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but FTSE bucks the trends as it touches five-year high


THE FTSE 100 climbed to a five
year peak during yesterdays
trading, breaking through
another psychological barrier.
Londons main blue chip index
reached 6,412.44 points as
investors were boosted by
renewed belief that the Bank of
England could be set for more
quantitative easing.
It was the first time since
January 2008 that the FTSE had
passed the 6,400 level.
Yet the market eased later in
the day to close up by only 0.26
BY JULIAN HARRIS
per cent, at 6,395.37. Analysts were
divided over whether the FTSEs
failure to hold about the 6,400
mark could result in profit-taking,
or whether the index will have
another push at closing above
6,400 today.
There are reasons to be bullish
but we do expect a light correction
of around three per cent over the
next week, said JN Financial
trader Rick Jones, who expects the
index to retreat to around 6,200
this week.
Theres an opportunity to book
some profits.
Equities have enjoyed a strong
rally so far this year, as risk
appetite resumes on hopes of
macroeconomic recovery.
The prospect of further asset
purchases from the Bank have also
bolstered the FTSE.
Good economic data from the
UK and across Europe gave
investors yet more reason to buy
equities as even though the
current economic environment
may not look all that bright, there
are indications that things are on
the mend, commented Capital
Spreads in a note.
Another positive set of labour
market data for the UK, showing a
further jump in the level of
employment, contributed to a
rosier outlook.
Unemployment in the UK fell
once again and the number in
work reached a new record high
showing that we may not be
producing all that much, as
evidenced by recent GDP figures,
but at least jobs are being
created, Capital added.
The FTSE has been on the rise
since sinking to around 5,260 last
summer, when the Eurozone crisis
had flared up again.
It started the year around the
5,900 mark but broke through
6,000 and recorded its best
January since 1989 last month,
gaining 6.43 per cent.
FTSE 100
20Feb 18Feb 19Feb
6,400
6,360
6,380
6,320
6,340
6,420
6,395.37
20Feb
BUSINESS WITH PERSONALITY
THE POUND tumbled to an eight
month low against the dollar yester-
day, after the Bank of England
revealed that its governor Sir Mervyn
King has begun pushing for another
round of monetary stimulus.
Sterling has taken a hammering so
far this year, dropping from around
$1.63 at the start of 2013 to $1.523 by
last night.
Earlier in the day it had fallen off a
cliff as the City reacted to the publica-
tion of minutes of Februarys meeting
of the Monetary Policy Committee
(MPC), losing $0.01 in value during
just a quarter of an hour of trading.
The minutes showed that Sir
Mervyn was one of three senior Bank
officials to vote for a further 25bn in
asset purchases.
The move, which would take the
total level of quantitative easing (QE)
to 400bn, was backed by David Miles
and executive director Paul Fisher
yet defeated by the six remaining
members of the committee.
Nonetheless, the shift by two of
the Banks most senior
policymakers Miles has
been voting for more QE
www.cityam.com FREE
ANDREW SENTANCE AND DANNY BLANCHFLOWER
FTSE 100 6,395.37 +16.30 DOW13,927.54 -108.13 NASDAQ3,164.41 -49.18 /$ 1.53 -0.01 / 1.15 unc /$ 1.33 -0.01
BY JULIAN HARRIS
DOWN, DOWN, DOWN
HEAD TO HEAD
ISSUE 1,824 THURSDAY 21 FEBRUARY 2013
MARK
KLEINMAN
See Page 7
See The Forum, Page 24-25
UK JOBS FIGURES: Page 2

FED MINUTES: Page 2

ALLISTER HEATH: Page 2

Certified Distribution
from 31/12/12 to 27/01/13 is 127,008
since November prompted investors
to move even further from sterling.
The markets were also affected by
dovish noises emerging from the
MPCs minutes.
The committee agreed that it was
important to communicate clearly its
willingness to bring inflation back to
the target over a longer time horizon
than usual, the minutes said.
The MPC added: as long as domes-
tic cost and price pressures remained
consistent with inflation returning to
target in the medium term, it was
appropriate to look through the tem-
porary, albeit protracted, period of
above-target inflation.
Last June Sir Mervyn was also part of
a three-man push for more QE, on
that occasion endors-
ing another 50bn
being added to
the Banks bal-
ance sheet. The
next month,
July 2012, saw a
clear majority of
seven of the MPC
wave through
50bn of extra
QE, raising
the total
a mo unt
to 375bn.
Sir Mervyn only has four months
left in the top job before stepping
down to be replaced by Mark Carney.
His vote surprised many investors,
due to recent speeches in which the
outgoing governor indicated that the
effectiveness of the QE programme
was fading.
Incoming governor Carney may
look for new forms of stimulus, with
some investors saying that the
Canadians expected dovish stance is
already weighing on sterling.
Carney is already easing policy,
before he even takes up his post,
Danske Bank economist Lars
Christensen told City A.M.
Market forces are determined by
expectations.
Sterling slumps even further as Bank governor votes for more QE
Spot gold dipped during the days trading
7am 9am 11am 1pm 3pm 5pm
1,620
1,600
1,580
1,570.79
$/ounce
PRICE OF GOLD FALLS TO A SEVEN-MONTH LOW
GOLD dipped to a fresh seven
month low last night, as the
precious metal was dealt a triple
blow of hawkish Federal Reserve
minutes, growing risk appetite,
and speculation that a hedge
fund is having to withdraw from
its commodities positions.
Spot gold was down at
$1,570.79 an ounce, having
begun the day comfortably
above the $1,600 mark.
There are rumours that a
large commodity hedge fund
blew up and was forced to dump
its holdings, sparking a selloff
across markets, said Adam
Sarhan, chief executive at
Sarhan Capital in New York.
The yellow metal has been on
the decline since the autumn.
Having come close to the $1,800
level on 4 October 2012, it has
lost significant ground while
more funds have gravitated
towards resurgent equities
markets across the globe.
Other commodities also
showed notable declines, during
yesterdays trading.
Silver was down over three
per cent to $28.5 an ounce in the
US last night, while Brent crude
lost 1.86 per cent.
Golds dip has seen it create a
so called death cross the term
investors use for the 50 day
moving average line falling to
cross the 200 day line.
But Michael Hewson of CMC
Markets warned off enthusiastic
bears by saying the fall may not
continue. In the last 10 years
weve seen six death crosses and
only one has worked with any
degree of success, he explained.
Kings vote caused sterling to fall out of bed
7am 9am 11am 1pm 3pm 5pm
1.55
1.54
1.53
1.523
/$
Sir Mervyn King leaves his
post at the end of June
Millions 960
940
920
2012
2012
2011 2010 2009 2008 2007
2011 2010 2009 2008 2007
TOTAL WEEKLYHOURS WORKED, SEASONALLYADJUSTED
6
4
2
0
-2
-4
-6
PRICES CONTINUE TO OUTPACE WAGES
%
Consumer Prices Index
Total Pay
UNEMPLOYMENT
2.5m
156,000 OVER THE YEAR
EMPLOYMENT
29.73m*
584,000 OVER THE YEAR
EM
2
558844,000
*ALL-TIME
RECORD
MALE
FEMALE
15.93m
329,000 OVER THE YEAR
13.80m
255,000 OVER THE YEAR
3.72m
75,000 OVER THE YEAR
1.41m
127,000 OVER THE YEAR
1.09m
29,000 OVER THE YEAR
0.97m
11,900 OVER THE YEAR YOUTH (16-24)
MALE
FEMALE
YOUTH (16-24) S
O
U
R
C
E
: O
F
F
IC
E
F
O
R
N
A
T
IO
N
A
L
S
T
A
T
IS
T
IC
S
*ALL FIGURES ARE FOR Q4 OF 2012, COMPARED TO Q4 OF 2011
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Jobs boom continues but
slump in real wages bites
EMPLOYMENT soared to another
new all-time record in the final three
months of 2012, despite the econom-
ic activity rate falling to a 22-year
low.
Employment rose 154,000 between
the third and fourth quarter of 2012,
reaching 29.73m, the highest level
ever. At the same time, unemploy-
ment edged down 14,000, to 2.50m,
156,000 lower than during the
fourth quarter of 2011.
Total weekly hours worked climbed
0.2 per cent over the quarter and 2.6
per cent over the year to reach
947.1m. And economic inactivity col-
lapsed to its lowest rate since 1991
22.3 per cent with 294,000 more
looking for work than a year earlier.
Yet another set of robust figures
for the labour market, with a
chunky increase in employment and
a sharp fall in the claimant count,
said Item economist Nida Ali.
There is also pleasing evidence of
Twitter tries new tool to unlock ads
Twitter has unveiled a new automated
advertising technology that promises to
unlock the moneymaking potential of the
microblogging site. The development of a
Twitter ads API, or application-
programming interface, satisfies a
long-awaited desire of advertisers to
increase and improve the reach of their
marketing messages to Twitters 200m
active users. A similar technology
launched by Facebook in 2010 helped that
social network reach more than $3bn in
revenues the following year.
Intrade traffic plummets
The number of people using Intrade has
plummeted since a US government
crackdown late last year, calling into
doubt the online prediction markets
powers to divine the wisdom of crowds on
matters ranging from election results to
the stock market.
Accor aims to cut costs in Europe
Accor, Europes largest hotels operator,
said it would cut costs to cope with a
difficult market in southern Europe and
accelerate new openings, particularly in
Asia. The firm is moving away from
owning sites to a franchise model.
Pressure to split top job at JP Morgan
Jamie Dimon is under pressure to
relinquish one of his roles as chairman
and chief executive of JP Morgan Chase
after the bank lost $6bn last year through
a bungled trading strategy.
Google unveils its Glasses
Google has released the first video
showing what the world looks like
through the latest prototype of its smart
glasses, a computer integrated into your
field of vision.
BAE Systems warns 3,500 jobs at risk
British defence giant BAE Systems has
warned it will be forced to cut 3,500 jobs
in the US if the threat of Pentagon
spending cuts becomes reality. The
company said it had warned staff at its US
ship repair business of the possible cuts.
Over-60s told to go back to Uni
People in their sixties should go to
university to retrain because they will be
expected to work for longer, the
government has suggested.
US fights theft of trade secrets
The White House yesterday unveiled a
new strategy to exert pressure on China
and other countries that engage in
corporate espionage against the US as
part of a new push to counter
cyberattacks and commercial spying.
LivingSocial Gets a $110m boost
LivingSocial has raised $110m from
existing investors, giving its coffers a
much needed boost after the daily-deals
sites 2012 losses widened by 30 per cent.
2
NEWS
BY BEN SOUTHWOOD
To contact the newsdesk email news@cityam.com
B
RITAIN is, as ever, a country of
contradictions. On the one
hand, the pound is tumbling as
the global markets begin to
worry about our future, the budget
deficit is increasing not least
because George Osborne got 1.2bn
less than expected from the sale of 4G
licences real wages are falling at an
accelerating rate and the Bank of
England has gone soft on inflation.
On the other, the jobs market is
continuing to perform remarkably
well, confounding all of the sceptics.
While it is still very tough for
millions, and unemployment
remains at horribly elevated levels,
more people than ever before are
working in the UK, and the quality of
the new jobs is improving.
The best way to assess the strength
of the labour market, adjusted for
part time and full time jobs, is to look
EDITORS
LETTER
ALLISTER HEATH
The only great British economic success story of recent years
THURSDAY 21 FEBRUARY 2013
at the total number of hours worked
in the economy. This reached 947.1m
in the September-December 2012
quarter, up by 2.6 per cent over the
past year; the rebound since the
trough of 904m in June-August 2009
has been spectacular. We are now just
2.2m hours below the boom-time
peak of 949.3m hours worked in Jan-
March 2008. That is very encouraging
news, and reinforces the more main-
stream data which reveals that there
are now more people in work in the
UK than ever before.
There are several major caveats, of
course. The first is that the popula-
tion of working age has expanded
substantially over the past five years,
with youngsters entering the work-
force and more immigrants moving
here than emigrants leaving. So while
the employment rate for those aged
from 16 to 64 was 71.5 per cent, up 1.1
percentage points on a year earlier,
and an astonishing 584,000 net extra
jobs were added to the economy (with
the private sector contributing sub-
stantially more than that, easily off-
setting public sector cuts of 128,000
in the year to September) the employ-
ment rate remains lower that it was
at the height of the boom. It hit 73
per cent or even slightly higher sever-
al times during the good years.
The difference explains the higher
unemployment, the greater number
stack up. There is something wrong
somewhere.
The final caveat is that real wages
are continuing to fall. People are pric-
ing themselves back into work, and
companies are substituting labour for
capital. Total pay is up 1.4 per cent
over the past year; retail prices rose
3.1 per cent, translating into a real cut
of 1.7 per cent. Once again, public sec-
tor pay is going up in nominal terms
yes, there is meant to be a freeze at a
faster rate than private sector pay, at 2
per cent against just 1.3 per cent. In
that respect, though not when it
comes to jobs, austerity is being borne
more by private workers.
That said, job creation has been the
one great British success story of the
past few years. Lets hope it continues.
of under-employed workers and the
other problems in the labour market.
The total number of people on the
key out of work benefits has fallen to
4.799m, down from a recent peak of
5.098m but remains higher than the
4.314m trough of November 2007.
The second major caveat is that
while the total number of hours is
almost back to peak levels, output
remains significantly lower. If the
data is correct, it confirms that pro-
ductivity output per hour worked
is substantially lower than it used to
be. With output stagnant, it seems
that output per hour worked in the
past 12 months alone collapsed by 2.6
per cent. We added over half a million
extra workers but produced no
more than before. Some of the UKs
past productivity puzzle makes sense
but no economist on earth can con-
vincingly make the past years figures
underlying strength, with the rise in
employment almost entirely due to
increasing numbers of full-time
employees, Ali added.
The one potentially glum note was
the starkly below-inflation increase in
THE Federal Reserve last night
hinted its current third round of
quantitative easing (QE3) may come
to an end earlier than planned,
trigging a sell-off in US stock
markets.
Minutes of the last Fed meeting
show there is growing unease
within the organisation over last
Septembers pledge to keep buying
$85bn of assets a month until there
has been a substantial recover in
the US jobs market.
They reveal a number of
participants at the rate-setting
meeting expressed concern over the
open-ended nature of the latest
economic stimulus programme.
However Fed chairman Ben
Bernanke appears to still have the
backing of a majority of committee
members in the short term, with
the Fed voting 11-1 last month to
keep its bond-buying program open-
ended and at the same size.
Wall Street fell the most in three
months after the minutes.
Fed minutes
suggest QE3
could end soon
BY JAMES WATERSON
WHAT THE OTHER PAPERS SAY THIS MORNING
Find your next step at
CITYAMCAREERS.com
The route to your ISA starts here...
wages.
Average earnings growth was just
1.4 per cent over the year to
December, only just over half the
headline inflation rate of 2.7 per
cent.
But economists have brought out
these flexible real wages as one of
the main reasons so many UK work-
ers are getting jobs despite the dire
overall economic picture in the
country and across the world.
ITS CRUNCH time for Bumi co-
founder Nat Rothschild this morn-
ing, as the bitter shareholder battle
for control of the coal miner looks
set to come to an end today.
Shareholders will meet in the City
of London to vote on Rothschilds
proposals to overhaul the board.
Rothschild needs a 50 per cent
majority to push through his propos-
als, which include scrapping 12 out
of the current 14 directors including
chief executive Nick von Schirnding
and chairman Samin Tan.
His camp also wants the full disclo-
sure of the Macfarlanes legal probe
announced in September into
alleged financial irregularities at
Indonesian division Bumi Resources,
and the removal of any company offi-
cials associated with the Indonesian
shareholders the Bakrie family.
He has the support of several major
investors including Schroders and
Taube Hodson Stonex.
If his proposals are rejected, the
D-Day for Nat
Rothschild at
Bumi meeting
BY CATHY ADAMS
incumbent Bumi board will remain
in charge in an outcome that is look-
ing increasingly likely, although
sources close to the vote said it will go
down to the wire.
The Bumi board has pledged to
accelerate the divorce from
Indonesian arm Bumi Resources,
something it claims Rothschild is
unable to do. It has the support of
Standard Life Investments.
Investors should know the outcome
of the meeting tonight, although due
to the complexity of the vote it could
be tomorrow morning.
THURSDAY 21 FEBRUARY 2013
3
NEWS
cityam.com
SPANISH bank Santander slashed
bosses bonuses by one-third
yesterday after profits slumped,
and froze the directors salaries at
2009 levels.
Long-serving chairman Emilio
Botin took a 32 per cent cut,
earning just over 3m (2.6m)
though 1.4m of that is in shares,
much of which are deferred.
Profits at Spains largest lender
fell 59 per cent on the year and as
a result directors pay has been
chopped back by almost 35 per
cent as a result.
Santander bosses take pay cut
on Spanish property troubles
BY CITY A.M. REPORTER
Spains banking industry has
been crippled by the countrys
property downturn, and although
Santander is one of the strongest
banks and one of the few that
does not need a bailout, it has still
been affected by the housing bust.
Chief executive Alfredo Saenz
received 8.24m for 2012, down
almost a third on the year.
And Ana Botin, chief of the
banks UK arm, saw her pay rise
2.6 per cent to 5.14m making her
the only boss to record an increase
in compensation for the year.
The groups shares fell 1.81 per
cent on the day.
Network Rail set to be fined as
planning mistakes cause delays
NETWORK Rail is facing a multi-
million pound fine for causing
unacceptable delays over the winter,
the industry regulator warned
yesterday.
Overrunning engineering work
over Christmas and basic
operational planning mistakes
were behind the slip in punctuality
on English and Welsh railways, said
the Office of Rail Regulation.
Around 88.3 per cent of long-
BY MARION DAKERS
distance trains arrived within ten
minutes of their expected time,
slightly better than the 87.1 per cent
level seen last year but still well
adrift of the ORRs targets.
The score improved to 91.4 per
cent for London and the south east.
The group in charge of Britains
railway infrastructure can be fined
1.5m for every 0.1 percentage point
it falls below its 92 per cent
punctuality target in 2013-14.
Network Rails operational
performance on parts of Britains
rail network has been poor over
recent months, said ORR boss
Richard Price.
[We are] concerned that the
company is losing touch with key
performance targets as passengers
again suffered poor performance
during challenging weather
conditions.
The regulator called on Network
Rail to improve its performance in
bad weather, highlighting the
admirable flood recovery
responses in parts of the country.
Nat Rothschild wants to oust 12 out of 14 current Bumi directors
FOREIGN banks will be put at a
huge competitive disadvantage
when trying to sell hedging
products to EU firms, banking
groups have warned, if damaging
incoming rules are not amended
quickly.
Under the CRD4 directive plans,
banks must hold extra capital
against derivatives to cover the risk
that they may lose value in future.
The EU negotiators recognise this
makes hedging products which
firms buy from banks to protect
themselves against risks like
exchange rate moves or interest rate
rises much more expensive and so
have exempted deals between EU
banks and EU firms from the rules.
But they have not exempted non-
EU banks from the credit valuation
adjustment (CVA) charge, which
could push up prices for customers
and so damage the economy.
CVA charges in these cases
would amount to a punitive cost for
these entities and could stifle
growth in the real economy, said
Christine Brentani from the
Association of Financial Markets in
Europe (AFME).
The exemption should apply to
all non-financial entities and not
just those established in the EU.
European parliamentarians and
leaders have been fiercely debating
the proposals which are already
behind schedule.
The most high profile row so far
flared up around bank bonuses,
with French and other politicians
pushing to cap variable pay
at the same level as
salaries a change
which is likely to
come in as only
Britain now publicly
opposes the move and
banks feel unable
to defend
themselves.
Banks fear EU
rules will hit
firms hedging
BY TIM WALLACE
Bumi PLC
20Feb 14 Feb 15Feb 18Feb 19Feb
440
400
420
380
460 p
379.30
20Feb
PROFILE: THE BUMI ROW
JULY 2010
Cash shell Vallar, founded by Nat
Rothschild, oats on the LSE after raising
700m. It intends to invest in mining sector
NOVEMBER 2010
Vallar buys stakes in Indonesian Berau Coal
and Bumi Resources in a $3bn cash and
shares transaction
NOVEMBER 2011
Rothschild writes to the chief executive of
Bumi and Bumi Resources to accuse him of
mismanagement
SEPTEMBER 2012
Bumi hires City law rm Macfarlanes to inves-
tigate alleged nancial irregularities at
Indonesian arm Bumi Resources after infor-
mation is passed to the board
OCTOBER 2012
The Bakries propose a share swap, to cancel
their shareholding in Bumi in exchange for
their Indonesian assets
Rothschild quits the Bumi board, claiming the
rm was failing act in the interests of minori-
ty shareholders
DECEMBER 2012
Nick von Schirnding replaces Nalin Rathod as
Bumi chief executive
The UK Takeover Panel rules that two founder
shareholders are acting in concert with one
another, and rules that their combined viting
power is reduced to 29.9pc. It also begins
probe into the deal that put Bumi together
JANUARY 2013
Bumi conrms it has conclusions from
Macfarlanes probe, but is unable to substan-
tiate details
Nat Rothschild calls extraordinary general
meeting to remove 12 out of the current 14
directors, including chief executive von
Schirnding and chairman Samin Tan
FEBRUARY 2013
Indonesian shareholder Rosan Roeslani sells
his 10pc stake to two hedge funds and one
fund manager, freeing up the votes
TODAY
Extraordinary general meeting held to vote
on Rothschilds proposals. It looks likely that
he will be defeated
The ECs Michel
Barnier is key in
the negotiations
-St James's Master Fund & Nat
Rothschild 20.5pc
-Schroders 3.5pc
-Taube Hodson Stonex 2.5pc
Others 1.8pc
-Abu Dhabi Investment Council 4pc
-Argyle Street Management 4.1pc
-Flaming Luck Investments 1.7
-Avenue Asia Capital Management
7.6pc
-Blackrock 1.1pc
-Credit Suisse 0.4pc
-JP Morgan 1pc
-SG Asset Management 1pc
-Eton Park Capital 1.5pc
-L&G 1.8pc
N.B: Figures are estimates and for illustrative
purposes only
DECLARED SUPPORT
FOR ROTHSCHILD YET TO DECLARE
-Route One 1.2pc
-Standard Life Investments 2.1pc
-Orchard Capital 1pc
-Long Haul Holdings (the Bakries)
29.9pc
AGAINST ROTHSCHILD
THE TREASURY will bank far less
than expected from an auction of 4G
spectrum, with bidding leaving a
black hole of more than 1bn in
George Osbornes accounts.
After weeks of secret bidding, the
UKs four mobile operators, along
with BT, will spend 2.34bn on air-
waves to deliver the next generation
of mobile services, far less than the
3.5bn Osborne had banked on.
However, the end of the auc-
tion does mean that after
years of arguments and legal
threats between communi-
cations regulator Ofcom and
the operators, the UK will
have widespread 4G cover-
age in the coming months,
allowing mobile internet
speeds around five times
faster than current 3G
levels.
Some attrib-
uted the
s mal l er
Osborne hit by
1.2bn shortfall
from 4G auction
BY JAMES TITCOMB
windfall from the auction to lower
than expected bidding from EE, the
UKs largest mobile phone network.
Ofcom gave EE clearance to use its 2G
airwaves for 4G use last year, giving it
a headstart on the rivals.
EE took a smaller amount of the
higher-value 800 MHz spectrum
which allows coverage over longer
ranges and indoors than both its
main rivals O2 and Vodafone. This
also meant that the UKs smallest
operator, Three, walked away
with a slice of the 800 MHz air-
waves for the auctions
reserve price.
O2 and Vodafone will
launch 4G networks at the
end of Spring, with Threes
going live later in the year.
The lower-quality 2.6 GHz
spectrum will be used to
improve speeds in city centres. BT
will use the spectrum to top up its
wireless broadband offering.
WOULD YOU SIGN UP FOR A
4G MOBILE SERVICE?
Interviews by Amy-Jo Crowley
We're an online stock exchange, so
anything that will speed up the
process will help us. 3G never works on Oxford
Street, so if it helps with that, I'd denitely pay
more... not lots though.
These views are those of the individuals above and
not necessarily those of their company
IAN BRANAGAN
BRITDAQ

