BUSINESS WITH PERSONALITY

Labour: we
will tax rich
home owners
LABOUR leader Ed Miliband yester-
day declared war on people who
own expensive homes, pledging to
impose a crippling tax on properties
worth more than £2m.
The revenue would be used to
partly reintroduce the 10p tax rate
abolished by Gordon Brown.
Shadow chancellor Ed Balls said
introducing a tax on 70,000 high-
end houses – 91 per cent of which
are in or near the capital – could
raise up to £2bn a year. This is
equivalent to an annual cash
payment of around £25,000 from
affected homeowners and would be
a very substantial tax hike.
Lucian Cook of Savills suggested
asset-rich but cash-poor
homeowners, including
pensioners, could be forced to sell
up: “It will be a nightmare to
administer because anyone close to
the threshold is likely to contest
their valuation.” Others said the
tax was an attack on ambition,
success and aspiration.
Miliband said the proposal was
not yet a manifesto pledge.
Last night the Institute for Fiscal
Studies criticised the 10p plan,
saying “more economically
sensible” options were available to
achieve the same aims.
Conservative MP Robert Halfon,
who is leading a campaign to
reintroduce the 10p tax rate, told
City A.M. that Labour had “made
this up on the hoof”.
“It’s a bit of a sweetener for the
Eastleigh by-election. I don’t believe
you cut tax by raising
another. It would
mean revaluing
every house in the
country,” he added.
The Treasury is
considering Halfon’s
more ambitious plan.
%
Ketchup and Sauces
Meals and Snacks
Infant/Nutrition
Other Oth
2012 SALES BY CATEGORY ($BN)
4.4
2
5.2
0.7
1.2
US BILLIONAIRE investor Warren
Buffet and 3G Capital have swooped
in to buy Heinz in a $28bn (£18bn)
deal that marks one of the food
industry’s largest ever acquisitions.
Buffett’s investment firm Berkshire
Hathaway and the Brazilian-backed
private equity firm will pay $72.50
per share for the baked beans and
ketchup maker, a 20 per cent premi-
um to Heinz’s closing share price of
$60.48 on Wednesday.
Heinz said the takeover would be
financed with $23bn in cash from
Berkshire and 3G, debt rollover and
debt financing from JP Morgan and
Wells Fargo.
Buffett, whose smart investments
have earned him the nickname the
sage of Omaha, is putting up about
$12bn-$13bn in cash, he told CNBC,
adding that Berkshire will be an
equal equity partner with 3G, which
will also operate the business.
The joint deal is a departure for
Buffett, who in the past has preferred
to buy companies outright. He told
CNBC yesterday: “It’s my kind of deal
and it’s my kind of partner.”
Berkshire already owns several food
brands including the Dairy Queen ice
cream chain as well as stakes in
Tesco, Coca-Cola and Kraft.
Meanwhile 3G owns fast-food chain
Burger King, which it took private in
late 2010.
Heinz shares soared 19.87 per cent
to $72.50 on the New York Stock
Exchange last night after the unex-
pected deal. The buyout is the latest
in a stream of mega-deals that have
lit up the market since the New Year,
including Liberty Global’s £13.96bn
bid for Virgin Media.
Heinz said the takeover has been
approved by the board but still needs
to be voted on by shareholders. It is
expected to close in the third quarter
of this financial year.
3G Capital’s co-founder Alex
www.cityam.com FREE
Behring stressed that Pittsburgh
would remain as the company’s glob-
al headquarters, adding that the con-
dition was part of the deal.
He said is was too early to talk
about cost cutting but said in con-
trast with some companies that 3G
has bought in the past, “Heinz is
doing extremely well”.
It is not immediately clear if Bill
Johnson, Heinz’s chief executive for
15 years, will stay on. Johnson is wide-
ly credited with driving Heinz’s
recent strong growth. Heinz’s share-
holders include US Secretary of State
John Kerry’s wife Teresa, who is the
widow of HJ Heinz and the heiress to
the ketchup empire. The size of her
holdings is unclear.
BY JAMES WATERSON
FTSE 100 ▼6,327.36 -31.75 DOW ▼13,973.39 -9.52 NASDAQ▲3,198.66 +1.78 £/$ 1.55 unc £/€ 1.16 unc €/$ ▼1.33 -0.01
BY KASMIRA JEFFORD
BUFFETTDINESON
HEINZ FOR $28BN
ISSUE 1,820 FRIDAY 15 FEBRUARY 2013
MORE: Page 3
▲ ▲
Certified Distribution
from 31/12/12 to 27/01/13 is 127,008
WARREN Buffett may have had one eye on Heinz since 1980, but it
took an airborne chat with influential Brazilian investor Jorge
Lemann to really open his eyes to the possibilities lying at the bot-
tomof theketchupbottle. TheUSbusiness magnate saidyester-
day that he and 3G founder Lemann have known each other since
thepair servedontheboard of Gillettein the1990s andthat
Lemann first approached him with the idea in December. “We
were on a plane together, so I followed –I have a file on Heinz that
goes back to 1980 – But, he is the one that got me going on this in
early December.” Lemann, a globe-trotting financier with Swiss
roots, made his money in banking and gained notoriety for help-
ing to pull together the deals that ultimately formed the brewing
giant AB InBev. The 73-year-old began his career as a talented
tennis player and made it to Wimbledon before turning to
finance, graduatingfromHarvard in1961 andtraining at
Credit Suisse before foundinginvestment bankingfirm
Banco Garantia.
Ed Miliband
wants owners
of expensive
homes to pay
more tax
H.J. Heinz Co
14Feb 8Feb 11 Feb 12Feb 13Feb
60
62
64
66
68
70
72
$
72.50
14Feb
ALLISTER HEATH:
Page 2
▲ ▲
THE BRAZILIAN WITH A TASTE FOR BEANS
OSCAR
PISTORIUS
CHARGED
WITH
MURDER
SEE PAGE 30
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
EU power grab with new
global transactions tax
THE CITY was shocked yesterday by a
surprise extension of the planned EU
financial transactions tax (FTT) as
the 11 countries implementing the
charge launched plans to levy the
tax across the whole world.
Under the scheme trades of shares,
bonds or derivatives will be taxed
regardless of where the transaction
takes place as long as there is “suffi-
cient link between the transaction
and the territory of the FTT jurisdic-
tion” – for instance if one of the par-
ties is based in the 11 states, has a
licence to deal in those states, or if
the instruments being traded origi-
nated in the countries.
That means a great deal of
London’s business could be affected,
with cash flowing from the City into
the coffers of foreign states includ-
ing France, Germany and Italy.
Lawyers hope the powers can be
watered down before coming into
force in January 2014, potentially as
it interferes with the single market.
“This proposal rides roughshod
over the rights of the 16 member
states who have opted out of the tax,”
said Mayer Brown’s Alexandria Carr.
“It will be paid by their firms and
even those outside of the EU simply
because a party to the transaction is
located in one of the 11 states.”
The tax is intended to appear mod-
JPMorgan’s Gulati launches fund
JPMorgan’s global head of equity
proprietary trading is quitting to set up a
hedge fund in Switzerland in what will be
the first prominent launch of a fund since
several bank spinouts floundered last
year. Deepak Gulati, once one of the
bank's star traders, will launch Argentière
Capital probably in the second or third
quarter of this year, according to two
peopel familiar with the plans. In a snub
to London, Europe’s main hedge fund
centre, the firm will be based in Zug, the
low tax Swiss canton.
Browett returns to UK high street
The Briton who left Dixons for a short stint
as head of Apple's global retail stores is
returning to the UK high street as the new
chief executive of Monsoon Accesorize.
John Browett's appointment comes just
three months after he abruptly parted
company with Apple.
Dell defends $24bn buyout price
Dell has sought to counter rising
shareholder anger over its planned
$24.4bn buyout, as debate among
investors turned to whether founder
Michael Dell and Silver Lake will be forced
to increase their offer for the company.
Walt Disney must split top roles
The second-largest public sector pension
fund in America has renewed its drive to
force Walt Disney to split the roles of
chairman and chief executive and temper
executive pay awards.
Blue Inc goes for Republic stores
Blue Inc, the fashion chain for the young,
is in negotiations to buy as many as 50
Republic stores out of administration. A
purchase of about 50 of Republic’s 121
stores could safeguard about 1,000 jobs.
Apple complaints force cider change
So many people call the Wroxham Barns
store enquiring about gadgets, it has
decided to ditch the word Apple
altogether. The Apple Shop will be known
as The Norfolk Cider Shop instead.
Britvic and AG Barr to press ahead
Britvic and AG Barr will battle regulators
over their proposed £1.4bn drinks merger
after it was referred to the Competition
Commission. An investigation by the CC is
expected to take six months
SAC moves to stem investor outflow
SAC Capital Advisors, the hedge-fund
firm that is seeking to stave off client
defections amid legal and regulatory
scrutiny, is offering investors a more-
flexible timeline to withdraw their money.
CBS profit rises and ad sales pick up
CBS’s net income rose six per cent in the
fourth quarter as the media company
generated higher advertising revenue
despite a weak start to the fall television
season.
ANHEUSER-BUSCH InBev, the
world’s largest brewer, has revised
the terms of its $20.1bn (£13bn)
takeover of Mexico’s Grupo
Modelo in hopes of ending US
Department of Justice concerns
that the deal would mean higher
prices for US beer drinkers.
AB InBev said yesterday it had
agreed to sell Modelo’s Piedras
Negras brewery in Mexico to
Constellation and grant it
perpetual rights for Corona and
other Modelo brands in the United
States, at a cost of $2.9bn.
AB InBev alter
takeover terms
Commissioner Antonis Samaras wants to raise €30bn, split between the 11 states and the EU
2
NEWS
BY CITY A.M. REPORTER
BLACKROCK, the world’s largest
money manager, said yesterday
Peter Fisher was stepping down as
head of fixed income at the New
York-based firm.
Fisher will become a senior
director at the BlackRock
Investment Institute, which
produces research for investors.
BlackRock chief executive
Laurence Fink said Fisher, 56, had
completed a multi-year
turnaround to improve
performance at the firm’s vast
bond division.
BlackRock bond
head quits role
BY CITY A.M. REPORTER
BY TIM WALLACE
To contact the newsdesk email news@cityam.com
I
F it moves, tax it; if it doesn’t,
subsidise it; and above all make
sure the tax system is as
complicated as possible. That, and
a nasty dose of class war and anti-
finance prejudice, has become the
new modus operandi for many in
Britain and Europe. As a result,
yesterday was one of the worst days in
a long time for those of us who
believe that lower and simpler taxes
are key to rescuing Western nations
from long-term decline.
From Brussels, we got the latest
plans for a Tobin tax on financial
transactions. They are even more
destructive than previously thought
and were rightly attacked by Barack
Obama’s administration and the UK
government. The big problem – apart
from the fact that those who will pay
the tax are investors via reduced
returns, companies via a higher cost
EDITOR’S
LETTER
ALLISTER HEATH
Tax onslaught from Labour and Brussels will destroy jobs
FRIDAY 15 FEBRUARY 2013
of capital and the workers who suffer
as a consequence -- is that they are
outrageously extra-territorial, make a
mockery of the single market, and are
a threat to global free trade and capi-
tal flows. A transaction will be hit
regardless of where it takes place, as
long as it involves a financial instru-
ment eligible to be taxed issued in
one of the 11 countries stupid enough
to back the tax. Jobs will be lost in
London and New York; Brussels is
delusional if it thinks the tax will rise
tens of billions, and even more so if it
thinks this money will be a free
lunch. The European Commission’s
own cost-benefit analysis showed that
the tax would have hugely negative
side-effects.
From Ed Miliband and Ed Balls, we
got a proposal for a partial reintro-
duction of a 10p starting rate of
income tax over a very narrow range
of income, to be funded by a “man-
sion tax”. I’m very much in favour of
cutting tax on the working poor, who
are being horribly squeezed by falling
real wages – but the best way to do it
is to increase the personal allowance,
not to introduce yet another band in
our overly-complex tax system.
Regrettably, the Tories will presum-
ably pre-emptively adopt it. To keep
the “cost” of the measure low, and to
make sure the “rich” don’t benefit,
we are likely to see yet another lower-
tax were deferred, fork out even more
inheritance tax); someone with ten
£1.9m homes and no mortgages
would pay nothing but someone with
one £2.1m home and a £2.3m mort-
gage would be hit; and so on.
The only way to salvage this awful
scheme would then be to impose a
fully-fledged wealth tax on all assets,
with disastrous consequences. Slowly
but surely, the definition of a “rich”
person would be broadened. Every
nation that has ever tried a wealth tax
– from France to Sweden – has faced
an exodus of capital and talent. The
poor, who get left behind, always suf-
fer the most. Taxing the rich until the
pips squeak always means less
growth, investment and jobs for the
rest of us. Shame nobody ever learns.
ing of the 40p threshold, dragging
more people into the net. Those of us
who believe in flatter and simpler
taxes have been roundly defeated.
As to the mansion tax, it represents
a return to the politics of envy of the
ugliest kind. It demonises those who
have done well in life. It would reopen
property rights and implies that even
though tax is payable on income, and
stamp duty payable on house pur-
chases, and inheritance tax payable at
death, the British now believe that a
hefty annual fee should also be neces-
sary to have the right to own an
expensive home.
It would require the revaluation of
all homes, leading to higher council
tax for hundreds of thousands.
Absurdities abound: some would pay
over 100 per cent tax on their income;
cash-poor pensioners would be forced
to extract equity or sell-up (or if the
est – a charge of 0.1 per cent on stock
and bond trades and 0.01 per cent on
derivatives transactions – but by apply-
ing the charge to every stage of a trans-
action the bills will quickly add up.
“This tax cascades – it applies sepa-
rately to each leg of a financial transac-
tion. For example, when a pension
fund buys a corporate bond it will
often clear through brokers and other
institutions in the FTT zone,” said Dan
Neidle from Clifford Chance.
“So whilst the headline rate is 0.1 per
cent, the effective rate in many cases
will be closer to one per cent.”
And although the stated aim is to hit
banks, the fee will hurt investors like
pension funds and individuals.
“This makes the cost base higher and
that additional cost will have to pass
through to investors,” said investment
manager Jonathan Clatworthy from
Arbuthnot Latham, who added the tax
will drive investors away from Europe.
“The tax will certainly have an
impact when looking at which mar-
kets to invest in. The extra frictions
and transaction costs will make the
markets less efficient and create more
opportunity for mispricing.”
n Derivatives transactions will be taxed at
a rate of 0.01 per cent
n Equities and bonds deals will face a 0.1
per cent charge
n The Commission hopes to raise €30bn
(£25.9bn) per year from the tax
n That would be split between the EU
budget and the 11 states behind the tax
n But sceptics point to previous
experience in countries like Sweden where
the tax drove transactions to other markets
and raised next to nothing
n To combat that, the Commission wants
the tax to apply across the world
n If any participant in the trade is based in
the 11 states, or is trading on behalf of
someone who is, all participants will pay
the tax
n Even if none of the participants are
based in the 11 countries, they will all pay if
the instrument being traded was issued in
the bloc
n That could lead to major rows over the
impact on the single market, which is
protected by treaties and highly valued by
countries like the UK
n How ever it is implemented in the end,
the tax will harm savers because the charge
will reduce the returns on their investments
n And businesses should expect to take a
hit to – firms trying to hedge their
exposure to exchange rates fluctuations or
changes in interest rates will see those
derivative purchases hit by the tax
n The countries involved are: Germany,
France, Italy, Spain, Greece, Portugal,
Belgium, Austria, Slovakia, Slovenia and
Estonia
n The UK opposes the charge and wants to
make sure it does not affect investors here
HOW THE FTT WORKS
WHAT THE OTHER PAPERS SAY THIS MORNING
Find your next step at
CITYAMCAREERS.com
TO broker the marriage between one of the
world’s most famous investors and its best-
loved brands, both sides turned to long-time
affiliates for financial advice, favouring
smaller firms over Wall Street’s traditional
big hitters.
Heinz chose Blair Effron’s Centerview
Partners, founded in 2006 by the ex-UBS
investment bank vice chairman.
Effron has a long history of advising on big
ticket consumer deals, including InBev’s
$52bn acquisition of Anheuser-Busch and
the merger of Unilever and Hellman’s owner
Bestfoods in 2000.
Heinz also instructed Bank of America Merrill
Lynch and turned to Davis Polk & Wardwell
for legal advice.
Berkshire Hathaway and 3G Capital, mean-
while, were advised by Lazard on their
consortium bid, with help from JP Morgan
and Wells Fargo.
Lazard has previously worked for 3G’s Jorge
Paulo Lemann on his $4bn acquisition of
Burger King in 2010.
Munger, Tolles & Olson was legal adviser to
Berkshire Hathaway, while Kirkland & Ellis
worked for 3G.
Moelis & Company – which has been climb-
ing up the M&A rankings in recent months
having been better known in the past for
restructuring work – was financial adviser to
the transaction committee of Heinz’s board
and law firm Wachtell Lipton Rosen & Katz
served as its legal adviser.
Steven Lipin, the former Wall Street Journal
finance editor and US senior partner at
Brunswick Group since 2001, headed up
Heinz’s external PR advice.
ADVISERS BUFFETT’S BID FOR HEINZ
BLAIR EFFRON
CENTERVIEW PARTNERS
Buffett’s taste for beans gives
deal outlook a shot in the arm
I
F confirmation were needed that
mega-deals are back on the
agenda, then the Sage of Omaha
certainly provided it yesterday.
Buffett’s $28bn move for Heinz is
the biggest deal this year in an
already booming market, with the
value of transactions in the last
week alone – including Liberty
Global’s bid for Virgin Media and
the US Airways/AMR tie-up –
nearing a huge $90bn.
For weary bankers, lawyers and
other advisers who’ve been living off
scraps for the past five years, the
sudden flurry of activity smells like
something of a renaissance. For the
rest of us, it certainly feels like the
start of something exciting.
Dig a little deeper though, and it’s
clear that things have changed since
the mad days of 2005-7. Buffett’s
choice of advisers (and financiers) is
proof that elephant-sized deals no
longer need elephant-sized
traditional investment banks. Wells
Fargo – in which Berkshire holds a
close-to 20 per cent stake – stumped
up cash for the deal as well as
leading Buffett’s transactional
advice, in something of a coup for a
bank better known for mortgage
lending than billion-dollar M&A
deals. It’s life, bankers, but not as
you knew it.
As for Buffett, it’s no secret that
he’s been sniffing around for a
worthy target for his £48bn cash-pile
for some time, and choosing
Valentine’s Day to shoot an arrow
though the heart of one of the
world’s best-loved brands is certainly
fitting. On the surface, Buffett and
beans looks like a match made in
heaven. Heinz’s solid management
history, strong brand position and
stock outperformance – well ahead
of both its sector and the broader
S&P500 – fit his long-held
investment model of sticking to
what he knows.
The veteran investor has
historically shied away from
investing in en vogue technology
firms he claims to know little about,
favouring instead brands that fit in
with his view of the world. With the
blockbuster Heinz deal, Buffett has
finally exercised the “itchy trigger
finger” he’s been referring to for
years, and his comments yesterday
that he’s already on the hunt for
another elephant will only stoke
excitement that a genuine pipeline
of deals is starting to return. Deal-
starved advisers will be hoping his
appetite for beans on toast is a taste
of things to come.
Elizabeth Fournier is News Editor of
City A.M. @ej_fournier
BOTTOM
LINE
ELIZABETH FOURNIER
DEALS ARE BACK: 2013 HAS GOT OFF TO A BUMPER START
FRIDAY 15 FEBRUARY 2013
3
NEWS
cityam.com
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1869 Henry J Heinz founds
Heinz Noble & Company with a
friend, L Clarence Noble.
Their first product is Henry's
horseradish relish, bottled in
clear glass to showits purity
1876 The company goes
bankrupt but Heinz founds
another business called
F & J Heinz with his brother
John Heinz and a cousin
Frederick. They launch Heinz
tomato ketchup
1896 Heinz opens its first
overseas ofce in London.
Although Heinz was manufacturing
more than 60 products at the time,
Henry believed 57 was a lucky
number so came up with
the slogan “57 Varieties”
1920’s UK production
starts, but Heinz is still
exporting baked beans,
spaghetti and tomato
ketchup to the UK from
America and Canada
1
9
9
0
s
1987 Irish businessman
Tony O'Reilly becomes
chairman of the company,
having joined in 1969.
He is the first non-family
member to hold that post.
1990s Heinz expands
distribution to Russia
and China, bringing the
total number of countries
to which beans were
exported to 60
1999 Heinz becomes
the world's fourth largest
food and drink brand,
behind Coca-Cola, McDonald's
and Nescafe
2005 HP, Lea & Perrins
and Amoy brands join
the Heinz family
of iconic sauces
2013 Berkshire Hathaway
and 3G announce they
are to take company
private
HEINZ TIMELINE
1946 Heinz lists
on the NewYork
Stock Exchange
1940’s A wartime shortage
of ingredients means no
ketchup is sold in the
UK from 1939-1948
DATE DEAL VALUE BUYER TARGET
14 February £18bn Berkshire Hathaway & 3G Heinz
6 February £13.96bn Liberty Global Virgin Media
5 February £13.9bn Silver Lake Partners Dell
14 February £7.1bn AMR US Airways
22 January £2.4bn Spirit Realty Capital Cole Credit
Property Trust II
30 January £2.7bn Kinder Morgan Energy Partners CopanoEnergy
LAWYERS yesterday raised concerns
over plans to ban companies that
have taken part in aggressive tax
avoidance schemes from bidding for
large government contracts.
Ministers said the rules, which are
due to come into effect at the start of
April, will force businesses who want
Whitehall contracts worth more
than £2m to disclose whether HMRC
has successfully challenged their tax
return, as well as any involvement in
failed tax avoidance schemes.
However Jason Collins of law firm
Pinsent Masons said the rules were
too flexible: “The proposals give too
much influence to bureaucrats and
could result in companies risking
challenging HMRC on tax avoidance
disputes rather than deciding to
settle. Many companies have settled
with HMRC over tax avoidance
disputes and have since acted in
good faith, but now they could be
barred from procurement contracts.”
Under the plan departments will
also gain the power to terminate
ongoing contracts worth more than
£2m if a company is later found to be
involved in tax avoidance schemes.
“These new rules will enable
departments to say no to firms
bidding for government contracts
where they have been involved in
failed tax avoidance,” said Treasury
minister Danny Alexander.
Tax cheat ban
on state deals
questioned
BY JAMES WATERSON
THE EUROZONE suffered another
sliding quarter of output in the
final three months of 2012, with
worse-than expected contractions
in both France and Germany.
The bloc’s GDP slid 0.6 per cent in
the final quarter, Eurostat revealed
yesterday, below the consensus fore-
cast predicting a 0.4 per cent fall
and capping off a yearly decline of
0.9 per cent.
But according to Capital
Economics, what was most surpris-
ing was not the worse-than-expect-
ed fall but the fact that the
currency area’s two biggest and so
far most resilient economies –
France and Germany – suffered
unexpectedly sharp falls, of 0.3 and
0.6 per cent respectively.
The worst GDP blows were saved
for crisis-hit Portugal, Spain, Italy
and Greece. Spanish GDP fell 0.7 per
cent in the fourth quarter, to cap
off a 1.8 per cent slide over the year.
Italian GDP plunged 0.9 per cent
between October and December,
leaving it 2.7 per cent lower than a
Eurozone GDP
sinks further in
fourth quarter
BY BEN SOUTHWOOD
year before. Portuguese output
crashed 1.8 per cent in just three
months, contributing to the 3.8 per
cent slashed from its GDP over the
year.
But as has been typical throughout
the crisis, Greek woe put other
Southern European economic prob-
lems into perspective. GDP was
down six per cent over the year,
according to official figures. And
unemployment soared to 27 per
cent in November, separate official
data showed, up some 6.2 percent-
age points in just a year.
Capital’s Johnathan Loynes said
that survey data since then, though
improved, suggests the zone has
more gloom to come. “For now at
least, survey indicators are not
strong enough to suggest that the
Eurozone has pulled out of reces-
sion,” Loynes judged.
The only bright sparks in the data
were the baltic states: Latvia enjoyed
5.7 per cent growth during 2012, the
data showed, while Estonia’s econo-
my grew 3.4 per cent and
Lithuania’s GDP expanded by 3.1
per cent.
FRIDAY 15 FEBRUARY 2013
cityam.com
4
NEWS

