will take over from Julian Dunkerton, who founded the group’s fashion brand SuperDry. Dunkerton has been appointed to the role of product and brand director.
Under the company's Performance Share Plan, Sutherland will receive 193,965 SuperGroup shares. This is on top of a £675,000 salary and up to a 150 per cent performance related bonus in cash and shares.  
It is a “conditional” award, however, which will only be made available to Sutherland after he has been with the company for three financial years. This means if he leaves after just ten months, as he did at the Co-operative Group in March, the award will be invalid. 
Sutherland said he was looking forward to joining the company in his announcement this morning. "SuperGroup is a great business with a strong brand and I am truly delighted to be taking on the challenge of delivering its growth potential," he said. 
“The business is at an exciting stage of its development and has numerous opportunities for growth. I admire what the business has achieved and am excited about being part of the team that will deliver the strategy. Julian and I work well together and have a shared ambition to succeed with the global roll out of the Superdry brand."
The news of Sutherland's appointment resulted in share price going down by as much as four per cent in morning trading. It closed at £9.75 this afternoon – a 5.3 per cent decline from yesterday. 
October 22, 2014, 7:28pm
Lloyds Banking Group is set to cut 9,000 jobs over the next three years, amounting to a loss of over ten per cent of its workforce. 
An announcement next week will provide more detail on the cuts, which reflect the British bank's move away from consumer-facing services and towards digital banking. 
This will coincide with the release of its third-quarter results, which are due to be released on Tuesday. 
Insiders informed Sky News that cuts will take place over a three year period ending in December 2017. The exact number is still being finalised, but the bank said 9,000 was the most likely figure. 
It has not been made clear who exactly the cuts will affect. Likely candidates include call centre staff, support staff and branch assistants. In addition, targets for branch closures are expected to be announced next week.
"This is about responding to customer behaviour and ensuring that Lloyds is in the right shape for the next 20 years of consumer banking," one insider told Sky.
A spokesperson for Lloyds declined to comment to City A.M., describing the cuts as “speculation”.
X and Y chromosomes
October 22, 2014, 6:11pm
In Europe, the average life expectancy of women is 7.5 years longer than of men, but the reason for this difference remains unknown. 
Now, researchers at Uppsala University in Sweden have made a discovery which sheds light on why men's health often deteriorates more quickly with age than women's does.
Age-related loss of the Y chromosome (LOY) involves the disappearance of Y chromosomes from men's cells. The Y chromosome is one of the two sex chromosomes contained in each male cell. The other is the X chromosome.
As Y chromosomes disappear from cells, the genes they contain can no longer be expressed. The researchers involved in this study found that some of these genes play an important role in the suppression of tumours. 
"Many people think the Y chromosome only contains genes involved in sex determination and sperm production,” said Jan Dumanski, co-author of the study told the BBC.
"In fact, these genes have other important functions, such as possibly playing a role in preventing tumours."
Dumanski and his team investigated the relationship between Y chromosome loss and health deterioration in 1,153 men aged between 70 and 84. They carried out blood tests to determine how many blood cells had gone through LOY, and found that 637 of the participants suffered from heightened risk of death because of the disorder.
Men who were free from LOY were found to live an average of 5.5 years longer than those who had the disorder, and a strong link was uncovered between LOY and a range of cancers. Once the results were adjusted for age and other health conditions besides LOY, the authors of the study said the link was “significant”. 
This, they explained, was because Y chromosome genes enabled blood cells to help with immuno-surveillance, where the immune system detected and killed tumour cells to prevent cancer. When LOY occurred the Y chromosome genes were not expressed, and so the chromosome's contribution to suppressing tumours was reduced. 
