Cityam 2012-07-25

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WINNER
Apple slows
on iPhone 5
speculation
APPLE recorded a rare quarter of dis-
appointing sales last night, sending
shares down almost six per cent in
after-hours trading, as demand for
its iPhone fell ahead of the impend-
ing release of its next model.
The worlds largest company by
market value said revenues were
$35bn (22.6bn) in the three
months to July, lower than the
$37.2bn forecasted.
Apple attributed the miss to
rumours and speculation about
the next iPhone, expected to be
released in the autumn, and weak
performance in Europe. Net
income was $8.8bn, 21 per cent up
year-on-year but lower than
forecasts of over $9.5bn.
Apple sold 26m iPhones over the
period, down from 35m in the
previous three months, although
iPad sales rose by 44 per cent to
17m following the release of the
newest version in March.
Chief executive Tim Cook said
he could not be more confident
in our product pipeline.
Apple also announced last night
that it will release the latest
version of its Mac operating
system, Mountain Lion, today.
Cook said that growth in
mainland Europe had been flat
over the last year. Apple expects
sales in the next quarter to fall
slightly to $34bn, suggesting the
next iPhone will not launch until
October at the earliest.
Earlier yesterday, the tech giant
claimed rival Samsung owes it
$2.5bn over the use of Apples
technology in the Korean firms
products. The two companies are
due to go to trial on Monday.
Greek PM Antonis Samaras is failing to keep his government finances on track, while Spanish leader Mariano Rajoy faces bailing out regional authorities
THE SPANISH governments borrow-
ing costs shot to a euro-era high yester-
day as another regional authority
requested a bailout, panicking already
nervous investors who now fear a full
rescue might be needed to try to help
the country out of its debt troubles.
It came as EU officials warned Greece
could also need another bailout,
meaning the European Central Bank
and International Monetary Fund
could lose the cash they pumped in
earlier this year an eventuality they
previously said would never happen.
The single currencys plight was
highlighted late last night as Moodys
shifted the European Financial
Stability Facility bailout fund from a
stable to a negative outlook, after a
similar knock to Germany on Monday.
Yesterday, Italian stocks plunged to
their lowest level since the euro was
created, as investors feared it could
also need a bailout if its situation does
not improve soon.
And influential survey data indicat-
ed the Eurozones private sector out-
put fell in July, raising expectations of
a recession as JP Morgan slashed its
forecast to predict a 0.5 per cent con-
traction in GDP in the fourth quarter.
Catalonias regional government will
apply for aid from the Spanish govern-
ment, its finance minister said yester-
day, as it cannot access debt markets.
It follows Valencia, which called for
assistance on Friday, seeking to tap the
central governments 18bn (14bn)
bailout fund for regional authorities.
But Spains government is already
under enormous strain dealing with
its own debts, and had to arrange a
100bn Eurozone rescue plan for the
banks as it cannot bail them out itself.
Yields on its 10-year bonds rose to
new highs of 7.636 per cent yesterday,
and a 3bn auction of three- and six-
month debt saw six-month yields rise
to 3.691 per cent, up from 3.237 per
cent last month.
A bailout is looking more likely by
the day, warned Jonathan Loynes of
Capital Economics. That would signif-
icantly deplete the resources of the
bailout funds and leave little in the
pot to provide further assistance to
Portugal and Ireland and, more cru-
cially, to deal with problems in Italy.
Yields on Italian 10-year bonds also
jumped 0.26 percentage points to
6.597 per cent, while the stock market
dropped another 2.71 per cent, hitting
a euro-era low in the course of the day.
Meanwhile EU sources told Reuters
that Greece could need to restructure
its debt again just four months after
the countrys last bailout.
Troika officials are in the country
ahead of European Commission presi-
dent Jose Manuel Barrosos visit tomor-
row, and have found government
finances far worse than hoped in
part because they now expect GDP to
fall seven per cent this year, not the
five per cent previously believed.
Meanwhile Standard & Poors down-
graded the subordinated debt of sever-
al European banks as it believes the
creditors will not receive any help in
the event of a bailout, under new EC
draft bank resolution plans.
BY JAMES TITCOMB
FTSE 100 M5,499.23 -34.64 DOW M12,617.32 -104.14 NASDAQM2,862.99 -27.16 /$ 1.55 unc / 1.28 unc /$ 1.21 unc
DEBATE: Page 19

BUSINESS WITH PERSONALITY
www.cmcmarkets.co.uk
LONDON2012
days to go
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2
www.cityam.com FREE ISSUE 1,681 WEDNESDAY 25 JULY 2012
BY TIM WALLACE
GREECEANDSPAIN
SPARK EURO FEAR
Certified Distribution
28/05/2012 till 01/07/2012 is 132,857
TURNER AFTER KINGSJOB
SHELLS UK BOSS ON THE KEY ROLE OF SCIENCE EDUCATION
FSA CHAIRMAN THROWS HIS HAT INTO THE RING
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
THE HOME Office is mounting a last-
gasp attempt to block planned strike
action by border workers during the
Olympics, it emerged yesterday.
Procedural errors in the strike
ballot could be used in support of an
injunction to halt the industrial
action due to start tomorrow.
The PCS union has said thousands
of public sector workers, including
those manning the immigration
desks at Heathrow and other key
routes into London, will walk out
the day before the Olympics begin.
The High Court will hear the
injunction application today.
Games strikes
face injunction
BY MARION DAKERS
G
E
T
T
Y
Londons enterprise sees
bright future for business
LONDONS businesses are bullish
about both their own futures and
the short-term economic outlook
for London as a whole, according to
research published by the London
Chambers of Commerce and
Industry (LCCI) today.
A balance of 37 per cent of firms
had positive overall expectations
for their business over the coming
12 months, compared to 12 per
cent six months ago and 31 per
cent last quarter. A balance of zero
would indicate that firms expected
no change in conditions.
Businesses were not quite as posi-
tive on the future of Londons econ-
omy, but nevertheless 80 per cent
of companies thought the capitals
prospects were positive or neutral
over the coming 12 months.
Enterprises reported their own
employment climbing over the sec-
ond quarter, to a four and a half
year high, with a positive figure of
eight per cent on balance.
In spite of the poor operating
environment London firms are
maintaining their staffing levels
and many are actually taking on
staff, the report stated.
London businesses are clearly
gearing themselves up for a great
summer, taking on staff and feel-
ing much more positive about
Green energy compromise reached
Wind investors will escape deep cuts to
subsidies but the coalition will not
commit to tough new targets for
decarbonising British electricity
generation under a compromise deal
thrashed out between George Osborne
and Ed Davey, the energy secretary.
Under the agreement, to be announced
today in parliament, Mr Davey will claim
victory for seeing off a treasury threat to
cut onshore wind subsidies further than
planned, a decision that will anger Tory
backbenchers.
Small banks fear rule squeeze
Small European banks are warning that
tough EU rules aimed at staving off future
taxpayer rescues of bigger banks could
wreak havoc with their capital costs and
force them to cut back lending.MEPs are
seeking to rewrite bank safety rules.
Big push on 2.5bn train deal
The most ambitious train procurement
programme undertaken in the UK is
expected to be signed off this week after
a delay of more than three years, creating
at least 500 jobs in the north-east and
supporting thousands in the supply chain.
Canadians strike Irish gold
The locals of Ballinvalley in Co Wicklow
have known since the Avoca rush of 1796
that there was gold in them thar hills. But
it has taken Canadian funding to confirm
that the land contains large seams of
untapped, high-grade ore.
Carmakers given green light
The lack of a genuine world leader in
designing and developing electric and
hybrid vehicles could offer a route to the
future global success of British
carmaking, a leading industry body says.
Romney would restore British link
Mitt Romney would restore "Anglo-Saxon"
understanding to the special relationship
between the US and Britain, and return Sir
Winston Churchill's bust to the White
House.
San Marino falls victim to euro crisis
Fitch has downgraded the republic, which
relies on banking and tourism, from A to
BBB+, with a negative outlook meaning
that its rating could drop further, following
an Italian crackdown on tax evasion.
Obama leads as voter anxiety rises
American voters are growing more
polarised and locked in their views as
they witness a presidential campaign that
is boosting negative feelings about both
candidates, a poll shows.
Finland pleased With Moody's
Finland said it was "very pleased" with
the confirmation of the country's AAA
rating by Moody's, which has left it the
only Eurozone member to have a top
rating backed by a stable outlook.
TRADE minister Lord Green
yesterday admitted that he
regrets HSBCs failures in relation
to alleged money laundering while
he was in charge of the bank but
says he has no intention of
resigning.
As HSBCs former chairman and
chief executive, Green has come
under pressure to explain what he
knew about the companys
compliance procedures following
last weeks publication of a US
Senate report that alleges the bank
dealt with rogue nations and drug
gangs under his watch.
HSBC has expressed its regret
that there were failures of
implementation in [compliance],
and I share that regret, Green
wrote to Chris Leslie, Labours
shadow Treasury minister.
HSBC has always sought to do
the right thing, and when things go
wrong, worked hard to put them
right. I have sought to embody
these values in my own work, he
added.
Green later told Sky News he had
no case to answer over the money
laundering allegations.
Business secretary Vince Cable
gave the peer his backing: He is a
very good trade minister and that
is what the Prime Minister hired
him for and he is doing that job
very well.
Green regrets
HSBC failings
but will stay on
In the second quarter only 12 per cent of businesses said their employment went down
2
NEWS
BY JAMES WATERSON
BY BEN SOUTHWOOD
To contact the newsdesk email news@cityam.com
W
ITH the Eurozone back in
crisis, it is tempting to
assume that Britain will be
fine, that we dont share the
problems plaguing much of the
continent. Such complacency would
be a mistake. As an intriguing note
from Credit Agricole points out,
there are growing signs that investors
are losing confidence in sterlings
status as a semi-safe haven, to use the
somewhat bizarre term favoured by
many market participants.
After peaking at 38bn in November
2011, Bank of England data shows
that foreign investor demand for gilts
has slumped, registering a 5bn out-
flow in the three months to June
2012, according to the French bank.
Foreign capital inflows from abroad
were one of the drivers of the pounds
relative strength during the crisis; if
this reverses, perhaps because of
EDITORS
LETTER
ALLISTER HEATH
First signs that foreign investors are losing trust in Britain
WEDNESDAY 25 JULY 2012
growing fears about the budget
deficit, George Osbornes claim to
have tamed the financial markets will
look increasingly hollow.
In fact, in what could be the first
signs of a shift in sentiment, the
effect has already started to show on
the foreign exchange markets, as
some of those seeking to buy curren-
cies to travel abroad this summer will
have noticed. To see the significance
of this change, it is worth taking a
look at recent history.
Sterlings broad nominal effective
exchange rate had spectacularly out-
performed both the euro and dollar
since early 2009, following a collapse
in the pounds value in the early
stages of the crisis and during its
peak. The pounds 7.5 per cent gain
over the past 12 months is a key rea-
son why it is up by more than 10 per
cent over the past three years.
Sterling/euro is up close to 13 per cent
in the past 12 months and by more
than 20 per cent in the past three
years; the pound has also done well
against the dollar, Swiss franc and
Norwegian kroner.
Yet more recently the dollar has
recovered, with the pound falling over
three per cent against the greenback
in the past 12 months. The pound has
also dipped against the yen, Canadian
dollar and Australian dollar over the
past three months, helping exporters
mentators realise. They have begun to
notice that things are not proceeding
according to plan, and are starting to
vote with their feet.
Who can blame them? Last Fridays
budget deficit figures were woeful.
Borrowing is on course to overshoot
the official full-year forecasts by a
long way on current trends, by
20bn, according to Capital
Economics. Osbornes saving grace, as
ever, will be the Eurozones even
worse performance: it is clear that
Spain will need a huge bailout and
that Greek debt will require another
restructuring. The UK, which will sim-
ply continue to monetise its debt, will
never look as risky in comparison. But
perceptions of the UK are clearly shift-
ing, and not for the better.
to those markets. The Credit Agricole
research shows that sterling has
underperformed against other devel-
oped country currencies recently.