GERMANY
EUROZONE
-0.9% GDP
+0.4% GDP
GDP -0.4%
BELGIUM
GDP -1.6%
FINLAND
-1.8% GDP
SPAIN
-3.8% GDP
PORTUGAL
-2.7%
ITALY
-0.3% GDP
FRANCE
+3.4% GDP
ESTONIA
+1.2% GDP
SLOVAKIA
-0.9% GDP
NETHERLANDS
*Figures show annual change in GDP in a given member area
GDP
AUSTRIA
GDP +0.4
-6.0%
27% IN
NOV 2012
UP FROM 20.8%
A YEAR EARLIER
GDP
UNEMPLOYMENT
GREECE
EUROZONE CRASHES FURTHER INTO DEPRESSION IN FINAL QUARTER OF YEAR
-3.0%
CYPRUS
GDP
SIX MORE banks are reviewing all
their sales of interest rate swap prod-
ucts after the finance watchdog
found over 90 per cent of sales exam-
ined broke the rules, the Financial
Services Authority said yesterday.
Allied Irish bank, the Clydesdale
and Yorkshire banks, Co-Operative
Bank, Santander UK and the Bank of
Ireland will all review their sales and
compensate anyone who was mis-
sold the protection against rate rises.
They join the big four banks
which have already agreed a process
to decide which were mis-sold.
More banks in
swap scandal
BY TIM WALLACE
FORMER Lloyds chief Eric Daniels
yesterday claimed most PPI policies
were not missold, and that banks
had even paid out to customers
who did not have insurance
because of the overwhelming
volume of complaints.
“I believe customers did know
what they were buying. They got
good value. In those cases where
they were missold products, that
clearly is wrong, but that is not the
majority,” he told MPs and peers.
Lloyds has set aside a total of
£5.3bn for compensation payouts.
Ex-Lloyds boss
defends PPI
BY CITY A.M. REPORTER
FRENCH bank BNP Paribas is launch-
ing a major cost cutting programme
to shore up profits in the face of
tough markets and regulatory pres-
sures, the lender said yesterday.
Profits came in at €514m (£422.6m)
for the final quarter of 2012, down
32.8 per cent on the same period of
2012. But income for the year as a
whole still increased, rising 8.3 per
cent to €6.55bn.
On the back of that success the bank
raised its Basel III core tier one capital
ratio to 9.9 per cent, well ahead of
most of its peers. But the weak eco-
nomic outlook prompted the institu-
tion to outline a shake up costing
€1.5bn over the next three years.
By investing in technology and sim-
plifying reporting processes BNP
Paribas hopes to save €2bn per year.
The bank has not disclosed how
many jobs will go in the restructur-
ing, but said no business units will be
cut. And it argued some sectors are
growing, even as there are troubles in
its recession-struck home market.
BNP is planning to expand its Asian
BNP Paribas
cuts costs as
red tape hits
BY TIM WALLACE
investment and corporate businesses,
hiring 1,300 more staff in the region.
And its fixed income arm saw rev-
enues rise 2.2 per cent on the year as it
benefits from a rebalancing of the
European firms away from bank debt
and into the capital markets.
“There is increasing demand for
fixed income securities from smaller
issuers, particularly in Europe – it is
one side effect of the new regulations,”
fixed income head Fred Janbon told
City A.M., referring to new capital rules
making it expensive for banks to lend
to smaller firms. “So far in the year we
have seen 57 bond issues from clients
who have not issued debt before.”
BNP Paribas SA
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47.27
14Feb
SHARES in Spanish lender Bankia
plunged yesterday on fears the
recapitalisation plan for the
group could almost wipe out
investors.
The nationalised institution
applied for a European rescue
worth €18bn (£15.48bn), leaving
shareholders fearing the worst.
Spanish newspaper reports
that the Fund for Orderly Bank
Restructuring (FROB) would
value shares at €0.01 sent the
stock tumbling.
But the FROB gave no
valuation, instead simply
Bankia bailout authority moves
closer to diluting shareholders
BY TIM WALLACE warning that a dilution will play
a part in the recapitalisation.
“The entity’s negative
valuation and its end-2012
projected results indicate the
price at which the FROB (will
participate in Bankia) will entail
a big reduction in the shares’
nominal value in order to absorb
losses,” the FROB said.
The bank’s stock opened down
22.65 per cent at an all-time low,
but rose a touch later on to end
the day down 1.7 per cent.
The group was put together as
a merger of regional lenders but
has struggled through the
housing bust.
FRIDAY 15 FEBRUARY 2013
5
NEWS
cityam.com
Prime Minister Mariano Rajoy is struggling with a recession which has hit house prices
ENGINEERING giant Rolls-Royce was
the biggest blue-chip riser yesterday
after it posted a 23.5 per cent rise in
underlying pre-tax profits to £1.43bn.
Rolls-Royce’s order book grew four
per cent to £60.15bn last year, and rev-
enues excluding currency changes
rose eight per cent to £12.2bn.
The gains mark Rolls-Royce’s tenth
straight year of profit growth.
Group margins rose from 10.7 to
12.2 per cent, and Rolls said this will
improve further in 2013.
The firm, which makes the Trent
1000 engines used in some of Boeing’s
beleaguered 787 Dreamliner aircraft,
said the decision to ground the planes
would not affect its profits this year.
“Boeing continues production so no,
it won’t impact us, and I’m confident
Boeing will sort the problems out
soon,” chief executive John Rishton
told reporters. “For the full year 2013,
we expect the group to see good
growth in underlying profit.”
The firm did not comment on an
ongoing Serious Fraud Office probe
Orders soar as
margins grow
at Rolls-Royce
BY MARION DAKERS into bribery and corruption in
Indonesia and China, beyond confirm-
ing that Lord Gold is reviewing its
compliance procedures.
Rolls-Royce also confirmed the
appointment of new chairman Ian
Davis. “Ian has experience under a raft
of different circumstances,” said
Rishton, noting Davis’s time at BP dur-
ing the 2010 Gulf of Mexico spill.
The group ended the year with
£1.3bn in cash, following its disposal of
a stake in International Aero Engines,
and the firm plans to “continue to
invest for future growth” this year.
Shares closed 3.3 per cent higher.
Manchester United kick on as
commercial revenue expands
BY JULIAN HARRIS
MANCHESTER United’s growing
commercial operations boosted its
revenues and pre-tax profits in the
final quarter of last year, the club
announced yesterday.
The New York-listed football
giant said that commercial sales
reached £35.6m in the three
months to 31 December 2013,
allowing revenue to edge up to
£110.1m – 8.7 per cent higher than
the same period a year earlier.
Earnings before interest, tax,
depreciation and amortisation
(Ebitda) was £50.2m, up 11.8 per
cent on the year-earlier period.
A tax charge, contrasting with
an earlier tax credit, was blamed
for net income sinking 61.5 per
cent to £16.2m.
The club, taken over by the
Glazer family in 2005 through a
leveraged buyout, has a debt pile
of £366.6m.
Shares closed down 0.91 per
cent at $18.54, yet remain higher
than the $14 price at which they
floated last August.
The morning after a 1-1 draw
away at Real Madrid in the
Champions League, the club also
said it has signed a new sponsor
for its training kit for the next
eight years. However, United
refused to reveal the identity of
the new sponsor.
Monte dei Paschi’s ex-finance
chief arrested in Italian probe
BY CITY A.M. REPORTER
ITALIAN police yesterday arrested
the former head of Monte dei
Paschi’s finance department, who is
at the centre of an inquiry into
alleged fraud and bribery at Italy’s
third largest bank.
Gianluca Baldassarri is the first
person to be arrested in a widening
scandal that has rocked the world’s
oldest bank and stirred up a
financial and political storm before
parliamentary elections on
24-25 February.
The prosecutors are investigating
Monte dei Paschi’s costly
acquisition of smaller rival
Antonveneta from Santander in
2007 as well as a series of loss-
making derivative and structured
finance trades dating back
to 2006-09.
They accuse Baldassarri of
helping to mislead regulators over
the true nature of a secret
derivative contract that was found
in a safe by the bank’s new
management in October 2012.
Baldassarri left Monte dei Paschi
shortly after the arrival of new
chief executive Fabrizio Viola in
January 2012.
Baldassarri has never commented
publicly on the allegations.
Monte dei Paschi won final
approval last month for a €3.9bn
state bailout.
Rolls-Royce Holdings PLC
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14Feb
Rolls produced another strong set of results, highlighting the benefits of
the decade-long strategy, providing consistent results in all economic condi-
tions. With operational progress showing through in financial improve-
ments... we remain confident that Rolls’ strategy will continue to deliver.
ANALYST VIEWS


Strong results, as expected. No material change to estimates at this
stage but there is headroom. Shares have been strong into results but a 2014
EV/EBIT of nine times is attractive for market leadership in the widebody
market, opportunities in Marine and the focus on cash.

The profits and strong order book shows that the investment strategy is
paying off and so long-term holders are probably happy enough to focus on
capital appreciation than yield in the medium-term.

