Cityam 2012-11-29 PDF

away, said the Democrat representa-
tive for Massachusetts.

Those closer to home were less sup-
portive. I dont exonerate the mis-
takes they made at all, but there was
a lot of political grandstanding in
the way Congress and even the
President reacted [in 2010], and this
seems to reinforce that view, Tim
Yeo MP, chairman of the Commons
energy and climate change commit-
tee, told City A.M.
I think this is a warning not just
for BP but for other foreign compa-
nies that are operating in the US. BP
have done what they can
reasonably be expected
to do.
BPs existing oper-
ations in the States
are not affected. As
well as being the
biggest driller in the
Gulf, it has a billion-
dollar fuel contract
with the US mili-
tary. BP
did not participate in the final auc-
tion for drilling blocks in the
Western Gulf yesterday, and it can-
not be awarded any further lucrative
blocks until the suspension is lifted.
The firm said yesterday it is in reg-
ular dialogue with the EPA and has
submitted evidence that it is respon-
sible enough to operate in the US.
The EPAs decision raises tensions
between the firm and the authori-
ties ahead of a long-awaited court
case set to start in February, in
which the US hopes to prove BP was
grossly negligent so it can extract
up to $21bn in fines under the Clean
Water Act.
BP PLC
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429.40
28Nov
Bob Dudley said BP and
the EPA are in talks
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MARK KLEINMAN
ISSUE 1,771 THURSDAY 29 NOVEMBER 2012
FREE SPEECH
IS SACRED
See The Forum, Page 25 See Page 6
Certified Distribution
01/10/12 til 28/10/12 is 129,297
THE GREEN shoots of growth in the
merger and acquisition markets
could be snuffed out by hostile
governments, with the growing
trend for active industrial policies
making cross-border deals more
complex, two top investment banks
warned yesterday.
The market has been sluggish
through the financial crisis, but as
firms have adapted to economic
conditions they are now looking to
diversify by making acquisitions in
other countries and continents.
But banks warn increasing
political activism is adding extra
complexity to the process, hitting
the new growth sector just as it
emerges. For example the UKs
business secretary Vince Cable
wants the government to support
favoured sectors like pharma and
aerospace, while French ministers
have increased the hostile rhetoric
against international groups like
Arcelor Mittal.
Industrial policies are adding a
new layer of complexity to
dealmaking, and we are spending
more time with policy makers to
make sure we can advise clients on
the political aspects as well, said JP
Morgans Hernan Cristerna.
That adds to the risk of deals
failing and means bankers need to
spend more resources
understanding political tensions.
We need to be able to advise
clients on all elements of complex
deals, he added.
And another major investment
bank, which asked not to be
named, agreed.
There are some elements of
nationalism from governments in
the resource business, in
particular, said a senior M&A
banker. We are paying more
attention to the politics around
deals, spending more time on it on
the very large deals.
It is understood that politicians
now interfere in most big deals,
hurting the market and hitting
firms chances of growth.
But a BIS spokesman said: It is
nonsense to suggest that it will add
complexity. He added: This
approach is backed by business and
we are pleased that the CBI has
acknowledged the work we are
doing to secure the future of
British industry.
Cristerna added business
executives themselves can do more
to help boost the merger market.
The markets now present an
opportunity to invest and firms
should be bolder in making
strategic purchases, he argued.
Investors want a strategic vision
from firms, and firms should spell
that vision out to shareholders to
boost investor confidence. If
companies dont do a good job of
explaining their vision,
shareholders will be unconvinced
and just ask them to return
undistributed earnings.
Vince Cable is behind Britains industrial policy
BP has been temporarily blocked
from new government work in the
United States for a lack of business
integrity during the Gulf of Mexico
oil spill, regulators said yesterday.
The surprise ban comes just two
weeks after BP admitted to 12 felony
charges and paid $4.5bn (2.8bn) in
penalties related to the 2010 disaster,
in which 11 workers lost their lives
and miles of the US coastline were
drenched in oil.
Federal suspensions do not normal-
ly last more than 18 months, the
Environmental Protection Agency
said yesterday.
But the ban could hamper BPs
American business, which generat-
ed over 30 per cent of the firms
most recent quarterly profits and a
fifth of its oil output.
US politician and BP critic Edward
Markey welcomed the move. When
someone recklessly crashes a car,
their licence and keys are taken
BY TIM WALLACE
Meddling politicians
hurt merger market
BY MARION DAKERS
BP BANNED
FROMWORK
IN AMERICA
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Invensys offloads rail unit
on Siemens in 1.7bn deal
ENGINEERING group Invensys yester-
day shocked the City by securing a
1.7bn sale for its rail business in a
deal with German giant Siemens.
Invensys shares soared 27 per cent
to reach 280p yesterday, giving the
group a valuation of roughly 2.3bn,
after the firm sold off its rail arm for
just 50m less than yesterday morn-
ings market capitalisation for the
entire company.
The parent company plans to use
money from selling Invensys Rail,
which produces signalling systems,
to return 625m of cash to
investors roughly 76p per share.
It will also plough 400m into its
pension scheme to reduce the deficit
along with a further 225m going
into a trust to counteract future pen-
sions problems. This will allow the
firm to halt its deficit reduction pay-
ments, recently totalling 40m-
47m annually.
The sale will leave Invensys more
focused on its core business, it says,
and deliver cost savings of 25m per
year by the end of 2014.
Following a strategic review
which highlighted the likely consoli-
dation in the global rail signalling
market and the limited scope to
increase the size of the Invensys Rail
business, we have decided to refocus
the group around our [core] busi-
Sabic in talks to invest in US shale gas
Saudi Basic Industries, the worlds largest
petrochemical maker by market
capitalisation, is in talks over a possible
investment in the US to take advantage of
cheap shale gas, said Mohamed al-Mady,
its chief executive.
Oakland plans Goldman boycott
The city of Oakland plans to boycott
Goldman Sachs after the investment bank
refused to unwind a $16m (10m) interest
rate swap struck more than a decade ago.
Balls warns Osborne over Vickers
Ed Balls has fired a warning shot against
George Osborne over bank reform by
warning there is no consensus over the
issue and a Labour government could
still carry out a Glass-Steagall-style
separation if the industry does not
change its culture voluntarily. The
shadow chancellors warning comes as
the Treasury prepares the ground for
legislation forcing internal ring-fences
on banks in a bid to limit the impact of a
future financial crash. Balls also urged
banks to lead the change that was
needed in the structure and culture of
the UKs banking sector.
Oil baron encourages Scottish no vote
Ian Taylor, the chief executive of Vitol, and
one of Scotlands richest businessman
has urged his countrymen to vote No to
independence in 2014.
Film tracks breakout from big screen
Making money from film soundtracks is
back on the cards after British company
The Cutting Edge Group launched a
website to help license film scores to
advertisers, broadcasters and video
games companies.
Moodys downgrades HP
Hewlett-Packard, the technology giant in
dispute with Autonomy founder Mike
Lynch, has had its credit rating cut by
Moodys amid concerns over its ability to
keep up with rivals.
E.ons 38m tampering fine upheld
The European Unions highest court
confirmed on Thursday that E.on must pay
a 38m (30.7bn) fine for tampering with
a seal EU investigators had put on a door
during an antitrust raid.
Sterling braces for UK downgrade
Worries that the UK could lose its Aaa
credit rating next year are putting pressure
on sterling, but investors are divided on
how lasting the impact could be.
Fiat plans to expand its line in US
Fiat, majority owner of Chrysler Group,
plans to expand its line in the US well
beyond the 500 nameplate by adding
larger cars and crossovers, Olivier
Francois, chief executive for the brand
worldwide, said yesterday.
Chairman Sir Nigel Rudd, a veteran dealmaker, is believed to have orchestrated the sale
2
NEWS
BY BEN SOUTHWOOD
To contact the newsdesk email news@cityam.com
W
ELCOME to Britain, a land
where rules, regulation and
taxes are one of the few
growth industries. In recent
days, the government has decided
that companies will no longer be
allowed to decide freely at which
price they can sell alcohol there will
be a minimum price, hurting those
who enjoy two-for-one deals.
Our rulers have also decided that
there will be a maximum rate of inter-
est on some loans; a drastic reduction
in the number of tariffs energy com-
panies can offer (what next? Fewer
mobile phone tariffs, or limits on
choice in supermarkets?); and we will
find out today whether newspapers
will be regulated by statute.
There may be public support for all
of these anti-libertarian rules. But
they will be rife with unintended con-
sequences, with social costs greater
EDITORS
LETTER
ALLISTER HEATH
Britain is becoming an increasingly anti-libertarian society
THURSDAY 29 NOVEMBER 2012
than social benefits.
Many people drink too much. The
chaos caused by excessive consump-
tion is disgusting, and the health
effect on many binge drinkers can be
heart-breaking. But this kind of state
paternalism is not the answer. It is a
myth that alcohol consumption keeps
soaring: it has actually dropped 12 per
cent between 2004 and 2011, with the
per capita consumption of pure alco-
hol falling from 9.5 litres to 8.3 litres,
according to HMRC. The proportion of
16-24 years olds drinking at least once
a week collapsed between 1998 and
2010: from 71 per cent to 48 per cent
for men; from 62 per cent to 46 per
cent for women, according to the
NHS. Binge drinking has also
slumped, even if it doesnt feel that
way on a Friday night. The proportion
of adults who drank in the last week
is down substantially over the past
decade. So why suddenly slap this
deeply illiberal minimum price on
alcohol? As the Institute for Fiscal
Studies points out, poorest house-
holds will fare worst.
Reforms to the energy market will
also hit the worse-off hardest. As the
brilliant Stephen Littlechild argues in
a devastating analysis on p24, the low-
est tariffs will be withdrawn, every-
body will face the higher tariffs,
competition will be crippled and prof-
its will rise, triggering another row.
track completely but he ought to
announce that the annual charge will
not be levied, or applied only to those
using a company to buy a home they
do not rent or hold for investment.
The stamp duty rates should be fixed
for the remainder of this Parliament,
and not hiked again or applied to
cheaper houses. The 2m value
should be indexed annually. The
inheritance tax implications for for-
eigners need to be looked at carefully.
This government, like its predeces-
sor, has been astonishingly illiberal in
all sorts of areas, restricting individu-
als freedom to choose or to keep their
own money. Let us hope at least that
it preserves the freedom of the press,
and gives short shrift to those calling
for its statutory regulation.
Its a shameful policy, the most retro-
grade step in 30 years for the industry.
Taxes are also wreaking havoc. As
City A.M. revealed last week, higher
taxes have coincided with a collapse
in the number of high earners: in
2009-10, 16,000 people earned 1m or
more; in 2010-11 6,000; in 2011-12
10,000 and in 2012-13 a mere 8,000.
There are fewer higher earners
around, and therefore less tax
receipts. Ditto high end property:
transactions in the 2m-5m bracket
have collapsed by over half since the
Chancellor introduced a 7 per cent
stamp duty rate and consulted on an
annual charge (or Mansion Tax-lite)
for anyone buying such properties
through companies. This is hitting
everybody, rich and poor: estate
agents, the construction industry and
various service staff, as well as
wealthy buyers. Osborne wont back-
ness, said chief executive Wayne
Edmunds.
As well as providing shareholders
with an immediate cash return, this
transaction enables the group to cre-
ate a long term pension solution and
therefore increased financial flexibili-
ty going forward.
Freshfields were legal advisers to
Invensys on their side of the deal. A
Linklaters team led by Roger Barron
and Iain Wagstaff advised Siemens,
the first time Linklaters have worked
with Siemens on mergers and acquisi-
tions. JPMorgan Cazenove and Ondra
Partners were joint financial advisers
to Invensys.
Invensys PLC
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RIVALS Getco and Virtu Financial
have launched bids for Knight
Capital in a battle that would see
either a merger or sale for the
brokerage.
While Getco has proposed a
$1.4bn (874m) merger, Virtu
Financial has offered to buy Knight
for at least $1.1bn. The main
attraction for both trading firms is
Knights US market-making
business, which uses computer
models to match buy and sell orders
in stocks and options and executes
around 10 per cent of US equity
trading volume.
Getcos proposal effectively would
see it bought by Knight, while
Getcos management, led by Chief
Executive Daniel Coleman, would
take control of the combined firm.
The combined firm would be
publicly traded, which would allow
General Atlantic, which invested in
Getco in 2007, to take the firm
public. Getco also already has a 23.8
per cent stake in Knight.
Meanwhile Virtu has offered to
take Knight private for at least $3 a
share in cash. Virtu would look to
sell off Knights businesses other
than market-making. Getco joined
with five other financial firms in
early August to provide $400m in
rescue funding to Knight after an
errant trading programme drove a
$461.1m loss.
Getco and Virtu
launch bids for
Knight Capital
BY CITY A.M. REPORTER
THE US could be in for further
monetary stimulus, after the Federal
Reserves Beige Book report on the
economy, out yesterday, gave little
sign of price pressures but revealed
continued worries about growth.
The report said manufacturers
were worried about the impact of
the so-called fiscal cliff of tax hikes
and spending cuts due in 2013. And
it found little evidence to suggest
prices were on the rise. Together
these open the door for the Fed to
expand its ultra-accommodative
monetary policy even further.
Beige Book
backs stimulus
BY BEN SOUTHWOOD
GOLD PRICES slid 1.5 per cent
yesterday, as investors worried that
the debt crisis in the Eurozone,
combined with fiscal crisis in the US,
could lead to deflation.
Some had speculated the sharp
fall, the biggest for around a month,
was down to a so-called fat finger
error, but derivatives market CME
denied this claim.
The fall saw spot gold fall to a low
of $1,705.64 an ounce, before
climbing to $1,718.60 and settling at
$1,716.50 admidst volumes around
double the 250-day average.
Gold slides on
deflation fears
BY BEN SOUTHWOOD
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
MEGAFON, the mobile telecoms
group controlled by Russias richest
man, Alisher Usmanov, became the
second largest share offering in
Europe this year as it raised $1.7bn
(1.06bn) yesterday in London and
Moscow despite concerns which had
earlier led Goldman Sachs to step
aside from the deal.
The deal was assisted in its final
stages by one investment group,
believed to be US based, buying one
tenth of the shares being issued in
the IPO, say banking sources.
In an on-off deal that has been
knocked sideways by Goldmans deci-
sion before an October roadshow to
step aside from the banking syndi-
cate, the companys remaining advis-
ers have been forced to address
scepticism about the structure of the
group post flotation.
Goldman highlighted concerns
about the structure of an umbrella
group in which Usmanov holds 60
per cent of the shares, with two asso-
London rejoices
as Megafon IPO
defies the odds
BY DAVID HELLIER
ciates owning the remainder. In the
prospectus, it emerges that Usmanov
will have voting rights over all the
shares in the company, which will
own Megafon, the tycoons sharehold-
ing in Arsenal and other assets.
Shares were priced at $20 each, at
the lowest end of the range, but that
didnt stop them falling slightly to
around $19.79 at the close yesterday.
Despite the slightly disappointing
start to trading, Alastair Walmsley,
director of equity primary markets at
London Stock Exchange, was delight-
ed to have got the issue off the
ground: MegaFon is another fantas-
tic win for London. It is our largest
telecoms offering for over ten years.
There will be lots of investors only
too happy to pick up shares at a low
entry point, says Luis Saenz, head of
equity trading at BCS Financial
Group.
Since Megafon is issuing global
depositary receipts in London it will
not be traded in the FTSE indices,
making it independent of tracker
funds.
London Stock Exchange chairman Chris Gibson-Smith (pink tie) welcomes Megafon
3
NEWS
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My Story, My Design
Barroso unveils blueprint for
restructuring of the Eurozone
THE European Commission
yesterday unveiled plans for a
fundamental overhaul of how the
Eurozone is structured, including
the prospect of setting up a
common budget for the single
currency area and issuing joint
debt in the years ahead.
In a five-page document dubbed
a blueprint for creating a deep
and genuine economic and
monetary union, Commission
president Jose Manuel Barroso
acknowledged that the 17 countries
BY HARRY BANKS
in the Eurozone needed to be
allowed to integrate more deeply
and at a faster rate than the rest of
the 27-country bloc.
Barroso set out his proposals in
three timeframes: those that can be
tackled in the next six to 18 months;
those that will take 18 months to
five years; and those that will only
be achieved from 2018 on, in the
final stage of monetary union.
Barrosos more radical ideas
include the joint issuance of bonds
by Eurozone countries, a process
that would effectively involve the 17
member states underwriting one
anothers obligations.
Barroso was asked why he was
putting forward his own ideas for
overhauling economic and
monetary union when he was
already supposed to be working
with Van Rompuy and others on a
nearly identical set of proposals.
He dismissed the suggestion that
he was launching a competing
vision, saying that under the EUs
treaties, it is the European
Commission that has the power to
initiate legislation and it was merely
fulfilling that mandate.
The Megafon bumper IPO has come like an
early Christmas present for City advisers,
who have lived through one of the most
barren periods of recent years in terms of
bids and deals both in the UK and elsewhere
in Europe.
Morgan Stanley and Sberbank were the two
lead banks on the deal, standing by their
client after Goldman Sachs stepped aside at
a crucial stage, citing corporate governance
concerns.
Goldman threw their client under a bus,
said one of the large number of advisers
who stayed the course yesterday.
Morgan Stanleys team of bankers was a
large team effort led by Gergely Voros out of
the groups Moscow ofce and Henrik
Gobel, head of equity capital markets for
EMEA.
Voros has 13 years of investment banking
experience in Russia and the CIS and has led
the origination and execution of some of
the biggest capital raisings in the region
including, among others, the IPOs of
Rosneft, Evraz Group, MMK and Eurasian
Natural Resources Corp.
Credit Suisse, Citi and VTB were also part of
the syndicate, with Michael Sherwood of
Goldman Sachs just an onlooker after with-
drawing from the deal at a crucial stage.
Megafon was also advised by legal teams
from Cleary Gottlieb and Freshelds.
Minority shareholder TeliaSonera, one of the
main sellers of shares in the deal, took
advice from White & Case.
Of the ve premium IPOs in London in 2012,
White & Case has advised on three including
RusPetro in January, MD Medical in October
and todays MegaFon transaction. The lead
lawyers were Allan Taylor (pictured), Marcus
Booth, and local partner Darina Lozovsky
and associate Dmitry Lapshin.
