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DAVID Cameron will today promise

an in-out referendum on Britains


continued membership of the
European Union by the end of 2017.
It is time for the British people to
have their say. It is time to settle this
European question, he will say in
his much-delayed speech on the EU,
which will be delivered this morning
at a location in the City of London.
The Prime Minister will warn that
democratic consent for the EU in
Britain is now wafer thin and say
that the UK could drift towards the
exit unless other European nations
are willing to allow some powers be
repatriated back from Brussels to
Westminster.
I will not rest until this debate is
won. For the future of my country.
For the success of the European
Union. And for the prosperity of our
peoples for generations to come, he
will say.
Although Cameron will stress his
desire for Britain to remain in the
27-member bloc, he will make it
clear he is not willing to accept
membership at any price, since a
very different organisation will
emerge from the Eurozone crisis.
Yet his pledge of a referendum is
reliant on the Conservatives winning
the 2015 general election.
The next Conservative manifesto
in 2015 will ask for a mandate from
the British people for a Conservative
government to negotiate a new
settlement with our European
partners in the next parliament, the
Prime Minister will say.
And when we have negotiated
that new settlement, we will give the
British people a referendum with a
very simple in or out choice to stay
in the EU on these new terms; or
come out altogether. It will be an in-
out referendum.
Legislation will be drafted before
the next election. And if a
Conservative government is elected
we will introduce the enabling
legislation immediately and pass it
by the end of that year. And we will
complete this negotiation and hold
this referendum within the first half
of the next parliament.
Cameron pledges to deliver in-out referendum on the EU by 2017
BY JAMES WATERSON
BUSINESS WITH PERSONALITY
King: keep
UKs target
for inflation
BANK of England chief Sir Mervyn
King last night welcomed new ideas
over the role of central banks in the
post-crisis era, but warned against
scrapping Threadneedle Streets
inflation-targeting remit.
Incoming governor Mark Carney
has floated the possibility of switch-
ing to a nominal GDP target, but Sir
Mervyn who steps down in June
told business leaders in Belfast that
targeting inflation still has merit.
A long-run target of two per cent
inflation should be an essential part
of our macroeconomic framework,
Sir Mervyn said. And it is interesting
to note that within the past year
both the Federal Reserve and the
Bank of Japan have adopted a target
for annual inflation of two per cent.
The anchoring of inflation expec-
tations has been the most successful
aspect of the inflation targeting
regime and it has allowed the Bank
to avoid an unnecessarily damaging
tightening of policy in response to
short-run movements in inflation. It
would be irresponsible to lose that.
In a possible swipe at overly-ambi-
tious monetary regimes, Sir Mervyn
said: Wishful thinking can be
indulged if the costs fall on the
dreamers; when the costs fall on oth-
ers, it is unacceptable.
Yet the governor hinted that the
UKs fourth quarter GDP figures may
be bad, and that more quantitative
easing could be in the pipeline.
Be in no doubt that we are ready
to provide more stimulus if it is need-
ed, Sir Mervyn said on the possibility
of more asset purchases, before
adding later in the speech: Growth
in quarter four will almost certainly
turn out to have been considerably
weaker than in quarter three.
BORROWING INCREASED AGAIN IN DECEMBER
THE GOVERNMENT BORROWED
15.4bn IN DECEMBER
3.8% ON THE YEAR
CURRENT TAX RECEIPTS
3.6%
TO 43.8bn
CURRENT SPENDING
5.4%
TO 55.3bn
IT BORROWED
FOR CURRENT SPENDING
13bn
FOR INVESTMENT
2.4bn
THE GOVERNMENT
HAS BORROWED
THAT TAKES THE
NATIONAL DEBT TO
A JUMP OF 10% ON THE YEAR
IT NOW STANDS AT
SO FAR THIS FINANCIAL YEAR
106.5bn
1.11 trillion
7.3% 70.7% GDP ON LAST YEAR
GOVERNMENT borrowing jumped
again in December despite George
Osbornes efforts to bring the deficit
down, as the chancellor yesterday
ordered Whitehall to prepare for
deeper spending cuts after the 2015
general election.
Economists believe Osborne is now
likely to overshoot his earlier borrow-
ing forecasts by as much as 10bn,
with many suggesting these latest fig-
ures have put the UKs triple-A credit
rating in even greater danger.
Yesterday morning the chancellor
told fellow members of the cabinet
that they must do more with less
and find ways to cut departmental
budgets for the 2015-16 financial year.
There is no flinching from the fact
that very difficult decisions will have
to be made, the Prime Ministers offi-
cial spokesman explained. There was
agreement around the cabinet table
that though the decisions that are
going to have to be taken are difficult,
they will have to be made.
The NHS, schools and overseas aid
budgets will remain ring-fenced but
all other departments face additional
cuts. These new budgets will be bind-
ing, regardless of who wins the next
general election.
Figure from the Office for National
Statistics show the deficit came in at
15.4bn for December 2012, up 3.8
per cent on the same month last year.
This brings the deficit for the finan-
cial year so far up to 106.5bn, exclud-
ing one-off transfers, a rise of 7.3 per
www.cityam.com FREE
cent on the year.
Tax revenues rose 3.6 per cent to hit
43.8bn in December.
But they were far outstripped by
increases in current
spending, which rose
5.4 per cent to
55.3bn.
BY JULIAN HARRIS
FTSE 100 M6,179.17 -1.81 DOW 13,712.21 +62.51 NASDAQ3,143.18 +8.47 /$ 1.58 unc / M1.19 unc /$ 1.33 unc
BY TIM WALLACE
AND JAMES WATERSON
STUART LANCASTER
ISSUE 1,803 WEDNESDAY 23 JANUARY 2013
OCADO PICKS
ROSE FROM M&S
See Page 4, Bottom Line Page 6
See Page 22
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from 26/11/12 to 30/12/12 is 127,678
And even though the claimant
count has been rising, the social secu-
rity bill only increased 3.3 per cent,
showing government spending in
other areas is rising more quickly.
Part of the rapid rise was caused by
increasing interest payments on the
governments mounting debts they
came in at 4.4bn in the month, up
5.1 per cent on the year.
If this trend were to continue for
the remaining three months of this
financial year, borrowing for the
whole of financial year 201213
would be about 130.5bn. This is
around 10bn higher than forecast
by the OBR in its December, said
analysts at the Institute for Fiscal
Studies.
And ING economists said the UK
could be about to lose its triple-A cred-
it rating, which might hit confidence
in the governments ability to bring
down borrowing and potential
increase interest costs further.
With the US and France having
been downgraded by one ratings
agency in the past couple of
years, another disappointing
UK borrowing number and a
widely expected contraction in
fourth quarter GDP on Friday
will intensify the threat of the
UK suffering the same
fate, said the banks
James Knightley.
George Osborne has
told ministers to look
for cuts
NEWCUTSASDEBT
HITS 1.1 TRILLION
ENGLANDS RUGBY BOSS ON WHY NO ONE IS TOO GOOD TO DROP
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
BARCLAYS is to cut hundreds of
investment banking jobs in London
next month, yesterday launching a
consultation on the job losses.
The bank is expected to shut
controversial businesses including its
tax planning arm and agricultural
commodities trading units next
month under a major review by new
chief executive Antony Jenkins,
aimed at improving the banks
reputation. He was brought in after
Bob Diamond resigned in the wake
of the Libor scandal and is clamping
down on bad behaviour to restore
the firms image.
But the bank is also joining the
industry-wide push to cut costs,
laying off staff to cope with the poor
market conditions and to shore up
profits in the face of weak revenues.
Hundreds of jobs will go in the
City and Canary Wharf up to 10 per
cent of the investment banking
arms 10,000 employees in London.
Globally 2000 staff are expected to be
cut, many in the groups Asian units.
We have begun a process of
consultation with UK based
employees. This exercise is being
carried out so that we can start to
effect some of the strategic changes
as a consequence of the Transform
review of Barclays business, the
outcomes of which will be
announced on the 12th of February,
the bank said in a statement.
Barclays to cut
hundreds of
London bankers
BY TIM WALLACE
City to gainas 11 EU states
close in on financial tax
ELEVEN EU countries were given the
go ahead yesterday to start planning
for a financial transactions tax (FTT)
in an effort to squeeze more state
revenues out of the sector.
The charge is expected to hit trad-
ing activity in the countries that
adopt it, potentially pushing more
business towards the City as the UK
is firmly opposed to the levy.
Germany and France are leading
the move to introduce the charge,
which European Commission presi-
dent Jose Manuel Barroso claims
can raise billions of euros of much-
needed revenue for member states in
these difficult times.
This is about fairness: we need to
ensure the costs of the crisis are
shared by the financial sector
instead of shouldered by ordinary
citizens, he said when the plan was
announced late last year.
The countries involved can now
negotiate exactly how the tax will
apply. It is likely to be based on earli-
er EC plans which envisaged a
charge of 0.1 per cent of the value of
any trade in shares or bonds and 0.01
per cent of derivatives contracts.
But the details are not certain for
example, whether the national gov-
ernments will receive the revenues
or the EU, and whether private pen-
sions funds will be affected.
New hedge fund cuts fees
One of the UKs fastest-growing hedge
funds is slashing fees, hoping it will spark
a rethink of the industrys high charges.
The Core Macro fund from Cambridge-
based Cantab Capital will employ similar
trading strategies as funds from Man
Group, Winton Capital and BlueCrest,
three of the worlds biggest hedge funds,
but at half the cost to investors. While the
industry standard is two per cent of all
capital invested annually and 20 per cent
of profits, Cantabs new fund levies only
0.5 per cent and 10 per cent.
Public funds for London super sewer
The proposed 4bn super sewer under
London could be built by the government
rather than the private sector under a
radical plan put forward by Oliver Letwin,
David Camerons head of strategy.
Letwin to publish press regulation
plan
Oliver Letwin is expected this week to
publish his proposals for press regulation
backed by a royal charter in an effort to
flush out an agreement between the main
political parties in the wake of the phone
hacking scandal.
Wrong time for UK to quit Europe,
says Sir Martin Sorrell
Britain may end up quitting the European
Union just as its big continental trading
partners are getting back into their
economic stride, Martin Sorrell, the head
of advertising giant WPP has warned.
Giants join Chinas shale gas boom
China has mounted a huge investment
drive to explore its reserves of shale gas
in what it hopes could be a repeat of the
energy revolution in North America.
Draghi: Darkest clouds have passed
The Eurozone can begin 2013 with more
confidence than last year but it is up to
governments to carry the bloc forward
with reforms while the European Central
Bank delivers stable prices, ECB President
Mario Draghi said on Tuesday.
Government texts to part-timers
Part-time workers could receive regular
text messages from the government
telling them how much better off they
would be if they worked extra hours.
Netanyahu seeks coalition
Israeli Prime Minister Benjamin
Netanyahus Likud Party emerged as the
largest faction in a close election, but a
lacklustre performance by his party and
surprising gains by a centrist newcomer
raised the possibility of a coalition.
IBMs profit up 6.3pc on software
IBM got back on track in the fourth
quarter after disappointing investors the
previous quarter, as its software business
and sales in emerging markets grew.
London could be a winner from the tax as business would move from the 11 states into the UK
2
NEWS
BY TIM WALLACE
To contact the newsdesk email news@cityam.com
I
t is starting to look as if George
Osborne is going to blow another
housing bubble, albeit this time of
a more modest variety. His
Funding for Lending Scheme is
starting to have an effect; but instead
of making it easier and cheaper for
small firms to borrow money, the
subsidys supposed intention, the
scheme is merely channelling funds
into the housing market.
Yet house prices remain over-valued
nationally, probably by about 25 per
cent. They still need to fall and even-
tually will, in real terms at least.
Delaying this adjustment will only
make the eventual correction even
more painful, while hurting the
prospects of those who cannot get
onto the housing ladder or are stuck
in excessively small homes.
But reflating the bubble could tem-
porarily make the economy feel better
EDITORS
LETTER
ALLISTER HEATH
Desperate Osborne risks fuelling another housing bubble
WEDNESDAY 23 JANUARY 2013
than it really is. Research by Robert J.
Shiller, who made his name warning
of irrational exuberance, and his col-
leagues Karl E. Case and John M.
Quigley, published by the National
Bureau of Economic Research, con-
firms how house prices drive con-
sumer spending. Their numbers
relate to America, but they would
undoubtedly also apply here; the
authors discovered that changes in
house prices have a larger impact on
spending than changes in share
prices, and that increases in property
prices boost consumption by more
than crashes cut it.
They found that an increase in real,
inflation-adjusted housing wealth, of
the sort seen in the US between 2001
and 2005, pushes up household
spending by 4.3 per cent in total. A
housing crash of the sort seen in
2005-2009, slashes consumer spend-
ing by around 3.5 per cent. There are
usually two ways in which house
prices impact spending: home owners
feel richer; and they are able to
extract equity by remortgaging or
downsizing their homes.
The drop in inflation-adjusted
house prices seen in Britain (exclud-
ing central London) over the past few
years hit consumers; the slow recov-
ery in mortgage lending and housing
transactions could soon start to boost
spending on the margins.
ising planning laws to allow develop-
ers to convert empty offices (outside
of pure business districts such as the
Square Mile) into homes actually
materialises this time. By boosting
housing capacity by some estimates,
if one in twenty empty offices were
converted, 130,000 new homes could
be built it would reduce the chances
of another property mini-bubble
while bolstering GDP figures as a lot
of the changes of use would involve
construction work. It would also be a
good policy in and of itself: the UKs
antiquated planning rules risk trap-
ping us into a fossilised, antiquated
society. Supply-side reforms of this
kind, rather than yet more credit bub-
bles, are the only way the UK will
return to sustainable growth.
Osborne is certainly desperate for
growth, ahead of this weeks likely
bad news on fourth quarter GDP. His
debt and deficit figures, released yes-
terday, make for grim reading. Public
sector net borrowing hit 15.4bn in
December 2012, 0.6bn higher than
the 14.8bn seen in the month a year
ago. As ever, public spending is grow-
ing faster than tax receipts, despite
supposedly swingeing cuts.
At the end of December 2012, the
public sector net debt excluding the
temporary effects of financial inter-
ventions hit 1.111 trillion, equivalent
to 70.7 per cent of GDP. A year ago, it
stood at 1.009 trillion, or 66 per cent
of GDP. The Chancellor is failing to
bring the deficit down, and this
means that the national debt is con-
tinuing to roar ahead.
It is to be hoped, therefore, that the
governments latest attempt at liberal-
There are also legal obstacles for the
negotiating nations to pass, as they are
not allowed to create a tax which dis-
torts the single market or which con-
travenes any previous treaty.
But investment groups and analysts
argued the tax is likely to backfire,
harming consumers and the economy.
This is simply a cost to those wish-
ing to invest in the countries which
adopt the FTT, said George Morley
Smith from the Investment
Management Association. And it will
not harm those it is purporting to tar-
get, just the savers and pensioners who
are the beneficial owners.
The UK is opposed to the tax, and is
trying to ensure it will not affect for-
eign firms operating in Britain.
The British government is well
aware of the issues and will do their
best to make sure that there is no
adverse effect on financial services out-
side the ECP area, said lawyer John
Chown, noting that anything which
harms those 11 countries as an invest-
ment destination makes London a
more attractive location. If it drives
business away, it could prove to be
good news for the City.
