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THE FUTURE of 130-year-old

brokerage Seymour Pierce was


hanging in the balance last night
as its board met to consider
administration unless a last-
minute investor comes forward.
Seymour Pierce, which has been
in talks with several potential
investors in recent months, is
believed to have put Grant
Thornton on notice as
administrator.
The small-cap broker, chaired by
well-known Premier League
adviser Keith Harris, has been left
struggling by the moribund
London fundraising market that
has forced many of its rivals to
merge or find fresh investment.
Seymour Pierce Holdings made
a pre-tax loss of 587,119 in the
year to September 2011, according
to its most recent Companies
House filings. The board said at
the time this was a reasonable
result in the light of the
extremely difficult trading
conditions.
The firm hired Tom
Forcier as chief
executive last May,
after Philip Wale left to
join rival Panmure
Gordon after just
over a year in
charge.
Panmure
Gordon is
Crunch talks to save Seymour Pierce as City broker scrambles for cash
BUSINESS WITH PERSONALITY
FTSE finishes
best January
since 1989
LONDONS blue chip market has
enjoyed its best January since 1989,
despite slipping on the final day of
the month, yesterday.
The FTSE 100 lost 46.23 points to
close 0.73 per cent down at 6,276.88.
Yet despite this final day dip, the
index has nonetheless gained a con-
siderable 6.43 per cent since the
start of 2013 the sharpest January
jump for 24 years.
Shrugging off lingering global eco-
nomic fears, the FTSE has gained
379.07 points since the beginning of
the year adding an approximate
96bn to the value of the top 100
listed companies.
The increase was narrowly higher
than the 6.29 per cent rise that the
FTSE put on in January 1998.
It was the third best starting
month to a year since the index was
launched in 1984.
The steepest ever January jump
came in 1989 when the FTSE shot
up by an eye-watering 14.43 per
cent. Two years earlier it had record-
ed a 7.7 per cent January increase.
Despite warning of near-term
risks, Shore Capital strategist
Gerard Lane said: I still think the
FTSE 100 will see 7,000 by the year-
end and if you are a smart investor
you invest for the 7,000 now rather
than wait for a correction that
might never happen.
Clockwise from top left: RBS Stephen Hester, Lloyds Antonio Horta-Osorio, HSBC boss Stuart
Gulliver and Barclays chief executive Antony Jenkins
THE FINANCE watchdog yesterday
opened the floodgates to tens of thou-
sands of compensation claims from
small firms who may have been mis-
sold interest-rate fixing products, rep-
resenting another major headache for
the scandal-struck industry.
The four biggest banks will now
review the 40,000 interest rate swap
transactions made since 2001 in a bid
to identify any unsophisticated cus-
tomers who lost out because they did
not understand the products they
were buying. Analysts believe the bill
could hit 2bn, on top of the 12bn the
big institutions have already set aside
to cover payment protection insurance
compensation claims.
Swaps were sold to borrowing firms
to protect them against rising interest
rates. But when rates dropped, firms
complained that they lost out by buy-
ing the protection and investigations
found some small firms had been mis-
led over the details of the product.
The Financial Services Authority
studied 173 sales to unsophisticated
customers and found more than 90
per cent of them had been missold.
This proportion cannot be applied to
the 40,000 figure the FSA specifically
chose unusually complex cases from
firms known to be at risk but still
shows a large number of cases where
sales should not have gone ahead .
The new redress process plans to first
filter out those who are deemed
sophisticated broadly large firms
with a turnover of more than 6.5m, a
balance sheet total of more than
3.26m and more than 50 employees,
eventual cost will be circa 1bn, said
Investecs Ian Gordon.
We believe RBS and Lloyds will have
just a few hundred million each to
recognise by way of incremental
charges not material relative to
charges of 5.3bn (Lloyds) and 1.7bn
(RBS) and counting for PPI redress.
That brings the total close to 2bn,
with banks and the FSA not yet disclos-
ing estimates of the final amount.
The FSA hopes most of the claims
will be processed within six months,
though for the banks most affected it
could take a year. In light of the new
guidelines the banks and their inde-
pendent assessors mainly the big
four professional services firms are
retraining staff in the processes.
The banks all pledged to compensate
affected customers swiftly.
We are committed to doing the
right thing by our customers, which
means following the review we will
provide redress as quickly as possible
to those small business customers
where detriment is identified, said a
Lloyds spokesperson.
We look forward to engaging with
eligible customers to commence the
review and redress process, said
Barclays. Where we have not met the
expected standards, we will put things
right. Barclays has already suspended
swap payments for customers in scope
of the FSAs review who are in finan-
cial distress.
Smaller banks including Santander,
Co-Operative Bank and the Clydesdale
and Yorkshire banks will be able to
launch their reviews in the coming
weeks.
or firms which are a small subsidiary
of a much larger group. Firms like
farmers with a large value of land can
now be classed as unsophisticated
while special purpose vehicles set up
by large property firms cannot fit in
the eligible category.
After that, each sale will be assessed
to see if it provided clear information,
if the terms of the swap exceeded
those of the underlying loan, and if
the bank understood customer needs.
If the bank did not and the customer
lost out as a result, the bank may have
to compensate them or provide an
alternative, more suitable product.
And if the bank has incomplete
records, they may have to pay out a
problem when the sales date back 12
years but records only have to be kept
for a minimum of seven.
Barclays has already set aside 450m
to pay customers back, HSBC roughly
200m, RBS around 100m and Lloyds
nothing. But analysts expect the total
provisions to shoot up in the coming
results season.
We currently estimate that Barclays
www.cityam.com FREE
BY JULIAN HARRIS
FTSE 100 M6,276.88 -46.23 DOW M13,860.58 -49.84 NASDAQM3,142.13 -0.18 /$ 1.58 unc / 1.16 unc /$ 1.36 unc
PETER JONES
BUYS JESSOPS
See Page 4
See Page 22
THE FORUM: Page 17

