28/01/2016 BBC Business Live


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Live from London, that's our top story on Thursday


Shell shareholders have given the green light -


now it's up to investors in BG Group to seal the deal.


And to say they are on board. With prices at around $30 a barrel, does


it make financial sex. Tax transparency -


will the new OECD deal make corporate giants pay


the right amount of tax.? And it's a mixed picture emerging


in Europe on financial markets - lots of companies have reported


earnings as investors cherry pick Monarch Airlines was close


to collapse just two years ago, but it's set to return to profit


after rebranding itself And how much is your


information worth? Facebook says it makes $3.73


a year from each of us, so we want to know -


is it right that firms profit Let us know, use the


hashtag BBC BizLive. Royal Dutch Shell shareholders have


given the go ahead for its takeover It's a merger that would make Shell


the world's biggest liquified The deal is worth $49 billion


dollars - and as well as LNG assets, it would also give Shell access


to valuable oil resources But some Shell shareholders have


questioned the logic of the deal - as oil has dropped from 55 dollars


a barrel when it was first announced in April - to just 30


dollars a barrel. BG Group shareholders


are expected to approve the deal If it goes ahead, the companies


would merge on the 15th of February. Christopher Wheaton,


Energy Analyst at Allianz Global Welcome. $49 billion, the deal, but


makes financial sense given the makes financial sense given the


sell-off in oil. Clearly shareholders in Shell think it does.


We have had mixed views in the market but it is important to note


the value of the deal has come down the third, $25 billion, since it was


announced last year. That is because Shell chose to pay sensibly part in


shares in part in cash and the falling price has been reflected in


the lower price they are paying. On paper it seems to make sense because


it is about streamlining operations and controlling a bigger slice of


the market. What is in it for both sides, when we talk about potential


gains? BG, they get part of a bigger business. Shell, it is important


they focus on the parts of the oil industry they are good at, such as


liquefied natural gas and deepwater offshore oil and gas industry. If


you look their history, that is where they have made the highest


return on capital. It makes sense for Shell to focus on the bits of


the industry it is good at. What is interesting in the climate of lower


oil prices, yesterday reports that officials from the IMF and World


Bank looking at Azerbaijan, and an emergency loan to prop up their


industry, given their dependence on oil. Are we likely to see more of


that, with countries dependent on the price of oil, in the same way


these companies look at the price, these countries say they cannot


afford to pay their bills? The industry is screaming in pain at $30


oil. And countries like Azerbaijan, you could add Nigeria, Columbia, and


Middle Eastern nations. It is hurting. We will see more of this


intervention at government level. There have been issues in Russia on


whether they need to tax the oil and gas industry to raise more


government revenue because the budget does not work at $30 oil. We


will see more of this, just as in the commercial sector more banks


trying to recover money they have led to the oil industry,


particularly the US shale industry over the last five years. To return


to this merger issue. What happens next? Shell shareholders giving this


the green light, are we set for it to go ahead? That is one formality,


the BG shareholder vote today which will almost certainly go through.


And the green light goes on on the 15th of February. Thanks very much.


Good to see you. When we hear about that result, the


vote, which is expected to be approved, we will let you know.


Facebook has been winning more friends on Wall Street.


Shares in the social media giant jumped almost 12 per cent


in after-hours trading after it said profits doubled in the last quarter.


Revenue was up strongly - as were the number of active users


Facebook has now beaten analysts' expectations for ten quarters


in a row as advertising revenue continues to surge.


EBay's shares have fallen sharply after it forecast lower


than expected earnings that could mean a decline


EBay is struggling with competition from rival Amazon and traditional


retailers like Wal-Mart that are boosting their online presence.


Rules to stop companies using complex tax arrangements


to avoid paying corporate tax have been agreed by 31 OECD members.


They will make it harder for firms to hide money in tax havens or play


one country's tax authority against another.


Firms such as Google, Amazon and Facebook must now pay tax


in the country where the profits are made.


Staying with the theme of tax, I want to take you to the life page


because the Today programme have spoken to a Commissioner responsible


for the deal over taxes and a debate about whether the EU could force


Google and other companies to pay more tax in the country's revenue is


earned. It has been debated, Starbucks, Tech giants, specifically


related to this row. A debate on the life page about whether the EU could


make a firm start paying fairer tax in the countries in which they earn


the money. I was going to jump in to say something I noticed today, this


is my opportunity to mention it, we have results coming in, Apple,


Boeing, eBay. Yesterday we had a steep fall on the markets in the US.


