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FTSE 100 6,005.09 +90.20 DOW 12,258.20 +191.40 NASDAQ 2,798.74 +50.67 /$ 1.63 unc / 1.17 -0.01 /$ 1.40+0.01 Certified Distribution03/01/11 till 30/01/11 is 97,465

NEWS Corp could have its credit rat-ing cut if it is forced to bid more than850p a share for BSkyB, according toanalysts at Jefferies.

Shares in the broadcaster closedlast night at a record 823p far ahead

of its pre-recession peak of 713p onthe expectation of a much improvedoffer from Rupert Murdoch, who bid700p a share in September.

Standard & Poors said last yearthat a bid of 840p may have a nega-tive impact on News Corps BBB+ rat-ing, which the firm is desperate tomaintain. Given higher earnings and

a reduction in debt at both firms, Jefferies said this is now likely tostand closer to 850p.

News Corp has been hit by a 10 percent appreciation in the pound ver-sus the dollar. Jefferies said if NewsCorp had hedged against exchangerisks, it may have been able to raisethe bid over 900p while maintaining

reasonable leverage.But News Corp last night told City

A.M.: We have not undertaken any currency hedging related to theBSkyB transaction.

Murdochs firm yesterday escapedthe prospect of a lengthy Competition Commission probe intothe takeover after offering to spin off

Sky News. The ruling has set the scene for a

battle between the Sky board andNews Corp.

Investors are pushing for a price of more than 900p a share but sourcesclose to News Corp say it will not

budge from its valuation of 750p to800p. FOCUS ON BSKYB BID: P6-7

BY STEVE DINNEENMEDIA

www.cityam.comIssue 1,335 Friday 4 March 2011 FREE

News Corps BSkyB bid could hit credit rat

EUROZONERATE RISETRICHET HINTS ITWILL COME NEXT

MONTH P3

BRITAIN NEEDS MOREYOUNG ENTREPRENEURS

PETER JONESS NEW REPORTP21

BUSINESS WITH PERSONALITY

Howard

Davies quitover Libya

FORMER Bank of England deputy gov-ernor Sir Howard Davies resigned asdirector of the London School of Economics yesterday over its links

with the Gaddafi family.Davies, who was also the first chair-

man of the Financial Services Authority, stepped down amid grow-ing pressure on the LSE for acceptinga 1.5m funding pledge from aGaddafi family charity.

The university received 300,000 of the money. The LSE also said it hadarranged a 2.2m deal with LibyasNational Economic DevelopmentBoard to train diplomats.

Davies, who was paid $50,000(30,700) for advising the LibyanInvestment Authority in 2007, said he

was aware the LSEs reputation hadsuffered.

There were risks involved in takingfunding from sources associated withLibya and they should have been

weighed more heavily in the balance,his resignation letter said.

The university has launched anindependent inquiry into its relation-ship with Libya and Gaddafis son Saif al Islam. Davies resignation cameafter the Treasury froze the assets of afurther 20 of Gaddafis top officials

yesterday including his two spy chiefsand the head of his personal security.

The asset freeze now covers 26 Libyanregime members and an estimated2bn of assets, government sourcessaid. The names are published on the

Treasurys website.

BY ALISON LOCKWORLD

George Osborne is unhappy with the business departments ideas to boost growth Picture: REUTERS

GEORGE Osborne is pushing forsweeping changes to Britains plan-ning regime as part of a package of low-cost measures designed to kick-start growth, City A.M.has learned.

He wants to make it much easierfor companies to obtain planningconsent for new projects even if they go against the wishes of localresidents allowing them to expandtheir businesses while also providinga timely boost for the constructionsector.

The changes would also enableministers to fast-track large scaleinfrastructure like nuclear power sta-tions.

But the Treasurys decision to try to overhaul the planning system hasput it on a collision course with EricPickles, the communities secretary. Itsits uneasily with his localism agen-da, which aims to devolve controlover planning decisions to local com-munities which are often resistant to

building projects.One source close to the negotia-

tions said: Weve had lots of meet-ings with ministers from theDepartment for Communities and

Local Government (DCLG). Were now close to agreeing a pro-growth pack-age.

Osborne hopes the planning shake-up will form the centrepiece of a

OSBORNE RIPS UPPLANNING RULESBY DAVID CROW

POLITICS

series of reforms designed to boosteconomic growth without the needfor more government spending. He isalso likely to announce the scrappingof some costly regulations, in a bid tofree up cash for investment as well as

various other supply side reforms.

An ally of the chancellor said:Well be explaining that Labour was wrong to say that the only way to bepro-growth is to spend loads of money.

The measures will be contained ina Growth Review, which will beunveiled alongside the Budget on 23March. The chancellor decided totake control of the review because he

was unhappy with the quality of ideas coming from Vince Cables

business department.However, in a speech to a City audi-ence last night, Cable insisted he wasfully signed up to the measures con-tained in the review.

Businesses have been disheartened by the coalitions approach to plan-ning since it won power last May. It isabolishing the InfrastructurePlanning Commission, which was setup by the previous government and

was widely seen as a valuable bul-

wark against nimbyism.Firms also complain that localplanning authorities are too focusedon the wishes of residents ratherthan businesses.

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News2 CITYA.M. 4 MARCH 201

Pension taxbill rule easedHIGH pension tax bills caused by acut in the annual allowance for finalsalary pension schemes can be paiddirectly out of individuals pensionschemes, Treasury financial secretary Mark Hoban said yesterday.

The legislation will help high earn-ers avoid the sting of a high tax bill in

April when the annual allowancefalls to 50,000 from 255,000.

Wealthy individuals, who areexpected to face bills running to tensof thousands of pounds, will be ableto pay any sum higher than 2,000from their gross pension income.

But tax experts said it would add tothe burden on pension schemes.

National Association of PensionFunds senior policy adviser DavidMcCourt said it was extremely disap-

pointed at the 2,000 threshold, which would encourage higheruptake of the scheme.

These changes will add cost and bureaucracy to what already is one of the most complex pensions systemsin the world, he said.

The Treasury also yesterday launched a consultation on its FairDeal policy to protect pensions of public sector employees transferredto private contractors. It is a responseto concerns that expensive pensionpayments deter contractors from bid-ding for public sector work.

BY A LISON LOCKREGULATION

Why the young are feeling worse off

FORGET about class war; we are enter-ing a new era of generational wars.

There is a growing sense among younger people that they wont enjoy as prosperous a life as their parents. Itis easy to understand such concerns:powerful economic, technological,demographic and political forces areforcing the generations apart.

For a start, the old system of finalsalary pensions is in terminal decline,so younger people will have to work longer than the cosseted baby-boomgeneration, for an uncertain retire-ment income. The property boom has

delivered a one-off windfall to mil-lions of older people, while making itharder for younger people to jumponto the housing ladder. The cost tostudents of university education, once

entirely provided at taxpayersexpense, is rocketing. Older pension-ers often earned a good living fromunskilled jobs; today, returns fromsuch occupations have collapsed, hit-ting a large number of youngstersfailed by the school system. Last butnot least, pensioners are being largely shielded from spending cuts, furtherexacerbating the generational gap.

House prices increased fourfold inthe 20 years to 2007. Many owner-occu-piers on modest incomes, includingpensioners who bought council hous-es at a discount, made a fortune.

Wealth is thus often not synonymous with a high income: 2.6 per cent of UK adults are dollar millionaires butonly 0.6 per cent of adults earn morethan 150,000 a year. Wealth hasaccrued largely through capital gainsin the property market younger peo-

ple wont benefit in the same way. While it is extremely bad news for

millions of younger people, two sub-groups will nevertheless do well overthe very long-run even in the present

environment. Those with a superioreducation either through good for-tune or through sheer effort and of course those whose parents have builtup housing wealth and who stand toinherit vast sums of money.

University graduates earn 50 percent more than those with just a sec-ondary education. The return oninvestment for an individual obtain-ing university education is around 10per cent, higher than the return onUK equities or housing in the last 20

years, estimates Deloittes chief econo-mist Ian Stewart some consolationperhaps for recent graduates who can-not afford a deposit.

To this I would add two crucialcaveats: what will increasingly countis not any old university degree butgoing to a good university and study-ing for a good, rigorous qualification.

Knowledge based industries thatrequire high levels of skill, includingfinance and technology, have emergedas a major source of high-paid jobs inthe modern, ultra-competitive glob-

alised world. Cognitive skills are espe-cially valuable but so are any usefulskills, from plumbing to high-levelcooking. People with good vocationaltraining ought, in many cases, to beable to earn a lot too we need a new generation of technical colleges.

What else should be done? Youngpeople should save and invest as muchas possible, even if they cant afford ahouse. And they should try andacquire the best, most marketableskills possible and invest in the rightkind of education. The government,for its part, must tear up planningrules to make it easier to build new homes and it must sort out the edu-cation system. This wont resolve thecrisis facing millions of younger peo-ple but it would be a good start.

[email protected] Follow me on Twitter: @allisterheath

TESCOS new chief executive PhilipClarke is to continue the US expan-sion strategy of his predecessor Sir

Terry Leahy despite ongoing losses inthe market, the group said yesterday.

Tesco said its Fresh & Easy brand was opening two new stores inCalifornia with a further ten due toopen across the state before the endof April this year.

