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BUSINESS WITH PERSONALITYwww.cityam.com FREEISSUE 1,797 TUESDAY 15 JANUARY 2013

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DAY THE MUSIC DIEDMORE SNOW ON THE WAY AS COLD SNAP HITS LONDONS TRANSPORT SYSTEM

LONDON woke upto the first snowflurries of the yearyesterday, and

more is forecastfor today and laterthis week. The icyconditions causeddelays on severalroads into the cityand speedrestrictions onsome rail routes.The Met Office hasforecast moresnow heading eastacross Englandtoday, expected toskirt round Londonagain by Friday,bringing with ittemperatures aslow as -6C.

FULL DETAILS: Page 2

BY JAMES WATERSON

Government tackles rising state pension bill with 144-a-week flat rateTHE STATE pension will bestandardised to 144 a weekpayment for almost all workers,the government confirmed

yesterday, claiming the move

would encourage individuals totake responsibility for savingtowards their own retirement as

well as saving cash that wouldotherwise be poured into the

states soaring pension bill.The self-employed and those

who have spent time out of theworkforce including manymothers will benefit the most.

But some high earners will behit, those who have contracted

out of part of the state systemand their employers will have topay more national insurance, and

young people will have to lowertheir expectations of what the

state can provide for them in oldage. The reforms could also hastenthe end of the few remaining finalsalary pension schemes in theprivate sector.

Were making sure people intheir 20s will have a savings

culture, pensions minister SteveWebb said. The current statepension system is too complicatedand leaves millions of peopleneeding means-tested top-ups.

He admitted some high earnerswould be affected but said overallthere will be far more winners.

Our simple, single-tier pensionwill provide a decent, solidfoundation for new pensioners inan otherwise less certain world,

Webb addedJoanne Segars of the NationalAssociation of Pension Fundswelcomed the move: For the firsttime in a generation, people will

know that it pays to save, and thatwhatever they put aside wont beeroded by means-testing when theyretire.

However the independentInstitute for Fiscal Studies warnedthat the overall effect of the policy

change would be a cut in pensionentitlements for most people inthe long run.

HMV CALLS IN ADMINISTRATORS AFTER TALKS TO SAVE 4,000 JOBS FAIL

FTSE 100 M6,107.86 -13.72 DOW 13,507.32 +18.89 NASDAQM3,117.50 -8.13 /$ 1.61 unc / M1.20 -0.01 /$ 1.34 +0.01

HMV boss Trevor Mooreleft Jessops last year

HMV has collapsed into administra-tion after last-ditch attempts to savethe crisis-hit music retailer came toan abrupt end last night, putting4,000 jobs at risk and signalling the

end of more than 90 years on theBritish high street.

Deloitte, which has beenadvising HMVs consor-tium of lenders led byLloyds Banking Groupand Royal Bank ofScotland, has beenappointed as adminis-trators to the belea-guered firm.

The board regrets toannounce that it has beenunable to reach a position whereit feels able to continue to trade out-side of insolvency protection, HMVsaid in a statement last night.

Deloitte could still find a buyer forsome of HMVs 230 stores across theUK, with the shops expected tocarry on trading while apurchaser is sought.Trading in the companys

shares, which closed at just1.1p last night, will be sus-pended from this morning.

Hopes were raised that thehistoric UK brand could besaved last month,when US privateequity firmApollo GlobalManagement

which has been buying up some ofHMVs debt was reported to beplotting a takeover of the firm.

But yesterday a source familiarwith the situation said Apollo hadno intention of make any bid for itsoutstanding debt.

HMV is the second major high-street name to collapse so far in

a dreadful start to the NewYear for UK retailers, after

specialist camera chainJessops was liquidatedlast week with the lossof 2,000 jobs, spellingfurther bad news forBritains fragile retail

sector.Last year saw the col-

lapse of Comet, JJB Sports,Clinton Cards, Game Group,

Peacocks and Blacks Leisure.The firm, which opened its first

flagship store on Oxford Street in1921, has struggled to survive in afast-declining music, DVD and

games market, and has facedintense competition from inter-net retailers and the rise ofdigital downloading.

It has tried to turn itselfaround by focusing on new

consumer technology products,live music and event ticketing, aswell as making efforts to pay

down debt by sellingboth its Waterstones

BY KASMIRA JEFFORD

book chain and its Canadian retailarm.

In May the group also offloaded theHammersmith Apollo music venuefor 32m, allowing it to extend its220m bank facility.

But it has failed to stem decliningsales and in December HMV warned itwas likely to breach its banking agree-ments after a poor start to Christmastrading, sending shares down 40 per

cent on the day.HMV, led by former Jessops chief

executive Trevor Moore, has sincebeen locked in talks with its syndicateof eight lenders over its debt, whichstood at 176.1m at its half year to27 October.

Pressure mounted this weekendafter the group launched a 25 per centsale of products in a last ditch attemptto boost stricken sales.

HMV Group PLC

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[email protected]

Follow me on Twitter: @allisterheath

Pension changes cheeredbut high earners take a hitBUSINESS leaders hailed the govern-ments plans for a simple, under-standable, state pension yesterday,but admitted that both employersand staff would have to take a finan-cial hit as part of the proposedreforms.

The introduction of a flat-ratestate pension, with an end to means-tested retirement income benefits, isessential if pension saving is to makesense for modest earners, saidMalcolm Small, pensions adviser atthe Institute of Directors yesterday.

[This] will help give prospectivepensioners a clear idea of what thestate will provide and just as impor-tantly, what it wont.

But Tom McPhail, head of pensionsresearch at Hargreaves Lansdown,warned the new rules could meanhigh earners missing out on some ofthe pensions perks they have accessto today.

If youre earning above-averageincome and are 30 you wont havebuilt up a pension of more than 144a week, said McPhail. Youre nownot going to have a chance to buildthat youre going to pay the sameNational Insurance to get less.At the moment there is a basic

state pension of 107 a week, whichcombines with various pension cred-its and earnings-related elements to

Junk-bond prices point to bulls returnThe junk-bond market is sending a bullishsignal for the global economy in 2013,with investors in US high-yield securitiesearning higher returns so far this yearthan those who have bought investment-grade debt. High-yield bonds are an acutebarometer of risk appetite and rises intheir prices have often signalled a turn insentiment.

Austerity gives drinkers bitter tasteBritains favourite pint of bitter is being

watered down as austerity continues tobite and taxes rise. John Smiths ExtraSmooth, billed as no nonsense beer , isbeing reduced from 3.8 per cent alcoholto 3.6 per cent in response to rising costsand reduced beer consumption.

EU berates China over steel subsidiesThe European Commission has concludedthat China is providing illegal subsidies toits steel manufacturers, paving the wayfor European companies to seek higherimport tariffs on a wide range of Chineseproducts. A report obtained by theFinancial Times said organic coated steelmakers could buy materials at a low rate.

Bold new era for capital shoppingFrom next month Britains biggest ownerof shopping centres would like to beknown as Intu. Capital ShoppingCentres is changing its name after a year-long project at a cost of 7m, aided byLandor Associates, a branding agencywith clients such as Smirnoff and Citroen.

Seven-runway airport at BeijingChinas political and military leaders havegiven the green light to a new seven-runway international airport for Beijing.

British banks admit poor lendingBritains largest banks privately admitthey are in a downward spiral of poorlending decisions and have a computersays no attitude to small businesses,according to the former chairman of HSBCLord Green, who is now the governmentstrade minister.

Iberdrola shelves Scottish Power saleSpanish power giant Iberdrola has shelveda plan to sell off part of its Scottish Powerdivision. Iberdrola had mulled a sale of astake in its UK regulated power business.

A blame game for forints fallHungarys economy ministry blamedNouriel Roubinis research firm forsparking a slide in the countrys currency.Roubinis firm pointed to the ministersown comments that hinted thegovernment would prefer a weaker forint.

France to pay EDF $6.57bnThe French government has agreed to paystate-controlled power utility Electricitede France 4.9bn (4.1bn) to coversubsidies for green energy and the poor.

DAVID Cameron was dealt a blowlast night as peers voted to block a

government plan for constituencyboundary changes.

By 300 to 231, the House ofLords voted to delay the boundaryreview until 2018, scuppering themove to cut the number of MPsfrom 650 to 600.

The Prime Minister is also facingopposition on his plans for theUKs relationship with Brussels.Cameron will set out his plan forBritain to repatriate powers fromthe European Union on Fridaymorning, it has been confirmed.

Downing Street said the PrimeMinister will deliver his long-awaited speech on the UKs futuremembership of the EU in

Amsterdam, following a meetingwith Dutch PM Mark Rutte.

Cameron is expected to say theEurozone crisis and the resultingdrive towards closer fiscalintegration offers a chance forBritain to establish a more arms-length relationship with the blocs26 partners.

The Prime Minister yesterdaydisappointed some of his Tory

backbenchers by ruling out astraight referendum on the UKscontinued membership of the

bloc, though he strongly hintedthat the public would have theirsay on any renegotiated deal.

