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BUSINESS WITH PERSONALITY

Senior Toryhits back atBoris claims

BORIS Johnson was last night onthe receiving end of a rebuke froma top minister after the Mayorcalled on the government to stoppussyfooting around and invest inLondons infrastructure.

Iain Duncan Smith, the workand pensions secretary, said Borisis wrong to say the government

was not doing enough to stimulategrowth. The Prime Minister andthe chancellor do not sit theretwiddling their thumbs, he toldBBCs Newsnight.

Johnson had used an interviewwith the Evening Standard to callon the government to back hisplans for airport expansion,

blaming inertia for the lack ofprogress on this and othereconomic growth measures.

Its alright for Boris and othersto say get on and do it, DuncanSmith said of forthcoming reformsto jobs market. But this has to bedone in the context of whats goodfor the economy and still allow usto develop people in work ratherthan harming them.

Johnsons contrary stancerevived speculation that he ispositioning himself for a futurerun for the Conservative party

leadership. His cause wasboosted by yesterdaysIpsos Mori poll thatrevealed two-thirds ofBritish adults have

adopted a morepositive view of

the Mayorfollowing theOlympics.

Virgins Sir Richard Branson (left) said Virgin did not outbid First Group, led by Tim OToole (right), as it did not want to risk certain bankruptcy

RAIL group FirstGroup yesterday reas-sured investors that potential losses onthe hotly-contested West Coast mainline could not exceed 265m, as sharesin the firm slumped on news it had

won the contract.The rail operator yesterday beat

off a bid from incumbent operatorVirgin Rail Group to land theScotland to London route, withpromises it will pay the government5.5bn over 13 years. Virgins SirRichard Branson branded the bidinsane.

But the company will cap theamount it could potentially lose onthe franchise by using a ring-fencedsubsidiary to secure the deal, whichonly has 265m of upfront capital atrisk. The deal is a similararrangement to that used byNational Express to secure the EastCoast mainline.

Controversially, the governmenthad to pick up the tab for the

botched East Coast deal which lost20m in its first half year after thefirm sought to renegotiate itscontract.

National Express walked away butwas able to insulate itself frompotential losses and further

government action by using thering-fenced franchise arrangement.The FirstGroup franchise has a

190m fixed-rate loan without

www.cityam.com FREE

indexation and 10m of ordinaryshare capital.

The franchise also includes apromise to pay a 45m inf lationlinked performance bond, a 5mseason ticket bond and to make15m in station repairs.

An equity analyst who did not

want to be named, said: This isasymmetric risk. If it all goeswrong, FirstGroup can walk away.

The governments decision to

award the contract to FirstGroupdrew a flurry of criticism from

Virgin founder Sir Richard andcaused shares in FirstGroup to falleight per cent yesterday. Sir Richardsaid that Virgin did not outbidFirstGroup because it did not wantto risk letting everybody down with

almost certain bankruptcy at sometime during the franchise.He also blasted as insanity, the

Department for Transports

decision to award the contract to abidder promising higher revenues.

FirstGroup shares opened at 264pbut ended the day at 243p as themarkets digested the news.

A spokesman for FirstGroup saidthe structure used was a standardone in rail franchises.

The DfT said the bid wasdeliverable and financiallyrobust.

HODGSONS ENGLAND BEAT EURO 2012 FINALISTS ITALY

BY JAMES WATERSON

FTSE 100 5,833.04 -31.74 DOW 13,164.78 -7.36 NASDAQ3,030.93 +13.95 /$ 1.57 unc / 1.27 unc /$ 1.23 unc

BY MICHAEL BOW

FIRSTGROUP CAPS

RAIL BID LIABILITY

THREE LIONS ROARISSUE 1,697 THURSDAY 16 AUGUST 2012

EXAMININGOUR A-LEVELSSee Pages 5, 14See Page 20

Certified Distribution

28/05/2012 till 01/07/2012 is 132,857

Virgins Sir Richard Branson calls the winning bid for the west coast line insane

Johnson wantsa new airport

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IN BRIEFHSBC reveals names in tax proben Global bank HSBC has handed over

details of current and formeremployees to the US authorities, itconfirmed yesterday, as part of a taxprobe that almost sank rival bank UBSin 2009. As a result the bank couldnow face legal action from individualswhose details have been revealed,lawyers representing them said. In aletter, the bank said it had passed ondocuments, in which their namesappear, on the request of USauthorities looking to hunt down UScitizens with untaxed money held inSwiss accounts. After passing on a firstset of documents earlier this year,HSBC has sent the new batch to the USDepartment of Justice and theSecurities and Exchange Commissionin an effort to reach a settlement overthe investigation.

Santander eyes $4bn Mexico IPOn Spanish bank Santander hopes toraise as much as $4bn (2.55bn) in aninitial public offering of a portion of itsMexican unit, Bloomberg reported lastnight. The bank will probably sell theshares after the first week ofSeptember, with one source sayingthe bank may sell a 25 to 30 per centstake. The unit produced a profit of5.3bn pesos (257m) in the secondquarter and is well placed to benefitfrom the countrys continuedeconomic growth. Chairman EmilioBotin confirmed at the end of Junethat his company was looking to floatpart of the Mexican business. Lastmonth the banks suffered asubstantial drop in profits afterremoving bad loans from its books.

Brazil lures private sectorin bid to boost economyBRAZILS President yesterdayannounced that up to 133bn real(42bn) will be put into boostinginfrastructure work across the coun-try, in a bid to kick-start the suppos-edly emerging economy back to life.

President Dilma Rousseffs planwill utilise the private sector inbuilding roads and railways, whiledelivering other supply side reforms.The reforms include liberalising

labour laws and privatising someareas of infrastructure, whileRousseff will also aim to slash taxeson electricity and mitigate the gov-ernments pension costs.

Further measures are expected tobe revealed in the coming weeks.Rousseffs stance signals a change indirection from Brazilian govern-ments previous attempts to bolsterdemand through more typical stim-ulus packages.

This would mark a welcomechange to the governments inter-ventionist bent to its approach toeconomic policy, commented NickChamie, an emerging marketsresearcher at RBC Capital Market.

Brazil makes up the B in the socalled BRICS group of emergingeconomies, along with Russia, India,China and South Africa.

Its economy boomed by over 7.5 percent in 2010, yet growth slowed to

Barrick Gold explores Africa saleCanadian miner Barrick Gold has beenexploring a sale of its 74 per cent stake inAfrican Barrick, the London-listed goldproducer, in a move that could prompt afull takeover. Barrick has been workingwith UBS to consider its options forAfrican Barrick, which the Canadianminer, the largest gold producer globally,partially floated in 2010.

US retailers to create mobile walletA group of the largest US retailers,including Walmart, Target and Best Buy,

on Wednesday announced plans to createa joint mobile wallet service calledMerchant Customer Exchange, adding yetanother competitor to the alreadycrowded market for mobile phonepayment services.

Holcim shakes up top managementHolcim is to reshuffle its seniormanagement as its new chief executiveBernard Fontana continues his drive toimprove profitability at the worlds largestcement maker by sales. Cementmanufacturers have struggled with risingenergy and raw materials prices over thepast 18 months.

HMRC names worst tax fraudstersThe taxman will today name Britains 20most wanted tax fraudsters, who it claimshave collectively cheated the Exchequerout of more than 700m. Photographs ofthe tax evaders will be posted to theFlickr photo website this morning.

Broadband speeds third higherUpgrades to the nations broadbandnetwork has boosted average broadbandspeeds to 9Mbps from 7.8Mbps sixmonths ago. The average speed is a thirdhigher than at the same time last year.

Soros has $10m Facebook investmentGeorge Soros, the legendary investor, hasrevealed he spent around $10.6m (6.7m)buying 341,000 shares in the socialnetworking site Facebook in the secondquarter. This is contrary to move of otherinvestors who have been defriendingFacebook ever since it listed in May.

S&P cuts Nokia further into junkStandard & Poor's has cut phone makerNokias credit rating further into junkterritory as it expects profits to fall in thesecond half of the year.

Samsung and Apple urged to talkThe judge overseeing the patent trialbetween Apple and Samsung has askedthe chief executives of both companies totalk one more time to try to settle thecase before it is handed to a jury.

Union split on Caterpillar offerUnion leaders are split on the merits of apay offer made by American machinerygiant Caterpillar in an effort to end astrike that began May 1 at the company'splant in Joliet, Illinois. Some workerswould receive a three per cent rise.

ITALIAN banks are strugglingunder the growing weight of non-performing loans as the economycontinues to perform poorly,according to a report out todayfrom Deloitte, and are increasinglylooking to sell off the bad assets.

The survey of senior managersfound 70 per cent expect the

volume of non-performing loans torise this year, and 75 per centexpect to sell bad assets next year.

Of a total combined asset base of1.7 trillion, the banks studied have100bn in non-performing loans.

