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The Global MBA+Study on the Citys doorstep

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Local councget bigger sof fracking

SHALE GAS exploration wfurther boost by the govetoday, as local councils wthat they could keep 100 of business rates from desites.

The increase from the cper cent figure could be wto 1.7m per year for a tythe government claims.

This is very, very goodthe industry and local coKen Cronin, chief executiUK Onshore Operators GCity A.M. It is a significa

Research from the InstDirectors shows that shalinvestment could reach year and support 74,000 j

Companies such as Cua

IGas have already begunexploratory drilling at UKenvironmental campaignopposed to shale gas due fracking technique used,they claim causes earth t

Labours shadow energTom Greatrex warned thagovernment needed to fuaddress legitimate envirand safety concerns aboufracking to reassure the

The government confirbreaks for shale gas in DeAutumn Statement and scommunities would recei100,000 and one per cenrevenue from successful

A Local Government Aspokesman said todays ma step in the right directargued that more could b

compensate local commu

BY SUZIE NEUWIRTH

AND KATE McCANN

FTSE 100 6,739.94 +48.60 DOW16,437.05 -7.71 NASDAQ 4,174.67 +9.05 /$ 1.648 unc /1.206 -0.005 /$ 1.367 +0.007

BANKS CUT HOURS

FOR JUNIOR STAFF

Certified Distribution

from 28/10/2013 till 24/11/2

BY TIM WALLACE

THE LIGHTS GO OUT ON HMVS FLAGSHIP OXFORD STREET STORE

HMVS flagship store at 150 OxfordStreet closed its doors for the lasttime yesterday, almost 30 years afterit was first opened.The worlds biggest music store,which opened in 1986, will beconverted into a Sports Direct afterthe sportswear giant snapped up thelease to the 60,000 square foot shop.The troubled music retailer hasmoved back into its original shop at

363 Oxford Street as part of its newowner Hilcos efforts to cut costs.The smaller 20,000 sq ft store at thewest end of Oxford Street was wherethe very first HMV shop was launchedas His Masters Voice in July 1921, in aceremony presided over by thecomposer Sir Edward Elgar.Restructuring firm Hilco rescued HMVout of administration in April last yearin a 40m deal that included 141stores and more than 2,000 jobs.

The GlobaMBA+Study on tCitys door

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BLURS ALEX JAMES APPLIES TO TRADEMARKNEW DRINKS BRANDBRITPOP IS BACK

ISSUE 2,042 MONDAY 13 JANUARY 2014

BUILDING BRITAINInterview, Page 10The Capitalist, Page 11

A NUMBER of City banks are examin-ing plans to cut the hours worked byinterns and junior staff in their invest-ment banking units, City A.M under-stands, following criticism some areworking dangerously hard.

After months of intense scrutiny ofthe industrys practices, Barclays isthought to be considering increasingthe number of junior staff it hires.The move would spread the work-

load and cut hours, as part of a rangeof measures to ensure that junior staff

and interns do not burn out.The bank has long had graduate

development teams looking after stafffor their first year, as well as a buddyscheme to help new graduates gethelp from outside their immediateteams. The well-being of all of ouremployees is a top priority, said aBarclays spokesman.

Meanwhile Deutsche Bank is alsobelieved to be considering new guide-lines for interns working hours, againto make sure they have some time out-side of the office. Deutsche Bankdeclined to comment.The latest disclosures come after

Bank of America Merrill Lynch onFriday told interns to take at least fourweekend days off each month. Itissued new guidelines after a reviewof work practices, following the deathof an intern last summer.

Moritz Erhardt died in Augusttowards the end of a summer

internship in the investment bank, andis thought to have worked all night forseveral days. The 21-year old student waslater found to have died of natural caus-es, but his death sparked a fierce debatearound the treatment of young staff.

Goldman Sachs has told its junior

staff to take more time off, insistingthat they are away from the office

between 9pm on Friday and 9am onSunday each weekend, while JPMorgan is increasing the number ofstaff and interns it hires to spread theworkload more widely. The bank hasalso reportedly told junior staff theymust take one weekend per month

where they dont work at all.Banking internships typically come

with salaries of 40,000 or more on apro-rata basis and are a key route to acareer in investment banking.The positions are very desirable, lead-

ing to fierce competition betweenapplicants. Long hours are commonwith interns sometimes working all

night to get ahead of colleagues andimpress bosses and recruiters.

BOVIS CHIEF EXECUTIVE DAVID RITCHIE

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MONDAY 13 JANUARY 20142 NEWS

To contact the newsdesk email news@c

[email protected]

Follow me on Twitter: @a

ANOTHER day, another reportproviding yet more evidencethat Britains housing crisis isgetting worse. Countrywide

estimates that England will face ahortfall of 1m homes by 2021, half of

which will be in London and the SouthEast. The problem, of course, is thatour planning rules have throttledhouse-building in the UK,guaranteeing very low levels ofhousebuilding at a time when thepopulation is growing very quickly.

In other countries, and in otherndustries, when there is lots of

demand, and when prices are rising,upply increases but not in the UK

housing market. The result is thatprices and rents have shot up, com-pared with average wages: despiteearning 3,804 more per year than theaverage person nationally, the typicalLondoner is actually 4,027 worse offafter theyve paid for somewhere to

EDITORSLETTER

ALLISTER HEATH

Our booming population faces a crippling shortage of hom

live, according to the PricedOut pres-sure group.The shortage of property mirrors

shifting population movements: as theLondon economy continues to outper-form that of the rest of the UK, morepeople are moving here both fromthe rest of the UK and from overseas. Ofcourse, plenty of Londoners continueto move out, as they always have, buton balance London (defined as the 32boroughs and the City) is growing andcould soon break its historic 1939 popu-lation peak of 8.6m. The capitals popu-

lation had collapsed to around 6.8m inthe 1980s, after decades of urban decay,economic decline and general malaisein the pre-Big Bang era but has sinceshot back up to at least 8.3m in 2012(according to official estimates). It wasstill just 7.2m as recently as in 2001.

Between 2004 and 2013, Countrywidecalculates that the proportion of popu-lation growth in London and the SouthEast has increased sharply from 25 percent to 45 per cent. House builders havepartly followed employment and popu-lation growth but insufficiently so: 36per cent of all new build properties arenow either located in London or theSouth East, up from 26 per cent in2000. While housebuilding in the capi-tal remains below the levels it reachedprior to the recession a situationwhich remains hugely problematic atleast the decline has been less bad thanelsewhere.

In London, the number of new build

boom, reducing prices, alldreds of thousands of famtheir own homes for the firmaking it cheaper to rent.The government must

enough land is granted plamission, it must cut taxes annew projects to make moprojects profitable, and it mage self-build, making it easilies to arrange for their owbe built on their own plotsgiving big developers a rumoney, as is the case on theBritain urgently needs mhomes of the right kind in London, including in newunless the right reforms aplace, millions of younger eventually pay a very dear pshort-termism of our politic

developments is now at 68 per cent ofpeak 2005 levels and 81 per cent of2008 pre-crash levels. While thatsounds shockingly low to me, it ismuch worse elsewhere: in the SouthWest of England, housebuilding is at apathetic 57 per cent of peak levels andin the South East 55 per cent of peaklevels. It gets worse: new starts in theEast Midlands are at 36 per cent of peaklevels, while Yorkshire and theHumbers new starts are at 39 per centof peak levels.

It is good news that the Labour party,for one, now agrees that the UK hasbuilt too few homes over the past 30years. The present government hastaken some action, though notenough; housebuilding is on the riseagain, albeit not by enough. The worryis that Labours solution will be focusedprimarily on social housing yet thereal answer is to tap the private sectorto engineer a 1930s-style housebuilding

Business lending to boom

as UK recovery takes holdLENDING is set to rise in every area ofthe economy, analysts at EY forecasttoday, as the recovery finally givesbanks the confidence to supply morecredit.

No other European countrysbankers have so much confidence, thestudy found, underlining the strengthof the recovery in Britain.

Firms of all sizes and sectors in theUK are expected to benefit, withhealthcare, media and telecoms firmsparticularly likely to borrow more.The study of senior bankers found 74

per cent expect the UK economy toimprove, compared with 56 per centacross the EU as a whole.

British banks expect to cut their loanloss provisions compared withEurozone banks who are still hikingtheir likely losses on bad loans.

Other parts of the market arepropped up by government support,including the Treasurys Help to Buymortgage guarantee programme.

However EYs Global BankingOutlook, also out this week, warnsthese supports could make the currentspurt of mortgage growth unsustain-able.

Many are wary of encouraging toomuch growth in this sector at a timewhen interest rates are at an all-timelow, said the report.

reasury debt pledge on Scotland

he UK Treasury will today assume fullesponsibility for Britains 1.2 trillion debt stockn the event of Scottish independence, in anttempt to head off market jitters ahead ofeptembers referendum. Danny Alexander,reasury chief secretary, fears gilt investors couldtart demanding a risk premium in the coming

months on the grounds that some UK debt coulde transferred to a newly-independent Scotland

with no credit history.

