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AFTER THE STORM

ISSUE 1,750 WEDNESDAY 31 OCTOBER 2012

n Stock markets set to re-open today n New York may be without power for days n Obama and Romney halt campaign events BY JAMES TITCOMB

BY TIM WALLACE

The New York Stock Exchange escaped the worst of the flooding, with full trading expected to commence today

UBS traders shown the door as axe falls in City they are almost certain to be dismissed formally in the coming weeks. “Maybe one or two of the hundred could find a job internally, but it is very unlikely,” he told City A.M. “This is pretty much the end of their careers in UBS.” Of the 10,000 jobs being lost, 2,500 will be in Switzerland, while the rest will largely fall in London and New York, where much of the

investment banking activities are carried out. The staff were given a letter from HR boss Marc Montanaro to tell them to keep out of the building and away from colleagues and clients. “You will not be required to continue to perform your current duties at this time. We have therefore taken the decision that you will not be required to attend the office and will be placed on special leave from today until

FTSE 100 n 5,849.90 +54.80 DOW 13,107.21 closed NASDAQ 2,987.95 closed

£/$ n 1.61 +0.01

further notice,” the letter read. It added the firm offers support for staff, including a counselling and advice hotline, and HR services to look for a new role internally. The investment banking industry received a double blow as German giant Deutsche Bank increased its planned job cuts to 1,993, up almost one hundred on the 1,900 announced in July. MORE: Page 5

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Dear Colleague... You will not be required to continue to perform your current duties at this time. We have therefore taken the decision that you will not be required to attend the office and will be placed on special leave from today until further notice....We appreciate that the communication today may have been unexpected and that this period may be a difficult time for you....During this period of special leave, you should not enter the premises of UBS (or any operating division) unless you are asked to do so. In addition you should not initiate any contact with clients of any UBS entities.Yours sincerely, Marc Montanaro Executive Director Human Resources

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TEN THOUSAND bankers will lose their jobs at Swiss giant UBS over the next two years, the bank revealed yesterday, as the group cuts back on investment banking operations. Over 100 London staff were hit immediately, largely in fixed income units. Yesterday morning the unsuspecting employees were intercepted at the reception of their City offices and escorted up to human resources to be given the news. The abrupt system was designed to keep staff away from the trading floor, and prevent access to bank and client funds. Those staff have two weeks to apply for other positions within the bank, and are still being paid as the mandatory official consultation is carried out. But a source close to the process said

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NEW YORK began to pick up the pieces of Hurricane Sandy’s aftermath last night, after Wall Street was brought to a standstill for a second consecutive day. Millions still face power outages and closed transport networks. The storm – which has resulted in at least 40 deaths, closed New York’s three major airports, and temporarily halted the US presidential election – moved inland yesterday, wreaking havoc in New Jersey and leaving 8m homes without electricity. Barack Obama described the damage from Sandy as “heartbreaking for the nation” while New York mayor Michael Bloomberg said it could be days before full service resumed for the power networks and the subway – which saw widespread flooding. The city did show signs of coming

back to life yesterday, as people returned to the streets, while shops and financial institutions scrambled to resume business as usual. Luxury department stores Saks and Macy’s said they hoped to re-open today. The city’s banks, which are expected to be losing tens of millions of pounds a day, also looked to open up their offices, although Wall Street will not be at full capacity for some time. “It is likely some employees will work from home, some will work from backup facilities in Greenwich and Princeton, and we continue to leverage offices not impacted by the storm,” a spokesman for Goldman Sachs said yesterday. The New York Stock Exchange will run on reserve power from a generator. IHS Global Insight warned the damage could cost up to $50bn (£31bn). MORE: Pages 8-9

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WEDNESDAY 31 OCTOBER 2012

NEWS

To contact the newsdesk email [email protected]

A corporatist economic growth plan that won’t rescue UK Plc

I

T is impossible not to like Michael Heseltine. He is an astonishingly successful individual, a great entrepreneur, a passionate speaker who genuinely cares about the poor, and a man who almost became Prime Minister. The tragedy is that while his goals are laudable the means he wishes to use to achieve them are generally deeply misguided. His obsession with European political centralisation is badly dated and he is a corporatist – a supporter of close ties between the state and business – rather than a free-marketeer. Lord Heseltine’s plan for growth, commissioned by the government, contains some good ideas – but unfortunately plenty of bad ones too. Let’s start with the good: it is right that schools should engage more closely with business, and that the bureaucracy around work experience be sim-

THE REPORT’S PATH TO ECONOMIC GROWTH n Establish a Prime Minister-led National

Growth Council, ensuring all parts of government support growth. n Launch an independent body to ensure the Council’s conclusions are fully and swiftly implemented. n Introduce a substantial devolution of funding from central government to Local Economic Partnerships (LEPs), based on major regional centres such as Manchester and Birmingham. n Ensure government backing for economic development is tailored to the needs of local businesses. n Produce an economic policy for each sector of the economy, written with help from industry and academia. n Parachute civil servants into local growth teams to remove blockages holding up business development. n Hand a legal role to chambers of commerce to boost local support for businesses. n The government should take a more active role in approving foreign takeovers. n Build business engagement into the national curriculum and ensure early intervention into failing schools. n Every government department should hire a chief procurement officer to lead the delivery of major projects. n Clarify policy on airport expansion in the south east at the earliest opportunity. n Turn all local government areas outside London into unitary authorities and enable conurbations to elect a mayor for the entire region.

EDITOR’S LETTER ALLISTER HEATH plified. The UK should indeed be run in a more devolved manner, with larger, unitary authorities. We need more airport capacity in the south east, and the government needs to indicate its preference on the way forward as soon as possible. Immigration bureaucracy needs to be torn up and we need a new energy policy. There is an excellent passage in the report on the need to develop the Thames Gateway and a reflection on the success of Canary Wharf and the Docklands, thanks to

the 1980s London Docklands Development Corporation. But Heseltine is too fond of grandiose strategies, wrong to see local government spending grants as the solution to growth and is excessively enamoured with the idea of government supporting (rather than merely enabling) companies. He is too concerned with political structures and committees; he fails to focus on the roles of bad tax and spend and monetary policies in damaging the UK’s performance. That is the biggest and most central flaw in his report. He wrongly wants to give business associations a statutory role. He even wants to consider forcing firms to join chambers of commerce, enshrining old-fashioned, almost medievalstyle, corporatism, creating a quasi-licensing system for business. It would also be a terrible mistake

were the government to listen to his advice and routinely run public interest tests for foreign companies seeking to buy UK firms. He wants ministers to use existing powers more readily. Yet one of the UK’s greatest strengths is its openness: foreigners should be allowed to continue to buy whatever they want here, with extremely limited exceptions relating to genuine national security interests. Powers of intervention would inevitably be abused by politicians seeking to “protect” jobs, capital would be misallocated and inferior business models allowed to continue unchecked, reducing productivity, growth, wages and job creation. Investors as well as workers would lose out over time. Heseltine is concerned that only 25 per cent of the top 100 investment funds in the City are headed by a CEO

Heseltine calls for power to be devolved to regions

[email protected] Follow me on Twitter: @allisterheath

Cameron faces large rebellion on EU budget BY JAMES WATERSON

“focuses too much on institutions, rather than on the fundamental barriers to business growth”. However both men welcomed plans to devolve more economic power to local bodies and backed a renewed focus on growth outside London. Business secretary Vince Cable said the report showed “where government can improve its performance in delivering better interventions” and George Osborne said it challenges “received wisdom” and provides “ideas on how to bring government and industry together”.

DAVID Cameron is today facing the prospect of a substantial backbench rebellion against his stance on EU budget negotiations. Around 40 Tory MPs have already signed an amendment to today’s motion, calling for the Prime Minister to demand a real-term reduction in EU spending. If around 50 Conservatives decide to vote against the government and are joined by all opposition MPs then the government would be defeated. Last night a major whipping operation was underway to avoid this embarrassment, with wavering backbenchers invited to Downing Street to discuss the issue with the Prime Minister. Cameron has repeatedly insisted he will oppose a planned five per cent rise in the organisation’s spending at next month’s meeting of the 27 EU leaders. Instead he will press for the 2014-2020 budget to rise in line with inflation – currently around two per cent. •A large majority of Greek socialist politicians have agreed to vote in favour of contested austerity reforms, sources said last night. Prime Minister Antonis Samaras is confident the measures can now be passed, even though the Democratic Left party opposes many of the cuts. Greece’s next tranche of bailout payments depend on an agreement.

ARM Holdings fends off Intel

Death knell for wind farms

Finalists rise for Bank job

ARM Holdings is to keep ahead of its rival, Intel, by launching processors to power a new generation of “superphones”. The processors will be built into phones and tablets that will hit the market from 2014.

Wind farms have been “peppered” across Britain without consideration for the countryside and people’s homes, senior energy minister John Hayes admitted last night as he warned “enough is enough”.

The government is closer to picking the next Bank of England governor, having whittled applicants down to a shortlist and begun the interviewing process, according to people in the Treasury.

High Court rejects Berezovsky case

Child benefit cuts could hit overtime

Apple exec Forstall left over maps

A High Court judge has dismissed a £15m case brought by Aeroflot against exiled Russian oligarch Boris Berezovsky relating to an alleged fraud against the part statecontrolled airline in the 1990s.

Controversial cuts to child benefit may hit the economy as thousands of middle-class workers could opt out of doing overtime to avoid crossing the level at which the cut kicks in, experts have warned.

Apple executive Scott Forstall was asked to leave after he refused to sign his name to a letter apologising for shortcomings in Apple's new mapping service, according to people familiar with the matter.

BY JAMES WATERSON MICHAEL Heseltine will today call for a swathe of economic powers to be devolved to regional institutions, as he demands “every sinew of our body politic” is stretched in the UK’s fight to remain globally competitive. In March the Conservative peer was commissioned by the government to look at ways of boosting economic growth. His proposals, published today, include abolishing two-tier local councils, boosting the role of chambers of commerce and introducing an obligation across public bodies to boost business. “Government must now reverse the trend of the past century and unleash the dynamic potential of our local economies,” the former cabinet minister writes. Heseltine criticises the government’s “piecemeal” approach to moving economic controls out of Whitehall, which he says has produced 13 distinct policies. Instead he desires for a single government policy on the economy. More controversially, his report also calls for substantial restrictions on the ability of overseas firms to buy British firms: “In today’s world it is difficult to see who else, other than the national government, is capable of looking out for the longer term interests of UK plc”.

from the UK, according to research he cites. I disagree: it is good for London to attract the best and brightest, and I doubt that foreign fund managers would seek to discriminate against the UK. Astonishingly, Heseltine refers uncritically to the fact that France assesses mergers against a general interest test, despite the rabidly nationalistic and economically irrational decisions that have resulted. The UK needs pro-growth policies. My list would include education reform, much lower and simpler taxes, reduced public spending, a supply-side revolution, less regulation, a reform to planning law and much else besides. Heseltine makes some good points but his own recipe would never deliver the goods.

Lord Heseltine says the economic recovery will be powered by individuals, not the state “The government should take a greater interest in foreign acquisitions,” he concludes. Business groups gave a mixed welcome to the publication, although it gained the approval of the TUC. Simon Walker, director general at the Institute of Directors, said the restrictions on overseas investment were “worrying” and “the idea that we should be suspicious of people from around the world putting the money into our country is misguided”. John Longworth of the British Chambers of Commerce said the plan

WHAT THE OTHER PAPERS SAY THIS MORNING China hit by unpaid bills Google and Starbucks face grilling Google and Starbucks will be subjected to parliamentary scrutiny over their tax affairs on Monday with the public accounts committee demanding the two US corporate giants give evidence. The committee has agreed to call in the two companies to give evidence at a session into Revenue & Customs where inspectors will be asked about their contributions to the exchequer. “We want to ask them for an opportunity to explain why they don’t pay proper levels of tax in the UK,” committee chair Margaret Hodge said.

Chinese listed companies have reported a sharp rise in unpaid bills during the third quarter, in one of the clearest signs yet of the toll that China’s economic slowdown is taking on corporate balance sheets, according to an FT report.

TomTom steers solid course Dutch navigation company TomTom, which earlier this year signed a deal to provide its maps data to Apple, said earnings margins held steady in the third quarter despite rapidly falling revenues. Sales fell 19 per cent to €274m (£220.8m).

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WEDNESDAY 31 OCTOBER 2012

NEWS

UBS swings to loss on a huge goodwill blow BY TIM WALLACE SWISS bank UBS swung to a loss in the third quarter on costs related to the cuts in its investment arm and a hit from a revaluation of the bank’s debt, according to results published yesterday. The bank lost SFr2.2bn (£1.5bn) in the three-month period, compared with a profit of SFr 435m in the previous quarter. The firm’s own-credit charge of SFr863m compared with a SFr239 gain in the second quarter. But even that hit was swamped by the SFr3.1bn impairment loss related to goodwill and other non-financial assets associated with its investment bank. Excluding those costs, the bank made a pre-tax profit of SFr1.4bn, with interest and trading revenues improving and net fee and commission income up. Wealth management profits hit SFr600m, up almost 20 per cent on the quarter, and asset management profit edged up to SFr124m. Retail and corporate profits rose a fraction to SFr409m, with strong

deposit growth offset by tight margins in the low interest rate environment. UBS also increased its fully applied Basel III core tier one common equity ratio from 8.8 per cent to 9.3 per cent, well ahead of its peers. “From this position of strength we are now able to take further decisive action to transform the firm and position it for future success,” said chief executive Sergio Ermotti as he announced plans to trim investment banking operations. The bank added that the move will cut its risk-weighted assets by more than SFr20bn. UBS’s shares jumped 5.87 per cent on the day.

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Debt business lifts Deutsche Bank’s profits BY TIM WALLACE

Sergio Ermotti is cutting costs by shrinking the UBS workforce

PROFILE: ANDREA ORCEL WHEN Andrea Orcel left Bank of America Merrill Lynch earlier this year to join UBS as its co-head of investment banking, many in the City believed it was only a matter of time before he claimed the top job, writes David Hellier. Yesterday the Swiss bank announced that Orcel will be leading the advisory functions of the investment bank going forward while co-head Carsten Kengeter will take over winding down the parts of the bank that have no future. Orcel, who has long been friends with UBS chief executive Sergio Ermotti, is the consummate corporate adviser and he has got off to a flying start at his new place of work. In

July he encouraged a former client of his, Russian bank VTB, to give UBS a lead role on its $1bn perpetual bond sale. He then helped the bank gain a key role in Santander Mexico's $4bn share listing in New York. “He’s certainly turned a few heads here, with the way in which he's been rushing around,” said one colleague. During a period when UBS will be going back to focus on advisory work, eschewing a strategy of taking large balance sheet risks, Orcel may blossom. However, one of his most talked about deals at Bank of America Merrill Lynch was UniCredit's rights issue, where the willingness of his bank to commit its balance sheet – and take a large risk in the process – played a crucial part in the transaction’s success.

IMPROVED investor sentiment and rising market activity pushed Deutsche Bank’s debt incomes up in the third quarter, the institution reported yesterday, contributing to a boom in profits. And the bank plans to continue to grow strongly by seizing market share from Swiss bank UBS, which is cutting back its investment business to focus on areas like wealth management. Pre-tax profits came in at €1.1bn (£887m) in the three-month period, up 20 per cent on the €942m in the same quarter of last year. The debt sales and trading arm excelled, with net revenues of €2.5bn, up 67 per cent on the year. The equity arm performed similarly strongly, with revenues of €642m, while origination and advisory revenues came in at €677mup 81 per cent. Retail banking also expanded, adding €492m to the group’s profits. But expenses increased to €7bn, including €276m of restructuring costs – partly due to redundancy costs from 1,900 job losses – and €289m in litigation-related expenses. The changes are part of a €4.5bn savings plan announced in September, which should be complete by 2015. Deutsche Bank’s shares jumped 3.48 per cent yesterday.

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cityam.com

WEDNESDAY 31 OCTOBER 2012

NEWS

Standard Chartered gets close to settling Iran sanction claims BY TIM WALLACE STANDARD Chartered saw profits rise in the third quarter, according to its update published yesterday, although its progress was slowed by the cost of settling claims made by US regulators that it broke sanctions against Iran. The emerging market specialist recorded “high single-digit” profit growth, knocking its hopes of upping profits by 10 per cent this year. The bank would have seen stronger growth were it not for a $340m

(£211.4m) bill to settle the New York state Department of Financial Services’ claims it broke sanctions with Iran in $250bn of transactions. It is still facing claims from four other US regulators, which it hopes can be settled by the end of the year. Lawyers believe these could cost the bank tens of billions of dollars. Elsewhere, the bank reported falling loan impairment levels on the first half of 2012, and rising mortgage lending. But although the tone of the update was broadly positive, analysts warned the bank is facing some

headwinds. “The strength of the US dollar compared to Asian currencies has dampened earnings growth. There was also weakness in India and in Singapore’s wholesale banking and South Korea’s consumer banking businesses,” said Charles Stanley’s Nic Clarke. Nonetheless, “the group has a very strong capital base, it has continued to see growth in both deposits and lending and the advances to deposit ratio was below 80 per cent at the end of the third quarter.”

