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The Sunday Times Business — 14 January 2018

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BUSINESS
&MONEY
January 14, 2018 · thesundaytimes.co.uk/business
thesundaytimes.co.uk/money
ONE YEAR ON, I’M
STILL ENJOYING
THE RIDE
IAN COWIE,
MONEY, PAGE 13
ALLIED MINDS BOSS
JILL SMITH
INTERVIEW, PAGE 6
Carillion is this weekend
scrambling to stay afloat amid
warnings that it could go
under within days unless it
secures a financial lifeline.
Insiders said last night that
time was running out to shore
up the construction giant’s
finances. “Cash is getting
incredibly tight. A resolution
needs to be found in the next
day or two,” said one source.
Carillion, which runs vital
services for the NHS and the
army and is helping to build
the HS2 rail link, is to hold
meetings with Whitehall
officials today. Without some
form of state support, the
company could tip into
administration, potentially
as soon as tomorrow, Sky
News reported yesterday.
Carillion has been driven
to the brink by spiralling
losses on high-profile
government contracts. It has
a £600m black hole in its
pension scheme and £900m
in debts. Its lenders are
refusing to pump in any more
cash without guarantees from
the taxpayer.
The crisis has become a
huge concern for the
government due to the range
of services performed by
Carillion for Whitehall
departments. It maintains
50,000 homes for the
Ministry of Defence, helps to
run half of Britain’s prisons
and provides services for
schools. Carillion employs
43,000 staff worldwide,
including nearly 20,000 in
Carlyle eyes
swoop as
GKN battle
heats up
Wall Street raider waits
in wings after FTSE 100
giant rejects £7bn bid
John Collingridge
American buyout giant Carlyle is weighing
an audacious counter-bid for the embattled plane and car parts maker GKN.
Shares in the FTSE 100 supplier hit a
record high on Friday after GKN rejected
a £7bn approach from turnaround firm
Melrose Industries. GKN said the “opportunistic” approach undervalued the business, and instead set out a plan to split in
two. Also, it promoted former independent director Anne Stevens to chief executive to spearhead a cost-cutting drive.
Carlyle, one of the world’s biggest private equity firms, is understood to have
long been interested in GKN. City sources
Anne Stevens,
the new chief
executive, will
be taking an
axe to costs
said its interest had intensified in recent
months, amid pressure on the supplier’s
share price after two profit warnings.
Any formal approach by Carlyle would
be hugely controversial, given GKN’s
status as one of Britain’s engineering
thoroughbreds and the private equity
industry’s reputation for asset stripping.
Carlyle was criticised for its role in the
privatisation of Qinetiq a decade ago.
Worcestershire-based GKN makes
parts such as engine casings for planes
including the Airbus A380, and is a big
supplier to car manufacturers such as
Mercedes-Benz and Jaguar Land Rover. It
began as an ironworks in Wales in 1759.
The Melrose bid provoked an angry
response from the Liberal Democrat
leader Sir Vince Cable, who called for the
government to block it.
The privatisation of Qinetiq in 2006
was lambasted by MPs for “profiteering
at taxpayers’ expense”. That deal made
hundreds of millions for the defence
equipment company’s management and
Carlyle, which took a stake in 2003.
It is understood that the Washingtonbased buyout titan, which has links to the
Bush presidential dynasty, has yet to
appoint advisers or make a decision on a
bid. The firm declined to comment.
GKN’s plan to split in two — revealed by
The Sunday Times in October — raises the
chances of rivals prising away either the
aerospace or automotive company.
A boardroom standoff is believed to
have hindered the break-up until now. Its
automotive operation reportedly had
interest from China’s SAIC in 2016. America’s Dana could also be interested.
Melrose bid 405p a share, 80% in
shares and 20% in cash. It is believed to
be prepared to sweeten the offer to
secure a deal.
It promised to improve GKN’s profit
margin to more than 10% and root out
underperforming managers. Simon
Peckham, chief executive of Melrose,
said: “It comes down to which management team do you want to believe.”
An industry source said Melrose had
underestimated and oversimplified the
challenges of dealing with Airbus and
Boeing. Both have been squeezing costs.
The deal would be Melrose’s biggest
yet, putting it in charge of hugely complex products. “This is going from playing in football’s league two, to the Premier League,” said a source.
The shares closed on Friday at 420p,
valuing the company at £7.2bn.
GKN vows to bang itself into shape,
page 5
Prufrock, page 10
the UK. It is thought that
thousands of sub-contractors
work on Carillion projects.
This weekend government
departments are scrambling
to draw up contingency plans
in the event of a chaotic
collapse of the company.
Last week Carillion held
emergency talks with banks,
ministers and the Pension
Protection Fund. On Friday it
admitted that any rescue plan
would entail its lenders
swapping their loans for new
shares in the company. Its
ARE GAMERS THE NEW
SPORTS HEROES?
PAGE 8
APPOINTMENTS
PAGE 8
PUZZLES
PAGE 16
Google backs
Oxford biotech
bid to beat flu
12
14
Carillion in last-ditch talks with Whitehall
Simon Duke
TECH
main creditors are Barclays,
HSBC and Santander.
The proposed debt-forequity swap would all but
wipe out existing investors.
Shares in Carillion have
already plunged 94% over the
past year, and are expected to
come under renewed selling
pressure tomorrow.
Sources said it was unclear
if Carillion’s banks would be
prepared to take control of
the company, which needs a
huge cash injection. They
want the government to
underpin any rescue plan.
But that would be hugely
controversial with Labour
and the Liberal Democrats.
Lib Dem leader Sir Vince
Cable said creditors and
shareholders should bear the
brunt of the collapse. He said
it would be unacceptable if
“profits were privatised and
the government nationalised
the losses” — as happened
with the 2008 bank rescues.
EY is waiting in the wings
to oversee a possible
administration of Carillion.
ADRIAN SHERRATT
DYSON’S DUST-UP
Sabah Meddings
Google has invested millions
of pounds in an Oxford
University spinout that is
developing a universal
flu vaccine.
The Silicon Valley giant is
among a clutch of investors
ploughing a total of £20m
into Vaccitech, a company
designing a vaccine to protect
against most strains of flu.
If successful, Vaccitech’s
product could put an end to
vaccine shortages, weak flu
jabs, and prevent a repeat of
the Spanish Flu pandemic
that claimed between 50m
and 100m lives after the
First World War.
Tom Evans, chief executive
of Vaccitech, warned that
existing flu vaccines were
becoming less effective. “The
older you get, the less
effective they are,” said
Evans, former global head of
infectious disease at Novartis,
the Swiss pharmaceuticals
giant. Existing vaccines are
updated every year,
according to which strains of
flu the World Health
Organisation predicts will be
most severe. However, they
do not offer high levels of
protection, and not everyone
is vaccinated. This year,
hospitals were ordered to
cancel non-urgent surgery
until February to cope with
the “Australian” flu outbreak.
The scientists behind
Vaccitech’s technology,
professors Adrian Hill and
Sarah Gilbert, have designed
a vaccine to boost the body’s
defences against a part of
the virus common to most
strains of flu.
Vaccitech will use the new
funds to complete a 2,000person study in Oxford. The
cash is coming from GV,
Google’s venture capital arm,
existing backer Oxford
Sciences Innovation and
prominent Silicon Valley
investor Sequoia. If
successful, the vaccine could
be available within five years.
Premier out of soup
with Batchelors sale
Oliver Shah
Premier Foods is in talks to
sell the soup and noodles
brand Batchelors to its
biggest shareholder — a move
that could trigger a gradual
break-up of the debt-laden
business.
Premier is understood to
be exploring a deal with
Nissin Foods, the Japanese
inventor of instant noodles.
Batchelors is said to be valued
at more than £200m.
Premier’s boss, Gavin
Darby, has been under
pressure to boost returns
since he rejected a £537m
takeover bid from the
American spices group
McCormick in 2016. Instead,
he forged a partnership with
Nissin, which built a 20%
stake in Premier.
The vacuum cleaner
manufacturer Dyson is
embroiled in a legal battle
with an American rival over
whose product is more
powerful, writes Liam Kelly.
The British company has
filed a claim at the High Court
accusing Shark of misleading
customers when comparing
its cordless IF2 cleaners with
Dyson’s V8 in TV and online
advertisements.
The two companies have
previously clashed in US
courts over ad campaigns.
Shark is a relative
newcomer to Britain, but has
grown to challenge Dyson as
American market leader with
its cheaper models.
Dyson alleges that Shark
claimed its products had
“more suction than the Dyson
V8” when tested on
“extended run-time mode”.
It argues that the V8 has
“substantially more suction”
when “both products are used
on their maximum settings”,
and that industry-standard
tests are carried out only on
high power modes.
In its defence, Shark said it
had tested the products on
the low-power setting
because standard tests were
designed for vacuum cleaners
with cords. It said this was a
better measure of
performance. Shark pulled
the ads two days after Dyson
filed the claim.
Dyson, founded by the
billionaire inventor Sir James
Dyson, above, said:
“Occasionally we take action
to protect ourselves against
competitors’ misleading
claims.” Shark could not be
reached for comment.
Darby subsequently had to
slash Premier’s sales target.
He suffered a further setback
last January when Premier
issued a profit warning,
blamed on sterling’s decline
and rising prices for
commodities such as wheat.
Paulson & Co, the US hedge
fund, reacted by urging the
board to “act upon their
fiduciary duty and put the
company up for sale”.
There was also
stakebuilding by Oasis
Management, a Hong Kong
activist fund, which took a
board seat in March.
Paulson, which owns 2% of
Premier, and Oasis, which
holds 9%, declined to
comment on disposal plans.
Premier reported better
results in November, when
Continued on page 2 →
BA tells Heathrow: Sell rail
link and focus on airport
John Collingridge
The owner of British Airways
has demanded that Heathrow
be forced to sell Britain’s
most expensive train service
and focus on running the
airport instead.
IAG’s latest salvo escalates
the long-running battle
between the airport and its
biggest customer over the
cost of Heathrow’s plans for a
third runway. IAG made the
call for the Heathrow Express
to be sold in a response to a
consultation by the aviation
watchdog. On Wednesday,
the airport is due to reveal its
blueprint for expansion as it
attempts to slash about £5bn
from the £18.6bn price tag for
the third runway.
Its 10-week planning
consultation is likely to
examine options such as
erecting a runway on stilts
over the M25 and building
new terminals.
The Heathrow Express,
which operates the 15-mile
Continued on page 2→
2
The Sunday Times January 14, 2018
BUSINESS
DIGEST
TOUR OPERATOR
IN LION CITY
DEUTSCHE BOSS:
NO CITY EXIT
Deutsche Bank will move
far fewer jobs to Frankfurt
after Brexit than the 4,000
that has been widely
reported, according to the
lender’s British boss. “The
4,000 number that comes
up again and again is much
too high,” John Cryan,
above, told a Swiss
newspaper.
The Yorkshireman added
that initially several
hundred jobs would be
created in Germany’s main
financial hub and cities
such as Milan and Paris.
Deutsche‘s headquarters
is in Frankfurt, but it has
8,600 employees in Britain.
“Mainly bankers,
technology experts and
traders work in London and
they want to stay there,”
Cryan said.
ROYAL MAIL’S
ONLINE BOOST
Royal Mail
475p
450
425
Tour operator Scott Dunn
has tightened its foothold in
Asia by snapping up
Country Holidays, a luxury
travel company based in
Singapore.
Scott Dunn, which is
majority owned by the
private equity firm
Inflexion, began as a luxury
ski chalet operator in 1986.
It was founded by Andrew
Dunn, who remains as
global president and a
significant shareholder.
The company now sells
holidays across the world,
with turnover expected to
reach £160m this year.
Scott Dunn will merge
Country Holidays’ sales
team with its own, creating
a larger company with 300
employees. The latest deal
follows Scott Dunn’s
acquisition of Aardvark
Safaris’ US operation in San
Diego in 2016.
Oil price increase burns hole
in City’s inflation forecasts
Three-year high for
crude to maintain
earnings squeeze
Tommy Stubbington
Surging oil prices are set to prolong the
squeeze on household incomes this year,
with economists expecting inflation to
fall only gradually from its recent peak.
The cost of a barrel of Brent crude shot
above $70 late last week, the first time it
has reached such levels since the oil price
crash in 2014.
Consumers are already feeling the
effects at the petrol pumps, where the
average price of a litre of fuel is up 5p at
121.27p, according to the RAC.
Inflation is forecast to fall for the first
time since June when the latest figures
are published this week. However, prices
may rise faster than wages for much of
this year as costlier oil feeds through to a
wide range of goods, economists say.
“UK consumers are already having a
hard time, and this will delay the recovery in real wages,” said Kallum Pickering,
an economist at Berenberg Bank.
Wages grew more slowly than inflation
for much of last year, with annual growth
currently running at 2.4%.
Inflation is forecast to fall to 3% in
December from 3.1% the previous month.
The consensus among City economists is
that it will average 2.6% this year. However, Pickering thinks the increase in
energy costs will cause some to lift their
projections.
Chris Hare, an economist at HSBC,
said: “We expect [inflation] to fall only
very gradually and remain above the
Bank of England’s 2% inflation target
throughout this year and next.”
Oil prices have been driven up by
robust economic growth around the
world, which has run down global stockpiles in recent weeks. The fact the rally is
being driven by strong demand, rather
than a shock to supply, is a silver lining for
consumers in Britain, according to Nomura economist George Buckley.
“The rise in oil prices is not happening
in isolation. It’s because there’s a strong,
synchronised global recovery from
which the UK is benefiting,” Buckley said.
Also, a rising pound should help to offset the impact of pricier oil by making all
imports cheaper. A barrel of Brent crude
is up 25% in dollar terms since early September, but just 20% in sterling terms.
On Friday, the pound climbed to its
highest level against the dollar since the
EU referendum in 2016.
SPENDING UP
Brent crude
£72
68
64
60
56
52
48
44
J FMAM J J A SOND
Source: Thomson Reuters
PETER MOUNTAIN
ASPREY LOSES LUSTRE
Czech
emigre
in £30m
sellout
0.4%
Ben Harrington
November’s rise in
manufacturing output, the
seventh consecutive month
of growth in the sector —
the longest run of
expansion since 1997. In the
three months to November,
output was up 3.9% on a
year ago, helped by a
booming global economy
and the weakness of
sterling.
REGIONS’
BREXIT BLUES
400
375
J FMAMJ J AS OND
Source: Thomson Reuters
Royal Mail will reveal the
fruits of the Christmas
online shopping frenzy
when it releases a
third-quarter trading
statement on Thursday.
The group opened six
temporary sorting centres
and recruited 20,000 staff
to cope with anticipated
demand — meaning any
slowdown will hit its bottom
line. However, numbers
from the British Retail
Consortium suggest online
retail enjoyed a strong
Christmas — boding well
for Royal Mail’s parcel
business.
Two of the most pro-Brexit
regions would be hardest
hit by any decline in
services exports after
leaving the EU, according
to trade experts.
Analysis by the University
of Sussex Trade Policy
Observatory (UKTPO)
shows that northeast
England and the West
Midlands are most reliant
on the EU for services trade,
selling about half their
services exports there.
“While London is by far
the biggest exporter of
services to the EU, it also
trades on a huge scale with
the rest of the world, so is
somewhat protected,” said
UKTPO’s Ingo Borchert.
Fundraising off the
table for Eat owner
Ben Harrington
The buyout firm behind the
Eat sandwich chain has
pulled a £400m fundraising
and shown the door to a raft
of senior staff.
