Nat Rothschild formed Bumi in early 2011 from a cash shell

NAT ROTHSCHILD last night resigned

from the board of struggling coal group
Bumi with immediate effect, claiming
the firm was failing to act in the interests
of its minority shareholders.
The move is the latest shock for the
investment vehicle Rothschild himself
put together less than three years ago
and which has embroiled some of the
worlds leading busi-
nessmen.
Rothschild said he was
resigning in protest at a
deal proposed by Bumis
key Indonesian share-
holders last week to split
from the firm. In the
terms, the Bakrie broth-
ers called for Rothschild
to give up bonus shares
in the firm worth
around 41m.
In his letter to board
chairman Samin Tan,
Rothschild said that the
deal was so obviously
not in the interests of
minority shareholders
that I find it impossible
to stay on as a director.
He claimed that the
value of the deal is
skewed heavily towards
Tan and the Bakrie broth-
ers, who hold 23.8 per cent of Bumi each
through a joint vehicle after Tan bought
out half of the Bakries stake earlier this
year. The Indonesian arm of London-list-
ed Bumi PT Bumi is currently under
investigation for alleged financial irreg-
ularities.
It appears that you shall be reim-
bursed for your investment at a price of
10.91 a share, whilst other investors see
an estimated return of just 4.30 a
share, Rothschild wrote, calling the
plan a clear breach of the spirit, and I
believe, the letter of the takeover code.
But a source close to Bumi said
Rothschild left after the companys
board turned against him, rather than
on principle. Rothschild jumped before
he was pushed he was
in a minority of one on
the board, the source
told City A.M.
Rothschild brought
the Bakries on board
less than two years ago
in a deal that com-
bined his listed invest-
ment vehicle Vallar
with Indonesian assets
to create Bumi. Shares
have lost almost 75 per
cent in value since
Vallar listed in 2010.
Last night the Bakries
called on Rothschild to
give up his shares
awarded on condition
the deal was a success.
Mr Nat Rothschild
has clearly taken care
of himself without
consideration to oth-
ers, a spokesman said.
Bumi said last night it had received
Rothschilds letter, and the board was
examining the Bakries terms. The inde-
pendent directors are unanimous that a
solution should be examined regarding
a separation. But they have not formed a
view on value, said a spokesperson.
FTSE 100 5,805.61 +12.29 DOW 13,424.23 +95.38 NASDAQ 3,064.18 +20.07 /$ 1.61 unc / 1.24 unc /$ M1.29 -0.01
See Page XX
BERNIE
ECCLESTONE ON
WHY THERE WONT
BE A RACE THROUGH
LONDONS STREETS
BY BEN SOUTHWOOD
NAT ROTHSCHILD
QUITS BOARD OF
TROUBLED BUMI
www.cityam.com
FREE ISSUE 1,739 TUESDAY 16 OCTOBER 2012
FORMULA
GONE
BY TIM WALLACE
RBS mulls float of branches to create challenger bank
RBS is working on a plan to
float the 316 branches it is
being forced to sell off, in a
move that could create a new
high street bank.
The state-owned institution
had hoped to sell the branches
to Santander, but after several
years of negotiations the
bidder dropped out last
Friday.
It needs to sell the unit by
the end of next year to avoid a
fine from the European
Commission.
Inspired by the successful
float of its Direct Line
subsidiary, RBS now hopes it
could spin off these branches
into a new independent bank.
The bailed out bank is
running a dual track
process, where it will
simultaneously work on plans
to sell the branches to other
bidders potentially
including Virgin Money, JC
Flowers and NBNK and to
float the bank as an
independent institution.
However, it is unlikely any
bidder will pay the 1.65bn
Santander had agreed to, and
an initial public offering (IPO)
would bring its own problems.
A float is far from ideal a
retail operation with only 316
branches and a peculiar
geographic distribution would
have a competitive
disadvantage in scale, even
before you get onto legacy
systems issues, said Investecs
Ian Gordon. RBS will pursue a
sale with all vigour, and even
then can expect to drop up to
1bn from the price.
BUSINESS WITH PERSONALITY
Certified Distribution
30/07/12 til 26/08/12 is 128,484
Dear Samin,
I am resigning from the
board of Bumi PLC with
immediate effect...
...You appear determined to
drive through the Bakries
proposal. I believe that this
proposal is so obviously not
in the interests of minority
shareholders that I find it
impossible to stay on as a
Director...
...I am determined to fight for
my fellow investors and can
do that better from outside
the tent...
Yours sincerely
Nat Rothschild
The letter that Nat wrote: How the
tycoon walked away from Bumi
See Page 24
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Virgin keeps its hands on
West Coast during probe
VIRGIN Trains has been asked to
keep running the West Coast Main
Line next year while the government
gets to the bottom of its mistakes
during the franchise competition.
Transport minister Patrick
McLoughlin said there will be no
sop to any organisation while his
departments errors are probed and
the bidding process is run again. But
he told parliament that Virgin, as
the current operator, is best placed
to serve passengers for the next nine
to 13 months.
The decision also avoids temporary
renationalisation. McLoughlin
added that I dont think theres any
reason to contemplate the prospect
of state-controlled Directly Operated
Railways taking over the three other
routes whose franchises are also on
hold.
The commercial terms of the deal
with Virgin are still being negotiat-
ed. The operator said before the com-
petition was cancelled that it would
run the route for free beyond the
franchises expiry date of 9
December, but this is now believed
to be unlikely.
McLoughlin could not tell MPs how
much the franchising debacle is like-
ly to cost, on top of the 40m refund
already promised to the four firms
who entered bids for the West Coast
Morgan Stanley sued over bias
Morgan Stanley has been sued by the
American Civil Liberties Union for
allegedly discriminating against black
homeowners through its bundling of
subprime mortgage loans.
RBS to exit Asset Protection Scheme
Royal Bank of Scotland will this week get
the go-ahead from government and
regulators to exit the state-backed
insurance scheme covering its old toxic
assets, in an early step towards
reprivatisation. By the end of the week,
RBS should be free of the long-running
Asset Protection Scheme, for which it has
already paid aggregate premiums of
2.5bn, according to people involved in
discussions.
Investors impatient at State Street
At a bank such as State Street, which has
a collection of good businesses, plenty of
capital and a shareholder roster packed
with names of asset managers that share
its Boston heritage, dissent does not build
quickly. However, the share price, at a
little over $41, is in the same place that it
started in 2009.
UBS traders losses led to job cuts
The Swiss bank UBS had to lay off staff and
reduced the bonus pool for its investment
bank by almost two thirds in the wake of
unauthorised trading losses of $2.3bn
(1.43bn), a court heard yesterday.
New league tests fund managers
They can make or break chief executives and
they can veto billion-pound deals but the
institutional investors that control Britains
biggest blue chips are about to be scored
and ranked by the companies they own.
Fracking to get green light in weeks
The government is preparing to give the
green light for fracking for shale gas in
the UK to resume within weeks. Despite
independent reports recommending
resuming fracking ministers have yet to
give the go-ahead.
Red Bull space jump worth 100m
The energy drink companys risk-taking
marketing is paying off as industry insiders
suggest its space jump could be worth
100m to the brand.
Yahoo taps Googles de Castro
Yahoo named Henrique de Castro, a
Google ad executive, as its new chief
operating officer, deepening Chief
Executive Marissa Mayer's stamp on the
company.
Chocolates reputation is tested
Cocoa prices are being hit by concerns
that Europes sweet-toothed but cash-
strapped consumers are cutting back on
the chocolate-making ingredient. But
analysts say these fears look overdone.
MAJOR banks may have to
reorganise their operations if they
are too complicated for regulators
to easily calculate their risks, under
new guidelines published last night
by the Financial Services Authority.
A separate document said the
Prudential Regulation Authority
(PRA) is willing to let insurers fail
under its watch.
The PRA, which will be part of
the Bank of England, wants to force
banks to simplify their structures
to allow it to get a better grasp of
how the lenders are run.
The PRA will also force banks to
operate within the spirit of its
regulations, rather than the exact
letter of the rules.
The second document on
insurers said: Contributing to an
appropriate degree of policyholder
protection and promoting
resilience against failure does not
mean protecting all policyholders
in full in all circumstances.
The statute is explicit that it will
not be the PRAs role to ensure that
no insurer fails, it goes on, saying
that since insurers are not as
systemically important as banks,
and since they typically do not
undertake maturity
transformation borrow short
and buy long they are not as
vulnerable as banks can be. But the
PRA will step in to maintain critical
financial services.
Watchdog sets
rules for banks
and insurers
Virgin Trains, owned by Richard Bransons Virgin and Stagecoach, has a short-term extension
2
NEWS
BY TIM WALLACE
BY MARION DAKERS
To contact the newsdesk email news@cityam.com
P
LEASE dont fall off your seats,
dear readers. Rather than
focusing on what is wrong with
the world, todays column is
about two positive, ground-breaking
technologies with the potential to
create jobs and prosperity and
revolutionise the way we live.
One such area is driverless cars:
Google is one of the main forces
behind this innovation, which would
reduce accidents by around 90 per
cent and liberate billions of hours of
wasted time, unleashing a productivi-
ty revolution. Several states in the US
have now changed their laws to allow
driverless cars, which use Google
street view, artificial intelligence and
sensors and radars, and appear to
work far better than human-driven
cars. When these eventually go main-
stream, they could transform society
and the economy for the better.
EDITORS
LETTER
ALLISTER HEATH
Two technologies that will create jobs and change the world
TUESDAY 16 OCTOBER 2012
Another revolutionary technology is
3D printing, which sounds like it
comes out the febrile imagination of
a science fiction writer but which
actually exists. The way it works is
astonishingly clever: it translates a
digital file designed on a computer
into a complex physical object, pro-
duced by small devices using a special
kind of plastic. So somebody can draw
a piece of furniture in 3D using com-
puter-assisted design, and then the
machine actually prints or pro-
duces it, using the plastic as the raw
material. It is a wonder to watch and
is set to transform key British indus-
tries over the next decade, according
to a fascinating report out today by
the Work Foundations Big
Innovation Centre.
The study by Andrew Sissons and
Spencer Thompson cogently argues
that 3D printing could help shift
some manufacturing jobs back to
Britain, reduce the environmental
impact of many goods, and offer con-
sumers far greater choice. It will dra-
matically blur the boundaries
between digital content and physical
output and challenge the traditional
model of mass production in manu-
facturing, enabling many objects to
be made close to where they are need-
ed. The industries most likely to be
disrupted by these changes, accord-
ing to the authors, include the tex-
framework of responsibility and lia-
bility is needed when things go
wrong. One thing is sure: driverless
cars and 3D printing are the big ideas
to watch over the next decade.
NOBEL HOPE
IT is excellent news that microecono-
mists have won this years Nobel Prize
for economics. As we explain on p3
and p17, Al Roth is an expert at
matching theory, and Lloyd Shapley
developed his insights using sophisti-
cated game theory. They have helped
patients who needed new organs,
shed light on marriage and dating
choices and helped design new mar-
kets. Their work is genuinely useful
sadly, not something that can be said
of all of modern economics.
tiles and clothing, pharmaceuticals,
rubber and plastics, machinery and
furniture industries. There will be sig-
nificant potential for on-demand
manufacture of drugs in hospitals
and bespoke shaped plastics. The first
area of real 3D penetration is likely to
be furniture and low-tech toys, the
report argues. There are still lots of
issues with the technology, which
remains in a state of infancy. Most
notably, the range of materials avail-
able to 3D printers remains limited.
The Work Foundation a left-wing
think-tank is too keen on govern-
ment micro-managing this crucial
new technology. We certainly dont
need a 3D task force led by Vince
Cable, or subsidies. But we do need an
intellectual property system that is fit
for purpose; to ensure 3D printing
isnt used for dangerous ends (such as
making bombs) and that a clear
route.
He acknowledged that staffing cuts
have been made in his department,
but made no apologies whatsoever
given the economic circumstances.
McLoughlin said there would be no
change to the High Speed 2 proposals
as a result. The HS2 business case has
undergone extensive quality assurance
and we are confident they are accu-
rate.
FirstGroup, which won the botched
West Coast franchise competition in
August but has been left in limbo by
the ongoing investigations, gave a cau-
tious welcome to Virgins extension
yesterday.
We believe the private sector pro-
vides the most effective and efficient
way to deliver passenger rail services in
the UK, said a spokesperson.
But lawyers said the decision sits
awkwardly with current rules on pro-
curement competition. The problem
is that there is no easy way out of the
hole and this mornings announce-
ment poses as many problems as it
solves, said Patrick Twist, an infra-
structure specialist at Pinsent Masons.
THE DEBATE: Page 17