ADVISERS
ALLAN TAYLOR
WHITE & CASE
MegaFon
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$ 19.7928Nov
MORE EUROZONE: Page 4

GREECES debt buy back plan, a key
element of the cash-strapped
countrys bailout deal, will be
voluntary but must succeed, finance
minister Yannis Stournaras said
yesterday.
In his first major speech since a
deal earlier this week to shave about
40bn (32.2bn) off the countrys
debt pile, Stournaras said the offer
would be attractive to bond holders.
Deutsche Bank will be the lead
manager of the operation, working
together with Morgan Stanley as
deal manager
Greece names
banks on key
debt buy back
FOUR Spanish banks have agreed to
downsize radically in return for a
huge injection of public money, after
the European Commission approved
the restructuring plans yesterday.
Between them the banks will
receive a 40bn (32.2bn) recapitalisa-
tion boost, but must slash jobs and
shrink their balance sheets by up to
60 per cent as part of the process.
The money is coming from Spains
fund for the orderly restructuring of
banks (FROB), which was financed by
the Eurozone bailout fund.
The fourth largest lender Bankia is
taking 18bn from the facility. It will
cut 6,000 jobs and close 39 per cent of
its branches under the programme.
Bankia itself was formed in 2010 out
of seven failed institutions, before
being nationalised. It will dispose of
50bn of assets which will sold or be
taken on by the new bad bank being
set up to wind down toxic holdings.
Junior debt holders will contribute
4.8bn to Bankias restructuring
through losses on their investments
one condition imposed on the banks
by the EC against the will of the
Spanish government which wanted to
Spanish banks
must slash jobs
for bailout cash
BY TIM WALLACE preserve bondholders investments.
After losing 19bn this year, the bank
hopes to rapidly become profitable
once more, making money next year.
Now our institution is financially
sound, we shall focus on making it
profitable because that is the best way
to reward our shareholders and tax-
payers, so they can recover their invest-
ment, said Bankia chairman Jose
Ignacio Goirigolzarri.
NovaGalicia Banco and Catalunya
Banc join Bankia in shedding assets
while Banco de Valencia is being sold
to healthier rival Caixabank.
Meanwhile Spains economy deterio-
rated further, with official data yester-
day revealing a 9.7 per cent fall in
retail sales in the year to October.
Bankia SA
0.95
1.00
1.05
1.10
1.15
0.96
28Nov
BANCA Monte dei Paschi di Siena,
Italys third biggest lender,
yesterday increased its request for
state aid by 500m (404m) to up
to 3.9bn, citing possible capital
concerns due to past financial
structured transactions.
In a statement Monte dei Paschi
said its board had approved the
issuing of special bonds to the
Treasury for up to 3.9bn, by 28
December. The scheme needs to be
approved by the EC.
It said the increase was due to
uncertainty over certain
structured transactions carried
out in previous financial years.
Italys Pashi ups
state aid plea
BANK lending to businesses fell
again in the Eurozone in October,
according to data published
yesterday by the European Central
Bank (ECB).
Despite market sentiment
improving on the back of the ECBs
plans to buy the bonds of struggling
governments like Spains, loans to
the firms fell 1.8 per cent,
accelerating from the 1.5 per cent
drop seen in September.
But lending to households edged
up 0.5 per cent, with mortgage
lending up 1.3 per cent in the year.
Private sector lending overall fell
0.7 per cent.
Private sector
loans decline
BY TIM WALLACE
4
NEWS
cityam.com
Citys bonuses safe
from EU cap for now
BY TIM WALLACE
THE EUROPEAN Parliament
yesterday postponed its key vote on
capping bank bonuses, putting its
decision back from December to
March as its members (MEPs) try to
agree what type of cap to consider.
The delay means bonuses are safe
for at least another year. MEPs had
hoped to approve the cap quickly in
a bid to push the European Council
to back the measure and impose it
before the coming bonus season.
But voting in March means the
cap if it is approved will not take
effect until at least the 2014 bonus
season.
The Parliaments Economic and
Monetary Affairs Committee
approved a bankers bonus cap of
one-times salary in May. But MEPs
are likely to vote on a compromise
level, possibly at three-times salary.
There has been a real push in
recent weeks by those in favour of
the bonus cap to reach a
compromise so the cap could be
approved by the new year, said Alex
Beidas from Linklaters. This is now
not going to happen which will be
good news for the banks.
THE French government has found an industrialist willing to invest 400m in ArcelorMittals
steelworks in northeast France, a minister said yesterday. Industry Minister Arnaud
Montebourg told lawmakers that the interested party was a private investor from the steel
industry. ArcelorMittal has so far said that it wants to sell the furnaces but not the entire site
FRANCE SAYS HAS BUYER FOR ARCELORMITTAL SITE
COMMUTERS should brace themselves
for season ticket price hikes of up to six
per cent in January, despite the govern-
ments intervention to stem inflation-
linked fare rises.
Passengers from Canterbury will be
worst hit in percentage terms, with the
price of an annual season ticket to
London rising 5.9 per cent to 4,860 in
the new year, Passenger Focus said yester-
day.
Just one of the 45 season passes checked
by the watchdog will become cheaper in
2013. Greater Anglia customers travelling
to the capital from Shenfield will enjoy a
0.6 per cent drop to 2,704.
Passengers will feel this pain. After
years of above-inflation fare rises, fresh
increases are piling pressure on already
high fares, said Passenger Focus chief
executive Anthony Smith.
Government and the rail industry
must now work together to deliver on the
welcome promise to get fare rises in line
Train pain for
season ticket
commuters
BY MARION DAKERS
with inflation.
In October, the Department for
Transport lowered the planned rise in
average regulated fares from 6.2 to 4.2
per cent, or one per cent above the retail
prices index (RPI) measure of inflation.
At the time the government claimed
passengers would be spared as much as
200 on rises that had been pencilled in
for the new year.
Plans to set the fare hike limit at RPI
plus three per cent had already been
delayed once, after chancellor George
Osborne backtracked in last years
Autumn Statement.
However, train companies are free to
hike some fares by more than the limit,
providing the average rise does not stray
above 4.2 per cent.
Commuters must wait until December
to find out how far the price of other
types of ticket will rise.
Passenger Focus said 42 per cent of
train users are happy with the cost of
tickets but this falls to 29 per cent for
those who commute for work.
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BUSINESS AND FIRST CLASS SECTORS
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BUSINESS
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ADELAIDE 2220 2220 7260 7440
BANGKOK 2265 1245 3390 5530
TORONTO 5435 3230 5930 4640
SINGAPORE 3470 1815 6115 5440
MAURITUS 2510 1640 - -
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AN BUSINESS
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SEASON TICKETS TO SOAR AGAIN IN JANUARY
SOUTH WEST TRAINS
GUILDFORD TO LONDON TERMINALS
3,224 IN 2013
4.3% on
last year
21%
since 2008
FIRST GREAT WESTERN
READING TO LONDON TERMINALS
3,960 IN 2013
4.2% on
last year
19%
since 2008
FIRST CAPITAL CONNECT
CAMBRIDGE TO LONDON TERMINALS
4,400 IN 2013
3.8% on
last year
21%
since 2008
CHILTERN
HIGH WYCOMBE TO LONDON TERMINALS
3,200 IN 2013
4.2% on
last year
16%
since 2009
SOUTHEASTERN
TONBRIDGE TO LONDON TERMINALS
3,796 IN 2013
5.2% on
last year
39%
since 2008
SOUTHERN
HOVE TO LONDON VICTORIA
3,860 IN 2013
4.1% on
last year
18%
since 2008
TfL hopes to push Overground
onto key suburban rail routes
TRANSPORT for London (TfL)
remains optimistic that it will get
the go-ahead to take control of key
suburban rail routes early next
year.
Howard Smith, chief operating
officer for TfLs rail operations,
told City A.M. that he is hopeful of
coming to some conclusions in
the next few months following
discussions with the Department
for Transport.
TfL wants to build on the
success of its London Overground
BY JAMES WATERSON
network by running parts of the
current West Anglia service from
Liverpool Street to Enfield and
Chingford, as well as some inner
suburban services out of London
Bridge and Charing Cross operated
by Southeastern.
We would plan to bring
where we can more trains,
integrated ticketing, more security
at stations, greater reliability and
better staffing, Smith said.
Franchisees can only justify
investment over seven years but
were able to take a thirty-year
view. Our job is to make the case to
the secretary of state as to what we
could do.
Mayor of London Boris Johnson
backs the plan, although it is
understood that current transport
secretary Patrick McLoughlin is
less supportive than his
predecessor Justine Greening.
Smith was talking at a preview
of the new London Overground
route from Clapham Junction to
Surrey Quays, which launches on 9
December. The new service
promises to cut journey times for
commuters heading from South
London to Canary Wharf.
THE GOVERNMENT yesterday
unveiled plans to introduce mini-
mum prices for alcohol, despite con-
cerns that such a move will penalise
ordinary drinkers.
The home office proposals include a
ban on multi-buy promotions and a
minimum unit price of 45p in
England and Wales. As a result a one
litre bottle of Gordons gin current-
ly available from ASDA for 14 will
have a minimum price of 16.88.
Meanwhile a bottle of wine would
cost a minimum of 4.22.
Tim Martin, chairman of pub chain
J D Wetherspoon, told City A.M. that
the proposals are purely a tax on peo-
ple who dont have a lot of money.
For people in London itll open up
the booze cruise again and once that
bandwagon starts rolling then the
chancellor starts to lose a lot of
income from VAT, employment and
alcohol duty, he added.
Its bad for the poor and its bad for
the sensible but it wont affect dinner
parties in Notting Hill.
Floor price for
alcohol will hit
poor hardest
BY JAMES WATERSON
Analysis by the Institute for Fiscal
Studies found that the price floor
would not just affect the very cheapest
alcohol, as 60 per cent of off-licence
units now cost less than 45p. It would
also hit certain drinks, such as ciders,
hard while alcopops would be relative-
ly unaffected. Low income households
would see the largest price increase.
Research from Sheffield University
suggests a 45p minimum unit price
would reduce the UKs alcohol con-
sumption by 4.3 per cent.
The government says that minimum
pricing will cut hospital admissions by
24,600 after 10 years and result in 714
fewer drink-related deaths over the
same period.
But British Retail Consortium food
director Andrew Opie said the govern-
ment should recognise the role of
personal responsibility. It should not
allow interfering in the market to reg-
ulate prices to become the default
approach for public health policy.
Clare Thomas of law firm Addleshaw
Goddard also warned that the changes
could breach the EU single market
legislation.
MINIMUM ALCHOHOL PRICING:
SHOULD IT BE STATE CONTROLLED?
Interviews by Alex Croell
Its a good thing because it will discourage
people from over-drinking and to be responsi-
ble. Its bad because it will affect some people more than
others. I dont think they should have that power.
These views are those of the individuals above andnot necessarily those of their company
PAULO AQUINO
NORDLB
Some alcohol is cheaper to buy than certain

zzy drinks so I think its a step in the right
direction when it comes to young adults drinking heavily.
But I dont believe they should have that much inuence.
RACHEL CALYDON
SCHINDLER
Sometimes I think you need regulation when
it comes to things that can harm you such as
alcohol. Young people are especially affected because its
easy and cheap to get so hopefully this will help.
TOBY GALLINGTON
QUBE GLOBAL SOFTWARE
CITYVIEWS
6
NEWS
cityam.com
Mark Kleinman is the City editor of Sky
News. Twitter: @MarkKleinmanSky
F
ROM the forthcoming report of
the Parliamentary Commission
on Banking Standards to a
possible resignation letter from
Paul Tucker: Mark Carney has an
unenviable reading list before he sets
foot in Threadneedle Street as the new
Governor of the Bank of England.
If he wants a genuine cold-towel
moment ahead of his arrival, however,
he should reach for a paper being
finalised this week by the Association
of British Insurers (ABI) about the pres-
ent case for investing in UK banks.
An earlier draft of the document,
passed to me earlier this month,
amounts to a brutal warning of a
buyers strike across the sector.
Among the dozen-or-so cautionary
notes about what the ABI calls the
new model: investor scepticism about
INSIDE
TRACK
MARK KLEINMAN
New broom Mark Carney has a lot of paperwork to sweep up
the ring-fencing model being imposed
on UK banks; confusion about the ben-
efits of bail-in capital; and the poten-
tial negative impact on equity demand
from the issuance of instruments such
as Cocos. As chairman of the Financial
Stability Board, the international
banking policy-making body, Carney
has urged big global lenders to hold
more capital, more quickly as the
industry migrates towards Basel-III.
The ABI rightly raises a red flag about
where that capital will be sourced
from. Sustainable dividend policies
and a clear path towards an attractive
return on equity, it says, are essential
but even they will not be sufficient in
themselves.
The implications of this capital
scarcity for banks ability to lend to the
wider economy make it as big as any of
the myriad other challenges con-
fronting Carney when he takes up his
new post. Alarm bells should be ring-
ing all the way to Ottawa.
MONITISE MULLS 100M FUNDRAISING
George Osborne may have snatched
Carney from across the Atlantic, but
the reverse journey is more common
when it comes to breeding successful
technology companies.
My sources tell me that it will be
sion capital theyve injected. Nasdaqs
gain would be Aims loss.
UK TAX SLIPPING DOWN THE AGENDA
Burberry, Diageo and
GlaxoSmithKline: three British compa-
nies with foreign competitors paying
questionable levels of tax on their UK
profits and whose chief executives
advise David Cameron.
So when the Prime Ministers
Business Advisory Group met in
Downing Street earlier this month, it
would have been reasonable to sup-
pose that the avoidance of UK tax obli-
gations by foreign multinationals
would have been high on the agenda.
Not a bit of it: a spokesman for
Number 10 says the discussion focused
on skills, and that corporate tax was
not raised.
Whether it was good manners on the
part of Mr Camerons guests or a wilful
blindness to tackle an issue causing
genuine public outrage, the omission
was an oversight on both sides.
worth watching Monitise, the mobile
payments company part-owned by
Visa, the credit card giant, in the days
ahead.
Monitise has already passed the (elec-
tronic, of course) begging bowl around
shareholders on six previous occa-
sions. I understand it is now in discus-
sions with investors about a further
fundraising of up to 100m.
The latest deal, arranged by
Canaccord Genuity, is not born out of
necessity, according to insiders, since
its business plan is already funded
through to next autumn.
Monitise has, however, floated the
prospect of shifting the companys list-
ing to New York when it decides it has
outgrown AIM.
That is of broader significance than
one company. Londons claim to be a
tech investment hub would be dam-
aged by a continued exodus of such
high-growth businesses overseas.
At some point Monitises investors
like those of other migrating tech com-
panies whose birthplace was in the UK
stand to be rewarded for the expan-
THOMAS COOKs new chief executive
Harriet Green yesterday insisted the
embattled tour operator had turned
a corner yesterday and outlined
plans for more drastic cost savings
after revealing a gaping 485m loss.
The groups full year results saw
losses widen by 22 per cent from a
398.2m loss last year while revenue
declined by three per cent to 9.5bn.
Green, who joined from Premier
Farnell in July, said the loss was
unacceptable but said the results
masked the improvement made in
the fourth quarter of the year.
The potential across our business
is strong and despite what these
results may suggest, this business is
very definitely viable and working,
Green said.
She pledged to improve profit and
said the business has already estab-
lished plans to deliver 100m of
annualised savings, largely expected
in 2014 and 2015, in addition to
140m of British cost cuts already
Thomas Cook
chief outlines
more cost cuts
BY KASMIRA JEFFORD announced.
Green, who has said technology will
be the groups salvation with its
online business set to be the key dis-
tribution channel, will unveil a full
turnaround plan for the group in the
spring.The group, which was on the
brink of collapse last year, has been
hit hard by the economic downturn,
high fuel costs and social unrest in
popular destinations. It has had to
renegotiate bank loans and make dis-
posals to cut debt.
Shares closed four per cent higher
yesterday at 25p.
US firm Affinion Group last
night pulled out of takeover
talks with credit card insurer
CPP.
Affinion, which had revealed it
was in preliminary takeover talks
at the end of last month, said it
had no intention of making an
offer.
CPP, said it would continue to
actively pursue a range of
financing options.
We are in discussions with
our lending banks about the
groups debt facilities which
mature in March 2013 as well as
considering a number of
alternative financing and
BY KATIE HOPE
strategic options, it said in a
statement.
York-based CPP, which derives
68 per cent of its revenues from
the UK, was hit earlier this
month with a record 10.5m fine
from the FSA over misselling
after a long-running
investigation into historic
practices at the firm.
At the time, CPP chief
executive Paul Stobart said it
would now seek to rebuild both
its business and market
reputation.
Shares in CPP, which have
collapsed since their 235p float
in 2010, closed down 5p
yesterday at 20p.
8
NEWS
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Law firm Simmons & Simmons
revenue hurt by the weak euro
LAW firm Simmons & Simmons
has blamed the tough economy
for a three per cent fall in half-
year revenue yesterday.
The corporate law specialist
posted revenues of around
121m for the first six months
of the financial year, but said
the figure is flat on last year
once exchange rates are
excluded.
Managing partner Jeremy
Hoyland said: As anticipated,
the ongoing uncertainties in the
BY MARION DAKERS
Eurozone and in a number of
economies have made market
conditions more difficult and
the results were impacted by the
weakening of the euro.
Our costs have fallen from the
prior year and the firm is well
positioned to take advantage of
developments in the second half
of the financial year.
The dip in revenues marks a
reversal from last year, when
Simmons posted a four per cent
rise in turnover and a 15 per cent
jump in profit per equity
partner.
The news follows confirmation
from rival law firm Ashurst
earlier this week that it would
defer the payment of profits to
partners this quarter after seeing
its revenue drop by six per cent
for the first six months of the
year.
Many City law firms have
struggled to recover the work
lost during the financial crisis. A
string of companies have
announced mergers in recent
years as they attempt to shelter
from the continued economic
turbulence.
This is an encouraging statement of intent and represents a suitably
aggressive start to life under Harriet Green...With net debt down to more manage-
able levels and a supportive banking syndicate, we think the group now has
the platform to deliver the required cost and business changes to thrive.
ANALYST VIEWS
The results were much as expected, as was the outline of the business
transformation strategy. But net debt was 100m lower than we expected, and this
should give some condence that the new management can deliver...While
the upside from getting it right is signicant, the task remains substantial.
The statement from Thomas Cook is positive...However, we consider

that the future remains highly uncertain and the turnaround task will, we
believe, be very difcult. At this stage we prefer to adopt a wait and see
attitude. We retain our hold rating.