So what are we to make of all of
this? It does seem that some investors
have started to see through Osbornes
propaganda. The economy has
ground to a halt, at least if the official
statistics are to be believed; what is
certainly unquestionable is that the
public finances are deteriorating
again. Most depressingly, income tax
receipts are falling; declining pay and
bonuses in the City are part of that
story, something that banker-bashers
would do well to remember. Another
lesson is that those who are relaxed
about the budget deficit and actually
want to borrow even more (supposed-
ly to stimulate demand) need to think
again. The markets are much more
fixated on the deficit than most com-
their future, despite other indicators
being weak, said LCCI chief execu-
tive Colin Stanbridge.
The next few months should bring
a much needed boost to sales both at
home and abroad, and should hope-
fully be the start an economic recov-
ery across the capital, Stanbridge
went on to say.
But nevertheless, firms face plenty
of problems, the survey showed.
Export and domestic sales remained
in negative territory for domestic
orders.
And while export orders were mar-
ginally positive rising on the quar-
ter, but still remaining down
compared to the same period last
year. Similarly, 31 per cent of firms
reported that their cashflow wors-
ened, compared to just 19 per cent
who reported improvement.
Condence in company propects over the next 12 months
2006 2007 2008 2009 2010 2011 2012
-40
-20
0
-60
20
40
60
80
100 %WeightedBalance+/-
Turnover Profitability
Overall prospects
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
FORMER Anglo Irish Bank head Sean
FitzPatrick was charged yesterday
over his part in Irelands most
expensive bank failure, making him
the highest profile banker to face
prison in connection with his
countrys financial meltdown.
FitzPatrick, the face of Ireland's
banking crisis after serving as Anglo
chief executive during its rapid rise
and chairman during its stunning
fall, was arrested in Dublin airport
and brought before court to face 16
charges. He was released on bail and
is due to appear again on 8 October.
Boss of Anglo
Irish charged
HARRY BANKS
TOP LAWYER Anthony Salz will have
free rein to speak to staff and examine
company documents in his inquiry
aimed at cleaning up Barclays cul-
ture in the wake of the Libor scandal,
the bank revealed yesterday.
The former Freshfields senior part-
ner has roughly nine months to inves-
tigate what went wrong at the bank
and to come up with a new code of
conduct, which Barclays board
intends to accept and implement.
Pay and bonuses are expected to be
more closely linked to good behaviour
too, the bank explained.
Salz will report to a committee of
non-executive directors, made up of
David Booth, Alison Carnwath and Sir
John Sutherland, and headed by
deputy chairman Sir Michael Rake
rather than former chair Marcus
Agius or chief executive Bob
Diamond, who were forced out over
the scandal.
He has been tasked with explaining
the key values and beliefs that
Barclays expects its staff to hold and
follow, and ensure the structures are
in place to maintain that behaviour.
BY TIM WALLACE
The measures are likely to include
ensuring policy and rewards are
aligned with those values, as well as
making sure bosses at the bank set a
good example to other staff.
Salz will be given a team from a pro-
fessional services firm to help in his
investigation, and will make his work
public next spring, shortly before
Barclays annual general meeting.
We will ensure that he has whatev-
er resources necessary at his disposal
to make it thorough and far-reaching,
promised Rake.
We expect this work to contribute
significantly to the broader change
that we intend to bring about to the
way in which Barclays operates.
ANTHONY Salz, appointed yesterday to lead
the investigation into staff culture at
Barclays, has a long record in City law, bank-
ing and public works, as well
as experience of leading
reviews into voluntary
regulation at private
rms.
After 30 years as a
corporate lawyer at
Freshelds, including 10
years as senior partner, in
2006 Anthony Salz moved
to become executive vice
chairman at Rothschild.
He also works in the public and
charitable sectors, as lead
non-executive
member of the
board of the Department for Education, and
is a trustee of the Tate Foundation, the Eden
Project, the Paul Hamlyn Foundation, the
Scott Trust and the Royal Opera House.
Salz was vice chairman of the BBC
board of governors from 2004 to
2006.
On top of that distinguished career,
Salz has direct experience in
running the kind of behavioural
review Barclays is after. He chaired
two review groups on press
self-regulation on behalf of the Media
Standards Trust, which published
reports in 2009 and June 2012.
As a result, Barclays deputy chair-
man Sir Michael Rake called
Salz the ideal individual
to lead this review.
Deutsche Bank reveals slump
in profit due to euro weakness
DEUTSCHE Bank rushed out a
profit warning yesterday
afternoon, and became the latest
global investment bank to reveal
weak second quarter pre-tax
profit, as the flagging euro and
lower trading activity hit earnings.
Preliminary figures released
yesterday ahead of Deutsches
planned 31 July reporting date
showed the bank expects quarterly
pre-tax profit of about 1bn
(645m), down from 1.8bn a year
earlier and below market
BY HARRY BANKS
expectations. Deutsche said it
would take steps to de-risk its
operations as a result.
Deutsche blamed the weak euro
for inflating its dollar and sterling
cost base, shrinking its second-
quarter net income to about
700m from the 1.2bn a year
before. The results are the first
since new co-chief execs Anshu Jain
and Jrgen Fitschen took over in
June.
Philipp Haessler, banking analyst
at Equinet, said: The figures are
weaker than expected, mainly due
to costs and risk provisions.
Costs were 300m higher than
expected, Metzler bank analyst
Guido Hoymann said, adding the
results did not appear to include
any provisions for a potential
settlement in the Libor rigging
scandal.
An internal probe at Deutsche
found that two of its former
traders may have been involved in
colluding to manipulate
benchmark interest rates, but
there was no indication of failure
at the top of the organisation,
three people close to the
investigation said.
THE proportion of women on the boards of FTSE 100 firms has risen to 16.7 per cent from 12.5
per cent in 2011, according to new figures from the Department of Business. The news will
add steam to business secretary Vince Cables insistence that quotas to force board diversity
are unnecessary. Recent appointments include Lucinda Bell, finance director at British Land.
WOMEN TAKE MORE SEATS ON FTSE 100 BOARDS
Barclays PLC
24Jul 18Jul 19Jul 20Jul 23Jul
155.0
157.5
160.0
162.5
150.0
152.5
165.0 p
150.60
24Jul
PROFILE: ANTHONY SALZ
3
NEWS
cityam.com
Major powers
for Salz inquiry
into Barclays
GOOGLE has agreed on the basis of
an antitrust settlement with the EU,
it emerged last night.
The EUs competition
commissioner Joaqun Almunia has
accepted proposals from the
internet giant on changes to the
way it ranks its search results.
Although the deal has not been
finalised, developments have
opened the door for Google to settle
the investigation.
Antoine Colombani, the
commissions spokesman, told City
A.M. last night that negotiations
have been positive.
We have reached a good level of
understanding, its a good basis for
further discussions at a technical
level, Colombani said, adding that
this was only a preliminary
agreement.
The EU has been investigating
claims from several firms that
Google favours its own services in
search results. The tech companys
executive chairman Eric Schmidt
outlined settlement proposals to
the EU earlier this month.
In May, Google was told of four
areas of concern where its practices
were considered a potential abuse
of its position. It currently has a 90
per cent market share in Europe.
A Google spokesman said: We
continue to work co-operatively
with the commission.
EU and Google
agree outlined
antitrust deal
BY JAMES TITCOMB
G
E
T
T
Y
A YEAR and a half after it sparked a
10bn row, Rosneft has waded back
into the dispute between BP and its
Russian partners by offering to buy
half of their joint venture, TNK-BP.
BP said yesterday it had entered for-
mal talks with state-owned Rosneft to
sell its 50 per cent holding in TNK-BP.
Last year, BP scrapped its 10bn
share swap and exploration deal with
Rosneft after coming under heavy
pressure from AAR, the vehicle used
by a trio of Russian billionaires to con-
trol half of TNK-BP.
Meanwhile, BP said it will continue
its 90 days of good faith negotiations
to sell the same stake to AAR, as
required by their joint venture.
The parallel talks mean the final
make-up of TNK-BP is unclear, with
some analysts speculating that
Rosnefts interest could bounce AAR
into selling out rather than BP.
Relations between all three firms
have soured further since AAR took
legal action to thwart Rosneft and
BPs alliance in January 2011, before
turning down a $32bn bid from the
Rosneft returns
to BP with offer
for Russian arm
BY MARION DAKERS
pair to buy it out of TNK-BP.
BP put the stake in TNK-BP on the
block on 1 June, after receiving unso-
licited approaches for the lucrative but
troublesome venture. TNK-BP has
delivered $19bn in dividend payments
to BP since it was formed in 2003.
Rosneft appeared to have no qualms
about its potential partners yesterday,
with president and former govern-
ment minister Ivor Sechin saying:
Rosneft has an established expertise
and track record in managing large
assets and considers the potential
acquisition of BPs participation in
TNK-BP to be an attractive commercial
proposition.
BP PLC
410
420
430
440
450 p
427.85
24Jul
DAVID Camerons former head of
communications Andy Coulson
and ex-News International chief
executive Rebekah Brooks are to
face criminal charges in relation
to phone hacking offences, it was
announced yesterday.
The Crown Prosecution Service
(CPS) alleges that 600 people were
targeted between 2000 and 2006.
Brooks and Coulson face specific
charges of conspiring to intercept
the voicemails of murdered
schoolgirl Milly Dowler.
Six other people with connec-
tions to the defunct News of the
Brooks and Coulson to face
charges over phone hacking
BY JAMES WATERSON World newspaper will also be
charged.
There is sufficient evidence for
there to be a realistic prospect of
conviction in relation to one or
more offences, said CPS legal
adviser Alison Levitt QC.
I have concluded that a
prosecution is required in the
public interest.
In a statement Brooks said: The
charge concerning Milly Dowler is
particularly upsetting not only as
it is untrue but also because I have
spent my journalistic career
campaigning for victims of crime.
I will vigorously defend these
allegations.
4
NEWS
cityam.com
Ex-NI chief Rebekah Brooks and former NotW editor Andy Coulson were charged
Trade EUR/USD from 0.7pts
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Spread Betting
Service
WINNER
ALTERNATIVE fund manager Man
Group said yesterday it would cut
more staff in an attempt to resize the
business amid falling asset alloca-
tions from investors, sending its
shares higher.
Chief executive Peter Clarke
announced a further round of cost
cuts totalling $100m (64.5m),
including headcount reductions, on
top of a planned $95m squeeze
announced in March a saving
equal to nearly a quarter of group
operating costs.
Mans funds under management
slumped 9.8 per cent to $52.7bn this
year, down from $58.4bn at the end
of last year and $71bn in June 2011.
Clarke told City A.M. the firm was
going through a transition to get
on the front foot for when
investor appetite for riskier assets
picked up.
He said: There is a programme
there around sizing the business
appropriately. We have announced
additional steps to get on the front
foot in maintaining attractive levels
of profit.
Investors cheer
Man Group cuts
to save $100m
BY MICHAEL BOW
We dont know when sentiment
is going to turn we dont know
when investors will put risk back on.
We would have hoped we were
through it all.
Clarke did not reveal where staff
would be reduced.
Bank of America Merrill Lynch
analyst Philip Middleton said: We
think the market has been worrying
excessively about short term factors
with Man, ignoring the companys
powerful strategic positioning as
well as its solid financials.
Shares in the FTSE 250-listed firm
rose as much as 9.3 per cent in early
trading, before settling to close 4.12
per cent up at 72p.
N+1 and Singer merge
BY MICHAEL BOW
Tim Cockroft will be chief executive.
Cockroft told City A.M.: It puts us
in a very strong position. Its going to
be business as usual from day one.
Realistically the key is to integrate it
quickly.
Ive known their business for a
long time and its a similar type of
business to ourselves. Theyre a good
group of people and culturally its a
good fit.
N+1 Brewin head of corporate
finance Sandy Fraser added: The
houses know each other reasonably
well and theres been dialogue on
and off. Its a pretty neat fit.
M
AN Group showed yesterday
that the City already has
plenty of investors with a
long-term outlook, as it
announced further outflows and
another round of cuts, only to see a
significant gain in its share price.