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
Q
What is this
planned financial
transactions tax?
A
The European
Commission wants
any trades of assets like shares and
bonds to be taxed at a rate of 0.1 per
cent. Derivatives trades would be
taxed at 0.01 per cent.
Q
Who does it affect?
A
The EC wants all EU nations to
sign up, but only 11 have so far
Germany, France, Spain, Portugal,
Italy, Belgium, Greece, Austria,
Slovenia, Slovakia and Estonia.
Q
What if I do business with firms from
those countries?
A
The details are still to be worked
out, but if the transaction is
processed in those countries, you
will probably be hit.
Q
When will the details be finalised?
A
The plan is to bash out a full plan
by December of this year. But EU
negotiations are famously slow, so
this is a tough deadline.
Q
How much will it raise?
A
The EC claims it would raise
57bn (47.9bn) per year if it was
applied to all member states. But as
it is missing out London, the total
will be far lower and will drop
more if it drives trades overseas.
Q
A
and
What is the plan for
this new tax?
MICROSOFT has waded into moves
to buy out US computer maker Dell,
offering a multi-billion dollar
investment in the deal.
Although the company is not
believed to have committed to a
contribution, it has held talks over
joining a group of investors led by
Silver Lake Partners.
An investment in Dell could
signal a further move into the
hardware business from Microsoft,
which launched its own Surface
tablet computer last year.
A takeover deal for Dell is
expected to cost around $23bn
(14.5bn), with most of the money
coming from Silver Lake
fundraising.
Founder and chief executive
Michael Dell, who owns 15 per cent
of the company, is contributing
equity to the deal, while Microsofts
investment is set to be around
$2bn, the Wall Street Journal
reported.
Silver Lake and Microsoft have a
working history, having co-operated
on Microsofts $8.5bn purchase of
video calling service Skype in 2011,
and a failed attempt to buy a stake
in Yahoo in the same year.
Shares in Dell rose to $13.12 a
share, nearing the market
valuation a takeover deal is
estimated at. Dell and Microsoft did
not comment.
Microsoft joins
race to take
Dell private
BY JAMES TITCOMB
GOOGLE saw record profits in the
final quarter of last year, as its busi-
ness grew internationally and aver-
age advertising rates stabilised.
The technology giant beat expecta-
tions to report revenues of $14.4bn
(9bn) for the period, a 36 per cent
year-on-year increase. Profits rose to
$2.89bn, relieving investors who
were spooked three months earlier
when Google posted a sharp decline
in earnings for the previous quarter.
Although profits were up only
slightly, the rise was impressive con-
sidering they included the lossmak-
ing Motorola business, which Google
bought last year for $12.5bn.
Average cost-per-click, the amount
that Google charges an advertiser
when someone using its search
engine clicks on an advert, declined
six per cent year-on-year.
This fall, attributed to the lower
rates charged in emerging markets
and on mobile phones, was not as
bad as feared, however, and the aver-
age cost-per-click actually improved
two per cent on the previous quarter.
Business looked really strong,
Google profits
break records
as ads recover
BY JAMES TITCOMB
especially from a profitability per-
spective, said Sameet Sinha, an ana-
lyst at Los Angeles investment bank B
Riley Caris.
The results meant that Googles rev-
enues for 2012 were above $50bn for
the first time. Not a bad achieve-
ment in just a decade and a half
[since Googles birth], Larry Page, the
companys chief executive said.
Shares in Google rose around five
per cent in after-hours trading follow-
ing the announcement. Revenues
from the UK amounted to $1.3bn,
roughly 10 per cent of total sales. This
came despite data from Experian
claiming that Googles market share
of search has dropped to 88 per cent,
its lowest position for five years.
Google Inc
22Jan 15Jan 16Jan 17Jan 18Jan
700
710
720
730
$
702.87
22Jan
City jobs rising as legal hiring
counters bank staff bloodbath
WEDNESDAY 23 JANUARY 2013
3
NEWS
cityam.com
Legal services were the fastest growing sector for headcount in the City last year
City jobs rising as legal hiring
counters bank staff bloodbath
Legal services were the fastest growing sector for headcount in the City last year
LEGAL services jobs in the City
increased rapidly last year,
outweighing even the dramatic
fall in bank employment and
pushing total headcount in the
square mile up through 2012,
new figures revealed yesterday.
A total of 117,800 people are
now employed in legal services,
TheCityUK found, an increase of
2.5 per cent on the year.
And headcount in accounting
and management consulting
edged up 0.3 per cent to 191,400.
Those increases outweighed
the 1.2 per cent fall in bank jobs
City jobs rising as legal hiring
counters bank staff bloodbath
BY TIM WALLACE to 144,300 and the 1.7 per cent
drop in insurance roles to 71,200.
Those changes contribute to an
overall rise of 0.3 per cent in
finance and professional services
jobs, taking overall headcount to
665,700.
That is up from a low of
635,900 in 2010.
English law is becoming the
law of choice for international
business and companies come to
London and the UK because they
know they will find world class
lawyers, mediators and
arbitrators, explained
TheCityUKs chief executive
Chris Cummings.
Legal services were the fastest growing sector for headcount in the City last year
Fund Management
22,100 -0.6%
Legal Services
117,700 +2.5%
Banking
144,300 -1.2%
TOTAL
665,700+0.3%
FINANCIAL AND PROFESSIONAL
SERVICES JOBS IN LONDON
Auxiliary & Other
119,100 +1.5%
Accouting &
Management consultancy
191,400 +0.3%
Insurance
71,200 -1.7%
Sir Stuart Rose may have questioned the
protability of Ocados business model in
2009, but yesterday the former M&S boss
put his weight behind the online grocer by
becoming its next chairman, saying
Ocados model will see it emerge as a
powerful online player. While analysts
remain sceptical of such a future for the loss-
making rm, most agree that Sir Stuarts long
record at the heart of UK retail makes him the
right man to try to reverse its fortunes. The 63-
year old, described by one analyst as a retail
Boris Johnson for his charismatic manner, has
worked in the retail sector for 41 years. He
rst joined Marks & Spencer in 1972
as a management trainee,
where he rose through the
ranks before leaving to
become chief executive of
the Burton Group in 1989.
Sir Stuart left in late 1997
before Burton Group
split into Arcadia and department store group
Debenhams. After stints as chief executive of Argos
and cash-and-carry business Booker, he joined the
Arcadia Group in 2000 as chief executive, where he
sealed his reputation for success by turning around
the debt-laden group and overseeing its sale in
2002 to Sir Philip Green for 885m. Sir Stuart
returned to M&S in 2008 as executive chairman,
where he was credited with defending that group
from a takeover bid in 2004 by Sir Philip Green, but
also courted controversy by becoming both chair-
manandchief executivechallengingcorporate
best practice rules. Since leaving in 2012 the retail
veteran has built up a cache of non-executive roles
at companies including fashion retailer Blue Inc,
online retailer Hut Group and travel insurer No
Exclusions. He is also on the board of private equity
rm Bridgepoint and property developer Land
Securities, mobile e-commerce service Mobile
Money Network and South African retailer
Woolworths Holdings.
SIR STUART Rose, the former boss of
Marks & Spencer, is to become chairman
of Ocado, in a major coup for the online
retailer.
The company said Sir Stuart is to
replace Sir Michael Grade after its annu-
al general meeting in May. Grade, best
known for his roles at ITV and Channel
Four, will be stepping down after seven
years at the helm of Ocado.
The change of guard comes at a crucial
time for the troubled firm, which has
failed to make a profit since it was first
founded 2001. The firm is pinning its
hopes on the opening of a distribution
centre in Warwickshire this year to help
it compete against fast-growing rivals.
Panmure Gordon analyst Philip
Dorgan hailed Sir Stuarts appointment
as a good move and one that is likely to
Sir Stuart Rose
takes the hot
seat at Ocado
BY KASMIRA JEFFORD
reignite bid chatter, though a bid for
the firm was unlikely. M&S was report-
ed to have eyed an acquisition before it
floated in 2010.
But Shore Capital analysts were scepti-
cal that Sir Stuart will turn around a
struggling Ocado and said: Bad compa-
nies will always beat good manage-
ment.
THE CAPITALIST: Page 13

BOTTOM LINE: Page 6

WEDNESDAY 23 JANUARY 2013
cityam.com
PROFILE: SIR STUART ROSE
Ocado Group PLC
22Jan 16Jan 17Jan 18Jan 21 Jan
85
90
95
100
105 p
101.00
22Jan
4
NEWS
BRITISH bosses are expecting a
wave of big deals in 2013, planning
to expand their companies
through mergers and acquisitions
rather than via organic growth,
research from PwC has revealed.
An international survey of chief
executives found that 43 per cent
of British business leaders plan to
complete a domestic M&A deal
this year, the highest proportion
in the world. Meanwhile, only one
in five said they were very
confident about growth over the
year, compared to more than one
in three chief executives globally.
Over-regulation and the
governments tackling of the
deficit were two of the biggest
concerns raised. And UK bosses
were relatively unconfident about
overseas growth, with only 14 per
cent targeting overseas expansion
in 2013.
These concerns about growth
mean that 83 per cent of bosses
intend to cut costs far above the
global average.
Data from Dealogic yesterday
suggested that the shopping spree
had already begun, with private
equity buyouts to date in 2013
hitting their highest values since
2007. Private equity-related M&A
activity has hit $15.6bn (9.8bn)
worldwide since 1 January, up
from $9.2bn last year.
British chiefs
anticipate M&A
shopping spree
BY JAMES TITCOMB
HMV was given a potential lifeline
yesterday after restructuring firm
Hilco bought the crisis-hit music
retailers debt for about 40m, effec-
tively giving it control of the group.
Hilco which already owns HMV
Canada confirmed yesterday it had
acquired HMVs debt from the
groups consortium of lenders led by
the Royal Bank of Scotland and
Lloyds Banking Group, which stood
at 176m at the end of October.
Although it has not bought the
business itself, the deal will give
Hilco a big say in the fate of the 92-
year-old group, which collapsed into
administration last week.
Hilco believes there to be a viable
underlying HMV business and will
now be working closely with Deloitte
who, as administrators, are review-
ing the business to determine
future options, the company
said in a statement.
Sources familiar with
the situation
said the next
step was work-
ing with sup-
BY KASMIRA JEFFORD
pliers to secure new stock for HMV so
it can continue to trade.
The group is counting on Hilcos
good relationship with music labels
and film studios through its
Canadian business, which it bought
in 2011.
HMVs move into administration
last week put 4,100 jobs at risk and
dealt the latest blow to a retail sector
which has seen a string of household
names such as Comet, JJB Sports, MFI,
and Woolworths fall by the wayside.
Chief executive Trevor Moore said
he was convinced the music chain
still has a future on the high street.
As well as Hilco, Deloitte has
received over 50 expressions of inter-
est in HMV, including from private
equity firms Better Capital and
Endless. Video games seller Game has
said it was interested in some HMV
stores.
Deloitte joint administra-
tor Nick Edwards said:
Stores continue to
trade and at this time
we remain hopeful of
securing a long-term
future for HMV as a
going concern.
Restructuring specialist Hilco may be a
secretive rm but its presence in the retail
sector is ever increasing as a whole host of
retailers fall into administration and demand
urgent surgery. Paul McGowan, the founding
partner of Hilco UK, has already come to
HMVs rescue once before after buying the
music retailers 125-store Canadian arm in
2011. He also engineered the sale of Habitat
to Home Retail Group for 24m in 2011, a
deal that saw all but three stores go into
administration. Hilco has also wound down
the bookseller chain Borders and helped run
the closing down sale for retailer
Woolworths after missing out on a deal to
buy the retail chain for 1 along with up to
300m of its debt.
McGowan, an accountant by trade, moved
from Northern Ireland to London in the
1980s to join KPMG before taking up the
post of nance and operations director at
Jacqmar. He then moved on to Leslie Fay, a
womenswear rm that ran concessions in
department stores, where he managed all
aspects of nance, administration, supply
chain and retail operations. He eventually
rose through the ranks to become chief
executive. In 2000 he left to set up Hilco UK
in a joint venture with its US parent, based
in Chicago.
HMVS RESCUER: HILCO
PAUL MCGOWAN
HILCO UK
WEDNESDAY 23 JANUARY 2013
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Hilco snaps up
HMV debt pile
to take control
A TRADER at Schroders was among
five people arrested yesterday as
part of an investigation into insider
dealing and market abuse.
Schroders confirmed that an
employee was arrested by the
Financial Services Authority (FSA)
and City of London police yesterday,
and has been suspended from the
firm with immediate effect.
The FTSE 100 asset management
group said the arrest was linked
entirely to this individuals person-
al actions and that there is no sign
that client or company money have
been affected.
Schroders is not subject to any
investigation, the company added
in a statement.
The bank, the police and the FSA
did not name the trader arrested,
but it is believed that the employee
worked in the investment manage-
ment division of the group and not
its private banking arm.
The FSA said five people were
questioned after it executed four
search warrants in the City,
Lincolnshire, Leicestershire and
North Yorkshire early yesterday
morning. Those arrested two men
aged 37 and 62 and three women
aged 39, 51 and 63 have all been
FSA arrests five
including trader
at Schroders
BY MARION DAKERS
released on bail.
It is understood that of the five,
only the Schroders employee works
in the City.
The FSA stressed that the arrests
were not linked to Operation
Tabernula, its extensive probe into
insider trading that has spanned
three years and counting.
The watchdog, which in April will
be rolled into a new body called the
Financial Conduct Authority, has
been more vigorous in it pursuit of
wrongdoing since the financial cri-
sis, when it was slammed for a per-
ceived light touch style of
regulation.
The FSA has secured 21 convictions
for insider dealing since 2009. In
December, Mizuho banker Thomas
Ammann was sentenced to two
years and eight months imprison-
ment for two counts of insider deal-
ing and two counts of encouraging
insider dealing. Six other prosecu-
tions for insider dealing, which can
carry a jail sentence of up to seven
years, are ongoing.
One of men involved in an ongo-
ing trial Paul Milsom, a former
equities sales trader at the invest-
ment arm of Legal & General indi-
cated at a pre-trial hearing last week
that he would plead guilty to one
count of insider dealing.
BOTTOM
LINE
ELIZABETH FOURNIER
WEDNESDAY 23 JANUARY 2013
6
NEWS
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W
HEN Sir Stuart Rose dipped
his toe back in the retail
waters by becoming
chairman of Blue Inc and
backing The Hut last year, it should
have been obvious he had his eye on
bigger things.
But why Ocado? This column not
to mention several high-profile City
analysts have long taken a dim
view of the former Goldman
bankers business model, and as it
faces increasing competition from
mainstream grocers as well as core
customer Waitrose itself moving
into online delivery, Ocados once-
innovative warehouse concept is no
longer looking very fresh.
Just this week Tesco cast a shadow
over Ocados traditional Home
Counties stronghold by opening its
fifth dark store in West Sussex,
cutting out the in-store experience
completely for both online shoppers
and the 700 staff wholl pound its
pseudo-aisles to prep deliveries.
Meanwhile Ocado is looking fur-
ther north to Warwickshire to dou-
ble its warehouse capacity, but
growth in its online sales (thats all
of them, then) is already trailing
both Tesco and Sainsbury over the
crucial Christmas trading period.