I nd 3G coverage in the City a bit


patchy - it works in some places but
not in others. If it works as advertised and
improves on coverage, stability and speed, then
I'd consider buying it.
CHRIS GASKIN
BCM

Not at the moment because of the


monthly bandwidth allowance. That
needs to expand signicantly for the expected
usage scenarios to make sense.
ROGER MORAN
HEWLETT-PACKARD

Watchdog backs Libor fine cuts


Another sort of Dutch auction from wary mobile firms
BARCLAYS deserved a multi-million
pound reduction in its Libor
manipulation fine because it
worked hard to cooperate with the
investigation, the Financial Service
Authority insisted today.
Defending itself against questions
from the Parliamentary
Commission on Banking Standards,
the FSA said it is vital to encourage
banks to be open with information.
BY TIM WALLACE
Barclays received a 30 per cent
discount for settling early, trimming
its fine from 85m to 59.5m.
Early settlement has many
potential advantages as it can result,
for example, in the saving of FSA
resources, messages getting out to
the market sooner and a public
perception of timely and effective
action, said the FSA.
We therefore consider that it is in
the public interest for matters to
settle, and settle early, if possible.
But the FSA added this discount
already came on top of another cut
awarded because Barclays had been
helpful through the investigation,
not just in the settlement process.
The benefits of co-operation with
the FSA are cumulative the fact of
a firms recognition of its own
failings and remedial steps taken
post-offending can result in a lower
than otherwise penalty, which is
then further reduced by the
settlement discount, it explained.
BOTTOM
LINE
MARC SIDWELL
CITYVIEWS
George Osborne expected
3.5bn from the auction
ADMINISTRATORS running
collapsed music and DVD retailer
HMV yesterday confirmed they
would close another 37 stores
across the UK, resulting in a
further 464 job cuts.
Deloittes Nick Edwards said the
closures, which come on top of a
previously announced wave of 66
HMV to close a further 37 stores
leaving hundreds out of work
BY JAMES WATERSON
closures, were required to
enhance the prospects of the
restructured business continuing
as a going concern.
Stores, including all four units
at Heathrow airport, will shut
over the next four to eight weeks.
This will leave HMV with just 116
shops, around half the number it
had when it was placed into
administration on 15 January.
THURSDAY 21 FEBRUARY 2013
4
NEWS
cityam.com
WHO WON WHAT IN THE 4G AUCTION?
OPERATOR SPECTRUM BOUGHT PRICE PAID STATE OF PLAY
10 MHz of 800 MHz,
70 MHz of 2.6 GHz
20 MHz of 800 MHz,
65 MHz of 2.6 GHz
20 MHz of
800 MHz
10 MHz of
800 MHz
50 MHz of
2.6 GHz
Launched 4G on existing spectrum
last year and will use newspectrum
to boost capacity
Will start running 4G
network in spring/summer
Will launch 4G in spring/summer with
obligation to cover 98%of
population by 2018
Will launch 4G by end of 2013
with separate spectrum from
EE and not charge extra for it
Will use spectrum to improve mobile
broadband ofering rather than
challenge other networks
588.9m
790.8m
550m
225m
186.5m
SHARE OF TOTAL SPECTRUM
BEFORE AUCTION
AFTER AUCTION
10
12
13
22
10
% %
35
29
43
25
T
HERE were five winners in the
2.3bn UK auction of fourth
generation (4G) wireless
frequencies announced
yesterday, but George Osborne was
not one of them.
The chancellor was counting on
a 3.5bn 4G windfall to provide a
figleaf of respectability over his
increasingly threadbare claims
that he is reducing the UK deficit.
The auction came up 1.2bn short,
leaving Osborne looking more
than ever like a case of all mouth
and no trousers.
However, while it is bad news
for all of us if the government
cant keep its promises to spend
less money it doesnt have, the
chancellors embarrassment has
its bright spots for the mobile
companies and their investors.
For example, it wasnt like this
in Holland. The Dutch 4G
competition last December was
anything but a Dutch auction, as a
bidding war ended up proving far
more expensive than expected for
the telecommunications firms
involved. Those companies felt the
pinch of buyers remorse as a
result. KPN, one of the three main
mobile players in the Netherlands,
cancelled its final dividend for the
year and reduced its 2013
dividend as well. Vodafones
shares fell 2.8 per cent at the time.
The hangover from a night on
the town in Holland probably fed
into more cautious bids in the
UK but it may also reflect a less
bullish view on likely consumer
interest in 4G. Thats a pity, for
Britain has been embarrassingly
laggard in its adoption of ultrafast
data on the go, and estimates of
the resulting cost to business have
been high. But slow adoption
wouldnt be too surprising. Even
now, the UK 4G picture is
confusing for consumers, with
different flavours of 4G working
with different phones. One more
thing to worry about, alongside
our ballooning national debt.
*Source: FIL LImited as at 31.12.2012. Issued by FIL Investments International, authorised and regulated in the UK by the Financial Services Authority. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited. CSO4637/0413
Your 2013 ISA.
Weve everything
to get you there.
Searching for the right ISA? Its not an uphill struggle at Fidelity.co.uk/guidance.
Our brand new websites got everything to help you decide. With tools, info and
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t 0800 368 0217
Quote CAM12
APPLEs major supplier, Chinese
company Foxconn, has frozen
recruitment at its factories,
suggesting a slowdown in demand for
the iPhone.
The news sent shares in the US
company down 2.4 per cent yesterday,
despite research showing that both
the iPhone 5 and its predecessor, the
4S, had outsold rival Samsungs
Galaxy S3 during the final quarter of
last year. According to Strategy
Analytics, the iPhone 5 sold 27.4m
units in the quarter with the iPhone
4S selling 17.4m to the S3s 15.4m.
Apple supplier
freezes hiring
BY JAMES TITCOMB
THE New York Times is putting The
Boston Globe on the auction block
for a second time as it seeks to focus
solely on growing its flagship
newspaper.
The company said it had hired
Evercore Partners to advise on the
sale, which is expected to come at a
big loss. Ken Doctor, an analyst with
Outsell Research, estimated the
Globe could fetch about $150m
(98m). The company paid $1.1bn for
the newspaper in 1993.
The New York Times is run by
Mark Thompson, the former BBC
Director-General.
NY Times to sell
Boston Globe
BY CITY A.M. REPORTER
COUNTRYWIDE Holdings, Britains
largest estate agency, is to return to
the market six years after it was taken
private, heralding a further sign of
recovery in the housing market.
The company aims to raise 200m
through the issue of new shares,
which it said it will use to repay debts
and fuel further growth.
It will be the second housebuilder to
float this year after Crest Nicholson
was admitted to the London Stock
Exchange this week.
Grenville Turner, who has been
chief executive since 2006, would not
comment on the groups expected val-
uation, although it is understood it
could be as much as 650m.
He said signs of the IPO market
operating effectively and of a recov-
ery in the housing and the mortgage
market were all reasons it decided to
return to the stock market.
Countrywide runs 46 high street
brands including John D Wood and
Churchills and specialises in all serv-
ices relating to residential property.
The company was taken private by
Countrywide in
float plan in bid
to raise 200m
BY KASMIRA JEFFORD
US buyout firm Apollo Global
Management at the height of the hous-
ing market collapse in 2007 for 1bn.
Distressed debt specialists Oaktree
Capital together with Alchemy Partner
then took control of Countrywide in
2009 in a complex deal that saw them
write-off three quarters of the debt and
inject 75m cash.
Turner has since led a restructuring
of the group that has included strip-
ping out more than 200m in costs
and expanding its lettings business.
It has bought over 40 businesses in
the last three years, including the UK
franchise of Sothebys and Hamptons
International, which have helped
expand its presence in the south east.
The group also revealed its 2012
earnings rose 12 per cent to 63m on
revenues up six per cent to 540m.
Oaktree currently has a 50 per cent
stake, Apollo 25 per cent and
Alchemys Special Opportunities Fund
has an eight per cent stake. The rest of
the shares are owned by the compa-
nys directors including Jones.
All shareholders have agreed to a
lock up period preventing them from
selling shares for at least six months.
MAGIC circle law rm Slaughter and May is
part of the legion of advisers assisting
Countrywide on its return to the London Stock
market. The law rms team is led by corpo-
rate partners Jeff Twentyman and Richard
Smith, both experts in equity capital markets
and handling mergers and acquisitions and
otations. Twentymanrecentlyadvised
Manchester Airport Group on its successful bid
to acquire Stansted Airport for 1.5bn and on
insurer Direct Lines IPO last year. On the
banking side, Goldman Sachs and Jefferies
have been hired as joint sponsors, joint global
co-ordinators andjoint bookrunners while
Credit Suisseis actingas joint global co-ordi-
nator and a joint bookrunner. Simon Taurins,
managingdirector of Credit Suisses invest-
ment banking division together with Jon
Grussing, the groups global markets solu-
tions head and Nick Williams, head of equity
capital markets are acting on the deal.
Goldman Sachs managing director of equity
capital markets Richard Cormack and Christos
Tomaras managing director of nancial spon-
sors are advisingCountrywide together with
AlexGarner, vicepresident of investment bank-
ing. Jefferies teamincludesRobert Foster
Europeanco-headof retail investment banking
andPaul Nichollsheadof HoareGovett, theUK
broker Jefferiesacquiredlast year.
ADVISERS
JEFF TWENTYMAN
SLAUGHTER & MAY
Chief executive Grenville Turner said Countrywide could list on the FTSE 250
THURSDAY 21 FEBRUARY 2013
6
NEWS
cityam.com
THURSDAY 21 FEBRUARY 2013
7
NEWS
cityam.com
Mark Kleinman is the City editor of
Sky News @MarkKleinmanSky
B
ANKS, ratings agencies, now
auditors: the firing line of
financial sub-industries
being dragged kicking and
screaming into a post-crisis world
continues to lengthen.
As soon as tomorrow, the
Competition Commission will pave
the way for an overhaul of the Big
Four accountants with a proposal
to enforce mandatory rotation of
their major audit clients at least
once a decade.
It is an overdue reform: the
average FTSE 100 company has had
the same auditor for almost half a
century.
The Financial Reporting Council
has done a limp job of addressing
concerns about the oligopoly
enjoyed by Deloitte, Ernst &
Young, KPMG and PwC.
Yet the consequence of
mandatory rotation may not be as
profound as some hope. Those who
argue that forcing FTSE companies
to switch between other Big Four
suppliers will do little to stimulate
competition beyond that closed
quartet have a point.
But there is a wider issue. Would
PwC, for example, have been happy
to approve the use of Barclays
infamous off-balance sheet
vehicle, Protium, if it had been on
the verge of being replaced by one
of its main rivals? Indeed, I
INSIDE
TRACK
MARK KLEINMAN
Plans to force firms to switch auditors dont go far enough
understand that Antony Jenkins,
Barclays chief executive, will
probably use the arrival of a new
finance director (replacing Chris
Lucas, himself a former PwC
partner) to review the banks
relationship with the audit firm.
The inability of the Big Four to
spot the looming crisis in 2007
and 2008 makes a strong case for
even more frequent mandatory
rotation, say every five years, in
the banking sector.
The Competition Commission
should go further.
ROLLS-ROYCE CHAIRMANS CLOSE TIES
Nobody doubts that Ian Davis,
named last week as the next
chairman of Rolls-Royce Holdings,
is a man of integrity. But there is
something about his appointment
to one of the most illustrious posts
in British business that is
uncomfortable.
The issue is this: Davis is among
the directors of BP responsible for
setting the pay of boardroom
colleagues including Iain Conn,
the oil groups head of refining
and marketing.
Conn was, in turn, the non-
executive director of Rolls-Royce
responsible for leading the search
for Sir Simon Robertsons
successor as chairman of the
aerospace group.
Did Davis recuse himself from
discussions about Conns pay once
he became a candidate for the
Rolls-Royce job? Did Conn hand
over the search to another Rolls
board member?
If either is the case, it should
have been made clear in the
statement announcing Daviss
appointment.
That is not to say that Davis will
or watching business news
bulletins, clearly.
Im told that at a recent meeting
with senior bankers, including
Bruce van Saun, finance director
of Royal Bank of Scotland, Sir
Jeremy professed himself to be
oblivious to industry concerns
about the eventual bill for mis-
selling payment protection
insurance and interest rate
derivatives.
Given that the 12bn already set
aside for redress by the four
biggest banks could support 10
times that sum in lending to the
real economy, it is a worrying gap
in the mandarins knowledge.
not make a fine chairman of
Britains most important
manufacturing company. His crisis
management experience, honed
after the Gulf of Mexico oil spill,
should equip him well if a similar
catastrophe were to emerge at
Rolls-Royce.
But the episode has done
nothing to assuage the widespread
impression that FTSE 100
boardrooms remain a cosseted
club where the back-scratching
suits its members just a little too
tidily.
SIR JEREMY MISSES MIS-SELLING
Where has Sir Jeremy Heywood,
the cabinet secretary and Britains
most powerful civil servant, been
for the last two years? Not reading
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MORE THAN 680m was wiped off
RSAs market capitalisation yesterday
as investors took flight following the
companys decision to slash its divi-
dend by a third.
Chief executive Simon Lee told City
A.M. that the unexpected decision to
cut investor payouts which forced
its share price down 14 per cent
was never going to be the most pop-
ular decision in the short term. But
he insisted that consistently low
investment returns meant RSA had
to be more realistic about what it
could offer shareholders.
If we were going to pay out that
level of earnings it would restrict
capacity to grow in the future. Our
share price is only down to where it
was three or four months ago, Lee
explained.
We have a robust balance sheet
and growing premiums. Its just that
were operating a low interest rate
environment and a conservative
investment portfolio with 90 per
cent in cash and bonds.
Shares in other insurers, including
Aviva, fell as investors feared their
Payout cut sees
680m wiped
off RSAs stock
BY JAMES WATERSON
boards may now to be tempted to
take similar action.
RSA also announced a decline in
full-year operating profit to 684m,
down from 727m, which the compa-
ny partly blamed on payouts relating
to UK floods and Italian earthquakes.
Lee said the company intends to
make up for flatlining performance
in Europe by expanding into develop-
ing markets, where he hopes organic
growth can increase premiums from
1.2bn to 2.2bn by 2015.
The company also used yesterdays
announcement to confirm it intends
to change its auditor from Deloitte to
KPMG.
David Gill led Manchester United through its controversial takeover by the Glazer family
RSA Insurance Group PLC
20Feb 14 Feb 15Feb 18Feb 19Feb
135
125
130
120
140 p 117.00
20Feb
Had the dividend cut been accompanied by a weak trading statement,
the fall of 14 per cent might be justied. However, the trading oor believes the
sell-off is harsh and applaud the boards swift reaction to low-yielding
bond incomes.
ANALYST VIEWS