Last week, Lyceum Capital
wrote to potential investors to
inform them that it would no
longer be raising cash for a
planned new fund.
The company blamed its
troubles on Brexit, saying that
international investors “are
taking a more cautious
approach”.
Lyceum has also had to
slim down its ranks of
dealmakers. Several top
executives are thought to
have left recently as part of a
redundancy and
restructuring process that
will leave the buyout shop
raising money “deal by deal”.
The move shocked the City
as Lyceum is one of Britain’s
oldest and most successful
private equity firms.
According to its website,
the firm has carried out more
than 100 deals, including
making an investment in
the private nursery and
pre-school operator Asquith.
However, the firm has had
a tough time recently as some
of its portfolio companies
have struggled.
Lyceum declined to
comment.
Retail sales weathered the
squeeze on household
incomes during the
crucial Christmas period,
official figures this week
are set to show.
Economists forecast a
fall of more than 1% on the
previous month, as
shoppers brought forward
purchases to capitalise on
November’s Black Friday
discounts.
However, the volume of
sales is expected to climb
relative to last year as
consumers borrow to
keep spending.
High-end jeweller Asprey
saw losses deepen last
year — despite a surge in
sales, writes Liam Kelly.
Asprey, which has
supplied jewellery to the
royal family since Queen
Victoria, reported pre-tax
losses of £19.1m — one-
third deeper than the year
before, though sales over
the period rose 63% to
£35.9m. It blamed rising
costs and unforeseen
moves on foreign
exchange markets.
The Asprey family sold
the New Bond Street
jeweller to the Sultan of
Brunei’s brother for £100m
in 1995. Its ownership has
since changed hands
frequently. In 2006, US
private equity firm Sciens
swooped when it was on
the brink of collapse.
Asprey has not turned a
profit since a debtrestructuring in 2011,
losing tens of millions in
the process amid a
squeeze on luxury goods.
The jeweller has a royal
warrant for Prince Charles,
and its goods featured in
the 2010 Angelina Jolie
Autonomy finance
boss faces court fight
Danny Fortson
in San Francisco
The long-running battle
between American
technology giant HP and
British software tycoon Mike
Lynch will burst into the open
again next month when the
trial of Autonomy’s former
finance director opens.
Sushovan Hussain, a 53year-old Briton, was indicted
in late 2016 by American
prosecutors. He is accused of
cooking the books to make it
appear that Autonomy, the
software company founded
and run by Lynch, made far
more money than it did.
Hussain has denied any
wrongdoing.
His lawyers recently
requested immunity for six
witnesses they hope to call,
according to court papers.
Government lawyers are
fighting the motion. The jury
trial is set to begin on
February 26 in San Francisco.
Christopher Egan, ex- head
of Autonomy’s US business,
has struck a deferred
prosecution agreement with
the government lawyers and
will be a co-operating witness.
HP paid more than $11bn
for Autonomy in 2011 but the
deal soon soured. It wrote off
most of the Cambridge
company’s value the next
year, and alleged that former
bosses, including Hussain
and Lynch, had overstated
Autonomy’s revenues.
In 2015, HP launched a
$5bnlawsuit in the High
Court, which is likely to go
to trial next year. Lynch has
countersued, accusing the
US company of smearing his
reputation as he sought to set
up a tech investment fund.
Hussain was Autonomy’s
finance director for 10 years.
The Serious Fraud Office
closed its own investigation
film The Tourist, pictured.
Asprey said it continued
to “invest in its product
offering, supply chain and
retail store network”, and
“expects to continue to
invest heavily in Asian
expansion” after opening
stores in Japan.
A Czech who came to Britain
on a student visa more than
35 years ago to escape
communism is set to make
millions of pounds from the
sale of his food data business.
City sources said Vladimir
Peksa had agreed to sell
Mintec, which he founded in
1982, to the private equity
firm Synova Capital for an
estimated £30m. The deal
could be announced as early
as this week.
Peksa, 72, came up with
the idea for Mintec — whose
clients include Tesco,
Unilever and US supermarket
chain Albertsons — while
head of cocoa research at the
confectionery giant Mars.
The Buckinghamshire
company sells information
about almost all of the food
ingredients that are not
traded on exchanges to more
than 400 retailers, food
manufacturers and suppliers.
Tony Pauley, an American
who previously worked at the
consultancy firm Mercer, was
appointed chief executive in
2016. It is understood that
Synova is backing him in a
buyout of Mintec from the
Peksa family.
Peksa owns 60% of the
shares in the company, which
paid a £1m dividend in 2016.
Synova Capital declined to
comment.
Private equity house
bags travel insurer
Ben Harrington
Hussain: lawyers seeking
immunity for witnesses
into Autonomy’s accounting
practices in 2015 without any
charges being made. The
watchdog said it had ceded
“aspects of the investigation”
to US authorities.
HP sold its software arm,
including Autonomy, to
Britain’s Micro Focus in
September 2016.
The founders of an insurer
that sells travel cover to
over-55s are in line for a
multi-million-pound fortune
from the impending £30m
sale of their company.
Mike Rutherford and Chris
Wacey, former insurance
brokers, founded AllClear
Insurance Services in 2001
and own a majority of the
shares.
The company, based in
Romford, Essex, specialises
in providing affordable
insurance to travellers who
are over 55 and have serious
medical conditions.
Last year it made a pre-tax
profit of £286,000 after
turnover rose by one third to
£12.9m.
The company operates in
the UK, Ireland and Australia
but insiders said that its new
owner, the buyout firm
Synova, may look to expand
into other countries.
The sale comes at a
turbulent time in over-50s
travel insurance, after Saga
issued a profit warning in
December for last year and
the current year.
Rutherford and Wacey,
both 69, are to remain as
non-executive directors at
AllClear after the takeover.
They are expected to retain
a small stake in the company.
Investors hungry for Heathrow to reveal
Premier Foods deal more about runway
→Continued from page 1
quarterly sales increased by
more than 6%.
Darby said Batchelors was
the company’s fastestgrowing brand and attributed
much of the better
performance to the tie-up
with Nissin, which has
resulted in products such as
Super Noodles pots.
However, Premier’s shares
continue to trade at almost
40% less than the level of
McCormick’s 65p-a-share
final bid. They closed on
Friday at 41.4p, valuing the
business at £346.3m.
The potential sale of
Batchelors is understood to
have emerged from a
strategic review carried out
by the investment bank
Credit Suisse. Nissin is being
advised by UBS.
A source close to the
situation said the disposal
would be supported by
shareholders, who “just want
something to happen to
create value”, but that Darby
was dragging his heels as it
would pave the way for a
break-up of the company.
Premier said there was “no
change to the strategy laid out
last May”, when it promised
to focus on growing sales,
cutting costs and paying
down debt. It is burdened
with £535m of borrowings,
the legacy of a lengthy
acquisition spree. Also,
Premier’s pension funds have
a combined deficit of £421m.
Agenda, page 4
→Continued from page 1
route between the airport
and Paddington station in
west London, is renowned for
charging passengers as much
as £27 for a single journey.
However, the operator
faces a threat from new
Crossrail trains, which are
due to start running
competing services in May.
Heathrow also owns part of
the track, but last May lost a
high court battle over
attempts to raise charges for
rival operators to run on its
rails.
IAG said Crossrail’s
introduction would mean
infrastructure costs were
disproportionately heaped
on to Heathrow Express at a
time when its revenues were
diluted — and would end up
in higher landing charges.
“Consequently, it would be
in passengers’ interests for
Heathrow to divest Heathrow
Express . . . to a rail operator
and to instead focus on its
core business of running and
expanding an airport,” it said.
Heathrow said: “We are
looking forward to the arrival
of Crossrail in coming years
as part of our plans to treble
Heathrow’s rail capacity by
2040 and put the airport at
the heart of an integrated
transport network.
“Heathrow Express has
carried more than 100m
passengers and will continue
to play an important role in
sustainable transport at
Heathrow alongside
Crossrail.”
3
The Sunday Times January 14, 2018
BUSINESS
Ex-Waitrose
boss’s warning
to big stores
Oliver Shah
The former boss of Waitrose
has urged middle-market
retailers to fix their
“fundamentally flawed”
business models in the wake
of poor Christmas trading
updates from Debenhams
and House of Fraser.
Lord (Mark) Price, who left
the John Lewis Partnership’s
grocery chain in 2016 for a
short-lived stint as the
government’s trade minister,
said the rise of the internet
and more promiscuous
shopping habits had
undermined many
department stores.
“It’s an incredibly difficult
space,” Price said. “In the old
days, people would say: ‘We
want to go to only one place,
and if there’s something there
we’ll buy it.’ And what we’ve
seen over the course of time
is those mid-market retailers
edit and edit their assortment
until they become a variety
store of nothing.”
His comments came after a
disappointing festive season
for most high street
operators. Debenhams issued
a profit warning, sending its
shares tumbling by almost a
fifth, and House of Fraser
announced a combined 4%
like-for-like sales drop from
its stores and website.
John Lewis accompanied
news of a 3.1% rise in sales at
its department stores with a
de facto profit warning,
explaining that it had been
forced to cut prices to
compete. Richard Hyman, an
independent analyst,
suggests in a report on the socalled golden quarter that
64% of retailers discounted
goods at Christmas.
The short-term pressures
on retailers, including the
pound’s fall and weaker
consumer confidence, are
compounding longer-term
problems, such as the rise of
Amazon and the declining
importance of stores. These
factors — a “perfect storm”,
said one veteran — have led
some to predict a wave of
mergers this year.
Terry Green, the former
boss of Debenhams, said
“consolidation,
differentiation and also costcutting” were needed in the
middle market. However,
Price said: “I don’t think
consolidation is the answer.
In many cases, the offer is
fundamentally flawed . . . The
truth is, it’s very hard for
them to compete against the
internet in terms of product
width, it’s hard to compete on
price against the discounters,
and it’s hard to compete on
service against the top end.”
Personal holiday
planner up for sale
Ben Harrington
A website that connects
holidaymakers with freelance
advisers to plan bespoke trips
could fetch up to £200m.
The private equity owner
of Travel Counsellors has
appointed the investment
bank Rothschild to sell, float
or refinance the business,
according to City sources.
Travel Counsellors had
revenue of £188m in 2016,
meaning it would be worth
Facebook
acts to stem
user exodus
CLIFF EDGE: NME BID
between £150m and £200m
in a sale.
The company was started
in 1994 by David Speakman,
who came up with the idea of
using travel planners working
from home. Travel
Counsellors now has 1,700
agents, who help customers
plan cruises, honeymoons
and trips to locations such as
Costa Rica, Hong Kong and
Mauritius. Speakman sold to
the buyout firm Equistone in
2014 for £100m.
Switch to favour
posts from friends
over news follows
7% fall in traffic
Danny Fortson
San Francisco
Front-page news: the NME was a must-read for music fans and stars, such as Cliff Richard
A former Ministry of Defence
mandarin is trying to buy the
magazines Marie Claire,
Wallpaper and NME for as
much as £150m, writes
Ben Harrington.
Sir Bernard Gray, who was
chief of defence materiel, is in
talks to acquire the titles,
which have been put up for
sale by America’s Time Inc.
The former journalist and
businessman is working with
buyout firm Epiris on the bid,
according to City sources.
Gray, 57, already owns the
New Scientist, which he
bought from publishing giant
RELX. It is thought that he
wants to merge the magazine
with Time’s British titles.
Epiris and Gray have been
in advanced talks since late
last year. However, the deal
is understood to be on
a knife- edge.
The American media giant
is being swallowed by rival
Meredith Corporation, which
is controlled by the billionaire
Koch brothers. The $2.8bn
(£2bn) deal has complicated
the sale of its UK publications,
sources said.
Gray worked at the MoD
from 2011 to 2015. Prior to that
he was chief executive of the
Times Educational
Supplement and a special
adviser to defence secretaries
Geoff Hoon and George
Robertson.
Epiris declined to
comment. Gray could not be
reached for comment.
Mark Zuckerberg’s decision to alter Facebook’s news feed to prioritise personal
posts over professionally produced news
and video was spurred by a potential exodus of users, according to research.
Time spent by average members fell by
7% last August compared with the same
period in 2016, and by a further 4.7% in
September, according to a review of Nielsen traffic data.
The analysis, by Pivotal Research, suggested that Facebook users had become
tired of being bombarded with news stories and adverts.
The figures may also indicate the first
signs of fallout among users after a series
of controversies in the past year, from
fake news to growing worries of potential
adverse psychological effects the platform may have, especially on the young.
On Wednesday, Facebook, YouTube
and Twitter will face another grilling in
the Senate over extremist content on
their sites. The hearing is titled “Terrorism and Social Media: #IsBigTechDoingEnough?”
In Zuckerberg’s public post announcing what he called a “major change”, the
billionaire made no mention of the hearing or any other specific issues buffeting
the company. His aim, he said, was simply to ensure that time on Facebook was
“time well spent”.
The first step in the effort is to re-engineer how the news feed, the core feature
of the platform, filters content deemed to
be of interest to individual users. The
new approach will feature less content
from “businesses, brands, and media”
and more from ”friends, family and
groups”.
Publishers, from newspapers to video
producers, reacted with dismay because
the move will make it harder for their
content to be seen. Facebook has
William Hill buoyed by
festive snore-draws
MARTIN RICKETT
Sabah Meddings
A string of draws in Premier
League football matches over
the Christmas period is
expected to have shored up
profits at William Hill.
The bookmaker is forecast
to have paid out less to
punters during the festive
fixtures and has a number of
drawn matches to thank,
including a goalless
encounter between
Manchester United and
Southampton.
Football fans tend to bet on
their team winning, meaning
bookies make fewer payouts
on draws. There were nine
draws over Christmas and
new year, against two in the
same period a year ago.
Horseracing results also
favoured bookmakers. The
most high-profile event, the
King George VI Chase at
Kempton Park on Boxing Day,
did go the way of favourite
Might Bite. However, at the
Chester
techies in
driverless
cash boost
Peter Evans
A Chester-based technology
business that collates data
from car journeys has raised
£5m from private investors to
prepare for an explosion in
“connected” vehicles,
including driverless cars.
Wejo, which processes
data from millions of cars
worldwide, has raised £25m
since it was established four
years ago.
Its technology collects
messages from thousands of
sensors in modern vehicles,
which can be used to predict
breakdowns, analyse
collisions and monitor a car’s
impact on the environment.
Bookie boost: Manchester United’s draw with Southampton
Leopardstown festival in
Ireland, a string of favourites
came up short.
The results, set to be
revealed by William Hill in a
trading update on Thursday,
will be a welcome boost to
the gambling sector, which is
facing a shake-up amid the
government’s crackdown on
fixed-odds betting terminals.
The industry has been widely
criticised for allowing
punters to lose up to £300 a
minute, and maximum bets
are to be cut from £100 to
between £2 and £50 following
a review by the Department
It has been used to analyse
40bn miles of driving data
from 3.5m cars.
The company employs
more than 100 people and
was founded by entrepreneur
Richard Barlow.
Wejo will use the latest
funds to hire more data
scientists and invest in its
technology.
The company’s platform
acts as a data exchange for
manufacturers, insurers and
other third parties.
Soaring production of
electric cars and, potentially,
the introduction of driverless
vehicles will lead to a huge
upsurge in the number of
connected cars in the next
five years.
