Buffett , 82, says he is ‘solidly in agreement’ with Berkshire Hathaway board members as to who should take over from him
Warren Buffett and the board of his conglomerate Berkshire Hathaway are “solidly in agreement” on who should be the company’s next chief executive, he said at Berkshire’s annual shareholder meeting on Saturday.
But Buffett, as with past practice, did not actually name his successor as CEO.
Speculation usually focuses on a small group of top Berkshire executives, among them insurance boss Ajit Jain and railroad leader Matt Rose.
The 82-year-old Buffett, in response to a shareholder question, said he thinks all the time about what could go wrong at Berkshire after he is gone.
“The key is preserving a culture and having a successor, a CEO that will have more brains, more energy, more passion for it than even I have … We’re solidly in agreement as to who that individual should be,” Buffett said.
Whoever ultimately takes over Berkshire will run a conglomerate that employs more than a quarter-million people in dozens of businesses worldwide, covering everything from ice cream to insurance and retail to railroads.
Its breadth means that its performance is often seen as a barometer for the broader economy. Earlier Saturday, one of Buffett’s top lieutenants said things were picking up but could improve further.
“It feels like a 2% economy. If we want to see GDP click up to 3.5%, 4%, you need to see more construction,” said Rose, CEO of the railroad Burlington Northern, in an interview.
Rose said BNSF was seeing “across the board” increases in demand to ship things like concrete, roofing tiles and cars.
But as much as investors want to hear about Berkshire’s growth potential and the state of the economy, some also attend the meeting just for a good laugh.
The meeting opened, as it does every year, with a video montage. This year’s included a duet between Buffett and singer Jon Bon Jovi and a take-off on the TV series Breaking Bad.
Some of the best comedy, though, usually comes in the verbal sparring between Buffett and Vice Chairman Charlie Munger over the course of the day. The two are close – they usually share an oversize box of peanut brittle during the meeting – but Munger’s acerbic tongue pops out from time to time.
“I come to see Charlie Munger needle Warren Buffett. Only he can,” said Sherman Silber, a doctor and shareholder.
Chancellor’s autumn statement brings good news for UK creative industries with a 25% tax relief and £6m fund for training
George Osborne has confirmed that the UK’s video game, animation and “high end” television industries will benefit from a 25% tax relief from April 2013.
The chancellor had already promised some form of games industry tax breaks as part of his March 2012 budget, but gave no further details at the time. In June the treasury released a statement claiming that these would be, “among the most generous [reliefs] in the world”.
Responding to the news, Dr Richard Wilson, CEO of Tiga, an association that represents independent game developers, said: “We did push for 30%, but we’re very pleased, that’s the key point. It’s fixed at 25% which means it’s going to be simple to understand and implement. It also gives us the most generous tax relief for video games within the European Union. It will be a big boost to the UK industry, and to Europe as a whole really. Global investors will see that our governments take games very seriously”.
The games industry contributes around £1bn a year to the UK economy, but has been losing staff and development contracts to countries offering generous tax subsidies. Tax relief in Quebec is worth up to 37.5% for creative industries employers.
“This tax relief puts us on a level playing field and it shows the government has been listening,” said Jo Twist, CEO of trade body, UKIE. “We have to be cautious at the moment, though, because the details are still unclear.”
The legislation for creative industries tax relief is being published on 11 December; this should spell out which sorts of companies and projects will be able to benefit. “As far as we can tell, it specifically supports developers rather than publishers; so the makers of games rather than the funders,” said Dave Bailey, co-founder of game developer, Mediatonic.
“This is really good news for businesses like ours. It will help studios that want to create new IP. Developing games from scratch is a really cash-intensive process, you’re taking a big gamble. This provides people with a cash boost if they’re not making profits yet, or a reduction on taxes if they are. It incentivises creative risk-taking.”
Also in the Autumn Statement, the chancellor announced a £6m investment in training for the games, TV and animation industries. According to a press release from the Department of Culture, Media and Sport, this will be used to provide entry-level and professional-level training for up to 3,300 people working in these industries.
“Combined with the Next Gen skills campaign to get creative computing into schools, this should really help with the talent pipeline,” said Twist. “It opens the chance for us to support apprenticeships, internships and more importantly continuous professional development. It should help crack open our innovative industry as a great career to pursue.”
There were other beneficial announcements for games development. A reduction in the general corporation tax to 21 percent in April 2014 will support the tax relief incentives, while a £50m investment into ultrafast broadband will create a new strata of twelve “super-connected cities” enjoying speeds of 80-100Mbps – perfect for online multiplayer gaming and digital downloads.
