BUSINESS WITH PERSONALITY

Old and the new: Founding partner Damon Buffini (left) and co-managing partner Kurt Bjorklund
THE CONSERVATIVES will find it
almost impossible to win the 2015
general election, polling companies
warned last night, after their Liberal
Democrat coalition partners scup-
pered plans to reform constituency
boundaries and reduce the number of
MPs in parliament.
Lib Dems joined Labour and the
smaller parties to vote in favour of
delaying the boundary reform pack-
age until the next parliament by a
margin of 334 to 292.
To get more than a single seat
majority in 2015, Cameron now needs
a poll lead hes really not going to get,
Anthony Wells, associate director of
YouGov, told City A.M.
With the new boundaries the
Conservatives would have just needed
to hold the votes they got in 2010. Now
they need to gain an extra 20 seats.
Existing constituencies have elec-
torates of wildly varying sizes, with the
number of voters in English seats rang-
ing from 45,000 in Wirral West to
91,000 in East Ham.
The current arrangement benefits
Labour, and the 2010 coalition agree-
www.cityam.com FREE
ment included a commitment to
equalise the size of electorates and cut
the number of MPs from 650 to 600.
Despite this Nick Clegg ordered his
MPs to vote against the measure in
retaliation to last summers back-
bench Conservative rebellion that
killed House of Lords reform.
Last night angry Tory MPs told City
A.M. that they were infuriated by
Cleggs decision to abandon collective
responsibility for government policies.
Colleagues were fizzing with indig-
nation, said Conor Burns, MP for
Bournemouth West, who had to resign
from the government to vote
against Lords reform.
[In 2015] we will go out with a
renewed zeal to take down Lib
Dem MPs. Nick Clegg has
proved again that he is leading a
party more suited to student
union politics than national
politics.
Robert Halfon, MP for
Harlow, said yester-
days result was a
shameful day for
our democracy.
The Lib Dems and
Labour have voted
for an unfair system and voted against
genuine representative democracy. If
the reforms had gone through it
would have saved the taxpayer mil-
lions of pounds by reducing the
number of MPs.
But Labours Sadiq Khan insisted
the plans had been selfish and par-
tisan, adding David Cameron
should try to win elections fair and
square and not by moving the goal-
posts.
YouGovs Wells suggests that the
Conservatives will now need a poll
lead of 11.1 per cent to win an overall
majority of seats in the House
of Commons at the next gen-
eral election, assuming a
uniform swing in the vote.
By contrast Labour will need
a poll lead of just 2.9 per cent
to achieve the same result.
The most recent YouGov poll
gives Labour a six
per cent lead.
FTSE 100 6,339.19 +44.78 DOW13,954.42 +72.49 NASDAQM3,153.66 -0.64 /$ 1.57 unc / 1.17 +0.01 /$ 1.35 -0.01
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ISSUE 1,808 WEDNESDAY 30 JANUARY 2013
TORIES LOSE
CRUNCH VOTE
ON REFORMS
BY JAMES WATERSON
PERMIRA, one of Europes best known
buyout groups, has been forced to
extend the closing date for its fifth
fund from the end of January to
possibly as late as March, amid
concerns that it is struggling to get to
its target.
Investors had previously been told
that the first closing date for the
fund, at which point it is able to start
making investments, was going to be
towards the end of January. This
deadline is now certain to be missed.
Sources close to the process said
yesterday: There are a lot of bilateral
conversations going on but this is a
difficult environment.
It is not clear whether the group
will formally write to investors now or
whether it might wait until February
to inform them of the extension.
Permira is hoping to raise a total of
6.5bn (5.6bn) for its fifth fund, well
down on its earlier 9.6bn fund, in a
reflection of the more difficult
markets in which private equity
groups are currently operating.
In the years since the financial
crisis most groups have found raising
money more difficult because of the
uncertainties in world financial
Shock for private equity world as
Permira struggles to raise fund
BY DAVID HELLIER
markets, especially the Eurozone,
and a downturn in the new issue
markets, traditionally the place for
private equity to offload assets.
Permiras problems feel like a
watershed moment for the industry,
said an industry source. It has
always been the flagship group for
the industry.
Sources close to Permira are
confident that the fund will
eventually raise the hoped for
amount, albeit slightly later than
expected. It is only targeting to raise
around one-third of the total by the
time of the first closing date.
Critics say the group has lost some
of its lustre since a handful of larger
personalities, such as Damon
Buffini, Martin Clarke and Charles
Sherwood, have either left or taken
less hands-on roles. The current co-
managing partners, Kurt Bjorklund
and Tom Lister, though very capable,
are less well-known than their
predecessors.
Permira has had a couple of
disastrous investments, Gala Coral
and Hungarys Borsodchem. But it
points to a number of recent
successes and a strong performance
from its Permira IV fund.
BRAMSON MOVES ON 3i
ACTIVIST INVESTORS STAKE SENDS SHARES HIGHER
Pressure has
been piled on
David Cameron
by the Lib Dem
revolt
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Bank bonuses chopped
back after year of scandal
BARCLAYS and RBS are expected to
slash bonus payouts in the coming
months after a series of scandals hit
the industry.
The deepening payment protection
insurance crisis has hit both banks
to the tune of several billion pounds
and shows no sign of ending, while
Barclays was hit by a 290m Libor
fine last year.
RBSs share price tumbled six per
cent yesterday on fresh talk it could
face a 500m fine and criminal sanc-
tions for interest rate fixing.
RBS also suffered a retail systems
crash last year that hit millions.
The state-backed banks boss
Stephen Hester is believed to be fore-
going his right to a bonus this years
in light of that crash. Last year he
also turned down his bonus.
Meanwhile RBS investment bank
bonus pot is set to come in at around
250m down sharply on the 390m
paid out a year ago and well below
the 950m the year before.
Barclays is also cutting back new
chief executive Antony Jenkins could
get a bonus of 1m, on top of his
1.1m salary. That would be a major
cut relative to his predecessor Bob
Diamond, who saw salary and bonus
payouts of 4.05m in 2011 and
6.75m in 2010, and long-term incen-
tive awards of 2.25m each year.
Brussels softens line on ringfencing
The European commissioner in charge of
regulatory reform of the regions banks
has signalled a retreat from plans to force
lenders to build barriers around their
securities trading operations, as policy
makers focus on stimulating growth.
Michel Barnier told the Financial Times
that any implementation of last years
Liikanen report on the structure of
European banks would have to preserve
their diversity and avoid penalising
lenders that were supporting the
economy.
Wider euro Tobin tax will net 35bn
The Eurozones biggest economies would
raise 30bn-35bn from their planned
levy on financial transactions, according
to an expansive European Commission
proposal that ensnares trades executed in
London, New York or Hong. Brussels
drive for a Europe-wide tax opened an
irreconcilable rift between European
Union members. In a bid to clampdown
on avoidance, as a last resort the
Commission proposes the tax should also
apply to transactions based on where the
financial product was issued, even if the
parties trading it are in Asia, the US or
Britain.
House broker hangs up on BT
Bank of America Merrill Lynch, broker to
BT, alongside JP Morgan Cazenove, has
told clients that the shares are no longer
worth buying. It also trimmed its target
price for the shares from 285p to 265p.
Presidents doctor joins BAT
Richard Tubb, the son of a tobacco farmer,
and who was the doctor of successive
American Presidents and helped Barack
Obama to stop smoking, has joined the
board of British American Tobacco.
Pimco boss says EU exit threatens UK
standard of living
Britain risks seeing its standard of living
hit if it leaves the EU, according to
Mohamed El-Erian, chief executive of
Pimco, the worlds largest bond fund.
Middle class suffer from booze policy
Older, middle-class drinkers will bear the
brunt of David Camerons minimum
alcohol price plan, according to experts
who predict one of its main effects will be
to end todays multi-buy deals.
ECB balance sheet shrinks
The European Central Banks balance
sheet shrank to its lowest level in nearly a
year, signaling a more restrictive
monetary policy that could drive the
euros exchange rate higher and further
threaten the regions economy.
Hostess nears Twinkie deal
Hostess is near to a deal to sell its Twinkie
brand and other cakes to private-equity
firms Apollo and C Dean Metropoulos for
over $400m (254m).
THE FTSE 100 climbed to a new
four and a half year high
yesterday, driven up by a rally in
mining stocks.
The index closed up 44.78 0.7
per cent at 6,339.19, its best
close since May 2008, with 13 of
these close-to-45-points coming
from gains among miners.
The biggest rises came from
Anglo American, who added three
per cent despite a 2.5bn
writedown, Kazakhmys and Evraz.
This means the UKs top 100
firms have added some 7.5 per
cent to their combined values over
just a month since 2013 began.
At the same time, the euro rose
to touch a 14-month high of just
below $1.35, meaning the
currency has put on two per cent
versus the dollar so far this year,
despite the ongoing pressure of
the blocs economic catastrophe.
Yesterday also saw Brent and US
crude oil prices climb Brent
gained $0.99 to reach $114.47 a
barrel while US crude climbed
$1.34 to touch $97.79 per barrel.
Shares also continued to climb
across the pond, with the Dow
Jones industrial average up over
half a per cent, closing last night
at 13,954.42.
FTSE hits new
56-month high
on miner rally
Stephen Hester is turning down his bonus while Antony Jenkins is set to be relatively modest
4
NEWS
BY BEN SOUTHWOOD
BY TIM WALLACE
To contact the newsdesk email news@cityam.com
Y
ESTERDAYS vote in Parliament
killing off constituency reform
will probably be remembered as
the moment the Labour party
won the next election. The issue is
that the size of constituencies varies
drastically. Because the Tories tend to
get votes in large constituencies,
while Labour is ahead in smaller
ones, David Camerons party will
need an almost unreachable lead of
11.1 per cent in the popular vote to
win an overall majority of seats in the
House of Commons at the next
general election, assuming a uniform
swing. By contrast Labour will need a
poll lead of just 2.9 per cent to
achieve the same result. Nobody
believes this to be fair, yet nothing
will now change.
Could the Conservatives still win?
They grabbed 306 seats last time on
36.1 per cent of the vote, against 57
EDITORS
LETTER
ALLISTER HEATH
Labour now the firm favourite to triumph in 2015 elections
WEDNESDAY 30 JANUARY 2013
seats for the Liberal Democrats on 23
per cent and 258 seats for Labour on
29 per cent. In theory, they need just
19 extra seats to win a majority of
one. But that would mean an extraor-
dinarily unstable government; John
Major was just able to survive in the
1990s with a tiny majority but the
new generation of ultra-rebellious
MPs is almost unwhippable.
So a government would need a
majority of at least 30 to be half
viable. The Tories therefore need to
win at least an extra 35 seats. The
problem for them is that they are
now at 35 per cent in the latest
YouGov poll (down just 1 per cent on
the last election), against 41 per cent
for Labour (up 12 per cent), 10 per
cent for the Liberal Democrats (down
13 per cent) and 9 per cent for Ukip,
which remains remarkably popular
despite David Camerons promise of a
referendum on EU membership.
No wonder the political markets are
predicting that Labour is by far the
favourite. Of course, anything can
happen. The Tories can still win. But
for that they need to be much more
ambitious and much more aggres-
sive. Are they up to the fight? We shall
soon find out.
EUROZONE CRISIS STILL REAL
It has become fashionable to declare
the Eurozone crisis over, and of
a trade-weighted basis. This is bound
to hit exports, the one source of
growth for many beleaguered
Eurozone economies.
My point is not to exaggerate the
Eurozones woes after all, German
confidence indicators are improving
again and the debt can has temporar-
ily been kicked sufficiently far down
the road. But just as sentiment might
have become too negative at the
height of the crisis, investors and
commentators have now over-com-
pensated and concocted a largely
imaginary recovery. The Eurozone is
still very badly sick, countries such as
France are in deep trouble, the Italian
elections are looming and nobody
really knows where any of this will
end.
course it is true that the intensity of
the problems has diminished. The
bond markets and even credit rating
agencies are relaxing. But some of the
data coming out of Southern
European countries is unbelievably
grim, suggesting that once again the
economic establishment has become
appallingly complacent.
Take Spanish retail sales: they are
down by 10.7 per cent year on year in
December, a disastrous, great depres-
sion-style collapse. The rate at which
sales are plummeting is accelerating
rapidly; retail sales have now gone
down for 30 months in a row.
Its not all grim in Spain, of course,
and exports have previously done
very well. But there are other omi-
nous signs: as Capital Economics
points out, since July 2012, the euro
has risen by 11 per cent or so against
the dollar and by a similar amount on
Jenkins spent most of last year head-
ing up the retail and business bank
and was successful enough to be
appointed chief executive, while the
banks share price has more than dou-
bled in the last six months.
Barclays declined to comment, not-
ing that the remuneration board has
yet to decide his bonus for the year.
The chiefs own guidelines to staff
explain that pay should be based on
the banks social impact and adher-
ence to cultural standards, as well as
financial targets.
Sky News reported that the remuner-
ation committee is sounding out
investors on the potential payout, as
well as looking at a total bonus pot of
1.5m to 2m.
Meanwhile RBS is planning to settle
its Libor fiddling case with UK and US
regulators in the coming weeks, and is
expected to face an even bigger fine
than Barclays.
Following in the steps of Swiss bank
UBS, the bank is under pressure from
US authorities to accept some criminal
liability for its actions. The Wall Street
Journal reported RBS is resisting the
idea. RBS declined to comment. CITY VIEWS: Page 16