Blow to Cameron

ahead of crucialspeech on EU

Pensions minister Steve Webb said the current pension system is too complicated

2 NEWS

BY JAMES WATERSON

BY JAMES WATERSON

To contact the newsdesk email [email protected]

SO thats it, then: HMV has finallygone into administration, thelatest, most tragic victim of therevolution that is sweeping away

erstwhile giants. This comes just daysafter Jessops, the camera firm, wasliquidated, and after the demise ofComet, the electrical retailer.

So whos responsible? Quite simply,all of us. Consumers are all-powerful,and shifting tastes and technologiesmean that fewer of us had chosen toshop in these stores. We are the mas-ters, and the capitalists our servants.Its become easier to buy goodsonline, or pick them up (or arrangefor them to be delivered) from a super-market and of course music is nowprimarily digital, with films followingsuit thanks to the likes of AmazonsLove Film. HMV still controlled 38 percent of what was left of the physicalmusic market.

EDITORSLETTER

ALLISTER HEATH

HMVs demise shows why even giant firms have feet of clay

TUESDAY 15 JANUARY 2013

It is always sad to see ancient busi-nesses die, and it is terrible news forthe staff, whose livelihoods have sud-denly evaporated. The governmentmust do more to liberalise the econo-my to make sure more entrepreneurscreate more firms and hence jobs.

But thats capitalism and theprocess of creative destruction: itensures ruthlessly that we get whatwe want, and that resources thatcease to be used in an economicallyrational manner are reallocated swift-

ly. New models have emerged; theyhave displaced the incumbents byproviding goods and services moreconveniently and cheaply. Those whomoan at HMVs demise should look atthemselves in the mirror.There were also some cyclical fac-

tors: the economy is not doing well

enough. But that wasnt the real rea-son and neither was the fact thatsome firms have a tax advantage overothers. No, the recent spate of bank-ruptcies unlike some earlier ones was almost entirely caused by theaccelerating technological revolution.

Several other stories in todays paperare also directly the result of this tech-nological revolution. Global PC salescollapsed 3.5 per cent last year, thefirst drop since 2001, according toGartner, despite strong global eco-nomic growth, thanks to the rise oftablets. And while Apple, whose

tem is simpler. But there are prob-lems. Contracting-out, introduced inthe 1980s, was originally meant to bethe precursor for a system of fully-funded private savings accounts.Sadly, this never happened.

But its abolition will hike thenational insurance (NI) paid by many

employers and employees; this willdestroy some private pension provi-sion and hike taxes on labour. NI isnow officially meaningless, merely asecond tier of income tax. But at leastthis has the benefit of honesty andit will make radical tax reform andthe merger of the two taxes much eas-ier to achieve. Now for the hard bit:the public will need to save much,much more in the years and decadesahead.

iTunes helped kill HMV, is doing wellfrom this shift its Macs are thriving,not just its iPads even it is suffering:its share price tumbled as other, nim-bler competitors such as Samsung aregaining ground in smartphones. Thefallout from this endless technologi-cal revolution triggered yet another

story: Dells share price shot up afterrumours the firm may be taken pri-vate. There is no more brutal combi-nation that those of technologicalchange, globalisation, and consumerpower. Corporations may seem unbe-lievably powerful but in reality theyare giants with feet of clay.

PENSION REFORMMany of the governments pensionreforms are good but some arent.The end to means-testing is excellent;saving will always pay. The contribu-tory principle remains. The new sys-

produce a final payout. As a result twomillion retirees currently receive astate pension of over 150 a week,while others receive far less.

The new plan combines the basicstate pension and the earnings-relatedelement. Everyone who pays NationalInsurance (NI) for more than 10 years or is registered as carer or on qualify-ing benefits will now receive somestate pension payments when theyretire. The exact amount will increaseproportionate to how long they paidNI, with every year of contributions upto 35 years increasing the individualspension until it hits a universal rate of144 a week.

People who have already built up anentitlement of more than this will beallowed to retain the higher sum. Butchanges will not come into effect until2017 at the earliest, meaning somepeople about to stop work will receivea pension well below 144 a week.All contracting out of pensions will

cease when the new system is intro-duced, meaning a rise in NI paymentsfor those who still enjoy defined-bene-fit pension schemes. Critics say theincrease in contributions whichcould see an employee on 40,040 ayear pay an extra 481 in NI may bethe death knell for the remaining finalsalary schemes in the private sector.

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WHAT THE OTHER PAPERS SAY THIS MORNING

HOW ARE YOU AFFECTED?The 25-year-old City workern Young people who expect to earn

more than the average person duringtheir career have missed out on thepotential to receive more than thebasic state pension, explains PeterMcDonald, a PwC partner. But theyface greater certainity as long as thegovernments promise not to meanstest the pension stays in place. Allworkers will require 35 years ofcontributions before collecting theirstate pension, rather than 30 today.

High earners in their 30s and 40sn Somebody nearer 40 who isearning around 40,000 a year willbenefit, says McDonald. But this isthe group that has been most affectedby closures to defined-benefitschemes. People who have alreadybecome eligible for a weekly statepension of more than 144 will keep

their advantage. But around 700,000contracted-out high-earners in privatesector defined-benefit schemes willpay more in National Insurance.

The 65-year-old about to retiren The reforms announced yesterdaywill not be implemented until 2017,after the next general election. As aresult those are due to retire in thenext few years and people who arealready pensioners will have theirpayments calculated under the oldsystem throughout their retirement,even if the sum is below the new flatrate of 144. The cliff-edge nature ofthe policy is one thing for governmentto consider, admits McDonald.

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THE Bakrie family yesterdaythreatened to renege on its

proposed divorce with Bumi if NatRothschilds plans to re-installhimself on the miners board arevoted through.

Co-founder Rothschild last weekcalled for a general meeting tooverhaul the board.

The Bakrie family said they willuse all legal means to honour theterms of the relationshipagreement, which gives thepowerful Indonesian family theright to appoint key Bumipositions.

The Bakries said yesterday thatthey would seriously consider thewithdrawal of its offer in the eventthat Rothschild wins support forhis proposal to change the board orindeed if the company fails tohonour all obligations under therelationship agreement.

In response, Rothschilds vehicle

NR Investments took itsshareholding in Bumi to more than18 per cent as a sign of confidencein the company once a new boardhas been elected, calling theBakrie threat juvenile.

A spokesperson for NRI said thatthe relationship agreement isbetween the board and the Bakries,and does not affect whatshareholders can vote on at themeeting, and does not affect theirability to put in place a new board.

Bakries sayBumi deal offif board goes

BY CATHY ADAMS

BANK job losses are set to be matchedby tough bonus cuts as the industryseeks to keep costs under control,with Barclays and Deutsche Bank yes-terday joining the long list of institu-tions thought to be preparing to keepa tight hold on the purse strings.

Deutsche Bank is expected to cut itsbonus pool by up to 20 per cent, aspart of a clampdown on costs whichwas announced last September.

That review established a new remu-neration panel, as well as increasingthe vesting time for executives sharebonuses. The bank is also in theprocess of cutting 2,000 jobs.

Barclays is believed to be looking tochop the same amount from its paycosts, reflecting its third-quarterresults, which said the bank is cuttingthe investment banks compensationratio from 47 per cent to 39 per cent.

It too is thought to be consideringcutting 2000 jobs to cut costs back fur-ther. But they are not the only bankslooking at trimming bonuses andjobs.

Investment banks have had a toughyear with the poor economic outlook

Barclays andDeutsche to cut

back bonusesBY TIM WALLACE and low deal levels keeping a cap onearnings.

Bonuses are designed to be variablepartly to reflect individual bankersperformance but also to make surebanks can easily cut their costs in leanyears, like 2012.

RBS bonuses are likely to be cut asthe bank faces a Libor fine of hun-dreds of millions of pounds, whileHSBC is believed to be restrictingbonus rules after their fine for havingpoor money laundering controls.

Even Wall Streets highest paid bossJamie Dimon of JP Morgan is likely tohave his payout slashed as a result ofthe London Whale derivatives tradinglosses last year.

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JP MORGAN Chase was last nightordered by regulators to tighten uprisk controls after a trader known

as the London Whale lost the firm$6.2bn (3.9bn).

The investment giant was hitwith two consent orders from theFederal Reserve and the Office ofthe Comptroller of the Currency,one for the trading losses, andanother requiring it to complymore closely with measures aimedat tackling customer moneylaundering.

A spokesperson for JP Morganpromised the bank was taking steps

JP Morgan ordered to tightenrisk controls after Whale losses

BY BEN SOUTHWOOD to deal with both issues.Complying with anti moneylaundering responsibilities is a toppriority for us, a spokespersonsaid. And of the controls

surrounding the London Whalelosses: Weve been working hardto fully remedy the issuesidentified in the consent order.

As well as US authorities, theUKs Financial Services Authorityissued a statement saying it wasalso making a formal investigationinto the trading losses that not onlyhit the banking giants reputationand balance sheet, but also lost itthe right to buy its own stock forsix months.

