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GREECE has not defaulted on itsdebts after all because the govern-ment has negotiated a voluntaryhaircut with investors, theInternational Swaps and Derivatives

Association (ISDA) controversiallyruled yesterday.

As a result, 3bn (2.5bn) in insur-ance contracts taken out against therisk of Greece defaulting will not bepaid out, even though bondholdersface heavy losses following a 50 percent writedown.

The decision has been criticised by some as making a mockery ofcredit default swaps on sovereigndebt. These critics believe that their

value has now been permanentlyundermined.

ISDAs voting committee unani-mously decided a credit event hasnot occurred because investors have

not been legally forced to take losseson their bonds even though ratingsagency Standard and Poors classes

the country as being in a selectivedefault.

If the default was deemedvoluntary, it was hopedinvestors would not put betson governments defaulting.Such a move could havepushed them into ever deep-er trouble, raising thechance of a default occurring.

However, ISDA acknowledgedthe situation in Greece isstill evolving and acredit eventc o u l doccur at alater date.

T h eultimateresult oft h eexchange

between private market holders andEU authorities are not yet known,

said Bill Gross from Pimco, the

bond fund that sits onISDAs voting commit-

tee.We expect the

next few days to ulti-mately bring thecommittee back forone final vote.

As part of theGreek bailout nego-tiated by technocraticGreek Prime Minister

Lucas Papademos private

investors are expected to swap their bonds in the coming weeks intolonger-term bonds of lower value.

If some investors refuse to takepart in this swap, and so are forcedto take losses by the Greek govern-ment through collective actionclauses, they will be able to applyagain to ISDA to consider whether ornot a credit event has occurred.

The debt swap itself is vitalbecause Greece needs to reduce itsdebts if it is to avoid going bankrupt.

Greece will only receive the nexttranche of its bailout funds fromother Eurozone countries if it doespersuade enough investors to takethe haircut.

Eurogroup leader Jean-ClaudeJuncker praised the country yester-day for its efforts in slashing spend-ing, raising taxes and reforming its

economy, but stressed that thebailout cash was not guaranteed.

A successful PSI operation with

high participation and a final posi-tive assessment of the complete setof prior actions are necessary condi-tions both for the disbursements ofthese EFSF bonds and for the secondprogramme, he said.

ISDAs voting committee includesbanks which are involved in that PSIdebt swap, as well as those whichhave bought and sold credit defaultswap insurance on Greek debt.Critics argue this means the panel isnot entirely impartial.

It is comprised of 10 banks, includ-ing Deutsche Bank, BNP Paribas and

JP Morgan, and five asset managersincluding BlueMountain Capital andElliott Management Corporation. Asupermajority of 12 or more mem-

bers is required to declare a creditevent has taken place.

MORE: P3

BY TIM WALLACE

EUROZONE

NULLANDVOIDwww.cityam.comIssue 1,583 Friday 2 March 2012 FREE

BUSINESS WITH PERSONALITY

LLOYDS Banking Group has clinchednew chief financial officer GeorgeCulmer, after months of wranglingover his start date and pay package.

But the part-nationalised bank willbe left without a finance chief for thenext two months because Culmer,

who stepped down from insurer RSAin November, will not join until the

Lloyds shareholder meeting in May.Chief executive Antnio Horta-Osrios finance team will manage hisresponsibilities between now and

Culmers arrival.Interim finance head Tim Tookey,

who stood in for Horta-Osrio duringhis leave of absence last year, jumpedship to Friends Life last week.

Culmer, 49, has been promised agolden hello of Lloyds shares worth1.9m to help make up for the loss ofhis deferred bonus from RSA.

The payment is similar to the con-troversial 4.6m share award given toHorta-Osrio when he joined, which

previous employer Santander consid-ered trying to claw back amid theinsurance mis-selling scandal.

Culmer will also get an allowance to

fund personal pension arrangementsworth 25 per cent of his salary, takinghis potential annual pay, bonus and

benefits to 4m.Culmer, in a break from the steady

stream of Santander alumni taking jobs at Lloyds, has a background ininsurance. He worked for Prudentialand Zurich before starting at RSA in2004.

His arrival was first trailed inNovember, before Horta-Osrio took

two months off for stress.Lloyds last week reported an annualloss of 3.54bn, hit by a 3.2bn chargefor mis-selling insurance.

Certified Distribution

02/01/12 till 29/01/12 is 92,258

George Culmer is joining the bank in May

BY MARION DAKERSBANKING

It looks like a default. It sounds like a default. But the official body yesterday ruled Greecehas not defaulted on its debt. Now bondholders will miss out on3bn of insurance payouts.

al investment consultaethical investment consultants

Greek PM Lucas Papademos was relieved afterISDA ruled the country had not defaulted

Lloyds signs finance chief but jobwill be left vacant for two months

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News2 CITYA.M. 2 MARCH 2012

GM asked tosave UK jobsVINCE Cable has flown to New York tomeet with the leaders of GeneralMotors (GM) and asked them to com-mit to UK manufacturing.

The business secretary met withGMs chief executive Dan Akersonand corporate strategy vice chairmanStephen Girsky to make the case forcontinued investment in its Britishfactories.

Reports suggest the American firmis tired of substantial losses at itsEuropean subsidiary Opel whichtrades as Vauxhall in the UK and isconsidering shutting down itsEllesmere Port factory in Cheshire.

The plant, which employs around2,800 people and makes the VauxhallAstra car, is already offering volun-tary redundancy packages to some

150 workers but fears are growingthat the entire site could be closed.

GM survived near-bankruptcy two years ago to post record profits of$7.6bn for 2011. But these weredragged down by a $747m hit onEuropean operations that the compa-ny described as simply unaccept-able.

Another Opel factory in Bochumm,Germany is also facing the threat ofclosure as GM looks to respond to lowdemand by reducing productioncapacity in Europe by around 400,000cars a year.

BY JAMESWATERSON

MANUFACTURING

STAFF AT JOHN LEWIS BRACED FORBONUS CUT The John Lewis Partnership is nextweek expected to announce the firstcut in its staff bonus for three years ashigh street turmoil takes its toll onthe employee-owned retailer. Analysts who track the groups weekly salesfigures forecast a pay-out of 12-14 percent of salary for the 77,000 staff at John Lewis department stores andWaitrose supermarkets.

FSA WIDENS INSIDER TRADINGINVESTIGATIONOne of the City regulators most high-profile investigations into insidertrading is expanding, with theFinancial Services Authority asking

several institutions, including broker-ages, for information on trading and

other data. WH Ireland has put one ofits Manchester-based traders on leave.

DEUTSCHE BANK REJECTS 800M OUTOF COURT DEAL TO SETTLE KIRCHDISPUTEDeutsche Bank has walked away froma potential 800m out-of-court settle-ment with the heirs of the defunctKirch media empire, dashing hopes ofan end to the 10-year dispute.

JUDGE RAMPS UP PRESSURE ONMISSING KAZAKH MOGULKazakh oligarch, Mukhtar Alyyazov,accused of siphoning off $5bn fromKazakhstan bank BTA, has untilMarch 9 to turn himself in or be pre-vented from defending fraud claims,the High Court in London ordered.

SUPERJUMBO WING CRACKS PUTDOWN TO BRITISH DESIGN FAULTWing cracks that have grounded the Airbus 380 superjumbo have beenidentified as the fault of design engi-neers at the manufacturers facility atFilton near Bristol. The entire fleet ofthe double-decker A380s is to becalled in after inspections foundcracks in key components in everyone of the 69 aircraft in service.

VIVENDI PROFITS HIT 2.9BN Vivendi, the French entertainmentand telecoms group, announcedrecord profits of2.9bn (2.4bn), up9.4 per cent. The news came the dayafter its subsidiary Activision Blizzardannounced 600 job cuts.

CHINA CLAIMS WORLDS BIGGESTSHALE GAS RESERVESChina is planning an investment blitzto unlock its vast reserves of shale gas,convinced it can match the energyrevolution under way in the US andmeet a significant part of its fast-grow-ing fuel needs. The resources ministrysaid yesterday that preliminary surveys showed the country hadexplorable shale-gas reserves of 25.1trillion cubic metres.

OIL PRICE REPORTING MAY NEEDGOVERNMENT INTERVENTIONGovernments may need to intervenein the reporting of oil prices to avoidmarket manipulation according toregulators worried by swings in prices.

AT&T CAPS UNLIMITED DATA PLANSAT&T is effectively ending unlimiteddata plans, saying that it will nolonger let customers use more than aset amount of data per month with-out penalty. Under a new policy,AT&T will slow download speeds forunlimited 3G and 4G smartphonecustomers who exceed three giga-bytes and 4G LTE users who exceedfive gigabytes of data in month.

ZYNGA LAUNCHES OWN SPACE FORGAMES WITHOUT FACEBOOKZynga made its Project Z official Thursday, announcing that gamersnow can play the companys populartitles on Zynga.com instead of relyingon social networks.

