BUSINESS WITH PERSONALITY

BUSINESS WITH PERSONALITY

Mobile lifts
Facebook to
record sales
FACEBOOKS revenues hit new
heights at the end of last year, as the
social network cashed in on more
people using it on smartphones.
Turnover during the final three
months of 2012 hit $1.59bn (1bn), a
26 per cent rise on the previous
quarter, and 40 per cent up year-on-
year, the company said yesterday.
Facebook also announced that, for
the first time, more people were
accessing its service on mobile
phones than on PCs. As more people
buy internet-connected smart-
phones, they are increasingly access-
ing Facebook on the move, and the
social network has struggled to con-
vince investors it is able to grow as
more people use it on devices with
smaller screens, where it is more
difficult to place adverts.
Yesterday, however, it said mobile
accounted for 23 per cent of all
advertising revenues.
Today theres no argument
Facebook is a mobile company,
chief executive Mark Zuckerberg
said. We started the year with no
ads on mobile and we ended up
with roughly 23 per cent. Thats
pretty amazing.
Despite revenues leaping, net prof-
its fell from $302m a year earlier to
$64m due to share-based compensa-
tion payments associated with last
years initial public offering.
Zuckerberg also warned that profits
would be low in 2013 as he invests
in new products and services.
Facebook shares fell in after-hours
trading yesterday, to stand at
around $30. Although the compa-
nys shares have improved since
Septembers lows, they are still
some way off the $38 per share
price that valued Facebook at
$100bn when it floated last May.
Federal Reserve chairman Ben Bernanke argued much of the weakness in the economy was down to temporary factors including the weather
THE US economy shrank unexpectedly
in the final three months of 2012, offi-
cial figures showed yesterday, taking
markets and analysts by surprise.
Ben Bernanke at the Federal Reserve
responded by holding interest rates at
record lows and continuing to print
$85bn (53.8bn) a month to buy gov-
ernment bonds and mortgage backed
securities.
Stocks dipped on the news, with the
S&P 500 edging down 0.4 per cent.
The worlds largest economy had
seen a steady recovery with growth far
exceeding the flat-lining UK and the
recession-struck Eurozone.
But US GDP contracted by an annu-
alised 0.1 per cent in the fourth quar-
ter as firms cut back on building up
stock and government spending on
defence plunged.
That represents a sharp swing back
from growth of 3.1 per cent in the pre-
vious three-month period, and takes
growth for 2012 overall to 2.2 per cent.
Much of the sharp turnaround was
down to volatile defence spending
which jumped 12.9 per cent in the
third quarter before plunging 22 per
cent in the fourth, leading a 6.6 per
cent drop in government spending in
the final three months.
Once defence and inventories are
stripped out, growth was a healthier
2.5 per cent, with capital expenditure
and consumer spending both staying
strong in the three-month period.
Analysts argued that bodes well for
the coming year.
www.cityam.com FREE
While the US GDP report was clear-
ly disappointing, the details of the
report were not as weak, or as shock-
ing, as the headline numbers suggest,
said JP Morgan Asset Managements
Andrew Goldberg. Gains in housing
and consumption offset much of the
weakness, and recent economic read-
ings point to growth closer to two per
cent in the first quarter than the con-
traction seen last in this report.
But incoming tax rises could be a
threat to that optimism.
US households have made consider-
able progress in paying off their debt.
This progress, moderate employment
growth and the apparent turn-around
in the housing market should support
consumption in 2013, said Berenberg
Banks Christian Schulz.
However, we expect austerity meas-
ures such as the increase in payroll tax
to dampen growth, and the latest
decline in consumer confidence pro-
vides evidence of that. The Fed
agreed, arguing its current very loose
policy means inflation and employ-
ment are both gradually improving.
With appropriate policy accommo-
dation, economic growth will proceed
at a moderate pace and the unemploy-
ment rate will gradually decline
toward levels the committee judges
consistent with its dual mandate, it
said in a statement.
BY JAMES TITCOMB
BY TIM WALLACE
US GROWTH FALLS
OFF A CLIFF AGAIN
BLACKBERRYS BACK
ISSUE 1,809 THURSDAY 31 JANUARY 2013
HOW SWEDEN
GOT IT RIGHT
See Forum, Page 20
See Page 3 and our
review in Tech, page 24
ALLISTER HEATH: Page 2

FTSE 100 M6,323.11 -16.08 DOW M13,910.42 -44.00 NASDAQ3,142.31 -11.35 /$ 1.58 +0.01 / M1.16 -0.01 /$ 1.36 +0.01
Certified Distribution
from 26/11/12 to 30/12/12 is 127,678
bank bonuses by 30 per cent, but
could not rein in Diamond who, she
said, valued his rewards very highly.
Bob Diamond always enjoyed a
generous pay packet and he thought
he found loyalty in people around
him by paying them well in my
view, paying more than he needed
to, she told the Parliamentary
Commission on Banking Standards.
And she criticised a sense of
entitlement that has emerged
among many staff, particularly in
the investment bank. The pay has in
some cases reached obscene levels.
Diamonds total pay came in at
6.3m for 2011, including long-term
incentive awards.
But current chair of the
remuneration committee Sir John
Sunderland pushed back, arguing
Diamond did deserve a bonus for
the year.Since he was
appointed as chief
executive Bob Diamond
engaged in the task
with great energy,
enthusiasm and skill, he
was a very successful
banker, he told the
commission.
You can
argue
about the culture at the bank,
but he was set a series of
objectives for the year and he
achieved many of them. The
board took the view that his
performance overall deserved
some recognition.
FORMER Barclays chief executive
Bob Diamond did not deserve a
bonus in 2011 because the bank
gave poor returns for shareholders,
former director and remuneration
committee head Alison Carnwath
said yesterday.
The ex-non-executive said she
worked to pull down investment
BY TIM WALLACE
Alison Carnwath is a City
veteran and chairs FTSE
100 firm Land Securities
Ex-Barclays pay boss attacks Diamonds reward for failure
US GDP fell for the rst time in years
2009Q1 2010Q1 2011 Q1 2012Q1
0.0
-4.0
4.0
THE BUSINESS SMARTPHONE GETS A MAKEOVER
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
New lending scheme fails
to boost small businesses
EFFECTIVE interest rates on new
deposits have dived from 3.01 per
cent in August, when the Funding
for Lending Scheme (FLS) started
to provide banks with cheap
funds, to just 2.11 per cent in
December, the Bank of England
revealed.
But the cheaper funds have start-
ed to divert cash back into the
mortgage market, the data
revealed, fuelling a boom in mort-
gages.
Lenders approved 55,785 loans
for house purchase in December,
an 11-month high, up 3.3 per cent
on Novembers 54,011 and up 6.1
per cent on the total approved
during the same month in 2011.
The total value of these loans
climbed a full 10.4 per cent over
the year to reach 8.3bn.
This improvement pushed many
analysts into suggesting FLS was
finally revitalising the generally
moribund housing market.
Katie Evans at the Centre for
Economics and Business Research
called the data tentative signs
that FLS is easing credit condi-
tions, while Melanie Bowler at
Moodys Analytics said UK credit
conditions are slowly starting to
loosen.
But this loosening did not
Nestl liable over spying on NGO
Nestl, whose clashes with activists over
sales of baby milk formula in Africa led to
widespread boycotts in the 1980s, has
been found liable in a civil case over the
secret infiltration of a non-governmental
organisation. A Swiss court last week
ordered Nestl and the Swiss security
company Securitas AG to pay
compensation following revelations that
an infiltrator had attended workgroup
meetings of Attac, an anti-globalisation
group. Some of those meetings took place
at members homes.
Hasenstab issue debt warning
Investor Michael Hasenstab, who made
some of the boldest contrarian bets in the
bond market last year has a new message
for investors: get out of supposedly safe
government debt now, before it is too
late. Hasenstab oversees $175bn in bonds
for Franklin Templeton.
Brussels blocks UPS takeover of TNT
Brussels formally blocked UPSs aborted
takeover of TNT Express yesterday, while
expressing surprise that the US delivery
group abandoned efforts to win approval
before its negotiating time was up.
Huge charity tax scam exposed
One of Britains biggest charities is a front
for tax avoidance. Wealthy donors used
the Cup Trust to avoid 46m in tax in an
extensive abuse of Gift Aid incentives
designed to encourage charitable giving.
The Cup Trust declined to comment.
Shell counts cost of Nigeria damage
A Dutch judge has ordered Shell to pay
compensation to a Nigerian farmer whose
livelihood was wrecked by oil spilling
from a well abandoned by the group.
Bundesbank wants competitive EU
Bundesbank President Jens Weidmann
has agreed with David Cameron that the
EU must be more open and competitive.
Weidmann said bailouts in the Eurozone
can ease the pain felt by austerity, but
they cannot replace the need for reform.
Alex opens London Stock Exchange
Actor Robert Bathurst, who played the
fictional City character Alex in a one-man
show, opened the London Stock Exchange
yesterday.
Germany to isolate bank risk
Germany plans to isolate banks risky
activities from customer deposits,
according to a draft law. Banks with risky
operations that make up 20 per cent of
the balance-sheet value will have to
transfer the business into separate units.
Bayer Faces Halt To Acne-Drug Sales
France is taking steps to halt sales of an
acne treatment used as a contraceptive,
after Diane 35 made by Bayer AG
Germanywas linked to four deaths.
PLANS to build more nuclear
power stations in the UK suffered a
blow yesterday as Cumbria county
council voted against proposals to
build a 12bn underground
radioactive waste dump on the
edge of the Lake District.
The government wants nuclear
power to help meet the UKs future
energy needs but it must first find
a new site for storing radioactive
waste. Cumbria, which already has
a substantial nuclear power
industry thanks to the presence of
the Sellafield plant, was the only
local area to have expressed an
interest in hosting such a site.
Without a solution to the
radioactive waste issue we cannot
build new nuclear power stations,
local MP Jamie Reed, who backs
nuclear expansion, told City A.M.
last night. The current process has
collapsed but the policy imperative
has intensified. Im confident we
can work to secure the needs of
this critical UK industry.
The government insisted it would
try and convince other councils to
host the nuclear storage site. But it
is understood that both Downing
Street and officials in the energy
department are keen to find a new
mandate for a Cumbrian location.
Hitachi, EDF, GDF and Iberdrola
all have interests in building new
UK nuclear power stations.
Nuclear power
expansion hit
by Cumbria vote
Sir Mervyn King unveiled the Funding for Lending Scheme last June
2
NEWS
BY JAMES WATERSON
BY BEN SOUTHWOOD
To contact the newsdesk email news@cityam.com
O
NE of the governments daftest
policies is its underpinning of
bank lending, a nationalisation
of credit in all but name. The
biggest losers from the funding for
lending scheme have been savers. The
effective average savings rate for new
deposits has collapsed from 2.75 per
cent in September to a miserable 2.11
per cent in December. After tax and
inflation, real savings are being
slashed by up to two per cent a year.
Its a shameful scandal.
The number of mortgage approvals
has jumped but interest rates on
business loans to small firms
increased from 3.39 per cent in
November to 3.65 per cent in
December. Rates fell at first but are
now little different to the 3.69 per
cent they were a year ago. The policy
has failed: it will fuel another bubble
in the housing market while decimat-
EDITORS
LETTER
ALLISTER HEATH
Flawed government policy is wiping out struggling savers
THURSDAY 31 JANUARY 2013
ing savers and doing nothing for
small businesses. What a shambles.
AMERICAS GDP TAKES A HIT
It came as a shock to many to see US
GDP contract in the last quarter of
the year, even though the tiny 0.1 per
cent fall could easily be revised away.
Yet this shouldnt have surprised any-
body: the uncertainty surrounding
the fiscal cliff was always going to
have a major effect.
The silver lining was that the
decline in output was largely caused
by reduced inventories, as well as a
drop in defence expenditure.
Consumption, business investment
and house building the components
that matter rose.
It would certainly be wrong for any-
body to believe that spending cuts are
killing off the recovery. Over the past
three years, the American economy
grew 4.8 per cent even though the US
public sector shrank by around 6 per
cent, massive belt-tightening far
greater than anything seen in the UK,
according to RBS. In fact, the public
sector shrank in 10 out of past the 12
quarters.
Now that is what I call radical aus-
terity, not the sort we have seen in
this country. In the UK, government
spending has barely gone down in
total terms, including interest spend-
ing and yet the economy remains
of this year. He calculates that season-
ally adjusted fourth quarter earnings
remain little changed from the level
that has prevailed since mid-2011. He
also worries that US equity markets
actual price to earnings ratio (p/e) of
15 has been massaged downwards by
a smoke and mirrors process the
use of operating as opposed to as
reported profits to a cheaper-
sounding 13.6, and that the prospec-
tive p/e of 12.2 implies implausibly
high earnings gains of 11-12 per cent.
Despite globalisation, the Western
world still needs the US economy to
act as its locomotive. Yesterdays
shock contraction in GDP should
serve as a warning that its recovery
could still grind to a screeching halt,
dealing the rest of us another blow.
substantially smaller than it was
prior to the recession.
The real lesson from yesterdays
GDP data is simply that any recovery
needs the private sector to be strong;
the lesson from the past few years in
the US is that spending cuts by the
public sector can easily be absorbed
by the rest of the economy. A much
greater worry is the impact of the pay-
roll tax hike in the first quarter,
which could conceivably trigger
another recession. It is too soon to be
making these sorts of predictions but
there is certainly a real risk of anoth-
er nasty surprise.
The market shrugged off the data,
partly because it is still being pumped
full of cheap money by Ben Bernanke.
Charles Dumas of Lombard Street
Research worries about Wall Streets
longer-term health, especially if the
economy worsens in the first quarter
extend to business lending, which
contracted further from its already
low base.
The net monthly flow of credit in
November was minus 2.8bn indi-
cating that more money was paid
back than was lent out in new
loans.
This meant the three-month annu-
alised growth rate moved further in
the red, to minus 3.5 per cent, fol-
lowing Octobers annualised con-
traction of three per cent.
The yearly rate was even worse,
showing a 4.1 per cent contraction
in business lending over the 12
months to November.
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
IN BRIEF
FSA set to probe annuity prices
The Financial Services Authority will
today kick off a thematic review into
annuity prices in a bid to make sure
customers are getting a fair deal on
prices when they come to retire. The
probe, which began earlier this month
but is officially unveiled by the City
watchdog today, will conduct a pricing
survey of all annuity providers rates
and aims to tackle risks to consumers
if they fail to shop around for an
annuity.
FIFA game publisher sales drop
Computer game publisher
Electronic Arts, the company behind
the FIFA series, last night announced
lower revenues for the third quarter as
the industry continued to struggle
with flagging sales as the public waits
for the next-generation of consoles.
For the last three months of 2012 the
company posted net revenue of
$922m (583m), compared with
$1.06bn a year ago. It reported a net
loss of $45m.
STMicroelectronics posts loss
STMicroelectronics posted a
quarterly loss last night, hurt by
troubles at its mobile chip unit, and
forecast a decline in revenue for the
next three months. The Geneva-
headquartered company, which makes
chips for cars, computers and mobile
phones, recorded a fourth-quarter net
loss of $428m (271m), compared
with a loss of $11m for the same period
last year. Revenue slipped slightly to
$2.2bn.
Savers suer as Funding for Lending hits rates
Feb2011 Feb2012 Dec
0
1
2
3
4 Effectiveinterestrateonhouseholddeposits, %
Outstandingdeposits
Newdeposits
IntroductionofFunding
forLendingScheme
g
MOTHERCARES UK boss is to leave
the baby products retailer as part of a
management shake-up to stem falling
sales at its troubled UK arm.
The retailer said yesterday that Mike
Logue, who moved to Mothercare
from Asda in late 2011, is to step down
next month after the role was made
redundant.
The restructure is part of a three
year turnaround plan being led by
chief executive Simon Calver, who
joined from Lovefilm in April last
year, to return the UK business to prof-
itability and revive sales.
Mothercares UK stores open for at
least a year saw sales fall 5.9 per cent
in the third quarter to 12 January
after improvements made to products
and ranges failed to pull in the
Christmas sales.
Calver will now play a more direct
role in the UK business and is also
looking to hire a commercial director
who will report directly to him.
In the Autumn the firm appointed
former Argos finance director Matt
Smith as its new finance chief and
Nick Henwood from Sainsburys as
director of retail operations.
Mothercare UK
boss to exit in
team reshuffle
BY KASMIRA JEFFORD Calver said yesterday: We would like
to thank Mike for his contribution to
developing and starting the imple-
mentation of our transformation and
growth plan.
Logues departure came as the com-
pany revealed that Mothercare
Australia a retailer in which it has a
minority stake called in administra-
tors after talks to sell the business fell
through.
Mothercare said the Australian arm
accounts for around seven per cent of
international retail sales and that the
impact on profits was expected to be
minimal and does not change our
overall view of International profitabil-
ity going forward.
Shares fell 3p to 326p yesterday.
Mothercare posted another steep fall in sales over Christmas despite turnaround efforts
Mothercare PLC
30Jan 24Jan 25Jan 28Jan 29Jan
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30Jan
REVIEW: Page 24