The message the games industry has taken from Osborne’s statement is that the government sees this sector as a decent bet for the UK economy going forward. “The chancellor has said that the economy is taking longer to recover, growth is slower than expected,” said Wilson. “Against that backdrop, where you have high levels of government borrowing, its incumbent on any government to look for sources of growth, to support industries where we have some form of competitive advantage.
“Clearly, there are areas such as aerospace, pharmaceuticals and the creative industries which are very important sectors – they have the capacity to grow. It’s sensible for the government to back them”.
The government must agree on a way forward for renewables if it is to unlock the billions of pounds poised to flow into the sector
Billions of pounds of investment in renewable energy is waiting to flow into the UK energy sector. Will the energy bill, published on Thursday, unlock it?
Vestas is the world’s leading manufacturer of wind turbines. We know what is needed to drive investment and what stymies it. Political consensus matters.
Investors were beginning to seriously doubt the government’s willingness and ability to deliver a workable energy policy for the UK. Last week’s disclosure of details in the bill demonstrated that agreement can be secured. It will give confidence to companies to continue with their planned investments. While final investment decisions for projects supported under the new scheme are unlikely until the arrangements are in place, clarity over the framework means there will at least be projects ready to sign once the scheme is ready.
By 2020, around 30% of the UK’s electricity will come from renewables, with wind contributing the majority of that. Vestas therefore sees considerable potential for the UK wind industry. We are forging ahead with the development of game-changing new offshore wind technology. The prototype of our new 8MW offshore turbine is due to be installed in early 2014 and the 80m blades will be tested in the UK in our state-of-the-art technology centre on the Isle of Wight.
Consumers also see the UK’s potential for renewable power. Vestas’ 2012 global consumer wind study showed 80% of UK consumers wanted to see more renewables in the energy mix compared to only 6% wanting more fossil fuels. Over three quarters were concerned about the UK’s dependency on imported fossil fuels.
The government’s transparency over the cost of supporting low-carbon investment is therefore extremely important. Yes, there is a cost to investment, but the important issue is whether that investment delivers good value for consumers. Support for all low-carbon investment, including nuclear, is estimated to be under £100 per household in 2020. This is extremely good value, even without taking account of savings achievable though increased energy efficiency.
The wind sector must not shy away from the debate on costs. Ultimately wind has to be economic without any support in the long term. We firmly believe it can be. Power prices are already rising due to increases in gas and carbon prices, that trend is likely to continue over the long term, while the cost of wind has the potential to fall over the medium term, with significant reductions possible offshore. Realising potential cost reductions requires a stable market and regulatory regime; the UK has perhaps been the antithesis of this over the past year.
The failure to establish a firm 2030 power sector carbon cap prolongs uncertainty for the supply chain where investment time horizons extend well beyond 2020. This is a significant missed opportunity. It is, however, helpful that the need for a 2030 power sector target has been recognised, as has the importance of the energy mix to facilitating the 2050 carbon targets at least cost. Wind will have a huge role to play in delivering both of these.
The need for political agreement over the energy bill is important, but broader political agreement over the increased use of wind energy in UK is needed. Over the past year, the onshore wind sector has been politically vilified. Such attacks add to the political risk attributed to the entire UK wind industry.
There is a common misunderstanding that it is possible to be vehemently anti-onshore wind while promoting the development of offshore wind. That is not the case. There is one wind industry in the UK, with largely the same developers, financiers and manufacturers operating across both the offshore and onshore environment. Offshore investors witnessing the attacks on the onshore sector are left wondering if they might be next. Political consensus needs to give confidence across the whole wind sector.
I look forward to the publication of the energy bill. I am confident the detail of the legislation can work; that it can deliver the investment in new low-carbon infrastructure the UK needs. The UK has secured the attention of potential investors from across the world. Investment in the offshore sector is due to ramp up dramatically over the next few years. With the eyes of international investors on the UK market; now is the time to show it can deliver.
• Ditlev Engel is CEO of Vestas Wind Systems AS
Former Olympus chief executive tells of risks he ran in exposing fraud scandal at the digital camera company
“This is humbling. It’s a long way from a private jet,” Michael Woodford shouts out as he charges across five lanes of traffic and into the underground at Euston Square.
In a previous life as the boss of one of Japan’s biggest companies, Woodford was used to being served champagne at 33,000ft as a stewardess put slippers on his feet. But that was a very different life again from the one Woodford was born into, in a “sink estate in Liverpool”.
As well as having a difficult upbringing in a “shoebox”-sized home, Woodford was bullied for being both Jewish and Chinese – he is neither, but he went to the King David Jewish school and has a slightly oriental appearance from Tamil ancestry.
“To get home you had to walk past the two big rough comprehensives, and they’d see my school blazer and yellow and black tie and they’d say, ‘Are you a yid, lad?’
