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Sports Direct founder Mike Ashley said a summer of sport pushed up sales and profits

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THE EUROPEAN Central Bank (ECB)will monitor the largest Eurozonebanks, the EUs leaders announcedyesterday, in a compromise whichrepresents a major step towards anew banking union for the currencyarea.And after late-night meetings,

Britain secured voting rights whichit hopes will safeguard its positionas a major centre for Eurozonefinance.They agreed the single supervisory

mechanism will see the ECB moni-tor the largest 200 Eurozone banks,with non-Eurozone member statesallowed to join if they wish.The deal represents a compromise

between countries led by Germanywhich wanted the ECB to monitor asmall number of banks, and thoselike France which wanted the cen-tral bank to supervise many more ofthe 6,000 banks in the currencyarea.

Overall the plan for a bankingunion is designed to do more tobreak the link between banks andtheir governments, and give coun-tries like Germany peace of mindthat a central authority has moresay over how banks in peripheraleconomies operate. This is vital asthe banking union will play a role indetermining how banks could be

Fed begins bank stress testsThe US Federal Reserve is carrying out itsfirst ever system-wide stress test of bankliquidity in a move that could force banksto change their funding sources.Known internally as C-Lar theliquidity version of the Feds annualcomprehensive capital analysis andreview the examination only beganrecently. According to people familiarwith the matter, it covers some of the 19banks subject to the capital tests as wellas some of the largest foreign banks withUS operations.

Man Group faces GLG write-offMan Group is weighing up significantaccounting write-offs next year relatingto its 2010 acquisition of GLG Partners, amove that will raise eyebrows after theannouncement on Monday that formerGLG boss Emmanuel Roman is to be thenew chief executive of the company.

Spain freezes Mubarak assetsSpain has frozen 28m of assets ownedby former Egyptian leader HosniMubarak, his family and associates,including luxury beachside propertiesand luxury cars.

Shepshed end after 133 yearsThe tiny Shepshed Building Society threwin the towel yesterday and announcedplans to be subsumed into theneighbouring Nottingham.

Foyles trade down the TubeThe development of Tottenham CourtRoad Tube station has been blamed for adrop in trade at Foyles bookshop onLondons Charing Cross Road.The independent chain reported a 26 percent fall in pre-tax profits.

Ofgem chief executive to leaveAlistair Buchanan is to step down as chiefexecutive of Ofgem after 10 years, raisingquestions about the future of the energyregulator at a crucial time for the industry.

App users waste 173m on dataConsumers are wasting a staggering173m annually in the UK on unsuitablemonthly tariffs and data-drainingsmartphone apps, according to CarphoneWarehouse and its technical adviser GeekSquad.

Pimco to boost Treasury holdingsThe world's biggest bond fund plans toincrease its holdings of five-year Treasurynotes now that the Federal Reserve willbe including them in its asset-purchaseprogramme and has made freshcommitments to keep interest rates lowfor a long period.

Pfizer IPO for unit in early 2013Pfizer is considering a January orFebruary launch of a roughly $4bn USinitial public offering for animal-healthunit Zoetis.

David Cameron is at a two-day EU summit, which includes talks on closer economic ties

2 NEWS

BY TIM WALLACE

To contact the newsdesk email [email protected] 14 DECEMBER 2012

bailed out by the European StabilityMechanism which German taxpay-ers are a major contributor towards.

Chancellor George Osborne wel-comed the agreement, and saidBritain has secured vital safeguards on the details of the rules and on dis-pute resolution, a majority of coun-tries in the union and a majority ofthose outside of it must agree.And a non-discrimination article

has been included, promising not todamage London or any other finan-cial centre outside the union as ahub for euro-based activities.

Still to be determined are a commonresolution scheme and a commondeposit insurance setup, which will benegotiated in the coming two years.

ECB president Mario Draghi saidthe agreement marks an importantstep towards a stable economic andmonetary union, and towards furtherEuropean integration.And the European Banking

Federation agreed, arguing it is ofparamount importance to ensurefinancial stability and safeguard alevel playing field between banksunder the mechanism.

n The biggest 200 Eurozone banks willbe monitored by the ECB, rather thanlocal regulators

n They are banks with assets of at least30bn (24.35bn), or with assets equal toone-fifth or more of their countryseconomic output

n That means the banks whose collapsecould cause most trouble are monitoredcentrally, but German fears over excessivecentral supervision of its mid-sized banksare also calmed

n All 27 EU nations approved the plan

n But it will only affect Eurozonemembers, plus those others who opt in ata later date

n Britain wanted to make sure it couldnot lose its positional as a key centre foreuro-based finance

n So a non-discrimination clause hasbeen inserted which the governmenthopes will protect the UK from any effortsto on shore euro activities

n The technical details will be decided bya dual majority system, where amajority of those in the banking unionand a majority of those outside it need toapprove the rules

n But this is just the single supervisorymechanism not the full banking unionjust yet

n For that, the countries will need toagree a communal deposit protectionscheme and a common resolution regimefor failed banks is also needed

n George Osborne said that will takeanother two years of negotiation

n But when it is agree, the bailout fundswill be able to centrally recapitalisetroubled banks, rather than goingthrough governments as they do now

WHAT HAS BEEN AGREED?

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WHAT THE OTHER PAPERS SAY THIS MORNING

IN BRIEFBank bonus cap rule edges closernMEPs yesterday issued a draft

proposal to cap bankers bonuses.They want to ban banks from payingbonuses of more than a n employeesbasic salary and if a supermajority ofshareholders disagree, that cap can beraised to two-times the salary. Themeasure will be voted on in the NewYear, before passing to the EuropeanCouncil. However Linklaters lawyerssuggested banks could get round thecap by paying shares rather than cash.

Deutsche charges to hit profitsn Deutsche Bank said yesterday thatits radical restructuring plan would hitfourth-quarter profits significantlyas the bank gets on with cleaning upits balance sheet, but there was nocause for investors to be alarmed.This is not seen as a profit warning,this is a guidance ... to make you

aware that we have effects coming outof resegmentation, chief financialofficer Stefan Krause told a nalystsduring a conference call.

Nasdaq cancels some tradesn Stock exchange operator NasdaqOMX is cancelling a series ofpremarket trades that resulted in wildprice swings in a number of stocksyesterday, including Citigroup andHewlett-Packard, the exchange said.Nasdaq said in a statement it iscancelling trades in nine stocks inwhich trades occurred at prices thatmarked a swing of 10 per cent or morefrom Wednesday's closing prices.AT&T was also affected.

Aman prepared to offendthousands of hardened Geordiefootball fans by renaming theirplace of worship the Sport

Direct Arena (now plain old St JamessPark again) wont be too botheredabout entering into a renewed battlewith City institutions over executive

pay.But more than a handful of otherexecutives will be interested in moni-toring Mike Ashleys discussions withinvestors over a scheme designed toreward the Sports Direct founder with39m of shares if his retail group canmeet some increased earnings targets.A previous proposal was withdrawn

in September in the wake of the share-holder spring, when a number of pro-posed executive pay schemescontributed to the demise of businessleaders such as Andrew Moss at Aviva,David Brennan at AstraZeneca and Sly

Ashleys naked ambition could help him win Sports Direct vote

Bailey at Trinity Mirror, as investorsflexed their muscles over boardroompay. Especially where it seemed out ofproportion to performance.Ashleys board never proposed a pay

increase for him because the founderof the company, 71 per cent share-holder, and its current deputy chair-man, doesnt take a salary.

But when it became clear that ascheme to award him an extra 10mshares in the group was going to bevoted down by shareholders it was

sensibly withdrawn.The new scheme, named super

stretch on the grounds that itdemands more stretching perform-ance targets (rather than because itsdescribing a new brand of SportsDirect football socks), is aimed purelyand simply at Ashley.

This, the board hopes, will addressearlier investor concerns that it mighthave been more broadly basedamongst the management team,which have another scheme of theirown anyway.The targets have been raised so that

the company needs to meet improvedearnings and profits figures in each ofthe following two years for Ashley tobenefit at all, so there are hopes thatthe renewed scheme will attract the75 per cent of investor support itneeds to go through.

Certainly shares in Sports Direct,

Management, who yesterday told mycolleague Kasmira Jefford he backedAshley in every possible way.

Andy Brough at Schroders is one ofthe other larger shareholders.The debate over the bonus will be

seen as a barometer for arguments tocome. Is the investor community pre-

pared to reward successful entrepre-neurs in the quoted company arenaor is it still so hostile that many of themost dynamic of them, like Sir PhilipGreen, shy away and stay private?Theres one bizarre reason why

retail analysts are hoping Ashley getshis way. Yesterday he threatened toattend next years analyst meetingstark naked if he loses. Now theres anincentive to vote it through.

which suffered from a disappointingpost IPO performance in 2007, havebeen moving in the right direction.Down 26.7p yesterday on profit-takingafter results, Sports Direct shares arenow trading at 382.6p, finally wellabove their 300p flotation price, tak-ing the group heading into the gener-

al direction of the FTSE 100.And in a sector that has seen morethan its fair share of casualties andwalking wounded of late, includingHMV and Comet, Sports Direct contin-ues to make good profits, no matterhow soul-destroying some of its storesmight feel.With only 29 per cent of the groups

shares in non-Ashley hands, the boardwill be concerned if any of the largershareholders decide to oppose therevised scheme.