Makers including Ferrari,
Volkswagen and BMW are all
developing autonomous
vehicles.
The company has
appointed Tim Lee, former
head of General Motors in
China, as its chairman.
Jaguar plots
robot future
from new
Irish hub
John Collingridge
Jaguar Land Rover is betting
on an electric and driverless
future with a new software
engineering hub in Shannon,
Ireland.
The Midlands car maker
plans to create 150 jobs at the
site, where it will research
new technologies to fuel its
march into battery-powered
cars and automated driving.
Car makers are racing to
develop hi-tech features as a
flood of new rivals, from
Tesla to Google, threaten to
steal their market share.
Jaguar’s first electric sports
utility vehicle, the I-Pace, is
due to go on sale this year.
for Digital, Culture, Media
and Sport.
The Responsible Gambling
Strategy Board — which
provides independent advice
to the Gambling Commission
— expects the new maximum
limit to be £20. However,
bookmakers have warned
that shops will close if the
stakes are cut.
The dispute comes amid a
wave of consolidation in the
sector. Last month Ladbrokes
Coral agreed to a £4bn
takeover by online rival GVC.
William Hill fended off a
takeover approach from 888
and Rank in 2016. Analysts
expect any further potential
bidders to wait for a
conclusion to the gambling
review before pouncing.
William Hill is among the
British bookmakers set to
benefit if the US Supreme
Court rules in favour of
liberalising sports betting. A
decision is expected in the
next few months.
Shannon has become a hitech hotbed, and companies
including chip giant Intel
have bases there. Jaguar said
the site would “complement”
more than 10,000 engineers
in the UK, adding that the
“heart of our business will
always be in the UK”.
The expansion comes after
another record year for the
company, owned by India’s
Tata conglomerate. It sold
621,109 cars, up 1% on 2016.
However, its growth has been
stymied by weaker consumer
confidence in the UK and
dwindling demand for diesel
vehicles.
Nick Rogers, Jaguar’s
executive director of product
engineering, said: “The new
facility provides an exciting
opportunity for us to pioneer
future autonomous and
electrification technologies.”
The expansion has been
supported by Ireland’s
Investment Development
Agency.
Plastic wars
The week we tried to ditch the packaging.
Pick up your copy of The Times tomorrow.
changed strategy several times before,
from promoting clicks and “likes” to
video and then live feeds.
Publishers have invested heavily to
meet those demands because of Facebook’s immense power and reach, only
to be left in the lurch when its priorities
change. For some, such as local news outlets that often rely on Facebook for a significant chunk of their traffic, this latest
change could be brutal.
Zuckerberg wrote: “I want to be clear:
by making these changes, I expect the
time people spend on Facebook and
some measures of engagement will go
down.” Investors dumped Facebook
stock after the warning. The shares tumbled 4% to $179.37.
Even after the sell-off, Facebook is
worth $520bn (£378bn). According to Pivotal Research, the overhaul of the news
feed could hit growth in the short term,
though it should bolster long-term
prospects.
RIVALS QUIT DISNEY
Silicon Valley heavyweights Sheryl
Sandberg, inset, and Jack Dorsey are
to leave the board of Walt Disney as
the entertainment giant muscles in
on their territory. Disney revealed
that Sandberg, chief operating
officer at Facebook, and Dorsey,
chief executive of Twitter, will not
stand for re-election at the annual
meeting in March. The home of
Mickey Mouse plans to launch a
video-streaming service next year to
rival Netflix. Facebook and Twitter
expanding their
are expandin
own video
vide products.
Walt Disney
D
that given its
said tha
“evolving
“evolvi
business”, it was
busine
increasingly
increa
difficult for
diffic
Dorsey and
Dorse
Sandberg to
Sand
“avoid conflicts
“avo
relating to
relat
board matters”.
boa
4
The Sunday Times January 14, 2018
BUSINESS
The FTSE dilemma: slim down or surrender
Simon Duke Agenda
L
ike Donald Trump and his
nuclear button, some company
bosses seek validation in the size
of their weaponry. How else to
explain some of the unwieldy
beasts we see on the FTSE 100?
There is, of course, merit in
diversification, but all too often
takeovers are motivated by a
vainglorious desire to expand for
expansion’s sake.
This trend appears to be falling out of
fashion. As predicted by Iain Dey in this
column recently, a wave of deal-making
is building that’s more about breaking
sprawling empires apart.
Last week, the struggling industrial
conglomerate GKN unveiled plans to
break itself in two after spurning a £7bn
takeover offer from the turnaround
specialist Melrose.
Embattled Premier Foods, the owner
of Mr Kipling cakes, is also slimming
down: it is in talks to sell its Batchelors
packet-soup brand. As we report today,
the £200m deal could be the prelude to
a dismantling of the food producer.
Many other companies have joined the
fitness fad, including drugs giant Shire
and education publisher Pearson.
Premier Foods has long been ripe for
a shake-up. For the past decade it has
laboured under a large pension deficit
and a crippling overdraft. Two years ago
an opportunity for a clean exit emerged,
but chief executive Gavin Darby turned
down a 65p-a-share offer from American
rival McCormick, only to see the stock
tumble to 41p.
A plummeting share price is far from
Premier’s only headache. Darby is under
siege from two aggressive hedge funds,
with New York giant Paulson & Co and
Hong Kong’s Oasis Management pushing
for a break-up or sale. Their wishes may
soon be granted: Darby is in discussions
with Chinese noodle maker Nissin,
Premier’s largest shareholder, over a sale
of the Batchelors business. If the deal
goes through, predators will surely smell
blood in the water. Premier’s Bisto gravy,
Ambrosia custard and Loyd Grossman
brands would make tasty morsels for
larger overseas rivals.
The fate of GKN is harder to call, with
the conglomerate having endured much
turbulence over recent months. It issued
two profit warnings at the tail end of last
year, leading to the departure of its chief
executive designate. Melrose specialises
in rehabilitating under-performing
industrial companies and has struck at
the moment of maximum weakness.
Melrose boss Simon Peckham will kick
off talks with GKN shareholders this
week. He will argue that his team are
more suited to the task of reviving the
sleeping giant than GKN’s current
management. The claim will be hard for
Turner and his new chief executive Anne
Stevens to dispute. Melrose has an
impressive track record in delivering fat
returns to its own investors.
Under the cash and shares offer, GKN
shareholders would end up with 57% of
the enlarged company — so they would
share in the extra profits generated from
a revival of the conglomerate. However,
Peckham’s offer is far from a knockout
blow and other suitors are waiting in the
wings. They include the private equity
giant Carlyle and a host of industry
players. Melrose will need to sweeten
its offer significantly if it is to prevail.
British American Tobacco
£60
40
20
0
2005
2010
2015
Source: Thomson Reuters
Predators will
surely smell blood
in the water at
Premier Foods
Big Tobacco can’t be extinguished
On July 1, 2007, Britain introduced a
smoking ban in all enclosed public
spaces. It promised to kill one of the
world’s most reviled industries — but
rumours of Big Tobacco’s imminent
demise were greatly exaggerated.
In the decade since the prohibition,
cigarette makers have enjoyed booming
profits. Shares in Lucky Strike owner
BAT have nearly trebled, giving it a
market value of £114bn.
In Britain and America, smoking rates
are falling. However, this has been more
than offset by a surge in emerging
markets. Tobacco giants have been able
to take advantage of looser regulation in
Asia and Latin America to hook a new
generation of smokers.
Paradoxically, smoking bans have
entrenched the power of the big four
cigarette makers. The advertising ban
has starved new entrants of the oxygen
of publicity, preventing them from
competing. It has also slashed marketing
budgets. Remember when Marlboro
used to sponsor the Ferrari Formula One
team? All those millions now drop
straight into Philip Morris’s bottom line.
As my colleague John Arlidge reports
today (on the opposite page), BAT and
Philip Morris have come up with a new
money-spinning idea; “heat, not burn”
cigarettes. These electronic gizmos
warm up a stick of tobacco, rather than
set it alight. Because the leaf is not
combusted, they produce fewer of the
noxious vapours that cause cancer.
However, let’s not be gulled into
believing that they are safe. According to
an independent study for MPs— using
data provided by the tobacco companies
—the “heat, not burn” products emit up
to half of the harmful compounds
produced by traditional gaspers.
Still, the new “cigarettes” are hugely
popular in Japan — where BAT and Philip
Morris are experimenting with the
product. There is no reason to believe
that they won’t take off in other
developed markets in the future.
Like it or not, big tobacco companies
are likely to remain among the great
survivors of the corporate world.
Iain Dey is away
Britain does infrastructure
well – let’s build on that
Antisocial media
must get smart fast
David Smith Economic Outlook
Irwin Stelzer American Account
R
ecently I was at a meeting at
which someone was extolling
the virtues of French
infrastructure — its railways,
its (toll) motorways and an
energy sector that is the largest
net exporter of electricity in
the world.
Then somebody else asked whether
they had ever travelled by Eurostar from
St Pancras, the magnificently restored
and modernised London terminus —
with its pianos, fashionable shops and
statue of John Betjeman (who helped to
save St Pancras from demolition) — to
Gare du Nord, its Paris equivalent. It is a
journey from high-quality infrastructure
to a dirty, run-down relic of a bygone
age. And if you do not believe me, look at
the reviews on Trip Advisor.
As for motorways, the M6 toll in the
Midlands has never been a commercial
success but it compares well with
anything in France.
This month has seen the opening of
the new London Bridge station, yards
from this newspaper’s offices. The
station, London’s oldest, has been
extensively remodelled and
modernised. It looks magnificent, and
will look even better when the work,
done for the most part while the trains
were still running, is complete.
There are plenty of other examples of
Britain doing infrastructure very well.
Crossrail, which will begin offering fast
services across London at the end of this
year, is an extraordinary engineering
achievement in a city where
underground space is severely limited.
With a fair wind, it will be followed by
Crossrail 2. And, while there has been an
infrastructure bias towards London —
needed for a modern capital city, which
at one time had a badly creaking
infrastructure — there are plenty of other
good examples around the country.
Look, for example, at Birmingham
New Street station, now a pleasure to use
and a great asset to Britain’s second city.
Both Severn bridges, linking England
and Wales, were great engineering
achievements at the time of their
construction, and this year they will go
toll-free.
Most people will be able to cite good
examples of new infrastructure in
different regions. I certainly can.
Many of Britain’s universities have
used their borrowing powers and the
income from foreign students to
transform and expand their campuses.
The problems in the National Health
Service do not, in the main, arise from a
lack of physical capacity, expanded and
modernised in the 2000s, but from the
squeeze on day-to-day spending.
Praising Britain’s infrastructure is not
a normal position for anybody, including
me, to take. It is very easy to see only the
negatives, and that for too long a period
too little was invested. George Osborne’s
hope that investment by pension funds
and insurance companies in
infrastructure would replace direct
investment by government came to
much less than hoped. The institutions
were concerned about taking on the
construction risks of large public
projects, and so the flow of money has
been disappointing. Regulations also
proved a significant constraint on
institutional involvement in new
infrastructure.
The long-running debate on new
runway capacity in the southeast has
come to be regarded as symptomatic of
Britain’s inability to get infrastructure
done. Having been a supporter of a third
runway at Heathrow but having often
East Coast rail franchise. Adonis was a
strong champion of infrastructure.
It is, as I say, easy to be negative.
Carillion, one of the biggest recipients of
the government contracts, and a big
player in HS2 — the high-speed rail line
linking London, Birmingham, the East
Midlands, Leeds and Manchester — is in
difficulty and has seen its share price
plunge as it sought new financing
arrangements. Its plight is indeed a
concern.
But there are reasons for optimism.
We have broken away from the old norm
in which infrastructure was delivered
late and after huge cost overruns. It
would have been easy to pull the plug on
high-profile infrastructure projects such
as HS2, but that has not happened. HS3,
otherwise known as Northern
Powerhouse Rail, will follow.
Under Philip Hammond, the Treasury
has quietly pushed infrastructure
towards the top of its list of priorities.
The November budget confirmed, as it
put it, a commitment to delivering
“high-value infrastructure projects . . .
underpinned by a major increase in
public investment”. It highlighted the
Mersey Gateway bridge and the
Northern Hub (rail) in Manchester,
noting a planned “50% increase in
transport investment, funding the
We have work to
do to match the
spending levels of
other countries
experienced the existing congestion
around Heathrow’s corner of the M25, I
am no longer sure it is the best option.
But, with the decision seemingly having
been kicked again into the long grass as a
result of Theresa May’s post-election
weakness, we need something soon to
put us out of our misery.
White elephants such as Hinkley
Point, the nuclear power station being
built in Somerset, do not do much for
the infrastructure cause. Neither did the
resignation of Lord Adonis as chairman
of the National Infrastructure
Commission over disagreements with
the prime minister over Brexit and in
protest at the transport secretary’s
bailout of Stagecoach and Virgin on the
GOVERNMENT INVESTMENT
IS INCREASING...
Public sector net investment
3.5% of national income
3.0
2.5
2.0
1.5
1.0
0.5
0
1980
1985
1990
1995
2000
2005
2010
2015
Source: Office for Budget Responsibility, IFS
... THOUGH SO FAR IT HAS BEEN
BIASED TOWARDS LONDON
Public spending on infrastructure per head, 2011-12 to 2015-16*
£0
1,000
London
Scotland
Northern Ireland
Wales
Northwest
Northeast
Yorkshire and the Humber
East of England
West Midlands
Southeast
East Midlands
Southwest
*Excludes spending incurred for UK as a whole. Source: House of Commons Library
2,000
3,000
4,000
2020
biggest road investment programme in a
generation, and the biggest rail
transformation in modern times”.
The Treasury has put its money where
its mouth is. Planned public investment
will mean, according to the Institute for
Fiscal Studies, a level of infrastructure
spending relative to gross domestic
product (GDP) on a sustained basis that
will be the highest for 40 years. A shortterm infrastructure boost at the time of
the financial crisis did not last.
Is it enough? Notwithstanding my
comparisons with France, Britain has
work to do to match levels of
infrastructure spending in other
countries. Figures from the Office for
National Statistics show that government
investment spending averaged 2.4% of
GDP over the 1997-2017 period, twothirds of the G7 average of 3.5%.
Japan spent 6% of GDP, America and
France 3.9%, Canada 3.6% and Italy
2.9%. Only Germany, 2.2% of GDP, had a
lower level of public investment than
Britain. Longer-term comparisons with
past public investment are tricky; when
Britain had more nationalised
industries, capital spending by them
counted as public investment. That may
also explain some of the differences
compared with other countries.
The one thing that can be said is that
infrastructure spending in Britain is
heading in the right direction. That
should mean not just better transport
but also more and better public housing.
It would be better still if increased levels
of public investment were to be
accompanied by more breakthroughs in
unlocking institutional money to be
invested in infrastructure. Some money
is flowing, but not enough. Britain does
infrastructure well. And you can never
have enough of it.
PS
The revival of British manufacturing in
recent months — part of a Europe-wide,
indeed a global, phenomenon — is to be
welcomed. It gives the lie to suggestions
that in this digital age we have moved on
from making and buying stuff to
“weightless” forms of consumption. The
nature of manufacturing changes all the
time but plenty of stuff is still made.
The question is whether this revival
has staying power. Official figures show
manufacturing output has risen for
seven months in a row, something rare
enough to be worthy of comment.
Though welcome, it was not even the
longest expansion since the crisis: that
accolade goes to the rebound straight
after the recession, a continuous
expansion of manufacturing that lasted
from August 2009 to March 2011.