Once the dust settles we urge investors to revisit the shares and indeed
we would view such weakness as a buying opportunity owing to the prospects
for the group outside the UK and the expectations for good return on
equity delivery in the coming years.

Given that 12 months ago RSA agged that the rate of dividend growth
was to reduce to circa two per cent we view the cut as very disappointing given
that nothing has materially changed over the last 12 months. We have
consequently downgraded our recommendation to Sell.

DID INVESTORS
OVERREACT TO RSAS
DIVIDEND CUT?
MARC KIMSEY ACCENDO MARKETS

EAMONN FLANAGAN SHORE CAPITAL

BARRIE CORNES PANMURE GORDON


THURSDAY 21 FEBRUARY 2013
9
NEWS
cityam.com
A TASTE OF PERU
March 12th, 6.30pm 9pm
Join us in celebrating the colour and cuisine of Peru at
our award-winning travel store on Cheapside.
A highlight will be a cooking demo by Martin Morales,
founder of Cerviche, accompanied by pisco sours.
Exclusive holiday offers will be available on the night.
We have 100 complimentary tickets up for grabs.
To apply, please visit abercrombiekent.co.uk/events
in association with
INSURER Ageas UK, best known for
its partnership with Tesco,
yesterday revealed that total
written premiums passed 2bn for
the first time in 2012.
This allowed the company to
post an 11 per cent rise in full-year
net profits to 82.9m.
Ageas managed to increase
returns at its Tesco tie-up, which
sees motor and household cover
sold under the supermarkets
brand, by focusing on more
profitable business.
Its combined ratio a measure
of underwriting profitability that
compares total premiums with
Premiums at Ageas UK pass
2bn for the first time in 2012
BY JAMES WATERSON
total claims improved slightly to
99.8 per cent.
It also booked a one-off 50.9m
gain following Septembers
purchase of Groupamas UK
business at a discount to net assets.
While the market is not
without its challenges our breadth
of distribution, strong
partnerships and reputation for
service excellence gives us
confidence that we will continue
to build momentum during 2013,
said chief executive Andy Watson.
The companys Belgian parent
group, previously known as Fortis,
yesterday beat analysts
expectations to unveil a full-year
profit of 624m (545m).
FORMER JP Morgan banker Ed
Woodward will take control of
Manchester United this summer,
replacing long-serving chief
executive David Gill.
Woodward helped the Glazer
family with their purchase of the
club in a 790m leveraged takeover
in 2005 before joining the club
shortly afterwards.
Gill piloted the club through a
difficult period which saw regular
fan protests against the Glazers. He
also oversaw the football clubs
successful float on the New York
Stock Exchange last year. Shares in
the club closed down one per cent.
Man Utd CEO
steps down
BY CITY A.M. REPORTER
TITAN International chairman
Maurice Taylor has taken a bold
stand on behalf of the Anglo-
Saxon model, not-so-politely
declining an offer to buy a French
factory that is being closed by
American tyre-maker Goodyear.
After being invited to visit the
factory in northern France, Taylor
sent a letter to French industry
minister Arnaud Montebourg,
and did not hold back on the rea-
sons behind his firms decision
not to purchase the tyre plant.
Taylor wrote: I have visited the
factory several times. The French
workforce gets paid high wages
but work only three hours. They
get one hour for breaks and
lunch, talk for three and work for
three. I told this to the French
union workers to their faces. They
told me thats the French way!
Taylor was equally frank about
what he thought of politicians:
You are a politician so you dont
want to rock the boat. The
Chinese are shipping tires into
France... and yet you do nothing.
France will lose its industrial
business, he warns. Sir, your let-
ter states that you want Titan to
start a discussion. How stupid do
you think we are? Titan is the one
with the money and the talent to
produce tires. What does the
crazy union have? It has the
French government... Titan is
going to buy a Chinese company
or an Indian one, pay less than
one euro per hour wage and ship
all the tires France needs. You can
keep the so-called workers.
It seems the Titan boss is grizzly
by name, grizzly by nature, as col-
leagues affectionately refer to him
as Morry or The Grizz. Not one
to say vive la difference.
A relaxing afternoon in the Jardin des Tuileries
Lawyer Lukas Hirst, and an elephant
Got A Story? Email thecapitalist@cityam.com
11
cityam.com
THECAPITALIST
THURSDAY 21 FEBRUARY 2013
cityam.com/the-capitalist
EDITED BY
CALLY SQUIRES
Bearish Titan says non
to French bon vivants
They say the Square
Mile is one of the safest
places in the country and
for one woman who was
having a heart attack while
driving past the Citys
Mansion House yesterday,
that proved correct. On her
way to work, The Capitalist
spotted a crowd gathered on
the doorstep of the Lord
Mayors residence. Luckily the
quick-thinking John Davies,
Keeper of Walbrook Hall, had
run outside to the rescue
defibrillator in hand and
carried out resuscitation.
Davies modestly told
colleagues afterwards that he
did what anyone else would
have done. Lucky that the
Mansion House is so well-
equipped.
READERS of this page will
remember that lucky Clifford
Chance associate Lukas Hirst
recently won a City A.M. prize
draw, and was rewarded with a
luxury holiday for two at the
beautiful Sandals hotel
in Antigua.
There is just one problem: our
lovely lawyer is single and the
resort, recently voted the
worlds most romantic is
aimed at couples in love.
Not missing an opportunity to
play Cupid, any ladies who wish
to meet an Aussie former rower,
not to mention fancy the
possibility of escaping the grey
British winter for more exotic
climes, should mark their love
notes FAO The Capitalist.
Wanted: Female, likes Antigua
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Legal Comment
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Employment Lawyer
Slater & Gordon
Statistics tell us that most
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There's no excuse in this day and age
for paying a woman less than a man.
For further details, or to handle your
case, contact Samantha Mangwana
at Slater & Gordon Lawyers on
0808 175 7742
THE CHANCELLOR should set out
specific tax objectives against
which to test tax policy, a
prominent think tank said
yesterday.
This move should come as part of
a new way of doing tax policy, the
influential Institute for Fiscal
Studies (IFS) argued, with the
Treasury facing greater scrutiny in
its policy-making. Reform is needed
because the current system is
unnecessarily inefficient, complex
and unfair and costs run into
billions of pounds in reduced
output and welfare, the IFS said.
IFS pushes for
new tax policy
BY BEN SOUTHWOOD
US NEW housing starts crashed in
January, but kept well above their
level during January last year.
Privately-owned housing starts
sunk 8.5 per cent between
December and the first month of
2013, bringing them from 973,000
in December to 890,000 but they
were still 23.6 per cent above
January 2012s 720,000 starts,
according to US Census Bureau
data. Data for completed projects
and issued building permits
showed them both racing up,
rising by over a third in just a year.
Housing starts
dip in January
BY BEN SOUTHWOOD
MORTGAGE interest rates dropped to
their lowest level ever in February,
new figures showed yesterday, six
months after the Bank of England
started offering banks cheap funding
in an effort to boost lending to the
private sector.
The average five-year fixed mort-
gage costs just 4.14 per cent, accord-
ing to finance research site
MoneyFacts.
That is down half a percentage
point from 4.64 per cent a year ago
andrepresents an enormous plunge
from 5.41 per cent in the same
month of 2011.
The Bank of Englands Funding for
Lending scheme (FLS) has allowed
banks to draw down billions of
pounds in cheap funding since
August, pushing down rates.
But even banks which are not tak-
ing state funding have increased
lending.
HSBC, the largest bank not taking
part in the FLS, published healthy
lending data yesterday.
The banking giants gross new
mortgage lending jumped 24 per
Mortgage rates
fall to new low
with state aid
BY TIM WALLACE
cent to 16.4bn in 2012, while it
approved 5bn for first time buyers,
an increase of 32 per cent on the year.
And its gross new business lending
increased two per cent to 30.4bn.
But figures across the whole indus-
try were not uniformly positive for
borrowers despite the falling inter-
est rates, mortgage lending fell in
January according to the Council of
Mortgage Lenders.
Gross home lending in the month
came in at 10.4bn, down nine per
cent on Decembers figure and three
per cent on the year.
Analysts blamed cold weather for
the fall, and remain upbeat about the
markets prospects.
Interest rates have plunged in the last year
Feb13 Nov12 Aug12 May12 Feb12 Nov11 Aug11
4.0
4.2
4.4
4.6
4.8
5.0
5.2 Average five-year fixedmortgages, %
S
o
u
r
c
e
: M
o
n
e
y
F
a
c
t
s
JAPAN recorded its deepest ever
trade deficit in January, despite a
sharp weakening in the yen due to
a raft of monetary stimulus.
Exports climbed for the first
time in eight months, helped by a
16 per cent slide in the yen, versus
the dollar, since November last
year. But this 6.4 per cent annual
rise was more than erased by a 7.3
per cent surge in imports, bringing
them to 6.43 trillion (44.9bn).
This left a balance of minus 1.63
trillion, up ten per cent on last
January, and the highest gap ever.
The record deficit came despite
Japan posts record trade deficit
as weak yen pushes up imports
BY BEN SOUTHWOOD Prime Minister Shinzo Abes
aggressive fiscal and monetary
policy to weaken the yen,
indicating a rise in exports on its
own was not enough to turn things
around.
Trade deficits could continue
for much of this year, if not into
next year, said Norio Miyagawa,
senior economist at Mizuho
Securities Research & Consulting.
This shows that on a net basis
money is leaving the country. We
need to turn this around by
increasing our earnings power
from exports. A weak yen will help,
but it wont solve all our
problems.
THURSDAY 21 FEBRUARY 2013
12
NEWS
cityam.com
Prime Minister Shinzo Abe has tasked the Bank of Japan to boost inflation up to two per cent
THE EUROPEAN Commission will get
new powers to monitor Eurozone gov-
ernments budgets and can demand
changes if they do not fit in with
European borrowing rules under a deal
struck with the European Parliament
yesterday.
But a plan to pool debts was aban-
doned after countries led by Germany
rejected the idea that they should back
other states borrowing.
The aim of the so-called two-pack deal
is to strengthen discipline over spend-
ing and taxation in an effort to stop
budget deficits ever getting out of hand
again and causing crises like those in
Greece and Spain.
Rules have already been introduced
to make sure states running deficits of
above three per cent of GDP are pun-
ished more quickly in the future, after
Brussels steps
up control over
borrowing rules
BY TIM WALLACE
governments went unchecked in run-
ning up borrowing before the crisis.
Under the new rules countries deemed
to be getting out of line will be put
under close surveillance, reporting to
the European Commission every quar-
ter and forced to correct past mistakes.
This will mean that the Eurozone can
benefit from a more integrated and
effective policy-setting framework
already for the 2014 budgetary cycle,
said commissioner Olli Rehn.
Towards the end of the year the
European Commission hopes to pro-
pose further measures to coordinate
economic reforms.
And although Germany rejected plans
for pooled borrowing as it fears high-
borrowing member states could benefit
from its prudence, the European
Commission is planning more work
towards a shared debt programme to be
implemented at a later date.
THURSDAY 21 FEBRUARY 2013
13
NEWS
cityam.com
NEW8 FROM THE
CTY OF LONDON
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Take your seat at Milton Court
Dread Poets at Keats House
Overseas business
delegation for
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Milton Court, the new world-class performance venue for Guildhall
School of Music & Drama opens in September to provide students
with state-of-the-art facilities and outstanding training for careers
in the performing arts. Find out how you can support Milton Court
by naming a seat in the Theatre or Concert Hall by calling Amber
Bielby on 020 7382 7162 or visit www.gsmd.ac.uk/takeyourseat
Alderman Roger Gifford, Lord
Mayor of the City of London,
is leading a business
delegation this week to
Kuwait, United Arab Emirates,
Egypt, Bahrain and Qatar to
promote London and the UK's
financial services to heads of
State, key politicians and
business leaders.
Alan Campbell, who won
Bronze in the Men's Single
Scull (Rowing) at the London
2012 Olympic Games, receives
the Freedom of the City of
London tomorrow, in recognition
of his sporting achievements.
Campbell, who is a Freeman of
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attend a private ceremony at
Guildhall.
Keats House Film Club presents a screening of Dread Poets
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in-Residence, on 23 February at 3pm. The film includes poetry and
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Top two Eurozone economies
hit by price deflation in 2013
CONSUMER prices fell into decline
in Germany and France in
January, according to figures
released yesterday.
Both countries were hit with a
0.5 per cent fall in their
consumer price indices (CPI) last
month, as the Eurozone crisis
continues, although over the year
the two Eurozone giants still saw
prices rise.
Annual inflation was 1.7 per
cent in Germany, its official
statistical body Destatis said,
BY BEN SOUTHWOOD
while French equivalent Insee put
its CPI inflation at 1.2 per cent
over the year.
Economists worry about
deflation because it can lead to
price imbalances in an economy,
which require a difficult period of
adjustment to iron out,
potentially including a large
increase in unemployment.
And with the price data came
gloomy confidence surveys from
both Insee and the European
Commission (EC), both released
separately yesterday.
Consumer confidence edged up
only 0.3 in the Eurozone during
February, the EC said, staying well
below zero at minus 23.6.
And the economic sentiment
indicator crept up 1.4 points, to
reach 89.2, still far below the long
term average of 100, and
significantly worse than for most
of the Eurozone crisis so far.
The French business climate
indicator, from Insee, did worse,
staying flat at 87 in February,
where it has been since December,
still far below the long-term
average of 100, as the countrys
economy remains depressed.
SOUTH African banking group
Nedbank yesterday said it expects
annual earnings to be between 18
and 23 per cent higher than last
year after a strong performance in
the final quarter.
Nedbank, majority owned by
London-listed Old Mutual, will
release its full-year results on
Monday.
The firm said in October that its
focus on unsecured lending while
the corporate market remained
subdued was set to deliver double-
digit growth.
Nedbank profit
rise is on track
BY MARION DAKERS
FRENCH bank Credit Agricole report-
ed record losses yesterday after a hefty
tax bill on the disposal of its Greek
arm sent costs soaring.
The bank lost 3.98bn (3.47bn) in
the fourth quarter of 2012 and
6.47bn in the year as a whole, its
worst performance since going public
11 years ago. But shares rose as
investors welcomed the banks plan to
cut costs over the next three years.
Revenue fell 15.8 per cent on the
year to 16.315bn, far more rapidly
than operating expenses which only
dipped 2.9 per cent to 12.037bn.
The bank was further hit by an
unexpectedly large 838m tax bill on
the sale of Greek unit Emporiki, as
well as a 541m charge from a revalu-
ation of its own debt and a 267m
impairment recorded on its 20 per
cent stake in Portuguese bank BES.
Tougher prudential requirements
added charges of 832m to the corpo-
rate and investment banking arm,
923m to consumer finance opera-
tions and 921m to international
retail banking.
Credit Agricole
in the red again
with record loss
BY TIM WALLACE
But underlying performance was
solid with normalised profits of 3bn
in retail banking and a contribution of
3.538bn from its regional banks.
The bank vowed to turnaround its
performance in 2013, arguing that it
has now put its Greek losses behind it
and is pushing through a programme
of 650m in cost reductions across IT,
procurement and real estate.
2012 was a year of transformation
and refocusing. We are turning a page
and will develop a new medium-term
plan this year, promised chief Jean-
Paul Chifflet.
The banks shares ended the day 3.89
per cent higher.
THE consortium responsible for the Heron Tower on Bishopsgate is understood to be
renegotiating a 370m loan used to construct the building. Gerald Ronsons Heron
International built the 230m tall structure, which opened in 2011, in conjunction with
Middle Eastern investors but both parties are now in discussions with German banks
who provided funding towards the project. Less than half the floors have been let.
HERON TOWER SEEKS REFINANCING
Credit Agricole
20Feb 14 Feb 15Feb 18Feb 19Feb
7.80
7.40
7.60
7.20
8.00
7.61
20Feb
THURSDAY 21 FEBRUARY 2013
14
NEWS
cityam.com
Boss of Capital
Spreads quits
BY AMY-JO CROWLEY
Simon Denham
founded the firm
THE CHIEF executive and co-founder
of spread betting firm Capital
Spreads stepped down yesterday, as
parent firm London Capital Group
swung to a 200,000 annual loss.
Simon Denham, who leaves after
a decade at the helm, will be
replaced by Mark Slade.
Revenues at LCG fell by
27 per cent to 28.6m,
which the Aim-listed
firm blamed on
calmer markets.
DRINKS-can maker Rexam yesterday
reported full-year underlying profit
above estimates and said it expects
sales to grow in its largest market
North America, sending its shares up
by over five per cent.
Rexam said it has a 20 per cent mar-
ket share in North America, the
worlds largest beverage can market
with 100bn cans used per year.
Well expect to see some high-sin-
gle digit (to) low double digit growth
in North America because were also
seeing speciality cans growing very
well there, chief executive Graham
Chipchase said yesterday.
Rexam, which counts Anheuser-
Busch Inbev, Coca-Cola, PepsiCo and
Red Bull among its customers,
recorded 10 per cent growth in spe-
ciality cans volumes in 2012.
The company also expects 2013 vol-
ume percentage growth in the mid-
single digits in South America as its
customers gear up for the 2014
Football World Cup and the 2016
Rexam expects
sales growth in
North America
BY HARRY BANKS Olympics in Brazil.
However, it did not give an overall
growth forecast for 2013.
Rexam said it would invest 115m
over the next three years to build a
new beverage can plant with an
expected capacity of 2.2bn cans in
Widnau, Switzerland.
The company reported an underly-
ing pre-tax profit of 418m for the
year to December, up from 414m a
year earlier.
Operating profit from Rexams bev-
erage can business grew five per cent
to 465m.
Chief executive Graham Chipchase has been with drinks-can maker Rexam since 2003
Rexam PLC
20Feb 14 Feb 15Feb 18Feb 19Feb
500
480
490
470
510 p
502.00
20Feb
SHARES in Sodastream fell as
much as seven per cent yesterday
in spite of the firm reporting a
better-than-expected 42 per cent
rise in net income to $7.5m
(4.9m), as investors took fright at
forecasts of slowing growth.
The Nasdaq-listed company said
revenues rose 55 per cent to
$132.9m in the final three months
of 2012.
But Sodastream pointed to a
slowing pace of growth in 2013,
with revenue growth set to slide
to 25 per cent, while adjusted
earnings growth is expected to
ease to 34 per cent.
The Israel-based group also
predicted a surge in costs.
Fizz goes out
of Sodastream
BY MARION DAKERS
THURSDAY 21 FEBRUARY 2013
15
NEWS
cityam.com
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Garmin profit drives off a cliff
as motorists ditch satnav tools
GARMIN yesterday forecast full-
year results below analysts
estimates, suggesting a market
share gain from smaller rivals
could no longer offset a lack of
demand for its GPS-enabled
handheld navigation devices.
Net profit fell to $129.3m
(84.5m) in the fourth quarter,
from $165.6m a year earlier.
Shares of Garmin, whose
quarterly profit also fell short of
market estimates, fell over nine
per cent after the results.
BY CITY A.M. REPORTER
Americas biggest navigation
device maker has been trying to
fight sluggish demand for these
once must-have gadgets by
bundling them with high-margin
specialised mapping services, as
smartphones loaded with free
mapping apps invade its market.
Analysts had expected the
strategy of including valuable
mapping software with hardware
to boost sales by the end of 2012.
But total annual revenue fell 16
per cent to $910m, the firm said
yesterday.
Sales at Garmins struggling
automotive and mobile business,
which makes navigation devices
for cars and accounted for nearly
half of the companys total
revenue in the fourth quarter,
slipped to $437m.
The companys outdoor
business, which makes dog-
trackers and golf gadgets, fell two
per cent to $119m in the fourth
quarter, while revenue from its
fitness business that makes
gadgets such as GPS-enabled
watches to count calories and
monitor heart beats, rose 10 per
cent to $104m.
OFFICE Depot will acquire smaller
rival OfficeMax in a $1.2bn
(788m) all-stock deal, the
companies said yesterday,
confirming an agreement
inadvertently announced earlier in
the day, before it was completed.
The combined entitys name,
headquarters location and chief
executive are all still
undetermined, suggesting the
companies were in a rush to get
the deal confirmed after a draft
accidentally went up on Office
Depots website.
Office Depot chief executive Neil
Austrian and OfficeMax boss Ravi
Saligram are both candidates for
the top job, the US firms said.
Office Depot
buys its rival
BY CITY A.M. REPORTER
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IN BRIEF
Polymetal buys $96m gold field
nJSC Polymetal, the subsidiary of
Russian precious metal producer
Polymetal, has agreed to buy ZAO
Maminskaya Gornorudnaya kompania,
which has a mining licence for the
Maminskoye gold mining field in
Russia, in a deal worth $95.5m
(62.7m). The licence is valid until
2023. Scoping studies show that the
field could have the potential to
produce between 80,000 and
120,000 ounces of gold each year.
Severstal lays out spending plans
nRussian steelmaker Severstal
yesterday said it would spend $1.3bn
(850m) this year, focusing mostly on
its Russian operations. Out of the
$1.3bn, it will direct $704m towards its
Russian steel business, to spend on
projects such as building steel mills
and modernising operations across
the region. Around $107m will be
spent in Severstals North America
business, and $60m will be put
towards the maintenance programme.
Lafarge returns to quarterly profit
nFrench cement maker Lafarge
returned to profit in the fourth
quarter, as it secured almost 900m
(787m) of divestments in 2012.
Quarterly net profit was 100m,
compared to a loss of 3m in the same
period a year earlier, while sales
declined one per cent to 3.8bn, it
said yesterday. Full-year sales were up
three per cent to 15.81bn. The worlds
largest cement maker also doubled its
2012 dividend to 1 a share.
SOUTH African miner AngloGold
Ashanti yesterday reported a plunge
in fourth quarter earnings, hit by
wildcat strikes at its operations last
year.
Industrial action plagued the
worlds third-largest bullion produc-
er from the end of September until
November, essentially halting pro-
duction for several weeks.
Fourth quarter headline earnings
in 2012 were $7m (4.6m) down
from $295m in the fourth quarter of
2011 hit by lower output volumes
and higher cash costs.
Full-year earnings came in at
$924m, down from $1.3bn in 2011.
The wildcat strikes last year and sub-
sequent mine closures wiped $208m
off annual earnings.
Full-year production totalled 3.9m
ounces of gold which includes a
loss of 235,000 ounces due to the
strikes below the firms target.
The gold miner is targeting a ramp-
up in output this year to between
4.1m ounces and 4.4m ounces,
which would make 2013 output
broadly flat to 2011s full-year pro-
AngloGold sees
profits plunge
as strikes weigh
BY CATHY ADAMS
duction of 4.33m gold ounces.
Last week, AngloGolds closest rival
Gold Fields reported a 20 per cent fall
in headline earnings, largely due to
the impact of an illegal strike at two
South African mines it has since spun
off.
Elsewhere in the South African min-
ing sector, striking employees at
Anglo Americans 80 per cent owned
subsidiary Anglo American Platinum
returned to work yesterday, following
a one-day walkout in response to vio-
lence at a mine.
Amplats said that over the one day
of suspended production, it lost 3,886
ounces of platinum output.
AngloGold Ashanti Ltd
20Feb 14 Feb 15Feb 18Feb 19Feb
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ICONIX Brand Group said yesterday it has snapped up the British denim label Lee Cooper for
47m as it continues its buying spree to expand its international business. The group, which
licenses shoe and clothing brands to retailers, also reported a fall in fourth quarter profit to
$26.1m (17m) from $27.2m last year with sales down 11 per cent to $85.1m.
ICONIX BUYS DENIM BRAND LEE COOPER FOR 47M
AXMINSTER Carpets, the historic
manufacturer that has woven
carpets and rugs for Britains stately
homes since the eighteenth century,
has filed for administration.
The Devon-based company, which
employs around 400 people,
confirmed its intention to appoint
Duff & Phelps as administrators.
It said it would continue to trade
while it explores all potential
restructuring operations.
Company director Joshua
Dutfield said: Trading has been
difficult and the management has
been working with key suppliers,
creditors and the lenders in an
attempt to resolve the companys
financial difficulties.
The company was founded in
Axminster in 1755 by weaver
Thomas Whitty, who was inspired
by the Turkish style of making
carpets. His carpets could be found
in Chatsworth House and Brighton
Pavilion and were bought by King
George III and Queen Charlotte,
who visited the factory.
In modern times, the company
has supplied carpets to high street
retailers including John Lewis and
Carpetright.
Axminster is the latest in a string
of companies to collapse this year
including Jessops and HMV.
Carpet maker
Axminster on
brink of failure
BY KASMIRA JEFFORD
VODAFONE takeover target Kabel
Deutschland hiked its dividend by
two thirds yesterday in a move that
may protect the company from a bid.
The German cable company, which
Vodafone is circling as it attempts to
improve its presence in the country,
also saw profits double to 200m
(175m), boosted by strong demand
for broadband and pay-TV.
However, the companys manage-
ment refused to comment on
whether it had been approached by
Vodafone over a deal that would be
likely to value Kabel Deutschland at
more than 6bn.
Shares in the company rose by
about 1.5 per cent as it raised its divi-
dend by 67 per cent, a move that was
widely seen as a defensive move to
prevent a hostile takeover. The com-
panys value had risen by nine per
cent last week as news of Vodafones
interests emerged.
The British telecoms giant has
appointed longtime advisers
Kabel hikes its
payout as tries
to fend off bid
BY JAMES TITCOMB
Goldman Sachs and UBS to work on
the deal. Vodafone is interested in
Kabel Deutschland as it tries to pro-
tect its German mobile base, with
increasing numbers of people taking
broadband, mobile and TV contracts
as a bundle.
An acquisition would be the latest
in a series of large telecommunica-
tions deals, which has included US
firm Liberty Globals $23.3bn (15bn)
takeover of British company Virgin
Media.
The companies did not comment on
takeover speculation.
STV shares leap as battle with
ITV ends and it returns to profit
SHARES in Scottish broadcaster STV
jumped by more than 10 per cent
yesterday as the company posted a
rise in profit on improved TV
advertising revenues.
STV, which runs the terrestrial
channels in central Scotland run by
ITV in England, posted a surprising
improvement in performance
during 2012, and said it expects
advertising revenues to improve in
the first quarter of this year.
Chief executive Rob Woodward
also said his company had put a
longrunning dispute with its
partner ITV behind it. The two
BY JAMES TITCOMB
companies were involved in a legal
battle for several years over
alleged unpaid contributions to
ITV.
The company had been hit
with a 13.4m charge related
to legal costs in 2011, and
booked 5.3m in tax
charges last year over the
dispute.
STV, which has also won
the licences to run local TV
stations in Edinburgh and
Glasgow, saw a one per cent
rise in revenue to 102.7m
during the year, and saw
profit rise three per cent to
14.4m. Significantly, the
firm also cut its debt by 17 per cent.
The company has made steady
progress in its TV production arm,
and announced yesterday it had
won new contracts to produce
new episodes of BBC Twos
Celebrity Antiques Road Trip
and ITVs Catchphrase.
We have delivered
strong financial results
with double digit growth
in operating profit and a
significant reduction in debt,
Woodward said.
US startup incubator TechStars
moves into Silicon Roundabout
A COLORADO-BASED firm that
nurtures technology startups has
made its first move out of the US by
launching in London.
TechStars will launch a
programme designed to help 20
small businesses develop, allowing
them 85,000 (74,000) made up of
funding and convertible debt each.
The startups will also receive
mentoring from successful British
technology startups such as Moshi
Monsters creator Mind Candy.
The launch will come as a boost
to Number 10s Tech City project,
which aims to incentivise
BY JAMES TITCOMB
innovative technology startups to
set up in London. Last week saw
new proposals to encourage high
growth companies to go public
on the London Stock Exchange
by relaxing listing requirements.
TechStars chief executive
David Cohen said he had
chosen London above
other European cities
because the current
business climate here
means we can work
with an incredibly
broad spectrum of
British and international
teams and top talent.
At a Downing Street
announcement of the launch,
culture minister Ed Vaizey said: We
are putting in place the policies to
help companies grow and help
them get access to the finance
they need.
TechStars, which is based in
Boulder, Colorado, also has
programmes in Boston,
New York, Seattle and
Chicago. The firm said it
would welcome
applications from
prospective startups in
March.
Kabel Deutschland Holding
20Feb 14 Feb 15Feb 18Feb 19Feb
71
69
70
68
72
68.00
20Feb
Actress Kym Marsh will feature in
STVs Celebrity Catchphrase
BSKYB has inked a deal with
Disney that will see the Hollywood
giants films shown on a new
channel as well as open up its
catalogue of historic films to on-
demand viewing.
The deal will tighten Skys grip
on exclusive film rights by giving
it first access to new titles such as
Iron Man 3 and Avengers
Assemble, having signed similar
deals with Sony, Universal and
Warner in the last six months.
However, it is the first deal Sky
has signed that will create a
Sky splashes out with a deal for
Disney movies and new channel
BY JAMES TITCOMB
separate channel, which will show
new and classic Disney films when
it launches next month.
The agreement continues Skys
claim to first access rights to
movies from Hollywoods six
major film studios, allowing it to
display films around six months
after they have run in cinemas and
a year before other broadcasters.
Its dominance has been a bone
of contention for its rivals, and
was probed by the Competition
Commission last year, although
the body found that the launch of
Netflix and Lovefilm had curbed
Skys powerful position.
THURSDAY 21 FEBRUARY 2013
18
NEWS
cityam.com
Movies to be shown on Skys new channel will include Pixar titles such as Finding Nemo
TESCO has been voted the worst of
Britains nine major supermarkets
in a poll carried out by one of the
leading consumer groups.
More than 11,000 Which?
members rated the supermarkets
with customer scores based on
customer satisfaction and the
likelihood they would recommend
it to a friend.
Tesco, the UKs largest
supermarket group, came last, with
a customer score of 45 per cent and
poor marks for its pricing, store
environment, quality of fresh
produce and customer service.
In contrast Waitrose was voted
the most popular supermarket,
with an overall satisfaction score of
Tesco voted worst supermarket
in survey of 11,000 UK shoppers
BY KASMIRA JEFFORD
82 per cent including five-star
ratings for customer service and
the quality of its fresh produce.
Discount supermarkets Aldi and
Lidl came second and third with
scores of 74 per cent and 69 per
cent respectively, beating their
bigger rivals such as Morrisons (59
per cent ), Sainsburys (58 per cent),
and Asda (53 per cent).
In these tough economic times
its understandable that
supermarkets scoring well for value
for money are being ranked so
highly in our league table, Which?
director Richard Lloyd said.
In fourth place was Marks &
Spencer with a score of 68 per cent.
Ocado was voted best online
grocer followed by Waitrose,
