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Marius Kloppers (left) is the latest to go after the planned exit of Glencores Mick Davis

Rio Tintos Tom Albanese and Anglo Americans Cynthia Carroll are also departing
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CITY banks yesterday refused to pub-
licly attack EU plans to limit their
bonus payments for fear sparking a
backlash, despite the intervention of
Mayor of London Boris Johnson.
Leading banks and industry
organisations contacted by City A.M.
put up a wall of silence, even though
many privately expressed concerns
that limiting bonus levels at double
annual pay will damage Londons
status as a global financial centre.
The Treasury is understood to have
instructed some trade organisations
to remain quiet and avoid attracting
adverse publicity while the issue is
debated in Brussels.
On Monday, Mayor of London Boris
Johnson told City A.M. that we dont
need Europe butting in on the issue
but no other politician has been
willing to make a public stand for
Londons financial sector.
The CBIs Katja Hall expressed
concern that regulating bankers
wages could be the thin end of the
wedge. She fears Europe would be
tempted to expand this legislation to
apply to businesses more generally,
damaging investor confidence and
economic growth.
Dr Roger Barker of the Institute of
Directors said there was some need
for pay restraint but the EUs
approach to remuneration policy is
excessively rigid and prescriptive.
This is a clear example of regulatory
policy that would be better designed
and implemented at national rather
than EU level, he added.
MEPs are also considering making
the EUs biggest firms report finances
on a country-by-country basis.
Lawmakers want this to be added to
new banking regulations, seizing the
moment to add to the burden on
lenders. Banks do not currently break
down their finances in such detail.
BY JAMES WATERSON
BY JAMES TITCOMB
THE MINING industry was shaken
by its latest change at the top last
night, as BHP Billiton chief
executive Marius Kloppers
announced his retirement.
The departure, the latest in a
string of shake-ups among the
FTSE 100s mining giants, will see
Andrew Mackenzie, who joined
from rival Rio Tinto five years ago,
take the helm at the Anglo-
Australian company, which is the
worlds largest miner.
It follows the exits of Anglo
American boss Cynthia Carroll and
Rio Tintos chief executive Tom
Albanese. Xstratas Mick Davis is
also due to step down six months
after the companys mega-merger
with Glencore is completed.
Kloppers departure means that
the FTSE 100s four biggest mining
companies have all announced
that their chief executives are
leaving in the last six months.
Last nights announcement
came as BHP posted a 43 per cent
drop in half-year profits to $5.68bn
(3.68bn), as falling metals prices
took their toll.
Mackenzie, who will take
control on 10 May, is currently
head of BHPs non-ferrous metals
division. The 56-year-old Scot was
poached from Rio Tinto in 2008,
having previously spent 22 years at
BP.
Mackenzie is understood to enjoy
a good working relationship with
Kloppers, whose departure is
believed to be his own decision.
Ive been very fortunate
to lead one of the worlds
great resource
companies, the South African said
last night. Deciding the right
time to retire was never going to
be easy. However after almost
twenty years with BHP Billiton, 12
as a senior executive and nearly six
as CEO, I believe now is the right
time to pass the leadership baton.
Kloppers had previously said that
he planned to serve around five
years as chief executive.
BHP blamed the profit fall the
biggest in more than a decade on
a combination of lower prices, a
weak dollar and inflation. The
company also took a $3bn
writedown on its aluminium
assets.
BHP chairman Jac Nasser praised
the outgoing boss last night,
saying: He leaves BHP Billiton a
safer and stronger company.
Despite an exceptionally
difficult economic
environment during
his tenure, Marius
and his team have
delivered for
shareholders,
Nasser added.
THE IODS SIMON WALKER ON WHY NUCLEAR AND SHALE CAN SAVE THE DAY
UK ENERGY CRISIS
8 8
8 8
Banks refuse
to speak out
in bonus row
CLEAN SWEEP AS
MINE BOSS QUITS
BHP Billitons Kloppers is fourth industry giant to go in six months
Andrew Mackenzie
has been at BHP
Billiton
since
2008
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Our pensions timebomb
is the worst in the world
UK WORKERS are worryingly under-
prepared for retirement, data out
this morning has revealed, with
many predicted to run out of savings
just seven years after leaving work.
The UK came at the top of a table of
the worlds worst savers, with the
average Briton facing a financial
shortfall of 63 per cent over the 19
years they are expected to live after
retiring.
The report by HSBC ranked UK
savers behind France, the US, Egypt,
China and Mexico.
The global average is a shortfall of
44 per cent, with just 10 years out of
an expected 18 years of retirement
covered by current provisions a fig-
ure that is expected to worsen as life
expectancy continues to rise in devel-
oped and developing economies.
This is yet another wake-up call
for people to start thinking about
where their later life income is com-
ing from, pensions campaigner Ros
Altmann told City A.M. There is no
money tree for retirees.
According to HSBC, nearly one in
five people working in the UK today
saves nothing at all, while 56 per
cent are not preparing well enough.
Fifty-seven per cent of UK workers
said they would prioritise going on
holiday over saving for retirement,
compared to two-fifths worldwide.
Big Anglo-French buyout planned
A British-based private equity consortium
is preparing a 3.5bn bid for French
catering company Elior in what would be
the biggest buyout in continental Europe
since Lehman Brothers collapsed in 2008.
CVC Capital Partners and BC Partners
have teamed up to launch a buyout of
Elior, underlining how confidence is
returning to Europes private equity
sector. Their bid would be for the whole of
Elior, not just the 2bn catering unit its
private equity owner Charterhouse had
initially planned to offload.
Esure speeds up stock market launch
Esure has appointed the brokers Numis
and Canaccord as the motor insurer
accelerates plans for a stock market
launch. The group is considering filing an
intention to float within days, the latest
sign of a revival in Londons IPO market.
Warner Music in deal with indies
Warner Music has struck a deal with two
groups representing independent record
labels to secure their support as it seeks
regulatory backing for its 487m deal for
EMI labels such as Parlophone, home to
Coldplay and Pink Floyd.
FBI investigates Heinz deal
The Federal Bureau of Investigation has
opened a criminal inquiry into alleged
insider trading before Warren Buffett
launched his $28 billion takeover bid for
H.J. Heinz.
Not enough tenants for Heron Tower
Gerald Ronson and an Arab consortium
that backed the development of the
Heron Tower in the Square Mile may have
to inject tens of millions of pounds of
fresh equity with lettings disappointing.
Cameron embarrassed over bribery
David Cameron has suffered an
embarrassing public intervention from
India over a bribery scandal involving
Finmeccanica, an Italian defence firm with
major British interests.
Bullying blamed for horse meat crisis
Cattle producer body The National Beef
Associations has pinned the blame for the
horse meat crisis on supermarkets and
accused them of short-sighted, price-led,
purchasing tactics.
Parties trade blame for looming cuts
With less than two weeks to go before the
latest fiscal face-off, members of both
American political parties yesterday
exchanged fire in a bid to shape public
opinion about it.
Apple attacked by hackers
Apple said some employee computers
were infiltrated by hackers, adding to the
wave of companies recently reporting
cyber attacks, although customer data
was not compromised.
ENERGY groups yesterday called
for more technological investment
to solve the UKs looming crisis
after warnings from regulators a
future squeeze on production will
cause price hikes for consumers.
The chief executive of energy
watchdog Ofgem, Alistair
Buchanan, yesterday warned a fall
in the UKs power production over
the next few years would lead to
more energy imports and rising
prices.
The UK is slowly closing its coal-
fired power plants and turning to
gas, but this is coming at the same
time as a squeeze on international
gas supplies.
The chief executive of trade
body Energy UK Angela Knight
said: It is essential that the
authorities pay close attention to
the transition such as assessing
what capacity is needed and what
headroom is required.
Simon Harrison, a chair at the
Institution of Engineering and
Technology, said: A stable policy
regime and confidence around
decarbonisation targets is
required to bring [...] investment
forward.
Senior Conservative MP Tim Yeo
yesterday said the last Labour
government was to blame for
neglecting energy policy.
UK trade bodies
call for solution
to energy crisis
Ros Altmann, pensions campaigner, warned that there is no money tree for retirees
2
NEWS
BY MICHAEL BOW
MARKETS hit their highest levels
for five years yesterday, as
optimism on further big M&A
deals and bullish German
sentiment ignited confidence.
The Dow Jones index rose to
14,035.67, the highest level seen
for more than five years, while the
FTSE 100 reached its highest level
since the financial crisis struck,
reaching 6,379.
The pound was driven down,
however, hitting its lowest value
against the dollar since last July.
Markets reach
five-year highs
BY JAMES TITCOMB
SPANISH real estate company
Reyal Urbis filed for insolvency
yesterday after failing to
renegotiate debt with its creditors,
the latest victim of Spain's
property market crash.
The move takes the property
developer closer to becoming
Spain's second-largest bankruptcy
after Martinsa Fadesa, which
defaulted in 2008. Dozens of
property companies have
collapsed in Spain, where house
prices have dropped 40 per cent
since their 2007 peak.
Spanish builder
goes bankrupt
BY CITY A.M. REPORTER
BY BEN SOUTHWOOD
To contact the newsdesk email news@cityam.com
S
o what, exactly, could the
chancellor do to boost growth?
He is, of course, hamstrung by
two conflicting realities: the fact
that the budget deficit remains huge,
and may even increase this year, as
well as by the realities of coalition
politics. But unless he changes
course, and is willing to take a major
risk, proper rates of growth are
unlikely to return in the near future,
which guarantees that the Tory party,
already behind in the polls and facing
an unreformed electoral system
biased in favour of the Labour party,
will face catastrophe at the 2015
general election.
For a given level of total demand,
companies and individuals will invest
more or less depending on their
return to capital. There is a straight-
forward way of boosting this: slash
corporation tax and axe capital gains
EDITORS
LETTER
ALLISTER HEATH
Time to take drastic action to reboot Britains feeble economy
WEDNESDAY 20 FEBRUARY 2013
tax entirely. While this sounds dras-
tic, this would immediately up the
returns on capital from all UK invest-
ments; at a stroke, it would become
significantly more profitable for
firms to invest and operate in Britain.
There is a catch, however: in the short
term at least, this would increase the
budget deficit. Unfortunately, there is
no alternative: our rocketing national
debt is reaching the sorts of levels
where any chance of growth will soon
be snuffed out; but without a drastic
improvement to incentives, compa-
nies wont start investing.
Regrettably, therefore, the deficit will
need to go up temporarily by up to 1.5
per cent of GDP, though some of this
would need to be cancelled out by
accelerating Osbornes spending cuts.
His deficit targets are toast anyway so
he might as well go for it.
Before any changes in behaviour are
accounted for, slashing corporation
tax to a symbolically low level of 11
per cent, below Irelands 12.5 per
cent, would reduce tax revenues by
around 20bn a year; when taking
account of increased investment and
jobs over time, the revenue loss would
end up being significantly less.
Repealing capital gains tax would
reduce revenues by 4.6bn; that
would need to be accompanied by
stricter rules to define what is
income, to prevent avoidance from
alternative to a compulsory living
wage. He should also make it clear
that he believes in across the board
income tax cuts, albeit at a later date.
On top of these tax changes, we
need to allow energy firms to kick-
start a shale gas revolution; planning
laws need to be torn up to allow a
mass privately-financed housebuild-
ing programme, with homes for
owner occupiers, private investors but
also for a new generation of profes-
sional, corporate landlords. We also
need new roads and airports; the pri-
vate sector would build many of these
if it were allowed to do so. A lot more
needs to be done; I havent even
touched on demand-side reforms. But
that would be a great start to getting
the economy moving again.
spiralling out of control. Countries
such as New Zealand, which dont
have a CGT, have managed this, so
there is no reason why we cant.
These reforms would transform the
UK into the most competitive destina-
tion for company locations of any
developed economy; it would elimi-
nate at a stroke much of the avoid-
ance issues. The psychological impact
would be explosive: Britain would be
truly open for business. Every busi-
ness leader in the world would stand
up and take notice.
The chancellor should also
announce that he will, over time,
increase the personal allowance
much more significantly. Nobody
who earns the minimum wage
should pay national insurance or
income tax. This will take years to
achieve but would boost incentives
for the low paid and be a job-friendly
Despite this lax attitude to saving,
people in the UK think they need a
retirement income of around 73 per
cent of their current earnings to enjoy
a comfortable standard of living.
The UK needs to do more to face up
to saving for its old age, warned
National Association of Pension Funds
chief Joanne Segars. For millions of
people that will mean working longer
or saving more, or both.
But Segars said that the report did
not directly include workplace pen-
sions, which pay an income until
death and so could go some way to
overcoming the 12-year savings short-
fall highlighted by HSBC.
She also said the governments
recent auto-enrolment scheme could
help ease the severity of the shortfall
by nudging people to save more.
Meanwhile Altmann, who recently
stepped down as Saga director-general,
blamed the lack of financial planning
on a pensions system that automati-
cally disincentivises you from saving.
Means-testing currently guarantees
everyone gets at least 142.70 in state
pension per week, though there is a
provision designed to boost saving. But
this is set to end in 2017 with the onset
of the universal state pension. THE FORUM: Page 20

