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BUSINESS WITH PERSONALITY

Rajoy wantsEU bankingunion actionSPAINS Prime Minister yesterdaycalled for a European bankingunion to be in place by December,on a day in which the troubledEurozone state was itself forced torescue the region of Catalonia.

Speaking after a meeting withEuropean Council chief HermanVan Rompuy, Mariano Rajoy saidthat decisions made in June overforming a banking union tomitigate the debt crisis should nowbegin to be implemented.

Van Rompuy echoed the SpanishPMs call. As the crisis in Spain hashighlighted, progress on thebanking union is particularlyurgent, he said. Setting up asingle banking supervisor coveringall banks in the euro area is key inthis context.

Both politicians also agreed ontheir determination to keep theEurozone together, despite theongoing debt crisis. Let there beno doubt: the euro is irreversible,said Van Rompuy. And let meinsist again: Greeces future isundoubtedly in the euro area.

And Rajoy said a so-called Grexitwould amount to a collectivefailure of Europe.

Earlier in the day the Catalonianregion said it required 5bn (4bn)from the central government inorder to keep servicing its debts.

When asked about the situation,Rajoy confirmed that Catalonianauthorities had tapped the Spanishstates liquidity facility.

Meanwhile economic dataconfirmed that the Spanisheconomy shrank by 0.4 per cent in

the second quarter reflecting aworse than previously expected dipof 1.3 per cent on an annual basis.

Delays on the West Coast Main Line: Sir R ichard Bransons Virgin has started judicial review proceedings in a bid to halt the handover to FirstGroup

THE HANDOVER of the West CoastMain Line was last night plunged intochaos after Virgin Trains, the losingbidder for the route, mounted a legalchallenge just hours before the finalsign-off.The government had been due to for-

mally approve FirstGroup as the newoperator of the franchise as early astoday, but the Department forTransport (DfT) hinted at delays lastnight, saying only that it expects tosign the contract soon.Virgin Trains put a spanner in the

works yesterday by applying for a judi-cial review into the DfTs decision,complaining that it did not properlyconsider the risks involved in each bid.Virgin, which has run the route in a

joint venture with Stagecoach since1997, has made increasingly angryappeals for a rethink since the depart-ment picked FirstGroup as the newoperator two weeks ago.

We have not taken this decisionlightly, but it is the only course nowavailable to try to unravel this sorryprocess, said Virgin founder SirRichard Branson in a statement.The company claims that a delay is

now required under rules set out inthe bidding process back in January,and so has not sought an injunction tostop the DfT putting pen to paper.

Legal experts were doutbful whether

Virgin will eventually win in thecourts, with Pinsent Masons partnerPatrick Twist calling the variousrequirements of a judicial review a

www.cityam.com FREE

very high hurdle to leap.Michael Whitehouse, partner at

Wragge & Co, told City A.M.: The gov-ernment processes lots of projectsand occasionally underbidders aredisgruntled for various reasons.While a judicial review is not some-thing that happens every day it

doesnt help relationships VirginTrains would be out of the rail busi-ness anyway.

I would think they have a hard task

ahead of them, but they do have somevery good lawyers.

FirstGroup, which outbid Virgin by1bn to run the West Coast for thenext 13 years from December, said:There has been no complaint aboutthe process, which was carefullydescribed in advance, until Virgin Rail

Group had lost commercially.The DfT was last night combingthrough Virgins hefty legal docu-ments before making its next move.

The setback comes at a torrid timefor Justine Greenings department,which this week encountered sternopposition on both the West Coastdecision and the thorny topic ofexpanding Heathrow airport.

Several select committees and theLabour Party have called on the coali-

tion to push back the West Coastapproval until after parliamentreturns from its summer break.

WHY THE WORLD NEEDS A 4X4 SUPERCAR

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THE FERRARI FFISSUE 1,705 WEDNESDAY 29 AUGUST 2012

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

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BAKER & McKenzie confirmed

yesterday it is still the worlds largestlaw firm by revenues, as it releasedglobal numbers showing a 2.1 percent rise in fee income.

Fee income from its 71 officesaround the world hit $2.3bn(1.45bn) in the year to 30 June,with strong growth in LatinAmerica and Asia driving revenues.

But profit per equity partneredged down slightly to $1.09m onincome of $790m, compared to$1.2m last year.

The dip reflected weakerdeveloped markets, and heavyinvestment in office openings inemerging markets including Turkeyand Morocco, the firm said.

Our results reflect our return toinvestments that were deferredduring the recent crisis years as wellas the challenging circumstancesconfronting our clients in an

uncertain global economy, said thefirms chairman, Eduardo C Leite.

Revenues across North America,Europe, the Middle East and Africa,which together make up 72 per centof the firms total turnover, wereflat, with a drop in activity acrossthe M&A, banking and financegroups.

On the flipside restructuringwork, corporate compliance and taxplanning saw strong demand, as didantitrust and competition matters.

Law firm Bakersretains top spotas revenues rise

BY ELIZABETH FOURNIER

G4S confirmed yesterday it lost 50mfrom its bungled Olympic contract,as chief executive Nick Bucklesfought to save the security compa-nys reputation and his own.

Buckles admitted he was extreme-ly disappointed with the way theproblems were managed, andstressed that G4Ss plans for theParalympics were in place.

He said the firm could resource itfully with no external interventions.

Buckles said he was confident thesecurity firm would over deliver onthe contract for the ParalympicGames, which begin tonight.

In July, G4S admitted it could notrecruit the necessary 10,400 securitystaff for the Games, and an extra4,700 military troops had to be calledin to make up the shortfall in G4Sstaff as a result.The findings of a review by PwC

into the failings of the private securi-ty group are expected in lateSeptember.

In its half-yearly report, G4S saidthat 3.8bn of work was in thepipeline, including new contracts

Buckles hangson as Olympics

cost G4S 50mBY CATHY ADAMS with two prisons and a police force.It posted flat profit year on year of

236m, with revenue up 5.8 per centto 3.9bn.

Emerging markets, which benefitedfrom growth of 12.7 per cent over thefirst half, performed well over theperiod. The interim dividend washeld at 3.42p.

G4S is undergoing a restructuringto trim costs by around 30m overthe next year, including cuttingaround 1,100 jobs.

It also confirmed yesterday it hadno plans to bid for contracts relatingto the upcoming World Cup orOlympics in Brazil.

Shares closed down 1.95 per cent.

Nick Buckles thanked the police and military for ensuring a safe and secure Olympics

Crucial time as investors awaitnews of public sector contracts

NICK Buckles could be forgivenfor not greeting todays start ofthe Paralympics with muchenthusiasm.

While the rest of the country is des-perate for a return to the more care-free mood that the Olympics broughtwith them (was it really just two

weeks ago?) scrutiny of G4S over thenext fortnight is going to be fierce.

Neither the firm nor its chief execu-tive can afford any more reputationaldamage, after yesterdays resultsshowed its pipeline of governmentwork shrinking by an estimated200m over the past three months.

Buckles has appeared contrite in theface of criticism so far, and has astrong track record at G4S, but theresonly so long the man at the top cansurvive when things start going wrong

further down the chain.He sounded confident yesterday, but

the market will need convincing andthey may have to wait until after theParalympics for the next round of gov-ernment contracts mostly for out-sourced prisons to be announced.

In the meantime its unlikely thatshares will recover much of the 10 percent theyve lost in the last few weeks.

Investors, and hopefully Buckles, arein for the long haul.

G4S PLC

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IN BRIEFSpaniards pull cash from banksnMoves by consumers and firms topull their money out of Spanish banksgathered pace in July, with privatesector deposits falling at a record rateas the country bore the brunt of theEurozones debt crisis. Privatedeposits fell by almost five per cent to1.509 trillion (1.119 trillion),European Central Bank data showedyesterday, in the biggest monthlydrop since the statistical series beganin 1997. Yet Spains central bankplayed down the drop, saying it wasmainly due to the holiday season.

Lenders start review of Portugaln Inspectors kicked off a review ofPortugals bailout yesterday, facingrising expectations they will grant thecountry some relief on tough fiscalgoals it looks set to miss despitesticking rigidly to a tough austerityprogramme. The troika of lenders the EU, European Central Bank, andInternational Monetary Fund are inPortugal for its fifth quarterly review,focusing on the country's budget.

Euro money growth speeds upnMoney supply growth picked up

and loans to the private sector inchedhigher in July, European Central Bank(ECB) data showed yesterday. Thebroadest measure, known as M3,accelerated at a rate of 3.8 per cent inJuly, from the previous year.Economists had expected a rate of 3.2per cent the same as had beenrecorded in June. And private sectorloans were up 0.1 per cent in July, afterfalling 0.2 per cent in June.

