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KPMG warnsUK staff willface job cutsKPMG has told staff it is planninghundreds of redundancies, withup to three per cent of its UKheadcount at risk.

The firm is the only one of theBig Four professional servicesfirms to embark upon aredundancy programme inrecent years.

KPMG blamed a subduedeconomy and fast-changingmarketplace in an email to staffnotifying them of the loomingcuts.

A review into the scale of thejob losses is ongoing and precisenumbers have not been decided,but KPMG says it expects theroles at risk to total less thanthree per cent of its UK staff, orjust over 300 jobs.

However, partners at the firmare not thought to be in thefiring line under this review.

Other Big Four firms told CityA.M. they do not have formalredundancy programmes in placeat present, and the last time theaccounting giants made large-scale cuts was in the wake of the2008 financial crisis.

But a slowdown in activityacross the financial world,including a slump in mergersand acquisitions, has left someareas of the businesses strugglingfor work.

KPMGs review comes justweeks after Simon Collins tookover as UK senior partner,succeeding John Griffith-Jones.

Clearly, any redundancysituation is regrettable and

KPMG will make every effort toredeploy individuals within thefirm whose roles are at risk,the firm added.

www.cityam.com FREE

speech from the 44-year-old. Jameshad used the same platform in 2009 toattack the BBC, saying the only reli-able, durable and perpetual guarantor

of independence is profit.Elisabeth who had left her fathersmedia empire in 2001 rejoined thecompany last year after the phonehacking scandal unfolded and her tel-

evision production company Shinewas bought by News Corporation for415m.

She remains as chairman of Shine

and now sits on News Corps board ofdirectors with Rupert and James aswell as her other brother Lachlan.

A string of damaging revelations fol-lowing the scandal has hit News

SHADOW DANCER IS A PROVOCATIVE, HARROWING SUCCESS

BY MARION DAKERS

FTSE 100 5,776.60 +2.40 DOWt13,057.46 -115.30 NASDAQt3,053.40 -20.27 /$1.59 +0.01 / t1.26 -0.01 /$ 1.26 +0.01

CHELSEA NEARMOSES MOVESee Page 22See Page 18

DAVID HELLIER: Page 2

Certified Distribution

02/07/12 til 29/07/12 is 131,194

ISSUE 1,703 FRIDAY 24 AUGUST 2012

THE DANCE MACABRE

MURDOCHS

AT WARBY JAMES TITCOMB

nElisabeth hits out at James in family feudELISABETH Murdoch last night dis-tanced herself from her brotherJames, criticising his leadership ofNews International in the wake of thephone hacking scandal and attackinghis rigorous focus on profit.

In her first public comments on theaffair since joining the board of herfather Ruperts News Corp last year,she took the stage at the prestigiousMacTaggart lecture in Edinburgh todeliver a speech that was receivedwith cheers and applause by a crowdthat had greeted her brother withhostility three years earlier.

Putting herself in the spotlight afterJamess resignation from NewsInternational, she rejected heryounger brothers claims that chasingprofits was the only way to guaranteean independent media.

I think that he left something out:the reason his statement sat souncomfortably is that profit withoutpurpose is a recipe for disaster, shesaid, in a highly personal 14-page

Corps reputation and led to Jamesstanding down as executive chairmanof News International the sub-sidiary that runs the Sun, the Timesand the Sunday Times, and which ranthe News of the World before lastyears closure. In distancing herselffrom the biggest casualty of the affair,Murdoch is likely to spark speculationthat she is positioning herself for ahigher role at News Corp.

Last night, in contrast to James, shedefended the BBC and said the phonehacking scandal showed the need fora more responsible British media.

Personally I believe one of thebiggest lessons of the past year hasbeen the need for any organisation todiscuss, affirm and institutionalise arigorous set of values based on anexplicit statement of purpose,Elisabeth said last night. It is increas-ingly apparent that the absence of

purpose or of a moral language within government, media or busi-ness, could become one of the mostdangerous own goals for capitalismand for freedom, she added.

Elisabeth Murdoch,speaking at lastnights MacTaggartlecture, said thehacking scandalshowed the need fora more responsibleBritish media

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The Parliamentary TransportCommittee has asked transportsecretary Justine Greening to delayhanding the keys for the West CoastMain Line over to FirstGroupfollowing concerns over the deal.

Chair Louise Ellman MP haswritten to Greening urging her todelay awarding the franchise, dueto be closed on 28 August, and waituntil the committee has had timeto scrutinise the deal. She wrote:This would help to provide greatertransparency and address theconcerns that have been raised.

FirstGroup deal

hits the buffersBY MICHAEL BOW

FORMER high flying Turkish-Cypriot magnate Asil Nadir, oncedubbed the Sultan of BerkeleySquare for his luxurious Mayfairlifestyle, was jailed for ten years yes-terday after being convicted of steal-ing from his former FTSE-listedbusiness empire.

Nadir, 71, was found guilty earlierthis week on ten counts of thefttotalling 28.9m from the firmbetween 1987 and 1990 the equiv-alent of 60m in todays money.

His devoted wife Nur Nadir, 28,spoke outside court after the sen-tence was delivered. She said herhusband was a business genius.

My husband is a warm and won-derful man, she said. My husbandis innocent and, having faith in theBritish justice system, we will con-tinue with our efforts to rectify thewrongs.

Sentencing Nadir yesterday to tenyears, Mr Justice Holroyde said theformer tycoon was a man of out-standing business skill but hiscrimes had been motivated bypure greed.

You committed theft on a grandscale, he added.

Nadir will serve five years of hissentence before being released onparole.

He said in a statement he was

Cameron pressed on GreeningDavid Cameron is coming underincreasing pressure to appoint a newtransport secretary in next month'scabinet reshuffle after the prime ministeradmitted his support towards theexpansion of Heathrow a policyimplacably opposed by Justine Greening.

Republicans eye gold standardThe gold standard has returned tomainstream US politics for the first time in30 years, with a gold commission set tobecome part of official Republican party

policy. Drafts of the party platform, whichit will adopt at a convention in Tampa Bay,Florida, next week, call for an audit ofFederal Reserve monetary policy and acommission to look at restoring the linkbetween the dollar and gold.

News Corp chief to departJonathan Miller, News Corps chief digitalofficer, is leaving Rupert Murdochs mediaempire at the end of September as thecompany prepares to split in two. Millerstarted at News Corp in 2009 and shiftedthe companys digital strategy to focus oncontent distribution deals and onlinesubscription models.

Krispy Kreme eyes Asia to lift profitThe Wests predilection for high fat, high-calorie food is spreading farther acrossthe globe as Americas Krispy Kremerevealed plans to open its first stores inIndia.

Aggreko talks to power Indian lightsDelhi is considering plans to build hugetemporary power stations to prevent arecurrence of the blackouts that left halfthe countrys population withoutelectricity last month.

London safe haven aids DerwentLondon is enjoying safe haven statusamong investors according to FTSE 250property company Derwent London. Thecompany, which specialises in offices inLondons West End and the borders of theCity, said the Eurozone crisis had drivenmore investment to the capital.

Fitch targeted by Italian magistrateItalian prosecutors have compiled acontroversial case against Fitch Ratings forallegedly issuing false and unfoundedjudgements against Italy.

GM to cut hours at German PlantsGeneral Motors reached an agreementwith labour representatives in Germany tocut production at its Opel unit by sendingworkers home early as many as 20 timesbetween 1 September and the year end.

Money-Fund Vote CancelledSecurities and Exchange CommissionChairman Mary Schapiro called off ahighly anticipated vote on rules for themoney-market mutual-fund industry afterlosing a swing vote she needed to pushthrough the rule change.

THE TREASURY yesterday refusedto back down on plans to reformcorporation tax for multinationalcompanies, despite accusationsfrom backbench MPs and charitiesthat it will severely harmdeveloping countries.

In March George Osborne saidthat UK firms would no longer paytop-up tax on income earned incountries with low-tax regimes. Theaim was to convince multinationalfirms to remain domiciled in orreturn to Britain.

As a result advertising giant WPPimmediately decided to relocate itsHQ from Dublin to London.

But this week a report by theHouse of Commons internationaldevelopment committee called forthe plans to be dropped, citingfigures from the charity ActionAidthat developing countries may loseup to 4bn of revenue as the newpolicy allegedly incentivises the useof tax havens.

The UKs controlled foreigncompany rules protect UK taxrevenues and were never designedto protect other countries taxrevenues. Their reform willencourage investment and drive

growth in the UK, said a Treasuryspokesman.

It is not sustainable fordeveloping countries to protecttheir revenue using our tax rules.

Government

stands firm ontax reforms

Asil Nadirs wife Nur praised her husband outside the Old Bailey after the sentence

2 NEWS

BY JAMES WATERSON

BY MICHAEL BOW

To contact the newsdesk email [email protected]

Professional services groupKPMG warned just yesterdaythat bankers faced more joblosses and pay cuts unless the

economy improved.A day later and the firm was back

in touch, announcing that there aregoing to be cuts in its own UK head-

count of around 11,300 people.Yesterday the firm said it was carry-ing out reviews of its structures andheadcount numbers. It is likely thatwe will need to make a number ofroles redundant over the comingweeks, a statement said.

Precise numbers are not known butestimates yesterday suggest the num-ber will be around 300.