Definitely supportive though isCrispin Odey, of Odey Asset

EDITORSLETTER

DAVID HELLIER

[email protected] me on Twitter: @hellierd

n Allister Heath is away

Euro leaders reach late

night bank union deal

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THE GOVERNMENT yesterday gaveenergy firms the green light toresume exploring offshore shale gasreserves in the UK despite splitsover its potential impact on con-sumer energy prices.

Exploration using hydraulic frac-turing or fracking which smashesrocks deep underground to get gas

out of them had been banned inthe UK since last summer followingconcerns the process was causingearthquakes.Yesterday the ban was

lifted by energy ministerEd Davey, whoannounced plans for rig-orous safety checks onthe procedure.

Following thean n oun ce m e n t ,splits emerged overhow much shalegas would lowerconsumer energybills.

A spokesmanfor the PrimeMinister saidthere waspotential forprices to come

down, whileConservative

Fracking ban

is lifted amidprice confusionBY MICHAEL BOW energy minister John Hayes said

fracking could have a significantimpact on unit gas prices, citing theexample of US shale gas, where gasprices have tumbled.

However, Davey sought to downplaythe impact shale gas will have on theeconomy and the pace at which itwill start to affect consumer bills.

We are still in the very early stagesof shale gas exploration in the UK

and it is likely to develop slowly, hesaid.Fracking was banned when small

tremors were felt in Lancashire fol-lowing drilling by energy companyCuadrilla Resources.

Cuadrilla chief executive FrancisEgan yesterday welcomed lifting theban, and said: Todays news is a turn-

ing point for the country's ener-gy future.

This week Prime MinisterDavid Cameron told a par-liamentary committee:You see America becom-ing virtually self-sufficientin gas, and there is theopportunity of uncon-

ventional gas-shale gas-here in the UK.

THE Duke of Edinburgh is well known for telling it straight , but the staff at the Bank of

England must have thought they were safe from any Royal gaffes yesterday, as the Duke madea visit to the Old Lady of Threadneedle Street with Her Royal Highness. As Bank economistSujit Kapadia explained the unpredictable nature of financial crises unpredictable, much likepandemic flu and earthquakes to the monarch, Prince Philip warned policymakers: Dontdo it again. The Queen also joined the debate, having asked on a visit in 2008 why no onesaw the crisis coming. Kapadia explained: "People thought markets were efficient, peoplethought regulation wasn't necessary, to which the Queen replied: People had got a bit...lax,had they? City watchdog the FSA responsible for overseeing markets was quick torespond. We've widely acknowledged that the regulatory approach before the financial crisisin 2008 was flawed and has since been completely changed. Parliament is now awaiting RoyalAssent for the Financial Services Bill, which will determine the powers for the new regulatorsthat will be created next year.

RIGHT ROYAL CRITICISM OF CITY REGULATION

Ed Davey said shale would

develop slowly

THE CAPITALIST: Page 12

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UBS set for $1bn fine next weekover Libor fiddling accusationsSWISS bank UBS is set to be fined

early next week for its role infiddling Libor submissions.It is expected to be hit by a $1bn

(621m) fine, divided betweenfour regulators across the UK, USand Switzerland.

That is more than double the290m charge Barclays attractedearlier this year, and represents amajor blow to a bank alreadyreeling from a rogue trader scandaland in the process of laying off

BY TIM WALLACE 10,000 staff to cut costs and exitunderperforming businesses.

Libor, the key inter-bank lending

rate, is used to determine howmuch interest is charged onhundreds of trillions of dollarsworth of financial products acrossthe world, but dozens of banks arebelieved to have entered falseinformation into the process.

Barclays fine came with a waveof bad publicity, making otherbanks keen to avoid being the nextin line. But UBS has lost thatstruggle, and is likely to be hit on

Monday or Tuesday.RBS is expected to follow soon

after, with chief executive Stephen

Hester last month explaining hewants to settle the claims beforethe banks results in February.

Three financiers were arrestedearlier this week over Libor fiddlingclaims, thought to include formerUBS trader Thomas Hayes.

UBS, the Financial ServicesAuthority, the US Department ofJustice and the Commodities andFutures Trading Commission alldeclined to comment.

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THE FUTURE of HMV was throwninto doubt once again yesterday afterthe music entertainment retailerwarned it is likely to breach its bank-ing agreements at the end ofJanuary, sending shares tumbling 40per cent.The company said weak market

conditions had created materialuncertainties for the business, aftera worse than expected start to theChristmas trading period in which itmakes up to 60 per cent of its salesfor the whole year.

It said it was in constructive dis-cussions with its eight lendingbanks, including keeping theminformed of current trading, whichit and other retailers hope will beboosted by a late surge in shoppingbefore Christmas Day.

HMVs statement came as thegroup reported a 24.1m operatingloss for the 26 weeks to 27 October,an improvement on the 33.2m lossposted a year ago.The demise of Game has helped

drive a six per cent increased in like-for-like sales of games and technolo-gy products. But like-for-like retailsales in music and DVDs fell by 16per cent despite growing its market

share in all categories.

Twelve days to

save Christmasas HMV falters

BY KASMIRA JEFFORD Chief executive Trevor Moore, whojoined from camera chain Jessops inSeptember, said HMV has had a dif-ficult first half.

Christmas gets later every year,people are also in search of the pro-motional offer and being very care-ful about where they spend theirmoney, he said.

There are still 12 critically impor-tant trading days until Christmasand being on the high street, ifthings do come late, is absolutely toour advantage because thats wherethe footfall will be, he added.

Net debt at the half-year rose to176.1m. The group has been sellingassets to pay down debt and earlierthis month sold a chunk of its livemusic business for 7m.

It is due to make a 30m amortisa-tion payment at the end of January.

BOTTOMLINE

MARC SIDWELL

HMV has been selling assets to pay down its debt

HMV Group PLC

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INTERNATIONAL negotiationsover internet regulation collapsed

without a conclusion last night, asrepresentatives from the UK andUS refused to agree to termsdemanded by countries includingRussia, China and Iran.

Two weeks of talks over areformed UN communicationsagreement came to a head as ahost of western nations said they

would not sign a proposed billthat could lead to greater

Talks break down on internettreaty after UK refuses to sign

BY JAMES TITCOMBcensorship. A bloc of countries

wants to add clauses to the treatythat would create internationallaws on spam messages andsecurity issues, but opponentshighlighted the risks associated

with the proposals, warning thatthey could be used to clamp downon free speech.

Were not able to sign a badagreement that does nobody anyfavours and makes nobody happy,British representatives said ahead

of todays vote, which is expectedto be rejected.


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HOW long can HMV rely on itssuppliers to play Santa Claus?At the start of 2012, the long-suffering entertainment

retailer forged a closer alliance withsuppliers in return for a 2.5 per centstake. Their support is understoodto have run into tens of millions of

pounds already, and to includesupplying goods on consignment sale or return this Christmas. Butit looks like cash-strapped HMV mayalready be returning to the well.

Chief executive Trevor Mooreyesterday referred to HMVssupport from its suppliers andthen said that developing thatrelationship further would be a keyfocus for next year.

HMVs suppliers might wince to

hear that their generosity has onlyjust begun to be tested, but do theyhave much choice? HMV may notseem to have any cards left in itshand, but as the last big bricks andmortar supplier of CDs and DVDs,the major content owners likeUniversal Music need its high streetpresence to counterbalance thethreat from low-margin digital files

or deep online discounts fromAmazon for the same physicalgoods. If HMV buckles, it will be alate Christmas gift for Jeff Bezos.

HMV is in terrible shape. Itsinterim results yesterday werebelow already low expectations.Having to sell off some of its more

successful side projects like HMVLive to raise cash can bring onlyshort term relief at best. But itsmassively Christmas-focusedbusiness this quarter of itsfinancial year brings in 46 per centof its revenues makes it vital tothe legacy media firms that wantto see their box sets under ourtrees. If it is lucky, they will decideto reach for the beard and red hatone more time.

Suppliers stuck playing Santa

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BARCLAYS is preparing to cut up to

2,000 investment banking jobsunder a major review of how it doesbusiness, it emerged yesterday,joining the flood of investmentbanks cutting costs and closingdown sub-scale businesses.

The major British bank is expectedto cut back its Asian and Europeanoperations as it focuses on its corebusinesses. But some jobs are likelyto go in London, with investmentbank head Rich Ricci recentlyindicating the banks tax planningunit and agricultural trading armmay be closed as part of itsreputational review.

The expected losses come in ataround 10 per cent of the investmentbanks headcount.

Barclays declined to commentahead of the officialannouncement bychief executive

Antony Jenkins inthe New Year.

Many majorbanks are sheddingstaff, with Citicurrently cutting11,000 jobs.