Certified Distribution
from 26/11/12 to 30/12/12 is 127,678
BY MARION DAKERS
BY TIM WALLACE
FTSE
29Jan 09Jan 18Jan
6,350
6,250
6,150
5,950
6,050
5,850
6,276.88
31Jan
Keith Harris led a management
buy-out at Seymour Pierce in 2003
believed to have talked to Seymour
Pierce about a possible cash
injection, but decided against a
deal.
Seymour Pierce and Grant
Thornton declined to comment
yesterday.
BONJOUR BECKHAM
STAR SIGNS FOR PARIS SAINT-GERMAIN AND GIVES UP WAGES
FRESH SCANDAL TO
COST BANKS 2BN
ISSUE 1,810 FRIDAY 1 FEBRUARY 2013
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Rail firms hit back as new
franchise auction is axed
TRAIN companies have reacted
furiously after the government
said it will not pay back money
they spent on the Great Western
rail franchise contest, which was
axed yesterday.
National Express, one of the
firms that was competing for the
15-year contract, said yesterday it
is taking legal advice after the
unfair and inconsistent decision
not to compensate bidders.
We put a huge amount of effort
into developing detailed plans to
deliver the governments aspira-
tions and improve train services
for passengers, added a spokesper-
son for Stagecoach, which also bid.
It is extremely disappointing
that investment has been wasted
through no fault of our own.
Arrivas UK managing director
Bob Holland said he was con-
cerned by the move.
Transport secretary Patrick
McLoughlin acknowledged yester-
day that he had made some tough
decisions over the rail franchising
process, which was frozen across
the board in October after a string
of errors were found in the West
Coast Main Line competition.
The Department for Transport
endured criticism at the time for
pledging to repay at least 40m to
Barclays in Qatar loan probe
UK authorities are probing an allegation
that Barclays loaned Qatar money to
invest in the bank as part of its cash call at
the height of the financial crisis in 2008,
which enabled the bank to avoid a UK
government bailout. Neither Sheikh
Hamad bin Jassim bin Jabr al-Than nor
Qatar Holding is accused of wrongdoing.
Their lawyer at Stephenson Harwood and
their spokesman declined to comment.
The bank said the authorities
investigations were ongoing. It neither
denied nor confirmed the revelation.
Owner of O2 arena in bidders sights
An Australian shopping centre operator, a
Los Angeles bank chief executive and a
Qatari quasi-sovereign wealth fund are
among those expected to submit bids of
$5bn-$8bn for Anschutz Entertainment
Group, owner of Londons O2 arena, as
early as next week.
Amazon paralysed by outage
Amazons homepage was knocked out for
49 minutes on Thursday afternoon in US
eastern time, in an unusual outage that
partly paralysed the worlds biggest
ecommerce business by sales. The firm
confirmed the US outage.
Strike fear over Iberias cut plans
Spanish unions have rejected a new
proposal for job cuts at Iberia.
International Airlines Group, which owns
Iberia and British Airways, announced
plans to cut almost a third of workers
.
Cookie thief holds biscuit to ransom
Bahlsen, a food company, has received a
ransom demand from a criminal disguised
as the Cookie Monster for the return of its
golden biscuit sign, which disappeared
from its Hanover headquarters last week.
BCC: Give us a bigger lender
The British Chambers of Commerce is
working with Labour to create a blueprint
for a British Investment Bank amid
claims that the Coalitions own state bank
is being blighted by political wrangling.
Talvivaara falls on Goldman sell call
The broker warned investors the miner will
need to sell shares. Analysts cut their
recommendation on Talvivaara to sell
from neutral. Investors holdings in
Talvivaara almost halved last year.
Peregrine Founder Hit With 50 Years
Russell Wasendorf Sr., was sentenced to
the maximum 50 years in jail after
admitting to orchestrating a fraud at his
futures brokerage and misleading
regulators for almost 20 years.
California Gets Rating Boost
Standard & Poor's upgraded California to
single-A from single-A-minus, after a
months-long rally in California debt and
almost a year since the ratings firm put it
on positive outlook
BANKS set aside such different
amounts of capital against the
same assets that investors cannot
be certain how safe the institutions
are and the authorities may have to
step in to set standards, a top
group of regulators warned
yesterday.
The Basel Committee tested 15
major international banks, giving
them each a hypothetical portfolio
of assets and running their
internal risk weighting models
against it.
The ratio of market risk
weighted assets to total trading
assets came in at 80 per cent for
UniCredit and 10 per cent for BNP
Paribas, an enormous variation.
Part of the difference came from
internal modelling differences,
though some of the variation was
made up of different national
guidelines as well as specific rules
given to different institutions by
their local regulators.
There are considerable
differences between banks in terms
of reporting details regarding
market risk, making comparisons
difficult, the report noted.
The Committee suggested more
regular reporting would help
investors understand the banks
positions, as would a more
standardised and detailed
breakdown of the models used.
Watchdog fears
chaotic bank
risk modelling
FirstGroup had been due to hand over the Great Western franchise later this year
2
NEWS
BY TIM WALLACE
BY MARION DAKERS
To contact the newsdesk email news@cityam.com
B
ACK in the 1980s, when the cult
of the equity was at its peak,
nobody had a bad word to say
about listed companies. Three
decades later, scandals and poor stock
market performance have badly
damaged their reputation, Januarys
FTSE 100 bounce notwithstanding.
Many now prefer private equity. I was
tasked by the Chartered Institute of
Securities and Investment to make
the case for the plc model; here are
the seven points I made last night at
a debate in the City.
1) Plcs allow the public to become
capitalists. It is easy to buy shares,
blurring the distinction between
those who sell their labour and those
who own the means of production.
Mass stock ownership has destroyed
Marxism.
2) Owning capital allows people to
become wealthier. Wages tend to
EDITORS
LETTER
ALLISTER HEATH
Seven reasons to like the plc model of company ownership
FRIDAY 1 FEBRUARY 2013
grow at the same rate as productivity
and inflation, over time. House prices
ironing out bubbles tend to go up
at roughly the same rate as nominal
GDP. Cash loses some of its value and
bonds make a small positive return,
at best. But equities with dividends
reinvested go up much faster than
any other asset class. Over a lifetime it
usually makes sense to own shares.
3) A company with a great idea but
with no backing from big funds can
appeal directly to the public. This
gives innovators another avenue to
raise money, increases the number of
commercial experiments and creates
a more open-minded society.
4) Listed firms end up being far
more transparent than privately
owned ones, revealing all sorts of
data. They follow far more sophisticat-
ed governance rules than privately-
held ones (there are, of course,
disastrous exceptions). There are
often better checks and balances on
boards, more scrutiny and accounta-
bility. And when or if these sorts of
rules turn out to work well, private
firms often follow them voluntarily
to bolster their own performance.
5) Equity and debt are both valuable
forms of financing. But across the eco-
nomic cycle and especially during
downturns equity is superior. It
allows flexibility: dividends dont
have to be paid, unlike interest pay-
worldwide. This information creation
mechanism is an essential part of
modern capitalism and the price
signals from stock markets help
inform decisions made in the non-list-
ed sector, including by venture capi-
talists, among private firms
themselves and private equity firms
that buy and sell businesses.
There are, of course, also several
ways in which private equity is superi-
or. Listed firms have plenty of draw-
backs: complex governance rules has
made them bureaucratic, they can be
short-termist and principal-agent
problems with directors pursuing
their own self-interest can be crip-
pling. But there is space for both mod-
els, and we forget the advantages of
the Plc at our peril.
ments. A prevalence of equity-
financed plcs can therefore have a
positive macroeconomic impact, help-
ing to reduce volatility.
6) Listed firms dont require the
same degree of shareholder involve-
ment as private ones. You can buy
1,000 shares in a big company and be
a passive provider of capital, free-rid-
ing on the decisions and knowledge
of others, including activists. While
this is usually seen as a disadvantage,
it is also an advantage: not everybody
has the time or skill to get involved.
The mergers and (especially hostile)
acquisitions market is vital: underper-
forming firms will be spotted, pur-
chased and run better.
7) Regardless of whether stock mar-
kets are perfect in the technical
sense, they are extremely good at
aggregating all of the information
and opinions of market participants
bidders in the botched contest.
But the DfT said of the latest can-
celled auction: In keeping with the
relevant invitations to tender, which
made clear that bidders are respon-
sible for their own costs, the secre-
tary of state does not believe it
would be appropriate to reimburse
bidders.
FirstGroup, whose contract to run
the Great Western route had been
due to run out in March, is now in
talks to operate it for a further two
years while the contest is run again.
The company chose in 2011 to exer-
cise a break clause to end its con-
tract three years early, avoiding pay-
ing premiums that were set to run
into hundreds of millions of pounds.
First could also keep hold of its
Capital Connect contract for a fur-
ther two years. McLoughlin said yes-
terday the ongoing bidding process
will be resumed, but that it could
take longer than planned.
The Essex Thameside franchise was
also unfrozen yesterday, but the gov-
ernment has started talks with
incumbent operator c2c for a two-
year extension.
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
IN BRIEF
Morgan Stanley boss doubles pay
nMorgan Stanley said chief executive
James Gorman will receive a base
salary of $1.5m (946,000) in 2013,
nearly double the $800,000 he
received last year. Morgan Stanley, the
sixth largest US bank, said the raise
was to bring Gormans salary into line
with the salaries paid to chief
executives at rival financial
institutions and to achieve an
appropriate balance between fixed
and at-risk variable compensation.
US Congress passes debt bill
nA bill allowing the US government
to keep borrowing money for at least
a few more months, beyond its record
$16.4 trillion (10.34 trillion) debt
limit, won final congressional approval
last night, clearing the way for
President Barack Obama to sign it into
law. The Democratic-led Senate
passed the bill, 64-34, which would
put off until at least 19 May a
showdown over the debt limit
between Republicans and Democrats.
Mark Carney to be grilled by MPs
nThe future governor of the Bank of
England will appear before a
parliamentary committee on Thursday
next week, the first public scrutiny of
the man set to fill Sir Mervyn Kings
shoes in June. Carney, currently
governor of the Canadian central
bank, will face MPs from the
heavyweight Treasury select
committee, chaired by Andrew Tyrie,
on Thursday morning, to answer
questions about his new role.
INSURERS Standard Life and
Resolution are most at risk from a
regulatory probe into whether
retirees who buy annuities get a fair
deal, analysts said yesterday.
The investigation by City
watchdog the Financial Services
Authority, launched yesterday, will
focus on whether people who buy
an annuity directly from their
pension provider pay more than
they would if they shopped around.
The regulator will also look into
whether insurers hinder their
customers from shopping around
under the Open Market Option.
The industry is obliged under FSA
rules to inform pension savers that
they have a right to compare
annuity rates across the market.
Resolution and Standard Life sell
annuities mainly to their own
pension customers, and therefore
potentially have the most to lose
from the probe, analysts said.
A successful FSA investigation
would logically impact on those
companies primarily selling only to
their in-house customers, Deutsche
Banks Oliver Steel wrote in a note
to clients. There is a risk that in-
house annuity providers such as
Standard Life and Resolution lose
out.
Insurers at risk
over watchdog
annuity probe
BY CITY A.M. REPORTER
DEUTSCHE Bank made a heavy loss in
the final quarter of 2012 as it strug-
gled to shore up its balance sheet and
increased provisions against a possi-
ble Libor fine, the bank said yesterday.
The German bank recorded a pre-
tax loss of 2.6bn (2.2bn), taking prof-
its for the year down to 0.7bn a
drop of 87.3 per cent on the year.
Revenues stayed stable, edging up
1.5 per cent to 33.7bn. But expenses
jumped 4.6bn to 30.6bn despite a
programme of job cuts.
Of that rise, 1.9bn came from
impairments of goodwill and other
intangible assets, while 1bn relates
to litigation provisions.
The bank continued pushing hard
to improve its capital levels, raising
the ratio on a Basel III basis to eight
per cent, up from below six per cent a
year ago. In part that is due to a 55bn
decline in risk-weighted assets.
That improvement led to JP Morgan
analysts upgrading the banks stock,
arguing new management under co-
Deutsche in the
red as reforms
cut into profits
BY TIM WALLACE
chief executive Anshu Jain has illus-
trated its ability, to improve its capital
position above expectation and guid-
ance in the fourth quarter.
The positive surprise came mainly
from low quality internal model
adjustments and portfolio optimisa-
tions rather than real legacy asset
sales however, the market will still
give Deutsche credit for these improve-
ments, said Kian Abouhossein.
The banks shares rose 2.45 per cent,
but Jain warned more pain was ahead
as the bank pushes through its reform
programme.
Santander sees UK growth but
bad Spanish loans dent profits
BANKING giant Santander claimed
it has now moved beyond the
Spanish housing crash, setting it up
for solid growth in the coming
years.
Profits plunged 59 per cent to
2.205bn (1.9bn) for 2012, in large
part due to bad loan provisions of
6.14bn. But the banks UK arm
reported gains, seeing post-tax
profits rise four per cent to 939m.
Margins in Britain were squeezed
by low interest rates and pushed
BY TIM WALLACE
operating income down five per cent
to 4.901bn.
Meanwhile expenses fell nine per
cent to 2.222bn, pushing up profits.
Current account deposits
increased 32 per cent on the year on
the back of a major advertising
campaign.
But gross mortgage lending fell 38
per cent to 14.6bn in the year.
We look forward to greater
regulatory clarity, regarding capital,
liquidity, conduct and governance,
as this will provide us with the
certainty we need to continue to
support the UK economy, said chief
executive Ana Botin.
Juergen Fitschen (left) and Anshu Jain became joint chief executives of Deutsche last year
Deutsches plan buys time but
Santander stumbles on Spain
W
HAT goes down must
come up. That was the
apparent lesson from
Deutsche Bank yesterday,
booking a 2.2bn (1.8bn) loss but
seeing its share price rise to the
highest level since the spring of
last year.
Since its August lows in 2012,
Deutsches toughminded recovery
plan has put its stock on an
upward march, increasing some
48 per cent over that period, while
Europes banking sector as a
whole, as represented by the Stoxx
600 benchmark, rose by just 37
per cent.
Santander on the other hand
saw its shares fall, after profits in
2012 were 59 per cent down on
2011, at 2.2bn. Profits would have
been up 17 per cent year-on-year at
6.3bn but 4.1bn was set aside to
cover bad property loans in Spain.
More troubling for Santander
was a fall in operating income
outside Spain, including the UK
and the US. The bank says the
worst is over. Investors still need
convincing.
BOTTOM
LINE
MARC SIDWELL
Banco Santander SA
31 Jan 25Jan 28Jan 29Jan 30Jan
6.30
6.20
6.40
6.50
6.60
6.18
31Jan
Deutsche Bank AG
31 Jan 25Jan 28Jan 29Jan 30Jan
37.5
36.5
37
38
38.5
39
38.21
31Jan
FRIDAY 1 FEBRUARY 2013
3
NEWS
cityam.com
BLACKSTONE, the US private equity
giant that co-owns Broadgate in the
City, yesterday said profits rose 43
per cent in the fourth quarter
despite its revenue generating real
estate arm misfiring.
The buyout shop, which has
focused more on bricks and mortar
in recent years, booked a $670m
(422m) profit for the three months
ending 2012, propelling a 30 per
cent rise in yearly economic net
income (ENI) a common measure
of private equity profits to $2bn
its best annual profit since listing
in 2007.
Blackstone fires on all cylinders
to roar to $2bn record profits
BY MICHAEL BOW
Its private equity division saw
profits up 86 per cent, while profits
rose 163 per cent at its hedge fund
arm and 96 per cent at its credit
arm.
But real estate, the biggest part
of Blackstones revenue generation,
saw ENI drop two per cent to
$246m.
And Blackstone said it returned
$3.5bn to investors over the year, at
an average of 2.1 times their money.
Across all its funds, it returned
$18bn to its investors.
The New York based outfit is also
sitting on $35bn of dry power,
ready to snap up firms and real
estate in future, it said.
CAMERA brand Jessops, which saw
its shops collapse into
administration last month, has been
sold to a group of buyers including
Dragons Den star Peter Jones,
administrators said yesterday.
The deal, structured by
administrators PwC, involves the
sale of Jessops 78- year old brand,
existing stock and intellectual
property, which involves non-
physical assets like trademarks and
patents.
It is not thought any shops will be
re-opening under the deal.
Rob Hunt, joint administrator at
PwC, said: We can confirm that we
have sold the brand and certain
other assets to a number of buyers
including entrepreneur
Peter Jones CBE.
Jessops collapse
into administration
last month led to 187
stores closures with
the loss of 1,500 jobs
at the chain.
The numbers have
failed to inspire against the
backdrop of a generally lack-
lustre market. Overall prot
was shy of expectations, costs
are on an upward trend within the industry and the
weakness of the gas price has impacted on Shell.
Dragon Jones
breathes new
life into Jessops
BY MICHAEL BOW
HMVs administrators confirmed yes-
terday that 190 staff have been made
redundant across the collapsed music
retailers head office and distribution
network.
Deloitte, which was hired to run the
chain after it fell into administration
earlier this month, said no jobs cuts
have been made at its stores, which all
continue to trade.
The redundancies took place at
HMVs office on Eastcastle Street in
London, with others in its Marlow
head office, and distribution sites in
Canning Town and Birmingham.
Nick Edwards, Deloitte administra-
tor, said: Although such decisions are
always difficult, it is a necessary step
in restructuring the business to
enhance the prospects of securing its
future as a going concern.
Administrators
announce 190
HMV job losses
BY KASMIRA JEFFORD
Despite the cuts, Deloitte sounded a
more upbeat note on the brands
future, insisting it still hopes to find a
buyer for the ailing company. The
deadline for suitors to register interest
in the brand closed on Wednesday and
the deadline for confirming interest in
the stores is set for today.
We have been very pleased with the
level of interest in the business as a
going concern, whilst the response
from customers has demonstrated the
demand to see HMV remain on the
high street, Edwards said.
Last week restructuring firm Hilco
bought HMVs 176m debt for a report-
ed 40m, giving it control over the
retailers future. Hilco has been using
its good relationship with music labels
and film studios through its Canadian
business, to bring in stock and ensure
HMV continues to trade.
Royal Dutch Shell PLC
31 Jan 25Jan 28Jan 29Jan 30Jan
2,250
2,275
2,300
2,325 p
2,241.00
31Jan
Dragons Den star
Peter Jones has
bought the brand
B&Q IRELAND was placed into a
form of bankruptcy protection
yesterday in a last-ditch attempt to
save the loss-making chain.
The company, which is owned by
FTSE 100 group Kingfisher,
operates nine stores in the Republic
of Ireland but has been hit by the
downturn in household spending.
It has also failed to renegotiate
rents with its landlords.
The company was placed into
receivership by a Dublin court,
giving it 100 days of protection
Kingfisher puts B&Qs Ireland
unit into bankruptcy protection
BY JAMES WATERSON from its creditors. It currently
employs 690 people but wants to
close four stores in an attempt to
balance the books.
The management team is
hopeful that a sustainable business
can emerge from the examinership
process, based on a restructuring
of the company, said B&Q Ireland
chairman Brian Mooney.
PwC has been appointed to
oversee the examinership process,
which is similar to administration.
The British B&Q business, also
owned by Kingfisher, is unaffected
by the decision.
THE CAPITALIST: Page 11

FRIDAY 1 FEBRUARY 2013
4
NEWS
cityam.com
B&Q Ireland began trading in 2002 but was badly hit by the countrys economic collapse
ANALYST VIEWS
Shell's production guid-
ance is in line with our fore-
casts. However, gross capital
expenditure came in a touch
higher than our forecasts,
again highlighting our concerns that Shell's medi-
um term capex is on a steep upward trajectory.
WERE SHELLS RESULTS WHAT
YOU WERE EXPECTING?
Interviews by Cathy Adams

RICHARD HUNTER HARGREAVESLANSDOWN


Shell hikes dividend
as weak oil and gas
prices hit earnings
OIL GIANT Royal Dutch Shell
unveiled a 4.7 per cent jump
in its dividend payout yester-
day despite posting a slump
in full-year earnings.
Annual earnings on a cur-
rent cost of supply basis
dropped six per cent to
$27bn (17.07bn) compared
with $28.6bn in 2011 as it
was hit by weaker oil and gas
prices but the dividend was
hiked to $0.45 a share on the
back of a strong cash flow
outlook.
Fourth quarter profits rose
15 per cent to $5.58bn,
helped by improved refining
margins, although this was
below forecasts.
Moving on from a year that
chief executive Peter Voser
said was beset by head-
winds, the Anglo-Dutch oil
BY CATHY ADAMS behemoth pledged $33bn of capital
investment in 2013 on its 30 proj-
ects under construction in regions
such as Nigeria, Kazakhstan, Iraq
and the Arctic.
In a strategy update yesterday,
Voser confirmed Shells growth plan,
which aims to deliver between
$175bn and $200bn of free cash flow
from operations over the next three
years. Markets took the results nega-
tively, and shares in Shell closed
down 2.8 per cent at 2,241p.
NASDAQ OMX Group yesterday
reported a higher fourth-quarter
profit as an increase in non-
transaction-based revenues
outweighed an industry-wide drop
in trading volumes.
Net income attributable to the
transatlantic exchange operator
totalled $85m (51m), or 50 cents a
share, up from $82m, or 45 cents a
share, a year earlier.
Nasdaq OMXs
earnings rise
BY CITY A.M. REPORTER
ASTRAZENECAs new boss said
yesterday that the drug maker
faced a tough year, with sales
expected to fall by a mid-to-high
single digit percentage rate as
patent expiries continued to
erode business.
Earnings will decline
significantly more than
revenue this year as operating
costs rise, the drug maker said
New AstraZeneca boss sees
big fall in profit and sales
BY CITY A.M. REPORTER
yesterday.
Fourth-quarter sales fell 16
per cent to 4.6bn, generating
core earnings, which exclude
certain items, down three per
cent at $1.56 per share. The
slower decline in earnings
reflected lower costs and a
favourable tax adjustment.
Chief executive Pascal Soriot
hopes to turn the group around
by investing in growth areas
such as emerging markets.

The results didnt blow


the market away and were
light as gas overtook liquids,
which gave a negative slant
to the numbers. Downstream
was better than expected although in areas such
as Europe, margins have fallen recently.

MALCOLM GRAHAM-WOOD VSACAPITAL


HOOTAN YAZHARI
BANKOFAMERICA MERRILL LYNCH
DRINKS giant Diageo reported a rise
in sales in the second half of the year,
driven by price rises and growth in
the US of premium brands like Ketel
One vodka and Bulleit Bourbon.
The maker of Baileys and Guinness
beer saw global sales grow five per
cent to 6.04bn in the six months to
December, while operating profits
rose 11 per cent to 2.05bn.
European sales, which make up
about 28 per cent of Diageos total rev-
enue, fell by two per cent as fast-grow-
ing Turkey, Russia and eastern Europe
helped offset a fall of 19 per cent in
crisis-hit southern Europe.
Faced with sluggish growth in
Europe, Diageo has been on a buying
spree as it looks to tap burgeoning
middle classes in Africa, Asia and
Latin America, where it aims to gain
around half of its profits by 2015.
Chief executive Paul Walsh declined
to comment further on the timing of
its proposed takeover of Indias United
Spirits, which is waiting regulatory
Price rises help
Diageo offset
European woes
BY KASMIRA JEFFORD
approval by Indias Securities and
Exchange Board.
When complete, it will be a gigantic
milestone for Diageo in building our
presence in the worlds largest Whisky
market, he said.
Diageo saw underlying sales in Asia,
which now accounts for about 14 per
cent of sales, rise six per cent, dragged
down by a contraction of the whisky
market in South Korea.
Sales in Africa rose 10 per cent, driv-
en by strong growth in spirits like
Johnny Walker and in beer.
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THE US government yesterday filed
a lawsuit in a bid to stop Anheuser-
Busch InBev (AB InBev) from buying
the half of Mexican brewer Grupo
Modelo that it does not already
own, saying the $20.1bn deal could
mean higher US beer prices.
AB InBev said it will fight back in
federal court, calling the Justice
Departments decision to sue to
stop the deal inconsistent with the
law, the facts and the reality of the
market place.
The company said in a statement,
however, that it no longer expected
the deal to close in the first
quarter.
AB InBev, which bought
Anheuser Busch in 2008, was the
top US brewer by far with 47 per
cent of the US beer market going
US sues to block $20bn AB Inbev
takeover of Mexicos Modelo
BY CITY A.M. REPORTER into the Modelo deal. It owns 200
brands of beer, according to the
Justice Department complaint.
Because of its scale, the company
crafted an agreement under which
AB InBev would sell Modelos 50-
per cent stake in Crown Imports,
its US distributor, to Constellation
Brands for $1.85bn. Constellation
was already Modelos partner in
Crown. AB InBev said that since it
would sell Modelos stake in
Crown, its US market share would
not go up.
But this did not satisfy the Justice
Department. If ABI fully owned
and controlled Modelo, ABI would
be able to increase beer prices to
American consumers. This lawsuit
seeks to prevent ABI from
eliminating Modelo as an important
competitive force in the beer
industry, it said in a statement.
Big four tax bosses defend their
firms during grilling from MPs
TAX heads at the big four
accountancy firms clashed with
MPs yesterday over their role in
helping large companies to reduce
their tax bills.
Margaret Hodge, who chairs the
public accounts committee, called
for PwC, KPMG, Deloitte and Ernst
& Young to be banned from doing
work for the government in light
of the loopholes they find for
corporations.
She added that she was
shocked to hear claims from a
BY MARION DAKERS
PwC employee that tax products
will be approved if there is just a
one in four chance of it being
cleared by HMRC.
That means you are knowingly
marketing these schemes to clients
when youve judged that there is a
75 per cent risk of it being deemed
unlawful, she said. PwCs tax boss
Kevin Nicholson said he did not
recognise the practice.
The four accountants rejected
the idea that they made more
money from tax advice than other
parts of their businesses, and
insisted that their advice follows
the law and the informed wishes of
their clients.
KPMGs Jane McCormick said
there was no appetite among
customers to create tax schemes
outside the law.
The committee has previously
grilled bosses from Starbucks and
Amazon, both of whom have come
under fire for their overseas
corporate structures.
The political fight over tax
avoidance last week prompted
Prime Minister David Cameron to
ask individuals and corporations
to pay their fair share.
BIG FOUR MPs
We dont mass market tax
products, we dont mass
produce tax products, we dont
promote tax products.
We are giving the best advice we
can to companies that compete
internationally, which is legal, fully
disclosable to HMRC and open to
challenge.
Tax work is not more protable
than other work. Tax compliance
makes up 40-45 per cent of busi-
ness, which is fundamen-
tally lower margin.

