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BUSINESS WITH PERSONALITY

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Inspiring stories.

Sterling hitsseven-monthlow on dollar

STERLING slid to a seven-monthlow against the dollar yesterday,after the Bank of Englands MartinWeale suggested on Friday thatrate-setters wanted the pound toweaken in order to boost demand.

The pound fell 0.5 per centduring the day to reach $1.5438, itslowest point since July last year,and five per cent below where itstarted 2013.

This came after a speech inwhich Weale said the Bank shouldhold off from counteracting anyrise in inflation that is caused by aweakening exchange rate. To doany different would be to veertowards deflation as a means ofrestoring equilibrium, Weale said.

In the same day, the yenresumed its falls, after the G20group of major economies decidednot to censure Japanese monetaryeasing that has seen the currencyweaken 20 per cent against thedollar since November last year.

And analysts said the yen wouldweaken further as Bank of Japan(BoJ) boss and monetary hawkMasaaki Shirakawa stepped downfrom his post, and premier ShinzoAbe said he would change BoJ law ifthe Bank did not boost inflation.

Boris Johnson called for banks to be allowed to set their own bonus levels but also to pay a better wage to those at the bottom of the pay scale

BORIS Johnson last night told City A.M.that we dont need Europe butting inon bonuses, as he launched a staunchattack on the EUs plan to cap bonusesat the same level as salaries.

Ill always be the first to defend theCity we need to remain competitive,said the Mayor, as he defended Londonbanks right to pay their workers whatthey want. Negotiations have heatedup in recent days as politicians try tohammer out a deal on new reforms.Johnson fears a cap would have unin-

tended consequences, pushing upsalaries and making the sector lessflexible. It is understood the Mayorsoffice is also concerned that the planswould make it harder for banks to cutcosts in a downturn, as well as affect-ing Britains competitiveness com-pared to other financial centres suchas New York and Hong Kong.

But Johnson insisted banks must alsoconvince the British public that theybenefit the wider economy by payinggenerous wages to low-level staff andtaking part in philanthropic activities.

If our banks and our finance housesreward top staff so handsomely thenthey need to give something back.That starts with the London LivingWage, the Mayor said. He is backing acampaign for London firms to pay all

staff a minimum of 8.55 per hour.European parliamentarians havebeen pushing hard for the cap onbonuses, and countries led by France

www.cityam.com FREE

have taken up the demands. Ifapproved, bonuses will be capped atthe same level as the workers salary,though a two-thirds vote of sharehold-ers could double that level.The Irish presidency of the EU has

made the reforms a priority for thenext six months, while Germany hasdropped its opposition to the cap.

That leaves Britain alone in publiclyopposing the plan. The UK favourspushing banks to pay more in shares,deferred for several years to allow

banks to claw back the bonuses if longterm performance is poor.The industry fears the UK will now

be defeated, hitting the sector.George Osborne doesnt want to

stand up alone and argue for biggerbonuses, so we will lose out by default.The banks have no friends on this one,so the end result will be another loss

to Londons competitiveness, said oneindustry insider.This cap will make other parts of

the world more attractive to bankers

looking at where they want to work,added TheCityUKs Chris Cummings.The banks themselves are concerned

that pay packages designed to encour-age long-term success will now bescrapped in favour of the capped one-year bonuses. This simply stops share-holders from having any redressagainst bad performance, warned a

source at a major UK lender.The Treasury declined to comment.

BY BEN SOUTHWOOD

FTSE 100 6,318.19 -10.07 DOW CLOSED YESTERDAY NASDAQ CLOSED YESTERDAY /$ 1.55 unc / 1.16 unc /$ 1.34 unc

ISSUE 1,822 TUESDAY 19 FEBRUARY 2013

DONT TAXFIZZY DRINKSSee the Forum, Page 21See Sport, Page 26

EXCLUSIVEBY TIM WALLACE AND

JAMES WATERSON

ALLISTER HEATH: Page 2

DEBATE: Page 21

MORE: Page 16, TRADING: Page 22

Certified Distribution

from 31/12/12 to 27/01/13 is 127,008

WENGER ON THE ROPESARSENAL BOSS UNDER PRESSURE AHEAD OF CRUCIAL BAYERN MATCH

BORIS TO EU: BACK

OFF ON BANK PAY

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[email protected]

Follow me on Twitter: @allisterheath

Cameron demands Indiaopens up economy to CityDAVID Cameron yesterday called onIndia to open up its economy toBritish banks and insurers, in returnfor relaxing UK visa rules for execu-tives from the subcontinent.

But the Prime Minister faced diffi-culty as he waded into the debateover two troubled defence contractsand tried to convince India to handmajor infrastructure contracts toBritish businesses.

Britain is an open economy andwe encourage that investment,Cameron said in New Delhi. I think,in return, we should be having a con-versation about opening up theIndian economy, making it easier todo business here, allowing insuranceand banking companies to do moreforeign direct investment.The Prime Minister is in the coun-

try with a 100-strong trade delega-tion, as well as four ministers andnine MPs, in the hope of boostingbusiness links with one of theworlds fastest growing economies.

Yesterday he unveiled plans toallow Indians to receive a same-dayvisa if they want to visit the UK onbusiness by streamlining the exist-ing bureaucracy-heavy process.

However large state-backed con-tracts remain the top prize. Cameroncontinues to argue that India shouldreconsider its decision to order 126

Employers work to avoid ObamacareUS companies that employ millions ofworkers are considering cutting theirhours or paying fines rather thanenrolling staff in health insurance plansunder Barack Obamas landmarkhealthcare law. Employers are concernedthat the law increases the cost of insuringlow-wage employees on existing plans,partly by broadening their benefits, aswell as requiring companies to insureworkers not previously covered. Thepenalty for not providing coverage is$2,000 (1,292) per worker.

EasyJet risks row with founderEasyJet is weighing an aircraft order thatwould eventually return its fleet to onecomposed entirely of Boeing jets, a movethat could raise tensions with the low-costcarriers founder, Sir Stelios Haji-Ioannou,who believes the group already has toomany aircraft.

Dublin faces suits over liquidationIreland faces a raft of potential lawsuitsand a possible constitutional challengeover its decision to liquidate one of itsfailed banks as part of a deal torestructure 28bn (24.2bn) in bankdebts.

Austerity bites in Year of the SnakeA clampdown on bribery and extravagancehas also applied the brakes to Chinese retailsales. Despite being in the critical new yearspending period, they grew last week attheir weakest pace for four years.

Push for Republic to return to founderCarl Brewins, the founder of Republichas won support from Denmark in hisattempt to reclaim the failed fashionchain, which has 121 stores, out ofadministration.

Arms sales fall as BAE slips in leaguePressure on the global defence industrywas laid bare as arms sales fell for the firsttime since the mid 1990s, while BAESystems slipped from second to third in aleague table of the biggest arms makers.

Royal Mint strikes coin in IndiaThe Royal Mints gold Sovereigncommemorative coins will be struck inIndia for the first time in nearly a century.The Royal Mint has licensed MMTC-PAMPto strike and market the Sovereign.

German recovery hinges on EurozoneGerman Economy Minister Philipp Rslerwarned that the return to strong growth inEuropes largest economy later this yeardepends on stabilisation of the Eurozone.

Hugo Chvez Returns to VenezuelaVenezuela President Hugo Chvez made asurprise return home yesterday after morethan two months in Cuba for treatment ofcancer, a move that is unlikely to quellspeculation that his health could force himfrom office after 14 years as premier.

TOP EUROCRATS yesterday cameout against the historic budgetdeal that would cut the limit ontheir spending for the first time.

All 27 premiers of the EUsconstituent states came to anagreement on a packagepencilling in 908.4bn (784.3bn)of spending between 2014 and2020, with a limit of 960bn.

This is down from the 994bnlimit in the previous seven year

budget cycle, and from the 1.05trillion eurocrats had originallydemanded.

But senior figures in the threebiggest parties in the EuropeanParliament, whose approval isneeded to pass the long-termplans, slammed the proposals,despite recession and austerityacross Europe.

Hannes Swoboda, who leadsthe second-biggest faction in thechamber, called the proposalsunacceptable. Guy Verhofstadt,president of a liberal coalition,and Joseph Daul, chairman of the

biggest bloc, the EuropeanPeoples Party, joined the chorusof parliamentary displeasure.

The budget deal was hailed as ahistoric victory for UK PrimeMinister David Cameron, at atime when his authority is beingquestioned by his own party,

which trails Labour in the polls.