“I would say, ‘No, I’m a gentile,’ but they couldn’t understand that, which would always irritate them and I’d get pushed around. Another day I’d come back and they’d say, ‘Are you a chink, lad?’. I’d say, ‘No I’m English,’ and they’d say, ‘Ah, two number 16s.’ They thought they were hilarious.”
Despite the bullying, Woodford, 52, is still in touch with many friends from his formative years in Liverpool and Southend. But he says you will never catch him boasting about the private jet that would whisk him from the modest Southend home he has lived in for 30 years to Paris for the overnight first-class flight to Tokyo, or his £2.75m to £3m a year salary. “My friends aren’t businessmen, they’re artists and teachers, that sort of thing,” he says. “If I went on about things like that, they would think I was a tosser.”
While he always tried to stay grounded as he climbed the corporate ladder at Olympus over three decades, it’s tough, he says, to break ties with the luxury lifestyle. “I don’t like travelling economy on long-haul flights. All that pampering over the years has obviously got to me – so it’s always business class,” he says as he relaxes into the leather seats of the first-class carriage from Paddington to Oxford for the latest in a series of public speaking engagements.
Woodford joined Olympus’s British subsidiary Keymed as a salesman in 1980 and rose to become managing director of the division before he was 30, then went on to become head of Olympus in Europe before being called to the top job in Japan. “But, you know, I don’t live on a yacht or do silly things.”
It’s not as if he can’t afford to be a little silly. Earlier this year he collected a £10m settlement over his dismissal for blowing the whistle on a £1bn fraud scandal at the endoscope and digital camera company.
“It must make you feel sick, interviewing people earning all this money,” he says. “I’m quite leftwing, you know. I could be a communist, if that worked any better than capitalism.”
Some of his beliefs would go down well with Marx and Lenin. His kids won’t be getting any of the £10m. “If I’m struck down now, they won’t get a penny,” he says. “Rather than being posh little rich kids, they’re going to go out there and earn it on their own.” Edward, 19, and Isabel, 17, were sent to state grammar schools until he left for Tokyo, when Isabel was sent to a private boarding school – “she would have had to be sedated and handcuffed to go [to Tokyo]” – where, Woodford says, she’s educating her classmates.
“Isabel told me the other day that some of her friends at school were saying taxation is wrong – not the level of taxation [but the fact that it exists]. She told them that that’s what pays for the hospitals and the schools for other kids who can’t afford to go to nice little rich schools.”
His money will go to charity, predominantly those campaigning for human rights, such as Clive Stafford-Smith’s Reprieve, and road safety foundations.
Noting the irony that he had just run across one of London’s busiest junctions, he says, “But we looked both ways, right? And we were late. Being late in Japan is just about the rudest thing you can do. The contents of a meeting [in Japan] don’t matter as long as you arrive on time.”
Woodford says Japan’s obsession with politeness and social niceties is partly to blame for the country’s fall from the top of the global power tree and the fraud that almost destroyed the 93-year-old Japanese electronics company.
“There is a disaster in Japan because of these social characteristics – the deference, not being able to question people in authority,” he says. It was this attitude, he continues, that almost allowed Olympus’s previous bosses to cover up more than £1bn of fraud.
He first got wind of the claims just weeks after taking over as chief executive – the first foreigner, or gaijin, to run the company, and only the fourth at any major Japanese company – when a friend emailed him a translation of “amazingly detailed” claims published in Facta, a local magazine with a campaigning remit similar to Private Eye.
“When I got to the office I expected everyone to be talking about it. But no one mentioned it.” By lunchtime he summoned two of his most trusted colleagues and ask them if they had read it. They had, but said that Tsuyoshi Kikukawa, Olympus’s previous CEO and then chairman, had “told them not to tell me”. Eventually Woodford demanded a meeting with Kikukawa and Hisashi Mori, then deputy president and “Kikukawa’s permanent sidekick”.
The table for the lunchtime meeting was set out with the “most wonderful selection of sushi, but in front of my place was a tuna sandwich”, Woodford, a committed sushi fan, told students at Saïd business school in Oxford later that evening. “It wasn’t just any tuna sandwich – it was a tuna sandwich that would have made British Rail in 1981 proud. It was that manky. The tuna sandwich was to tell me my place in life.
“That’s when it really blew up, and the shit hit the fan,” he said, before pausing hand over mouth in mock horror that he might have committed another terrible faux pas on top of arriving half an hour late for his own talk. “Can you say that at Oxford?”
Although Woodford tried to embarrass Mori into talking to him by following him into the urinals and shouting at him eyeball to eyeball, Mori and Kikukawa refused to explain why Olympus had spent almost £1bn buying three “Mickey Mouse” companies and paid $687m for mergers and acquisitions (M&A) advice on the deal. “It was the largest payment ever made for M&A advice in the history of capitalism by a factor of three,” Woodford says. Forensic accountants traced the money to London, from where it “went to the Cayman Islands and disappeared”.