ANGUS CAMPBELL: Page 23

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WHAT THE OTHER PAPERS SAY THIS MORNING
IN BRIEF
Jefferies boss in massive payout
nInvestment bank Jefferies Group
paid its chief executive Richard
Handler $45.2m (28.7m) in 2012,
making him one of Wall Streets most
highly compensated executives,
according to a securities filing
yesterday. Handlers pay package
included $1m in salary, a $5m bonus
and $39m in stock grants that would
cover 2013 to 2015, according to the
filing. JP Morgan halved Jamie
Dimons bonus to $11.5m for 2012.
Kerry is new US secretary of state
nFormer Democratic Presidential
candidate John Kerrys nomination as
President Barack Obamas new
secretary of state sailed through the
US Senate last night, as his fellow
senators voted overwhelmingly to
confirm him to replace Hillary Clinton
as the countrys top diplomat. Kerry,
69, a five-term senator, is expected to
be sworn in as secretary of state this
week. Clintons last day at the state
department is Friday.
Chesapeake Energy chief quits
nChesapeake Energy yesterday said
that chief executive Aubrey
McClendon is leaving the company on
1 April, but moved to reassure
employees the departure did not
indicate the firm was for sale. The
outfit, battling a governance crisis,
sent an email to employees on behalf
which said: The company is not for
sale. News of McClendons departure
sent the company's shares up eight
per cent.
PHOENIX Group Holdings, the closed
life assurance funds group created
by entrepreneur Hugh Osmond , is
said to be close to a breakthrough in
its talks with its banking group over
the extension of its 2.5bn of gross
debt.
According to sources, the group is
close to announcing an equity issue
that will enable some of its debt pile
to be repaid ahead of the expiry of
the bulk of the group's debt facilities
in 2014.
Protracted discussions with the
banking group have been going on
now for more than 18 months but
chief executive Clive Bannister recent-
ly said, after producing a good set of
results, that the company had more
financial flexibility to strike a deal.
Key investors are believed to be happy
to support a share issue.
Osmond, who founded the group
then known as Pearl, is a non-execu-
tive director and substantial share-
holder.
Phoenix shares
closed at 591p, valu-
ing the group at
974m. Any equity
will likely be issued
at a discount.
Phoenix close
to deal with its
banking group
BY DAVID HELLIER
AMAZON saw record sales over the
Christmas period, propelling the
online retailer to new heights as the
high street suffered.
The company last night posted rev-
enues of $21.27bn (13.5bn) for the
fourth quarter of 2012, a 22 per cent
increase on the same period last year.
Although revenues were less than
analysts had predicted, Wall Street
cheered the results. After-hours trad-
ing sent shares to all-time highs, as
Amazon finally showed signs of
increasing its notoriously thin profit
margins.
The firms net profits were down
on last year as Amazon invested in
new products and services. But oper-
ating profits, which stripped out
these activities, was up from $260m
to $405m. Although Amazons main
business is as a web retailer, it has
branched out into more profitable
activities in recent years such as
ebooks and website hosting.
Investors have long been waiting
for the company to turn its massive
revenues into substantial profits.
Amazon climbs
to new high on
record results
BY JAMES TITCOMB
Amazon has historically sacrificed its
margins in order to compete aggres-
sively on price and establish itself as
the webs dominant retailer.
The fourth-quarter operating
income was up more than expected,
RJ Hottovy, an analyst at Morningstar,
said. This supports the bull case that
Amazon can monetise its growth
over the longer term.
Were now seeing the transition
weve been expecting, the companys
chief executive Jeff Bezos said, reveal-
ing that ebook sales had risen 70 per
cent last year and now represented a
multi-billion dollar category.
Physical book sales on which
Amazon established its reputation in
the 1990s saw their slowest
December growth in the companys
17-year existence.
Amazons shares, which had risen
steadily in anticipation of the
announcement, went up nearly 10
per cent in after-hours trading.
Despite the results, Amazon suf-
fered a net loss of $39m in 2012 over-
all, owing to a $169m writedown on
online coupon business LivingSocial,
which it booked in the third quarter.
Hugh Osmond
is still on the
board of group
he founded
STALLING car sales in Europe
dragged US motoring giant Ford
down last year, and the company
said it expects conditions to get
worse in 2013.
Ford made a pre-tax loss of
$1.75bn (1.1bn) in Europe last
year as revenues in the region fell
by a fifth. It said it forecasts a
$2bn loss on the continent this
year as it restructures the
European business.
The company is one of the first
big car manufacturers to report
2012 figures, and its performance
suggest similarly bad trading in
Ford loses grip in Europe and
predicts worse trading in 2013
BY JAMES TITCOMB the region for the likes of General
Motors, which reports next
month.
Fords European gloom pushed
shares in the company down 4.6
per cent even as it beat forecasts
to record a group profit of $8bn
although this was down on 2011s
$8.76bn. Sales in the US had been
far better than expected, and Ford
said it expects the number of cars
sold in both the US and Asia to
increase this year.
We do believe the industry will
turn around and we will get to a
profitable, growing, Ford Motor
Europe, the companys chief
financial officer Bob Shanks said.
WEDNESDAY 30 JANUARY 2013
5
NEWS
cityam.com
Economic turmoil in Europe has hit car sales, sending Ford to a $1.75bn loss in 2012
MINER Anglo American is to take a
$4bn (2.5bn) write-down on its
Minas-Rio iron ore project, as invest-
ment soared.
Anglo American, which commis-
sioned a cost review into the
Brazilian Minas-Rio iron ore project
in November, said yesterday that
investment in the iron ore project
would jump to $8.8bn.
On the basis of spiralling spending
on the project, Anglo American said
it would record an impairment
charge of $4bn in its full-year results.
Minas-Rio will now cost more than
three times Anglo Americans previ-
ous estimates.
The write-down comes two weeks
after fellow blue chip miner Rio
Tinto wrote down two recent acquisi-
tions by $14bn, spelling the end for
chief executive Tom Albanese.
Anglo American chief executive
Cynthia Carroll, who is to step down
in April and be replaced by
AngloGold chief Mark Cutifani, said
yesterday that the company was
clearly disappointed with the
increase in capital expenditure and
subsequent write-down.
Despite the difficulties, we contin-
ue to be confident of the medium
Anglo American
takes $4bn hit
for Brazil mine
BY CATHY ADAMS and long term attractiveness and
strategic positioning of Minas-Rio and
we remain committed to the project,
she added.
Anglo American is targeting its first
iron ore at the site at the end of the
next year, it said. The FTSE 100 miner
also confirmed progress on the proj-
ect, saying that two grinding mills
had been installed and 50 per cent of
a pipeline had been laid.
Designed to help to diversify a com-
pany that was still dependent on
South Africa for the bulk of its rev-
enue, Minas-Rio was bought by the
miner for $5.5bn in two stages in
2007 and 2008.
The markets reacted positively to
news of the write-down, and Anglo
American was the top riser on the
FTSE 100 yesterday, adding 3.04 per
cent to close at 1,929.5p.
BOTTOM
LINE
ELIZABETH FOURNIER
Cynthia Carroll will hand over the reins at Anglo American to Mark Cutifani in April
Anglo American PLC
29Jan 23Jan 24Jan 25Jan 28Jan
1,860
1,880
1,900
1,920
1,940 p
1,929.50
29Jan
WEDNESDAY 30 JANUARY 2013
6
NEWS
cityam.com
M
ARKETS dont like (bad)
surprises. When Rio Tinto
sucker punched investors with
a $14bn (8.9bn) writedown on
its Alcan aluminium unit earlier this
month, shares fell three per cent and
its chief executive was peeling his
name off the door within hours.
Contrast that with Anglo Americans
admission yesterday that it would take
a $4bn hit in Brazil.
With investors well prepared for bad
news and a CEO already half way out
the door, youve got a buy signal that
leaves Anglo shares jostling for a space
at the top of a roaring FTSE.
Admittedly the amount written
down pales somewhat in comparison,
but the main difference here is that
old PR favourite communication.
Shareholders have known since
November that total costs, which have
been steadily revised up from an ini-
tial estimate of $2.6bn since the devel-
opment began, could top $8bn.
Along with strikes in South Africa,
rising capex has been an albatross
around outgoing boss Cynthia
Carrolls neck for some time
brought into even greater focus by
her promise to rein in spending by
$1.5bn just last July.
But over at AngloGold Ashanti, Mark
Cutifani should be rubbing his hands
with glee. By taking the hit on her
watch Carroll has handed her replace-
ment a clean slate on which to work.
Anglo American is still committed to
the Brazil project, and has made head-
way on the bulk of the outstanding
licences over which its been tussling
with Brazilian regulators.
If, as Carroll promises, she is hand-
ing Cutifani a world-class iron ore
project of rare magnitude and quali-
ty, then he should grab the opportu-
nity to make the most of a bad
situation. Until its clear hes the man
for the job, investors should sit tight.
Elizabeth Fournier is News Editor of
City A.M. @ej_fournier
BUSINESS secretary Vince Cable has
today written to the remaining
FTSE 100 companies with all-male
boards, calling on them to take
action to appoint women to
boardroom positions.
The businesses with no top-level
female executives are Antofagasta,
Croda, Glencore, Xstrata,
Kazakhmys, Melrose and Vedanta.
All of them are in the traditionally
male-dominated engineering,
mining and chemicals industries.
Cable tells all-male FTSE 100
boards to appoint women
BY JAMES WATERSON
My vision by 2015 is that Britain
will not have a single FTSE 100
board without a significant female
presence, Cable said. This is not
about equality, this is about good
governance and good business.
A spokesman for Glencore said
the company had planned to
appoint a female non-executive
director but the process was halted
by last years merger with Xstrata.
The appointment of a female
board director is a significant
consideration and will be an
important area of focus for the new
nominations committee, he said.
Why it pays to keep investors in the loop
Ocial government fuel consumption gures in mpg (litres per 100km) for the new E-Class range: urban 20.3 (13.9) 68.9 (4.1), extra urban 36.2 (7.8) 68.9 (4.1), combined 28.3
(10.0) 68.9 (4.1). CO2 emissions: 234 109g/km. Model featured is a E 220 CDI AMG Sport at 39,530.00 on-the-road including optional metallic paint at 645.00, 18" AMG Alloy Wheels at 365.00, LED Intelligent Light System at 1,280.00 and Driving Assistance
Package at 2,345.00 (price includes VAT, delivery, 12 months Road Fund Licence, number plates, rst registration fee and fuel). Some combinations of features/options may not be available. Please contact your Mercedes-Benz Retailer for availability. Price correct at time of going to print.
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Sharp. The new E
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SHARES in private equity firm 3i
Group jumped three per cent yester-
day after it revealed that activist
investor Edward Bramsons
Sherborne Investors and its broker
Jefferies has been buying up shares.
3i took the unusual step of declar-
ing to the market that Sherborne
had bought 0.7 per cent of the firms
share capital during January, which
has been sold to Jefferies, which by
last week held around 1.6 per cent.
Companies are not obliged to name
big investors until they pass a thresh-
old of three per cent.
3i also drew attention to
Sherbornes stated intention to use a
new 207m fund to buy a large stake
in one target company.
It is thought that Sherborne has
not yet been in touch with 3i to
declare its intentions, and analysts
pointed out that the Sherborne fund
would only have enough resources to
buy up nine per cent of the private
equity firms shares.
3i shares surge
on interest from
activist investor
BY MARION DAKERS
Market-watchers also noted that 3i
has been working on turning itself
around since new chief executive
Simon Borrows was promoted in May.
3i fended off activist hedge fund
Laxey Partners shortly after Borrows
took the top job, rebuffing its call to
sell businesses and return cash to
shareholders by setting out its own
plan to cut jobs and rejig its
European operations.
The firms shares have risen around
47 per cent since Borrows took over.
Sherborne and 3i Group declined to
comment yesterday.
WEDNESDAY 30 JANUARY 2013
8
NEWS
cityam.com
Seymour Pierce is latest broker
to search for fresh investment
SMALL-CAP brokerage and
investment bank Seymour Pierce
is talking to potential investors
about injecting cash into the
firm, according to sources in the
industry.
Seymour Pierce, which has
around 70 clients on the main
and junior stock markets, is
believed to be in discussions with
a number of parties about a
possible investment.
Rival company Panmure
Gordon had been approached,
BY MARION DAKERS
but decided to pass over a deal in
favour of organic growth.
Panmure hired Seymour Pierces
chief executive Philip Wale last
April.
Both firms declined to
comment yesterday.