Pay committee sees own fees rise

irectors who set executive pay at the U Ks

largest quoted companies have seen their ownfees rise up to 140 per cent in the past five years,according to new research. According to PwC, theprofessional services firm, median additionalfees for non-executives who act as members ofremuneration committees at FTSE 100 companiesincreased from 5,000 in 2009 to 12,000 in 2013.

JPMorgan vs Berlin transport authority

JPMorgan and BVG, the Berlin transportauthority, are set to begin a $200m High Courttrial over a complex credit default swaparrangement signed before the 2008 financialcrisis. The case will be closely watched as itrevolves around European public authoritiesusing complex financial instruments before thecredit crunch and similar cases will follow.

US firms told not to avoid UK tax

One of Britains biggest shareholders in Amazon,Google, Facebook and Apple has warned themnot to be so aggressive in avoiding UKcorporation tax in the wake of parliamentary andpublic anger last year. James Anderson, managerof the 2.6bn Scottish Mortgage I nvestment Trust,said the American companies were taking risks byso aggressively seeking to minimise their taxbills.

British firms herald new wave of drugs

A vaccine for malaria and treatments for cancer,ulcers, varicose veins and gout could revive thefortunes of Britains pharmaceuticals industry.

North sees fastest growth: Ian Powell

Companies in the North of England are nowgrowing at the fastest pace seen in any UK regionsaid Ian Powell, the chairman of top-fouraccountancy firm PricewaterhouseCoopers (PWC)He said PWCs regional offices in the North haveexperienced double-digit growth over the lastyear with a marked upswing in deals and a rise

jobs.

BP compensation appeal fails

An attempt by BP to block billions of dollars ofwhat it says are bogus compensation claimsrelated to the Deepwater Horizon Gulf oil spill hasbeen rejected by a US appeals court.

Swatch sales growth slows

Swatch Group reported its slowest agrowth in four years, but said businhigher this year as the key Chinese mrecovers and exchange rates stabilis

Neiman Marcus breach is sm

A credit card security breach that o cthe holiday shopping season at Neimappears so far to be smaller than theattack that compromised tens of miand debit cards at Target last monthto people familiar with details of theFewer than 1m were thought to be c

CITY hiring bounced back towardshe end of 2013 in new signs thathe finance sectors crisis era is

over, industry data show today.Recruiter Astbury Marsden

found 1,336 new jobs inDecember, up 67 per cent on theame month of 2012.At the start of 2013 job creation

was falling, but the increase in thefinal few months means the sectornow looks like it is recovering rises in November and Decemberbreak a 22-month spell of fallingrecruitment.

Last year saw 27,915 new jobs,

down 21 per cent on the year.However that fall slowed downfrom 2012, when recruitment fellby 35 per cent.

As a result Astbury Marsdenbelieves the market has bottomedout and is now on the way up.

The last couple of years haveeen the banks undergoing

fundamental restructuring, and inmost business areas they weremore likely to downsize teamshan to make plans to expand,aid recruiter Mark Cameron.

In 2013 that shrinkage haslowed down. What we are seeings very far from a return to

aggressive hiring, but it is a goodign that banks are thinking again

about growth.

Jump in Cityhiring as firms

bounce back

Bank of England governor Mark Carney has pulled back some mortgage lending supports

BY TIM WALLACE

BY TIM WALLACE

Such concerns have led Bank ofEngland governor Mark Carney to with-draw the Funding for Lending schemefrom the mortgage market, a pro-gramme which offers banks cheapfunds if they increase lending.The study also warned that the varied

new regulations from country to coun-try may reverse some of the globalisa-tion of recent decades, a s-calledBalkanisation of the financial system.

Variations may be justifiable at anational level, but they will force banksto rethink their global strategies as theplaying field becomes much less level,said the report. The benefits of aglobal banking system are also beingthreatened by the preference of somegovernments and regulators for whatsome term overreach, as evidenced bythe Eurozones attempt to introduce afinancial transaction tax.

WHAT THE OTHER PAPERS SAY THIS MORNING

BANKS won a welcome repyesterday after regulators aease the way a new rule, mrein in risky balance sheets2018, is compiled to try to acrimping financing for theeconomy.

The decisions, by the BasCommittees oversight bodlatest sign of how regulatobecome more willing toaccommodate banks as theswitches to helping economrecover. The relief to lenderhowever, be temporary as t

regulators signaled there isagreement on the final levnew leverage ratio, which mhow much capital a bank magainst its loans and other

The ratio was initially seper cent of capital but supefrom the US, Britain and elare pushing for a higher pra person familiar with the said. The ratio acts as a baclender's core risk-weightedrequirements. A ratio of thcent means a bank must hequivalent to three per centotal assets.

The final calibration, anfurther adjustments to thedefinition, will be complet2017, the group said in a s

Relief for bas regulatoeases debt

BY CITY A.M. REPORTE

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MONDAY 13 JANUARY 2014

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AGUAR Land Rover smashed its annualales record in 2013, helped by the soar-ng global demand for luxury Britishars that has revived the fortunes of the

UK motor manufacturing industry.The company, which sells 85 per centf its cars abroad, sold 425,006 vehiclesast year, a rise of 19 per cent.More than 348,000 Land Rovers were

old in the year, up 15 per cent, while6,668 Jaguars left the showroom, or a

whopping 42 per cent more than theprevious year.

In China, the firms biggest market,ales were up 30 per cent to 95,000. JLRaid it also had broken sales records in8 countries including Russia, Brazil

nd Korea.This follows Rolls-Royce Motor Carsnnouncement last week that China

was now equalling the US as its largestource of sales.British motorists bought 14 per cent

more cars bearing the Jaguar and LandRover marques last year, outstripping a

0.8 per cent rise in the UKs overall

UK car industryracing back as

Jaguar sales riseBY MARION DAKERS new car market.JLR, owned by Indian conglomerateTata since 2008 but based in Coventry,has bounced back from near bankrupt-cy over the last six years as new RangeRover models and growing clamour forthe Jaguar range revived sales.

Last month, JLR unveiled plans tobuild a new factory in Brazil to keeppace with demand from Latin America.It has also pledged to create 1,700 newjobs at its Solihull plant, as part of a2.75bn spending package this year.The Society of Motor Manufacturers

and Traders predicted last week thatBritains car factories will beat the pro-duction record set in the 1970s by 2017.The industry group is set to publish

2013 production data on 23 January,

with the figures expected to show thatmore than 1.5m cars were built inBritain, the highest level since beforethe recession and edging closer to the1.92m vehicles made in 1972.The UK car industry surpassed its all-

time export record in 2012, with 1.2mvehicles shipped abroad, or 83 per centof all cars made in the country.

A DEAL for Iran to freeze pnuclear program in returnsanctions relief will take efJanuary, giving world powTehran six months to agrecomplete end to a standoffraised the risk of a wider Mwar.

US Secretary of State Johcautioned that the next stanegotiations would be verafter Iran, Washington andyesterday announced the lfor the interim deal struckin November. Iran will receeasing of economic sanctioJanuary, including the susrestrictions on Iranian exppetrochemicals, a senior Usaid.

The official said such imrelief which will hinge oninspectors confirming thatcurbing enrichment of urawould include imports for

manufacturing sector and gold and other precious m

Shortly after the interimgoes into force, an Iranian said, the two sides will starnegotiating a final settlemtheir differences about actWest suspects is aimed at onuclear weapons capability

Curbs on Iranuclear actstart next w

BY CITY A.M. REPORTE

UK CAR PRODUCTION NEARS RECORD

2.5m

2.0m

1.5m

1.0m

0.5m

0905019793898581771973 13Estimate

1972 record

BRITISH CAR MANUFACTURING NEARS 1970S RECORD

19%425,006 VEHICLES

1.5%3,630 VEHICLES

19%10,120 VEHICLES

83%WERE EXPORTED

OF ALL CARSBUILT IN THE UK

IN 2012

*Figures for Bentley, Rolls-Royce and Jaguar Land Rover are for 2013

SOURCE: SMMT

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cit

Investment bank Moelis & Cois mulling a public offeringNVESTMENT bank Moelis & Co is

working with Goldman Sachs on apotential initial public offeringIPO), according to reports.

The New York-based bank,founded by Wall Street dealmakerKen Moelis, is assemblingpaperwork for its IPO, andworking on it with law firmSkadden Arps Slate Meagher &Flom and other advisers, the Wall

BY JENNY FORSYTH Street Journal reported. Moelis &Co was last night unavailable forcomment.

Moelis in November said it hiredformer Citigroup banker JonathanKaye to focus on its merger andacquisition practice andshareholder activism, in a sign thatinvestment banks want to be ableto advise public companies asshareholders look to shake upboardrooms.

The firm was founded in March

2007, after Ken Moelis steppeddown from his role as aninvestment banker at Swissfinancial giant UBS. He and otheremployees now hold an 85 per centstake in the firm, and institutionalinvestors own another 10 per cent,according to reports.

Moeliss recent deals includeBerkshire Hathaways takeover ofHeinz, SABMillers bid for Fostersas well as the pending merger ofOmnicom and Publicis Groupe.

BlackRock is supporting its portfolio manager Nigel Bolton against the regula

BLACKROCK said it has conducted afull internal investigation and foundno evidence to support allegationsthat fund manager Nigel Bolton isguilty of insider trading.