WHAT THE OTHER PAPERS SAY THIS MORNING

All tax rates are too high in Britain

IT was good to see yet more entrepre-neurs and small business owners join-ing in the campaign to scrap the 50ptax rate yesterday. But supporters ofthe tax were also out in force yester-day; they deployed three main argu-ments. The first is that bankers (inmodern parlance, anybody who worksin finance, including fund managers,traders, investors, corporate lawyers,private equity folk and even someaccountants) are the ones being hit bythe tax, and that such people shouldcount themselves lucky that the toprate is just 50p. In other words, the

usual rabid anti-City hatred. Giventhat the overwhelming majority ofCity workers didnt cause the bubble,such a slur is preposterously unfair.

But the argument is also wrong for

another reason. At last count, only 23per cent of 50p taxpayers worked infinancial intermediation. In Marchlast year, Sir Nicholas Macpherson,permanent secretary at HM Treasury,revealed to the House of CommonsPublic Accounts Committee that ofthe 275,000 paying the new 50p taxrate at the time, only 63,000 work infinancial intermediation. Theremainder is made up of entrepre-neurs, senior executives in every partof the UK manufacturing and servicesindustries, consultants, lawyers, someIT contractors, authors and entertain-ers, sports stars, top medical profes-sionals and many other kinds ofpeople. All successful people are beinghit, not just bankers.

The next argument is that those onhigh incomes dont pay their fairshare. The evidence shows this to be

untrue, except, of course, if you are aMarxist who believes in entirely elimi-nating inequality and seizing all ofthe top earners income. The top oneper cent of taxpayers (who roughly

coincide with 50p tax rate payers on150k or more) are expected to haveearned 12.6 per cent of total income in2011-12, down from 13.4 per cent atthe height of the bubble; they willhave paid a massive 27.7 per cent of allincome tax, a new record. Withoutthe top one per cents tax payments,the welfare state would collapse andthe UK would go bankrupt; they payfor a disproportionate chunk of publicservices. In fact, they pay for a greaterproportion of the welfare state thanever before. How much more doactivists want these people to con-tribute? They pick up over a quarter ofthe bill should it be half, or even allof it? How would that be fair?

The third argument is that there isno evidence that the tax will hitgrowth and jobs. Again, that is non-sense. There are dozens of studies con-

ducted by researchers all over the world that demonstrate that highmarginal tax rates on income and cap-ital do have a negative effect; there arealso lots of studies that show that

above a certain level at least increasedpublic spending as a share of GDPreduces growth.

It is clear that the 50p tax rate (52pwhen employee national insurance isadded) is damaging and has to go. Butit is also true the 40p rate is also toohigh: it now hits millions of workers(and is actually 42 per cent whenemployee national insurance is added,and more if the 13.8 per cent employ-ers contributions are included, apoint that is also applicable to the 50prate). All income and national insur-ance tax rates are too high in the UK.Britain is a thoroughly over-taxedcountry and until it ceases to betaboo to say so, we stand no chance ofonce again building a truly dynamicand competitive economy.

[email protected] me on Twitter: @allisterheath

OIL hit a four-year high yesterdayafter an Iranian state-run news chan-nel reported an explosion on apipeline in Saudi Arabia.

Brent crude prices hit $128 a barrelin late post-settlement trade, a levelnot reached since July 2008.

A Saudi official later denied thePress TV broadcast, saying no oil facil-ities had been sabotaged.

Iran, the worlds fifth largest oil

producer, has been struggling to sellits crude in the face of a EU embargothat kicks in on 1 July. Sanctionsthreaten to tighten crude suppliesand have already pushed up prices.

Meanwhile, UK petrol prices areexpected to hit an all-time high today.The AA said the average cost of a litreof petrol is 137.34 pence and that theaverage cost of filling up a car willsoon pass 100.

Chancellor George Osborne isunder pressure to delay a plannedthree pence increase in fuel duty.

BY JAMESWATERSON

ENERGY

Oil price hits $128 highOil prices hit their highest point since July 2008 following rumours of an explosion.

NEWS | IN BRIEF

Peugeot debt cut to junk statusPeugeot Citroens debt was cut to junkstatus by credit ratings agency Moodysyesterday, after the French automakerannounced a 1bn (627m) share issueand an alliance with US peer GeneralMotors. Moody's Investors Service low-ered Peugeot's rating by one notch to

Ba1, the highest so-called speculativegrade with a negative outlook. The costof implementing the alliance will hurtPeugeots earnings in the short term, theagency warned, and cooperation maynot produce the savings expected later.

Police raids over insider tradingPolice in several European countries haveraided more than 80 properties in aprobe by German prosecutors into stockmarket manipulation, the Munich prose-cutors office said yesterday. The officesspokesman said the raids Wednesdaywere into suspected cases of marketmanipulation, insider trading and fraud.Fifty-three sites in Germany weresearched, 29 in other European countriesand four outside Europe. He would notidentify the people or companies undersuspicion, saying only a double-digitnumber of people were involved.

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

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

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

Vince Cable flew toNew York onWednesday to ask GMto save 2,800 jobs inEllesmere Port.

4th Floor, 33 Queen Street, London, EC4R 1BRTel: 020 3201 8900 Fax: 020 7248 2711Email: [email protected] www.cityam.com

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

CommercialSales Director Jeremy SlatteryCommercial Director Harry Owen

Head of Distribution Nick Owen

The new jobs website for London professionalsCAREERS.com

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GREECE was last night forced to waitlonger for its bailout after Eurozonemembers demanded additionalassurances that Athens would imple-ment austerity measures agreed atthe end of last month.

Eurozone members at yesterdaysmeeting in Brussels decided to hold

back half the 130bn bailout sum,71.5bn, until 38 specific prioractions are implemented.

The soonest the second half of thebailout can now get final approval byEuropean finance ministers is 12March just eight days ahead of its14.5bn bond repayment.

The economic reforms are part ofthe 21 February deal under whichother European nations will pay offGreek debt.

Pushing these economic reformsthrough the Greek parliament has

been proved to be tortuous althoughon Wednesday night Athens

approved the final significant ele-ment of the changes: an extension ofpharmacy opening hours and cuts tospending on drugs.

Last night Eurogroup chairmanJean-Claude Juncker insisted that he was confident that Athens wouldimplement all the measures in thenear future.

All required legislation by the par-liament and the ministerial cabinethas been adopted, and a few pendingimplementing acts should be com-pleted shortly, he said in a statement

The bailout aims to reduce Greeksdebt burden to 120 per cent of GDPfrom the current level of 160 percent.

Greece facesnew wait for

bailout fundsEDWARDS, a private equity-backed

vacuum pump engineering companybased in Crawley, is poised to try itsluck with an IPO in the US afterLondon gave it the thumbs-down last

year.The groups backers, CCMP Capital

and Unitas Capital, have hired agroup of banks, including GoldmanSachs and Barclays Capital, to preparefor a listing within the next few

weeks, a banking source told City A.M.yesterday.

Edwards makes vacuum pumps forthe manufacture of microelectronicsdevices, such as semiconductors,solar panels, LEDs and flat panel dis-plays.

The group initially enjoyed a posi-tive hearing from UK investors last

year but they finally baulked at the

valuation the private equity sellerswere demanding.

If Edwards does succeed in floatingin the US, there will be much soul-searching in the City, where wran-gling between different groups ofadvisers and investors and poor pric-ing decisions have resulted in the IPOmarket virtually seizing up.

When it halted its plants to floatlast year, Edwards cited equity mar-ket uncertainty. Some said the sellers

wanted too high a price.

Edwards hiresbanks for USflotation plan

Google boss Eric Schmidt implemented a new privacy policy yesterday

BY JAMESWATERSON

EUROZONE

CAPITAL MARKETS

Greeces 38 austerity measures include build-ing an accurate land registry for the first time. They also include such demands as buying anew computer system for the tax office andreducing the regulation of beauty salons.

FAST FACTS | GREEK AUSTERITY

NewsCITYA.M. 2 MARCH 2012 3

Googles new data policybegins amid controversy

AS GOOGLES new privacy policy cameinto effect yesterday, the worlds

biggest search engine was forced toexplain itself yet again amid unrelent-ing criticism from users and regula-tors.

Viviane Reding, the EUs commis-sioner of justice, spoke out againstGoogles changes yesterday, joining astring of public critics including the

Japanese government and French data

privacy authority CNIL.

But the tech giant refused to bebeaten, blogging: As you use our prod-ucts one thing will be clear: its thesame Google experience that youreused to, with the same controls.

Googles privacy and product direc-tor Alma Whitten reiterated that thecompany will not be collecting new oradditional information about users,

but collating personal and historicaldata across its services includingsearch, email and YouTube for animproved customer experience.