The discussions come at a time
of consolidation in the brokerage
industry, as rivals team up to
compete for a dwindling amount
of business.
RBSs stockbroker Hoare Govett
was bought by investment bank
Jefferies for a nominal 1 last
February, while N+1, Brewin
Dolphin and Singer Capital
Markets merged their brokerages
to create N+1 Singer in July.
Investec took over Evolution for
230m and Canaccord swallowed
Collins Stewart Hawkpoint for
252m at the end of 2011.
Seymour Pierce had done a deal
to merge with Gerova Financial
Group in early 2011, but the
transatlantic merger was called
off by chairman Keith Harris
amid concerns about Gerovas
financial health. Gerova filed for
bankruptcy protection last
summer.
PROFILE: EDWARD BRAMSON
EDWARD Bramsons reputation as a fearsome activist investor is clear
from 3is move to sound the alarm to its investors over a eeting 0.7
per cent shareholding.
Anglo-American Bramson is best known for his boardroom coup
at F&C, deposing chairman Nick MacAndrew and sparking
the departure of chief executive Alain Grisay in order to
overhaul the asset manager in 2011.
He put in motion plans to step back from F&C last year,
as Sherborne Investors (Guernsey) B the fund now said
to have invested in 3i was listing on the Alternative
Investment Market.
He founded Sherborne Investors in 1986 as a private
equity rm focused on turning around undervalued
companies.
Sherbornes website states that the rm aims to
cataly[se] prolonged period of shareholder dissatisfaction
through a well researched turnaround thesis.
Investors in the latest fund include Aviva, George
Soross fund management rm and Jupiter.
3i Group PLC
29Jan 23Jan 24Jan 25Jan 28Jan
255
250
260
265
270
275 p
266.80
29Jan
DEUTSCHE Bank
has made Henrik
Aslaksen (left)
and Paul
Stefanick co-
heads of the
firms global
investment
banking coverage
and advisory
business, running
the banks
industry and
country coverage
groups globally.
The two men will
replace Jacques
Brand, who
became chief
executive officer
of Deutsche Bank
North America in
November. Both
men have been
promoted
internally.
DEUTSCHE HIRES TWO INVESTMENT BANK BOSSES
BRITISH LAND confirmed yesterday
it plans to keep its 50 per cent stake
in the 3.1bn Broadgate Estate and
work closely with Blackstone as it
looks to sell its half in a deal that
could net the private equity firm an
eightfold return.
The FTSE developer sold down its
stake in Broadgate to Blackstone in
2009 for just 77m. But its stake has
since shot up in value to more than
500m, according to British Lands
2012 annual report.
Lucinda Bell, finance director, said:
It was the right decision at the right
time. We benefited from a number
of strategic aims to reduce our con-
centration on individual assets and
to rebalance the portfolio between
the City and the West End.
The estate, which is home to some
of finances biggest names including
UBS and Deutsche Bank, could inter-
est overseas sovereign wealth funds
and pension funds, analysts said.
In a third quarter trading update,
British Land to
keep its share
of Broadgate
BY KASMIRA JEFFORD
British Land said it continued to see
good demand for retail space despite
weak consumer spending and a surge
in retail collapses, with lettings and
renewals achieved at 13.1 per cent
ahead of ERV (estimated rental value).
Retail occupancy remained flat at
98.1 per cent with 1.2 per cent of ten-
ants in administration.
Overall it has secured 665,000
square feet of lettings, pre-lets and
lease renewals across its portfolio in
the period. It also agreed heads of
terms for an 111,000 sq ft pre-let with
Amlin at The Leadenhall Building,
which is now 50 per cent pre-let.
THE future of the Qatar-owned Chelsea Barracks site has been put into doubt, after a
3bn plan to convert it into luxury housing was put under review. The Qatari Diar, the
property arm of the oil-rich state, is believed to have concerns over the UKs economy.
CHELSEA BARRACKS DEVELOPMENT STALLS
British Land Company PLC
29Jan 23Jan 24Jan 25Jan 28Jan
562.5
560.0
557.5
565.0
567.5
570.0
572.5 p
563.50
29Jan
VETERAN Wall Street rainmaker
Eric Gleacher, famed for his role in
the fraught takeover of RJR
Nabisco in the 1980s, yesterday
resigned as chairman of Gleacher
& Co, the firm he founded 22 years
ago.
Gleacher, who is 73, said he was
leaving to focus on other business
ventures outside of Gleacher. The
decision to step down comes after
the firm said it was exploring the
Godfather of 1980s Wall Street
dealmaking Gleacher to retire
BY MICHAEL BOW potential sale of the New York
based company last year.
Gleacher, one of Wall Streets
most famed dealmakers, founded
the M&A department at Lehman
Brothers 34 years ago.
As the head of M&A at Morgan
Stanley, he advised private equity
firm Kohlberg Kravis & Roberts in
its hostile takeover of RJR Nabisco.
He featured in the bestselling
business book Barbarians at the
Gate about the deal, cementing
his dealmaking credentials.
10
NEWS
cityam.com
NATIONAL Grid has a positive
outlook for the year in spite of
ongoing recovery work at its US
business, which was battered by
Hurricane Sandy, it said yesterday.
Investor relations head John
Dawson told analysts that working
capital is likely to be 200m to
300m higher than normal in the
first half of the year as the firm
works through cost claims in the
wake of the hurricane.
National Grid expects to recover
costs from the Long Island Power
Authority (LIPA) within months,
Dawson added.
Almost a million of LIPAs
customers lost power after the
hurricane. National Grid has a
contract with the firm to run its
electicity services.
The FTSE 100 component said it
will make a decision on dividends
after it responds to UK regulator
Ofgems eight-year pricing plan,
which was set out in December.
National Grid repeated its pledge
to spend 3.6bn on capital
investment this year across its UK
and US operations.
Sustained investment in
transmission and distribution
infrastructure, combined with a
strong focus on efficiency has
resulted in another solid operational
performance, said chief executive
Steve Holliday.
National Grids
recovery after
storm on track
BY MARION DAKERS
TESCO maintained its market share
and matched market growth for the
first time since June 2011, according
to the latest grocery share data from
Kantar Worldpanel.
The UKs biggest supermarket grew
sales year-on-year by 3.3 per cent in
the 12 weeks to 20 January, giving it
a market share of 30.4 per cent, as its
turnaround plan helped to win back
shoppers this Christmas.
These positive results are a sign of
stabilisation for Tesco as the retailer
gets back on track with its cus-
tomers, Ed Garner, direc-
tor at Kantar said.
However, the data con-
firmed that Tesco is put-
ting pressure on rivals
with Morrisons in par-
ticular suffering a 1.7
per cent drop in sales and
a share decline of 0.6
percentage points
in the period.
S a i nb ur y s
sales rose 3.2
per cent year-
Tesco fightback
steadies giants
market share
BY KASMIRA JEFFORD
on-year but its market share fell 0.1
percentage points to 16.9 per cent.
Meanwhile discounters continue to
outperform the market, with Aldi
and Lidl recording sales growth rates
of 28.2 per cent and 10 per cent
respectively.
Kantar highlighted that a widening
gap between overall grocery market
growth of 3.3 per cent and grocery
inflation of 4.9 per cent is causing a
squeeze on shopping budgets.
Upmarket grocer Waitrose posted
the strongest growth after the dis-
counters, with sales up eight per cent
in the period.
The John Lewis owned group
increased its market share by 0.2
percentage points to 4.6 per cent
after enjoying a record Christmas
trading period.
Co-op also made a surprise
comeback in the period recording
a 0.6 per cent sales rise
compared with
declines seen
in 2012.
Tesco boss Philip Clarke
has turned sales around
WEDNESDAY 30 JANUARY 2013
11
NEWS
cityam.com
CHANGE ON SAME PERIOD IN 2012
DISCOUNT GROCERS LEAD MARKET GROWTH
+3.3% +28.2% +10% +8% +2.1% +3.2% +0.6% +9.6% -1.7%
TOTAL MARKET GROWTH
3.3%
GROCERY PRICE INFLATION
4.9%
2.7%
12.5%
2.5%
4.6%
17.6%
30.4%
16.9%
6.2%
2.2%
FIGURES ARE FOR THE 12 WEEKS TO 20 JANUARY 2013
A WEST END investment company
has delayed its initial public offering
set for next month in a bid to round
up some last-minute investor
interest.
The newly-formed West End of
London Property Investment
Company (Welpic) was originally
intending to float on the
Alternative Investment Market on
5 February, in a listing expected to
raise around 100m.
However, yesterday the company
said it now expected to float on 13
February. An insider at Oriel
Securities, Welpics financial
adviser and broker on the deal, said
that more time had been needed to
market the flotation to potential
investors.
Welpic is raising the cash in order
to invest in office properties in the
West End and Midtown, where it
already owns 873m of properties.
It is dreaming of graduating to
the London Stock Exchanges main
market if it can improve its market
capitalisation to more than 250m
in the next two years.
The business is managed by
Schroders and domiciled in Jersey.
Welpic could not be reached for
comment.
Property fund
Welpic delays
Aim flotation
BY JAMES TITCOMB
A RAPID rise in people gambling
from their phones and tablets pro-
pelled William Hill to a 20 per cent
rise in profits last year.
The bookie said it had seen a 260
per cent increase in turnover from
mobile gaming in 2012, leading the
online business to grow operating
profits by 36 per cent.
Chief executive Ralph Topping said
he planned to continue this level of
digital growth in 2013, boosted by
the recent acquisition of online
bookie Sportingbets Australian and
Spanish businesses, and the expected
purchase of Playtechs 29 per cent
stake in William Hill Online.
The companys shares rose by 2.7
per cent yesterday, as it said group
revenue had risen by 12 per cent.
High street sales grew at a slower but
still impressive six per cent.
William Hill said mobile gambling,
which had been bolstered by the
Rise of the iPad
gambler gives
William Hill lift
BY JAMES TITCOMB launch of a sports betting iPad app
last year, now accounts for around a
third of all online wagers.
The fourth quarter delivered a
strong end to an already good year in
2012, Topping said. Performance
was robust in retail and profits con-
tinued to grow strongly in online,
with sporting results going in our
favour in both channels.
Unfancied outcomes, such as
Chelseas Champions League victory
and Enckes 25-1 St Leger horseracing
win, improved bookie profits in 2012.
PZ Cussons first-half profit rises
on growth in Asia and the UK
PZ CUSSONS, the maker of
Imperial Leather soaps, reported a
10 per cent rise in first-half profit
as growth in the United Kingdom
and Asia offset tough trading
conditions at its key Nigerian
market.
The soap and shampoo maker
said performance of its UK
washing and bathing division was
robust and that its business in
Australia had returned to profit.
The company said in July that
retailers in Australia had devoted
greater shelf space to private
labels, hurting PZ Cussons
BY CITY A.M REPORTER volumes and margins in the home-
care business.
Pre-tax profit rose to 44.1m
during the six months to 30
November. Revenue was flat at
414.8m, hurt by trading
conditions in Nigeria.
Unrelenting religious violence in
the north, severe floods and weak
consumer spending following the
removal of a fuel subsidy in
Nigeria prompted the company to
warn on profit in 2012.
PZ Cussons generates about
45 per cent of its revenue from
Africa, of which Nigeria is the
largest contributor. Asia, which
includes its business in Australia,
accounts for about 20 per cent of
revenue.
PZ Cussons raised its interim
dividend to 2.35p per share from
2.23p a year earlier.
Carpetright lifts British sales yet
trading in Europe disappoints
CARPETRIGHT posted better than
expected third quarter sales in its
home market after self-help
measures such as store revamps
and new product ranges helped to
boost trading.
The flooring specialist retailer,
said UK like-for-like sales were up
3.2 per cent in the 13 weeks to 26
January, compared with a 0.6 per
cent rise in its second quarter.
Total sales in the UK rose by 1.6
per cent.
The company issued its seventh
profit warning last April over
BY KASMIRA JEFFORD
more than a year as it battled
against rising living costs and a
stagnant housing market.
It has since been trying to drive
sales by refurbishing 122 of its 476,
stores and expanding its laminate
floor and bed ranges.
Whilst trading conditions
remain challenging, we have good
momentum in our self-help
initiatives, chief executive Darren
Shapland said.
Despite an improvement in its
UK performance, sales in Europe
shrank by 11.5 per cent on a like-
for-like basis, with the
Netherlands a particularly tough
market.
Shares in the company, founded
by Lord Harris, closed down 1.17
per cent to 675p yesterday.
William Hills Ralph Topping put rising profits down to a friendly set of sporting results
Carpetright PLC
29Jan 23Jan 24Jan 25Jan 28Jan
680
675
665
670
685
690
695
700 p
675.00
29Jan
PZ Cussons PLC
29Jan 23Jan 24Jan 25Jan 28Jan
380
375
385
390
395
400 p
373.20
29Jan
William Hill PLC
29Jan 23Jan 24Jan 25Jan 28Jan
365
360
355
370
375
380
385 p
374.00
29Jan
William Hill enjoyed a strong fourth quarter but the shares have per-
formed very well and we doubt that there will be forecast changes following the
trading statement. We believe the share price will retrace its recent steps
and we reiterate our Reduce recommendation and 310p target.
ANALYST VIEWS