It emerged on Friday that Consob,the Italian securities regulator, hadlaunched civil proceedings againstBolton, a portfolio manager and headof BlackRock InvestmentManagements European equity team,accusing him of using non-publicinformation to sell around 2.3 per centof Saipems stock last January, justbefore the Italian oil services companyissued a profit warning.

Such matters would usually remainprivate, but Consobs letter was leakedto an Italian blog at the end of lastmonth, before BlackRock received it,City A.M. understands.

BlackRock conducted a thoroughinvestigation and found there is noevidence to support the allegations,said the asset manager in a statement.

We believe we have fully cooperatedwith Consob, and we will continue to

do soNone of our clients nor any of

BlackRock bacBolton againstItalian civil sui

BY SUZIE NEUWIRTH our funds will be affected bceedings.Troubled Saipem has h

share of scandals of late, ininvestigation into corrupthat prompted the resignchief executive Pietro Fran

firm, which issued two pings last year, denies any wwith regard to the probe.

Following the internal invBlackRock believes the saleon widely available publtion, as a number of analyssteadily reducing their eamates on Saipem.The final straw was thou

Barclays analysts researwhich slashed its earningon the stock.

BlackRock is believed toconfidence in Bolton andBolton will maintain in comulti-billion pound portfo

It is understood that therno dialogue yet betweenand Boltons other clients the dispute broke late on Fr

Consob was unavailable

ment yesterday.

PROFILE: NIGEL BOLTONBOLTONis generally heralded as one of theUKs leading fund managers, having demon-strated a stellar performance in his roles aschief investment officer of InternationalFundamental Equity and head of BlackRocksEuropean equity team.

He is responsible for the team investmentprocess and business development and forthe management of pan-European portfo-lios, adopting a flexible style.

He was awarded the Morningstar FundManager of the Year award in the Europeanequity category last March, where he waspraised for building one of t he strongestEuropean equity teams in the market.

Prior to joining BlackRock in 2Bolton was director and head ofEquities at Scottish Widows InvePartnership (SWIP). Prior to joinin 2004, he was with WP Stewaras head of European investment

From 1992 to 2003, Bolton waCitigroup Global Asset Managemhe was a managing director and European Equities.

Previously, he was a portfolio mwith Abbey Life Investment Servinvestment analyst with BZW anRedmayne Bentley where he begcareer in 1985.

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MONDAY 13 JANUARY 2014NE

ityam.com

Offer open to UK and Ireland residents over 18 years of age and subject to availability and booking dates. Sale ends 31st January 2014. Flight + hotel ofis per person, based on two people sharing for four nights, departing from London. Prices correct at time of print. The lastminute.com price match guasubject to conditions, and only applicable to products on other websites priced in pounds sterling and not on special offer. Visit www.lastminute.com for mor

Flights + 4 nights 4* hotel from 575

NEWYEAR,NEW

YORK.

Sale ends 31st January.

WM MORRISON is expected to resistalls by activists for a radical overhaul

of its property portfolio, insisting in-tead that it will make some modest

disposals within its freehold estate.In the aftermath of disappointing

Christmas trading figures last weekhe supermarket group has faced de-

mands from some dissident investorso take the knife to its freehold estaten order to buy back shares or rewardrustrated investors with greater divi-

dends.Britains fourth largest supermarket

group is due to update investors inMarch on a review of its 9bn property

portfolio, and has indicated that it willell and lease back some of its super-

markets and distribution centres.It owns the freehold to around 90

per cent of the portfolio much morehan any of its rival supermarkets nd a reduction of just 10 per centould raise as much as 800m.Activist investors including Elliot Ad-

Morrison resistscalls for radical

property plansBY KASMIRA JEFFORD visors, which has a stake of less thanone per cent, are said to be eyeing thecompany with a view to pressing itinto a more radical shake-up of itsportfolio.

But while Morrisons has indicated itplans to return some capital to share-holders, it insisted that it wants to re-main an overwhelmingly a freeholdbusiness.

Its vast freehold estate is a legacy ofSir Ken Morrisons reign, who saw itas key that it should retain ownershipof stores rather than become depend-ent on onerous lease agreements.The groups core institutional share-

holders are understood to be con-cerned over plans to sell off part of

its estate, preferring it to concentrateon other issues such as growing its on-line business and tackling discounters.

Morrisons, which has been ham-pered by the lack of online presence,launched its website last week and isalso aggressively growing its conven-ience store networkThe company declined to comment.

Morrisons boss Dalton Philips personally d elivered its first online grocery order last week.

Online fashion giant Asos set reveal sparkling Christmas saONLINE fashion giant Asos is set toreport a leap in sales of as much as38 per cent tomorrow thanks torising demand in Germany and astrong performance in the UK.

The online retailer is expected tohave bucked the gloom faced bymany bricks and mortar retailersthis Christmas, with Peel Huntanalysts predicting a 35 per centrise in UK retail sales in the first

BY KASMIRA JEFFORD four months of the year.The launch of a new mobile

Android app and the addition ofnew brands such as New Look andRiver Island is also expected to havefurther lifted sales in its homemarket.

Asos participation in Germanytelevision show Fashion Hero isexpected to have raised its profileand boosted sales in the country.

Overall European sales arepredicted to have increased by as

much as 72 per cent.The US was Asos fastes

division last year. Howeveexpected to have slowed abrands were not pricedcompetitively enough.

Meanwhile Peel Hunt iforecasting a 23 per cent its Rest of World division.

The Aim-listed group, wseen shares rise by more tper cent over the past yeatargeting 1bn sales by 20

THE debate being waged overwhether Morrisons should sellsome of its freehold estatesurely misses the point about

he grocery chains future. There isothing wrong with the structure ofMorrisons estate that a littleinkering can not remedy. And it

will remain, as it has insisted,overwhelmingly freehold that iss long as activist investors such aslliot Advisors do not push it to gourther.

Rather it is Morrisons late entrynto the online grocery business,

which it is tackling with the Ocadoeal, and its poor trading in itstores that it needs to address first.

Rapidly growing competition fromhe discounters Aldi and Lidl shoulde at the top of chief executive

Dalton Philips list of priorities.Operating in Morrisons northern

eartland, this Christmasighlighted how much of a threathe discount retailers now pose,

with Philips admitting himself thatthe group missed out as customerschose to stay put with discountersrather than trade up as manyusually do over the festive period.

Growing its convenience estateand investing in a more up-to-datevouchering system to rival those ofSainsburys and Tesco are pressingissues Morrisons needs to tackle tosafeguard its future in the war ofthe supermarkets.

Preserving a majority freeholdestate may have been top of Sir KenMorrisons priorities during 50-yearreign, but Philips has more urgentissues at hand.

BOTTOM

LINEKASMIRA JEFFORD

Supermarket needs to focus onweb and sales, not real estate

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Labour to focus on smaller firmsand sites in new housing planLABOURS shadow housingminister Emma Reynolds willannounce a new housing policyoday and admit that the UK has

underbuilt for the last 30 years,ncluding under previous Labour

governments.Reynolds will address the

National House Building Council,where she will unveil Labours

BY KATE McCANN Build First policy, a scheme toencourage more competition in the

construction sector by boosting thenumber of homes built by small andmedium-sized companies. The nextLabour government will requirelocal authorities to include a higherproportion of small sites in theirfive year land supply, she will say,adding: We will give guaranteedaccess to public land to smallerfirms and custom builders.

The shadow minister will alsoconfirm Labours commitment to

new towns and garden cities butwill admit that house-building hasbeen too low for 30 years.

Conservative housing ministerKris Hopkins criticised the scheme,calling it: The same old recipe oftop-down targets which buildnothing but resentment, more taxesand more debt.He said building isnow at its highest since 2007.

NICK CLEGG would support the princi-ple of a two-year ban on EU migrantslaiming benefits, he indicated yester-

day.Speaking to the BBCs Andrew Marr,

he Deputy Prime Minister said: Imup for establishing a clear principlehat says the freedom to move aroundhe European Union to look for works one thing, but its not the same ashe freedom to claim benefits on day

one no questions asked, no stringsttached.The proposal to restrict access to gov-rnment support has been mooted byecretary of state for work and pen-

ions Iain Duncan Smith, and couldpotentially prevent EU migrants fromlaiming benefits for up to two years.

Duncan Smith told the Sunday Timesnewspaper that the UK should be freeo ask migrants to show their commit-

ment to the country, adding: At thatparticular point... it could be a year, it

Clegg: I wouldsupport benefit

ban for migrantsBY KATE McCANN could be two years, after that, then wewill consider you a resident of the UKand be happy to pay you benefits. Healso confirmed that he is currentlyworking with Germany, Italy, theNetherlands and Finland on plans tocurb benefits tourism.The ministers proposal goes much

further than the one recently floatedby Prime Minister David Cameron,who raised concerns about the legalityof extending the amount of time EUmigrants could be prevented fromclaiming benefits. The plans have alsocaused a stir in Brussels, with the pres-ident of the European parliamentwarning that free movement is a fun-damental principle of membership.

Clegg also voiced his opposition toCamerons bid to remove housing ben-efit for under-25s during his interviewwith Marr yesterday, accusing the gov-ernment of proposing a Chinese-stylefamily policy saying that the state saysWell, its OK to have two children. Itsnot OK to have three children.

