cityam 2011-01-27book

8/7/2019 Cityam 2011-01-27book

1/32

Join us at our next information session on 1 February 2011. For moredetails call 020 7040 5258 or email [email protected]

Cass MastersIm not waiting for the upturn,

Im making it happen.

www.cass.city.ac.uk/skillup


FTSE 100 5,969.21 +51.50 DOW 11,985.44 +8.25 NASDAQ 2,739.50 +20.25 /$ 1.59 -0.01 / 1.16 -0.01 /$ 1.37unc Certified Distribution29/11/10 till 02/01/11 is 98,444

Banks hit

out at callsfor breakup

BRITAINS biggest banks warnedagainst any radical change to theirstructure yesterday, after theIndependent Commission onBanking (ICB) published responses toits research on how best to boost com-petition in the banking sector.

Several City stalwarts includingBarclays and the Royal Bank ofScotland (RBS) claimed that banking

would not be made safer by hiving offtheir investment banking arms in aneffort to protect retail deposits.

State-supported RBS also said thatby sharing funding sources and backoffices with NatWest, the group man-ages to save between 3.5bn and4.8bn each year.

The commission has heard from150 experts and interested parties onhow the industry should be reformedto avoid another state-funded bailoutand boost competition.

Most respondents said the newBasel III rules did not go far enough toregulate financial powers.

But the banker who orchestratedRBSs 20bn expansion in 2000, for-mer chief executive and chairmanGeorge Mathewson, called for the UKgovernment to force RBS and Lloydsto dismantle their current structurein the interests of competition.

ICB head Sir John Vickers has notexplicitly recommended a full break-

up of the banks but has said he wouldconsider forcing greater segregationbetween retail and investment bank-ing arms. MORE: PAGE 2

BY MARION DAKERS

BANKING

Business secretary Vince Cable will outline reforms to the UKs employment tribunals today

THE GOVERNMENT will today unveilsweeping reforms to employment tri-

bunals, in a bid to clamp down on spuri-ous claims and rebalance the system infavour of businesses.

Vince Cable, the business secretary, isexpected to announce that firms will beable to sack workers during the firsttwo years of employment without

being taken to a tribunal for unfair dis-missal.

Currently, employees are able to bring an unfair dismissal claim afterjust one year in the job.

The government will also launch aconsultation on charging employeesfees for tribunal cases, in a bid to deterthem from making claims that areunlikely to succeed.

Currently, workers can take theiremployer to tribunal without incurringany costs, meaning they have nothingto lose by bringing an unfair dismissalclaim even if their case is unsuccess-ful. And all claims will be lodged withconciliation service Acas, which couldhelp prevent a large number of claimsfrom actually reaching tribunal andreduce costs for businesses.

A raft of smaller changes will also beintroduced, in a bid to simplify the

process and make it less costly for firms.Employers and witnesses will be ableto submit written evidence to tribunalsrather than attending in person, mean-

FIRMS WELCOMETRIBUNAL REFORMBY DAVID CROWPOLITICS

www.cityam.comIssue 1,309 Thursday 27 January 2011 FREE

FOCUS ONDAVOS

MEDVEDEV TRIES

TO LURE FIRMS TO

RUSSIA P10-P11

BUSINESS WITH PERSONALITY

ing fewer business hours are lost, whileclaims will be heard by a single judgeinstead of two.

Prime Minister David Cameron ishoping the reforms will encourage pri-

vate sector firms to employ thousandsmore staff, helping to soften the blowof public sector job cuts.

A Whitehall source said: We want togive businesses, especially smaller busi-nesses that are critical to the recovery,the conditions and confidence to grow

by reducing regulation and ensuring abalance of rights between the employerand the employee.

Employers have long said the tribunalsystem is skewed in favour of workers.Claims rose to 236,000 last year arecord figure and a rise of 56 per cent on2009 and firms have to spend 4,000

on average to defend themselves. Mostfirms decide to settle cases, even if theybelieve the claim has little or no merit,because the cost of fighting or losing

the claim is much greater.Cameron is hoping the reforms will

counter suggestions the government isthwarting economic growth by pursu-ing policies that are costly for firms,such as the abolition of the defaultretirement age and new paternityrights. The government will unveil the

plans alongside a new employers char-ter, which will outline the rights offirms over their workers.

ALLISTER HEATH: P2

KEYS RESIGNS FROM SKYAFTER BUNGLED APOLOGY

DARK FORCES TO BLAME P31

8/7/2019 Cityam 2011-01-27book

2/32

News2 CITYA.M. 27 JANUARY 2011

Coalition right to help job-creators

VINCE Cable is back and seems deter-mined to shake off his reputation asthe anti-business secretary. He wantsto encourage firms to take on more

workers by making it easier for themto sack underperforming staff. Thenumber of cases reaching employ-ment tribunals will be cut by automat-ically lodging all cases with Acas, thearbitration service. Tribunals maycease to be free: the introduction offees, Cable believes, would discouragefrivolous cases. Employers will nolonger have to turn up in person at tri-

bunals, and employees wont be able

to sue for unfair dismissal untiltheyve been in a job for two years (upfrom one). Not a revolution but thechanges will be welcomed in board-rooms across the land. Tribunal

claims hit a record 236,000 last year, arise of 56 per cent on 2009, with firmshaving to spend almost 4,000 on aver-age defending themselves, even whenthey were in the right.

Many workers, of course, wont likeany of this, believing the reforms willallow bosses to exploit them. That

would be an understandable yet short-sighted reaction. Hundreds of thou-sands of firms now live in such fearthat they will end up being taken tothe cleaners and forced into expen-sive settlements regardless of the mer-its of any case that they increasinglythink twice before hiring anybody.Such a situation breeds distrust. Itdoesnt help anybody.

More relaxed employers will meanmore job offers especially full-time,proper staff positions safe in theknowledge that the costs of getting it

wrong wont be crippling. This willmean greater opportunities for every-

body, especially the young. There isplenty of academic evidence from allover the world that well-intentioned

rules that make it too hard for employ-ers to fire under-performing staffalways backfire, reducing employ-ment levels over time. In a modernsociety, an employees best protectionis the availability of as many alterna-tive job options as possible.

It is good news that the coalition isnow turning to supply-side reforms to

boost growth. In that spirit, Cableought to take another look at thespeech made earlier this week by theCBIs Sir Richard Lambert. Crucially,Lambert argues, governments shouldnot attempt to pick winners. Its policyto favour some sectors wont workeither. The National Endowment forScience, Technology and the Artsfound that high-growth firms arealmost equally present in the high-tech and low-tech sectors. Just sixper cent of UK businesses with the

highest growth rates generated halfthe new jobs created by existing busi-nesses between 2002 and 2008.Experian found that looking at sectorsis one of the least useful predictors of

whether a company will turn out to bea winner. It too emphasises that fewerthan one in ten small firms generate ahugely disproportionate share of thenew jobs.

Job-creating firms are not generallyfresh start-ups. They tend to have beenaround a few years but companiesthat are much more than 20 years oldare not likely to start taking on lots ofnew people. They will be highly inno-

vative and run by driven managersand entrepreneurs but as Lambertpoints out, job creators are just as like-ly to be world-class innovators in the

brick making industry as in high techbiosciences. It is these firms that thecoalition must seek to liberate fromthe dead hand of bureaucracy. Todaysstep is welcome; more is now needed.

[email protected] me on twitter: @allisterheath

THE OFFICE of Fair Trading has decid-ed not to report Londons investment

banking industry for anti-competitivepractices, according to reports lastnight.

The OFT has spent six months look-ing at whether equity underwritingpractices stifle competition, but doesnot have enough evidence to make aformal referral to the CompetitionCommission.

The watchdog said in June thatthere is some dissatisfaction amongcorporate users of the market overthe fees charged by the biggest invest-ment banks for underwriting rightsissues.

The banks could still face measuresshort of a full-scale competitionprobe, according to Sky News.

The biggest equity underwriters inLondon include Goldman Sachs, JPMorgan and Barclays Capital.

The OFTs findings are due to bereleased at 7am today.

BYMARION DAKERS

BANKING

OFT wont report banksGoldman Sachs, led by Lloyd Blankfein, was among those scrutinised by the OFT

NEWS | IN BRIEF

US gets rid of Citigroup stakeThe US government is set to dispose ofits remaining stake in Citigroup for a$312.2m (196m) profit, the TreasuryDepartment said last night. The sale of465.1m warrants to purchase commonshares in Citi were acquired as part ofthe Troubled Asset Relief Programme, or

TARP. American taxpayers are expectedto end up $12.3bn in profit on the gov-ernments investment in Citi. DeutscheBank Securities is the sole bookrunneron the deal.

CSC approves Trafford dealShareholders in Capital ShoppingCentres yesterday gave the green lightto the firms 1.6bn purchase of theTrafford Centre, bringing to a closemonths of tussling with predatoryinvestor Simon Property. Simon said in astatement yesterday that it wouldclosely track the progress of the CSCboard, after giving up on its 3bntakeover bid earlier this month. TheTrafford takeover will give previousowner Peel Holdings a one-quarter stakein CSC, though it amended its termsafter Simon criticised the deal inNovember.

EDITORS LETTER

ALLISTER HEATH

7th Floor, Centurion House,24 Monument Street, London, EC3R 8AJTel: 020 7015 1200 Fax: 020 7283 5334Email: [email protected] www.cityam.com

EditorialEditor Allister HeathDeputy Editor David HellierNews Editor David CrowNight Editor Katie HopeBusiness Features Editor Marc SidwellLifestyle Editor Zoe StrimpelSports Editor Frank DalleresArt Director Craig GaymerPictures Alex Ridley

CommercialSales Director Jeremy SlatteryCommercial Director Harry Owen

Head of Distribution Nick Owen

Editorial StatementThis newspaper adheres to the system of

self-regulation overseen by the Press ComplaintsCommission. The PCC takes complaints about theeditorial content of publications under the EditorsCode of Practice, a copy of which can be found atwww.pcc.org.uk

Printed by Newsfax International,Beam Reach 5 Business Park,Marsh Way, Rainham, Essex, RM13 8RS

Distribution helplineIf you have any comments about the distributionof City A.M. Please ring 0207 015 1230, or [email protected]

SUBMISSIONS TO VICKERS

BARCLAYSSaid a forced split would harm the stabilityof the system. There is little empirical evi-dence to suggest that material structuralchange would enhance financial stability,it said, warning that the UK economywould also suffer if the financial sector iscurtailed.