Parachuting Sir Stuart in looks
great, and certainly delivered the
shares off more than 50 per cent in
the past two years a boost.
But beyond giving investors a
short-term opportunity to sell as
stock trades high on renewed bid
rumours, his appearance at the firm
is unlikely to lift anything other
than morale.
NIPPER KEEPS ON BARKING
Despite the unconventional way a
deal was struck, getting Hilco on
board at HMV is great news for both
the brand and its employees.
Since the restructuring specialist
took HMVs Canadian operations off
its hands for 2m in 2011 it has kept
119 stores in the country alive, hav-
ing initially provided a C$26m
(16.5m) emergency loan to keep the
shops trading over a crucial
Christmas period.
But it also has form closer to home
with iconic UK brands. Since buying
up Habitats debt in 2009 its made
the furniture firms European opera-
tions profitable, and its acquisition
of the defunct Polaroid brand and
assets in April of the same year led to
a relaunch backed by newly recruit-
ed creative director Lady Gaga.
But surely the feather in Hilcos hat
is its existing relationships with
HMVs suppliers the music labels
and film studios that have declared
themselves so keen to see His
Masters Voice keep on barking.
It is stock from these suppliers that
will be crucial to keeping HMV
afloat in the short term. Deep dis-
counting may drag curious punters
in for now, but as soon as the in-
demand Homeland box sets are
cleared from the shelves its unlikely
theyll come back to buy Cliff
Richards latest calendar or yet
another pair of headphones.
Paul McGowan and his team have
proved themselves a dab hand at
mopping up the best of whats left of
some of the UKs biggest brands.
Heres hoping theyve got the con-
tacts to salvage some of this latest
high street mess.
Elizabeth Fournier is News Editor of
City A.M. @ej_fournier
Rose will keep up Ocados appearances but little else
MIDDLE CLASS tax evaders are
more likely to be prosecuted
under plans unveiled last night by
the boss of the Crown Prosecution
Service (CPS).
Tax evasion has to be dealt with
robustly all the time, said Keir
Starmer, director of public
prosecutions. But in a recession,
when ordinary law abiding
taxpayers are suffering real
hardship, the need to deter, detect
Middle class tax evaders face
new crackdown by prosecutors
BY JAMES WATERSON and prosecute those who evade tax
is greater than ever.
Starmer said he wants to combat
the perception that tax evasion is
victimless crime and increase the
number of prosecutions fivefold,
hitting at least 7,500 a year by
2015.
People who may now face
criminal proceedings include buy-
to-let landlords who fail to declare
rental income and professionals
who channel money to illegal
overseas tax avoidance schemes.
THE ECONOMIC recovery has been
put on hold as manufacturers
reported demand is lower than
expected in an industry survey
published yesterday.
New orders fell in the last quarter
according to 28 per cent of firms
questioned by the Confederation of
British Industry (CBI), outweighing
the 25 per cent who reported rising
orders and disappointing hopes of
an improvement in the quarter.
And export orders continued to
fall, with a net balance of 13 per cent
of manufacturers reporting a drop.
The manufacturing sector may be
past the worst after a pretty torrid
2012, but it still has its work cut out
to return to sustainable growth in
the face of ongoing challenging
domestic and international
conditions, said Howard Archer
from IHS Global Insight.
Meanwhile, a further appreciable
rise in manufacturers near-term
pricing expectations to a 21-month
high in January is likely to reinforce
current heightened concerns over
the outlook for inflation.
Manufacturing
orders dip hits
growth hopes
BY TIM WALLACE
THE UKS audit watchdog has
announced plans to hike levy rates by
8.5 per cent.
The Financial Reporting Council
(FRC)s move was criticised by firms
yesterday but the regulator said the
increase was necessary as it attempts
to clear a backlog of cases and deals
with extra regulation.
The FRC is upping its budget by 10
per cent for 2013-14 to 24.5m. It
charges all firms with revenues or val-
uations above a certain level.
Accountants hit out at the increase
yesterday. Their costs have gone up
significantly and we end up bearing
them, while other departments are
trying to cut budgets, Nick Winters,
head of audit in London at RSM
Tenon, told City A.M.. Sir Michael
Snyder, the chairman of industry
Audit watchdog
hikes business
levy by 8.5pc
BY JAMES TITCOMB
body the Professional and Business
Services Group and a senior partner at
Kingston Smith, said: I dont see why
regulators should be able to levy above
inflation increases to add to the bur-
den to business. An FRC spokesperson
said: The additional funding will
strengthen our ability to respond to
international demands, to scrutinise
emerging issues and to conduct
research into the economic and busi-
ness environment.
Meanwhile. the results of a probe
into the dominance of the big four
professional services firms KPMG,
Ernst & Young, PwC and Deloitte was
postponed by the Competition
Commission for a second time yester-
day. The watchdog may recommend
ways to ensure competition in the
market, but individuals have suggest-
ed that it has not been able to come up
with workable proposals.
LAWYERS for former Goldman
Sachs Group board member Rajat
Gupta are urging a federal appeals
court to reverse his insider trading
conviction, arguing that a judge
shouldnt have allowed wiretaps to
be heard at trial.
In a brief filed Friday at the 2nd
US Circuit Court of Appeals in New
York, Guptas lawyers argued
wiretaps of now-imprisoned hedge
fund manager Raj Rajaratnam
amounted to hearsay statements
and should not have been
BY CITY A.M. REPORTER
presented to the jury.
Without a proper basis for
admission, these untestable,
unreliable hearsay statements had
no place in a criminal trial, and
their admission alone compels
reversal, Guptas lawyers wrote.
A federal jury convicted Gupta,
64, in June of leaking Goldman
boardroom secrets to Rajaratnam,
the Galleon Group hedge fund
manager at the centre of probe into
insider trading. Lawyers for
Rajaratnam had no immediate
comment.
Gupta was convicted as part of a big US insider trading probe last year
WEDNESDAY 23 JANUARY 2013
7
NEWS
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Rajat Gupta seeks reversal of
conviction for insider trading
THE GOVERNMENT has hired an
investment banker, formerly of
Deutsche Bank, to work on the affairs
of Royal Mail, which is being primed
for privatisation.
Jonathan Berger is said to have
joined the Shareholder Executive,
part of the Department for Business,
Innovation and Skills. His appoint-
ment will increase speculation that a
listing of Royal Mail could come later
this year.
Government
hires banker
for Royal Mail
BY DAVID HELLIER
UBS has named private banker
Andre Cronje as the chief operating
officer of its investment bank.
Andres experience from
investment banking, wealth
management and corporate centre,
as well as his international
perspective, is a major asset as we
seek to reposition ourselves, UBS
said in a memo. Cronje replaces Sam
Molinaro, an ex-Bear Stearns
financial chief. Cronje has been head
of UBSs private bank in the UK and
Jersey since 2008.
UBS names
wealth man as
operating boss
BY CITY A.M. REPORTER
THE GOVERNMENT will remove barri-
ers on converting office buildings
into residential flats in the hope of
easing the housing crisis, it was
revealed yesterday.
Planning minister Nick Boles is due
to announce the move later this week,
which will permit developers to con-
vert many office buildings into
domestic residences without needing
planning permission.
But the City of London will be
exempt from the rule change, as will
shops and warehouses. Canary
Wharf, however, is unlikely to be
given any special privileges.
Demand for commercial property
has slumped since the financial crisis
and some areas of the country are
blighted by low office occupancy
rates. At the same time, housing
supply has not kept pace with
demand and the value of residen-
tial property space is up to double
that of commercial property,
according to Savills.
If the planning barriers to
Minister to ease
rules on turning
offices into flats
BY JAMES WATERSON
conversion are effectively removed,
this could have a significant impact,
said Peel Hunt analyst Robin Hardy.
The whole country is littered with
masses of under-occupied low-value
office buildings that would make fab-
ulous residential [property].
Some London boroughs have fought
hard against change-of-use for office
developments, amid fears that any
homes built as a result will be snapped
up by overseas purchasers and drive
workers out of the area.
Peter Rees, the Citys planning offi-
cer, said: The City of London has
made no secret of our concern about
the impact of the proposed change to
planning rules upon our role as a
world business centre. Property con-
sultants estimate 20 per cent of the
office floor space in the Square
Mile would be in immediate
danger of conversion to flats if
we do not achieve an exemption
from the rule change.
Last year developers proposed
turning the Centre Point building
by Tottenham Court Road
underground station into
luxury flats.
Planning minister Nick Boles
THE TOP brass at the Bank of
England are so overworked that it
is harming their ability to work
well and the situation will only
get worse as the Bank takes on
more regulatory responsibility,
former Monetary Policy Committee
member Adam Posen warned
yesterday.
The governor and his two
deputies work 18 hour days, seven
days a week, 365 days a year, and
that does not give them time to
reflect, time to assimilate, he told
the Treasury Select Committee.
There have been instances
Adam Posen warns Sir Mervyn
King is being worked too hard
BY TIM WALLACE where that has run up against the
committees, and with the Financial
Services Authority folded back into
the Bank, that is going to get
worse.
He also said the governor should
act more as a chairman rather than
an executive.
And Posen attacked suggestions
that the Bank should abandon its
current inflation targeting regime
and choose a nominal GDP target
to promote growth.
He argued a shift could lead to
volatile prices and lose the anchor
to inflation expectations which has
been important in trying to keep
the economy stable.
WEDNESDAY 23 JANUARY 2013
8
NEWS
cityam.com
Adam Posen sat on the Monetary Policy Committee of the Bank of England until 2012
PARTNERS at City law firm Baker &
McKenzie have chosen intellectual
property partner Paul Rawlinson as
the next head of the London office,
replacing Gary Senior who will step
down this summer after 10 years in
the role.
Rawlinson, a Bakers lifer who
joined the firm as a trainee in 1986,
is serving his second stint on the
firms managing committee and
will become London managing
partner on 1 July.
As figures from The CityUK
showed yesterday that legal services
employment in the City grew by 2.5
per cent (see page 3) offsetting a
decline in finance roles
Rawlinson said the sector had a
crucial role to play in supporting
financial services firms.
With an increased focus on
compliance and risk management
law firms are more relevant than
ever, he told City A.M. yesterday.
Were perfectly placed to help UK
plc grow in emerging markets and
manage their risks on a global
basis.
Rawlinson plans to keep working
for a core group of clients with
whom he has a long-standing
relationship, including FTSE 100
firms Unilever and British
American Tobacco.
Though Bakers does not release
half-year figures, Rawlinson was
upbeat about the
first few
months of
the financial
year,
predicting a
good first
half
compared
to last
year.
New London
head at Baker
& McKenzie
BY ELIZABETH FOURNIER
Philip Robert-Tissot will take a two-year secondment from Citi to join the Panel
WEDNESDAY 23 JANUARY 2013
9
NEWS
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Citis European rainmaker to lead Takeover Panel
SENIOR Citigroup banker Philip
Robert-Tissot was yesterday named
as the incoming head of the UKs
Takeover Panel, putting him in a
key position to decide the
outcome of acquisitions and
influence policy in the area.
Robert-Tissot, who made no
public comment on his
appointment which takes effect
on 1 April, succeeds Robert
Gillespie, a senior M&A banker at
advisory boutique Evercore
Partners, who had been in the role
BY HARRY BANKS since September 2010. He will join
the Panel on a two-year
secondment from Citi, where he
currently holds the role as M&A
chairman for Europe, Middle East
and Africa.
Robert-Tissot joined Schroders in
1989 and became a director there
in 1996, before being made a
managing director when Citi
acquired Schroders investment
banking business in 2000.
The Panel, which administers
the UKs code on takeovers and
regulates deals to ensure fair
treatment for investors, adopted
tougher rules in 2011 designed to
tip the balance of power back
towards acquisition targets.
That move came in response to
the acquisition of chocolate maker
Cadbury by Kraft, which sparked
public anger after the US buyer
reversed a promise to keep a plant
open.
The revised rules for instance
give bidders less time to decide on
a bid to avoid a UK company being
under siege from a predator for
months. Another change was that
hostile bidders had to disclose
what they paid their bankers.
INVESTORS in Europe are
becoming more confident about
spending their cash piles,
according to data out yesterday.
German analyst and investor
morale hit its highest level in more
than two and a half years in
January, think tank Zew said.
The monthly poll of economic
sentiment climbed for a second
month to reach its highest level
since May 2010, rising to 31.5
points from 6.9 in December.
This is a huge upwards jump
and a positive surprise. It reflects
the improvement in the global
economy, from better growth
chances in China to orders in
Germanys industrial sector," said
Postbank chief economist Marco
Bargel.
Meanwhile, historical figures
from Eurostat revealed that
investors in the European Union
held almost 5bn of stocks in the
rest of the world at the end of 2011.
The rise from 3.8bn in 2008
means the 27 EU countries are net
investors in the global equities
market. EU stocks held in another
member state also rose by 20 per
cent in the same period.
EU confidence
on the increase
BY CITY A.M. REPORTER
THE BANK of Japan yesterday
unveiled its most determined
effort yet to end years of economic
stagnation in the country, saying it
would switch to an open-ended
commitment to buying assets next
year and double its inflation target
to two per cent.
It issued a joint statement with
the new government promising to
reach the inflation goal at the
earliest possible time, drawing
praise from Prime Minister Shinzo
Abe, who has piled relentless
pressure on the central bank to
take bolder measures to pull Japan
out of deflation.
The decision to adopt asset
buying with no end date had
exceeded market expectations,
analysts said. But Tokyo stocks fell
and, after an initial selloff, the yen
rose on investor disappointment
that the expanded stimulus would
not start until 2014.
Having slashed interest rates
close to zero, the BoJs policy is the
latest unorthodox effort by a
leading central bank to try to boost
an otherwise weak recovery from
the global financial crisis and, in
Japans case, overcome more than a
decade of deflation.
Japan raises
inflation goal
BY CITY A.M. REPORTER
Global jobs market struggling to recover
THE JOBS market in wealthier
countries is struggling to grow after
the financial crisis, figures from the
Organisation for Economic Co-
operation and Development (OECD)
think tank showed yesterday.
The share of working age people
in jobs in the worlds wealthier
nations was 1.5 percentage points
below the 2008 watermark in the
third quarter of 2012, though the
BY MARION DAKERS
employment rate for OECD
countries rose 0.2 per cent on last
year to reach 65 per cent.
The Eurozones rate fell 0.4
percentage points on a year ago to
63.8 per cent, faring worse than the
US and Japan, which reported
modest rises.
And the stark outlook for young
people trying to find work failed to
improve, with a stagnant 39.3 per
cent employment rate for 15-24
years olds in the quarter.
In the UK, the employment rate
improved 0.3 points to 70.3 per cent
over the third quarter, though it
lingers below the 71.5 per cent rate
seen in 2008, the OECD said.
The group expects the UK
economy to grow just 0.9 per cent
this year as the Eurozones
economic woes continue to weigh
on the recovery.
The figures came as a UN agency
repeated its warning that the global
jobless queue will stretch to more
than 200m people this year.
The International Labor
Organization said unemployment
will rise by 5.1m this year to hit
202m, though the agencys annual
figures are often revised down.
The ILO added that the prolonged
period of patchy global growth has
worsened a skills mismatch, as
people who have struggled to gain
work during the crisis are often no
longer qualified to take the new
jobs being created.