MARIO DRAGHI has said he will notattend the Jackson Hole gathering ofcentral bankers, sparking a flurry ofspeculation about the EuropeanCentral Banks (ECB) bond buyingplans.The ECB president, who said he

declined the invitation because of aheavy workload, had been sched-uled to speak on Saturday, butnow no one from the six mem-ber executive board will attend.

Analysts speculate thatDraghi will remain behind tothrash out the details of theplan to bring down borrow-

ing costs in troubledEurozone states bybuying bonds.

This plan hasproved extreme-ly controversialin Germany,especially with-in theBundesbank,whose presi-dent JensWe i d m a n n

Draghi will notattend Jackson

Hole gatheringBY BEN SOUTHWOOD will attend Jackson Hole. Weidmannspredecessor, Axel Weber, quit his postin protest at the bond-buying plan, asdid German ECB heavyweight JrgenStark.

But another German member of theECBs top body, Jrg Asmussen, tried toreassure Bundesbank opponents ofthe programme by claiming that the

bank would make sure recipients ofits aid drove through robust

reforms.Spain managed yesterday to

auction off3.6bn (2.9bn) ofbills at rock-bottom rates: three-month yields fell to 0.95 percent, from 2.43 per cent, and six-month yields fell to 2.03 per

cent, from 3.69 per cent.But yields on its 10-

year bills, as well asthose of Italy, wereup roughly 10 basispoints by the end ofthe day.

CREDIT rating agency Fitchdowngraded seven Italian banks lastnight, in a warning sign for the

struggling Eurozone states financialsector.

The report cited tightened liquidityat the lenders due to deterioratingfunding conditions, noting that theyhave all accessed funding from theEuropean Central Bank (ECB).

Banks downgraded in the reportincluded Banca Popolare di Sondrio,Banco di Desio e della Brianza, andBanca Popolare di Milano.

All seven banks listed are onnegative outlook.

Seven Italian banks see creditratings slashed by agency Fitch

BY CITY A.M. REPORTER Fitchs decision comes afterthe head of another Italian banksaid on Monday that lenders

were relying greater integrationin the Eurozone.

Alessandro Profumo, head ofMonte dei Paschi di Siena, said:[Banks] have lent out moremoney than they have collected...If we dont create this Europeansystem we will not be able toplug that gap and this will be acolossal problem.

The Italian state looked likelierto take a stake in Monte deiPaschi yesterday after the bankposted a worse-than-expectedhalf-year loss of 1.62bn.

Italian PM Mario Monti is tasked with saving the indebted Eurozone state

WEDNESDAY 29 AUGUST 2012 cityam.com4 NEWS

Mario Draghi plansto buy Eurozonenations bonds

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cityam.com

President Hollande wants to raise taxes on the rich while cutting the levy on petrol

FRENCH giant Credit Agricole sur-prised analysts by posting a secondquarter profit yesterday, despitethe flat French economy and toughEurozone conditions.

But the bank is still taking majorsteps to shore up its position andreduce exposure to the troubledperiphery nations. It hopes tofinalise the sale of much of itsGreek arm Emporiki in the nextfew weeks, and chief executiveJean-Paul Chifflet said he remainsopen to reducing the stake inSpanish Bankinter.

Its Italian unit Cariparma is also

being cut down after it posted a271m (215.3m) loss, with 400 jobsset to be lost by the end of 2014through a voluntary redundancyplan.

Profits slumped to 111m in thesecond quarter, a 67.3 per cent fallon the same period of 2011.

However, the bank did performsteadily in the domestic retail andsavings space, despite the lack ofeconomic growth in France.

Outstanding loans in the country

Credit Agricolecuts exposure

to risky GreeceBY TIM WALLACE rose 2.4 per cent on the year, whileon-balance sheet deposits were up7.7 per cent. Overall, CreditAgricoles loan-to-deposit ratio fellfrom 128.8 per cent a year ago to123.7 per cent in June 2012.

Meanwhile the bank slashed itsshort-term debt from 185bn to127bn and raised its liquidityreserves to 151bn, equivalent to137 per cent of its net short-termdebt.

Similarly Credit Agricole reducedrisk-weighted assets by 48bn,which the bank says leaves it on tar-get for a Basel III core tier one capi-tal ratio of 10 per cent by the end of2013.

Credit Agricole


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4.2728 Aug

MORTGAGE lender Caisse Centrale

du Credit Immobilier de France(3CIF) yesterday saw its long-termdebt rating slashed from A1 to Baa1by ratings agency Moodys, as itcontinues to seek a buyer.

The troubled institution cannotaccess capital markets, and in Julyannounced plans to sell itself.

But its long-term future is far fromassured and the state could end upbecoming involved, said Moodys,due to the rising probability that3CIF will not be able to roll-over atleast1.75bn (1.39bn) in maturingdebts in October.

Previously the credit ratingincluded a 12-notch boost from thelenders implicit state backing alevel of support that Moodys hasnow cut to nine points.

That is because any governmentintervention could potentially beless favourable for creditors than an

acquisition by a strong strategicpartner, the agency warned.

Meanwhile Moodys put New Yorkstate-based M&T Bank on review fora downgrade after it announcedplans to snap up Hudson CityBancorp in a deal worth roughly$3.7bn (2.34bn).

The agency will study Hudsonscredit profile and the integrationchallenges it presents, in partbecause this is M&Ts largest everacquisition.

Moodys chops3CIFs ratingon bailout fear

BY TIM WALLACE

THE FRENCH government hasteamed up with oil businesses toease the pressure of high prices on

motorists, finance minister PierreMoscovici announced yesterday.

Prices will fall today by up to sixeuro cents per litre for the nextthree months, with the

government and industry eachbearing half of the burden.

The government will see itsrevenues hit by roughly300m(238m), described by Moscovici asextremely substantial.

But he defended the move,arguing it will cost 1.50 less to

French state pushes oil firms tocut prices at the petrol pump

BY TIM WALLACE put 25 litres in the fuel tank. It is asubstantial amount, especially forpeople with low revenues or whohave to drive a lot.

Before his election in May,

socialist President Hollande vowedto freeze rising fuel prices for threemonths, despite the governmentstruggling to cut its budget deficitto three per cent of GDP this year.

Recent polls have shownHollandes popularity falling andrising prices are frequently cited asa major concern for voters.

Meanwhile politicians aregearing up to debate the 75p toptax rate, which formed another keyplank of Hollandes election bid.

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THAI Beverage has raised its stake inFraser and Neave to just below thelevel that would trigger a mandatoryoffer for the whole company,showing its commitment to blockingHeinekens bid for Asia PacificBreweries.

ThaiBev, controlled by billionaireCharoen Sirivadhanabhakdi, saidyesterday it had bought a 2.6 percent stake in Fraser and Neave for$316m to bring its interest to 29 percent. If it hit 30 per cent it would be

obliged to bid for the whole of theSingapore conglomerate.

ThaiBev hikes

stake in F&N inHeineken fight

BY CITY A.M. REPORTER

RESTAURATEURS behind the trendyJapanese restaurant chains Zuma andRoka and Hong Kongs AquaRestaurant Group have agreed tolease the entire restaurant space atEuropes tallest building.

Sellar Property, the developerbehind the Shard, revealed yesterdaythat Zuma duo Rainer Becker andArjun Waney are to open a rotisserieand grill as well as a bar with livemusic and a lighter menu on the32nd floor of the London skyscraper.

David Yeo, the founder of the Aquaempire, which runs 23 outlets acrossthe globe, will open two restaurants

on the 31st and 33rd floors.We are delighted to have signed

agreements with these two respectedgiants of the international restaurantscene, said Irvine Sellar, chairman of

Restaurants aimhigh by moving

into the ShardBY KASMIRA JEFFORD Sellar Property.These top name operators will com-

bine with the best views of London tocreate a superb and varied restaurantoffering within the Shard that willcomplement the buildings interna-tional landmark status, he added.The three restaurants, which span

30,000 square feet, are expected toopen by April 2013.The Renzo Piano-designed building

which was inaugurated last month,has already pre-let floors 34 to 52 tothe five-star Shangri-La Hotel, whichwill open in March next year.

Separately, a report by Lloyds TSB yes-terday showed restaurants enjoyed thebiggest annual rise in takings in the

period up to and including theOlympics up 11.5 per cent. This con-trasts with 6.6 per cent rise in healthand beauty products, six per cent onfood and 0.6 in hotel spending.

MPs demand an end to easyhonours for business leadersBRITAINS business leaders shouldonly receive honours if they havetruly gone beyond the call of duty not simply for being good attheir jobs, for which they arealready often handsomelyrewarded, an influentialcommittee of backbench MPsdeclared today.

The Public AdministrationSelect Committee (PASC) also hitout at the way in which formerRBS boss Fred Goodwin wasstripped of his knighthood,arguing the secret nature ofproceedings essentially made itappear a trial by media.

The new report argues there toomany awards are given out fordoing the day job, and calls forreforms to the system to honour

BY TIM WALLACE community achievements andservice instead.