TUESDAY 15 JANUARY 20133NEWScityam.com

JP Morgan chief executive Jamie Dimon has pledged to tighten risk controls

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RETAIL bankers should be moreclosely regulated, the authoritiesshould give tighter guidelines ontraining and more resources shouldbe devoted to enforcing laws on

fraud, the British BankersAssociation said yesterday.Its chief Anthony Browne also told

the Parliamentary Commission onBanking Standards that a newstandards council would helpimprove bankers behaviour.

And ex-HSBC chair Lord Greentold a committee of Lords the lure ofhigh finance has drawn the bestbankers to the City, hitting localbanks and harming credit decisions.

Bankers wanttougher rules

BY TIM WALLACE

Goldman says the globalGDP recovery is taking offTHE GLOBAL economys zig-zagphase of repeated periods ofgrowth and contraction is at lastcoming to an end, with the UK one

of the economies pushing its wayout of stagnation, top economistsat Goldman Sachs said yesterday.

At the start of 2011 and 2012,Goldmans own leading index sawan upturn in the world economy,followed by renewed downturn.

But now it believes that gloomycycle has been broken with astronger and more sustained risein its index pointing to a realrecovery at last.

BY TIM WALLACE The economists are even moreoptimistic in the medium term,forecasting a fall in oil prices downto $85 per barrel by 2016 on theback of the shale revolution,helping cap inflation.

The Eurozone remains a weakarea, and Goldman expects a 0.2per cent contraction in its GDP thisyear, followed by a very slowincrease in 2014.

But the picture for the UK ismore positive, with growth of 1.4per cent forecast for this year.

Data from the ONS probablyunderstates the pace of growth we expect positive revisions, saideconomist Huw Pill.

Former Credit Suisse trader Kareem Serageldin, 39, can be extradited to the UnitedStates, a court ruled yesterday. The Swiss banks former global head of structured creditis accused of artificially inflating the prices of subprime mortgage-backed bonds to thetune of $540m in 2007-2008.

EX-CREDIT SUISSE TRADER FACES EXTRADITION

SHARES in Apple fell to below $500for the first time in almost a year

yesterday, on reports that thecompany had cut orders for iPhoneparts following weak demand.

The worlds highest-valuedcompany fell almost four per centin New York, wiping over $18bn(11.1bn) off its value, withinvestors fearing Apples most

profitable product was not sellingas well as expected.

Apple shares dip below $500on demand concerns for iPhone

BY JAMES TITCOMB The fall came as Apples Koreanrival Samsung announced it hadsold 40m of its top of the rangeGalaxy S III smartphone, and 100mof the Galaxy S series since the firstmodel was launched in June 2010.In comparison, Apple is estimatedto have sold around 300m iPhonessince 2007.

In contrast to Apples fall, sharesin BlackBerry maker Research inMotion rose more than 10 per cent

to their highest point sinceFebruary.

BOTTOM LINE: Page 11


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PERSONAL computer sales plungedinto decline for the first time in morethan a decade last year as consumersswitched to buying tablets, in aserious blow to PC manufacturers andsoftware companies.

Figures released yesterday byresearch firm Gartner showed thatworldwide sales of PCs fell by 12.7m or 3.5 per cent to 352.7m last year,the first time the market has shrunksince 2001.

One of the companies worst-hit bythe slump, Dell, was yesterday report-ed to be in talks to go private. Sharesin the company leapt last night afterBloomberg reported that the US com-pany had talked to at least two privateequity firms over a leveraged buyout.Dell did not comment.The global fall in PC sales was put

down to lukewarm demand for

PC sales crashas buyers shiftfocus to tablets

BY JAMES TITCOMB

Microsofts new software, Windows 8,and increasing appetite for devicessuch as Apples iPad. The declineshows a shift in buying habits thatthreatens Microsoft which haspinned its hopes on the success ofWindows 8 as well as Dell and HP,which saw sales slip.

The figures include Apples Mac com-puters, though sales of these areexpected to have increased marginally.Chinas Lenovo, which briefly becamethe worlds bestselling PC firm lastyear, and Taiwans Asus saw double-digit growth, but Dell and HP suffered,with total sales down nine per cent.

Tablet makers have long talkedabout a post-PC world, in whichmost home computing is done ontablets and smartphones. Tablet salesare expected to have doubled last yearto roughly 120m.

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ANDREA Orcel, the newly appointed

head of investment banking at UBS,has made his first significant hire,bringing deal-maker Piero Novelliback to the bank.

Novelli, whose past clients includeGas Natural Fenosa, Repsol, Enel,Renault, ABB, Siemens, GM, Ford,Cisco and HP, left the Japanese bankNomura at the end of last year bymutual consent.

Orcel announced the news internal-ly yesterday. In a memo sent aroundUBS, he said: In line with our commit-ment to continuously improve thevalue we add to our clients, I amdelighted to announce that PieroNovelli has today rejoined UBS aschairman of global M&A, reporting tome.

Novelli was until recently global co-head of M&A at Nomura. Prior to thishe was global head of M&A at UBSbetween 2004 and 2008/9 after joining

from Merrill Lynch in 2004 where heheld the position of head of EuropeanM&A.

Orcel is trying to bolster certainparts of the investment bank, mainlythose that rely on client relationships,while shrinking other parts such as itsfixed income trading business.

Nomura is struggling to make animpression in equity-based investmentbanking, although it does occasionallyfinish in the top ten in the industryM&A league tables.

Orcel heraldsNovelli as hereturns to UBS

BY DAVID HELLIER

SHARES in delivery firm TNTExpress slumped more than 40 percent yesterday after its long-awaited5.2bn (4.3bn) takeover by UnitedParcel Service (UPS) collapsed underregulatory pressure.

Despite efforts to appease theEuropean Commission with offers toamend the deal, the firms were toldon Friday that the EC intended toprohibit the purchase.

UPS said in a statement it will paya 200m break fee to withdraw itsoffer, ending almost a year of discus-sions between the firms.

The European Commission said itsformal decision is not due until 5February. The body has prohibitedaround 20 deals on competitiongrounds in as many years.The regulatory roadblock leaves

Amsterdam-listed TNT without apermanent chief executive or long-term strategy as a standalonecompany.

FedEx, which had complained tothe European Commission aboutthe proposed deal, is not thought to

UPS and TNTfail to deliver

4.3bn tie-upBY MARION DAKERS be preparing a bid for TNT, while

analysts said an offer from largerrival Deutsche Post was unlikely togain competition clearance.

Shares in PostNL, TNTs biggestshareholder which had been count-ing on using proceeds from the dealto pay investors a dividend, plungeda third on the news.

Hedge funds were left nursing loss-es of more han $700m after the col-lapse of TNTs shares.

Merger arbitrage funds are estimat-ed to have owned around 30 per centof TNT shares before yesterdaysannouncement, a source toldReuters.

AFTER almost a year of talks about thefinances of the 4.3bn postal purchase, thedeal was finally felled by legal tangles.Antitrust lawyers from Freshfields acting forUPS and Allen & Overy partner Paul Glazenerfor TNT Express learned last week that theEuropean Commission planned to exercise itsright to prohibit the deal.FedEx, which successfully lobbied on compe-

tition grounds to the EC, hired Baker &McKenzie as its legal advisers. The team wasled by Fiona Carlin, head of the firmsEuropean and competition law practice inBrussels, and Gavin Bushell, a partner in thesame practice (both pictured left).The collapse of the tie-up between Taurusand Utah (the codenames given to thefirms in the deals early stages) has cost thefinancial advisers an estimated $55m(34.2m) in fees. UPSs financial advisersMorgan Stanley, Bank of America and UBSwould have shared around $25m to $30m,according to Freeman Consulting. TNTsbankers, Goldman Sachs and Lazard, alongwith Deutsche Bank, which helped the Dutchgroup's largest shareholder PostNL, wouldhave split the remaining $20m to $25m, thedata consultant estimated yesterday.

ADVISERS UPS PURCHASE OF TNT

UPS will not be able to fulfil its plan to take over TNT Express because of EC rules

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TUESDAY 15 JANUARY 20136 NEWS cityam.com

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US PRESIDENT Barack Obama andFederal Reserve chairman BenBernanke yesterday joined forces tomount an assault on Republicanplans to use the debt ceiling as abargaining tool.

Obama said there would be nospending cuts in exchange for a hikeddebt limit, while Ben Bernankelikened refusing to raise thedebt limit to refusing to paycredit card bills, andwarned that brinkmanshipcould hurt the US creditrating.

If the goal is to make sure

that we are being responsibleabout our debt and our deficit,Im happy to have thatconversation, Obama

BY BEN SOUTHWOODsaid in a press conference.

What I will not do is have that nego-tiation with a gun at the head of theAmerican people.

Bernanke said: Not raising the debtceiling is like a family, which is tryingto improve its credit rating saying, oh,I know how we can save money, wewont pay our credit card bills.

This comes as Republicans in theHouse of Representatives are demand-ing spending cuts to match anyincrease in the debt ceiling, after a

fiscal cliff deal that imposedincreases in taxes with fewer cutsto rein in US spending, which is

viewed by most analysts as the root

cause of the deficit problem.

