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MONDAY: EU boss says threat to euro has been overcomeYESTERDAY: Joblessness in single currency area hits record

BUSINESS WITH PERSONALITY

KEYRed Rising unemploymentGreen Falling unemploymentGrey Stable unemployment

* October data** September data

UK 7.8%

BELGIUM 7.4%

GERMANY 5.4%

LATVIA** 14.1%

ITALY 11.1% BULGARIA 2.4%

ROMANIA 6.7%SLOVENIA 9.6%

ESTONIA* 9.5%

PORTUGAL 16.3%

IRELAND 14.6%

FRANCE 10.5% CZECH REPUBLIC 7.4%

AUSTRIA 4.5%

NETHERLANDS 5.6%

SPAIN 26.6%

FINLAND 7.9%

LITHUANIA 12.5%

POLAND 10.6%

SLOVAKIA 14.5%

HUNGARY* 10.9%

DENMARK 7.9%

SWEDEN 8.1%

GREECE** 26%

UNEMPLOYMENT HIT ANOTHER RECORD HIGH IN NOVEMBER

EU 27 10.7%

EUROZONE 11.8%

57.6%GREEK YOUTHUNEMPLOYMENT

56.5%SPANISH YOUTHUNEMPLOYMENT

GERMAN EXPORTS

3.4%INNOVEMBER

EUROZONE RETAIL SALES

2.6%ON THEYEAR

Germany and by extension, theEurozone as a whole, and undersuch circumstances, it is difficultto imagine that the 12 monthsthat lie before us will be devoid ofone funding crisis of varying scaleor other.

And despite positive marketreactions to the ECBs plans tosupport the economy throughmonetary policy, economists arguesuch aid cannot put the Eurozoneback on a track to recovery by itself.

The Eurozone is trundlingfurther into recession, but neitherstates nor the central bank aretaking action. Reform will have tobe undertaken the long andpainful way: falling wages in theperiphery amid widespreadunemployment, rising wages in thecore thanks to a weak euro andloose monetary policy, said Tim

Ohlenburg from the Centre forEconomics and Business Research(CEBR).

He doubts whether thecurrency area really will

last as president Barrosoclaims.

The Eurozone facesa long and hard trekand it remainsunclear if it can reachthe summit intact,Ohlenburg warned.

UNEMPLOYMENT hit a record highand retail sales slumped towardsthe end of last year as theEurozones economic tragedyplumbed new depths, officialfigures showed yesterday despitetop Brussels politicians insistingthe crisis has been overcome.

That means the Eurozone isalmost certainly still in recession,with even the tough Germaneconomy likely to have shrunk atthe end of the year as its exports toother countries plunged.

The latest set of gloomy datacomes after European Commissionpresident Jose Manuel Barrosoclaimed on Monday that theexistential threat against the eurohas essentially been overcome.

In 2013 the question wont be if

the euro will implode or not, hesaid, arguing that EuropeanCentral Bank boss Mario Draghihas helped put the continent backon track to recovery by promisingto buy bonds from strugglinggovernments that ask for a bailoutand vow to reform theireconomies.

But despite Barrosos optimism,the crisis is deepening andeconomists still doubt whether theEurozone can stay together in theface of such mounting economicand social pressures.

Unemployment hit 11.8 per centin November the highest level onrecord since the euro wasintroduced in 1999 with 18.82mpeople unemployed across thesingle currency area.

And youth unemployment in the

www.cityam.com FREE

Eurozone also jumped to a newhigh of 24.4 per cent, with the ratein the worst-hit states like Spainand Greece edging closer to 60 percent.

Retail sales fell 2.6 per centcompared with November 2011,and analysts expect demand toremain under pressure as theprivate sector continues to paydown its debts instead ofborrowing and spending.

Even the Eurozones largesteconomy Germany may have beenbattered into contraction at theend of last year by the worseningcrisis, with figures out yesterdayshowing that German exportsdropped 3.4 per cent in Novemberand factory orders fell 1.6 per cent,worsening the Eurozones ongoingrecession.

A weaker German economy thisyear poses an additional and very

real threat to existingprojections for growth anddeficits across much of theEurozone, said Neil Mellorfrom BNY Mellon

This will be a tougheryear than 2012 for

FTSE 100 n6,053.63 -10.95 DOWn 13,328.85 -55.44 NASDAQn 3091.81 -7.00 /$ 1.61 unc / 1.23 unc /$ 1.31 unc

BY TIM WALLACE

ITS OK TO SHOP AT ALDIISSUE 1,793 WEDNESDAY 9 JANUARY 2013

FORMER HBOSSTAFF CHARGEDSee Page 3See Page 11

MORE: Page 4LL

Certified Distributionfrom 29/10/12 to 25/11/12 is 129,356

President Barrosoclaimed theworst of thecrisis is over

THE UROZONEIS NOT WORKING

STEPHAN SHAKESPEARE ON THE RISE OF THE BUDGET SUPERMARKET

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[email protected]

Follow me on Twitter: @allisterheath

THE SECOND half of the coalitionsparliament got off to a busy start yes-terday, as the government pushedthrough a one per cent cap onincreases to most working-age wel-fare payments, as well as setting outits stall for the new year with plans tospeed-up large infrastructure proj-ects and regulate the pub industry.The coalition won last nights vote

on welfare legislation by 324 to 268,despite a number of rebellions andabstentions among Liberal DemocratMPs. The affected benefits had beendue to rise by 2.2 per cent in April.

Iain Duncan Smith, the work andpensions secretary, said the policywould save taxpayers 1.1bn in itsfirst year and was fair at a time whenprivate sector incomes are risingbelow the rate of inflation.

We inherited an unsustainableand costly system, he said. Theseare not decisions taken lightly or eas-ily, but we have to take them and[Labour] are in denial.

During a lengthy debate, Labourspokesman Liam Byrne insisted thechanges would hurt the low-paidwho rely on tax credits: Its turninginto a hit-and-run on working fami-lies and we should not stand for it.

Meanwhile Vince Cable said hewould call time on allegedly unfairpractices in the pub industry andannounced plans to introduce legis-

Telecoms discuss Europe networkEuropes top telecoms executives arediscussing the creation of a pan-Europeaninfrastructure network to unite thecontinents fragmented national markets,following prompting from Brussels toconsider more radical options.The idea of pooling telecomsinfrastructure emerged at a privatemeeting between Joaqun Almunia, theEUs competition chief, and bosses ofEuropes biggest groups, includingDeutsche Telekom, France Telecom,Telecom Italia and Telefonica.

Fed reviews foreign banks tradingThe US Federal Reserve is weighing a planthat would allow big foreign banks toavoid costly regulatory changes that weremeant to prevent derivatives trading frombeing subsidised by taxpayers. The banksare currently not able to trade derivativesif they have Fed credit facilities.

Schroders ditches PwC as auditorSchroders is jettisoning PwC as its auditorafter more than half a century in a signthat big companies are becoming moresensitive to claims they are too cosy withthe people vetting their accounts.

Electric revolution falls flatA survey of 200 car industry leaderssuggests that billions of dollars spent onproducing battery-driven cars over thepast decade could have been spent moreeffectively.

Eurotunnel gives pets an easy rideThe Channel Tunnel operator has reportedthat last Sunday, for the first time, it hadto deal with more than a thousand petspassing through its Calais terminal and onto the train.

Police officers were wrong to callfor Andrew Mitchell's resignationRank-and-file officers were wrong to callfor the resignation of the then-chief whipAndrew Mitchell over the plebgate row,Britains most senior officer has said.

McDonalds Aussie rebrand to MaccasInternational food giant McDonalds isembracing its Australian nickname, withselected stores around the countrychanging their signage to Maccas tocelebrate Australia Day on 26 January.

Finra to shine light on dark poolsA top US regulator plans to shine a lighton dark pools, private trading venues thatallow buyers and sellers to post ordersthat are hidden from the rest of themarket.

Qatar to double aid to EgyptQatar said it was doubling its financialaid to the Egyptian government with anew injection of $2.5bn (1.6bn),underlining its role in propping up Cairosforeign-currency reserves.

BUSINESS minister Lord Marland,the Conservative peer, yesterdayresigned from government thesecond minister to quit thecoalition in as many days.

His resignation is a major blowfor Prime Minister DavidCameron, who on Mondayannounced a high profilerelaunch of coalition policy thesame day Lord Strathclyderesigned from his cabinet role asleader of the Lords.

Marland will step down tofocus on his business interests,Downing Street said. It comes justmonths after he was moved fromthe Department of Energy andClimate Change to Vince CablesBusiness, Innovation and Skillsdepartment.

Marland, a former Torytreasurer, was made a peer in2006. He helped found FTSE listed

insurer Jardine LloydThompson after adistinguishedCity career ininsurance. Healso led the

acquisition ofHunter

Wellington Boots.

Tory business

minister quitsgovernment

David Cameron has repeatedly insisted it is fair to cap increases to welfare payments

2 NEWS

BY MICHAEL BOW

JAMES WATERSON

To contact the newsdesk email [email protected]

GIVEN the fury surrounding the

welfare debate in Parliamentyesterday, you would beforgiven for believing that this

was about a major downsizing of thewelfare state. In reality, the coalitionwill be capping the increase in mostworking age benefits to 1 per cent for

the next three years, ensuring a realterms cut but only reducing totalwelfare spending by under 0.5 percent compared to the level it wouldhave been under the previous regimeof inflation-linked hikes.