DO THOMAS COOKS
RESULTS SHOW IT IS
HEADING THE RIGHT WAY? Interviews by Kasmira Jefford
JAMES HOLLINS INVESTEC
NICK BATRAMPEEL HUNT
WYN ELLIS NUMIS SECURITIES

Thomas Cook Group PLC
22
23
24
25
26 p 25.00
28Nov
US firm Affinion drops out
of takeover talks for CPP
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TAX advisory and agricultural
commodities trading could be some
of the business arms cut by Barclays
in its impending shakeup of
operations, as it tries to improve its
reputation, investment bank boss
Rich Ricci told MPs and peers
yesterday.
And the senior banker also
confirmed yesterday that five staff
have been fired over the Libor fixing
scandal, while another eight have
been disciplined.
Ricci said the current
review is designed to
make sure no activities
will embarrass the bank
in future.
Separately Deutsche
Bank said it could
settle with
regulators over
Libor allegations.
Barclays set to
close its tax
advisory unit
BY TIM WALLACE
PAYDAY loan firms face a cap on the
amount they can charge consumers,
the government announced last
night.
In a blow to the booming industry,
ministers said that legislation will be
introduced to give the new Financial
Conduct Authority (FCA) power to
intervene in the industry if it sees evi-
dence of bad practice.
The government agreed to add
clauses to the Financial Services Bill
after realising it faced defeat on a
cross-party amendment that called
for regulators to sanction businesses if
they offer credit on terms that cause
consumer detriment.
Payday loans which generally take
Payday loan
charges to be
capped by law
BY JAMES WATERSON
the form of short-term unsecured debt
offered to individuals have been con-
troversial due to some of the sky-high
interest rates charged by lenders.
But lenders say that they provide a
valuable service to customers. Market
leader Wonga argues that its 4,214 per
cent APR is not representative of the
actual cost of borrowing small
amounts for a short period of time.
Conservative Treasury minister Lord
Sassoon warned that while the addi-
tional regulation could bring huge
benefits, it may also reduce access to
borrowing for the poor.
Capping the cost of credit and the
number of times a loan can be rolled
over would be a major market inter-
vention and regulators will need to
act with care, Sassoon added.
Marks and Spencer Group PLC
375
380
385
390
395 p
387.00
28Nov
LIBOR fiddlers could face up to
seven years in jail under new
proposals put out for consultation
by the Treasury yesterday.
And other market benchmark
indices could fall under similar
regulations.
For example energy market
benchmarks, which saw
accusations of abuse and price-
fixing earlier this month, could be
subject to state regulation.
Energy market abusers could
face jail under new proposals
BY TIM WALLACE
The proposals also follow those
of Martin Wheatley, the head of
the incoming Prudential Conduct
Authority (PRA) next year, who
called for Libor submissions to be
audited and based on real trades.
Recent events have illustrated
that Libor might not be the only
benchmark subject to attempted
manipulation, said Treasury
minister Greg Clark. We are
consulting on whether further
benchmarks should be brought
within the scope of regulation.
Minister Greg Clark said other benchmarks could be regulated in the same way as Libor
cityam.com
12
NEWS
SHARES in Marks and Spencer were
given a boost yesterday after the
retailer announced yesterday it had
agreed on a cheaper funding plan
after slashing its pension deficit by
nearly 80 per cent since 2009.
The group said the latest
actuarial valuation of its UK defined
benefit pension scheme, which
takes place every three years,
showed a deficit of 290m at March
2012 compared with 1.3bn at the
same period in 2009.
M&S said the improvement
reflected additional contributions
together with strong investment
growth and sound risk
management.
As a result the company has
drawn up a new 10-year funding
plan and will pay cash
contributions of 28m per year over
the next three years, less than the
60m previously agreed until 2018.
M&S cuts pension funding costs
after narrowing deficit by 80pc
BY KASMIRA JEFFORD
The remaining amount will be
funded from returns on existing
assets as well as investment returns
on its property portfolio.
Shares rose three per cent in early
morning trading before closing up
2.17 per cent at 387p.
Jean Roche, analyst at Panmure
Gordon said there is a sense of
relief in terms of this unexpected
good news announcement after a
lacklustre performance in it share
price over the past few weeks.
MARKS and Spencer has done an
impressive job of cleaning up its
pension deficit, knocking off 1bn
over the last three years. It has
now agreed a ten-year plan to deal
with the remaining 290m.
That saw a bump in the share
price, which some attribute to the
greater attractiveness of Marks
and Spencer as a takeover target.
Having its pensions liabilities
under control avoids a poison pill
for any future buyer.
But perhaps stockholders were
simply acknowledging that
pension deficits are bad for their
interests already. Research by
Professor Ian Tonks and Weixi Liu
this year found that companies
with large pension deficits make
up the funding shortfall by paying
lower dividends to shareholders.
The researchers looked at a sample
of 180 firms from the FTSE 350
over the period 2000-2007, and
found a strong negative
relationship between a firms
dividend payments and its
mandatory pension contributions.
The impact of pension deficits
on corporate performance is also
becoming a serious matter.
Research this November from the
Institute of Chartered Accountants
of England and Wales (ICAEW) and
pension fund consultancy Mercer
found more than half of those
surveyed said that high defined
benefit pension deficits will have a
negative impact on the financial
performance of their business over
the next three years.
With Hymans Robertson putting
the FTSE 350s collective pension
deficit at 115bn in the year to 31
July 2012, pension deficits will
continue to affect corporate
performance and dividend
payments. Marks and Spencer is
getting its debts in order, but it
wasnt alone in having a problem.
DROWN YOUR SORROWS
Hopefully rumours of the demise
of the M&S meal deal thanks to a
state minimum price for alcohol
have been exaggerated. But a
measure intended to change
drinking habits was bound to
affect firms that sell alcohol. By
reducing competition and raising
prices, it will boost them at
consumers expense. Perhaps it is
time to comfort yourself not with
a glass of overpriced scotch but by
doubling down on the suppliers
who will be the beneficiaries.
BOTTOM
LINE
MARC SIDWELL
Pension deficits cost investors
Rich Ricci heads the
investment bank
www.cityamsurvey.com
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HELP US MAKE YOUR FAVOURITE PAPER EVEN BETTER
BUSINESS leaders have applauded
planning minister Nick Boles after he
called for homes to be built over
swathes of countryside in order to
combat the UKs housing shortage.
Last night Boles told BBC Newsnight
that around 1,500 square miles of
open countryside should be
developed, in the hope of
bringing down the cost of
homes and kickstarting
the economy with a con-
struction boom.
Corin Taylor of the
Institute of Directors, said
this was a sensible policy:
The UK population is ris-
ing, so it is utterly unrealis-
tic to simply hope
people will disap-
pear or cram
themselves into
ever smaller
divisions of the
Businesses back Boles plans to
develop on open countryside
BY ALEX CROELL
existing stock.
New houses must be of a good stan-
dard, and in sensible locations rather
than smack in the middle of flood
plains, but they do need to be built.
Despite this Boles faces opposition
from within his own party and envi-
ronmental groups.
In a speech later today Boles will
emphasise that while the govern-
ment has handed responsibility to
local councils to plan for future
housing needs, this can be swiftly
taken away: If they fail to take their
responsibilities seriously, the pre-
sumption in favour of sustainable
development will fill the vacuum
and make the vital decisions that
they are ducking.
We want to build beautiful
and affordable places
once again, Boles will
say.
Boles says 1,500 square
miles should be built on
TOP STANDARD Chartered
economist Gerard Lyons is leaving
the bank, he said yesterday, for a job
outside the financial services
industry.
The head of global research and
chief economist will leave the bank
tomorrow, ending a 13-year career at
Gerard Lyons resigns from top
economist role at StanChart
BY BEN SOUTHWOOD the UK-headquartered, but Asia and
Africa-focused bank.
In 2010 and 2011, the team Lyons
oversaw was ranked the top global
forecaster by Bloomberg, and the 51
year old was often the banks
authoritative voice on issues in its
main markets. Before StanChart,
Lyons worked at DKB International
and Swiss Bank Corporation.
Gerard Lyons has been with Standard Chartered for 13 years
THE US government is threatening
to file civil securities fraud charges
against SAC Capital Advisors and is
tightening the regulatory screws
around Steven A. Cohen, the $14bn
hedge funds founder and one of the
industrys most famous traders.
The move comes a week after a
former SAC Capital employee was
charged with running the most
lucrative insider trading scheme ever
in a series of transactions Cohen
signed off on.
Cohen and a top SAC executive
told investors on a 20-minute long
conference call yesterday that the
Securities and Exchange
Commission had issued a so-called
Wells notice to the firm.
SAC has averaged an annual
return of 30 per cent since Cohen
founded it in 1992.
Cohen has not been accused of
wrongdoing.
SAC could see
SEC charges
THERE are over three million work-
ers who are in employment, but
wish they worked longer hours, a
report for 2012 revealed yesterday.
Around a tenth of all workers
wanted to work more hours, accord-
ing to the data from the Office for
National Statistics (ONS), including
just under a quarter of those cur-
rently working part-time.
This represents a 1m or 47.3 per
cent rise in underemployment
since the height of the financial cri-
sis in 2008.
However, the ONS said the increase
came mainly during the depths of
the recession in 2008 and 2009
when employment was also falling
not in the period since then where
the UK has enjoyed so much job
growth.
But commentators still saw the
data as extra evidence highlighting
the sluggishness of the UKs recov-
ery, even in the labour market.
Taking any job available, even if it
Over 3m want
to extend their
working hours
BY BEN SOUTHWOOD
meant lower pay and fewer hours,
was a pragmatic response to the
recession, said Trades Union
Congress boss Brendan Barber. The
fact that the number of underem-
ployed people continues to grow
shows just how weak our recovery is,
and how fragile the labour market
remains.
Underemployment was highest
amongst young people, with 21.7 per
cent of workers aged 16 to 24 wishing
they had more work, compared to 9.7
per cent of 25-34 year olds, 9.6 per
cent of 35-49 year olds eight per cent
of 50-64 year olds and 4.2 per cent of
over 65s. And this age-axis held up
even after controlling for the fact
that 42 per cent of 16-24 year olds
work part time, versus 28 per cent of
all age groups.
The data also revealed that under-
employment hit hourly wages by
3.32 an hour on average though
this information was affected by the
fact that part-timers both earn lower
wages and report higher rates of
underemployment.
14
NEWS
cityam.com
UNDEREMPLOYMENT HAS RISEN BY MORE THAN 1m SINCE 2008
21%
of workers aged
16 to 24 want to
work more hours
9.7%
of workers aged
24 to 35 want to
work more hours
4.2%
of workers aged
over 65 want to
work more hours
Underemployed
workers earned
an average of
7.49
per hour
Other workers
are getting
paid
10.81
per hour
MORE THAN3mPEOPLE WANT TOWORKLONGERHOURS
MOST OF THE UNDEREMPLOYEDWANT TOSTAYINTHEIR
JOB, JUST WORKLONGERHOURS
Want replacement
jobwithmore hours
(0.46m)
Want anadditional
job(0.27m)
Want more hours in
current job(2.33m)
9%
76%
15%
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2000 2002 2004 2006 2008 2010 2012
SPENDING fell slightly going into
the second half of November,
data revealed yesterday, despite
the proximity to Christmas.
Spending was down 0.8 per
cent in the four weeks to 19
November, figures from Visa
revealed, despite a 1.2 per cent
increase going into the last week
of that period.
This meant spending was some
3.7 per cent lower than the same
period during 2011, the credit
card firm said.
Data from Visas weekly
Christmas spending tracker
indicates that consumer spend in
the UK is flat, meaning that
retailers online and on the high
Consumer spending weak even
with Christmas a month away
BY BEN SOUTHWOOD
street are going to have to work
hard to extract the same level of
spending as last year, said Visa
commercial director Dr. Steve
Perry.
He said that hard-pressed
consumers were waiting and
seeking out the best deals to get
the biggest bang for their bucks,
and thus predicted a record
number of shoppers on so-called
Mega Monday, on 3 December.
Visa yesterday predicted that
on 3 December 320m will be
spent online with its cards
which typically make up about a
third of total consumer
spending as retailers
aggressively discount products
to pull in so-far-reluctant
shoppers.
PwC bets chancellor will scrap
duty hike in Autumn Statement
THE most likely tax announcement
George Osborne will make in his
Autumn Statement is scrapping the
planned 3p fuel duty rise, PwC
estimated yesterday.
The odds of Osborne cancelling
Januarys rise are 7-2, the financial
services giant said, ahead of
extending entrepreneurs relief to
all employees, rated at 5-1.
Least likely of the possibilities are
scrapping the 45p top tax rate (66-
1), hiking VAT further, to 22.5 per
cent (also 66-1) and a harmonisation
BY BEN SOUTHWOOD
of national insurance contributions
and income tax (100-1).
Separately, tax specialists Baker
Tilly criticised government tax
tactics. Though raising the personal
allowance has brought many low
earners out of income tax, it was
paid for with a falling real starting
point for the higher rate 41,450
for 2013-4, compared to 49,000 if
the boundary had moved with
consumer prices, it said.
The Treasury also used these
fiscal drag tactics on inheritance
tax, freezing the threshold at
325,000 from 2009-10 equivalent
to 364,000 in next years money
worth about 325m in revenue, said
Baker Tilly.
Meanwhile, the Confederation of
British Industry argued for a series
of policy changes.
Business supports planned fiscal
consolidation, the lobby group
claimed, but thinks the government
could be both austere and pro-
growth by cutting current rather
than capital spending.
The body also asked the
government to limit business rates
rises to two per cent next year
rather than 2.6 per cent as planned.
LORD Rothschild yesterday said gov-
ernment monetary policy was failing
to fix the financial system as he
revealed a near-80m drop in value
for his investment fund RIT Capital
in the past six months.
Their actions prevent systemic col-
lapse but the deeper underlying
problems remain, he said in a state-
ment to shareholders.
The City grandee and member of
bankings most famous family said
policy was tempting people to
increase how much risk they take
with their investments, a strategy he
would ignore.
RIT Capital Partners, the fund
Rothschild founded in 1988 and still
chairs, lost 77.9m in the six months
to September after a 10.3m loss on
sovereign bond and currency hedges.
Lord Rothschild
slams central
banking policy
BY MICHAEL BOW
Almost 18m of losses were also
made by external asset managers
given money by the fund to manage.
We intend to focus our invest-
ments on such individual situations
and on external managers who recog-
nise the new reality, he said.
Analysts said the drop in value meant
Rothschilds fund was now trading at
an attractive discount.
Adrian Haxby worked at UBS for 27 years
RIT Capital Partners PLC
1,130
1,135
1,140
1,145
1,150
1,155 p 1,153.00
28Nov
UK listed private equity firm
Electra Partners yesterday said
expensive price tags on companies
being sold had stopped it buying
more firms this year after
revealing solid numbers in its full
year results.
The firm, which has holdings in
motor car insurer esure and
caravan park operator Park
Resorts, said the chasm between
Electra waits for prices to fall as
it builds up war chest to 400m
BY MICHAEL BOW buyer and seller expectations had
slowed investments despite a
massive increase in deal flow. The
fund yesterday said realisations
for its portfolio this year of 301m
was higher than the total amount
realised in the previous 24
months. Investments remained
broadly flat from 136m to 150m
this year. Electra, chaired by
Ofcom chair Dr Colette Bowe, has
around 400m of dry power from
investors waiting to be invested.
Electra Partners is chaired by Dr Colette Bowe, who also chairs media regulator Ofcom
15
NEWS
cityam.com
The new
jobs website
for London
professionals
C
I
T
Y
A
M
C
A
R
E
E
R
S
.
c
o
m
ALBION Venture Capital Trust, one of
the largest listed venture capital
firms in the UK, yesterday posted a
drop in its net asset value (NAV)
following its internal merger with
Albion Prime Venture Capital Trust.
The trust, which is one of six
under the Albion Ventures umbrella
and invests in smaller unquoted
companies, reported a NAV of 76p a
share for the six months ending
September compared to 78p a share
for the same period last year. Pre-
tax revenues dropped from
529,000 last year down to 413,000.
The company said it
would maintain its
second dividend of
2.5p pence a share
taking its full year
dividend up to 5p.
Albion Ventures
merged the Prime and
Venture trusts in
September.
Albion Venture
reveals trust
merger impact
BY MICHAEL BOW
CANACCORD Genuity
yesterday said it planned to
add to its roster of recent
executive hires by recruiting
former UBS banker Adrian
Haxby to lead its European
investment banking division.
Haxby, 54, was a long
standing figure at the Swiss
bank, having started working
for the firm in the mid-1980s.
He went on to become the
head of the banks UK Mid
Market Group working mainly
with FTSE 250 companies
before leaving the firm earlier
this year.
Haxby will oversee
Corporate Broking and
Advisory activities at
Canaccord and report to chief
Canaccord Genuity recruits
ex-UBS banker as new boss
BY MICHAEL BOW
executive Alexis de Rosnay.
Adrian has advised on
many notable transactions
during his career, de Rosnay
said. His relationship-based
approach and recent mid-
market focus are extremely
complementary to Canaccord
Genuitys growing client base
and client-centred model.
The appointment comes
after a string of senior hires
by Canaccord. In September
the firm appointed de Rosnay
from Lazards to head up the
UK and European business
and Peter OMalley as chief
executive of Canaccord
Genuity Asia.
Haxby will oversee
investment banking in the UK,
France and Germany,
Canaccord said.
GLOBAL miner Rio Tinto said last
night it will slash costs by $5bn
over the next two years as
commodity prices tumble, but
said it was cautiously optimistic
on Chinas outlook and was
sticking with plans to expand its
lucrative Australian iron ore
operations.
Rio said it is aiming to cut more
than $5bn of operating and
support costs by the end of 2014,
and would cut spending on
exploration and evaluation
projects by $1bn over the rest of
2012 and 2013. Much of the cost
cuts would come in its coal and
aluminium assets, chief executive
Tom Albanese said at the investor
seminar. It also plans to cut
spending on sustaining
operations by more than $1bn.