TECHNOLOGY

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THE INDIAN GIANT EYEING UP CWW

$83.3bn

$7bn

Annualrevenues of

with

in the UK

Largestforeign

investorin UK

industry

A SECOND bidder has entered thering to fight for Cable & Wireless

Worldwide (CWW), the ailing tele-coms company which has alreadyattracted the interest of Vodafone.

Tata Communications yesterdaysaid it was evaluating a possible cashoffer for CWW, but emphasised thatconsiderations are at a very prelimi-nary stage.

Its announcement comes just twoweeks after telecoms giant Vodafoneconfirmed it was weighing up the

benefits of bidding for CWW, sendingthe cable companys shares up 45 percent.

CWWs stock yesterday rose a fur-ther 27 per cent valuing the compa-ny at 851.6m when Indian

company Tata joined the race. It hasuntil 5pm on 29 March to confirm orwithdraw its intention to bid.

Based in Mumbai, TataCommunications owns one of the

worlds largest and most advancedsubmarine cable networks andclaims to be the sixth largest interna-tional internet carrier.

Its parent company Tata Group isthe largest foreign investor in the UK,owning 19 British companies includ-ing landmark brands Tetley Tea and

Jaguar Land Rover.Cable & Wireless Worldwide has

had a turbulent time of late and iscurrently on its third chief executivein the last year. Former boss JohnPluthero was replaced by Gavin Darbyfollowing a 433m half-year loss.

But CWW is still attractive to buy-ers for its fixed line network in theUK, the extra capacity it would pro-

vide and its large corporate client base. CWW is the communications

provider for 70 firms in the FTSE 100. Analysts say private equity firmsare probably eyeing CWW too.

Tata to rivalVodafone inbid for CWWBY LAUREN DAVIDSON

TELECOMS

NEW JOBLESS claims in the US fell totheir lowest level in nearly four years,data showed yesterday, and strongretail and car sales figures combinedto give a strong image of the econo-mys health.

However, manufacturing cooled offin February and consumer spendingstayed flat in January, taking the edgeoff the optimism.

Jobless claims fell by 2,000 to355,000 in the week ending 25February, figures from the LaborDepartment showed, continuing thedecline seen in recent months.

The Institute for SupplyManagement said its index of nationalactivity fell to 52.4 last month, indicat-ing a mild expansion and surprisinganalysts who had looked for a strongerimprovement.

And household income remainedflat as inflation and taxes absorbed

any benefit from lower unemploy-ment.Consumer spending is off to a pret-

ty weak start in the first quarter, saidKeith Hembre, economist at Nuveen

Asset Management.That is painting a pretty weak pic-

ture for first-quarter GDP despite thestrong jobs numbers.

But stock markets cheered thestrong employment data with theDow Jones closing 0.2 per cent higherat 12,980.3.

US jobless claimants fall asmanufacturing keeps risingBY TIMWALLACE

US ECONOMY


Tata Communications has hiredStandard Chartered bank to advise it asit considers a bid for CWW.

Heading the team of financial advis-ers is Topsy Mathew, the Mumbai-based managing director of the bankscorporate advisory division.

In 2010, Mathew led StanChart to

number three for deals in India, beating

takeover king Goldman Sachs.In the 36 year olds portfolio is

Bharti Airtel, which he advised on its$10.7bn purchase of Zain TelecomsAfrican mobile arm the second-biggest overseas acquisition by anIndian company.

Prior to joining Standard Chartered,Mathew headed the corporate financeteam at Credit Suisse.

Tatas London-based adviser on theCWW deal is Amer Baig, who is alsoadvising Cove on its $1.6bn offer fromShell.

BarCaps Will Peters and Rothschilds

Jeremy Boardman are advising CWW.

MEET THE ADVISERS

TOPSY MATHEW

STANDARD

CHARTERED

19 COMPANIES IN THE UK INCLUDING:

45,000Employs

people in the UKacross 41 sites

Right: Tata chair Ratan Tata

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THE WORLDS biggest advertisingcompany yesterday posted a recordyear as WPPs pre-tax profits hit the1bn milestone in 2011, a growth of 18per cent on the year before.

The British company generated rev-enues of an unprecedented 10bn, up7.4 per cent on 2010, and said itexpects to generate more in 2012thanks to landmark events includingthe London Olympics and the Eurofootball championship.

WPP chief executive Sir MartinSorrell expects the US presidentialelection to boost income by $3-4bn.

But he said a win for Obama wouldput clouds on the horizon for 2013due to legislative gridlock as he con-fronts the budget deficit while deal-ing with a Republican-controlledSenate.

Asia-Pacific and Latin Americaboosted WPP last year while the UKgrew revenues 6.7 per cent to 1.2bn.

Sir Martin revealed his company

invested $1.6bn with Google on behalfof its clients and $200m withFacebook a number he expects todouble to $400m this year.

Sir Martin added he was delight-ed to confirm that the companysheadquarters are likely to move backto London from Dublin as soon as leg-islation is passed on overseas profitand subject to a shareholders meet-ing. WPP dished out a year-end divi-dend of 24.6p up 38.3 per cent onlast year.

Shares jumped five per cent to ahigh of 843p before closing at 827.5p.

A record yeartakes WPP toprofit of 1bn

CHANCELLOR George Osborne yester-day broke new ground to mark thestart of construction work on UBSsnew headquarters at 5 Broadgate.

The occasion marks the beginningof three years of building work over-seen by site owners British Land andBlackstone, and the success of a cam-paign byCity A.M. to allow the 850mdevelopment to go ahead.

This new site, in the heart of theCity, signals the confidence placed inLondon as the worlds leading finan-cial centre, said Osborne.

The 700,000 square foot, 12-storey building is due to complete in late2014, and will house four open trad-ing floors and custom-built officespace for the Swiss bank.

UBS will rent the entire buildingon an 18-year lease, paying a headline

rent of 54.50 per square foot.Broadgate estate was designed by

Peter Foggo in the mid-1980s, and wassubject to an application for listed sta-tus by English Heritage last year.

City A.M. revealed that culture secre-tary Jeremy Hunt had decided to dis-miss the application in June, afterCity executives and business leadershit out at the message that blockingthe development would send.

Chancellor George Osborne trying out the diggers at Broadgate yesterday

BY LAUREN DAVIDSON

MEDIA

PROPERTY


George Osborne celebrates the startof new City base for UBS at Broadgate

ANALYSIS l WPP

p

24 Feb 27 Feb 28 Feb 29 Feb 1 Mar

840

830

820

810

800

790

827.501 Mar

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News 7CITYA.M. 2 MARCH 2012

DOES WPP HAVE A BRIGHT FUTURE? By James Waterson

LORNA TILBIANNUMIS

We have longbeen supportive of WPPmanagement's focus ondigital and emerging mar-kets. Digital now accounts

for 30 per cent of group revenues (with afive year target of 35-40 per cent), andabsolute digital revenues are $4.6bn, wellahead of the nearest competitor at $2.5bn.We believe that, as the wider industrymoves towards digital maturity (defined aspercentage of budget spent on digital mov-ing nearer percentage of consumer timespent online) then WPPs scale in this disci-pline will begin to translate into mar-gin growth.

STEVE LIECHTIINVESTEC

Full year figureslook good with like-for-like sales up 5.3 per centas expected but marginbetter at 14.3 per cent vs

our 14.1 per cent. Higher base numbersimply modest upgrades though outlooklooks in line with our forecasts. We notepoor US growth which is again worse than'disappointing' nine month figures. Overall,decent figures and slight upgrades, soshares should go better, but we feel upsideis mostly discounted currently post strongshare price performance.

JONATHAN JACKSONKILLIK & CO

During 2011,the group continued tobenefit from consolida-tion trends in the indus-try, winning assignments

from existing and new clients. Estimatednet new business billings of 3.2bn were 7per cent higher than last year, placing thegroup first or second in all leading net newbusiness tables. There was a big surprise onthe dividend, which was raised by 38 percent to 24.6p. Although the shares have hada strong run, earnings momentum remainsgood and the current valuation of 10.4 timesconsensus 2013 earnings isattractive.

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SHARES in Man Group were thebiggest riser on the FTSE 100 yesterdayafter the worlds largest listed hedgefund reported a fall in outflows.

The stock soared 12.68 per cent to147.5p, providing some relief for man-agement who have seen the value ofMans shares halve over the past year.

Mans assets under managementhave risen 1.9 per cent to an estimated$59.5bn (37.3bn) since the end ofDecember, mainly due to the perform-ance of its funds.

Chief executive Peter Clarke saidthere had been a significant fall innet client outflows this year but toldCity A.M. that the impact of an easingof the Eurozone crisis would not befelt immediately.

It will take longer than twomonths for people to respond to(Mans) good performance and stable

markets... Sentiment remains fragile.Man shocked the market in

September when it reported its fastestrate of outflows since early 2009 butits shares have inched up this year.

The group, which is shifting thetiming of its financial year, posted apre-tax profit of $262m for the ninemonths to the end of December. It alsoannounced plans to boost future divi-dends by paying out all its adjustedearnings from management fees.

