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THE government received at least two bids forNorthern Rock yesterday, six weeks after itkicked off the privatisation of the lenderbailed out during the financial crisis.

Virgin Money and private equity firm JCFlowers are both understood to have madeindicative offers for the Northern Rock goodbank that is on sale, with the bad bank supposedly the Rocks most toxic assets hav-ing been hived off into a separate firm.

City A.M. has also learned that ApaxPartners, the US private equity firm, is intalks to fund another bid, though its possible

partner for such an offer in unknown.Virgin Moneys bid is to be funded by a mix

of US, UK and Middle Eastern capital as wellas cash from its parent group. Analysts expectthe assets to fetch about 1.5bn.

Insurance tycoon Clive Cowdery is under-stood to be keeping an eye on the sale but hasnot made an offer, while Blackstone, whichrequested the Rocks information memoran-dum, has dropped its interest.

Paragon Mortgages has also said that it willlook at the assets, but it is not clear if it madean offer. There were also reports thatCoventry Building Society had sent in a bid,which would please those who want to seethe Rock mutualised.

Virgin Money is also in talks with Lloydsover its sale of 632 branches, but has notmade an offer on those assets.

As City A.M. reported last week, Virginbelieves that the Northern Rock assets on saleare a simpler prospect for a start-up bankbecause they have a loan-to-deposit ratio of 72per cent on 17bn of deposits, with all of theloans in mortgages.

The Lloyds branches, by contrast, have aloan-to-deposit ratio of 130 per cent on 68bnof mixed assets, equating to a 30bn fundinggap. All parties declined to comment.

BUSINESS WITH PERSONALITYwww.cityam.comIssue 1,435 Friday 29 July 2011 FREE

FTSE 100 5,873.21 +16.63 DOW 12,240.11 -62.44 NASDAQ 2,766.25 +1.46 /$ 1.64 +0.01 / 1.14 unc /$ 1.43-0.01

JAMES Murdoch survived a boardroom

debate about his chairmanship of BSkyB yes-terday as the satellite broadcaster agreed ashare buy-back plan of up to $1bn (611.2m),which will be unveiled today.

It is the first time in BSkyBs history thatits dominant shareholder, the Murdoch-con-trolled News Corporation, has agreed to sellshares in a buy-back to make sure that itsstake doesnt rise above the current 39 percent. In a previous buy-back News Corpdecided against selling shares to take itsstake up from 36 per cent, inviting criticismabout creeping control.

Sources said the board engaged in a vig-orous discussion about James Murdochscontinuing role as chairman at Sky but hisposition had already been secured ahead ofthe meeting when senior independent direc-tor Nick Ferguson intimated his support.

This is despite a member of the commit-tee that grilled News Corp executives last week calling for James Murdoch to berecalled for further questioning over thehacking scandal.

Tom Watson, a Labour MP, believes contra-dictory statements made to the committeeneed to be clarified, especially those relatingto an email supposedly containing evidencethat phone hacking at the paper was notcontained to a single rogue reporter.

Former News of the World editor ColinMyler and the papers former legal managerTom Crone could also be recalled, Watsonsaid.

The former Labour minister told SkyNews: News International have had to beforced at every point to admit things havehappened ... and generally [theyre] having tohave things dragged out of them.

Analysts said that News Corporationsagreement to a share buy-back, including itscommitment to sell shares itself, wouldmake a lot of sense.

BY DAVID HELLIER AND STEVE DINNEEN

MEDIA

A buy-back, with News selling pari passu,is the best outcome for all shareholders,said Lorna Tilbian of Numis Securities.BSkyB shares have been under pressure dur-ing the phone-hacking scandal, which hasresulted in News having to drop its bid togain full control of the company.

Pressure on News Corp rose again yester-

day after it was alleged that News of theWorld journalists hacked the phone of SaraPayne, the mother of murdered schoolgirlSarah.

Meanwhile, Lord Leveson yesterday heldthe first meeting in his inquiry into mediaethics and the relationship between journal-ists and the police.

BIDS ROLL IN FOR THE ROCKBY JULIET SAMUELBANKING

James Murdochsurvived as

BSkyB chair

Pic: REUTERS

FLINTOFFEXCLUSIVEENGLANDTO RULEFOR 10YEARSPAGE 32

Certified Distribution

30/05/11 till 03/07/11 is 102,636

ANALYSIS l BSkyB

p

22 Jul 25 Jul 26 Jul 27 Jul 28 Jul

750

740

730

720

716.0028 Jul

SKYS $1BN PLANTOPLACATECITY

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News2 CITYA.M. 29 JULY 2011

Italys yieldshit 11-yr highITALY saw its debt costs soar at an8bn (7bn) bond auction yesterday,prompting Eurozone officials tothrow Romes participation inGreeces bailout into doubt.

As rumours circulated that Italianfinance minister Giulio Tremonticould resign over a corruption probeinvolving an aide, secondary marketyields shot to 5.99 per cent, with sixper cent seen as a dangerous thresh-old.

In the event, Italy paid 5.77 per centon the 10-year bonds, a price lastdemanded in 2000, and 4.8 per centon its three-year debt, a high not seensince before the financial crisis.

There were also reports that Italycould opt out of its share of Greecesnext tranche of aid. Conditions of

Athens original 110bn aid package,put together last year, state that anycountry whose debt costs rise abovethat on the loans given to Greece originally set at 5.8 per cent can haltits rescue fund payments.

Europes markets face a tumul-tuous summer before Eurozone gov-ernments vote on Greeces newbailout package, with the chief pay-master, Germany, not due to voteuntil September. Finance ministerWolfgang Schuble has spooked mar-kets repeatedly pledging that Berlinwill not fork out for more rescues.

BY JULIET SAMUEL

EUROZONE

When good news turns out to be bad

SOMETIMES, it is hard not to be a glasshalf empty kind of person, eventhough I always try to see the brightside of life. Take the news yesterdaythat Britains borrowing costs fellbelow equivalent American rates forthe first time in almost two years. Thereason, of course, was the US debt cri-sis; the battle between Republicansand Democrats over the debt ceiling isbecoming ever nastier.

Before the general election, BillGross, the boss of Pimco, the worlds biggest bonds investor, famouslyremarked that the UK was sitting on a

bed of nitroglycerine. At the time, giltyields were creeping up in a way that would eventually have been danger-ous, and it is only because marketsstill believe the coalitions austerity

plans will materialise that the UK hasemerged as a relative safe haven. Yet instead of cheering ultra-low

borrowing costs, I worry not justabout the possibility of US-triggereddefault catastrophe (that goes withoutsaying and ought to keep everybodyup at night) but also about the ridicu-lously low rate of interest payable ongovernment debt. How can anybodythink it makes sense for yields on 10-year gilts to be 2.97 per cent (less thaninflation), and for US Treasuries to payjust 0.03 per cent more? Massive dis-tortions and interventions from themonetary authorities worldwide havecreated gigantic, multi-decade bub-bles in the bond markets; well all bein trouble when they burst.

I had an equally glass half emptyreaction to the latest deregulatory pro-posals. Shops will soon no longer need

a licence to sell chocolate liqueurs,they will no longer have to notify theauthorities whenever somebody buysa TV and the age limit for buyingChristmas crackers will be cut from 16

to 12 in some cases only after a con-sultation process, however. Severalother useful changes will be made by Vince Cable, the business secretary.But these reforms, while great as faras they go, are merely the easiest, leastcontroversial deregulatory moves pos-sible. Many of the other regulationsthat will be abolished are obsolete andunused. The claim that 130 out of the257 rules covering retail firms will go,and 30 be simplified, is meaningless.All the really big stuff (Sunday open-ing limits, labour market rules and soon) arent included, that list in realityis much longer and theres lots morered tape coming that it is hugely moreimportant and costly than all of thesemi-trivial rules that are being abol-ished put together.

Next year, a huge avalanche ofbureaucracy will hit every company in

the country (and cost them lots) whenthe new national auto-enrolment pen-sion scheme is launched. There will bemore than 45 staging dates.Separately, firms across the country

are scrambling to change their proce-dures to comply with anti-bribery leg-islation. Of course, corruption iscompletely wrong but the way theact has been phrased, the fact that it isa unilateral decision from the UK andthe continuing question marksaround what it does and doesnt banare very serious issues for UK Plc. Boththose pieces of legislation are turningout to be very costly and burdensome.Meanwhile, a truly good piece ofderegulation the so-called Tesco law,which will inject real competition inlaw and change the structure of manylaw firms, has been delayed again.

Hopefully, all will be well in theend. The US wont implode; the UKwill tackle its bureaucracy. We can butdream.

[email protected] me on Twitter: @allisterheath

THE government launched a probeinto how the UKs smallest businessesare taxed yesterday, to ease the bur-den on unincorporated firms.

The Office for Tax Simplificationsaid people had to prepare arduousaccounts to complete their taxreturns, and grapple with undulycomplex tax and accounting rules when their enterprises were oftensmall and informal.

The OTS said it was concerned thatthe tax system demanded too muchfrom people in terms of skills, train-ing and time to handle taxes in suchsmall firms.

A major simplification of the rulescould improve the extent to whichsuch businesses engage with the taxsystem, it said in a discussion paper.

Business groups welcomed thepaper. This is a sensible survey of theoptions for resolving a serious issue,said Richard Baron, head of taxationat the Institute of Directors.