Women do not suffer from LOY because they have to X chromosomes, rather than one X and one Y. Therefore, their health is not put at risk in the same way as they get older. 
"This is an intriguing theory but more research is needed to establish whether loss of the Y chromosome really could be a predictor of cancer risk,” said Dr Julie Sharp, head of Health Information at Cancer Research.
If further studies consolidate this link between a man's Y chromosome and his health, it could be important for the future of disease monitoring. Blood tests looking at the health state of a man's Y chromosome could be used to predict his risk of cancer, for example.
October 22, 2014, 5:40pm
Chancellor George Osborne has given his support to the idea of an American Football team in the capital, arguing it would be a “huge boost to London”.
With Wembley due to host the second of three NFL games this season on Sunday, and the FA contemplating hosting England games elsewhere, there has been increased speculation the stadium could become home to an NFL franchise.
Osborne met with NFL officials today to give his backing to the idea, according to the Evening Standard.
Osborne told the paper:  “I’ve said to the NFL that anything the Government can do to make this happen we will do, because I think it would be a huge boost to London.
“I just think it will cement London as a global sporting capital as well as a global financial and business and cultural capital.”
He said: 
We’re really focused on making the three games we’re playing today as successful as they can be. 
We’re very open and flexible on the models going forward and I think we’ll look to continue opportunities we have to grow the engagement and activation in the market for our fans there, so if that means more games, if it means a team down the road – all of those things we’ll look at, but it really starts with how we continue to grow and give more opportunities to our fans to experience the NFL live in the London market.
This Sunday over 80,000 fans are expected to pile into Wembley to watch the Detroit Lions take on the Atlanta Falcons, while a full house is also expected for the 9 November clash between the Dallas Cowboys and the Jacksonville Jaguars.
October 22, 2014, 5:34pm
Tomorrow morning, Tesco will post its half-year results, as investors and pundits wait with sharpened knives.
It has been a turbulent few years for the supermarket giant. Once, Tesco seemed to have the world in its aisles, with stores as far-flung as Japan and the US.
But bit by bit, the retailer's empire has begun to crumble. 2014 became a year of profit warnings and high drama, culminating in a baptism of fire for new boss Dave Lewis, who only started on 1 September.
Barely three weeks after his first day, the company suspended several senior staff members after it discovered a £250m black hole in its profit forecast. 
What followed was mayhem: Blackrock, a major investor, slashed its stake, while ratings agencies put the retailer on negative watch, just weeks after Standard and Poor's had cut its rating to "BBB" from "BBB+". There was even talk of executives being hauled before MPs. 
Here, we chart the decline of a retail empire.
Pinch and zoom to see the detail on mobile.
October 22, 2014, 4:03pm
The saga surrounding Raheem Sterling’s fatigue continues to rumble on.
The Sun’s front page this morning screamed “'Tired’ Raheem at 3am 3 Lions party” and led to a story exposing the teenage winger’s exploits at a London nightclub just a day after suggesting he was “a bit tired” ahead of England’s game against Estonia.
The tabloid press is not known for subtlety when it comes to its discussion of young English footballers’ social lives, but there are real reasons for Liverpool fans and staff to be at least a little bit worried by Sterling’s off-field exploits.
The Guardian has reported that Liverpool are unconcerned by the reports, but according to a sports physiologist who specialises in sleep and fatigue, late nights and loss of sleep could lead to headaches further down the line.
Jonathan Bloomfield from Support2Perform told City A.M. that for a 19-year-old such as Sterling, irregular sleep patterns could have a real effect on athletic performance and lead to an increased injury risk.
As fatigue builds up over time, it becomes increasingly hard to reverse - especially for teenagers.