2,000 staff togo in Barclaysmajor review

BY TIM WALLACE

A ROGUE former investment bankerwho convinced his two girlfriends totrade on insider information he fedthem was locked up for two yearsand eight months yesterday.Thomas Ammann, 39, leaked insid-

er tips to both of his girlfriendsChristina Weckwerth, 44, and DrJessica Mang, 30, about his client,Canon, and its planned takeover ofDutch photocopier firm Oce.The women bought shares in Oce,

and when the price subsequentlyspiked Weckwerth made 1m(805,000) and Mang, a chiropractorfrom Surrey, made 29,000.

Ammann took half of the profitsfrom each.Yesterday he was sentenced at

Southwark Crown Court havingpleaded guilty to two counts of insid-er dealing and two counts of encour-aging insider dealing earlier thisyear.

His sentence was cut from fouryears to two years and eight monthsfor an early guilty plea.

Sentencing, Judge AnthonyLeonard QC said: Your activities not

Two-timing exbanker jailed

for illegal tipsBY MICHAEL BOW

only cast a cloud over the particularbusiness that employed you butpotentially affects the perception ofmergers and acquisitions businesswithin the City as a whole.

Last month a jury cleared bothMang and Weckwerth of insider deal-ing following a trial at SouthwarkCrown Court, after accepting they didnot know they were trading on illegalinformation.Ammann, who worked in London

for Japanese investment bank MizuhoInternational, had been working onCanons takeover of Dutch photocopi-er firm Oce in late 2008 and early2009.

He was dating both of the women at

the same time when he got them tobuy the shares in Oce.

The Financial Services Authority,which brought the case, yesterdaysaid it made no criticism of MizuhoInternational.Tracey McDermott, FSA director of

enforcement and financial crime,said: At the time of his arrestAmmann was an FSA approved per-son with privileged access to insideinformation. He sought to exploitthat position to make easy money.

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Chief executiveAntony Jenkins willannounce the shakeup in the New Year

Thomas Ammann has been sentenced to two years and eight months for insider dealing

Dr Jessica Mang (left) and Christina Weckwerth (right) were cleared of all charges

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SHARES in Egyptian-focused minerCentamin lost almost half theirvalue yesterday, as is said it wouldclose its flagship asset following adispute over diesel supplies.The FTSE 250 firm said yesterday

that it had received a claim fromEgypts national oil company foraround $65m (40m) in back pay-ments for diesel fuel supplied fromDecember 2009 until January 2012.Centamin argued that the claim wasillegal.As a result, the Egyptian General

Petroleum Corporation (EGPC) hasstopped all diesel supplies to the

Sukari gold mine until the amount ispaid.

Discussions are ongoing, but fuelsupplies have reached critical levels,Centamin said.Additionally, an unforeseen and

arbitrary request from customs offi-cials has halted gold exports, pend-ing an approval from Egypts financeministry.

Centamin sinksas it suspends

its Sukari mineBY CATHY ADAMS

Due to a resultant lack of dieseland a shortfall in working capital inEgypt for the local operations thedecision has been taken to suspendoperations at Sukari, Centamin saidyesterday, which sent its shares to aseven-year low.

Shares in the gold miner are stillrecovering from losing a third oftheir value in October, when anEgyptian court said that the compa-nys right to mine gold in the countrywas invalid.

Shares closed down 47.44 per cent at27.7p yesterday.

Majority owner Sprint offers up$2.1bn to buy rest of ClearwireSPRINT Nextel, the majority ownerof Clearwire, has offered $2.1bn(1.3bn) to buy the rest of thewireless service provider, but it willlikely have to offer more money inorder to secure a deal.

Clearwire, which said it isreviewing the offer, saw its sharesjump more than 11 per cent to $3.06after the bid, topping Sprints $2.90offer price and suggesting thatshareholders were hoping for ahigher sum. Sprint said it would

BY CITY A.M. REPORTER also provide interim financing of$800m to cash-strapped Clearwire ifshareholders agree to the $2.90 offer.

But analysts said that Clearwireshareholders would be very unlikelyto accept Sprints offer, which wouldallow the third-biggest US mobileservice provider to take full controlof Clearwires spectrum holdings tobolster its own wireless data services.

Sprint declined to comment onwhether it would revise its offer. Itsproposed price is five per cent higherthan Clearwires closing stock priceon Wednesday, but more than

double its $1.30 price on 10 October.Clearwire shares have risen

sharply since then on increasinginvestor speculation that loss-making Sprint would use newfinancing from Japans Softbank tobuy Clearwire. Sprint agreed inOctober to sell a 70 per cent stake toSoftbank for $20bn.

Clearwire said in a regulatoryfiling that it is in talks with Sprintregarding a potential strategictransaction and that a committeeof its board of directors has beenreviewing the potential deal.

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13 Dec

BG GROUP yesterday appointedChris Finlayson as its new chiefexecutive, starting in January.

Industry veteran Finlayson iscurrently managing director of BG

Advance and has over 35 years of

experience in the oil and gasindustry. He joined BG Groupfrom Shell, where he was amember of the exploration andproduction leadership team.

Sir Frank Chapman, currenthead of BG Group, will step downat the end of the year after a 12-

year tenure, although he willcontinue to work as an adviser

BG Group appoints oil veteranChris Finlayson as its new chief

BY CATHY ADAMS until his retirement next June.Analysts welcomed Finlaysons

appointment, with Gordon Gray atCanaccord Genuity saying thatinvestors should view the move asa positive one.

Analysts at N+1 Singer alsoheralded Finlayson, saying it

removed a key uncertainty forBG.

They highlighted that while hewas not the most obviouscandidate, given others in theframe who have been at BG for along time, but said they expectedhim to be a strong leader at adifficult time for BG as it strugglesto deliver on production growth.


Chris Finlayson joined BG Group in August 2010 after working for Shell for over 33 years

KPMGs global revenues hit arecord $23bn (14.3bn) for the

year to the end of September, theprofessional services firm said

yesterday.Turnover rose 4.4 per cent in

local terms across the business,or 1.4 per cent includingcurrency movements.

Chairman Michael Andrew saidperformance had grown weakerduring the year. 2012 was a yearof two distinct halves; with

growth strongest at 6.4 per centin the first six months of the yearand relatively weaker growth of

KPMGs global revenues jump1.4 per cent to a record $23bn

BY MARION DAKERS 2.1 per cent in the six months toSeptember, he said.

The firms global advisoryrevenues jumped 8.3 per cent to$7.86bn, while the tax armenjoyed a 6.3 per cent rise to$4.86bn.

KPMG is due to give moredetails on its European earningsnext week, but said yesterdaythat revenues rose four per centacross the region in spite of theeconomic turbulence.

The company increased its totalheadcount by over five per centto more than 152,000 over the

year, while 450 new partnerswere appointed.

MORRISONS, the UKs fourth biggestsupermarket, has chosen Trevor

Strain to replace Richard Pennycookas its new group finance director, itsaid yesterday.

Strain will be officially appointedto the main board in June 2013, butwill take on Pennycooksresponsibilities next spring after ahandover. Strain joined Morrisons in2009 as commercial and operationsfinance director, and was madefinance director of the corporatedivision in 2011. He previouslyworked at Tesco for seven years as UKplanning and reporting financedirector.

Morrisons chief executive DaltonPhilips said: Ive worked closelywith Trevor for threeyears and Imconfident that he hasthe qualities andexperience to makean excellent

group financedirector.

Pennycookannounced hisdepartureunexpectedlyin June.

Trevor to takethe Strain asMorrisons FD

BY ALEX WYNICK

Strain has worked forthe firm since 2009

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10 NEWS

THE BOTCHED West Coast rail franchise contestcould cost the public purse millions of poundsmore to put right, the Department for Transportstop civil servant admitted yesterday.

MPs on the public accounts committee pointedout yesterday that the original competition cost1.9m, but the DfT has so far spent a mind-

blowing 2.7m on preparing to defend itsdecision in court and 4.3m on subsequent advice,including the Laidlaw report into the DfTsshortcomings.

Its a prime example of how one can be pennywise and pound foolish, conceded permanentsecretary Philip Rutnam.

The DfT scrapped a decision to awardFirstGroup the right to run the West Coast MainLine in October, blaming serious flaws in the waythe bids were judged.

I cant say that there wont be [further costs],Rutnam said. The DfT has so far pledged toreimburse 40m spent by the bidders.

West Coast failurescould cost even more

BY MARION DAKERS

TRANSPORT company National Express saidyesterday that it is on track to deliver a goodrevenue and profit performance for 2012.

Its coach division, which covers 1,000destinations in the UK, expects a four per cent risein passenger volume in 2012, while revenues fromnon-concession passengers rose two per cent. Therise comes after a good performance during theOlympics and the addition of new routes, whichthe firm says has offset last years withdrawal of

government subsidies.National Express said it is on course to deliver

its 2012 targets.By focusing on good value, high quality

transport services, we have delivered growthacross our core bus and coach operations,supplemented by a strong performance in rail,said. Recent bid wins from an expanding pipelineof opportunities, combined with strong cash

generation, underpin our platform for growth in

the medium term.

National Express ontrack with revenues

BY JAKOB VILLUMSEN

DO YOU THINK ERIC SCHMIDT IS RIGHT TOBE PROUD OF GOOGLES UK TAX PLANS?Interviews by Alex Wynick and Jakob Villumsen

If they feel its withinthe borders of good

ethics, I guess they can.But I think they should follow thelead of Starbucks in order to pre-serve integrity in the eyes of theconsumer.