Rising unemployment was seenas the driver of rising bad debt by41 per cent of respondents, whilefalling property prices and the

global crisis were also blamed.However the banking sector did

show unexpected strengthyesterday as UniCredit raised750m in a covered bond issue the first Italian to do so this year.

The five-year bonds yield camein at roughly 100 basis points belowthe rate on the governments debt,surprising analysts.

There was huge demand for thisdespite it being mid-August, but itseems like it is because of the lackof supply in recent months, saidRBS Jan King. It will be interestingto see whether other large Italianand Spanish banks try to jump inthis in the coming weeks.

Bad bank debts

hit 100bn andrising in Italy

Brazilian President Dilma Rousseff wants to revitalise the countrys sluggish growth

2 NEWS

BY TIM WALLACE

BY JULIAN HARRIS

To contact the newsdesk email news@cityam.com

Ihave always had a soft spot for SirRichard Branson, ever since hetook me on a press trip to Tokyo. Hewas warm and friendly and held

great parties in his hotel room untilthe early hours of the morning.

It was Virgins inaugural flight toTokyo, and to mark the occasion Sir

Richard invited celebrities such asPatsy Kensit and Swing Out Sister, aBritish pop band who had just record-ed a hit called Breakout. His motherwas there too. The few days were veryjolly and there was no shortage of par-tying and bonhomie.

Sadly there didnt seem to be a lot ofbonhomie around yesterday as SirRichard reacted with venom to VirginRail losing out in its franchise bid forthe west coast route to Glasgow toFirst Group.

Sir Richard, who has lost three otherbids, branded the decision insane and

Sir Richard Branson should be more gracious in rail defeat

THURSDAY 16 AUGUST 2012

threatened to pull out of the railwaybusiness altogether.

The new deal sees First Group bid-ding 5.5bn for the right to operatethe routes from London to destina-tions including Glasgow, Manchesterand Liverpool, until 2026.

Branson, who bid 4.8bn, said hiscompany refused to matchFirstGroups bid because of the risk ofalmost certain bankruptcy.

In the past Virgin has been outbidon a couple of other routes, only to

see the winning bidder, on one occa-sion National Express, and on theother GNER, fail to complete the con-tract.

However, there are good reasons tobelieve that First Group has a decentchance of making a success of its newbusiness. It is looking for growth in

revenues of 10.4 per cent a year,through a mixture of increasing pas-senger numbers, price rises, and amore flexible fare structure aimed atbetter utilising capacity during non-peak hours.Although the trains are currently

jammed during peak hours, currentcapacity levels are only around 35 percent. There is bags and bags ofunderutilised capacity, says a FirstGroup spokesman.

First Group says it has managed toincrease passenger revenues byaround 20 per cent a year on its trans-

PENSION WOES FLOOR DAWSON

After weeks of negotiations with thePension Fund Body the Pension FundRegulator (PPF), the cashmere groupDawson International was yesterdayforced to call in administrators. Thegroup was hopeful it could secure a

deal with the PPF that would haveseen the body take an equity stake inDawson, and suppliers and sharehold-ers take some pain but reach a conclu-sion that could have led to thesurvival of the 140 year-old group thatonce owned brands like Pringle andBannatyne.

Chairman David Bolton is con-vinced the PPF could have been moreflexible in its approach and couldhave reached a deal. What a shame.

Pennine routes and sees little reasonwhy a similarly healthy increase cannot be achieved on its new route.

Could it be that Sir Richard made atactical mistake in bidding so farbelow First Group? If he had bid closerto his rival, he might have stood achance.

As an incumbent who could arguehad done a reasonably good job onthe line already, he may have gotaway with a slightly lower bid andstill been allowed to keep the fran-chise. But the difference between thetwo bids is too large for any tightlysqueezed government to ignore.

Only time will tell whether FirstGroup has overpaid or not but inbehaving so petulantly Sir Richard iswinning himself no favours and islooking like a bad loser. It would havebeen better to accept the decisiongracefully.

just over 2.7 per cent last year. And itwill expand by just 2.1 per cent in2012, the Centre for Economics andBusiness Research predicted this week.

These set of measures, if they mate-rialise, would be a very positive efforton the part of the government toaddress constraints on Brazils long-term growth potential by addressingsome of its supply-side weaknesses,Chamie added.The cost of electricity and labour as

well as poor infrastructure have ham-pered the south American giantsgrowth, Chamie said.

Yet economists warned that most ofthe measures would be prone to time-lag, with the benefits potentially notrealised for several years.

Yesterdays announcement suggeststhat the government has finallyacknowledged that the economysproblems are not just cyclical innature, added Neil Shearing ofCapital Economics.

Yet while the measures are a step inthe right direction... it is equally obvi-ous that these represent only a smallfraction of what needs to be done,Shearing warned.

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

EDITORSLETTER

DAVID HELLIER

david.helllier@cityam.comfollow me on twitter: @hellierd

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SEVEN banks have been subpoenaed

by US authorities as part of aninvestigation into possiblemanipulation of the Libor interestrate, it was revealed last night.

JP Morgan Chase, Deutsche Bankand Barclays will have to facequestions from a joint probe by NewYork and Connecticut investigatorsafter receiving subpoenas in recentweeks.

Britains RBS and HSBC have alsobeen called to provide evidence,while UBS and Citigroup receivedsimilar demands earlier in the year.

The subpoenas request copies ofcommunication between executivesrelated to possible collusion andother conduct that may have playeda role in alleged rate manipulation,a person familiar with the mattersaid.

Spokesmen for the USprosecutors declined to comment

on the report.The scandal shows no sign of

going away with multipleinvestigations on both sides of theAtlantic. Martin Wheatley, the headof the Financial Services Authority,is carrying out an urgent review ofLibor for the government and willreport back next month.

In June Barclays, the first bank toadmit it manipulated thebenchmark interest rate, was fined290m by US and UK authorities.

Seven lenderssubpoenaed inLibor probe

BY JAMES WATERSON

BRITISH banks may now think twiceabout expanding their US operationsbecause of the newly unpredictableregulatory environment, bankers,lawyers and analysts have warned.The unexpected high-profile accusa-

tions levelled at Standard Charteredby the New York state Department ofFinancial Services (DFS), and subse-quent $340m (217m) settlement, areseen by some as bullying tactics, andcould make the US less appealing.The row has also turned the spot-

light on the complex system of over-lapping regulators in the US Standard Chartered is still negotiat-

ing with four other authorities.The DFS breached all the rules of

regulatory process, said SimonMorris from law firm CMS CameronMcKenna, as the regulator brokecover during settlement negotiations,cut across four more senior US regula-tors, and failed to advise the Bank ofEngland or the Financial ServicesAuthority what was going on.

By shooting from the hip its leaderMr Lawsky has single-handedly madeNew York a less attractive place to do

StanChart rowhits UK banks

faith in the USBY TIM WALLACE business, Morris explained.

And banks are already concernedthat the turmoil could hit any plans toextend their US operations.

We need a stable platform on whichto build the business, but now there isa question over how confident we canbe in this regulatory environment,one top UK bank told City A.M.

Meanwhile Standard Chartered stillhas to negotiate a settlement withfour other regulators, although thefines are expected to be far smallerthan the $340m levied by the DFS.

Typically fines from bodies like theDepartment of Justice are in the tensof millions the US authorities have aformula to work through, said

Pinsent Masons Tom Stocker.

Chief executive Peter Sands flew to New York to make sure the bank kept its licence

Standard Chartered PLC

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Nobody at the top of Standard Charteredhas resigned over the Iranian sanction-breaching charges a stark contrast withthe outcome of Barclays LIBOR scandal.Peter Sands initially responded slowly to lastweeks allegations. The chief executive wason holiday and taken by surprise. But sincethen he has impressed analysts andinvestors by flying to New York and pushing

hard to reach asettlement, makingsure the bank keepsits licence, andavoiding anembarrassingpublic hearing.Chairman Sir JohnPeace (left) hassteered clear of the

public glare throughmuch of theepisode, morewidely beingperceived as adriving force behindefforts to settlequickly and stop thefirms reputationtaking any furtherbeating. However, investors are less certainabout group finance director RichardMeddings (above). He has held senior,relevant roles since 2002 covering much ofthe 2001 to 2007 period focused on byregulators. Meddings has not been accusedof personal wrongdoing, but analysts fearany increase in pressure on the bank couldfocus on him.

HOW HAVE THE BANKS TOP BRASS BEEN HIT?

THURSDAY 16 AUGUST 20123NEWScityam.com

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DAWSON Internationals chairmanblasted the UKs emergency pensionfund and the pension regulator yes-terday as the Scottish cashmere firmcalled in administrators.

David Bolton told City A.M. that thepension protection fund (PPF) wasnot fit for purpose after it rejectedDawsons offer for a rescue package.The company has been unable tomaintain its enormous pensionfund deficit, many times itsannual revenue.

