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BUSINESS WITH PERSONALITY

INFLATION SPECIAL
OUR ANALYSIS OF SIR MERVYN KING’S LAST REPORT
GADGETS TO
WATCH OUT FOR
Allister Heath p2, News p3, The Capitalist p15 and Andrew Sentance in the Forum p26 See Page 30
ISSUE 1,819 THURSDAY 14 FEBRUARY 2013 www.cityam.com FREE

VODAFONE MULLS US airlines


clinch $11bn
mega-merger
£5BN CABLE DEAL
BY MARION DAKERS
VODAFONE yesterday became the lat-
est telecoms giant to join the return to
BY JAMES WATERSON
THE WORLD’S biggest airline will be
unveiled this morning after the
boards of American Airlines and US
Airways voted late last night to
merge the two businesses in an
$11bn (£7bn) deal.
The combined company will have
1,500 aircraft, $39bn (£25bn) in
annual revenues and employ more
than 100,000 people.
dealmaking, after the firm was linked US Airways chief executive Doug
to Germany’s biggest cable operator Parker is expected to head the com-
Kabel Deutschland. bined business, which will see
FTSE 100-listed Vodafone is believed American Airlines exit bankruptcy
to be discussing a bid for the firm, proceedings after 15 months.
which had a market capitalisation of American’s chief executive Tom
€5.6bn (£4.85bn) before the takeover Horton will stay on the board for
talk sent its shares up almost nine per another year as non-executive chair-
cent. Including debt, the group now man. Up to $1bn annual savings are
has an enterprise value of €8.9bn. expected as a result of the deal.
Executives at Vodafone have not yet The merger is set to give American
made a decision whether to bid and creditors 72 per cent of ownership in
have not been in contact with Kabel the combined company and US
Deutschland, but are believed to have Airways shareholders the rest. The
studied the merits of a takeover several company will have a board of 12
times recently. members: four from US Airways,
Analysts said a deal could enable three from American and five to be
Vodafone to sell lucrative bundles of designated by the American credi-
mobile, fixed-line and TV services in tors.
Europe. As part of the deal, US Airways will
The discussions surfaced a week after also leave the Star Alliance to join the
a string of blockbuster deals in the sec- oneworld global airline alliance, of
tor. Virgin Media agreed a $23.3bn which American Airlines is already a
(£15bn) takeover by American firm Vittorio Colao has been on the acquisition trail since a dividend windfall from Vodafone’s US partner member along with British Airways.
Liberty Global, Dell revealed a $24.4bn US Airways will follow through on
buyout led by founder Michael Dell, 20,000km of fibre cables in the UK, Chief executive Vittorio Colao said onto its own fixed line networks. its agreement with American unions
and Comcast agreed to take the rest of and snapped up New Zealand tele- last week, after revealing a disappoint- Espirito Santo noted that a Vodafone- last year that the combined carrier
NBC Universal for $16.7bn. coms group TelstraClear for £429m. ing two per cent slide in quarterly rev- Kabel Deutschland tie-up could would be branded American Airlines
A bid for Kabel Deutschland would “Vodafone have said they have a con- enues, that Vodafone would look to prompt scrutiny from the German and be based in Fort Worth, Texas,
mark an acceleration in Vodafone’s vergence strategy that includes M&A make acquisitions to prop up growth. antitrust watchdog. where American is currently based,
race down the acquisitions trail, as it and they have indicated that they are The firm already has around 3.4m However, analysts at Jefferies said a sources said. US Airways has its head-
looks to spend some of the billions in interested in fixed assets,” said Espirito internet customers in Germany deal “would elicit little regulatory con- quarters in Tempe, Arizona.
long-awaited dividends granted by US Santo telecoms analyst Nick Brown. through its ownership of Arcor, but cern in our view, not least as it would The US airline industry has seen a
partner Verizon Wireless. “Liberty Global potentially could coun- stands apart from its European com- create a more viable competitor to spate of consolidation over the last
The firm last year paid £1.3bn for terbid, but after the Virgin Media deal petitors in focusing on mobile opera- Deutsche Telekom”. decade after United merged with
Cable & Wireless Worldwide, a pur- it may be a good time for Vodafone to tions, reducing its ability to offer Continental and Delta joined forces
BOTTOMLINE: Page 9, DEALS:Page 7



chase that included more than pursue a bid.” package deals and offload data traffic with Northwest.
Certified Distribution
FTSE 100  6,359.11 +20.73 DOW M 13,982.91 -35.79 NASDAQ  3,196.88 +10.39 £/$ M 1.55 -0.01 £/€ M 1.16 -0.01 €/$M 1.34 -0.01 from 31/12/12 to 27/01/13 is 127,008
THURSDAY 14 FEBRUARY 2013
2 NEWS To contact the newsdesk email news@cityam.com

Stagnant growth and high inflation crippling take home pay


I
F you have lots of debt, own a happened, were smaller. Between themselves, an excellent development like overtime getting axed); when
home in London with a mortgage,
are employed and hope that your EDITOR’S 2010-2012, the decline in median real
earnings averaged 2.1 per cent per
as it increases the flexibility in the
labour market and makes people
demand rises, their hours rise before
staff get hired. A final reason may be

LETTER
wages will rise, you may be one of year for full-time male public sector freer and more responsible for their measurement error: income is hard
the great winners of our age. If you workers (and rose in cash terms, own lives. The increase in numbers (of to quantify in the freelance sector.
are self-employed, work in the private despite the supposed pay freeze) com- around 10 per cent) is one reason for Unless you are lucky, very skilled
sector, have lots of savings and have pared with a drop of 3.1 per cent per the decline in median incomes; new and in an industry where productivi-
limited control over your income, you
are fast becoming one of the losers.
ALLISTER HEATH year for their private sector counter-
parts. Yet again, austerity has been
entrants probably earn less because
they lost their jobs, couldn’t (or didn’t
ty is increasing (or a firm that is buck-
ing the trend), brace for years of
That, in a nutshell, are the conclu- much harsher in the private sector want to) find an alternative position misery and declining living stan-
sions to be drawn from devastating lower than they were in 2003. Average than in the public sector. but found that they could still earn dards. Deals are back in the City –
data showing the extent and distribu- private sector wages have been falling Astonishingly, median self- something by going freelance. with yesterday’s mulled bid by
tion of falling real wages in the UK – since 2009; they peaked in 2008 but employed income has collapsed by 25 Another reason is the collapse in the Vodafone for Kabel Deutschland just
and the Bank of England’s dramatic, gains seen in previous years have per cent in real terms from peak – construction industries. Many other the latest – but the financial sector’s
semi-explicit admission that inflation been undone. Male full-time employ- and by an almost incredible 33.8 per freelance intensive industries – such partial recovery should not be misin-
is now being allowed to rip. Prices will ees resident in London earned £15.54 cent in London. So why are the self- as personal trainers – are very terpreted for an overall economic
continue to rise above the target, with per hour in 2012, compared with employed doing so badly? Their dependent on the earnings of their rebound. For most people, especially
the Bank blaming all sorts of factors £16.14 in real terms in 2002 – a drop income fluctuates much more with clients; if these fall, the impact on the outside of London and its commuter
apart from themselves. That suits of 4 per cent. the economic cycle; freelance con- self-employed is disproportionate. belt, the grim reality of declining real
some borrowers just fine but is a dis- Public sector workers have done tracts are short-term and can easily be Self-employed people who work for wages won’t go away any time soon.
aster for many, who wrongly trusted best. Their incomes started to fall well renegotiated up or down very quickly. big firms are the easiest buffer: when
the authorities to protect the pound. after those of their private sector Their number is up by 367,000 since demand falls, their hours get allister.heath@cityam.com
Real median wages are now slightly counterparts; the drops, when they 2008; far more Brits are working for chopped before staff get fired (a bit Follow me on Twitter: @allisterheath

Real wages tumble to below 2003 levels


BY JULIAN HARRIS
UK REAL UK WAGES REAL LONDON WAGES
REAL wages have sunk to levels last
seen a decade ago, due to stubborn 2003 2012 14 £ per hour 18 £ per hour

£11.24 £11.21
inflation and sluggish pay growth.
Including the effects of inflation, ALL WORKERS IN LONDON
the median average UK wage last
year was even lower than it was in -0.26%
2003, new data revealed yesterday. 12 16
The Office for National Statistics MEDIAN HOURLY WAGE AT 2012 CONSTANT PRICES
(ONS) said that the median hourly
wage dropped to £11.21 in 2012 –
below 2003, when it would have
LONDON*
been the equivalent of £11.24 when
2003 2012 10 14 WORKERS IN LONDON WHO ALSO LIVE IN THE CAPITAL
adjusted to last year’s price levels.
Real wages peaked in 2009 when
they reached an equivalent of £12.25
per hour, adjusted to 2012 prices –
£15.74 £15.70
yet they have been on the decline
-0.25% 12
8
since, partly due to the UK’s 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
stubbornly high inflation. MEDIAN HOURLY WAGE AT 2012 CONSTANT PRICES
The consumer price index *includes workers who commute into London
measure of inflation was confirmed REAL PUBLIC vs PRIVATE WAGES REAL SELF-EMPLOYED WAGES
earlier this week at 2.7 per cent for LONDON’S SELF EMPLOYED
January, the 38th straight month 18 £ per hour 400 £ per week
that it has held above the Bank of
England’s two per cent target. 2007-08 2010-11 PUBLIC SECTOR
MEN
Yesterday, the ONS figures also
revealed a stark drop in the median £378 £250 16
350 LONDON
average real wage of the self-
employed. Having touched a peak of
-33.8%
14 PUBLIC SECTOR
£281 per week in 2006/07, at MEDIAN WEEKLY WAGE AT 2010/11 CONSTANT PRICES WOMEN
constant 2012 prices, it was down to 300
£212 last year. 12
And London’s self-employed have MALE WORKERS IN LONDON PRIVATE SECTOR
MEN
seen their median weekly pay drop
250 UK
from a high of £378 in 2007/08 to
just £250 in 2012.
“In April-June 2012, self-employed
£17.33 £20.22 10
PRIVATE SECTOR
people comprised 14 per cent of PRIVATE SECTOR PUBLIC SECTOR 8
WOMEN
200
people in employment in the UK and
18 per cent of people in employment 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2002/03 2004/05 2006/07 2008/09 2010/11
in London,” the ONS report added. MEDIAN HOURLY WAGE FOR 2012 *ALL GRAPHS SHOW MEDIAN AVERAGE

WHAT THE OTHER PAPERS SAY THIS MORNING


bidding for major government contracts
under rules aimed at clamping down on
Hedge funds win big on yen bets aggressive tax avoidance by some of Longer contracts halt phone growth Standard Life to buy Newton arm Apple loses Brazilian ruling
Whitehall’s most important suppliers.
Hedge fund giants have made billions Companies will have to sign a declaration Sales of mobile phones worldwide have Standard Life is in exclusive discussions to Brazilian regulators yesterday rejected
betting against the yen in recent months, that they have not fallen foul of wide- gone into reverse as the industry’s drive buy Newton Investment Management’s Apple Inc.'s request to register the iPhone
marking a return to form for some blue- ranging tax avoidance rules in the past 10 towards longer contracts has reduced the wealth management division for up to name in that country, setting up a
blood investors that stumbled after the years before bidding for government need constantly to upgrade a handset. £90m. The sale, of Newton’s £3.5bn potentially costly legal dispute in one of
financial crisis. Managers who speculate contracts worth £2m or more. About 1.75bn were sold last year almost 2 wealth portfolio, could be announced the world's fastest-growing smartphone
on economic shifts by trading currencies, per cent lower than in the previous year. imminently. markets.
bonds and derivatives have reaped their
SEC to launch anti-fraud RoboCop
biggest gains in years trading on the
The US securities and exchange Bic makes more disposable income AgustaWestland faces uncertainty Barnes & Noble warns on Nook
Japanese currency. Bic, the maker of disposable pens, Yeovil-based helicopter manufacturer
commission is deploying an innovative Barnes & Noble Inc. said on Wednesday
computer tool designed to automatically lighters and razors, announced a 10.6 per AgustaWestland was facing uncertainty that its Nook business will perform worse
Tax avoiders face Whitehall ban trigger alerts over suspicious accounting cent rise in net profit yesterday, lifting the yesterday after the Indian government for the fiscal year ended April 27 than
Big companies face being banned from at publicly traded companies. figures for 2012 to €263.1m. threatened to cancel a $750m (£482m) forecast as recently as early January.
order because of bribery allegations.

