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Mobile liftsFacebook torecord sales

FACEBOOKS revenues hit newheights at the end of last year, as thesocial network cashed in on morepeople using it on smartphones.Turnover during the final three

months of 2012 hit $1.59bn (1bn), a26 per cent rise on the previousquarter, and 40 per cent up year-on-year, the company said yesterday.

Facebook also announced that, forthe first time, more people wereaccessing its service on mobilephones than on PCs. As more peoplebuy internet-connected smart-phones, they are increasingly access-ing Facebook on the move, and thesocial network has struggled to con-vince investors it is able to grow asmore people use it on devices withsmaller screens, where it is moredifficult to place adverts.Yesterday, however, it said mobile

accounted for 23 per cent of alladvertising revenues.

Today theres no argument Facebook is a mobile company,chief executive Mark Zuckerbergsaid. We started the year with noads on mobile and we ended upwith roughly 23 per cent. Thatspretty amazing.

Despite revenues leaping, net prof-its fell from $302m a year earlier to$64m due to share-based compensa-tion payments associated with lastyears initial public offering.Zuckerberg also warned that profitswould be low in 2013 as he investsin new products and services.

Facebook shares fell in after-hourstrading yesterday, to stand ataround $30. Although the compa-nys shares have improved since

Septembers lows, they are stillsome way off the $38 per shareprice that valued Facebook at$100bn when it floated last May.

Federal Reserve chairman Ben Bernanke argued much of the weakness in the economy was down to temporary factors including the weather

THE US economy shrank unexpectedlyin the final three months of 2012, offi-cial figures showed yesterday, takingmarkets and analysts by surprise.

Ben Bernanke at the Federal Reserveresponded by holding interest rates atrecord lows and continuing to print$85bn (53.8bn) a month to buy gov-ernment bonds and mortgage backedsecurities.

Stocks dipped on the news, with theS&P 500 edging down 0.4 per cent.The worlds largest economy had

seen a steady recovery with growth farexceeding the flat-lining UK and therecession-struck Eurozone.

But US GDP contracted by an annu-alised 0.1 per cent in the fourth quar-ter as firms cut back on building upstock and government spending ondefence plunged.That represents a sharp swing back

from growth of 3.1 per cent in the pre-vious three-month period, and takesgrowth for 2012 overall to 2.2 per cent.

Much of the sharp turnaround wasdown to volatile defence spendingwhich jumped 12.9 per cent in thethird quarter before plunging 22 percent in the fourth, leading a 6.6 percent drop in government spending inthe final three months.

Once defence and inventories arestripped out, growth was a healthier2.5 per cent, with capital expenditure

and consumer spending both stayingstrong in the three-month period.Analysts argued that bodes well for

the coming year.

www.cityam.com FREE

While the US GDP report was clear-ly disappointing, the details of thereport were not as weak, or as shock-ing, as the headline numbers suggest,said JP Morgan Asset ManagementsAndrew Goldberg. Gains in housingand consumption offset much of theweakness, and recent economic read-

ings point to growth closer to two percent in the first quarter than the con-traction seen last in this report.

But incoming tax rises could be a

threat to that optimism.US households have made consider-

able progress in paying off their debt.This progress, moderate employmentgrowth and the apparent turn-aroundin the housing market should supportconsumption in 2013, said BerenbergBanks Christian Schulz.

However, we expect austerity meas-ures such as the increase in payroll taxto dampen growth, and the latestdecline in consumer confidence pro-

vides evidence of that. The Fedagreed, arguing its current very loosepolicy means inflation and employ-ment are both gradually improving.

With appropriate policy accommo-dation, economic growth will proceedat a moderate pace and the unemploy-ment rate will gradually decline

toward levels the committee judgesconsistent with its dual mandate, itsaid in a statement.

BY JAMES TITCOMB

BY TIM WALLACE

US GROWTH FALLS

OFF A CLIFF AGAIN

BLACKBERRYS BACKISSUE 1,809 THURSDAY 31 JANUARY 2013

HOW SWEDENGOT IT RIGHTSee Forum, Page 20

See Page 3 and ourreview in Tech, page 24

ALLISTER HEATH: Page 2

FTSE 100 M6,323.11 -16.08 DOW M13,910.42 -44.00 NASDAQ3,142.31 -11.35 /$ 1.58 +0.01 / M1.16 -0.01 /$ 1.36 +0.01 Certified Distributionfrom 26/11/12 to 30/12/12 is 127,678

bank bonuses by 30 per cent, butcould not rein in Diamond who, shesaid, valued his rewards very highly.

Bob Diamond always enjoyed agenerous pay packet and he thoughthe found loyalty in people aroundhim by paying them well in myview, paying more than he neededto, she told the ParliamentaryCommission on Banking Standards.

And she criticised a sense of

entitlement that has emergedamong many staff, particularly inthe investment bank. The pay has insome cases reached obscene levels.

Diamonds total pay came in at6.3m for 2011, including long-termincentive awards.

But current chair of theremuneration committee Sir JohnSunderland pushed back, arguingDiamond did deserve a bonus for

the year.Since he wasappointed as chiefexecutive Bob Diamondengaged in the taskwith great energy,enthusiasm and skill, hewas a very successfulbanker, he told thecommission.

You canargue

about the culture at the bank,but he was set a series ofobjectives for the year and heachieved many of them. The

board took the view that hisperformance overall deserved

some recognition.

FORMER Barclays chief executiveBob Diamond did not deserve abonus in 2011 because the bankgave poor returns for shareholders,former director and remunerationcommittee head Alison Carnwathsaid yesterday.

The ex-non-executive said sheworked to pull down investment

BY TIM WALLACE

Alison Carnwath is a Cityveteran and chairs FTSE100 firm Land Securities

Ex-Barclays pay boss attacks Diamonds reward for failure

US GDP fell for the first time in years

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THE BUSINESS SMARTPHONE GETS A MAKEOVER

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[email protected]

Follow me on Twitter: @allisterheath

New lending scheme failsto boost small businessesEFFECTIVE interest rates on newdeposits have dived from 3.01 percent in August, when the Fundingfor Lending Scheme (FLS) startedto provide banks with cheapfunds, to just 2.11 per cent inDecember, the Bank of Englandrevealed.

But the cheaper funds have start-ed to divert cash back into themortgage market, the datarevealed, fuelling a boom in mort-gages.

Lenders approved 55,785 loansfor house purchase in December,an 11-month high, up 3.3 per centon Novembers 54,011 and up 6.1per cent on the total approvedduring the same month in 2011.The total value of these loansclimbed a full 10.4 per cent overthe year to reach 8.3bn.This improvement pushed many

analysts into suggesting FLS wasfinally revitalising the generallymoribund housing market.

Katie Evans at the Centre forEconomics and Business Researchcalled the data tentative signsthat FLS is easing credit condi-tions, while Melanie Bowler atMoodys Analytics said UK creditconditions are slowly starting toloosen.

But this loosening did not

Nestl liable over spying on NGONestl, whose clashes with activists oversales of baby milk formula in Africa led towidespread boycotts in the 1980s, hasbeen found liable in a civil case over thesecret infiltration of a non-governmentalorganisation. A Swiss court last weekordered Nestl and the Swiss securitycompany Securitas AG to paycompensation following revelations thatan infiltrator had attended workgroupmeetings of Attac, an anti-globalisationgroup. Some of those meetings took placeat members homes.

Hasenstab issue debt warningInvestor Michael Hasenstab, who madesome of the boldest contrarian bets in thebond market last year has a new messagefor investors: get out of supposedly safegovernment debt now, before it is toolate. Hasenstab oversees $175bn in bondsfor Franklin Templeton.

Brussels blocks UPS takeover of TNTBrussels formally blocked UPSs abortedtakeover of TNT Express yesterday, whileexpressing surprise that the US deliverygroup abandoned efforts to win approvalbefore its negotiating time was up.

Huge charity tax scam exposedOne of Britains biggest charities is a frontfor tax avoidance. Wealthy donors usedthe Cup Trust to avoid 46m in tax in anextensive abuse of Gift Aid incentivesdesigned to encourage charitable giving.The Cup Trust declined to comment.

Shell counts cost of Nigeria damageA Dutch judge has o rdered Shell to paycompensation to a Nigerian farmer whoselivelihood was wrecked by oil spillingfrom a well abandoned by the group.

Bundesbank wants competitive EUBundesbank President Jens Weidmannhas agreed with David Cameron that theEU must be more open and competitive.Weidmann said bailouts in the Eurozonecan ease the pain felt by austerity, butthey cannot replace the need for reform.

Alex opens London Stock ExchangeActor Robert Bathurst, who played thefictional City character Alex in a one-manshow, opened the London Stock Exchangeyesterday.

Germany to isolate bank riskGermany plans to isolate banks riskyactivities from customer deposits,according to a draft law. Banks with riskyoperations that make up 20 per cent ofthe balance-sheet value will have totransfer the business into separate units.

Bayer Faces Halt To Acne-Drug SalesFrance is taking steps to halt sales of anacne treatment used as a contraceptive,after Diane 35 made by Bayer AGGermanywas linked to four deaths.