THURSDAY 31 JANUARY 2013
3
NEWS
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BlackBerry unveils long-awaited
facelift with revamped handsets
THE NEXT generation of BlackBerry
phones was finally revealed
yesterday, kicking off a make-or-
break period for Research in Motion.
The Canadian firm revealed a
radical overhaul of its ageing
mobile software and two new
smartphones, which it hopes will
be able to compete with the
dominant Samsung and Apple.
The new operating system,
BlackBerry 10, has long been in the
works, and has been repeatedly
delayed, leading many to question
BY JAMES TITCOMB
whether the firm has a future at all.
Unexpectedly, yesterday did in
fact spell the end for Research in
Motion, with the company
announcing it would now simply be
called BlackBerry.
Today sees a re-invented
BlackBerry launching an entirely
new mobile experience, said chief
executive Thorsten Heins, who took
the reins 12 months ago. Former
bosses Jim Balsillie and Mike
Lazaridis were forced out following
years of declining market share.
Shares fell more than 12 per cent
on fears the relaunch would not be
enough. The first BlackBerry 10
phone goes on sale in the UK today.
INVESTMENT giant BlackRock
yesterday bought eight per cent of
the available shares in Manchester
United football club, worth around
$55m (34.8m) at yesterdays closing
price.
A filing with the US Securities and
Exchange Commission reveals the
New York-based company has
snapped up 3.3m shares in the Old
Trafford-based business.
The football club completed its
IPO on the New York Stock Exchange
last August after abandoning
previous attempts to float in
Singapore and Hong Kong.
BlackRock makes $55m punt
on Manchester United shares
BY JAMES WATERSON At that time investors were
unimpressed with the offering, with
the shares only reaching $14, below
the $16-20 range the clubs bankers
had been seeking.
Since then interest has increased,
pushing the stock past $17 this week
and causing Forbes Magazine to
declare the club is worth over $3bn
once debts are taken into account.
The share price rise will benefit
the US-based Glazer family, who
bought Manchester United amid fan
protests in 2005 for 790m in a
leveraged deal. They retain control
through the ownership of Class B
shares that have ten times the voting
rights of publicly available stock.
Research In Motion Ltd
30Jan 23Jan 24Jan 25Jan 28Jan
16
14
18
$
13.78
30Jan
THE TUBE could run until 2am on
Friday and Saturday nights, the
managing director of London
Underground said yesterday.
Mike Brown said that now the
Tubes modernisation programme
is well underway, there is scope to
scale back the amount of time
dedicated to late-night engineering
work and allow trains to run later
some of the week.
This is not imminent and we still
have much work to do, but I
recognise the importance to
London, said Brown.
There is clearly a balance to be
struck between extending our
hours of operation, which would
mean less time to do upgrade work,
and the understandable desire for a
later running Tube.
A 24-hour Tube service is believed
to be off the cards.
The London Underground
currently runs from 5am to around
1am, but successfully opened later
during the Olympics.
Mayor of London Boris Johnson
had pledged to keep the Tube
running later during his 2008
election campaign, though the plan
was thwarted by ongoing upgrade
work.
According to TfL, up to 5,000
work underground overnight to
improve and maintain the Tube
network.
Tube could run
until 2am, says
transport boss
BY MARION DAKERS
HIGH fuel prices in the UK are due to
high duty and VAT, not a lack of com-
petition, competition authorities con-
cluded yesterday.
There is no need for a full inquiry
into UK petrol pricing, the Office of
Fair Trading (OFT) said yesterday,
because there is no persuasive evi-
dence of anti-competitive behaviour
in fuel markets.
In fact the UK enjoys some of the
cheapest pre-tax fuel in Europe,
according to the OFT. It said that high
tax levels are to blame for inflated
prices at the pump.
Between 2003 and 2012 petrol pump
prices grew from 76p per litre (ppl) to
136ppl, while diesel prices climbed
from 78ppl to 142ppl. But of this rise,
89 to 95 per cent came from increased
duty and higher crude oil prices
around the world. Only a small
amount extra went to those selling
the oil, the OFT found.
We recognise that there has been
widespread mistrust in how this mar-
ket is operating, said OFT chief Clive
Maxwell. However, our analysis sug-
gests that competition is working
OFT blames tax
for high petrol
prices in the UK
BY BEN SOUTHWOOD
well, and rises in pump prices over the
last decade or so have largely been
down to increases in tax and the cost
of crude oil.
And the OFT said that it was a mis-
conception that firms were engaging
in so-called rocket and feather pric-
ing where pump prices rise rapidly
when input prices climb, but only
recede slowly when inputs cheapen.
The watchdog could find very limited
evidence to suggest firms used this
pricing strategy.
But competition has not driven all
prices to exactly the same point.
Supermarkets sell fuel around 2ppl
cheaper than the average oil company
owned vendor, which was in turn
2.3ppl cheaper than the average inde-
pendent dealer.
And most expensive were motorway
service stations, where consumers
often cannot see the prices on offer
before they drive in.
A separate report out yesterday, from
British Car Auctions revealed that
high oil prices were driving con-
sumers to re-think their car usage.
Some 53 per cent said they would
eventually buy a more efficient vehicle
or change their driving habits.
THURSDAY 31 JANUARY 2013
5
NEWS
cityam.com
KENSINGTON ROOF GARDENS, one of Londons most glamorous party venues, has been put
up for sale for around 200m. The grade II listed gardens overlooking Kensington High Street
have been leased since 1981 by Sir Richard Bransons Virgin group. Its Asian owners are
believed to have hired Jones Lang LaSalle to sell the building, according to Property Week.
KENSINGTON ROOF GARDENS ON SALE FOR 200M
BP Marsh was yesterday forced by a
rising share price to issue a statement
confirming that it is in talks with a
potential buyer for its 13.5 per cent
shareholding in insurance group
Hyperion.
The specialist private equity
investor said discussions were pro-
gressing at a normal pace but there
could be no certainty that these
would lead to the company disposing
of its interest in Hyperions shares.
By yesterdays close news of the
interest in the stake had pushed up
BP Marshs shares by 12.5p to 124.5p.
There has been constant specula-
tion about the future of Hyperion
since Tuesday this week after City A.M.
reported that 3i, a near 23 per cent
shareholder in the insurance group,
was in talks with a buyer.
Market sources suggest that a pri-
vate equity group wants to buy the
combined stakes ahead of a possible
flotation of Hyperion as soon as 2014.
There had been hopes on behalf of
some shareholders that a flotation
might have come in the latter half of
this year.
But Hyperions management team,
headed by David Howden, prefer to
wait until 2014 to further assimilate
the purchase of Windsor into the
group.
Howden has made it clear that he
has no intention of selling his shares
in the group just yet.
BP Marsh gets
approach for
Hyperion stake
BY DAVID HELLIER
TESCO yesterday fired a supplier con-
trolled by Irelands most powerful
beef baron for selling it burgers con-
taining horse meat.
The grocer also promised to use
DNA testing equipment to check the
content of products on its shelves.
Britains biggest supermarket chain
is reeling from a wave of bad publicity
after the Irish food safety authority
discovered that 29 per cent of a frozen
beef burger was horse meat.
We took that decision with regret
but the breach of trust is simply too
great, Tesco technical director Tim
Smith said in a statement announc-
ing the termination of its contract
with Silvercrest, a subsidiary of Larry
Goodmans ABP Foods.
ABP, Europes largest beef exporter,
tried to deflect blame for the scandal
this week after the Irish government
announced it had traced the source of
the meat to a Polish supplier.
Catherine Brown, head of the Food
Standards Agency, told MPs yesterday
that horse meat may have been pres-
ent in burgers for the past year,
Tesco ends deal
with supplier in
horse scandal
BY HARRY BANKS
adding that there is no evidence of any
health risk.
ABP said it had never knowingly
purchased or traded in equine prod-
uct but Tesco said it had failed to use
meat from a list of approved suppliers
and to honour an instruction to
source ingredients exclusively in the
UK and Ireland. Tesco said it would
continue to buy Irish beef worth more
than 100m (85.9m) per year from
other ABP companies.
We expect this to reassure con-
sumers and draw a line under the inci-
dent, said Espirito Santo analyst
Caroline Gulliver, who has a sell rat-
ing on the stock.
Tesco PLC
29Jan 24Jan 25Jan 28Jan 29Jan
354
356
358
350
352
360
362 p
357.35
30Jan
BOEING posted stronger-than-
expected profit yesterday as its
backlog of orders rose, and said
its 2013 forecast assumed no
significant financial impact from
the grounding of its 787
Dreamliner jet by regulators.
Boeing said net income fell to
$978m (619.5m), or $1.28 per
share, in the fourth quarter,
from $1.39bn, or $1.84 per share,
in the year-ago period, when it
posted a special tax gain.
Boeings New York-listed
shares reacted positively to the
results, which come as aviation
Boeing profits impress as firm
awaits Dreamliner probe results
BY CITY A.M. REPORTER safety agencies in the US and
Japan probe what caused lithium-
ion batteries to burn on two 787
passenger jets earlier this month,
prompting regulators to ground
the planes worldwide.
Boeing said it is continuing to
build the Dreamliner but has
halted deliveries, and analysts
have raised concerns about the
cost of the grounding and fixing
the battery problem on about
125 jets that Boeing has built so
far.
Boeing said it expects to
deliver at least 60 Dreamliners in
2013, compared with the 80 or
more that analysts expected.
Boeings 787 Dreamliners are grounded while watchdogs examine possible faults
THURSDAY 31 JANUARY 2013
7
NEWS
cityam.com
EVERCORE Partners quarterly profit
more than doubled as the boutique
investment bank earned more fees
from its investment banking business.
Evercore, founded as a merger and
asset management firm in 1996 by
former US deputy treasury secretary
Roger Altman, has been aggressively
hiring senior bankers as it looks to
grab a bigger slice of the financial
advisory business in a tough M&A
market.
The New York-based bank said it
hired six senior managing directors to
its advisory business, and in January
promoted three others internally.
The boutique investment banks net
income rose to $35.3m (22.3m) for
the fourth quarter ended 31
December, from $14.1m a year earlier.
BY HARRY BANKS Net revenue doubled to $214m as
investment banking revenue jumped
twofold to $195m.
Chief executive Ralph Schlosstein
said Evercore had ended the year on a
strong note in an environment
when announced transactions on a
global basis were essentially flat and
completed transactions were down 15
per cent.
Rival Greenhill & Co reported last
week a four per cent drop in advisory
revenue for the year, far less than the
21 per cent drop reported by Morgan
Stanley, signaling greater momentum
for smaller shops even in weak merger
markets.
Evercores shares, which have risen
about 13 per cent this month, traded
through $37 in New York yesterday
their highest level in almost two
years before closing at $35.60.
LAW firm Cobbetts, head
quartered in Manchester, is set to
enter administration, blaming
difficult trading conditions for
the move.
The firm, which also has offices
in London, Birmingham and Leeds,
said it would sell off its business
and assets as soon as possible.
Cobbetts attempt to merge with
rival law firm DWF failed last year.
Cobbetts nears
administration
BY KATIE HOPE
TECHNOLOGY consultants Booz
Allen yesterday reported a fall in
net income to $56.2m (35.6m) for
the final three months of 2013,
down from $62.9m for the same
period last year.
Revenue at the US business was
$1.39bn, a decrease of 3.5 per cent.
The company blamed challenging
market conditions for government
contractors for the fall.
Booz Allen
profits drop
BY JAMES WATERSON
8
NEWS
cityam.com
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E
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R
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M
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i
t
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a
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o
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JOIN THE DEBATE
PAGES
20-21
THE HEADS of five influential parliamentary committees have called on the government to
remove foreign students from the target immigration level to help the economy. The group
argues incomers boost trade and jobs immediately, and build good global relations over time.
PM URGED TO DROP STUDENT IMMIGRATION CAP
Bank fees drive
Evercore profit
HSBC yesterday hired more ex-regu-
lators to set up a new unit to fight
crime in a drive to show it is striv-
ing to clean up its tarnished image.
The bank paid fines totalling
$1.9bn (1.2bn) to settle accusa-
tions lax money laundering con-
trols allowed drugs gangs and
terrorists to funnel money through
the institution.
Its new Financial System
Vulnerabilities Committee will be
made up of three non-executive
directors and five external advi-
sors, monitoring progress in tight-
ening the system and identifying
potential problems in compliance.
It will meet at least six to eight
times per year, beginning in
February, as well as responding to
any specific risks that emerge.
The bank has hired former HM
Revenue and Customs boss Dave
Hartnett and former counter ter-
rorism officer Nick Fishwick as
well as ex-serious organised crime
HSBC on hiring
spree to beef
up crime team
BY TIM WALLACE
agency head Bill Hughes as advisers
to the committee. Former US
deputy attorney general James
Comey is a non-executive board
member.
As well as improving anti-money
laundering controls and clamping
down on terrorist and drug financ-
ing, the committee also plans to
improve tax compliance and trans-
parency.
That also covers tax avoidance,
which the bank wants to cut down
on to further restore its damaged
image.
The new committee, which will
benefit from the experience of the
expert advisers, will provide invalu-
able guidance and advice as we
strengthen our capabilities and
enforce the highest standards, in
particular in relation to combating
financial crime, said chief execu-
tive Stuart Gulliver.
The calibre, status and experi-
ence of the individuals reinforce
once more how seriously we are tak-
ing this.
9
NEWS
cityam.com
PROFILE: DAVE HARTNETT
Dave Hartnett spent 36 years at HM Revenue and Customs, ending up as permanent
secretary for tax and retiring last year. He has been recruited
because of his deep knowledge of tax administration, after
leading policy development in the area, as well as compli-
ance and enforcement on international tax affairs.
Hartnetts experience also extends into the international
arena. He was deputy chairman of the OECDs forum on tax
administration, and has supported developing countries in
growing the capacity and capability of their tax departments.
But Hartnetts career has not been without controver-
sy HMRC was accused of making sweetheart deals
with big companies to reduce their tax bills on his
watch. A National Audit Ofce report deemed
those specic arrangements reasonable, argu-
ing the overall outcome for the exchequer was
good, but told the department to brush up
its internal communications and to stick
more closely to ofcial rules. Despite
being cleared of wrongdoing, Hartnett
has been targeted by protestors.
F&C ASSET Management yesterday
posted a 4.9bn fall in the amount of
money it manages after losing a
contract with insurer Friends Life.
The money manager, which is in
the midst of a radical turnover led
by activist owner Ed Bramson, saw
2.4bn of fixed income cash pulled
out by the insurer, which will now
manage the pot itself through its
own internal money manager.
Institutional cash from pension
funds and charities also fled out of
F&Cs funds, with third party
institutional business depriving
F&C of 956m. Its wholesale
business also saw a net outflow of
340m over the quarter.
Total assets under management
came in at 95.2bn at the end of
December, down from 100.1bn a
year ago.
The 144-year old business, which
started life as Foreign & Colonial,
was taken over by Sherborne
Investors boss Ed Bramson in a
boardroom coup in 2011.
Bramson has launched two
strategic reviews to turn around the
business, which has resulted in a
number of job losses.
He appointed Richard Wilson as
chief executive before Christmas.
We look forward to continuing
progress in executing our Third-
Party Institutional and Consumer
growth strategies, Wilson said.
F&C funds lose
5bn after key
contract pulled
BY MICHAEL BOW
THE RISING black market for ciga-
rettes in Europe has hit profits at
Imperial Tobacco, the FTSE 100 giant
said yesterday.
Imperial said that sales of cigarettes
in the EU are currently around five
per cent lower than last year, as ris-
ing prices and squeezed budgets
meant more people buying illegal
cigarettes.
Given our ongoing investment
and the European market pressures
we expect first half adjusted operat-
ing profit to be down year-on-year,
the company said.
The profit warning sent shares in
Imperial down by almost five per
cent yesterday. Fellow FTSE 100 tobac-
co stock British American Tobacco
dropped by almost one per cent.
This reinforces the importance of
our two focus areas for 2013: further
investing behind our key total tobac-
co assets and geographies; and accel-
erating our cost optimisation
programme, Imperials chief execu-
tive Alison Cooper said.
The company said that in the last
three months of 2012, revenues rose
Illicit cigarettes
stunt Imperial
Tobacco growth
BY JAMES TITCOMB
by two per cent even as volume sales
fell slightly. It said the firms key
strategic brands Davidoff,
Gauloises, West and JPS saw rev-
enues increase by 12 per cent.
In Australia where cigarettes have
been sold in plain, olive coloured
packaging since 1 December
Imperial claimed to have seen no sig-
nificant change in consumption
trends in the country.
Despite Imperials troubles, analysts
were bullish on the stock yesterday,
claiming it remains underpriced.
Yesterday, the company also
announced that finance director Bob
Dyrbus, who has been with the com-
pany for 25 years would retire.
F&C boss Richard Wilson was appointed by owner Ed Bramson in December 2012
THURSDAY 31 JANUARY 2013
10
NEWS
cityam.com
Imperial Tobacco Group PLC
30Jan 24Jan 25Jan 28Jan 29Jan
2,375
2,400
2,425
2,350
2,450
2,475 p
2,361.00
30Jan
F&C has made progress in improving ows, albeit that the headline
number continues to reect the larger strategic partner outows. We continue to
expect that earnings growth will be driven by the delivery of planned
cost savings, and this is likely to drive our 2013 forecasts higher.
ANALYST VIEWS

