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Waitrose smashes Christmas sales WAITROSE yesterday toasted recordtrading in the run-up to the New

Year after the grocer said aggressivepromotions on products such aschampagne and its Brand PriceMatch campaign helped to lurecustomers from rivals.

The upmarket supermarket, whichis owned by John Lewis, said like-for-

BY KASMIRA JEFFORD like sales rose 5.4 per cent between18 December New Years Eve.

Total sales excluding fuel across its288 stores were 8.8 per cent higher,

breaking the 300m mark for thefirst time.

Waitrose last week posted sales up7.7 per cent in the period from 4November to 24 December, with like-for-like sales up 4.3 per cent.

Managing director Mark Price said

some 250,000 extra customers visited Waitrose over the period, with recent research suggestingmost of the switchover in customers

was coming from Sainsburys.He attributed much of Waitrose

success to its Price Brand Matchcampaign, which matches Tesco on1,000 branded products.

Since doing that we have beenconsistently less expensive aroundHeston Blumenthals food was popular

BUSINESS WITH PERSONALITY

Transoceansettlementset at $1.4bDRILLING contractor Transocean

yesterday agreed to pay $1.4bn(867m) in fines to settle charges

with the US government relatingto the 2010 BP oil spill in the Gulf of Mexico. Transocean, the Switzerland-

based owner of the DeepwaterHorizon vessel, will pay $1bn incivil penalties and $400m in crimi-nal penalties over five years underthe settlement with theDepartment of Justice. The firm will also plead guilty to

violating the Clean Water Act. The 20 April 2010 explosion hap-

pened aboard TransoceansDeepwater Horizon rig offshoreMexico, which killed 11 workersand spewed around 4.9m barrels of oil into the sea over three months. Yesterdays settlement follows

the BP settlement in November, where the oil major paid $4.5bn tosettle all claims relating to the dis-aster. It also pleaded guilty tocharges of misconduct.

In a statement, BP said the settle-ment underscored that theDeepwater Horizon accidentresulted from multiple causes,involving multiple pa rties.

BP, whose shares rose yesterday,still faces damages of a maximumof $21bn for claims under theClean Water Act, and other claimsfor Natural Resources Damages. Italso faces various private claimsgoing through US federal and statecourts.

Offshore drill contractor Transocean said yesterday that it believed the settlement was in the

best interest of its shareholdersand employees, and wouldremove much uncertainty associ-ated with the 2010 Macondo spill.

Twitters founder and chairman Jack Dorsey said in December that the social networking website will go public when i t is ready to do so

TWITTER has been valued at $11bnahead of a potential move to take thesocial network public next year. The micro-blogging company, which

has gone from strength to strength inrecent years as questions have beenraised about its major competitorFacebook, appears to be lining up for a2014 initial public offering (IPO),according to analysts at New York advisory firm Greencrest Capital. The valuation, which is based on

unofficial, private trading of Twitterstock, comes after a series of stepsfrom the Silicon Valley firm that sug-gest it is looking to go public. Twitter has recently reshuffled its

management, appointing formerZynga executive Mike Gupta as chief financial officer. Gupta was part of the team that took Zynga, the onlinegame company, public in 2011. The company did not comment on

IPO plans, but founder and chairman Jack Dorsey has recently said that Twitter will go public when it is ready.

Many industry observers believethat an IPO is likely in 2014, but theprocess could begin late this year,Greencrests Max Wolff said. An IPO could add to the fortune of

British entrepreneur Iain Dodsworth, who founded TweetDeck, the third-party Twitter app bought by the firm

for 25m in cash and shares in 2011. The $11bn (6.8bn) figure follows afundraising round valuing the firm at$8bn in the summer of 2011.

www.cityam.com FREE

Investors were less bullish about thefirm last summer after Facebooks dis-astrous IPO, but Twitters valuationhas increased following a spectacular

year. The social network, which letsusers send messages of 140 charactersinto the public domain, is used by public figures from Barack Obama to

the Pope and is estimated to have hit500m users last year, with more than10m of those in the UK. The company has also embarked on

measures to make it more attractiveto advertisers, such as restrictingaccess to Twitters database by other

websites and applications.In the last year theres been a wide

range of moves around professionalis-ing Twitter, working out the right way to engage with advertisers, Benedict

Evans of researchers Enders Analysissaid. Theyve moved towards being amore grown up company. And unlike Facebook, which has

faced serious questions about itsfuture since its $100bn IPO in May,

Twitters potential is far more clear.Twitter is simpler and cleaner than

Facebook, it doesnt face the samechallenge in working out what theuser experience is. It doesnt face thesame questions over whether the busi-

ness will be disrupted, Evans added,although he pointed out that it ishard to value Twitter without know-ing revenues or user figures.

BY CATHY ADAMS

FTSE 100 6,047.34 +19.97 DOWM13,391.36 -21.19NASDAQM3,100.57 -11.69 /$ M 1.61 -0.02 / 1.23 unc /$ M 1.30 -0.02

BY JAMES TITCOMB

ISSUE 1,790 FRIDAY 4 JANUARY 2013

James Frayne in the Forum, Page 16See Lifestyle, Page 19

Certified Distribution01/10/12 til 28/10/12 is 129,297

HOT RIGHT NOWCULTURE: WHAT NOT TO MISS IN 2013

1.5 per cent 0.5 per cent thanSainsbury and the same as Tesco, hesaid. He added that Duchy andHeston Blumenthal products didparticularly well over Christmas.

Waitrose has held a record 4.5 percent market share for much of the

year and its performance is likely tocome ahead of lacklustre tradingstatements from Morrisons andSainsburys next week.

THE POLITICSOF PERCEPTION

TWITTER IN $11BNMEGA-VALUATION

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allister.heath@cityam.comFollow me on Twitter: @allisterheath

Regulators let Google offlightly over search fixingUS regulators yesterday clearedGoogle of fixing internet searchesto favour its own services, althoughthe settlement came with a numberof concessions from the web giant. The company was forced to

change ways it produces searchresults and how it displays adverts,following complaints from competi-tors that Google had abused its posi-tion as the worlds dominantinternet search provider. The settlement follows a 19-

month investigation in which theFederal Trade Commission (FTC)scored 9m pages of evidence.

Under the agreement, Google willstop using sections of other web-sites data in its own services such asreviews if the websites opt out of it.

Perhaps more significantly, thecompany will now have to allow rival device manufacturers, such as

Apple and Nokia, to have greateraccess to certain patents owned by Google. This is a blow for Google because

its $12.5bn (7.8bn) acquisition of the lossmaking phone manufactur-er Motorola Mobility was widely interpreted as a move to fight back in the global patent wars againstthe likes of Apple.

Now, it will not be able to requestsales bans on devices that allegedly

F&Cs Bramson lines up targetEdward Bramson, the activist investorwho is executive chairman of F&C AssetManagement, is preparing to take onanother midsized UK public company. Hehas launched a second Guernsey vehicle,backed by Soros Fund Management, thatwill sit alongside Sherborne InvestorsGuernsey A, the fund through which MrBramson controls 22 per cent of F&C.

Starbucks takes on Vietnam coffeeStarbucks will take on the traditionalcoffee culture of Vietnam next month

when it opens its first outlet in theCommunist-ruled country. The Seattle-based company would open its debutcoffee shop in Ho Chi Minh City in earlyFebruary, it said yesterday, increasing itspresence across Asia to 12 countries.

Ex-SAC official denies claimsMathew Martoma, a former portfoliomanager with a unit of the hedge fundSAC Capital, has pleaded not guilty toallegations that he traded shares in twopharmaceutical companies after learningthe confidential results of a clinical drugtrial, in a $276m insider trading scheme.Mr Martoma was arrested in Novemberand charged.

Ulster Bank to close 20 branchesAbout 20 branches of Ulster Bank willclose in the wake of Irelands bankingcrisis, the Royal Bank of Scotland-ownedorganisation said yesterday.

US gun investor buys stake in pubsThe US investment firm that holds a stakein the maker of the rifle used in lastmonths Connecticut school massacre isto acquire one of Britains biggest pubcompanies. Cerberus Capital Managementis in talks to acquire Admiral Taverns.

Italy bans card payments in VaticanItalian authorities have stopped allelectronic payments inside the VaticanCity after the Bank of Italy complainedthat it had failed to bring in newprocedures to prevent money laundering.

Thomson Reuters buys publisherTwo former City lawyers are in line formulti-million pound payouts after sellingtheir legal publishing company PracticalLaw Company to Thomson Reuters, thebusiness information giant.

Boeing likely reigns as No. 1Boeing said yesterday that it delivered601 commercial jets last year, likelytopping rival Airbus to become theworlds largest aircraft manufacturer forthe first time since 2002.

Orange-juice futures tumbleFutures of frozen orange-juiceconcentrate plunged more than four percent to the lowest settlement in morethan six weeks on above-averagetemperatures expected for top US citrusgrower Florida.

BUOYANT US traders were brought back down to earth yesterday after Federal Reserveminutes showed waning supportfor asset purchases in 2013, endingthe euphoria felt by marketsfollowing Wednesdays fiscal cliff deal.