One reason it is so tough to cut thewelfare bill is that so much of it isspent on pensioners, which the coali-tion wrongly seems to think it will beable to shield from austerity indefi-nitely. Another is that Gordon Brownensured that far more people endedup in receipt of tax credits or benefits,expanding the number of families

EDITORSLETTER

ALLISTER HEATH

Vested interests will fight to block necessary spending cuts

WEDNESDAY 9 JANUARY 2013

dependent on the state for at leastsome of their income and thus inflat-ing the constituency with an incen-tive to oppose reform.

In fact, one of the most importantfacts about British society today isthat over half the population receivesmore from the state in cash (includ-ing welfare) or kind (including theuse of services) than pay in direct andindirect tax. Research from theCentre for Policy Studies reveals thenumber of such net dependents was

just 43.1 per cent of total householdsin 1979; by 2000/01 the share was 43.8per cent. But the numbers then shotup, reaching 53.4 per cent by 2010-11.

Of course, many of these are pen-sioners; lots of these net recipientsvote Tory and may even support thecuts. There is no necessary link

between being on the governmentspayroll and supporting a bigger state.But this nevertheless illustrates the

challenge facing those who realisethat the government needs to bedownsized: the losers will be numer-ous and vocal; taxpayers, who standto gain, probably wont even notice.

FREE NO MOREHow free are British citizens? Notvery, according to research out lastnight from the Cato Institute, whichranks us an all too realistic 18th. Theleague table uses indicators that

Switzerland. The UK is ranked a pret-ty pathetic 18th, but that remains bet-ter than France (33rd), Germany(35th) or Italy (40th).

If classical liberals, who believe thata free society is conducive to creativi-ty, free thinking, innovation andgrowth, are right, this is not good

news for the UK and it is terrible newsfor the main Eurozone powers.Excessive restraints on freedom leadto stultified, stagnant societies, ascountries and empires have discov-ered over the centuries. This is true ofeconomics with yesterdays sillyattack on pub companies by VinceCable another blow as well as otherforms of individual choices. Let ushope we eventually remember thisbefore it becomes too late.

assess what philosophers call negativeliberty the absence of coercion.These include freedom of speech, reli-gion, individual economic choice,and association and assembly. Intotal, Catos human freedom indexassesses 76 metrics, including meas-ures of safety and security (including

private crime against property andstate crimes against citizens), free-dom of movement, and relationshipfreedoms. Countries that discrimi-nate against groups on the basis ofgender or sexuality would fare poorly,for example, as would those withhigh taxes or onerous regulations.The freest country on the index

the first such table to fuse economicand social freedoms is NewZealand, followed by the Netherlands,Hong Kong, Australia, Canada andIreland. The US comes seventh, aheadof Denmark, Japan, Estonia and

lation to regulate the relationshipbetween large pub companies and ten-ant landlords.

Last year we gave the pubcos one lastchance to change their behaviour but itis clear that the self-regulationapproach was not enough so we arechanging the law, he said.And newly appointed infrastructure

minister Lord Deighton told MPs hehas launched a capability review toensure Whitehall departments areworking hard to deliver projects suchas railway investment and new powerstations.

Lord Marlandhas leftgovernment

n Most working-age benefits, includingjobseekers allowance and tax credits,will only rise by one per cent for threeyears starting in April.

n The pub industry could get a regulator.It would focus on abuse of the beer tie,which forces some tenants to buy all theirbeer from large pubcos.

n Lord Deighton has pledged to ensurethe best civil servants are working on keyinfrastructure projects.

A DAY IN WESTMINSTER

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

Benefit rises capped ascoalition regulates pubs A CHEAPER, lower-end iPhone

could reportedly go on sale asearly as this year, as Apple looksto expand its market share in theface of increasing competition.

The company is working on adevice that would look the sameas current models, but with a less-expensive, plastic body that couldappeal to those unwilling tosplash out, the Wall Street

Journal reported, citing peoplebriefed on the matter.

Apple did not comment.

Cheap iPhone

in the worksBY JAMES TITCOMB

THE EU would be making a mistakeif it made member states hit firmswith sanctions based on the gendermake-up of their boardrooms, aLords sub-committee decidedyesterday.

Baroness OCathain, who chairsthe Lords Internal Market,Infrastructure and Employmentsub-committee, said membercountries were better placed thanthe European Commission todecide appropriate gender targetsfor their firms.

Lords add toquota criticsBY BEN SOUTHWOOD

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FORMER senior bankers at HalifaxBank of Scotland (HBOS) were yester-day charged with corruption over35m of loans made while they wereat the bank.

Lynden Scourfield, 50, and MarkDobson, 52 are among eight peopleaccused of making the fraudulentbusiness loans through a turnaroundconsultancy in exchange for high-value gifts between 2003 and 2010.

Scourfield and Dobson worked atHBOSs Reading and London officesduring the seven-year period.Also charged were David Mills and

Michael Bancroft, employees of the

Quayside Corporate Services (QCS)consultancy, who allegedly providedthe kickbacks in return for beingassigned the loans to administer.The charges follow a two-year inves-

tigation from Thames Valley Policeunder the codename OperationHornet. The forces Economic CrimeUnit investigated the allegations afterthe Financial Services Authorityraised warnings over the formerbankers activity.

The four other people charged in

Ex-HBOS staffcharged over

35m of loansBY JAMES TITCOMB the investigation are John Cartright,described as an associate at QCS, andthe wives of Scourfield, Mills andBancroft, who, with their husbandsare accused of money laundering.Their names are JacquelineScourfield, Alison Mills and BeverleyBancroft.The allegations are the second scan-

dal regarding HBOS to emerge inmonths, after former corporate lend-ing head Peter Cummings wasbanned for life from working in thefinancial services industry for failureto exercise due diligence. Cummingsis not connected in any way to thepresent alleged fraud.

HBOS bank was taken over by Lloyds

for 12bn in 2009. A spokesperson forLloyds said yesterday: We cannotcomment on the detail of this investi-gation by Thames Valley Police or onthe charges that have been brought.

Neither Bank of Scotland norLloyds Banking Group is the subject ofthe investigation. We have been assist-ing the Police with their investigationand will continue to do so.The eight were released on bail

yesterday and will appear at ReadingMagistrates Court on 18 January.

JP MORGANS investment bankchairman Jes Staley announced hisresignation yesterday, ending 34

years at the giant firm to become apartner at hedge fund BlueMountain Capital.

Blue Mountain was set up by aformer JP Morgan banker AndrewFeldstein in 2003 and is believed tohave made hundreds of millions ofdollars betting against derivativespositions taken by the London

Whale a trader who lost JPMorgan $6.2bn (3.86bn) last year.

He will purchase a stake in thefund, and will sit on the

JPM investment chairman joinsWhale-hunting US hedge fund

BY TIM WALLACE management, risk and investmentcommittees.

Staley is of an age with JPMorgan chief executive JamieDimon and it is thought he hoped

to rise to the top job. But Dimonhas made it clear he has nointention of leaving the bank anytime soon, ending Staleysambitions in the business.

Im very excited to be joiningBlue Mountain, Staley said in astatement. I want to thank all mycolleagues at JP Morgan, my homefor the last 34 years, and I lookforward to working with them inthe future. It is thought that hisposition may not be continued.

WEDNESDAY 9 JANUARY 20133NEWScityam.com

Staley ran JP Morgans investment arm from 2009 but was unlikely to get the top job

AVIVA is to sell its remaining stakein Dutch company Delta Lloyd, adisposal that forms part of a shake-up to turn around a f lagging shareprice at Britains second biggest

insurer.Aviva plans to sell all its 34.3mshares in Delta Lloyd, an amountequivalent to around 19.4 per centof the Dutch insurers capital.

The pricing of the shares wasannounced at 12.65 each lastnight, which would value the stakeat around 434m (353m), thecompany said.

Aviva sells offits Delta stake

BY CITY A.M. REPORTER

THE USS biggest aluminiumproducer, Alcoa, kicked off the

countrys fourth-quarter resultsseason yesterday, beatingexpectations on revenue andforecasting an improved 2013.

The company, seen as abellwether for the countryseconomy, swung to a profit of$242m (151m) after a loss in theprevious quarter, and said it seesglobal aluminium consumption torise seven per cent this year, anupgrade on the previous quartersexpectations of six per cent.

Alcoa positiveabout 2013

BY JAMES TITCOMB

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THE EUROZONES bailout fund

raised funds successfully yesterday,issuing three-month debt at negativeyields, indicating strong support forthe paper.

And Irelands government took abig step towards recovery, easilycovering a 2.5bn (2.04bn) issue ofdebt maturing in 2017.

It received orders totalling over7bn, a strong reception for thestates first long-term issuance sincethe 2010 bailout.

That puts this years10bnfundraising plan on a strong footingand indicates the country may soonbe able to exit the bailout program.

The European StabilityMechanism (ESM) launched its short-term funding programme with athree-month bill auction.

It raised 1.927bn with a weightedaverage yield of minus 0.0324 percent with investors effectively

paying to lend money to theGermany-backed bailout fund.