BYALISON LOCK

POLITICS

Easier tax on small firmsMichael Jack, the chairman of the Office of Tax Simplification, hopes to make tax easier

NEWS | IN BRIEF

MF Global beats forecastsUS stockbroker MF Global beat marketexpectations yesterday as it more thandoubled its net revenues to $314.5m(192m) in the past quarter and saw itsearnings jump to $7.8m, from $0.7m inthe same quarter last year. MF Globallaunched five years ago but saw the

greatest benefit from its proprietarytrading division, Principal StrategiesGroup, which it started last year. It isnow moving to a full investment bankingmodel. It also said it would sell $300min convertible bonds due in 2018.

Thomson Reuters profit up 17pcFinance data provider Thomson Reuterssaid its operating profit rose 17 per centin the past quarter to $669m and earn-ings per share rose $24 per cent despiteonly a four per cent rise in its revenues,as buoyant sales of its legal andaccountancy-focused products were off-set against lower-than-expected rev-enues in its markets division. Reuterschief executive Thomas Glocer said itsmarkets performance was below ourexpectations and he planned to accel-erate the transformation in the division,changing several of its leadership posts.

EDITORS LETTER

ALLISTER HEATH

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

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

Italian prime ministerSilvio Berlusconi is atthe helm as the cost ofthe countrys debtscontinue to spiral

4th Floor, 33 Queen Street, London, EC4R 1BRTel: 020 3201 8900 Fax: 020 7283 5334Email: [email protected] www.cityam.com

EditorialEditor Allister HeathDeputy Editor David HellierNews Editor David CrowActing Night Editor Marion DakersBusiness Features Editor Marc SidwellLifestyle Editor Zoe StrimpelSports Editor Frank DalleresArt Director Craig GaymerPictures Alice HeppleCommercialSales Director Jeremy SlatteryCommercial Director Harry Owen

Head of Distribution Nick Owen

BHP BILLITON DIGS IN AGAINSTSTRIKING MINERSBHP Billiton has declared forcemajeure on exports from the worldsbiggest copper mine, as a minework-ers strike entered its eighth day. Thestrike at BHPs Escondida mine inChile, which supplied 7 per cent ofthe worlds copper last year, comes ina month of widespread mining strikesfrom Indonesia to South Africa.

BRUSSELS TO PROBE ROYAL MAILPRIVATISATION Antitrust officials in Brussels areexpected in the next few days to opena probe into the UK governmentsplans to privatise Royal Mail. Themove comes amid growing doubtsabout whether the coalition will beable to sell even part of the state-owned postal operator before 2013

because of Royal Mails deterioratingfinances.

MADOFF TRUSTEE COLLECTS $1BNFROM HEDGE FUND

Hedge fund Tremont Group and itsparent company Mass Mutual haveagreed to pay more than $1bn to set-tle a lawsuit brought by the trusteeresponsible for collecting money forBernard Madoffs victims. The settle-ment, which requires US courtapproval, will bring the total amountcollected by the court-appointedtrustee, Irving Picard, to $8.6bn.

OBERTHUR SET TO SELL OFF SMARTCARD STAKESOberthur is in the final stages of anauction to sell large chunks of its busi-ness to private equity bidders, in amove that analysts said would providethe French group with fire power toeventually relaunch a bid for troubledUK banknote printer De La Rue. USfinancial investors AdventInternational and One Equity Partnersare the two remaining contenders

vying for a 60 per cent stake inOberthurs smart card business.

KEEP COMET AS A GOING CONCERN,BIDDERS TOLDKesa has sought to safeguard thou-sands of jobs at Comet by askingpotential buyers of the strugglingretailer to guarantee to run it as agoing concern. Kesa, which also ownsthe profitable French electricalschain Darty, made its wishes known yesterday to bidders that had pro-gressed to a second round.

IRELAND CLOSE TO STANDING ON ITSOWN FEET AGAINIrelands government could be in astrong enough position to raise fundson the markets as soon as next year,making it the first eurozone periph-ery nation to break free of the debtcrisis. Booming exports and on-targetdeficit reduction could put Dublin ina position to raise funds on accept-

able terms in the second half of2012, Berenberg bank claimed.

PROMETHEAN WORLD SEES PROFITSPLUMMET ON US CUTSInvestors in Promethean World werehanded their latest setback after theinteractive whiteboard makerunveiled a 65pc drop in pre-tax profitsand said it expected government aus-terity cutbacks to continue to maketrading "challenging". The companymade profits of 3.3m in the sixmonths to the end of June after rev-enues fell 11.9pc to 107.8m.

DAVID BECKHAM LAUNCHES NEWUNDERWEAR LINE WITH H&MDavid Beckham is to launch a newrange of underwear in partnershipwith high street chain H&M. Shoppers will be able to get into the footballstar's pants in time for Valentines Day,with the former England football cap-tain agreeing a two-year partnership

that will see his 'bodywear' line hit theshelves from February 2.

GOLDMAN-CITI OFFERING IS PULLEDOVER RATINGSGoldman Sachs and Citigroup pulleda $1.48 billion commercial mortgage-backed security from the market late Wednesday after an 11th-hour inter-nal review by Standard & Poor's,throwing the CMBS world into disar-ray. The move surprised analysts andinvestors since Goldman Sachs andCitigroup had already priced the issuelast Friday based on preliminary rat-ings. The firms were hours away fromsettling the issue.

JUDGE RULES FOR MARVEL IN COMICSDISPUTMarvel Entertainment LLC, not theheirs to legendary comic-book artist Jack Kirby, own the rights to morethan a dozen of the company's iconiccharacters, including Spider-Man, the

Fantastic Four and Iron Man, a feder-al judge ruled on Thursday.

WHAT THE OTHER PAPERS SAY THIS MORNING

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VODAFONE will finally see the bene-fit of its investment in VerizonWireless in January, it emerged yes-terday, when it will be paid its shareof a $10bn (6.1bn) dividend from theUS telecoms operator.

Verizon Wireless, the biggestmobile operator in the US, said itwould pay the dividend to its co-own-ers Vodafone and VerizonCommunications on 31 January, giv-

ing Vodafone a 2.8bn total payoutfrom its 45 per cent stake.

The move will enable Vodafone topay its own investors a 2bn windfallafter using 800m to repay debt.

The news should ease pressure on Vodafones chief executive VittorioColao from shareholders, who calledfor it to sell out of the joint venturerather than wait for it to yield cash.

Verizon has not paid a dividendsince 2006 as it has chosen to pay off alarge debt burden, but had said it

intended to restart payments next year when the debt was repaid. Itschief operating officer LowellMcAdam told investors in January thecompany would decide by the end ofthe year whether to issue a dividend.

Verizon Wireless has been a phe-nomenal growth story over recent years and now has nearly 90m USretail customers on its wireless 3G

and 4G networks, but has generatedlimited cash for its investors.

That has left Vodafones dividendyield lower than its major competi-tors, at six per cent compared with O2parent company Telefonica on up to9.8 per cent. Vodafone shares areexpected to soar today.

Vodafone toshare $10bn

Verizon divi

TURMOIL engulfed Washington DClate last night after Republicans wereforced to stall a House vote on theirdeficit reduction plan, causing theNikkei to tumble upon opening thismorning.

GOP speaker John Boehners planseemed on course for defeat, with upto 25 Republican rebels set to opposethe measures.

Boehner requires 216 votes to passthe House of Representatives, yet Tea

Party-sympathising Republicans arereluctant to pass the plan.

With no end in sight for the effortsto raise the governments self-enforced $14.3 trillion debt ceiling,the Nikkei sank by half a per cent inthe opening minutes of trading.

Analysts said that the Nikkei isexpected to trade between 9,800 and9,950 today.

And with Americas ticking timebomb growing louder, US bond yieldsrose above their UK equivalents forthe first time in almost two years.

The yield on UK 10-year gilts had

earlier dropped within sight of aneight-month low at 2.931 per cent,

while US yields exceeded 2.97 percent.

The collapse of Boehners plan lefthim scrambling to secure Republicanbacking once the vote reconvenes.

Democrats hope to pounce on theRepublican strife, by proposing analternative plan, with politiciansunder intense pressure to come to anagreement. The US Treasury has saidthat it will run out of cash to serviceits debts at midnight next Tuesday, 2August.

Republican in-fighting thwarts debt plan

President Obama has threatened to veto the Republicans plan, which faced GOP opposition in the House Picture: REUTERS

BYALISON LOCK

TELECOMS

NewsCITYA.M. 29 JULY 2011

BY JULIAN HARRIS

US CRISIS: 1AM UPDATE (BST)

3

Vodafone chief execVittorio Colao has

resisted pressure frominvestors to sell theVerizon Wireless stake

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CENTRICA, the UKs largest energysupplier, said pre-tax profits droppedby 19 per cent in the first half of the year after higher wholesale pricesand warmer weather took its toll onits residential energy business.

The utility firm saw its adjustedoperating profits fall to 1.26bn inthe six months to 30 June, which wiped out a slight rise in itsupstream businesses to 414m.

Higher commodity prices and sig-nificantly lower energy consumptiondue to warmer seasonal tempera-tures led to a 54 per cent drop inoperational profits in the residentialbusiness arm of British Gas.

The first half was pretty turbu-lent, finance director Nick Luff saidyesterday, citing unrest in the MiddleEast and the earthquake in Japan.

Services faced a tough environ-ment both competitively and withthe economy impacting consumerconfidence, he said in a news confer-ence.

Centrica announced last monththat it would raise gas and electricityprices by 18 and 16 per cent respec-

tively in August, pushing up the aver-age bill for around 9m customers by190 a year.