Meeting notes from the FederalReserve monetary policy committee showed several of the12 man group wanted to stop theFeds relentless asset buyingprogramme sometime later this

year. The news sent US stocksdown, with the Dow closing 21.19points lower at 13,391.36.

The market rally following Wednesdays fiscal cliff deallooked to have been extended to asecond day yesterday after therelease of good US job data and carsales figures.

Statistics from payroll provider ADP showed private sectoremployers in the US added 215,000

jobs in December, beatingforecasts. US car sales also jumped

by more than 13 per cent in 2012,according to figures.

But minutes showingpolicymakers thought assetpurchases should stop well

before the end of 2013 temperedthe relief felt by markets over thefiscal cliff deal.

US fiscal cliff joy

fades after Fedsplit on 2013 QE

Google, led by chief executive Larry Page, has been forced to change some procedures

4 NEWS

BY MICHAEL BOW

BY JAMES TITCOMB

To contact the newsdesk email news@citya

H APPY New Year, dear readers.Let me begin my first column of 2013 with a plea to economists,policy-makers, commentators,politicians, financiers, business folk and everyone else who wants moregrowth and jobs.

Please, please, spend less of your

time obsessing about fresh ways tosubsidise mortgages, pump prime theeconomy with more quantitative eas-ing or to bolster domestic demand by getting the government to borrow even more. Instead, lets focus onBritish companies abject failure to tri-umph in the global export markets, ata time of unprecedented opportuni-ties around the world. There is lots of appetite internationally for goods andservices this is not a demand sideproblem, it is a supply-side problem.

Export volumes of goods and servic-es fell in the first half of last year, and

EDITORSLETTER

ALLISTER HEATH

We need an export-led revolution to save the UFRIDAY 4 JANUARY 2013

the latest figures suggest that Britainis exporting just 0.1 per cent morethan it did in the first quarter of 2008,

when the economy reached its credit-infused bubble peak. It is embarrass-ing just how many economies haveincreased their exports at a faster ratethan us over the past five years.Ireland is up by 9.7 per cent, Germany

by 9.5 per cent, the Netherlands by 9.2per cent, Spain by 7.4 per cent, andeven nose-diving France has doneslightly better at 0.4 per cent. As

Michael Saunders of Citigroup notesin an excellent research paper, justfive of the fifteen traditional EUmembers (Austria, Italy down 7 percent Luxembourg, Finland andGreece) have done worse. What makes all of this especially

depressing is that sterlings trade-

weighted index remains 17 per cent below the 2000-07 average, makingUK exports more competitive.

So what is happening? UK firmshave become obsessed with Europe unlike, paradoxically, members of theEurozone. IMF data analysed by Citigroup suggest that UK exports of goods to emerging economies was

worth 3.4 per cent of our nationalincome last year, a smaller share thanall other EU-15 member states. EvenGreece exports relatively more.

Britains exports to China havesurged 11 per cent a year over the past

At last count, the volume of UK exports of services was still 4.3 percent down from peak.

In 2010-2011, world trade in goodssurged 20.1 per cent year on year,compared with 10.1 per cent for allservices, 9.6 per cent for financialservices and 10.2 per cent for business

services. Of course, this mix is cur-rently better for Germany, which spe-cialises in goods, but it ought to still

be pretty decent for London. Theopportunities are there UK Plc musttake them, and the governmentneeds to focus on making Britain acompetitive location from which tocreate wealth once again. Lets endthe City and business-bashing in 2013,and focus on exporting our way back to prosperity.

decade, which sounds good until onerealises that everybody else has beendoing even better. Switzerland hasincreased its own exports to China by 25 per cent a year, and now sells moreto it than Britain does, even thoughthe UKs GDP is four times larger thanSwitzerlands. In 2011, the UKs

exports of goods to Italy, Spain,Portugal, Ireland, Greece and Cyprus were worth exactly the same as ourcombined exports to the biggest 10emerging markets. This is a mon-strous miscalculation.

But there is another issue. The UK increasingly specialises in exportinghigh value added financial and busi-ness services, rather than goods. Yet

while strong growth in global servicestrade has resumed, the City remainsshell-shocked and unable to bounce-

back, partly as a result of an ultra-hos-tile regulatory and tax environment.

infringe on its intellectual property.However, Google was considered by

many to have been let off lightly. TheFTC did not crack down on the majorcomplaint from competitors thatGoogle favours its own services, suchas its maps and shopping tools, in itssearch results. And the company wasnot hit with a fine.

It may not get off so lightly when aprobe from EU competition authori-ties concludes. Google has proposed anumber of concessions to theEuropean Commission, which theauthorities are currently mulling.

Although some evidence suggestedGoogle was trying to eliminate com-petition, Google's primary reason forchanging its look and feel or algo-rithm was to improve search results,FTC chairman Jon Leibowitz said.

He added that Google was unques-tionably one of Americas great com-panies.

In a triumphant statement follow-ing the announcement, Googleschief legal officer David Drummondsaid: The conclusion is clear:Googles services are good for usersand good for competition.

The new jobs website for London profeCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

LABOUR will today spell out a 1bnraid on the pension pots of wealthy savers to fund a jobs guaranteeprogramme for 130,000unemployed people.

The plan, to be unveiled by shadow chancellor Ed Balls, wouldrestrict the tax relief on pensioncontributions of people earningover 150,000 to 20 per cent,clashing with coalition plans to freeup the limits on pension tax relief.

The 1bn saved by the move would be used to subsidise jobs foradults who are out of work formore than two years, some 130,000.

When times are tough it cannot be right that we subsidise thepension contributions of the toptwo per cent of earners at morethan double the rate of people onaverage incomes paying the basicrate of tax, Balls said.

Savers earning more than150,000 a year currently get 50 percent tax relief on contributionsinto their pension pots. This is setto fall to 45 per cent in April.

People out of work would beoffered a job under Laboursproposed guarantee scheme and

would be obliged to take it or facelosing their benefits.

The announcement from Labouris the first big tax policy floated by the party as it fights to win backpower from the coalition.

Labour plot

pensions raid subsidise jobsBY MICHAEL BOW

MARKE T REP ORT: Page 15

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BANKS will get more time to buildup cash buffers to protect againstmarket shocks under a rule changethat could help free up credit forstruggling economies, a Europeanregulatory source said.

The Basel Committee, made up of banking supervisors from nearly 30countries, is expected to announcethe revision on Sunday to itsliquidity coverage ratio or LCR,part of efforts to make banks lesslikely to need taxpayer help in acrisis. The change comes after

heavy pressure from banks andsome regulators.

More time forbanks on BaselBY BEN SOUTHWOOD

MOBILE owners will be able to break contracts free of charge if operatorshike prices mid-way through a dealunder new proposals. Telecoms regulator Ofcom has

lodged plans to put an end to mid-contract price rises, following an out-cry over what consumers believed to

be fixed deals.O2, Vodafone, Orange, T-Mobile and

Three have all announced price risesof between 2.4 and 4.34 per cent inthe last 14 months. Consumer advicegroup Which? estimates that theseprice rises are costing consumersaround 150m per year. The measures will

also include fixedline and broadband.

Ofcom claimedthe proposals

would address con-sumer concernsthat providers arecurrently able to raiseprices, whilethey them-s e l v e shave lit-t l echoice

Crackdown on

mobile contractprice increasesBY JAMES TITCOMB but to accept the increase or pay a

penalty to exit the contract.However, Vodafone criticised the

plans yesterday, warning that they would increase contract prices.

The regulators proposals risk gener-ating significant confusion and poten-tially increasing the cost of getting amobile phone contract for millions of people, a Vodafone UK spokespersonsaid. Ofcom itself admits that if itsproposals are carried out, they couldresult in the up-front cost of using amobile phone actually increasing asoperators will have to try and secondguess what price increases third par-ties will attempt to introduce.

Currently, pay-monthly customerscan only cancel contracts for free if price rises cause material detri-ment an undefined term.Otherwise, they tend to have to pay off the remainder of their contract to can-cel it. Ofcoms proposals follow areview of 1,644 consumer complaints.It will now seek industry input on the

proposals before making a decisionaround June.

FRIDAY 4 JANUARY 20135NEWScityam.com

Global Investment Banking Fees by Region: Full Year 2012

US $ 35 .57bn UP 5.3%Japan $4.18bn UP 18.1%

China $3.40bn DOWN 25.5%

Australia $2.14bn DOWN 11.6%

Russia $702m DOWN 37.0%UK $3.76bn DOWN 16.4%

Me xico $442m UP2 6.9%

France$2.05bn

DOWN 28.6%

Germany$2.14bn

DOWN 12.1%

EUROPEAN investment banks wereamong the worst hit by the feesdownturn in 2012, according todata released yesterday by Thomson Reuters.

Worldwide fees fell by just 3.4per cent to $74.8bn (46bn) last year but the income from dealsinvolving the UK, France and Spainslumped by more than 15 per cent.

The Eurozone crisis is theoverriding issue for investment

banking fees, because you dont dodeals when corporate dont haveconfidence in the market, saidThomson Reuters research directorLeon Saunders Calvert.

Europe bears brunt of fainvestment banking reve

BY JAMES WATERSON A slight uptick in theperformance of the US economy saved the industry from adisastrous year but there wereheavy falls in emerging markets,such as China and Russia.