BILLIONAIRE businessman PeterCruddas has joined the board ofBusiness for Britain, anindependent group campaigning

for a better deal from the EU.Cruddas is one of eight new

board members at the group,headed up by Matthew Elliott,founder of the Taxpayers Alliance.Other new faces include AdrianMcAlpine, partner at Sir RobertMcAlpine; Robert Hiscox, honorary

Peter Cruddas joins Business forBritain in January board revamp

Businessman Peter Cruddas has joined the board at campaign group Business for Britain.

BY KATE McCANN president at Hiscox and BrianKingham, chairman of the RelianceSecurity Group.

Elliott said: The debate onBritains relationship with the EU isheating up and the impressive list

of names signed up to Business forBritains new board shows thebusiness community is looking toget engaged. He added that thegroup would shortly bring forwarda proposal for a renegotiation of EUmembership and urged thegovernment to take note.

YOUNG workers moving to citieswith better job prospects are payingwhopping extra rental charges,

outstripping the effect of higher payin more prosperous areas.An average income in London is

460 higher per month than inEngland generally, but a typical one-bedroom flat is 648 per monthmore expensive to rent, drainingaway the capitals bigger salaries.

Research released by housingcampaign group Priced Out reveals

Workers in top job cities srents outstrip higher salar

BY MICHAEL BIRD the major squeeze on incopeople moving for employopportunities.

In less expensive cities lRochdale, renting a one be

flat makes up around 21 pa median income, against cent in Cambridge, 41 per Oxford and an eye-waterincent in London.

We desperately need mbuilt in places where jobs created to ease the pressurrents, commented Dan WCraw, spokesman for Price

THE HOUSING supply crisisEngland means the countrya shortfall of 1m homes in jyears, with half the neededin London and the south ea

Countrywides quarterlythe housing market, releasshows how the demand forhas steadily climbed since tfinancial crisis.

While there were only 6.each house on the market iNovember 2008, and 8.5 in 2012, the same month last 9.7 potential owners chasin

Despite the increase in dconstruction of homes is stthan before the financial crLondon, where house priceincreasing most quickly, reconstruction is still only at of the pre-2008 constructio

The latest forecast from tConstruction Products Asso(CPA) is that the sector will than the wider economy in

two years, projecting a 3.4 pexpansion in 2014 and 5.2 phigher output in 2015.

The CPA also shows how sector has been damaged inyears as private commerciadropped by 33.1 per cent be2008 and 2012 .

Building plnot enoughstop shortf

BY MICHAEL BIRD

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Genel Energy PLC

JanDec

1,200

1,080

p

1,040

1,113.0010 Jan

Uphill climb: Debt-laden Premier Foods is in talks with potential investors in Hovis

Gores close to taking a sliceof Hovis from Premier FoodPRIVATE equity company GoresGroup is eyeing up a slice of breadbrand Hovis as part of its parentcompanys restructuring efforts,according to reports.

Current owner Premier Foodshired Ondra Partners severalmonths ago to look at options forthe bread company, and Gores isseen as the frontrunner to become apartner in Hovis turnaround.

BY MARION DAKERS The American private equitygroup, founded by buyout veteranAlec Gores, is in talks to take amajority stake in Hovis and injecttens of millions of pounds into thebusiness, the Sunday Times reportedyesterday.

Premier, which reported a debtpile of 890.4m at the end of June, isalso planning talks to cut its 395mpension deficit and is weighing up arights issue.

In October the groups chief

executive, Gavin Darby, sano plans to sell the Hovis boutright, and was focusedexpanding it.

The business has struggcompete with Kingsmill anset out plans to shut threeand two mills.

Premier Foods, which alAmbrosia, Bisto and Mr Kideclined to comment yesteGores did not respond to afor comment.

NAT ROTHSCHILD and five otherounders of Genel Energy are edgingloser to receiving a bumper bonus

payout, if shares continue to reachecord highs.The billionaire financier and other

ounders who include former BPhief Tony Hayward will receiveround 100m in total, if shares in

he Kurdistan-focused oil explorerlose higher than 12.50 for 20 trad-ng days out of 30.The exact amount the founders

would receive depends on the averagehare price across the period, but

Rothschild would be likely to collectround 50m.Shares in the London-listedompany hit 11.13 last week, withnvestors clamouring to buy the stockfter a number of analysts publishedncouraging research reports. Someaised their target price on the stocko 12.50 or higher.Genel is a hydrocarbon leader in

he Kurdistan Region of Iraq (KRI), inerms of current/projected oil and gas

Genel founders

on the verge of100m payout

BY SUZIE NEUWIRTH production, diversity of licenses andremaining upside potential, andthrough its strong Turkish and KRIrelationships, said CanaccordGenuity, which raised its target priceto 12.50.

Genel was given a boost last weekwhen the Kurdistan regional govern-ment announced plans to being pip-ing oil to Turkey without the Iraqicentral governments approval.

Kurdistan has previously beenunable to exploit its burgeoning oilindustry as Baghdad insisted itretains control over Iraqs energyresources.

IN BRIEF

Chinese shoppers boost Ferragamo Travelling Chinese shoppers snapping upleather goods will drive sales growth in 2014 atluxury group Salvatore Ferragamo, its chiefexecutive said yesterday, before it s howed amenswear collection aimed at promoting itsItalian heritage. Michele Norsa said the group hadclosed 2013 in line with its expectations, but that itwas important to wait until Chinese New Year inJanuary to make forecasts for the year. Travellingkeeps being a strong driver of growth, Norsa toldreporters before the show in Milan, singling outChinese tourists to Europe and the US.

British firms order Scania trucks

Scania has received an order for 1,500 trucksfrom British transport companies Eddie Stobart

and A.W. Jenkinson Forest Products, the Swedishtruck maker said yesterday. The order, Scaniasbiggest in Britain ever, will be filled over twoyears and follows a new joint-procurementagreement between Scania and the twocompanies, Scania said in a statement. Scania,majority owned by Germanys Volkswagen,received orders for 59,405 trucks in total duringthe first nine months of 2013.

Accenture picked for Obamacare

Accenture has been chosen to replace CGIFederal as the lead contractor for the Obamacareenrolment website, which failed to work when itlaunched in October for millions of Americansshopping for health insurance, the US Centers forMedicare and Medicaid Services announced overthe weekend.

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Business records top quarter forgrowth in 12 years as 2013 endsTHE LAST quarter of 2013 saw thebiggest jump in business activityrecorded in over a decade, as amajor survey of firms suggestedhat the economic climate has

warmed across the country.Lloyds Banks purchasing

managers index (PMI) for Englandand Wales hit 60 in December,with a score over 50 indicating an

BY MICHAEL BIRD improvement in conditions forgrowth. Even Yorkshire, the region

with the lowest score, had areading of 55.8.The growth reported to Lloyds in

the final three months of last yearis the best since the survey beganin 2001, highlighting the rapidchange in conditions for firmsduring the second half of 2013.

The north east of England postedthe best growth in 49-months in

December, while the south westand west midlands were at their

highest on record. Positive news onjob growth also hints thatunemployment rate will continueto fall in 2014.

Recruitment is most robust inthe south of England, with theemployment part of the index inthe south west at the highest levelon record, and plans to hire fromfirms in the south east and London.

DESPITE crushing levels of youthunemployment, many European busi-nesses say they struggle to find appro-priately skilled young workers forvacant places, raising questions aboutducational systems in the EU.A report released today by manage-

ment firm McKinsey shows that someof the countries with the most signifi-ant youth unemployment crises also

have major skill shortages in theiryoung workforces.

Of the eight major EU economiesssessed for the research, the Britishystem comes off relatively well. Only8 per cent of employers in the UK say

shortage of entry-level employeekills is harming business.But the level is highest in Italy and

Greece, countries with some of themost severe youth unemploymentproblems in the continent. DuringOctober, 57.9 per cent of Greek under-5s were unemployed, along with 41.4

Firms say skillsgap keeping EU

youth worklessBY MICHAEL BIRD per cent of the young workforce inItaly.

But even with this elevated level ofjoblessness, 47 and 45 per cent ofemployers are concerned about a lackof entry-level skills for first jobs in Italyand Greece respectively.The survey also shows that 74 per

cent of vocational and academic edu-cation providers in Europe think theirgraduates are prepared for the labourmarket, but only 35 per cent of firmsand 38 per cent of young people agree.The authors also credit the UK

higher education system, which hostsalmost half the European universitiesin the worlds top 100. However, thereport suggests that a stigma toward

vocational education could be holdingback the British economy.

Of the eight countries assessed, theUK is the only one in which recentgraduates from vocational courses aremore likely to be in jobs than thosewho have just finished comparableacademic studies.

THE VALUE of investors trading inAim stocks has shot up nearly 30 percent since August, after the shares

became eligible for inclusion in Isas.Since August 2013, when thechange occurred, the average dailyvalue traded in Aim stocks has risen29 per cent to 127.6m, with a highof 148.4m in October, according toaccountancy group UHY HackerYoung.

By contrast, over the same period,the average daily value traded in

Value of trading in Aim shaup 30 per cent after new ru

BY JENNY FORSYTH FTSE100 stocks dropped thcent to 6.2bn.