Clarkes decision to plough ahead

with the stores is a key show of sup-port for Leahys strategy for the chain,

which made a 95m loss in the sixmonths to the end of August. Fresh &Easy currently has more than 160stores but half-year sales were 247m.

It is not expected to turn a profituntil the 2012-13 financial year but

breaking into the US market is animportant long-term goal for Tesco.

Shore Capital analyst Clive Black said this year would be critical todetermine whether Fresh & Easy wason the path to prof itability.

BY A LISON LOCKRETAIL

Tesco backs Fresh & E Philip Clarke, new chief executive of Tesco, is continuing with Leahys US push

NEWS | IN BRIEF

Wal-Mart ups its 2012 dividendUS supermarket giant Wal-Mart said itwould raise its dividend for 2012 by20.6 per cent yesterday despite a yearof weak sales. The chain is to pay a divi-dend of $1.46 (0.90) per share in thefiscal year ending in January 2012, upfrom $1.21 this year. Wal-Mart said the

hike, which translates to a $5.2bn pay-out to investors, was due to its strongcash generation, with $10.9bn generatedin the past year. However, sales havenow declined for seven consecutivequarters.

Air fares to rise on carbon costsRating agency Standard & Poors saidyesterday that air travellers may seefares rise up to 40 (34) from the endof this year as airlines join the EUs emis-sions trading scheme. Additional costsfrom the scheme are estimated to reach 1.1bn in the first year alone as airlinescarbon dioxide emissions are cappedand they must trade credits to meet anyexcess. The agency said customerswould bear between 4.60 and 39.60per flight at a 13 price for a tonne of carbon. However, some forecasts havesaid carbon could reach 75 a tonne.

EDITORS LETTER

ALLISTER HEATH

7thFloor, Centurion House,24 Monument Street, London, EC3R 8AJTel: 020 7015 1200 Fax: 020 7283 5334Email: [email protected] www.cityam.comEditorialEditor Allister HeathDeputy Editor David HellierNews Editor David CrowNight Editor Katie HopeBusiness Features EditorMarc SidwellLifestyle Editor Zoe StrimpelSports Editor Frank DalleresArt Director Craig GaymerPictures Micha TheinerCommercialSales Director Jeremy SlatteryCommercial Director Harry OwenHead of Distribution Nick Owen

Editorial StatementThis newspaper adheres to the system of

self-regulation overseen by the Press ComplaintsCommission. The PCC takes complaints about theeditorial content of publications under the EditorsCode of Practice, a copy of which can be found at www.pcc.org.uk

Printed by Newsfax International,Beam Reach 5 Business Park,Marsh Way, Rainham, Essex, RM13 8RS

Distribution helplineIf you have any comments about the distributionof City A.M. Please ring 0207 015 1230, or [email protected]

Financial secretary tothe Treasury MarkHoban said the reformwould give people anincentive to save

HEDGE FUNDS HEAD FOR MALTA TOESCAPE REGULATIONSome of Londons biggest hedge fundmanagers are shifting their opera-tions to Malta in response to both therising costs of business and the grow-ing regulatory burden in the UK. TheMediterranean island is emergingalongside traditional rivals toLondon, such as Swiss towns Genevaand Zug, as another European loca-tion for hedge fund managers keen tomaintain flexible operating arrange-ments and avoid heavy tax bills.

TRUCKMAKERS IN BRUSSELSANTITRUST PROBEEuropes antitrust officials are investi-gating allegations that some of the

worlds largest truckmakers havefixed prices and delivery times formore than a decade, in a probe trig-

gered by German truck group MAN.In January, officials raided truckmak-

ers offices all over the continent.

FOXCONN TO MOVE CHINA JOBSINLANDFoxconn Technology will transformits south China manufacturing hubinto an engineering base and move200,000 jobs to cheaper inlandprovinces in a further sign that theregions days as a low-end productioncentre are numbered. The worldslargest contract electronics manufac-turer employs 1m people in China.

BRAZIL CLAIMS IT IS FIFTH LARGESTECONOMY IN WORLDBrazil has overtaken Britain andFrance to become the fifth largesteconomy in the world after reporting7.5 per cent economic growth in 2010 the fastest rate since 1986, financeminister Guido Mantega said. Latin

Americas biggest economy grew last year on the back of consumer credit,investment and a government stimu-

lus package but was showing signs of moderating.

ODDBINS CALLS IN FIREFIGHTERS ASFEARS FOR SURVIVAL MOUNT

The future of one of the last remain-ing independent off-licence chains

was in the balance after it emergedthat restructuring specialists have

been called into Oddbins. The compa-ny said that it had called in advisersfrom Spectrum Corporate Finance toconsider strategic options in light of achallenging retail environment.

TWITTER FOUNDER SAYS FLOTATIONNOT EVEN BEING DISCUSSED

Twitter has dismissed speculationthat a fund run by JP Morgan wasseeking to buy a significant share,saying that the microblogging service

would not seek additional funding asit was already making money. BizStone, Twitters co-founder, rein-forced the companys public stance

that it has no intention of launchinga stock market flotation soon.

ENDING TAX RELIEF WILL HURT RETAILOne retailer with big online sales saidthat clamping down on the so-calledlow-value consignment relief (LVCR)

would be an attack on business inno- vation. Tax experts also warned thatchanges to the relief, which theGovernment has hinted may beincluded in the Budget, would hitsmall businesses hardest and costmore to implement than it could raisein extra taxes.

FINANCIAL ADVISER FEES RULINGPROMPTS LOW COST FUND LAUNCHSchroders has become the latest assetmanagement company to launch alow fee fund. Following JP Morgansdecision to cut fees on one of its UK equity funds, rival Schroders willlaunch a low cost fund. The SchrodersCore UK Equity fund will be launched

on March 18, charging 40 basis pointsa year, with no entry or exit fees.

HCA INVESTOR WINDFALLBain Capital,Kohlberg Kravis Roberts& Co., Bank of America. and the

brother of former Senate Majority Leader William Frist are each in lineto make nearly $3bn from $1.2bninvestments in the 2006 leveraged

buyout of hospital chain HCA Holdings. The gainabout 250 percent over five years that were tryingfor the economy and health-care com-panieswould amount to one of thelargest ever from a private-equity deal.

BRAZILIAN FIRM IN FRAUD PROBrazilian authorities are investigat-ing a possible fraud at a So Paulofinancing company partly owned by aGoldman Sachs vice president. TheGoldman executive, CristianoCamargo, 31 years old, now owns a

stake of less than 5 per cent in PortoForte, according to his lawyer.

WHAT THE OTHER PAPERS SAY THIS MORNING

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RULES regulating bonuses in the USare substantially less onerous thanequivalent UK rules introduced in

January, according to the BritishBankers Association.

The framework for the US rules,released by the Securities andExchange Commission (SEC) on

Wednesday, state that financial insti-tutions must provide a description of their pay plans and explain why they

will not result in a material financialloss. Institutions with over $50bn in

assets must also defer 50 per cent of executives salaries over at least three

years and include clawback clauses.But the rules are not nearly as

detailed as those introduced by theFSA under an EU mandate, and apply only to executive officers ratherthan thousands of financial staff as inthe UK.

Irving Henry of the British Bankers Association, an industry group, toldCity A.M .: The US rules are far less pre-scriptive than the EU rules. Its a lotless bureaucratic: you dont need anentire internal rule book. Its less time-consuming and less costly.

The disparity will raise concernsthat British firms could lose out in the

fierce competition for talentedrecruits.

INCOME tax and national insurancetax should be merged and dozens of tax allowances abolished, according torecommendations published by theOffice of Tax Simplification (OTS).

The OTS, convened in July by chan-cellor George Osborne to overhaul theUKs increasingly complex tax system,has suggested that the Treasury get ridof 47 tax reliefs that it says cost the UK more in administrative burden thanthey benefit their recipients.

It suggests replacing national insur-ance and income tax with a singlelevy, pointing to instances whereemployers are forced to apply differentreliefs to each tax for single employees.The mismatch between the rules is amajor cause of complexity, it says.

The report adds that a range of reliefs on inheritance tax could also bedone away with if the Treasury simply reviewed the tax as a whole.

Abolishing inheritance tax was a key pledge in the Conservative manifesto,

but was dropped during coalitionnegotiations.

And it adds that capital gains tax(CGT) for companies has diverged too

far from CGT for individuals, saying:The existence of two differentregimes can cause confusion for tax-payers as well as for smaller firms of advisers.

Despite its wide-ranging recommen-dations, however, the report only examined a fraction of the UKs 1,042taxes that it identified last year. Citinga lack of resources, the OTS narrowedits scope to look at just 155 reliefs,rather than performing a holistic eval-uation of the whole tax system.

In particular, it excluded many cor-porate taxes. Neal Todd, a tax partnerat law firm Berwin Leighton Paisnersaid: The business community will bedisappointed that the OTS has not

been as bold in its proposals for thecorporation tax system, despite thefact that over 80 per cent of corpora-tion tax is paid by the top one per centof companies.

Some of the other reliefs that could be for the chop if Osborne accepts therecommendations include relief forexpensing late-night taxis home from

work, relief on provision of meals foremployees on designated cycle to

work days, miners coal allowancesand reliefs for divers and diving super-

visors.