Despite the fact their economies

are still growing effectively,dealmaking activity is reliant oncross-border investment fromEurope and the US, Calvert added.When Western Europe isstruggling internally then theyreless likely to make risky deals inemerging markets.

Bankers looking for new marketsshould look to Mexico, Malaysiaand Finland, where total fees rose

by more than 25 per cent.

ACTOR Gerard Depardieu has been granted Russian citizenship after vowing to avoid the new topearners tax rate planned by FrenchPresident Francois Hollande.

Russian President Vladimir Putinhas granted citizenship to theCyrano de Bergerac star.

Depardieu, 63, bought ahouse in Belgium last yearto avoid the mootedFrench tax rate, which

would levy 75 percent on those with

yearly incomesover 1m.

Russian offerfor Depardieu

Vodafone is led byVittorio Colao

BOT TOM LINE: Page 7

BY JENNY FORSYTH

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THE DISASTROUS West Coast railfranchise contest proves theDepartment for Transport lackscommercial nous and it shouldconsider outsourcing such tasks,

MPs said today.In a wide-ranging review of therail industry, the transport selectcommittee also warned the DfT against hammering passengers withmore price hikes, and claimed thesectors obscure public fundingstructure risks unjustified profits.

MPs argued that the collapse of the West Coast contest in October,

when First was stripped of itscontract and Virgin won a short-term extension, highlighted seriousdoubts about the DfTs capability tomanage major procurements.

They suggested an arms-length body or new agency within the DfT to let and manage franchises.

An independent review of railcontracts is expected next week.

Fares were also a source of frustration for the committee, whichurged the government to rule outsuper-peak tickets intended to curbdemand during rush hours.

[T]o drive efficiency savings acrossthe sector the government and theregulator must shine a light oncomplacent management, waste andprofiteering by ensuring greatertransparency in the finances of therail industry, said committee chairLouise Ellman.

Train firms hit back, arguing thatprofit margins are relatively smallfor franchise operators.

MPs slam raperformance

BY MARION DAKERS

SHARES in Next reached a recordhigh yesterday after the high streetclothing stalwart upped its full-yearprofit guidance and reported astrong rise in sales in the run-up toChristmas. The UKs second largest clothing

retailer said it expected to make prof-it before tax in the range of 611m to625m in the year to January 2013,

which would be up 7.1 to 9.6 per centon last year. That compared with a previous

forecast of 590m to 620m. The stock market darling leapt to

the top of the FTSE 100, with sharesup 2.7 per cent to 3,873p their high-est level since listing 30 years ago. Total sales excluding VAT rose 3.9

per cent between 1 November and 24December. Store sales were up by 0.8per cent, compared with 0.6 per centfor the year to date.

Next Directory, its online and mailorder business, reported sales up 11.2per cent in the period, recoveringfrom a slowdown in the third quar-ter when they rose by 5.6 per cent.

Next shares hitfresh high overbumper Xmas

BY KASMIRA JEFFORD Chief executive Lord Simon Wolfsonsaid although sales were in line withexpectations, cost control measures,markdowns and gross margins hadall been slightly better than expected.

Profit growth, lower corporationtax rates and 241 worth of share buy-

backs should result in earningsgrowth of between 14 per cent and 17per cent, the group said.

Commenting on the outlook for the year, Wolfson said it was unlikely there will be any dramatic change inthe consumer environment in the

year ahead. But with healthy employ-ment numbers there is little risk of asignificant downturn, he added.

Nexts Lord Wolfson predicted the consumer environment would be subdued but steady

Next PLC

2Jan 3Jan27Dec 28 Dec 31 Dec

3,700

3,800

3,750

3,850

3,900

P 3,873.003 Jan

Next has published a strong trading statement for the period with sales andmargins better than expected.. On the back of the statement, we have raised

our Directory revenue growth forecast for 2013 to 10.5 per cent from 10 percent and our Next Retail revenue growth forecast to 0.6 from 0.5 per cent.

ANALYST VIEWS

Brand sales growth was 3.9 per cent, in line with guidance at the thirdquarter stage and a number which should reassure.....We remain long-term fans ofNexts strategy and management, but continue to feel that these attractionsare reected in the current rating of the shares.

Next is highly cash generative, tightly run and looks to continue to executeon the basics of giving the consumer great product and capitalising on its leadingmulti-channel position. But the sector has performed strongly over the lastyear and sector rotation is likely to lead to a period of consolidation.

HAS NEXTS STATEMENTMADE A CHANGE TO YOURRECOMMENDATION?Interviews by Kasmira Jefford

JEAN ROCHEPANMURE GORDON

BETHANY HOCKINGINVESTEC

FREDDIE GEORGESEYMOUR PIERCE

FRIDAY 4 JANUARY 20136 NEWS cityam.com

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BUMI co-founder Nat Rothschild yes-terday slammed the results of estranged Indonesian arm BumiResources as not credible, after itplunged to a $632m (391m) loss overthe nine months to September.

Over the same period last year, theminer booked a net profit of $176m. The Indonesian coal miner, which

has been at the heart of a bitter dis-pute with its parent company Bumi,

was hit by net losses on derivatives of more than $422m.

Meanwhile, Bumi Resources alsoknown as PT Bumi said operatingprofit fell to $312m, down from$780m over the same period in 2011.

Financier Rothschild, who co-found-ed Bumi as cash shell Vallar back in2010, questioned why the derivativeslosses were so high.

Why should a simple coal miningcompany experience such swings (inprofitability) due to book losses? Itssimply not credible, he said.

Bumi Resources director and corpo-rate secretary, Dileep Srivastava, saidthe derivatives and foreign exchangelosses were paper losses.

Theres no cash impact at all, hetold Reuters in a telephone interview

Troubled BumiIndonesian armin $600m loss

BY CATHY ADAMS from Dubai. These are all non-cashand tax-neutral because we are adapt-ing to new accounting principles that

we are adopting. The relationship between the power-

ful Bakrie family who brought in theIndonesian assets and Rothschildsoured soon after Bumi was listed inLondon. It culminated in September

when City law firm Macfarlaneslaunched an investigation into allegedfinancial wrongdoing at BumiResources. After the review, the Bumi board

said it would move to unwind the rela-tionship between the two, and sepa-rate the Indonesian assets from theirLondon-listed parent. The Bakrie family and Bumi chair-

man Samin Tan made no comment.

VODAFONE aside, mobile phonenetwork providers were strangely reluctant to criticise Ofcomsproposals that customers should be

allowed to get out of contracts scotfree if prices are hiked. While Ofcom claims it is reacting

to customer complaints, Vodafone which stuck its head above theparapet to fight back said new rules would cancel out any benefits

by triggering higher up-front fees. Theres no doubt that the penaltiesto break contracts are oppressive if

your operator ups fees two monthsinto a 24-month deal youre more

likely to keep fishing than cut bait when almost two years of chargesawaits. But are customers really angry about price rises, or justannoyed at all the new, better dealsand handsets that seem to appearthe minute they commit? The

150m cost that Which? saysconsumers incurred from fee riseslast year is hardly outlandish lessthan 2 per mobile, according to

Ofcom figures that claim there areclose to 81.6m handsets in the UK.Best intentions aside, seeing how

reluctant the public is to change bank accounts (just seven per centswitched between 2008-10) theredoesnt seem to be a good case forimposing the same rights oncontracts. If Vodafone is right aboutprice increases, the other network providers need to shout about it too.

This is one battle worth fighting.

BOTTOM

LINEELIZABETH FOURNIER

CATASTROPHE LOSSES FELL IN 2012NATURAL disastersforced insurers topay out just $65bnlast year, down from$119bn in 2011,according to figuresout yesterday.Research by MunichRe shows almost allcatastrophe lossesrelated to events in

the US, withHurricane Sandyresponsible for$25bn of the totalsum. Worldwidelosses from naturalcatastrophes including those notcovered byinsurance fell from$400bn to $160bnin 2012.

Bumi PLC

2Jan 3Jan27Dec 28 Dec 31 Dec

268

274

270

272

276

278 P274.74

3 Jan

HORMEL Foods has agreed to buy Skippy, the iconic US peanut

butter brand, from Unilever for$700m (435m), adding it to aportfolio that includes Spamcanned meat.

The deal also gives Hormel, bigger global presence, includingin markets such as China whereSkippy is the leading peanut

butter brand. Consumer goodsconglomerate Unilever said inOctober it was selling the Skippy

line, as it shifted its focus tohigher-growth food brands.

Unilever sellspeanut butter

BY CITY A.M. REPORTER

FOYLES yesterday posted f lat salesover Christmas after a weak performance at its flagship CharingCross Road branch was offset by strong trading at Westfield Stratfordand online.

The bookseller said while thesales period between Christmas andNew Year proved exceptionally strong, its overall performance wasdragged down by weaker trading

between 1 December and ChristmasEve, when sales fell two per cent.

Sales, excluding its website, weredown 3.7 per cent on 2011.