PLANS to build more nuclearpower stations in the UK suffered a

blow yesterday as Cumbria countycouncil voted against proposals to

build a 12bn undergroundradioactive waste dump on theedge of the Lake District.

The government wants nuclearpower to help meet the UKs futureenergy needs but it must first finda new site for storing radioactive

waste. Cumbria, which already hasa substantial nuclear powerindustry thanks to the presence ofthe Sellafield plant, was the onlylocal area to have expressed aninterest in hosting such a site.

Without a solution to theradioactive waste issue we cannot

build new nuclear power stations,local MP Jamie Reed, who backsnuclear expansion, told City A.M.last night. The current process hascollapsed but the policy imperativehas intensified. Im confident wecan work to secure the needs ofthis critical UK industry.

The government insisted it wouldtry and convince other councils tohost the nuclear storage site. But itis understood that both DowningStreet and officials in the energydepartment are keen to find a newmandate for a Cumbrian location.

Hitachi, EDF, GDF and Iberdrolaall have interests in building newUK nuclear power stations.

Nuclear power

expansion hitby Cumbria vote

Sir Mervyn King unveiled the Funding for Lending Scheme last June

2 NEWS

BY JAMES WATERSON

BY BEN SOUTHWOOD

To contact the newsdesk email [email protected]

ONE of the governments daftestpolicies is its underpinning ofbank lending, a nationalisationof credit in all but name. The

biggest losers from the funding forlending scheme have been savers. Theeffective average savings rate for newdeposits has collapsed from 2.75 per

cent in September to a miserable 2.11per cent in December. After tax andinflation, real savings are beingslashed by up to two per cent a year.Its a shameful scandal.The number of mortgage approvals

has jumped but interest rates onbusiness loans to small firmsincreased from 3.39 per cent inNovember to 3.65 per cent inDecember. Rates fell at first but arenow little different to the 3.69 percent they were a year ago. The policyhas failed: it will fuel another bubblein the housing market while decimat-

EDITORSLETTER

ALLISTER HEATH

Flawed government policy is wiping out struggling savers

THURSDAY 31 JANUARY 2013

ing savers and doing nothing forsmall businesses. What a shambles.

AMERICAS GDP TAKES A HITIt came as a shock to many to see USGDP contract in the last quarter ofthe year, even though the tiny 0.1 percent fall could easily be revised away.Yet this shouldnt have surprised any-body: the uncertainty surroundingthe fiscal cliff was always going tohave a major effect.The silver lining was that the

decline in output was largely causedby reduced inventories, as well as adrop in defence expenditure.Consumption, business investmentand house building the componentsthat matter rose.

It would certainly be wrong for any-body to believe that spending cuts are

killing off the recovery. Over the pastthree years, the American economygrew 4.8 per cent even though the USpublic sector shrank by around 6 percent, massive belt-tightening fargreater than anything seen in the UK,according to RBS. In fact, the publicsector shrank in 10 out of past the 12quarters.

Now that is what I call radical aus-terity, not the sort we have seen inthis country. In the UK, governmentspending has barely gone down intotal terms, including interest spend-ing and yet the economy remains

of this year. He calculates that season-ally adjusted fourth quarter earningsremain little changed from the levelthat has prevailed since mid-2011. Healso worries that US equity marketsactual price to earnings ratio (p/e) of15 has been massaged downwards bya smoke and mirrors process the

use of operating as opposed to asreported profits to a cheaper-sounding 13.6, and that the prospec-tive p/e of 12.2 implies implausiblyhigh earnings gains of 11-12 per cent.

Despite globalisation, the Westernworld still needs the US economy toact as its locomotive. Yesterdaysshock contraction in GDP shouldserve as a warning that its recoverycould still grind to a screeching halt,dealing the rest of us another blow.

substantially smaller than it wasprior to the recession.The real lesson from yesterdays

GDP data is simply that any recoveryneeds the private sector to be strong;the lesson from the past few years inthe US is that spending cuts by thepublic sector can easily be absorbed

by the rest of the economy. A muchgreater worry is the impact of the pay-roll tax hike in the first quarter,which could conceivably triggeranother recession. It is too soon to bemaking these sorts of predictions butthere is certainly a real risk of anoth-er nasty surprise.The market shrugged off the data,

partly because it is still being pumpedfull of cheap money by Ben Bernanke.Charles Dumas of Lombard StreetResearch worries about Wall Streetslonger-term health, especially if theeconomy worsens in the first quarter

extend to business lending, whichcontracted further from its alreadylow base.The net monthly f low of credit in

November was minus 2.8bn indi-cating that more money was paidback than was lent out in newloans.This meant the three-month annu-

alised growth rate moved further inthe red, to minus 3.5 per cent, fol-lowing Octobers annualised con-traction of three per cent.The yearly rate was even worse,

showing a 4.1 per cent contraction

in business lending over the 12months to November.

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

IN BRIEFFSA set to probe annuity prices The Financial Services Authority will

today kick off a thematic review intoannuity prices in a bid to make surecustomers are getting a fair deal onprices when they come to retire. Theprobe, which began earlier this monthbut is officially unveiled by the Citywatchdog today, will conduct a pricingsurvey of all annuity providers ratesand aims to tackle risks to consumersif they fail to shop around for anannuity.

FIFA game publisher sales drop Computer game publisherElectronic Arts, the company behindthe FIFA series, last night announcedlower revenues for the third quarter asthe industry continued to strugglewith flagging sales as the public waitsfor the next-generation of consoles.For the last three months of 2012 the

company posted net revenue of$922m (583m), compared with$1.06bn a year ago. It reported a netloss of $45m.

STMicroelectronics posts loss STMicroelectronics posted aquarterly loss last night, hurt bytroubles at its mobile chip unit, andforecast a decline in revenue for thenext three months. The Geneva-headquartered company, which makeschips for cars, computers and mobilephones, recorded a fourth-quarter netloss of $428m (271m), comparedwith a loss of $11m for the same periodlast year. Revenue slipped slightly to$2.2bn.

Savers suer as Funding for Lending hits rates

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MOTHERCARES UK boss is to leavethe baby products retailer as part of amanagement shake-up to stem fallingsales at its troubled UK arm.The retailer said yesterday that Mike

Logue, who moved to Mothercarefrom Asda in late 2011, is to step downnext month after the role was maderedundant.The restructure is part of a three

year turnaround plan being led bychief executive Simon Calver, whojoined from Lovefilm in April lastyear, to return the UK business to prof-itability and revive sales.

Mothercares UK stores open for atleast a year saw sales fall 5.9 per centin the third quarter to 12 Januaryafter improvements made to productsand ranges failed to pull in theChristmas sales.

Calver will now play a more directrole in the UK business and is alsolooking to hire a commercial directorwho will report directly to him.

In the Autumn the firm appointedformer Argos finance director MattSmith as its new finance chief andNick Henwood from Sainsburys asdirector of retail operations.

Mothercare UK

boss to exit inteam reshuffleBY KASMIRA JEFFORD Calver said yesterday: We would like

to thank Mike for his contribution todeveloping and starting the imple-mentation of our transformation andgrowth plan.

Logues departure came as the com-pany revealed that MothercareAustralia a retailer in which it has aminority stake called in administra-tors after talks to sell the business fellthrough.

Mothercare said the Australian armaccounts for around seven per cent ofinternational retail sales and that theimpact on profits was expected to beminimal and does not change ouroverall view of International profitabil-ity going forward.

Shares fell 3p to 326p yesterday.

Mothercare posted another steep fall in sales over Christmas despite turnaround efforts

Mothercare PLC

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REVIEW: Page 24

THURSDAY 31 JANUARY 20133NEWScityam.com

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BlackBerry unveils long-awaitedfacelift with revamped handsetsTHE NEXT generation of BlackBerryphones was finally revealed

yesterday, kicking off a make-or-break period for Research in Motion.The Canadian firm revealed a

radical overhaul of its ageingmobile software and two newsmartphones, which it hopes willbe able to compete with thedominant Samsung and Apple.

The new operating system,BlackBerry 10, has long been in theworks, and has been repeatedlydelayed, leading many to question

BY JAMES TITCOMB whether the firm has a future at all.Unexpectedly, yesterday did in

fact spell the end for Research inMotion, with the company

announcing it would now simply becalled BlackBerry.Today sees a re-invented

BlackBerry launching an entirelynew mobile experience, said chiefexecutive Thorsten Heins, who tookthe reins 12 months ago. Formerbosses Jim Balsillie and MikeLazaridis were forced out followingyears of declining market share.

Shares fell more than 12 per centon fears the relaunch would not be

enough. The first BlackBerry 10phone goes on sale in the UK today.

INVESTMENT giant BlackRockyesterday bought eight per cent ofthe available shares in ManchesterUnited football club, worth around$55m (34.8m) at yesterdays closingprice.

A filing with the US Securities andExchange Commission reveals theNew York-based company hassnapped up 3.3m shares in the OldTrafford-based business.

The football club completed itsIPO on the New York Stock Exchangelast August after abandoning

previous attempts to float inSingapore and Hong Kong.

BlackRock makes $55m punton Manchester United sharesBY JAMES WATERSON At that time investors were

unimpressed with the offering, withthe shares only reaching $14, belowthe $16-20 range the clubs bankershad been seeking.