Scrap dozens

of tax reliefs,Osborne told

THE euro jumped to a four-monthhigh against the dollar yesterday,after European Central Bank (ECB)President Jean-Claude Trichetdropped hinted that interest ratescould rise soon.

Despite holding rates at one percent for now, Trichet said strong vig-ilance was warranted, with the ECB

prepared to act in a firm and timely manner to suppress inflation.In previous years the ECB has used

the term strong vigilance in themonth before a rate hike.

The re-financing rate looks almostcertain to go up to 1.25 per cent on 7

April, commented Ken Wattret of BNP Paribas. Its not quite a donedeal, but barring a radical turn of events over the next month, theground has been well and truly pre-

pared for the move. Trichets comments caused theeuro to soar to more than $1.395.

Data earlier this week showedEurozone inflation running at 2.4 percent in February, a 28-month high.

The single currency area seems to be recovering well, according to otherdata released yesterday. GDP for thefinal three months of the year wasconfirmed at 0.3 per cent, with broad-ly based growth.

Euro surges after ECBsTrihints of rate rise next mon

BBA: US bonus rules less onerousand expensive than EU laws

BY J ULIET S AMUELREGULATION

BY J ULIET S AMUELBANKING

Jean-Claude Trichet said strong vigilance was needed Picture: PA

BY J ULIAN HARRISEUROPEAN ECONOMY

News 3CITYA.M. 3 MARCH 2011

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INVESTORS welcomed Avivas fore-cast-beating results yesterday as theinsurance giant reported a 35 percent jump in pre-tax profit.

Achievements included eliminat-ing its 1.7bn pension deficit in the

year, and returning its net asset valueto a 12.8bn pre-crisis level.

Aviva said its 2011 strategy was toconcentrate on the markets where wehave strength and scale and chief executive Andrew Moss hinted at dis-posals in less profitable markets.

We are going to focus on andinvest in 12 key markets; on the posi-tive side, you will see that investmentin those markets, he said. It willmean de-emphasising certain othermarkets and, over the course of thenext 6-12 months, I think that will

become clear.Keefe, Bruyette & Woods analyst

Greig Paterson said its US businesswill likely be sold as it looked likean in-demand asset.

Avivas pre-tax profit hit 2.4bnfrom 1.8bn in 2009, while IFRS oper-ating profit rose 26 per cent to 2.6bnfrom 2bn, boosted by strong UK growth and cost-cutting.

Net asset value per share rose 21per cent to 454p from 374p in 2009,

while its 55.1p earnings per sharecame in well ahead of the 50.5p earn-ings per share market forecast.

Aviva shares closed up 1.69 per centat 457.3p. On virtually every valua-tion methodology Aviva appears very attractive compared to its peergroup, said Panmure Gordon analystBarrie Cornes.

Aviva hints at

disposals asprofits surge

Kwik-Fit unit to make 192mEUROPEAN private equity firm PAIPartners is expected to make 192m

from its sale of Kwik-Fit to Japaneseconglomerate ITOCHU, a deal firstrevealed by City A.M. on Wednesday (see right).

PAI, which was being advised by Morgan Stanley and Credit Suisse,signed off on a 637m sale of Britains

biggest tyre retailer to ITOCHU on Tuesday, including 457m of debt.ITOCHU was being advised by

Nomura.PAI originally bought Kwik-Fit from

rival private equity firm CVC CapitalPartners in 2005, when it paid 800m.But the sell-off of separate entities

within the retailer since then makethe venture a profitable one.Shortly after buying the auto shop

chain, PAI sold off its stores and re-leased them in order to refinance itsoriginal purchase. It then sold off Kwik-Fits insurance business last yearfor 215m, before selling the last partof the retailer this week.

PAI declined to comment.

BY A LISON LOCKINSURANCE

BY J ULIET S AMUELM&A

SHARES in Shire leapt 2.6 per cent toa near all-time high yesterday on thenews that European regulatorsapproved its Firazyr drug for self-administration by sufferers.

The treatment, for a rare heredi-tary immunity disorder known asQuincke edema, now looked very like-ly to be approved by the US regulatorand has the potential to generate

sales of $150m (92m) to $200m a year, analysts said.

Shares in the drug company closedup 44p at 17.63. The rare disorder, which targets

the bodys immune, system causesswelling, particularly of the face andairways, as well as abdominal cramp-ing. Shires treatment allows Firazyrto be administered using a pre-filledsyringe. The drug is licensed in 37countries.

Shire receives Europeaapproval for Firazyr dr

PHARMACEUTICALS


Aviva chief executive Andrew Moss will focus on key markets

ANALYSIS l Aviva

p

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LLOYDS insurer Hardy Underwriting yesterday became the latest company to report results hit by catastrophelosses as its profit halved to 10m in2010.

Net tangible assets rose 1.5 percent to 270p per share, from 266p in2009, and it raised its dividend tenper cent to 14.6p. Gross written pre-miums increased to 279.4m from242m the previous year.

Chairman David Mann said anunprecedented level of internation-al natural catastrophes had hit prof-its, while a surplus of capacity inthe market had prevented rate rises.

He also warned that new Solvency II capital requirements on insurers

were driving rising costs in the firm.Chief executive Barbara Merry said

the global spread of disasters meantHardys property treaty reinsuranceaccount incurred a greater frequen-cy and severity of loss than a typicalLloyds account.

Hardy said it had opened a new office in Singapore alongside its cur-rent London and Bermuda presence,to access the most important Asianhub for reinsurance.

It added that its director of underwriting, Adrian Walker, is to retireon 17 May and would be replaced by his deputy, Patrick Gage.

Insurer Hardytakes a hit aftedisaster losses

INSURANCE

Impressive results that should givethe share price a much-needed lift AVIVAs results and strategy updateshould cheer investors for severalreasons. The winter weather thathas hindered other insurers resultsdidnt even dent its 2.4bn pre-taxprofit.

Its strength in life insurance andcommitment to cost-cutting are

welcome, particularly against a backdrop of new regulation such asthe ban on using gender in insur-ance calculations and higher capi-tal requirements due in 2012.

These results will also feedinvestor hopes of fixing Avivas long-time share price shortfall. Analystsconsensus rating on the stock is abuy because at 457p today it isstill about 40 per cent cheaper than

its 740p trading price in mid-2007.In contrast, its peers are less than

ten per cent short of their 2007prices. Prudential has regainedabout 94 per cent of its former

value while Legal & General hasabout an eight per cent gap.

Avivas shares are rising: they have gained 19 per cent over thepast year and 11 per cent since theend of 2010.

These impressive results may giveits stock the boost needed for fur-ther shareholder value to materi-alise.

BOTTOMLINEAnalysis by Alison Lock

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NEWS Corp yesterday won fullapproval to bid for the 61 per cent of BSkyB it does not already own.

Culture minister Jeremy Huntaccepted an eleventh hour News Corp

concession that it would spin-off Sky News into a separate, publicly-tradedentity, in order to counter media plu-rality concerns.

Hunt said he accepted the termsoffered by News Corp after itaddressed a string of issues raised by media regulator Ofcom.

The decision will save the bid beingsubject to a lengthy CompetitionCommission ruling that would havelasted at least six months.

Hunt said: The undertakingsoffered would ensure that sharehold-ings in Sky News would remainunchanged, and indeed offer it moreindependence from News Corp than itcurrently has. Throughout this processI have been very aware of the potentialcontroversy surrounding this merger.Nothing is more precious to me thanthe free and independent press for

which this country is famous the

world over. An Ofcom spokesman said: We are

pleased that News Corp has agreed inthe proposed undertakings to placeeditorial independence and integrity at the heart of NewCo and to under-pin this with arrangements thatsecure full independent governance.

The decision was slammed by analliance of media owners who say the

move will give Murdoch too muchpower. A spokesman for the group, which includes Daily Mail publisher Associated Newspapers, Trinity Mirror,BT and the owners of The Daily

Telegraph, said it is now consideringchallenging the ruling in the courts.

Vince Cable, who was axed from thedecision-making process after promis-ing to wage war on Murdoch to anundercover reporter, declined to com-ment yesterday.

News Corpwins right tobid for BSkyBBY S TEVE D INNEEN

MEDIA

TRINITY MIRROR saw its share pricetumble more than 20 per cent yester-day after it admitted that it will not hitsavings targets for the year.

The publisher pointed to inflationand the rising cost of newsprint,

which will outstrip its cost-cuttingmeasures.

Despite tripling its pre-tax profit for

2010 from 42m to 123m, it said itsrecovery will be slow and volatile.

Figures for the start of 2011 makegrim reading, with national advertis-ing falling nine per cent year-on-yearand regional ads dropping 11 per cent.

Operating profit at its national titlesrose three per cent after marginsimproved, although revenue fell 6.5per cent, reflecting declining circula-tions.

Chief executive Sly Bailey said:Although 2010 proved to be as chal-lenging as expected, we made goodprogress in rolling out our new operat-ing model, integrating GMG RegionalMedia and increasing profitability andmargin whilst managing extremely

volatile revenue trends throughoutthe year.

The stock closed down 21.7 per cent yesterday at 66p.