Without the August price rise,this would have wiped out a largepart of 270m profit, the companypointed out in the report, addingthat it had sold energy at a loss sinceApril.

The firm rewarded investors, how-ever, with a 12 per cent rise in inter-im dividend to 4.29p.

On Wednesday British Gas wasfined 2.5m by the energy regulatorOfgem for failing to address properlycustomer complaints, its second finein less than a month.

Centrica shares fell 2.3 per cent to313p last night.

Centrica fall

is blamed onthe weatherBYKASMIRA JEFFORD

ENERGY

EXXON Mobil, the worlds largestpublicly traded oil company, yester-day reported a higher quarterly profit but missed Wall Street estimates asits international refining businessand output fell short.

The companys second-quarter prof-it rose 41 per cent to $10.68bn(6.54bn), up from $7.56bn a year ago.

Exxons refining operations had aprofit of $1.36bn, down from the

anticipated $2bn in the quarter.

But even with the earnings miss,Exxons profit was the highest innearly three years, lifted by a jump incrude oil and higher natural gasprices.

Improvement in the worldseconomies has driven up demand forfuel, especially in developing coun-tries like China, which helped pushWTI crude prices up 32 per cent froma year-earlier in the second quarter toan average of about $102 per barrel.

Oil and gas output rose to 4.4m bar-

rels oil equivalent per day.

Exxon Mobil posts its highestprofits for almost three years

ENERGY

ROYAL Dutch Shells chief executiveyesterday declared the end of low costoil and gas, warning that companieswere entering a world where f indinghydrocarbons was going to be morecomplex.

Peter Voser was speaking as thecompany revealed a 77 per cent risein second quarter profits, fuelled byhigher oil prices and the first deliver-

ies from its projects in Canada andQatar.The energy giant reported second

quarter earnings of $8bn (4.9bn) ona current cost of supplies basis, upfrom $4.5bn in the same period last year. Group revenues jumped to$121.26bn, compared with $90.57bnin 2010.

Oil and gas production droppedslightly because of its sale of a stakein a deepwater Brazilian project earli-er this month.

Excluding divestments, the groupsvolumes increased by two per cent,lifted by two new projects in Qatarand the expansion of its Canadian oilsands operation. Together they areexpected to contribute over 400,000 barrels of oil equivalent per day(boepd) at peak production.

Voser confirmed that the group was in ongoing talks with Russiasstate-owned oil company Rosneft the recent venture target of BP foropportunities in and outside Russia.

Shell doubles its takings as itwarns the end of low cost oilBYKASMIRA JEFFORDENERGY


Shells Peter Voser confirmed talks with Rosneft, aimed at opening up fresh sources of oil

ANALYSIS l Centrica

p


335

325

315

313.0028 Jul

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ANALYSIS l How BT measures up

First quarter revenue

1.8bn

First quarteroperating profit

344m

5% 4%


1.9bn


-37m

31% 4%


1bn


155m

5%

16%


1.26bn


306m

3%

5%

BT yesterday reported a 20 per centleap in pre-tax profit, sending itsshares up more than four per cent.

Its revenues continued to fall, witha five per cent decrease to 4.7bn nar-rowly beating analysts forecasts.

Its performance was driven by asurge in uptake for its superfast inter-net services, with 141,000 new cus-tomers taking up its broadbandoffering. This pushed BT Retail to afour per cent rise in profits to hit344m. However, the revenues at theconsumer-facing business droppedfour per cent to 1.8bn, marking itsninth consecutive quarter of negativegrowth.

Average revenue per user rose to27.50 a month still a long way behind Virgin Medias eye-watering47. Fixed-line revenues fell six percent as customer numbers decreasedand voice calls dropped off.

Its Global Services division contin-ued its recovery, reporting an operat-ing loss of just 37m, a 31 per centimprovement on the 54m loss last

year.BT chief executive Ian Livingston

said: Customers are voting withtheir feet. BT and Sky have been the winners and pretty much everyoneelse has been the losers.

Virgin Media and TalkTalk bothreported net customer losses thisweek.

Meanwhile, the High Court yester-day ordered BT to block access to theNewzbin website, which has beenaccused of piracy. Critics say the rul-ing could lead to stricter controls onthe internet but the move has beenwelcomed by the creative industriesand rights holders.

Broadband

drives profitsat BT up 20pcBY STEVE DINNEEN

TELECOMS

TALKTALK lost 38,000 customers inthe latest quarter as it strugglesagainst strong performances at itsrivals and a reputation for poor cus-tomer service.

Its revenues decreased five per centyear-on-year to 423m. The firm doesnot disclose its profits until its inter-im results in October.

Average revenue per user

increased year-on-year from 23.90to 24.70, but fell slightly on the pre-vious quarter.

Chief executive Dido Harding said:Revenue in the quarter was lower, asexpected. With our customers expe-rience improving, churn falling, newservices gaining traction and the nextphase of our unbundling programmeaccelerating, we are confident that we will deliver growing revenue inthe second half.

TalkTalk revenuefalls as users leaveTELECOMS


ANALYSIS l BT

p


202

198

194

190

197.9028 Jul

ANALYST VIEWS: ARE BTS PROFITS ENOUGHTO OFFSET ITS FALLING TOP LINE ? By Steve Dinneen

MORTEN SINGLETON | INVESTEC

The cost-cutting story continues to demonstrate further mileage. Totaloperating costs before specific items down six per cent year on year, highlightingthe success of the continued cost efficiency drive.

ROBIN BIENENSTOCK | BERNSTEIN

BTs top line declines continue to highlight the weaknesses facing thecompany, while cost cutting to maintain margins can only be a short/mid-termsolution without shrinking the scale of the company.

CARL MURDOCK-SMITH | JP MORGAN

Strong revenue performance in Openreach and cost control within BTRetail are financial highlights. Management reiterated its full-year guidance, stat-ing that the results add confidence in delivering the outlook.

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NINTENDO has posted its first-everquarterly operating loss, cut the priceof its 3DS handheld game player andslashed its full-year profit forecast far below market expectations, hit bysluggish sales and a strong yen.

The weak result confirmed investorfears that the video games maker istoo focused on hardware when themarket is shifting toward software, with games played on the internetand on smartphones seen as key driv-ers of industry growth. Doubts that itcan replicate the success of its Wii

console have also dampened enthusi-asm for the companys stock.

FRANCE Telecom, the owner of halfof the Everything Everywhere joint venture in the UK, is preparing anasset sale that could rake in much as2bn (1.75bn).

It is considering putting its Swiss,Austrian and Portuguese units on themarket in a move that could pave theway for a bumper return to sharehold-ers. The telecoms operator yesterdayannounced second quarter resultsthat fell slightly behind forecasts butmaintained its full-year guidance.

It saw quarterly revenue slip by 1.3per cent to 11.34bn as competitionintensifies in France ahead of theentry of rival Iliad into the mobilemarket. Ebitda fell by 5.9 per cent to3.88bn.

Meanwhile, Telefonica posted adecline in first-half profit as a resultof economic woes at home in Spaincoupled with faltering performances

in the UK and other key markets.Overall, first-half profits fell 16.3

per cent to 3.16bn. Revenues rose 6.3per cent overall but tumbled 6.1 percent in Spain.

Some analysts are now questioningwhether Telefonica will maintain itscurrent credit rating.

In the UK, its O2 network saw serv-ice revenues decline 4.3 per cent inthe second quarter, trailing behind Vodafone and the joint venturebetween Orange and T-Mobile.

Orange ownermulls a 2bnsale of assets

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SONY stuck with its full-year profitforecast despite slashing its outlookfor TV sales, saying it is confident thatother units will perform better thananticipated to offset the losses.

The maker of Bravia TVs andPlayStation game consoles left itsfull-year operating profit outlookunchanged at 200bn yen (1.6bn),flat on the previous year, eventhough it cut its annual forecast forLCD TVs to 22m sets from 27m. Thatprofit target is below an average ana-lyst forecast.

Its profit for the quarter fell to 27.5bnyen from 67bn yen a year earlier.

Sony slashes itsoutlook for TVNintendo postsfirst ever losses

BY STEVE DINNEEN

TELECOMS

TECHNOLOGY

TECHNOLOGY

France Telecom, led by Stephane Richards, wants to sell foreign assets Picture: REUTERS

News 9

ANALYSIS l France Telecom


14.55

14.45

14.35

14.25

14.3428 Jul

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WEALTH manager St Jamess Placewas a haven for investors in the pastsix months as they ploughed morethan 2.7bn of new money into itsfunds, it said yesterday.

Record inflows of new businessand loyalty from current clientspushed its total funds under manage-ment to 29.1bn by the end of June,30 per cent higher than in June 2010.

Its chief executive David Bellamyshrugged off the tough economic cli-mate and said the firm would berecruiting new fund managers laterin the year.

The results were particularlypleasing given the current economicenvironment, sovereign debt con-cerns and fragile stock markets, he

said in a statement. We continue toattract new funds from both new andexisting clients.

New business inflows at the privateclient manager were 15 per cent upon the first of 2010 and were also gen-erating more profits, as new businessprofits were up 27 per cent at127.7m. It also hiked its interim divi-dend by 58 per cent.

Analysts said the results were inline with expectations, but cautionedthat the firms share price was ham-pered by low liquidity as it is 60 percent owned by Lloyds Bank.

Funds up at StJamess PlaceBYALISON LOCK

FUND MANAGEMENT

SOFTWARE firm Misys, which is cur-rently in takeover talks, yesterday saidits new Bankfusion platform helpedits banking division return to growthin the year to May.