Find your next step at CITYAMCAREERS.com


cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 3

Prices will soar EU aims to sign


US trade deal
for three more by end of 2014
BY JAMES WATERSON

years says King


THE EUROPEAN UNION will this sum-
mer begin talks with the United States
on producing a free-trade agreement
that would be the biggest such trade
deal in history.
European Commission president
Jose Manuel Barroso made the
BY TIM WALLACE while rising university tuition fees are announcement after President Obama
having a bigger impact than expected. backed reducing trade barriers in
GOVERNMENT policies are pushing Between them factors like those add Tuesday’s State of the Union address.
prices up beyond the control of the a full percentage point to inflation, Ian Davis (above) spent 31 years with management consultancy McKinsey Under an outline for the deal, the

Rolls-Royce to appoint former


Bank of England while a lack of sup- meaning the Bank would have to two sides expect it to add 0.5 per cent
ply side policies from the Treasury tighten policy unacceptably hard, hit- to the EU economy and 0.4 per cent to
means consumers and firms are ting jobs for no good reason, he said. the U.S. economy by 2027 – equiva-
lent to €86bn (£55bn) a year for the

McKinsey boss as new chairman


being given little hope of better “This makes our job more difficult in
growth in future, governor Sir the short run, we have to deal with the Europeans and €65bn for the US.
Mervyn King claimed yesterday. consequences,” Sir Mervyn said. The resulting free trade area could
And he added monetary policy is “But it would be a mistake to push encompass half of world output and a
becoming less and less effective at up unemployment to compensate for BY JAMES WATERSON third of all trade. It is hoped that talks
stimulating the economy further, a short term rise in prices.” AND CATHY ADAMS He is currently a non-executive – which depend upon the agreement
meaning the government needs to And the Bank predicts it will be at director at both BP and Johnson & of all EU member states and the US
help rebalance the economy to pre- least another two years before the ROLLS-ROYCE will today unveil ex- Johnson, in addition to work advis- congress – can be completed at a brisk
pare the country for growth in future. economy grows back to its pre-crisis McKinsey boss Ian Davis as its new ing Apax Partners and the govern- pace with a deal signed by the end of
The outgoing head of the Bank size, not because of deficit reduction chairman, replacing Sir Simon ment’s cabinet office. 2014.
launched the unusually strong attack but because of a lack of reforms. Robertson who will leave the busi- Meanwhile Rolls-Royce yesterday “If we want to go down this road, we
on the government as he explained “The government should put togeth- ness after eight years. signed a 10-year contract with the want to get there on one tank of gas
why inflation is still running well er a package of supply-side reforms to The announcement will be made Ministry of Defence for the develop- and we don't want to spend 10 years
above its target – at 2.7 per cent in raise future income expecta- alongside today’s year-end results ment of submarines, which will help negotiating what are well known
January, above the two per cent goal tions and so raise consumer which are expected to show the safeguard up to 2,000 jobs in the UK issues and not reach a result,” White
– and will stay high until 2016. spending today,” he argued. engineering giant made bumper and deliver up to £200m worth of House adviser Michael Froman said
Sir Mervyn argued green energy The Treasury rejects Sir profits in 2012, according to Sky savings to the department. yesterday.
policies are driving up energy prices Mervyn’s analysis, arguing it News. The contract, worth around £800m Agriculture is likely to produce most
has kept prices down by freez- Davis spent 31 years with manage- over the next decade, would help disputes, particularly EU farm subsi-
ing fuel duty and helped by ment consultants McKinsey, includ- deliver cost savings around the pro- dies and the use of genetically modi-
Sir Mervyn said loose cutting corporation tax. ing six years as managing director – vision of nuclear propulsion systems fied crops in the US. Other issues
monetary policy may CAPITALIST: Page 15 effectively chief executive – between for Britain’s existing and future sub- include battle over state aid for aircraft



be hitting its limits 2003 and 2009. marine flotilla. manufacturers Airbus and Boeing.
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 5

LSE tries to turn CAPITAL IDEA: TECH VIEWS Britvic-Barr


MICHAEL ACTON SMITH
deal threatens
tide on exodus
CHIEF EXECUTIVE OF MIND CANDY

“We are proud to be a British company and love being


based in London. We welcome these new initiatives to
make the London financial markets more attractive to
to fizzle out
the many fast growth tech companies that are based BY MICHAEL BOW

of tech startups
here.” THE proposed £1.4bn merger of soft
drinks giants AG Barr and Britvic
was thrown into disarray yesterday
ERROL DAMELIN after a trading watchdog referred
CHIEF EXECUTIVE OF WONGA the deal to the Competition
Commission (CC).
“If we want to build Googles, Facebooks, and Apples in The current terms of the all share
BY MARION DAKERS law partner Jonathan King. Britain, our entrepreneurs need the backing of British merger, agreed in November, have
“It’s obviously great news for high- financial institutions. The London Stock Exchange is lis- now been shelved after the Office of
THE LONDON Stock Exchange is try- growth companies, but it’s also great Fair Trading said the range of
ing to tempt fast-growing tech firms news for private equity houses who, in tening, and I hope these proposals will create a platform Britvic and Barr’s drinks made its
away from Silicon Valley by launching light of the more relaxed free float for fast-growth companies with the character and the merger a threat to competition in
a “high growth segment” with less requirement, have an additional liq- capability to go global.” the £9bn soft drink market.
onerous listing rules. uidity channel available to them.” “We’re in the long grass for at
The exchange said yesterday that Some market watchers, including NEIL RIMER least nine months,” Britvic
companies with an annual growth governance body Manifest, questioned CO-FOUNDER OF INDEX VENTURES chairman Gerald Corbett said
rate of 20 per cent over three years whether such a small free float “We welcome the LSE’s proposals to help kick-start yesterday, criticising the OFT for its
will from next month be able to join requirement would attract long-term decision to refer the merger.
the segment of the main market with investors to UK firms. London’s IPO market for high growth companies... but these The OFT will release its report
a minimum free float of just 10 per And Deloitte pointed out while tech changes are not a panacea. In order to give European growth into the ruling in the coming
cent. firms have abandoned the LSE in the companies robust access to public markets, the institutional weeks. Former Britvic chief
This compares to the usual require- last three years, smaller companies investment community need to invest in understanding how executive Paul Moody stepped down
ment of a 25 per cent free float. already use the junior Alternative in anticipation of the merger,
“Ensuring that the UK’s fastest grow- Investment Market as a launch pad. growth models work and how they are valued to develop which would have
ing and most dynamic companies Around 30 tech firms have listed on conviction about owning pieces of these companies.” seen Barr boss
have access to equity capital is a prior- Aim in the past three years, it said, Roger White taking
ity for London Stock Exchange,” said including software group WANDisco’s GREG CLARK over. Yesterday
chief executive Alexander Justham. oversubscribed £15m initial public FINANCIAL SECRETARY TO THE TREASURY Britvic made
“The High Growth Segment will pro- offering last year. managing director
vide an additional attractive choice, The scheme mirrors the Jobs Act in “We are delighted that the London Stock Exchange is of Britvic GB Simon
giving these companies a launch pad the United States, which last year taking action to ensure that London’s public markets are Litherland chief
for further success.” streamlined float requirements for organised to help these companies fuel their growth. The executive until the
The changes, backed by the govern- companies generating less than $1bn issue is resolved.
ment after months of consultations, (£644m) annual revenues. UK has a world leading crop of high growth businesses,
should provide investors with easier Manchester United was criticised for and the announcement is an important step in creating
the right environment for them to IPO in London.” Simon Litherland fills
access to the UK’s future tech success using the Jobs Act exemptions for its
stories, said Osborne Clarke corporate $234m IPO in New York last summer. Paul Moody’s boots
6 NEWS
THURSDAY 14 FEBRUARY 2013 cityam.com

Crest Nicholson No Stone unturned by


ADVISERS

hails a jubilant
DEREK
SHAKESPEARE
BARCLAYS
housebuilding boss
his confidence in London seems

market return
BY DAVID HELLIER
to have been well placed.
BARCLAYS Capital and HSBC acted as STEPHEN Stone was a happy man Certainly he reports no lack of
joint sponsors, joint global co-ordina- yesterday. But he was, after a interest in his group’s story. He
tors and joint bookrunners on Crest gruelling round of presentations, said all the large UK institutions
Nicholson’s initial public offering. also a man with a gravelly were interested to hear from him.
Derek Shakespeare, a managing direc-
sounding voice. Many now think Crest
tor at Barclays’ investment banking
The chief executive of Crest Nicholson's success will prompt
division, is leading the effort for the
Nicholson since 2005, Stone is the other companies to revisit their
bank. He recently advised Redrow
first person to lead a company to flotation plans. “The success of
BY KASMIRA JEFFORD founder and chairman Steve Morgan’s
tressed investment fund Varde vehicle Bridgemere and fund manager a main stock market listing in our float is good for the housing
Partners took majority ownership Tosca on their bid to take over the London this year and that’s sector and good overall.”
CREST NICHOLSON made a success- after buying up its debt in 2011. housebuilder, which was eventually required a massive round of With a bit of luck, Stone might
ful return to the stock market yester- The company, which builds homes pulled. He is joined by Chris presentations, lunches and be able to enjoy a couple of quiet
day, after the 50-year old British mainly in the south of England, also Madderson, part of the bank’s UK origi- breakfasts that have clearly taken days to leave him in tip-top
housebuilder completed a listing reported last month it returned to a nation team and Ben West in the equity their toll on the vocal chords. condition for another day in the
which valued it at £553m. pre-tax profit of £62.1m last year, up syndicates team. Born in the east end of London, spotlight next week.
The company, taken private by from a £27m loss in 2011. HSBC’s advisory team was led by Nick Stone never doubted London was Unconditional dealings start
Scottish entrepreneur Tom Hunter at Norton Rose partner Mark Lloyd Donald, head of equity capital markets the best place to float his on Monday and the housebuilding
the height of the housing bubble in Williams who worked on the IPO – (ECM). His previous deals include act- housebuilding group, which had boss is in talks
2007, priced its shares at 220p, the the first on the London Stock ing as joint bookrunner for miner been financially restructured by with the
upper half of its original range. Exchange this year – said: “This Lonmin on its $817m rights issue in Deutsche Bank and Varde after a London
As part of the listing, Crest is rais- flotation is a litmus test for all those November. Simon Cloke, head of diver- heavily leveraged deal headed by Stock
ing £224.9m, with £169m going to watching to see if the UK equity sified industries at HSBC and ECM Sir Tom Hunter ran into trouble. Exchange
existing shareholders Varde markets have reopened for busi- director Stuart Dickson worked with “I always thought of London as about
Investment Partners and Deutsche ness”. Donald on the deal. the place to float, it’s our home opening
Bank and £56m going to the compa- Norton Rose, the law firm also acted for town after all,” says Stone. “It was the
ny to pay down existing debt. Crest Nicholson holdings limited PLC obvious to float here.” market
Crest Nicholson, with corporate part-
Stephen Stone, who has been chief p Crest Nicholson, 50 years of that day.
executive since 2005 saw the value of
255.00 ners Mark Lloyd Williams and Tom Vita
age this year, is based in
13 Feb leading the team. Norton Rose also
his shares shoot up to £10m after the 256 recently advised the consortium led by Weybridge, Surrey, after all.
listing. Chairman William Rucker, 254 Malaysia’s SP Setia that bought After seeing shares in the
who is also head of Lazard London 252 Battersea Power Station last year. housebuilding group, in which
saw his shares valued at £8m. 250 Meanwhile broker Numis is lead man- management have a 10 per cent
Crest Nicholson’s return to market 248 ager on the listing while Lazard & Co is stake, surge to a premium on the
brings an end to a painful five years 246 first day of conditional dealings,
244 financial adviser to Crest Nicholson.
for the group that including two
rounds of debt restructuring. US dis- 8am 10am 12pm 2pm 4pm Stephen Stone, Crest Nicholson’s chief
exec, has finished a punishing schedule
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 7

Deutsche: Jump
TOP 5 GLOBAL M&A TRANSACTIONS IN 2013 TOP 10 FINANCIAL ADVISERS ON
Deal Value Target Target’s dominant Target/Seller Bidder M&A TRANSACTIONS IN 2013
(£bn) company geography Financial advisers company
Rank House Value (£bn) Deals
13.963 Virgin Media UK Goldman Sachs; Liberty

in market means
JPMorgan Global 1 1 Goldman Sachs 39.908 19
22 JP Morgan Cazenove 37.38 19
13.909 Dell USA Evercore Partners; Silver Lake
Goldman Sachs; Partners 33 Credit Suisse 33.127 15
JPMorgan; Lazard 44 Barclays 24.576 16

deals are back


55 BofA Merrill Lynch 21.742 14
2.703 Copano Energy USA Barclays; Kinder Morgan 66 Lazard 18.863 14
Jefferies & Company Energy Partners
77 Evercore Partners 16.123 8

SOURCE: MERGERMARKET
2.433 Spirit Realty USA Barclays Cole Credit Property 88 RBC Capital Markets 15.016 9
BY TIM WALLACE the industry, there will clearly be hopes Capital Trust II 99
that the sector-wide collapse in jobs will LionTree Advisers 14.45 2
SOARING equities markets are giving a come to an end or even reverse as more
major boost to confidence and should bankers are needed to work on the deals. 2.157
10 Citi
10 8.788 13
Slovensky Plynarensky Slovakia Advising sellers: Energeticky a
lead to a strong recovery in mergers and Deutsche expects mid-sized deals to be Prumyslovy GLOBAL M&A ACTIVITY
acquisitions and in share listings the first to come through as cautious Priemysel Citi; Deutsche Bank;
through 2013, top investment bankers at firms and investors test the market. (49 per cent stake) Morgan Stanley Holding Year to date £129.547bn 1,521
Deutsche Bank said yesterday. Well-trailed deals, like joint venture
Market activity, and thus bank rev- minority unwinds delayed by the finan-
enues, have been falling ever since the cial crisis, should also be early beneficiar-
financial crisis. But Deutsche Bank ies of the new optimism.
reports increasing optimism, forecasting A particularly helpful change is that US
a healthy recovery at last this year. investors are increasingly likely to fund
“There is a lot of positive feeling now activity in the UK and Europe, the
that the Eurozone has stabilised and bankers said, as they become more confi-
that we can now move into a growth dent that they have now seen the bottom
phase,” said UK equity capital markets of the Eurozone crisis.
head Lorcan O’Shea. Private equity groups are also expected
“There is a significant pipeline of IPOs to take advantage of the rising tide to
coming through in the UK.” offload assets they have been sitting on
Although it is too soon to say what through the lean years, as well as seeking
impact this will have on employment in to raise funds in the improved climate.
8 NEWS
THURSDAY 14 FEBRUARY 2013 cityam.com

Fashion chain John Lewis to


sack managers
Republic enters
BY JAMES WATERSON
DEPARTMENT store chain John Lewis
could sack up to 325 managers from
its stores as part of a staff shake-up

administration
designed to take into account the
growing importance of online sales.
The partnership, which has a
reputation for looking after its staff,
said it was consulting on the need to
have individual departmental
managers for sections such as
womenswear and furnishings in its
BY KASMIRA JEFFORD insolvency process,” Kelly said. store. The changes are being made to
The group will continue to trade reflect the growing importance of its
BRITAIN’S already fragile high street while Ernst & Young try to sell the website, which now produces a
was dealt a fresh blow yesterday after business as a going concern. quarter of total revenue.
fashion chain Republic collapsed into Republics’s demise marks the latest
administration. in a string of casualties since the start