Sainsburys and Tesco.
THE PUBLISHER of business
magazines Marketing Week and
The Lawyer saw its losses more
than treble in the six months to
the end of last year, owing to
restructuring costs.
Centaur Media, which also owns
market researchers Econsultancy,
said exceptional costs associated
with recent sales and acquisitions
had dragged the company down to
a loss of 5m.
Chief executive Geoff Wilmot
has attempted to refocus the
business on events and digital
publishing as print magazine
advertising falls.
The turnaround resulted in
rising profits last year, and the
Digital revamp takes its toll on
Centaur Media as losses widen
BY JAMES TITCOMB
company announced a 14 per cent
rise in half-year revenues yesterday
to 30.4m.
Digital revenues now account
for 39 per cent of total revenues,
compared to 32 per cent last year,
with prints contribution falling
from 45 per cent to 31 per cent.
Wilmot said that, as usual,
Centaur will see better trading in
the next six months the second
half of its financial year.
We are maintaining
momentum in improving the
quality of our portfolio and
remain focused on increasing
margins, he said.
The performance failed to
impress investors however, as
analyst downgrades sent shares
falling by 9.4 per cent.
Culture minister Ed Vaizey
welcomed the news
THE GOVERNMENT needs some radi-
cal thinking to get the economy mov-
ing, the boss of the countrys biggest
supplier of building materials, Travis
Perkins said yesterday.
The trouble at the moment is that
people are thinking of conventional
solutions and Im afraid were not in
conventional economic times, so
weve got to think more radically to
get some of these markets moving,
chief executive Geoff Cooper said.
He called on chancellor George
Osborne to cut VAT sales tax on
home improvement products, partic-
ularly for renewable building proj-
ects, in his Budget next month.
Theres a lot of evidence to show
that if you increase economic activi-
ty in construction, you get a boost to
the economy overall because most of
the product is domestically derived
and its domestic activity, he said.
The Bank of England has predicted
a slow economic recovery over the
next three years after two years of
Travis Perkins
slams Osborne
over economy
BY CITY A.M. REPORTER
stagnation because of a mix of
Eurozone turmoil, government auster-
ity and subdued consumer spending.
Cooper also wants the government
to extend its Funding for Lending
scheme, cut stamp duty and bring
back tax relief for first-time buyers to
boost the housing market.
He was speaking after Travis Perkins
posted a 1.1 per cent rise in underly-
ing pre-tax profit to 300m on sales
up 1.4 per cent to 4.85bn.
But 2013 has got off to a slow start,
with like-for-like sales down 5.1 per
cent in the first seven weeks.
Travis Perkins PLC
20Feb 14 Feb 15Feb 18Feb 19Feb
1,310
1,280
1,290
1,300
1,270
1,260
1,320 p
1,271.00
20Feb
THURSDAY 21 FEBRUARY 2013
19
NEWS
cityam.com
TICKETS
ON SALE
NOW
In association with
For more information visit gauchopolo.com
BREWING COMPANY
ENGINEER the Weir Group
yesterday said it had snapped up a
trio of companies for 55m, as it
extends its footprint into mining
industries.
The FTSE 100 firm has bought
the R Wales group of companies in
Canada which makes rubber
linings for the processing
industries in a move into the
North American oil sands and
mining sectors.
R Wales, which also has a US
facility in Arizona, generated
revenues of more than C$30m
(19.3m) last year, Weir said.
Additionally, Weir has acquired
two developing market foundry
Weir in 55m shopping spree
as it extends mining footprint
BY CATHY ADAMS
supply chain businesses.
It said yesterday it had bought
the business and assets of the
Cheong foundry in Malaysia,
which supplies castings to the
mining and power industries.
The last asset it has picked up
on the spree is the plant,
equipment and buildings of
Xmeco Foundry in Port Elizabeth,
South Africa, enhancing its
presence in the fast-growing
African markets.
The R Wales and Cheong
foundry acquisitions completed
earlier this month, and the Xmeco
buy will complete in May.
All three acquisitions will be
funded from existing bank
facilities, Weir said yesterday.
BOEING is believed to have found a way to fix the batteries on its new 787 Dreamliner, over
a month after signs of burning grounded all 50 of the planes in operation. However,
transport watchdogs are yet to decide whether and when to allow the planes to fly again.
BOEING NEARS DREAMLINER FIX
EASYJET will today face tough
questioning from its major
shareholder Sir Stelios Haji-Ioannou,
who has called for outgoing
chairman Sir Mike Rake to resign
immediately.
Sir Stelios yesterday published a
list of nine questions he will put to
the EasyJet board at todays
shareholder meeting, covering his
concerns about plans to buy new
aircraft, the length of time served by
non-executives, and the size of the
dividend.
EasyJets founder will also vote
against the firms remuneration
report.
EasyJet faces
AGM questions
BY MARION DAKERS
GALLIFORD TRY yesterday said a
robust first half for its
housebuilding division helped
offset a tough construction
market, with a record number of
homes sold in the period.
The group yesterday said it
completed 1,364 homes in the six
months to 31 December, up from
1,352 the same time last year and
ahead of expectations.
Average selling prices increased
by 6.4 per cent to 216,000 while
housebuilding net margins
improved to 12.1 per cent.
We will retain our focus on the
more robust southern market,
Galliford Try posts strong first
half for housebuilding division
BY KASMIRA JEFFORD
where we currently have around
75 per cent of our landbank and
where we continue to see good
opportunities to acquire new land
at attractive prices, Greg
Fitzgerald, chief executive said.
In construction, the group said
markets remained difficult, with
revenues falling 12 per cent to
439.8m compared with 499.9m
in the first half of last year.
This dragged down overall
group revenues, which fell nine
per cent to 678.3m. Pre-tax
profits were flat at 32.3m.
Margins also slipped from 2.2
per cent last year to 1.9 per cent as
competition for contracts put
pressure on the business.
IN BRIEF
PZ Cussons sells Polish brands
nPZ Cussons is to sell its Polish home
care brands to German consumer
good giant Henkel for 46.6m in cash,
the group announced yesterday. The
deal, which includes the sale of
laundry detergent and washing up
liquid, is still subject to merger control
clearances and is expected to be
completed in the next six months. PZ
Cussons said the sale will allow it to
focus on growing its personal care
division in the country.
Regus raises its offer for MWB
nRegus, the office space supplier, has
raised its offer to acquire MWB
Business Exchange to 65.6m,
outbidding Hong Kong billionaire
investor Anson Chan, who made an
offer of 65m last week. Regus, which
wants to expand its portfolio to new
locations through MWBs business
centres, had previously made an offer
of 40m. Pyrrho, which already owns
a 17 per cent stake, is not allowed to
make another offer.
Vicky Pryce jury dismissed
nEconomist Vicky Pryce faces a
retrial for allegedly helping her ex-
husband Chris Huhne dodge a driving
ban, after a jury failed to reach a
verdict yesterday. The judge attacked
the jurys fundamental deficit in
understanding of the trial process
and scheduled a new hearing on
Monday. Huhne, a former cabinet
minister, pleaded guilty to perverting
the course of justice earlier this month
and is awaiting sentencing.
FRENCH IT services firm Capgemini
yesterday reported a 1.2 per cent
surge in revenues to 10.3bn
(8.9bn) for the past year.
It marks the first time the IT
services group, Europes largest
based on market capitalisation,
has seen full-year revenues top
10bn.
The 1.2 per cent revenue rise is
on a like-for-like basis, stripping
out the impact of the rise of the
US dollar and sterling against the
euro, as well as the contribution of
Prosodie the French internet and
telecoms services company it
bought for 382m in 2011.
Operating margin, which
measures the difference between
revenue and operating and
administrative costs and is used
as a key way to judge the groups
performance, edged up to 7.7 per
cent in 2012 compared to 7.4 per
cent in 2011.
Capgemini predicted this
margin would rise further in 2013,
hitting 8.3 per cent.
Capgemini sees
revenue growth
over 1pc in 2013
BY KATIE HOPE And despite the economic
turmoil, Capgemini said it
expected to deliver similar levels of
revenue growth in 2013.
Paul Hermelin, chairman and
chief executive officer of
Capgemini, described 2012 as a
solid performance.
Hermelin also said the firm had
strengthened its global focus.
While France remains its top
revenue earner, it said North
America saw organic revenue
growth of seven per cent, while
like-for-like revenue growth in the
UK and Ireland was 0.9 per cent.
Dulux maker AkzoNobel says it
plans to slash its costs quicker
THE NEW chief executive of Dutch
paints and chemicals group
AkzoNobel said yesterday it plans to
speed up cost-cutting and focus on
improving returns and cash
generation over the next three years.
The firm, best known for its
Dulux brand, is aiming for a return
on sales of nine per cent, return on
investment of 14 per cent by the
end of 2015, and to trim its debt to
earnings ratio.
The firm yesterday reported
fourth-quarter Ebitda of 363m
(316.9m), slightly up from a year
ago, and a quarterly net loss of
59m, on revenue of 3.67bn.
AkzoNobels results over recent
quarters have been hit by fragile
BY CITY A.M. REPORTER
consumer demand and weak
housing markets in the United
States and Europe, as well as high
costs for raw materials such as
titanium dioxide, a pigment
used in paint.
In the last six months, it
has taken a huge writedown
on its purchase of Dulux
paint maker ICI and sold its
struggling North
American decorative
paints arm to US rival
PPG Industries for
$1.1bn to focus on
its larger
European and
faster-growing
businesses.
Ton
Buechner, who
took over from Hans Wijers as chief
executive in April 2012, had
originally planned to outline his
strategy alongside the third-quarter
results last year, but had to
postpone the
announcement when he
went on medical leave.
AkzoNobels new
financial targets are
designed to drive
operational excellence, cash
generation and
accountability and
demonstrate a clear focus on
creating value for
shareholders, the company
said in a statement.
Cap Gemini
20Feb 14 Feb 15Feb 18Feb 19Feb
37.25
36.50
36.75
37.00
36.25
36.00
35.75
37.50
36.86
20Feb
Losses linked to Dulux
have dogged AkzoNobel
CARLOS Slim, the worlds richest
man, has backed KPNs plan to
raise 4bn (3.49bn) and will take
two board seats as he battles to
turn around a losing investment
in the Dutch telecommunications
group.
However, the Mexican telecoms
tycoon, whose America Movil
owns just under 30 per cent of
KPN, said he has no plans to
launch a full takeover as it
struggles with cut-throat
competition and high investment
costs.
KPN shares slid over nine per
Carlos Slim backs KPN plan but
steers clear of a takeover offer
BY CITY A.M. REPORTER
cent to an 11-year low yesterday.
The announcement was also a
blow to America Movil shares,
since Latin Americas biggest
phone company will have to
invest a further 900m in KPN to
maintain its 29.77 per cent stake.
America Movil has already
pumped about 3bn into KPN as
part of a drive to expand in
Europe. The Mexican group also
has a stake in Telekom Austria,
which is underwater as well.
KPN shares have slumped as it
battles with a heavy debt load and
stiff competition and after paying
much more than expected for a
4G mobile licence.
THURSDAY 21 FEBRUARY 2013
20
NEWS
cityam.com
Carlos Slim, who made his fortune in mobile phones, is the worlds richest man
Jones Lang LaSalle
The real estate services firm
has announced the
appointment of James Dolphin
as lead director for
international retail to support
its cross-border expansion.
Before joining the firm as a
national director in 2005,
Dolphin was an associate
partner at Blair Kirkman.
Societe General
Zak de Mariveles will join the banks corporate and
investment banking division as head of UK independent
financial adviser sales in its global markets business. De
Mariveles joins from RBS, where he was most recently a
managing director and responsible for its UK listed
products business. He is also founder and first chair of
the UK Structured Products Association.
Berenberg Bank
The European investment and private bank has
announced the appointment of two senior analysts to
its utilities equity analysis team. Andrew Fisher joins
from Espirito Santos investment division, where he
spent the last three years as an equity analyst. Lawson
Steele also joins from Espirito Santo, where he was
most recently head of power research.
Promontory Financial Group (UK)
Tim Roberts has been appointed chief executive of the
consulting firms London practice. He joins from Ignis,
where he was chief operating officer. Prior to Ignis,
Roberts was a senior partner at McKinsey, where he led
its UK financial services practice.
Carmignac Gestion
The asset management firm has appointed Mikael
Fellbom as head of countries for the Nordics region. He
was most recently head of business development at
UFFI Ream and Corum AM in Paris.
CBRE
Chris Brett will join the real estate advisory firm as head
of international investment for its UK business. Brett
joins from LaSalle Investment Management, where he
was European head of strategic partnerships and
responsible for relationships with major institutional
investors in Asia and the Middle East.
Hyperion Insurance Group
DUAL, the groups underwriting arm, has appointed
Alan Grant as non-executive chairman of its
international board. He has previously held senior
positions at Converium and CNA Reinsurance.
WHOS SWITCHING JOBS Edited by Annabel Palmer CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
UPMARKET wealth manager
Rathbone Brothers yesterday said
people withdrawing funds to
maintain their standard of living
had contributed to a small fall in
organic fund growth last year.
Despite posting a solid 13 per
cent increase in funds managed up
to 18bn and adding 1,100 more
clients, money leaving the groups
investment funds increased from
about 870m to 1.16bn. Inflows
were flat at 1.6bn.
The company, which was set up
in 1742, said the loss of a big client
cut 31m from investment funds
managed but that people dipping
into their savings to maintain
their lifestyles had also had an
impact.
Andy Pomfret, chief executive,
said: Anecdotally there are clients
Rathbones stays the course
despite dip in fund growth
BY MICHAEL BOW whose income has been squeezed
Its got tougher to generate
income, and theyre eating into
their capital.
Pre-tax profits at the group were
up slightly to 29.2m, while it also
increased its dividend 1p to 47p.
The company also announced
the appointment of former
William de Bro chief executive
Philip Howell as deputy chief
executive, underscoring its
commitment to boost growth.
Pomfret said he hoped to
continue with the firms core
strategy of growing the business
organically and through bolt-on
acquisitions in the year ahead.
Weve proven ourselves to be
pretty good at it, he said. The
firm snapped up two smaller
boutiques in 2012, R.M. Walkden &
Co in April and AIB Jersey, which
it purchased in October.
THURSDAY 21 FEBRUARY 2013
21
cityam.com
In association with
LONDONREPORT
T
HE FTSE 100 benchmark equity
index edged up yesterday to
touch fresh five-year highs but
its failure to close above a key
technical level led some traders to
expect a minor, near-term sell-off.
The blue-chip FTSE 100 index closed
up 0.3 per cent, or 16.30 points higher,
at 6,395.37 points - its highest level
since early 2008.
The FTSE fell towards the end of the
trading session, however, down from
an intraday high of 6,412.44 points.
Traders said the fact the index could
not hold above the 6,400 point level,
seen by many as key to more near-
term gains, meant it was now more
likely that the market would fall in
the coming sessions.
There are reasons to be bullish but
we do expect a light correction of
around three percent over the next
week, said JN Financial trader Rick
Jones. Theres an opportunity to
book some profits, he added.
Jones said he had sold the FTSE 100
at around the 6,400 point mark yes-
terday. Jones said the market could
retreat to around 6,200 by the end of
this week, before eventually recover-
ing to 6,600 by late March or early
April.
Monetary stimulus measures by cen-
tral banks have supported equities in
spite of the weak economy, which is
why most investors remain bullish on
stocks this year.
A poll showed that the Bank of
England was expected to inject more
cash into the economy in 2013.
Insurer RSAwas one of the biggest
drags on the FTSE 100, slumping 14.2
per cent after it cut its dividend, and
rival Aviva fell in its wake, dropping
4.1 per cent.
Economic torpor in much of the
world and competitive insurance
rates globally mean that RSA will
struggle to grow its top line, we
believe, Investec analysts wrote in a
research note, keeping a sell rating
on RSA.
Drinks-can maker Rexamsurged 5.3
per cent to top the FTSE 100 after post-
ing higher profits and raising its divi-
dend.
Bank of America Merrill Lynch ana-
lysts said they were keeping a buy
rating on the stock.
Darren Easton, director of trading at
Logic Investments, said there were
signs the FTSE's strong start to 2013
was fading slightly.
The market has risen eight per cent
since the start of 2013, against a 5.8
per cent gain in the whole of 2012.
It does feel tempting to call the top
of the market here, Easton said.
Securequity sales trader Jawaid
Afsar said he would look to book prof-
its on the rally by shorting the mar-
ket, namely taking out bets on future
falls.
If the market continues to go high-
er, I would be looking for opportuni-
ties to short the market, he said.
FTSE surges to
highest level in
over five years
CITY
YOUR ONE-
STOP SHOP
BROKER VIEWS AND
MARKET REPORTS
FTSE
20 Feb 14 Feb 15 Feb 18 Feb 19 Feb
6,320
6,340
6,360
6,380
6,400
6,420
6,395.37
20 Feb
DASHBOARD
Wall St drops
as Fed minutes
spark concern
U
S stocks fell the most in three
months and a key gauge of
market volatility spiked
yesterday after minutes from
the US Federal Reserves most recent
meeting suggested the central bank
may slow or stop buying bonds
sooner than expected.
The minutes from the Feds January
meeting showed many officials voiced
concern last month over potential
costs of more asset purchases, suggest-
ing that the program, known as QE,
may slow before the pickup in hiring
it was intended to deliver.
What Wall Street wants to hear is
an absolute sign that the Fed will con-
tinue with QE for the indefinite
future. When it says we may end it
faster, that just raises the uncertainty,
and the market hates that, said Todd
Schoenberger, managing partner at
LandColt Capital in New York.
Yesterdays slide marked a rare
return of nervousness to markets
after their solid march higher this
year. The CBOE Volatility index, or the
VIX, a measure of investor fear,
jumped 19.3 per cent - the biggest
daily gain for the VIX since November
2011. In a sign of broad market weak-
ness, the number of declining stocks
outnumbered advancers by a ratio of
more than 3 to 1 on both the New
York Stock Exchange and the Nasdaq.
Prominent stocks in a range of sectors
booked sharp losses after disappoint-
ing earnings and outlooks, including
homebuilder Toll Brothers, fertilizer
maker CF Industries and oil and gas
producer Devon Energy.
Spot gold dropped to the lowest
level since July.
On Wall Street, the Dow Jones indus-
trial average dropped 108.13 points, or
0.77 per cent, to 13,927.54 at the close.
The Standard & Poors 500 Index fell
18.99 points, or 1.24 per cent, to
1,511.95. The Nasdaq Composite Index
lost 49.19 points, or 1.53 per cent, to
end at 3,164.41.
BESTof theBROKERS NEW YORK
REPORT
BARCLAYS
Goldman Sachs yesterday removed the bank from its pan-European buy list and
downgraded it to a neutral rating, with a 12-month target price of 340p, down
from 350p. The broker thinks Barclays latest operational targets contain a
significant execution risk, and leave the bank with the lowest medium-term return
on equity target of its peers.
Barclays PLC
14Feb 15Feb 18Feb 19Feb 20Feb
p
324
322
326
318
316
320
328
319.95
20 Feb
COMPASS
UBS has cut the catering firm from buy to neutral and raised its 12-month target
from 770p to 790p. The broker remains impressed with Compasss growth in the
past year, and has upgraded its earnings forecasts by a further two per cent on
currency grounds. UBS also expects cash returns for shareholders to rise to 7.1 per
cent of the firms market capitalisation by 2015.
Compass Group PLC
14Feb 15Feb 18Feb 19Feb 20Feb
p
800
795
805
785
780
775
790
810
809.50
20 Feb
PEARSON
Numis rates the publishing group neutral with a target of 1,320p ahead of full-
year results on Monday. The broker will be focusing on Pearsons outlook for the
coming year, following a cautious tone in its pre-close update, and would like to see
progress on the sale of Penguin. For now, Numis sees better value in rivals Reed and
DMGT.
Pearson PLC
14Feb 15Feb 18Feb 19Feb 20Feb
p
1,200
1,190
1,210
1,180
1,220
1,206.00
20 Feb
To appear in Best of the Brokers, email your research to notes@cityam.com
Capital Spreads is a trading name of London Capital Group Ltd (LCG), which is authorised and regulated by the Financial Services Authority and a member of the London Stock Exchange.
a) Eat less pork and consider
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b) Sell the Euro in expectation that the
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Focus swings back onto the PIIGS
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operate in industries with high
barriers to entry, enjoy superior
pricing power, and have a high
percentage of recurring sales. They
are exposed to fast-growing regions,
and have robust balance sheets.
EMERGING ASIA
While the growth potential of
emerging markets is not a new
phenomenon, we are at an
inflection point. The IMF estimates
that 2013 will be the first year
where the total GDP of these
emerging markets exceeds that of
advanced economies. And given the
current challenges facing developed
nations, we see this relatively strong
performance continuing.
We expect the Asia sector
(excluding Japan) to attract the most
investment, followed by Latin
America, emerging Europe and
Africa. As the largest regional group
within emerging markets, Asia
offers more liquidity for foreign
investors, as well as potentially
stronger currencies. At the same
M
ANY consumers are aware of
the benefits that come with an
individual savings account
(Isa). You wont pay capital
gains tax on your Isa investments, nor
will you pay income tax on your Isa
savings, and you dont have to
mention Isas on your tax return. But
in this tough economic climate, it is
important to ensure that youre
getting the best interest rate, and that
youre not paying unnecessary charges
on your shares Isas. Cash Isa rates are
constantly changing, meaning the
best buys a few years ago could now be
giving you measly returns.
So with the end of the tax year fast
approaching, now is a good time to
review your investments to take full
advantage of the tax breaks available
to you. Not all cash ISAs accept trans-
fers in, especially the top paying ones.
But some do, and transferring is both
quick and easy. But there are a few
things to bear in mind before making
the move.
BY THE BOOK
As cash Isas are generally variable rate,
MoneySavingExpert recommends
checking every six months that your
rate is still competitive. If not, transfer
to a better payer, or you could look to a
fixed rate account. This is particularly
appropriate if youre happy to put cash
aside but you will run the risk of
rates improving in the meantime.
Be aware that the self-transfer of
Isas isnt allowed. If you withdraw the
Isa and move it yourself, it will lose its
tax-free status. Instead, you need to
speak to your new provider and com-
plete a transfer form, which should
include a note you can send to your
T
HE prospects for the US
economy, slower growth in
China, and European summits
all weighed on the minds of
investors in 2012. And this led
many to seek shelter in safe havens,
like cash.
But now investment austerity is
set to characterise the investing
landscape in 2013. The new
normal low yields, greater
correlation between the
performance of asset classes, and
waning economic growth means
that attractive investments will
remain relatively scarce. The pre-
crisis days of high returns, without
taking on much risk, are gone for
the foreseeable future.
But there still are opportunities
for savvy investors who are able to
look beyond the headlines, adopt a
disciplined approach, and set
realistic long-term investment goals.
CORPORATE EUROPE
For example, despite talk about
economic and political problems in
the Eurozone, much of Europe
remains fundamentally strong. GDP
growth may be sluggish, but the
European corporate sector has a
wealth of world-class companies.
Corporate Europe has become
more dependent on emerging
markets and the US, rather than on
its own domestic economies. And
these companies have taken
advantage of the crisis to clean up
their financial houses unlike their
governments.
Compared with historical
averages, equity valuations look
cheap, due to risk aversion and
deleveraging by international
investors. Therefore we expect that
recent underperformance may be
coming to an end. We continue to
emphasise the importance of
resilient equities, which exist in
different sectors across the
continent, from healthcare to
industrials. These companies
time, interventionist policies by
some governments in Latin America
may pose risks to asset prices, while
emerging Europe may remain in the
shadow of its deleveraging
neighbour.
ACTIVE ON RISK
Another issue playing on the minds
of investors is that of rising interest
rates, which have resulted in
exaggerated fears about fixed
income securities. Investors that
look beyond these risks, however,
and select actively managed
investments may, in fact, benefit
from higher yields over time.
Risk premiums declined in fixed
income markets around the globe
during 2012, making defensive
positioning important. But this year,
an emphasis on shorter maturities,
favourably mispriced sectors, and
ample liquidity should provide
attractive risk-adjusted returns. It
will also provide investors with the
flexibility to reposition their
portfolios when better
A few forms will enable you to tranfer to a better deal
THURSDAY 21 FEBRUARY 2013
23
cityam.com
PERSONAL FINANCE MANAGEMENT WEALTH
Three opportunities for investors in 2013
opportunities present themselves.
Being active and remaining nimble
is key to navigating what promises
to be a more nuanced fixed income
environment.
These are just a few examples of
the opportunities available. But they
should not detract from the
importance of building a diversified
portfolio. Risk should be based on
your own personal circumstances,
and you must understand how
much you are willing to tolerate,
and how liquid you would like your
portfolio to be. In many cases,
investors need to face the truth, and
recalibrate their expectations of the
returns that they can expect to
achieve over time, without going
beyond their risk tolerance.
Finally, it has never been more
important for investors to actively
review the state of their portfolios
with their advisers. This will help
your portfolio to remain aligned to
your long-term objectives.
George King is head of portfolio strategy
at RBC Wealth Management.
It is much easier to
transfer your account
than you may think,
says Annabel Palmer
INVESTMENT
COMMENT
GEORGE KING
How to make the most of your Isa
existing Isa company. More often than
not, your new company will then take
care of everything, including transfer-
ring the money for you.
Transferring a cash Isa will only be
beneficial if the costs are not too pro-
hibitive. Christina Bridge of the
Investment Management Association
highlights two fees to watch out for
dealing fees, covering the cost of the
outgoing manager selling securities
and the new manager purchasing
securities so you can leave and enter
the funds; and a transfer fee that may
be charged by the outgoing manager
to process your switch. A small fee
from your current provider may not
affect you too much, but a higher
penalty could mean the financial gain
from switching is negated by the trans-
fer charge.
ONE-WAY TICKET
Existing Isa balances must be trans-
ferred in full, but you have the option
to transfer all or part of any Isa savings
from previous tax years to a new
provider. It isnt possible to transfer
money from a stocks and shares Isa to
a cash Isa, but you can transfer money
from a cash Isa into a stocks and shares
Isa. So if you do choose to move your
cash into an investment Isa, you wont
be able to reverse the decision later.
Although you may want the security
of a cash buffer for emergencies, bear
in mind that low interest rates and
high inflation means your cash Isass
real capital value will slowly be eroded.
Research by Moneyfacts has found that
the average rate on an Isa now is just
1.74 per cent rate, compared with 2.55
per cent this time last year. Stocks and
shares Isas offer the possibility of
greater long-term returns provided
you are prepared to accept the risk to
your capital, and the fluctuations in
income that investments produce,
says Catherine Penney, vice president
of Barclays Stockbrokers.
But if your risk appetite is fairly low,
you do have the option of corporate
bonds or gilts, less volatile investments
that will still generate regular interest.
These can be useful to supplement
pensions in retirement, adds Penney.
But, says Jason Hollands of BestInvest,
yields are currently low and valua-
tions high, so they may not be such a
safe haven after all.
CONSOLIDATING YOUR SHARES ISAS
With many Isa providers charging an
annual management fee, consolida-
tion could be a good option. Having
your Isas and other investments like
unit trusts or Sipps in a single
account means charges could be
reduced and it will give you better con-
trol of your investments. You can login
online to see valuations, performance
analysis, and you may be able to adapt
your portfolio to capitalise on chang-
ing market conditions. If you do decide
to make changes, they can then be
enacted quickly and easily.
In contrast, if you hold your invest-
ments in multiple Isa accounts with
different providers, you may find you
are limited in each to switching into
another fund offered solely by that
provider, says Hollands. Make sure,
however, that consolidating multiple
old Isas doesnt push your combined
savings with one financial institution
over 85,000, as that would put your
funds over the governments deposit
insurance schemes limit.
BestInvests Spot the Dog guide has
highlighted that a large number of
investors have billions stuck in poor-
performing investment funds and
many more in pedestrian investments
that could be upgraded. So dont let
inertia stop you from taking action:
there is no need to stick with poor
returns when a few forms will enable
you to move elsewhere.
TOP RATE CASH ISAs
Bank Rate Allows previous Minimum Deposit
Isa transfers?
Cheshire Building 2.5% AER includes 2% bonus Yes 1,000
Society until 21 July 2014
NatWest 2.5% variable AER Yes 30,000
First Direct 3% AER Yes 40,000
Source: MoneySavingExpert.com
T
HE Monetary Policy
Committees (MPC)
minutes of its meeting on
20 February make some
very interesting reading.
They suggest that the Committee
is ready to adopt a more flexible
approach to policy-making. And
of particular interest is that, for
an unprecedented fifth time,
governor of the Bank of England
Sir Mervyn King voted in the
minority with two other
members Paul Fisher and David
Miles for an additional 25bn
of quantitative easing.
This is the second time King
has been in the minority on
making asset purchases; he was
also in a minority of three in
June 2012, when he voted with
Miles and Adam Posen for an
extra 50bn of quantitative
easing. Further, King has voted
against the majority three times
over interest rate rises which
he voted in favour of twice in
2002 and once in 2007.
This wouldnt happen in the
United States, and I suspect it
wont happen in Britain for long,
M
ONETARY policy in the UK
is becoming increasingly
confusing. When the Bank
of England assumed
responsibility for setting interest
rates in 1997, it was given a clear
objective keeping inflation on
target at a low target level (retail
price index, excluding mortgage
interest payments (RPIX) at 2.5 per
cent, and then consumer price
index (CPI) at 2 per cent). And until
the financial crisis, the Monetary
Policy Committee (MPC) succeeded
in doing this.
Since 2008, however, inflation has
been persistently high hitting 5
per cent twice and averaging close
to 3.5 per cent. At no point has any
action been taken by the MPC to
bring inflation back to the target.
Instead, the MPC has risked adding
to inflationary pressures by inject-
ing more money into the economy
through quantitative easing in
2011 and 2012.
In its inflation report last week,
the MPC acknowledged that the
combined impact of these policies
and other factors meant it was
cityam.com/forum
A weaker pound will
squeeze consumers,
and is also likely to hit
UK economic growth
THEFORUM