You all choose to focus on


working in an area which
reduces the available resources for
us to build schools, hospitals,
infrastructure.
This is a huge industry. In the UK
alone, getting on for 2bn. Youre
all incredibly well paid people, very
sophisticated, very well versed.
Im not, but it seems to me that the
main purpose of what youre doing
is to try to minimise the tax either
wealthy individuals or
corporations pay.

WHAT THEY SAID


IN BRIEF
Ryanair loses compensation case
nIrish budget carrier Ryanair has
been ordered by Europes top court to
compensate passengers delayed by a
volcanic ash cloud in Iceland in 2010, in
a ruling that could expose other
airlines to similar claims from
disgruntled travellers. The court said
EU rules require airlines to compensate
travellers for delays caused by
unforeseen events. Ryanair said the
decision could materially increase the
cost of flying across Europe.
Euromoney revenue holds steady
nEuromoney Institutional Investor,
the financial events and information
group, saw a slight uptick in revenues
during the quarter to January,
although the company said it expects
challenging trading conditions to
continue for the foreseeable future as
the financial services industry
continues to see squeezed budgets.
Although subscription revenues held
fairly steady, Euromoney was hit by a
10 per cent fall in advertising revenue.
Halfords appoints JP Morgan
nBicycle and car parts retailer
Halfords yesterday appointed JP
Morgan Cazenove as its joint corporate
broker alongside Investec Bank. JP
Morgan Cazenove replaces Bank of
America Merrill Lynch, which helped
list Halfords in 2004. JP Morgan
Cazenoves covering of Halfords will
be led by head of UK investment
banking Laurence Hollingworth, and
Luke Bordewich, executive director on
the UK consumer team.
AN IMPRESSIVE showing from
BSkyBs new on-demand internet
streaming service, Now TV, helped it
to a 10 per cent rise in profits, the
broadcaster said yesterday.
Sky said that half of the 50,000 new
TV customers it signed up during the
last six months of 2012 were for Now
TV, which charges customers 15 a
month for on-demand access to Skys
movie catalogue on internet-connect-
ed devices such as PCs and tablets.
The company also managed to
move more customers onto lucrative
triple-play plans, in which they buy
broadband and landline telephone
subscriptions as well as TV services.
The average Sky customer now pays
568 per year.
The lower costs associated with
triple-play contracts meant Sky saw a
10 per cent rise in half-year profits to
487m, even as revenues rose at a
slower rate to hit 3.5bn.
Sky also announced yesterday it
would show its live sports channels
on Now TV, a move that is expected
to drive adoption of the platform
New TV services
lift Skys profits
as rivals circle
BY JAMES TITCOMB
and expand Skys appeal to those who
do not want to pay the minimum
42.50 a month a Sky Sports TV pack-
age costs. However, at 9.99 for 24
hours viewing, regular use of the
service will be pricey.
Sky has launched Now TV and
improved its internet-based services
this year in a bid to fend off increas-
ing competition from the likes of
Netflix and Lovefilm as more people
watch content on smartphones and
tablets. Bringing sports to Now TV
will also defend Sky against BT, which
will start its own sports program-
ming from the summer, discounting
it for BT customers.
British Sky Broadcasting Group PLC
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790
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cityam.com
INSIDE
TRACK
DAVID HELLIER
W
ith the first month of the
year out of the way, most
investment bankers are
beginning to feel a little bit
chirpier at least those of them
lucky enough still to be in a job.
In Europe, January has brought a
few large deals to the markets, includ-
ing ArcelorMittals $3.5bn (2.21bn)
mandatory convertible bond and the
sale of a 12 per cent stake in the
Polish lender PKO BP to raise $1.75bn
for the government there.
In the UK, in a deal advised by JP
Morgan and Deutsche Bank, Phoenix,
the life assurance group, finally made
a breakthrough in its restructuring
talks with its banks as it unveiled a
250m equity issue as part of a debt
repayment plan.
The deal was unusual in that Sun
Capital, one of the companys major
shareholders, found an equity part-
ner in Och Ziff and took much of the
pressure off the bank advisers.
But theres also no doubt that the
relative stability of the financial mar-
kets played a part in getting the deal
done now rather than at any other
time in the past 18 months that it has
been discussed.
One senior equity capital markets
banker told me this week that hes
looking at a 15-20 per cent uplift in
deals this year, comprising increases
in mergers & acquisitions, sales of
large stakes and equity and debt
money raisings. The dialogue is
more focused, he said.
Sadly the upturn in Europes capital
markets doesnt yet seem to have fil-
tered through to Londons still strug-
gling IPO market.
Investors consider the market virtu-
ally dead, although there are signs of
life with the imminent flotation of
the housebuilder Crest Nicholson.
Advisers to this deal, which is
expected to value the group at
around 500m, began bookbuilding
yesterday, having marketed in
Edinburgh and New York as well as
London and Frankfurt.
Some have criticised bank syndi-
cates in the past for not seeing
enough institutions but Barclays,
Numis and HSBC insist they will see
hundreds of different potential
investors before the deal closes, some-
time in mid-February.
Unlike the flotation of Direct Line,
the insurance group that was partly
sold off by RBS bank before
Christmas, there will be no retail
offering. Advisers say this is a size
thing, but its a pity nonetheless.
The great hope for retail participa-
tion will be the flotation of the Royal
Mail, if it ever comes off. On that one
advisers feel there is a real chance of
involving the retail investor in a way
that hasnt happened since the
privatisations of the 1980s.
Meanwhile, the debate over the IPO
process continues. Legal & General
Investment Management (LGIM) has
proposed several changes, including a
plan that fees for the banks should be
based on a post issue share trading
performance.
One suggestion being advocated by
STJ Advisors, capital market special-
ists, to further the investor education
process, is to encourage a company
being listed to allow analysts to
attend the pre-IPO analysts briefing
session, even if the analysts firm is
not part of the syndicate. That sounds
sensible to me.
david.hellier@cityam.com
APPLES share of the tablet market
fell over the Christmas period,
even as it sold record numbers of
iPads, according to research.
Figures from market analysts
IDC claim that the iPad and iPad
mini accounted for 43.6 per cent
of worldwide sales in the fourth
quarter of 2012.
This was down from 51.7 per
cent in the same period last year
and 46.4 per cent on the previous
quarter. Although Apple sold a
record 22.9m iPads in the
quarter a 49 per cent increase on
last year it still did not grow as
fast as the overall tablet market.
IDC said tablet shipments hit
52.5m in the quarter. This was 75
Apples slice of the tablet pie
shrinks in the fourth quarter
BY JAMES TITCOMB
per cent up year-on-year,
displaying the incredible shift as
consumers bought tablets instead
of personal computers. According
to another research firm, Gartner,
PC shipments fell to 90m units in
the fourth quarter.
A similar level of growth again
in 2013, although deemed unlikely,
would see tablet sales overtake PCs
by the end of the year.
Although Apples market share
fell, it still retained a sizeable lead
on second-placed Samsung, which
more than doubled its share to
15.1 per cent. Amazons Kindle
range took 11.5 per cent of the
market.
However, Microsoft, which
launched its Surface tablet in the
period, did not make the top five.
LUXURY conglomerate LVMH said yesterday it aims to keep growing in 2013 despite
Europes uncertain economic environment, as it posted improved fourth-quarter figures.
Sales rose eight per cent in the quarter to the end of December, up from six per cent the
previous quarter. The group reported 13 per cent growth in full-year profit to 5.9m (5m).
LVMH UPBEAT ON GROWTH AS PROFITS JUMP
Time Warner disappoints
as customer numbers fall
Time Warner Cable added fewer high-speed
Internet users than expected in the fourth
quarter and missed analysts estimates for
earnings growth and cash flow this year.
Average revenue per customer rose to
$119.83 from $117.58 in the third quarter. Net
income for the fourth quarter fell to $513m
from $564m a year earlier.
Advertising revenue drags
down turnover at Viacom
SpongeBob SquarePants and the Teenage
Mutant Ninja Turtles could not lift ad sales at
Viacoms stable of cable networks, which
dragged down first quarter total revenue.
Viacom reported total revenue fell 16 per
cent to $3.3bn, shy of analysts average
forecast of $3.48bn. Net income fell to
$473m from $591m a year earlier.
Colgate-Palmolives sales
slow but profit still rises
Colgate-Palmolive said yesterday a key
measure of sales growth slowed for the
second quarter in a row, partly due to
economic and labour problems in
Venezuela. It earned $598m, or $1.26 per
share, in the fourth quarter, up slightly from
$590m, or $1.21 per share, in the quarter a
year earlier. Sales rose 2.5 per cent to
$4.29bn, missing analysts target of $4.31bn.
Dow Chemical shares drop
after results disappoint
Dow Chemical reported a lower-than-
expected adjusted profit yesterday as
international demand for polyurethane and
chlorine withered, especially in China and
Europe. For the fourth quarter, Dows net
loss widened to $716m, or 61 cents per share,
from $20m, two cents per share, in the year-
earlier quarter. Excluding one-time items,
the firm earned 33 cents in the quarter.
Occidental Petroleum's
profit slumps on $1.1bn hit
Occidental Petroleum , the fourth-largest US
oil company, reported a 79 per cent drop in
quarterly profit yesterday as it wrote down
the value of certain gas properties by $1.1bn.
The companys net profit fell to $336m, or
45 cents per share, in the fourth quarter
from $1.6bn, or $2.02 per share, a year
earlier. Revenue rose two per cent to
$6.17bn.
US CORPORATE RESULTS
ROUND UP
Dealmakers already confident of better times ahead
BREWIN Dolphin, the 250-year old
investment manager, yesterday said
quarterly revenues shrank five per
cent in the three months to the end
of 2012 due to new payment rules
from the City watchdog.
The firm, which traces its roots
back to Londons first ever stock
exchange, enjoyed good revenue
increases annually but was hit in the
short term by preparations for new
Retail Distribution Review (RDR)
rules, which are laid down by the
Financial Services Authority.
It reported revenues of 67.8m for
the fourth quarter, almost 14 per
cent ahead of total revenues at the
end of last year, but five per cent
behind figures clocked at the end of
September.
Preparations for the rules, which
are now in force, curtailed commis-
sion fee income, hitting revenues
over the quarter, it said.
Brewin said that while still invest-
ing in the business it was now focus-
Brewin Dolphin
hit by new FSA
adviser rules
BY MICHAEL BOW
ing on cost control after the tough
trading environment last year.
Future efforts will not be limited to
further investment in systems and
people but will also encompass a pro-
gramme of organisational efficiency,
underpinned by rigorous and disci-
plined cost control, it said.
Brewins money management arm,
which runs investments on a discre-
tionary basis, also steadied its assets
under management, with the cash
pot under its wing at 26bn, 100,000
up from last quarter, helped by posi-
tive market movements.
Simon Borrows joined 3i as chief executive last summer
Brewin Dolphin Holdings PLC
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3i stresses the success of its cost
savings and plans further sales
PRIVATE equity firm 3i Group
yesterday talked up the success of
its cost-cutting measures as it
reported steady gains from its
investments.
With one eye on activist investor
Edward Bramsons recent stake-
building, 3i chief executive Simon
Borrows said he expects to beat
savings targets for this financial
year.
Since the announcement of our
new strategy in June last year, the
discount of 3is share price to
BY MARION DAKERS
reported net asset value per share
has narrowed materially, said
Borrows.
Borrows, who took the top job
last summer following a wave of
shareholder disquiet, has cut jobs
and closed offices as the firm
tightens focus on northern Europe.
He added that the firm will exit
more of its investments in the
coming 18 months.
This follows a subdued final nine
months of 2012, in which the firm
sold off 318m-worth of assets for a
profit of 74m.
The company said that its net
asset value grew 4.8 per cent to
286p a share in the last quarter.
Gross debt, which stood at
1.2bn at the end of the year, is on
track to fall below 1bn by June.
This week 3i revealed that
Bramsons Sherborne Investors and
its broker Jefferies had been buying
shares in the company.
Bramson, known for his
boardroom coup at F&C, has not
yet been in touch with 3i to declare
his intentions, the firm confirmed
yesterday.
Shares in 3i Group closed down
3.4 per cent at 263.2p.
INVESTEC, the South African
money manager, yesterday said it
overcame a weaker rand to
increase annual operating income
by one per cent in the nine
months ending December 2012.
The dual listed company, which
trades in London and
Johannesburg, posted the increase,
net of depreciation on operating
leased assets, despite a 13 per cent
slide in the average rand-sterling
exchange rate over the nine month
period.
The business also saw its assets
under management defy weak
investor confidence and Eurozone
turmoil last year to attract 2.8bn
of net inflows, boosted by a 12 per
cent rise in third party assets on a
Investec trumps rand weakness
to increase its income for 2012
BY MICHAEL BOW
currency neutral basis. The rand
plummeted last year and is trading
at a three year and a half year low
to sterling.
The 38-year old money manager,
whose managing director is horse
racing aficionado Bernard Kantor,
also announced the departure of
non executive director Sam
Abrahams, also chairman of its
audit committee, after 15 years
serving on the board.
His replacement, David
Friedland, is currently a partner at
KPMG in South Africa and will
retire from there in a month.
Shares in the Gresham Street-
based firm fell more than two per
cent on the FTSE 250 yesterday
after the news, correcting a spike
on Tuesday following a Morgan
Stanley upgrade on the stock.
IN BRIEF
China may be set for correction
nChina and other capital expenditure-
driven economies may face a downturn
when poor investments come home to
roost, Standard & Poors warned
yesterday. What we found is that China
has the highest risk of an economic
correction because of low investment
productivity over recent years, said S&P
credit analyst Terry Chan. The ratings
behemoth said China had an
investment overhang because capital
spend was so high relative to growth.
Global finance chiefs less gloomy
nFinance professionals across the
world were more upbeat about the
global economys prospects by the
fourth quarter of last year, according to
data out yesterday. Thirty per cent of
respondents to a poll carried out by two
accountancy bodies said the world was
on its way to recovery, up one
percentage point. But the optimists
were still outweighed by more than
double as many pessimists who thought
the global economy would worsen.
UK construction plunges further
nBuilding activity in the UK fell yet
further in January, according to
numbers released this morning.
Glenigans index for the sector was a
full 18 per cent lower in January 2013
than in the same month a year earlier,
driven down by collapsing
infrastructure starts down 44 per
cent over the year. The only positive
note for builders was the one per cent
pick-up in social housing activity.
S
O
U
R
C
E
:

N
A
T
I
O
N
W
I
D
E
HOUSE prices swung back into
growth in January, according to
Nationwides latest house price index.
Prices grew 0.5 per cent over the first
month of 2013, the data showed, so
that the index was back to almost
exactly the same level as during
January 2012. This marks the first
time in 11 months the annual change
has been positive, it said.
Nationwide chief economist Robert
Gardner put the improvement down
to the Funding for Lending Scheme,
which he said had achieved some
success in bringing down mortgage
rates, with some signs of a pick up in
lending activity.
Despite the bumpy overall picture
painted by the Nationwide numbers,
separate data from LSL Property
Services suggested that the first-time
buyer segment of the market had
improved significantly over the year.
December 2012 saw 17.7 per cent
more transactions involving first-
UK house prices
back in black at
end of January
BY BEN SOUTHWOOD
timers, LSL said, though these buyers
faced less generous mortgages, taking
up smaller loans relative to the value
of their purchases.
And more encouraging news came
from Marsh & Parsons London prime
market monitor, which showed more
Londoners upsizing at the top end of
the market. Nineteen per cent of all
moves in the fourth quarter of last
year were upsizes, compared to 14.5
per cent in the previous quarter, the
estate agent said, and compared to 17
per cent a year before.
IFS blames zombie companies
for devouring UK productivity
MISALLOCATED capital, tied up in
zombie firms, rather than
funding new projects, is reducing
the UKs productivity, according
to a prominent think-tank.
Capital has not been able to
move from low-productivity to
high-productivity projects, the
Institute for Fiscal Studies (IFS)
said this morning, slowing down
the speed of the capital
adjustment required to ramp up
productivity.
And business investment has
stayed 16 per cent below the pre-
recession peak, the IFS pointed
BY BEN SOUTHWOOD
out, due to uncertainty over
future economic conditions, and a
substitution towards relatively
cheap, and more quickly
adaptable labour.
The fall in labour productivity
seems to have been driven by low
real wages and low firm
investment, said IFS research
economist Wenchao Jin.
Important in this movement is
the UKs flexible labour market,
the IFS says, which has allowed
real wages to fall, and prevented
economic inactivity rising as in
recessions in the 1970s and 1980s.
By contrast, labour hoarding
cannot explain the productivity
puzzle, the think-tank said, as
employment is on its way up,
rather than simply falling very
slowly, and has snapped back from
an initial fall.
The decline in financial services
jobs typically highly
productive is another
explanation that does not cut the
mustard, the authors say, since all
industries have seen effectiveness
decline. Productivity slowdown
has happened right across the
economy, Jin commented. It has
not been driven by a change in the
composition of the economy nor
by a change in the composition of
the workforce.
Germany sees employment rise
despite crisis across Eurozone
GERMAN employment soared in
December, despite the devastating
repercussions of the Eurozone
crisis.
Official statistical body Destatis
yesterday revealed that 291,000
more German residents were in
employment in December 2012
than during the same month a year
before, bringing the total to 41.8m.
Unemployment declined 77,000
as well, bringing the total to 2.25m,
or 5.3 per cent of the economically
active population.
More welcome news came from
the banking sector, with credit
BY BEN SOUTHWOOD
constraints on German trade and
industry down 0.8 percentage
points according to Ifo, the
economic research institution. Now
just 20.3 per cent of German firms
report restrictive credit policies
from banks.
And this continued employment
and credit market improvement
came despite a drastic drop in retail
turnover down 4.7 per cent in real
terms over the same period, also
according to Destatis.
But German strength was set
against weakness in yesterdays data
regarding the rest of the single
currency bloc.
French household consumption
inched down 0.1 per cent in volume
terms between the third and fourth
quarters, despite the impact of
Christmas. Spending on
manufactured goods fell 0.8 per
cent the biggest fall since 1993.
Spanish data was less downbeat,
with inflation creeping down and
tourism edging up. The consumer
price index for Spain grew 2.6 per
cent in the year to January,
according to Ine, the official
statistical body, down from 2.9 per
cent in December and November.
A separate release from Ine
showed that December also enjoyed
a 1.1 per cent increase in stays in
tourist accommodation.
January growth leads to at annual picture
Jan13 Oct12 Jul 12 Apr12 Jan12 Oct11 Jul 11 Apr11 Jan11
-1.0
-0.5
0
0.5
1.0
-3.0
-2.5
-2.0
-1.5
1.5
2.0 Annual change inhouse prices, %
Nationwide
House Price Index
Average of all
House Price Index
EURO area house prices sunk
over the 12 months to the third
quarter last year, as the blocs
economic travails took their toll.
Prices were down 2.5 per cent
between July and September,
Eurostat revealed yesterday,
compared to the same period a
year before.
In the wider EU, prices were
down 1.9 per cent over the same
period, as some of its non-
Eurozone members escaped the
effects of the currency blocs
sovereign debt crisis.
Worst hit was the Eurozones
Value of Spanish homes drops
15.2pc as recession takes a toll
BY BEN SOUTHWOOD beleaguered fourth-biggest
economy, Spain, where house
prices plummeted 15.2 per cent
over the year.
Ireland and the Netherlands
also suffered corrections close to
double figures.
By contrast, Estonia was
enjoying a house price boom,
with values climbing some 8.4
per cent over the year.
After Luxembourg, where
prices grew 7.1 per cent in the
year to the third quarter 2012,
the next fastest growth was in
Finland 2.1 per cent and in
the UK and Belgium 1.8 per
cent.
FRIDAY 1 FEBRUARY 2013
9
NEWS
cityam.com
Spanish, Irish and Dutch house prices collapsed the furthest over the year
NEW US unemployment insurance
claims climbed in the penultimate
week of January, according to
Department of Labor data out
yesterday.
But just a month before, in
December, personal incomes were
still rising, according to a separate
release from the Bureau of
Economic Analysis (BEA).
Personal income climbed 2.6 per
cent, or $352.4bn (222.1bn),
between November and December,
the BEA said, adding to the
$135.8bn income boost US
residents enjoyed in November.
Still, the more recent jobless
claim data was gloomy, with a
38,000 weekly jump in seasonally
Ranks of jobless in US expand
but personal income improves
BY BEN SOUTHWOOD
adjusted claims bringing the total
to 368,000, within touching
distance of the 381,000 new claims
seen in the same week last year.
Total unemployment insurance
claims, also seasonally adjusted,
also jumped, the newest data
showed, from 3,175,000 in the
week ending 12 January, to
3,197,000 in the following week.
But economists took the jump
with a pinch of salt, suggesting
that it came mainly due to
volatility in the new claims
numbers. Were not alarmed by
the rise in the number of initial
jobless claims, said Capital
Economics Paul Dales. This just
reverses some of the previous
sharp falls without altering the
gradual downward trend.
JAPANESE industrial production
jumped in December, but remains
sharply down on the year after a
territorial dispute with China hit
trade between companies in the
two countries.
Output climbed 2.5 per cent in
the last month of 2012, according
to statistics released by the
Japanese ministry of economy,
trade and industry yesterday, the
fastest expansion in 18 months.
However, the growth came in
below market forecasts, averaging
at 4.5 per cent, and follows a 1.4
per cent decline in November.
And factory output is still some
7.8 per cent below where it was in
December 2011, after a year in
Japan industrial production up
but China trade woes still felt
BY BEN SOUTHWOOD which disputes over the Senkaku-
Diaoyu island chain drove boycotts
of Japanese goods in China.
Other bearish news came from
Markits manufacturing
purchasing managers index (PMI)
business survey for January,
released late Wednesday night.
This widely-regarded index
climbed from 45 in December to
47.7 in January suggesting a
slowdown in the rate of factory
decline, but still a substantial
slowdown in the sector.
Operating conditions for
Japans manufacturing sector
remained challenging at the start
of 2013, with a number of key
barometers stuck in contraction
territory, said report author Paul
Smith.
CASINO operator Ranks luck was
mixed during the second half of last
year, as good online and casino per-
formances were overshadowed by dif-
ficulties at its Mecca bingo halls and
Blue Square sports betting business.
Operating profits at its Grosvenor
casinos rose by a third and its Mecca
bingo business saw digital revenues
overtake those from bingo halls for
the first time.
However, the company said yester-
day that the January snow had hit
trading in the last two weeks, and
that increased costs in its bingo halls
and at Blue Square business had led
to a fall in overall profits.
The Blue Square division, which
Rank is exploring a sale of, saw its
operating losses treble in the period
to 4.8m, making a successful dispos-
al look unlikely.
Overall, Rank saw pre-tax profits
fall 19 per cent to 15.3m in the six-
month period, which represents the
first half of its financial year.
Tough odds for
Rank Group as
profits decline
BY JAMES TITCOMB
Turnover rose from 296m to 312m.
Its been a difficult first half,
theres no question about that, chief
executive Ian Burke said, although he
said the company had a big opportu-
nity to use the Grosvenor brand to
expand its online casino operation.
Ranks 205m deal to buy Galas 23
casinos has been put on hold by the
Competition Commission, which is
set to report back on 20 February.
If the deal is cleared, Rank and Gala
will have to reach a new agreement,
as the original deals deadline passed
last September.
FRIDAY 1 FEBRUARY 2013
10
NEWS
cityam.com
Angela Spindler named as the
new chief executive at N Brown
CATALOGUE and online fashion
retailer N Brown has hired Original
Factory Shop chief executive
Angela Spindler to succeed its
outgoing boss Alan White.
The company, which targets
older and larger shoppers with
brands such as Simply Be and
Jacamo, said Spindler will join the
firm before July to ensure a smooth
succession.
White will retire after 25 years
and plans to build a portfolio of
non-executive directorships.
BY KASMIRA JEFFORD
Spindler headed the Original
Factory shop since 2009, where
she has led the value retailers
fast-growing expansion.
She kicked-off her career at
Coca-Cola, before spending ten
years in a number of
marketing and sales roles
at Pedigree Masterfoods. In
1997, she joined Asda,
eventually becoming
global managing director
of its 2bn clothing
label George in 2005.
She left in 2007 to
take up the role of
managing director at department
store group Debenhams.
N Brown chairman Andrew
Higginson said Spindler has
the personal qualities to lead
the team, and the business, as
it continues its growth
online and
internationally.
Shares rose 2.3 per
cent yesterday on the
announcement.
Angela Spindler is to join
N Brown as CEO in July
PUB chains Mitchells & Butlers and Enterprise Inns both blamed the heavy snow during
January for poor trading over the past few weeks. The companies, which own around
7,600 establishments between them, said that despite strong Christmas sales, a dismal
January meant performances over recent weeks have been down year-on-year.
SNOW HITS ENTERPRISE INNS AND M&B
IN BRIEF
Cranswick signs 30m Asda deal
n Sausage-maker Cranswick said
yesterday it has signed a deal to
become Asdas main fresh pork supplier
thought to be worth around 30m. The
news came as it posted a seven per cent
rise in underlying third quarter revenue
despite record pig prices in the UK. It
said input costs rose during the quarter
to 31 December, with UK pig prices
reaching a record level in December.
Successful pricing talks with customers
helped partially mitigate the full impact
on margins, Cranswick said.
Great Portland sees value jump
n Great Portland Estates, the West End
focused property developer, said the
value of its portfolio rose 1.4 per cent
excluding acquisitions and disposals in
the third quarter as it saw an increased
level of demand for its retail assets. Net
asset value per share for the period was
430p at 31 December 2012, up 11.4 per
cent on the previous year, driven by
growth in rental values of 0.7 per cent.
LondonMetric makes first buy
n LondonMetric Property has snapped
up six retail warehouses for 92.4m, its
first acquisition since the company was
created through the merger of London
& Stamford Property and Metric
Property Investments this month. The
retail parks, all near London, are 98 per
cent let to tenants including B&Q and
Halfords, it said yesterday.
Rank Group PLC
31 Jan 25Jan 28Jan 29Jan 30Jan
154
156
152
150
158
160 p
150.40
31Jan
11
cityam.com
FRIDAY 1 FEBRUARY 2013
cityam.com/the-capitalist
THECAPITALIST
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
WEDNESDAY nights ninth annual
Quoted Company Awards, this year
held at the Natural History Museum,
was a considerably more cheerful
affair than in recent years, thanks to
celebrity impressionist Rory Bremner.
Winners included Lupus Capitals
Martin Towers for non-executive
director of the year, Snoozebox
Holdings for
IPO of the year, Entertainment Ones
purchase of Alliance Films as deal of
the year, Playtech for AIM to Main,
Delcams Clive Martell as top chief
executive officer and entrepreneur of
the year went to Bernard Van
Bilderbeek from Plexus Holdings.
After the trophies had been dis-
persed, Bremner rounded off the
evening with impressions
including Bill
Clinton, John
Prescott, President
Obama, Tony Blair,
David Cameron and
that other political
big dog, the X
Factors Louis Walsh.
L to R: Lupus Capitals
Martin Towers, Bernard
Van Bilderbeek of Plexus
& Delcams Clive Martell
Oh the mixed blessing that is
social media. At best a cheap
marketing tool, but at worst (and in
the wrong hands) a public relations
ticking timebomb as HMV is
discovering. The music retailer, which
is now in administration, felt the wrath
yesterday of disgruntled employees
who chirped from the @hmvtweets
account Were tweeting live from HR
where were all being fired! and
minutes later: Just overheard our
marketing director
(hes staying,
folks) ask How
do I shut down
Twitter?
#cringe anyone?
The rather bullish campaign to
advertise The View, the gallery
from the gods at the top of the Shard,
launches today. With the punchy
taglines Stop Staring Up. Start
Looking Down and Londons Highest
and Best View it is no surprise to
learn that the masterminds behind it
are Clive Yaxley and Jerry Gallager
from M&C Saatchi, the agency
responsible for the famous (and much
parodied) Vote Conservative adverts.
The bold election posters bearing a
large image of Gordon Browns face
alongside the words I doubled the
national debt and I let out 80,000
criminals Vote for me certainly
embody the Saatchi brands mantra of
brutal simplicity.
OFFICE workers with a window
seat in Canary Wharf can amuse
themselves, until 15 February,
with interactive art installation
The Voyage.
The 300 illuminated boats that
comprise the piece can be seen
floating in the Wharfs Middle
Dock; and any bored bankers can
change the colours and patterns of
the lights from their mobile
phones.
To interact with the art
connect to the Voyage Wi-Fi
network and follow instructions
on the voyage.co.uk website.
The Voyage art installation by architect Claudio Benghi and lighting artist Gloria Ronchi
Sail away: Floating interactive
artwork lights up Canary Wharf
Small cap stars
celebrate with
the dinosaurs
L
A
U
R
A