Since then, two things have held back
“the march of the makers”. One was the
extent of the ground to be made up.
After a 13.2% peak-to-trough fall in the
2008-9 recession, manufacturing output
has still not returned to pre-recession
levels. The other has been the
uncertainty of the global, European and
domestic recoveries. It has been all too
easy for factory output to slip back.
Is it plain sailing this time? The world
economy is enjoying a purple patch,
which is good for manufacturing. But the
uncertainties persist, particularly with
regard to Brexit. It remains to be seen
how industry responds to these
uncertainties as the exit date approaches
and with the prospect of investment
decisions being delayed or cancelled.
For some sectors, particularly underpressure car manufacturing, there is a
huge amount at stake.
david.smith@sunday-times.co.uk
F
orgive me Lord, for I knew not
what I was doing.” No, not Victor
Frankenstein after creating his
monster. Instead, Tony Fadell,
co-creator of the iPhone; and
Chamath Palihapitiya and Roger
McNamee, former Facebook
executive and investor,
respectively. Even Mark Zuckerberg
confesses concern with his creation,
although in a roundabout way:
“Facebook has a lot of work to do”, and
his “personal challenge for 2018 is to
focus on fixing these important issues”.
We have here a test of whether
corporate capitalism is capable of selfreform, or whether politicians around
the world will seize this opportunity to
expand the regulatory state. So far selfcorrection, driven by the profit motive,
seems to be the answer to a set of
problems that threaten to convert a host
of proudly self-styled “disrupters” from
heroes to zeroes.
Eleven years ago almost to the day
Apple ended decades in which we were
tethered to the wires of telephone
company monopolies; Facebook,
meanwhile, has provided two billion
people with a platform on which to
display pictures of their cats and for
Vladimir Putin to interfere in nations’
elections. Such radical change inevitably
creates problems, just as, for example,
Detroit’s creation, the mass-produced
automobile, created environmental
problems, engendering regulations
galore. Now it’s the turn of the creations
of Silicon Valley, which might be
spawning social problems only now
being understood.
Start with Apple, charged with
harming children and producing an iGen
(born in 1995 or later) that is “on the
brink of the worst mental-health crisis in
decades”, according to Jean Twenge of
San Diego State University. Studies
purport to show that opioids are not the
only addictive substances available to
teens. These children also suffer from
mobile phone addiction that produces
“depressive symptoms” (University of
Basel), increased risk of suicide (San
Diego State University), and poor
scholastic performance after sleepdeprived nights on their mobiles.
Then there is Facebook. Sean Parker,
the founding president of the social
media firm, says it was designed to
“exploit . . . a vulnerability in human
psychology [and] consume as much of
your time and conscious attention as
possible” by giving you “a little
dopamine hit every once in a while,
because someone liked or commented
on a photo or a post”.
All of this angst has produced a
reaction until now foreign to Silicon
Valley — big investors, driven by a desire
for sustainable profits, rather than
politicians, calling for reforms.
Investment managers Jana Partners and
the California State Teachers’
Retirement System hold $2bn of Apple
stock.
They believe Jonathan Haskel and
Stian Westlake, authors of Capitalism
Without Capital, are right that the price
of these companies’ shares is based on
the value of their intangible assets —
their reputations and brands, not bricks
and mortar. They want the company to
tell its customers how to control and,
when they choose to, curtail use of its
product. Not only to do good, but to do
well by avoiding being converted from a
Wall Street darling to a financial pariah.
Apple’s response, that it already has
parental controls built into its iPhones, is
deemed inadequate. Its critics, who
admire Apple for such policies as
forgoing profits it might have made by
allowing pornography into its iTunes
store, want the company to add more
parental controls, make them easier to
use, and provide data on that use, just as
it can on your heartbeat. “That’s really
easy to do,” says Fadell.
It seems beyond dispute that kids are
spending lots of time on mobile phones
and social media. It seems, too, that
critics might be on to something when
they toss around the word “addicted”.
There is evidence from interviews that
children feel “naked”, “abandoned”,
“anxious”, perhaps “suicidal” if
deprived of their phones. But we must
be careful: studies showing a correlation
between depression and heavy use of
mobile phones might mean that the use
There is evidence
that children
deprived of their
phones feel anxious
of the device causes depression, but
equally that depression causes people to
become heavy users in a frantic attempt
to “connect” with other people.
The problem with social media is even
more complicated. Facebook is already
under pressure to control the content
that goes onto its platform, and the idea
of urging users to limit time spent on it
runs contrary to the company’s desire to
encourage them to spend more time
consulting their electronic devices.
So, as Lenin once asked in a different
context, what is to be done? No one can
reasonably object to pressure on Apple’s
management from owners of the
company to increase the range and ease
of use of tools to control children’s use of
these devices. Or Zuckerberg’s effort to
move Facebook from a mere provider of
a platform to a company responsible for
how it is used. But in the end there is
little substitute for parental courage in
the face of insistence on unlimited use.
My firm’s technical adviser, Jeff
Raben, tells me parents should start with
the proposition that they, not their kids,
own their mobile phones and have every
right to control their use, tantrums
notwithstanding. One suggestion is to
charge phones at night, in a room far
from the children’s bedrooms. In the
end, however, this father of about-to-beteenage twins says children will have
more ways around parental restrictions
than less tech-savvy adults can imagine.
So we are back to reliance on the
disrupters to provide a bit of help to
parents — lest the politicians decide that
this is a job for them.
irwin@irwinstelzer.com
Irwin Stelzer is a business adviser
5
The Sunday Times January 14, 2018
BUSINESS
Big tobacco looks east to
sell a new kind of smoking
Sales of new ‘less harmful’ heat-not-burn cigarettes are soaring in Japan. John Arlidge reports from Tokyo
L
ike most Japanese twentysomethings, Chihiro Eda and
her boyfriend Eiki Yoshida are
always looking for the new, new
thing. In the fashionable
Omotesando district of Tokyo
they chance upon something so
new they scarcely believe it’s
real: a shop that encourages
you to smoke.
The Glo store doesn’t look like a tobacconist. With its Scandi-chic design,
splodges of orange on the walls and artfully arranged books, it looks more like an
artisanal coffee bar. But it sells Globranded white paper sticks stuffed with
tobacco that — gasp! — you can light up
and smoke.
“It’s a new way to enjoy tobacco,” says
Eda, grinning between puffs.
Those words are more than just
the verdict of one satisfied customer.
To big tobacco, they herald a new
future for an industry that has been
in terminal decline in western markets for decades, as have many of its
customers.
The industry’s latest wheeze is
“heat-not-burn” cigarettes. London-based
British
American
Tobacco (BAT) sells them under
the Glo brand. Its Marlboro-toting
arch rival Philip Morris’s brand,
called iQOS, is already on sale in
Britain — there are three branded
IQOS stores in London and 1,000
stockists around the country —
and Glo is set to follow later this
year.
They look like traditional cigarettes but are shorter and thinner.
They come with a tiny electric
heater about the size of an iPod.
You put the cigarette in the
heater, which warms it to 250C350C, less than half the temperature of a traditional cigarette
when it is alight but warm enough
to generate smoke.
Because the tobacco is not
burning, the smoke contains less
tar and other toxins that can
cause cancer — between 50% and
90% less, according to early British
government
research,
although independent experts
warn the new cigarettes could still
cause cancer. The smoke has
enough tobacco flavour, plus the
nicotine “hit”, to satisfy smokers.
“We can make a lot of money
with these,” said Nicandro Durante, chief executive of BAT, in a rare
interview in his London office that looks
out over a bend in the Thames.
What makes Durante so confident is
the early evidence from Japan, which
both BAT and Philip Morris are using as a
test bed to attract consumers to the new
kind of smoking.
There, heat-not-burn cigarettes are
selling like crazy — to the alarm of health
campaigners, who accuse the companies
of getting a new generation hooked on
nicotine.
In Britain, the Commons science and
technology committee is already investigating the health implications of ecigarettes that use nicotine-infused liquid,
but no tobacco.
Some 2.9m Britons use these “vapes”,
compared with about 9m who smoke tra-
ditional cigarettes. Even though iQOS and
Glo have been on the market in Japan for
only three years, they already account for
about half of Philip Morris and BAT’s
sales in the key test city of Sendai, and
about 30% of the total tobacco market in
the city. In Tokyo, iQOS alone already has
more than 16% of the total tobacco market.
To put those figures in perspective, if a
tobacco company’s new product
achieves a 0.5% share of the total market,
it is considered a huge hit.
Naoto Yoshi, who enjoys iQOS in the
Coloboccle smoke store in the Akihabara
electronics district of Tokyo every evening after work, explains the appeal. “It
tastes like smoking but there is no smell
and it feels healthier,” he said.
The technological disruption of
one of the world’s oldest, most controversial industries has convinced
Durante and Andre Calantzopoulos,
the boss of Philip Morris, that they
no longer have to manage decline in
mature markets while stuffing traditional cigarettes into the mouths of
consumers in emerging markets
and hoping nobody notices.
“It’s a revolution, a new, brave
world,” Calantzopoulos tells me
in his office, which has an even
more impressive view than Durante’s — it looks out over Lausanne towards the Swiss Alps.
Philip Morris predicts newstyle cigarettes will account for at
least 30% of its sales by 2025,
“but I think it is going to be higher
than that,” said Calantzopoulos,
who believes their share could
reach 50%-60% in most mature
markets.
He is so excited by the success
of iQOS in Japan he is starting to
pull out of the traditional “combustible” cigarette market. He is
axing some local brands, notably
variants of Marlboro, and says he
will stop selling traditional cigarettes in the country altogether as
soon as 2020.
BAT expects its heat-not-burn
and vaping products to generate
more than £5bn in global sales in
2022. Together, they will account
for 50% of revenue by 2030, Durante predicts — 25 times their
share today.
New-style cigarettes not only
promise a future for a declining
industry; they could drive up profits. Gross margins on heat-not-burn
products could exceed those on traditional cigarettes because consumers will
replace the micro-heaters every few
years as they improve and will buy
accessories to personalise their kits.
The heater itself costs between £40 and
£60. The tobacco sticks cost about the
same as ordinary cigarettes. Taxation is
likely to be lower, stimulating sales.
There is also the chance for BAT and
Philip Morris to take market share from
rivals that do not yet have these products.
Glo and iQOS have this market to them-
selves in Japan and in the other countries
where they have been approved, including Canada, Italy, Russia, Switzerland,
South Korea — and Britain.
Durante and Calantzopoulos talk a
good game but can they be trusted on
health questions? After all, the industry
lied and lied and lied about the safety of
its products. The reliability and accuracy
of Philip Morris’s own clinical studies into
the health effects of using iQOS have
recently been questioned.
The two bosses are not expecting any-
one to trust their word alone. Instead,
they point to studies by independent scientists that suggest heat-not-burn products are far less harmful than normal cigarettes. A report last month by the
Committee on Toxicity (COT), a scientific
body that advises the UK Department of
Health, found smokers of heat-not-burn
cigarettes are exposed to 50%-90% fewer
harmful compounds compared with traditional cigarettes.
It stressed, however, that most of the
data on which it based its findings had
been provided by the manufacturers
themselves, and only a limited amount of
independent research was available to
draw on.
“Science is going to answer the critics,”
said Durante. But perhaps not: COT says
heat-not-burn products could still cause
cancer and many more tests will be
needed. Health campaigners oppose the
introduction of any new tobacco products and anything that “normalises”
smoking, which is the leading preventable cause of cancer and kills more than
‘HEAT-AND-BURN’ CIGARETTES
IN NUMBERS
£5bn
16%
7m
Expected BAT annual revenues from
‘heat-not-burn’ and vaping by 2022
Share of Tokyo tobacco market taken
by Philip Morris’s iQOS products
Num
mber of
o people in the wor
orld
ld kil
k
lled
ed
Number
world
killed
year by smoking
smoking
each year
7m people around the world every year.
Even if the toxicology findings are reassuring, isn’t it wrong to encourage youngsters such as Eda and Yoshida to start
smoking at all, albeit using a less harmful
product?
Durante insists he is “migrating” many
more existing smokers away from traditional cigarettes than he is attracting new
ones to start smoking. “The figures are
95%-98% [are existing smokers]. We are
doing something good,” he said, but
added: “If you want to be 100% safe, stop
smoking — anything.”
Calantzopoulos stressed: “If anyone
comes into an iQOS store and says they
are not a smoker, we say iQOS is not for
them. The instructions are clear.”
Big tobacco is using Japan to test heatnot-burn products because it remains a
huge smoking market: the world’s sixthlargest, in which 30% of men smoke.
Also, its consumers are open to new
hi-tech products. Regulation is
light: tobacco firms can talk
directly to consumers in stores or
via social media and promotions.
And vaping using electronic cigarettes is all but non-existent in
Japan because they are
classed as a pharmaceutical
product. That leaves a big
gap in the market for heatnot-burn products.
As I leave Tokyo, I
wonder what the iconic,
rugged Marlboro Man
would say about the
plasticky, antiseptic
Glo and iQOS cigarettes the Japanese
are puffing away on.
“IQOS is the Marlboro of the future,”
Calantzopoulos told
me. “The world has
changed.” That’s his
and his industry’s
hope, at least.
Glo, main
image, and
iQOS
cigarettes
promise a
new future
for a
declining
industry
ST DIGITAL
Video: how the ecigarette works
Go to thesundaytimes.co.uk or our
phone or tablet apps
As the alarm sounds, GKN vows to bang itself into shape
With its tilt at the
engineering giant,
Melrose may have
started a bigger
battle, reports
John Collingridge
As the cream of Britain’s
aerospace and defence
industry sipped champagne
in a wood-panelled
restaurant in London on
Tuesday evening, one guest
had other things on his mind.
Mike Turner could be
forgiven for looking
distracted as executives,
lobbyists and journalists
rubbed shoulders with MPs
and military chiefs at the
event hosted by the planemaker Airbus.
The former chief executive
of defence giant BAE Systems
was mulling the future of
GKN, the troubled aerospace
and automotive company he
has chaired since 2012.
A day earlier, the FTSE 100
stalwart had received a bolt
from the blue. Executives
from Melrose Industries, the
stock market-listed
turnaround specialist, had
turned up to a meeting in the
London offices of GKN’s
bankers, JP Morgan, in
Canary Wharf and tabled an
audacious £7bn takeover bid.
The meeting, described as
“cordial”, ended without
resolution.
On Friday, news of that bid
broke when GKN told
investors it had rejected an
“entirely opportunistic”
proposal by Melrose. The
terms “fundamentally
undervalue the company and
its prospects”, it said.
Instead, the venerable
company has come up with
its own turnaround plan,
dubbed Project Boost. The
company will be broken in
two, it said, confirming a
revelation in The Sunday
Times last October.
Its former non-executive
director, Anne Stevens, will
become full-time chief
executive, instead of interim,
to spearhead the two-year
turnaround programme.
Melrose struck while GKN
is at its weakest. The
conglomerate, formerly
Guest, Keen and Nettlefolds,
has been hammered by
disclosures about hundreds
of millions of pounds of
writedowns in America and
boardroom turmoil.
Its admission in November
that up to £130m of
overvalued and obsolete
parts for aircraft have been
gathering dust in its
American factories triggered
the sacking of chief executivedesignate Kevin Cummings. It
was a devastating blow to the
company, and GKN’s second
profit warning in months,
sending its shares tumbling.