Bolton said that the PPF hadrepeatedly rejected offers ofcash and a stake in Dawson,

without making clear whatthe company would need tooffer. Dawsons pensionfund will now receive pro-tection from the PPF asthe textile firm entersadministration.

Our proposal, whichwas all we could possiblyafford, would have deliv-

Dawsons chairblames pension

as calls in KPMGBY JAMES TITCOMB ered significantly more to the PPF

than it is likely to receive fromadministration, Bolton said yester-day. We literally emptied our pocketsand thats what frustrated us, headded.The PPFs executive director for

financial risk, Martin Clarke,responded by saying that companiescan continue to operate while beingcovered by the PPF, but that Dawsons

offers were inadequate.Dawson International, which

runs Barrie Knitwear in Hawick,manufactures cashmere clothingfor fashion houses and depart-ment stores around the world.

The mill has been trading

profitably and generated a pre-tax profit of 1.1m in thefinancial year ended 31 March

2012, KPMG said.KPMG said the Barrie business

will continue to trade whilst itseeks a buyer.

Employment surges yet againconfounding gloomy GDP dataEMPLOYMENT shot up in the threemonths to June, highlighting thejuxtaposition between labourmarket and GDP data, accordingto Office for National Statistics(ONS) figures released yesterday.

Some 201,000 more people hadjobs in the second quarter than inthe first, while 46,000 fewer wereunemployed, the data showed.

London led the pack, accountingfor 91 per cent of the fall injoblessness, and close to half ofthe growth in employment

Public sector pay consolidatedits lead over packets in the private

BY BEN SOUTHWOOD sector, with weakly earnings 15higher on average, but this wasmainly down to around 200,000lower paid public sector workersshifting sector.

Bonuses in the financial sectorperformed particularly poorly,falling more than a fifth comparedto June last year though bonusesin finance were still more thandouble those in any other sector.

The data included a number ofrecord highs, as the labour marketcontinues to recover solidly despitethe double dip downturn.

Self-employment and part-timeemployment hit their highest everlevels but the job growth was

broad-based, as 74,000 worked full-time for others. Hours worked shotup by 20.5m, reinforcing therobustness of the positive picture.

THE DUKE of Edinburgh has been taken to hospital as a precautionary measure after arecurrence of a bladder infection, Buckingham Palace said yesterday. Prince Philip, who

is 91, was driven by ambulance to Aberdeen Royal Infirmary while staying at Balmoralwith the Queen, a spokesperson said.

DUKE OF EDINBURGH BACK IN HOSPITAL

Agents reports signal economy-wide slowdown

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Dawson makes cashmere forglobal fashion houses

CISCO Systems last night offered

little hope that dire economicconditions in Europe would come toan end any time soon but pleasedinvestors with a 75 per cent dividendhike as the company postedquarterly results that beat estimates.

The worlds largest networkequipment maker had spookedinvestors three months ago, whenchief executive John Chamberscautioned that macroeconomicconditions in Europe could hurttechnology spending.

Ciscos fourth-quarter results beatestimates, thanks to cost savingsand a continuing restructuringprogramme.

Quarterly net income, excludingitems, was $2.5bn (1.6bn) or 47cents per share, compared withanalysts average estimate of 45cents a share. Revenue rose four percent from the year-ago quarter to

$11.7bn, compared withexpectations of $11.61bn.

The San Jose, California-basedcompany also said its dividend willrise to 14 cents per share in the firstquarter of fiscal 2013 and that itplans to return a minimum of 50per cent of free cash flow annuallythrough dividends and sharerepurchases.

Solid quartersees Cisco hikedividend 75pc

BY CITY A.M. REPORTER

THE UK economy is suffering adrubbing across the board, said theBank of England in its latesteconomic survey yesterday, raisingthe prospect of more monetaryintervention, despite the Bankswait and see attitude revealed byminutes also released yesterday.

Construction decline worsened,manufacturing export growthslowed, investment intentions werereined in, and labour markettightening suffered its sharpestslowdown for over two years, saidthe agents survey of conditions.

The monetary policy committee(MPC) which sets interest ratesand decides on quantitative easing(QE) rejected further money

Minutes from Banks meetingsuggest further QE is likely

BY BEN SOUTHWOOD printing and further rate cutsunanimously, citing existinginterventions. But some membersthought that this decision wasfinely balanced, and that a goodcase could be madefor more assetpurchases, suggesting further QEmay be on the horizon.

THURSDAY 16 AUGUST 20124 NEWS cityam.com

RUPERT Murdochs NewsCorporation has opened a reviewinto anti-corruption practices atoperations including its UK newspa-pers, the media mogul announcedyesterday.

In an internal email, Murdochsaid the purpose of the review wasto test our current internalcontrols and identify ways inwhich we can enhance them butthat the probe is not based on anysuspicion of wrongdoing by anyparticular business unit or itspersonnel.

He added: As you are all aware,

our company has been underintense scrutiny in the United

News Corp opens official review

into anti-corruption practicesBY JAMES TITCOMB Kingdom. I assured parliament and

the Leveson inquiry that we wouldmove quickly and aggressively toredress wrongdoing, co-operatewith law enforcement officials andstrengthen our compliance andethics programme company-wide.

The probe is the latest aspect of awider review of governance atMurdochs UK publishing armNews International that wasinstigated after the publisherschief executive Tom Mockridgetook over from Rebekah Brooks lastyear.

So far, 14 current or former NewsInternational journalists have beenarrested as part of Scotland Yards

investigation into corruptpayments.

Employment climbs, defying GDP gloom

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SHARES IN JJB Sports dived byalmost a quarter yesterday after amajor US investor wrote off aninvestment it made in thestruggling sporting goods retailer

just five months ago.Dicks Sporting Goods which

came to JJBs rescue in April with a20m investment, disclosed a pre-tax impairment charge of $32.4min its second-quarter results onTuesday. In a statement EdwardStack, the US retailers chiefexecutive of Dicks SportingGoods, said JJBs performance hasmaterially deteriorated from its

expectations, partly due toeconomic woes in Europe.

JJB hit as Dicks

writes off 20mBY KASMIRA JEFFORD

GETTY

THE home secretary is opposing plans by her cabinet colleagues to make it easier forChinese tourists to get visas amid fears it will lead to a rise in organised crime, accordingto a leaked letter. In the letter, Theresa May said that relaxing checks o n Chinese visitorswould pose a threat to national security and bring Chinese criminals to Britain.

MAY OPPOSES RELAXING CHINESE VISA RULES

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AS students across the country wake

up today to collect their A-levelresults, several City firms haveannounced initiatives to encourageschool leavers into finance and

business roles.In an attempt to lure pupils away

from the conventional route of auniversity degree, accountancy firmKPMG said yesterday it has doubledthe number of training placesavailable to A-level students, afterreceiving 1,500 applications for theschemes existing 75 places.

Fellow big four player PwC saidapplications to its own entry schemehad risen by 34 per cent by last year,

with 2,352 applicants for the 100places available from this autumn.

Theres a generation of studentsweighing up their career andtraining options differently, whether

because of university fees, economicforecasts or graduate

unemployment, and employers haveto adapt, said PwCs Gaynor Bagley.

Ernst & Young, meanwhile, isencouraging school leavers to applyearly to its summer internships 90per cent of which it aims to convertto graduate jobs.

About 84,000 students areexpected to get top AAB+ grades this

year, and for the first time there isno limit on the number of placesuniversities can offer that demandthese results.

School leaversscramble forfinance roles

BY ELIZABETH FOURNIER

LIFE insurance takeover firmResolution yesterday shelved itsambitious acquisition and flotationplans as it said it would become amore conventional business.

The group, which was set up byClive Cowdery to take overstruggling firms and sell them onfor a profit, said poor marketconditions meant its original planto buy firms and exit through anIPO would have to be canned.

Cowdery said there wasdisappointment Resolutioncouldnt push on with plans to buy

more firms.Weve come to a view that its

not in the best interest ofshareholders to target an exit eventin 2013 or 2014, he said.

I wish we could have a benignmarket and have the possibility ofpulling off creative mergers wherecorporate activity is rewarded. Butthis is not a period when corporateactivity is rewarded.

The management shake-up willsee Cowdery appointed to the

Resolution callstime on further

takeover plansBY MICHAEL BOW board, with former FSA chief

executive John Tiner stepping downover the next few months. It makessense to focus on other things I

want to do in life, Tiner said.Resolution yesterday posted a pre-

tax operating profit of 163m in thefirst six months of the year, downfrom 390m pounds a year earlier.

Markets backed the moveyesterday, as its share price soared8.7 per cent in the first 45 minutesof trading, eventually closing 2.9per cent higher.

BarCap analysts said in a note: Ithas, in effect, decided to behave likea normal UK Life company.

