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GOOGLE is taking on the worlds lead-ing financial data firms after strikinga deal to provide real-time prices ofstocks on the London Stock Exchange(LSE) for free.

The agreement means that users ofthe Google Finance website can now

view a live feed of the last tradeprice a service that was previouslyonly available on a 15-minute delay.

Google Finance is targeted at indi- vidual investors but the addition of

live data poses a threat to subscriber-only services aimed at professionals,such as those provided by Bloombergand Thomson Reuters.

The deal is one of the first of itskind for the LSE, run by chiefexecutive Xavier Rolet(pictured) and is notexclusive, meaning thatsimilar agreementscould be agreed withother websites.

It shows that alterna-tive aggregators can repli-cate some of the basicservices of a ThomsonReuters or aBloomberg, but

what ThomsonReuters andBloomberg providein terms of the

whole package isnot replicated by

what Google

Finance provides, said media analystThomas Singlehurst of Citigroup.

Equally, it shows that any of these businesses that are built up on theaggregation of quasi-public data aregoing to see that competitive positioneroded as other companies comealong and try to do it better, whetherits Bloomberg Law or GoogleFinance.

A Bloomberg Terminal, ubiquitouson trading floors, costs in the regionof $20,000 (12,600) per year but doesoffer additional services, such as theability to view tradeable prices and

faster data delivery. In November 2011LSE had 93,000 subscribers usingsuch professional user terminals.

Google and the LSE would not com-ment on the cost of the live data butit is likely to be a substantial increase

on their previous agreement. The stock exchanges data busi-

ness is growing fast, with revenuesrising 24 per cent to 52.8m lastquarter, accounting for 27 per centof group revenue.

Google also used the statement toannounce similar agreements

with Germanys DeutscheBoerse and Italys Borsa

Italiana.The firm already

provides real-timeshare data fromthe New YorkStock Exchange,Nasdaq, andexchanges inChina and India.

Google offersreal-time LSEdata for free MICHAEL Gove, the education secre-tary, yesterday launched a scathingattack on the Leveson inquiry, which

he blamed for cultivating a chillingatmosphere towards freedom ofexpression.

In comments that could be seen ascritical towards David Cameron, whoordered the Leveson inquiry, Gove

said there was a temptation for politi-cians to succumb to an establish-ment inquiry in the aftermath of aspecific crisis.

But he added: Sometimes the rec-ommendations give birth to quan-gos, commissions and law-making

bodies that generate over-regulation,and a cure that is worse than the dis-ease.

The Leveson inquiry was set up inthe wake of the phone hacking scan-

dal at the News of the World, and hasheard from a number of journalistsand celebrities who must testifyunder oath. It looks set to recom-mend much stricter regulation of thepress in the future.

Gove, formerly an employee of theNews International-owned Timesnewspaper, was speaking to journal-ists at the monthly press lunch in theHouse of Commons. His wife, Sarah

Vine, still works for the Times.

Gove launches scathing attackon Leveson inquiry into press

BY JAMESWATERSON

CAPITAL MARKETS

BYDAVID CROWPOLITICS

News 11CITYA.M. 22 FEBRUARY 2012

MUNCHS SCREAM TO GO ON SALE IN NEW YORK

EDVARD Munchs iconic painting The Scream will be auctioned in New York this year,with the price for the 1895 masterpiece expected to exceed $80m (50.7m). The paintingwill be sold at Sothebys in New York on 2 May, but will be on public display in London

for the first time ever from 13 April. Picture: GETTY

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News2 CITYA.M. 22 FEBRUARY 2012

BCs new fundpulls in 6.5bnPRIVATE equity house BC Partners hasshone a ray of light on the troubled buyout industry by raising6.5bn(5.45bn), in the largest Europeanfundraising since the onset of thefinancial crisis.

The owner of gyms chain FitnessFirst and Swedish cable group ComHem raised more than it expecteddespite many of the worlds pensionfunds, banks and insurers sitting ontheir cash last year. Only US giantBlackstone has recently collected agreater a sum, taking four years tobring in $16bn (10.14bn).

BC tapped new investors, includingsovereign wealth funds in the MiddleEast and Asia over 18 months. It willenable the group to maintain a dealrate after being one of the most active

private equity firms in Europe last year, when it carried out fourtakeovers including a deal worth600m to 700m for Phones 4u.

Charlie Bott, managing partner ofBC, said raising a fund took two tothree times longer than at the heightof the boom. BC offered the first waveof investors a five per cent reductionin management fees and carriedinterest the bonuses paid out to pri-vate equity executives.

Private equity firms raised $263bnin 2011, sightly less than in 2010,according to data firm Preqin.

BY PETER EDWARDS

PRIVATE EQUITY

OSBORNE URGED TO CUT TAXES ONBUSINESSGeorge Osborne has come underrenewed pressure from theConservative right to cut businesstaxes and simplify labour laws in nextmonths Budget. Liam Fox, the for-mer defence secretary, called forurgent action to deal with the truehorror of the governments econom-ic inheritance.

PANDORA PLUNGES ON PRODUCT SWAPXShares in Pandora suffered theirsteepest fall in six months after thedanish jeweller said it would allowretailers to swap its unsold jewelleryfor better-selling items. The unexpect-ed move, which came as the company

reported a 39 per cent drop in fourth-quarter operating profits, will cost

Pandora up to DKr800m (90.2m).MINISTERS HARDEN STANCE ONGROUPS OPPOSING NHS BILLMinisters have stepped up theirattacks on health groups opposingthe reform of the National HealthService as debate surrounding the billbecomes increasingly bitter.

QINETIQ DERECOGNITION PLANSPARKS TRADE UNION ANGERQinetiq, the privatised defence tech-nology contractor, provoked furyamong trade unions yesterday byannouncing plans to derecognisethem for collective bargaining pur-poses. The company said it would endbargaining with Prospect, the GMB,PCS and Unite from the end of March.

EX-BANKER HAS TO SELL 8M HOMETO END DISPUTE WITH INVESTORSA former Goldman Sachs banker hasagreed to give up his 8m countryhome after a long-running disputewith a group of investors. ChristopherWightman will vacate Evenley Hall inNorthamptonshire, and allow it to besold. About 2.2m of the proceeds areexpected go to shareholders in a com-pany that Mr Wightman ran calledClickstream Technologies.

THE JOY OF TEXT BEGINS TO WANE Texts have been the bedrock of themobile phone sector since the firstmessage was sent almost 20 yearsago. But the inexorable rise of instantmessaging is eroding the SMS.

BP SETTLES WITH INJURED RIG COOKAS TRIAL LOOMSBP has agreed a settlement with aworker injured in the Gulf of Mexicodisaster, in a move further raisinghopes the oil giant could yet settleother claims and avert the trial due tobegin on Monday to determine dam-ages and fines related to spill.

FRANCE AND GERMANY LOOK TOHARMONISE CORPORATE TAX RATESGermany and France moved even clos-er to full fiscal union by announcingthey will be harmonising their cor-porate tax rates by 2013 a move thatwill increase the prospect of an EU- wide enforced tax rate that Irelandand the UK have been opposed to.

AMR SEES $1BN IN NEW REVENUEFROM RESTRUCTURINGAmerican Airlines parent AMR saidnew revenue needed for its turn-around plan requires labour agree-ments that allow it to use largerplanes to sell more premium ticketsand to strike agreements with air-lines to handle more domestic f lying.

DUNKIN AND STARBUCKS TO DUKE ITOUT IN INDIADunkin Donuts and Starbucks Corp.are bringing their coffee war to India,attempting to tap Indians growingappetite for Western fast food.Jubilant FoodWorks said it expects toopen the first Dunkin Donuts inIndia by June.

WHAT THE OTHER PAPERS SAY THIS MORNING

Osbornes lucky escape on the deficit

FOR once, and I can barely believe thatIm writing this, George Osborne hasreason to be happy. The budget deficitfor this fiscal year to date (April 2011-January 2012) was a still horrendous,Greek-style 93.5bn, but this wasdown 15.6bn from a year earlier, avery non-Greek development. This is amuch better performance thanexpected by the Office for BudgetResponsibility (OBR): it was hoping fora decline of just 9bn for the wholeyear (from 135.8bn in 2010-11). Unlessthe situation worsens drastically overthe next two months, it looks as if

Osbornes deficit reduction plans havemoved slightly ahead of target.

Even better was the reason for thisimprovement: spending is growing incash terms at a slower rate, and falling

faster in real terms. Central govern-ment current spending has risen byjust 1.6 per cent so far this fiscal year,versus a forecast of a 3.1 per cent riseover the full year. Local authorityfinances were also better than expect-ed. Perhaps less happily, spending oncapital projects is also falling fasterthan expected, something worthremembering next time a govern-ment minister claims that infrastruc-ture projects are being protected.