24
THURSDAY 21 FEBRUARY 2013
ANDREW SENTANCE
Confusing Bank policy is failing to
contain persistently high inflation
The hawk and the dove give their verdict
unlikely that inflation would come
back to the 2 per cent target in the
next two years. Indeed, inflation is
likely to rise above 3 per cent in the
short-term.
But despite all this, we learned
from the MPC minutes released
yesterday that three of its members
including the outgoing governor
Sir Mervyn King wanted to inject
more quantitative easing, even
though the response of the econo-
my to the same medicine in late
2011 and last year was very disap-
pointing.
Fortunately, the majority of the
Committee resisted this pressure.
But the foreign exchange markets
took a clear signal from the minor-
ity vote, and sterling fell below
$1.53 against the US dollar and
1.15 against the euro its lowest
value against both currencies for
over a year. Sterling is getting little
support from the statements of
ministers and Bank officials. And
with the current combination of
disappointing growth and high
inflation, it seems likely to sink
further in the weeks and months
ahead.
Yet a weaker pound can only
make the outlook for inflation
worse, as it will push up the value
of imported goods. And because
this in turn squeezes consumers, it
is also likely to hit economic
growth. As we saw in the aftermath
of the big fall in the pound five
years ago, the boost to UK exports
of weaker sterling doesnt offset
the consumer squeeze from higher
import prices.
In addition, the split vote on the
MPC sends out a very confusing sig-
nal about the Committees com-
mitment to low inflation. Coupled
with all the discussion of flexible
inflation targets and perhaps a
shift away from inflation targets
altogether, many people may con-
clude that the Bank is giving up on
its commitment to price stability
and low inflation.
All this is sadly reminiscent of the
late 1960s and 1970s the belief
that a falling pound will help the
UK economy and rising inflation
will prove temporary and can be
contained. It didnt work then and
it is not working now.
Andrew Sentance is senior economic
adviser to PwC and a former member of
the Bank of Englands Monetary Policy
Committee.
given that King retires in June
and the other members will not
want him left out on a limb. As
such, I suspect that two or more
will vote with him over the next
few meetings. And this means
that additional easing is coming,
as it should, even before Capable
Mark Carney, the Bank of
Englands knight in shining
armour, takes over in July.
Carney, the poor chap, had
better deliver quickly, given the
high expectations. If he doesnt,
the press will be all over him.
But due to the parlous state of
the British economy, it is hard to
see that he will be able to do
much, and the honeymoon will
be over all too quickly. One thing
we do know, however, is that he
plans to loosen monetary policy
even further. As he should.
These were very dovish
minutes which, rightly in my
view, gave extremely short shrift
to misguided inflation hawks
like Patrick Minford and Andrew
Lilico, who have been pushing
for interest rate increases. Their
stance pays insufficient
attention to the young, the
unemployed and the poor, who
have suffered most from
Britains recession.
And the most telling sentences
to emerge from the minutes, in
my view, are these:
Attempting to bring inflation
back to target sooner, by
removing the current policy
stimulus more quickly than
currently anticipated by
financial markets, would risk
derailing the recovery and
undershooting the inflation
target in the medium term. The
Committees remit was to deliver
price stability, but to do so in a
way that avoided undesirable
volatility in output.
The stimulus must be kept
going as growth disappoints
just look at the horrible retail
sales numbers. The MPCs fear is
still of deflation, not inflation.
Sorry savers, you did well from
the house price boom, as well as
the recent burst in the equity
markets: the FTSE is up nearly 9
per cent this year already.
Inflation is the least of our
worries; raising rates would be a
disaster right now. I suspect we
wont see a rate rise for five
years at least. Thankfully, more
monetary stimulus is on the way.
The hawks dont know what
they are talking about.
David Blanchflower is Bruce V
Rauner professor of economics at
Dartmouth College, and a former
member of the Bank of Englands
Monetary Policy Committee.
DAVID BLANCHFLOWER
Sorry savers: More easing is still
needed to support UK recovery
In association with
DUBLIN
One way fare includes all taxes and charges, in-ight snacks and 12kg hand luggage. Check-in luggage is not permitted for this fare, but can be purchased for an additional fee during online check-in or at the airport. Correct as of 20 February. Non-refundable, non-changeable. Subject to availability.
Additional QE is
coming, as it should,
even before Mark
Carney takes over in July