The acquisition of Sportingbet and potential buy-out of the Playtech

minority are transformational deals, but William Hill is likely to pay a full price
for both. In order to fund the latter, it is also likely to tap investors. This
has held us back. We retain our Hold recommendation.

The groups stated prot of 330m is 6.5 per cent ahead of expecta-
tions, but the key challenge for the market is how to value a company whose
earnings prole and quality is improving rapidly. We reiterate our Buy
recommendation and 400p target price.

HOW DOES WILLIAM HILLS

TRADING UPDATE AFFECT
YOUR RATING? Interviews by James Titcomb
IVOR JONES NUMIS

NICK BATRAM PEEL HUNT

SIMON FRENCH PANMURE GORDON

WEDNESDAY 30 JANUARY 2013
12
NEWS
cityam.com
FOOD group Greencore yesterday
said a challenging UK food
market has resulted in flat like-for-
like sales in the first quarter of the
year.
The company, which makes
prepared meals and sandwiches for
retailers such as Tesco and Asda,
said sales at its convenience food
division rose 2.5 per cent to
285.8m in the 13 weeks to 28
December 2012.
Its ingredients division, which
represented six per cent of group
sales last year, suffered a 17.9 per
cent fall in sales to 13.1m.
Greencore said it completed the
restructuring of pudding maker
Greencore warns UK market
showing little or no growth
BY KASMIRA JEFFORD
Uniq, which it ate up in 2011 for
113m. It also sold its chilled
desserts facility in Minsterley to
Mller Dairy UK in the period.
In the US, Greencore said it
performed well with revenues more
than doubling thanks to
acquisitions it made last year. The
company also confirmed that it has
started to supply Starbucks on the
east coast of the US this month.
Commenting on the outlook for
the coming year Greencore said
market conditions continued to be
challenging, particularly in the core
UK market which showed little or
no volume growth.
We expect this to remain the
case for the foreseeable future, it
added.
THE HUT Group yesterday
announced it had bought
Probikekit, the latest in a string
of acquisitions from the internet
retailer.
By snapping up the firm,
which counts retail veterans
Sir Stuart Rose and Sir Terry
Leahy among its backers,
the outfit has jumped on
the bandwagon of the
recent cycling craze, driven
by Olympic stars Victoria
Pendleton, Bradley Wiggins
and Chris Hoy.
The company
also acquired
The Hut Group takes hold of
cycling gear site Probikekit
BY BEN SOUTHWOOD Lookfantastic, a luxury hair and
beauty website, and Myprotein,
which sells sports supplements
and vitamins, last year.
Richard Pennycook, Morrisons
outgoing finance director,
became the latest high
profile executive to
join the board in
October.
The online retail
group was founded in
2004, and currently
runs a total of 16
websites, including
Zavvi.
The Hut Group counts
Sir Stuart Rose among
its backers
ONLY a third of private sector
workers are currently contributing
to a pension, data revealed this
morning.
But despite not paying enough in
already only 14 per cent thought
their current plans were adequate
and the tough economic climate,
some 63 per cent of these private
sector employees told the National
Employment Savings Trust (NEST)
they agreed with the idea of auto-
enrolment.
In fact, some 70 per cent said they
would definitely or probably stay
enrolled rather than opting-out of
pensions minister Steve Webbs
savings policy.
Justifying this apparent
discrepancy, the respondents
pointed to the simple nature of the
scheme, combined with the benefit
of the employer contribution.
And 67 per cent said that after
auto-enrolment, they would be able
to stop worrying that they had not
prepared for their retirement.
NEST is a low fee pension fund
designed for auto-enrolment.
Just a third of
private sector
have pensions
BY BEN SOUTHWOOD
ERNST and Young will not face any
action relating to its work with
Lehman Brothers in the year before
the banks collapse, the Financial
Reporting Council ruled yesterday.
The Big Four auditor had faced
claims it had been too lenient on the
bank, signing off their reports into its
European arm despite Lehman break-
ing the rules on the handling of client
money.
The bank did not properly segregate
and safeguard client money as speci-
fied by the Financial Services
Authoritys Client Assets Sourcebook
(CASS), and the FRCs Accountancy
and Actuarial Disciplinary Board
(AADB) was also concerned that
money relating to Lehmans prime
brokerage clients needed segregation.
Because Ernst and Young audited
Auditor Ernst &
Young cleared
over Lehman
BY TIM WALLACE
client money opt out arrangements,
client classification and the segrega-
tion of client money after Markets in
Financial Instruments Direction
(MiFID) came in, the FRC wanted to
investigate the firm.
But after reviewing Ernst and
Youngs audit files and hard copy doc-
umentation as well as interviewing
audit staff, the FRC decided not to take
the case further.
Executive counsel has decided that
there is no realistic prospect that a tri-
bunal would make an adverse finding
against E&Y in the UK or members
within that firm. The investigation
will therefore be closed and no further
action taken, the FRC said.
Ernst and Young welcomed the deci-
sion. This confirms our belief that the
quality of our audit work met with the
appropriate professional standards,
the firm said in a statement.
Osborne urged to scrap index
links to slash pension deficits
SCRAPPING index linking for
pensions could cut the UKs
1trillion funding deficit in half
at a stroke, a leading accountant
and former government
advisor claimed yesterday.
City A.M. understands
Richard Farr, head of pensions
advisory at professional
services firm BDO, has written
to George Osborne to urge him
to abandon the index link and
ease the pensions crisis.
It would bring the
UK into line with
countries like the
US, where index-
linking does not
exist, and the
Netherlands,
where only
well-funded
pension pots
are typically linked to prices.
The move could prove
unpopular, removing an
important rule which keeps the
value of pension pots steady
against a backdrop of sustained
inflation.
But Farr, who has
written industry
guidelines for the
Pensions Regulator,
argues that taking the
hit from inflation still
causes much less pain
than being left with
nothing as funds
scramble to
fill enormous
funding
black holes
in years to
come.
Under his proposal only well-
funded pension schemes would
choose to return to index-linking,
removing an additional pressure
from already strained savings
funds.
Pension funds have been
particularly squeezed by the Bank
of Englands efforts to hold down
interest rates, with quantitative
easing alone blamed for a 100bn
increase in their deficits.
The government is already
considering other moves to ease
this pressure; for example by
using average interest rates over a
period of several years to discount
the funds liabilities, artificially
moving to a higher interest rate.
But Farr dismisses those ideas as
playing games with the
numbers, removing market
values from the process and
inserting figures to falsely flatter
the funds.
Ombudsman in difficulty as
the rate of PPI claims doubles
OFFICIALS tasked with judging
rejected PPI misselling claims
received 10,000 new complaints
a week in the final quarter of
2012, the Financial Ombudsman
Service (FOS) reported yesterday,
double the rate seen in the
previous three-month period.
The continued boom in claims
means the FOS expects to receive
over 350,000 complaints by the
end of the financial year, double
its original forecast of 165,000.
BY HARRY BANKS The agency took on an extra
1,000 workers to deal with the
flood, but it cannot keep up with
the pace and has a backlog of
approximately 250,000 cases to
deal with.
The four biggest banks have
already set aside more than
12bn to repay customers who
were wrongly sold the payment
protection insurance, but the
increasing flow of claims to the
FOS suggests this will only
increase further in the coming
results season.
Banks will also find out this
week how they will have to deal
with interest rate swap
misselling claims from firms.
Hundreds of millions of
pounds have been set aside to
repay complaining firms.
The Financial Services
Authority is expected to lay out
new guidelines to differentiate
between sophisticated firms who
knew what they were buying,
and small firms who lacked the
ability to understand the
products.
TOP DOGS in the pension industry
yesterday called for government
help in dealing with the 90bn hole
in pension schemes driven by
quantitative easing (QE).
Talking to MPs on the Treasury
Select Committee, representatives
from pension groups including the
National Association of Pension
Funds (NAPF) said that Bank of
England gilt purchases had
widened funds deficits, by
Pension industry asks for help
with 90bn deficit hit from QE
BY BEN SOUTHWOOD expanding their liabilities faster
than their assets.
Though saying the Bank was
right to take steps it deemed
necessary to manage inflation and
steady the economy, NAPF chair
Mark Hyde-Harrison asked for
more flexibility from The Pensions
Regulator in filling in the deficits
that Bank policy has added to.
He said giving funds only 10
years in such a hard climate pulled
money out of investment, acting as
a drag on the economic recovery.
EXCLUSIVE
BY TIM WALLACE
Pension industry chief Mark Hyde-Harrison asked for more flexibility from regulators
WEDNESDAY 30 JANUARY 2013
13
NEWS
cityam.com
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BDO wants the
chancellor to
ease the
pensions crisis
IN BRIEF
Chemring nets $28.5m US deal
Chemring Detection Systems, the
US subsidiary of London-listed
defence services firm Chemring, has
won a $28.5m (18m) multi-year
contract to supply detection systems
to the US Army. The company will
provide more than 100 chemical
detectors, which remotely detect and
identify chemical vapour clouds at
ranges up to 5km.
Leni hails Trinidad oil progress
Explorer Leni Gas and Oil has made
significant progress at its Trinidad
operations, it said yesterday. Over the
last week, production at the Goudron
and Icacos fields averaged more than
170 barrels of oil a day, smashing
Lenis production targets. The
explorer, chaired by entrepreneur
David Lenigas, hit a record 201 barrels
of oil a day on 27 January.
Judge accept BP plea over spill
An American judge has accepted an
agreement by BP to plead guilty for its
role in the Deepwater Horizon disaster
and pay $4.5bn (2.9bn) in penalties
for the worst offshore oil spill in US
history. BP now has 60 days to send a
remedial plan to the Department of
Justice and the Environmental
Protection Agency laying out how it
plans to meet all of its stipulations.
COAL miner Bumi has set the date
for its boardroom showdown with
co-founder Nat Rothschild and urged
shareholders to reject his proposals
for a board overhaul.
The London-listed miner, which
will meet on the 21 February in
London, recommended that share-
holders reject Rothschilds proposals,
which would see 12 out of 14 current
directors of Bumi removed.
In a circular to shareholders yester-
day, Bumi said that Rothschilds pro-
posals are not the way forward for
the company and, if passed, will lead
to stalemate, continued shareholder
disputes and further value
destruction.
The FTSE 250 firm also confirmed
the appointment of Eko Budianto as
the new director of subsidiary Berau
Bumi sets date
for battle with
Nat Rothschild
BY CATHY ADAMS Coal who Rothschild has argued is
not independent and Tony Redman
as technical adviser to the company.
Meanwhile, Rothschild added that
his proposals for the coal miner had
won the support of shareholder
Stoneycroft Limited, which holds
around 0.35 per cent of voting shares.
Bumi closed up one per cent yester-
day at 344.7p.
Bumi PLC
29Jan 23Jan 24Jan 25Jan 28Jan
330
320
340
350
p
344.70
29Jan
TWO Russian billionaires have
been shortlisted to buy a stake in
Polyus Gold, sources said, in a deal
which could pave the way for a
merger with rival Polymetal to
create a national gold mining
champion.
Sources close to the matter said
retail boss Zelimkhan Mutsoyev
and fruit juice magnate Gavriil
Yushvayev wanted to buy tycoon-
turned-politician Mikhail
Prokhorov's $4bn (2.5bn) stake in
Billionaire duo shortlisted for
$4bn Polyus Gold shareholding
BY CITY A.M. REPORTER
London-listed Polyus Gold.
The proposed deal has gone
before the UK Takeover Panel,
which is evaluating whether the
proposed buyers of the 38 per cent
stake are acting independently or
form a concert party that would
control more than 30 per cent of
Polyus, a level that would force a
mandatory offer to buy out
minorities.
Also under scrutiny is the
buyers' relationship to tycoon
Suleiman Kerimov, who owns 40
per cent of Polyus.
WEDNESDAY 30 JANUARY 2013
14
NEWS
cityam.com
Mikhail Prokhorov is the seventh richest man in Russia, according to Forbes
Watchdog says boards should
look for risks on the horizon
COMPANY boards and auditors
need to be more vigilant about
long-term risks to financial
health, according to tighter
rules from the Financial
Reporting Council written in
the wake of the credit crisis.
The FRC said today it wants
directors to consider threats to
their business models and
capital levels at least a year into
the future, and always disclose
significant risks to solvency and
liquidity.
The regulators proposed
changes to the UK Corporate
Governance Code follow the
Sharman Inquiry, which was set
up to examine why banks were
given clean bills of health in the
run-up to the financial crisis.
Lord Sharman said today that
BY MARION DAKERS
while the recommendations will
be radical for many companies,
they should ensure firms make
better decisions and that
investors, creditors and
stakeholders are kept informed.
The new rules should strike a
chord with audit committees at
UK companies, almost half of
whom believe their risk
management programmes need
to be improved, according to a
KPMG survey out yesterday.
Around 39 per cent of audit
committee members said their
risks planning requires
substantial work, and a further
10 per cent said they were still
drafting or had no formal risk
management in place.
Fifty-two per cent said risk
management at their company
was robust and mature, faring
better than the global average of
37 per cent (see chart below).
One in five respondents said their
companys risk management plans
fail to look far enough into the
horizon, while one in ten said they
were not happy with their ability to
respond quickly to changing risks.
However, the majority (58 per
cent) were sceptical about the
benefits of forcing firms to retender
their external audit contracts.
RUSSIAN steelmaker Severstal
yesterday posted a one per cent
drop in crude steel output over
2012, with the biggest drop seen in
its Russian operations.
The steelmaker said that crude
production of the metal fell to
15.14m tonnes last year, down
from 15.29m tonnes over the
previous year.
Russian steel output plunged
seven per cent year on year,
Severstal said yesterday, to a total
of 10.55m tonnes.
Over the fourth quarter of last
year, output dropped five per cent
to 3.58m tonnes, from 3.76m the
year previously.
Output drops
at Severstal
BY CATHY ADAMS
MINER Petra Diamonds
yesterday revised down its full-
year production guidance,
sending its shares tumbling.
The diamond miner said it
expected its full-year
production for 2013 to be
around seven per cent or
200,000 carats lower than
previous guidance of 2.85m.
The FTSE 250 firm yesterday
posted a buoyant trading
update, with production up 31
per cent to 1.24m carats over
the six months to December,
boosted by the ramp-up of the
Williamson and Kimberley
Underground mines, and the
Petra Diamonds tumbles as
it revises down output goal
BY CATHY ADAMS inclusion of the Finsch mine in
the portfolio.
While production over 2012
jumped, Petra added that its
South African operations were
affected by brief stoppages,
and these resulted in
production losses during its
first half, which caused it to
revise down its forecasts.
Meanwhile, revenue soared
by 54 per cent to $156.3m
(99.2m), up from $101.4m over
the previous year.
Our production growth
plans remain in place, with
targeted output growing to 5m
carats by 2019, chief executive
Johan Dipenaar said yesterday.
It closed down 4.83 per cent.
What isthestatusof your companysrisk
management programme?
Risk management system
implemented, but requires
substantial work
Risk management system
in planning/development stage
%
e
37 45
14 1
4
No active/formal
efort to implement
risk management system
Robust, mature risk
management system
in place
S
O
U
R
C
E
:

K
P
M
G
NEVER mind Tatlers List of People
Who Really Matter, the Lawyer
Magazines Hot 100
list has been pub-
lished this week,
alongside snaps
from a glossy photo-
shoot.
Not only have our
legal hotties been
shot by John Miller,
who has papped
the likes of David
Cameron, they
have also been
filmed for five
minutes of inter-
net video fame.
The Capitalist
doesnt doubt their
legal credibility; artistic judgment,
however, is another matter. The images
include Freshfields Adam Gallagher
popping his
collar and
K&L Gates
p a r t n e r
E l i z a b e t h
Robe r t s on
flicking a V-
sign. But
more unusual
still was one
partner who
appeared to The
Capitalist to be
grabbing an
imaginary pair
of .... well, per-
haps its best if
readers look
through the complete list and
come to their own conclusions.
Freshfields Adam Gallagher and K&L
Gates partner Elizabeth Robertson
There is somebody out there in
the Square Mile who is missing
out on a tidy 1m cash lump sum. No,
not a late bonus, but an unclaimed
EuroMillions raffle prize draw. The
ticket, purchased in the City of London
on 11 January, mysteriously remains
unclaimed. The Capitalists Camelot
spies inform that this isnt the first
time a prize has escaped an unlucky
pair of City hands. A 267,000 ticket
expired in 2010, with the money
reverting to The National Lottery Good
Causes. To jog players memories,
Calvin Harris was at the top of the
album charts with 18 Months on the
day of the draw, Fulham Football Club
were held by Wigan to a 1-1 draw at
Craven Cottage, Harlequins scored a
47-8 win over Connacht in the
Heineken Cup and, of course, City A.M.
reported that yields on inflation-linked
gilt plunged to a record low. Now if
that doesnt ring any bells, The
Capitalist doesnt know what will.
SPADES and wellies were order of
the day when Lord Mayor Roger
Gifford and his wife, the Lady
Mayoress, ventured deep into
forest territory this week, ankle-
deep in mud.
The couple were planting three
trees to launch the Gifford Wood
Appeal, an effort which will help
safeguard 30 acres of land at
Horseshoe Hill under the Epping
Forest Act.
The site was acquired by the
City of London Corporation last
year. However from the looks of
the photographic evidence, it
rather appears that the Lady
Mayoress was getting more stuck
into the hard labour than her
green-fingered husband.
Lord Mayor Roger Gifford and Lady Mayoress Clare Gifford plant a tree in Gifford Wood
Green-fingered Lady and Lord
Mayor get muddy in the forest
Going vogue:
Legal Hot 100s
15 mins of fame
15
cityam.com
WEDNESDAY 30 JANUARY 2013
cityam.com/the-capitalist
THECAPITALIST
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
SAVERS have come in for an
interest rate hammering, as
account providers have slashed
rates since the Funding for Lending
Scheme (FLS) kicked in last August.
In January so far, 100 accounts
have seen their interest rate
chopped, according to data released
by the Savingschampion website
yesterday, adding to the 64 cuts in
the previous four months.
The website puts the plunges
down to a reduced demand for
deposits with providers switching
to easily available cash from the
FLS, instead.
No one is immune from the
savings rate slaughter, said
Savingschampion.co.uk director
Anna Bowes. New and existing
savers have seen their rates
plummet in recent months things
have truly gone from bad to worse
and theres no clear end in sight.
The 100 cuts this month, from 16
providers, take on average 0.4 per
cent from the rates they change,
with the biggest snip coming to a
full percentage point.
The FLS has simply been
disastrous for savers, Bowes said.
We urge the government to
recognise the knock-on effects this
scheme has had on savers.
Savers hit with
lower interest
as FLS kicks in
BY BEN SOUTHWOOD
CAN THE FTSE SURGE CONTINUE?
Interviews by Ben Southwood
No I think the index is headed for a
correction, bringing it down closer to 6,000.
Currently we have 2008 valuations without
2008 levels of economic prosperity so the valuations
dont make sense.
These views are those of the individuals belowandnot necessarily those of their company
WELI ELMI
HUXLEY

I dont think so. Sometimes forecasting

market movements is complete guesswork,
but it seems to me that such a surge would
justify some sort of natural correction. Markets tend to
follow ups with downs.
PHILIP ALLMAN
BUTTERFIELD PRIVATE
BANK
I hope so Ive been following the recent
highs with some interest. But really its pretty
debatable whether the FTSE 100 is that good
as a general barometer of health in the UK economy
overall.
PAUL ELLISON
CO-WORK CITY