We continue to see intrinsic value in F&C given the maintained assets

under management levels. The uncertainty from the outow of Friends Life
assets under management continues to abate as less of it remains to be
in-sourced.

A weaker than expected quarter... To see further earnings and so share

price growth from here, the business will need to start delivering some mean-
ingful organic growth. This still feels a long way off.

WHAT DO YOU THINK OF

F&CS RESULTS?
STUART DUNCAN PEEL HUNT

ARUN MELMANE CANACCORD GENUITY

DAVID MCCANN NUMIS

THURSDAY 31 JANUARY 2013
11
NEWS
cityam.com
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Out, proud and FERCE
at Guildhall Art Gallery
Lord Mayor Alderman Roger Giord and Sheri of London
Alderman }erey Ivans auend lhe Cily Marilime Dinner: 'The
Role of Shiing in Inlernalional Trade' al Guildhall lhis evening.
The evenl celebrales lhe Cily's slrong links vilh lhe marilime
seclor and vill be auended by a vide range of guesls, including
oeralors, inveslors, lrade associalions and reresenlalives from
nalions vhich share a slrong marilime relalionshi vilh lhe UK.
Guildhall hosts City Maritime Dinner
London-based holograher A|amu
resenls FIIRCI, a series of orlrails
of lack rilish-born LGTQ
(Lesbian, Gay, isexual, Transgender
and Queer) eole al Guildhall Arl
Gallery and Roman Amhilhealre,
IC2, from 1 February lo 14 Aril.
The shov brings logelher overful
images of arlisls, aclivisls, oels and
cullural roducers lo challenge ideas
aboul black masculinily, gender,
sexualily and reresenlalion.
Cily churches and liule-knovn venues rovide lhe seuing for
Cily of London Free Winler Concerls. In|oy free lunchlime music
on Tuesdays and Wednesdays from 1.05m lo 1.55m more
delails from
Free music concerts in the 8quare Mile
Tncrc is a paucitq cj inagcs tc rccct tnc ricnncss an! !itcrsitq cj tnc
B|ac| IGBTQ |itc! cxpcricncc, sc nq ncu ucr| scc|s tc capturc a ncu
gcncraticn cj B|ac| an! prcu!|q cut qcung, cncrging an! csta||isnc!
ta|cnt in tnis ccnnunitq, says A|amu.
A secial Lale Viev vill be held al lhe arl gallery on 1 February
from 6m lo 10m, fealuring live music, soken vord cabarel
and a o-u bar. Admission FRII.
IN BRIEF
Tax change pushes Safestore to loss
n Self storage firm Safestore swung into a
loss in 2012, as the government extended
VAT to the industry. The UKs largest self
storage operator lost 19.5m before tax in
the year ending 31st October 2012,
compared to the 8.5m before tax profit it
enjoyed in the same period a year before.
The firm also announced it would become
a real estate investment trust during 2013.
Salmonds Scottish question rejected
n The question proposed for Scotlands
vote on independence has been rejected
by the Electoral Commission. The
commission said that asking voters
whether they agree that Scotland
should be an independent country was
biased, in a setback for SNP leader Alex
Salmonds campaign. The vote is due to
take place in 2014.
T
HERE were more bleak
economic figures out of Spain
yesterday, with its output in
the last quarter of 2012 down
1.8 per cent year-on-year. That wont
have been much of a surprise for
Imperial Tobacco, which produced
an interim management statement
for the last quarter of 2012 that
announced its six month adjusted
operating profit was likely to be
down year-on-year and blamed the
punishing effects of European
market pressures. This follows
Imperial writing down 1.2bn on its
Spanish business in October last
year. While the tobacco giant still
expects its full-year results to be in
line with expectations, thanks to
cost-cutting, it is hardly a picture of
booming growth, with the firms
tobacco net revenue in the quarter
up two per cent.
Part of the problem for Imperial is
that, despite ongoing boom times in
some emerging markets, it still
generates most of its profits in
Europe and America. In 2012, the UK
accounted for 21 per cent of its
adjusted operating profits, Germany
BOTTOM
LINE
MARC SIDWELL
Taxing times for tobacco as smokers count the change
another 15 per cent, Spain seven per
cent, and the rest of the EU together
a further 21 per cent. The rest of the
world outside the Americas
(including China, the biggest tobacco
market in the world) brings in less
than a third of its operating profit:
29 per cent.
Relying on smokers in developed
markets is a tough call these days.
Imperial estimates that the legal
cigarette market size is down seven
per cent in the EU. One obvious
immediate challenge is the
economic pressure from the
Eurozone crisis. Imperial boasts of
being a high margin company,
maintaining tobacco operating
margins at around 42 per cent. With
smokers budgets increasingly
constricted, they are looking for
cheaper solutions, either trading
down to non-premium brands,
turning to rolling their own
(Imperial saw nine per cent growth
in its rolling tobacco in the last
quarter of 2012) or simply turning to
the black market to avoid the taxes
which add so significantly to the
legal products costs: 16.5 per cent of
the retail price in the UK.
The result is pressure on tobacco
firms profits, and also, perversely,
on the tax-collectors. The Taxpayers
Alliance reported last year that 16
per cent of the UK market in
cigarettes was black market and
fully half of the market in rolling
tobacco. As a result, the taxman lost
out on a cool 12.2bn between the
2005/06 tax year and 2009/10 thanks
to illicit cigarettes alone.
This is not just a challenge in
Imperials most profitable market,
the UK. Australia has moved to plain
packaging of cigarettes. Russia
floated a plan at the end of last year
to increase tobacco taxes eightfold
and is voting on a ban on smoking in
enclosed public spaces. Russia is
second only to China in tobacco
consumption. Imperial has almost a
10 per cent share of the market.
Smoking is a costly habit, so
consumers act to reduce those costs,
by giving up or seeking cheaper
products. With taxes and regulation
pushing up costs, and hard times
limiting income, fat margins will
soon be going up in smoke.
Yesterdays debt issue by Phoenix was
structured in a unusual manner, with new
shareholder Och-Ziff underwriting part of
the transaction and receiving a guaran-
teed 8m of fees in return.
Och-Ziff fully underwrote the deal,
enabling us to negotiate better terms, chief
executive Clive Bannister explained.
Deutsche Bank and JP Morgan acted as joint
brokers on the deal but will only receive
0.75 per cent of the 1.75 per cent fee, with
the remaining one per cent shared among
Phoenixs shareholders, including Och-Ziff,
TDR Capital and Sun Capital.
JP Morgans team included Conor Hillery
and Tim Wise, while Deutsches bankers
included James Agnew and Mike Lamb.
Sun Capital, led by Phoenix founder and
board member Hugh Osmond, played a
central role in the renegotiation and intro-
duced Och-Ziff to the company. The entire
deal took almost a year to put together,
with the process made easier by the
involvement of a single underwriter.
ADVISERS
DEUTSCHE
JP MORGAN
OCH-ZIFF
SUN CAPITAL
The firm hopes a new Zelda title will help
THURSDAY 31 JANUARY 2013
12
NEWS
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GLOBAL staffing company
Manpower yesterday reported a
16 per cent fall in fourth-quarter
profit as a weak European
market hurt its margins.
US-based Manpower, which
derives most of its sales and
profit overseas, has been under
pressure from a weak economy
in Europe, where many
companies have cut back on
hiring.
We are on guard for potential
disruption in all markets,
particularly Europe, but at this
time we do not anticipate any
dramatic negatives, chief
executive Jeffrey Joerres said in a
statement.
Manpower, the worlds third
largest staffing company,
generates about two-thirds of its
sales in Europe.
Weak Europe
hits Manpower
BY CITY A.M. REPORTER
NINTENDO surprised the video
gaming world yesterday by cutting
sales forecasts for its Wii U and
3DS consoles.
The Japanese giant said it
expects Wii U shipments to have
hit 4m from its November launch
to the end of March, down from
the 5.5m originally anticipated.
Nintendo also trimmed annual
forecasts for the handheld 3DS
device from 17.5m to 15m.
The news will raise fears that
the Wii U will struggle to match
the success of its predecessor, the
Wii, which has hit sales of 100m
since its launch in 2006.
However, the firm upgraded its
profit forecasts on the back of a
weaker yen improving revenues.
Nintendo now expects to swing to
a 14bn (97m) profit for the year
to the end of March, up from the
6bn it forecast in October.
This compares to the 37.3bn
loss it made in the last financial
year, which was the first in
Nintendos 124-year history.
The firm, which began in 1889
as a playing card manufacturer,
has struggled to woo key casual
gamers, who are now playing on
Facebook and smartphones.
Nintendo cuts
forecasts for
sales of Wii U
BY JAMES TITCOMB
SWISS pharmaceuticals giant Roche
yesterday posted a four per cent lift
in group sales for last year, and said
it expects sales to grow at the same
rate in 2013.
The firm reported that sales hit
SFr45.5bn (31.6bn) due to greater
demand for key cancer drugs and
higher sales of diagnostic tests.
Excluding the effects of varying
exchange rates, sales were up seven
per cent.
Strong revenues allowed the firm
to post core operating profit of
SFr17.2bn, with core earning per
share up 10 per cent at SFr13.62.
A particular highlight in 2012
was the approval of breast cancer
medicine Perjeta, which helps
women with HER2-positive breast
cancer live longer, said Roche CEO
Severin Schwan.
Roche posts
lift in sales
BY JULIAN HARRIS
APPLE has seen its request to
increase its rival Samsungs
$1.05bn (665m) copyright fine
rejected in US courts.
The Korean company was
ordered to pay Apple the sum in
August after it was found to have
used patented iPhone designs in
its Galaxy handsets. Apple had
Apple loses attempt to triple
Samsungs $1bn patent charge
BY JAMES TITCOMB
attempted to up the fine, claiming
Samsung purposefully infringed
the patents. A verdict in Apples
favour could have seen the
damages tripled, but a New York
judge shot down the claims.
However, Samsung lost an
attempt to have the original trial
reheld. The legal duels between
the two are set to continue, with
more cases scheduled for 2014.
THREE Asian companies injected
fresh competition into the
smartphone industry yesterday,
boosting British chip firms
Imagination Technologies and
ARM Holdings.
LG, ZTE and Lenovo all outlined
a focus on competing with the
likes of Apple and Samsung, and
said they anticipate better sales of
high-end devices this year.
Chinas Lenovo, which is likely
Asian tech firms bring life to smartphone race
BY JAMES TITCOMB to become the worlds biggest
computer seller this year,
reported a 34 per cent rise
in quarterly profits, but
said it would protect itself
from a global PC slowdown
by trying to sell more
devices in mature markets.
ZTE, also based in China,
said it expects a 50 per
cent leap in smartphone
shipments this year while
Korean firm LG saw
smartphone sales rise as its
TV division suffered a decline.
The news, as well as an
upgrade from Morgan
Stanley, boosted graphics chip
designer Imagination, which
saw shares rise by 11.18 per
cent. ARM, which also makes
smartphone chips, rose as
much as 2.3 per cent
finishing half a per cent up.
ZTE expects smartphone sales to
rise by 50 per cent
LIFE insurer Phoenix yesterday
unveiled plans to raise 250m in a
share issue, enabling it to pay down
some of its 2.4bn debt pile and
raising the prospect of a return to
the acquisition market.
Chief executive Clive Bannister
said the deal first disclosed in
yesterdays City A.M. transforms
Phoenix by removing the
existential threat of having to pay
back 1.9bn of debt by 2016.
The clouds of uncertainty have
been removed, Bannister said,
Phoenix rises again after 250m share issue
BY JAMES WATERSON
adding that his company can now
look to purchase more businesses.
Unless we consolidate more we
would go inexorably into run-off.
We could not conceive of doing
acquisitions had we not retermed
our debt. That door is now open
we are back in the saddle, he told
City A.M.
The FTSE 250 company, formerly
known as Pearl, has carried heavy
debts since it purchased Clive
Cowderys Resolution in 2008.
Closed-book life insurers do not
accept new business but instead
buy portfolios of existing policies,
charging premiums until the
policies mature and combining the
businesses to save on costs.
Hedge fund Och-Ziff has agreed
to buy 80m of the issue, with the
rest available in an open offer. The
proceeds will be combined with
company cash to pay down 450m
of debt.
The maturity date for the crucial
1.4bn of Resolution-related debt
will be extended until June 2019.
Yesterday shares in company rose
by 6.6 per cent and Phoenix expects
its final dividend to rise by 27 per
cent to 26.7p as a result of the deal.
GOOD news for City lotharios, espe-
cially in the run-up to Valentines
Day. Apparently more women
would rather date a City trader
than a footballer.
The shine is slightly taken off
this news by discovering that it
is only true for women look-
ing to trade their hus-
bands for a banker
part-time.
The study, by
IllicitEncounters.com,
the dating website
for married people,
finds that after rock-
stars and musi-
cians, bankers are
the most lusted
after professionals.
Well at least by the
unfaithful members of the fairer
sex who visit its website.
The Capitalist is reminded of a
more wholesome survey once
conducted here, which round-
ed up the best of the Citys tal-
ent by seeking out the hunkiest
gents in finance.
Back then environ-
mental markets bro-
ker Anthony Astbury
and PwC England
rugby star Josh
Lewsey were hotties
du jour.
The Capitalist
would like to invite
submissions worthy
of elevation onto a
2013 Citys Got
Talent pedestal to
as always thecapi-
talist@cityam.com
Some women want more
The City of London Corporation
has dragged itself, kicking and
screaming, into the 21st century to
experience the joys of social media.
After months of toil spent developing
a new website and Facebook page, it
has now reached over 4,000 followers
on Twitter. It is good news for
#Guildhall, although it might take a
while to win over a couple of the Citys
elder statesmen who, The Capitalist is
told, still view email with a degree of
suspicion. Among the Corporations
new online disciples are the London
Bee Keepers, Dead Fox Removal
London and The Gin Spot. Yes theyre
all there said a spokesperson: Insect
lovers, vermin control and fine
dining. @cityoflondon seems to be
more discerning in whom it follows
itself. Enjoying science author Ben
Goldacre and the Citys snow-clearing
updates in its leisure hours, it wisely
keeps an eye throughout the day on
the latest business insights from
@allisterheath, @hellierd and
@cityamforum. Sorrowfully, we noted
that it has yet to discover the joys of
@cityamonline. The Corporation also
appears to have a slight obsession
with China, following twenty or more
related news feeds. Hopefully this
isnt a sign of the City itself
considering following the lead of so
many other banking types and
uprooting the Remembrancers Office
for a new life in the Asia-Pacific
region. But if so, there may be some
promising leads on @cityamcareers.
Original Thinking Applied
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imposed a 15% tax on your
product. Your customers have
signed a petition, but theyve
stopped buying. Think you
FDQPDLQWDLQSURts?
Think. You can.
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FORMER managing director of
private banking at RBS Nigel
Jackson has taken on a charity
role chairing the organising
committee of The Circuit, a
motor racing event to raise
money for the NSPCC.
Jackson, currently director of
boutique business consulting
company Abstract UK told The
Capitalist that weve already got
some keen racers signed up from
the Square Mile in addition to
celebrity team captains the
chef Gino DAcampo and rugby
player Austin Healey. However
Jackson was tight-lipped when it
came to naming which City boy
racer he thought might take
home the trophy on 7 March.
Chairman of The Circuit 2013, business consultant Nigel Jackson
Boy racers in the Square Mile
gear up for motoring challenge
No more WAGs
please: Women
prefer traders
13
cityam.com
THURSDAY 31 JANUARY 2013
cityam.com/the-capitalist
THECAPITALIST
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
FIAT said yesterday its debt grew by
about 1bn (850m) in 2012 as
European car sales tumbled 14 per
cent, leaving the Italian carmaker
ever more dependent on strong
growth at US unit Chrysler.
As Fiats management moves to
increase spending on new models in
Europe and the United States,
investors are keeping a close watch on
its debts for signs that cash-burning
European operations are straining the
groups crucial ability to invest in
products that will win customers in
the future.
Fiat, suffering from a brutal sales
downturn in Europe, said it did not
expect business conditions to change
in 2013 from its previous forecasts
and that its home region continues
to present significant levels of uncer-
tainty. Fiats net debt rose about 18
per cent to 6.54bn during 2012, a bet-
ter performance than nearly all ana-
lysts had expected.
Chrysler is also spending on new
BY HARRY BANKS models and said separately it expects
cash flow to slow to $1bn or higher in
2013, from $2.2bm in 2012.
Total available liquidity for the
group was 20.8bn, slightly higher
than year-end 2011.
Fiat said its full-year loss before inter-
est and taxes in Europe, where car
sales are entering their sixth year of
decline, was 738m. It has said it does
not expect to break even in Europe
before 2015. It pared fourth-quarter
losses in Europe before interest and
taxes to 165m, down from 298m
the same time last year.
Retailers warn politicians red
tape is stifling social mobility
RETAILERS last night urged
politicians in Westminster to avoid
stifling the work opportunities it
offers to people from less
privileged backgrounds.
On the evening that the British
Retail Consortium (BRC) held its
annual parliamentary reception,
the group called on government to
cut back on red tape.
Retail is one of the most
meritocratic sectors of the
economy, the BRC says, providing
flexible work to at least one
person in every one in eight
British households.
In retail, career progression is
based on aptitude and attitude.
You really can climb from shop
BY JULIAN HARRIS
floor to boardroom, commented
Helen Dickinson, the BRCs
director general.
Retailers are uniquely placed to
promote social mobility and help
the government deliver on its
growth, jobs and skills priorities,
but this shouldn't be taken for
granted.
Shops and other retailers provide
jobs to 40 per cent of 16 to 19 year
olds, the BRC says, investing 1,275
on training per employee every
year. It added that one in six
people without qualifications work
in retail, while 13 per cent of the
sectors staff have a disability.
We must not let our investment
in people be stifled by allowing red
tape to get in the way, Dickinson
added.
IN BRIEF
Renishaw helped by China
n Manufacturing group Renishaw has
posted an 18 per cent rise in revenues to
174.2m for the last six months of 2012,
giving it a 39 per cent jump in adjusted
pre-tax profits to 42.3m. The company
hailed a rise in orders from China for the
boost, which has helped it hike its
dividend ten per cent to 11.33p.
However, its shares fell more than four
per cent on the firms caution over
orders for the next half of the year.
Architect Aukett swings into black
n Aukett Fitzroy Robinson, the Aim-
listed architect practice, yesterday said
it had swung to a profit of 210,000, in
spite of wealthy clients reluctance to
build during a period of economic
turbulence. Revenues at the firm,
known for restoring Ashdown House in
Victoria, rose six per cent to 9.15m.
Strong quarter for Las Vegas Sands
n Casino operator Las Vegas Sands,
owned by billionaire Sheldon Adelson,
yesterday said fourth-quarter earnings
rose 35.8 per cent from a year ago,
helped by a strong performance in
China. Fourth-quarter net income rose
to $434.8m, while earnings per share
rose 35.9 per cent to 53 cents from 39
cents a year earlier. Revenues rose 20.9
per cent to $3.08bn.
Revenue up at Kenmare Resources
n FTSE 250 miner Kenmare Resources
yesterday posted a 40 per cent jump in
revenue to $234.5m (148.5m) in 2012,
boosted by a 98 per cent increase in the
price of ilmenite, which it mines in
Mozambique. However, the total
amount of metal shipped fell last year
to 680,800 tonnes of finished product,
compared to 730,400 tonnes in 2011.
HORNBY, the maker of toy trains and Scalextric sets, said yesterday it expects full-year profits
to be in line with expectations after issuing a surprise profit warning in September. The
company, which is expected to break-even in the year to March 2013, also said that the
majority of its 2012 branded goods that it failed to sell during the Olympics had been sold.
TOYMAKER HORNBY SAYS SALES BACK ON TRACK
Fiat SpA
30Jan 23Jan 24Jan 25Jan 28Jan
4.60
4.50
4.70