While spending seems to be undercontrol this could yet change as offi-cials often go on scandalous splurgesto max out budgets just before theend of the financial year tax receiptshave slowed. This is an excellent devel-opment: the reduction in the deficit is being achieved through reducedspending growth, not by clobberingtaxpayers even more. Central govern-

ment revenues were up 2.8 per centyear on year in January, with growthover the year to date at 4.7 per cent.Citis Michael Saunders is predicting adeficit of just 122bn this financial

year, 5bn less than the official fore-cast. Simon Ward of Henderson is pre-dicting 119bn, close to the OBRsoriginal 116bn forecast at the time ofOsbornes first Budget in June 2010. Itwould equate to 7.8 per cent of GDP,compared with a peak of 11.1 per centin 2009-10. If this materialises, itwould be a devastating blow to theOBRs credibility, suggesting its recentrevisions were far too pessimistic.

But it would be grossly prematureto uncork the champagne. The UKssix-year deficit reduction planremains out of reach. The spendingundershoot this year seems to havehappened by chance. What theChancellor should actually be doing isto accept that bigger, faster cuts arepossible as demonstrated by his sur-prise, unplanned budgetary success inrecent months and revise his budget

for next year accordingly. If he doesthat, he will have earned the credibili-ty to introduce tax cuts at his Budgetnext month. These should be supply-side measures that will partly pay for

themselves by stimulating growth;there should be no fiddling withdemand-side measures such as Vat.

Osborne ought to consider eitherslashing corporation tax to 20p asquickly as possible (from 26p today) orcutting employers national insurancecontributions, reducing the cost oflabour and increasing its demand. Imassuming that he will not want toscrap the competitiveness-destroying50p top rate, even though the drop inincome tax receipts in January furthersuggests it is not raising much money.But if the past 10 months have shownanything, it is that there is more fat tochop out of the UKs bloated govern-ment budget than is usually realised and that this is the time for greaterboldness on the tax front.

[email protected] me on Twitter: @allisterheath

HSBC is to adopt a complicated new way of paying the cash part of itsstaffs bonuses after pressure from theBank of England and FSA.

The bank is set to unveil a system topay for the up-front cash chunk ofbonuses (20 per cent of the total) forsenior UK staff by issuing new sharesand instantly selling them.

HSBC hopes to stop bonuses fromdiminishing its capital base, with therest of the awards to be paid out in

deferred shares due to EU rules.It is not clear what value of pay will

be accounted for in this way but the bank believes it will be a negligibleamount in terms of affecting share-holder value.

The FSA said it was doing the bid-ding of the Bank of EnglandsFinancial Policy Committee by tellingfirms they must not allow bonus pay-outs to hit their capital base. Otherbanks could also adopt a similar plan.

However, if only applied to HSBCsUK staff, the overhaul will not affectmost of the bonuses the bank pays.

BY JULIET SAMUEL

BANKING

HSBC overhauls bonusesHSBC chief Stuart Gulliver is f inding inventive new ways to kowtow to regulators demands

NEWS | IN BRIEF

J&J names new chief executiveJohnson & Johnson chief executiveWilliam Weldon will step down from hispost in April after a series of recallscalled into question the quality of thehealthcare giants products, from artifi-cial hips to infant Tylenol. Weldon, 63,will remain chairman, the company said

yesterday. He has held both roles fornearly 10 years, after three decadesspent working his way through the com-pany from his first job as a sales repre-sentative at J&J's McNeil consumerdivision. Vice chairman Alex Gorsky, 51,will become chief executive as of thenext board meeting on 26 April.

Obama to lay out tax strategyThe US Treasury Department will todayroll out a corporate tax reform planfrom President Barack Obama. TheObama plan will follow such principlesas fairness that the president laid outin his State of the Union address lastmonth, officials said last night.Analysts said a cut in the corporate taxrate, which presently tops out at 35per cent, may be included, as well asproposals for a minimum tax on over-seas profits.

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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Bott said investorswere demanding moredetailed information onprivate equity firmstrack record

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EditorialEditor Allister HeathDeputy Editor David HellierNews Editor David CrowActing Night Editor Marion DakersBusiness Features Editor Marc SidwellLifestyle Editor Zoe StrimpelSports Editor Frank DalleresArt Director Gavin BillennessPictures Alice Hepple

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A KEY FSA body is trying to ambushthe governments flagship financialreform by enlisting the support ofopposition MPs to insert a last-minute amendment, City A.M. haslearned.

The change being pushed by theFSAs Consumer Panel, an influen-tial advisory body, would give firmsa new explicit legal fiduciary dutytowards their customers that wouldgo far beyond their current respon-sibilities.

It would require them to sign upto avoiding conflicts of interest in

serving clients, not profiting offcustomers without telling them

about it, giving undivided loyaltyto the customer and vowing tokeep their information confiden-tial.

The Consumer Panel will tomor-row unveil a briefing paper outlin-ing the amendment to theFinancial Services Bill, which wouldfundamentally transform the rela-tionship between financial firmsand their customers and couldmake it much easier for consumersto sue over issues like the recentpayment protection insurance mis-selling scandal.

The amendment has been tabledby shadow Treasury ministers ChrisLeslie and Cathy Jamieson as well as

Mark Durkan of Northern IrelandsSocial Democratic and Labour Party.

ASSET manager Threadneedle hassacked a trader over a suspectedattempt to carry out a $150m(95.03m) rogue trade.

The American-owned firm made acomplaint to the City of LondonPolice after discovering the plannedtrade in August last year. It wasstopped before it was completed.

The deal would have been wortharound $150m and is believed to havebeen linked to Argentine warrants. A junior trader in Threadneedlesinvestment arm was later sacked.

Last night the firm, which man-ages about 60bn in assets, said noclient money had been lost.

A spokesman said in a statement:In August 2011, our systems stoppeda suspicious attempted trade. Thematter was immediately reported tothe authorities and the individualinvolved was subsequently dis-missed.

Threadneedle, set up in 1994, hasgone through various owners and is

today part of New York-listed moneymanager Ameriprise Financial.

It is not known whether any arrestshave been made over the allegedrogue trading attempt. Both theFinancial Services Authority and thepolice declined to comment yester-day.

It comes just days after a 44-year-old man working at Legal & GeneralInvestment Management was arrest-ed and bailed in the FSAs largestinsider dealing operation.

Searches were also carried out atone business and two homes inLondon and Kent.

Last week LGIM said it was notaware of any impact on our financialresults. The probe by the regulatorand the Serious Organised CrimeAgency has run for nearly two years.

Kweku Adoboli, the former UBStrader accuse of a $2.3bn rogue trade,is due to stand trial later this year. Hedenies all the charges.

The regulator is leading a clamp-down on market abuse before it issplit into two new bodies by GeorgeOsborne.

Trader fired

amid fraudplan probe

THE PRICE of oil hovered above the$120 a barrel mark yesterday as moreof Irans trade partners looked to cutback fuel purchases from the country.

The worlds leading oil trader Vitolsaid yesterday it expects instability inthe Middle East to push prices further.

Boss Ian Taylor said: The Iraniansnow want the price as high as possible

as theyve got less volumes to sell. Ireckon they are probably quite close towinning based on the numbers.

Taylor said that an Israeli airstrikeon Iran was one scenario that was like-ly to push oil prices to $150 a barrel.

As nuclear inspectors wrapped upmeetings in Tehran yesterday, callingthe lack of access disappointing,key trading partners China, India andJapan were planning cuts of at least10 per cent in Iranian crude imports.

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FSA body enlists Labour MPs

to ambush financial reform bill

BY PETER EDWARDS

ASSET MANAGEMENT

Soul singer Adelelast night added toher awards haul atthe 2012 BRITAwards in London,with two gongs forBritish female soloartist and best

album. The 23-year-old also performedat the event at theO2 Arena, whichsaw the FooFighters win bestinternationalgroup andColdplay pick upbest British group.

Picture: GETTY

BYMARION DAKERSENERGY


BY JULIET SAMUEL

EXCLUSIVE

ADELE CLEANS UP AT THE BRIT AWARDS

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EUROPEAN leaders have finally agreedthe terms of the second Greek bailout,which they hope will bring down thecountrys crushing debt burden andallow for a long-term shift towards sta-ble economic growth.

International Monetary Fund (IMF) boss Christine Lagarde praised thedeal, saying it will create the spaceneeded to secure improvements indebt sustainability and competitive-ness and pave the way for a gradualresumption of economic growth.

The IMF will back up the bailout,supporting the Eurozones efforts.

However, the deal is not yet in placeas Greece needs to alter its constitu-

tion to allow international monitors apermanent place in its government.

Private sector bondholders havetaken a major loss on their invest-ments; countries which have madeloans to Greece have agreed to chargea much lower rate of interest; and thecountry will be closely monitored tomake sure it sticks to its promises oflower spending.

Leaders hope the Greek economy will begin to recover and be able tofinance its own spending by 2014, andthat its debt to GDP ratio will fall fromthe current level above 160 per cent to a more manageable 120.5 per centby 2020.

Investors are to take a 53.5 per centwrite-down on their holdings of Greekdebt, and swap the remainder into

Troika bossesstumble uponBY TIMWALLACE

EUROZONE

News4

other assets. They will receive long-term Greek bonds equivalent to 31.5per cent of the principle holdings,plus bonds in the European FinancialStability Facility worth 15 per cent,resulting in a total write-down ofaround 70 per cent or 107bn.