UHY Hacker Young said retail investors were now ato Aim stocks, especially a

growing number of f irms index are now paying a diUHY Hacker Young part

Laurence Sacker said: Maeligible for Isas appears to coincided nicely with a retappetite for both smaller cand for exposure to the UKand that has significantly investor interest in Aim.

TWO THIRDS of workers disalary increase during 2013little growth in pay followidecent economic growth dsecond half of the year.

Figures published by carwebsite Reed today add tomounting evidence that wnot yet feeling the effect orecovery in their pay pack

The survey of thousandsuggests that 66 per cent otheir wages stay still or falper cent of employees hadfinancial or training incenany kind from their emplopast 12 months.

Despite a need to attracretain talent within theirorganisation, many busineinvesting in their workforpay or their benefits, suchtraining, and this will impoverall satisfaction rating workforce, said Tom Love

group managing directorDespite no pay rise for m

people, there was an imprin perceptions of job secu2013: 79 per cent of emplofeel secure or very secure iposition, an improvementlast years 74 per cent.

No pay risetwo thirds staff last y

BY MICHAEL BIRD

YOUNG WORKERS IN EUROPE LACKING SKILLS

FIRMS REPORTING SIGNIFICANT SKILLS PROBLEMS WITH YOUNG PEOPLE

UK 18%

GERMANY26%

SPAIN33%

FRANCE35%

ITALY47%

GREECE45%

SWEDEN31%

UNEMPLOYEDYOUNG PEOPLE

IN EUROPE

5.6mYOUTH UNEMPLOYMENT STILL HIGH IN THE EU

RESPONDENTS THAT SAY GRADUATES ARE WELL PREPARED FOR WORK

24%

22%

20%

18%

16%

14%2000 01 02 03 04 05 06 07 08 09 10 11 12 13

74%

SAY GRADUATES ARE WELL-PREPARED FOR WORK

EMPLOYERS YOUNG PEOPLE

BUT ONLY 35% OF EMPLOYERS AND 38% OF YOUNG PEOPLE AGREE

SOURCES:Eurostat,Mckinsey

35% 38%

EDUCATION PROVIDERS

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Promoion ends h January . Travel validiy: From h January - h June .Changes permited, penalies will apply. Non reundable afer deparure. Fares are valid romLondon Heahrow. Seas are limied and subjec o availabiliy. Blackou daes apply. Please

review oher erms and condiions a ime o booking.

High performance sports cars dominate 2014 Detroit auto shoSO-CALLED green cars electricvehicles, hybrids and hydrogen fuelcells are set to be heavilyovershadowed at this weeks Detroitshow by sports cars, in a broadspectrum of sizes, shapes andprices, from Fords redesigned 2015Mustang to Kia Motors zippy GT4Stinger concept.

The annual event, officiallycalled the North American

CITY A.M. REPORTER International Auto Show, attractsmore than 750,000 members of thepublic to Motor City, along withover 5,000 journalists and industryexecutives.

Five years ago, during the depthsof the US auto industrys recession,excess went out of fashion,industry consultant LincolnMerrihew, of Millward BrownDigital, as auto companies parkedtheir performance models to focuson greener technologies.

Now that the economyrebounded and automakeredefining performance combination of speed, safefficiency, that stigma isto fade he said, and percars are OK to buy again.

General Motors last nigunveiled its new 2015 Canpickup, which executivescounting on being a trumachine that will attractruck owners from rival b

he Taxpayers Alliance has accused HS2 Ltd of wasting money on a white elephant

THE COST of building HS2, the newhigh-speed rail link between Londonnd Birmingham, could spiral out ofontrol, a campaign group has

warned.The Taxpayers Alliance has pub-

ished figures showing that HS2 Ltd,he publically-funded company set upo develop the rail link, has spent300m since January 2011. Of this fig-

ure, over 1m was spent on publicelations and lobbying services andlmost 130,000 went to Toyboy filmsor promotional material, includingilms with alternate endings. The com-

pany also spent thousands on flights,ransport and hotels, paying over90,000 to Travelodge in the last threeears.The figures will cause concern for

hose who fear HS2 may fail before itven gets off the ground, with Labourhreatening to withdraw its support ifosts for the project spiral out of con-rol. Chief executive of the Taxpayers

Alliance, Jonathan Isaby, accused HS2td of a wasteful spending binge at

HS2 firm spent

300m on raillink since 2011

BY KATE McCANN taxpayers expense, adding: Not evena million-pound PR bill will changethe fact that HS2 is a white elephantthat will cost every family in the UK afortune and fail to deliver on itsgrandiose and unrealistic promises.Its particularly troubling to see HS2Ltd throwing money at its cheerlead-ers. Its time to scrap this costly projectbefore any more taxpayers' money ispoured down the drain.

Ben Ruse, spokesman for HS2 Ltd

said the project will be delivered on-budget and on-time. We constantlyassess our priorities to maintain aruthless focus on driving down costs.We delivered well within our budgetfor 2012-2013 and we fully expect to dothe same within the current financialyear, he said. Ruse added that thecompany has undertaken the largestpublic consultation and engagementprogramme a UK government has evercarried out. Earlier this month theChina Railway Group indicated that itwas interested in investing in the proj-ect, offering to build connections toBirmingham airport, Coventry andPeterborough.

NPOWER today unveiled a new,implified energy bill, amid claimshat energy companies make it too

complicated for customers lookingo reduce costs.

The big six supplier embarked ona bill design makeover at the end ofast year in response to customer

feedback. The new format usesclearer language and containsnformation on energy usage and

energy saving advice.A customers energy bill is their

main, and in some cases only, lineof communication with theirenergy supplier, said Paul Massara,

Npower unveils new bills to help

customers cut their energy costsBY SUZIE NEUWIRTH chief executive of Npower. We

want to make sure that our energybill helps our customers to takecontrol of their energy usage.

Regulator Ofgem launched aretail market review in 2010 tomake the energy market clearerand fairer for customers.

Reforms to energy bills wereintroduced on 1 January, forcingsuppliers to inform customersthrough bills what they are doingand of any upcoming changes.

More energy reforms will beintroduced at the end of March,mandating companies to tellconsumers which of their tariffsare the cheapest.

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you can do is stop buying labuilding more houses. The ohave built you can keep tryand then every pound that ya customer, even if its a low per cent cashflow.The strategy meant that d

Bovis generated a third of itin cash, adding 220m to sheet and leaving it perfecttake advantage of the plumm

values that the bottom of th

fered. Today, it has around 1of land that have consent toland that Ritchie says will kfor the next five years or soernment targets for new h

well over than 200,000 everynext decade, that number mlow, but Ritchie insists UK de

building as fast as they can.The sales rate in the ma

selling more than 50 homeyear is very difficult. Even build faster, in the whole of are only 350,000 plots of lan

with cohome one yement housin

wed bewith cofast.

And term hble re-British

since the introduction of ments Help To Buy schemnounced last April, Ritchie nificant uptick in housing already well underway mato the earlier funding for lentive, which was recently narclude mortgage products.

The redirection of the scheon small business lending isof the improved confidenceof the housing market, Ritthe decision, which knockedthe UKs housebuilders whenounced last November.

He says the effect of the seof Help To Buy equity loato first-time buyers and mov

build homes worth up to 6yet to be seen, but believes thrising house prices are overticularly outside London. Tsuch a microcosm, he says. London out of the house prigrowth would be much, mu

THE LAST 12 months have been goodones for Britains housebuilders.

After a financial crisis that sawbillions wiped off the sector as

credit dried up and house pricescrashed, 2013 saw a return to form asmore confident buyers rushed to takeadvantage of government guaranteeschemes and new mortgage products.

For David Ritchie, chief executive ofFTSE 250 housebuilder Bovis, it has beena welcome change of pace. Named CEO

in July 2008, Ritchie took the reins at Bo-vis during what he calls the worst ofthe housing market downturn 60 percent of the groups workforce had beencut, and just 100 of its new-build prop-erties had been sold in the entire secondquarter, a tenth of normal volumes.

It was catastrophic, says Ritchie, a 44-year old Scot who trained as an account-ant before entering the boardroom. Onoccasions we would come to the end ofa week and not have sold any houses;thats not a great feeling.

It was hardly the ideal situation to walkinto, but Ritchie in-sists he was happy totake on the chal-lenge.

You dont alwaysget to come into aflying, buoyant mar-ket, but it was a good

opportunity to comein and make a lot ofchanges. Were amuch better busi-ness five years on now than we werethen, because we were encouraged bythe downturn to look inwards and makedecisions about how to run the businessdifferently.

Ritchie first joined Bovis as group fi-nancial controller in 1998, having helpedthe firm come to market while at previ-ous employer KPMG. Four years later at

just 32 he stepped up to become financedirector. Its a role he admits he initiallysaw as a stepping stone to a similar jobin a larger company, but when formerchief executive Malcolm Harris steppedup to become chairman, he took an even

bigger step. His early months in the jobsaw a complete shake up of the business,including not only dramatic staff cuts,

but also the decision to put a completehalt to the two things that define ahousebuilders modus operandi; buyingland, and building houses.