Rio to slash
costs by $5bn
Albion Ventures
managing partner
Patrick Reeve
Great Scot! Its Aberdeen
Assets Caledonian awards
Explorer Jock Wishart and HSBC Private Bank
chief investment officer Nigel Webber
Above:
Business
tycoon Sir
Tom Hunter
and Lady
Hunter
Left:
Journalist
Peter McKay
with Boisdale
owner Ranald
MacDonald
17
cityam.com
WITH Boris out on a
charm offensive to India
this week, what better time
for Prime Minister David
Cameron to address spicy
food lovers at the eighth
annual British Curry Awards?
Speaking via video to guests
like Chris Grayling MP and
UKIP leader Nigel Farage,
Cameron offered: It is often
said that curry is Britains
national dish. It is not just the
flavour served up, it is the
welcome too. City curry
connoisseurs may be
disappointed, but not
surprised, to hear that the
curry houses of Brick Lane
were snubbed on the shortlist
for Best City Spice Restaurant.
Making the cut were London
Walls Mehek eaterie and
Oxford Streets Gaylord
restaurant, which were
pipped to the post by winner
Bombay Palace on Connaught
Street.
THERE was a huge bevy
of executives and
advisers at the offices of the
London Stock Exchange
yesterday to celebrate the
flotation of Megafon, the
Russian telecoms group
controlled by Alisher
Usmanov (pictured below).
But where was Usmanov
himself? Russias richest
man, whose plans for the
flotation did not meet with
the approval of one-time
adviser Goldman Sachs, was
absent from the occasion. He
just couldnt be in the
country for it, said a
spokesman for him yesterday.
Which is a shame. For the
money-raising
was the
largest in
the UK
telecoms
sector
for 10
years and
one of the
biggest of a
barren year
for London.
cityam.com/the-capitalist
THECAPITALIST
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
TO Ranald MacDonalds
Boisdale restaurant for the
Aberdeen Asset Management
Great Scot Awards 2012.
Bagpipes were blaring to
welcome tartanclad guests to
the patriotic dinner, held in
association with City A.M. and
Johnnie Walker Blue Label.
Winners included Lord
Steel of Aikwood, fashion
designer Pam Hogg, actor
Jamie Sives and Olympic gold
medallist Tim Baillie with
Sir Alex Ferguson named
Greatest Scot of them all.
Previous Scot winner
Lorraine Kelly was there to
present a trophy this year,
although didnt embrace the
spirit of the night as heartily
as other guests. Leaving
Canary Wharf at an all too
respectable hour she told The
Capitalist: My busy career
leaves me with a social life of
a toddler as I have to be up at
4am.
Left to right: Piping the guests in to dinner; entrepreneur and ex-City worker Gijs Kaars-Sijpesteijn, Berry Asset Management chief executive Jamie MacLeod, Aberdeen Asset
Management chief executive Martin Gilbert; Scot winner Lord (David) Steel, the former leader of the Liberal Party.
NOKIA has won a significant victory
over the company that makes
BlackBerry smartphones, the Finnish
firm revealed yesterday, with a court
deciding that its patented Wi-Fi tech-
nology was being used without per-
mission.
Research in Motion (RIM) now faces
the prospect of having to change the
technology used in its devices or pay
fees to Nokia. In legal filings reveal-
ing the results of the
Swedish arbitration rul-
ing, Nokia yesterday
outlined plans to block
sales of BlackBerry
smartphones in the
UK, US and Canada via
the courts.
The Swedish arbitra-
tor does not have the
power to ban sales of
BlackBerry handsets,
but its decision could
set an important prece-
dent in other courts.
All of RIMs handsets
use Nokias patented
Wi-Fi technology, the
tribunal said, after it
Nokia looks for
BlackBerry ban
after court win
BY JAMES TITCOMB
was chosen by both companies as an
independent party.
The dispute centred on the terms of
an agreement signed between Nokia
and RIM in 2003, which allowed
Nokias cellular technology to be used
in BlackBerry handsets. RIM had
argued that the licence should
extend to Wi-Fi, while Nokia and the
arbitrator disagreed.
The decision is the latest blow to
beleaguered RIM, which has seen
sales of its once-dominant smart-
phones drop in recent months.
Figures released this week
showed that its share of
UK smartphone sales has
more than halved in the
last year, as it has lost out
to Apples iPhone and
handsets running
Googles Android soft-
ware, such as Samsungs
Galaxy SIII.
The developments will
come as a boost to Nokia,
which may see its warch-
est of patents as an extra
source of revenue as it
tries to turn around its
billion-dollar losses. The
firm is outwardly confi-
dent of a revival in its
smartphone business but is
burning through its cash pile.
T
R
E
V
O
R

S
A
M
S
O
N
BlackBerry handsets use
Nokias Wi-Fi technology
COMETS administrators yesterday
confirmed they are to close a further
125 stores and may shut the entire
business by the end of the year
unless a buyer can be found, in a
devastating blow for the high street.
Deloitte said just 70 stores of the
original 236 stores will continue to
trade until all of the remaining
electricals stock is sold.
Some 1,000 staff have already been
made redundant and the jobs of the
remaining 5,000 staff now hang in
the balance, in what would be the
biggest collapse on the high street
since Woolworths in 2008.
Deloitte partner Chris Farrington
said the group remained in talks
with a small number of interested
parties and will delay the store
closures if any acceptable offers
are made. Unfortunately, in the
absence of a firm offer for the whole
of the business, it has become
necessary to begin making plans in
case a sale is not concluded. If a sale
is not possible we would envisage
stores to begin closing in December,
Farrington said.
Entrepreneur Clive Coombes,
Dixons and TK Maxx have been in
talks to buy some of stores while
Appliances Online has tabled a bid
for Comets website and brand.
In a statement last night, Comet
owner OpCapita blamed a
combination of adverse factors,
including the withdrawal of credit
insurance and the consequent
reluctance of suppliers to supply the
business on normal terms, for the
failure of the business to continue
trading.
Comet forecast
to leave high
street by Xmas
BY KASMIRA JEFFORD
CANADIAN IT services company
CGI Group yesterday reported a
fourth-quarter loss due to costs
associated with its acquisition of
Logica.
The Montreal-based company
completed the $2.64bn (1.65bn)
acquisition of its larger Anglo-
Dutch rival Logica in August and
recorded a related charge of
C$248m in the quarter.
CGI posted a loss of C$168m, or
58 Canadian cents per share,
compared with a profit of C$70m,
or 26 Canadian cents per share, a
year earlier.
Analysts on average expected
earnings of 41 Canadian cents on
revenue of C$1.65bn.
Revenue rose 60 per cent to
C$1.61bn.
The company, which provides
technology outsourcing and
consulting services, booked
C$1.52bn in new contracts,
extensions and renewals, up three
per cent from a year earlier.
The integration of Logica into
the CGI operational model is well
underway and being
implemented as planned, said
president and chief executive
Michael Roach.
We continue to expect the
combination to generate an
accretion rate of 25 per cent to 30
per cent in fiscal 2013, excluding
acquisition related and
integration costs.
We are well positioned
operationally and financially to
continue to execute our
profitable growth strategy in
F2013 and beyond, he added.
Michael Roach said the intregration of Logica was on track as planned
Valere Capital backs our appeal
Mark Preston, principal of Valere Capital, on a visit to Mozambique with Opportunity
19
CHRISTMASAPPEAL
CITYA.M.
cityam.com
THE CAPITALIST asks Mark Preston,
principal of Valere Capital, why the
firm is supporting the City A.M.
Christmas Appeal this year.
Why are Valere Capital supporting
Opportunity International?
The relationship between us came
about due to my involvement with
Opportunity when I was co-head of
Corporate Markets at Lloyds TSB. With
the support of my boss, Truett Tate, we
made Opportunity the charity of the
year in Corporate Markets. When we
formed Valere Capital in 2008, my part-
ners and I felt strongly that
theethicalsolution must lie from with-
in the banking sector, and we wanted
to take a lead in demonstrating that
the City should acknowledge its good
fortune and obligations to the wider
world.
What was the first charitable cause
that made an impression on you?
When I was chief executive of CIBC in
Europe we had a Childrens Miracle
charity day where we donated a days
commission to various childrens char-
ities. I ran the London day and also
recall, with some pain, being auctioned
at a womens only night at Grimsby
winter gardens in aid of St Andrews
Hospice in Grimsby.
Is it more important for people to
give their time or money?
I think it depends on the person and
where they are in their life.
Do you think that the rich have a
moral obligation to give to charity?
I think that each has to look at his own
conscience and beliefs. If you feel that
you should leave it to government to
even things up through taxation, fine,
however my own view is that govern-
ment is not always best placed to make
all these decisions as effectively.
Do you think the economic crisis has
affected peoples attitude to charita-
ble donations?
Oddly, I hope that it has made people
think a little more deeply about the
headlong pursuit of wealth.
What is your favourite example of a
charity in action?
I have spent the last few years quite
heavily involved with Opportunity
International. For example I met a
woman in a market in Blantyre who,
through a donation from Opportunity,
was able to take a bus from Blantyre to
Dar es Salaam, and thus buy triple the
amount of stock that she would nor-
mally have been able to buy. This trans-
formed the economics of her business,
enabled her to feed her family and gave
employment to another woman who
ran the stall while she was travelling.
Is there anything you would like to
change about the way we give?
Clearly the more tax relief you
get, the more good you can do.
This is a difficult debate
though, as by increasing tax
relief you are basically asking
other taxpayers to fund chari-
ties.
Text donations may not
work from company
mobile phones as these
often block premium
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CGI Group posts fourth-quarter
loss after Logica acquisition
IN BRIEF
Andy Coulson wins fee appeal
nAndy Coulson, the former director
of communications for David
Cameron, yesterday won a legal battle
against the owner of the Sun and the
now-defunct News of the World,
where Coulson was an editor. News
Group Newspapers will now have to
pay Coulsons legal fees related to
allegations of illegal activity after he
successfully appealed a High Court
ruling. Coulson is currently facing
charges from more than 600 people
related to phone hacking.
Telefonica cuts debt with swap
nSpains Telefonica said yesterday it
would slash 776m (626m) from its
50bn debt after receiving 97 per cent
uptake in a swap of preference shares
for stocks and bonds. The cash raised
will take the Spanish telecoms group
closer to its year-end leverage target
of 2.35 times operating income. The
firm, which must slash debt to hold
onto its investment grade rating, has
said it will end the year with 50bn
debt, compared to 56bn at the end
of September.
Ford set to delay new minivans
nFord may delay the next versions of
the Galaxy and S-MAX minivans as it
plans to shut a factory in Genk,
Belgium, where the vehicles are made,
German magazine Auto Motor und
Sport reported yesterday. Ford said on
24 October that it plans to close the
Genk factory employing about 4,300
workers by the end of 2014 and shift
production to Valencia. Ford declined
to comment on the delay yesterday.
THE HEALTH unit of Nestle yesterday
launched a tie-up with a company
that specialises in traditional
Chinese medicine in a bid to develop
novel medicines derived from plants.
Nestle Health Science is expected to
plough at least 100m into the joint
venture with London-listed Chi-Med,
which creates a new company called
Nutrition Science Partners (NSP).
Chi-Med, which has years of experi-
ence in alternative medicine, will
contribute its knowledge and facili-
ties, while Nestle is throwing its
weight behind the joint venture with
a cash investment.
This is estimated at $150-200m (94-
125m), although sources close to
the deal suggested the figure could
be higher than this. The companies
believe the marriage of Nestles back-
ing with Chi-Meds herbal treat-
ments will result in new remedies.
The parties will each have a 50 per
cent stake in the venture. NSP will
focus on gastro-intestinal treat-
Nestle turns to
China in bid for
herbal remedy
BY JAMES TITCOMB
ments such as those for irritable
bowel syndrome and may expand
into the metabolic disease and brain
health areas, the new company said.
Shares in Chi-Med which is major-
ity owned by Chinese conglomerate
Hutchison Whampoa rose almost
five per cent in London yesterday.
Christian Hogg, the firms chief
executive, said that Chi-Med has
invested for many years in developing
novel medicines for the global mar-
ket derived from proven botanical
sources and that it was a leading
company in the world in this field.
Luxury firm PPR close to a deal
to sell off Redcats plus-size unit
THE Redcats mail order unit of
French retail and luxury group
PPR SA is in late-stage talks to sell
its plus-size fashion business to
Boston-based private equity firm
Charlesbank, according to four
sources.
The deal for OneStopPlus will
likely be between $400m and
$500m (250m to 300m), the
sources said.
Earlier this month, PPRs
Redcats unit sold its US sports and
leisure business, Sportsmans
Guide, as well as its Golf
Warehouse business, to retailer
Northern Tool + Equipment for
$215m.
The deal follows last months
announcement of plans to spin off
PPRs Fnac music and book unit
and last years sale of the
Conforama furniture unit.
Last year, PPR hired Rothschild to
sell off its entire Redcats business,
but there was no buyer.
Now, the parent company of
high-end brands including Gucci,
Bottega Veneta and Yves Saint
Laurent is looking to unload the
unit in pieces.
PPR, the worlds third-largest
luxury group behind LVMH and
Switzerlands Richemont, has been
trying to unload its various retail
businesses for several years in
order to focus on luxury and sports
brands which it has said have
stronger growth prospects.
Last month PPR said the process
for the disposal of Redcats was
under way and that all options
were being considered.
Peter J. Solomon, which sources
said is advising PPR on the process,
declined to comment.
PPR, Charlesbank and Rothschild
also declined to comment.
Shares in PPR closed 0.2 per cent
higher yesterday at 140.5, giving
the luxury firm an estimated
market capitalisation of 17.7bn.
Gatwick looks to grow through
single runway as traffic rises
GATWICK executives talked up the
airports chances of competing with
Londons biggest hubs yesterday as
the firm posted rising revenues and
traffic.
Britains second-biggest airport
said passengers rose 1.2 per cent on
last year to 19.9m in the half-year to
the end of September. Turnover
jumped 3.6 per cent to 325.8m,
helped in part by an increase in
retail sales.
Earnings before interest, tax,
depreciation and amortisation rose
4.8 per cent to 172m.
Chief financial officer Nick Dunn
BY MARION DAKERS
said Gatwick was happy with the
figures, given that traffic was flat
during the Olympics, when Brits
stayed at home to watch the
competition.
Dunn expects traffic to pick up
next year, partly due to new routes
to Korea, Russia and China.
He added that while rival hub
Heathrow is close to capacity,
Gatwick has enough slack in its
single runway to increase traffic to
as many as 45m passengers a year.
This would require larger planes and
more off-peak flights, he added.
We see Gatwick as a very credible
and, in our eyes, the best option to
expand in the south east, he told
City A.M. I think a vibrant and
competitive set of airports is the best
way to deliver customer choice.
Gatwick chief executive Stewart
Wingate is due to appear before the
transport select committee on
Monday to discuss Britains long-
term aviation plans.
Wingate said yesterday that the
UK should be aiming for a New York-
style transport system, where
double-runway airports Newark and
La Guardia compete with the larger
JFK hub.
The airport last month revealed it
hoped to build a long-mooted second
runway after a deal with Sussex
County Council expires in 2019.
GREAT Portland Estates revealed yesterday that its joint venture with Scottish Widows
Investment Partnership has signed up its first tenant at its office development in the West
End. The Great Wigmore Partnership has signed a pre-let deal with actuarial firm Lane
Clare and Peacock to take the first three floors at 95 Wigmore Street on a 15 year lease.
GREAT PORTLAND SECURES WEST END LETTING
Hutchinson China MediTech Ltd
430
425
435
440
445
450
455
460 p
450.00
28Nov
20
NEWS
cityam.com
RETAILER Costco Wholesale
yesterday said it will pay a
special dividend worth some
$3bn (1.9bn) to investors,
sending cash to its shareholders
ahead of a likely increase in the
dividend tax.
The retailer also posted
monthly same-store sales that
beat analysts expectations.
Several companies have
declared one-time cash dividends
in recent days ahead of a likely
increase in the dividend tax rate
due to the so-called fiscal cliff a
combination of tax increases and
spending cuts due to kick in at
the beginning of next year if
Congress and the White House
Costco plans $3bn special payout
ahead of fiscal cliff tax increases
BY CITY A.M. REPORTER cannot reach an agreement on a
new deficit cutting plan.
Among those, spirits company
Brown-Forman Corp declared a
$4-a-share special dividend on
Tuesday and casino developer Las
Vegas Sands, whose chairman is
billionaire Republican donor
Sheldon Adelson, announced a
special dividend of $2.75 a share
on Monday.
We expect many cash-rich,
stable operating companies to
follow this trend, along with
companies that have high insider
ownership, Janney Capital
Markets analyst David Strasser
said.
Costcos special dividend will
be paid on 18 December, with the
record date set at 10 December.
GENERAL MOTORS and its
Chinese joint-venture partners
yesterday announced plans to
build a $1bn (620m) auto
assembly plant in the city of
Chongqing in a bid to remain the
leader in the worlds largest auto
market.
GM, SAIC Motor and Wuling
Motors said they will begin
construction of the plant early
next year, pending government
approvals.
The 6.6bn Chinese yuan (625m)
first phase is scheduled to start in
2015. The plant in southwestern
China will have annual
production capacity of 400,000
vehicles, but the partners did not
General Motors pushes further
East with $1bn factory expansion
disclose what vehicles will be built
there.
It will also have the capacity to
build 400,000 engines annually, a
GM spokesman said.
The new plant is part of SAIC-
GM-Wulings push to reach a
production target of 2m vehicles
per year by the end of 2015. GM
invests $1bn annually in China.
Chongqing, one of Chinas
largest cities, is home to Ford
Motor and its Chinese partner
Changan Automobile.
GM, whose Chinese joint
venture began building vehicles in
1999, had a leading 14 per cent of
Chinas market of 18.5m vehicles
last year just ahead of
Volkswagen AG, which also counts
SAIC as a partner.
IN BRIEF
Saudi postpones aviation licences
nSaudi Arabias General Authority for
Civil Aviation (GACA) has postponed
awarding new carrier licenses until the
end of this year as it needs more time to
evaluate the bids, it said in an emailed
statement yesterday. The winning bids
were expected by the end of November.
(GACA) needs more time to choose the
best operating models after it completes
the analysis and evaluation of the bids
that were received from the companies,
it said in the statement.
Groupon chief offers to resign
nGroupon chief executive officer
Andrew Mason, under fire for a
plunging share price and tapering
growth, said yesterday he would
agree to step down if needed, as the
struggling companys board prepared
to debate whether he remains the
right leader. Mason, responding to
reports that the board of directors will
discuss his performance during a
regular Thursday meeting, said it
would be weird if they did not.