Disney, known for characters such as Mickey Mouse, will release new Star Wars films

Disney feels the force with $4bn Star Wars deal BY JAMES TITCOMB DISNEY yesterday shocked the film industry by announcing it was buying Lucasfilm, the owner of the Star Wars and Indiana Jones franchises, for $4.05bn (£2.52bn). The American media giant’s purchase follows on from multi-billion dollar acquisitions of superhero franchise Marvel and animation studio Pixar in recent years. Disney, famous for animated films featuring the likes of Mickey Mouse, also said it would make new Star Wars films over the next few years, in what is bound to be a lucrative move. The next film – the seventh in the series – will hit cinemas in 2015, with episodes eight and nine due after that. “Our long term plan is to release a new Star Wars feature film every two to three years,” Disney said. The deal will be made half in cash and half in Disney shares. Lucasfilm is entirely owned by George Lucas, who founded the studio in 1971 before directing its first film, American

Graffiti, in 1973 and the first Star Wars in 1977. The series was rebooted in 1999 with three new films, and while not critically acclaimed, they were an enormous commercial success. “We believe there is substantial pent up demand,” Disney said. The franchise also includes video games, television series and theme parks. “Lucasfilm reflects the extraordinary passion, vision, and storytelling of its founder, George Lucas,” said Robert Iger, Disney’s chief executive “This transaction combines a worldclass portfolio of content including Star Wars, one of the greatest family entertainment franchises of all time, with Disney’s unique and unparalleled creativity across multiple platforms, businesses, and markets to generate sustained growth and drive significant long-term value.” Lucas, who has maintained an iron grip on the Star Wars franchise since the first film, said: “It’s now time for me to pass Star Wars on to a new generation of filmmakers.” He will stay on as a creative consultant.

HBOS risk boss says lessons of failure have not been learned BY TIM WALLACE A FORMER whistleblower and risk head at failed bank HBOS yesterday warned lessons had not been learned from the crisis. Paul Moore told peers and MPs that there was a “threatening” culture at the bank, where senior executives ignored his warnings over risk and stability. “If your job was to check people out, there was behaviour that was threatening and unpleasant to people doing these activities” in risk and compliance, Moore told members of the Parliamentary Commission into Banking Standards. And he argued there was a conflict of interest in the reporting lines when passing on concerns to his superiors, as executives are

responsible for growth and so may not act properly on risk concerns which get in the way of that. Instead, he called for risk and compliance officers to report up to non-executive directors. However, he also added that the non-executives at HBOS were not always qualified for such a role. “My experience of non-executives on risk committees is that they were generally inadequate. As a rule, they did not have technical expertise in risk management, audit, assurance, oversight.” More broadly, Moore said the whole structure of business in the UK is set up in the wrong way. “The current way company law is set up drives executives to focus on short-term profits,” he said. “That is what investment analysts want, and in itself contains risks.”

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WEDNESDAY 31 OCTOBER 2012

NEWS

Hurricane Sandy leaves insurers with $10bn bill BY JAMES WATERSON INSURERS yesterday began counting the cost of this week’s US superstorm, amid predictions that it will be even costlier than last year’s Hurricane Irene. Disaster exposure specialist RMS said the insurance bill will be larger than the $4.5bn (£2.8bn) that the industry paid out after Irene. This follows early estimates from rival firm Eqecat that the bill to insurers will be $5-10bn, with economic losses of around $10-20bn. Fitch Ratings said it expected the “brunt of losses to be borne by primary writers”, mainly US firms such as State Farm, Allstate, Liberty Mutual Group, and Travelers. This view is shared by Societe Generale, which estimates European reinsurers such as Swiss Re and Munich Re would only be affected if losses “reach or exceed” $10bn. Marcus Barnard, an analyst at Oriel Securities, said he expects the industry “will easily absorb these losses”. He also believes that Monday’s insurance share sell-off, which caused many Lloyd’s of London firms to drop by two per cent, “looked slightly overdone”. London firms such as Amlin and Catlin closed up yesterday as investors realised that the storm had not been as bad as feared.

Two impressive red lines. The new 911 Carrera models. The redline of a Porsche 911 has always been impressive. For almost 50 years now, each new generation has pushed the boundaries of performance further and further. The new 911 Carrera 4 models are no exception. As well as their legendary all-wheel drive handling, they feature broad shoulders, making for a striking presence. And the iconic red LED light strip across the rear, means other road users can now appreciate the red line of a 911 too.

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Model shown is a Carrera 4S Coupe at £88,774.00 including first year road fund licence and first registration fee. Fuel consumption figures for the new 911 Carrera 4S Coupe in mpg (l/100km): Urban 19.9 (14.2); Extra Urban 37.7 (7.5); Combined 28.5 (9.9). CO2 emissions (g/km) 234.

cityam.com

cityam.com

WEDNESDAY 31 OCTOBER 2012

NEWS

9

New York Stock Exchange set Freeze delays to resume full trading today firms’ results BY JULIAN HARRIS

Clockwise from left: Residents survey the damage left by fires after the storm hit; downtown New York; fallen trees in a near-deserted Manhattan

Obama consoles heartbroken cities ahead of looming vote BY HARRY BANKS

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PRESIDENT Barack Obama cancelled campaign appearances in Ohio due today and scheduled a trip to New Jersey instead to survey damage caused by powerful storm Sandy, a move designed to portray him as a strong leader a week before the election next week. Obama, who is in a close race with Republican rival Mitt Romney, has dropped three days of campaigning in battleground states to oversee the government response to the storm, which crippled New York City and much of the eastern US.

The White House has taken pains to show Obama at work, releasing readouts on briefings he has attended and calls he has made to governors and mayors of states and cities affected by the storm. “Our thoughts and prayers go out to all the families who have lost loved ones ... Obviously, this is something that is heartbreaking for the entire nation," he said from a podium with Red Cross workers in the background. Romney also cancelled some political events, but his campaign announced he would hold rallies in Florida – another battleground state – today. EUROPE BACKS OBAMA: Page 23

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THE NEW York Stock Exchange will re-open today, little more than 24 hours after the passing of the monster storm and severe flooding caused by Hurricane Sandy. “NYSE Euronext will open for normal trading operations in coordination with all US equities, bonds, options and derivatives markets,” the exchange said. “Trading will commence on the New York Stock Exchange at 9:30am (Eastern Time) under normal opening procedures, and the NYSE Euronext building and trading floor are fully operational.” The exchange had said that it

could switch to fully electronic trading if necessary, but such a contingency plan is not believed to be necessary. “The devastation [caused by the storm] is a huge concern for stocks and sectors exposed heavily to transport, logistics, industrial and insurance and we are set to see a significant hit to share prices on Wall Street when trade resumes,” said Ishaq Siddiqi of ETX Capital. “With that in mind, the gains made in Europe on Tuesday are likely to be under increased pressure in today’s session.” The latest Chicago purchasing managers’ index is expected today. MARKET REPORT: Page 25

BY JAMES TITCOMB DOZENS of US companies were forced to delay the release of earnings reports yesterday as the market was frozen for a second day. The likes of pharmaceutical giant Pfizer, financial news provider Thomson Reuters and power firm NRG, were all set to report either today or yesterday, but delayed until later in the week. Others included GNC Holdings, TimeWarner Cable, Spirit Airlines and TripAdvisor. One company that did release results was car giant Ford, which trounced forecasts to report revenue of $32bn (£19.9bn) and a pre-tax profit of $2.2bn.

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NEWS

Bayer swallows Schiff Nutrition BY CITY A.M. REPORTER GERMAN pharma group Bayer is to buy US vitamins maker Schiff Nutrition International for an agreed $1.2bn (£747m) as it seeks stable sources of growth to complement its more volatile prescription drugs business. Bayer said it was offering $34 per share in cash to Schiff shareholders, a 47 per cent premium over Friday's closing price. The German group expects to benefit from Schiff’s strength in product development and brand recognition, and that the deal will close by the end of 2012. Bayer said it had support from investors representing more than half of Schiff's voting rights.

cityam.com

WEDNESDAY 31 OCTOBER 2012

UBS trader Adoboli tells court that he lost control BY CITY A.M. REPORTER FORMER UBS trader Kweku Adoboli told a London court yesterday he “lost control” in the summer of 2011 but insisted he never acted dishonestly in the frantic weeks that resulted in losses of $2.3bn (£1.43bn). Ending an emotional three-day defence against charges of fraud and false accounting, a tearful Adoboli said he was “devastated” and “sorry beyond words” about the

losses. But he attacked the culture of investment banks, arguing that compliance rules were “aspirational” and that traders had to bend rules to achieve the goals set by senior management. The 32-year-old Britisheducated Ghanaian denies two counts of fraud and four of false accounting. The trial continues today, when Adoboli will be cross-examined by the prosecuting counsel.

Kweku Adoboli, a former senior trader on the bank’s ETF desk

Russian sale helps BP hike its dividend BY CATHY ADAMS OIL giant BP yesterday announced a quarterly dividend hike of 12.5 per cent, as it reported a jump in third quarter profit. The dividend increase to nine cents a share, which will be paid in the fourth quarter, was announced just days after BP confirmed it is to sell its 50 per cent stake in TNK-BP to Russian state-owned producer Rosneft in a deal worth $27bn (£16.8bn). Profit was up 40 per cent in the three months to September to $5.2bn, from $3.2bn in the previous quarter. But it fell from $5.5bn a year ago. A strong downstream performance helped lift the numbers. The oil major has enjoyed a cash boost recently, as it has so far raised $35bn out of its planned $38bn asset sale. It will also net $12bn in cash from the sale of its stake in TNK-BP. Chief executive Bob Dudley yesterday said that BP’s strong progress in transforming the company “give us the confidence to increase distributions to our shareholders”. Dudley also touched upon the Gulf

of Mexico oil spill, saying that BP was ready for a court battle with US authorities if necessary. It is currently in talks with the authorities regarding a final settlement for the 2010 oil spill. Meanwhile, the British oil major reported that production was broadly similar to last quarter, with production excluding TNK-BP at 2.26m barrels of oil equivalent a day. In a separate announcement, TNKBP announced a 53 per cent profit surge over the quarter. Net income rose to $2.7bn (£1.7bn) from £1.8bn last year thanks to lower taxes and costs.

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ANALYST VIEWS

WERE BP’S RESULTS WHAT YOU WERE EXPECTING?

Interviews by Cathy Adams

RICHARD HUNTER HARGREAVES LANSDOWN

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The recently announced agreement with Rosneft leaves BP with exposure to the important Russian region without some of the previous distractions, and the hike in the dividend is proof of management’s optimism for prospects.

JONATHAN JACKSON KILLIK & CO

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The results are strong, and they provide reassurance that the group remains focused on its core operations. Although the potential liability for the Gulf of Mexico oil spill remains an uncertainty, we are positive on the shares, which continue to trade on a discount to asset value.

STUART JOYNER INVESTEC SECURITIES

The results were much stronger than we, and the market, anticipated. Overall, we have seen a much better result than the poor second quarter and the company has moved early on a dividend increase to nine cents a share. We retain our ‘buy’ rating on the stock.

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Centamin plummets as Egyptian courts say right to operate gold mine is invalid BY CATHY ADAMS SHARES in Egyptian gold miner Centamin lost a third of their value yesterday, as an Egyptian court said the company’s right to operate its flagship Sukari Gold Mine was invalid. However, the miner yesterday said that the concession agreement, which allows Centamin to explore, develop and extract gold from the Sukari mine, is part of law and the court does not have jurisdiction to cancel it. It said that the court had only made comments about the case,

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WEDNESDAY 31 OCTOBER 2012

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no details of a final decision are available, and no written judgement has been given. FTSE 250-listed Centamin added yesterday that operations continue as normal at Sukari. Emerging markets drilling company Capital Drilling, which provides rigs to mining companies, also said yesterday that operations at Sukari were continuing as normal. Shares dropped almost 60 per cent during trading, before recovering some ground to hover around 35 per cent down when the shares were suspended at around 10am yesterday.

PWC SEEKS FUNDING FOR MANGANESE BRONZE

Sukari is the only operating mine that Centamin has in Egypt, although it also has four exploration licences in northern Ethiopia.

Centamin PLC p

45.00

30 Oct

100 90 80 70 60 50 24 Oct

25 Oct 26 Oct

29 Oct

30 Oct

The administrators of London black cab maker Manganese Bronze yesterday called for potential lenders to contact them “as a matter of urgency”, after the company confirmed it had appointed PwC’s Matthew Hammond, Tony Barrell, Ian Green and Mike Jervis. The maker of the iconic vehicles went into administration after failing to secure new funding last week.

Strike-hit miner Lonmin plans $800m cash call BY CATHY ADAMS

n n

PLATINUM miner Lonmin yesterday said it was planning an $800m (£497m) rights issue to shore up its balance sheet in the wake of a violent five-week strike over the summer. The world’s third-largest platinum miner had previously warned of the possibility of an equity raising, after the strike at its Marikana mine in South Africa hit output. The proposed rights issue will reduce indebtedness and increase the miner’s financial strength, Lonmin said yesterday. It will be underpinned by a standby underwriting agreement. Lonmin also said it had tweaked a deal with its lenders to remove earnings-related covenants. The company’s debt covenants are due to be formally tested in early November, although Lonmin said yesterday that it was unlikely that they would be breached. Employees at Marikana have now returned to work, following Lonmin’s increased pay offer last month, and the firm said the ramp up to full platinum production was “going better than expected”.

Platinum output for the fourth quarter was down 45.7 per cent year-onyear due to the industrial action which crippled production throughout August. Around 110,000 ounces of mined platinum were lost due to the strike, Lonmin said. Chairman Roger Phillimore said that following the events at Marikana, the miner needed “solid financial foundations” for the future. “With the standby underwriting and amended debt facilities signed we have taken two decisive steps on our way to delivering that. “We are confident about our financial security,” he said. Lonmin shares closed up 6.98 per cent yesterday at 507.04p. BOTTOM LINE: Page 19

Lonmin PLC p 510 500

507.04

30 Oct

490 480 24 Oct 25 Oct 26 Oct 29 Oct 30 Oct

ADVISERS JP MORGAN CAZENOVE JP MORGAN CAZENOVE INVESTMENT bank JP Morgan Cazenove is likely to have won a role advising Lonmin on its $800m rights issue. It has worked with the miner previously, on a share subscription with Shanduka last year. The team is likely to be headed up by Michael WentworthStanley, a senior rainmaker at the bank. He has been a managing director at JP Morgan Cazenove since 2005 but began his career as a chartered accountant in 1974. WentworthStanley joined Cazenove in 1975 and was a

partner at the firm between 1982 and 2001 before becoming the managing director of Cazenove & Co from 2001 until 2005. Most recently, he has been involved with Serica Energy and its project in the North Sea. Other companies he has worked with include GCM Resources and technology investment group Imperial Innovations. In 2010 he led the team working for banknote printer De La Rue when it rejected a takeover bid. Citigroup is also thought to be working with Lonmin on this transaction. Managing directors Tom Reid and Alex Carter have been involved with Lonmin previously, and it is likely they would be heading up the team. Other banks that are speculated to have a role include HSBC Holdings and South Africa-based Standard Bank.

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30 lenders now ready to take state funding BY TIM WALLACE THE NUMBER of banks and building societies looking to take cheap funding from the government more than doubled in the last month, according to official figures published yesterday. The Bank of England revealed another 17 have signed up to the Funding for Lending Scheme (FLS), which offers lenders cheap funds in the hope that they will increase credit to businesses and households, taking the total to 30 institutions. Initially, each is eligible to take funding equivalent to five per cent of their stock of lending as of 30 June 2012. If they increase lending, they will be offered more funding. But if they cut lending, the cost of the funding rises. The largest to sign up in the last month is the Clydesdale Bank, with outstanding loans of £33.2bn.

The smallest is Metro Bank, which has £78m stock of loans as of 30 June. Together the 17 banks’ stock of loans stands at £113.9bn, or 6.9 per cent of all lending, and if they tool up all of their initial FLS allowance it would come in at £5.7bn. HSBC remains the biggest bank that is not taking part. “We now expect participants to access £85-£90bn, previously £80bn£85bn, of funding over the 18-month window, including £20-£25bn in new net lending,” said Barclays’ analyst Chris Crowe. “However, we do not expect the scheme to transform the UK credit environment, as most lenders still face balance sheet pressures, demand for credit among highquality borrowers remains subdued, and lenders will be unwilling to lower credit standards to encourage additional borrowing.”

Middle Britain hit by stagnant living standard BY JULIAN HARRIS LOW and middle income earners in the UK are in the midst of a long stagnation in living standards, according to a key report published this morning. The independent Commission on Living Standards – set up by the Resolution Foundation – says that “large swathes” of households will be no better off in 2020 than they were in 2000. Technological developments and globalisation are prompting “a hollowing out of middle-income jobs”, the report says. “Two million senior and professional jobs are expected to be created along with 400,000 basic service and elementary jobs. Meanwhile 800,000 mid-level admin and manufacturing jobs look set to be lost,” it adds. The report proposes that taxes be cut for low earners. “Under current government plans, a low paid second earner will face an effective tax rate of 65 per cent from the first pound they earn,” it says, suggesting that Universal Credit be unaffected during the first £2,000 earned.