Since then interest has increased,pushing the stock past $17 this weekand causing Forbes Magazine todeclare the club is worth over $3bnonce debts are taken into account.

The share price rise will benefitthe US-based Glazer family, whobought Manchester United amid fanprotests in 2005 for 790m in aleveraged deal. They retain controlthrough the ownership of Class B

shares that have ten times the votingrights of publicly available stock.

Research In Motion Ltd


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THE TUBE could run until 2am on

Friday and Saturday nights, themanaging director of LondonUnderground said yesterday.

Mike Brown said that now theTubes modernisation programmeis well underway, there is scope toscale back the amount of timededicated to late-night engineeringwork and allow trains to run latersome of the week.

This is not imminent and we stillhave much work to do, but Irecognise the importance toLondon, said Brown.

There is clearly a balance to bestruck between extending ourhours of operation, which wouldmean less time to do upgrade work,and the understandable desire for alater running Tube.

A 24-hour Tube service is believedto be off the cards.

The London Underground

currently runs from 5am to around1am, but successfully opened laterduring the Olympics.

Mayor of London Boris Johnsonhad pledged to keep the Tuberunning later during his 2008election campaign, though the planwas thwarted by ongoing upgradework.

According to TfL, up to 5,000work underground overnight toimprove and maintain the Tubenetwork.

Tube could rununtil 2am, saystransport boss

BY MARION DAKERS

HIGH fuel prices in the UK are due tohigh duty and VAT, not a lack of com-petition, competition authorities con-cluded yesterday.There is no need for a full inquiry

into UK petrol pricing, the Office ofFair Trading (OFT) said yesterday,because there is no persuasive evi-dence of anti-competitive behaviourin fuel markets.

In fact the UK enjoys some of thecheapest pre-tax fuel in Europe,according to the OFT. It said that hightax levels are to blame for inflatedprices at the pump.

Between 2003 and 2012 petrol pump

prices grew from 76p per litre (ppl) to136ppl, while diesel prices climbedfrom 78ppl to 142ppl. But of this rise,89 to 95 per cent came from increasedduty and higher crude oil pricesaround the world. Only a smallamount extra went to those sellingthe oil, the OFT found.

We recognise that there has beenwidespread mistrust in how this mar-ket is operating, said OFT chief CliveMaxwell. However, our analysis sug-gests that competition is working

OFT blames taxfor high petrol

prices in the UKBY BEN SOUTHWOOD well, and rises in pump prices over thelast decade or so have largely beendown to increases in tax and the costof crude oil.And the OFT said that it was a mis-

conception that firms were engagingin so-called rocket and feather pric-ing where pump prices rise rapidlywhen input prices climb, but onlyrecede slowly when inputs cheapen.The watchdog could find very limitedevidence to suggest firms used thispricing strategy.

But competition has not driven allprices to exactly the same point.Supermarkets sell fuel around 2pplcheaper than the average oil companyowned vendor, which was in turn

2.3ppl cheaper than the average inde-pendent dealer.And most expensive were motorway

service stations, where consumersoften cannot see the prices on offerbefore they drive in.

A separate report out yesterday, fromBritish Car Auctions revealed thathigh oil prices were driving con-sumers to re-think their car usage.Some 53 per cent said they wouldeventually buy a more efficient vehicleor change their driving habits.


KENSINGTON ROOF GARDENS, one of Londons most glamorous party venues, has been putup for sale for around 200m. The grade II listed gardens overlooking Kensington High Streethave been leased since 1981 by Sir Richard Bransons Virgin group. Its Asian owners arebelieved to have hired Jones Lang LaSalle to sell the building, according to Property Week.

KENSINGTON ROOF GARDENS ON SALE FOR 200M

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BP Marsh was yesterday forced by a

rising share price to issue a statementconfirming that it is in talks with apotential buyer for its 13.5 per centshareholding in insurance groupHyperion.The specialist private equity

investor said discussions were pro-gressing at a normal pace but therecould be no certainty that thesewould lead to the company disposingof its interest in Hyperions shares.

By yesterdays close news of theinterest in the stake had pushed upBP Marshs shares by 12.5p to 124.5p.There has been constant specula-

tion about the future of Hyperionsince Tuesday this week after City A.M.reported that 3i, a near 23 per centshareholder in the insurance group,was in talks with a buyer.

Market sources suggest that a pri-vate equity group wants to buy thecombined stakes ahead of a possible

flotation of Hyperion as soon as 2014.There had been hopes on behalf ofsome shareholders that a flotationmight have come in the latter half ofthis year.

But Hyperions management team,headed by David Howden, prefer towait until 2014 to further assimilatethe purchase of Windsor into thegroup.

Howden has made it clear that hehas no intention of selling his sharesin the group just yet.

BP Marsh getsapproach forHyperion stake

BY DAVID HELLIER

TESCO yesterday fired a supplier con-trolled by Irelands most powerfulbeef baron for selling it burgers con-taining horse meat.The grocer also promised to use

DNA testing equipment to check thecontent of products on its shelves.

Britains biggest supermarket chainis reeling from a wave of bad publicityafter the Irish food safety authoritydiscovered that 29 per cent of a frozenbeef burger was horse meat.

We took that decision with regretbut the breach of trust is simply toogreat, Tesco technical director Tim

Smith said in a statement announc-ing the termination of its contractwith Silvercrest, a subsidiary of LarryGoodmans ABP Foods.ABP, Europes largest beef exporter,

tried to deflect blame for the scandalthis week after the Irish governmentannounced it had traced the source ofthe meat to a Polish supplier.

Catherine Brown, head of the FoodStandards Agency, told MPs yesterdaythat horse meat may have been pres-ent in burgers for the past year,

Tesco ends dealwith supplier in

horse scandalBY HARRY BANKS adding that there is no evidence of any

health risk.ABP said it had never knowingly

purchased or traded in equine prod-uct but Tesco said it had failed to usemeat from a list of approved suppliersand to honour an instruction tosource ingredients exclusively in theUK and Ireland. Tesco said it wouldcontinue to buy Irish beef worth morethan 100m (85.9m) per year fromother ABP companies.

We expect this to reassure con-sumers and draw a line under the inci-dent, said Espirito Santo analystCaroline Gulliver, who has a sell rat-ing on the stock.

Tesco PLC


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BOEING posted stronger-than-expected profit yesterday as its

backlog of orders rose, and said

its 2013 forecast assumed nosignificant financial impact fromthe grounding of its 787Dreamliner jet by regulators.

Boeing said net income fell to$978m (619.5m), or $1.28 pershare, in the fourth quarter,from $1.39bn, or $1.84 per share,in the year-ago period, when itposted a special tax gain.

Boeings New York-listedshares reacted positively to theresults, which come as aviation

Boeing profits impress as firmawaits Dreamliner probe results

BY CITY A.M. REPORTER safety agencies in the US andJapan probe what caused lithium-ion batteries to burn on two 787passenger jets earlier this month,prompting regulators to ground

the planes worldwide.Boeing said it is continuing to

build the Dreamliner but hashalted deliveries, and analystshave raised concerns about thecost of the grounding and fixingthe battery problem on about125 jets that Boeing has built sofar.

Boeing said it expects todeliver at least 60 Dreamliners in2013, compared with the 80 ormore that analysts expected.

Boeings 787 Dreamliners are grounded while watchdogs examine possible faults


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EVERCORE Partners quarterly profitmore than doubled as the boutiqueinvestment bank earned more feesfrom its investment banking business.

Evercore, founded as a merger andasset management firm in 1996 byformer US deputy treasury secretaryRoger Altman, has been aggressivelyhiring senior bankers as it looks tograb a bigger slice of the financialadvisory business in a tough M&Amarket.The New York-based bank said it

hired six senior managing directors toits advisory business, and in Januarypromoted three others internally.The boutique investment banks net

income rose to $35.3m (22.3m) forthe fourth quarter ended 31December, from $14.1m a year earlier.

BY HARRY BANKS Net revenue doubled to $214m asinvestment banking revenue jumpedtwofold to $195m.

Chief executive Ralph Schlossteinsaid Evercore had ended the year on astrong note in an environmentwhen announced transactions on aglobal basis were essentially flat andcompleted transactions were down 15per cent.

Rival Greenhill & Co reported lastweek a four per cent drop in advisoryrevenue for the year, far less than the21 per cent drop reported by MorganStanley, signaling greater momentumfor smaller shops even in weak mergermarkets.

Evercores shares, which have risenabout 13 per cent this month, tradedthrough $37 in New York yesterday their highest level in almost twoyears before closing at $35.60.

LAW firm Cobbetts, headquartered in Manchester, is set toenter administration, blamingdifficult trading conditions forthe move.

The firm, which also has officesin London, Birmingham and Leeds,

said it would sell off its businessand assets as soon as possible.Cobbetts attempt to merge with

rival law firm DWF failed last year.

Cobbetts nearsadministration

BY KATIE HOPE

TECHNOLOGY consultants BoozAllen yesterday reported a fall innet income to $56.2m (35.6m) forthe final three months of 2013,down from $62.9m for the sameperiod last year.