The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
IN BRIEF
Qatar keen on Glenstrata merger
nQatar, the second-largest investor
in miner Xstrata, is in favour of the
companys proposed $32bn (20bn)
tie-up with commodities trader
Glencore, Prime Minister Sheikh
Hamad bin Jassim al-Thani said
yesterday. Sheikh Hamad said at a
news conference: We are looking in
favour of a merger between the two
companies. But he stopped short of
signalling whether the Gulf state
would vote for last months final offer.
EU adds to sanctions against Iran
nEU governments agreed further
sanctions against Iran's banking,
shipping and industrial sectors
yesterday, cranking up pressure on
Tehran in the hope of drawing it into
serious negotiations on its nuclear
plans. The move by EU foreign ministers
reflected mounting concerns over Iran's
nuclear intentions and Israeli threats to
attack Iran atomic installations if a mix
of sanctions and diplomacy fails to lead
to a peaceful solution.
UBS trader loss dwarfed by crisis
nUBSs losses in the financial crisis
dwarfed a $2.3bn (1.4bn) hit from a
rogue trading scandal last year and
caused longer-lasting damage, lawyers
for accused fraudster Kweku Adoboli
said in court yesterday. Lawyers have so
far argued that Adoboli believed he
was trading for the good of the bank. In
a fresh tack yesterday, lawyers
questioned Tom Naratil finance chief
at UBS on the impact of other losses
and probes on the Swiss bank and its
share price. The trial continues.
RBS has suspended one of its senior
trader over Libor manipulation
claims, it emerged yesterday,
following the publication of
internal messages the staff
member had sent to other
employees.
Jezri Mohideen was suspended
on Friday, less than three weeks
after emails were published which
revealed the then-head of yen
products asked Neil Danziger
whats the call on Libor?
Danziger, who has since been fired,
replied Where would you like it?
Mohideen has denied
wrongdoing.
Our
investigations into
submissions,
communications
and procedures
relating to the
setting of Libor
and other interest
rates are ongoing,
said RBS.
RBS suspends
senior trader
over Libor fix
BY TIM WALLACE
PROFITS at Citigroup tumbled in the
third quarter as it suffered losses on
the sale of its stake in the Smith
Barney brokerage.
The 87.6 per cent fall in profits to
$468m (291m) compares poorly with
JP Morgan and Wells Fargo, who last
week reported record third-quarters.
The brokerage was set up as a joint
venture with Morgan Stanley, and
when Citi sold its share of the unit it
incurred a pre-tax loss of $4.7bn as the
BY TIM WALLACE
unit was sold for less than its previous
valuation. But excluding one-off fac-
tors, profits came in at $3.3bn, up 27
per cent on the year, in part due to ris-
ing mortgage lending revenues.
Loans increased in every part of the
Citicorp unit for the seventh consecu-
tive quarter, with corporate loans up
17 per cent and retail bank revenues
rising six per cent on the year. Total
revenues in the unit rose three per
cent, driven by a seven per cent jump
in Latin America and Europe, Middle
East and Africa, but slowed by a two
per cent drop in Asia, where regulato-
ry changes hit the business.
Our core businesses showed
momentum during the quarter as we
increased lending and generated high-
er operating revenues, said chief exec-
utive Vikram Pandit.
The banks core tier one capital rose
to an estimated 8.6 per cent on a Basel
3 basis. Headcount at the bank fell two
per cent on the year to 262,000.
BOTTOM
LINE
MARC SIDWELL
MERGER and acquisition activity is
set to fall further next year, hitting
investment banks further,
according to a major business
study published yesterday.
Only 40 per cent of the firms are
looking to expand geographically
compared with 60 per cent a year
ago, reducing the number who may
expand through acquisitions,
Thomson Reuters survey of
corporate decision makers found.
And 44 per cent of European firms
expect turmoil in the European
finance industry to undermine the
M&A market even further.
The study also showed firms are
increasingly willing to switch their
investment bank, valuing low fees
over loyalty, again illustrating the
weak economic environment. The
gloomy outlook will put pressure
on investment banks, many of
whom are struggling with low
volumes and are engaged in cost-
cutting to shore up sliding profits.
M&A slump will
hit investment
banks growth
BY TIM WALLACE
TWO economists who have
developed life-saving kidney
swapping schemes and ways for
schools to select pupils were
yesterday awarded the highly
coveted Nobel prize for economics.
Alvin Roth and Lloyd Shapley
specialise in so-called market
design, formulating improved
methods to match up individuals
to their needs.
Californian academics awarded
the Nobel prize for economics
BY JULIAN HARRIS The unassuming pair are
professors in the US, at Stanford
University and the University of
California, respectively.
Their work is now rewarded with
8m Swedish kronas worth
(747,000) of prize money.
A bleary-eyed Roth was woken by
the news early yesterday. Were in
California, its still pitch-dark here
and we got a telephone call, he
said. It was worth waking up for.
THE SERIOUS Fraud Office (SFO) last
night abandoned its three-year investi-
gation into Robert Tchenguiz and col-
lapsed Icelandic bank Kaupthing, after
admitting there was insufficient evi-
dence to proceed.
The SFOs decision to end the multi-
million pound probe is highly embar-
rassing and could result in the
investigator facing substantial
claims for damages.
In a statement Robert
Tchenguiz said: I recognise
the SFO have an important
role to play in investigations
of this nature, and have done
my utmost to assist them in
any way I can. I look for-
ward to closing this chap-
ter and getting on with
business.
Tchenguiz, his brother
BY JAMES WATERSON Vincent, and several associates were
arrested in dawn raids last March. The
SFO had concerns about their relation-
ship with Kaupthing, which provided
the brothers with substantial loans
shortly before the bank failed.
But in June the agency dropped its
parallel investigation into Vincent
Tchenguiz after admitting that it had
made serious mistakes when applying
for a search warrant.
Both brothers, who became notori-
ous for their playboy lifestyles after
making billions during the 1990s,
are now set to seek damages and
bring proceedings against the
SFO. Although the case has cast
the agency in a poor
light it has also led to
calls for its funding
to be increased.
At the moment
the nations fraud
investigator oper-
ates on an annu-
al budget of
just 32m.
THE FORUM: Page 16

Professors Lloyd Shapley and Alvin Roth were pleasantly surprised to receive the award
TUESDAY 16 OCTOBER 2012
3
NEWS
cityam.com
The new
jobs website
for London
professionals
The new
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for London
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C
I
T
Y
A
M
C
A
R
E
E
R
S
.
c
o
m
I
T SEEMS to be a good earnings
season for US banks, with even
Citigroup beating the analysts
yesterday despite its losses and JP
Morgan and Wells Fargo doing well
last Friday. But while we wait to see if
Bank of America Merrill Lynch and
BNY Mellon, both reporting today,
can surprise to the upside, it is worth
looking at Citis performance beyond
its share price jump.
Thanks to a one-time $4.7bn
(2.9bn) loss over the sale of its stake
in Smith Barney, Citi did less badly
than it might, rather than actually
doing well. Yes, with all of the
quarters one-time costs stripped out,
Citigroup reported net income of
$3.3bn for the third quarter of 2012,
27 per cent higher than in the third
quarter of 2011. That helps explain
the rise in its share price that
followed. But the groups actual
unadjusted net income was $468m,
down from $3.8bn the previous year.
Also, while within North
American Global Consumer
Banking, retail banking revenues
grew 35 per cent from the third
quarter of 2011 to $1.7bn, largely due
to increased mortgage revenues,
Citis housing boost didnt match
that of JP Morgan and Wells Fargo,
despite Ben Bernankes best efforts.
But the real alarm bells sounding
behind the cheerful reports from US
banks are the new lawsuits brought
against JP Morgan and Wells Fargo. If
US banks are back in the firing line,
their future looks bleak, whatever
the numbers say.
No reprieve for upbeat US banks
Citi profit hit by
brokerage sale
SFO drops probe
into Tchenguiz and
Icelands Kaupthing
Robert Tchenguiz was also
an investor in Kaupthing
US BANKS' THIRD
QUARTER PROFITS
Bank Q3 profit Change on
Q3 2011
Citigroup $468m Down 88%
JP Morgan $5.71bn Up 34%
Wells Fargo $4.9bn Up 22%
Jezri Mohideen has
denied wrongdoing
YIELDS on Greek government 10-year
debt fell to their lowest rate since
August 2011 yesterday, as the
struggling Eurozone states bonds
continue to strengthen.
Bond prices which move
conversely to yields have been on
the up since late July, with recent
comments appearing to strengthen
the Greek position.
Investors increasingly see German
Chancellor Angela Merkel as being
determined to keep Greece in the
Eurozone, thus reducing its risk of a
messy default. Her finance minister
Wolfgang Schaeuble said over the
weekend: I think it will not happen
that there will be a state bankrupt in
Greece.
Greek yields fell 48 basis points
yesterday, ending at 17.56 per cent.
As the long-term trends shown on
the charts show, yields have fallen
across troubled Eurozone states
during the summer, although
Spains level bucked the trend
yesterday, rising 19 basis points.
Markets remain on edge over
Spains willingness to officially
accept a full bailout package. Yields
have been helped to ease in recent
weeks by the European Central
Banks (ECB) pledge to buy the
countrys bonds if it requests aid.
Eurozone officials briefed yesterday
that a Spanish bailout may come as
soon as next month.
Debt yields fall
as euro exit
risks diminish
BY JULIAN HARRIS
NEGOTIATIONS in Greece could
drag on into next month, top EU
official Olli Rehn warned yesterday,
dashing hopes that the govern-
ment is close to receiving the next
tranche of its bailout.
The troika of creditors the
European Central Bank, EU and
International Monetary Fund are
demanding Greece makes more
convincing spending cuts before
they commit to handing out the
31.5bn (25.4bn) the government
needs to avoid going bust next
month.
Finance minister Yannis
Stournaras yesterday said negotia-
tions will continue until after the
EU summit, which takes place on
Thursday and Friday, despite previ-
ously planning to complete the
round of bargaining this week.
And European commissioner
Rehn told the Wall Street Journal
that the deal will only be complete
in mid-November.
German Chancellor Angela
Merkel also acknowledged the
Greek talks not
likely to close
before summit
BY TIM WALLACE
country may need more help to get
its finances in line, yesterday insist-
ing the government will not be
allowed to default on its debts.
That brings her closer to the IMFs
position the organisation has sug-
gested that the terms of the bailout
should be extended to give hard-
pressed Greece more time to pay
back the borrowed funds.
The country is about to go into its
sixth consecutive year of recession,
throwing initial plans well off
track, necessitating even greater
spending cuts to try to bring its
finances under some kind of con-
trol.
Meanwhile the ECBs Klaas Knot
warned that government debts in
the Eurozone will be dangerously
high for decades to come.
Policymakers hope that jointly
backed eurobonds could be issued
when governments get their debts
back down to more normal levels
once again.
Given how remote we still are
from the 60 per cent debt target,
this will likely be a matter of
decades rather than years, he said.
TUESDAY 16 OCTOBER 2012
4
NEWS
cityam.com
YIELDS IN TROUBLED EURO STATES ARE FALLING
Aug Sep Oct
20
22
24
26
28
30
Aug Sep Oct
9
10
11
12
Aug Sep Oct
5
5.5
6.5
6
7
Aug Sep Oct
6
6.5
7.5
7
8
17.5630
15Oct
8.0650
15Oct
5.8170
15Oct
4.9820
15Oct
Greece Portugal
Italy Spain
SCOTLAND will vote on becoming
an independent nation by autumn
2014, as part of a historic deal
signed yesterday by David Cameron
and First Minister Alex Salmond.
The Scottish National Party (SNP)
won a majority of seats in the 2011
Scottish parliament election, with a
mandate to hold an independence
referendum.
Following months of negotiations
the Prime Minister lost his battle to
hold the referendum at an earlier
date and also agreed that 16 and 17
year olds will have the right to vote.
The SNP failed to secure the
inclusion of a third option devo-
max, which would stop short of
complete independence on the
ballot paper. Instead voters will face
a simple choice between staying as
part of the UK or striking out alone.
Polls currently show a majority of
Scots would prefer to
keep the status
quo, although
many have
not yet
made up
their
minds.
IN BRIEF
Scots secure
independence
vote by 2014
BY JAMES WATERSON
BRITAIN is pushing for changes to a
proposed Eurozone banking union
to dilute the power of the European
Central Bank, EU officials said yester-
day, potentially hampering efforts to
build the infrastructure urgently
needed to underpin the euro.
The European Commission has pro-
posed making the ECB responsible
for supervising lenders as a step
towards a banking union where
chiefly Eurozone countries would
jointly tackle problem banks and
shield savers deposits.
But last months Commission pro-
posal, central to closer economic
integration in the currency area, has
encountered opposition in Britain,
Europes biggest financial centre,
that could delay or even derail bank-
ing union.
Britain intends to propose a system
that would give countries outside
the banking union the possibility of
blocking those within the project
from clubbing together to shape EU-
wide regulations, said EU officials,
speaking on condition of anonymity.
UK challenges
Brussels over
banking union
BY HARRY BANKS
The concern is that the Bank of
England can find itself outvoted by
the ECB on aspects of rule making,
said one official. Britain will not join
the banking union, while the Bank of
England will become the UK regula-
tor next year.
They are worried that the euro
area will be able to push through a
whole lot of decisions of its own voli-
tion. They are looking for something
with checks and balances.
Although the discussion is techni-
cal, it is highly politically charged.
Speaking privately, a second EU offi-
cial said it could further sour an
already strained relationship
between Britain and the bloc.
A spokesman for the Treasury said:
Weve consistently said that the euro
area, like any single currency, needs
closer economic and fiscal integra-
tion to secure its future. More inte-
grated supervision of euro area banks
is a part of that.
Weve also been clear that any
measures must be compatible with
the single market, and uphold a level
playing field for all EU member
states, he added.
David
Cameron
agreed the
vote plan
PORTUGALS centre-right
government yesterday announced
sweeping tax rises and spending
cuts in its 2013 budget, which
promises a third year of recession
and hardship under the strict
terms of a 78bn (62.8bn) bailout.
Finance minister Vitor Gaspar
warned that failure to continue on
the path of austerity could be
catastrophic, as about 2,000
protesters gathered outside
parliament to demand the
resignation of the government.
The budget includes the
toughest tax hikes yet under the
Portugal braced for deeper cuts
and tax rises from 2013 budget
BY CITY A.M. REPORTER countrys bailout programme,
which will amount to up to three
months wages for middle-income
workers. It has ignited the greatest
outpouring of anger so far in
Portugals economic crisis, but
Gaspar remained resolute.
The margin of manoeuvre for
unilateral decisions is non-
existent. A rejection of the 2013
budget would mean a rejection of
the bailout programme, he said.
However some economists say
the measures, including pension
cuts, a financial transaction tax
and higher property taxes, could
push Portugal into a recessive
spiral like Greece.
TUESDAY 16 OCTOBER 2012
5
NEWS
cityam.com
Prime Minister Pedro Passos Coelho is facing increasing anger over his austerity drive
JAPANESE telecoms giant Softbank
confirmed yesterday it will buy a
majority stake in US mobile operator
Sprint Nextel in the biggest ever over-
seas investment from a Japanese
firm.
Softbank will acquire 70 per cent of
the USs third-biggest mobile opera-
tor for $20.1bn (12.5bn), the firms
billionaire head Masoyashi Son
announced in Tokyo yesterday, stand-
ing alongside Dan Hesse, Sprints
chief executive.
Hesse welcomed the deal, saying:
This is pro-competitive and pro-con-
sumer in the US because it creates a
stronger number three... it competes
with the duopoly of AT&T and
Verizon.
However, Tokyo was less impressed,
sending Softbank shares down 5.3
per cent on fears the company may
have overpaid for Sprint.
The deal will plough $8bn directly
into Sprint in new shares and con-
vertible bonds, with 55 per cent of
current shares sold for the remain-
ing $12.1bn. Analysts suggested
Sprints new cash could now be used
for an acquisition of smaller US oper-
Softbank seals
Sprint buyout in
record for Japan
BY JAMES TITCOMB
ator Clearwire, which is 49 per cent
owned by Sprint, or to improve its
network as operators aim to roll out
4G services nationwide.
The cash injection significantly
bolsters Sprints balance sheet, and
should help fund future initiatives,
including potential acquisitions,
William Power at Baird Equity
Research said, pointing out that an
acquisition of Clearwire does
remain a future possibility.
The deal, which is due to complete
mid-2013, will also bolster both
Sprints and Softbanks negotiating
positions with handset manufactur-
ers such as Apple.
Softbank bought Vodafone Japan in
2006 and turned it into one of the
countrys biggest mobile networks.
Ex-L&G chief Tim Breedon ups
Barclays reforming credentials
FORMER Legal & General boss Tim
Breedon was yesterday appointed as
a non-executive director of Barclays.
The first such appointment
under new chairman Sir David
Walker represents another attempt
to restore the banks tarnished
reputation, as Breedon has a
reputation as a critic of excessive
executive pay, and has publicly
looked into ways to boost lending to
small and medium sized firms.
Breedon stepped down as L&G
BY TIM WALLACE
chief executive in June after six
years in the top job and ten years at
the City giant.
He took an industry-wide view
earlier this year when heading the
governments taskforce to boost
finance options for businesses,
which called for the creation of a
new aggregation agency to bundle
SME loans, and for the government
to consider investing in markets for
innovative products like mezzanine
finance and peer-to-peer lending.
Breedon also clamped down on
excessive pay in his time at L&G. In
2011, the groups investment arm
voted down 125 remuneration
reports, again showing his
credentials in the sphere of social
responsibility and firmly reflecting
the values Barclays is trying to
adopt.
I am delighted that Barclays has
secured the services of Tim Breedon
as a non-executive director, said
Walker. He brings extensive
knowledge and experience of
financial services, regulation and
customer focus to the Barclays
boards.
Tim Breedon has worked to rein in executive pay and increase lending to small businesses
Softbank Corp
15Oct 9Oct 10Oct 11 Oct 12Oct
2,400
2,600
2,800
3,000
3,200 JPY
2,268
15Oct
THE UKs Office of Fair Trading will
this morning announce changes to
its investigation procedures, as it
attempts to rejig its systems in the
wake of high-profile failures on
appeal.
The changes are expected to
include introducing collective
decision making, meaning that
each case will be handed on after
the first phase of investigation to
ensure a fresh and accurate level of
scrutiny. Lawyers welcomed the
new system. This change will
increase parties confidence in the
Office of Fair Trading set to beef
up its investigation procedures
BY ELIZABETH FOURNIER OFTs decision making as there will
be the assurance of meaningful
fresh scrutiny of the provisional
decision of the OFT, said Bruce
Kilpatrick, competition lawyer at
Addleshaw Goddard.
The OFT also plans to give parties
a heads up on possible penalties
involved during the deliberation
process, instead of waiting for the
final outcome, as well as making
changes to the formal oral hearings
that form part of its investigations.
The regulator has recently faced
embarrassing climbdowns on fines
meted out to the tobacco and
construction industries.
TUESDAY 16 OCTOBER 2012
6
NEWS
cityam.com
MEMBERS of Parliament could lose
their gold-plated pensions under pro-
posals to be considered as part of a
review of their salary and benefits.
The Independent Parliamentary
Standards Authority (IPSA) yesterday
launched its consultation on the
future of MPs pay, which includes
questions on parliaments
final salary pension
scheme.
Others proposals
include linking MPs
salaries to a multiple of
average earnings and
reducing the
amount paid to
representatives
who have secondary
sources of income.
MPs currently take
home 65,738 a year,
which has been
frozen until March
2013.
However IPSA said
MPs could lose
gold-plated
pension pots
BY JAMES WATERSON
that any move to introduce regional
variations to MPs pay in line with
other public sector workers was
inappropriate.
IPSA was founded in the aftermath
of the 2009 expenses scandal and nei-
ther MPs nor the government can
block its decisions.
MPs self regulation of their finan-
cial affairs is over. For the first time an
independent body IPSA will decide,
but not before we ask the public what
they think, said Sir Ian Kennedy, IPSA
chairman. In the past this issue has
been ducked, dodged or fudged to
meet the political whim of the
moment. Clearly that is not right.
IPSAs approach is different.
As part of the consultation
polling firm ComRes discov-
ered that most people do
not understand what MPs
do, which fosters animosity
and scepticism.
ONLINE pollster YouGov yesterday
announced its first dividend after
benefiting from growth at its
brand-monitoring business.
The Aim-listed company will pay
investors 0.5p a share after
growing revenues by four per cent
to 58.1m in the year to 31 July.
Profits were up six per cent at
5.6m.
YouGov made its name with
political polling, with its online
panel often proving to be more
accurate than traditional
interview-based competitors.
However much of its growth is
now coming from other areas
revenues from its BrandIndex
service, which monitors online
perceptions of leading products,
grew 39 per cent to 4.4m.
Chief executive Stephan
Shakespeare, who writes a weekly
Polling firm YouGov pays first
divi as brand monitoring grows
BY JAMES WATERSON
column for City A.M., said the
firm is well placed to continue to
outperform the research market
both in terms of sales growth and
our reputation for new product
development.
Despite this he admitted there
was some evidence, notably in the
Nordics, of client demand being
affected by the continuing
economic uncertainties.
The loss of a major Iraqi
contract and a restructuring of its
Germany business also restrained
the firms revenue growth.
YouGov has a worldwide panel
of more than 3m users, including
432,400 in the UK, who receive
small payments in return for
completing surveys.
Shakespeare set up the firm in
2000 with Nadhim Zahawi, now
the Conservative MP for Stratford-
on-Avon. They each retain a 10 per
cent stake in the company.
TUESDAY 16 OCTOBER 2012
7
NEWS
cityam.com
Lord Puttnam is set to help overseas trade