Might of Manreturning asturmoil easesBY PETER EDWARDS

HEDGE FUNDS

HOARE Govett, the corporate brokerthat has just been bought by theinvestment bank Jefferies, has lostanother client.

Mouchel, the outsourcing group,said yesterday it had appointedGoldman Sachs as its new broker andfinancial adviser. Goldman, which

had traditionally served only the larg-er UK corporates, has been moving

down the value chain in recentmonths.

A source close to Mouchel said thatthe firm had instigated a review of itsadvisers following the change in own-ership at Hoare Govett, which used tobe owned by RBS. Hoare Govett alsoyesterday officially lost G4S as a clientand recently another of its clients,Tullow Oil, switched advisers.

Jefferies is expected to make afightback in the coming weeks.

Hoare Govett loses another client

as Mouchel hires Goldman Sachs

ADVISERS


Chief executive Peter Clarke said sentiment remained fragile Picture: REUTERS

Meaty dividend looks less vulnerableITS the dividend, stupid. SinceSeptember, when Man revealed ithad been hit by billions-of-pounds- worth of redemptions, its meatypayout has looked distinctly vulner-able.

Yesterday, chief executive PeterClarke made it clear that Man iscommitted to paying bumper divi-dends, even if times are hard. Fromnow on it will pay out 100 per centof its adjusted management fees equivalent to two per cent of thefunds it runs in the full year divi-dend.

If returns improve and it startsearning performance fees equiva-

lent to 20 per cent of profits it willreturn that cash via special divi-dends or share buybacks. Hence therally in the groups shares yesterday.The worries about the payout thehighest in the FTSE 100 have been

eradicated. At least for now.Of course, the management feeswill only cover the dividend if thereare no more tidal waves of redemp-tions. So far this year, things arelooking more positive. Assets undermanagement have actually edgedup, from $58.4bn to $59.5bn(although this is still a far cry fromthe $69.1bn it managed back inMarch 2011). AHL, Man Groups cash

cow, has also recovered slightly,posting a gain of 2.5 per cent in theopening two months of the year.

But Man Group is still a play onthe wider market. If the euro crisisflares up and market volatility

returns, the computer driven AHL will flounder once again. Clientswill pull out cash, management feeswill tumble, and the dividend willno longer seem so secure. Incomeseekers beware.

[email protected]

BOTTOMLINEAnalysis by David Crow

ANALYSIS l Man Group

p


145.00

142.50

140.00

137.50

135.00

147.51 Mar

132.50

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12/40

BARCLAYS Capitals investment bank-ing ambitions were given a further

boost yesterday after being appointedas joint financial adviser to the FTSE100 security group G4S.

The news comes just hours afterthe group poached Mark Astaire, theformer head of corporate broking atBank of America Merrill Lynch.

Although G4S will not count as abroking win for BarCap it is the startof another potentially strong advisoryrelationship.

In other changes G4S has appoint-

ed JP Morgan Cazenove as joint bro-ker and joint financial adviser and

Citigroup as joint broker. The grouphad been widely expected to changeits advisers, who were Deutsche Bankand Hoare Govett, following its abort-ed takeover of ISS last year.

The intended takeover had to becalled off after a revolt by investors,causing embarrassment and disap-pointment to the advisers.

Barclays chief executive BobDiamond has signalled that he wantsthe bank to challenge for a place inthe top three in investment banking

but the strategy does not come with-out costs.

Investment bank revenues haverecently been lower than hoped for.

INFORMATION services groupExperian has hired top Greenhill

banker Brian Cassin as chief financialofficer.

Cassin, currently co-head ofEuropean corporate advisory atGreenhill, will join Experian on 30

April, the firm said yesterday. The loss of Cassin will come as a

blow to investment bank Greenhill, which last year saw chief executiveSimon Borrows take a back seat to takeup a new role at investment group 3i.

But Cassins experience will be aboon for Experian. He said yesterday: Iam excited to be joining such a suc-cessful business as Experian and to beinheriting an exceptionally strongfinance function. Experian is a compa-ny I know well and I look forward to

being part of the management teamas we work to further develop andgrow the business.

Experian began the search for achief financial officer in January, fol-lowing the sudden death of PaulBrooks.

Shore Capital analyst Robin

Speakman said Cassins appointmentis not likely to drastically alter thefirms course.

Hes well known, hes got a goodpedigree, and has worked withExperian in the past. But whats impor-tant in our view is that the firm worksin so many regions with operationalmanagers on the ground, the strategyis unlikely to be changed by oneappointment.

The firm also completed its pur-chase of identity verification specialist192business yesterday. The firm works

with companies on fraud screening,voice recognition and online data veri-fication.

Greenhill to

lose bankerto Experian

Barclays Capital wins anotherclient as G4S switches advisers

BYMARION DAKERS

FINANCIAL SERVICES

BRIAN Cassin (pictured inset) is toleave Greenhill after 14 years at theend of April. And though the jumpfrom investment bank to UK-listeddata specialist Experian will be achange of pace, it wont be a total cul-ture shock for the Irish-born banker.Cassin has spent years advising thecompany, working with predecessorGUS when it split into Argos (nowHome Retail Group) and Experian in

2006 and subsequently helping thefirm, which is known for its con-

sumer credit checks but also offersonline security, insurance modelsand retail statistics.

Recent clients of his departmentinclude Auerlian Oil & Gas, Robert

Wiseman Dairies during its takeoverand delisting, and G4S during itsattempted 5.2bn merger with ISS.

Cassin joined Greenhill in 1998after working for six years withBaring Brothers International in

London and New York and four yearswith the London Stock Exchange.

He also advisedEmerson on itsbid for UK powerprotection groupChloride and wasinvolved inmedia firmDMGTs agree-ment to sellStudy GroupInternational.

Cassin moves from adviser tofinance head at the data firm

PROFILE


Experian head Don Robert has signed up Brian Cassin to the role of finance chief

ANALYSIS l Experian

p


955

950

945

940

935

955.501 Mar

ADVISERS

8/2/2019 Cityam 2012-03-02

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CENTER Parcs, the private equity-backed holiday village operator, is toopen a fifth site in Britain after a 1bnrefinancing.

The group said construction of the250m park, in Woburn inBedfordshire, will create 1,500 jobsand a further 1,200 in construction.

Blackstone, which bought CenterParcs in 2006, will put another 100minto the business and four banks RBS, Barclays, HSBC and Lloyds haveagreed a 150m construction loan.

The venture won backing fromDavid Cameron, who said: This

expansion and the jobs that it bringswill be a real boost to growth and asign of the increasing investor confi-dence that there is too.

John Cridland, director-general ofthe CBI, said it was vital to encour-age investment into the leisure sector.

Martin Dalby, Center Parcs chiefexecutive, said: This is our 25th yearof operation and Center Parcs is trad-ing strongly, with occupancy rates ofaround 97 per cent throughout 2011and positive forward booking trends.

Earlier this week the firm complet-ed a 1bn refinancing. It is secured

against the existing four sites andreplaces the previous debt structure.

THE CITY jobs market is unlikely toimprove this year, according to thechief executive of recruiter Robert

Walters, which yesterday posted slow-ing growth in its UK business.

Despite net fee income growing justthree per cent in the UK in 2011 com-pared to 36 per cent the previous year,a strong performance by the firms

Asia Pacific and European operations which deliver 74 per cent of its rev-enues meant overall fee income rose

15 per cent.Income in Asia increased by 23 per

cent, and in Europe it was up 29 percent. Revenue for the full year rose 21per cent to 528.1m, and operatingprofit was up 14 per cent at 15.6m.

The UK market at the moment is abit like running up a downwards esca-lator, chief executive Robert Walterstold City A.M. yesterday. Youre work-ing hard to stay still.

But he remained upbeat on the out-look for the UK business, saying thegroup was in a strong cash positionand would be in a good position totake advantage of the market once itdoes return.

At the moment people who areunhappy in their job just arent will-ing to take the risk of moving, said

Walters. But once it starts theres like-ly to be a domino effect as confidenceis created.

In the next 12 months the companyplans to expand in emerging markets

where it already has a presence,including opening an office in Rio,Brazil. It is also opening an office inSan Francisco to focus on placing UScandidates in Asia Pacific jurisdic-tions, and vice versa.

The company also announced it

would increase its final dividend byfive per cent to 3.68p per share. Itsshares rose by almost four per cent yes-terday, closing at 239p.

City recruitersees UK feesgrowth slow PROFITS at insurer Jardine Lloyd Thompson (JLT) increased by 13 percent to 147.6m during 2011, assisted

by strong growth from its emergingmarket units. Overall group revenue

was up 10 per cent at 818.8m. Although European retail sales

declined, the firm managed toincrease revenue from its Asian divi-

sion by 28 per cent to 81.9m whilemaintaining its trading margins.Similarly, sales in Latin America

were up by a fifth to 48.8m as othermarkets struggled. Performance inSouthern European countries such asItaly was deemed unsatisfactory.