Misys said it was confident its strat-egy, centred on new software andnew markets in Asia, Latin Americaand the Middle East, would deliver

growth as its headline earnings metexpectations with a 12 per cent rise.

Misys aided bynew software

TECHNOLOGY

PUBLISHING group Reed Elsevierposted better than expected first-halfresults yesterday after seeing a revivalin subscriptions to its scientific andhealth publications.

The Anglo-Dutch business and aca-demic publisher and events managersaid pre-tax profit rose six per cent to662m compared with a year ago, butrevenues fell three per cent to 2.9bn.

Its operating margin increased,while underlying revenues showed amarginal one per cent growth as itsaid most of its cyclical businesses

were recovering.Chief executive Erik Engstrom said

it had benefited from global growthin scientific and medical research,

which saw more spent on researchinformation. With positive momen-tum across our businesses, we contin-ue to expect a gradual improvementin performance, he said.

Its academic journal publishingdivision Elsevier, which makes 44 percent of the groups operating profit,saw four per cent underlying profitgrowth, while its LexisNexis RiskSolutions business intelligence armhad six per cent profit growth .

Its exhibition business showedstrong ten per cent underlying rev-enue growth once the effect of eventsheld only every second year wasstripped out. The divisions operatingprofit fell eight per cent.

Reed Elsevier impresses onhigh demand for its journalsBYALISON LOCK

MEDIA


ANALYSIS l St James's Place

p


385

375

365

355

356.0028 Jul

KELLOGGS WARNS OVER INFLATION

KELLOGG Co stood by its 2011 earnings target despite beating expectations in the secondquarter, as price increases made to offset higher ingredient costs could hurt demand.Kellogg expects its full-year cost inflation to be around the high end of its seven per cent toeight per cent forecast. The company is 90 per cent hedged on commodities, but cited theimpact of higher spot prices for the remaining 10 per cent. Picture: NEWSCAST

COFFEE chain Starbucks posted quar-terly profit that topped Wall Streetsexpectations on more visits from its

well-heeled customers yesterday.Sales in US cafes open at least 13

months jumped eight per cent in thequarter, more than the 5.3 per centrise expected, and the company raisedits fiscal year forecast above analysts

estimates. The increase came fromhigher prices, it said.

Starbucks salesup as prices rise

CONSUMER

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JOHNSTON Press, the highlyindebted newspaper publisher, yes-terday shocked the market byappointing the man behind theBBC iPlayer as its new chief execu-tive.

Ashley Highfield, who left theBBC to join Microsoft in 2009, willreplace John Fry, who is steppingdown as chief executive and leav-ing Johnston Press on 31 October2011, the firm said.

Highfield will receive a goldenhello consisting of 500,000 worth

of shares when he joins the firmunder its long-term incentive pro-gramme.

He came to prominence asdirector of new media and tech-nology at the BBC, where he wasthe executive responsible forlaunching the corporations huge-ly successful iPlayer catch-up TVservice in 2007.

He joined Microsoft in 2009 as a vice-president, with responsibilityfor its UK consumer and online

business, including the MSN con-tent portal.

The appointment of an executivewho has worked almost exclusively

in online media for over a decadesuggests that Johnston Press is setto unveil a massive shift in strategyto focus on the web.

Ian Russell, chairman of Johnston Press, said: His combined online and media sectorpedigree will be a major strengthin enabling us to grow our businessagain.

Shares in the publisher of TheScotsman and Yorkshire Post tum-

bled almost three per cent to 5p onthe news, valuing the firm ataround 33m. Its debt pile is overten times its market capitalisationat 389m.

Johnston Press tapsiPlayer man as CEOBYDAVID CROW

MEDIA

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www.cityam.com

News 11CITYA.M. 29 JULY 2011

AS the executive responsiblefor introducing the BBCsiPlayer service, AshleyHighfield has a track recordthat most can only dream of.

Launched on Christmas Day2007, the BBCs online catch-up

TV service was an instant hit andhas gone from strength to

strength ever since.In the first fortnight,

viewers downloadedmore than 3.5m shows,smashing internal tar-

gets. But that figurenow seems paltry.Last month saw thecatch-up servicereceive 157mrequests for TV andradio programmes;the phrase Ill watch it on

iPlayer hasbecome

common parlance.Highfield was known at the BBC for

his colourful floral shirts, but he alsoraised eyebrows with his expensesclaims, which included 450 on twoiPods and a 1,400 claim for two yearsof Sky TV.

He had less success at Kangaroo, thecommercial on-demand service spear-headed by ITV, the BBC and Channel 4,

which he quit for a job at Microsoft afterjust four months. The project collapsedshortly after.

As a vice-president at Microsoft, he isin charge of the UKs largest content por-tal MSN. But those who know him sayhe is often irritated by the companyscorporatist culture.

Taking the top job at Johnston Press issurely his biggest challenge to date. Thefirms debt pile is over ten times its mar-ket cap and it is years behind its competi-tors when it comes to the web.

Highfields appointment suggests the board wants to try something radical. There is no guarantee it will work,although the firm has little option butto try.

The exec who introduced theiPod generation to the BBCBYDAVID CROW

PROFILE

ASHLEY HIGHFIELD

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SHARES in BAE Systems rose five percent yesterday after the firm unveiledplans to up its dividend and buy back500m shares in a move to reassureinvestors it can navigate through mili-tary spending cuts in the UK.

But the British arms manufacturerposted a drop in net profits of 22 percent to 478m in the first half on the

back of falling sales.

Pre-tax profits for the first half fellfrom 781m a year ago to 691m,

with sales falling by 13 per cent. Chiefexecutive Ian King told reporters thecompany was in a sweet spot in theUS despite budgetary uncertaintythere and falling sales across thegroup.

We still think were in the fast laneand the sweet spot of governmentspending in the US. Were seeing con-tracts coming through -- the order

backlog is reducing, King said duringa conference call yesterday.

King sounded the upbeat note asthe maker of naval destroyers, sub-marines and Bradley military vehiclessaid profit before tax in the first halfof 2011 reached 691m, down from781m a year ago. The fall came afteran anticipated 13 per cent drop inheadline sales to 9.2bn from 10.6bn.

Shares in BAE closed at 307.34p yes-terday, up 5.1 per cent.

MINER Xstrata has made an all-cashbid for First Coal Corporation, a pri-vately held Canadian miner, that val-ues the firm at $153m (93.7m).

Xstrata, the fourth largest globaldiversified miner, said in a statement

yesterday that the board of First Coalhad unanimously recommended thedeal, which will give it access to cok-ing coal exploration leases inCanadas British Columbia region.

Coal accounted for 29 per cent ofXstratas earnings in 2010. It is the

worlds largest exporter of thermalcoal and a large producer of high-quality coking coal and semi-softcoal.

The group has mines in Australia,South Africa and Colombia and an

exploration project in Nova Scotia,Canada.Shareholders representing more

than 50 per cent of First Coals equityhave agreed to sell their shares toXstrata under lock-up agreements.

The proposed purchase of FirstCoal provides Xstrata Coal withaccess to coking coal exploration leas-es in British Columbia, Canada, saidLondon-listed Xstrata, explaining itsmotivation for the deal.

Analysts predict Xstrata will reportearnings before interest, taxes, depre-ciation, and amortisation of $5,845m,a 30 per cent rise on last year, when itpublishes its half year results next

week.Xstrata has under-performed the

peer group and market over the lastthree months, partly we believe astalk of a takeover by Glencore haseased, coupled with cost pressuresand production disruptions withinthe coal division, said analysts at

BNP Paribas. Yesterday shares in Xstrata closeddown 1.31 per cent at 1320.50p.

Xstrata set tobuy First CoalBYKASMIRA JEFFORD

MINING

BAE Systems ups dividend toease worries on defence cutsBYHARRY BANKSENERGY


FULL STEAM AHEAD AT NATIONAL EXPRESS

BRITISH transport group National Express has reported a 26 per cent rise in first-halfunderlying profit and chief executive Dean Finch said he was bullish about further

growth in the second half. The coach, bus and railway services operator said underlyingprofit for the six months to the end of June rose to 95.5m, which was at the top end ofanalysts forecasts.

NEWS | IN BRIEF

Ryanair loses Aer Lingus caseRyanair was yesterday dealt a blow bythe Competition Appeal Tribunal, whichruled that the budget airlines stake in AerLingus can be probed by UK watchdogs.Ryanair, the biggest shareholder in AerLingus, has previously had two hostilebids for the firm blocked under monopolylaw. Ryanair said it plans to appeal, afterarguing the Office of Fair Trading was outof time to launch a probe. Aer Lingus saidit welcomed the ruling and called on theOFT to recommence its investigation assoon as possible Ryanairs shareholdingis contrary to the interests of consumers

and the majority of our shareholders andmust now be addressed once and for all.

Shell signs 300m redevelopmentProperty developers Canary WharfGroup and Qatari Diar have won a300m contract to redevelop RoyalDutch Shells headquarters nearWaterloo station, Shell confirmed yester-day. The two developers will each con-tribute 150m to the deal, which will seehouses, offices and shops built on thefive-acre site surrounding the 1950stower in central London. Shell firstannounced plans to rejuvenate the site in1997 but the scheme was put on hold.George Iacobescu CBE, chief executive ofCanary Wharf Group, said: It is both a

privilege and a great responsibility to beinvolved in this redevelopment project.

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WOULD YOULIKE A WILL

OR DIVORCEWITH THAT?