Foyles reportsflat Christmas

BY KASMIRA JEFFORD

FRIDAY 4 JANUARY 20137NEWScityam.com

If Ofcom plans will really puprices, networks must speak

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TENS OF thousands more p eople

became property milli onaires in2012, driven by healthy growth inLondon house prices.

The number of properti es worth1m climbed 47,024 over 2012,Zoopla.co.uk said yesterday, to hit300,142 a rise of 19 per cent in

just a year.Of this total, some 182,583 or

64 per cent are located inLondon, the property websitecalculates, and some 36,815 of these broke the 1m barrier in thelast year. This means some 100new property millionaires werecreated every day in the capital.

Out of all the London boroughs,Kensington and Chelsea wears thecrown as the priciest, with anaverage house pri ce of 1,514,490.

Across the borough, some 44.9 p ercent of residents live in houses

worth over 1m, dwarfing t henext most desirable borough, Westminster, where 28.2 per centare property millionaires, andHammersmith and Fulham, whereproperty millionaires make up21.3 per cent of residents.

The Kensington figures arepulled up by the most expensivestreet in the UK KensingtonPalace Gardens home to both thecountrys richest man LakshmiMittal, and the sixth wealthiest,Leonard Blavatnik.

London fuelsmillion-pounproperty boo

BY BEN SOUTHWOOD

HOUSE PRICES sunk back into declinein the final month of 2012, cappingoff a gloomy year, according to dataout yesterday.

Prices edged down 0.1 per cent onaverage across the country inDecember, Nationwide said, contribut-ing to an overall decline of one percent over the year. This yearly fallcame despite four individual monthly rises, and projects a picture of an over-all flat market.

UK house prices were little changedin December, declining by just 0.1 percent , said Nationwide chief econo-mist Robert Gardner, though this wassufficient to keep annual price growthin negative territory for the 10th suc-cessive month .

But Gardner played down the nega-tivity of the data, given the economicdifficulties across the world and2012s return to technical recession.

However the data showed a marketstarkly divided between North andSouth and between London and every-

where else. The difference betweenaverage house prices in the South andthose in the North rose two per cent to

Capital defiesgloomy outlookon house pricesBY BEN SOUTHWOOD a new high of 95,000.If not for the pulling power of

London, the fall would have beenmuch larger. London prices increased0.7 per cent over the year, according toNationwides data, and along with theSouth West, London was the only region to see any house price growth.

Even this upbeat approach to Londonprices may underestimate the successseen in the capitals housing marketduring 2012, as Nationwides indexonly considers houses bought with amortgage hence ignoring much of the top end of the market, where cashpurchases are common. Other indicesthat did include cash reported a much

bigger price rise over 2012 in London.

Long term real house price trend

82 Q4 88 Q4 94 Q4 00 Q4 06 Q4 12 Q4

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160180200220240 (000s)

TrendReal House Price

FRIDAY 4 JANUARY 20138 NEWS cityam.com

Greenwich dees upbeat 2012 picture for London house prices

Change in boroughs average house price in 12 months to December 2012

+ 11% - 11%

Greenwich-11%

Southwark11%

Brent8%

Newham7%

Wandsworth8%

KENSINGTON AND CHELSEA RULE LONDON PROPERTY ROOST

Average property value Percentage property millionaires

Kensington and Chelsea 1,514,490 44.9%Westminster 996,992 28.2%Hammersmith and Fulham 774,416 21.3%Camden 745,572 17.3%Richmond upon Thames 621,536 13.5%City of London 576,262 5.9%Wandsworth 568,007 10.3%Islington 539,994 9.1%Barnet 496,812 7.0%Haringey 450,375 6.3%

12

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2012 Cisco and/or its affiliates. All rights reserved. All third-party products belong to the companiesthat own them. Cisco, the Cisco logo, and Cisco UCS are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. Intel, the Intel logo, Xeon and Xeon Inside aretrademarks or registered trademarks of Intel Corporation in the U.S. and/or other countries. All othertrademarks are the property of their respective owners.

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4 years interest free credit withnothing to pay for the first yearno deposit, no interest ever

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IN BRIEF Ageing Brits aim for longer carn Passing the retirement age does notnecessarily mean retiring, according todata released by Aviva this morning.Almost one in four 65-74 year oldscontinue to earn a wage, the insurancefirm said, up from 18 per cent in 2010, ahopeful statistic for a country with arapidly-ageing population. Andyounger cohorts seem to be embracinga longer career as well 55 per cent of55-64 year olds are in work, up from 41per cent back in 2010.

German unemployment risesn The number of unemployed Germansrose in December, remaining close topost-unification lows. Unemploymentclimbed 3,000 to 2.942m in December,according to data from the FederalLabour Agency. The rise was lower thanthe 10,000 forecast by analysts, whoexpected the ongoing Eurozone crisisto have more of an impact. Separatedata from Destatis showed that theemployment picture actually improved,rising around 9,000 to hit 41.899m.

UK labour productivity slidesn Productivity in the British workforce

continued to slide in the third quarterof 2012, according to data from theOffice for National Statistics (ONS).Output per hour edged down 0.2 percent over the quarter, making it thefifth successive quarter of decline.While productivity per worker andproductivity per job both increased inthe period, the ONS said output perhour was a more comprehensiveindicator of labour productivity.

CORPORATE and household creditconditions eased significantly overthe last three months of 2012,according to data from the Bank of England. Almost 30 per cent of lenders

told the Bank that their lendingconditions for firms had eased inthe past three months, swinginginto the positive after three quar-ters of negative figures. A net balance of +14.9 per cent of

lenders said things would contin-ue to improve in the first threemonths of 2013. This chimed with data for house-holds, where lenders said secured

lending conditions had eased yetagain, by a bigger margin than inthe third quarter. A balance of 26.2per cent said the availability of secured credit had improved, upfrom 21.9 per cent who said so forthe period between July andSeptember. And a balance of 24.7per cent expected this to go on intothe first quarter of this year.

Encouragingly, the improvement

Bank says it iseasier for firmsto obtain credit

BY BEN SOUTHWOOD for borrowers looking for credit athigher loan-to-value ratios saw aneven bigger improvement than atthe safer end of the market.

Improving credit conditions alsotouched on the market for unse-cured credit, although lower posi-tive net balances indicate theimprovements in this area wereless substantial. A balance of 6.6 per cent of

lenders said the availability of unsecured lending to households

was up in the quarter, swinginginto the positive after a figure of minus 4.2 per cent in the previousquarter.

THE slump in the UK construction industry deepenedin December, with activity dropping even further.

The purchasing managersindex (PMI) for the constructionindustry fell to a six-month lowof 48.7 in December, from 49.3 inNovember, according to datareleased yesterday by Markit andthe Chartered Institute of Purchase & Supply. Since this isfurther below the crucial nochange value of 50, it signals afaster pace of decline in the

beleaguered industr y.

Construction hits 6-month lowin December as slump deepens

BY BEN SOUTHWOOD December rounded off amiserable year for the UK construction sector, said TimMoore at Markit, with outputdeclining at the steepest pace forsix months and new businessintakes falling back at the fastestrate since April 2009.

And unlike many otherindustries, construction firmsdont expect much of a let-up in2013, Moore said, due to worriesthat client purse-strings could betightened in the coming year.

The sector was even denied goodnews from input prices inflation,

which rose despite the profound weakness in the sector.

FRIDAY 4 JANUARY 201311NEWScityam.com

Further gloom in the UK economy will be a blow to chancellor George Osborne

Firms report big boost in credit conditions 40.0 30.0 20.0

0 10.0

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THOMAS Cook has been accused of ignoring corporate governance rules

by offering its new chief executive,Harriet Green, a two-year noticeperiod if it terminates her contract.

In its annual report, the holiday

giant said that period is cut by onemonth every month for the first 18months, until it becomes a morestandard six-month notice period.

Green, who took over in July, hasto give just six months notice.

The UK corporate governancecode recommends a maximumnotice period of one year.

Shareholder advisory group Pircsaid the terms were a breach of bestpractice.

BY JENNY FORSYTH

THE INDEPENDENT film company behind Peppa Pig and the Twilightfilms will close its purchase of moviedistributor Alliance Films imminent-ly, after the London-listed company

won approval from Canadian compe-tition authorities.

Entertainment One is likely to com-plete the C$225m (141.2m) deal next

week, sources close to the deal said. The company said yesterday that itis now clear to complete the acquisi-tion, which it intends to do as soonas possible.

Relief at the clearance pushedshares in Entertainment One upmore than six per cent yesterday.This is good news in our

view given a relatively high film market sharein Canada, Investecanalyst Steve Liechtisaid. The acquisition will

give EntertainmentOne a roster of filmsincluding theKings Speech

BY JAMES TITCOMB and the Hunger Games series. The latter in particular is crucial for

Entertainment One, after the endingof the popular Twilight vampire fran-chise raised questions over the com-panys blockbuster potential.

Other films in Alliances catalogueinclude the Lord of the Rings trilogy and movies made from StiegLarssons novels. The deal will createthe largest independent film distribu-tion company in the UK and Canada.

A further announcement will bemade in due course, the company said yesterday.

Entertainment One funded the deal with a 110m share placing. It is buy-ing Alliance Films from investorsincluding Goldman Sachs and the

Quebec government.