Part of that success came from theJapanese governmentsparticipation, with the countrysfinance minister Taro Aso pledgingto buy ESM debt regularly with thestates foreign reserves.

Meanwhile Austria and theNetherlands also tapped the bondmarkets successfully, showinginvestors have relaxed in the wake oflast months deal on Greek finances.

Markets lap upIrish debt asstate recovers

BY TIM WALLACE

THE SALE of HSBCs stake in a majorChinese insurer could be at risk ofcollapsing, it emerged yesterday, asthe bank funding the purchasercould pull out of the deal.Thai conglomerate Charoen

Pophand (CP) Group is part waythrough acquiring HSBCs 15.6 percent stake in Chinese insurer PingAn for $9.4bn (5.96bn).

CP Group received 20.8 per cent ofthe stake last month, but the pur-chase of the remainder relies bothon approval from the regulator andon funds from the ChinaDevelopment Bank which is

rumoured to be considering pullingthe loans.

HSBCs shares fell 0.48 per centyesterday.

But analysts said any breakdown ofthe deal would in fact be a gooddevelopment for HSBC as shares inPing An have risen since the dealwas struck, meaning the bank couldnow sell for a better price.

If this does happen, it is probablygood for HSBC they agreed the dealat a share price of HK$59, and yester-

Funding threatto $10bn HSBC

insurance saleBY TIM WALLACE day the price was HK$68, said IanGordon from Investec.

So in effect the bank is locked intoan out-of-the-money deal. But itseems HSBCs share price fell on therumours because the markets do notlike uncertainty.The sale is part of a wider strategy

to offload non-core assets. ButGordon also warned the bank isalready overcapitalised, with too fewopportunities to make good use ofthe proceeds of the sale, dampeningthe groups prospects in the shortterm.

HSBC declined to comment whileCP Group and the ChinaDevelopment Bank were unavailable.

HSBC Holdings PLC

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657.50

662.50

672.50

667.50

p660.20

8 Jan

SHARES in Vodafone rose as muchas 2.7 per cent yesterday onsuggestions the company could

reap a 50bn windfall from thesale of its stake in its US joint

venture, Verizon Wireless (VZW).The jump comes after the chief

executive of VerizonCommunications, which owns 55per cent of VZW to Vodafones 45per cent, said he wanted to buy outthe remainder.

We have always said we wouldlove to own all of that asset. I think[a deal] is feasible, Lowell McAdamtold the Wall Street Journal.

Vodafone shares up as Verizoneyes buyout of US joint venture

BY JAMES TITCOMB VZW has become a successfulventure for Vodafone, paying outmulti-billion pound dividends inthe last two years. However, it hasalso been a source of instability,

with shareholders uncertain aboutthe likelihood of a payout.

An immediate deal, which oneanalyst pegged at more than50bn, is thought unlikely, with

Vodafone unwilling to sell andVerizon Communications short ofthe backing needed to lodge a bid.

Shares in the FTSE 100 companyrose to a high of 164.74p beforefinishing up 3p at 162.74p. Neitherfirm opted to comment yesterday.

BOTTOM LINE: Page 13LL

WEDNESDAY 9 JANUARY 20134 NEWS cityam.com

Verizon Communications boss Lowell McAdam said he thought a deal was possible

Vodafone Group PLC


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164

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p

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NETWORK Rail yesterday set out its37.5bn plan to improve Britains rail-ways in the five years to 2019, includ-ing a 20 per cent rise in seats forLondons peak time commuters.The investment plan, if approved,

will be funded by a combination ofsubsidy, more borrowing and above-inflation fare increases.The money spent on upgrading the

countrys rail infrastructure, much ofwhich was built in the Victorian era,is higher than Network Rail had setout last year.

But chief executive David Higginssaid in yesterdays report: We shouldnever be afraid to make the case toinvest today to reduce public subsidy

Network Rails

37.5bn plan toimprove trains

BY MARION DAKERS in the years ahead.Commuters into London will be pro-

vided with 115,000 extra seats duringthe morning peak by 2019, a rise of afifth, as well as extra space to stand.The plans include a total of 170,000extra commuter seats nationwide.The firm also plans to cut the cost of

running the rail network by a further18 per cent in the period, and reducethe annual taxpayer subsidy from apeak of 7bn in 2004 to around 2.9bnin 2019.

Network Rail hopes to do thisthrough centralising operations, stan-dardising maintenance and securingbetter contracts with partners.

The Office of Rail Regulation willnow comb through the plans toensure every penny is made to count.

5NEWScityam.com

BRITAINS GROWING RAILWAYS

Number of passengers a year

Airports compared with Railway stations

The average ticket cost

5.06

3.57

2003/04

Network Rails cost to maintainand operate the railway

The average ticket cost

5.21

1.62

2013/14

Network Rails cost to maintainand operate the railway

100,000,000

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80,000,000

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60,000,000

50,000,000

40,000,000

30,000,000

20,000,000

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0

Waterloo

Victoria

LiverpoolStreet

LondonBridge

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Paddington

KingsCross G

lasgowCentral

BirminghamNewStreet

ManchesterPiccadilly

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Gatwick

Stansted

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n Network Rail, which is responsible formaintaining the railways, wants to spend37.5bn on infrastructure between 2014and 2019

n The upgrades are needed to bring theVictorian-era network up to date and copewith soaring passenger numbers, whichare set to double between now and 2035under NRs projections

n Staff numbers will be cut by 1,200during the period, as NR centralises someoperations and switches to new systems

n This centralisation will see 800 signalboxes replaced with 14 operational centres

n Specific upgrade plans includeelectrifying the Great Western Line,bringing the platforms at WaterlooInternational back into use and creating a

Northern Hub at Manchester that will see

700 more trains a day linking key northerncities

n NR also thinks the controversial HighSpeed 2 route between London,Birmingham and the North needs to bebuilt to cope with expected surges indemand

n NR hopes to shift 30 per cent morefreight onto the railways by 2019, as partof its efforts to become more green

n To try and make better use of newertechnology, NR wants to increase researchand development expenditure from 2mthis year to 150m a year by 2019

n The proposals will be scrutinised by theOffice of Rail Regulation before gettingthe official green light in October.Network Rail will set out a final plan in

March 2014

NETWORK RAILS AMBITIOUS STRATEGY

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SHARES in London-listed minerAfrican Barrick Gold (ABG) plummet-ed more than 20 per cent yesterday,as its Canadian parent Barrick Goldsaid it was no longer in talks to sellthe unit to a national Chinese goldcompany.The talks with China Gold regard-

ing the London-listed gold producer,which is 74 per cent-owned by its par-ent Barrick Gold, were firstannounced in August.

Calling time on months of talks,Jamie Sokalsky, president and chiefexecutive of Barrick Gold, said yester-day that the company would onlyproceed with opportunities that gen-erate acceptable value, suggestingthat the China Gold offer fell short ofwhat Barrick Gold was after.

He added that ABGs assets holdsignificant potential, and BarrickGold would continue to seek the bestway to realise that value for share-holders.Additionally, ABG whose flagship

mine Bulyanhulu in Tanzania hasperformed well has kicked off anoperational review of the business, to

African Barrick

Gold plungesas talks finishBY CATHY ADAMS look at costs and the various assets in

the portfolio, among others.Greg Hawkins, chief executive of

ABG, said that the sale process hademphasised the fundamental long-term value of its portfolio.

Hawkins added that he had a highdegree of confidence in the business,and believed the operational reviewwill further improve the return pro-file of the business.

However, Jonathan Guy, analyst atRBC Capital Markets, said yesterdaythat he believed the disposal of theinterest in ABG remains the preferredoption for Barrick.

Shares in ABG closed down 20.7 percent yesterday at 352.4p.

Mark Cutifani has served as chief executive of AngloGold Ashanti since 2007

African Barrick Gold PLC

2 Jan 4 Jan3 Jan 7 Jan 8 Jan

380

400

360

420

440

460

480 p 352.398 Jan

ITALIAN insurance giantGenerali yesterday paid 2.5bn(2bn) to take full control of aneastern European joint-venture

with Czech f irm PPF.It is the first major decision

made by Mario Greco, Generalisnew chief executive, as part ofthe strategic review thatfollowed his appointment last

August.Generali said eastern Europe

was now its fourth biggestmarket and growing faster than

western Europe, with grosspremiums totalling 4bn at the

end of 2011, up from 1bn in2007.

Insurer Generali pays 2.5bn foreastern European joint-ventureBY JAMES WATERSON Greco insisted the deal would

enable his firm to concentrateresources on a high-growth

business area: This transactioneliminates all uncertainty overour development strategy inCentral and Eastern Europe andthe resources required from the

group to put it in place .The joint-venture between PPF

and Generali, known as GPH, wasonly formed in 2007. PPF isowned by Petr Kellner, the CzechRepublics richest man, who may

walk away with a healthy prof it.As part of the deal PPF will pay

80m to retain the joint-ventures operations in Russia,

Ukraine, Belarus andKazakhstan.


Market welcomes Cutifani asnew Anglo American chiefTHE MARKET reacted well to AngloAmericans official appointment of

incoming chief executive MarkCutifani yesterday, with the minersshares closing up 1.37 per cent.

Cutifani, currently chiefexecutive of South African-focusedgold producer AngloGold Ashanti,will begin his tenure on 3 April.