Paul Rawlinsons
clients include
Unilver and BAT
AN exceptionally cold Chinese winter
drove down beer sales in the country
and hit growth at SABMiller.
The FTSE 100 brewing giant, which
makes Peroni, Grolsch and Pilsner
Urquell, said it had sold three per
cent less beer in China in the final
quarter of 2012 than in the same peri-
od last year, when acquisitions and
disposals were stripped out.
However, strong showings in Latin
America and Africa and steady per-
formance in Europe led the company
to report an eight per cent rise in rev-
enues for the period.
SABMiller saw volume sales in the
UK rise four per cent, outperforming
a shrinking premium lager market,
with Peroni proving more popular
than ever.
Latin America saw lager volumes up
six per cent, while Africa was up four
per cent and Europe rose one per
cent. This meant that despite the
Chinese freeze
waters down
SABMiller sales
BY JAMES TITCOMB
Chinese weather, SABMiller sold two
per cent more lager than last year
overall. The soft drinks business,
which bottles and distributes some of
Coca Colas worldwide sales, also rose.
The companys revenue growth was
spurred by higher average prices as
performance in higher-margin
regions beat expectations. SABMiller
said average revenue per hectolitre
sold was up five per cent.
Trading beat expectations, sending
shares up around one per cent.
SABMiller PLC
22Jan 16Jan 17Jan 18Jan 21 Jan
2,950
2,960
2,970
2,980
2,990
3,000
3,010 p 3,000.00
22Jan
WEDNESDAY 23 JANUARY 2013
10
NEWS
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GLOBAL INVESTMENT
TRENDS FOR 2013
A SEMINAR WITH THE FINANCIAL TIMES JOURNALIST
DAVID STEVENSON
FREE INVESTME NT SEMINAR
Appropriately, in our rst seminar for 2013, David Stevenson will be gazing into his
crystal ball to give us an idea of what might lie ahead for 2013, and what this could
mean for your portfolio.
Societe Generale will also give you a brief introduction to some of the ways you can
exercise these views using Listed Products.
Date: 29th January 2013
Time: 6:45pm 8:00pm
Venue: SG House, 41 Tower Hill, London EC3N 4SG
Register today online at www.sglistedproducts.co.uk
The content of David Stevensons presentation is provided by David Stevenson, an independent nancial journalist. The views expressed in this
presentation are those of David Stevenson and not those of Socit Gnrale or its representatives. The views expressed are David Stevensons
current views as of the date of publication only. Any views expressed are subject to change without notice and David Stevenson is under no
obligation to update the information contained herein.
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Services Authority in the UK. Details of the extent of our regulation by the Financial Services Authority are available from us on request. Investors
capital is at risk. Investors should not deal in this product unless they understand its nature and the extent of their exposure to risk. We recommend
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Freephone: 0800 328 1199
Spirits at Marstons pubs lifted
by influx of Christmas diners
PUB and brewing company
Marstons, known for beer brands
such as Marstons Pedigree and
Hobgoblin, said comparable sales
rose 5.8 per cent at its pubs in the
Christmas holiday season.
The company, which operates
around 2,150 pubs across England
and Wales, said like-for-like sales at
its managed pubs in the three
weeks ending 5 January was
helped by a 10 per cent rise on
Christmas Day.
For the 16 weeks to 19 January,
BY HARRY BANKS the company reported a 1.2 per
cent increase in like-for-like sales at
its managed pubs as snowfall hit
sales in the last week, but said
profitability was in line with its
expectations.
Heavy snowfall has hit
businesses and travellers across
Britain threatening an
unprecedented triple-dip recession
that could knock the governments
economic plans further off track.
However, pub operators have
benefited as cash-strapped
customers choose to treat
themselves to meals at their local
pub instead of dining out at
restaurants. Marstons shares fell by
around one per cent yesterday.
SKY has unveiled a premium version of its mobile TV service, Sky Go, that will allow Sky
customers to download films such as Marvels Avengers Assemble (pictured) and TV
programmes. The broadcaster is charging an additional 5 a month for Sky Go Extra.
SKY POWERS UP MOBILE TV SERVICE
We doubt this statement will cause many people to change their view of
the stock. However, we think it supports our investment case: we have a Buy on the
stock because we believe investors will see over time that the good things
about SAB will continue and that the two problem markets will stabilise.
ANALYST VIEWS

We believe the results highlight the higher growth credentials of the


group where we forecast an organic revenue CAGR of 7.3 per cent versus peers on
ve per cent... Altogether we believe SABs premium rating is justied
given its superior growth prole and strong track record of delivery.

Stronger than expected price-mix was driven by selected price increase


and positive country-mix with (higher margin) Latin America and South Africa
better and (lower margin) Europe and China weaker.

IS SABMILLER BREWING
FUTURE GROWTH?
By Marion Dakers
ADAM SPIELMAN CITI

DIRK VAN VLAANDEREN JEFFERIES

TREVOR STIRLING BERNSTEIN RESEARCH


Marstons PLC
22Jan 16Jan 17Jan 18Jan 21 Jan
128
129
130
131
132
133
134
135 p
132.70
22Jan
JOHNSON & Johnson reported better-
than-expected fourth-quarter
earnings yesterday, due in part to a
favourable tax rate, and said it is
considering selling a $2bn (1.2bn)-a-
year diagnostics business.
J&J said it earned $1.19 per share,
excluding one-time items, in the
fourth quarter, beating analysts
average estimate of $1.17. The firm
said it may sell Ortho Clinical
Diagnostics, which makes tests to
determine blood type.
J&J profit tops
forecast as it
mulls unit sale
BY CITY A.M. REPORTER
THE LONG-awaited Macfarlanes legal
report commissioned by London-list-
ed coal miner Bumi is unable to sub-
stantiate claims of financial
misconduct at Indonesian arm Bumi
Resources, it said yesterday.
The City law firm was appointed in
September to investigate allegations
of potential financial irregularities
at Bumi Resources, in which Bumi
has a 29 per cent stake, following
information handed to the board by
Bumi co-founder Nat Rothschild.
Circumstantial evidence supports
a number of the allegations but, due
to the unwillingness of key parties to
be interviewed and provide informa-
tion as well as provenance issues, the
allegations have not been substanti-
ated, the FTSE 250 miner said in a
statement yesterday.
Bumi, which was founded in 2011
from cash shell Vallar, said it is
unable to release details of the report
due to legal risks that exist because
the information that the report
hinges on was ascertained to have
been obtained illegally.
Bumi inquiry
unable to back
misuse claims
BY CATHY ADAMS
The coal miner added that it would
continue to engage with the
Indonesian authorities and the UKs
Serious Fraud Office, and investigate
all recourse options available.
It is also investigating why due dili-
gence carried out before the miner
was set up did not reveal the issues
which prompted the probe, some-
thing which the UK Takeover Panel is
also looking into.
Bumi is currently preparing for a
showdown with Rothschild next
month, who is demanding the
removal of 12 out of the miners 14
directors, and that shareholders rein-
state him at the top of the company.
Bumi PLC
22Jan 16Jan 17Jan 18Jan 21 Jan
310
320
330
340
350 p
324.50
22Jan
SALES of phones running Googles
Android operating system
continued to grow over the
Christmas period, despite the
release of Apples iPhone 5.
Data from researchers Kantar
Worldpanel found that Android
increased its market share in key
territories the US, the UK, China
and the EU although Microsofts
Windows Phone software is
showing signs of life.
Android had a 54.4 per cent
share of sales in the UK for the 12
week period to 23 December,
which was slightly up on the
overlapping period ending 25
November, and up from 43.9 per
cent in the same stretch last year.
Android maintains command of
smartphone sales at Christmas
BY JAMES TITCOMB
Apple took just under one third
of the market. Windows Phone,
which was revamped at the start
of the period, saw encouraging
rises, while BlackBerry continued
to decline in the run up to the new
wave of handsets set to be released
at the end of this month.
Android has gained popularity
across the world, with the
software available to customers on
a range of budgets, unlike Apples
iPhones, which are deemed too
pricey for many.
Kantar Worldpanel said
Samsung was the UKs biggest
handset seller, with 35 per cent of
sales over the period compared to
Apples 32 per cent. More than
four in five phones sold in the UK
are now smartphones.
WEDNESDAY 23 JANUARY 2013
11
NEWS
cityam.com
SOURCE: KANTAR
UNITED STATES
APPLE iOS
51.2%
ANDROID
44.2%
WINDOWS
2.6%
RIM
1.1%
UNITED KINGDOM
APPLE iOS
32.4%
ANDROID
54.4%
WINDOWS
5.9%
RIM
6.4%
ANDROID TIGHTENS ITS GRIP ON MARKET
EUROPEAN UNION*
APPLE iOS
25.6%
ANDROID
61.1%
WINDOWS
5.4%
RIM
4.0%
CHINA
APPLE iOS
21.9%
ANDROID
72.5%
WINDOWS
0.9%
RIM
0%
JAPAN
APPLE iOS
66.2%
ANDROID
31.9%
WINDOWS
0.8%
RIM
0.3%
*UK, Germany, Italy, Spain and France
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Verizon pledges to
deliver cost cutting
VERIZON Communications posted a
weaker-than-expected wireless
operating profit margin yesterday
due to hefty costs from
smartphones like Apples iPhone,
but the US telephone company
promised a big improvement this
year as it cuts costs.
While Verizons fourth quarter
bottom line was weaker than
anticipated, investors were
encouraged when finance chief
Fran Shammo said yesterday that
the company could be in a position
BY CITY A.M. REPORTER
to buy back shares sooner than
expected and that wireless margins
could rise this year to as high as 50
per cent. Shammo said that the
numbers will be helped by $2bn
(1.3bn) in cost cuts at Verizon
Wireless, Verizons mobile venture
with Vodafone Group.
The companys fourth-quarter net
loss widened to $4.23bn from a loss of
$2.02bn in the year-ago quarter.
Excluding unusual items such as the
charge from Superstorm Sandy and
pension liabilities, Verizon would
have earned 45 cents per share, well
below Wall Street expectations.
The UKs only listed undertaker
soared to its highest share price ever
yesterday after unveiling plans to
buy a northern funeral business.
Dignity, which famously buried Sir
Winston Churchill, has agreed to buy
privately owned business Yew
Holdings for 58.3m, giving it 40
additional funeral parlours and two
crematoria to add to its 600 locations
and 37 crematoria across the UK.
Following the deal, the companys
share price spiked almost 2.5 per
cent to its highest level since Dignity
was listed in 2004.
Yew, which performed over 6,000
funerals and more than 2,500 crema-
tions for the year ending July 2012, is
a collection of independent funeral
directors across Yorkshire and the
north west of England.
The acquisition is intended to give
Dignity a bigger footprint in the
north.
The firm also plans to spend 2.5m
modernising Yews current locations
and increase the amount of money
the firm can charge for each funeral.
Currently Yew gets 1,565 of
income per funeral compared to
Dignitys 2,350. Despite this, Yew
performs more funerals than Dignity
Undertaker hits
decade high on
takeover deal
BY MICHAEL BOW
at each location, with 155 funerals
versus 104 funerals on average.
[Yew] is one of the few remaining
funeral assets of this size in the UK
available to Dignity, the firm said in
a statement yesterday.
The two crematoria are attractive,
established assets. Privately owned
crematoria are relatively rare as
approximately 67 per cent of all cre-
matoria in the UK are owned by local
authorities.
The deal is being financed through
a new 24.2m share placing
announced by Dignity yesterday,
propped up by a 39.8m loan.
The placing is priced at 10.60 per
share and was underwritten by
Investec and Panmure Gordon. They
will list on the London Stock
Exchange on Friday.
WEDNESDAY 23 JANUARY 2013
12
NEWS
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IN BRIEF
Rolls-Royce to axe nearly 400 jobs
n Rolls-Royce is to axe up to 378 jobs
at its Ansty plant near Coventry,
according to union Unite. The aerospace
firm said it was consulting with the
unions over reductions in the defence
workforce, and that it hopes to avoid
compulsory redundancies.
WANdisco sets up in China
n British software company WANdisco
has opened a base in China, as the
newly-listed company expands in the
country. The firm said establishing itself
in the southwestern city of Chengdu,
where many other western technology
companies have based themselves,
would allow them to seek more clients
in the wake of its contract with Huawei.
British Empire outperforms
n British Empire Securities and General
Trust yesterday revealed it surpassed its
benchmark to deliver a 7.9 per cent net
asset value return for the three months
ending December. The firm had an
overall annual return of 18.8 per cent,
aided by French telecom stock Vivendi.
EDF issues perpetual bonds
n French energy firm EDF made the
most of a buoyant bond market
yesterday to raise 4bn (3.36bn)
through perpetual hybrid bonds in
euros and sterling, its first such issue in
16 years.
Dignity
(inc. newpurchase)
Other co-op
%
62.5
12.5 12 5
7
18
Co-operative
Funeralcare
Small companies
UK funeral market
Tesco is already bouncing back from burger debacle
BRAND
INDEX
STEPHAN SHAKESPEARE
S
UPERMARKET giant Tesco has
faced a brand crisis with the
revelation that it sold beef
burgers contaminated by
horse meat in its stores.
In such situations, daily tracking
of the publics perceptions of the
under-pressure brand really comes
into its own.
So how quickly did the news
spread and what was the impact
on the UK grocers reputation?
Lets first use SoMA which is
YouGovs social media analytics
tool that looks at the impact
through various social media to
measure the reaction on Twitter.
Though the story broke on a
Tuesday evening, 51 per cent of UK
Twitter users were exposed to
tweets about Tesco that night, up
from seven per cent the previous
day.
This rose further to 65 per cent
on Wednesday and remained at
around 40 per cent through Friday
before chatter died down
somewhat.
The immediate impact the story
made on social media was
reflected in the BrandIndex buzz
score. Having been around zero for
every day so far this year, Tesco
plummeted to minus 35 on
Wednesday, minus 47 on Thursday
and minus 46 on Friday.
However Mondays figures show
that the recovery has already
begun as the company climbed
back up to minus 32.
So the story quickly permeated
the real world and was seen as bad
for Tesco. However, there are early
indications it has started to recede.
How has it hit the brands
perception?
The Index score (a composite of
six key image attributes) fell from
plus 24 on Tuesday to plus eight
on Thursday but again the figures
started to recover and Tesco was
back to plus 16 by Monday.
It is still early days, but the
initial indications are that the
crisis had a sizable immediate
impact on Tesco, but that the
horse meat story will ultimately
prove to be a storm in a teacup.
The data suggests that the Tesco
brand should soon regain the
ground it lost in terms of
consumer perception.
Stephan Shakespeare is the chief
executive of YouGov
Tescos Buzz fell of a clif
1 Jan 11 Jan
-20
-60
-30
-10
-40
-50
0
10
20
30
21 Jan
Buzz
Index
% that saw Tesco in Tweets
11 Jan 12Jan 13Jan 14Jan 15Jan 16Jan 17Jan
20
0
10
30
40
50
60
70
18Jan 19Jan 20Jan 21 Jan
%
S
IR STUART ROSES retail track
record stretches as far back as
the 1970s, when he was known
to sweep the warehouse floors
during his time as a management
trainee at Marks & Spencer.
Since then his career has taken in
shelf stacking, pyjama folding and
clothes hanging before he took the
top job at Marks & Sparks, a testa-
ment to the rewards of getting ones
hands dirty.