“We have a body clock, a 24-hour natural rhythm. If we regularly act against that rhythm we eventually suffer a fatigue penalty. If you create a sleep debt, which can accumulate, it will become more and more of a challenge to fix”, he explained. 
“Take any 19-year-old. There is an increased sleep-need throughout the teenage years because they go through a growth phase, so the body needs between 10 and 12 hours sleep on a regular basis. But this is rarely achieved, so there's a debt.
“People who become more tired over time make more mistakes. Their mental decision making and reaction speed is reduced. So if a player has a natural high intensity game, they could have more injury risk - and evidence suggests this risk is prevalent amongst adolescent athletes.”
Even if players are avoiding lavish parties and booming sound systems, Bloomfield suggests youngsters are now more likely than ever to develop fatigue through other, seemingly more innocent, activities.
Games consoles, smartphones, internet - all temptations that could prevent today’s blossoming athletes from getting some much-needed sleep.
“This could be the first case of many," he said. "Somebody who’s 19 years old, they’ve never known a world without the internet. People are much more social, much more connected. Because we’ve got this behavioural desire to stay up even longer, we can play the Xbox at 3am with some kid in Japan. So the sleep debt accumulated by teenagers 10-15 years ago may not be nearly as bad as that being accumulated by teenagers today.
“For a footballer, a typical example of sleep disturbance would be Champions League midweek away game. Say the game finishes at 11pm, there’s at least three hours following heavy exercise before the body’s even capable of sleeping. Exercising late at night is not good preparation for going to bed, and the clubs choose to travel home. They’re potentially getting back into bed at four or half-four in the morning, missing nearly a full night’s sleep. Their body clocks will typically still try and wake them up at 9am or 10am, so total sleep will often be reduced.
“It’s simple mathematics. If you lose one night’s sleep, it will take you up to seven to recover. But because football fixtures are so relentless, it can be quite challenging to recover that, hence they become fatigued over time.
“I’m far from surprised by a young player like Sterling reporting extreme tiredness at this stage in the season. Like he said himself, he’s only human”
Job Interview
October 22, 2014, 3:56pm
You've finally found the perfect candidate for a job you're trying to fill – they have an excellent degree, lots of experience in the right professional area, and a personality that fits into your organisation.
It's much easier to welcome them on board right away than conduct background checks and risk losing them to someone else in the meantime. After all, credentials like that don't come around every day and the chances they would have the audacity to lie are slim. 
But the reality is in many cases, job applicants should not be given the benefit of the doubt. According to pre-employment screening company First Advantage, almost a quarter of applications for financial services jobs contain inaccuracies.
On a random sample of CVs, 23.1 per cent of checks conducted by the organisation (which, surprise surprise, specialises in background checks) between January 2011 and June 2014 revealed discrepancies. The study included applications from Europe, the Middle East and Africa. 
“The high percentage of major discrepancies in financial services shows employers cannot afford to be complacent – screening is not only a safeguard for employers but a powerful deterrent to candidates who might otherwise mislead or overstate their qualifications and experience,” commented Traci Canning,  managing director of First Advantage in Europe, the Middle East and Africa.
Most of these were “minor” inaccuracies – ones which would be unlikely to alter an employer's overall view of a candidate. But nine per cent of CVs contained “major” inaccuracies, raising “significant cause for concern”. This means one in 10 candidates applying for a financial services job told at least one major lie about their education or employment history. 
The highest level of inaccuracy was found in candidates’ education history, where 31.2 per cent of checks uncovered a discrepancy relating to when, what and where a candidate studied. Just under 20 per cent revealed inaccuracies in employment history.