These views are those of the individuals above andnot necessarily those of their company

I dont blame Google foravoiding tax, thats the

way our laws work. The firmemploys thousands of people andif it had to pay more taxes it mayhave to make redundancies.Youve got to find a balance.

SARAH ROBERTS INDEMNITY RISK SOLUTIONS

I think proud is astrange word to use.

They should be confident, notproud. Proud makes Google

sound like its being rather smugabout the situation.

PAUL OVER TRIDENT INTERNATIONAL

CITYVIEWS

IMRAN KAHN BANK OF ENGLAND

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CITY grandee Rupert Pennant-Reayesterday announced he was stand-ing down as chairman of FTSE 250money manager Henderson Groupat the groups next annual meeting.

Pennant-Rea, 64, will move to takeup the chairmanship of financialservices firm Royal London Groupfollowing his departure fromHenderson in March next year. Hissuccessor has yet to beannounced.

The company has come along way since it demergedfrom AMP and relisted,and has made two success-ful acquisitions in recentyears. I am leaving thecompany and the board ingood shape, he said.

Pennant-Rea, a formereditor of TheEconomist news-paper, is oneof the Citysbest known

Henderson loses

Pennant-Rae toRoyal LondonBY MICHAEL BOW names, having risen to become

deputy governor of the Bank ofEngland from 1993 to 1995. He hadbeen at Henderson since 2004.

He is currently chairman of TheEconomist Group, and also holdsdirectorships at Go-Ahead Group,Gold Fields Limited and HochschildMining.

Pennant-Rea oversaw Hendersonstakeover of two of fund manage-ments biggest names, New Star Asset

Management in 2009 andGartmore in 2010.

Henderson yesterday alsorevealed plans to switch itstax residency back to theUK from the Republic ofIreland.The firm is also ditching

two executive directors,David Jacob and JamesDarkins, as part of a down-sizing of its board.

Rupert Pennant-Rea isleaving Henderson

Shock departure of WH Ireland

boss causes shares to plummetCITY broker WH Ireland saw itsshare price collapse yesterdayafter the sudden departure of itschief executive Paul Compton.

The group, which helped foundthe Manchester Stock Exchangein 1836, crashed 27.5 per centafter announcing Compton hadleft the business with immediateeffect.

It did not give further details. Aspokeswoman for the firm said itcould not reveal why Comptonhad left.

The companys head of privatewealth management RichardKillingbeck, who joined the

business last month, will replacehim as acting chief executive.

Chairman Rupert Lowe, theformer chairman of Southampton

FC, will also lend a hand.WH Ireland floated on the

junior stock market in 2000 andhad been performing modestlyrecently.

It posted a slight fall in pre-taxprofits in its last set of interimresults, despite the ravages oflower market volumes andinvestor sentiment.

Compton directly owns around1.2m of the 23.7m shares in issue,according to the firms website.This equates to around five percent of the business.

The firms investor relationsdepartment did not comment on

whether Compton still ownedthese shares now he had left.

Killingbeck previously heldsenior management positions at

Close Brothers Asset Managementand Credit Suisse.

MARIA MILLER INVESTIGATED OVER EXPENSESCULTURE secretaryMaria Miller will beinvestigated overher expenses, theParliamentaryCommissioner forStandardsconfirmedyesterday. Miller,who has beenaccused of claiming

allowances on thehouse her parentslive in, received thefull backing ofDavid Cameron.The Prime Ministersaid she hadexcellentanswers toquestions abouther expenses.

BANKS will be banned fromcompeting too aggressively toraise market share, as regulatorsfear it will encourage other firmsto follow suit in a race to the

bottom, undermining financialstability, new guidance showedyesterday.

The Prudential RegulationAuthority will also seek to stoplarge insurers with hugeinvestment portfolios fromaffecting asset prices with majorshifts in their investments.

But both will be enforced bythe PRAs judgement of levels ofrisk to financial stability, with no

New regulator to ban banks from competingtoo aggressively for more lending business

BY TIM WALLACE hard and fast rules set down.A bank could compete for

business too aggressively and thuscontribute to risky

behaviour acrossthe system as a

whole, said the

note, publishedin the Bank ofEnglandsquarterly

bulletin.This means

banks efforts toseize marketshare byloweringinterestrates and

lending standards will becarefully monitored byregulators, keen to stop bankstaking too many risks but alsopotentially denying customers thegood deal banks want to offer toout-compete rivals.

The PRA will examine boththe threats to the viability of afirms business model and the

ways in which a firm couldcreate adverse effects on otherparticipants in the system by theway it carries on its business,

the release explained.

Andrew Bailey will lead thenew banking regulator

BY MICHAEL BOW

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TO The Savoy on Wednesdayevening, for one of the final awardsdos in The Capitalists diary beforethe Square Mile goes into hiberna-tion for the festive period.The occasion this week was the

Mergermarket European M&AAwards 2012, hosted byDaily Politics presenterand Spectator chair-

man Andrew Neil.The annual cer-

emony awardsthe biggestdealmakersfrom Europe,the MiddleEast andAfrica.

This year thebig winnerswere KKR,which won

Dealmakers atThe Savoy forM&A knees up

private equity deal of the year for itssale of Alliance Boots, and DirectLine, which took IPO of the year.

Goldman Sachs was named finan-cial adviser of the year, Linklaters asprivate equity legal adviser of the

year, and t he merger ofGlencore and Xstratawas named M&A deal ofthe year.

The only remain-ing deal to bedone at the endof the eveningwas negotiat-ing entry to asuitably near-

by nightclub. Itis Christmas, afterall.

12 cityam.com

cityam.com/the-capitalistTHECAPITALISTAll change at corporate researchfirm Hardman & Co, which has

been sold by Roger Hardman to aconsortium of City worthies. Thebusiness has also taken on a new chiefexecutive in the form of Keith Hiscock.

Hiscock, who used to be director ofEvolution Securities, tells The Capitalistthat he hadnt anticipated his new roleinvolving a need for fitness, having beentold by his new bosses in no uncertainterms that he must learn to ride apushbike: I havent been on a bike sinceI was in short trousers, but John Holmes,our new chairman, is cycling from LandsEnd to John OGroats. Hiscocklamented: They even say they are goingto confiscate my Oyster card...

Loyal lunchtime visitors toThreadneedle Street restaurant

The Mercer, may have noticedsomething amiss with the shopssignage this week. The wooden and ironM symbol, which notoriously danglesover the pavement and which manyCity workers will no doubt be familiar

with from their daily commute hasmysteriously disappeared. ManagerJason Bedford revealed to The Capitalistthat is not the start of a modernmakeover, but the result of anunfortunate accident. It turns out thatan errant Number 242 bus smashed thebeloved sign to pieces. Luckily regularpatrons from the Bank of England oughtto still be able to navigate their waythere, given that they both reside on thesame street.

FRIDAY 14 DECEMBER 2012

EDITED BY CALLY SQUIRES

Got A Story? [email protected]

L to R: Andrew Neil &KKRs Dominic Murphy

WHEN they werent making

insightful observations on the stateof the UKs financial regulation

yesterday, The Queen and His RoyalHighness The Duke of Edinburghseemed to enjoy the rest of their

visit to the vaults of the Bank ofEngland yesterday.

As tradition dictates, the Queenand Prince Philip both signed anunissued 1m banknote to recordtheir visit, a quirky pastime thatdates back to the 19th century. Thepricey note was then placed in the

Queen and Prince Philip inspectBank of Englands gold stash

banks distinguished visitors book.

The Queen and The Duke weregreeted by governor Sir MervynKing and Lord Mayor of the City ofLondon Roger Gifford, before being

whisked off for a tour of the Bank.The last time the couple browsed

the Banks vaults of gold bars wasin 1998, although the Queens first

visit was back in 1937 when sheaccompanied Queen Mary.

No word on Prince Philipslegendary line of questioning whenhe met staff members.

Her Majesty the Queen takes a tour of Threadneedle Streets finest bars

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TM and 2012 Apple Inc. All rights reserved. Subject to availability. Limited stock on a first come first served basis. Connection subject to status, credit check, Direct Debit and 24 month minimum term contract. Allowances are monthly. Calls/texts made in UK to standard UK landlines/ mobiles, special numbers chargeable. UK data.Excessive usage policy applies. 99.99 for iPhone5 16GB. Terms apply, see o2.co.uk

0800 081 0495Visit o2.co.uk/iphone5

A special gift forsomeone special. You

Treat yourself to unlimited calls, unlimited texts and amassive 1GB for 36 a month with On & On. Just 99.99 upfront cost

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THE TWO founders of a Londondigital advertising agency were bothset for multi-million pound rewardsas they sold their company to Saatchi& Saatchi in a deal believed to beworth around 10m.

Outside Line, majority owned byAnt Cauchi and Lloyd Salmons,employs around 70 people from itsFarringdon office. Saatchi &Saatchis owner Publicis announcedthe deal yesterday, saying it wouldaccelerate the firms shift towardsbeing a digital-focused company.