The redundancies come just weeksinto Simon Collins reign as chair-man of KPMG UK and have the hall-mark of the type of move made bymany a chief executive coming in to

KPMG cuts own staff after warning bankers of job losses

FRIDAY 24 AUGUST 2012

a job.There is certainly a change of feel

from the leadership days of JohnGriffith-Jones where the firm react-ed to the downturn following theLehman crisis by introducing a novelprogramme of allowing staff to workon four day weeks or take long sab-baticals in order to bring its costsdown.The firm reckoned it saved 4m or

the equivalent of 100 jobs becauseone quarter of its UK staff enrolled

for the scheme.This time there will definitely be

redundancies, something that isalmost certainly going on across theindustry but a touch more quietly.

Sources said the firm considered aflexible working scheme but felt thistime around it would not do the job.

The latest cuts appear to be inresponse to what the firm is seeingin terms of its future work commit-ments, which does not augur wellfor the rest of the City.The kind of work professional serv-

ice firms depend on these days is soM&A and IPO focused, that whenthese markets turn downwards,many of the firms work streamsdry up.

How sad that London is not cur-rently able to capitalise on the prob-lems faced by Nasdaq in New York,which botched up the Facebook IPO.

their spending back.Hence the Co-op is sticking to its

2bn investment programme overthree years. This will help it expand inareas, for example, such as legal serv-ices, where it is hiring 3,000 peopleover the period to handle consumerlaw work such as conveyancing which

it can offer from its bank branches.The purchase of the Lloyds branch-es will bring the groups share of thecurrent account market up fromseven per cent and that is before itwins over any customers disillusionedby the scandals that have beset manyof its rivals.The Co-op has an opportunity to

grow but it needs to probe its prob-lem areas and sort them soon.

CO-OP: RISK OR OPPORTUNITYSome, especially those behind rivalLord Levenes unsuccessful NBNKbid for the Lloyds branches, will nodoubt use yesterdays half-yearprofits slide at the Co-op to argue itisnt ready for such a big deal.

Nobody is more mindful than theinstitution itself of the need toimprove performance, both at itsbanks and in its other activites suchas supermarkets.

Theres no point being the mostethical business in the corporategraveyard, is a phrase commonlyheard around Manchester, the move-ments headquarters.

But the Co-op argues its mutual sta-tus enables it to carry on investing inits business areas at a time when insti-tutions being run on a more short-term basis might be tempted to rein

most disappointed by the outcome.His solicitors Bark & Co added: He

maintains that he is totally innocentof all charges and will be lodging anappeal.

Nadir, who moved to Britain in the1960s, was a poster boy for the stockmarket boom of the 1980s.

By the end of the decade he hadturned a small womens clothingfirm in the East End bought in 1980into a global powerhouse comprising200 subsidiary firms, including fruitcompany Del Monte.

Nadir and PPI moved rapidly into

rarefied circles of British high society,basing itself out of 42 BerkeleySquare a Georgian townhouse inMayfair dating from the 1740s.

However, he fled to northernCyprus in 1993 after being chargedwith theft following an investigationby the Serious Fraud Office into hisdealings at Polly Peck in 1990.

He dramatically returned to the UKin August 2010 to face trial, due to aburning sense of injustice, he said.A case hearing is now scheduled for

27 September to discuss compensa-tion claims.

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

EDITORSLETTER

DAVID HELLIER

[email protected] me on Twitter: @hellierdAllister Heath is on holiday

Standard & Poors lowered itsoutlook on HSBC to negative fromstable yesterday, leaving the bankmore vulnerable to a ratingsdowngrade some time in theintermediate future.

The ratings agency said thatmoney-laundering allegationsagainst HSBC may cause the Britishbank to lose business and faceadditional costs related toregulatory fines and litigation.

A negative outlook shows the S&Pmay lower a companys ratings overthe next six months to two years.

S&P puts HSBCon lower rating

BY CITY A.M. REPORTER

Wife of fallen magnateNadir vows to fight on

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INSURANCE giant Aviva last night

confirmed plans to cut 800 jobs inthe UK this year as part of a shake-upaimed at reducing the number ofmiddle-managers in the company.

Aviva currently employs 18,500staff in Britain and a spokesmanconfirmed to City A.M. that up to800 roles are at risk. In practice itwill be significantly fewer because ofvoluntary redundancies, naturalturnover and opportunities forredeployment, they added.

The job losses are part of arestructuring announced in July byexecutive chairman John McFarlane,who is attempting to turn aroundthe firm following the departure offormer chief executive Andrew Mossduring the shareholder spring.

McFarlane is aiming to reducecosts by 400m between now and theend of 2014 but faces strongopposition from trade unions.

David Fleming, Unite nationalofficer said: Our members facebeing asked to pay the price ofboardroom failure and Unite isdismayed that what started out as ashareholders revolt on executive paywill result in a jobs cull.

Yesterday around 70 per cent ofstaff in the insurers UK Life divisionwere told their jobs were safe. Afurther 25 per cent will be retainedin some role, with around five percent facing the sack.

Aviva to cut800 jobs at itsUK businesses

BY JAMES WATERSON

FRENCH President Francois Hollandestuck by German chancellor AngelaMerkel last night, as the pair precededcrunch Eurozone talks by insistingthat Greece must maintain its pro-gramme of fiscal consolidation.The meeting came at the end of a

day in which new economic datapointed to recession and tumblingconsumer confidence in the singlecurrency area.

We want I want Greeceto be in the Eurozone its up to the Greeks tomake the effort that isessential for that goal to

be met, Hollande said.His statement echoed

comments made theprevious day byMerkel andE ur og r oupchief Jean-C l a u d eJuncker, asE u r o z o n eleaders turnthe screw onGreece.

Germany andFrance keep the

onus on GreeceBY JULIAN HARRIS We and I will encourage Greece topursue the path of reform thatdemands a lot from the people, addedMerkel last night, in a conference heldprior to dinner-time talks withHollande. Greece has been asking formore time to implement austeritymeasures that are conditional on itreceiving further tranches of bailoutfunds from its international lenders.

But many lender governments areopposed to loosening the conditions,with Dutch finance minister Jan Keesde Jager leading the disapproval.

I say to the German governmentthat it is best for it to stick with itsstrict position, he added yesterday.Delaying correct measures helps

nobody, not even the Greeks.Hollande also repeated his call for a

euro-wide banking union.Meanwhile a purchasing managers

index (PMI) suggested that theEurozone economy will shrink by0.5-0.6 per cent this quarter,while an EU consumer confi-dence survey also worsenedmore than expected in August.

Francois Hollande also wantsa banking union for Europe

CITIGROUP launched a blisteringattack on the Nasdaq stock market

yesterday over its botchedhandling of Facebooks flotation.

The bank demanded the USSecurities and ExchangeCommission reject Nasdaqscompensation offer after Citi andseveral other firms lost millions ofdollars on the listing. It saidNasdaqs $62m (39m) offer wouldonly cover a very small fraction of

Citigroup slams Nasdaq payoutoffer for Facebook IPO disaster

BY JAMES TITCOMB its total losses on Mays float,which saw a host of technicalglitches and trades delayed byhours.

Nasdaqs reckless, profit-oriented decision to open tradingdespite system malfunctions,insufficient failover proceduresand a known design flaw resultedin rampant confusion and furthersystem failures, Citigroup said,demanding Nasdaq pay the entirecost of its and others losses.

FRIDAY 24 AUGUST 20123NEWScityam.com

MICROSOFT REVEALS NEW LOGO

Microsoft yesterday unveiled its first logo

change in 25 years as chief executiveSteve Ballmer (left) looks to unify thefirms branding ahead of new productlaunches, such as the Microsoft Surfacetablet and Windows 8 operating system

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FRIDAY 24 AUGUST 20124 NEWS cityam.com

SOARING levels of bad debt combinedwith the uncertainty caused by theEurozone crisis pummelled The Co-operative Group, dragging down theoverall groups performance, its half-year results showed yesterday.

Group profits came to 174m in thefirst six months of theyear, down 34 per centon the 264m recordedin the same period of2011.The group also

blamed intense compe-tition in the supermar-ket businesses,which hit itsretail sales.

Continuing PPIprovisions meantrevenues fell 1.1per cent, whileunderlying profitsin the bank fell 67.9per cent to 36.9m.The bank is in the

process of purchas-ing 632 Lloyds

Co-op suffersas bank woesknock profits

BY TIM WALLACE branches for up to 750m, expandingits network to almost 1,000 branchesand 11m customers a move that maytake time to yield returns as the busi-nesses are integrated.

Group chief executive Peter Marksblamed the recession for much of thefall in profits.

The impact has been felt most keen-ly in our bank which has been hit byincreased impairments on lending tocorporate customers and the on-goinglow-interest-rate environment, heexplained.The groups funeral business saw

profits rise 6.6 per cent to 36m andthe pharmaceuticals divi-sions profits jump 27.2 percent to 16.1m.

But food sales fell 1.2 percent on a like-for-likebasis and operating prof-its fell 16.4 per cent to119m, with the firmblaming strong competi-tion in the sector.

Bank report claims pensionersbenefited from QE programmeTHE BANK of England yesterday hit

back at critics who claimed itsquantitative easing (QE) policy hasharmed pensioners, saying they wereactually the main winners from theasset purchase programme.

A report from the Bank,commissioned by the Treasury,argues that QE boosted bond andequity prices. It said thisconsequently inflated the wealth ofasset holders, who tend to be older,leading the Bank to claim that older

BY BEN SOUTHWOOD people had benefited the most.The Bank also argued that without

the QE programme, the economy

would have faced a deeper slump.Economic growth would have beenlower. Unemployment would havebeen higher. More companies wouldhave gone out of business, the reportstated.