WHEN the Legal Services Act wasannounced last year, it was quickly dubbedthe Tesco law, due to rumours it couldencourage supermarkets to start offeringlegal services to their customers. But comeMonday the moniker may have to bealtered.

Despite news this week that the Actcould be delayed until the end of the year,retailer WHSmith is making sure its aheadof the game by providing access to legalservices in more than 100 of its storesacross the UK.

Alongside the books, snacks and sta-tionery supplies that the store is known

for, regular customers will now also be ableto find dedicated staff ready to task a net-

work of affiliated lawyers with all theirlegal nuisances.

Lawyers from QualitySolicitors will offershoppers advice on everything from con-

veyancing to wills with the new servicepotentially bringing a whole new meaningto the idea of a quickie divorce.

WHSmith says the move is designed tomake accessing legal services as easy aspicking up your morning paper, which asCity A.M. readers will already know is really

to fuel their afternoon trades on Tuesdaywould have come face to face with EnglandPolo players Luke Tomlinson, James Beimand Malcolm Borwick, who managed tocommandeer the streets surroundingMayfairs hedgie heartlands to play a fewchukkas.

MANY HAPPY RETURNSA VERY happy birthday to the Boris bike,which officially turned one yesterday.

More than 6m journeys have beenmade on the distinctive silver and blue

two-wheelers since they were launchedlast summer, and Transport for London isnow preparing for an expansion of thescheme further into west London, includ-ing new docking stations at WestfieldShopping Centre.

Key sponsor Barclays has also pledged afurther 25m to the scheme to take its sup-port of the project through to 2018, withchief exec Bob Diamond (left) calling thescheme a huge success... which makes apositive difference to everyday life inLondon.

very easy indeed.But rest assured, we have no plans to

position strategically placed lawyers inblue jackets outside Bank underground sta-tion for your convenience anytime soon.

SHOOT THE MESSENGERSOUR grapes at Microsoft, which has for- bidden Ashleigh Highfield, the newJohnston Press chief executive, from talk-ing to the press.

Highfield, who doesnt officially leavehis job as vice-president at Microsoft untilSeptember, was more than happy to out-line his vision for the troubled newspaperfirm.

But The Capitalisthears the grey suits atMicrosoft sent a clinical email to thespinners at Johnston Press yesterday morn-

ing, informing the firm theyd asked himto keep schtum.

Theyre obviously sorry to lose him,said our source. Quite.

Still, at least hes used to the bureaucra-cy: the architect of the iPlayer spent almosta decade working for the BBC.

HEDGE YOUR BETSMAYFAIR hedge fund managers unable totear themselves away from their deskslong enough to make it to the CartierPolo were treated to an impromptulunchtime display earlier this week cour-tesy of Tony Lutwhyche, when theEngland polo teams official tailor broughta taste of country tradition onto Old BondStreet.

Desk jockeys nipping out for something

London mayor Boris Johnson celebrated the first anniversary of the launch of the Barclays Cycle Hirescheme at Westfield shopping centre yesterday, where the bikes will be introduced early next year.

Members ofthe Englandpolo team

took to thestreets ofMayfair thisweek to playa few WestEnd chukkas

13

The CapitalistCITYA.M. 29 JULY 2011 EDITED BY

ELIZABETH FOURNIERGot A Story? [email protected] The Capitaliston Twitter: @citycapitalist

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A SURGE in mergers and acquisi-tions fuelled a 33 per cent increasein quarterly pre-tax profit at bou-tique US investment bank Lazard, itsaid yesterday.

Lazard, which advises the worlds biggest companies on multi-billiondollar takeovers and asset sales, saidits second quarter profit before tax jumped to $89.2m (54.4m) from$67.1m in the same period in 2010.

Its revenues rose 12 per cent to$491.8m, but its overall $0.48 earn-ings per share came in narrowly below analysts consensus expecta-tions for $0.49.

Lazard chief executive KennethJacobs said it had invested strategi-cally in both its financial advisoryand asset management divisions,including by hiring new staff.

He said the business was wellpositioned, as the need for independ-ent strategic advice and superiorinvestment solutions continues toincrease.

A string of blockbuster M&A deals

propelled revenues in its M&A andstrategic advisory business up 21 percent to $200.9m.

Deals Lazard worked on in the sec-ond quarter included Vodafones$11.3bn sale of its stake in Frenchtelecoms operator SFR; the $29bnmerger between Express Scripts andMedco Health; and the UK govern-ments sale of the Tote to Betfred.

But it cut its compensation ratioto 58.5 per cent in the first half of2010, from 60 per cent in the firsthalf of 2010, as Lazard said it aimedto raise the ratio at a slower ratethan its revenue growth.

Its asset management arm alsohad a healthy quarer, with operatingrevenuesup 27 per cent to a second-quarter record of $237.7m, it said.

That was largely thanks to a 32 percent rise in its management fees, which went up 32 per cent com-pared with 2010. In contrast, itsincentive fees halved to $6.3m in theperiod as it said these were usuallyrecorded in the fourth quarter of theyear.

Lazards New York-listed sharesclosed up 1.2 per cent at $35.11.

Lazard profit

hike on M&AdealmakingBYALISON LOCK

FINANCIAL SERVICES

BARCLAYS Capital, the investmentbanking of arm of Barclays, has wonanother corporate broking client toadd to its growing presence in UKequities.

Barclays beat competition fromother investment houses to win the joint mandate at Catlin, the insur-ance broker. It will share the man-date with Catlins long-term broker

JP Morgan, and is replacing UBS.FTSE250-listed Catlin is the latest win for Barclays, which has wonmore than a dozen mandates in thelast twelve months, six of which areFTSE 100 companies, includingResolution, 3i and IAG, the new hold-ing company for British Airways andIberia.

Barclays Capitals corporate broking team is headed by JimRenwick.

Barclays Capital innew broking win

INVESTMENT BANKING


BELL MOVES UP AT DEUTSCHE

Scott Bell hasbecome DeutscheBanks head of cor-porate finance inthe UK.Bell, who advisedInBev on its acquisi-tion of Anheuser

Busch, will continuewith his current roleas global head ofconsumer.He formerly workedfor Goldman Sachsand HSBC.Nigel Meek willbecome chairman ofUK corporatefinance.

FOREIGN & Colonial InvestmentTrust yesterday said its portfolio deliv-ered 32.7m income in the past sixmonths, almost ten per cent morethan in the f irst half of 2010.

The 2.4bn fund, run by JeremyTigue, saw its net asset value increaseby 3.5 per cent to 3.58 per share overthe half year as major companiesraised their dividends.

UK companies provided almost halfof its dividend yields, 16.1m, com-pared with 16.3m contributed fromelsewhere in the world.

The trust had also spent 45.9m onshare buybacks in the past half year.

SOUTH African investment bank andasset manager Investec said first-quarter profit was marginally higher,as it battled tougher-than-expectedeconomic conditions and weak debtand equity markets.

Investec, which has been boostingits asset management business todiversify beyond lending, said yester-day that its principal banking activi-ties have been under pressure.

But the bank said that pre-taxoperating profit was marginallyhigher in the three months to the

end of June compared with a yearearlier.

Investec edgesup its earningsF&C trust sees32.7m incomeFUND MANAGEMENT

BANKING

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ASTRAZENECA yesterday raised its2011 earnings outlook and promisedto hand more cash back to sharehold-ers, following the sale of its Astra

Tech dental unit.Second-quarter sales rose a modest

three per cent in the second quarteras revenue growth from key medi-cines slowed and generic competitionincreased.

Britains second-biggest drugmakerfaces dwindling sales of heartburn

pill Nexium and decelerating growthof cholesterol fighter Crestor, whichcould worsen with the arrival ofgeneric copies of Pfizers Lipitor laterthis year.

Sales in the quarter were $8.43bn(5.16bn) and the company generatedcore pretax profit of $3.22bn, equiva-lent to core earnings per share (EPS)down three per cent at $1.73, it said

yesterday. Analysts had expected sales of

$8.24bn and core EPS, which excludes

some charges, of $1.72.Meanwhile, rival firm Shire report-

ed a better-than-expected rise in sec-ond-quarter revenue and earnings,reflecting strong demand for itshyperactivity medicines and treat-ments for rare diseases.

The company, which has built itsdrugs portfolio through acquisition,posted a 25 per cent rise in revenue to$1.06bn.

Shares in AstraZeneca lifted 0.2 percent to 3016.5p while Shire sharesrose 4.2 per cent to close yesterday at2136p.

AstraZenecalifts views as

Shire shines

LAIRD yesterday rebuffed an improved533m approach from its US rivalCooper Industries, saying the offercontinues to undervalue the firm.

The British electronics firm hasrefused to fully open its books, object-ing to certain preconditions byCooper, including its right to reduceits 200p offer if Laird declares a divi-dend for its shareholders.

But the firm said it remains open toconstructive talks and will give outspecific information if Cooper reason-ably requests it.

Laird, led by chief executive PeterHill, has set out to convince investorsto support its independence by recom-mending a full-year pay-out of 8p.

Cooper said shareholders couldeither accept an attractive cash exitor continue to place faith in theuncertain future of a company with apoor historic track record.

Laird board turns downCoopers sweetened offer

Laird, led by Peter Hill, said Coopers offer still undervalues the firm

BYHARRY BANKS

PHARMACEUTICAL


BYKASMIRA JEFFORDINDUSTRIAL

ANALYSIS l AstraZeneca

p


3,120

3,080

3,040

3,000

3,016.5028 Jul

ROTHSCHILDS head of investmentbanking, Robert Leito, is leadingLairds advisory team. Since joiningthe bank in 1998 from MorganGrenfell, where he spent nine years,he has built Rothschilds M&A armto be the Citys top M&A bank bynumber of transactions, specialisingin deals in the mid-market range.