Meanwhile Vodafones shares fell
more than one per cent, in the wake
of tough first quarter numbers out
on Friday, with UK revenue down 0.8
per cent and a loss of 1.5m
customers across Europe. But
shareholders at the AGM didnt seem
too worried either: 96 per cent voted
for the boards remuneration report.
In a year when 14 per cent dissent
is the new normal, such strong
support proves that the shareholder
spring isnt a generalised mood of
vindictiveness against all highly-paid
chief executives. Perhaps Vodafones
owners are mollified by its promised
dividend per share growth of at least
seven per cent a year to March 2013,
and the 10bn returned to investors
over the past year. The attention
Vodafone pays to avoiding rewards
for failure may also be a factor. Chief
executive Vittorio Colaos
remuneration increased by 23.4 per
cent in 2012, but his salary fell, with
his shareholding in the company
increasing from six times his salary
to over ten times his salary. Firms
that want to avoid a revolt need to
learn from one that got it right.
Marc Sidwell is City A.M.s managing
editor
BOTTOM
LINE
MARC SIDWELL
Man Group PLC
70
68
72
74
76
78 p 72.00
24Jul
EASYJET founder Sir Stelios Haji-
Ioannou plans to press the
airlines board on the cost of
new planes and its advisers
when he meets with the firm
today.
Fresh from a scuffle
over the suitability of
EasyJet chairman
and Barclays
deputy chair Sir
Mike Rake, Sir
Stelios has voiced
EasyJet to face fresh questions
from Stelios alongside update
BY MARION DAKERS
concern over an Airbus order.
And in a list of questions for the
board published last night to
coincide with EasyJets third
quarter update today, the airlines
largest shareholder also criticised
Amir Eilon, an adviser to the firm
who parted ways with Stelios in
2010. EasyJet has had a fraught
relationship with Stelios since he
quit the board for a second time
in May 2010.
VODAFONE: Page 10

6
NEWS
cityam.com
Peter Clarke did not say where planned staff cuts could hit
Provident cards
boost earnings
BY MICHAEL BOW
CREDIT firm International Personal
Finance yesterday announced a drop
in profits after an increase in early
settlement rebates in the Czech
Republic and Slovakia region.
The group reported a fall in
underlying pre-tax profits to 31.4m,
down from 35.7m last year.
Profits from the Czech-Slovakia
region were down 28 per cent due to
a 4.9m loss attributed to high early
settlement rebates and weak foreign
exchange rates.
Shares in the FTSE 250-listed firm
closed 8.2 per cent higher.
BY MICHAEL BOW
SMALL and mid cap company
advisers Singer Capital Markets and
N+1 Brewin yesterday announced
plans to merge the two companies
into a new business called N+1
Singer, in a tie-up first revealed in
City A.M. earlier this year.
The deal between the two houses
will put the company in the top five
corporate advisory and broking
businesses in the UK small and mid
cap market. N+1 Group chairman
Santiago Eguidazu will chair the
new firm and Singer chief executive
EasyJets largest investor
Sir Stelios Haji-Ioannou
PROVIDENT Financial, the money
lending firm, revealed a 17 per cent
increase in pre-tax profits to 72.9m
yesterday due to a surge in people
using its low-limit credit cards.
The jump was led by its Vanquis
Bank business, which increased pre-
tax profits by 60 per cent to 28.2m.
Chief exec Peter Crook told City
A.M.: Its a part of the market where
really were the only active players.
High street banks have retreated and
were enjoying a period where we
havent got a huge amount of
competition.
IPF shares up
as profit falls
Spring turns to a summer of love
as investors look to sunny side
How City A.M. first revealed the news of
a possible merger on 15 March
BUSINESS borrowing slumped again
in June according to industry figures
released yesterday, raising more fears
that there is little demand for credit
and so the governments funding
for lending scheme, which starts
next month, may not work.
Net lending to non-financial busi-
nesses fell 3.2bn in June, reversing
Mays 1.3bn rise, British Banking
Association data showed.
Household lending also performed
poorly, with the number of
mortgages approved falling from
66,653 in June 2011 to 59,923 in May
2012 and 51,610 last month.
We do not think that the terms of
the funding for lending scheme will
sufficiently change the banks
lending patterns, as they remain
under continued pressure to
maintain large liquidity buffers and
increase their capital ratios, warned
Barclays analyst Blerina Uruci.
Furthermore, credit is demand- as
well as supply-constrained, in our
view, and therefore purely supply
side measures are bound to have
only a limited effect on credit flows.
Firms demand
for credit fell
again in June
BY TIM WALLACE
Turner could replace Sir Mervyn King
7
NEWS
cityam.com
Turner wants to take Bank job
TOP regulator Lord Turner
yesterday said he would consider
running for governor at the Bank
of England, confirming his
position as one of the favourites to
take the role when Sir Mervyn
Kings term ends at the end of
June next year.
In a wide ranging speech and
interview the Financial Services
Authority (FSA) boss blamed free
current accounts for the lack of
competition in the banking sector
and said the popular service may
appear good for customers but
simply pushes up costs for other
products.
He also told a Bloomberg
audience that they should not
demonise banks as the source of
all our economic problems, but
instead recognise that banks face
their own external constraints
such as the high cost of funding,
which has hit borrowing levels.
I would obviously not rule
myself out, Turner said when
asked about taking over at the
Bank of England. It is something
Ill have to think about when the
time comes.
Other lead contenders for the
top job include former civil service
boss Sir Gus ODonnell and Bank
BY TIM WALLACE
deputy governor Paul Tucker.
And Turner stressed the
importance of prudential
regulation to promote financial
stability something the Bank of
England will soon have
responsibility for.
But he argued that regulators
should not be given too many roles.
I do not believe it is the role of
the regulator itself to have
responsibility to promote the
competitiveness of the City,
because the moment you introduce
that requirement, you create a
confusion of objectives and open
the door to regulatory arbitrage,
he explained.
He ended by arguing that banks
may be stuck in a damaging
tradition by offering free current
account services, hitting
competition in the sector.
That means that it may be
difficult for a new entrant to make
a business plan stack up unless
they assume the sale in some
future year of high margin
ancillary products, he said.
And that pressure to make
money elsewhere means many
who stay in credit get a good deal,
subsidised by others who pay
through, for instance,
unauthorised overdraft charges
and PPI insurance premiums. This
is not a sound basis for a long-
term trust-based relationship
between a competitive banking
system and its customers, he said.
IMPERIAL Tobacco yesterday
announced improved revenues,
despite sales volumes falling as reces-
sion-hit Europeans reduce their
tobacco consumption.
Price rises for its premium brands
enabled net revenue to increase by
three per cent for the nine months to
the end of June, even though the
amount of tobacco it sold fell by three
per cent during the same period.
Im particularly pleased with the
quality of the volume and revenue
growth were achieving with our key
strategic brands Davidoff, Gauloises
Blondes, West and JPS which now
account for almost a third of our total
stick equivalent volumes, said chief
executive Alison Cooper.
The Bristol-based firm said it contin-
ues to invest in new packaging
designs to attract customers but
these may be hit by the UK govern-
ments intention to enforce plain
packaging on all tobacco products.
Volumes in Spain, the companys
third-biggest market, fell 11 per cent
as a rise in the unemployment rate to
Imperial grows
despite drop in
cigarette sales
BY JAMES WATERSON
one in four of the population forced
consumers to cut back on cigarettes
sales of which tend to be relatively
resistant to economic conditions.
Other areas for concern include
Ukraine, where illicit sales mean mar-
ket volumes are down 11 per cent and
Poland, where the business for hand
rolling tobacco dropped 37 per cent.
But there was some good news from
Imperials niche divisions with sales
of snus, a Swedish form of tobacco
that is banned in the rest of the EU,
up by 39 per cent in the last nine
months and sales of Cuban cigars in
emerging markets increasing by 10
per cent.
Imperial Tobacco Group PLC
2,450
2,425
2,475
2,500
2,525
2,550 p
2,449.00
24Jul
The third quarter has come in below our expectations with an implied
volume decline in the quarter of around one per cent. We are disappointed: there
should have been decent share momentum out of the second quarter, and
the third quarter presented the weakest volume comparative of the year.
ANALYST VIEWS
Although the level of net debt is high, we are comfortable given the
business is defensive and highly cash generative. Imperial has very low xed
capital investment, high margins and a target to convert 90-100 per cent
of prot into cash. We reiterate our Buy recommendation.
Despite lowering our earnings per share forecasts to reect foreign

exchange headwinds we believe that Imperial remains well positioned to deliver
further volume growth from its key brands and should also benet from
positive pricing momentum. The valuation remains attractive.
DID IMPERIALS RESULTS

PROVIDE SHAREHOLDERS
WITH A QUICK HIT? by James Waterson
MARTIN DEBOO INVESTEC
JONATHAN JACKSON KILLIK & CO
DAMIAN MCNEELA PANMURE GORDON

SHARES in leading gambling firms
rose yesterday after MPs said strict
restrictions on casinos and high-
street betting operations should be
watered down.
Ladbrokes, Rank Group and
William Hill all received a boost
following the publication of the
culture, media and sport select
committees report, which
recommended allowing more high-
stakes gambling machines into
shops and giving local councils the
flexibility to award casino licenses.
Betting shops and casinos are
currently allowed just four high-
stakes machines offering prizes of
Bookmakers win big as MPs call
for gambling laws to be relaxed
BY JAMES WATERSON
up to 500 but the report suggests
that casinos should be allowed to
have up to 20.
Other recommendations
including bringing duties on bingo
into line with other forms of
gambling and adjusting tax levels
on online gambling in the hope of
attracting offshore operations
back to the UK.
While we recognise the need to
be aware of the harm caused by
problem gambling, we believe that
there is considerable scope to
reduce and simplify the current
burden of regulation and to
devolve decision-making to a more
local level, said committee
chairman John Whittingdale.
9
NEWS
cityam.com
Raise the allowed number
of betting machines
in casinos from
Charge
independent
bookmakers
Reduce bingo tax from
4 to 20
LESS
15%
20%
Local authorities should be allowed to
decide whether they want to allow casinos
Set online gambling taxes at correct level
to attract overseas rms back to UK
YES
NO
A
A
to
for licenses
MPs recommendations on gambling
CHEMICALS firm Croda reported a
six per cent increase in first-half
profit yesterday as the company sold
more higher-margin products and
strong demand in North America
offset softness in Europe.
The company, which counts
Procter & Gamble, Unilever, LOreal
and Estee Lauder among its
customers, said adjusted pre-tax
profit rose to 132.6m from 124.8m
a year earlier.
Sales rose 2.5 per cent to 572.9m,
driven by a six per cent increase at
its core consumer care division. The
company raised its interim dividend
8.1 per cent to 26.75p per share.
Croda ups divi
as profits rise
BY CITY A.M. REPORTER
CSR, the British chipmaker that
sold its mobile phone technology
to Samsung last week, posted
better-than-expected second-
quarter results helped by demand
for its platforms in audio and
automotive.
The Cambridge-based company
posted a 37 per cent rise in second-
quarter revenue to $266.5m
(172m), just exceeding its own
guidance, while underlying
earnings per share of $0.09,
unchanged on a year ago, beat
market expectations.
It said order patterns for the
second half of the year were more
cautious than the first, although it
still expected revenue for the full
year to be broadly in line with
market consensus.
The group last week struck a
$310m deal with Samsung to exit
smartphones, where it was losing
ground to larger rivals, a move
that was well received by
shareholders.
The company said last week it
expected third-quarter revenue to
be the range $260m to $265m.
Audio and cars
boost for CSR
BY CITY A.M. REPORTER
G
E
T
T
Y
VIRGIN Media reported better than
expected sales yesterday, driven by
strong demand for the cable opera-
tors internet-connected television
and high-speed broadband services.
The popularity of Virgins TiVo
equipment, which offers on-demand
internet services as well as tradition-
al channels, offset a seasonal fall in
the number of cable TV subscribers.
Virgin signed up its one millionth
TiVo subscriber this month, having
added more than 260,000 users in
the three months to July, which
helped sales rise 4.2 per cent to 1bn
for the period.