Outside Line is a perfect culturalfit, Saatchi & Saatchi Londons chiefexecutive Magnus Djaba said. Theagency, which will be integrated intoSaatchi & Saatchi, runs campaignsfor clients including Andy Murray,British Gas and VirginAtlantic.

We know this isan exciting newstep forward, bothfor our agencies andfor our clients,Cauchi and Salmonssaid.

Ad founderscash in with

Saatchi saleBY JAMES TITCOMB

The agreement may meancheaper Kindle ebooks

Bessie Lee has held variousroles at WPP for 20 years

Magnus Djaba,Saatchi & SaatchiLondon chief


APPLE and a group of major publish-ers have backed down over the pricingof ebooks, in a move that could seeAmazon set lower prices.

The four publishers Simon &Schuster, HarperCollins, HachetteLivre and Macmillan as well as thetechnology giant reached an agree-ment with European authorities fol-lowing a competition investigation.The companies agreed

to change the way theydistributed ebooks,moving from a modelin which the publishersset the prices to a sys-tem that allows retail-ers to discount.This is a victory for

Amazon, which is look-ing to cut ebook pricesin order to encourageuptake of its Kindleereader. In 2010, majorpublishers teamed upto force the web retailer

Apple agrees to

back down onebook pricing...

BY JAMES TITCOMBto sell Kindle books at prices theydetermined, fearing ebooks wouldaffect more profitable physical sales.The European Commission had

accused the companies of colludingover the pricing strategy. Late Appleboss Steve Jobs is believed to have nego-tiated a deal with publishers that keptthe cost of ebooks artificially high.

While each separate publisher andeach retailer of ebooks are free tochoose the type of business relation-

ship they prefer, any formof collusion to restrict oreliminate competition issimply unacceptable,said Joaquin Almunia,the EUs competitioncommissioner.

The commitments pro-posed by Apple and thefour publishers willrestore normal competi-tive conditions in this newand fast-moving market.

WPP outlines China expansionwith new chief executive roleSIR MARTIN Sorrells advertising com-pany, WPP, yesterday signalled furtherexpansion into the East, in appoint-ing WPP veteran Bessie Lee to the newrole of chief executive for its Chineseoperations.

The move follows an acquisitionspree in the country, which is nowWPPs third-largest market after theUK and US. Sir Martin expects Chinato overtake the UK in the comingyears, although he has highlightedslowing growth in the region as acause for concern.

Lee is currently chief executive ofGroupM China, a WPP subsidiary.

BY JAMES TITCOMB The company said her newrole will require her tohelp identify newbusiness opportunities,potential acquisitions andinvestments, as well assupport the groupsongoing efforts to attractand retain the best talentin China.

Lee has worked atvarious WPP subsidiariesfor the past 20 years.

Bessie has done afantastic job in buildingGroupM China into not

only the leading mediaagency group in China,

but one of GroupMs strongestoperations globally, Sir Martinsaid.

We look forward to herlending her considerableexpertise and experience acrossWPP to accelerate the growth of

all areas of our business inChina.

WPP has made a flurry ofChinese acquisitions in recentyears, including Octoberspurchase of communicationsagency ArtM. It employs14,000 people in the country.

New Betfair boss playing it safewith focus on regulated nationsTHE NEW chief executive of Betfairhas outlined plans to focus on

regulated gambling markets,indicating a shift from thestrategy outlined by former bossDavid Yu.

Breon Corcoran, who joined theonline exchange-betting operatorin the summer from Paddy Power,said the regulatory environmentin certain countries waschallenging and thus thecompany would focus investmentwithin regulated markets withsustainable revenues.

The shift, which essentially

BY JAMES TITCOMB means dropping support formarkets such as Russia andCanada, follows Betfairs recentexits from Germany and Greece.

The move will cut Betfairrevenues by roughly a quarter.The new plan was announced as

the company posted a 64m loss inthe six months to November, owingmainly to acquisition costs andCorcorans 81m writedowns.

With these effects stripped out,higher costs moved pre-tax profits22 per cent lower to 21m, even asrevenues were five per cent up at200.6m.

Corcoran also announced a20m cost-saving plan, which he

said would make Betfair a leanerand more dynamic business.

We have identified a number ofareas requiring change and fixing

these will take time, he said.

GOOGLE yesterday released aversion of its mapping software forApple devices, followingwidespread criticism of the iPhonemakers own service.

Apple replaced Googles softwarewith its own as the iPhonesdefault maps application inSeptember. However, the service

was riddled with errors, leadingchief executive Tim Cook to issuean uncharacteristic apology.

The service had put landmarksin the wrong place and senttourists off course. Police in the

BY JAMES TITCOMBAustralian city of Mildura hadwarned travellers not to use theapp this week after reports of itsending people to a national park45 miles away.

The fiasco led Cook to fire Appleexecutive Scott Forstall, who was incharge of software.

In a blogpost announcing thesoftware, Googles director ofmobile maps, Daniel Graf.highlighted Googles focus onaccuracy.

We make tens of thousands ofdaily updates to keep Google Mapsaccurate and comprehensive, Graf

wrote.

Googles mapping software was used on the iPhone before Apple replaced it this year

THE UKS biggest mobile networkoperator, EE, will double thenumber of cities that its 4G servicecovers next spring.

The move will extend thecompanys headstart on Vodafoneand O2, which will not be able tolaunch their own high-speedmobile internet services untilearly summer.

EE said yesterday it would bring4G to an extra 17 areas, includingSt Albans, Reading and Watford,

by March. This will extend theservices reach to an extra 4mpeople across 35 cities.

Rival networks will not be ableto launch 4G services until early

EE extends headstart by rollingout 4G service in 17 more cities

BY JAMES TITCOMB summer, following an Ofcom-runauction of 4G-approved mobilespectrum. Applications for theauction were submitted this week,

with the UKs four majoroperators O2, Vodafone, EE andThree as well as BT, entering.

EE, which runs Orange and T-Mobile as well its own self-brandedservice, won approval to usespectrum it already owned for 4Gearlier this year. The clearanceangered rival operators and gaveEE a headstart of around eightmonths. The service launched inOctober, backed by an extensiveadvertising campaign.

Were delighted with the

progress of the 4G rollout, EEschief executive Olaf Swantee said.

Betfair is reallocating resources; trying to create a business of betterquality with better long-term growth potential. Management now seems keeneron adapting the product to the customer and less determined that thecustomer adapt to the product. Target cut to 1,000p but Buy guidance.

ANALYST VIEWS

Current trading is slightly better than we anticipated with revenue uptwo per cent year on year in Q3 to date and the groups guidance indicates asmall downgrade to full year expectations reflecting the exit from certainmarkets. We reiterate our Buy recommendation and 912p target.

The narrative that accompanied the figures contained everything thatwe hoped it might. The task facing the new management team should not beunderestimated, but at least Breon Corcoran now appears to be pointingthe business in the right direction. We rate Betfair as a Buy.

WHAT DO YOU MAKE OFBETFAIRS SHIFT UNDERNEW MANAGEMENT?Interviews by James Titcomb

IVOR JONES NUMIS SECURITIES

SIMON FRENCH

PANMURE GORDON

NICK BATRAM PEEL HUNT

Betfair Group PLC


745

755

750

740

760

765

770

775 p761.0013 Dec

...while Google muscles in onits turf with iPhone maps app

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IN BRIEFLondon gives birth to new firms London is the new mother ofbusiness, according to data releasedyesterday, with a business birth rate of14.5 per cent, the highest in the UK.The Office for National Statistics saidyesterday that nearly 13,000 newcompanies opened in London between2010 and 2011. Overall, the UK saw abusiness births increase by 26,000, or11.2 per cent, and business deaths fallby 20,000, or 7.9 per cent.

Small firms will drive recovery Three hundred thousand new smallfirms are needed to restore the UKeconomy to its former heights, said astudy out yesterday. Smaller firms arecurrently contributing 52 per cent of theprivate sector output in the economy,the Centre for Economics and BusinessResearch said yesterday. And while thenumber of large companies fell by 11 percent over the past 10 years, there are

now 35 per cent more small firms.

Greek jobs crisis worsens further Greek unemployment continued torise in the third quarter, the HellenicStatistical Authority said yesterday.The number unemployed jumped 5.3per cent between the second and thirdquarters of 2012, it said, putting thetotal number of jobless up 40.2 percent in just a year. Women under theage of 24 are finding it hardest to finda job, and suffer an unemploymentrate of 65.4 per cent .

HOUSE PRICES managed to creep upin November, after the month sawuncharacteristically high activity.

Prices were up 0.2 per cent on themonth, according to data from LSLProperty Services and Acadametrics,on the back of a five per cent rise inthe number of transactions comparedto last November. This put prices up3.3 per cent on the year a rise ofmore than 7,000 the index showed.The news comes as a separate

report, released today by the RoyalInstitution of Chartered Surveyors(RICS) estimates that house prices willrise by two per cent in 2013.The bullish outlook contrasts with

earlier data from Halifax andNationwide, which pointed to adecline in prices over the current year,but is in line with more cheeryNovember data from Rightmove.And Esurv statistics on the

November mortgage market reinforcethe idea that the month was relative-

House prices up

on high volumeof transactions

BY BEN SOUTHWOOD ly positive for the housing market.The number of home purchase loans

rose to an 11-month high of 53,259 inNovember, the surveyor said. Asrecently as June, the number of loansagreed had dipped to 44,192. But Esurvdid not put this credit boost down tothe governments Funding for LendingScheme (FLS). FLS has lowered mort-gage rates, but criteria failed to loosenin November, with banks content tofocus on lower-risk low loan-to-valueborrowers, the report said.