TIME for a new direction: thatis the conclusion of insuranceM&A specialist Resolution,

which announced plansyesterday to give up on its strategyof aggressive acquisitions andfocus on becoming an entirelyconventional company.

In Silicon Valley, they call this apivot. Its something of a badge ofpride among the Californian techstart-up set, where strategic

flexibility is seen as the hallmarkof firms that listen to theircustomers and follow where thenumbers lead them.

In the case of Resolution, it seemsmore the product of having triedevery other option first. After themarket for insurance acquisitionsdried up, Resolution has facedshareholder resentment over thecancellation of a planned 250mpayback in July, the looming threatof regulators running its

unconventional structure out of theFTSE 100 and sceptical reactions toprevious tentative plans to split part

of its business. As a result, therewere few places left to turn.

Still, the true test of a pivot isnthow gracefully it is executed but

whether a company can adjust itselfto the new approach. The market

was initially hopeful, or at leastgrateful for a settled direction, butas the day wore on and the shareprice fell back somewhat, it seemedthat not everyone was convinced ofthe profit to be made as Resolutionsees the journey through.

BOTTOMLINE

MARC SIDWELL

Resolution ltd

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THURSDAY 16 AUGUST 20126 NEWS cityam.com

Resolutions CEO John Tiner will leave the firm as part of the shake-up

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IN BRIEF

KAZAKH mining group ENRC yester-day blamed falling commodity pricesand a challenging economic envi-ronment for declining revenuesover the first half of the year.The FTSE 100-listed miner reported

lower underlying earnings of$1.14bn, down 41 per cent over thefirst half of the year. Earnings pershare also fell 60 per cent to $0.36.

Revenues fell by 19 per cent to$3,246m (2,070m), lower than theforecast $3.4bn.

It cut spending plans from $2.7bnto $2.4bn in 2012, primarily due tounallocated licences for a Brazilian

iron ore project, which has pushedproduction back to 2016. Chief execu-tive officer Felix Vulis said that ENRChad completed all required publichearings and was waiting for a

ENRC rockedas commodity

prices tumbleBY CATHY ADAMS response from the authorities as to

whether the project could go ahead.It is understood ENRC, which mines

metals such as copper and iron orepredominantly out of Kazakhstan,could spin-off its African assets into anew London-listed vehicle but a deci-sion is currently under review.The shares closed 8.46 per cent

down at 379.6p.

Felix Vulis expects demand will remain robust for its core commodities this year

The firms co-founder Mark Getty

Eurasian Natural Resources Corp

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420

410

p 379.6015 Aug

400

390

380

370

Eurasians results came in below expectations on the earnings level.Cost inflation was better than we expected, but the results showed that cashflows are under pressure, but this is true across the sector.

ANALYST VIEWS

WHAT ARE YOURTHOUGHTS ABOUT ENRCSQUARTERLY RESULTS?Interviews by Cathy Adams

ROBERT CLIFFORDDEUTSCHE BANK

PRIVATE equity veteran Jon Moulton

yesterday said low lending rates werestrangling the flow of buyout dealsas banks propped up distressedcompanies with cheap capital.

Moulton, who is chairman ofturnaround specialist BetterCapital, said banks were content tolend money to bad businessesrather than crystalise their lossesand sell to a private equity firm drying up the pool of firms to buy.

What you have is good peopleand good assets but badperformance. Its zombie style, andits starting to stack up.

Better Capital yesterday issued aninterim management statementshowing its first investment fundhad 80.1m committed to ventures.

In April its second fundcommitted 40m to Jaeger butMoulton said the potential for dealshad been patchy.

Anything near a consumer is aproblem and anything outside ofLondon.

It could be better but its not astrong market at the moment.

Better CapitalsMoulton slamsbanks attitude

BY MICHAEL BOW

GETTY Images, the worldsbiggest photo agency, has beentaken over by Carlyle Group afterthe American private equity firm

won the bidding for a majorityshare in the company.

The deal sees Carlyle take justover 50 per cent of Getty fromanother private equity outfit,Hellman and Friedman. Theremainder of the agency will becontrolled by Gettysmanagement, with the total deal

valuing the company at $3.3bn(2.1bn).

Carlyle is betting on growingdemand for online images as themedia industry moves away fromprint. We will harness Carlylesfinancial resources and globalnetwork to help take GettyImages to the next stage of

Getty Images bought out byCarlyle Group in $3.3bn deal

BY JAMES TITCOMBproduct innovation and global

growth, Carlyles managingdirector Eliot Merrill said

yesterday.Getty has moved to adapt to

the growing market for digitalpictures, but prices commandedonline still pale to those in print.

Carlyle, which was advised byGoldman Sachs and JP Morganon the deal, beat other privateequity firms including CVCCapital to the deal. Mark Gettyand chief executive JonathanKlein, who founded Getty Imagestogether in 1995, will invest theirown equity in the deal.

Klein said the agency wasseeing an explosion of demandfor rich media and visualcontent. Getty has expandedinto video distribution in recent

years as demand for interactiveonline material grows.

THURSDAY 16 AUGUST 20128 NEWS cityam.com

The balance sheet looks more constrained than we anticipated. Costpressures experienced are slightly lower than previous guidance. Shares remainfully priced and we maintain our hold recommendation.

ASH LAZENBY LIBERUM CAPITAL

Neutral overall. It sustained good demand for key products and costcontrol is helping keep costs below expectations, despite the sharp rises. Overall,it was an in-line statement with caution to the outlook.

CAILEY BARKER NUMIS SECURITIES

FACEBOOK is braced forfurther falls in its value todayas shareholders who invested inthe company before it wentpublic become able to sellshares for the first time.

Analysts are not predicting afiresale, with most of theunlocked shares owned by

venture capital funds ratherthan Facebook staff, who aredeemed more likely to sell overthe next nine months whenmore shares can go on sale.

Facebook shares are trading

at just over half the value ofMays initial public offering.

Facebook fall

could worsenas stock freedBY JAMES TITCOMB

TOBACCO firms saw share pricesdip yesterday after the Australianhigh court upheld a law enforcingplain cigarette packaging, the firstof its kind in the world.

Shares in FTSE 100 companiesBritish American Tobacco (BAT) andImperial Tobacco both closedalmost two per cent lower assuggestions spread that the UK andother markets could follow suit.The department of health iskeeping a close eye on howAustralia implements the laws andpotential legal challenges fromtobacco firms, having closed aconsultation on plain packaginglast week.

The Australian bill was passed

last year but challenged by globaltobacco companies on the basis

Tobacco giants hitas Australia

set for firstplainpackets lawBY JAMES TITCOMB that it was unconstitutional. Theycould now dispute the ruling byclaiming it violates internationaltrade agreements. Anyonethinking that the tobaccocompanies will accept that thefight is over would be clearlymistaken, said Rupert Casey of lawfirm Macfarlanes. BAT said: In theUK, plain packaging wouldconstitute a wholesaleexpropriation of our valuableintellectual property, requiringpayment by the government ofvery significant compensation.

Australias law will forcecigarettes to be sold in olive-coloured packets without logosfrom December. Tobaccos globalgiants argue the move will notdiscourage smoking, but simply

drive down prices and increasetrafficking.

7/31/2019 cityam 2012-08-16

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7/31/2019 cityam 2012-08-16

10/19

ANY City workers terrified ofpublic embarrassment, look

away now.As part of the ongoingcultural celebrations to tie in

with the London 2012 Games,incognito Shakespeareanactors have been tasked withentertaining the visitingmasses with impromptu

ON your marks, get set...BID!Time is quickly running out to

secure your very own piece ofOlympic history, with memorabiliaon offer in the off icial London 2012auction selling faster than you cansay and Usain Bolt takes the gold.

Raising money for the MayorsFund for London, the auctionis currently offering a vastarray of official Wenlockand Mandeville statues and competition tosecure one of the snazzilydressed mascots is fierce.The Ritzs resident

Queens Guard Wenlock iscurrently fetching close to6,000 with just hours togo, while Mandeville the PearlyKing resident in BishopsSquare is attracting bids ofmore than 4,000.The Mayors Fund for

London partners and funds

projects across the capitalthat help in three coreareas education, engage-ment and employment, with

Act fast to grabyour own sliceof 2012 history

the ultimate goal of helping disad-vantaged youngsters all the way to adecent job opportunity.

Sixty pence of every single poundraised by the auction (after logisti-cal and Locog fees) will go to help-ing the charitys project work in

both east and south London suc-ceed.

This is a once in a life-time chance to bid fortruly iconic Olympic

Games memorabilia andhelp out our young people inneed, said Mayor of LondonBoris Johnson, the charitys

patron.But if you think youve

missed your chance, dontfret check back withThe Capitalist tomorrowfor an exclusive opportu-

nity to be in with a chanceof securing your very owntwo-metre high souvenir.