Bank of England governor Sir Mervyn King hopes the scheme will boost the economy

17 MORE LENDERS HAVE JOINED THE FUNDING SCHEME Institution

Stock of lending as of 30 June Metro Bank £78m Newbury Building Society £554m Newcastle Building Society £2.7bn Nottingham Building Society £2.1bn Skipton Building Society £9.5bn Tesco £4.8bn West Bromwich BS £4.1bn

Arbuthnot Latham £507m Cambridge Building Society £851m Clydesdale £33.2bn Co-operative Bank £31.8bn Coventry Building Society £21bn Cumberland Building Society £1.2bn Julian Hodge Bank £374m Manchester Building Society £569m Mansfield Building Society £213m Market Harborough BS £322m

Total: £113.9bn Total of all 30 banks: £1.33 trillion

THE FASTEST GROWING ONLINE JOBS

230,614

JOBS POSTED

Demand for jobs

up from

189,917

INTERNET MARKETING

12% 15,475 JOBS

in Q2

44% Jobs up 8% to

3,038

after decline of 14% last quarter

LINK BUILDING UP

12% 10,509 JOBS

8%

ANDROID JOBS FOUGHT BACK AS APPLE iOS JOBS LEVELLED OFF

iPhone JOBS

8%

5,509

vs

Android JOBS Returned to 11% job growth

SEARCH ENGINE OPTIMISATION

16%

4,795

7,068 JOBS

MORE OFFICES WENT PAPERLESS

145%

COPY TYPING AND THE TRANSLATION OF PAPER DOCUMENTS TO ELECTRONIC Rank

1 2 3 4 5

Job Category Copy Typing HTML5 eBay jQuery / Prototype Wordpress

Q3 2012 6,932

Q2 2012 2,826

Growth 145%

3,038

2,108

44%

1,470

1,039

41%

2,972 7,703

2,245 6,084

32% 27%

* all data for 3 months to 30 September 2012 SOURCE: Freelancer.co.uk

Digital economy jobs leap as clamour for engineers grows BY JAMES TITCOMB DEMAND for IT jobs leapt by more than a fifth in the last few months, as firms increasingly invested in app and website development, and internet retail and advertising picked up. Figures from online job website Freelancer.co.uk showed that adverts for the world’s 50 most popular digital jobs grew from 230,614 in the third quarter of the year from 189,917 in the previous quarter. Some of the fastest growing job postings were for HTML 5 developers – for building websites using the latest programming tools, for eBay sellers as the site unveiled a

radical redesign and ahead of Christmas, and for Facebook advertisers as the social network recovered from the gloom surrounding its initial public offering in May. The figures also came as a boost to Google’s Android smartphone software and a blow to Apple. Job postings associated with Android, such as app developers, rose 16 per cent in the quarter after the success of Android’s hottest smartphone, the Samsung Galaxy SIII, while demand for iPhone jobs rose at a much slower eight per cent ahead of the launch of the iPhone 5 and the iOS6 software. The survey revealed that the

biggest increase in jobs was associated with the “paperless office” – transcribing paper documents into files and moving them online. Jobs for copy typing and the translation of paper documents to electronic ones rose 145 per cent in the quarter, driven by the increased use of cloud computing – storing documents online. Recent tweaks to how Google arranges its websites and adverts in search results also drove jobs. Internet marketing and search engine optimisation positions were both up 12 per cent, while link building – increasing the number of external websites that link to a client’s – rose by eight per cent.

cityam.com

WEDNESDAY 31 OCTOBER 2012

NEWS

15

Metropolitan Police propose sale of New Scotland Yard HQ BY JAMES WATERSON

Lib Dem minister Jo Swinson said employee-owned firms are “flexible and resilient”

Government plans boost for employee ownership model BY JAMES WATERSON THE GOVERNMENT yesterday unveiled a package of measures aimed at promoting the employee-ownership model, with the aim of allowing more workers to have a stake in their business. This will see the development of a simple “off the shelf” template for setting up an employee-owned company, as well as work to raise awareness of the model.

LONDON’S police force could leave its iconic New Scotland Yard base in order to meet tough cost-cutting measures imposed by City Hall, it was revealed yesterday. The Westminster building has been the force’s headquarters for 45 years but the Met says dramatic measures are needed if it is cut £500m from its existing £3.6bn annual budget by 2015. Deputy commissioner Craig Mackey unveiled the proposal yesterday morning and said the

building – which houses the Met’s top brass, as well as several specialist units – costs £11m a year in maintenance and needs a £50m upgrade to meet modern standards. “It’s an expensive building to run and it’s an expensive building to maintain and as we go through this change programme it’s going to have space in it that we don’t need. In central London that’s an expensive luxury,” Mackey said.

The force could move to the Curtis Green building next to the Ministry of Defence on the Embankment, a smaller space that is already owned by the Metropolitan Police Authority. Although New Scotland Yard was purpose built for the police, it only bought the freehold from Land Securities in 2008 for £124m. Its famous rotating sign will be moved to the new location.

However the well-established Employee Ownership Organisation yesterday published an open letter to business minister Jo Swinson, raising concerns about parallel plans to let workers trade employment rights for shares. “Our members are very aware that there is no need to dilute the rights of workers in order to grow employee ownership,” it says.

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16

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Prime property in capital still rocketing up PRIME London property values soared in the third quarter, two separate data releases showed yesterday, boosting the number of homes worth more than a million pounds to over two fifths. Forty-three per cent of homes in prime London areas are now worth at least £1m, data from estate agent Marsh & Parsons showed, compared to 35 per cent last year. This headline figure only highlights an upward trend, with prime property prices growing 3.5 per cent in the third quarter, putting them some 11.1 per cent higher than in the third quarter of 2011. This means the average prime London property is worth some £1.29m, while the average property in prime areas of central London is valued at £1.89m. A four bedroom home would set a buyer back £2.73m on average, if they wished to live in a top central London location. Harcourt House in Cavendish Square, London, which yesterday invited offers of £60m and above

for freehold from December 2015, is only one example of the booming market, which has consistently defied downturn elsewhere across the country. “The number of property millionaires in the capital has shot up,” said Marsh & Parsons boss Peter Rollings. “Properties no longer have to be palatial to be worth £1m.” Rollings said that international interest, once clustered in only the most desirable areas, has started spreading out through the capital, leading to price rising ripples across the city. “Wealth has been overflowing into areas like Balham, Clapham and Brook Green, pushing up prices and boosting the number of £1m properties,” Rollings added. But Rollings suggested that the boom could start to slow down as supply to the market – though still very low – was outpacing new buyer registrations. This data was backed up by a similar data release from Cluttons, which said prime central London property values were 7.1 per cent up on the year.

BY KASMIRA JEFFORD

” ” ”

BY BEN SOUTHWOOD

Record level of offices turned into residences

Harcourt House in Cavendish Square is expected to be sold for more than £60m

CITYVIEWS PAUL COOPER OSBORNE CLARK

ROBERT MCCREATH ARCHON SOLICITORS

ANDREW DAVIS BANCO POPULARE

CAN YOU SEE THE APPEAL OF A CONVERTED OFFICE BUILDING?

Interviews by William Campbell and Oliver Hill-Smith

Converted office units offer an alternative investment opportunity for City workers. The process of converting offices uses space in prime locations across the city that otherwise would be left derelict.

Office spaces that have been converted into residential units give buyers the perfect opportunity to acquire beautiful, old, period buildings. For these spaces to be successful though, you have to remove the office feel. Many people I know would hate to live in a space that was an office. You work in an office, you live in a home. However, I can see the draw that converted office units would have for young people.

These views are those of the individuals above and not necessarily those of their company

THE NUMBER of offices being converted into homes is set to jump significantly over the next two years as developers chase higher returns for their property, according to property services firm DTZ. Strong growth in London residential values and weak demand for secondary office property is prompting developers and landlords to turn tired office blocks into prime living space. The report by DTZ published yesterday shows that planning permissions for conversion to residential units in central London reached 2,197 in the first nine months of the year, up from 1,178 units for 2011 in total. As a result, DTZ predicts the number of scheme completions to jump by 12 per cent next year to 1,350 units compared with the previous year and by 18 per cent to around 1,600 units in 2014. The West End has traditionally seen the highest rate of conversions, where residential values range up to £3,250 per square foot compared to prime office values of around £2,100 per sq ft. But the City and its outskirts is seeing a rapid pick-up in residential schemes, including CIT Group’s King’s Reach Tower scheme, and is set to account for 40 per cent of total units delivered in 2013-2014.

Who Won One? Congratulations to the winners of the 2012 S&P Capital IQ UK Fund Awards S&P Capital IQ fund research is delighted to recognise and honour those individuals and teams that have demonstrated superior quality in their investment capabilities, as recognised by our 14-strong team of fund analysts who review and consider the gradings of over 1,100 funds a year. For more information on these winners and the qualitative fund research from S&P Capital IQ please visit www.spcapitaliq-funds.com

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For further information regarding the fund management research reports and / or the methodology applied for these awards please contact [email protected] or call +44 (0) 20 7176 8500 Copyright © 2012 by Standard & Poor’s Financial Services LLC (S&P), a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved

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NEWS

19

Miners on shaky ground despite stabilising backdrop BOTTOM W LINE ITH the US markets firmly shut for a second day, investors had no choice yesterday but to focus on corporate events closer to home. Luckily the FTSE’s resources stocks more than made up for the lack of American action, with market watchers gripped yesterday by the unfolding tale of two miners. First up, Lonmin finally announced its long-awaited rights issue. Far from being priced in, the preliminary plans – despite a heavily revised production update – sent the strike-hit miner’s shares up by almost seven per cent. Lonmin’s South African strike saga has been the longest and sorriest of them all, starting way back in April and

ELIZABETH FOURNIER culminating in mid-August with the shooting of 34 workers at the company’s Marikana mine by police. A deal has now been struck with the dissenting mine staff, but at a price that will add 11 per cent to its overall wage costs for next year. Add that to a 46 per cent drop in platinum concentrate due to the unrest and looming debt covenants, and you’ll understand why investors

Premier sells Branston arm in £92.5m deal BY KASMIRA JEFFORD PREMIER Foods yesterday said it has agreed to sell its Branston range of pickles and sauces to Japanese food manufacturer Mizkan for £92.5m, in its latest efforts to pay down debts. The deal, which is expected to be completed early next year, includes Premier’s Bury St Edmunds factory where the sauces including Branston relish, salad cream and mayonnaise are made. Premier said all 350 employees at the site will transfer to Mizkan, which also bought its Sarson’s and Haywards pickled onion brands for £41m earlier this year. The FTSE 250 firm ran up large debts after a decade-long acquisition spree and has been selling off assets to meet the refinancing terms agreed with its banks in March. The sale of the Branston brands will take Premier’s total disposals to £370m, exceeding the £330m it has to raise by 2014 as part of the refinancing deal. The funds will cut its £1.3bn debt pile by 30 per cent.

Michael Clarke, chief executive, said: “I’m delighted to have exceeded our disposal target 20 months early while at the same time delivering three successive quarters of sales growth.” Kazuhide Matazaemon Nakano VIII, chief executive of Mizkan, said Branston was an “excellent strategic fit” with its portfolio and “adds to our solid foundation for growth in the UK. The pickle sauce was first produced in 1829 in the village of Branston before being turned into a brand in 1922 by Crosse & Blackwell. Premier bought the foodmaker from Nestle in 2002 before selling it again in 2011.

Premier Foods PLC p 110 105 100 95

109.00

30 Oct

90 85 24 Oct 25 Oct 26 Oct 29 Oct 30 Oct

are breathing a sigh of relief at the $880m cash call. But they might do well to hold their breath. Details of the rights issue yesterday were scant, but analysts were speculating about the role that Xstrata – which owns a 25 per cent stake in Lonmin after a failed takeover attempt – would play in approving the deal. The mining giant, currently negotiating the stages of its own deal approval in its tie-up with Glencore, has so far kept schtum throughout the Lonmin crisis but last night said it was considering its position on whether to subscribe. Xstrata’s statement said it would examine the company’s “strategy, business plan and management capability to ensure an attractive and

BOOK publisher Quarto yesterday lashed out at a group of investors aiming at ousting co-founder and chief executive Laurence Orbach, urging other shareholders to vote against his being replaced at a meeting next month. The group also warned that the spat was a distraction at a time when it should be focusing its attention on opportunities that might arise from Penguin’s merger with Random House. Activist investor Christopher Mills’ Harwood Capital and the Wellcome Trust – who between them own 20 per cent – are urging

fellow shareholders to remove Orbach, who is also chairman but has already agreed to relinquish the CEO post, and replace him with industry veteran Tim Chadwick, in a vote on 7 November. But in a circular sent to shareholders yesterday, Quarto’s board warned the move would be “completely detrimental” to the best interests of the company and snubbed Chadwick’s “poor record of running publishing businesses”. The board said the former Bookseller chief executive “has not

Laurence Orbach has come under pressure to step down soon from the top job at Quarto

to strike action, and until more clarity can be given the shares are unlikely to recover. Back in August it reported record output of 67,422 ounces for the second quarter – up 40 per cent on the previous year. Analysts are hopeful that the firm will be able to appeal and overturn the decision, but any delay will inevitably impact production – and could leave workers disgruntled. Africa’s mining disruption may have quietened down since the heated days of this summer, but yesterday was a stark reminder of the threats that still exist – and the investor headaches that they can spark. Elizabeth Fournier is news editor of City A.M. @ej_fournier

IN BRIEF M&S to launch four overseas sites n Marks & Spencer is to step up its international growth plans with the launch of four new foreign language websites next month. The retailer revealed that it will expand online in Germany, Spain, Austria and Belgium on 19 November after opening its first two overseas sites in France and Ireland in the past year. “This is us moving forward with our plan to transform M&S from traditional British retailer to a leading international, multi-channel retailer,” said chief executive Marc Bolland. M&S delivers to over 80 countries through its UK website and said those four markets were among the most popular delivery destinations.

Premier relishes the sale of its Branston unit after debt pile left the firm in a pickle

ADVISERS ADRIAN MAGUIRE FRESHFIELDS

ADRIAN Maguire, corporate partner at Freshfields Bruckhaus Deringer, acted for Premier on the sale of its sweet pickles and table sauces business with the support of intellectual property partner Andrew Craig. Law firm Ashurst advised Mizkan. Maguire joined Freshfields in 1996 as a trainee, after graduating from Durham, and was made partner in 2008. He has focused solely on private equity deals since 2005 but first struck a relationship with Premier after

Quarto attacks rebel investors over attempt to oust founder BY KASMIRA JEFFORD

sustainable future,” and where the big money goes, smaller stakeholders may follow. Meanwhile at the opposite end of the movers board, Centamin was stuck so firmly on the sell pile that it was forced to suspend trading in its shares after they plummeted as much as 59 per cent. The gold miners problems are also Africa-focused, but around 4,000 miles due north in Egypt’s Eastern desert, where yesterday a local court annulled the licence of the FTSE 250 firm’s key asset – the Sukari mine. Yesterday all Centamin could do was tell investors it wasn’t a party to the case, and that it had seen no written judgement or details of the final decision. Sukari has already been shut down twice this year due

been involved in the industry for approximately 15 years.” It also added that Marcus Leaver, chief executive designate who joined in March, was “admirably equipped” for the task of succeeding Orbach.

advising buyout firm Warburg Pincus on its £64m investment in Premier Foods in 2009. Maguire said yesterday’s deal was not an easy feat and required the “carving out” of all the assets up for sale from the existing business and moving them to Mizkan’s operations. Earlier this year he advised European private equity firm Cinven on its acquisition of legal outsourcing company CPA Global. He also acted for Cinven when it acquired a majority stake in Turkish alarm systems provider Pronet Güvenlik in June – its first move into the Turkish market. Other deals including advising Warburg this summer on the sale of Mach, a Luxembourgbased business that provides roaming and billing services to mobile phone companies, to Syniverse Holdings for €550m (£444m).

Hugo Boss posts China sales rise n German fashion house Hugo Boss said yesterday it was seeing some signs of improvement in China, with sales picking up there in the third quarter. “We do see stabilisation but no recovery in consumer confidence in China yet,” chief executive ClausDietrich Lahrs said, as the firm posted third-quarter earnings showing flat sales of €646m (£521m) and a drop in core profits. Warnings on slowing demand in China from luxury companies such as Burberry have spooked the luxury sector in the last couple of months. Shares in Hugo Boss have dropped 13 per cent over the last three months. Nevertheless the group said sales in China rose five per cent, up from just one per cent in the second quarter. Earnings dropped seven per cent to €165m.