It stressed how this would haveharmed everyone, including saversand pensioners.

But critics were not convinced.There can be no doubt that QE hasmade millions of pensioners

permanently poorer, said NigelGreen of financial adviser DeVere. Hesaid that QE drove down the yield on

gilts, increasing pensions liabilites.But the Bank said these opponentswere ignoring one side of the balancesheet. Funds liabilities had increased,but so had their assets, and at a ratethat compensated them fully, it said.

Pension expert Ros Altmann saidQE had pushed up inflation meaningthe impact on real incomes andspending power of Britains retireeshad been damaged. The Bank seemsoblivious to this effect, she said.

Peter Marks blamed thepoor state of the economy

DESPITE the benefits the Bank accords to QE so far, policymaker Martin Weale did notrecommend more easing. At this stage, my personal opinion is that it is not necessary toincrease the size of the asset purchase programme, he told French newspaper Les Echos.

BANKS WEALE: FURTHER ACTION UNNECESSARY

A FORMER trader at RBS hasclaimed the banks internal controls

were so lax that staff that hadnothing to do with LIBOR-settingcould easily alter the banks interestrates submission.

Tan Chi Min, who is suing thebank for wrongful dismissal, madethe claim in court documents filedin Singapore, which emerged

yesterday. He says RBS minutes ofhis disciplinary meeting miss outdetails of conversations about howtraders at the bank tried to alter

the submissions.In the documents he claims he

Ex-trader claims anyone at RBScould have fixed LIBOR entry

BY TIM WALLACE told the disciplinary meeting thatit seemed anyone can changeLIBOR.

The bank declined to commentyesterday. It revealed in its first halfresults that its LIBOR activities areunder investigation by authoritiesincluding the US CommodityFutures Trading Commission, theUS Department of Justices (FraudDivision), the Financial Services

Authority and the JapaneseFinancial Services Agency, as well ascompetition authorities in Europe,the US and Canada.

RBS confirmed several employees

have been dismissed as a result ofits own investigations.

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INCREASING numbers of banks

clawed back pay from executiveswho breached codes of conduct,failed to perform or made losses ontransactions last year, according tonew research from Mercer.

And this years scandals could seepay reduced further.

A total of 14 per cent of banksacross North America, Europe, theMiddle East and Africa clawed backsome compensation payments lastyear, while another three per centclaimed back the payments buthave yet to see the money returned.

More pay is expected to bereclaimed this year 62 per centnow have claw-back provisions inplace, up from 44 per cent in 2011.

And as banks take an increasinglylong-term view on bonuses, moredeferred payments are set to bereduced or cut entirely asapparently strong performance in

one year may turn out to beunsustainable three or four yearsdown the line.

HR specialists Mercer praisedbanks for their effort in ensuringbonuses are tied to performance.

It is critical for a firm tomaintain a forward-looking long-term incentive programme,particularly for top executives, inorder to keep them consistently tiedto the future success of thecompany, said partner Vicki Elliott.

Bonuses lostas more banksclaw back pay

BY TIM WALLACE

CLEAR details on fees and charges onpensions, as well as regular, stan-dard updates on costs are vital ifpublic trust is to be rebuilt in theindustry, the Association of BritishInsurers (ABI) said yesterday, callingfor a sector-wide agreement on trans-parency.

Millions of new savers are set tobuild up pension pots for the firsttime as auto-enrolment starts, lead-ing the ABI to demand more scruti-ny of costs as well as benefits.Writing to the Financial Services

Authority (FSA) and the PensionsRegulator, the ABI said clarity would

help employees to make good deci-sions, and said the costs incurredby pensions schemes in thecourse of their investmenttrading should be dis-closed to employees incontract- and trust-basedschemes.The National

Association ofPension Funds wel-comed the letter,arguing employees

Pension groupswant to open

up on chargesBY TIM WALLACE

must be able to gauge whethertheyre getting a good deal out ofauto-enrolment.And the Investment Management

Association said trust and confi-dence are both pre-requisites for asuccessful retirement savings cul-ture, which would be boosted byincreased transparency.

However, although the ABI is seek-ing help from the authorities, theFSA insisted such a change of set upis down to the industry alone.

Meanwhile the PensionsRegulator welcomed theletter, saying action bythe industry now, ahead ofthe main wave of auto-

enrolment, is timely andappropriate.

Automatic enrol-ment is beingphased in fromOctober 2012, andis expected to seean additional 8m

workers save for apension.

The ABI wrote to theFSAs Martin Wheatley

INSURANCE firm Phoenixyesterday named Howard Davies,the former head of the Financial

Services Authority, as its newchairman. The company alsoincreased its cash generation targetfor the year by 100m.

Chief executive Clive Bannistertold City A.M. that his newchairman would bring a breadthof expertise to the firm, whichalso announced first-half profits of207m, up from 136m for thesame period last year.

These are strong results in aperiod of uncertainty. Weve

Phoenix appoints ex-FSA chiefHoward Davies as chairman

BY JAMES WATERSON generated 119m cash, giving usthe confidence to raise [full-year]cash targets from 500-600m to600-700m, Bannister added.

Phoenix operates life insurance

firms that are closed to newbusiness and combines them into amore profitable whole. But it isunder pressure to renegotiate

banking facilities relating to morethan 2.1bn of debt that it used tofund previous expansions.

While there is no update on thedebt refinancing, managementremains comfortable thatdiscussions will reach a successfuloutcome, said analyst MatthewPreston at Berenberg bank.


Former FSA head Howard Davies has been named chairman of Phoenix

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freight operations wereprofitable in the year to 30

June, but a A$450m loss onits international routesand A$398m inrestructuring costshammered its bottom line.

Chief executive AlanJoyce declined to give anyguidance for earnings inthe current year, but saidthe airline remainedcommitted to reaching

break-even in itsinternational business in

2015.Theres

no silver bullet,theres no easy fix, theresno exit here thats going tosolve it, Joyce toldreporters yesterday.

But we are committedto it, he added.

The firm said that itsoutlook remainschallenging, volatile anddependent on a number of

uncontrollable externalfactors.

AUSTRALIAN airline Qantashas scrapped an order for 35new Dreamliner planes as itfights to control costsfollowing a A$244m (160.9m)annual loss.

Qantas yesterday posted itsfirst loss since it wasprivatised 17 years ago,

blaming an 18 per cent jumpin fuel costs and strike actionlinked to its ongoingspending cuts.

As a result, the f irm hascancelled its $8.5bn order for

Boeings new Dreamliners.Qantas short-haul and

ANGLO American has defused its

months-long fight with Chilesstate copper miner by agreeing tosell more than a quarter of itsprized AA Sur assets.

Chilean miner Codelco hasdropped the threat of legal actionafter agreeing to take a 29.5 percent holding in the site, whichincludes the lucrative Los Broncesmine.

The stake is smaller than t he 49per cent Codelco tried to buyusing a longstanding option inOctober, but at a discounted priceto its market value.

The deal brings to an end adispute over the AA Sur assets,sparked when Anglo sold a stakein the mines to Mitsubishi at ahefty premium late last year,scuppering Codelcos attempts touse the option it had held since1978.

Under yesterdays agreement,Anglo will cut its 75.5 per centstake to 50.1 per cent, whileMitsubishi will reduce its holdingfrom 24.5 to 20.4 per cent.

This allows Codelco and i ts jointventure partner Mitsui to buy a29.5 per cent stake in a sale worth$2.8bn (1.76bn).

Executives trumpeted the deal,reached just a day before thefirms self-imposed deadline, asbeneficial to all sides.

Anglo American chief executiveCynthia Carroll said the firmshave gained significant value forour shareholders and otherstakeholders.

Chile will reap some $1.3bn intax from the deal, according toCodelco.

Chile thaws asAnglo agreesto sell Sur stake

BY MARION DAKERS

DIAGEO, the drinks giant, yesterdayreported an 11 per cent hike in full-year profits after its exposure to fast-growing markets in Africa, Asia andLatin America helped offset weakersales in Europe.The maker of Johnnie Walker and

Smirnoff Vodka said it made an oper-ating profit of 3.2bn in the year to30 June, while overall net sales grewsix per cent to 10.8bn, driven bygrowth in emerging markets whichnow account for almost 40 per cent ofDiageos business.

In Europe challenging economicconditions, particularly in Spain,

Greece and Italy, dragged sales downby one per cent, with UK net salesdown two per cent.

Nevertheless Russia, Eastern Europeand Turkey posted stronger sales driv-en by scotch and the group said itsrecent acquisition of Turkeys MeyIcki raki brand would help serve as afurther platform for growth.

Diageo has been in talks to buyMexican tequila maker Jose Cuervo,from its owners, the Beckmann fami-ly. But yesterday chief executive PaulWalsh hinted that the two sidesremained at a stalemate.

We would love to deepen our rela-tionship with the brand and with thefamily but it takes both parties towant to do that and the right set ofeconomics that works for sharehold-ers and the family, Walsh said.

Diageo successspurred by new

market growthBY KASMIRA JEFFORD Diageo distributes the Mexican dis-tillers Jose Cuervo brand but wants tomove toward full control of the fami-ly-owned company ahead of the distri-bution agreements expiration nextyear.