Apple and Boeing plunging on disappointing results. Together the


share price fall accounted for more than half the slide on the Dow Jones


industrial average. They are such big companies, and Apple the biggest


in terms of market capitalisation. That is interesting. Please agree


with me! The world is glad he reported on that news. We have heard


from many big names in technology. Samsung has reported profits down


40% for the fourth quarter, It is squeezed at both ends of the


smartphone market we can talk to Sarah. Give us more detail on how


Samsung is doing. Hello, Sally. After years of record profits it


appears things are finally slowing down for Samsung Electronics.


Profits fell by about 40% down to $2.7 billion in the first three


months to December. That is significantly below estimates.


Samsung warned it would be difficult to maintain profits this year.


Smartphone sales hit by strong competition, and cheaper Chinese


rivals and at the top of the market, Apple. The slowdown in China is


taking its toll. The most recent top of the range handset, Galaxy Essex,


fails to excite consumers and their other core business, semiconductors,


faces we can demand, for personal computer. It makes components for


the iPhone and that too is also facing a slowdown in sales. Thanks.


Ling us in on Samsun, it is one of those companies that has a massive


impact on the market here. The big loser on the Dow Jones, Apple, and


Boeing. Six and a half per cent down, Apple shares. A lot of


companies have come up with earnings. Diageo, better than


expected news. The FTSE was up. And Germany France hovering around the


same level, one third. It is reading between the lines as companies


reveal how they are faring stock companies like Diageo and the


American firms, some of them affected by the dollar. For a look


ahead today and what we can expect, we can go to the US. Microsoft


should impress and it is looking at how the strong dollar is affecting


revenue. The company has been more focused on its cloud business.


Amazon will look to beat expectations when it reports


fourth-quarter revenue. It is thought to have cornered 43% of


online sales in November and December and that combined with


strength in cloud computing should have led to strong growth. Ford


motor company is expected to announce record profits in 2015. The


US Congress department will release data on orders for US manufactured


goods which likely slipped in December because of the strong


dollar and fall in global demand. As far as financial markets are


concerned, in Asia we saw reaction to the Fed statement about interest


rates. But they are keeping a close eye on events before they make their


next choice on rates. We expect it to go up rather than down.


We are keeping an eye on UK GDP figures also today. We asked at the


start of the programme how much your personal information was worth,


relating to the fact Facebook said it makes $3 73 from each of us on


average from information we put on the site. Add that up and it comes


to a lot of money. Some comments. Never give correct details, says


Jerome Hurel. Protect your security data. Is he


really called to Rome?! If you are a product and you are


using it for free, you are the product and they are entitled to


make that money from you. Alistair says few people know how


Facebook generates their revenue, including HMRC. Perhaps like me the


best protest is to cancel our Facebook accounts, he says.


Another says, perhaps there should be an opt out where Facebook users


could pay $4 to opt out from that data being used. Other suggest stop


using it. Still to come. Monarch Airlines was


close to going under but the company has reinvented itself as a low-cost


carrier. That move is paying off. The chief executive will be hair.


Stay with us for that. We can bring you more detail now on the figures.


We are expecting to get a number of around double .4,. .5%, something


consistent with the economy growing at 2%. Not terrible and that not


relent. Let me show you where we have been. There is the Big Dipper,


the great recession. We have been hovering -- between 2% and 3% -- the


big decrease. Recently we have seen service sector is doing well but the


bit the government would like to stimulate, manufacturing,


construction, have been pretty weak. The march of the makers has not


materialised. Manufacture has been weak. Expects the oil price plunge


to affect the North Sea, which will have an impact on manufacturing. We


expect half a per cent but it will not be the headline number that is


interesting, it will be the way it is made up and it will show a


picture of a balanced, rebalanced economy. And the cocktail of risks


facing the economy, which the Chancellor highlighted. Those are


still ringing in the air is of many. -- in the ears. We have seen big


market falls and we have had volatile stock markets. Confidence


is not running at a high level. Perhaps people are not taking on an


extra person, not investing in an extra bit of equipment. At 2%, the


Chancellor will say we are hanging in there. He would like to see it


more balanced. It is easy to underestimate the effect the North


Sea house on the UK manufacturing economy, particularly in north-east


Scotland and North East England and I expect it to show up in the


numbers. David Cameron has is visiting


Aberdeen, this is a real issue for those parts of Scotland but for the


industry as a whole in the UK. Extra help is being demanded by the


authorities in Scotland when it comes to the help that can be given


to Aberdeen. You're watching Business


Live - our top story: The energy megamerger. There is


expected to be a $49 billion deal today. We will be watching the


details. Until then we are going to turn our attention to the airlines.


In 2014 - one of the UK's oldest airlines - Monarch -


looked like it was on the edge of collapse.


But after a rescue deal and more than a year of restructuring.