L
E
A
N
/
C
I
T
Y

.
M
.
SHARES in platinum miner Lonmin
soared yesterday as it showed signs of
shrugging off its troubles at Marikana
last year.
The worlds third-largest platinum
miner said yesterday that production
in the first quarter had substantially
exceeded the planned ramp-up to
full platinum output.
Lonmin said it mined 2.7m tonnes
over the year from the Marikana oper-
ations in South Africa, down just one
per cent on the prior year.
Sales of the metal also jumped 16.7
per cent over the year to 108,342
saleable ounces.
The wildcat strikes at Marikana,
which started in August, led to a six-
week shut down and caused Lonmin
to lose 110,000 ounces of production.
Platinum has also come under pres-
sure from the slump in European car
demand. The combination of violent
strikes and a fall in demand led to
Lonmin launching a $817m (515m)
rights issue last year.
Lonmin output
bounces back
after hard year
BY CATHY ADAMS
The FTSE 250 miner yesterday reiter-
ated its guidance of 660,000 ounces of
platinum and spending guidance of
around $175m for its financial year
ending September 2013.
Alison Turner at Panmure Gordon
said yesterday that Lonmins rapid
recovery from the strike shows a fun-
damental improvement in Lonmins
operating performance.
In addition, Lonmin has appointed
HSBC as joint broker alongside JP
Morgan Cazenove. Shares closed up
14.29 per cent yesterday at 360p, after
losing almost half their value last year.
DEMAND for global air travel will slow again this year, but freight markets will recover
from a decline in 2012, the International Air Transport Association (IATA) said yesterday.
Passenger traffic grew 5.3 per cent last year, IATA said in its annual update.
DEMAND FOR AIR TRAVEL TO LOSE ALTITUDE
Lonmin PLC
31 Jan 25Jan 28Jan 29Jan 30Jan
340
350
330
320
360
370 p 360.00
31Jan
FRIDAY 1 FEBRUARY 2013
13
NEWS
cityam.com
IN BRIEF
Lamprell advances debt talks
n Rig maker Lamprell has made good
progress in discussions with its lenders
over the refinancing of its debt, it said
yesterday. The Middle East-focused firm
also reiterated its previous loss
guidance and said the working capital
situation continues to be healthy.
Kazakhmys copper output drops
n Copper miner Kazakhmys said
yesterday full-year copper cathode
output fell two per cent on lower
grades. The Kazakhstan-based
company produced 292,200 tonnes of
copper cathode from its own
concentrate, down from 298,500
tonnes a year earlier.
Vedanta oil and gas output jumps
n Oil and gas production jumped 21 per
cent over 2012 for India-focused
Vedanta, the firm said yesterday. Group
earnings were 31 per cent higher last
year than in 2011, helped by a strong
performance from its Indian oil and gas
unit Cairn India.
SSE forecasts rise in profits
n Energy firm SSE yesterday said its
full-year profits could be up to five per
cent higher, adding that it was on
course to deliver an increase in the
dividend. The energy giant, which hiked
prices last year, also said it lost more
than 100,000 UK customers over the
nine months to December.
Ogier
The law firm has
appointed three
new partners.
Matthew Newman
joined Ogier in
2008 from DLA
Piper. Rachael
Reynolds joined in
2008 from Clyde & Co. Nick Williams joined
in 2007 from Clifford Chance.
Freshfields
The law firm has appointed David Haworth
as head of its London tax practice. He
succeeds Sarah Falk. Haworth works on tax
aspects of complex financial transactions,
including derivatives, and debt and equity
capital markets.
Deloitte Real Estate
The real estate consultancy has announced
three new appointments to its London
valuation team. Wendy Robertson joins as a
director from BNP Paribas Real Estate.
Varun Ghai joins as a senior surveyor from
DTZ in Paris. Gareth Thomas joins as a
senior surveyor from Jones Lang La Salle.
Holley Holland
The financial services consultancy has
appointed Richard Hallt as principal
consultant. He has over 25 years
experience in the industry, and has worked
at a senior consulting level with Ernst &
Young, Thompson Reuters, JP Morgan,
Fidelity, and Threadneedle among others.
Jones Day
The law firm has appointed Sheila
Shadmand as partner in charge of its Dubai
office. She has worked for Jones Day since
1997. Shadmand succeeds Arman Galledari.
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
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FRIDAY 1 FEBRUARY 2013
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In association with
LONDONREPORT
L
ONDONS top shares closed
lower yesterday as downbeat
company earnings and mixed
global economic data triggered
the sharpest one-day fall on the FTSE
100 since mid-November.
Earnings were in focus after updates
from British oil heavyweight Royal
Dutch Shell and drugmaker
AstraZeneca, and Facebook in the
United States, disappointed.
Shell alone took 16 points off the
blue chip FTSE 100 index after its
fourth quarter profit came in nearly
$400m short of expectations.
The FTSE closed down 46.23 points,
or 0.7 per cent at 6,276.88, edging away
from mid-May 2008 highs of 6,376.
AstraZeneca shed 3.1 per cent after
warning of a tough year ahead, while
in the United States social network
Facebook fell 3.8 per cent after its
growth trailed the more aggressive
estimates.
Temporary power provider Aggreko
took its losses over the last five trading
days to more than 11 per cent, with
traders citing recent press speculation
about the potential for another warn-
ing on earnings when it reports in
March.
British banks meanwhile face anoth-
er round of compensation claims that
could total billions of pounds after the
regulator found they had widely mis-
sold complex interest-rate hedging
products to small businesses. Royal
Bank of Scotlandshed 1.1 per cent fol-
lowing the finding.
Retailer Kingfisher fell 1.5 per cent
after Nomura cut its target price and
earnings estimates by 6 per cent on
the firm as it took a more pessimistic
view of the UK market.
Recent results have put a dampener
on investor optimism, which helped
push markets up towards four-and-a-
half year highs.
While 70 per cent of European com-
panies have so far beaten or met earn-
ings estimates in the current reporting
season, top analysts still expect fourth-
quarter growth to fall 8.8 per cent year-
on-year.
After rallying six per cent in January,
Shore Capital strategist Gerard Lane
said the FTSE looked way too high
given the near-term risks to earnings
and the US fiscal worries.
However, I still think the FTSE 100
will see 7,000 by the year-end and if
you are a smart investor you invest for
the 7,000 now rather than wait for a
correction that might never happen,
he added.
Investors greeted BSkyBs offer to
show its popular sports channels
online for a daily fee with enthusiasm,
pushing the shares up 1.0 per cent.
The company is seeking new cus-
tomers to offset slowing growth at its
core pay-TV service given sluggish con-
sumer spending.
Diageo was a top riser, up 1.3 per
cent after the worlds biggest spirits
group ended talks to buy a stake in
top-selling tequila brand Jose Cuervo.
FTSE falls again
as weak results
dampen mood
CITY
YOUR ONE-
STOP SHOP
BROKER VIEWS AND
MARKET REPORTS
FTSE
31Jan 25Jan 28Jan 29Jan 30Jan
6,500
6,400
6,450
6,300
6,350
6,200
6,250
6,150
6,276.88
31 Jan
DASHBOARD
Markets ease
ahead of key
jobs numbers
U
S stocks edged lower yesterday
on caution ahead of todays all-
important jobs report, but the
S&P 500 still posted its best
monthly gain since October 2011.
The benchmark S&P 500 advanced
5.1 per cent in January as investors
cheered a compromise that temporar-
ily postponed the impact of the fiscal
cliff and fourth-quarter earnings
were better than expected.
The S&P 500 registered its largest
monthly advance since a rise of more
than six per cent in October 2011 and
the best January showing since a 6.1
per cent jump in 1997. For the month,
the Dow gained 5.8 per cent and the
Nasdaq rose 4.1 per cent.
Investors expect a pullback in equi-
ties after the recent gains, though
they have bought on dips over the
past four weeks. The largest daily
decline on the S&P 500 so far in 2013
was Wednesdays 0.39 per cent drop
after data showed the economy con-
tracted in the fourth quarter of 2012.
The US government is due to release
Januarys employment figures today
at 1.30pm. Economists polled by
Reuters expect non-farm payrolls to
show employers added 160,000 jobs
compared with a rise of 155,000 in
December. The unemployment rate is
likely to hold steady at 7.8 per cent.
A survey by payroll processing com-
pany ADP on Wednesday showed pri-
vate sector employment rose higher
than expected last month, but the
governments measure of jobless
benefits claims increased last week.
The Dow Jones industrial average
closed down 49.84 points yesterday, or
0.36 per cent, at 13,860.58. The
Standard & Poors 500 Index was
down 3.85 points, or 0.26 per cent, at
1,498.11. The Nasdaq Composite Index
was down 0.18 points, or 0.01 per
cent, at 3,142.13. Today will also bring
reports on consumer confidence, U.S.
manufacturing, construction spend-
ing and car sales.
BESTof theBROKERS
STOBART GROUP
Espirito Santo rates the logistics firm sell with a fair value of 70p. The broker has
cut its earnings per share forecasts by around 13 per cent for the next two years,
based on a downbeat update from the firm. Espirito Santo is worried about the
groups high and rising levels of debt, and is also sceptical about the benefits of a
faster than planned asset sale under the new executive chairman.
GLENCORE
UBS rates the commodities giant buy and has a target of 440p. With Glencores
merger with Xstrata due to complete shortly, the broker thinks the enlarged firm will
be less risky and enjoy strong earning momentum, aided by capital discipline and
synergies. UBS also believes that management will be entrepreneurial given their
equity stakes.
MOTHERCARE
Seymour Pierce has a sell rating on the retailer and a target of 200p. Mothercare
is not an easy fix, the broker believes, warning that the brand may never regain its
relevance for modern mothers and noting that competition from online rivals is
fierce. The administration of the firms Australian arm also acts as a cautionary tale
for firms with overseas partners, it adds.
NEW YORK
REPORT
Stobart Group Ltd
25 Jan 28 Jan 29 Jan 30 Jan 31 Jan
p 104
103
102
101
100
99
97
98
96.55
31 Jan
Glencore International PLC
25 Jan 28 Jan 29 Jan 30 Jan 31 Jan
p 398
396
394
392
390
388
386
393.45
31 Jan
Mothercare PLC
25 Jan 28 Jan 29 Jan 30 Jan 31 Jan
p 335
330
325
320
315
310
310.00
31 Jan
A
S THE UK economy skids
towards a triple-dip recession,
many are looking at George
Osborne and his plan A and
wondering whether someone
else could do better. Osbornes own
cat Freya, for instance. If we saved on
Osbornes salary and, in a spirit of
austerity, paid his replacement with
Whiskas and the occasional catnip
chew toy, would we notice any
difference in the quality of decision-
making?
One financially-astute feline that
suggests this idea might not be so
silly after all is Orlando, the
stockpicking cat. Following a long
line of prescient monkeys and other
domesticated fund managers,
Orlando was recently recruited by The
T
HE UK has a desperate need for
growth. But while many of the
means of reaching this goal
tax reform, for instance are
controversial, the need for
innovation is widely accepted.
Economic evidence clearly
demonstrates that a key driver of
growth is the development and
adoption of innovative products and
services.
A natural question would be to ask
what government can do to boost high-
potential ventures and their financiers.
When we look at the worlds great
hubs of entrepreneurial activity
Silicon Valley, Singapore, Tel Aviv, and
Bangalore the stamp of the state is
unmistakable. But for each effective
intervention, there are hundreds of dis-
appointments.
You might conclude that state sup-
port is a casino making bets, with few
guarantees of an attractive return. The
truth, however, is more subtle. When
you examine abandoned efforts to pro-
mote entrepreneurial activity, failure
was mostly predictable. These efforts
had a shared set of flaws in their
cityam.com/forum
Helping universities is
good but many new
entrepreneurs are from
the corporate world
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
FRIDAY 1 FEBRUARY 2013
JOSH LERNER
Why the government will struggle
to deliver a Silicon Valley for Britain
design, and were doomed from the
start.
This can be understood by unpicking
the rationale behind government
efforts to stimulate entrepreneurship.
This rests on two pillars. First, techno-
logical innovation spurs economic
growth. Second, academic research has
highlighted the role of entrepreneur-
ship and venture capital in stimulating
innovation. They have a set of tools
that are well-suited to the task of nur-
turing high risk new ideas. If that were
all there was to it, there would be a
compelling case for public involve-
ment. But the case for intervention
rests on a third leg: the argument that
governments can effectively promote
entrepreneurship and venture capital.
This is a much shakier assumption.
Yes, entrepreneurial markets have
features that suggest there is a role for
government in encouraging their evo-
lution. Put simply, it is easier to be a
start-up founder if there are ten other
entrepreneurs nearby. Here, govern-
ment can play a role as a catalyst.
But there are two major problems.
First, governments simply get it wrong:
allocating funds and support in an
inept or counter-productive manner.
There is also the problem of regulatory
capture. Private and public sector enti-
ties often organise to capture subsidies
handed out by the public sector.
Programmes geared towards helping
nascent enterprises may end up boost-
ing cronies of the nations rulers.
So how can you overcome this?
Crucially, its necessary to ensure that
entrepreneurship is itself an attractive
option. Often, in their eagerness to get
to the fun part of handing out money,
public leaders neglect the importance
of setting the table, or creating a
favourable environment.
Such efforts have several dimensions.
Ensuring that ideas can move easily
from universities and government lab-
oratories is important. And Britain is
doing a lot to encourage this. But many
entrepreneurs come from corporate
positions, not academia. And Studies
have documented that the attractive-
ness of entrepreneurial activity for
these individuals is sensitive to tax pol-
icy. Education is also critical. Creating
training opportunities for mid-career
professionals can pay dividends.
This doesnt mean that government
cant intervene directly in the entrepre-
neurial process. But these efforts must
be designed thoughtfully to be sensi-
tive to the markets dictates.
Governments must avoid the pitfalls
that befall many public initiatives. One
common problem is to ignore the real-
ities of the entrepreneurial process.
Many initiatives are abandoned after a
few years, for instance. The pro-
grammes authors apparently do not
understand that initiatives take years
to bear fruit. Some add requirements
that seem reasonable from a public
policy perspective, but run counter to
the nature of business. In other cases,
programmes are too tiny to have any
impact or so large they swamp already-
existing funds.
But most frequently, governments
create programmes that ignore what
the market can support. Far too often,
officials seek to encourage funding in
industries or regions where private
interest simply doesnt exist. Whether
driven by political considerations or
hubris, the result is waste. The only
effective way to solve this is by
demanding that credible private sector
players provide matching funds. Only
in cooperation with private initiative
can public support for entrepreneur-
ship work.
Josh Lerner is Jacob H Schiff professor at
Harvard Business School, and the author of
The Architecture of Innovation.
Observer to chose stocks by throwing
a toy mouse at a page of numbers. His
choices outperformed a team of
professional fund managers by a
factor of three.
Stockpicking and policysetting may
be different professions, but Orlando
shows that sometimes much more
can be done with less cleverness. A
further wrinkle to the Orlando study
was that tracking the index beat
absolutely everyone, even the cat.
Osborne, being both chancellor and
the top Tory electoral strategist, is a
cunning tinkerer with taxes and
regulation. He apparently imagines
that constant intervention will
maximise both tax receipts and his
partys advantage at the ballot box.
But sometimes the simplest way is
the best: tracking the index or, for a
chancellor, the power of flatter,
simpler taxes to raise receipts and
boost the economy.
While simplicity would be a start,
its not enough. If we dont hire
Orlando to replace Osborne, we
should put Tardar Sauce, the
internets favourite Grumpy Cat, on
our shortlist. Osborne is a blithe and
cheery sort, able to enjoy a pizza at
Davos, even when hes just been told
the latest depressing GDP figures. His
department celebrates its
achievement in bringing the deficit
down by a quarter, despite ballooning
national debt and the creep of its
original deadlines for consolidation.
When it comes to bad news about
your ability to stop spending other
peoples money, an honestly grumpy
face would be an asset.
But if the Treasury wants to start a
more wide-ranging interview process
for 11 Downing Street, they should
send an HR team to Lady Dinahs Cat
Emporium when it opens. Hoping to
be London's first cat cafe, this small
business idea is currently eschewing
Funding for Lending in favour of
crowdfunding on Indiegogo. The
Japanese cat cafe craze is a business
model that no political planner could
have predicted: the sort of idea that
free markets are so good at
developing into profitable forms. And
as employees of a small business, its
staff of cats will know better than
Osborne and his mandarins how
regulatory hurdles continue to stand
in the way of their owners further
investment in scratching posts and
other essentials for expansion.
But sadly, were stuck with the
man at the top: caught in his cats
cradle of interventionist policies that
promise austerity but cant seem to
cut spending or stimulate growth. If
only hed just let sleeping cats lie.
Marc Sidwell is managing editor of
City A.M.
THE LONG
VIEW
MARC SIDWELL
Osborne isnt the cats whiskers but we dont have to give up on austerity
In association with
FRENCH
17
FRIDAY 1 FEBRUARY 2013
The Nordic model
[Re: How Sweden reformed its state to lay
the foundations for future growth,
yesterday]
All those on the left who look to Sweden as
the ideal society should read this article. The
common image of a socialist nation, with
all-encompassing state provision, needs
refining. Not only is Sweden weathering this
recession better than other Western
economies. It has also thought sensibly and
hard about what its state can feasibly
provide. At the heart of this was a concerted
effort to break the link in the public mind
between equality and state provision. As
Sweden shows, liberalising regulation and