Worse still, Cummings had
been promoted from his role
running the aerospace arm
only two months earlier.
Melrose has offered 405p
for every GKN share, making
the deal worth about £8bn
including debt. Investors
would get 80% of this in new
Melrose shares and 20% in
cash. That means GKN
backers would receive 1.49
Melrose shares and 81p in
cash for every share they
own. GKN investors would
end up owning 57% of the
enlarged group.
Melrose’s bid — set at a 24%
premium to GKN’s price on
Thursday — sent its target’s
shares to an all-time high.
GKN closed at 420p, valuing it
at £7.2bn. Melrose’s climbed
6% to 227.5p, making it worth
£4.4bn. A takeover approach
has been a long while
coming. Bidders have sniffed
around its divisions in the
past, with SAIC of China
reportedly poking around its
Driveline division, which
makes powertrains for cars.
But until now, none has
materialised.
Melrose has carved out a
reputation as a successful, if
ruthless, turnaround
merchant. It is run by a
quartet comprising executive
chairman Christopher Miller,
executive vice-chairman
David Roper, chief executive
Simon Peckham and finance
director Geoffrey Martin.
They have amassed huge
fortunes from their strategy
of buying underperforming
industrial companies,
overhauling them and selling
them on once they have
improved. Little known
outside the City, Melrose
listed in 2003 and operates a
model similar to private
equity, even down to the
huge rewards for
management. In May, the
quartet shared a £160m
bonus pot, while a cohort of
senior managers also
received huge rewards from
a scheme set up in 2012.
Yet their eye-watering
bonuses elicit scant
opposition from
shareholders, who have also
done well out of its deals.
Investors in Melrose at the
time of its 2008 offer for
engineering group FKI saw
The venerable engineer GKN is a major player in aerospace systems
the value of their equity surge
260% in three years, a trick it
has repeated many times.
Melrose insisted its
ownership of GKN would
reverse “a history of existing
management not delivering
on margin targets”,
promising to swell its margins
beyond 10%. Roper put it
more bluntly, saying GKN has
been “a bit like lions being led
by donkeys”.
A takeover is far from
done, however. It would be
Melrose’s biggest deal yet and
propel it into the rarefied air
occupied by tier one
suppliers to aerospace giants
Boeing and Airbus.
The American and FrancoGerman titans are watching
closely, as are trade unions,
and will want assurances
about Melrose’s motives. GKN
makes parts including wing
tips and engine casings for
planes such as Boeing’s 737
Max and the Airbus A380
superjumbo. Its automotive
division is a big supplier of
powertrains to companies
ranging from Mercedes to
Jaguar Land Rover.
GKN’s defence was short
on detail. It has yet to reveal
how it will split in two —
something complicated by a
pension scheme deficit that
stood at £1.8bn at the end of
June — although this has since
been cut with a £250m cash
injection. A split would
unpick a merger struck in
1902 when Guest, Keen & Co
staged a hostile takeover of
Nettlefolds to create GKN. It is
one of the oldest names in
British industry. Starting in
1759 as an ironworks in
Wales, it played a key role in
the Second World War,
building Spitfires.
The appointment of 69year-old former Ford director
Stevens as chief executive is
also unlikely to be universally
popular. At the time of
Cummings’ sacking, investors
called for the board to run a
thorough search and appoint
from outside. It’s debatable
whether Stevens fits the bill —
she has been on the GKN
board since 2016.
A higher bid from Melrose
is likely, as is a counter-bid
from a third party. Melrose
has until February 9 to make
its intentions clear, under the
Takeover Panel’s “put up or
shut up” rule. Sandy Morris,
aerospace analyst at Jefferies,
called the Melrose offer a
“decent sighting shot”. “Now
it gets interesting,” he said.
Additional reporting by
Ben Harrington
6
The Sunday Times January 14, 2018
BUSINESS
My mission
to revive a
former
City darling
JOSH ANDRUS
Allied Minds boss Jill Smith needs
to rekindle the Square Mile’s
affair with the early-stage investor
SABAH
MEDDINGS
J
ill Smith was destined to be a PA.
That, at least, was her parents’
ambition. They pushed her to go
to secretarial college after
school. It was a future she was so
desperate to avoid that she travelled more than 3,000 miles
from Bedford to escape it. “My
parents thought it was a sensible
job to have,” says Smith, who is
tall and has a crop of short grey hair.
“They said, ‘Women don’t drive — go be a
secretary.’ ”
There were several times over the past
year when Smith could have been forgiven for wishing she had opted for a
career organising someone else’s diary.
Technology and sciences investor
Allied Minds, the Boston-based, UK-listed
company she leads as president and chief
executive, has been under siege.
Last April, the newly appointed Smith
was forced to slash the value of its investment portfolio and set loose seven of its
start-ups. Its market value crashed.
Shareholders, including prominent
stockpicker Neil Woodford, made heavy
paper losses.
The journey from stock market darling
to pariah was brutally swift. Smith, however, shows no sign of stress when we
meet to discuss how she plans to revive
Allied Minds, which places bets on promising research conceived in American
university labs.
With a wide smile permanently etched
on her face, the 59-year-old says she is
confident of hitting her target. She has
promised shareholders that in little more
than two years they will finally see some
cash from their investment.
It is quite a clean-up job for Smith, who
has spent almost her entire career in the
American technology industry. She is fluent in US boardroom-speak; company
milestones are “proof points”, while successes are “core inflection points”.
Allied Minds hopes to make money
from the intellectual property created by
university professors and researchers. It
has exclusive deals with a range of US
institutions, giving it first refusal over
their most promising ideas.
The company was floated in 2014 and
was once described as London’s “bestkept secret”. As the darling of the City, its
share price rocketed to a high of 725p,
valuing it at more than £1bn.
However, its days as a stock market star
proved short-lived. Backing early-stage
companies is a hit-driven business; most
bets will fail. The problem for Allied
Minds was that it had failed to back any
big winners. Smith urges patience.
“There needs to be an awareness that if
you’re in very early-stage companies, a
majority of the businesses won’t make it,”
she says.
This harsh truth has been forced home
to shareholders over the past year. In
March, Allied Minds ousted chief executive Chris Silva, who received a $1.3m
(£877,000) “golden goodbye”. Smith,
who was already an independent
director, took his place on an interim
basis. She immediately set about righting
the ship.
A month after taking charge, she wrote
down the value of its investments by
$146m and suspended financial support
for seven start-ups. The idea was to focus
efforts on a smaller number of firms.
Smith was made chief executive on a permanent basis at the end of May.
Deciding which companies to jettison
was tough as, inevitably, there would be
job losses. “The key is to come in to make
some early decisions and to make it clear,
because death by a thousand cuts is never
a good thing,” says Smith.
This week, she will attempt to convince a sceptical City audience that she
can turn the tide. At a meeting with 50
analysts and investors on Wednesday,
she will lay out her plan to boost Allied’s
Jill Smith’s parents told her: ‘Women
don’t drive — go be a secretary’
THE LIFE OF JILL SMITH
VITAL STATISTICS
Born: April 20, 1958
Family: married, one son
Homes: Boston,
Massachusetts, and
Rhode Island
School: Pilgrim in Bedford
First Job: C&A and BHS
Pay: $100,000 a month
until last June. Her salary
since becoming permanent
chief executive has not
been published
Car: Toyota Prius
Film: Love Actually
Book: Jerusalem, by Yotam
Ottolenghi
Music: Tracy Chapman
Gadget: NutriBullet blender
Holiday: skiing in Vail,
Colorado
Charity: Combined Jewish
Philanthropies
dinner with her husband,
Randy, 74, at 7pm.
WORKING DAY
The chief executive of
Allied Minds rises at 5am
and exercises for an hour to
an hour and a half, usually
spinning, weights and
strength.
If she’s not travelling, Jill
Smith leaves the house at
7am and is in the office by
7.45am. However, she is
often away meeting chief
executives of the
companies in which Allied
Minds has invested.
She usually leaves her
office in Boston at 6pm, and
is working from home after
DOWNTIME
Aside from her charitable
work — she is on the board
of non-profit organisations
and supports Jewish day
schools — Smith enjoys
food, wine and travel with
her husband.
Free moments are
usually spent walking the
family dog, skiing or
hiking. Her great love is
sailing.
She spends as many
weekends as she can at her
holiday home in Rhode
Island, the centre of the
East Coast sailing world.
flagging share price, which has plummeted 80% from its peak.
Allied’s prospects now rest on just
seven companies that are rich in promise
but as yet unproven. Among them is
Precision Biopsy, which is developing a
medical device that can scan for suspicious prostate tissue, detecting the early
stages of cancer. Other hopes include
Spin Transfer Technologies, a data stor-
Favourite film: Love Actually
age firm spun out of New York University,
and BridgeSat, a satellite data business.
“With Spin Transfer, we have a commercial pipeline second to none, in terms
of the number of parties interested in the
technology we have,” says Smith.
She has been tasked with bringing in
new investors, and has shifted the focus
away from risky therapeutics ventures.
Smith is “keeping our eye on the prize”,
which in this case could be a money-spinning sale of one of its ventures.
Woodford, who has a 28% stake in
Allied Minds, admits it is “clearly not the
plat du jour of the stock market at the
moment”. Smith, he says, has done a
“fantastic job since she came in”, adding:
“The company needed to focus, it
needed fresh blood.”
Smith went to secretarial college
straight after school. However, a further
course at City of London Polytechnic —
now London Guildhall University —
allowed her to travel to Vancouver for six
months. It was there that a boss encouraged her to aim higher.
She was persuaded to apply for an
MBA at MIT Sloan in Cambridge, Massachusetts, where she graduated early,
avoiding classes altogether in some cases
and just taking the exams. “I did everything fast. I wanted to get out and work,”
she says. After settling in Boston, Smith
spent most of her working life commuting across the US. Her most recent fulltime post was with DigitalGlobe, a satellite imagery outfit in Colorado. She quit
the job, and the five-hour commute by
plane, to be at home while son Josh, now
16, attended middle school.
She is sceptical of the notion that
Allied Minds would be better off being
subsumed into a larger investment company. Rivals IP Group and Touchstone are
merging to create a £1.5bn British life
sciences and technology giant.
“The jury is out as to whether intrinsically larger is better,” she says, furrowing
her brow for the first time. “There are
often reasons why venture capital firms
are small. It creates a level of discipline
and focus on driving returns.”
Allied is certainly smaller than it once
was. It remains to be seen whether Smith
can steer it back to its previous heights.
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8
The Sunday Times January 14, 2018
BUSINESS
Tycoons line up to turn teen
gaming into a spectator sport
Backers hope a global league will
become as popular as football, says
Danny Fortson in Burbank, California
T
he crowd went wild as half-adozen young men emerged
into an arena filled to the rafters with rabid fans. Music
blared. Television cameras
craned over the crowd. One of
the men, a stocky 28-year-old
with a shock of bleached
blond hair who goes by the
name of Dhak, slapped hands
with fans and flexed his biceps before he
sat down. At a computer.
“Let’s do this!” yelled one wide-eyed
fan. “It’s go time, bro.”
It was launch day for the Overwatch
League, a professional computer gaming
competition that its backers hope will
soon rival football’s Premier League as a
global spectator sport.
Esports, to use the industry jargon, is
the $90bn (£65.6bn) video game industry’s next big bet. And it may well pay off.
To get the Overwatch League off the
ground, gaming giant Activision Blizzard
convinced some of the world’s savviest
business people to spend a reported
$20m each to buy one of the league’s first
12 teams, which represent cities from
Shanghai to London.
Stan Kroenke, the billionaire who controls Arsenal football club, picked up the
Los Angeles Gladiators. The junk-bond
tycoon Michael Milken and friends went
for LA rivals the Valiant. The San Francisco Shock’s owners include the pop star
Jennifer Lopez, basketball hero Shaquille
O’Neal and entrepreneur Andy Miller,
who sold his mobile ad business to Apple.
Who on earth would want to watch a
handful of sun-starved young men play
computer games? The answer: a lot more
people than you might think. In November, Beijing’s 91,000-seat Bird’s Nest stadium was a sell out for the world championships of League of Legends. The game
was created by Riot Games, a US developer owned by China’s Tencent.
“Esports is here,” said Dan Fiden, president of Cloud9, which owns the London
Spitfire team. “Millennials don’t differentiate between esports and traditional
sports in the way my generation would.”
The Overwatch League is the biggest test yet of that belief. It is the
first esports league to ape traditional sports models by setting
up city-based teams, with
logos, colours and, eventually,
home
stadiums.
Cloud9,
whose backers include esports
magnate Jack Etienne and American football great Joe Montana, has
committed to building, or securing
rights to, a 20,000-seat arena in London. Fiden said Cloud9 was “deep in conversations” with Premier League teams
and venue developers.
League of Legends, which launched its
North American League in 2012, is following Activision’s lead. It recently
restructured to create a partnership with
10 teams, each of which paid $10m to
secure their spots.
The big money has come rushing in
because of gaming’s audience. Nate Nanzer, head of the Overwatch League, said
the target audience is males aged 13-34, a
demographic sought after by advertisers,
but one that eschews traditional media.
They can be found in droves on
Twitch. Every day nearly 10m people log
on to the live-streaming platform, which
Amazon bought for nearly $1bn in 2014,
to watch people play and chat with their
gaming heroes. The average time spent
on Twitch is 1 hour and 46 minutes. Last
week the platform announced a two-year
deal to stream all Overwatch matches.
The price tag was reportedly $90m.
With the $240m of team buy-ins and
the streaming contract, Activision raised
about $330m for its grand experiment
before a single mouse click or keystroke.
The rewards could continue far beyond
the two years. Nanzer said: “Something
that Stan Kroenke said sums up the way a
lot of the investors are viewing this: ‘Kids
watch what they grow up with.’ When
APPOINTMENTS
Heads they win: gamers do battle in
the first tie of the Overwatch League
Millennials don’t
differentiate
between esports
and traditional
sports as we would
you ask a 12-year-old what they watch,
the answer very often is long-form video
game content. That is not going to change
when that kid grows up.”
Overwatch is a “first-person shooter”
game in which six-player teams blast
each other with guns and bombs. For the
uninitiated, it is a bewildering onslaught
of video violence. For fans, it is intoxicating. The Blizzard Arena, a former television studio in Burbank, California, will
host all games in the first season while
teams put in place their stadium plans.
At Wednesday’s launch, the 500
capacity audience was joined by 425,000
watching online as the Valiant trounced
the Shock. Sky draws about 820,000
viewers for Premier League matches.
If you are of a certain age, the idea of
paying to watch such a spectacle seems
unfathomable. Gamers claim that it is no
different from a football match, where
fans pay to watch men chase a bag of air
around a pitch. The attraction is seeing
the best compete against the best. Nanzer
said: “More than 35m people play the
game and we have just 113 players in the
league, he said. That is a similar percentage to the number who make it all the way
to the Premier League, he explained.
One of the few is Jay Won, a spotty
17-year-old from Washington state. His
fans know him by his gamer handle, Sinatraa, though his San Francisco Shock
teammates call him “Mr 150”, because he
bagged a $150,000-a-year contract, mak-
ing him the team’s best-paid player. Like a
growing number of players, he quit high
school to go professional and has not
looked back. “I just hate school. I do not
plan on going to university,” he said. Top
players in more established games such
as League of Legends — Overwatch came
out in 2016 — bring in several million pounds a year in prize
money, streaming fees and
sponsorships.