KCAP Financial settles SEC charges
nKCAP Financial settled charges
brought by US regulators yesterday
that they overstated fund assets
during the financial crisis. The
Securities and Exchange Commission
said the fund company did not report
the fair market value of its debt
securities and other investments in
the fourth quarter of 2008. The
company agreed to settle the case
without admitting or denying the
charges, and did not pay any penalty.
Smith & Nephews push into the bioactive
wound care space was assisted by Deutsche
Banks well regarded Europe, Middle East
and Africa healthcare team, which is based
out of London.
Leading on the Smith & Nephew deal was
James Arculus and Simon Elliot. Arculus is
managing director in Deutsches UK invest-
ment banking team while Elliot is director
in the EMEA healthcare team.
Arculus has been involved in some of the
biggest deals on the market in his 19 years
at Deutsche.
Most recently he advised UK Financial
Investments on the sale of state owned
bank Northern Rock to Sir Richard
Bransons Virgin Money as well as advising
Scottish & Newcastle on the offer for the
business from Carlsberg and Heineken.
He also was also a member of the banks
advisory teams on the acquisition by US
cheese manufacturer Kraft of Birmingham-
based chocolate maker Cadbury.
Elliot helped lead the deal from the health-
care team side. The banks EMEA health-
care team is headed by Darren Campili and
is ranked top in EMEA healthcare.
The bank has helped advise on some of the
big deals which have driven the healthcare
market in the past few years.
It was adviser to EQT on acquisition of BSN
Medical for 1.8bn in June this year and
also advised private equity rm Advent on
its all cash acquisition of Mediq. Overseas it
helped advise Kazanah on its acquisition of
Acibedem in Turkey.
The bank has also been active in bringing
healthcare and pharmaceutical rms to
market after executing several initial public
offerings. It helped oat NMCin London for
117m as well as on the oat of Russias MD
Medical Group.
ADVISERS DEUTSCHE BANK
JAMES ARCULUS
SIMON ELLIOT
DEUTSCHE BANK
Smith & Nephew PLC
645
650
655
660
665 p
651.00
28Nov
Talvivaara Mining Company PLC
92.5
95.0
97.5
100.0
102.5
105.0 p
94.50
28Nov
United Utilities Group PLC
670
675
680
685
690
695 p
686.50
28Nov
22
NEWS
cityam.com
UNITED Utilities yesterday said price
rises had enabled it to report higher
revenues yesterday, keeping the UKs
largest listed water utility on track to
meet its targets.
Revenue increased 3.8 per cent to
823m in the six months to the end of
September, thanks to a 5.8 per cent
price increase permitted by British
water regulator Ofwat.
Ofwat recently set out proposals to
give it greater scope to set different
price limits, a move that has proved
unpopular with many of the water
firms.
We are unable to accept the flexi-
bility that theyve proposed in the
licence modifications, because of the
uncertainty that that generates and
also the potential for that uncertainty
feeding into customer bills, chief
executive Steve Mogford said on a con-
ference call.
The company said it was on track to
deliver targets that include 300m of
financing outperformance, despite a
United Utilities
gets boost from
higher pricing
BY HARRY BANKS
tough economic environment.
The North West faces a particularly
tough economic environment, with
unemployment having increased at a
faster rate than any other UK region in
2011-12, resulting in an adverse impact
on ability to pay this year, the compa-
ny said.
The company reported underlying
operating profit down 8m to 316m,
broadly in line with estimates. It
attributed the drop to increased infra-
structure expenditure following last
years transfer of responsibility for pri-
vate sewers to wastewater companies.
Talvivaara production under
scrutiny after mine restart stalls
NICKEL miner Talvivaara yesterday
postponed the restart of mining in
Sotkamo, Eastern Finland by half a
year to mid-2013, raising concern
over its future metals production.
The Finnish company, which
pioneered a technique to extract
nickel using bacteria, has been hit
by a series of problems in the past
year, including waste water
leakage, production disruptions
and the death of a worker.
Talvivaara halted mining and
crushing operations in September
for three to four months due to
excess water in the mining pit, but
said now it would not restart ore
production until mid-2013 once
water had been drained away from
the pit.
Earlier yesterday Talvivaara gave
its production update for this year,
forecasting around 13,000 tonnes of
nickel after its metals production
was halted in November for more
than two weeks by a leakage of toxic
waste water.
The company previously said it
targeted 50,000 tonnes per year
running at full capacity. In 2011
nickel production was 16,000
tonnes.
The company swung to an
operating loss of 4.3m (3.4m) in
the third quarter due to production
disruptions and weak nickel prices,
and said it was considering new
funding options, including
convertible bonds and equity.
Smith & Nephew buys skin heal
firm in bid to dominate sector
MEDICAL technology firm Smith &
Nephew yesterday continued its
push into the wound healing
market by striking a $782m
(487.5m) deal to buy a US company
specialising in spray-on treatment
for cuts and grazes.
The FSTE 100 listed company will
buy the assets of Texas-based
Healthpoint Biotherapeutics in a
$782m all cash deal as it seeks to
push the business into higher
growth areas like wound care.
Smith & Nephew said it was
hoping to capitalise on the $1bn
bio-active market, the fastest
BY MICHAEL BOW
growing sector of the wound care
market.
Healthpoint makes Collaganese
Santyl which is the only enzymatic
treatment available in the US. The
company reported revenues of
$190m this year, delivering an
increase of 25 per cent on the
$151m of the previous year.
Roger Teasdale, president of
Smith & Nephews advanced wound
management unit, said the firm
would push on with the
development of a new product,
codenamed HP802-247, which can
be used to treat diabetic leg ulcers.
Smith & Nephew specialises in
making artificial hips and limbs.
Chief executive Oliver Bohuon
said the Healthpoint acquisition
tied in with the firms push to re-
orientate the business towards
faster growing sectors.
EAST London developer Telford
Homes yesterday reported a
fourfold increase in pre-tax profits
driven by a step up in demand for
its properties on the back of the
Olympics.
The group has sold 60m of new
homes at its Stratford Plaza
development near Westfield
shopping centre which is due to be
completed in 2015.
Some 47 of the 198 homes
worth up to 400,000 each went
to UK investors showing strong
domestic demand while 140 were
sold to overseas buyers.
Telford quadruples profit on
the back of Olympics success
BY KASMIRA JEFFORD
The group said: Buyers had
responded well to the fact that
unlike many regeneration areas,
all of the transport and
commercial infrastructure is
already in place and was
thoroughly tested during the
Olympics, passing with flying
colours.
Overall, pre-tax profit jumped to
6.5m in the six months to 30
September compared with 1.5m
for the same period last year.
Revenue increased by 34 per
cent to 78.3m since the first half
of last year and the number of
open market completions rose
from 125 to 252 in the period.
Telford has sold 60m homes at its Stratford Plaza development near the Olympic site
THE Canadian government is still
mulling its options as deadlines
near on two proposed foreign
takeovers of domestic energy
companies, but an official offered
no clues on when or how Ottawa
would announce the hotly
debated decisions.
Andrew MacDougall,
spokesman for Prime Minister
Stephen Harper, did not
comment on a report that the
federal government might want
Chinas CNOOC to sell the seven
per cent stake that takeover
target Nexen holds in the large
Syncrude oil sands joint venture,
because fellow Chinese company
Sinopec Group has a nine per
Canada says it is still examining
options on potential CNOOC bid
cent stake in it.
The government is examining
its options, he said by email.
The Conservative government is
trying to balance the need for
foreign investment to develop
natural resources with concern
that China and other countries
could snap up a big chunk of the
energy sector, and that state-
owned firms might not play by
free-market rules.
It faces a deadline of 10
December for deciding on
whether to allow the $15.1bn
(9.4bn) Nexen bid. A separate
decision is pending on a bid by
Malaysias Petronas for Progress
Energy Resources, while Ottawa
also promises to clarify its overall
guidelines on foreign investment.
23
Wall St surges
on fiscal cliff
solution hopes
U
S stocks rallied yesterday after
comments from House Speaker
John Boehner, the top
Republican in Congress, on a
possible compromise to avoid the
fiscal cliff turned the market
around.
The S&P 500 rebounded from a 1 per
cent decline, gaining more than 20
points from its low after Boehner, an
Ohio Republican, said he was opti-
mistic that a budget deal to avoid big
spending cuts and tax hikes can be
worked out. President Barack Obama
said he hoped to get a deal done in
the next four weeks.
Whether or not those remarks
reflect the reality of negotiations is
another story.
The fiscal cliff is dominating the
discussion, and short term, were a lit-
tle bit too optimistic on it being fixed
right away, said John Manley, chief
equity strategist for Wells Fargo
Advantage Funds in New York.
In expectation of higher dividend
tax rates in 2013, companies have
been shifting dividends or announc-
ing special payouts to shareholders.
Costco Wholesale Corp, up 6.3 per
cent at $102.58, was the S&P 500s
biggest percentage gainer after it
became the latest company to
announce a special dividend.
The markets move marked the sec-
ond straight day where a leading leg-
islator dictated trading action.
The Dow Jones industrial average
rose 106.98 points, or 0.83 per cent, to
12,985.11 at the close. The S&P 500
gained 10.99 points, or 0.79 per cent,
to 1,409.93. The Nasdaq Composite
added 23.99 points, or 0.81 per cent,
to close at 2,991.78. The S&P 500
closed above 1,400 for the third ses-
sion in four an optimistic sign.
B
RITAINS top share index edged
higher yesterday after a volatile
session, as signs of potential
compromise in US budget talks
reversed early falls over fears that
negotiations had stalled.
The FTSE 100 initially extended losses in
afternoon trading, with a weak US open
and disappointing housing data com-
pounding caution that had been instilled
when a Democratic senate leader said
there had been little progress in US
budget discussions.
However, stocks staged a major rally in
the last hour of trading, gaining 0.7 per
cent after US House Speaker John Boehner
said he was optimistic that a deal with
Obama could be reached to avert the fis-
cal cliff of spending cuts and tax hikes.
At the close, Britains FTSE 100 was up
3.57 points, or 0.1 per cent at 5,803.28
points, having hit a session low at 5,755.23,
or a 0.8 per cent loss, shortly before
Boehners comments.
Defensive stocks benefited most, with
United Utilities among FTSE 100 leaders. It
rose 2 per cent after the multi-utility post-
ed a rise in first-half revenues and said it
was on track to meet regulatory outperfor-
mance targets.
BP staged an afternoon recovery to close
down only 0.8 per cent at 429.4 pence,
despite losing 2.9 per cent in the minutes
after it was suspended from new contracts
with the US government.
The stock was one of the most heavily
traded on the index, trading over twice its
average 90-day volume, having reversed
early gains that had been made after the
successful sale of North Sea assets to Abu
Dhabi.
FTSE rallies in final trading hour as
US budget talks show signs of deal
BESTof theBROKERS
Bunzl PLC
p
1,080
1,070
1,060
1,050
1,030
1,040
1,031.00
28 Nov
BUNZL
Citi cut the FTSE 100
distribution groups
target price from 1,250p
to 1,190p but kept the
firm at neutral to
reflect a slow projected
growth rate and lower
earnings forecasts.
DASHBOARD CITY
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
FTSE
5,840
5,820
5,800
5,780
5,760
5,803.28
28 Nov
ARM Holdings PLCt
p
780
770
760
750
740
772.50
28 Nov
ARM HOLDINGS
Barclays Capital raised
the Apple chip
designers target price
from 750p to 820p and
kept its overweight
rating, reflecting higher
demand for smartphones
and tablets.
Creston PLC
p
83
82
81
80
77
76
78
79
76.00
28 Nov
CRESTON
Liberum started
coverage of the
communications firm
with a buy rating and
a target price of 120p. It
called Creston a high
quality company with
appealing assets.
Aviva
Phil Pavitt has been appointed to
the role of IT transformation
director at the insurance group.
He joins from HMRC, where he
was general director of change.
Pavitt has also held chief
information officer positions at
Centrica, Virgin Media and BT.
MasterCard
Will Judge has been appointed vice president for travel and
transit. He most recently worked for Transport for London,
where he was head of future ticketing. Judge previously
worked as a management consultant at McKinsey.
Societe Generale Private Banking Hambros
The bank has announced several appointments to its private
banking, investment and wealth planning teams. Samik
Mukherjee joins as a senior private banker from Coutts. Paul
Stappard joins as a senior portfolio manager also from
Coutts. Louise Mannooch joins the wealth planning team
from Speechly Bircham.
Neuberger Berman
Robert Ryan has been appointed managing director, official
institutions at the asset management firm. He previously
worked for Morgan Stanley Investment Management, where
he was variously head of Europe, Middle East and Africa
distribution, and head of central banks and sovereign
wealth funds.
Vanguard Asset Management
The asset management firm has made two new
appointments. Carole Costello joins as head of consultant
relationships from Aviva Investors, where she was
consultant relations manager. Kerry Drew joins as
consultant relations director from Legal & General
Investment Management, where she was also consultant
relations manager.
Kennedys
Peter Cashin has been appointed partner in the law firms
Hong Kong corporate and commercial group. He was
formerly a partner at CMS Cameron McKenna, and has held
a number of senior in-house counsel positions at AIA and
MetLife.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
in association with
LONDONREPORT
NEW YORK
REPORT
in association with
in association with
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
D
O YOU care whether London
remains the international
financial centre? It might be
a sacrilegious question to
ask City A.M. readers, but it is
at the heart of the debate over the
future of banking.
If someone doesnt want London
to remain a world leader, then
concerns about regulatory
overreaction damaging our
competitiveness and banks moving
overseas will be met with a shrug of
the shoulders and a smirk. At the
Institute for Public Policy Research
London Policy Conference this week,
at which I spoke, there was barely
concealed relish at the thought of
London turning into Toronto. The
session asked Game over for
T
HE Prime Minister has
proposed that each energy
supplier should put all its
customers on the best tariff.
The regulator Ofgem has
proposed that suppliers should be
restricted to four tariffs each. The
Department for Energy and Climate
Change has proposed putting a mix of
these proposals into law. Has no one
thought through the consequences?
These ideas are based on a simple
economic fallacy: that the range of tar-
iffs available in a competitive market
would remain unchanged if new obli-
gations were introduced. It would not.
If a supplier were required to put all its
customers on its best tariff, it would
simply withdraw that best tariff.
To illustrate, the average annual dual
fuel bill is about 1300 and the cheap-
est dual fuel tariff about 1165 a dif-
ference of 135. Roughly 75 per cent of
customers are on standard tariffs and
25 per cent on cheaper ones. Consider
a major supplier with 3m customers
on standard tariffs and 1m customers
on cheaper ones. Which would be
more profitable: to cut prices by 135
cityam.com/forum
Ofgems argument
for change runs to 700
pages. Its the biggest
step back for 30 years
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.
24
STEPHEN LITTLECHILD
Simpler energy tariffs will lead to
higher bills and less competition
to 3m customers, at a loss of revenue
of 405m per year, or to withdraw the
cheap tariffs and lose 1m customers of
only borderline profitability? This is a
no-brainer.
Such proposals are effectively a tax
on competition. They would drive the
lowest prices out of the market. Over
time this reduction in competitive
pressure would increase prices and
profit margins across the board. All
customers would be worse off, includ-
ing those the policy is designed to
help.
The proposal that each supplier
should be allowed only four tariffs is
particularly repressive. Many tariff
options and discounts would be
reduced, withdrawn or prohibited.
Under pressure from Ofgem, some of
the major suppliers have already
moved in this direction, and retail
profit margins are already increasing.
The proposals have no counterbal-
ancing advantages. The only potential
beneficiaries would be the major ener-
gy suppliers, which would be able to
enjoy quieter and more profitable
lives, unhindered by retail competi-
tion.
There would be other negative con-
sequences. These proposals would con-
siderably increase the cost of
regulation though Ofgem says it
does not know what this cost would
be. Its argument for change runs to
700 pages. It proposes 80 pages of addi-
tional license conditions. In terms of
UK red-tape regulatory bureaucracy,
this is the biggest step backwards in
30 years. Disputes over interpretation
would be rife.
Restrictions on the number and type
of tariffs would effectively preclude
innovation. A supplier could only
introduce a new tariff if it withdrew
one of its four existing ones. What
sane company would sacrifice a quar-
ter of its existing sales to bet on an
uncertain new product? New entrants
would suffer too they would be pre-
vented from offering a range of niche
products to compete with the high-
volume incumbent suppliers. And
Ofgems provisions for exceptions and
derogations invite lobbying, political
influence and worse.
The longer-term consequences are
even more serious. When such poli-
cies deliver less competition rather
than more, and higher prices rather
than lower, is it likely that the govern-
ment will repeal them? More likely, it
will say that the policies did not go far
enough. There will be a demand for
direct controls on profit margins, on
wholesale transfer prices and on final
retail prices. And if a competitive mar-
ket has failed so comprehensively,
what is the case for continued private
ownership? But without competition
and private ownership, will a nation-
alised monopoly have the ability and
incentive to purchase efficiently on
the wholesale energy market? Are tax-
payers ready to fund the 200bn
future energy investment programme
that the government envisages?
There are strong and understand-
able concerns about high and rising
energy prices. But competition (or the
alleged lack of it) in the retail energy
market is not the source of the prob-
lem. The causes of price increases lie
in international wholesale gas mar-
kets, in the costs of low-carbon genera-
tion, environmental regulation and
other government and EU policies. We
should explicitly explain and discuss
these costs, instead of shooting the
messenger.
Stephen Littlechild is fellow at Judge
Business School, University of Cambridge,
emeritus professor at the University of
Birmingham, and was an energy regulator
between 1989 and 1998.
Londons financial services?, to
which the answer seemed to be we
hope so.
There is no doubt that the City is
shrinking, and that the earlier
doom-laden predictions are being
fulfilled. Massive job culls are
almost daily news, as banks go into
retreat and restructure. The Centre
for Economic and Business Research
predicts that the number of City
jobs will next year drop to 237,000,
down from 354,000 in 2007. Equity
trading is down 20 per cent year on
year, gilts trading down a third,
mergers and acquisition activity
down a third, derivatives are down a
fifth. International league tables
have already knocked London off
the global top spot as a financial
centre. Future regulation, such as
the revised Markets in Financial
Instruments directive (MIFID II), is
also expected to curb growth, and
uncertainties over the EU are dark
clouds almost straight overhead. To
those who believe financial services
are parasitic, this will seem like
good news.