WHAT DID YOU MAKE OF
ROLLS-ROYCE’S RESULTS?
ROGER JOHNSTON EDISON

BEN BOURNE LIBERUM

MIKE VAN DULKEN ACCENDO MARKETS
SHARES in Russian bank VTB shot
up as much as five per cent
yesterday after reports that Qatar’s
sovereign wealth fund is preparing
to invest up to $3.5bn (£2.3bn).
VTB, which has offices in
Moscow, London New York and
Singapore, is said to be in the final
stages of talks with the Qatar
Investment Authority about a cash
injection.
Neither firm responded to a
request for comment yesterday.
VTB has expressed an interest in
issuing equity this year, as the
Russian government gets ready to
reduce its stake in the bank.
Qatar interest
lifts VTB stock
BY MARION DAKERS
FRIDAY 15 FEBRUARY 2013
6
NEWS
cityam.com
A NEW head of British Gas is set to be
installed by parent company
Centrica as soon as today, with the
firm’s US executive Chris Weston
widely tipped to be taking over, it
emerged last night.
Weston is currently head of
Centrica’s US gas retail business
Direct Energy.
He is set to replace outgoing man-
aging director Phil Bentley, who is
stepping down after six years in
charge of the UK’s biggest ener-
gy retailer for customers.
The move would be a return to
British Gas for the 48-year old,
who served in the British Army
for seven years and holds a PhD
Centrica set to
name US head
British Gas boss
BY MICHAEL BOW
in quantitative finance from Imperial
College, London.
He was managing director of British
Gas Services, which offers boiler
repair services and insurance servic-
es, from 2005 until moving across to
Centrica, having joined the business
in 2002 from OneTel.
Bentley has led the FTSE 100 compa-
ny as managing director since 2007,
having joined in 2000 as finance
director.
The change at the top of one of
Britain’s main energy providers
comes at a time of upheaval in
the energy sector, with the
industry coming under the
political spotlight and rapid
changes to US energy markets.
Earlier this month Centrica
scrapped plans to build new
nuclear power stations in
Britain with French
partner EDF .
Chris Weston is tipped
to take the helm
FRIDAY 15 FEBRUARY 2013
7
NEWS
cityam.com
INSIDE
TRACK
DAVID HELLIER
F
OUR weeks ago I asked Andrew
Grant of Tulchan a simple
question. Had his firm been
fired from the retailer Marks &
Spencer as its external financial
public relations adviser, following
the leaking of its annual results
which forced their rushed and
premature publication?
Grant, rightly known for being
courteous, well-informed and
straightforward, responded that as
far as he knew there had been no
parting of the ways between his
firm and the company it had served
for eight years. He also told me, and
I have no reason to not believe him,
his firm was not the source of the
leak to Sky TV’s Mark Kleinman,
who broke the story.
But Grant proceeded to speak to
the M&S chairman Robert
Swannell, a former Schroders
investment banker, and Marc
Bolland, the M&S chief executive, to
make sure Tulchan was still being
retained by the retailer.
When Grant came back he told
me he had been assured that he was
not in danger of losing the account
and that no discussions had been
taking place with other agencies.
Two weeks ago, alas, Grant was
given the bad news that I feared he
would receive all along. He was
summoned to see the retailer’s top
brass and told his account was
being put out to review and that he
wouldn’t be asked to re-apply for it.
Now the focus turns to
Brunswick, the company I am told
will win the account from Tulchan.
Bolland is keen to rehire Alan
Parker’s agency – it was the M&S
agency before Tulchan – believing it
will help him spread a more
positive message about M&S and its
plans. That’s perhaps not an easy
task when like-for-like sales are
falling in key sectors but not an
impossible one if the right people,
like John Dixon, have a strategy for
reversing such decline.
Bolland has a reputation for not
being as candid as he perhaps
should be with the media. He also
has a hard act to follow, for in Sir
Stuart Rose M&S had the closest a
boss could be to a media luvvie.
For months, the group denied
speculation that its head of
clothing Kate Bostock was defecting
to Asos, until it was ready to
announce her replacements. The
denials did not forge a trusting
relationship with the press pack or
financial analysts.
If Brunswick wins the account – it
has conflicts, with Tesco and
Debenhams among its other clients
– its first job ought to be to curb
Bolland’s instinct to obfuscate and
delay confirming developments
within the group, be they positive
or negative.
He has every right to end his
links with Tulchan if he feels he can
get a better service elsewhere. But
he could have communicated the
change more deftly.
And if one of his star performers
is leaving, he may as well admit it,
rather than stubbornly giving a
different impression. As chairman,
Swannell should begin to help in
this process too, rather than
allowing these sorts of futile
denials. It is high time for a real
change of culture at M&S.
david.hellier@cityam.com
Reflections on Tulchan’s demise at Marks & Spencer
The barn filled with a chilling premonition that their escape plan could have a fatal flaw
BRITISH police investigating alleged
mislabeling of beef products arrested
three people yesterday at facilities in
Wales and Yorkshire which had
handled horsemeat and were raided
by police earlier. The arrests come as
the first set of results from tests
carried out by the Food Standards
Agency into processed beef suspected
of containing horsemeat are
revealed today. MPs said yesterday
that current results showing
horsemeat in beef are likely to just
be the “tip of the iceberg”.
Horsemeat arrests as results revealed
AMR and US Airways yesterday set
out on a winding road towards
regulatory approval for their
$11bn (£7.1bn) merger deal, which
was confirmed yesterday.
US Air’s management team, led
by chief executive Doug Parker,
will assume operational control of
the airline, while AMR creditors
will wind up owning 72 per cent
of the combined carrier and take
five seats on the 12-member
board.
The deal, which will create the
world’s biggest airline with 6,700
flights a day under the American
Airlines brand, faces up to two
years of “the hard work of
implementation”, said Robert
Mann, head of consultant RW
Mann & Co. “So far it’s just been
pushing paper.”
The tie-up is subject to
approvals from US and European
regulators, labour unions and the
US Bankruptcy Court, and will
give creditors of the bankrupt
American Airlines parent control
of the combined airline.
The two companies said they
expect $1.2bn in one-time
transition costs, spread over the
next three years, but that the deal
will generate $1bn in annual
savings by 2015.
The enlarged airline will be
based in Dallas-Fort Worth, Texas.
Airlines work
to sew up US
mega-merger
BY CITY A.M. REPORTER
RIO TINTO chief executive Sam
Walsh promised to cut costs and
spend capital more carefully this
year, as the miner slumped to a full-
year loss of $3bn (£1.9bn).
Walsh, who was appointed chief
executive in January after former
boss Tom Albanese resigned on a
$14.4bn write-down on two failed
acquisitions, said the company
would have an “unrelenting focus”
on pursuing value for shareholders.
The miner said it would target cost
savings of $5bn by the end of 2014.
Over the full year, Rio Tinto
plunged to a loss of $2.99bn, a drop
of 151 per cent from 2011’s profit of
$5.83bn, reflecting the write-downs
on its Alcan aluminium takeover in
2007 and a coal acquisition in
Mozambique.
Underlying earnings over the full
year fell 40 per cent to $9.3bn, on the
back of weaker commodity prices.
Despite the lower result, Rio Tinto
pledged a 15 per cent rise in the divi-
dend to $1.67 a share, which was
more than expected.
Separately, Andrew Harding has
Rio Tinto vows
to cut costs as it
posts $3bn loss
BY CATHY ADAMS
been appointed as chief executive of
the iron ore division, replacing veter-
an miner Walsh who became chief
executive in January.
Jean-Sebastien Jacques has been
appointed chief executive of the cop-
per division to replace Harding.
Cailey Barker, analyst at Numis
Securities, hailed the results as
“slightly positive”.
Rio Tinto looks like “the pick of the
bunch here”, he added, “but it needs
to come back from the write-down
and get the new chief executive bed-
ded in”.
Investors were not too deterred by
the loss, and shares closed down 0.31
per cent at 3,745.5p.
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14Feb
SHARES in oil engineer Amec sank
yesterday as it warned revenue
growth this year would be lower
than expected.
Strong growth in conventional
oil and gas markets would be
offset by softening demand in the
mining market and reduced oil
sands revenue, the FTSE engineer
– which designs and builds
infrastructure for the oil and gas,
mining, nuclear and renewable
energy sectors – said yesterday.
Despite the disappointing
outlook, Amec posted an 11 per
cent rise in annual earnings to
Amec beats forecasts but warns
revenue growth is set to slow
BY CATHY ADAMS
£331m, thanks to a surge in
revenue from oil and gas activity,
prompting it to pledge a 20 per
cent hike in the dividend to 36.5p
per share.
Nuclear power is set to be a
growing focus for blue chip Amec,
as it aims to diversify away from
traditional oil and gas markets.
Chief financial officer Ian McHoul
told City A.M. yesterday that
nuclear energy was “an important
part of the equation” going
forward for the company.
Shares closed down 7.3 per cent
yesterday at 1,042p, making Amec
the biggest faller on the blue chip
index.
FRIDAY 15 FEBRUARY 2013
8
NEWS
cityam.com
Amec serves customers in the oil & gas, mining, clean energy and environment markets
9
INSURANCE giant Zurich yesterday
beat expectations as it unveiled net
profits of $3.88bn (£2.5bn) for 2012,
an increase of three per cent on last
year, helped by healthy returns from
the company’s investment division.
Although many other insurers
have reported a largely disaster-free
year, Zurich said it had suffered
from “above average levels of
catastrophe, large and weather-
related losses” including superstorm
Sandy and losses in Germany.
“We delivered a solid performance
in 2012, a year characterised by
ongoing economic challenges,” said
chief executive Martin Senn.
“The integration of our acquired
insurance businesses in Latin
America and Malaysia is progressing
well and contributing meaningfully
to growth as evidenced in the strong
contribution to profitability from
these areas.”
Zurich’s combined ratio, a
measure of underwriting
profitability, was 98.4 per cent,
compared to a forecast of 99.4 per
cent.
Peter Eliot, an analyst at
Berenberg, praised the company’s
performance: “Zurich continues to
benefit from strong trends in its
business and from its geographical
exposure. Strong premium rate
increases are continuing to be put
through, the life business is showing
strong growth.”
Zurich beats
forecasts to hit
£2.5bn profit
BY JAMES WATERSON
MONEY manager Aberdeen Asset
Management hit the acquisition trail
yesterday, bolting on a US fund man-
ager and taking a 50 per cent stake in
a private equity unit.
The investment house, which has
had a stellar market run over the
year, with its shares increasing 64
per cent, agreed to buy listed fund
manager Artio Global Investors for
$175m (£112m), a £22m premium on
the firm’s share price.
In a separate deal, Aberdeen has
also snapped up a 50.1 per cent stake
in SVG Advisers from its parent, FTSE
listed firm SVG Capital. Aberdeen is
paying some £17.5m for the outfit.
The buys will hearten shareholders
keen to see how management han-
dles the next stage of the company’s
growth, after a blockbuster 2012.
Investors rallied to the deal yesterday,
sending Aberdeen shares up 2.4 per
cent to a new high of 426.5p.
The business, which started life in
the granite city, had amassed a net
cash warchest of £224.5m according
to analysts before today’s deal, lead-
ing to speculation about what the
Aberdeen buys
up two firms in
spending spree
BY MICHAEL BOW
company would do with its cash pile.
Analysts now expect remaining cash
reserves of £50m. Chief executive
Martin Gilbert said no more deals
were imminent.
The purchase with Artio will see
Aberdeen add £9.2bn to its assets
under management, while the SVG
deal will add about £4bn.
SVG Advisers has a put and call
option to sell its remaining stake to
Aberdeen in three years’ time.
Gilbert told City A.M. the firm would
have liked to acquire the full owner-
ship of the unit outright.
The tie-up will marry SVG Advisers
private equity funds with Aberdeen’s
distribution platform.
Aberdeen Asset Management, which has
bought US fund manager Artio and half of
private equity unit SVG Capital, drew on its
house broker JP Morgan Cazenove to advise
it on the acquisitions.
Leading the deal team was Conor Hillery, a
managing director of corporate finance at
the investment bank, who moved to work
at Cazenove when it was a standalone enti-
ty in 2001. He moved into JP Morgan when
the two joined forces in 2004.
Hillery has been lead adviser for a number
of other money manager related transac-
tions over the years, including Friends
Provident Group’s de-merger from F&C
Asset Management in July 2009.
Most recently he was involved in the rights
issue of pension consolidator Phoenix
Group to raise £250m and also helped bro-
ker a rights issue by underwriter Catlin.
Hillery originally qualified as a chartered
accountant in Dublin while working at
KPMG before moving over to London in
order to pursue a career in investment
banking. Also working on the deal from JP
Morgan alongside Hillery was Usman
Khalid. Willkie Farr & Gallagher LLP was
used to act as Aberdeen’s US legal adviser
for its purchase of Artio, which is based in
New York.
ADVISERS ABERDEEN ASSET MANAGEMENT
CONOR HILLERY
JP MORGAN CAZENOVE
Aberdeen Asset Management chief executive Martin Gilbert has snapped up two firms
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14Feb
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FRIDAY 15 FEBRUARY 2013
11
NEWS
cityam.com
B
ROCK Gill is frustratingly un-
Googleable. Type his name into
any search engine and you’re
instead presented with links to
an American illusionist with the same
name. This Brock Gill is a miner, but it
might take some smoke and mirrors
for what he wants to pull off.
The 32-year-old Canadian has found
himself in quite a situation. Following
seven years in the Gobi desert, he
received a phone call that threw his
career down a very different path. The
voice at the end of the line was Nat
Rothschild, Bumi co-founder and bil-
lionaire financier, asking him to lead
the miner if his board changes are
voted through at next Thursday’s high-
ly-charged shareholder meeting.
“I was actually shopping for a steak at
the time when I got a message from
this person called Nat Rothschild,” says
Gill, having never heard of the finan-
cier or the company until December.
But Gill is an enthusiastic Rothschild
cheerleader now. “It takes a lot of per-
sonal drive and motivation to affect
this kind of change, to publicly admit
there had been mistakes. He wants to
believe in the future of the company,”
he tells City A.M.
Gill – other than by dint of his
youth – is very different from his Bumi
counterpart Nick von Schirnding, in
that he is a dyed-in-the-wool miner.
“It’s what my parents do, my stepfa-
thers do, my aunts and uncles do. My
childhood was spent within four miles
of a mine site,” he says.
He started off in insurance, but soon
slipped back into the family business,
and by 2006 was stationed in Mongolia
working for Ivanhoe Mines on the
huge Oyu Tolgoi copper project, even-
tually working up to deputy director
level.
His plan for Bumi, if Rothschild’s pro-
posals are voted through, is to shift the
centre of gravity of the company from
London to Indonesia, where subsidiary
Berau operates. This will include him
essentially moving to the mine site to
run day-to-day operations.
“We need miners to run the compa-
ny. The issue is that it has been very
London-focused. Bumi is nothing but a
mining company, and you need min-
ers to run it,” he says.
Despite his lofty ambitions, it’s not as
simple as being shipped off to
Brock Gill could find himself as the chief executive of the FTSE 250 coal miner
Mongolian mine boss
finds himself in midst
of ugly Bumi debacle
Can Nat Rothschild’s chosen one overcome inexperience – and
shareholder strife – to lead the troubled miner, asks Cathy Adams
I was shopping for
a steak when I got a
message from this
person called Nat

Kalimantan and digging stuff out of
the ground. If – and it’s a big if –
Rothschild succeeds in bulldozing
through his board changes, Gill will
have to separate Bumi Resources from
its London-listed parent. This will be a
huge stumbling block due to the rela-
tionship agreement that allows
Indonesian investors the Bakrie family
to nominate key company executives.
But Gill is forever optimistic. “Of
course we can deal with them. The
Bakries are pragmatic people. After all,
we’re dealing with a lot of money
here,” he says.
When asked about the much-antici-
pated vote next Thursday, Brock says
he is “optimistic” that Rothschild can
flatten the incumbent Bumi board.
“I’m looking forward to it. I’m excited
about the future of the company –
there’s a tremendous amount of
upside. Nat’s sole goal is to increase the
shareholder value of this company,
and he wants a team around him that
ensures it’s going to be done.”
GENERAL Motors said yesterday it
recorded “another solid year” after
its fourth-quarter earnings jumped
89 per cent to $892m (£575.5m),
despite wider losses in Europe and
higher costs in its core North
American market.
Full-year profits at the firm fell
36 per cent to $4.9bn, due in part to
higher tax rates, while revenues
rose 1.5 per cent to $152bn.
GM’s operations in Europe,
where the firm has struggled to
return to profit since its 2009
bankruptcy, delivered a $1.8bn loss
in the year, worse than the $700m
loss posted in 2011.
General Motors
hurt in Europe
BY AMY-JO CROWLEY
ONE of the UK’s biggest hedge funds,
Winton Capital, saw investors pull
about $1bn (£645m) from its funds last
year due to poorer than expected
performance.
Winton, a quantitative hedge
fund set up by Cambridge
physicist David Harding in
1997, saw total assets decline
from $29bn to $26bn over
2012, a source said.
Around $2bn of that came
from market movements but
the rest came from investors
such as pension funds
pulling funds
from its flag-
ship Winton
F u t u r e s
fund.
BY MICHAEL BOW
The outfit’s funds performed badly
last year, dropping 3.6 per cent, revers-
ing a good year in 2011 when it
increased 6.3 per cent.
A source close to the company
said it had seen net inflows in
the previous year. “We’re not
panicking,” they said.
Harding, who is thought
to be the richest hedge
fund manager in Britain,
set up Winton after leaving
AHL, the quantitative strate-
gy fund firm he co-founded.
Winton does a type of strate-
gy known as CTAs, which are
very liquid and may have
contributed to the out-
flows.
IN BRIEF
Morgan Crucible to change name
n Industrial materials group Morgan
Crucible reported a 25 per cent drop
in full-year profits yesterday, and
plans to change its name to Morgan
Advanced Materials as part of a
restructure. Pre-tax profits at the firm,
which offers carbon tech services to
the aerospace and space exploration
sectors, fell to £89.7m in 2012.
Randstad sees green shoots
n Recruitment firm Randstad
yesterday said the European jobs
market is stabilising, after it reported
a three per cent drop in revenue to
€4.2bn (£3.6bn) for the final quarter
of 2012. The firm said that the UK was
faring better, posting double-digit
revenue growth in finance.
Gatwick asks for price freedom
n Gatwick Airport yesterday
repeated its request to set its own
fees charged to airlines based on
bilateral contracts, rather than abide
by price caps imposed by the Civil
Aviation Authority. Gatwick said it
plans to invest £1bn over the next five
years as it looks to grow to 37m
passengers by 2020.
Pennon cautious about Viridor
n Shares in South West Water owner
Pennon fell 3.1 per cent yesterday
after the firm said its waste
management arm Viridor is still
suffering from declining volumes.
Pennon said it is reviewing the value
of some of Viridor’s assets, while the
water firm is performing as expected.
Winton Capital founder
David Harding
FRIDAY 15 FEBRUARY 2013
12
NEWS
cityam.com