Revenue at the US business was

$1.39bn, a decrease of 3.5 per cent.The company blamed challengingmarket conditions for governmentcontractors for the fall.

Booz Allenprofits drop

BY JAMES WATERSON

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THE HEADS of five influential parliamentary committees have called on the government toremove foreign students from the target immigration level to help the economy. The groupargues incomers boost trade and jobs immediately, and build good global relations over time.

PM URGED TO DROP STUDENT IMMIGRATION CAP

Bank fees drive

Evercore profit

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HSBC yesterday hired more ex-regu-lators to set up a new unit to fightcrime in a drive to show it is striv-ing to clean up its tarnished image.The bank paid fines totalling

$1.9bn (1.2bn) to settle accusa-tions lax money laundering con-trols allowed drugs gangs andterrorists to funnel money throughthe institution.

Its new Financial SystemVulnerabilities Committee will bemade up of three non-executivedirectors and five external advi-sors, monitoring progress in tight-

ening the system and identifyingpotential problems in compliance.

It will meet at least six to eighttimes per year, beginning inFebruary, as well as responding toany specific risks that emerge.The bank has hired former HM

Revenue and Customs boss DaveHartnett and former counter ter-rorism officer Nick Fishwick aswell as ex-serious organised crime

HSBC on hiringspree to beef

up crime teamBY TIM WALLACE agency head Bill Hughes as advisers

to the committee. Former USdeputy attorney general JamesComey is a non-executive boardmember.As well as improving anti-money

laundering controls and clampingdown on terrorist and drug financ-ing, the committee also plans toimprove tax compliance and trans-parency.That also covers tax avoidance,

which the bank wants to cut downon to further restore its damagedimage.

The new committee, which willbenefit from the experience of the

expert advisers, will provide invalu-able guidance and advice as westrengthen our capabilities andenforce the highest standards, inparticular in relation to combatingfinancial crime, said chief execu-tive Stuart Gulliver.

The calibre, status and experi-ence of the individuals reinforceonce more how seriously we are tak-ing this.

9NEWScityam.com

PROFILE: DAVE HARTNETTDave Hartnett spent 36 years at HM Revenue and Customs, ending up as permanentsecretary for tax and retiring last year. He has been recruitedbecause of his deep knowledge of tax administration, afterleading policy development in the area, as well as compli-ance and enforcement on international tax affairs.Hartnetts experience also extends into the internationalarena. He was deputy chairman of the OECDs forum on tax

administration, and has supported developing countries ingrowing the capacity and capability of their tax departments.But Hartnetts career has not been without controver-sy HMRC was accused of making sweetheart dealswith big companies to reduce their tax bills on hiswatch. A National Audit Office report deemedthose specific arrangements reasonable, argu-ing the overall outcome for the exchequer wasgood, but told the department to brush upits internal communications and to stickmore closely to official rules. Despitebeing cleared of wrongdoing, Hartnetthas been targeted by protestors.

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F&C ASSET Management yesterday

posted a 4.9bn fall in the amount ofmoney it manages after losing acontract with insurer Friends Life.

The money manager, which is inthe midst of a radical turnover ledby activist owner Ed Bramson, saw2.4bn of fixed income cash pulledout by the insurer, which will nowmanage the pot itself through itsown internal money manager.

Institutional cash from pensionfunds and charities also fled out ofF&Cs funds, with third partyinstitutional business deprivingF&C of 956m. Its wholesalebusiness also saw a net outflow of340m over the quarter.

Total assets under managementcame in at 95.2bn at the end ofDecember, down from 100.1bn ayear ago.

The 144-year old business, whichstarted life as Foreign & Colonial,

was taken over by SherborneInvestors boss Ed Bramson in aboardroom coup in 2011.

Bramson has launched twostrategic reviews to turn around thebusiness, which has resulted in anumber of job losses.

He appointed Richard Wilson aschief executive before Christmas.

We look forward to continuingprogress in executing our Third-Party Institutional and Consumergrowth strategies, Wilson said.

F&C funds lose5bn after keycontract pulled

BY MICHAEL BOW

THE RISING black market for ciga-rettes in Europe has hit profits atImperial Tobacco, the FTSE 100 giantsaid yesterday.

Imperial said that sales of cigarettesin the EU are currently around fiveper cent lower than last year, as ris-ing prices and squeezed budgetsmeant more people buying illegalcigarettes.

Given our ongoing investmentand the European market pressureswe expect first half adjusted operat-ing profit to be down year-on-year,the company said.The profit warning sent shares in

Imperial down by almost five percent yesterday. Fellow FTSE 100 tobac-co stock British American Tobaccodropped by almost one per cent.

This reinforces the importance ofour two focus areas for 2013: furtherinvesting behind our key total tobac-co assets and geographies; and accel-erating our cost optimisationprogramme, Imperials chief execu-tive Alison Cooper said.The company said that in the last

three months of 2012, revenues rose

Illicit cigarettesstunt Imperial

Tobacco growthBY JAMES TITCOMB by two per cent even as volume salesfell slightly. It said the firms keystrategic brands Davidoff,Gauloises, West and JPS saw rev-enues increase by 12 per cent.

In Australia where cigarettes havebeen sold in plain, olive colouredpackaging since 1 December Imperial claimed to have seen no sig-nificant change in consumptiontrends in the country.

Despite Imperials troubles, analystswere bullish on the stock yesterday,claiming it remains underpriced.Yesterday, the company also

announced that finance director BobDyrbus, who has been with the com-pany for 25 years would retire.

F&C boss Richard Wilson was appointed by owner Ed Bramson in December 2012

THURSDAY 31 JANUARY 201310 NEWS cityam.com

Imperial Tobacco Group PLC


2,375

2,400

2,425

2,350

2,450

2,475 p2,361.00

30 Jan

F&C has made progress in improving flows, albeit that the headlinenumber continues to reflect the larger strategic partner outflows. We continue toexpect that earnings growth will be driven by the delivery of plannedcost savings, and this is likely to drive our 2013 forecasts higher.

ANALYST VIEWS

We continue to see intrinsic value in F&C given the maintained assetsunder management levels. The uncertainty from the outflow of Friends Lifeassets under management continues to abate as less of it remains to bein-sourced.

A weaker than expected quarter... To see further earnings and so share

price growth from here, the business will need to start delivering some mean-ingful organic growth. This still feels a long way off.

WHAT DO YOU THINK OFF&CS RESULTS?

STUART DUNCAN PEEL HUNT

ARUN MELMANE CANACCORD GENUITY

DAVID MCCANN NUMIS

7/29/2019 Cityam 2012-01-31

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Yesterdays debt issue by Phoenix wasstructured in a unusual manner, with newshareholder Och-Ziff underwriting part ofthe transaction and receiving a guaran-

teed 8m of fees in return.Och-Ziff fully underwrote the deal,enabling us to negotiate better terms, chiefexecutive Clive Bannister explained.

Deutsche Bank and JP Morgan acted as jointbrokers on the deal but will only receive0.75 per cent of the 1.75 per cent fee, withthe remaining one per cent shared amongPhoenixs shareholders, including Och-Ziff,TDR Capital and Sun Capital.JP Morgans team included Conor Hilleryand Tim Wise, while Deutsches bankersincluded James Agnew and Mike Lamb.Sun Capital, led by Phoenix founder andboard member Hugh Osmond, played acentral role in the renegotiation and intro-

duced Och-Ziff to the company. The entiredeal took almost a year to put together,with the process made easier by theinvolvement of a single underwriter.

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GLOBAL staffing companyManpower yesterday reported a16 per cent fall in fourth-quarterprofit as a weak Europeanmarket hurt its margins.

US-based Manpower, which

derives most of its sales andprofit overseas, has been underpressure from a weak economyin Europe, where manycompanies have cut back onhiring.

We are on guard for potentialdisruption in all markets,particularly Europe, but at thistime we do not anticipate anydramatic negatives, chiefexecutive Jeffrey Joerres said in astatement.

Manpower, the worlds thirdlargest staffing company,

generates about two-thirds of itssales in Europe.

Weak Europehits Manpower

BY CITY A.M. REPORTER

NINTENDO surprised the videogaming world yesterday by cuttingsales forecasts for its Wii U and3DS consoles.

The Japanese giant said itexpects Wii U shipments to havehit 4m from its November launchto the end of March, down fromthe 5.5m originally anticipated.Nintendo also trimmed annualforecasts for the handheld 3DSdevice from 17.5m to 15m.

The news will raise fears thatthe Wii U will struggle to matchthe success of its predecessor, the

Wii, which has hit sales of 100msince its launch in 2006.

However, the firm upgraded itsprofit forecasts on the back of a

weaker yen improving revenues.Nintendo now expects to swing toa 14bn (97m) profit for the yearto the end of March, up from the

6bn it forecast in October.This compares to the 37.3bn

loss it made in the last financialyear, which was the first inNintendos 124-year history.

The firm, which began in 1889as a playing card manufacturer,has struggled to woo key casual

gamers, who are now playing onFacebook and smartphones.

Nintendo cutsforecasts forsales of Wii U

BY JAMES TITCOMB

SWISS pharmaceuticals giant Rocheyesterday posted a four per cent liftin group sales for last year, and saidit expects sales to grow at the samerate in 2013.