So he should be well suited to his
new chairmanship at online gro-
cery business Ocado, announced
yesterday to cheers among the
firms long-suffering shareholders.
Ocados three founders are not
averse to mucking in them-
selves. In the early days
of the business, when the firm was
struggling to hire staff fast enough to
cope with demand for its home-deliv-
ered hummus and biofair quinoa,
the founders were known to nip
down to the distribution centre to
help out their hard-working stock
pickers and bag packers in order to
complete overnight orders on time.
So experienced were Tim Steiner,
Jason Gidding and Jonathan Fairman
in the ways of the warehouse
that they named their com-
pany after the avocado,
among the most difficult
perishable items to get
through the delivery chain in
one piece.
On the subject of whether 63-
year-old Rose will relive his
bag-packing days in his
new role, Ocado was
strangely mute.
Stuart Rose is joining a
hands-on retailer
SEEMS the long standing
mistrust between some parts of
the private equity industry and the
press has hit a new low. Journalists
paying a visit to a conference at the
Marriott Hotel in Grosvenor Square
yesterday were greeted with a
conference agenda spliced with
draconian red warnings about the
events they were banned from
attending. Speakers from mega
private equity shops including
Kohlberg Kravis Roberts and CVC
Capital never ones to be known for
their vulnerability were kept a safe
distance from newshounds, who were
barred from a total of eight events out
of 13. Of particular note was the
aversion of US private equity shop
Silver Lake, currently in talks to buy
out computer giant Dell, to be seen or
heard by reporters. They were listed
on a panel with the Canada Pension
Plan Investment Board, one of the
worlds biggest investors in private
equity funds a talk hacks were
barred from entering (The ever-so-
subtle bright yellow press badges
probably gave the game away)
Speakers who were happy to allow the
press into their talks included Silicon
Valley Bank, Dechert LLP, Greenoaks
Capital Management and Advent,
among others. The splattering of NO
PRESS notices plastered across the
agenda may have given comfort to the
fretful giants of private equity but
probably not the 24 media partners
backing the conference.
The Capitalist was delighted to
receive a call from David Cameron
yesterday afternoon, arguing in
favour of renegotiating Britains
relationship with the EU and, er,
the removal of VAT on hot
sandwiches.
Cameron the owner of a
Subway fast food franchise in
Dewsbury, Yorkshire was
delivering a 150,000-strong petition
to his namesake at Downing Street,
calling for a tax cut on warmed
sandwiches so Subway can compete
with pasty suppliers.
With the pasty tax U-turn they
reintroduced a loophole, which we
felt gave bakeries a tax break,
Cameron said. Its unfair.
And he also gave his backing to a
new deal with the EU: Were
happy to be a trading partner with
the EU. But personally, I have
concerns over the euro crisis and
currency fluctuations pushing up
the price of our food.
David Cameron, above, is deeply concerned about overheated currencies and warm rolls
David Cameron backs new EU
deal and cheaper sandwiches
Sir Stuarts in
line for a shelf
stacking role
13
cityam.com
WEDNESDAY 23 JANUARY 2013
cityam.com/the-capitalist
THECAPITALIST
CALLY SQUIRES IS AWAY
Got A Story? Email
thecapitalist@cityam.com
HIGH street phone retailer Phones
4u is launching its own mobile
network.
The company says its Life Mobile
service, which will use EEs
airwaves, will be focused on
offering customers flexibility.
The move is a dramatic shift from
Phones 4u, which has expanded to
550 UK stores since its 1996
opening.
The retailer said Life Mobile will
offer high-speed 4G mobile internet
access later in the year. The service
will go live in March, and Phones 4u
will continue to sell handsets on
other mobile networks.
Phones 4u to
run network
BY JAMES TITCOMB
MEXICAN precious metals miner
Fresnillo sank on the FTSE 100 yester-
day, despite reporting a relatively
upbeat trading statement.
The miner, which has seven operat-
ing mines in Mexico, posted record
gold output of 473,034 ounces over
2012, up 5.4 per cent year on year,
thanks to a successful first year at its
Noche Buena mine and a ramp-up of
its Saucito operations.
However, the record annual pro-
duction was at odds with output over
the fourth quarter, as the gold haul
sank 20.6 per cent year on year.
Fresnillo cited a slow recovery at its
Soledad-Dipolos mine and lower ore
grades at the Herradura mine for
the sudden fourth quarter drop in
production.
Silver production fell two per cent
over the year at 41m ounces,
although it was in line with expecta-
tions. Good performance from
Saucito offset a decline in silver ore
grade at the Fresnillo mine.
Over 2013 as a whole, Fresnillo is
targeting flat silver production, with
output expected to remain stable at
41m ounces.
Gold output is expected to contin-
ue to increase thanks to the contin-
ued ramp-up of Noche Buena to
reach 490,000 ounces this year.
The miner also reiterated its target
of 65m ounces of silver and 500,000
ounces of gold annually by 2018.
Fresnillo sinks
despite posting
top gold output
BY CATHY ADAMS
In line with a ramp-up at Noche
Buena and Saucito, the miners explo-
ration budget will increase by 15 per
cent this year to $270m (170m), from
$234m spent in 2012.
Meanwhile, to remain in the FTSE
100, Fresnillo must increase its free
float to 25 per cent by the end of
2013, and yesterday it reiterated its
intention to do so.
Analysts from Goldman Sachs
hailed the results as a really solid
result in a market where other pre-
cious metal miners are missing guid-
ance. They added that Fresnillo was
progressing well towards its 2018
output target.
Despite a positive trading statement
and outlook, Fresnillo was among
several precious metal miners
including sector peer Polymetal
that fell on the FTSE 100 yesterday.
The Mexican miner closed down 2.82
per cent yesterday at 1,725p, making
it the biggest faller on the index.
IN BRIEF
ABG nets $142m for gold mine
n London-listed African Barrick Gold
has secured $142m (90m) in
financing from a syndicate of banks
to expand its flagship Bulyanhulu
process plant in Tanzania, the miner
said yesterday. Chief executive Greg
Hawkins added that while the FTSE
250 miner had sufficient cash on its
balance sheet to fund the expansion,
it used the financing as a cost-
effective way of maintaining
maximum flexibility within the
portfolio.
Output drops 5pc at Nord Gold
n Nord Gold, the gold unit spun off
from Russian mining group Severstal
in 2011, said yesterday its gold
production for last year fell five per
cent to 716,900 ounces. The gold
miner blamed mechanical issues
which hampered production in the
first half of last year. Output for this
year is expected to be in the range of
770,000 to 850,000 ounces.
Revenues for the 12 months edged up
one per cent to $1.2bn (756m), Nord
Gold added.
Ryanair expects drag on growth
n Low-cost airline Ryanair expects
passenger growth to slow in 2013 as it
cuts back on short-distance flights in
some markets due to higher airport
fees, chief executive Michael OLeary
said yesterday. I think the growth
will be slower this year, he told
Reuters, predicting passenger
numbers would increase three to four
per cent to up to 82.5m in the year
to March 2014. That compares with
expected growth of 4.2 per cent in
the current financial year.
Fresnillo PLC
22Jan 16Jan 17Jan 18Jan 21 Jan
1,720
1,700
1,740
1,760
1,780
1,800 p
1,725.00
22Jan
WEDNESDAY 23 JANUARY 2013
14
NEWS
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EUROPEAN TOY MARKET SHRINKS FOR FIRST TIME SINCE 2004
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OIL and gas explorer Cairn Energy
said yesterday it was fully funded
for all planned exploration and
development activities over the
next few years.
Over the next five years, Cairn
will spend between $1.5bn (945m)
and $2bn on its development
assets, plus an annual average of
between $250m and $300m on
exploration.
The FTSE 250-listed oil firm is
currently sitting on $1.6bn of net
cash, it said yesterday.
Chief executive Simon Thomson
said that its balance sheet strength
meant it could also consider
further opportunities.
Cairn sets out
spending plan
BY CATHY ADAMS
THE 56bn Glencore-Xstrata mega
merger jumped another hurdle
yesterday as it won approval from
the South African anti-trust
authorities.
The South African Competition
Tribunal gave the green light to the
merger, although it recommended
that some employment conditions
are met, including limiting the
number of job losses among skilled
workers to 80.
Completion of the mega deal still
hinges on regulatory approval in
China, having already secured the
nod from European regulators.
Last week, the completion date
was pushed back to 15 March.
SA gives nod
to Glenstrata
BY CATHY ADAMS
GRAINGER yesterday
announced it has teamed up
with Europes largest pension
fund manager to create a
349m residential property
fund.
The Grip fund will see
Grainger and APG Strategic
Real Estate Pool acquire G:res,
a residential property fund set
up and managed by Grainger
since 2005. APG is making an
investment of 158m while
Grainger is investing 59m,
comprising proceeds from its
stake in G:res and an
additional 9.1m of new equity.
Grainger and APG get a grip
on 349m property fund
BY KASMIRA JEFFORD
The deal marks one of the
biggest investments into the
private-rented sector. Last year,
the government launched a
review into the sector to find
ways of encouraging
institutions to invest in
privately rented homes to meet
the shortage in demand.
Grainger boss Andrew
Cunningham said:We see
APGs commitment as a clear
acknowledgement of UK
residential propertys growing
appeal as an institutional asset
class, as well as a significant
endorsement of Graingers
expertise in the UK residential
sector.
WEDNESDAY 23 JANUARY 2013
15
LONDONREPORT
S&P 500 hits
fresh five year
closing high
U
S bank and commodity shares
led the Standard & Poors 500 to
a fresh five-year closing high
yesterday on hopes that the
global economy continues to mend.
The Dow Jones industrial average
also ended at a five-year high.
The market also gained on signals
that Republican leaders in the US
House of Representatives aim today to
pass a nearly four-month extension of
the US debt limit. The White House
welcomed the move, saying it defuses
fears of a US default on its debt.
Investors, however, were cautious
ahead of an increase in earnings
reports and as the S&P 500 rose for a
fifth straight day. Jack de Gan, chief
investment officer of Harbor Advisory
Corp, said better economic numbers
in the US and China, as well as more
stabilisation in Europe, were driving
buyers into sectors associated with
economic growth.
Any (bearish) news could turn us
down for a day or so, he said, refer-
ring to the recent string of gains.
Freeport-McMoRan Copper & Gold
led gains in the materials sector after
it reported a 16 per cent rise in fourth-
quarter profit on higher production.
Shares gained 4.6 per cent to $35.19.
The Dow Jones industrial average
rose 62.51 points, or 0.46 per cent, to
13,712.21 at the close. The S&P 500
gained 6.58 points, or 0.44 per cent, to
1,492.56. The Nasdaq Composite
added 8.47 points or 0.27 per cent, to
3,143.18.
Signs of improved sentiment toward
world growth were seen in European
bond markets. The yield on Portugals
benchmark 10-year note fell below six
per cent for the first time since late
2010 on news that the country was set
to tap the bond market this week for
the first time since its 2011 bailout.
Technology shares underperformed
as concerns about Apples ability to
continue to grow at hyper speed and a
weak outlook from Intel diminished
optimism about the sectors
prospects.
The S&P technology index added
0.16 per cent, compared with 0.9 per
cent gains in energy, financials and
basic materials. In extended-hours
trading, Google shares rose 4.5 per
cent to above $734 after the worlds
No1 search engine reported a jump in
fourth-quarter revenue, while IBM
added more than three per cent to
trade above $200.
B
RITAINS leading share index eased
a touch yesterday, stalling after a
recent push up to its highest level in
four-and-a-half years, weighed by
falls in financials and mining stocks.
Banks were the biggest sector fallers,
knocking over four points off the FTSE 100,
with traders citing profit-taking after
recent gains, and caution over a report
that several German banks had been asked
to simulate a split of their investment
banking operations.
Insurers were also weak, led by Standard
Life, down 0.8 per cent as UBS downgraded
its rating to sell from neutral in a UK
life and general insurance review.
UBS undertook the same downgrade on
mid cap Phoenix Group, off 2.1 per cent,
citing valuation grounds for both.
After strong share price performance in
2012, the (insurance) sector no longer
offers such clear value, and fundamentals
look challenging, UBS said in a note.
Among weaker miners, Mexican silver
miner Fresnillo was the biggest FTSE 100
percentage faller, shedding 2.8 per cent
after a fourth-quarter production report,
with some analysts citing concerns over
the potential introduction of a mining
royalty in Mexico.
Perhaps its that thats spooking
investors, RBC analyst Jonathan Guy said,
adding that the results were decent.
At the close, the FTSE 100 index was
down 1.81 points, or 0.03 per cent at
6,179.17 points, retreating after having hit
a fresh 2013 peak at 6,184.02 in early trade.
News of a move by Credit Suisse to reduce
its strategy allocation in UK equities also
weighed on the London market.
The FTSE 100 is a defensive market by
sector composition and thus tends to
underperform when economic lead indica-
tors and global equity markets rise, Credit
Suisse said in a global strategy review.
But the Swiss bank retained its over-
weight stance on the London market, see-
ing opportunities in real estate stocks and
cheap international earners, such as
Smiths Groupand Shire. Smiths added 1.7
per cent, and Shire 0.8 per cent.
Other stocks perceived as defensive pro-
vided the main underlying strength for
the market, with drinks groups and food
producers standing out.
Food ingredients group Tate & Lyle
gained 1.5 per cent with traders citing the
impact of an upgrade in rating to buy
from hold by Berenberg Bank, which
said the stock is the most undervalued in
its sector.
Retailer Kingfisher was a good FTSE 100
gainer, up 1.5 per cent, rallying after recent
falls supported by a nine per cent price tar-
get hike by Exane BNP Paribas to 350p, in
an upbeat review of UK retailers, with the
bank forecasting new share buy backs by
the DIY stores group.
Exane also upgraded its rating for Next
to neutral from underperform as the
bank thinks its forecasts look well under-
pinned. Next added 1.5 per cent.
FTSE hits the brakes on 2013 rally
as banks and miners lose ground
BESTof theBROKERS
Barclays PLC
16Jan 17Jan 18Jan 21Jan 22Jan
p 302
300
298
296
294
292
290
288
296.05
22 Jan
BARCLAYS
Morgan Stanley has an
overweight rating on
the bank and has raised
its target from 295p to
386p. It thinks Barclays
could soon trade above
its book value as focus
turns to the prospect of
the bank beating its cost
of capital. Morgan
Stanley expects a return
on tangible equity of 13
per cent by 2015.
DASHBOARD CITY
NEW YORK
REPORT
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
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FTSE
16Jan 17Jan 18Jan 21Jan 22Jan
6,200
6,175
6,150
6,125
6,100
6,179.17
22 Jan
Computacenter PLC
16Jan 17Jan 18Jan 21Jan 22Jan
p 460
450
440
430
420
410
444.00
22 Jan
COMPUTACENTER
George O'Connor at
Panmure Gordon has
upgraded the IT
company from hold to
buy, with a target
price of 480p. He
believes UK margins
have improved and there
is a high likelihood of a
special dividend
following last weeks
impressive trading
update.