4.46
30Jan
THURSDAY 31 JANUARY 2013
15
NEWS
cityam.com
H&M, the Swedish fashion giant,
said it plans to press ahead with
ambitious expansion plans this
year as it reported an
unexpected drop in fourth
quarter earnings yesterday.
The worlds second
largest retailer said it will
open 325 stores this year,
with most planned in
China and the US, up
from 304 last year.
It will also launch in
new markets including
Chile, Estonia and
Lithuania and its new
more luxurious brand
& Other Stories will also
open its first stores
H&M eyes further expansion as
earnings drop on higher costs
BY KASMIRA JEFFORD across Europe this spring as it
attempts to catch-up with the
wider offering of Zara-owner
Inditex.
H&Ms plans came as it reported
net profit of 5.29bn kronor
(528m), for the quarter to the
end of November, down from
5.36bn kronor in the same
period last year, mainly due to
higher expansion costs.
The group also
warned that January
sales are only
expected to have
risen five per cent
due to the colder
weather.
IN THE run-up to the board
showdown with Nat Rothschild
on 21 February, Bumi shareholder
and hedge fund Route One spoke
out in support of the board
yesterday, with founder Ashish
Pant telling City A.M. that the
coal miners proposal for the
future of the firm was the lower-
risk option.
US-based Route One, which was
reported to the UK Takeover
Panel by Bumi co-founder
Rothschild at the weekend for
allegedly breaching concert party
rules, holds a 2.8 per cent stake in
the London-listed miner.
Last month, the Takeover Panel
ruled that Indonesian
Route One founder speaks
out in support of Bumi board
BY CATHY ADAMS shareholders the Bakries and
Rosan Roeslani should be
considered as a concert party, and
so must have their voting power
reduced to 29.9 per cent.
But in a statement last
weekend, NR Investments said
that the concert party should be
widened. Both Orchard Capital
[another stakeholder] and Route
One are invested in or affiliated
with companies that have
exposure to the Bakries margin
loans, it said.
Two small Bumi shareholders
Michael Platt of BlueCrest Capital
Management and Lord David
Alliance spoke out in support of
the financiers proposals
yesterday, which involve
overhauling the current board.
MPs have today urged the
Department for Transport to reveal
exactly what went wrong during
the botched franchising
competition for the West Coast
Main Line rail route.
The transport select committee
said it wants to know how much
the failed process has cost and hear
more details of how department
staff ended up with wrong
information about the loan
requirements of each bid.
Many of the problems with the
franchise competition, detailed in
the Laidlaw report, reflect very
badly on civil servants at the DfT,
said committee chair Louise
Ellman MP.
MPs want info
on West Coast
BY MARION DAKERS
Lana del Rey fronted a
campaign for H&M in 2012
AN unemployed man has gone on
trial at Southwark Crown Crout
charged with six counts of insider
trading related to shares traded on
the London Stock Exchange.
Richard Joseph, 43, is accused of
trading in the shares of six publicly
listed companies between
September 2007 and July 2008
allegedly using price sensitive
information given to him by a
printer who worked in the print
room of JP Morgan Cazenove.
He denies the charges. JP Morgan
is not accused of any wrongdoing
and bear no corporate
responsibility for what allegedly
took place.
The trial continues.
Insider trading
case kicks off
BY MICHAEL BOW
Fiats debt rises
as car sales fall
14pc in Europe
THREE police forces have axed
plans to outsource support work
to G4S, in a blow to the company
just months after its botched
Olympics contract.
Bedfordshire, Hertfordshire and
Cambridgeshire police forces had
hoped to save 73m through a deal
that handed G4S human resources,
finance and IT work, but will now
look at other ways to cut costs.
The contracts had been based on a
similar deal with Lincolnshire
police force.
Police forces
ditch G4S deal
BY MARION DAKERS
JAPANESE car maker Toyota will
recall nearly 1.3m cars globally for
faulty airbags and windscreen
wipers, the firm announced
yesterday.
The recall, which is not thought
to affect UK customers, includes
left-hand drive models of certain
Corolla and Corolla Matrix vehicles,
as well as some Lexus IS cars.
It is the third major Toyota recall
since October, and echoes a series of
faulty models that caused the firm
to lose its crown as the worlds
biggest selling car maker in 2011.
New car recall
woe at Toyota
BY MARION DAKERS
ONLY 148,000 people usually
resident in England or Wales
cannot speak one of the two
countries mother tongues, the
census data, yesterday released by
the Office for National Statistics,
revealed.
Around three-quarters of a
million people could speak some
English or Welsh though it was
not their first or main language
but could not speak it well or very
well.
But a full 49.8m of people 92.3
per cent counted English or
Welsh as their first or main
language, though in diverse
London this proportion fell to 77.9
per cent.
Across England and Wales, the
second most common main
language was Polish with
546,000 speakers, followed by
Panjabi and Urdu, both of which
had just over a quarter of a million
speakers.
The data also included figures
on household make-up, which
revealed that fewer and fewer
households were headed by
married couples six per cent less
in 2011 compared to 2001 while
more and more were headed by
lone parents or unmarried
cohabiting couples.
Census reveals
English spoken
by 92 per cent
BY BEN SOUTHWOOD
THURSDAY 31 JANUARY 2013
16
NEWS
cityam.com
THE RECESSION in the Eurozone was
exposed by more bearish data
released yesterday, yet a survey of con-
fidence from Brussels suggested that
hopes for a recovery are starting to
grow.
In crisis-struck Spain the downturn
worsened in the final three months of
the year, figures showed, while retail-
ers across the single currency area are
continuing to report economic con-
traction in their industry.
Output in Spain collapsed 0.7 per
cent in the final quarter of 2012,
down 1.8 per cent from the same peri-
od a year earlier.
And Markits latest purchasing man-
agers index (PMI) for retailers across
the euro area as a whole showed a
15th consecutive month of declining
sales. The PMI edged up from 44.5 in
December to 45.9 in January, but
remains below the 50 no-change
mark.
Yet a measure of economic confi-
dence in the Eurozone, published by
Morale in euro
area edges up
despite Spain
BY JULIAN HARRIS the European Commission, edged up
in January.
The Commissions economic senti-
ment indicator rose by 1.4 points in
both the Eurozone (to 89.2) and the
wider European Union area (to 90.6).
Both levels remain sunk below the
100 mark, however, which represents
the average between 1990 and 2012.
In Italy a separate survey of business
confidence also edged up, from an
index score of 79.9, up from 75.6 in
December.
And confidence in Italys prospects
also appeared to be improving, as the
government paid less to borrow over
five and 10 years than it had since
October 2010. The Treasury raised
6.5bn (5.6bn), the top of its 4.5-
6.5bn target range, 3.5bn of which
was 10-year debt. Rome paid a yield of
4.17 per cent for the 10-year paper,
down from 4.48 per cent at the end-
December sale and below 4.23 per cent
in the secondary market around the
time of the auction. Ten-year yields
were little changed after the results,
up five basis points.
Economists warn poor standard
of British schools will hurt GDP
A GROUP of economists will today
urge the government to radically
improve educational standards at
British schools, arguing that
reforms are key to the countrys
long-term prosperity.
The London School of Economics
(LSE) growth commission will also
hit out at UK governments poor
record over infrastructure.
Political procrastination and the
absence of a strategic framework
have created policy risk, which
deters investors from making long-
term commitments, the report
said, attacking the planning system.
BY JULIAN HARRIS Decisions are rarely based on the
best evidence and the planning
system does not properly share the
benefits of development, so that
people who are adversely affected by
new developments do not receive
compensation and have little
incentive to support them.
The LSE panel includes former
Bank of England deputy governor
Rachel Lomax, and is co-chaired by
fellow ex-Bank official Tim Besley.
It will argue that the standard of
compulsory schooling in the UK is a
fundamental growth issue.
Increasing UK school standards
even moderately could put the
country on a growth path that
would more than double long-run
average incomes, it says.
House prices in London satellite
towns expected to climb in 2013
HOUSE prices in commuter towns
on the outskirts of London
jumped in the final three months
of the year, high end estate agent
Savills said yesterday.
Prices in the so-called inner
commute area were up 0.5 per
cent from October to December,
compared to the previous quarter.
Residential properties in these
areas remained slightly down
compared to a year earlier, the
data said, and 4.8 per cent down
on their peak.
Yet Savills expects prices to
climb during 2013.
BY CITY A.M. REPORTER
Price growth has focused in
commuter hotspots such as
Sevenoaks and Guildford and
Chelmsford as buyers continue to
favour urban locations, the firms
report said.
The inner commuter zones and
prime suburbs closer to London
are forecast to be the only prime
markets to see house price growth
this year, with a rise of one per
cent expected.
Prime locations inside London
itself, however, are expected to
flatline.
The value gap between London
and prime commuter locations
seems to have peaked, says Lucian
Cook, director of residential
research at Savills.
We expect this to trigger a
long-awaited ripple out of
London.
Outside the capital, prices in
urban neighbourhoods are
holding up more than in nearby
rural areas, Savills said.
Its figures show prices in
southern England countryside
villages are down 14.8 compared
to their peak having dropped 1.7
per cent last year while those in
southern towns and cities are a
less severe 10.8 per cent below
peak having dropped only 0.3
per cent last year.
BRITISH consumers have started
the year feeling less pessimistic
about the countrys economic
prospects, a widely-regarded
survey revealed this morning.
Research company GfKs first
consumer confidence barometer
of 2013 found that expectations
for the general economic situation
over the coming year jumped by
six index points.
While still slumped in negative
territory, this sub-index climbed
from minus 31 at the end of last
year, to minus 25 this month.
With a brighter outlook, people
may be more prepared to splash
more cash on coveted consumer
goods, the survey added.
Hope for the high street as UK
consumer confidence improves
BY JULIAN HARRIS
The firms climate for major
purchases sub-index rose from a
reading of minus 27 to minus 22.
Yet GfKs Nick Moon warned:
Its worth noting however that
peoples views of their own
financial situation arent as
optimistic, with no improvement
expected in the next 12 months.
The sub-index measuring
respondents personal finances
over the past 12 months slipped
from minus 22 to minus 24 two
points lower than at the same time
last year.
Overall the index was positive,
nonetheless. GfKs headline
figure a leading measure of
consumer confidence rose to
minus 26 in January, up from
minus 29 the previous month.
OVERWHELMING MAJORITY OF UK RESIDENTS ARE ENGLISH-SPEAKERS
LONDON STANDS OUT AMONGST REGIONS FOR LINGUISTIC DIVERSITY
ONLY 138,000
49.8m (92%)
SPEAK ENGLISH AS
THEIR MAIN LANGUAGE
OF RESIDENTS AGED 3+
IN ENGLAND & WALES
(BELOW 0.5%)
CANT SPEAK ENGLISH OR WELSH
OF RESIDENTS
THE NEXT BIGGEST FIRST LANGUAGES ARE...
POLISH
546,000
PUNJABI
273,000
URDU
269,000
ENGLAND AND WALES
LONDON
WEST MIDLANDS
EAST MIDLANDS
YORKSHIRE & THE HUMBER
SOUTH EAST
EAST OF ENGLAND
NORTH WEST
SOUTH WEST
WALES
NORTH EAST
0
PROPORTIONOF RESIDENTS WITHAMAINLANGUAGE OTHERTHANENGLISH, %
5 10 15 20 25
IN BRIEF
Belgiums GDP shows slow decline
n The Belgian economy shrank by 0.2
per cent last year, according to official
flash estimates released yesterday. The
Eurozone states GDP fell by 0.1 per cent
in the final three months of the year,
compared to the previous quarter. BNP
Paribas said it expects the Belgian
economy to flatline in 2013, recording
zero growth.
Quotas opposed by 94pc of women
n Only six per cent of attendees at a
recent conference of high-powered
women believed quotas to be the best
way of getting women ahead in key
industries, recruitment firm Randstad
said yesterday. The view I hear echoed
by many women in the retail sector is
that they would prefer to get there on
their own merit, commented Randstad
director Peter Shrimpton.
Irish unemployment holds at 14.6pc
n Unemployment in Ireland has stuck
at 14.6 per cent at the start of this year,
its Central Statistics Office (CSO) said
yesterday. The rate is down 0.3
percentage points compared to January
a year ago. The number of people
claiming jobless benefits in Ireland fell
by 900 on a seasonally adjusted basis
compared to December.
Fitch cuts troubled Egypts rating
n Fitch yesterday cut Egypts sovereign
credit rating one notch to B from B-
plus, citing a wider budget deficit and
political instability. The rating reflects
a balance between short-term reserve
pressure, political upheaval, a weak and
deteriorating fiscal position and capital
flight against our assumption that an
IMF programme will be in place after
the election, Fitch said
LSE groups recommendations:
Better teachers
Greater autonomy for schools
More apprenticeships
A so-called infrastructure bank to
boost funding for projects
More competition in retail banking
Business bank that prioritises
lending to SMEs and innovative firms
HOW TO BOOST GROWTH
THURSDAY 31 JANUARY 2013
17
NEWS
cityam.com
CHEMICALS firm Johnson Matthey
saw profits plunge over the third
quarter, due to lower sales in its
precious metals products division.
Underlying pre-tax profits sank
19 per cent to 84.3m over the third
quarter, it said yesterday.
The precious metal product
division, which refines and
fabricates metals such as platinum,
posted a seven per cent drop in sales
to 128m, in part due to lower
volumes from Anglo American
Platinum.
Earlier this month, Amplats said
it would restructure its business,
which involves closing several
mines in South Africa.
Meanwhile, the groups emission
control technologies division,
which makes catalytic converters
for cars, was hit by weak car sales in
Europe and Japan. The arm posted a
six per cent drop in sales to 346m
over the three months to December.
The FTSE 100 firm added that it
expected the groups performance
in the second half to be similar to
the first half. In a difficult market
environment during the quarter,
trading across the group was
challenging, Johnson Matthey said
in a statement yesterday.
Its shares closed 4.24 per cent
down at 2,306p.
Weaker sales
hurt Johnson
Matthey profit
BY CATHY ADAMS
RUSSIAN precious metals producer
Polymetal yesterday denied merger
talks with peer Polyus Gold, as it said
it was on track to produce 1.2m troy
ounces of gold equivalent in 2013.
A spokesperson from the FTSE 100
company yesterday told City A.M. that
Polymetal was not in discussions
with fellow Russian gold producer
Polyus Gold regarding a possible
merger.
There has been long-running specu-
lation of a combination between the