Drivers face Blackwall Tunnel toll to fund new river crossing BY MARION DAKERS MOTORISTS will bear the cost of a new Thames crossing in east London, Transport for London said yesterday. TfL has not set aside any money in its budget for the planned tunnel at Silvertown or a new vehicle ferry service, and said the “most appropriate way to fund the projects would be to charge a toll”. Drivers using Blackwall Tunnel, which is currently free, will face charges of around £2 for cars, £2.50 for vans and £5 for large trucks, under preliminary plans put out for consultation by TfL. The levies could be hiked during rush hour or lowered in quiet times to manage traffic. Silvertown Tunnel is expected to

cost around £600m to build, and will not be open until at least 2021. Users of this new tunnel will also be charged a toll. TfL said both tunnels would have to impose levies to prevent motorists flocking to the older crossing to avoid the charge and causing long delays. But the Rotherhithe tunnel would be spared because it serves a different set of destinations, TfL said. As well as the extra tunnel, the transport authorities envisage a new vehicle ferry crossing between Thamesmead and Beckton, which would open by around 2017. The Gallions Reach Ferry is expected to replace the Woolwich Ferry. Londoners have until February to submit their views on the plans.

20

EE rolls out UK’s first 4G mobile network amid contract criticism BY JAMES TITCOMB THE UK finally saw its first highspeed 4G service switched on yesterday after years of delays and legal threats between the country’s mobile networks. EE, the parent of Orange and TMobile formerly known as Everything Everywhere, launched its 4G service in 11 UK cities and moved the first customers onto its new, third, network, also called EE. EE claims the 4G service will offer speeds on average five times faster than current mobile data speeds, allowing faster downloads and

trouble-free streaming of highdefinition video. The company now has an estimated seven-month headstart on rivals, which will not be able to launch 4G services until preapproved spectrum is cleared for use. Broadcasting regulator Ofcom granted EE early 4G clearance for its current mobile airwaves for 4G in August, a decision that sparked outrage from its rivals. Ofcom will auction off three lots of new spectrum at the start of next year. The lots are expected to go to Vodafone, O2 and EE – which needs the extra spectrum to bolster the

Big brands help Imperial profits beat estimates BY CITY A.M. REPORTER IMPERIAL Tobacco, the world’s fourth largest cigarette group, reported an eight per cent rise in annual earnings yesterday, helped by strong revenue growth from its key brands. The British firm, which sells over 340bn cigarettes annually of brands such as Davidoff, Gauloises, JPS and West, said adjusted earnings rose to 201p a share for the year to endSeptember, ahead of a company-compiled consensus of 199.6p. It raised the annual dividend by 11 per cent to 105.6p a share, boosting its payout ratio from earnings to 52.5 per cent. Revenue rose four per cent to £7bn, however, reflecting the group’s aim to counter Europe’s downturn by offering economy-brand cigarettes, such as JPS, Lambert & Butler and roll-your-own products, while also raising prices for more affluent consumers in western Europe and the US. “We see significant growth opportunities in our rest of the world region across Eastern Europe, Africa

and the Middle East and Asia-Pacific and we'll continue to invest to support sustainable growth,” the firm said. Overall stick equivalent volumes declined 2.7 per cent in the period due to tough markets in Poland, Ukraine and compliance with international trade sanctions against Syria. Its four key brands -- upmarket Davidoff, mid-priced Gauloises Blondes and value brands West and JPS -- saw annual volumes increase seven per cent. Its Gold Leaf and Golden Virginia fine cut business volumes were stable, it added.

Imperial Tobacco Group PLC 2,400 p 2,375

2,368.15

30 Oct

2,350 2,325 2,300 24 Oct 25 Oct 26 Oct 29 Oct 30 Oct

Ombudsman says blame for PPI lies squarely with banks BY CITY A.M. REPORTER BANKS have only themselves to blame for the flood of spurious claims around payment protection insurance (PPI) misselling, the financial ombudsman said yesterday. Banks have argued claims management companies (CMCs) have launched a deluge of baseless claims on behalf of customers who have never even been sold PPI. But ombudsman chief executive Natalie Ceeney told MPs that this is the banks’ own fault for spending so long pretending there was no PPI problem, then mishandling many

cityam.com

WEDNESDAY 31 OCTOBER 2012

NEWS

of the claims that were submitted. “CMCs thrive because the problem built over many years when banks said there was not an issue,” she told the Treasury Select Committee. “And in a quarter of cases [which banks rejected claiming consumers had never bought PPI] we see banks have just not done a proper job checking.” But she also turned her fire on the CMCs for falsely telling consumers they need help claiming. “They get a quarter of the compensation just for putting a stamp on an envelope,” Ceeney said.

network it switched on today. The country’s fourth operator, Three, will be able to run a 4G network using a slice of the airwaves EE was forced to sell off as a condition of gaining early access, although EE does not have to do so until next August. EE’s service will cost on average £5 per month higher than 3G contracts with similar allowances, and will only be available on certain high-end handsets. The tariffs were criticised when announced last week, since at 4G speeds, the monthly data allowances of the cheaper tariffs could be used up within minutes.

Sales of iPhone 5 reinvigorate Apple’s standing in UK market BY JAMES TITCOMB APPLE’S iPhone clawed back share of the smartphone market in the UK and Europe in the six weeks to the end of September, as sales of the iPhone 5 reversed a decline seen in recent months. The latest data from research firm Kantar Worldpanel showed that Apple had 28 per cent of all UK smartphone sales in the period, up from 21 per cent in the preceding six weeks. The period counted just nine days

The iPhone 5 has led Apple to recover market share

of sales of the new iPhone 5. However, despite being the world’s most profitable phone company, Apple’s market share still pales in comparison to Android, which had 58.2 per cent of sales. Android has long been the most-sold operating system, due to the large number of handsets at many different price points that run it. The figures also illustrated the decline of Research in Motion’s BlackBerry. Sales of the ailing platform were just 8.8 per cent of the market. A year ago they were 20.8 per cent.

IN BRIEF Watchdog to examine ferry deal n The Competition Commission will probe Eurotunnel’s takeover of some of collapsed ferry operator SeaFrance’s assets, after the Office of Fair Trading yesterday referred the cross-channel deal to the watchdog. Eurotunnel hopes to take on three boats and other assets from SeaFrance, which fell into liquidation at the start of the year. The OFT is worried that only Eurotunnel and P&O are left as large competitors on the Dover to Calais crossing after the acquisition.

Banks extend Rusal covenant Crossrail is set to bring an extra 200,000 visitors per day to Tottenham Court Road

East Oxford Street prepares for major high street regeneration BY KASMIRA JEFFORD THE ARRIVAL of Crossrail and the regeneration of Tottenham Court Road is set to double spending growth in the area by £448m over the next 12 years, according to a report commissioned by the New West End Company. The east end of Oxford Street has struggled over the years to shake off its image as the poorer relation to the more fashionable West End but has fought to lure high profile retailers to set up shop. The report, conducted by property advisory firm GVA and

presented to property executives yesterday, estimates that the launch of Crossrail in 2018 will boost the number of visitors to the area by 36 per cent, with Tottenham Court Road set to overtake Oxford Street as the West End’s highest footfall tube station. Chris Goddard, senior director at GVA, told City A.M the launch of a giant 82,400 square foot Primark store last month marked the beginning of a “retail renaissance” in the area and sets in motion a series of developments that will see the area rival the west end of Oxford Street.

n Russian aluminium producer Rusal, controlled by billionaire Oleg Deripaska, has extended a waiver from its banks to the end of 2013 to meet its financial covenants on a $4.75bn (£2.95bn) syndicated loan, as it battles falling prices and higher debt. In March, it agreed a 12-month holiday on the financial conditions, and has now extended the holiday until the end of next year.

Wolfson back in the black n British chipmaker Wolfson Microelectronics delivered its first profitable quarter since the end of 2010 as its technology was used in Samsung’s popular Galaxy SIII smartphone and Microsoft's Surface tablet. The company yesterday reported an underlying operating profit of $3.4m (£2.1m) against a $0.7m loss a year ago and a $1.3m loss in the last quarter. Revenue was up 31 per cent on last year to $53m.

Telefonica Germany rises in first day of year’s biggest Europe IPO BY HARRY BANKS SHARES in Spanish telecoms giant Telefonica’s O2-branded German unit rose in its first day in trading yesterday following Europe’s biggest initial public offering (IPO) in more than a year, adding to a fledgling recovery in the region’s new issues market. The offering will raise as much as €1.45bn (£1.17bn) for Spain’s Telefonica to trim its huge debt pile, and is a positive step for an IPO market which has struggled for months amid Europe’s debt crisis and sluggish economic growth.

Telefonica said on Monday it was selling a 23 per cent stake in Germany’s smallest mobile operator, including an overallotment option, for €5.60 a share. The price was in the lower half of Telefonica’s original €5.25€6.50 range, which it narrowed twice during bookbuilding. Telefonica Deutschland shares began trading at €5.70 yesterday and rose to €5.80 by the end of trading, valuing the unit at around €6.4bn. “We have seen a re-emergence of some sort of IPO market. The recent transactions, the fact they have gone well, is clearly

presenting a positive backdrop,” said one banker not involved in the deal, referring to other recent listings such as Talanx and Direct Line.

Telefonica Deutschland Holding AG

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5.84 € 5.82 5.80 5.78 5.76 5.74 5.72 10:00

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WEDNESDAY 31 OCTOBER 2012

NEWS

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squeezed by deepening Debt-ravaged Eurozone suffers Spain recession and surging inflation poor month on the high street BY BEN SOUTHWOOD

BY BEN SOUTHWOOD RETAILING in the Eurozone’s second and third biggest economies slipped to even sharper decline in October, business survey data showed yesterday, though resilient Germany dragged the bloc's average up significantly. The retail purchasing managers' index (PMI) for the Eurozone as a whole collapsed from 47.1 in September to 45.3 this month, Markit said yesterday, where values below 50 indicate decline in the sector. This overall fall was driven by plummeting figures for France and Italy, the two biggest economies in

the Eurozone after Germany. France’s retail PMI fell from 47.9 to 46, the data revealed, while Italy’s plummeted from 42.9 to 37.3. “The Eurozone retail sector entered the fourth quarter in a deepening slump,” said Trevor Balchin at Markit. “Sales have now fallen for 12 consecutive months, and there is little sign of an imminent return to growth.” This came as Eurostat data revealed the Eurozone savings rate fell in the second quarter, hitting 12.9 per cent from 13.1 per cent in the first three months of the year. Business investment data from the same period, also from Eurostat,

gave a less gloomy impression, as it increased from 20.2 per cent to hit 20.3 per cent. However, this was still below the level seen throughout 2011.

Eurozone retail dives further into decline

56 Eurozone Retail PMI, 50 = no change 54 52 50 48 46 44 42 40 2008

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SPAIN slipped yet deeper into depression, data revealed yesterday, while inflation picked up, raising the spectre of socalled stagflation. Spanish GDP shrunk 0.3 per cent in the third quarter, according to data from official statistics office Ine, the fifth successive quarter without expansion, adding to pressure on Prime Minister Mariano Rajoy to request a full bailout package from Brussels. This latest fall meant the economy was some 1.6 per cent smaller than a year ago and around five per cent smaller than the pre-recession peak in

CBI says retail sales bounced back in October UK RETAILERS reported a rapidly improving sales climate in October, according to data out yesterday, driving hopes for continued expansion. Thirty percentage points more retailers saw improving than worsening sales in October, according to the Confederation of British Industry (CBI), up from a net balance of six per cent in September and well above firm expectations which summed to 15 per cent. A net balance of 27 per cent of firms expect increasing sales volumes in November. “It is great news that last month’s sales growth has continued into October,” said Anna Leach at the CBI. But other data in the release suggested this rise might be mainly down to seasonal movements. Seven percentage points more respondent firms said sales volumes were down for the time of year, than said they were up. Still, these sales were much better – even seasonally – than October, when the net balance was

German labour market rising but pace slows BY BEN SOUTHWOOD

minus 22 per cent. Consumer confidence data from Gfk supported the more pessimistic approach to the data. Gfk’s index slid two points to hit minus 30 in October, putting the index only just above the place it was in October last year. Trend data from Conlumino, also out yesterday, highlighted the damage the recession did to the retail market. The total UK home retail market slumped by £9bn between 2008 and 2011, Conlumino said, blaming double figure declines in furniture and electricals on a stagnant home market.

Public sector employees are spending millions of paid hours tending to union duties

Think-tank says taxpayers are handing over £113m to unions BY BEN SOUTHWOOD

Yet consumer confidence stays down in the dumps 0 Consumer confidence index, 0 is neutral -5 -10 -15 Annual moving -20 average -25 -30 -35 Monthly Value -40 -45

Oct ‘07 Oct ‘08 Oct ‘09 Oct ‘10 Oct ‘11 Oct ‘12

SOURCE: G FK

BY BEN SOUTHWOOD

TAXPAYERS are forking out to subsidise trade unions as the state pays public sector workers to perform union duties, a think-tank claimed this morning. The total hours public employees spent on union duties amounted to the equivalent of 3,041 full time workers – two and a half times more workers than HM Treasury – the Taxpayers’ Alliance (TPA) said, costing taxpayers some £92m in the 2011-12 financial year. Combined with some £21m in direct payments, taxpayers are showering

Bank of Japan fights deflation battle with novel easing policy BY BEN SOUTHWOOD THE BANK of Japan yesterday hit markets with another bout of quantitative easing (QE), easing policy for two consecutive months for the first time in eight years. The Bank added 11 trillion yen (£86bn) to its main asset purchase programme, which also includes lending provisions, but they did not stop at traditional QE, and also announced new and unprecedented deflation-busting schemes. Bank bosses, including governor Masaaki Shirakawa, released a joint statement with

the government, promising to reverse price declines and bring inflation up to the one per cent target, potentially firming up markets’ confidence that policymakers will to do what is necessary. And the Bank, following similar plans worldwide, launched a scheme offering banks 15 trillion yen of cheap, long-term credit, as it tries to fend off world economic pressures and put the Japanese economy back on

Masaaki Shirakawa boosted QE

the third quarter of 2008. Jennifer McKeown at Capital Economics said this new low might not be the worst of Spain’s deep recession. “The third quarter's GDP figures were probably flattered by consumers bringing forward spending ahead of September's VAT hike and we still think that renewed falls in sentiment and a deeper economic downturn are to come,” McKeown said. The economic contraction came in tandem with an uptick in inflation, which saw yearly growth in the consumer price index hit 3.5 per cent in October, up from 3.4 per cent in September and 1.9 per cent as recently as June.

the path to growth. But analysts said that lending demand would be constricted by deflation – growing purchasing power – regardless of funds made available to the banking sector. “The problem is not banks ability to lend,” said Masayuki Kichikawa, top economist at Bank of America Merrill Lynch in Tokyo. “The problem is lack of demand for loans due to deflation and a high exchange rate.”

public sector unions with at least £113m, the think-tank showed. The group says its figures are “almost certainly” underestimates, as 480 of the 1,296 public bodies it surveyed did not even record facility time – when employees perform union duties in paid time. This judgement chimes with the government's estimate in July that facility time cost £240m – or 0.14 per cent of the public sector pay bill. The TPA claims public bodies hand out facility time too liberally, compared with the private sector, where just 0.04 per cent of the pay bill is taken up by facility time.

EMPLOYMENT continued to increase in Germany during September, figures out yesterday showed, but the federal statistics office Destatis warned that momentum was slipping out of labour market improvements. Employment climbed 324,000 in the year to last month, hitting 41.8m, Destatis said, while unemployment fell 48,000 to 2.2m. However the statistics office said that yearly employment growth had slowed down from 1.4 per cent in January to just 0.6 per cent last month, calling the drop a loss of momentum. The seasonally adjusted figures – which showed a completely flat picture – backed up this less optimistic approach to the stats. And credit constraints data from think tank Ifo also suggested Germany resilience to the Eurozone debt crisis was ebbing away. The proportion of German firms calling credit conditions “restrictive” increased 0.9 percentage points to hit 23.1 per cent, Ifo data showed. But this slight increase still suggested conditions were much easier than during much of aftermath of the financial crisis, when the proportion stayed above half for nearly a year.

Case-Shiller index says house prices growing across the US BY BEN SOUTHWOOD US HOME prices continued to rebound in August, data suggested yesterday, adding to the zig-zag recovery from the depths of the credit crunch. Average prices edged up 0.9 per cent in the month, according to both the 10- and 20-city composite Case-Shiller home price indices. This monthly increase capped off a 1.3 per cent rise across the year for the 10 biggest cities, and a two per cent climb for all 20 cities. Seventeen of the 20 cities in the wider index saw prices up compared to a year earlier, led by Phoenix, where homes were 18.8 per cent more expensive –

prices only fell in Atlanta, Chicago and New York. “Home prices continued climbing across the country in August,” said David Blitzer, chairman of the index committee overseeing the data. “Nineteen of the 20 cities and both composites showed monthly gains in August. “The sustained good news in home prices over the past five months makes us optimistic for continued recovery in the housing market,” Blitzer added. The Conference Board had been scheduled to release consumer confidence data yesterday, but delayed the release until tomorrow due to Hurricane Sandy.