The firm reported that sales hitSFr45.5bn (31.6bn) due to greaterdemand for key cancer drugs andhigher sales of diagnostic tests.Excluding the effects of varyingexchange rates, sales were up sevenper cent.

Strong revenues allowed the f irmto post core operating profit ofSFr17.2bn, with core earning pershare up 10 per cent at SFr13.62.

A particular highlight in 2012

was the approval of breast cancermedicine Perjeta, which helpswomen with HER2-positive breastcancer live longer, said Roche CEOSeverin Schwan.

Roche posts

lift in salesBY JULIAN HARRIS

APPLE has seen its request toincrease its rival Samsungs$1.05bn (665m) copyright finerejected in US courts.

The Korean company wasordered to pay Apple the sum in

August after it was found to have

used patented iPhone designs inits Galaxy handsets. Apple had

Apple loses attempt to tripleSamsungs $1bn patent charge

BY JAMES TITCOMB attempted to up the fine, claimingSamsung purposefully infringedthe patents. A verdict in Applesfavour could have seen thedamages tripled, but a New York

judge shot down the claims.However, Samsung lost an

attempt to have the original trialreheld. The legal duels between

the two are set to continue, withmore cases scheduled for 2014.

THREE Asian companies injectedfresh competition into thesmartphone industry yesterday,

boosting British chip firmsImagination Technologies and

ARM Holdings.LG, ZTE and Lenovo all outlined

a focus on competing with thelikes of Apple and Samsung, andsaid they anticipate better sales of

high-end devices this year.Chinas Lenovo, which is likely

Asian tech firms bring life to smartphone raceBY JAMES TITCOMB to become the worlds biggest

computer seller this year,reported a 34 per cent risein quarterly profits, butsaid it would protect itselffrom a global PC slowdown

by trying to sell moredevices in mature markets.

ZTE, also based in China,said it expects a 50 percent leap in smartphoneshipments this year while

Korean firm LG sawsmartphone sales rise as its

TV division suffered a decline.The news, as well as an

upgrade from MorganStanley, boosted graphics chipdesigner Imagination, whichsaw shares rise by 11.18 percent. ARM, which also makessmartphone chips, rose asmuch as 2.3 per centfinishing half a per cent up.

ZTE expects smartphone sales torise by 50 per cent

LIFE insurer Phoenix yesterdayunveiled plans to raise 250m in ashare issue, enabling it to pay downsome of its 2.4bn debt pile andraising the prospect of a return tothe acquisition market.

Chief executive Clive Bannistersaid the deal first disclosed in

yesterdays City A.M. transformsPhoenix by removing theexistential threat of having to pay

back 1.9bn of debt by 2016.The clouds of uncertainty have

been removed, Bannister said,

Phoenix rises again after 250m share issueBY JAMES WATERSON adding that his company can now

look to purchase more businesses.Unless we consolidate more we

would go inexorably into run-off.We could not conceive of doingacquisitions had we not retermedour debt. That door is now open

we are back in the saddle, he toldCity A.M.

The FTSE 250 company, formerly

known as Pearl, has carried heavydebts since it purchased CliveCowderys Resolution in 2008.

Closed-book life insurers do notaccept new business but instead

buy portfolios of existing policies,

charging premiums until thepolicies mature and combining the

businesses to save on costs.Hedge fund Och-Ziff has agreed

to buy 80m of the issue, with therest available in an open offer. Theproceeds will be combined withcompany cash to pay down 450mof debt.

The maturity date for the crucial

1.4bn of Resolution-related debtwill be extended until June 2019.Yesterday shares in company rose

by 6.6 per cent and Phoenix expectsits final dividend to rise by 27 percent to 26.7p as a result of the deal.

7/29/2019 Cityam 2012-01-31

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GOOD news for City lotharios, espe-cially in the run-up to ValentinesDay. Apparently more womenwould rather date a City traderthan a footballer.The shine is slightly taken off

this news by discovering that itis only true for women look-ing to trade their hus-bands for a banker

part-time.The study, by

IllicitEncounters.com,the dating websitefor married people,finds that after rock-stars and musi-cians, bankers arethe most lustedafter professionals.Well at least by the

unfaithful members of the fairersex who visit its website.

The Capitalist is reminded of amore wholesome survey onceconducted here, which round-ed up the best of the Citys tal-ent by seeking out the hunkiest

gents in finance.Back then environ-mental markets bro-

ker Anthony Astburyand PwC Englandrugby star JoshLewsey were hottiesdu jour.

The Capitalistwould like to invitesubmissions worthyof elevation onto a2013 Citys GotTalent pedestal to as always [email protected] women want more

The City of London Corporationhas dragged itself, kicking and

screaming, into the 21st century toexperience the joys of social media.After months of toil spent developinga new website and Facebook page, it

has now reached over 4,000 followerson Twitter. It is good news for#Guildhall, although it might take awhile to win over a couple of the Cityselder statesmen who, The Capitalististold, still view email with a degree ofsuspicion. Among the Corporationsnew online disciples are the LondonBee Keepers, Dead Fox RemovalLondon and The Gin Spot. Yes theyreall there said a spokesperson: Insectlovers, vermin control and finedining. @cityoflondon seems to bemore discerning in whom it followsitself. Enjoying science author BenGoldacre and the Citys snow-clearingupdates in its leisure hours, it wiselykeeps an eye throughout the day onthe latest business insights from@allisterheath, @hellierd and@cityamforum. Sorrowfully, we notedthat it has yet to discover the joys of@cityamonline. The Corporation alsoappears to have a slight obsessionwith China, following twenty or morerelated news feeds. Hopefully thisisnt a sign of the City itselfconsidering following the lead of somany other banking types anduprooting the Remembrancers Officefor a new life in the Asia-Pacificregion. But if so, there may be somepromising leads on @cityamcareers.

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FORMER managing director ofprivate banking at RBS Nigel

Jackson has taken on a charit yrole chairing the organisingcommittee of The Circuit, amotor racing event to raisemoney for the NSPCC.

Jackson, currently director ofboutique business consultingcompany Abstract UK told The

Capitalistthat weve already gotsome keen racers signed up fromthe Square Mile in addition tocelebrity team captains thechef Gino DAcampo and rugbyplayer Austin Healey. However

Jackson was tight-lipped when itcame to naming which City boyracer he thought might takehome the trophy on 7 March.

Chairman of The Circuit 2013, business consultant Nigel Jackson

Boy racers in the Square Mile

gear up for motoring challenge

No more WAGsplease: Womenprefer traders

13cityam.comTHURSDAY 31 JANUARY 2013

cityam.com/the-capitalistTHECAPITALIST EDITED BY CALLY SQUIRESGot A Story? Email

[email protected]

7/29/2019 Cityam 2012-01-31

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FIAT said yesterday its debt grew byabout 1bn (850m) in 2012 asEuropean car sales tumbled 14 percent, leaving the Italian carmakerever more dependent on stronggrowth at US unit Chrysler.As Fiats management moves to

increase spending on new models inEurope and the United States,investors are keeping a close watch onits debts for signs that cash-burningEuropean operations are straining thegroups crucial ability to invest inproducts that will win customers inthe future.

Fiat, suffering from a brutal salesdownturn in Europe, said it did notexpect business conditions to changein 2013 from its previous forecastsand that its home region continuesto present significant levels of uncer-tainty. Fiats net debt rose about 18per cent to6.54bn during 2012, a bet-ter performance than nearly all ana-lysts had expected.

Chrysler is also spending on new

BY HARRY BANKS models and said separately it expectscash flow to slow to $1bn or higher in2013, from $2.2bm in 2012.Total available liquidity for the

group was 20.8bn, slightly higherthan year-end 2011.

Fiat said its full-year loss before inter-est and taxes in Europe, where carsales are entering their sixth year ofdecline, was738m. It has said it doesnot expect to break even in Europebefore 2015. It pared fourth-quarterlosses in Europe before interest andtaxes to 165m, down from 298mthe same time last year.

Retailers warn politicians red

tape is stifling social mobilityRETAILERS last night urgedpoliticians in Westminster to avoidstifling the work opportunities itoffers to people from lessprivileged backgrounds.

On the evening that the BritishRetail Consortium (BRC) held itsannual parliamentary reception,the group called on government tocut back on red tape.

Retail is one of the mostmeritocratic sectors of theeconomy, the BRC says, providingflexible work to at least oneperson in every one in eightBritish households.

In retail, career progression is

based on aptitude and attitude.You really can climb from shop

BY JULIAN HARRIS floor to boardroom, commentedHelen Dickinson, the BRCsdirector general.

Retailers are uniquely placed topromote social mobility and helpthe government deliver on itsgrowth, jobs and skills priorities,but this shouldn't be taken forgranted.

Shops and other retailers providejobs to 40 per cent of 16 to 19 yearolds, the BRC says, investing 1,275on training per employee everyyear. It added that one in sixpeople without qualifications workin retail, while 13 per cent of thesectors staff have a disability.

We must not let our investmentin people be stifled by allowing red

tape to get in the way, Dickinsonadded.