MARKET REPORTS: Page 18

WHAT THE OTHER PAPERS SAY THIS MORNING
Find your next step at
CITYAMCAREERS.com
Retirement
shortfall (%)
Retirement
shortfall (years)
WORLD'S WORST SAVERS
Global 8/18 44%
1: UK 12/19 63%
2: Egypt 6/11 55%
3: France 10/19 53%
4: China 10/20 50%
BUMI yesterday inched closer
towards defeating Nat Rothschild at
the long-awaited boardroom battle
tomorrow, as institutional share-
holder Standard Life Investments
spoke out in favour of the board.
Standard Life Investments, which
owns 2.17 per cent of the share capi-
tal of Bumi, said it would vote
against co-founder Rothschilds
board proposals at the meeting.
He has proposed removing 12 out
of the 14 current directors.
Head of equities and executive
director of Standard Life Investments
David Cumming said that the
restructured Bumi board has the
best prospects of exiting the Bakrie
relationship and maximising long
term value for the remaining share-
holders.
However, Cumming said there were
caveats with the support. We have
made clear to Bumi the importance
we attach to the successful restruc-
turing of its board and the strength-
ening of its executive team, he said
yesterday.
Investor backs
Bumi as battle
reaches climax
BY CATHY ADAMS
These are pre requisites for restor-
ing confidence and delivering the
returns shareholders expect.
Rothschild responded: We both
agree that this board and the existing
management team needs to be
restructured.
Almost all institutional sharehold-
ers have now spoken out in support
of either Rothschild or Bumi in the
run-up to tomorrows meeting, with
the exception of Abu Dhabi
Investment Council, which has
around a four per cent stake.
Earlier this week, Indonesian share-
holder Rosan Roeslani sold off his 13
per cent voting stake in the miner.
Bumi PLC
19Feb 13Feb 14Feb 15Feb 18Feb
440
400
420
380
460 p
396.00
19Feb
HUNDREDS of millions of pounds
in unpaid back taxes will be
recouped next year under a new
agreement with the Isle of Man,
the Treasury announced yesterday.
A disclosure facility aims to
claim taxes on undeclared
incomes back to 1999, while an
automatic tax information
exchange agreement should
prevent similar tax evasion
occurring in the future.
Individuals will have from April
until 2016 to declare the tax they
owe and pay a discounted penalty.
The government is committed
to tackling tax evasion and this
agreement will greatly enhance
HM Revenue and Customs ability
to clamp down on those who try
to hide their money offshore,
said chancellor George Osborne
yesterday.
I welcome the progress made
with the Isle of Man and look
forward to working on this new
standard in the automatic
exchange of tax information.
The measures follow similar
agreements with Switzerland and
the US, while talks are ongoing
about a deal with Jersey and
Guernsey.
The government has also
pledged to focus on international
tax transparency during the UKs
presidency of the G8 this year.
Treasury in tax
evasion deal
with the Manx
BY TIM WALLACE
WEDNESDAY 20 FEBRUARY 2013
3
NEWS
cityam.com
BANK of America boss Brian
Moynihan's pay increased 73 per
cent to $12.1m (7.8m) in 2012
from the previous year, as the bank
gave him a bigger package of stock
awards.
The second-largest US bank gave
Moynihan 926,238 shares of stock
in three types of grants, including
restricted shares and performance-
based shares, according to a
regulatory filing last night.
Moynihan earned a $950,000
salary in 2012, but received no cash
bonus, similar to 2011, a person
familiar with the situation said. His
Bank of America pays its boss
Moynihan $12.1m as shares rise
BY HARRY BANKS 2013 salary will increase to $1.5m,
the person said.
The stock grants for 2012 were
worth $11.1m at the closing price
of $12.03 on Friday, the date they
were awarded. Moynihan received
grants worth about $6.1m for 2011.
Bank of Americas shares rose
109 per cent in 2012, the best
performance among stocks in the
Dow Jones Industrial Average, as
investors grew confident it had the
capital it needed to meet new rules.
Moynihan, however, is still
wrestling with losses from BAMLs
2008 purchase of Countrywide
Financial and is under pressure to
show the bank can grow earnings.
Brian Moynihan has held the top spot at global banking giant BAML for the past three years
STATE-BACKED bank RBS is
considering selling off a stake in the
316 branches it is being forced to
offload, ahead of a larger share
listing or sale, it emerged yesterday.
Such a move could drum up
investor interest in the unit, dubbed
Project Rainbow, by showing buyers
are prepared to buy into the unit.
The branches were nearly sold to
Santander but the deal fell through
last year. The bank is not likely to
announce its plan soon as it is still
working through its options.
RBS considers
hybrid selloff
BY TIM WALLACE
CANADIAN life insurer Great-West
Lifeco bought state-rescued insurer
Irish Life for 1.3bn (1.13bn)
yesterday in a deal that increases its
presence in Ireland and lightens the
Irish governments debts.
Ireland last year paid the same
amount to take over Irish Life,
formerly the insurance arm of
bailed-out Irish Life & Permanent,
after the Eurozone debt crisis forced
the suspension of its sale in late
2011. The sale, expected to close in
July, will help to push the Irish
governments debt to just below 120
per cent of GDP this year.
Irish Life sold
to Canadians
BY CITY A.M. REPORTER
TOP regulator Andrew Bailey was yes-
terday named as head of the incom-
ing Prudential Regulatory Authority
(PRA) and deputy governor of the
Bank of England, posts which give
him major new powers over banks.
Bailey is currently head of the pru-
dential business unit within the
Financial Services Authority (FSA) and
used to be chief cashier at the Bank.
The powers of the post mean Bailey
will face a grilling by MPs on the
Treasury Select Committee ahead of
starting the new role in April.
The FSA is being split into the
Financial Conduct Authority and the
PRA. The PRA is designed to promote
stability in the financial
sector, ensuring banks
are allowed to fail
safely rather than
causing widespread
damage.
Bailey will monitor
banks capital
buffers, and
whether they
are well run.
Bailey gets top
job in the new
bank watchdog
BY TIM WALLACE
Those powers mean he can set stan-
dards for banks and supervise how
they are run, looking to reduce risks in
their operations.
The position also gives Bailey a seat
on the Financial Policy Committee,
judging when bubbles are building in
financial markets and altering capital
requirements to dampen any danger-
ous movements.
I am very honoured to have been
chosen for this role and excited to see
the PRA taking shape, Bailey said.
There have been important and
painful lessons from the crisis and we
must ensure that the UK has a success-
ful system of financial regulation
Treasury Select Committee chair-
man Andrew Tyrie MP warned that
the size of the task facing Mr Bailey
should not be underestimated.
His leadership will be instrumental
in shaping a much-needed cultural
change at the regulator, moving away
from the failed box-ticking exercises of
the FSA towards more judgement-led
regulation, said Tyrie.
Andrew Bailey has worked to
set up the new watchdog
LLOYDS was yesterday fined 4.3m
for failing to compensate 140,000
payment protection insurance (PPI)
mis-selling victims promptly,
adding to the 5bn already set
aside to cover the scandal.
Thousands of those customers
had to wait as long as six months
for compensation, when it should
have taken 28 days, the Financial
Services Authority (FSA) said.
The problems from May 2011 and
March 2012 also saw 25,000 claims
drop out of the process. They were
only identified when customers
called the bank to complain.
Lloyds fined for failing to make
PPI redress payouts on time
BY TIM WALLACE Lloyds PPI redress systems fell
well below the standard the FSA
expects, and the size of this fine
reflects how seriously we view
these breaches, said the FSAs
Tracey McDermott.
Lloyds blamed the problems on
the huge volume of complaints.
We acknowledge that this led
to some customers not being
compensated on time and we
apologise to those customers
whose payments were delayed,
said a spokesperson for the bank.
The problems have since been
addressed, with the bank adding
interest to all payouts at a rate of
eight per cent per year.
WEDNESDAY 20 FEBRUARY 2013
4
NEWS
cityam.com
Chief Antonio Horta Osorio has seen the PPI compensation bill rise far higher than expected
VODAFONE has appointed banks to
advise on its proposed acquisition of
German cable operator Kabel
Deutschland, with Goldman Sachs
and UBS to work on the deal, sources
close to discussions have said.
The British telecoms giant is
considering a takeover of the
German firm, which would
strengthen its presence in one of its
biggest markets.
Goldman and UBS have a history
of working with Vodafone. UBS led
Vodafones 1bn takeover of Cable &
Wireless Communications, and
Goldman has long worked with the
company.
Speculation over a deal for Kabel
Deutschland sent shares in the
company up almost nine per cent
last week. The companys market
capitalisation was 5.95bn (5.2bn)
last night, a price that would make
a deal Vodafones biggest
acquisition since 2007.
Kabels earnings report, released
this morning, will be pored over by
Vodafone before a bid is made.
The companies did not comment.
Voda hires UBS
and Goldman
for cable deal
BY JAMES TITCOMB
THE COST of running a retail business
has soared far beyond the increase in
sales over the past six years, the
British Retail Consortium (BRC) has
warned today, as it urged the chancel-
lor to slash red tape and support con-
sumer spending.
Retailers total operating costs have
increased by 21 per cent a huge
20bn since 2006, taking annual
operating costs to 116bn, according
to a study by Oxford Economics for
the BRC. But over the same period the
value of retail sales rose by just 12 per
cent. The BRC warned that spiralling
costs are forcing store closures and
curbing job creation.
Ahead of George Osbornes budget
on 20 March, the industry body
renewed its plea to freeze business
Retailers urge
Osborne to cut
business costs
BY KASMIRA JEFFORD
rates, which are set to rise to 175m in
April, and laid out a string of reforms,
including the introduction of a time-
limited National Insurance holiday for
all firms which take on an unem-
ployed young person. It also called for
the coalition to speed up progress
towards its target of a 10,000 per year
personal tax allowance.
BP wins spill fine argument
as it gears up for court case
OIL GIANT BP last night clinched
a $3.4bn (2.2bn) reduction in the
potential fine it faces under the
US Clear Water Act for the 2010
Deepwater Horizon oil spill.
The FTSE 100 firm, which is
preparing to defend itself at next
weeks court fight against the US
government, has agreed with the
US Department of Justice that
the amount of oil spilled into the
Gulf of Mexico was lower than
the latter had been arguing.
BP yesterday said that the 4.9m
spilt barrels estimate from the US
government is too high by 20 per
cent, believing 3.1m barrels
should be considered the
maximum limit as it also
recovered 810,000 barrels directly
from the Macondo well.
The maximum fine payable
BY CATHY ADAMS under the act is $4,300 per barrel,
and the reduction sees BPs
penalty fall from a maximum of
$21bn.
BP said yesterday that it is
preparing for Mondays trial after
failing to reach a reasonable
settlement for civil claims
relating to the 2010 Deepwater
Horizon oil spill.
We have always been open to
settlements on reasonable terms,
failing which we have always
been prepared to defend our case
at trial, Rupert Bondy, group
general counsel of BP, said
yesterday.
The two-phase trial, which will
begin in New Orleans, will decide
whether BP was grossly negligent
at the time of the disaster, which
killed 11 workers and spilled oil
into the Gulf of Mexico for three
months. Bondy said yesterday
that BP firmly believes it was
not grossly negligent.
Earlier this month, BP said its
total liability for the oil slick
could reach $90bn.
Yesterday, a US federal judge
gave final approval to
Transocean the Switzerland-
based owner of the Deepwater
Horizon vessel for its $1bn civil
settlement relating to the oil spill.
DELLS profits fell by almost a
third in the final quarter of
2012, the company revealed last
night, in what may well be its
final public report before the
computer maker is taken
private.
The firm, which is set to be
bought out by founder Michael
Dell and private equity
company Silverlake Partners for
$24bn (15.6bn), saw profits
decline by 31 per cent to $530m
on an 11 per cent drop in
turnover to $14.3bn.
Dell has been one of the PC
manufacturers worst hit by a
global slowdown in sales as
consumers instead spend on
tablets and smartphones.
BY JAMES TITCOMB
It is also struggling to
compete with new competition
from Chinas Lenovo, which is
expected to overtake HP to
become the worlds biggest PC
manufacturer this year.
Sales in Dells consumer arm
fell by 24 per cent in the final
quarter of the year, while
operating profits in the
division slumped by 87
per cent. Slow
economic conditions
in Europe were
partially responsible
for the decline, with
group sales in the
EMEA region
down 14 per
cent in the
quarter.
The firms
enterprise software, a target for
growth, did well however.
Since Dells board announced
the proposed sale, several big
shareholders have come out
against the deal, claiming it
undervalues the company.
Investors holding around 14
per cent of Dell have said they
plan to vote against the deal,
although it is still believed the
buyout will go ahead, even if it
is at an altered price.
Dells shares are currently
trading at above the $13.65 price
proposed by Michael Dell, who
founded the company in 1984
and took it public in
1988.
UK retailers operating costs 2012, BN
and as per cent of total
Labour
Property
Utilities and Transport
Professional services
and other
Source: Oxford Economics/Haver Analytics
%
48.1bn
29.7bn
7.2bn
31.4bn
BP PLC
19Feb 13Feb 14Feb 15Feb 18Feb
455.0
450.0
452.5
447.5
445.0
457.5 p
446.35
19Feb
Michael Dell founded the
firm in 1984
Dells profits fall ahead of $24bn buyout deal
SUPERMARKETS slice of
consumer spending has
dramatically increased during the
last decade as consumers spend
less on the high street.
Around 58p in every pound
spent in the retail sector goes to
supermarkets such as Tesco and
Sainsburys, up from 46p a decade
ago, according to data from the
Payments Council, the payments
More than half of UK consumer
spend made in supermarkets
BY KASMIRA JEFFORD
services watchdog.
Their growth has come at the
expense of high street retailers
including homeware shops, which
have seen spend fall by nearly half.
Sainsburys also revealed
yesterday that annual sales in its
general merchandise business hit
1bn for the first time, with non-
food sales including homewares,
clothes and cookware growing at
three times the rate of food.
WEDNESDAY 20 FEBRUARY 2013
6
NEWS
cityam.com
Sainsburys said yesterday that its non-food business has hit 1bn of annual sales
THE LAUNCH of the UKs first 4G
mobile network has so far failed to
convince Vodafone and O2 customers
to switch to EE, company results sug-
gested yesterday.
EE, which owns Orange and T-
Mobile as well as its new self-branded
network, signed 201,000 new cus-
tomers to contracts during the final
quarter of last year. The period began
shortly after EE launched the UKs
first high speed mobile internet serv-
ice, gaining a head start on its rivals.
Although EE did not reveal how
many customers are now on 4G con-
tracts, citing the sensitive situation as
operators bid in the 4G auction, the
figures for new customers were
unspectacular. In fact, EE had signed
up more new contract cus-
tomers in the previous
quarter, when it was not
offering 4G.
Chief executive Olaf
Swantee played down sug-
gestions the 4G launch had
gone poorly, saying his
focus was on con-
vincing Orange
and T-Mobile
customers with
expiring con-
tracts to
upgrade to 4G.
4G off to a slow
start as EE fails
to woo users
BY JAMES TITCOMB
We had 1.9m of our customers leav-
ing contracts [in the quarter], that was
my first priority, trying to convince
them to take a 4G device. Thats a very
strong feeding ground, Swantee told
City A.M.. The next priority is acquir-
ing new high-value customers; Im
not interested in chasing volume.
EE said those signed up to 4G were
paying an average of 10 per cent more
than those on Orange and T-Mobile,
although this did not prevent a 2.6
per cent fall in annual service rev-
enues to 5.95bn. Mobile revenues
were hit last year by enforced cuts to
charges for calling other networks.
Without these changes, EE said
annual revenues rose 2.7 per cent. The
companys pre-tax losses more than
doubled to 249m, although the com-
pany put this down to writing down
the value of its assets and the invest-
ment associated with 4G.
Swantee said the loss would be
unlikely to put off EEs owners
France Telecom and Deutsche
Telekom from floating the firm.
Ofcom will today reveal the win-
ners of the crucial first round of
the 4G auction, which is
expected to raise at least
3.5bn for the Treasury.
Swantee said his focus is
on retaining customers
WEDNESDAY 20 FEBRUARY 2013
8
NEWS
cityam.com
BOTTOM
LINE
STEPHAN SHAKESPEARE
L
INKEDIN, the social network
for professionals, this week
ran a fantastically successful
social marketing campaign,
showing how one social network
can harness the power of another
to get its message out.
To celebrate reaching 200m
profiles, LinkedIn sent emails to
many of its users congratulating
them on being in the top 10 per
cent, five per cent or one per cent
most viewed profiles.
The ego boost that these
messages gave to users receiving
the emails led to many of them
turning to social media to
celebrate their popularity. Others
took to Twitter to double-check the
authenticity of the email.
The impact is seen at a glance on
YouGovs social media audience
measurement tool, SoMA.
On the four days the emails
went out, LinkedIn achieved reach
figures on Twitter (that is, the
percentage of the UK Twitter
population hearing about them) of
up to 13 per cent.
The firm then got a secondary
boost earlier this week when
articles started appearing talking
about the success of the campaign,
which enabled LinkedIn to achieve
18 per cent reach, which came
despite a big drop in the volume of
tweets.
ONLINE TALK SNOWBALLS
Combining the initial hit and the
follow-up story, LinkedIn has
reached 40 per cent of UK Twitter
users since 7 February. All of this
was achieved simply by running a
global event-driven marketing
campaign that persuaded
recipients to talk about it on social
media.
Pretty impressive stuff, made
even more so by the audience that
LinkedIn managed to reach. The
most valuable audience for the
professional networking giant is in
the higher income brackets, and
the second chart shows the reach
amongst those earning 50,000 or
more.
Among this group, LinkedIn
reached over 15 per cent of the
Twitter audience on three separate
occasions, and got a total of 45 per
cent reach over the period.
Stephan Shakespeare is the chief
executive of YouGov
LinkedIn shows the power of harnessing social media
HTC has unveiled its new
flagship handset in a bid to
claw back market share
from rivals.
The Taiwanese firm
yesterday launched its HTC
One device, promising a host
of new features it hopes will
attract customers who have
abandoned the company for
smartphones made by Apple
and Samsung.
HTC launches high-end phone
in effort to take on Samsung
BY JAMES TITCOMB
Chief executive Peter Chou,
unveiling the phone in London,
emphasised the Ones
advanced photography and
music features, as well as a
new homescreen design
featuring live updates from
news websites and social
networks.
Chou hopes the new
features will differentiate
his phones from Samsung,
despite them both running
Googles Android software.
LinkedIn's reach on Twitter
7Feb 8Feb 9Feb 10Feb 11 Feb 12Feb 13Feb14Feb15Feb16Feb17Feb 18Feb
6
8
10
0
2
4
12
14
16
18
20 %reach
LinkedIn's reach among those earning over 50,000
7Feb 8Feb 9Feb 10Feb 11 Feb 12Feb 13Feb14Feb15Feb16Feb17Feb 18Feb
6
8
10
0
2
4
12
14
16
18
20 %reach
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INTERCONTINENTAL Hotels Group
reported an 11 per cent jump in full-
year operating profits yesterday, driv-
en by a strong performance in the US
and its expansion in developing mar-
kets.
The owner of the Crowne Plaza,
Holiday Inns and InterContinental
brands made an operating profit of
$614m (387m) in 2012, while rev-
enue rose five per cent to $1.84bn.
Pre-tax profit rose five per cent to
$556m from $532m a year earlier.
Global revenue per available room
(revpar), a key hotel industry meas-
ure, grew 5.2 per cent in 2012, with
its US market up 6.3 per cent and
China 5.4 per cent ahead.
Tom Singer, IHGs chief financial
officer, said revpar in Greater China
fell 0.3 per cent in the fourth quarter
due to the China-Japan territorial
island dispute and the political lead-
ership changes. He expects sales
growth to recover once the new lead-
ership take official charge in March.
The FTSE 100 group, which runs
more than 670,000 rooms in over
IHG unveils rise
in profits led
by US growth
BY KASMIRA JEFFORD
4,500 hotels worldwide, said it was on
track for a further good performance
in 2013 with global revpar in January
up 6.6 per cent.
IHG recently put its London Park
Lane hotel up for sale and is also look-
ing for a buyer for its New York
Barclay Hotel after talks with a poten-
tial buyer collapsed last year. Analysts
expect the pair to fetch over $700m.
The sale of the Barclay hotel has
proved complicated because of the
significant costs a buyer would need
to invest to revamp the site. Singer
said the market for trophy real estate
has firmed up in the past year and
it expects to complete a sale this year.
IHG opened a net 18,000 rooms during the year and has a pipeline of around 169,000
InterContinental Hotels Group PLC
19Feb 13Feb 14Feb 15Feb 18Feb
2,000
1,960
1,980
1,940
2,020 p
1,953.00
19Feb
InterContinental has announced its preliminary results reporting $560m
prot before tax versus consensus of $551m and our forecast of $552m. We expect
consensus forecasts for 2013 will move up around two to three per cent on
these results and weakening sterling makes the stock less expensive.
ANALYST VIEWS

InterContinental has reported a two per cent full year earnings beat
and, in our view, the stock is a core travel and leisure sector holding, offering
high returns, global growth and diversity, leading brands and projected
ongoing cash shareholder returns.