Other countries have also con-

AT A GLANCE: THE SECOND BAILOUT DEAL

PRIVATE SECTOR HAIRCUTPrivate sector bondholders are expected totake a 53.5 per cent nominal loss, slightly upfrom the 50 per cent agreed in October.This should shave 107bn off privately heldGreek debt.

EUROZONE LENDING RATES CUT

Various Eurozone states have made bilateralloans to Greece. The rates on these loans

will be reduced to 150 basis points, reding the debt-to-GDP ratio by 2.8 percepoints.

BOND PROFITS RETURNED TO GR

Where Eurozone governments centralbanks own Greek debt, the equivalent any profits accrued from these holdinguntil 2020, will be paid to Greece wi1.8 per cent off the Greek debt ratio.

IMF chief Christine Lagarde praises the bai

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tributed, agreeing to cut the interestcharged on their loans to 150 basispoints. The actual cash being received

by Greece will be held in an escrowaccount, which means creditors will

be paid first before money is releasedfor Greece to spend.

WEALTH MANAGEMENT: P26

* These views are those of the individuals below and not necessarily those of their company

The Greeks need to dowhat Argentina did,when they defaulted.

But the real question iswhether countrieslike Germanyand Franceare goingto let ithappen.

CITY VIEWS: WILL THIS BE GREECES FINAL BAILOUT?* Interviews by Phoebe Torrance

Focus on Greece 5

finallya deal

GREEK CUTS TO BE MONITORED

e Eurogroup welcomed 325m of additionalts, yet lenders will have a permanent pres-ce in Athens to oversee reforms and cuts.

AND OF COURSE...THE ACTUAL BAILOUT

the condition that the Greek governmentcks to its side of the deal, Eurozone statesnfirmed a total 130bn bailout, with the IMFpected to chip in.

Europe is justthrowing goodmoney after badEUROZONE finance ministershave obviously opted out of the

working time directive. It tookthem thirteen hours to hammerout the terms of Greeces latest

bailout on Monday night. Liketeenagers, they only seem able toachieve anything in the wee smallhours, when most sensible adultsare asleep. But even a teenagercould tell you this latest rescueplan is doomed to failure.

That is because the fiscalassumptions upon which the

bailout is predicated are straightout of La La Land. The EuropeanCommissions debt sustainabilityanalysis forecasts that Greecesdebt-to-GDP ratio will fall to 129per cent of GDP by 2020. This ishigher than the 120 per cent tar-get but still wildly optimistic.

It is based on the belief that theGreek economy, which contracted

by a painful 6.1 per cent last year,

will bounce back remarkablyquickly. This year, the EC expectsGDP to contract by 4.3 per cent

before flatlining in 2013. It thenpencils in laughable growth of 2.3per cent in 2014 and 2.9 per centin 2015. To put that in context,the Office of BudgetResponsibility expects Britainsmuch-stronger economy to grow

by an only slightly higher 3.1 percent in 2014-15.

The projections assume thatGreece has the political will andoperational ability to achieve the

virtually impossible: a massiveinternal devaluation that boostscompetitiveness within the strait-

jacket of the euro. At any rate, the bailout cash

only gets Greece through to 2014,when it must return to markets.After yesterdays haircut, no onein their right mind is going to buythe countrys debt for the bestpart of a decade.

All that Europe buys for its130bn is time. It is throwinggood money after bad.

BOTTOMLINEAnalysis by David Crow

Leaders hail agreement yet

sustainability still in doubt

ASHRAFELGARF

IG GROUP

I suspect this wont bethe last time thatGreece asks for a

bailout. I dont thinkthey understand the sizeof their debt,even withthe 130bnof sup-port.

GREGDAVIS

DETICA

No way. Greeces econo-my is broken; the moneythe Eurozone has given

is nowhere near enough.The best thing to do isget them toleave the euroso they canhave a cleanslate.

JAYRAO

WHITEHORSE TRADING

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GREECES finance minister hailed thecountrys latest bailout deal yesterday,saying that politicians had avoided anightmare scenario.

It is maybe the most important[deal] in Greeces post-war history,Evangelos Venizelos argued, welcom-ing the long-term support that hesays will enable Greece to stay in theEurozone.

Yet research by the troika of mainlenders the European Union,European Central Bank andInternational Monetary Fund showed that there remains an uphillstruggle to save Greece from anyfuture default.

There is a fundamental tensionbetween the programme objectives ofreducing debt and improving compet-itiveness, in that the internal devalua-tion needed to restore Greecescompetitiveness will inevitably lead toa higher debt to GDP ratio in the nearterm, the analysis said.

Given the risks, the Greek pro-gramme may thus remain accident-prone, with questions about

BY JULIAN HARRISEUROZONE

much higher debt trajectory, theresearch found, leaving debt as highas 160 per cent of GDP in 2020.

The troika aims to slash Greek debtto the equivalent of 120 per cent ofGDP by 2020, yet the plans rely onGreece returning to healthy growth.

sustainability hanging over it.Delays to the required structural

reforms and privatisations wouldpose a particular risk to the strategy ofgetting Greece back on track, it said.

Hold-ups in the implementation ofagreed reforms would result in a

Evangelos Venizelos (left) praised the deal, sealed by PM Lucas Papdemos (right)

s Jean-Claude Juncker looks on Pic: GETTY

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PRIVATE holders of Greeces debt final-ly agreed a proposal for a bond swap with the stricken country yesterday,which will see the value of their bondswritten down by over 70 per cent.

The Institute of InternationalFinance (IIF), which represents 32Greek creditors, unveiled the outlinesof a deal yesterday that they said couldknock 107bn (89bn) off Greeces340bn debt pile.

If Athens and Greeces creditors signup, the deal would see a 53.5 per centhaircut on the up-front value of thebonds in addition to changes in theirinterest payments that would effec-tively bring their net present valuedown by just over 70 per cent.

Those changes include creditorsreceiving new long-term Greek bondsequivalent to 31.5 per cent of the prin-cipal value of their current holdingsand short-dated bonds issued by the

Eurozone bailout fund, the EuropeanFinancial Stability Facility, equal in

value to 15 per cent of the principal.Greece must now thrash out the

terms and conditions of the deal.

Crucially, Athens will have to decidewhether and how to force the deal onprivate creditors who do not want toparticipate by introducing retrospec-tive collective action clauses on itsdebt.

Having previously said that 95 percent of creditors would have to agreein order for the deal to be imposed onthe remainder, Greece is now reportedto be considering a much lowerthreshold of 66 per cent acceptance inorder to coerce the other third.

The IIF says its members representmore than half of Greeces privatedebt-holders, but is not sure how manywill sign up voluntarily.

The deal must also be hastily rati-fied by 17 Eurozone states in order toavoid a disorderly default by Greece on20 March, when 14.5bn in bondscome due. The deadline is extremelytight: equivalent deals in the private

sector are normally executed over aperiod of at least a month.

Greeces debtholders unveilexchange deal

ANGER in Greece has escalated overthe countrys deal with its lenders an agreement that will requirechanges to the Greek constitution,and see a foreign task force sta-tioned in Athens to oversee condition-al reforms and spending cuts.

Support for the main coalition par-

ties, which led negotiations over thedeal, has sunk in recent weeks and is

expected to dip further after a seriesof protests that ended in violence andarson in the Greek capital.

Backing for the conservative NewDemocracy party dipped under 20 percent in a recent poll by GPO, whilePASOK fell to 13.1 per cent bothdown around two percentage pointssince the end of last year.

Socialist parties that have spokenout against the bailout deal, such as

the Left Coalition and the DemocraticLeft have gained support.

The erosion of Greek sovereigntyhas led to some analysts to questionwhether the arrangement can be sus-tained.

Phillip Souta, head of Business forNew Europe, said the deal had elimi-nated the risk of default, yet warned:The deal however involves anunprecedented level of interventionin the running of Greeces economy.

It is impossible to know for certain

if Greek society will be able to bearthis, Souta added.

Foreign inspection of Athens provokesopposition to new rescue agreement

The New Democracy party, led by Antonis Samaras, has seen a fall in popularity because it supported the Greek deal Picture: GETTY

BY JULIET SAMUEL

EUROZONE


BY JULIAN HARRIS

EUROZONE

CUSTOM IG APPS FOR

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of GDP by 2020 if reforms slip

bailout... and things have got worse

Its less than two years since the first

110bn

of GDP

Current Greek debt is nearly

170%


bailout until 2014

130bn

in Greek cuts

An additional

325mPrivate sector haircut of

Cut interest on loans from Eurozone states to53.5%1.5%

Greek debt could still be at

160%

2010 2012 2014 2016 2018 2020

4

3

2

1

0

-1

-3

-5

-2

-4

-6

-7

-8

%

PoliticsHome.comPoliticsHome.com

Apply to join today atwww.cityam.com/panel

In partnership with

Did Brusselsget it right

this time?So Greece has secured a secondbailout in the latest effort by theEurozone to deal with the escalat-ing debt crisis.

We are asking members of ourVoice of the City panel, run withPoliticsHome.com, if they thinkthe deal will work.

Is this the beginning of a brightnew start for Greece, or are theEuropeans still kicking the candown the boulevard?