Diageo PLC
16Jan 17Jan 18Jan 21Jan 22Jan
p 1,860
1,840
1,820
1,800
1,780
1,836.00
22 Jan
DIAGEO
Nomura has maintained
its buy rating and kept
a target price of 2040p. It
believes Diageos
valuation is now
attractive following a
recent dip in share price,
and said the rms strong
balance sheet provided
scope for future M&A
activity. It added
revenues would
accelerate in 2013.
Carmignac Gestion
Keith Ney has been appointed
co-manager of the asset
management firms European
bond fund, working alongside
Carlos Galvis. He has worked for
Carmignac for eight years, most
recently as head of credit.
Stenham Asset Management
The asset management firm has made two appointments
to its investment team. Akshay Krishnan joins as a senior
research analyst from SAIL Advisors, where he was a senior
analyst. He has also held roles at ING and BNP Paribas.
Rishi Patel joins as a senior operational due diligence
analyst from Momentum Global Investment Management.
He has also worked for Credit Suisse, Ernst & Young, and
Deloitte.
Sberbank CIB
Bill Beller has been appointed head of equity options
trading at the Russian investment firm. He joins from
Unicredit Bank, where he was head of eastern Europe,
Middle East and Africa equity derivatives flow trading.
Beller has also held senior roles at Citibank.
Macquarie
Neil Hasson has been appointed head of real estate lending
within the financial services firms corporate and asset
finance group. He joins from Citi, where he was responsible
for its real estate private equity platform in Europe.
MW Cornish & Co
The law firm has appointed Myles Flint as a partner. He
joins from Cardano Risk Management, a fund management
firm, where he was head of legal. Flint has also worked as
counsel at Appleby.
BNY Mellon
The bank has announced two appointments to its treasury
services business in Europe, Middle East and Africa. Bana
Akkad Azhari becomes head of relationship management
for the Middle East and North Africa. Cihat Takunyaci
becomes head of relationship management for Turkey,
Russia, and Israel.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
in association with
K
EIR Starmer, the director of
public prosecutions, has
vowed to ramp up the
number of prosecutions
against tax evasion five-fold
in two years. He plans to target
middle-class earners, citing as
examples lawyers, tax consultants
and plumbers an intriguing
perspective on the British class
system. Or perhaps we are all middle-
class now.
It is, of course, wholly proper that
people pay the amount of tax
required by law. As Starmer points
out, evasion is not a victimless crime.
Law abiding citizens are required to
make up the shortfall. His estimate
that this amounts to 769 per
household has an accuracy that
I
TS months later than planned,
but David Cameron will finally
deliver his much-anticipated
speech on Europe today. We first
expected him to speak last
autumn. Then an unfortunate clash
with the anniversary of the lyse
Treaty prompted a rethink. And crisis
in Algeria forced another
postponement.
But Camerons speech to end all
Europe speeches is also overdue
because of wider developments within
the European Union. Given the implica-
tions of the ongoing Eurozone debt cri-
sis and subsequent steps towards
banking and fiscal union the shifting
sands of EU politics are moving quickly.
For the UK, the status quo is no longer
an option. An alternative vision, detail-
ing our new position within a chang-
ing EU, had become unavoidable.
The defining moment in the UKs
relationship with the EU was its deci-
sion not to join the euro. Significantly,
this meant that Britain would never fol-
low Germany, France and others in the
pursuit of ever closer union. A multi-
tier Europe was implicit it was obvi-
cityam.com/forum
Germanys largest
trading partner is now
the UK it has most to
lose from a British exit
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.

16
WEDNESDAY 23 JANUARY 2013
CHRISTOPHER HOWARTH
Camerons EU balancing act makes
treaty renegotiation unavoidable
ous that, at the first point of crisis,
countries that shared the single cur-
rency would be forced to do more
things in common.
But what can Cameron say to remedy
this situation? Leaked extracts give us
some room for cheer. He must firstly
set out a plan for an EU based on a bal-
ancing act between cooperation and
real devolution of power. Hints about
a lack of democratic and accountabili-
ty and consent, felt particularly
acutely in Britain, suggest hes head-
ing in that direction. And given the
political momentum behind a referen-
dum, Cameron almost cant avoid
promising one. It would certainly go
some way to addressing the democrat-
ic deficit that has grown in recent years
between British voters and Brussels.
Most likely, a referendum will come
in the form of fresh consent on a new
renegotiated deal. This isnt a risk-free
strategy, but would finally put Britains
membership of the EU on a stable foot-
ing, after years of dissatisfaction and
sniping. Some will criticise Cameron
for not offering a vote today, but hes
right to say this would be a false choice.
First, according to the latest polling by
YouGov, most voters want to stay in the
EU, but on renegotiated terms.
Secondly, the EU is itself in a state of
flux. It would be odd to offer a referen-
dum on a moving target.
And will renegotiation succeed?
There are no guarantees, but the situa-
tion is more promising than many
believe. First, countries like Germany,
the Netherlands and Sweden rely on
the UK to push for liberal economics
and free trade. Without British mem-
bership, the EU could succumb to pro-
tectionist tendencies from the
Mediterranean bloc. Its true that
Angela Merkel may not wish to revisit
the accepted wisdom of EU integration.
But given the fact that Britain is now
Germanys biggest trading partner
with trade worth 153bn (128.3bn) in
the first nine months of 2012 it still
has most to lose from a UK exit, the
most likely result of a failure to allow
reform. The UK also has a strong moral
case for adjusting its membership
terms. After all, it is not Britain that is
changing the rules of the game.
Critically, renegotiation will only suc-
ceed if (as happened with banking
union) the UK can secure an EU that
works for all its members, and that
means picking the right issues. The sin-
gle market must remain the preserve
of all member states, and not be sub-
ject to a club within a club. But many
of the reforms the UK should hope to
see enacted do not require treaty
changes, and many have wide EU sup-
port. These include an end to the recy-
cling of wasteful regeneration cash,
and the scaling back of growth-destroy-
ing farm subsidies under the Common
Agricultural Policy. Others, however,
will require a general discussion the
next time a treaty change is required
for the Eurozone and that will hap-
pen sooner or later. The UK and its
allies will need to know what to ask for.
Despite the positive situation
Cameron is in, its important to realise
that his vision of powers flowing back
to member states is not shared by all in
his coalition, nor in his party. It is also
unclear when the next Eurozone treaty
change will happen. This makes action
this side of the general election unlike-
ly. There are therefore several big ifs
in Camerons approach the biggest
being whether the Conservatives get re-
elected. But the complex interaction
between Eurozone and domestic poli-
tics will fuel uncertainty, no matter
whos in power. At least Cameron is try-
ing to set out a plan.
Christopher Howarth is a senior political
analyst at Open Europe.
recalls Gordon Browns days at the
Treasury. No doubt Brown would
have added the correct number of
pence as well. But whatever the exact
number, it is clearly non-trivial.
Starmer goes on to argue that
this is money that could have been
spent on schools, hospitals, fire-
fighters, police and public services.
But there is something missing from
this list. It could be used, not to
increase public spending, but to
finance tax cuts for the vast majority
of people who pay the correct
amount.
Total VAT receipts, for example,
currently run at an annual rate of
about 85bn. The tax shortfall due to
illegal evasion is estimated to be
14bn. So the money could be used
to reverse George Osbornes January
2011 increase in the standard rate
from 17.5 to 20 per cent, and there
would still be a bit left over. With
many retailers struggling, a VAT cut
would be very welcome news.
Browns long tenure as chancellor
and Prime Minister brutally exposed
the myth that spending more on
public services necessarily leads to an
improvement in those services. Much
of the huge increase in spending was
expropriated by public sector
employees to boost their salaries and
pensions. Far from providing better
services, the money was used to
subsidise the private consumption of
those employed in the public sector.
The shambles at the BBC
epitomises the problem. Its former
director-general George Entwistle, on
450,000 a year, was merely the tip of
the iceberg. The organisation chart
for senior management appeared in
the press at the time of his
resignation. Large numbers of people
are paid huge six figure salaries,
holding job titles which appear to
have no meaning in everyday
English.
Perhaps the most depressing
aspect of the current debate on
austerity is the way in which the Left
has slid effortlessly into the most
conservative stance imaginable.
Despite overwhelming evidence to
the contrary, every single penny of
public spending is deemed not only
worthwhile but sacrosanct. Whats
ignored is that the impact of
excessive public spending can be
devastating. We see the effects in
countries like Greece and Spain,
which lived far beyond their means
for years. There is, as such, a moral
case for holding it in check.
Paul Ormerod is an economist at
Volterra Partners, a director of the think-
tank Synthesis, and author of Positive
Linking: How Networks Can Revolutionise
the World.
AGAINST
THE GRAIN
PAUL ORMEROD
Justification for tax evasion crackdown has worrying shades of Brown
In association with
DUBLIN
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17
WEDNESDAY 23 JANUARY 2013
Debt killed growth
[Re: Economic perfect storm: The four
trends that killed Western growth,
yesterday]
The debt supercycle, as Tim Morgan puts it,
captured politicians, consumers, and
companies in its wake, defying all logic. But
only two of those groups have since woken
up to its consequences. The latest
government deficit figures remain appalling,
and its entirely credible that Britain will
miss its target to have debt falling as a
proportion of GDP by 2018.
Rupert Bartlett
Morgan draws an inference from debt levels
that the chancellor seems to have missed
the negative consequences of burdensome
debt on long-term economic growth. The
failure by George Osborne to clearly explain
the economic, not moral, importance of
paying off debts is likely the source of his
failure to make courageous cuts to
spending. When advised to make sacrifices
for the sake of their fictional great-
grandchildren, its not surprising that many
voters choose instead to defend their self-
interest.
MarkBlake
Morgan is eccentric on globalisation. He
castigates companies for shifting production
abroad. But fails to explain that those very
companies are largely owned by the same
consumers who also benefit from cheaper
goods.
NadiaHyde
T
HE emergence of competitive
economies in the East is a well-
known phenomenon. But less
understood is the challenge
this poses to the West. First,
the rising East will squeeze
traditional markets (albeit while
creating new ones). Secondly, it will
turn the terms of trade for primary
products against us.
We are not powerless, however.
Emerging economies have their
weaknesses as well as strengths. But
to understand how to return prosper-
ity to the West, we must define a new
theory of how growth is generated.
Growth is constrained by balance of
payments and by inflation. The first is
because trade is now all-pervasive.
Any economy that is going to succeed
must be successful at exporting. But
built into this, it looks increasingly
likely that we will have to participate
in currency wars. The City is expect-
ing sterling to weaken further this
year. But currency devaluations are
only damaging if they lead to infla-
tion. This is where the second part of
my prescription becomes necessary.
We must act aggressively to squeeze
down the cost of living in the UK.
Currently, it is at 11 per cent higher
than the OECD average. More worry-
ingly, the cost of living in Britain is
2.75 times that of India, 1.75 times
that of China, and nearly 1.5 times
the cost in Singapore which has one
of the highest standards of living and
one of the highest life expectancies in
the world.
Our costs are particularly high for
housing and utilities (18 per cent
above the OECD average); transport
(31 per cent); recreation and culture
(14 per cent); restaurants and hotels
(12 per cent); and miscellaneous
goods and services (15 per cent).
Of critical importance, therefore, is
improving the supply of housing and
commercial property. The latest
As global leaders descend on Davos, is the
World Economic Forum just a talking shop?
YES
To improve the state of the world is a great objective for a
conference. But such lofty ideals fall short of the shmoozefest that is
Davos. For the optimists, this years title should bring a cold shower
of reality Resilient Dynamism. I had to turn to the dictionary for
help. Davos is a global talking shop, where panellists discussing
carbon emission and greenhouse gases get flown into Switzerland
and are driven up a mountain. It is in danger of becoming a parody of
some of the great international meetings that really did help the
world, like the creation of the IMF after the Second World War. Yet
this is the time when the world needs more global cooperation than
ever before. We need the major players to work together. But this
wont happen at Davos. Rather than swapping business cards in the
Swiss Alps, world leaders should spend their time away from the
media, really trying to sort the financial crisis out.
Louise Cooper is founder of Cooper City.
Louise Cooper
NO
Peter Cappelli
There is a lot of talking and networking at the World Economic
Forum in Davos, and there are some celebrity appearances
although not as many as the media suggests. But there is also
serious discussion, and the consequences of that discussion matter.
Think of this event as similar to going back to college for business
and political leaders. They hear what might be done about the big
challenges we face, and that can lead to action. The bigger outcome,
though, may simply come from being around other people who
believe that we should care about the worlds problems, even if they
dont directly affect our lives. Central to the Davos ethic is that
businesses and other organisations have responsibilities to all those
they impact, not just to shareholders or immediate constituents.
Seeing other leaders articulating the same beliefs can influence your
own views and behaviour, and that is a force for good.
Peter Cappelli is a professor at the Wharton School of Management.
Crack down on the
high cost of living
or growth suffers
reforms to the planning system may
be starting to have a positive effect,
but the government must watch to
ensure no backsliding. Imposing high
fuel and energy costs in the name of
an ersatz greenery must also be avoid-
ed. US electricity costs are now as
much as 50 per cent lower than ours
in those states that have avoided
green surcharges.
Ending the war against motorists is
essential. Public transport should
compete by providing a better service,
not through handicapping rival
modes of transport. Part of the high
cost of transport reflects very high
salaries paid to unionised employees
London tube drivers now earn more
than the base salary of EasyJet pilots,
though the level of skills required is
nowhere near.
I estimate that if, over 10 years, we
reduce the cost of housing, commer-
cial property, energy and transport in
the UK to the OECD average, GDP
would be about 15 per cent higher
than it otherwise would have been.
We could return to a rate of growth
close to the 2.5 per cent we used to
enjoy before the economic crisis.
Its not impossible to get back to eco-
nomic growth Ive outlined a plan
that Im convinced would achieve it.
The only issue is whether we have the
will to give growth priority.
Professor Douglas McWilliams is execu-
tive chairman of the Centre for Economic
and Business Research. His fourth lecture as
Gresham professor of commerce will be held
at the Museum of London at 6:30pm on
Thursday 24 January 2013.
DOUGLAS MCWILLIAMS
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59
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WAY
Bookings need to be made a minimum of 30 days before the date of outbound departure.
Lack of focus at Davos is likely to hinder any
real progress. The Eurozone will make up
only four out of the 140 sessions.
@juliahobsbawm
David Cameron has done the pro-EU camp a
favour. Hes forced it to state its case and
public opinion has started to shift.
@FlipChartRick
Weaker sterling has hampered growth
exports have not benefited and consumers
have been squeezed. Its the wrong policy.
@asentance
Im sure Cameron will plug an EU-US free
trade deal in his speech today. Fair enough,
but it doesnt weaken the case for leaving.
@DanHannanMEP
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19
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T
HE notion of the UK as a safe
haven is unravelling. As more
economic data filters through,
and questions about the UKs
role within Europe continue to
dominate headlines, the pound is set
to come under intense pressure.
On a trade-weighted basis, sterling
has fallen in value by 20 per cent since
the start of the financial crisis. And
since the beginning of the year, it has
been among the worst-performing
G10 currencies, lurking at 10-month
lows against the euro and the dollar
(currently around 1.19 and $1.58
respectively).
SAFE NO MORE
The phrase safe haven refers to
countries with good growth
prospects; low, stable inflation; and
budget and trade surpluses.