IHG stock up 26 per cent over the past quarter. We would not expect IHG to
roar away on these results but it does show the strength of the groups global mix,
especially with the Americas region strong again in January. It remains our
preferred hotel stock in 2013 due to its relative lack of European exposure.

DID INTERCONTINENTALS
RESULTS MEET YOUR
EXPECTATIONS? by Kasmira Jefford
SIMON FRENCH PANMURE GORDON

JAMES HOLLINS INVESTEC

GEOF COLLYER DEUTSCHE BANK


A US judge said yesterday that
David Einhorn's hedge fund had
shown a likelihood of success if
his legal attack against Apple goes
forward, though he made no
immediate ruling on whether to
block next week's shareholder
vote on a proxy proposal.
Einhorn wants to stop a vote on
one of Apples shareholder
proposals, which would eliminate
the iPhone maker's ability to issue
preferred stock without investor
approval. He wants the firm to
return more cash to shareholders.
Einhorn could
win Apple suit
BY CITY A.M. REPORTER
LONDONS escalating rents are
forcing two-thirds of businesses to
consider moving offices, a new study
seen by City A.M. has found.
A OnePoll survey commissioned
by outsourcing specialist Capital
Capture found that 63 per cent of
firms in the finance, IT, legal and
insurance industries have considered
moving, with over half blaming
property-relating costs.
Nearly half of the 300 London-
based businesses surveyed reported
a rise in their commercial rent in
the last two years.
Rent prompts
office moves
BY KASMIRA JEFFORD
WEDNESDAY 20 FEBRUARY 2013
10
NEWS
cityam.com
SWISS drug firm Novartis yesterday
dropped plans to pay its outgoing
chairman SFr72m (50.6m) to stop
him going to work for rivals.
Daniel Vasellas golden handcuffs
deal was announced on Friday but
abandoned after a very negative reac-
tion from shareholders.
Executive pay has come under
intense scrutiny in the country ahead
of next months referendum on
whether or not to bring in new con-
trols. If it succeeds, non-competition
deals will be banned and sharehold-
ers will get a binding vote on pay.
Vasella has long been a top earner,
taking home SFr13.1m last year and
SFr13.5m in 2011. But the proposed
exit package proved too much for
investors to bear and activist fund
Novartis scraps
50m payoff
for chairman
BY HARRY BANKS
managers urged investors to oppose
the deal in this weeks meeting.
I have understood that many people
find the amount of the compensation
linked to the non-compete agreement
unreasonably high, despite the fact I
had announced my intention to make
the net amount available for philan-
thropic activities, Vasella said
THOMAS Minders campaign against executive pay packets began
almost exactly ve years ago at a UBS shareholder meeting in the
sleepy Swiss town of Basel. Until then Minder was best known for his
familys traditional herbal toothpaste, Trybol, but he was ung into
the spotlight when he attacked then-UBS chairman Marcel Ospel
over the subprime writedowns that had forced the bank to seek a
government bailout. Though Ospel stepped down weeks later,
Minders campaign really began in earnest later that summer, when he
collected 100,000 signatures and called for a referendum to impose
executive pay restrictions including forcing all listed companies
to have binding votes on compensation for company man-
agers and directors, and banning golden handshakes and
parachutes. If passed on 2 March, the new rules would
make the Swiss system one of the strictest in the world
on pay a dramatic departure for a country better
known for its secret bank accounts and populated by
some of the richest individuals in the world.
Daniel Vasella has led the firm for 17 years but shareholders still rejected his huge payoff
Novartis AG
19Feb 13Feb 14Feb 15Feb 18Feb
64.25
63.75
64.00
63.50
63.00
63.25
62.75
64.50 CHF
64.30
19Feb
SIR Richard Branson yesterday
pledged to give away half his
fortune to good causes.
The British entrepreneur and his
wife Joan were one of 12 new
signatories to Bill and Melinda
Gates Giving Pledge Initiative.
They join a list that includes Mark
Zuckerberg, David Rockefeller and
Branson pledges to give away half his worth
BY A CITY A.M. REPORTER
Warren Buffett. Yesterday saw
the first billionaires from
outside the US pledge to donate
the funds to philanthropic
activities, with other signatories
including Russian nickel mogul
Vladimir Potanin and Indian
software tycoon Azim Premji.
Sir Richard has an estimated
fortune of 2.7bn. In a letter to
the Giving Pledge Initiative,
which now counts donations of
around $500bn (324m), Sir
Richard said: Stuff really is
not what brings happiness.
Family, friends, good health and
the satisfaction that comes from
making a positive difference are
what really matters.
Happily our children, who
will be our principal heirs,
agree with me on this.
DANONE said yesterday it plans
to axe around 900 jobs to cope
with the downturn in southern
Europe that is hurting its core
dairy business and aims to return
to more profitable growth next
year.
Danone yesterday reported
sales of 20.1bn (17.3bn) in 2012,
up 5.4 per cent from a year
earlier. It warned margins would
fall again this year in the face of
weak European demand.
Danone to cut
900 jobs in EU
BY CITY A.M. REPORTER
AMERICAN payment processor
TSYS said last night it will buy
prepaid debit card provider
NetSpend Holdings for about
$1.4bn (907.4m) in cash to
expand its presence in the prepaid
processing market.
TSYS offered to pay $16 per
share for NetSpend -- a premium
of 30 per cent to the stocks
closing price yesterday.
NetSpend shares were up
around 28 per cent at $15.80 in
trading after the bell.
TSYS to snap
up NetSpend
BY CITY A.M. REPORTER
PROFILE: THE MAN MINDING SWISS EXEC PAY
WEDNESDAY 20 FEBRUARY 2013
11
NEWS
cityam.com
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IN BRIEF
BA offers light luggage discount
nBritish Airways followed its budget
rivals yesterday in offering cheaper
tickets for passengers who only travel
with hand luggage. BA said customers
flying from Gatwick to five European
cities will be able to buy tickets up to
15 cheaper if they stick to carry-on
baggage. The firm said the deal will not
affect the price of tickets that come
with a check-in luggage allowance.
Dairy Crest unveils shake-up
nDairy Crest, which has been trying
to cut losses in its core milk business,
said yesterday it will consolidate its
business into a single structure from
the next financial year. The maker of
Cathedral City cheese said it expects
annual cost savings of at least 5m.
Dairy Crest also said Tom Atherton
would replace Alastair Murray as
finance director, starting 23 May.
Regus raises offer for MWB
nOffice space supplier Regus
yesterday raised its offer for MWB
Business Exchange by nearly two-
thirds to about 65.6m, marginally
above a bid by Hong Kong-based
Pyrrho Investments. Regus said it
would pay just over 101p per MWB
share, up from its prior offer of
61.576p. Shares in MWB closed up one
per cent at 99p yesterday.
THE Honourable Artillery Company
was the venue for the 2013 UK
Stock Market Awards on Monday
evening.
The third annual ceremony, com-
pered by BBC Radio 4 sports presen-
ter Garry Richardson, was held to
celebrate all that is great about
publicly listed British companies
and the equity market within
which they operate.
With that in mind, solicitors
Baker & McKenzie won best
legal adviser, the London Stock
Exchange was named best
exchange, Plexus Holdings
received the oil and
gas gong, and the
top financial servic-
es firm went to Hargreaves
Lansdown, while Numis Securities
took best adviser and Inmarsat won
the best telecom company title.
There were no speeches as recipients
were hastily whisked on and off the
stage. However, that did not prevent
a token audience groan when
HSBCs investor relations
manger Guy Lewis took to
the stage to collect the
best bank award. Not to a
solemn orchestral piece,
but to the tune of South
Korean rapper Psys song
Gangnam Style.
Turns out there
aint no party
like a
British list-
ed compa-
ny party.
Plexus Holdings chief
executive Ben van
Bilderbeek
What is this? A bit of
unchallenged discrimination in
the City of London? It is strictly
women-only at the Guildhalls
business library next month, when
Susan Attard deputy town clerk of
the Corporation gives the keynote
speech at the International Womens
Day networking lunch on 8 March. The
Capitalist hears there will be seminars
on personal finance, converting
contacts into customers, and the dos
and donts of being a woman in
business. And if that wasnt enough to
tempt you, then the all-you-can-eat
sushi buffet should be an added
incentive. Sure to sell like hotcakes,
ladies who lunch can secure tickets,
which cost 10, by calling 020 7332
1812.
Time to rejoice the Eurozone
economies are rebalancing and
the crisis is over. Or is it? It seems
esteemed experts at Capital
Economics were divided on the topic
earlier this week. Only a few hours
after boss Roger Bootle and his
colleague Jonathan Loynes sent out a
note pointing to positive signs in the
labour cost data, senior economist
Jennifer McKeown took the opposite
approach. McKeown sent her own
email arguing: There is little sign of
the rebalancing that is sorely needed
both within and between Eurozone
economies. Nothing like a bit of lively
office debate.
WHILE a game of squash or round
of golf are the more traditional
City pastimes for the competitively
inclined among us, a new sport
seems to be ruffling a few feathers
within the Square Mile.
Yes, the City Slickers Grand Prix
is back for a third year. With go-
kart racers from Morgan Stanley,
Barclays, UBS, JP Morgan, HSBC
and Deutsche competing last year
under imaginative team names
such as The SpeedoPhiles and
Bottom Gear The Capitalist
assumed it would be a sportsman-
like contest. However spies inform
The Capitalist that one team, who
made it to the podium last year but
missed the top spot, were so
peeved at losing the winning
trophy that they threw down their
medals and made a swift departure
from the track. Handbags at the
ready, gentleman...
Left to right: Connection Capitals Julian Carr and TeamSport boss Dom Gaynor
Tantrums and tyres as Square
Mile go-karting contest returns
UK firms party
Gangnam Style
at market bash
12
cityam.com
WEDNESDAY 20 FEBRUARY 2013
cityam.com/the-capitalist
THECAPITALIST
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
BANCOLOMBIA, Colombias largest
lender by assets, agreed to purchase
HSBC Bank SA Panama for $2.1bn
(1.36bn), the most ever paid by a
local bank and the latest in an
expansion wave by financial entities
into Latin America.
The acquisition includes HSBC
Panamas brokerage, fiduciary
services unit, banking business and
its insurance company, Bancolombia
said in a regulatory filing yesterday.
The transaction is aligned with
Bancolombias strategy to expand its
international operations by investing
in the growing, solid and profitable
market of Panama, where it has been
present for over 40 years, it said.
The Bancolombia agreement does
not include HSBC Panamas units in
Colombia, it said.
The sale is expected to close
during the third quarter of 2013,
subject to regulatory approvals. Last
year, Banco GNB Sudameris agreed
to buy HSBCs units in Colombia,
Peru, Paraguay and Uruguay for
$400m, while Banco Davivienda
agreed to acquire HSBC assets in
Costa Rica, El Salvador and
Honduras for $801m.
HSBC could make about $1.4bn
from the sale of the Panama assets,
as the business is being sold at three
times its net asset value of $700m.
Bancolombia
snaps up HSBC
Panama assets
BY CITY A.M. REPORTER
LAWYERS saw their total pay pack-
ages fall by five per cent last year, as
rising bonus payouts failed to stem
the drop in average salary.
Total remuneration for lawyers in
2012 came in at 139,040, down from
146,500 in 2011 according to
recruiters Laurence Simons.
Though bonuses edged up very
slightly to 35,000, it wasnt enough
to offset the seven per cent drop in
base pay to 103,450 down from
111,500.
The survey showed a stark differ-
ence between the amounts that in-
house counsel can expect to receive
compared to their private practice
counterparts. The average bonus for
an in-house lawyer working in finan-
cial services last year came in at
48,688, compared to just 14,852 for
private practice professionals.
2012 was a tough year for legal
firms and departments, meaning
they couldnt replicate the sharp rise
in pay seen in 2011, said Laurence
Simons director Lucinda Moule. The
Higher bonuses
cant halt fall in
lawyer payouts
BY ELIZABETH FOURNIER
focus was on stability and a conserva-
tive steadying of salary costs.
But she said the pattern of bonus
payments, which ticked up sharply in
December after a lull from August to
November, offers some green shoots
for lawyers, suggesting performance
exceeded expectations.
Falling salaries have left many
lawyers considering jumping ship,
with two-thirds of those surveyed say-
ing they were actively looking for a
new role, or would move if the right