It says its underlying earnings for 2015 will be more


So how did the airline manage to turn itself around?


Its workers took large pay cuts - and 700 staff were made redundant.


It also restructured its routes, axing long-haul services -


and instead focusing on becoming a low-cost carrier.


With us is Andrew Swaffield, chief executive of Monarch Airlines


He has a lot to do with the changes. Thanks are coming on the show. Just


to say that when you took over, you were not aware of how bad things


were. That's right. I came in and aware of those issues, which turned


out to be helpful for me because I think that when you come to try to


restructure the company of that size, talking to the workforce, it


was helpful that I was nothing to do with the problem and I had not


actually been aware of it. We discovered it together. Talk me


through that moment you discovered things were quite so bad. What


happened? Escape! I had 20 years with British Airways and the parent


company. I was not used to being in an environment in that kind of


state. My first reaction was that this is going to be very difficult.


I was not the CEO at the time. I was number two. From a series of events


I was asked to take over. It was as much of an instinct decision as a


logical one. We have touched on some of the measures you had to take


which were not easy. We know what it is like when bosses try to reshape


airline companies. Unions are involved, strike action, problems


for the users of the airline, how did you go through that process in


such a way that the company came out like that? I think it was in such a


way that the owners had made it clear that they were not going to


continue owning it and no new owner would buy the company with the cost


base that it had. The lack of prospects and profitability. It was


about making that clear to the employees and the trade unions, and


the great thing about airlines is many of the implied he is our


professional. If you take pilots and engineers and cabin crew, they


understand if you explain it to them straightforward, they got the


message and be understood that the alternative was the company ceasing


to exist so they chose that. We spoke in the introduction about this


move away from what the company had been towards our low-cost model.


What was on that list when you said, these are the things that we've got


to cut. It was fairly straightforward to make the


decision. That is the future of European aviation. You can see it


with the growth of easyJet and Ryanair. The long haul operation


only had two Mac planes. It was not scalable. The charter operation was


dying. That business has been in decline for years. That was an easy


decision and it inspired a lot of other decisions behind it which


allowed us to build a new business plan. We are running out of time but


I want to ask you a question about being the boss of an airline, safety


is on the mind of everybody, tell us about that area of your job. I


understand in the industry there is incredible transparency and


collaboration between airlines. The aviation industry thrives on


openness and we have thorough investigations, and then the


industry gets safer. That happened after a previous incident and will


happen with the current threat. Aviation is very good at adapting,


so whether it is a port security or in the air, it will get safer. It


takes safety very seriously. That is one of the reasons why I love it


because it is a group of professionals. On that note we shall


end the interview. Thank you for coming in.


Diageo, the maker of Johhny Walker whisky and Smirnoff vodka says it


has increased its global sales, despite the slowdown in China.


Major bright spots include the high end market in Africa -


where premium brands saw sales surge 65 per cent.


Ivan Menezes is the chief executive of the drinks maker,


speaking a little earlier he gave us his take on.


China is not growing double-digit but it grew a very solid 4%. Africa


remains a good opportunity. We are used to volatility in emerging


markets, these underlying demographics and the trend towards


consumers and the middle-class drinking better, they are intact and


that bodes well for the company. We need to stay the course and handle


the volatility but I'm pleased that our emerging markets grew. We've got


some breaking news about the economy Minister of Japan, he has announced


his resignation at a press conference. A lot of attention on


Japan. The bank of Japan will be having a very important meeting at


the end of this week to decide on monetary policy. A lot of pressure


on the Japanese central bank to do more to stimulate the economy. That


has just occurred. That came as a surprise because they were hoping he


would go to New Zealand to sign a big trade deal. This relates to


Braves which he denies. Richard Jeffrey from


Cazenove Capital Management Talk with us about the other


stories. We are starting with tax. Google and apple have hit back.


Google settling with UK authorities and some said it was not as good as


it could have been, it is paying a lot more in Italy. This debate will


rumble on. I think it will. What we are beginning to see is some


international agreement that you cannot tackle these issues of big


corporations and where they pay their tax on a country by country


basis. It must be done amongst countries. There needs to be


agreement with America and the European Union in order to locate


where profits are made and insured they are taxed where they are made


rather than transferred to lower tax areas. It is quite a step forward. I


can imagine the likes of Margaret Hodge and others thinking we are


getting there. We are getting there, we are still quite a long way away


from where we want to be, but you've got to take the first steps, and


they are being taken. It is up to corporations to respond to this and


realise the environment is changing, people expect them to pay more


taxation. What we need now is a more transparent system so people can


quite clearly see where these companies are making profits and


where they are being taxed on these profits. Very nice to see you. Short


but sweet. That is all for now.


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