privatising services can and does result in
good social outcomes.
Anna Holden
Taxing tobacco
[Re: Taxing times for tobacco as smokers
count the change, yesterday]
I read Marc Sidwells piece with interest.
According to HMRC, the average tax on
cigarettes was 82.2 per cent of retail price in
2012, rising to nearly 86 per cent in the
ultra-low price category. And according to
our research, in Spain the figure is about 83
per cent. It is always difficult to directly
correlate higher tobacco excise with a rise in
illicit trade (other factors like geographic
location and enforcement resources are
often just as important). But high tax
incidence does fuel a sense of injustice in
consumers, pushing some onto the black
market.
ShaneMacGuill, analyst at Euromonitor
International
B
ANKS are embroiled in
another mis-selling
scandal, but we can be sure
that customer behaviour
wont be affected. Few people
will switch bank as a result.
Regulation means we are indifferent
to how our banks behave. Why?
Because we know banks will always
be fined for their faults, and we
know well always be compensated.
Theres no incentive for consumers
to punish banks they know have
done wrong.
It didnt have to be this way. The
concept of mis-selling is actually rela-
tively new. Until 1986, financial prod-
uct sales were regulated by contract
law the law relating to the sale of
goods and services and, sometimes,
some very specific regulation.
But in 1986, those selling a product
became responsible for ensuring it
was fit for the customer. This new
concept was accompanied by meticu-
lous record keeping and mounds of
paperwork for each product sale.
Advice did not only have to be good
advice, but the seller of a product
would have to be able to prove that it
was good advice at a later date per-
haps ten years later.
The early mis-selling scandals were
caused by government. Pensions mis-
selling arose directly from the govern-
ment retrospectively changing
privately-agreed employment con-
tracts, which required employees to
join their company pension schemes.
It decided that employees should be
allowed to exit, leaving millions vul-
nerable to predatory sales staff.
Similarly, the zero-dividend prefer-
ence share and mortgage endow-
ment scandals were artificial
creations of a complex tax system.
Nonetheless, the blame for recent
scandals payment protection insur-
ance and interest rate swaps lies
squarely with banks. Arguably, there
After a rebrand and new product launch,
can BlackBerry save itself from decline?
YES
BlackBerry can be saved, but it wont reclaim its position as a
market leader. The question is who is going to be the third player
in the market behind Apple and Google: Microsoft, Nokia, or
BlackBerry? BlackBerry still has a sizeable customer base
especially corporate users. Its brand was looking tired, but now its
management finally understands the need for better marketing,
which is key to winning consumer users. The latest rebranding is a
good step in re-energising the company, and its new handsets
have a lot of exciting features. Its technology is excellent, and
could be licensed to other companies, so BlackBerry will survive in
some form in a similar way to Qualcomm (it used to be in the
handset business, but now supplies technology to other
manufacturers). There are challenges ahead, but I like the latest
steps it has taken. It positions Blackberry to be a player once again.
Jeff Kagan is an independent technology analyst.
Jeff Kagan
NO
Steve Dinneen
Nothing lasts forever. BlackBerrys time as a major player in the
smartphone market is almost up. Its new handset, the Z10, is a
quality device: innovative, attractive, even fun. But its too little
too late it has lost far too much ground to bigger, better-
resourced rivals. It bravely or stupidly shirked making a deal
with Google to use its Android software, instead spending years
building a new operating system of its own. But its market share
is now in terminal decline. The Canadian firm is still spinning the
wheel of the Titanic, not realising its at a 45 degree angle,
slipping slowly but inexorably below the icy water. BlackBerrys
best hope now is to compete for the scraps left by Apple and
Samsung. Its fate echoes that of Nokia, a former mobile king that
took its eye off the ball, tried to mount a comeback and
discovered that nobody cared anymore.
Steve Dinneen is lifestyle editor at City A.M..
Customers have no
incentive to punish
mis-selling banks
is now little benefit in being a dis-
cerning customer, or understanding
the basic concepts of personal
finance. At the same time, regulators
are using A-level economics textbook
terminology by trying to control mar-
kets in the name of preventing mar-
ket failure. They need to have a more
sophisticated understanding of how
markets really work in practice.
Before restrictive regulation, institu-
tions developed within markets to
protect customers. These included
mutual building societies, insurance
companies, as well as maximum
commission agreements. These insti-
tutions have been rendered unneces-
sary or, in some cases, made illegal on
the grounds that they were anti-com-
petitive. Financial advice is now
closed to effective competition and
innovation. Its provision has become
a bureaucratic process. Where are the
innovations? Where is the
TripAdvisor of financial products?
Product sale regulation has been a
disaster. We have a nation of people
with no incentive to understand the
basics of financial products. Worse
still, these people have no incentive to
find out whether the individuals
they are talking to have a good repu-
tation or not. As mis-selling crisis
after mis-selling crisis shows, regula-
tion has been a failure, offering no
alternative to the proper operation of
financial markets.
Philip Booth is editorial and programme
director of the Institute of Economic Affairs,
and author of Does Britain Need a
Financial Regulator?
PHILIP BOOTH
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News Editor Elizabeth Fournier | Business Features Editor Tom Welsh | Lifestyle Editor Steve Dinneen | Sports Editor Frank Dalleres
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KISS
visit cityjet.com
Plan a romantic weekend in France with your
valentine. Fly from London City Airport to Paris,
Brest, Brive, Deauville, Toulon or Avignon... xx
Given that David Beckhams salary is going to
charity rather than his pocket, will the French
government still take 75 per cent tax?
@markgeveritt
If NHS and schools (and now defence) are still
ringfenced from 2015, will that mean 35 per
cent cuts to non-ringfenced departments?
@AndrewLilico
There has been a talent exodus in French
football. High taxes can do the same to the
rest of the economy.
@mjhsinclair
The question is whether there was anything
Blackberry could have realistically done that
would have spiked its stock.
@brianlustig
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LIFE&STYLE
FRIDAY 1 FEBRUARY 2013
18
cityam.com
GOING OUT
FILM
FLIGHT
Cert 15 | By Annabel Palmer
hhhii
WHERE
TO DRINK
TIM BADHAM
LONDON ALWAYS experiences a bit of a lull
in January, but there are still some notable
new arrivals you may have missed around
town. The first of such is The Luggage
Room, nestled neatly into the north-
eastern corner of Grosvenor Square, just
next to Maze and Maze Grill. It takes its
name from its previous incarnation at the
Marriot next door, however its now
accessed via a separate, clandestine
entrance complete with speakeasy-style
sliding metal hatch. They seem to have
imported Shoreditchs basement cocktail
parlour concept and polished it up for
Mayfair. The interior exudes art deco
elegance, with a bounty of dark brown
leather banquettes and varnished wooden
panelling, marble flooring and handcrafted
wine cabinets. The cocktail menu,
orchestrated by bar manager Abdulai
Kpekawa, hinges on British classics.
In revitalised Fitzrovia, the Newman
Street Tavern opened recently near
Sanderson London and has already won
praise for its in-house butchery and elegant
atmosphere. The bar area downstairs is a
great place to kick back, with a less formal
ambience spurred on by a colourful
collection of photos and prints paying
homage to British game and livestock. The
lynchpin of the operation is the crustacea
bar, fashioned from a deep ceramic trough,
from which craft beer from Hackney Wicks
Crate Brewery is served. The selection of
Bloody Marys is enough to put a person in a
sanguine humour, as is the carefully
conceived wine list.
In Islington, Neil Rankin at John Salts
refit is definitely worth a trip. Spread over a
ground floor and a mezzanine level, the bar
features a rusticated, industrial vibe, which
prioritises liveliness over lavishness. Owner
580 Group (Owl & Pussycat, Field Day and
Beacons Festivals) has access to an
enviable stable of music industry contacts,
so on weekends the bar is frequented by
talented DJs playing late sets. Factor in
craft beers and cocktails with one of the
best bar snacks in Britain (frites with pulled
pork and kim chi) for midnight bliss.
Tim Badham is the founder of
Innerplace, Londons most personal and
exclusive concierge service.
www.innerplace.co.uk
Overcome the
January lull at
these drink dens
Denzel saves turbulent drama
Arts round-up: Manet, Picasso and Jurgen Teller exhibitions
BILL MURRAY sits at the centre of
this flabby period drama like a
grotesque but lovable toad in a
dangerously shallow pond.
Hyde Park on Hudson follows the
budding sexual relationship
between President Franklin Delano
Roosevelt (Murray) and his distant
cousin Margaret Daisy Suckley
during the visit of King George VI
to the US.
Murray portrays FDR as a
generally likable sort with the
faintest hint of something more
sinister lying deep beneath. While
it is hardly the performance of his
career, he dominates the screen,
often to the detriment of the
supporting cast, who appear half-
formed by comparison.
The films biggest crime is failing
to make enough of Murray for a
story that centres on the illicit
relationship between the married
FDR and Daisy, it makes little effort
to understand or explain his
motives. What could have been a
striking portrait of a charismatic
but troubled man instead unravels
into a comedy of manners, gently
ribbing the prim English and their
quaint, stuttering King.
It speaks volumes that the
central dramatic conceit doesnt
concern FDRs sexual
peccadillos, nor George
VIs quest to gain US
support for the
upcoming
war, but on
whether the
King will eat the
hotdog he is served
at a picnic (a
metaphor for the
conflict between new
and old that becomes
increasingly strained
the longer it is
played out).
FILM
HYDE PARK ON HUDSON
Cert 15 | By Steve Dinneen
hhhii
Murrays FDR breathes life into flabby period drama
Bill Murray as President
Franklin D Roosevelt
Denzel Washington shines as a troubled airline pilot
Manet: Portraying Life opens at the RA
Hudson will inevitably be
compared to The Kings Speech,
with Bertie and Elizabeth (the
Queen Mother) once again playing
central roles, and it will
inevitably come out second
best.
It is all very pretty, with
plenty of lingering shots of
flower-laden fields, but in
the end it feels far too
parochial smashed
crockery and belligerent
mothers in place of drama
or enlightenment.
F
light probably isnt the film
youre expecting. For the first 15
minutes, Cast Away director
Robert Zemeckis flexes his live-
action, big-effects muscles but
following the knuckle-whitening
opener, it becomes less a dramatic
thriller than a slow-paced portrait of
alcohol addiction.
We meet Denzel Washingtons
Captain Whip Whitaker as he wakes
with a stinking hangover, a naked
woman wandering out of focus in
his hotel room, talking to his embit-
tered ex-wife on the phone about
child support. We then learn that
Whitaker is an airline pilot, his lady
friend is a flight attendant, and their
next flight is scheduled to leave two
hours later.
When Whitakers routine flight
encounters a series of inexplicable
mechanical malfunctions, he calmly
manoeuvres the plane into a barrel
roll and then a complete inversion,
before guiding it into a bumpy land-
ing. Whitaker is hailed as a hero for
saving 96 of the 102 lives on board.
No one else could have landed that
plane, as subsequent simulations
with 10 other pilots proves. Perhaps
not even a sober Whitaker could
have undertaken such spur of the
moment daredevilry. But does that
condone his behaviour? It's an inter-
esting moral question (perhaps not
for the airline's owner, who later
quips I like this guy. He makes me
wanna sniff some lines and fly a
jet). But the ominous National
Transportation Safety Board, with an
incriminating toxicology report in
its hands, disagrees. As the subject of
their subsequent investigation,
Whitaker retreats to his father's
empty farmhouse and the film hits
some turbulence. He gets on the
wagon, then falls off it again, chas-
ing straight vodka with a 12 pack
whilst driving. Friends old and new
rally to support him Kelly Reilly as
a fellow lost soul, Don Cheadle as a
hotshot Chicago lawyer. But it is in
solitude that Whitaker contemplates
life imprisonment, and Washington
superbly conveys his inner struggle.
As with Cast Away, Zemeckis has
extracted a top notch performance
from his lead and Washingtons best
since Training Day.
Where the film really falters is in
losing the tremendous momentum
of the opening scenes, instead revert-
ing to just another tale about the
problems that come with addiction
(the lies, the self hatred, the rejection
by family members), and the pre-
dictable search for truth.
MANET: PORTRAYING LIFE
Royal Academy of Arts
Manet: Portraying Life is the first
major UK exhibition dedicated to
the portraiture of the great French
painter douard Manet. The
exhibition brings together works
from America, Europe and Asia,
including the famed The Railing
he created in 1873. Dont expect to
see his most famous pieces though
Olympia cannot be removed
from the Muse DOrsay, as it
continues to be among the
museums biggest attractions and
the A Bar at the Folies-Bergre
cannot be moved from the
Courtault Institute at Somerset
House. The exhibition runs until 14
April at the Royal Academy of Arts,
Burlington House, Piccadilly, W1J 0BD.
JUERGEN TELLER: WOO
The Institute of Contemporary Art
Consciously or not, you will know
at least one Juergen Teller
photograph. His instantly
recognisable fashion shots are
now the subject of a major
exhibition at the Institute of
Contemporary Arts. The
exhibition features many of his
fashion and commercial work
alongside intimate photographs of
his mother and children. Juergen
Teller: Who runs until 17 March at the
Institute of Contemporary Art, The
Mall, SW1Y 5AH.
BECOMING PICASSO: PARIS 190
The Courtauld Gallery
The exhibition tells the story of
the legendary painters
breakthrough year as an artist.
While 1901 was the year his career
reached new heights in the
Parisian art scene, it was also the
year his best friend Carles
Casagemas committed suicide. The
curators have cleverly compiled
some of his best work to illustrate
how the events of that year helped
to shape his aesthetic. The exhibition
runs from 14 February at The
Courtauld Gallery, 150A Strand,
Charing Cross, WC2R 0RN.
19
TV & GAMES
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T
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BBC1
SKY SPORTS 1
7pmLive Super League 10pm
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Football Club 3amWomens
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Fantasy Football Club 5am
Premier League Preview
5.30am-6amLive IRB Rugby
Sevens
SKY SPORTS 2
5.30pmLive International Rugby
Union 7.30pmLive International
Rugby Union 10pmWWE: Late
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5.30am-6amNBA Action
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7pmLive Darts 11pmTest Cricket
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Cup 12.30amInternational One-
Day Cricket 1.30amNBA Action
2amNFL: Americas Game 3am
Tight Lines 4amElite League Ice
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Game
BRITISH EUROSPORT
7pmLive Snooker 10.15pm
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7.30pmLive Bundesliga 9.30pm
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1.30amUFC 156 Countdown
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BBC THREE
7pmGreat Movie Mistakes 2: The
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News 2.45am-3.45amSun, Sex
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7pmHollyoaks 7.30pmHow I
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Taylor 2008. 11.05pmRevenge
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Gervais Show2.05amThe
Cleveland Show2.30amBalls of
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11.25pmFILMLesbian Vampire
Killers: Premiere. Comedy horror,
starring James Corden. 2009.
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2005. 2.20amWeatherview
2.25am-6amBBC News
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Garden with Carol Klein
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French Gardens
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2009. 1.35amSign Zone: Question
Time 2.35am-6amClose
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Coronation Street
8pmWild Britain
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10.35pmFILMDemolition
Man: Sci-fi thriller, starring
Sylvester Stallone. 1993.
12.40amJackpot247
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Dont Trust the B**** in Apartment
23 1.30amBobs Burgers 1.55am
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6pmHome and Away
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9pmFILMThe Last Samurai:
Historical adventure, starring
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12amSuperCasino:
Live interactive gaming.
3.55amMotorsport Mundial
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Michaelas Wild Challenge 5.10am
Wildlife SOS 5.35am-6am
Wildlife SOS
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
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COFFEE BREAK
Using only the letters in the Wordwheel, you have
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none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6
7 8 9
10
11 12 13
14
15 16 17
18 19
20 21
22 23
6 7 16
45
13 5 7
34 12
41
29 11
35
3 16
23 9 8
45
10 11 24
20
16
26
21
13
7
25
17
39
4
15
35
15
29
8
13
11
27
39
14
6
10
ACROSS
1 Sun-dried brick (5)
3 Crouch, bow (5)
7 Poems (4)
9 Cause (6)
10 Four-wheeled
motor vehicle (4)
11 Incinerate (4)
12 Saline (5)
15 Awry (5)
17 King of the beasts (4)
19 Eric ___, member of the
Monty Python team (4)
20 Physical science
relating to light (6)
21 Distant (4)
22 Walked up and
down (5)
23 Unsatisfactorily (5)
DOWN
1 Single-celled,
water-living
protozoon (6)
2 Petty ofcer
on a ship (5)
4 Drag behind (5)
5 Cooking
utensils (4)
6 Transversely (9)
8 Merits,
deserves (5)
13 Burglar (5)
14 Exertion of
force (6)
16 Item of cutlery (5)
17 Andean
mammal (5)
18 Closed circuit (4)
T
M
N
U
I B
S
G
L