Trinity Mirror tanks aftercosts outstrip its savings

MEDIA

Rupert Murdoch (centre) looks likely to eventually wrest control of BSkyB after cultureminister Jeremy Hunt (second from left) waved through any potential bid. If the takeover

goes through it could raise questions over who ranks higher; Sky chief executive Jeremy Darroch (far left) or News International chief executive Rebekah Brooks (second fromright) . Both would report directly to James Murdoch (far right), the chairman and chief executive of News Corp in Europe and Asia.

ANALYSIS l BskyB

p

2010 20 Dec 2011 17 Jan 31 Jan 14 Feb 28 Feb

800

770

740

823.003 Mar

710

8/7/2019 2011Book

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Focus on News Corp bid 7CITYA.M. 4 MARCH 2011

s e a t . c o . u k

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IF News Corp goes ahead with its 8bntakeover of BSkyB it has agreed to spinoff the loss-making Sky News channelas an independent company, which

will have its shares publicly traded. As part of the deal, Rupert Murdoch

has agreed to continue broadcastingSky News for at least 10 years and pro-

vide it with a dowry during this time thought to be around 30m a year to cover its losses.

It is understood News Corp willretain a 39 per cent economic interestand 37 per cent voting interest in thenew company. News Corp wouldlicense the Sky News brand and allow the news channel to continue using itsstudios.

The company must remain underthe same name for at least seven years.

After the decade is up Murdoch may be allowed to buy the channel back.

While BSkyB will continue to broad-cast the channel for 10 years, it is notan exclusive deal, opening up the pos-sibility of Murdoch opening up a FoxNews franchise in the UK.

The spun-off firm will have an inde-pendent non-executive chairman,

while the board will have a majority of independent non-executive directors.

The board will also have approval of the hiring and firing of the editor of Sky News.

What becomeof Sky Newspost-takeover?

MEDIA

NewsInternational

NewCo

Newswire

NewsGroup

HOW SKY NEWS WILL FIT IN THE NEWS CORP WEBBSKYB SHAREHOLDERS

3 9. 1 4 %

6. 7 %

6 %

2. 8 1 %

2. 2 4 %

2. 1 1 %

1 2. 2 2 %

7. 7 4 %

2. 1 6 %

2. 0 8 % 10

1

2

3

4

5

6

7

8

9

8/7/2019 2011Book

8/28

had I imagined I would attemptingto race up nearly 1,000 steps inrecord time.

NOTES ON A SCANDAL WITH a month having passed sinceformer Dresdner Kleinwort bankerChristian Littlewood was given theUKs longest-ever sentence (40months) for insider dealing, its oddthe FSA still hasnt acknowledged hismisdemeanours.

The FSAs website (www.fsa.gov.uk/register) would seem to suggest thatLittlewood has no disciplinary record

worth mentioning, despite being con- victed of buying shares in companies

just prior to takeover announcementsmore than 20 times in ten years.

Littlewood is clearly a man wholikes to play his cards close to hischest, judging by the fact that hisLinkedIn page shows him acquiring

just one solitary connection duringhis time at Dresdner.

Its not his wife Angie, whom Littlewood chival-rously attempted to

blame for the insider

trading scandal, so who could it be?

TAXI! AS insurancefirms digest theimplications of the EuropeanCourt of Justicedecision that they cant reduce premi-ums for safer femaledrivers, there is at leastone feminist for whomthe controversial rulingsimply doesnt apply.

Labours deputy leader and chief gender

warrior HarrietHarman was at a

Westminster lunch forpolitical reporters yester-

day when she declared:Ive been paying twice as

much on my car insurance for years and I cant work out why!

Harman was poking fun at herself because she was, in fact, fully awarethat the premium hike came after alittle incident in 2009 when she wasso busy chattering on her mobile thatshe crashed her car and, in her hurry,failed to leave her details at the scene.

Instead, she proclaimed: ImHarriet Harman you know where

you can get me!Luckily, discrimination against

politicians is still very much allowed even after the ECJs interventions.

ON YOUR BIKEIS there anybody left working at theirdesks in the City these days? TheCapitalist only asks because the startof spring seems to have inspired thefinancial world to up sticks and setoff around the world by bicycle.

Brett Seychell, who has been thegeneral manager of the Abacus baron Cornhill for the past three years, isturning his back on working for the

busiest bar in the City to cycle fromLondon to Melbourne with his girl-friend Kimmi.

You can follow their exploits at www.thekindnessofstrangers.net, the website for the private charity they have set up. But if you would like totake a more active role, Matthew

Whitaker, programme manager fromBarclays, is looking for volunteers to

join him on a bike ride from HydePark corner to Christchurch to raisefunds for the victims of the New Zealand earthquake.

Christchurch, Bournemouth, thatis to ride, help or sponsor the 110mile feat, contact Matthew onmattheww_nz @yahoo.co.uk.

100K DAY ANOTHER fundraiser for the

New Zealand earthquake victims is the all-star chari-

ty rugby game betweenthe Pacific Barbariansand an Australian XV this Sunday at the OldDeer Park inRichmond.

Bookmaker Paddy Power is sponsoring ahalf-time cross-bar

challenge at the game, when two people from thecrowd who have bought raf-fle tickets will be selectedto drop-kick from 40metres for 100,000.If the punters hit the bar,

they win the jackpot and thedrinks are on them for the rest

of the day not bad at all for 15minutes of work.

SNOWS THE STAIR MASTER INTHE RACE OF THE THOUSAND STEPSHERES a story with legs: the resultsof the third annual Vertical Rushrace up the 920 dizzying steps of City skyscraper Tower 42 in aid of hous-ing charity Shelter.

Setting off in hourly slots, 1,200chip-timed runners including rac-ers from Legal & General, Schroders,

Threadneedle, Tullett Prebon andKPMG vied to see who could scalethe stairs in the fastest time, with

Graeme Newton from Tullett Prebonreaching the top in seven minutesand 11 seconds and Hugo Joyce fromSchroders clocking in at eight min-utes and two seconds.

However, they were no match forMatt Roberts, personal trainer to therich and famous, who pushed hisphysical capabilities to the limit toreach the top in just six minutes and44 seconds, before Channel 4 News

broadcaster Jon Snow had even tiedhis shoelaces.

When Snow did eventually reachthe top, five minutes and 13 secondslater, he declared that the UKslargest tower-running event is on apar with tackling election nightsand conducting heated debates withmembers of Parliament. Ive cer-tainly come across some challengesin my career, he said. But never

Jon Snow reaches new career heights at Tower 42 Pictures, REX, Micha Theiner, LNPIts too big to miss!

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The Capitalist8

Christian Littlewood: inside knowledge

EDITED BYHARRIET DENNYSGOT A STORY? [email protected]

CITYA.M. 4 MARCH 2011

8/7/2019 2011Book

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STRUGGLING sportswear retailer JJBSports is offering its landlords a shareof up to 7.5m if they back its rescueplan.

The company, in which Americasrichest man Bill Gates holds a 5.5 percent stake set out the details of its sec-ond company voluntary arrangement(CVA) in as many years.

It needs creditors, including land-lords, and shareholders to back theplan or it will likely go into adminis-tration, threatening 6,300 jobs.

JJB wants to close 43 stores by April2012 and have the option of closing afurther 46 stores by April 2013, pay 50per cent less rent on these 89 proper-ties prior to closure and pay rentmonthly rather than quarterly on allstores.

It would retain a core group of 150stores. The CVA terms provide for anadditional payment to landlords of

between 2.5m and 7.5m, to be paidin cash or JJB shares in April 2013.

In formulating these CVA propos-als we have talked to our landlordsand listened to their views. As aresult, we are offering them a possi-

ble share in the value of a restruc-

tured JJB, said chairman MikeMcTighe. Prior to yesterdays updateshares in JJB had lost 89 per cent of their value over the last year.

It was also revealed yesterday thatactivist investor Crystal Amber isreceiving a 580,000 payment inshares for bringing in new investorInvestec to JJB. Investec now has a 22per cent stake in the retailer.

JJBs CVA proposals need the back-ing of 75 per cent of unsecured credi-tors and 50 per cent of shareholdersat meetings set for 22 March.

There has been landlord hostility toits plan, with some arguing that they are being unfairly treated.

Last month JJB raised 31.5m in ashare sale that represented a first steptowards survival.

EUROPES biggest retailer Carrefourand Dutch peer Ahold, struggled toconvince investors yesterday withsteps aimed at boosting their shareprices against tough trading condi-tions.

Carrefour, hit by two profit warn-ings last year, detailed plans to spinoff discount chain Dia and 25 per

cent of its European property arm.

It believes this will allow it to focuson turning around its Europeanhypermarket business and expandingin fast-growing emerging markets,

while also unlocking value for share-holders from its real estate business.

However, Espirito Santo analystsdescribed the plan as cosmetic spinand were disappointed by the lack of detail in the French groups forecastto grow sales and profits this year.

Ahold, which runs Dutch market

leader Albert Heijn but makes about

60 per cent of its sales in the US,announced a bigger-than-expectedprogramme to buy back 1bn(858m) of shares over 18 months,and hiked its dividend. But it alsomissed forecasts with a 14 per centdrop in fourth-quarter operating prof-it to 295m, saying it failed to pass onthe full effects of higher food pricesto cash-strapped shoppers.

Ahold reiterated its long-term goalto grow both net sales and margins

by five per cent.