When the next edition of Facta was published, it claimed the fraud was linked to “antisocial forces” – code for the Yakuza, the Japanese mafia. “I was scared. Even telling you now I can feel myself shaking and feel my hands going cold, soon my feet will go cold too,” he says. “I started to think what was going to happen to me. My fate could have been, ‘Michael has been under a lot of stress, he’s been drinking and taking sleeping pills. He jumped off the top of a building.’ That’s what happens in Japan.”
At home, his wife, Nuncy, (“she’s Spanish, Latin-tempered and very bossy”) was having constant nightmares. And it was about to get worse. Woodford called a meeting of the whole Olympus board to discuss the crisis, but Kikukawa had changed the agenda. “This meeting is to vote on the dismissal of Michael Woodford as CEO,” Woodford heard via simultaneous translation in his headset. “As he said the O, all the directors put their arms up. They couldn’t have put them up higher.”
The next word was from Kikukawa. “‘Mr Woodford cannot speak on this matter because he has a conflict of interest.’ It was an eight-minute corporate execution.”
He was forced to give up his apartment and take the bus to the airport, but Woodford wouldn’t acquiesce to Mori’s demands to hand over his iPhone. “I got in his face. ‘Are you going to take it off me? My wife will be phoning, she’ll be worried,’” he says. “Mr Mori didn’t know I’d grown up in Liverpool.”
Within hours he had given all the details to the press and the police. Kikukawa and Mori eventually resigned, but even then the rest of the board and institutional shareholders failed to support his bid to be reinstated as CEO.
“It is like a John Grisham novel. But it’s true.”
Exposure: Inside the Olympus Scandal – How I Went from CEO to Whistleblower (Portfolio Penguin) is published on 29 November. Available for £16 from www.guardianbookshop.co.uk
Sir Howard Davies counters criticism that commission – which will produce final report after next election – is too slow
The leader of the newly launched airports commission has countered claims that his inquiry will serve as a political delaying tactic by pledging to offer practical answers by next year, well before the next general election.
The commission is charged with examining “the scale and timing of any requirement for additional [aviation] capacity”, according to its terms of reference released on Friday. It will produce its final report in June 2015, a month after the election, but Sir Howard Davies, who is leading the inquiry, said its interim report in 2013 would narrow down the options for airport expansion to those it considered feasible.
“The experience of recent years shows we need a robust evidence base which has the support of a broad consensus of opinion,” Davies said. He has pledged to provide an open-minded assessment of the business and environmental cases for and against airport expansion.
Davies admitted he was highly aware of criticisms that his review would be “booting into the long grass” what has become a toxic political issue, and promised to deliver full, feasible solutions ready for implementation – including producing short-term options for expanding aviation capacity in the south-east in his interim report.
Earlier, Boris Johnson, the mayor of London, criticised the commission as too slow and described it as a “policy of utter inertia”.
Davies said by next year he would have given feasible options for any measures short of runway expansion, which is ruled out in the current coalition agreement. His interim report will narrow down the options for airport expansion to those the commission believes are workable, potentially refocusing the debate on Heathrow versus a new four-runway hub airport – the mayor’s preferring solution – before the election.
The transport secretary, Patrick McLoughlin, announcing the commission’s terms of reference and which academics and aviation experts would be assisting Davies, said: “Aviation is vital to the UK economy and we need to have a long-term aviation policy which meets the challenges of the future. Sir Howard and his team will now take forward this vitally important work for the government and bring a much-needed fresh perspective to the debate.”
Davies said his team, who between them have worked on delivering the Olympics, managed airports and sat on key environmental bodies, had the range of skills and experience required. “With open minds, we will take time to explore the evidence, consider the options and aim to develop a lasting solution to the nation’s aviation needs,” he said. “Our ambition is to do a thorough piece of work that will ensure aviation continues to support this country’s economic, social and environmental ambitions. We aim to put the next government into a position in which rapid and implementable decisions can be soundly made.”
The other five commissioners are Sir John Armitt, former chairman of the Olympic Delivery Authority and former chief executive of Network Rail; Ricky Burdett, professor of urban studies at the London School of Economics; Vivienne Cox, former CEO and executive vice-president of BP Alternative Energy; Dame Julia King, vice-chancellor of Aston University and a member of the Committee on Climate Change; and Geoff Muirhead, the former CEO of the Manchester Airport Group.
The government said the commission would “examine the scale and timing of any requirement for additional capacity to maintain the UK’s position as Europe’s most important aviation hub; and it will identify and evaluate how any need for additional capacity should be met in the short, medium and long term”.
Davies seemed to implicitly accept an underlying need for new capacity, but he has pledged to examine all the evidence, including Department for Transport forecasts for passenger growth that underpin the debate.