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Investment in developing the UK’s oil and gas reserves hit a record high
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THE BEARD belonging to Goldman
Sachs chief executive Lloyd
Blankfein managed to catch every-
one’s attention in Davos, and as it
grows so does the stream of com-
mentary surrounding it.
Facial hair trends have, thankfully,
come a long way since JP Morgan’s
namesake John Pierpont Morgan
sported a bushy handlebar.
So, beard or clean-cut, what
is de rigueur in the Square
Mile these days?
The Capitalist consulted co-
founder of City tailor Cad &
The Dandy James Sleater,
who ought to know about
acceptable workplace
L to R: JP Morgan,
Goldman boss Lloyd
Blankfein and head
of Xstrata Mick Davis
The City of London Corporation’s
new health and wellbeing board
hosted a tenuous Valentine’s event
yesterday, though romance was a long
way down the agenda. The City’s
Guildhall played host to the Love Health
day, where activities on offer
included karate
demonstrations, belly
dancing, cycling and free liver
testing. Lord Mayor Roger
Gifford (pictured) popped
by with the Lady Mayoress,
although to The
Capitalist’s
disappointment the
pair declined to
take part in any of the
sporting events on show.
Deal of the day yesterday was
undoubtedly Berkshire
Hathaway and 3G Capital’s agreement
to buy ketchup-maker Heinz for £18bn.
It seems Berkshire Hathaway chief
executive Warren Buffett’s purchase of
the junk-food condiment should fit in
well with his culinary tastes. The
Oracle of Omaha has previously
admitted he enjoys Haagen-Dazs
strawberry ice-cream or cinnamon
toast for breakfast. The billionaire is
also partial to ordering hash browns
and root beer floats when visiting his
local diner, but apparently “never
orders vegetables”. Hopefully from
now on he’ll get his five-a-day with
plenty of tomato sauce.
FINANCIAL services firm BNY
Mellon was yesterday unveiled as
the new sponsor of the Oxford v
Cambridge Boat Race, replacing
outsourcing company Xchanging.
To celebrate the five-year deal,
BNY Mellon got Olympic rower
Katherine Grainger out on a boat
at Putney yesterday, and tested the
oar skills of staff when they had to
row against her. The firm have also
launched a campaign to ask
celebrities and politicians: Which
Blue are you? When asked the big
question, Cambridge Union Boat
Club president George Nash said
there was “only one answer that
makes sense.” The Capitalist will
leave readers to guess what that
might be.
Olympic rower Katherine Grainger and BNY Mellon marketing man Jamie Brookes
New Boat Race sponsor BNY
Mellon asks: Which Blue are you
14
cityam.com
FRIDAY 15 FEBRUARY 2013
cityam.com/the-capitalist
THECAPITALIST
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
grooming, having worked at BNP
Paribas before breaking into men’s
fashion. His verdict? “Short, well-
trimmed beards are massively back
in fashion.” So it seems the facial
fluff of Xstrata’s Mick Davis is bang
on trend. Perhaps Blankfein is grow-
ing out his designer stubble (“so
Nineties” says Sleater) to bring back
the full-blown grizzly beard.
The Blankfein
beard sparks
stubble debate
Gustav Steuch, head of corporate
finance for the Nordics region at BNP
Paribas, worked on Talvivaara’s €260m
rights issue.
Having studied at Copenhagen
Business School, Steuch is also head of
equity capital markets for the bank for
the Nordics and Netherlands regions.
The banker joined BNP Paribas in
November 2007, and led the develop-
ment of the bank’s equity capital mar-
kets franchise in the Nordics and
Netherlands.
He started his career at Danske Bank
corporate finance in 1998, working on
both mergers & acquisitions and equity
capital markets projects.
He became head of equity capital mar-
kets at Danske Bank in 2002.
Also involved in the rights issue were
JP Morgan and Bank of American
Merrill Lynch in London, and Nordic-
based banks Danske and Nordea. They
are all underwriting the issue.
College Hill had a role in the cash call as
the public relations adviser for Finland-
focused Talvivaara.
ADVISERS TALVIVAARA
GUSTAV
STEUCH
BNP PARIBAS
Pernod Ricard mulls a shot at
tequila company as sales rise
FRENCH spirits maker Pernod
Ricard yesterday hinted that it
could make a bid for tequila
powerhouse Jose Cuervo after
rival Diageo walked away from
a deal.
Pernod Ricard, the world’s
second-biggest spirits group
behind Diageo, also stuck with
its target of full-year profit
growth yesterday, thanks to
demand from Asia and the US
that offset declining sales in
France and Spain.
Chief executive Pierre
Pringuet said at a press
conference that his firm is
BY CITY A.M. REPORTER
“open to all forms of
discussions” about Jose Cuervo,
but stressed that a deal is not
imminent.
“We could do tactical
acquisitions in the next two
years, maybe strategic
acquisitions after that,”
Pringuet told Reuters.
Pernod, the owner of
Mumm champagne,
Absolut vodka and Martell
cognac, said yesterday it
still expected underlying
operating profit growth of
close to six per cent in the
year to June, slowing from
nine per cent in the
previous year.
Goldman Sachs analysts
said in a note they
believed Pernod’s
guidance was “conservative”.
First-half sales reached €4.91bn
(£4.21bn), an underlying rise of
three per cent, while underlying
operating profit grew one per cent
to €1.459bn, Pernod said.
Strong cash flow generation
helped cut net debt by €215m to
€9.148bn.
Pernod Ricard SA
14Feb 8Feb 11 Feb 12Feb 13Feb
92
91
93
94
95
96
97
98 €
96.03
14Feb
Talvivaara
14Feb 8Feb 11 Feb 12Feb 13Feb
82.5
85.0
87.5
90.0
92.5
p
86.50
14Feb
Diageo walked away from a deal
to buy Jose Cuervo last year
Tata Motors makes
Jaguar saloons
FRIDAY 15 FEBRUARY 2013
17
NEWS
cityam.com
FINNISH miner Talvivaara
yesterday said it will launch a
rights issue, as it swung to a
loss of €104m (£67m) over 2012.
It hopes that its €260m cash
call will help to shore up its
balance sheet as the miner
recovers from a year that has
seen a mine closure and the
company being demoted from
the FTSE 250.
The placing will help to
secure liquidity for future
operations, provide an
appropriate capital structure
for refinancing and satisfy
conditions for a revolving
credit facility, Talvivaara said
yesterday.
“Production challenges
suffered over the course of
2012 have underlined the need
to focus on stabilising and
improving Talvivaara’s
production processes in order
to return to a sustainable
ramp-up towards the targeted
full capacity of 50,000 tonnes
Talvivaara launches €260m
cash call to improve finances
BY CATHY ADAMS of nickel per year,” said Tapani
Jarvinen, chairman of the firm.
Over the year, Talvivaara has
faced some considerable
production obstacles, as well as a
battling a weak nickel price.
Output for the full year came in
below target – for the third year in
a row – at 12,916 tonnes of nickel,
and in September a water
imbalance forced the miner to stop
production, and it closed its mine
in November due to a leak.
Talvivaara is currently working
on ramping up production and
removing excess water from the
mine site.
TATA Motors posted its first
drop in profit in five quarters
yesterday after its Jaguar Land
Rover (JLR) business faced
higher spending and a drop in
operating margin following
18 months of soaring profit.
Rising investment costs and
falling profitability at the
carmaker, whose profits have
propped up its weaker parent
for the past year and a half,
combined with a drop into the
red for the Indian company’s
domestic business.
JLR said operating margin
was 14 per cent in the
December
quarter,
down
from 17
per cent a
year ago,
also due
Fall in profits at Jaguar Land
Rover hits parent Tata Motors
BY CITY A.M. REPORTER
in part to a shift towards less
profitable models.
Total sales at JLR rose to
£3.8bn but profit fell to £296m,
down 25 per cent from a year
earlier when it was £393m.
In China, the world’s biggest
auto market, JLR sales jumped
71 per cent in 2012, making it
the marque’s second-largest
market after Europe. Tata’s net
profit for the third quarter of
the financial year ending
31 March came in far below
market estimates at 16.28bn
rupees (£193.8m), down 52 per
cent on the year and the first
fall since the three months to
September 2011.
JLR had net cash
of £437m at the
end of September,
it said yesterday.
IN BRIEF
Pepsi posts rising revenues
nPepsiCo reported a higher-than-
expected quarterly profit yesterday,
helped by increases in sales volume
and prices, and gave a 2013 forecast
consistent with its ongoing
turnaround plan. The American drinks
and snacks maker posted net income
of $1.66bn (£1.07bn), up 17 per cent
on a year ago and beating Wall Street
forecasts. Net revenue fell one per
cent to $19.95bn, though organic sales
growth came in at five per cent.
Publicis expects a tricky year
nAd agency Publicis finished 2012 on
a high note as sales got a big bump
from emerging markets and on-line
marketing, yet it warned yesterday
that the year ahead would be difficult,
especially in Europe. The group, which
competes with larger rivals WPP and
Omnicom, posted organic growth of
3.9 per cent in the fourth quarter and
sales of €6.61bn (£5.7bn), recovering
from a sharp slowdown in advertising
spending in September.
IN BRIEF
Firms criticise UK broadband
nBusiness has hit out at the state of
broadband internet in the UK, in a poll
carried out by the Institute of Directors
(IoD). Just 57 per cent of IoD members
are satisfied with download speeds on
fixed lines, the survey, out this morning,
revealed. Conversely, some 83 per cent
of respondents said that significantly
faster internet speeds would improve
their productivity, while 13 per cent said
it would drive them to hire more staff.
THE BUY-TO-LET market enjoyed rapid
expansion in 2012, ballooning back
up towards its pre-recession peak,
according to figures out yesterday.
Buy-to let lending exploded 19 per
cent between 2011 and last year, from
£13.8bn to £16.4bn, the Council of
Mortgage Lenders (CML) said. This
boom saw it taking up 11.5 per cent of
total gross mortgage lending in 2012,
up from the 9.8 per cent it took up
during the previous year.
“Buy-to-let is benefiting from strong
tenant demand, which is likely to con-
tinue,” claimed CML boss Paul Smee.
“Landlords who can demonstrate a
strong track record are in a good posi-
tion to expand their portfolio.”
Smee referenced figures in the CML
release showing that just 1.14 per cent
of buy-to-let mortgages ended 2012 in
arrears – in comparison to 2.03 per
cent of owner-occupier loans.
However the yearly repossession rate –
though below 0.5 per cent in both
cases – was nearly twice as high for
Buy to let loans
grow to 12pc of
market in 2012
BY BEN SOUTHWOOD
buy-to-let loans.
This data came just before figures
today revealed rents fell in January to
reach their lowest point in six months.
The average rent across England and
Wales crept down 0.3 per cent in the
first month of the year, reaching £732
per month, according to figures
released by LSL Property Services this
morning.
But the yearly increase was still firm-
ly positive, with a 2.8 per cent gain –
worth about £20 per month – over the
12 months to January.
And in London’s tight property mar-
ket rents raced up 5.2 per cent – or £54
per month – over the year.
This strong longer term picture was
reflected in another set of data out
this morning. Markit and Knight
Frank’s house price sentiment index
grew to its highest point since June
2010, with residents in all 11 UK
regions expecting their house to gain
in value over the coming year.
The headline index climbed from
57.3 to 54.5 in January, further above
the 50 level indicating no change.
CentreForum says equity could
fill small business funding gap
THE GOVERNMENT must slash
financial taxes and cut red tape to
allow small firms to fill their
funding gaps by going public, a
think tank said yesterday.
Ending the tax and regulatory
bias toward debt finance would be
a massive step toward narrowing
the £59bn funding gap faced by
small and medium sized
enterprises (SMEs), CentreForum
claimed in a new report.
“Equity markets offer a huge
opportunity to unlock a vast
amount of growth capital,” said
CentreForum’s Tom Papworth, co-
BY BEN SOUTHWOOD
author of the report.
“This will enable innovative and
dynamic British firms to grow at a
rapid rate, while making the UK
the international marketplace for
fast growing companies and
ambitious entrepreneurs,”
Papworth added.
The think tank called on the
government to abolish stamp duty
on all share transactions, allow
stocks and shares ISAs to include
equity trade on the Alternative
Investment Market (AIM) and other
markets including smaller firms.
They also demanded a wider
entrepreneurs’ relief, and for
capital gains tax bills to take into
account paid corporation tax – as
is done for dividend income.
The report gained a positive
response from politicians, market
makers and business groups.
“CentreForum’s report contains
some interesting ideas for how
access to equity finance for SMEs
can be improved,” said business
secretary Vince Cable.
The Confederation of British
Industry (CBI) endorsed all the
report’s major policy guidance.
And London Stock Exchange
chief Xavier Rolet said his firm
“wholeheartedly supports the
recommendations in CenteForum’s
report.”
Chinese buyers poised to step
up search for London property
CHINESE investors’ appetite for
London property is expected to
increase this year after the Chinese
government relaxed rules on
offshore investment.
Savills said the recent relaxation
on the investment of insurance
proceeds by the Chinese Insurance
Regulatory Commission could
result in up to £10bn of new
inward investment into London.
Research published by the
property specialist yesterday showed
overseas buyers will continue to
dominate the market this year after
accounting for 76 per cent of
BY KASMIRA JEFFORD
investment transactions in the City
during 2012 and 67 per cent in the
West End. That compares with
around 60 per cent reported in 2011
for both markets.
Total transaction volume for the
City market was £8.9bn, with Asian
buyers – including buyers from
Malaysia, Japan, Greater China and
Korea – investing £2.27bn.
Major deals include the
acquisition of Thames Court on the
banks of the Thames by Korean
Pension fund POBA for £165m.
Malaysian fund Tabung Haji
bought SJ Berwin’s City offices at 10
Queen Street Place for £165m in
September last year.
Meanwhile the West End saw
£6.1bn of investment deals last year,
with European buyers snapping up
£1.55bn of properties.
These include German property
fund Deka Immobilien which
bought Guardian Media Group’s
headquarters at King’s Cross for
£235m and 1 Southampton Row for
£110m in April last year.
Savills said overseas investors, who
typically favour central London,
conducted 79 deals in the City
compared with 64 in the West End.
Domestic purchasers transacted a
higher level of deals at 88 in the City
and 89 in the West End, but with a
lower overall sales volume.
THE UK enjoyed a slightly higher
flow of tourists coming into the
country in 2012, despite a fall in
visits during the time of the
Olympic and Paralympic games.
Total visits to the UK crept up
one per cent to 31.1m in 2012,
compared to 2011, according to
figures released by the Office for
National Statistics (ONS) yesterday.
Total spend climbed a healthier
four per cent to £18.7bn in the
12 month period, the ONS said.
Foreign visits to the UK creep
up despite impact of Olympics
BY BEN SOUTHWOOD But despite London hosting the
world’s top sporting event, most
of these extra visits came at the
start and the end of the year, the
ONS pointed out – the summer of
sport actually saw a dip in visits.
However, visits abroad by
Britons were flat at 56.6m, though
British tourists spent £32.6bn,
three per cent more than before.
Though spending in the UK
grew at a faster rate than spending
abroad, the total tourism trade
deficit widened £0.1bn due to the
huge existing spend by Brits.
FRIDAY 15 FEBRUARY 2013
18
NEWS
cityam.com
Visitors seemed to avoid the UK during the period of the Olympic and Paralympic games
THE PUBLIC Accounts Committee
(PAC) this morning blasted the
Treasury for focusing solely on its
economic mission and “appearing
to neglect” its role as finance
ministry.
Labour’s Margaret Hodge, PAC
chair, accused the department, run
by chancellor George Osborne, of
producing “impenetrable accounts”
and failing to properly oversee a
proliferation of “instances of poor
decision making.”
Hodge singled out staff turnover
as one cause of the problems,
which include the failure to
recover the £66bn spent bailing out
Lloyds and RBS (the government’s
stakes are now worth just £34bn),
MPs slate Treasury for neglect
of finance management role
BY BEN SOUTHWOOD
the risk of indemnifying the Bank
of England against future losses on
the quantitative easing programme
and the lacklustre performance of
the economy.
She focused particular criticism
on government schemes designed
to boost loans. “The Treasury’s
attempts to stimulate economic
growth through new lending have
not been successful,” Hodge said.
“The National Loans Guarantee
Scheme achieved just 15 per cent of
its intended take-up and has now
been superseded by a more
generous Bank scheme.”
“Throughout, the Treasury seems