The company lost 14,700 pay-TV
customers overall during the quar-
ter, a time when many students cut
the service off before the summer.
Broadband and
TiVo lift Virgin
Media revenue
BY JAMES TITCOMB
Subscribers to Virgins superfast
internet service increased by 460,000,
although income for the period fell
from 98m to 72m.
Chief executive Neil Berkett said:
We are well placed to benefit from
the fast-growing demand for super-
fast broadband and TiVo positions us
well to lead the evolving TV market.
IN BRIEF
Bookings slump for Volvo
n World number two truck maker
Volvo's order bookings suffered a
deeper-than-expected fall in the
second quarter, hit by slumping
demand in North America and
Europe, but it stood by its outlook for
its two top markets in the face
growing uncertainty. Volvo said
yesterday order bookings of its trucks
fell 19 per cent year-on-year across all
its markets. Operating earnings
slipped to 7.34bn crowns (678m)
from 7.65bn a year ago.
London health accelerator opens
n US venture capital firm Sandbox
has put 750,000 into a healthcare
technology seed fund to be launched
in London. Europes first healthcare
accelerator will comprise 10 teams of
entrepreneurs who will receive
funding as well industry links and
office space. Mayor Boris Johnson
said the investment recognises
London is Europes science and tech
capital. Sandbox said they had
already had applications from all over
Europe and was beginning the
selection process as of last night.
Profits fall at Morgan Crucible
n British advanced materials group
Morgan Crucible said yesterday its
first-half profit had fallen about three
per cent, hurt by lower revenue at its
engineered materials division.
Morgan Crucible's underlying pre-tax
profit fell to 57.8m for January-June
from 59.7m a year earlier. Revenue
fell about five per cent to 533m.
SAP maintains full-year outlook
n SAP kept its full-year outlook
yesterday amid an uncertain
economic environment as it continued
to draw clients, especially from the
financial industry and the retail
sector, to its new cloud-based
services. The worlds biggest maker
of business software, which reported
key figures on 12 July, said it still
expected 2012 operating profit to rise
to between 5.05bn and 5.25bn.
Virgin Media Inc
1,620
1,600
1,580
1,640
1,660
1,680
1,700 p
1,662.00
24Jul
SHAREHOLDERS in Vodafone
overwhelmingly voted to back
chief executive Vittorio Colaos
pay package at yesterdays annual
meeting, despite warnings of an
investor rebellion.
Colaos remuneration package,
which has more than doubled in
the last year to 14m, was
supported by 96 per cent of
investors, despite advisory body
Pirc urging them to oppose it.
Vodafones shareholder spring
fizzles out as CEOs pay backed
BY JAMES TITCOMB
Vodafones shareholders, who
were the FTSEs best repaid last
year, backed all motions, but did
call for extra dividends from
Vodafones 45 per cent stake in US
mobile operator Verizon Wireless.
Chairman Gerard Kleisterlee
admitted tensions between the
two companies, citing very
difficult discussions with
Verizon, but said he hoped for a
dividend soon. Kleisterlee also
raised the possibility of making
new acquisitions in Indonesia.
10
NEWS
cityam.com
Chief executive Vittorio Colaos 14m pay packet was supported by Vodafone investors
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TELECOMS regulator Ofcom
yesterday said that the auction of
licences to run fast 4G mobile
networks will be held before the end
of this year, enabling services to be
rolled out by the middle of 2013.
Countries such as the United States
already have 4G networks offering
high-speed mobile broadband
connections capable of data-hungry
tasks such as streaming video.
But the UK has lagged behind
thanks to legal wranglings over the
quality of the spectrum that is up for
sale and competition concerns.
Ofcom fought hard to ensure that
space was reserved for a fourth
national provider, probably Three,
despite claims that such an action
could constitute state aid.
Analysts at PwC said they expected
the auction to raise up to 3bn-
4bn for the UK Treasury.
EverythingEverywhere, owner of
T-Mobile and Orange, said yesterday
that it is still seeking Ofcoms
permission to bring 4G connections
to the UK in 2011 by exploiting space
on its existing 2G network.
4G high-speed
mobile data to
hit UK in 2013
BY JAMES WATERSON
CONGRATULATIONS
TO BRADLEY AND TEAM SKY
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GREAT Portland Estates yesterday
posted a buoyant set of quarter
results, boosted by its prized West
End offices and pipeline of upcoming
developments.
The firm said the value of its portfo-
lio rose by 3.1 per cent to 2.1bn in the
quarter to 30 June, while net asset
value lifted 3.5 per cent to 417p.
The main drivers were its West End
offices, up 3.8 per cent, while its devel-
opments rose by 5.5 per cent, includ-
ing a 10 per cent gain at its Hanover
Square scheme above Bond Streets
Crossrail station.
The FTSE 250 firm has been aggres-
sively disposing of properties, with
140.5m from sales in the quarter to
then reinvest into acquisitions and
projects mainly in the West End.
The group this week announced it
has bought the Jermyn Street Estate
West End gives
Great Portland
quarterly boost
BY KASMIRA JEFFORD in Piccadilly from its joint venture
with Capital and Counties. Earlier this
year it bought the Royal Mails old sort-
ing office at Rathbone Place and will
seek planning application next year.
In the City, the group said talks to
sell down its stake in 100 Bishopsgate
were still ongoing. The 40-storey tower,
jointly owned by Great Portland and
Canadas Brookfield, has yet to secure
the pre-lets it needs to start building.
HELICAL Bar said yesterday it has submitted plans to build 1,150 homes as part of a giant 12-
acre residential-led development in White City, west London. The site, known as Brickfields, is
being built in partnership with Aviva Investors and is expected to be worth 750m.
HELICAL BAR SUBMITS PLANS FOR WHITE CITY
Great Portland Estates PLC
422.5
420.0
417.5
425.0
427.5
430.0
432.5 p
418.80
24Jul
12
NEWS
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We offer a Satisfaction Guarantee. 100 if you like us, 200 if you dont.
Satised with your bank?
Because we want to make sure were doing a good job, we may monitor and/or record calls. We hope you dont mind. Applicants must be 18 or over. We reserve the right to decline to open an account. Written details, terms and
conditions are available on request. Well take into account your current standing orders and Direct Debits when assessing your application for an overdraft, using our usual criteria. If there is a delay or mistake in the switching process
we will refund any charges or interest youve paid to us. If youre a Northern Ireland customer your old bank will also refund any charges or interest youve paid to them and if youve used our switching service we can offer you an
interest-free overdraft for up to three months. HSBC Bank plc 2012. rst direct, 40 Wakeeld Road, Leeds LS98 1FD. All rights reserved. AC22907.
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know within 12 months of opening your account, we will give you 100
and help you switch banks. Thats as long as youve paid in 1,500 or
more a month for at least six months, have used our Easyswitch service
and youve closed all your first direct accounts. There is no monthly
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may have to pay a monthly fee of 10 if you do not pay at least 1,500
a month into your 1st Account. This offer may be withdrawn at any time
without notice. For information about our charges and interest rates visit
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firstdirect.com
OFF-LICENCE chain Oddbins
hasnt so much tweaked the noses
of London 2012 chiefs as clamped
them in a vice and swung them
from a wrecking ball.
In a tongue-in-cheek attack on
the strict branding laws designed
to protect the Games official
sponsors, Oddbins have offered a
discount to anyone who proves
theyve shunned all of Adidas,
BMW, Lloyds TSB, Visa, Samsung,
EDF Energy, Coca-Cola and
McDonalds.
Thirsty customers sporting Nike
trainers and able to produce
Vauxhall car keys, an RBS
MasterCard, an iPhone, a British
Gas bill and a receipt for a Pepsi
bought from KFC will qualify for a
30 per cent off their beer and
wine.
If that were not enough, they
have also created an array of
posters for their shop windows
declaring: Celebrate the
CENSORED with Oddbins.
London 2012 chiefs are unlikely
to be impressed, although the
Capitalist understands that
Oddbins is confident its activity is
legally watertight.
Off-licence hits
back at Games
branding rules
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FOREX I SPREAD BETTING I CFDs
THE OFFICIAL medal target for
British athletes may be 48, but if a
team of financial risk analysts have
their way then Team GB should be
taking home a much higher haul of
precious metals.
According to Airton Risk
Management, part of betting firm
Paddy Power, the home turf advan-
tage and some surprise star perform-
ances could push the final count to
61, meaning the British team could
finally muscle in on the traditional
top three positions held by China,
the US and Russia.
On top of expected victories by
Team GB stalwarts such as sailor Ben
Ainslie and boxer Anthony Joshua,
Airton is predicting that up-and-com-
ing 400m hurdler Perri Shakes-
Drayton could triumph in front of
her home crowd, while discus new-
bie Lawrence Okoye (he only took up
the sport 18 months ago) may also
bag a medal.
Meanwhile economists at ING have
taken a rather more scientific
approach to the art of medal predic-
tion linking the likelihood of suc-
cess not only to GDP per capita, but
also claiming a good performance
will boost UK productivity.
In addition to the home advantage,
a link has been established between
wealth a higher gross domestic
product (GDP) per capita and medal
success, shown in a body of academic
research, INGs chief economist Ian
Bright.
As far as effects on personal
finance go, it is possible that Brits
will get a happy effect from British
athletes doing well. When people are
happy, they tend to be more produc-
tive, which can be good for them and
good for the wider economy as well.
Got A Story? Email
thecapitalist@cityam.com
13
cityam.com
cityam.com/the-capitalist
THECAPITALIST
AT LONDON2012
LONDON 2012 IMAGE OF THE DAY
PRINCESS Anne yesterday attended the
official welcome for Team GB to the Olympic
Village. Britains competitors were greeted
by a ceremony of dancers and musicians.
During the Olympics, City A.M. will publish an
Image of the Day. If you have a shot you think
our readers will like, email
pictures@cityam.com
Bumper medal
haul predicted
for Team GB
SOAPMAKER PZ Cussons yesterday
reported a sharp fall in full-year
profits after shouldering higher raw
material costs and suffering
worsening trading conditions in
Nigeria and Australia.
The owner of Imperial Leather
soap and St Tropez fake tan said
profit before tax fell by 55 per cent to
48.5m in the year to 31 May.
Profits were hit by 43.7m of
exceptional costs largely related to
the groups restructuring in
Australia and Nigeria and a
writedown on its Australian Home
Care brands.
Overall revenue increased about
five per cent to 858.9m, while
revenue in Africa, its largest market,
grew seven per cent. But sales on the
continent were dented by economic
and social unrest in Nigeria and a
strike against the end of an $8bn
fuel subsidy in January.
Strong growth in the UK and
Indonesia helped offset weak
revenues in Australia, where it has
been squeezed by domestic retailers
promoting own-brand products.
PZ Cussons hit
by Nigeria and
Australia woes
BY KASMIRA JEFFORD
CARPETRIGHT, the troubled floor cov-
erings retailer, showed some signs of
recovery yesterday after revamped
stores and improvements to its bed
range helped boost first quarter sales.
The group, which has issued a string
of profit warnings over the last two
years, said like-for-like sales at its 486
UK stores rose 1.7 per cent in the 12
weeks to 21 July.
That compared with a 1.4 per cent
increase in the previous quarter.
Chief executive Darren Shapland
attributed the uptick to self-help
actions such as extending its lami-
nate range, developing its bed offer,
and refurbishing stores.
But he conceded that it had benefit-
ed from the unusually wet weather,
which helped drive customers
through its doors.
Wet weather
helps lift sales
at Carpetright
BY KASMIRA JEFFORD
Carpetright has been particularly
hard hit because of a stagnant housing
market and cash-strapped consumers
delaying home DIY projects.
Taking into account the four store
closures, total UK sales fell 2.1 per cent.
Economic woe in the Eurozone
meant sales in the Netherlands,
Belgium and Ireland slumped by 6.3
per cent on a like-for-like basis.
IN BRIEF
Finsbury Food sales up to 207m
n Bakery goods maker Finsbury Food
yesterday posted a 9.4 per cent leap
in sales to 207m for the year despite
tough market conditions and price
inflation in key ingredients such as
eggs and sugar. Its cake division
enjoyed a 9.2 per cent jump in sales
while its bread and free from division
grew 10 per cent on the back of
demand for gluten-free products and
its Vogels specialty bread brand.