The arrival of the industry’s
new billionaire benefactors has
opened up the possibility of making a decent career as a pro, like a
journeyman right-back in football.
Overwatch has set a minimum $50,000
annual salary for all players, but Ryan
Morrison, a top esports agent, said the
average was closer to $120,000.
Since co-founding Morrison Lee, his
New York agency, in 2016, he has
watched esports evolve from a largely
informal industry dominated by one-off
sponsorship deals and one-sided contracts taking advantage of gamers. “A
first-year law student would have shredded the contracts,” said Morrison.
The influx of cash has not driven out
financial opportunists, though, and there
are real concerns, given that many players lack the acumen to negotiate on their
own behalf. The life of a pro is demanding
— “hellish” even, according to Morrison.
“Players rarely have relationships. They
rarely have friendships,” he added.
Sinatraa said a typical day involved six
to eight hours of practice, followed by six
hours of streamed playing, which is vital
to build a brand with the fans. “It’s very
draining,” he said.
As with any boom, there will be plenty
who get burnt. For the youngsters who
have turned their basement hobby into
fame and fortune, however, it is still all
wide-eyed wonderment. One of the
Houston Outlaws reflected: “To go from,
‘You’re wasting your time; what are you
doing with your life?’ to ‘Oh my God,
you’re famous,’ — that is mind-blowing.”
ST DIGITAL
Video: behind the esports frenzy
Go to thesundaytimes.co.uk or our
phone or tablet apps
9
The Sunday Times January 14, 2018
ENTERPRISE
Soon enough we’ll all be
leaving second homes alone
Luke Johnson Animal Spirits
M
oney tends to make people
go mad. One of the mad
things people who have
money do is buy second
homes. This purchase can
make emotional sense, but
it very rarely makes
economic sense. At heart,
owning a holiday home is a romantic
decision, unlike owning a principal
private residence.
After all, we need somewhere to live,
and investing in a property is usually a
sound financial move — but having two
rarely pays. Most owners use second
homes a fraction of the time,
but meanwhile they have to pay all the
maintenance, tax, insurance and service
charges.
Millions of second homes all over the
world sit vacant for most of the year,
while costing money to clean and repair.
Indeed, they can become a burden and a
source of guilt, obliging the owners
always to go on holiday to the same
place, even if they are bored with it.
Of course, a second home is seen as a
vital status symbol and, indeed, almost a
social necessity among a certain class —
as important as sending your children to
the right private school or going skiing
every winter.
The big choice is whether to have a
weekend home in Britain or a holiday
home abroad — or possibly both. About
3.5% of the population has a second
home in the UK, according to the Office
for National Statistics, and 1.5% owns a
home overseas.
The Resolution Foundation reports
that there has been a 30% increase in
multiple-home ownership over the past
15 years.
Not all second properties are holiday
homes but most are, especially abroad.
However, the buy-to-let boom is over
due to tax increases, with many people
finding that being a residential landlord
is a lot of work for little income. In the
medium term, I suspect holiday homes
will prove a poor investment.
Historically, some people have made
money owning Swiss chalets and Greek
hideaways, but buyers of such
properties are fast disappearing.
Millennials prefer spending money on
experiences rather than possessions,
When they inherit
the family holiday
home, they will
sell it — if they can
which is why they are shunning buying
cars, for example.
I think they are not going to buy
second homes as their parents’
generation did; they love to travel but
want to explore and are much more
adventurous in their holiday ambitions.
I don’t think they enjoy going to the
same destination every year, when,
thanks to the digital revolution, low-cost
airlines, boutique resorts and Airbnb,
more choices of interesting new places
to visit are available than ever before.
Consequently, when they inherit the
family holiday home, I think they will
sell it — if they can. So over the coming
decades, as the baby boomers pass on
such assets to their children, a huge
number of these properties will come on
the market. Be they villas in Spain or on
the French Riviera, apartments in
Florida or the Algarve, or cottages in
Norfolk or Cornwall, the market is likely
to be saturated. This is the first
generation when large numbers of
holiday homes will be passed on — and,
inevitably, those who inherit them will
not be as attached to them as the original
buyers were.
After all, a holiday home is the
ultimate discretionary purchase. Unless
you use it for a few months every year, or
let it, you are financially better off
renting somewhere or staying in a hotel
on vacation.
People believe in the value of tangible
assets such as buildings, but prices do
not always go up. With rising interest
rates, property prices are likely to be
vulnerable. The London market is
already weak; I fear others will follow.
My view is that if you need to borrow to
buy a holiday home, you should not be
purchasing it in the first place.
Holiday home developers are partly to
blame for the industry’s poor prospects.
They often construct shoddy buildings
and levy excessive service charges. They
No bricks, no
mortar — just
miles of tiles
HOW I MADE IT
MO IQBAL
CO-FOUNDER OF
TILE MOUNTAIN
Millennials are prone to leaving a job
within two years, but there are ways
to win their loyalty, reports Peter Evans
T
TEACH YOURSELF TO . . .
UNDERSTAND
OPEN BANKING
New changes to banking
rules could help small
businesses to access
funding. The open banking
regulations, which came into
force yesterday, require
high street banks to share
customer data with
approved third parties if
account holders give their
permission.
It is hoped this will
improve the chances of
raising finance because
alternative providers, such
ment, a media agency, in her parents’
garage in Walthamstow, northeast London, in 2002. The business is operated
through remote workers, many of them
freelancers, who communicate via chat
apps and video calls. Littleton said she
has no trouble motivating them. “We go a
little overboard on the emoji,” she said.
Despite Littleton’s success, freelancing
does not suit everyone. A common misconception among employers is that
younger workers are happy not being on
the staff because it gives them freedom to
work a number of jobs at the same time.
Not so, according to a survey released last
year by the consultancy Deloitte. It found
70% of millennials in developed markets
It’s about more
than trendy
offices, beanbags
and free breakfast
would prefer permanent employment
over a freelance contract. That suggests
start-ups employing casual consultants
are often doing so because it is good for
them, not the worker.
Other common mistakes include the
belief that trendy offices and superficial
perks will guarantee happiness. More
important is giving employees a stake in
the future of the business through equity
or share options, according to the Supper
Club report. “It’s about more than beanbags and a free breakfast,” said EmmaJane Packe, the club’s managing director.
Some of the fears about millennial
workers are well founded. Many do move
jobs frequently in the early part of their
as peer-to-peer lenders and
challenger banks, will be
able to approach firms they
know are looking for cash.
However, the most
immediate benefit for
company owners is likely to
involve workload. A typical
small business devotes 12%
of its manpower to
paperwork, according to
research by the accounting
giant Sage.
Wider availability of data
will allow software
developers such as Sage to
create platforms that allow
bosses to see all their
finances in one place, even if
they hold accounts with
different providers.
Luke Johnson is chairman of Risk Capital
Partners and the Institute of Cancer
Research. luke@riskcapitalpartners.co.uk
@LukeJohnsonRCP
TOM STOCKILL
How to
keep the
young ones
on board
wo years after co-founding
the advertising technology
business Captify, Adam Ludwin had a problem. One of the
company’s original members
of staff had just handed in his
notice, thinking that better
prospects lay elsewhere.
What the worker did not
know was that Captify was
about to secure £1.2m investment.
To persuade him to stay, Ludwin told
him the news. His candour was enough to
prevent his workmate from leaving (he is
now a sales director, with a team of 20).
“It taught us a valuable lesson,” said
Ludwin, 30. “You have to be transparent
with the people you work with.”
The episode offers an insight into the
sometimes capricious mindset of
younger workers. More than two-thirds
of millennials — those born between the
early 1980s and mid-1990s — plan to stay
in their current jobs for less than two
years, according to a 2016 survey by the
recruitment group Manpower. A quarter
said they wanted to leave within a year.
Such restlessness can put off employers: why employ someone who may
move on so soon? Some small business
owners approach hiring younger staff
with undisguised dread, fearing the
resource-draining task of managing a
member of the “snowflake” generation.
Yet get it right and the rewards can be
huge — from providing the business with
a shot of fresh insight and energy to
developing future leaders.
Considerations when hiring millennials include articulating a mission for the
company, providing autonomy and
empowering people to learn, according
to a report to be released this week by the
Supper Club, a membership club for
founders of high-growth businesses.
A willingness to be flexible, both in
terms of working hours and location, can
often pay off.
Tamara Littleton set up the Social Ele-
typically sell off-plan and frequently go
bust before projects are completed.
Many use hard-sell techniques and
overbuild at the slightest opportunity.
Meanwhile, buying and selling costs,
from surveys to estate agent and legal
fees, can be excessive.
Lots of markets are brimming over
with unsellable homes and deeply
disenchanted owners, from Turkey to
the Caribbean, while overseas
properties are also loaded with extra
risks: legal differences, exchange rate
exposure, security concerns.
Property is a lumpy, highly illiquid
asset, yet many of us remain sentimental
about possessing it. However, I fear a
second home is as bad a bet as a pension
pot. Shares are more suitable.
careers. The chances of a graduate
spending 50 years in the same job are
about as likely as them enjoying a finalsalary pension, or buying a four-bedroom house in their twenties.
“My assumption when you hire someone is that you have them for a year or
two at most,” said Celia Francis, chief
executive of Rated People, an online platform for recommending tradespeople.
“There is an opportunity
to consolidate information
into a single source,” said
Seamus Smith, Sage’s
executive vice-president for
payments and banking.
Eventually, open banking
will bring more products for
small business owners who
have been turned down for,
or do not want to apply for, a
bank loan. Anil Stocker,
head of the finance platform
MarketInvoice, said: “It will
help them access a wider
pool of options for their
business finance needs.
Open banking could be a
bigger shift in the market
than Brexit.”
Peter Evans
ANGEL Q&A
RAMONA LIBEROFF
Every week we talk to a
business angel, one of the
early-stage investors who
collectively inject £1.5bn
a year into British start-up
companies
Adam Ludwin,
left, and Dominic
Joseph, founders
of ad tech
company Captify
The fickleness does not just apply to
recent graduates. “In the tech space, it
feels like everyone is a millennial,” Francis added. Even so, the basics remain the
same. Treat young workers well and they
will repay you with loyalty. Mess them
around with low pay and poor career
prospects and they are likely to look elsewhere. It was ever thus.
@peterevans10
Ramona Liberoff, 47, is chief
operating officer of the
Innogy Innovation Hub,
which backs start-ups in the
energy industry. She also
invests personally, often
through the Angel Academe
syndicate.
She has backed Arachnys,
which helps banks and law
firms to carry out due
diligence in emerging
markets, and Repositive, a
platform that shares
genomic data for research
purposes. Repositive
recently raised £2.5m.
Why I invest
I worked for two completely
failed start-ups. I realised it
was easier to invest in startups, both from a financial
and emotional point of view.
What I look for
My filter is a global mindset
and a purpose mindset.
That’s not just for benign
reasons; it’s because some of
the biggest challenges in the
world really need to be
solved, and there will be
tremendous market
opportunities for getting it
right.
I’m in no rush
The average horizon for an
investment is growing
longer and longer. It’s now
7-11 years. An angel
Mo Iqbal worked his way up
from sweeping the floors at
Topps Tiles to its executive
ranks. Now, the 45-year-old is
one of his former employer’s
most formidable competitors
— after luring swathes of its
customers online.
Like many other retailers,
Topps failed to prepare
properly for the rise of
ecommerce, according to
Iqbal. “They said the internet
would not affect them, which
was great for us.”
Iqbal set up Tile Mountain,
based in Stoke-on-Trent, in
2013 with Nick Ounstead and
Jeremy Harris. The friends
are all former executives at
Topps, the listed chain.
In the year to December
2016, Tile Mountain made a
pre-tax profit of £386,000 on
sales of £8.8m. It opened a
new warehouse, showroom
and office last year, and 2017
sales are expected to exceed
£11m.
Iqbal started working at
the Newcastle-under-Lyme
branch of Topps aged 17 after
dropping out of college. He
became a store manager after
two years and operations
director before the age of 30.
Tile Mountain is not the
first time Iqbal has gone
head to head with his former
employer. He struck out on
his own after falling out with
Topps’s management over a
merger and the axing of a
bonus scheme in 2002.
Two years later, he bought
a pair of ailing Tile Giant
shops in Preston for £14,000,
returning to work on the shop
floor. “It was a big shock to go
from having loads of staff at
your disposal and a company
car to suddenly having your
own business,” he said.
“It’s real.”
Iqbal built Tile Giant into a
32-store chain, which he sold
to builder’s merchant Travis
Perkins in 2007, pocketing
£15m from the sale with his
fellow investors. He left four
years later.
Today, Tile Giant is the
UK’s second-biggest tile
retailer, after Topps.
investment lasts longer than
many marriages.
Don’t imitate
You’d be amazed at how
many founders are copying
and pasting what they’ve
seen elsewhere and hoping
to make it work.
Diversity matters
The amount of capital going
into female founder teams
has remained stubbornly
low and the situation is not
improving. People have rigid
expectations that start-up
teams will look and act a
certain way. If change is
happening, it’s at a glacial
pace.
Five years ago, Iqbal
decided to start selling online
after noticing that his
children were browsing
shops for clothes, but then
ordering them on the internet
to avoid lugging them home.
He teamed up with Ounstead
— chief executive of Topps for
five years — and Harris to
launch Tile Mountain. They
used £4m of savings to get
started.
Tile Mountain has done
away with the costly network
of bricks-and-mortar stores of
its rivals, “which we channel
back into our pricing”. Its
prices can be half those of the
store chains, Iqbal claimed.
Despite his years of
experience, the move online
was a challenge. “There were
a lot of broken tiles at the
start,” Iqbal said. “We lost a
lot of money trying to get it
right.”
Customers are sent free
samples before they commit
to buying a product. “People
want to touch and feel a tile,”
he said.
Iqbal, born in the disputed
territory of Kashmir, came to
Britain aged seven after his
mother died. He was adopted
by his uncle, a potteries
worker in Stoke.
He grew up in Tunstall and
went to Brownhills School.
He has two sons and a
daughter, and still lives in
Tunstall with his wife and
youngest son. Iqbal advises
entrepreneurs should not
spend more money than they
have, Iqbal advises: “Don’t
live a champagne lifestyle on
beer money.”
Liam Kelly
Iqbal says customers ‘want
to touch and feel a tile’
Greed is not good
The road of a start-up
founder is long and often
unrewarding in financial
terms. You need to be
extremely realistic about the
prospects of getting a ton of
cash back.
Next disrupted industry
Energy. There are some
amazing forces at work in
the democratisation,
digitisation and
decarbonisation of energy.
As energy demand grows
and technology provides
more of a solution at a lower
cost, the industry will be
ripe for disruption.
Peter Evans
10
The Sunday Times January 14, 2018
BUSINESS
Oliver Shah
Vince’s wingman on the inside
Even before the industrial
turnaround outfit Melrose
had spelt out the full details
of its £7bn takeover plan for
GKN, the FTSE 100 maker of
parts for cars and planes, the
Liberal Democrat leader Sir
Vince Cable was decrying
what he said would be “a
massive blow to our
industrial strategy”.
Cable said he would be
writing to the business
secretary, Greg Clark, asking
him to intervene to “ensure
this damaging takeover does
not happen”.
Amid the indignation,
JUST SAYING . . .
Cable, 74, neglected to
mention that his own
business spokesman, Lord
Fox, was director of
communications at GKN for
five years. Fox, 60, officially
left the job last April,
although he is still on the
payroll as a consultant.