A spokesman for Heathrow, whose planned third runway was cancelled by the coalition government in 2010, said: “We hope the Davies commission will build consensus on the UK’s requirements for hub capacity and then rigorously assess every option against those needs. None of the options for hub airport capacity is easy. Every choice, including doing nothing, has its consequences.”
Gatwick airport said it would be submitting full plans to Davies for building its second runway.
Despite Davies’s pledge to advance the timetable as much as he could within the current political constraints, business groups urged the government to let him report sooner. Corin Taylor, of the Institute of Directors, said: “Sir Howard Davies is obviously doing the best he can with the hand he was dealt, but it seems that the commission will have solid conclusions based on extensive research ready well before 2015. Business needs to know what they are as soon as possible.”
Did Citi’s chairman push the CEO out? Either way, the concentration of power in too few hands leads inevitably to abuses
Four years after the financial crisis began in earnest, the public has struck something of a devil’s deal with the financial system: the only thing we demand of banks is that they make an effort to orderly and stable. As long as our six too-big-to-fail banks don’t send massive signals of distress, most people seem content to put off complaints about the financial system to next year.
Citigroup failed that test last week. After four years of relative stability and unglamorous work in reducing Citigroup’s toxic balance sheet, the bank’s CEO, Vikram Pandit, announced suddenly that he was leaving.
The whole thing was done in a baffling manner. On Wall Street, as in Hollywood, timing is everything, and Citigroup fumbled badly. The announcement came after Citigroup had actually handed in a good quarter of earnings, so there was little chance that Pandit was being punished for financial underperformance. The purpose of earnings announcements, as well, is to inform investors of everything big happening at a company – when Pandit’s departure, the biggest news, came the day after earnings, it raised the question of whether something terrible had happened to convince Pandit to leave one of the biggest jobs on Wall Street so suddenly.
The exit statement also suggested that Pandit was leaving immediately, with no transition – a sure sign to the public that Citigroup and Pandit had been caught on their back foot, that the departure was not planned carefully. It was all so mystifying that reportedly, the Securities and Exchange Commission started to investigate the bank.
The New York Times had a fascinating story on Friday that shed more light on the circumstances behind Pandit’s departure.
According to the Times, Citigroup’s chairman, Michael E O’Neill, had methodically undermined Pandit’s support within the board of directors in a way that would have done him proud had he lived among the Borgias, or the court of Louis XIV: whenever the opportunity came, O’Neill, in secret meetings with board members, dented Pandit’s reputation a little bit more. O’Neill had been a contender for Pandit’s job, and hadn’t won it; apparently, being the chairman of the bank offered little comfort.
Now, the problem with this is not that Vikram Pandit is leaving Citigroup. The fact that a bank CEO is leaving is news of the mildest kind, and absurd politics and smashing of rivals is usually how it’s done. There’s an excellent case to be made that Pandit had done all he could do for Citigroup. Pandit had a decent run – longer than his predecessor, Charles Prince – and started Citi on the hard work of cleaning up a messy business model that had baffled the bank’s CEOs and finance chiefs before him. He wasn’t charismatic, but he also wasn’t a lightning rod for controversy, and that relative peace was a gift to Citi.
Pandit had also been, since the beginning, the odd man out among Wall Street CEOs. Jamie Dimon, the CEO of JP Morgan Chase, called him “a jerk.” Pandit was given to asking wonky math questions about the value of Tarp shares when the financial system was on the brink of collapse. He offered to take $1 a year in salary in 2010, as a heroic gesture of self-abnegation, and then couldn’t convince shareholders to pay him a cent more.
So it would be entirely plausible if Citigroup, in the standard language of financial euphemisms, thanked Pandit for his service, named an interim CEO, and claimed that it was “time for a new phase.” We don’t expect cank CEOs to hold on to power very long in these choppy times, anyway.
But that’s not what happened. Pandit was pushed out and a new CEO, Michael Corbat, named immediately. Conveniently, Corbat, who runs the division of Citigroup that gets rid of its toxic assets, was a favorite of O’Neill’s. There was no “interim” period. Most disturbingly, there was no wide-netted search for someone else. Michael O’Neill seems to have had his mind set on Corbat, and Corbat got the job.
This is a dangerous precedent for Citi to set. One man should not have that much power over a major bank that controls trillions of dollars.
It used to be that the world admired and feared “imperial CEOs,” like General Electric’s Jack Welch, who controlled their companies like emperors, unquestioned.
The financial crisis gave the world the illusion that “bank CEOs” like Dick Fuld at Lehman Brothers and Stan O’Neal at Merrill Lynch were to blame for the problems at our financial institutions. This is only partly true. The real problem was the issue of one man – or just a few men – holding too much power and crushing dissent. Over the past 10 years, there’s been an enormous movement towards appointing more “independent” board members precisely to avoid the bullying and groupthink that characterized the boardrooms of too many companies. Remember that the board of Enron was usually in complete agreement, as was the board of Hewlett-Packard during its darkest days.