We call it the cash-up period, explainsRitchie. If you have built a lot of housesand bought a lot of land, the one thing

David Ritchie was made chief executive in 2008, aged just 39

Even if we couldbuild faster, in the wholeof the UK there are only

350,000 plots of landwith consent for a home

A recovery built onbricks and mortarBovis chief executive David Ritchie tells Elizabeth Fournierwhyhes not concerned about a new UK housing bubble

Born in 1969 in Falkirk, Scotland

Qualified as a chartered accountant and

worked for KPMG in Bristol, where he helpedBovis with the firms 1997 stock market flotation

Joined Bovis in 1998 as group financialcontroller

Promoted to financial director in 2002

Named chief executive in 2008

DAVID RITCHIECV Bovis Homes Group PLC

2012 2009 2010 2011

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cit

cityam.com/the-capitalist EDITED BYGABRIELLA

Got A Stthecapitalist@ci

AN YOU remember what 1993 tastedke? Well, if youre curious, Blur bassist-um-cheese wizard Alex James haspplied to trademark a new drink lled Britpop.

The application doesnt giveway any clues as to what theink will taste like but we canst imagine the Cool Britan-a branding now.ts not the first timemes has venturedto the food and bev-age market the

assist has beenorking on hiswn cheeses sincee gave up on hisck and roll

Fancy a taste of

James Britpop?lifestyle and bought a farm in ChippingNorton in the early noughties, and cur-rently peddles eight cheese through hisAlex James Presents site.

Sadly Asda dropped his everydaycheese range in 2012, calling theflavours ahead of their time but tim-ing could be on his side with this latest

venture a thirst for all things Britpopis already brewing among the

British public, with bands such asSuede and Pulp enjoying a sec-ond wave of popularity. Letsjust hope its not a cheeseinspired drink liquid ched-dar should remain thereserve of fondue sets.

Alex James hopes to add drinks

to his epicurian empire

His strengths dont justlie in asset management.

This former Goldman Sachs-erwon a local arm wrestlingcompetition in his native SouthAfrica back in 1992. Its all inthe technique, he told TheCapitalist.

Not content with thetraditional dogs and cats

Lankesters itinerary of petsincludes two Welsh mountainsheep and eight chickens.

To his own eternalshame Meatloaf

is his favourite singer.

2

3

1

Chief exec of ACPI Investment Managers Brett Lan

CITY revellers searching for a historical tipple can nowadd another venue to their hit list. The owners of The

Sign of the Don restaurant have restored a 30 metre, 200-year-old vault underneath its restaurant, creating a cellarand space for a handful of punters to enjoy a drink. Theproject has been fantastic but it took us longer than we hadhoped, owner Robyn Wilson told The Capitalist. The cellar

was used for bottling port by the Sandeman Company for200 years and was once part of a Roman tunnel which led tothe Thames. The cellar is a little daunting and can be trickyto get down to but dont worry about 17th Century ghosts.So much cognac and port has evaporated in those tunnelsover the years any spirits lingering would be pretty mellow,Wilson laughed.

THREE THINGS YOU DIDNT KNOW ABOUT

THECAPITALIST

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levels of bureaucracy?MINIMALYou just have. In Wales.

a flexible business space and

Where can you findan impressive skills base,

financial incentives

UNBEATABLE

No-one delivers like Wales.Our country is geared to accommodate themost demanding business requirements. We

have the best financial incentives in the UK and

minimal levels of bureaucracy. For example,

if your business is seeking investment of up

to 1 million we can get can you a decision

within 30 days from receipt of your application

and supporting business plan. Its not exactlya bolt from the blue that, in 2012/13, Wales

experienced the best improvement in foreigndirect investment in the UK.

Find out what Wales can do for your businessJustAsk.Wales.com +44 (0) 3000 6 03000

FTSE 100 COMPANIES TOP M&A DESTINATIONS 2003-2013

TOTAL 391.5BNINVESTED ACROSS 3,967 DEALS GLOBALLY

MATURE MARKETS

DEVELOPING MARKETS

CANADA 30.9bn107 DEALS

SPAIN 16.9bn103 DEALS

BRAZIL 8.5BN

71 DEALS

RUSSIA 9.7BN41 DEALS

INDIA 18.8BN145 DEALS

SOUTH AFRICA 8.5BN105 DEALS

US 98.9bn741 DEALS

UK 101.9bn1,074 DEALS

CHINA is not ranked among the topmergers and acquisitions (M&A) invest-ment destinations for FTSE 100 compa-nies over the past decade, according toresearch out today from internationallaw firm Freshfields.

Of the 391.5bn of total M&A invest-ment by FTSE 100 companies between2003 and 2013, the top 10 countriesattracted over 81 per cent of the invest-ment, with China failing to rankamong them with just one per cent ofthe FTSE 100s total investment(4.8bn over 111 deals).

On the lack of M&A activity in China,Freshfields India Group chairman

Pratap Amin said: Growth in Chinahas been largely organic over the pastdecade and many international com-panies have gained a foothold in theregion by pursuing joint venture mod-els rather than outright acquisitions.The energy sector has been the most

active M&A sector, with almost a thirdof all investment 122bn across 472deals while the financial sectoraccounted for a fifth of the totalinvestment 69.8bn across 358 deals.

Freshfields global head of corporateEdward Braham said: The FTSE 100have continued to globalise their busi-

China not a toM&A target fo

FTSE 100 firmsBY OLIVER SMITH nesses over the last 10 several companies, only asmall proportion of thturnover and operations aBritain.

Of emerging markets Indtinued to be the frontrunFTSE 100s M&A investmeing 4.8 per cent of total inv

India has been more opnational investment in a rators over the past decade, pthose that are capital-inthave needed internationalsaid Amin.

British companies haveto capitalise on the oppormake the most of establish

cal, cultural and diplomatiWhile investment levels

ing from their declines financial crisis, Freshfieldfirms are still favouring caas defensive buffers ovetakeovers and mergers.

Despite a few notable mwe are yet to see M&A levelsto historic norms. There smore confidence in the and Britains largest comcontinuing to look for growoping markets, particulaand Africa, said Braham.

HOTELS are back in vogue withinvestors, according to research outyesterday by Deloitte, which showsthat hotel deals in 2013 were attheir highest in six years.

UK hotel transactions totalledaround 800m in the second half of2013, up 66 per cent on the sameperiod last year and taking dealsfor the year to 3bn.

London accounted for two thirdsof all transactions, including the88m sale of Millennium BridgeHouse by US private equity groupCarlyle to Shiva hotels.

Deloittes head of hospitality,Nick van Marken, said: Thespotlight has returned to hotels asan investment class, underpinned

Hotels back on investors listtransactions reach six-year h

Millennium Bridge House fetched 88m for its private equity owner last year

BY KASMIRA JEFFORD by a clear market recoverimproved macro-economi

The first six months of were dominated by portfosuch as the sale of the hotPrincipal Hayley to US invfirm Starwood Capital. Thhalf was led by the sale ofassets such as the 12 Menhotels, which were snappeproperty firm Topland.

The imminent sale of Dconference venues is expekick off further activity th

Sovereign wealth fundspecialised investment grprivate equity will remaindominant buyers in 2014,expect the continued inflforeign capital, Van Markadded.

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AN INVESTOR pushing for change atirstGroup will try to sell his break-

up plan to other shareholders thisweek, paving the way for a heatedapital markets day later in the

month.Thomas Sandell, whose hedge fundevealed a three per cent stake inirstGroup in November, will this

week be in London to set out his pro-posals for the transport firm to majornvestors.Last month, Sandell Asset

Management called publically forirst to spin off its US operations, fol-owing talks behind the scenes thatailed to persuade management ofhe plans benefits.Sandell wants First to sell its yellowchool buses and the coach business

Greyhound in order to strengthen itsbalance sheet.

We believe there is strong share-holder support for our ideas and thisbelief has been reinforced since ourngagement with management

became public, said Sandell yester-

Activist to pitchbreakup plan toFirsts investors

BY MARION DAKERS day, adding that its plan should pro-vide a contingency should the com-panys turnaround fail to materialisein the anticipated timeframe.

First completed a 615m discountedrights issue last summer and axed itsdividend in a bid to defend its creditrating following the 2bn purchaseof Laidlaw and the suspension of theUK rail franchise contests.The FTSE 250 group has responded

coolly to Sandells proposal. InDecember it said that while it wasopen to all means of enhancinglong-term value, the scheme set out

by Sandell had structural flaws.Sandell Asset Management isexpected to send a representative toFirsts capital markets day on 23January, when new chairman JohnMcFarlane will update investors onthe companys turnaround plans.

Shares in FirstGroup have gainedmore than 17 per cent since Sandelldeclared his holding in November,though Fridays close of 136p is farbelow the 199p that the hedge fundboss believes they would be worthunder his plan.

SAUDI British Bank, Saudi Arabiasfourth-largest listed bank, saidyesterday its fourth-quarter netprofit rose 20 per cent over theame period of 2012, beating analyst

expectations.The lender, an affiliate of HSBC

Holdings, said it made 976m riyals157.8m) in the three months to 31December, compared to 815m riyalsn the corresponding period of 2012.

SABB attributed its profit riseonly to higher operating income,without elaborating.