HSBC APPOINTS NEW CORPORATE BANK CHIEFS

Obama said he wouldnot budget on cuts

HEDGE funds are loading up onrecord levels of debt to try andmake money off the New Year rallyin stock markets, according toindustry f igures leaked yesterday.

Data from Morgan Stanley, seenby Bloomberg, shows gross leverageat US hedge funds whichmeasures money borrowed by

funds versus money given to themby investors was 153 per cent forthe first week in January, comparedto 143 per cent a year ago.

This was its highest recordedlevel since 2004 and is 10

BY MICHAEL BOW percentage points higher than theaverage leverage level of 143 percent recorded since its 2004 peak,according to the data.

Hedge funds typically borrowmoney to leverage up theirholdings in stocks, increasing thelevel of returns. Recent figuresshows the practice is on the rise.

Data from the New York StockExchange reveals debt levels in

margin accounts, which allowinvestors to borrow money to buystocks, hit $327bn (203bn) inNovember, its highest level sinceearly 2008. The S&P hit a five yearhigh last week.

ICAP, the worlds largestinterdealer broker, yesterday saidit had sold a 12 per cent stake inpost-trade processing firm Traianato a consortium of seven banks,

valuing the business at $300m(186.5m).

Under the terms of the deal, the

investors Bank of AmericaMerrill Lynch, Barclays, Citi,

Icap sells stake in post-tradefirm to seven-bank consortium

BY MICHAEL BOWDeutsche Bank, JP Morgan,Nomura and RBS will also havethe chance to snap up anadditional 20 per cent stake inTraiana for up to $82.5m in future.

The sale underscores Icapsdrive to cut costs and turn the

business around after a difficulttrading period, which Icap bossMichael Spencer dubbed one of

the toughest periods in his 36year City career.

7NEWScityam.com

HSBC has appointedDan Howlett (left)and Ian Henley(right) to run itsEuropean corporatebanking arm, itrevealed yesterday.Henley will be headof corporate bankingacross Europe whileHowlett is the newhead of corporatebanking in the UK.

Hedge funds lift debt levels inbid to cash in on equity rally

Bernanke andObama call for

debt limit hike

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Heathrow hits record as flightsto Brazil and Middle East soarHEATHROW Airport yesterdayheralded a surge in passengers

from Brazil and the Middle East forits record traffic numbers for 2012.Almost 70m passengers passed

through the gates of Britainsbusiest airport last year, a rise of0.9 per cent.

In December alone, trafficjumped two per cent to 5.6m,making it Heathrows busiest everend to a year.

The firm said there was stronggrowth from the Brazilian market

BY MARION DAKERS as airlines added flights, whiledestinations in the Middle Eastbounced back following politicalupheaval in 2011.

European traffic also rose,though growth came chiefly fromthe cornerstone economies ofGermany and France, while trafficfrom Greece and Portugal fell.

Heathrow is effectively full 471,341 flights were made at theairport, just under its cap of480,000 and so growth camefrom airlines flying larger andfuller planes, it said yesterday.

The overall load factor at

Heathrow last year was 75.6 percent, slightly higher than the 75.2per cent level posted in 2011.

Cargo traffic fell 1.3 per cent.

The figures for 2012 showHeathrow is delivering higherpassenger numbers despite a tougheconomic climate, said chiefexecutive Colin Matthews. At thesame time passenger satisfactionreached record levels.

At Stansted, which Heathrowsparent company is selling, annualtraffic fell 3.2 per cent to 17.46m.Final bids for the airport are duethis week.


HEATHROW HITS RECORDS IN 2012

DOMESTIC0.5%

AFRICA

5.7%

NORTHATLANTIC

3.2%

EUROPE

0.5%

EAST ASIA

6.2%

MIDDLE EAST &CENTRAL ASIA

3.4%

BRAZIL21.6%

INDIA

3.4%

CARGO1.3%

471,341 FLIGHTS 98.2%OF THE MAX ALLOWED

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INDUSTRIAL output collapsed in theEurozone in November, official figuresrevealed yesterday, leaving economistscertain the currency area is mired inrecession again.Yet International Monetary Fund

chief Christine Lagarde argued thatthe Eurozone has turned a corner andthat the economy is on the mend.

We forecast the Eurozone to bedelivering growth in 2013, which isbetter than the recession that it hasexperienced in 2012, she said in aninterview broadcast on the BBCsWorld Service.

There is an improvement, and thereis the beginning of recovery.

But her optimism stands at odds

with the official figures fromEurostat, which showed a continuedfall in industrial output.

Production was down 3.7 per cent onthe same month of 2011 a steeperfall than the 3.3 per cent drop record-ed in October, the data revealed.

On the month, production fell 0.3per cent. By country Italy is the worsthit with industrial output down 7.6per cent, closely followed by Spains 7.2per cent decline.

Irelands industrial productiondropped 6.6 per cent on the year,while Greeces slid 3.1 per cent.

Even Germany saw its output fallthree per cent, though a few countriesrecorded growth, led by Estonia with a6.5 increase.

The latest survey evidence indicatesthat the sector is still in recessionaryterritory and that conditions continueto be tough going into 2013, saideconomist Howard Archer from IHSGlobal Insight.

Specifically, the latest purchasing

managers survey indicated that over-all Eurozone manufacturing activitycontracted for a 17th successivemonth in December.

Any significant recovery inEurozone manufacturing activity stilllooks some way off.The grim output data came after fig-

ures showing Eurozone unemploy-ment hit a record high in November.Joblessness climbed to 11.8 per cent,

accounting for 18.82m people.

Eurozones industry plummetsBY TIM WALLACE

GOVERNMENT consumption isrising at its fastest pace in eight

years, a group of economists saidtoday, warning that the very slowpace of the coalitions austerityplans means deficit reduction willhave to drag on for another twofull parliaments.

Slow growth combined with thisyears 2.8 per cent rise in

BY TIM WALLACE government consumption meanthe national debt will rise to 85per cent of GDP by 2017/18, theCentre for Economics and

Business Research said and itwill keep rising rapidly beyond.The think tank expects the UKs

budget deficit to stand at 68bnthat year, more than double the31bn forecast by the Office forBudget Responsibility, the

governments fiscal watchdog.


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RAISING capital requirements forbank lending will promote financialstability but will also increase the costof credit and hit the economy in theshort run, the Bank of Englandacknowledged yesterday.

Its policy document explaining howthe Financial Policy Committee willtry to identify and deal with financialbubbles also said the powers couldput banks at a competitive disadvan-tage relative to other firms, particu-larly when operating abroad.

But the Bank hopes to coordinateaction with foreign regulators, andbelieves in any case that the benefitsof greater stability will outweighthose damaging side-effects.The FPC will be able to raise capital

requirements against bank lending ifit fears a bubble building in a sector such as mortgage or commercial

Watchdog says

stability ruleswill hit growthBY TIM WALLACE property lending or a country.

It can set limits on loan to value ratesto discourage booms, or cap loan toincome rates to make it harder for bor-rowers to over-extend themselves.

By forcing banks to hold more capi-tal against a specific loan type, the FPChopes to reduce the amount of creditavailable. But it knows this may alsohurt growth.

A one percentage point increase incapital requirements is estimated tolead to an increase in the interest rateon bank loans of between 4.5 and 25basis points and a decline in the quan-tity of lending of between zero percent and 3.6 per cent relative to base-line, the Bank said.

It added studies have found GDPwill contract by between 0.05 per centand 0.35 per cent relative to baselinein the short run following a 100 basispoint increase in headline capitalrequirements.

UKs public debt to keep rising

UK BROKERAGE giant TullettPrebon yesterday lost a $16m(9.9m) damages claim against rivalUS firm BGC Partners concerningan alleged raid on members of its

workforce by BGC in 2011.The US financial watchdog Finrakicked out the damages claim byTullett against BGCssubsidiary BGC Financial overnine brokers it claims werepoached from its repo desk

between 2009 and 2011.Finra denied all of Tulletts

claims in full. Tullett was alsoordered to pay a total ofaround $380,000

owed to the nine brokers whojoined BGC. It is another chapter inthe long running legal feud

between the two firms over Tullettstaff who have defected to BGC.

A high profile court case wassettled between the two firms in

the UK in April 2011 concerning 10London-based brokers. Thesettlement was not disclosed.

A Tullett Prebonspokesman yesterday saidfurther claims wouldcontinue on course,notwithstanding thedecision in yesterdays case.

Tullett Prebon loses claim ofstaff poaching by rival BGC

BY MICHAEL BOW

City veteran Terry Smithis CEO of Tullett Prebon

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JEWELLER Harry Winston is sellingits high-end watches-to-necklacesdivision to Swatch Group in a $750m(467.3m) cash deal that expands theSwiss watchmakers luxury offeringand lets the Canadian group concen-trate on its diamond mines.Yesterdays s deal reverses a 2004

acquisition which turned HarryWinston, the group that discoveredwhat became Canadas Diavik dia-mond mine now controlled by RioTinto into a miner and jeweller.

The original mining arm isrenamed Dominion DiamondCorporation after the sale of theHarry Winston luxury business,which started as a small jeweller inNew York in 1932 and rapidlybecame a favourite with movie stars.