MEPs hit out at

reduction to EUbudget ceiling

Prime Minister David Cameron is in talks with Indian prime minister Manmohan Singh

2 NEWS

BY BEN SOUTHWOOD

BY JAMES WATERSON

To contact the newsdesk email [email protected]

ONCE again, Britain is about toshoot itself in the foot. Thelatest proposals from Brussels this time, to impose a cap on

bank bonuses look like they mayshortly be nodded through, withGeorge Osborne seemingly toofrightened by anti-City sentiment to

block them. Bonuses may have to beno more than 100 per cent or at most200 per cent of base pay, though thedevil will be in the detail.

Before I tell you why I think this lat-est EU plan is bonkers, bad for the UK,bad for jobs, bad for London, bad fortax receipts and bad for the stabilityof the financial system, let me remindreaders of what reforms I do support.Prior to 2007, profits were privatisedbut risks nationalised, with anappalling regulatory model eliminat-ing some core market disciplines butreplacing them with nothing.

EDITORSLETTER

ALLISTER HEATH

Brussels plans to cap bonuses will be a disaster for London

TUESDAY 19 FEBRUARY 2013

Some of the extensive reforms sincethen have been good, including therequirements to hold more capitaland liquidity (though some of thechanges have been too quick).

Pay is rightly now structured differ-ently, with bonuses deferred to alignshareholder interests with staff com-pensation and to allow banks to can-cel payouts if they turn out to havebeen based on false or excessivelyhopeful accounting. We still urgentlyneed proper resolution mechanisms

and specially tailored bankruptcyrules to allow even the largest banksto be wound down without destroy-ing the overall economy or triggeringa Lehman-style panic in the event offailure, protecting depositors but wip-ing out bondholders, shareholdersand senior staff. There should never

be any more taxpayer bailouts.But the bonus cap plan is wrong. Itinvolves the biggest violation of theright of companies and employees tofreely determine pay since the priceand wage controls of the 1970s, huge-ly distorting price signals. What willstart with banks will end up beingapplied to everybody.

It wrongly assumes that successshould not be rewarded of course,badly designed contracts can incen-tivise bad outcomes, but the chal-lenge is to design contracts properlyand put in place strict monitoring sys-

apply these rules globally, whichmeans they will become utterlyuncompetitive in overseas locations.Some UK and EU universal banks mayhave to quit investment banking alto-gether. It may even make more sense,under these rules, for the likes ofBarclays to float their investment

bank in New York and move as manybankers out of the EU as possible.Given all of this, I have two ques-

tions: why are so many City firms stillso keen on the EU, given its apparentdetermination to inflict as muchharm as possible on London; and whyis the industry so shy at making itscase publicly and on the record, giventhat so many of its staff are about tosuffer the consequences?

Its truly baffling.

tems to prevent unintended conse-quences such as excessive risks,Libor-style fraud, or other improperbehaviour motivated by the hope ofmaking higher bonuses. Its not rock-et science to design a system thatworks; yet the EU wishes to throw outthe baby with the bath water.

The cap will lead to further boosts tobase pay, increasing fixed costs andrisk. When business volumes drop,the only answer will be to sack peo-ple, rather than cutting bonuses. Thisis tricky and will further increasecyclical risks for the banking system.A banker at a US, Singapore, Swiss

or Tokyo branch of a large non-EUbank will be able to earn a largebonus, but not those in the Londonoffice. People doing the same job, inthe same team and performing iden-tically will be paid differently. Britishor European banks will be forced to

French-built Rafale fighter jets infavour of the part-British Eurofighter,which he calls a superior aircraft.

It appears that the UK is just as likelyto lose a major defence contract withthe Indian government. On FridayNew Delhi said it wanted to cancel a480m deal to buy a dozen helicoptersfrom Anglo-Italian businessAgustaWestland, which has a majormanufacturing base in Yeovil, overallegations of bribery which haveresulted in the arrest of the companyschief executive Bruno Spagnolini.The Prime Minister insisted the man-

ufacturer was an excellent companywho make brilliant helicopters andsaid Britains Serious Fraud Officewould decide whether to investigatethe allegations.

Cameron also said he wanted Britishbusinesses to help develop the corridorbetween Mumbai and Bangalore, aswants the rules on the operations offoreign chains to be relaxed pavingthe way for businesses such as Tesco toexpand in the country.

Representatives of major firms suchas BP, BAE Systems and the LondonStock Exchange are also on the trip.

WHAT THE OTHER PAPERS SAY THIS MORNING

IN BRIEFOscar Pistorius back in courtn South African athlete Oscar Pistorius

is due back in court today to apply forbail after being charged withmurdering his girlfriend. Model ReevaSteenkamp was found shot dead in hisPretoria home in the early hours of lastThursday. Police say Steenkamp waskilled by more than one gunshot, thatPistorius, 26, was the only suspect andneighbours heard earlier disturbances.Pistorius stated he disputes the chargein the strongest possible terms.

Greece fails to cut state payrolln Greece yesterday refused to firealmost 1,900 civil servants earmarkedfor possible dismissal, despitepromising foreign lenders it wouldseek to cut the public payroll. Workerswere put last year into a labourmobility scheme, meaning theywould receive about two thirds of

their salary and be dismissed within 12months if no other public sector jobswere found for them. Yesterday aGreek ministry found 2,400 vacancies.

Spain to take over small lendern The Spanish authorities will take amajority stake of 65 per cent in small,unlisted lender BMN after a cashinjection and the conversion of sharesinto capital, a source said yesterday. Ina statement to the Spanish stockexchange regulator released earlier onMonday, BMN had said the country'sbank restructuring fund would convert915m (788.7m) in preference sharesinto capital as well as fully subscribe acapital increase of 730m.

Find your next step at CITYAMCAREERS.com

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THE Big Four accounting firms will

learn this week whether the UKCompetition Commission plans toshake up the industry to givesmaller challengers a better shot at

winning audit work.KPMG, PwC, Ernst & Young and

Deloitte, which together audit allbut a handful of Britains biggestfirms, have told the commissionthat the industry is alreadycompetitive, giving firms adequatechance to change auditor.

The House of Lords found in 2011that the average listed companykeeps the same auditor for 48 years.

What were hoping for is apackage of interconnected reformsthat would help create a more levelplaying field, giving additional firmsa chance to prove themselves, saidDavid Herbinet, a partner at Mazars.

The commission, which started itsprobe in 2011 and has twice delayed

reporting its findings on the auditmarket for FTSE 350 firms, said ithopes to reveal its recommendationsthis week.

The findings will be closelyexamined by politicians in Europe,

who have drafted laws that wouldforce companies to rotate auditorevery six years.

The UKs Financial ReportingCouncil already wants firms to puttheir audit contract out to tenderonce a decade.

Anti-trust bodyto rule on auditwork this week

BY MARION DAKERS

THE BITTER battle for control at coalminer Bumi was blown wide open yes-terday as a key Indonesian investorsold his 10 per cent stake just days

before the crunch vote, potentiallyscuppering co-founder NatRothschilds bid to gain control of thecoal miner.

Recapital Group, which owns 13 percent of Bumi voting rights, offloadedits stake yesterday just days before theemergency meeting on Thursday,

where investors will vote on proposalsby Rothschild to remove 12 out of 14current directors.

Controlled by former Bumi non-

executive director Rosan Roeslanis,Recapitals stake has been sold to the

Tanoesoedibjos family Flaming LuckInvestments and to hedge funds

Avenue Asia Capital Management andArgyle Street Management. Sourceswith knowledge of the situation saidthe last-minute share sale could provepositive for the Bumi board.Yesterdays sale lifts voting restric-

tions on the shares. The UK TakeoverPanel ruled in December that majorIndonesian shareholders the Bakrie

Bumi stock saledeals blow to

Nat RothschildBY CATHY ADAMS family and Roeslani should be consid-

ered a concert party and have theirvoting power reduced to 29.9 per cent.

Recapital said in a statement yester-day that the Takeover Panel confirmedthe buyers of Roeslanis shares are notconsidered a concert party with theBakries, which is likely to tip the votein Bumis favour.

Many investors have already showntheir hand in advance of this

Thursdays meeting.Schroders, Taube Hodson Stonex and

Artemis are three large shareholdersthat have declared support forRothschild. And, St Jamess MasterFund, led by Rothschilds cousin TomDaniel, has recently bought shares in a

move understood to have raised theircombined stake to 25 per cent.

However, hedge fund Route One hasspoken out in favour of the board.The Abu Dhabi Investment Council

is one of the last Bumi investors yet tovoice support for either side, but itsfour per cent holding could be enoughto sway the vote.A spokesman for Rothschild had no

comment yesterday.Shares in Bumi closed up 4.4 per

cent.