Net profit for full-year 2013advanced 16.5 per cent to 3.77bnriyals.

Saudi companies issue briefearnings statements early in the

Saudi British Bank fourth quarternet profit jumps by 20 per cent

irstGroup, led by Tim OToole, wants to stick to its own recovery plan

BY CITY A.M. REPORTER reporting period before publishingmore detailed results later.

SABBs loans portfolio climbed 10per cent to 106bn riyals over the endof 2012, and deposits grew 15 percent over the same timeframe to139bn riyals.

Saudi banks have benefited fromrising lending, deposits and dealactivity in an economy buoyed byyears of high state spending whichis backed by strong oil prices andrecord government surpluses.

The kingdoms budget for 2014,while the smallest increase for adecade at 4.3 per cent, is stillanother record amount, and banklending to the private sector grew at13.8 per cent year-on-year inNovember, up 0.3 per cent from theprevious months 17-month low.

Hall & Woodhouse receives 20loan from M&G Investments fuINDEPENDENT brewer Hall &Woodhouse has received a 20mloan from M&G Investments as partof the funds effort to support mid-sized UK firms.

Hall & Woodhouse, a regionalbrewer and owner of over 200public houses, has over 1,400employees in the UK and is lookingto use the 10-year investment toacquire and develop its estate.

BY OLIVER SMITH This innovative and market-leading transaction is one of thefirst non-bank, long-term financingsin the regional brewing sector sincethe global financial crisis andreflects the strength of Hall &Woodhouses business, saidDeloitte debt advisory team partnerFenton Burgin, who advised Hall &Woodhouse on the deal.

Backed by the UK government,the Prudential and a number of UKpension funds, M&Gs UK

Companies Financing Fun500m fund to supportcorporations with a turno25m to 500m with loan

M&G Investments headlending James Pearce saidsuch as UK Companies Finopen up substantial oppofor established companieat expansive long-term plthe financial foresight anbenefits long term financthem with.

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Smith & WilliamsonThe accountancy and wealthmanagement group has

nnounced the appointmentof Tina Riches as national taxpartner. She was mostecently at the Charterednstitute of Taxation, wherehe was a technical director.

Royal Bank of CanadaThe bank has recruited Tim Houghton as head ofbusiness development in its wealth managementdivision. Houghton joined RBC in 1999. Since 2011, he

has been head of private client wealth managementoffshore.

NomuraThe investment bank has hired Todd Sandoz as globalhead of execution services and equity trading. He joinsfrom Credit Suisse, where he was most recently headof global foreign exchange and short-term interestrates trading in London.

Kingsley NapleyFiona Simpson has been appointed partner in thelitigation firms dispute resolution practice. Simpsonspecialises in civil and criminal fraud cases. She was

formerly at Withers, where she was special counsel.Prior to that, she held roles at Crowell & Moring andVizards Wyeth Solicitors.

FinnCapThe broker has made two senior appointments. PaulHarrington joins from Westhouse Securities, where heworked in its investment trust team. James Simpson

joins from Jefferies. He has previously worked atCanaccord Genuity, HSBC Investment Bank and

Arbuthnot Securities.

Round Hill CapitalThe integrated real estate investment firm has

recruited John Baker as chief financial offiwas most recently CFO at DTZ Global InvesAsset Management.

Assurant SolutionsAndy Morris has been appointed chief marofficer for the insurance companys EuropeHe previously worked at GE Commercial Fi

Kemp LittleThe law firm has recruited Nicola Fulford ain its commercial technology practice. Fulffrom Bristows, where she specialised in pridata protection.

WHOS SWITCHING JOBS Edited by Annabel PalmerCITY MOVES

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

with Gina Bryce, Mick Fitzgerald fromC4 Racing and City A.M.s finest Bill Esdaile taking

you through the festival card withthe latest information

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Actual Experience prepares a17m London public offeringANALYTICS firm Actual ExperienceLimited is planning an initial public

offering (IPO) on LondonsAlternative Investment Market at theend of the month that is set to valuethe company at 17m.

Actual Experience (AE) works withover 40 blue-chip clients includingCisco, Ofcom and Accenture toimprove the experience of staff andcustomers using digital services

BY OLIVER SMITH with software to measure, analyseand improve each companys so-called digital supply chains.

Henderson, the fund giant behind

Westfield Stratford City shoppingcentre, led a successful 4mfundraise for AE in November 2013,and said the flotation could be one ofthe best small IPOs of 2014.

Hendersons UK & Irish funddirector Rob Giles said, We haventcome across such an excitingtechnology company with truly

global potential for many years. Webelieve this has the potential to bethe best float of 2014.

On the investment that the funds

raised from the IPO will be used for,AE chief executive Dave Page toldCityAM, Were looking to increase oursales staff and double our currentheadcount [16]by the end of 2014.

In July 2013 the company reportedrevenue of around 400,000, andsince then its client base has grownby almost 50 per cent to over 40.hief executive Dave Page

Actual Experience Limited is beingby small and mid cap company brSinger for its listing o n Londons A

Investment Market with a team leDobson, the brokers head of corpfinance. Dobson joined N+1 Singerand has advised British technologon its October 2012 IPO and last yeN+1 Singer win a contract to becoadvisers to Porta Communication

ADVISERS

SHAUN DN+1 SINGER

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Spread Betting | CFDs Capital Spreads is a trading name of London Capital Group Ltd (LCG), which is authorised and regulated by the Financial Conduct Authority.Capital Spreads is a trading name of London Capital Group Ltd (LCG), which is authorised and regulated by the Financial Conduct Authority.

Apply for an account today

MONDAY 13 JANUARY 2014ityam.com

In association with

LONDON REPORT

RETAILERS are expected to reveal

where UK shoppers showedtheir Christmas cheer, with around of results in contrast to

ast weeks gloomy December tidings.

Figures out this week from retailersuch as Argos, Asos, Dixons, Ocado

and Primark are expected to showncreased sales.The successes are in contrast to the

ales dips seen by Tesco andMorrisons, and the difficulties Marks& Spencer has seen with its clothinganges.

In the consumer calendar,Ashmore Group, Asos, BarrattDevelopments, Balfour Beatty, BigYellow Group, Carrs Millingndustries, Countrywide, Dragon

Oil, IG Group, Mecom Group,Michael Page International,Provident Financial and Spirit PubCompany are all due to reportomorrow.

On Wednesday Burberry Group,Fenner, Genel Energy, Jupiter FundManagement, Smiths News, Taylor

Wimpey, Tullow Oil and UK MailGroupwill give their latest figures.Aberdeen Asset Management, AB

Foods, Bovis Homes, C&C Group,Dixons Retail, Experian, HalfordsGroup, Home Retail Group, OcadoGroup, Premier Oil and Quindellwill all update the market onThursday.

Booker Group, Stobart Group andWilliam Hill are due to give tradingupdates on Friday.

In economics news, ONS Houseprice data for the year to November

will be released tomorrow, while RICShouse price data for December is dueout on Thursday. Both will give bricksand mortar investors a clue as towhether the gradual price rise seen at

the end of last year is continuing orincreasing.

Inflation data both retail priceindex (RPI) and consumer price index(CPI) is also due out tomorrow, withanalysts expecting little change fromlast month.

Alan Clarke from Scotia Bank said:We expect UK CPI inflation to bestable at 2.1 per cent year-on-year inDecember, with the RPI ticking backup to 2.8 per cent year on year. Twokey influences this month are likelyto be petrol prices and utility billhikes.

On Friday retail sales data forDecember is due to be released. Officefor National Statistics figures areforecast to show a 3.4 per cent annualrise in December sales, animprovement on Novembers 2.3 percent increase.

Retailers revealwhere tills rangfor Christmas

CITYYOUR OSTOP SH

BROKER VIEMARKET REP

FTSE

6,775 6,739.94

10 Jan

6,700

6,725

6,750

9 Jan 10 Jan6 Jan 7 Jan 8 Jan

DASHBOARD

Big banks set pace inearnings r

AFTER the S&P 500impressive 30 per cin 2013, Wall Streebetter picture of r

week as the pace picks upcompanies reporting earA number of big banks

report quarterly and full-yresults, includingJPMorgandWells FargotomorroAmerica on Wednesday, G

Sachs Group and CitigroThursday, andMorgan StFriday.Their results will help d

whether earnings forecasneed to come down and wstock values have becomeoverblown.

Investors may get a betthow quickly the central breduce its market-friendlychases from a number of Reserve officials due to spweek. A much weaker-thaDecember payrolls reportraised new questions abostrength of the economy aggressiveness of Fed stim

Federal Reserve Bank ofPresident Dennis Lockharuled to speak at events toWednesday, while Fed ch

Bernanke is set to speak oThursday. The Feds Beigedue on Wednesday.A batch of December da

come out this week, withtomorrow, the US ProducIndex on Wednesday, theConsumer Price Index onand housing starts on FridAmong other earnings t

this week are General EleFriday and American Expwhich releases its fourth ures on Thursday.

ASTRAZENECAUBS has started covering the pharmaceutical giant with a buy rating and a target price or4,000p. The broker thinks AZs earnings outlook is tough until 2017 as the f irm prioritisesinvestment, but thinks this will store up a strong pipeline of products.