When people are too afraid to say ‘no’, when one man controls too much of the conversation at the top, then it is a sign that a company is not thinking clearly about its direction, that it’s not considering all options. That’s what happened at Merrill Lynch, at Bear Stearns, and at Lehman Brothers. Of all the smart people working there, of all the intelligent board members, few were brave enough to stand up and speak vocally about what was going wrong. Thus CEOs and board members were allowed to live in their own bubble, until the reality of the financial crisis broke the illusion.
Either way, it seems that O’Neill succeeded in his plan to oust Pandit, and now has the man he wants in power. Corbat, the CEO, is in the awkward position of owing O’Neill an enormous amount for his rise. Will he dare to disagree with his chairman? Will he feel the pressure to toe the line of what O’Neill wants for Citigroup? If Corbat does, or if the rest of the board does, that would be a shame. If there’s one thing the financial crisis has taught us, it is that the concentration of power in only a few hands leads inevitably to abuses.
Flight search site hopes to expand tenfold in the next three or four years and has not ruled out a stock market flotation
Skyscanner, the flight search site, has doubled its revenues in the last year and is planning an aggressive recruitment drive in its home base in Edinburgh, its chief executive has said.
Gareth Williams, also co-founder of the site, said on Thursday it hopes to expand tenfold in the next three or four years and has not ruled out a flotation on the stock market.
Skyscanner is a free service which trawls the world’s airlines for flights serving up users with results by time, price and airline.
It was started in 2001 and has survived despite the dominating presence of the likes of Expedia and Kayak, which floated earlier this year.
Skyscanner, which takes a cut on each booking or a commission on each click through to an airline website which converts into a sale, is now turning over £3m a month in revenues.
Asked whether it would float, Williams said “possibly so”, but he said it would be a function of the company’s size, not an immediate goal.
“As a founder and CEO my day-to-day concern is just to get bigger. I think we have 10 times the size with us in the next three of four years. I don’t see an IPO as a goal, I see it as a side effect,” he told the Dublin web summit.
His site attracts 14m uniques a month with 30m visits with a 28% click-through rate and a 20% booking rate. About half of visitors are repeat visitors.
Last year it was pulling in £1.8m a month and five years ago £180,000 a month.
Williams puts down the growth to the simplicity of the offering – it is offering raw data with click-through to airline sites – it is not intervening in the sale and will click through to an airline’s website even where there is no partnership.
Around a third of its traffic is to budget airlines – and he reports that Ryanair has described Skyscanner as one of the “good guys” – and about 60% of the traffic shorthaul.
The company has raised just less than £3m in equity funding.
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British drugs company releases findings of clinical trials and announces new effort to find tropical disease cures
The British drugs company GlaxoSmithKline is to open up the detailed data from its clinical trials to the scrutiny of scientists in a bid to help the discovery of new medicines and end the suspicions of critics that it has secrets to hide.
In a speech today to the Wellcome Trust in London, the chief executive, Andrew Witty, will say openness to the public and active collaboration with scientists and firms outside GSK are essential to finding new drugs to treat the diseases plaguing the world, from novel antibiotics to cures for malaria and tuberculosis.
He told the Guardian GSK had already done much to advance transparency in clinical research, including publishing a summary of every drug trial – whether a success or not – on its website.
“We’ve done an awful lot around this area but I think it’s still fair to say that not everybody believes that everything is made public. Even things we do all the time we’re criticised for not doing,” he said. “People say we only publish positive trials. No, we publish everything. But the fact that people don’t know or haven’t yet accepted that we have this real commitment to transparency – we’ve got to keep working harder to get that message across.”
GSK will set up an independent board which will assess requests from scientists to look at the anonymised patient data from the trials and grant access on merit through a secure website.
Witty accepted there could be attempts at fishing trips by anti-vaccination groups or critics of GSK drugs such as the antidepressant Seroxat, which was linked a decade ago to increased suicidal feelings in the young, amid accusations that the company had known and hidden the data years earlier.
Witty, who took over as CEO when the scandal had largely died down, said he was prepared to take the risk: “We know it’s possible people will mix and match different data, come up with what we would regard as non-scientifically credible conclusions but, in a way, it’s not our job to decide that. It’s the job of society, the regulators, to make a decision about what’s credible and what isn’t credible as a scientific conclusion.”
He said nothing would make him happier than to see outside scientists use the data to find new drugs. “While of course there is a risk of mischief, I think there is a much higher possibility of transforming the usefulness of this data on a much more positive set of agendas.