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.
25
THURSDAY 21 FEBRUARY 2013
Reform for growth
[Re: Time to take drastic action to reboot
Britains feeble economy, yesterday]
Cutting corporation tax and capital gains tax
will undoubtedly increase the incentive for
risk-taking and investment, both
prerequisites for growth. But other
fundamental problems will remain. First,
government spending is currently
unaffordable. The required money cannot
be raised from taxation in an open,
international trading economy like the UK.
Secondly, over-regulation means that even
those who want to set up and grow a
business are weighed down by planning,
employment, licensing and other rules. Tax
reform is certainly necessary to return
Britain to growth. But its far from sufficient.
MikeRock
Cost of nuclear
[Re: Britain continues to fail on energy:
Shale and nuclear offer the answer,
yesterday]
Nuclear power is not a cheap answer to
Britains energy needs. Once the massive
initial investment costs are met, it involves
adding huge capital repayments to the load
cost of every kilowatt generated. This makes
it unattractive at present prices against
every alternative. And thats without the
additional provision for disposal or storage
of nuclear waste. Or is Simon Walker
assuming that taxpayers will pay for this
separately to hide the actual cost, as with
the present generation of nuclear power
stations? Nuclear is also not a short-term
investment.
LeeHorwich
O
NE of the best ways to ease
the tax burden on low
earners is to increase the
personal allowance, the
amount you can earn before
you start paying income tax. Letting
people keep more of their own
money is far better than taking it
away in tax and giving it back in
benefits. Fiscal churn is only good for
the bureaucrats paid to manage the
system, and the politicians who can
pretend they are doing people a
favour by robbing Peter to pay Paul.
But some advocates of lower taxes
are uncomfortable with the idea of
increasing the personal allowance.
They can even be worried enough to
support pointless complications in
the tax code like a new 10p rate.
There is, of course, a moral argu-
ment that everyone should earn a
stake in society by paying tax. But
those on low incomes still pay con-
sumption taxes like VAT and excise
duties. There is nothing magical
about income tax that connects us all
as citizens. Were we less of a nation
before it was introduced to fight
Napoleon? When it was abolished
after the Battle of Waterloo, did that
rend the country asunder? Are those
with incomes too modest to make
them liable for income tax somehow
lesser citizens than the rest of us?
The more credible argument is
political: it will be too easy for low
earners to vote for higher and higher
income tax on everyone else if they
dont pay it themselves. That argu-
ment makes some sense. But it does-
nt seem to fit the evidence.
Margaret Thatcher was elected in
1979 on a simple promise: we shall
cut income tax at all levels. When
she made that pledge, the personal
allowance was 1,165. That is around
the same level it is today: 31 per cent
of average earnings. By the time of
her last victory in 1987, it had risen to
As UK unemployment falls again, should we
be concerned about stagnant productivity?
YES
The latest unemployment figures show that the UK has a growth
and productivity problem, not a jobs problem. The economy has
shown an ability to destroy and create jobs at an astonishing rate,
as it has responded to the cutbacks in public sector employment
and in retail. This is good news. It indicates that fiscal stimulus is
not needed and would be undesirable. However, our growth and
productivity problem, reflected in falling real wages and living
standards, is serious. These problems cannot be solved by more
government borrowing and spending. Indeed, in order to see the
economy growing again, we must cut government spending from
its current extremely high levels, reduce taxation and deregulate
the economy. Unfortunately, in many key areas, the government is
moving in precisely the opposite direction.
Philip Booth is editorial and programme director at the Institute
of Economic Affairs.
Philip Booth
NO
Victoria Clarke
The jobs market is the relative bright spot for the UK economy.
There has been a steady but slow decline in unemployment, and
there is growing evidence that the quality of the recovery
appears to be improving, as more part-time and self-employed
workers move over into the full-time employed bracket. This is
very encouraging, and indicates that the jobs recovery has still
got legs left in it. We dont see a reversal in the fortunes of the
labour market coming any time soon. While the so-called
productivity puzzle is perplexing, it is a bit of a red herring and it
shouldnt panic us. The fact that the labour market figures are
holding up is a reason to be optimistic. It will help workers to
maintain skills and therefore drive an eventual recovery in the
broader economy, and then we will finally see that gap in
productivity start to close.
Victoria Clarke is a senior economist at Investec.
Taxing poor less
wont make them
back hikes for rest
2,425, but fallen slightly as a share of
average earnings to 30 per cent.
When Tony Blair was elected in
1997, the personal allowance had fall-
en to 28 per cent of average earnings.
And it continued to drop. By the 2001
election, it was 26 per cent and when
Labour was re-elected for a third term
in 2005 it was just 24 per cent of aver-
age earnings.
If the Thatcher government that cut
income tax was elected with a rela-
tively high personal allowance, and
the Labour governments that ulti-
mately gave us the 50p rate were elect-
ed with a low personal allowance, the
allowance isnt the problem.
Ramesh Ponnuru, senior editor of
the US magazine National Review,
has made the same point about
America: The US that began the
Democrats 40-year reign in the
House of Representatives in 1954 had
roughly the same percentage of non-
payers of income tax (24.9) as the U.S.
that ended it in 1994 (24.4).
Of course, economic interests affect
political choices. But the final deci-
sion is the result of a more complicat-
ed calculation than whether or not
you pay income tax. There are no fun-
damental political obstacles to the
right answer: let people earn enough
to pay for the basics without the tax
system getting in the way, then
charge a simple proportionate rate so
that, if you earn twice as much, you
pay twice as much.
Matthew Sinclair is chief executive of the
TaxPayers Alliance and a member of the
2020 Tax Commission.
MATTHEW SINCLAIR
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59
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Dont discount the ability of the Bank of
England to use voting as a method of policy
communication to the markets.
@Josh_CityIndex
Unemployment fall shows the economy is
being rebalanced away from dependence on
the state. Theres no need for more stimulus.
@DanHannanMEP
It looks like the pound will suffer very badly
in the near-term but this is exactly what
the Bank of England wants.
@Nick_Beecroft
Why did the Irish 4G auction raise 700m,
but the UK raise only 2.3bn? 14 times the
population, but only three times the revenue.
@DuncanWeldon
BEST OF TWITTER
LETTERSto the editor
WE WANT TO HEAR YOUR VIEWS
E: theforum@cityam.com | Comment: cityam.com/forum | @cityamforum
THURSDAY 21 FEBRUARY 2013
cityam.com
26
LIFE&STYLE BY STEVE DINNEEN TECHNOLOGY
We quiz BlackBerry designer Todd Wood on the new range of phones
B
LACKBERRY UNVEILED its two latest
models earlier this month. We spoke
to the man behind the new design
about the new features and how he
dealt with the pressure and expectations.
HOW DO YOU KEEP THE BLACKBERRY
IDENTITY WHILE PUSHING THE DESIGN?
That is the challenge. We have this great
base of customers who love our products,
so we asked ourselves what elements are
essential. People recognise things like the
red light as a BlackBerry attribute. The
same was true of the keyboard. Were
famous for it and they are the best. We
have customers who insist they want the
keyboard, and thats why, with Blackberry
10, we have the Q, which stands for
QWERTY keyboard. Thats always the
thought process: is it essential? We dont
want to just redo the old Blackberry, we
want to reinvent and reengineer the
brand.
DID YOU FEEL UNDER PRESSURE
WORKING ON THESE PHONES?
Without a doubt. Theres so much focus on
this category, its part of social culture. But
the engineering were working on is
necessary and if we deliver, itll be
successful. People are always concerned
about how things are going; its just about
really believing in what youre doing.
HOW DO YOU KNOW WHAT PEOPLE ARE
GOING TO WANT TWO YEARS FROM NOW?
As designers and engineers, were always
envisioning the future and where things
are headed. Its important to have a road
map and a vision. You need to ask what
the problems are going forward,
otherwise youre just reacting.
HOW MUCH DID YOU CONSIDER YOUR
RIVALS?
We are aware. Its an art of war. You need to
know your competition but its more
important to know yourself as a brand and
understand what the values of our
customers are and how theyre different to
our competitors. If you become too
distracted by other brands you lose it.
PEOPLE HAVE SAID THE Z10 LOOKS LIKE
THE IPHONE...
The differences become very clear when
you start to look at its utility. It doesnt
slip out of your hand; it feels good up
against your ear. Theres no home
button, the navigation is gesture based
and it flows easily between applications.
So there are similarities, like four door
sedans are similar, but there are
differences. Theres a sleekness to the
new phones, an elegance and they are
understated in their design. This allows
the user experience of BB10 to shine
through. People look at it and think
thats fresh, but its still recognisable
as a BlackBerry.
TELL US ABOUT THE GESTURE CONTROLS
It feels like a noticeable change to begin
with but its easy to learn and once you do,
youll never forget. Its new and whats
interesting with innovation is that people
have this primitive response. They either
love it or they run away from it. But once you
go past the threshold, you cant go back.
Hot in the kitchen: the top gadgets
DeLonghi Icona 310.R
This espresso-maker not only looks
great in your kitchen (especially in fire-
engine red), it also makes a knockout
espresso. It is simple to use put
ground coffee in the top and hit go.
149.95, johnlewis.com
Panasonic Automatic Breadmaker
This is the Rolls-Royce of bread-
makers. It comes with a
diamond-tipped kneading blade and
non stick surface that will create
delicious loaves from scratch.
119.99, currys.co.uk
HAPIfork
If will-power alone isn't helping you
lose weight, enlist the help of your
cutlery. If you're eating too much too
fast, the HAPIfork will notify you by
softly vibrating.
Price: tbc, hapilabs.com
Vitamix 5200
The Vitamix 5200 is one powerful
blender. Whether you are blending
smoothies, dicing onions or making
breadcrumbs, this wont let you down.
The sound could bug some.
469.99, amazon.co.uk
Gorenje iChef +
Thanks to the iChef + you will never have to worry
about burning your food or ensuring consistent quality
when entertaining for large numbers. It comes with a
touch screen display offering a choice of 65 pre-set
recipes to choose from. Select your choice and the oven
does the rest, ensuring the same results every time.
Price yet to be released, gorenje.co.uk
5 Magimix Vision
Sick of eating marmalade on
charcoal? Look no further than the 5
Magimix Vision. With transparent
sides, you can tell when your toast is
just right.
160, houseoffraser.co.uk
SousVide Supreme
SousVide Supreme promises to deliver
real depth of flavour. Seal your
seasoned food in a bag, submerge it in
the 9 litre bath and youre good to go.
349.99, Selfridges.com
Samsung Four Door Refrigerator
Your fridge can put ice cubes in your
drink, but what about bubbles?
Samsung have teamed up with
SodaStream to create a fridge that
dispenses sparkling water.
Price: tbc, samsung.com
Avance Collection Table Grill
Want the BBQ taste but without the
hassle? All you need to do is place food in
the middle and allow the grill to infuse it
with wine, smoke and herb flavours from
reservoirs in the back.
95, phillips.co.uk
Thermomix Blender TM31
If youre a fan of MasterChef you
have probably come across the
Thermomix TM31 blender. The
gadget, which is already proving
a hit with leading chefs, cooks,
weighs, grates, steams, kneads
and minces food. Add water and
washing liquid and it washes
itself too.
885, ukthermomix.com
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built to handle workloads ranging from simple tasks to complex cloud-based and business applications.
Featuring the latest Intel