Diageo has a war chest of 1.6bn incash but Walsh said the group wouldnot be pressured into frittering itaway. He also shrugged off reportsthat it is in talks to buy Indias UnitedSpirits, saying there is dialogue witheveryone in the industry.The largest producer of Scotch

whisky, Diageo announced earlier thisyear plans to invest over 1bn in thedrink over the next five years to meetgrowing demand from emerging mar-

kets. Johnny Walker delivered excep-tional sales of 15 per cent during theperiod.The company recommended an

eight per cent increase in the finaldividend to 26.9p, giving a total divi-dend of 43.5p.

Aegis profits shoot up ahead of Dentsusale but ad spending forecasts are cutADVERTISING firm Aegis said newcontracts including a lucrativedeal with General Motors led to a20 per cent rise in first-half profit,in what is likely to be thecompanys last earnings reportbefore it is sold to Japanese giantDentsu.

Chief executive JerryBuhlmann said the results

continued Aegiss considerable

BY JAMES TITCOMB positive momentumalthough he did warn thatadvertising spend would notgrow as fast as previouslythought.

Aegis subsidiary Carat cutits ad spend growth forecastfor this year from six per centto five per cent, and saidonline spending wouldovertake newspaper ad salesnext year to become the

second-biggest advertising

market after TV.Aegis, whose 3.2bn sale to

Dentsu was overwhelminglyapproved by shareholders lastweek, said revenue rose 15per cent to 596.8m andprofit before tax was 87m.

The agency said theacquisition is expected to becompleted in the fourthquarter of the year subject toclearing a number of

competition hurdles.

Diageo chief executive Paul Walsh saw an 11 per cent increase in profits

Emerging markets prove thirstyfor spirits with a taste of luxury

WITH results as strong as itspremium scotch, Diageomore than metexpectations yesterday,

topping up its share price andbuying a round of applause for itsexposure to emerging marketsgrowth. Profit before tax rose 32 per

cent year on year.One of the interesting aspects is

exactly what the emerging marketsare buying. Even as their economiesgrow at rates unimaginableanytime soon in Europe, you wouldbe forgiven for thinking the newmiddle-class topers of LatinAmerica, Africa and Asia Pacificmight be supping more basic brews.But take vodka. Diageo saw superpremium brand volume up 30 percent overall, and both LatinAmerica and Asia Pacific posted netsales growth of over 50 per cent inhandcrafted Ketel One. Or whisky(and whiskey), where againpremium and super premiumbrands grew in all regions. JohnnieWalker grew net sales 15 per centoverall, and Gold Label net sales

more than doubled in Asia Pacific.As for gin super premium gingrew over 20 per cent in Asia Pacificand Latin America as the categorysaw a resurgence as the white spiritof choice with bartenders.Although it was also true thatAfrica saw double digit net salesgrowth of value gin brands.

All of this is good news forDiageo, of course, which isprimarily a purveyor of premiumspirit brands. But its also areminder that the economic storyof emerging market growth isabout shaking up businessopportunities at every level andmaking the ingredients of a reallygreat martini available worldwide.

Diageo PLC

20 Aug17 Aug 21 Aug 2 2 Aug 2 3 Aug

1,700

1,710

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p 1,698.0023 Aug

Qantas has posted its firstannual loss since privatisation


Aegis Group PLC

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238.00

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237.3023 Aug

BY MARION DAKERS

Qantas Airways Ltd

17 Aug 20 Aug 21 Aug 22 Aug 23 Aug

1.26

1.22

1.24

1.16

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AUD 1.2023 Aug

BOTTOMLINE

MARC SIDWELL

Qantas scraps plane order as it posts an annual loss

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PREMIER FOODS yesterday said it hadsold some of the UKs best-knownbreakfast table staples includingHartleys jam and Gales Honey to anAmerican food group, in its latestefforts to pay down debts.

Hain Celestial, the US organic prod-ucts company, known for its EarthsBest and Celestial Seasonings Brands,has agreed to pay around 200m forPremiers jams and spreads business.The portfolio, which also includes

Sun-Pat peanut butter, the mar-malade brands Robertsons, FrankCooper, Keiller and the licence forRoses marmalade, generated $250min sales in its last financial year.

Premier ran up large debts after buy-ing RHM and Campbell Soups UK andIrish business in 2006 and has beenselling off assets to meet the refinanc-ing terms agreed with its banks inMarch.

It has to raise 330m from assetsales by mid-2014 after its banks, ledby Royal Bank of Scotland, agreed to

Premier skips

breakfast after200m sell-off

BY KASMIRA JEFFORD give Premier more time to repay 1bnof loans. It has raised 275m so far.

Hain Celestial is an example of yetanother foreign buyer raiding UKlarders in recent years. It has been rap-idly cementing its foothold in the UKafter buying Daniels, the owner ofCovent Garden soups, last year.

In a statement yesterday the compa-ny said buying Premiers jam busi-ness gave it access into thenon-refrigerated food market andwould pave the way for Hain becom-ing one of the largest healthy foodcompanies in the UK.

Spayne Lindsay & Co, an independent advi-sory firm focused on the consumer indus-tries, has acted for Premier Foods on severaldisposals and acquisitions over the yearsand was hired last year to advise on the saleof its sweet spreads and jellies business.The team was led by Tom Lindsay, a char-tered accountant and Manchester universitygraduate who co-founded Spayne Lindsayin 2000 after working more than twentyyears in investment banking for Flemings

and Lehman Brothers. A consumer industryveteran, Lindsay is also on the board of

Eminate, a subsidiary of NottinghamUniversity which commercialises research-led projects and recently signed a deal withTate & Lyle to supply it with a new productthat reduces the salt content in food.Spayne Lindsay has worked with Premier ona number of deals including the 460mtakeover of Campbells UK and Irish busi-ness in 2006, which brought the iconicsoup, Batchelors and Oxo into its fold.It also acted for Haine Celestial in Octoberlast year on the $230m acquisition ofDaniels group, the chilled food manufactur-er whose brands include New CoventGarden soup and Johnsons natural freshsqueezed juices. The firm also advised Uniqon its sale to Greencore last year.

ADVISERS

TOM LINDSAYSPAYNE LINDSEY

Fifty Shades of Grey novels givenewsagent WH Smith a boostWH SMITH yesterday said the hugesuccess of the Fifty Shares of Grey

trilogy and other so-called passionfiction novels helped boost tradingacross its 600 high street stores.

In a brief trading update, thebooks and stationary firm said itshigh street arm had performedwell thanks to the recent positivepublishing schedule that includedEL James erotic bestseller.

Shares soared in early morningtrading before closing up 2.7 percent after the company said full-yearprofits would be at the top end ofanalyst expectations.

BY KASMIRA JEFFORD Profit forecasts previously stood at97-101m and are now expected tocome in at the top end of that range.

Its share price was also buoyed by

the announcement of a further50m share buyback programme in2012 to 2013 after recently spendingthe same amount.

WH Smiths Travel arm, whichincludes stores at airports, trainstations, and motorway servicestations, also continued to tradewell despite the current economicclimate and plans to open 35 UKstores this year remain on track, thegroup said.

Peel Hunt analyst John Stevensonsaid: Strong cash generation and

an attractive yield underpin theshares, although our enthusiasm istempered by the potential impact oftechnology.

Shares closed up at 597.50p.

Premier chief Michael Clarke has sold off some of the UKs best known breakfast staples

WH Smith PLC

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FRIDAY 24 AUGUST8 NEWS cityam.com

JD SPORTS, the sportswear retailer,has agreed to sell its Rugby brandCanterbury to its majorityshareholder Pentland for 1, three

years after the group bought it out

of administration.Pentland, which owns brandsincluding Beghaus and Speedos andholds a 58 per cent stake in JDSports, will pay a token 1 forshares in Canterbury and 22.7mfor its debt.

The brand, which is the officialkit partner to the Rugby FootballUnion, generates most of its salesin Australia and New Zealand

where it recently performed wellon the back of the Rugby WorldCup.

JD Sports sells rugby kit brandCanterbury to Pentland for 1

BY KASMIRA JEFFORD But poor sales in Europe and theUS dragged it to a pre-tax loss of1.1m last year.

JD said the disposal will free upmanagement resources to furtherdevelop its core retail business inEurope, including the recently-

acquired Blacks business.The sports retailer has alsoagreed to buy casual clothing

brand ONETrueSaxon fromPentland for 50,000.

Both deals require shareholderapproval at a meeting to be held on13 September.

Chairman Peter Cowgill said:Acquiring the ONETrueSaxon

brand will allow us to leverage ourin-house expertise and offer newproducts through our core retailfascias.

rem er oo s


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p 67.2523 Aug

HgCapital Trust beefs up valueafter Mercury Pharma sell-offPRIVATE equity trust HgCapitalTrust yesterday reported doubledigit total return figures afterexiting two of its top threeholdings this year.

The 32-company portfolio saw itsdisposal of pharmaceutical distribu-tor Mercury Pharma last week andpsychometric testing outfit SHL inJuly add 28.6p to its net asset value(NAV) equal to a total return of10.1 per cent over the half year.The three exits from Pharma,

SHL and windfarm vehicle RPPI

boosted the f irms investment fire-power by 90m.

BY MICHAEL BOW Adding in a 40m undrawn loanfacility it gives the trust 130m toinvest equivalent to 34 per cent ofnet assets.