Fox says he spoke to Cable
on Friday morning, around
the time the statement was
issued, although he can’t
remember whether their
conversation came before or
after. “I don’t know quite the
exact timing, but it’s very
much his work,” Fox insists.
A source close to Cable
says the release was already
written when they spoke.
Sounds like they have an
impermeable Chinese wall.
Consumers
are behaving in a Mullins warms to
recessionary way run at mayor
Marks & Spencer
chief executive
Steve Rowe after
announcing a decline in
food sales that usually
prop up a weak
performance in clothing
Watch out, Sadiq Khan:
Charlie Mullins, the mullethaired boss of Pimlico
Plumbers, is setting his sights
on City Hall. In a television
interview to be broadcast on
London Live this evening,
Mullins, 65, says he can
“undoubtably” see himself
running for elected office.
Asked by host Michael
Hayman about going for the
London mayoralty, he
shrugs: “I’ll give it a bash . . . I
think I could do a better job
than this guy for businesses.”
LETTERS
A clash between Mullins, a
devout Thatcherite with two
Bentleys, and Khan, a
teetotal former human rights
lawyer from south London,
would certainly be lively.
No longer Heard
on the high street
The property industry is
abuzz with talk that JLL, one
of the biggest agencies, is
cutting back on high street
activities to focus on central
London and shopping
centres. The retreat has a
piquancy: it marks the
unravelling of Churston
Heard, the retail agency JLL
bought in 2008. Churston
Heard was the alma mater of
Guy Grainger, JLL’s 50-yearold silver fox chief executive.
Churston Heard’s cofounder, Peter Heard, 79,
says: “Because they are
Chicago-owned, they will
driven by the bottom line. I
can understand why they
need to keep their overheads
trimmed . . . It’s nowt to do
with me any more.”
Penalty time at
Gillingham
A drama erupted off the
pitch at Gillingham FC last
September, when vicechairman Michael Anderson
was charged with a $5.7m
(£4.2m) healthcare fraud by a
US grand jury. Anderson,
who is accused of extracting
DATABANK
How big can the bakery chain
Greggs get? A trip to Glasgow
offers a clue: a dozen of its
sausage roll-selling outlets
surround the central train
station. With that kind of
concentration of stores,
there’s clearly room for the
FTSE 250 chain to continue
expanding elsewhere.
More than 1,800 of its
shops are on the high street,
up about 500 in a decade.
The chain, founded in 1939 as
a Tyneside baker, talks about
growing “substantially
beyond” 2,000 outlets.
Lately, things have got
tougher. Ingredient prices,
which make up about a
quarter of costs, are expected
to have risen by about 7%
since last year. That’s forced
Greggs to put up prices:
sausage rolls went from 85p
to 90p last year. A tide of new
employment rules, from an
increase in the minimum
wage to the apprenticeship
levy, has increased wage costs
(41% of its cost base) by 3.1%.
This week Greggs will
update on trading in the final
quarter of 2017. With
consumer confidence
waning, it might be looking
down the barrel of a gun. Yet
its shares, aside from a recent
cooling, have climbed
steadily north. They ended
last week at £13.29, a 40%
gain on a year earlier, valuing
the company at £1.3bn.
Chief executive Roger
Whiteside has turned around
Greggs during almost five
years at the helm. He got rid
of unprofitable ventures such
as fresh bread baked in-store,
shifting from take-home food
to “food on the go”. Healthier
fare, such as a Cajun chicken
flatbread, now makes up 11%
of sales.
Greggs
£14
12
10
8
2016
Chappell’s red
nose day
SIGNALS
AND NOISE . . .
Send your letters, including
full name and address,
to: The Sunday Times,
1 London Bridge Street,
London SE1 9GF. Or email
letters@sunday-times.co.uk
Letters may be edited
Railways going backwards
on service and principles
Fare increases are only part
of the problem with our
railways. Great Western
promised a glorious dawn of
luxury and speed after a
year of disruption and
replacement bus services to
prepare the line for new
express trains.
What has arrived is risible:
seats almost literally as hard
as rock, interiors starker than
a hospital waiting room and
journey times shortened
negligibly, if at all. Travelling
long distance from the West
Country to London is now
such an unpleasant and
uncomfortable experience
one needs a stiff drink to
counter the misery. But, of
course, they’ve also decided
to remove the buffet car.
Passengers are being
treated with contempt:
they’re paying more for a
standard of service that has
taken such a seismic shift
downward that it would be
impossible to defend in any
other sector. And with more
than £7bn spent to upgrade
the line, the poor passengers
are stuck with these third-rate
trains. Unless, of course, they
break down first.
Oliver Hylton, Bath
San Francisco may be the
tech capital of the world but
the city’s administrators
have all but outlawed
delivery robots, saying that
these experimental carriers
are a danger to pedestrians.
Danny Fortson reports.
MAGAZINE, PAGE 52
The final owner of BHS,
Dominic Chappell, had a
distinctly red nose as he
emerged on Thursday from
Brighton magistrates’ court,
having been convicted of
three charges of failing to
hand over information about
the store chain’s pension
deficit to the regulator.
Prufrock asked whether
the errant former bankrupt
had been enjoying too much
port. “Unfortunately not,”
Chappell clarified. “I was
wearing a snoring strap and
I had an allergic reaction to
the glue on it.”
oliver.shah@
sunday-times.co.uk
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@ST_Business
At the opening of the first
passenger steam railway line,
Stockton to Darlington, in
1825, the financier Edward
Pease proudly displayed a
flag declaring, “Periculum
privatum utilitas publica”
(“private risk for public
utility”), a commendable
declaration.
Sadly, today, with a
government policy of putting
public pounds into private
pockets, we see the taxpayer
(once again) bailing out
private enterprise. Virgin and
Stagecoach are being relieved
of the consequences of poor
business decisions on the
East Coast main line.
Chris Kilkenny, Sunniside,
Newcastle upon Tyne
2017
Source: Thomson Reuters
Diversification is the key to
future expansion. More high
street stores are no longer on
Whiteside’s target list; he
wants to open in stations and
motorway pit stops.
Unprofitable shops are
shutting and others are being
refurbished. Last year Greggs
opened its first drive-through
outlet, and Whiteside is keen
to expand into hospitals and
office deliveries.
The backbone that
underpins this operation is
being overhauled. Fewer
factories, and a network of
integrated distribution hubs
and bakeries, will cut costs.
Algorithms are being used to
forecast stock demand.
Greggs’ finances are in
good shape, too. In July it had
£20m of net cash and analysts
at Shore Capital expect it to
have ended the year with
£41m of net funds. They see
the chain reporting profits of
about £83m for the year on
revenues of close to £1bn.
However, there will be
limits to growth. Amid a
national obesity epidemic, it
will be a brave hospital chief
who allows Greggs to open on
site. For all its expansion
plans, the shares look fully
valued. Hold.
@jcollingridgeST
FTSE 100
7,778.64
20,859.35
451.14
6.16%
H:7,792.6
L:7,093.6
FTSE 250
988.27
4.97%
H:20,984.8
L:18,040.5
DOW JONES
25,803.19
NASDAQ
7,261.06
498.85
7.38%
H:2,787.9
L:2,254.3
7,600
7,400
7,200
J
F
M
A M
J
J
A
S
O N
D
Source: Thomson Reuters
RISERS
GKN: 420p, U 28.7% on takeover
bid Dialight: 670p, U 21.8% on
sentiment Fenner: 503.5p, U 18.6%
on broker upgrade AO World: 141.4p,
U 17.8% on sales rise Pagegroup:
544p, U 17.3% on record profits
Carrs: 140p, U 15.7% on trading update
FALLERS
Carillion: 14.2p, V 24.8% on lenders
rejecting deal Card Factory: 215p,
V 24.1% on profit fears Mothercare:
50.1p,V 19.2% on profit warning
McBride: 180.6p, V 18.8% on trading
update Moss Brothers: 73p,
V 17.5% on profit worries
FTSE EUROFIRST
1,567.67
47.00
3.09%
H:1,573.9
L:1,420.8
SHANGHAI
3,428.9
SENSEX
34,592.39
CAC 40
5,517.06
ALL ORDS
6,176.80
196.49
1.51%
Consumer prices index
CPI including housing
12-month high: $1.37
low: $1.20
Retail prices index
EURO
EUR > GBP
Average weekly earnings
V 0.01
Unemployment
€1.13
7,000
DAX
13,245.03
H:23,952.6
L:18,224.7
Women are as capable as
men, and often even more
talented and impressive, but
weary from the constant
battles and discrimination.
These days everyone is a
working parent. Women’s
careers should be as
important as men’s. All that
any ambitious and talented
women want is equality, the
chance to achieve in the same
way that men can. It still is
very much a man’s world.
Ruth Cornish, Uley,
Gloucestershire
U 0.03
141.53
2.63%
NIKKEI
23,653.82
60.71
0.26%
$1.37
7,800
125.3
3.79%
S&P 500
2,786.24
156.67
5.96%
DOLLAR
USD > GBP
FTSE 100
2,569.74 H:31,412.5
8.91%
L:22,657.4
H:7,265.3
L:5,496.8
More time needed to hit
FTSE women target
It is only two years until 2020
— the 30% Club’s deadline is
far too soon (“FTSE giants
drag feet over women
bosses”, last week). I’m a
strong supporter of diverse
teams: we have been putting
women on FTSE boards for
more than 20 years and our
board is 50% female. But in a
big FTSE company it doesn’t
make sense to have measures
such as all-female shortlists
for senior executive posts,
which would be necessary if
they were to raise the
proportion of women to 30%
in such a short time.
Nicholas Beale, chairman,
Sciteb, London W1
THE ECONOMY
HANG SENG
31,412.54
1,622.55 H:25,810.4
6.71%
L:19,677.9
country with cheap steel
products. British investment
in India is fraught with angst
because of bureaucracy and
the bitter experiences of
Vodafone and Cairn in the law
courts there.
Sam Banik, London N10
Better the partners we know
when it comes to exports
We are neglecting our
substantial export market
across the Channel for the
sake of uncertain trade deals
in faraway countries, as David
Smith wrote last week (“The
most important trade deal is
on our doorstep”).
Suffering from the ills of
economic nationalism,
America will be looking for a
massive trade surplus and we
are likely to be at the tail end
of the queue. With the TransPacific Partnership nations,
minus America, we can
export only invisible services
and look for intangible
investments.
Material exports to faraway
countries will be costly. China
is well known for subsidising
its exports and will flood our
THE WEEK IN THE MARKETS
INSIDE THE CITY JOHN COLLINGRIDGE
Greggs on
a roll – but
the shares
are baked
money from a governmentbacked scheme for veterans
by creating false prescriptions
and submitting fraudulent
reimbursement claims,
stepped down from his role
at the club. Relations now
seem to have turned nasty.
Anderson, 64, has filed a
High Court case demanding
repayment of more than
£900,000 he claims
Gillingham owes him in loans
and interest. The club says it
is “not a straightforward
situation” because of the US
proceedings but says it will
defend the claim. Anderson
says he “absolutely” rejects
the American charge,
adding: “I haven’t even
heard from them.”