MEDIA investment banking chief HarryHampson has acted as an adviser toEntertainment One for some time, havingled a strategic review that could have led tothe company seeking a sale last year.Entertainment One was rumoured to beapproached by Zodiak Media Group towardsthe end of 2011, but decided on a majoracquisition of its own following the review.Canadian-born Hampson was a key player ina number of high-prole media deals in

recent years, including the sale of Channel 5to Richard Desmond, and ElisabethMurdochs sale of her company Shine to herfather Ruperts News Corp.Hampson also worked on News Corpsfailed bid for BSkyB, which would havebeen the biggest media deal in UK history.Last year, he become head of the banksFinancial Sponsors Group which advises pri-vate equity rms, for Europe, the MiddleEast and Africa. Hampson was joined on thedeal by JP Morgan Cazenoves Nicholas Halland Virginia Khoo.Long-time nancial adviser AlastairBlackman at Credit Suisse also worked onthe deal for Entertainment One.Cenkos Securities Growth Companies teamwas the companys broker and jointbookrunner on the 110m fundraising

HARRY HAMPSONJP MORGAN CAZENOVE

Barnes & Nobles Nook hasweaker Christmas periodUS book retailer Barnes& Noble saw itsfledgling Nook ereaderunit falter over the

Christmas season, as itsold fewer devices thanin the same period last

year, and saw growth insales of digital booksand magazines fall.

The company, whichlaunched its range of ereaders and tablets inthe UK in time forChristmas, saidrevenues for the unit

fell 12.6 per cent over the period year-on-year, even as sales of

content improved. The move will come as a

blow to the company as itaims to take on the likes

of Amazon in the rapidly growing ebook market. The Nook, launched in

2009, has been thecornerstone of Barnes &Nobles strategy tocounter the shift by many book readers to digital books.

SIR Richard Branson yesterday waded into the debate over the UKs EU membership,urging Britain to stay in the union. An exit would be very bad for British business and theeconomy as a whole, he said. Addressing calls by MPs for a referendum on the issue,Branson added the EU would be in better shape than the US in a few years time.

BRANSON URGES BRITAIN TO STAY

Entertainment One Ltd

2 Jan 3Jan27Dec 28 Dec 31 Dec

165

175

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P176.35

3 Jan

B&N launched the Nook inthe UK late last year

FRIDAY 4 JANUARY 201312 NEWS cityam.com

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Peppa Pig firmgets go-aheadfor movie dea

ADVISERSENTERTAINMENT ONES BLOCKBUSTER Peppa Pigs creators arebuying Alliance films

BY JAMES TITCOMB

Thomas Cookin notice row

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CAPTAIN of Leicestershire County Cricket Club and former Englandplayer Matthew Hoggard recently didhis best to bowl over GlobalPayments London office, as part of a

work placement initiative to helpcricketers gain business skills. The project is a joint effort

between the ProfessionalCricketers Association andEnglish Cricket Board, whichhelps to prepare sports profes-sionals for life off the pitch.

Hoggard seemed enthusias-tic about a mid-thirties careerchange, telling The Capitalist : If Freddie Flintoff can stepinto a boxing ring,then I could be a

Sporting starseye up future jobs in the City

salesman.Cricketers arent the only ones

making a transition from sport tothe City. Who can forgot our mostshining example of an athlete whois now a top dog over in Canary

Wharf? Former Olympic medallistLord Sebastian Coe went from

track hero to chairman of Locog, with an added detourinto politics along the way. When The Capitalist corneredformer England rugby cap-tain Martin Corry at a recent

liquid lunch in the City, herevealed he had been given

the position of busi-ness developmentmanager atOracle. Unclearon what that jobentails? Yep, so was he.

IT has been hard to avoid thestories about the making of Rivendell, the fictional Hobbitcolony out in New Zealand. Buthere is a current construction thatleaves the film village looking elf-like in comparison.

Russian oligarch and chairmanof Evraz, Alexander Abramov, isthe owner of New Zealands

biggest, most expensive newresidential development in ruralHelena Bay.

Granted The Capitalist could notthink of a more secluded sunshineretreat to escape to. However,

what the local farmers of Whangarei will make of their new glamorous Russian neighbours is aquestion yet to be answered.

FRIDAY 4 JANUARY 2013

Construction of the mansion at Helena Bay in New Zealand

13cityam.com

cityam.com/the-capitalistTHECAPITALIST EDITED BY CALLY SQUIRESGot A Story? Ema

thecapitalist@cityam.com

Which Russian oligarch wouldlive in a giant house like this?

Wine merchant Oddbins ispromoting an unusual offer on

bottles this January. The firm is offeringdiscounts to bankers, gingers, Germansand mothers on certain weekends. Thereason for this niche philanthropy? Forthe last two months weve beenspreading love almost willy-nilly. Now wehave decided to give our love focus.Right... And who better to receive it thanthe much maligned finance industry?Two ginger bankers who would qualifyfor a double whammy discount are Bankof America Merrill Lynch chairman ofglobal corporate and investment bankingRupert Hume-Kendall and Terra Firmachairman Guy Hands. Althoughpresumably both could get by withoutthat pound off a 2011 Sauvignon Blanc. Ifreaders can suggest any ginger Germanmothers who work in banking,The Capitalist would like to hear from you.

Left to right: Rupert Hume-Kendallfrom Bank of America Merrill Lynchand Terra Firma chairman Guy Hands

Cricketer MatthewHoggard MBE

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IN BRIEFGap buys luxury retailer Intern Gap, the US clothing giant whichalso owns Banana Republic and OldNavy, revealed yesterday it is tappinginto the luxury market with the $130m(80m) acquisition of womens fashion

boutique Intermix. The business sellsclothes and accessories brands such asYves Saint Laurent and Jimmy Choo viaits 32 stores in the US and its website.The deal is the latest by Gap followingits purchase of womens active apparelbrand Athleta in 2008.

Quiksilver appoints new chiefn Quiksilver, the Californian groupknown for its surfwear, said yesterday ithas hired former Disney executive AndyMooney as its new chief executive.Mooney will take up his role next weekreplacing Quicksilver co-founder BobMcKnight, who will become executivechairman. Mooney resigned aschairman of Disneys consumerproducts division last year after 12years with the entertainment giant. Hepreviously spent 20 years with Nike.

Leni starts legal fight with MOn Explorer Leni Gas and Oil yesterdayissued High Court proceedings againstfellow explorer Mediterranean Oil andGas (MOG), regarding last years saleof Lenis 10 per cent stake in a Malteseoil block to the European-focusedexplorer. Leni alleges that MOGmisrepresented the productivity of theoil block, which the latter denies. MOGsaid yesterday that the allegations areunfounded and it will defend itselfrigorously.

IRISH building materials group CRHrevealed yesterday it had made 630m (511m) of acquisitions in2012, its highest investment spendfor four years.

Over the second half of last year,the FTSE 100 firm, which moved itsprimary listing to London last year,undertook 18 deals, with a value of 375m.

CRHs Americas division made 12acquisitions over the six months,

worth a total of 256m. The materials arm of the business

acquired a majority share in New Jersey-based Trap Rock Industries, itslargest individual transaction this

year, which added between three andfour per cent to CRHs US permittedreserves.

Meanwhile, in its US architecturalproducts division, CRH acquiredseven concrete paving facilities inCanada and Florida.

CRH made six transactions inEurope at a value of 119m over thesecond half of the year, including aconcrete products manufacturer in

CRHs spending

spree for 2012reaches 511mBY CATHY ADAMS Finland and a cement importation

business in the Isle of Man.CRH chief executive Myles Lee said

that the 0.6bn of development activ-ity reflects the companys long-term,

value-based approach to developingits portfolio. Analyst Aynsley Lammin at Citi said

yesterday that the Dublin-based building materials group balancesheet remained strong, but untilthe macro outlook becomes more cer-tain, there would not be a huge stepup in acquisition spend.

Shares in CRH closed down 1.48 percent yesterday at 1,264p, making itthe biggest faller on the FTSE 100.

Ex-Treasury minister Sassoonsteps into a top role at JardineFORMER Treasury minister LordSassoon has re-entered the privatesector by taking a senior job at

Asia-focused conglomerate Jardine Matheson.

Sassoon will take up hisnew executive role, based inLondon, on 14 January. He isalso being lined up to take

board seats on the firmsother listedcompanies, whichinclude insurancegroup Jardine Lloyd

Thomson.Sassoon spent

BY MARION DAKERS almost a decade at the Treasury, asa civil servant, an ambassador forthe City and later a minister.

He defected to the Conservativesin 2008, advising George

Osborne on financialregulation, and when thecoalition won power, taking alife peerage and the post of commercial secretary to the Treasury.

The Oxfordgraduate used hisfinancialexperience, gained

during spells at SG Warburg andKPMG, to help sculpt the Treasurysrecent overhaul of financialregulation and the FSAs demise.

However Sassoon lost out in thegovernments September reshuff le,

when it was announced that Locog boss Paul Deighton would replacehim at the start of 2013.

The 57-year-old had been tippedto replace Sir Mervyn King asgovernor of the Bank of England.