Chief executive Nic Humphriesalso said more portfolio companydisposals would be forthcoming inthe next six to 12 months at a sig-nificant premia.

He added: If we look at the cur-rent portfolio we continue to seedouble digit revenue and EBITDAgrowth.

We continue to believe thatswhat well see going forward, almostwhatever the economy does over the

next six to 12 months.Growth in underlying investments

slowed over the full year, with thetop 20 companies in the buyout port-folio posting average sales growth of11 per cent, down slightly from 13per cent the year before.

HgCapital Trust PLC

23 Aug17 Aug 20 Aug 21 Aug 22 Aug

960

965

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985 p984.00

23 Aug

DEALMAKERS in emerging marketsare now feeling the impact of the

worldwide slump in mergers andacquisitions, according to researchout yesterday.

The overall number of cross-border deals fell 15.8 per cent to979 in the first half of 2012compared to last year, figures fromKPMG claim.

It found that even fast-growingeconomies such as China are seeingdeal activity dampened this year,suggesting the economic worriesthat have cast a pall over M&A in

Western markets are being feltworldwide.

Deal volume between highgrowth emerging markets is down

Emerging markets feel sting of

the Eurozone as M&A deals fallBY MARION DAKERS 30.72 per cent year-on-year.

Buyers in emerging markets havealso pared back purchases inmature economies to the lowestlevel since 2006, the research said.

Meanwhile, the number of firmsin developed markets looking tohigh-growth regions fell to itslowest in seven years, with 661transactions in total.

UK companies remain subdued,with just 51 deals in high-growtheconomies compared to 66 a yearago.

KPMG global head of M&A DavidSimpson said this is not a sign thatthe country has gone cold onemerging markets. Rather, the lownumber of deals involving UK firms

is simply symptomatic of thedepressed market generally.

TALKS between Best Buy and itsfounder, who has expressed interestin buying back the company, werelast night reported to be back on.

Earlier this month, Best Buyfounder Richard Schulze announcedan offer to buy back the company foran estimated $8bn with an offer of$24.00 to $26.00 per share in cash.

Best Buy initiated the fresh discus-sions shortly after announcing quar-terly earnings on Tuesday revealing a91 per cent drop in profit that missedanalysts expectations, according toBloomberg.

Best Buy backin buyout talks

BY CITY A.M. REPORTER

SIGNET Jewelers posted a larger-than-expected quarterly profityesterday.

Its UK Ernest Jones chains same-store sales rose 4.4 per cent. Still, thecompanys gross margin there took ahit from shoppers preference for saleitems, Signet said.

Company-wide, same-store salesrose 7.1 per cent, compared with aslower 1.2 per cent in the last quarter.

Net income rose to $70.7m, or 85cents per share, from $66.3m, or 76cents per share, a year earlier.

Signet trumps

expectationsBY CITY A.M. REPORTER

7/31/2019 Cityam 2012-08-24

9/23

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SARACENS caused a stir in the Cityagain last night when the high-flyingrugby team returned to theHonourable Artillery Club for a glitzypre-season friendly against Frenchstars Stade Francais.

The 2011 Premiership championswon 61-17, with England winger ChrisAshton scoring a hat-trick.

But it wasnt just the rugby gettingtongues wagging. The St Albans-

based outfit also piqued interestwith the launch of theirTulip Club high-endhospitality venture.

The Tulip Club,whose logoappeared on theplayers shirts in yes-terdays match, willbe housed inSaracens new 20mAllianz Stadium innorth London,

Saracens star

brings rugby tothe Citys heart

which is due to open in February.Saracens and former England for-

ward Hugh Vyvyan, who is runningthe Tulip Club, told the Capitalist:After eight years playing at the high-est level of English rugby Im excitedabout my move into developingSaracens off the pitch.

The Tulip Club is an exclusive net-working club combining the cama-

raderie of rugby and business with

the most luxurious matchday expe-rience in sport. We aim tobe at the heart of the

City.Saracens has also

agreed a tie-up withsports supplementsmakers OptimumNutrition.

Labour MP John Mann had a brush with deah after his wheels were tampered with

Got A Story? [email protected]

10 cityam.com

cityam.com/the-capitalistTHECAPITALISTThe Docklands Light Railwaycelebrated its 25th birthday in the

time-honoured tradition yesterdaymorning: with balloons and a cake withcandles. DLR director Jonathan Fox wason hand at Stratford Regional Station to

cut the cake and dispense slices to luckycommuters. The Capitalistunderstandsthat it was a three foot-long spongecake, in the shape of DLR carriages. Butdont feel left out if you missedyesterdays festivities instead try andcatch a glimpse of the Paralympic torchas it travels on the DLR today.

On the subject of the Games, MoFarahs talents appear to know no

bounds. The double gold medallist hassigned up to promote the cause ofVirgin, helping push up the pace of SirRichard Bransons online crusade tokeep his hands on the West Coast railroute. An online petition calling for thebeardy one to have another crack atrunning the trains passed 85,000signatures last night within sprintingdistance of the 100,000 mark needed totrigger a debate in parliament.

Theres still a week left to bid forCity Wenlock, the pinstriped

statue being auctioned off after theOlympics to raise money for Mayor'sFund for London. The Olympic mascothas a price to match his Square Milecredentials bids had reached 16,694last night but cheaper lots includeswimming trunks signed by diving starTom Daley, at just over 100. To bid,visit memorabilia.london2012.com


Hugh Vyvyan with twomembers of the Tulip club

BANK-BOTHERING Labour MP John

Mann won few friends in the Cityestablishment with his robustdenunciations of Bob Diamondduring Julys hearings intoBarclays abuse of the Libor rate.

But the star of the Treasuryselect committee (who describeshimself in press releases asOutspoken Labour MP JohnMann) yesterday revealed that hehad a brush with death after hiscar was sabotaged in London.

Mann drove 200 miles back to his

Worksop constituency without any

nuts holding the wheels onto hiscar and struggled to control the

vehicle after he turned ontowinding country lanes. Theconsequences of this madness donot bear thinking about, he said.I and others could easily have beenkilled.

Mann says he believes it was abodged theft, rather than a threat.But its not the first time he has

been targeted in May his wifereceived a dead bird in the post.

Bob Diamonds fiercest criticthreatened by act of sabotage

Saracens won 61-17

England wing Chris Ashton scored ahat-trick of tries

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SHARES in London-listed Russiangold miner Petropavlovsk slumped15.97 per cent in trading yesterday,as it posted a 91 per cent drop inprofit for the first half of the year.

Interest payments, depreciation andforeign exchange costs were behindthe sharp profit slump to $11m(6.93m), from $108.2m last year.

Net debt ballooned to $1.12bn from$787m in the six months to 30 June,on the back of increased investmentin new mines.The $106.9m depreciation charge,

up 132 per cent, was put down to thework on the mines commissionedlast summer.Three operations went online dur-

ing this quarter, at the RussianPioneer, Albyn and Malomir lines. Itwas this new investment that over-stretched the balance sheet,Petropavlovsk said.

Capital expenditure came in at$262m for the first half, andPetropavlovsk said there will be fur-ther capital investment in thesecond half.The miner said yesterday that inter-

est rate costs will accelerate in thesecond half of the year, consistentwith an increase in net debt, which is

Petropavlovsk

rocked by 91pcdrop in profits

BY CATHY ADAMS expected to peak in mid-2013.Chairman Peter Hambro said yester-

day: We have a big charge for depre-ciation the moment we startoperating new facilities. Were in aninvestment-heavy period.

Hambro added that second halfprofitability would be better than thefirst half.

Gold production during the secondhalf is expected to be around 420,000ounces, a 50 per cent year-on-yearuplift thanks to the full expansion oftwo of Petropavlovsks gold sites. Itreiterated its full-year production tar-get of 700,000 ounces.

Cailey Barker of Numis Securitiessaid: While the operations continueto perform well, the miss on thefinancial extras is likely to disap-point.

IN BRIEFCostain boosted by infrastructuren Infrastructure profits have buoyedengineering and construction groupCostain, as it posted a 16 per centincrease in profits for the first half of theyear. Profits in its infrastructuredivision, which includes big-ticketcontracts with Crossrail and the LondonBridge redevelopment, were up 91 percent year-on-year.

Qatar increases holding in Xstratan Qatar Holdings, the second-largestshareholder in Xstrata after Glencore, hasbought nearly 24m of shares in thetakeover target. It takes its holding inXstrata to more than 12 per cent. Qatar

has been raising its stake in the minersince July, and formerly owned just lessthan 11 per cent of the company. Thechief executive of Glencore said earlierthis week that the $30bn bid for Xstratawas not a must-do deal.

Premier Oil posts record resultsn FTSE 250 exploration and productionfirm Premier Oil posted pre-tax profits of$194.6m (122.5m) for the first half yes-terday, up from $32.5m the year before.The results were flattered by acquisitionsand new ventures in Vietnam, Iraq,Norway and the UK. Average productionrose 58 per cent year-on-year, hitting58,400 barrels of oil a day on average.


Kazakhmys slashes dividendpayout as metal prices tumbleFIRST-HALF profit at Kazakhmysslumped by nearly 65 per cent, as

the copper miner slashed itsdividend by almost the sameamount.

Profit for the six months to 30June came in at $307m (193m),down from $866m the yearpreviously.

It is the latest miner to be hit bythe drop in commodity prices,with weaker pricing for copper,silver and zinc concentratehitting profits at the Kazakhstan-

BY CATHY ADAMSfocused miner. High labour costs inthe Middle Eastern country and adelayed shipment to China alsoweighed on profits.