Carrefour and Ahold struggle to winover investors as market gets tough

BRITISH kitchen supplier Howden Joinery said it was confident of win-ning more market share in 2011 as its

business model focused on small builders makes the best of a toughmarket.

The firm, which supplies kitchenunits to over 200,000 small buildersfrom 489 UK depots, beat forecasts

with a 47 per cent rise in 2010 profit.It said current trading was robust andoutlined a plan to resume dividends

in the current year, disappointingthose who had hoped for a payout on

last years profit.The market, the way its shapingin its complexity with peoplesrequirements for a working kitchen,is moving our way, chief executiveMatthew Ingle, who foundedHowden Joinery in 1995, said. Are weimmune from a downturn? No we arenot, but we have access to more of themarkets doing it our way than I think perhaps people are aware of, headded.

Howden sees sales of ikitchens serve up profi

CONSUMER

DANISH outsourcing firm ISS has pricedits proposed $2.5bn (1.5bn) initial pub-lic offering (IPO), in one of the biggestlistings in Europe so far this year.

The company, one of Britains biggestproviders of public sector services, plansto issue as many as 133m new shares toraise 13.3bn Danish crowns (1.5bn),

valuing it as highly as 26.7bn Danishcrowns.

It will use the cash to pay down debtowed to its private equity backers Goldman Sachs and EQT, the invest-ment vehicle operated by Swedens

Wallenberg family. A secondary placement of 4m shares

will also be made by the pair.ISS yesterday revealed a price of

between 100 and 135 Danish crowns pershare, which will help to reduce its netdebt from 33bn Danish crowns to 18bnDanish crowns.

The firm, which counts hospitalcatering staff and cleaners among the41,000 people it employs in Britain, isplanning to list on CopenhagensNasdaq OMS exchange on 18 March.

Chief executive Jeff Gravenhorst saidit was the right time for a listing. Hesaid: Of course there are macro eco-nomic concerns but mainly in theMiddle East, where we dont know

whats going to unravel or whether it will impact. The company is ready andmarket conditions are receptive. Thereis a lot of appetite.

Danish firmISS revealslisting pric

SERVICES

COST cutting and drinkers in key markets splashing out on more

expensive beers helped AB InBev to astrong performance over the past year.

The worlds largest brewer saidtotal sales for the year grew by 4.4 percent to $36.3bn (22.3bn).

Despite a continuing decline in itsUS home market, the companys flag-ship Budweiser brand posted its firstincrease in global volumes for twodecades.

AB InBev said the increase was

thanks in part to the brands sponsor-ship of the 2010 World Cup.

Beer volumes were up in the UK forthe year, partially offsetting declinesin North America and Western

Europe. Overall volumes were up 2.1per cent throughout the year. The performance was boosted by

cost savings of $620m which the com-pany said were generated by themerger of Anheuser-Busch and InBev in 2008.

Much has been accomplishedsince the combination of Anheuser-Busch and InBev two years ago, thecompany said in a statement.

With our integration now com-

plete, we have a solid platform inplace to take advantage of the excit-ing opportunities we see for sustain-able profitable growth in a globalmarketplace.

Our financial results for 2010showed very good progress in spite of the persistent challenging economicenvironment in several of our mar-kets.

However, there are several areas where we know we can still makeprogress.

AB InBev said it would double thedividend it was paying shareholdersas a result of the performance overthe year.

AB InBev toasts volume riseBY HARRY B ANKS

CONSUMER

JJB launcheslife-savingrent cut planBY J OHN DUNNE

RETAIL

BY HARRY B ANKSRETAIL

NEWS | IN BRIEF

Lego builds on UK successToy brick maker Lego yesterdayannounced booming sales figures as itsnew Harry Potter figures gave the comp-any a boost. The Danish group says 2010profit before tax rose by 63 per cent to563m, while sales were up 32 per centto 1.8bn. It says it is now thefourth ?largest toy manufacturer with aglobal market share of 5.9 per cent.In the UK sales grew by 48 per cent lastyear. Marko Ilincic, the UK managingdirector, said: Lego UK has enjoyed phe-nomenal sales over the past year. Whileit was fantastic to see sustained growthwithin our classic product lines, we wereequally delighted to see our new LegoHarry Potter products further consolidat-

ed our market position.

Adecco sees temp jobs boostAdecco, the worlds biggest temporarystaffing company, expects demand toimprove as employers seek flexiblelabour to fill jobs in an uncertain recov-ery. This year got off to a good start,with sales rising 17 per cent organicallyin January from a year earlier, chief exec-utive Patrick De Maeseneire said yester-day. Temporary employment is seen as aleading indicator for wider labour mar-kets. So far, many employers have beenreluctant to commit to full-time hiring,preferring temporary workers as a wayof staying flexible in case the recoveryfalters. The environment will stayfavourable for flexible labour, Adeccosaid. It said that unemployment would

remain high in developed economies.

Consumer News 9CITYA.M. 4 MARCH 2011

ANALYSIS l JJB Sports

p


30

20

10

17.753 Mar

HEAD of restructuring at KPMGRichard Fleming is advising JJB on thecompany voluntary agreement (CVA)aimed at stopping the beleagueredcompany plunging into administration.

He has been at KPMG since 2003and has steered a number of compa-nies through choppy financial watersincluding Blacks Leisure. Fleming andhis team successfully pulled off the

first JJB CVA in April 2009 and hewas upbeat about the chance of thelatest version being approved by cred-itors. He said: Whichever way you cutit this is the best option available. If the company goes into administrationthe creditors will receive less. I thinkthat is clear.

He said that, unlike with adminis-tration, the companys shares continuetrading during the negotiations whichmakes CVAs a delicate process. Headded: "While CVAs have come in forcriticism, we believe they offer a moresocially responsible alternative forcompanies in distress.

He added: They keep more of abusinesss operations intact and moreof the workforce in jobs.

RICHARD FLEMINGKPMG

Keith Jones is hoping to steer JJB to safety

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BRITAINS recovery looks set to be weighed down by sluggishgrowth, the latest business surveyssuggest.

The economy is on course togrow by 0.5 per cent this quarter,according to Markits surveys,rebounding from the snow-affect-ed 0.6 per cent contraction in thefinal three months of last year.

Yet much of the recovery isfrom activity deferred by Decembers snow, flattering thefigure. Underlying growth is clos-er to 0.2 per cent for the quarter,Markit said.

Sterling fell 0.4 per cent againstthe dollar yesterday, as markets

absorbed the news.Services the UKs largest sector

-- grew last month, but at a slowerrate than in January. And stub-

born inflation continued to bur-den the sector, with the rate of price rises only marginally slow-er than Januarys peaks.

The purchasing managers survey, released yesterday, recorded52.6 for business activity in theservice sector still above the 50no change mark, yet down from

Januarys eight-month high of 54.5.

However, there were some posi-tive signs for the near future, asnew business continued to rise.Excluding January, this element of the index was at its strongestsince June last year.

And business expectations roseto 71.8, up from 68.3 in January and 66.5 in December, as confi-dence reached a nine-month high.

Panellists commented on animprovement in the economic cli-mate and ongoing recovery, thereport said.

Employment in the sector fellagain, but at 49.5 the index isapproaching parity, suggestingthe job losses will soon be cur-tailed.

Input prices (64.8) continued toreflect higher global costs, with

businesses reporting higher fueland food prices.

And some costs are filteringthrough to consumers, with pricescharged increasing at an indexscore of 52.8.

No double dip but UKfaces weak recoveryBY J ULIAN HARRIS

UK ECONOMY

GROWTH in Americas serviceindustries accelerated again lastmonth, it was revealed yesterday.

On another strong day of datareleases for the US recovery, the ISMnon-manufacturing index unex-pectedly jumped to 59.7, from 59.4in January.

Meanwhile, unemploymentclaims continued to fall, whilethere was also positive news for pro-

ductivity in the US labour market.Initial jobless claims dropped by

another 20,000 to 368,000 for the week ending 26 February, from adownwardly revised 388,000 theprevious week.

Ongoing claims declined to3.774m in the week ending 19February, down from 3.833m the

week before, as the jobs marketshowed signs of recovery.

Non-farm payrolls, announcedtoday, could have increased by 250,000 according to Paul

Ashworth of Capital Economics. And the Labour Department con-

firmed that productivity was up 2.6per cent in the final three months

of the year, up from 2.3 per cent inthe third quarter of 2010.

Economic activity in non-manu-facturing areas has now grown for15 straight months, the Institutefor Supply Management (ISM) said.

Employment in the sector rose atan index level of 55.6 in February,up by 1.1 per cent on January.

Scores above 50 indicateeconomic growth.

US services got a boost fromexports, according to the survey.

The export orders index jumped

to 56.5 from 53.5, while importsheld steady.

Jobs boost for US as service seexpands for 15 consecutive mo

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Economics10 CITYA.M. 4 MARCH 201

NEWS | IN BRIEF

Bean unlikely to back a rate hikeInflation may prove a little more persist-ent than the Bank of Englands forecastscurrently show, its deputy governorCharles Bean admitted yesterday.However, in a dovish speech, Bean gavelittle indication that he would vote for arise in interest rates next week.