IN BRIEFRenishaw helped by Chinan Manufacturing group Renishaw hasposted an 18 per cent rise in revenues to174.2m for the last six months of 2012,giving it a 39 per cent jump in adjustedpre-tax profits to 42.3m. The companyhailed a rise in orders from China for theboost, which has helped it hike itsdividend ten per cent to 11.33p.However, its shares fell more than four

per cent on the firms caution overorders for the next half of the year.

Architect Aukett swings into blackn Aukett Fitzroy Robinson, the Aim-listed architect practice, yesterday saidit had swung to a profit of 210,000, inspite of wealthy clients reluctance tobuild during a period of economicturbulence. Revenues at the firm,known for restoring Ashdown House inVictoria, rose six per cent to 9.15m.

Strong quarter for Las Vegas Sandsn Casino operator Las Vegas Sands,owned by billionaire Sheldon Adelson,yesterday said fourth-quarter earningsrose 35.8 per cent from a year ago,helped by a strong performance inChina. Fourth-quarter net income roseto $434.8m, while earnings per sharerose 35.9 per cent to 53 cents from 39cents a year earlier. Revenues rose 20.9

per cent to $3.08bn.

Revenue up at Kenmare Resourcesn FTSE 250 miner Kenmare Resourcesyesterday posted a 40 per cent jump inrevenue to $234.5m (148.5m) in 2012,boosted by a 98 per cent increase in theprice of ilmenite, which it mines inMozambique. However, the totalamount of metal shipped fell last yearto 680,800 tonnes of finished product,compared to 730,400 tonnes in 2011.

HORNBY, the maker of toy trains and Scalextric sets, said yesterday it expects full-year profitsto be in line with expectations after issuing a surprise profit warning in September. Thecompany, which is expected to break-even in the year to March 2013, also said that themajority of its 2012 branded goods that it failed to sell during the Olympics had been sold.

TOYMAKER HORNBY SAYS SALES BACK ON TRACK

Fiat SpA


4.60

4.50

4.70

4.4630 Jan


H&M, the Swedish fashion giant,said it plans to press ahead withambitious expansion plans this

year as it reported anunexpected drop in fourthquarter earnings yesterday.

The worlds secondlargest retailer said it willopen 325 stores this year,

with most planned inChina and the US, upfrom 304 last year.

It will also launch innew markets includingChile, Estonia andLithuania and its newmore luxurious brand

& Other Stories will alsoopen its first stores

H&M eyes further expansion as

earnings drop on higher costsBY KASMIRA JEFFORD across Europe this spring as it

attempts to catch-up with thewider offering of Zara-ownerInditex.

H&Ms plans came as it reportednet profit of 5.29bn kronor

(528m), for the quarter to theend of November, down from5.36bn kronor in the sameperiod last year, mainly due tohigher expansion costs.

The group alsowarned that January

sales are onlyexpected to haverisen five per centdue to the colder

weather.

IN THE run-up to the boardshowdown with Nat Rothschildon 21 February, Bumi shareholderand hedge fund Route One spokeout in support of the board

yesterday, with founder AshishPant telling City A.M. that thecoal miners proposal for thefuture of the firm was the lower-risk option.

US-based Route One, which wasreported to the UK TakeoverPanel by Bumi co-founderRothschild at the weekend forallegedly breaching concert partyrules, holds a 2.8 per cent stake inthe London-listed miner.

Last month, the Takeover Panelruled that Indonesian

Route One founder speaksout in support of Bumi board

BY CATHY ADAMS shareholders the Bakries andRosan Roeslani should beconsidered as a concert party, andso must have their voting powerreduced to 29.9 per cent.

But in a statement lastweekend, NR Investments said

that the concert party should bewidened. Both Orchard Capital[another stakeholder] and RouteOne are invested in or affiliated

with companies that haveexposure to the Bakries marginloans, it said.

Two small Bumi shareholders Michael Platt of BlueCrest CapitalManagement and Lord David

Alliance spoke out in support ofthe financiers proposals

yesterday, which involveoverhauling the current board.

MPs have today urged theDepartment for Transport to revealexactly what went wrong duringthe botched franchisingcompetition for the West Coast

Main Line rail route.The transport select committeesaid it wants to know how muchthe failed process has cost and hearmore details of how departmentstaff ended up with wronginformation about the loanrequirements of each bid.

Many of the problems with thefranchise competition, detailed inthe Laidlaw report, reflect verybadly on civil servants at the DfT,said committee chair LouiseEllman MP.

MPs want infoon West Coast

BY MARION DAKERS

Lana del Rey fronted acampaign for H&M in 2012

AN unemployed man has gone ontrial at Southwark Crown Croutcharged with six counts of insidertrading related to shares traded onthe London Stock Exchange.

Richard Joseph, 43, is accused oftrading in the shares of six publiclylisted companies betweenSeptember 2007 and July 2008allegedly using price sensitiveinformation given to him by aprinter who worked in the printroom of JP Morgan Cazenove.

He denies the charges. JP Morganis not accused of any wrongdoingand bear no corporateresponsibility for what allegedly

took place.The trial continues.

Insider trading

case kicks offBY MICHAEL BOW

Fiats debt rises

as car sales fall14pc in Europe

THREE police forces have axedplans to outsource support workto G4S, in a blow to the company

just months after its botchedOlympics contract.

Bedfordshire, Hertfordshire andCambridgeshire police forces hadhoped to save 73m through a dealthat handed G4S human resources,finance and IT work, but will nowlook at other ways to cut costs.The contracts had been based on asimilar deal with Lincolnshirepolice force.

Police forces

ditch G4S dealBY MARION DAKERS

JAPANESE car maker Toyota willrecall nearly 1.3m cars globally forfaulty airbags and windscreenwipers, the firm announcedyesterday.

The recall, which is not thoughtto affect UK customers, includesleft-hand drive models of certainCorolla and Corolla Matrix vehicles,as well as some Lexus IS cars.

It is the third major Toyota recallsince October, and echoes a series offaulty models that caused the firmto lose its crown as the worldsbiggest selling car maker in 2011.

New car recallwoe at Toyota

BY MARION DAKERS

7/29/2019 Cityam 2012-01-31

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ONLY 148,000 people usuallyresident in England or Walescannot speak one of the twocountries mother tongues, thecensus data, yesterday released bythe Office for National Statistics,revealed.

Around three-quarters of amillion people could speak someEnglish or Welsh though it wasnot their first or main language but could not speak it well or verywell.

But a full 49.8m of people 92.3per cent counted English orWelsh as their first or mainlanguage, though in diverseLondon this proportion fell to 77.9per cent.

Across England and Wales, thesecond most common mainlanguage was Polish with546,000 speakers, followed byPanjabi and Urdu, both of whichhad just over a quarter of a millionspeakers.

The data also included figureson household make-up, whichrevealed that fewer and fewerhouseholds were headed bymarried couples six per cent lessin 2011 compared to 2001 whilemore and more were headed bylone parents or unmarriedcohabiting couples.

Census revealsEnglish spoken

by 92 per centBY BEN SOUTHWOOD


THE RECESSION in the Eurozone wasexposed by more bearish datareleased yesterday, yet a survey of con-fidence from Brussels suggested thathopes for a recovery are starting togrow.

In crisis-struck Spain the downturnworsened in the final three months ofthe year, figures showed, while retail-ers across the single currency area arecontinuing to report economic con-traction in their industry.

Output in Spain collapsed 0.7 percent in the final quarter of 2012,down 1.8 per cent from the same peri-od a year earlier.And Markits latest purchasing man-

agers index (PMI) for retailers acrossthe euro area as a whole showed a15th consecutive month of decliningsales. The PMI edged up from 44.5 inDecember to 45.9 in January, butremains below the 50 no-changemark.Yet a measure of economic confi-

dence in the Eurozone, published by

Morale in euro

area edges updespite Spain

BY JULIAN HARRIS the European Commission, edged upin January.The Commissions economic senti-

ment indicator rose by 1.4 points inboth the Eurozone (to 89.2) and thewider European Union area (to 90.6).

Both levels remain sunk below the100 mark, however, which representsthe average between 1990 and 2012.

In Italy a separate survey of businessconfidence also edged up, from anindex score of 79.9, up from 75.6 inDecember.And confidence in Italys prospects

also appeared to be improving, as thegovernment paid less to borrow overfive and 10 years than it had sinceOctober 2010. The Treasury raised6.5bn (5.6bn), the top of its 4.5-6.5bn target range, 3.5bn of whichwas 10-year debt. Rome paid a yield of4.17 per cent for the 10-year paper,down from 4.48 per cent at the end-December sale and below 4.23 per centin the secondary market around thetime of the auction. Ten-year yieldswere little changed after the results,up five basis points.

Economists warn poor standardof British schools will hurt GDPA GROUP of economists will todayurge the government to radically

improve educational standards atBritish schools, arguing thatreforms are key to the countryslong-term prosperity.

The London School of Economics(LSE) growth commission will alsohit out at UK governments poorrecord over infrastructure.

Political procrastination and theabsence of a strategic frameworkhave created policy risk, whichdeters investors from making long-term commitments, the reportsaid, attacking the planning system.