It is distasteful anddamaging for peoplewho already commandvast personalremuneration packagesfor doing their job, toalso be honouredfor simply beingat the helm oflargecompanies.This muststop, said thereport.

High-fliersin the publicsector alsotook abeating inthe report,which

complained that civil servants oftenappear to benefit from a system ofautomatic honours.

It points to Lord Gus ODonnell asa prime example, as he has been

awarded four honours over thecourse of his career in the civil

service.The removal of honourswas also scrutinised,

following the strippingof Fred Goodwin wholost his knighthood inJanuary.

Again, thecommittee called forreforms so that thecriteria for removalare clear in future.

6 NEWScityam.com

SMALL FIRMS will get more help

from lawyers and accountants toguide them through the complexapprenticeship system, thegovernment announced today.

The announcement comes asjewellery entrepreneur Jason Holtpublishes his review into the sector,which found few small and mediumsized firms (SMEs) understand thecurrent structure or purpose ofapprenticeships.

SMEs have an outdated view ofapprenticeships, are often in thedark, and frequently do not receivethe specific training provision theirapprentices need, said Holt.

The Confederation of BritishIndustry (CBI) welcomed the report,stressing the importance of hiringyoung trainees.

SMEs are a major untappedsource of apprenticeships, so itsgood that this review shows how

complex the current process hasbecome for smaller firms to dealwith, said Jim Bligh. SMEs needbetter local advice which helps themprovide on-the-job training.

Firms praiseapprenticehelp pledge

BY TIM WALLACE

Investors cheer asLexmark quits inkPRINTER maker LexmarkInternational said yesterday it

will stop making inkjet printersand focus on its more profitableimaging and software businesses,sending its shares up as much as20 per cent.

Lexmark, never a big player ininkjet printers, said it wouldcontinue to sell laser printers asit beefs up its print services

business, for which it hasrecently made acquisitions.

The company plans to sell

about 1,000 inkjet-relatedpatents and will cut 1,700 jobs,

BY CITY A.M. REPORTER or 13 per cent of its workforce.Most printer makers are

struggling with falling sales asprinting has been a target ofcorporate cost cutting andpersonal computing moves totablets and smart phones.

Lexmark said it was quittingthe inkjet business because ofaggressive market pricing andthe investment required tomaintain a return. Revenuefrom the companys legacyinkjet hardware businessdeclined 66 per cent in the firsthalf of 2012, forcing the

company to cut its full-yearforecast.

Fred Goodwin lost hishonour in a media storm

WEDNESDAY 29 AUGUST 2012

FLOORS 31 & 33

RUN BYDavid Yeo (pictured),Aqua Restaurant Group

BACKGROUNDEx-finance lawyer turnedrestaurateur who runs a host of

restaurants, bars and ahotel in Hong Kong andrecently expanded toLondon with the launch ofAqua Kyoto,Nueva andSpirit inSoho.

LOOKThe restaurant willinclude an atrium withthree-storey highpanoramic views ofLondon.

CUISINELondonsAquas offermodern

Japanese,Spanish tapas,

pluscocktails

RUN BYBusiness partners RainerBecker (pictured) andArjun Waney

BACKGROUNDFounded both Zumaand Roka, whichwere launched inLondon and nowhave branches aroundthe world

LOOKA separate restaurantand bar with livemusic

CUISINEContemporaryrotisserie andgrill

FOOD WITH A VIEW: INTERNATIONAL

RESTAURATEURS LOOK UPWARDS

FLOOR 32

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THE Paralympics 2012 officially

kick off today, and the Dutchseven-a-side football team werehaving a warm up game

yesterday. Not at the Olympic Park,but on another newly created pitchin Tottenham.The team was playing to mark the

launch of Cruyff Court, a state-of-the-art games area at the Ferry LaneEstates that has been built by theeponymous former Dutch footballerJohan Cruyff in partnership with

Tottenham Hotspur Foundation.

The Cruyff Foundation, backed bythe Peoples Postcode Lottery andHaringey Council, has revamped anold football pitch with facilitiesincluding a 3G astroturf pitch thatare also adapted for people with dis-abilities to use.

It is Cruyffs second site in Londonand one of 160-plus courts builtaround the world to help provideyoung people with a safe place toplay sports. It also forms part of the

councils efforts to regenerate the

area after last years riots.Former Tottenham Hotspur starLedley King, who launched CruyffCourt yesterday, told The Capitalist:Theres been a lot of negativity sur-rounding the area of Tottenham overthe past year but developments likethis go to show this community ismoving in the right direction.Hopefully we can find the buddingsportspeople of the future makinguse of this facility.

Paralympics visit Tottenham

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cityam.com/the-capitalistTHECAPITALIST


Game, set and 3,000 match to the winner who yesterday snapped up Topiary Wenlock inthe Mayors Fund for London charity auction. Unlike all the other 2m high sporting bodies,this is a living monument, which may need some replanting next year. Lets hope the topbidder has green fingers. For more items, go to http://memorabilia.london2012.com

WIMBLEDON WENLOCK IS TOP SEEDED MASCOT

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UTV Media, owner of talkSport

radio, yesterday posted a small risein pre-tax profits as an expectedOlympics advertising boost failedto materialise.The Belfast-based media group

said net advertising revenues fromits television division had droppedthree per cent over the half year,taking total television revenuesdown two per cent to 16.9m.The firm said an anticipated

Olympics boost from increasedsports-related advertising had failedto provide any performanceenhancing effect on revenues forthe third quarter.

Overall, pre-tax profits increasedthree per cent to 11.2m, withgroup revenue up four per cent to61.6m.

Group chief executive JohnMcCann said: The group has posteda resilient performance for the first

half of 2012, growing both revenuesand pre-tax profits in a choppy mar-ket.The firm was also able to increase

its proposed interim dividend by0.25p to 1.75p after paying down13.1m of debt, reducing its debtburden by more than a fifth.

UTV Television is part of the ITVnetwork in Northern Ireland.

Olympics failto deliver UTVadvert boost

BY MICHAEL BOW

ANGLO-SWEDISH giant AstraZeneca(AZ) yesterday revealed that it haspoached Pascal Soriot from rivalpharmaceuticals firm Roche.

Soriot will become AZs new chiefexecutive on 1 October, replacingDavid Brennan who quit the roleabruptly at the end of April thisyear after announcing a profitwarning and weak quarterlyresults.

Shareholders had been agitatingfor a reshuffle of the firms boarddue to fears over its dwindlingpipeline and a string of prospectivenew products that had failed to

pass the late stages of regulatorytests.

Since Brennan stepped down, AZhas been under the interim leader-ship of chief financial officerSimon Lowth, who was believed tobe in the running for the top job.

But yesterday the company con-firmed that he will resume beingCFO from October.

Pharma veterannamed new CEO

of AstraZenecaBY JULIAN HARRIS In a bid to revive its fortunes, AZ isinstead turning to Soriot, who hasworked in the pharmaceuticalindustry for over 25 years.

He will be looking to make signif-icant changes, including reviewingthe pipeline and doing more deals,said Cenkos Securities analyst NavidMalik.

Hell have to work fast becausetheres an uphill struggle now togrow sales in the face of majorpatent losses.The firms sales fell 21 per cent in

quarter two, it admitted last month.

The AstraZeneca board is hoping thatPascal Soriots wide experience of the phar-maceuticals industry and high-levelinvolvement in mergers will turn around thebehemoths fortunes. A couple of years agoSoriot held the top position at Genentech, abiologics firm based in San Francisco precisely the kind of innovative business

that big pharma companies are increasinglylooking to acquire in order to plug holes intheir pipelines. Patents are fast expiring forthe industrys giants, with AZs own loss ofexclusivity on Seroquel causing a 15 percent dip in sales in the second quarter ofthis year. So the headhunters tasked withdelivering a new boss to AZ would havenoted Soriots involvement in Genentechs

successful merger with Roche and strongleadership of the firm. Following the dealSoriot became chief operating officer atRoche, showing that he could cope with atop position at a multinational firm with44,000 employees throughout the world.In his early 20s, Soriot became a vet, prac-ticing in a suburb of Paris. Yet treating ani-

mals failed to satisfy his ambitions andwhile in the French capital he completed anMBA, majoring in finance. Before long hehad moved into the sphere of treatinghumans, joining French pharma companyRoussel Uclaf where he became a globe-trotter, taking up roles in Asia, Australia andNew Zealand. Soriot is married with twochildren and one grandchild.

Everything Everywhere teams upwith MasterCard on digital walletMASTERCARD yesterday announced afive year deal with the UKs biggestmobile phone operator EverythingEverywhere to develop contactlessmobile phone payment systems forthe networks 27m customers.The duo will kick off the deal by

launching a pre-paid digital wallet,allowing customers to transfer moneyfrom a bank account to a mobilephone for use in micro payments atmore than 100,000 eligible shopsacross the country.