RBSRBS sought to quantify the benefits of theuniversal model, estimating that sharingback-office functions and funding sourcesacross the group saved it 3.5bn-4.8bneach year.

HSBCThe bank said it does not believe that pro-

prietary trading is a necessary part of acustomerfocused universal bank.Said that its own investment banking activ-ities are driven by what its clients need,such as legitimate hedging of risks, andsays it would never seek to merely tradeoff its own book.

BRITISH BANKERS ASSOCIATIONArgues that splitting up the country'sbanks would harm Britain's role as a lead-ing global financial centre and prove to betoo costly to undertake.

NATIONWIDESaid it would be better to ringfence banks'retail deposits from their investment bank-ing activities, forming separate subsidiariesfor these different units, rather than a fullsplit.

CITIGROUPCitigroup cautioned the commission not tocontribute to the UK falling too far out ofstep with the rest of the world in its finan-cial reforms, urging it to instead help refo-cus the public debate on banking onto theUKS long-term competitiveness.

LLOYDS BANKING GROUPSubmitted a 100-page response to thecommission warning that inadequate regu-

lation rather than the growing size ofbanks was responsible for the crisis. Thebank supports the principle of living willsbut disagrees with a bail-in or separatingmore risky operations.

SIR GEORGE MATHEWSONThe man behind RBSs 20bn merger withNatWest called on regulators to split thebanks and hive off RBSs insurance busi-ness to make the bank more stable. He alsosaid Lloyds should be forced to untangleitself from HBOS in the name of increasingcompetition in the sector.

TALKTALK CUTS WORKFORCE BY 13PER CENTBroadband provider TalkTalk is cut-ting its workforce by almost 13 percent as part of efforts to improve prof-itability. Dido Harding, chief execu-tive, announced yesterday that thecompany was cutting 580 jobs fromits 4,500-strong UK workforce. Thestaff cuts, which are likely to beachieved through compulsory redun-dancies by 30 April, is the first mani-festation of Hardings cost-cuttingdrive.

STANLEY HO GOES PUBLIC TO SOOTHEFEUD TALKMacao gambling tycoon Stanley Hohas made a rare television appear-ance in a bid to defuse speculationabout a family feud over his businessempire. Ho, who is 89 and in poor

health, said he did not intend toreverse the transfer of a controlling

stake in his company to his third wifeand five of his children.

TNK-BP INVESTORS REASSURED ONROSNEFTIgor Sechin, Russias powerful energytsar, has moved to quell a backlash byBPs Russian billionaire partners in

TNK-BP over the UK oil groups pro-posed alliance with state oil companyRosneft, saying it is not a blow to theexisting venture. Sechin, who alsochairs Rosneft and serves as Russiasdeputy prime minister, struck a con-ciliatory tone and described the issueas a misunderstanding.

BOSCH SET TO EXPAND WORKFORCEBosch, Germanys largest privatelyheld industrial group by sales, saidthat it would add 16,500 jobs this

year, highlighting how the countrysdynamic industrial recovery is start-ing to filter down to the job market.Franz Fehrenbach, chief executive,

said the firm would increase the sizeof its global workforce by six per cent.

EQUITABLE PAYOUT WILL LEAVE100,000 EMPTY-HANDED

Almost a million Equitable Life poli-cyholders will receive compensation

worth less than a quarter of their loss-es after the Treasury published newdetails on its payout scheme. As itreleased the findings of a commis-sion set up to allocate compensation

worth a total of 1.5bn, the Treasuryalso said yesterday that 100,000 poli-cyholders would receive nothing.

WESTERN JOBS CRISIS NEEDS HI-TECHSOLUTION

Western industrial jobs outsourced to Asia will not return, one of Indiasmost prominent businessmen hassaid. The Indian steel magnateNaveen Jindal argued that the UnitedStates and Europe must retrain its

workforce rapidly to take on high-

tech jobs if it is to deal with the spec-tre of unemployment.

SHELL CLAIMS NIGERIA SPILL PAYOUTS WOULD ENCOURAGE TERRORISMRoyal Dutch Shell has been forced todefend its record on oil spills andhuman rights in Nigeria in the face ofa barrage of criticism before a panel ofDutch politicians. At a hearing in TheHague, Shell was bombarded withaccusations from AmnestyInternational and other pressuregroups.

FIRMS PLAN TO WORK STAFF HARDERBusinesses plan to make staff workharder over the next year rather thantaking on new employees, research bythe Bank of England suggests. Themajority of factories and offices couldraise output by up to five per centusing existing staff, the poll of 370companies by the Banks regionalagents found. Fewer than 10 per cent

of the businesses said they had nospare capacity.

TURKEY CALLS FOR TIME OUT INMONETARY MOVES

Turkeys economy minister said thecountrys central bank should wait

before making further changes tomonetary policy, the governmentsfirst public sign of concern over the

bank's unorthodox strategy of cuttinginterest rates amid booming demand.We dont want an uncertain envi-ronment in Turkey, deputy primeminister for the economy Ali Babacantold reporters yesterday.

GERMAN BOND AUCTION FLOPSGermany failed to attract enough

bids at its first ultralong bund auc-tion in six months, catching investorssomewhat offguard, as the bund line

was considered overvalued despite itsrecent cheapening against Eurozonepeers. By contrast, in a separate ten-

der, Italy sold 8bn (6.88bn) of six-month treasury bills yesterday.

WHAT THE OTHER PAPERS SAY THIS MORNING

8/7/2019 Cityam 2011-01-27book

3/32

OUTDOOR clothing retailer BlacksLeisure called off talks with potentialsuitors yesterday, saying none of theproposals were sufficiently com-pelling to take to shareholders.

The owner of the Blacks Outdoorand Millets chains said its board would instead focus on supportingthe firms budding turnaround andopening additional stores.

Interested parties were said toinclude Argos owner Home RetailGroup, Lloyds Development Capitaland Lion Capital.

Blacks shares lost nine per cent yes-terday to close at 35p.

THE Dow surged past 12,000 yester-day for the first time since June 2008 before eventually closing at11,985.44, after a series of positivenews was followed by a reassuringstatement from the Federal Reserve.

The Fed will keep interest rateslow and maintain its policy of quan-titative easing (QE2), it announcedlast night.

The economic recovery is contin-uing, it said, although it warnedthat the recovery was still too slow tosignificantly dent the countrys highunemployment.

Markets had been wary of a movetowards monetary tightening, eitherfrom a slight rise in rates, or a cut-back in QE2.

You had a relief rally at first onthe simple fact that there were nodissents, said Cary Leahey ofDecision Economics. The marketwas worried that up to two, or per-haps even three, incoming hawksmight dissent and no one did.

Earlier in the day markets reacted well to President Obamas state ofthe union address, which stressed a

freeze on government spending, andthe need to lower corporate tax ratesand simplify the tax code.

However, the countrys publicfinances remain in a concerningstate, after the congressional budgetoffice reported the budget deficit will jump nearly 40 per cent overforecasts. The CBO said the fiscal2011 deficit will hit $1.48 trillion, upfrom last Augusts $1.07 trillion esti-mate, which was crafted beforeBush-era tax rates were extended at acost of $858bn over 10 years.

The US faces daunting economicand budgetary challenges, the CBOsaid. The CBO said the $1.48 trilliondeficit would be about 9.8 per centof GDP. US HOME SALES SURGE: P15

Fed reassures

as Dow surgespast 12,000

THE Bank of England took a smallstep towards raising interest ratesduring a notably hawkish policymeeting earlier this month.

Two members of the monetary pol-icy committee (MPC) voted in favourof a 0.25 per cent increase in rates.

Implied interest rate futures basedon overnight index swaps were pric-

ing in a 44 per cent chance of a 25basis point rate hike in May, up from30 per cent before the minutes werereleased. And the pound rose againstthe dollar yesterday after the minutes were published, strengthening asmuch as 0.5 per cent to $1.5892before falling back slightly through-out the afternoon.

The FTSE hovered around the 6,000mark as the minutes wereannounced, before giving up some of

the mornings gains.However, six members of the MPCvoted to keep rates at half a per cent.And having met on 13 January, theMPC was unaware of the shock con-traction in the economy in the fourthquarter of 2010, reported on Tuesdayof this week.

Martin Weale, who joined the MPClast summer, surprised analysts byvoting for a rise in rates.

WEALE PROFILE: P15

Chance of May hike increasesafter two at Bank vote for rise

BANKRUPT financial companyLehman Brothers Holdings proposeda new plan for dividing up billions ofdollars among its creditors andoffered a bigger payment to bond-holders, provided they sign on.

The plan, key to Lehmans exitfrom the largest bankruptcy in US his-tory, comes after an earlier versionfiled in April met strong oppositionfrom hedge fund Paulson & Co andother bondholders.

Senior unsecured creditors, includ-ing bondholders, could get back more

than 21 per cent of their claims ifthey vote for the new scheme.

Lehman unveilscreditor offerBlacks calls offtakeover talks

BY JULIAN HARRIS

US ECONOMY

CONSUMER

BANKING

BY JULIAN HARRIS AND MARION DAKERSUK ECONOMY

News 3CITYA.M. 27 JANUARY 2011

Ben BernankesFederal Reservevoted to keepmonetarypolicy loose.Picture: REUTERS

ANALYSIS lDow Jones Industrial

15,000

12,000

9,000

7,000

Jan 08 Jan 09 Jan 10 Jan 11Jan 07

11,985.4426 Jan

8/7/2019 Cityam 2011-01-27book

4/32

8/7/2019 Cityam 2011-01-27book

5/32

In this online, digital world,

sometimes insurance is stillall about snowshoes.