He is a seasoned miner, withbroad experience of miningoperations and projects across awide range of commodities andgeographies, including South

BY CATHY ADAMS Africa and the Americas, Anglochairman Sir John Parker saidyesterday, adding that Cutifani wasa unanimous choice.

He is in line for a 1.2m annualsalary plus incentives.The miners current chief

executive Cynthia Carroll will stepdown from the board at the AGM inApril, and leave the company at theend of the month.

Cailey Barker at Numis hailed theappointment as positive. He isworth the money and a good hire inour view, the analyst added.

Paul Gait at Bernstein Research

remarked that Cutifani is aminers miner, one whom weexpect will help reengage seniorleadership with the 'bread and

butter' of operating performance.Meanwhile, Sir John confirmedthat the details of the platinumreview would be announced in thenext few weeks, as it marked animportant move to increaseefficiency and cost effectiveness ofthe business.

The chairman also reiterated theminers strong commitment toSouth Africa.

Shares closed at 2,028p.

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AIG, the insurer rescued by the USgovernment in 2008 with a bailoutthat ultimately totaled $182bn(113.3bn), may now join a lawsuitagainst the government alleging

the terms of t he deal were unfair,the company said yesterday.AIG said its board would meet

today to discuss joining a lawsuitfiled against the government bythe insurers former chiefexecutive, Hank Greenberg.

The White House declined tocomment, but one Democraticcongressman called the criticismutterly ridiculous.

The news prompted a swiftreaction from one of AIGssaviours, with the Federal ReserveBank of New York saying theinsurer could have just as wellchosen bankruptcy four years agoand wiped shareholders outentirely.

The move would be something ofa shock, given that AIG justlaunched a high-profile televisionad campaign called Thank you,

America, in which it offers thepublic its gratitude for the bailout.

If AIG enters this suit it wouldbe the equivalent of a patientsuing their doctor for saving theirlife, said Mark Williams, a formerFederal Reserve bank examinerwho teaches in the financedepartment at Boston University.

AIG needs to look at only itselfas a company that recklesslyengaged in excessive risk taking,Williams added.

AIG could joincase against US

BY CITY A.M. REPORTER

VIRGIN Atlantic has hiredAmerican Airlines executive CraigKreeger as its new chief executive,replacing Steve Ridgway at the car-rier from 1 February.

Kreeger, who has beaten internalcandidate Julie Southern to the topjob, joins the firm as it navigates anew tie-up with US giant Delta AirLines.The search for Ridgways

replacement has taken over ayear. The current chief execu-tive will retire from the air-line at the end ofFebruary after a 27-

year-career withVirgin Atlantic.

Sir RichardBranson, who owns51 per cent of thefirm, said yesterdayKreeger was takingthe helm at adynamic and chal-lenging time for ourairline.

We believe Craighas the experience

Virgin picks USexec as its new

airline leaderBY MARION DAKERS and passion to drive Virgin Atlanticforward and capitalise on theopportunities created by our newventure with Delta Airlines, hesaid in a statement.Virgin Atlantic announced last

month that Delta had spent 223mbuying Singapore Airlines 49 percent stake, and the pair plan to linkup on lucrative transatlantic routes,pending antitrust clearance.

The tie-up was announced bySouthern, and it is thought shewill remain at the firm to over-see the partnership.The airline is also set tolaunch its maiden short-haul

routes, flying to

Manchester andScotland from spring.

An external appoint-ment was going to benecessary if the air-line were to take a dif-ferent course, saidEspirito Santo analystGerald Khoo.

Craig Kreeger helped set up American Airlines partnership with Virgin rival BA


Steve Ridgway is retiringas chief executive

PROFILE: CRAIG KREEGERCRAIG Kreeger has many assets on his CVthat will help him run Sir Richard Bransonsairline.

His most recent job title at AmericanAirlines was senior vice president cus-tomer, meaning he is already attuned toVirgins aim to wow its passengers.

He has also spent six years working for the

US carrier in London, keeping an eye onsales and getting to grips with the complexworkings of Heathrow Airport. This giveshim a head-start as Virgin jostles for spaceat the close-to-capacity hub.

His 27-year American Airlines career alsoinvolved a spell in the finance office over-seeing yield management not a badskillset for a man taking over an airline thatlost 80m in the year to February 2012.

And, possibly most satisfying for SirRichard, Kreeger has the inside track on how

American Airlines forged its transatlantictie-up with bitter rival British Airways. Thisfeat is something Virgin hopes to replicatewith its new partner Delta.

The economics graduate is intimatelyfamiliar with how American looks at itsalliances, said Robert Mann, a New York-based airline consultant. So on that basis,

its a lot of strategic information that's avail-able not only to Virgin Atlantic but poten-tially to Delta.

American boss Tom Horton yesterdaycalled Kreeger a driving force at Americanwho helped make the firm more innovative.

Kreeger was not available for commentyesterday, but said in a statement: I havebeen competing with [Virgin] for manyyears but have always admired its laserfocus on its people, its products and itscustomers.

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SAINSBURY posted the highest sales

growth of the so called big fourgrocers in the run-up to Christmasand was the only one to grow marketshare, data revealed yesterday.

Figures from Kantar Worldpanelshowed Britains grocery marketgrew 3.2 per cent in the 12 weeks to23 December, with the strongestgrowth at the discount andpremium ends of the market atAldi and John Lewis Waitroserespectively.

Among the big four which alsoincludes market leader Tesco, Wal-Marts Asda and Wm Morrison Sainsburys saw sales growth of 3.4per cent, edging up its market shareby 0.1 percentage points to 17.1 percent. Tesco, which is fighting backafter a dire Christmas in 2011 led toits first profit warning in 20 years,saw sales growth of 2.9 per cent butits market share dipped slightly 0.1

percentage points to 30.5 per cent.Morrisons share dropped from

12.4 per cent to 12 per cent.Waitrose achieved sales growth of

5.4 per cent, while budget chainsAldi, Lidl and Iceland postedrespective growth rates of 30.1 percent, 10.8 per cent and 9.7 per centrespectively. Sainsbury publishes itslatest financial results today.

Sainsburystakes the leadat Christmas

BY KASMIRA JEFFORD

DEBENHAMS shares took a batteringyesterday after the department storegroups rise in sales this Christmascame at the expense of more promo-tions to lure cautious shoppersthrough its doors.

Chief executive Michael Sharp saidit had been the toughest Christmasin his 40-year career and shot downcomments made by Nexts chief LordWolfson that there had been less dis-counting on the high street this year.

I think they (Next) need to get outa bit more, he said.

Its quite plain that the marketwas more promotional than last

year. All our major competitors weredoing non-like-for-like promotionalactivity.

Sharp said Debenhams ran twomore days of sales than a year earlier,including a six day campaign calledChristmas Spectacular offering up to25 per cent off every department and10 per cent off beauty.A step up in sales led Debenhams

Discount battleknocks margins

at DebenhamsBY KASMIRA JEFFORD to halve its gross profit margin fore-cast from 0.2 per cent to 0.1 per cent,sending shares down 7.7 per cent.Analysts also downgraded their full-

year forecasts after Debenhamswarned of one-off costs such as therevamp of its Oxford Street flagshipstore, which is estimated to knockaround 2m off profits.

Nevertheless sales at stores openover a year rose five per cent in thefive weeks to 5 January, with like-for-like sales up 2.9 per cent in the 18weeks to 5 January. Online salesjumped 39 per cent.

Prosecco adds fizz to Majesticsfestive sales in slow DecemberMAJESTIC said Britons uncorked arecord number of bottles ofProsecco this Christmas than lastyear and drank just as much asChampagne as the wine specialistposted a rise in sales over the period.

Chief executive Steve Lewis saidProsecco sales rose 20 per cent onlast year while Champagne saleswere flat. New Zealand SauvignonBlanc also topped shoppers lists.

The group said like- for-like salesgrew by 1.1 per cent in the seven

BY KASMIRA JEFFORD weeks to 31 December, a slowdownon last year when Majestic had anexceptionally strong Christmas withsales up four per cent.

Despite tough comparatives,Panmure Gordon trimmed theirprofit forecast to 23.5m for 2013.

Lewis said Majestic was at thetop of [its] game but thatChristmas was challenging andthere was more last-minuteshopping than ever before.

We stocked up and staffed up fora very late Christmas, he said.

Total UK sales, which includes the

new stores Majestic opened in theperiod, increased 5.1 per cent.

CEO Michael Sharp said there were more high street promotions than the previous year

IN BRIEFDunelm looks to build on profitsn British home wares retailer Dunelmsaid yesterday that it expects to reporta pre-tax profit in the range of 59m-60m for the first half as it continues togrow sales despite weak demand andextreme weather conditions. Dunelm

said revenue increased 13.4 per cent forthe 26 weeks to 29 December,compared with a year earlier.

Winter sales shine bright for Signetn Sales at Signets US stores open atleast a year rose 4.7 per cent inNovember and December, the jewellersaid yesterday. Ahead of ValentinesDay, the report eased concerns overwhether slumping consumer confidencein December might dent luxury sales.

McBride hit by weak Europen McBride, Europes leading providerof private label household products,yesterday posted a six per cent declinein revenue, measured at a constantcurrency rate. In a trading update, itsaid the firm had experienced weaker

trading in December in its coreEuropean markets due to economicheadwinds in the region.