CITYVIEWS
WEDNESDAY 30 JANUARY 2013
16
NEWS
cityam.com
LONDONS business population got
healthier through 2012, according
to insolvency figures published yes-
terday, with the number of firms
increasing and the proportion fail-
ing coming down.
A total of 5,105 firms in the capi-
tal entered insolvency in the year,
up 2.28 per cent on the year accord-
ing to Experian.
But the rate of insolvency fell to
0.98 per cent from 1.03 per cent in
2011, indicating firm creation was
faster than business destruction.
Nationally, the total number of
insolvencies fell 0.86 per cent to
20,889, bringing the rate down
from 1.1 per cent to 1.04 per cent.
London is almost the best per-
former, with only three regions
with lower insolvency rates.
Scotlands came in at 0.86 per
cent, the south wests at 0.87 per
cent and the south easts at 0.88 per
cent.
By sector a few struggled the IT
Recovery hope
as insolvency
rate declines
BY TIM WALLACE
industry saw insolvencies jump
21.66 per cent with 837 firms going
under, taking the rate up from 0.65
per cent to 0.74 per cent.
But the other four of the top five
sectors saw their fortunes improve.
The oil industry saw the biggest
improvement with just 16 insolven-
cies in the year, a 46.67 per cent
drop. That took its rate down from
1.08 per cent to 0.56 per cent.
The rate of insolvencies is signifi-
cantly lower now than when it was
at its peak in 2009 at 1.25 per cent,
but there is still a way to go before
we reach the pre-recession rate of
2007, which stood at 0.97 per cent,
said Experians Max Firth.
This is highlighted by the slight
increase in insolvencies amongst
larger businesses which highlights
the need for businesses to stay alert
to changes which may affect them.
Ongoing monitoring of all clients
and suppliers regardless of size is
essential, as the impact of larger cor-
porate insolvencies can be felt down
the supply chain.
Senior judges rule CRB checks
are a breach of human rights
THE Court of Appeal yesterday ruled
that the law forcing people to
disclose all previous criminal
convictions in job applications is a
breach of human rights.
The court said legal
requirements forcing people to
reveal convictions turned up by a
Criminal Records Bureau (CRB)
check to prospective employers was
not compatible with article 8 of
the Human Rights Act.
A draft judgment handed down
yesterday said CRB checks could
prevent a persons right to a family
life and private life.
BY MICHAEL BOW
As a conviction recedes into the
past, it becomes part of the
individuals private life, it said.
It follows a case brought by a 21
year old man who was forced to
disclose to his university and future
employer that he had been handed
two police warnings over bicycle
thefts at the age of 11.
Lord Dyson, a senior judge who
helped make the ruling, said: It is
extraordinary that nothing has
been done.
The government needs to pull its
finger out and introduce
legislation.
The Home Office said it was
disappointed by the ruling and
intended to appeal at the Supreme
Court.
Human rights group Liberty
cheered the decision.
Legal officer Corinna Ferguson
said: This sensible judgment
requires the government to
introduce a more nuanced system
for disclosing this type of sensitive
personal data to employers.
For too long irrelevant and
unreliable information provided
under the blanket CRB system has
blighted peoples lives.
CRB checks, which can be costly
to have done, are often required by
employers before a job offer is made
to a candidate.
Car insurance cost dips yet effect
of gender ruling still to be felt
THE COST of a comprehensive car
insurance policy fell to an average
of 789 in December the lowest
level since October 2011
according to figures released today
by the AA.
However the company warned
that the 2.9 per cent decline over
the last three months of 2012 does
not tell the full story of what has
happened to the marketplace since
it became illegal to take gender
into account when calculating
premiums on 21 December.
Average premiums are falling
but they mask considerable
BY JAMES WATERSON
extremes for individual groups,
said Simon Douglas, director of AA
insurance, who warned that
insurers are struggling to find new
ways of identifying risky drivers.
They have gone back to square
one in calculating risk. The gender
directive doesnt mean that young
male drivers are any less likely to
suffer collisions. Young men
represent just eight per cent of all
drivers, yet still account for 23 per
cent of all those killed or seriously
injured on Britains roads.
The AA index suggests that the
average premium increase for
women aged 17-22 was 4.7 per cent
over the period while men in the
same age group have seen an
average reduction of 1.9 per cent.
Greater London saw the smallest
fall, with the average cost of
comprehensive car insurance
dropping by 0.7 per cent.
It could take several years for the
full effect of the European Court of
Justices gender ruling to become
apparent, as premiums come up for
renewal and insurers fine-tune
their pricing structures using other
risk measures.
Meanwhile the average price of a
combined buildings and contents
household insurance policy rose 1.3
per cent to 304 per year over the
same period.
Source: savingschampion.co.uk
SAVERS CLOBBERED AS FUNDING FOR LENDING SCHEME KICKS IN
MORE AND MORE SAVINGS ACCOUNTS HIT WITH RATE CUTS
Number of accounts featuring cuts
120
100
80
60
40
20
0
Jan 2012 Apr 2012 Jul 2012 Sep 2012 Jan 2013
SAW BANKS CUT RATES ON 100 OF THEIR ACCOUNT OFFERINGS
DURING THE MONTH
THE BIGGEST RATE CUT WAS 1%
HOUSE prices climbed upwards at
a stately pace in December,
consolidating modest yearly
gains, according to data out
yesterday.
Housing was 0.8 per cent more
expensive in the final month of
2012 than it was in November, the
Land Registry said, capping off a
yearly increase of 1.7 per cent.
As it has throughout the post-
recession years, London drove
most of England and Wales gains,
with prices soaring 3.1 per cent in
just a month. Over the year
Londons housing got 8.4 per cent
more expensive, significantly
above the pace of growth in
England and Wales as a whole.
Land Registry says house prices
grew modestly over December
BY BEN SOUTHWOOD Despite the sluggish summer
months, 2012 marked a year of
recovery for house prices and
ended strongly given the
currently bleak economic
outlook, said LSL Property
Services boss David Newnes.
He hailed the Funding for
Lending Scheme (FLS) as buoying
the market by giving buyers
access to cheaper finance. But
Newnes warned that the overall
picture looked excessively rosy
because of the massive impact of
the booming London market.
The increasingly large wedge
between the south and north of
the country...wont begin to close
until we see a vibrant first-time
buyer market across the country,
Newnes added.
THE USS expanding gambling
market has invigorated Sportech, the
football pools and horseracing bets
operator, the company said
yesterday.
Sportech said a strong
performance in the US, where it is
expanding its operations, had offset
a slightly disappointing
performance in its online casino
division. The company, which has
also seen a historic 80m VAT
charge hearing delayed, reports full
results in March.
Sportech sees
boost from US
BY JAMES TITCOMB
OFFICE space provider MWB
yesterday announced it would buy
up more properties, following an
increase in rental rates during the
second half of last year.
The company said average
revenue per workstation it rents out
now stands at 7,447, up from
6,969 a year earlier. This means the
group expects profits to multiply to
nearly 5m, compared with 1m a
year before.
MWB said it would acquire four
new London offices this year.
BY JAMES TITCOMB
PHILIPS, the Dutch firm that was
once famous for its televisions, audio
systems and DVD players, yesterday
said it was selling its consumer elec-
tronics arm.
Chief executive Frans van Houten
said the company had sold its audio
and video division once the worlds
biggest for a paltry 150m (128m)
to Japans Funai Electric. Philips will
now focus on its home appliances
and healthcare businesses.
The sale puts an end to Philips 64-
year history as a consumer electron-
ics business. It sold its first television
in 1949, but sold the majority of its
TV business last year, creating a joint
venture with Hong Kongs TPV.
Philips has been hit by competition
from Asian giants such as Samsung,
as well as a global fall in demand for
TVs and video cameras. Its Consumer
Lifestyle division which includes
the electronics business Philips is
selling as well as the home appli-
ances business it is hanging on to
Philips shuts off
its once famous
electronics arm
BY JAMES TITCOMB
saw sales fall from 13.3bn in 2007 to
3.3bn last year. Philips has high
hopes for the other half of Consumer
Lifestyle, which makes toasters,
shavers and electric toothbrushes.
We have taken an important step
in transforming Philips into the lead-
ing technology company in health
and well-being, van Houten said.
Philips announced the disposal as it
reported a 355m loss in the final
quarter of 2012, owing to a 509m
European Commission fine over
alleged price fixing of cathode ray
tubes between 1996 and 2006.
Toyota should target the media to aid its recovery
Toyota Impression
1 Jan2012 10Nov2012 19Dec2012
16
18
14
20
22
24
26
28
Negative switchers
All originally positive Switched positive to negative
40
50
0
60
10
20
30
70
80
90
100 %
67%
40%
90%
59%
Consumer electronics fades out
2008 2007 2009 2010 2011 2012
2
4
0
6
8
10
12
14
5
10
0
15
20
25
30
35 bn bn
Consumer
Lifestyle Revenue (LHS)
Group Revenue (RHS)
PFIZER reported better-than-
expected fourth-quarter results
yesterday, helped by rebounding
sales in emerging markets, but the
drugmaker forecast that 2013
profits would be weaker than Wall
Street has estimated.
Pfizer, the largest US
drugmaker, said quarterly
earnings quadrupled to $6.32bn
(4bn), or 86 cents per share, as it
recorded a gain from selling its
nutritional products business to
Swiss food groups Nestle for about
$12bn in November.
In the year-earlier quarter, it
Pfizer tops forecasts after sale
of nutrition business pays off
BY CITY A.M. REPORTER
posted a profit of $1.44bn, or 19
cents per share.
Excluding special items, Pfizer
earned 47 cents per share in the
quarter.
Global company sales fell seven
per cent to $15.1bn, hurt by
generic competition for its Lipitor
cholesterol fighter, but came in
well above expectations of
$14.37bn.
On the heels of selling its
nutrition business, Pfizer is
expected within days to raise more
than $2.2bn through an initial
public offering that will separate
its animal health unit into a new
company called Zoetis.
WEDNESDAY 30 JANUARY 2013
17
NEWS
cityam.com
Pfizer booked a gain on its infant nutrition unit, which it sold late last year
I
N October 2012 Toyota recalled
7.4 million cars due to an electric
window fault. The recall had an
immediate impact on perception
of the brand, according to our
surveys.
The YouGov Impression measure
on BrandIndex dropped from the
mid +20s to the mid-teens a
small yet significant fall in
perception.
Knowing exactly which
consumers switched their view
from positive to negative would be
key to informing Toyotas response
to the crisis.
PMARC, a new BrandIndex-
complementary tool, has allowed
me to explore this in detail.
By taking the people we know
were positive about Toyota back in
the summer and we know are now
negative, and overlaying all the
other data that we hold on them
profiling information, media
consumption, car ownership I
can focus on the precise type of
people that Toyota lost and need to
win back.
DRIVING UP NEW CUSTOMERS
From this I have drawn a number
of conclusions current customers
have remained positive, so it is
only potential customers they
need to worry about.
Those that have become
negative have lost confidence in
the brands reliability so regaining
that perception of reliability is the
key.
But the conclusion that I want
to focus on is this: who are the
people who have turned negative?
There is one clear story they
are people who interact with news
90 per cent watch TV news and
59 per cent are broadsheet readers.
Toyota has suffered a news-based
crisis.
I would advise responding with
a media campaign targeting the
news media in order to regain the
lost perception.
This ability to target with ever
greater precision is what the new
world of connected data offers,
and the winners of the future will
be the companies who understand
and harness this.
PREDICTING THE FUTURE
Speaking of winners, I must boast
about a recent YouGov win our
InvestorView prediction of fourth
quarter iPhone sales made three
weeks before Apples
announcement was within 0.05
per cent of actual sales,
demonstrating that consumer
insight can effectively be used to
predict the future.
Stephan Shakespeare is the chief
executive of YouGov
BRAND
INDEX
STEPHAN SHAKESPEARE
Harley-Davidson revs up margin target as
factory revamp kicks in to help meet demand
Harley-Davidson said yesterday it expects profit margins to rise this year
as the US motorcycle maker begins to benefit from a revamp of its
factories to allow them to react more quickly to shifts in demand. Harley
forecast that 2013 operating margin would rise to between 35.25 per cent
and 36.25 per cent of sales, up from 34.8 per cent last year. The company
said profit was $70.6m (44.8m), or 31 cents per share, compared with
$105.7m, or 46 cents per share a year ago, when it booked a 22-cent tax
benefit related to the 2010 sale of Italian motorcycle unit MV Augusta.
Tupperware profits boxed in due to higher
charges despite quarterly jump in revenues
Tupperware Brands posted a 14 per cent drop in fourth-quarter earnings
yesterday as higher corporate charges masked a 5.2 per cent rise in
revenue. European sales dropped slightly by 1.7 per cent but its US
beauty business saw a 7.8 per cent spike in sales. The firm said profits
came in at $74.5m (47.3m) down from $86.9m last year. I am pleased
with our fourth-quarter results, chairman and chief executive of
Tupperware Rick Goings said. When we look across our markets, we
see a balanced portfolio.
Lexmark forecasts current-quarter income
below estimates after exiting inkjet business
Printer maker Lexmark International yesterday forecast current-quarter
profit below analysts estimates after reporting fourth-quarter earnings
that missed expectations. The company expects a continued negative
impact in the current quarter from its decision to exit its low-margin
inkjet printers business. Lexmark forecast first-quarter adjusted earnings
of between 80 cents and 90 cents per share. It expects revenue to decline
11 per cent to 13 per cent from a year earlier. Net income fell to $6.3m
(4m) in the fourth quarter from $69.3m a year earlier.
Eli Lilly says generic competition to Zyprexa
hurt fourth-quarter profit as sales slide 49pc
Eli Lilly and Co said yesterday that fourth-quarter profit fell as competition
from generic drugs, particularly for its once top-selling schizophrenia drug
Zyprexa, drove revenue lower. The US drugmaker earned $827m (525m),
or 74 cents per share, down from $858m, or 77 cents per share, a year
earlier. Excluding special items such as asset impairments and
restructuring, Lilly earned 85 cents per share, beating analysts'
expectations by seven cents per share. Zyprexa, now facing generic
competition, saw sales slide 49 per cent to $385m from $750m year earlier.
Jones Lang LaSalle posts record revenue for
2012 led by late surge at the end of the year
Property giant Jones Lang LaSalle yesterday reported record revenues
for 2012. The US firm, which has a strong UK presence, posted a 12 per
cent rise in full year revenues in local currency up to $3.9bn (2.3bn).
This fed a surge in annual earnings per share to $5.48 up from $4.83 last
year. Chief executive Colin Dyer said: Our 2012 performance met our
expectations, with a strong finish to the year in challenging global
markets. Again, we continue to secure market share growth,
productivity improvements and expanded client relationships.
US CORPORATE RESULTS
ROUND UP
MWB plans to
up office space
BUSINESS investment slid across the
Eurozone in the third quarter of
2012, as household income sunk as
well, data revealed yesterday.
The euro area business investment
rate fell from 20.2 per cent in the
second quarter of last year to 19.9
per cent in the third, Eurostat
figures showed, after adjusting for
seasonal variations.
This came as real disposable
household income per capita fell for
the fifth straight quarter, this time
by 0.3 per cent, according to Eurostat
data. Except for two tiny rises of 0.1
per cent, Eurozone household
income has now been in free fall
since the first quarter of 2009
eroding consumer spending power.
And few places have endured that
gloomy spending movement as
much as Spain, where retail sales
collapsed 10.2 per cent over the year
to December. This brought the
overall yearly fall to 6.8 per cent, as
the blocs fourth biggest economy
was hit by mass unemployment and
recession.
The only good news came from
powerhouse economy Germany,
where consumer morale edged up to
a score of 5.8 looking towards
February, according to researcher
Gfk, up from 5.7 for January.
Eurozone sees
investment dip
as income falls
BY BEN SOUTHWOOD
HOME prices in the US shot up at
the quickest pace seen in almost
seven years in November, data
revealed yesterday.
The Case-Shiller 20-city composite
home price index grew 5.5 per cent
in the year to November 2012,
according to data from S&P Dow
Jones Indices the biggest yearly
price gain since August 2006.
The 10-city index, looking at the
biggest 10 metropolitan areas in
the US, also saw healthy growth,
running at 4.5 per cent over the 12
months to last November.
Omair Sharif at RBS Securities
said this new data added to a pic-
ture of a solid housing recovery,
after the first post-crisis correction
fizzled out.
This is a continuing trend in
place for the better part of a year,
Sharif said. This is another indica-
tion that a housing rebound is fair-
ly entrenched at this point.
The top performer was Phoenix,
US house prices
climb at fastest
rate since 2006
BY BEN SOUTHWOOD Arizona, the sixth biggest city in
the US, in which home prices
soared 22.8 per cent over the year.
Prices fell only in New York, by one
per cent, while four cities other
than Phoenix enjoyed double-figure
price growth.
But the Conference Boards meas-
ure of US consumer confidence,
also out yesterday, was much
gloomier reading. The headline fig-
ure collapsed from 66.7 in
December to hit 58.6 in January, yet
further below the 100 level that
corresponds to the average for 2008.
Conference Board director Lynn
Franco blamed the payroll tax hike
agreed in the fiscal cliff deal for
tightening pressure on wallets and
therefore clamping down on
sentiment.
The increase in the payroll tax
has undoubtedly dampened con-
sumers spirits and it may take a
while for confidence to rebound
and consumers to recover from
their initial paycheck shock,
Franco said.
Swiss government gives 340m
to the UK Treasury in tax deal
THE SWISS authorities have paid
HM Revenue & Customs an initial
340m as part of a deal to
crackdown on tax evasion,
chancellor George Osborne revealed
yesterday.
The payment was made on
Monday and forms the first part of
an arrangement that the Treasury
hopes could raise up to 6bn in
extra revenue over the next five
years.
[This is] the first time in our
history that money due in taxes has
flowed from Switzerland to the UK,
instead of the other way round,
BY JAMES WATERSON Osborne told the House of
Commons, while defending plans to
cut taxes.
Switzerland agreed with the UK
last year to impose a one-off levy on
money in Britons secret Swiss bank
accounts and to tax future interest
payments, with effect from the start
of 2013.
We are supporting more job
creation by further reducing the rate
of corporation tax to 21 per cent, and
since 1 January we have been
helping businesses large and small
to invest, with a temporary tenfold
increase in the annual investment
allowance, Osborne said at Treasury
questions.
We can afford these tax
reductions in part because we are
taking tough action on tax evasion.
The governments Autumn
Statement estimated that 40bn is
held by Britons in Swiss bank
accounts but it will only be possible
to identify of the owners of 25bn of
this money.
In addition to the one-off levy
there will be a withholding tax of at
least 27 per cent on future income
and a 40 per cent inheritance tax on
Swiss assets held by British investors.
Switzerland has watered down its
banking secrecy rules under
pressure from foreign governments
following the financial crisis.
INCREASING central banks
inflation targets might stimulate
growth in the very short run, but
would lead to a dangerously
volatile economy in future, the
European Central Banks (ECB) top
economist Peter Praet warned
yesterday.
He joins policymakers including
Sir Mervyn King and Adam Posen
in opposing suggestions made by
incoming Bank of England
governor Mark Carney that the
two per cent inflation target
could be changed or scrapped.
Because central banks say they
ECB policymaker joins chorus
against upping inflation target
BY TIM WALLACE
cannot set interest rates below
zero, it is difficult for them to
loosen policy further in an effort
to stimulate growth.
Proponents of a higher
inflation target argue higher
prices mean real interest rates
would be pushed down,
stimulating growth.
Inflation impinges on a large
array of economic activities. For
example, a households decision
to consume today or instead save
and consume in the future; a
workers decision to supply
labour; or a firms decision to
invest, Praet told a business
conference in Copenhagen.
THE FORUM: Page 21