The specialist London MarketOperations division grew by eight percent and contributed revenues of329.9m.

Chief executive Dominic Burke

said: Our emphasis on being a client-first organisation continues to serveus well.

Our strategy, built around grow-ing our areas of specialty, strengthen-ing our international footprint anddriving efficiency, provides us withconfidence that we will continue tomake financial progress in 2012.

Despite an increased dividend of24p per share shares closed down 0.4per cent at 699p.

Asian boost helps profits atJardine Lloyd Thompson

Blackstone goes to Bedfordshirefor 250m Center Parcs venture

BY ELIZABETH FOURNIER

RECRUITMENT

LEISURE

BY JAMESWATERSONINSURANCE


ANALYSIS l Robert Walters Plc

p


237.50

232.50

227.50

222.50

239.001 Mar

Center Parcs family-friendly holidays are proving lucrative for Blackstone

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The Capitalist14 CITYA.M. 2 MARCH 2012

Got A Story? [email protected]

The Three Dancers, one of the Picassos on show

SOUND OFTHE CITY:

BABBLEBAR OPENSITS DOORS

Babble Bar: so good they launched ittwice. The Mayfair-established water-ing hole, sister of the LateNightLondonwebsite, opened the doors to its newCity location last Friday and the cele-

brations continued last night. Thevenue was full to capacity with Cityworkers and burlesque dancers wan-dering cocktail in hand betweenBabbles four bars: the private boothsof the Crimson Club, the cushion-splat-tered Upstairs Terrace, the elegantmahogany-decked Crystal Bar and TheBoudoir, where risqu photos plasterthe walls. Thats as much detail as TheCapitalist can go into on that, youunderstand, but pop along to 45 OldBroad Street to see for yourself.

Epsom Downs Racecourse yesterday signed up Boisdale, the Scottish-themed restaurantgroup, to provide a hospitality enclosure for the Investec Derby Festival 2012.

Launched at Boisdales Canary Wharf restaurant, The Boisdale Enclosure at Epsom DownsRacecourse will be situated on the finishing line adjacent to the Queens Stand and will reflectBoisdales trademark reputation for the finest whisky, cigars, jazz and cuisine.Hospitality packages for the event on the first weekend in June, which include valet carparking, start from 675 plus VAT per person (depending on the day) and can be booked [email protected].

Roland Rudd is not one for beingfazed by party clashes. The formida-

ble spin-meisters splendid fiftieth birthday party last summer in his

country-house near Glastonbury famous-ly clashed with chancellor GeorgeOsbornes fortieth birthday celebrations.One suspects some guests had a difficultchoice to make but that didnt stoparound 500 of Londons business commu-nity, including Lord Rothermere, SirRoger Carr and Sir Martin Sorrell, hot-footing it down the motorway to toast aglass or two of the finest. With RuddsRLM Finsbury co-sponsoring the newPicasso exhibition at Tate Britain, bankers,

journalists and famous figures includingRobert Gillespie, director general of the

Takeover Panel and justice secretary KenClarke, enjoyed a preview of the show lastnight. This time the event clashed with aparty hosted by former Sunday Times

business editor John Waples in his role

as UK head of FTI StrategicCommunications at Claridges and thePLC Awards, which is annually attended

by 1,500 bankers and City analysts.

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7 DAY

TRIALONLY 25MANUFACTURING output andemployment increased in February,new data showed yesterday, but thepace of expansion was slower thanin January.

The sectors purchasing man-agers index (PMI) from Markit fellfrom 52 to 51.2 in the month as neworders from the Eurozone fell. Anyfigure above 50 indicates expansion.

Input prices rose at their fastestrate for 19 years, with oil, metals,transportation and chemical pricesall jumping.

Domestic orders stabilised overall, but were slowed in part by fallingdemand from the public sector.

Manufacturers were also hit by weakening demand from theEurozone, although that was in partoffset by higher orders from the USand Asia.

The continued growth resulted ina second consecutive rise in employ-ment, with Markit estimating the

rise at around 5,000 new jobs.Manufacturers have persisted in

working through backlogs of work,but the Eurozone crisis continues toloom large with continued declinesin new work from the continent,said David Noble from theChartered Institute of Purchasingand Supply.

As a result of continued growthin orders in Asia and the US, thefocus for many manufacturers will

be on developing as exporters tonew markets. This will be critical ifsustained growth is to be realised.

UK factoriessee rate ofgrowth slowBY TIMWALLACE

UK ECONOMY

OUTSOURCING firm Xchanging saidyesterday it had seen an increase inpotential contracts in the first weeksof 2012, as a restructuring imple-mented last year began to pay off.

Xchanging posted an expected 23per cent fall in adjusted operatingprofit to 43.2m but aims to return to

growth next year.Cost cuts at the firm, which runs

back-office activities such as invoiceprocessing and staff payments,included shedding its loss-making USCambridge workers compensationoperation in June, reshaping manage-ment and seeking smaller, more regu-lar contracts.

It recently signed a deal with cos-metics giant L'Oreal to manage500m of indirect purchasing.

Investors responded positively withshares up 10 per cent at 94 pence.

Xchanging profits slump aftertransition year for outsourcer

SERVICES

HOUSE prices rose across the countryin February, according to data pub-lished yesterday although askingprices for prime properties havetaken a hit from the seasonal dip in

buying activity.Average prices rose 0.6 per cent in

the month, Nationwide figuresshowed, rebounding from the 0.3 percent fall in January.

Prices were up 0.9 per cent com-pared with February 2011 a jumpfrom the 0.6 per cent annual riserecorded in February.

The data suggests that economicconditions may not be quite as weakas feared after the UK economy con-tracted in the final quarter of 2011,said Nationwides chief economistRobert Gardner.

Surveys of activity in the manufac-turing and service sectors point to a

rebound in January, while consumerconfidence and retail spending were both stronger than expected duringthe month.

However, asking prices on primeproperties the top quarter of themarket by value have been cut by0.4 per cent since the start of the yearaccording to PrimeLocation.com.

London escaped the fall in prices, with a 0.6 per cent rise in primeprices.

House prices reverse Januaryfall as confidence increasesBY TIMWALLACE

HOUSING


Top end property prices fell across the country but are still rising in London.

ANALYSIS l Manufacturing output keptgrowing -just- in February

PMI

2000 02 04 06 08 10 12

65

60

55

50

45

40

35

30

8/2/2019 Cityam 2012-03-02

16/40

EUROZONE unemployment increasedin January and manufacturing outputfell again in February, new datarevealed yesterday.

Greece led the decline with a recordfall in factory output, while Spain nowleads the currency area in joblessness,

with unemployment at 23.3 per cent.Overall Eurozone unemployment

increased to 10.7 per cent in January,or 16.925m people, according toEurostat, from 10.6 per cent inDecember.

The lowest rates are in Austria atfour per cent, the Netherlands at fiveper cent and Luxembourg at 5.1 percent, while the highest are in Spain,Ireland and Portugal.

Manufacturing output expanded inGermany and stabilised in France butfell sharply in Italy and Spain, the pur-chasing managers index (PMI) datafrom Markit showed.

The PMI figure for the Eurozonecame in at 49 in February up from48.8 in January, but still below the nochange mark of 50.

German manufacturing registered aPMI score of 50.2, down from 51 in

January, while France climbed from

48.5 to 50, ending six consecutivemonths of decline.

Meanwhile the index fell to 45 inSpain, down from 45.1 in January andmarking the tenth consecutivemonthly fall in its PMI.

Italys decline slowed in the month,rising from 46.8 to 47.8.

However Greek manufacturing PMIhit a survey low of 37.7 the fastestdecline ever recorded, and the coun-trys 30th consecutive monthly fall.

Considering the challenge that theeconomy is facing, one could expectthe index to edge lower in the comingmonths, as further consolidationmeasures kick in not only in Greece

but also in other large euro area coun-tries such as Italy and Spain, saidBarclays Capitals Francois Cabau.

INDIAN manufacturing outputgrowth slowed slightly in February,

but remained above its long-termtrend rates according to data pub-lished yesterday by Markit.

Figures also showed recentdeclines in Chinas manufacturingoutput slowed, indicating a brighterfuture for the economy.

The purchasing managers index(PMI) figures came in at 56.6 in India,

down from Januarys eight-monthhigh of 57.5 and demonstrating solidgrowth in the country.

Despite the growth in output,employment fell and most firms didnot report any change in headcount,

with panellists reporting a lack ofsuitable labour.

In China, the PMI rose from 48.8 to49.6, on an index where any number

below 50 represents contraction.Russia registered modest growth

in the month, with a PMI of 50.7, which economists do not expect to

improve soon as export orders havefallen for three months in a row andinventories have declined sharply.

A moderation of hiring growthand a faster decline in stocks of inputpurchases in February have prompt-ed the Russian manufacturing sectorto continue gradually losing growthmomentum, in spite of a slightlyfaster increase in new orders, saidHSBCs Alexander Morozov.