two.
Meanwhile, Polymetal yesterday
said total gold equivalent production
in 2012 was up 31 per cent year on
year to 1.06m ounces exceeding
guidance by six per cent driven
mainly by a stable performance at all
its mature mines.
On the back of strong output over
the past year, the precious metals
miner said it paid its first special div-
idend this year of $0.50 (0.32) a
share in January.
Polymetal gives
upbeat outlook
as denies tie-up
BY CATHY ADAMS
While the company reiterated its
2013 production guidance of 1.2m
ounces of gold equivalent, it warned
that there was a moderate risk of
this guidance not being achieved.
The company, controlled by Russian
businessmen Alexander Nesis
brother of chief executive Vitaly and
Alexander Mamut along with Czech
private equity investor PPF, added it
expected capital spending of $300m
in 2013, inclusive of exploration.
Polymetals shares closed down 1.98
per cent yesterday at 1,088p.
CHILEAN copper miner
Antofagasta topped the FTSE 100
loser board yesterday as it warned
on copper and gold production.
Output this year is expected to
fall to around 700,000 tonnes of
copper and 260,000 ounces of gold,
due to higher on-site costs at both
the Esperanza and Los Pelambres
mines.
The cost to mine a pound of
copper is also expected to
increase, Antofagasta said, from
Costs force Antofagasta to warn
over gold and copper output
BY CATHY ADAMS 140 cents per pound to 185 cents
per pound this year.
Ben Davies at Liberum yesterday
said costs were significantly
higher than expected.
The miner yesterday posted a
10.8 per cent increase in copper
output over 2012 to hit 709,600
tonnes. Gold production rose to
299,900 ounces last year, compared
to 196,800 ounces over the
previous year, reflecting higher
throughput at its Esperanza mine.
Shares closed down 8.31 per
cent yesterday at 1,169p.
Antofagastas operations are mainly concentrated in Chile, South America
A DUTCH court ruled yesterday
that Royal Dutch Shells Nigerian
subsidiary was responsible for a
case of oil pollution in the Niger
Delta and ordered it to pay
damages in a decision that could
open the door to further
litigation.
The district court in The Hague
said Shell Petroleum Development
Company of Nigeria (SPDC), a
wholly-owned subsidiary, must
compensate one farmer, but
dismissed four other claims filed
against the Dutch parent company.
Four Nigerians and campaign
group Friends of the Earth filed
suits in 2008 in The Hague, where
Shell has its global headquarters,
Dutch court says Shell partly
responsible for Nigeria spills
BY CITY A.M. REPORTER seeking reparations for lost
income from contaminated land
and waterways in the Niger Delta
region.
The case was seen by
environmental activists as a test
for holding multinationals
responsible for offences at foreign
subsidiaries, and legal experts said
other Nigerians affected by
pollution might now be able to sue
in the Netherlands.
Shell said the case would not set
a precedent because its parent
company was not held responsible.
The farmer who won
compensation, 52-year-old father
of 12 Friday Akpan, said he was
very happy with the judgment
because it would allow him to
repay his debts.
LM Investment Management
The fund management firm has
announced two appointments.
Joe Samuel becomes director of
LM London. He has previously
held roles at Law Business
Research. Simon Bottle becomes
business development manager
in London. He has also worked at
Goldman Sachs and ABN AMRO.
Actis
The private equity firm has appointed Arjun Oberoi as
global healthcare sector head and Ivy Santoso as
Indonesian country head. Oberoi was most recently head
of international strategy at Stryker Corporation. He has
also held roles at McKinsey and Pfizer. Santoso joins
from Avenue Capital.
John Menzies
Paula Bell has been appointed group finance director of
John Menzies. She joins from Ricardo, the consultancy,
where she was group finance director for six years. Bell
has also held senior roles at Rolls Royce, AWG, and BAA
Gatwick.
Mubadala Pramerica Real Estate Investors
Faris Mansour has been appointed director of capital
markets at the investment firm. He was previously head
of private capital markets at Macquarie Capital in Dubai.
Mansour has also held senior roles in Macquarie Real
Estate Funds Group, based in Chicago.
Linklaters
The law firm has appointed Juan Barona as a partner in
its Spanish banking practice. He joins from Allen &
Overy, where he was a partner. Barona specialises in
advising on restructuring matters.
BlueBay Asset Management
The fixed income and alternative investment
management firm has appointed Steven Bayly as head
of sales, Germany. He joins from BlackRock, where he
was head of institutional business for Germany and
Austria. Bayly has also held senior roles at Deutsche
Investment Trust.
Colliers International
Jack Benson has been appointed as a surveyor within
the commercial real estate services firms West End
tenant representation team. He has transferred across
from Colliers Internationals Sydney team, where he
focused on providing representation services to
landlords in the technology and media sectors.
BNP Paribas Real Estate
Ashley Layton has been recruited by the real estate
services firm. He specialises in the retail and leisure
markets, focusing on investment, and joins as an
associate director from Gerald Eve.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
in association with
Polymetal International PLC
30Jan 24Jan 25Jan 28Jan 29Jan
1,080
1,100
1,060
1,120
1,140 p
1,088.00
30Jan
Antofagasta PLC
30Jan 24Jan 25Jan 28Jan 29Jan
1,240
1,260
1,220
1,180
1,200
1,280
1,300 p 1,169.00
30Jan
WASTE and water group United
Utilities said yesterday that it is
trading in line with expectations,
although it said that revenue had
increased at a rate slightly below
the regulated price rises.
This reflected the ongoing
impact of a tough economic
climate, it said.
Depreciation, power and other
costs also increased, which
weighed on the increase in
revenue.
The water firm added that it
continued to make good progress
on its capital investment
programme, and remained on
track to invest around 750m in its
asset base this year.
United Utilities
trading in line
BY CATHY ADAMS
PRE-TAX profit at iron ore producer
Ferrexpo tumbled 57.1 per cent over
the first nine months of last year, it
said yesterday.
Profits sank to $228.8m (144.8m),
down from $533.6m over the first
nine months of 2011, on the back of
lower sales volumes and lower iron
ore prices.
Sales fell to 7m tonnes of pellets
over the period, down from 7.2m
pellets the previous year, while the
average iron fines price sank to $131
a tonne from $177 a tonne over the
nine months of 2011, Ferrexpo said.
It also said it is looking at a
potential US dollar-denominated
senior unsecured Eurobond issue.
Shares closed down 5.48 per cent.
Lower prices
hit Ferrexpo
BY CATHY ADAMS
PETROFAC tumbled on the FTSE 100
yesterday as it was hurt by a profit
warning from Italian peer Saipem.
Shares in the oil and gas services
group closed down 7.02 per cent
down at 1,615p, as the Italian
energy engineering firm issued an
unexpected profit warning.
The group, which is controlled by
ENI, cut its guidance for 2012 and
forecast a fall of 80 per cent in
earnings before interest and tax in
2013 for its onshore business, and a
70 per cent fall in offshore activity.
We expected some form of profit
warning from Saipem, but this
news has far surpassed our
expectations, analysts from
Canaccord Genuity said yesterday.
Petrofac falls
as sector hurt
BY CATHY ADAMS
THURSDAY 31 JANUARY 2013
18
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LONDONREPORT
T
he FTSE 100 fell yesterday,
weighed down by miners after
disappointing US GDP data as
investors considered whether
the rally that has lifted the index to
4-1/2 year highs has further to run.
The FTSE 100 closed down 16.08
points, or 0.3 per cent, at 6,323.11, hav-
ing climbed some 20 per cent from its
June lows.
The data which showed the world's
largest economy suffered an unexpect-
ed contraction in the fourth quarter
knocked the index even as it buoyed
expectations that the US Federal
Reserve will continue its easy mone-
tary policy.
The Fed is expected to maintain asset
buying at $85bn (53.8bn) a month
when it concludes its policy meeting
later in the day and stick to its commit-
ment to hold interest rates near zero
until the unemployment rate falls to
6.5 per cent.
Heavyweight miners were the
biggest casualties yesterday, led down
by an 8.3 per cent drop from Chilean
miner Antofagasta which said its pro-
duction costs would jump this year
and it would not increase output.
Charts show the strong rally has pro-
pelled the UK benchmark heavily into
overbought territory, fuelling some
expectations of a pull-back.
The FTSE 100's 14-day relative
strength index (RSI) - a widely-used
technical momentum indicator - was
at 80, with a reading of 70 and above
deemed to be overbought.
However some strategists see further
gains in equity markets thanks to liq-
uidity support from central banks, an
improving global economic outlook,
and robust earnings.
I would be reluctant to say (the
grind higher) has gone too far, Ian
Richards, head of equity strategy at
Exane BNP Paribas, said.
When we look at fundamentals, I
would fully expect earnings forecasts
to be met this year; I think the econo-
my can support that.
Angus Campbell, head of market
analysis at Capital Spreads, mean-
while, said: It's just interesting to see
that any dips have been really short-
lived this year which just goes to show
that there's still momentum in the
uptrend.
Imperial Tobacco also knocked the
FTSE 100, the biggest drag on the
index yesterday in terms of points,
after saying it expects growing compe-
tition from the black market in ciga-
rettes to hit its first-half profits.
Its shares fell 4.3 per cent in brisk
trade, with volume at 323 per cent of
its 90-day daily average against the
FTSE 100 on 104 per cent of its 90-day
daily average.
Oil services stocks weakened, impact-
ed by a profit warning from Italy's
Saipem.
Petrofac was left nursing a seven per
cent drop, while Wood Group shed
2.2 per cent, and Amec traded 2.1 per
cent lower.
FTSE loses pace
after poor US
economic data
CITY
YOUR ONE-
STOP SHOP
BROKER VIEWS AND
MARKET REPORTS
FTSE
30Jan 24Jan 25Jan 28Jan 29Jan
6,375
6,350
6,325
6,300
6,275
6,250
6,225
6,200
6,323.11
30 Jan
DASHBOARD
Stocks dip on
Fed decision to
keep easing
U
S stocks edged lower yesterday
after the Federal Reserve left in
place its bond-buying stimulus
plan, saying economic growth
had stalled but indicating the
pullback was likely temporary.
Describing the US job market as con-
tinuing its modest pace of improve-
ment, the Fed repeated a pledge to
keep purchasing securities until
employment improves substantially.
The statement from the Fed follows
data that showed the economy, as
measured by gross domestic product,
unexpectedly contracted in the fourth
quarter. Economists stressed that the
0.1 per cent contraction, caused partly
by a plunge in government spending
and lower business inventories, is not
an indicator of recession.
It is interesting that the Fed decided
to focus on the GDP report, pointing
to how activity slowed because of tran-
sitory factors. That sums up the GDP
report. I am a bit puzzled why the Fed
focused solely on one report. I would
argue that this was a slightly dovish
report, said Tom Porcelli, chief US
economist at RBC Capital Markets
The Dow Jones industrial average
was down 44.00 points, or 0.32 per
cent, at 13,910.42. The Standard &
Poors 500 Index was down 5.88
points, or 0.39 per cent, at 1,501.96.
The Nasdaq Composite Index was
down 11.35 points, or 0.36 per cent, at
3,142.31.
The S&P 500 held above 1,500, seen
by technical analysts as an inflection
point that will determine the overall
direction in the near term. The index
is on track to post its best month since
October 2011 and its best January
since 1997.
Both Boeing and Amazon.com
shares gained after earnings beat
expectations, continuing a trend this
quarter of high-profile names advanc-
ing after results. Amazon rose 5.1 per
cent to $273.51 (173.15) and Boeing
rose 1.1 per cent to $74.43.
BESTof theBROKERS
WPP
Jefferies upgraded the worlds biggest advertising group from a hold to a buy
yesterday, saying that the outlook for 2013 is encouraging, even in a cyclically poor
year. With expectations low, we see upside risk, the bank said, adding that after a
period of acquisitions in 2012, WPP is more likely to use cash to pay higher
dividends this year. Jefferies upped its target price from 800p to 1,150p yesterday.
BRITISH LAND
Charles Stanley keeps its accumulate rating on the property firm following a
reassuring third quarter update this week. Despite economic headwinds, British
Land has maintained its occupancy rate at an impressive 97.7 per cent, the broker
notes, and says that the firm has positioned itself well as a defensive play as well as
a real estate growth pick.
EXPERIAN
Nomura has a buy rating on the data firm and a target price of 1,215p following an
investor day. The broker thinks Experian is deliberately pursuing growth rather than
margin expansion, which it believes is probably to the long-term benefit of the
business. Expansion into new markets and new products will help the firm
rebalance away from its reliance on banks, Nomura adds.
NEW YORK
REPORT
WPP PLC
24 Jan 25 Jan 28 Jan 29 Jan 30 Jan
p 1,010
1,000
990
980
970
960
990.00
30 Jan
British Land Company PLC
24 Jan 25 Jan 28 Jan 29 Jan 30 Jan
p 572
570
568
566
564
562
560
558
564.00
30 Jan
Experian PLC
24 Jan 25 Jan 28 Jan 29 Jan 30 Jan
p 1,105
1,100
1,095
1,090
1,085
1,080
1,075
1,070
1,081.00
30 Jan
W
ITH the predictability of
snowflake causes chaos
stories, we are entering the
annual banker bonus
furore season. With the
economy in doldrums, and the
industry in the doghouse, it is easy to
understand the concern. Top bankers
have themselves said that pay has
been grotesque.
But just as predictable as the
outrage is a lack of acknowledgement
of how much has changed since the
start of the crisis. Across investment
banking, bonus pools fell 55 per cent
between 2007 and 2011 (according to
pay consultants McLagan), and are
widely predicted to fall again this year.
Overall, immediate cash bonuses are
down 77 per cent in four years a
T
HE muted optimism of the
coalitions mid-term review has
made way for the harsh reality
of disappointing GDP figures.
The economys most recent dip
demonstrates the scale of the
remaining challenge: public sector
reform was David Camerons big idea,
but too little has been achieved.
Even the coalitions more radical
reforms, in health and education, are
not moving fast enough to deliver value
and quality. What is going wrong? The
coalition doesnt begin to measure up
to one of its main inspirations the
Swedish reformers of the 1990s.
Swedens financial crisis struck in
1991: the product of a now familiar
cocktail of housing bubble, credit
crunch and anti-competitive regula-
tion. High taxes and productivity
decline foretold years of low or negative
growth: GDP fell by 4 per cent between
1990 and 1993.
Swedish reformers used this fiscal cri-
sis to radically reform the state. A cen-
tre-right coalition opened up the
universal welfare state to choice and
competition, using private companies
cityam.com/forum
Swedens economy
grew by 3.7 per cent in
2011, compared to just
0.8 per cent in Britain
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