When a customer in Canadacalled to say his holiday homehad been vandalised, Avivaadvisor Karen Matchett had aproblem. At the time, thearea was covered by severalfeet of snow.

The only way to inspect thedamage was with snowshoesand a snowmobile. So thatsexactly what Karen did.

At Aviva, we know thatinsurance is all about people,not policies recognising theirindividual circumstances and

needs.

Maybe its because we try toput the customer first thatweve got so many of them, in28 countries around the world.

youarethebigpicture.com

PORSCHE yesterday announced ithas smashed its sales record inChina, shifting almost 15,000 vehi-cles in 2010, an increase of 62.7 percent on a year earlier.

The German carmakers four- wheel-drive Cayenne model wasthe most popular, selling nearly

9,000 units.Sales of sports cars including theiconic 911 and the newer Boxstermodel rose 77 per cent year-on-yearto 2,340.

Bernhard Maier, Porsche boardmember for sales and marketing,said: We can look back on anextremely successful 2010.

Maier added the firm wouldalmost triple the size of its dealernetwork in China over the nextfew years to cope with demandfrom the emerging economicsuperpower.

Porsche shares closed over sevenper cent higher yesterday at 68.74off the back of the Chinese salessurge and news its planned merger

with fellow German manufacturerVolkswagen is likely to go ahead.

A senior member of the Porschefamily said the tie-up was on the

right track, also sending shares inVolkswagen higher.

Porsche supervisory board andfamily member Wolfgang Porschealso said the carmaker expected tohear next week whether hedgefunds will appeal against the dis-missal of their US lawsuit againstPorsche.

Porsche is to be subsumed intothe Volkswagen empire with share-holders trading in their holdingsfor stock in Europes largest car-

maker once their company is debt-free as part of a planned merger.Wolfgang Porsche also said that

Qatar is unlikely to boost its 10 percent stake in Porsche though thetwo sides are in talks for coopera-tion in several areas.

The tiny Gulf Arab states sover-eign wealth fund, QatarInvestment Authority, bought a 10per cent stake in Porsche inSeptember 2009.

Porsche sales

in China jumpby 63 per centBY STEVE DINNEEN

MANUFACTURING

THE VALUE of private equity backed buyouts in Europe rocketed 169 per

cent to 63.1bn (54.3bn) last year.The number of deals last year alsosaw a 43 per cent increase on the pre-

vious year to 367 deals, according toresearch commissioned by privateequity house Candover.

Overall, European private equityincreased by a whopping 143 per centon 2009 to 1,029 deals worth 71.5bn.

The purchase of a 42.5 per centstake in global chemical distributioncompany Univar by private equity

group Clayton Dubilier & Rice forover 3bn was among several bigdeals last year that helped boost thefigure.

However, the report by research

provider unquote.com found that the value and number of private equitydeals slipped across Europe during thefinal three months of last year, hit bymacroeconomic concerns.

Private equity managers usuallylook to tie up deals before the end ofthe year, normally giving the finalquarter a boost.

However, the report said caution hadcome to reign supreme again fuelled

by fears over the Eurozone crisis and

government austerity packages.Yet the UK still managed to main-

tain its position as the most active private equity market in Europe involume terms, with 23 deals complet-

ed during the last three months oflast year. The Benelux region was thelargest with transactions amountingto5.2bn.

Managing partner of Candover John Arney said: As we move into2011 we are likely to see an element ofcaution prevail until the economicsituation becomes clearer. At thattime, all the signs indicate that recov-ery in the European private equitysector will continue to accelerate.

BYRICHARD PARTINGTON

PRIVATE EQUITY


European buyouts up 169pcANALYSIS lPORSCHE CHINESE SALES: 2010

A total of

14,785

vehicles were delivered to customersin China, including Hong Kong and Macau

This represents a rise of62.7 per cent rise compared with previous year.

4x4s:8,612 vehicles

Sports cars:

2,340vehicles

Touring cars: 3,833 vehicles

ANALYSIS lPorsche

66.0

67.0

68.0

69.0

12 pm 2 pm 4 pm10 am

68.7426 Jan

8/7/2019 Cityam 2011-01-27book

6/32

THERES little that cheers the soul bet-ter after a lingering recession than a

roomful of entrepreneurs, and lastnights Quoted Company Awards wereno exception, as banks and broker-ages gathered to cheer on their newand growing clients.

Companies in attendance rangedfrom a bevy of smart media startups,including nine-month-old Digital

Theatre and acquisition-hungryProgressive Digital Media, to house-hold staples such as Dominos Pizzaand ASOS.

BBC anchor Mishal Husain, whocompred for the packed tables seated

among the Natural History Museumsmassive dinosaurs, warmed up thenight with reminiscences of the badold days of the recession.

It feels great to be liberated fromthe BBC newsroom, she said, a far cryfrom the credit crunch workload of2009 which left her spending moretime with Robert Peston than with myown husband.

It was a reminder of the remark-able feat the nine winning execs and

their companies had pulled off byachieving stellar growth in daunting

economic conditions. John Rennocks of Nestor

Healthcare received the headlineChairman of the Year Award for his

work driving the firm to 83 per centprofit growth last year and overseeingits 124m takeover by Saga.

Peter Slabbert took home the ChiefExecutive of the Year Award for hisleadership of Avon Rubber, whilestock market veteran Brian

Winterflood, the pioneer of the Aim

marketplace, scooped the prestigiousLifetime Achievement Award. Other

winners included Dominos, in the Aim to Main category, and Chi-Medchief Christian Hogg, who was namedEmerging Markets CEO of the Year.

Among the table talk was grumbles

about tax: For the amount of tax Ipay, I deserve to have my name put onsomething. Like a hospital ward, oneLeeds business owner said.

Others advised on the tricky worldof non-executive directorships. Back

your own judgement, said PeterHewitt, director of Provident andRegional Estates. And make sure youhave excellent insurance, addedChris Spencer-Phillips, chief executiveof First Flight Placements.

The Capitalist6

EDITED BY

ALISON LOCKGOT A STORY? [email protected]

CITYA.M. 27 JANUARY 2011

Left: Diane Gwilliamof Baker Tilley withSarah Jacobs and

Jonathan Wright ofSeymour Pierce

Right: BrianWinterflood with his

Lifetime AchievementAward

Left: Investor of theYear Award winner

Mike Prentis ofBlackRock (left) withpresenter MishalHusain

Right: Sheena Khanof City Profile, withBen Gillen, andAndrewCunningham ofGranger

Far right top: AndyRoberts, CenkosSecurities with

Darren Throop andGiles Willits of

Entertainment One

A NIGHT TO CELEBRATE SUCCESS

Above: Michael Darriba of Deutsche Bank(left) presents John Rennocks of Nestor

Healthcare with the Chairman of the YearAward

8/7/2019 Cityam 2011-01-27book

7/32

Take a day to make a difference.Join teams from across the City and finance industry.Challenge Yourself: As a team of four, youll complete a trail challenge, bike

route and canoe relay. Each member of your team will cover a marathon distance.

After the challenge, enjoy a post-event meal, prize giving and party.

Challenge Poverty: CARE International fights poverty and injustice in over 70 countries.

With your support we provide relief to families affected by humanitarian emergencies

and work with communities to help people work themselves out of poverty. Our economic

development and microfinance programmes help people gain access to credit and acquire

skills to start or expand their business, enabling people to transform their own lives.

www.carechallenge.org.uk/finance

Email: [email protected] Tel: 020 7934 9470

The CARE Finance Adventure Challenge, 25 June 2011, Exmoor National Park, Somerset

SUPPORTED BY

HISCHALLENGE

RegisteredCharitynumber292506

YOURCHALLENGE

Photo:CARE/ThomasSchwartz

HISCHALLENGE

YSUPPORTED B

HISCHALLENGE

OURCHALLENGEY

OURCHALLENGE

erutnevdAecnaniFERACehT

oss the City and finance industryom acroin teams frJffidaekamotyadaekaT

oomx,enu,egnea

oss the City and finance industry.ecneef

tesremoS,kraPlanoitaNro

oss the City and finance industry

umber292506

edCharityn

egister

R

einternational.orEmail: challenge@car

g.uk/finance.orechallengecarwww.

e,ssenisubriehtdnapxerotratsotslliks

ammogrce profinand micrt anenopmelved

elp peoplo hunities tork with commd wan

amilies affected bo felief te rvidoprur support wWith y

ternational fighCARE Inerty:voChallenge P

tneve-tsopayojne,egnellahcehtretfA

forebmemhcaE.yalereonacdnaetuor

, yourf fs a team oAself:ourChallenge Y

oss the City and finance industryom acroin teams frJ

el: 020 7934 9470g Teinternational.or

vilnworiehtmrofsnartotelpoepgnilane

d aedit ano crccess te gain aelp peoples hamm

. Our econertyvf poes out oselvemork the welp peopl

engerumanitarian emy hamilies affected b

er 70 counvstice in od injuerty anvs potternational figh

.ytrapdnagnivigezirp,laem

cnatsidnohtaramarevoclliwmaetruoy

e, bikegenail challete a troull compl, y

oss the City and finance industry

.sev

ecquird a

omic. Our econ

ciesen

.trieser 70 coun

.e

.


*Terms and conditions apply. See samsung.com/uk/galaxytab for details 2010 Samsung Electronics Co. Ltd. Google and Android are trademarks of Google, Inc. Sex and the City 2 2010 Warner Bros.

Entertainment Inc. and Home Box Office, Inc. All Rights Reserved. 2009 Gameloft. All Rights Reserved. All manufacturers, cars, motorbikes, names, brands and associated imagery featured in Asphalt 5 mobile

game are trademarks and/or copyrighted materials of their respective owners. 2009 Gameloft. All rights reserved. Gameloft, the Gameloft logo are trademarks of Gameloft in the U.S. and/or other countries.