to be embarking on a series of
expensive experiments,
indemnified with taxpayers’
money,” Hodge added.
THE JAPANESE economy declined
for the third successive quarter in
the final three months of 2012,
despite the impact of the first
elements of radical stimulus policy.
Japan’s GDP shrunk 0.1 per cent
in the fourth quarter of the year,
according to official statistics from
the country’s Economic and Social
Research Institute, released
yesterday.
This came despite a monetary
policy that was already effectively
easing in advance of the
26 December election of Shinzo
Abe, whose plan to unleash an
avalanche of fiscal and monetary
stimulus had been well signposted.
Though the Bank of Japan (BoJ)
Japan suffers third quarter of
falling output despite stimulus
BY BEN SOUTHWOOD
yesterday said the Japanese
economy “appears to be bottoming
out”, the worse-than-expected
output numbers may lead the new
Premier to put further pressure on
rate-setters to intervene with yet
more stimulus and boost inflation
up to the two per cent target.
But yesterday’s BoJ minutes saw
the monetary policymakers slightly
increase their target interest rate
from 0 per cent to 0.1 per cent,
while keeping their asset buying
and lending programmes.
And BoJ boss Masaaki Shirakawa
yesterday defended recent tranches
of stimulus as aimed at reviving the
economy and not weakening the
yen, after G20 leaders condemned
policies aimed to manipulate
exchange rates as “currency war”.
US new jobless claims fall again
nNew claims for unemployment
insurance fell again in the US, according
to figures released by the Department of
Labor (DoL) yesterday. New claims were
341,000 in the week ending 9 February,
down 27,000 on the previous week, and
20,000 underneath where they were a
year before. Total insured
unemployment also fell, the DoL said, by
some 130,000 in the previous week.
Fitch upgrades Iceland to BBB
nIceland’s debt is now investment-
grade, according to a revised rating from
Fitch. Citing “impressive progress in
recovering from the financial crisis of
2008-09” the ratings behemoth
announced yesterday evening that it was
upping the north Atlantic island’s debt,
as well as placing it on a stable outlook.
Fitch gave the small country plaudits for
a debt-to-GDP ratio that is already on its
way down due to fiscal consolidation.
IN BRIEF
Sunny outlook lifts Renault
nFrench carmaker Renault yesterday
predicted an upturn in global sales will
restore its manufacturing division to
profit this year, as overseas growth
outweighs Europe’s slump. The firm
yesterday impressed investors with a
rise in operating cash flow to €597m
(£513.9m), which offset a fall in net
income to €1.77bn on revenues 3.2 per
cent lower at €41.27bn. Renault’s
upbeat outlook contrasted with rival
Peugeot’s gloomy forecast earlier in
the week.
Puma swings to a loss
nSportswear group Puma yesterday
said it is ending its sailing sponsorship
deals as it swung to a quarterly loss of
€42.6m. The German firm last month
axed its sponsorship of the Irish rugby
union team kit. Chief executive Franz
Koch told journalists that it would take
“some time” before Puma’s cost
savings brought visible success, with
sales this year expected to remain on
a level with 2012’s total of €3.27bn
(£2.83bn).
January boost for online retail
nOnline retail sales were up 16 per
cent overall year-on-year in January.
The clothing sector was the best
performer, with its 23 per cent year-
on-year rise marking a three-year high
for the sector. In total, £6.9bn was
spent online in January – nearly £1bn
more than January 2012 – according
to the statistics from the IMRG
Capgemini e-Retail Sales Index. Sales
by mobile devices, including tablets,
continued their inexorable rise with a
193 per cent year-on-year rise.
FRENCH energy giant EDF yesterday
reported flat earnings and invest-
ment, but surprised shareholders
with a dividend increase.
EDF’s UK nuclear stations produced
60 terawatt hours of energy last year,
the best performance in seven years,
which helped to boost sales by over
13.6 per cent to €9.7bn (£8.3bn),
representing organic growth of 6.4
per cent.
EDF aims to maintain this level of
production this year.
The company said it is “confident”
that the Hinkley Point nuclear proj-
ect in Somerset will go ahead, in
spite of partner Centrica’s exit last
year, providing the firm can agree
with the government a reasonable
price for the energy generated.
EDF reported a 5.3 per cent rise in
group annual net income to €3.3bn,
below consensus forecasts for a 9.8
per cent rise.
The firm, which is 84.4 per cent
owned by the French government,
expects Ebitda to be stable this year,
and has kept its spending plans flat
at €12bn.
EDF seeks deal
for nuclear as
profits inch up
BY HARRY BANKS
The group hiked its dividend to
€1.25 per share, up from €1.15 and
ahead of expectations.
Henri Proglio, chairman and chief
executive of EDF, said: “EDF’s results
were up in 2012, underscoring a third
consecutive year of progress during
which the group delivered on its
commitments.”
Meanwhile Spanish utility
Iberdrola, which owns Scottish
Power, said the UK had become its
biggest market outside of Spain as it
posted a 1.3 per cent rise in group net
profit to €2.84bn. Earnings in
Iberdrola’s domestic market plunged
36 per cent, dented by lower produc-
tion and tax changes.
Electricite de France SA
14Feb 8Feb 11 Feb 12Feb 13Feb
14.2
14.4
14.6
14.0
13.8
14.8
15.0
15.2 €
14.95
14Feb
POPULAR children’s cartoon
Peppa Pig going primetime in the
US and a series of box office hits
helped drive group revenues at
Entertainment One 15 per cent
higher in the 10 months to the end
of January.
The group, which distributes
films and television series in the
UK, US, Canada and several other
countries, said the increase meant
full year earnings were on track to
meet expectations.
The firm, which bought movie
distributor Alliance Films for
£142m at the end of last year, said
Primetime Peppa Pig and films
put Entertainment One on track
BY KATIE HOPE
film revenues were up 24 per cent
year-on-year, with Alliance
contributing nine per cent of this.
The Group released 159 movies
in the period, compared to 125 in
the year ago period, with
successful titles including Django
Unchained – starring Leonardo
DiCaprio – and the Twilight Saga;
Breaking Dawn Part 2, helping to
boost box office receipts 56 per
cent year-on-year.
Television revenues were up 30
per cent year-on-year helped by its
popular Peppa Pig series securing
the prime 6pm timeslot on Nick Jr
channel in the US, and its
continuing success in the UK.
FRIDAY 15 FEBRUARY 2013
19
NEWS
cityam.com
The information contained herein may only be released, published or distributed in the United Kingdom, Jersey, Isle of Man and Guernsey in accordance with applicable regulatory requirements. The information contained herein is not for release, publication or distribution in or into the
United States, Australia, Canada, Japan, South Africa, Republic of Ireland or in any other jurisdiction where it is unlawful to distribute this document. The bonds referred to below may only be sold in Jersey in compliance with the provisions of the Control of Borrowing (Jersey) Order 1958.
Any offer for subscription, sale or exchange of the bonds within the Isle of Man must be made (i) by an Isle of Man financial services licence holder licensed under section 7 of the Financial Services Act 2008 to do so or (ii) in accordance with any relevant exclusion contained within the
Regulated Activities Order 2011 or exemption contained in the Financial Services (Exemptions) Regulations 2011.
Lead Manager: Canaccord Genuity Limited
This is an advertisement and is not a prospectus for the purposes of EU Directive 2003/71/EC, as
amended, or Part VI of the Financial Services and Markets Act 2000 (the “FSMA”). A prospectus dated
11 February 2013 (the “Prospectus”) has been prepared and made available to the public as required by
Part VI of the FSMA. Investors may obtain copies of the Prospectus from the website of the Regulatory
News Service operated by the London Stock Exchange and inspect copies on request at the registered
office of The Paragon Group of Companies PLC at 51 Homer Road, Solihull, West Midlands B91 3QJ and
should not buy any bonds except on the basis of information contained in the Prospectus.
The Paragon Group of Companies PLC is the legal entity that will issue the bonds. References to “Paragon”
in this advertisement are references to The Paragon Group of Companies PLC. This is a financial promotion
made by Paragon and approved by Canaccord Genuity Limited (No.1774003) (“Canaccord”) solely for the
purposes of section 21(2)(b) of the (“FSMA”). Canaccord whose registered office is 88 Wood Street, London
EC2V 7QR is authorised and regulated by the Financial Services Authority (Firm Ref Number: 182011).
Important Information
Your capital is at risk. Contact your stockbroker or any of the Authorised Offerors listed above to buy these bonds, or to discuss if these bonds are a suitable investment for you. Additional risks and other
important information are set out in the Prospectus (defined below). Before buying any bonds, you should make sure that you fully understand and accept the risks set out in the Prospectus. You should determine
whether the investment is appropriate for you on the basis of all the information contained in the Prospectus and if you are in any doubt as to the suitability of these bonds for your circumstances, you should
seek independent professional advice. The tax treatment of an investor will depend upon individual circumstances and taxation law and practice at the relevant time and may be subject to change in the future.
Paragon and Canaccord do not provide legal, tax, accounting or investment advice in relation to the bonds and are not responsible for any advice you may receive from any third party. The offering and the
distribution of this advertisement and other information in connection with the offer in certain jurisdictions may be restricted by law and persons into whose possession this announcement or any document or
other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any
such jurisdiction. The bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Subject to certain exceptions, the bonds may not be offered, sold
or delivered within the United States or to, or for the account of, U.S. persons. The bonds are being offered and sold outside of the United States in reliance on Regulation S of the Securities Act. There will be
no public offering in the United States.
*
**
The Paragon Group of Companies PLC is a FTSE 250 company, with £9.6 billion assets under management, specialising in
loan origination, loan servicing and the acquisition of assets. It is the UK’s leading independent specialist lender.
• Paragon is offering 6% fixed rate sterling bonds maturing December 2020, available to buy until 26 February 2013*
• Bonds can be bought and sold in multiples of £100 face value – subject to a minimum initial investment of £2,000
• The bonds pay a fixed rate of interest of 6% each year in half-yearly instalments. The bonds are expected to be available for trading on the Order Book
for Retail Bonds on the London Stock Exchange so investors will be able to check the trading price on the London Stock Exchange website and buy and
sell their bonds at any time during market hours, subject to normal market conditions and liquidity
• In the event that Paragon defaults, becomes insolvent or goes out of business, you may lose some or all of your investment. The market price of the bonds
is variable and could fall below their face value during the life of the investment and you may lose some or all of your investment if you sell your bonds
before maturity
• Unlike a bank deposit, the bonds are not covered by the Financial Services Compensation Scheme
• At the time of issue the bonds can be invested in a stocks and shares ISA or SIPP**
For more information visit: www.paragon-group.co.uk/group/Retail-Bond
Barclays Stockbrokers
www.barclaysstockbrokers.co.uk/pages/Paragon.aspx
Collins Stewart Wealth Management
www.collinsstewartwealth.com
Interactive Investor
www.iii.co.uk/investing/new-issues
Redmayne-Bentley
www.redmayne.co.uk/paragon
Selftrade
www.selftrade.co.uk/paragon
Smith & Williamson Securities
www.smith.williamson.co.uk/fixed-income-dealing-service
Authorised Offerors
Retail Bond Offer
6%fixed to December 2020
When the offer will close, unless the offer is closed early.
Subject to limits and conditions and, in the case of a stocks and shares ISA, subject to the bonds being and remaining listed on the Official List of the UK Listing Authority and admitted totrading on the regulated
market of the London Stock Exchange. Investors should seek advice as to whether the specific terms of their arrangements permit investment of this type.
Django Unchained, starring Leonardo DiCaprio, helped lift revenues at Entertainment One
NESTLE, the world’s biggest food com-
pany, sees no respite this year from a
tough trading environment after
sales growth undershot rival Unilever
last year as emerging markets like
Asia slowed.
Nestle’s 2012 underlying sales grew
5.9 per cent last year to SFr92.2bn
(£64.6bn), the firm said yesterday.
The figure is in line with a consen-
sus analyst forecast and implies a
slight recovery after third-quarter
growth of some five per cent.
It said it still saw double-digit sales
growth in Africa, China, the Middle
East and Indonesia, helped by strong
demand for products like its Milo
chocolate milk and Maggi stock
cubes.
The Swiss firm is trying to keep
earnings growing in a flag-
ging global economy
by focusing
on its most
prof itable
food busi-
nesses such as
formula milk
and premium
coffee Nespresso.
But its focus on
Slower growth
in new markets
knocks Nestle
BY HARRY BANKS
emerging markets has made the
maker of KitKat chocolate bars and
Maggi soup sensitive to any slackening
of demand in those faster-growing
regions.
Its expansion in emerging markets,
which make up 43 per cent of sales,
slowed last year to 11 per cent from
13.3 per cent in 2011.
Chief financial officer Wan Ling
Martello said there had been fewer of
the one-off events such as typhoons in
the Philippines and social unrest in
Egypt that hit sales in the quarter.
Nestle, which sold the rights to the
Findus brand in most of Europe in
2000 but retained them in
Switzerland, launched a campaign
this week to reassure
consumers that Swiss
Findus products
were only made
from Swiss beef.
“ Ever yt hi ng
under our labels
is not affected,”
chief executive
Paul Bulcke
told a news
conference.
FRIDAY 15 FEBRUARY 2013
20
NEWS
cityam.com
TICKETS
ON SALE
NOW
In association with
For more information visit gauchopolo.com
BREWING COMPANY
CBRE
The property firm has
appointed Andrew Peacock as
head of central London asset
management. He joins after
24 years at Aviva Investors,
where he held a number of
senior roles, including
manager of its central London
office portfolio.
Towers Watson
The professional services company has appointed Liz
Rennie as senior consultant in its human resources
(HR) service delivery team. Rennie joins from
NorthgateArinso, where she built up its HR practice
and supported global blue chip customers for over 15
years. Prior to NorthgateArinso, Rennie spent three
years at Accenture.
Personal Finance Society
Keith Richards will join the professional organisation
for financial advisers as chief executive. Richards has
over 15 years’ industry experience, most recently as
group distribution and development director for
Tenet. He previously worked at Royal London as head
of retail.
Jones Day
The law firm has announced the appointment of two
partners to its recently-opened Amsterdam office.
Marcel Van de Vorst and Marc Rijkaart van Cappellen
both bring extensive experience in transactional and
corporate advisory law.
Borro
Nigel Morris has been appointed chairman of the
personal asset lending firm, where his responsibilities
will include supporting Borro’s UK and US growth. He
was co-founder of Capital One Financial Corporation,
and is currently managing partner at QED Investors.
Fleming Family and Partners
Mark Sullivan will join the wealth management firm as
client relationship director. Sullivan has previously
worked at Rathbones as investment director and has
also held roles at UBS Wealth Management. He was
most recently marketing and business development
manager at Buckland Capital Partners.
Alliance Trust
Win Robbins joins the investment firm as non-
executive director. Robbins has held a number of
senior roles at financial services firms, including as
managing director at Barclays Global Investors.
WHO’S SWITCHING JOBS Edited by Annabel Palmer
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
in association with
KitKat maker Nestle’s growth in new
markets has a break
HOW MUCH HAVE YOU SPENT ON
VALENTINE’S DAY THIS YEAR?
Interviews by Amy-Jo Crowley
I have a girlfriend and haven’t spent a penny. I
don’t see it as a big thing and only found out
when somebody told me today… I found a poem, copied
it into an email and sent it to her. I don’t think she’s
particularly worried either.
These views are those of the individuals above andnot necessarily those of their company
ADAM LEWIS
UBS