But there is little appreciation
that much of what London does is
international we are providing
banking services for sophisticated
corporations and governments
across Europe, the Middle East and
Asia. Companies from France to
South Korea do their deals and raise
their finance in London. The
gleaming spires of Canary Wharf are
an export industry with a bigger net
trade surplus than the entire rest of
the UK economy. That trade surplus
means that British people can buy
iPhones and Volkswagens without
sending sterling into a tailspin. The
industry allows us to productively
invest the vast savings we have built
up in pension funds, and make a
return.
This export industry, and its
employees, used to pay 65bn in tax
more than enough to pay for all
the schools and universities and
police but that is shrinking fast.
Bonuses are down, but simple
arithmetic shows that the bigger
loser is the general public. For every
pound of bonus, 56p goes to the
taxman. This is why the Treasury is
so concerned every 1bn less they
get from the City, is 1bn of cuts to
services or tax rises they have to
impose elsewhere.
It would be typically suicidal of
Britain to kill off the one industry in
which it is a clear world leader.
Excessive bank bashing might be fun
for some, but we will all lose from it.
Anthony Browne is chief executive of
the British Bankers Association.
ANTHONY BROWNE
Banker bashing in practice: The suicidal tendency thats killing finance
MORNING UPDATE
A.M.
25
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
Bank multi-tasking
[Re: Mark Carneys Canadian legacy has still
not weathered the test of time, yesterday]
Mark Carney's appointment as the new
governor of the Bank of England has been
welcomed with open arms. Indeed, he
appears to be the strongest candidate for
the job. Needless to say, expectations are
extremely high. The Bank requires a leader
who can deliver simultaneously against
multiple agendas: rescuing the UK
economy, reforming the Bank of England
itself, heading up the Monetary Policy
Committee and taking on increased
regulatory responsibility for the financial
industry in Britain. Ultimately, these
different aspects of the role are each huge
challenges in themselves and call for very
different characteristics. And so, we must
ask ourselves whether one man can
reasonably be asked to be chief economist,
a convincing and skillful leader, an agent of
structural and cultural change, and point-
person for the Banks increasing remit for
regulation and banking supervision? This
role is too broad to fit into the average
working week. Perhaps Carney recognised
this himself when he earlier ruled himself
out of the running for the governorship. Like
an eagerly anticipated football managerial
appointment, he may subsequently be
viewed as having failed if he does not
manage to deliver against all four agendas.
This is particularly true when Sir Mervyn
King arguably only delivered against one.
GraemeYell, director for financial services at
HayGroup
L
ORD Justice Levesons report
into media culture and
ethics will not turn Britain
into Zimbabwe-on-Sea. But it
will risk leaving our press
even less free and open than it is
already.
Today, Leveson is widely expected
to propose a new press regulator
backed by law. Statute-backed regula-
tion is certainly what celebrities and
anti-tabloid crusaders are demand-
ing. But what would it mean?
Those who want new legal meas-
ures to curb the press use inoffensive
expressions like statutory underpin-
ning, or statutory recognition.
But these are weasel words. You can
call it whatever you like, it still
means more state intervention in a
supposedly free press. And that
should have no place in a civilised
society.
A statute compelling newspapers
to sign up to a new regulator would
look like a modern version of state
licensing. That system dictated that
nothing could be published without
the permission of the Crown. People
went to the Tower and the gallows to
fight for a free press until licensing
was ended in 1694.
Similarly, a rule that imposed
financial penalties on publications
that dont submit to the new system
would look like an indirect tax on
dissident publications. Ironically it is
exactly 300 years since the British
state first imposed taxes on the unli-
censed press in 1712 a tax on
knowledge to try to stop the masses
reading what their rulers were up to.
And what happens to a newspaper
that refuses to pay penalties under
the new statutory-backed system?
Are the authorities going to close it
down?
That said, there is no need for scare-
mongering. The danger is not crude
censorship or the Orwellian night-
TOP TWEETS
Charging 45p per unit of alcohol will make
little difference to those who abuse it. Theyll
just have less spare money.
@SteelMarshian
Minimum alcohol prices are stupid.
Cigarettes are 7.50 a packet and people still
smoke them. Its just a stunt.
@gus1944gus
On the subject of freedom, can we stop the
government interfering in prices? Minimum
alcohol pricing is an unfair idea.
@RyanCPS
Im not pleased about alcohol prices. What
about moderate drinkers who are now going
to be out of pocket because of drunks?
@OfficialGDovez
Could President Hollandes anti-business
stance drive companies away from France?
YES
The bitter dispute between the French government and the steel
company Mittal reflects its contradictory attitude towards business.
Francois Hollandes post-election actions have had an anti-business
flavour that appealed to his socialist support base. But in response to
the International Monetary Fund (IMF) warning France over its low
competitiveness, Hollande introduced new measures to encourage
business and innovation. They are a step in the right direction, but fall
short of what is needed. The Mittal affair reflects poorly on Frances
attitude towards the private sector. It may be seen as a special case
with a difficult history, but it could deter foreign investors from
locating in France. It is unclear whether it will lead firms already
established in France to move. But if Hollande fails to take the IMF
warning seriously, France will continue to lose business to its
neighbours. Threats of nationalisation can only add to this.
Bill Witherell is chief global economist at Cumberland Advisors.
Bill Witherell
NO
Adrian Leach
The business of relocating is not as simple as it first appears. Many
multinationals are actively considering relocating their headquarters
to the UK now a more favourable tax regime is available. And
understandably, Mittal may well consider moving some divisions of
its business into the UK, and relocating key personnel at the same
time. However, relocation isnt a simple case of saying Au Revoir
Belle France and Hello Great Britain. Determining a location for a
headquarters, with access to a mix of suitable residential areas and
good commuting and transport links, requires careful consideration.
Add in the blend of schooling needs, family language capabilities,
cultural differences and second family income, and the project
becomes even more complex and potentially costly. But if the sums
are right, Mittal wont hesitate in relocating to the country that
provides the best business environment.
Adrian Leach is business development director at HCR.
RAPIDresponses
Leveson must not
purge the press of
its messy freedom
mare of government-controlled
British newspapers.
The threat is more insidious: that
the shadow of state intervention
leaves us with a more conformist,
tamer and sanitised press. The mis-
sion of the Leveson Inquiry has been
to purge the press of everything that
is perceived as tasteless. A conformist
culture of you cant say THAT is the
biggest threat to press freedom after
Leveson, whatever new system of reg-
ulation is finally agreed.
Too many in this debate have
accepted the myth that the UK press
has been too free to run wild. The
truth is that the press is neither free
nor open enough, even before a new
regulator is appointed to wash its
mouth out.
We should defend the right of a
free press to be an unruly mess. That
some abuse press freedom, as in the
phone-hacking scandal, is no excuse
for others to encroach upon it. Press
freedom is not a gift to be handed
down like charity only to those
deemed deserving. It is an indivisible
liberty for all or none at all.
Why do we need special regulation
of a free press anyway? In the US, the
First Amendment makes it illegal to
pass any law abridging the freedom
of speech or of the press. Those few
words inspired by the Puritan revo-
lutionaries of England say more
about the meaning of press freedom
than Lord Justice Levesons volumi-
nous report will today.
Mick Hume is author of There Is No Such
Thing as a Free Press.
MICK HUME
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26
DIRECTOR UK ENTERPRISE, CISCO
Q
What questions should
businesses consider when
planning investment during a
difficult economic period?
A
The Institute for Fiscal studies
said this week that the current
economic environment austerity
is likely to be with us until 2018.
Organisations will thrive if they
embrace this outlook and design
into their processes, people and
infrastructure the ability to rapidly
react to market opportunities and
risks. This ability to act in an agile
manner, identifying and monetising
new opportunities and threats,
requires employees to be supported
by a collaborative infrastructure.
This enables people to work
effectively as teams across functional
and geographic boundaries to
facilitate rapid decision-making and
the implementation of plans.
Q
How can companies better
engage their employees in their
investment plans?
A
To paraphrase Tom Peters: listen
to your employees, they are the
closest to the customer and the
business. Most respond well to being
listened to and seeing changes that
demonstrate the listening was not in
vain. In todays connected world,
listening to your employees, however
remote, has never been easier. Social
media, business video and mobility
all enable organisations to
communicate quickly and
effectively. Generation Y, those born
in the 1980s and 90s, are the
embodiment of this communication
culture, blending work and play
together with a mix of technology
and attitude.
Q
How can businesses effectively
prepare themselves for an
unpredictable future? What place
does a focus on innovation have in
this preparation?
A
The future is predictably
unpredictable and becoming an
innovative organisation creates
TIM SKINNER
BUSINESSSTRATEGY
value for customers, employees and
shareholders. The ability of your
people to harness their creativity is
accelerated when they have a clear
understanding of your
organisations goals and strategy,
supported by an infrastructure that
gives access to relevant information
quickly. Couple this to the ability to
team with the people best able to
help them, and innovation will
happen on a macro and micro scale.
Q
To what extent is an effective
business infrastructure useful in
weathering a difficult economic
environment?
A
This weeks weather challenges
are the perfect analogy for
answering this question. Companies
that invest in inherently flexible and
mobile infrastructure will minimise
the disruption to their customers
during the economic and
environmental storms battering the
UK. Companies that create the
ability to work regardless of location,
using video to cover a missed
meeting (because the rail lines were
flooded), or automatically moving
customer calls to an alternative
contact centre or home workers, are
more likely to thrive in adverse
economic and weather conditions.
www.cityam.com/cisco
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ones. Public. Private. Even hybrid. Your people, partners, citizens and
customers must move swiftly and securely between many clouds. Not
just one. Thats why Cisco Data Centre and Cloud services ensure the
same agility, efciency and security as the rest of the Cisco architecture.
So your data, your relationships and your business can remain protected
at every level. Enabling you to focus on taking your business to new
heights through innovative growth.
Learn how businesses in every industry are entrusting their data with
Cisco Data Centre and Cloud services in the physical workplace, and
the virtual one, at www.cisco.co.uk/ucs
In the past year,
67% more
companies
moved to cloud.
(But not just to one.)
Firms can weather the storm and
thrive despite the current climate
Recession shouldnt
T
HE financial crisis has forced
companies to operate in new
and challenging
environments. Many are now
leaner organisations, the result of
significant cutbacks in both staff
and operations. But a simple
trimming down is not a solution
for the medium or longer term.
A lot of companies are still cling-
ing to in-house research and devel-
opment (R&D) to provide new
ideas. But they need to seek
avenues for growth through prod-
ucts and services that target cus-
tomers in new ways, and with
technology at the core.
NEW TECHNOLOGIES
An influx of new production tech-
nologies is already leading to a
transformation of the manufactur-
ing industry. 3D printing, for exam-
ple, has revolutionised the way
companies build things. Unlikely
companies such as Airbus which
is exploring how it could be used to
build planes see 3D printing as a
cost-effective solution to high com-
petition. As another 1.8bn con-
sumers join the global marketplace
in the next 15 years, the demand
for both basic and more costly
goods and gadgets with grow, says
a recent McKinsey report. And as
demand grows, advanced
economies will need to use new
technologies to compete with devel-
oping economies that have low cost
manufacturing and labour.
HOME IMPROVEMENTS
But it is not just consumers that
benefit from new technologies
they can also improve workforce
productivity. Todays workers want
the convenience that comes with
being able to work anywhere, any-
Modern technologies will help companies
attract new customers and enhance their
own productivity, writes Annabel Palmer
time, on the device they choose.
According to the MIT Technology
Review, IBM is one of many large com-
panies that has adopted bring your
own device (BYOD). Indeed, 80,000 of
its 400,000 employees now reach inter-
nal IBM networks using smart phones
and tablets, including ones they pur-
chased. It has not been without trou-
bles compliance issues and security
to name but a few but IBM is looking
beyond teething problems to see that
BYOD is a good way to build relation-
ship between technology and business.
The Yankee Group has identified
cloud computing as another new tech-
nology that can increase in-house IT
flexibility as well as driving traditional
IT departments towards new operat-
ing models. By making data more
mobile so it can be accessed from any-
where, cloud computing can signifi-
cantly enhance employee productivity.
A TOUGHER AUDIENCE
A lack of loyalty following the series of
banking disasters that started in 2008
means that banks in particular have
needed to find new and innovative
ways to cater to the needs of younger
generations through technologies
like mobile devices, video, and social
networking. As an example, Barclays
recently held a series of events in
Manchester to showcase develop-
ments, including contactless pay-
ments and personalised debit cards.
In another attempt to attract new
customers, earlier this year Barclays
introduced Barclaycard Ring the first
social credit card to be designed and
built through the power of communi-
ty crowd sourcing. Crucially, it offers
customers a place to voice their opin-
ions on card decisions and share in
profit, tapping into the new business
trend of getting customer feedback.
The BBC found that Barclaycard Ring
has helped to reduce complaints by 50
per cent, and increased customer
retention by 25 per cent resulting in
an annual benefit of more than $10m
(6.25m) to the business.
GETTING CREATIVE
Low customer loyalty and competition
are the biggest challenges facing busi-
nesses today. Companies have to
accept the mantra that the customer
is always right if they want to achieve
success on the level of retailer John
Lewis which kept up its performance
levels between 2008-2011, despite the
economic downturn. R&D only pro-
vides bandages on a broken model,
Shapeshifting may be required for companies to adapt
27
stop tech innovation
write Larry Huston and Nabil Sakkab
in the Harvard Business Review. The
innovation landscape has changed,
and companies need to adapt accord-
ingly. The Review cites Procter and
Gamble, which invests $400m (250m)
each year in foundational consumer
research (on top of what it spends on
R&D) to find new ways to innovate.
Failure to get creative in business
models can have serious conse-
quences. In 1999, Netflix launched its
subscription-based digital distribution
service a dotcom revolution. It expe-
rienced continual success, even in the
economic downturn, by acquiring
more and more titles and expanding
across the globe. However, without
altering its fundamental model,
Netflix introduced a new pricing strat-
egy in 2011 that led to a price hike for
its subscribers. The resultant backlash
caused a sudden drop in stock price
and a loss of almost 1m customers.
RECIPE FOR SUCCESS
Amazon.com simply started as an
online bookstore, but quickly diversi-
fied as it realised its business model
and infrastructure could be mimicked
by competitors. Soon after its creation,
it diversified its product range
extending to CDs, DVDs, and so on. In
2006, it developed a web services plat-
form which is now used by other
large companies that handles orders,
payments and shipments. In 2007, it
created the Kindle. And earlier this
month, it launched a wine site, offer-
ing 1,000 wines from around the
world. It is this constant diversifica-
tion that has enabled Amazon to
weather recent economic storms.
A 2012 Department for Business
report said that there are strong
opportunities for economic growth
through technology-enabled transfor-
mations. To do this, company execu-
tives need to become more flexible
and adapt to todays new and challeng-
ing environment.
A business model for
a low growth world
F
ACED with the most severe
downturn since the 1930s,
corporate confidence has
declined. Recent research from
Ernst and Young revealed that
company executives are more
pessimistic about the current state
of the global economy now than
they were a year ago. But more
interestingly, given the Bank of
Englands recent growth forecast,
over 78 per cent of respondents still
expect a recovery within two years.
This combination of short-term
pessimism and longer-term opti-
mism is leading UK businesses to sit
and wait for things to improve, creat-
ing a bias towards risk avoidance
and inertia. UK corporates are sitting
on over 700bn in cash, equivalent
to around 50 per cent of GDP, but
despite these cash stock piles and
adequate access to capital, execu-
tives are waiting for a sustained
recovery before engaging in business
investment and mergers and acquisi-
tions (M&A).
There will be a recovery, but the
world is not going to return to the
boom of 2005 to 2008. In the pre-cri-
sis decade, emerging markets grew
faster than their long-term sustain-
able growth rates, driving up com-
modity prices and inflation. Excess
savings in emerging markets were
exported to western economies, con-
tributing to the explosion in credit
that fuelled developed market
growth. The world will be working
off this excess for the next decade
and economic growth will be below
trend, particularly in Europe.
Ernst and Young is concerned that,
in waiting for the upturn, corporates
have not recognised that they will be
facing a very different environment.
The harsh reality is that low growth
is the new normal. Some businesses
are using historic decision criteria,
developed in the pre-crisis decade, to
plan for the future and this means
they are at risk of inefficiently using
their capital.
Take, for example, asset values.
Quantitative easing (QE) is distorting
values by pushing down govern-
ment bond yields and increasing the
demand for other asset classes like
equities, raising their prices. Our
research suggests that current UK
transactions levels are 30-40 per cent
off where current stock market val-
ues suggest they should be, as value
and the underlying business eco-
nomics have seemingly become dis-
connected. As the impact of QE fades
over time, the values of these assets
could fall. So rather than waiting to
realise unrealistic value expecta-
tions, divesting today would free up
cash to acquire other assets, opening
up opportunities for growth.
Similarly, businesses considering
acquisitions need to act now to iden-
tify and integrate those assets, to
strategically position themselves in
their chosen markets. Failure to act
could lead to businesses playing sec-
ond fiddle to their competitors.
Now is the time to undertake a
review of business models. Is the cost
structure and operating model suffi-
ciently flexible for a low growth
world with more pressure on mar-
gins and price aware customers?
Portfolio rationalisation must be
considered, both in terms of geo-
graphic footprint and product lines,
to assess whether the market offers
sufficient growth opportunities. If
not, then conducting M&A or invest-
ing into a higher growth market and
jurisdiction should be a focus for the
business to ensure it is placed exact-
ly where the optimum growth
opportunities exist.
Jon Hughes is head of Ernst & Youngs
transaction advisory services practice.
cityam.com
G
E
T
T
Y
JON HUGHES
29
cityam.com
COMPLIANCE ANALYST
LONDON
60k-84k pa
A global financial services firm is looking to
recruit a compliance analyst on a six month
rolling contract. Knowledge and/or experience
of UK and European regulation is essential.
http://www.cityamcareers.com/job/32217
FIXED INCOME QUANT
LONDON
100k pa, plus equity
A 12 man start-up company is looking to recruit
someone with strong fixed income experience
accross pricing. Four years commercial experi-
ence and an MSc or PhD is essential.
MERGERS AND ACQUISITION ASSOCIATE
LONDON
60k pa
A leading pan-European corporate finance firm
seeks an associate to join its M&A team. An out-
standing academic background and experience
in a reputable investment bank is desirable.