Topps Tiles turns around revenuesn Topps Tiles, the flooring company,laid down a solid set of interim resultsyesterday with a 1.6 per cent quarterlyrise in revenues. This reversed a 4.2 percent drop in revenues for the sameperiod last year. Like-for-like growthimproved in the quarters last six weeks.

Debenhams PLC


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125(And thats just for starters)

We anticipated a weak performance from Debenhams shares [yesterday],as a better than expected top line is likely to be more than overshadowed by weakgross margins...This shows that Debenhams is suffering from the extremelypromotional backdrop we saw pre-Christmas and are continuing to see.

ANALYST VIEWS

The Christmas statement reports very good sales, but updated guidanceon gross margin and costs may see consensus profit before tax move down five

to six per cent...With trading momentum clearly with the company, wemay not put through the entirety of the implied downgrade.

We believe this update is not good enough to support the recent rally in

the share price. Debenhams shares had a fantastic 2012...However, we downgradedour recommendation to reduce pre-Christmas as we felt the scale of the re-rating was not justified by its recent results, fundamentals and outlook.

DID DEBENHAMS FARE ASWELL THIS CHRISTMAS ASYOU EXPECTED?Interviews by Kasmira Jefford

JEAN ROCHE PANMURE GORDON

BETHANY HOCKING INVESTEC

KATE CALVERT SEYMOUR PIERCE

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Aldi hitting the mainstream as customers seek valueBRANDINDEX

STEPHAN SHAKESPEARE

THIS time last year poor resultsat Tesco shocked investors andthe grocery sector, althoughfollowers of YouGovs

BrandIndex and this column wouldhave been aware of their problemsa month earlier.With the all-important Christmas

season now behind us Ive taken alook back at 2012 to see what thebig customer perception storieswere last year.

Some of them Ive touched onbefore.

The decline of Tesco continued tomid-year but has since stabilised,Morrisons saw a small but steadydrop over the year, Sainsburysremained top of the pile while Asdais now clearly winning the value

battle among the big four.

RISE OF THE DISCOUNTERSBut the big story of 2012 was the

rise of Aldi. It had already had agood 2011 with both buzz and per-ception rising in line with fellowdiscounter Lidl and at the expenseof other supermarkets.

In fact, by the end of 2011 both

discounters had moved ahead ofTesco and Sainsburys on value andwere in a three-way tie for secondplace (with Morrisons, behindAsda).

That position was maintainedthroughout much of 2012 before asurge from October took Aldi from

around +30 to +37 by the end of theyear and into a clear f irst place asthe best perceived supermarket forvalue.

ITS BEGINNING TO LOOK A LOT LIKE ALDIThis pattern is repeated on buzz

where again Aldi held a consistentlevel through much of 2012 beforeclimbing steadily from Octoberonwards to move into the top spotabove Sainsburys by December.

The difficult economic times con-tinue and both Aldi and Lidl havebenefited from that, but it is Aldithat has really taken advantage. Itslatest advertising campaign ignoresthe discounters and compares itsproducts with those from more

upmarket stores.Its beginning to look a lot like

Aldi may be successfully transi-tioning into the mainstream ofBritish supermarkets.Stephan Shakespeare is the chiefexecutive of YouGov

Buzz

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BRITONS ordering pizzas online fromthe comfort of their sofas helpeddrive a 20 per cent rise in sales at

Dominos to 174.5m.The group yesterday said online

sales in the UK and Ireland jumped56.6 per cent to 84m in the final 14

weeks of the year to 30 December.

Internet drives sales at DominosBY KASMIRA JEFFORD E-commerce now accounts for 56 per

cent of UK deliveries compared with44.3 per cent last year. More than afifth of online sales were made bycustomers using mobile devices.

Like-for-like sales in 612 UK maturestores rose five per cent.

Dominos said it would meet full-yearprofit expectations, which analystshave forecast at 45.8m- 46.93m.

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LONDON Mayor Boris Johnson was atCity Hall yesterday morning, wolfingdown porridge with children fromHaseltine Primary School, to markthe launch of the Mayors Fund sup-porting the Magic Breakfast healthyeating initiative.The Mayor, who is patron of the

charity, told The Capitalist: It is a realshame that so many kids in London

dont get the food they need forbreakfast. There are all sorts of rea-sons not just economic it is out ofhabit and culture too.

He revealed: Ive just had a deli-cious breakfast of organic, humanelyslaughtered porridge. It was firstrate.

Despite the Mayors enthusing overhealthy oats, The Capitalist couldnthelp but catch a whiff bacon waftingfrom the City Hall kitchen. So what isBoJos morning meal of choice? I

Kippers and

oats: breakfastthe Boris way

used to like kippers in the days whenBritish Rail did them. They were thebest thing about British Rail, in a notvery hotly contested field.

Before leaving he signed one of the21 hats that were part of the Hatwalkdisplay in Trafalgar Square last year,which will be auctioned off for thecharity. On the wider subject of taxrelief for charitable donations, our

Mayor mused: I have always thoughtthere was a case for the simplifica-tion of the rules so that it becamemore like the American system. Butwe never seem to win that argumentwith the Treasury.

One hungry Haseltine pupil told TheCapitalist how the programme hashelped him: I normally have a bagelwith jam, which gives me energy. Idont really get breakfast at home.Breakfast club is fun because I get toplay games with my friends.

12 cityam.com

cityam.com/the-capitalistTHECAPITALISTWEDNESDAY 9 JANUARY 2013

EDITED BY CALLY SQUIRES

Got A Story? [email protected]

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Pupils from Haseltine Primary School (left) and Mayor Boris Johnson signing a Hatwalk hat that he donated to the charity (right)

Mayor BorisJohnson(left) andCazenoveCapitalManagementchiefexecutiveofficerAndrew Ross(right)

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MAN Group, the FTSE listed moneymanager, yesterday announced a raftof senior appointments to its hedgefund arm GLG, indicating it could begearing up to launch new funds thisyear.

The troubled company, which start-ed life as a commodity firm sellingrum to the British Navy, has seen itsshare price tumble since March aftera spate of poor numbers from itsquantitative arm AHL.

Incoming Man chief executiveManny Roman, the former head ofGLG, yesterday announced he wasbringing heavyweight macro strate-gists on board from Pimco and TheWorld Bank to improve strategy.

Absolute return manager KumaranDamodaran has been poached fromPimco, the worlds largest bond man-ager, to become a GLG portfoliomanager.

He will work for another recentnew hire Sudi Mariappa, also a for-mer Pimco man, who joined inSeptember to build up GLGs fixed

Man Group ups

macro focuswith new hiresBY MICHAEL BOW income offering. World Bank econo-

mist Brian Pinto, who was at thebank for 30 years, comes over tobecome senior macro-economist. GLGhas also taken over AHLs RichardBateson as senior quanti-tative analyst.The rush to firm up

the macro and fixedincome teams couldpoint to a pipeline ofnew funds in the spacefrom Man.

Damodaran hasexperience man-aging fixedincome emerg-ing marketmoney and Pintoalso specialisesin emergingmarkets and sov-ereign debt.

NO wonder investors cheered

Verizon Communications bossLowell McAdams claimyesterday that hed be up for

buying out Vodafones stake inAmericas Verizon Wireless.

Analysts are valuing the 45 per centstake at around 50bn, and havingwaited years to take a dividend from

the US tie-up shareholders will nodoubt be hoping they can spy a payouton the horizon.

But can Vodafone live without therevenue and dividend growth thatVerizon brings in? And does Verizonhave the cash to make it an offer itcant refuse?

The answer to both question is, atthe moment, probably not.A sale would definitely mean more

certainty for investors. Though Voda

comes to strategy.But Verizon Wirelesss growth to

become the biggest mobile network inthe US is an undisputed cash cow forits UK partner, contributing morethan 50 per cent of earnings at theFTSE 100 firm. It would be a cryingshame if another British firm gave upon its global ambitions in search of an

easier life, and with Vodafones south-ern European operations struggling,exposure to the US market is an assetworth more in the long term.

Either way Verizons offer wouldhave to be high, and it looks unlikelyright now that McAdam has a suffi-ciently full war chest to temptVodafone execs into a complete sale.

Analysts have likened the specialrelationship between the transat-lantic telecoms giants to a soap opera,

and the latest twist seems to fit thestory.

Rumours of a buy out have beenrumbling on for years and McAdamsinterview delivered on the sidelinesof a Las Vegas trade event smacks alittle of showmanship. He may havekicked off an interesting new plotdevelopment, but investors will have

to wait a few more episodes beforethis storyline is over.

WHEN NO DEAL IS A GOOD DEALHow do you book a $2.6bn gain on adeal that fails half way through whena major investor pulls out?

HSBC might be about to show us allhow, if rumours floating around yes-terday that the buyer for its Chineseinsurer Ping An might have lost thebacking of one of its key lenders.