Blockbuster to
Ernst & Young, the business adviso- of the year after Jessops, Blockbuster Republic began as a men's denim retailer in 1986 under the Best Jeans brand in Leeds
ry firm, has been appointed as admin- and HMV all entered administration.
istrator and 150 staff at its Leeds US private equity firm TPG bought
ADVISERS
close 164 shops
headquarters were immediately the chain in 2010 for £300m with the
made redundant. aim of doubling the size of the busi- working with private equity investors.
The retailer, which sells youth fash- ness to over 200 stores. Some of the major restructurings Hudson
ion brands including Jack Jones and The firm has twice tried to inject has worked on include Focus DIY, the hard-
SoulCal, runs 121 stores and employs more cash but the retailer has failed to
ALAN HUDSON ware chain owned by private equity firm BY KASMIRA JEFFORD
around 2,500 staff. stem falling sales amid fierce competi- Cerberus, which appointed Ernst & Young as
Hunter Kelly, joint tion and weak demand, particularly ERNST & YOUNG administrators in May 2011 and DTZ, the BLOCKBUSTER, the DVD and games
administrator, said among young consumers. global real estate services firm which fell rental chain, is to close a further 164
Republic was hit by The latest accounts show sales into administration in December 2011. It stores the firm’s administrators said
poor trading declined by 2.3 per cent to £177m in Alan Hudson, partner and head of restruc- was then sold to Australian engineering yesterday, putting a further 800 staff
results in Autumn the year to January 2012. Pre-tax profit turing at Ernst & Young, is acting as joint firm UGL. In 2011, Hudson acted as joint at risk.
and “a sudden and slumped from £27.3m to £3.2m. administrator of the fashion retailer administrator and receiver of London land- Deloitte said the stores will shut
rapid decline in Former Asda boss Andy Bond Republic together with Leeds-based partner mark Battersea Power Station, which was over the coming week as part of a
sales” in January. stepped down as chairman at the end Hunter Kelly and director John Sumpton. then sold a year later to a Malaysian consor- “phased closure” as it continues to
“The impact on of January but a spokesper- A licensed insolvency practitioner, Hudson tium led by SP Setia and Sime Darby for find a buyer for the business and its
cash flows has result- son said it was not related has more than 24 years’ experience of work- £400m. Meanwhile Hunter, a partner since remaining 204 stores. The latest cull
ed in the business to the company entering ing across restructuring and accelerated 1996, has worked on a number of insolven- comes on top of the 168 store
being unable to administration. M&A. He also in the past headed up Ernst & cy appointments including Snackhouse, closures announced last month. The
continue to Young’s transaction advisory services retail once one of the UK’s biggest snackfood chain employed 4,190 staff and ran
operate out- Andy Bond, former team in the UK and now has particular focus makers which collapsed in 2001. 528 stores at the time of its collapse.
side of an chairman of Republic
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 9

SocGen shakes ING profits dip on tough year of restructuring

up top brass
divestments as the group sells off group’s bailout, giving
BY TIM WALLACE
non-core units such as its UK €1.125bn to the Dutch
DUTCH finance group ING savings arm. government in the year – a
yesterday announced it is cutting On an underlying basis payment which hit the
another 2,400 jobs as it unveiled profits dipped from €664m to institution’s core tier one
a disappointing fourth-quarter €184m with the bank tax and capital ratio to the tune of

after bad year


profit figure. losses on the sale of peripheral 20 basis points. ING still has
That brings current headcount European securities €3.4bn of aid to repay
cuts to 7,400 which the bank hurting the group. by 2015.
hopes will save €1bn (£865m) a Full-year profits Shares fell 4.04
year by 2015. came in at €3.894bn, per cent on the
The group made €1.434bn in down 32.5 per cent. news.
the final three months of the The slowdown
year, up 21 per cent on the year comes in part from ING chief Jans
BY TIM WALLACE weak capital adequacy and liquidity in but below expectations. the ongoing Hommen is paying
2012, SocGen is still struggling to con- Much of that gain was down to repayment of the back the bailout
FRENCH bank Société Générale stum- vince investors that it can achieve
bled to an unexpectedly large loss in improved returns,” said Espirito

High street red in tooth and claw


the final quarter of 2012, financial fig- Santo’s Andrew Lim.
ures showed yesterday, dragging Deputy CFO Philippe Heim is replac-
down its full year results. ing his outgoing boss Bertrand Badre,
The group revealed a management who is joining the World Bank.
reshuffle as it streamlines its five William Kadouch-Chassing will take

I
main business lines into three in an the deputy position, while Didier
drive to cut costs.
SocGen lost €476m (£412m) in the
final three months of the year com-
Haugel and Jean-Luc Parer will jointly
lead the new international retail bank-
ing and financial services division.
BOTTOM
T’S simply too tough out there, said
the last official tweet from
@republicfashion, announcing the
now eyeing Germany’s Kabel
Deutschland. However, Vodafone’s
shares fell on the news, suggesting a
pared with profit of €100m in the
same period of 2011.
And on the year profits fell 67.5 per
Meanwhile investment manage-
ment head Jacques Ripoll is leaving
the bank.
LINE
company’s fall into administration.
With inflation still stubbornly high
and the news today of real wages back
dim market reception.
That’s perhaps because it means
pouring more money into a Europe
cent to €774m.
The bank managed to drag down
SocGen’s shares dipped 3.57 per cent. at 2003 levels, it is certainly a tough
market. Republic is just the latest MARC SIDWELL stuck in the economic doldrums.
Vodafone takes 69 per cent of its
operating expenses by 3.5 per cent, Societe Generale casualty in a post-Christmas cull of revenue from Europe, and the
31.50
but operating income fell much more 33.00 € 13 Feb the UK high street, itself following in Eurozone crisis has hit it hard, even
sharply at 22.4 per cent, resulting in 32.75 the wake of Comet last year and it while taking advantage of the in a relatively strong market like
the weaker figure. Part of the hit 32.50 doesn’t look likely to be the last migration to online shopping are Germany. More scale and the ability
came from a €300m litigation impair- 32.25 company to suffer. As such, the UK’s suffering most. It’s tough out there, to bundle products would increase
ment charge in the quarter, while a listed retailers look like risky bets for but it’s also the survival of the fittest. revenue but at a price – and in a
goodwill writedown on its NewEdge 32.00 investors. Yet this is not some declining market the returns risk
joint venture also came in at €390m. 31.75 indiscriminate, mass-extinction event. CABLE TIES being less than stellar. Vodafone is
Analysts fear more reforms are need- 31.50 Those firms that are failing to tightly The purchase of Virgin Media by tied: with so much of its business in
ed before the bank returns to health. 31.25 control the costs of maintaining a Liberty Global may be kicking off a Europe it has to make the best of it.
“Although management has dealt bricks-and-mortar store network consolidation trend, with Vodafone But it won’t be cheap or easy.
convincingly with concerns about 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 11

Cough and cold High-frequency


trading firm
season boosts Getco struggles
BY JAMES WATERSON

Reckitt figures
Reckitt Benckiser boss Rakesh Kapoor has overseen operating profit of £2.6bn for 2012
HIGH-FREQUENCY trading business

ANALYST VIEWS
Interviews by Kasmira Jefford
HAS RECKITT BENCKISER
GOT OFF TO A HEALTHY
START TO 2013?
Getco yesterday revealed an 82 per
cent drop in profits for the first nine
months of 2012 thanks to poor
market conditions.
The figures – the first time that
GRAHAM JONES PANMURE GORDON the company has made its financial


BY KASMIRA JEFFORD hygiene sector, with brands such as performance public – were
Durex condoms and Dettol disinfec- contained in a filing to the US
A HEAVY flu and cold season in the tant, which it said will account for 72
Reckitt’s full-year results came in ahead of expectations, with like-for-like securities and exchange made as
growth of six per cent in the fourth quarter better than our 4.2 per cent forecast, with


US caused misery for many people per cent of net revenue by 2015 – up part of its reverse takeover of Knight
but helped Strepsils-maker Reckitt from 68 per cent today. the outperformance entirely coming in ENA (Europe, North America) where Capital.
Benckiser yesterday report a healthy It is also targeting emerging mar- growth was three per cent helped by a favourable cold season. Net profits for the nine months to
lift in fourth quarter sales. kets and plans for half of net revenue 30 September were $24.6m (£15.4m)
Reckitt said sales in Europe and in its core business to come from DARREN SHIRLEY SHORE CAPITAL compared to $134.8m in the same


North America grew three per cent developing markets by 2015. period last year.
after “higher incidences of cold and With the positive impact of the strong flu season flowing into the first Total revenue dropped from
flu” had boosted demand for prod- Reckitt Benckiser Group PLC $719m to $425.3m on the same basis.
4,419.00 quarter...we believe 2013 has started well for Reckitt... We expect the market to


ucts such as Mucinex decongestant. 4,500 p Worryingly for investors, this
13 Feb respond positively to yesterday’s results, whilst recognising some investors
Total annual revenues rose five per appears to be part of a long-term
cent on a like-for-like basis, excluding 4,450 may be underwhelmed by management’s full year targets. downward slide since the start of the
non-core pharmaceuticals, to £9.6bn. 4,400 financial crisis with full-year
ALICIA FORRY CANACCORD GENUITY


Chief executive Rakesh Kapoor said 4,350 revenues peaking at $1.2bn in 2008.
this year the group would target rev- Getco agreed to buy Knight Capital
enue growth of between five and six 4,300 last year for $1.4bn after it was badly
Reckitt’s results are strong...While our numbers and consensus will clearly
per cent, including acquisitions and 4,250 need to come up by around five per cent, we retain our ‘sell’ recommendation, hit by an incident last August when


disposals announced to date. 4,200 its software malfunctioned, causing
Reckitt has also been shifting its based on valuation, though we acknowledge the progress that has been major volatility on the New York
focus to the fast-growing health and 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb made in the last year. We still expect competition for Suboxone this year. Stock Exchange.

   
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   next step at
    
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12 NEWS
THURSDAY 14 FEBRUARY 2013 cityam.com

Aviation bosses set out their KINGFISHER LOSING ALTITUDE

stalls for London expansion requirements for London and avoid the hub capacity you have, flying to
BY MARION DAKERS
the need for a hub airport, but to places that frankly should be point
TRANSPORT bosses locked horns boot you will also spread the to point out of other airports,” said
over how to provide London with economic benefits that are driven Aitken.
more flights yesterday, as rival by the airports around the city, and But Heathrow director of public
firms ramp up campaigns aimed at also distribute the environmental policy Nigel Milton said that a well-
the coalition’s Davies Commission impact caused by aviation,” he told connected hub airport is the only
on the future of air travel. the London Assembly. way forward. “All of the evidence
Gatwick chief executive Stewart Wingate and EasyJet’s UK shows that the lack of hub capacity
Wingate said his firm will propose commercial manager Hugh Aitken in London is harming the UK today,”
to Davies that the UK should allow argued that existing airports could he said, claiming Heathrow has lost
a new runway each at Gatwick and create capacity almost immediately. routes to Amsterdam, Frankfurt and
Stansted, enabling them to “We find it surprising that British Paris.
compete with Heathrow. Airways is starting flights out of Davies’ panel will spend the next
“Not only will you support the Heathrow to Alicante and Ibiza this few months taking submissions,
vast majority of the connectivity summer. That’s not effectively using but will not report until 2015.
TIME is running out for Vijay Mallya’s Kingsfisher Airlines, after the firm’s lenders
decided to take initial steps towards recovering $1.4bn (£901m) of loans in default.
Shares in the firm slumped a further five per cent yesterday after the lenders’ meeting.

Santander may
shut financial
advice division
BY TIM WALLACE looking to invest a lump sum through
a bank or building society – with
SANTANDER is reviewing the future Santander believed to have been
of its bancassurance division after it referred to the enforcement division
struggled to train its hundreds of over poor advice and practices.
advisers to meet the new regulations The FSA said that overall the results
around the sector, the bank’s UK arm of its mystery shopping exercise were
announced yesterday. disappointing.
That could lead to the division being In 11 per cent of cases the advice was
closed, joining the swathe of banks unsuitable, and in 15 per cent the
cutting back on mass advice as a advisers had not obtained enough
result of the new Retail Distribution information to make a proper recom-
Review rules. mendation.
The bank will continue to provide The FSA’s survey found three main
advice to existing investment cus- problems with sales staff; firstly a fail-
tomers, but has not yet decided what ure to assess the level of risk customers
will happen to the rest of that busi- were prepared to take; secondly a fail-
ness. ure to assess the customers individual
“There is never a good time to financial needs and thirdly failing to
announce changes such as this and take into account how long the cus-
we are acutely aware of the uncertain- tomer wanted to hold their invest-
ty staff are facing,” said a spokesper- ment for.
son. “This review shows that customers
“We are working closely with other are not consistently getting the quality
business areas to ensure that many of of advice on their investments that
those who may be impacted are able they should expect when visiting an
to secure roles in a growing adviser in a bank or building society,”
Santander Group.” said Clive Adamson of the FSA.
It came as the Financial Services “Whilst we are disappointed by the
Authority (FSA) released the results of results of this review, we are encour-
its mystery shopping exercise which aged by the action that the firms
found cause for concern in the advice involved have taken to rectify the situ-
given to one quarter of customers

CITYVIEWS
” ation for their customers.”

ARE YOU WORRIED INFLATION HAS


BEEN ABOVE TARGET FOR SO LONG?
RICHARD WINSTON
BADENOCH & CLARK
” Interviews by Amy-Jo Crowley
On a such a small percentage, when I get my
monthly paycheck I don't think about it and if
you're getting an annual pay rise above the rate of infla-

GLYNIS WIGGINTON
KEMP LITTLE
” tion, then in real terms it's not affecting you.
The rise is very tangible for consumers like me.
The cost of everything has risen dramatically
which results in a significant impact on disposable
income.
ALEX CUNYNGHAME Not for me but when there are general pay
DELOITTE freezes, job cuts –look what’s happening at
Barclays – and increasing costs of living, I can see why it
would be worrying for some.
These views are those of the individuals above and not necessarily those of their company
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cityam.com THURSDAY 14 FEBRUARY 2013
15

THECAPITALIST
Got A Story? Email
thecapitalist@cityam.com

cityam.com/the-capitalist EDITED BY CALLY SQUIRES

Governor’s 20 City maverick David Buik slams Many readers may be refraining
from the pleasures of chocolate,
caffeine or booze for Lent. However

Sir Mervyn King’s BoE speech


there is no such abstinence over at
newly-launched alcohol awareness app

year flashback
DrinkCoach. Creators told The Capitalist
the app is “not about stopping
CITY stalwart David Buik of “However having looked at the drinking” but “merely making lifestyle
Cantor, who is known for his tea-leaf remnants made from Sir improvements by providing useful tools
poetic City commentary – often Mervyn King’s comments at the to change behaviour as wanted.” The
quoting the likes of Whitman, Inflation Report, I would be invitation for the launch party, to be

doesn’t add up
Shakespeare, Poe and Housman - amazed if he did not send out
held at the City’s Guildhall, promises
was left unimpressed with the coded comments that some large
Bank of England governor UK banks will need the injection catered food and beverages. Sadly The
yesterday. of substantial capital in the years Capitalist hears that organisers thought
“I would hardly describe to come.” Clearly not won over by long and hard, but settled on serving
myself as the sharpest pin in the the anniversary reminiscence, strictly non-alcoholic drinks only.
box” opened Buik. then.