For Swatch, the deal is evidence ofthe benefits of strong Asian demandfor watches, handbags and otherhigh-end items that has given com-panies the firepower to expand theirportfolio.

Harry Winston which MarilynMonroe mentioned in her songDiamonds Are A Girls Best Friend

BY HARRY BANKS has the potential to generate morethan SwFr1bn (674m) in sales andSwFr250m net profit in about four tofive years, Swatch boss Nick Hayeksaid.

Swatch Group is already the worldsbiggest watchmaker by sales, withSwFr8.1bn sales in 2012 thanks tobrands such as Omega. Buying HarryWinston allows it to enter high-endjewellery, a market dominated byRichemont with its flagship brandCartier.

If watches continue to grow asdynamically as in 2012, SwFr9bnsales are within reach in 2013. Nowin view of this acquisition, it can ofcourse be even more, said Hayek.

Jessica Alba wore Harry Winston diamonds to Sunday nights Golden Globes

Harry Winston Diamond Corp


14.00

14.50

15.00

15.50

CAD 14.9014 Jan


MENSWEAR retailer Moss BrosGroup said yesterday it expected

full-year results to exceed marketexpectations, helped by salesduring the Christmas period.

The company said like-for-likesales during the 24 weeks to 12January rose 2.7 per cent.

The suit specialist, which sellsand hires out clothing through itsMoss Bros Hire, Moss Bespoke,Moss Bros and Savoy Taylors Guildbrands, said close control overdiscounting and cost-control

BY CITY A.M. REPORTER measures would also help itexceed market expectationsfor the year ending 28January.

We remain consciousof the fragile tradingenvironment, butcontinue to rigorouslyimplement ourstrategic plan toturnaround and growthe business, said

chief executive Brian Brick.Shares in the company closed

up almost seven per cent at71.26p yesterday.

Moss Bros, which was set upin 1851, will report its full-year results on 22 March.

The company isexpected to launch aweb sales platform

soon, incorporatingthe retail and bespokebusinesses, as well asprocessing hire ordersonline.Moss Bros stylish

turnaround plan is working

PRIVATE equity firm CVC CapitalPartners and Royal Bank ofScotland have sold a combined$290m (180m) stake in HongKong-listed luggage makerSamsonite International,according to a term sheet of thedeal.

The 138.3m shares were sold atHK$16.20 each, a 4.9 per centdiscount to Samsonites Friday'sclose of HK$17.04, the termsshowed. That would put the totaldeal at HK$2.24bn , with about 65

per cent of the shares sold by CVCand the remainder by RBS.

CVC and RBS inSamonsite sale

BY CITY A.M. REPORTER

BT has launched a challenge tomobile phone operators, launchinga smartphone service that allowsphone calls over the internet.

SmartTalk, which the telecomsfirm announced yesterday, allowsBT customers to make calls whichare then charged to their landlineaccount, as if the calls were from ahome phone.

But the launch of the service mayconcern mobile network operatorssuch as Vodafone and O2, whichare struggling with declining voice

call revenues as more peoplecommunicate via social media.

BT app targetsmobile calls

BY JAMES TITCOMB

Swatch chimes

in with $750mjewellery deal

Moss Bros raises profits outlookafter strong Christmas trading

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TAKE note. 2013 has already beendubbed the year of the phablet the hideous nickname givento oversized mobile phones that

are closer in form factor to a tabletcomputer. This years ConsumerElectronics Show featured newphablets from the likes of Lenovo,Sony and Huawei. Some have gone sofar as to call them the new PC. It isall good news for Samsung, whichwas in the vanguard with its GalaxyNote, selling 10m units from October2011 before introducing the GalaxyNote II last August.

It is not such good news for Apple,which has steered clear of thecategory, opting instead for a mini

but still tablet-sized version of itsiPad and a somewhat enlargedscreen on its iPhone that, at fourinches, is still far smaller than theGalaxy Note IIs 5.5-inch screen.

For the last five years, the iPhonehas held near-undisputed sway asthe industry-leading mobile. Butperhaps the tide is starting to turn.In another indication that some ofthe shine is coming off the iPhone,Americas influential ConsumerReports used its February 2013edition to identify the iPhone 5 as atthe back of the pack of topsmartphones available on USnetworks. The scores only vary by apoint or two but it is a seismicmoment for what was once dubbedthe Jesus phone. Samsung phonesare not always the top choice butthey beat the iPhone 5 on AT&T,Sprint and Verizon.

And this is about more thanphablet fads. Consumer Reports putsthe Galaxy Note II in third place onT-Mobile but it gave first place toSamsungs Galaxy S III, also in the

top three for all the other networks.Apple saw its shares fall yesterdayon the report of weak demand forthe iPhone 5. It follows a lacklustreend to 2012 for the Cupertino-basedfirm. Meanwhile Samsung said ithad sold 100m Galaxy S phonesglobally since 2010. For comparison,from the iPhones launch in June2007, Apple took until March 2011 tosell 108m units. All this hardlymeans crunchtime for Apple. Itsproducts remain exceptionallyprofitable and there are even strayrumours of a five-inch screen in itsnext generation of products. But theclear winner here is Samsung. Bigenough to stand up toe-to-toe withApple in the mobile patent wars, it iscreating a suite of products that maynot cast the religious aura of itsrival, but can still generate enoughpassion to sell in their millions.

BOTTOMLINE

MARC SIDWELL

11NEWSTUESDAY 15 JANUARY 2013

Hobbs dresses, often seen on the Duchess of Cambridge, saw a 57 per cent rise in sales

BY KASMIRA JEFFORD

HOBBS, the upmarket womenswear

chain, enjoyed a surge in sales overthe Christmas trading period,boosted by a record online trading.

The chain said total sales rose 16.4per cent in the 10 weeks to 5January, driven by a 60 per centjump in online sales. That comparedwith a six per cent rise in store sales.

Chairman Iain MacRitchie said theretailer achieved good growth acrossall labels and channels, despite atough trading environment.

AUDITORS today warned against theretail sectors over-reliance on like-for-like trading figures, saying theyare not always consistent nor directlylinked to profitability.

Like-for-like sales are a key measureused by retailers that strips out of theeffects of expansion, shop closuresand other distorting events to helpinvestors better understand how theunderlying business is performing.

But critics of like-for-likes argue thatthey do not always give a reliable wayof tracking how a business is per-forming in the wider retailer sector.

A report published by the Instituteof Chartered Accountants in Englandand Wales (ICAEW) today warnedthat the lack of an industry standardmakes it difficult to compare like-for-like sales between different retailers.

Like-for-like sales figures are onekey way of judging retailers perform-ance. This key performanceindicator getsa lot of atten-tion, yet howit is preparedcan vary, saidJulie Carlyle,

Auditors: likefor like sales

distort outlookBY KASMIRA JEFFORD head of retail at Ernst & Young.

It is not always a reliable indicatorof how a business is performing.

Retailers, including Debenhams,have stepped up their offers and pro-motions in the face of an increasinglycompetitive market, but often at theexpense of their profit margins.

The trend of heavy discounting haschanged the relationship betweensales data and profitability. More salesdont necessarily mean higher profits.Sales volumes can be driven at theexpense of profitability, Carlyle said.The increasing importance of online

sales could also confuse the picturefurther, ICAEWs report said, mean-

ing the use of like-for-likes couldbecome obsolete.

Ted Baker is one of the few retailersthat does not publish like-for-like trad-ing figures.The firm argues that as retail

accounts for just 40 per cent of thebusiness, like-for-likes would give an

inaccurate picture of thecompany, which is alsomade up of a wholesaleand licensing business.

Hobbs reportssurge in salesat Christmas

Big screens and popular designsare helping Samsung take a biteout of Apples smartphone lead

Ted Baker does not releaselike-for-like figures

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LEADING hedge funds are makingenormous bets against the healthof the UK high street, according tofigures supplied to City A.M. bydata provider Markit.

Home Retail Group, the parentcompany of Argos and Homebase,has more than one in five of itsshares out on loan ahead ofThursdays interim managementstatement.

Short sellers borrow shares froma broker in the hope that a compa-nys stock price will fall. If theprice does indeed fall, then thetraders can buy back the shares at

a lower price and profit from thedifference.

Other retailers affected by suchtactics include new sagent WHSmith, which this week surgedinto second place on the most-shorted list with 15 per cent of itsshares currently out on loan.

Electronics retailer Dixons hasalso been hit after hedge fund FestNV took a substantial short posi-tion on the stock, leaving one in10 shares out on loan.

Retail shareshammered by

short sellersBY JAMES WATERSON Online supermarket Ocado is along-term target of short sellers,with almost 14 per cent of its stockcurrently being used in this man-ner. Essex-based flooring companyCarpetright is also in the top 10most shorted shares.

Recently rule changes forceinvestors to declare substantialshort positions to the FinancialServices Authority. Yesterdays pub-lication of the FSA list reveals thehedge funds betting against thefuture success of Home RetailGroup include BlackRock,Maverick Capital and Lone Pine.

Mid-ranking high street chainshave struggled in recent weeks.