£20 on beauty products and a card. It’s a nice
idea, a bit of fun and because I always get
something in return…
PHIL KNIGHT
SEB
No cards, no presents…Plus ca change…lucky
I didn’t spend any money either.
WARREN PHELOPS
K&L GATES


CITYVIEWS
15 FEBRUARY 2013
21
cityam.com
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a) Tell yourself you must get on with
redecorating the bedroom
b) Sell the Wall Street index in anticipation
of a stock market crash
Rising US debt levels are scraping
the ceiling again, do you:
In association with
LONDONREPORT
B
ENCHMARK share index fell
from five-year highs, hit by
weakness at telecoms group
Vodafone and engineer AMEC,
although many traders stayed
positive on equities for the longer
term.
The blue-chip FTSE 100 index, which
touched a five-year intraday high on
Wednesday, closed down 0.5 per cent,
or 31.75 points lower, at 6,327.36 yes-
terday.
Some traders said the FTSE’s rally,
which has seen the index rise some 7
percent since the start of 2013, could
soon lose momentum on lingering
signs of a weak global economy, with
data yesterday showing a contraction
in the euro zone economy.
Berkeley Futures associate director
Richard Griffiths said the FTSE 100
could fall 200 points over the next
month, but others expected it to
maintain an upwards path, on hopes
of a gradual global economic recovery
that should support equities.
“People generally want to see the
market go higher. They want to see
the FTSE attacking 6,400 points,” said
Mike Mason, senior trader at Sucden
Financial Private Clients.
Mason said the FTSE would contin-
ue to attract money since equities had
better returns than cash or bench-
mark government bonds, where
returns have been hit as central banks
have kept interest rates at record lows
to try and boost the economy.
Colin McLean, managing director at
SVM Asset Management, said many
investors were still looking to use any
market weakness to buy equities for
relatively cheap prices.
“There's plenty of cash to buy the
dips, which should prevent any fall
from being a material one,” he said.
McLean said his firm had recently
added to positions in the industrials
sector and remained ‘overweight’ on
UK financial stocks, on expectations
the global economy would recover as
2013 progressed, which in turn
should boost those stocks and equities
in general.
A 2.4 per cent fall at Vodafone took
the most points off the FTSE.
Vodafone was hit by concerns over
weakness in its southern European
business and the possibility it might
be lining up a pricey bid for
Germany's Kabel Deutschland.
AMECslumped 7.3 per cent to make
it the worst-performing FTSE 100
stock, after the company’s cautious
outlook disappointed some investors.
“Margin guidance looks disappoint-
ing so forecasts will come back a lit-
tle,” Liberum Capital analysts wrote in
a research note. Darren Easton, direc-
tor of trading at Logic Investments,
said he would hold “short” positions
to bet on a future fall in the FTSE 100,
down to around the 6,325 point level.
“We could easily test 6,250 points. The
market is looking for an excuse to sell
off in the near term,” he said.
FTSE falters as
Vodafone and
Amec see falls
CITY
YOUR ONE-
STOP SHOP
BROKER VIEWS AND
MARKET REPORTS
DASHBOARD
Wall St treads
water despite
surge in M&A
T
HE S&P 500 eked out a small
gain for a third straight session
yesterday, helped by a flurry of
merger activity, though
investors see no catalysts to lift the
market further with major averages
near multi-year highs.
The market’s slowed advance took
the S&P 500 to its highest intraday
level since November 2007 on
Wednesday. While the index notched
its third straight day of gains, none
was more than 0.2 per cent.
Shares of H.J. Heinz jumped 20 per
ent to $72.50 after it said Warren
Buffett’s Berkshire Hathaway and
3G Capital will buy the food compa-
ny for $72.50 a share, or $28bn
including debt. Berkshire’s class B
shares rose 1.3 per cent to $99.21.
Also supporting the market was
data showing the number of
Americans filing new claims for
unemployment benefits fell more
than expected in the latest week. The
CBOE Volatility index fell 2.4 per
cent, dropping to 12.67.
Stocks fell earlier after a report the
Eurozone’s gross domestic product
contracted by the steepest amount
since the first quarter of 2009. In
addition, Japan’s GDP shrank 0.1 per
cent in the fourth quarter, crushing
expectations of a modest return to
growth.
The Dow Jones industrial average
was down 9.52 points, or 0.07 per
cent, at 13,973.39. The Standard &
Poor’s 500 Index was up 1.05 points,
or 0.07 per cent, at 1,521.38. The
Nasdaq Composite Index was up 1.78
points, or 0.06 per cent, at 3,198.66.
Constellation Brands soared 37 per
cent to $43.75 after AB InBev’s deal
to take over Mexican brewer Grupo
Modelo was revised to grant
Constellation perpetual rights to dis-
tribute Corona and other Modelo
brands in the United States. US
shares of AB InBev gained 5.1 per
cent to $92.77.
BESTof theBROKERS NEW YORK
REPORT
SPIRIT PUB COMPANY
Broker Numis has reiterated its “buy” rating on the pub stock after it said the
company’s growth prospects were “undervalued”. Analysts said there were
concerns about the firm’s bond amortisation schedule in 2015 but that it should be
resolved by refinancing. The firm’s net debt to earnings ratio should also fall in 2015,
a note said. Numis has a target price of 85p on the stock.
Spirit Pub Company PLC
8Feb 11Feb 12Feb 13Feb 14Feb
p 68.25
68.00
67.75
67.25
67.50
67.75
14 Feb
CARNIVAL
Cruise line owner Carnival has had its target price cut by Standard & Poor’s equity
research after a fire on its passenger vessel Triumph. S&P maintained a “strong buy”
conviction on the stock despite the fire. It said the company now faced a “PR
headache” because the fire “may remind investors of the 2012 Concordia disaster”.
The target price of 2,500p is reduced on lowered multiples.
Carnival PLC
8Feb 11Feb 12Feb 13Feb 14Feb
p 2,640
2,620
2,600
2,520
2,540
2,500
2,560
2,580
2,499.00
14 Feb
MANAGEMENT CONSULTING GROUP
Peel Hunt reiterated its “buy” rating on the only listed management consulting firm
on the FTSE, which the broker describes as “peerless”. It has given the business a
40p target price, a big premium to its current trading range. Management
Consulting Group has a price to earnings multiple of 8.3 times and Peel Hunt said
the shares were “undeniably cheap” at the current levels.
Management Consulting Group PLC
8Feb 11Feb 12Feb 13Feb 14Feb
p 28.25
28.00
27.75
27.25
27.50
28.00
14 Feb
To appear in Best of the Brokers, email your research to notes@cityam.com
FTSE
14 Feb 8 Feb 11 Feb 12 Feb 13 Feb
6,300
6,250
6,275
6,325
6,350
6,375
6,400 6,327.36
14 Feb
T
HERE was an important
speech in America this week,
and it wasn’t made by Barack
Obama. The President’s State
of the Union address was, once
again, a conventional recitation of
the technocrat’s creed: state
intervention can solve almost
everything, so long as smart people
like me make it smarter.
Marco Rubio’s speech wasn’t
important either. The Republican
made some good points, but his
remarks were mainly noted for his
inability to sip water (try googling
Poland Spring if you haven’t seen it).
Rubio is talented, but the senator is
also suffering from being accelerated
onto the national stage too fast,
largely because his party senses it can
E
ACH year, Eurasia Group
releases its top risks report,
where we consider the ten
biggest geopolitical threats to
markets and economies, judged
by probability and potential impact.
So what’s on our radar for 2013? The
top risk is now found in emerging mar-
kets, as the world’s focus shifts back to
the developing world and away from
America’s slow-to-recover economy
and the travails of the Eurozone. The
second lies in China: the country’s
authoritarian ruling elite will find it
increasingly difficult to manage the
flow of information both within the
country and across national borders.
Number three is the still-developing
turmoil in the Middle East, from Syria
to North Africa.
But international politics and the
global economy are also shaped by the
risks that don’t develop, and we have
identified three specific threats that
we consider overrated. These are the
year’s “red herrings.”
Our biggest red herring for 2013
focuses on the geopolitics of energy. In
recent years, political threats in oil-
cityam.com/forum
New fossil fuels are
increasingly coming
from developed nations
– good for consumers
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.