Bernanke: Save during boom erasGovernments must stop overspendingduring upturns in the business cycle,Federal Reserve chairman Ben Bernankesaid yesterday. Building an adequatereserve fund during good times may notbe politically popular, but doing so canpay off during bad times, he said.Meanwhile, his Fed colleague NarayanaKocherlakota endorsed Bernankesaccommodative monetary policy, arguingit was appropriate for the US economy.

London property rent on the riseRental prices in London rose again inJanuary, the Royal Institution of Chartered Surveyors (RICS) said yester-day. Over two thirds more surveyorsexpect rents to rise, than fall, in the com-ing three months, RICS announced.

IP crucial for growth, says CBIRobust intellectual property systems arecritical for the UKs economic growth,the CBI argued yesterday. IP should beconsidered one of our crown jewels, saidCBI chief John Cridland. Global food prices rose 2.2 per cent to hit a fresh record high in February

GLOBAL food prices hit a recordhigh in February, the UnitedNations (UN) said yesterday, warn-ing that further oil price spikes andstockpiling by importers keen tohead off unrest would hit already

volatile cereal markets.Rising food prices are a growing

global concern, partly fuelling theprotests which toppled the rulers of

Tunisia and Egypt in January andFebruary, which in turn unleashedunrest in North Africa and theMiddle East from Algeria to Yemen.

The UN Food and AgricultureOrganisations (FAO) Food PriceIndex hit its second straight recordlast month, driven by rising graincosts and tighter supply to furtherpass peaks seen in 2008 when prices

sparked riots in several countries.FAO economist Abdolreza

Abbassian said global food pricesare likely to remain close to recordhighs until the condition of new crops is known, adding that jumpsin the oil price could have a biggerimpact on grain markets, whichhave seen benchmark US wheatprices surge 60 per cent in the yearto March.

Until we know about new crops,that means waiting at least until

April, our view is dont expect any major corrections in these highprices, expect even more volatility now that oil has joined the crowd,

Abbassian said.Oil prices recently hit 2-1/2 year

highs, nearing records set in 2008, with markets spooked on concernthat North African and Middle Eastunrest would choke key supplies.

Global unrest feaas food prices risto hit a record higBY HARRY B ANKS

COMMODITIES

BY J ULIAN HARRISUS ECONOMY

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HOUSEBUILDER Taylor Wimpey improved its operating margins to postan underlying annual profit ahead of expectations.

Revenues remained flat for the con-struction firm at 2.6bn in the year to31 December 2010, whilst the numberof homes completed dropped to 14,272from 15,166 a year earlier.

An increase in average selling priceshelped the builder to eke outincreased operating margins and pareits losses.

Taylor Wimpey made a pre-tax lossof 71.3m including exceptional itemsof 146.4m, compared with a loss of 96.1m a year earlier.

Discarding the exceptional items,the group hit profits of 75.1m, wellabove analysts predictions.

Market expectations had ranged between 24.1m and 70m.

The construction group said it now held a net debt of 654.5m, slashedfrom 750.9m a year earlier.

The builder is in the process of selling its Taylor Morrison opera-tions in North America in order topay down debt and focus on itsdomestic market.

Potential buyers for the unit includeCanadas biggest builder Mattamy Homes and US f irm Meritage Homes.

A sale could net Taylor Wimpey upto 620m.

For the year ahead, the builder saidit expected volatile market conditionsdriven by fluctuating house prices,economic uncertainty and restrictedmortgage lending. It said it would con-tinue to run the business cautiously.

Group chief executive Pete Redfernsaid: The significant improvement inour performance during 2010 reflectsour disciplined focus on margin aheadof volume growth.

We now have the financing inplace to enable us to continue thatprogress towards our aim of achievingdouble digit margins in 2012.

LONDON landlord Shaftesbury yester-day tapped investors for 102m in ashare placement to help fund acquisi-tions as more assets come up for salein its core West End market.

The real estate investor, whichowns more than 500 shops, restau-rants and bars in the West End, said ithad placed 22.7m new ordinary shares at 450p each a five per centdiscount to its Wednesday closingprice.

Shaftesbury said opportunities to buy property assets in West End loca-tions were increasing as the govern-ment and local authorities soldassets, and as building sales delayed

by the global financial crisis returnedto market.

The firm said it has spent themajority of the 149m raised duringits last rights issue in 2009 on acquir-ing new buildings.

This placing will ensure we havethe financial resources to take advan-tage of an acceleration in rarely avail-able long-term investments now emerging, particularly in and aroundBerwick Street, said chief executive

Jonathan Lane. JPMorgan Securities and Execution

Noble were the joint bookrunners forthe placing, equivalent to 9.99 percent of existing Shaftesbury shares.

The group also said it was evaluat-ing new long-term debt options to

bolster its capital structure.

Shaftesburyraises cashto expand

PROPERTY

THE MOST expensive workplace inthe world is now in Hong Kong,knocking Londons West End fromthe top spot, according to figuresfrom DTZ out yesterday.

The City of London has jumped to become the eighth most expensivelocation to run an office, with thecost per desk now 9,410 a year arise of 21 per cent on 2009.

The surge in City office costs wasdue to a revival in financial services

and a continued lack of supply push-ing rents up, DTZ said in its survey of

121 business districts across the world. The UK property tax rating revalua-

tion was another added cost from April 2010.

The West End is expected to be thefastest-growing rental market inEurope over the next five years withoccupancy costs set to rise 5.1 percent a year, compared to an expectedfour per cent annual growth in theCity.

The cost of a desk in thCity hits 9,400 a year

PROPERTYCONSTRUCTION firm Balfour Beatty saw its underlying pre-tax profits

jump to 319m last year. The infrastructure and mainte-nance group increased profits in the

year to 31 December 2010 by 20 percent, beating market expectations.

The strong improvement was bol-stered by its acquisition of US firmParsons Brinckerhoff two years ago.

The consolidation of the profes-sional services unit helped to boostits full-year results for the first time,accounting for 13 per cent of

growth. Yet weak construction markets in

America and the UK also wiped off 11 per cent of underlying revenue.

Balfour Beattys order book

increased by eight per cent to15.2bn over the year, with 7.2bn of work to be carried out in 2011.

Its average cash for the year was astrong 435m, despite an unwindingof negative working capital due tolower construction volumes.

Management at the f irm approveda six per cent increase in dividendpayments on last year, giving a full-

year payout of 12.7p. Analysts said the results showed

strong progress could be made this year, despite potentially tough trad-ing conditions.

Andy Brown, analyst at PanmureGordon, said: Its financial position

remains strong and the order book provides good revenue visibility.Immediate conditions remaintough, but the group expects tomake further progress. We maintainour positive stance.

Balfour Beatty chief executive Ian Tyler said: While we do not expect,in the short term, a meaningfulrecovery in the UK and US infrastruc-ture markets, we expect to makeprogress this year.

US unit drives Balfour profitsBYR ICHARD P ARTINGTON

CONSTRUCTION

Margin focusboosts TaylorWimpey profitBYR ICHARD P ARTINGTON

CONSTRUCTION


Taylor Wimpey chief exec Pete Redfern eyes higher profit margins. Picture: Micha Theiner

On the whole ISAs are a goodidea. Tax freesavings accountsare a great wayto encouragemore people tosave, so it's defi-nitely an optionI'd like to consid-er in the future.

DAVID PERRY |PROPERTY MANAGER

ISAs are a great way to savemoney and invest tax free. Youkeep everythingyou earn on yoursavings which isalways good.This is somethingId considerinvesting in atsome point.

NIGEL YEATMAN |CB RICHARD ELLIS

CITY VIEWS: WOULD YOU CONSIDER INVESTING INAN ISA? Interviews by Maria Tadeo

ANALYST VIEWS: IS TAYLOR WIMPEY NOWWELL PLACED FOR THE FUTURE?Interviews by Richard Partington

KEITH BOWMAN |HARGREAVES LANSDOWN

Taylor Wimpey appears to be firmly on the road to recovery. 2011 isexpected to be a further year of progress, supported by ongoing cost cutting,while more recently acquired lower priced land should contribute to the recoveryin the companys profit margin.

JOHN MESSENGER |RBS

The group is in a stronger position to manage the land acquisition andhome sale process relative to recent years. In particular, this implies a more selectiveland buying process aimed at maximising margin and value over volume in essenceallowing the landbank to determine sales output rather than vice versa.

RACHEL WARING |PANMURE GORDON

There has been a lot of improvement over the last couple of years, specifi-cally in tightening up the balance sheet. It does appear to be in pretty good health atthe moment, yet it still has highest level of gearing in the sector. If it did dispose itsnorth American business it would hit normal levels. Watch this space.

ANALYSIS l |Taylor Wimpey

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38

32

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40.703 Mar

INDIVIDUAL Savings Accounts (ISAs)are still the most popular invest-ment in the UK, remaining numberone for the fourth consecutive year,according to the latest research intofinancial products.

Two thirds of people have investedin a cash ISA over the past year,according to the annual investorconfidence index by broker TD

Waterhouse.Stocks and shares ISAs were the

second most popular choice withalmost half 47 per cent of respon-dents investing in them.

They are particularly popular inthe South East where over 60 percent say that they have invested inthis type of ISA.