BY JULIAN HARRIS Decisions are rarely based on thebest evidence and the planningsystem does not properly share thebenefits of development, so that

people who are adversely affected bynew developments do not receivecompensation and have littleincentive to support them.

The LSE panel includes formerBank of England deputy governorRachel Lomax, and is co-chaired byfellow ex-Bank official Tim Besley.

It will argue that the standard ofcompulsory schooling in the UK is afundamental growth issue.

Increasing UK school standardseven moderately could put thecountry on a growth path that

would more than double long-runaverage incomes, it says.

House prices in London satellitetowns expected to climb in 2013HOUSE prices in commuter townson the outskirts of Londonjumped in the final t hree monthsof the year, high end estate agentSavills said yesterday.

Prices in the so-called innercommute area were up 0.5 percent from October to December,compared to the previous quarter.

Residential properties in theseareas remained slightly downcompared to a year earlier, thedata said, and 4.8 per cent downon their peak.

Yet Savills expects prices toclimb during 2013.

BY CITY A.M. REPORTER Price growth has focused incommuter hotspots such asSevenoaks and Guildford andChelmsford as buyers continue tofavour urban locations, the firmsreport said.

The inner commuter zones andprime suburbs closer to Londonare forecast to be the only primemarkets to see house price growththis year, with a rise of one percent expected.

Prime locations inside Londonitself, however, are expected toflatline.

The value gap between London

and prime commuter locationsseems to have peaked, says Lucian

Cook, director of residentialresearch at Savills.

We expect this to trigger along-awaited ripple out ofLondon.

Outside the capital, prices inurban neighbourhoods areholding up more than in nearbyrural areas, Savills said.

Its figures show prices insouthern England countrysidevillages are down 14.8 comparedto their peak having dropped 1.7per cent last year while those insouthern towns and cities are aless severe 10.8 per cent below

peak having dropped only 0.3per cent last year.

BRITISH consumers have startedthe year feeling less pessimisticabout the countrys economicprospects, a widely-regardedsurvey revealed this morning.

Research company GfKs firstconsumer confidence barometerof 2013 found that expectationsfor the general economic situationover the coming year jumped bysix index points.

While still slumped in negativeterritory, this sub-index climbedfrom minus 31 at the end of last

year, to minus 25 this month.With a brighter outlook, people

may be more prepared to splashmore cash on coveted consumer

goods, the survey added.

Hope for the high street as UKconsumer confidence improves

BY JULIAN HARRIS The firms climate for majorpurchases sub-index rose from areading of minus 27 to minus 22.

Yet GfKs Nick Moon warned:Its worth noting however thatpeoples views of their ownfinancial situation arent as

optimistic, with no improvementexpected in the next 12 months.The sub-index measuring

respondents personal financesover the past 12 months slippedfrom minus 22 to minus 24 twopoints lower than at the same timelast year.

Overall the index was positive,nonetheless. GfKs headlinefigure a leading measure ofconsumer confidence rose tominus 26 in January, up fromminus 29 the previous month.

OVERWHELMING MAJORITY OF UK RESIDENTS ARE ENGLISH- SPEAKERS

LONDON STANDS OUT AMONGST REGIONS FOR LINGUISTIC DIVERSITY

ONLY 138,000 49.8m (92%)

SPEAK ENGLISH ASTHEIR MAIN LANGUAGE

OF RESIDENTS AGED 3+IN ENGLAND & WALES

(BELOW 0.5%)

CANT SPEAK ENGLISH OR WELSH

OF RESIDENTS

THE NEXT BIGGEST FIRST LANGUAGES ARE...

POLISH

546,000PUNJABI

273,000URDU

269,000

ENGLAND AND WALES

LONDON

WEST MIDLANDS

EAST MIDLANDS

YORKSHIRE & THE HUMBER

SOUTH EAST

EAST OF ENGLAND

NORTH WEST

SOUTH WEST

WALES

NORTH EAST

0

PROPORTION OF RESIDENTS WITH A MAIN LANGUAGE OTHER THAN ENGLISH, %

5 10 15 20 25

IN BRIEFBelgiums GDP shows slow declinen The Belgian economy shrank by 0.2per cent last year, according to officialflash estimates released yesterday. TheEurozone states GDP fell by 0.1 per centin the final three months of the year,compared to the previous quarter. BNPParibas said it expects the Belgianeconomy to flatline in 2013, recordingzero growth.

Quotas opposed by 94pc of womenn Only six per cent of attendees at arecent conference of high-poweredwomen believed quotas to be the bestway of getting women ahead in keyindustries, recruitment firm Randstadsaid yesterday. The view I hear echoedby many women in the retail sector isthat they would prefer to get there ontheir own merit, commented Randstaddirector Peter Shrimpton.

Irish unemployment holds at 14.6pcn Unemployment in Ireland has stuckat 14.6 per cent a t the start of this year,its Central Statistics Office (CSO) saidyesterday. The rate is down 0.3percentage points compared to Januarya year ago. The number of peopleclaiming jobless benefits in Ireland fellby 900 on a seasonally adjusted basiscompared to December.

Fitch cuts troubled Egypts ratingn Fitch yesterday cut Egypts sovereigncredit rating one notch to B from B-plus, citing a wider budget deficit andpolitical instability. The rating reflectsa balance between short-term reservepressure, political upheaval, a weak anddeteriorating fiscal position and capitalflight against our assumption that anIMF programme will be in place afterthe election, Fitch said

LSE groups recommendations: Better teachers

Greater autonomy for schools

More apprenticeships

A so-called infrastructure bank toboost funding for projects

More competition in retail banking

Business bank that prioritiseslending to SMEs and innovative firms

HOW TO BOOST GROWTH

7/29/2019 Cityam 2012-01-31

19/31


CHEMICALS firm Johnson Mattheysaw profits plunge over the thirdquarter, due to lower sales in itsprecious metals products division.

Underlying pre-tax profits sank19 per cent to 84.3m over the thirdquarter, it said yesterday.

The precious metal productdivision, which refines andfabricates metals such as platinum,posted a seven per cent drop in salesto 128m, in part due to lowervolumes from Anglo AmericanPlatinum.

Earlier this month, Amplats saidit would restructure its business,which involves closing severalmines in South Africa.

Meanwhile, the groups emissioncontrol technologies division,which makes catalytic convertersfor cars, was hit by weak car sales inEurope and Japan. The arm posted asix per cent drop in sales to 346mover the three months to December.

The FTSE 100 firm added that itexpected the groups performancein the second half to be similar tothe first half. In a difficult marketenvironment during the quarter,trading across the group waschallenging, Johnson Matthey saidin a statement yesterday.

Its shares closed 4.24 per centdown at 2,306p.

Weaker saleshurt Johnson

Matthey profitBY CATHY ADAMS

RUSSIAN precious metals producerPolymetal yesterday denied mergertalks with peer Polyus Gold, as it saidit was on track to produce 1.2m troyounces of gold equivalent in 2013.A spokesperson from the FTSE 100

company yesterday told City A.M. thatPolymetal was not in discussionswith fellow Russian gold producerPolyus Gold regarding a possiblemerger.There has been long-running specu-

lation of a combination between thetwo.

Meanwhile, Polymetal yesterdaysaid total gold equivalent productionin 2012 was up 31 per cent year onyear to 1.06m ounces exceedingguidance by six per cent drivenmainly by a stable performance at allits mature mines.

On the back of strong output overthe past year, the precious metalsminer said it paid its first special div-idend this year of $0.50 (0.32) ashare in January.

Polymetal gives

upbeat outlookas denies tie-up

BY CATHY ADAMSWhile the company reiterated its

2013 production guidance of 1.2mounces of gold equivalent, it warnedthat there was a moderate risk ofthis guidance not being achieved.The company, controlled by Russian

businessmen Alexander Nesis brother of chief executive Vitaly andAlexander Mamut along with Czechprivate equity investor PPF, added itexpected capital spending of $300min 2013, inclusive of exploration.

Polymetals shares closed down 1.98per cent yesterday at 1,088p.

CHILEAN copper minerAntofagasta topped the FTSE 100loser board yesterday as it warnedon copper and gold production.

Output this year is expected tofall to around 700,000 tonnes ofcopper and 260,000 ounces of gold,due to higher on-site costs at boththe Esperanza and Los Pelambresmines.

The cost to mine a pound ofcopper is also expected toincrease, Antofagasta said, from

Costs force Antofagasta to warn

over gold and copper outputBY CATHY ADAMS 140 cents per pound to 185 centsper pound this year.

Ben Davies at Liberum yesterdaysaid costs were significantlyhigher than expected.

The miner yesterday posted a10.8 per cent increase in copperoutput over 2012 to hit 709,600tonnes. Gold production rose to299,900 ounces last year, comparedto 196,800 ounces over theprevious year, reflecting higherthroughput at its Esperanza mine.

Shares closed down 8.31 percent yesterday at 1,169p.

Antofagastas operations are mainly concentrated in Chile, South America

A DUTCH court ruled yesterdaythat Royal Dutch Shells Nigeriansubsidiary was responsible for acase of oil pollution in the NigerDelta and ordered it to paydamages in a decision that couldopen the door to furtherlitigation.