BY MICHAEL BOW The partnership is also set to roll outa variety of other services, includingperson-to-person money transfers andloyalty rewards at shops where pay-ments are made. Plans to help boostthe capability of small retailers toaccept contactless payments in thefuture are also on the cards.

MasterCard UK & Ireland presidentMarion King said: There is no doubtthe smartphone is taking over variouscapabilities so its quite logical that itwill become the dominant mecha-nism for payment in the future.The deal builds on a previous part-

nership between the two firms whichsaw the launch of an Orange cash pre-paid card and contactless payment sys-tem in 2011.

Everything Everywhere chief market-ing officer Gerry McQuade said thepre-paid mobile service would let cus-tomers use their mobile to pay for trav-el to work and other smallerpurchases.The hotly contested mobile phone

payment arena has seen recent per-son-to-person money transfer servicesoffered by Barclays as well as pre-pay-ment apps from Starbucks.

53-year-old Frenchman Pascal Soriot is excited and honoured to take up the new role

AstraZeneca PLC


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PROFILE: PASCAL SORIOT


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AMERICAN book retailer Barnes &Noble yesterday said it has chosen

John Lewis to be its first UKpartner in the push to sell itsNook ebook readers in Britain.

The department store group willbe the first retailer outside theUnited States to sell the Nookdevices across its 37 of its shopsfrom October.

Barnes & Noble announced lastweek plans to bring the Nookdevices to Britain in its firstexpansion overseas, as it battles

with fierce competition fromAmazons Kindle in the States.

John Lewis first retailer to sellBarnes & Noble ereader in UK

BY KASMIRA JEFFORDThe popular Nook has allowed

Barnes & Noble to grab between 25per cent and 30 per cent of the USe-books market, helping to offset afall in demand for printed books.

But the book chain said lastweek that sales of its device hadfallen in its most recent quarterafter cuts in its selling price.

It did not disclose the pricingfor its launch in the UK. JohnLewis will sell two of its models the Nook Simple Touch and NookSimple Touch with GlowLight

which cost about $99 and $139 inthe US.

The Nook Colour and NookTable will not be sold in the UK.

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IN BRIEFAirbus wins $7bn plane ordern Airbus yesterday won a $7bn (4bn)order to help more than triple PhilippineAirlines fleet, beating Boeing to a dealdespite US support for Manila in adiplomatic dispute with China. The flagcarrier plans to buy up to 100 new jetsin total over the next five to seven years.

Chemring issues profit warning

nDefence group Chemring yesterdaycut its full-year operating profit by15m as it warned of a delay to produc-tion systems. The firm, which is cur-rently a target of private equity firmCarlyle Group, said its order book at theend of July was 910m, nine per centlower year on year.

Renewed violence at Lonminn Violent clashes have returned toLonmins Marikana mine, as peacenegotiations are held today to cool ten-sions across South Africas platinumbelt. The peace talks will aim to seal adeal to get workers back to the mine.

Bunzl grows in tough marketnDisposables supplier Bunzl said yes-terday it would continue to grow in all

regions, after posting a seven per centrise in revenues to 2.61bn and an eightper cent jump in pre-tax profits to151.7m for the first six months of theyear.

Vedanta hit byAGM protests

BY MARION DAKERS

BRITISH oil and gas firm CairnEnergy has bought a stake in anexploration well off the coast ofMorocco as it continues its huntfor oil and gas in the region.The f irm said yesterday it would

pay $60m (38m) towards theFoum Draa well, in return for a 50per cent stake in a licence sharedwith smaller explorers San LeonEnergy, Serica Enerft andLongreach Oil and Gas. Drilling inthe region is expected to com-mence in the second half of nextyear.

The move is part of a portfolio

rebalance, which will see Cairnfocus more on the Mediterranean,the Atlantic Margin and the NorthSea rather than its Greenland proj-ect, where it has so far failed to

Cairn Energylooks offshore

for Moroccan oilBY CATHY ADAMS find oil reserves.Cairn yesterday announced a pre-

tax loss of $50m for the first sixmonths of the year to 30 June, animprovement on the $141m it lostover the first half of 2011.

It said it expected to finish theyear with a cash balance of morethan $500m, following variousasset sales.

OFFICE space supplier Regussaid yesterday its first-halfadjusted profit rose about 64per cent on higher revenuefrom its business in theAmericas.

Regus, which offers ready-to-use offices for rentals forperiods as short as half a day,said adjusted pre-tax profitgrew to 21.3m for the sixmonths ended 30 June, from13m a year earlier.

The Luxembourg-headquartered company,whose customers includeGlaxoSmithKline, Googleand Nokia, said revenuegrew 7.6 per cent to 608.6m.

BY HARRY BANKS Revenue from the companysmature business centres openedon or before 31 December 2010 within the Americas grew six percent to 242.7m on higheroccupancy rates. Like-for-likerevenue from its mature centres,represents 83 per cent of its globalportfolio, grew 2.6 per cent.

Sir Bill Gammell, Cairns chairman, is looking for oil further afield

Cairn Energy PLC

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The first-half results are as expected. Cairn has farmed in to offshoreexploration acreage in Morocco and emphasised this is one of the three areas forfuture investment. Otherwise, there is little new in the update.

ANALYST VIEWS

WERE THERE ANYSURPRISES IN CAIRNSHALF-YEAR RESULTS?Interviews by Cathy Adams

ANDREW WHITTOCK LIBERUM CAPITAL

WEDNESDAY 29 AUGUST 201212 NEWS

cityam.com

Cairns results today are less about financials and more about progresson strategic milestones. Cairn's shares have underperformed UK peers by nineper cent, leaving it cheap versus a set of largely liquid underlying assets.

SIMON HAWKINS SINGER CAPITAL MARKETS

The last six months have been very active as management look to re-balance the asset portfolio. Cairns recent sale of Cairn India Limited provides thecompany with sufficient funds to the end of financial year 2014.

SANJEEV BAHL NUMIS SECURITIES

BY CITY A.M. REPORTER

OIL rig maker Lamprellreassured on its future

yesterday, saying that its bidpipeline was positive and it wasconfident of the support of its

banks after posting a loss in atorrid first-half marred by theimpact of contract delays.

Lamprell, which this yearhas issued a series of

warnings on itsperformance, said that itmade a net loss of$47.1m (29.8m) in thesix months to 30 June,slightly higher than the$45m loss it forecast in

July, after the cost

of delayeddeliveries of

wind farm installation vessels.Calling the results a

setback, the UAE-basedcompany said it expected to beable to restructure itsagreements with its banks toavoid any breaches in the full-

year period.The groups order

book remains at anhistorically high levelof $1.5bn and bidactivity remainspositive across all our

main businesses,chief executive Nigel

McCue said.

Nigel McCue said

the firms orderbook was thriving

Thriving Americaslift Regus earnings

Lamprell stays upbeat

despite half-year loss NORWAY yesterday emerged as thelatest shareholder to have increasedits stake in Xstrata, posing anotherstumbling block to the minersbiggest shareholder Glencore as ittries to get a grip on its plans tomerge with the group.

Norges Bank InvestmentManagement, which managesNorways $610bn sovereign wealthfund, has been steadily buyingXstrata shares over the last fewweeks and the latest regulatoryfiling yesterday showed it hadcrossed the three per centthreshold.

The move comes after fellowsovereign welath fund QatarHolding upped its stake in Xstratato 12 per cent, pressing for better

terms and threatening to voteagainst the merger.

Norway raisesXstrata stake

BY KASMIRA JEFFORD

VEDANTA shareholders approved allresolutions at yesterdays annualmeeting, despite angry protestsabout the mining groups humanrights record.

Campaign groups includingAmnesty International threw redpaint and waved banners outside themeeting in central London, angry atthe London-listed firms treatmentof workers in Orissa, India. The firmreported 22 fatalies across its globaloperations last year.

Chairman Anil Agarwal toldshareholders that sustainabledevelopment remains at [our] core.

More than 12 per cent of Vedantasinvestors voted against the directorsremuneration report, on a turnoutof just under 80 per cent, while 16.1per cent voted down the employeeshare ownership plan.

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US CONSUMER confidence collapsedin August, according to data releasedby the Conference Board, just as theRichmond Fed said decline in themanufacturing industry slowed downin the same month.

Consumer confidence was at itsworst level for nine months, theConference Boards index showed,dropping to 60.6, down from 65.4 inJuly and a pre-crisis peak of 115.

The random survey found that just15.2 per cent rated the current busi-ness conditions as good, while 34.4per cent thought the climate was bad.Just seven per cent thought jobs wereplentiful compared to 40.7 per centwho claimed jobs were hard to get.