AstraZeneca PLC

p

10 Jan6 Jan 7 Jan 8 Jan 9 Jan

3,660

3,680

3,620

3,580

3,600

3,540

3,560

3,640

3,652.0010 Jan

CINEWORLDCanaccord Genuity keep its buy recommendation and shifts its target from 450p to 500pfollowing Cineworlds plan to take over Cinema City. The broker sees the tie-up as an ambitiousway to boost earnings while keeping debts at manageable levels.

Cineworld Group PLC

p


440

450

420

400

410

390

380

430

443.5010 Jan

HARGREAVES LANSDOWNPeel Hunt tells investors to hold shares in the asset manager and has a target of 1,000p aheadof the firms pricing update on Wednesday. Despite the uncertainty around Hargreaves new clientfees, the broker expects plenty of new business in the wake of the Retail Distribution Review.

Hargreaves Lansdown PLC

p


1,490

1,500

1,470

1,450

1,460

1,440

1,480

1,478.0010 Jan

To appear in Best of the Brokers, email your research to [email protected]

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EAGLE-EYED City workers may

have already spotted this,but there are some slightlyunusual adverts on the sideof their buses this year.

Alongside the regular adverts forLondon attractions and products,hree buses have been specially

wrapped to enable 34 organisationso proclaim that We are all

dedicated to diversity.While commuters can be

eassured that the buses are stillheaded to their normaldestinations of Bow, WestbournePark and Shepherds Bush, we arealso headed to DestinationDiversity. The buses are a movingbillboard for my Lord MayorsAppeal, which is supporting fourommunity-based charities, as well

EACH year, we release our Top Risksreport, where we consider the ten

biggest geopolitical threats tomarkets and economies, judged by

probability and potential impact. Whatst the top of our list for 2014?

Uncertainties about Americas foreignpolicy and Chinas ambitious domesticeforms create the potential for volatilitynd surprises this year and, given the rise

of demanding middle classes in so manymerging market countries, well be

watching for election-year risks andopportunities in Turkey, Brazil, India,ndonesia, South Africa, and Colombia.But international politics and the

global economy are also shaped by theisks that wont live up to their billing,nd weve identified three specific storieshat we consider overrated. These are the

years red herrings.2013 was an ugly year for US domestic

politics, especially for President Obama,who saw his popularity dive following aeries of bruising showdowns with

Republican lawmakers and theObamacare rollout disaster. Republicanswere harmed by a government shutdown

cityam.com/forTHEFORUM

Twitter: @cityamforum on the web: cityam.com/forum or by email: [email protected]? Disagree? Got a sharp comment?

The Forum wants you to join the debate. Top responses will be reprinted in T

16MONDAY 13 JANUARY 2014

IAN BREMMER &DAVID GORDON

The three geopolitical red herring

that wont spook markets this yea

that left them with most of the blameand brought to light the party leader-ships inability to keep its Tea Party wingin check.

Despite all this, the US economy proved

more resilient than most predicted. Thegood news for markets is that the econo-my will continue to shrug off

Washingtons dysfunction, and 2014 willbe less politically volatile. A budget deal,though not significant in economicterms, will prevent another self-defeatingfiscal policy duel until at least 2015.This years fight will not be on policy,

regardless of how much noise the twosides make in support of their agendas.Instead, the real struggle will be for the

seven Senate seats currently held byDemocrats in states won by Republicanpresidential candidate Mitt Romney in2012. The predictability imposed by theNovember elections is good news for aneconomy driven by companies andinvestors that want a break from politicalsurprises.

Europe has a red herring of its own.Those who predicted the collapse of theeuro have always underestimated the

willingness of those with the power tosave it to make tough choices. Yet, givencontinued low growth rates in Europesperiphery, Frances ability to slowprogress on major structural reforms,

continued uncertainty about Britainsrole in Europe, and rising populismfuelled by explicitly anti-EU sentiment,the doomsayers are again making noise.We think theyre wrong. At the finan-

cial level, pledges from Europes CentralBank and German Chancellor AngelaMerkel to take any measures necessaryto defend the euro limit the potentialdamage to Europes finances in 2014. Yes,anti-European political parties are gain-ing traction, but theyre still not in a posi-

tion to challenge for power, or even todetermine the make-up of governingcoalitions except in a couple of countries.

Theyll likely win increased representa-tion in the European Parliament, butthese parties will have trouble poolingtheir influence because their agendas arealmost entirely nationalist, and there isno great trust among them. BritainsUkip, Frances Front National, Hungarys

Jobbik, and Greeces Golden Dawn, forexample, just dont have that much incommon. Europe will remain very muchin the muddled middle this year, withneither momentum for structuralreform nor the sort of market crisis that

might create it.Finally, there is the Middle Easts most

tragic quagmire. Syrias civil conflict isleaking across the border into Iraq,Lebanon, even Turkey. Yet, though theneighbours are in for a few surprises this

year, Syria itself is becoming much morepredictable. Its civil war, which has rav-aged the country for nearly three years,

will continue in 2014 but theres littlechance that Syria will become a largerglobal security or economic risk. The cri-

sis over its chemical weaponsnever really about the futurmuch as the credibility othreats and posturing in endgame negotiations over tIrans nuclear programme.There is no prospect for

breakthrough by either the Aor the opposition, and hopRussian chemical weapons rmight create some momentumacy have evaporated. Al Qagroups inside Syria are likeincreasingly on targets of opneighbouring Iraq. Violenccould even subside in 2014,

begin to accept that no internport is coming and cut deaSyrian military. Either way, Iraq and other Middle East likely to produce surprises Syria will remain locked in itdictable stalemate.Ian Bremmer is president of E

and author of Every Nation for Itand Losers in a G-Zero World. Dachairman and head of researcGroup. www.eurasiagroup.net

as for the The Power of Diversityprogramme, which is beingsupported by 34 firms. Its aparticularly apt year for ourdiversity buses as well 2014 marksthe 100th anniversary of womenworking on the buses in largenumbers, and its great to celebratethat link to womensempowerment.

The Power of Diversity

programme is a series of events

designed to share best practice andexperience among senior and mid-level managers across a diversearray of organisations, in acollaborative effort to ensure thattalent from all backgrounds can getto the top. These events includeconferences and businessbreakfasts, looking in detail at howthe City can speed up its diversityachievements.

It is also important for me toraise the profile of the issue. I amonly the second female lord mayorsince 1189. In this role as a leadingglobal spokeswoman for the UKfinancial, business and professionalservices sector, I am determined tofocus attention on the practicalsteps the City needs to take to

harness the benefits of diversity in

the talent pool on which it depends.This is critical to sustainingLondons success and to creating agenuinely inclusive City. Only thenwill the statistics on diversity betterreflect modern society.

The world has changed since Ibecame the first female partner atmy law firm, CMS, in London 30years ago. But it has not changedfast enough, and we need to makesure far fewer people from diversebackgrounds get left behind. One ofmy inspirations throughout mycareer has been former US secretaryof state Madeleine Albright, whosaid that there is a special place inhell for women who dont helpother women. But its not just afear of hell that has me focused on

improving diversity its

right thing to do, from bomoral case and a businessperspective.

London will lose out if capture the benefits of difresh perspectives, originainnovation by enabling individuals to get to the tchange will not happen ovbut we need to ensure thabusinesses employ a truemeritocracy, so that the bsucceed, regardless of racsexual orientation, nationsocial background. Only twe be assured that Londoequipped to tackle the chthe City faces in the futurmeeting the needs of soci

Fiona Woolf is lord mayor

CITYMATTERS

FIONA WOOLF

Why the City will lose out if its fails to capitalise on Londons divers

Updateyo

urselfat

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Why we dont saveRe: Our pension system is broken. We must tear itp and start again, Friday]hie authors comparison of Britains pensionystem with Australias is interesting andnformative. But there are several blocks towardsncouraging a savings mindset in Britain. First,here is no safeguard against misappropriation inhe future. Secondly, while the state wishes tonflate its way out of debt, it hardly makes sense toave. After income tax on savings income, it will bempossible to find a savings product that beatsnflation. Third, while the cost of housing andransport rises faster than wages or inflation, there

an ever smaller hope of any disposable income

for saving. Fourth, UK pension fees are high. Othertransaction costs on exchange-traded securities aresignificantly higher than many countries in the EUand particularly higher than the US. Fifth, the latestthreat being promoted by some to cap Isas with alifetime limit of 150,000 highlights just howvulnerable savings and investments withincollective schemes or wrappers really are to thefingers of a present or future chancellor. Finally,inheritance tax planning revolves around dis-investment of wealth no later than seven yearsbefore death. Those with something left are likelyto have consumed that wealth on old age care.Name withheld

Despite claiming pole position in global trade,should we doubt Chinas long-term influence?

YESn our latest World Economic League Table, we pushed back the date whenhina will overtake the US to become the worlds largest economy by fiveears, to 2028. China is already the largest importer of many raw materials,nd has likely just become the worlds largest trading nation. But it is unlikelyver to be the world leader in free thinking and creativity such attributes areot typically fostered by communist conformism. In international politicalerms, China will undoubtedly become a major military superpower, butrobably not the only one. And a

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