The district court in The Haguesaid Shell Petroleum DevelopmentCompany of Nigeria (SPDC), a

wholly-owned subsidiary, mustcompensate one farmer, butdismissed four other claims filedagainst the Dutch parent company.

Four Nigerians and campaigngroup Friends of the Earth filed

suits in 2008 in The Hague, whereShell has its global headquarters,

Dutch court says Shell partly

responsible for Nigeria spillsBY CITY A.M. REPORTER seeking reparations for lost

income from contaminated landand waterways in the Niger Deltaregion.

The case was seen byenvironmental activists as a testfor holding multinationalsresponsible for offences at foreignsubsidiaries, and legal experts saidother Nigerians affected bypollution might now be able to suein the Netherlands.

Shell said the case would not seta precedent because its parentcompany was not held responsible.

The farmer who woncompensation, 52-year-old fatherof 12 Friday Akpan, said he was

very happy with the judgment

because it would allow him torepay his debts.

LM Investment ManagementThe fund management firm hasannounced two appointments.Joe Samuel becomes director ofLM London. He has previouslyheld roles at Law BusinessResearch. Simon Bottle becomesbusiness development managerin London. He has also worked at

Goldman Sachs and ABN AMRO.

ActisThe private equity firm has appointed Arjun Oberoi asglobal healthcare sector head and Ivy Santoso asIndonesian country head. Oberoi was most recently head

of international strategy at Stryker Corporation. He hasalso held roles at McKinsey and Pfizer. Santoso joinsfrom Avenue Capital.

John MenziesPaula Bell has been appointed group finance director ofJohn Menzies. She joins from Ricardo, the consultancy,where she was group finance director for six years. Bellhas also held senior roles at Rolls Royce, AWG, and BAA

Gatwick.

Mubadala Pramerica Real Estate InvestorsFaris Mansour has been appointed director of capitalmarkets at the investment firm. He was previously headof private capital markets at Macquarie Capital in Dubai.

Mansour has also held senior roles in Macquarie RealEstate Funds Group, based in Chicago.

LinklatersThe law firm has appointed Juan Barona as a partner inits Spanish banking practice. He joins from Allen &Overy, where he was a partner. Barona specialises inadvising on restructuring matters.

BlueBay Asset ManagementThe fixed income and alternative investmentmanagement firm has appointed Steven Bayly as headof sales, Germany. He joins from BlackRock, where hewas head of institutional business for Germany andAustria. Bayly has also held senior roles at Deutsche

Investment Trust.

Colliers InternationalJack Benson has been appointed as a surveyor withinthe commercial real estate services firms West Endtenant representation team. He has transferred acrossfrom Colliers Internationals Sydney team, where hefocused on providing representation services tolandlords in the technology and media sectors.

BNP Paribas Real EstateAshley Layton has been recruited by the real estateservices firm. He specialises in the retail and leisuremarkets, focusing on investment, and joins as anassociate director from Gerald Eve.

WHOS SWITCHING JOBS Edited by Tom Welsh

+44 (0)20 7092 0053morganmckinley.comSPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

CITY MOVES

To appear in CITYMOVES please email your career updates and pictures to [email protected]

in association with

Polymetal International PLC

30Jan24Jan 25Jan 28Jan 29Jan

1,080

1,100

1,060

1,120

1,140 p 1,088.0030 Jan

Antofagasta PLC


1,240

1,260

1,220

1,180

1,200

1,280

1,300 p 1,169.0030 Jan

WASTE and water group UnitedUtilities said yesterday that it istrading in line with expectations,although it said that revenue hadincreased at a rate slightly belowthe regulated price rises.

This reflected the ongoingimpact of a tough economicclimate, it said.

Depreciation, power and othercosts also increased, which

weighed on the increase inrevenue.

The water firm added that itcontinued to make good progresson its capital investmentprogramme, and remained on

track to invest around 750m in itsasset base this year.

United Utilities

trading in lineBY CATHY ADAMS

PRE-TAX profit at iron ore producerFerrexpo tumbled 57.1 per cent overthe first nine months of last year, itsaid yesterday.

Profits sank to $228.8m (144.8m),down from $533.6m over the firstnine months of 2011, on the back oflower sales volumes and lower ironore prices.

Sales fell to 7m tonnes of pelletsover the period, down from 7.2mpellets the previous year, while theaverage iron fines price sank to $131a tonne from $177 a tonne over thenine months of 2011, Ferrexpo said.

It also said it is looking at apotential US dollar-denominated

senior unsecured Eurobond issue.Shares closed down 5.48 per cent.

Lower prices

hit FerrexpoBY CATHY ADAMS

PETROFAC tumbled on the FTSE 100yesterday as it was hurt by a profitwarning from Italian peer Saipem.

Shares in the oil and gas servicesgroup closed down 7.02 per centdown at 1,615p, as the Italianenergy engineering firm issued anunexpected profit warning.

The group, which is controlled byENI, cut its guidance for 2012 andforecast a fall of 80 per cent inearnings before interest and tax in2013 for its onshore business, and a70 per cent fall in offshore activity.

We expected some form of profitwarning from Saipem, but thisnews has far surpassed our

expectations, analysts fromCanaccord Genuity said yesterday.

Petrofac falls

as sector hurtBY CATHY ADAMS

7/29/2019 Cityam 2012-01-31

20/31

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LONDON REPORT

The FTSE 100 fell yesterday,weighed down by miners afterdisappointing US GDP data asinvestors considered whether

the rally that has lifted the index to4-1/2 year highs has further to run.The FTSE 100 closed down 16.08

points, or 0.3 per cent, at 6,323.11, hav-ing climbed some 20 per cent from itsJune lows.

The data which showed the world'slargest economy suffered an unexpect-ed contraction in the fourth quarter knocked the index even as it buoyedexpectations that the US FederalReserve will continue its easy mone-tary policy.The Fed is expected to maintain asset

buying at $85bn (53.8bn) a monthwhen it concludes its policy meetinglater in the day and stick to its commit-ment to hold interest rates near zerountil the unemployment rate falls to6.5 per cent.

Heavyweight miners were thebiggest casualties yesterday, led downby an 8.3 per cent drop from ChileanminerAntofagastawhich said its pro-duction costs would jump this yearand it would not increase output.

Charts show the strong rally has pro-pelled the UK benchmark heavily intooverbought territory, fuelling someexpectations of a pull-back.The FTSE 100's 14-day relative

strength index (RSI) - a widely-usedtechnical momentum indicator - wasat 80, with a reading of 70 and abovedeemed to be overbought.

However some strategists see furthergains in equity markets thanks to liq-uidity support from central banks, animproving global economic outlook,and robust earnings.

I would be reluctant to say (the

grind higher) has gone too far, IanRichards, head of equity strategy atExane BNP Paribas, said.

When we look at fundamentals, I

would fully expect earnings forecaststo be met this year; I think the econo-my can support that.Angus Campbell, head of market

analysis at Capital Spreads, mean-while, said: It's just interesting to seethat any dips have been really short-lived this year which just goes to showthat there's still momentum in theuptrend.

Imperial Tobacco also knocked theFTSE 100, the biggest drag on theindex yesterday in terms of points,after saying it expects growing compe-tition from the black market in ciga-rettes to hit its first-half profits.

Its shares fell 4.3 per cent in brisktrade, with volume at 323 per cent ofits 90-day daily average against theFTSE 100 on 104 per cent of its 90-daydaily average.

Oil services stocks weakened, impact-ed by a profit warning from Italy'sSaipem.

Petrofacwas left nursing a seven percent drop, while Wood Group shed2.2 per cent, andAmec traded 2.1 percent lower.

FTSE loses paceafter poor USeconomic data

CITYYOUR ONE-STOP SHOP

BROKER VIEWS ANDMARKET REPORTS

FTSE


6,375

6,350

6,325

6,300

6,275

6,250

6,225

6,200

6,323.1130 Jan

DASHBOARD

Stocks dip onFed decision tokeep easing

US stocks edged lower yesterdayafter the Federal Reserve left inplace its bond-buying stimulusplan, saying economic growth

had stalled but indicating thepullback was likely temporary.

Describing the US job market as con-tinuing its modest pace of improve-ment, the Fed repeated a pledge tokeep purchasing securities until

employment improves substantially.The statement from the Fed follows

data that showed the economy, asmeasured by gross domestic product,unexpectedly contracted in the fourthquarter. Economists stressed that the0.1 per cent contraction, caused partlyby a plunge in government spendingand lower business inventories, is notan indicator of recession.

It is interesting that the Fed decidedto focus on the GDP report, pointingto how activity slowed because of tran-sitory factors. That sums up the GDPreport. I am a bit puzzled why the Fedfocused solely on one report. I wouldargue that this was a slightly dovishreport, said Tom Porcelli, chief USeconomist at RBC Capital MarketsThe Dow Jones industrial average

was down 44.00 points, or 0.32 percent, at 13,910.42. The Standard &Poors 500 Index was down 5.88points, or 0.39 per cent, at 1,501.96.The Nasdaq Composite Index wasdown 11.35 points, or 0.36 per cent, at3,142.31.The S&P 500 held above 1,500, seen

by technical analysts as an inflectionpoint that will determine the overalldirection in the

cityam 2012-01-31

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