5.5m to support high streets
n Nearly 400 struggling town
centres have won support from a
government programme that aims to
help revive high streets. Fifteen will
become Portas Pilots named after
retail consultant Mary Portas and
will receive investment and support
from leading industry figures. Newly
announced Portas Pilots in London
include Lower Marsh and The Cut in
Waterloo, Forest Hill and Sydenham
in Lewisham, and parts of Towers
Hamlets. The total package of
support is worth 5.5m nationwide.
Carpetright PLC
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BOOMING demand for mid-priced
watches in China is more than
offsetting a slight cooling at the
top end of the market, Swatch
Group said yesterday as it stuck to
a forecast for record annual sales.
The worlds largest watchmaker,
whose Omega brand is the official
timekeeper for the London
Olympics, reported first-half sales
up 14 per cent to SFr3.85bn
Swatch revenue soars despite
weaker China luxury demand
BY CITY A.M. REPORTER (2.5bn), while net income rose 25
per cent to SFr720m, beating
analyst expectations.
Asia-Pacific, led by China, is the
fastest-growing luxury market but
a slowdown in the Chinese
economy has slightly dampened
demand for ultra-pricey
timepieces there, Swatch said.
We see a slowdown in the very
high end. But if we talk about
slowdown, its relatively healthy,
chief executive Nick Hayek said.
14
NEWS
cityam.com
Swatchs higher end brands include Omega watches
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18-19
DISAPPOINTING economic data
weighed on US stocks yesterday, as
worrying surveys continue to dent
confidence in the recovery of the
worlds biggest economy.
An estimate of American factory
activity for July revealed the slowest
growth in 19 months, while a region-
al manufacturing survey showed its
worst top line since April 2009.
The Richmond Federal Reserves
index for manufacturing plunged
from minus one per cent to minus 17
per cent, as shipments cascaded to
minus 23 per cent (from zero), and
new orders tumbled to minus 25 per
cent (from minus seven per cent).
Negative scores show that a larger
proportion of factories in the area
reported worse levels compared to the
proportion reporting improved levels.
The Richmond Fed also released
Poor US factory
data hits stocks
BY JULIAN HARRIS
data on service sector revenues, the
index of which dived to minus 11 per
cent from a positive reading of 14 per
cent last month.
Meanwhile, a flash purchasing
managers index survey by Markit, of
manufacturing across the US, fell to
51.8 from 52.5 in June. Scores above 50
indicate growth.
The Dow Jones closed down over 100
points, partly on Eurozone worries.
Output falls back after weak recovery
Jul 12 Jul 10 Jul 08 Jul 06 Jul 04 Jul 02
30
20
10
0
-10
-20
-30
-40
In
d
e
x
, S
A
Service
Manufacturing
I
N January, I wrote about how
British Airways had recovered
from the difficulties it faced in
2010 when strikes, snow and the
Icelandic ash cloud all caused
delays and cancellations. In 2011,
crisis was avoided and the company
overtook many of its rivals in terms
of brand perception to sit in second
place behind Virgin Atlantic. I
suggested that 2012 could be the
year it regained its mantle as
Britains favourite airline.
Looking at the Index score (a
composite of six key image
measures), we can see that it has
now edged above Virgin Atlantic.
Focusing on one specific
attribute recommendation BA
will be delighted that its recovery
here was even quicker. It moved
into first place among airlines in
Britain as early as September 2011,
a position held ever since.
Recent weeks have seen many of
our biggest brands, particularly
banks but also the likes of O2,
suffer crises. The British Airways
case shows that while there may be
an inevitable decline in brand
perception, what really matters in
terms of long term impact is the
response. It can take time, but BA
shows that if you respond well you
can recover lost ground.
Understanding who is feeling
differently and what you need to
do to bring them back is crucial to
knowing how to respond well.
Stephan Shakespeare is the chief
executive of YouGov
BUSINESS conditions in Chinese
factories worsened this month,
according to data released
yesterday by Markit and HSBC.
Yet the fall was only marginal,
as the rate of decline improved
significantly.
Chinese survey picks up in July
BY BEN SOUTHWOOD
15
NEWS
cityam.com
Telecoms firm AT&T posted higher than
expected second quarter earnings yester-
day. Gross profit was at $3.9bn, up from
$3.59bn a year before. Customers waiting for
the new iPhone postponed upgrades in the last
quarter, falling to six per cent from seven per cent.
AT&T beats expectations
Global courier UPS said yesterday
earnings rose in the second quarter but
came in below estimates due to Eurozone
woes and weakening Asian trade. Net earn-
ings were $1.12bn from $1.09bn a year earlier,
and the firm pared back its full year forecasts.
UPS cuts its outlook
The worlds largest payment transfer
company Western Union reported a sec-
ond-quarter profit above analysts estimates
yesterday as it was boosted by higher revenue
from its business solutions segment. Net income
rose to $271.2m from $263.2m a year earlier.
Western Union income rises
Household appliance maker
Whirlpool was hit by anemic Eurozone
demand as its quarterly results yesterday
showed sales falling 4.6 per cent. Sales were
especially hit in the EMEA region, falling to
$692m from $841m a year earlier.
US corporate results round-up
BRAND
INDEX
STEPHAN SHAKESPEARE
Index Chart
2009 2010 2012
5
10
15
0
20
25
30
35
40
Emirates
SingaporeAirline
VirginAtlantic
BritishAirways
British Airways shows firms can recover ground
The flash purchasing managers
index (PMI) for manufacturing
rose to 49.5 in July, where 50
indicates no change the highest
result for five months.
In the previous month, June,
the PMI score had come in at 48.2,
indicating deeper contraction.
Recommend
2009 2010 2011 2012
35
30
25
20
15
10
5
0
VirginAtlantic
Emirates
SingaporeAirlines
BritishAirways
Europe drags on Whirlpool
16
LONDONREPORT
Worrying stats
help pull Wall
Street lower
W
ALL Street stocks fell
yesterday, hit by signs the
Eurozone crisis is
worsening and evidence
that Europes slowdown is hurting
US companies, including bellwether
UPS.
The decline was the third straight
for the S&P 500 index, which tested
its 50-day moving average, a technical
support level that could trigger more
selling if convincingly broken.
United Parcel Service, seen by
many as a proxy for economic activi-
ty, fell 4.6 per cent after reporting
quarterly results that missed fore-
casts and cut its 2012 outlook, citing
uncertain global economic condi-
tions. UPS helped pull the Dow Jones
Transportation average down 1.2 per
cent.
We are going through an adjust-
ment period where there has been a
lot of talk about Europe facing a
recession in 2012. Now we are actual-
ly seeing it in the earnings and the
market is reacting to that, said Gail
Dudack, chief investment strategist
at Dudack Research Group.
AT&T lost 2.1 per cent after the
company reduced its outlook for busi-
ness services this year. The S&P tele-
com index dropped 1.8 per cent.
Whirlpool slumped 7.5 per cent
after the worlds largest appliance
maker missed Wall Streets expecta-
tions for quarterly earnings and sales,
hurt by weak demand in Europe and
a stronger dollar.
The Dow Jones industrial average
was down 104.14 points, or 0.82 per
cent, at 12,617.32. The Standard &
Poors 500 Index was down 12.21
points, or 0.9 per cent, at 1,338.31.
The Nasdaq Composite Index was
down 27.16 points, or 0.94 per cent, at
2,862.99.
B
RITAINS top share index closed
back below 5,500 for the first
time this month yesterday, with
financials among the worst off
on Eurozone debt exposure fears as
Spain looked to be nearing a full
sovereign bailout.
Spain paid the second highest yield on
short-term debt since the birth of the
euro at an auction yesterday, reflecting
the growing belief that the country will
need a bailout that the Eurozone can
barely afford, with international
lenders having already bailed out
Greece, Ireland, and Portugal.
Merged airline group IAG was a big
blue chip faller, down 2.2 per cent, on
concerns over the situation in Spain,
with investors worried that hard-
pressed Spanish banks will need to sell
their big holdings in the firm created by
the takeover of Iberia by British Airways.
At the close, the FTSE 100 index was
down 34.64 points, or 0.6 per cent, at
5,499.23, having slumped 2.1 per cent
on Monday. Volume was 60 per cent of
the 90-day daily average.
Commodities trader Glencore was the
top blue chip faller in London, down 2.3
per cent as Qatar Holding, the second-
largest shareholder in the Swiss-based
firms takeover target Xstrata, again
added to its stake in the miner. Xstrata
fell 1.8 per cent.
Chilean copper miner Antofagasta
bucked the weaker market and sector
trend, adding 1.8 per cent as it appoint-
ed a new chief executive.
Chemicals firm Croda International
was the top FTSE 100 gainer, jumping
6.1 per cent as it posted a six per cent
rise in first-half profit.
FTSE tumbles below 5,500 mark as
Spain edges closer to a full bailout
BESTof theBROKERS
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340
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24Jul
AFRICAN
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Numis has upgraded the
miner from hold to
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of 430p, due to price
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forecasts are reduced
after a miss on Q2 costs.
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Amlin PLC AMLIN
Canaccord Genuity has
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speculative buy with a
400p price target ahead
of first half results on 20
August. The broker has
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SAVILLS
UBS has lowered its
rating on the real estate
group from buy to
neutral following the
shares recent strong
performance. The broker
says the stocks
attractions are now
reflected in its price.
Intelligent Environments
The digital banking software
provider has appointed David
Webber as its managing director.
He has over 20 years experience
in financial services software and
joins from Patsystems Group,
where was chief executive.
Houlihan Lokey
Magnus Scaddan has been appointed managing director,
and head of consumer and retail for Europe, Middle East
and Africa, at the investment bank. He was most recently at
Nomura, where he was a managing director. Scaddan has
also previously held positions at HSBC and Credit Suisse.
HSBC Global Asset Management
The asset management division of HSBC has made two
appointments to its London global macro and investment
strategy team. Julien Seetharamdoo joins as a senior
economist from Coutts Investment Services. Rabia Bhopal
joins as an economist from Standard & Poors.
Simmons & Simmons
Dr Wolfgang Kotzur has been appointed as a finance
partner in the law firms Frankfurt office. He joins from
Freshfields Bruckhaus Deringer, where he focused on
acquisition finance, infrastructure finance, real estate
finance and restructuring.
WH Ireland
The wealth management firm has appointed Miles Nolan as
research editor. He joins from Growth Company Investor
magazine, where he served as editor. Nolan has over 14
years experience in journalism and finance, and previously
managed funds at Unicorn Asset Management.
Octopus Investments
Shay Ramalingam has been appointed as an investment
director in the investment firms specialist finance division.
He previously worked as an investment director at Shore
Capital, and has also held roles at Nomura.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
in association with
WORDS BY PHILIP SALTER
T
HE word legacy is somewhat
overused. But Visi the real-time
energy monitoring technology,
installed by EDF Energy at sports
venues across the Olympic Park has a
business case that reaches beyond the
Games.
Visi (see screenshot right) helps
energy managers understand and
reduce electricity consumption. It will
remain at the Olympic Stadium,
Aquatics Centre and Velodrome when
the athletes have gone home. But, in a
bid to help managers and employees
understand their own energy issues,
EDF Energy will also offer Visi
technology to its business customers.
Visi offers managers insight into a
buildings energy use. The costs of
wasted energy can mount up. And
simply switching off equipment that
employees control individually such
as computers in an office or a bakery
oven in a supermarket can make a
big difference. Visi will provide the
statistics to back up company policies.
The technology also allows
employees to interact with a real-time
display of the energy being used
within their workplace to see how it
changes during different parts of the
day and year; along with the impact
that factors such as the weather have
on consumption levels. Historic
energy trends also provide a valuable
tool for monitoring use.
On its travels across the globe, EDF
Energy has literally helped keep the
Olympic flame ablaze (it fuelled the
8,000 relay torches and the Olympic
Cauldron). Through the vagaries of
various climates, EDF has managed to
keep the fire burning. When it comes
to powering the country, innovative
companies will also keep the lights on,
but costs also matter. Visi will help
make the case for less waste which
can only be a good thing.