22
FRIDAY 15 FEBRUARY 2013
IAN BREMMER
The three geopolitical red herrings
that the markets can safely ignore
exporting countries have added signif-
icant upward pressure to energy
prices. At times, this political risk pre-
mium can send prices surging. Brent
Crude reached $119 per barrel just last
week. And with so much upheaval in
the Middle East, and rising demand for
energy in the developing world, why
do we believe that 2013 will not be a
year of geopolitical risk for energy mar-
kets?
First, most risk in the the Middle East
doesn’t involve the major energy pro-
ducers – it’s about everywhere else,
from Syria, Jordan and Lebanon to
Mali. Problems in Iran are still very
present, but with sanctions in place
and little appetite among outsiders for
another regional conflict, the likeli-
hood of an Iran-related energy shock is
exaggerated – at least in 2013.
More important is the supply-side of
the equation. Technological break-
throughs in energy production in the
US and Canada have sharply altered
the outlook for the world oil market,
reducing imports into North America
and alleviating unease about supply
scarcity. New fossil fuels are increasing-
ly coming from the developed world,
as well as from stable developing coun-
tries like Brazil and Mexico. That’s
good for all global consumers. Even a
modest economic recovery isn’t lead-
ing to overwhelming demand growth,
with tighter fuel efficiency standards
and shifts in consumer behaviour con-
tinuing to have an impact.
But there are two sides to every coin.
This red herring is not great news for
poorly-governed resource-rich coun-
tries like Russia or Venezuela, which
need high energy prices to keep their
books in balance and their people
happy. After all, the oil price required
to keep Russia’s budget in the black
ballooned from $34 in 2007 to $117 last
year. But 2013 isn’t the year to worry
about this.
There are other red herrings. For one,
fears of a surge of global protectionism
ignore some important developments.
Since the financial crisis hit in 2008,
we’ve heard constant worries about an
impending increase in trade barriers,
and the threat this poses to the global
economy, as countries enact tit-for-tat
policies to get a leg up on the competi-
tion.
But in G20 annual meetings, curbing
global protectionism has been about
the only issue where leaders maintain
a strong consensus. There have been
no commercial restrictions in most
countries, but there are big develop-
ments leading the broader global
economy in the other direction.
Competitive trade liberalisation efforts
are accelerating. Just this week, the EU
and the US announced the launch of
talks for a new major trans-Atlantic
economic cooperation package. And
there’s momentum behind a trans-
Pacific partnership in both Asia and
the Americas.
Finally, there are currently exaggerat-
ed concerns about European sepa-
ratism. Pressures in Catalonia and
Scotland are real, but these issues
won’t come to a head as soon as many
fear. Catalonia will take the first steps
toward holding a referendum in 2013,
but a vote is unlikely until 2014 and a
new fiscal deal with Madrid could
even contain the push for self-determi-
nation. We’ll also see an intensifying
debate on the effects of independence
for Scotland, but there won’t be a refer-
endum until 2014. Next year, this risk
could vault from red herring to reality.
But for now, it’s simply fodder for spir-
ited arguments.
Ian Bremmer is founder and president of
Eurasia Group. His most recent book is Every
Nation for Itself: Winners and Losers in a G-
Zero World. www.eurasiagroup.net
wring electoral advantage from his
ethnic background.
But the second, unofficial response
to the President was a different
matter. Rand Paul is another
Republican – the junior senator for
Kentucky – but his speech was given
on behalf of the Tea Party, America’s
grassroots movement committed to
holding US elites to account for
runaway government spending.
The Tea Party has been around
since early 2009 and shows every sign
of being a fixture on the American
political scene. In some ways it is the
closest the republic is likely to come
to a true third party influence, for its
critique of overbearing government is
as much a rebuke to high-spending
conservatives like George W. Bush as
it is to Obama’s open chequebook.
Rand Paul’s speech matters
because it was the voice of a new
political rhetoric. It’s as true here as
in the US that whoever you vote for,
the government always seems to get
in, partly because politicians across
the spectrum have been seduced by
the technocratic imperative. This
view holds that the right to rule is a
matter of possessing the high-level
skills necessary to shape citizens’
behaviour through intricate policy
architectures. It is an ideology that
flatters the manipulative types
drawn to the battle for high office.
But it is not as smart as it thinks it is.
Paul’s speech offered another
vision. Citing Adam Smith and
Ronald Reagan, he appealed to the
principle that government works
best when it follows simple rules. He
rebuked ingenious policymongers on
behalf of common sense.
As he said, “Washington acts in a
way that your family never could –
they spend money they do not have,
they borrow from future generations,
and then they blame each other for
never fixing the problem.”
Rand spoke up for the forgotten
ideal that simple doesn’t have to be
stupid. As the Nobel-winning
economist Friedrich Hayek said in his
final book The Fatal Conceit, the
“naive mind” is the one unable to
conceive of complex order arising
except through central control. Such
would-be philosopher-kings,
Democrat or Republican, miss the
possibility that their ministrations
must be less effective than the
evolution of spontaneous market
orders. Hayek’s groundbreaking work
returns us to the great, Socratic
insight of intellectual humility. In
Britain as well as America, it’s time
for a common sense revolution.
Marc Sidwell is managing editor at
City A.M.
THE LONG
VIEW
MARC SIDWELL
Voice of a new political rhetoric highlights the need for intellectual humility
In association with
NORMAN
For its beaches or betting, fly to Deauville from London City Airport. From
23
FRIDAY 15 FEBRUARY 2013
Cost of inflation
[Re: High inflation is denting recovery: The
Bank of England must act now, yesterday]
The idea that a weaker pound would
somehow promote an export boom is
absurd. Most of our exports are either
specialised services, which would be
purchased anyway, or specialised
manufacturing, which tends to require
goods to be imported in order to be finished
off and sold. In any case, we should be
focusing on improving the things we do
well, not trying to compete with countries
where production costs are lower. Of course,
current policies are not making anything
easier. Both the Bank of England and the
Treasury are responsible for rampant
increases in the cost of living, which don’t
make Britain any more competitive.
Carl Thomas
Horse meat
[Re: Should we blame EU policy for the
failure to prevent the horse meat scandal,
yesterday]
All of the behaviour concerned in the horse
meat scandal is illegal under EU rules, and
member states have legal tools to combat,
investigate and punish it. It is their role to do
so and that is what the UK has been doing
with regard to possible fraud on its territory.
So, of course, EU regulation – which is
decided by member states anyway – is not
“to blame” for criminal fraud. Is the Home
Office to blame for burglary? However,
whether there is more the European
Commission and member states together
can do to put an end to uncertainty, and to
reestablish and maintain consumer
confidence, is a different question.
MarkEnglish, EuropeanCommissioninLondon
D
AVID Cameron’s enthusiasm
for the Single Market must
be taking a knock, as the
horse meat scandal gallops
on. It is, after all, one of the
fundamental four freedoms of the
Single Market – the free movement of
goods – that prohibits environment
secretary Owen Paterson from
banning imports of suspect meat.
But the EU has exercised its influ-
ence in other ways. All matters relat-
ing to food safety are an exclusive EU
“competence”. Not only does this
mean that food law is written in
Brussels, but UK authorities are pre-
vented from making their own laws
to fill the gaps without the permis-
sion of the European Commission.
The specific instrument that con-
strains our government is regulation
(EC) No 178/2002. It requires “food
business operators” – farms, factories
and retailers – to have the “primary
legal responsibility for ensuring food
safety”. It warns that, if responsibility
is assumed by national regulators,
“disparities are liable to create barri-
ers to trade and distort competition
between food business operators in
different member states”.
As Paterson has rightly said, the sys-
tem is “paper-based, and too much is
taken on trust”. And this lies at the
heart of the problem. The EU regula-
tions, although loved by consultants
and bureaucrats, remove much of the
physical checking from the system,
and put in its place a complex chain
of documents that must accompany
every part of the production process.
Lord Haskins, former chairman of
Northern Foods, has complained that
“everybody fills in forms to say they
are doing the right thing, but they
don’t actually look at the factory to
see what is happening inside”.
Haskins didn’t identify the root cause,
but others have been less reticent. A
senior consultant in the food industry
After GDP contracted in France and Germany,
can we still be optimistic about the Eurozone?
YES
The Eurozone’s turning point, Mario Draghi’s European Central Bank
safety net, happened before the fourth quarter of 2012 even started.
It triggered a chain reaction of improving confidence, which was just
too slow to prevent this downturn. Capital returned to the periphery,
but Eurozone leaders still needed to prove their resolve to tackle the
economic problems. Economic sentiment turned when Dutch voters
punished the Eurosceptics and Greece pushed harsh austerity
through crunch parliamentary votes to avoid default. Borrowing
costs are now falling, closing the gap with the US and the UK and
boosting investment. Initial divergence shouldn’t surprise: this dip
may have been a springboard for healthy Germany, but Italy and
Spain still need to complete their reform homework before austerity
can give way to growth. Risks still abound, but the base for recovery
has been laid. Only France remains on a slippery slope towards crisis.
Dr Christian Schulz is senior economist at Berenberg Bank.
Christian Schulz
NO
Osman Ismail
The Eurozone still faces deep problems. The division between the
core and periphery is stark, but now core nations – like Germany and
the Netherlands – are looking vulnerable too. The situation in the
periphery is worse; the dismal labour market conditions are putting
downward pressure on wages. But there are also potential external
stresses: supply shocks, like a spike in oil prices, could stoke inflation
and aggravate the situation further. The upcoming elections in Italy
and Germany could also cause political instability. There are some
positives, like steps towards a banking union; but nothing has been
finalised yet. Eurozone GDP will probably contract by 0.5 per cent
this year. And continuing weak demand, labour market upheaval,
and austerity will weigh on growth for the next couple of years. It is
going to be a hard slog to bring it out of the mire it is in.
Osman Ismail is an analyst at the Centre for Economics and Business
Research.
How EU regulation
has prevented UK
horse meat action
told me that the effect of the EU sys-
tem is to “hammer the good guys”
while the crooks find a way around it.
The trouble is that the system
assumes that food producers are hon-
est. But, as Paterson has pointed out,
this scandal “is a criminal action, sub-
stituting one material for another”.
The longer-term problem is that the
EU system is not capable of detecting
food fraud – an industry reckoned by
the FBI and the World Customs
Organisation to be worth $49bn
(£31.6bn) a year to its perpetrators.
Another issue is conceptual.
Regulators glibly talk of the food sup-
ply “chain”. But it’s actually an
extraordinary network – a kaleido-
scope of factories and suppliers, all
working together. And while access
can be controlled and processes super-
vised in a simple linear chain, the net-
work, with its multiple entry points,
is not amenable to the EU control
model. The assumption on which the
controls are based is flawed.
Paterson would like more rigorous
and random testing – a hands-on
approach to food control. But this
flies in the face of EU dogma, and that
is why he has had to get on a plane to
Brussels. A sympathetic commission-
er has acceded to requests for permis-
sion to require more testing, but it is
the Commission calling the shots.
And that is no way to run a national
food safety system.
Richard AE North is co-author with
Christopher Booker of Scared to Death:
From BSE to Global Warming. He blogs at
www.eureferendum.com
RICHARD A E NORTH
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Ed Miliband says because of company greed.
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UK’s trade is with the Eurozone.
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The government has extended the 0 per
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S E A M S D R A W S
I O C I H
N U C L E A R F R E E
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S A C R E D B A I L
U I R
C A R R D E S E R T
A R A E W
B R E A S T P L A T E
A N E M A
L A T C H B A T I K
9 5 1 3 1 3
8 7 9 6 4 7 5 9
7 3 8 4 5 9 2 1 6
5 4 2 7 2 4
6 2 1 4 2
3 1 2 4 8 9 7 6
1 9 3 4 3
9 3 6 2 9 4
7 1 5 8 4 3 9 6 2
8 6 9 6 9 7 8 5
2 8 1 4 5 1
4
4
4
4
4
4
4
4
4
The nine-letter word was
SAVOURING
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FILM
THIS IS 40
Cert 12A | by Alex Dymoke
hhiii
WHERE
TO DRINK
TIM BADHAM
NEW KING’S Road launch Upper West
channels the spirit of Manhattan clubs
like PH-D. The lounge bar boasts a roof
terrace complete with olive trees and
cascading fountains, while the separate
nightclub Madison’s is accessed by a
grand staircase and will feature floor to
ceiling bronze mirror panelling and a
state-of-the-art lighting system.
The City remains an exciting place to
grab a cheeky post-work beverage, with
two new openings this week, including
The Cutler Bar below Sushinho on
Devonshire Square. The bar features
encaustic tiles, exposed brick, hardwood
and stone flooring, as well as
prepossessing iron columns. The cocktail
list fuses authentic Japanese and
Brazilian ingredients.
Voltaire opened in what were
formerly bank vaults just north of
Blackfriars Bridge and is candidly
attempting to quench the local
workforce’s thirst for bubbles. Helpful,
then, that it boasts London’s largest
collection of Pommery Champagne, not
to mention an al fresco cigar terrace, an
array of secluded alcoves just begging
for debauchery, and a fizz bar with a
colour palette paying homage to caviar,
cigars and champagne.
Famous Soho hotel Café Royal
recently reopened and didn’t cut
corners with The Bar, which is
surprisingly industrial compared to the
rest of the hotel. The island bar
comprises of burnished metal and
exposed rivets, with art deco
gracenotes in the form of dark green
glass bricks and neon lighting. The Bar
evokes the spirit of the green fairy with
a huge range of absinthe cocktails and
Belle Epoque fountains.
February has also seen many a pop-
up, beginning with The Rum Shack at
Floridita on Wardour Street. It’s turned to
Papa Hemingway’s choice of tipple to
replicate the Cuban beach bar
experience, with the largest selection of
rum in Europe. Speakeasy BYOC (Bring
Your Own Cocktail) opened in a Covent
Garden basement and has jettisoned the
whole “serving customers alcohol” idea.
Instead, punters bring their own booze to
be mixed tableside with homegrown
syrups, spices, cordials and salts.
Tim Badham is the founder of
Innerplace, London’s personal concierge
service.www.innerplace.co.uk
@innerplaceLDN
The City in full
swing with glut
of new joints
Cafe Royal in Soho
An explosive
the bad boy
T
HE ROYAL Opera House’s
mixed programme of ballet,
marking the 25th anniversary
of renowned dancer and
choreographer Frederick Ashton’s
death, was bound to be an
explosive affair.
It saw the dramatic return of
Sergei Polunin – the former bad
boy of British ballet – to the stage
he dramatically quit, mid rehears-
al, just under a year ago. Polunin, a
formidable presence on the stage,
was expected to be at the heart of
the Royal Ballet for many years but
shocked the establishment when
he spoke of his deep disillusion-
ment with the ballet world and his
role in it.
Now a principal at the Stanislavski
Ballet in Russia – replete with an
inked torso acquired at his very own
Holloway Road parlour – his return
as a guest performer had fans sali-
vating. Thankfully, he clearly hasn’t
lost his passion altogether. His per-
formance as Armand in Marguerite
and Armand, the final performance
of the night, was wonderfully
ardent.
He was starring opposite the lumi-
nous Tamara Rojo, former principal
dancer at the Royal Ballet, now
working behind the scenes as
Artistic Director of the English
National Ballet, who returned to
Covent Garden for her swansong.
Polunin’s feeling for Rojo’s
Marguerite was touching and
believable, first wooing then reject-
ing her, his jumps and spins ever
higher and sharper, before collaps-
ing into grief as the tragedy con-
cludes. Rojo, a real dancing actress,
portrayed Marguerite’s journey
from adored courtesan to desper-
ate lover with tremendous pathos.
Her fluidity of movement in even
the most simple of gestures, such
as the telling cough of the con-
sumptive, was sublime and utterly
moving.
My belief never wavered in Rojo
and her relationships with the var-
ied men in her life. The rapturous
response was well deserved: proof, if
any were needed, that the Royal
Ballet will sorely miss having these
two artists as full-time members.
Of the works earlier in the pro-
gramme, Voices of Spring offered
the most charm; Yuhui Choe and
HALF-WAY THROUGH Judd Apatow’s
latest, This Is 40, a woman accuses
Debbie (Leslie Mann) and Pete (Paul
Rudd) of looking like a couple from
a bank advert. Its one of the better
jokes, not least because it highlights
the fundamental problem with the
film.
Debbie and Pete are a beautiful
couple with a beautiful house and
two beautiful children. She works
out and runs a vintage clothes shop,
he runs a record label.
Pete and Debbie’s
alienation from each
other is expressed
through the refuge they
take in Apple products: as
marital mid-life crises go,
this is a glamorous one.
For most people, this
isn’t 40 at all.
Financial problems
and flagging libidos
threaten to
explode this
perfectly proportioned nuclear
family. Debbie is disgusted by Pete’s
eating habits. Pete is disgusted by
Debbie’s music taste.
There are numerous directionless
sub-plots designed to flesh out the
psychology of psychologically
uninteresting characters. There are
long, laughless stretches and like a
real-life marriage gone stale,
after a while you realise you’ve
just been drifting without any
emotional investment.
There are some good
jokes. Too many,
however, fall flat. You
will laugh a couple
of times but the
ending doesn’t
arrive quick enough. This
is 40 minutes too long.
Alexander Campbell confidently
filling the shoes of the indisposed
Alina Cojocaru and Steven McRae
with their neat steps and petal
throwing. The retro-futuristic look
of the dancers in Monotones I and II
offered a study in balance and still-
ness, but the ambition of the piece
was only partially realised.
Meditation from Thais seemed a
This is 40 minutes too long
A Good Day to Die Hard is a
FILM
A GOOD DAY TO DIE HARD
Cert: 12A | By Alex Dymoke
hhiii
JOHN MCCLANE is a family
man. When he purged that New
York tower block of eastern
European terrorists in 1988, he
wasn’t doing it out of patriotic
or professional duty – he was
doing it for his wife who was
trapped in the building.
A Good Day to Die Hard
reestablishes the familial theme
by introducing John McClane
Junior. In Russia. Inevitably, a
crazily contrived set of
circumstances brings NYPD
beat cop McClane senior to the
streets of Moscow to look out
for his estranged son. Starting
with the title, everything about
the film feels lazily conceived.
The plot is shabbily glued
together with an adhesive made
from Russian stereotypes. At
one point the story requires the
father-son duo to be armed. Not
to worry – McClane Jr knows a
club where loads of Chechens
hangout and reckons they’ll have
guns stashed in their cars. And
they do!
The story builds up to a
tediously long, painfully loud
action sequence in Chernobyl
nuclear plant. At one point (for
about the 15th time) the
McClanes find
themselves jumping
off a building,
this time without
a conveniently
placed
canvas
awning to
break their
fall. So they
instead land
FRIDAY 15 FEBRUARY 2013
27
Great Expectations,
below par results
touch dated in both choreography
and presentation but La Valse was a
pleasing opener, setting the tone for
an evening The Royal Ballet should
consider a great success.
THEATRE
GREAT EXPECTATIONS
Vaudeville Theatre | By Joseph Charlton
hhiii
ludicrous, outdated relic
in… a swimming pool. In a
nuclear plant? The
transformation of Chernobyl
power station to Chernobyl
leisure centre is in keeping
with the all-pervasive
absurdity of the affair.
Whatever John
McClane has been
doing since the first
Die Hard film, he
certainly hasn’t been
studying for an
extramural masters
in moral philosophy.
“Let’s go
and kill
scumbags,” he suggests,
“scumbags” being a synonym
for Russians. The number of
random vehicles crunched
and squashed in one twenty
minute car chase is
disturbing. It seems that one
of the pulls of setting the
movie in Russia is that they
could get away with higher
civilian death tolls.
It feels like screenwriter
Skip Waters stumbled across
the script while clearing out
his loft for the first time in
two decades. Or that he based
the entire movie on a “things I
know about Russia” spider
diagram from 1989.
Xenophobic renderings of
Russian baddies and
implausible plots centring on
enriched uranium should
have ended in the 90s. The
same goes for the Die Hard
franchise.
Sergei Polunin makes a
triumphant return as part of
this mixed programme
T
HE VAUDEVILLE seems a fitting
space to stage Great Expectations. It
was founded in 1870, just ten years
after Dickens finished serialising
his much loved classic, and Dickens
himself – who loved theatre deeply –
might have visited had he not died in the
year it was completed. Like Dickens’
book, the Vaudeville also has a strong
whiff of faded splendour: it’s been
rebuilt twice, with each iteration
retaining elements of the previous
structure: a Victorian stage mechanism
here, a discarded black curtain there.
Great Expectations is similarly a gothic
collage of sorts – an assembly of varied
grotesques: Magwitch the convict-come-
benefactor, Miss Havisham the eternal
bride-to-be, Jaggers the archetypal
London hyper-lawyer. Dickens’ prose – by
turns stately and satirical – makes his
characters complex beings; glimpsed
briefly on stage, however, they risk
straying into caricature.
This is proved to be the case early on in
director Graham McLaren’s production.
He makes a mess of the relationship
between Pip’s first guardians, the
blacksmith Joe Gargery and his cruel
wife, Mrs Joe Gargery. Dickens’ study of
domestic abuse – subtle and sharp in the
novel – is crassly directed here, with
Isabelle Joss’s Mrs Joe tending to shout a
lot and sometimes beat things with a
stick. Herbert Pocket – immortalised by a
young Alec Guinness in David Lean’s
unbeatable 1946 film production – is
another of the production’s casualties.
Pip’s friend and tutor gets only a single
scene, in which he is represented as a
one-dimensional fop by the instantly
ittitating Rhys Wharrington.
Of course, much of this is inevitable.
Characterisation is sacrificed at the altar
of plot when a writer tries to compress a
500-word epic into less than two and a
half hours (Jo Gifford, responsible for the
adaptation, admits as much in her stage
notes). Some shrewd characterisation,
thankfully, does make it in. Grace Rowe’s
Estella injects some much-needed
sharpness into proceedings, and Taylor
Jay-Davies’ Pip gets across the unlovable
side of Dickens’ narrator – the gifted
social climber, jostling to be part of
London’s aristocracy. The overwrought
lawyer-speak of Jaggers (Jack Ellis) also
lends itself well to stage, providing a few
precious drops of comic relief.
Where the play really fails, however, is
the look and feel of the production. The
set, costume design and sound are
Vaudevillian-gothic ad nauseam.
Annoying fairground music plays
interminably in the background, the
male characters almost all wear giant Dr
Seuss-style striped top hats, and cobwebs
are draped everywhere: on the
lampshades, the tophats, even Miss
Havisham’s cake.
The result is a Tim Burton-esque
muddle. To gothicise every part of Great
Expectations is to miss the point,
detracting attention from its two gothic
superstars: Abel Magwitch and Miss
Havisham. The greatest adaptations of the
book know this: David Lean used the its
darker elements sparingly and to great
effect. This production – assiduously
gloomy to the point of tedium – overplays
its hand.
Underground
success story
EXHIBITION
POSTER ART 150
London Transport Museum | by Alex Dymoke
hhhhi
IN THIS excellent new exhibition at the
London Transport Museum, 150 posters
have been selected from a collection of
more than 3,300. Not only are the
posters striking pieces of art, they also
offer a unique insight into the history of
the transport system that most of us
use every day.
The posters record the early history
of the tube before the network was
unified under a single brand: the
Underground. It also documents the
transformation of villages into suburbs.
Many of the early posters call for people
to have “countryside excursions” in
places like Golder’s Green and
Hampstead.
Some of the designs will be familiar,
such as Man Ray’s Keeps London Going
and the poster campaign for the
expansion of the Piccadilly Line to
Heathrow. However, it’s the early ones,
with their snapshots of an
unrecognisable London, that are really
special. An excellent way to mark the
150th anniversary of the tube.
Gothic gloominess clouds this production
J
O
H
A
N