True or not, HSBC investors will becalmed by the fact that 20 per cent ofthe deal went through straight awayin December, funded by up-front cashfrom the Thai buyer with theremaining 80 per cent relying on theloan from China Development Bankthat appears to be under threat.Any hit is also tempered by the fact

that HSBC had already allowed itsstake in Ping An to wane (throughnon-participation in share sales) inthe run-up to the sale, limiting lossesit would incur.With a deal locked in, the only thing

to question here is the HSBC manage-ments judgement in striking a dealwith what may turn out to be a less-than-reliable counterparty.Elizabeth Fournier is News editor of

City A.M. ej_fournier

Manny Romantakes over aschief executive inFebruary

INVESTMENT bank HoulihanLokey has posted a fresh slump inannual profits for its European

business, with corporaterestructuring work thin on the

ground.The restructuring specialist

made profits after tax in Europe of3.95m, down more than halffrom 8.1m a year ago andcompared to more than 16m in2010, due to a lower level offinancial advisory fees, accordingto Companies House accounts.

Revenues fell more than 25 percent, from 58.2m to 43.3m, inthe year to 31 March 2012.

The firm did not respond to acall for comment yesterday.

BY MARION DAKERS BY CITY A.M. REPORTER


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It makes no sense for Voda to give up its US ambitions

Advisory lull

hits Houlihan

BoAML loses

prime broker

made bumper dividends from its partof the business last year, passing 2bnonto shareholders, it wasnt until 2011that the tie-up inked back in 2000 paid out at all.With dividend payments up for rene-

gotiation every year theres no guaran-tee that payouts that big will comearound again, and Vodafones minori-ty stake means its at the mercy ofMcAdams management team when it

CHARLOTTE Burkeman, the Europe,Middle East and Asia head of primebrokerage at Bank of AmericaMerrill Lynch is leaving the firm,two sources said yesterday.

London-based Burkeman, 34, wasa former prime brokerage executiveat UBS and a former associate atGoldman Sachs and is consideredone of the industrys young risingstars.

One of the sources, who is close tothe bank, said that she is leaving forpersonal reasons.

Bank of America Merrill Lynchdeclined to comment.

Prime brokers provide services

such as stock lending and finance tohedge funds.

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THE STRICKEN Costa Concordia

cruiseliner, which ran aground offthe coast of Italy last year, helpedpush up the total number of shipslost worldwide to 106 in 2012,according to figures releasedyesterday.

Half of the ships lost were eithersank or became submerged, while22 per cent were abandoned afterrunning aground. Collisionsaccounted for just six per cent oflosses, according to figures releasedyesterday by the specialist marinedivision of insurer Allianz.

However there is some positivenews for the insurance industry aslosses remain 27 per cent below the10-year average of 146 ships perannum.

Allianzs Dr Sven Gerhard saidhuman error was responsible formost accidents: For somecommercial ship-owners, especially

in the hard-pressed bulk cargo andtanker sectors, there is little moneyfor maintenance and little moneyfor training.

The report also praises the effortsof cruise operators to improve self-regulation following the CostaConcordia disaster.

Concordia lossadds to rise inwrecked ships

BY JAMES WATERSON

HOUSEBUILDER Persimmon yester-day posted a 12 per cent rise in annualrevenue and an uptick in interestedfirst time buyers helped by govern-ment incentives.The news came as Persimmon

revealed its chief executive wouldretire in April after seven years at thehelm.

Mike Farley, who has been with thecompany for more than threedecades, will be succeeded by JeffFairburn, the groups managing direc-tor and chief executive of its northerndivision.

The largest British housebuilder bymarket value said revenue for theyear to 31 December was 1.7bn, up12 per cent, as its average selling pricerose six per cent to 173,400 and thenumber of new homes it legally com-pleted also increased six per cent.This comes as valuations climbed

across the housing market, driven byvibrant activity in buy-to-let. In totalthere were 12 per cent more valua-tions in 2012 than in 2011, accordingto data from Connells Survey &

FirstBuy helpsattract buyers

to PersimmonBY HARRY BANKS Valuation out yesterday, pushed up by

a 33 per cent jump in buy-to-let.Housebuilders are nevertheless bene-

fiting from a lack of available newhomes in Britain and governmentmeasures to spur the market, whichhave shored up demand despite atough economic backdrop.

Persimmon has renewed its efforts toattract first time buyers to coincidewith the extension of the govern-ments FirstBuy scheme in September.The firm said it has seen an increase

in interest from new buyers, and hasrecently secured an allocation of 3,000new homes as part of the schemesfunding.

Persimmon PLC


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THE PROPERTY companycontrolled by former ReadingFootball Club owner Sir JohnMadejski widened its losses last

year, but gained more breathingspace from its lenders.

Sackville Properties posted lossesafter tax on continuing operationsof almost 10.9m for the year to 31March 2012, up from 4.6m theprevious year.

Turnover rose slightly to 4.34mat the firm, which was hit hard bythe real estate crash in 2008 andhas been in breach of its bankingcovenants with RBS since 2010.

The firms directors have made

BY MARION DAKERS an informal deal with RBS toensure its 52.7m loan is not calledin until December 2013, in orderto facilitate the orderlyrestructuring of the groups

property portfolio.BDO, the companys auditor,

states in the accounts that there isno guarantee that funding will not

be withdrawn as a result of thisagreement and that materialuncertainties remain.

But it stresses that the firmsdirectors think the business hasenough resources to pay its loans asthey fall due this year. The firm didnot respond to a request forcomment on the accounts.


Sir John Madejski owned Reading FC until mid-2012 and remains chairman

The Costa Concordia disaster claimedthe lives of 30 people in January 2012

Madejski property firm widenslosses but gets time from banks

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IN BRIEFInterserve in board shake upn Support services firm Interserveyesterday said it continued to trade inline with expectations, followingseveral contract wins at the end of lastyear. The FTSE 250-listed firm alsounveiled a board shake up, with LesCullen succeeding director DavidTrapnell, who will retire after 10 years.Earlier this week, Interserveannounced the $41.3m (25.7m)purchase of Omani oilfield servicescompany Willbros Middle East.

Base Resources joins AIMn Kenyan-focused B ase Resourcesstarted trading on Londons juniorstockmarket yesterday, under theticker BSE, in a move to expand itsinternational footprint. It is also listedon the Australian securities exchange.The company is developing the KwaleMineral Sands project around 50kmfrom Mombasa in Kenya. RFC Ambrianacted as Base Resources nominated

adviser and broker for the admissionto AIM.

Fidelity hits top of sales rankingsn Fidelity Worldwide Investments hasclimbed to the top of the salesrankings in November figures out fromthe Investment ManagementAssociation. The asset managershead of retail funds, John Clougherty,said: This reflects a lot of hard workby our distribution teams and isrecognition of the breadth and depthof our equity and fixed income fundsand the consistent performance of ourportfolio managers.

KOREAN electronics giant Samsung,the world leader in mobiles andmemory chips, said it had earned aquarterly profit of $8.3bn (5.2bn), asit sold close to 500 handsets a minuteand as demand picked up for the flatscreens it makes for mobile devices,including those for rival Appleproducts.That run of five straight

record quarters may endin January-March onweaker seasonal demand,though a strong pipelineof smartphones theSouth Korean group'sbiggest earner andimproving chip priceshave eased concerns thatearnings growth couldslow this year, poweringSamsung shares to recordlevels last week.

Samsung has outpacedApple its biggest rivaland biggest customer

Samsung sees

fifth successiverecord quarter

BY HARRY BANKS despite the US firms launch of thelatest iPhone 5, with sales momen-tum boosted by its Galaxy Note IIphone-cum-tablet, or phablet, inthe fourth quarter. iPhone 5 saleswere a little below expectations.

While Apple rolled out just a singlenew smartphone last year globally,Samsung bombarded the marketwith 37 variants tweaked for regional

and consumer tastes, fromhigh-end smartphones tocheaper low-end models. Bycomparison, Taiwans HTCreleased 18 models andNokia nine.Yesterday, Samsung said it

was planning somethingexciting for next monthsMobile World Congresstrade show. This is expectedto be the next high-endGalaxy S smartphone, whichhas emerged as the leadingcontender to the iPhone.

RECRUITMENT firm RobertWalters is looking for growthoverseas as it waits for the UK jobsmarket to improve, it said in atrading update yesterday.

The firms eponymous chiefexecutive said the firm willcontinue to invest in areas whichwill enable us to build our marketposition while trimming its costbase in regions that are faring lesswell.

The market is still challengingand there is yet to be an indication

that the situation will improve in2013, he said.

BY MARION DAKERS The group, which makes half ofits earnings in Asia Pacific, madegross profits of 47.4m in the threemonths to the end of December, uptwo per cent, or four per centstripping out currency changes.

The UK business posted grossprofits up four per cent at 12.5m,which the firm said wascommendable... despite a difficulteconomic backdrop.

Group net fee income for theyear was 188.2m (2011: 183.6m).This is a solid performance and weexpect to meet our 2012 targets,

the FTSE-listed company said in astatement.

Samsung is selling closeto 500 phones a minute

A STELLAR lineup of film releasesat the end of last year rescued filmtheatre chain Cineworld from asubdued summer, with cinema

goers spending more than ever ontickets and popcorn, despite thedraw of the Olympics.

The company said yesterday thatrevenues across the group hadrisen by 2.4 per cent in 2012,despite it scrapping online

booking fees and selling fewer 3Dglasses. Cineworld suffered adifficult summer as it struggled to

Bond and The Hobbit rescue

Cineworld from Olympic bluesBY JAMES TITCOMB compete with the Olympics andthe Euro 2012 footballtournament, but the releases ofSkyfall, The Dark Knight Rises, TheHobbit and the final Twilight filmensured a strong final push.