Must Greece be kept in the sin-gle currency or would it be betteroff going alone?

To answer these questions andmore, you can apply to join thepanel at cityam.com/panel

Angela Merkels ministers pushed forGreece to accept fresh reforms and cuts

PLANS FOR GREEK SUSTAINABILITYRELY ON A QUICK RETURN TO GROWTH

Lenders distrust Greece toimplement reforms, and willstation themselves in Athensto check on progress asrequested by Dutch

politician Jan Kees de Jager

The popularity of pro-bailout coalition partieshas plummeted, the twomain groups sinking twopercentage points in thepolls since December

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Morgan Sindfirm is hopefBYKASMIRA JEFFORD

CONSTRUCTION

REGENERATION and constructionfirm Morgan Sindall said it was con-fident it could grow the businessagainst a backdrop of tough marketconditions, as the group unveiled a12 per cent drop in profits.

Profits before tax and exceptionalitems fell to 45.3m last year com-pared with 51.3m the previous year while revenues rose six per cent to2.2bn.

The group, which is involved inCrossrail, has been reducing its expo-

sure to public-sector related work asthe governments austerity cuts and

AMEC yesterday announced a 400mshare buyback and hiked its dividendon the strength of its 2011 profits.

The engineer, which is a consult-ant to energy industry big hittersincluding Centrica andConocoPhillips, said it had been buoyed by a string of acquisitionsand was on the hunt for more.

AMEC posted full-year earningsbefore interest, tax and amortisation(Ebitda) of 299m, 12 per cent higherthan in 2010.

The company is debt free and has been lining up a buyback for sometime.

A strong performance in the NorthSea, a contract win on the decommis-sioning of Sellafield nuclear plant innorthern England, plus a 21 per cent jump in earnings in the part ofAMECs business which provides con-sulting and engineering forenvironmental and waterprojects, helped boost prof-its.

Chief financial officer IanMcHoul told City A.M:Commodities have been hotand that has given us a boost.

We see this trend continu-ing. Acquisitions havereally helped us as hasthe fact that we havesuch a diversifiedbusiness.

When some partsof the business are

IGINDEX.CO.UK/SPREADBET

HIGHSPEED

BY JOHN DUNNE

ENGINEERING

News8

not performing, others are.He added that the surging oilprice triggered by Middle

Eastern unrest hashelped stoke the

companys profits AMEC, whi

said the buyback would place over 12

Chief executive Samir Brikho (inset) i

Amecin 400m

Executive chairman John Morgan

Tarmac merger und

THE Competition Commission (CC)

said a proposed joint venturebetween Anglo American and Lafargein Britain could damage competitionfor construction materials in somemarkets.

Having struggled for more thanthree years to find a buyer for itsTarmac UK unit, which it bought aspart of the larger Tarmac group in2000, Anglo last year agreed to merge Tarmac UK with Lafarges own UKcement, aggregates, concrete and

asphalt businesses in a 50-50 jointventure.

However, the CC yesterday said the venture could lead to a substantia

lessening of competition for the sup-ply of materials including bulkcement, rail ballast and asphalt incertain markets.

The commission said it was nowconsulting on the possible actions itcould take in response, which couldinclude a forced sale of some or all ofthe business.

It said it would publish a list of pos-sible remedies, outlining the waythat anti-competitive effects of the

BYHARRY BANKS

CONSTRUCTION

8/3/2019 Cityam 2012-02-22

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rofits slide 12 per cent butbout regeneration projectsIGINDEX.CO.UK/SPREADBET

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buyback plan

months, also said it planned to lift itsfull year dividend to 30.5p per sharefrom the 26.5p in 2010.

McHoul said that despite the buy-back, the company had acquisitions inits sights and would not run awayfrom debt to bankroll them.

Debt is not a bad thing we have astrong balance sheet and are lookingfor the right opportunities.

fire from regulatorsjoint venture could be prevented, andwould accept comments by 13 March.

In bulk cement there are current-ly only four UK producers, and there

is evidence that the market is not ascompetitive as it could be, the CCsaid.

Prices and profit margins havent been affected in the way we wouldhave expected following the big fallsin the demand for cement in the pastfew years.

We are concerned that the pro-posed tie-up would increase the sus-ceptibility of this market tocoordination. Tarmac chief executive Terry Last

The team from Deutsche Bankadvising AMEC on its buyback wasled from London by chairman of UKcorporate broking James Agnew.He also advised AMEC on its 173mtakeover bid for MACTEC in Maylast year. A veteran banker, Agnewcurrently sits on the Takeover Paneland has had a prolific City career. Healso advised Kraft on its bid forCadbury. He joined Deutsche in2002, having previously been headof corporate broking at MerrillLynch from 1995. Mark Astaire atBank of America Merrill Lynch was

joint adviser to Amec.

DEUTSCHE BANK

JAMES

AGNEW

UK CORPPRATE

BROKING

ANALYSIS l AMEC PLC

1,110

1,120

1,100

1,090

1,080

1,111.0021 Feb

fierce competition for projects hurtmargins at its construction andinfrastructure division, where prof-its declined fell 22 per cent to21.1m.

Executive chairman John Morgan,who founded the company in 1977,said the company has instead beenfocusing on expanding its regenera-tion pipeline of work in partnershipmainly with local authorities.

Morgan Sindall is involved in 30-40 regeneration projects and hopesto capitalise on the release of publicsector land the government ispushing the release of land assets

such as car parks from public bodiesto fund regeneration.

The group urban regenerationarm doubled its profits to 3.9m andgrew its pipeline of project from1.4bn to 2.4bn including preferred

bidder positions.Overall we think next year will be

much the same as this year but wedo have confidence that we can growour business even if the market does-nt improve, from these regenerationprojects that we have already won,he said.

In 2010 the groups affordablehousing division, LovellPartnerships, bought Connaughtstroubled social housing mainte-

nance division out of administra-tion, saving 2,500 jobs.

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SHARES in Dutch delivery firm TNT Express fell by almost threeper cent yesterday after it said itwas planning to curb its interna-tional expansion plans in the wake of a net loss of173m(145m) for the fourth quarter.

Despite pushing for a higherprice from potential suitor UPS whose 9 per share offer it reject-ed last week TNT admitted yes-terday it was reducing itsexposure to emerging markets inChina and Brazil, where it will

instead forge local partnerships.We will reduce our exposure to

fixed intercontinental capacitythrough cooperation agreementswith leading airlines and we willexplore partnership opportunitiesfor our domestic activities inBrazil and China, said chief exec-utive Marie-Christine Lombard.

Revenue growth of 2.3 per centin the fourth quarter helped boostfull-year revenues to 7.2bn, butthe firms overall operating lossfor 2011 was still 105m, which itput down to operating losses inBrazil and challenging Asia-Europe trading conditions.

The firm said it is targeting150m of fixed cost reductions byend of 2013.

TNT declined to provide anupdate on the UPS bid as share-holders continued to hold out fora higher bid, but analysts specu-lated yesterday that rival FedExcould also enter the fray.

TNT silent over UPSbid as losses mountBY ELIZABETH FOURNIER

CONSUMER


NEWS | IN BRIEF

Ericsson takes in BelAirSwedish telecoms firm Ericsson is tobuy privately-held WiFi technologyfirm BelAir Networks as part of itsplan to boost its mobile broadbandoffering. BelAir, which produces indoorand outdoor WiFi systems for tele-coms operators that allow people to

surf the internet without a physicalcoupling to a network, has 120 staff.Ericsson did not give any financialdetails of the deal.

Colliers extends bid deadlineProperty services group ColliersInternational has agreed to extends its

put up or shut up deadline for i tsmajority shareholder FirstserviceCorporation to make a bid for its trou-bled UK arm. The firm had a deadlineof 5pm yesterday to make a formaloffer according to Takeover Panelrules, but Colliers has extended thedeadline for Firstservice to 20 March.

MORE NEWSONLINE AT

www.cityam.com

EUROPEAN bond activity is show-ing signs of recovery, with corpo-rate debt issues so far in 2012worth $75bn (47bn), an increaseof 83 per cent on the same periodlast year, according to data fromThomson Reuters.

The data suggests that compa-nies that struggle to borrow frombanks are instead turning to capi-tal markets for fundraising. Theycan benefit from good liquidityand a quicker closing process.

January 2012 saw Europeanfirms raise $48bn, the strongestmonth since March 2011 issuancein the first three weeks of thismonth is already up 68 per centon February 2011.

The biggest single borrower was brewer SABMiller, which raised$6.9bn, followed by over $3bneach for oil giant BP and car man-ufacturer BMW.

And yesterday, mining groupBHP Billiton launched a $5.25bnbond sale.

German, UK and French borrow-

ers accounted for 69 per cent of allEuropean corporate bond issuance.