Cameron calls upon
Lords to boost trade
PRIME Minister David Cameron is
today expected to hand trade roles
to prominent peers as part of a
wider plan to boost the UKs
overseas trade.
Under the plans, first reported
by Sky News, leading members of
the House of Lords will be
allocated specific countries or
regions and asked to exploit their
connections to help boost British
industry.
Initial appointments are
BY JAMES WATERSON expected to include Lord Puttnam,
the Labour peer who directed
Chariots of Fire, who will take
responsibility for Vietnam.
Lib Dem Baroness Bonham-
Carter is set take responsibility for
Mexico and Conservative Lord
Risby will deal with Angola.
The government has repeatedly
emphasised its commitment to
overseas trade and has instructed
all foreign embassies to work on
improving trade links, in addition
to their traditional political and
consular roles.
Sir Ian Kennedys IPSA said
that MPs pensions are
out of step
LVMH SUFFERS THIRD QUARTER SLOWDOWN
The worldwide
boom in luxury
goods appeared to
be slowing down
yesterday, as LVMH
revealed sales grew
just six per cent into
the third quarter
after eight per cent
growth in the second
quarter, and 12 per
cent growth in the
first quarter. The
drop came from
reduced demand for
high-end goods,
said the owner of
Fendi, Louis Vuitton
and Moet.
DEBT investor Palio Capital Partners,
headed by former Gresham Private
Equity managing director Michael
Henebery, yesterday unveiled plans
to float a fund in London aimed at
tapping debt-starved small and
medium sized enterpris-
es.
Palio UK Mid-Market
Debt Fund is seeking
to raise more than
150m from investors
for the fund, which is
set to list on the
Specialist Fund Market
of the LSE and the
Channel Islands Stock
Exchange.
The fund will
provide senior
Palio to float
its 150m debt
fund in London
BY MICHAEL BOW
and mezzanine debt to companies in
the UK lower mid market.
Henebery will draw on his private
equity background at Gresham,
where he worked until 2009, to work
alongside private equity houses to
select SMEs with enterprise values of
between 10m and 100m to invest
in.
Henebery said the fund would pro-
vide SMEs greater choice to access
loans.
The company said its portfolio
would comprise 50 per cent of sen-
ior debt commitments, 40 per cent
of mezzanine debts and 10 per cent
of junior equity.
The issue is being led by Oriel
Securities.
Cinven was advised on the acquisition by
Jefferies healthcare investment banking
division. Heading up the team was Tommy
Erdei, managing director in the healthcare
division and Tariq Hussain, joint head of
M&A investment banking in Europe. The
Jefferies team previously advised
HgCapital on the sale of Mercury Pharma
to Cinven in August. It was also under-
writer to Cinven's debt issue last month to
help fund the purchase. Jefferies also
worked as adviser to London-listed
SkyePharma on its capital structure plans
this year. The bank has one of the biggest
healthcare divisions in the world, compris-
ing 82 people globally including 15 based
out of its European headquarters in
London. The latest Cinven transaction is
the 21st speciality pharma transaction
advised on by Jefferies since January 2011.
It is also the fth speciality pharma
European transaction announced over the
last four months for the bank.
ADVISERS JEFFERIES
TOMMY ERDEI
TARIQ HUSSAIN
JEFFERIES
Permira set for Iglo
finance restructure
IGLO Group, the maker of Birds
Eye frozen foods owned by private
equity firm Permira, is set to
restructure its finances by
extending its loan maturity and
issuing more debt to boost the
companys growth potential.
Permira is set to get the
thumbs up from its lenders to
extend the maturity of 1.4bn
(1.12bn) of senior debt from 2014
and 2015 to 2017 as it seeks to
extend the time horizon of its
investment in Iglo.
BY MICHAEL BOW BY ELIZABETH FOURNIER
Iglo is also set to issue 250m of
new senior debt as it seeks to
capitalise on the companys
current low indebtedness. The
firm is also planning to pass back
300m to its shareholders.
A source said there was good
support from lenders for the
three-pronged proposal, as the
firm seeks to organise its capital
structure in case it decided to sell
the business.
Permira shelved plans earlier
this year to sell Iglo after bidders
failed to meet the asking price it
was seeking.
Palio chief Michael Henebery
hopes to raise 150m
CINVEN, the European private
equity giant, yesterday
announced it had bought UK
pharmaceutical firm
Amdipharm in a bespoke deal
using cash raised for its new
Cinven V flagship fund.
The 367m purchase of the
family owned business follows
on from the acquisition in
August of another healthcare
business, Mercury Pharma
from HgCapital for 465m.
Cinven said it will merge the
two businesses into a single
entity within months, forming
a new business that Cinven
claims will double the revenue
streams and profits of the
combined group. The
acquisition has been funded
with money from its Cinven V
fund. Though still in its
fundraising phase, the fund
which is targeting 5bn has
Cinven draws on new funds
to buy latest pharma firm
BY MICHAEL BOW
raised around 80 per cent of its
capital, or 4bn.
The purchase was
undertaken as a proprietary
deal by Cinven, unusual for
private equity deals, which are
often sold through a
traditional bidding auction
process.
It is the third bilateral deal
completed by Cinvens
healthcare side since 2010.
Cinven partner Supraj
Rajagopalan, a former NHS
doctor, who led the purchase,
said the fundraising challenges
faced by some private equity
houses meant more bi-lateral
deals could come to market.
Clearly it is more difficult
to raise funds than it has been
before, he said. However, this
is making the market less
competitive, which means if
you are genuinely credible you
can get access to good deal
flow.
TUESDAY 16 OCTOBER 2012
9
NEWS
cityam.com
SALES PERCENTAGE BY CATEGORY (2012) (2011)
10
13
REST OF THE WORLD
DOWN
FROM
2011
%
%
2012
8 30
CHINA
DOWN
FROM
2011
%
%
2012
5
9
EUROPE
DOWN
FROM
2011
%
%
2012
13
10
THE AMERICAS
UP
FROM
2011
%
%
2012
8
2
JAPAN
UP
FROM
2011
% %
2012
8
25
ASIA PACIFIC
DOWN
FROM
2011
%
%
2012
MAKE-UP OF THE MARKET
SOURCES: ALTAGAMMA/ BAIN
Grant Thornton
lifts revenues
by 10 per cent
PROFESSIONAL services firm Grant
Thornton yesterday revealed a 10.6
per cent rise in revenues for the year
to 30 June, led by growth in its
recovery and reorganisation arm.
Profits before tax rose by 1m, but
average distributable profit per
partner dipped slightly to 335,000,
two per cent lower than last year,
which the firm put down to a
continued investment in people,
brand and infrastructure. Over the
year Grant Thornton hired 300 new
trainees and appointed 20 partners.
BY KASMIRA JEFFORD
GROWTH in the global luxury
goods market is set to slump by
more than half this year as Chinese
shoppers cut back on spending and
tough economic conditions take
their toll on consumers in the
Eurozone.
A report by business consultancy
Bain and the Italian luxury goods
trade body Altagamma yesterday
predicted that sales will grow by
just five per cent to 212bn
(170bn) at constant exchange rates
compared with 13 per cent in 2011.
Sales in China will grow by eight
per cent in 2012, the study claims,
down from 30 per cent last year at
constant currencies.
Sales growth in Europe hit by
the ongoing sovereign debt crisis
it set to slow to five per cent, down
from nine per cent.
Luxury goods market is braced for a slowdown
BUSINESSMAN, philanthropist and
television personality James Caan
has flown the Dragons nest and is to
host his own entrepreneurial-themed
show on CNBC.
The Capitalist paid a visit to the
bearded former Dragon on set at The
Business Class studio, ahead of the
shows debut tomorrow evening.
When asked the dreaded how does
this programme compare to Dragons
Den? question, Caan admitted: This
one is amazing, because you dont
have to part with any cash. And the
official answer: This really is more
me, and I feel really more comfort-
able because this is my core subject
SMEs and entrepreneurs.
The show is set to feature guest pan-
elists Jo Malone, Julie Meyer of
Ariadne Capital and as a final
episode treat, producers are hoping
Vince Cable will make a cameo.
The Capitalist took a sneak peek at
the tape of the first episode, and is
happy to report it features two ex-
City women whose online designer
clothing business, LUX FIX, is scruti-
nised by Caan in a suitably Dragons
Den-esque fashion.
Start a business? Yes you Caan
TUESDAY 16 OCTOBER 2012
10
cityam.com
cityam.com/the-capitalist
THECAPITALIST
To lighten the mood and lift
spirits after the doom and gloom
of yesterdays Black Monday nostalgia,
The Capitalist felt it would only be right
to share some more joyous news today.
And lo and behold, what should wing
its way to The Capitalists inbox, but an
animal study from Japan! Researchers
at Hiroshima University have found that
showing workers pictures of adorable,
fuzzy, baby animals makes them more
productive. Although never having
conducted its own studies within the
City A.M. office, The Capitalist cannot
help but feel that circulating pictures of
kittens and puppies (especially
puppies) would achieve about the same
effect on productivity as streaming live
footage of Felix Baumgartner jumping
out of a hot air balloon. That is to say,
pretty steep changes, but mostly in the
downward direction.
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
sum that made it talk of the pad-
docks as the highest grossing yearling
auction in European history.
No pennies, or rather guineas, were
being pinched when the hammer
came down for one particular horse.
A bidding war between former
Manchester United co-owner John
Magnier and Sheikh Fahad Al Thani,
a member of Qatar royalty, had the
bloodstock industry on the edge of
their saddles. The colt in question,
Hydrogen, was finally won by Sheikh
Fahad for a casual 2.5m guineas.
Investec boss Bernard Kantor (inset) and Hydrogen, the colt sired by Irish stallion
Galileo, were both at the Tattersalls yearling sale
John Casey, vice president of CNBC international news and programming (left) and
James Caan, entrepreneur and presenter of new CNBC show The Business Class (right)
CITY horse racing fans, of which
there are no doubt many, may have
been following the Tattersalls year-
ling sale last week with a speculative
eye.
This was certainly the case for
Bernard Kantor of Investec and
Martin Hughes of Cheviot Asset
Management, who were both spotted
at the old auction house. Tatts, by no
means a budget auctioneer by any
standards, did particularly good
trade by the end of the week, turning
over 68,102,500 guineas (71.5m) a
Tattersalls sale
attracts wealth
of racing fans
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L
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speaking to our teams.
They can help you choose the account thats
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fluent in our platforms and tools to help you
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In fact, they put your interests at the heart
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IN BRIEF
Energy is biggest consumer worry
nUK consumers rate rising energy
prices as the biggest threat to their
household finances in the coming 12
months, a YouGov poll suggested
yesterday. Households rated energy
prices 7.8 on average on a scale of
one to 10, where 10 is the biggest
impact on household finances
followed by unemployment at 7.4 and
inflation at 6.9.
France calls for food reserves
nFrench agriculture minister
Stephane le Foll yesterday said
strategic food reserves ought to be set
up to smooth food prices in vulnerable
countries, claiming that recent high
prices mean the market has failed to
self-regulate. But le Foll said France
was unlikely to reach a deal soon on
implementing the idea, since many
countries stood in opposition to it.
Academic says cuts overstated
nThe coalition is overstating its
austerity programme in a bid to
convince the bond markets that the cuts
are working and the public that tough
measures are needed, one academic
argues in a paper out yesterday.
Spending as a proportion of GDP is set
to fall due to overly optimistic growth
forecasts, Anthony Evans at the
Mercatus Center claims, raising the risk
of tax hikes to compensate.
Construction slump squeezes housing supply
REAL income levels improved for
UK households in the second quar-
ter of the year, according to data
released yesterday by the Office for
National Statistics (ONS).
Yet austerity-minded Britons
opted against increasing their
spending in light of the extra
funds, instead opting to add to
their savings.
Allowing for inflation, house-
hold actual income per head rose
by 1.6 per cent in the three months
to June, meaning that people had
an extra 69 in their pockets.
While this was the highest level
since the final months of 2010, it
remains 2.9 per cent below the
peak levels seen in mid-2009,
according to IHS Global Insight
economist Howard Archer.
Consumer spending caution is
likely to be reinforced by still
appreciable concerns over the eco-
nomic outlook, Archer said.
Consumer spending per head
dipped by 7 in the second quarter,
a decline of 0.2 per cent compared
to the first three months of the
year.
Instead of splashing the cash on
the high street, people chose to put
it aside for a rainy day. The house-
hold saving ratio grew by 0.7 per-
centage points to 6.7 per cent in
quarter two, the ONS said.
The hair shirt could soon be
declared national dress, com-
mented financial adviser Phillip
Bray, of Investment Sense. Britons
may have got richer in quarter two,
but we didnt feel it and we cer-
tainly didnt spend like it.
Bray added: Theres a danger
that such reluctance to spend
could become a self-fulfilling
prophecy and the economy may
grind to a halt as a result.
A separate study by Lloyds TSB
said that real discretionary spend-
ing power fell 0.9 per cent last
month, having risen in the previ-
ous three months suggesting
that households income levels
remain in choppy waters.
Incomes rise but Brits
save instead of spend
BY JULIAN HARRIS
Good economic news could boost
President Obamas election hopes
INFLATION shot up to a 10 month
high in India last month, official
data revealed yesterday, worrying
policymakers and denting the
emerging economys prospects.
Yet in neighbouring China,
inflation eased further, stoking
expectations of further stimulus
from its monetary authorities.
Indian inflation rose to 7.8 per
cent in September, driven up from
Augusts level of 7.55 per cent by
BY CITY A.M. REPORTER higher fuel costs.
The government increased the
price of heavily subsidised diesel
on 13 September in a bid to rein in
its spending.
The Reserve Bank of India has
kept its policy rate at eight per
cent since April.
Beijing could reveal further
monetary easing after Chinas rate
of inflation slipped from two per
cent in August to 1.9 per cent last
month. Its economy has been hit
by global economic slowdown.
TUESDAY 16 OCTOBER 2012
12
NEWS
cityam.com
Higher costs at the petrol pump have contributed to growing levels of inflation in India
Price hikes quicken in India but
remain under control in China
American consumer
comes to the rescue
THE AMERICAN consumer sprang to
life in September, boosting US retail
sales and suggesting that the
countrys economic recovery could
be sustained.
Sales were up 1.1 per cent last
month, the Census Bureau said a
5.4 per cent improvement on the
same time last year.
Separate data measuring the
factory activity in New York state
revealed a third straight month of
decline, yet the rate of
contraction eased
considerably.
The widely-regarded
Empire State
Manufacturing Survey
showed general business
conditions rising by four
points to an index score
of -6.2.
Despite the
sales figures
appearing to
reflect
improving
domestic
demand, the
BY JULIAN HARRIS global economic slowdown
continues to hit US factories, Capital
Economics said in a note.
American GDP for the third
quarter should be relatively positive,
however. It now seems likely that
third-quarter annualised GDP
growth was closer to two per cent
than our previous estimate of 1.5 per
cent, Capital said.
With presidential elections set for
6 November, incumbent Barack
Obama will be hoping that bullish
economic news assists his hopes of
being re-elected.
Meanwhile the Federal
Reserve is continuing with its
efforts to stimulate the US
economy, after revealing its
third spell of quantitative
easing (QE3) last month.
An influential Fed official,
William Dudley, said yesterday
that it will not react to strong
economic news in a hasty
manner by reversing its ultra-
accommodative policy stance.
The saving ratio is rising again
1997
Q1
2000
Q1
2003
Q1
2006
Q1
2009
Q1
2012
Q1
0
-2
2
4
6
8
10 %
Savingratio
THE UK construction industry
continued to decline in the third
quarter of the year and faces more
difficult times ahead, according to
two gloomy industry surveys
released yesterday.
Construction output is expected
to drop by 6.3 per cent this year
and another 1.4 per cent
throughout 2013, the Construction
Products Association (CPA) said.
And the construction decline is
set to worsen the UKs housing
shortage, with the CPA forecasting
just 118,000 housing starts this
year fewer than half the number
needed to meet the number of new
households being created, it said.
Meanwhile a survey by the
BY JULIAN HARRIS
Federation of Master Builders
(FMB) echoed the findings.
An alarming 39 per cent of
respondents reported a decline in
private new house building
workloads in the third quarter of
the year, and 40 per cent predict a
further decline in the last three
months of this year, it said.
FMB boss Brian Berry added:
There is little doubt that we are
in the midst of a serious housing
crisis with fewer than half the
number of new homes being built
to meet current demand.
Berry urged the coalition to
avoid any new burdens on the
industry. Instead, real progress is
required on deregulation, he said.
More new houses are required
TUESDAY 16 OCTOBER 2012
13
NEWS
cityam.com
IN BRIEF
Morrisons FD joins The Hut Group
nRichard Pennycook, Morrisons
outgoing finance director, is the latest
high profile executive to join the board
of Hut Group, fuelling further
speculation that the fast-growing
retailer is gearing up for an IPO. The
firm, which counts retail veterans Sir
Stuart Rose and Sir Terry Leahy among
its backers, said Pennycook will join
the board immediately. Morrisons
announced earlier this year that
Pennycook will step down in 2013.
Galliford wins 89m casino deal
nGalliford Try yesterday announced it
has signed an 89m deal with casino
operator Genting UK to build a casino
complex in Birmingham. The Resorts
World project at the National
Exhibition Centre will also include a
176-bed four-star hotel, a spa,
conference facilities, a factory outlet
centre and a cinema, the construction
company said. Construction is set to
begin this month and is expected to
be completed in 2015.
CBRE GIs supermarket sweep
nCBRE Global Investors yesterday said
it has bought five supermarkets across
the UK for around 62m. The
acquisitions include two Waitrose
stores in Frimley and East Grinstead,
two Sainsburys stores in Chadwell
Heath and West Wickham and a Co-op
in Leeds. These five acquisitions offer
secure income streams of more than 15
years and with sustainable and above
market yields, the company said in a
statement.
MCBRIDE, Europes biggest maker of
retailer own-brand cleaning prod-
ucts, yesterday warned that first-half
profits will be hit by a sharper than
expected dent in sales after the wind-
down of its contract manufacturing
business.
The firm said trading profit in the
year to the end of June 2013 will be
about 2m lower than previously
anticipated after posting a seven per
cent decline in revenues in the first
quarter of the year to 14 October.
As we indicated at the full year,
our financial performance this year
will be second-half weighted as some
contract manufacturing business is
wound down, allowing us to grow
our Private Label business in the sec-
ond half and beyond, chief execu-
tive Chris Ball told shareholders at
the firms annual general meeting.
Although our contract manufac-
turing business has declined more
rapidly than expected in the first
half, I remain very encouraged by the
progress being made by the business
McBride issues
profit warning
as sales slide
BY KASMIRA JEFFORD
overall, he added.
Panmure Gordon analysts down-
graded their profit before tax fore-
casts by 2m to 26.8m but said they
remained encouraged by the groups
private label business, which per-
formed in line with expectations.
McBride, which supplies companies
such as Tesco and Carrefour with
goods ranging from dishwasher
tablets to deodorant, is stepping back
from contract manufacturing as an
increasing number of shoppers opt to
buy supermarkets own-brand label
products, denting consumer demand
for other brands.
Microsoft launches Xbox music
service in bid to take on iTunes
MICROSOFT is launching a new
music streaming service in an
effort to take on Apples iTunes
and Swedish startup Spotify, and
build up excitement around its
new Windows 8 operating system.
The companys Xbox Music
offering, which launches today on
the Xbox 360 console and later
this month on Microsofts
forthcoming Windows 8 PC, tablet
and phone software, will allow
users to stream or download songs
and promises a catalogue of 30m
songs similar to iTunes.
BY JAMES TITCOMB However, the service will at first
only be available on devices
running new Microsoft software,
meaning users of the iPhone or of
handsets running the Android
operating system will not be able
to use it. Computers running older
versions of Windows will also not
be supported.
Microsoft will hope the
exclusivity of Xbox Music which
is priced lower than its rival
Spotify and will offer six months of
unlimited listening for free will
tempt people onto its struggling
Windows Phone operating system
and encourage purchases of the
Windows 8 desktop software and
the firms upcoming Surface
tablet.
The move marks the companys
first major foray into music since
the failure of Zune, its iPod rival.
Production of the Zune stopped
late last year having failed to make
a dent in the digital music player
market and as Microsoft focused
on development of Windows 8.
Xbox Music will be split into
three strands; a free, ad-supported
streaming service with unlimited
plays for six months; an 8.99 per
month ad-free unlimited
subscription service; and a music
download service similar to iTunes.
BAA brand bites the dust after
firm renames itself Heathrow
AVIATION infrastructure group
BAA is to ditch its name and
rebrand its airports
individually.
BAA was known as the
British Airports Authority in
the 1960s, when it took over
responsibility for airports
from the Ministry of Defence.
But the firm has been owned
by Spanish-listed Ferrovial
since 2006 and in
recent years has been
forced to sell off
several assets
including Glasgow
BY MARION DAKERS
and Stansted due to competition
concerns.
The slimmed-down company said
yesterday that the BAA name
no longer fits its operations.
We do not represent all
British airports; we are not a
public authority; and
practically speaking the
company is no longer a group
as Heathrow will account for
more than 95 per cent of
the business, said BAA
boss Colin
Matthews, who will become the
chief executive of Heathrow under
the plans. The bosses of the other
airports will remain in post.
The firm added that it will no
longer publish quarterly financial
results for airports other than
Heathrow, as they are not funded
by publicly-traded debt.
Dropping the BAA name marks
a symbolic break with the
company of the past, Matthews
said.
Bids for Stansted are due in next
week. Following this disposal, the
company will be made up of
Heathrow, Southampton, Glasgow
and Aberdeen airports.
McBride PLC
15Oct 9Oct 10Oct 11 Oct 12Oct
124
126
128
130
132
134 p
129.50
15Oct
CHINESE telecoms equipment
maker ZTE sank to a first
quarterly loss yesterday due to
project delays in a slowing global
economy.
ZTE blamed delays in overseas
projects, which count for around
half of its revenue, for a 2bn yuan
(198m) loss in its third quarter,
which compares with a profit of
299.3m yuan for the same period
last year. Shares in the company
slumped to a one-month low
yesterday, falling 16 per cent in
Hong Kong.
The firm said it had seen
reduced sales in the domestic
market, although its international
ZTE slumps to first loss as firm
is blighted by US security fears
BY FAIZA MALIK
position is seen as most at threat,
after a US Senate committee last
week branded the company
along with fellow Chinese
telecoms giant Huawei a security
risk, urging companies not to do
business with them.
ZTE has infrastructure contracts
with all the UKs major telecoms
firms, though it does not sell its
handsets here, despite being the
worlds fourth-largest phone
maker by sales.
Fitch yesterday put the
company's ratings on negative
watch, saying ZTE's results were
significantly worse than its
expectations. The company is due
to report final results at the end of
the month.
TRINITY Mirror boss Simon Fox
said yesterday he would
streamline the newspaper firms
operations, announcing a wave of
cost-cutting measures after just
over a month in the job.
Fox, who relinquished the reins
at HMV in September to replace
long-serving Trinity Mirror head
Sly Bailey, said he would merge the
national and regional newspaper
operations, shake up the firms
management, focus on digital
publishing growth and get rid of
daily deals service Happli.
The restructuring, announced to
staff in an internal email
yesterday, comes as the publisher
New Trinity Mirror boss makes
his mark with cost cutting push
BY JAMES TITCOMB
of the Daily and Sunday Mirror
and People titles struggles with
declining print circulation and
advertising revenues.
It has become increasingly
clear that we have a disconnect
between what we all want and
what our financial projections are
showing, Fox wrote yesterday.
What I have largely seen is a
scattergun approach to digital
which has neglected the
development of our core
newspaper brands.
Fox said Georgina Harvey, who
has run the regional newspaper
division since 2005, would be let
go, while nationals head Mark
Hollinshead was promoted to
chief operating officer.
GREAT Portland Estates yesterday confirmed it has agreed to sell a chunk of its 50 per
cent stake in 100 Bishopsgate to its Canadian joint venture partner Brookfield Properties
for 50m. The developer is to sell a 37.5 per cent stake in the two-acre site in the City,
where the firms plan to build a 40-storey skyscraper with both flats and offices.
GREAT PORTLAND SELLS STAKE IN CITY TOWER
Heathrow chief
Colin Matthews
IN BRIEF
Talvivaara warns on nickel target
nFinnish miner Talvivaara yesterday
warned it would miss its nickel
production target for 2012, sending its
shares on a downward spiral. The
miner said historically heavy rainfall at
its Sotkamo mine had impacted its
ability to deliver a target of 17,000
tonnes of the base metal. The miner
produced 4,030 tonnes of nickel in the
third quarter and 10,598 tonnes in the
year to date. Shares closed down 7.39
per cent yesterday.
Filtrona sales up in third quarter
nFoam products supplier Filtrona
yesterday said trading in the third
quarter was in line with the boards
expectations, with revenue up by 26
per cent compared to the same period
last year. Like-for-like sales for the
three months were up 10 per cent on
last year. Chief exec Colin Day said the
firms aim for 2015 was at least mid
single-digit like-for-like revenue
growth and double-digit adjusted
earnings per share growth.
Quindell acquires law firm
nInsurance outsourcing firm Quindell
Portfolio yesterday announced the
acquisition of personal injury claims
specialist Pinto Potts for an initial
payment of 1.5m, with a further
1.5m and shares to follow. Fast-
growing Quindell has been on a
spending spree, snapping up four
firms in the last month. Yesterday it
reported turnover for the first nine
months of the year hit 95.7m, with
adjusted EBITDA of around 29m.
MEXICAN precious metal miner
Fresnillo yesterday posted a record
15.1 per cent increase in gold produc-
tion in the year to date, putting it on
track to meet its targets for the full
year.
Fresnillo, which has seven operat-
ing mines in Mexico, said gold pro-
duction hit 375,637 ounces in the
year to date. Quarter on quarter, pro-
duction was up 5.9 per cent to
126,841 ounces, largely due to a
strong contribution from the new
Noche Buena gold mine.
The mine continues to ramp up,
said Fresnillo, and it will reach full
capacity of 42,000 ounces of gold a
year by early next year.
In the year to date, gold production
at the mine was 20 per cent above
planned levels.
Silver production also increased
over the quarter, up 2.6 per cent to
10.3m ounces.
On a year to date basis though, sil-
ver production decreased 3.6 per cent
compared to the same period in 2011,
Record output
lifts Fresnillo
for 2012 targets
BY CATHY ADAMS
as a result of a fall in silver grades at
the Fresnillo mine operation.
The miner added it was on track to
meet its full-year production targets
of 41m ounces of silver and 460,000
ounces of gold.
Chief executive Octavio Alvidrez,
who joined the company in July fol-
lowing the resignation of Jaime
Lomelin, said yesterday: Looking to
the remainder of the year, Fresnillo is
confident that it will continue to
deliver growth through existing oper-
ations and new deposits and remains
on track to meet its short and long
term aspirations.
Aveva beats flat IT spending to
bring shares to all-time highs
SHARES in IT systems group Aveva
hit a record high yesterday as the
company said it had beaten a
general slowdown in computer
spending and difficult currency
headwinds in the six months to
October.
The company said it had seen
good revenue growth over the
same period last year, suggesting
it had outperformed the sector on
the whole. Data released yesterday
by advisory firm CEB said IT
budgets were expected to stagnate
this year and next year, with firms
BY JAMES TITCOMB concentrating on keeping the
lights on rather than improving
infrastructure.
Avevas performance moved
shares up 2.36 per cent to 2,037p, a
record level and 42 per cent up
since the start of the year. David
Toms at Numis Securities, who rates
Aveva as a buy, predicted sales
had risen around 11 per cent over
the period.
The firm said its oil and gas
businesses continued to be the key
driver of sales, while the
engineering and designs division
had also done well. Aveva also said
that Bocad, the steel detailing
software business the company
bought in May for 14m, had
performed in line with
expectations. The firm announces
full results on 12 November.
Tullow Oil partners with Maersk
in exploration of Greenland oil
BRITISH explorer Tullow Oil
yesterday acquired a 40 per cent
interest in a block belonging to
Maersk Oil offshore Greenland.
Maersk Oil will continue to act as
operator of the Tooq licence in
Baffin Bay, an area of North West
Greenland, with a 47.5 per cent
interest.
The Tooq licence, which covers
an area of 11,802 square
kilometres, includes both the
acquisition and the processing of
3D seismic data on the site.
Seismic work to determine the
prospectivity has already been
BY CATHY ADAMS
completed on almost 2,000 square
kilometres of the licence.
Tullow, which focuses mainly in
Africa, said this morning it will
wait for results from the geological
tests at Tooq to decide whether or
not to drill a well in the area.
Angus McCoss, exploration
director at Tullow, yesterday
welcomed the partnership between
the FTSE 100 listed firm and Maersk
in an unexplored and highly
prospective province.
The oil industry hopes to open up
a new multi-billion oil province in
the seas around Greenland but
drilling in the pristine Arctic is
strongly opposed by environmental
groups who claim cleaning up a
spill in the region would be very
difficult.
Tullow shares closed up 0.78 per
cent at 1,415p yesterday.
Fresnillo PLC
15Oct 9Oct 10Oct 11 Oct 12Oct
1,900
1,920
1,940
1,960
1,980
2,000 p 1,916
15Oct
TUESDAY 16 OCTOBER 2012
14
NEWS
cityam.com
SHARES in British translation
software firm SDL plummeted
yesterday as the firm counted the
cost of a lawsuit resulting from its
2005 acquisition of Trados.
SDL said litigation from a
former Trados shareholder could
cost the firm up to $3m (1.9m).
The announcement, along with a
host of City analyst downgrades,
sent SDLs share price down 15 per
cent yesterday.
The firm also said that trading
had been broadly in line with
management expectations in the
three months to October.
That often translates to not
quite in line, Panmure Gordons
Language software outfit SDL
shares drop on legal warning
BY JAMES TITCOMB
George OConnor said.
SDL said most of its growth had
come from its language services
arm, while its technology division,
which develops and sells other
software continued to be
suppressed.
The company called the lawsuit
from the Trados shareholder
minor and said the board
believes the case to be completely
without merit. It expects to bear
the $1-3m cost of the case next
year.
On a more positive note, SDL
said that Januarys 70m
acquisition of marketing software
firm Alterian was starting to pay
off, with the business performing
ahead of expectations.
HARBOURVEST Global Private
Equity, the London-listed
investment company, yesterday
posted a small uptick in fund
value and a slowdown in fund
commitments for September as it
reduced its debt pile.
The fund, which is run by
Boston-based fund of fund
manager HarbourVest Partners,
increased the estimated net asset
value of the fund by 0.8 per cent to
$11.55 per share from August until
September.
The fund also slowed down its
US fund of fund investments to
$3.3m (2.05m), compared to
$15.7m of commitments made in
HarbourVest pays back $12m in
September to reduce debt pile
BY MICHAEL BOW
August, and received $17.1m in
realisations over the month, giving
it net positive cash flows for
September of $13.8m.
The rush of cash for the month
allowed HarbourVest, which has a
joint listing on the Amsterdam
Euronext market alongside its
London listing, to repay $12m of
borrowings in September, it said.
The funds deleveraging trend
has meant it has now reduced its
gearing since 31 January 2012
from 16 per cent to nine per cent,
repaying $60m of net borrowings
in total.
The decrease on its outstanding
debt facility means there is now
$94.2m outstanding on the funds
credit facility.
The weakness in silver was offset by stronger-than-expected gold
production. Annual targets are expected to be met, with gold targets likely
to be exceeded, in our view. There was good progress recorded at key
development projects as well as with browneld exploration.
ANALYST VIEWS