WHILST another governor may have compares the economic situation now
used yesterday’s Inflation Report with 1993. In April 1993 the govern-
press conference to look forward, Sir ment declared the official end of the
Mervyn King took a more nostalgic recession after growth reached 0.6 per
approach in his opening remarks. cent. But with the latest figures
The Bank of England governor at –0.3 per cent, there hardly seems to
reminded us that this was the 20th be the same hope that it will all end
birthday edition of the Report. Back in up quite so rosily.
1993, King was serving in the There are similarities though – in
more lowly position of chief 1993 we had a Conservative PM in
economist and executive John Major. And a Royal scandal –
director at the Bank of Princess Diana sued the Daily
England. Mirror over photographs that were
King’s anniversary compar- taken of her at a gym whereas now
isons made yesterday don’t the focus is over photographs of the
all bear scrutiny. The pregnant Duchess of Cambridge in
Capitalist won- an Italian magazine.
ders if King At least some things
isn’t being too don’t change.
optimistic
when he BoE boss Sir Mervyn King

The date for the 2013 Standard Chartered Great City Race, the annual 5k
running challenge that sees corporate joggers sprint around the closed-off
streets of the City of London, has been set for Thursday 11 July. As in previous
years, over 5,000 workers from the Square Mile are expected to don their running
gear, come rain or shine. This is the ninth year that Standard Chartered have
sponsored the charity dash, which helps to raise awareness and funds for eyesight
charity Seeing is Believing. Ten pounds from every £30 entry fee will be donated
to an eye-care project in Zambia. To register go to www.cityrace.co.uk.

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16 NEWS
THURSDAY 14 FEBRUARY 2013 cityam.com

Tullow rallies on strong results Bakries want a


as it eyes Kenyan oil discovery
BY CATHY ADAMS planned this year, in territories growth”, and that it would not join quicker probe
into Bumi deal
such as Kenya, Ethiopia and the “treadmill of production”.
SHARES in Tullow Oil soared Norway among others. Shares closed up 6.78 per cent.
yesterday, as it eyed commercial Production-wise, it reaffirmed
production in Kenya. January’s guidance for 2013 at Tullow Oil PLC
The FTSE 100-listed oil explorer, between 86,000 and 92,000 1,280 p 1,260.00
which reported its 2012 results barrels of oil equivalent per day. 1,260 13 Feb
yesterday, hailed a major basin- Operating profit rose five per
1,240
opening discovery in Kenya as one cent to $1.18bn, while sales
of its wells reported better-than- revenue edged up two per cent to 1,220 BY CATHY ADAMS in December.
expected flow tests. $2.34bn, despite writing off 1,200 The Bakries asked that the Takeover
The African-focused explorer $617m (£397m) for unsuccessful 1,180 BUMI shareholder the Bakrie family yes- Panel publish its factual findings
yesterday pledged $2bn (£1.3bn) of drilling last year. terday called on the Takeover Panel to prior to next Thursday’s meeting, in
spending this year – up from $1bn Chief executive Aiden Heavey 1,160 accelerate its inquiry into the deal that “the interest of fairness”.
last year – to drive exploration-led said that the company was put the coal miner together in 2011. Bumi shares rocketed yesterday, as
growth on more than 40 wells focused on “exploration-led 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb “The panel was kept in the dark about the company moved closer to separat-
key facts at the time of the creation of ing from Indonesian arm Bumi
Bumi,” said Nirwan Bakrie, the chair- Resources.
man of the Indonesian Bakrie Group, in Shares closed up 9.7 per cent.
his first statement since the Bumi soap
opera began last year. Bumi PLC
“How this occurred goes to the heart of 460 p 444.80
why the Vallar/Bumi structure has been 13 Feb
so disappointing and also done serious 440
damage to London’s reputation as an 420
honest capital market with emerging
market investors such as ourselves.” 400
The Bakrie group yesterday questioned
380
why the progress with the current probe
has been much slower when compared 360
to the original concert party investiga-
tion, which the Takeover Panel ruled on 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 17

IN BRIEF
Total to raise exploration budget
n French oil major Total plans to raise Shale oil could SHALE OIL HAS POTENTIAL TO REVOLUTIONISE GLOBAL ENERGY MARKETS

add £50bn to
its exploration budget in 2013 under

2015 2020 2025


an investment policy that takes
advantage of high oil prices and
financing from some large-scale asset
sales. The world’s fifth largest oil
company said it would spend $2.8bn
2.3m* 5.4m* 9.3m*

UK GDP by 2035
(£1.8bn) on exploration in 2013, up
from $2.5bn last year.

Citi axes 50 EMEA bankers


n Citigroup has begun axing 50
investment bankers across its Europe,
Middle East and Africa (EMEA) division
as a programme of cutting 11,000 jobs
hits the heart of the investment bank.
BY CATHY ADAMS in the oilfields services industry in
the North Sea – is already known to
2030
Citi announced the global cuts, equal
to about four per cent of the bank's
GLOBAL production of shale oil
could boost the UK economy by
£50bn by 2035, analysis from
have significant shale gas resources,
and this could be a good indicator of
the potential for tight oil, PwC
11.7m*
workforce, in December as part of an PricewaterhouseCoopers reveals suggests.
effort to eliminate $1.1bn in annual today. By exploiting this natural resource,
costs by 2014.

2035
Shale oil, much like shale gas, is a the UK can contribute to investment,
hydrocarbon produced through employment, economic growth and
MetLife hit by derivative losses fracking, and resources have been energy independence, and lower oil
n MetLife, the largest US life insurer, found worldwide. prices mean the UK can become a net
Production of shale oil – also called oil importer over time, PwC says.
last night reported a 90 per cent fall in
“tight” oil – has the potential to PwC’s report suggests that shale oil
quarterly profits as a result of reach up to 14m barrels of oil a day has the potential to spread away from
derivative losses linked to its credit

13.8m*
by 2035, which could push global oil the US – where 553,000 barrels were
spreads. However its operating profit prices down by up to 40 per cent over produced in 2011, up from 110,000
beat estimates and the company the period thanks to the extra sup- barrels in 2004 – and increase to
reported a fall in net income to $96m ply, according to PwC’s shale oil almost 12 per cent of the world’s total
(£61m) from $959m a year earlier. report. oil supply by 2035.
In this scenario, the resource has “Lower global oil prices due to
MF Global UK debtors boosted the potential to revolutionise the UK increased shale oil supply could have
economy, and the development of a major impact on the future evolu-
n Unsecured British debtors of failed shale oil could see UK GDP increase tion of the world economy by allow-
brokerage MF Global are set to receive by between two to 3.3 per cent by ing more output to be produced at
an interim payment of 40p in the £1, 2035, equalling a rise of around £500 the same cost,” John Hawksworth, * NUMBERS REFER TO
according to KPMG who are winding to £800 per person. chief economist at PwC and co- BARRELS OF OIL A DAY
up the business. Further payments On a global scale, GDP could rise by author of the report, said yesterday.
could be made, depending on the around 2.3 to 3.7 per cent by 2035, or “For the UK alone, the benefit of
outcome of lawsuits involving the US up to $2.7 trillion (£1.7 trillion) at lower than expected oil prices could
arm of the business. today’s values. be around £30bn to £50bn at today’s
The UK – which has a big presence values.”
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 19

African Barrick IN BRIEF


Rosneft and Exxon in Arctic tie-up
n Oil giants Rosneft and ExxonMobil

warns output
yesterday agreed to expand their
cooperation agreement to include an
extra 600,000 square kilometres of
exploration acreage in the Arctic. The
agreement includes seven new
offshore licences in the Chukchi,

will sink again


Laptev and Kara seas. Russia’s Rosneft
and the US’s Exxon have already
agreed to jointly tap hydrocarbon
deposits in Russia’s Arctic waters and
in North America.

BY CATHY ADAMS talks between ABG parent Barrick Finmeccanica names new head
Gold and a national Chinese gold n Italy’s Finmeccanica promoted
SHARES in gold miner African company in January, the Tanzania- company insider Alessandro Pansa to
Barrick Gold sank yesterday as it focused company kicked off an opera- run the defence group as chief
Byron Grote, to join Anglo American, enjoyed a career with BP spanning 33 years
posted disappointing results for the tional review, with emphasis on cost executive officer after the arrest of its

BP veteran Byron Grote set to


full year, and forecast lower produc- cutting, which chief executive Greg head for alleged bribery led India to
tion for the fourth year in a row. Hawkins told City A.M. was a “strong suspend a $750m (£483m) deal to buy
The FTSE 250 gold miner said it focus” for this year. helicopters. Finmeccanica said Pansa,
expects production to sink for the Hawkins added that investors

join board of Anglo American


the chief operating officer, would step
fourth consecutive year in 2013, to should “stick with” the company as it up to ensure management continuity
between 540,000 and 600,000 ounces rides through a difficult period. following the arrest on Tuesday of
of the yellow metal. Analysts from Canaccord Genuity
Last year, output came in at said that the production target is
chairman and chief executive Giuseppe
Grote joined BP in 1987, and has Orsi. Orsi denies any wrongdoing.
626,000 ounces of gold, down from “substantially below our estimate”, BY CATHY ADAMS
688,000 ounces over 2011, primarily while Cailey Barker at Numis said been a member of the board since
due to the winding down of an old investors should avoid the company, MINER Anglo American has 2000. He also served as BP’s chief
mine. adding it is “another disappointing appointed BP board member financial officer from 2002 to
Thomson Reuters beats forecasts
African Barrick Gold, which has result from a serial disappointer”. Byron Grote as a non-executive 2011, and has overseen the oil n Thomson Reuters posted a better-
four producing mines in Tanzania, director. behemoth through many than-expected rise in quarterly profit
said earnings before interest, tax, African Barrick Gold PLC The appointment of Grote, who acquisitions. yesterday and forecast that revenue
depreciation and amortisation for 360 p 302.00 announced last week that he was Grote also has a role as non- would increase in the low single digits
the full year were $331m (£213m), 13 Feb to step down as a senior board executive director of consumer this year. The outlook was largely
350
down almost 40 per cent from 2011 member of BP following 33 years goods giant Unilever. anticipated by analysts, who had
and below forecasts. 340 with the oil giant, will be proposed Blue chip miner Anglo forecast a two per cent rise. Adjusted
The crash was a result of lower pro- to shareholders at Anglo’s AGM on American has seen many board earnings increased to $497m
duction – hit by a strike at its flag- 330 19 April. changes over the past few months, (£320m), or 60 cents a share, from
ship Bulyanhulu mine and illegal 320 He will join the Anglo board’s most notably with AngloGold $445m, or 54 cents a share, a year
mining at North Mara – but also cash audit committee, and after an Ashanti boss Mark Cutifani earlier. Full year revenue rose three
costs, which soared 37 per cent from 310 induction period, will take over appointed chief executive to per cent to $12.89bn.
their 2011 level to $949 per ounce. from David Challen as chairman of replace Cynthia Carroll when she
Following the collapse of takeover 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb the group. steps down at the end of April.
20 NEWS
THURSDAY 14 FEBRUARY 2013 cityam.com

Telecity pleases BT EXECUTIVE LIV GARFIELD JOINS TESCO BOARD


Tui Travel helps
put parent firm
market with on an even keel

robust outlook
BY MARION DAKERS

TUI Travel’s growing holiday sales


have helped parent firm Tui AG beat
quarterly forecasts and pare losses.
The German firm, which holds 56
per cent of FTSE 100-listed Tui
Travel, said yesterday its turnover
BY HARRY BANKS but that these were caused by diffi- rose 1.4 per cent on last year to
culties in obtaining planning per- €3.5bn (£3bn), or flat excluding
DATA centre operator Telecity yes- mission and power supplies rather currency changes, in the first
terday posted a 22 per cent rise in than demand weakness. financial quarter.
full-year earnings, meeting analyst “Some analysts misinterpreted the It posted an underlying loss of
expectations, and gave a confident slowdown of capacity growth as a €141m, four per cent better than a
outlook for 2013 underlined by slowdown of demand,” he said. year ago.
robust demand. “(But) not withstanding all of those Tui AG, which dramatically
The British company bases its facil- of challenges, we ended the year started and then called off merger
ities in European cities like London, with the largest expansion of capaci- talks with Tui Travel last month,
Amsterdam and Paris, where multi- ty in our history.” said the UK firm had delivered a
ple Internet connections provide Analysts at Berenberg said guid- OLIVIA Garfield, chief executive of BT’s Openreach, is to join the board of Tesco as a non- “sound operating performance”.
near failsafe services to retailers, ance from management that it executive director, the supermarket giant announced yesterday. Garfield has been with BT Tui Travel reported first-quarter
banks, social media sites and video- should be able to grow earnings in since 2002 and head of its superfast broadband division since 2011. Tesco said she will bring results last week and said more
on-demand providers. line with forecasts of about 20 per “valuable experience of new and emerging technologies” when she joins the board in April. Europeans were booking all-
Chief executive Michael Tobin said cent for 2013 would reassure the inclusive holidays to make the best

Regulator warns Global-GMG


the group was continuing to build market. use of dwindling incomes.
new capacity, which rose to 86 Milan Radia at Jefferies, mean- Yesterday Tui AG said its cruises
megawatts from 68 last year. while, who has a “buy” rating on the business was delivering “substantial
Demand was driven by growth in stock, said it was a solid set of growth”, with revenues up from
online activity, both at home and on
mobile devices, he said.
“You probably watch TV over the
Internet, do some online banking,
results.
Telecity’s adjusted core earnings
rose 22 per cent to £129.5m in the
year to end-December.
radio deal may hit competition €40m last year to €51m, though
operating losses widened to €11m
due to spending on expansion.

do your Sainsbury’s shop, download BY CITY A.M. REPORTER Smooth Radio.