European corporate debt issues upas banks struggle to provide fundsCAPITAL MARKETS

ANALYSIS l European corporate debtvolumes soared in January

Proceeds(US$ bn) Proceeds

(US$bn)No. Issues

No. Issues

J

an11

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan12

Feb

60 80

70

60

50

40

30

20

10

0

50

40

30

10

0

20

TNT chief executiveMarie-ChristineLombard said thegroup would focus onEuropean operations

G r a p h i c : T h o m s o n R e u t e r s

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at the London 2012 Olympic Games.ASDA, owned by US retailer Wal-MartStores, yesterday posted a slowdown insales growth in its fiscal fourth quar-ter as shoppers cut back due to risingprices, muted wages growth and anuncertain economic outlook.

Chief executive Andy Clarke said he was instinctively optimistic aboutprospects in 2012 but said it was tooearly to say if positive recent data onthe UK economy represented a turn-ing point or was merely a blip.

Britains second-biggest supermar-ket chain behind Tesco said sales atstores open more than a year, exclud-ing fuel and VAT sales tax, rose one percent in the 14 weeks to 7 January.

That followed a 1.3 per cent increasein the third quarter, but comparedfavourably with many of its rivals,prompting Clarke to tell reporters:We were the clear winners atChristmas, we won Christmas.

Asda said underlying sales rose just0.1 per cent in the last three months of2011, followed by a surge in demand inthe first week of January, when Britishshops traditionally offer unsold stockat cheaper prices.

Its parent company Wal-Mart said yesterday that price cuts had hit its

fourth-quarter profit, but that it plansto trim prices further in the comingmonths, a move that is expected tokeep shrinking margins.

The companys shares, up morethan 29 per cent since August, fell 4.2per cent in early trading, erasing thegains seen so far in 2012.

Wal-Marts quarterly profit and salesfell short of Wall Street expectations. While price cuts in the US helped bring in more customers during thecrucial holiday season, those cus-tomers did not spend as much asinvestors had hoped.

Wal-Mart US posted a 1.5 per centincrease in sales at stores open at leasta year. It was the second quarter in arow that Walmart US same-store salesrose after nine consecutive declines.

Sales slow at

Asda but bossstays upbeatBYHARRY BANKS

RETAIL

Dell shares fell after hours yesterdayafter the tech firm forecast fiscal first-quarter revenue below Wall Street's

expectations, stoking fears the PCindustry has not fully emerged fromits downturn.

The worlds third-biggest personalcomputer maker projected sales would be down seven per cent this quarterfrom the previous quarter, when itposted revenue of $16bn.

Dells fiscal fourth quarter earningsalso came in below Wall Streets view,with net income down 18 per cent to$764m (484m).

TEMENOS insisted yesterday its planto merge with British banking soft-ware group Misys presents the bestdeal for both sides, despite the rivaloffer from Vista Equity Partners onMonday.

Swiss-based Temenos, which report-ed a 35 per cent fall in fourth quarteradjusted profits to $35.2m (22.3m),

said the merger would give enhancedscale and growth prospects alongwith significant cost synergies.

Temeos added that its presence banking, wealth management and business intelligence complementsMisys core operations.

The firm said its revenues fell 15 percent on last year to $127m in the quar-ter, as the Eurozone crisis made its banking customers reluctant tospend.

Dell disappointswith glum viewMisys suitor talks

up its merger bidBYMARION DAKERSM&A

TECHNOLOGY


NEWS | IN BRIEF

Kraft forecasts earnings growthKraft Foods has forecast earningsgrowth of at least nine per cent this yeareven as it prunes its portfolio of NorthAmerican brands. Kraft, due to split intwo this year, forecast 2012 net revenuegrowth of about five per cent, including ahit of up to one percentage point fromproduct pruning in North America. Itsaid net income was $830m in the fourthquarter, up from $540m a year earlier.

Macys expects sales gainsMacy's expects further sales gains thisyear, helped by the broad array of exclusiveand private brands that led to a higherprofit in the holiday quarter. For the newfiscal year just under way, Macy's expectssales at stores open at least a year to rise

3.5 per cent. Macy's reported net income of$745m for the fourth quarter to 28

January, up 11.7 per cent.

Home Depot beats Street forecastHome Depot quarterly results have beatenWall Street estimates as a warm winterboosted sales at the worlds largest homeimprovement chain by pulling some springdemand forward. Home Depots quarterlysales rose 5.9 per cent to $16.01bn(10.2bn) in the fourth quarter ended on29 January, well ahead of the analystsaverage estimate of $15.51bn.

Tesco changes tack on job schemeSupermarket giant Tesco yesterday agreedto start paying young people taking part inthe governments work experience scheme,in a bid to halt growing complaints aboutthe programme. Tesco had been advertis-

ing long-term, unpaid positions for those onjobseekers allowance.

ANALYSIS l Wal-Mart Stores Inc

$

21 Feb14 Feb 15 Feb 16 Feb 17 Feb

62.00

61.50

62.50

61.00

60.50

60.00

60.0721 Feb

Misys chief executive Mike Lawrie has received competing bids for the company

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Yandex to show new tweetsTwitter has joined hands with Yandexin a deal to allow Russias top searchengine to display new tweets almostinstantly in the results it brings up.While the companies declined to givefinancial details of their partnership, asimilar deal saw Microsoft whosesearch engine Bing has less than onepercentage point more market sharethan Yandex pay Twitter around$30m (19m). The micro-blogging siteused to have a similar deal withGoogle before the search enginepulled out in favour of its own socialnetwork Google+.

Genus boostedGenus shareshave jumpedtwo percent astheani-mal

genetics company reported a 25 percent rise in pre-tax profits to 23.3mand announced an interim dividend.

iPhone encroaches on ChinaApple is set to boost its flagging shareof the worlds biggest mobile phonemarket, as the iPhone becomes avail-able on network provider ChinaTelecom from next month. Last quarterApple ranked just fifth in China with 7.5per cent of the smartphone market,pipped by local firms ZTE and Huawei.

However, China Telecom isexpected to sell about

1.5m iPhones this year,rising to up to 4m in

2013. Apple hassigned up two

of Chinastop three

carriers,but notChinaMobile.

NEWS | IN BRIEF

EVERYTHING EVERYWHERE haspledged to invest at least 1.5bn overthe next three years in improving net-work speed, reliability and coverage.

The promise, first reported byCityA.M. in December, came as the hybridtelecoms group reported a 2.1 percent annual increase in underlyingservice revenue due to high demandfor data plans. Adjusted pre-tax earn-ings grew 2.4 per cent to 1.42bn.

But the British company lost 259m

in 2011 due to regulators slashing theamount mobile operators can chargeeach other for use of their lines, drag-ging total service revenue for the yeardown 2.1 per cent to 6.17bn.

Everything Everywhere boss OlafSwantee said he expects this regulato-

ry pressure to continue well into 2013.Formed in 2010 by the fusion of UK

brands T-Mobile and Orange, the tele-coms giant signed up 313,000 new con-tract customers in the fourth quarterand said 69 per cent of its post-paidusers are now on smartphone, com-pared to 51 per cent a year ago.

This boosted revenue from non-mes-saging data eight percentage points,meaning it now makes up 24 per centof average revenue per user.

Swantee told City A.M.: We are justat the start of a data revolution.

As the largest network operator inthe market, it is our duty to start build-

ing a new digital background for theUK. Britain needs to step up.

He added: It will be a great boostfor the UK economy in the currentclimate, telecoms is one of the fewindustries where companies are invest-ing more now than in the past.

EverythingEverywheresvow to invest

Olympus in mourning as India bossOmori found hanged at Delhi home

A SENIOR executive at troubled cam-era firm Olympus issued an apologybefore apparently committing suicideoutside his home in Delhi.

Tsutomu Omori, 49, head of thecompanys medical equipment busi-ness in India, was found hanging,police said yesterday. His body wasapparently discovered in a garden orpark near his upmarket flat in theGurgaon area of Delhi.

Handwritten notes in English andJapanese were discovered at his home,police said. The English note said I amsorry for bothering you, but the otherhas not yet been translated.

Lal Singh, investigating officer of

Gurgaon Police said: At this stage ofthe probe, it looks like he committedsuicide. One of his company executivestold us he was depressed for the lasttwo weeks.

There was no immediate suggestionthe death of Omori, believed to haveoccurred late on Sunday night, waslinked to the $1.7bn (1.08bn) account-ing scandal that has stunned corpo-rate Japan, led to the arrest of seniorexecutives in Tokyo and prompted thesacking of Michael Woodford, theBritish former chief executive, whoacted as whistleblower.

An official at the Japanese embassysaid the cause of Omoris death is being investigated by the Indianauthorities.

It comes in another turbulent week

for Olympus with Western investorsaccusing its banks of trying to takecontrol of the boardroom by stealth.

The firms major creditors haveshowed signs they may want to choosewho fills the vacant seats on the board.More executives are set to resign at ashareholders meeting in April.

BY LAUREN DAVIDSON

TELECOMS

PAYPAL, the online payment facilita-tor, plans to create one thousandnew jobs in Dublin by establishing anew operations centre in the Irishcapital by July.

The eBay subsidiary has held itsEuropean headquarters in Dublin,where it already employs up to 1,500staff, since 2003.

Taoiseach Enda Kenny welcomedthe move, calling it a clear recogni-tion of the opportunities thatIreland offers global leaders likePayPal.