Last month electronics specialistComet closed all of its 236 stores,while camera chain Jessops col-lapsed last Friday with the loss of1,370 jobs.As a result hedge funds have

taken an active interest in otherhigh street companies that theythink could face difficulties.

Scottish engineering companyWeir Group ret ains the unwantedtitle of most shorted stock in theFTSE 100.

Ocado chief executive Tim Steiner has seen his company targeted by short sellers


TOP 10 MOST SHORTED SHARES

Rank Company Percentage of shares currently out on loan

1 Home Retail Group 21.4%1 WH Smith 15.6%

1 Weir Group 15.2%

1 Ocado 13.9%

1 Carpetright 12.2%

1 JKX Oil & Gas 11.1%

1 Dixons 10.2%

1 Thomas Cook 7.9%

Premier Foods 6.1%

1 Admiral 6.0%

1

2

3

4

5

6

7

8

9

10

RUPERT Murdochs News Corp

tightened its grip on SkyDeutschland yesterday, saying itwould raise its stake in the Germanpay-TV company to 54.5 per centfrom just under half, buying up347m (288.6m) of new stock in acapital increase.

The move comes as mediaconglomerate News Corp separatesits publishing and entertainmentassets into two publicly tradedcompanies following shareholderpressure to sell its troublednewspaper business and put agreater focus on the faster-growingTV companies.

It also follows an attempt in 2010by News Corp to snap up the 61 percent of BSkyB that it did not alreadyown. That deal was eventuallyscuppered by the phone hackingscandal, but it indicated the groupsintentions around pay-TV.

News Corp is hoping SkyDeutschland will turn out like

BSkyB, which hasamassed over 10mcustomers and grownadept at sellingincreasing numbers of

services to them.

Murdoch takescontrol of SkyDeutschland

BY HARRY BANKS

Murdoch failedwith a bid forBSkyB in 2010

7/30/2019 Cityam 2013-01-15

13/27

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ANY high rollers who havelost a pound or several tothe bookies recently, will beinterested to hear of the

bashing that Balthazar Fabricius,founder of bespoke bookmaker

Fitzdares, is lining himself up for atthis years Boodles Boxing Ball. Thebiennial ball, held in aid of Starlightchildrens foundation, has justannounced the line-up for its 2013black tie clash.

Fabricius will be squaring offagainst the rather beefier ArthurLandon, son of the late Tim Landon,who has lined up Barry McGuigansson Shane as his trainer.

Not to be out-done, The Capitalisthears Fabricius is being coachedby Clay OShea, the man whohelped Tom Hardy shape-upto play Bane in the recentBatman film.

Our betting mansportingly told The

Capitalist: Arthur is the opposite ofme younger, better-looking andhes done it before. I know everyonethinks Im going to get hammered,but we bookies know a thing or twoabout a favourite being beaten.

Also signed up to step into thering is Sir Richard Bransons son-in-law, shipbroker Fred Andrewes, whowill be fighting Adam Bidwell fromInvestec.

It is lucky that Maggies nightclubowner Charlie Gilkes is on theorganising committee at leastthere will be somewhere for thedefeated boxers to have a well-earned drink afterwards.

The ball is being held atGrosvenor House Hotel on

21 September. For more infor-mation please contact:

[email protected]

14 cityam.com

cityam.com/the-capitalistTHECAPITALISTThe City rugbyleague season

kicked off over theweekend at theHonourable ArtilleryCompanys grounds. The

capitals two professionalteams went head-to-head in the annual CapitalChallenge, sponsored byNasdaq OMX, Capita andBoost. The ninth clash between the Skolars and Broncos ended in a rather one-sided746 win for the Broncos. However it was the pre-match luncheon at the HACsbanqueting hall that was the real draw of the day, with ex-England rugby playerJason Robinson (pictured) on the bill as guest speaker. The Capitalist hears thatRobinson made the day for a younger generation too presenting medals to childrenfrom a local school who were playing on the pitch beforehand.

TUESDAY 15 JANUARY 2013

EDITED BY CALLY SQUIRES

Got A Story? [email protected]

Boodles Ball back with

smashing set of boxers

Founder of Fitzdares,Balthazar Fabricius

7/30/2019 Cityam 2013-01-15

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ammerson


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Taylor Wimpey PLC


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77 p 73.0614 Jan


IN BRIEFLochard to lose Thunderballn Aim-listed Lochard Energy will letits licence to operate the Thunderballnatural gas discovery in the North Sealapse, as it does not have enoughfunding to drill it on its own. It hastried to bring in a farm-in partner buthas been unsuccessful. Additionally,the firm is to be de-listed from theAustralian Securities Exchange, due tolow level of liquidity in trading sharesin Sydney.

Angle soars on cancer advancen Specialist medical technologycompany Angle yesterday said it hadachieved a breakthrough in the use ofa cancer diagnostic treatment,sending its shares on a sharp upwardspike. The Aim-listed company said ithad made progress in its Parsortixproduct, which captures and countscirculating tumour cells from theblood of cancer patients. Its shares

closed up 139.66 per cent yesterday.

Wave of interest for Billabongn Australian surfwear companyBillabong International has received asecond takeover offer from USclothing firm VF and a private equityfirm that matches a A$556 million(367m) bid by its US boss, PaulNaude. Billabong said yesterday it willallow VF and the firm, AltamontCapital Partners, to see its books, afteralready opening the accounts to aconsortium led by Naude and privateequity firm Sycamore Partners.

TAYLOR Wimpey said yesterday itexpects profits for the year to be atthe top end of expectations asconsumer sentiment in the housingmarket shows signs of improvement.The housebuilder said it expected

to report that group operating profitrose by over 40 per cent in 2012 whenit reports its annual results in March.

In a trading update, the companyadded that full year operating mar-gin would be ahead of that reportedfor the first half of 2012 and for thefull year in 2011.

Pete Redfern, chief executive, said:We are delivering on the strategythat we set out in 2011, including areturn to UK double digit operatingmargin ahead of schedule.The group said average selling

prices on private completionsincreased by six per cent to 197,000against a backdrop of broadly flathouse prices in the wider market.

Home completions rose by sevenper cent to 10,886, up from 10,180 in

Taylor Wimpey

hails pick-up inhouse buying

BY KASMIRA JEFFORD2011, of which 18 per cent wereaffordable homes, down slightly from20 per cent in 2011.Taylor Wimpey said it started 2013

in an excellent position with anorder book of 5,966 homes worth948m in value on last year.

Two weeks into 2013, consumersentiment towards the housing mar-ket is more positive than we haveseen in recent times. Clearly it is tooearly to judge the market for the year,but we maintain a positive, althoughcautious view in the short term, thefirm said.

Toyota retakes crown from GMas Detroit motor show kicks offGENERAL Motors reported a 2.9per cent rise in global salesyesterday as the Detroit motorshow opened its doors.

GM, which launched a newversion of its Chevy Corvette sportscar at the industry show, saidglobal sales totalled more than9.28m vehicles, up from just over9m in 2011.

But it was not enough tooutpace Toyota, which has retakenits title as the worlds top-sellingcar maker after growing its sales

22 per cent to 9.7m vehicles.Toyota was aided by new models

BY CITY A.M. REPORTER and a bounce back from theJapanese tsunami that closed someof its factories in 2011 and pushedthe firm into second place forglobal sales.

GMs international operations,dominated by China, had thebiggest increase, 10.1 per cent tomore than 3.61m vehicles. GM isthe market leader in China.

GM and its Chinese jointventures sold almost 2.84m carsand trucks last year, up 11.3 percent from 2011. Domestic sales byShanghai GM rose 10.9 per cent toa record 1,331,022 vehicles.

Sales for the North Americanregion, GMs second largest, rose

3.2 per cent to almost 3.02mvehicles last year. The Chevy brandmade up 71 per cent of US saleslast year.

In Europe, where the money-losing Opel unit is struggling torestructure operations, sales slid8.2 per cent to almost 1.61mvehicles.

GM chief executive Dan Akersonreiterated yesterday that Opel isnot for sale, following a Frenchmedia report that PSA PeugeotCitroen could take over thebusiness.

Opel is not for sale, Akerson

told reporters. Its not to be givenaway either.

Property firm Hammerson hiresSainsburys head as chairmanDAVID Tyler, the chairman ofSainsburys, is to take on another

FTSE 100 role, after it wasannounced yesterday he will replaceJohn Nelson as chairman ofproperty giant Hammerson.

Tyler, who has also been a non-executive director at luxury groupBurberry for more than a decade,will join the board with immediateeffect on a salary of 55,000 beforesucceeding Nelson as chairmanafter the annual meeting in May.

Nelson will step down fromHammerson after nine years withthe firm to become chairman of

BY KASMIRA JEFFORDinsurer Lloyds of London.

Nelson said Tyler was exactly theright candidate after Hammersonlast year offloaded its office assets

as part of a wide plan to focus itsefforts on convenient retail marketsand premium designer outlets inFrance and the UK.