WEDNESDAY 31 OCTOBER 2012

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cityam.com

THECAPITALIST Spread betters host celebrity charity traders SPREAD betting firm City Index has engaged the services of former footballers Bob Wilson and Gareth Southgate this month. Messrs Wilson and Southgate are battling it out to win the firm’s Celebrity Trader Challenge, a new monthly initiative to raise money for charity. Each month City Index will be giving a celeb trader £2,500 in a spread betting account to trade the markets with. Whatever they make plus their

starting cash then goes to a charity of their choice, which this month is the Willow Foundation. Previously the firm has hosted Caprice, Adam Boulton and Heston Blumenthal as guest traders. Although the superstar so far has been actor Warwick Davis, who turned his starting balance from £2,500 into £2,991. With only a day to go before their trading balances are revealed, the pair have both tentatively shared their thoughts on their progress on Twitter. Don’t count your chickens boys.

Football players and celebrity traders: Bob Wilson (left) and Gareth Southgate (right)

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One of The Capitalist’s favourite providers of amusing surveys, Travelodge, released a “scary snooze study” yesterday of bedtime Bogeymen who are causing us to lose out on beauty sleep. In the poll, George Osborne, Gordon Brown and Ed Balls make the list of culprits rudely making unwanted appearances in the nightmares of British adults. All very plausible entries with the exception of number seven, pop singer Justin Bieber, who is surely a less terrifying dream catcher than the shadow chancellor? Perhaps the ‘Lodge should have surveyed a few more of Balls’ neighbours. Having recently admitted to taking up the piano, that is one poll where the politician is guaranteed to count on winning votes.

Left to right: Able seaman Carl Butterworth, Mayor Boris Johnson and Charles Byrne

Boris goes Bond for Poppy Day as he speeds down The Thames THE Capitalist, and presumably most of London, simply cannot escape Mayor Boris Johnson these days. Fresh from his appearance at the NFL game at Wembley Stadium on Sunday evening, Boris was cruising down the River Thames on a Royal Navy RIB yesterday morning. Pointing his trigger finger at onlookers, Bozza arrived at Canary Wharf in timely 007 style to launch the London Poppy Day Appeal.

EDITED BY CALLY SQUIRES

For the first time ever, the Poppy Appeal has gone electronic this year. Barclaycard has donated 400 mobile card payment terminals so that Londoners with empty pockets can donate using their debit cards. After his boat was winched aboard HMS Severn, the Mayor swiped his card and bought the first poppy using the contactless payment system. Money raised from the appeal supports The Royal British Legion.

As Goldman Sachs was sandbagging down the hatches of its West Street building on Monday, most New York City workers were opting to weather out the Frankenstorm with books and candlelight after the power went down. However gym chain Equinox, which has 25 clubs in the New York region, took an optimistic approach to the storm, informing members by email that: “Last August, Hurricane Irene didn't stop us from delivering an unparalleled experience; Hurricane Sandy won't either. We are open regular hours today and tomorrow and invite you to come in for a complimentary workout." Now there’s a city where the glass is truly half full.

cityam.com

WEDNESDAY 31 OCTOBER 2012

NEWS

23

Why the polls don’t tell the whole story of the US election BRAND I INDEX STEPHAN SHAKESPEARE

debate. That said, an Obama victory is by no means a certainty. This remains a very tight race and the political impact of Hurricane Sandy across swathes of the east and midwest of the country is an important unknown. YouGov will be polling again both at the state and national 9% 8% 9% 5% 10% 5% 6%

80 95%

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TRANSPORT group Stagecoach said it had traded well in its first half due to a strong performance from its British rail and US bus businesses. The Perth-based company yesterday said like-for-like revenues at its British rail unit rose 7.9 per cent in the 24 weeks to 14 October, while sales at its North America coach business, which includes Megabus, rose 10.7 per cent. Its British regional bus division reported a 3.6 per cent sales uplift during the period, but its London bus arm posted revenues down 0.9 per cent after it dropped some contracts as part of a restructuring effort. Stagecoach said the overall profitability of the group had remained good, and that there had been no significant change to its annual pre-tax profit forecasts. Virgin Trains, jointly owned by Stagecoach and Sir Richard Branson’s Virgin Group, was last

month stripped of the West Coast Mainline franchise, which runs from London to Scotland, after the Department for Transport (DfT) awarded the 13 year franchise to rival FirstGroup. However, the DfT has since asked Virgin and Stagecoach to continue operating the service for up to 13 months from December, while it revamps Britain’s rail franchising process. “The group welcomes the opportunity to participate in these reviews where appropriate,” Stagecoach said.

Stagecoach Group PLC p 276 274 272

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Strong UK train showing buoys Stagecoach BY HARRY BANKS

level. What we can say now is that the swing to Romney was not as dramatic as it might have looked. As things stand, the President is the one who should be drafting a victory speech – or at least looking at quotes for red, white and blue balloons. Stephan Shakespeare is the chief executive of YouGov

US Vote

Europeans Vote 100

91%

Kellner, who brilliantly summed up where the race is now. The headline figures from YouGov polls over the past couple of weeks show that Obama leads nationally by 48 per cent to 46 per cent and holds the advantage in enough key swing states (including Ohio) to win the election. It is the detail behind these figures, in particular the state polling numbers, that goes some

way to explaining why there is such a large discrepancy between polls. The surveys of 25 states before and after the first televised debate were true panel surveys. We contacted the same people twice so we could look at actual change among the 25,000 people recontacted (from an initial sample of 33,000). What we found was only a tiny movement – Obama’s lead was cut by one per cent. But 80 per cent of previous Romney supporters responded to this second wave of surveying, compared to 74 per cent of Obama supporters. So the bigger swings that some polls have shown was not caused by voter shifts, but by Obama supporters becoming less likely to respond to surveys after the

92%

F EUROPEAN citizens could vote for Barack Obama, the incumbent President’s people would already be stocking up on ticker tape, celebratory balloons and patriotic banners. A YouGov survey of seven European countries released yesterday showed that if the election was held here, Obama would receive over 90 per cent of the vote in each country, including 91 per cent in Britain. Republican challenger Mitt Romney would fare even worse on the continent, picking up just one in 10 votes in Germany, or a paltry one in 20 in Sweden. Turning to the US, where they will actually vote, it is much closer of course, and to make the point I will borrow from an article last week from YouGov president Peter

48%

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Other/ Not sure

Carlyle snaps up Japanese packaging arm BY CITY A.M. REPORTER

HR Owen chief executive Joe Doyle has seen a roaring trade in top of the range cars

UK dealers cheer rising sales of luxury vehicles and used cars BY MARION DAKERS A SLEW of UK car dealers heralded a strong spell of trading yesterday, with sales of both luxury motors and used vehicles on the rise. Shares in high-end car dealership HR Owen closed 11.2 per cent higher after the firm said it was trading ahead of expectations and that full-year profits are on track to beat market forecasts. Lookers, meanwhile, boasted of an “excellent trading performance… in particular during the critical month of September”,

with an 11 per cent year-on-year jump in core retail new car sales in the first nine months of the year. And dealership chain Pendragon said third quarter like-for-like profit is up 11.7 per cent on the previous period due to improving margins and expansion. Like-forlike used car sales are up 2.8 per cent on last year, and the firm expects to hit full-year forecasts. But in Europe the picture was less rosy. Fiat cut its full-year forecasts to the lower end of its range and said net debt could be up to €1bn more than expected.

Carlyle Group yesterday said it will buy a Japanese unit of US food packaging company Sealed Air at an undisclosed price, in the private equity firm’s second Japanese acquisition in a month. Carlyle has agreed to acquire Diversey Japan, a major provider of cleaning, sanitation and hygiene products and services, from Sealed Air, the company said in a statement yesterday. Sealed Air said in a separate statement that it would receive gross proceeds of around $377m (£234.5m) for the business, which generated approximately $321m in sales during the twelve months to the end of September. The firm added that the sale will help it cut its debt pile and generate value for its shareholders. Carlyle is the only global buyout firm in Japan with a fund that focuses solely on Japanese assets. The investment period of the fund, Carlyle Japan Partner ll, will expire next year. Last month, Carlyle acquired Arizona-based Walbro Engine Management, an engine parts maker, from Sun Capital Partners, through Carlyle Japan Partner ll.

set to offer a merger British firms get lift from sale of Glencore compromise for EU regulators Horizon nuclear power project BY CITY A.M. REPORTER

BY CATHY ADAMS BRITISH firms cashed in on the sale of Horizon Nuclear Power yesterday, as Babcock and Rolls-Royce won contracts to help Hitachi deliver its new build nuclear power project in the UK. Engineering support services company Babcock and power systems provider Rolls-Royce will help Hitachi with manufacturing, engineering and technical services at two sites in the UK. Japanese electronics company Hitachi yesterday confirmed its purchase of Horizon Nuclear Power from German firms RWE and E.ON

to develop much-needed power plants in the UK. The contract involves building two or three 1,300 MW plants in Anglesey and Gloucestershire. The first unit will become operational in the first half of the 2020s. Up to 6,000 jobs will be created at each site, Hitachi estimated, with the possibility of a further 1,000 permanent jobs at each site at the start of each operation. Lawrie Hayes, president of nuclear at Rolls-Royce, said yesterday: “Hitachi is a recognised leader in the global nuclear industry and its acquisition of Horizon is a major step forward for

the UK in securing its long term, low carbon energy needs.” Rolls-Royce shares closed 0.06 per cent up yesterday, while Babcock closed up 1.57 per cent.

Rolls-Royce Holdings PLC 862.70 p

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COMMODITIES trader Glencore, hoping to speed its multi-billion pound takeover of Xstrata over its final hurdles, was last night gearing up to offer to sell part of the group’s zinc assets, meeting a deadline set by European authorities. Industry sources said Glencore’s desire to avoid an indepth investigation in Brussels would prompt it to respond to the call for disposals in zinc metal, where market concentration is most significant. The sources said Glencore, which yesterday night had yet to submit its proposals, would weigh up the benefits of completing the

deal quickly against the desire to retain large European plants like Xstrata’s San Juan de Nieva refinery, the largest zinc production unit in the world. “It’s not a huge part of the business and [zinc metal] is the only area that will see an increase in concentration such that it requires a remedy,” analyst Nik Stanojevic at Brewin Dolphin said. “I don’t think it is a dealbreaker.” Glencore and Xstrata shares are currently trading at levels that imply a ratio of 2.85 – a marginal improvement on the ratio at Monday night’s close and narrowing in on the deal ratio of 3.05, implying the market expects an agreement to be reached.

cityam.com

WEDNESDAY 31 OCTOBER 2012

CITYDASHBOARD CITY MOVES WHO’S SWITCHING JOBS

Cushman & Wakefield The commercial real estate services firm has appointed Richard Davies as a partner and head of retail property and asset management in Europe, Middle East and Africa. He joins from Jones Lang LaSalle, where he was lead director for property and asset management in the UK.

YOUR ONE-STOP SHOP FOR JOB MOVES, BROKER VIEWS AND MARKET REPORTS in association with

Edited by Tom Welsh

Koltas. Additionally, Rob Squire has been appointed senior managing director within CVC’s investor relations team. He joins from Coller Capital.

Parmenion Andrew Doughty has been appointed corporate development director at the investment services provider. He is currently a director of Doughty Finance, a corporate finance business. Doughty will be responsible for identifying investment opportunities for Parmenion.

CVC Capital Partners

Taylor Wessing

The private equity firm has announced the retirement of Michael Smith as chairman, and his replacement by cochairmen Donald Mackenzie, Rolly van Rappard and Steve

The law firm has appointed two new partners to its private equity team. James Goold joins from Jones Day, where he has been a partner in its private equity practice for ten

25

years. Edward Waldron joins from Eversheds, where he was a principal associate in its corporate team.

The investor relations firm has appointed Tom Durie as head of investment companies. He was most recently head of the investment companies team at Fairfax, and has previously helped establish similar teams at Oriel Securities and Winterflood Securities.

Adobe Mark Zablan has been appointed president for Europe, Middle East and Africa at software firm. He joins from Experian, where he was managing director of marketing services in Europe.

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Strong BP results fuel FTSE to a one per cent jump amid weak volumes

B

RITISH blue-chip index posted its biggest gain in two weeks yesterday after BP’s earnings topped forecasts, although volumes were among the lowest this year as US markets stayed shut. BP shares topped the FTSE 100 gainers, jumping 4.2 per cent after the oil giant lifted its dividend and delivered better-thanexpected third-quarter earnings. The index closed up 54.80 points, or one per cent, at 5,849.90, its biggest one-day percentage gain since 16 October and more than reversing Monday’s fall of 0.2 per cent. The heavyweight integrated oil and gas sector added 23 points to the FTSE, with miners adding another eight points. BP alone contributed 13.5 points to the index. BP’s “results were much stronger than we and the market anticipated – almost entirely in refining and marketing where the clean result was $3bn versus our forecast of $1.8bn,” Investec said in a note. Imperial Tobacco shares also gained, up 1.6 per cent as the cigarette group unveiled an eight per cent rise in annual earnings. Some encouraging earnings reports from

the Eurozone, including a 20 per cent jump in Deutsche Bank’s group profit, also helped sentiment. The index rose on low volumes of a mere 55 per cent of the 90-day daily average as Sandy – one of the biggest storms on record – battered the US east coast, keeping Wall Street closed for a second day and suppressing trading activity. Insurers, highly exposed to natural disasters, recovered after sharp falls on Monday on hurricane cost worries. Admiral rose 0.6 per cent and the sector gained 0.9 per cent.

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Broker Profile

SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

NEW YORK

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BOOKER GROUP

Investec upped its target price from 104p to 108p and reiterated “buy”. The broker said recent results showed Booker’s core still business has excellent momentum despite weather challenges.

ARM HOLDINGS

Jefferies has raised its target price from 485p to 693p and kept its “hold” rating after Arm posted better-than-expected quarterly figures last week and a positive fourth quarter outlook.

DIRECT LINE

Credit Suisse has initiated coverage of Direct Line with an “outperform” rating and a 225p target price. With a forecast dividend yield of 6.3 per cent, it said the firm offers solid cash returns.

NYSE expected to re-open for trading today

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HE US stock market was closed for a second straight day yesterday as cash equity trading was cancelled in the wake of Hurricane Sandy. Yesterday’s shutdown was the first time weather had resulted in a two-day market shutdown since the Great Blizzard of 1888. Exchanges expect to reopen today. NYSE Euronext said the New York Stock Exchange would open, although it will switch to fully electronic trading if necessary. Nasdaq OMX’s Nasdaq Stock Market will also be operating today, a source familiar with the matter said. Index futures stopped trading electronically at 9:15am yesterday (Eastern Time) and ended the session largely flat. S&P index futures ended 0.2 per cent higher. Investors expect heightened volatility when markets do reopen as the twoday closure creates pent-up demand. Compounding the issue, Sandy arrived in the middle of the corporate earnings season. While some companies, including Pfizer, delayed releasing their results until the storm passed, others released theirs on schedule, including Ford Motor and TD Ameritrade. With their results out but investors unable to trade on them, those stocks may see particular interest today. Certain sectors are seen as especially tied to the fallout from the storm, which caused major flooding. Construction sectors as well as retailers such as Home Depot may see a boost from the eventual rebuilding effort, though airlines, which were forced to cancel thousands of flights, could see sharp falls. Insurance companies will also be in focus.

WEDNESDAY 31 OCTOBER 2012

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THEFORUM

cityam.com/forum

The government should learn from big companies on local pay policy T

HE Heseltine Review, written by former deputy Prime Minister Michael Heseltine is published today. It recommends how growth might be spurred across the country by public sector bodies interacting more effectively with the private sector. One essential part of this plan – although unfortunately not included by Heseltine – is reform of how public sector workers are paid. Wages for employees across large swathes of the public sector are currently set nationally through collective agreements, meaning they do not vary across the country. The result is that, as a long line of academic studies has shown, large remuneration differentials exist between public and private sector workers. As a rule, compared to their private sector counterparts, public employees with relatively low qualifications, and those in low cost areas of the country, tend to be overpaid. Senior public sector employees, and those in high cost areas, tend to be underpaid. A recent Policy Exchange report out-

Agree? Disagree? Got a sharp comment? The Forum wants you to join the debate.