Our action plan on jobs pub-lished last week will help to ensurethat this is just the first of many sim-ilar announcements over the comingyear, he added.

Irish unemployment has morethan trebled to 14.2 per cent follow-ing the financial crisis.

US companies accounted for 38per cent of offices bought or rentedin Dublin last year, according to theCBRE.

PayPals new centre will focus oncustomer service and sales acrossEurope, the Middle East and Africa.

PayPal expandsIrish office with1,000 new jobsTECHNOLOGY


Chief executive Olaf Swantee called for a digital overhaul in Britain Pictures: REUTERS

ANALYSIS l Olympus Corp

JPY


1,290

1,300

1,280

1,320

1,310

1,270

1,260

1,30921 Feb

BY PETER EDWARDS

TECHNOLOGY

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SEGRO, the industrial property devel-oper, said that it was hit by a 9.6 percent decline in its net asset value (NAV)last year after bigger-than-forecastwrite-downs on its portfolio.

The real estate investment trust saidits NAV per share fell to 340p after thegroup wrote down the value of its non-core assets by 187m. Analysts had been expecting a write-down ofaround 160m.

Segro announced plans inNovember to focus its UK multi-let

industrial portfolio on London andsouth east and dispose of non-coreassets across Europe worth about1.6bn over the next three years.

Analysts said the increase in write-downs reflected the difficulty to sellthe six larger assets in the portfolio.

The group completed the sale of fivesmaller UK assets yesterday to IgnisAsset Management for 80.2m, addingto the 111m sales completed in 2011.

We have got a number of negotia-tions ongoing so we expect to be ableto make 300-500m of disposals thisyear, chief executive David Sleath toldCity A.M.

On the operational side, the picturewas brighter. Sleath said void rates fellbelow 10 per cent for the first time infour years, from 10.2 to 9.1 per cent in

the fourth quarter of 2011.Underlying pre-tax profit rose 8.8

per cent to 138.5m while earningsper share rose 7.6 per cent to 18.4p.

Segro assetvalue hit bywrite-downsBYKASMIRA JEFFORD

PROPERTY

BNP PARIBAS Real Estate enjoyed astrong performance in 2011 despitetougher market conditions, posting an11 per cent rise in operating profits to156m (130.8m).

The real estate advisory arm ofFrances biggest listed bank whichposted full-year profits of 6bn lastweek said turnover increased by sixper cent to658m in the period.

The group, which derives 64 percent of its revenues from France, 11per cent from Germany and 11 percent from the UK, said its commercialproperty development generatedrecord business volumes of851m, up78 per cent compared to 2010.

Its transactional business grewturnover by nine per cent to176m inthe year, with France accounting for 51per cent.

Philippe Zivkovic, President of BNPParibas Real Estate, warned 2012 willbe a more complex year but pointedto undeniable advantages includingits strong property developmentpipeline for offices and residential.

The firm was appointed last year tolease Stratfords International Quarterby LendLease and the Olympic Legacyand also transacted on three of the biggest deals in London, includingacquiring space for the EuropeanMedicines Agency in Canary Wharf.

Strong profitsat BNP ParibasReal EstatePROPERTY

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ANALYST VIEWS: WERE SEGROS RESULTS ONTRACK? Interviews by Kasmira Jefford

LI SUN | ORIEL SECURITIES

Segro reported solid results although adjusted net asset value of 340pwas below our estimate of 352p due to higher than expected non-core asset write-down. Underlying operation remains solid with small improvements to occupancy andretention rate... We retain add.

MIKE BESSELL | INVESTEC

Segros results were in line with our expectations...Fundamentally thestory is playing out as guided during the investor day in autumn. We had beenbuyers for the income growth and dividend yield, and nothing in the headlinechanges this view.

JAMES CARSWELL | PEEL HUNT

Segros final result, preceding its substantial and detailed portfoliorestructure in November is again disappointing. The divestment and re-investmentinto higher grade logistics and data centres, will, we expect, be managed careful-ly to preserve the dividend cover.

BNP was appointed to lease Aldgate Tower

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STOCK EXCHANGE BLOCKS STELIOSFROM AIRING HIS LATEST ATTACKEASYJET founder Sir Stelios Haji-Ioannou has never been shy aboutletting the airlines managementknow what he really thinks.

But yesterdays attack on chairmanMike Rakes team, in which he paintsEasyJet lawyers Herbert Smith in anunflattering light, was the straw that

broke the London Stock Exchangesback it refused to publish the mediastatement without a full rewrite.

EasyGroup conceded there may

have been a couple of areas to botherthe exchange in the diatribe releasedtwo days before the EasyJet AGM.

Dismissing the law firms requestfor full details of voting arrange-ments between Stelios and his sib-lings as frivolous and vexatious wasone of them. What I found utterlydistasteful was Herbert Smithsimplied threat of legal proceedings ifI did not answer their outrageous andintrusive questions, wrote Stelios.

Shareholder Standard Life, mean-while, should abstain from voting attomorrows AGM because it is con-flicted by EasyJets extensive pur-chase of Airbus aircraft. Thesituation is beginning to feel likeone of Putins elections in Russia,according to Stelios.

EasyGroup said it would lose thestatements more contentious phrasesfollowing a conference call betweenthe RNS legal team and the firms PR

The Capitalist18 CITYA.M. 22 FEBRUARY 2012

EDITED BY

HARRIET DENNYSGot A Story? [email protected] The Capitaliston Twitter: @dennysharriet

adviser Citigate, but refused to issue anew draft. Its Stelios being Stelios,said a source. He is one of the larger-than-life characters in the British busi-ness world.

Herbert Smith and the LSEdeclined to comment.

FORD ON BOARD THERE has been some speculationthat Stephen Ford of Hoare Govett,one of the firms top salesmen, wouldnot be joining his new employers at

Jefferies, the US group that has takenon the broker from RBS.

But Ford, speaking from his new Jefferies offices, yesterday put thatidle chatter to rest. I am fully com-mitted to the new owners and veryhappy to be on board, he said.Everyone has been very welcoming.

PRIVATE DININGSPOTTED dining in one of RBS-owned

Coutts private dining rooms yester-day: Coutts & Co chief executiveMichael Morley and chairman LordHome. No doubt there was plenty tochew over ahead of RBS newsworthyannual results tomorrow.

EasyJet founder Sir Stelios Haji-Ioannou Picture: GETTY

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RATHBONE Brothers shrugged offconcern over the Eurozone to post a20 per cent rise in profits for last year.

The genteel wealth manager,whose origins go back to 1742, saidglobal output is continuing to growand there are small signs ofimprovement in some developedeconomies.

Rathbones, which has a bankinglicence, pulled its money from

Spanish and Italian banks and invest-ed in British treasury bills. Chief exec-utive Andy Pomfret told City A.M. thatinternational investments had feltthe impact of the Eurozone crisis butstruck an otherwise bullish tone.

There is no doubt that the uncer-tainties over Europe persist but theseare balanced by indications that the world economy continues to growand some developed economies areshowing small signs of improve-ment, he said.

Rathbones posted underlying pre-tax profit of 46.2m for the year to 31December, stripping out exceptionalitems such as 3m on relocating allits London staff to a single Mayfairoffice and gains from the disposal offinancial securities.

The board recommended a 29pfinal dividend for 2011, bringing thetotal for the year to 46p, comparedwith 44p a year earlier.

Total funds under managementinched up 1.4 per cent to 15.85bnduring a turbulent year for the sector.

Rathbones inprofit despiteEurope drama

FORMER IMF chief Dominique Strauss-Kahn was questioned by police yester-day over his dealings with an allegedprostitution ring that was run fromthe northern French city of Lille andorganised sex parties in Paris, Brusselsand Washington.

Strauss-Kahn was to remain inpolice custody overnight. The investi-gation is focused on a prostitution

ring that allegedly supplied clients ofLilles luxury Carlton hotel. Police want to establish whether Strauss-Kahn knew that women at parties heattended were prostitutes.

He could be deemed free of suspi-cion, or may be placed under formalinvestigation for benefitting frommisappropriated company funds ifinvestigators conclude that he attend-ed sex sessions with prostitutes thatwere paid for by company executivesusing expense accounts.

Strauss-Kahn grilled inParis prostitutes inquiry

Rape charges against Strauss-Kahn, later dropped, ended his IMF career Pic: GETTYBY PETER EDWARDS

BANKING

NewsCITYA.M. 22 FEBRUARY 2012

BYHARRY BANKSPOLITICS

19

ANALYSIS l Rathbone Brothers

p


1,300

1,280

1,320

1,260

1,240

1,275.0021 Feb

NEWS | IN BRIEF

Four bids for Edinburgh airportFerrovial, the owner of British airportsoperator BAA, has produced a four-strong shortlist of bidders for itsEdinburgh airport and will accept finaloffers in early April, according toreports. Global Infrastructure Partners,JP Morgan Asset Management and con-

sortia led by Carlyle Group and 3i arebelieved to have made the cut. BAA isbeing forced to sell the airport in thewake of a competition ruling. Analystssay it is worth 500m-700m.