Another strong quarter with 10.3m ounces of silver and 127,000 ounces
of gold, beating our forecast. Higher production from the Saucito mine helped
offset lower grades from Fresnillo, while gold was higher due to Noche
Buena ramping up. Fresnillo remains our preferred silver play.

The group is on track to achieve annual silver production target of 41m

ounces and 460,000 ounces of gold. On the exploration side, signicant progress
has been made in the drilling programme in the Herradura District where
encouraging results were obtained at Tajitos.

WHAT WERE THE HIGH-

LIGHTS FROM FRESNILLOS
PRODUCTION UPDATE? By Cathy Adams
JONATHAN GUY RBC CAPITAL MARKETS

CAILEY BARKER NUMIS SECURITIES

JONATHAN JACKSON KILLIK & CO

Chief executive Octavio Alvidrez joined Fresnillo in July
Tullow Oil PLC
15Oct 9Oct 10Oct 11 Oct 12Oct
1,400
1,410
1,420
1,430
1,440
1,450 p
1,415.00
15Oct
AVEVA Group PLC
15Oct 9Oct 10Oct 11 Oct 12Oct
1,960
1,980
2,000
2,020
2,040
2,060 p
2,037.00
15Oct
TUESDAY 16 OCTOBER 2012
15
LONDONREPORT
Wall St rises as
Citigroup sales
beat forecasts
U
S stocks climbed yesterday,
rebounding from last weeks
losses after Citigroups
earnings and retail sales
sharply exceeded expectations.
Citigroup shares shot up 5.5 per
cent to $36.66 and gave the biggest
lift to the S&P 500 after the third-
largest US bank reported quarterly
adjusted earnings that surged from
the year-ago quarter and beat expec-
tations. The growth came as mort-
gage lending increased and capital
markets results rebounded.
Results from Goldman Sachs are
expected today. The stock gained 3.6
per cent to $124.50 yesterday, while
the S&P financial index rose 1.2 per
cent.
Worries about third-quarter US
earnings have put a damper on
stocks in recent weeks, with the
S&P 500 falling 2.2 per cent last
week its worst weekly perform-
ance in four months. But the S&P
500 is still up 14.5 per cent for the
year.
The three major US stock indexes
also drew support from optimism
about retail data, which showed
September retail sales rose 1.1 per
cent above the 0.8 per cent
growth that had been anticipated.
Investors remained cautious about
Europe, waiting for signs that Spain
was ready to formally request a
bailout, which is seen as necessary
to deal with its debt crisis.
The Dow Jones industrial average
rose 95.38 points, or 0.72 per cent,
to 13,424.23. The Standard & Poors
500 Index gained 11.54 points, or
0.81 per cent, to close at 1,440.13.
The Nasdaq Composite Index
advanced 20.07 points, or 0.66 per
cent, to close at 3,064.18.
U
K shares rose yesterday, buoyed by
gains for heavyweight banks as the
sector tracked continental peers on
expectations Spain was moving
closer to asking for a bailout.
A 12.29 point, or 0.2 per cent, move high-
er to 5,805.61 points was not enough to
take the FTSE 100 out of its recent tight
trading range, however, and the index
remained a regional laggard in compari-
son to gains in Germany and France.
While traded volumes were towards the
top of their recent range, at 90 per cent of
their 90-day daily average, absolute vol-
umes remained low, traders said.
Markets are paper thin at the moment.
There isnt any conviction in their moves,
said Zeg Choudhry, head of equities trad-
ing at Northland Capital Partners.
That lack of conviction has kept the FTSE
in a tight 47 point range since the start of
October, flirting with the trendline formed
by the indexs lows in June and August.
British banks led sectoral gainers, up 1.3
per cent, after a Reuters report that Spain
could apply for a bailout in November sup-
ported sentiment towards the sector,
adding to a solid third quarter rally.
HSBC, up 0.9 per cent, added nearly four
points to the broader index, while peers
including Barclays and Lloyds Banking
Group also rose. The sectoral performance
was marred only by a one per cent fall for
Royal Bank of Scotland, hit after Spanish
bank Santander withdrew from a deal to
buy 316 branches from the UK lender late
on Friday.
The FTSE 100 has added 5.6 per cent since
late July, against 7.9 per cent for the
FTSEurofirst 300 and 15.1 per cent for the
Euro STOXX 50.
UK shares lifted by banking gains
on hopes for Spanish bailout soon
BESTof theBROKERS
Optos PLC
9Oct 10Oct 11Oct 12Oct 15Oct
p 215.0
212.5
210.0
207.5
205.0
202.5
200.0
197.5
208.75
15 Oct
OPTOS
Panmure Gordon has
upgraded the retinal imag-
ing firm to buy from
holdafter a strong trading
statement. The broker has
also raised its target price to
320p from 230p.
DASHBOARD CITY
NEW YORK
REPORT
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
FTSE
9Oct 10Oct 11Oct 12Oct 15Oct
5,860
5,840
5,820
5,800
5,780
5,805.61
15 Oct
Lloyds Banking Group PLC
9Oct 10Oct 11Oct 12Oct 15Oct
p 40.5
40.0
39.5
30.0
38.5
38.0
37.5
37.0
40.32
15 Oct
LLOYDS BANKING
GROUP
Shore Capital has
upgraded the bank from
hold to buy with a
target price of 53p, saying
that central bank action
and a softer regulatory
stance has moderated risk.
InterContinental Hotels Group PLC
9Oct 10Oct 11Oct 12Oct 15Oct
p 1,660
1,650
1,640
1,630
1,620
1,610
1,604.00
15 Oct
INTERCONTINENTAL
HOTELS
Investec has raised its
target prcie to 1,950p from
1850p and retained its
buy rating on the hotel
group, ahead of an update
on its American operations
next Wednesday.
Alvarez & Marsal Taxand
The tax advisory firm has
appointed Stephen Labrum as a
managing director and global
head of transfer pricing. He joins
after 13 years at Ernst & Young,
where was a transfer pricing
partner.
Allianz Global Investors
The asset management firm has appointed Andy Wiggins
to the newly-created role of head of institutional business
for the UK. He joins from Threadneedle Investments,
where he was head of UK institutional client relationships.
Wiggins has also worked at AllianceBernstein.
Societe Generale
Ian Fisher has been appointed head of coverage and
investment banking for the UK at Societe Generale
Corporate & Investment Banking. He retains his role as
group country head for the UK. Fisher has also previously
worked at Citibank, where he held senior positions in the
capital markets division. He began his banking career at
Credit Lyonnais.
Morrison & Foerster
David Bresnick has been appointed as a mergers and
acquisitions partner in the law firms corporate practice.
He joins from CMS Cameron, where he headed up its
private equity group and led its corporate telecoms,
media and technology group.
Eversheds
Tim Buckingham has been appointed partner in the law
firms financial services dispute resolution team. He joins
from DLA Piper, where he was head of its Manchester
banking and financial litigation team. Buckingham acts
for institutional clients, and has particular expertise in
payment processing, risk, insolvency and fraud matters.
Grant Thornton
Jane Stevensen has been appointed head of the business
advisory firms newly-created sustainability team. She
most recently worked for Barclays Global, where she
advised on sustainability strategy and social
responsibility for clients including BP, Scottish Water and
Sainsburys.
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
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I
AM about to start teaching one of
my favourite classes. I provide
students with background
reading and ask a simple
question: how should we allocate
kidneys? This year the course will be
particularly relevant. Yesterday, we
heard that Lloyd Shapley and Alvin
Roth shared the 2012 Sveriges
Riksbank Prize (the Nobel Prize in
Economics). Both had fascinating
insights on allocating kidneys, an
emotionally charged subject.
Kidney allocation is a complex and
pressing issue. There are around
7,000 people in the UK who need a
new kidney, but tragically fewer than
3,000 operations are conducted
annually. My class helps students
understand alternative allocation
mechanisms. We talk about the pros
W
E ARE heading towards a
serious pensions problem.
That much, the experts
agree. In the UK alone,
some estimates suggest
the nation should be putting aside an
extra 300bn each year if todays
workers are to enjoy a decent
standard of living in retirement. That
is the size of the current savings gap
or shortfall in pension savings.
Contrary to popular belief, con-
sumers are willing to save more for
retirement. But they are at a loss as to
how to go about saving and how much
they will need. With demographic
change and the pressure on public
spending, it is clear that state pensions
cannot provide a complete solution. In
addition, companies can no longer
afford the generous defined benefit
schemes of the past.
So the onus is on individuals to
make up for this shortfall if they dont
want to see their living standards
sharply decline when they retire. But
private pension saving is moving in
the wrong direction. According to gov-
ernment figures, saving into private
cityam.com/forum
Consumers are
willing to save more
but are at a loss as to
how to go about it
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