Politicians call this stability, but

economists are tempted to call thisstagnation.

Indian manufacturing keeps boomingas Chinese factories start to stabilise

A TOP Bank of England officialbelieves pensioners have not been asbadly hit by quantitative easing (QE) asthe industry argues.

David Miles yesterday said pension-ers should stop focusing on low yieldsand the low annuity rates that theBank of Englands extremely low inter-est rates and QE has forced on themand instead look at the increase in

asset prices it has caused.The very low level of real yields is

related in large part to safe havenasset flows, he said, arguing QE is notthe only factor pushing down yields.

The two factors together havepushed down annuity rates by 100

basis points since QE started in March2009, he said, and focusing just onannuity prices, those approachingretirement have seen the value of theirpensions fall by around 17 per cent.

However, once the impact on assetprices is included, it can offset some,

all or more than all of the effects of ris-ing annuity prices, Miles said.

QE hits pensions less thanfeared, says MPCs Miles

UK ECONOMY

THE SPANISH government hastepped up its appeal for leniencyfrom the European Commission (EC),arguing its budget deficit will onlymiss targets because of the recession,not a lack of action by the govern-ment.

Prime Minister Mariano Rajoy,elected last year after pledging dra-conian spending cuts, is now lobby-ing Brussels arguing thedeteriorating economy makes itimpossible to cut spending by morethan 40bn (33.39bn) this year toreach a deficit target of 4.4 per centof gross domestic product.

Tough spending cuts and recenteconomic reforms all show a com-mitment to fiscal stability and Spain

will be on track to hit the ultimategoal which is a deficit of three percent of GDP in 2013, a governmentsource said.

Madrid said this week that its 2011 budget deficit was 8.5 per cent ofGDP, 2.5 percentage points above asix per cent target, putting the 2012goal almost certainly out of reach.

However, foreign minister JoseManuel Garcia Margallo said in a tel-evision interview yesterday thatSpain does not expect Brussels torelax the deficit target by more thana few decimal points.

Rajoy plans to present his complet-ed budget on 30 March despite pres-sure from Brussels to finish it sooner.

Spain stepsup budget

row with ECEUROZONE

ASTRAZENECA has picked formerVolvo boss Leif Johansson as its nextchairman, hoping his experience ofsteering the truckmaker throughtough times will help at a drugmakerfacing shrinking revenues and a weakpipeline of new drugs.

The 60-year-old Swede was chiefexecutive of world number two truckmaker Volvo for 14 years and hisarrival at AstraZeneca follows a trendamong drugmakers seeking lessons

from the auto industry on leaner,meaner production.

Johansson cut his teeth in the BigPharma sector with three years as anon-executive director at Bristol-Myers Squibb until 2011, but wasmost recently chairman of the

worlds top mobile network equip-ment maker Ericsson, a job he tookup barely a year ago in April 2011.

AstraZeneca faces loss of exclusivi-ty on many of its top-selling drugsover the next five years and has fewobvious replacements in its pipeline.

AstraZeneca appointsJohansson as new chair

PHARMACEUTICALSTAGECOACH profits are driving for-

ward fuelled by a strong performance

at its rail operations in Britain, it said. The FTSE 250 transport companysaid Virgin Rail, a joint venture in

which it owns a 49 per cent stake, wasprogressing its bid for the new WestCoast Trains rail franchise which wasput up for tender by BritainsDepartment for Transport lastmonth.

Like-for-like revenue atStagecoachs UK rail business, whichincludes London commuter franchise

South West Trains, grew 9.5 per centin the 40 weeks to 5 February.

Virgin Rail Group achieved an 8.9per cent jump in like-for-like revenuein the same period.

Sales at Stagecoachs British busunit climbed three per cent, while itsNorth American coaches operationposted a 13.3 per cent leap in the ninemonths to the end of January.

Rival British transport firmNational Express Group on

Wednesday said full-year profits roseon strong performance at its USschool bus and UK coach divisions,and said it was confident aboutgrowth in 2012.

Stagecoach said: Overall currenttrading remains good and we believethe prospects for the group remainpositive.

However, analysts at Shore Capital

warned: We remain cautious giventhe uncertainty over future rail fran-chises.

Stagecoach in UK rail boostBYHARRY BANKS

TRANSPORT

Eurozone hit

by fall in jobsand outputBY TIMWALLACE

UK ECONOMY

BY TIMWALLACE

EUROZONE

Like-for-like revenue at Stagecoachs UK railbusiness grew 9.5 per cent in the 40 weeks to 5February. Stagecoach has a joint venture with VirginRail, in which it owns a 49 per cent stake.

FAST FACTS | STAGECOACH

EC KEEPS PUSHING NEW PENSION RULES

EUROPEAN commissioner Michel Barnier yesterday argued in favour of new pensionrules which funds warn would spell the end of final salary schemes. Barnier said In sofar as insurance products and pension schemes are comparable, the regulatory frame-work should be similar. However, such Solvency II style rules will cost the industry hun-dreds of billions of pounds, the National Association of Pension Funds warned.


ANALYSIS l Greece Manufacturing

PMI

99 00 01 02 03 04 05 06 07 08 09 10 11

60

55

50

45

40

35

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SPIRENT Communications yesterdayposted a 10 per cent rise in its full-yearprofit, helped by strength in its coreperformance analysis segment, butcautioned that the prevailing econom-ic environment could hurt it in theshort-term.

West Sussex-based Spirent, whichtests telecom devices and wireless net-working equipment, said pre-tax profitrose to $123.3m, from $112.2m a yearearlier. Revenue climbed 10 per cent to$528.2m. Its performance analysis divi-sion revenue rose 14 per cent to

$416.4m,helped by growth in wireless,positioning.

INDUSTRY bodies backed calls for the50p top rate of income tax to bescrapped yesterday, as Labour politi-cians and trade unions argued reliev-ing pressure on high-earners shouldnot be a priority.

Chancellor George Osborne is com-ing under increasing pressure to cuttaxes or boost spending in his budgetlater this month, after public borrow-ing figures revealed he was 7bnahead of schedule in his deficit reduc-tion plan.

Over 500 small business bossesargued the tax is damaging the econo-my, with their supporters claiming itmay even reduce revenues for the gov-ernment.

If you punitively tax hard work,aspiration and wealth creation, you will get less of all three, saidConservative MP David Ruffley.

It sends the message the UK is nolonger open for business.

The Institute of Directors Simon Walker also backed the call, explain-ing Scrapping the rate, and encourag-ing business, would increase the tax

take and reduce the tax burden onlower-income people.

If there was ever a win-win for thechancellor, scrapping the 50p rate isit.

However, opponents dismissed theargument that lower taxes canincrease revenues.

Its not surprising to learn that richpeople want to pay less tax, saidTrades Union Congress general secre-tary Brendan Barber.

The chancellor will probably rejecttheir special pleading in this yearsbudget, but it is clear that his long-term priority is cutting tax for the richrather than restoring the services hehas cut or investing in jobs for theyoung unemployed.

Labours shadow chief secretary tothe Treasury Rachel Reeves also saidcutting the top rate would be wrong.

When millions of families and pen-sioners on middle and low incomesare being squeezed by the VAT rise andcuts to tax credits, cutting taxes onlyfor the richest one per cent cannot bethe right priority now, she said, argu-ing instead that a VAT cut would domore to help families and pensioners.

Osborne hit

as 50p taxrow escalates

THE former chief executive ofOlympus yesterday vowed to hold toaccount the Japanese technologyfirm as he launched employment tri-bunal proceedings in London.

Michael Woodford, who was firedafter questioning $1.7bn (1.1bn) ofpayments, could receive tens of mil-lions of pounds if he wins the case

against his former employer. His con-tract to run the firm was due to lastuntil June 2015.

Yesterdays hearing, at East LondonEmployment Tribunal, was closed tothe media but beforehand Woodfordsaid: I found wrongdoing, I raisedthat wrongdoing and for doing that Iwas dismissed... in a way in which Illnever forget... (I was) thrown out of myapartment and told to get the bus tothe airport. We now know why ... Im

looking today to hold Olympus toaccount.Woodford is a former UK salesman

for Olympus and spent much of hiscareer at the firm in this country.

Shuici Takayama, president ofOlympus, has said the company dis-missed Woodford because of his uni-lateral decision-making and bypassingof consultation. A full hearing isexpected to be held in the next fewmonths unless the case is settled.

Woodford in plea for justiceas Olympus case opens in UK

EUROTUNNEL swung into profit in2011, crediting steady growth in pas-senger numbers.

Revenues rose 16 per cent to845m(706m) at the Channel Tunnel opera-tor, allowing it to post a 272m oper-ating profit and after-tax earnings of11m.

The number of cars using theChunnel rose by six per cent to 2.26m, while truck traffic grew by 16 percent to 1.26m

The firm said it expects the upturnto continue, adding that it is organis-

ing the resources to buy and operateferries from bankrupt SeaFrance.