JAVA ANALYST PROGRAMMER
LONDON
70k pa, plus bonus and medical
A leading pensions trading business seeks a Java
programmer. Four years of commercial experi-
ence, and experience with composed systems is
essential.
PRINCIPAL LEVEL INVESTOR
PARIS/BERLIN
Competitive
A multi-fund European venture capital firm, with
a focus on early stage IT deals, seeks a principal
level investor. Strong experience and networks in
Germany are desirable.
JOBSoftheWEEK
There are rays of hope in a
sluggish City jobs market
There are still career opportunities in the financial sector, writes Chris Harlow
C
ONSIDERING the current employment climate in the City,
and the ruthless job cuts hitting the headlines, you would
be forgiven for considering packing your bags and taking an
early retirement in the country.
A report released by Roland Berger Strategy Consultants last
week showed that investment banks are set to lose another
40,000 jobs in the next few years, on top of cuts that have
already been announced. In addition, the Centre for Economics
and Business Research (CEBR) has predicted that the total
number of people employed in Londons financial sector is set to
fall from 250,000 to 237,000 next year. This will be the lowest
level since 1993.
And its not just jobs that are under fire. The CEBR also
estimates that the level of City bonuses paid out in January 2013
will be 1.6bn, down from a peak of 11.6bn in 2008.
But despite the doom and gloom, there are still areas in the
City that are thriving and taking on staff. I have spoken to five
recruitment experts who have given me their insights into
which areas are continuing to hire, and where you could be
looking for your next job.
8.7%
Unemployment in London
for July-September
2012
CITYAMCAREERS.com
1/3
of investment banks
are giving up their global
ambitions
50K
Average salary for a newly
qualified accountant
in oil & gas
32%
of finance professionals
expect their firm to cut
jobs over the next 12
months
CITYAMCAREERS.com is the jobs site
for the London professional from
City A.M. Visit the website to see for
yourself the range of jobs on offer
@cityamcareers
Andrew Young - Oil and Gas
One area that is doing particularly well at the
moment is the UK oil and gas industry.
Demand for accounting and compliance staff
is especially high. Further, a large number of
national oil companies have been forming
temporary partnerships with private
companies, resulting in a high demand for
jobs relating to joint ventures. Some roles
may be moving to places like Aberdeen in
order to be closer to resources in the North
Sea, and to save on costs. But finance roles, like in investment appraisal,
will continue to remain in the City. My advice to someone looking to
move into the industry would be to get exposure to oil and gas clients,
or work with large capital expenditure businesses, as the technical
characteristics of these industries are quite similar.
Andrew Young is senior consultant at Mark Sattin.
Nick Teige - Internal Audit
In the past, talented candidates finishing their
accountancy training schemes at one of the
big four houses saw another role in audit as
the last thing they wanted. But now more
candidates are focused on career longevity.
Good governance is under the spotlight, and
it is more important than ever that financial
institutions manage all of their risks and
exposures internally. There are few big banks
that have not seen flaws in their risk and
governance procedures, and internal audit is a vital element in improving
that. There has been an emphasis recently on more specialised internal
auditors. While the majority of candidates are from the big four, we have
also seen a surge in demand for people with quantitative, credit risk, or
compliance skills looking to change their focus.
Nick Teige is a partner at Ashton Hendricks.
James Holland - Quantitative Analysis
While we have seen a mixed performance in
the quantitative market recently, well-
established firms with strong reputations are
continuing to grow and hire staff. Following
the reduction in bank-based desks, desk
quants and quant traders have been taken up
by proprietary trading businesses and hedge
funds. We have also seen a movement by
quant businesses into commodities, creating
demand for quant traders in this area. In
addition, many funds that have not been in the quant market are
looking to diversify their strategies. Over the next few years, investors
will be looking to minimise risk, but maintain high returns. People that
can deliver a stable quantitative strategy, where risk is visible and
returns are good, will never struggle to find a role.
James Holland is head of global markets at Alexander Black.
James Smith - Project and Change
Change is still happening across the financial
services industry. Hiring in change
management accounted for over a quarter of
the roles that we worked on in October.
Finance change roles are in particular
demand, especially subject matter experts in
regulation, accounting, integration and
system work. In response to regulatory
changes like Basel III, risk specialists are also
finding themselves sought after, even in
areas outside of risk particularly collateral and margining. Project
managers and business analysts are in high demand for these roles if
they have trade-processing expertise. As the entire business model of a
bank is restructured, there is an increased demand for individuals with a
broad financial services experience.
James Smith is associate director at Morgan McKinley.
David Banner - Insurance
Insurance is still recruiting because it
remains a growth industry. It hasnt been
affected in the same way as some other
sectors by the financial crisis, and insurance
is often a non-discretionary purchase.
Insurers are experts in risk, but they dont
take any risks with their customers money,
therefore their business model is long-term
and inherently stable. As a specialist
insurance market, Lloyds employs a huge
variety of people. Analysts, actuaries and IT professionals are
particularly in demand. As Asian economies continue to develop and
more wealth is created, there are further opportunities for insurers to
grow, making this an exciting and expanding industry in which to
pursue a career.
David Banner is senior recruitment manager at Lloyds of London.
cityam.com
30
LIFE&STYLE BY ALEX DYMOKE TECHNOLOGY
E-currencies reach a major milestone
F
OR SOME, Bitcoin is an
unregulated rogue currency for
pornographers and drug dealers.
For others, it is a victory for
economic freedom, and a way of
protecting business transactions
from what they see as the inherent
volatility of the banking system. But
despite its contentiousness, the
controversial e-currency is in rude
health. Yesterday it reached a crucial
milestone its halving day.
As a safeguard against inflation,
built into the Bitcoin code is a func-
tion that reduces the rewards for
uncovering its block solutions by half,
once a certain number of Bitcoins
have entered into circulation. If that
sounds complicated, its because it is.
Bitcoins were originally the preserve
of mega boffins and tech-savvy
traders. The currency was first
released in January 2009 by a develop-
er using the name Satoshi Nakamoto.
As the arrival of halving day proves,
Bitcoins are becoming more and
more widespread. Over the last three
years it has become the worlds most
widely used alternative currency and
its been tarred with a fair amount of
controversy along the way.
Unlike regular bank accounts,
which require proof of address and
identity, all that is needed for a
Bitcoin account is an IP address. As a
result, many see it as a haven for the
sale of illegal goods over the internet.
Earlier this year, the currency gained
notoriety alongside a website named
Silk Road, where vendors offer to
send heroin, LSD, and 9mm Beretta
handguns in the post in exchange for
Bitcoins. And it doesnt end there.
There is also a Bitcoin stock
exchange, where companies can
make initial public offerings and pay
dividends with it. One website offer-
ing Bitcoin options trading was list-
ed this month for an implied
valuation of half a million dollars.
Perhaps the most infamous of these
sights is Bitcoinica, a platform offer-
ing margin trading, short selling and
stop orders run by 17-year-old Chinese
high school student Zhou Tong (pic-
tured).
The lack of regulation is not only
attractive to criminals. Bitcoins are
not issued by a central bank or
national mint. Instead, the currency
is run by a peer-to-peer network in
accordance with the internal soft-
ware, a system attractive to many
hardline economic libertarians.
As one City trader notes, Bitcoin is
not run by people with hot sexual
appetites for hotel maids. It is not run
by corporations. It is not governed by
people with budgets to meet. It is gov-
erned by a mathematical formula.
HERE ARE SOME OTHER SUCCESSFUL (AND NOT SO SUCCESSFUL) INTERNET CURRENCIES
BY ALEX DYMOKE
DigiCash started it off but went bust
Founded in 1990 by David Chaum, DigiCash was one of the
first electronic currencies but was went bust almost a
decade later when Mark Twain bank the only bank that
supported the business decided to withdraw its backing.
Mint Chip focuses on small transactions
MintChip is The Royal Canadian Mints attempt to com-
pete with anonymous transaction currencies like Bitcoin.
Launched this year, it is designed to cope with small
transactions.
Share virtual content with Linden Dollar
The Linden Dollar is the currency of Second Life, an online
virtual community and social network. Second Life is a
place where people can buy and sell virtual content that
they have created.
Zero cost payments with Zen
Ven is a global digital currency used by Hub Culture mem-
bers, who share and exchange knowledge related to their
businesses, to buy, share, sell and trade. Its main use is to
send and receive payments online for zero cost.
12 January 2009
First Bitcoin transaction from
Satoshi to Hal Finney.
5 October 2009
Exchange rates published by
New Liberty Standard.
6 February 2010
Bitcoin market established.
11 July 2010
Bitcoin v0.3 release mentioned
on tech news website Slashdot.
6 November 2010
The Bitcoin economy passed US
$1 million.
20 August 2011
First Bitcoin conference and
World Expo held in New York.
22 July 2012
One millionth topic reply was
posted on the unofficial Bitcoin
forum.
28 November 2012
Bitcoin reaches halving day.
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cityam.com
LIFE&STYLE FASHION
F
OR MANY, the closest you will
ever get to a couture outfit are
the images you see in magazines.
That is, of course, if youre not
amongst the handful of women
whose pockets are deep enough to
meet the 50,000 starting price for a
dress. But this year in particular, the
upper echelon of fashion has become
a lot more accessible, thanks to the
rise of the fashion exhibition, which
continues to dominate the arts
calendar.
Paul Bernstock and Thelma Spiers,
the legendary milliners behind
Bernstock Spiers, celebrated 30 years
in the business with a big exhibition at
Fred; Chanel brought its hugely suc-
cessful exhibition Little Black Jacket to
the capital; the V&A played host to one
of the biggest of the year, Hollywood
Costume; and now its Valentinos
turn. Today, Somerset House will open
its doors to the highly anticipated
Valentino: Master of Couture exhibi-
tion, dedicated to the life and work of
the labels founder Valentino
Garavani, most commonly referred to
as Valentino. Mr Valentino and Mr
Giametti wanted to stage an exhibi-
tion in London and they came to
Somerset House because they liked the
fact that fashion week is here and
Couture designs are done completely
by hand without machines. To see that
kind of craftsmanship is extremely
humbling and its important that we
continue to support that culture, says
ONeil. In this exhibition we are going
to be demonstrating some of the spe-
cialised couture techniques that
underpin these amazing dresses.
And thats not all. Visitors can also
expect to see unseen private photo-
graphs of the designer alongside a
series of the labels extravagant cou-
ture show invitations from over the
years. Ziegfeld Girl and La Dolce Vita
two films that have inspired his work
will be screened alongside his docu-
mentary Valentino: The Last
Emperor, which documents a year
of his life at work before his retire-
ment.
But its not all about
Garavani. Since his departure,
the brands new creative direc-
tors Maria Grazia Chiuri and
Pierpaolo Piccioli have helped
usher in a new era for couture.
The incredible craftsmanship
and romantic heritage of the
brand is there, but now the
designs infuse a discretion
that feels very now. Orders for
dresses under their direction
has far exceeded the numbers
before Garavani resigned, so
three of their designs will be
on show too. Its a must see.
Valentino: Master of
Couture opens today at
the Embankment
Galleries, Somerset
House, Strand, WC1R 1LA.
theyve seen some of the exhibitions
weve staged here to date, says Alistair
ONeil, one of the three curators
responsible for bringing their vision to
life.
With the economy as it is, you would
be forgiven for questioning the rele-
vance of couture but its an industry
thats thriving. This year Versace
joined the couture schedule after an
eight-year hiatus and Armani reported
a 50 per cent growth in sales in 2011
compared to the same time the previ-
ous year. The painstaking attention to
detail and exquisite level of craftsman-
ship found in couture seems to tap
into the spirit of escapism and need
for fantasy in fashion that has
emerged in response to the recession,
making the timing perfect for an
exhibition of this kind.
The presentation, which will
run from 29 November 3 March
showcases more than 130 of his
most celebrated creations from a
career that has spanned five
decades, including dresses worn
by the likes of Grace Kelly and
Gwyneth Paltrow. Each of these
designs has a beautiful story. The
atelier [where the pieces are made]
crafted each so diligently by hand,
taking hours, sometimes days to
complete, says Garavani. The
details are incredibly intricate,
though outside the runway
shows and events, the dresses
have rarely been seen, so to be
able to showcase these designs
at Somerset House, where
they can be seen in great
detail by the public, is
very unique.
Much of the exhibition
focuses on showcasing this.
VALENTINO: The last emperor of couture
The legendary designer has opened the doors to his highly anticipated retrospective at Somerset House
Naomi Mdudu
33
TV & GAMES
cityam.com
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BBC1
SKY SPORTS 1
6.30pmPremier League Review
7.30pmLive Victory Shield
Football 9.45pmThe Footballers
Football Show11.15pmSPL
Round-Up 11.45pmRingside
12.45amSky Sports Classics 1am
Live NFL 4.30amSky Sports
Classics 5amPremier League
World 5.30am-6amSPL Round-
Up
SKY SPORTS 2
7pmRacemax 8pmThe Rugby
Club 9pmRingside 10pmWWE:
Late Night Raw12amWWE:
NXT 1amThe Footballers Football
Show2.25am-6amLive Test
Cricket
SKY SPORTS 3
6pmGolf 8pmLive PGA Tour Golf
11pmGolf 1am-4amPGA Tour
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BRITISH EUROSPORT
6.15pmSki Jumping 7.15pm
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11.15pmPoker 12.15am-12.30am
Horse Racing Time
ESPN
6.15pmPremier League Review
7.15pmCoppa Italia 9pm
Bundesliga Review Show10pm
ESPN Kicks: Scottish Football
10.15pmESPN Kicks: Premier
League 10.30pmFrench Ligue 1
Preview11pmESPN FC Press
Pass 11.30pmPremier League
Review12.30amLive College
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Basketball 4.30amUFC: The
Ultimate Fighter 5.30am-6am
FIBA Basketball
SKY LIVING
7pmCriminal Minds 8pm
Americas Next Top Model
9pmLadyboys 10pmCriminal
Minds 11pmBones 12amBig
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Anatomy 1.50amSupernatural
2.40amMedium3.30amBones
4.20amNothing to Declare
5.10am-6amPassport Patrol
BBC THREE
7pmTop Gear 8pmDont Tell the
Bride 9pmRussell Howards Good
News 9.30pmImpractical Jokers
10pmWorlds Craziest Fools
10.30pmEastEnders 11pmFamily
Guy 11.45pmAmerican Dad!
12.30amRussell Howards Good
News 1amImpractical Jokers
1.30amSome Girls 2amDying for
Clear Skin 3am-4amInside the
Body Beautiful How Cosmetic
Surgery Works
E4
7pmHollyoaks 7.30pmHow I Met
Your Mother 8pmThe Big Bang
Theory 8.30pm2 Broke Girls
9pmDerren Brown: The Assassin
10pmFILMCellular: Thriller, with
Kim Basinger and Jason Statham.
2004. 12amThe Big Bang Theory
1amHow I Met Your Mother
1.30amThe Ricky Gervais Show
2amThe Cleveland Show2.25am
The IT Crowd 2.50amRules of
Engagement 3.10amScrubs
3.35amThe Work Experience
4am90210 4.40am-6amOne
Tree Hill
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 8pmMankind: The Story of
All of Us 9pmIce Road Truckers
10pmStorage Wars 10.30pm
Storage Wars: Texas 11pm
Storage Wars 11.30pmPawn
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1amStorage Wars 1.30am
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American Pickers 3amAx Men
4amSwamp People 5amPawn
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DISCOVERY
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Raging Planet 5.30am-6am
Meerkat Manor
DISCOVERY HOME &
HEALTH
7pmDr Oz 8pmI Didnt Know I
Was Pregnant 9pmMy Strange
Addiction 10pmMy Naked Secret
11pmHoarding: Buried Alive
12amMy Strange Addiction 1am
Wanted Down Under 2amMy
Naked Secret 3amHoarding:
Buried Alive 4amA Baby Story
5am-6amBabys Room
SKY1
8pmThe Middle 8.30pmModern
Family 9pmFlintoff: From Lords
to the Ring 10pmAn Idiot Abroad
2 11pmAn Idiot Abroad 12am
Spy 12.30amA League of Their
Own 1.30amRoad Wars
4.10am-6amStargate SG-1
BBC2 ITV1 CHANNEL4 CHANNEL5
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6pmBBC News
6.30pmBBC London News
7pmThe One Show
7.30pmEastEnders; BBC News
8pmCHOICE
Young Apprentice
9pmGoodnight Britain
10pmBBC News
10.25pmRegional News 10.35pm
Question Time 11.35pmThis Week
12.20amHoliday Weatherview
12.25amSign Zone: Undercover:
How to Dodge Tax Panorama
12.55amCountryfile 1.40am
Planet Earth Live: A Monkeys Tale
2.40amAntiques Roadshow
3.40amPaul Martins Handmade
Revolution 4.25am-6amBBC News
6pmEggheads
6.30pmStrictly Come Dancing
It Takes Two
7pmAntiques Road Trip
8pmMasterChef: The
Professionals
9pmGreat Continental
Railway Journeys
10pmRhod Gilberts Work
Experience
10.30pmNewsnight; Weather
11.20pmDara O Briains
Science Club
12.20amThe Culture Show
12.50amAn Island Parish
1.20amBBC News 4am-6am
BBC Learning Zone
6pmLondon Tonight
6.30pmITV News
7pmEmmerdale
7.30pmBritains Deadly Gun
Trade: Tonight
8pmEmmerdale: Declan fears
for Katies life.
8.30pmIm a Celebrity Get
Me Out of Here!
10pmITV News at Ten
10.30pmLondon News
10.35pmCorfu: A Tale of Two
Islands 11.05pmDirty Britain
12.05amJackpot247; ITV News
Headlines 3amBritains Deadly Gun
Trade: Tonight 3.25amITV
Nightscreen 4.35am-5.30amThe
Jeremy Kyle Show
6pmThe Simpsons 6.30pm
Hollyoaks 7pmChannel 4 News
7.55pm4thought.tv
8pmKirsties Vintage Home
9pmCHOICE
The Aristocrats: Goodwood
10pmCaptive The Sex Slave
Girl: True Stories
11.25pmThe Curious Case of the
Clark Brothers 12.25amRandom
Acts 12.30amEmbarrassing Fat
Bodies 1.25amChannel 4 Presents
Nathan 1.30amGeordies
Overboard 2.25amUnreported
World 2.50amWhere Has Your Aid
Money Gone? 3.20amTime Team
4.15amDeal or No Deal
5.10am-5.55amCountdown
6pmHome and Away
6.30pm5 News at 6.30
7pmRolfs Animal Clinic: Jo
Oultram trims the hooves of a
herd of yaks; 5 News Update
8pmWorlds Strongest Man
2012: Qualifiers; 5 News at 9
9pmCHOICE
New Cowboy Builders
10pmFILMPineapple
Express: Action comedy,
starring Seth Rogen. 2008.