Among his most prestigiousrecent deals is the huge $9.6bn(6bn) sale of a majority stake inCairn Energys Indian arm toVedanta Resources, which requiredagreement from the Indian govern-ment to secure.

Other deals include Babcocks1.32bn acquisition of VT Group inMarch; investment fund Melroses$855.6m disposal of McKechnieAerospace in 2007, and Thales51m takeover of data security firm

nCipher in 2008, among others.A chartered accountant, Leito

qualified at Peat Marwick Mitchell(now KPMG) and holds an engineer-ing degree from Imperial CollegeLondon.

He is joined by Ravi Gupta, whorecently advised Melrose on the saleof its Dynacast business in June.Gupta also advised the Board of StIves disposal of its magazine busi-ness to Walstead Newco3.

MEET THE ADVISERS

ROBERT

LEITAO

ROTHSCHILD

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RETAIL sales collapsed in June and July according to a business surveyreleased yesterday, while a separatepoll this morning shows British con-sumer confidence sinking again, fol-lowing brief respite in May.

Before this year, lower morale onthe high street had only been record-ed twice in the history of the GfKNOP consumer confidence index during the recessions of the early1990s and 2008.

The index dropped to -30 in July,from -25 in June, with all the sub-indices getting worse.

The biggest drop of nine points was in peoples expectations of theperformance of the economy overthe next 12 months, said Nick Moonof GfK NOP Social Research.

When combined with peoplespessimistic expectations for theirown finances over the next year,retailers can expect tough condi-tions to persist for a while yet

threatening an already fragile recov-ery.

Retail sales this month were evenlower than at the same point lastyear according to a Confederation ofBritish Industry (CBI) survey pub-lished yesterday.

Almost four in 10 (38 per cent) ofretailers reported that sales weredown on a year ago; only a third saidthat sales were up, resulting in anegative balance of minus five percent.

The underlying measure of sales, athree-month average, remained inpositive territory (at plus four percent) but this was still its weakestprint since July last year.

At the beginning of the year, theindex was at +45 per cent, yet hasplummeted since. A negative bal-ance of -33 per cent of shopkeeperssaid that sales poor for the time of year. Rising prices, especially forfuel, continue to impact consumerconfidence and make life tough onthe high street, said JudithMcKenna, chair of the CBIDistributive Trades Panel.

HOUSE prices have dropped at theirsharpest rate since October 2009, theLand Registry announced yesterday.Compared to a year earlier, Junesprices were down 2.5 per cent, it said.

However, house prices acrossEngland and Wales were flat month-on-month in June.

There is some disparity across the

regions, the Land Registry said, withWales experiencing a 2.8 per cent rise

in prices on the month, while thenorth-east of England suffered a 2.1per cent fall in the same period. Thenorth-east had an even greater annualdecline of 7.1 per cent, with regionalhouse prices suffering drops seven ofthe last nine months.

London was the only region torecord annual house price growth,but at a meagre 0.8 per cent.

House prices are expected to contin-ue on the downward spiral, reflecting

the troublesome economic climateand an environment that largely

favours buyers, commented HowardArcher of IHS Global Insight.

House prices are expected to fall byaround five per cent by mid-2012,Archer said, indicating that the aver-age standardised price of a house, cur-rently at 161,479, will fall furtherfrom its peak at 166,780 in August2010.

The British Bankers Associationthis week reported that mortgageapprovals were at an 11 month high,

but were still only 55 per cent of theaverage monthly level seen since 1997.

House prices down on a year earlierafter sharpest drop for 20 months

HIGH STREET firms are set to begranted some relief from the burdenof red tape, after business secretary Vince Cable announced changes toover half the UKs retail legislation.

The Red Tape Challenge willamend, simplify or scrap 160 out of257 pieces of regulation, it said yes-terday.

The scheme, which invites peopleto single out harmful and unneces-sary regulations, was launched bythe coalition this year.

We have to roll back the numberof rules and regulations that our businesses have to deal with if weare to create the right conditions forsustainable economic growth,Cable said yesterday.

We have heard these promises bysuccessive governments before butthese first proposals show that weare serious and are making realprogress.

Yet Stephen Robertson of theBritish Retail Consortium warnedthat more has to be done.

Scrapping regulations disused

since World War II may make thescale of action look better but regula-tory reform isnt a numbers game,Robertson said.

Its about reducing the impact. The promise to simplify regulationin several of the areas weve high-lighted is good news but theGovernment must now deliver andgo further.

Firms in other sectors, such asmanufacturing and enforcement,are currently being asked to suggestwhich pieces of regulation should bescrapped.

Cable set to cut red tape for retailersREGULATION

MULTINATIONAL car dealer Inchcapeposted a 10.1 per cent rise in first-halfprofit as strong revenue growth in Asia-Pacific and emerging marketsoffset declines in the UK and Europe.

The British-based group, whichsells and distributes cars for manufac-turers like Toyota, Mercedes-Benz andBMW in 26 markets, said yesterday itmade a profit before tax of 126.8min the six months to 30 June, up from115.2m in the same period last year.

That was despite a 5.3 per cent fallin turnover to 2.9bn, with the firm

benefiting from an 8.6 per cent reduc-tion in costs. Two thirds of Inchcapes trading

profit came from Asia-Pacific andemerging markets.

The firm, which ended the halfwith net cash of 188.6m, is paying aninterim dividend of 3.6p, havingomitted the payment at the samestage last year.

Shares in Inchcape closed up 8.4per cent yesterday at 390p.

Inchcape sees its profitdriven up by Asia-PacificAUTOMOTIVE

BRITISH enginemaker Rolls-Royceposted a 28 per cent rise in first-half

profit yesterday, helped by a growthin engine servicing revenue and con-tinued demand from planemakers working through hefty order back-logs.

Rolls, the worlds second-largestmaker of aircraft engines behind USgroup General Electric, yesterdayreported an underlying pre-tax profitof 595m on revenue up four per centat 5.46bn.

The company, whose order book

jumped four per cent to a record61.4bn, said it would increase itsinterim dividend eight per cent to 6.9pence.

Rolls, which makes engines

for planemakers Airbusand Boeing, said it was oncourse to deliver higher2011 profit, helped by itsmany long-term contractsto service the engines itsells to airlines and the mil-itary.

For the full year, wecontinue toexpect goodgrowth in

underlying profit, said chief execu-tive John Rishton (pictured), addingthat its joint $4.8bn (2.9bn) acquisi-tion of German diesel engine maker Tognum with Daimler would boost

the company further.Rolls-Royce was on averageexpected to post a first-half pre-taxprofit of 530.5m, according toanalysts. It is expected to report afull-year pre-tax profit of around

1.1bn.Rolls have significantly

beaten our expecta-tions for the firsthalf, said GuyBrown at Evolution.

Rolls-Royce beats forecastsBYHARRY BANKSENGINEERING

Retailer woecompoundedby poor salesBY JULIAN HARRISRETAIL

BYHELEN THOMPSONHOUSING


Yes, definitely. There is too muchred tape restricting the economy.Rules and regulations developedover the past tenyears, appliedlayer after layer,are imposingcompliance andpreventinggrowth.

SHAUN FOX |THOMAS COOPER

Impending regulations mighthamper UK growth, but not at theminute. The introduction of theAmerican DoddFrank policy atthe end of thisyear and itseffect on OTCtrading is anunknownquanti-ty.

DAVID CRAWFORD |LONDON METAL EXCHANGE

Yes, regulations are intended toimprove the economy, bringingquality controls, but the UK hasfailed to achieve this. Forexample health serv-ices are costly andthe facilities andtreatments inemerging marketsare moreappeal-ing.

HASAN GENCER |ICB UK

CITY VIEWS: IS REGULATION HAMPERING UK GROWTH? Interviews by Helen Thompson

ECONOMIC NEWS

NEWS | IN BRIEF

Downbeat morale in Euro areaEconomic sentiment in the Eurozoneworsened more than expected thismonth with optimism fading in all sec-tors, data showed yesterday, signallingslower expansion of the regions econo-my in the second half of this year.The European Commission's monthlysentiment index, based on a survey ofbusinessmen and consumers across the17-nation Eurozone, fell to 103.2 in Julyfrom 105.4 in June. This month's figurewas the lowest reading since 102.2 inAugust 2010.

German jobs data disappointsThe number of Germans out of work fellless than expected in July, data showed,

adding to signs of a growth slowdown,but labour officials said levels of jobless-

ness in Europe's top economy shouldcontinue to decline. Seasonally adjustedfigures from the federal labour officeyesterday showed unemployment fell by11,000 to 2.957m, undershooting expec-tations for a drop of 13,000 but continu-ing on a downward path unbroken sincehitting a peak in February 2010.

Retail sales down in EurozoneRetail sales across the Eurozone droppefor the third month in a row in July, andat their fastest rate of decline since lastOctober, according to a purchasing man-agers index (PMI) released by Markityesterday. Germany was the only mem-ber of the big-three to register growthof retail sales, the report said. High

street sales fell in France, while Italyposted another steep decline.

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SIEMENS, Europes largest engineer-ing group, has warned that the globaleconomy is becoming riskier, as itshealthcare unit dragged quarterlyresults below expectations.