AUTOMOTIVE icon Ferrari shiftedup a gear in 2012 despite atroubling world economic climate,

boasting its best ever sales.The legendary carmaker enjoyed

record sales in the US, Germany,China and the UK, selling 7,318road cars 4.5 per cent up on2011 and turning over 2.43bn(2.1bn).

And despite poor economicconditions in the UK, US andEurozone, most of the companys

growth came from these maturemarkets and not rapidly growingChina, Ferrari said.

Ferrari races to all-time recordof 7,318 car sales despite crisis

BY BEN SOUTHWOOD Sales in the UK soared 20.4 percent between 2011 and 2012, thefirm said, while sales climbed 14.6per cent across the US and Canada,and 8.2 per cent in Germany.

Similarly, Japanese customersbought 14.4 per cent more Ferrarislast year than the year before.

By contrast, China, Hong Kongand Taiwan only boosted theirFerrari purchases by four per cent.

This sales boom drove pre-taxprofits up 12.1 per cent, to reach350m, according to Ferrari.

This came as Ferrari was rankedthe worlds number one brand,ahead of Google, Coca-cola andPwC, in a list by Brand Finance.

TUESDAY 19 FEBRUARY 20133NEWScityam.com

The cheapest new Ferrari retails at around 150,000 in the UK

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BRITAINS battered retail sectorgained no respite this week as the lat-est research showed vacancy ratesremained stubbornly above 14 percent last year as retailers continue toshut up shop across the country.The Local Data Companys (LDC) lat-

est report published today showsvacancy levels fell slightly from 14.3per cent to 14.2 per cent last year,although this does not include the lat-est spate of collapses seen on the highstreet this year.

LDC warned last month that morethan 1,400 stores are now at risk ofclosure after Comet, HMV,

Blockbuster and Jessops among oth-ers entered into administration.The retail specialist, which surveyed

278,915 retail and leisure sites acrossthe country, said shopping centressuffered the highest average vacancyrate at 15.6 per cent.

Town centres had the second high-est average vacancy rate (14.2 per cent)followed by retail parks, which have

Shop vacancyfigures expose

UK retail woesBY KASMIRA JEFFORD

proved more robust at 8.8 per cent.Wales was the worst performing

country, with 18 per cent of its storeslying vacant at the end of 2012 fol-lowed by Scotland (15.5 per cent) andEngland, which was the best per-former at 13.8 per cent.

London, east Midlands and Yorkshire& the Humber were the only regionsto report a decline in the number ofempty stores. All other regions suf-fered a rise in vacancies, with the westMidlands hit the hardest.

The picture is one of increasingpolarisation of performance betweentown centres, shopping centres andretail parks in every part of the coun-try, Matthew Hopkinson, LDC direc-

tor said. Online is driving growth fora majority of retailers and so 2013 is allabout the supporting role that shops

will have as customer experience cen-tres and showrooms as much as trans-actions through their tills.

He added: Inevitably this meansfewer shops will be required... and assuch one can expect this divergence inperformance to grow.

4 NEWS cityam.com

ONLINE retail sales areendangering the profits of bricksand mortar stores and threateningto put commercial landlords out of

business, a new report claims.The boom in web business means

investors should tread carefullybefore investing in physical retailsales because there is unlikely to

be a return to the heyday of storespending, says the Market Edgeresearch paper, published by Axa

yesterday.According to Axa Real Estates

forecasts, a whopping 90 per centof future growth in retail sales inthe UK, France and Germany from

2012 to 2016 around 91.5bn(79bn) will be captured by online

Landlord profits under threat

from online growth, Axa warnsBY KASMIRA JEFFORD spending. And it warns that

investors have so far been unable tospot the weakening of physicalsales due to the shift online

because they have blamed therecession.

Axa believes current predictionsthat 25 per cent of total UK retailsales may be captured online by2020 are understated, with thefigure more likely to be 30 per cent.

Alan Patterson, global head ofresearch said: [These] conclusions...do not mean that retail as asector is a poor investment, butinvestors need to consider verycarefully whether the mediumto-long term risks associated fromexpanding online retail sales are

appropriately priced into the assetsthat they are buying.

THE NUMBER OF SHOP VACANCIES REMAINS ELEVATED IN THE UK

AVERAGE SHOP VACANCY INGREAT BRITAIN FELL FROM

WORST PERFORMING COUNTRIES

SHOPPING CENTRES

HAVE THE HIGHEST

VACANCY RATE

AVERAGE OF 15.6%

FOLLOWED BY TOWN

CENTRES (14.2%) AND

RETAIL PARKS (8.8%)

ALL REGIONS EXCEPTFOR YORKSHIRE& THE HUMBER,LONDON ANDTHE EAST MIDLANDSSAW A RISEIN SHOPVACANCY RATES

THERE ARE 35,516 VACANT UNITS ACROSS 1,914 RETAIL CENTRES

14.3% TO 14.2% CLOSED CLOSEDCLOSED

WALES18% 15.5%

SCOTLAND13.9%

ENGLAND

15.6%14.2%

8.8%

SHOPPINGCENTRES

TOWNCENTRES

RETAILPARKS

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EUROPEAN regulators threatenedaction against Google yesterday overrecent changes to the web firmsprivacy policy.

French data commissioner CNIL,which has led the EUs 27 data regu-lators in pursuing Google, yesterdaysaid the company had failed to ade-quately respond to demands tochange its privacy rules.

Last year, Googlemerged 60 policiesinto just one, allow-ing it to shareuser informationbetween servicessuch as Gmailand YouTube. Themove allows it totarget its advertise-ments more effective-ly, but regulatorsraised concerns that itwould place users atrisk.

In October,

Google faces EU

measures overprivacy policyBY JAMES TITCOMB they wrote to Google with a list of rec-

ommendations, and gave it fourmonths to respond.The company claims to have

responded to the regulators con-cerns, but yesterday CNIL said thatGoogle did not provide any preciseand effective answers.

In this context, the EU data protec-tion authorities are committed to actand continue their investigations.

Therefore, they propose to set up aworking group, led by CNIL, in orderto coordinate their reaction, whichshould take place before summer.The regulators have not yet claimed

that the policy is illegal under EU law.Our privacy policy respects

European law and allows us to cre-ate simpler, more effective services,

Google said. We have engaged fullywith CNIL throughout this process,

and we will continue to do so goingforward.

Margaret Hodge says the die are loaded in favour of the promoters of tax avoidance

Google, led by LarryPage, may face action

over privacy issues

TUESDAY 19 FEBRUARY 20135NEWScityam.com

THE ENVIRONMENT Agency is torelaunch the competition for amajor contract to build flooddefences after the process wasdelayed by the West Coast Mainlinefiasco.

The procurement process wasdelayed after last years decision toaward control of one of thecountrys main railway routes toFirstGroup. Existing operator

Virgin Rail successfully challengedthe decision in the court,highlighting major issues with thetendering process for large

government contracts such as theflood defences.

More than a dozen bidders are

thought to be interested in theflood defence contract and now

Flood defence contract delayed

after West Coast Mainline fiascoBY JAMES WATERSON face additional costs associated

with adjusting their bids.A spokesperson for the agency

said: We have slightly delayed thisprocurement process in order to

give complete transparency tobidders and will be re-issuing theinvitation to tender on 26 February.The new framework will beawarded in June 2013.

We do not believe that deliveryof flood defence projects will beheld up by the re-tendering and areconfident that the amount of new

work which bidders are required todo will be minimal.

Meanwhile discussions areongoing on a new deal to guaranteeflood insurance for all homes inBritain, with Conservative minister

Oliver Letwin locked in discussionswith industry representatives.

MPs demand tax avoiders arenamed and shamed by HMRCINDIVIDUALS who take part in taxavoidance schemes should have

their names made public by HMRevenue & Customs, according tothe chair of an influentialparliamentary select committee.

Labours Margaret Hodge MPsays the taxman should name andshame those who sell or use taxavoidance schemes, directingpublic anger at those who attemptto shelter taxable income fromthe state.

A report published today by

BY JAMES WATERSONHodges public accounts committeedraws parallels with last yearsbacklash over unusual taxarrangements at coffee chain

Starbucks, suggesting the weight ofpublic opinion should be harnessedto force tax avoiders to pay their billin the full.

Although HMRC does publishdetails of tax avoidance schemes thatdo not work, it does not currentlyname the companies who devisedthem.

The select committee report alsopoint out that while promoters ofsuch schemes are required to declare

them to HMRC under law, only 11companies have been fined for non-compliance in the last nine years,with the average fine being just

5,000.It is a game of cat and mouse andHMRC is losing, Hodge added.

In response an HMRC spokesmansaid: We are glad the report thepractices of promoters who sell taxavoidance schemes to wealthyindividuals. In the last year alone thecourts have ruled in HMRCs favourin multiple tax avoidance caseswhere over 1bn has beenprotected.