On a more positive note, this tendency to bend the truth appears to be diminishing over time. 18.6 per cent of CVs for financial services jobs were found to contain inaccuracies in the first half of 2014, compared with 26.4 per cent in 2011. 

Additionally, the average number of inaccuracies in job applications in the financial sector was lower than the national average of 27.2 per cent – a fact which Canning puts down to greater candidate awareness of the screening their CVs will be subjected it.
This is because specific checks are legally required for ‘controlled functions’ in UK financial institutions. Canning warned if other sectors are to see a similar reduction in inaccuracies, they must implement similar checks.
“The comparatively low and falling rate of discrepancies in the financial services sector reflects the greater regulation and a workforce that’s increasingly familiar with screening,” she said.
“This provides an example to other sectors where screening is less commonplace – our findings indicate the greater use of screening, the less likely candidates are to attempt to conceal or misrepresent information when applying for a new job, which in turn improves the quality of hire.”
October 22, 2014, 3:07pm

The deep web black marketplace Silk Road, which was shut down last year, prevented violence associated with the illegal drug trade and represented a breakthrough in criminal innovation.

So concludes a new study by researchers at the University of Manchester and the University of Montreal.

Dubbed the "eBay" of drugs, the site was not, as many had thought, dominated by transactions between drug dealers and users, but appears to have had a significant level of dealer-to-dealer transactions.

Between 31 per cent and 45 per cent of transactions were likely "business-to-business", according to the research.

Using a bespoke web crawler, the authors downloaded all drugs listings on Silk Road in September 2013. The sales were in quantities and at prices typical of purchases made by drug dealers sourcing supplies.

The ability of distributors to use Silk Road to source stock for street operations helped to develop a new breed of drug dealer. This study labelled this type of criminal innovation "transformative" and said it would have major implications for the future of the drug war.

"This new breed of drug dealer is likely to be relatively free from violence typically associated with traditional drug markets," the authors wrote.

It's also fair to say there was a significant demand for the service Silk Road was offering, as it became extemely popular in a short time frame. Sales on the site sky-rocketed from an estimated $14.4m in the middle of 2012 to $89.7m, an increase of 600 per cent in a single year - without resorting to violence. 

"Whereas violence was commonly used to gain market share, protect turfs and resolve conflicts, the virtual location and anonymity that the cryptomarket provides reduces or eliminates the need - or even the ability - to resort to violence", the authors explained. 

These Silk Road drug distributors have more in common with university type drug dealers, being white, middle class and highly educated men who avoid violence.

This is a big change from the days of the street dealer who is often confronted with violence and must interact personally with customers and suppliers to establish trust relationships.

Silk Road solved many of these problems with its feedback and review system, where products and customer service would be subject to ratings in a similar way to eBay. In the virtual world, online reputation was more important than street cred.

The rating system provided by Silk Road also appears to have led to higher quality products and more accountable suppliers. Marijuana was by far the most popular drug with sales of harder drugs trailing far behind reflecting their general unpopularity among drug users.

In what may be the boldest claim of the paper, the authors argue deep web sites such as Silk Road could revolutionise the drug trade the same way Napster revolutionised music piracy. All this will be bad news for drug enforcement agencies and could "set back regulation efforts by decades".

However, site administrators will need to wise up too and build protections for their users from both police and administrators themselves. The theft of 96,000 Bitcoins from Silk Road successor Sheep Marketplace may linger in the mind of potential customers.

Mark Zuckerberg
October 22, 2014, 2:56pm

Facebook’s corporate tax bill for 2013 came in at just £3,169 last year, according to its latest accounts.

It paid less than London commuters pay for a yearly zone one to nine travelcard (£3,256) by basing its European headquarters in tax-favourable Ireland, and using a tax loophole known as the “Double-Irish”.

The social network paid the £3,169 on revenues of £49.8m and pre-tax losses of £11.6m. It also received a tax credit of £182,000 due to adjustments for previous years.

Facebook's London operations are estimated to have brought in £371m in revenues last year, up from £223m a year earlier, the Evening Standard reports. However, the accounts show lower revenues because Facebook processes much of its British sales in Ireland, where there is a lower rate of corporate tax.

In addition to the travelcard, Facebook’s tax bill was also cheaper than a night in the presidential suite of London's Mandarin Oriental hotel (that's not even its most expensive suite) and a return business class flight from London to New York.

The figure is also almost half that of the average Londoner's income tax bill.

The EU, British and Irish governments have begun to crack down on companies such as Facebook which pay a small tax bill in Britain by reporting profits through European subsidiaries based in low-tax countries such as Ireland, Luxembourg and the Netherlands. 

Ireland has proposed legislation to close the Double-Irish loophole by 2020, while the European Commission is investigating Amazon and Apple over its arrangements, which Brussels claims amounts to illegal state aid.