Skyfall coming 50 years afterthe first James Bond film brokeUK box office records, becomingthe first film to bring in morethan 100m in ticket sales.

Cineworld said revenues fromticket sales grew 3.9 per cent inthe year, owing partly to a five percent average price hike, while foodand drink sales rose 0.8 per cent.


Skyfall, starring Daniel Craig as James Bond, broke UK box office records in 2012

THE MERGER of soft-drinksmakers Britvic and AG Barr wasrubber stamped by shareholderson both sides yesterday.

The deal, which will create oneof Europes biggest soft drinksfirms with a market capitalisationof over 1.5bn, is set to becompleted by the end of January.

The vote was passed fairlyunanimously, although 39 Britvicshareholders voted against thedeal. The Office of Fair Tradingmust now give the merger the

green light before it can becompleted.

The combined company will be63 per cent owned by Britvic,

Britvic and AG Barr investorsgive green light to 1.5bn deal

BY JAMES TITCOMBwith the Irn-Bru maker owningthe remaining 37 per cent, but

will be led by AG Barr chiefexecutive Roger White, withBritvic boss Paul Moody steppingdown after eight years. Britvicsfinance director John Gibney willtake the role of chief financialofficer at the new firm.

The companies combinedrevenues are around 1.5bn, andmanagement says the deal willmean savings of around 40mover the next few years as up to500 jobs are cut from its

workforce of around 4,000.The new company will be called

Barr Britvic and will be run

through Britvics offices in HemelHempstead.

FASTER and more powerful mobilephone technology became the focusof Las Vegass Consumer ElectronicsShow (CES) yesterday, as microchipmakers battled to show off thedesigns they hopewill be used in the

next generation ofsmartphones.Two US

processormanufacturers Qualcomm andIntel have bothunveiled their latestmobile microchips, inevents that will becarefully watched by Cambridge-based smartphone chip designerARM Holdings.

Qualcomm after hosting CESsopening keynote on Monday night yesterday showcased its new top ofthe range processors, which arebased on licensed ARM technology,

while Intel renewedits push into theFTSE 100 companys

territory byreiterating its plansto make a dent inthe smartphonemarket.

Intel has longbeen renowned forits computer

processors, but as PCsales decline, it has made efforts topush into designing chips for mobiledevices.

Processors for smartphones are

seeing rapidly increasing demand assales rocket in emerging economiesand high-end handsetmanufacturers demand ever morepower and efficiency.

The City did not appear fazed byIntels words however, as ARM sharesrose 1.15 per cent in trading

yesterday, despite analyst warningsthat Intel could muscle in on its corebusiness.

While ARMs valuations continueto suggest that it will remain amonopoly in the smartphone andtablet markets while taking share inthe notebook and server segments,we expect Intel to gradually takegreater share in both smartphonesand tablets while defending share inthe notebook segment, LiberumCapital analyst Eoin Lambe said.

BY JAMES TITCOMB

Chipmaker battles hot up at Vegas consumer showCONSUMER ELECTRONICS SHOW 2013 ROUNDUP

Sony unveils waterproof phonen Japanese firm Sony unveiled its latestsmartphone in a bid to make animpression on the smartphone market,where it has failed to gain muchmomentum. The Sony Xperia Zs uniquefeature is that it can be used in the bathor the shower without it breaking.

Firefox mobile software this yearnMozilla, the software company bestknown for its Firefox web browser,promised that a Firefox smartphoneoperating system will be released laterthis year. The free software is likely tofeature on cheap smartphones indeveloping economies.

Microsoft at 60m Windows 8 salesnMicrosoft said yesterday that it hadsold 60m licences for its new operatingsystem, Windows 8, and that thesoftware was selling at a rate equal tothat of its last desktop computersoftware, Windows 7. Other industrydata has suggested poor sales.

Chinese firms eye expansionn Huawei and ZTE both unveiled newhigh-end smartphones, in a bid toexpand beyond their established Asianmarkets into Europe and the US. Huaweiin particular caught the eye, showcasinga device featuring a 6.1-inch screen the biggest seen on a smartphone.

THE OWNER of Cosmopolitan andEsquire magazines, Hearst, sawprofits more than halve in 2011 inthe UK after its 76.6m acquisitionof Hachette Filipacchis Britishbusiness.

Hachette Filipacchis UK arm,which publishes magazinesincluding Elle, was bought by theUS-based publisher alongside theUS, Russian and Ukrainianbusinesses in 2011, although theprice of the UK deal was notrevealed until at the time.

Pre-tax profits at the company,which trades as National

Magazine, fell to 5.2m due to thecost of integrating Hachette.

Hearst profitshit by dealBY JAMES TITCOMB

Robert Walters waitsfor job market uptick

7/30/2019 Cityam 2013-01-09

17/27

TOP RESTRUCTURING ADVISERS

1. Lazard $330bn

2. Blackstone $323bn

3. Moelis & co $54bn

4. Houlihan Lockey $47bn

5. Rothschild $34bn

Rank Bank Deal value

Broker WH Ireland advised Roxi Petroleumon the equity investment, with head of cor-porate finance James Joyce and colleagueJames Bavister leading on the transaction.

Both have been involved previously withRoxi Petroleum.Joyce, a chartered accountant, previouslyworked at Arthur Andersen and the LondonStock Exchange. Prior to joining WH Ireland,he spent five years at a venture capital andcorporate advisory firm.Joyce has advised on a wide range of publicand private transactions including IPOs, sec-ondary fundraisings, code offers, M&A andprivate equity.In the natural resources sector he hasworked with a slew of junior stockmarket

listed clients, including African explorerGoldplat and Vatukoula Gold Mines. Joycewas has also worked with Rare EarthMinerals.Joyce is also an expert in the aviation sectorand counts Australian carrier Skywestamong his clients, as well as aircraft leasingcompanies Aviation PLC and Capital LeaseAviation.Bavister was involved with the sale of TheFine Art Auction Group to NobleInvestments last year. Alongside Joyce, he

has also worked with Rare Earth Minerals,Capital Lease Aviation, Vatukoula GoldMines.WH Ireland is a prolific adviser to AIM-listedcompanies, and in September it rose to thethird position of top advisers for juniorstockmarket-listed firms, according to areport by Morningstar.Its corporate finance team has experience inproviding general advice and nominatedadviser services, as well as pre-IPOfundraisings, secondary issues, M&A trans-actions and public offers.

ADVISERS WH IRELAND

JAMES JOYCEJAMES BAVISTERWH IRELAND

Roxi Petroleum PLC


2.50

3.00

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4.50

5.00 p4.12

8 Jan

Nautilus Minerals Inc


30

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55 p 39.138 Jan


IN BRIEFBG starts Brazil field productionn Blue chip BG Group has kicked offproduction at the Sapinho field in ablock offshore Brazil, four and a halfyears after its discovery. The field isone of BGs big five discoveries inthe pre-salt Santos Basin. BG Groupowns 30 per cent of the licence Brazilian state-run energy behemothPetrobras operates the Sapinho fieldwith a 45 per cent stake and said theoil produced from the field was ofhigh quality and medium density.

Rolls-Royce grows nuclear bizn Rolls-Royce has moved to expandits nuclear energy services businesswith the acquisition of US-based PKMJTechnical Services. The purchase, foran undisclosed sum, of the nuclearengineering services firm will providea footprint in the US nuclear servicesmarket for the FTSE 100 powersystems company. Rolls-Royce alsosaid yesterday it had won a 26m

design and systems integrationcontract with Cosco.

Pellet output down at Ferrexpon Ferrexpo yesterday posted a slightdrop in total pellet production for lastyear down to 9.7m tonnes from9.8m tonnes in 2011 due to lowerpurchases of third party concentrate.However, the FTSE 250-listedresources company recorded a 2.6 percent year on year increase in pelletproduction from its own iron ore to hit9.3m tonnes. Ukrainian-focusedFerrexpo makes iron ore pellets thatare used in steel manufacturing.

GREECES record-breaking $263bn(163.8bn) debt restructuring was bythe far the biggest deal of its kind in2012, according to research releasedyesterday by Thomson Reuters.

It massively distorted the market,doubling last years total industry-wide deal value to $422.6bn eventhough the actual number of suchdeals dropped from 774 to 430.The Tribune Company, the US pub-

lisher that owns the Chicago Tribuneand LA Times, was in second-placebehind the Hellenic Republic after itrestructured $13bn of debt.

Restructuring deals occur when acompany or government cannot

Greece top of

restructureddebt league

BY JAMES WATERSON afford its debt repayments and takesremedial action to avoid bankruptcy.

Investment bank Lazard was able toclaim an astonishing 78 per cent mar-ket share in 2012 thanks to its involve-ment in the Greek debt exchange,although it would have topped theadvisers league table regardless.

For the past couple of years weveseen a downturn in distressed debtand restructuring, explained MattToole of Thomson Reuters. 2012 was abit of an outlier and the deal value wasdown 24 per cent excluding Greece.

Companies are restructuring theirbalance sheets and waiting for M&Aactivity to pick up. I would guess M&A,not debt restructuring, will be thestory of 2013.