Buy a new Samsung

Galaxy Tab right now

and get 200 worth of

music, movies, games

and books. Its the

best all in one device

even on the go.

And at just 7 inches

its compact enough

to fit in your pocket.

NOW WITH AN

ENTERTAINMENT PACKAGE

WORTH 200.*

Available at all major phone and electrical stores now

or visit www.samsung.com/uk/galaxytab

Sex and the City 2 available nowfrom samsungmovies.com

Movies15

Games7

MP3s50

eBooks5

WH SMITH said yesterday a drop insales over Christmas had been offset bya rise in profit margins.

Sales in the two months to 22 January dropped four per cent at thenewspaper, stationery and book chain.

Like-for-like sales, which strip out theeffect of new store spaces, fell by sevenper cent.

The company said its sales had beenhit by the snow but insisted its profit

was on course, with cost savings alsoplaying a part.

At railway stations, airports andother travel hubs, the company report-ed a three per cent sales fall in the 21

weeks to 22 January, with the direweather causing travel chaos.

Chief executive Kate Swann said:Our staff worked extremely hard dur-ing this period to maintain the bestpossible service for our customers.

However, she urged caution over the year ahead, adding: We expect thetrading environment to remain chal-lenging and we have planned accord-

ingly. The chain has been focusing on

main trading categories such as sta-tionery and books, and away fromlower-margin areas such as DVDs andCDs.

The company said it was still ontrack to meet City forecasts of profitaround the 93m mark for the full-

year.Nick Bubb, retail analyst at Arden,

said: The resilient Christmas profitperformance shows that the business

was not blown off course by the snowand the obvious contrast is with thestruggling HMV.

WH Smith inmargin boostBY JOHN DUNNE

RETAIL

ANALYSIS lWH Smith

460

480

500

520

19 Nov 9 Dec 31 Dec 21 Jan1 Nov

p 482.3026 Jan

AG BARR SALES STILL FIZZING

SOFT DRINKS GROUP AG Barr forecast like-for-like sales growth of around ten per cent forthe full-year, helped by strong demand for its Irn-Bru and Rubicon drinks. The company, ledby chief executive Roger White, said: Across the financial year all of our core brands haveperformed strongly.

8/7/2019 Cityam 2011-01-27book

8/32


THE UNITED States has granted share-holders a say on executive pay as partof efforts to scrutinise corporateAmerica in the wake of the financialcrisis.

The US Securities and ExchangeCommission (SEC) voted 3-2 to requireshareholders to make an advisory voteevery three years on directors pay atcompanies with a public float of more

than $75m (47.3m).Investors will also get more infor-mation and the chance to vote ongolden parachute pay-outs awardedto executives during mergers or aftera resignation, as part of a corporategovernance overhaul under the Dodd-Frank Act that was enacted in July.

The rules will apply to around 9,000US-based companies. However, morethan 1,500 firms with a float of lessthan $75m have been exempted fromthe regulations until at least 2013.

Some companies includingMicrosoft, Apple and Verizon havealready voluntarily adopted say-on-pay proposals, following widespreadprotests about director pay and bonus-es during the recession.

The UK f irst gave shareholders say-on-pay rights in 2002 following theCadbury Report.

The SEC has also passed rules thatwill force hedge funds to reveal somedetails of their trading, assets andleverage.

SEC gives US shareholdersthe right to vote on exec payBYMARION DAKERSREGULATION

Starbucks chief executive Howard Schultz saw profits increase despite rising coffee prices

COFFEE giant Starbucks posted a 35per cent rise in operating income yesterday, which nevertheless fellshort of analyst forecasts for thefull-year as the rising cost of coffeecontinued to dent margins.

The worlds largest coffee chainhas seen wholesale coffee pricesincrease by nearly three-quarterssince last summer due to poorweather, fears over crop failure andrising global demand.

The firm reported an operatingincome of $501.9m (315m) for thethree months to 2 January, up from$370.9m a year earlier.

Earnings per share stood at 45cents, compared with 33 cents lastyear.

Christmas trading, traditionally astrong period for Starbucks, saw afive per cent rise in international

sales. The firm hopes to continue itsaggressive expansion by opening500 new stores in 2011, 400 of whichwill be outside the US.

Starbucks shares, which haverisen 47 per cent in the last year,lost two per cent in after-hours trad-ing following the results announce-ment after the New York closingbell.

The strong momentum in ourglobal business in fiscal 2011 posi-tions us to deliver 15 to 20 per centearnings per share growth com-pared to last years results, and toreaffirm our 2011 guidance despitedramatically higher coffee costs,said chief financial officer TroyAlstead.

Chief executive Howard Schultzcredited some of the earnings jumpto Starbucks foray into pre-pack-aged instant coffee, which grew 12per cent in the period and nowmakes up six per cent of revenue.

Profits surgeat StarbucksBYMARION DAKERS

CONSUMER

US AIRPLANE maker Boeing weighedon the Dow index yesterday after itoffered a weaker-than-expected 2011earnings outlook due to higher pen-sion costs and fewer than expectedplan deliveries.

The New York-listed firm said rev-

enues rose eight per cent on last yearto $16.55bn (10.4bn) in the last three

months of 2010, while earnings pershare rose 11 per cent to $1.56.

Boeing said last week that its long-anticipated 787 Dreamliner planefaces further delays.

The company said it will focus ondelivering the 787 this year, andexpects its commercial airplanes divi-sion to deliver between 485 and 500airplanes in 2011.

Boeings shares lost 3.1 per cent toclose at $70.02 yesterday.

Boeing disappointsas misses forecastsBYMARION DAKERS

AEROSPACE

8/7/2019 Cityam 2011-01-27book

9/32

GOOGLE, Yahoo, Amazon, eBay andFacebook. What do they have in com-mon?

Yes, yes, they are all giants of theinternet age, brand new companies

worth hundreds of billions of dollarsas they transform the world economy.But they are also all not British.London with more top universitiesthan any other city in the world andproducing more Nobel prizes thanFrance has claimed to be the ideascapital of the world.

But despite our entrepreneurial,innovation-loving culture, which hasmeant London has for centuries beenat the cutting edge of economic devel-opments, we have been slow off the

blocks in the digital revolution.I wont dwell now on the why,

because things are rapidly changing.There are hundreds of digital start upcompanies in London, some of whichare coming of age. They may not be

valued in the billions, but Lovefilm,Last.fm and others are valued in thehundreds of millions.

Londons digital cluster, much of it based around Old Street, has beengathering pace under its own steam,and the world is starting to pay atten-tion.

In November, the Mayor of Londonand the Prime Minister launched the

joint Tech City East initiative to pro-mote London as the undisputed digi-

tal capital of Europe, enabling us torival the worlds biggest digital clus-

ter, Silicon Valley.London has huge starting advan-

tages. We have top universities pour-ing out top IT graduates and arehome to a quarter of all the UKs ITprofessionals. We are already a majorcreative industry cluster, with a bigfilm, television and newspaper indus-try providing content for new digitalservices. We are the venture capitaland the advertising capital of Europe,providing advertising revenues thatdrive many digital businesses. We arealso very digitally enabled as a city interms of broadband access, smart-phone usage, and the development ofe-commerce.

Since City Hall and Number 10started working on this agenda, theinterest has been almost overwhelm-ing.

At a conference last week, the airwas audibly crackling with electricityas universities, big technology firms,

venture capital companies, and start

ups all the different elements of thedigital cluster ecosystem swappedideas and contacts.

Small companies are seeing inter-est from investors soar, one had aquadrupling in its share price, while

big companies are stepping up theirinvestment plans. Plans are being dis-cussed to turn the Olympic Park a500 acre space in central London into Europes largest high tech clus-ter. This week, the Mayor and I are inDavos speaking to digital companiesand others interested in investing inLondon.

The role of government is not topick winners we are the grounds-man, not the umpire or players. Wecan promote, facilitate and encour-age. But as we stagger out of reces-sion, it is clear our digital sector will

be one of the driving forces of recov-ery.

Anthony Browne is an adviser to theMayor of London

London could

be the newSilicon Valley

CITY veteran John Gunn (pictured)said yesterday he hoped his near 3minvestment in Aim group Rotala

would come good at some point andresult in a tidy nest egg for his family.

The former head of British &Commonwealth, whose company col-lapsed after the 410m acquisition of

Atlantic Computers, has been leftexasperated by the gradual share

price decline in Rotala, which has just announced the purchaseof Preston Bus. Gunn is cur-rently chairman of the

Aim-listed group and a 25per cent shareholder.

Rotalas shares havefallen from a high of 52pto as low as 25p over thepast few months. Gunnsays the disposal of shares

by four institutions after thedeparture of four individual fund

managers who were fans of the stockhas not helped.Rotala is forecast to make

a 1.9m profit in the yearto November 2010.

Says Gunn: We were worth twice as much as we are now when wewere losing money.

Gunn and chief execu-tive Bob Dunn have agreed

to subscribe a total of265,000 in a share placing.

City veteran Gunn thinks itwill all come good at RotalaBYDAVID HELLIERAIM


THE advisers to a group whose shareprice has literally halved in a few

months will inevitably feel a touchunder pressure.In Rotalas case the institution

charged with helping reverse that situ-ation is Charles Stanley, which hasadvised the company since taking overfrom Blue Oar in 2008.

Yesterday the firms analyst PeterAinsworth praised Rotalas PrestonBus acquisition, saying it expanded thefirms operations significantly, and itissued a target price of 44p, well

above the shares current miserablelevels.

The man most under pressure atCharles Stanley is Mark Taylor, headof corporate finance, whose job it is toresurrect some investment demandfor the stock.

Taylor joined Charles Stanley in2002 having previously been aDirector of Corporate Finance atTeather & Greenwood.