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IRISH food group Greencores shares

bounced back by eight per centyesterday after it said that tests hadfound no other traces of horsemeatin its products or at its conveniencefood sites.

Shares in the company sunk morethan 12 per cent at the end of lastweek when Asda withdrew its own-brand beef bolognese saucesupplied by the firm after it testedpositive for traces of horse DNA.

Greencore, which makes ownlabel sandwiches and chilledconvenience food for majorsupermarkets, said it has restartedproduction at its Bristol facilityafter a deep clean this weekend.

It said Asda remains supportive ofthe group and that it is workingwith suppliers and customers toinvestigate how the Chosen By Youproduct came to contain 4.8 percent of horse DNA.

Greencore riseson proof of nocontamination

BY KASMIRA JEFFORD

ENVIRONMENT minister OwenPaterson last night said food retail-ers will conduct tests for horse-meat in processed beef productsevery three months, in an attemptto restore consumer confidence inthe industry.

There was absolute determina-tion in the industry to restore con-fidence in their products, and Impleased to say we look forward tomeeting on a regular basis to makeabsolutely clear that when con-sumers buy a product they getwhat they bought, Paterson toldthe BBC, after spending yesterday

afternoon with representatives ofthe food industry.

In a meeting at Westminster dur-ing the parliamentary recess yester-day, Paterson met bosses from thebig four grocers Tesco, Asda,Morrisons and Sainsburys, as wellas representatives of the Instituteof Grocery Distribution and theFood and Drink Federation.

Meanwhile a survey of 2,200adults released yesterday by retail-er research group Consumer

Suppliers backquarterly tests

for horsemeatBY JAMES WATERSON Intelligence found that a fifth of

respondents said they had startedbuying less meat after traces ofhorse DNA were found in someproducts.The government has repeatedly

insisted that retailers must lead theway in convincing consumers tohave confidence in food labelling,with no sign that the scandal posesa health risk to consumers.The Food Standards Agency last

week said that an initial check ofmore than 2,500 processed beefproducts had found 29 cases ofhorsemeat contamination, all ofwhich had been previously reportedand the products cleared from the

shelves.The organisation is due to release

another tranche of results onFriday, with further updates due on1 March.

French meat processing firmSpanghero, which has been accusedof knowingly selling horsemeat asbeef, yesterday had its productionban partially lifted.

The French government said t hatit did not want ordinary workers tolose their jobs due to the crisis.

HAVE YOU CHANGED YOUR EATING HABITSBECAUSE OF THE HORSEMEAT SCANDAL?Interviews by Amy-Jo Crowley

I eat very little processed meat, so it hasntchanged my habit. I wouldnt be surprised if a

lot of people haveIts not a food safety issue, butpeople should know what theyre consciously eating.

These views are those of the individuals above and not necessarily those of their company

CHRIS DUNNEVOCALINK

No. I dont eat a lot of burgers and at the placesI eat, I tend to know what Im eating. Its not so

much about horsemeat, its about poor labelling andtraceability. If they get that sorted, it might help.

KHALID AZIZAZIZ CORPORATION

Ive a reputation for eating ready-made meals inthe office from nearby supermarkets. People

would laugh at me with good reason, now I see. So I tendto eat salads now or go to the Vietnamese restaurant.

ARCHIE MAITLANDACCENTURE

Owen Paterson met food industry executives at Westminster yesterday

CITYVIEWS

Greencore Group PLC

18 Feb12 Feb 13 Feb 14 Feb 15 Feb

105

100

90

95

80

85

110 p 100.0018 Feb

TUESDAY 19 FEBRUARY 20136 NEWS cityam.com

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CREST Nicholson kicked off its firstofficial day of trading on the LondonStock Exchange yesterday after thehousebuilder last week completedLondons largest public listing so farthis year at 553m.

Shares in the company edged downby 0.75 per cent to 262.38p still sig-nificantly above its original listingprice of 220p and up on the overallhousebuilding sector, which wasdown by more than one per cent.

Opening the London StockExchanges UK markets yesterday,Stephen Stone, Crest Nicholson chiefexecutive, said: Our listing is the firstsignificant IPO of 2013, and the posi-tive response we have received fromthe investment community is goodnews for our industry and the widermarket.

Shares have soared since their firstday of trading in the institutional orgrey market last Wednesday,although private investors were notable to buy or sell shares until theystarted trading with a full listing yes-

Crest Nicholson

rejoins marketwith 107m lift

BY KASMIRA JEFFORD terday. Stone and his wife Lesleycashed in over 2.5m worth of sharesfollowing its admission, the compa-nys prospectus shows.

Liberum analyst Charlie Campbellsaid Crest Nicholson is likely to receiveanother welcome boost as house-builders begin this week to releasetrading statements this week showinga positive start to the importantSpring selling season.The 50-year-old firms IPO marked a

return to the stock market, five yearsafter it was taken over as a result of themarket crash. Last nights closing pricevalued the company at around 660m.

BOTTOMLINE

MARC SIDWELL

Crest Nicholson boss Stephen Stone opened the London Stock Exchange yesterday

Crest Nicholson Holdings PLC

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Crest Nicholson started trading last Wednesday in the grey market, somost of the trading happened last week... I thought it would go well but I amsurprised the extent it has continued to trade well. Now with all the house-builders we are waiting to see how the spring selling season has kicked off. Ifthe world takes the view that the season has started well, Crests sharesare likely to benefit and rise further.

ANALYST VIEWS

Crest Nicholsons initial public offering went at a pretty sensible valua-tion and its great to see that it has been exceptionally well received and full ofthe blue-chip institutional shareholders. It hasnt surprised us that it has goneto a premium post the issue and the demand is testament to the attractions ofthe stock in terms of returns, geography, and management.

WHAT IS YOUR REACTIONTO CREST NICHOLSONS

MARKET DEBUT?Interviews by Kasmira Jefford

CHARLIE CAMPBELL LIBERUM

CHRIS MILLINGTON NUMIS

A weak pound helps UK exportsbut it risks a currency civil warAS David Cameron talks up Britishexports in India, it might seemgood news that the pound sankyesterday. A weaker currency makes

exports cheaper (to pay the price inpounds takes less foreign currency).In theory that boosts demand and,so the argument goes, rebalancesthe economy towards opportunitiesin emerging markets. It also boostsprofits for UK multinationals thatconduct most business overseas butreport in pounds.

But UK exports are higher-gradethan in the past and there isntmuch evidence todays buyers are

price-sensitive enough for this towork. Meanwhile, accounting tricksaside, on the home front we all feelthe cost of a weaker pound. Withthe UK high street in crisis, the lastthing we need are rising domesticprices, yet that is the other side of

the devaluation equation: a weakpound buys fewer imports, of bothraw materials and foreign-madeitems, raising the costs of consumer

goods. That effect is worsened byhigh inflation, not due to fall to theofficial Bank of England target fortwo more years according toBritains outgoing central bankgovernor Sir Mervyn King last week.

As fear recedes somewhat fromthe Eurozone, sterling has founditself exposed. Any theoretical shortterm boost isnt worth the longterm hurt to businesses andhousehold balance sheets at home.

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MANCHESTER Airports Groups

purchase of Stansted Airport is ontrack to close by the end of themonth, but the firm was hit by adebt rating downgrade fromStandard & Poors yesterday.

S&P lowered its rating on MAGfrom A to BBB, repeating itsconcerns that the 1.5bn purchase

will push the groups debt pile to900m, weakening its financial riskprofile from modest tosignificant.

The agency said it was alsowithdrawing its rating on MAG atthe firms request. The companydeclined to comment on why itasked S&P to end its debt coverage.

MAG and its new partner IndustryFunds Management have not yetmade public the debt structure oflast months deal, but it has beenreported that the firm has agreed a1.2bn club loan from 13 banks and

is mulling a bond auction within thenext 18 months.

As part of the deal, set to closebefore 28 February, IFM is buying35.5 per cent of the enlarged group.

Stansted dealprompts MAGdowngrade

BY MARION DAKERS

HEATHROW yesterday posted an 11per cent rise in adjusted yearly earn-ings thanks to a hike in airline fees, asits chief executive called for speedfrom the governments commissionon the future of UK aviation.

Revenues at Heathrow Limitedrose 8.1 per cent to 2.46bn in2012 despite flat passenger traf-fic of 87.4m.Adjusted earnings before

interest, tax, depreciation andamortisation jumped to1.27bn.The results included

Stansted Airport,

which was soldto Manchester

Airports Groupfor 1.5bn in

January.