16
TUESDAY 16 OCTOBER 2012
GRAHAM JACKSON
Life companies arent up to scratch
as grave pensions problem looms
schemes both company schemes and
personal pensions fell from 25.9bn
in 2007 to 22.9bn in 2009, and the
average total pension pot in the UK is
only 26,000.
Planned pension reforms and even-
tual economic recovery should help
improve the situation. But convention-
al wisdom suggests that consumers
are simply unwilling, or unprepared,
to save enough. In fact, our research
concludes that UK consumers are
deeply worried about the future and
very willing to save more. The real
problem is that they do not know how
to go about it, not least because they
lack the information they need and
face a difficulty in getting good,
impartial advice.
Life companies have traditionally
been the home for long-term pension
savings in the UK. But the complexity
of their products, and mistrust engen-
dered by the old commission-driven
sales approach, has alienated con-
sumers. As a result, much of the
money that UK savers do set aside now
goes into bank accounts or Individual
Savings Accounts (Isa). Isas have the
merit of being simple and easy to
understand, and 54bn went into this
form of saving during the 2010-11 tax
year. Unfortunately, more than two-
thirds of that went into cash
accounts the worst asset to be in
when inflation is high. Equities are
much more suitable long-term for
pension saving and this is where life
companies traditionally invest money
for pension savers.
A recent survey of retirement servic-
es in 15 countries demonstrates the
extent and nature of the savings prob-
lem. The vast majority of people are
very worried about their financial sit-
uation after retirement: 60 per cent
think they are not saving enough and
nearly three-quarters believe state pen-
sions will not compensate for this.
Over 90 per cent know they will have
to rely partly or wholly on their own
savings and they are more than ready
to put money aside. In fact, more than
40 per cent would be prepared to save
up to a fifth of their annual income.
But when it comes to taking action,
savers are confused. More than two-
thirds are unsure how much they
should save to guarantee their stan-
dard of living in retirement. For
advice, people are most likely to turn
to either independent financial advis-
ers (51 per cent) or family and friends
(44 per cent). And the majority dont
understand what life companies have
to offer for pension savings and dont
believe they offer unbiased advice.
If they are going to change this, life
companies will need to recognise who
their real customers are. They have tra-
ditionally operated on the assumption
that pensions and other long-term sav-
ings products were sold, not bought.
As a result, the industry geared its
products more to the commission-
driven sales forces that sold them and
less towards the consumer or policy-
holder. The Retail Distribution Review
is set to change that; banning commis-
sion on sales means there should be
more focus on whether the product
offers value for money.
Traditionally, life insurers have been
the key players in the long-term sav-
ings and pensions market, so solu-
tions to the pensions problem need to
involve them. But unless the industry
does a better job of educating cus-
tomers about what is on offer and pro-
vides simple, cost-effective retirement
products which are easy to buy, they
may find the world passes them by.
Graham Jackson is a senior executive at
Accentures financial services group.
and cons of relying on personal
networks, a centrally-managed list of
donors, or indeed an actual market.
Shapley was interested in exactly
this kind of market one where two
sides of an exchange need to be
matched. He developed an algorithm
that resulted in non-arbitrary and
stable outcomes. Roth built on this
theoretical work to solve real word
problems, like matching students
with schools. This is the exciting
field known as market design and it
blends together game theory and
experimental economics.
But these arent really markets
kidneys arent bought or sold.
Instead people who are willing to
donate their kidney to a friend or
relative, but who are not a suitable
match, can exchange their
commitment with someone who is.
Genuine markets require private
ownership and trading, but many
applications of market design occur
when property rights are ill-defined
(like mobile network licensing or
pollution permits). These are
networks that depending on your
view either draw upon important
market-like mechanisms, or get in
the way of real markets developing.
There is a danger of market design
conceit, where bright economists
become overconfident about their
ability to improve upon potential
market outcomes. The most
important function of markets is the
way the price mechanism conveys
information. But, if goods arent
actually traded, you get only an
approximation of a price at best.
As is often the case, the pioneers
of market design are humble about
the limits. Roth has also made
significant contributions to the topic
of so-called repugnant markets
the extent to which cultural factors
can act as a constraint.
Few economists actually advocate
an open market in kidneys. But I am
always intrigued by how many
students leave my class recognising
that a more market orientated
approach to kidney donation would
result in fewer organ patients dying,
but how this also generates a great
deal of uneasiness. How many
people are you willing to let die to
avoid feeling icky? I ask.
I finish the class by saying that
there is only one country in the
world with a market in kidneys. And
there is also only one country that
has no waiting list. You wont be
surprised to learn that its the same
country. But you may be surprised to
learn that its Iran.
Regardless of ones own views on
the matter, Roth and Shapley are
deserving winners.
Anthony J. Evans is associate professor
of economics at ESCP Europe Business
School. Email Anthonyjevans@gmail.com
Twitter: @anthonyjevans
FRONTLINE
ECONOMICS
ANTHONY J. EVANS
This years Nobel economists have transplanted theory into good practice
MORNING UPDATE
A.M.
17
TUESDAY 16 OCTOBER 2012
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
Romneys limits
[Re: A Romney victory would have a big
impact on the UK economy, yesterday]
The difference between Romney and
Obama does look significant, but neither of
them will be able to solve the really pressing
problems that the US faces. They wont
eliminate the deficit, and they will be unable
to sufficiently deregulate the US economy.
Romney does have an advantage, however.
His substantial business experience makes it
more likely that he will avoid the state-
guided and taxpayer-funded rescue
packages that Obama favours. But should
the US be content with a President with
better reactions than his predecessor? It
needs someone who will proactively solve
the countrys problems.
Tobias Wahl
The US election has been considerably more
enthralling than many in the UK anticipated.
It was seemingly inconceivable that Romney
could snatch a victory, but thanks to his
trouncing of the incumbent in the first
presidential debate, the race grows ever
closer. If Romney wins this election, his
policies will have a huge impact this side of
the pond. His government would implement
a pro-business, austere policy that would
cut benefits and axe spending in an attempt
to stimulate growth. If successful, the effects
would be felt on an economic and
ideological level: it would give this approach
some much-needed credibility and show UK
Labour supporters that a pro-austerity
government can boost the economy.
Anna Baines
T
HE United Nations recently
reported that, with global
food prices rising, food
shortages will likely emerge
in developing countries at
the end of this year and into 2013.
And with today being World Food
Day, we must get serious about one
of the greatest humanitarian
challenges of our time: feeding a
global population that is expected to
grow nearly 50 per cent and top
10bn people by the year 2050.
It is possible to feed a rising popula-
tion, one that is demanding more
calories and nutrients. But to do so,
policymakers must embrace technol-
ogy and trade, the two forces that are
powerful enough to meet the formi-
dable challenge ahead.
New technology is the key to mod-
ernising farm production. With
state-of-the-art methods of planting,
land management, crop production,
and animal husbandry, it is possible
to increase yields while minimising
the environmental footprint.
Witness the tremendous increases
in crop yields over the twentieth cen-
tury in Europe and North America.
These regions were able to adequate-
ly feed their people, and even export
food to others, all while using a
steadily diminishing amount of land
under cultivation over time.
In the twenty-first century we are
now seeing improved yields in the
developing world. Some of the most
extraordinary gains have come in
Africa and southeast Asia. There we
find farmers leveraging the efficien-
cies of plantation-scale agriculture,
coupled with the productivity
enhancements of drought-resistant
technologies, to boost yields of rice,
fruits, cooking oil, and other staple
crops.
But this transformational power of
technology must be linked to
increased global trade. It does no
TOP TWEETS
Virgin is keeping its trains (for now), and
snapping up the RBS branches (potentially).
A busy weekend for Sir Richard Branson.
@Kuitz_Biz
Im glad to hear Virgin Trains will be running
the West Coast Mainline for a little longer.
Its a great service.
@lucyelizabeth3
Im disappointed Iceland wasnt awarded
the Noble Prize for Economics. Its recovery
since 2008 has been astonishing.
@calgaryrabbit
Americans top the list of Nobel Prizes. Not
unusually, the economics award rarely goes
to a European.
@Jesus0064
Is Sir Richard Bransons personality the real
reason Virgin Group is still shaking up UK Plc?
YES
Many of us fondly remember the launch of Virgin Atlantic, the
fledgling challenger brand that was going to take the battle to the
established big-boys of the airline industry. But now the business
touches everything from media to banking, you could be forgiven for
thinking Virgin has become part for the very establishment it set out
to challenge, and therefore somehow lost its edge. However, the
recent West Coast rail debacle reminded us of what the brand is
about being the peoples champion. As such, although Virgins
corporate structure doesnt lend itself to being disruptive, Sir Richard
Bransons ability to vocalise this brand makes up the difference. I
dont for one moment believe that Bransons high profile role in
outing the failures of the West Coast bidding process was designed
to do anything other than remind consumers of Virgins core values.
After a period of silence, the Virgin brand is back on track.
Andrew Mulholland is executive client director at The Gild.
Andrew Mulholland
NO
Benjamin Hallen
Beginning as a record shop, the Virgin Group is now an airline, a
mobile phone operator, and space tourism sits on the horizon. Its an
exception to the rule that large organisations tend to be plodding
giants. Why has Virgin retained its entrepreneurial spirit? Its easy to
point to its ebullient founder, Sir Richard Branson, but more critical is
Virgins organisational structure. First, it avoids behaving like a large
organisation because it isnt one. Instead, Virgin maintains a loose
coupling that structures new initiatives as separate subsidiaries,
giving each the autonomy to optimise for its own market. Second,
whereas most large organisations become burdened by
expectations of success, Virgin embraces failure. It is both willing to
lend its brand to risky new ideas (Virgin Galactic), and is also willing
to ruthlessly cut initiatives that fail to find ground (Virgin Brides).
Benjamin Hallen is associate professor for strategy and
entrepreneurship at London Business School.
RAPIDresponses
Trade and tech are
the solution to the
worlds food crisis
nation any good to improve its pro-
duction if it creates a surplus that
cant be sold in other countries. This
is why policymakers must focus on
removing barriers to trade.
The UK understands the impor-
tance of agriculture trade. UK farm-
ers only produce a little over half the
food consumed by the population,
with the rest made up by imports
from continental Europe, Asia,
Africa and the Americas.
Despite this, some environmental
activist groups, like Greenpeace and
WWF, are hostile to rapidly scaling
up agriculture in the developing
world, believing it to be unsustain-
able. As such, they are hoping to
limit the use of yield-enhancing tech-
nologies like gene splicing. Some
even hope to block some foods pro-
duced in poor countries like beef,
fish, vegetable oil, and others from
the markets of the wealthy West.
This is shortsighted. The only truly
unsustainable course is one that lim-
its agricultural yields and blocks
trade. Such a path ensures that mil-
lions of people will go hungry.
True sustainability will arrive
when the millions of small farmers
in developing nations are empow-
ered to fully modernise their agricul-
ture systems, and they can follow the
same path as the rich nations of
Europe and North America.
Technology and trade will make a
sustainable planet a reality.
Nick Schulz is DeWitt Wallace fellow at
the American Enterprise Institute and
author of From Poverty to Prosperity.
NICK SCHULZ
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TUESDAY 16 OCTOBER 2012
18
cityam.com
A
S GREECES politicians
prepare for their latest cap-
in-hand trip to Brussels on
Thursday, some of its largest
companies are heading for the exit.
Coca-Cola Hellenic, a subsidiary of
Coca-Cola which owns 23 per cent of
it, is leaving Greece. It is opting for a
Swiss domicile and a listing in
London where it will join the FTSE
100. Valued at 5.7bn (4.6bn), the
bottling company accounts for one-
fifth of Athens Stock Exchanges
market capitalisation, which has
shed 85 per cent since 2007. In this
period, Coca-Cola Hellenic has fared
less badly, losing 37 per cent.
Chief executive Dimitris Lois said
that the moves make clear busi-
ness sense, citing shareholder com-
plaints about tax rates in Greece,
which can be as high as 45 per cent.
But this is not the whole story: Coca-
Cola Hellenic will pay 25 to 27 per
cent corporation tax in 2012; corpo-
ration tax is 21 per cent in
Switzerland. The logic for the move
is also to access cheaper corporate
debt.
Following downgrades to Greek
sovereign debt, rating agencies also
downgraded Greeces corporations,
making it more expensive for them
to raise capital. Standard & Poors
rate Coca-Cola Hellenics debt three
notches above junk; with 950m
debt due to mature within the year,
the move ensures that the company
receives better refinancing terms.
Coca-Cola Hellenic will enjoy a
more stable economic and political
environment. According to Lois, the
move will give [the company]
greater recognition among interna-
tional investors, will increase the liq-
uidity of [the] stock and improve
access to the international equity
and debt markets. Its regulatory
statement said the move would
better reflect the international
character of Coca-Cola Hellenics
business activities and shareholder
base.
Coca-Cola bottler has
lost its fizz for Greece
Athens gets the can
A listing in London
is attractive, writes
Yogesh Chandarana
TRADING MANAGEMENT WEALTH
THE TIPSTER
Builder to cement profits
H
OUSE builder Bellway
reports today, and traders
expect to see profits up as it
capitalises on a turnaround
in UK housing. The company
has focused heavily on homes with
renewable energy sources, which has
proven to be lucrative. Shares are
towards the top of its 52-week range
and have risen 40 per cent in the last
year. Spread Co quotes a price of
948.2p-949p for Bellway.
Considering the recent scandal,
banking giant Barclays has fared
well. Shares seem to have priced in
the negative Libor news and the latest
twist in the saga has not weighed on
prices, which are up by over 35 per
cent in 2012. GFT Markets quotes a
price of 235.4p-236p for Barclays.
Analysts expect a mixed trading
update from Man Group, one of the
worlds largest hedge funds. Although
shares have gone up by 50 per cent
since lows in July, they are still more
than 40 per cent down in the last year
and some way off pre-crisis highs of
around 6. Spreadex quotes a price of
89.9p-90.5p for Man Group.
Drinks company Diageo gives a
trading update tomorrow. It has been
one of the hottest stocks of 2012 and
risen by 37 per cent in the last 12
months. The company has benefited
from the recession, as people have
not abandoned discretionary
spending on drinks, choosing to cut
spending elsewhere. Capital Spreads
quotes a price of 1,779.6p-1,782.4p for
Diageo.
Informa delivers its third quarter
figures today and traders will be
seeking reassurance from the board
after a shaky year. It has been a
volatile 12 months for the publisher
and, although shares are up 14 per
cent, they are stuck in the middle of
their 52-week range. ETX Capital
quotes a price of 402.2p-402.8p for
Informa.
YOGESH CHANDARANA
holding excess cash on its books
and paying tax on it) when it moves
to London.
Coca-Cola Hellenics move speaks
volumes about the attractiveness of
doing business in Greece. Recently,
the countrys largest dairy produc-
er Fage switched Greece for
Luxembourg. Is this the start of an
exodus? The negative impact may
be limited for Greece: Coca-Cola
Hellenic earns 95 per cent of its rev-
enues from exports, not all compa-
nies are as internationally focused,
and are more likely to stay put.
What lessons can policymakers
draw? Since restructuring its debt,
Greeces debt-to-GDP ratio has bal-
looned and could hit 164 per cent
in 2013 according to analysis by the
International Monetary Fund, the
European Central Bank and the
European Commission. Its compet-
itiveness has been decimated.
Perhaps the lesson is that you can-
not resurrect the economy by
inhibiting business through tax
hikes. One thing is clear: if the fizz
doesnt return to Greece soon, this
wont be the last pop they see.
Chief financial officer Michalis
Imellos points to a divergence in
fundamentals: When you have
more liquidity you can trade clos-
er to the fundamentals. Greater liq-
uidity helps stem volatility. In the
last year, the standard deviation of
the stocks daily movements has
been 3 per cent, underscoring its
volatility (compare that with 1 per
cent of the FTSE 100).
The company already has listings