WEDNESDAY 30 JANUARY 2013
18
NEWS
cityam.com
Peter Praet joined the European Central Banks executive committee 18 months ago
Pinsent Masons
Michael Isaacs has been
appointed partner in the law
firms financial sector disputes
practice. He is a banking
litigation specialist, and joins
from Addleshaw Goddard.
Issacs has over 20 years
experience in the sector.
Mizuho International
The London-based securities and investment banking
arm of Mizuho Financial Group has appointed Antony
Slotboom as head of central and eastern Europe, Middle
East and Africa. He joins from RBS, where he was head
of corporate finance for central and eastern Europe and
the Commonwealth of Independent States.
RBC Wealth Management
David McLaughlin has been appointed business
development director in the wealth management firms
private client team. He was previously an investor
relations consultant at Elan, a biotechnology firm.
McLaughlin has also worked as an investment adviser in
a Dublin-based private family office.
BNP Paribas Real Estate
The real estate investment firm has recruited a retail
agency and investment team from Drivers Jonas
Deloitte. Simon Williams joins as head of retail
investment. Patrick Heaps joins as head of retail. Chris
Mulcock joins as senior retail investment director.
Jemima Unterhalter joins as associate director in retail
investment. Rosemary Baker joins as an administrator.
REYL Bank
The Swiss bank has appointed two new partners.
Christian Fringhian is currently responsible for heading
up business development. He has previously held roles
at JP Morgan, Deutsche Bank, and Barclays Capital.
Lorenzo Rocco di Torrepadula is deputy head of wealth
management for Switzerland. He has previously worked
at San Paolo IMI and Credit Suisse First Boston.
JLT Employee Benefits
The employee benefits provider has appointed Kieran
Harkin as senior investment consultant in its investment
consulting business. He joins from KPMG, where he was
an executive investment consultant, investment
advisory. Harkin has also held roles at PwC and HSBC
Actuaries and Consultants.
Apogee Corporation
The digital office solutions firm has appointed Steve
Hibbert as strategy director. He is a former UK group
sales director and chief executive of Danwood USA. In
his new role, he will be responsible for furthering
Apogees growth in Europe.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
in association with
LOCAL government faces a funding
crisis and many authorities could
be forced to make substantial cuts
to core services, according to a
report released today by the
National Audit Office (NAO).
The NAO estimates that local
authorities are planning to reduce
spending by 4.6bn by April 2013
but councils still need to identify
about half of the further savings to
be made before March 2015. The
report suggests that high-cost
services, such as adult and
childrens social care, may need to
be cut to meet targets.
The scope is diminishing for
absorbing cost pressures through
reducing other, lower cost services
Watchdog says local councils
will struggle to balance budget
BY JAMES WATERSON
given that spending on these
services has already been reduced,
the report says.
Margaret Hodge MP, chair of the
public accounts committee, said: I
am alarmed to hear that 12 per
cent are now at risk of being
unable to balance their books in
the future, according to local
auditors, with potentially
disastrous consequences.
As the cuts kick in, the
department needs to make clear
what it will do if multiple
authorities fail financially.
But the CBI business group said
council cuts are part of necessary
deficit reduction: Councils need to
adapt to their new financial reality
and be smarter about forging long-
term partnerships with service
providers.
WEDNESDAY 30 JANUARY 2013
19
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LONDONREPORT
B
RITAINS top share index hit
new four and a half year
peaks yesterday, with a strong
rally in miners outweighing
concerns about continuing
problems in the banking sector.
Data from the US offered fresh
proof of improvement in the worlds
biggest economy, with a strong pick-
up in housing prices following above-
forecast durable goods data the
previous session.
The numbers supported oil and
copper prices, in turn boosting
Britains heavyweight energy and
mining stocks, which together added
some 13 points to the FTSE 100.
The benchmark UK index closed up
44.78 points, or 0.7 per cent, at
6,339.19, posting its best finish since
May 2008 as traders used a mid-ses-
sion dip as an attractive entry point.
With the FTSE 100 already up 7.5
per cent since the start of the year
and in overbought territory on the
seven- and 14-day relative strength
indexes, some analysts are warning
that the case is building for a correc-
tion or at least a consolidation, and
recommending that investors look to
book profits.
But so far, the market has contin-
ued to grind higher, posting gains in
eight of the past nine sessions.
We are looking very strong at the
moment, it seems we are shrugging
off any bad news... The miners are
having a good day, weve some good
data out, particularly from America,
said Jonathan Roy, a broker at
London Stone Securities.
I think we will see a correction at
some point, it will be a surprise that
gets us moving back down towards
6,000. (But) for the moment I would
probably be moving up stop-losses
rather than taking profits.
In a sign of continued investor opti-
mism, implied volatility on the FTSE
100 which tracks the prices
investors are willing to pay for
option protection held close to six-
year lows.
Banks suffered, however. with
Royal Bank of Scotland off six per
cent after the Wall Street Journal
reported that the lender is close to a
500m settlement with US and
British authorities over Libor, return-
ing the interbank rate-fixing scandal
to the front of investors minds.
With UK banks already up some 11
per cent since the start of 2013 the
concerns about problems in the
financial sector gave a cue for some
profit-taking.
Cautious comments from several
investment banks also weighed on
sentiment.
While systemic and regulatory
risks have receded, the operating
environment remains difficult in the
face of a weak economic outlook,
analysts at Espirito Santo said in a
note, downgrading both RBS and
Lloyds to sell. Lloyds ended down
2.28 per cent at 51.93p.
FTSE rally tops
fresh peaks yet
UK banks slip
CITY
YOUR ONE-
STOP SHOP
BROKER VIEWS AND
MARKET REPORTS
FTSE
29Jan 23Jan 24Jan 25Jan 28Jan
6,350
6,325
6,300
6,275
6,250
6,225
6,200
6,339.19
29 Jan
DASHBOARD
US investors
buy defensive
sectors stock
U
S stocks advanced yesterday,
led by defensive sectors, in a
sign the cash piles recently
moving into the market are
being put to use by cautious
investors to pick up more gains.
S&P 500 is on track to post its best
monthly performance since October
2011 and its best January since 1997 as
investors poured $55bn in new cash
into stock mutual funds and
exchange-traded funds in January, the
biggest monthly inflow on record.
The Dow Jones industrial average has
been flirting with 14,000, a level it
hasnt seen since October 2007.
Shares of Amazon jumped nearly
seven per cent in extended trade after
the worlds largest internet retailer
posted fourth-quarter revenue that
jumped 22 per cent to $21.27bn. The
stock closed down 5.7 per cent at
$260.35 in regular trading.
Among rising defensive shares,
which are companies relatively
immune to economic swings, were
drugmaker Pfizer, up 3.2 per cent to
$27.70 after posting earnings; and
AT&T, 1.6 per cent higher at $34.68.
The top performing sectors on the
S&P 500 were healthcare and telecom
services, so-called defensive sectors,
both up more than one per cent.
The energy sector also advanced, on
the back of strong earnings from
Valero Energy and a hedge fund
move to break up Hess Corp to boost
investor returns.
Valero shares jumped 12.8 per cent
to $43.77 and Hess gained nine per
cent to $68.11.
Yet Ford dropped 4.6 per cent to
$13.14 as one of the biggest percent-
age losers on the S&P 500.
The Dow Jones industrial average
was up 72.49 points, or 0.52 per cent,
at 13,954.42. The Standard & Poors
500 Index was up 7.66 points, or 0.51
per cent, at 1,507.84. The Nasdaq
Composite Index was down 0.64
points, or 0.02 per cent, at 3,153.66.
BESTof theBROKERS
HYDER CONSULTING
The engineering consultancys trading update yesterday said that trading had
improved in key Asia Pacific and Middle East areas, but analysts at Panmure Gordon
warned against buying the stock, claiming that although they are fans of the
business, growth is already priced into Hyders Shares after a strong show of late.
Analyst Mike Allen gave a Hold recommendation and a 488p target.
SYNERGY HEALTH
Canaccord Genuity initiated coverage on the healthcare outsourcing company with a
Sell recommendation and an 857p target well below the current share price, as it
said that a period of investment would reduce opportunities for a shareholder
payout. Any disappointment in delivery is likely to result in a de-rating. Ongoing
margin pressure in Europe could also result in downgrades, Canaccord said.
LLOYDS BANKING GROUP
Analysts at Espirito Santo have downgraded the bank, along with RBS, to a Sell
rating, claiming that the operating environment remains difficult in the face of a
weak economic outlook. Espirito Santo has also raised flags over the regulatory
environment, saying standardised credit risks would require raising new money
from equity, and thus dilute the shares. The target price is 48p on Lloyds.
NEW YORK
REPORT
Hyder Consulting PLC
23 Jan 24 Jan 25 Jan 28 Jan 29 Jan
p 475.0
470
465
460
475.00
29Jan
Synergy Health PLC
23 Jan 24 Jan 25 Jan 28 Jan 29 Jan
p 1,120
1,110
1,100
1,080
1,090
1,080.00
29Jan
Lloyds Banking Group PLC
23 Jan 24 Jan 25 Jan 28 Jan 29 Jan
p 54.0
53.5
53.0
52.5
52.0
51.93
29Jan
I
S AMERICA heading for a boom?
Real GDP has risen for 13
successive quarters and now
stands 3 per cent above its peak
level. A net total of 4.8m jobs has
been created over the past three
years, with a fall of 500,000 in the
public sector massively outweighed
by a 5.3m rise in the private.
But welcome and sustained
though this recovery is, it hardly
constitutes a boom. And it certainly
doesnt stack up well against growth
rates seen in the recovery from the
last major financial crisis in the
1930s. The slump then was much
worse, of course, with output falling
in every single year between 1930
and 1933. But the rebound was
spectacular. GDP rose by no less than
H
OW much would it cost the
government to raise spending
on childcare subsidies to the
average level in Scandinavia?
Your guess is probably wrong.
As a proportion of GDP, the UK
government spends more on childcare
subsidies than Finland, Norway and
Iceland, and about as much as Sweden.
The only country ahead of us on this
count is Denmark.
So if high levels of public spending
were the solution, the UK would be a
beacon of family-friendliness. But
according to a report by the Resolution
Foundation in 2012, a family bringing
in 53,924 a year would have to devote
40 per cent of its disposable income,
after housing costs, to put two children
under five in full-time childcare. OECD
figures show British childcare is some
of the most expensive in the world.
The problem is not a lack of demand-
side subsidies, but an excess of supply-
side regulation. This is why education
minister Elizabeth Trusss announce-
ment yesterday that the government
will relax restrictions (including allow-
ing each childminder to look after
cityam.com/forum
Worryingly, only
one in four low income
parents in Britain use
childcare services
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