Analysts suggested that poor con-sumer data should add to the case forrenewed Federal Reserve intervention-ism. Althoughconfidence has notbeen a very reliable leading indicatorof actual consumption, the drop inAugust is nonetheless one more rea-son for the Fed to act boldly, said PaulDales at Capital Economics.This came as manufacturing activity

continued to decline, according to theRichmond Feds survey of the centralAtlantic region, albeit at a slower rate.

BY BEN SOUTHWOOD The index hit -9 in August, comparedto -17 in July, an improvement thattogether with the figures for ship-ments and new orders indicates slow-er decline. However, the sub-index forjobs was down six points at -5.

House prices looked like they wererecovering somewhat from their sec-ond slump, with the headline Case-Shiller home price index showing thatprices in the second quarter of 2012were 1.2 per cent higher than the pre-vious three months.

While warning of headwinds in slowgrowth, high unemployment, restric-tive credit and 1.3m homes in the fore-closure pipeline, Ed Stansfield atCapital Economics suggested that UShousing could yet have bottomed out,ready for a recovery.

Landlords keen on buy-to-letas rental prices hit record highsLANDLORDS are set to boostinvestment in a resurgent buy-to-

let sector, which is enjoying acombination of healthy demandfrom tenants and below-peakhouse prices, a survey showedyesterday.

Nearly half of landlords polledby LSL Property Services said thatnow was a good time to invest inproperty, while less than ahundredth thought now was atime to reduce portfolios.

Of those who believe now

BY BEN SOUTHWOOD presents an opportunity to increaseinvestment, 82 per cent pointed totempting property prices and 53per cent cited tenant demand.

House prices are still subdued inmany parts of the country andtenant demand is still growing,said LSL boss David Newnes.

This is presenting landlordswith the opportunity to securestrong yieldsand boostingconfidence in buy-to-let, he wenton.

The strength of demand isillustrated by booming rents tenants have been hammered by

record average highs of 725 amonth across England and Wales inJuly. Even so, 44 per cent oflandlords reported rising tenant

demand, while just one per centsaid they faced diminished demand and 64 per cent expect demand tocontinue to boom.

Around two fifths of landlordsexpect to take advantage of thisclamour for real estate by hikingrents further over the next 12months. However, half of landlordswho have tried to get a mortgagerecently say it has become moredifficult to access loans.

OUTGOING POLICYMAKER CALLS FOR MORE QE

The decline in manufacturing activity appears to slow down

30

0

15

-45

-60

-30

-15

Aug2002 Aug2004 Aug2006 Aug2008 Aug2010 Aug2012

Monthly

3-monthmovingaverage

Mitt Romney will bemade nominee

THE REPUBLICAN Party yesterdayofficially nominated Mitt Romneyas its candidate for the 2012presidential election, at itsnational convention inTampa, Florida.

Hurricane Isaacnarrowly missed Tampaand last night looked set tohit Louisiana, whose largestcity New Orleans bore the

brunt of 2005s HurricaneKatrina.

The convention comes

BY BEN SOUTHWOOD


cityam.com

Adam Posen,the outgoingmember ofthe Bank ofEnglandmonetarypolicycommittee,has said thatthe Bankcould do more

to boost theeconomy.I still thinktheres roomfor the Bankto be moreaggressive,the rate-setter said inan interviewwith CNBC.

amid another sort of storm,created when congressman Todd

Akin, told media that legitimaterape survivors could not conceive

through the attack.But the Republican ticket

is keen to move the focuson to economic issues,exemplified by the hugedebt clock hanging overthe stage. The party alsolooked to make Romney

more appealing through aspeech by wife Ann, whoopened up about her

miscarriage, as wellas her breast

cancerexperiences.

US consumers

keep tight holdon their wallets

Republicans officially nominateRomney in national convention

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14/23

SWISS private bank Julius Baer yes-terday said it suspected Germanclient data allegedly stolen by a for-mer employee could have been givento German authorities investigatingtax evasion.The banks chief executive Boris

Collardi admitted in a German news-paper on Sunday it had discoveredmisuse of client data by an employ-ee.A spokesman yesterday said the

data could have been given to aGerman state tax authority, whichhas been linked to several cases ofdata breaches in Switzerland.

Presumably they could have thedata, he said.

Its a bank issue if we lose the databut we are not responsible forclients taxes, the spokesman added.Julius Baer confirmed the suspect-

ed thief, a male employee in itsZurich office, had been sacked forthe data breach and was being heldin custody in Zurich. However thefirm refused to comment on anypotential charges.

Tax probe linksto data breachat Julius Baer

BY MICHAEL BOW It is the third time in a decade JuliusBaer client data has been compro-mised following similar incidences in2002 and 2009.At the start of this month the

German state of North Rhine-Westphalia said it was pursuing taxevaders who secretly stashed cash inSwitzerland.

It is thought state tax officials havepreviously purchased leaked bankdata from whistleblowers to investi-gate possible tax evasion by Germancitizens.A spokeswoman at the North Rhine-

Westphalia Ministry of Finance wasunavailable for comment last night.

John Laing Infrastructure playsdown risks to public revenuesJOHN Laing Infrastructure Fundyesterday talked down the risks

that government policy shifts onpublic-private partnerships (PPP)posed to the fund as it reported afurther 53.5m of asset purchasesthis year.The fund said material risks to the

portfolio from any government pol-icy changes on public-private initia-tives were lessened by thecoalitions commitment to futureinfrastructure spending.

It also reassured investors yester-

BY MICHAEL BOW day that its 27.5 per cent stake inQueen Elizabeth Hospital inGreenwich, backed by the troubledSouth London NHS Trust, was safe

from default.This is despite ministers having toparachute administrators into thetrust to shore it up.

JLIF fund manager David Marshallsaid: In our contracts we are wellprotected. Were very comfortablewith the credit side of things.

On government policy, were aninterested spectator. Critical infra-structure needs to be delivered toboost the economy and a great deal

needs to be privately financed.The fund, which floated on the

stock market in 2010, reported itsportfolio value had increased 18 per

cent to 449.4m from 380.4m inDecember, after making six newacquisitions.

It currently holds 35 assets in thepublic sector, all predominantlybacked by government revenuestreams.

As JLIF is an investor in opera-tional PPP projects, changes to exist-ing PPP policy will not impact JLIFfor a number of years, the fund saidyesterday in a report to the market.

IN BRIEFLOreal profits rise 11 per centn L'Oreal, the world's biggestcosmetics maker, posted an 11.4 percent increase in its first-half operatingprofit yesterday, helped largely by itsluxury products and still expects tooutperform the market and grow profitsand sales this year. Earnings beforeinterest and tax reached 1.897bn(1.5bn) while its operating marginwidened to 16.9 per cent from 16.8 percent in the same period a year ago.

Bank of Montreal beats estimatesn Bank of Montreal yesterday reporteda 37 per cent jump in quarterly profit,topping estimates, helped by the

acquisition of US bank Marshall & Illsley,and raised its quarterly dividend. BMO,Canada's fourth-biggest lender, said itearned C$970m (621.2m) for the thirdquarter ended 31 July, compared withC$708m a year earlier.

Scotiabank gains on office salen Bank of Nova Scotias quarterly profitrose 57 per cent on the back of a gainfrom the sale of the corporateheadquarters in Toronto, and Canadasthird biggest lender raised its quarterlydividend. Toronto-based Scotiabanksaid yesterday it had earned C$2.1bn(1.3bn) in the third quarter ended on31 July, compared with C$1.3bn a year

earlier.

ALEX Manson is now Standard Chartereds head of wholesale banking, after 12 years atDeutsche Bank. He joined on 13 August and will be based in London, although the mainoperations are based in the Middle East, Africa and Asia. The bank has had a tough month,paying a US regulator $340m (215m) to settle charges it broke sanctions against Iran.

NEW WHOLESALE BOSS AT STANDARD CHARTERED

Julius Baer Gruppe AG


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15WEDNESDAY 29 AUGUST 2012cityam.com

LONDON REPORT

Ludgate InvestmentsThe private equity investor has

appointed Dr Bernard Bulkinand Ekaterina Sharashidze asnon-executive directors. Bulkinjoins from Vantage PointCapital Partners. In addition tohis extensive investmentexperience, Bulkin is aprofessorial fellow atCambridge University.Sharashidze has over 15 years experience in privateequity and joins from Samena Capital, where she was adirector. She is also a former economic adviser toPresident Mikheil Saakashvili of Georgia. Both will serveon the investment committee.

MarshThe global risk and insurance services firm has

appointed John Kunzler as head of its UK-regulatedprofessions practice for England and Wales. The movecomes after the firm promoted William Cooper to headof its England and Wales solicitors professionalindemnity practice. Kunzler joins from Travelers, wherehe was senior product manager for professionsprofessional indemnity.

CBREThe property adviser has strengthened its Londonresidential investment team by appointing ArthurMcCalmont as associate director. McCalmont waspreviously residential investment acquisitions and assetmanager at Grainger. McCalmont will be responsible forbuying and selling income-producing investment blocksand trading vacant blocks.