Fiscal third-quarter net profit fromcontinuing operations fell 47 per centto763m (668m), lower than an ana-lysts consensus of about 1bn, and

while the group brushed off concernsthat emerging markets might be cool-ing, it acknowledged developed coun-tries were a worry.

Chief executive Peter Loescher said:In terms of macroeconomic condi-tions, I think we are seeing a levellingoff of growth momentum in the USand Europe.

He added that the healthcare mar-ket is difficult. Cash-strapped govern-ments across Europe are pushingahead with a drive to lower costs,

while US President Barack Obama isstepping up his drive to get health-care spending under control in aneffort to curb the bloated budget.

The results suffered from a chargerelated to Siemens exit from nuclear

joint venture Areva and one from ahalted particle therapy project it had

with Rhoen Klinikum.But the firm confirmed its full-year

profit outlook, banking on robustdemand from emerging markets.

Siemens dipson healthcare

headline sponsor champagne reception sponsor

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sponsors

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Book your place for the City A.M.Awards

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BYHARRY BANKS

ENGINEERING

ROBERT Dyas, the hardware storechain, is likely to be sold soon as its co-owners Lloyds and Allied Irish Banksare hiring an adviser to review itsoptions, City A.M. has learned.

Lloyds and AIB held meetings withseveral advisory firms over the past

few days to review options for the saleof the 139-year-old business they took

control of two years ago. They are stillto take a decision on an adviser butthe frontrunner candidate is believedto be Cavendish Corporate Finance.

The banks, once lenders to RobertDyas, saved it from administration in2009 by stepping in to back a manage-ment buyout and debt-for-equity swapthat took it from private equity firmChange Capital. The business was val-

ued at 30m then, but may be worthonly about 25m now.

Lloyds and AIB weigh sale ofRobert Dyas hardware chain

SOUTH Koreas Hyundai Motor yester-day posted a 37 per cent rise in quar-terly net profit after it logged recordglobal vehicle sales and gained mar-ket share from Japanese rivals reelingfrom the 11 March earthquake.

Meanwhile French car makerRenault said the impact from

Japanese disruption, which depressedprofit by a fifth in the first half,

would ease over the rest of the year.Hyundai, the worlds fifth-biggestcar maker along with affiliate KiaMotors, yesterday reported a 2.3 tril-lion won (1.3bn) net profit for the

April to June quarter, compared withanalysts forecast of 2.1 trillion won.

Park Jung-Won, fund manager at Yurie Asset Management said:Despite Japanese rivals recovering,Hyundai has new factories rampingup production. Its quality hasimproved and foreign sales are good.

Renault said first-half automotiveoperating profit took a 150m(131m) hit, mainly as a result of lostsales. It added the hit would be 50min the second half.

However Renault confirmed itexpected the world car market togrow by between three and four percent in 2011, led by emerging marketsand said it expected its year-on-year

vehicle sales and revenue to grow.Shares yesterday rose 4.5 per cent

to 37.42 on the Paris Stock Exchange.

Hyundai gains market shareas Renault hit by Japan quakeBYHARRY BANKSAUTOMOTIVE


RANK RESILIENT AFTER TAKEOVER DRAMA

MECCA Bingo owner and takeover target Rank Group yesterday posted an underlyingpre-tax profit of 26.4m, up 8.6 per cent on last year. The firm, which is keeping its

London listing after Guoco snapped up most of its shares earlier this month, said it alsoreceived a 162m rebate from HM Revenue & Customs for overpaying VAT on its bingotakings. Group revenues rose 4.6 per cent to 294m.

ANALYSIS l Siemens AG


95

93

91

89

90.1328 Jul

BYALISON LOCK

RETAIL

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BRITISH sweetener and starchesmaker Tate & Lyle said it had madean encouraging start to the newfinancial year and expected another year of profitable growth amidgrowing demand for its specialityingredients.

The London-based group, whichmakes sucralose zero-calorie sweet-ener Splenda, was giving an updatefor its first quarter trading ahead ofits annual general meeting.

Overall first-quarter volumesgrew at its speciality food ingredi-ents division driven by strong salesof Splenda and firm demand for its bulk ingredients. By-productsreturns were also helped by higher

market prices, the company said.Overall, our expectations for the

full year remain unchanged and wecontinue to anticipate another yearof profitable growth, the groupsaid in the update. In May, the com-pany said it will reopen a moth-balled Splenda plant in the UnitedStates next year as demand forhealthy sweeteners picks up after itreported a 34 percent rise in annualprofits in its year to end-March 2011.

The shares have performed wellyear to date, outperforming the FTAllshare by 19 per cent and on 13times FY2012 PE, they look broadlyfairly valued in our view, said ana-lyst Julian Hardwick at house bro-ker RBS. He added that withexpectations for the full yearunchanged it suggests the group is

confident for the current consensusfor pre-tax profits of around 290mafter 263m the previous year. Twoyears ago the company sold its oncecore sugar refineries.

Tate & Lyles share jumped threeper cent in early trading before trail-ing off to close 0.1 per cent down.

Tate & Lyle is off tosweet start to yearBY JOHN DUNNE

CONSUMER

COMPASS Group, the worlds biggest caterer, said its expecta-tions for the full year wereunchanged after delivering a goodperformance in the third quarterof its fiscal year.

The company, which servesaround 4bn meals each year in over50 countries, said constant curren-cy revenue increased by over eightper cent in the quarter to end-Junecompared with the same period

the previous year.We are encouraged by the

pipeline of new business and theongoing opportunities we have togenerate further efficiencies. Afterabsorbing the profit impact ofevents in Japan, our expectationsfor the full year remainunchanged, Compass said in astatement.

Compass, whose clients includeLondons 02 Arena, the Bank ofEngland and Chelsea FootballClub, said organic revenue rose by4.5 per cent during the period.

Third quarter organic revenue

growth has been driven by goodlevels of new business wins and a

high contract retention rate, thecompany said.

Compass added that, in NorthAmerica and the rest of the world,comparable revenues were posi-tive, while in Britain and much ofcontinental Europe conditionswere more challenging.

After absorbing the impact ofthe earthquake and tsunami inJapan, the operating margin in thequarter was broadly in line withlast year.

Excluding the Japan impact, it

would have increased by around 20basis points.

Compass finds its way to revenuegrowth to keep it on track for yearSERVICES

AG Barr said yesterday it has defiedbleak weather over the last six monthsto increase its sales.

The Irn Bru maker, which also ownsthe Rubicon juice brand, said in its lat-est trading statement that sales for thesix months to 30 July were up 3.5 percent compared with the same peri-od last year.

That was despite a slowdownin the soft drinks market as awhole during June.

The company said in a state-ment: We are pleased tohave matched the market

volume growth figures without responding tothe significant increasein competitor price pro-motion activity in the

period.Overall, our sales momentum is

increasing and, despite difficult mar-ket conditions in June, the businesshas performed well in July building onthe growth experienced earlier in theyear.

But the company admittedthat delays to improvementsmade at its Cumbernauld pro-

duction facility had resulted inshort-term capacity issues.

We anticipate a gradualimprovement in our productioncapacity and efficiencies over the

coming months, the Scotland-based group said.

In the year to date the total soft

drinks market has remained resilient,driven by increased promotional activ-ity, taking volume up by one per centand value by six per cent in the 26weeks to 9 July.

AG Barr weatherswell as sales rise

despite rainfallBY JOHN DUNNE

CONSUMER

ANALYSIS l Tate and Lyle

p


630

620

610

614.5028 Jul

COCA-COLA Enterprises yesterdayreported higher-than-expected 24 percent rise in quarterly earnings,helped by volume increases and for-eign currency movements.

Western Europes biggest bottler ofCoca-Cola drinks said net income roseto $246m (150m) from $199m a yearearlier. On a per-share basis, earningswere 74 cents.

Revenue rose 22 per cent to$2.41bn, while sales by volume rose4.5 per cent.

The company said it still expectsearnings of $2.10 to $2.15 per share in2011, including a benefit of 15 centsper share from the weak US dollar.

Following Coca-Colas acquisitionof the bottlers North American oper-ations, Coca-Cola Enterprises hasbecome a US-based company operat-

ing only in Europe.It buys syrup concentrate from

Coke and bottles and distributesdrinks in seven nations includingBritain and France.

Earnings jumpat Coca-ColaEnterprisesCONSUMER

GKN TO BUY GETRAG IN 295M DEAL

GLOBAL engineering giant GKN is buying automotive components business GetragDriveline, for 295m, it said yesterday. GKN, whose chief executive is Sir Kevin Smith (pic-tured), will pay 283m in cash and equity followed by 12m if Getrag hits targets on thefuture trade it generates. It is privately owned by the Hagenmeyer family.

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InvensysThe technology company hasannounced that David Thomas, who hasbeen acting chief financial officer of the

group since March 2011, has beenappointed to the role on a permanentbasis. The former Ernst & Young seniorpartner joined Invensys in 2002.

Volkswagen GroupEurope's biggest carmaker has appoint-ed Simon Thomas as managing directorof Volkswagen Group UK. Thomas pre-viously worked for Nissan UK in salesand marketing in Canada and Europe

before being appointed senior vice pres-ident for Europe sales and marketingwith Nissan in 2009.

Bluefin Wealth ManagementThe unit of Bluefin Advisory Servicesappointed Martin Avery to its London-based marketing team. Avery is joiningBluefin with more than a decade ofexperience in the financial servicesindustry.