It pointed out that the average loanto value on properties worth less than125,000 actually fell, reaching 66 percent, the lowest in 21 months, suggest-ing first time buyers were being keptout of the market, even after FLS.

Newnes at LSL agreed that mortgagemarket improvements were topheavy. He said: Lenders remain riskaverse and conscious of capitalrequirements, and those that havestarted to tap FLS have been directingadditional funding towards buyerswith larger deposits and buy-to-let.

UK individual consumption fallsto fourth in the European UnionUK INDIVIDUAL consumption slidto fourth in the EU in 2011, fallingbehind Austria and Germany.

British individuals were stillable to exercise 18 per cent morepurchasing power in theirconsumption than the EU average,Eurostat revealed yesterday, butthis placed them fourth.

In 2010 their consumption wasa fifth above average, puttingthem in second, behind onlyLuxembourg. But Germany andAustria both saw their individual

consumption increase, movingthe countries into second and

third.Measured by GDP per resident,

corrected for purchasing power,the UKs living standards placedonly 10th in 2011. The top ninewere populated entirely bynorthern European countries the benelux nations, the EUsthree Scandinavian members, thetwo German-speaking countries,and Ireland.

Luxembourg placed first onboth measures, with a GDP percapita some 171 per cent close totriple the EU average, andconsumption some 40 per cent

above the mean of the rest of theEUs members.

BY BEN SOUTHWOOD

Olympic and Paralympic Gamesfail to boost UK visitor numbersVISITS to the UK cr ept lower in2012, despite London hosting the

Olympic and Paralympic Games.A total of 26.2m visits have beenmade to the UK in the first tenmonths of 2012, according tofigures released by the Office forNational Statistics yesterday. Thisis one per cent below the level in2011, despite the capita l hostingthe worlds biggest sportingevent.

October, which saw a four percent decline in visits compared tothe same month last year,bringing the figure to 2.7m, was

BY BEN SOUTHWOODthe fourth month out of the lastfive with visitor figures lowerthan last year.

However, earnings fr om

tourism, at 15.8bn in the first tenmonths of the year, were up threeper cent on the year before,despite an 11 per cent fall inOctober earnings, bringing themonths figure to 1.6bn. And thisgain did appear to come from anOlympic boost, rising 12 per centand 19 per cent in the two monthsthe Games were held.

Barclays Mike Saul took adownbeat view on the figures,suggesting that Eurozone troubleswere acting as a brake on tourism

from the currency bloc. The latesttourist numbers offer littleChristmas cheer as year on yearfigures continue to decrease, Saul

said. With weak growth acrossthe Eurozone, household spendingremains a major concern for manyof our traditional visitors.

Whatever the picture for visitorsto the country, UK touristsenthusiasm for foreign visitsappeared undimmed, with thetotal number, at 50.3m in the yearup to and including October,completely flat on the figure for2011. And spending abroadclimbed four per cent to reach29.3bn over the year to October.

NEW CLAIMS for unemploymentinsurance fell back again in thefirst full week of December.

Seasonally adjusted initialclaims dropped 29,000 to reach

343,000 in the week ending 8December, the Department ofLabor said yesterday. Thisreflected a bigger than seasonallyusual fall in the underlyingclaims, bringing them from500,931 last week to 428,814 justunder the 435,863 they reached inthe same week in 2011.

And total insuredunemployment came down withnew claims, hitting 3,198,000 onthe headline seasonally adjustednumber during the week ending 1

US new unemployment claimsenjoy second December drop

BY BEN SOUTHWOOD December, down 23,000 on theweak before and 411,000 on theyear before.

Retail sales data was alsocheery. November sales totalled$412.4bn (255.6bn), the USCensus Bureau said, a rise of 0.3

per cent compared to Octoberand a full 3.7 per cent above thesales seen during November 2011.

Separate data from the CensusBureau had a less positivemessage, though for the previousmonth. Distributive trade salesand manufacturing shipmentssummed to a total value of $1.26trillion in October, the datashowed. Though this was a 0.4 percent fall compared to September,it represented a 3.1 per cent jumpcompared to a year before.

ORDERS on manufacturers bookshave begun to show improvedsigns of life this month, accordingto a survey out yesterday.

A net balance of 12 percentagepoints more firms told theConfederation of British Industry(CBI) their order books were

below normal in December, thanthose that said their books weremore full than normal.

But this minus 12 figure was asignificant improvement onNovembers minus 21, and it iscomfortably above the long runaverage of minus 17, putting a

more positive gloss on the data.And the index for output over

Drop in factory orders now lesssevere than long run average

BY BEN SOUTHWOOD the coming three months alsoimproved from minus nine inNovember to zero in December,suggesting firms expect output tostay about where it is now.

IHS Global Insights HowardArcher said the improvement inthe survey data provided somereason for hope amongstmanufacturers. A significantlyimproved December CBIindustrial trends survey offerssome grounds for optimism formanufacturers going into 2013after they suffered a pretty torridend to a largely difficult 2012,

Archer said.But he predicted that

international conditions wouldcontinue to prove difficult.

HOUSING MARKET STILL CHOPPY BUT NOVEMBER SEES PRICES UP

HOUSE PRICES

IN NOVEMBER 2012COMPARED TO OCT 2012

0.2% HOUSE PRICETHE AVERAGE

226,918

HOUSE PRICES

IN NOVEMBER 2012COMPARED TO NOV 2011

3.3%

INDICES TREND BROADLY UPWARD AS STUTTERING RECOVERY CONTINUES

Annual increase in house prices, %

Source: LSL Property Services / Acadametrics

15

10

5

0

-5

-10

-15

-20Mar 08 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12

LSL Index

Range of other indices

UK LIVING STANDARDS RANK ONLY 10TH IN EU

GDP* Consumption*

Luxembourg 271 140 (1st)

Netherlands 131 113

Ireland 129 101

Austria 129 119 (3rd)

Sweden 127 116 (5th)

Denmark 125 113

Germany 121 120 (2nd)

Belgium 119 111

Finland 114 112

UK 109 118 (4th)

1

2

3

4

5

6

7

8

9

10 SOURCE:EUROSTAT

*(PER CAPITA) AT PURCHASING POWER STANDARDS, 2011, 100 = EU AVERAGE

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IN BRIEFRolls-Royce secures Brazil deal British engineering giant Rolls-Royce yesterday said it had secureda 100m contract to supplyintegrated power and propulsionsystems for seven offshore drillships for Brazilian oil companyPetrobras. The ships will be built atthe Atlantico Sul shipyard, and willsupport the extraction of oil frombetween 2,000 and 3,000 metresbelow the Atlantic Ocean.

Suffolk win for Balfour Beatty Infrastructure group Balfour Beattysaid yesterday it had been selected aspreferred bidder on a 200m contractto maintain highways in Suffolk. Thecontract, initially for five years, hasthe possibility of an extension to 10years. If approved, Balfour Beatty willbe responsible for designing andimplementing highway maintenenceand improvement works in the East

Anglian county.

Adobe Systems earnings rocket Software maker Adobe Systems,the firm behind Photoshop andAcrobat, yesterday posted a higherfourth-quarter profit on lowerexpenses. Net income rose to $222.3m(138m) from $173.7m a year earlier.Revenue was flat at $1.15bn. Deferredrevenue grew by $59.3m to a record$619.6m, the firm said in its fourthquarter figures yesterday, whilesubscriptions to its marketing cloudservice are on the rise.

GLOBAL airlines yesterday revisedupwards widely-watched industryprofit forecasts for 2012 and 2013, butsaid that carriers remain vulnerableto risks including the Eurozone crisisand the threat of a US fiscal cliff.The International Air Transport

Association (Iata), which represents240 carriers, said that airlines wereset to make a collective profit of$6.7bn (4.15bn) in 2012, up from aprevious forecast of $4.1bn.

For 2013, it predicted an industryprofit of $8.4bn, up from its previousestimate of $7.5bn.

Following projections of a loss forin the October forecast, Iata nowexpects European airlines to breakeven, a decline of $400m from the2011 figure.African carriers are

also expectedto break even,with airlinesacross NorthAmerica, the

Iata says airline

profits will behigher in 2013

BY HARRY BANKS Middle East and Asia-Pacific regionsall expected to increase profits.

Expectations for Latin Americaremain unchanged.The airline association warned that

macroeconomic risk particularlythe Eurozone crisis and the US fiscalcliff remained a key threat to globalperformance.

We need to make sure that cashstrapped governments understandaviation is a catalyst for economicgrowth, and ensure that light touchregulation does not become a licencefor infrastructure providers to letcosts get out of control, said Iata chiefexecutive and director general TonyTyler.

Tyler said the organisation wouldalso maintain pressure on govern-

ments toinvest in keyinfrastructure

improvements.