The dividend has been cut by 63per cent to three cents a share,reflecting the lower profits withinthe group, said Kazakhmys. It alsoblamed increased capitalinvestment requirements for thedividend cut.

Kazakhmys said it was on track tomeet its full-year target of between285 and 295 kilotons of copper.

Chief executive Oleg Novachuksaid yesterday: Uncertainty prevails

in the global markets, but we areencouraged by the continuingdemand from our customers.

Kazakhmys PLC


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SOUTH Africans held a memorial service yesterday at a mine where police shot dead 34strikers. Some 500 people crammed into a marquee pitched at the platinum mine, nearwhat has been dubbed the Hill of Horror where police opened fire on striking miners.

SOUTH AFRICA MOURNS MINING DEAD

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G E T T Y

LENDING to businesses was squeezedonce more in July, according to areport released yesterday by theBritish Bankers Association (BBA).

Lending to non-financial compa-nies decreased by over 500m in July,the BBA said, driven by big declinesin loans to the retail, catering andhospitality and real estate sectors.This decline caps off a total contrac-

tion of 9.6bn in borrowing by non-financial firms over the past sixmonths, something that the BBAputs down to a lack of demand.

Companies are reluctant to bor-row or invest new funds whiledomestic and international tradingactivities remain subdued or uncer-tain, said David Dooks at the BBA.Analysts agreed that firms were

holding out for a better economic cli-mate, but suggested this approachmight cost them in the long term.

Businesses have proved resilient inthis tough economic climate, but

Business loansplunge as firmsdelay investing

BY BEN SOUTHWOOD they cannot afford to stand still iftheir future growth is to be secured,firms need to grasp investmentopportunities now, said StephenPegge at Lloyds.

But small businesses blamed banksfor restricting borrowing, said aYouGov report, exclusively publishedbyCity A.M.

Some 35 per cent of small and medi-um enterprises said negotiating loanshad got harder over the past threeyears, while just four per cent said itwas easier.

Olympic feelgood factor fails tolift gloom on British high streetGLOOM on the high street hascontinued in August, a leading

survey revealed yesterday, withretailers becoming even moredownbeat over business prospectsfor the next three months.

Despite an uplift in morale fromsunny weather and the London2012 Olympic Games, retail saleswere virtually flat compared to thesame time last year.

The survey, published by theConfederation of British Industry(CBI), showed that nearly one third

BY JULIAN HARRIS (31 per cent) of retailers reportedlower sales volumes this monththan in August 2011.

Only 27 per cent reported a

greater volume of sales, leaving adisappointing rounded balance ofminus three per cent.

Although this summers eventscreated a mood of celebration acrossthe nation, these figures wouldsuggest this positivity did notextend to the high street, saidJudith McKenna, chief operatingofficer of Asda.

However, although retailersexpect the overall business situation

to worsen in the coming threemonths, they still expect sales torise year-on-year in September.

A net balance of 17 per cent of

retailers said they expect theiroverall business situation todeteriorate in the next threemonths, while the number ofpeople being employed in the sectoralso fell.

A net balance of 25 per cent ofretailers said their headcount wasdown compared to the same timelast year, while a net balance of 12per cent expect it to fall furthernext month.

MANUFACTURING growth in the US edged up this month, providing a modest boost toPresident Barack Obama, although labour market data released yesterday was mixed.Markits purchasing managers index (PMI) moved to 51.9 from 51.4 last month, yetseasonally adjusted initial unemployment claims rose 4,000 to 372,000. And houseprices edged up 0.7 per cent in June, a separate survey revealed.

US FACTORY GROWTH INCHES UPWARDS

Lending to businesses contracts yet again

Jul 2009 Jul 2010 Jul 2011 2012-8

-4

0

4

8

12 %

Personaldeposits

Mortgages

Unsecuredlending

Non-financialcompanies

CHINAS factories have been hitagain this month, with new export

business declining sharply,according to a purchasingmanagers index business surveyreleased by HSBC and Markit

yesterday.The early flash figure dived to

a nine-month low of 47.8 for theAugust survey, as Chinas

apparently inexorable boom comesup against problems.

Chinas manufacturing hits therocks as slump knocks exports

BY BEN SOUTHWOOD The number is down from Julysfigure of 49.3, which was close tothe 50 level that indicates nochange in activity.

Output, new export orders andemployment are all contracting,prompting some analysts to suggestintervention.

To achieve the stated policy goalof stabilising growth and the jobsmarket, Beijing must step up policyeasing to lift infrastructure

investment in the coming months,said Hongbin Qu at HSBC.


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IN BRIEFPublic funding of trains fallsn The taxpayer propped up Britainsrail network to the tune of 3.9bn lastyear, though this has dropped slightlyfrom 3.96bn a year ago and is downfrom a peak of 6.3bn in 2006, theOffice of Rail Regulation revealedyesterday. However, some trainoperating companies handed back partof their grants, meaning the state

clawed back 133m in the year.

JPMorgan accused hires lawyern The trader at the centre of thecriminal investigation surroundingJPMorgan's $5.8bn trading loss hashired a lawyer in Paris, sources said

yesterday. Bruno Iksil, a French citizenand a former London-based trader inJPMorgan Chase & Cos chiefinvestment office, is under scrutiny fortrades he made in an illiquid market forcredit products that resulted in thebank's losses. Iksil became known inthe derivatives market as the LondonWhale for the size of the positions hetook.

Fed Bank sells last AIG assetsThe Federal Reserve Bank of New Yorkhas sold its remaining assets of insurerAmerican International Group (AIG),the bank said yesterday. It soldsecurities for a gain of $6.6bn (4.2bn).

FRIDAY 24 AUGUST 2012 13

US stocks dropon weak data

US stocks fell yesterday asexpectations for quickstimulus action from theFederal Reserve faded and

Chinese and Eurozone data pointedto a stalling global economy.

Each of the 10 major S&P sectorsfinished in negative territory, withthe economically sensitivematerials sector the worstperformer, down 1.7 per cent.

Minutes published from thelatest Federal Reserve meetingindicated the central bank mightbe ready for another round ofstimulus for the economy,supporting equities on Wednesday.

The Dow Jones industrial averagedropped 115.30 points, or 0.88 percent, to 13,057.46. The Standard &Poors 500 Index lost 11.41 points,or 0.81 per cent, to 1,402.08.Meanwhile the Nasdaq CompositeIndex fell 20.27 points, or 0.66 percent, to 3,053.40.

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Montagu EvansThe property consultancy firmhas appointed Jonathan Manleyas a partner in its professionalservices team. He has over 20years experience in the industry,and was previously a partner atKing Sturge, and a director atJones Lang La Salle. In his newrole, Manley will focus onexpanding Montagu Evanssmarket presence in lender valuation markets.

Barings Asset ManagementChristopher Mahon has been appointed to the role ofdirector of asset allocation research at the investmentmanagement firm. He joins from Momentum GlobalInvestment Management, where he was head of investmentstrategy and lead portfolio manager for its multi asset

funds. Mahon has over 13 years experience in financial

markets, and will report to the head of Baringss multi assetgroup Percival Stanion.

RBC Wealth ManagementThe Royal Bank of Canadas wealth management divisionhas announced several changes to its senior leadershipteam. Paul Patterson, currently head, global trust becomesdeputy chair of ultra high net work international. Based inLondon, he succeeds Michael Lagopoulos, who is retiring.Stuart Rutledge, currently head of global wealth services,strategy and transformation, replaces Patterson in hisprevious role.

Meyer BergmanThe real estate investment management firm hasannounced two new analyst appointments. Hannah Wartonjoins from QIC Global Real Estate Group, where she was aproperty management analyst. Kevin Kong joins from

Citigroup, where he worked as an analyst in its real estate

division.

CapeLeslie Van de Walle has been appointed non-executivedirector of the resource-focused support services firm. He isa former director at Shell International Petroleum, andadditionally served as chief executive of United Biscuitsbetween 1999 and 2000. Van de Walle was also non-executive director of Aegis between 2003 and 2009, and ofAviva between 2009 and 2012.

Shanta GoldThe African-focused gold mining company has appointed anew chief executive. Mike Houston was formerly chiefexecutive of Zimplats Holding, the platinum miningcompany. He also previously held senior mana gement rolesat Anglo American, where he was responsible for runningseveral of its Zimbabwe mines.

WHOS SWITCHING JOBS Edited by Tom Welsh

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LONDON REPORT

BRITAINS top share index inchedhigher yesterday, steadying aftersharp falls in the previous session,underpinned by a recovery among

heavyweight miners on expectations offresh global stimulus measures fromcentral banks.

Mining stocks tracked firmer copperprices, which were up over 1 per cent at aone-month high as the demand picture formetals improved on the stimulus hopes.

Speculation of further monetary actionfrom top metals consumer China washeightened after the countrys manufactur-ing sector PMI data came in at the lowestlevel since last November.

Investors also saw the minutes from the 31July 31- 1August US Federal Reserve policymeeting, published after the London closeon Wednesday, as suggesting the Fed is like-ly to launch a third quantitative easing proAt the close, the FTSE 100 was up 2.40

points, or 0.04 per cent, at 5,776.60 after atopsy-turvy session with thin volumes.West Africa-focused gold producer

Randgold Resourceswas the top FTSE 100riser, up 4.2 per cent, while Kazakhmyswas

the top FTSE 100 faller, down 3.4 per cent,after it reported a steep fall in profits.