EDF Energy is whipping up a storm
of innovation for electric vehicles
Londons charge
point upgrade will
be a lasting legacy
T
HE atmosphere will be electric
when the worlds greatest
athletes compete at Londons
Olympic Games over the
coming weeks. But the power needed
to stage the greatest show on earth
has to come from somewhere, and
responsibility for this falls on the
shoulders of EDF Energy official
partner and the official electricity
supplier of the London 2012 Olympic
and Paralympic Games.
EDF Energy will be powering the
Olympic venues, as well as supplying
energy to light up two of Londons
most iconic landmarks: The nine-
teenth-century Tower Bridge, and the
twenty-first-century London Eye.
Gareth Wynn, group director of the
Olympic & Paralympic programme at
EDF, explains that there are three
dimensions to the companys involve-
ment with the Games. The first dimen-
sion is to transmit a clear brand
message. And that message is low car-
bon the Games will be run on 80 per
cent nuclear and 20 per cent renew-
ables. The second dimension is
employee engagement, and the
third is the development and
showcasing of the companys tech-
nology.
Part of this innovation can be
seen in EDF Energys support beyond
2 DAYS TO GO
COUNTDOWN
TO THE LONDON
2012
OLYMPIC
GAMES
OLYMPICBUSINESS
17
WDNESDAY 25 JULY 2012
cityam.com
the event spaces and landmarks.
Wynn explains that EDF Energy decid-
ed to use the Olympics to give a boost
to electric vehicles, noting that fore-
casters expect we will have 600,000
electric vehicles on our roads as early
as 2020. As such, 120 charge points
have been installed in five key loca-
tions in East London where they
will be used by the Olympic fleet
during Games. And after the
Games, the charge points will
become part of the Source London
network, benefiting all electric car
drivers in the capital. Mayor Boris
Johnson is committed to increasing
the network to 1,300 points by 2013,
which would give London more
charge points than petrol stations.
LOCOG is running 200 electric
BMWs. EDF Energy had to ensure that
the local electricity network wasnt
destabilised when as many as 30 vehi-
cles are charging simultaneously at a
single location. Never before has a
public electric vehicle charging net-
work been installed in this density in
the UK before, said Wynn. By finding
a fast, effective and safe way of simul-
taneously charging in the same loca-
tion, we have made another signifi-
cant step forward in making electric
vehicles an attractive low carbon alter-
native to traditional motoring. Wynn
believes this is an investment in the
future: Our innovative solution to
recharging will not only help keep the
entire Olympic fleet of electric vehi-
cles charged up during Games time,
but could also provide a valuable
insight into how electric vehicles
could be used on a mass scale in
future.
EDF Energy has put electric vehicles
on their marks. Its full throttle ahead.
EDF will keep the
lights on for
Victoria Pendleton
and her fellow
Olympians
An energetic tool to help manage business ambitions
A screenshot of Visi in action
T
HE DEBT problem currently
afflicting the UK and Europe
is essentially a question of
political economy. Basically,
there is a lot of debt around
and everybody is wondering who is
going to pay for it. All the economic
theory in the world fails to get
around this fundamental issue.
Traditionally, bondholders took
the hit when governments were
unwilling or unable to pay back
what they had borrowed. The real
value of debt has historically been
eroded by inflation. In 1945, for
example, the UKs public sector
debt to GDP ratio stood at a massive
250 per cent. Slow but steady
inflation ensured that, by 1970,
this had fallen to 67 per cent
G
EORGE Osbornes fiscal
strategy increasingly
resembles alphabet soup:
Plan A for austerity, Plan A+
for magic bullets, Plan B for
debt and Plan I for infrastructure.
Flexible planning is not necessarily a
bad thing. What is a problem,
however, is if revisions do not reflect
changing economic circumstances
but a weakness in the Treasurys
approach.
On one level, the chancellors fiscal
strategy has delivered. Ed Balls is
wrong to say that our current situa-
tion means an earlier increase in
spending would have been the right
strategy. The Treasury got the big call
broadly right. The pace and depth of
consolidation brought market confi-
dence. But it did little more than this,
with Osborne planning a structural
budget deficit of 1.5 per cent of GDP
for 2014-15, compared to Alistair
Darlings pre-election plan of 1.3 per
cent. Nonetheless, the country does
have breathing space. This market
credibility has been reinforced by
Britain being outside the Eurozone.
in association with category sponsors venue sponsor champagne reception sponsor
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cityam.com/forum
New Zealand has
shown that rescuing
public finances can build
a stronger economy
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.
18
PATRICK NOLAN
The coalition must press reset and
make a positive case for austerity
But in other ways the Treasurys
approach has been a disappointment.
At Reform, economists and business
people are increasingly telling us of
their concern over the lack of a sup-
ply-side agenda. And their concerns
go deeper. There are also worries that
the government is failing in its
efforts to rescue the public finances.
These budgetary problems are not
just caused by drag from the
Eurozone. Major departments have
failed to make promised savings.
Indeed, most experts predict that the
largest departmental budget, the
NHS, will receive a cash boost before
the election. On the revenue side, the
coalitions tax policy has increased
complexity. By introducing high and
variable rates, the coalition has
increased incentives for tax avoid-
ance. Sensible efforts to broaden the
base, including VAT, have ended with
embarrassing climb downs.
For long-time watchers of public
finances these problems will not
have come as a surprise. As early as
June 2010, Reform was warning that
the Treasurys approach had real lim-
itations.
One concern was a lack of realism.
The coalition underestimated how
hard fiscal consolidation can be.
Ministers took their eyes off the ball
and spent too much time on other
projects, like reform of the House of
Lords. They also tried to move on
before the job was finished. They
must recognise there is much more
work to be done.
Another concern was a lack of con-
sistency. Major spending areas were
ring-fenced, including the NHS and
pensioner benefits. This meant these
areas had fewer incentives to do more
with less, cuts in other areas had to
be deeper than otherwise and lobby
groups were encouraged to argue for
extending special treatment.
Fiscal consolidation has also been
poorly implemented. Even when the
coalition set out to do the right thing,
it failed to do it in the right way. An
obvious example of this is the target-
ing of child benefit, which was so
poorly implemented that the whole
idea of means-testing has been dam-
aged.
The Prime Minister appears to
recognise some of these concerns.
Last week he noted that austerity
should be expected to last until 2020.
But this should not be seen as an
admission of defeat. It is a clich, but
fiscal consolidation presents oppor-
tunities as well as challenges.
Rescuing the public finances can
help build a stronger economy. This is
certainly the experience of countries
like New Zealand, which went
through major reforms in the 1980s
and 1990s. There is no doubt about
how hard this decade of reform was,
but the changes made have proven
resilient.
Rather than alphabet soup, the
economy needs greater clarity from
the coalition. This requires honesty
about the changes that must take
place. Austerity is the new normal.
Trying to prop up growth in the short
term will simply postpone the
inevitable.
This also requires the coalition to
press the political reset button with a
spending review now, not in 2014 or
after the next election. This spending
review must learn from the mistakes
of the last. Rather than being an
opportunity to develop a list of cuts,
this should be seen as an opportunity
to have an honest debate on how to
curb the over-reach of the state.
Dr Patrick Nolan is the chief economist at
the independent think tank Reform.
lower than it is today. This was
before the inflationary surge of the
1970s, but 3 to 4 per cent average
annual inflation doubled price
levels over the course of 20 years.
This, on its own, halved the real
value of the debt.
The case of Japan is instructive.
In the crash of the late 1980s, the
Nikkei share index fell 80 per cent
imagine the FTSE at just 1,400
and land values dropped a
stunning 90 per cent. The country
was awash with debt, accumulated
to buy these assets at their peak
prices.
Almost ever since, Japan has
followed an expansionary
monetary policy, with interest rates
close to zero. It has carried out
quantitative easing on a huge scale,
ever since three big banks
collapsed in the late 1990s. Yet
since 1990, Japanese inflation has
been barely positive, averaging just
0.3 per cent a year. Japans
government needed 3 per cent and
got just a tenth of it.
The evidence suggests very
strongly that, in general, inflation
is not purely a monetary
phenomenon. We can identify
special historical cases where it has
been, like during civil wars or
sieges. But, in developed
economies, very lax monetary
policy can go hand in hand with
low inflation.
Inflation in the UK, and the West
in general, fell in the early 1990s. It
has remained low ever since,
despite unemployment falling
more or less continuously for over a
decade up until the crash of 2008.
Low inflation is not due to the
brilliance of politicians or central
bankers. After Gordon Brown and
Sir Mervyn King, who could believe
that anyway? Low inflation exists
for purely structural reasons.
Globalisation has led to a flow of
cheaper goods from emerging
markets. It has restricted the ability
of the labour force in industries
which compete with this trends to
enforce wage increases. This, in
turn, enables companies to raise
their profit share and hold real
wages down.
In short, we are in a regime of
low inflation which no amount of
monetary expansion will overturn.
We must look elsewhere for the
answer to the question: who pays
for the debt?
Paul Ormerod is an economist, a
partner at Volterra, and author of
Positive Linking: How Networks Can
Revolutionise the World (Faber and
Faber, July 2012).
AGAINST
THE GRAIN
PAUL ORMEROD
Japan shows we cant rely on inflation to tame rampant government debt
General enquires: 020 8267 4043 | jo.pead@cityamawards.com
19
Mutual benefits
[Re: It's not all bad: Britain is becoming safer
despite recession, Friday]
Allister Heath is sceptical of mutuals ability to
add something positive to the market for
banking services. But the contribution of
mutuals is simple diversity. For too long, the
banking sector has been dominated by a
model that emphasises maximising returns to
shareholders and management, rather than to
customers. Not surprisingly, there have been
complaints about poor customer service and
an inability to prioritise customer needs. There
are dangers in putting all our eggs in the Plc
basket. Boards of Plcs have a fiduciary duty to
operate in the interests of owners share-
holders. In banking, this does not necessarily
work, creating space for institutions that are
legally accountable to their customers
mutuals. This model leads to a different set of
incentives and behaviours. Building Societies
Association (BSA) research shows that cus-
tomer perception of service across a range of
measures, including trust, value for money,
treating customers fairly, dealing with com-
plaints, looking after those in financial difficul-
ties, and playing a valued part in local
communities, are higher in mutuals than in Plc
banks. Building societies know that, when
they serve a customer, they are serving one of
their owners. It is not surprising that this
affects their level of service. Its time to give
mutuals a fair wind. They offer low costs, high
customer service, good products and require
little taxpayer support not characteristics
we can readily associate with Plc banking.
AdrianColes, director-general of theBSA
T
HE HOUSE of Lords select
committee on science and
technology has just published
an insightful report into
higher education in science,
technology, engineering and
mathematics (STEM) subjects. It
rightly suggested that the jobs of the
future will increasingly require
people with the capabilities and
skills that a STEM education
provides. However, there is a
mismatch between the supply of
STEM graduates and postgraduates
from higher education institutes
and the demand from employers
both in terms of the number of
students and the skills and
knowledge they acquire.
At Shell, we see this first hand and
it is of genuine concern. As an indus-
try, we rely on the rigour and flair of
our scientists and engineers to build
the vast and highly technical energy
infrastructure the world needs. Such
projects are often in extremely chal-
lenging conditions, like the deep
waters of the Gulf of Mexico or the
North Sea. The reality is, without a
strong pipeline of highly qualified
scientists and engineers, important
projects like these will have fewer
and fewer British operators. So what
needs to happen?
Firstly, Britain should seriously con-
sider the House of Lords recommen-
dation that mathematics should be
compulsory for all students after 16,
and that maths to A2 level should be
a requirement for students intend-
ing to study STEM subjects in higher
education. As the report says, the
current number of pupils studying
maths post-16 is insufficient to meet
the level of numeracy needed in
modern society, let alone in modern
industry.
However, we also need to find solu-
tions to get more STEM students to
translate their skills into the career
TOP TWEETS
Spain is in its current mess solely because it
joined the euro. It was running a surplus
going into the financial crash.