20
THURSDAY 31 JANUARY 2013
WILL TANNER
How Sweden reformed its state to
lay foundations for future growth
and people power to improve quality
and efficiency. State funding for educa-
tion was reformed to follow the pupil,
rather than the service, meaning that
schools had to compete for custom for
the first time. In healthcare, the private
sector was invited to set up hospitals,
GP clinics and even ambulances.
In both sectors, postcode lotteries
have been replaced with a diverse sys-
tem of providers in which the citizen is
king. The best providers flourish, the
worst adapt or die. Over 400 free
schools have since been set up, many
profit-making, and nearly a tenth of
parents now choose to send their chil-
dren to a privately-run secondary
school. Free schools may be Michael
Goves headline education reform, but
barriers to private sector involvement
have limited their number to just 79.
And two decades of competition policy
in the NHS have resulted in just 3 per
cent of healthcare services provided by
outside companies; over the same peri-
od, Sweden has increased that number
to 25 per cent.
Competition has delivered better serv-
ices. At Kunskapsskolan, a private free
school chain, children take greater
responsibility for their own learning;
setting their own goals, class schedules
and recording progress online. The
10,000 pupils taught in its 33 schools
consistently outperform the national
average. Private healthcare companies
have helped the Swedish healthcare
system keep up with rapid change. St
Gran hospital in Stockholm has been
outsourced to a private company,
Capio. Since 1999, St Gran has grown
its market share, improved clinical care
and patient satisfaction, and saved mil-
lions.
Choice has also been accompanied by
a shifting of responsibility. While min-
isters baulk at the idea of introducing
charging in the NHS, patients in
Sweden do not just choose their health
provider, they pay for services too.
Small payments for GP and hospital
stays incentivise would-be patients to
think about their health and use more
cost-effective care settings, with individ-
ual costs capped to ensure poorer citi-
zens are not disadvantaged. In the
decade to 2010, costly hospital admis-
sions increased by just 1.6 per cent,
compared to a 38 per cent increase in
the UK, without any adverse effect on
health outcomes.
One of the most important achieve-
ments in Sweden has been bringing
workers on side. While outsourcing is
still controversial, once-obstructionist
unions have been persuaded that com-
petition drives up wages and improves
working conditions for members. They
now largely support the reforms. In
2001, a major report by the powerful
Municipal Workers Union went so far
as to say that competition between the
various providers can promote and
promulgate improvements in both pro-
ductivity and quality.
As a result, Sweden now enjoys budg-
et surpluses of up to 3 per cent of GDP a
year. Meanwhile, since public sector
reform improves economic perform-
ance by raising productivity, the
Swedish economy continues to grow.
Sweden recorded growth of 3.7 per cent
of GDP in 2011 and an estimated 0.9 per
cent in 2012, compared to just 0.8 per
cent and zero in the UK.
The Swedish experience not only
reveals the limitations of the coalitions
achievements, it also shows the value
of consistent policy, even in the face of
opposition. Cameron has not learnt the
lessons of another reforming Prime
Minister, Tony Blair: if you think a
change is right, go with it. Opposition is
inevitable, but rarely unbeatable.
Will Tanner is a senior researcher at the
independent think tank Reform.
huge drop by any standards. Last year,
financial services was one of the few
sectors where bonuses fell down 11
per cent, compared to a rise of 50 per
cent in real estate and 11 per cent in
construction (according to the Office
for National Statistics.)
More importantly, bankers no
longer get bonuses for taking short-
term risks. By law, bankers have to
have at least half paid in their banks
shares, which are largely deferred for
three years or more. For the higher
paid, the immediate cash bonus must
be at most 20 per cent of the total. The
FSA has also introduced clawback: if it
turns out an employee took reckless
risks or behaved illegally, his or her
deferred bonus can be cut or
cancelled. No longer are bankers
rewarded for their successes but not
punished for failure. This sanction has
been used in high profile cases.
I am often asked why bankers
should be paid bonuses at all. Like
employers across the UK economy,
retail banks and investment banks
find that performance-related pay is a
useful tool to incentivise workers. In
banking, profits rise and fall rapidly,
and having a large proportion of
variable pay means that, in down
years, banks can cut pay rather than
jobs. That leaves more people working
in the UKs most successful export
sector to generate business when the
economy picks up. If you got rid of
bonuses, banks would only have the
option of cutting jobs, hampering the
recovery of the UK economy.
Banks have far more intrusive pay
regulation than any other sector it is
a little appreciated fact that banks
have to get their pay packages signed
off by the FSA (no other sector has to
go through this). London already has
among the toughest bonus rules in
the world, but more is to come. The
EU is planning legislation that would
cap the size of the bonus that banks
can pay. It is a pan-European version
of 1970s-style government pay
controls, but applied to one sector.
There are downsides to restricting
bonuses too much. Investment
banking in London already pays less
than in any rival financial centre,
which impacts on the Citys ability to
attract the top talent, and thus our
ability to compete in the global
market. The biggest loser from falling
bonuses is actually the government
more than half the bonus pool is paid
out in tax and national insurance.
Bankers pay needed to change. And
it has. Continuing to bash bankers
over their bonuses makes good
headlines, but might not be the best
thing for the economy.
Anthony Browne is chief executive of the
British Bankers Association.
ANTHONY BROWNE
Banks arent rewarding failure but restrictions on bonuses could go too far
In association with
GET A RE
Dont forget to le your return and then book one to Europe with CityJet.
21
THURSDAY 31 JANUARY 2013
Heathrow vs HS2
[Re: HS2 cost-benefit is a worrying mix of
naive projections, Tuesday]
The comparison we should make is between
HS2 and a third runway at Heathrow. The
former requires a fortune of borrowed
taxpayers money, will find it difficult to
recover the cost of capital, and is a massive
transfer from the bulk of the population to a
small minority of business passengers. The
latter would be privately-financed, would
generate a positive return for investors, and
would enhance Britains competitiveness by
connecting London to other cities. Heathrow
expansion is what an infrastructure project
should look like based on a commercial
return, with risks carried by the private
sector.
LydiaMurray
Boundary reform
[Re: Labour now the firm favourite to
triumph in 2015 election, yesterday]
Lets not solely attribute a likely
Conservative defeat on unfair boundaries.
Yes, it takes more Tory voters to elect an MP
than it takes Labour voters. But that also
reflects lower typical turnout in Labour
seats. Liverpool Riverside had just 52.1 per
cent turnout in 2010, up from 34.1 per cent in
2001. Is Liverpool likely to turn blue any
time soon? Hardly. A bigger problem is the
fact that political parties increasingly
resemble regional issue groups rather than
national movements. Labour makes no
attempt to appeal to the shires. The
Conservatives have no incentive to win
support in gritty urban Britain.
Peter Marbrow
T
HE number of UK start-ups
hasnt deviated much in years,
with business birth rates
hovering between 10 and 13
per cent of overall enterprise
numbers. So recent figures from
StartUp Britain, showing a 10 per cent
spike of 484,224 new firms in 2012,
are a welcome anomaly.
For many first-time entrepreneurs,
the idea of starting a business is terri-
fying. Many will have lost confidence
through an impersonal redundancy
process, or wonder if theyre up to
going it alone. But, as investor-entre-
preneur Luke Johnson says, nothing
saps ambition quite like a steady
income. The flipside of 20-year lows
in City employment could be that
many find their inner entrepreneur
in 2013. So how do you give yourself
the best chance of success?
Countless books offer advice. With
titles like You Can Do It, or How I
Nailed It, most fail from the start; the
hesitant entrepreneur needs a dose of
belief. My favourite personal pep-talk
is Start it Up: Why Running Your Own
Business is Easier Than You Think, by
Johnson himself. A successful busi-
nessman and gifted columnist, his
views carry clout.
Younger entrepreneurs tend to have
more appetite for risk, but Johnson
also encourages the more mature.
Experience and wisdom will be their
secret weapon, he says. But the most
successful entrepreneurs, he cautions,
are not the same as other people.
They have an ambition, a competitive
urge and a lust to take risks that is
way beyond the norm.
The already self-confident will love
Start it Up; the tentative may feel
cowed. Boldness has genius, power
and magic in it. Begin it now,
Johnson advises, quoting Goethe.
Rasheed Ogunlarus Soul Trader is a
more therapeutic introduction. His
eight principles clarity, customers,
After reaching its highest point since 2008,
can the FTSE 100 continue its recent rally?
YES
As the FTSE 100 share index moves safely back into pre-financial
crisis territory, the question is whether its recent performance
can continue for the rest of 2013. We analysed the performance
of the index since its inception in 1984, and found that it has
risen in the first month of the year in 17 out of 29 years with
this year likely to make it 18 out of 30. In 14 out of the 17 years
that the FTSE 100 rose in January, equity markets continued to
rise in the 11 months that followed. This suggests that there really
might be something to the so-called January effect (the idea
that when share prices rise in January, the odds are stacked in
favour of them rising for the rest of the year). Im usually
sceptical about these kinds of rules of thumb, but it is hard to
ignore these facts.
Tom Stevenson is an investment director at Fidelity Worldwide
Investment.
Tom Stevenson
NO
Gemma Godfrey
The FTSE 100 has been rallying as the fear of risks, like a
Eurozone exit or fiscal cliff stalemate, has receded. But growth is
now needed for another leg up: there has been relief in the
diagnosis, but the patient must now show signs of recovery. The
concern for the UK is that it is tough to see a possible source of
growth, especially after the latest economic figures showed us
courting a triple dip recession. Looking overseas as many FTSE
companies do the outlook for growth is more encouraging. But
troubles in Europe and the US are far from over, as the former
grapples with fiscal and banking union, and the latter with
delayed spending cut decisions. Equities may provide value over
the longer term, but you will have to encounter heightened
volatility and a likely correction in the immediate future.
Gemma Godfrey is head of investment strategy at Brooks
Macdonald.
Six books to spur
Britains start-up
revolution onward
courage, cooperation, conversations,
creativity, compassion and change
are drawn from encounters with busi-
ness owners. But Soul Trader mixes
sensitive counsel with practicality. It
could become a well-thumbed classic.
Steve Parkss updated Start Your
Business, Week by Week is another
clever format, providing weekly to-do
lists over six months, culminating in
the launch of a business. Those who
crave structure at a testing time will
find this reassuring.
Jonathan Mouless The Rebel
Entrepreneur, meanwhile, heaving
with personal stories, will also reas-
sure entrepreneurs that theyre not
alone. Theyll be encouraged that
bootstrapping (the value of having
no money) is critical to success. And
while Moules admires entrepreneurs,
he knows theyre often flawed, lucky,
adaptable, and always persistent.
Entrepreneurs are not those who
push original ideas at all costs, but
those who work out which of their
original assumptions are wrong, and
stop pursuing them.
Rachel Bridgess fast, smart How to
Start a Business Without Any Money
also shows how much can be achieved
(hiring staff, renting premises, adver-
tising) for nothing. And if youre
hatching an online business, Lucy
Tobins Entrepreneur takes you inside
Britains top digital companies. Could
your business be the next Wonga?
MatthewRockwas a founding editor of
Real Business, the UKs first magazine for
entrepreneurs. Follow him on Twitter
@matthewrock www.realbusiness.co.uk
MATTHEW ROCK
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TURN IN
visit cityjet.com
Even with a $1 trillion (633bn) deficit,
Americas economy still contracts. Now who
would have predicted that?
@GABaines
Over the last few months, cries of recovery
have been deafening. Yet the US and UK are
both shrinking, at best stagnating.
@umairh
Petrol prices have increased heavily because
of tax, not falsely inflated prices. Thanks
Gordon Brown.
@HappytobeTommy
The Office of Fair Trading says that the UKs
fuel industry is working well. But for who
exactly? Not anyone that is actually buying it.
@touchmum
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22
THURSDAY 31 JANUARY 2013
DIRECTOR UK ENTERPRISE, CISCO
Q
How has bring your own
device (BYOD) helped
companies and their employees?
A
BYOD is helping companies
attract the talent they need to
prosper. Increasingly, graduates and
early career individuals will select a
company based on its flexible
working arrangements and the
freedom to connect to work away
from the traditional office
environment. Organisations that
allow employees to use their own
tablet or phone for working
remotely will not only attract new
and diverse talent, but also benefit
from less space, more cloud usage,
and consequently reduced costs.
BYOD and remote working
strategies also give employees a
greater sense of freedom. This can
result in employees becoming more
engaged with their work, and may
have a positive effect on staff
retention. Therefore, not only can
an increasingly remote network
give businesses a competitive edge,
but workers can feel more
emotionally connected with what
they do which has to be a positive
thing.
Q
What are the security
implications of BYOD and how
can they be resolved?
A
Opinion over the the effect that
BYOD and remote working have
on security is somewhat polarised.
Many believe that distributed
working poses a clear and present
danger to data protection. However,
many also argue that if the correct
procedures and processes are
implemented, corporate security
can actually be stronger in a remote
working environment. Whats
certain is that in order to fully
utilise the benefits of collaboration,
businesses must be prepared to
properly manage their data security
in the future, and employees need
to take responsibility for adhering
to procedures and policies.
TIM SKINNER
BUSINESSSTRATEGY
Q
What are the potential risks to
flexible working?
A
Despite the immediate and
tangible benefits, there are some
risks. Businesses must overcome the
IT complexity that comes with
remote and flexible working.
Having a distributed working
environment can result in control
becoming decentralised. As a
consequence, the task of managing
this sort of IT network, and
implementing the necessary
governance and controls,
intensifies.
Q
Do you see the flexible working
phenomenon progressing
further in the future?
A
Absolutely. Technologys main