Roxi Petroleum nets $40m fordrilling project in KazakhstanKAZAKHSTAN-focused RoxiPetroleum has attracted $40m

(25m) in new investment from aKazakhstan investor, a move whichsaw its share price nearly double.

Kairat Alpamysovich Satylganov,a Kazakh businessman, will buy355.2m new Roxi shares at 7p ashare, marking a significantpremium to the closing share priceof 2.125p at the start of this week.

The investment will be used tofund the BNG licence area inKazakhstan, where Roxi intends todrill three deep wells and threeshallow wells.

BY CATHY ADAMSFollowing the subscription,

Satylganov, a former chairman ofKazakh banks Halyk Bank and ATFBank, will hold a 37.5 per cent

holding. The Kazakhstanbusinessman, who was alsochairman of investment companyAlmex, will join the Roxi board.

The first $10m representingaround 14.57 per cent of Roxisshare capital will be paid on 31January in exchange for the issue ofaround 88.8m new shares.

The AIM-listed firm is not subjectto the UK Takeover Code, andSatylganovs investment will nottrigger an automatic takeover offer.

Roxi Petroleum chairman Clive

Carver said yesterday that theinvestment will take care of thefunding needs of Roxi for theforeseeable future. Shares closed

up 94.12 per cent at 4.12p.

Nautilus Minerals made targetof hostile Canadian investorJUNIOR stockmarket-listed minerNautilus Minerals yesterday said ithad been made aware of anunsolicited takeover bid from alittle-known Canadian investor,sending its shares on a sharpupward spiral.

The miner, which hopes todevelop the worlds firstunderwater copper-gold mine offPapua New Guinea, said that it wasmade aware that an individualcalled Michael Bailey and an entity

controlled by him intended tomake a hostile offer for the

BY CATHY ADAMS outstanding shares of the company.Nautilus said yesterday it had no

knowledge or contact with Bailey,and was unable to make anydecisions regarding the offer or itsvalidity.

It said it would consider theunsolicited offer if and when it isformally made, although a sourcewith knowledge of the situationsaid it was likely that an offer mightnot appear at all.

Bailey made an unsuccessful bidto buy diamond miner VaaldiamResources Ltd for about $19.3m

(12m) in February 2010. Thecompany was later bought by

Tiomin Resources.Nautilus Minerals soared on AIM

yesterday, closing 39.13 per cent upat 40p.

PARCEL delivery company UK MailGroup said yesterday its trading inthe third quarter exceeded itsexpectations, boosted by higher

volumes during Christmas.UK Mail, the largest

independent parcels, mail andlogistics services company in theUK, said underlying revenueincreased about eight per cent forthe three-months to 31 December,after adjusting for an increase inprices by state-owned Royal Mail,and an extra working day.

UK Mail delivers soaring sales

during online shopping rushBY CITY A.M. REPORTER Volumes from its parcelbusiness rose 20 per cent, partlydriven by an increase in internetshopping-related home deliveries,said the company, which has anational network of more than 55sites and 2,500 vehicles.

The group has maintained highservice levels during the busyChristmas period, which musthave helped, Investec Securitiesanalyst John Lawson said as heraised his price target on thecompanys stock to 350p from300p.

Shares closed up 3.47 per cent.

UK Mail cheered a surge in online retail for its bumper Christmas performance

FOLLOWING its executivereshuffle earlier this week, FTSE250-listed firm Balfour Beatty

yesterday said its order book wasshifting towards support servicesand infrastructure.

In a trading update, theinfrastructure group said that last

years performance would be inline with expectations.

The order book jumped toaround 15bn at the end of the

year from 14.2bn at the end ofNovember boosted by two recentcontract wins.

Balfour Beatty, which last year

said it would review parts of itsbusiness following a profit

Balfour Beatty sees order bookshift towards support services

BY CATHY ADAMS warning, noted that its order bookwas shifting from its traditionaloffering of construction servicesto support services, and more

generally, from building toinfrastructure projects.

Due to the longer-term natureand back-end loaded marginprofile of these contracts, most ofthe benefit to revenue and profitarises in 2014 and thereafter, thecompany said, which sent itsshares down almost three per centat the close of play yesterday.

Chief executive Ian Tyler is dueto step down as chief executive atthe end of March following aneight-year tenure. Deputy chief

executive Andrew McNaughtonwill take the reins at the firm.

Greece

WashingtonMutual

Cemex SABde CV

Tribune Co

Ao*BTAbank*

Largest Restructurings of 2012

$263bn$13bn

$11bn

$7bn

$7bn

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EVEN if Scotland left the UK, theBank of England would remainguarantor of the Scottish financialsystem, Capital Economics predictedyesterday.

First Minister Alex Salmond plansto keep Scotland on pound sterlingeven if the country left the union,meaning that it would be likely tonegotiate a deal maintaining theBanks backstop position, theeconomics consultancy said. Thiswould leave taxpayers in the rest ofthe UK on the hook in case ofproblems in the Scottish financialsector.

This disadvantage wouldoutbalance any benefit the rest ofthe union enjoyed in reducing theburden of maintaining the costlyScottish state, author Martin Beck

Post-breakup Scotland wouldrely on Bank, says City analyst

BY BEN SOUTHWOOD

FOOD prices remained well abovetheir December 2011 levels lastmonth, despite creeping downmarginally compared to November.The annual rate of food price

inflation was 4.1 per cent inDecember, the British RetailConsortium (BRC) said this morn-ing, down from 4.6 per cent in theyear to November. This fal l comesoff the back of a 0.1 per cent fall infood prices between November andDecember rare respite for con-sumers after the steady rises of thelast year.

BRC boss Helen Dickinson put theeasing down to less heat in thecommodities markets, though shewarned that past shocks to inputswere still filtering through the sys-tem, and some of the adverseaffects of bad weather were still tobe felt in shops.

Dickinsons story was supportedby figures showing that corn priceswere down 6.3 per cent inDecember, compared to November,while wheat prices fell 2.8 per cent,and soya beans cost 4.9 per centless. All three commodities areboth staples for humans and keyfood sources for livestock.Though the pace of food price

hikes steadied, the overall shopprice inflation rate was flat com-pared to November, continuing to

UK food pricespropping up

shopping costsBY BEN SOUTHWOOD show inflation running at 1.5 per

cent over the year. This was due toan increase in the rate of change fornon-food prices in December theywere completely f lat compared tothe same month in 2011, up fromthe 0.3 per cent deflation the indus-try endured during the year toNovember.This extremely flat picture in non-

food unattractive for the industrybut appealing to the consumer looks to be driven by an extremelytough market where demandcomes from canny bargain-hunters.Mike Watkin at Nielsen, which co-authored the data with the BRC,

said firms were forced to offer sig-nificant savings to lure savvyshoppers into the market. Anddata released by the BRC yesterday,showing only marginal increases inboth food and non-food like-for-likesales over the year, reinforces thisperspective.

Insurers say extreme weatherand slump are a vicious circleTHE PROLONGED economicdownturn is eating into thecapacity of countries to deal withextreme weather andenvironmental problems, which isin turn adding to businessmalaise, according to a report outyesterday.

Difficult times in the worldeconomy have driven money and

attention away from abatingclimate change, andcounteracting its harmful effects,

BY BEN SOUTHWOOD the World Economic Forums(WEF) 2013 report on risks claims.

Rather than benefiting theeconomy, on balance thisapproach ends up backfiring,they say, as more rapid climatechange is leading to moreextreme weather, and lesspreparation for this weathermeans it wreaks more havoc.

With the growing cost ofevents like Superstorm Sandy,

huge threats to island nationsand coastal communities, and noresolution to greenhouse gas

emissions, the writing is on thewall, said Alex Lehmann, chiefrisk officer at insurance giantZurich. It is time to act.

The authors claim the focus ofvoters and policymakers on theshort term was preventing hugelong-term problems beingresolved with measures thatwould be costly right now.

National resilience to globalrisks needs to be a priority so that

critical systems continue tofunction despite a majordisturbance, added Lee Howell.

Food prices still climbing fast despite slight ease-o

Dec 12Jun 12Dec 11Jun 11Dec 10Jun 10Dec 09

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WEDNESDAY 9 JANUARY 201318 ECONOMICS NEWS cityam.com

First Minister Alex Salmond and his party are seeking full independence for Scotland

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NUISANCE silent phone callsreceived by homes and

businesses almost doubled lastyear according to figurepublished yesterday, promptingregulator Ofcom to promisetougher action to stamp out thepractice.

Silent and abandoned phonecalls are associated withautomatic diallers used in callcentres punching in numbers at

random.The calls are silent when they

are picked up, causingannoyance and concern forpeople at the other end of theline, Ofcom said.

Instances of such calls doubledlast year to 47 per cent up from24 per cent of people who saythey have received them.

Almost three quarters oflandline customers also said theyhad received a live marketing calllast year, while 63 per cent saidthey had received a recordedmarketing message.

Ofcom yesterday announced afive-point plan to bring together

industry, regulators andgovernment to help addressnuisance calls.

The regulator said it would domore to trace companies who tryand hide the practice, as well as

write to businesses in the UKwarning them they face fines ofup to 5m if they break the ruleThe body issued fines of over800,000 last year to companies

breaking the laws on calls.The five point plan also

included more resear

cityam 2013-01-09

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