@DanHannanMEP
The Kay review sees declining UK business
research and development as a symptom of
short-termism in the financial system.
@RichardALJones
Following the G4S shortfall, there are now
more troops at the Olympic venues than
there are in Afghanistan.
@tonyblackburn
The Spanish government has done almost
everything the Eurozone has asked it do, but
its not working. Now what?
@YanniKouts
As Spain nears a full bailout, will Germany
accept fiscal union to save the Eurozone?
YES
There is a good reason why markets have been unconvinced by the
latest Eurozone intervention: policymakers continue to deal with
symptoms while structural problems mount up. This is now the third
summer in which investors have seen returns hit by a deepening euro
crisis. Each time has resulted (eventually) in credible responses from
Brussels. But it is no longer enough for the European Central Bank to
be granted greater firepower, or the bailout fund to be thrown more
resources. If the euro is to survive, Europe must tackle the structural
problems of a monetary system which lacks fiscal coordination.
There has been movement (especially in Berlin) in recent months, as
the dawning acceptance that common debt is necessary. But
democratic politics is slow and markets are very fast. The longer it
has been left to fester, the bigger the dose of medication required.
Stephen Barber is reader in public policy at London South Bank
University and economic adviser to Selftrade, the stockbroker.
Stephen Barber
NO
Jason Gaywood
Market reaction says it all Spain will soon require a national bailout
on top of the 100bn (77.9bn) already given to its banks. Common-
sense now dictates that either the Eurozone should jettison its
weaker members or adopt full fiscal integration in order to survive.
However, while the benefits to the EU periphery of such integration
are clear, this course of action would be disasterous to the reigning
champion Germany. Over one third of German national output is
exported. It doesnt take a huge leap of faith to understand that a
resultant jump in borrowing costs, coupled with a appreciation in the
value of the euro caused by fiscal integration, would cripple this key
element in the German economy. While full Eurozone integration
would represent a viable solution to the needs of the many, its
difficult to envisage a scenario where a German premier would ratify
a solution that destroys the countrys ability to dominate the race.
Jason Gaywood is a director at HiFX, the currency specialist.
RAPIDresponses
choices they make. Analysis conduct-
ed by the then Department of
Innovation, Universities and Skills,
for example, estimated that just over
a third of STEM graduates were work-
ing in non-STEM occupations. This
needs to change. And this is where
industry and society must play a
role.
One way industry can help is
through forging more partnerships
with education providers to excite
young students about STEM subjects.
Research shows that children as
young as nine are already consider-
ing their future career direction. This
underlines the importance of engag-
ing children with maths and science
early. But we must also ensure that,
once children are excited by these
subjects, we harness this enthusiasm
throughout their academic journey.
Weve seen the impact this can
make through our Shell Education
Service, which provides science work-
shops to 60,000 children in 600
schools, our research and develop-
ment partnerships with universities,
and our global student competitions.
As an industry, however, we need
much more deep-rooted support on
a national level. From both a govern-
ment and industry perspective, activ-
ity to encourage more young people
to study STEM subjects is no longer a
nice to have. It is imperative for
long-term economic success in the
UK.
Graham vant Hoff is chairman of Shell
UK and vice president CO2 and alternative
energies for Shell International.
GRAHAM VANT HOFF
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The Forum is open for you to take part. Got a sharp comment on
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to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
Push students into
maths subjects or
watch industry fail
T
he law of Jante is a Swedish
idea that discourages
individuality and showing off.
Literally it means: Dont think
youre anyone special or that youre
better than us. Its a fascinating
idea because its contrary to the
concept of a premium car, which by
its very nature means I deserve the
best.
This puts Volvo in a very interest-
ing position. Its latest V40 model has
been designed to be a premium car
yet not be too flash, which is some-
thing of a contradiction. Volvo antic-
ipates selling the car to people
moving up to a premium brand and
people looking for something a little
different or more understated, com-
pared to rivals. To Volvo, its introduc-
tion is so important, the Swedish
company is calling the V40 its most
important car for 20 years.
And who am I to disagree? It cer-
tainly looks and feels like a fresh
start. So many people are forecast to
move into smaller premium cars
that Volvo has replaced not one but
two larger models the Volvo S40
saloon and V50 estate with its
smaller V40 hatchback.
Like the Mercedes A-Class, Volvo
has gone for a low, sleek and quite
elegant look for the V40. The V40s
interior is proof that the Swedes are
a conservative bunch. It is, however,
practical, functional, well laid out
and well put together and its leather
sculptured seats are comfortable.
Its fanciest feature is its driver
instrumentation which has gone
digital. Traditional analogue instru-
ments have been replaced with a
TCT display that can be reconfig-
ured depending on your mood or
driving style. In practice this means
you can choose a green eco, blue
elegance or red performance
theme which sees the car prioritis-
ing the information displayed differ-
ently. Combined with the
astonishing amount of safety fea-
tures, it gives the V40 a trustworthy
character.
Safety of course remains Volvos
raison detre. The amount of safety
kit available on the V40 is mind-
numbing and makes for a very
unique car. This is the first car of its
kind to have a low-speed automatic
braking system as standard, which
will automatically brake the car at
speeds of up to 31mph if it senses an
impact is about to happen.
Meanwhile, a pedestrian detection
system can sense somebody in front
of the car, which will warn you audi-
bly and then apply the brakes if you
dont.
And if the car hits someone, it has
the worlds first pedestrian airbag
which deploys from under the rear
of the bonnet (at the base of the
windscreen) to cushion a pedestrian
from the A-pillars. At the same time,
the bonnet pops up to keep their soft
wobbly bits from hitting the hard
points of the cars engine. Also, the
car has optional cross traffic alert
technology which can warn you if a
car is coming across your rear (i.e.
when reversing out of the car park).
Such social responsibility should be
applauded. And this is just the start
because Volvo has publicly stated
that by 2020 its aim is to engineer
cars that wont kill or seriously
injure anyone.
The car will be sold with three
petrol and three diesel engines,
priced from 19,745. We drove three
of them through the quite bleak-
looking rain-sodden drama of
Snowdonia National Park. The 2.0-
litre 177bhp D4 diesel manual in SE
Lux trim was our favourite, although
we also drove the quicker 1.6-litre
180bhp T4 petrol and the less expen-
sive D2 diesel which will almost cer-
tainly be the bestselling model in the
UK. Though the D4 doesnt quite
offer the mileage of the D2 (65.7mpg
as opposed to 78.5mpg), its mileage
and emissions are low enough to be
extremely attractive, while still offer-
ing near hot hatch levels of
performance.
We found the Volvo V40 to be quick,
refined and quiet. It is surprisingly
agile, though the ride could some-
times be a bit twitchy, ducking and
diving rather more than I would
have liked.
So is the new V40 worth buying?
Absolutely. Just remember: the car
may be special but youre not. Show-
offs shop elsewhere.
Volvo may be understated to look at but its safety technology is impressive.
Safety still rules at unflashy Volvo
The Swedish carmaker should be commended for its safety innovations, and the car is pretty nice too
21
LIFE&STYLE
cityam.com
MOTORING
CAR TALK
BY RYAN BORROFF
Vauxhalls new urban-chic small car
Vauxhall has released images of its new urban-chic small car which
will be launched at this years Paris motor show in September. Called
Adam, the three-door, four-seater has a distinctive two-tone
floating roof and will be offered with a choice of three petrol
engines with optional start/stop technology and a five-speed manual
gearbox.
WORDS BY
RYAN BORROFF
THE VERDICT:
DESIGN hhhhi
PERFORMANCE hhhhi
PRACTICALITY hhhhi
VALUE FOR MONEY hhhhi
THE FACTS:
VOLVO V40 D4 SE NAV
PRICE: 26,795
0-62MPH: 8.6secs
TOP SPEED: 137mph
CO2 G/KM: 114g/km
MPG COMBINED: 65.7mpg
Seats third-gen Leon
Seat has released images of its forthcoming third generation Leon.
Shorter than its predecessor but with a longer wheelbase and a bigger
interior; sculptured, more muscular looks give it a more assertive
character, which is most apparent in its full-LED headlamps and daytime
running lights. The engine range includes a 104bhp 1.6 TDI unit capable
of 74.3mpg and a CO2 figure of just 99g/km.
All hail Astons most powerful Vantage ever
Aston Martins most powerful Vantage droptop ever, the 150,000
limited edition V12 Vantage Roadster, has been unveiled. Powered by a
normally aspirated V12 6.0-litre engine, mated to a six-speed manual
gearbox generating 517PS, the car is capable of 0-62mph sprint in 4.5
seconds and 190mph. It has a revised chassis and a more pronounced
boot lid with flip to reduce rear lift and improve stability.
22
TV & GAMES
cityam.com
T
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BBC1
SKY SPORTS 1
7pmLive Darts 12amTime of
Our Lives 1amSporting Greats
2am-6amDarts
SKY SPORTS 2
7pmLive T20 Cricket 10.30pm
Trans World Sport 11.30pm
Watersports World 12.30am
Total Rugby 1amT20 Cricket
3am-4amTime of Our Lives
SKY SPORTS 3
7pmPool 8pmBoots n All 9pm
European Tour Golf 11pmPGA
EuroPro Tour Golf 1amInside
the PGA Tour 1.30am-3.30am
European Tour Golf
BRITISH EUROSPORT
3.45pmLive Olympic Football
9.45pmOlympic Games
10.15pmOlympic Football
11.15pmWATTS 11.30pm
Olympic Games 12am-12.30am
Inside WTCC
ESPN
6.15pmFootball 8pmWorld
Series by Renault 9.30pm
Premier League World 10pm
Russian Premier League Review
10.30pmOlympia 11.30pmLive
Football 1.30amLive Football
4amPress Pass 2012 4.30am
ESPN Kicks: MLS 5amESPN
Kicks: Brasileirao 5.15amGoal
Show5.45am-6amESPN Kicks:
Extra
SKY LIVING
7pmCriminal Minds 8pmHot in
Cleveland 9pmThe 45 Stone
Virgin: The Weight Is Over: A
man who shed 28 stone without
surgery. 10pmFILMLegally
Blonde 2: Red, White and Blonde
2003. 11.50pm Bones 12.50am
Criminal Minds 1.50am
Americas Next Top Model
2.40amSupernatural 3.30am
Bones 4.20amMedium
5.10am-6amPassport Patrol
BBC THREE
7pmOlympics 2012 9pm
Cherry Healey: How to Get a Life
10pmEastEnders 10.30pm
Little Britain 11pmFamily Guy
11.45pmAmerican Dad!
12.30amCherry Healey: How to
Get a Life 1.25amThe Bad Boy
Olympian 2.25amCare Home
Kids: Looking for Love 3.25am
Little Britain 3.50amLive at the
Electric 4.20am-5.20amThe
Bad Boy Olympian
E4
7pmHollyoaks 7.30pmHow I
Met Your Mother 8pmFILM
Ice Age: The Meltdown 2006.