Heathrow feelsneed for speed

as earnings riseBY MARION DAKERS Heathrow will use the proceeds of

the sale to pay down its debt pile,which last year rose 9.9 per cent to12.1bn.The group reported an unadjusted

pre-tax loss of 32.8m, down from255.8m in 2011.

Chief executive Colin Matthews saidthe group would prefer to hear the

Davies Commissions recommen-dations on air capacity before its2015 deadline.

In terms of timing, wed likethe decision quicker ... we think

its urgent, he said.Heathrow, owned by Spanish infra-

structure firm Ferrovial, last week setout its 3bn investment plan

for the five years to 2019.

Man Group shake up begins asEllis moves in to be presidentEMMANUEL ROMAN, the incoming

boss of Man Group, has alreadybegun making changes at the hedgefund ahead of officially taking thereins next week, appointing formercolleague Luke Ellis as president ofthe company amid a raft of changesto the companys executiveleadership.

Ellis, a big hitter once tipped totake the top spot at Man, will beformally named as president whenRoman starts on 28 February, buthas already taken up the mantleand now oversees the investmentactivities of all three Man divisions,its fund of fund business FinancialRisk Management (FRM), hedge fundGLG Partners and quant strategy

ALM, which comprises its biggestfund AHL.

BY MICHAEL BOW Ellis and Roman worked togetherat GLG before the hedge fund, co-founded by Pierre LaGrange, wassnapped up Man Group in a 2010mega deal.

As part of a series of changes thatwill see GLG employees move intomore senior roles at Man whenRoman takes over fromdeparting boss PeterClarke, AHL has beenmerged with ManSystematic Strategies(MSS). Man is alsounderstood to bemulling plans to renamethe unit.

AHL chiefexecutive Tim

Wong has beenmoved on to

becomeexecutive

chairman of the fund he founded,with GLGs Sandy Rattray steppingup to become chief executive.

Chief operating officer at GLGMark Jones has also been made co-chief executive of the unit along

with Teun Johnston. The changesmark an acceleration in moves toshow the market the firm is turningthe business around followingpoorer than expected performanceover the year.

At the start of January itappointed figures from global bondmanager Pimco to help direct itsGLG unit ahead of plans for freshfund launches. Markets cheered the

changes yesterday and sent thefirms stock up 1.86 per cent intrading to close at 109.6p.

New Man Group presidentLuke Ellis takes the helm

STRIKING union workers clashedwith police at Madrids Barajasairport yesterday on the first dayof a week-long strike over morethan 3,800 pending job cuts atBritish Airways sister airline

Iberia, part of London-listed IAG.More than 80 Iberia flights were

cancelled as workers at the carrierbegan a series of five-day walkoutsthat are expected to cost the

IAGs Iberia endures first day ofstrike action at its Madrid hub

BY CITY A.M. REPORTER airline and struggling nationaleconomy millions of euros in lost

business.Hundreds of workers flooded

into the airport to noisily protest,chanting and whistling, with one

group staging a sit-in. About 2,000people demonstrated outside the

terminal.Demonstrators waved Spanish

flags and banners saying Britishgo home. At least five peoplewere arrested.

More than 80 Iberia flights were cancelled yesterday as workers walked out


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Heathrow chief ColinMatthews wants a decision

FIRST Capital Connect deliversthe worst train service in Britain,according to a survey ofthousands of passengers byconsumer group Which?.

Virgin retained the top spot ina poll about value, punctualityand reliability, with a satisfactionscore of 67 per cent, closelyfollowed by the LondonOverground and C2C.

This compares to just 40 percent satisfaction at FCC, whosescore dips to 37 per cent oncommuter routes.

But it was Greater Anglia that

scored lowest with commuters,achieving just 36 per cent

First Capital Connect comes last in passengersatisfaction poll as Virgin retains the top spotBY MARION DAKERS

satisfaction in the annual surveyreleased yesterday.

First Groups other franchisesfared better, with the Great

Western line scoring 43 per cent,and the Transpenine Expressservice achieving an above-average score of 54 per cent.

More than half of the UKstrain companies had a score of 50per cent or lower, and a mere 22per cent of the 7,500 regular trainusers surveyed by Which? believethat services are improving.

Which? executive directorRichard Lloyd said: Passengerstell us they are fed up with trainsthat are delayed, overcrowded

and dirty. This is especiallydisappointing as many

commuters cant shop around orchange the company they travel

with.Train companies need to play

fair with their customers,especially when they are beingasked to pay more for their

journeys.The Association of Train

Operating Companies counteredthat a larger poll by watchdogPassenger Focus last monthfound that a record 85 per cent oftrain users are satisfied with theservice.

Rail fares rose by an average of3.9 per cent in January, with sometickets on unregulated journeys

soaring by as much as 12 per cent.

7/29/2019 Cityam 2013-02-19

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SPARE a thought for the latest intakeof trainees over at Berwin LeightonPaisner, who started last week. Thelaw firm is not only sending the freshrecruits off today for a relaxed day ofteam bonding at Army officer train-ing centre Sandhurst a video oftheir exploits will feature on the web.The charming title of the online

tribute? From the horses mouth putting our trainees through theirpaces at Sandhurst.

We send our new trainees toSandhurst every year, BLP partnerTim Smith told The Capitalist. It is afun and unusual start to their trainingcontracts but there is a serious sidetoo. It helps develop the team buildingskills that will be vital to their future

careers.One former Sandhurst survivor rem-

inisced on the experience: We board-ed the coach with mixed feelings ...excitement, fear and disgust at the6:30am departure time.At the end of the video trainees sing

enthusiastically: At Sandhurst we rollin the mud. We might have hurt ourknees, but its all good.

Presumably the lack of sleep, andnot the dirt-rolling, is the career prepa-ration the firm had in mind.BLP trainees at a Sandhurst sing-a-long

WHEN IS being chairman of aunit of one of the worlds most

prestigious investment banks notreally as powerful a job as it seems?When it is Lord Mandelsonschairmanship of Lazard International,

perhaps. The Labour Party broker andformer minister for business joinedLazard International as an adviser lastNovember but is yet to pick up aregistration from the FinancialServices Authority, which he wouldneed if he were to execute deals andgive advice to clients. Mandelson isthere merely as an adviser, TheCapitalisthears, and theres no needfor him to gain FSA authorisation.Unlike the previous chairman, LordMandelson does not work full time atthe bank. The units former chairmanwas Ken Costa, a seasoned dealmakerwho joined from UBS, and whoincidentally, is still registered with theFSA.

BANK of America Merrill Lynch,sponsor of the Tate Modernshighly anticipated Lichtensteinexhibition, is also backing a far lesstraditional venture an outdoor

graffiti art project.With the retrospective finally

opening this week, the firm isgetting involved with aLichtenstein-inspired art education

project with Graffiti Life acollective of tattooists and graphicand interior designers.

The collaboration will see 60young unemployed people who livein Southwark produce a giantpublic display on the outside of alocal building. Art appreciators willhave to wait until March to judgethe finished result for themselves.

Whaam! Merrill seeks street cred

with graffiti and tattoo project

BLPs trainees

told to march tothe firms tune

11cityam.com TUESDAY 19 FEBRUARY 2013

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

[email protected]

Lazard adviser Lord Mandelson

ESTATEOFROYLICHTENSTEIN/DACS2012

Roy Lichtensteins 1963 Whaam! installation at the Tate Modern

7/29/2019 Cityam 2013-02-19

12/27

EQUISTONE, the private equity

group, yesterday exited its majoritystake in oil and gas companyHydrasun after selling it to aBahraini-listed investmentcompany.

The sale, which comes over fiveyears after Equistone backed amanagement buyout of the firm,represents more than a 2.5xpremium to the firms originalmoney investment of 38m. Thefirm was valued at around 75m atthe time of the deal.

It is understood the buyer of thestake, listed alternative investmentmanager Investcorp, paid anenterprise value of around 145mto take on the company, which isbased in Aberdeen and started lifein 1976 servicing offshore oil rigs inthe North Sea.

Equistone held Hydrasun whosperformance is closely aligned to

oil prices over a period when oilspiked to $140 in 2008 beforefalling to $35 in the first part of2009. The firm grew revenues overthe period from 50m to 105m

Rob Myers, Equistone UKmanaging director, told City A.M.:The biggest decision we made wasto back the management team. Wemade a decision in 2009 to relocatebusiness premises and we startedhiring a number of key executivesto grow the business.

When the market was hard wespent a lot of time investing in thebusiness.

Yesterdays deal is the first sale bEquistone, which was spun out ofBarclays in 2011, since it closed itsfourth buyout fund last monthafter raising 1.5bn (970m).