Farebrother CSThe property consultant has appointed Shayan Malik as

head of research. The experienced analyst joins fromCushman & Wakefield and brings international realestate experience. He has been charged with driving theresearch department, focussing on developinginvestment and commercial occupation research for the200-year-old firm.

Bluefin Corporate ConsultingThe employee benefits consultancy of Capita hasappointed Ian Treece to its growing auto-enrolmentpractice. Treece joins from Barclays, where he wasassociate director for the banks pension scheme.

BarclaysThe multinational bank continues its growth drive in theAmericas with the appointment of Christopher VanHouten as relationship director within its New York-based financial institutions team. Van Houten joins fromNational Australia Bank where he was a director.

WHOS SWITCHING JOBS Edited by Yogesh Chandarana

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

Trading light inUS as investorswait on the Fed

US stocks ended little changedin another day of scarceactivity yesterday after mixedeconomic data gave investors

little reason to shift their focus fromFederal Reserve chairman BenBernankes speech on Friday.The Fed chief is scheduled to

address a conference of centralbankers in Jackson Hole, Wyoming,

and could announce new measuresto boost growth. While Bernanke isexpected to keep alive expectationsfor a third round of major bondbuying by the Fed, or quantitativeeasing, he could keep marketsguessing about the actual timing.The Dow Jones industrial average

was down 21.68 points, or 0.17 percent, at 13,102.99. The Standard &Poors 500 Index slipped 1.14 points,or 0.08 per cent, at 1,409.30. TheNasdaq Composite Index edged down3.95 points, or 0.13 per cent, at3,077.14.Volume was among the lightest of

the year after Mondays lightesttrading in 2012. August is a slowseason, and investors mostly stayedon the sidelines, anticipatingBernankes speech.

I dont think you can read a lotfrom whats going on in the marketright now, said John Fox, of the FAMValue Fund in New York. Becausetheres nothing going on, everyone iswaiting for the speech on Friday.

The latest sign of slowing in theglobal economy added toexpectations for more central bankstimulus. Japan cut its assessment ofeconomic growth, citing adeceleration in US and Chinesedemand for Japanese exports.

US consumer confidenceunexpectedly weakened in August toits lowest in nine months asAmericans turned more pessimisticabout the short-term outlook,according to the Conference Board.

But in another report, the S&P/CaseShiller composite index of 20metropolitan areas showed US homeprices rose for a fifth consecutivemonth, a sign of slow improvement

in the housing sector.Among the days biggest gainers,Lexmark Internationaljumped 13.7per cent to $21.62 after it said itwould stop making inkjet printers,cut about 1,700 jobs, and focus on itsmore profitable imaging andsoftware businesses.The NYSEArca computer hardware

index rose 1.2 per cent. Shares ofHewlett Packard, which has asubstantial portion of inkjet sales,were down 1.8 per cent at $16.90.

Volume was 4.60bn shares tradedon the New York Stock Exchange, theNasdaq and the NYSE MKT,compared with Mondays 2012 low of4.46 billion shares. The year-to-dateaverage is about 6.6bn.Among other gainers, PVH raised

its full-year earnings outlook for thethird time this year as it expects itsEuropean business to grow and its

flagship Tommy Hilfiger brand toremain popular with shoppers.

BRITAINS top share index ended flat

yesterday, with the marketstagnating as expectations foreconomic stimulus measures were

countered by concerns over global growth,which was reinforced by gloomy forecastsfrom Japan.The government in Tokyo cut its econom-

ic assessment yesterday, citing the impactof a slowdown in the United States andChina on top of Europes debt crisis.

Miners were weak, tracking falls in cop-per prices on uncertainty about the out-look for growth, which could impactdemand for commodities.

Investors were also reluctant to take onfresh positions as they awaited a meetingof central bankers later this week for clueson possible further stimulus measures toboost growth.

US Federal Reserve chairman BenBernanke gives a keynote speech on Fridayat the US central banks annual get-togeth-er in Jackson Hole, Wyoming, withinvestors hoping he will hint at forthcom-ing monetary policy moves.

I think theres an expectation that they[central banks] are going to deliver, but its

to an extent what theyre going to deliver,said Joe Rundle, head of trading at ETXCapital. If the banks are very bullish theFTSE could break through the upper endof the August range at 5,876, setting it upto target 5,900, he said.

The risk is to the downside if theycome out and say nothing, I think weregoing to fall back quite heavily [to around]5,625, Rundle added.

However, not all commentators expectthe Fed to undertake more quantitativeeasing (QE) to boost the economy.

I am not expecting further QE ... given Ithink the US has shown good signs ofrecovery this month in construction andalso in retail. I think the US economy isdoing as well as it can and doesnt needfurther stimulation, said Colin McLean,managing director of Edinburgh-basedfund manager SVM.The FTSE 100 index fell less than a point

or 0.02 per cent to 5,775.71, stuck within a

tight 30-point trading range from a sessionlow of 5,749 and a high of 5,779.

Volume for the UK blue chip indexremained thin at around 65 per cent of the90-day daily average as traders returned totheir desks after a long UK bank holidayweekend, with many still dragging out thesummer holiday break.

I think prices have held up pretty wellgiven the markets have had a good run.But I think well see a bit of profit-takingbefore the end of the month, said SVMsMcLean.Among the weak miners, Rio Tinto lost

1.7 per cent, with traders citing the impactof a cut in estimates and price target byMorgan Stanley for Rio and a number ofother miners in a sector review, reflectinglowered commodity price forecasts for ironore and metallurgical coal.

But takeover targetXstratabucked themining sector trend, adding 1.4 per cent,with its predator, commodities traderGlencore International ahead 4.7 per cent,as investors weighed up the chances of itsbid succeeding ahead of key shareholdersmeetings. Xstrata shareholder QatarHoldings has pushed for better terms.

Drugmakers were also a drag on the FTSE100 index, with GlaxoSmithKline losing

0.8 per cent as UBS downgraded its ratingfor the stock to neutral from buy witha reduced target of 1,525p, down from1,625p.

PeerAstraZeneca lost 0.5 per cent. Thedrugs group has poached Pascal Soriotfrom Swiss rival Roche to be its new chiefexecutive, hoping his track record in druginnovation and dealmaking can revive acompany battered by clinical trial failuresand patent expiries.

FTSE flat as gloomy forecasts fromJapan highlight worldwide slump

BESTof the BROKERSMax Petroleum PLC


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MAX PETROLEUMMerchant Securities has changed its recommendation on the Kazakh-focused oil & gas company to sell from hold and lowered its targetrprice on the stock from 4.8p to 3.1p following a writedown of 2 .7mbarrel reserves and knock-on effect of the reduction on half-year resevrefigures. The broker is also concerned that there has been no update onhow debt negotiations with lender Macquarie are going.

FTSE


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THE highly emotional debatestill raging about GCSE gradesis not very enlightening. Butwhat has happened tells us alot about how incentives

matter, and how they affectoutcomes. At the same time, itshows us that unless a proper set ofsocial norms is in place, incentivescan have unanticipated, perverseeffects. In this respect, bankers andteachers have behaved in exactly thesame way.

Go back to the major reforms ineducation under Margaret Thatcherin the 1980s. There was no marketwithin the state sector, so the govern-ment tried to mimic the effects of amarket by introducing exam targets.

Resources for your school and your

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

FACT OF

THE DAY

HSBC, Vodafone Group, BP, Royal Dutch Shell

and GlaxoSmithKline are the top 5 stocks on the

FTSE 100 which have the heaviest weighting.

cityam.com/forumTHEFORUM

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.

16WEDNESDAY 29 AUGUST 2012

own promotion prospects dependedon hitting these targets. Teacherswere given an incentive to improve,just like in a real market. At least,that was the theory.

Incentives did indeed work, but inan unforeseen way, and with anundesirable outcome. Teachersworked out that targets could be met

by entering pupils for Mickey

Mouse subjects. These boomed atthe expense of subjects like physics.

Nobel Laureate Elinor Ostrom wasawarded her prize for pointing outthat markets were not the solutionto everything. Social norms, emerg-ing from the interactions betweenpeople, can trump incentives. So ifthe teachers had upheld a set ofsocial norms, which disapproved ofthe devaluation of standards, wewould not be in this mess. But theydidnt. Most individual teachers areleft-wing, but they acted like carica-tures of the rational economic per-son in their own self-interest, justlike the bankers they despise.What about t he exam boards and

grade inflation? No one outside the

state education sector believes that

the sustained rise in grades over a 24year period has any real meaning.The boards compete in a real market,for students to take their exams.Competition is almost always benefi-cial. It keeps suppliers on their toes,forcing them to innovate, andimproves quality. The concept ofwasteful competition is virtually anoxymoron.