20
WEDNESDAY 30 JANUARY 2013
KRISTIAN NIEMITZ
Fewer fiddly rules will help make
childcare more affordable for all
more children) is a step in the right
direction albeit a timid one.
Between 1997 and 2010, real-term
government spending on childcare
increased by an average of 12 per cent
every year. Subsidies come in all shapes
and sizes: cash and kind, universal and
means-tested, work-contingent and
age-contingent. The childcare element
of the Working Tax Credit (WTC)
refunds 70 per cent of formal childcare
costs. Under the Early Years pro-
gramme, all three and four year olds
(and, in some places, two year olds) are
entitled to 15 hours of free nursery
schooling a week. Some Sure Start cen-
tres offer childcare services at sub-
sidised rates. There are programmes
which incentivise employers to co-
finance their employees childcare
costs, for example through tax-
deductible childcare vouchers. We
could keep adding more layers to this.
But by now, we should have realised
that Nordic spending levels do not
guarantee Nordic results.
In Scandinavia, parents pay a lot for
childcare as taxpayers, but this largely
covers the cost. Direct-user fees only
have a minor role. This is in contrast
with the UK, where high out-of-pocket
payments among the highest in the
world, according to the OECD come
on top of high tax payments. These
extra costs explain why the flood of
subsidies has failed to ensure afford-
ability. In Sweden, about one in two
low income parents use childcare serv-
ices, while in Denmark the figure is
almost three in four. Worryingly, in the
UK, it is about one in four no higher
than the proportion most of Europe
achieves at a fraction of the cost.
So what has gone wrong? The
increase in public spending has coin-
cided with a transformation of the sec-
tor, guided by the government.
Childcare has moved from being rela-
tively informal to become heavily-regu-
lated and standardised. The day-to-day
operations of both childminders and
nurseries are now largely shaped by
statutory regulation.
Truss is going some way towards rem-
edying this. But she has tried to
assuage her critics by pointing out
that, even after the increase in mini-
mum staff-to-children ratios, these
ratios would still be higher than in
many neighbouring countries. True,
but this still reflects the belief under-
pinning UK childcare policy that the
government should determine every
detail of service provision. A better idea
is for childcare providers to work out
the ratios for themselves. And if they
fail to keep children safe, they should
be liable for the consequences. That
should be the principle for wholesale
reform of the sector.
Truss is also right to shift responsibil-
ity from regulators to childminding
agencies, a move which means a par-
tial substitution of private regulation
for statutory regulation. But it is incon-
sistent to couple this with raising statu-
tory requirements for formal
qualifications effectively a barrier to
entry. Why not let each agency decide
the qualifications they require from
the childminders they sign on, and
then signal this to their potential
clients?
Bringing the cost of childcare under
control would have many desirable
side-effects; not least, it would enable
more low-income parents to enter the
workforce and earn a wage. But to
achieve this, we need to get away from
the current obsession with microman-
agement. David Cameron was right to
point out in his EU speech that not
everything has to be harmonised but
that is no less true within the country.
Kristian Niemitz is poverty research fellow
at the Institute of Economic Affairs.
43 per cent between 1933 and 1937.
The driver of recovery in the 1930s
was the private corporate sector,
contrary to much popular myth
about the New Deal and government
fiscal expansion. Overall, 1933 was
still a recession year for the US. But it
was also the year in which corporate
sentiment changed. Sharp cut-backs
in investment meant that, in 1932,
companies were directly responsible
for a reduction in GDP of 5
percentage points. This changed
dramatically in 1933, with increases
in investment contributing 2 per
cent to GDP. Positive feedbacks
meant that the economy then
surged. Optimism rose, so
investment rose even faster. This lead
to increases in employment, so
consumers both felt better off, and
were so in reality.
The same potential exists for the
US in 2013. One big difference with
the Great Depression of the 1930s is
that, this time round, companies
took much more effective action,
much more quickly, to protect their
balance sheets. In the 1930s,
undistributed profits were negative
for four successive years. Since the
financial crisis of 2008-09, corporate
profits in the US have risen sharply.
Over the five years from 2003 to
2007 inclusive, the annual average
value of undistributed corporate
profits in America was some $480bn
(305bn), or about 3 per cent of GDP.
Over the 2009-2012 period, the
average has been $800bn, and it is
currently running at an annual rate
of $1 trillion.
The myth again persists that it is
the public sector which is
responsible for the American
recovery, in contrast to the UKs
wicked austerity programme. But
over the past three years, US
government current spending has
made a marginally negative
contribution to GDP growth.
Compared to the years before the
crash, US companies are building up
cash balances on a massive scale. The
increase is of the order of 2 per cent
of GDP each year from 2009 onwards,
and in 2012 was over 3 per cent. Once
corporate sentiment turns,
investment will boom, many more
jobs will be created, and consumer
spending will rise even more rapidly
as a result. When companies in
America decide that the bad times
are well and truly over, we could
easily see GDP growth rates of 5 per
cent or more.
Paul Ormerod is an economist at
Volterra Partners, a director of the think-
tank Synthesis and author of Positive
Linking: How Networks Can Revolutionise
the World (Faber & Faber).
AGAINST
THE GRAIN
PAUL ORMEROD
Government didnt rescue the US from Depression it was corporate cash
In association with
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21
WEDNESDAY 30 JANUARY 2013
Spending restraint
[Re: Austerity cant have hurt UK growth
because austerity hasnt yet begun,
yesterday]
Im surprised that commentators continue
to suggest that austerity is a policy, not an
outcome. It is the latter. No sane leader
would wish to impose austerity on his or her
people. But, as in the immediate aftermath
of the second world war, sometimes
macroeconomic reality dictates that there
has to be restraint. Of course, a combination
of spending cuts and tax rises can cause
widespread hardship - increased
unemployment, reduced family purchasing
power, and low or even negative growth.
But, as in the post-war period, the final
outcome will be positive.
PaddyBriggs
Full steam ahead
[Re: HS2 cost-benefit is a worrying mix of
naive projections, yesterday]
Im sure Matthew Sinclair is right on HS2s
cost-benefit. Although the price-tag of
1,000 or so per taxpayer will be spread
over many years, I cant believe the
Department for Transport has got its
projections right for a change. But what is
the alternative? Im sure someone will say
something about freeing the private sector
to invest and build where it pleases, but
thats not going to happen. First, business
confidence is too low. And second, so many
homeowners feel they must protect the
value of their properties against
development. Itll take more than a few rule
changes to change those perceptions.
RichardMartin
T
HIS year could be a watershed
for the Eurozone. There is
now a real chance the region
can overcome the market
volatility and fragmentation
of the past few years, and that
countries like Greece could actively
return to capital markets.
European leaders have laid much of
the groundwork towards restoring
credibility to Eurozone policy. But
improving creditworthiness now
depends on their response to the
Eurozones economic, political, and
social risks. They have a challenging
but achievable agenda, though imple-
mentation risks loom large. These
risks are the main reason that most
of our outlooks on Eurozone sover-
eign credit ratings are still negative.
First, the effectiveness of outright
monetary transactions, announced
by the European Central Bank (ECB)
last September, depends on the will-
ingness of governments to follow
through with measures that will like-
ly be politically and socially con-
tentious. The risk to the credibility of
the ECB could be significant if the
conditions attached to its assistance
are breached due to lack of domestic
political resolve. The key to a lasting
solution lies with national politi-
cians, not with the ECB. Without sus-
tained reform progress, the ECB can
only achieve temporary respites.
Another risk is complacency arising
from improving market conditions.
This could lead to fragile policy agree-
ments unravelling if policymakers
believe that previously-agreed actions
can be shelved or watered down. It is
too early to say that complacency has
taken hold, but the consensus may be
more brittle than many appreciate.
Investor confidence will also only
return if member states continue to
make progress in rebalancing their
economies, by structurally stabilising
public debt and further reducing
Should the government introduce a tax on
sugary drinks to encourage a healthy diet?
YES
More often than not, sugary drinks offer no nutritional benefits
other than empty calories to a nation already suffering high
levels of obesity-related diseases and dental decay. So it would be
good for our health and the environment if we drank less of them.
A 20p per litre sugary drinks duty would both discourage
consumption and raise around 1bn a year for policies like
providing free healthy school meals and sustainably produced
fruit and vegetable snacks in schools. More than 60 organisations
back our call for a fund, financed by this duty, to pay for these
policies. Diet-related illness affects us all: it already costs the NHS
6bn every year. Further, if left unchecked, 70 per cent of the
British public will be overweight by 2020. It is time for the
government to put our health interests above the commercial
interests of the junk food industry.
Charlie Powell is campaigns director at Sustain.
Charlie Powell
NO
Eamonn Butler
The hardest-hit will be poorer families. Groceries are a big
proportion of their budget. Middle-class campaigners, on the
other hand, may not notice the difference. A Singapore study has
shown that low-rate sugar taxes are just stealth taxes: people
dont switch. High-rate taxes do make them switch but only to
other, untaxed, sugary drinks. And a tax on some drinks but not
others is a menace for shopkeepers. It will spawn a huge
bureaucracy to collect it, earmark it, spend it, and monitor it. The
Danes had a fat tax, which was so hated that now, a year later,
theyve scrapped it. Meant to hit chips and crisps, it also hit meat
and gourmet cheeses, causing serious problems for specialist
businesses. We all know tax creep its soda today, but what
tomorrow? Chocolate? Cream? Cakes? Surely we have had enough
of politicians attempting to micro-manage our lives.
Eamonn Butler is director of the Adam Smith Institute.
Political risk could
still derail a better
Eurozone outlook
external deficits. This process has
some way to go and will seriously
challenge political leaders.
The economic and social costs of
rebalancing, however, may be more
easily contained if the burden was
shared more evenly between the
Eurozones core and the peripheral
deficit countries. Safeguards to the
social contract may also be necessary
in countries suffering from high
unemployment, excessive private
leverage, and stagnating or falling liv-
ing standards.
And with the key to successful reso-
lution in the hands of governments,
the electoral calendar remains a vital
factor. Votes in the Netherlands,
Greece, and France last year resulted
in governments that took a construc-
tive view of crisis resolution. We
believe that the most important elec-
tions in 2013 in Italy, Germany and
Austria will also lead to a continua-
tion of the current policy path.
Challenges in the Eurozone remain
formidable. But we expect 2013 to be
a critical year in determining
whether the downward trajectory of
sovereign ratings in the Eurozone,
which began in 2004 with the down-
grades of Greece and Italy, will finally
end. If we see disciplined policy
implementation, progress towards
economic and fiscal rebalancing, and
social cohesion, it would be realistic
to say that Eurozone sovereign credit-
worthiness had bottomed out.
Moritz Kraemer is head of Europe, Middle
East and Africa sovereign ratings at
Standard & Poors Rating Services.
MORITZ KRAEMER
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WEDNESDAY 30 JANUARY 2013
23
cityam.com
TRADING MANAGEMENT WEALTH
A
LTHOUGH the US has shown
signs of rebounding, a scratch
beneath the surface reveals that
there are still issues dragging on
the worlds largest economy.
By historical standards, the pace of its
current recovery is feeble. Research
from Bank of America Merrill Lynch
points out that the average annual
growth rate of this recovery is 2.3 per
cent, compared to 3 per cent after
recessions in 1990-91 and 2001, and 4.5
per cent for the severe recessions of
1957-58, 1973-75 and 1981-82.
SHAKING CONFIDENCE
And there are reasons to be concerned.
It was revealed yesterday that US con-
sumer confidence fell to its lowest level
in more than a year, due to the on-
going fiscal debacle, and compounded
by a 2 per cent hike in payroll taxes this
month.
US politicians seem content to boot
the countrys problems down the road:
the debt ceiling was raised last week,
and automatic spending cuts await in
March, which will weigh on sentiment.
Now a cloud of uncertainty hangs
over the near term, says Peter
Newland of Barclays. It is this uncer-
tainty that has shaken the US con-
sumer. This is a concern, considering
that consumer spending accounts for
70 per cent of US economic output.
Fridays consumer sentiment and
spending data will confirm whether
this reading is an aberration, or the
start of a new trend.
In the meantime, todays fourth-quar-
ter GDP reading is effectively the acid
test. Annualised GDP growth is expect-
ed to have slowed, from 3.1 per cent to
around 1.5 per cent. However, this may
not be dollar negative. Third-quarter
GDP was largely driven by government
spending, so the market will want to
see improvements in private invest-
ment and net trade. If these are posi-
tive, the dollar may be able to shake off
a poor GDP reading.
DICTATED DOLLAR
The dollars recent performance has
been dictated by the fundamentals of
other currencies, as exemplified by its
movements against the yen and euro.
The euros recent upwards run
against the buck is due to improving
Eurozone sentiment, and the
European Central Banks (ECB) shrink-
ing balance sheet (as European banks
begin repaying loans that the ECB
poured into the market to help sta-
bilise the sector). In contrast, the Feds
balance sheet is expanding, passing
the $3 trillion (1.91 trillion) mark last
week.
The size of Feds balance sheet is
closely related to the value of the dollar
(see chart). The Fed uses money created
through easing to buy government
bonds and mortgage securities. This
creates heavy demand for these assets,
pushing down yields; lower interest
rates make the dollar less attractive.
Traders then move money into higher-
yielding currencies, and the dollars
value falls. Further, this policy also has
inflationary implications, which can
drag on the currency.
Although minutes from the Feds pre-
Fed is ahead in
the battle of the
central banks
vious meeting struck a hawkish tone
(some members are concerned about
the impact that aggressive easing is
having on the financial system), a slow-
down of this policy is unlikely. Indeed,
the conclusion of the Feds policy meet-
ing today is unlikely to bring a change
of policy, since it was only six weeks
ago that it expanded its asset purchas-
es, and pledged to keep rates low for
the foreseeable future.
Fridays employment data has more
market-moving potential. The consen-
sus is for a reading around 157,500. A
higher reading would, of course, result
in a dollar rally, due to improving fun-
damentals that could result in a less
dovish Fed in the medium-term.
But even if we get a positive reading,
it would take months of sustained
employment growth to reach a 6.5 per
cent unemployment rate. As a result,
The bucks performance has been chained
to other currencies, says Yogesh Chandarana
the Feds relentless balance sheet
expansion will continue, and will hit
$4 trillion by the end of 2013.
BATTLE OF THE BANKS
Divyang Shah of IFR Markets says this
balance sheet divergence will support
euro-dollar, which has a strong correla-
tion with the relative balance sheets of
the Fed and ECB.
However, some believe that the euros
recent run against the dollar will run
into a wall. John Higgins of Capital
Economics argues that, if the Eurozone
crisis flares up which he expects will
happen in the second half of 2013
demand for safe haven assets, like the
dollar, will be back in vogue.
Against the yen, the greenbacks
meteoric rise is due to Japans ultra-
dovish stance in trying to engineer
growth through inflation. Japan has
now adopted a higher inflation target
and is committed to further easing. If
the rhetoric of Japanese officials is any-
thing to go by, we can expect more yen
weakness against the greenback.
However, Japans easing efforts will
be in competition with those of the
Fed. If Japan is unsuccessful in generat-
ing inflation, then markets may lose
faith in its policy. Ironically, it is likely
that this failure would drive the yens
value higher against the dollar.
Even with Japans dovish advances,
the pace that the Fed has grown its bal-
ance sheet means that it is ahead in
the battle of the central banks. The
ECB, it seems, is losing. But in the long
term, ultra-loose policies are likely to
make losers out of all central banks.
What goes up, must come down. And
balance sheets need to be unwound at
some point.
itself around after a few quarters
of slowing growth.
On top of this, we are in the
middle of the current US
corporate earnings season. This
has seen the large majority of
firms beat Wall Street forecasts
(albeit from a pretty low base).
There has also been talk of a
great rotation out of bonds into
stocks, and this hype is likely to be
another reason behind the rally
thus far.
All this flies in the face of a UK
economy that we now know
contracted in the final quarter of
2012, and is heading towards
recording a triple-dip recession.
Investors have completely brushed
this under the carpet, and seem
happy to buy UK stocks despite
the economic woes we are
enduring. Ultimately, the
companies that make up the FTSE
100, and even a large chunk of the
T
HE FTSE 100 index has gained
nearly 7 per cent since 2013
got underway, almost a
month ago to the day. This is
one of the most impressive starts
to a year on record. Only two
previous Januaries since the FTSE
100 was formed have beaten the
current month (as of the time of
writing).
So why the sudden bout of
bullishness? And can it continue?
This strength certainly comes as a
major surprise, and has caught
even the most bullish of analysts
off guard. Many have been forced
to frantically readjust upwards
their six month and year-end
targets for the index.
And to say that investors have
gorged themselves on equities
would be an apt description, as
the rally to date was ignited by the
New Year US fiscal cliff
negotiations, which finally