4




4

S K I R T M A N I A
L E F U M E N
E G E S T D O D G E
E P B N L
P O L I C E S T A T E
U R A I H
S T E A M R O L L E R
T T D L A
A V A I L N A T A L
M H O O F D L
P R A N G B O B B Y
2 8 7 9 2 3 1
1 6 3 5 2 4 5 2
4 9 5 8 7 9 8 3
1 2 2 1 4
3 1 6 9 8 5 7 2
9 8 7 4 2 5 3 6 1
7 4 2 1 3 6 9 8
5 4 3 9 7
2 6 1 9 7 6 5 8
7 9 8 5 3 2 1 4
1 7 3 8 4 2 9
4
4
4
4
4
4
4
4
4
The nine-letter word was
DEPRAVITY
T
E
R
R
E
S
T
R
I
A
L
S
A
T
E
L
L
I
T
E
&
C
A
B
L
E
BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
FRIDAY 1 FEBRUARY 2013
MONTY DONS FRENCH GARDENS
BBC2, 9PM
New series. Horticulturist and
broadcaster Monty Don visits some of
the most famous and interesting
gardens in France.
CORONATION STREET
ITV, 7.30PM
Lewis blackmails Kylie to get Gails
bank account log-in and password, and
Sylvia arrives back from America
unannounced.
ICE ROAD TRUCKERS
CHANNEL5, 8PM
Lisa Kelly and fellow driver Scott
Swanson push Carey Hall and his 120-
ton cargo up one of the Dalton
Highways steepest inclines.
TVPICK
T
HIS YEARS Six Nations
promises to be another thrilling
northern hemisphere battle
with England and France
jostling for favouritism. Wales are
the defending Grand Slam
champions, yet have had a disastrous
run of it with an almost record-
breaking losing run of seven games.
England face Les Bleus at
Twickenham on Saturday 23
February in a pivotal contest that
should decide where the trophy will
end up. A lot was made of the Red
Roses win over New Zealand, but the
world champions were not at their
best after an exhausting season.
France are the more complete outfit
and they excelled in the autumn with
wins over Australia, Argentina and
Samoa. Successive trips to
Twickenham and Dublin makes a
Grand Slam tough, but Philippe Saint-
Andre has the squad to justify back-
ing them to win the tournament at
2/1 with Blue Square Bet.
The Irish have suffered with injuries
and are awaiting news on Paul
OConnell, Stephen Ferris and Rob
Kearney. Declan Kidneys side are
available at 7/2 with Blue Square Bet
and look outsiders despite facing
France and England at home.
Italy and Scotland are the main con-
tenders for the wooden spoon, a title
the Azzurri have won nine times
since 2000. Italy have three home
games, so backing the Scots to finish
bottom, in a repeat of last year, at 11/4
with Star Sports Bet is recommended.
England can throw down the gaunt-
let when they take on Scotland in the
Calcutta Cup at Twickenham in their
opening game tomorrow. Scotland
have only won this battle on three
occasions since 2000 the Red Rose
have prevailed nine times including
the past two years.
Stuart Lancaster hasnt been afraid
to bring youngsters into his side and
Gloucesters Billy Twelvetrees is set to
line-up against Scotland for his debut
after impressing the coaches.
The Scots ran England close in the
2012 competition opener, yet new
head coach Scott Johnson has it all to
do as they ultimately lost all their
matches in 2012 and havent won at
Twickenham since 1983.
Impressive wins over Australia,
Samoa and Fiji meant a promising
autumn before a shock loss to Tonga
reminded everyone of Scotlands lim-
itations.
Their last five defeats against
England in London have been by an
average of 19 points, so Im happy to
tip up Lancasters side with the -14
handicap at 10/11 with Coral. Id also
have a small buy of Englands
supremacy at 17 with Sporting Index.
Before the action at Twickenham,
Ireland and Wales meet at the
Millennium Stadium for a cracking
match-up.
Wales edged a brilliant contest in
Ireland last year, as Leigh Halfpenny
held his nerve to slot a late penalty to
take the game 22-21.
Warren Gatland has been a big loss
for the hosts as he prepares for his
new role as head coach of the Lions
tour later this year and Rob Howleys
run of four straight defeats gives
Ireland the edge.
Even without the captains arm-
band, Brian O'Driscolls return pro-
vides essential leadership in midfield
and I would take the 5/4 available
with Blue Square Bet for Ireland to
open with a victory.
FRIDAY 1 FEBRUARY 2013
20
THEPUNTER
WILLIAM CHRIMES AND BEN CLEMINSON PREVIEW THE SIX NATIONS AND PREMIER LEAGUE
France hitting
their peak at
perfect time to
land Six Nations
France look the value option as they bid for a sixth Six Nations crown
The Road to
Cheltenham
BY BILL ESDAILE
WWW.STARSPORTSBET.CO.UK
08000 521 321
THE RYANAIR Chase is always one of
the most competitive races of the entire
Cheltenham Festival and this years
renewal looks no different.
The main problem is trying to work out
who runs. Flemenstar would go off
favourite if lining up, but a win in next
weekends Irish Hennessy will surely
result in connections opting for the Gold
Cup.
Cue Card is solid enough at 6/1 with
Star Sports, although his price is unlikely
to shorten much between now and the
Festival. Sizing Europe and Finians
Rainbow would both be respected on
decent ground, but I dont think
Champion Court or Menorah are quite
good enough for this.
Having already tipped up First
Lieutenant for the Gold Cup, I clearly
cant recommend backing him in this,
but if Mouse Morris was to nominate
the Ryanair Id have to get involved.
That said, the trainer does have another
contender who I think is worth
supporting at this stage. CHINA ROCK
has been called a few names in the past,
but he won the Grade One
Punchestown Gold Cup in April and he
has contested the last two Cheltenham
Gold Cups. I dont think he stays well
enough to win the blue riband event, yet
this intermediate trip promises to suit.
He loves good ground and there is
plenty of juice in his 20/1 price with Star
Sports.
n Pointers
CHINA ROCK 20/1 e/w
Ryanair Chase
(Cheltenham Festival)
Liverpool were equally frustrated
but had themselves to blame for let-
ting a two-goal lead slip at Arsenal on
Wednesday.
Hosts City are comfortable favourites
for Liverpools visit, but I think that the
5/6 with Star Sports for the home win is
a very reasonable price, given the form
of Roberto Mancinis men at the Etihad.
Theyve won three on the bounce
there without conceding. And, after
collecting 29 points from a possible 36
have the second best home record in
the top flight, behind leaders
Manchester United, the only side to
beat them in front of their own fans.
Its been a stop-start campaign for
Brendan Rodgers at Liverpool and
their away record typifies this, as illus-
trated by three wins, five draws, four
defeats and a neutral goal difference
on the road. Their stalemate at Arsenal
followed the shock 3-2 loss to Oldham
in the FA Cup.
The nightmare at Boundary Park
may turn out to be a blessing in dis-
guise in the long run, with the Reds
now free to concentrate on this sea-
sons Europa League and their
attempts to return to European com-
petition in 2013-14 through a strong
league finish.
But they havent beaten any side cur-
rently in the top half of the table and I
simply dont see them getting any-
thing from this clash.
Mario Balotelli had gone from being
Citys talisman to a burden for Mancini
and his departure this week should
MANCHESTER CITY ........................
LIVERPOOL....................................
SUNDAY 4:00pm
BOTH Manchester City and Liverpool
head into their meeting on Sunday
after drawing midweek and neither
will be happy with the point they took.
City dominated Queens Park Rangers
in west London but an exceptional dis-
play from the home goalkeeper Julio
Cesar ensured the game ended goalless.
n Pointers
France to win the Six Nations at 2/1 Blue Square Bet
England to beat Scotland (-14 points) at 10/11 with Coral
Buy England supremacy at 17 with Sporting Index
give City the focus they need as we get
to the business end of the season.
Citys home fixtures have averaged
exactly three goals-per-game 2.25 for
and 0.75 against and Id be happy to
back the 2-1 correct score with Blue
Square Bet at 15/2.
n Pointers
Man City at 5/6 Star Sports
Man City to win 2-1 at 15/2 with Blue Square Bet
N
EW ORLEANS hosts the
47th edition of
Americas greatest
sporting showpiece
when the Baltimore Ravens
and San Francisco 49ers meet
in the Mercedes-Benz
Superdome.
For the first time in NFL
Super Bowl history the oppos-
ing head coaches are brothers
as the Ravens John and the
49ers Jim Harbaugh go into
battle. The only other occasion
the siblings clashed came in
the 2011 season, when John
marked Thanksgiving with a
16-6 victory over younger
brother Jim.
Future Hall of Famer Ray
Lewis has dominated pre-match
headlines and will represent
the Ravens for the final time.
He will hope to claim a second
Super Bowl ring to accompany
his 2001 triumph for the same
team in which he was named
Most Valuable Player.
The Championship contests
emphasised how strong both
franchises are, as the 49ers
came from behind to beat
Atlanta on the road, while the
Ravens won 28-13 against the
New England Patriots.
Colin Kaepernick took over
the 49ers quarterback duties
mid-season and fully justified
the decision to take his career
record to 7-2, while he is 2-0 in
the play-offs.
His opposite man is also enjoy-
ing a brilliant run that has seen
the Ravens win their past four
games improving Joe Flaccos
play-off record to 8-4.
The 49ers and Ravens also
thrive on the defensive side of
the game. The 49ers allowed
17.1 points per game and fin-
ished third in total defence this
season. In their past four
games the Ravens have limited
Eli Manning (New York Giants),
Andrew Luck (Indianapolis
Colts), Peyton Manning (Denver
Broncos) and Tom Brady (New
England Patriots) to a 55.3 per-
cent completion rate, with
nine sacks, five touchdowns
and five interceptions in their
past four games.
The Ravens 2001 defence is
regarded as one of the best of
all time and before the post-
season, this current unit was
failing to live up to the fran-
chises legacy. It all changed
during the wild card game
with a dominant performance
and 24-9 defeat of the
Indianapolis Colts.
Their aggressive defence has
returned and seems to have a
date with destiny powered by
Lewiss looming retirement
after a 17-year career. Although
age has slowed him, the line-
backer has 44 tackles in the
post-season and his presence is
invaluable.
The Ravens kicker Justin
Tucker has been exceptional in
clutch situations, while 49ers
veteran David Akers is no
longer dependable as his sim-
ple 38-yard field goal miss at
Atlanta demonstrated. The
49ers are 1/2 favourites with
Blue Square Bet and Im keen
to leave them alone.
Quarterbacks have earned
the MVP honour 25 times in 46
Super Bowl games and its
Flacco that leads the NFL in the
play-offs with a 114.7 passer rat-
ing, including eight touch-
downs with no interceptions.
He can inspire the Ravens to
the Vince Lombardi trophy to
ensure that Lewis rides off into
the sunset with the ultimate
prize, an outcome Coral are
offering 6/4 for. Spread bettors
are advised to sell San
Franciscos supremacy at 3
with Sporting Index.
21
WILLIAM CHRIMES AND BILL ESDAILE PREVIEW SUPER BOWL XLVII AND THE WEEKENDS RACING
cityam.com
FRIDAY 1 FEBRUARY 2013
ALL OFFERS: 18+ UK/ROI / customers only. Free bet stakes not included in returns. Free bets cannot be withdrawn and are
valid for 7 days on selected bets (winners offer free bets only valid on the specified twilight card today at Wolverhampton or
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as a free bet up to 25 at
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OUTRI GHT WI NNER
15/8 England
2/1 France
4/1 Ireland
4/1 Wales
25/1 Scotland
125/1 Italy
Others on request. Prices subject to fluctuation.
4/6 Wales 20/1 Draw Ireland 5/4
Millenium Stadium, Saturday, Kick-off 1:30pm, Live on BBC1
1/14 England 33/1 Draw Scotland 13/2
Twickenham, Saturday, Kick-off 4:00pm, Live on BBC1
11/2 Italy 33/1 Draw France 1/10
Stadio Olimpico, Sunday, Kick-off 3:00pm, Live on BBC1
T
HE SNOW might have gone
but now racing has to deal
with the aftermath and,
with more rain forecast over
the next couple of days, there is
likely to be fresh disruption to the
cards at Sandown and Ffos Las,
where the highlights are the Scilly
Isles Novices Chase and the Welsh
Champion Hurdle respectively.
If Sandown gets the go-ahead
then the focus will be on the Scilly
Isles (2.25pm) where my ante-post
selection for the Jewson at the
Cheltenham Festival, CAPTAIN
CONAN, will be a very warm
order.
However, at a likely starting
price of 1/3 he looks very short,
considering he is unproven at the
extended two-and-a-half-mile trip.
The very heavy ground may make
him vulnerable as it was hard to
tell in his last run here in
December whether his stamina
was giving way or whether he
was just idling at the front.
These Nicky Henderson hot-
pots are typically overbet and, at
that skinny price and knowing
he will be looked after by Barry
Geragthy, Id rather lay him on
Betfair for this contest.
With the other meetings a
major doubt, we can take a look
at Musselburghs exciting card
on Sunday.
OVERTURNshould take all the
beating in the 2.00pm on his way
to the Racing Post Arkle for
which he is currently ante-post
second favourite behind
Simonsig.
John Quinn won the Triumph
Hurdle at the Festival with
Countrywide Flame last season
and he has another lively out-
sider running in the Triumph
Hurdle Trial at 2.30pm in KASH-
MIR PEAK.
Unbeaten in two starts over
hurdles, the Tiger Hill gelding
lowered the colours of a
Henderson jolly last time and
looks a classy prospect.
W
E HAD some
more thrilling
finishes in last
weeks Blue
Square Bet Sprint Series
races at Lingfield and
its great to see full
fields and split
divisions once more.
The first division
(2.20pm) sees last weeks
first and second return.
Violet Jordans charge
Frognal won by two lengths last
Saturday in round fours second
division, beating the re-opposing
Rich Again, and if hes in the
same form hell be hard to beat.
However, Frognal got first run
that day and RICH AGAIN is meet-
ing his conqueror on 4lb better
terms. If Graham Gibbons can
wait with him from a wide draw,
he might be able to get his head
in front.
In the 2.55pm, we have a really
competitive division with seven
previous course and distance
winners in the mix. Charming
beat a hot favourite here yester-
day and if Olivia Maylams filly
turns up, she looks one of the
likelier candidates.
But Ill chance WAABEL each-
way to give Jordan and Blue
Square Bet favourite for the lead-
ing jockey award, William
Carson, more points in the Series.
He hasnt won for a while but was
unlucky last week and should go
close.
As ever, bet with Blue Square
Bet and we will give you your
money back if your horse is sec-
ond, beaten less than half a
length.
WITH ALAN ALGER
FROM BLUE SQUARE BET
Ravens
resurgence
can deliver
Super Bowl Baltmore Ravens can follow up their 2001
title with another on Sunday evening
Captain Conan too short
in Sandown feature
n Pointers
Baltimore Ravens at 6/4 with Coral
Sell San Francisco supremacy at 3 with Sporting Index
QUEENS Park Rangers broke their
transfer record for the second time
in a month yesterday by signing
former Blackburn defender
Christopher Samba from Russian
side Anzhi Makhachkala for 12.5m.
Samba joined Rangers on a four-
and-a-half-year contract hours before
last nights deadline, replacing
former Ewood Park team-mate Ryan
Nelsen, who has left to manage
Toronto FC, at the back.
QPR manager Harry Redknapp
also produced a double signing from
former club Tottenham, midfielders
Jermaine Jenas and Andros
Townsend inking permanent and
loan moves respectively.
But in a bizarre late twist
Redknapp failed to complete a deal
for West Broms Peter Odemwingie,
despite the striker driving to Loftus
Road ahead of a transfer.
Odemwingie was left to wait in his
car as negotiations between the
clubs foundered, while Rangers also
proved unable to pursuade Stoke to
sell Peter Crouch.
Arsenal signed some much-needed
defensive reinforcement in Malaga
and Spain left-back Nacho Monreal
for a fee in the region of 8.3m.
The 26-year-old, who has nine
caps, arrived 24 hours after Kieran
Gibbs was ruled for three weeks with
a thigh strain suffered against
Liverpool on Wednesday.
Tottenham failed to bring in long-
term target Leandro Damiao from
Internacional despite fresh talks over
the Brazil centre-forward.
Spurs goalkeeper Heurelho Gomes
joined German side Hoffenheim on
loan, having found himself relegated
to third choice at White Hart Lane.
Fulham boss Martin Jol bolstered
his squad with three loan signings,
most notably left-sided AC Milan and
Holland player Urby Emanuelson.
Ajax and Cameroon midfielder
Eyong Enoh and PSV Eindhoven
right-back Stanislav Manolev also
arrived at Craven Cottage.
England goalkeeper Jack Butland
joined Stoke from Birmingham for
4m, while the Potters also brought
in American midfielder Brek Shea
from FC Dallas for 2.5m.
Sunderland signed striker Danny
Graham for 5m from Swansea after
he grew frustrated at a lack of first-
team opportunities.
Odemwingie
farce mars QPR
triple signing
FORMER England captain David
Beckham joined Paris Saint-Germain
in the highest-profile transfer of
deadline day and then sprung
another shock by announcing that
his wages will be donated to charity.
The 37-year-old midfielder, who
has signed a five-month contract
until the end of the season, revealed
his pay packet, thought to be around
150,000 per week, would be divert-
ed in an unprecedented move.
I wont receive any salary, he
said. My salary will go to a local chil-
drens charity in Paris. Its something
exciting and something Im not sure
has been done before.
It is unclear whether Beckham
will benefit financially in any other
way from his move to France, where
plans for a 75 per cent rate of tax for
those earning over 1m (850,000) a
year have caused disquiet.
Suggestions have been raised that
Beckham may retain a role with PSG
beyond this season he said he was
honoured to be part of its future
or their owners in Qatar, which will
host the 2020 World Cup.
The former Manchester United,
Real Madrid, LA Galaxy and AC Milan
player said he had rejected a number
of English clubs in favour of joining
PSG, who lead the French top flight
and are in the Champions League.
I chose Paris because I can see
what the club are trying to do. Its an
exciting city and now theres a club
thats going to have a lot of success in
the next 10, 20, 30 years, he added.
I was successful with Manchester
United and always said Id never play
for another English club. Im hon-
oured by offers I had from Premier
League clubs but I didnt want to play
there unless it was for United.
Englands most capped outfield
player ever, who won domestic titles
at United, Real and the Galaxy, is to
be reunited with manager Carlo
Ancelotti and striker Zlatan
Ibrahimovic, whom he knows from
loan spells at Milan.
PSG, who have spent more than
200m on players since the takeover
by Qatar Sports Investments an arm
of the state 18 months ago, almost
signed Beckham last January, only for
him to stay in California.
The east London-born superstar
opted to leave America when his con-
tract expired in December, and began
training with Arsenal last month in
order to regain his fitness.
F1 chief Ecclestone tips Mercedes
to split with team boss Brawn
FORMULA One boss Bernie
Ecclestone has fuelled speculation
that Mercedes will part company
with team principal Ross Brawn.
Rumours suggesting that Brawn
will be replaced began to rev up last
week when Mercedes poached
experienced motorsport manager
Toto Wolff from rivals Williams.
His appointment followed
Mercedes hiring of British driver
Lewis Hamilton and three-time F1
champion Niki Lauda who is non-
executive chairman of the team.
They have got Toto there and
they have got Niki. That will
probably be enough, Ecclestone
told City A.M.
In addition to Lauda, Wolff and
Brawn, Mercedes also have former
Honda team principal Nick Fry as
chief executive. The large number of
senior management has driven
speculation that Brawn may not stay.
Mercedes have only won one
race since the car
manufacturer bought
the team in 2009, and
former head of
motorsport
Norbert Haug has
already paid the
price by stepping
down in December after 22 years in
the job.
I think the system at Mercedes
needs to work, said Wolff. If you
have more good people it is not bad
news but I think everybody needs to
understand what his role and
position is. I think we are all
complementary to each other. It is
about finding the right structure.
Mercedes have also been
linked with McLarens veteran
technical director Paddy Lowe
as a possible replacement for
Brawn. Lowe was not present
at the McLaren launch
yesterday though team
principal Martin Whitmarsh
insisted he would stay for
at least this year.
CHELSEA star Eden Hazard has
escaped an extension to his original
three-match ban for an altercation
with a ball boy last week at Swansea.
The Football Association was
overruled by its independent
regulatory commission, which
decided that Hazards automatic ban
for violent conduct was sufficient.
Belgium midfielder Hazard has
already sat out two games, so will
miss tomorrows trip to Newcastle
but could return at home to Wigan
on 9 February.
Players union the PFA welcomed
the decision, chairman Gordon
Taylor having written to the FA to
argue in favour of limiting the ban
to three games.
Chelsea also argued that the ban
should not be increased.
Hazard avoids
ban extension
BY ALEX SHARP
BY FRANK DALLERES
Ross Brawn could
be on his way out
of Mercedes
Beckham rejected Premier League interest
to sign for Paris Saint-Germain until the
end of the current season
FRIDAY 1 FEBRUARY 2013
22
cityam.com
SPORT
cityam.com/sport @cityam_sport
Beckham to
forgo wages
after sealing
Paris match
BY FRANK DALLERES
EXCLUSIVE
BY CHRISTIAN SYLT
BIG D-DAY DEALS
Chris Samba
Anzhi Makhachkala to QPR 12.5m
Nacho Monreal
Malaga to Arsenal 8.3m
Danny Graham
Swansea to Sunderland 5m
Jack Butland
Birmingham to Stoke 4m
John Stones
Barnsley to Everton 3m
Brek Shea
FC Dallas to Stoke 2.5m
Yacouba Sylla
Clermont to Aston Villa 1.7m
David Beckham
Free agent to PSG Free
Cole set to win 100th England cap
n FOOTBALL: Chelsea left-back Ashley
Cole could become the seventh man to
reach 100 caps for England after being
named in manager Roy Hodgsons
squad to take on Brazil on Wednesday
at Wembley.
Rasmussen admits 12 year doping
n CYCLING: Denmarks Michael
Rasmussen has admitted using
performance-enhancing drugs from
1998 to 2010 and announced his
retirement with immediate effect. Gloucesters Twelvetrees is set to make his England debut tomorrow
ENGLAND coach Stuart Lancaster
has urged uncapped centre Billy
Twelvetrees to seize his interna-
tional chance, but warned that
even a starring role tomorrow
against Scotland is unlikely to see
him keep his place.
Twelvetrees, 24, replaces injured
powerhouse Manu Tuilagi in one of
two changes from Decembers his-
toric defeat of New Zealand for the
RBS Six Nations opener at
Twickenham.
The Gloucester player is set to
start at inside centre, with
Saracens Brad Barritt switching to
outside, but Lancaster hinted
Tuilagi is likely to return to the
starting XV for next weeks trip to
Ireland.
This is a great opportunity for
Billy. I coached him in the
Churchill Cup it was a winning
side, he played No12 and I could see
then he had lots of potential and
physicality, he said.
I have every confidence in him
going into the game. Sometimes
opportunities present themselves
in different ways. We know Manu is
going to be fit for next week and we
hope Billy puts a marker down and
gives us another headache.
Prop Alex Corbisieros injury sees
Harlequins Joe Marler return at
loosehead, while the Youngs broth-
Results
23
FRIDAY 1 FEBRUARY 2013
Hes a monster. Great in the air, quick, a leader,
fantastic in both boxes and hard as nails. Hes a
proper centre-half