LONDONS free outdoor jazz festival returns to Canary Wharf this weekend with a lineup of jazz heavyweights, including Courtney Pine (above) headlining on Saturdayevening. Its going to be a heatwave so bring a picnic, grab a drink and enjoy the music.

JAZZ FESTIVAL RETURNS TO CANARY WHARF

Wenlock is one of the Gamesmost enduring symbols

Mark Rylance has organisedthe pop-up Shakespeare event

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cityam.com/the-capitalistTHECAPITALIST

THURSDAY 16 AUGUST 2012

IF you pick up a dictionary today youmight be in for a bit of a shock

words that sprung from the financial crisishave finally been given the ultimateaccolade and received a slot in the newedition of Merriam-Websters literarylexicon.Both systemic risk and toxic as inasset have been included in the 200-year old dictionary for the first time, afterthe popular emergence of the zingingneologisms following the 2007-2008financial crisis.This is all good news for office pedants.For one, it finally puts pay to theboardroom debate about whethersystemic risk can be used as a synonym

for systematic risk (it cant).Secondly, it rids the word toxic of thoseawkward biological hazard connotations,replacing it with the slightly moreperilous-to-mankind inference thatsprings to mind when discussing bad bankloans or, indeed, Greek sovereign bonds.Also making the cut are cloudcomputing, to reflect external computerdata storage and underwater, as inunderwater mortgage, which have beengiven entries. And theres one other lessobvious new entry that might just havebeen included as a result of the crisis energy drink. As in: get me anotherenergy drink please, the markets tankingand Im going to be here until dawn.

They doth desire we be better strangersstreet performances during theupcoming Paralympics.

Hidden at tourist hotspots,performers will pop-up onunassuming crowds andlaunch into a variety ofpersonalised one-to-oneperformances and flash mobmoments using the bardsmost famous words.

Created by actor MarkRylance, who calls the initiativea random act of senseless

beauty and an artistic

ambush, London MayorBoris Johnson called the

performances a delightfulway to break down thoseself-imposed barriers thatkeep Londoners apart.

So next time you sitdown on a bench near StPauls for your lunchtimesandwich take a very goodlook at whos next to you any minute you could find

yourself re-enacting Romeoand Juliets Balcony scene.

7/31/2019 cityam 2012-08-16

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IN BRIEFGlaxo sells Australian drug brands

n GlaxoSmithKline advanced its clear-out of non-core drugs yesterday witha deal to sell 25 older brandsmarketed in Australia to South Africa'sAspen Pharmacare for 172m. The oldbrands being bought by Aspen includeherpes treatment Valtrex, epilepsydrug Lamictal and the antibioticAmoxil. In total, the 25 productsgenerated sales of around 83mpounds in 2011 and 31m in the firsthalf of 2012.

Carlsberg dampened by weather

n Carlsberg said a boost provided bysponsoring the Euro 2012 football tour-nament did not make up for unseason-ably wet weather as the brewerreported a five per cent fall in sales innorthern and western Europe. However,the firms pre-tax profit rose 47 percent to 2.6bn Danish kroner (273m) asit sold off breweries. The firm said thesales fall was more than expectedbut said investments in Russia had paidoff, with sales rising in the country forthe first time in several quarters.

H&Ms July sales defy gloom

nHennes & Mauritz (H&M), theSwedish clothing giant, said sales grewfor a third consecutive month in July.The upbeat results came despite gloomin its biggest market Germany, in a signof robust demand for cheap fashionfrom cash-strapped shoppers. Sales atstores open a year or more rose two percent in local currencies in the period,compared with a forecast for 2.7 percent. The worlds second largest cloth-ing chain said total sales, including newstores, were up 11 per cent.

CLS HOLDINGS set the exampleyesterday on how to profit fromthe secondary office market, afterthe property investment company

posted strong half-year figures.The family-run firm said netasset value jumped 5.6 per cent to1,038p a share in the first half ofthe year despite a fall in profit to27.1m from 37.1m.

During the period, the groupsecured planning permission forSpring Mews in Vauxhall, which itplans to turn into a large mixed-usescheme including a 399 student

bedrooms and a 120-room hotel.

CLS posts lift innet asset value

BY KASMIRA JEFFORD

STRATFORD City, Europes biggestshopping mall, attracted 5.5m visi-tors during the Olympic Games, itsAustralian developer Westfield saidas it reported a 31 per cent increasein its first-half profits.

Stratfords bustling shops contrastwith retailers in west London thatlamented a lack of visitors, particu-larly in the first week of the Games,after warnings about traffic keptpeople away.The company, which owns 119

shopping centres in Australia, theUS, New Zealand and the UK, report-ed a net profit of A$800.1m (534m)in the six months to the end of June.

Funds from operations a meas-ure of earnings that strips out fluctu-ations from property revaluations rose 3.1 per cent to A$751.2m, boost-ed by a strong rise in income from itsUS and Australian malls.The group said income from its five

UK centres was steady, with over 99per cent of its portfolio leaseddespite the tough retail environmentand high number of shop failuresthis year.

Olympics boom

sees 5.5m flockto Stratford City

BY KASMIRA JEFFORD It expects its two London centres Stratford City and Westfield Londonin Shepherds Bush to attract a totalof 60m customer visits spending anestimated 1.8bn this year.

Steve Lowey, Westfields co-chiefexecutive, said its strong perform-ance in the half year was a result ofits change in strategy in 2010, when itdecided to focus on the developmentof large urban sites to generate high-er returns.

It sold its Nottingham shoppingmall Broadmarsh last year as part ofits change in strategy and is currentlyvying with Anglo-French rivalHammerson to redevelop the 1960sWhitgift centre in Croydon.

Westfield Group

9 Aug 10 Aug 13 Aug 14 Aug 15 Aug

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AUD

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9.6315 Aug

9.50

SHAREHOLDERS in HMV yesterdayvoted in favour of changing thestruggling music entertainmentchains stock market listing in amove that will help speed up thesale of its Live music arm.

Some 99 per cent of investorsapproved the change in listingcategory from premium tostandard, at an extraordinary

general meeting held yesterday.In a circular sent to shareholders

in July, HMV said the move wouldallow the group to sell off parts ofits Live arm in a shorter timescaleand at lower expense, and without

HMV changes its stock marketlisting to speed up sale of Live

BY KASMIRA JEFFORD the need to seek shareholderapproval in respect of suchdisposals.

HMV put its Live arm, whichruns 13 venues and a number offestivals including Lovebox inLondon, up for sale at the

beginning of the year to help paydown its 180m debt pile.

Last week, the group completedthe sale of the Hammersmith

Apollo to American-German jointventure Stage C for 32m.

A standard listing means HMVwill only have to comply with EUrequirements without the moreonerous corporate governance stan-dards of a premium listing.

THURSDAY 16 AUGUST 201211NEWS

cityam.com

The high street chain is struggling to adapt to modern market changes

Strong first half puts Interserveback on track for the full yearSUPPORT services and constructiongroup Interserve yesterday reportedhalf-year profit of eight per centdriven by strong performance in itsBritish support services business.

Pre-tax profit for the firm, whoseservices range from cleaningSainsburys supermarkets tobuilding Jaguar a new site inCoventry, came in at 32.6m in thesix months to 30 June, up from30.1m the year before.

The support services division,

which includes buildingmaintenance and security, reported

BY CATHY ADAMSrevenue growth of 11.5 per cent to588m.

It pointed to some recent supportservices contract wins, withcompanies such as National Gridand Alliance Boots, for the increasein profits. Future workload rose to4.7bn in the first half of this year,an increase of 200m year on year.

Interserve shouldered a 27 percent slide in UK construction profitsto 7.3m from 10m in the first halfof 2011. Management admitted thatthe UK construction sector stillfaces several challenges due to lack

of confidence and a lack ofliquidity.

The interim dividend was up 6.7per cent to 6.4p a share.

The stock closed up 2.47 per centat 335.2p.

CLUFF Gold yesterday reported a17 per cent increase in earningsfor the second half of the year,driven by increased production atits Kalsaka gold mine.

The Aim-listed West Africangold producer increasedproduction by 21 per cent in thethree months to 30 June, followingpositive updates at its other

African sites.The Kalsaka mine, in Burkina

Faso in West Africa, upped goldproduction to 15,191 ouncescompared to 12,504 ounces in thefirst quarter of 2012. Cluff added

that it was responsible for $9m(5.7m) of earnings in the first

Gold production helps 17pc risein second-half earnings at Cluff

BY CATHY ADAMSquarter. Production is set tostrengthen at the site in thesecond half, Cluff said.

Cluff is due to update on itsBaomahun gold project in SierraLeone in October, but it isunderstood that the site which isCluffs f lagship asset, andaccounts for 3m ounces of its 4.5mounces of gold will continue todeliver robust performance.

Additionally, Cluff is looking atexpanding the Baomahun site dueto its strong gold grade quality.