resulted in an eleventh hour deal.
But, since then, initial strength
has continued unabated, with
even the odd sell-off being very
short-lived.
But other contributing factors
have led to this remarkable rally
in stocks. First, theres been a
marked change in sentiment
towards the larger elephants in
the room such as the Eurozone
debt crisis and the prospect of a
hard landing for the Chinese
economy. This renewed
confidence in equities has partly
been triggered by comments from
the European Central Bank
president Mario Draghi, who has
been very vocal in saying that he
believes the worst of the Eurozone
storms are past us now. Further,
the Chinese economy is turning
FTSE 250, are international stocks
anyway. So for those investors who
believe that the global economic
picture isnt as bad as it was a year
ago, those multinational
companies quoted in London are
likely to attract buyers.
However, as with anything in
the financial markets, nothing
goes up in a straight line forever.
One thing that should be pointed
out is that the overall volume of
trading has been rather low by
historical standards, and so the
conviction and sustainability of
this rally could be called into
question. We also have to
remember that there are
considerable political as well as
economic risks that lie ahead this
year, with general elections in
Italy and Germany. Whether the
FTSE 100 index rises or falls over
the coming months, theres likely
to be some bumps along the way.
Why the FTSE has rallied strongly in January
Angus Campbell is head of
market analysis at Capital
Spreads. You can follow him on
Twitter @AngusCapSpreads
While Capital Spreads attempts to
ensure that the information herein is
accurate at the date the information was
produced, however, Capital Spreads does
not guarantee the accuracy, timeliness,
completeness, performance or fitness for
a particular purpose of any of the
information provided herein and under
no circumstances are they to be
considered an offer, solicitation to invest
or be construed as giving investment
advice.
CAPITAL
COMMENT
ANGUS CAMPBELL
In association with
ANALYSTS FORECASTS
Fourth-quarter
annualised US GDP
Non-Farm Payrolls
(No. of payrolls to be added)
Where will Euro-dollar
finish at the end of Q2 2013?
Barclays 1.5% 150,000 $1.26
UBS 0.7% 175,000 $1.30
Morgan Stanley 0.6% 160,000 $1.36
Bank of America 1% 130,000 $1.25
Merrill Lynch
Capital 1% 130,000 $1.25
Economics
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Euro-dollar
Jan13 Nov 12 Sep12 Jul 12 May 12 Mar 12
1.28
1.30
1.32
1.26
1.24
1.22
1.34
1.36 $ Weakerdollar
Strongerdollar
Euro-dollar vs relative size of central bank balance sheets
Nov 12 Sep12 Jul 12 May 12 Mar 12
1.1
1.2
1.3
1.0
0.9 1.1
1.2
1.3
1.4
1.5
1.6
1.4
1.5 $
Fedbalancesheet
relativetoECB(LHS)
EUR/USD
(RHS)
W
ITH THE price of fuel about
to go up again, its no
surprise so many of us
now consider fuel
economy one of the most important
considerations when buying a new
car. Its the latest front to open up
in the battle to attract car buyers
and Mazda has made a massive
effort to ensure its latest Mazda 6
saloon is as economical and
efficient as possible.
Mazda wants to become the go-to
manufacturer for economical,
clean cars but without losing the
element of fun thats vital to its
brand image. This is why Mazdas
UK boss, Jeremy Thompson, says the
new Mazda 6 saloon is the most
important car the firm has ever
made. Mazdas ambition is for its
latest four-door family saloon to
shake up the European market. It
wants to attract drivers who would
otherwise have opted for a Ford
Mondeo or Volkswagen Passat or
perhaps even a BMW 3 Series or
Audi A4.
Most family saloons are not
known for their visual excitement
but the new 6 looks good. At last
weeks launch, in a very cold
Scotland and on frequently icy
roads, the car I was driving attract-
ed a good deal of attention. Its
styling is dramatic, if a little fussy.
The front of the car has a wild,
feline face and looks muscular. Its
not exactly elegant but its enough
to stand out from the competition.
The cabin, though, is a little bit
dull. Its comfortable enough but
not very plush it just feels a little
ordinary. Our top-spec Sport Nav
model also had a wine-coloured
dash trim matching the sporty seat
piping. I preferred the mid-spec SE-
L trim. The steering wheel, though,
is a strong point. Wrapped in
leather its small and sporty and
looks great. In terms of functionali-
ty, everything is well laid out and
intuitive and the interior feels like
it has been built to last. Its spacious
too, particularly in the rear.
Mazda is offering a choice of
143bhp and 163bhp 2.0-litre petrol
engines and 148bhp or 173bhp 2.2-
litre diesel engines, with new six-
speed manual or automatic
transmissions. We drove all but the
lower-powered petrol version in a
number of different guises. Each has
a good balance of economy and per-
formance thanks to a series of incre-
mental performance efficiency
tweaks. One new feature is an i-
Eloop system, which is unusual
because it powers systems like light-
ing, audio and aircon using brake
energy regeneration, bypassing the
battery. The result is significant fuel
savings and reduced CO2 emissions.
Make no mistake about it, CO2 emis-
sion figures of 119g/km and com-
bined fuel consumption of 62.8mpg
is excellent for a car this big.
The 2.2-litre diesel model I drove in
Sport trim feels agile and the steer-
ing and handling were solid. My
only real complaint would be that,
on 19-inch wheels, the car suffered
from quite a lot of road noise. The
lower-spec model with 17-inch
wheels could well be a better and
more comfortable option for many
drivers.
All in all, the new Mazda 6 is a
good choice for anyone who wants
an economical family saloon for a
daily commute; someone who does
a lot of miles and wants to enjoy
them as much as possible. It suc-
ceeds in striking a balance between
performance and efficiency, appeal-
ing to the heart as well as the head.
The new Mazda 6 stands out in a crowded field with its unusual curves
The sporty but sensible Mazda 6
This muscular saloon appeals to both your head and your heart and its also an economical wonder
24
WEDNESDAY 30 JANUARY 2013
LIFE&STYLE
cityam.com
MOTORING
CAR TALK
BY RYAN BORROFF
Aston Martin ushers in an even faster supercar
Aston Martin has introduced a faster, more agile four-door Rapide
supercar. The Rapide S luxury GT has a more powerful, though more
efficient, 6.0-litre V12 engine. Power is up by a massive 80bhp to
550bhp shaving 0.3 seconds off its 0-62 mph time; down to just 4.9
seconds. The new model also has a striking front grille and more
pronounced boot lid flip.
BY RYAN BORROFF
Kia zooms into the hot hatch space
Kia is launching its first hot hatch at the Geneva motor show in March.
The three-door Proceed GT and five-door Ceed GT hatchbacks will be
powered by a new turbocharged 1.6-litre GDI petrol engine. The 201bhp
unit allows the cars to accelerate from 0 to 62mph in 7.9 seconds. Each
has distinctive LED running lights, dual-exhaust pipes, 18-inch alloy
wheels and red brake calipers.
Mini unveils (yet another) London model
Mini has been doing very well selling special London editions of its cars.
Its latest limited edition Clubman Bond Street goes on sale in March.
Finished in black metallic and champagne paint, the car gets special 17-
inch wheels and an interior in champagne and black. Its available with
the usual four engine choices 122hp Cooper, 184hp Cooper S, 112hp
Cooper D and 143hp Cooper SD.
THE VERDICT:
DESIGN hhhhi
PERFORMANCE hhhhi
PRACTICALITY hhhhi
VALUE FOR MONEY hhhhi
THE FACTS:
THE MAZDA 6
PRICE: 26,095
0-62MPH: 7.9 secs
TOP SPEED: 139mph
CO2 G/KM: 119g/km
MPG COMBINED: 62.8mpg
25
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Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
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COFFEE BREAK
Using only the letters in the Wordwheel, you have
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none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
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numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6 7 8
9 10
11 12
13
14 15 16 17
18
19 20
21 22
34 11
17 14
9 37
6 12
45
4 17 16
45
16 15
39 8
10 33
10 15
23
11
5
9
19
24
10
14
18
45 8
22
22
45
35
7
9
7
24
6
17
13
20
ACROSS
1 Catapult (5)
3 Violent type of weather
condition (5)
6 Killer whale (4)
8 US term for a water tap (6)
9 Mr Garfunkel, singer-
songwriter (3)
11 Unkind or cruel (5)
12 US tennis player Chris,
who won Wimbledon in
1974, 1976 and 1981 (5)
13 Forename of golfer,
Mr Woosnam (3)
14 Colour of the rainbow (5)
15 Bothered (3,2)
18 Sin (3)
19 Accomplish (6)
20 Stun (4)
21 Branchlet (5)
22 Compound leaf
of a fern (5)
DOWN
1 Move with
a splashing
sound (5)
2 Approaches (5)
3 Collect
discarded
material (8)
4 Musical
group (9)
5 Anthem (5)
7 Woodworker
(9)
10 Using ones
mind (8)
14 Pasture (5)
16 Arrange (5)
17 Thick woollen
fabric (5)
T
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
WEDNESDAY 30 JANUARY 2013
AFRICA
BBC1, 9PM
David Attenborough explores the
wildlife eking out an existence in and
around the scorching wilderness of the
Sahara Desert.
MIDSOMER MURDERS
ITV, 8PM
When a dairy worker is crushed to
death by a giant round of cheese,
Barnaby and Jones are soon on the
case. Last in the series.
DEREK
CHANNEL4, 10PM
New series. Comedy drama, written by
and starring Ricky Gervais, following
the life of a retirement-home worker
and his colleagues.
TVPICK
QUEENS Park Rangers manager
Harry Redknapp last night con-
firmed he is eyeing a fifth spell with
former England striker Peter Crouch,
after holding Premier League cham-
pions Manchester City to a draw.
Redknapp wants to sign Crouch,
31, from Stoke and Russia-based for-
mer Blackburn defender Christopher
Samba before tomorrows transfer
deadline in a bid to bolster his squad
for the relegation run-in.
A deal for Crouch would resume
one of English footballs longest-
standing double acts, the centre-for-
ward having played under Redknapp
at Southampton, Tottenham and in
two spells at Portsmouth.
I dont know if they want to sell
him or not, Redknapp said. Well
have to wait and see. If they decide to
sell him we would be interested
because I like Peter, I have managed
him several times.
Congolese centre-back Samba,
who has complained of racism in
Russia since joining Anzhi
Makhachkala, is also a key target,
with last night ending defender
Ryan Nelsens spell at Rangers.
Crouch and
Samba on
Redknapps
shopping list
Were struggling a bit, said
Redknapp, who named two goalkeep-
ers among his substitutes. The chair-
man asked me if Id be interested if he
could get me Samba and I said of
course, he is a fantastic competitor.
Redknapp called the draw a bonus
point, although they remain three
adrift at the bottom of the table,
while City boss Roberto Mancini
labelled the result incredible.
We did everything to win this
game but we didnt score, said
Mancini, who praised QPR goalkeeper
Julio Cesar. Julio saved everything
and we made some mistakes on
another day maybe we could have
scored four goals.
Cesar denied Gareth Barry with a
superb fingertip save just before half-
time, and kept out David Silva from
close range late on, as City missed the
chance to cut the gap on leaders
Manchester United to two points.
Visiting stopper Joe Hart was equal-
ly alert to rush off his line, spread
himself and block Adel Taarabts first-
half shot after a surging run from the
Moroccan midfielder.
City dominated but needed Joe Hart on form to stop QPR pinching all three points
NEWCASTLE midfielder Yohan
Cabaye scored a wondergoal in a 2-1
victory at fellow strugglers Aston
Villa last night to complete a
nightmare eight days for Paul
Lamberts beleaguered side.
Striker Papiss Cisse also netted as
the Magpies, who handed debuts to
three new signings, won for the first
time in seven fixtures and climbed
to 15th in the Premier League.
Villas Christian Benteke pulled
one back from the penalty spot but
could not prevent them following
exits from both cup competitions
with a defeat that plunged them
into the relegation zone.
Newcastle boss Alan Pardew gave
starts to Moussa Sissoko and Yoan
Gouffran, who joined from Toulouse
and Bordeaux respectively last
week, and the former
released Cisse for the
opener on 19 minutes.
Cabaye volleyed an
out-swinging second
from 25 yards just after
the half hour, and
Bentekes spot-kick,
following a foul by
Mathieu Debuchy
on Gabriel
Agbonlahor, failed to
spark a comeback
from Villa, who have
now lost seven of their
last 11 matches.
Villas loss was
Wigans gain, as the Latics climbed
out of the bottom three by salvaging
a 2-2 draw at Stoke.
Defender Ryan Shawcrosss volley
and a poachers effort from Peter
Crouch put Stoke in control, but
Wigan midfielder James
McArthur finished with the
outside of his boot to reduce
the deficit and then set up
forward Franco di Santo to
sweep home an equaliser.
A heroic late block from
Sunderlands Titus
Bramble denied Danny
Graham and Swansea a winner in a
0-0 draw at the Stadium of Light.
WEDNESDAY 30 JANUARY 2013
26
SPORT
cityam.com/sport
BY SPORTS DESK STAFF
Villa plunge into relegation zone
QUEENS PARK RANGERS...........0
MANCHESTER CITY ....................0
BY FRANK DALLERES
PREMIER LEAGUE
@cityam_sport
IN BRIEF
Al Fayed makes Fulham debt-free
n FOOTBALL: Fulham owner Mohamed
Al Fayed has cleared the clubs debt by
converting 212m of loans into equity.
The Premier League club yesterday
announced an operating profit of 1.2m
and revenue of 79.3m for last season,
up from 77.1m in 2010-11, but did not
reveal full financial results.
Footballers in doping inquiry
n GENERAL: The Spanish doctor
accused of running a major doping
operation has admitted treating
footballers and tennis stars as well as
cyclists. Eufemiano Fuentes, who
denies wrongdoing, told a Madrid court
his clients were sportspeople of all
kinds, including boxers and athletes.
Results
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AC MILAN are today expected to
bring down the curtain on one
of the most controversial careers
in Premier League history by
completing the 20m signing of
Italy forward Mario Balotelli
from Manchester City.
Balotelli is due to undergo a
medical and sign a four-and-a-
half-year contract with the
bitter rivals of Inter Milan, the
club at which he first emerged
as one of European footballs
brightest stars.
Milan were so confident of
concluding the deal last night
that they had already begun
selling Balotelli shirts on the
website of their club shop.
Umberto Gandini, director of
the Italian side, wrote on
Twitter yesterday: Transfer
agreement for Balotelli signed
with Manchester City. Medicals
tomorrow in Milan, then
personal terms until 2017
signing.
City stand to recoup most of
the 24m they spent on Balotelli
in August 2010, the day after his
20th birthday, despite his
turbulent spell in England.
The 22-year-old scored 26
goals in 71 appearances, helping
City win the FA Cup in 2011 and
the Premier League 12 months
later. But his performances were
overshadowed by controversy,
the latest and perhaps decisive
episode being last months
training-ground scuffle with
manager Roberto Mancini.
Milan agree
20m swoop
for Balotelli
BY FRANK DALLERES
Balotelli scored 26 in 71 for City
Cabayes 25-yard volley helped to end
Newcastles six-match winless run
Wigan 24 5 5 14 27 45 20
Aston Villa 24 4 8 12 20 46 20
Reading 23 4 7 12 28 43 19
QPR 24 2 10 12 18 37 16
BOTTOM FOUR
TEAM PLD W D L F A PTS
27
B
RITISH and Irish Lions great Sir
Ian McGeechan insists Brian
ODriscoll is still a leading
candidate to skipper the tour of
Australia, despite losing the Ireland
captaincy to Jamie Heaslip.
The most decorated Lions head
coach in history believes ODriscoll
remains in a four-way tussle for the
honour with Heaslip, Englands
Chris Robshaw and Welshman Sam
Warburton.
Erstwhile Wales coach Warren
Gatland will be scouring the Six
Nations from Saturday in order to
finalise his squad, and McGeechan
thinks the incredible 34-year-old
could still be a very important part
of the Lions team.
Warren Gatland has that rapport
with Sam Warburton and needs him
to be playing well, McGeechan, who
coached the Lions on their last
successful tour in 1997, told City A.M.
But youve got a change of
captain in Ireland which will be
interesting to see. I do like Jamie as a
player and if he comes through then
youve got him in the mix. Chris
Robshaw has done a fantastic job.
Those are the things that Warren
has to take into consideration.
At the moment I wouldnt put
ODriscoll out of it. Hes got great
Lions experience and is great on
tour. There are four players who
could be in the mix.
Which fly-halves will jet off
with the Lions in less than
four months time is
another of Gatlands
conundrums, and
McGeechan believes
Gloucester No10 Freddie
Burns, who shone for
England in the autumn,
may sneak in, but
warns he must flesh out talent with
performances.
The strongest No10 is probably
Jonathan Sexton, but one who has
come forward, and has a fantastic
attitude, is Owen Farrell, he added.
Hes very different, but has an
ability to keep the team in the right
place when under pressure. Then
you have someone like Freddie
Burns. If they keep emerging, they
could be the three they take. You just
want to see a bit more to make sure
theyve got that consistency.
McGeechan, who struck gold by
pairing ODriscoll with Jamie
Roberts of Wales in 2009, stresses
that combinations are an often
underestimated but paramount
selection consideration.
Roberts and ODriscoll ultimately
produced arguably the best centre
partnership in world rugby in 2009,
he said. In the third Test Riki Flutey
and Tommy Bowe produced another
completely different centre
combination but they
couldnt have been more
effective. They brought
the best out of each other.
That to me is the essence
of the Lions.
Sir Ian McGeechan is
the ambassador for
FirstCape wine which
has launched
ww.lionswineclub.com
in association with The
British & Irish Lions.
For more information
about FirstCape wine
visit www.firstcape.com
Beckham trains with Arsenal but boss
Arsene Wenger insists former England star
wont be signing for the Gunners
cityam.com
WEDNESDAY 30 JANUARY 2013
ENGLAND backs coach Andy Farrell
has hit back at former Scotland
boss Jim Telfers claim that Red
Rose players are arrogant,
pretentious and condescending.
Telfer singled out Chris Ashton,
Danny Care, Ben Youngs and Manu
Tuilagi in his blast, ahead of
Saturdays RBS Six Nations opener
between the teams.
I definitely dont recognise
anything he has said, Farrell said.
Hes Scottish, isnt he? Very
passionate about his country and
he wants to give his lads as much
belief as he can.
Gloucesters Billy Twelvetrees is
being tipped for a debut at centre
after Jonathan Joseph of London
Irish was among nine trimmed
from Englands squad last night.
Northamptons Ben Foden was
also released, leaving Saracens
Alex Goode and Mike Brown of
Harlequins to vie for the full-back
spot. Head coach Stuart Lancaster is
due to name his team tomorrow.
Farrell shrugs
off arrogant
England claim
BY FRANK DALLERES
ODriscoll (centre) played under McGeechan (below right) on the last Lions tour in 2009
Dont write off incredible ODriscoll
for Lions captaincy, says McGeechan
CITY A.M.S RACING EDITOR BILL ESDAILE WITH ALL THE LASTEST RACING INFORMATION
FOR THE
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FESTIVAL.
In association with
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TO DIGEST THE SIX NATIONS 2013
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Exclusive: Sir Ian on
Gatlands dilemmas,
by Frank Dalleres
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