opportunity came up. And 69 per cent
said they would be willing to move
abroad in search of the perfect role, up
one per cent from last year.
But Moule said those moving job in
the hopes of securing a substantial rise
in pay would be disappointed. The
average lawyer looking to change roles
in 2013 will be expecting an increase
in basic salary of 15 per cent. This type
of increment is more the exception
than the norm.
W
ITH so much focus on the
latest bonus controls that
EU politicians want to slap
on Europes banks, its
sometimes easy to forget just how
severely economic uncertainty has
already slashed pay.
Its also often forgotten that banks
arent just populated by the deal-
makers that attract the publics
attention behind every rainmaker
theres a growing army of compli-
ance staff, lawyers and IT whizzes,
most of whose salaries are also suf-
fering.
Theres no doubt that banks in-
house lawyers have stepped out of
the shadows over the past five years.
Back in 2008 it was all-too familiar
to hear bankers counsel bemoan-
ing their lack of status in the trad-
ing room, shouting to be heard on
the incoming slew of new rules and
being asked to sign off deals almost
as an afterthought. Now the compli-
ance gurus are front and centre of
every decision that banks make
but unless their salaries match the
more high-profile role then theres
little chance of attracting the best
people into the fold. Its no wonder
so many lawyers are on the lookout
for a new job but can anyone offer
them the salary bump theyre after?
With the Citys new roster of regu-
latory bodies hardly offering the big
bucks (even the FSAs top enforcer
Margaret Cole made just 263,686
in 2010-11, much less than an equity
partner at a City law firm would
take home) hungry lawyers will
instead have their fingers crossed
that the recent uptick in deal activi-
ty will drive hiring and salaries
in the right direction. Industry
insiders say private equity depart-
ments have already been ramping
up hiring in anticipation of a surge
in deals. Heres hoping it materialis-
es, and that next years pay packages
are enough to keep the Citys bright-
est minds exactly where they
belong.
KLOPPERS WILL BE MISSED AT BHP
SO BHP Billitons Marius Kloppers
is the latest mining domino to
topple, in the wake of Tom
Albanese and Cynthia Carroll.
Pressure on mining bosses may be
rife as low commodity prices drag
on shares, and China could soon
slow again, but Kloppers was a
straight-talking CEO who saw the
firm through the financial crisis
with aplomb after winning the top
job in 2007. His successor Andrew
Mackenzie has some rather big
shoes to fill.
IN BRIEF
Car boom helps Pendragon
n Car dealer Pendragon yesterday
posted an 18 per cent rise in full-year
profit, helped by growing new car
sales in Britain, Europe's only bright
spot for car sales. The company,
which runs 250-plus retail outlets,
reported underlying pre-tax profits of
36.4m on revenues five per cent
higher at 3.63bn. The firm said its
like-for-like car volumes increased by
15 per cent during the year, helped, in
part, by an 18 per cent increase in
visitors to its main dealer websites.
Brammer revenues hit record
n Industrial equipment firm
Brammer yesterday reported an 11.9
per cent rise in yearly revenues to a
record 639.6m, on pre-tax profits
up 19 per cent to 34.5m. The FTSE-
listed firm said it expects to perform
well ahead of the market in 2013 in
spite of choppy economic
conditions, following a successful
and significant year. Brammers
shares closed up two per cent at
348p, the highest level since last
May.
Cash for green car charge-points
n The coalition has set aside 37m to
help pay for new charge points for
electric cars, transport minister
Patrick McLoughlin said yesterday.
Local authorities, train operators and
individuals can claim back up to 75
per cent of the cost of installing a
charge point until April 2015, in a bid
to encourage UK drivers to choose
greener vehicles. There were almost
3,000 electric cars on the roads in
London last year, according to the
Greater London Authority.
ELIZABETH FOURNIER
SINGAPORE has granted four
international law firms the right to
practice in the city state, in only
the second round of licences to be
awarded since it liberalised its legal
system in 2008.
Linklaters, Sidley Austin, Gibson
Dunn & Crutcher and Jones Day all
won approval to practice Singapore
law including corporate, project
finance and banking, but excluding
domestic litigation and general
practice such as criminal law.
But 19 other firms failed to meet
the Singapore Ministry of Laws
BY ELIZABETH FOURNIER
tough criteria, which look at the
value of work a firm will bring to
the jurisdiction, and the number of
lawyers it would base there.
Linklaters Singapore managing
partner Kevin Wong said the firm
was delighted to be approved.
Linklaters has a long-term
commitment to Singapore and we
are privileged to be an established
member of its legal community, he
added.
Allen & Overy, Clifford Chance,
Herbert Smith, Latham & Watkins,
Norton Rose and White & Case won
licences when the first round was
awarded in 2008.
WEDNESDAY 20 FEBRUARY 2013
13
NEWS
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CITYAMCAREERS.com
US MANUFACTURING output
started 2013 with a fall, according
to data out yesterday, driven by
weakness in car production.
Factory production dropped 0.4
per cent in January, Federal Reserve
data showed, pushed by the 3.2 per
cent crash in car output.
The fact that the decline was
coming mainly from one sector,
combined with upward revisions to
the numbers for November and
December, made analysts
optimistic that the underlying
trend was still positive.
Given that most of the weakness
was due to the give-back in motor
vehicle production after the 11 per
cent surge in activity during the
last two months of 2012, we expect
this retreat in industrial output to
be temporary, said Millan
Mulraine at TD Securities.
And consumer confidence data,
released separately, supported a
more hopeful view. The Thomson
Reuters consumer confidence index
climbed to 76.3 in February from
73.8 in January, after job gains.
US industrial
output caught
in traffic jam
BY BEN SOUTHWOOD
FALLING output across the Eurozone
pulled the Organisation for
Economic Co-operation and
Development (OECD) group of major
economies into decline in the fourth
quarter of 2012, the organisation
said yesterday.
The total output from OECD coun-
tries fell 0.2 per cent in the final
three months of last year, dragged
down by a 0.6 per cent contraction in
the Eurozone economy.
But other major economies were
little help: the UK shrank 0.3 per
cent, Japans GDP crept down 0.1 per
cent, US GDP was almost completely
flat and Canadas figures were not
yet released.
But this gloomy quarterly picture
was not mirrored exactly in the
OECD falls into
contraction on
Eurozone woe
BY BEN SOUTHWOOD
annual figures. OECD output rose 0.7
per cent between the fourth quarter
of 2011 and the same period last year,
the organisations numbers revealed.
But for a 2.7 per cent plunge in
Italian GDP, the OECD would have
done better, as US output increased
1.5 per cent, Japan edged up 0.1 per
cent, and Germanys economy grew
0.4 per cent. UK output was almost
completely flat over the year, with a
strong third quarter outweighed by
poor performance in the other nine
months of the year.
These yearly figures, which give a
much stronger impression of the
pace of expansion in the US, are in
line with widely-held hopes that the
worlds biggest economy is finally on
the path to solid growth, potentially
bringing other countries with it on
its way up.
WEDNESDAY 20 FEBRUARY 2013
14
NEWS
cityam.com
Find your
next step at
C
I
T
Y
A
M
C
A
R
E
E
R
S
.
c
o
m
Source: OECD
Change in GDP between third and fourth quarters of 2012
OECD total
-0.2%
EU
-0.5%
Eurozone
-0.6%
Germany
-0.6%
Italy
-0.9%
US
No change
Japan
-0.1%
UK
-0.3%
OECD FALLS INTO DECLINE BY THE END OF 2012
EUROZONE construction output
sank further in December, putting it
at the lowest level since early 1996,
excluding two apparent blips.
Eurostats construction output
index fell 1.7 per cent to reach 80.1
in December, which is the lowest
since February 1996, excepting two
one-off sharp drops last February
and in December 2010.
Over the whole year, output is
down some 4.8 per cent across the
17-member currency union, Eurostat
revealed, and since the pre-recession
peak, when the index neared 110,
output has crashed over a quarter.
The wider EU is also in the midst
of a construction slide, the data
revealed. Though output in the 27-
member region is not as far below its
pre-recession peak, it fell 2.7 per cent
between November and December to
cap off an 8.5 per cent drop in 2012.
Among the countries, Poland a
member of the EU but not the crisis-
hit Eurozone did worst, with a 23.7
per cent blow to construction
production over the year.
But Eurozone members were not
far behind, with Portugal suffering
an 18.2 per cent hit, and Slovenia
and Slovakia also seeing
construction output fall by double
digit percentages.
Italy keeps its data confidential for
two months, while Greece publishes
only quarterly figures, and its
estimates for the fourth quarter of
2012 have not been released.
But the other Eurozone member
hit hard by the sovereign debt crisis,
Spain, enjoyed a 4.5 per cent
improvement in building over the
year, in spite of the tough recession
squeezing the country.
Construction
output heads
to record low
BY BEN SOUTHWOOD
NEW CAR registrations in the EU
collapsed to their lowest January
level since 1990 last month, dealing
the unions carmakers a drubbing.
Peugeot Citroen, Ford, Fiat, Toyota,
Volvo, Suzuki and Mitsubishi suf-
fered double digit falls in sales
between already-poor January 2012
and January 2013, figures revealed
yesterday, as Europes economic
troubles clobbered one of its biggest
industries.
Overall sales were down 8.7 per
cent over the year, according to the
European Automobile
Manufacturers Association (ACEA),
bringing total sales across the union
to 885,159, under a million for the
first time in 23 years.
Sales were down 9.6 per cent in
Spain, 15.9 per cent in Sweden, 18.8
per cent in Ireland, 15.1 per cent in
France, and 17.6 per cent in crisis-hit
Italy. And even powerhouse econo-
my Germany felt the pain, with an
8.6 per cent plunge only slightly
better than the bloc average.
Other smaller economies that
have also avoided much of the
Eurozone pain nevertheless came in
for a car sales hammering. Sales
crashed 28.2 per cent in Finland,
and plummeted 31.2 per cent in the
Netherlands.
But the worst fall was saved for
Greece, with 34.5 per cent fewer car
Worst January
since 1990 for
EU carmakers
BY BEN SOUTHWOOD
sales than a year before. That
amounts to around 5,533 new cars
shifted in January, in a country with
a population of around 11m mean-
ing just one 20th of a per cent of
Greeks bought new vehicles.
By contrast, sales in the UK soared
11.5 per cent, sales in Poland jumped
8.8 per cent, and Belgium, Austria,
Denmark and Estonia also saw sig-
nificant gains.
Despite the combination of UK
growth and German decline, the lat-
ter remained the biggest EU car mar-
ket, with 192,090 new registrations
during the month, followed by the
UK at 143,643, France at 124,798 and
Italy at 113,525.
The worst-hit carmaker in propor-
tional terms was Mitsubishi, with
sales down some 37.4 per cent, fol-
lowed by Ford, which suffered a 25.5
per cent drop, Suzuki and Peugeot
Citroen.
The best performer was Jaguar
Land Rover, which managed to grow
its sales 19 per cent.
Honda and Mazda also enjoyed
double-digit growth, and Kia sales
were up 7.2 per cent.
Volkswagen retained its top spot,
with sales falling 5.5 per cent less
than average so that it gained 0.8
percentage points of market share.
In January it sold 24.4 per cent of
all cars sold in the EU, some 13 per-
centage points ahead of the nearest
contender, Peugeot Citroen.
Hollande wants to
help Greece
German investor sentiment roars up in 2013
WEDNESDAY 20 FEBRUARY 2013
15
NEWS
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CCCA CCCCA CCCCCCCCAL AAAAAAA LLLLLLLLLLLLLLLLLLL LLLL AAAAAAAAAAA
99
AAL AAL
0000000 000
SS US SSS UUUUS SS UUUUS UUUUU LLLLLLLL LLLLL LLLLL LLLLLL AAAAAA CCA AAA CCCCA CCCCCCCAA CA UUUUUUUUUSSSSSSS LLL AL AL A L LL LL LLL LLLLLL LLLLLLLLLLL AAAAAAAAAAA CCA CCCCCA CCCCCCCCCCC
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LLL LL
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SSS NNNN SSSS N OOON OOOOOOOOOOOOOOOOOOOOOOOOOOOO SS ON OOOOOOOOOOOOOOOOOOO
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S ON N
2013 IS WORST JANUARY FOR CAR REGISTRATIONS SINCE 1990
New car registrations in January
Car sales in January, millions 1.4
1.3
1.2
1.1
1.0
0.9
0.8
Jan
2003
Jan
2004
Jan
2005
Jan
2006
Jan
2007
Jan
2008
Jan
2009
Jan
2010
Jan
2011
Jan
2012
Jan
2013
BIGGEST FALLERS (COUNTRIES)
BIGGEST FALLERS (FIRMS)
Netherlands 31.2%
Greece 34.5%
Finland 28.2%
Peugeot/Citroen 16.3%
Ford 25.5%
Toyota 16.8%
S
o
u
r
c
e
:

A
C
E
A
France pledges privatisation
and tourism help for Greece
FRENCH President Francois
Hollande yesterday told Greece
that austerity alone could not
bring the country out of its
crippling recession, and that he
would help the stricken state
with privatisations, economic
reforms and improving tourism
numbers.
We must make sure that
growth and jobs come back in
Greece, Hollande said after
meeting Greek leader
Antonis Samaras. We
BY CITY A.M. REPORTER
need more growth in Europe.
That is how well reach our public
deficit goals. Greeces
government has
been bailed out
twice, but has
struggled to meet
the tough terms
attached to the
funding. Much
of the problem
has come from
the collapse of
GDP,
making it harder to reduce
spending and borrowing as a
share of the economy.
The latest figures show the
countrys economy shrank six per
cent through 2012. Meanwhile
unemployment soared to 24.8 per
cent in the third quarter.
We have to show the Greeks
solidarity, support and also
confidence that will allow growth
to come back, Hollande said,
promising to help increase French
tourism to Greece visitor levels
from the country are just half
those of Germany and to
encourage French investment
when state-owned Greek
industries are sold off.
GERMAN investors were more
upbeat in February than at any
point since the end of 2009,
according to a prominent survey
out yesterday.
Economic sentiment climbed
16.7 points to hit 48.2, ZEW
said, a 38-month high after
three successive months of
improvements.
The financial market experts
BY BEN SOUTHWOOD
have made their peace with the
weak fourth quarter of 2012,
ZEW chief Professor Wolfgang
Franz said.
In their opinion the German
economy faces less headwinds
from the euro crisis than
throughout the last months,
Franz added. He went on to
predict a pick-up in German
output if these economic
pressures remained muted.
Respondents to ZEW were less
positive on the actual state of
the German economy with the
think tanks situation indicator
falling from 7.1 in January to 5.2
this month.
This means that according to
investors, Germanys economic
situation is worse than at any
time since June 2010, when the
Eurozone powerhouse was
recovering from recession.
IN BRIEF
Orix buys asset manager Robeco
nJapanese financial services firm
Orix Corp said yesterday it has
agreed to buy Dutch asset manager
Robeco from its owner, Rabobank,
for 1.935bn (1.68bn) in a cash-
and-stock deal. The acquisition is the
biggest ever by Orix, a diversified
financial services company with
businesses ranging from leasing, life
insurance, real estate and corporate
lending to a professional baseball
team.
Morgan Sindall sees rough 2013
nConstruction company Morgan
Sindall yesterday halved its final
dividend and said it expected the
market to remain challenging in the
short term, sending its shares down as
much as 11 per cent. Profit before tax
fell to 34.2m in 2012, from 40m in
the previous year. Revenue declined
eight per cent to 2.05bn, while the
order book slipped nine per cent to
3.1bn. Margins at the construction
business will remain under pressure in
2013, chief exec John Morgan said.
Rank gets go-ahead for Gala buy
nThe Competition Commission
yesterday cleared Ranks purchase of
Gala Casinos, on the condition that it
sells off four of the 23 casinos bought
as part of the deal. Rank must also
dispose of a licence it holds in
Edinburgh or the commission will
block its acquisition of a casino in the
city. The firm, which agreed to buy
Gala in May 2012, said it remains in
talks about how to amend its purchase
in light of the commissions ruling.
THE LEEDS Building Society hiked
mortgage lending on the back of
rising savings deposits and support
from the Bank of Englands
Funding for Lending Scheme (FLS),
the mutual announced yesterday.
Pre-tax profits came in at 52.4m
for 2012, up four per cent on the
year, while capital and reserves rose
seven per cent to 614m.
New mortgage lending jumped
35 per cent to 1.65bn, while
net residential lending soared
to 737m, more than double
the 300m recorded in 2011
and the building societys
highest ever figure.
The group attracted
an extra 61,000 new
members, including
39,000 savings mem-
bers taking total mem-
bership to 696,000 and
savings balances up
384m to 7.74bn.
BY TIM WALLACE
In also raised 375m in long-term
wholesale markets and drew down
200m from the FLS.
Whilst this initiative supported
our mortgage volume aspirations,
retail savings remain the core of our
funding requirements, and will con-
tinue to be so, as we look to grow
the business over the coming years,
said chief executive Peter Hill.
All of our residential mortgage
balances are funded entirely by
members savings. Our whole-
sale funding ratio reduced to
18.8 per cent, compared to
19.2 per cent a year earlier.
In a sign of improved mar-
ket conditions charges for
impairment losses fell
6.6m to 41.9m, while
residential arrears fell
from 3.23 per cent to
2.89 per cent.
But an increase of
30 jobs contributed
to a small annual
rise in the building
societys cost ratio
from 31 per cent in
2011 to 33 per cent in
2012.
Leeds chief Peter Hill said
it is reducing reliance on
wholesale funding
WEDNESDAY 20 FEBRUARY 2013
16
NEWS
cityam.com
Mortgage loans
up sharply at
Leeds mutual
THE COMPETITION Commission
yesterday raised concerns that
Eurotunnels purchase of defunct
SeaFrances ferries could drive up
fares for passengers.
Eurotunnel bought three of
SeaFrances four boats for 60m
(52m) last year with the aim of
launching its own English Channel
ferry service. The Office of Fair
Trading referred the deal to the
watchdog.
The Competition Commission
claimed that Eurotunnel decided
to acquire the SeaFrance ferries in
order to prevent a rival ferry
BY AMY-JO CROWLEY
operator buying them, a move that
could have driven down prices.
Given that the company
already holds a market share of
over 40 per cent, were concerned
that customers could lose out from
Eurotunnel increasing its share
even further and being able to
raise prices on the tunnel
services, said CC deputy chairman
Alasdair Smith.
Eurotunnel, which now runs 16
ferry crossings a day, said it would
challenge the finding, saying in a
statement that its new brand
MyFerryLink would increase
competition and bring more
choice to customers.
Eurotunnel bought three boats from the collapsed operator SeaFrance last year
Eurotunnels ferry deal runs
into competition headwinds
STRUCTURAL steelwork maker
Severfield-Rowen yesterday said it
was looking at a 50m rights issue,
as it said it would take a 20.1m hit
thanks to spiralling costs on a
number of contracts.
In a review of 70 of the companys
contracts, Severfield-Rowen said it
would take close to a 10m charge
in relation to the 122 Leadenhall
project, known as the Cheesegrater.
The technical challenges of the
site works on this contract are
significantly greater than originally
estimated and will require longer
timescales and greater resources to
complete, it said yesterday.
Eight other contracts totted up
cost overruns of 10.2m, Severfield-
Rowen revealed.
The group added that
constructive discussions were
continuing with its lending banks,
which have agreed to waive
covenants that were due to be tested
on 31 December.
As a result of the review, the
steelwork maker said yesterday its
expectations for the full year are
now somewhat lower.
Former chief executive Tom
Haughey resigned last month after
the full extent of the cost overruns
on the Cheesegrater project were
unveiled, which sent its shares
tumbling.
Shares in Severfield-Rowen closed
down 5.1 per cent yesterday at
74.5p.
Steel maker
eyes 50m
rights issue
BY CATHY ADAMS
WILDCAT strikes halted production
at South African mining giant Anglo
American Platinum yesterday, fol-
lowing violence which erupted earli-
er this week.
Employees in the Rustenberg and
Pilanesburg areas went on strike,
effectively suspending mining oper-
ations at all of Amplats mines in
South Africa yesterday.
A spokeswoman for the belea-
guered platinum miner confirmed
that the employees would return to
work this morning.
Earlier this week, 12 Amplats
employees were injured at Amplats
Siphumelele mine in the Rustenberg
region, 70 miles north-west of
Johannesburg, when rubber bullets
were fired at employees by security
personnel following a clash between
unions.
The work stoppage yesterday is
thought to be in response to the ear-
lier incident.
More than 50 people were killed in
labour strife last year, including 34
shot dead by police at Lonmins
Marikana mine in August the
deadliest single security incident in
BY CATHY ADAMS
South Africa since apartheid ended
in the 1990s.
Amplats, which is 80 per cent
owned by its parent Anglo American,
reported its first ever annual loss ear-
lier this month as it was battered by
weeks of violent strikes, soaring costs
and softening platinum prices.
The unrest last summer cost the
firm 306,000 ounces of platinum,
reducing full-year output by eight
per cent to 2.2m ounces.
Amplats, whose majority share-
holder is Anglo American, recently
unveiled a radical overhaul of its
operations, which could see up to
14,000 jobs cut from South Africa
and the closure of several of its
mines.
Simon Hardy, Lee Morton and Harry
Nicholas work for Jefferies Hoare Govett,
which is both the nancial adviser and the
corporate broker to Severeld-Rowen.
Jefferies Group bought the historic City
broking institution Hoare Govett from Royal
Bank of Scotland last February.
Hardy has previously worked as a managing
director of UBS Investment Bank, before
joining RBS Hoare Govett in 2008. He
became managing director at Jefferies in
2012 following the takeover.
As well as Severeld-Rowen, Hardy has
worked with junior stock market-listed
President Energy, nutritional solutions
group Glanbia and oil and gas explorer
3Legs Resources.
In September last year, Hardy was involved
with President Energys share placing,
which raised more than 24m.
Hardys colleagues on the deal include
Nicholas, a graduate in American Studies
from the University of Manchester, who has
previously worked for BDO Stoy Hayward
and Landsbanki before joining RBS in 2005.
Morton, who works in the equity syndicate
team, has been with Hoare Govett for 32
years, and was involved with the share plac-
ing of Keller Group in March last year.
Pelham Bell Pottinger is the PR adviser.
ADVISERS SEVERFIELD-ROWEN
SIMON HARDY
LEE MORTON
HARRY NICHOLAS
JEFFERIES HOARE
GOVETT
Drax gears up to total biomass
conversion as annual profit falls
ANNUAL profits dipped at coal
fired power producer Drax, as it
ramped up its transformation
into a biomass-fuelled business.
Drax, which runs a coal-fired
power station in Yorkshire, said
yesterday that earnings before
interest, tax, depreciation and
amortisation over the full year fell
to 298m from 334m in 2011,
although this was in line with
forecasts.
In October, the power station
operator raised 190m through a
share placing to support its
growth into a biomass-fuelled
electricity generator.
BY CATHY ADAMS
In a statement yesterday, Drax
confirmed that its planned
transformation was well underway
during a pivotal year for the
company.
With government support and
our financing secured, both in the
second half of 2012, we are on
track to convert our first
generating unit fully to biomass in
April of this year, with the second
to follow in 2014, chief executive
Dorothy Thompson said.
Capital spending will increase to
between 250m and 300m this
year, to cover costs of the biomass
transformation, and earnings are
likely to be impacted adversely
over the period by the rising cost
of carbon, Drax said.
Investors were upbeat on Draxs
update though, and shares closed
6.12 per cent up yesterday at
641.5p.
Anglo American Platinum Ltd
19Feb 13Feb 14Feb 15Feb 18Feb
48,000
47,000
46,000
45,000
44,000
ZAc
44,204.00
19Feb
Drax Group PLC
19Feb 13Feb 14Feb 15Feb 18Feb
640
620
630
610
590
600
650 p
641.50
19Feb
WEDNESDAY 20 FEBRUARY 2013
17
NEWS
cityam.com
The Cheesegrater, at 122 Leadenhall, has this week overtaken the Gherkin in height
Broadwalk Asset
Management
Mark Shepperd will join the
asset management firm as a
senior analyst. He was most
recently a senior adviser in the
investment banking division
at UBS, and previously spent
20 years running its support
services team.
Scipion
The African commodities investment firm has
appointed Georgina Fleming to oversee product
management and development. Fleming was most
recently a business development coordinator at Cleary
Gottlieb Steen & Hamilton in New York.
Barclays
The bank has appointed Nicki Thomson as head of
business services for corporate banking. She has been
working at Barclays for over six years, and will replace
Mike Daniels, who has been promoted to head of
London, corporate banking.
KPMG
The professional services firm has appointed two new
directors to its economics and regulation advisory
team to focus on the energies and utilities sector.
Duncan Michie most recently led the utilities
regulatory consulting team at PwC. Adrian Leaker has
over 20 years experience working in energy markets
in the UK and Europe. He also joins from PwC.
LaSalle
The investment management firm has announced the
appointment of Elisabeth Stheeman as global chief
operating officer. She was most recently at Morgan
Stanley in London, where she was chief operating
officer in its investment banking division focused on
real estate and natural resources.
The Ashton Partnership
Nick Aitchison will join the executive search firm as a
partner. Aitchison will be responsible for developing
the firms client relationships in the UK and emerging
markets. He began his search career at Russell
Reynolds Associates, where he was managing director.
He was most recently a partner at Stork & May.
Grainger
Sebastian Cave will join the property company as joint
managing director in its German office. He was most
recently director of corporate development at
Grainger in London, and has previously worked as an
analyst at Deutsche Bank.
WHOS SWITCHING JOBS Edited by Annabel Palmer CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
Amplats halts
production as
strikes erupt
XSTRATAS $5.9bn (3.8bn) mining
project in the Philippines has been
given the green light by the local
environment department, removing
a key hurdle delaying work on the
copper-gold mine.
The Tampakan project has been
held up by a 2010 ban on open-pit
mining imposed by the provincial
government of South Cotabato
because of its harmful effects on
the environment.
The Department of Environment
and Natural Resources in the
Philippines yesterday issued an
environmental compliance
certificate (ECC) to Sagittarius
Mines the Philippines-based
subsidiary of FTSE 100-listed
Xstrata although with certain
Xstrata 3.8bn Filipino project
gets environmental go ahead
BY CATHY ADAMS
conditions.
The firm must mitigate possible
adverse impacts of the project on
the community health, welfare and
the environment, according to the
ECC.
Sagittarius is now reviewing the
conditions.
The company, however, still needs
at least three more local permits
before construction work can begin.
Sagittarius is majority-owned by
Xstrata Copper, the worlds fourth-
largest copper producer.
The 9,605-hectare Tampakan
project, on the southern island of
Mindanao, is expected to produce
an average annual yield of 375,000
metric tons of the red metal and
360,000 ounces of gold per year.
The mine is predicted to have a
17-year lifespan.
WEDNESDAY 20 FEBRUARY 2013
18
cityam.com
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LONDONREPORT
B
LUE chip index posted its
highest close in five years
yesterday in a broad-based
surge across all major sectors,
as a strong German business
sentiment survey supported a
favourable technical picture.
The FTSE 100 extended gains in
afternoon trade after a ZEW survey
showed that German investor and
analyst sentiment soared to its high-
est level in nearly three years this
month, although investor sentiment
on the current state of the German
economy has yet to pick up.
The ZEW outlook for 6-months
down the road was much better than
expected but the current situation
was much worse, Nick Xanders, who
directs European equity strategy at
BTIG, said.
People will see what they want to
see, and right now all they want to see
is the good news that lets them load
the boat and buy stocks.
The FTSE 100 lagged major
European peers, which were seen as
benefiting more directly from the
ZEW survey, with the German Dax up
1.7 per cent and the French Cac up
two per cent.
It's the second worst performing
market in Europe today (behind
Sweden), but I still like the FTSE,
Xanders said, saying that its exposure
to Asia as well as weak currency could
both fuel a good performance from
the index.
The FTSE 100 closed up 60.88 points,
or one per cent, at 6,379.07, the
index's highest close since January
2008. Nine tenths of the index fin-
ished in positive territory.
Several stocks benefited from
favourable broker coverage as well as
a good appetite for equities. Rolls
Royce gained 3.9 per cent, with
traders citing a price-target upgrade
by Exane as fuelling the move.
Standard Chartered rose 2.4 per
cent after a note from Morgan Stanley
recommended switching into the
bank and out of the UK's other Asia-
focused bank, HSBC. Earnings
momentum and valuation are two
reasons to prefer Standard Chartered
to HSBC right now, Simon Maughan,
financial sector strategist at Olivetree
Securities, said.
The closing price surpassed both last
week's high close of 6,359, and the
highest close in May 2008 at 6,376.50.
Since breaking through the 6,200
level towards the end of January, the
FTSE 100 had been trading in a 200-
point range for three weeks. However,
the strong close suggested that the
recent pullback may be nearing its
conclusion.
The FTSE 100 remains bullish, and
the movement that was initiated in
late November is not over, Valerie
Gastaldy, director of Paris-based tech-
nical analysis firm Day By Day, said.
Weve had a short consolidation for
a week, but the trend is still to the
upside.
German data
helps FTSE hit
five-year high
CITY
YOUR ONE-
STOP SHOP
BROKER VIEWS AND
MARKET REPORTS
FTSE
19 Feb 13 Feb 14 Feb 15 Feb 18 Feb
6,320
6,340
6,360
6,380
6,400
6,379.07
19 Feb
DASHBOARD
M&A activity
lift shares near
record levels
U
S STOCKS rose yesterday as
this year's ongoing surge in
merger activity suggested
investors were still finding
value in the market even as indexes
closed in on all-time highs.
Office Depot Inc surged 9.4 per cent
to $5.02 after a person familiar with
the matter said the number two US
office supply retailer was in advanced
talks to merge with smaller rival
OfficeMax Inc, which jumped more
than 20 per cent.
The Dow industrials closed 0.9 per
cent away from their record high
while S&P 500 was 2.2 per cent off its
peak.
Deals are good for the market, said
Frank Lesh, a futures analyst and bro-
ker at FuturePath Trading. The fact
that they're being done is a positive.
The Dow Jones industrial average
gained 53.91 points, or 0.39 per cent,
to 14,035.67. The Standard & Poor's
500 Index gained 11.15 points, or 0.73
per cent, to 1,530.94. The Nasdaq
Composite Index gained 21.56 points,
or 0.68 per cent, to 3,213.59.
Other stocks in the office supplies
sector also rose. Larger rival Staples
Inc shot up 13.1 per cent to $14.65 as
the best performer on the S&P 500.
On the downside, health insurance
stocks tumbled, led by a 6.4 per cent
drop in Humana Inc to $73.01. The
company said the government's pro-
posed 2014 payment rates for
Medicare Advantage participants
were lower than expected and would
hurt its profit outlook.
UnitedHealth Group lost 1.2 per
cent to $56.66. The Morgan Stanley
healthcare payor index dropped 1.2
per cent. Express Scripts rose 2.5 per
cent to $56.98 after the pharmacy
benefits manager posted fourth-quar-
ter earnings. About two stocks rose for
everyone that fell on the New York
Stock Exchange (NYSE) and Nasdaq.
The VIX volatility index fell close to
six-year lows.
BESTof theBROKERS NEW YORK
REPORT
STANDARD CHARTERED
Shares in the bank rose 2.3 per cent as analysts at Morgan Stanley upgraded it from
equal weight to overweight and upped its target price from 1656p to 1924p.
Morgan Stanley said it was switching our preference from HSBC to Standard
Chartered due to the improvement in the Asian economic environment (a positive
for Standard Chartereds asset quality outlook).
Standard Chartered PLC
13Feb 14Feb 15Feb 18Feb 19Feb
p
1,760
1,720
1,740
1,780
1,771.00
19 Feb
LADBROKES
Investec upgraded the bookie from a hold to a buy recommendation yesterday
on an improving outlook for the companys online operation, which has struggled
against the likes of William Hill, ahead of Ladbrokes results tomorrow. Ladbrokes
should be putting the delay in its sportsbook relaunch behind it, Investecs James
Hollins said, upgrading the companys target price from 165p to 250p.
Ladbrokes PLC
13Feb 14Feb 15Feb 18Feb 19Feb
p
226
222
224
230
228
230.30
19 Feb
BRITVIC
Nomura has resumed coverage of the soft drinks company with a buy rating,
based on positive recent results, strong progress in the US, and potential synergies if
it is able to complete its merger with AG Barr, which is being probed by the
Competition Commission. Nomura puts a target price of 480p on the stock, despite
only seeing the mergers chances at 30 per cent.
Britvic PLC
13Feb 14Feb 15Feb 18Feb 19Feb
p
420
400
460
440
405.30
19 Feb
To appear in Best of the Brokers, email your research to notes@cityam.com
W
HAT can be done about
the North-South divide?
The gap just grows and
grows. The response of
many in the political
class in the North is the dispiriting
whinge of entitlement. The leader of
Newcastle Council recently attracted
national publicity for his decision to
cut all arts funding in the city in
response to the wicked cuts. The
city needs more subsidies, he says.
The idea that the Geordies
themselves might make some
payment towards their own cultural
enjoyment seems not to cross his
mind.
Certainly, many parts of the North
have received bad publicity, and
almost nowhere more so than the
O
N FAR too many questions of
national infrastructure,
Britain has developed a
reputation as the great
procrastinator. Time and
again, decisions seem to be too hard,
too controversial or too close to an
election to tackle. So they are put off.
In a competitive world, there is little
time for thumb-twiddling on any
topic. But the issue of where we get
our power from is more pressing than
most.
In this regard, Ofgems chief execu-
tive Alistair Buchanan is absolutely
right to warn that we face price rises
as a result of our failure to implement
a serious energy strategy. Rather fit-
tingly, he has left it rather late to deliv-
er his warning. By April, power station
closures may see our national generat-
ing capacity fall by up to 10 per cent.
To fill the gap, we will have to import
more foreign gas which means even
higher prices.
The frustrating thing is that energy
is a clear-cut issue. We need it, and we
need it in a reliable, affordable supply.
Consumers require low cost, uninter-
cityam.com/forum
Power station closures
may see our national
capacity fall by up to 10
per cent by April this year
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.