Equistone exitsUK energy firmat a premium

BY MICHAEL BOW

EDMOND de Rothschild, the wealthmanager chaired by an heir of theRothschild banking dynasty, is tolaunch a UK merchant bank afterwinning regulatory approval for theplan.The new outfit, which was given

consent to launch by the FinancialServices Authority in mid-January,will be called Edmond deRothschild Private MerchantBanking and offer a range of corpo-rate advisory services to privatebacked companies, entrepreneursand family offices.

It will be the third arm of Edmond

de Rothschild Groups UK opera-tions, which also include EdmondDe Rothschild Securities andEdmond de Rothschild AssetManagement.

Despite not being ready totake on customers, the firmalready has staff working atthe company.

Edmond de Rothschild wasset up and named after thefather of current chairBenjamin de Rothschild.

He is the great, great, greatgrandson of Mayer AmschelRothschild, the originator ofthe Rothschild dynasty which

BY MICHAEL BOWnow runs to seven generations offinanciers.The merchant bank, which will not

hold client money but will offeradvice on mergers and acquisitionsand private share placings, is backedby a trio of heavyweight former pri-vate banking executives.

Christoph Ladanyi, ex-managingdirector at Lehman Brothers andBarclays Wealth, and RichardMadeley, who worked at JP MorganPrivate Bank are both partners at thenew merchant bank.

Former co-head of defunct advisorycompany Hawkpoint HenrikSchliemann is also involved, joininghis old partner Richard Briance, who

was the former chief executive anddeputy chairman of

Hawkpoint.Briance joinedEdmond deRothschild in2010.The move

to launch am e r c h a n t

bank harksback to thepre-Big Bang

era City whentasks now under-taken by invest-

ment banks weretraditionally carried

out by merchantbankers.

Leading Equistone Partners Europes sale ofHydrasun to Investcorp was the EquistoneUK managing director Rob Myers anddirector Tim Swales.The company used independent investmentbankers Simmons & Company InternationalLimited, which specialises in mergers andacquisition activity in the energy industry, asits lead corporate finance adviser on thedeal.Simmons, which was founded in 1974, has

four offices around the globe and about 150employees. The deal was advised out of itsAberdeen and London.Leading the deal out of Aberdeen wasSimmons & Company managing directorNick Dalgarno.Dalgarno, who graduated from theUniversity of Glasgow and subsequentlyearned a diploma in legal practice at theUniversity of Aberdeen, celebrates his tenyear anniversary at the firm this year, hav-ing joined in 2003.Prior to this, Dalgarno was vice president incommercial and legal at oil services compa-ny ASCO for three years.Before 2000, Dalgarno worked as a corpo-rate lawyer specialising in oil service M&Atransactions at Paull & Williamsons, a firmof solicitors in Aberdeen.

ADVISERS EQUISTONE DEAL

NICK DALGARNOSIMMONS & CO

WH Ireland snaps up 270m ofSeymour Pierce wealth assetsCITY broker WH Ireland yesterdayannounced it had swooped on theremnants of bankrupt brokerSeymour Pierce and snapped up itswealth management business forjust 25,000.

The acquisition struck betweenTenebris Realisations SeymourPierces moniker sinceadministration and WH Ireland

on Friday follows rival brokerCantor Fitzgeralds agreement tobuy substantial portions ofSeymour Pierce after it fell into

BY MICHAEL BOWadministration a fortnight ago.

WH Ireland chief executiveRichard Killingbeck said heexpected the wealth managementdivision, which has some 270m ofassets under management, to helpincrease the firms full year profits.

These came in at 2.2m last yearadjusted for impairments. Theassets acquired generated a profit ofabout 200,000 for Seymour Pierce,one of the oldest stockbrokers in

the City with a 130-year pedigree,last year.Part of our private client growth

strategy is to seek to acquire private

client teams and assets in existingWH Ireland office locations and thistransaction will add considerably toour London based assets undermanagement, Killingbeck said in astatement.

Cantor Fitzgerald took overSeymour Pierces broking businessat the start of February as part of apre-pack insolvency, adding 70clients and a host of analysts toboost its stock research coverage.

Grant Thornton was appointed asadministrator after the companyfailed to find a backer to bail outthe business.

IN BRIEF

UBS fund managers go passive

n UBS Global Asset Management is setto push into the passive managementspace for the first time, it saidyesterday. The outfit, traditionallyknown as an active fund manager, isbringing out a passive bond fund forinstitutional investors. The move couldput them into competition with otherbig passive management houses likeLegal and General InvestmnentManagement and BlackRock. The fixedincome fund is set to launch next monthor in April.

Vietnam Infrastructure in buyback

n Vietnam Infrastructure, the Londonlisted fund on the junior stock market,yesterday said it had bought more of itsshares as part of a pre-announced sharebuyback programme. The fund, formedin 2007 to invest in Vietnameseinfrastructure, bought one millionshares at $0.3225 a share, equivalent to$322,500 (208,491), it said in a stockmarket statement yesterday. It takes thefirms total buyback since last July to$5.7m, or 4.54 per cent of the totalshares in issue.

Benjamin de Rothschildis chair of the firm

Equistone UK managing director Rob Myers led the sale of Hydrasun to Investcorp

TUESDAY 19 FEBRUARY 201312 NEWS

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IN BRIEFBBC strikes hit flagship shows

n BBC staff yesterday disruptedprominent news programmes,including Newsnight and Radio 4sToday, by staging a 24-hour walk-outin a row over job cuts. Thousands ofstrikers picketed the corporationsoffices across the country in protestagainst the 2,000 jobs being axedacross the BBC under its restructuring.Prime Minister David Cameron insistedyesterday that the BBC is well funded.

BATM returns to annual profit

n Telecoms company BATM AdvancedCommunications returned to profit in2012, the firm announced yesterday.The London-listed company, which isbased in New York and Israel, providestechnology and equipment fornetwork builders such as NokiaSiemens Networks, its biggestcustomer. The company said itmanaged a profit of $0.7m (0.45m)on $107.8m of revenues.

BT and Barclays in Wi-Fi tie-up

n Barclays is set to become the firstbank in the UK to offer Wi-Fi in itsbranches. The bank is introducing theservice after reaching an agreement

with BT, which has thousands of itsown Wi-Fi hotspots around thecountry. Barclays hopes the move willencourage more of its customers touse banking services on their mobilephones and tablets. The service willcome to 1,500 Barclays branches.

SONY has slashed the cost of its PSVita handheld games console, sug-gesting poor sales of the device aheadof tomorrows crucial launch of thenext PlayStation.The company, which has previously

cut sales forecasts for the Vita, saidthe device would now retail for up toa third less than before in Japan,Sonys home market.The move comes as chief executive

Kazuo Hirai attempts to focus thecompany on gaming as sales of its dig-ital cameras and TVs decline.However, both Sony and its rivalNintendo have seen sales of portable

consoles hit by the popularity ofcheap and free games on smart-phones and tablets.The Vita, released

in the UK around12 months ago asHirai took thereins at Sony, isexpected to sell

Sony cuts pricesahead of crucial

console launchBY JAMES TITCOMB around 10m this financial year, lower

than previously forecast, although aweak yen is expected to have boostedsales outside of Japan, where Vitaprices are not yet being cut.

Sony will unveil its next home con-sole, expected to be named thePlayStation 4, at an event in New Yorktomorrow. The console will be morepowerful than its predecessor, and isexpected to have a touch-sensitive con-troller as well as being able to streamgames over the internet.

Crucially, the console is beingunveiled before Microsofts new Xboxconsole, and is expected to be pricedcheaper than the PlayStation 3 was

when it went on sale in 2006.

The console has since seen sales of70m, less than half that of its predeces-

sor, the PlayStation 2, whichremains the bestselling

home console of all time.

ITV shares hit six-year highs astakeover speculation returnsSHARES in ITV hit their highestlevels in almost six years yesterdayon suggestions the broadcaster

would be the latest target in a waveof blockbuster acquisitions.

The company has long been seenas an attractive property foroverseas media giants, and with amarket re-energised by recent dealsfor Virgin Media and NBCUniversal,ITV has been highlighted as apotential target, sending shares inthe company up 2.8 per cent

yesterday to value the FTSE 100

BY JAMES TITCOMB constituent at 4.85bn.The definitely tick the right

boxes, they are a very good businessand have cleared up a lot of theirproblems, Liberum Capitals Ian

Whittaker said yesterday. Peopleare feeling a lot more confidentabout free-to-air broadcasting andthere are people interested in theUK market.

Potential buyers could includeRTL, the European broadcasterowned by German media giantBertelsmann. The German companyis seeking to reduce its stake in RTLin a bid to f inance acquisitions.

ITVs shares last reached theircurrent level in 2007, when it was

believed to be a target for Apax.