Prior to joining Teather &Greenwood, he qualified as a char-tered accountant with PriceWaterhouse and latterly worked inPrice Waterhouses Corporate FinanceGlobal Technology Team. YesterdayTaylor said was organising roadshows.

Rotala does not retain an externalpublic relations company. With Gunnsaying things like: One day, somebodywill believe in us, it may not be longbefore that changes.

MARK TAYLOR

CHARLES STANLEY

VIEW FROM CITY HALL

ANTHONY BROWNE

With sufficient investment the capital has seriouspotential to rival the worlds biggest digital clusterand help drive the economic recovery

8/7/2019 Cityam 2011-01-27book

10/32

Focus on Davos10 CITYA.M. 27 JANUARY 2011

BUSINESSES ANDINDIVIDUALS NEEDLONG TERM PLANS

ANDREW MOSSGROUP CHIEF EXECUTIVE, AVIVA

AS INSURERS, were here to help secure our customersfinancial futures and we understand the responsibilitythat comes with that. Ours is a long term business. Wehave to be there for our customers throughout their

lifetimes, and beyond. So inevitably the sustainability of ourbusiness is a key priority for us.

Recent history tells us that businesses can no longer lookat cashing in on short-term financial rewards without keepingan eye on their long-term impact. We have been fortunate tobe a business that has always had to take a long-term per-spective, and while we operate in the interest of our share-holders for whom we must drive value we also have a duty toour customers and more broadly society. We have to addressissues around the significant level of under-provision forretirement and our societys relationship with money becausethese things directly affect our business.

We are looking at new ways through which we can betterengage consumers to take greater personal responsibility fortheir financial security. We are also going to be more vocalabout creating and maintaining better environments for long-term businesses whether thats corporate governance, finan-cial reporting or regulation. This is a global challenge: and tothat end we are very proud to be supporting the UNs GlobalCompact LEAD initiative, which Secretary General Ban Ki-Moon launches this week in Davos. Ill be speaking on theneed for investors, regulators and companies to work togeth-er to enhance performance on environmental, social and cor-porate governance issues.

The responsibility for all of this is shared between govern-ments, business and individuals, we all have a role to play. Ihope at Davos we can broaden what sustainability reallymeans and discuss the responsibilities on all of our shouldersin ensuring future prosperity.

CHINESE inflation is structural andrisks derailing the global economicrecovery, according to a quarterlyinflation report by business consultan-cy McKinsey. The report, released atthe start of the World EconomicForum in Davos, warns leaders thatChina is in danger of overheating andcausing major disruption to world-wide demand.

The entire system is now so highlystressed that one snowstorm bringslarge spikes in food and energy pricesas coal runs short, writes McKinsey

director Gordon Orr, a director in thefirms Shanghai office. The Chineseconsumer price index inflationtopped five per cent in November lastyear.

The report coincides with a similarwarning from the IMF that Chinesedemand will send the average oil pricefor 2011 to over $90 (56.7) a barrel, versus $79 last year. The IMF is stilloverall positive on growth, forecastinga global expansion of 4.4 per cent thisyear, but warns that if policymakersfall behind the curve in responding tonascent overheating pressures...emerging economies could be settingthe stage for boom-bust dynamics.

Orr warns of a similar crash risk:The food supply chain, running atthe limit, is close to breaking, and thepressures this problem creates willlead to further food quality crises, hewrites. Whats more, price caps wontbe effective... Rising food prices are apan-Asian issue.

The prospect of emerging market bubbles has been a major point ofconcern in discussions at Davos.Economist Nouriel Roubini namedrising prices as a reason to see theglobal economy as a glass halfempty: This growth in inflation inemerging markets, is leading toanother challenge, he said.

Asia inflation may hit growthBY JULIET SAMUEL

WORLD ECONOMY

RUSSIAN President Dmitry Medvedevlaunched an audacious bid to lurefinancial services to Moscow in hisspeech at the World Economic Forumat Davos last night, promising mini-mal regulation and support for risk-taking.

Speaking the day after 35 people were killed in Moscow Domodedovoairport by terrorists, he began bythanking other world leaders for theirexpressions of support: That tragedy

shook the entire Russian society,although our country was in the pastsubject to serious tests, he said.

But he nonetheless continued withhis plan to present a modernised viewof Russia, outlining the ways in whichthe country is bidding to become amajor economic power.

He used the Davos platform toannounce that the Russian govern-ment does not intend to introduceany significant regulations on itsfinancial services sector, in a veiledreference to the bank levies, bonusregulations and disclosure require-

ments being introduced acrossEurope.

We have abolished tax on the sell-ing of securities for long-term invest-ment, he said. Our point of viewdiffers from our G20 friends: we haveno intention to introduce any furtherlimitations on financial activities, hesaid.

On the contrary, we would like toexpand opportunities to turn Moscowinto a major financial centre, to become a catalyst for the develop-ment of financial markets for thepost-Soviet era.

He also welcomed the BP-Rosneftdeal as part of a move to share thedevelopment of more efficient energyproduction.

But while he said he was relaxedabout excessive risk-taking by privateindividuals and enterprises, he added:States cannot have that sort of right...Sovereign countries face the problemof sovereign debt and yet are unwill-ingness to cut expenditure.

He also mentioned that Moscowintends to raise the issue of intellectu-al property rights at the next G20meeting.

Medvedev bidto lure finance

firms to Russia

@flacqua 7.51pm

Great Davos moment. Trichet taking a wrong left turnand walking into press room. Then realising he didn'twant to get assailed so ran out

@tim_weber 7.50pmRussian President Medvedev on #davos stage seemsto star in a commercial for Apple's iPad. Talking abouthis web habits, he waves one about

@dtapscott 5.51pm@Davos. A big challenge in #Davos is managing toget to the right place on time. But it's worth the effort.#WEF http://ht.ly/3KCvl

@felixsalmon 6.55pmThanks @black_von for giving me a shove and wak-ing me up. I was literally nodding off there. #Medvedev#wef

Davos tweets ...

BY JULIET SAMUEL

DAVOS 2011Think ahead for a lifetime of financial security Picture : GETTY

AN educational skills gap is one of themain causes of western unemploy-ment, according to chief executivesand delegates at the World EconomicForum in Davos yesterday.

Jeffrey Joerre, chief executive ofemployment consultancy Manpower,said in a CNBC-hosted debate: Wehave high unemployment and a highnumber of job openings. Its a skillsgap: not having the right skills at theright time produced by universities... If

we dont fix education we will not beable to create jobs and skills required.

Unemployment in the US andEurope is 10 per cent overall, althoughthis masks severe joblessness of 20 percent in countries like Spain.

Other delegates agreed but said thatthe blame does not lie wholly withuniversities or governments, sayingthat businesses need to get involved inthe training of workers rather thancriticising educational establishments.

Indian MP and steel magnateNaveen Jindal said the gap is also aconcern in India: We need to give peo-ple employable skills. We must cater toan almost 200m new workforce and

we need help from the west in build-ing this capacity in our country.

Employers must help withtraining to close skills gapBY JULIET SAMUEL

EMPLOYMENT

STANDARD Chartered chief executivePeter Sands yesterday warned globaleconomic growth was under threat ofbeing stifled by over-regulation ofthe finance sector.

Slamming a series of wildly com-plicated and irrelevant rules beinginstituted worldwide, he said overregulation was in direct contradic-tion to governments fiscal and mone-tary policies that are trying tostimulate growth. Sands concerns,aired in his address at the WorldEconomic Forum in Davos yesterday,were echoed by many senior bankers

who complained of ongoing bankbashing.

Sands warns ofover regulationBANKING

8/7/2019 Cityam 2011-01-27book

11/32

Focus on Davos 11CITYA.M. 27 JANUARY 2011

THE Lloyds of London insurance mar-ket expects to pay 300m to imple-ment stringent new capitalrequirement rules for insurers, itschairman Lord Levene (pictured) saidyesterday.

Levene criticised the additional bur-den placed on insurers by the SolvencyII rules, imposed by European lawmak-ers to require insurers to hold morecapital to cover the risks they under-write.

Lloyds said earlier this month it wason course to spend 250m preparing

for the Solvency II changes.Its a huge task, said Levene, on the

sidelines of meetings at Davos. Its cost-ing Lloyds markets just to get ready forSolvency II 300m. Its a lot of moneyand its a diversion of effort.

About 3,600 European insurers willhave to comply with Solvency II by IJanuary 2013.

But firms are concerned that therequirements will tie up needed capi-tal, divert earnings from investors toadd to capital reserves, and make insur-ance more expensive.The concept behind it is good but weneed to get details right and it does takepeoples eye off the ball, Levene added.

Levene says Solvency II

to cost Lloyds 300mBYALISON LOCK

INSURANCE

UK must cut public deficit

Juliet Samuel in Davos gives us a behind-the-scenes glance at what

is really going on as the global elite descend on the small Swiss town

DAVOS DIVASDavos this year might have drawnheadlines for its first ever quota forfemale delegates, but theres onegroup of women the event hasalways catered for: the Davos wives. Anya Stiglitz, wife of theeconomist Dr Joseph Stiglitz (pic-tured together), has this year beenspilling the beans in a series of blogposts on the spouses predicament.

It seems the poor dears are sim-ply overwhelmed with invitationsto specially prepared events akind of crche for the wives of theworlds leaders, if you will, wherethe ladies can go cross country ski-ing, ice driving an Audi and theubiquitous open sleigh ride. But ifyou think its a cakewalk being aDavos wife, think again. Stiglitz iskind enough to let us in on thelong list of provisions against hard-

ship: chapstick, sleeping pills, soap,flannel pyjamas, a torch and, mostausterely of all a thick coat to padthe inevitable falls on the ice. Ialways wear my bargain basement Turkish shearling to Davos, sheadds, reasonably.

And under the thick coat? Athick skin. I developed this over theyears. Its a vital protection fromthe barrage of snubs that are bound to come my way. Still, asshe points out, the danger of asnub is really not so bad when oneconsiders Davos past form, a townwhose original claim to fame washousing the tuberculosis sanatori-um in Thomas Manns MagicMountain. Perhaps weshould have picked upone of those freebiehand sanitisers beinggiven out byZurich FinancialServices Groupafter all...