12.10amSuperCasino
3.55amHouseBusters 4.20am
House Doctor 4.45amDivine
Designs 5.10amWildlife SOS
5.35am-6amWildlife SOS
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5 6
7
8 9
10
11 12 13
14
15 16
17
18 19 20
21 22
24 16
45
3 23 17
10 9
7 14 17
25 12
5 12 15
8 9
16 22 12
45
15 7
13
11
21
39
13
16
6
4
9
9
8
35
34
16
15
12
13
10
10
15
29
11
12
27
ACROSS
1 Contented (5)
4 Animal with
two feet (5)
8 Indigent (4)
9 Hydrophobia (6)
10 In the past (3)
11 Depletes (4)
13 Kin group (4)
14 Anticipate (7)
15 Christmas (4)
16 Ancient Greek
harp (4)
17 Expert (3)
18 Cargo ship designed
to carry crude
oil in bulk (6)
19 Expectorated (4)
21 Founded upon
law (5)
22 Fusilli, for
example (5)
DOWN
2 Much ___
about Nothing,
Shakespeare play (3)
3 Sun umbrella (7)
5 Soft wool fabric
with a colourful
swirled pattern of
curved shapes (7)
6 Rid of disease-
causing bacteria (9)
7 One-humped
camel (9)
8 Occurring
immediately
after birth (9)
12 Former German
coin (7)
13 Percussion
instrument (7)
20 Toward the stern
of a ship (3)
G
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4

4

S P L I T Y U C C A
T S O I R U
R E D T A P E A I D
U S L B I
M E R I T D I S C O
G C D O
M O S E S S O G G Y
E W C K A
A B E R O I S T E R
N A E L A D
S U R G E L O T U S
3 9 5 1 2 4 1
1 4 7 8 3 5 6 9 2
5 8 6 9 7 9 8 6
2 5 9 8 2 1
2 4 3 5 1 6 5
1 7 8 6 9 3 2 5 4
4 6 2 6 4 1 3
8 1 7 7 8 9
3 8 9 7 1 4 2 5
2 9 6 5 1 7 3 4 8
1 6 3 2 5 1 7
4
4
4
4
4
4
4
4
4
The nine-letter word was
INTERLOCK
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
YOUNG APPRENTICE
BBC1, 8PM
Alan Sugar sends the teenage
entrepreneurs back to school,
challenging them to come up with new
ideas for kids clubs.
THE ARISTOCRATS: GOODWOOD
CHANNEL4, 9PM
Part two of two. Documentary
following Charles Gordon-Lennox, heir
to the Dukedom of Richmond and
owner of Goodwood in West Sussex.
NEWCOWBOY BUILDERS
CHANNEL5, 9PM
Dominic Littlewood and Melinda
Messenger tackle a house near
Newcastle, that has been identified as
having more than 100 defects.
TVPICK
34
SPORT
cityam.com/sport
TOTTENHAM HOTSPUR ..............2
LIVERPOOL .................................1
BY FRANK DALLERES
PREMIER LEAGUE
@cityam_sport
R
ELEGATION might not be until
May, but the fate of many a
Queens Park Rangers player
will be decided much sooner,
as Harry Redknapp weighs up which
men he can rely on to drag them off
the foot of the Premier League.
Redknapp knows exactly the type
of character he likes, and come
January it will obvious to all which
Hoops stars fit his criteria, because
those who dont will soon be
shipped out on loan or sold.
QPR were right to act when they
did and replace Mark Hughes with
Harry, because it gives the new
manager a handful of games before
the New Year to assess his team and
prepare for the transfer window.
Hughes could not axe those
failing players since he brought
most of them in it would have
been a damning indictment of his
own judgement. Its far easier for
Redknapp to be ruthless.
Clearly they are light in attack,
while they are very shaky in
defence. I dont see Anton
Ferdinand or Armand Traore as
good enough, so at least two of the
back four need replacing.
If I was a betting man Id back
Redknapp to keep Rangers in the
top flight, despite their dreadful
start. What QPR need more than
anything is a good man-manager,
and hes the best in the business.
MOCKERY
I think clubs will support the idea
of scrapping the Europa League
and expanding the Champions
League to 64 teams since European
chiefs must have calculated it will
bring in more cash. The Europa
League does not excite the public
and no-one remembers who the
winners were, although enlarging
the Champions League presents its
own problems.
Scrapping Thursday night games
a feature of the Europa League
that clubs hate, because it leaves
little time to prepare for weekend
fixtures would make teams happy
but may not be possible with 64
clubs in the main competition.
The name Champions League
might also need to be reconsidered.
Its bad enough with the top three
or four teams from each country
qualifying, but the top seven would
make a mockery of the title.
Eventually I expect we will see a
full-time European super league,
although there are too many
obstacles in place at the moment
and I have my reservations.
The Premier Leagues popularity
depends on its many local rivalries;
its why fans care about and go to
games. Liverpool not playing
Everton every season, for instance,
would wreak huge damage on our
football heritage.
Trevor Steven is a former England
footballer who now works as a scout and
media commentator.
Clock is ticking
for QPR stars to
wow Redknapp
TOTTENHAM manager Andre Villas-
Boas admitted his team had been
lucky last night after they survived a
Liverpool fight-back to clinch consec-
utive wins for the first time since
September and climb to fifth in the
Premier League.
In-form winger Gareth Bale laid on
the first for Aaron Lennon and
struck the second himself with a 30-
yard free-kick, before the
Welshmans comical own goal
sparked the visitors back into life.
Riled Liverpool boss Brendan
Rodgers insisted the visitors should
have had two penalties, accusing
Mousa Dembele of nearly assault-
ing Steven Gerrard and William
Gallas of impeding Luis Suarez.
Spurs defender Kyle Walker
cleared off the line, Reds midfielder
Jordan Henderson missed an open
goal from 20 yards and Jose Enrique
threatened to level three times.
Villas-Boas conceded his team had
ridden their luck.
A draw would have maybe been
fairer, I have to agree with that, said
the Spurs boss. But sometimes its
important to get three points like
this by fighting. Liverpool in the sec-
ond half were very strong.
Victory lifted Tottenham back
above Everton and north London
rivals Arsenal, while Liverpool, with
just one win in nine in all competi-
tions, sunk to 12th, ahead of
Norwich only on goal difference.
I thought we should have had two
[penalties]. Its incredible, said
Rodgers. Gerrards was nearly
assault, how was that not a penalty?
Second one, Suarez spins and
William Gallas swings his left foot
and he goes down.
Bale terrorised Liverpool early on
and provided Lennon with an easy
finish for the opening goal after just
seven minutes. He doubled the lead
nine minutes later when his free-kick
swerved as it flew over the wall, per-
haps taking a deflection, wrong-foot-
ing a bamboozled Pepe Reina.
Suarez saw his prod at goal cleared
from the goalmouth by Walker and
Henderson missed under pressure
with the net gaping, but it was not
until the 72nd minute that Liverpool
got a reward for their pressure.
Substitute Jonjo Shelveys free-kick
found its way to captain Gerrard,
whose header Lennon hacked off the
line only to see it rebound off Bales
face and bounce past him, flooring
the Spurs star in the process.
Bale (left) set up the first for Lennon (right) before netting the second and then scoring an unfortunate own goal
SPORT
Bale stars at both ends
as Tottenham ride luck
ARSENAL boss Arsene Wenger
urged his team to turn their
season around after failing to grab
three points for the second time in
five days last night.
The Gunners silenced Evertons
fans with a first minute goal from
Theo Walcott yet had to settle for
a draw after Marouane Fellaini
curled a low equaliser past
Wojciech Szczesny from 25 yards
shortly before the half-hour.
In the Premier League we have
played 14 games, eight away at
two Manchester [clubs], at two
Liverpool [clubs], said Wenger.
If we play well at home we have
the chance to come back.
The draw left Arsenal seventh,
one point behind Everton, yet the
north Londoners now have four
home games before the year ends,
as well as visits to struggling
Reading and Wigan.
Defender Laurent Koscielny
picked up a groin strain and is set
to miss three weeks, while Walcott
suffered a minor ankle problem.
Wenger eyes home comforts as
Fellaini denies Gunners victory
MANCHESTER UNITED ................1
WEST HAM UNITED....................0
BY SPORTS DESK STAFF
PREMIER LEAGUE
STRIKER Robin Van Persie scored
the fastest goal in the Premier
League this season to beat West
Ham and maintain Manchester
Uniteds one-point lead at the top of
the table.
Van Persie struck after just 32
seconds, his effort fortunately
looping in off James Collins, for the
Dutchmans 12th goal in all
competitions this campaign.
However the league leaders
struggled for width and pace
without any orthodox wingers,
playing well below their best.
West Ham were robust but rarely
threatened to level except when
Andy Carroll lashed a volley over
from close range.
Javier Hernandez scuffed a decent
opening for the hosts and Jussi
Jaaskelainen managed to tip wide
his effort from 18 yards.
Carlton Cole came off the bench
late on and went agonisingly close
to stealing a point for the Hammers
but Anders Lindegaard denied the
striker from five yards as the hosts
held on to stay top.
Van Persie sinks Hammers in
32 seconds to keep United top
FOOTBALL
COMMENT
TREVOR STEVEN
Man Utd 14 11 0 3 33 18 33
Man City 14 9 5 0 27 10 32
Chelsea 14 7 5 2 24 13 26
West Brom 14 8 2 4 24 18 26
Tottenham 14 7 2 5 25 23 23
TOP FIVE
TEAM PLD W D L F A PTS
EVERTON.....................................1
ARSENAL.....................................1
BY JULIAN HARRIS
AT GOODISON PARK
PREMIER LEAGUE
35
IN BRIEF
Williams axe Senna for test driver
nFORMULA ONE: Williams have
confirmed that Finnish driver Valtteri
Bottas will replace Bruno Senna next
season. The 23-year-old, who worked
as test driver for Williams last year,
will partner Venezuelan Pastor
Maldonado.
Mourinho is best paid manager
nFOOTBALL: Real Madrid manager
Jose Mourinhos 12.3m salary makes
him the best paid in the world,
according to a Brazilian survey.
Manchester United boss Sir Alex
Ferguson is fourth on 7.6m, with
Arsenals Arsene Wenger fifth on
7.5m. Harry Redknapps appointment
at QPR puts him in fourteenth spot,
with a yearly pay packet of 3.2m.
England fly-half Owen Farrell has earned a
surprise spot on the shortlist for the International
Rugby Board Player of the Year award
cityam.com
CHELSEA....................................0
FULHAM.....................................0
BY ALEX SHARP
PREMIER LEAGUE
EMBATTLED Chelsea manager Rafael
Benitez bemoaned his sides lack of
cutting edge last night after drawing
another blank in his second game in
charge, against Fulham at Stamford
Bridge.
Misfiring striker Fernando Torres,
who has gone over 10 hours without
a Premier League goal, wasted
Chelseas best chance after a neat
turn in the box, firing straight at
Fulham goalkeeper Mark Schwarzer.
A draw in the west London derby
leaves Benitez still searching for his
first win as Blues boss while his
second consecutive goalless draw
was met with a chorus of jeers from
the home crowd at the final whistle.
The main thing is to put them
under pressure and hopefully in the
future we can play these passes in
the final third more precise and we
will have more chances, said
Benitez, whose side slipped seven
points behind league leaders
Manchester United.
We will create the chances we
have to with the talent we have up
front but if you dont link with them
quickly the defenders have time to
reorganise.
Everybody here is disappointed at
the end so we have to give credit to
Fulham who worked very hard but
these are the games you have to win
and cannot lose.
You cannot be satisfied when you
cannot win these games.
Fulham sat very deep at Stamford
Bridge, frustrating the hosts.
Brazilians David Luiz and Ramires
fired way off target with speculative
efforts in a quiet opening period.
Chelsea dominated possession and
territory after the break but rarely
cut through Fulhams defence.
John Arne Riise nearly stole a
point for Fulham when clear on the
left after a swift counter attack, but
his ferocious drive forced Peter Cech
into a fine, point-winning save.
More Blues for
Benitez as his
attack misfires
All Black Hore escapes with five-game ban
NEW Zealand hooker Andrew Hore
has escaped a lengthy ban for
striking Wales lock Bradley Davies
off the ball last Friday at the
Millenium Stadium, but will still
miss Saturdays clash against
England.
Hore has been widely condemned
for the incident, which occurred
barely 30 seconds into the All
Blacks 33-10 victory, but was
yesterday handed only a five-week
ban for the hit that left Davies
hospitalised with concussion.
The 34-year-old faced an eight-
week suspension for a top-end
offence but, after his disciplinary
record and remorse was taken into
account, the ban was reduced.
New Zealands trip to
Twickenham on Saturday is their
last match of the year and therefore
the ban will run until mid-February,
when Hore will miss the first three
pre-season matches for his club side
the Highlanders.
Referee Craig Joubert and his
assistants missed the incident,
prompting former Wales captain
Jonathan Davies to call for video
evidence to be used during matches
to help officials immediately catch
acts of serious foul play.
How long will it be before the
fourth official can come in and say
Right cheap shot, red card? We have
to clean the game up, said Davies,
who described Hores hit as a
cowardly assault.
Bradley Davies has received an
apology from Hore since Friday,
alongside texts and calls checking up
on his wellbeing.
It is nice to hear Andrew express
remorse for Bradley, said All Black
assistant coach Ian Foster. Andrew
has been suspended at the high level
but hes accepted responsibility, he
has more than 300 first-class games,
hes been a leader and his character
over that time period has been
exemplary. This one incident he has
accepted, he has fronted up for it
and he has been punished.
England head coach Stuart
Lancaster will name his starting line-
up today as he looks to bounce back
from narrow defeats to Australia and
South Africa in the past fortnight.
New Zealand have not lost to
England since 2003, when the Red
Rose went on to lift the World Cup.
Lancaster has lost fly-half Toby
Flood to a toe injury, with Saracens
No10 Owen Farrell expected to start
in his place.
BY ALEX SHARP
Giles handed limited overs role
as England prune Flower duties
FORMER England captain Nasser
Hussain has welcomed the
appointment of Warwickshire
chief Ashley Giles as one-day
international and Twenty20 head
coach, but insists talk of him
succeeding Andy Flower is
premature.
Giles will take charge for
Englands January ODI campaign
in India, which follow the current
Test series, leaving Flower to
concentrate on the five-day format
and in particular looming back-to-
back Ashes series.
Ashley ticks every box, said
Hussain. Hes been very successful
with Warwickshire as a coach, hes
played for England, hes been
involved as a selector and been
involved in the set-up of English
cricket now for 15 years.
I dont think that they were
sitting there thinking Who is
going to replace Andy Flower? I
think they are thinking We have a
good man in Flower, we have two
Ashes series home and away
coming up and we need him full of
energy for that.
Former England off-spinner
Giles, 39, has left Warwickshire
with immediate effect, having led
them to the County Championship
in September, and will report to
Flower. His first task will be the
five-match one-day series in India,
beginning on 11 January, followed
by T20 and ODI series away and at
home against New Zealand, and the
50-over Champions Trophy in
England next summer.
Batsman Kevin Pietersen is back
in the ODI squad for the first time
since last winter. He will play in the
India series but has been rested for
the two T20 matches on the
subcontinent before Christmas.
BY FRANK DALLERES
Former England spinner Giles led Warwickshire to the County Championship this year
GOLFS ruling organisations have
proposed anchored putting be
banned from all competitions by
2016, in what would be the biggest
shake-up to the sport in decades.
The new rules proposed by the
Royal and Ancient Club and
United States Golf Association
would permit the use of long-
handed putters, such as the broom
handle or belly putter, but would
outlaw players from anchoring
strokes to a pivot point on the
body, such as the chest or midriff.
Anchors away:
Golf to ban putt
BY TOM SHEPHERD
FORMULA One team Ferrari are
considering a protest over an illegal
overtake by Sebastian Vettel during
Sundays Brazilian Grand Prix, which
could see his World Championship
title handed to Fernando Alonso.
Ferraris Alonso lost to the
German by just three points after
finishing second at Interlagos, with
Red Bulls Vettel sixth. His team are
studying footage to see if Vettel
overtook Toro Rossos Jean-Eric
Vergne in a yellow caution zone.
Protest threat
to Vettel title
BY ALEX SHARP
STRIKER Mario Balotelli poached
his first Premier League goal of the
season as Manchester City kept the
heat on leaders Manchester United
with a 2-0 win at Wigan.
City foundered against a tireless
Wigan side until Balotelli pounced
on a spill by Ali Al Habsi in the
69th minute and finished at the
second attempt. Moments later
James Milner made the points safe
with a rising drive.
Swansea ended high-flying West
Broms run of four straight wins,
Wayne Routledge scoring twice in a
3-1 home win. Michu had given the
Swans the lead with his ninth goal
Super Mario rediscovers touch
as City stay on leaders heels
of the season before Routledges
brace, and fourth-placed West
Brom failed to mount the
comeback threatened by Romelu
Lukakus effort.
A howler from goalkeeper Paulo
Gazzaniga cost Southampton three
points in a 1-1 draw at home to
Norwich, although they still moved
to within one of safety. Rickie
Lambert put Saints ahead before
Gazzaniga allowed a Robert
Snodgrass free-kick to squirm in.
Stoke struck twice in the last 10
minutes through Jonathan Walters
and Cameron Jerome to condemn
flailing Newcastle to a fourth
successive top-flight defeat for the
first time since 2006.
BY SPORTS DESK STAFF
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ENGLAND SQUADS
nT20: S Broad; J Bairstow; T Bresnan;
D Briggs; J Buttler; J Dernbach; A
Hales; M Lumb; S Meaker; E Morgan; S
Patel; J Tredwell; L Wright
nODI: A Cook; J Bairstow; I Bell; T
Bresnan; D Briggs; J Dernbach; S Finn;
C Kieswetter; S Meaker; E Morgan; S
Patel; K Pietersen; J Tredwell; J Trott;
J Anderson (first three matches only);
S Broad (last two only)
Results

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