P
E
R
R
S
O
N
return for
of opera
Bruce Willis
plays John
McClane.
Again
Captain Chris has looked an improved performer this season and loves going right-handed
FRIDAY 15 FEBRUARY 2013
28
THEPUNTER
RACING TRADER
BILL ESDAILE PREVIEWS THE BEST OF THE WEEKEND’S RACING
FIRST TRY INSURANCE: UK/ROI £/€ website/mobile/telephone & shop customers 18+. Applies to the Super League matches covered
live on Sky Sports between 15/02/2013 – 16/02/2013. If your selected player fails to score the first try but scores the last try of the
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match. Free bet credited within 24 hours of settlement. Free bet valid 7 days and must be wagered in full on any Single sports
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FI RST TRYSCORER
7/1 C. Riley (W)
8/1 J. Monaghan (W)
10/1 R. Atkins (W)
11/1 D. Blanch (C)
11/1 R. Myler (W)
12/1 R. Evans (W)
12/1 B. Hodgson (W)
12/1 D. Millard (C)
1/4 Warrington 20/1 Draw Catalans 3/1
8:00pm, Live on Sky Sports 1
FI RST TRYSCORER
9/1 J. Foster (B)
9/1 B. Kearney (B)
10/1 J. Carney (C)
10/1 J. Sammut (B)
11/1 E. Kear (B)
11/1 R. Owen (C)
12/1 M. Blythe (B)
12/1 K. Dixon (C)
1/3 Bradford 20/1 Draw Castleford 9/4
Tomorrow 4:45pm, Live on Sky Sports 1
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player in above matches. Refund as free bet online or cash in shop
up to £/€50 per customer per match.
All above prices subject to fluctuation.
6/4 Warrington
5/2 Wigan
9/2 St Helens
8/1 Leeds
14/1 Hull FC
16/1 Catalans
16/1 Huddersfield
125/1 Bradford
200/1 Hull KR
250/1 Wakefield
250/1 Castleford
250/1 Widnes
500/1 London Broncos
1000/1 Salford
cityam.com
Follow Captain’s orders in
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WWW.STARSPORTSBET.CO.UK 08000 521 321
NICKY Henderson has trained more
Cheltenham Festival winners than
anyone, including a record seven last
year. However, he hasn’t been very
lucky in the opening Supreme Novices’
Hurdle – his last win in the race came 21
years ago.
The performance of My Tent Or
Yours at Newbury last weekend
suggests this hoodoo may finally come
to an end, but supporters of the JP
McManus-owned six-year-old have to
be worried that connections will switch
to the Champion Hurdle.
I think that is very possible,
especially as Henderson’s RIVER
MAIGUE looks a ready-made
replacement for his stablemate in the
Festival curtain raiser.
Well backed on his hurdling debut at
Cheltenham in November, the son of
Zagreb produced a fine effort to finish
second to the race fit Dodging Bullets.
He then came out and thrashed New
Year’s Eve at Kempton on Boxing Day.
River Maigue has the chance to
bolster his claims at Ascot tomorrow
and I am keen to snap up some of the
12/1 available with Star Sports for the
Supreme.
If he produces a display like I expect
him to, Henderson may start thinking
even more seriously about the
Champion Hurdle for My Tent Or Yours,
which could lead to my selection lining
up at 6/1 or shorter on the day.
Another benefit is that Michael
Buckley’s contender only has this
option, while other well-fancied horses
like Melodic Rendezvous could step up
in trip for the Neptune Investment.
BY BILL ESDAILE
nPointers…
RIVER MAIGUE 12/1 e/w
Supreme Novices’ Hurdle
(Cheltenham Festival)
nPointers…
ROCKY CREEK 2.05pm Ascot
(tomorrow)
TRUSTAN TIMES 2.20pm Haydock
(tomorrow)
THE RAINBOWHUNTER e/w 2.40pm Ascot
(tomorrow)
TEAFORTHREE 2.55pm Haydock
(tomorrow)
ZARKANDAR 3.35pm Wincanton
(tomorrow)
CAPTAIN CHRIS 3.50pm Ascot
(tomorrow)
RIVER MAIGUE 4.25pm Ascot
(tomorrow)
W
E are now less than a
month away from
the start of the
Cheltenham Festival
and trainers are beginning to
put the finishing touches to
their charges.
The ground is going to be
extremely testing all over the
country again this weekend,
highlighting the need to find
horses that truly stay and
handle conditions.
Ascot is a stiff course at the
best of times, but it is going to
be particularly demanding
tomorrow and that is surely
going to count against
Champion Chase winner
Finian’s Rainbow in the
Betfair Ascot Chase at 3.50pm.
Nicky Henderson’s 10-year-
old was bitterly disappointing
at this track in November
where connections blamed
the ground for his abject
showing. He has since had a
breathing operation, but he
won’t like it this soft and is
passed over at 7/2 with Coral.
Somersby has been well
backed all week, but he
struggles for consistency, and
although I respect Cue Card,
it’s CAPTAIN CHRIS for me.
He pulverised Finian’s
Rainbow here in November
and was only just touched off
in the King George.
There aren’t many in the
line-up who will appreciate
the going, but he at least
handles it and just looks a
better horse this year.
Although a former Arkle
winner, he is a decent stayer
and this 2m 5f trip on a right-
handed course is just about
ideal. Take the 11/4 available
with Star Sports.
Cue Card is the biggest
threat, but I just worry
slightly about him getting
home on this ground. He
didn’t stay at Kempton and
when conditions are like this
at Ascot it’s pretty much a
three mile race.
Haydock is going to be even
more challenging for the
runners in the Betfred Grand
National Trial (2.55pm) and
only the best stayers need
apply.
When I normally analyse
races like this I concentrate on
those towards the foot of the
weights. However, a number
of these types of contests have
gone to the classiest
contenders in recent years and
I can see the same happening
tomorrow.
TEAFORTHREE ran an
absolute stormer in the Coral
Welsh National, only to be
heartbreakingly reeled in by
Monbeg Dude under an
inspired Paul Carberry.
AP McCoy’s mount had
jumped with all his
customary zeal and he looked
like being a comfortable
winner three out. He had to
play second best that day, but
is a horse that thrives on his
racing and I expect him to
bounce back and land the
prize tomorrow. Coral offer
5/1 and that is a fair price.
Rigadin De Beauchene is a
danger, along with Monbeg
Dude and Well Refreshed, but
Teaforthree is a very classy
animal and tomorrow’s
conditions should play to his
strengths.
The Rendlesham Hurdle is
the warm-up to the Grand
National Trial (2.20pm) and
Cross Kennon will be primed
to go one better than his
second-place finish in this
race 12 months ago. However,
he has dropped 9lb in the
weights since then and I
think he’ll struggle against
Tim Easterby’s TRUSTAN
TIMES.
My selection won the
competitive Fixed Brush
Hurdle on Betfair Chase day
here in November and
although he was well beaten
by Reve De Sivola in the Long
Walk, he can bounce back
dropped in grade.
Moving back to Ascot and
ROCKY CREEK is a strong
fancy to give Paul Nicholls his
first Reynoldstown success
since 2007 (2.05pm). The son
of Dr Massini won really well
at Warwick last time and he
could be a genuine Gold Cup
contender this time next year.
This race is normally a key
trial for the RSA Chase, but it
looks as though connections
of Rocky Creek are going to
wait for Aintree and follow
the same path as Silviniaco
Conti last year.
Kim Bailey has a few decent
chasers on his hands at the
moment and course and
distance winner THE
RAINBOW HUNTER should
go very close in the 3m
handicap chase (2.40pm),
before an audacious tilt at the
Grand National.
He won really well here two
starts ago and can be forgiven
a disappointing run at
Chepstow in early December
when the ground was
absolutely horrible.
RIVER MAIGUE is one of
the great white hopes in the
novice hurdling department
for Nicky Henderson and the
Michael Buckley-owned six-
year-old can book his ticket to the
Supreme Novices’ by taking the
4.25pm.
He looked very good at Kempton
last time and there may not be all
that much between him and the
hugely impressive My Tent Or Yours.
Finally, make sure you back
ZARKANDAR to win the Kingwell
Hurdle at Wincanton (3.35pm).
Grandouet would have been hard to
beat, but he has had a setback this
week and Nicholls’ 2011 Triumph
Hurdle winner can make it three
out of three for the season.
You can follow me on Twitter
@BillEsdaile.
B
LUE Square Bet Premier side
Luton pulled off the shock of
the FA Cup fourth round with
a heroic win at Norwich and
have been rewarded with a home
tie against Millwall tomorrow.
The Hatters have been through
relegation, points deductions and
financial difficulties over the past
few years, but this season’s FA Cup
has been a bright spot.
Neither side is playing that well
at the moment, yet Luton have
home advantage and have also
eliminated Championship outfit
Wolves from the competition.
Paul Buckle’s men have
flourished at Kenilworth Road this
campaign, winning four of their
past six. The atmosphere inside
the ground will be electric and, at
3/1 with Star Sports, I am happy to
back Luton to claim another scalp.
Barnsley are one of the hottest
teams in the Football League and
their resurgence has given hope
that Championship survival is
within reach.
The Tykes have picked
themselves up after a torrid time
to win six of their past seven and
are now in a great position to beat
MK Dons tomorrow.
The Dons are in freefall in
League One; without a win in four
outings during which they have
scored only twice. All the
momentum is with Barnsley and
at 21/10 with Star Sports, they are
value to reach the quarter-finals at
the first time of asking.
Manchester City’s 3-1 defeat at
Southampton all but ended their
chances of retaining the league
title and the FA Cup remains
Roberto Mancini’s best chance of
silverware. The 2011 winners
welcome Leeds to the Etihad
Stadium and Mancini is sure to
demand a better performance
from his players.
Neil Warnock’s men won at
Birmingham in the previous
round and I expect them to play
for a replay. City are dominant at
home, though, and their class
should tell come the final whistle,
so backing them in the draw/City
double result at 7/2 with Blue
Square Bet makes sense.
IN BRIEF
Froome grabs red jersey in Oman
n CYCLING: Britain’s Chris Froome
leads the Tour of Oman, after finishing
second in the fourth stage of the race
yesterday. The Team Sky rider holds a
24-second lead with two stages to go.
Lancaster plays down Lions fears
n RUGBY UNION: Coach Stuart
Lancaster has reassured his England
players that selection for the British and
Irish Lions squad’s tour to Australia this
summer will be based “solely on merit”,
after Lions coach Warren Gatland
admitted to concerns over picking too
many Englishmen.
Bresnan braced for fitness battle
n CRICKET: England bowler Tim
Bresnan faces a race to prove his fitness
for this summer’s home Ashes series
after undergoing surgery. The 27-year-
old required an operation on his right
elbow and faces eight weeks out.
Lee to face match-fixing hearing
n SNOOKER: Former world No5
Stephen Lee is to face an independent
hearing in relation to four allegations of
match fixing. Lee is currently suspended
as part of an ongoing investigation into
a separate charge of match fixing. Lee
denies the allegations.
29
FOOTBALL TRADER
BEN CLEMINSON PREVIEWS THE WEEKEND’S FA CUP ACTION
nPointers…
Luton at 3/1 with Star Sports
Barnsley at 9/5 with Coral
Draw/Manchester City at 7/2 with Blue Square Bet
FRIDAY 15 FEBRUARY 2013
cityam.com
Luton can continue their outstanding FA Cup run against Millwall
WE’RE now just over a week away from the Blue Square Bet Sprint Series
Grand Final and tomorrow’s racing will be the last chance for a few
horses to earn enough points to make the £17,500 showpiece at Lingfield Park
Racecourse.
Looking at the Blue Square Bet Sprint Series action tomorrow, I have to side
with TIDAL’S BABY in the first division (2.15pm).
Tony Carroll’s charge was a massive eye-catcher last weekend, when he
was slowly into stride before absolutely flying in the final furlong to just fail
by a short head. He won his maiden over this course and distance and should
be hard to beat.
In the 2.50pm, DANZIGER is a lot less exposed than some of these and
although the David Evans-trained horse has a tricky draw in stall 11, he should
make a bold bid under leading all-weather jockey Adam Kirby.
The four-year-old was an impressive winner at Lingfield last time over five
furlongs and the extra furlong tomorrow shouldn’t cause any problems.
The Sprint Series standings are desperately tight after six rounds with
Violet Jordan the leading trainer with 48 points, just two clear of David Evans.
William Carson didn’t pick up any points last week and now leads the
jockey’s standings by just one point from Jim Crowley.
As ever, bet with Blue Square Bet and we will give you your money back if
your horse is second, beaten less than half a length in all Sprint Series races.
WITH ALAN ALGER
FROM BLUE SQUARE BET
Non-league Hatters can make Lions mad
Allianz Park will take Sarries to
a whole new level, says Strettle
SARACENS winger David Strettle
believes the official opening of the
club’s new £20m Allianz Park home
tomorrow marks the dawning of a
new era for one of English rugby’s
biggest clubs.
After 15 years of sharing a
ground with Watford at Vicarage
Road, Sarries have relocated to
their new development on the site
of the old Barnet Copthall facility.
Fans have been swept up by the
excitement with the visit of Exeter
Chiefs in the Aviva Premiership a
10,000 sell-out.
And Strettle, who returns from
RBS Six Nations duty with England
to play, feels the landmark match
signals the start of a bright future.
“Saracens are one of the biggest
clubs in England and they need a
ground to call their own,
somewhere that the fans can call
home,” Strettle told City A.M.
“For the club, on the whole, this
can definitely take us forwards.
“The boys have been playing in
front of crowds of 3,000, so
Saturday may feel different, but the
increased support can only help us.
“You can feel the difference when
you go on the road and play at
Northampton, Harlequins and
Leicester, for example, to playing at
Watford. They have enclosed
grounds and it helps generate a
great atmosphere.
“That is something we can
now look forward to.”
As well as bringing top-
class rugby to north
London, Allianz Park
provides supporters with
the biggest bar in world
rugby – 2,000 capacity
– and the players
with an artificial
surface.
The all-weather
pitch is the
first of its
kind in the
top flight
and
Strettle
expects it
to help, not
hinder, Sarries’ form.
“Sometimes you have to
play on heavy pitches and
it can be a leveller in games,” he
added. “But we have a fast surface
that should make for good rugby.
We play a tactical game, but have
talented players and it will suit us.”
Former England lock Hugh
Vyvyan will be among the capacity
crowd for the historic afternoon.
And the founder of the Saracens
Tulip Club, which offers prime
hospitality and a networking
facility on matchdays, is eagerly
anticipating the occasion.
“I will enjoy watching the
first game with Owen
Farrell, Chris Ashton
and our new Tulip
Club members,” he
said. “The
exclusive club
offers the
camaraderie
of rugby
while
members and
players rub
shoulders in
the finest
hospitality.”
For more on the
Tulip Club email
hugh.vyvyan@
saracens.net
SPORT
Results
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England’s David Strettle is
set to play at Allianz Park
EXCLUSIVE
BY JOSH RICHARDS
PARALYMPIC star Oscar Pistorius is
due to appear in court today charged
with the Valentines Day murder of
his model girlfriend after she was
shot dead at his home in South
Africa early yesterday morning.
Pistorius – dubbed Blade Runner
for his trademark prosthetic legs –
was arrested at his luxury home in a
gated compound in Pretoria, where
Reeva Steenkamp died from four
gunshot wounds at around 3am.
Local police distanced themselves
from initial reports that Pistorius,
who became the first double
amputee to compete at the
Olympics in London last
year, had mistaken his
girlfriend for an
intruder.
A police spokesper-
son added that there
was no evidence of
forced entry or any-
one other than the 26-
year-old and
Steenkamp, 30, having
been present.
“A 26-year-old
man has
b e e n
Blade Runner
charged with
shooting model
girlfriend dead
arrested and has been charged with
murder,” said Brigadier Denise
Beukes. “The South African Police
Service was surprised to hear allega-
tions on the radio this morning that
the deceased had been perceived to
be a burglar. The allegations did not
come from us.”
No other suspects had been identi-
fied, Brigadier Beukes said, adding
that “allegations of a domestic
nature” had previously been made at
the same address.
“I can’t confirm that it’s related to
the person who has been arrested,
but I can confirm there has previous-
ly been incidents at the home of Mr
Oscar Pistorius,” she said.
Police recovered a 9mm pistol from
the scene and were yesterday continu-
ing with forensic tests. More than
four per cent of people own guns in
South Africa, which has one of the
highest crime rates in the world.
Pistorius, the most famous
Paralympic athlete ever, has previous-
ly spoken of his enjoyment of target
shooting and appeared in a Nike
advertising campaign with the slo-
gan: “I am a bullet in the chamber.”
Steenkamp, who is believed to have
begun dating Pistorius in November,
was shot in the head and upper body.
Hours before her death she wrote on
Twitter: “What do you have up your
sleeve for your love tomorrow? It
should be a day of love for everyone.”
Pistorius was arrested at his Pretoria home and is due to appear in court today
FRIDAY 15 FEBRUARY 2013
30
SPORT
cityam.com/sport
BY FRANK DALLERES
@cityam_sport
Visit fulhamfc.com or call 0843 208 1234 (option 1)
FULHAM FOOTBALL CLUB, CRAVEN COTTAGE
All tickets are subject to availability, terms and conditions apply.
Tickets on sale now
Saturday 23rd February,
Kick-Off 12.45pm.
FACTFILE
Oscar Pistorius
nBorn in Johannesburg on 22
November 1986 without fibulas in
both legs, which are amputated below
the knee at 11 months
n Gains global recognition aged 17 by
winning T44 200m gold at the 2004
Paralympics in Athens
n Wins three golds at 2006
Paralympic World Championships,
setting new world record over 200m
n Begins competing against non-
disabled athletes in 2007, and voices
ambition to run at the Olympics
n Banned from competing against
non-disabled athletes in January
2008 by athletics world governing
body the IAAF, but successfully
overturns the verdict in May at the
Court of Arbitration for Sport
n Misses 2008 Olympics but claims
Paralympic gold in T44 100m, 200m
and 400m, setting a world record
n Head injuries from a speedboat
accident force him to miss 2009 IAAF
World Championships
n Suffers first 100m defeat in seven
years at 2011 Paralympic World
Championships but is selected for
IAAF World Championships later that
year, where he reaches 400m semi-
finals and helps 4x400m relay team
reach final, only to be dropped
n Becomes first double amputee to
compete at an Olympics, reaching the
400m semi-finals at London 2012
n Wins two golds and one silver in
the Paralympics, but is forced to
apologise after criticising the length
of rival Alan Oliveira’s blades in the
wake of his
shock
200m
final
defeat
Reeva Steenkamp (far left) had been
dating Pistorius since November
31
Substitute Oscar’s 82nd-minute goal earned Chelsea a first-leg lead
WINGER Gareth Bale scored
two stunning free-kicks to
earn Tottenham victory
in their Europa League
last 32, first leg clash
last night and the
Wales star insisted: it
was no fluke.
Bale showcased his
talent with two perfectly
executed dead ball strikes,
either side of Samuel Umtiti’s
blistering half-volley for Lyon,
to give Spurs a slender
advantage ahead of next
week’s second leg in France.
And the 23-year-old, who
has scored all six of Spurs’
goals in their last four games,
revealed he had been putting in the
hours when it comes to hitting the
perfect free-kick.
“I’ve been practising free-kicks on
the training ground and I scored
one like that last week [against
Newcastle],” he said. “Both came at
good times in the game.
“Lyon are a good team and we
weren’t 100 per cent, but the
most important thing is we
got the win.”
Bale opened the scoring
in first-half stoppage
time with a looping
free-kick from 35
yards, but Umtiti
levelled with a fine
half-volley. Bale had
the final say though,
with a 25-yard strike
in the last minute.
Saracens are one of England’s biggest
clubs and need a ground to call their own

cityam.com
FRIDAY 15 FEBRUARY 2013
A BUSI NESS CLUB EXCLUSI VELY FOR THOSE AT THE VERY TOP OF THEI R GAME
The Tulip Club
Adorning the palaces and private rooms of Sultans, and the upper echelons of society,
the Parrot Tulip is synonymous with success. It’s the territory of the highest ranking,
the most affluent, and the most influential.
The Tulip Club will bring together the cream of the business community for the finest
in rugby hospitality at Saracens new state-of-the-art stadium, Allianz Park, in the heart of London.
As well as exclusive networking opportunities and special themed events in the heart of the city.
To join the waiting list, email hughvyvyan@saracens.net
Brilliant Bale brace
hands Spurs crucial
first-leg advantage
TOTTENHAM HOTSPUR ..............2
OLYMPIQUE LYONNAIS ...............1
BY JOSH RICHARDS
EUROPA LEAGUE
SPARTA PRAGUE .......................0
CHELSEA .....................................1
BY FRANK DALLERES
EUROPA LEAGUE
Gareth Bale has scored six
goals in four games
CHELSEA substitute Oscar spared
Fernando Torres’ blushes by firing a
late winner in last night’s Europa
League last 32, first leg clash at
Sparta Prague.
Torres, who has scored just once in
13 games, missed a host of chances
before Brazil midfielder Oscar
started and finished a slick move
eight minutes from time.
Blues manager Rafael Benitez
admitted the European champions
should have converted more of their
18 attempts but, with a place in the
last 16 beckoning, defended the out-
of-sorts £50m striker.
“We have to create more
opportunities and the strikers will
score more goals,” Benitez said.
“Everybody expects from a striker
just to score goals, but he’s also
doing a great job for the team.”
Oscar rescues
Blues as Torres
angst persists
Rugby exclusive: Strettle expects Allianz Park to give Sarries a lift, Page 29

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