20
WEDNESDAY 20 FEBRUARY 2013
SIMON WALKER
Britain continues to fail on energy:
Shale and nuclear offer the answer
rupted power to heat and light their
homes, and industry must have the
same to keep factories running and
offices open. This is a question of basic
necessity which makes it all the
more absurd that we are failing to
address it coherently. The squeeze on
hard-pressed consumers is set to tight-
en, and the prospects for manufactur-
ing in particular are set to become
even more serious.
For decades, it has been clear that
Britain should be planning for its
future energy supply. Scores of warn-
ings have been issued. That we are
now on the cusp of serious problems
is a shameful indictment of top level
indecision in recent decades.
We have a number of options. We
could simply do more of the same
yet more indecision, propped up by
expensive gas imports and ageing
coal-fired power stations. This is
unthinkable. Household budgets
would be hammered by rising prices
and industry would fall even further
behind its international competitors.
Or we could learn from the success-
es of our competitors. The shale gas
revolution in the US is well-document-
ed the country is accessing vast
quantities of low-cost domestic fuel,
which produces far fewer pollutants
and carbon emissions than dirty coal.
From a standing start, shale now
accounts for around a quarter of US
natural gas production. This has con-
tributed to a dramatic fall in prices,
and a renaissance in the countrys
manufacturing industry. Natural gas
prices have tumbled to around a third
of those in Britain. For the first time
in decades, American jobs are being
brought home from China some-
thing once thought impossible.
The potential of British shale gas is
also huge. The British Geological
Survey is reportedly set to release new
estimates of how much lies in UK ter-
ritory which will absolutely dwarf
their previous, cautious estimate of 5
trillion cubic feet. Even if we are half
as successful as the Americans at
extracting it, we should have enough
to provide 10 per cent of the UKs gas
needs for the next 103 years. A recent
report from the Pyry energy consul-
tancy found that the UKs trade bal-
ance could improve by over 3bn a
year through lower gas imports. This
is all the more important given that,
according to the Office for Budget
Responsibility, North Sea oil and gas
revenue will fall from over 11bn in
2011 to less than 5bn in 2015.
Similarly, the rest of the world is
developing huge quantities of new
nuclear power generation. An
Institute of Directors study last year
found that globally there were 63 new
reactors under construction, 161 new
reactors being planned and 334 new
reactors at the proposal stage. Given
that nuclear power, levelised over a
lifetime, is cheaper than gas, coal,
wind or solar energy and safer per
gigawatt generated than any other
form of power generation including
renewables this is hardly surprising.
The surprise lies in Britains failure to
follow the logic that the rest of the
world finds obvious.
By no means should we put all of
our eggs in one basket. There is no
need to. With reports of large shale
gas reserves in the UK, and the clear
benefits of nuclear power, as well as
the growing potential of some renew-
ables, we have a great opportunity to
develop a healthy mix of energy
sources. To do so, though, we must
have the will to make a decision and
get on with it.
Simon Walker is director general of the
Institute of Directors.
Lancashire town of Rochdale. The
centre of a major abuse scandal, the
borough was recently vilified for the
amount of money its inhabitants
spend on online gambling. But its
chief claim to fame, or notoriety, is
the Falinge estate. For five years in a
row, this has been named as the local
area with the highest rate of adult
worklessness in the whole of the UK.
All in all, a pretty depressing picture.
But even here, there are sparks of
life and of entrepreneurial spirit.
One of the towns pubs, the Baum,
has just been named the Campaign
for Real Ales National Pub of the
Year. And the nearby city of
Manchester shows that the North
does have the capacity to re-invent
itself. The citys council is the
majority shareholder in Manchester
airport now easily the third largest
in the UK which is acquiring
Stansted from BAA.
The Sunday Times had an
excellent feature on Burnley like
Rochdale, a former mill town fallen
on harder times. Burnleys leading
companies have formed a club that
provides ideas and access to
networks for its members. It also
lobbies to rejuvenate the image of
the town. Already, new companies
have been attracted.
What many parts of the North
lack are the networks which allow
entrepreneurship to thrive. In fact,
their networks are just not dense
enough, and they do not have
enough connections. Think Silicon
Valley. Not only are its firms closely
connected, the place swarms with
venture capitalists, with skilled
labour frantically networking.
Not everywhere can have hi-tech
industries, or develop a major
airport. But networks are the key to
successful firms and local prosperity,
regardless of the sectors of the
economy in which they operate.
Networks build trust and co-
operation, they provide access to
local capital, they provide
information on supply chains, and
ideas on how best to sell goods and
services to the prosperous South
East.
The North used to be one of the
richest places in the whole world
the birthplace of the Industrial
Revolution. It does not need more
subsidies. Billions have been wasted
on such policies. It needs to get off
its knees and recreate the
entrepreneurial spirit at which it
used to excel.
Paul Ormerod is an economist at
Volterra Partners, a director of the think-
tank Synthesis and author of Positive
Linking: How Networks Can Revolutionise
the World.
AGAINST
THE GRAIN
PAUL ORMEROD
How the North can rediscover its entrepreneurial spirit without subsidies
In association with
DOUBLE
RETURN ECONOMY, INCLUDING ALL TAXES AND CHARGES. Correct as of 19 Feb. Non-refundable, changeable for a fee. Subject to terms, conditions and availability.
From London City Airport Amsterdam 99rtn Rotterdam
21
WEDNESDAY 20 FEBRUARY 2013
Mansion tax
[Re: Tax onslaught from Labour and
Brussels will destroy jobs, Friday]
One of the most pernicious arguments in
favour of a mansion tax is that home owners
have unfairly benefited from property price
rises. In fact, they can only do so if they sell
the property. In any case, the best way to tax
gains is through capital gains tax and by
removing the primary residence exemption.
And we shouldnt forget that the money
used to buy expensive properties has
already been taxed as income. Its
absolutely certain that a mansion tax will
suffer from fiscal drift. All politicians have to
do is leave the figure at 2m and, in another
couple of decades, even fairly average
London homes will be caught out.
MeganMurphy
Congestion charge
[Re: Congestion charge after 10 years: its
time to bolder, Monday]
Baroness Valentine is right to insist that we
should think about imaginative solutions to
Londons congestion problems. The present
scheme has been a useful first step in
helping drivers understand the rationale for
charging. Now the technology exists to
develop the project further by creating a
City-wide solution. A future project should
have two objectives in mind. It should be an
effective traffic management tool. It should
secondly provide a reliable funding
mechanism for local transport infrastructure.
Revenue from motoring taxes is predicted to
fall as a direct result of improved fuel
efficiency and reduced emissions.
RobBurton, director, RoscarrekConsulting
D
ESPITE being Britains fifth
largest revenue-generating
sector, tourism is
undervalued by the
government. Between 2007
and 2011, the industry increased
revenues by 12.6 per cent to more
than 40bn per year, and visitor
numbers rose by 3.1 per cent.
Tourism is also one of the few sectors
that employs more people now than
before the financial crisis.
Government policy, however, is hav-
ing a negative impact on visitor num-
bers. Between 2007 and 2011, global
tourism grew by 23.4 per cent, but
the UK failed to benefit. In that peri-
od, 2m fewer visitors arrived a drop
of more than 6 per cent. We are oper-
ating in a highly-competitive market,
and Britain is losing market share.
Every Indian or Chinese tourist visit-
ing the US, France or Germany is a
lost opportunity. The government
must act on its claim that Britain is
open for business.
To help achieve this, we have pub-
lished a plan to work towards the gov-
ernments target of achieving 4m
new overseas visitors by 2014 a tar-
get that will otherwise be missed.
First, there must be a more cohesive
tourism strategy to bring together
the boards and agencies that pro-
mote Scotland, England and Wales.
While London will always be a vital
part of the UKs offer, our data shows
that cities like Liverpool are leading
the way in placing tourism at the
heart of all that they do. We need a
London and beyond strategy to
ensure investment returns beyond
the capital.
Secondly, tourism must be given
the status it deserves. The govern-
ment should move the industry from
the Department of Culture, Media
and Sports to the Department for
Business. A taskforce dedicated to
delivering growth, and led by a
As Lloyds is fined for PPI payment delays, is it
now time to draw a line under the scandal?
YES
Payment protection insurance (PPI) is the biggest financial mis-
selling scandal of all time with total compensation at 13.6bn and
rising. Its in everyones interest to draw a line under it. However
the first priority is for the regulator to enforce existing rules so that
consumers get their money back, and ensure this can never
happen again. Banks need to sort out their backlog of claims,
proactively contacting PPI customers and making it as easy as
possible for people entitled to a legitimate refund to claim back
their money without any hassle. Meanwhile, however, the
government needs to focus on clamping down on unscrupulous
claims management companies, who are bombarding the many
people who dont realise its easy to reclaim their money for free.
Finally, it should also be concentrating on reforming the banks so
that they work for customers, not bankers.
Richard Lloyd is executive director at Which?
Richard Lloyd
NO
Craig Lowther
The reality is that far too many Lloyds customers who were mis-
sold PPI are being confronted with a monolithic and inefficient
bureaucracy when they approach the bank for redress. While few
of us will feel any sympathy for it, the Lloyds board may be
feeling that it cant win. Despite assigning thousands of staff and
millions of pounds just to handle a mountain of outstanding PPI
claims, the bank clearly isnt keeping up. The FSAs fine is a
recognition of the frustration felt by thousands of Lloyds
customers whose claims are stuck in the pipeline. For those who
have lost out once, this is adding insult to injury. Around a fifth of
all the PPI claims we handle are on behalf of Lloyds Banking
Group customers, and we hope that this fine will concentrate the
banks mind into paying people what they are owed promptly.
The bank has seen its reputation blackened once again.
Craig Lowther is managing director of Money Boomerang.
Government is not
treating tourism as
a serious business
tourism minister, would show that
Britain is serious about the industry.
As well as promoting the sector, the
government should take bigger steps
to reduce the bureaucracy behind the
visa application process for Chinese
tourists. The Home Office has prom-
ised some improvements for April
this year, but these will only have a
marginal impact. We are talking seri-
ous numbers. For every Chinese visi-
tor to Britain, eight go to Paris and 10
to the US. The typical Chinese visitor
spends 1,600 while in Britain. But in
2011, just 149,000 visited the UK,
spending 240m. The US attracted
1.1m.
Finally, we must be more competi-
tive, which means tax breaks for the
sector. The current rate of 20 per cent
VAT on tourism should be cut to 5 per
cent, in line with rival destinations in
Europe. By following the 13 EU mem-
ber states that have introduced a
reduced VAT rate, we estimate
236,000 jobs could be created by 2015,
boosting the economy by 150m a
year. Why give tourism tax breaks?
First, because EU law allows it. And
secondly, because our competitors
have already done so to great effect.
UK tourism is weathering the reces-
sion. But it deserves the chance to
unlock its true potential. We can play
a significant part in helping recovery.
But a lack of immediate action is cost-
ing jobs, growth and investment. It is
time that British tourism was treated
as a serious business sector.
Grant Hearn is chief executive of
Travelodge.
GRANT HEARN
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E DUTCH
visit cityjet.com 99rtn
OECD published latest GDP growth for last
four quarters spot who had the Olympics:
France -0.4; UK 0; Italy -2.6; USA +1.6.
@D_Blanchflower
If the FSA thinks that on a scale of one to
five, the Lloyds PPI breach was only a level
two, I wonder what a level five would be.
@DominicLindley
31 per cent of properties in London worth
over 2m have been in same ownership for
over 10 years; 15 per cent over 20 years.
@petercohen
Energy companies blame bill hikes on
wholesale costs, but when wholesale costs
fall consumers should see bills fall too.
@james_kilmartin
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LETTERSto the editor
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E: theforum@cityam.com | Comment: cityam.com/forum | @cityamforum
WEDNESDAY 20 FEBRUARY 2013
22
cityam.com
PERSONAL FINANCE MANAGEMENT WEALTH
A
CCORDING to lenders like
Nationwide and Halifax, house
prices in England and Wales
were virtually flat over the last
year. But looking solely at these sorts
of price benchmarks may understate
the case for investing in this asset class.
And there are plenty of opportuni-
ties; not only through direct investing
(physically buying property), but also
indirect (for example, through a fund).
THE CASE FOR PROPERTY
Essentially, there are two ways to profit
from direct property investing: capital
appreciation and rental income. While
residential property prices have been
flat over the last year, according to
Nationwide, some areas are bucking
the trend.
For example, Rightmove says that
house prices rose by 8 per cent over the
last 12 months in London. And includ-
ing rental income, total returns were
an inflation-busting 6 per cent in
England and Wales, according to LSL
Property Services hardly flat.
It is important to understand what
influences property prices. Janey
Siebrits of CBRE says they are depend-
ent on a sustained economic recovery.
She notes that improvements in
employment a key driver of property
returns will drive the confidence
needed to boost the housing market.
Nevertheless, homes are still unaf-
fordable to many. The ratio for house
prices to earnings is 4.4 across the UK
almost double what it was 20 years ago.
And at a ratio of 6.5, the situation in
London is worse. As long as people
struggle to get a foot on the property
ladder, there will always be a place for
the private landlord.
The Funding for Lending Scheme has
helped first-time buyers. However, the
benefits have been more explicit for
investors. Moneyfacts claims that buy-
to-let lending was up by 19 per cent in
2012. And there are now around 450
buy-to-let mortgage products available,
compared to only 250 in 2010.
However, lenders are picky, and top
deals typically require a higher deposit.
One of the best is Coventry Building
Societys two-year fixed buy-to-let mort-
gage, with an initial rate of 3.29 per
cent (reverting to 4.8 per cent APR). But
it requires a 35 per cent deposit
which would be 170,000 for the aver-
age London property.
THE SEARCH FOR YIELD
Student accommodation has been an
attractive sector for investors who can
obtain finance. Yields above 10 per cent
are not unheard of. And since there are
approximately 1.5m full-time students
in the UK, the sector is attracting insti-
tutional investment.
Marcus Roberts of Savills reinforces
the importance of location. The onset
of tuition fees has dampened demand
in some regions, typically at lower-
ranked universities. So look for univer-
sities offering popular courses that are
attractive to both domestic and inter-
national students.
Investors can lease property directly
to a university if you are willing to
forgo some yield (youll still achieve
about 5 per cent). But this may involve
obtaining accreditation from a body
like the Association of Residential
Letting Agents to market your property
to their students.
Property could
be a shrewd bet
in the long run
Roberts says that properties such as
HMOs (homes in multiple occupation,
effectively a shared property) are also
popular, and offer yields around 10 per
cent. They are appropriate not only for
students, but other types of tenants
too.
Higher yields reflect higher risk. As
such, you should carry out through
tenant referencing, which costs
around 20 from organisations such as
the National Landlords Association, as
well as having specific landlord insur-
ance in place. HMOs also require licens-
ing from local authorities, as well as
additional facilities like fire exits,
which may be costly investments. The
rules can vary across different local
authorities, so there is no substitute to
seeking the advice of a local agent
before looking to buy.
While it can be challenging to find
suitable HMOs for students without
forking out to convert properties your-
self, Roberts says that demand and
yields should hold at their current lev-
els, beating many other property
assets. Its worth making the effort.
Yogesh Chandarana finds that house price
indices do not show you the whole picture
THE ARMCHAIR APPROACH
If financing is elusive, there are indi-
rect investment options not only for
the student sector, but also the wider
property market. But these invest-
ments will not offer the amplified
returns that direct property offers
(because of gearing).
The Mansion student accommoda-
tion fund is one popular indirect
investment. It carries an initial charge
of 5 per cent of assets under manage-
ment (AUM), as well as a 1.5 per cent
annual charge. It has returned 10 per
cent over the last year (and around 65
per cent over the last three years)
investing in quality student accommo-
dation. Alternatively, funds like the
Aberdeen Property Share invests in
companies that have a significant
income from property assets (across all
sectors). It charges an initial fee of 4.25
per cent AUM, and a 1.5 per cent annu-
al charge. It returned nearly 30 per
cent last year, beating the Investment
Management Association property sec-
tor average of 12.5 per cent.
These funds can also be held within a
self-invested personal pension (Sipp),
offering a cost-effective tax wrapper
that shields you from capital gains tax.
The armchair approach can also be
applied to investment, like real estate
investment trusts (REITs) essentially a
tax-efficient property company that is
required to distribute 90 per cent of its
income to shareholders.
Unsurprisingly, most have had a diffi-
cult time during the crisis. But they are
beginning to look attractive again.
There are REITs listed on the FTSE
100, like Hammerson, British Land and
Land Securities, which are all up by
over 20 per cent over the last 12
months. Effectively, REITs specialise in
acquiring, developing and managing
specific types of property assets.
Through active management, they aim
to outperform the market just as an
active fund manager would.
These types of investments have a
diversification benefit, and as a result
there is a place for them in most port-
folios. However, property is a long-term
investment. Dont pay too much atten-
tion to indices in the short-term.
easier by the fact that opinion
polls are not allowed to be
published for the two weeks
running up to the election. So
despite Berlusconi trailing
Bersani in the last published poll
by some 6 per cent, the race is
still wide open.
The markets sanguine
sentiment in the run up to these
elections feels like the quiet
before the storm. Even though
Italian bond yields experienced a
small spike in early February, as
Berlusconi closed the gap in the
polls, investors do not really seem
to have factored in a possible
return to power for the
septuagenarian.
Berlusconi still commands a
loyal following among the
electorate and seems to have
some momentum behind him. If
he does win, there could be a
T
HERES currently a degree of
nervousness among
investors. Although equity
markets are hovering
around multi-year highs, with the
FTSE 100 closing at 6,371
yesterday, markets havent been
able to edge much higher. And
theres even been the odd hiccup
along the way. Some stocks have
retraced enough over the past
few days for investors to sit up
and take note. Other equities
have failed to join in any of the
recent bounces.
You could forgive investors for
banking their profits following
the impressive gains weve seen so
far this year. But theres likely to
be more to this apprehension
than people simply cashing in
their chips and taking advantage
of the rally.
One of the biggest near-term
risks for the markets will come
upon us this weekend in the form
of the Italian elections. There is a
great deal of speculation about
who will win. Polls have been
consistently pointing to a victory
by the Democratic Party, led by
Pier Luigi Bersani. But weve seen
in the past that many Italians
may not wish to admit to the
pollsters that they will vote for
Silvio Berlusconi. And yet they
stick their cross in his box on the
day in any case.
The situation is not made any
sharp sell-off in risk assets and a
corresponding spike in Italian
bond yields, purely due to his
stance on Europe. Massively anti-
austerity and reform, to the
pro-Europeans he is seen as
worryingly eurosceptic.
Even though he may have
momentum on his side, its hard
to believe that voters will put
Berlusconi back into office. Its
not only in their interests, but
the interests of the wider
Eurozone for Italys borrowing
costs to be prevented from
returning to the dizzy heights of
2011, and a possible Greek style
crisis. But whatever the outcome
next week, theres the potential
for some fireworks that might
provide some volatility.
Angus Campbell is head of
market analysis at Capital
Spreads. You can follow him on
Impending Italian elections may prompt market volatility
Twitter @AngusCapSpreads
While Capital Spreads attempts
to ensure that the information
herein is accurate at the date the
information was produced,
however, Capital Spreads does
not guarantee the accuracy,
timeliness, completeness,
performance or fitness for a
particular purpose of any of the
information provided herein and
under no circumstances are they
to be considered an offer,
solicitation to invest or be
construed as giving investment
advice.
CAPITAL
COMMENT
In association with
Lending you a hand to build returns
Property Performance, England and Wales
Jan2008 Jan2010 Jan2012
-15.0
-10.0
-20.0
-5.0
0.0
5.0
10.0
15.0 %
Averagebuy-to-letyield
Buy-to-let, total return
UKhouseprices(nominal)
BUY-TO-LET MORTGAGES
Lender Initial rate APR cost Type Max LTV
Coventry Building Society 3.29%, reverting to 4.74% 4.8% 2-year xed 65%
Principality Building Society 3.49%, reverting to 4.99% 5% 2-year xed 60%
Manseld Building Society 4.29%, reverting to 5.5% 5.5% 3-year xed 70%
Virgin Money 3.89%, reverting to 4.79% 4.9% 3-year xed 60%
Principality Building Society 2.74%, reverting to 4.99% 5% Tracker 60%
ANGUS CAMPBELL
S
O
U
R
C
E
:

M
O
N
E
Y
F
A
C
T
S
,

L
S
L

P
R
O
P
E
R
T
Y

S
E
R
V
I
C
E
S
,

N
A
T
I
O
N
W
I
D
E
T
HE European Commissions
Valentines Day message will
never be shortlisted for its
romantic content. But its
implications will play with the
emotions of City executives for longer
than any well-crafted declaration of
undying love.
The announcement that the
Commission will pursue a financial
transaction tax (FTT) means that 11
member states Belgium, Germany,
Estonia, Greece, Spain, France, Italy,
Austria, Portugal, Slovenia and
Slovakia can move ahead under
enhanced cooperation. This is the
process under which a minimum of
nine EU member states can integrate
without all members being involved.
The Commission claims a FTT will
raise between 30bn (25.8bn) and
35bn a year.
While the Commission has said it
would have liked to see the FTT applied
across the EU, it has accepted that,
since this has proven impossible,
enhanced cooperation is the right way
to proceed. It says that the original
objectives remain valid and achiev-
able. It is also sticking to its belief that
a common FTT will ensure a fairer con-
tribution to public finances from the
financial sector, which it claims is cur-
rently under-taxed by about 18bn a
year, and which has benefited from
rescue operations pre-financed by tax-
payers.
TRANSACTION TAX IN PRACTICE
The Commission has outlined three
core objectives for the FTT: that it will
strengthen the Single Market by cut-
ting the number of national approach-
es to financial transaction taxation;
that it will ensure the financial sector
makes a fair and substantial contribu-
tion to public revenues; and that it will
support regulatory measures to
encourage the financial sector to
engage in more responsible activities,
geared towards the real economy.
The Commission says that the new
tax will have low rates, a wide base and
safety nets against the relocation of
the financial sector. The tax will have
to be paid if any party to a transaction
is established in a participating mem-
ber state, regardless of where the trans-
action takes place. And to prevent
avoidance, instruments issued in the
11 member states will also be taxed
when traded, even if those trading
them are not established within the
FTT-zone.
THE PROBLEMS
While we recognise that all sectors of
the economy should contribute their
fair share to the collective effort
towards reigniting growth, it is ACCAs
longstanding view that, in order to be
successful, a FTT should only be imple-
mented if adopted globally.
The EU transaction tax is bad policy
A FTT restricted to 11 participating
states runs the risk of potential nega-
tive effects on the internal market, as
the tax might create additional com-
plexity and administrative burdens. It
will reduce growth in the adopting
member states, and will create momen-
tum to relocate as much financial activ-
ity as possible out of the FTT zone to
London or other parts of the world.
In any case, non-participating states
will need to put up firewalls around
their financial products to avoid being
liable for FTT. This is a key issue. If the
Commission wants to raise more tax to
pay for essential services, it should
focus on improving the structure of the
tax system, not adding unnecessary lay-
ers of complexity to it.
A SIMPLER SYSTEM
For any tax system to be effective it is
important that taxpayers and their
advisers have certainty over how
much tax they should pay and where
and when it applies. When a system is
excessively complex and difficult for
taxpayers, advisers and regulators to
understand, the potential for mistakes
to occur, and the scope for uncertainty
and abuse, is greatly increased.
Tax authorities need to ensure that
the rules are tightly and clearly writ-
ten, are specific about their intentions,
are framed in a way that actively seeks
to pre-empt attempts to find loopholes
through or around them, and are sup-
ported by a commitment to administer
the rules effectively and fairly.
We also believe that the Commission
is misguided in its intention to protect
what it calls the real economy, by
ring-fencing day-to-day financial activi-
ties of citizens and businesses includ-
ing loans or payments, traditional
investment banking activities linked to
raising capital or restructuring opera-
tions, and transactions linked to refi-
nancing, monetary policy and public
debt management. The re-published
impact assessment fails to demonstrate
that the revised FTT will be able to
improve the stability of financial mar-
kets and create increased fiscal returns.
It is all about punishing financial insti-
tutions, but the losers will be jobs,
growth and the real economy. It is
inevitable that any transaction tax will
ultimately be passed onto the con-
sumer. They will be paying the price of
FTT not the target the politicians may
have in mind.
TAINTED LINKS
The tax seems to have been greatly
extended by using a so-called issuance
principle, which complements the
residence principle. This no longer
ring-fences the tax implementation to
the 11 member states, but deliberately
seeks to taint transactions and prod-
ucts so that non-FTT states may be
impacted by the tax.
This implies that any transactions
would be taxed if there is a proven eco-
nomic link to the FTT-zone, either
through parties to the transaction, or if
the traded product was issued in that
zone. Why should a non-FTT state be
brought within the compliance burden
for this tax because of this tainting
mechanism?
In addition, the new proposal does
not seem to take into account the com-
plex nature of some financial instru-
ments. It appears to assume that their
market will change once the tax is
implemented.
As a result, complex financial prod-
ucts would need to be split into sale
and purchase instruments so that
both parts of the transaction can be
taxed only if impacted by the FTT zone.
However, in a true single market it will
not be easy to carve up a product in an
artificial way between the FTT and non-
FTT sectors.
We cannot see how it can be accept-
able that some products and transac-
tions will be subject to double or
multiple taxation. The Commission
merely acknowledges and accepts the
possibility of double taxation.
We should stick to the original pro-
posal of only applying the tax when the
instrument is operated from an FTT
jurisdiction. The proposals as they
stand now, while trying to capture fur-
ther transactions within the FTT net to
prevent avoidance and to prevent busi-
nesses from relocating their transac-
tions, risk creating a situation where a
poorly-engineered tax would have fur-
ther unintended negative conse-
quences.
Chas Roy-Chowdhury is head of tax at
ACCA.
ACCA
COMMENT
CHAS ROY-CHOWDHURY
The European Commission claims the financial sector is undertaxed by about 18bn a year
Countries outside the
zone will be forced to
comply with its rules
Excessively complex
tax systems have much
greater potential for
mistakes and abuse