virtue is its ability to create
freedom in the workplace, break
down internal barriers and allow
businesses to cooperate effectively
and efficiently. Organisations are
now conducting their business
based on their best skills and
resources, regardless of where they
are. Rather than this being a long-
term vision, this is happening now
and will dramatically increase over
the next two to three years.
TOMORROW
starts here.
#tomorrowstartshere
How to tackle the challenges
of bring your own device Remote working: A
L
AST November, Nick Clegg hit
headlines when he made a
speech on flexible working. His
proposal may only have extended
the right to request flexible working
hours to all employees, but this
phenomenon is here to stay. And it
wont exclusively be for the benefit of
those with children.
Flexible working can be an appealing
option for both employers and employ-
ees. From an employer perspective, it
gives them a competitive edge when
seeking to woo new staff, it can
increase staff loyalty, and reduce levels
of absenteeism. And employees want
and expect their offices to have bring
your own device (BYOD) capabilities,
with the option of flexible working.
But there are some significant chal-
lenges to be considered.
TECHNOLOGICAL ADVANCES
High demand for flexible working is
putting pressure on IT departments to
develop the necessary infrastructure
to enable it. And, assuming demand
will only go up, security will pose the
biggest concern for companies. Cisco
has identified two priorities emerging
ahead of others accessing data in real
time and accessing data from multiple
devices. Cloud computing which is
designed to work irrespective of loca-
tion has been listed as one of many
new systems helping companies over-
come their infrastructure shortages.
A recent BT report highlighted two
key categories for concern about secu-
rity: network intrusion and infection;
and data theft and loss. Hacking and
malicious codes in the form of virus-
es, worms and trojans is on the rise,
so robust security is essential, it says.
A few of the measures BT names as
possible ways to mitigate these con-
cerns include firewall management,
intrusion detection, virus detection,
An increasing number of companies are
embracing it, but the security issues are
worth considering, writes Annabel Palmer
spam prevention, disaster recovery,
and remote device deactivation.
But security needs to be more sophis-
ticated than just firewalls or intrusion
detection. This is why a Yankee Group
report has said that security needs
not only to know who and what is
coming into the enterprise, but it
must also take into account factors
such as location and context.
Security, at least, is less of a concern
for remote meeting services. Many
companies are now used to online con-
ferencing tools such as Webex, Adobe
Connect and GoToMeeting. These have
become the de facto standard for
external meetings, says Matt Price,
general manager at Zendesk.
Applications including Skype and
FaceTime give employers affordable
video conferencing, and new commu-
nication tools, such as Flowdock, pro-
vide good platforms for better
collaborations within the workplace.
THE COSTS
It is easy to sing the praises of file host-
ing systems like cloud computing.
Dropbox, for example, is free, and it
provides 2GB storage, enables employ-
ees to access files anywhere in the
world, and keeps files on all comput-
ers up-to-date. However, it has encoun-
tered a number of serious security
issues that may deter larger compa-
nies from using it. Last year, for exam-
ple, usernames and passwords were
stolen from other websites and used to
sign into a small number of Dropbox
accounts. And the technology compa-
ny AVG found that, in 2011, 3.37m
worth of damage was inflicted on UK
small firms by cybercriminals, with
expectations that the figure would
rise significantly in 2012 and 2013.
Companies are also struggling to sur-
mount difficulties including manag-
ing expenses and ensuring adherence
Not all employees work so diligently from home
to regulatory requirements. But there
is pressure from the other direction.
Cisco believes space is its most under-
utilised asset, because only half of
their assigned workspaces are actually
used in a typical day. This adds up to
$1bn (633m) per year in wasted
expense. So the cost of flexible work-
23
THURSDAY 31 JANUARY 2013
new approach to 9-5
City firms can fix the
flexibility conundrum
W
ORKING culture in the UK
has seen a notable change
in recent years. No longer
are we focused on a
prescriptive work mentality, where
9-5 hours and a career for life are
the norm. Instead, its now about
making the how, when, and
where factors of our job work for
us, rather than the other way
around.
The rise of flexible working in the
last 10 years has been constant and
significant. There have been a num-
ber of reasons influencing this
shift, namely technology and
changing attitudes to the work-
place.
For Deloitte, we needed to take a
pragmatic approach to flexible
working, steering away from hav-
ing overly rigid policies and proce-
dures. Our broad flexible working
programme offers both formal and
informal arrangements. The firm
supports different ways of working
and all requests are considered
within the context of a persons
individual needs, their client work
and how it might affect colleagues.
Like many businesses, we have
employees who work full and part-
time across multiple locations. In
2012, for example, 600 worked part-
time, while 250 took a career break.
Although many are office-based, a
good proportion of our nearly
14,000 UK staff will travel for proj-
ects or work from a clients site. To
give you an idea, close to 10,000 of
Deloittes UK staff work in London;
40 per cent are on the move every
day.
Making this work efficiently
requires flexibility and an open
mind. Everyone at Deloitte is given
a laptop, but can choose from a
range of mobile devices for use on
the go. Across the UK firm, we are
introducing a new unified commu-
nications platform that incorpo-
rates telephony, instant message,
audio, video and web conferencing
into one application. The key objec-
tive is to make sure people can
always feel like a part of the
Deloitte network, whether in the
office, at home, abroad, or with a
client. While this has involved a
cultural shift internally, we are
aware of the importance of allow-
ing our employees to choose what
works best for them.
For companies looking to offer
their employees flexible working,
there are practical matters that
should be considered. From an
employees point of view, can you
still perform your job to the same
ability as when youre in the office?
For instance, will you still be able to
make meetings or take on addition-
al responsibilities? Companies
need to ask themselves whether
their business can manage with
people working remotely, or on
reduced or flexible hours? Will it
affect the services the business pro-
vides its customers or clients?
These are just some of the many
questions that should be asked
when considering flexible working
arrangements. However, by having
open and honest conversations, it
can work. Traditional perceptions
of the office have changed, particu-
larly for new recruits joining the
workforce for the first time. The
office is no longer a place where
you go Monday to Friday at a set
desk for a specific timeframe.
Striking a balance that works for
both people and the business can
ensure a more creative, innovative
and productive environment for
employers and employees alike.
Stevan Rolls is UK head of human
resources at Deloitte.
cityam.com
G
E
T
T
Y
STEVAN ROLLS
ing infrastructure may be worth it.
MANAGEMENT ISSUES
Another key consideration is the
inability to supervise employees as
they work from home. How can you be
sure theyre hard at work rather than
watching daytime television? BTs
report may assuage such concerns. It
points out that flexible working
enables employees to be productive at
all times when commuting to work,
when away from their desks at meet-
ings, at the weekend. Staff are always
connected, which means employers
can keep a close eye on them. This may
explain why 72 per cent of firms said,
according to a 2012 Regus study, that
higher productivity was a direct result
of flexible working practices. The
workplace is no longer always a cubi-
cle or an office desk, and companies
and their IT departments will need to
adapt accordingly.
... While Google has a taste of Raspberry Pi
n WHEN WAS IT CONCEIVED?
A group of academics at Cambridges
Computer Laboratory came up with the
idea of a coding-focused machine in
2006. The idea was to plug the gap left
by the demise of machines like the
Amiga, BBC Micro, Spectrum ZX and
Commodore 64 that encouraged users to
learn basic coding.
n WHAT IS IT?
The Raspberry Pi Model B is a PC the size
of a credit card that allows you to attach a
keyboard and monitor. It has 512MB RAM,
two USB ports and an ethernet port. It can
be used to run basic functions like
spreadsheets, text files and games, as
well as playing high definition video.
Crucially, it requires users to use basic
coding, making it a good learning tool.
n HOW POWERFUL IS IT?
Its graphics are about as powerful as the
first Xbox which was a pretty heavy-
duty console that still looks good today
although overall performance is at
about the level of high-end PCs from the
late 1990s. It uses a Broadcom BCM2835
system on a chip with an ARM11
microprocessor.
THURSDAY 31 JANUARY 2013
cityam.com
24
LIFE&STYLE BY STEVE DINNEEN TECHNOLOGY
BlackBerry in last chance saloon...
B
LACKBERRY the company
formally known as RIM
yesterday unveiled the
handsets it hopes will
help keep it in the smartphone
space. The new devices, the
touchscreen Z10 (out today) and
the physical keyboard Q10
(expected in April), are also loaded
with BlackBerrys new operating
system, BB10, in the biggest shake-
up at the firm in years.
First impressions of BB10 are
impressive. Multi-tasking is
brought to the fore, with the
ability to easily switch between
eight apps, all running
simultaneously. There is also a
handy option to peek (their
word, not mine) at your social
networking and messaging
updates without having to quit
what you are currently doing.
It has an impressive camera
with a very good in-built editing
suite, allowing you to add filters
and even flick forward a few
frames if someone has blinked.
So far so good, but it is the app
eco-system that could prove to be
BlackBerrys downfall it has
just a tenth of what is available
on the App Store. Here are some
of the new phones features:
The Canadian firms new devices and operating system were finally unveiled but are they any good?
R
ASPBERRY PI is the sub-22 PC
that this week got a boost
from internet giant Google,
which will fund the
distribution of 15,000 free units to
schools around the UK.
The plan follows news that the
company has already sold 1m
Raspberry Pi units in less than a
year on sale. Google hopes the
device can arrest the decline in
students taking computer science at
university level. But what exactly is
a Raspberry Pi, and how does it plan
on revolutionising the way children
learn about computing?
n DESIGN
First impressions: Wow, it looks just like
the iPhone, which is no bad thing. There
is no physical home button, which gives
the front a clean appearance, although
plastic bevels at the top and bottom
detract. The rubberised plastic back also
feels a little flimsy not something you
can imagine Steve Jobs allowing.
n 4G/LTE
Both new phones are 4G
compatible, meaning they will be
able to run on the new superfast
network designed to make
mobile web browsing run
significantly more quickly. EE
customers will be able to start
using it on the network today.
n TOUCHSCREEN KEYBOARD
This is one of the coolest features on the
new BlackBerry Z10. The keyboard
features rails between the rows of
letters, which suggest the most likely next
word, which you can select with an
upward gesture. It will also learn your
most frequent mistakes and mitigate for
them when youre typing.
n CAMERA
The eight megapixel
camera is one of the most
striking improvements,
with sharp images and
enough editing tools to
make Instagram junkies
burn with envy.
n PHYSICAL KEYBOARD
The feature BlackBerry is most famous for
is its physical keyboard, which the Q10
retains. Email junkies looking for the
versatility of a touchscreen but the ease
of use of actual keys will be impressed,
although the handset seems like less of a
progression from BlackBerrys previous
8900 model.
n SCREEN
The Q10 has both a
touchscreen and a
physical keyboard,
allowing you to scroll
through photographs
and select apps using
your fingers. The
display is 3.1 inches,
giving a surprising
amount of real-estate
for a phone with a
keyboard.
n PROFILES
BlackBerry wants to maintain its
business ties and offers the
ability to switch between work
and social modes, meaning
users dont have to carry two
phones. Companies even have
the option to remotely wipe
information.
n SIZE AND WEIGHT
The 4.2 inch screen makes
the Z10 quite a lot wider
and a hairs breadth taller
than the iPhone 5. It
manages this without
feeling any heavier than
its Apple rival. It is
marginally thicker (9mm
instead of 7.6mm).
n MULTITASKING
The peek view (displayed on
the screens to the left and right)
lets you quickly flick between
your apps and messages. The Z10
uses a series of smart gestures
(for example swiping your finger
in an L shape) to access
different content without having
to close down your current
projects.
The credit card sized unit features two
USB ports and and ethernet port
n RESOLUTION
The high-quality
1280x768 resolution
makes the Z10 screen
stand shoulder to
shoulder with the best
Android phones and
Apples iPhone 5.
Because no two businesses are the same.
Introducing the flexible new range of IBM System x servers.
No two companies have the same IT requirements. Thats why IBM has a new range of System x servers
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
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Intel Xeon E5-2620 2.0GHz 15M 6C
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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
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5,297 incl. VAT
Or 147/MONTH OVER 36 MONTHS
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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
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26
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The technology behind a top-
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8pmCHOICE Dangerous
Drivers School; 5 News at 9
9pmWinter Road Rescue
10pmFILMNavy Seals:
Action adventure, starring
Charlie Sheen. 1990.
12.15amSuperCasino
4amHouse Doctor 4.25amHouse
Doctor 4.50amMichaelas 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
10 16 6
17 11
33 20
3 7
4 37
45
23 17
12 16
9 35
24 15
11 12 11
7
19
10
23
40
9
25
36 18
14
22
44
24
15
42
8
6
11
21
ACROSS
1 Garment hanging
from the waist (5)
3 Mood disorder (5)
7 Seethe (4)
8 Eliminate from
the body (5)
9 Avoid by a sudden
quick movement (5)
11 Country that
maintains repressive
control over the
people by means of
secret forces (6,5)
14 Road construction
vehicle (11)
16 Be of service (5)
19 Connected with
birth (5)
20 Animals foot (4)
21 Car crash (5)
22 Informal term for a
British policeman (5)
DOWN
1 Slumber (5)
2 Complete act
of breathing in
and out (11)
3 Soft wet earth (3)
4 Pale medium-dry
Spanish sherry (11)
5 ___ Kelly, 19th
century Australian
bushranger (3)
6 Anoint with oil (5)
10 Facial hair (5)
12 Not at home (3)
13 Denite article (3)
14 Walk heavily (5)
15 Large gathering
of people (5)
17 Expression of
surprise or sudden
realisation (3)
18 Cut part of a
tree trunk (3)
E
A
P
I
R T
V
Y
D