Airbus confirms $9.4bn AirAsiaorder in boost to Welsh factoryEUROPEAN planemaker Airbussaid yesterday that Malaysiangroup AirAsia was the customerbehind a previously announcedorder for 100 A320 aircraft wortharound $9.4bn (5.8bn) at listprices.

The deal, which provides AirAsiawith an additional 64 A320neo and36 A320ceo aircraft, was formallyunveiled at Airbuss wing assemblyplant in Broughton, Wales, in thepresence of Prime Minister DavidCameron.

The contract will safeguard 1,500Airbus jobs in Britain and 7,500 in

BY CITY A.M. REPORTER the group's wider supply chain,Camerons office said.

This is excellent news and atremendous boost for theworkforce and for UKmanufacturing, Cameron said in astatement.

Todays announcementdemonstrates the strength of theUK aerospace sector and theimportant role it plays in growingand rebalancing our economy.

Alongside AirAsias chiefexecutive Tony Fernandes, Camerontoured the Broughton plant, whichemploys over 5,000 people and will

be making the wings of theaircraft.

Other major parts are made inFrance, Germany and Spain.

The announcement comes a dayafter data showed that the numberof people in work in Britain hit arecord high in November, offeringsome relief to a governmentstruggling with unpopularausterity measures and a sluggisheconomy. The contract alsoreaffirms AirAsia, Asias largestlow-cost carrier, as the worldslargest A320 customer by numberof aircraft ordered.

We have just bought 100 planeswhich makes a total of 475. To meet

the amazing demand in Asia,Fernandes wrote on Twitter.

Wood Group drops in spite ofan upbeat trading statementOIL AND gas services firm JohnWood Group said yesterday that it

expects to deliver good growthfor the year in line withexpectations, despite a subdueddownstream market outlook.

The FTSE 100 firm said in a pre-closing trading statementyesterday that Wood Group PSNwas boosted by strongperformance in the North Sea andNorth America, although it addedthat it expects to lose around$20m (12.4m) this year on acontract with PetroleumDevelopment Oman.

BY ALEX WYNICK The seven-year engineering andmaintenance contract, worth$800m, was awarded in 2010 toprovide energy and petroleum

operations in the Arabian Gulf.The company said that it wastaking steps to reduce losses inOman for 2013, and hopes that thecontract will become profitable in2014.

Meanwhile its engineeringdivisions core profit was predictedto be up 30 per cent for t he fullyear.

We anticipate further goodgrowth in 2013 and remainconfident in t he longer-termprospects, Wood Group said

yesterday.Despite the upbeat comments,

the company was the biggest bluechip faller yesterday, closing down

4.55 per cent at 733.5p.

John Wood Group PLC


740

750

760

770

780 p 733.5013 Dec

EUROPES largest budget carrier,Ryanair, yesterday lost its appeal to

block an investigation into its near-30 per cent stake in rival AerLingus.

The UKs Court of Appeal ruledthat it is within the jurisdiction ofthe Competition Commission (CC)to investigate Ryanairs ownership.

The CC is investigating the caseafter the Office of Fair Tradingruled that the stake threatenscompetition in the UK airlinemarket, and could lead to Ryanair

being forced to reduce its golding.

Ryanair appeal over Aer Lingusbid hit by court rejection in UK

BY JAKOB VILLUMSEN Aer Lingus chairman, ColmBarrington, said he was delighted

with the ruling and called it a keymilestone on the path towardRyanair being required to divest itsshareholding in Aer Lingus.

Ryanair plans to take therejection to the UK Supreme Courtfor review.

Meanwhile, Ryanair added twonew board members yesterday totry and address the gender balancein its boardroom. Julie ONeill, theformer secretary general of theIrish Department of Transport, andPaypal exec Louise Phelan were

welcomed to the firm yesterday.


Michael OLearys Ryanair plans to appeal the decision in the Supreme Court

THE US unit of aerospace companyBAE Systems has won a five-yearcontract worth $400m (248m)

with the US Navy, it announcedyesterday.

The London-listed company willperform inspections, maintenanceand modifications for more than300 T-34, T-44 and T-6 traineraircraft used by the Chief of Naval

Air Training in Florida and Texas.This is a major win for our

team, significantly expanding oursupport to the US Navy for traineraircraft, said Gordon Eldridge,

vice president and generalmanager of Aerospace Solutions atBAE Systems.

Dave Herr, president of BAE

BAE clinches a $400m deal toservice US Navy trainer aircraft

BY ALEX WYNICK Systems Support Solutions, said:This win strengthens our positionin the aviation services marketand creates opportunities foradditional organic growth.

It was a major win for BAE,which beat incumbent Sikorsky

Aircraft, a unit of UnitedTechnologies Corp, and L-3Communications Holdings tosecure the contract.

This is BAEs second majormilitary deal in a week, and isexpected to expand its services

business significantly.On Monday, BAE won a further

560m deal to complete theAudacious submarine for theMinistry of Defence.

It had already won 640m ofwork on Audacious.

FRENCH food group Danone saidyesterday that it plans to cut jobsin Europe in an attempt to save200m (162.2m) over the next two

years.The company, the biggest

yoghurt maker in the world, saidjob losses will be restricted tomanagerial roles, and will be

based on voluntary departures,but did not comment on howmany positions will be cut.

Danone has been struggling toimprove European sales throughthe recession, with a 1.5 per centdrop in third-quarter sales in

Europe, and some businessesfalling by as much as 10 per cent.

Danone seeks more savings asausterity in Europe dents sales

BY ALEX WYNICK Activist investor Nelson Peltz,who has a one per cent stake inthe company, has been pressuringthe company to save profits andreduce costs.

Danone spokesman LaurentSacchi denied that Peltz hadinfluenced the decision to cutstaff: We have thought for several

weeks, if not months, about a wayto regain a competitive edge, hesaid.

Danone warned in June that itsoperating profit margin would fall

by 50 basis points to 14.1 per centthis year and investors have been

bracing themselves for a similardecline next year as economies

deteriorate. Danone has yet to giveits official outlook for 2013.

Profits in the airlineindustry are set to take off

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FRIDAY 14 DECEMBER 201218

Wall Streetsrally halts overeconomic fears

THE S&P 500 ended its six-daywinning streak yesterday,retreating as worries intensifiedthat Washington's fiscal cliff

negotiations were dragging on withlittle progress.Anxiety about the drawn-out talks

between Democrats and Republicanswas enough to offset encouragingdata on retail sales and jobless

claims .There is concern that tax hikes and

spending cuts, set to begin in 2013 ifa deal is not reached in Washington,will hurt growth. The stock markethas taken the heated rhetoric instride of late, but downbeat remarksfrom Republican House Speaker JohnBoehner prompted some selling onThursday.

After coming close to a one percent decline for the day, the S&P 500pared losses late in the session. Theindex had posted six straightsessions of gains throughWednesdays close, and at one pointon Wednesday, the S&P touched itshighest intraday level since 22October.The Standard & Poors 500 Index

fell 9.03 points, or 0.63 per cent, toclose at 1,419.45. The Dow Jonesindustrial average tumbled 74.73points, or 0.56 per cent, to 13,170.72at the close. The Nasdaq CompositeIndex slid 21.65 points, or 0.72 percent, to end at 2,992.16.Apple's stock, down 1.7 per cent at

$529.69, was among the biggestdrags on the Nasdaq, whileInternational Business Machines,down 0.5 per cent at $191.99, wasamong the biggest weights on theDow.A US jury found that Apple's

iPhone infringed three patentsowned by MobileMedia Ideas.

BRITAINS leading share index fellyesterday as concerns over USfiscal negotiations resurfaced,prompting investors to

consolidate recent gains made duringthe longest continuous rally of the year.The FTSE 100 index was down 16.24

points, or 0.3 per cent, at 5,929.61,having closed 0.4 per cent higher at anine-month closing peak on Wednesdayfollowing six days of consecutive gains.The index recovered slightly in

afternoon trading from early fallsfollowing encouraging unemploymentand retail data from the United States.

However, shares fell back towards theintraday trough of 5,918 after US HouseSpeaker John Boehner accusedPresident Barack Obama of beingwilling to slow walk the economytowards fiscal crisis.

Federal Reserve Chairman BenBernanke had set the tone for the day'strading, warning that monetary policywont be enough to offset damage ifpoliticians fail to avert the fiscal cliffof steep tax hikes and budget cuts

which could throw the worlds biggesteconomy into recession.AstraZenecawas the most heavily

traded stock in the index, trading overtwice its 90-day daily average volume,while FTSE volume was at 70 per cent.

The drug company lost 2.8 per centand took the most points off the indexas it said an experimental rheumatoidarthritis drug proved inferior to AbbottLaboratories Humira in a clinical study.Profit taking was seen as a theme acrossthe index, with the FTSE expected toresume its upward path heading intothe year end despite the sessions losses.

BESTof the BROKERSJohnston Press PLC

7 Dec 10 Dec 11 Dec 12 Dec 13 Dec

p14.75

14.50

13.75

14.00

14.25

14.7513 Dec

JOHNSTON PRESSPanmure Gordon has kepta strong buy rating onthe publishing group andincreased its target priceto 18p. The broker saysbeing elevated to the FTSESmall Cap index will havea positive effect on shares.