Despite the strong results,financial director Peter Gardner

warned of decreasing margins inthe gold production sector due to

the volatile gold price and highcosts associated with production.

Interserve PLC

9 Aug 10 Aug 13 Aug 14 Aug 15 Aug

340

335

330

325

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p 335.2015 Aug

Balfour Beatty wary over UK asemerging markets drive revenueBALFOUR BEATTY, the UKs largest

construction company, yesterdaysaid it could not foresee when therewould be a pick-up in its homemarket where its own order bookwas down three per cent,outperforming a 10 per cent fallacross the industry.

It said its focus in recent monthson winning contracts in industriessuch as transport and mining,particularly in emerging markets,meant it should meet its own full-

BY A CITY A.M. REPORTERyear expectations.

The company, which operates inmore than 80 countries and builtthe Aquatics Centre for the London

Olympics, posted a 12 per cent risein underlying first-half pre-taxprofit to 154m, lifted by a one-timegain from the sale of infrastructureinvestment assets.

Sales rose six per cent to 5.5bn.We do not anticipate any

significant further reduction [inBritain] ... But in terms of recoveryof volumes, it is difficult to see, inthe very short term, where recoveryis coming from, deputy chief

executive Andrew McNaughtonsaid. The interim dividend wasraised six per cent to 5.6p.

Balfour Beatty PLC

9 Aug 10 Aug 13 Aug 14 Aug 15 Aug

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300

298

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p

294

292

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296.1015 Aug

CAPITAL & REGIONAL, the retail andleisure asset manager, yesterdayposted a five per cent rise inrecurring pre-tax profits to 9.2m in

the first half of the year.But the property specialistsuffered a 4.8 per cent drop in its netasset value, primarily due to a sharpdevaluation of its German portfolio.

Cap&Regs largest asset is its 20per cent interest in The Mall fund,which comprises nine UK shoppingcentres including Luton andMaidstone. These dropped in valueby 3.8 per cent, as net income fell asa result of retail failures.

Profit at Capital& Regionalup

BY KASMIRA JEFFORD

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THURSDAY 16 AUGUST 201212

cityam.com

LONDON REPORT

S&P maintainsupward shiftson low trading

US stocks spent another sessionin a t ight range yesterday,with the S&P 500 ending a fewpoints higher and extending a

rally that seems to be happening inslow motion.The benchmark S&P 500 index fin-

ished just a hair away from its highestclose in three months, but with earn-ings season winding down and manytraders away, volume was light.

For the next couple of days thegreatest influence may be the optionsmarket, which is seeing heavy volumein August call and put options clus-tered around the 1,400 level for theS&P 500.

If the index closes at or very close to1,400, those options expire worthlesson Friday. That means market-makershave an incentive to try to make that

happen, or pin the index at 1,400.The Dow Jones industrial averagewas down 7.36 points, or 0.06 percent, at 13,164.78. The Standard &Poors 500 Index was up 1.60 points,or 0.11 per cent, at 1,405.53. TheNasdaq Composite Index was up 13.95points, or 0.46 per cent, at 3,030.93.

Shares of Deere & Co lost 6.3 percent to $75.10 after the worlds largestagricultural equipment maker report-ed a lower-than-expected quarterlyprofit. Rival Caterpillar slipped 0.3per cent to $87.61 as the biggest dragon the Dow.

Staples slumped 14.6 per cent to$11.49 as the worst performer on theindex after the office supply chainreported lower-than-expected quarter-ly revenue on weak demand in NorthAmerica, Europe and Australia, andforecast flat sales for the fiscal year.

In economic data, US industrial out-

put expanded 0.6 per cent lastmonth, the fastest pace since April.

T

OP shares fell yesterday in sluggishvolumes as weakness in index

heavyweights such as miners,tobaccos and Vodafone outstrippedgains in financials.

Londons benchmark FTSE 100 indexclosed down 31.74 points or 0.5 per centat 5,833.04, erasing the previous sessionsgains and fluctuating in a tight rangebetween 5,800 and 5,900 in volumes just66 per cent of their 90-day average.The FTSE 100 has flattened out with the

summer rally waning as investors awaitcautiously for announcements from cen-tral banks regarding further stimulusmeasures.

Miners, which have spearheaded recentgains up six per cent in the lastmonth were among the top fallers asENRC became the latest commodity-linked stock to raise donuts over the out-look for global demand. ENRC shed 8.5per cent, topping the list of FTSE 100 fall-ers, after the Kazakh miner reportedfirst-half profit plunged 41 per cent and

announced it was cutting spending andits dividend.

Index heavyweightVodafone shed 0.9per cent, accounting for around 3.5

points, or nearly 11 per cent of the FTSE100 indexs retreat. BofA Merrill Lynchdowngraded its rating for the mobiletelecoms group to neutral from buy,on concerns its recent rally has left itsvaluation stretched.

British American Tobacco (BAT) andImperial Tobacco, down 1.7 per cent and1.9 per cent respectively, were hit afterAustralias highest court yesterday dis-missed a challenge from internationalcigarette companies over tough new anti-tobacco marketing laws.

FTSE 100 slips lower as investors waitfor fresh stimulus from central banks

BESTof the BROKERSHSBC Holdings PLC

9 Aug 10 Aug 13 Aug 14 Aug 15 Aug

575

565

560

550

555

540

545

570

562.2015 Aug

pHSBCInvestec has moved thebank from buy tohold, saying anassortment ofheadwinds means stockis unlikely to rise fromcurrent highs. Target

price reduced to 590p.

DASHBOARDCITY NEW YORKREPORT

YOUR ONE-STOP SHOP FOR JOB MOVES,BROKER VIEWS AND MARKET REPORTS

FTSE

9 Aug 10 Aug 13 Aug 14 Aug 15 Aug

5,880

5,860

5,850

5,870

5,830

5,840

5,820

5,833.0415 Aug

Essar Energy PLC

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113

110.7015 Aug

p

ESSAR ENERGYJP Morgan Cazenove hasdowngraded Essar fromoverweight toneutral and reducedthe price target from175p to 150p, sayingregulatory hurdles inIndia may stifle the firm.

Pearson PLC

9 Aug 10 Aug 13 Aug 14 Aug 15 Aug

1,260

1,240

1,230

1,210

1,220

1,250

1,209.0015 Aug

pPEARSONLiberum Capital has cutthe publishers targetprice to 1,050p andrepeated its sellrecommendation, sayingthe cracks are startingto appear in thepublishers US business.

Troika Dialog

The investment banking divisionof Sberbank has appointed DeanTyler as managing director, headof international fixed incomesales. He joins its London officefrom VTB Capital, where he washead of its fixed income salesteam. Tyler has also held seniorroles at ING Bank and F&C AssetManagement.

Scottish Widows Investment Partnership

William Low has been appointed director of equities at the

fund management firm. He succeeds Andrew November,who is taking up the newly-created role of investmentpropositions director. Low joined the firm in April 2011, andhas since headed its global equities team.

Vectura

The medical technology firm has appointed Dr Karl Keeganas director of corporate development. He has more than 20years experience in pharmaceuticals, and most recentlyworked in biotech analysis at UBS and Bank of America.

Paddy Power

The bookmaker has announced two senior appointments

to its marketing team. Danny Russell joins as insight

director from BskyB, where he was marketing strategydirector. He has also held business development roles atBritish Airways and Boots Healthcare International. RobinAuld joins as brand director from Dominos, where wassales and marketing director for the firms Germandivision.

Capco

The business and technology consultancy has appointedArmin Schmitt as partner in charge of its continentalEuropean operations. He was previously head of Capcooperations in Germany. Prior to joining the firm in 2007,Schmitt spent more than 10 years in senior leadership rolesat consulting firms, including KPMG and BearingPoint. Healso previously served as co-head of IT at DZ Bank.

WHOS SWITCHING JOBS Edited by Tom Welsh

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

CITY MOVES

To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com

in association with

US corporate results round-up

TEEN clothing retailer Abercrombie & Fitchearned $15.5m, or 19 cents per share, in thesecond quarter ended 28 July, down from $32m, or35 cents per share, a year ago. Overall sales rosefour per cent to $951.4m. Sales at stores open a

year fell 11 per cent at Abercrombie & Fitch and 10per cent at both Abercrombie kids and Hollister.

Abercrombie hit by fall in profitbut sales slowdown stabilises

DEERE & Co, the worlds largest agriculturalequipment maker, reported lower-than-expectedprofit yesterday. For the third quarter ended 31

July, the company posted net income of $788m,or $1.98 per share, compared with $712.3m, or$1.69 per share, a year earlier. Revenue rose 15per cent to $9.59bn.

Deere sees net income jump butincrease is lower-than-expected

US discount chain Targets profit wasunchanged at $704m in the second quarter, whileearnings per share rose to $1.06 from $1.03 a yearearlier. The profit topped analysts averageforecast of $1.01 per share. For the year, Targetnow expects to earn $4.20 to $4.40 per share, upfrom its May forecast of $4.10 to $4.30.