MATTHEW OAKLEY lined the scale of these differences. In some parts of the country, some public sector workers are paid over 30 per cent more than equivalent employees in the private sector. The gap widens further if more generous pensions, holidays and working hours are taken into account. The report also showed that moving to a localised system of pay setting, allowing public sector pay and pensions to move to match those in the private sector, could save at least £6.3bn a year. A conservative estimate is that this money could create around 288,000 jobs. With the potential for such largescale job creation, this is a proposal that everyone should support. Sadly, however, trade unions are united in

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opposition. One of their main arguments is that many private sector firms also set their compensation packages nationally. An immediate criticism of this argument is that around half of employees in the UK work in firms with less than 50 employees. For these workers, pay negotiation will be local by default. However, with larger firms, the counter argument is more detailed. Where the unions are right is that large firms do not tend to have pay rates that vary rigidly across the country. They do not tend to have regional pay. However, this does not mean that reward is managed in the same way as in the public sector. In fact, it is very different. Most firms will have structures of pay setting that deliver both local flexibility and an ability to reward performance. A common approach is for large firms to set guidelines at the national level that dictate the conditions under which pay can vary locally. As one recent academic study reported, these guidelines require “evidence of the rates

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paid by local competitors, of the local cost of living, and perhaps of local unemployment rates or turnover rates as evidence of market tightness.” Such guidelines result in a system in which pay awards will both vary individually and be decided locally. They give individual stores or offices the flexibility to vary pay in response to

sector workers ‘canPublic earn 30 per cent more than their private sector equivalents

local market conditions. A particular branch of a major firm, struggling to recruit staff, could choose to increase pay to attract employees. The same is not true in the public sector. Recent academic research has shown that rigid pay structures lead to problems recruiting public sector

workers in high-cost areas, as wages cannot rise to meet living costs. These difficulties in recruitment have been linked to increased death rates in hospitals and worse performance of school children in struggling areas. Looking abroad, we also see that other countries have moved away from crude national pay rates. Sweden is a prime example. Reforms since the 1980s have moved public sector pay negotiation to a system much like large private sector firms. Local negotiations take place within frameworks set regionally or nationally. The evidence from the UK private sector and from other countries is clear. The UK’s public sector system of national pay negotiation needs reform. Doing so could boost growth and create jobs in some of the areas of the country hardest hit by the recession and could dramatically improve public services. Reform will not be easy nor without controversy. But the need for change could not be clearer. Matthew Oakley is head of economics and social policy at Policy Exchange.

or by email: [email protected] Top responses will be reprinted in The Forum.

If corporation tax didn’t already exist it would be madness to introduce it

C

ORPORATION tax is back in the news. Starbucks is the latest company to be in the spotlight, having allegedly paid £8m corporation tax in 14 years, despite sales of more than £1bn. This became noteworthy when the Prime Minister waded into the debate, expressing his concern with the levels of tax some companies are paying. But if corporation tax did not exist, it would be madness to introduce it. The tax perpetuates the fantasy that there is a free lunch, and that someone else will pick up the bill for the welfare state and bloated bureaucracy. Mainstream economic theory has many faults, but it is not an empty

AGAINST THE GRAIN PAUL ORMEROD box. The key point is that, ultimately, the tax burden falls on individuals. Companies are simply legal entities: if a company pays more corporation tax, someone, somewhere, pays the bill. There are many nuances to corporate tax law. But in order to illustrate the basic economic principles, we need to set these

A.M.

nuances aside. For example, one way for a company to respond to an increase in corporation tax is to reduce dividends, hitting the income of shareholders – including pension funds. Higher corporation tax might lead to smaller pensions. Another response is for firms to offset the tax by holding down wage increases. This way, the company’s workforce gets less money. Or an overall wage bill might be reduced by simply employing fewer people. So, somewhere, some people pay the price of the tax by not being offered jobs. Alternatively, the company could be tougher with its suppliers by screwing prices down. In this case, the supplying companies and their

workforces pay the cost of the tax. Capital expenditure plans could be cut back when the burden falls on the specific group of firms who supply such equipment. In all these examples, the cost of the increase in corporation tax is eventually borne by individuals. The specific ways in which these actions might be implemented will depend upon the subtleties of the tax system. But there is no escape from the fundamental fact that only people can pay tax. There is a further cost to the massive complications of current tax law. Highly skilled professionals are employed by HM Revenue & Customs, by big companies and by the major accounting firms solely

to do battle over the interpretation of legislation. Simplifying and significantly lowering corporation tax would free up these resources for productive uses, rather than the complete waste which the current system demands. Of course, it would be a bold, not to say foolhardy politician who would make this argument in the current climate. But eventually Western electorates will have to face up to many realities, including the one that heavy corporation taxes do them no good. Paul Ormerod is an economist at Volterra Partners, a director of the thinktank Synthesis and author of Positive Linking: How Networks Can Revolutionise the World (Faber & Faber).

MORNING UPDATE

WEDNESDAY 31 OCTOBER 2012

27

The Forum is open for you to take part. Got a sharp comment on one of today’s columns? Do you have another subject you want to share your opinion on? We want to hear your views. Email [email protected] or comment at cityam.com/forum

RAPIDresponses

TOP TWEETS

EU budget battles Privatised roads [Re: Cameron should wield the UK veto and block the EU’s bloated budget, yesterday] Priti Patel is emerging as the rising star of the Conservative party, and this spirited encouragement for David Cameron to stand firm on ridiculous EU budget demands just adds to her support for tax reform earlier this week. I do wonder, however, whether anyone is listening. Cameron last used his veto more as an act of showmanship than statesmanship. He’s shown himself singularly helpless at trimming the UK budget, let alone the EU’s much smaller one. Although Patel’s intervention may help push Cameron in the right direction, we shouldn’t be surprised if he agrees to some sort of compromise as usual. Malcolm Hancock

[Re: A radical proposal for privatising the UK’s road network, yesterday] Richard Wellings makes an interesting case, but his argument for privatising the roads has two major flaws. Firstly, although he highlights the potential cost benefits, what is to stop an owner charging motorists hundreds of pounds for using their service? Some major routes have few alternatives (or at least convenient or speedy ones). Some form of government regulation will crop up. Secondly, privatisation will not remove the impetus for green policies against motorists. Whoever owns the roads, the argument for imposing charges on drivers to mitigate against their impact on the environment will remain. Rupert Brown

Japanese firms announced the purchase of a UK nuclear power plant and the Branston Pickle brand. A strange shopping list. @bbodien

It’s excellent news that Hitachi is taking over the Horizon nuclear plant. We’re putting together a sustainable energy strategy. @ben4ipswich

Whoever handles Hurricane Sandy best will surely have an advantage in next week’s presidential election. @harlowlucy

It’s encouraging to see the US unite to deal with Sandy, but a shame that next week’s election will divide the country again. @REH311

Does Hurricane Sandy have the potential to change the outcome of the US election?

YES

Ewan Watt

It’s common for political pundits to overanalyse the impact of particular events on the US presidential race and Hurricane Sandy is no exception. But Sandy could potentially result in the closure of polling stations in key swing states, like North Carolina and Virginia, which may have a particular impact on early voting and in-person absentee voting. In this, Republicans could have an advantage in that they tend to cast their ballots on election day itself. The campaign schedule has also been heavily disrupted. President Obama has decamped to the White House, while Mitt Romney is calling for his supporters to donate to the Red Cross and to help run food banks in Ohio. Cynics say that both candidates are campaigning by not campaigning, but optics and tone are crucial – especially at the time of a national urgency. Ewan Watt is a Washington, D.C.-based consultant. 4th Floor, 33 Queen Street, London, EC4R 1BR Tel: 020 3201 8900 Fax: 020 7248 2711 Email: [email protected]

NO

Xenia Dormandy Hurricane Sandy is unlikely to have a major effect on the outcome of the US election. While the extreme weather might reduce turnout in areas along the East Coast – like New York, Boston and Washington DC – it will not do so sufficiently or unevenly enough to turn any of these states from Democrat to Republican. Due to the nature of the US electoral system, Presidents are not elected on the popular vote, but by winning enough states in the electoral college. Therefore, while Sandy may reduce the overall popular vote for President Obama, it is unlikely to reduce the tally he will gain in the all-important college. Beyond the East Coast, the impact will be minimal. It looks as though it will once again be Ohio (which is likely to be unaffected by Sandy) that, as in previous years, will be the decider for who is the next President of the United States. Xenia Dormandy is a senior fellow at Chatham House.

Europe’s new ban on short selling is a failed old policy

T

OMORROW, new regulations on short selling come into force across the European Union. Although designed to stabilise prices, they will have harmful effects on market quality, while producing few of the benefits claimed by their supporters. We’ve been here before. During the early stages of the financial crisis, politicians pulled every plug they could to stabilise the banking system. Several European countries panicked and imposed individual bans on the short selling of shares in selected financial institutions, and on credit default swaps for Eurozone bonds. The US Securities and Exchange Commission also banned short selling on the stocks of big financial institutions after Lehman Brothers collapsed in 2008. Aggressive short selling was thought to have pushed down Lehman’s share price prior to its bankruptcy. Regulators perceived, without factual basis, that short selling was a threat to the value of banking assets and government bonds, just when the markets needed certainty. Typically they banned – for fixed periods of time – naked shorting of specific stocks. But this is not a tried and tested method for stabilising share and bond prices. Far from it. A study by Alessandro Beber and Marco Padano, first released in 2009, indicated that in most countries in which short selling was prohibited between 2007 and 2009, the ban was detrimental for liquidity, especially for stocks with small capitalisation and no listed options. It slowed down price discovery, especially in bear markets, and failed to support prices. At best, according to Beber and Padono’s research, short-

CHRISTIAN VOIGT selling bans left stock prices unaffected. At worst, restrictions may have contributed to further declines. Thus, previous attempts at the policy delivered nothing they intended to. This makes recent pressure from European regulators and politicians to return to the policy so confusing. This latest Europe-wide ban on naked short selling of stocks and credit default swaps bears all the hallmarks of previous failed attempts. The European ban includes provisions that firms must disclose short positions to regulators if they held more than 0.2 per cent of the issuers’ capital, and must do so publicly if they hold 0.5 per cent or more. But Oliver Wyman published a study in 2011 on the effect of disclosure regimes. It indicated that liquidity and trading volumes were considerably suppressed in stocks with public disclosure regimes, compared to stocks without. While some national regulators, like Spain and Italy in July, have frequently introduced these bans overnight, the Europe-wide ban has at least been given due process. But without evidence to support the aims of the ban, and with little support from buy-side or sell-side firms that see the lower liquidity and wider spreads as a hindrance to business, the question is who is this ban intended to protect? Dr Christian Voigt is business solutions architect at Fidessa.

Distribution helpline Editorial Editor Allister Heath | Deputy Editor David Hellier | Managing Editor Marc Sidwell News Editor Elizabeth Fournier | Business Features Editor Tom Welsh | Lifestyle Editor Steve Dinneen | Sports Editor Frank Dalleres If you have any comments about the distribution of City A.M. Creative Director Gavin Billenness please ring 0203 201 8955, or email Commercial Sales Director Jeremy Slattery | Commercial Director Harry Owen | Head of Distribution Nick Owen [email protected]

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cityam.com

WEDNESDAY 31 OCTOBER 2012

WEALTHMANAGEMENTMARKET MOVERS

29

Bond opportunities are still emerging

Local currency debt gives developing market exposure, writes Craig Drake

I

F YOU are on the hunt for strong and diversified returns from emerging markets, local currency denominated debt can give you solid exposure to attractive yields. Until the 1990s, due to poor liquidity and low transparency, emerging market debt was issued only in hard currencies, predominantly the US dollar. But many emerging markets now run disciplined fiscal and monetary regimes, and have cast off policies that previously gave investors nightmares over the potential for currency devaluation, bond defaults and rampant inflation. At the same time, many emerging markets have liberalised their currencies, removing pegs to the US dollar, and allowing them to float freely. As recently as 1996, 70 per cent of all emerging market economies either pegged to the dollar or ran a US dollar economy. Now, with the notable exception of China, the majority of emerging markets’ currencies are either free floating or subject to minimal controls. These reforms mean that the floating currencies are less exposed to global shocks in times of volatility. With the move away from the fixed currency regimes of the past, the correlation between emerging market debt and that of developed markets

has been kept low, giving it the potential to form the core of a diversification strategy – helping to manage risk and achieve excess relative returns in changing market conditions. And this debt issuance has seen quickly accelerating demand. According to Dealogic, domestic emerging market corporate bond volume has led the surge with $276.2bn (£171.8bn) in 2012, up 38 per cent compared to the $200.4bn raised in the same 2011 period – the highest year-on-year increase since 2009 (129 per cent). Total emerging market debt capital market volume also stands at a record $751.3bn so far this year, up 31 per cent from the $572.6bn raised in the year-to-date 2011. Corporate issuers account for 54 per cent of total emerging market volume, up from the 53 per cent share they held in the same period last year, and marking the highest proportion on record.

DOLLAR DIFFERENCE

Local currency denominated debt is a very different beast to its emerging market dollar denominated equivalent. Though both are issued by the same country, they are a different asset class, with differing underlying risk considerations. Where the debt is dollar denominated, its yield spread is measured against US Treasuries

and so is at the mercy of domestic US policy. However, local currency denominated debt is measured on currency and duration risk – driven by domestic monetary policy. And it is this currency risk that makes local currency emerging market debt a draw for those who want to diversify away from dollar and euro debt.

CONTRASTING COUNTRIES

It is a mistake to lump emerging market economies into the same class. Even the Bric grouping of Brazil, Russia, India and China, coined by Goldman Sachs’s Jim O’Neill, contains greatly varying economies, and that is before you include smaller markets like Indonesia into the mix. Before taking a position on an emerging market issuance, whether at the corporate or sovereign level, you should consider external macro factors; the internal fundamental conditions such as political and economic risk; as well as market conditions dictating liquidity and leverage available. With more than 60 per cent of emerging market debt now rated at investment grade (BBB- or above), emerging debt has gone a long way from its junk bond past. As the market grows, so will the opportunities to profit from emerging market development.

PowerShares Emerging Markets Sovereign Debt 31.5 $ 31.0 30.5 30.0 29.5 29.0 28.5 28.0 27.5 27.0 26.5

Nov 2011

Jan 2012 Mar 2012 May 2012 Jul 2012 Sep 2012

Market Vectors Emerging Markets Local Currency Bond ETF 27.00 $ 26.00 25.00 24.00 23.00

Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct

Exchange traded funds can give broad exposure to emerging market debt

Unemployment targeting by the Fed could see equities move upwards

A

S WE approach the release of the final US employment report before the presidential election, we’ll see plenty of analysis about both the recent decline in country’s unemployment rate and the health of its overall economy. Yet, if you look at more frequently-released data, like weekly unemployment insurance claims, the jobless rate has fallen by 45 per cent from a 2009 peak. Looking back at the last two US economic downturns, the peak-to-trough decline in jobless claims was 45 per cent and 46 per cent. Notably, the

MARKET COMMENT ASHRAF LAIDI April 2000 bottom in claims coincided with the April 2000 peak in US equity indices, while the January 2006 bottom in claims occurred 21 months ahead of the October 2007 peak in equity indices. But what will happen this time?

Jobless claims are currently at 369,000, down 45 per cent from their 2009 high, while both the Dow 30 and S&P500 are 5 per cent below their four-year highs reached last month. It is one thing to assume that jobless claims have reached a trough after a 45 per cent decline for the third time in 20 years. But what will be the time lag between the bottom in claims and the next peak in equities? The answer lies in the Federal Reserve’s new policy focus of implicitly targeting a lower unemployment rate, even at the expense of a slight rebound in inflation. The Fed will

maintain quantitative easing until US Jobless Claims the unemployment rate falls from its current 7.8 per cent to near 7.0 per 700 (000s) Highest point cent. Such aggressive policy easing is likely to prove friendly for labour and Lowest point equity markets. As long as weekly job- 600 less claims do not regain the 400,000 level, and the unemployment rate 500 maintains its downward path, markets will likely find reason to revisit their 2012 highs and beyond to reach 400 2007 levels. Keep informed with the expert opinion 300 of City Index’s chief global strategist, Ashraf Laidi: 2000 www.cityindex.co.uk/market-analysis

2012

cityam.com

WEDNESDAY 31 OCTOBER 2012

30

LIFE&STYLE MOTORING

BY RYAN BORROFF

A superlative-defying Range Rover

The new Range Rover could just be the most complete, versatile car we have tested – it’s that good.

I

’VE only been driving Land Rover’s new Range Rover for five minutes and already I have had to swerve to avoid a man running down the motorway. Not across the motorway you understand but down it, as if he is pretending to be a car. Driving the new Range Rover in Morocco is challenging. Pedestrians (and here you can include sheep and goats) seem to consider themselves equal to road transport. Add scooters, bicycles and donkeys with carts to the mix and the roads are unpredictable and chaotic. Not that any of this feels stressful from where I’m sitting. The imperious driving position of the latest, fourthgeneration Range Rover affords an exceptional view and I can barely hear any exterior noise. And take a look at it. When did an SUV ever look so good? The new Range Rover still has its familiar, utilitarian shape but now comes with a more elegant tapering, floating roof and beautiful LED headlamps. Inside it is calm, comfortable and luxurious. Trimmed wood veneer, chrome and leather ensure all of the interior surfaces are clean and uncluttered. There are less than half the switches in here than there used to be. The build quality really is exceptional and the interior, quite beautiful. First stop is the beach and we’re off driving along the Moroccan Atlantic coast before turning towards the sand dunes and away from the sea. And these sand dunes – by nature of the fact that this is where the Sahara Desert meets the sea – are big. Yet we power up and down them with no problems, even in very deep sand. The trick? To travel across them very quickly. Luckily, the side effect of doing so is uncontrollable laughter. What fun. As a display of the new Range Rover’s abilities it’s impressive, because all of this off-road hard work has occurred while I’ve remained cosseted in sumptuous interior comfort.