SQUARESD e l e g a t e swere hitting ithard as soonas theyarrived intown on

Tuesday, crowding into the famousPiano Bar at Hotel Europe, host tomany a sozzled karaoke night. Sosurely all these leading businesslights were thrilled to bits at theprospect of some serious economicdiscourse? Not quite. The craze ofthe moment was, in fact, FourSquare. For those unversed, FourSquare is a GPS-tracking app thatinvolves checking in on yoursmartphone every time you visit acertain location in order to score apoint. The person with the mostcheck-ins is then designated virtualmayor of the location.

Proving that healthy competi-tion is at the heart of any seriousbusiness concern, a small core ofdelegates has sparked up a compe-tition to win the mayoralty of theCongress Centre. Reports are thatNat Rothschild was tempted to join

the fray, but no word yet on hisranking. The current winner is ananonymous Hendryk M, with 13visits. Do you know this illustriousmayors identity? Let us know.

SOUP-STIRRINGDavos veteran and panel chairMichael Elliot of Time Magazinewas keen to stir up trouble amonghis panellists. Turning to two repre-sentatives from Asia, he demand-ed: Do you think Asians are fed up with the west because theEuropeans cant get their houses inorder, Americans cant sort outlong-term budget deficits and Asians are fed up of being lec-

tured? Chinese economist andIMF advisor Zhu Min hesitat-

ed. Lectured? This is atough question. Its mucheasier for you (to answer),

he said, turning to hisIndian neighbour,software tycoonAzim Premji.

I didnt quiteunderstand the ques-tion, Premji dead-

panned, quick as aflash. Now thatscrisis manage-ment.

DAVOS: THURSDAY 27 JAN

l French President Nicolas Sarkozy willgive the opening address in the CongressCentre.

l 7.30am in theBelvedere Hotel: BCG-CII breakfast ses-sion, with BCG CEOPaul Buerknerspeaking.

l 7.30am in theBelvedere: SwissRe hosts a round-table on solutions toageing, good securityand natural disasters.

lNASDAQ OMX hosts an opening bellceremony with CNBC Europe, to bebroadcast live at 8am in the DavosHallenbad.

l 12pm in the Belvedere: InfosysTechnologies hosts a lunch and panel dis-cussion on what the new enterprise driv-

ers of tomorrow will be.

l 12.30pm: the Davos Open Forum hostsa debate called "Euro Grounding?", featur-ing ECB president Jean-Claude Trichet.

lThe fourth Davos Philanthropic

Roundtable is in the MorosaniSchweizerhof Hotel at 12.30pm,hosted by the Victor Pinchuk

Foundation.

l From 3.30 - 4.30, dele-gates will be attending theopening reception in theCongress Hall.

l6.30pm: Coca-ColaCompany hosts a reception in

the Morosani SchweizerhofHotel.

l 7.30pm: JETRO hosts Japan Night atthe Central Sporthotel.

l 10pm: FT/CNBC "nightcap" or drinks inthe Belvedere.

l 10pm: McKinsey party in theBelvedere one of this year's hottest tick-

ets.

Events ............................... ....

In

association

with

A QUOTA imposed on top companiesat Davos insisting that one of their fivedelegates is female has made a mini-mal impact so far, mirroring slowboardroom progress on diversity.

The World Economic Forum saidthe scheme more than doubled partic-ipation of female executives from itskey partners, although women stillonly made up around 16 per cent ofthe 2,500 participants. Some 20 of the100 partner firms have still chosen to

bring all-male delegations to Davos,forfeiting an extra conference pass.

Female quotahas little impact

DAVOS

BRITAIN must stick to its deficit reduc-tion plan, the head of theOrganisation for Economic Co-opera-tion and Development (OECD) said yes-terday, speaking from Davos.

Asked if Tuesdays negative GDP fig-ures should prompt a rethink of thedeficit cuts, secretary general AngelGurria piled support on DavidCamerons coalition government.

No, they should stay the course,he said. The plan cleared the marketsin terms of its credibility. Its what was

necessary. The fiscal situation in theUK absolutely requires this approach.

The OECD expected Britain to havepositive, albeit modest, growth in 2011and perhaps somewhat more robustgrowth in 2012, he added.

Of course there are short termimplications but without it there will be no medium and long termgrowth, he said.

And price pressure are nothing to be worried about in the UK, Gurriaclaimed.

They [inflation pressures] are aresult of the weakness of the pound,and a result of the spike of the pricesof both food and energy, he said.

On Tuesday Bank of England gover-

nor Mervyn King said inflation couldreach between four and five per cent.

BY JULIAN HARRIS

UK ECONOMY

Davos was bathed in agolden glow at sunsetyesterday

Picture: REUTERS

Diary

8/7/2019 Cityam 2011-01-27book

12/32

Markets are expanding. So are the ways you can reach them.Whether its urgent or not. A small box or heavy freight. Imports or exports. You can rely on

FedEx for a range of business solutions. So whichever service you choose, you can be sure

your business is moving in the right direction.

FedEx delivers to a changing world.

business.fedex.com

2

010Fed

Ex.

8/7/2019 Cityam 2011-01-27book

13/32

BARCLAYS has been handed its secondfine in two weeks by Britains financial

watchdog, after it was found to have breached rules on handling clientsmoney.

The banks investment arm,Barclays Capital, has been made to pay1.12m by the Financial Services

Authority (FSA) for failing to protectand segregate clients money on anintra-day basis between 2001 to 2009.

FSA director of enforcementMargaret Cole has cracked down onthe rules around client money han-dling following the bankruptcy ofLehman Brothers in 2008.

The US lenders European armfailed to segregate billions of dollars ofclients funds from its own accounts,leading to a series of court cases filed

by creditors.Cole said: Barclays Capital commit-

ted a serious breach of FSA clientmoney rules by failing to segregatemillions of pounds of its clientsmoney for over eight years. This poseda significant risk and the penaltyreflects the amount of client moneyinvolved in this breach.

Barclays said it closely cooperatedwith the FSA throughout the probe.

A spokesperson said: The segrega-tion error was corrected on discovery.No counterparties, clients, or financialreports were affected and BarclaysCapital did not profit in any way.

The latest fine comes after the FSAhit Barclays with a record 7.7m finefor mis-selling investment products tomore than 12,000 clients that lostmoney during the financial crisis.

Separately, the bank yesterdayannounced it would cut 1,000 jobs inits UK retail operation.

Barclays plans to move its financialplanning advice service online due to acontinuing trend by consumers tomanage investments over the internet.

Barclays hit

by FSA fineof over 1m

SPORTS retailer JJB was fined nearly500,000 yesterday for failing to giveinvestors the full picture about twoacquisitions.

The Financial Services Authorityimposed the fine after JJB said in 2007that it had bought the Original ShoeCompany for 5m, without disclosingit paid an extra 10.04m to buy all the

shoe chains stock. In 2008, JJB toldthe market it bought Qubefootwearfor 1, but did not mention it hadpaid a further 6.47m to settle thecompanys overdraft.

The information inflated JJBs shareprice for nine months before theextent of its indebtedness was exposedin its interim 2008 results. Its shareprice dived 49.5 per cent that day.

The FSA said the failure showed alack of regard for the market.

Model shown is Insight 1.3 ES CVT 2010 year model (17,655 OTR excluding pearlescent paint (430)).

Fuel consumption figures for the Insight range in mpg (l/100km): Urban 60.1 61.4 (4.7 4.6),

Extra Urban 62.8 67.3 (4.5 4.2), Combined 61.4 64.2 (4.6 4.4). CO2 emissions 105 101g/km.

Terms and Conditions: Offers valid on new retail cars registered from 1 January to 31 January 2011. Applies to Insight Range.Offers applicable at participating Dealers and are at the Promoters absolute discretion. Subject to model, colour and stock availability.VAT: The variance between the December 2010 and the January 2011 on the road price will be refunded by the Dealership at time of invoice.Honda Hire Purchase (HP): Indemnities may be required in certain circumstances. Finance is only available to persons aged 18 or over subjectto status. All figures are correct at time of publication but may be subject to change. Credit provided by Honda Finance Europe PLC, 470 LondonRoad, Slough, Berkshire SL3 8QY. Servicing: 3 years complimentary servicing or 37,500 miles, whichever comes first, and includesa maximum of 3 services. Complimentary servicing covers the manufacturers scheduled servicing only.

Dont youjust hate waste?Were pretty sure you do. Nobody likes waste. Except sea gulls maybe.But we know waste can be useful. After all, its often a result of something

good in the first place. Like our engine reliability tests. We use the power

generated to help light our Swindon factory. Its exactly the same principle

with our hybrids. Energy thats usually lost is recovered when decelerating.

It helps charge the battery, so you never have to. And our Insights IMA

hybrid technology means you never waste fuel. Or your money.

You have to love that.

The Honda Insight range available with:

Pre VAT-rise prices

3 years complimentary servicing

2 years 0% APR typical

Call 0845 200 8000 to experience our Insight for yourself.

Or visit honda.co.ukto find out more about our products and

discover how everything we do goes into everything we do.

JJB fined for lackof deal disclosure

BYRICHARD PARTINGTON

BANKING

Margaret Cole saysBarclays Capitalcommitted abreach of clientmoney rules

Picture: MichaTheiner/ CITY A.M

BYALISON LOCKREGULATION


THE US accounting regulator hasrelaxed its fair-value proposals, mean-ing that banks will be allowed to con-tinue valuing their loans at adjustedhistorical costs rather than usingmark-to-market principles.

US banks welcomed the decision,having feared that a rule change

would force them to value loans basedon market movements. This can leadto massive writedowns on loans as

prices fluctuate, without consideringthe banks business model as a con-

tributing factor to the loans long-term performance.