Alibaba bids to delist subsidiaryChinese e-commerce firm Alibaba hasoffered around $2.5bn to take its HongKong-listed Alibaba.com unit private,stressing the move was unrelated to anypossible deal to buy back shares ownedby Yahoo. Alibaba Group is offeringinvestors HK$13.50 (1.10) in cash pershare to take Alibaba.com private, thesame price as at the company's IPO in2007. Jack Ma, chairman of AlibabaGroup, said: Taking Alibaba.com privatewill allow our company to make long-term decisions that are in the best inter-est of our customers and that are alsofree from the pressures that come fromhaving a publicly listed company.

Pawnbroker sees profits boomPawnbroker Albemarle & Bond raised itinterim dividend on the back of a higherfirst-half profit, as more hard-up Britonspawned or sold gold jewellery for cash.First-half profit before tax rose 12 percent to 12.1m and the companyspledge book was up seven per cent to38.3m. The firm, which also offerscheque cashing, small instalment andpayday loans, said it was on track toopen 25 new stores in the full year.

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ICAP, the worlds largest inter-dealer broker, has announced thepurchase of Singaporean firmIsland Shipbrokers as it looks to boost its influence in the Asianmarket.

Islands core business is thechartering, sale and purchase ofoil tankers and it has been work-ing closely with ICAP for severalyears.

ICAP Shipping began as a dry bulk specialist before movinginto tankers, but until now it hasnot had an Asian tanker arm.

The new deal will give Islandaccess to ICAPs lengthy client listand the ability to take advantageof the Asian commodities boom, with staff working closely with

ICAPs existing dry cargo officesin Shanghai and Singapore.

The cost of buying out Islandsprevious owners Tim Madley, Allan Spangsberg and MysticEnterprises Limited was not dis-closed but the Asian firm has netassets of $2.4m (1.5m), grossassets of $8.4m and employs 39staff in its Singapore office.

Henry Liddell, chief executiveof ICAP Shipping, said: IslandShipbrokers extensive experiencein the tanker chartering and saleand purchase markets will com-plement our existing London andShanghai operations andstrengthen ICAP Shippingsgrowth in the Asia region.

Tim Madley, president of IslandShipbrokers, added: Our per-formance in the physical tankerchartering and sale and purchase

markets will be further enhanced by ICAP Shippings capability intanker derivatives and research.With a broader network of globalcoverage, we will be stronglyplaced to continue expansion inthe Asian shipping markets.

Shares in the parent firmclosed up 1.5 per cent at 395.8pyesterday.

ICAP buys

shipbrokerand targetsAsia growthBY JAMESWATERSON

BROKERS


German cars win style race for UKs drivers

NEXT week sees the first 2012-plate registered cars roll ontothe streets. YouGovsBrandIndex data indicates that

the cars consumers would prefer todrive away are German.

The Index rankings have fourGerman brands in the top five:

Volkswagen leads the way with a scoreof +31, followed by Audi on +29,Mercedes, Jaguar (the one interloper)and BMW, all on +26.

In the car market, the Index scoregives an idea of aspiration, but it is acomposite of six key measures impression, quality, value, satisfaction,recommendation and reputation and there are considerable differencesin ratings between measures. Indeedonly Volkswagen makes it into the topfive on all six of the measures (the next

best is four out of six top five spots).The biggest contrast comes between

quality and value. From a quality pointof view, the top three are BMW, Audi

and Mercedes, but we see a differentpicture when it comes to that keymeasure of value. Here, it is VW andFord that share the top spot on +23,with Toyota, Skoda and Honda round-ing out the top five. Indeed, you needto drop as far down as 17th and 18thon this measure to find BMW andMercedes. One brand on the slide value-wise is Vauxhall, which hasdropped from seventh a year ago toninth today.

British consumers may aspire to an

Audi or Mercedes but with value suchan important factor in a car purchase,reality may lead them to Ford or a VW.It is the latter that has been the most

successful brand in terms of combin-

ing the two and portraying an imageof affordable aspiration.Stephan Shakespeare is the chief executive ofYouGov

GERMAN CAR SPECIAL: P30

BRANDINDEX

STEPHAN SHAKESPEARE

NEWS | IN BRIEF

Profit warning at Gooch & HousegoOptical components maker Gooch &Housego has issued a full-year profit warn-

ing, saying demand for some of its industriallaser products was considerably weakerthan it had expected, and that it would cutcosts where possible. The company said itexpected profits for the year ending 30

September to be significantly below itsprevious expectations, sending its sharesdown 17 per cent to 383.75p. Analysts on anaverage had expected the company to earn

a pre-tax profit of 10.2m. G&H, which sup-plies critical components to optical and lasersystem makers, said it would continue toconsolidate and integrate the acquisitions itmade last year to diversify its revenues.

ANALYSIS l ICAP

p


395

390

400

385

380

375

370

395.8021 Feb

Michael Spencer is eyeing expansionPicture: Laura Lean/City A.M.

ANALYSIS l Value Chart

Audi

Ford

Mercedes

Volkswagen

1 Jul 1 Aug 1 Sep 1 Nov1 Oct 1 Dec 1 Jan 1 Feb

30

25

20

15

10

5

0

ANALYSIS l Index Chart

Audi

Ford

Mercedes

Volkswagen

1 Jul 1 Aug 1 Sep 1 Nov1 Oct 1 Dec 1 Jan 1 Feb

35

30

25

20

15

10

5

0

TATA Motors will double invest-ments in its Jaguar Land Rover brands to 1.5bn a year, even asthe Indian carmaker warned thatit will be a challenge to sustainhigh margins at its key profit gen-erator.

With soaring revenues andexpanding margins, Jaguar LandRover (JLR) has driven the compa-nys growth in recent quarters, asstrong demand in emerging coun-tries for the famous British brandsoffset sluggish performance in

Tatas home market.Over the past five to six years,

JLR has spent around 700-800mannually on capital expenditureand product development. Goingforward, we will double that, CRRamakrishnan, Tatas financechief, said yesterday.

JLR spending will be in theorder of 1.5bn each year,Ramakrishnan told reporters,adding that the increase wouldapply in the current fiscal yearending in March.

JLR contributed 95 per cent ofthe companys profit in the quar-ter to end-December, with a profitmargin of 20 per cent, three timesthe profitability seen at Tatas

domestic business.Sustaining such high margins

in coming quarters would be achallenge, for JLR, Ramakrishnanadded, as sales growth likely mod-erates.

Sales of its new compact EvoqueSUV accounted for much of JLRsrevenue growth in the fiscal thirdquarter, alongside surgingdemand in emerging marketssuch as Russia and China.

Tata has selected a joint venturepartner for manufacturing JLRcars in China and is awaitingapproval from government regula-tors in the worlds fastest-growingauto market, Ramakrishnan said.

An announcement on the com-

panys China joint venture will bemade very soon, he added.

Tata doubles Jaguar Land Rover fundsBYHARRY BANKS

INDUSTRY

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OIL firm Tullow Oil said yesterday along-awaited $2.9bn (1.8bn) deal tobring in French oil major Total andChinese group CNOOC as partners todevelop its oil fields in Uganda closed yesterday, paving the way for com-mercial oil production to start in theAfrican country.

The conclusion of the deal marksthe transfer of $2.9bn to Tullow from Total and CNOOC, after repeated

delays following the initial announce-ment of the deal early in 2010, andthe signing of the sale agreements inMarch 2011.

The British group will now focus onits $10bn plan to start pumping oilfrom huge reserves discovered on theshores of Lake Albert.

Early production is scheduled tostart in 2013 before ramping up to amajor production phase in 2016,Tullow said.

The final closing of the deal had

been expected following Tullowssigning of two production-sharingagreements with Uganda earlier inFebruary.

FTSE 100-listed Tullows sharesdipped in early trading yesterdayafter a drilling update on its Jupiter-1deep-water discovery well in Block SL-07B offshore Sierra Leone, operatedby Anadarko Petroleum, was poorlyreceived by investors.

Westhouse Securities said in a notethat the data provided by the compa-ny was inconclusive.

Tullow finallyseals $2.9bnUganda dealBYHARRY BANKS

ENERGY

NewsCITYA.M. 22 FEBRUARY 2012 21

BEST OF THE BROKERS

To appear in Best of the Brokers email your research to [email protected]

ANALYSIS lAberdeen AssetManagement

250

200

225

275

Dec Jan Feb

p

257.0221 Feb

ABERDEEN ASSET MANAGEMENTPeel Hunt has downgraded its recommenda-tion on the asset manager from buy tohold but upgraded its estimates and targetprice on the stock, with the latter climbingfrom 270p to 280p. The broker says strongperformances in its key equity funds have led

to upgrades of 2012 and 2013 estimates byfour per cent and seven per cent respectively,but the 36 per cent share rise over threemonths means the recommendation falls.

ANALYSIS lAdmiral

900

800

850

950

1,000

1,050

Dec Jan Feb

p

1,043.0021 Feb

ADMIRALCredit Suisse has upgraded the insurancegroup from neutral to outperformahead of full-year figures expected on 7March. The broker has also increased itstarget price on the stock from 1,100p to1,300p, and expects the upcoming resultsto show that Admiral can regain marketconfidence as bodily injury challenges arebeing resolved. Credit Suisse expects pre-tax profits to come in at 295m.