Skating down sanddunes in the new Range Rover is the most fun you can have in a car

We drive 450km in total and at the end of a very long day, I am in no hurry to get out of the car. Buyers can choose between two diesel models – a 3.0-litre 255bhp TDV6 or a 4.4-litre 313bhp SDV8 engine – or the flagship 5.0-litre supercharged 503bhp V8 petrol engine. All have eight-speed automatic transmission. I drove all three models. The cheaper V6 will be a big seller in the UK and is more than enough for most drivers. But the powerful flagship V8 is also fiendishly fast and absurdly agile, if expensive. So how does a car so big get to be so agile? Well the latest Range Rover has lost as much as 420kg compared to the outgoing model. It’s the first SUV with an all-aluminium body struc-

ture so it is lighter, cleaner and drinks less fuel. It has an adaptive dynamics system, which monitors the vehicle to minimise body roll. In practice this means it stays flat in the corners. And the 5.0-litre V8 version is blisteringly quick, yet limousinelike in terms of comfort. It’s unnecessary of course, even the slowest V6 diesel feels quick enough, but that’s not the point – this one is the most expensive and some people will want it for that reason alone. And it can go anywhere. Later we crawl up through the rivers and trails of the Atlas Mountains. At times, the drop is terrifyingly steep and we’re so high we’d have time to phone home to say goodbye should we plunge off the

edge. Yet the Range Rover dependably climbs through these goat tracks with ease. We don’t even need to tell it what to do: its latest off-road terrain response technology analyses the driving conditions and switches automatically between different vehicle settings. Amazing. So what have I discovered at the end of a long couple of days? Well, neither its road-going credentials nor its offroad ability feels compromised by the other. The new Range Rover doesn’t feel schizophrenic, just astonishingly capable. In fact, it’s the most complete and versatile car I’ve ever driven. What’s more, I bet you can get at least four fully-grown goats in the boot.

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cityam.com

WEDNESDAY 31 OCTOBER 2012

LIFE&STYLE BONFIRE NIGHT

31

Make sure you have a blast this Bonfire night Our top picks for the best of the capital’s fireworks

FRIDAY

SATURDAY

SUNDAY

Brockwell Park

Enfield Town Park

Richmond Athletic Ground Ealing Cricket Club

A fireworks showcase organised by Lambeth Council. Doors open 4pm and the display will begin at 8pm. Free to attend.

Streatham Common

A second show by Lambeth Council, running parallel to the Brockwell Park display (see above).

Bishops Park

Hammersmith and Fulham Council’s event opens at 6pm, with fireworks on at 7.15pm. Adults £5 entry.

This long-running display promises to provide a family atmosphere. Gates 6pm, show 7.30pm. Adults £6.

Battersea Park

One of the glitziest shows of the Bonfire weekend, Battersea Park will host a London-themed display with specially designed fireworks. Gates 6pm, display 8pm. Adults £8.

Blackheath Common

A gigantic free display that kicks off at 8pm.

MONDAY

West-enders will flock to this musically themed display, complete with a bit of dancing. Doors 4pm, fireworks 7pm. Adults £10.

Dubbed a “Jubilee firework megashow”, this Brit-pop-inspired event is sure to go off with a bang. Doors 6pm, display 7.30pm. Adults £6.

Part of a trio of events hosted by Tower Hamlets Council. Fireworks start 7.30pm. Admission free.

Another musical number, kicking off at 6pm, with the main event at 7pm. And best of all... it’s free.

Millwall Park Barking Park

All the thrills and spills of the funfair at this proper East End bash. Doors at 4pm, fireworks at 6.15pm. Adults £5.

Southwark Park

Waltham Forest Town Hall

This free display will offer guests food and drinks from 5.30pm, with the spectacular finale following later.

ALL FIREWORKED OUT?

HERE ARE SOME OTHER ACTIVITIES TO SEE YOU THROUGH

Seize the Day at the Wellcome Trust

Friday 2 November The Wellcome trust is hosting a macabre night looking at our experiences and relationships with death. Activities will include coffin decorating and a near-death experience. There will also be talks on throughout the four hour event. Doors 7pm. The event is free but some talks are ticketed.

Regent Street Motor Show

Saturday 3 November A free show celebrating 125 years of motoring, all laid out right on Regent Street. Over 300 cars will be on display, from the earliest 19th century vehicles to the cars of the future. For some respite from all the banging and flashing, this could be a life-saver.

The Disappearing Dining Club

Saturday 3 November For those who prefer a more underground approach to entertainment, try The Disappearing Dining Club’s East London Poacher event, held in a huge converted railway arch. Tickets to dinner and the following dance are £55, dancing only is £10. For more details go to www.disappearingdiningclub.co.uk

Oxford Street Christmas lights

Monday 5 November Crowds will congregate on Oxford Street to see the lighting of this year’s festive decorations. The theme of the event is, rather bizarrely, Marmite (hopefully more than half of the population will like the event, though). Free but ticketed – apply early.

TV & GAMES

SATELLITE& &CABLE CABLE SATELLITE

TERRESTRIAL TERRESTRIAL

32

cityam.com

WEDNESDAY 31 OCTOBER 2012

BBC1 BBC1

BBC2 BBC2

6pm BBC News 6.30pm BBC London News 7pm The One Show: Hosted by Matt Baker and Alex Jones. 7.59pm BBC News 8pm Watchdog 9pm CHOICE Brazil with Michael Palin 10pm BBC News 10.25pm Regional News 10.35pm The National Lottery Wednesday Night Draws 10.45pm Michael McIntyre’s Comedy Roadshow 11.15pm The League Cup Show; National Lottery Update 12.10am FILM No Way Out. 1987. 2am Weatherview 2.05am Sign Zone: See Hear 2.35am Sign Zone: Andrew Marr’s History of the World 3.35am Sign Zone: Cash Britain 4.05am Sign Zone: How We Won the War 4.35am-6am BBC News

6pm Eggheads 6.30pm Strictly Come Dancing – It Takes Two 7pm Great British Food Revival 8pm Autumnwatch 2012: 9pm CHOICE How Safe Are Britain’s Roads? 10pm The Culture Show 10.30pm Newsnight; Weather 11.20pm The Choir: Sing While You Work 12.20am FILM Despicable Dick: Storyville: Premiere. Documentary following a recovering alcoholic. 2011.

SKY SPORTS 1

10.30pm Poker 12.30am Cage Fighter 1am F3 Euroseries 2am-4am Poker

7pm Live Capital One Cup: Chelsea v Manchester United (Kick-off 7.45pm). 10.15pm Trans World Sport 11.15pm A League of Their Own 12.15am Capital One Cup 1.45am Sky Sports Classics 2am Golf 2.30am Inside the PGA Tour 3am-6am Live World Golf Championship

1.40am BBC News 3.55am-6am BBC Learning Zone

7pm Live Masters Tennis 9pm FIBA Basketball 9.30pm Great Run Series 10pm European Tour Weekly 10.30pm Golf 11pm F3 Euroseries 12am World Eightball Pool Championships 1am Champions Tour Golf 2am World Eightball Pool Championships 3am-4am DTM Motor Racing

ESPN

7pm Total Rugby 7.30pm Hong Kong Sixes Cricket 8.30pm Inside the PGA Tour 9pm Champions Tour Golf 10pm Cage Fighter

6pm Home and Away 6.30pm 5 News at 6.30 7pm Eddie Stobart: Trucks and Trailers; 5 News Update 8pm The Removal Men; 5 News at 9 9pm CHOICE Dallas 10pm Law & Order: Special Victims Unit 10.55pm Law & Order: Special Victims Unit

10pm Shameless 11.05pm Random Acts 11.10pm Frankenstein: A Modern Myth 12.10am Music on 4: Mercury Prize: 2012 Albums of the Year Live 1am Music on 4: Spotlight: Ones to Watch 1.15am Music on 4: 4Play: Delilah 1.25am Music on 4: The Crush 2.20am 90210 3am FILM Blowing Wild. 1953. 4.30am Deal or No Deal 5.25am-6.10am Countdown

3am FILM The Prince and the Pauper: Period drama, starring Oliver Reed. 1977. 5.05am-5.30am ITV Nightscreen

7pm Top Gear 8pm Gavin & Stacey 9pm Unsafe Sex in the City 10pm Unzipped 10.45pm Family Guy 11.30pm American Dad! 12.15am Unsafe Sex in the City 1.15am Unzipped 2am Gavin & Stacey 3am-4am Don’t Tell the Bride

E4

DISCOVERY

BBC THREE

SKY1

8pm The Glee Project 9pm Last Resort 10pm Fringe 11pm An Idiot Abroad 2 12am Trollied 12.30am Road Wars 3.10am Dog the Bounty Hunter 4.10am Crash Test Dummies 5.05am-6am Don’t Forget the Lyrics

KAKURO

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.



 

 

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 digits 1-9 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.



 

    

 

11

35

45

13 12

23

19

4

12

29

6 16

14

9

7

5

22

23



  



6

LAST ISSUE’S SOLUTIONS

QUICK CROSSWORD C H A R C O A L

O B R P O W Y N I H E I S T A C C H

W E B R G E E S W I C U A D S O M P A E S S N T

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SUDOKU WORDWHEEL The nine-letter word was IMPOUNDED

        

        



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Using only the letters in the Wordwheel, you have ten minutes to find 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.

        

        

        

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CHANNEL5, 9PM When Bobby is rushed to hospital, John Ross and Christopher bury the hatchet and decide to go into business together.



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QUICK CROSSWORD

Copyright Puzzle Press Ltd, www.puzzlepress.co.uk

SUDOKU

Justin Rowlatt and Anita Rani travel around the nation to try to find out why the number of people injured in traffic incidents is rising.

7pm Dr Oz 8pm Secretly Pregnant 9pm Hospital Sydney 10pm Trauma: Life in the ER 11pm The Real Sleeping Beauty 12am Hospital Sydney 1am Trauma: Life in the ER 2am The Real Sleeping Beauty 3am Secretly Pregnant 4am A Baby Story 5am-6am Birth Days

COFFEE BREAK 24

HOW SAFE ARE BRITAIN’S ROADS? BBC2, 9PM

DISCOVERY HOME & HEALTH

7pm Bear Grylls: Born Survivor 8pm American Guns 9pm Fast ‘n’ Loud 10pm The Devils Ride

7pm Hollyoaks 7.30pm How I Met Your Mother 8pm The Big Bang Theory 8.30pm 2 Broke Girls

BBC1, 9PM The Python star travels from the northern border to Brasilia, along the way searching for Henry Ford’s failed rubber plantation.

11pm Deadliest Catch 12am Fast ‘n’ Loud 1am The Devils Ride 2am American Guns 3am Fast ‘n’ Loud 3.50am The Devils Ride 4.40am Discovery Atlas: India Revealed 5.30am-6am Meerkat Manor

HISTORY

7pm Storage Wars 7.30pm Pawn Stars 8pm Storage Wars 8.30pm Storage Wars: Texas 9pm Swamp People: The season comes to a close. 10pm Ax Men 11pm Storage Wars 11.30pm Pawn Stars 12am Swamp People 1am Ax Men 2am American Pickers 3am Ax Men 4am Swamp People 5am Pawn Stars 5.30am-6am American Restoration

BRAZIL WITH MICHAEL PALIN

11.50pm NCIS 12.45am Forensic Files 1.10am SuperCasino: Live interactive gaming. 3.55am Great Artists 4.20am House Doctor 4.45am Michaela’s Wild Challenge 5.15am Wildlife SOS 5.35am-6am Wildlife SOS

9pm The Big Bang Theory 9.30pm The Work Experience 10pm The Inbetweeners 11.05pm Shameless 12.10am The Big Bang Theory 1.10am How I Met Your Mother 1.35am Scrubs 2am Misfits 2.55am The IT Crowd 3.20am 90210 4am One Tree Hill 4.45am-6am Being Erica

7pm Criminal Minds 8pm Elementary 9pm Chicago Fire 10pm Supernatural 12am Caribbean Cops 1am Bones 1.50am Criminal Minds 2.40am Supernatural 3.30am Medium 4.20am Bones 5.10am-6am Passport Patrol

7pm ESPN Kicks: MLS 7.30pm Live Serie A 9.45pm ESPN Kicks: Brasileirao 10pm ESPN FC Press Pass 10.30pm World Series by Renault 12am UFC: The Ultimate Fighter 1am Live Major League Soccer 3am ESPN Films: The Real Rocky 4am ESPN Films: 26 Years: The Dewey Bozella Story

SKY SPORTS 3

6pm The Simpsons 6.30pm Hollyoaks 7pm Channel 4 News 7.55pm 4thought.tv 8pm Come Dine with Me Halloween Special 9pm Grand Designs

6pm London Tonight 6.30pm ITV News 7pm Emmerdale 7.30pm Coronation Street 8pm All Star Mr & Mrs 9pm DCI Banks 10pm ITV News at Ten 10.30pm London News 10.35pm Exposure 11.35pm Perspectives: David Walliams: The Genius of Dahl 12.30am Jackpot247; ITV News Headlines

SKY LIVING

6pm Live Football 8pm Campus 8.30pm Wednesday Selection 8.35pm Equestrian 9.35pm Riders Club 9.40pm PGA Tour Golf 10.35pm Golf Club 10.40pm Alexia’s Selection 10.45pm Yacht Club 10.50pm Wednesday Selection 11.05pm-12.35am MotoGP

TV PICK

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5.30am-6am FA Cup Preview Show

BRITISH EUROSPORT

SKY SPORTS 2

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9 Chemical used to kill rodents or insects (9)

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11 Playing card (3)

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16 Consciousness (9) 18 Successor (4) 19 Reverberation (4) 20 Senior member of a group (5) 21 Remove (4)

15 Above average in size (5) 17 Fired a bullet at (4)

cityam.com

WEDNESDAY 31 OCTOBER 2012

SPORT

33

A new star could mitigate India defeat

England bowler Steven Finn only managed four overs before limping off with a thigh injury that was due to be assessed last night

CRICKET COMMENT ANDY LLOYD

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Finn injury scare upstages Pietersen England return BY FRANK DALLERES ENGLAND seamer Tim Bresnan played down the significance of Kevin Pietersen’s comeback after the estranged batsman’s reintegration was overshadowed by an injury scare for bowler Steven Finn. Pietersen appeared in England colours yesterday for the first time since his infamous text messaging dispute as the tourists saw India A reach 369-9 on day one of their first warm-up match in Mumbai. Finn stole his thunder, albeit in unwelcome fashion, by limping off with a thigh problem having bowled just four overs. He was due

to have a scan last night, with an update on his condition expected today. Pietersen’s spectacular falling-out with England chiefs and exile from the dressing room ensured his eventual return would be eagerly scrutinised, but Bresnan called it “business as usual”. “I’m sure most of the lads in the dressing room were expecting it to be like that,” said Bresnan. “It’s nothing different to having [any] player come back into the squad who’s been missing for a while. “Everyone in the know has sat down and spoken about it. There’s

Scottish rugby chiefs invite bids for Murrayfield naming rights BY FRANK DALLERES MURRAYFIELD could become the latest stadium to be rebranded by a corporate sponsor after Scottish rugby chiefs admitted the naming rights were up for sale. Scottish Rugby Union chief executive Mark Dodson said they would be “crazy” if they did not seek a multi-million pound deal similar to Arsenal’s with airline Emirates. “The single biggest piece of our inventory is our national stadium,” he said. “We would like to see if we

can monetise that.” Selling stadium naming rights can be unpopular with fans, with Newcastle United fans furious at the rebranding of St James’ Park as the Sports Direct Arena. The English Football Association has ruled out renaming Wembley Stadium, despite seeking a sponsor, but Ireland called their home for football and rugby union the Aviva Stadium with little opposition. Existing stadia have proven harder to rebrand than selling naming rights to newly built grounds.

nothing exceptionally different. He’s the same old Kev – energy in the field that he showed today, all day. It’s been good.” Pietersen is down to bat fourth, with Test newcomer Nick Compton set to open with captain Alastair Cook, when England finally get their first batting practice of the tour today. First, however, they will have to finish off a stubborn India A innings in which Manoj Tiawary top scored with 93, while Abhinav Mukund, with 73, and Yuvraj Singh, who hit 59, also impressed. Mukund drove on a strong India A

side in the early stages, smashing a dozen fours in a swift 50, and, having collapsed to 190-6, Tiawary and Irfan Pathan’s century stand for the seventh wicket prolonged matters. Bresnan proved the most effective of England’s bowlers, taking 3-59 including the early scalps of Murali Vijay and Ajinkya Rahane, who edged for Pietersen to catch him at gully. Graeme Swann took 3-90, but fellow spinner Samit Patel had a more testing day, conceding 95 runs for his solitary wicket from his 20 overs, as well as dropping Yuvraj’s first ball.