Passengers upat EurotunnelSpirent Commsprofit increases

BY TIMWALLACE

POLITICS

MEDIA

TRANSPORT

George Osborne faces claims from all directions for more spending Picture: GETTY

BY PETER EDWARDSTECHNOLOGY


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BRITAINS largest student landlordUnite saw its net asset value (NAV)increase by eight per cent a sharelast year, driven by strong rentalgrowth and development activity.

Chief executive Mark Allan saidthe groups NAV of 318p would have

been higher if it were not for a 21mcharge it incurred for closing itsmanufacturing arm Unite ModularSolutions (UMS).

Profits increased to 11m in theyear to 31 December, up from 4min 2010, by achieving 99 per centoccupancy for the 20112012 aca-demic year.

The group, which manages40,000 student beds across Britain,

said reservations across its portfoliofor the 2012/13 academic year stoodat 59 per cent of available roomscompared to 62 per cent in 2011.

Allan said the fall in reservationlevels was largely explained by theone-off rush to secure accommoda-tion in 2011 as applications surgedahead of the rise in tuition fees.

Demand for 20122013 universi-ty places is outstripping supply and

will result in a shortfall of at least160,000 places, he said.

Unites development pipeline ison track to deliver a further 40m ofnet asset value uplift by December2014 as the outlook for 2012remains good.

The group has signed a 15-yearagreement with Kings College totake 97 per cent of Moonraker Point,

its 671 room development inSouthwark, which is due to be com-pleted before the start of the aca-demic year. It aims to deliver 4,000

bedrooms in London by 2014.The group also reinstated its full-

year dividend of 1.75p per share.Shares rose 5.8 per cent to 195.8p.

Student landlordenjoys rise in valueBYKASMIRA JEFFORD

PROPERTY

ABERDEEN Asset Managementcould yet be promoted to the FTSE100 for the first time in next

Wednesdays index reshuffle, afterits shares recovered from a five percent drubbing earlier in the week.

Aberdeen had already fallen 3.5per cent in the week to Wednesday,

when news broke that Credit Suissewas selling some of its stake in thefirm for 240p a share, the bottomend of its selling range.

But the markets went some wayto repairing the damage yesterday,

with the shares gaining3.9 per cent to close at250p.

This gives the firm amarket cap of 2.83bn, inthe middle of the pack offirms fighting for promo-tion to the FTSE 100.

Other candidates tomove into the prestigiousindex include Croda,

which yesterday had a2.93bn market cap.

Mondi, another firm

gunning for a spot, had avalue of 2.81bn yesterday.

John Wood GroupPennon and theLondon StockExchange are also inthe running to join thetop index, while EssarEnergy and HargreavesLansdown are at risk offalling into the FTSE250.

The review, conduct-ed after the marketsclose on Tuesday, willalso mark the debut of

free float figures for allFTSE 100 companies.

Aberdeen edges closer to FTSE 100promotion as quarterly review nearsASSET MANAGEMENT

NORTH American investors nowaccount for a quarter of all cross-bor-der purchases in the central Londonoffice market, according to figuresfrom CBRE, the worlds largest com-mercial property business.

The influx of buyers from the USand Canada has seen their share ofcentral London office transactionsconducted by foreign investors jumpfrom 10 per cent in 2008 to 24 percent last year.

In total North American firms areresponsible for a tenth of Londonoffice purchases.

London has become increasinglyreliant on foreign investment inoffice space with 4.5bn coming from

overseas investors during 2011, repre-senting more than half of the totalmarket.

The Canadian investment is largelydriven by its cash-rich pension funds.

North Americaninvestors surgeinto Londonoffice market

RETAIL


PROPERTY firm Derwent London hasset up a joint venture with GrosvenorEstates, Londons biggest landlord, toredevelop a 1.5 acre site at Hyde ParkCorner into a 200m luxury scheme.

The two are planning to turn 1-5Grosvenor Place into a mixed-usedevelopment, which will include afive-star hotel as well as offices andhomes.

Derwent has owned the site foralmost 20 years, but has agreed to sell50 per cent of its ownership toGrosvenor, which owns the freehold,in return for 60m.

Grosvenor owned by the Duke of Westminster also extendedDerwents leases on the site to 150

years. The announcement was made

alongside Derwents full-year results,which revealed a 15.4 per cent hike innet asset value and record number oflettings in the period from bothdomestic and overseas investors.

The group struck 100 deals last year, producing rental income of16.7m per annum on floorspace of495,700 square feet, up from its 2010performance, when the lettingstotalled 8m per annum.

The landlord announced just last week the pre-let of its Page streetdevelopment in Victoria to fashionhouse Burberry.

John Burns, chief executive officer,said: The robust leasing activity weexperienced in the first half of the

year has continued throughout 2011and into 2012 and we are confidentthat the quality and distinctive spacein our portfolio will continue toattract a diverse mix of tenants.

Derwent partnerswith Grosvenor in

Hyde Park schemeBYKASMIRA JEFFORD

PROPERTY

Grosvenor Place will be transformed into five-star luxury

ANALYSIS l The UNITE Group PLC

p


194

190

186

182

195.81 Mar

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TOY firm Lego posted a sharp rise inprofits yesterday, boosted by bumpersales of its popular Star Wars andHarry Potter tie-ins.

Net income at the companyincrease by 12 per cent to a record4.16bn Danish krone (470m) in2011, while revenues rose 17 per centto reach 18.7bn krone.

The group said sales of its licensedproducts which include the HarryPotter, Star Wars and Pirates of theCaribbean were considerablyabove expectations, offsetting weak-ness in some of its key WesternEuropean markets.

Its most recent new toy, the LegoNinjago range, was the companys

biggest product launch ever at thestart of the year, but its online ven-ture Lego Universe did not meet

expectations, and has been discon-tinued as of the end of January thisyear.

Lego said it expected its Europeanmarkets to remain stagnant over thecoming year, with minor increasesacross the rest of the world in its tra-ditional toys.

Lego was founded in Bilund,Denmark in 1932, and is still owned

by the family of its inventor, KirkKristiansen.

Lego builds higher profitthanks to cinema tie-upsBY ELIZABETH FOURNIERLEISURE


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

WHY DO YOU THINK LEGO IS STILL SO POPULAR IN THEAGE OF VIDEO GAMES? Interviews by Kasmira Jefford

Lego engages the imagination. Children cancreate something they thought of themselveswhereas a video game is pre-conceived bysomeone else. Video games also reach an end,

but the possibilities with Lego are endless.

AMY WRIGHT | BUCK

Its quite a versatile product. Legos successis also down to the fact it has lots of themes like Harry Potter to cater to peoples tastes.Still, Lego doesnt compare to video gamesand I am surprised to hear it is so successful.

Lego appeals to children too young toplay video games. Simple toys are oftenbest and there is a certain innocence too. Ithink parents have an attachment to Lego

as it reminds them of their childhood.

PAUL MULVEE | LGIM

RICHARD WILLIAMS | HUDSON

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COPPER miner Kazakhmys posted aflat core profit for 2011 as strongermetal prices were offset by an 18 percent rise in production costs, includ-ing soaring wages for skilled workersin Kazakhstan, home to its core opera-tions.

The FTSE 100 miner announced ahigher-than-expected 27 per cent divi-dend hike but warned it was unlikelyto complete a $250m (157m) buybackannounced last year. The firm has

bought back $83m of shares to date.We are mindful of the freefloat

and comments made by shareholdersthat they would like to maintain a cer-tain level of freefloat, chief financialofficer Matthew Hird said, whenasked if he would consider a fresh buy-

back.So we wont rule it out, but going

forward it is more likely that if we hadsurplus capital we would be returningit through an increased dividend.

Kazakhmys whose shares have ral-

lied more than 21 per cent this yearand outperformed the sector as cop-per prices recover said dividendincreases were likely to ease as itramps up spending on its growth proj-ects.

Capital expenditure for 2012 isexpected to be $1.5bn, more than dou-

ble than in 2011, largely due to devel-opment of its $1.8bn Bozshakolproject.

Charles Cooper, at Oriel in London,said the dividend hike would not doenough to make up for the failure ofthe buyback for some investors.

Kazakhmys is

hit by risingoutput costsBY JOHN DUNNE

MINING

INDEPENDENT oil explorers saw theirmarket value hit last year, a newleague table compiled by Deloitte hasrevealed.

The market capitalisation of theUKs 25 biggest companies in the sec-tor fell from 32.2bn in 2010 to27.8bn. The fall came as investorsshied away from projects viewed asrisky amid volatile world markets.

However Deloittes research which includes a table of the top 25 said that projects in East Africa were

benefiting the likes of Cove Energy which operates in Mozambique andTanzania and has become an acquisi-tion target for hell.

Cove is now 13th on the list with amarket value of 326m. The table isled by Tullow Oil which has a value of12.6bn.