The real-estate investment truststepped up its retail acquisitions atthe end of last year, paying 136mfor the Victoria Quarter in Leeds,and buying a 25 per cent stake inthe Whitgift Centre in Croydon for65m, which it is battling over withWestfield.

Chief executive David Atkins saidTyler has considerable experience

of both retail and finance, whichwill prove invaluable as wecontinue our evolution to the bestoperator of retail property in

Europe.

THREE quarters of the homesplanned for first phase of theregeneration of Battersea PowerStation have been snapped upsince they went on sale last week,the developers said yesterday.

The Battersea Power StationDevelopment Company said 600 ofthe townhouses and flats at Circus

West had been reserved, withcommitments for over 600mreceived since the launch lastThursday.

Battersea Station and Embassy

Gardens homes snapped upBY KASMIRA JEFFORD The properties, which went onsale to UK buyers first, range from343,000 for a studio flat to 6mfor a duplex penthouse.

The developers of EmbassyGardens scheme, a neighbouringscheme in the Nine ElmsOpportunity Area, also revealed

yesterday that 90 per cent of flatsoffered have been sold to date.

Ballymore said some 60 per centof the 2,000 homes were claimed

by UK buyers. A three bedroomflat is being marketed for as much2m, according to its website.

The 800 townhouses and flats at Battersea Power Station went on sale last Thursday

FIAT and Chrysler will eventuallybe merged even if Chrysler does gofor an initial public offering, saidSergio Marchionne, the chiefexecutive of both carmakers.

We will eventually have amerged car company, Marchionnetold reporters at the Detroit autoshow yesterday.

A minority owner of Chryslerlast week pushed the US firm totake the first step toward becominga public company again bydemanding that Chrysler registershares with US regulators. A

voluntary employee beneficiaryassociation (VEBA), which owns

41.5 per cent of Chrysler, has theright to make the demand.

Chrysler talks

up Fiat mergerBY CITY A.M. REPORTER

SPORTS Direct has parted ways withcorporate broker Bank of AmericaMerrill Lynch after six years.

Mike Ashleys retailer and thebank are believed to have ended therelationship by mutual consent atthe end of last year.

Ashley and BAML have workedtogether since Sports Direct floatedin 2007, and are reported to haveonce settled a legal bill linked to theIPO by a game of spoof.

The departure leaves OrielSecurities as sole broker to FTSE250-listed Sports Direct.

The retailer is expected to hireanother bank to act as joint broker,

though it has not begun a formalsearch.

PROFILE: DAVID TYLERDAVID TYLER added a new string to his bowyesterday that of property after he wasannounced as the new chairman ofHammerson. But he will still be playing asimilar tune and advising them on the sectorhe knows best, retail, after Hammersondecided last year to shed its offices andbecome a pure retail property player.Adding to that his background as financedirector at several well-known firms, Tylermakes a good match for the FTSE firm.

The 59-year-old began hiscareer in financial andcommercial managementat Unilever, which he

joined after graduating ineconomics fromCambridge in the 1970s.He spent 11 years atUnilever, including stintsat Birds Eye and in thegroups strategy unitbefore joining CountyNatWest, the invest-

ment banking arm of NatWest, as financialcontroller in 1986.Tyler left County three years later to join artauctioneer Christies as finance director, wherehe spent seven years, including two in NewYork as president of Christies American arm.But he is perhaps best known for his role asgroup finance director of retail conglomerateGUS, which he joined in 1997. Tyler spentalmost a decade building up the businessalongside industry veteran John Peace

acquiring retailers such as Argos andHomebase before overseeing the demergerinto two separate companies, Home RetailGroup and Experian in 2006. Since then, Tyler

has held a number of non-executive roles.He was chairman of 3i from 2007 to

2009, chairman of Logica from2007 until last year, and hejoined Sainsburys as chairman

in 2009. He has also been anon-executive director ofBurberry, previously owned byGUS, since 2002.

BY MARION DAKERS

Sports Direct

ends BAML link

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HOUSEHOLD incomes managed tooutpace inflation during the thirdquarter of 2012, giving a much-need-ed boost to tight household incomes.

Real household actual income perhead climbed 21 or 0.5 per cent between July and September, datafrom the Office for National Statisticsrevealed, adding to the 39 boostfrom the first three quarters.This brought quarterly real actual

household income per head to 4,535,well up on the five-year low of 4,494in the first quarter of 2011, but still faroff the all-time highs of 4,647 seen inthe first and second quarters of 2009.

But disposable income whichexcludes the value of services provid-ed by the state was up just 8, or 0.2per cent, above inflation, with stateservices making up the bulk of therecent increase.This may explain why actual expen-

diture per head also increased by just0.2 per cent, bringing it to 4,456, andincreasing the savings ratio to a three-year high of 7.7 per cent.

On the other hand the value of gov-ernment-provided goods and services

Households gota 60 income

boost last yearBY BEN SOUTHWOOD expanded 13, bucking the correctivetrend which saw the quarterly per-head value fall to a six-year low of 753in the second quarter of 2012.

But this negative trend in the govern-ment-provided element of householdincomes seen since 2009 is itself a cor-rection to the rapid expansion seensince 1997, which in just 12 years sawreal expenditures grow 79.3 per cent.

Howard Archer at IHS Global Insightsaid any improvement in householdsfinancial position could be a majorboost to the economy consumptionis around two thirds of GDP butwarned that inflation could hit spend-ing power.

Incomes pick up in 2012

Q1 1997 Q1 2006 Q1 2012

3300

3500

3700

2900

3100

3900

4100

4300

4500

4700

Real householddisposable income per head

Real actual householddisposable income per head

UK GROWTH is solidifying, notfalling away, according to widelyregarded data out yesterday.

The UKs composite leadingindicator (CLI) edged up to 100.7 inNovember, the Organisation forEconomic Co-operation andDevelopment (OECD) revealed, from100.5 in October indicatinggrowth firming.

CLIs tend to precede turningpoints in economic activity byapproximately six months, theOECD says.

This monthly increase of 0.2 percent caps off five straight months

OECD: UK economy not on itsway into triple-dip recession

BY BEN SOUTHWOOD of improvement and a yearlyincrease of 1.5 per cent that

brought the indicator over the longterm average of 100.

This UK improvement was

echoed by higher CLIs in the US,China, India, and Japan, along withpromising Eurozone figures thatthe OECD believes suggeststabilising growth.

The positive findings will givechancellor George Osborne a lift, asa raft of recent releases suggest theUK may return to recession. Buteven if the economy does notshrink for two successive quartersanalysts believe at least one quarterof GDP decline is highly likely.


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A return to economic growth in the UK will provide a huge boost to chancellor Osborne

HOUSE PRICES stayed flat over thepast three months, a poll ofsurveyors revealed this morning.

Exactly the same fraction ofsurveyors said prices rose as

reported that prices fell, the RoyalInstitution of Chartered Surveyorsdata showed, producing a net

balance of zero in December compared to Novembers minusnine. And the figures suggested thehousing market could be moving, ifmodestly, into positive territory,

with upbeat expectations aboutprices for the first time since 2010.

Surveyors sayhousing is flat

BY BEN SOUTHWOOD

BANKING growth outside the capital

is driving City workers to considermoving as far afield as Edinburgh inorder to get the right role, datarevealed yesterday.

Forty-nine per cent wouldconsider a move to Manchester to getthe right job, making it the mostpopular destination, ahead of 45 percent who would mull moving to theUKs second city, Birmingham, andEdinburgh in third, BrightPool said.

Banks are moving out of Londonin search of wage and rent savings.

City workersmull moving

BY BEN SOUTHWOOD

7/30/2019 Cityam 2013-01-15

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Trading remains tough, but the group continues to deliver both top-lineand margin growth. The quality of the estate and management together withthe undemanding rating leaves Greene King as a core Buy in thesector. We retain our 702p target price.

ANALYST VIEWS

Our fear is that if the group does not utilise its valuation to make acqui-sitions then the market will de-rate the stock. The stock trades on an earningsmultiple of 9.3x, compared to the sector average of 9.1x. We view thestock as fully valued and reiterate Hold and a 607p target price.

We believe the shares are on the right earnings multiple, but our stance

is to continue with an Add recommendation to reflect an estimated eight percent earnings growth, a four per cent dividend yield and a reasonabletrading backdrop for food-led residential pubs in 2013. Target 710p.

HOW DID GREENE KINGSTRADING UPDATE AFFECTYOUR RECOMMENDATION?Interviews by James Titcomb

NICK BATRAM PEEL HUNT

SIMON FRENCH PANMURE GORDON

DOUGLAS JACK NUMIS

IN BRIEFAfferro exclusivity period endsn Takeover target Afferro Miningyesterday confirmed that its period ofexclusivity with an unnamed bidderhad ended although discussionswith the party were ongoing and itwas free to start formal discussionswith other parties. Fellow Aim-listedInternational Mining & InfrastructureCorporation has approached the minerwith regards to a possible takeoveroffer.

Shanks nets 750m waste dealnWaste management group Shankshas won a 25-year contract withWakefield Council worth 750m,which will see the firm build a residualwaste treatment facility to process upto 230,000 tonnes a year of municipalsolid waste and turn it into electricity.The contract has been funded by theUK Green Investment Bank and a hostof banks including Barclays, Japans

SMBC and Germanys BayernLB.