IN BRIEF O’Driscoll and Best out for Ireland

Richards set for 16 weeks out

n RUGBY UNION: Ireland captain Brian

n FOOTBALL: Manchester City’s Micah

O’Driscoll and hooker Rory Best have been ruled out of their autumn internationals due to respective ankle and neck ligament injuries.

Klitschko to make Haye wait n BOXING: Britain’s David Haye will

have to wait to learn if a fight with WBC heavyweight champion Vitali Klitschko can be organised, with the latter considering retirement. “Vitali will not make a decision before December or the beginning of next year,” said the Ukrainian’s manager, Bernd Boente.

Richards is likely to be out of action for 16 weeks after surgery on a knee injury sustained on Saturday against Swansea, meaning the defender could miss at least 20 matches.

Wiggins wins Velo d’Or n CYCLING: Tour de France champion

Bradley Wiggins has won the Velo d’Or award for 2012’s best cyclist after a superbly successful year in which he also won the Paris-Nice, Tour de Romandie, Criterium du Dauphine and London Olympic time trial titles.

OURS don’t come much harder than India and it’s difficult to see England winning the looming four-Test series. The vibes around the squad are not good, having endured plenty of controversy lately, and it’s all rather unsettling. It certainly won’t help them overcome a good side on tricky terrain. But it wouldn’t be a disaster if England lost the series in close, competitive circumstances if they were to achieve something they haven’t done for quite some time and transform one of the less experienced players into a bona fide Test mainstay. Of course it’s down to the players themselves to step up and stake a claim, and I’m particularly thinking of people such as Nick Compton, Eoin Morgan, Jonny Bairstow and – crossing my fingers that the injury he suffered yesterday isn’t too serious – Steven Finn. The top-order batsmen will be under particular scrutiny, after a difficult last series at home to South Africa, in which too often a few wickets fell before England had reached 100. I can’t remember the last century opening partnership and it would be great to see them get to 150-1 and then dominate matches.

ARDUOUS

With that in mind it’s a huge opportunity for newcomer Compton, who looks certain to open with captain Alastair Cook. He is totally untried at Test level but has the two ingredients that every cricketer needs to be successful: sound technique and confidence. He’ll need that temperament to get through some inevitable tough times on this tour, but he’s got what it takes to break through. Compton could hardly ask for a better partner than Cook, too. The skipper is a very balanced character, phlegmatic and knows what is required, which can only help the Somerset player. I don’t think it does England any harm to have a righthanded opener alongside left-hander Cook for a change, forcing bowlers to mix it up. He’s no stranger to the Test scene but I’m also hoping for a strong showing from Graeme Swann. Perhaps it is because batsmen have sussed out his preferred pace and lines, but he has gone off the boil in the last 12 months. England are going to need bowlers to make match-winning performances, and you have to a think a spinner would be best equipped on Indian surfaces. It all amounts to an arduous first series as captain for Cook, but even if England get off to a bad start I don’t expect people to get on his back too much. We all know how difficult this trip is and England should have enough bowling might to win in New Zealand early next year; if they don’t then he can expect some serious pressure. Most importantly, though, anyone in the game knows he is the right man for the job at this time, particularly the players, who I’m certain will support him. Andy Lloyd is a former England Test cricketer, and former captain and chairman of Warwickshire.

cityam.com

SPORT

WEDNESDAY 31 OCTOBER 2012

35

Let us all hear what refs do, it’ll keep players in line too SPORT COMMENT

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FRANK DALLERES

UNDAY’S tinderbox collision between Chelsea, Manchester United and referee Mark Clattenburg has seemingly left us with two possible conclusions, both unedifying: either one of England’s top officials is racist, or one of this country’s most powerful clubs has irresponsibly smeared him in the aftermath of a wounding defeat.

It is difficult to see how football can emerge well from yet another unsavoury episode, although some good might come if lessons were learned from a dispute that looks likely to amount to the word of Chelsea players versus that of Clattenburg and his assistants, with whom he was in constant radio contact during the match. The Football Association, still bruised from a year of criticism over its handling of racism cases, has the unenviable task of picking through the debris and passing judgement. They will do this on the basis of witness statements and television footage, but, crucially and staggeringly, a total absence of audio

evidence. While referees wear microphones throughout games in order to discuss decisions with their assistants, and those microphones remain open for the game’s entirety, the feed is neither recorded nor broadcast. This incident perfectly illustrates what a colossal failing of the system that is and why the time is right for change.

TRANSPARENT

I would advocate broadcasting the audio to anyone who wanted to listen, via headsets or the red button on their television remote controls, making the entire process transparent. At a stroke it would eliminate any possibility of players

making false claims against referees, and indeed vice versa. Football is notoriously slow to acknowledge technological advances, as evidenced by the eternal wait for goal-line technology. But there is no need for lengthy pilot schemes and testing of this idea; the hardware already exists and has been used with success in international and European rugby for several years. It wouldn’t just solve disputes of this nature, which are mercifully rare, but ought to improve players’ on-field behaviour. If footballers knew every word they yelled at referees was being beamed into peoples’ living rooms, and therefore

Hat-trick hero Walcott leads rally at Reading CAPITAL ONE CUP READING....................................5 ARSENAL....................................7 BY DECLAN WARRINGTON ARSENAL last night secured a place in the fifth round of the Capital One Cup after a near-farcical affair in which they recovered from conceding the first four goals of an entirely unpredictable 120 minutes away to Reading. Forward Theo Walcott scored the crucial equalising goal deep into second-half stoppage time to ensure the additional 30 minutes in which a further four goals arrived where he completed his impressive hat-trick. The England international has largely been a peripheral figure this season as the uncertainty surrounding his intention to extend his imminently expiring contract continues but if the reality is that he wishes for an extended run as a central striker then last night’s exploits would have done his chances no harm. Laurent Koscielny’s 18th-minute own goal had followed Jason Roberts’ explosive 12th-minute opener and further goals from Mikele Leigertwood and Noel Hunt were to arrive before Walcott scored

Arsenal’s ultimately crucial first on the stroke of half-time. It was as woeful a 45-minute performance as even an understrength Arsenal team could possibly have produced so to eventually secure an equalising goal at any stage in the game, let alone with what would otherwise have been the last kick of the match, was highly impressive. Throughout the second-half of normal time Arsenal played with a small but unlikely element of belief, as though their embarrassing three-goal deficit had given them the feeling that they had nothing to lose, and as the result of a far more convincing attacking performance, Olivier Giroud scored a 64th-minute header that made the highly unlikely suddenly appear somewhat possible. With the match on the verge of entering injury time, Koscielny this time scored at the right end with a header to create further urgency and belief which Walcott capitalised upon in the sixth minute of what was supposed to be four minutes of added time to curl in the equaliser. When Marouane Chamakh scored in the 103rd minute to put the away side in front for the first time, the match finally appeared over, but Pavel Pogrebnyak equalised with four minutes remaining to spark further goals from Walcott and then Chamakh at the match’s conclusion.

damaging their lucrative sponsorship and image rights, they might just act with a touch more grace. Those involved in rugby say opening up the audio feed has improved player behaviour. The potential benefits ought to outweigh the disadvantages for officials too. A curb on players’ angry remonstrations would make their jobs easier, at a time when the FA’s Respect campaign appears to have had little impact, while giving fans an insight into their treatment would earn them more sympathy. It’s a small change, but it promises to go an awful long way. Frank Dalleres is Sports Editor of City A.M. @frankdalleres

Brave Bradford stun Premier League Wigan BY SPORTS DESK STAFF

Arsenal forward Theo Walcott last night scored three of their goals away to Reading

LEAGUE TWO Bradford City last night led the Capital One Cup’s surprise results after securing a 4-2 penalty shoot-out victory away to Premier League Wigan when the match had remained goalless after 120 minutes. Shaun Maloney fired his penalty over the bar, and Matt Duke saved from Jordi Gomez, after the home side – for whom manager Roberto Martinez had made nine changes from the weekend’s 2-1 victory over West Ham – missed a number of chances against a resolute defence. Nathan Doyle, Gary Jones, Stephen Darby and Alan Connell scored Bradford’s four penalties, while Ben Watson and David Jones had scored Wigan’s successful two. Struggling Southampton were another Premier League side to suffer a somewhat surprising elimination in a 3-0 defeat to Leeds after Michael Tonge’s 35th-minute opener was followed by late goals from El-Hadji Diouf, in the 88th minute, and a last-minute penalty from Luciano Becchio. Leeds were not the only Championship side to secure such a morale-boosting victory, as Middlesbrough forward Scott McDonald scored a 39th-minute goal to secure his side a deserved 1-0 victory in the Wear-Tees derby away to Sunderland. And Aston Villa recovered from conceding two second-half goals to Swindon Town’s Miles Storey – when they had led 2-0 – to win 3-2 after a brace from Christian Benteke and another from Gabriel Agbonlahor.

Serbian police Redknapp denies interest in Defoe details Norwich danger charge U21s Blackburn managerial vacancy after recent win over rivals BY DECLAN WARRINGTON THE Serbian police have charged two England U21 players for their roles in the aggressive confrontations witnessed at the end of this month’s European Championship qualifier in Krusevac. A total of 12 people were yesterday believed to have been charged, with two of England’s backroom staff among them. Uefa’s control and disciplinary body is to deal with its own case on November 22.

BY DECLAN WARRINGTON FORMER Tottenham manager Harry Redknapp has denied having an interest in the vacant Blackburn Rovers job after heavy speculation arose linking him with the role. The former West Ham and Portsmouth manager has also been linked with Queens Park Rangers where, ironically, popular former Blackburn coach Mark Hughes is under pressure, and it continues to appear that a Premier League post

is likely to be his next destination which makes Henning Berg, Ian Holloway and Glenn Hoddle more likely to succeed the departed Steve Kean at Rovers. “I haven’t met anyone from Blackburn and have no plans to,” said Redknapp. “As far as I am concerned there is nothing in it. It’s as simple as that.” Blackburn’s previous moves to appoint former midfielders Tim Sherwood and Billy McKinlay have also both failed.

BY DECLAN WARRINGTON TOTTENHAM striker Jermain Defoe has warned his team-mates that Norwich will tonight pose a significant threat because of the confidence they are building that began with their win over Arsenal. Spurs are to travel to Carrow Road, where club favourite and former assistant Chris Hughton is manager, in the fourth round of the Capital One Cup and Defoe, who worked under Hughton before the latter’s

2007 departure from the club, is expecting a considerable challenge after Norwich followed a 1-0 victory over Arsenal with a 1-1 draw away to Aston Villa. “It’s another hard game, they had a fantastic result against Arsenal,” said Defoe. “I’m sure Chrissie [Hughton] was delighted with that performance and to beat Arsenal, not many teams do that. “I can imagine they are buzzing after a win like that. It’s another away game, another tough game.”

SPORT 36

WEDNESDAY 31 OCTOBER 2012

Christian Benteke came to Aston Villa’s rescue last night in the Capital One Cup

@cityam_sport cityam.com/sport

Football: Page 35

Mata did not hear referee’s remarks, says Blues colleague BY FRANK DALLERES CHELSEA forward Juan Mata did not hear race-row referee Mark Clattenburg use alleged “inappropriate language” towards him, his teammate Oriol Romeu said yesterday, as police launched a formal investigation into the incident. Spaniard Mata is one of two Blues players, along with Nigerian John Obi Mikel, that the club believes was verbally abused by Clattenburg during Sunday’s stormy Premier League defeat to Manchester United. It is understood that part of the claims involve the official using a term interpreted as racist. Romeu, who was an unused substitute for the fixture, said: “Neither Juan nor [Chelsea striker] Fernando [Torres] told me they heard it because from what I have understood they didn’t hear anything. It was someone else who heard it, but not directly at them. It was another player who heard it and that is what they told me. I didn’t hear anything as I left quickly to go home, but after talking to Juan he told me there was some problem and he had to stay. “I only know Chelsea made a complaint and I think there could really be a problem if what Chelsea players say happened really happened. If there was really a racist comment or something said against a Spanish player this will be serious.”

The Metropolitan Police opened an investigation after receiving a complaint from Peter Herbert of the Society of Black Lawyers and said it would liaise with the Football Association, which launched its own probe on Monday following a complaint from Chelsea on Sunday night. The case has echoes of that involving Chelsea captain John Terry, who was accused of racially abusing QPR’s Anton Ferdinand. Terry was acquitted in a criminal court in a case that took eight months to be heard, but later found guilty by an FA disciplinary panel and banned for four matches, a suspension still being served. The FA was forced to place its Terry investigation on hold until after the trial but it appeared last night that they were continuing to examine Sunday’s game unimpeded with a view to a swift outcome. Chelsea meet United again tonight, just four days after the flashpoint, in a Capital One Cup tie that has suddenly taken on extra significance. Clattenburg, one of the country’s leading referees who regularly officiates at international level, has been stood down from duty this weekend by the Professional Game Match Officials body, in order to shield him from attention. The Durham official had been expected to issue a statement yesterday denying Chelsea’s accusations before police confirmed their probe.

Wenger: Fighting back from four goals down was a miracle BY DECLAN WARRINGTON ARSENAL manager Arsene Wenger described his side’s almostunbelievable victory away to Reading as a “miracle” after they recovered from four goals down to secure a 7-5 scoreline and their place in the fifth round of the Capital One Cup. The evening had strongly threatened to be an embarrassing one for the manager after his team – in which he had made 11 changes from the weekend’s 1-0 victory over QPR – were 4-0 down after only 37 minutes and still losing in the fourth minute of the second-half’s added time when they finally completed an astonishing comeback with a tenacity that many had considered to be beyond them. “You always see new things in our game,” Wenger said. “That is why it is never boring. “It finished well for us but they [Reading] made a fantastic start. We were not sharp, beaten in every

single one-against-one and it was 4-0. It could have been one or two more. “After that, I believe, in the second half, we came back after 4-1. We created chance after chance and it was 4-2 but, at 89 minutes, we still needed to score two goals. “The miracle happened. In extra time, we were always in front.” It was Theo Walcott – whose contract expires at the season’s end and who last night secured his second hat-trick since first signing for the club – who scored Arsenal’s only first-half goal on the brink of half-time and it was this that Reading manager Brian McDermott insisted was ultimately crucial. “The goal we conceded just before half-time [was crucial], we’ve got to clear that and make sure it's 4-0,” said McDermott, who was also annoyed at the sixth minute of what was supposed to be only four of added time. “I was waiting for him to blow his whistle but he’ll have reasons.”

Arsenal scored seven goals to secure an unlikely Capital One Cup victory after trailing 4-0 away to Reading after just 37 minutes

Hooker Hartley out as Robshaw keeps the armband BY DECLAN WARRINGTON ENGLAND flanker Chris Robshaw is to continue as the national team’s captain for the impending autumn internationals but he will lead the side without the hooker Dylan Hartley who has been ruled out for four weeks. The coach Stuart Lancaster’s decision to delay the announcement of his captain had created some uncertainty as to whether Robshaw would continue in the role but after also saying last month that he was undecided on the issue, Lancaster yesterday insisted that his only true misgivings surrounded the fitness of his squad. “Chris has been outstanding on and off the field and we are

delighted that he will captain the team for what will be an immense challenge in the QBE Internationals,” said Lancaster, who is also without the lock Courtney Lawes who, like Hartley, has an injured knee that is scheduled to keep him sidelined for two weeks, though the prop Joe Marler is likely to be available. “We have a strong leadership group in this squad and I know that Chris will be well supported by them in the weeks ahead. “It was important to wait until after last weekend’s Premiership matches to check on everyone’s form and fitness and not

interrupt the players’ preparations. I have had the chance now to have a one-on-one catch-up with each player and we are really pleased to announce Chris as captain. “The reality is [Lawes and Hartley] won’t be available for the Fiji game [on 10 November]. “We’re confident in Joe [Marler]. We were being careful with him this week. “All the medical info I’m getting is he’ll be good to go on Monday.” After being almost entirely overlooked by Lancaster’s predecessor, Martin Johnson, Robshaw

Dylan Hartley is suffering from an injured knee

was a surprise appointment as captain for this year’s Six Nations and after leading England to an impressive four wins from five fixtures following their understandably highly-criticised 2011 World Cup performance, he continued throughout the summer tour to South Africa. “It’s a real honour to be asked again,” said Robshaw. “I enjoyed being captain in the Six Nations and in South Africa and this is a great group of players who really want to be successful. “We are lucky to have some good leaders in the squad who I know I can work well with and count on their support. We have a huge opportunity to put a marker down over the next few weeks.”

PAST AND PRESENT Robshaw’s record as captain n Scotland 6-13 England n Italy 15-19 England n England 12-19 Wales n France 22-24 England n England 30-9 France n South Africa 22-17 England n South Africa 36-27 England n South Africa 14-14 England

England’s autumn fixture list n Fiji, 10 November n Australia, 17 November n South Africa, 24 November n New Zealand, 1 December