“There isn’t a day goes by that me and the rest of the company aren’t grateful for what patients offer to do in a clinical trial. They offer willingly to go through a process of experimentation. That’s an extraordinary gift from individual men and women. At one very human level actually we should be finding ways to make that commitment as useful as it can possibly be for society.”
Witty will also announce new initiatives in the hunt for cures for neglected tropical diseases, building on a strategy begun soon after he took over as CEO. GSK has now screened its entire pharmaceutical library of more than 2m compounds to find any that could inhibit tuberculosis, he will say. It has found 200 promising “hits” that the company will make available to researchers wanting to investigate further. GSK did the same for anti-malarial compounds in 2009, which has led to a number of research projects into potential new drugs.
An extra £5m funding to the Open Lab, which the company established at its Tres Cantos facility in Spain in 2010, will also be announced. Independent researchers with projects relating to developing world diseases are invited to use its facilities and collaborate with GSK scientists. There are 16 such projects under way.
Witty said he had tried to tackle the issues that people outside the drug industry cared about, such as transparency, access to medicines and prices, not through corporate social responsibility “but by fundamentally challenging the business model that we operated”. That included allowing researchers to work on compounds over which GSK had patents in the hunt for cures for neglected tropical diseases. “Whatever tiny risk we took in that decision has more than paid off in terms of what it has led to, I think for people in Africa and people who suffer from these diseases.”
Sir Mark Walport, director of the Wellcome Trust, is a keen advocate of transparency, calling particularly on scientists with public funding to make the results of their research freely and widely available. He was supportive of Witty’s initiatives.
“In its commitment towards more openness and collaboration, GSK is setting an example of how the pharmaceutical industry must adapt to help drive forward medical advances. Real breakthroughs do not come out of nowhere, but are borne of scientists sharing their knowledge and learning from each other. GSK’s moves are bold and innovative, a very positive sign of its commitment to tackle some of the greatest health challenges facing the world today,” he said.
Halfords, the UK’s biggest bike retailer, said cycle sales jumped 14.7% in the three months to the end of September
The cycling gold rush at the London 2012 Olympics and Bradley Wiggins’s historic triumph in the Tour de France have encouraged the nation’s couch potatoes to get on their bikes.
Halfords, the UK’s biggest bike retailer, said like-for-like cycle sales jumped 14.7% in the three months to the end of September.
Dennis Millard, Halfords’ chairman, who has been running the company since the former chief executive David Wild quit in July following a profits warning, said the Olympics had driven an uptake in cycling across all members of families, with women’s bikes selling “exceptionally well” following Victoria Pendleton’s success.
He said sales of new bikes designed by Pendleton – which are the chain’s first range of cycles designed exclusively for women – are proving among the best sellers but refused to disclose any sales figures. However, sales of wicker baskets to fit on the front of the vintage-style Pendleton bike jumped 55% in August.
Halfords said the increase was being driven by a host of celebrities, including Miranda Hart, Elle Macpherson, Angelina Jolie and Gwyneth Paltrow, being snapped in magazines riding vintage-style bikes.
When she launched the range of bikes, Pendleton said: “I wanted to help create a bike that you could just jump on to go down to the shops or the park. I know that most women don’t want to squeeze into Lycra before they get on a bike.”
Halfords said there was considerable potential for growth among women, with research by a cycling charity showing 79% of women don’t regularly cycle.
“When the middle-aged man in Lycra buys his racing bike, the rest of the family join in,” Millard said. “From two-year-old kiddies to an old guy like me, who rides [Halfords' Chris-Boardman-designed] Boardman bike.”
The sales boost comes after a torrid few months for the chain. In May, Halfords reported a 27% fall in full-year profits to £92m.
Halfords shares jumped 13.5% to 301.5p in early trading on the back of the good results on Thursday.
Millard reckons one in three bikes sold in the UK are from Halfords, but conceded that the company’s poor reputation for customer service was still a big problem.
“We believe we have been lagging behind in training colleagues and not providing the right tools to deal with customers effectively,” he said. “We believe we should be training them better – the delivery of service and expertise was not consistently good.
“We will invest in training so that they can delight the customer.”
On Thursday, Halfords also announced it had appointed the former Pets at Home boss Matt Davies as chief executive. Millard said Davies’s key mission would be to improve the company’s poor record on customer service.
Davies, 41, who started working at the chain immediately, will be paid £500,000 a year with a potential annual bonus of £750,000 and a further £750,000 in long-term incentive shares from next August.
Analysts at Panmure Gordon said: “While perhaps some of the improvement is a one-off, the new chief executive has a stronger platform than he might have expected as he starts his first day.”
Christodoulos Chaviaras, an analyst at Barclays, said: “After seven consecutive earnings downgrades in the last 18 months it was time for Halfords to beat and it did beat strongly, with management raising full-year guidance.”