a movie or make an Amazon pur- Telecity Group PLC But in Manchester, Scotland, TUI Travel PLC
chase,” he said. “All of these things 900 p 893.50 GLOBAL Radio’s £70m deal to buy Cardiff, Yorkshire, the east 320.0 p 315.90
13 Feb 13 Feb
are driving growth.” GMG Radio was yesterday cleared Midlands and north Wales it
880 317.5
Telecity, which competes with by the Competition Commission, cautioned that competition in
Equinix and Interxion, triggered but the regulator warned that the local advertising markets could be 315.0
some concerns among investors last 860 takeover could drive up affected. 312.5
year about whether a slowdown in advertising prices across the UK. “The CC has found that in many
new capacity might be a sign of 840 In London – where Global Radio areas where Global and Real and 310.0
cooling demand. runs Heart, LBC, Choice, Gold, Smooth stations currently overlap 307.5
Tobin said yesterday that there 820 Capital and Xfm – the commission and compete, advertisers ... could 305.0
had been delays in opening new cleared the deal, which would see face higher costs,” the commission
capacity in London and Amsterdam, 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb Global take ownership of GMG’s said in a statement. 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb

Deere results beat forecasts Dr Pepper Snapple Group US market helps Hyatt Cisco sees higher revenue
on strong farm demands outlook disappoints Street Hotels profit top estimates and profit in second quarter
DEERE & Co, the world’s largest farm DR PEPPER Snapple Group forecast profit HYATT Hotels reported a better-than- NETWORK equipment maker Cisco Systems
equipment maker, reported first-quarter for the current year below analysts’ expected fourth-quarter profit and said it reported quarterly revenue and earnings last
results above analysts’ expectations estimates as the soft drink maker expects expects a year of solid growth ahead. night that beat Wall Street’s average
yesterday as farmers geared up to plant the raw material costs to continue to constrain Hyatt’s higher exposure to a better- estimates.
biggest corn crop in US history following the earnings. On a conference call with analysts, positioned US market is coming in handy at Revenue rose five per cent for Cisco’s fiscal
worst drought in the US Midwest in 56 years. Dr Pepper executives said they expected a time when it said it sees “headwinds” in second quarter that ended 26 January to
The company also raised its forecast for net packaging and ingredients to increase the some other markets this year. About three $12.1bn versus a year ago. Analysts, on
income in 2013 to $3.3 bn (£2.05bn) from total cost of goods by about two per cent in quarters of Hyatt’s revenue comes from the average, were expecting $12.06bn.
US CORPORATE RESULTS $3.2bn. Analysts had estimated $3.26bn on 2013. Almost half of this increase is due to
the higher cost of apples, while the
United States, where a business-led recovery Income, excluding items, rose 6.2 per cent to

ROUND UP
average. “Relatively high commodity prices has lifted hotel occupancy rates over the $2.7bn, or 51 cents per share, three cents
and strong farm incomes are expected to remainder is primarily PET used for bottles, past year. above analysts’ average estimate of 48 cents
continue supporting a favorable level of corn for sweeteners and paper board for Hyatt’s results follow better-than-expected a share. For the current quarter, Cisco said it
demand for farm machinery during the packaging, finance chief Marty Ellen said. earnings from Starwood Hotels & Resorts expects revenue in the current period to
year,” Deere said. The US Agriculture The company expects full-year profit of Worldwide last week. grow within a range of four to six per cent
Department said this week farm income $3.04 to $3.12 per share and sales growth of Marriott International is scheduled to report from the same period last year.
would soar to a record $127.6bn this year, up about three per cent, implying revenue of results on 19 February. Analysts had been expecting Cisco to do
15 per cent. Sales of agriculture and turf about $6.17bn. Analysts were looking for a Hyatt reported a 7.5 per cent increase in better than forecast and Shaw Wu, an
equipment – which make up three-quarters profit of $3.20 per share on revenue of revenue per available room (revPAR) in the analyst at Sterne Agee, said that “it’s pretty
of Deere’s total revenue – jumped 16 per $6.17bn. Dr Pepper reported fourth-quarter fourth quarter ended December. much going to boil down to guidance now”.
cent in the quarter ended 31 January. Total SG&A expenses of $555m for the quarter Total revenue rose one per cent to $1bn “They did say they got a benefit from taxes.
revenue rose 10 per cent to $7.42bn, well ended 31 December, up from $553m a year (£643m). Net profit fell to $16m, or nine When you (take) that out its 50 cents. That
ahead of the $6.72bn expected. earlier. The company said total volumes cents per share, from $52m, or 31 cents per still beat by twp cents,” he said referring to
Net income attributable to Deere rose to declined one per cent, with beverage share, largely due to one-time items such as Cisco’s earnings per share. Cisco’s shares fell
$649.7m, or $1.65 per share, in the first concentrates declining the most. Profit rose lower tax benefits and investment losses. 1.2 per cent in after-hours trading to $20.89.
quarter from $532.9m, or $1.30 per share, a to $170m, or 81 cents per share, from $166m, Excluding these, it earned 20 cents per They have risen almost 25 per cent since its
year earlier. or 77 cents per share, a year earlier. share. last quarterly earnings report.

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cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 21

Ros Altmann Harvey Nash


lifts dividend
steps down as as profits grow
BY AMY CROWLEY

head of Saga
GLOBAL specialist recruiter Harvey
Nash said yesterday it plans to
increase its final dividend by 10 per
cent after it posted a slight increase
in full-year profits, adding that its
full-year results would be ahead of
expectations.
an 120 per cent drawdown limit, and Pre-tax profit at the firm, which
BY BEN SOUTHWOOD putting the problems of QE squarely specialises in technology and IT
SAGA boss Ros Altmann yesterday on the maps,” she told City A.M. service roles, is expected to rise to
announced she was stepping down as But she would not rest on her lau- £8.6m for the year to 31 January
Business customers have been travelling less due to tough conditions across Europe
director-general of the over-50s lobby, rels, she said, and planned to return to from £8.5m a year earlier.

Hogg Robinson revenues drop


after two and a half years in the role. an independent advocacy and adviso- Revenues are expected to rise by
The tireless advocate for pensioners, ry role, a position she was in for 17 10.7 per cent to £590m from £533m
and fierce critic of quantitative easing years before joining Saga. Chief among over the same period a year earlier,
(QE) said she had enjoyed her role, but her aims is to get policymakers to with gross profit of around £80m
wanted to spend more time in
London – Saga is based in Folkestone.
“Saga has decided to restructure its
presence in the advocacy and lobby-
reconsider QE, which she believes has
failed.
Altmann rose to fame when she cam-
paigned between 2002 and 2007 for
as business travellers spend less despite challenging market
conditions, the group said.
Harvey Nash put the increase
down to new offices in Hong Kong
ing space and, after much careful the Allied Steel and Wire workers who BY CITY A.M. REPORTER Robinson’s push into online and Sydney, the acquisition of the
thought, Ros Altmann is stepping lost their supposedly fully-funded pen- services could help drive Talent IT business in Belgium and
down as Saga’s Director General,” the sions when the company went into BUSINESS travel management improvements at the firm. increased market share from its
organisation said in a statement. administration. Her campaign suc- company Hogg Robinson said “Increasing adoption by clients technology and digital segment.
It said Altmann’s departure ceeded when the government was, yesterday the group had of Hogg Robinson’s on-line travel Full-year results for the group,
would be a “loss” for the firm. in 2008, found guilty by the continued to trade in line with management tools, and the which said it had increased its debt
Altmann said she was proud Appeal Court of misleading the expectations since October last growing level of software sales facilities with the Royal Bank of
of the achievements she’d pensioners. year, as revenues for the four will drive medium-term margin Scotland from £40m to £52m to fund
made since she took up the Altmann was also a consult- months to the end of January fell improvement,” said Julian Cater at working capital when
role in September 2010. ant to the Treasury on the by seven per cent. Canaccord Genuity. recruitment markets
“I’m very proud of things Myners Review on institutional The firm, which plans trips for “Whilst the market backdrop recover, will be
I’ve achieved: changing investment. She is also a non- corporate clients, has been hit by remains uncertain, Hogg released this April.
the government’s executive director at the businesses cutting back on travel Robinson continues to make It plans to pay a
views on the unfair London School of spending. Transaction volumes progress as clients look to the final dividend of
increase in the Economics. were down by two per cent, while group for support in helping them 1.795p per share.
women’s state pen- the amount that clients spent per to achieve best value from their
sion age, pushing Altmann wants to spend transaction fell by three per cent. travel budgets,” chief executive Harvey Nash is led
for the move back to more time in London Analysts said they hope Hogg David Radcliffe said yesterday. by Albert Ellis

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22 NEWS
THURSDAY 14 FEBRUARY 2013 cityam.com

CITY MOVES WHO’S SWITCHING JOBS Edited by Annabel Palmer


in association with

KNG Securities associate in its sports group. Kelham spent seven Legg Mason Alvarez and Marsal
years as senior lawyer on brand protection matters for
The fixed income specialist the London Organising Committee of the Olympic The asset management firm has announced the The professional services firm has announced the
has announced the Games. She will be working closely with Lewis Silkin’s appointment of Joseph A Sullivan as president and appointment of Wayne Grundy as managing director
appointment of Armando La media, brands and technology team. chief executive. Sullivan joined the firm as chief to lead its new European cyber practice. Grundy has 16
Morgia as a head of structured administrative officer in 2008, and has held prior years’ experience working within internet security,
finance. He joins from Hemera executive roles at Dain Bosworth and Piper Jaffray. and joins from Raytheon UK, where he was chief
Capital Management, where USS Investment Management information officer.
he focused on residential
mortgage-backed and Robin Filmer-Wilson will join the investment Metlife
consumer asset-backed management firm as investment manager in private
Shirley Fell has been appointed chief operations Throgmorton
securities. equity co-investments. He has over 14 years’ direct
private equity and investment experience, and started officer, UK at the insurance company. She has over 30 Carolyn Twist will join the accountancy and back office
his career at Brown Brothers Harriman & Co in New years’ experience in the financial services industry, services firm as senior client adviser. Twist has worked
Lewis Silkin York. He was most recently director at TCR Capital, having previously worked for HBOS and Zurich. She at Morgan Stanley for the past 15 years, most recently
Alex Kelham will join the City law firm as senior where he worked on leveraged buyout transactions. will be responsible for IT application development. as executive director and European controller.

+44 (0)20 7092 0053


SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT morganmckinley.com
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com

IMF demands
details on EU
banking union now vary widely across Europe – some-
BY TIM WALLACE
thing the IMF is keen to stop happen-
THE EU must lay out a careful plan ing again.
towards a banking union, ironing out “Single supervision should reduce
disagreements and preparing thor- national distortions, bring a uniform-
oughly if the new system of regula- ly high standard of oversight, and mit-
tion is to work smoothly, the igate the buildup of concentrated risk
International Monetary Fund (IMF) that compromises stability for all,”
warned yesterday. said Rishi Goyal, who wrote the
TICKETS A lack of good staff, a need for report. “And moving responsibility for
increased cooperation between potential financial support to the
ON SALE national authorities and determining supranational level would de-couple
NOW the exact nature of the central reg-
ulator’s powers are all chal-
banks’ prospects from that of sover-
eigns with weak finances, pro-
lenges to the end goal, it said. tect individual sovereigns from
The global finance advisor banking sector weaknesses,
approves of the aims of the and thus enhance confi-
banking union, as the nation- dence.”
al arrangement of financial But the IMF warned there are
supervision, resolution and challenges ahead, as bringing
safety nets struggled to cope non-euro members into the
with the credit crunch. union raises tough
Banks became questions over the
unwilling to lend structure of the safe-
across borders to ty net.
areas where funding
was scarce and lend- The IMF’s Christine Lagarde
ing and deposit rates approves of the bank plan

Merkel vows to fight tax havens


at next G8 meeting in the UK
BY CITY A.M. REPORTER meeting of finance ministers and
central bankers from the Group of
CHANCELLOR Angela Merkel took 20 developed and emerging
aim yesterday at multinational economies in Moscow.
corporations that use tax rules in On Tuesday the Paris-based
In association with Europe and the United States to Organisation for Economic
avoid payments and said the Group Cooperation and Development
of Eight (G8) plans to fight tax called for an urgent overhaul of
For more information visit gauchopolo.com havens. international corporate tax rules to
“It’s not right that giant global stop big companies escaping
companies have huge sales here (in payment of billions of euros to
Germany), in all of Europe, in the cash-strapped governments.
United States and elsewhere and Governments face a growing
then only pay taxes somewhere in a outcry from voters to force big
tiny tax haven,” Merkel said. companies with extensive
“That’s why we’re going to fight international business to pay more
to finally put an end to tax havens tax after evidence that many use
BREWING COMPANY at the G8 meeting this year in Great differences between national tax
Britain,” she said. “The whole rules to reduce their bill.
world will have to fight for it The OECD said multinational
otherwise we won’t accomplish companies were increasingly
that.” reporting profits in countries other
Merkel was speaking before a than where their main revenues
were generated to avoid taxes.
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 23

December sees UK has widest


productivity
factory output gap since 1993
BY BEN SOUTHWOOD

rise in Eurozone

LAURA LEAN/CITY A.M.