His expert knowledge andextensive experience in the

business, government andfinancial sectors will be of great

value to the group, said Jardinechairman Sir Henry Keswick.

Balfour Beatty expands its US businessINFRASTRUCTURE firm BalfourBeatty has beefed up its American

business by acquiring a US energy storage firm in a deal thought to be

worth around $18m (11m).Balfour Beatty subsidiary Parsons

Brinckerhoff has bought Texas-

based Subsurface, a consulting andengineering firm providingservices in energy storage.

Subsurface is forecast to generatearound $50m in revenue over 2012,Balfour Beatty said in a statement

yesterday.Subsurface Groups recognised

expertise in underground injectionand speciality wells and ParsonsBrinckerhoffs skills and services in

BY CATHY ADAMS underground storage createsynergies for us and for the oil andgas, energy and industrial clients

both companies serve, Ian Tyler,Balfour Beatty chief executive, said

yesterday. Andy Brown at Panmure Gordon

yesterday hailed the small additionto its professional service capacity

in the US, calling it a good movefor Balfour Beatty.It will not impact forecasts at

this stage but is a good reminder of the strategic push to diversify future earnings away from themore cyclical constructionactivities, analyst Brown said in anote.

In November, the infrastructurefirm said it would review its

business following a profit warningthat caused its share price to fall by 18 per cent.

Investors reacted well to news of the acquisition yesterday, andBalfour Beattys shares rose, closing0.53 per cent up at 282p.

Balfour Beatty PLC

3 Jan2 7 Dec 28 De c 31 Dec 2 Ja n

275.0

277.5

280.0

282.5

285.0 p282.89

3 Jan

CRH PLC

3 Jan2 7 Dec 28 Dec 31 De c2 Ja n

1,250

1,260

1,240

1,270

1,280

1,290

1,300 p1,264.00

3 Jan

Steve Heapy is Jet2snew chief executive

THE NEW chief executive of defence services firm Chemring

yesterday hired two newexecutives in an effort to turnaround the companys fortunes.

In a boardroom shake-up, newchief executive Mark Papworthappointed Steve Bowers, formerdirector of aerospace materials

group Umeco, as group f inancedirector with effect from 7

January. He takes over frominterim chief financial officerNigel Young, appointed last July.

Bowers joins just two monthsafter Chemring hired former

BY CATHY ADAMS John Wood Group executivePapworth to lead the company,amid takeover talks with CarlyleGroup.

Papworth replaced previouschief executive David Price, just

before US-based pri vate equity house Carlyle dropped the bid.

Additionally, Chemring yesterday said it had hir ed JimDevine, formerly humanresources director at Centrica, as

group HR director.In November, the FTSE 250

firm admitted that last year had been extremely disappoi nting,as it issued two profit warningsin less than three months.

FRIDAY 4 JANUARY 201314 NEWS cityam.com

Chief executive Mark Papworth formerly of John Wood Group was hired in November

LEISURE airline and holiday firm Jet2 has picked Steve Heapy as itsnew chief executive as founderPhilip Meeson takes a back seat.

Heapy, most recently the chief commercial officer at

Jet2.com and managingdirector at Jet2Holidays, has been

with the firm since2009.

Meeson will becomeexecutive chairman at

the airline, whilekeeping his roles

Jet2 chooses new leader afounder vacates one of hi

BY MARION DAKERS as chairman and chief executive atDart Group, the firms Aim-listedparent. The airline said he willcontinue to play an integral roleat the company he created.

The 64-year-old former RAF pilot bought what became Jet2 in 1983.He turned Express Air Services, aChannel Islands carriertransporting flowers and otherfresh produce to mainland Britain,into an international aviation andhaulage group.

I am pleased to be able tocontinue driving the businessesforward in this new role, saidHeapy yesterday.

Jet2 is also looking for a financedirector to replace Andrew

Merrick, who is leaving to join lawfirm Irwin Mitchell in April.

Chemring hires former Umecoexec as new finance director

DISTRIBUTION and aviation group John Menzies said yesterday it would take a 7m hit from theclosure of its loss-making cargohandling operations at Chicago

Airport.The closure of the operations which comes as John Menzies hasexhausted all alternativeoptions will improve earnings

by around 1.4m next year, it said.Following the restructuring

actions across the group, JohnMenzies yesterday forecast a full-

year exceptional charge of 18m. John Menzies operates in two

John Menzies to close caoperations at Chicago air

BY CATHY ADAMS divisions newspaper andmagazine distribution in the UK and aviation services. The former

generates 70 per cent of thecompanys revenue, while thelatter which operates at about130 airports in 29 countries

accounts for around 64 per cent of its adjusted operating profit.The FTSE 250-listed company

added that full-year results would be in line with expectations.

Additionally, the group said that group finance director PaulDollman would stand down at the

AGM in May, while non-executivedirector Ian Harrison will alsoretire from the board.

Lord Sassoon helpedreform finance rules

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15FRIDAY 4 JANUARY 2013cityam.com

LONDONREPORT

Barings Asset ManagementNicola Hayes has been appointedhead of client service andrelationship development inLondon for the investmentmanagement firm. She joinsfrom Invesco Perpetual, whereshe was most recently associatedirector, global sales andrelationship management. Hayeswas also previously a consultantdirector in Invescos UK institutional sales team.

Smith & Williamson Investment ManagementMickey Morrissey has been appointed director and head ofindependent financial adviser sales at the investmentmanagement firm. He joins from Liontrust, where heworked as head of distribution for ten years. Morrissey alsospent 12 years at Merrill Lynch Investment Managers.

Pillsbury Winthrop Shaw PittmanMike Pierides has been appointed partner in the law firmsglobal sourcing practice. He joins from Pinsent Masons,where he was a partner in its technology, media andtelecoms sourcing group. Pierides is joined by seniorassociates Simon Lightman and Alistair Charleton.

Arbuthnot LathamThe private bank has appointed Ian Avery as a charteredwealth planner. He joins from Shipman Financial Planning,where he held the same position. Avery has also held rolesat JLT, where he was an independent financial adviser in itswealth management team.

AbbVieMatt Regan has been appointed UK general manager ofthe biopharmaceutical firm, following the companysseparation from Abbott. He was previously generalmanager for Abbott Norge in Norway, and has also served

as regional director for the Abbott Diabetes Care Divisionin Northern Europe.

Macquarie SecuritiesMatthew Turner has been appointed precious metalsanalyst in the financial services firms commoditiesresearch team. He joins from Mitsubishi, where he was itsglobal precious metals strategist. Turner has previouslyheld roles at VM Group, the World Gold Council and TheEconomist.

Pioneer InvestmentsDavid Glazer has been appointed to the newly-created roleof portfolio manager in the investment management firmsglobal equities team. He was most recently co-portfoliomanager at Franklin Templeton Global Advisors in NewYork. Glazer has over 12 years experience as an equityprofessional, and has also held roles at Boston CommonAsset Management and Harbor Capital Management.

WHOS SWITCHING JOBS Edited by Tom Welsh

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

Wall St slideafter minutesfrom the Fed

US stocks dipped yesterday aftersigns the Federal Reserve hasgrowing concern about itshighly stimulative monetary policy, giving investors reason to pull

back after a two-day rally. The minutes from the Feds

December policy meeting, released yesterday, showed increasing reti-cence about adding to the central

banks $2.9 trillion balance sheet, which it expanded sharply inresponse to the financial crisis andrecession of 2007-2009.

Some policymakers thought asset buying should be slowed or stopped before the end of 2013 while othershighlighted the need for further stim-ulus. The Feds policy of easy credithas helped push the S&P 500 to a 13.4per cent gain in 2012. Ending that pol-icy would remove an incentive forinvestors to purchase riskier assetslike stocks.

The surprise was the changes toduration and extent of that programin 2013, but given the tone in previ-ous Fed meeting minutes, it shouldnot have been an entire surprise, saidFred Dickson, chief market strategistat D.A. Davidson & Co. in LakeOswego, Oregon.

Despite the concerns about theeffects of its asset purchases, the Fedlook set to continue its open-endedstimulus programme for now.

Stocks pushed the S&P 500 index 4.3percent higher in the previous twosessions. Yesterday investors turnedtheir focus to coming battles inCongress, including the likelihood of

bitter fights over budget cuts and rais-ing the federal debt ceiling.

We were definitely technically extended and ripe for a little bit of aconsolidation and today is very order-ly traders and investors are still try-ing to digest the language and thedetails from the 2012 taxpayer act,Dickson said. The Dow Jones industrial average

dropped 21.19 points, or 0.16 per cent,to 13,391.36. The Standard & Poors500 Index shed 3.05 points, or 0.21 percent, to 1,459.37. The Nasdaq

Composite Index lost 11.70 points, or0.38 per cent, to 3,100.57.Economic data showed US private-

sector employers shrugged off a loom-ing budget crisis and stepped uphiring in December, offering furtherevidence of underlying strength inthe economy as 2012 ended. The governments broader monthly

payrolls report, due on Friday, isexpected to show the economy creat-ed 150,000 jobs compared with146,000 in November, according to aReuters poll. The US unemploymentrate is seen holding steady at 7.7 percent.