But it was “far from the truth” to say Halfords’ challenges were over, Chaviaras added. “The new CEO is indeed a highly qualified individual in our view and has had success in deal making [for example, selling Pets at Home to KKR].
“However, the appointment of a good-quality CEO doesn’t mean that the problems are automatically fixed. The success of Matt Davies at Pets at Home doesn’t guarantee his success at Halfords, where he will have to deal with some structurally declining product categories like car enhancement rather than with a naturally growing pets/pets care industry.”
Kate Calvert, an analyst at Seymour Pierce, said: “We continue to believe that Halfords suffers from maturity and a tired offer rather than structural issues.”
Sales at Halfords’ Autocentres car servicing operation rose 12.4% – the strongest quarter since it acquired the business in 2010.
Halfords said it expected its half-year pre-tax profits to be between £40m and £42m, and full-year profits to be towards the top end of its previously stated £62-£70m range.
FSA says incentive schemes are likely to drive staff to mis-sell, after finding ‘serious failings’ in study of 22 financial institutions
The City watchdog has ordered banks to put an end to their bonus culture, in a report that blames staff incentives for corrupting the services they provide and leading to millions of consumers being missold investments and insurance policies.
Many if not all of the recent mis-selling scandals over products including payment protection insurance (PPI), endowments and pensions had come about because of the way companies rewarded sales rather than service, the FSA said.
The watchdog investigated the incentive and bonus schemes at 22 financial firms, and uncovered a range of “serious failings”.
It is understood that the worst were at Lloyds Banking Group, which has been referred to the FSA’s enforcement division. This could result in the group, which is 40% owned by the government, facing a fine of billions of pounds. Lloyds has already set aside more than £3.5bn to cover compensation payments.
Martin Wheatley, the FSA’s managing director, said banks used to be a place “where you would go in, stand in a queue and have a pleasant chat with the clerk”, but some time ago financial institutions had changed their view of consumers “from someone to serve to someone to sell to”.
The FSA has ordered firms to drop such sales tactics in favour of schemes that put the customer first, and said bank bosses should “take a real interest in fixing this”. If firms failed to comply, the watchdog said, it was prepared to introduce new rules cracking down on bonus schemes that prioritise sales.
“What we found is not pretty,” Wheatley said. “Most of the incentive schemes we looked at were likely to drive people to mis-sell in order to meet targets and receive a bonus, and these risks were not being properly managed.”
He said he had ruled out getting rid of incentive schemes altogether, but banks would be expected to properly consider whether their incentive schemes increased the risk of mis-selling.
“I want to draw a line in the sand and use the report we are publishing today to set out our expectations,” he said. “CEO’s are ultimately accountable for the way their staff are incentivised, so we expect them to take a real interest in fixing this.”
Where a recurring problem was identified, banks would be expected to investigate, take action and pay compensation, the FSA said. In the past, incidents of misselling have often been left to the watchdog and consumer bodies to identify and act upon.
Firms have until the end of October to submit their views on the guidance, and Wheatley said he expected them to start to clean up their act immediately.
Lloyds would not confirm whether it had been referred to the FSA’s enforcement division, but said in a statement that it had made “significant changes” to its incentive schemes since the beginning of the year. It said it had been ” working closely with [the FSA], keeping them updated on our progress and to ensure the changes we have made to the schemes are appropriate.”
Richard Lloyd, the Which? executive director, said that the FSA’s findings supported his organisation’s view that most banks had incentive schemes that prioritised sales.
“This must change. It is clear that the light touch regulation of the past has not worked. We want to see the FSA rigorously enforcing the rules and taking tough action against those banks that continue to let their customers down,” he said.
Figures released by the banks last week showed that customer complaints soared in the first half of this year, due to increasing numbers of cases relating to the mis-selling of PPI. Lloyds received around 860,000 complaints in the first six months, a 145% increase on a year ago. Complaints to NatWest doubled year-on-year, while those to Barclays rose by 80%.
The FSA found that firms were using a wide range of sales incentive schemes to encourage their staff to part consumers from their cash. These included:
• A “first past the post” system whereby the first 21 sales staff to reach a target could earn a “super bonus” of £10,000.
• Basic salaries for sales staff could move up or down by more than £10,000 a year depending on how much they sold.
• Sales staff could earn a bonus of 100% of their basic salary for the sale of loans and PPI – if they sold PPI to at least half of their customers.
• Advisers were paid commission on products sold over the course of the year. If they reached a series of targets, they could lock in an enhanced commission of up to 35% for the whole of the next year.
• One firm excessively incentivised sales of one product type over another, where that product was more profitable. Staff could therefore earn bigger bonuses by selling one particular product, even if it was wrong for the customer.