Xeon

E5-2600 and E5-2400 series processors, these servers can be


customised so that you can select features you need today and add more as your business needs
change. Additionally, IBM Business Partners can help you find the server that meets your needs, and pair
it with the right IBM storage, networking and software solutions for a truly optimised infrastructure.
A new range of customisable servers to support your unique business needs.
1
Pricing quoted is based on IBMs 0% System x Solution Finance offering (FMV lease). Terms & Conditions Apply. Offering availability subject to credit approval; for more details and full Terms and Conditions please visit:
http://www.ibm.com/financing/uk/lifecycle/acquire/xsolutionfinancing.html.
Rates and offerings are subject to change, extension or withdrawal without notice. Prices include VAT at a rate of 20%. IBM hardware products are manufactured from new parts or new and serviceable used parts. Regardless, our warranty
terms apply. For a copy of applicable product warranties, visit http://www.ibm.com/servers/support/machine_warranties. IBM makes no representation or warranty regarding third-party products or services. IBM, the IBM logo, System Storage
and System x are registered trademarks of International Business Machines Corporation registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. For a current list of IBM
trademarks, see www.ibm.com/legal/copytrade.shtml. Intel, the Intel logo, Xeon and Xeon Inside are trademarks of Intel Corporation in the U.S. and other countries. All prices and savings estimates are subject to change without notice, may
vary according to configuration, are based upon IBMs estimated retail selling prices as of 26/09/2012 and may not include storage, hard drive, operating system or other features. Reseller prices and savings to end users may vary. Products
are subject to availability. This document was developed for offerings in the United Kingdom. IBM may not offer the products, features, or services discussed in this document in other countries. Contact your IBM representative or IBM Business
Partner for the most current pricing in your geographic area. 2012 IBM Corporation. All rights reserved.
IBM System x3650 M4 Express
1,549 incl. VAT
Or 43/MONTH OVER 36 MONTHS
1
PN: 7915E3G
Intel Xeon E5-2620 2.0GHz 15M 6C
8GB (1 x 8GB RDIMM)
Open Bay for 2.5" SAS/SATA Hot Swap HDD (8)
M5110e disk controller
Multiburner
550 Watt power supply
Intel Xeon E5-2603 1.8GHz 10M 4C
4GB (1 x 4GB RDIMM)
Open Bay for 3.5" Hot Swap SAS/SATA HDD (8)
M1115 disk controller
Multiburner
750 Watt power supply
DS3524 Express dual controller 1746A4D (1 qty)
300GB 10K SFF SAS drives 49Y1836 (4 qty)
3m SAS cable 39R6531 (4 qty)
IBM System x3500 M4 Express
1,249 incl. VAT
Or 35/MONTH OVER 36 MONTHS
1
PN: 7383E1G
5,297 incl. VAT
Or 147/MONTH OVER 36 MONTHS
1
PN: 1746PBE
IBM System Storage DS3524 Express See For Yourself
The new IBM System x Selection Tool can help
you choose the right server and save money.
www.ibm.com/systems/uk/express1
Contact the IBM Team to help
you connect to the right IBM
Business Partner.
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THURSDAY 21 FEBRUARY 2013
28
cityam.com
LIFE&STYLE FASHION
NAOMI MDUDU
The top shows from fashion week
L
ONDON FASHION Week is a third of a
century old and this season: it showed.
There was a maturity and a sense of
optimism, both in the way the clothes
were presented and in the collections
themselves. And, while some of the outfits
might seem daunting on the
runway, many of the pieces could
easily be paired with wardrobe
staples. Here is the inside track on
our four favourite shows.
TOM FORD
Ford, who usually shows in a
private, intimate presentation,
placed his catwalk in the
aristocratic splendour of
Lancaster House, which was once
part of St Jamess palace. It was a
fitting background for his
collection, which included
embroidered Chinese-inspired
coats and graphic prints on floor
sweeping gowns; bold, block
coloured fur jackets and leopard
printed bombers. The message
was clear: the clinical, austere
spirit that has permeated
collections in all four fashion
capitals since the onset of the recession
is over. Next winter is all about
embracing luxurious fabrics, colour and
decoration.
MULBERRY
This optimistic aesthetic was also
apparent at Mulberry, albeit in a con-
servative way. The labels fantastical
sensibility gave way to something
more grown up; more accessible and
daytime-appropriate. Talking after the
show, designer Emma Hill explained
she wanted to focus on new luxe, which
translated into a, brooding tone. While the
colour palette was black with the odd flash
of white, Hill went to town with quality tex-
tiles and dynamic prints. Oversized checks
appeared on wool coats, dresses came in
rich-toned winter florals and the range also
included thick, textured fabrics, especially
on outerwear. Even the labels iconic
Bayswater bag wasnt exempt from the
image overhaul. Its new incarnation, called
the Suffolk, comes with added hardware
and framing, which lends itself to a more
sophisticated look. This will no doubt result
in a higher price tag than its predecessor.
With bags still forming the lion share of the
brands revenue and older women continu-
ing to be amongst their most important cus-
tomers, the change seems like a logical next
step.
LWREN SCOTT
A willingness to embrace a new everyday
glamour was apparent at LWren Scotts col-
lection. The American, who is the long-term
partner of Rolling Stones star Mick Jagger,
staged her first London show in the grand
hall of Westminsters Institute of Civil
Engineers. Gold was everywhere, particular-
ly adorning the white everyday coats that
opened the show. It worked best when woven
into sophisticated tweed skirt suits, ideal for
making a statement in the office.
Embellishment also appeared on knitwear,
which served as one of the more manageable
ways to incorporate the trend into your
every day wardrobe next season. The plush
jacquards and brocade tai-
lored jackets are a good
way to embrace it too.
CHRISTOPHER BAILEY
Bailey had already
moved away from min-
imalism last season
with the bright
coloured neons he
showed for spring,
but for winter the
colour palette is
more traditional,
with many of
the looks com-
ing in oxblood,
which is shap-
ing up to be a
key colour. The
new take on the brands
crown jewel, the trench coat,
came with rubberised sleeves
and storm flaps, while metal
hardware appeared on the
belt, epaulets and collars.
Rubber also featured on pen-
cil skirts, along with leop-
ard and zebra prints and
thick stripes proof that
Bailey isnt afraid to take
a risk.
While New York was a muted affair, British brands
embraced colour and everyday decadence in a big way
Issa designer Daniella Helayel played with prints
Gold dominated LWrens Scott debut London show Emma Hill embraced new luxe at Mulberry
Inset: Bold
stripes at
Burberry. Main:
Strong
embellished
eveningwear at
Tom Ford
FASHION
SENSE
The message was clear:
the clinical, austere spirit
that has permeated collec-
tions since the onset of the
recession is officially over.