UK OUTPUT per hour in 2011 was
further below the average of major
economies than at any time since
1993, according to figures released
yesterday.
British output per worker trailed
the G7 average by 21 per cent in
less than a quarter of the falls Around a million Londoners drive to work, according to data from the 2011 Census 2011, the most recent year for
BY BEN SOUTHWOOD
recorded over the previous three which there is data, the Office for
EUROZONE factory output grew for
the first time for five months in
December, but analysts said the
months,” May pointed out.
But the small overall improve-
ment hid some much starker moves
Fall in the number of London National Statistics (ONS) numbers
showed. Output per hour was
some 16 per cent worse than

workers that commute by car


above-expectations rise would not in member states. across the other major
stop GDP from contracting. Ireland enjoyed an 8.5 per cent industrialised economies, the ONS
Industrial production grew 0.7 increase in industrial output over said, the worst figure for 18 years.
per cent in the final month of the month, as part of a 1.9 per cent And a flat picture for UK output
2012, Eurostat said yesterday, the improvement over the year. BY JULIAN HARRIS at work via rail or buses, the 2011 in 2012, combined with a jobs
first month of growth since By contrast, Spain and Italy both Census showed. boom, means that these figures
August, and almost double consen- saw industrial production slide over THE NUMBER of Londoners that In the south east region outside are expected to worsen. “Certainly
sus expectations. 6.5 per cent between December drive to work has dropped by over London, however, 57.2 per cent of we can conclude that no growth in
But Ben May at Capital Economics 2011 and December 2012. seven per cent since the start of workers drive a car or van for GDP, combined with booming
echoed many analysts by continu- the millenium, according to their daily commute – slightly employment, will lead to lower
ing to forecast a deep fall in the Census data released yesterday. down on the 59.2 per cent output per worker,” ITEM’s Nida
bloc’s overall output. Eurozone industry shocks by boosting output in December Over 1.1m residents in the recorded in 2001. Ali told City A.M.
“December’s rise in Eurozone 110 Index of industrial output, 100 = average level in 2005 capital used to drive a car or van Across England and Wales, But the “productivity
industrial production does not to work according to the 2001 driving remains the most common conundrum” was not a UK-only
alter the fact that GDP probably 105 Census – yet the figure is now form of commuting to work, used phenomenon, the ONS claimed –
contracted pretty sharply in the closer to 1m, data from the 2011 by 15.3m people, 57.5 per cent of while the UK has trailed the US,
fourth quarter,” May said. 100 Census has shown. the working population. Japan and Canada’s productivity
In fact, industrial woe probably 95 London has the lowest Yet only 4.3m people (16.4 per growth since 2007, it has kept
took about 0.5 percentage points Euro area, proportion of people who drive to cent of workers) travel by public close to Germany and Italy. The
seasonally adjusted
Source: Eurostat

away from fourth quarter GDP 90 series work in the UK, at 26.3 per cent – transport, according to the figures ONS says this means what it calls
growth, May said. down from 33.5 per cent in 2001. from 2011. Around 3.6m walk or the “productivity conundrum” is
“December’s increase reversed 85 Nearly half (48.3 per cent) arrive cycle to work. not unique to these isles.
2003 2007 2012

Lift in US manufacturing and Experts predict global growth


is set to return in six months
retail sales boost the economy period a year before. Firms also built up their
BY BEN SOUTHWOOD
GLOBAL growth will return with
a bang over the next six months,
100 level that corresponds to the
economic climate in 2005.
These boosts came mainly from
Asia, where worries of an
BY BEN SOUTHWOOD
Car sellers did particular well, inventories slightly – by 0.1 per cent driven by emerging markets, emerging market slowdown
US RETAIL sales continued their enjoying a 9.4 per cent surge in sales over the month, contributing to the according to a poll of experts out seemed to have disappeared. The
steady climb in the first month of over the year. Non-store retailers – overall 5.1 per cent extra yesterday. Asian climate indicator rocketed
2013, according to data out catalogues and the internet – manufacturers had stored compared The Ifo expectations index from 81.6 in the final three
yesterday. managed a 15.7 per cent boost over to December 2011. soared from 87.7 in the fourth months of last year to 97.4 this
Like-for-like retail and food the year, the Census Bureau said. But the data was not entirely quarter of 2012 to 107 in the quarter.
services sales climbed 0.1 per cent Manufacturers also enjoyed an positive. The retail sales bump was first quarter of 2013, the highest But North America and
between December and January to improvement in their business the smallest in three months and result for seven quarters, and Western Europe also enjoyed
cap off a 4.4 per cent improvement environment, according to separate came as payroll taxes reverted to back to a position suggesting climbing indices, with respective
over the year, the US Census Bureau figures from the Census Bureau. higher rates. And a third data things would be significantly jumps of 5.9 and 11.1.
said. Looking at the three months Their sales edged up 0.3 per cent release, from the Labor Department, better in six months time. “After six months of
ending with January gave the same between November and December showed that import prices were Ifo’s climate indicator also stagnation, the prospects for the
picture of steady but substantial last year, again capping off a more driven up 0.6 per cent in January by climbed significantly, from 82.4 world economy seem to be
improvement, with firms shifting substantial annual increase of 3.6 rising oil prices, further impacting to 94.1, although not quite to the brightening,” said Ifo president
4.5 per cent more than the same per cent. on tight consumer budgets. long term average of 96 nor the Hans-Werner Sinn.

Find your next step at


24 NEWS
THURSDAY 14 FEBRUARY 2013 cityam.com

Peugeot rules IN BRIEF


Town Centre Securities’ profit falls
n Leeds-based property investment

out asset sales


and development firm Town Centre
Securities yesterday said first half pre-
tax profits were five per cent down on
2011 at £3.8m for the period to 31
December 2012. Its net asset value
(Nav) per share also slipped to 263p,

as losses grow
from 284p in 2011. Chairman and chief
executive Edward Ziff blamed higher
borrowing costs following its 2011
refinancing for the fall. “We retain a
robust financial position,” he added.

itability in the following full year.


Oxford Instruments is on track
BY HARRY BANKS
The company yesterday unveiled a n High-tech manufacturer Oxford
PSA Peugeot Citroen vowed to avoid €5bn (£4.3bn) net loss, bloated by Instruments said yesterday that
further asset sales or government €4.74bn in writedowns as its industri- trading was on track for the full year.
James Bond, acted by Daniel Craig (above), supped on Heineken in the latest Skyfall film The firm said that the trends it
bailouts, insisting that cuts under- al operations continue to bleed cash.

Heineken sees growth regions


way will be enough for it to recover Losses at the auto division swelled reported for the first half of the year
from its biggest-ever full-year loss. to €1.5bn from €92m as group rev- had continued into the second half. It
Peugeot shares rose yesterday after enue fell 5.2 per cent to €58.4bn. said its nanotechnology tools sector
the troubled carmaker said it burned Divisional cashflow came to a nega- continued to grow but its industrial
through cash at the expected rate in
2012 and stuck by a pledge to halve
that figure this year, despite weaken-
ing prospects for a European market
tive €2.5bn, for a €208m monthly
average.
The earnings slide has fuelled spec-
ulation that chief executive officer
offsetting weakness in Europe products sector remained soft. “The
board anticipates that Oxford
Instruments will continue to make
good progress,” it added.
recovery. Varin may be forced to consider sell- BY CITY A.M. REPORTER achieve €525m (£337.7m) of cost
“The foundations for our rebound ing the Faurecia parts division or seek savings under its TCM2 programme
have been laid,” chief executive a further cash injection – which HEINEKEN, the world’s third- from 2012-14, with €25m of gains International boosts Speedy Hire
Philippe Varin told reporters in Paris, could involve Peugeot become partly largest brewer, beat expectations from the acquisition of Asia Pacific
citing savings that were slightly state-owned, like rival Renault. for 2012 profit yesterday and said Breweries (APB) now added to its n Equipment rental hire firm Speedy
ahead of plan. Africa, Asia and the Americas initial target. It had reached €196m Hire said yesterday trading was on
Peugeot is the worst casualty of a Peugeot SA should drive continued volume and of savings by the end of December. track for the full year after its
European auto sales collapse that has 6.50 €
6.40 revenue growth, offsetting weak Its net profit before one-offs rose international business grew revenues
13 Feb 37 per cent year-on-year for the third
been especially brutal in its core European markets. 7.1 per cent to €1.70bn, compared
southern markets. The company’s The brewer also said that savings with a forecast for €1.65bn. quarter. In the UK, revenues were up
6.25 two per cent year-on-year for the
share of regional sales fell to 11.7 per should outweigh rising costs. Like-for-like net profit rose 1.6
cent last year from 12.4 per cent, as The brewer of Heineken – per cent – Heineken had forecast same period from 1 October last year
rivals such as Volkswagen and 6.00 Europe’s best-selling lager, and Sol, 2012 profit would be flat on that to 12 February. “Importantly both
Hyundai-Kia gained ground. Strongbow and Tiger, said input basis. After taking full control of margins and returns have continued to
The Paris-based company is scrap- 5.75 prices, including malted barley and Tiger beer maker APB last year, 64 improve across the group,” the
ping 8,000 jobs and an assembly packaging, would rise only slightly per cent of Heineken’s volume and company said in a statement.
plant in an attempt to return to after rising 8.3 per cent last year. 59 per cent of its operating profit
break-even late in 2014 and prof- 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb Heineken said it expected to comes from emerging markets.
cityam.com THURSDAY 14 FEBRUARY 2013
25

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REPORT
Late rally sees
To appear in Best of the Brokers, email your research to notes@cityam.com
Petrofac Ltd
1,655.00
1,690
1,680
p 13 Feb
Caution keeps
FTSE 100 hit a
1,670
1,660
1,650 volumes low
and Wall St flat
1,640
1,630

five-year high
1,620

U
7 Feb 8 Feb 11 Feb 12 Feb 13 Feb
S stocks drifted in light volume
PETROFAC yesterday, ending little
changed, as investors remained
UBS yesterday upgraded oilfield services group Petrofac from “neutral” to “buy”, cautious after the S&P 500
with the target price increased from 1,575p to 1,875p. “We think Petrofac has a solid index briefly hit its highest intraday
business model within the onshore engineering & construction end market,” the

T
level since November 2007.
HE FTSE 100 staged a late rally Kenyan well test results, which it note said. UBS recommends “deploying cash organically” within other parts of the The S&P 500 was buoyed by General
yesterday when shorts got said could lead to the country's first business in order to avoid the risks associated with M&A activity. Electric after cable company Comcast
squeezed by the continued commercial production. said it will buy from GE the the part of
resilience of the market on “Whilst this test rate exceeds prior Capita PLC NBCUniversal it didn’t already own
the back of rising investor guidance, some of this positive news
p
831.00 for $16.7bn. Comcast’s stock hit the
confidence. should be in the price, with the stock 840 13 Feb highest since 1999 before closing up 3
Britain’s top share index closed up trading up after disappointing per cent at $40.13 and GE gained 3.6
830
20.73 points, or 0.3 per cent, at announcements yesterday,” per cent to $23.39.
6,359.11, and touched an intraday Canaccord Genuity said in a note. 820 The S&P 500 is up 6.6 per cent so far
high of 6,384.70 – its highest in five Reckitt Benckiser, maker of this year, partly due to stronger-than-
years. Strepsils throat lozenges and 810 expected corporate earnings and a bet-
The index, however, fell short of its Mucinex decongestant, was up 1.3 ter economic outlook. The Dow
highest closing level since January 3 per cent after beating profit fore- 800 industrials is about 1 per cent away
2008 with some late profit taking casts. UBS provided a boost for from an all-time intraday high,
and strong resistance seen at 6,400, Petrofac, which rose two per cent reached in October 2007.
according to technical analysts. after the investment bank upgraded 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb The Dow Jones industrial average fell
The latest market rally has the oil services firm to “buy” from 35.79 points or 0.26 per cent, to
stretched back to November 19 2012 “neutral” after recent underperfor- CAPITA 13,982.91, the S&P 500 gained 0.9 point
without a correction, squeezing the mance following a profit warning Shore Capital have reiterated their “hold” rating on outsourcing firm Capita, with a or 0.06 per cent, to 1,520.33 and the
bears and fuelling the bulls’ appetite from European peer Saipem. target price of 810p – below yesterday’s closing price. Although the brokers expects Nasdaq Composite added 10.38 points
for equities. IMI, meanwhile, fell 0.8 per cent “contract news flow to remain positive” it insists “margin concerns persist” ahead of or 0.33 per cent, to 3,196.88. The S&P
Miner ENRC, up three per cent yes- after UBS cut its rating to “sell” from full-year results due on 28 February. “We see evidence of changing business models gained 12 per cent in the first three
terday, has rallied 26 per cent over “neutral”, saying the company faces that weigh on capital requirements,” it adds. months of 2012.
the last week as bid rumours refuse severe margin pressures in its service Deere & Co, the world’s largest farm
to go away. Vodafone fell 1.1 per cent division, and is not as deserving of its equipment maker, forecast a modest
Drax Group PLC
on reports it weighing up a bid for
Germany’s Kabel Deutschland, leav-
new multiple as other engineers.
AstraZeneca, BP, Royal Dutch 625 p
611.50 increase in sales this year despite the
prospect of the biggest corn crop in US
ing further question marks over its Shell and Sage Group all restricted 13 Feb history. The forecast fell short of ana-
dividend outlook. further gains on the index after they 620 lysts’ expectations, sending shares of
“(There is) limited scope for addi- traded without their dividend attrac- Deere down 3.5 per cent to $90.68.
tional leverage at Vodafone while tions. 615 In extended trading, shares of tech-
maintaining dividend cover,” Simon nology bellwether Cisco Systems fell 2
Maughan, strategist at Olive Tree 610 per cent after it posted results.
FTSE
Securities, said.
6,400 6,359.11 605
Dr Pepper Snapple fell 5.8 per cent
Maughan said that while address- 13 Feb to $42.69 after it forecast profit for the
ing it's lack of fixed line ‘back-haul’ 6,375 current year below analysts’ estimates.
capacity by buying Cable & Wireless 6,350 Cliffs Natural Resources lost a fifth
in the UK and TelstraClear in New 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb of its market value a day after the
6,325
Zealand, obvious gaps remain for
Vodafone in Germany, Spain and 6,300 DRAX GROUP miner reported a quarterly loss and
slashed its dividend by 76 per cent.
Italy, and less pressingly in Holland 6,275 Cantor Fitzgerald yesterday downgraded Yorkshire power station giant Drax from According to the latest Thomson
and Portugal. 6,250 “reduce” to “sell”, with a target price of 524p. Drax is proceeding with plans to Reuters data, of the 364 companies in
Elsewhere on the upside, Tullow diversify into biomass power generation but the broker fears there are still concerns the S&P 500 that have reported results,
6,225 about the plan. “We believe that the plans are not risk free, and the group remains
Oil recovered some recent losses, up 70.3 per cent have exceeded analysts'
6.8 per cent after releasing a set of 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb exposed to carbon costs even after the planned unit conversions,” the note said. expectations.