NorcrosThe home consumer products grouphas appointed Martin Towers, 58, as anindependent non-executive director.Towers is also now chairman of theaudit committee. He replaces Jamie

Stevenson, who retired from the twopositions at yesterdays annual generalmeeting. Towers is a non-executivedirector of RPC Group, KCOM Groupand Lupus Capital. He was formerlychief executive of Spice, the utility sup-port services group, and prior to thatwas group finance director of KeldaGroup, group finance director of SpringRam Corporation and McCarthy andStone.

QBEThe specialist in business insurance hasappointed Patrick Coene as managingdirector for European markets. Based inBrussels, Coene will join in Septemberand report to Terry Whittaker, manag-

ing director for distribution in QBEsEuropean operations. Coene was previ-ously chief executive officer of AmlinCorporate Insurance. He joined the P&Cdivision of AG 1824 (now AGInsurance) in 1992 where he was lat-terly head of motor insurance. In 1998he joined Fortis Corporate Insuranceand was subsequently appointed chiefexecutive of Fortis Corporate Insurance(now Amlin Corporate Insurance).

CITY MOVES | WHOS SWITCHING JOBS Edited by Phoebe Torrance

+44 (0)20 7092 0053morganmckinley.com

To appear in CITYMOVESplease email your careerupdates and pictures to [email protected] SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

Wall Street flagsas debt talks stall

US stocks faded in the afternoon

yesterday to end mostly lower, with investors skeptical a keyvote by Congress would lead to

a deal to avoid a US default. The S&P 500 fell for a fourth

straight day as buyers kept to the side-lines while lawmakers tried to hashout an agreement on the deficit.

The Dow Jones industrial averageended down 62.44 points, or 0.51 percent, at 12,240.11. The Standard &Poors 500 Index was down 4.22points, or 0.32 per cent, at 1,300.67.The Nasdaq Composite Index finishedup 1.46 points, or 0.05 per cent, at2,766.25.

A vote on a Republican-led bill toraise the debt limit was expectedafter the close of trading yesterday inthe US House of Representatives. TheDemocratic-controlled Senate is craft-ing a competing bill, and Democraticleaders have said the House bill willbe defeated in the Senate.

During the course of the day, itbecame clear that even if [RepublicanHouse Speaker John] Boehner doesget the vote, when it's turned over to

the Senate, the Senate is going toreject it. That seems to be the reason

for the selling into strength, saidQuincy Krosby, market strategist atPrudential Financial.

Analysts said dissension among theranks of lawmakers has also madeinvestors less certain that a deal canhappen.

The wrangling over the US deficithas boosted volatility as stocks havefallen. The S&P 500 is down 3.3 percent on the week and the market'sfear gauge, the CBOE Volatility Index,rose above 23, the highest since mid-June.

The lack of leadership has opti-mism flying at a very low altitude...Its basically leaving investors veryskittish, said Steve Goldman, marketstrategist with Weeden & Co.

Stocks got an early lift from a dip injobless claims and strong pending UShome sales data, a day after the S&P500 had its biggest fall in eight weeks.

Among gainers, Green MountainCoffee Roastersjumped 16.4 per centto $102.57 after the company said lateWednesday its third-quarter sales rose18 per cent. Green Mountain was thetop percentage gainer on the Nasdaq,which ended slightly higher.Exxon Mobil Corp, the world'slargest publicly traded oil company,however, reported results that fellshort of expectations and its stock fell2.2 percent to $81.46.

Also on the downside were sharesof internet delivery companyAkamaiTechnologies, a day after it loweredits revenue growth target.

S TRONGER banks helped theFTSE 100 share index edge high-er yesterday as investors wel-comed upbeat data releases

from across the Atlantic, though theoverriding mood was one of caution,with only a few days left for the US

government and its opponents toreach a deal on its debt and avoid adefault.

The FTSE 100 index ended up 16.63points, or 0.3 per cent, at 5,873.21, inchoppy trading, having dropped 1.2per cent in the previous session onconcerns over US debt.

Banking stocks bounced after thesharp falls seen on Wednesday, con-tributing more than 12 points to theindex's advance, as bargain huntersmoved in, encouraged by better-than-expected US data on home sales andemployment.

But investors remained jittery overthe impasse in US debt ceiling talksthat has sparked fears of a US debtdefault and a credit rating down-grade.

Gains could be fairly short-lived inthis market, Martin Dobson, head oftrading at Westhouse Securities, said.

There is nervousness out thereand I dont think anyone's prepared

to take any positions until they've gota bit more clarity.

A vote of approval yesterday in theHouse of Representatives for a deficit-cutting plan presented by the topRepublican in Congress, JohnBoehner, could help ease the tensedebt deadlock.

Among the risers pharmaceuticalfirm Shire gained 4.2 per cent afterthe company reported a better thanexpected rise in second-quarter rev-enue and earnings, prompting Matrixto repeat its buy rating on the stock.

AstraZeneca edged up 0.2 per centafter the drugmaker raised its 2011earnings outlook and promised tohand more cash back to shareholders.BT Group, meanwhile, advanced3.8 per cent after the telecomsprovider said cost-cutting helped liftits core profit by three per cent in itsfiscal first quarter, and on relief thefirm retained its outlook.BAE Systemswas the top blue-chipriser, up 4.9 per cent, as the defencecontractor raised its dividend andannounced a 500m share buyback,as it moved to reassure investors itcan navigate through military spend-ing cuts in the UK and United States.

Elsewhere in the sector, Rolls-Roycefirmed 0.6 per cent after well-receivedfirst-half numbers which included aneight per cent hike in the dividend.Evolution Securities raised its targetprice for the company.

Concerns over Eurozone sovereigndebt dampened the mood, as Italy's

borrowing costs soared at a closelywatched bond auction yesterday.

Michael Hewson, market analyst atCMC Markets, sees little in the way ofcatalysts to jolt the FTSE 100 out of arange it has traded within since thestart of the year a high of around6,105 and a low of 5,600.

Into the mix, UK corporate results,broadly speaking, have done little toinspire markets, with UBS pointingout that earnings momentum hasturned negative.Compass Group topped the FTSE100 fallers list, off three per cent,after the worlds biggest contractcaterers unsurprising trading updateprompted a trimming of estimatesfollowing a conference call, brokerArbuthnot said.Inmarsatwas a top blue-chip riser,up 3.9 per cent, with traders sayingthe satellites operator was benefitingfrom confirmation of a big dealsigned by its US partnerLightSquared.

Banking bounce and positivedata help FTSE to edge higherTHELONDONREPORT

THENEW YORKREPORT

BEST OF THE BROKERS To appear in Best of the Brokers email your research to [email protected]

ANALYSIS lRenishaw

1,850

1,750

1,650

May Jun Jul

p1,614.00

28 Jul

RENISHAWCiti rates the global healthcare company as a sell with a target price of14.92, after this weeks preliminary results revealed a three per cent consen-sus earnings miss. As the results were in line with the brokers estimates,though, it views the miss a sign of miscommunication with investors ratherthan a symptom of weaker end markets. Citi says Renishaw stock has verylimited revenue visibility, and history suggests earnings are deeply cyclical.

ANALYSIS lCapita740

700

680

May Jun Jul

p

714.0028 Jul

CAPITAMorgan Stanley double upgrades Capita to overweight with a target priceof 860p having turned positive on the outsourcing subsector after two yearsof caution. The broker says that timing when to buy in the business servicessector is more important that selecting which stock to play, but sees greaterupside potential at Capita and Carillion than rivals Serco and Babcock, as itsees potential medium-term downside in the latters numbers.

ANALYSIS lEasyjet370

350

330

310

May Jun Jul

p367.40

28 Jul

EASYJETDeutsche Bank rates the budget airline as a buy and raises its targetprice from 480p to 490p after its third quarter results were significantlyahead of market expectations. The broker raises its full-year profit beforetax forecast to 225m from 194m, within the new company guidance of200-230m. Its full-year earnings per share forecast remains unchangedgiven the fuel headwind.

p

9 May 27 May 17 Jun 7 Jul 27 Jul

6,100

5,700

5,800

5,900

6,000

ANALYSIS l FTSE5,873.21

27 Jul

Cisco SystemsOne of the worlds largest global IT companieshas appointed Phil Read as operations directorfor its finance and professional services busi-ness. Read rejoins Cisco after a four-year stintas a sales and marketing director at BT. In his

new role, he will be responsible for the salesand engineering teams responsible for thefirms IT technology platforms. Reads organi-sation will advise on key aspects of workforceproductivity, efficiency systems and risk andcompliance solutions.

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FAIRY TALE CASTLE FOR SALECastello di Scerpena, a five-bedroom mediaeval castle inTuscany, is now on the market for 16.5m. There are twovillas, a guardian cottage, a deer park and 190 hectaresof land with 7,000 olive trees attached to the propertyssale. Contact Savills International on 0207 016 3754 orgo to www.savills.com/international.

TUNNEL TO GIVE HAMPSHIRE MARKET A BO0STBuyers, previously turned off by commuting to Londonthrough A3 congestion, are expected to flood into theWest Sussex and Hampshire area thanks to the comple-tion of the Hindhead tunnel. Anticipating this demand,

Knight Frank is launching a new office in nearbyHaslemere in September.

EURO CRISIS HITS CLUB MED PROPERTY MARKETThe Eurozone crisis is making itself felt in the Club Medproperty market. Between the first and the secondquarter of this year, interest in homes in Portugal, Italy,Greece and Spain fell by almost a quarter (24 per cent),

according to PrimeLocation.coms latest InternationalIndex.

BUYERS SAY DELAYS ARE

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