The Financial AccountingStandards Board (FASB) has scaled

back the proposal for now, but a finaldecision wont be made until June,

when FASB plans to present wide-ranging accounting reforms includ-ing revenue recognition and thepresentation of comprehensive rev-enue.

FASB is working to align US-specificaccounting standards with globalstandards, but business groups have

been lobbying hard to make sure theirpractices arent adversely affected.

FASB softens fair valueaccounting for US banks

BY ELIZABETH FOURNIER

ACCOUNTING

ANALYSIS lBarclays

260

280

300

320


p

295.5026 Jan

8/7/2019 Cityam 2011-01-27book

14/32

8/7/2019 Cityam 2011-01-27book

15/32

NEW home sales rocketed by 17.5 percent in December, compared toNovember, data showed yesterday.

The rise meant that 329,000 onefamily homes were sold in the 12months to December.

Sales were up massively in the westof the US -- a 33 per cent increase onthe previous month -- raising somesuspicions over the reliability of thedata. And some analysts warnedagainst volatility in the figures.

Things are definitely perking up,but there is a question whether its

sustainable, said Brian Bethune, aneconomist at IHS Global Insight.

LENDING remained sluggish inDecember, while approvals for mort-gages dropped to their lowest ratesince January 2009, the BritishBankers Association said yesterday.

The number of approvals from banks dropped from 29,696 inNovember, to 28,726 in December,the BBA said.

Overall mortgage lending rose by0.9bn, a slower rate than was meas-ured in November (1.2bn).

Net lending to companies dropped by 34.5bn last month, a sharper

drop than in November when it fellby 8bn.

Mortgage levelsfell in DecemberShock surge inUS house salesUS ECONOMY

UK ECONOMY

Economics 15CITYA.M. 27 JANUARY 2011

Hoping for aprosperous New Year?Apply now and get a head start with up to 2 years free business banking.

If youre starting a business and opening a business current account or

if you move your business current account to HSBC before 28 February 2011,

you could receive an extra 6 months free business banking on top

of the everyday 18 months free banking*.

This offer is available to businesses whose annual turnover from account

opening is projected to be above 100,000 and below 1m and meets

that threshold in the first 12 months.

Speak to a Business Specialist today

Call 0800 032 4739

Visit www.business.hsbc.co.uk

Sale Terms & Conditions and standard product terms apply.*During your free business banking period, we will not charge you an account maintenancefee or for payments into your account covered by our standard account charges. Additionally, we will not charge you for making internal transfers, cash

withdrawals (this is for UK transactions only, some self-service machine operators may charge a levy) and payments from your account by cheque,Business Debit Card, Direct Debit, Standing Order and Bill Payments. During the free business banking period, no credit interest is payable.

All applications for bank accounts are subject to approval. Lines are open 8am to 10pm every day (except Christmas Day, Boxing Day and New YearsDay). To help us continually improve our service and in the interest of security, we may monitor and/or record calls. Issued by HSBC Bank plc.

AC20520

Job prospects for university graduates have been hard hit by the recession

One in five newgraduates facesunemployment

GRADUATES were hit with an unem-ployment rate of 20 per cent in thethird quarter of 2010, official datashowed yesterday.

This was the highest unemploy-ment rate for new graduates in over adecade, and double the rate seen

before the recession.By the end of the recession gradu-

ate unemployment was twice thenational rate, the ONS said.

And jobs growth in the retail sec-tor slowed in the final quarter of the

year, the British Retail Consortiumsaid today.

Against an economy-wide back-ground of rising unemployment,retail jobs were up modestly by 0.6per cent in the final quarter, theBRCs Stephen Robertson said.

EMPLOYMENT

Yes. It probably should happen but I wouldnt want

them to. They perhaps need to go up to getus back into a good position.

JAIMIE FERNANDEZ | LDN UNDERWRITING

Yes, in this economic climate. It should happen tokeep inflation under control and itll probably hap-pen towards the end of the year.

ANTHONY BURKE | WSI CORPORATE

Yes, a little bit to control inflation, but not much isneeded. I dont think it will make much differencebased on the current drivers.

DANIEL WARD | KELWAY

WILL INTEREST RATES BE RAISED THIS YEAR?Interviews by Richard Partington

FOR seven straight months AndrewSentance stood alone in the Bank ofEnglands rate setting committee the only member proposing anincrease in the Banks lending rate.

But this month Sentance con-vinced one of his colleagues to jumpoff the fence.

The surprise was not so muchthat someone joined AndrewSentence, it was the fact that it wasMartin Weale, commented AlanClarke of BNP Paribas.

Most would haveassumed thatWeale was of amore dovishpersuasion,Clarke said.

With infla-tion spiralling

upwards, there was an air ofinevitability to

the change in vot-ing figures.

Consumer price index (CPI) infla-

tion hit 3.7 per cent in December,and Bank governor Mervyn Kingadmitted it will reach four to fiveper cent in the coming months.

But while some suspected that amember such as Spencer Dalemight take the plunge towardsstronger rates, few thoughtSentance would be joined by Weale-- a man who, within the last sixmonths, said there was a real dan-ger of a double dip recession.

Back in August, Weale pledged hewould not be voting for an interestrate hike any time soon.

Being a new member, he doesnthave much of a voting record for usto judge, said Howard Archer ofIHS Global Insight, but he seemedto be slightly on the dovish side.

But not everyone was surprised.The dove-hawk split is too much of ageneralisation, said Investecs Philip

Shaw. At the National Institute ofEconomic and Social Research hehas called for rate rises at earlytimes before, Shaw said.

Most of the Banks interest ratesetters have been extremely loath tonail their colours to the mast, dur-ing uncertain economic times. Newmember Weale appears somewhatmore intrepid.

Second Bank voter joinscall for interest rate rise

MARTIN WEALE

BY JULIAN HARRIS

UK ECONOMY

MORE NEWSONLINEwww.cityam.com

8/7/2019 Cityam 2011-01-27book

16/32

More workloads dont haveto mean more servers.With the IBM System x3650 M3 Express server you can consolidate

the workloads of up to 20 ageing servers.1 Powered by the Intel Xeon

processor 5600 series, the x3650 M3 delivers up to 40% increased

performance to confidently handle additional workloads.2 And with

greater memory and storage capacity, you can run more virtual

machines and see a return on investment in as little as three months.3

IBM System x3650 M3 Express

1,718 excl.VATOR 221 PER QUARTER4

PN: 7945K3G

2U dual-socket server featuring up to 2 Intel Xeon processor 5600 series

18 DIMM sockets, 1333MHz DDR-3 (18 RDIMMs, 144GB max)

IBM ServicePac 3-year onsite limited warranty5 on parts and labour

Upgrades to 3 years 24x7 Onsite Repair with a 4-hour response6 490 excl. VAT

IBM System x3550 M3 Express

1,489 excl.VATOR 191 PER QUARTER4

PN: 7944K3G

1U dual-socket server featuring up to 2 Intel Xeon processor 5600 series

18 DIMM sockets, 1333MHz DDR-3 (18 RDIMMs, 144GB max)

IBM ServicePac 3-year onsite limited warranty5 on parts and labour

Upgrades to 3 years 24x7 Onsite Repair with a 4-hour response6357 excl. VAT

IBM System Storage DS3524

3,087excl.VATOR 397 PER QUARTER4

PN: 1746A4S

External disk storage with 6Gb/s Serial Attach SCSI (SAS) interface technology

Scalable up to 48TB with 500GB NL-SAS 2.5" drives

Support for 96 drives with combination of EXP3512 or EXP3524 expansionenclosures

Field upgradeable with FC or ISCSI host interface cards

Self encrypting drive options available for secure data at rest

DS3512 also available with 3.5" drive support

See for yourself.

See how much you could be saving with theIBM Systems Consolidation Evaluation Tool.

Contact the IBM team to help you connect

to the right IBM Business Partner.0800 028 6282ibm.com/systems/uk/express1

1. Based on industry standard benchmark Spec JBB. Previous generation server IBM eServer xSeries 346 scored 39585 comparing to New generation x3650 M3 scored 915103 which is23 x bigger score and x3400 M3 scored 877231 which is 22 x bigger score. Performance comparison using server side java bops (business operations per second). Results have been estimatedbased on SPEC JBB published results. IBM System x3650 M3 SPECjbb2005 bops = 915103 http://www.spec.org/jbb2005/results/res2010q2/jbb2005-20100326-00835.txt SPECjbb is a registeredtrademark of the Standard Performanc e Evaluation Corporation (SPEC ). Source: http://www.spec.org/, results public on 8/1/2010. 2. The x3650 M3 series feature s the Intel Xeon processor 5600series which claims to deliver up to 40 percent more performance per watt than the Intel Xeon 5500 processor series. Based on Intel Engineering Study, January 2010, See page 8, footnote 3 formore information: http:// www.intel.com/ Assets/PDF /prodbrief/3235 01.pdf 3. Based on comparing previous generation, 200 servers IBM eServer xSeries 346 (3.0GHz) (2Ch /2Co) to new generation10 servers IBM x3650 M3 (Xeon E5650) 2.66GHz (2x6) using the IBM Systems Consolidation Evaluation tool, https://roianalyst.alinean.com/stgi/ 4. IBM Global Financing terms and conditions andother restrictions may apply. All rates are for a 24-month period and based on a minimum deal size of 5,000 and a maximum of 200,000. Monthly payment provided is for planning purposes onlyand may vary based on customer credit and other factors. Payment is quarterl y. Rates and offerings are subject to changes, exten sion or withdrawal with out notice. 5. Standard warranty is 3 yearsonsite limited warranty. 6. The ServicePac upgrades this to 3 years 7x24x4hrs. Service will only be provided in the country where the service has been purchased, unless stated otherwis e. For moreinformatio n on ServicePac warranty enhancements visit: ibm.co m/service s/europe/ma intenance All prices stated exclude VAT and are the IBM estimated retail selling prices that were correct atthe time of going to print. The rate of VAT is 20%. Prices may vary according to configuration. IBM Business Partners set their own prices and their prices to end users may vary. Products are subjectto availability. IBM logo and ibm.com are trademarks of International Business Machines Corporation in the United States, other countries, or both. A current list of IBM trademarks is available onthe Web at Copyright and trademark information at ibm.com/legal/copytrade.shtml Intel Core, Core Inside, Intel Inside, Intel Inside Logo, Xeon and Xeon Inside are trademarks of Intel Corporationin the United States and other countries. Other company, product and service names may be trademarks or service marks of others. IBM Corporation 2011. All Rights Reserved.