Rising US debt levels are scraping a) Tell yourself you must get on with
redecorating the bedroom

the ceiling again, do you: b) Sell the Wall Street index in anticipation
of a stock market crash

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THURSDAY 14 FEBRUARY 2013
26

THEFORUM In association with


cityam.com/forum

High inflation is denting recovery:


The Bank of England must act now
I
T’S official. The Bank of England rate of increase. The answer from the outgoing Bank and are also cutting back on their con-
has confirmed in its latest Second, strong economic growth in of England governor Sir Mervyn King sumption.
Inflation Report that it is unlikely Asia and other emerging market yesterday was the same as he has been Another concern is the impact of a
to get inflation back to target in economies has continued to push up giving throughout the crisis. We have very low interest rate policy, accompa-
the next couple of years. On its global energy and commodity prices. to keep interest rates low to support nied by high inflation, on the value of
central forecast, the Bank is not Despite the impact of the Eurozone economic growth, and the prospects the pound. The official Bank of
expecting inflation to be back around crisis, and disappointing growth in for the economy would be worse if we England view is that a weak pound
the 2 per cent level until late 2015 or
early 2016.
ANDREW SENTANCE many western economies, the oil price
is around $115-120, and could well rise
did anything to curb inflation.
That was exactly the right policy in
helps the rebalancing of the UK econ-
omy towards exports. But we have
As a result, the UK will have suffered further if the global economy picks up seen little evidence of that because UK

‘an additional
The UK has suffered
a decade of almost continuous above- “hawk” or “uber-hawk” as a result. as forecast this year and next. exports are not price sensitive and the
target inflation since the mid 2000s – Well, I’m afraid those warnings were Third, the UK has suffered from an UK doesn’t have lots of spare capacity
with two major inflation spikes above
5 per cent, and the likelihood that
correct. And the Bank of England has
officially acknowledged this in its lat-
additional surge in import prices due
to the weakness of the pound. In surge in in exporting industries. Instead, a
weak currency squeezes consumers
inflation will rise above 3 per cent est Inflation Report. February 2011, I described this as and probably does more harm than
again this year. This has happened
despite the financial crisis and a
The reasons that inflation has
remained stubbornly high are exactly
Selling England by the Pound – the
title of the classic Genesis rock album
import prices due to the good.
In the short term, the MPC is reluc-
major recession, which was originally
expected to create serious deflation-
those which I highlighted in my final
MPC speeches in early 2011, and
released 40 years ago. The recent
decline in our currency is worrying
weakness of the pound tant to take action to keep inflation
on target. But relatively high inflation
ary forces in the UK and other major they’re still available on the Bank of from this standpoint. A renewed bout and a weak currency are becoming
economies. Deflation has been fore- England website. First, the Bank of of sterling weakness would give added part of the problem for UK economy,
stalled, and instead we are suffering England’s economic model and fore- momentum to the rise in inflation, the depths of the financial crisis in rather than part of the solution. The
inflation. casts vastly overestimated the down- which the Bank is already forecasting 2009, but I don’t think it is the right sooner we recognise this, the more
To me this is not a surprise. Two ward pressure on inflation from spare for the first half of this year. approach now. Tolerating inflation is quickly we can plot a course ahead for
years ago, in my final year as a mem- capacity in the economy. In particular, These arguments were well-aired in contributing to the squeeze on con- a genuine and sustained recovery.
ber of the Monetary Policy Committee we have seen services prices in the the columns of City A.M. But it is all sumers, which is one of the main neg- Andrew Sentance is senior economic advis-
(MPC) I warned that we were set for a consumer price index rising at 3 to 4 very well to say “I told you so”. The ative factors behind weak growth. er at PwC, and a former member of the
persistent period of relatively high UK per cent consistently since 1997. The harder question is: what do we do Savers have suffered from low interest Bank of England’s Monetary Policy
inflation. I was branded an inflation recession has made little dent in this now? rates for a prolonged period of time Committee.

Agree? Disagree? Got a sharp comment?


The Forum wants you to join the debate. Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com Top responses will be reprinted in The Forum.

Finance education at school is the first step to empowering future consumers


I
AM sure that you and I have at decided to include financial backed the Personal Finance running their own schemes. A
least one thing in common: that education in the national Education Group (Pfeg) in its number also support the work
one of the most useful skills in curriculum, making it a legal campaign to ensure that every child carried out in schools by Pfeg, which
our lives is being able to manage requirement for schools to teach it. It and young person has the skills, trains teachers in financial education.
money – making sure I live within is something the British Bankers’ knowledge and confidence to manage The industry works with Pfeg’s
my means, don’t run up excessive Association had been urging the their money well. Until now, there Quality Mark accreditation scheme,
debts, can pay my mortgage, can government to do. have only been guidelines in place for ensuring that young people in receipt
make sure my savings earn interest,
and that my pension is not eaten up
ANTHONY BROWNE Financial education helps people
balance their finances, avoid costly
four to16 year-olds to learn about
financial education. For primary
of financial education programmes,
or education resources produced by
by fees. Not having that skill can lead equip children with both intellectual debt, save for their future and better schools, the guidelines recommend financial firms, are not being exposed
not just to being worse off, but to learning and skills for life outside the understand their investments. It that pupils are taught to look after to marketing.
financial ruin. As debt advice school gates. And one of the most empowers customers, giving them their money and realise that future We now need to ensure that
charities see every day, the lack of important and practical skills the confidence that they are getting wants and needs may be met through schools can deliver the necessary
financial capability can devastate throughout life is the ability to the best deal from financial services savings. That is good as far as it goes – teaching. At a time when the need for
lives. In recent years, runaway manage money. companies. Unlike many of the skills but it is only by including personal financial education has never been
personal debt has caused problems That is why in all last week’s hoopla taught in school, financial education finance in the curriculum that we clearer, the banking industry is keen
for individuals and the economy. about changes to GCSEs, there was benefits everyone throughout their can be sure that every school equips to work with the government to
But although it is one of my most one barely-noticed announcement whole lives. And the lack of it can be every child with the skills they need. deliver its new commitment.
important life skills, I was never that particularly pleased me. Michael personally disastrous. British banks are already active in Anthony Browne is chief executive of the
taught it at school. Schools should Gove, the education secretary, had For all these reasons, we have financial education, with many British Bankers’ Association.

FOREIGN
Fly from London City Airport to a European city and enjoy a memorable
THURSDAY 14 FEBRUARY 2013
27

WE WANT TO HEAR YOUR VIEWS


E: theforum@cityam.com | Comment: cityam.com/forum | @cityamforum

LETTERS to the editor Crest Nicholson IPO


True entrepreneurs Work placements BEST OF TWITTER could herald a new
dawn for markets
Sir Mervyn King’s high inflation forecast
[Re: Europe needs to be more relaxed about [Re: Pope Benedict saw why the capitalist seems deliberate. Kings have historically
entrepreneurs getting filthy rich, yesterday] system is virtuous, yesterday] debauched the coin to inflate away debts.
Few people have a problem with people like Philip Booth’s thoughtful piece mentioned @GuidoFawkes
Google’s Eric Schmidt becoming wealthy if two central issues – the role of solidarity in
they have been genuinely entrepreneurial – capitalism and what he called “the Did I hear a coded message from Sir Mervyn

I
creating something new by effort and requirements for justice” in relation to it. As King that banks may require huge capital
ingenuity. But Paul Ormerod doesn’t seem one who came to the Square Mile in 1964, injections in the years to come? N THE biggest flotation of the
to recognise a difference between Schmidt my observation is that solidarity is all but @truemagic68 year so far, the housebuilder
and many of China’s new rich. The latter absent from the City and “justice” is a word Crest Nicholson has returned to
define and often administer the laws in their rarely if ever considered. The vast majority The elders of my tribe talk of a time when the stock market. One swallow
country. These men and women are part of of people who work here are decent citizens. the Bank of England met its inflation target. doesn’t make a summer, but
an oligarchy – in collusion with political But within a City increasingly dominated by But I think it’s just a story. given that we have now seen a flock
power. Like Russian oligarchs or Arab faceless international corporations, there @DanHannanMEP of the creatures, it’s clear that the
princes, they have taken hold of their has developed a potentially fatal lack of
Nobody will be happier about a US-EU trade
initial public offering (IPO) market is ANDY CROSSLEY
nation’s assets by force or guile, and have morality. The key rests with individuals at open for business.
injected no effort or creativity. Why should every level trying to live out their own values partnership than David Cameron. It makes The backdrop for such transactions But these criticisms have been taken
we be relaxed about that? and beliefs in their work. for a better argument to stay within the EU. is better than it has been for some on board by responsible banks and
John Hawkes Lord Phillips of Sudbury @IanBremmer years. First, we are talking about qual- advisers; engagement with investors
ity companies, sensibly priced, with now starts earlier in the process, syn-

Should we blame EU policy for the failure


credible management, and Crest dicates are smaller, involving mid-cap
Nicholson ticks all these boxes with specialists for mid-cap stocks, and
panache. It follows Direct Line – more thoughtful pricing has meant
another hugely successful float, that fairer valuations.

to prevent the current horse meat scandal?


has traded well ever since. These are Another factor that has lent support
not like some of the poorly-conceived is the significant interest garnered
and poorly-priced priced companies from retail investors, particularly in
that appeared on the market in the Hong Kong and Singapore. For the UK
mid-1990s. model to thrive, weakness in this area

YES NO
Institutional clients are also looking must be addressed, and individuals’
for new ideas: the lack of IPOs and the appetite for IPOs and  equity invest-
attrition of companies through ment needs to be rekindled. This
takeovers has led to a shrinkage in the could be done by involving brokers
investable equities universe. In partic- with long-standing relationships with
ular, the quoted tech sector has retail wealth managers in syndicates,
shrunk dramatically, with Autonomy, and by giving them the responsibility
Logica, Misys, Psion, Kewill all ceasing for the intermediaries offer and for

Robert Oulds Diane Dodds


to exist. But now, for the first time in a corralling the offer through their
while, we are seeing flows into equi- platforms. In cases where the UK gov-
ties. With the “Great Rotation” only ernment is the vendor, and for com-
just beginning, this can be expected panies with a well-recognised brand,
Food safety and labelling, and therefore the issue of food fraud, Farmers in my Northern Ireland constituency make the important to continue for the foreseeable future. promotion to retail investors could
comes under the power of the EU. EU law (council regulation decision to adhere to the strictest animal welfare, environmental and Valuations remain attractive, particu- prove very helpful in achieving a suc-
178/2002) clearly states that food producers and retailers, not British traceability rules. This ensures that when the produce leaves the larly relative to other asset classes, cessful float.
civil servants, have the primary responsibility for food safety and farm, the farmer can say it is of a high standard. But in recent days, and the global economy is at last A functioning IPO market is vital to
quality in the UK. And if a product is judged acceptable in one EU consumer confidence in British produce has been eroded by the beginning to recover from the 2008-9 the future of the UK economy.
state, EU rules say it should be accepted in all. This passing of unscrupulous and fraudulent practices of a minority of processors crisis. Businesses must be able to come to
responsibility from Whitehall to Brussels has created a system where and retailers. This isn’t indicative of a problem with the rules. As with A handful of institutions have previ- market to raise capital to fund oppor-
those who have an interest in fraud are being asked to police all aspects of its remit, the EU subjects the agri-food sector to ously criticised IPO processes. tunities, and to create wealth and
themselves. In short, there is a systems failure. The parent excesses of red tape and regulation. Rather, it is a problem faced in BlackRock sent a letter to the invest- jobs. This market is now open. But for
organisation of Britain’s Food Standards Agency (FSA) is the all walks of life – that of the minority bending, breaking and ment banks with concerns about the creation of a really thriving and
European Food Safety Authority, and the FSA solely exists to enforce exploiting the rules. Evaluating enforcement measures across the EU excessive valuations. It encouraged sustainable IPO market, we also need
rules originating from the European Commission. But those rules do and within member states is a must. Those guilty of this deceit must smaller syndicates and opposed fees to broaden the pools of capital, and
not lay responsibility, or adequate resources for testing, with the FSA. face the full force of the law and stringent penalties. based on valuation targets. More the retail investor should have a place
recently, Legal and General has raised alongside the institutional.
It is this slack EU regime that has allowed consumers to be deceived. Diane Dodds is a Democratic Unionist Party MEP and member of the
similar concerns in a submission to Andy Crossley is head of corporate
Robert Oulds is director of the Bruges Group. European Parliament’s Agriculture and Rural Development Committee. the UK Listing Authority. sales/syndication at Peel Hunt.

4th Floor, 33 Queen Street, Editorial Editor Allister Heath | Deputy Editor David Hellier | Managing Editor Marc Sidwell Distribution helpline
London, EC4R 1BR News Editor Elizabeth Fournier | Business Features Editor Tom Welsh | Lifestyle Editor Steve Dinneen | Sports Editor Frank Dalleres If you have any comments about the
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AFFAIRS
weekend together. Visit cityjet.com
cityam.com THURSDAY 14 FEBRUARY 2013
29

LIFE&STYLE FASHION
The white shirt: White Shirt Week is as good a
reason as any to splash out on
a crisp new bespoke shirt

it’s a classic for a S


INCE MAD Men’s Don Draper breathed new
life into the white shirt back in 2007, it has
been a wardrobe staple for the distinguished
man about town. But picking the right one
isn’t easy. Few people expect to walk into a shop
and immediately find a suit that fits – the same
goes for shirts.

very good reason


If you can afford to spend a bit extra, a
bespoke shirt can complete an outfit. And it’s
worth bearing in mind that white doesn’t
necessarily mean boring: the tailors around St
James’s all have their individual flourishes to
make your shirt a unique creation. Here are
our top recommendations to make sure you get
it right. For more information visit stjameslondon.co.uk

Budd
3 Piccadilly Arcade, SW1Y 6NH
buddshirts.co.uk

Budd has a shirtmaking legacy spanning more than a century. All of its
shirts are handmade in its on-site workshop. It also offers a wealth of
Turnbull & Asser hard to find items like detachable collars and waistcoat slips.
71-72 Jermyn Street, SW1Y 6P, 020 7808 3000
turnbullandasser.com

Turnbull & Asser has been making luxury men’s shirts since 1903. In
that time it has kitted out everyone from Charlie Chaplin to the Prince
of Wales, Winston Churchill to Ronald Reagan.

Emma Willis
66 Jermyn Street, SW1Y 6NY, 020 7930 9980
emmawillis.com

Slade School of Art-trained Emma Willis opened her Jermyn Street


store in 1999, with the philosophy of combining traditional English
tailoring with luxurious European fabrics.

TEAM IT WITH THESE TOP ACCESSORIES


BY NAOMI MDUDU

John Lobb Bottega Veneta Mulberry


Oxford shoes, £655 Curved intrecciato cufflinks, £270 Heathcliffe leather briefcase, £895
mrporter.com mrporter.com mulberry.com
30 LIFE&STYLE TECHNOLOGY THURSDAY 14 FEBRUARY 2013 cityam.com

What 2013’s top gadgets might


look like (we really, really hope)
Fantasy gadgets: how graphic artists think the technology of tomorrow might look, by Steve Dinneen
Xbox 720
Microsoft’s as yet unnamed upcoming
console (720 sounds like a reasonable
follow-up to the 360) will almost certainly
look nothing like this artist’s impression. It
is likely to be very Kinect focused, be an
all-in-one entertainment hub and feature
a subscription model for games.

iPad 5
The last generation iPad was a small
improvement on the iPad 3. Expect the
next one to be lighter and thinner, and
some analysts think it could shave 17mm
from the width and 4mm from the height.
It is also likely to feature a far smaller
bevel, more akin to the iPad Mini.