4
4


4

S L I N G S T O R M
L E C R O
O R C A F A U C E T
S A R T V H E
H A R S H E V E R T
P I A N S
G R E E N G O T A T
R N K E R R W
A T T A I N D A Z E
S E N E E
S P R I G F R O N D
9 6 7 8 4 9 2
6 2 3 5 1 5 1 8
8 1 6 3 8 7 4 9
5 1 4 8
4 7 9 2 5 3 6 8 1
1 3 3 9 5 9 7
6 9 3 4 8 2 1 7 5
7 9 9 6
4 8 5 7 9 6 1 7
1 7 2 8 7 6 3 9
9 1 5 1 3 2 4
4
4
4
4
4
4
4
4
4
The nine-letter word was
MARKETING
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 31 JANUARY 2013
THE SECRET LIFE OF DOGS
ITV, 9PM
Exploring how dogs see, smell and
experience the world, revealing
insights into the behaviour, loyalty and
intuition of mans best friend.
CHARLIE BROOKERS WEEKLY
WIPE BBC2, 10PM
A look at the latest news from politics,
the media and the internet, casting an
eye over developments in TV, cinema,
computer games and social media.
DANGEROUS DRIVERS SCHOOL
CHANNEL5, 8PM
Motorists re-learn the skills required
to take to the roads safely. Actor
Melvyn Hayes driving is appraised by
an instructor.
TVPICK
ARSENAL boss Arsene Wenger insists
his squad can compete for footballs
top prizes even if, as expected. he
fails to add any talent before the
transfer window closes tonight.
Second-half strikes from Olivier
Giroud and Theo Walcott earned the
Gunners a draw against Liverpool
last night, after Luis Suarez and
Jordan Henderson had
exploited woeful
defending to give the
visitors a two-goal lead.
The result leaves
Arsenal four points off
the top four, having
taken just five points
from their five Premier
League games since the
turn of the year yet
Wenger remains bullish.
This squad is top, top level for me.
And I think we have to learn to trust
these players again and keep faith in
them, he said. We have signed a
bunch of young English players who
have committed to the club for the
next four or five years and I think
theres a lot to come out of this
team.
Wenger said he cannot promise
that the club will sign any players
before tonights deadline.
Arsenal have started games poorly
of late, and the trait was evident
again last night. After six minutes
Bacary Sagna slipped, allowing Glen
Johnson to find Daniel Sturridge free
just six yards out. His effort was
blocked but the rebound fell to
Suarez, who slotted home.
And Liverpool had two chances to
double the lead before half-time.
Sturridge almost stole the ball from
goalkeeper Wojciech Szczesnys feet
right in front of goal on 10 minutes,
while Henderson caught the Pole off
his line shortly before half time, but
saw his chip drop over the bar.
Nonetheless, a second goal came
on the hour, as Henderson
meandered through a sluggish
Arsenal defence. His first
effort was blocked, but the
midfielder reacted quickest to
jab into an empty net.
Yet Arsenal hit back almost
immediately, Giroud heading
home an in-swinging Jack
Wilshere free-kick.
With the wind finally in
their sails, the Gunners scored
again just two minutes later. A
neat passing move on the
right side of the penalty area
saw Giroud lay the ball to
Walcott, who smacked a first-
time drive inside the far post.
Wenger in no mood
to buy despite Reds
exposing frailties
United seven
points clear
ENGLANDS Brad Barritt insists they
can overcome the absence of fellow
centre Manu Tuilagi and begin their
RBS Six Nations campaign with a
win over Scotland on Saturday.
Gloucesters Billy Twelvetrees is
tipped to replace Tuilagi when the
England XV is named today and
Barritt said: Manus a fantastic
player and an asset to any team, but
no team is reliant on one person.
Barritt: Manu
loss no worry
BY FRANK DALLERES
Berbatov celebrates birthday with goal
as Fulham leapfrog freefalling Hammers
FULHAM eased their worries
with only a third win in 16
games as West Hams season
disintegrated further at
Craven Cottage last night.
Forward Dimitar Berbatov
headed his eighth Premier
League goal of the season,
amid suspicions of offside, to
give the home side the lead
after just 10 minutes.
Hammers captain Kevin
Nolan equalised from a tight
angle after a quick free-kick
early in the second half, but
Hugo Rodallega hit back
instantly from close range.
Substitute Mladen Petric
crowned victory in injury
time when his shot hit the
post in went in via West
Hams Joey OBrien.
Berbatov, on his 32nd
birthday, went close to
scoring his second, as three
points lifted Fulham into
12th place, one ahead of Sam
Allardyces visitors, who have
now lost seven of their last 11
in all competitions.
SPORT
27
THURSDAY 31 JANUARY 2013
cityam.com
IN BRIEF
Thomson joy at 80 days feat
n SAILING: Record-breaking Briton
Alex Thomson toasted a dream come
true yesterday after finishing the
solo, non-stop, round-the-world
Vendee Globe race in third place.
Thomson, 38, completed the course in
a British record 80 days, 19 hours and
23 minutes, finishing two days, 17
hours and seven minutes behind
French winner Francois Gabart.
Twickenham to host Sarries tie
n RUGBY UNION: Saracens will play
their Heineken Cup quarter-final
against Ulster at Twickenham, the club
have announced. Sarries decided
against applying for one-off
permission to expand the capacity of
Allianz Park for the match on 6 April.
The club ofiicially opened their new
Barnet home on Sunday with a 19-11
LV= Cup win over Cardiff Blues.
Results
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Q
UEENS Park Rangers might
have pulled off an unlikely
draw against champions
Manchester City on Tuesday,
but all is far from well at Loftus Road.
Ive never seen manager Harry
Redknapp look more annoyed with a
group of players, while chairman
Tony Fernandes has even talked
about walking away.
Draws, even against big teams, are
all well and good but what Rangers
desperately need are wins over those
sides also scrapping for their top-
flight lives.
Few clubs anchored to the bottom
at Christmas, never mind a month
later, survive, and I think QPR need
to win at least six or seven of their 14
remaining games.
To do that they need goals,
because, while Redknapp has
improved performances and bred
some consistency, hitting the net is
still proving to be a major problem.
January signing Loic Remy is good
but doesnt have a fantastic scoring
record, so I can see why Redknapp is
eager to sign another forward before
tonights deadline.
He needs players who can make an
instant impact, which makes Peter
Crouch a sensible target. He knows
Harry and has always caused
problems in the Premier League.
Jamie Mackie, who Harry has used
up front, is so hard working but
lacks that little bit extra needed at
this level and Crouch possesses it.
Ryan Nelsens departure has
heightened QPRs need for
defenders, and Harry will move hell
or high water to get Chris Samba
exactly the type of player hed want.
Its not all about arrivals though. I
think QPR are stretched financially
and must need to offload a few, even
on loan, before offering more 70k a
week contracts.
No other team needs to do
business on transfer deadline day
quite as much as QPR, because if
they have an average February I
believe their fight will be all over.
Trevor Steven is a former England
footballer who played at two World Cups
and two European Championships. He
now works as a media commentator.
FOOTBALL
COMMENT
TREVOR STEVEN
Only 11th hour spree can save goal-shy QPR
ARSENAL....................................2
LIVERPOOL.................................2
BY JULIAN HARRIS
PREMIER LEAGUE
MANCHESTER UNITED............2
SOUTHAMPTON ......................1
BY SPORTS DESK STAFF
PREMIER LEAGUE
FULHAM ..........................3
WEST HAM UNITED ..........1
BY SPORTS DESK STAFF
PREMIER LEAGUE
ENGLAND striker Wayne Rooney
made it nine goals in nine games
as Manchester United survived a
scare to extend their Premier
League lead to seven points.
Jay Rodriguez gave Southampton
a shock lead at Old Trafford after
just three minutes, when he beat
goalkeeper David de Gea to
Michael Carricks back-pass.
Rooney gathered Shinji Kagawas
pass to equalise five minutes later,
and added a second from Patrice
Evras header across goal just
before the half-hour mark. Victory
ensured United took full advantage
of Manchester Citys draw at
Queens Park Rangers on Tuesday.
5
Points taken by
Arsenal from five
league games in
2013
AT EMIRATES STADIUM
TOTTENHAM manager Andre Villas-
Boas admitted his side had missed a
golden chance to tighten their grip
on a top-four place after failing to
win for a fourth consecutive match.
Norwich had taken just one point
from their previous six Premier
League fixtures but took a surprise
lead in the 32nd minute when Wes
Hoolahan finished after Grant Holts
knock-down reached him via
Anthony Pilkington.
Spurs winger Gareth Bale capped a
50-yard burst by crashing in a
brilliant solo equaliser 10 minutes
from time, but it was not enough for
the visitors to capitalise on slips by
rivals Chelsea and Arsenal.
In the second half we really put
on a show and a good performance,
said Villas-Boas. Its a pity, because
our first half cost us two points and
we wanted to profit from the
Arsenal-Liverpool game, but we did
not have enough time to get a
winner.
Victory could have lifted
Tottenham to within two points of
third-placed Chelsea, but instead
they remain four behind and just
one clear of Everton, who won 2-1
against West Brom, and four ahead
of Arsenal.
Villas-Boas aired his frustration at
perceived rough treatment of Bale
and praised new signing Lewis
Holtby, who made his Spurs debut in
a lively 20-minute cameo.
Gareth Bale had such pace and
power, there was a tackle that could
have broken his leg, but never
mind, he added.
Lewis Holtby made a difference,
it is a major coup for us and he gave
us something in between the lines to
connect our team.
Spurs pass up
chance to steal
march on rivals
CHELSEA manager Rafael Benitez
criticised his teams late collapse
after the Blues threw away the
chance to close on the Premier
Leagues top two by allowing
Readings Adam Le Fondre to score
twice in the last five minutes.
Benitez did not hide his frustra-
tion at succumbing to a fourth draw
in five matches that raises further
questions about the Spaniards
future at Stamford Bridge.
The European champions had
looked set for a comfortable win that
would move them to within four
points of second-placed Manchester
City, after goals from midfielders
Frank Lampard and Juan Mata.
But nerves set in after Le Fondre
rifled his first past Ross
Turnbull in the 87th
minute, and the same
player calmly finished
deep into stoppage time
to lift Reading out of
the relegation zone.
Its difficult to
explain, we were con-
trolling the game for 85
minutes. But from the last
free-kick we made too many
mistakes in one situation that wed
been dealing well with all night,
said Benitez.
We had chances to finish the
game, but we didnt do it. Even after
they scored the first goal we were
still in control, but if we scored three
or four goals it changes the game. We
have to be more clinical and be more
aware of defending set-pieces.
Baffled Benitez blasts his
Blues after late collapse
We did a great job for 85 minutes.
We were professional and created
chances, they had their first shot
after 78 minutes. We are all disap-
pointed, we knew that we could be
closer and reducing the gap.
Mata clinically half-volleyed
Chelsea ahead on the stroke of half-
time and his free-kick set up Lampard
to head the second his 196th for the
club as a much-needed win beck-
oned for Benitez.
But Hope Akpan, who just weeks
ago was playing for Crawley Town, set
up fellow substitute Le Fondre to fire
past Turnbull at his near post, and,
when the Blues failed to clear their
lines following a free-kick, Akpan
headed on to Le Fondre, who stayed
cool to sidefoot-volley across Turnbull
and inside the far post.
Im fall guy - Merckx era wasnt
clean either, insists Armstrong
DISGRACED former cyclist Lance
Armstrong has reiterated his belief
that he has been made a scapegoat
and insisted that doping, or some
form of cheating, has existed
throughout the sports history.
In his first interview since
confessing this month to doping
his way to seven Tour de France
titles, Armstrong also said a truth
and reconciliation commission was
cyclings only way forward.
Asked whether he felt like the
fall guy for an entire sport, the
American, stripped of his titles and
banned for life, said: Actually, yes I
do. But I understand why. We all
make the beds we sleep in.
He added: My generation was no
different than any other. The help
has evolved over the years but the
fact remains that our sport is damn
hard, the Tour was invented as a
stunt, and very tough motherf***ers
have competed for a century and
all looked for advantages.
From hopping on trains 100
years ago to [banned blood-booster]
EPO now. No generation was
exempt or clean. Not Merckxs,
not Hinaults, not LeMonds, not
Coppis, not Gimondis, not
Indurains, not Anquetils, not
Bartalis, and not mine.
Of the prospect of a truth and
reconcilliation commission, he
said: Its not the best way, its the
only way. As much as Im the eye of
the storm this is not about one
man, one team, one director.
Meanwhile, Luxembourgs Frank
Schleck is set to miss the Tour after
testing positive in last years race.
Reading substitute Adam Le Fondre scored twice in the dying stages as Chelsea slipped to a fourth draw in five matches
QUEENS Park Rangers look certain to
be the Premier Leagues biggest
players before tonights transfer
deadline, with manager Harry
Redknapp still working on several
last-minute deals yesterday.
A defender and a striker remain
Redknapps priorities, despite the
arrival of South Korea left-back Yun
Suk-Young following the successful
bid to obtain a work permit.
Former Blackburn defender
Christopher Samba could be next to
sign after Rangers 10m bid
activated a release clause in the
Samba set to join Yun as QPR
and Fulham eye late swoops
Congo centre-backs contract with
Russian side Anzhi Makachkala.
Redknapp is also working on
persuading Stoke to sell striker Peter
Crouch, but is thought to have had a
second bid for Fulham defender
Brede Hangeland rejected.
The Cottagers, meanwhile, are
close to sealing a loan deal for left-
sided AC Milan and Holland star
Urby Emmanuelson, who can play at
full-back or in midfield.
Boss Martin Jol is also interested in
a 5m move for Tottenham
midfielder Tom Huddlestone.
BY FRANK DALLERES
BY FRANK DALLERES
THURSDAY 31 JANUARY 2013
28
SPORT
cityam.com/sport
Arsenal fight back
from two down but
drop points at home
to Liverpool
@cityam_sport
NORWICH CITY ...........................1
TOTTENHAM HOTSPUR...............1
BY SPORTS DESK STAFF
PREMIER LEAGUE
READING....................................2
CHELSEA.....................................2
BY FRANK DALLERES
PREMIER LEAGUE
196
Chelsea goals
scored by Frank
Lampard
Midweek football round-up: Page 27
TREVOR STEVEN: Page 27