Target bullish for third quarteras it trumps analyst forecasts

STAPLES reported lower-than-expectedquarterly results yesterday prompting the largestUS office supply chain to cut its profit forecastsfor the year. Staples net income fell to $120.4m,

or 18 cents a share in the second quarter, from$176.4m, or 25 cents a share, a year ago. Sales fell5.5 per cent to $5.50bn in the quarter to 28 July.

Staples forced to cut forecastsas quarterly results disappoint NEW YORK manufacturers came

in for a walloping during July, in amonth where consumer pricesedged up, and industrialproduction as a whole crept up,

according to a tranche of datareleased yesterday by various USofficial bodies.

The headline index formanufacturing in the Empire Statecollapsed 13 percentage points to

-5.9, diving below zero for thefirst time in 10 months, a surveyfrom the New York Fed showed.Though the index for shipmentsremained positive, it fell six pointsto 4.1, while new orders shrunk forthe second month in a row.

This went against the trend forthe USA as a whole, whoseindustrial production grew 0.6 percent in July, which compared well

with the 0.1 per cent it inched up

New York manufacturing hit asoverall US production expands

BY BEN SOUTHWOOD in both May and June. Despite thisincrease, industrial productionremained two per cent lower thanthe average for 2007, a testament tothe length of the current slump,said the data from the FederalReserve.

These reports came as consumerprices grew 1.4 per cent over the 12months to July, no change over theprevious two months, according tothe Bureau of Labor Statistics.

US Industrial Production

2008 2010 2012

2007output=100

Total

Manufacturing

106

102

98

94

90

86

82

78

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IN PICKING congressman PaulRyan as his running mate for thepresidency, Mitt Romneyshunned safety. Instead, heselected a figure popular with

the Republican base, but also a policyadvocate with an unmatched graspof conservative solutions to fix

Americas $90 trillion (57 trillion) ofunfunded entitlements. This fact,however, will delight Democrats asmuch as it will endear the Ryan pickto Republicans.

As his partys intellectual leader,Democrats have been runningagainst Ryan longer than theRepublican nominee himself.Democrats, and some Republicans,deem Ryan an overwhelming

liability due to his proposals to

ITS A-level results day. Across thecountry, 18 year olds will benervously waiting to find outtheir results, with thousands ofuniversity places dependent on

the right grades. We shouldnthesitate to celebrate these youngpeople for their months of hard

work and dedication, as well aspraising the teachers who haveplayed such a crucial role in theirpupils success.

But a debate has raged on this day

for each of the past few decadesabout grade inflation and whether

A-levels have been getting easier inparticular whether its becoming eas-ier to get an A or A* grade. Thisdebate shouldnt distract from thecelebrations, but it is crucial that wetake it seriously to ensure that we areable to compete in an increasinglycompetitive global market for skills.The real test of whether A-levels are

credible enough shouldnt, of course,be based on the opinion of politi-cians, commentators and thinktankers. Ultimately, the most impor-tant test for the qualifications should

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cityam.com/forum

In 1982, 8.9 per cent

of A-levels were givenA grades, while it stoodat 27 per cent in 2010

THEFORUM

Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.comAgree? Disagree? Got a sharp comment?

The Forum wants you to join the debate. Top responses will be reprinted in The Forum.

14THURSDAY 16 AUGUST 2012

DAVID SKELTON

Raise a glass to students successbut we need to talk about A-levels

be the esteem in which they are heldby universities and businesses. Amajor question that must be asked is

whether A-levels are rigorous

enough in comparison with similarqualifications from other countries.

Set against these standards, A-levelsdont seem to be passing the test.

There has undoubtedly been gradeinflation over recent decades. Fromthe early 1980s, the proportion of Agrades being awarded has increased

year on year. In 1982, 8.9 per cent ofA-levels awarded were in A grades,while in 2010 that figure stood at 27per cent. Indeed, the A* grade, intro-duced after complaints about gradeinflation, accounted for 8.2 per centof all grades in 2011 almost thelevel of the original A grade thirty

years ago. This is evidence that A-lev-els arent as rigorous as they could

be, particularly when compared withsimilar qualifications overseas.Theres a pretty straightforward

solution to many of the concernsabout grade inflation. Exam boardscould provide pupils with richerinformation about their perform-ance in relation to others. This couldeasily be done by giving pupils a per-centile score, alongside their grade,

which would make their relative per-

formance to other pupils much clear-er. Percentiles would also benefitemployers and universities, by intro-ducing much more transparencyinto the system, as well as providinga straightforward comparison acrosssubjects and exam boards.

Consideration also needs to begiven to ensuring that the curricu-lum is rigorous and testing. Research

by the University of Durham hasshown that Film Studies students arelikely to do a grade and a half betterthan students studying science.Issues with the rigour of certain sub-

jects in the curriculum have forced

some employers and businesses totake defensive action. Some universi-ties dont accept certain A-levels,

which they regard as less rigorous.Top universities allegedly maintain abanned list of certain subjects,

while employers have also becomemore selective about which A-levelsubjects they value in a potential

employee.Its lazy to mindlessly criticise so-

called Mickey mouse subjects,many of which have a crucial role toplay in our economy. But we shouldensure that different A-levels havesimilar levels of rigour and credibili-ty and arent viewed by employers,universities and students as a rela-

tively easy route to a good grade.The government is right to devolve

more power and autonomy toschools and colleges over the curricu-lum. But schools shouldnt see thisas an excuse to shop around for lessrigorous subjects, which couldimprove their league table perform-ance. The reputation of a school withparents, businesses and universities

will be affected by what they decideto teach.

Rather than seeking a short-cut to

improved academic performance,schools should use autonomy overtheir curriculum to teach subjectsthat are academically rigorous, withreal world application. And thismight involve working with localuniversities and local businesses inthe design of courses.Today, we should raise a glass to

students success. But once the cele-brating is done we need ensure thatA-levels remain credible to parents,universities and employers.

David Skelton is deputy director ofPolicy Exchange. You can follow David onTwitter @djskelton

reform Medicare, a health care planfor pensioners, and social security.

The strategy for Democrats will be toremind voters that Republicans arecommitted to overhauling thisthird rail of American politics andensure that they get burned. Pollsconducted by PPP in Florida andNorth Carolina found that votersopposed Ryans plan by 16 and 23 per

cent respectively. Losing North

Carolina would wound Romney, butdefeat in Florida would be mortal.

But Barack Obama is vulnerableon Medicare too. As Democratsdouble down and go on the offensiveabout what Republicans might do,Romney can merely highlight whatObama has already done: redirectedover $720bn in Medicare funds tofinance his deeply unpopular healthcare reforms. The fact that Ryansown mother is a Medicare seniorin Florida will hardly deflect attacks,

but its a humanised riposte. Obamais Ryans protection. As one of themain progressive calling cards, it

would be outrageous for aDemocratic President to beoutmanoeuvred on Medicare. But its

not impossible.

And yet for conservatives, a debateabout policy is not necessarily seenas a bad thing, but as an opportunityto bait Democrats, wait for theirincendiary language, and highlightnot just their lack of ideas, butObamas failure of leadership.

Whats more, Ryan has wide appeal representing a Wisconsin districtthat voted for Bill Clinton, Al Gore,and Obama. And, although theresplenty of time to define Ryan, pollssuggest that in the crucial swingstate of Ohio, the congressmanmakes 42 per cent of independent

voters more likely to back theRepublican ticket, with just 18 percent saying otherwise. Mostsurprising of all, Ryan receives his

most positive numbers from senior

citizens.Ryans role now is to complement,

not conquer, the ticket. Its his job tolucidly convey the urgency of aRomney presidency, as theRepublican nominee focuses on hisown business experience and theneed to elevate the tone of this uglycontest. Right now, Romney iskeeping his head, as Democrats arelosing theirs. For all the noise aboutRyan, this election is still very mucha choice between Romney andObama. But although Republicansgot their nominee a few months

back, only now do conservatives havea ticket to fight for.

Ewan Watt is a Washington, DC-basedconsultant. You can follow him on Twitter

@ewancwatt

THE WHITEHOUSE RACE

EWAN WATT

Romneys vice presidential pick puts policy at the heart of the US election

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15

Not short changed[Re: Why Boris owes me 90,000 forOlympic damage, yesterday]I couldnt afford to travel from Florida to goto the Olympics and enjoy all that Londonand Britain had to offer during thatfortnight. The Games are expensive, andLondon isnt cheap. However, now the bigshow is over, Im inspired to see Londonwithout the distraction of the sports. I sawNeleen Strausss frustration at the lack oftourism during London 2012. To reassureher, I would think there are many who aresimilarly inspired to visit in the near future.Her losses from the Games cant be good,but I bet the longer-term return will beexcellent. I, for one, will make sure to dine atHigh Timber restaurant.Thomas Wade

Guided growth[Re: Should the government design anindustrial strategy for UK growth, yesterday]The main problem with Kevin Dowds com-plaints about an industrial strategy is thatthey dont apply to most major infrastructureprojects. Theres no way the private sectorcould build Boris Island airport without gov-ernment support. The private sector can fundit, but the green light for development mustcome from the government.