29
TV & GAMES
cityam.com
T
E
R
R
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S
T
R
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A
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BBC1
SKY SPORTS 1
7pmLive Premier League Darts
10.30pmThe Footballers
Football Show12amRingside
1amPremier League World
1.30amThe Footballers Football
Show3amRingside
3.55am-6amLive Test Cricket
SKY SPORTS 2
6pmLive World Golf
Championship 11pmRugby Club
12amAmericas Cup Discovered
12.30amPremier League Darts
4amATP Tour Uncovered
4.30amPremier League World
5am-6amRacemax
SKY SPORTS 3
7pmATP Tour Uncovered
7.30pmPremier League World
8pmThe Rugby Club 9pm
Ringside 10pmWWE: Late Night
Raw12amWWE: NXT
1am-6amWorld Golf
Championship
BRITISH EUROSPORT
7.45pmWorld Superbikes
10.45pmEuropean Poker Tour
11.45pm-12.45amStrongest
Man
ESPN
5.30pmLive UEFA Europa
League Football 8pmLive UEFA
Europa League Football 10.30pm
Goal! Bundesliga Preview11pm
ESPN FC Press Pass 11.30pm
French Ligue 1 Preview12am
NASCAR Now12.30amFreestyle
FIS World Cup Magazine 1am
Live NBA Basketball
3.30am-6amLive NBA
Basketball
SKY LIVING
7pmCriminal Minds 8pmStitch
Me, Lift Me, Tuck Me 9pmThe
Spa 9.30pmMount Pleasant
10.30pmCriminal Minds
11.30pmBones 12.30am
Caribbean Cops 1.25am
Supernatural 2.15amCSI: Crime
Scene Investigation 3.05am
Bones 3.55amMedium4.45am
Nothing to Declare 5.10am-6am
Motorway Patrol
BBC THREE
7pmTop Gear 8pmDont Tell the
Bride 9pmJunior Doctors: Your
Life in Their Hands 10pmWay to
Go 10.30pmEastEnders 11pm
Family Guy 11.45pmAmerican
Dad! 12.30amWay to Go 1am
Junior Doctors: Your Life in Their
Hands 1.55amPeople Like Us
2.55amPramface
3.25am-3.55amWay to Go
E4
7pmHollyoaks 7.30pmHow I
Met Your Mother 8pmThe Big
Bang Theory 8.30pmHow I Met
Your Mother 9pmThe New
Normal 9.30pm2 Broke Girls
10pmMy Mad Fat Diary
11pmDont Blame Facebook
12.05amThe Big Bang Theory
1.05amHappy Endings 1.35am
The Ricky Gervais Show2.05am
The Cleveland Show2.30am
Dont Blame Facebook 3.20am
Franklin & Bash 4amPrivileged
4.40am-6amMade in Chelsea
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 8pmMountain Men 9pm
Counting Cars 10pmStorage
Wars 11.30pmPawn Stars 12am
Counting Cars 1amStorage Wars
2amAmerican Pickers 3amIce
Road Truckers 4amAmerican
Restoration 5amPawn Stars
5.30am-6amStorage Wars
DISCOVERY
7pmBear Grylls: Born Survivor
8pmWheeler Dealers 9pmBen
Fogles Year of Adventures 10pm
Die Hard 4.0: The True Story
11pmAuction Hunters 11.30pm
Auction Kings 12amBen Fogles
Year of Adventures 1amDie Hard
4.0: The True Story 2amSons of
Guns 3amBen Fogles Year of
Adventures 3.50amDie Hard
4.0: The True Story 4.40am
American Chopper: Senior Versus
Junior 5.30am-6amMeerkat
Manor
DISCOVERY HOME &
HEALTH
7pmBaby Whisperer 8pmJon
and Kate Plus 8 9pmA Haunting
10pmMy Strange Addiction
11pmSex Change Uncut 12amA
Haunting 1amMy Strange
Addiction 2amSex Change
Uncut 3amJon and Kate Plus 8
4amBaby ER 5am-6am
Bringing Home Baby
SKY1
8pmArrow9pmHawaii Five-0
10pmNCIS 11pmA League of
Their Own 12amArmed and
Dangerous: Ultimate Forces 1am
Road Wars 3amTerra Nova
4am-6amStargate SG-1
BBC2 ITV CHANNEL4 CHANNEL5
S
A
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E
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L
I
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E
&
C
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B
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6pmBBC News
6.30pmBBC London News
7pmThe One Show
7.30pmEastEnders: BBC News
8pmCHOICE Waterloo
Road: Kacey faces up to her
gender issues.
9pmMeet the Izzards
10pmBBC News
10.25pmRegional News
10.35pmQuestion Time: From
St Pauls Cathedral, London.
11.35pmFILMThe Magdalene
Sisters: Drama, starring
Geraldine McEwan. 2002.
1.30amSkiing Weatherview
1.35am-6amBBC News
6pmEggheads: Quiz show,
hosted by Jeremy Vine.
6.30pmFlog It! Trade Secrets
7.30pmGreat British Menu
8pmThe Planners
9pmMurder on the Victorian
Railway
10pmCharlie Brookers Weekly
Wipe
10.30pmNewsnight: Weather
11.20pmThe Railway: Keeping
Britain on Track
12.20amBrain Doctors
1.20amThe Culture Show1.50am
Sign Zone: Whats Really in our
Food? Panorama 2.20amClose
4am-6amBBC Learning Zone
6pmITV News London
6.30pmITV News
6.45pmCHOICE Emmerdale
7.45pmUEFA Europa League
Live: Liverpool v Zenit St
Petersburg (Kick-off 8.05pm).
10.10pmITV News
10.40pmITV News London
10.50pmThe Jonathan Ross
Show: With Ant and Dec, Tim
Roth and Kesha.
11.50pm The Golden Rules of
TV
12.15amJackpot247
3amRiver Monsters 3.50amITV
Nightscreen 5.05am-6amThe
Jeremy Kyle Show
6pmThe Simpsons 6.30pm
Hollyoaks 7pmChannel 4 News
7.55pm4thought.tv
8pmBritains Secret Shoppers
9pmHughs Fish Fight:
Save Our Seas
10pmWalking Wounded:
Return to the Frontline
11.05pmRandom Acts 11.10pm
Embarrassing Bodies 12.15amFried
Chicken Shop: Life in a Day 1.10am
Inside Natures Giants 2.05amWild
Things 2.30amThe Horse Meat
Scandal Channel 4 Dispatches
3amTony Robinsons Gods and
Monsters 3.55amTime Team
4.50am Countdown 5.35am-6am
Baking Mad with Eric Lanlard
6pmHome and Away
6.30pm5 News at 6.30
7pmPolice Interceptors: 5
News Update
8pmDangerous Drivers
School: 5 News at 9
9pmCHOICE
Jack Taylor: The Guards
10.45pmLaw & Order:
Special Victims Unit
11.45pmTrue Crimes:
The First 72 Hours
12.15amSuperCasino
3.55amHouse Doctor 4.20am
House Doctor 4.45amMichaelas
Wild Challenge 5.10amWildlife
SOS 5.35am-6amWildlife SOS
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5 6
7
8 9
10 11 12 13
14 15 16 17 18 19
20 21
22
23 24
18 27
29 13
20 16
15 8
15 33
12 26
34 3
11 16
3 19
10 16
28 27
9
9
11
17
44
29
7
7
32
21
10
11
23
42
8
6
30
43
4
14
12
10
ACROSS
1 Instances (5)
4 Foot-operated
lever (5)
7 Of a female (3)
8 Small pendant eshy
lobe at the back of
the soft palate (5)
9 Board used with
a planchette (5)
10 Temporary police
force (5)
12 Exclamation of
surprise (5)
14 Terminate before
completion (5)
17 Abrogate (5)
20 Held back, as
of breath (5)
21 Insectivorous
lizard (5)
22 Donkey (3)
23 Be superior to (5)
24 Topic (5)
DOWN
1 Compact mass,
cluster (5)
2 Garden pests
which leave trails
of slime (5)
3 Remove unwanted
hair (5)
4 Person authorised to
act for another (5)
5 Take in uids through
the mouth (5)
6 Goes in front (5)
11 Spherical object (3)
13 ___ de Cologne,
perfume (3)
14 Leisurely walk (5)
15 Relating to
the eye (5)
16 Relating to sea
movements (5)
17 Acute insecurity (5)
18 Small concavity (5)
19 Free (5)
E
J
O
U
R B
A
G
T
4







4
B I S H O P W N
A E A R N I C A
S H A R E S D V
I M S T R O D E
L O V E R R W L
I S O L A T E
F T S M O R A L
A R R O Y O U E
N I D E C I D E
G R O U N D H R
S L S L E A Z Y
6 2 1 8 3 9
3 9 1 4 7 5 2 6 8
6 8 5 7 9 1 2 7
3 2 7 9
2 9 5 9 8 1
1 4 6 3 2 7 9 8 5
7 9 1 3 4 1
8 3 9 3
4 2 1 7 6 4 9 8
9 6 3 1 4 8 2 5 7
8 9 5 5 1 2
4
4
4
4
4
4
4
4
4
The nine-letter word was
SOUTHWARD
T
E
R
R
E
S
T
R
I
A
L
S
A
T
E
L
L
I
T
E
&
C
A
B
L
E
BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
THURSDAY 21 FEBRUARY 2013
WATERLOO ROAD
BBC1, 8PM
Michael bans Kacey from the football
final as girls are not eligible to play,
but Tom says she can take part if she
pretends to be a boy.
EMMERDALE
ITV, 6.45PM
Hour-long episode. Declan and Charity
give in to their passion, and Moira
braces herself for an argument with
Adam because Cain stayed the night.
JACK TAYLOR: THE GUARDS
CHANNEL5, 9PM
A former garda investigates the
disappearance of a teenager and finds
himself in the underworld of Galway
City. Drama, starring Iain Glen.
TVPICK
MURDER suspect Paralympic super-
star Oscar Pistorius could find out
today whether he is to be granted
bail or faces months in jail awaiting
trial for the alleged killing of his
model girlfriend.
A South African court heard yes-
terday how witnesses reported
female screaming amid the gunshots
around the time of Reeva
Steenkamps death, in the early
hours of Valentines Day last week.
However the Pistorius legal team
cast doubt on the prosecution case
with robust cross-examination, and
later declared themselves very
pleased following the second day of
the bail hearing in Pretoria.
Magistrate Desmond Nair
appeared to lean towards granting
bail, casting doubt on the likelihood
of a world famous athlete known for
his prosthetic legs attempting to flee,
and may deliver a decision today.
Pistorius nicknamed Blade
Runner for his distinctive track limbs
denies the premeditated murder of
law graduate Steenkamp, 29, at his
home, saying he mistakenly shot her
thinking she was an intruder.
The 26-year-old, who last year
became the first double amputee to
compete at an Olympic Games, told
Screams amid
firing at Blade
Runner home,
court hears
the court this week that he fired his
9mm pistol through the toilet door
believing Steenkamp to be in bed.
Detective Hilton Botha said yester-
day that one witness had heard raised
voices at around 2am, while another
testified to hearing a womans
screams in between gunfire and see-
ing a light on at the property, which
is set in an exclusive gated estate pro-
tected by armed guards.
Under questioning from Pistorius
defence advocate Barry Roux, howev-
er, Botha conceded the witness had
been 600m away a figure he later
amended to 300m.
Roux undermined Botha further
by questioning why police had not
seized all of Pistoriuss mobile phones
and worn unprotected footwear at
the crime scene.
Botha said he believed Pistorius
had shot in a downward direction at
Steenkamp, backing up the prosecu-
tions assertion that he attached his
legs before walking to the bathroom.
Pistorius has said he moved on his
stumps and felt afraid and vulnerable
when he opened fire.
Pistorius must have known
Steenkamp was not in bed because
his pistol holster was discovered on
her side of the room, prosecutor
Gerrie Nel argued. The athlete has
said the room was completely dark.
ITALY captain Sergio Parisse is set to
miss the rest of the RBS Six Nations
championships after being handed a
30-day suspension for insulting
match referee Laurent Cardona
during club side Stade Francaiss
30-14 win against Bordeaux on
Saturday.
No8 Parisse, who has won 93 caps
for the Azzurri, will definitely miss
Saturdays home match against
Wales in Rome.
The 29-year-old also stands to be
unavailable for Italys final two
matches, against England and
Ireland, but hinted he may take up
the option of appealing.
Parisse used his Twitter account
to apologise: Sorry to my team-
mates and fans for the red card,
which I find too harsh! I never
insulted M. Cardona.
Parisse pays
for faux pas
BY JOSH RICHARDS
THURSDAY 21 FEBRUARY 2013
30
SPORT
cityam.com/sport
CHELSEA midfielder Frank
Lampard must wait to break the
clubs all-time goalscoring record,
after manager Rafael Benitez
revealed the England international
will miss tonights Europa League
match against Sparta Prague.
Lampard is in a rich vein of
form with four goals in his last
five games and is now just three
strikes short of matching Bobby
Tamblings 202 goals for the Blues.
But Benitez will rest his 34-year-
old star for tonights last 32,
second leg clash at Stamford
Bridge and will rotate his squad
with a crucial trip to second-
placed Manchester City to come in
the Premier League on Sunday.
Frank will not be in the squad
as we have to manage the group
and think about all the other
games, Benitez confirmed.
Weve played so many games
25 in three months.
To play every game because we
didnt have the options is a
problem, but at least now we have
fresh legs.
Chelsea hold a one-goal lead
from the first leg after midfielder
Oscar netted in the Czech capital.
Defender Branislav Ivanovic will
be rested tonight and striker
Demba Ba is ineligible.
Lampard set to
be rested for
Prague clash
BY JOSH RICHARDS
TOTTENHAM manager Andre Villas-
Boas hopes his side can successfully
see off Lyon in tonights Europa
League last 32, second leg and go on
to land their first European trophy
in 28 years.
Two goals from Welsh wizard
Gareth Bale give Tottenham a 2-1
advantage going in to tonights tie
at the Stade de Gerland and a
potential last-16 encounter with
Italian giants Inter Milan awaits.
But Villas-Boas insists his team
have what it takes to reach the final
in Amsterdam and bring the trophy
back to White Hart Lane for the first
time since 1984.
For the history of the club, if we
are able to win the competition, it
will be magnificent, he said.
Lyon will be up for it. They have
a lot of experience in Europe, but
we have confidence.
Goalkeeper Hugo Lloriss dreams
of a reunion with the club he left in
an 8m summer move for north
London appear to be in tatters with
41-year-old Brad Friedel set to
feature for a third consecutive
Europa League tie.
Spurs will also be without striker
Jermain Defoe who continues to
nurse an ankle injury, while
defender Younes Kaboul and
midfielders Tom Huddlestone and
Sandro are also sidelined by injury.
Villas-Boas
targets first
Spurs trophy
BY JOSH RICHARDS
BY FRANK DALLERES
Champions League favourites
Barca stunned by Milan double
FORMER Portsmouth pair Kevin
Prince Boateng and Sulley Muntari
struck second-half goals as Milan
stunned the Champions League
favourites into submission at the
San Siro.
The home side took their chances
with aplomb to edge the last 16,
first leg tie and produced a
masterclass in containing
Barcelona, who failed to score for
only the second time this season.
The Spanish giants dominated
possession in the first half, but
were left frustrated by Milans
determination in defence.
Irrepressible Barca forward
Lionel Messi found few
opportunities to
impose himself on
the game, as the
Rossoneri
seven time
winners of
the
competition
spent the
majority of the
opening period
camped deep
inside their
own half.
Milan made
the breakthrough on 56 minutes
when Riccardo Montolivos 25-yard
strike cannoned off team-mate
Cristian Zapata and the ball sat up
for midfielder Boateng to hook in a
half-volley from 18 yards.
Spanish World Cup
winners Andres Iniesta and
Xavi had glimpses at goal
for the
visitors.
But the
hosts struck
again when
Muntari
blasted into
the bottom
corner.
Goalscorers Kevin Prince
Boateng and Sulley Muntari
@cityam_sport
AC MILAN ...................................2
FC BARCELONA..........................0
BY JOSH RICHARDS
CHAMPIONS LEAGUE
Oscar Pistorius is
likely to find out
today whether or
not he is granted bail
31
BOWLER James Anderson claimed
a five-for in Englands eight-
wicket win against New Zealand to
level the one day series yesterday
and hopes he can continue his
record-breaking international
career for 10 more years.
The 30-year-old became
Englands leading wicket taker in
all forms of the game over the
weekend, surpassing previous
record holder Sir Ian Bothams 528
dismissals.
And Anderson believes he still
has plenty of years left at the top.
I want to keep playing until Im
39-40 and put that record well
away from anyone else, he said.
I want to prolong my career for
as long as I can.
Anderson helped bowl the hosts
out for 269 in Napier, taking the
prize scalp of century maker Ross
Taylor on the way.
England hit their target with 14
balls to spare as captain Alastair
Cook, Jonathan Trott and Joe Root
all posted half-centuries.
Anderson and
Root hit form
to level series
CRICKET
COMMENT
ANDY LLOYD
Great Britain won two medals on day one of
the Track Cycling World Championships in the
mens team pursuit and womens sprint
cityam.com
THURSDAY 21 FEBRUARY 2013
BY JOSH RICHARDS
Cycling sucks in the city! Bring your wheels to the iconic Brands Hatch Circuit and race
international sporting legends in the 8 or 12 hour thigh-busting, soul-strengthening,
endurance team relay.
3TRONG3QUARE-ILEATTENDANCE/PTIONALFUNDRAISING#ELEBRITYRIDERS
#ORPORATE3PONSORSHIPAVAILABLE,OADEDGOODYBAGSHUGEPRIZES&REEMASSAGESUPPORT
5th September 2013
CYCLOTHON UK 2013
@cyclothonuk
www.cyclothonuk.com 0871 871 5300
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England struggling to find winning habit
T
HERE was much to cheer in
Englands one-day series-
levelling stroll in the park
against New Zealand yesterday,
yet lingering doubts remain about the
state of the limited overs set-up.
James Anderson was fantastic with
the ball, Alastair Cook and Ian Bell
enjoyed a strong opening stand, and
Joe Root showcased his skills, aided
by Jonathan Trott, as England
cruised home. But that victory only
compensated for Sundays defeat. Top
teams win 90 per cent of games and
right now, in one-day and Twenty20,
England only claim every other.
Clearly the team, and especially
Trott, find it easier to pace an
innings when chasing than when
they have to set a total themselves.
I think England need to be more
inventive. Conventional wisdom says
youll win if you start your innings
well, keep wickets in hand and have
a big bash at the end. But Im not
sure those mid-innings overs are
used as productively as possible.
Im also not convinced by
Englands use of the power play. The
default setting seems to be to use
them at the 36-40 over mark, but if
two men are set in the 25th over,
thats just as good a time to press
home an advantage. You have to
speculate when in a good position.
Mixed results are slightly
mitigated by the fact that England
have a new coach in Ashley Giles and
are still figuring out selection issues,
of which there are several. The rested
Kevin Pietersen will go straight back
into the side, but for who? On
current form Id have to say Trott.
Graeme Swann had his worst one-
day figures ever yesterday, while
James Tredwell shone on the recent
tour of India. Id suggest thats
another area to look at. With the
Champions Trophy little more than
three months away, Giles and the
selectors are fast running out of
time to find the winning formula.
Andy Lloyd is a former England Test
cricketer who has also captained and been
chairman of Warwickshire.
England batsman Joe Root hit an unbeaten 79 from 56 balls to help beat New Zealand
IN BRIEF
Perez goes quickest on day two
n FORMULA ONE: McLaren driver
Sergio Perez, team-mate of Britains
Jenson Button, posted the fastest lap
time on day two of testing in
Barcelona yesterday. Perez clocked
one minute, 21.818 seconds.
Snow stops play at Dove Mountain
n GOLF: Heavy snow forced play to be
suspended at the WGC Match Play
Championship in Arizona yesterday.
No first round matches were finished.
Results
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BLADE Runner Oscar Pistorius faced
accusations of doping yesterday, as
day two of his bail hearing for
suspected murder took an
unexpected twist.
Police said they found two boxes of
the male hormone testosterone and
syringes at the pioneering track
superstars Pretoria home.
But the South Africans defence
lawyer Barry Roux rubbished the
claim, saying that the substance
found was a herbal remedy not a
steroid and not a banned substance.
Detective Hilton Botha, who had
made the allegation, admitted under
questioning that he could not be
sure of the content of his discovery.
Advocate Roux told the court that
the substance found was called testo-
compositum co-enzyme and was
commonly used by many athletes.
Pistorius, who was born without
fibulas and had both legs amputated
below the knee at 11 months, is the
most celebrated Paralympic athlete
in history. The 26-year-old,
nicknamed Blade Runner, became a
dominant force in the T44 100m,
200m and his specialism, the 400m,
breaking several world records.
He won a legal challenge in 2008
to overturn a ban on him competing
against non-disabled athletes and
became the first double amputee to
run at an Olympic Games last
summer in London, where he
reached the 400m semi-finals.
Pistoriuss tale of triumph over
adversity attracted a host of blue-
chip sponsors, including Nike and
BT. The former has put future
advertising involving Pistorius on
hold while he awaits trial.
He denies the premeditated
murder of his girlfriend Reeva
Steenkamp, a 29-year-old model and
law graduate, at his Pretoria home in
the early hours of Valentines Day
morning last week.
Doping claims
add sub-plot
to court drama
BY FRANK DALLERES
f i a t . c o . u k
FIAT PANDA 4x4
THE S.U.V OF THE YEAR