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Time for England to reveal their true style
Twelvetrees gets chance to
give Lancaster a headache
BY FRANK DALLERES
Spending up
on 2012 but
shy of record
PREMIER League clubs spent
around 37m on deadline day, tak-
ing the total spend for the January
transfer window to 125m.
The overall figure is double last
Januarys meagre 60m outlay,
and the fourth highest spend by
top flight sides since the winter
windows introduction in 2003.
But it was well short of the
record 225m outlay in 2011,
which featured Chelseas British
record 50m signing of Fernando
Torres from Liverpool. Yesterdays
biggest deal was Christopher
Sambas 12.5m switch from Anzhi
Makachkala to Queens Park
Rangers.
Deloittes Dan Jones said modest
spending, despite the prospect of
20m in extra television revenue
per club next season, may be down
to new financial fair play rules.
Jones added: Their apparent rel-
ative restraint in this transfer win-
dow may reflect an increasing
focus on clubs achieving more sus-
tainable levels of expenditure rela-
tive to revenues.
YEAR SPEND
WINDOW SHOPPING
RUGBY
COMMENT
KYRAN BRACKEN
always tricky and historically its
never been an easy contest but
hopefully England have turned a
corner and my expectations are
very high for a comfortable win.
Their form against New Zealand
in the autumn is where they need
to be. Theres no doubt Scotland
carry a threat in their powerful
attack, but the backs are in disarray,
so its a chance for Lancasters men
to really dominate proceedings.
FIREPOWER
There is no doubt that the absence
of Manu Tuilagi, who was so
influential against the All Blacks,
is a loss to England. But Billy
Twelvetress is in good form, is big
and strong and will get over the
advantage line, so England should
still have enough firepower to win.
The centre partnerships have
always been up for debate and this
will be a chance for Billy to make a
mark.
Another man with a point to
prove is prop Joe Marler. There
were questions over him against
Australia in November, and when
Alex Corbisiero came in it certainly
helped England. I still think Alex
would start if fit but Joe will be
chomping at the bit to show what
he can do and claw back his
reputation.
CRUCIAL
Elsewhere this weekend I expect
France, Englands main rivals for
the title, to beat Italy comfortably,
while Irelands trip to Wales is
harder to call. I see a few teams
beating each other this time, so
Im not expecting to see a Grand
Slam, and points difference could
be absolutely crucial in deciding
this championship.
Kyran Bracken was speaking courtesy
of GamePlan Solutions: managing high-
profile and popular sport stars; speakers,
leaders, motivators and ambassadors.
www.gameplansolutions.co.uk
I
N 12 months under Stuart
Lancaster England have developed
well beyond where I thought
theyd be. They now look like a
team, have proved that a group of
talented individuals can play as a
cohesive unit, have pride in the shirt,
and they look happy.
If something is slightly missing
its certainty about the way theyre
going to try to play; how theyre
going to develop their style. This Six
Nations is a crucial time for England
are they going to adopt a
Harlequins-type game or are they
going to grind out wins?
TRICKY
Scotland at home tomorrow
represents the perfect opening Six
Nations fixture. The first Test is
ers are preferred to Danny Care at
scrum-half and Dylan Hartley at
hooker.
Scrum-half is the position I
spend most time thinking about.
Ben Youngs gets the start this time
and Danny will come off the bench
but both will get their turn during
the Six Nations, Lancaster added.
It was a tight call there and at
hooker. Tom [Youngs] played very
well in the autumn. Dylan comes
back into the equation but I need to
reward the player in the shirt.
Lancaster also hit back at former
Scotland boss Jim Telfers claim this
week that England players, such as
Tuilagi and swallow-diving wing
Chris Ashton, were arrogant.
I dont call celebrating a try
showboating, he said. It is not
what we believe in.
IN BRIEF
2013 125m*
2012 60m
2011 225m
2010 30m
2009 170m
2008 175m
2007 60m
2006 70m
2005 50m
2004 50m
2003 35m
*Estimated spend at time of press
Source for historical figures: Deloitte
QPR boss Redknapp delighted with Samba deal