Retailers advanced after severalmajor companies in the sector beatexpectations of modest sales increasesin December, with the S&P retailindex up 0.4 per cent.

Shares in Cost co rose 1 per cent to$102.49 after the company reported a

better-than-expected 9 per cent rise inDecember sales at stores open a year.

BRITAINS FTSE rallied in theafternoon yesterday, asencouraging economic data out of the United States provided themomentum to lift the index to fresh 17-month highs. The FTSE 100 had edged lower in morn-

ing trade, but added 0.3 per cent in 15minutes after the release of data showingthat US private-sector employers added215,000 jobs in December, well aboveeconomists expectations.

The FTSE 100 spent most of the morn-ing relatively flat with investors possibly awaiting the [US data], which traditional-ly is used as a barometer for the all-impor-tant non-farm payrolls that are due forrelease tomorrow, Lee Armitage, Senior

Trader at Accendo Markets, said, addingthat the expectation-beating resultshelped markets across the board.

The FTSE took a lead from this andmoved back into the blue.

Londons blue-chip index closed up19.97 points, or 0.3 per cent, at 6,047.34,having hit its highest level since July 2011on Wednesday after a deal in the UnitedStates to avoid a series of tax hikes and

spending cuts that threatened economicrecovery, known as the fiscal cliff.Oil and Gas stocks gained 1.3 per cent,

and energy added the most points to theindex, contributing 13 points to gains.

The big move for the UK is the Oil andGas sector is rallying, which is a much big-ger sector for the UK than for Europe,Henry Lancaster, senior investment ana-lyst at Coutts, said, adding that they wereattractive on valuation grounds.

Oil stocks look cheap and out of favour,so its something we think could run on. The heavyweighting of energy in the FTSE

helped it to outperform European peers,Lancaster said, with the Spanish IBEX andthe French CAC both losing 0.3 per cent.

He added that the bigger gains inEuropean indices yesterday meant thatover the two days since the fiscal cliffdeal was struck, there was little differ-ence between returns in the UK and onEuropean bourses.

Switzerlands SMI benchmark surged2.9 per cent, catching up with the

European market rally after a nationalholiday. The UKs strong start to 2013 has seen it

begin to reverse some of last years under-performance, where it gained only six percent compared to 30 per cent on the DAX.

This combined with a weak domesticeconomy that is seen as at risk of a triple-dip recession.

However, high-street retailers were givena welcome boost by a strong festive trad-ing update from Next , which led blue-chip gainers and suggest that domesticconsumption was strong over theChristmas period. The fashion firm rose 2.7 per cent after

it met fourth-quarter sales forecasts andlifted annual profit guidance, giving a

boost to the retailers in a strong start tothe festive trading update season.

Nexts earnings quality score rose to 100from 95 after its previous filing in June,

which suggests the composition of earn-ings in the recent past is robust enough forits growth rate to be sustainable, accordingto Thomson Reuters Starmine data.

Imagination Technologies , the chipdesigner whose technology is used in

Apples iPad, saw shares lift 10 per cent to439.7p on positive sentiment ahead of itsappearance at the consumer electronicsshow in Las Vegas. The companys chief executive, Iran-born Hossein Yassaie,received a knighthood in the new yearshonours list.

Meanwhile horticulture firm WilliamSinclair slumped to a pre-tax loss of 400,000 in the year to September, downfrom a profit of 3.18m the year before.

The garden product producer cited bad weather.

FTSE spikes in afternoon trading onUS December employment boost

BESTof theBROKERSCompass Group PLC

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733.573 Jan

COMPASSEspirito Santo yesterday downgraded the food services group frombuy to neutral, believing the companys shares outperformed in2012. According to the analysts, this encapsulates the gloomy short-term potential in the company due to limited organic growth caused bycyclical pressure in Europe. However, Espirito Santo has raised its fairvalue by 50p to 750p and sees long-term opportunities.

FTSE

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Betfair Group PLC

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BETFAIRInvestec lowered its target price by 15p to 585p yesterday and reiteratedits sell label on the o nline betting and gaming operator. The

companys new chief execuive has not convinced Investec that histurnaround story is persuasive, and the analyst forecasts lowerprojected revenue and costs as the firm pares back some overseas arms.On the other hand, Investec thinks Betfair is doing well in the UK.

Experian PLC

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EXPERIANSeymour Pierce hiked its view on the credit information agency fromreduce to add and increased the target price to 1,100p on the backof recent share price underperformance. The move follows positive newson consumer lending in the US, the companys largest market where it

makes almost half of its sales. Seymour Pierce has trimmed its profitforecasts by two per cent on currency movements.

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MUCH of finance is devoted tothe management of risk. Yet before the financial crisis, wespectacularly misunderstoodthe riskiness of investments which, leveraged to the hilt, inflated afinancial bubble that burst in 2007. Asthe fallout continues, we ask why risk management failed so epically. Many point to the scientific shortcomings of economics. A common refrain is thatmarkets are so complex that they defy reason, that the assumed culprits of the crisis irrationality, herd

behaviour cant be expressedmathematically, so we shouldnt try.

But recent work by Ole Peters of theLondon Mathematical Laboratory rightly challenges this view. That

human behaviour governs markets

A S 2013 begins, GeorgeOsborne, Ed Balls, and Danny Alexander should look at thepolls with a mix of depressionand hope. Depression, becausedespite all the coverage of their efforts,the public remains completely dividedand confused on economic policy.Hope, because there is everything toplay for and a politician who takes arisk with a different approach cansecure political advantage. YouGovs December polls showed the

following: by 77 per cent to 4 per centpeople think the economy is bad; by 62to 30 per cent, people think the govern-ment is mismanaging the economy; by 60 to 26 per cent that spending cuts are

being done unfairly; and by 44 to 13per cent that cuts are being made toofast. But the same polls show by 56 to31 per cent that people think they arenecessary. The public therefore simul-taneously thinks the governments eco-nomic policies are wrong and right. This should not come as any real sur-

prise. After all, amid a massive andcomplex economic shock, no seniorpolitician regularly explains the funda-

cityam.com/foru

People make political

decisions primarily onemotional judgements,even on the economy

THEFORUM

Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com Agree? Disagree? Got a sharp comment?The Forum wants you to join the debate. Top responses will be reprinted in The F

16 FRIDAY 4 JANUARY 2013

JAMES FRAYNE

Public understanding of econprinciples will decide 2015 el

mentals of their economic policy tothe public. No politician consistently returns to first principles to explainhow we got into this mess, what anacceptable outcome looks like, how weget there, and a realistic timetable.

Politicians have generally played aninside Westminster game, jumping onpositive or negative data, and pilinginto each other on big days inParliament. The polls show that thisapproach is not working. There is aknowledge gap in the public mind thatmeans they are not processing all thenews that reaches them. The economicdebate is passing them by.

Politicians are rightly wary of com-plexity. People make political decisionsprimarily based on emotional judg-ments, not reason, even on apparently

rational issues like the economy. They make decisions based on feelingsabout competency, fairness, and trust.Economic realities count, but busy people ultimately make judgementson their perceptions of reality, not justobjective facts. Perceptions of the econ-omy will determine the next election.

But the parties cannot hope to movepeople emotionally through simplearguments unless they establish aframework to help the public under-stand their economic policies. The gov-ernment will struggle to project asense of competence if the public hasno concept of government debt and

why it is bad. Labour will struggle toportray the governments policies asincompetent and unfair if the publichas no concept of why spending dur-ing a recession makes economic sense.

Politicians will only win the econom-ic debate when they take a risk by rais-ing its quality. City A.M. has beencalling for better financial education.

This is right and politicians need tostart this process now, doing the equiv-alent of taking the British public back to school. Politicians need to accept

first that the basic economic conceptsthey take for granted are not under-stood by the public, and second thatthese concepts must be understood forall their other communications tomake sense. What does that mean in practice?

Above all it means hitting the reset button by finding opportunities for

major events and big speeches that go back to first principles on the economy and that explain these basic conceptsto the public debt for the govern-ment, growth for Labour. It also meansthe creation of perfect paragraphs ontheir fundamental approaches to eco-nomic policy that can be front-loadedinto all their public communications. Agree with him or not, the person

that probably got this approach mostright in recent times was US econo-mist Paul Krugman. On his autumn

visit to the UK, he articulated anapproach that touched on serious eco-nomic policy but that also made senseto a popular audience. His argumentthat the government was mad to pushausterity in a downturn regardless of its merits was compelling. It was par-ticularly so given the absence of a clearalternative articulated by domesticpoliticians. Will such an approach work? With

the ludicrous ban on political advertis-ing on TV, it is harder than it might be.But I believe that it can work. Pollsshow that the economy is by far peo-ples biggest concern and they are stillpaying more attention to economicand business news than before. Whatis clear is that it is not credible for thegovernment to continue to inflict seri-ous economic pain on the public with-out a real explanation. Perceptions will

be everything in 2015. James Frayne is a communications strate-

gist and a former government director of communications.

does not make maths futile. The problem, instead, is how time

and its irreversibility have fitted intothe framework of economics. Risk has two sources. The first is that thefuture is uncertain. The second isthat time is irreversible. Choicesabout uncertain futures are risky

because we cant go back and try again. We must live with the

consequences. Without uncertainty

or irreversibility, decisions would betrivial, and economics dull if accurate.