Nick Reid

Kevin Dowd is right. I dont want Vince Cabledeciding which businesses he judges shouldsucceed. Where will we go next? Limits onsuccessful firms to assuage the bad experi-ences of the failures?

Sam Wilson

THE top rank of HMRC ischanging. Edward Troup hastaken up his new post as taxassurance commissioner,responsible for advising

Treasury ministers on shaping UKtax policy. He has considerable taxexperience, both in the public andprivate sectors. But the job has neverbeen more challenging.

The UK faces pressure to improve itsfiscal position. As a result, therell be

few opportunities to implement taxreforms to allow much-needed ratereductions, and simplifications thatare not matched by the withdrawalof other reliefs. And taxation hasnever been so high profile. Complexissues are too often compressed intomisleading sound bites.

If I were Troup, top of my agendawould be establishing the right lan-guage for government departmentsand ministers to use when discussingwhat is meant by tax avoidance andabuse. Tax abuse will become betterunderstood, as general anti-abuserule (GAAR) proposals are enacted in2013. The same cant, unfortunately,be said about avoidance.

What counts as tax avoidance oftendepends upon personal and politicalperspectives. Therell inevitably be agrey line between legislation thatprovides necessary tax reliefs, andthe need to collect the revenues thatParliament thinks should be paid. Ontop of this, in an increasingly com-plex business world, nearly everyonewants tax legislation to be as simpleas it can be.

Ministers should also expect Troupto recommend a framework that setsout clear language underpinning thedifference between tax avoidance,which HMRC will seek to prevent,and tax planning, which businessesmust be allowed to undertake tobuild the attractiveness of the UK toinvestors.

TOP TWEETSIve seen Virgin Trains improve the Londoncommute so that its no longer gruelling. Idread losing Sir Richard Branson.@AnnaLouiseLucia

The big fact from yesterdays job numbers:half the 201,000 increase in UK employmentwas in London.@demotfinch

UK unemployment: its good that its failing,claims are down, private sector hiring is up.But record number of part-timers is not good.@AlbertoNardelli

So the Australians are going to put cigarettesin plain packaging to deter smoking. Im fairlysure people dont smoke for the art work.@mannixbrian

As Australia confirms a law banning brandedtobacco packages, should the UK follow suit?

YESBranded packs are the last form of tobacco marketing. They act as

mobile billboards that are visible every time a smoker reaches for acigarette. Research shows that children are especially vulnerable andfind colourful and glitzy packaging appealing, tempting them tosmoke. Removing the promotional aspects of tobacco from packswould make the health warnings more prominent, stop peoplethinking that certain brands are less hazardous than others, anddissuade children from starting to smoke. The Australian High Courtruling establishes an important principle that governments can,and should, implement measures to protect the health of citizens byremoving all forms of tobacco promotion, including on the packs.Where Australia leads, other countries will follow. Now the UKgovernments consultation on plain packaging has closed, the UK iswell placed to be next.Amanda Sandford is research manager at Action on Smoking and Health.

Amanda Sandford

NOSimon Clark

Plain packaging is based on the fallacy that children find so-called

glitzy packaging appealing and, with cigarettes in dull, drab packsfewer young people will be tempted to start smoking. Yet there is nocredible evidence to support this suggestion. Instead, the removal ofbranding could affect thousands of retailers, who may lose businessto the uncontrolled black market. It could cost jobs in graphicdesign, paper production and packaging. Over 235,000 people havesigned the Hands Off Our Packs petition against plain packaging.There is also opposition from retailers, shop workers and policeofficers who are concerned about counterfeiting and the sale of illicittobacco that standard packs will undoubtedly encourage. Anysensible government would wait and assess the impact of plainpackaging in Australia before adopting the same, potentiallyreckless, policy in the UK. Hopefully common sense will prevail.Simon Clark is director of the smokers group Forest.

RAPIDresponses The new top brass

at HMs Revenuehas a taxing task

Drawing the line in the wrongplace will drive away the businessactivities needed to generate the tax

revenues required to finance broader-based tax cuts. There is a risk that lessbusiness-friendly HMRC officials willseek to treat most tax planning as taxavoidance, and most tax avoidance astax abuse. It is imperative that Troupcascades the message through HMRCthat neither he nor the Treasury min-isters will allow this to happen.This top priority does not mean,

however, that there is only one issueto be addressed. Other concerns willlikely include the proposed taxationof child benefit. This will collect sig-nificant revenue but may provokehostility towards HMRC from themedia and wider public.Troup will also face demands for

improvements in speed and efficien-cy. He must address the perceptionthat HMRC fails to respond to taxpay-ers promptly, and fix the backlog oftax cases due to be heard by the taxtribunals. On top of this, there is aneed to improve the quality of thetechnical guidance provided throughHMRCs website. Its a sorry state ofaffairs that users find it so complexthat the majority now resort toGoogle for answers.

Finally, and perhaps most impor-tantly, Troup must play a key role inidentifying for ministers any poten-tial Budget 2013 proposals which arelikely to lead to embarrassing U-turnsnext Spring.

Stephen Herring is a senior tax partnerat BDO LLP.

THURSDAY 16 AUGUST 2012

STEPHEN HERRING

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If youre fashion-mad, theseapps will make sure you dont

miss a trick shopping, gettingdressed and following trends

THURSDAY 16 AUGUST 2012 cityam.com16

LIFE&STYLEWORDS BY

ALBANY BELL

TECHNOLOGY

n STYLE.COMFor those of you who want to keep up to date onthe latest trends but dont have time to flickthrough magazines and trawl the web, style.comis the app for you. Owned by CondeNast, thisstylish app brings you all the latest fashion news.With clips from the runway, party coverage andexclusive video interviews, there will be noexcuse to be out of fashion.

n SHOPSTYLEWarning: this app is dangerous. With the bestdesigner brands and all the high street stores atyour fingertips, your bank allowance is sure totake a hit. With categories selecting colour, size

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n STYLEBOOK, 2.49This is the best way to get yourcloset organised. Byphotographing all your clothesand uploading them, this appallows you to digitally manageyour wardrobe. With the calendarfunction, it documents when youhave worn what, telling you howmany times each piece has beensported. One of its key benefits isits magazine-style layout, whereyou can resize and layer the iconsof clothes, allowing you toproperly visualise each look.

POSEPeople become buddingstylists with this app, as Poseencourages you to rate andcomment other peoplesoutfits. It allows one to seewhat fashionistas around theworld are wearing and passjudgement. With famousnames such as Rachel Zoe andCoco Rocha involved it isgrowing in popularity.

n GILT GROUPEGilt Groupe is guilt free

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n TRENDABLThis is the social networking app for thefashion generation. It is the facebook of thefashion apps. With people around the world

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STRIKEAPPOSE

MR PORTER STYLE HELPThis app provides style help for men on the go. Ithas an impressive stylepedia, alphabeticallylisting mens styles. The instructive video manualsoffering style tips from fashion insiders providewelcome support for any fashion dilemmas. Withtheir archive of style icons, such as Clint Eastwoodand Clark Gable and a selection of 30 must-haveseasonal items, Mr Porter ensures men will alwaysbe in style.

GIVE THE BLING A RINGALBANYBELL SUGGESTS FOUR OF THE BEST DESIGNER MOBILE PHONES

LG Prada phone by LG3.0 P940The Prada phone issleek and sophisticated.With an 8 mega pixelcamera and 8GB ofmemory and GPS, thistouchscreen Android OSphone is one of the bestdesigner models. Pad itout with other Pradaaccessories includingdesigner cases and

Bluetooth ear set.Available at T Mobile stores

Versace UniqueThis is Versaces firstmultimedia touchphone, with blackstainless steel andcalfskin leather.The graphics arestriking and themenu is easy tonavigate. TheMedusa logo isengraved on theleather backcreating a classic

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Dior, Zlie BlackCrafted from 147 cutdiamonds and blacksapphire crystals, thisLCD telephone is theheight of luxury. Run onGoogle Android OS,this 3.2 inchtouchscreen phoneincludes a 5 mega pixelcamera, MP3 and videocamera. Its a limitededition phone for extracache. Available at

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Vertu, Signature Clousde ParisVertu phones are beautiful aswell as technologicallyimpressive. The uniquehandsets are made in Englandusing only the very finestmaterials, making them avaluable and desirablecommodity. The classic Clousde Paris has 1,580 intricatelyengraved patterned squarescovering it. vertu.com

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