TD Waterhouse said the trendfrom the survey was apparent in itsISA account opening activity, withnew account openings having dou-

bled in the first few months of this

year compared to the same periodlast year.

The combination of continually low interest rates and last yearsincrease in ISA investment limits to10,200 has certainly helped to boostthe popularity of equity ISA invest-ment, said Darren Hepworth,

Trading and Customer ServicesDirector at TD Waterhouse.

ISA allowances are set to increaseagain to 10,680 on 6 April, provid-ing investors with more scope to buy shares and equity funds through

their ISA or diversify into interna-tional markets.

Individual Savings Accounts surgpopularity as interest rates stay low

INVESTMENT

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BP scaled back its staff pay-outs inlight of the Gulf of Mexico disasterlast year, according to its annualreport released yesterday.

Chief executive Bob Dudley, whotook the top job in October after Tony Hayward stepped down, has notreceived a performance bonus follow-ing the Gulf spill, which killed 11people and could cost BP up to$40bn.

Chief financial officer Byron Grote will get 30 per cent of his bonus, or$207,000, to reflect strong perform-ance in parts of the company notlinked to the Gulf spill.

Refining and marketing chief IainConn also got a 104,000 bonus.

While the tragedy of lost lives andenvironmental damage remains fore-most in everyones minds, the com-mittee also wished to fairly acknowledge the good businessresults in many parts of BP, deliveredin the most testing of times, saidremuneration chairman DeAnne

Julius in the report.Hayward did not receive a per-

formance bonus but was paid 1.08mon leaving BP a years salary plus

30,000. The firm trimmed its staff num-

bers by 600 to 79,700 during the yearas part of a long-term programme. Itsaid it dismissed 552 workers for

breaking its code of conduct last year,up from 524 in 2009.

Excluding the Gulf disaster, BPsspill rate rose 44 per cent by volumeto 1.7m litres in 2010. The number of oil spills of one barrel or more rosefrom 234 to 261 during the year.

The firm said in its report that ithopes to eventually restart opera-tions in the Gulf of Mexico. The deep-

water drilling ban in the Gulf helpedpull production volumes down fourper cent to 3.82m barrels per day, thecompany added. BP shares closed 1.4per cent higher at 491.5p yesterday.

RUSSIAN mining and steel groupSeverstal is unlikely to bring its NordGold arm back to the market foranother IPO attempt this year, thefirms chief financial officer told City

A.M. yesterday.Definitely we believe we will come

back to the market when we areready, said Alexey Kulichenko. We

really need to focus on integratingthe company and showing to every-

body that we are able to deliver both volume and value efficiency in the business.

Nord Gold, whose London float toraise up to 622m was shelved lastmonth, is one of the few organicgrowth stories in the group,Kulichenko said.

We were just not happy with themarket, their expectations of ourgrowth prospects, and we decidedthat it didnt reflect the value that we

were looking for, he added.Nord Gold would have joined the

FTSE 100 had it floated, with a mar-ket capitalisation of around 3bn.Severstal hoped to use the funds tofuel expansion and pay down itsdebts.

The firm was one of four Russiangroups to pull out of London listingslast month.

FTSE-listed Severstal posted afourth-quarter loss of $352m(216.5m) yesterday to round off a

yearly loss of $577m, slightly ahead of

expectations, as discontinued opera-tions hit the firms bottom line.

Nord Gold unlikely to retry London floatthis year as Severstal looks for growth

THE board of Russian aluminiumgiant Rusal yesterday rejected Norilsk Nickels offer to buy out 20 per cent of its shares, RIA news agency said, quot-ing sources close to the Rusal board.

Last month, Norilsk offered to buy 20 per cent of its shares from Rusalfor $12.8bn, which would leave thealuminium giant majority owned

by tycoon Oleg Deripaska -- with a five

per cent stake. The deadline for theoffer is 4 March.

Norilsk Nickel and Rusal could not be reached for immediate comment.

Rusals decision to keep the stakemeans that the marathon fight forcontrol of Norilsk Nickel betweentycoons Oleg Deripaska and VladimirPotanin will continue.

The next round is set for 11 March, when Norilsk Nickel will hold anEGM to elect a new board.

Deripaska controls 25 per cent of the company through Rusal, while

Potanin holds the same amount viahis Interros investment group.

Rusal snubs Norilsks oto buy a 20 per cent stak

COMMODITIES

THE OWNER of Londons fire engines, AssetCo, has successfully raised 16mthrough a new share placement inorder to tackle its debt problems.

The outsourcing firm, which main-tains the capitals fire engines, was fac-ing serious financial problems and aHigh Court winding-up petition.

However, the new placement of 160m ordinary shares, underwritten

by Arden Partners, will cut its bank debts to about 3.9m by the end of this

year. The issuance leaves shares in the

firm massively diluted, with sharesclosing down at 12p yesterday. The chairman, chief executive and

finance director will now be changed. Arden analyst Geoff Allum said:

There are no problems with the oper-ation of this company, the problemhas been with financial managementof its balance sheets. The share price isgoing to shoot up now, if it doesntrecover pretty rapidly there are bid-ders out there and they wont go away.

Share issue nets Londofire engine owner 16m

SUPPORT SERVICESGLENCORE unveiled a trading updateshowing a 60 per cent rise in pre-tax

profit yesterday, with the results par-ticularly buoyed by rising prices formetals and agricultural products.

The privately owned Swiss com-modities trader is currently lining upinvestors for an initial public offering(IPO), with its chief executive IvanGlasenberg making a major presenta-tion to analysts on Monday and

Tuesday in preparation for the float.It is being advised by Morgan

Stanley, Citigroup and Credit Suisse,

although further banks could be brought on to underwrite the deal, which could be worth up to $60bn. AsCity A.M.revealed in December, howev-er, a large portion of its shares could

be taken to Hong Kong in a dual-list-ing, rather than staying in London.By the terms of bonds it issued last

year, Glencore must either float by 2013 or buy back its debt with a highinterest rate.

But it is expected to go public soon-er rather than later to take advantageof a benign commodities environ-ment: its revenues swelled 36 per centlast year to $145bn, with earnings

before interest and taxes of $5.29bn.

The firm said that energy commodi-ties trading was disproportionately hit

by an unusually stable price environ-ment characterised by surplus refin-ery capacity and a weak freight

market. Oil and coal are expected tomake a comeback this year, with oilalready at two-and-a-half year highs.

The weak energy trading was coun-tered by higher volumes in grain dueto bad weather in Russia, Ukraine and

Australia.Glencore also disclosed that it refi-

nanced its debt to the tune of $10.3bnlast year, including the issue of $3bn of long-term bonds and $300m of contin-gent convertible bonds (cocos).

Profits up 60pc at GlencoreBY J ULIET S AMUEL

COMMODITIES

BP cancels itsbonuses afterGulf disasterBY M ARION DAKERS

ENERGY

BY M ARION DAKERSMINING


BP and Rosneft:

Estimated reserves of 10 trillion cubic metres of gas and

5bn tonnes of crude oil.

Gazprom: Yamal

Estimated reserves of 7.3bn cubic metres of gas and

10.3m tonnes of oil

Shell (with Gazprom): Sakhalin

Produces average 15m barrels of oil a year

Total and Novatek: Yamal field

Estimated reserves of 802bn cubicfeet of gas and 31m tonnes of gas condensate.

ANALYSIS l Oil companies in Arctic Russia

South Kara Sea

NEWS | IN BRIEF

Tullow finds oil in GhanaShares in Tullow Oil rose 3.9 per centyesterday, among the top risers on theFTSE 100, after the oil explorerannounced that it had found oil in excel-lent quality sandstone reservoirs at itswell off the coast of Ghana. Explorationdirector Angus McCoss said it is a highlyencouraging step towards the firmsgoal of declaring the well commerciallyviable later this year.

Kazakhmys forecasts flat salesFTSE 100-listed copper producerKazakhmys forecast no output growththis year after shutting mines to savecash in 2009 and seeing fourth-quarterproduction slide by 25 per cent. Thefirm, which posted a 35 per cent rise inrevenue to $3.2bn (1.97bn) on risingcommodity prices, said it will focus onmanaging costs and working on growthprojects this year, as well as preparingfor a possible Hong Kong listing.

Churchill suffers licence setbackChurchill Mining shares were suspendedfrom AIM for most of yesterday aheadof the news that an Indonesian tribunalhas supported a decision to cancel fourof the firms mining licences in the coun-try. Churchills shares tanked 69.7 percent to close at 27.25p when reinstatedat 3pm, after it said it is working on anappeal against the decision, insistingthat the ruling does not alter its legalownership of the licences.

GDF Suez expects bumper profGDF Suez raised its earnings forecastfor the year yesterday in light of itsrecent merger of international businesswith International Power, after report-ing a forecast-beating 4.62bn(3.96bn) net income. Its revenues rose5.7 per cent to 84.5bn on higher ener-gy tariffs in its native France. GDF said itplans to focus on emerging markets forlong-term growth.

ANALYSIS l BP

p


510

490

470

450

491.503 Mar

FRENCH oil giant Total has done a$4bn (2.46bn) deal to explore gasdeposits in the Arctic with Russianindependent firm Novatek, itannounced yesterday.

Total has signed up for a 20 percent stake in the Yamal liquefiednatural gas project, which containsan estimated 802bn cubic metres of natural gas and 31m tonnes of gascondensate.