ANALYSIS lRightmove PLC

1,350

1,200

1,250

1,300

Dec Jan Feb

p 1,339.00

21 Feb

RIGHTMOVENumis rates the mortgage group add

with a target price of 14.29. The brokerexpects pre-tax profits of 67m whenRightmove reports its full year figures onFriday, with customer growth at aroundtwo per cent. Numis is also upbeat aboutthe firms prospects for monetising mobileand commercial property products.Overall, it expects average revenue peradvertiser to rise 11 per cent this year.

NEWS | IN BRIEF

Vedanta buoyed by shake-upMiner Vedanta, responding to specula-tion it could merge two separately listedIndian subsidiaries, said yesterday itaimed to simplify and consolidate itsstructure. The FTSE 100-listed compa-ny trades at a discount to the sector,because of its gearing and because of a

structure which means it finds it harderto repatriate cash from subsidiaries toservice group debt. Reports had saidVedanta was considering a move torestructure Sterlite and Sesa Goa,potentially merging the two. It ownsalmost 55 per cent of Sterlite and justover 55 per cent of Sesa Goa. The com-panys shares jumped by seven per centafter it confirmed some restructuring.

Drax ditches biomass plant planBritain's coal-fired power producer Draxhas scrapped plans to build a dedicatedbiomass plant on its site in NorthYorkshire, but said it was ready to investin biomass-fuelled power generation ifgiven appropriate regulatory support.The company claimed state support lev-els for using only biomass in power gen-eration were still too low. For 2011, Draxsaid earnings before interest, taxes,depreciation, and amortisation fell 15

per cent to 334m.

Dragon Oil sees profits surgeDragon Oil said yesterday its profitssurged 76 per cent in 2011, helped by aproduction ramp up at its Turkmenistanoil field and a higher oil price, thoughwas silent on whether it would proceedwith a takeover bid for explorerBowleven. Dragon Oil posted full-yearoperating profit of $856.2m (542m).It said in 2011, its oil production rose30 per cent.

ANALYSIS l Tullow Oil

p


1,620

1,600

1,580

1,560

1,540

1,520

1,543.0021 Feb

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NewRiver RetailThe real estate investment trust hasappointed Christopher Taylor and Kay

Chaldecott as non-executive directors,effective from 31 March, when currentnon-executive directors Peter Tom and

Susie Farnon will stand down. Taylor ischief executive of Hermes Real Estate,and Chaldecott stepped down as manag-ing director and an executive boarddirector at Capital Shopping CentresGroup last September.

Shore CapitalShore Capital has hired Patrick Castle toits corporate finance team. Castle movesfrom Evolution Securities; prior to that,he worked at Arden Partners.

Horizonte MineralsThe Aim-listed explorer focused in Brazil

has appointed Phillip Mackey as seniormetallurgical advisor. Mackey is a con-sulting metallurgical engineer specialisingin nickel, who has worked for producersFalconbridge and Xstrata.

Veritas Asset Management

Ramesh Narayanaswamy has beenappointed as global industrials analyst towork across the groups global strategies.Narayanaswamy joins from FidelityInvestments, where he spent five yearsas a global equity analyst covering globalindustries including construction materi-als, capital goods and utilities.

PimcoThe investment management firm hasstrengthened its European investmentsolutions team with two hires in itsLondon office. Hannah Simons joins fromBlackRock as a senior vice president andproduct manager, and Janki Tanna joins

as a product associate from MercerInvestment Consulting.

Grant ThorntonMartin Young has joined as head of finan-cial planning for the investment advisersLondon team. Young was previouslymanaging partner at Coutts & Co.

CITY MOVES | WHOS SWITCHING JOBS Edited by Harriet Dennys

+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

Quindell PortfolioThe Aim-listed consultancy, software and out-sourcing business has appointed Gillian Bakeras head of investor relations and chair of thecompanys newly formed strategy and integra-tion advisory board. Baker started her careerat IBM, working with clients in the finance

and insurance sectors, before joining theInnovation Group in 2000 as senior vice presi-dent, marketing.

Dow Jones climbs

despite Wal-Mart

US stocks ended little changed yes-terday, paring gains after theDow topped 13,000 for the firsttime since May 2008, and as

higher oil prices damped prospects forthe economy.

Greeces securing of a bailout toavoid a disorderly default providedsome support to stocks, but investorssaid the news had mostly been pricedin to the market.

Fresh highs in oil prices gaveinvestors a reason to sell. US crude

futures rose 2.5 per cent to a nine-

month high of $105.84 a barrel on Iransupply worries.

Since the start of the year, signs ofimprovement in the economy and sta-bilization of Europes debt crisis havedriven the Dow up 6.1 per cent, whilethe S&P has climbed 8.3 per cent.

Yesterday the Dow Jones industrialaverage finished up 15.82 points, or0.12 per cent, at 12,965.69, after brieflyclimbing above the psychologicallyimportant 13,000.

The Standard & Poors 500 Indexwas up 0.98 point, or 0.07 per cent, at1,362.21. The Nasdaq Composite Indexwas down 3.21 points, or 0.11 per cent,at 2,948.57.Wal-Mart shares fell 3.9 per cent to$60.07, erasing most of the stocksgains so far in 2012, after its quarterly

profit came in short of expectations.

THENEW YORKREPORT

FTSE corrects as

Greek deal struck

BRITAINS top share index edgedlower yesterday, with investorstaking profit on banks andcyclicals after Greece secured a

long-awaited bailout deal that avertedthe immediate risk of a messy defaultbut offered no long-term panacea.

Londons blue chip index closeddown 17.05 points, or 0.3 per cent at5,928.20, retreating from a seven-month closing high it reached onMonday on expectations for theGreek deal and posting its biggestdaily drop in seven sessions.

Having risen 6.5 per cent this year,bolstered by liquidity injections fromglobal central banks and improvedrisk appetite, the FTSE is approachingoverbought territory on the relativestrength indicator (RSI).

If we go down two per cent fromhere, that will be a good healthy cor-rection. We are not going to go backto unchanged on the year there istoo much money about, all that QE(quantitative easing) liquidity, said

Justin Haque, pan-European equitysales trader at Hobart CapitalMarkets.

Low turnover underlined investorscautious mood, with volumes on theFTSE 100 coming in at 93 per cent ofthe 90-day average.

Eurozone policymakers agreed a130bn (109bn) rescue for Athens,enabling it to meet bond paymentsdue in March. With the widely expect-ed deal done, investors switched theirfocus to the remaining doubts aboutGreeces ability to recover and avoid adefault in the longer term, as well asrisks of contagion to other countries.

It [the Greek deal] does not changemy view at all, said Francesco Curto,CROCI strategist at Deutsche Bank.

We all know that it is not going totake three months or six months tosolve Greece, but ultimately it seemsthat within Europe you are managingto confine the problem.

Curto favours a defensive valuestrategy, focusing on companies withlow price-earnings ratios, which alsooffer relatively high cash returns, lowfinancial leverage and low volatility,like pay-TV group BSkyB, drugmakerShire and oil major Royal Dutch Shell.Shell was one of the few FTSE gainers,up 0.8 per cent, as high oil and metalprices boosted energy and miners.

THELONDONREPORT

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AS SOON as The Iron Lady hit the silver

screen, it brought back memories ofthe Falklands War -- a war that official-ly commenced on 2 April, 1982, only

three short years after Margaret Thatcherassumed the reins as Prime Minister.

Since 1833, Britain has been able to main-tain its colonial settlement of the Falklandsagainst the objections of Argentina. TheFalklands? Even Samuel Johnson had some-thing to say about the Falklands. This is whathe wrote in 1771:

What, but a bleak and gloomy solitude, anisland thrown aside from human use, stormyin winter, and barren in summer; an islandwhich not even southern savages have digni-fied with habitation; where a garrison must be kept in a state that contemplates withenvy the exiles of Siberia; of which theexpense will be perpetual, and the use onlyoccasional; and which, if fortune smiles uponour labours, may become a nest of smugglersin peace, and in war t he refuge of future buc-caneers.

When Thatcher took over from JimCallaghan, her government was briefed onthe festering Falklands sore. But the Thatchergovernment did not realise that danger waslurking, as is always the case when disputedterritories are in the picture. Indeed, Britainsintelligence about what Argentinas militarygovernment was up to was wanting. Whenthe Galtieri government struck, Britain wascaught off guard and the Falklands Warensued, resulting in more than 900 casual-ties.

And, as they say, what goes around comesaround. As preparations for the 30th anniver-sary of the war proceed, tensions are on therise, yet again. Last December, Prime MinisterDavid Cameron was angered by reports that Argentine naval vessels had interceptedSpanish fishing boats in Falkland waters. Argentinas President Cristina Fernndezbrushed this off and ratcheted things up byclaiming that the Falklands were a global

issue. In addition, she obtained an agreement

with countries in the Mercosur trade pactthat any ships flying the Falklands flag would not be permitted to enter Mercosurports.

Before we have more nationalistic postur-ing, sanctions, protracted skirmishes, a newwar, and on

cityam 2012-02-22

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