But in education, we are not deal-ing in competing goods and services,but in competing currencies, wherea different set of rules apply. Theunit of value is the quality of thegrades. Collectively, it was in theirinterests to maintain standards.Individually, each board had anincentive to make the exams that lit-

tle bit easier. The outcome has been

a catastrophic decline in standards.We have seen a classic example of

Greshams Law, of bad money driv-ing out good. Why choose to enteryour students into an exam with aboard which tries to uphold stan-dards? When another will supplyyou with more and better grades forthe same price, in terms of effortthat you and your students need toput in.

Michael Gove is trying to enforce anew set of social norms, with theeducational sector once morerespecting standards. He must notback down.

Paul Ormerod is an economist and part-ner at Volterra Partners. He is the authorof Positive Linking: How Networks Can

Revolutionise the World (Faber and Faber).

AGAINSTTHE GRAIN

PAUL ORMEROD

Exam targets shouldnt be prioritised at the expense of a decent education

EVERYONE tells stories. Its oneof the ways we connect withour friends and families. Itshow we impress people whenwe apply for jobs, or sell

business products to potentialcustomers. Telling stories is alsowhat we do on Facebook and Twitter,and is even part of how we go aboutfinding a partner.

Leaders tell stories too. They just doit better and more professionallythan the rest of us. A leader has to

possess many different skills. But,without the ability to tell stories, heor she would have no followers andwould cease to lead anyone.

In my new book, Lessons From TheTop, I explore the power of such sto-ries. The book is based largely onleaders I have met, and examines thechanges which have taken place inthe kinds of stories leaders now feelthey must tell in order to impress usin the twenty-first century.Why, for example, did Barack

Obama write in his autobiographythat he had used illegal drugs? Why,in the last British election in 2010,

Stories may be in a

leaders best interestsbut they may notnecessarily be in ours

GAVIN ESLER

Why a flair for storytelling is vitalif you want others to follow you

did David Cameron answer mediaquestions about his relationship withhis wife and family? And can you

imagine leaders from the past beingopen to discussing what were onceconsidered private matters? WouldWinston Churchill admit that hedrank too much? Would MargaretThatcher discuss her personal life?Why have things changed for leaders,and the rest of us, in the past 30 or soyears?

Sometimes a leaders storytellingcan be summed up in a phrase.Thatcher was the grocers daughterfrom Grantham -- five wordsreminding us that, unlike previousConservative leaders, she was notespecially posh, did not go to Eton

and was a woman. When theRussians called her the Iron Lady, shewas blessed with a story whichappeared to fit her character perfect-ly in just two words.

Bill Clinton, when I first met him,described himself as the boy fromHope, the small town in Arkansaswhere he grew up. Actually, much ofhis childhood was spent in HotSprings, a gambling town. But thatdid not make for such a snappy story.He later called himself the

Comeback Kid -- and he had quite alot to come back from.

Every leader that I have met or stud-ied including business leaders likeSir Richard Branson and Steve Jobs,as well as political and cultural lead-ers like Angelina Jolie and LadyGaga tells three key stories: Whoam I? as a person, who are we? as agroup, a political party, a nation, or abusiness, and finally what is ourcommon purpose? In other words:Where will my leadership take us?

If you are applying for a new job ora promotion, trying for a universityplace or obtaining a loan from your

bank, the kinds of stories you tellabout yourself, your business andyour skills, will fall more or less intothese three categories. And learningby example is one reason why study-ing how the most successful leadersuse their own stories can be soinstructive.

Ive looked at the storytelling tech-

niques of leaders ranging fromClinton, Ronald Reagan and Obamato President Zardari of Pakistan andDeng Xiao Ping of China. Ive alsoconsidered the most unlikely leaders-- terrorists, from the IRA to Osamabin Laden, plus Hollywood stars andother cultural leaders, royal families,and even those who told a story in

Singapore in 2005 to secure the 2012Olympic Games for London. Thosebehind the Olympic bid admitted tome that London was not the mostobvious candidate. But by carefullycrafting the right story, they wereable to persuade the InternationalOlympic Committee to give Londonthe Games.

Even if many of us do not aspire to aposition of leadership, we are all fol-lowers. We may follow an ideal, a phi-losophy or religion, a football team, a

rock star, a political party, a brand ofcomputer, or a fashion trend.

But beware. The stories leaders tellus are designed to make them lookgood. Such stories may be in theleaders best interests but they maynot necessarily be in ours. We need tounderstand, interpret and, at times,debunk the stories leaders tell us andthe ways they often mislead us fortheir own benefit.

Gavin Esler is a television and radiobroadcaster, and presents BBC2sNewsnight. Lessons From The Top is pub-lished by Profile Books. You can followGavin on Twitter: @gavinesler

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17

Vaguely taxing[RE: Taxation shouldnt be determined bysubjective opinions of fairness, Tuesday]It is interesting that recent developmentsin political circles have redefined the basisupon which tax policy is to be developed.A poorly thought-out policy will causemore harm than good. In the case of themansion tax, it is a double taxation andignores the very essence of fairness. Asthe attraction of foreign investments intothe UK is focused around multinationalcompanies, an alignment of tax policiesto attract high net worth individuals couldbe more beneficial to the economy, asmost high net worths have influence onmultinational decision making. Can fair-ness in itself be a good foundation for theadvancement of tax policy? Yes it can,

but not based on politicians definition. Ifwe were truly interested in fairness, thenwe would need to address all of the unfairpolicies.Peter Caine

There is a cruel irony when we use theword fairness in any capacity whentalking about anything to do with UK tax-ation. Our tax system is anything but fairand it is destroying all incentives to createwealth in this domicile. No wonder thelikes of the former Conservative peer,Baron Bagri, are a llegedly moving theirbusinesses to low tax domiciles to avoidpaying extortionate rates of tax in thiscountry.Anand Gondhia

AIRPORTS are an umbilicalcord for the economy tourism, inward investmentand export opportunities allflow into Britain through

them. Any constriction, or lack incapacity, has a harmful effect,limiting our potential for growth.

Particularly when we are in themidst of double dip recession, weshould be looking to the parts of theworld that are growing, in order to

gain access to their success. India,Brazil and China are already hugelyinfluential in the global economy,and their spending power is only setto increase.

In that context, it is bizarre that weare paralysed as a nation when itcomes to deciding the future ofBritains airports.This is not a party political prob-

lem. For years, governments of allcolours have tried their best tododge and delay the issue, fearingthe criticism of Greens and westLondon voters. In many ways, thecoalition is simply continuing tradi-tional Westminster politics tossingthe ticking time bomb from onehand to the other until they can passit on to another schmuck.

But the problem with such a gameis that eventually the timer runs out.Tony Blair could afford to procrasti-nate on airports 15 years ago, butDavid Cameron cannot afford totoday.

Finally, a consultation is comingup, after seemingly endless delays.However, despite its name, this con-sultation will not be a proper, opendebate the coalition has ruled outa third runway at Heathrow evenbefore the discussion has begun.

In an age where taxpayers moneyis so tight that the prospects forinfrastructure investment are limit-ed, it is deeply troubling that thegovernment is ruling out a scheme

TOP TWEETSWhatever the pros and cons of a third runwayat Heathrow a promise is a promise@DanHannanMEP

Women are still getting concussion hittingour heads on glass ceiling. Only 4 of 87 chiefexecutives appointed by FTSE 100 companiesin last two years are female@KathyLette

Is the gold standard commission a way toprevent votes leaking to the LibertariansGary Johnson?@JimPethokoukis

Old Apple line: No phone is like the iPhone.New Apple line: All phones are like theiPhone@politicalmath

Is Americas Republican Party right to beconsidering a return to the gold standard?

YESThere is simply no alternative to going back to hard and apolitical

money. It is the only form of money that is compatible withcapitalism. Our present fiat money system is a creation not ofmarkets, but of politics, designed to allow the constant injection ofunlimited new money into banks for the purpose of cheapeningcredit artificially. This creates inflationary booms and temporaryillusions of prosperity, followed by busts and recessions. Forty yearsof fiat money has left us with a bloated financial industry, assetbubbles and excessive debt. The present system is already in itsendgame. Under a proper gold standard, governments and bankshave to play by the rules of the market. Hard money encouragessaving, proper capital accumulation and financial prudence. It is aguarantor of property rights and individual freedom.Detlev Schlichter is the author of Paper Money Collapse . He blogsat PaperMoneyCollapse.com

Detlev Schlichter

NORoss Walker

There is a strong case for a more rigorous, anti-inflationary

monetary framework once normality returns. But will bindingcurrencies to gold achieve this? There is no reason to believegold is inherently stable. It is a tradable commodity subject tosupply and demand influences. Over time, money supply needsto expand in line with nominal GDP. During a crisis, a goldstandard would not allow monetary flexibility. Quantitativeeasing and public debt monetisation are not long-term solutions,but have helped avert a deeper crisis (compare UK and Spanishbonds). If currencies were convertible into gold at fixed rates, therisks of speculative attacks would increase, hence the goldstandard would ultimately prove as ineffective a monetaryanchor as fixed exchange rate regimes like the exchange ratemechanism.Ross Walker is senior UK economist at RBS

RAPIDresponses

which has private investors liningup to fund it at no cost to theTreasury.