9.45pmRude Tube: Viral Ads
10.50pm The IT Crowd
11.25pmLittle Box of Horrors
12amThe Big Bang Theory
12.55amScrubs 1.25amRude
Tube: Viral Ads 2.25amHow I
Met Your Mother 2.50am Rules
of Engagement 3.10am90210
3.50amGreek 4.35am-6am
Switched
HISTORY
7pmStorage Wars 7.30pm
Pawn Stars 8pmSwamp People
10pmAx Men 11pmStorage
Wars 11.30pmPawn Stars
12amAmerican Pickers 1am
Swamp People 2amAx Men
3amSwamp People 4amThe
Last Days of World War Two
5amPawn Stars 5.30am-6am
American Restoration
DISCOVERY
7pmAmerican Guns 8pmSons
of Guns 9pmAmerican Chopper:
Senior Versus Junior 10pm
Auction Hunters 11pmGold
Rush 12amAmerican Chopper:
Senior Versus Junior 1amSons
of Guns 2amAuction Kings 3am
American Chopper 3.50am
Flying Wild Alaska 4.40am
Bear Grylls: Born Survivor
5.30am-6amDestroyed in
Seconds
DISCOVERY HOME &
HEALTH
8pmI Didnt Know I Was
Pregnant 9pmHospital Sydney
10pmYoung Doctors 11pm
Untold Stories of the ER 12am
Hospital Sydney 1amYoung
Doctors 2amUntold Stories of
the ER 3amWife Swap 4am
Birth Stories 5am-6amSpecial
Delivery: Baby ER
SKY1
7pmThe Simpsons 8pm
Emergency with Angela Griffin
9pmAn Idiot Abroad 10pmSpy
10.30pmThe Cafe 11pmCop
Squad 12amUK Border Force
1.55amThe Good Guys 2.55am
The Chicago Code 3.45amIts
Me or the Dog 4.35amAirline
5.05am-6amSell Me the
Answer
BBC2 ITV1 CHANNEL4 CHANNEL5
S
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6pmBBC News 6.30pmBBC
London News 7pmThe One Show
7.30pmBritains Olympic Torch
Story: BBC News
8pmEastEnders
8.30pmCHOICE Bert and
Dickie
10pmBBC News 10.25pm
Regional News 10.35pmThe
National Lottery Wednesday Night
Draws 10.45pmHave I Got Old
News for You 11.15pmEastEnders:
National Lottery Update 1.10am
Weatherview1.15amSign Zone:
Britains Lost Routes with Griff
Rhys Jones 2.15amSign Zone: Fake
Britain 3amSign Zone: Britains
Heritage Heroes 3.30amSign Zone:
Food Factory 4am-6amBBC News
6pmEggheads
6.30pmGreat British Railway
Journeys
7pmCoast: The history of
Britains harbours.
8pmRestoration Home
9pmLeaving Amish Paradise
10pmCHOICE The Culture
Show
10.30pmNewsnight: Weather
11.20pmFILMThe Odyssey.
2012.
11.50pm The Bridges That
Built London with Dan
Cruickshank
12.50am BBC News
4am-6amClose
6pmLondon Tonight
6.30pmITV News
7pmEmmerdale
7.30pmCoronation Street
8pmBritains Greatest Gold
Medallists
9pmCHOICE Superstar
10.15pmITV News
10.45pmLondon News
10.50pmFILMA Clockwork
Orange: Drama, starring
Malcolm McDowell. 1971.
1.20amJackpot247; ITV News
Headlines 3amFILMAnalyze
This: Comedy, starring Robert De
Niro and Billy Crystal. 1999.
4.40am-5.30amITV Nightscreen
6pmThe Simpsons 6.30pm
Hollyoaks 7pmNews 7.55pm
4thought.tv 8pmSuperScrimpers
9pm24 Hours in A&E 10pm
Worlds Maddest Job Interview
11.05pmMusic on 4: Mercury Prize
Sessions: Howler 11.35pmRandom
Acts 11.40pmThe Killing 12.35am
Music on 4: Summer Daze 1.15am
Ibiza Rocks: Labrinth 1.30am
4Play: Delilah 1.40am4Play:
Bullitts 1.50amClement Marfo and
the Frontline: Intro 2amThe Album
Chart Show: Spotlight 2.15amThe
Big C 2.45amFILMBarefoot in the
Park: Comedy, with Robert Redford
and Jane Fonda. 1967. 4.35amDeal
or No Deal: Gold Medal Deal
5.30am-6.15amCountdown
6pmHome and Away
6.30pm5 News at 6.30
7pmIce Road Truckers:
Deadliest Roads: 5 News
Update
8pmBritains Strangest Pets: 5
News at 9
9pmNCIS
10pmBig Brother
11pmBig Brothers Bit on the
Side
12amPoker: The Big Game
1amSuperCasino 3.55amNicks
Quest 4.20amMichaelas Wild
Challenge 4.45amMichaelas Wild
Challenge 5.10amHouse Doctor
5.35am-6amHouse Doctor
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5 6
7
8 9 10
11
12 13 14
15 16 17 18
19
20 21 22
23
24 25
4 17 6
16 23
24 22
11 39
24 12
45
8 23
29 6
28 26
11 15
7 8 14
22
15
37
10
3
42
30
13
12
34
5
11
29
35
9
25
38
27
21
ACROSS
1 Trinket (5)
4 Muscle cramp (5)
7 Early form of
modern jazz (3)
8 Raises up (5)
10 Occupied a chair (3)
11 Leak through (4)
12 Eddy (5)
14 Australian wild
dog (5)
15 Metal currency
units (5)
16 Broker (5)
19 O ___ All Ye Faithful,
Christmas carol (4)
20 Sleeveless garment
worn by Arabs (3)
21 Fill with high
spirits (5)
23 Neither (3)
24 Turn inside out (5)
25 Sacred table in
a church (5)
DOWN
1 Small compart-
ments (5)
2 Branch of the
British armed
forces (inits) (3)
3 Out of date (11)
4 Roadside device
triggered by
fast-moving
vehicles (5,6)
5 Its said to make
the heart grow
fonder (7)
6 Paris underground
railway (5)
9 High rocky hill (3)
13 Mimic (7)
15 Desire strongly (5)
17 Mousse (3)
18 Belonging to
those people (5)
22 Products of human
creativity (3)
O
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G A S P B I C E P S
R L E E R
A L G A T R A V E L
P N X C
P A R T Y P I E C E
A L E A A D D
A D M I N I S T E R
M E N E
B O T T L E A B E D
D A R C G
B E A K E R K A L E
7 5 8 9 9 8 7
1 2 5 6 4 7 9 3 8
9 4 3 1 3 1 6
6 4 8 7 9 2 9
8 1 2 9 8 5
9 3 1 7 5 4 2 8 6
3 9 8 3 7 4
1 7 4 2 6 1 3
2 4 1 6 9 5 1
5 9 7 1 3 8 4 6 2
8 9 2 7 8 9 3
4
4
4
4
4
4
4
4
4
The nine-letter word was
CONTRIVED
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
BERT AND DICKIE
BBC1, 8.30PM
Doctor Who star Matt Smith swaps
his sonic screwdriver for a set of oars
in this timely fact-based drama about
the 1948 London Olympics.
THE CULTURE SHOW
BBC2, 10PM
Mark Kermode interviews Christopher
Nolan about how his trilogy of Batman
films has depicted the caped
crimefighter.
SUPERSTAR
ITV1, 9PM
The talent search reaches its climax as
the remaining hopefuls prepare to
deliver what they hope will be their
best performances so far.
TVPICK
LONDON 2012 medal hopeful
Phillips Idowu is incredibly
disappointed with the British
Olympic Association over the
organisations decision to make
public their request to see his
medical records.
The triple jumpers preparations
for the Olympics have been an
exceptionally frustrating experience
during which a foot injury sustained
early last month was followed by a
hip injury that prevented his
participation at the Aviva Grand Prix
in Crystal Palace just 11 days ago.
That he has competed on just
three occasions this year has already
provoked concern over his potential
to win a medal but in also missing
Team GBs training camp in Portugal
to undergo treatment from a private
physiotherapist, the question of his
ability to even be fit has ensued and
had prompted BOA chief medical
officer Dr Ian McCrudie to ask for
Idowus medical records.
Hes incredibly disappointed and
surprised as to why the BOA has
chosen to do this, said Idowu's
agent, Jonathan Marks. I cant
understand the benefit [to Idowu].
We are more than happy to send
the BOA the medical records. Our
office has even had a call from a
member of the BOA medical team
who has also expressed surprise at
the organisations decision to go
public with the request.
Phillips is an athlete whos
proven that if he gets to the start line
then he is one of those athletes who
can win a medal.
The 2009 world champion won a
silver medal at the 2008 Games in
Beijing but his finest form has this
season eluded him all season; leaps
of 16.43m and 17.05m this season are
substantially short of his 17.81m
personal best.
BOA spokesman Darryl Seibel had
said: Dr Ian McCurdie wrote to
Phillips asking that he provide the
relevant medical records relating to
his injury and treatment.
Idowu troubled
by BOAs public
injury enquiry
BRITISH No1 Andy Murray has
vowed to control his emotions
when he returns to Wimbledon at
the weekend seeking to overcome
his Wimbledon final heartbreak
by claiming gold at the London
2012 Olympics.
The Scot broke down uncontrol-
lably shortly after his four-set
defeat to Roger Federer at the SW19
grand slam earlier this month, visi-
bly distraught at having come so
close to realising his dream in front
of a fanatical home crowd.
He will return to Centre Court
and more adoring British fans
when the Olympic tennis competi-
tion begins at the iconic club on
Saturday, less than three weeks
after his ordeal, and believes the
venue will inspire rather
than subdue.
Im pretty confident Ill be able
to control my emotions, said the
25-year-old. Ive had a lot of
ups and downs in my career,
a lot of tough losses
Ive had to come back
from, and Ive done
that fine.
I always think
that Wimbledon has
brought the best out
of me; Ive played
most of my best
tennis there, and I
dont see why that
wouldnt be the
case at the start of
the tournament.
Murray, speaking at an Adidas
event, played down talk of avenging
his loss to Federer but admitted the
tournament had come at the per-
fect time to lift his spirits and help
him prepare for next months
US Open.
Its not revenge I wont be play-
ing Roger Federer again unless we
both make it to the final, so thats a
long way away, he added. But I
think I needed a tournament like
this to get ready and help get over
the disappointment of losing the
final of Wimbledon. Its come at the
right time. I took a few days off but
practice has been good.
British womens No1 Heather
Watson, meanwhile, has been
handed a last-
minute place in
the singles draw
at London
2012, follow-
ing the with-
drawal of the
i n j u r e d
Ukrainian Alona
B o n d a r e n k o .
Watson, 20, reached
the third round of
this years
Wimbledon but
had been overlooked
when organ-
isers instead
handed wild
cards to com-
patriots Anne
Keot havong
and Elena
Baltacha.
Watson also
partners teenager
Laura Robson in the
Olympic doubles.
IN BRIEF
Koscielny agrees Arsenal stay
n FOOTBALL: Arsenal defender Laurent
Koscielny has agreed a new long-term
contract to remain at the club. Details of
its length have not been published, but
he said: Im delighted to have reached
agreement with the club.
Bellew and Barker fights set
n BOXING: World-title challengers
Tony Bellew and Darren Barker will
respectively fight Edison Miranda and
Simone Rotolo at the Alexandra Palace
on 8 September. [Mirandas] a world-
class name, said Bellew.
ENGLANDS Ian Bell concedes he
and his fellow batsmen will have to
be more potent if they are to save
the series with victory in the
second Test against South Africa.
Alastair Cooks 20th Test century
proved a rare highlight when
England were dismissed for 385 a
considerable contrast with South
Africas 637-2 and Bell is
adamant that without drastic
improvement only further
disappointment will arise.
We had to bat time in that
second innings but unfortunately
Bell believes batsmen hold the
key to success in second Test
we didnt face enough balls as a
batting unit, said Bell. It was a
real shame because weve done
it before.
Individually we can all look at
the shots we got out to. If we are
honest there were some soft
dismissals right the way through
the Test match. We pride ourselves
on not only having a great bowling
unit but we got ourselves into a
position to score 500 in the first
innings and we didnt do that.
We have to learn from those
mistakes at Headingley.
The second Test at Headingley
begins 2 August.
THE Olympics begin today ahead
of Fridays opening ceremony with
a fixture between Team GBs and
New Zealands womens football
teams at the Millenium Stadium
in Cardiff.
Regardless of the outcome, Team
GB will then play Cameroon, again
in Cardiff, on Saturday, before
Brazil at Wembley Stadium three
days later.
The mens team, managed by
Stuart Pearce, play their first fixture
tomorrow versus Senegal at
Manchester Uniteds Old Trafford.
Early start for
London 2012
BY DECLAN WARRINGTON
23
SPORT
cityam.com/sport
BY FRANK DALLERES
Andy Murray lost
in the Wimbledon
final earlier this month
Former England captain
David Beckham has confirmed
he will participate in Fridays
opening Olympics ceremony
Results
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Murray: Tears
wont return
at Olympics
Phillips Idowu is
struggling to find
his form and fitness
before the start of
London 2012

Cityam 2012-07-25

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