DASHBOARDCITY YOUR ONE-STOP SHOP FOR JOB MOVES,BROKER VIEWS AND MARKET REPORTScityam.com

FTSE


5,950

5,940

5,930

5,920

5,900

5,890

5,910

5,921.4913 Dec

Travis Perkins PLC


p1,120

1,110

1,070

1,080

1,090

1,100

1,060

1,072.0013 Dec

TRAVIS PERKINSUBS has kept its neutralrating for Travis Perkins,and lowered its pricetarget to 1,100p as productinflation for buildingsupplies fell from two to

zero per cent in the secondhalf, and like-for-like salesfell by 1.8 per cent.

Victrex PLC


p1,680

1,660

1,580

1,600

1,620

1,640

1,560

1,581.0013 Dec

VICTREXBroker Numis has issued ahold rating for thepolymer manufacturer,with an increased targetprice of 1,593p. Results forthis fiscal year have beenrespectable but Numisremains cautious fornext year.

Carmignac GestionVincent Steenman has been

appointed to the assetmanagement firms portfoliomanagement team. He joins fromZadig Asset Management, wherehe was a partner. Steenman hasalso held roles at the LVMH GroupArnault Family Office and MorganStanley.

Allele FundJohn Shea has been appointed to the investment fundsadvisory board. He is co-owner of Shea Homes, and has alsopreviously held audit positions at Peat, Marwick, Mitchell &

Co, a predecessor of KPMG.

Innovation GroupThe business services firm has appointed Louise Fisk ashead of global communications and marketing. She joinsfrom Logica, where she managed global public relationsand communications.

Old Mutual Global InvestorsThe investment firm has announced four appointments.John Shepherd joins as head of UK discretionary sales fromUBS Global Asset Management. Nick Pearse joins asdiscretionary sales manager, south from Milton AssetManagement. Brian McLaughlin joins as advisory salesmanager, north from Prudential UK Intermediaries. And

Graeme Brown joins as advisory sales manager, south fromMomentum Global Investment Management.

Chadbourne & ParkeThe law firm has expanded its international arbitration teamwith two new partner appointments. Mark Beckett andRachel Thorn both join from Latham & Wakins. Beckett isadditionally a lecturer in law at Harvard Law School, andThorn specialises in international commercial arbitration.

Simmons & SimmonsJay Lee has been appointed partner in the law firmsfinancial markets practice. He joins from StandardChartered, where he was head of debt capital markets legalfor North East Asia.

WHOS SWITCHING JOBS Edited by Tom Welsh

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

CITY MOVES

To appear in CITYMOVES please email your career updates and pictures to [email protected]

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in association with

Ominous fiscal cliff talk from FedsBen Bernanke spooks the FTSE 100

7/30/2019 Cityam 2012-12-14

21/31

LETS open the kimono. Thelanguage of business is a joke.It now seems to be bestpractice to get your ducks in arow for corporate meetings by

memorising phrases like valueproposition, point person and corecompetency. At the end of the day,buzz phrases and bizarre metaphorsmay take it to the next level, but themost insidious part of this corrosionof office communication is morebanal: loose usage, cliche and jargonthat conceal lazy thinking.

What a pleasure, then, to receivein the post a copy of TheUnpublished David Ogilvy. In thisanthology of office prose, most ofwhich was never intended for a

public audience, the Father of

FORGET the Energy Bill; theannouncement that explorationfor shale gas can now resume isthe big energy story of 2012. InLancashire alone, there is

enough shale gas in the ground tomeet Britains needs for decades. Butthe big question is what proportioncan be developed at a reasonable cost.Yesterdays decision means that we cannow find out.

Even on pretty cautious assumptions,the benefits of a new source of domes-

tic gas could be immense. There arethree principal dividends.

Firstly, economic. We estimate thatdeveloping a shale gas industry couldprovide 35,000 jobs, many of themhighly-skilled and in parts of the coun-try that need them most. Shale gas willalso generate tax revenue and improvethe UKs balance of payments.According to the Office for BudgetResponsibility, North Sea oil and gasrevenue will fall from over 11bn lastyear to less than 5bn in 2015. A grow-ing shale sector could help to fill thathole. And a recent report from thePyry energy consultancy found that

cityam.com/forum

The UKs balance of

trade could improve by3bn a year throughlower gas imports

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.

20FRIDAY 14 DECEMBER 2012

CORIN TAYLOR

Green light for shale: Now Britainwill benefit from the dash for gas

the UKs trade balance could improveby over 3bn a year through lower gasimports.

Secondly, environmental. Gas is the

ideal fuel to provide back-up electricityto intermittent renewables like windand solar. The development of cheapUK gas will help to accelerate the moveaway from coal, reducing carbon emis-sions and improving air quality. Usingnatural gas in road transport is anoth-er major opportunity, and could com-plement electric and hybrid cars incutting the thousands of deaths eachyear from polluted streets.

Thirdly, security. Britain currentlyimports around half of its gas, andfalling North Sea production meansthat imports are projected to reachthree quarters of usage by 2030. UK

shale gas can halt this rise. Shale devel-opments around the world are alsolikely to lead to the link between oiland gas prices breaking down, as hashappened in the US. But transportingnatural gas by sea or long-distancepipeline can be expensive. Indigenousproduction will remain important.The official reports have concluded

that the hydraulic fracturing process issafe if conducted properly. But strongregulation is important to ensure thatno corners are cut. As energy secretary

Ed Davey pointed out yesterday, theseismic controls placed on shale gasfracking are more stringent than thosefor geothermal energy, constructionand quarrying projects. And with theLancashire shale many times thickerthan the leading plays in the US, con-siderably more gas can be extractedfrom each well. In Britain, thousandsof wells dotting the landscape aretherefore unlikely to be needed.As in so many cases, the shale revolu-

tion began in the US. From a standingstart, shale now accounts for around aquarter of US natural gas production.Natural gas prices have tumbled to

around a third of those in Britain, lead-ing to a manufacturing renaissance asindustry returns from the Far East andrelocates from Europe. Cheap gas isincreasingly displacing coal in electric-ity generation, meaning that carbonemissions have fallen more quicklythan in any other country over the lastfew years. And with an accompanying

boom in shale oil production, NorthAmerica is on a rapid path towardsenergy independence.

Other countries, particularly themajor coal users, are racing to catch up.China has set out ambitious plans toproduce up to 100bn cubic metres ofshale gas annually by 2020 about asmuch as the UKs entire consumption.

South Africa removed a ban onhydraulic fracturing in September.Poland will have 34 exploration wellscompleted by the end of this year. AndIndia will unveil a shale gas explo-ration regime over the next few weeks.

Globally, the International EnergyAgency believes that extensive shaledevelopments outside the US will leadto natural gas and renewables goinghand-in-hand as the major energygrowth stories of the next 25 years,with each energy source accounting

for around a third of global energydemand growth through 2035.

Less than 40 per cent of UK gasdemand is for electricity, and so howev-er successful we are at decarbonisingthe power sector, gas will still be need-ed in large quantities for heating,industry and potentially road trans-port for several decades to come. SoBritain faces a choice between ever-ris-ing imports and developing a greatsource that is under our feet.Fortunately, it looks like weve madethe right one.

Corin Taylor is a senior economic adviser atthe Institute of Directors (www.iod.com).

Advertising not only reveals muchabout his distinctive approach to hisprofession, but also offers apractical masterclass in clearEnglish as a critical business tool.That it comes from a marketingman, a profession too oftenassociated in the popular mind withobfuscation and misdirection,makes it all the more impressive.

On 7 September 1982, Ogilvy

drafted a memo for internalcirculation on How to write. Hereis how he began:

If everybody in our companytook an exam in writing, thehighest marks would go to the 14directors.

The better you write, the higheryou go in Ogilvy & Mather. Peoplewho think well, write well.

Woolly minded people writewoolly memos, woolly letters andwoolly speeches.

Ogilvy also drew a connectionbetween writing well and a writerstruth and integrity. In one speech,he attacked verbal andtypographical weasels thatencourage public scepticism about

the truth of advertisements. He

encouraged his audience: Lets takeour tongues out of our cheeks. Letstry and write like human beings.His final tip in a list for hiscopywriters was: Whenever youwrite a commercial, bear in mindthat it is likely to be seen by yourchildren, your wife and yourconscience.

Ogilvys passion for clear andhonest words finds an echo inGeorge Orwell, who wrote: Goodprose is like a windowpane. In his1946 essay Politics and the EnglishLanguage, Orwell agrees that clearlanguage is the first step to clearthoughts, arguing that the fightagainst bad English is not frivolousand is not the exclusive concern of

professional writers. It was a theme

that haunted his work. The horrorsof Newspeak, in his masterpiece,1984, explore just how far thecorrosion of language might be usedto constrain intelligent thought.

Orwell worried about the impactof language on politics, but today itis business that should beconcerned. Not just because sloppylanguage risks encouraging sloppythinking, but because a sector thatcan only speak in jargon leaves thepublic with the impression it hassomething to hide. Lets park thethought that language doesntmatter. We need to manage theoptics of this.

Marc Sidwell is managing editor ofCity A.M. The U

cityam 2012-12-14

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