This is not a good way to makedecisions. No one pretends thatHeathrow expansion would solveeverything. In fact, it might simplybe a useful stopgap preceding alonger-term solution which mightinvolve a mix of approaches, fromregional airport upgrades to a possi-ble new hub airport.

Everyone understands the politicaldifficulties for the Prime Ministerand his transport secretary in mak-ing a decision that might be unpop-ular in West London marginals. Butwe arent asking for a guarantee tobuild a third runway were justasking that the idea be fairly consid-ered alongside all the others.The current policy position creates

uncertainty which is harmful.People who want to expand theirbusinesses in overseas markets areleft unsure as to the future. Peoplewho want to base their businessesnear key airports are having to delaydecisions on where they should belocated. Most worryingly of all, theworld is looking at us and seeingthat we cannot make decisions.When all the evidence is weighed

up, Heathrows expansion may notbe the right decision in the end butwe simply cannot afford to take it offthe table when making such a cru-cial decision on our economicfuture.

Simon Walker is director general of theInstitute of Directors.


SIMON WALKER

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This government

should not try tohinder Heathrow

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FERRARI doesnt tend to dothings by halves. When itlaunched its FF model thefirst four-wheel-drive in its

history it did so by having its twoF1 racing drivers drive it at the topof Plan De Corones in the Dolomitesat 2,350 metres. Its fair to say, then,that Ferrari is confident about theFFs four-wheel-drive capabilities.Which is an important point, given

that this is a car that no one outsideof Maranello thought the world need-ed. On paper the FF just didnt seemto fit with the Ferrari brand. Ferrariwas building a car that answered aquestion no one seems to have asked.A Ferrari 4x4, oh my God, no!

decried the deriders. Ferrari ignoredthem and went on and built its four-seater estate anyway.And Im very pleased they did. Back

in the real world Ive been drivingthe V12 shooting brake on thesunny, dry roads of Essex. It becomesimmediately clear from the momentthe engine barks into life that driv-ing the FF is going to be special. It ismonstrously fast and feels fantasti-cally capable. The steering is preciseand the FF is very agile. But thats tounderstate the experience. It is alsoluxurious, comfortable and surpris-ingly easy to drive around town. Thisis as forgiving a sportscar as anyother and you dont need the skillsof Fernando Alonso or Felipe Massato master it.

Subtle, though, it isnt. It is so loudmy three-year-old daughterscreamed at me from the back seatto slow down. She disliked the mon-strous roar of the engine underacceleration. Yet, at speed on themotorway in top gear, the enginebecomes quiet and conversationremains easy.And, like a crazed supermodel with

a kitchen knife, its impossible towalk away from with your backturned. It really is quite beautiful. Itis shapely yet muscular, like a super-model on steroids. Is this the bestlooking four-wheel-drive ever made?I find myself staring at it a lot. I squatdown, stretch up on my toes, I walkaround, stop, think, walk aroundagain. It is a design that I find asintellectual as it is emotional. Itsclear even from its curves that the FF

is a very unusual car.Ferrari has thrown everything at it

to ensure it is a 4x4 worthy of theFerrari name. The mid-front V12 6.3-litre engine produces 650bhp it isthe most powerful production carFerrari has ever built and theengine is coupled with a seven-speedF1 dual-clutch gearbox. It takes just3.7 seconds to reach 62mph and goeson to a top speed of 208mph. And, asit screams forward in a kaleidoscopicblur of gravity and colour, it feels likeit too. Under hard acceleration, thenoise is astonishing.The real story is the unusual 4RM

four-wheel drive system, which allowsthe FF to drive like a conventional

rear-wheel drive supercar most of thetime. But, if the rear wheels lose grippower is transferred as needed to thefront wheels via a separate two-speedgearbox at the front. The system is soclever it can distribute power to eachof the four wheels individually, whileadding hardly any weight overall.

But setting all of its technology toone side, whats most surprising ishow versatile the FF is. You really canmove the family across continents inabsolute comfort and with the mostextreme efficiency. Its spaciousenough to accommodate fouradults, yet it still has 450-litres ofboot space. The cockpit is focusedand sumptuous our test car was

trimmed in aniline calf leather; a14,000 option and there wereentertainment screens inset in theheadrests. All of the controls areoperated from the steering wheel(there are no stalks) which takessome getting used to at first, butmakes complete sense when you aremoving at high speed.

Blending extreme sports car per-formance with load-lugging practi-cality was never going to be easy, yetthe resulting design is nothing shortof a triumph. All in all, the FF is atruly extraordinary car and, amaz-ingly, genuinely practical (if eye-wateringly expensive). There isnothing else like it.

Does the world need a Ferrari 4x4? On the strength of the FF, the answer may be yes.

The FF is a supermodel on steroidsFerraris 4x4 is a wonder of design and practicality. If you can get past the price tag, there is nothing like it

19WEDNESDAY 29 AUGUST 2012

LIFE&STYLE

cityam.com

MOTORING

CAR TALKBY RYAN BORROFF

Bentley shows off its most powerful creationThe fastest, most powerful road-going Bentley ever makes its debut atthe Moscow Motor Show today. Capable of 2 05mph, the all-wheel-driveflagship Continental GT Speed is powered by a 6-litre twin-turbo W12engine developing 616bhp, and can sprint from 0-62mph in 4.2

seconds. Chassis, steering and brakes are uprated and there are a bunchof styling tweaks to the exterior.

WORDS BY

RYAN BORROFF

THE VERDICT:DESIGN hhhhhPERFORMANCE hhhhhPRACTICALITY hhhhiVALUE FOR MONEY hhhhi

THE FACTS:FERRARI FF

PRICE: 227,1070-62MPH: 3.7 secsTOP SPEED: 208mphCO2 G/KM: 360g/kmMPG COMBINED: 15.4mpg

Porsche prepares to showcase the new 911 Carrera 4 and 4SPorsche has revealed its 911 Carrera 4 and Carrera 4S models ahead oftheir introduction at the Paris Motor Show next month. On sale inDecember the Carrera 4 models are up to 65kg lighter than theirpredecessors. The 3.4-litre 350hp Carrera 4 can sprint from 0-62mph in

4.5 seconds and on to 177mph. The 3.8-litre 400hp Carrera 4S takes 4.1seconds to reach 62mph and 186mph is possible.

Check out the new built-to-order TridentBritish sports car maker Trident is showing its Iceni Grand Tourer atSalon Priv 2012 at West Londons Syon Park from 5 September. With atop speed of almost 200mph and a 0-60mph sprint in just 3.7 seconds,the Iceni's mid-front mounted 6.6-litre turbodiesel engine produces

430bhp. Trident claim 68.9mpg is possible. The car is built to order inNorfolk and is priced from 75,000.

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RESTRIAL BBC1

SKY SPORTS 14pmLive US Open Tennis 7.30pmLive US Open Tennis 12am Live USOpen Tennis 4amUEFA ChampionsLeague Goals 4.30am FIFA FutbolMundial 5amEuropean Tour

Weekly5.30am-6am Inside thePGA Tour

SKY SPORTS 27pmLive UEFA Champions League10pm UEFA Champions LeagueGoals 10.30pm Champions Tour

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Football

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BRITISH EUROSPORT4pm-12.30am Live US Open Tennis

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League World 10.45pm ESPNKicks: Brasileirao 11pm ESPN Kicks:

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Kicks: MLS

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Americas Next Top Model

BBC THREE7pm Top Gear 8pmGreat Movie

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FILM Indiana Jones and the

Temple of Doom1984.10pm The

Revolution Will Be Televised

10.30pm Family Guy 11.15pmAmerican Dad! 12am The

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12.30am Bad Education 1amOur

War2amRussell Brand: From

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War

E47pmHollyoaks 7.30pm How I Met

Your Mother 8pmFILMBigMommas House 2 2006. 10pm

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HISTORY7pmStorage Wars 7.30pm Pawn

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American Chopper: Senior Versus

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DISCOVERY HOME &

HEALTH7pmBirth Days 8pm I Didnt KnowI Was Pregnant 9pmHospitalSydney 10pm Trauma: Life in theER 11pm Untold Stories of the ER12am Hospital Sydney 1am Trauma:Life in the ER 2amUntold Stories of

the ER 3amDr G: Medical Examiner4am Labour and Delivery5am-6am A Baby Story

SKY18pm Emergency with AngelaGriffin9pmA League of Their Own10pm An Idiot Abroad: KarlPilkington visits Brazil. 11pm CopSquad 12am Ross K

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