FTSE buoyed by hopes of

37-')-6+-9)27,%7%7)5-2+%2()67%85%27-1-7)(,%6%440-)(737,)-7

7/31/2019 Cityam 2012-08-24

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SUMMERS lease is drawing toa close again. With less thana month until the autumnalequinox on 22 September,were running out of time to

complain about the disappointingweather or attempt to cook burgersin one anothers backyards. Or,from another point of view, theresfour weeks left before the summerof 2012 is over: what shall we dowith all that time?

Two thousand years ago, LuciusAnneus Seneca, the Romanphilosopher who tutored theEmperor Nero, wrote to his friendPaulinus about this dilemma. Hisessay, known today as On TheShortness of Life, is a short, brilliant

argument for the latter school of

THE coalition has identified theNHS as the UKs next bigexport. We have some formhere: internationally renownedbrands like the Royal Marsden

Hospital in Chelsea, Moorfields EyeHospital and Great Ormond Streethave foreign campuses in the MiddleEast with similar tie-ins to some ofour leading universities.And this outward-looking approach

is to be encouraged. The global marketfor healthcare is already worth tril-

lions of dollars, and it will onlyincrease in size. The successful nationswill be those that can export theirhealthcare services and not be forcedto buy them from other countries.Hospitals in America, Europe, Indiaand Australia are selling their expert-ise across the world and the NHS isquite right to try to get a slice of theaction.

But we also need to be realistic. TheNHS is not the envy of the world any-more, and there wouldnt be buyersfor many of our unreformed services.

Many of the most exciting healthcarepioneers are abroad. These innovators

Spread betting, CFDs Trade today atwww.cityindex.co.uk

FACT OF

THE DAY

Of the last 10 quarterly UK GDP readings, only once ha

the preliminary figure stayed unchanged by the time t

final reading has been confirmed.

cityam.com/forum

Hospitals in the US,

Europe, India andAustralia are alreadyselling their expertise

THEFORUM

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

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

14FRIDAY 24 AUGUST 2012

THOMAS CAWSTON

The NHS must look outwards if itsto become the envy of the world

have performed tricks right out of theHarvard Business School playbook,reminding us that high quality afford-able healthcare isnt trademarked by

any one country. As well as exporting,the NHS needs to import.

Browsing the global marketplace ofhealthcare innovations will quicklyreveal the secrets of better for less.While NHS hospitals seek to provideevery service to patients under oneroof, the best hospitals in the worldspecialise in solving just one medicalproblem. A trip to India will uncoverthe Narayana heart hospital. This1,000 bed heart specialist performs 35surgeries a day on average, and a max-imum of 60 a day in its 24 operatingtheatres. Practice makes perfect: suchhigh volumes lower costs and improve

outcomes. Narayanas cardiac surgeryoperates at one tenth of the cost ofNHS hospitals, with clinical outcomesat the same standard, if not better.Another lesson the NHS should

quickly take on board is that modernand rigorous management is essentialto drive up performance. A provenmethod for innovative hospitals hasbeen to rank staff to harness the com-petitive nature of doctors. TheCleveland Clinic in Ohio publishes out-comes data for every major disease

area, which allows the hospital to setbenchmarks for staff and creates thepeer pressure to make better doctors.Unlike the NHS, where doctors stillrule the roost, these hospitals alsohold employees to account. Doctors atthe Cleveland are on a one year con-tract: if theyre not up to the job, theywalk.

Providing better care for patientswith chronic diseases, like diabetes orAlzheimers, will be the central mis-sion of the NHS in the years to come.New ways of organising services aresorely needed. Again, there is much tolearn from the rest of the world. In the

US, Kaiser Permanente is a householdname for high quality, joined-up care.By measuring and monitoringpatients closely, with doctors on stand-by around the clock, they are muchbetter than we are at preventing peo-ple from becoming ill and at givingpeople the best personalised treat-ments if they do get ill.

Another American success story canbe found in Rhode Island, where a pre-viously fragmented and confusedassortment of mental health servicesmeant patients often fell through thecracks and ended up in the emergencyroom the worst place for them. A pri-vate company, Beacon Health

Strategies, was brought in to get thingsorganised. Working with the estab-lished providers, they coordinatedservices outside the hospital and inone year the cost of hospitalisationsfor children was cut by 20 per cent.With healthcare costs set to rise inex-

orably in the years ahead, the NHS can-not afford to ignore the lessons fromabroad. As the Olympics got under waythe chancellor announced thatBritain has always been a countrythat is open to the world. In hosting

the Olympic Games, we are showcas-ing that openness. However, the NHShas remained obstinately closed tofresh thinking and innovative modelsfrom the outside. Opening up the NHSto competition would give patientsnew choices and the chance todemand excellent services that areshaped around their needs.

Better, cheaper healthcare is the nextbig global industry. If the NHS wantsto be the envy of the world, it will haveto start learning from the best in theworld.

Thomas Cawston is research director at theindependent think tank Reform.

thought. Its message can besummed up as: life isnt short.

So it is the life we receive is notshort, but we make it so, nor do welack time, but we waste it. A fortunecan be lost in a night if it comesinto the hands of a bad owner,while wealth, however limited,grows if the capital is carefully

invested. Our life is long enough for

anyone who uses it well.Senecas bold assertions turn the

table on our comfortableassumptions that scarcity of time isa problem we inherit. Instead, hesees it as a moral failing that webring upon ourselves: Why blameNature? Shes everyones angelinvestor. Life, if you spend your daysright, is enough to make you rich.But one woman is consumed bygreed she cant satisfy, anotherslaves away completing jobs thatare pointless; one man drowns hispassion in claret, another cant getout of bed.

Those two quotes, admittedlysomewhat freely translated, revealanother surprising side to Senecas

argument his return to the

metaphor of finance throughoutthe essay. Seneca was a wealthyman himself, who knew the valueof money. He argues that we have amental blind spot when it comes toour time, that we waste it as wenever would our fortunes. Weunderstand that money is scarceand has to be put to its best uses.We understand that there areproperty rights in money, and wehave the right to spend our ownmoney as we see fit. But, saysSeneca, most of us fritter away ourlimited supply of days like theworst kind of spendthriftgovernment. Worse still, werepractically communist in the waywe leave the disposal of our own

time to the whims of others: No

one asserts his claim to himself,everyone is wasted for the sake ofanother.

Its no surprise that Senecaswords continue to have resonancein our world of time-poor, always-onlives. Tim Ferriss, the author of thebestselling advice book The Four-Hour Workweek, admits that OnThe Shortness of Life is one of hisfavourite books. Nassim Taleb ofBlack Swan fame is another Senecafan. For City-dwellers readjusting tothe rigours of work after the longholiday, the ancient philosopher isa useful touchstone to remind us totreat our precious time with thesame respect we give to money.

Marc Sidwell is managing editor of

City A.M.

THE LONGVIEW

MARC SIDWELL

Life isnt short: But weve learnt to squander our time like spendthrifts

In association withIn association with

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POINTSPREAD*TRADE FTSE

*1 point spreads available during market hours on daily funded trades and daily future spread bets and CFDs (excluding futures).

15

Work experience[Re: Rigour in GCSEs is essential but weneed students fit for business, yesterday]While its important to provide children withwork experience, there must be guidelinesto ensure it is meaningful. In my last year ofsecondary school, I was allocated a twoweek stint in a local supermarket, while Iwatched my friends enjoy paid work at lawfirms. What did I learn from this experience?Nothing. I skipped the last day and nobodyquestioned it. Its not enough to simply tickthe work experience box, nor is it right togive children a false idea of their future.Partnerships with business need improving,and the standard of experience offered mustbe more uniform to give school-leavers realinsight to what their future holds.

Hayden Lloyd

Peter Searle makes a good case for usingeducation to prepare young people forwork. But he misses a broader point. Yes,fundamental skills like numeracy andliteracy are important to employers. Butteaching students how to become goodscientists, or innovative engineers, orcultural pioneers wont be accomplishedthrough some uniform, national scheme.Education is often tediously described aslighting a fire rather than filling a bucket.Searles scheme proposes too much bucket-filling, and too little ignition. We need toprovide young people with the basic toolsand curiosity to succeed in any area of ourdiverse economy not simply to becomeidentikit employable clones.

Sophie Purdy

BAD borrowing figures haveincreased the pressure onthe government to changeits course, abandon austerityand crank up new public

infrastructure projects. Indeed, witha cabinet reshuffle expected in thenext few weeks, a number of peoplehave been saying that DavidCameron should shuffle hischancellor, George Osborne, off tothe backbenches.

Neither is a sensible recovery plan.Osborne has at least committed theUK government which of courseincludes a large number of LiberalDemocrats who are understandablysquishy about the idea of publicspending cuts to getting the publicdeficit under control. Even if this isturning out to be a hard job, it is theright message and it is why the UKcan borrow more cheaply than themighty United States. DroppingOsborne now would create uncer-tainty that would scare off investors.As for more infrastructure spend-

ing, paying for the over-indulgentinvestment of the Brown years the vast school and hospital buildingprogrammes was one of the thingsthat got us into our present mess.We were investing money that wedid not have. We need to learn fromthat mistake, not repeat it.Where would the extra money for

infrastructure spending come from?The government could raise taxes,but the tax burden is already crip-pling both businesses and their cus-tomers. It could print money, butthat policy simply undermines con-fidence in sterling and distorts mar-kets so that people make a greaternumber of mistaken investments.