in New York and London, but the
Greek listing is dragging on its equi-
ty. Traders will wonder whether
moving its listing will free it from a
Greek discount. But George Zois
of Exotix thinks that the shares,
which have risen by 30 per cent in
the last year, are still expensive. He
says that the price-to-earnings
ratio around 20 times earnings
is overly rich, and he would not
buy at this level. He argues that the
de-listing will trigger sales from
Greek mutual funds, putting down-
ward pressure on the stock. He also
questions whether it will continue
returning surplus cash to share-
holders (which it has done to avoid
fx360.com
WHAT IT TAKES TO MOVE THE
FTSE OUT OF ITS THIN RANGE
Five day FTSE 100
9Oct 10Oct 11 Oct 12Oct 15Oct
5,780
5,790
5,800
5,770
5,810
5,820
5,830
5,840
5,850
twitter.com/fx360 facebook.com/fx360
The contents of this column are provided for general information purposes only. One should consider the appropriateness
of the information in light of their own objectives, financial situation or needs before trading. CD11UK.074.010612
NEAL GILBERT
SENIOR MARKET STRATEGIST, GFT
F
OR the last five weeks, weve seen
the FTSE trade in a tight range of a
couple of hundred points. It would
seem that the days of 100 plus point
gains and losses are over. So what would it
take to drive a breakout from the 5,700-
5,900 range?
DIRECTION FROM ACROSS THE POND
Third quarter earnings season is just
getting underway, but weve already seen
mixed results, although with few
consequence for UK markets. Alcoa
disappointed on sluggish demand, and
with a large number of resource stocks in
London this might have been expected to
result in FTSE falls. But not this time
round. Equally, JP Morgan was the first US
bank to report again a heavily weighted
sector in the FTSE. It presented a rather
more upbeat assessment of the market,
but again London has been stoic in its
response.
The presidential election campaign is
now moving into its final weeks, but again
there has been little impact upon US
equity markets, let alone further afield.
Polls suggest that its looking like a win for
the incumbent, so the only real prospect
of this initiating a FTSE breakout would be
if we were to see a late surge by
Republican hopeful Mitt Romney.
DIRECTION FROM THE EUROZONE
A Spanish bailout has been talked about
with increased frequency of late, but it has
thus far failed to materialise. Nevertheless,
markets have been relatively relaxed so
any positive news would be unlikely to
initiate a heated buying frenzy, piling back
into stocks, with traders suddenly
believing all is well with the world. We
also had the prospect that a Spanish
downgrade could skew markets, but the
fact its sovereign debt still sits (just)
above junk grade indicates that the ratings
agencies continue to have some
confidence.
However, this comes with the caveat that
a bailout proceeds if necessary. Any
blocking move from the Bundestag
especially given the International
Monetary Funds support for more
bailouts and this sentiment could shift
very quickly.
A CHINA CRISIS
Growth in the Chinese economy is now
slowing, which can be little surprise given
the rampant rates of expansion weve seen
over recent years.
However, Beijing has repeatedly
intervened with rounds of policy easing,
frequently taking creative routes to keep
the wheels of industry spinning freely.
Each time this is announced, we tend to
see some upside for London, with the big
resource plays tending to find renewed
support. If Beijing decides not to move, or
threatens to further reign in easing, that
would be a trigger for driving the FTSE out
of its range the outcome would likely be
a fairly robust bout of selling.
So is FTSE set to simply stick in this
range for the time being? This looks likely,
assuming we dont see any of the
scenarios above playing out. A key
implication is that significant price
reactions would come from a heavy
degree of political intervention.
Dont forget to enter GFTs Forecast The
FTSE competition for a chance to win a
spread betting account with 1,000. Enter
today: www.cityam.com/forecast-ftse
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Chinas declining condition is a cause of concern, writes Craig Drake
My pick: Long New Zealand dollar-dollar
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few days
Last week I explained that I took a new long New Zealand
dollar-dollar position at $0.8175. Alongside new stimulus
measures expected from China, as the new leadership comes
into play, and a positive market reaction from a Spanish
bailout request, Im gearing up for a dollar sell-off in October.
Little has changed over the past week and the trade has
weathered some selling in US equity markets. I continue to
maintain my bias.
ANALYST PICKS
STRATEGIST
ILYA SPIVAK
My pick: Stay short Aussie dollar-Canadian dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
I sold Aussie dollar-Canadian dollar at Ca$1.0441 on 14 August to
trade expectations of a pick up in US economic growth, coupled
with a slowdown in China. I added to the position at Ca$1.0370
on 24 August, as the down move resumed after a brief rebound.
Last week the pair put in a shooting star candle on a retest of
support-turned-resistance at Ca$1.0048. I added to the position
once again. My stop-loss will now be triggered on a daily close
above Ca$1.0089. My first objective is Ca$0.9955.
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Short euro-dollar, Aussie dollar-dollar, long dollar-yen
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
Ive held off from congestion setups because the pressure is
building behind far bigger risk moves ahead. I am looking for
an S&P 500 break below 1,425, which would be excellent
confirmation for a $1.2825 euro-dollar break. The $1.0150
floor is a good Aussie dollar-dollar turning point. But a
rebound before a turn lower is possible, so Im looking at
$1.0500. Dollar-yen is my non-risk pair, with a view for a
channel break above 79.00.
TUESDAY 16 OCTOBER 2012
20
MANAGEMENT WEALTH TRADING
cityam.com
A shot in the arm for China would give copper a boost
the health of the global economy. It is
the only metal with a PhD in economics.
But the doctors concern about the
health of global demand for industrial
metals has checked the copper bull mar-
ket.
The first quarter of the year saw strong
demand for copper, with the
International Copper Study Group
reporting a year-on-year increase in cop-
per usage of 9 per cent, with refined pro-
duction up by 4 per cent.
But, with the International Monetary
Fund (IMF) cutting its global growth
forecasts and the World Bank express-
ing concerns about a Chinese slow-
down, the metal may struggle to
resume its bull run in the second half of
this year.
STOCKPILING
In 2012, China has been responsible for
over 40 per cent of global copper
demand. But these imports accompa-
nied growing copper inventories in
bonded warehouses, which will con-
tribute to a slowdown in demand in the
short term.
And its not just Chinese woes that are
denting copper. The US has been stag-
nant for much of the year, while Europe
has declined. But it was concerns over
Copper in need of a health check
C
OPPER was yesterday given a
short boost. Economic data
coming out of China indicated
that its inflation rate fell to 1.9
per cent in September, from 2 per
cent the month before. However,
this news was not enough to dispel
worries of a Chinese hard landing,
and the metal closed flat at
$8,132.4 (5,060.84) a tonne.
In recent weeks, copper has seen a
breakdown in its price, declining
from its quantitative easing-
induced highs of mid-September, as
a weakening dollar aided dollar-
denominated commodity markets.
Gold and silver have also retraced
their Fed-induced bounces. But
while these precious metals are gen-
erally counter-cyclical, the fortunes
of copper are tied to the health of
the global economy.
HEALTH SCARE
Copper is sometimes referred to as
Dr Copper, because of the metals
industrial applications and its use
in so many sectors of the economy
from housing and infrastructure
building to electronics and telecom-
munications its price action
makes it a very good indicator of
Chinese construction activity over the
short and medium term that led
Goldman Sachs yesterday to cut its 12-
month forecast for copper from
$9,000 a tonne to $8,000 a tonne. At
the same time, Goldman Sachs down-
graded its three, six and 12 month
aluminium, nickel and zinc forecasts.
There is some positive news
Chinese central planners recently
announced a 1 trillion yuan (100bn)
infrastructure programme, focus on
copper-intensive power grid expan-
sion. There are also plans to build
36m housing units in Beijing. But
unless Chinese demand is given a sus-
tainable shot in the arm, the copper
prices may peak within 12 months.
CURRENCY STRATEGIST
CHRIS VECCHIO
6 Month Copper Spot
16Apr 25Jul 1 Oct
3.2
3.4
3.6
3.8
4.0 $/Ib
LIFE&STYLE
TUESDAY 16 OCTOBER 2012
22
cityam.com
HEALTH & GROOMING
LOSING YOUR HAIR?
IT CAN BE RESTORED!
THE WIMPOLE CLINIC
Ha nna h Hous e , 1 1 - 1 6 Ma nc he s t e r S t r e e t , L ond on W1 U 4 DJ
At The Wimpole Clinic, one
of the leading hair transplant
centres in Europe, Dr. Michael
May F.R.C. S. has pioneered
a permanent solution to
male pattern baldness using
advanced follicular unit
hair transplant techniques.
For your FREE consultation
with Dr May call today on:
020 7935 1861
www. wi mpol ec l i ni c. c om
Summer is officially over and,
just the way you swap your
summer clothes for something
more hard-wearing, you should
do the same with your hair care
products. Here are the top five
to invest in this winter:
n Pantene 24hr Nourishment
Leave In Conditioner, 4.99
Say hello to Pantenes first ever
non-aerosol conditioning foam.
Stylist Danilo swears by it.
n Percy & Reed Totally TLC
Hydrating Mask, 175ml 20
Treat wind-beaten hair to a bit
of TLC with this indulgent
mask. Combined with a unique
scent inspired by the British
countryside, this product helps
restore your hairs vitality and
leaves it feeling soft and
healthy.
n Louise Galvin Deep
Conditioning Treatment,
300ml 10.98
Many conditioners can leave
your hair feeling weighed down.
The vegetable proteins and
honey formula in this one will
leave it feeling light and silky.
n Kiehls Magic Elixir Hair
Conditioning Concentrate,
125ml 25
Inspired by traditional oil
treatments used across the
world, Kiehls latest
concentrate features a blend of
oils known for their nourishing
qualities like avocado and
rosemary leaf oil. The result?
Glossy, moisturised hair.
n Ojon Damage Reverse
Restorative Hair Treatment
Plus, 100ml 32.50
This treatment has reached cult
status for a reason. The go-to
piece for people with lifeless
and brittle hair, the clinically
proven formula is now purified
to counteract any damage
created by harsh weather
conditions and central heating.
n TRX Overhead Squat: This is a great
exercise as it integrates not only the largest
muscles for the lower body, but it also
integrates back and shoulders, helping
strengthen the muscles that weaken from
extended periods of sitting at a desk.
Stand tall with arms overhead. Hold a
TRX strap in each hand so that the TRX
hangs diagonally with a little slack.
Initiating the movement with your hips,
squat back and down until thighs are
parallel with the floor and the strap is
straight. Return to a standing by pushing
through hips.
n TRX Single Arm Row: A great exercise
that targets the postural muscles in the
lower back while focusing on core
strength and rotation.
Holding the TRX handles in your right
hand, turn yourself to face the anchor
point. Stand with left foot in front of right,
both feet facing forward.
Bring right arm to chest height and
straighten your elbow. Slowly lean
backwards keeping body weight over rear
leg, right arm at chest height.
Bend right elbow, pulling your body
away from your arm, right elbow moving
towards the right ribs. Keep torso straight
and slowly lower your body back to start
position.
MUST TRY MOVES
T
HE TRX system is the latest
must-have fitness regime. It
consists of several suspension
cables, which you attach to
either arms or legs as straps that
then suspend you from a surface
using your own body weight (and
gravity) as resistance. The intensity
of the exercise is determined by
how you position the cables on your
body. Its a pretty simple but
effective way of working out that
can help breathe life into your
current resistance routine. Whether
youre into Pilates and want to
ramp up your core workout or a
power-lifter looking for some
variation in your strength routine,
TRX is worth investigating. We talk
to Randy Hetrick, the Navy Seal
turned fitness innovator who
developed the equipment.
The market is flooded with
devices to help your strength, core
and balance training. Where does
the TRX fit in?
The real advantage of TRX
equipment and training is the
ability to train you to use human
movement as the foundation of
fitness, performance and
durability. Becoming aware of your
own body weight developing and
maintaining appropriate levels of
mobility, strength, power and
endurance is a great stand-alone
training method. You should be
competent, and even attain a
certain level of mastery, in getting
a great workout using only your
own body weight. You can also
modify exercise intensity across a
wide range to meet the needs for
virtually everyone.
For the home workout enthusiast
whos wondering whether the
outlay is worth it compared to
tying tubes and bands around his
or her home, what would you say?
In addition to being more versatile
and scalable, in terms of ease of use
and effectiveness for all levels, TRX is
portable and even fun. Once you
master the basic movements and
modify resistance and stability to
challenge your fitness, the sky is
almost the limit to creativity and
applications. You will not outgrow it,
or get bored. With the ideas and
the time-constrained business
traveller it is perfect as it weighs less
than 2lbs, fits nicely in a suitcase and
a full body workout can be
accomplished in as little as 30
minutes.
Would you recommend learning to
use the equipment with a trainer
first?
One of the nice things about the TRX
Suspension Trainer is theres a
relatively small learning curve. Once
youve mastered how to adjust the
straps and the easiest way to put them
on your feet, youre ready to try the
most common exercises, modified so
that you use your own weight. With
five minutes of instruction, a
beginner should be comfortable with
most of the facets of training.
TRX Pro is 149.99, amazon.co.uk
support TRX provides you can keep it
simple or stay on the cutting edge of
fitness and performance.
Do you think TRX is portable
enough for travelling with work
and staying in hotel rooms, or is it
better confined to use in homes
and parks?
People can train anywhere, anytime.
One of the reasons TRX has been so
successful is that we see our
customers using it in the gym during
winter or outdoors during good
weather. And for
The TRX system, developed by a former Navy Seal, claims to be a gym in a box. Laura Williams investigates.
Suspend your disbelief training
Left: Randy Hetrick demonstrating his
technique; above: trainers try out new
moves on the TRX.
Contact Laura on:
www.laurawilliamsonline.co.uk or @laurafitness
Battle against the winter hair blues
23
TV & GAMES
cityam.com
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BBC1
SKY SPORTS 1
7pmSpecial Report 7.30pm
Footballs Greatest 8.30pmLive
International Football 11pm
Footballs Greatest 12amSpecial
Report 12.30amInternational
Football 2.30amFootball Asia
3amInternational Football 5am
Footballs Greatest 5.30am-6am
Football Asia
SKY SPORTS 2
6.45pmLive International
Football 9.15pmMarathon des
Sables 9.45pmPremier League
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1.15amLGU Golf Monthly
1.45am-3.45amPremier League
Poker
SKY SPORTS 3
7pmShow Jumping 8pmIRB
Rugby Sevens 10pmSports
Unlimited 11pmFishing Gurus
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Sports Unlimited
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5.30pmWTA Tennis 7.30pm
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7pmCriminal Minds 8pm
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4.20amAmericas Next Top
Model: All-Stars 5.10am-6am
Passport Patrol
BBC THREE
7pmTotal Wipeout 8pmUFOs:
Conspiracy Road Trip 9pmDont
Tell the Bride 10pmCuckoo
10.30pmEastEnders 11pmFamily
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Face Tapes 3am-4amUFOs:
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E4
7pmHollyoaks 7.30pmHow I Met
Your Mother 8pmBig Bang
Theory 8.30pmSuburgatory 9pm
New Girl 9.30pmFILM27
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Theory 12.40amCleveland Show
1.45amHow I Met Your Mother
2.10amThe Ricky Gervais Show
2.35amScrubs 3am90210
3.40amBeing Erica 4.25amOne
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HISTORY
7pmStorage Wars 7.30pmPawn
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Airline
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Town That Never Retired 3.35am
Sign Zone: Celebrity MasterChef
4.05am-6amBBC News
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8pmCHOICE The Great British
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11.20pmThe Choir: Sing While
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12.20amBBC News
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7.30pmLive International
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Wildlife SOS
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6
7 8 9 10
11
12 13
14
15 16 17 18
19 20
21 22
23 24
7 10
30 28
10 17 9
27 9
39
16 4
37
8 34
24 5 9
12 29
26 8
34
13
16
33
11
14
15
34
14
23
8
7
39
11
27
8
30
35
11
15
ACROSS
1 One half of one
third (5)
3 Cooks in an oven (5)
7 Recollect (6)
10 Digestive juice secreted
by the liver (4)
11 Afrm solemnly and
formally as true (4)
12 One who torments (10)
15 Showing indiference
or disregard (10)
20 Drudge (4)
21 Cable (4)
22 Relating to the
backbone (6)
23 Saying: He who
pays the ___ calls
the tune (5)
24 Vigilant, awake (5)
DOWN
1 Angel of the
highest order (6)
2 Melts, as of
ice (5)
4 Chief monk (5)
5 Dance move (4)
6 Most courageous
or daring (9)
8 Adams wife (3)
9 Welsh breed
of dog (5)
13 Aromatic,
edible bulb (5)
14 Missile
discharged from
a rearm (6)
16 Blockade (5)
17 Calm (5)
18 By means of (3)
19 Stage item (4)
E
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V
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4