DESIGNED BY TAI CHIEM

Amazon Phone PlayStation 4


Rumours of an Amazon phone, which Much as I like this awesome touchscreen
would sit alongside its Kindle Fire tablets controller, it is unlikely to feature on the
have been rife for a while now but they real PS4. However, the new pad may
could come to fruition this year. If it include an LCD touchscreen. Also expect
arrives it is likely to be cheap, run Android vamped-up cloud services, allowing
(despite some WP8 rumours) and games streaming and ultra high
integrate with Amazon’s cloud service. resolution.

DESIGNED BY ANTONIO DEROSA, ADR-STUDIO.IT

Google Project Glass Apple iWatch


Google’s futuristic augmented reality specs This is already in development,
are well into the development process – according to the rumour mill. Around
Google co-founder Sergey Brin has even 100 Apple staff are said to be developing
worn them out in public a few times. They a watch that can sync with your iPhone
will allow you to overlay maps onto your to display information about whatever
vision, as well as check emails, take you are doing. It may also feature a
photographs and share them with friends. flexible glass front.
32 TV & GAMES
THURSDAY 14 FEBRUARY 2013 cityam.com

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7pm The One Show: Topical 6.45pm Emmerdale Channel 4 News 7.55pm 4thought.
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tv 8pm Britain’s Secret Shoppers
stories from around the UK. 7.30pm Great British Menu 7.45pm CHOICE UEFA Europa 9pm CHOICE Hugh’s Fish Fight: 7pm Police Interceptors: Two
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SUDOKU KAKURO
38 22 11 15 10 11 
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34 21
Place the numbers from 1 to 9 in each empty cell so that 28
Fill the grid so that each 45
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block adds up to the total
numbers from 1 to 9 to solve this tricky Sudoku puzzle.   
in the box above or to the 9 9 6
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row or column, but it must 45
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together (5)
3 Sketches (5)
2 Tooth with a
broad crown (5)
4 Price of a plane
Using only the letters in the Wordwheel, you have 7 Cleared of weapons such ticket (3,4)
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none of which may be plurals, foreign words or
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LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
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SOLUTIONS KAKURO is at least one nine-letter word in the wheel. U A flooding a vessel (4) time (7)
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D U P E S C O U G H
9 7 6 7 8 3 6 9 SUDOKU          12 Leave in the lurch (6) seeks power
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cityam.com THURSDAY 14 FEBRUARY 2013
SPORT 33

Ashes double is
ALL OUT: CHAMPIONS MISS OUT ON FINAL PLACE IN BRIEF
Fresh delay over Pompey sale
n FOOTBALL: Uncertainty over

our aim, says


Portsmouth’s future was prolonged
yesterday when a High Court hearing
was adjourned for the fourth time. The
Portsmouth Supporters’ Trust remain
administrators PKF’s preferred
bidders despite interest from football

England’s Prior
takeover broker Keith Harris. The
hearing is set to resume next week.

Wales in Lydiate comeback boost


n RUGBY UNION: Wales expect to
have flanker Dan Lydiate back for next
month’s final RBS Six Nations clash
BY JOSH RICHARDS have to be on our game to do it.” against England in Cardiff. Lydiate, 25,
Australian cricket is currently has been sidelined since September
WICKETKEEPER Matt Prior believes going through a period of with a broken ankle.
England possess all the qualities transition following the retirement
required to win back-to-back Ashes of legendary batsmen Mike Hussey
series against old adversaries
Australia later this year.
Prior, who played a crucial part
and Ricky Ponting late last year.
The pair’s decision to hang up
their baggy green caps leaves
Results
in England’s two previous triumphs Australia’s current squad, which is =FFK98CC
at home and Down Under, is touring India, boasting only five L<=8:?8DG@FEJC<8>L<
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ended England’s hopes of defending their title.

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SPORT cityam.com/sport @cityam_sport


FOOTBALL
COMMENT
TREVOR STEVEN
It’s United’s to lose now,
Evans and De CHAMPIONS LEAGUE
REAL MADRID.............................1
Gea make case MANCHESTER UNITED ................1

for the defence BY JOSH RICHARDS


MANCHESTER United boss Sir Alex

P
Ferguson believes his team have one
EOPLE like to criticise him foot in the Champions League
because he is not a big name, quarter-finals after they held Real
but Jonny Evans showed last Madrid at the Bernabeu last night.
night he has the character to Danny Welbeck headed the
stand up and be counted in visitors in front with 20 minutes
Manchester United’s biggest games. played in the last 16, first leg tie, but
The centre-back was strong and United old boy Cristiano Ronaldo
played an important role in inevitably levelled 10 minutes later.
organising an excellent defensive In an even second half United
display against a talented Real went closest to grabbing a winner
Madrid attack that makes United when Robin van Persie saw a shot
firm favourites to qualify. come back off the post and
Evans wasn’t the only one; Ferguson is confident his side can
goalkeeper David de Gea, one now finish the job in the second leg
characteristic flap at a cross aside, in three weeks’ time.
was impeccable back on home soil “I’ve got to be pleased with the
and will derive great confidence result. It takes us back to Old
from his display. Trafford with a great chance,” said
De Gea could do nothing about the 71-year-old Scot.
Cristiano Ronaldo’s headed equaliser “I think we’ll score at Old
but had everything else covered, Trafford, but I know how dangerous
summoning a performance that they can be on the counter attack
because I watched them at
Manchester City earlier this season.
“So we still have a big job on our
hands, but it’s within our grasp.”
United keeper David de Gea,
much maligned for some of his
Premier League performances this
season, made several outstanding
saves to deny Real a second.
And Ferguson was full of praise
for the ex-Atletico Madrid stopper’s
performance.
“David de Gea made three or four
great saves,” he said. “But we missed
chances ourselves. It was an
interesting game.”
Real flew out of the traps in front
of an expectant home crowd and
forced a fine finger-tip save from De
Ronaldo’s header beat the otherwise outstanding De Gea to equalise for Real, after Welbeck had put United in front
Gea, who pushed Fabio Coentrao’s matches. The visitors’ lead was soon agility of De Gea with shots from in victory in the 72nd minute. First,
low, curling effort onto the post. wiped out though, when Ronaldo and around the box, but the the Dutchman got in behind the
But United weathered the storm leapt majestically to head Angel Di 22-year-old was equal to everything Madrid defence and saw a powerful
and took a surprise lead through Maria’s left-wing cross into the the home team threw at him. right-footed strike squirm through
Jonny Evans helped keep Real at bay Welbeck when the England forward bottom corner. United were forced to soak up the the hands of Real keeper Diego
rose above defender Sergio Ramos to Real continued in the ascendancy pressure for much of the second Lopez and come back off the post.
showed why United paid £18m for meet Wayne Rooney’s corner and after the interval, as Ronaldo, Di period, but Van Persie twice went And, as the hosts struggled to
the youngster. headed in only his second goal in 28 Maria and Coentrao all tested the close to snatching a memorable clear their lines, Van Persie found
Rio Ferdinand was steady
alongside Evans, while right-back

Benitez ready to offer goal shy Prove you belong in European


Rafael continues to improve. His
doggedness makes him a worthy
successor to the equally tenacious
Gary Neville.

Torres a helping hand in attack elite, Villas-Boas urges Spurs


First legs are often decisive and
United had much to lose against a
Real side for whom the Champions
League is their clear priority, so I
could understand Sir Alex Ferguson BY JOSH RICHARDS Southampton on 5 January, could BY JOSH RICHARDS Champions League,” he said. “I
not being too adventurous and he be thrown back into the action think we’ve been handed the most
will be delighted with the draw. CHELSEA manager Rafael Benitez is with Torres having scored just TOTTENHAM manager Andre Villas- difficult draw of this knock-out
Ronaldo justified Ferguson’s pre- preparing to deploy winger Victor once in his last 12 matches. Boas believes tonight’s Europa phase. This is like a Champions
match talk of him stepping up to Moses as an emergency striker to “It’s a problem, but we’ll try League clash with Lyon will be a League tie. It will be a good test for
another level; he was the most ease the burden on misfiring to keep Fernando fit and perfect test of his team’s Champions Tottenham.”
influential player on the pitch by forward Fernando Torres. hopefully scoring goals,” League credentials. Goalkeeper Hugo Lloris, who
some distance and looks the biggest Nigeria international Moses said Benitez. Lyon’s appearance in this year’s moved from Lyon to Spurs for £8m
threat to United’s otherwise likely returned triumphant from the “If we have to manage in a Europa League ends 13 consecutive in the summer, will have to make
qualification. Africa Cup of Nations this week different way because we seasons of playing Champions do with a place on the bench
If they can minimise his impact at and will miss tonight’s don’t have him we will, League football. against his former employers in the
Old Trafford, then I’m sure Wayne Europa League round of but Victor Moses is And Villas-Boas, whose Spurs side last 32, first leg match, with Brad
Rooney and Robin van Persie, neither 32, first leg game at back and he’s an currently occupy fourth place in the Friedel set for a rare start.
of whom could get into last night’s Sparta Prague. option to play as a Premier League, feels the French Striker Jermain Defoe is out with
game, will be far more effective and But Benitez has striker.” giants are the calibre of opposition an ankle injury and midfielder Tom
send United into the last eight. stated the 22-year-old, his team could have to try to cope Huddlestone is missing with knee
Trevor Steven is a former England who has not played with next season. trouble. Long-term absentees
footballer who now works as a media for Chelsea since Benitez says Moses can play “This could be a test of whether Younes Kaboul and Sandro remain
commentator. their FA Cup win at as a striker if needed we’re good enough to play in the sidelined.
THURSDAY 14 FEBRUARY 2013 cityam.com 35

‘dominate
There is no reason why we shouldn’t
Australia in these two Ashes series
England wicketkeeper Matt Prior: Cricket, Page 33

insists Ferguson Six Nations turns sour for Ireland


as Healy is found guilty of stamp
BY JOSH RICHARDS
PROP Cian Healy will miss Ireland’s
carries the standard punishment of a
five-week suspension.
The committee also allowed a two-

Mourinho: We
next two RBS Six Nations fixtures after week mitigation period, recognising
being found guilty of stamping on that Healy would not have played this
England’s Dan Cole during their 12-6 weekend as Ireland are without a

will score two


defeat in Dublin on Sunday. fixture, therefore the ban will end at
The 25-year-old trod on Cole’s ankle midnight on 10 March.
in the 14th minute of the match at the A statement from the committee
Aviva Stadium after an Ireland maul said: “The committee, having viewed

at Old Trafford collapsed, though match referee


Jerome Garces missed the
incident after allowing the game
to continue with an Irish
the footage of the incident and
listened to the representations by and
on behalf of the player, found that
the stamp should be categorised as a
BY FRANK DALLERES advantage. mid-range offence in terms of
However, Healy was seriousness, which carries a
REAL Madrid manager Jose subsequently cited for sanction of five weeks.”
Mourinho insists his team will the stamp and an Healy will miss Ireland’s
score more than one goal at independent trip to Scotland on
Manchester United in the second disciplinary 24 February and France’s
leg and expects their Champions committee ruled visit to Dublin on 9
League last 16 tie to go right down the Leinster March, their
to the last minute. forward should penultimate fixture.
United’s 1-1 draw in the Spanish be banned for a
capital last night would appear to mid-range Healy will miss Scotland
make them favourites to progress offence, which and France fixtures
to the quarter-finals in a three
weeks’ time, but Mourinho believes
the contest is still wide open.
“The match was very open, but I
haven’t changed my mind, it’s 50-50
and I think it will go down to the
last minute of the second leg,” said
the former Chelsea boss.
“It’s two matches, home and
away. They did well but my players
were together and they gave
everything. They have no
advantage, 1-1 is not a bad result
because everything is still open and
we can score more than one goal
there.”
United’s Spanish goalkeeper
David de Gea was forced to make a
string of excellent saves as Real
mustered 28 attempts on goal to
United’s 13.
Mourinho accused opposite
number Sir Alex Ferguson of
abandoning United’s traditional
emphasis on attack in favour of an
ultra-defensive strategy designed to
frustrate the hosts.
“They changed the way they
himself with space inside the the keeper made two played,” he added. “They didn’t put
box again, but this time saw a outstanding reaction saves. a foot outside their own half. They
miscued shot hooked off the Ronaldo made one last were waiting for a set piece or a
line by Xabi Alonso with Lopez attempt to steal the limelight chance on the counter attack. They
beaten. with five minutes remaining, had two big chances in the second
Khedira and Real substitute but the Portugal star’s long- half, but they were out of context
Gonzalo Higuain called De Gea range free-kick dipped onto the because we were chasing forwards.”
into action again late on, but roof of the net.

Robson and Watson handed Hunt quits as


South American Fed Cup test Olympic chief
BY FRANK DALLERES qualifying for World Group II, BY FRANK DALLERES
the competition’s second tier.
BRITAIN’S women tennis stars Team captain Murray said: THE BRITISH Olympic Association is
will have to overcome a tricky “Argentina away on clay will be in no hurry to appoint a new chief
trip to Argentina if they are to a tough challenge for us but we executive, after Andy Hunt
achieve promotion to the Fed have a strong squad and a huge announced his resignation yesterday.
Cup’s World Group II, after the opportunity to grab a place in Hunt, who led Team GB at the
draw was made yesterday. the World Group. Vamos!” London 2012 Games, their most
Judy Murray’s team, which Britain reached the same successful for more than a century,
includes world No41 Heather stage last year, only to lose 4-1 is set to leave his post at the end of
Watson and No45 Laura to Sweden, Robson breaking February.
Robson, are ranked one place down in tears courtside after But the BOA, which is
above Argentina but are likely her loss to Sofia Arvidsson implementing a restructure under
to feel less at home on the clay confirmed the defeat. new chairman Lord Coe, is not
courts. Argentina’s highest ranked seeking an immediate replacement
Watson and Robson both player is world No195 Paula and may not hire one at all.
won singles matches as Great Ormaechea. They lie 17th in the Hunt follows former director of
Britain beat Bulgaria last week Fed Cup rankings, one place sport Sir Clive Woodward in
in Israel to set up a shot at behind Britain. departing post-London 2012.