Peters criticises the commonpractice of gauging investments by their expected return, the sum of allpossible outcomes weighted by theirprobabilities. This is equivalent toimagining multiple copies of ourselvesin parallel universes and averaging.

This is known as an ensemble average.But we live just one life and realise

just one future. If we lose, we cant ask our imaginary selves to make us

whole again.In a groundbreaking paper for the

Royal Society, Peters urged economiststo consider another average, the timeaverage, in which the future unfoldsin just one universe over a long time.

While ensemble averages run possible

scenarios in parallel, time averagingruns scenarios in sequence reflecting that previous decisionscant be undone as time passes. This isfar closer to what we, as individuals,actually experience, and is thereforethe appropriate measure on which to

base our investment decisions. The striking difference in how these

averages measure risk is shown in amarket example. Assume you have anasset priced at 100. Imagine the pricefirst goes up by 50 per cent, and laterfalls by 50 per cent. The ensembleaverage of the assets price would be100. We envision two imaginary parallel markets, where the asset pricefalls by 50 per cent to 50 in one andrises to 150 in the other, and take the

average of both. The time average of

the assets value would be 75,however. We envisage just oneuniverse where the asset price firstrises by 50 per cent to 150, and thenfalls by 50 per cent to 75.

The simplest physical systems, like a balloon full of gas, are what physicistscall ergodic. This means their time andensemble averages are identical. Butcomplex systems can be non-ergodic,and this is true of many economicmodels like those that describe how stock prices move and how nationaleconomies grow. Economists, investorsand analysts should grasp the nettle of non-ergodicity and deploy themathematical machinery developed inthe twentieth century to handle it.

Alex Adamou is a fellow of the London

Mathematical Laboratory : www.lml.org.uk

ALEX ADAMOU

Faulty maths didnt cause the crisis but risk management

MORNING UPD A .M.

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17FRIDAY 4 JANUARY 2013

The Forum is open for you to take part. Got a sharp comment onone of todays columns? Do you have another subject you wantto share your opinion on? We want to hear your views.Email theforum@cityam.com or comment at cityam.com/forum

Corporation tax[Re: Is Sir Martin Sorrell right that corporation tax payments are a question of judgement? , yesterday]While Steve Barclay is right that the UK taxsystem needs reforming, tax is still solely amatter of legal obligation, not a function ofpublic relations. Starbuckss recent move topay an additional 20m set a dangerousprecedent. Laura Bryonson

Navel-gazing over why companies shouldpay tax is irrelevant. Sorrell proved thishimself. WPP shifted its headquarters toIreland as soon as it felt UK taxation wasburdensome. The company is only back inthe UK now the situation is better. Iain Richards

Fiscal cliff failure[Re: Fiscal cliff deal is no grand bargain to save the US from growing debts , yesterday]The real significance of the fiscal cliff deal ishidden in the detail of Ewan Wattsargument. Well be back here again in twomonths when politicians are forced todebate the US debt ceiling. Nothing wasresolved only an agreement on slightadjustments to tax rates. Spending was leftlargely untouched there was no attempt toreach agreement on the reform ofunsustainable entitlement spending. AsWatt says, the deal isnt representative of amuch-needed spirit of cross-partycooperation in Washington. Its bipartisancollusion to sweep the real problems underthe rug for another few months. Michael Kelly

Y ESTERDAYs call by thePresident of Argentina,Cristina Fernndez deKirchner, for the UK to handher the Falklands Islands was just the latest example of diplomatic sabre-rattling fromBuenos Aires over the islandssovereignty. Alas history hasnt recorded

whether David Cameron got as faras page 25 of The Guardian to readfor himself the missive thatKirchner addressed to him. But he

was right to insist that the FalklandIslanders themselves should retainthe right to self-determination, andthat they would have his full back-ing as long as they choose to stay

with the UK. Its unacceptable foranother nation to repeatedly makehostile claims on British sovereignterritory, and its hardly contro-

verisial that anyone making suchclaims should expect short shriftfrom the UK.

Except that Argentina is not get-ting the cold shoulder from thePrime Minister and, in particular,the Department for InternationalDevelopment. Research published

by the TaxPayers Alliance last yearshowed that British taxpayersmoney is effectively supporting the

Argentinian government throughloans doled out by the World Bank and aff iliated institutions. As of March 2012, outstanding

loans to Argentina were worth$16.2bn (10bn). Based on Britainsshareholdings in the two responsi-

ble lending institutions, that meansa total UK taxpayer stake in loans to

Argentina of nearly $353.8m. While no cash may have been sent

directly from London, British money is underwriting borrowing by the

Argentinian government: the samegovernment which has spent money on ads in the British press demand-

TOP TWEETSIts irritating that many talk of handingback the Falklands to Argentina. It onlyever held the Falklands for four months.@AndrewLilico

After the fiscal cliff deal, the richestAmericans will still pay less tax than middleincome earners in Britain.@GABaines

The Falklands are British not because the UKgovernment says so, but because the peoplethere feel British.@PeterRNeumann

Means testing winter fuel allowance issupported by 74 per cent of the public,including 66 per cent aged 65+.@Andrew_ComRes

Should winter fuel payments for pensionersbe means tested to help fund elderly care?

YESA person that owns an average priced home will currently pay theequivalent of around 65 per cent of its value to pay for their old-age care. But implementing the proposals of the DilnotCommission capping the cost of care at 50,000, and extendingthe means test to 100,000 would cost an average person only22 per cent of the value of their home. Winter fuel paymentscurrently cost the taxpayer over 2bn annually. If it were onlydistributed to those on pension credit, it would save 1.5bn peryear. People need to take a hit of a few hundred pounds now inorder to save tens of thousands of pounds in the future. Byearmarking this saved money for something else, we also stop thatmoney from disappearing into the Treasurys coffers, and divert itinto the pockets of older people in desperate need of care.Paul Burstow is Liberal Democrat MP for Sutton, Cheam and Worcester Park.

Paul Burstow

NORos Altmann

Finding a balance between state help and individual responsibilityto pay for care costs does not imply more means testing. Strippingwinter fuel payments from those with some savings would be adisincentive for people saving for retirement. Winter fuel paymentswere introduced as a way of topping-up basic state pensions among the lowest in the developed world. Median incomes ofpensioners are around 15,000 per year, and most pensioners needas much of this as possible. Universal payments are important inproviding a minimum level of income, and can be supplemented byprivate savings. There are alternative ways of saving money, likeincreasing the age of entitlement or taxing benefits, which wouldpose less health risks to pensioners. Extending means testing mayexacerbate the care crisis, as more pensioners suffer cold-relatedillnesses, leading to more people relying on state care in the future.Ros Altmann is director-general of Saga.

RAPIDresp onses Argentine bravahas an unlikely ain the UK taxpa

ing the return of the Falklands.For some time, Barack Obamas

administration in the US has pur-sued a policy of voting against any new loans to Argentina at theInternational Bank forReconstruction and Development(IBRD) and the Inter-AmericanDevelopment Bank (IADB), the twoinstitutions lending to Argentina. Ithas done so in response to

Argentinas treatment of existingcreditors. EU nations like Germany and even Spain have also opposedfurther loans to the country.

In the circumstances, you mightexpect the UK government wouldhave joined them. Alas not. In all themeetings at which new loans to

Argentina have been discussed atthe IBRD and IADB, not once has theBritish representative cast a voteagainst such a proposal. When I recently challenged the

international development secre-tary Justine Greening on this matter,she insisted that British decision-making in multilateral finance bod-ies is guided by economic anddevelopment principles.

Many, however, would disagree.Such decisions should first and fore-most be guided by Britains nationalinterest. This is why we must pressthe government to oppose furtherloans to Argentina. And any City A.M.readers who agree can sign our peti-tion at

www.StopFundingArgentina.org. Jonathan Isaby is political director of the

TaxPayers Alliance.

JONATHAN ISABY

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LIFE& STYLEFRIDAY 4 JANUARY 2013

19cityam.com

GOING OUT

You would be mad to mis

ARTLichtenstein: A RetrospectiveTate Modern, 21 FebruaryIt has been an astonishing 20 years since thelast retrospective of one of the mostrecognisable artists of the 20th Century. TheTate Moderns show promises to showcase thevery best of Lichtensteins famous pop artcreations that influenced a generation of artistsand still stands shoulder to shoulder with thevery best American art.

FILMMan of SteelIn cinemas 14 JuneThe latest interpretation of Superman

has been on the cards forthe past few years,having initially stalled

due to litigationbetween Warner Bros

and the characterscreator Jerry Siegels

family. But dontworry, the film willfinally grace ourscreens thissummer. Britishactor HenryCavill stars as atwenty-somethingyear old ClarkKent and hisfamous alter

ego.

THEATREQuartermaines TermsWyndhams Theatre, from 23 JanuarySimon Grays lauded Quartermaine'sTerms will make a triumphant returnto the West End, with RowanAtkinson taking the reins as St JohnQuartermaine, the bumbling teacherattempting to navigate the

precarious staffroom politics. RichardEyre directs what is sure to be a veryEnglish