ITV PLC


120

118

114

116

122 p120.3018 Feb


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Sony expects to sell 10mPS Vitas this year

LIVE TV CONTINUES TO DOMINATE WATCHING

BRITISH TV VIEWERS CONTINUE TO WATCH LIVE BROADCASTS IN

OVERWHELMING NUMBERS, DESPITE THE RISE OF ON-DEMAND

INTERNET SERVICES, SMART TVs, AND DIGITAL VIDEO RECORDERS,

ACCORDING TO FIGURES FROM THE BROADCASTERS AUDIENCE

RESEARCH BOARD. JUST 1.2% OF TV WATCHING IS DONE VIA

ON-DEMAND SERVICES, WITH CONSUMERS STILL WATCHINGMORE THAN THREE AND A HALF HOURS OF LIVE TV PER DAY.

ALTHOUGH HALF OF

HOUSEHOLDS NOW OWN

A DIGITAL TV RECORDERTWO-THIRDS OF VIEWING WAS ONCOMMERCIAL CHANNELS IN 2012,

WITH THE REST ON BBC

VIEWERS WATCH ON AVERAGE3 MINUTES OF CATCHUP TV

PER DAY ON LAPTOPS,

TABLETS AND SMARTPHONES

OF TV IS STILL

WATCHED LIVE90%

COMMERCIALCHANNELS

BBC

THE AVERAGE BRIT WATCHES

ROUGHLY THE SAMEAS A YEAR AGO

10 YEARS AGO THE AVERAGE WAS

4 HOURS AND 1 MINUTE

OF TV PER DAY3 HOURS AND

34 MINUTES

OF TV PER DAY

EQUIVALENT TO THREE HALF-HOURS SHOWS A MONTH

THE PUBLISHER of Readers DigestUS magazine has filed for

bankruptcy in America in an effortto cut its $465m (300m) debt pile.

RDA Holdings, the parentcompany of the 91 year-old generalinterest magazine, applied for themeasure on Sunday night in New

York, the second time the companyhas done so in four years. RDA saida restructuring would enable it tocut around 80 per cent of its debts,leaving it owing around $100m.

The restructuring, supported byWells Fargo, will see most of thedebt turned to equity.

RDA had also filed for

Readers Digest publisher filesfor bankruptcy over debt pile

BY JAMES TITCOMB bankruptcy in August 2009, citinga fall in advertising revenues as itsreaders shifted to the internet, butemerged the year after arestructuring. It had gone publicin 1990 but was sold to privateequity firm Ripplewood Holdingsin 2007 for around $1.6bn.

After considering a wide rangeof alternatives, we believe thiscourse of action will mosteffectively enable us to maintainour momentum in transformingthe business, RDA chief executiveRobert Guth said.

Readers Digest, which featuresrecipes, financial advice and healthtips, claims around 25m readers inthe US.

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IN BRIEFLand Secs submits Oxford St plansn Land Securities has submitted plansfor a new residential scheme onOxford Street, one of Londons busiestshopping streets, the property giantrevealed yesterday. The proposals,submitted to Westminster CityCouncil, will see Oxford House at theeast end of Oxford Street refurbishedand extended to provide 89apartments, including studios andpenthouses, on the second to ninthfloors, above two levels of retail space.

Lend Lease posts 39pc profit risen Lend Lease Corp, Australias largestproperty developer, posted a 39 percent rise in first-half net profitsyesterday, boosted by land sales on itsflagship A$6bn (4bn) BarangarooSydney waterfront development. Thecompany, which last month gainedplanning consent for its 1.5bnredevelopment of the Heygate Estatein Elephant & Castle, said net profitafter tax was A$302.3m comparedwith A$217m a year ago.

Grainger wins Newbury contractnWest Berkshire Council and Network

Rail have appointed Grainger toredevelop a 5.5 acre site in the centre ofNewbury, the residential landlord saidyesterday. The contract, worth between45m-55m, will see Grainger work upplans for a residential-led developmenton the site, which lies between therailway station and Market Street. It isbeing funded as a private sector projectthrough Grainger, with the land ownedby the council and Network Rail.

A JOINT venture between engineersCostain and Skanska has bagged aconstruction contract worth 110mto help Bond Street station cope withthe 70,000 extra passengers a day it isexpected to see once the Crossrailline is completed.The project will include building

two new ticket halls at the popularWest End shopping hub, as wellas providing step-free access to

both Underground and Crossrailplatforms.Around 155,000 people travel

through Bond Street every day, withtraffic expected to rise to more than

220,000 once Crossrail is running.The Costain and Skanska joint ven-

ture was awarded the initial con-struction contract for the West EndCrossrail station in 2011.

Since 2010, the joint venture haswon seven Crossrail contracts, includ-ing working on Paddington Station,

work around Eleanor Street and MileEnd shafts in east London and thePudding Mill Lane portal in theDocklands.Work on the Bond Street station

Costain snagsBond St deal

with SkanskaBY CATHY ADAMS improvements will start this month

and is expected to complete inFebruary 2017, ahead of Crossrailsopening the following year.

This contract further contributes tothe strength of our order book, whichcomprises approximately 90 per centrepeat business, Andrew Wyllie, chiefexecutive of Costain said yesterday.

Crossrail, which was finallyapproved in 2007, will linkMaidenhead and Heathrow to the

west of London, to Shenfield andAbbey Wood to the east, using 21kmof new tunnels under central London.

Shares in London-listed Costainclosed up 3.42 per cent yesterday at272p.

Bond Street is getting an 110m makeover to cope with Crossrail traffic

Costain Group PLC

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272

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278 p272.0018 Feb

TUESDAY 19 FEBRUARY 201315NEWS

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INVESTORS at last believe theEuropean economy is on the righttrack, with investment beginning toflow back into the stricken continent,surveys and data showed yesterday.

For the first time since 2010, a Fitchsurvey showed more investors areoptimistic than pessimistic, as respon-dents were swept up on a wave ofnew year enthusiasm.

Market sentiment had been weakover the past years with the sovereigndebt crisis raising fears that countrieslike Greece and Spain could leave thesingle currency, as well as uncertaintyover governments bailouts.

But markets appear to have calmeddown, particularly in light ofEuropean Central Bank (ECB) promis-es to buy bonds of bailed out nations.A total of 51 per cent told Fitch they

now expect the Eurozone to muddlethrough rather than break up, asharp improvement on the 31 percent in the July 2012 survey.And ECB data showed an improve-

ment in investment flows into thecurrency area.

Net portfolio investment inflowscame in strong in the year toDecember, with a net 82.4bn(71.1bn) in equity investments and

Investors start

to regain faithin the EurozoneBY TIM WALLACE

28bn in bonds and notes.Those inflows more than outweigh

the net outflows of from money mar-ket instruments and direct invest-ment, leaving net investment flows at13bn for the 12-month period.

But Fitch warned the growing signsof recovery do not mean the crisis isentirely behind the Eurozone.

Volatility will stay high, andinvestor confidence will not be fullyrestored until a tangible economicrecovery is underway, it noted.

Policy momentum towards a deep-er economic and monetary unionneeded to secure the Eurozones long-term viability will probably slow in2013. This is in part because marketpressures have receded, but also due toother factors such as the approach ofGerman elections.

ECB boss Mario Draghi says the euros strength is pulling down inflation too far

IN BRIEFFrance plays down budget worries

n The French government will waituntil the European Commission releasesnew growth forecasts before updatingits borrowing plans, finance ministerPierre Moscovici said yesterday. He didnot rule out adding to the 60bn cutsplanned, but did argue pushing backthe three per cent deficit target wouldnot be a serious concern. I dont thinkour credibility will be damaged ifsomething exceptional intervenes,Moscovici said. Credibility lies with thestructural deficit above all. It comesafter Prime Minister Jean-Marc Ayraultlast weak said weak growth waspushing the deficit goal out of reach.French GDP shrank 0.3 per cent in the

final quarter of 2012.

Natixis shares up on dividend plan

n French investment bank Natixis sawits shares leap 22.47 per cent yesterdayafter announcements it will pay higherdividends to investors. The institutionhad to be rescued in a government-backed merger in 2009, but is nowplanning to ownership changes thatwould improve payouts forshareholders. It plans to get rid of its 20per cent stake in a group of savingsbanks tied to its parent firm BPCE,freeing up capital and allowing a one-off 2bn (1.73bn) dividend. The bankwill shift the stake by selling 12bn ininvestment certificates which gave it aone-fifth ownership of the retaillenders. It comes ahead of a three-year

plan to be unveiled later this year.


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Draghi warns currency war mayhurt European growth this yearTHE STRENGTH of the euro risksharming economic growth and

pulling down inflation too far,European Central Bank boss MarioDraghi told Europeanparliamentarians yesterday.