But with forecasts for UK annual
growth in 2013 at an anaemic 1.5 per
cent at best; inflation stubborn at 2.7
per cent; and yesterdays confirma-
tion that the governments fiscal con-
solidation plans are off-course (the
budget deficit is now around 8 per
cent of GDP), the UK hardly fits the
bill.
If anything, over the last few years
the UK has just been a safer place for
investors to park their cash than other
countries. Mike Ingram of BGC
Brokers suggests that it was the UKs
political stability, when the rest of
Europe was in turmoil, that gave the
perception of safety, along with a low
risk that the UK would default on its
government debt.
TWISTED IRONY
It is ironic that as the Eurozones polit-
ical environment stabilises, the UKs
looks more risky. Prime Minister
David Cameron delivers his long-
awaited speech on Europe this morn-
ing, and there is a high chance that
the UKs EU membership will be put
to referendum in the near future.
This will rattle sterling traders.
Markets like stability, Ingram says,
and the prospect of the UK leaving
Europe [however unlikely] presents
policy uncertainty. Any uncertainty
may drag on the pound.
DOVES WILL FLY
Sterling will come under further pres-
sure at 9.30am today, when the Bank
of England releases minutes from its
latest policy meeting. Mansoor Mohi-
uddin of UBS thinks the minutes are
likely to be dovish, and will leave the
door open to more easing.
The prospect of more easing will
cheer markets, since it helps boost
equities and lower bond yields. But it
will weigh on sterling. It is also ques-
tionable whether another dose would
benefit the economy, given the limit-
ed success of the last round.
Some also argue that excessive eas-
ing gives rise to zombie corporations,
which would not survive if interest
rates moved higher. There is merit to
this argument: while employment in
the UK has improved, productivity has
fallen, and this will hinder long-term
The UK has lost
its position as a
genuine haven
economic growth prospects.
TRIGGER-HAPPY
Worryingly, the UK has been more
trigger-happy with easing than any
other major nation: as a percentage of
GDP, the Bank of England has eased to
the tune of 24 per cent. Compare that
with the Federal Reserve (17 per cent),
the European Central Bank (less than
3 per cent), and even the ultra-loose
Bank of Japan, which has eased to the
tune of 8.5 per cent (so far, but this
will rise).
The Bank of England is now also the
largest investor in gilts. This is one of
the central reasons why government
bonds have performed well since the
start of the crisis not the markets
faith in the UKs fundamentals.
Its judgement week for the pound and the
signs are worrying, says Yogesh Chandarana
This could be unsustainable in the
long term and, as markets move into
risk-on mode, at some point yields
must climb higher (they are already
up to 2 per cent, from 1.5 per cent in
the middle of 2012). Ingram says that
as the risk-on move continues, there
will be less need for apparent safe
havens, and gilts will be vulnerable.
GOODBYE TRIPLE-A
Friday will complete judgement week
for sterling, with the release of the lat-
est GDP data. Recent purchasing man-
agers surveys do not augur well. The
services sector contracted in
December, which is gravely concern-
ing given that it accounts for around
75 per cent of the UKs output.
Analysts are forecasting a slight con-
traction in the fourth-quarter of
2012 the fourth quarter in five that
the UK economy will have shrunk.
Along with the recent heavy snowfall,
there are increasing risks that the UK
will fall into a triple-dip recession.
It could also now be a matter of
weeks before the UK is stripped of its
triple-A rating on the back of
mediocre growth and failure to make
fiscal progress. This would be the final
nail in the coffin, extinguishing any
idea that the UK is a safe haven. And if
one major rating agency downgrades
the UK, the rest will soon follow.
Sterling will react violently to the
news, and the bond markets will spike
higher. Many have warned of the UKs
weak fundamentals. The conse-
quences may soon be upon us.
Talking the pound down
Sterling-euro
2012 2013 2011 2010 2009
1.10
1.20
1.30
1.40 Stronger sterling
Weaker sterling
S
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RIVING A rear-wheel drive car
in the snow and ice is the
only time any self-respecting
petrol-head might wish for
front-wheel drive. Its also when the
traction control warning light is at
its most comforting. So it was for us,
skating our way out of a snowed-in
car park on the M2 services, running
and swearing, jumping with the car
still rolling along, like David Starsky
in the opening sequence of 70s
detective show Starsky & Hutch.
In fact the 330d Touring we were
driving the estate version of
BMWs ubiquitous 3 Series han-
dled itself pretty well, even in that
testing snow.
The estate version of BMWs 3
Series has been around for 25 years
now and has always been a big sell-
er in Europe. Yet rivals have fre-
quently offered more flexibility and
storage space, even if the BMW has
been considered more dynamic
because of that sporty rear wheel
drive setup.
With its latest 3 Series Touring
BMW is raising its game by improv-
ing on its functionality and efficien-
cy without compromising on the
driving experience. It is powered by
a 3.0-litre turbo diesel engine, pro-
ducing 258bhp. Thats enough to
reach 62mph from start in just 5.6
seconds and on to a restricted maxi-
mum speed of 155mph, yet its still
capable of 55.4mpg.
It certainly feels fast and power-
ful and theres no discordant diesel
engine note, either. BMW must have
some of the best acoustic boffins in
the business because their diesels
are beginning to sound almost as
good as their petrol engines, from
inside the car at least.
Its a looker too, thanks to its gen-
tly sloping roofline, which gives a
sleek, streamlined look. Here is an
estate thats even better looking
than the regular saloon. Dynamic
and muscular in appearance, it
even looks exciting. Its only serious
rival in the looks department is
Hyundais i40 Tourer.
Inside its plush and feels more
spacious than before. This fifth gen-
eration model has an extra 97mm
in length with a 50mm longer
wheelbase than its predecessor.
This translates to a 35-litre bigger
load space of 495 litres and 1,500
litres with the rear seats folded
down. Theres a clever 40:20:40 rear
seat split, too, that allows you to
transport awkward items, even
with four people in the car. There is
also more space in the rear so its
more comfortable and easier to get
in and out. And theres 7mm extra
knee room and 9mm more head-
room, despite that sleek exterior. I
can almost hear the ski slopes call-
ing.
Still, despite all of this hard work
to make the 3 Series Touring more
practical, the lasting impression
comes from its performance. It is
fast and comfortable. The 3.0-litre
turbo diesel engine has bags of
torque and its acceleration is ruth-
lessly efficient. A new eight-speed
automatic gearbox gives you almost
imperceptible gear changes and
progress is effortless. Handling is
excellent too its a lovely car
through the corners, which means
youll be able to enjoy yourself
when the kids are in the back and
youll long for solitary, empty roads
when theyre not.
So whats not to like? Well,
because of that streamlined body
shape, visibility out of the back
could be better, which is why our
test car had audible parking sensors
and an in-dash display. There is also
a video screen display showing you
whats happening outside. All this
tech should mean youll never hit
anything whilst parking, which,
given how handsome this car is, is
comforting.
Fast, frugal and fun, this is
undoubtedly the best estate car Ive
driven. The 330d Touring is a com-
plete all-rounder and proof that
estate cars need not be dull. I just
wish Id had some more cold, dry
roads rather than all that tricky ice
and snow.
The 330d Touring is a handsome beast with enough tech to geek gadget geeks happy
The best estate car on the market
The latest addition to BMWs ubiquitous 3-Series range proves estate cars dont need to be boring
20
WEDNESDAY 23 JANUARY 2013
LIFE&STYLE
cityam.com
MOTORING
CAR TALK
BY RYAN BORROFF
Happy 100th Birthday Aston Martin
As part of its centenary celebrations, Aston Martin airlifted a
Vanquish super car 1,000ft above the ground onto the helipad of
Dubais iconic Burj Al Arab Hotel last week, ensuring excellent
photographic opportunities. Aston Martin was founded 100 years
ago in Londons Henniker Mews on 15 January 1913. More Aston
Martin-themed events are planned throughout the year.
BY RYAN BORROFF
THE VERDICT:
DESIGN hhhhh
PERFORMANCE hhhhh
PRACTICALITY hhhhi
VALUE FOR MONEY hhhhi
THE FACTS:
BMW 330d TOURING
PRICE: 36,300
0-62MPH: 5.6 secs
TOP SPEED: 155mph
CO2 G/KM: 135g/km
MPG COMBINED: 55.4mpg
Smoking the rivals with an all new powerful Roller
Rolls-Royce Motor Cars is to the launch the most dynamic and
powerful Roller in its history at the Geneva Motor Show at the
beginning of March. The new model will revive the Wraith name and
promises power, style and drama. Rolls-Royce has said it will be the
most dynamic, powerful and beautiful Rolls-Royce in the companys
history.
A Panda with drive...
Fancy a bit of automotive parkour? The original Fiat Panda 4x4 from
almost 30 years ago has become something of a cult icon over the years
and the latest, third generation Panda 4x4 has just gone on sale. It is
surprisingly competent off-road thanks to its raised ground clearance
and is available with either an 875cc TwinAir Turbo or 1.3-litre MultiJet 2
turbo diesel engine.
21
TV & GAMES
cityam.com
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BBC1
SKY SPORTS 1
6pmBritains Best: The Gloves Are
Off 7.30pmLive Capital One Cup
10.30pmFootball Special 11.30pm
Sporting Heroes Graham Taylor
Interviews Denis Law12.30am
Capital One Cup 1.30amFIFA
Futbol Mundial 2amLive Cycling
4amFIFA Futbol Mundial 4.30am
Sporting Heroes Graham Taylor
Interviews Denis Law5.30am-6am
FIFA Futbol Mundial
SKY SPORTS 2
8.30pmLive Copa Del Rey Football
10.30pmInternational One-Day
Cricket 12.30amCopa Del Rey
Football 2.30amSporting Heroes:
Graham Taylor Interviews Denis
Law3.30amCapital One Cup
4.30am-5.30amFootball Special
SKY SPORTS 3
7pmLive Netball 9.30pmCycling:
The Tour Down Under. 10pmSailing
10.30pmTrans World Sport
11.30pmWatersports World
12.30amCycling 1amNetball
3.30amMax Power
4.30am-5.30amTrans World
Sport: Action and features.
BRITISH EUROSPORT
5.30pmLive Africa Cup of Nations
8pmSelection 8.05pmEquestrian
9.05pmRiders Club 9.10pmPGA
Tour Golf 10.40pmYacht Club
10.45pmGolf Club 10.50pm
Selection 11.10pmTennis:
Australian Open 12am-12.30am
Game, Set and Mats
ESPN
7pmESPN Kicks: Extra 7.15pm
ESPN FC Press Pass 7.45pmLive
Coppa Italia 9.45pmESPN Kicks:
Extra 10pmPremier League World
10.30pmCopa Libertadores
Preview11pmESPN FC Press Pass
11.30pmISOC Snocross 12amLive
Copa Libertadores Football 2am30
for 30 3.30amESPN Kicks: Extra
3.45am30 for 30 4.45amFIS
Alpine Ski World Cup Report
5.15amPlanet Speed 5.45am-6am
ESPN Kicks: Premier League
SKY LIVING
7pmCriminal Minds 8pmCSI:
Crime Scene Investigation 9pm
Bones 10pmCriminal Minds 11pm
Bones 12amCaribbean Cops 1am
Supernatural 2.40amCSI: Crime
Scene Investigation 3.30amBones
4.20amNothing to Declare UK
5.10am-6amMotorway Patrol
BBC THREE
7pmThe Worlds Strictest Parents
8pmDont Tell the Bride 9pmLife
After War: Haunted by Helmand
10pmRussell Howards Good News
10.30pmWay to Go 11pmFamily
Guy 11.45pmAmerican Dad!
12.25amLife After War: Haunted
by Helmand 1.25amJunior Doctors:
Your Life in Their Hands 2.25am
Worlds Craziest Fools
2.55am-3.55amLife After War:
Haunted by Helmand
E4
7pmHollyoaks 7.30pmHow I Met
Your Mother 8pmFILMFame
2009. 10.05pmThe New Normal
10.35pmThe Cleveland Show: Holt
joins the gang as they work on
opening a bar at the airport. 11pm
Rude Tube: Extreme Rides 12.05am
The Big Bang Theory 1amHappy
Endings 1.30amThe Ricky Gervais
Show2amThe Cleveland Show
2.25amRude Tube: Extreme Rides
3.20amBeing Erica 4amHappy
Endings 4.20am-6amMade in
Chelsea
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 8pmStorage Wars 9pm
Mountain Men 10pmMankind: The
Story of All of Us 11pmStorage
Wars 11.30pmPawn Stars 12am
Mountain Men 1amMankind: The
Story of All of Us 2amAmerican
Pickers 3amIce Road Truckers
4amSwamp People 5am-6am
American Restoration
DISCOVERY
7pmBear Grylls: Born Survivor
8pmHow Its Made 9pmAmerican
Chopper 10pmOutlaw Empires
11pmAuction Hunters 11.30pm
Auction Kings 12amAmerican
Chopper 1amOutlaw Empires 2am
Battle Castle with Dan Snow3am
American Chopper 3.50amOutlaw
Empires 4.40amRaging Planet
5.30am-6amMeerkat Manor
DISCOVERY HOME &
HEALTH
7pmDr Oz 8pmJon and Kate Plus
8 9pm42 Stone Mum10pm42
Stone Mum: One Year Later 11pm
My Deadly Appetite 12am42 Stone
Mum1am42 Stone Mum: One Year
Later 2amMy Deadly Appetite
3amDr Oz 4amMyleene Klass
Bumps, Babies and Beyond
5am-6amStudent Midwives
SKY1
7pmGot to Dance: Auditions 9pm
Glee 10pmFringe 12amLast
Resort 1amBrit Cops: Law &
Disorder 1.55amNCIS: Los Angeles
2.45amRoad Wars 3.35am
Crash Test Dummies 4am-6am
Stargate SG-1
BBC2 ITV CHANNEL4 CHANNEL5
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6pmBBC News
6.30pmBBC London News
6.55pmParty Political
Broadcast
7pmThe One Show; BBC News
8pmThe Food Inspectors
9pmCHOICE Africa
10pmBBC News
10.25pmRegional News;
National Lottery Update
10.35pmA Question of Sport
11.05pmThe League Cup
Show
11.50pm Film 2013
12.25amFILMCabaret: 1972.
2.25am Weatherview
2.30am-6amBBC News
6pmEggheads
6.30pmGreat British Railway
Journeys
7pmHeir Hunters
8pmThe Great Comic Relief
Bake Off
9pmDouble Cross: The True
Story of the D-Day Spies
10pmCHOICE The Culture
Show
10.30pmNewsnight; Weather
11.20pm Tankies: Tank Heroes of
WWII 12.20amBowls 1.20am
Sign Zone: Dara O Briains Science
Club 2.20amNatures Weirdest
Events 3.20amSee Hear 3.50am
Close 4am-6amBBC Learning
Zone
6pmLondon Tonight
6.25pmParty Political
Broadcast
6.30pmITV News
7pmCoronation Street
7.30pmCHOICE The National
Television Awards 2013
10pmITV News at Ten
10.30pmLondon News
10.35pmInside Death Row
with Trevor McDonald
11.35pmSafari Vet School
12.05amJackpot247
3amFILMThe Battle of Midway:
Fact-based Second World War
drama, with Charlton Heston. 1976.