Cairn Energy took second place at3.7bn with Premier Oil next on1.6bn.

The top three are the same as theprevious year and Ophir Energy, witha value of 929m is the only newentrant, in at number six.

Deloittes Ian Sperling-Tyler saidthat the outlook for private equityinvestment was strong in 2012.

Oil firms seeslump in

market value


BY JOHN DUNNE

ENERGY

NEWS | IN BRIEF

Weir renews Ludowici offerEngineer Weir Group yesterday renewedits $10 a share bid for Ludowici, as ittries to beat rival FLSmidth to a deal.The board of Ludowici, said yesterday itcontinued to recommend the FLSmidthbid to shareholders in the absence of ahigher offer. However Weir has appealed

against a decision by the Australiantakeovers panel, claiming that FLSmidthhas breached rules. It said yesterday itsoffer was still on the table.

Chemring has record order bookDefence contractor Chemring said yester-day it has a record order book of 997m.Revenue during the first three monthswas 137m, in line with the boards

expectations but sales have been flatwhile the company, which makes ejectorseats and pyrotechnic decoys for militaryaircraft, reported delays with contracts.

Howden restores its dividendBritish kitchen supplier Howden Joinerysaid yesterday that it would pay its first

dividend for four years as it met fore-casts with a nine per cent rise in 2011profit. The firm, which emerged from theold MFI Furniture business, said yester-day that after ending the year with netcash of 57.1m it would pay a dividend of0.5 pence. Howden, a supplier of kitchenunits and joinery to more than 200,000small builders from over 500 UK depots,made an underlying pre-tax profit of

110m in the year to 24 December. Thatcompared with company guidance of103-111m and 100.9m made in theprevious year. The group has fared rela-tively well during Britain's consumerrecession. It does not serve the retailmarket directly, focusing instead on tradecustomers.

Enegi Oil boosted by updateShares in AIM-listed oil and gas groupEnegi Oil soared by up to 14 per centafter it confirmed positive preliminaryanalysis results at its operations in GardenHill South, Western Newfoundland. Thecompany says the well will now be flowedto bring it back online at controlled ratesover the following days.

US oil major Chevron has held talks with a Russian government officialin a bid to exploit some of the coun-trys Arctic oil reserves.

The reserves are currently off limitsfor non-state corporations, butRussias Ministry of NaturalResources said the situation is underreview. The statement came a dayafter Russian Prime Minister

Vladimir Putin said he intended tofree up access to the Northern off-

shore fields.Your country owns giant reserves,and absence of significant projects inthe Russian Federation is a huge gapin our portfolio, Andrew McGrahan,president of Chevron Neftegaz, toldofficials.

McGrahan met the deputy ministerDenis Khramov to discuss the opera-tions of oil companies in Russia.

Chevron in move to tapinto Russias Arctic oilOIL

ANALYSIS l Kazakhmys PLCp

1,150

1,125

1,100

1,075

1,062.001 Mar

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London 2012

IMAGE OF THE WEEK

This week, Boris Johnson launched aset of giant Olympic rings onto theThames to mark 150 days until thestart of the Games. Pictured herefloating past the Tower of London, therings took in Canary Wharf and theCity before heading back into storage.

Photo: Laura Lean / CITY A.M.

Between now and the start ofthe Olympics, City A.M. is pub-lishing its Olympic Image of theWeek. If you have a shot youthink our readers will like, pleaseemail [email protected] IOW2012 in the subjectline. Full details:cityam.com/london-2012

ON BOARD | THE RINGS

BOMBARDIER expects a drop in air-craft deliveries and related profitmargins in 2012, but the worldsthird-biggest commercial planemaker said yesterday it is well posi-tioned for any recovery in the aero-space sector, thanks to a growingnumber of customers for its new C-Series planes.

The company said its net profit

was $214m (134m) for the fourthquarter, or 12 cents a share, com-pared with $295m, or 16 cents ashare, a year ago.

Revenue fell 23 per cent to $4.3bnat Bombardier, which competes withlarger Airbus and Boeing.

Revenue at the transportationunit, which makes trains includ-ing at several UK-based facilities fellto $2.3bn for the three-month periodended 31 December, from $2.5bn forthe same period last year.

Bombardier suffers dip inplane deliveries this year

Bombardiers UK unit is tendering to supply trains to Crossrail Picture: GETTY

BYHARRY BANKS

INDUSTRIALS

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EvershedsThe law firm has hired Sebastian Daly asa partner in its London real estate taxteam. Daly joins from Clifford Chance,

where he was a director in the magic cir-cle firms tax group. He is currently aqualified barrister, but will requalify as asolicitor to take up his new position.

Duke StreetThe independent European private equi-ty firm has appointed Paul Lester as anoperating partner. Lester was chiefexecutive of VT Group from 2002 to2010. Prior to that he was group man-

aging director of Balfour Beatty, chiefexecutive of Graseby and a generalmanager at Schlumberger. Lester alsoserves as chairman of Greenergy,Survitec, John Laing InfrastructureFund and Norland, and sits on the boardof Investec.

SavillsGianni Flammini has joined the interna-tional real estate adviser as director of

its valuation team in Italy. Flamminijoins from CBRE Global investors andhas more than 15 years experience inreal estate advisory across multiplesectors having worked at ING RealEstate Investment Management andDTZ.

MarshThe insurance broking and risk manage-ment firm has hired Chris Lay to thenewly-created position of businessdevelopment leader for its internationaldivision. Lay joined Marsh & McLennanin 1984 and has held a variety of seniorpositions at the firm. He will remain ashead of sales and head of middle mar-ket for Marshs Europe, Middle East and

Africa region for a transitional period.

Freshfields Bruckhaus DeringerThe law firm has appointed corporatepartners Simon Marchant and BenSpiers as co-heads of its London M&Apractice. The newly created roles will

have a two year term and are effectiveimmediately. Marchant has served asthe firms managing partner for its Asiabusiness, and has also headed up theglobal energy and natural resourcesgroup, as well as the global telecoms,media and technology (TMT) group.Spiers is co-head of the firms TMTgroup, and spent several years second-ed to companies including Hewlett-Packard and Morgan Stanley.

CITY MOVES | WHOS SWITCHING JOBS Edited by Elizabeth Fournier

+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

US stocks return tothe highs of 2008

US stocks rose yesterday, moving

back to 2008 highs, after a jumpin bank shares and furtherupbeat data on the labour mar-

ket, though sharp gains in oil priceslimited the advance.

After losses on Wednesday, therebound took the S&P 500 back aboveits 1,370 resistance level, which is seenas key to maintaining momentum inthis five-month rally.

Bank shares ranked among the bestperformers on hopes that theEuropean Central Banks second long-term liquidity injection would easethe regions financial crisis. The S&Pfinancial sector gained 1.2 per cent,led by a 2.9 per cent gain in JPMorganChase & Co to $40.37.

The ECB news is going to be imme-diately positive for the banking systemand for the credit markets in Europe,and in time, will be positive for theEuropean economy. They are on theright road, which means that the risksassociated with Europe are starting toabate. And thats really good news,said Hugh Johnson, chief investmentofficer of Hugh Johnson Advisors LLC

in Albany, New York.An index of European shares rose

1.1 per cent.Brent crudes advance, which took

futures above $128 a barrel to thehighest since 2008 in post-settlementtrading, revived concerns about theeffect of higher oil prices on con-sumers and businesses.

Still, the Dow Jones Transportation Average ended up 1.1 per cent, sug-gesting investors were shrugging offthe day's rise in oil.

US jobless claims, which fell 2,000to 351,000 in the latest week, were viewed as another sign the labour

market may be on the mend. Thenews was partly offset by an Institutefor Supply Management report show-ing the pace of growth in the US man-ufacturing sector unexpectedlyslowed in February.

The Dow Jones industrial averagewas up 28.23 points, or 0.22 per cent,at 12,980.30. The Standard & Poors500 Index was up 8.41 points, or 0.62per cent, at 1,374.09. The NasdaqComposite Index was up 22.08 points,or 0.74 per cent, at 2,988.97.

Automakers and retailers also wereamong the days best advancers.

US automakers reported healthysales in the face of rising gas prices.Shares ofFord Motors rose 2.3 per centto $12.66, while General Motorsadvanced 1.7 per cent to $26.47.

Mild weather helped many USchains post better-than-expectedmonthly sales in February. Gapjumped 7.2 per cent to $25.05. Bucklegained 6.9 per cent to $48.01.

B ANKS and other financialstocks, buoyed by central bankinfusions of money into the sys-tem, helped Britains top share

index rebound yesterday with fundmanager Man Group surging after itreported client outflows have slowed.

Londons blue-chip index closed up59.74 points, or 1 per cent, at 5,931.25,erasing the 1 per cent drop on Wednesday after downbeat com-ments on the US economy fromFederal Reserve Chairman BenBernanke.

US data yesterday was mixed.Fi

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