Or the popular solution it couldjust borrow the money. This is themost bizarre idea of all. Most ordi-nary householders would see thefolly of that solution in respect of

TOP TWEETSHaving lost a six figure sum with Polly Peckand its sister companies in the 1990s, Imhappy with Asil Nadirs 10 year jail sentence.@Meliden

The fall in GCSE results for the first time intheir history marks the happy end of gradeinflation.@thejamesmax

The government should stop fobbing offtough economic decisions on the Bank ofEngland its now defending QE.@tonyrossmcmahon

SSE puts its energy prices up. We cant haveanother winter of tweaks to the energy mar-ket when radical reform is needed.@WhichConvo

As SSE raises its energy prices by 9 per cent,is the firm right to blame UK green policies?

YESSo long as the government sticks to radical EU targets for the

energy sector particularly for a drastic increase in the use ofrenewable energy domestic and industrial consumers willcontinue to face punishing increases in prices. Attempts toreassure investors with expensive commitments like the carbonprice floor will ultimately backfire, as they know there are risks tothe policies on which they are relying. The fiscal adjustment andpoor economic growth are already putting pressure on livingstandards. There are limits to what families, and the politicianswho need their votes, will stomach. With other countries notimposing anything like the same burdens on their industries, andthe UK responsible for well under two per cent of globalemissions, there is little to show for the sacrifice. This countryurgently needs a more affordable climate policy.Matthew Sinclair is chief executive of the TaxPayers Alliance.

Matthew Sinclair

NOJim Woods

SSEs announcement has raised questions of whether the

transition to clean energy is too expensive. It feels like a questionof how good can we afford to be?. But are the underlyingassumptions valid? A recent Green Monday business surveyshowed major energy users expect the price they pay for energy toincrease by 6 per cent over the next two years, which they expectto be higher than competitor economies. But when asked aboutthe influence of underlying factors, 77 per cent attributed it tofossil fuel prices, versus 23 per cent and 24 per cent for carbonpolicies and transmission costs. In an era of rising commodityprices, businesss prime concern is the UKs exposure to importedfossil fuel prices, exacerbated by an energy crunch arising from theuncertainty over the governments desired generating capacity. Inshort, that points to too little policy rather than too much.Jim Woods is a director at Green Monday.

RAPIDresponses New infrastructure

cannot dig us fromour economic hole

their own finances. How can econo-mists seriously suggest these things?And when would we benefit from

all this infrastructure spending?Business people say they wantthings like new roads and rail linksso that business costs are reduced,which might help them to grow. Butinfrastructure spending is a long-term business. Planning permissionfor Terminal 5 at Heathrow tooklonger than the first and secondworld wars put together. Even mod-est by-pass plans can take almost aslong. By the time businesses couldexpect to get any benefit from thatsort of thing, most would have gonebust anyway.

Yes, government spending on con-struction would boost employmentin the construction sector, for a time.But it would destroy even more jobselsewhere, and more permanently.The money has to come from some-where, either from todays taxpayersor tomorrows through borrowing,or by cheating savers through infla-tion.

People are trying to pay down debt,and we have to let that process workout. But we also need to boostgrowth by making it easier for peo-ple to do business. That means a rad-ical simplification of the tax system,cutting back higher tax rates on indi-viduals and businesses, and gettingreally serious about cutting bureau-cracy and regulation. And to do itright now.Eamonn Butler is director of the Adam

Smith Institute.


EAMONN BUTLER

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FRIDAY 24 AUGUST 2012 cityam.com16 TV LISTINGS

TE

RRESTRIAL

IN WITH THEFLYNNS

BBC1,9PMThe couple throw an anniversary partyfor Carolines parents. Meanwhile,Kevin has an awkward reunion with agirl he last met at a funeral.

PARADES END

BBC2,9PMDrama, based on Ford Madox

Fords novels set in the seconddecade of the 20th century, starring

Benedict Cumberbatch.

THE BACHELOR

CHANNEL5, 11.15PM

The three remaining contestants headto the Bahamas, where they each getto spend time alone with SpencerMatthews on an individual date.

BBC1

SKY SPORTS 17pm Premier League Preview

7.30pm Live Football League

10pm Fantasy Football Club 11pm

Premier League Preview 11.30pm

Football League 1am Fantasy

Football Club 2am Premier League

Preview 2.30am Football League

4am Fantasy Football Club 5am

Premier League Preview

5.30am-8am Live ITM Cup

Rugby Union

SKY SPORTS 2

7pm Test Cricket 8pmInternational One-Day Cricket

10pm WWE: Smackdown 12am

WWE: Bottom Line 1am

International One-Day Cricket

3am IAAF Athletix 3.30am ATP

Tour Uncovered 4am Tight Lines

5am IAAF Athletix 5.30am-6am

FIFA Futbol Mundial

SKY SPORTS 37pm Live PGA Tour Golf11pm

European Tour Golf1am PGA Tour

Golf4am Super Leagues

Supermen 4.55am-6am Live Test

Cricket

BRITISH EUROSPORT4.45pm Live Snooker 8pm Live

Boxing9.55pm MotoGP

10.55pm-12.30am WTA Tennis

ESPN7pm ESPN at the Festival 7.15pm

Live Bundesliga 9.30pm French

Football 11.15pmESPN Kicks:

Brasileirao 11.30pmESPN FC

Press Pass 12am Premier League

Preview 12.30amLive Major

League Soccer 3am MMA Live

3.30am ESPN at the Festival

SKY LIVING7pm Sing Date 8pm Britain &

Irelands Next Top Model 9pm

Nikita 10pm Criminal Minds 11pm

Mount Pleasant 12am Bones 1am

Supernatural 1.50am Criminal

Minds2.40am Medium 3.30am

Bones4.20am Americas Next

Top Model 5.10am-6am Criminal

Minds

BBC THREE7pmDont Tell the Bride 8pm The

Hives and Bombay Bicycle Club @

Reading 9pm The Cure Live @

Reading 10pm Celebrity B****slap

News 10.30pm EastEnders 11pm

Bad Education 11.30pmThe Cure

and the Maccabees @ Reading

1am The Revolution Will Be

Televised 1.30am Bad Education

2amCelebrity B****slap News

2.30am The Premier Leagues

Most Amazing Moments

4.30am-5am The Revolution Will

Be Televised

E47pmHollyoaks7.30pm How I Met

Your Mother 8pm The Big Bang

Theory 8.30pm 2 Broke Girls

9pmFILM Die Hard 2 1990.11.20pm Revenge 12.20am The

Big Bang Theory 1.20am Scrubs

1.55am How I Met Your Mother

2.20am Rules of Engagement

2.40am Desperate Housewives

3.25am 90210 4.05am Greek

4.50am-6am Switched

HISTORY7pm Storage Wars 7.30pm Pawn

Stars8pm Storage Wars 9pm

American Pickers 10pm Top Shot

11pm Storage Wars 11.30pm

Pawn Stars 12am American

Pickers2am Top Shot 3am

Swamp People 4am The Last

Days of World War Two 5am

Pawn Stars 5.30am-6am

American Restoration

DISCOVERY7pm Born Survivor 8pm Auction

Hunters9pmMan, Woman, Wild

10pmAmerican Chopper: Senior

Versus Junior 11pm Extreme Drug

Smuggling 12am Man, Woman,

Wild 1am American Chopper:

Senior Versus Junior 2amAuction

Kings3am American Chopper:

Senior Versus Junior

3.50am Wheeler Dealers 4.40am

Born Survivor 5.30am-6am

Destroyed in Seconds

DISCOVERY HOME &

HEALTH7pmBirth Days 8pm I Didnt

Know I Was Pregnant 10pm

Supernanny US 11pm

Embarrassing Bodies12am I

Didnt Know I Was Pregnant 1am

Supernanny US 2am

Embarrassing Bodies 3amDr G:

Medical Examiner 4am Labour

and Delivery 5am-6am A BabyStory

SKY17.30pm Raising Hope 8pm The

Simpsons9pm Stella 10pm An

Idiot Abroad 11pm Dog the

Bounty Hunter 12am Ross Kemp:

Extreme World 1am The Good

Guys 2am Sun, Sea and A&E

2.55am Caprica3.45am Secret

World of Magic 4.35am Airline5.05am-6am Sell Me the Answer

BBC2 ITV1 CHANNEL4 CHANNEL5

SATELL

ITE&

CABLE

TVPICK6pm BBC News6.30pm BBC London News

7pm The One Show

7.30pmA Question of Sport:

Extra Time: BBC News

8pm EastEnders

8.30pmMiranda9pm CHOICE In with the Flynns

9.30pm Mrs Browns Boys 10pm

BBC News 10.25pm Regional News

10.35pmWould I Lie to You?11.05pm Come Fly with Me

11.35pmThe National Lottery

Friday Night Draws 11.45pm

EastEnders: Weatherview 1.40am

Sign Zone: The Hairy Bikers

Bakeation2.40am Sign Zone: Real

Rescues 3.25am-6am BBC News

6pm Eggheads

6.30pm Celebrity MasterChef

7pm Escape to the Country

8pmMastermind

8.30pm Gardeners World

9pmCHOICE Parades End

10pm The World of Parades

End

10.30pmNewsnight

11pm The Book Review Show

cityam 2012-08-24

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