WEDNESDAY 20 FEBRUARY 2013


23
cityam.com
ACCOUNTINGBUSINESS
A little touch
of the Midas
W
HILE ON holiday in San Sebastin
a few years back, I decided to
take a trip to Arzak, which is,
quite simply, one of the finest
restaurants in the world. Despite leaving
with considerably fewer euros than when I
had walked in, the meal was good value
I had tried some of the finest food I will
ever taste.
Of all the dishes on Arzaks titanic
tasting menu, the masterpiece was a
dessert coated in gold leaf. It was the first
time I had come across the practice of
eating precious metals. As a closet gold
bug, the idea of consuming what looked
like a solid long-term investment was an
incredible indulgence.
Like Prousts Madeleine moment, I was
shot back to childhood when I had held a
similar reverence for the silver drage that
adorn many cakes, which have since been
banned in some places. Perhaps officials
fear that once the kids get hooked on
silver, they face a slippery slope of
addiction smoking gold, sniffing
rhodium, eventually ending up dead in a
hotel following a platinum overdose.
The reason for my reverence is that
both alcohol and precious metals have a
depth of value beyond the obvious glitter
and glamour. Although you wouldnt turn
to a margarita to hedge your equity
portfolio, a bottle of decent cognac can
hold its value like gold, and there are
more wine funds than you can shake a
vine at.
But before you pontificate about why
you shouldnt be consuming gold, the first
thing you need to do is to try it. WYLD
night club at the W London is serving the
Gold Narcissus cocktail, a delicious
concoction from mixologist Eric Le Pape,
which is being made in honour of
Sundays Oscars. The ingredients result in
a perfectly balanced drink that is exquisite
in both appearance and taste.
GOLD NARCISSUS
n40ml Ketel One Citroen
n20ml Limoncello
n20ml Crme de Abricot
n2 dashes of cherry bitters
nTop up with Pommery Champagne
Method
lStir ingredients
l Strain into a coupette glass
l Top up with champagne
l Garnish with lemon and cherry
l Pepper with flecks of gold
LIFE&STYLE
WEDNESDAY 20 FEBRUARY 2013
24
cityam.com
FOOD & DRINK
STRAIGHT
UP
PHILIP SALTER
City A.M.s cocktail expert
Dine like a top chef at these spots
The top places to eat in and around the City, as recommended by the culinary worlds biggest names
1. Fox and Anchor
115 Charterhouse Street, EC1M 6AA
020 7250 1300
Despite the abundance of gastro pubs in
the City, nobody does gourmet pub grub
quite like The Fox and Anchor. The venue,
which also has an upstairs hotel, is located
in the heart of the City; just a stones
throw from the Barbican. Its menu
celebrates English classics like steak and
kidney pie and the much-loved Sunday
roast.
What the chefs say:
Pascal Aussignac: Every time Im in
London I got to the Fox and Anchor to feel
the London vibe. I love the mix of laid back
attitude and very fine food.
2. Sweetings
39 Queen Victoria Street, EC4N 4SF
020 7248 3062
Sweetings is one of the last remaining
lunchtime restaurants and since opening
in 1889, has become something of an
institution in the City. While the restaurant
itself has barely changed over the years,
City folk and tourists continue to flock
there to sample its wide variety of fish
dishes.
What the chefs say:
Fergus Henderson: Fantastic working
chaos, it couldnt exist anywhere else by
the City of London.
Also recommended by:
Jacob Kenedy and Stevie Parle
3. Hawksmoor
10 Basinghall Street, EC2V 5BQ
020 7397 8120
While its heralded as one of the best
places in the City for a good steak,
Hawksmoor is also gaining a reputation
for its breakfast. At its City branch, expect
all of the usual breakfast trimmings with a
few surprises thrown in too.
What the chefs say:
Alyn Williams: Youll get a great full
English at Hawksmoor including baked
beans with pigs trotters.
Also recommended by:
Paul Foster, Justin Ip and Tom Oldroyd
4. The Modern Pantry
47-48 St Johns Square, EC1V 4JJ
020 7553 9210
With its eclectic menu offering everything
from grilled chorizo with plantain fritters
to its celebrated traditional Sri-Lankan-
inspired omelette filled with sugar-cured
prawns, chilli, and coriander, The Modern
Pantry is the place to go for a breakfast
meal with a difference.
What the chefs say:
Angela Hartnett: I love the grilled
haloumi breakfast with spinach.
5. Caravan
11-13 Exmouth Market, EC1R 4QD
020 7833 8115
Located at the mouth of the bustling
Exmouth Market, Caravan has proved itself
to be quite the lively local hotspot. The all-
day menu boasts a selection of snacks,
small plates and hearty main courses. All
of its coffee beans are roasted on site.
What the chefs say:
Bruno Loubet: Great creamy mushrooms
on toast.
Recommended by:
Peter Gordon and Christoffer Hruskova
6. St John Bread & Wine
94-96 Commercial Street, E1 6LZ
020 3301 8096
Just one of the restaurants under the St
John family umbrella, Bread & Wine taps
into the groups seasonal nose-to-tail
approach but tailors it into a tapas-style
format. The restaurant, which is built around
an open kitchen and its famous bakery, is
less formal than its sister eateries and guests
are encouraged to share dishes.
What the chefs say:
Theo Randall: In its style, location and
food, its the very best of old London.
Also recommen1ded by:
Brett Barnes, Adam Byatt, Miguel Castro e
Silva, Andreas Dahlberg, Anthony
Demetre, Semsa Denizsel, Andre Garrett,
Matthew Harris, Sam Harris, Margot
Henderson, Shaun Hill, Jonathan Jones,
Miles Kirby, Jeremy Lee, Tom Oldroyd,
Ruth Rogers, Tim Siadatan, Fernando
Trocca and Alyn Williams.
7. La Chapelle
35 Spital Square, E1 6DY
020 7299 0400
La Chapelle is part of the Galvin
restaurants group, a family run collection
of French restaurants founded in 2005 by
Michelin-starred chef brothers, Chris and
Jeff Galvin. It was awarded a Michelin star
in 2011, in recognition of its quality
modern take on traditional French cuisine.
The decadent interior in the grade II listed
building is a major draw too.
What the chefs say:
Anna Hansen: Best stuff pigs trotters with
Madeira sauce ever served in a particularly
beautiful space.
Where Chefs Eat is available to buy now
at uk.phaidon.com
Naomi Mdudu
3
6
7
4
2
1
5
25
TV & GAMES
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BBC1
SKY SPORTS 1
5pmLive World Golf Championship
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Champions League Goals 1am
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3amFIFA Futbol Mundial 3.30amA
League Football 4amSporting
Heroes: Suzanne Dando Interviews
Olga Korbut 5amFIFA Futbol
Mundial 5.30am-6amA League
Football
SKY SPORTS 2
7pmLive UEFA Champions League
10pmSporting Heroes: Suzanne
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Bowling 3amInternational One-Day
Cricket 5am-6amUEFA Champions
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SKY SPORTS 3
7pmLive Johnstones Paint Trophy
Football 9.30pmInternational One-
Day Cricket 11.30pmTotal Rugby
12amSailing 12.30amPool 1.30am
Total Rugby 2amSailing 2.30am
Trans World Sport 3.30amWarren
Miller Skiing Films 5am-6amBoots
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BRITISH EUROSPORT
6.05pmEquestrian 8.35pmRiders
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12.15am-12.30amWintersports:
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SKY LIVING
7pmCriminal Minds 8pmChicago
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3.30amBones 4.20amNothing to
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BBC THREE
7pmJunior Doctors: Your Life in
Their Hands 8pmDont Tell the
Bride 9pmPeople Like Us 10pm
Russell Howards Good News 11pm
Family Guy 11.45pmAmerican Dad!
12.30amPeople Like Us 1.30am
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The Year of Making Love
E4
7pmHollyoaks 7.30pmHow I Met
Your Mother 8pmFILMEdward
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Tube 11.10pmThe New Normal
11.40pmThe Cleveland Show
12.10amThe Big Bang Theory
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3.20amBeing Erica 4.05am
Privileged 4.45am-6amMade in
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HISTORY
7pmStorage Wars 7.30pmPawn
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Story of All of Us 11pmStorage
Wars 11.30pmPawn Stars 12am
Mountain Men 1amMankind: The
Story of All of Us 2amAmerican
Pickers 3amIce Road Truckers 4am
American Restoration 5amPawn
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DISCOVERY
7pmBear Grylls: Born Survivor
8pmHow Its Made 9pmAmerican
Chopper 10pmOutlaw Empires
11pmAuction Hunters
11.30pmAuction Kings 12am
American Chopper 1amOutlaw
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American Chopper 3.50amOutlaw
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5.30am-6amMeerkat Manor
DISCOVERY HOME &
HEALTH
7pmBaby Whisperer 8pmJon and
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Temple Street Childrens Hospital
11pmMystery Diagnosis 12am
Deliver Me 1amTemple Street
Childrens Hospital 2amMystery
Diagnosis 3amJon and Kate Plus 8
4amBaby ER 5am-6amBringing
Home Baby
SKY1
7pmGot to Dance: Live 8.30pm
John Bishops Only Joking 9pmGlee
10pmBonds Greatest Moments
11.30pmBruce Willis: Die Hard
Special 12amA League of Their
Own 1amRoad Wars 3amTerra
Nova 4am-6amStargate SG-1
BBC2 ITV CHANNEL4 CHANNEL5
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6pmBBC News
6.30pmBBC London News
7pmThe One Show: BBC News
8pmHoliday Hit Squad
9pmCHOICE Meet the Izzards
10pmBBC News
10.25pmRegional News;
National Lottery Update
10.35pmA Question of Sport:
With Louis Smith, Geordan
Murphy and Fran Halsall.
11.05pmFilm 2013
11.40pmFILMRounders:
Drama, with Matt Damon and
Edward Norton. 1998.
1.35amWeatherview1.40am-6am
BBC News
6pmEggheads
6.30pmFlog It! Trade Secrets:
Advice on buying jewellery,
watches and fashion items.
7.30pmGreat British Menu
8pmThe Hairy Bikers:
Everyday Gourmets
9pmBrain Doctors
10pmThe Culture Show
10.30pmNewsnight: Weather
11.20pmThe Genius of
Invention
12.20amSign Zone: See Hear
12.50am Sign Zone: Worlds
Most Dangerous Roads
1.50amClose 4am-6amBBC
Learning Zone
6pmITV News London
6.30pmITV News
7pmEmmerdale
7.30pmCoronation Street
8pmBrit Awards 2013: Star-
studded music ceremony live
from Londons O2, hosted by
James Corden.
10.15pmITV News
10.45pmITV News London
10.50pmThe Cube
11.50pm Safari Vet School
12.15amJackpot247
3amFILMPillow Talk: Comedy,
with Rock Hudson. 1959. 4.40am
ITV Nightscreen 5.05am-6amThe
Jeremy Kyle Show
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
8pmObsessive Compulsive
Cleaners
9pmOne Born Every Minute
10pmCHOICE Derek 10.30pm8
Out of 10 Cats Uncut 11.20pmThe
Last Leg 12.10amRandom Acts
12.15amMusic on 4: Launched at
Red Bull Studios 12.45amMusic on
4: Mercury Prize: 2012 Albums of
the Year Live 1amRevenge 1.50am
FILMIn Her Shoes. 2005. 4am
Deal or No Deal 4.55am
Countdown 5.40am-6.05am
Baking Mad with Eric Lanlard
6pmHome and Away
6.30pm5 News at 6.30
7pmShrinking My 17-Stone
Legs: An Extraordinary People
Special: 5 News Update
8pmKillers Behind Bars: The
Untold Story: 5 News at 9
9pmCHOICE NCIS
10pmLaw & Order: Special Victims
Unit 10.55pmCSI: Crime Scene
Investigation 11.55pmCSI: Crime
Scene Investigation 12.50am
True Crimes: The First 72 Hours
1.15amSuperCasino 3.55amHouse
Doctor 4.20amHouse Doctor
4.45amMichaelas Wild Challenge
5.10amWildlife SOS 5.35am-6am
Wildlife SOS
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6
7
8 9
10 11 12
13 14
15 16 17
18 19
20
21
22
9 20
45
35 10
5 16
11 14 9
45
16 4 5
11 12
7 34
45
22 8
9
3
21
23
39
11
15
13
22
6
16
12
11
13
38
6
17
10
37
16
24
6
15
ACROSS
1 Chess piece (6)
6 Medicinal
plant (6)
7 Equal portions
into which the
capital stock of
a corporation
is divided (6)
8 Walked with
long steps (6)
10 Paramour (5)
13 Set apart from
others (7)
16 Signicance of
a story (5)
18 Dry gully (6)
20 Make up ones
mind (6)
21 Solid part of the
Earths surface (6)
22 Sordid (6)
DOWN
1 Sybil Fawltys husband
in Fawlty Towers (5)
2 Greek messenger and
herald of the gods (6)
3 Authorisation to go
somewhere (4)
4 Man who has lost his
wife by death and has
not married again (7)
5 Belly button (5)
9 Streetcar (4)
11 Expression of
hatred (7)
12 Pink-tinged (4)
14 Acknowledgement of
a hit in fencing (6)
15 Canine teeth of a
carnivorous animal (5)
17 Suspicious,
untrusting (5)
19 ___ and ends (4)
T
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M O T U R U G U A Y
U A P E E
R N A K E D N E S S
A R K E T K
L E S S E R E D A M
G A P P L E T
T A L L M I L L E T
L I A I R A
R E B E L L I O N L
A N S E O
P A R T A K E S U N
9 6 2 3 1 9 2
4 2 5 1 9 3 5 1
4 9 6 9 8 4
8 5 1 3 5 4
7 1 3 6 8 7 4 9
4 3 1 2 2 1 3 6
9 8 3 6 5 7 2 8
2 4 1 9 9 7
8 9 5 7 2 1
1 6 5 8 9 7 6 4
2 8 8 9 7 7 1
4
4
4
4
4
4
4
4
4
The nine-letter word was
DEFRAYING
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
WEDNESDAY 20 FEBRUARY 2013
MEET THE IZZARDS
BBC1, 9PM
Part one of two. Eddie Izzard embarks
on a unique personal journey, using his
DNA to trace the migration of his
ancestors.
NCIS
CHANNEL 5, 9PM
A lieutenant commander is revealed to
have been the target of a hitman,
while Abby discovers that she may
have a relative she never knew about.
DEREK
CHANNEL 4, 10PM
The retirement-home worker decides
to sell some of his autographs, but
struggles to remember who they
belong to. Drama, with Ricky Gervais.
TVPICK
EMBATTLED Arsenal manager Arsene
Wenger admits his team have more
chance of clawing back a Champions
League qualifying spot than they do
of staying in this seasons competi-
tion after a chastening defeat last
night left them on the brink of
elimination.
Runaway Bundesliga leaders
Bayern Munich justified their status
as one of the competition favourites
and made the Gunners look like
European featherweights with a
resounding victory in the last 16,
first leg fixture.
Germany stars Toni Kroos and
Thomas Muller put Bayern in
control and, although Lukas
Podolski rekindled Arsenal hopes
against his former team, Mario
Mandzukic extended his white-hot
scoring run to leave Wengers men
on the precipice.
We have two battles. Maybe the
easier battle is to be back in the
Champions League but we have to
give absolutely everything to change
things in the second leg, said
Wenger, whose side are fifth in the
Premier League.
Lets not hide the truth. It will be
extremely difficult against a team
of that quality [in the second leg].
They didnt play two finals in the
last three years without that quality.
We have to give our best there and
hope that everything will go for us.
We played against a good team
who took advantage of every
opportunity they created in the first
half. You could see we were a bit
nervous but Bayern were fully
confident and we paid for it.
Wenger came into the game in
need of a result to lighten his mood,
Wenger concedes trophy
having appeared waspish since
Saturdays shock FA Cup exit to
Blackburn, though last years
beaten finalists, who arrived on an
18-match unbeaten run, never
looked ideal opponents.
Bayerns pressing flustered
Arsenal immediately and it took the
Baravians just seven minutes to
score. Full-back Philip Lahms cross
bobbled to the edge of the penalty
area, where Kroos volleyed into the
ground and past Wojciech Szczesny.
By the 21st minute, the Germans
had all but secured their first ever
win in London. Centre-back Daniel
van Buyten beat Aaron Ramsey to
an out-swinging corner and, when
Szczesny could only parry the
Belgians header, the lurking Muller
stabbed in the second.
A blocked Per Mertesacker volley
was Arsenals most threatening
endeavour of a first half in which
they were outclassed.
Yet the Gunners emerged
reinvograted after the interval, and
Podolski, who spent three years at
Bayern, eased Wengers frown with
a close-range header from a corner
that eluded everyone else.
The wide forward almost scored a
virtuoso second, but when he cut in
from the left, danced into the box
and fired low past goalkeeper
Manuel Neuer, full-back David
Alaba was on hand to clear.
Wengers decision to throw on
midfielder Tomas Rosicky and
Pistorius: I thought girlfriend was intruder
PARALYMPIC superstar Oscar
Pistorius wept profusely in court
yesterday as he denied the
premeditated murder of girlfriend
Reeva Steenkamp, insisting he shot
her dead thinking she was a burglar.
In an affidavit read out by his
lawyer, the athlete nicknamed Blade
Runner for his trademark prosthetic
legs said he moved towards the
bathroom of his home on his
stumps before firing four shots
through the door.
Pistorius was then mortified to
discover that Steenkamp was not in
his bedroom, as he had thought, and
broke down his bathroom door to
find the model, who died in his arms
before paramedics arrived, he said.
The 26-year-olds statement came
on the first day of his bail hearing,
which will resume this morning in
Pretoria, South Africa.
Pistorius has been warned he faces
a possible life sentence if found
guilty, although a trial could still be
months away.
The first double amputee to
compete in an Olympic Games, his
arrest following the death of law
graduate Steenkamp, 29, on
Thursday has stunned his homeland,
where he is a national hero, and
captivated the world.
Earlier the prosecution accused
Pistorius of deliberately firing his
9mm pistol through the locked
bathroom door in order to kill his
girlfriend of three months.
If I arm myself, walk a distance
and murder a person, that is
premeditated, said lead prosecutor
Gerrie Nel. The motive is I want to
kill. Thats it. This deceased was in a
1.4 by 1.14m little room. She could go
nowhere.
Pistorius, who slept with his pistol
to hand, had received death threats
and was scared of being burgled, said
defence lawyer Barry Roux.
Describing his suspicions of an
intruder, Pistorius said in his
affidavit: It was pitch dark in the
bedroom. I did not have my
prosthetic legs on and felt extremely
vulnerable.
I am absolutely mortified at the
death of my beloved Reeva, the
statement added, as Pistorius wept
repeatedly, causing proceedings to be
halted.
The most famous competitor in
Paralympic historys court
appearance came as Steenkamps
family and friends gathered for her
funeral in Port Elizabeth.
FRANCE coach Philippe Saint-
Andre has attempted to rouse his
beleaguered team for Saturdays
RBS Six Nations showdown with
England by depicting the trip to
Twickenham as their very own
Grand Slam.
The pre-tournament favourites
cross the Channel having lost both
of their matches, to Italy and
Wales, while England, riding the
crest of a wave, have beaten
Scotland and Ireland.
But Saint-Andre believes France
can use their underdog status to
their advantage if they rise to the
challenge of Stuart Lancasters in-
form men in a fixture that is never
less than keenly contested.
England can be our Grand
Slam, said the former Sale boss.
Theyre in a state of euphoria.
Everybody sees them win the Grand
Slam, everybody sees us take the
wooden spoon.
We will need to bring
enthusiasm and confidence. We
will not beat England by doing
nothing. Going to Twickenham is a
fantastic challenge. I want to be
proud of a team who will go there
to give 120 per cent.
England coach Lancaster has
named an unchanged 23-man
squad from the 12-6 triumph over
Ireland in Dublin.
England match
is Frances own
Grand Slam
WEDNESDAY 20 FEBRUARY 2013
26
SPORT
cityam.com/sport
BY FRANK DALLERES
FORMULA One team Williams was
told yesterday that the design of
their car for the forthcoming 2013
season is in strict contravention of
governing body FIAs rules.
The Williams team, based in
Oxfordshire, launched their new
car, the FW35, yesterday ahead of
the first day of the second testing
session in Barcelona.
But the design of their exhaust,
which redirects the flow of
emitted gases, is illegal, as is the
design of the exhaust the
Caterham team were planning to
use for the 2013 campaign.
Both cars were eligible to take
part in testing, where Mercedes
driver Nico Rosberg posted the
days fastest lap time, but would
face disqualification if they ran
with the same design on the
opening weekend of the regular
season in Melbourne, Australia on
15-17 March.
Pastor Maldonado, driving for
Williams, was fifth fastest at the
Circuit de Catalunya and believes
the performances in testing point
to a successful season ahead.
We are really looking forward,
said the Venezuelan driver.
We know very well the rules
and we are looking forward to
getting 100%, not only from the
exhaust, but all of the car.
Williams told
new design is
not allowed
BY JOSH RICHARDS
BY FRANK DALLERES
@cityam_sport
ARSENAL.....................................1
BAYERN MUNICH........................3
BY FRANK DALLERES
CHAMPIONS LEAGUE
AT EMIRATES STADIUM
Arsenal manager says
focus must now be on
a top four finish
27
ARSENAL midfielder Jack Wilshere
leapt to the defence of under-
pressure boss Arsene Wenger after
last nights 3-1 defeat to Bayern
Munich in the Champions League
last 16, first leg, insisting the players
are letting their manager down.
Wenger has come in for heavy
criticism with Arsenal fifth in the
Premier League and out of both
domestic cup competitions to
lower league opposition and last
nights loss to the Bundesliga
leaders leaves the Gunners hopes
of ending their eight-year trophy
drought in tatters.
But Wilshere insists Wenger
should not shoulder the blame
and it is now up to the players to
stand up and be counted.
He [Wenger] puts us on the
pitch and its down to us to
perform, its nothing to do with
the manager, said the 21-year-old,
England international.
He can motivate us, but we
have to do it on the pitch. The
players will take responsibility,
were man enough to take it. You
cant question the manager hes
been here for 16 years.
The visitors struck twice in the
opening 21 minutes through Toni
Kroos and Thomas Muller, but
former Bayern forward Lukas
Podolski headed in on 55 minutes
to hand the Gunners a lifeline.
The outcome was put beyond
doubt though, when Mario
Mandzukic scrambled in Bayerns
third on 77 minutes and Wilshere
admitted his team paid the price
for their sloppy start.
We didnt start well and
against good teams you get
punished, he added.
In the second half we stepped it
up and showed what we can do.
Theres always a chance [to
qualify] but we must start better.
Players must
take blame,
says Wilshere
hunt is over
Its a pleasure to drive, because
its a lot faster than last year

cityam.com
WEDNESDAY 20 FEBRUARY 2013
BY JOSH RICHARDS
Formula One driver Nico Rosberg on his new Mercedes
TICKETS
ON SALE
NOW
In association with
For more information visit gauchopolo.com
BREWING COMPANY
IN BRIEF
Goal line technology at World Cup
nFOOTBALL: Governing body FIFA
has confirmed goal line technology
will be implented at the 2014 World
Cup. The Hawk-Eye and GoalRef
systems are front runners for the
lucrative contract.
Meadows to lead GB in Sweden
nATHLETICS: Middle distance runner
Jenny Meadows will captain the Great
Britain team at the European Indoor
Championships next month.
Results
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Oscar Pistorius in
court yesterday for his
bail hearing
forward Olivier Giroud almost
reaped instant reward, but when
Rosicky sprayed a fine ball out to
Theo Walcott and he crossed early,
Girouds volley thumped back off
Neuer.
It proved a turning point. Twelve
minutes from time Lahm escaped
auxiliary Arsenal left-back Thomas
Vermaelen, centred low and Croatia
forward Mandzukic bundled home
his eighth goal from six matches
since the turn of the year.
Thomas Muller celebrates
as Bayern Munich score
their third goal at the
Emirates Stadium
Ocial government fuel consumption gures in mpg (litres per 100km) for the new E-Class range: urban 20.3 (13.9) 68.9 (4.1), extra urban 36.2 (7.8) 68.9 (4.1), combined 28.3
(10.0) 68.9 (4.1). CO2 emissions: 234 109g/km. Model featured is a E 220 CDI AMG Sport at 39,530.00 on-the-road including optional metallic paint at 645.00, 18" AMG Alloy Wheels at 365.00, LED Intelligent Light System at 1,280.00 and Driving Assistance
Package at 2,345.00 (price includes VAT, delivery, 12 months Road Fund Licence, number plates, rst registration fee and fuel). Some combinations of features/options may not be available. Please contact your Mercedes-Benz Retailer for availability. Price correct at time of going to print.
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Sharp. The new E
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