The bank president hit out at talkof a currency war between states

vying to push down their exchangerates and improve their economiescompetitiveness, insisting thepolicies affecting currencies are

validly targeting growth.But he also said he will keep a

BY TIM WALLACE close eye on the euros value as itcould hurt the blocs emergingeconomic recovery.

Most of the exchange rate

movements that we have seen werenot explicitly targeted, they werethe result of domestic macroeconomic policies meant to boostthe economy, Draghi said.

In this sense, I find reallyexcessive any language referring tocurrency wars.

The G20, which met in Moscowlast week, argues that exchangerates must not be targeted explicitly,

with policies that devalue a

currency only used for other ends,with the side effect of cheapening acountrys exports.

Quantitative easing has played a

major part in driving down thesterling, yen and US dollar, makingthe euro more expensive.

And with Japans central bankadopting a new, higher inflationtarget, downward pressure on thecurrency is set to increase.

We will have to assess in thecoming projections whether theexchange rate has had an impact onour inflationary profile, Draghisaid.

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IN BRIEFBAE wins $23m Oman contractn Defence group BAE Systemsyesterday said it had snapped up a$23m (14.8m) contract with theOman government. The deal will seeFTSE 100-listed BAE provide supportequipment, test systems and sparesfor the fleet of F-16 aircraft operatedby US allies. BAE will develop and

deliver the equipment at its FortWorth plant by early next year. InDecember, BAE signed a deal, to startin 2017, with Oman to supply aircraft.

Amplats employees injuredn Nine Anglo American Platinumemployees were injured yesterdaywhen they were hit by rubber bulletsfired by security personnel during aclash between unions, the SouthAfrican-focused miner said yesterday.The employees were fired at near theSiphumele mine in the Rustenbergarea, outside Johannesburg. Threesecurity guards also sustained minorinjuries in the scuffle, but no-one wasfatally injured, the miner said.

Salamander in Thai well success

n South east Asia focusedSalamander Energy said yesterdaythat its offshore Thailand drillingprogramme was performing ahead ofexpectations. The first four wells, of its16 well-strong developmentprogramme, have encounteredbetween 495m to 530m of good-quality oil. In the year to date theBualuang field has produced 10,531barrels of oil a day, and full-yearproduction is slated to be between11,000 and 14,000 barrels a day.

DANISH brewer Carlsberg said yester-day it had scrapped its profit margintarget for eastern Europe, blamingvolatile markets and raw materialcosts, and dampening hopes theregion can offset sluggish demand inwestern Europe.

The worlds fourth-biggest brewersaid that sales growth had stalled inits key Russian market and the cost ofan efficiency drive in western Europewould cap earnings growth this year,sending its shares down as much asseven per cent.

Several events, both within andbeyond our control, have and will con-tinue to impact margins, Carlsbergsaid as it scrapped its target for anoperating profit margin of 26-29 percent for eastern Europe by 2015. Thegroup made an operating margin inthe region of 21.7 per cent in 2011.

Carlsberg did give a longer-term tar-get for average growth in adjustedunderlying earnings per share ofmore than 10 per cent per year.

However, it forecast operating earn-

Carlsberg hitby Russia salesand rising costs

BY HARRY BANKS ings this year would reach onlyaround 10bn Danish crowns (1.16bn)from 9.8bn in 2012.

Carlsberg said an efficiency drive inwestern Europe, which includes cen-trally managing all procurement, pro-duction, planning and logistics, wouldhurt in the short term. The revamp,while helping operating margins inthe region in the long term, will cost300-400m crowns this year, 400-500min 2014 and 500m in 2015, it said.

Fourth-quarter operating profitbefore one-off items was 2.15bncrowns, missing analysts average fore-cast of 2.3bn.

BIOTECH firm Phytopharm saidyesterday its major drug hope fortreating Parkinsons disease hadfailed in a clinical trial, the latestin a string of firms to disappointafter showing early promise.

Shares in Phytopharm fell morethan 80 per cent yesterday after itsaid its drug, Cogane, showed nobenefit over placebo in thetreatment of more than 400patients with early-stageParkinsons, a neurodegenerativedisease.

Chief executive TimSharpington said he wasdisappointed.

Cogane had demonstratedencouraging efficacy in a wide

BY CITY A.M. REPORTER range of industry standard pre-clinical models but this promisehas not translated into clinicallymeaningful efficacy, he said.

Phytopharm hoped itscompounds had the potential tobe a new class of t herapy forneurodegenerative diseases, motorneuron disease and glaucoma.Cogane demonstratedneuroprotective effects inpreclinical models, the companyhad said, with indications that itcould ease the symptoms and slowthe progression of Parkinsons, acondition where part of the brainbecomes more damaged over time.

Phytopharm said yesterday ithad halted all research and

development spending while itreviewed its drugs pipeline.

Analyst Paul Cuddon at PeelHunt said the result was a failurefor Phytopharms key asset, and heattributed no value to the groupsremaining pipeline of drugs.

Shares in the firm lost 81 percent of their value yesterday,closing at 1.9p.

Carlsberg


580

690

600

560

570

610 DKK 567.5018 Feb

Phytopharm PLC


10

8

4

2

6

12 p 1.918 Feb

TNT Express, whose $7bn (4.5bn)takeover by United Parcel Service

was blocked last month, reported afourth-quarter loss yesterday andsaid it was looking to sell troubled

businesses in Brazil and China.The collapse of the UPS deal

leaves the Dutch express deliveryfirm having to confront a weakEuropean market on its own.

It reported a net loss for the f inalquarter of 2012 of 148m, downfrom a loss of 173m a year ago on

TNT Express planning emergingmarket disposals on fresh losses

BY CITY A.M. REPORTER flat revenue of 1.86bn, whileanalysts had on average forecast anet profit of 32.2m on revenue of1.886bn.

There are many positive actionswe can take to improve profitabilityand we look forward to providing afull update on 25 March, saidBernard Bot, interim chiefexecutive. He also said the company

was looking to make disposalsabroad. Divestment opportunitiesfor our domestic activities in Braziland China are being secured," hesaid.

TUESDAY 19 FEBRUARY 201317NEWS

cityam.com

TNTs takeover by US peer United Parcel Service was blocked last month

BaringsThe asset management firmhas announced theappointment of AngusWoolhouse as global head ofdistribution. Woolhouse hasover 20 years experience inthe asset managementindustry, and has held senior

roles at Gartmore, Invescoand HSBC Asset Management.

ColliersThe commercial real estate services company has

appointed Mark Emburey as a director in its nationaloffices team. He has previously worked at Jones LangLaSalle, and was most recently a senior director atCBREs South East office agency.

RBC Wealth ManagementLuke Dugdale has joined Royal Bank of Canada as adirector in its London-based UK private client wealth

management team. Dugdale has 10 years experiencein private banking and has held senior roles at CitiPrivate Bank and UBS. He joins from Deutsche BankPrivate Wealth Management, where he was a seniordirector in charge of the London ultra-high net worthdesk.

Aon HewittThe resource solutions firm has announced theappointment of Dan Morris as a partner in itsinvestment consulting team. Morris joins from TowersWatson, where he was a senior investment strategyconsultant. He has previously worked at PwC andHSBC Actuaries and Consultants.

Faegre Baker DanielsKatrina Cooper has joined the law firm as a seniorsolicitor in its immigration and global mobility lawpractice. Cooper has spent the past six years as asenior solicitor and manager at Fragomen in London,where she was responsible for its regional

coordination centre for immigration advice.

CitationChris Morris has been appointed chief executive ofthe consultancy firm following its acquisition by ECIPartners in December 2012. Morris joins fromLateRooms.com, where he was most recentlymanaging director.

Cooke, Young and KeidanThe litigation firm has announced the appointment ofTina Asgarian as a senior associate. Asgarian waspreviously at off-shore law firm Babbe, where sheworked in high value commercial litigation.

WHOS SWITCHING JOBS Edited by Annabel PalmerCITY MOVES

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

Phytopharm plummets after

Parkinsons drug fails in trials

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a) Tell yourself you must get on withredecorating the bedroom

b) Sell the Wall Street index in anticipationof a stock market crash

Rising US debt levels are scraping

the ceiling again, do you:

In association with

LONDON REPORT

BRITAINS top share index fell

yesterday, with the miningsector hit by low commodityprices and a resurgence in

industrial unrest.However, the index remained above

the key support level of 6,300, keepingit around five-year highs.The mining sector was the main drag

on the FTSE 100, losing 0.9 per centafter copper fell to a three-week low.Volatile copper miner Kazakhmys

was a top faller on the index, lo

cityam 2013-02-19

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