8/7/2019 Cityam 2011-01-27book

17/32

LLOYDS insurer Hiscox was yesterdaythe latest company to warn that insur-ance claims from the UKs snowy win-ter are on the rise.

Hiscox estimated it faces 16m inclaims from November andDecembers bad weather-related claimsand said this did not take Januarys fur-ther freezing conditions into account.

The loss is likely to be revised up asfurther claims are added, and follows aprofit warning from property insurerRSA last week after it incurred an110m UK loss from the weather.

Hiscox also played down its exposureto the f loods that devastated Australiaearlier this month, in its third-quartertrading update.

Hiscoxs position on the Australianfloods is still evolving, however we

believe we are underweight in thisarea, the insurer said.

But after taking a 37m net loss

from last Septembers earthquake inChristchurch, New Zealand, it is possi-

ble the f loods may also cost it millions.Hiscox, which wrote 1.7bn in pre-

miums last year, reported a 131mcombined loss from the Chilean earth-quake last February, windstormXynthia, which hit Europe in March,and the New Zealand quake.

Although 2010 was marked bymany significant and expensive catas-trophes, most of these occurred inareas where Hiscox had deliberatelyreduced exposure due to weak rates,the company said.

Analysts said the combined loss,about 10 per cent of Hiscoxs combinedratio a ratio of premiums to lossesthat indicates profitability was in line

with forecasts.These numbers are broadly reassur-

ing, said Jeffries analyst Nick Pope.And despite the UK weather claims,

the Bermuda-based insurer says its UKbusiness remains on track to make ahealthy profit.

Hiscox is hitby disastersBYALISON LOCK

INSURANCE

HERITAGE OIL revealed yesterday thatits Miran oil field in Iraq turns out to

be mostly filled with natural gas.FTSE 250-listed Heritage said yester-

day it will continue drilling at theMiran site, which is one of the largestgas fields to be discovered in Iraq.

Its shares sank 29 per cent to 310p,as investors had anticipated a lucra-tive oil find at the field in theKurdistan region of the country.

Heritage expects first production in2015, with an expected output rate ofover 100m cubic feet per day.

We are considering various devel-opment options including a tie-in toplanned infrastructure, said chiefexecutive Tony Buckingham. Thisdiscovery has the potential to gener-

ate substantial further value for ourshareholders and benefit the peopleof Kurdistan and Iraq.

The firm said it is mulling usingthe under-construction Nabuccopipeline to transport its gas output toEurope.

BYMARION DAKERS

ENERGY

Heritage admits itsIraq oil find is gas

Cass MastersIm not waiting for the upturn,Im making it happen.

Giedre Drake graduated from the MSc in Finance andInvestment at Cass Business School in 2010. Now shesa Business Development Executive at MTS Markets.The future belongs to people like Giedre.

Developed with the most current industry thinking,designed around your busy lifestyle and deliveredin state-of-the-art facilities in the heart of the City of

London, a part-time MSc from Cass in Finance andInvestment or Mathematical Trading and Financecould be your next step on the road to success.

Casss finance research is ranked third in Europe bytheEuropean Financial Management Report 2010.


Join us at our next information

session on 1 February 2011. For

more details call 020 7040 5258 oremail [email protected]

BG Group strikes oil in BrazilShares in BG Group rose nearly four percent yesterday after the explorerannounced a discovery of light oil inCarioca area, offshore Brazil, withEvolution Securities upbeat on hopes offuture production upgrades. The keyhere is that this is yet another discovery

along with recent major success off-shore Tanzania (multi-TCF gas discover-ies) that should increase confidence inBG's ability to deliver its six to eight percent per annum production growth to2020, Evolution Securities said in anote.

ConocoPhillips profits surgeConocoPhillips, the third-largest US oilcompany, reported a 54 per centincrease in quarterly profit yesterday asproceeds from asset sales and highercrude prices and refining margins boost-ed results. Profit in the fourth quarterwas $2bn (1.26bn), or $1.39 per share,compared with $1.3bn, or 86 cents pershare, a year earlier.

More Morocco success for CircleOil and gas explorer Circle Oil said itmade another gas discovery in its keySebou Permit, marking its second suc-

cessive discovery in Morocco this month.The company said it found gas in thedeeper Main Hoot and the secondaryGuebbas regions of the reservoir. CircleOil shares closed up 1.9 per cent.


Hiscox played down its exposure to the Australian floods Picture: REUTERS

ANALYSIS lHeritage Oil

340

380

420

460

500


p 346.6026 Jan

Costly case of mistaken identityTHERES a whole ocean of oil underour feet! No one can get at it exceptfor me! So screams Daniel Day Lewisas Plainview in Paul Thomas

Andersons film There Will be Blood.Until yesterday, Heritage was on the

verge of a similarly huge find in thesemi-autonomous Iraqi region ofKurdistan.

Heritage did find something, butit wasnt an ocean of oil. Instead, thecompany has stumbled on one ofIraqs biggest gas fields. Investors,

who had piled into the stock on theexpectation of striking crude, haveleft in their droves.

At first glance, its not clear whyfinding so much gas is necessarily

bad news, but it is. It is hard to mon-etise a gas discovery in Kurdistan,

which has strict rules on exports andquotas for domestic gas needs even

harder for an oil company. House

broker JP Morgan has cut its net assetvalue from 542p to 381p.

If Heritage doesnt want to mone-tise the gas itself, it could sell theasset to a more suitable company,although analysts and the marketclearly think it isnt worth much.

Having lost so much of its marketvalue after yesterdays shock news,Heritage is looking increasingly vul-nerable to predators. CentralEuropean gas group OMV is tipped asa potential bidder, as is HungarianMOL. Both serve markets that wantto lessen their reliance on Russiangas.

As Plainview found out to his eter-nal cost, oil exploration is an unpre-dictable game.

BOTTOMLINEAnalysis by David Crow

NEWS | IN BRIEF

8/7/2019 Cityam 2011-01-27book

18/32

ACCOUNTANCY software firm SageGroup said yesterday a recovery inspending by small businesses hadcontinued in its first quarter, help-ing it to hit its forecasts for theperiod.

This marks the first return togrowth in software revenue sincethe second half of 2007.

Sage, which sells software to 6.3msmall and medium-sized businesses,said results for each of its regions

were in line with expectations.The company said in December

that organic revenue grew by threeper cent in the six months endingSeptember, the second half of its fis-cal year.

Chief executive Guy Berruyer said:Our principal markets continuedtheir gradual recovery in the quar-ter, and I am pleased that our results

were in line with our expectations.Sage said it cut its debt to 187m

from 219.8m three months earlier.Meanwhile, German business

software maker SAP forecast double-digit revenue growth this year andraised its dividend 20 per cent.

The firm says it wants to refocusinvestor attention on its futureprospects after a damaging court

battle with US rival Oracle.Chief financial officer Werner

Brandt said the dividend hike to0.60 (52p) shows confidence in ourbusiness going forward.

He said: We showed rock-solidrevenue across the globe [in the

fourth quarter], particularly in thefast-growing emerging markets.

SAP shares closed 1.4 per centlower at 41.13 as analysts andtraders pointed to a strong run-up inthe shares prior to the results,adding that the dividend increase

was in line with expectations.

Small firms help putSage back on trackBY STEVE DINNEEN

TECHNOLOGY

AIM listed fund management groupMAM Funds is set to raise up to 20m byplacing more than 60m new shares.

MAM intends to place the new ordi-nary shares, worth 33p per share, inorder to pay off outstanding bank debtsas well as to appoint new management.

Chairman and chief executive ColinRutherfood will step down, taking apayout of 350,000 as a reward, as wellas board director Adrian Collins.

Ian Dighe will come in as executivechairman whilst former Gartmorefund manager Gervais Williams will

become managing director from 1March.

Speaking yesterday, Colin Rutherfordsaid: Completion of this successful

placing and the debt and preferenceshare repayment will leave MAM Fundsdebt and covenant free with high quali-ty and supportive shareholders and astrengthened management team.

MAM Funds toissue 20m innew shares topay off debt

FUND MANAGEMENT


BREWIN Dolphin has been slapped with a 6m bill from the FinancialServices Compensation Scheme (FSCS)as part of an industry-wide burden that

will hit bonuses and could even putsome smaller brokers out of business.

The FSCS has sent invoices totalling326m to wealth management firmsto collect compensation for investorsin two firms that went bust.

Keydata Investment Services col-lapsed owing 247m after sellingfraudulent bonds to more than 5,000investors and Wills & Co ceased trad-ing after being hit with a 1.5m fine by

the Financial Services Authority (FSA)for mis-selling.

Charles Stanley was asked to pay2.6m and Rathbone Brothers has

been billed for 3.2m. The invoices,

which must be paid within a month, will hit profit sharing schemes at wealth management firms, directlypenalising brokers.

Brewin Dolphin said it wasextremely disappointed by the fail-ure by the FSA.

Meanwhile, Brewin Dolphin report-ed a 16 per cent rise in revenues from a

year earlier as its investment manage-ment arm attracted new client money.

A 17 per cent increase in income frominvestment management offset a 13per cent decline from its corporateadvisory and broking business.

The total value of its managed fundsgrew seven per cent from the previousquarter to 24.8bn, boosted by rising

stock markets but also helped by500m of new money.

Charles Stanley reported 14 per centrevenue growth during its

cityam 2011-01-27book

Documents