Optimal Payments tops forecastsn Shares in Optimal Payments rose5.5 per cent yesterday as the onlinecredit card processing firm said itexpected to beat full-year forecasts.The Aim-listed firm put the successdown to a strong showing in thesecond half of last year, especially byits divisions in Asia. The group expectsfull year revenue of at least $172m(79.7m), which would be a 34 percent increase on last year.

RECORD numbers of people flockedto Greene King pubs over Christmasas the company ramped up efforts tobring in festive diners.

The pub owner and brewerrevealed yesterday that like-for-liketrading in its establishments was up2.8 per cent in the six weeks to 6January, while pub sales were up 6.8per cent on Christmas Day to 2.7m.

We have continually made sure weare getting ready and improving ouroffering [for Christmas] and this hasclearly borne fruit, Greene Kingschief executive Rooney Anand toldCity A.M., revealing that the companysold 56 tonnes of turkey and 42tonnes of Brussels sprouts during thefestive period.

Many pub chains have focused onimproving their dining experiencesto take advantage of customers whocan no longer afford to eat at restau-rants regularly. This has paid off forGreene King, which yesterday saidlike-for-like food sales were up 4.1 per

Christmas cheer

raises spirits atGreene King

BY JAMES TITCOMB cent in the 36 weeks to 6 January.I think the fact we have grown our

business is a sign that decent pubscan be a welcome relief from thedoom and gloom, Anand, who isentering his ninth year as GreeneKing boss, said.

However, the chief executive wascautious about growth in 2013, say-ing he does not expect conditions toimprove for consumers.

Greene King, which runs chainsincluding Hungry Horse and OldEnglish Inns, saw shares edge upslightly yesterday.

Amplats warns of full year lossas strike cripples productionANGLO American Platinum saidyesterday it slumped to a loss lastyear, as it battled a two-monthstrike during the second half of2012.

Amplats, which is 80 per centowned by parent Anglo American,said it expected headline earningsper share to drop to between 491and 628 South African cents overthe year to December 2012 from aprofit of 1,365 cents for theprevious year largely as a resultof the industrial action which

crippled output. Lower platinumprices also contributed to the

BY CATHY ADAMSdecline in earnings.

Amplats said it lost 306,000ounces of platinum over the year toDecember 2012, equal to around 12-13 per cent of total expectedproduction, due to a wave of strikesthat spread to other South Africanplatinum producers and caused theclosure of many mines.

It also said it would write downZAR6.6bn (470m) of other assetsthat are considered noteconomically viable.

A review by its parent AngloAmerican, which wascommissioned almost a year ago, is

due this week. It is expected toannounce some shaft closures in

the face of soaring costs and fallingprofits.

In Johannesburg, AngloAmerican closed down 1.82 percent yesterday at 49,101 cents.

Britvic and Barr merger put onice as watchdog delays tie-upTHE UKS trade watchdog has putthe brakes on the merger of soft

drink giants Britvic and AG Barrafter extending the timetable for itsprobe into the deal.

The Office of Fair Trading has putback a decision to green light themerger until the 13 February, givingit more time to scrutinise whetherthe merged entity, Barr Britvic SoftDrinks, will create a monopoly inthe industry.

The 1.4bn deal, which was struckin November giving Britvicshareholders 0.8 Barr shares forevery Britvic share, was due to be

BY MICHAEL BOW signed off on 30 January.The OFT probe will examine

whether the tie-up will lead to asubstantial lessening of competition

in the UKs soft drink sector.Barr makes iconic Scottish tonicIrn Bru, while Britvic is behind someof the UKs best known brands,including Tango and Robinson FruitShoots.

The watchdog could refer the dealto the Competition Commission if itdecides the merger will weakencompetition in the sector.

This would delay the deal for afurther six months.

An OFT spokesman said it wasnot uncommon for the body to

extend its deadline and stakeholdersshould not infer too much from thedelay.

Britvic shares finished flat in

trading yesterday.

Britvic PLC


407.5

405.0

402.5

410.0

412.5

415.0

417.5 p413.1014 Jan

Greene King PLC


630

640

650

660

670 p 651.0014 Jan

Anglo American Platinum Ltd


51,000

50,000

49,000

48,000

47,000

ZAc 49,101.0014 Jan


CEO Rooney Anand said his pubs sold 56 tonnes of turkey as part of Christmas meals

OIL explorer Exillon Energyyesterday agreed to a shareholdermeeting, which could see itschairman removed as a director.

Over the weekend, shareholderWorldview Capital Managementwrote to the oil explorer todemand an EGM and three new

board members.The shareholder, which Exillon

says has around two per cent invoting rights, wants to turnaround the firms ailing shareprice, which has fallen by aroundtwo thirds since March 2011.

Exillon said yesterday it willsend notice to shareholders

convening the meeting, which isexpected to be in about a months

Exillon Energy agrees to meet

to discuss overhaul of boardBY CATHY ADAMS time.

We have engaged extensivelywith Worldview both before andsince they became a notifiableshareholder in June 2012, Exillonsaid in a statement responding tothe requisition yesterday.

We have discussed all of theseat length with Worldview by letter,

by email and in numerous face toface meetings.

We have also discussed thesetopics on an ongoing basis withour other major shareholders.None of the material topics raised

by Worldview are new orpreviously undisclosed, it said.

A dialogue would continuedirectly with shareholders, it said.

Exillon shares closed down 8.9per cent yesterday at 133p.

BIG Yellow, the self-storageprovider, said 2013 had started

well after a quiet third quarterwhen occupancy at its warehousesfell following the strong summer

months.The company said total revenueacross its 54 stores rose 3.7 percent to 16.8m in the thirdquarter to 31 December compared

with last year but down 9.7 percent on the second quarter.

In November the group warnedthat the introduction of VAT onthe self-storage sector on 1October would weigh downearnings growth in the short term.

Big Yellow passed on just overhalf the VAT charge to its private

Big Yellow upbeat on bookingsdespite a muted third quarter

BY KASMIRA JEFFORD customers, a price rise of 10-12 percent according to analysts.

The introduction of VATpresented the group with asignificant challenge and we are

broadly satisfied with the way thebusiness has absorbed this

change, James Gibson, chiefexecutive said yesterday.The company also saw

occupancy fall by four per cent ofcapacity to 2,171,000 square feet,representing 63.3 per cent of their3,432,000 sq ft total capacity.

The third quarter is theseasonally weakest quarter and,

when combined with a strongsummer of student lets, occupancyis down, analysts at Peel Huntsaid, maintaining a buyrecommendation on the stock.

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18TUESDAY 15 JANUARY 2013 cityam.com

LONDON REPORT

Brookland PartnersThe real estate focused

investment bank has appointedDawn Prideaux de Lacy as its newchief operating officer. She waspreviously global chief operatingofficer at ING Real EstateInvestment Management.Prideaux de Lacy has over 30years experience in the industry,and is also a former chiefadministrative officer o f Morgan Stanley InvestmentManagement.

Aberdeen Asset ManagementDimme Lucassen has been appointed fund manager withinAberdeens property multi-manager team. He joins after 10years working at Schroders Property Investment, mostrecently as fund manager for a European fund of funds.

Lucassen replaces Karin Koks, who will now become head ofglobal mandates.

Sullivan & WorcesterThe US law firm has opened a London office and recruitedGeoffrey Wynne as a trade finance partner. He joins fromSNR Denton, where he was head of trade and exportfinance. Wynne specialises in advising banks and tradefinanciers on trade and commodity transactions.

Ashcourt RowanThe wealth management firm has appointed David Palmeras business director in its asset management division. Hejoins from Generali, where he was founding chief executiveof its London-based portfolio management business.Palmer has also held senior roles at Rea Brothers.

Pinsent MasonsThe law firm has appointed John Gilbert to its energy and

natural resources team. He is an international arbitrationspecialist and joins after five years in the litigation group ofBPs legal department. Gilbert also previously worked atHerbert Smith.

Carmignac GestionEdward Cole has been appointed as an analyst responsiblefor Eastern Europe, Middle East and Africa at the assetmanagement firm. He joins from Finisterre Capital, where heco-managed emerging markets funds. Cole previously helda similar role at Ashmore Group, and started his career at JPMorgan Securities covering Europe, Middle East and Africa.

Gleacher ShacklockThe corporate finance advisory firm has appointed RichardSimmon as a partner, with responsibility for financialinstitutions. He joins from Deutsche Bank, where he was amanaging director. Simmon has over 20 years experience inthe sector, and also once worked for Merrill Lynch.

WHOS SWITCHING JOBS Edited by Tom Welsh

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

Apple stockstake a bite outof US markets

THE S&P 500 and Nasdaq endedlower yesterday as worries overdemand forAppleproductsdrove down its shares and as

investors braced for earningsdisappointments.

But Dells stock jumped 13 per centto about a five-month high at $12.29,offsetting some of the tech-sectorweakness, after Bloomberg reported

the number three personal computermaker

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