4
4
G A B L E P O P U P
U I N J U R E I
E M B E D S C R A P
S D A H E
S I D E E F F E C T S
N T T S O
I N T E R E S T I N G
N C R R O
C O A T S L A G E R
A N O U G A T G
S C A R E D E L V E
6 1 9 8 3 9
9 8 4 7 5 6 1 7
2 6 1 5 2 4
7 1 5 3 2 8 4
1 2 8 6 9 8 5
2 5 9 3 4 8 7 6 1
7 9 8 1 6 9 2
3 6 1 2 9 8 5
3 1 5 2 7 9
7 6 3 5 4 6 1 2
1 4 1 3 9 7
4
4
4
4
4
4
4
4
4
The nine-letter word was
PATRONISE
T
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
TUESDAY 16 OCTOBER 2012
HOLBY CITY
BBC1, 8PM
Hanssen struggles to cope as the press
descends on Holby, but becomes
determined to silence the critics. Guy
Henry and Paul Bradley star.
THE GREAT BRITISH BAKE OFF
BBC2, 8PM
Mel Giedroyc and Sue Perkins host the
final, in which the three remaining
bakers attempt to make perfect puff-
pastry pies and chiffon sponges.
JEWISH MUMOF THE YEAR
CHANNEL4, 9PM
The six remaining mums in the
competition play matchmaker as they
try to find the perfect partner for
29-year-old Nicola.
TVPICK
ENGLAND manager Roy Hodgson
has revealed that the amount
of playing time given to his
developing, young players remains
an ongoing significant concern
despite being pleased about the
options at his disposal.
For tonights World Cup qualifier
away to Poland, the England
manager is set to make several
changes to the team that on Friday
defeated San Marino 5-0 at Wembley
where his unexpected inclination to
select the countrys younger players
continued. James Milner, Steven
Gerrard, Glen Johnson, Ashley Cole
and Joleon Lescott are set for recalls
but Hodgson regardless said that he
is continuing to monitor the others
who can compete.
It is nice to know we are
producing some players now who
will challenge, will continue to
improve, will mature with time and
the matches they can play, Hodgson
said. My only fear is hoping these
talents can get enough game time.
Since his May appointment,
Hodgson has given international
debuts to talents like Alex Oxlade-
Chamberlain, Jack Butland, Ryan
Bertrand and Jonjo Shelvey and
called up Kieran Gibbs and Raheem
Sterling, and has spoken of his
willingness to continue to include
younger, less-established individuals.
Hodgson holds
concern over
young Lions
FORMULA ONE boss Bernie
Ecclestone has revealed that his plan
to hold a Grand Prix on the streets of
London is unlikely to get off the grid
because the government will not pro-
vide the multi-million pound
support required.
Ecclestone unveiled lavish plans
for a race route snaking past some of
the capitals most famous land-
marks, including Big Ben and
Nelsons Column, in June, but feels
he has now reached a roadblock.
I dont think the government
would be prepared to put the
required amount of money behind
it, Ecclestone said.
Ecclestone has committed to sup-
porting the race financially rather
than simply charging a hosting fee,
which usually rises to 35m annual-
ly. However, the cost of building
grandstands and readying roads for
F1 would still run into eight figures,
and the government would have to
cover some of this cost.
We would make a large contribu-
tion towards the race, Ecclestone
added. That is whatever it takes to
get it done with all the permissions.
We could help the government and
council with their costs.
Ecclestone dismissed the possibility
of hosting a race around the Olympic
Stadium one of four plans being
considered for the venue insisting a
street grand prix was Londons only
viable option. We wouldnt go to the
Olympic Park, he said. I dont think
anybody [else] is serious about a grand
prix in London.
Central London
Grand Prix off,
says Ecclestone
Ecclestone believes the success of
the London 2012 Olympics should
remind government of the value of
staging elite sport.
I think they did a good job with
the Olympics, he said. It is the first
time I have been proud of England.
They showed that England can do it if
they have to. The population was
behind it. I just think that Formula 1
could do the same job for a lot less.
Lets look at the worst-case sce-
nario, which they wouldnt need to,
and say a race in London costs them
$50m (31m) a year. Over 10 years
that is $500m (311m). What is that as
a percentage of the 10bn they spent
on the Olympics? And you are going
to get good coverage for 10 years.
When you think really and truly,
the F1 industry is British. We have
won more world championships
[than the foreign teams] and it is not
government supported at all.
The Olympics got incredible cover-
age in England. They got 28m viewers
for the opening, which is near half
the population, so it was good. And
even that guy who ran very quickly,
22m watched him. It is unbelievable.
F1 is the worlds most-watched
annual sport, with 515m viewers last
year. The Olympic mens 100m final
attracted around 1bn viewers.
FERRARI chiefs have denied
reports that world champion
Sebastian Vettel is poised to join
them from Red Bull in 2014.Ive
always said I dont want two
roosters in the hen-house, said
principal Luca Di Montezemolo on
the possibility of Vettel joining
Fernando Alonso. I dont like that
and it creates instability.
IN BRIEF
Harrison weighs up retirement
n BOXING: British former Olympic
champion Audley Harrison, 40, admits
he is considering retirement after
Saturdays 82-second defeat by David
Price. Ill take some time to think this
out, Harrison added.
Reds chief defends Anfield plans
n FOOTBALL: Liverpools spending
power will not suffer from plans to
redevelop Anfield rather than build a
new stadium, insists managing director
Ian Ayre. The whole point is to actually
increase our revenues, he said.
HUGHES RIDES TO SEVENTH HEAVEN AT WINDSOR
JOCKEY Richard Hughes yesterday secured seven victories from an eight-race card in an
incredible feat given bookmakers odds of 10,168-1 at Windsor. The 39-year-old is the
second rider to do so at a UK event Frankie Dettori was the last at Ascot in 1996. He
won the first five races before finishing third in the days sixth and winning the final two,
the last riding Mama Quilla. He said: Every day my kid says, How many winners today?
Six or seven?. I tell him I wont ride that many, but I have today.
ENGLAND cricket officials have
attempted to draw a line under
their spat with South Africa over
the Kevin Pietersen text message
saga, but admit some differences
remain unresolved.
South Africa chiefs were
infuriated when David Collier, chief
executive of the England and Wales
Cricket Board (ECB), earlier this
month accused Proteas players of
deliberately provoking Pietersen.
The ECB yesterday said an apology
had been accepted by their South
African counterparts, but conceded
that they remained at odds over how
the episode, which threatened
Pietersens England career, unfolded.
England and South Africa bury
hatchet almost over KP row
Although the two boards do not
agree on the sequence of events
regarding any responses to messages
between Kevin Pietersen and certain
Proteas players, CSA and SACA
accept Mr Colliers apology based
upon his earlier utterances that the
team may have acted in a way which
was underhand, read an ECB
statement. Both CSA and ECB
regard this matter as now closed.
Pietersen is set to meet England
coach Andy Flower today in London
as he begins his reintegration to the
camp, having been dropped for the
final Test of the summer series
against South Africa and then left
out of the squad for this months
World Twenty20 in Sri Lanka.
A DECISION on the future of the
Olympic Stadium has been
postponed, prompting fears that its
planned reopening in 2014 could
also be delayed.
David Gold, chairman of West
Ham, who are favourites to be made
anchor tenants, wrote on Twitter last
night: Sadly the decision on the OS
has been postponed. We must be
patient but resolute.
The London Legacy Development
Corporation, which had been tipped
to choose between four bids this
month, met yesterday. It is thought a
European Commission probe into
state aid to football clubs could yet
further complicate the decision.
Fresh delay in
stadium saga
BY FRANK DALLERES
TUESDAY 16 OCTOBER 2012
24
BY DECLAN WARRINGTON
BY FRANK DALLERES
SPORT
I have crossed the Alps barefoot
and I have overcome many difficult
situations in my career
Republic of Ireland manager Giovanni Trapattoni on
speculation surrounding a potential exit from the role