5.10am-6amITV Nightscreen
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
8pmGoks Style Secrets
9pmOne Born Every Minute
10pm16 Kids and Counting
11.05pmRandom Acts
11.10pmEmbarrassing Fat Bodies
12.15amMusic on 4: Launched at
Red Bull Studios 12.45amMercury
Prize: 2012 Albums of the Year
Live 1amMercury Prize: 2012
Albums of the Year Live 1.10am
Revenge 1.55amFILMPanic in the
Streets: 1950. 3.35amSmallville
4.15amDeal or No Deal
5.10am-5.55amCountdown
6pmHome and Away
6.30pm5 News at 6.30
7pmIce Road Truckers; 5
News Update
8pmCharley Boormans South
African Adventure; 5 News at
9
9pmCelebrity Big Brother:
Live Eviction
10.30pmCelebrity Big
Brothers Bit on the Side
11.30pmFILMAlien Hunter:
2003.
1.15amSuperCasino 3.55amHouse
Doctor 4.45amMichaelas Wild
Challenge 5.10amWildlife SOS
5.35am-6amWildlife SOS
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
WEDNESDAY 23 JANUARY 2013
AFRICA
BBC1, 9PM
David Attenborough describes the
wildlife spectacles of southern Africa,
as butterflies perform a mating dance,
and green turtles are born.
THE CULTURE SHOW
BBC2, 10PM
Mark Kermode meets director Kathryn
Bigelow to talk about the controversy
surrounding her Oscar-nominated film
Zero Dark Thirty.
THE NATIONAL TELEVISION
AWARDS 2013 ITV, 7.30PM
The biggest names on the small screen
gather at the O2 in London for the
annual ceremony celebrating the best
of British TV. Dermot OLeary hosts.
TVPICK
M
OUSETRAPS nestle behind
the sink in the gents toilets.
Rugby training kit crowds
shelves in a tiny clubhouse
bar, which is improbably squeezed
under railway arches. The spartan,
chilly office upstairs is strewn
with cobwebs. In many ways,
humble Millwall RFC is the ideal
setting to meet Stuart Lancaster.
For the England rugby head coach
is steeped in the decidedly unglam-
orous world of grass roots sport. He
still helps coach his sons Under-12
club, is bemused by his elevation to
demi-celebrity status, and favours
old-fashioned remedies to defeat.
We were disappointed to lose on
Sunday, he says of his second teams
recent Yorkshire Cup defeat. But we
had a good chips and sausage after-
wards so we all cheered up.
Yet that cloth-cap image belies his
position as the most powerful man
in English rugby in arguably its most
important era. A World Cup on these
shores is little more than two years
away, and Lancaster, who can boast
no glittering playing career, is the
man the Rugby Football Union have
entrusted with masterminding a
home triumph.
EXPECTATION
His unpretentious persona is also at
odds with the meticulous, scientific
rigour that has served him well in his
first year in charge, while his affabil-
ity masks the palpable pain he
speaks of feeling at each defeat, and
the anguish of his most cherished
protege peeing his future up the
wall literally and metaphorically.
It has been a whirlwind 12 months
for the 43-year-old, who has gone
from little-known coach of Englands
second-string Saxons team to the suc-
cessor to Martin Johnson, a 2003
World Cup winner, and reached a
peak last month, when his youthful
team romped to a record-breaking
victory over the mighty All Blacks.
But, as the Cumbrian prepares for
his second RBS Six Nations cam-
paign, the stakes have now been
raised. Stabilising a squad riven by a
disastrous last World Cup will not
suffice this time; England are fancied
to win the title. He acknowledges the
pressure, but, as is his wont, has a
painstakingly crafted plan.
There is expectation now sur-
rounding the Six Nations, particular-
ly after the All Blacks game, but the
only way to deal with that is to focus
on the process of winning, rather
than the winning itself, he says of
next months championship.
Thatll look after itself if you get
your foundations right: strong team
spirit, good culture, good technical
organisation, and motivate them in
the right way. And thats what I do. I
invest all my time in thinking about
that, rather than the implications of
winning or losing. Because if you did,
you wouldnt be doing your job prop-
erly, youd be too worried about the
consequences of defeat.
Lancaster puffs out his cheeks and
exhales when it is suggested the
world he now inhabits was alien just
a year ago. It is, he says, hugely dif-
ferent, largely in terms of media and
commercial commitments the
sideshow and the scrutiny and
exposure entwined with matches
being broadcast to millions.
He also keenly feels the burden of
leading England, and admits to hav-
ing to wrench himself out of the
gloom following home defeats to
Australia and South Africa in
November and Wales last spring.
Thats three more losses at
Twickenham than I wanted, he says.
Having lost against Sheffield, you
feel bad for your Under-12s. Multiply
that by 10,000 when youve lost an
international, because you feel
responsibility for your team, people
in the stadium, the country. Defeat
hurts at international level and you
dont want to experience it very
often, I can assure you.
Youve got to get yourself out of
that disappointment and find what
went wrong. Its a skill a coach has to
have. If you look browbeaten and
down that you havent found the
solution, they [players] will pick up
on that. Thats not good coaching.
No one is too talented
Bradford slay Villa to reach final
JUBILANT Bradford manager Phil
Parkinson admitted he was in
dreamland last night after
completing another Capital One
Cup giant-killing to reach the final
and land a trip to Las Vegas.
James Hansons second-half
header earned the Bantams an
aggregate victory to become the
first team from footballs fourth
tier to reach the final since 1962.
Christian Bentekes volley had
earlier raised Aston Villa hopes of
overturning a two-goal first leg
deficit, but Andreas Weimanns
late second was not enough and
Bradford held on to claim a third
Premier League scalp.
Its dreamland, said Parkinson.
We said we had a chance to make
history and tonight weve done it.
What it means to the club and the
city is tremendous.
Bradford chairman Mark Lawn
pledged to take his squad to Vegas
in the summer, regardless of the
outcome in the final, admitting: I
dont care who we get. Theyll
probably both batter us.
Europe may yet beckon too. The
West Yorkshire club are one win
away from reaching the Europa
League, although they will have to
overcome either Chelsea or
Swansea next month.
Beleaguered Villa manager Paul
Lambert vowed absolutely to
continue despite defeat plunging
his position into further doubt.
Lancaster, pictured with players from Millwall RFC, still juggles coaching Englands elite with his
England rugby coach Stuart Lancaster tells
Frank Dalleres about laying down the law,
pain of defeat and Six Nations pressure
FAILURE to qualify for last seasons
Champions League sent Tottenham
into the red for the year ending June
2012, the football club announced
yesterday.
Spurs recorded a loss of 4.3m,
down from a 0.7m profit the
previous year, as revenues fell 12 per
cent from 163m to 144m.
The north Londoners said the
financial blow was primarily due to
the absence of Champions League
football estimated to be worth at
least 30m in prize money, broadcast
and matchday income.
It should not greatly impact
Tottenhams ability to meet
European financial fair play (FFP)
rules, which stipulate clubs must not
lose more than 37m during last
season and this term combined.
Spurs said that they continued to
comply with Uefa FFP criteria and
added that they support its further
integration into the Premier League
a contentious matter among
English top-flight sides.
Chairman Daniel Levy said the
clubs focus remained the delivery
of an increased capacity stadium.
Spurs have received planning
consent to build a new 56,250-seater
venue next to White Hart Lane, their
current home, but Levy said: There
is much work to be done refining
the detailed design and resolving the
final development issues.
BY FRANK DALLERES
CHELSEA manager Rafael Benitez
has launched a stinging attack on
his former Inter Milan player
Marco Materazzi, as he prepares for
tonights make-or-break Capital
One Cup clash at Swansea.
Materazzi called Benitez weak,
accused the Spaniard of making
him remove pictures of ex-boss Jose
Mourinho from the dressing room,
and said life under him was like
being back at school.
Hes lying, Benitez hit back
yesterday. Marco Materazzi is
lying, just lying. Everything that he
said is a lie. Simple.
Benitezs outburst comes as he
looks to prevent another trophy
slipping through his grasp,
following last months Club World
Cup final defeat, in this evenings
semi-final second leg in Wales.
To do so Chelsea must overturn
Swanseas 2-0 first leg advantage,
but despite needing goals Benitez
ruled out starting in-form January
signing Demba Ba alongside
misfiring Fernando Torres.
Its not easy to play both at the
same time given the quality of the
players playing behind, he said.
Its an option for 15 minutes.
Captain John Terry is in
contention for a first start since his
two-month injury absence.
BY FRANK DALLERES
WEDNESDAY 23 JANUARY 2013
22
SPORT
cityam.com/sport
ASTON VILLA..............................2
BRADFORD CITY .........................1
BY FRANK DALLERES
CAPITAL ONE CUP
@cityam_sport
Materazzi jibes
are lies, says
angry Benitez
Spurs blame
4.3m loss on
Euro failings
ARSENAL manager Arsene Wenger
admits his team have their backs to
the wall as they look to bounce
back from Sundays defeat at Chelsea
tonight against West Ham.
Victory would lift the Gunners to
within four points of the Premier
Leagues top four, and Wenger said:
Im confident we will but the team
was very down after Chelsea.
The Hammers could go 10th with
a win, but have taken just five points
from their last seven fixtures.
BY FRANK DALLERES
Derby fillip in
Wenger sights
I feel bad when my
Under-12s lose. Multiply
that by 10,000 when
you lose internationals.
You feel responsibility
for your team, people
in the stadium, the
country. Defeat hurts, I
can assure you

FERRY-JUMPING
He may have found the solution in
the glorious sacking of the world
champions, but was swiftly brought
down to earth in a Yorkshire Cup
Under-12s quarter-final. I said to the
team that beat us: We can beat the
All Blacks but we cant beat
Sheffield, he laughs, adding of his
weekend role: It keeps you grounded
and reinforces the privilege of doing
the [England] job. Coaching players,
whether theyre 12 or 25, you deal
with them the same way: youre posi-
tive, enthusiastic, want to help them
improve, and deal with defeat and vic-
tory in the same way.
That affection for rugby also radi-
ates when discussing Rugby Force,
Bradford City win 4-3 on aggregate
23
to discard
role at West Park Leeds Under-12s
Northampton flanker Calum Clark could
miss the whole Six Nations with a shoulder
injury. He will have surgery on the joint today
cityam.com
WEDNESDAY 23 JANUARY 2013
JOIN THE CALCUTTA CUP STARS
AND LAUNCH 2013 SIX NATIONS IN STYLE
Supporters of the great Calcutta Cup xture are being given the unique opportunity to share
the eve of the 2013 clash at Twickenham with players who have made the game come alive.
The Glengoyne Auld Enemy Dinner will be held at The Dorchester Hotel, London on Friday
1st February 2013, the night before the RBS six Nations kicks off.
Players attending the event include: Martin Johnson, Matt Dawson, Nick Easter, Peter
Winterbottom, Jason White, Gary Armstrong, Kenny Logan, Victor Ubogu and Andy Nicol.
A host of leading lights will be at The Dorchester, including captains and coaches from both
sides of the great divide and some special celebrities, to share stories from past Calcutta Cup
battles with each other and supporters of the game.
The event, supported by the RFU and SRU, will also raise money for Help for Heroes. With
over 350 people attending already only a handful of tables remain. Book your table using the
details below.
TABLES OF 12 COST JUST 2500 PLUS VAT. TO BOOK YOUR PLACE, CONTACT
EVENT ORGANISER STUART REID AT: INFO1879@BTINTERNET.COM
IN BRIEF
Snow may mean Sunday Trials
n HORSE RACING: Cheltenhams
Festival Trials Day will be postponed
24 hours to Sunday if further snowfall,
forecast for last night, makes the
ground unsuitable for racing.
England eye crucial one-day win
n CRICKET: England must win todays
fourth one-day international in Mohali
if they are to claim victory in the series
against India. The tourists lost by
seven wickets on Saturday.
Results
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TENNIS world No1 Novak Djokovic
declared himself ready for another
five-hour epic after brushing off
fatigue to reach the Australian Open
semi-finals.
Djokovic endured a gruelling test
against Stan Wawrinka in round
four but showed no ill effects 48
hours later as he overcame fifth seed
Tomas Berdych 6-1, 4-6, 6-1, 6-4.
I felt good enough to go another
five hours, he said, after securing a
meeting with Spains David Ferrer.
Superfit Djokovic up for repeat
of five-hour battle in Australia
The Serb may need to against
notoriously dogged fourth seed
Ferrer, who beat Nicolas Almagro 4-6,
4-6, 7-5, 7-6 (7-4), 6-2 despite his
compatriot serving for the match on
three occasions.
Womens second seed Maria
Sharapova continued her ominous
progress with a comfortable 6-2, 6-2
victory over fellow Russian Ekaterina
Makarova.
Sharapova will face Li Na in the
semi-finals, after the Chinese sixth
seed eliminated fourth seed
Agnieszka Radwanska 7-5, 6-3.
BY FRANK DALLERES
the NatWest-backed initiative aimed
at helping local teams improve facili-
ties. Clubs are encouraged to apply for
grants and join a weekend of DIY, ulti-
mately nurturing the talent pool for
Lancasters successors. He says: If we
develop facilities, well get more play-
ers at clubs, and itll make them bet-
ter places for players to develop.
REMORSEFUL
One of Lancasters biggest achieve-
ments has been repairing Englands
sullied image, following the ferry-
jumping antics of players at the dis-
mal 2011 World Cup. He talks with
pride at changing the culture of the
set-up, a feat that helped the RFU
retain commercial partner O2 and
sign deals with BMW and Canterbury.
Yet his seemingly no-nonsense
stance on discipline is more nuanced.
Having initially dropped Danny Care
after a drink-driving charge, he wel-
comed him back later last year,
despite a further incident in which
the Harlequins scrum-half was cau-
tioned for urinating in public. It was
an episode that severely tested
Lancashires loyalty to a player he first
coached in the Leeds academy.
He was the player Id worked with
at the youngest age, and I wanted to
work with him probably more so
than anyone. People have said to me,
Do you think it was a great opportu-
nity for you?. I thought, I couldnt
think of anything worse, he says.
Generally I dont have one set of
rules; I have a set of principles I apply
on the context that I know surrounds
that particular individual. In Dannys
case, he was hugely remorseful about
what happened this time last year. I
met him a couple of times during the
Six Nations, and I became more and
more convinced he was on the right
track. I think subsequent behaviour
has proven that.
CLEMENCY
Lancasters willingness to offer sec-
ond chances is not restricted to Care.
Eyebrows were raised when
Northampton forward Calum Clark
made the Six Nations squad, despite
last years 10-month ban for over-
extending and breaking an oppo-
nents arm, while hooker Dylan
Hartley, who served a six-month ban
for gouging in 2007, is seen as captain
material. Perhaps, with 2015 at stake,
there is pragmatism as well as
clemency in Lancasters approach.
No, he laughs, taken aback by the
suggestion. There is no too talented
a player to discard, in my opinion. If
you want to build a successful team,
youve got to have everyone on the
same page. Talent gets you to the
front gate, but its character that
keeps you there. Ive seen loads of
players who have the talent to get to
the top, and theyve got there, but
dont have the character to keep them
there. If you dont have both, Ive got
plenty of players who have.
Stuart Lancaster was launching NatWest
RugbyForce (part of the wider RBS
RugbyForce programme), helping commu-
nity rugby clubs in England become
stronger businesses. For more information
and to register your club visit:
www.natwest.com/ rugbyforce
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