Total plans to spend $4bn on buy-ing a 12 per cent stake in Novatek,

which both firms expect to rise to19.4 per cent within three years.

Russian prime minister VladimirPutin was present at the signing cer-emony near Moscow.

Total, which has operated inRussia since 1989, is the latest oilmajor to team up with a Russianfirm to gain access to Arctic explo-ration.

State-owned oil firm Rosneft hassigned multi-billion dollar deals

with Exxon and BP this year to com- bine the expertise of US and UK firms with access to one of the lastknown untapped oil deposits.

BY M ARION DAKERSENERGY

Total spends $4bn to tapNovateks Arctic gas find

8/7/2019 2011Book

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Berry Asset ManagementThe specialist private client wealth

management firm has appointedMalcolm Cuthbert as director of wealthmanagement, where he will work

alongside the newly appointed RichardFellows. Cuthbert will start in April.

Speechly Bircham LLPThe City law firm has appointedMalcolm MacDougall as a partner tohead its private equity practice.

MacDougall, who joins from DLA Piper,undertook two of the largest privateequity deals in the UK in 2010:Sophos/Apax Partners and CVC CapitalPartners/Autobar Group.

Foreign & ColonialSarah Arkle and Nicholas Moakes havebeen appointed to the Board of the

Foreign & Colonial Investment Trust asnon-executive directors. Arkle is vicechairman of Threadneedle AssetManagement and Nicholas Moakes ishead of public markets at the WellcomeTrust. Until 2007, Moakes was head of the Asia Pacific investment team at

BlackRock Investment Management.Ark Therapeutics GroupRussell Banks has been appointed tothe role of chief financial officer at ArkTherapeutics Group. He succeeds DavidBowyer, who has returned to his nativeZimbabwe to take on a senior opera-tional role in a Zimbabwean company.

Montello Income FundAndrew Wood has been appointedhead of fund distribution for MontelloIncome Fund and its new alternativefund distribution business MontelloDistribution. Wood previously workedfor large wealth and fund managers in

London and Zurich.Mayfair CapitalThe commercial property fund managerhas hired Sarah Bate as director of research and James Feilden as assistantasset manager. Bate joins fromRockspring PIM and Feilden joins fromGVA, where he was a senior surveyor.

CITY MOVES |WHOS SWITCHING JOBS Edited by Harriet Dennys

Bank Of America Merrill LynchMatthew Koder will join Bank of America MerrillLynch as head of global corporate and invest-ment banking for Asia Pacific in the summer.Koder will report to Brian Brille, president of Asia Pacific, and will be a member of the GlobalCorporate and Investment Banking Operating

Committee. Koder has 20 years experienceworking in investment banking and capital mar-kets. Most recently, he worked at UBS as headof Global Capital Markets. Prior to joining UBS,Koder spent almost 10 years at Goldman Sachs.

+44 (0)20 7557 7245morganmckinley.com

To appear in CITYMOVES please email your careerupdates and pictures to [email protected] SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

Optimism on jobfuels Wall St rally

INVESTORS betting on a big gain inUS payrolls pushed Wall Street toits best one-day rally in threemonths yesterday, but weak vol-

ume remained a concern. As oil paused from its recent climb,

the markets focus shifted to stronger-

than-expected economic data a day before the February US employmentreport. The median estimate is for again of 185,000 jobs, according to econ-omists polled by Reuters, but marketsentiment was leaning toward a num-

ber above 200,000, traders said.There are still concerns about high

oil prices but the bottom line is, the USeconomy is improving. We continue toget confirmations of that, and its agood sentiment heading into Fridaysnumbers, said Ryan Detrick, technicalanalyst at Schaeffers InvestmentResearch in Cincinnati, Ohio.

The Dow Jones industrial averageclosed up 191.40 points, or 1.59 percent, at 12,258.20. The Standard &Poors 500 Index finished up 22.53points, or 1.72 per cent, at 1,330.97. TheNasdaq Composite Index was up 50.67points, or 1.84 per cent, at 2,798.74.

The Dow and S&P 500 posted their

biggest one-day gains since December1. However, volume was below average

for days when the market rallies, caus-ing some traders to be sceptical aboutthe durability of the rally.

About 7.81 billion shares traded onthe New York Stock Exchange, NYSE

Amex and Nasdaq, below last yearsdaily average of 8.47 billion.

The put-to-call ratio in the optionsmarket also didnt change muchdespite the days rally as traders con-tinued to hedge against a potentialdrop in the market.

As much as investors are excitedabout a pullback so that they can

jump in, they are just as concerned

about how quickly this market canturn, Detrick said.Initial jobless claims fell last week to

368,000 a two-and-a-half year low one day after a robust report on pri-

vate-sector hiring. The Institute forSupply Management's non-manufac-turing index rose to 59.7 in February,slightly above forecasts and higherthan the January result.

Industrial stocks led the markethigher, boosted by a weaker dollar andan improving outlook for globaldemand. The S&P industrial indexgained 2.4 per cent, with Caterpillarup 3.2 per cent to $104.25.

Stocks have shown resilience in theface of economic headwinds. The

broad S&P 500 is down only about oneper cent from a peak in late February after falling around three per cent dueto growing violence in oil-producerLibya. The Arab League said yesterday a

peace plan for Libya was under consid-eration.

AREBOUND by commodity stocks fuelled strong gains by the UKs top share index yester-day, as oil prices fell back on

hopes for a peace deal in Libya, easingconcerns over global demand.

The FTSE 100 was up 90.20 pointsor 1.5 per cent at 6,005.09 at the close,

ending above the 6,000 level for thefirst time since 21 February. It hadfallen in eight of the previous ninetrading days.

The sun has come out today intrue risk-on style, and after threedays of suffering, Londons headline-index is trying to turn positive for the

week, said Will Hedden, sales traderat IG Index.

Heavyweight energy stocks andminers led the rally, two sectors thathave been hit recently by fears the ris-ing cost of oil could derail a fragileglobal economic recovery and damp-en demand for commodities.

Brent crude fell below $115 (70.64)a barrel as the Libyan governmentaccepted a plan for a negotiated solu-tion to the revolt in the North Africancountry, a spokesman for Libyan ally

Venezuelan President Hugo Chavezsaid.

Oil explorer Tullow Oil was a majorgainer, up 3.9 per cent af ter announc-

ing an oil discovery offshore Ghana.While the oil price remains high,

we believe the outperformance willcontinue (for Tullow), said RichardCurr, head of dealing for CFD special-ist Richard Curr.

He said Tullow stock was a buy, with a target of 1,500p-plus in thecoming weeks, though he recom-mended a tight stop loss to take intoaccount any oil-price-driven volatili-ty.

Xstrata was a strong performeramong the miners, up 2.6 per centafter stakeholder Glencore reported

bumper profits.But gold miners African BarrickGold and Randgold Resources missedout on the sector rally as the price of the precious metal fell, with recentsafe-haven-related demand softened

by the peace possibilities in Libya.Gold also fell as the dollar dropped

back against the euro after EuropeanCentral Bank chief Jean-Claude

Trichet said the bank would exercisestrong vigilance over inflation, rais-ing the prospect that it might liftinterest rates in Europe as soon asnext month.

Travel firms benefited from an eas-ing in worries over fuel costs, withTUI Travel adding 4.6 per cent.

TUI Travel was also boosted asGerman parent TUI's board gave thego-ahead for a possible initial publicoffering of container shipping groupHapag-Lloyd , raising hopes for a mop-

up bid for the British firm.International Consolidated

Airlines added 3.3 per cent as therecently merged firm reported 8.2 percent growth in group premium traf-fic in February.

Strong corporate earnings data inthe services and engineering sectorsalso helped market sentiment.

Engineer IMI topped the risers board, gaining 6.6 per cent to 943pafter hiking its 2010 dividend by 29per cent, while oil services company AMEC closed up 5.4 per cent at 1,190pafter it posted a 27 per cent rise inprofits for the past year.

Weir Group was also up four per

cent at 1,770p.US blue chips were up 1.4 per cent by London's close, supported by theeasier crude price as well as by newsUS weekly jobless claims dropped to atwo-and-a-half year low.

The jobless claims news came oneday after a similarly robust ADPreport on private sector hiring.

Taken together, the two could bode well for Fridays key February payrollreport.

FTSE bounces on commodityrebound as oil price weakensTHELONDONREPORT

THENEW YORKREPORT

p

20 Dec2010 10 Jan 24 Jan 7 Feb 21 Feb

6,100

5,700

5,800

5,900

6,000

ANALYSIS l FTSE6,005.09

3 Mar

BEST OF THE BROKERS To appear in Best of the Brokers email your research [email protected] l ITV95


p

85

75

65

90.553 Mar

ITVUBS rates the media company buy with a 12-month target price of 115p.The broker says that the firms strong results on Wednesday benefitedfrom cost-cutting and a strong advert ising environment, and forecasts fiveper cent growth in the second half of 2011. UBS adds that while the firmis focused on organic investment, an acquisition in production would com-plete ITVs turnaround story.

ANALYSIS l Standard Chartered1,900


p

1,800

1,700

1,600

1,712.503 Mar

STANDARD CHARTEREDNomura has upgraded th

2011book

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