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Pa|+r 1 Er|+r (8pm) ...................................................................................
>iflg81 V+cear|+ 1 Ser||+ (.JO).>iflg91 O/ec| Rep 1
Ba|+r|+ (pm), lt+|] 1 Derm+r|.>iflg:1 Aastr|+ 1
K+/+||st+r (.J5), Oerm+r] 1 SWeer.>iflg;1 Ararr+ 1
Estar|+ (opm), Har+r] 1 Tar|e] (.JO), Ram+r|+ 1 Ha||+r
(pm).>iflg<1 A||+r|+ 1 S|a1er|+, O]pras 1 NarW+] (opm),
lce|+r 1 SW|t/er|+r (.JO).>iflg=1 lsr+e| 1 latem|aar
(5pm), Rass|+ 1 A/er|+|j+r (4pm).>iflg>1 Basr|+H'1|r+ 1
l|t|a+r|+ (pm), l+t1|+ 1 l|ec|terste|r (opm), S|a1+||+ 1
Oreece (.JO).>iflg?1 S+r V+r|ra 1 Va|a1+ (.JO),
U|r+|re 1 Varterera (pm).>iflg@1 Be|+ras 1 Oear|+
(5pm), Sp+|r 1 |r+rce (8pm).
<lifg\XeL$)(:_j_`gGcXp$F]]J\Zfe[ C\^1 Ser||+ (O) 1
Er|+r () (5pm).
POLAND: THE FACTS
nPoland are ranked 54th in the world
after their first-round exit at Euro 2012
and a win and a draw in Group H of the
2014 World Cup qualifiers
n Since Euro 2012, they have won both
home fixtures: 2-0 vs Moldova, and
1-0 vs South Africa
n Borussia Dortmunds Robert
Lewandowski, who last season scored
30 goals, and Lukasz Piszczek are key.
EXCLUSIVE
BY CHRISTIAN SYLT
cityam.com/sport