1,789.95 H:34,638.4
5.46%
L:26,963.6
H:3,450.5
L:3,016.5
S&P TSX
16,308.18
41.26
0.25%
H:13,525.6
L:11,425.1
YEN
YEN > USD
¥111.03
OIL
DOLLARS/BARREL
$69.87
U 2.25
12-month high: $70.50
low: $44.35
GOLD
DOLLARS/TROY OZ
$1,331.02
1.43m
Manufacturing output
H:16,421.4
L:14,915.8
$14,432.80
V 2,956.4
12-month high: $18,905.20
low: $777.76
Price at 5pm Saturday
prev. month
2.8%
current rate
prev. month
3.9%
4.0%
Retail sales
0.2%
U
prev. month
4.3%
4.3%
on the year
on last month
3.5%
U
on the year
U
UK trade
balance (£bn)
Gross domestic
product
Budget deficit
(PSNB) in £bn
2.4%
current rate
U
0.4%
on last month
1.6%
U
1.1%
latest 3 mths
prev. 3 mths
latest 12 mths
-6.2
-8.3
-28.3
latest quarter prev. quarter
U
0.4%
U
0.3%
annual change
U
1.5%
latest month
prev. month
year to date
8.7
7.8
48.1
10-YEAR BOND YIELDS %
variation
12-month high: $1,347.38
low: $1,187.13
BITCOIN
DOLLARS
current rate
2.8%
U
V 1.55
12-month high: ¥115.61
low: ¥107.31
prev. month
3.0%
on prev. month on last year
£510
low: €1.07
U 67.30
H:6,256.5
L:5,635.1
119.50
1.97%
H:5,536.4
L:4,733.8
12-month high: €1.20
current rate
3.1%
12 months
high
low
0.72
UK
1.33
U 0.07
1.53
US
2.55
U 0.20
2.63
2.02
JAPAN
0.08
U 0.03
0.16
-0.01
GERMANY
0.51
U 0.19
0.59
-0.27
TOP 200 COMPANIES
Market cap ranking
V
Price Change
on week
52-week
Yield
high
low
51 3i Group
950.6
+6.8 969.5 687.5
181 3i Infrastructure
208.0
–5.5
214.5
187.0
91 Admiral
1887.0 +15.0 2178.0 1732.0
184 Aggreko
818.8
+4.2 1064.0 758.0
163 Alliance Trust
764.0
+3.0 767.0 645.0
26 Anglo American
1768.2 +164.8 1768.2 959.4
47 Antofagasta
1032.0 +50.2 1061.0
721.0
144 Ashmore
431.6 +24.6
431.6 283.5
46 Ashtead
2105.0 +90.0 2105.0 1542.0
28 Associated British Foods
2825.0 –57.0 3371.0 2361.0
8 Astra Zeneca
5132.0 –72.0 5508.0 4194.0
128 Auto Trader
355.0
–1.4 435.9
319.0
200 Aveva
2838.0 +38.0 2838.0 1863.0
29 Aviva
533.6 +27.0 544.0 470.6
119 Babcock International
742.2 +26.8 969.5 654.5
30 BAE Systems
589.6 +17.6 677.0 535.5
183 Balfour Beatty
307.6 +11.6 307.6 253.5
19 Barclays
194.5
–4.7 239.2
178.9
79 Barratt Developments
621.2 –36.6 700.0
471.1
121 BBA Aviation
357.8 +13.6 359.8 279.5
160 Beazley
514.0
–7.5 534.5 383.3
106 Bellway
3573.0 –113.0 3792.0 2457.0
88 Berkeley
4125.0 –100.0 4240.0 2787.0
17 BHP Billiton
1647.4 +85.8 1647.4 1117.0
109 B&M European
417.0
+4.0 423.6 293.4
199 Bodycote
951.5 +25.5 962.5 630.0
112 Booker
225.9 –5.0 233.2
182.7
3 BP
534.8
+5.2 534.8 439.8
5 British American Tobacco
4968.0 –2.0 5643.0 4565.0
68 British Land
673.0
–1.8
691.5 579.0
185 Britvic
789.0 –9.0 820.0 582.0
24 BT
274.9
+3.9
391.8 243.8
151 BTG
750.0
–6.5 779.0 534.5
71 Bunzl
2041.0 –22.0 2465.0 2005.0
60 Burberry
1791.0
+8.5 1985.0 1566.0
166 Capital & Counties Properties
301.0 –11.6 324.8
253.1
157 Capita
420.6
–2.8 705.5 392.9
44 Carnival
5040.0 +188.0 5380.0 4105.0
195 Centamin
163.9
+7.3
190.5
131.8
59 Centrica
143.1 –3.0 235.8
137.3
178 Close Brothers
1499.0 +40.0 1715.0 1316.0
140 Cobham
129.9
+6.7 148.0
110.7
54 Coca Cola HBC
2400.0 +17.0 2671.0 1780.0
25 Compass
1550.5 –17.5 1757.6 1447.7
120 Convatec
190.0 –10.0 344.0
182.0
27 CRH
2704.0 –58.0 2920.0 2530.0
84 Croda
4409.0 –70.0 4512.0 3310.0
150 CYBG
327.6
+1.2 340.3 260.0
70 DCC
7700.0 +150.0 7755.0 6045.0
197 Dechra Pharmaceuticals
1970.0 –70.0 2249.0 1366.0
130 Derwent London
2985.0 –84.0 3118.0 2451.0
P/E
Mkt Cap
(£m)
2.8
- 9228.7
3.7
- 2142.8
2.8 23.6 5373.8
3.3 17.4 2097.2
1.8
- 2655.6
- 17.8 24836.2
1.4 41.0 10174.1
3.9 18.2 3053.0
1.3 19.1 10508.7
1.3 18.6 22364.8
4.0 24.7 64958.1
1.5 21.3 3453.2
1.4 86.0 1816.3
4.0 35.3 21584.4
3.8 11.6 3752.5
3.6 17.7 18772.8
0.9 93.2 2121.6
1.5 16.3 33133.5
3.0 11.0 6255.4
2.7 24.6 3691.6
2.0 14.0 2702.1
3.1 9.7 4387.5
3.3 7.5 5585.9
2.6 19.4 34793.1
1.4 27.2 4170.0
1.7 23.4 1821.7
2.1 26.3 4027.0
5.6 36.5 105821.0
3.1 19.9 92625.9
4.4 11.6 6930.6
3.1 18.7 2080.2
5.3 17.1 27381.6
- 39.5 2893.1
2.1 23.8 6857.7
2.2 25.5 7851.4
0.5 103.8 2551.8
7.5 539.2 2806.6
2.3 17.6 10754.8
7.3 25.1 1888.3
8.4 14.3 7863.0
3.9 11.8 2274.1
1.4
- 3107.1
1.6 25.3 8744.1
2.2 21.8 25499.4
- 3707.8
2.1 19.4 22613.2
1.7 27.2 5957.6
- 19.0 2898.0
1.5 34.0 6858.6
0.9 133.0 1835.6
1.8 31.2 3326.8
Market cap ranking
V
7
96
176
82
159
92
36
38
124
45
104
64
6
10
192
180
156
98
111
56
188
152
155
170
113
168
154
1
158
115
21
131
145
80
172
52
133
57
37
182
134
123
72
171
142
125
81
162
90
107
62
126
Diageo
Direct Line Insurance
Dixons Carphone
EasyJet
Electrocomponents
Evraz
Experian
Ferguson
Foreign & Colonial
Fresnillo
G4S
GKN
Glaxo Smith Kline
Glencore
Grafton Group Units
Great Portland Estates
GVC Holdings
Halma
Hammerson
Hargreaves Lansdown
Hastings
Hays
HICL Infrastructure
Hikma Pharmaceuticals
Hiscox
Homeserve
Howden Joinery
HSBC
IG Group
IMI
Imperial Brands
Inchcape
Indivior
Informa
Inmarsat
Intercontinental Hotels
Intermediate Capital
Intertek
International Airlines Group
International Public Partnerships
Intu Properties
Investec
ITV
IWG
Jardine Lloyd Thompson
JD Sports
Johnson Matthey
Jupiter Fund Management
Just Eat
Kaz Minerals
Kingfisher
Ladbrokes Coral
Price Change
on week
2641.0
371.0
201.2
1529.5
628.2
375.0
1676.5
5480.0
665.0
1436.5
286.9
420.0
1353.0
407.5
825.0
658.0
940.0
1287.0
516.2
1813.5
309.6
200.0
159.1
1013.5
1401.0
811.0
456.9
791.7
759.5
1443.0
3160.0
782.0
416.0
746.2
528.8
4780.0
1149.0
5212.0
668.8
158.0
237.5
543.6
168.0
264.3
1410.0
361.7
3164.0
587.6
798.4
946.0
348.1
182.3
–31.0
+1.2
–1.8
+18.0
–7.4
+3.8
+27.5
+50.0
+8.0
+42.0
+11.7
+93.7
–8.0
+19.0
+20.0
–26.5
–28.5
–3.0
–19.8
–10.5
–0.6
+14.5
–4.0
–115.5
–6.0
+8.0
–10.2
+28.2
–33.0
+47.0
–10.0
–3.0
+11.4
+24.2
+36.4
+89.0
–29.0
–106.0
+4.8
–0.8
–12.2
+4.8
–2.9
+3.3
+6.0
+9.7
–35.0
–43.8
–12.6
+59.0
+8.5
–5.7
52-week
Yield
high
low
2725.0
411.3
350.9
1536.5
709.0
382.9
1705.0
5494.0
668.0
1725.0
341.1
420.0
1722.0
407.5
841.0
739.0
982.0
1322.0
609.5
1824.0
325.0
200.0
174.6
2297.0
1470.0
867.0
475.7
796.0
792.5
1443.0
3933.5
880.5
419.5
761.0
850.5
4780.0
1178.0
5425.0
670.0
166.6
294.0
627.5
219.6
365.2
1448.0
456.0
3503.0
631.4
824.0
951.4
368.1
188.0
2131.5
333.8
149.1
914.5
471.1
173.2
1446.0
4460.0
542.0
1260.0
243.1
294.3
1275.5
276.6
579.5
587.5
594.0
913.5
501.5
1266.0
220.4
147.2
153.3
949.5
997.5
523.0
373.0
620.8
491.9
1070.0
3027.0
704.0
267.6
629.5
443.3
3668.0
684.0
3392.0
472.6
150.3
194.7
461.4
146.9
190.9
995.5
303.3
2727.0
393.4
496.0
410.3
288.0
111.3
2.3
3.9
3.5
2.0
1.9
1.9
1.6
1.6
3.3
2.1
5.9
0.7
1.7
1.6
1.1
4.7
1.4
3.2
1.5
4.9
2.2
2.0
1.9
2.3
4.8
4.1
2.7
5.1
3.0
2.3
2.6
8.1
1.6
2.2
1.2
3.0
4.2
5.9
4.2
3.9
1.9
2.3
0.4
2.4
2.5
3.0
1.6
P/E
Mkt Cap
(£m)
24.5 66485.7
16.0 5101.2
9.5 2320.4
19.9 6075.3
26.2 2773.8
- 5370.2
27.2 15472.5
15.6 13868.7
- 3621.8
24.2 10585.5
15.6 4451.5
14.4 7213.1
28.6 66538.6
35.3 58665.8
19.0 1955.0
- 2149.9
- 2826.3
35.0 4880.1
9.2 4094.6
40.7 8601.8
21.8 2034.8
21.0 2886.0
- 2857.7
19.0 2437.9
17.1 4003.2
34.8 2519.8
15.5 2875.8
37.9 158736.9
16.4 2787.2
26.0 3924.6
21.5 30138.1
16.3 3261.4
22.2 2999.3
29.9 6148.7
15.1 2411.5
27.5 9081.5
15.4 3223.4
30.8 8411.7
8.0 14030.3
9.2 2132.7
14.1 3218.2
11.2 3623.8
15.1 6762.7
18.4 2416.7
26.1 3088.4
17.6 3520.2
16.1 6123.4
19.0 2689.4
64.9 5423.6
18.9 4226.0
13.3 7653.1
- 3493.1
Market cap ranking
V
61
34
13
41
127
97
103
118
105
122
148
48
198
67
194
94
193
22
175
63
78
161
42
85
143
169
58
196
137
165
114
66
12
69
15
174
18
116
87
110
11
141
35
164
16
2
4
102
129
77
53
Land Securities
Legal & General
Lloyds Banking Group
London Stock Exchange
Man
Marks & Spencer
Mediclinic International
Meggitt
Melrose
Merlin Entertainments
Metro Bank
Micro Focus International
Millennium & Copthorne Hotels
Mondi
Moneysupermarket
Morrison Supermarkets
National Express
National Grid
Nex Group
Next
NMC Health
Ocado
Old Mutual
Pearson
Pennon
Pershing Square
Persimmon
Petrofac
Phoenix Group Holdings
Playtech
Polymetal International
Paddy Power Betfair
Prudential
Randgold Resources
Reckitt Benckiser
Redrow
Relx
Renishaw
Rentokil Initial
Rightmove
Rio Tinto
RIT Capital Partners
Rolls-Royce
Rotork
Royal Bank Of Scotland
Royal Dutch Shell A
Royal Dutch Shell B
Royal Mail
RPC
RSA Insurance
Sage
Price Change
on week
974.4
274.7
70.5
3700.0
212.2
309.2
605.0
487.6
227.5
361.8
3642.0
2278.0
565.0
1923.5
354.5
228.1
382.0
842.3
612.0
4990.0
3102.0
428.8
228.8
723.0
735.2
1020.0
2647.0
541.6
793.5
808.4
916.8
8460.0
1973.5
7302.0
6802.0
644.5
1659.0
5380.0
311.0
4542.0
4170.0
2005.0
860.8
301.2
302.4
2573.5
2603.0
462.8
832.6
627.0
811.4
–11.2
+3.0
+2.4
–58.0
+0.2
–4.5
–21.0
–3.1
+9.9
+4.8
+38.0
–304.0
–15.0
–5.0
–12.0
+2.9
–1.6
–26.1
+9.5
+136.0
–36.0
–8.4
+3.3
–12.2
–26.4
–44.0
–131.0
+20.0
+20.0
–73.8
–6.8
–410.0
+53.0
+34.0
–39.0
–20.0
–54.5
+80.0
+0.1
–26.0
+210.5
+29.0
–3.2
+25.6
+26.1
+43.5
+40.0
+7.0
–26.8
+1.4
+4.4
52-week
Yield
high
low
1208.5
276.0
73.1
3983.0
214.5
395.5
887.0
526.0
261.2
537.0
3834.0
2739.0
625.5
2130.0
366.5
252.9
386.8
1157.5
684.0
5320.0
3216.0
437.8
231.7
817.0
944.0
1250.0
2890.0
946.0
798.5
1016.0
1095.0
8900.0
1973.5
8190.0
8108.0
664.5
1782.0
5555.0
335.8
4568.0
4170.0
2005.0
981.0
301.2
302.4
2573.5
2607.0
462.8
1075.0
666.5
811.4
917.0
232.8
62.2
2933.0
124.3
297.8
507.5
410.6
195.2
349.0
3132.0
2020.0
410.2
1693.0
296.2
207.0
334.7
838.5
512.5
3617.0
1583.0
238.5
188.0
566.5
735.2
959.0
1886.0
349.0
723.0
768.0
803.5
6665.0
1532.0
6420.0
6355.0
433.8
1398.0
2705.0
219.1
3889.0
2910.0
1815.0
660.0
223.5
214.9
1992.5
2052.5
369.9
720.5
562.5
599.0
P/E
Mkt Cap
(£m)
4.3 42.3 7705.1
5.2 10.7 16359.4
3.8 16.4 50590.8
1.2 43.6 12831.0
3.3
- 3492.8
6.1 27.1 5023.7
1.3 65.1 4458.9
3.1 13.0 3782.6
0.9
- 4416.2
1.8 17.5 3675.2
- 627.9 2927.9
3.2 44.3 9911.1
1.4 16.5 1834.8
2.6 17.0 7063.9
2.8 25.5 1920.8
2.4 15.1 5327.7
3.2 16.6 1954.8
5.4 17.0 28884.6
6.3 33.3 2324.0
3.2 11.7 7338.1
0.3 50.4 6336.9
- 239.6 2701.8
2.7 14.5 11279.8
7.2
- 5827.2
4.9 16.8 3061.7
- 2449.3
5.1 11.9 8169.3
9.4 40.9 1873.5
5.9
- 3117.4
3.6 13.0 2565.4
2.2 14.5 3943.3
1.8 52.1 7125.5
2.2 18.5 51031.3
1.0 33.1 6863.5
2.2 22.8 47814.3
1.5 10.2 2383.4
2.0 29.7 34346.6
0.9 38.1 3916.0
1.1 8.4 5714.1
1.0 33.3 4149.9
3.1 15.8 57451.6
- 3097.7
0.5
- 15839.9
1.7 34.6 2620.9
- 35913.2
5.6 34.1 115207.8
5.6 34.5 97495.0
5.0 13.0 4628.0
2.9 16.3 3433.8
2.5 56.0 6411.7
1.8 34.1 8770.2
Market cap ranking
V
89
49
73
86
100
139
20
31
93
43
75
173
83
146
138
108
186
39
136
23
74
40
135
76
179
33
189
147
117
50
132
149
191
14
95
167
177
9
99
65
153
190
187
101
55
32
Sainsbury, J
Schroders
Scottish Mortgage
Segro
Severn Trent
Shaftesbury
Shire
Sky
Smith (DS)
Smith & Nephew
Smiths
Smith WH
Smurfit Kappa
Sophos
Spectris
Spirax-Sarco
Sports Direct International
SSE
SSP
Standard Chartered
St James’s Place Capital
Standard Life Aberdeen
Tate & Lyle
Taylor Wimpey
Templeton Emerging Markets
Tesco
Thomas Cook
TP Icap
Travis Perkins
Tui
Tullow Oil
UBM
UDG Healthcare
Unilever
United Utilities
Vedanta Resources
Victrex
Vodafone
Weir
Whitbread
William Hill
Witan Investment Trust
Wizz Air Holdings
Wood
Worldpay
WPP
Price Change
on week
252.7
3625.0
468.0
574.6
2015.0
1015.0
3581.0
1010.0
503.0
1266.5
1652.0
2186.0
2534.0
648.5
2614.0
5705.0
377.1
1321.0
663.0
833.0
1242.5
441.1
685.0
197.9
804.0
204.9
129.3
530.2
1537.0
1587.0
234.3
739.5
792.5
3984.0
765.8
910.8
2672.0
229.4
2204.0
3901.0
335.3
1106.0
3554.0
692.0
435.4
1354.5
+11.7
+63.0
+6.0
–12.0
–125.0
–26.0
–294.0
+0.5
–15.0
–19.0
+107.0
–74.0
+70.0
+34.5
+26.0
+20.0
+3.1
–3.0
–24.5
+39.0
–8.5
+13.4
–14.6
–13.4
–2.0
–4.8
+4.3
–0.8
–50.5
+32.5
+13.9
–16.0
–32.5
–108.5
–52.0
+47.2
–10.0
–7.4
–77.0
–93.0
+6.0
+8.0
–106.0
+2.6
+0.4
+15.0
52-week
Yield
high
low
281.7
3629.0
470.2
587.6
2553.0
1055.0
5036.0
1023.0
558.5
1431.0
1684.0
2347.0
2534.0
649.0
2834.0
5920.0
419.5
1557.0
687.5
846.7
1257.5
446.3
795.0
211.2
809.0
214.4
129.3
544.5
1696.0
1587.0
315.6
764.5
959.0
4548.5
1056.0
1102.0
2730.0
238.0
2305.0
4307.0
335.3
1106.0
3700.0
887.0
447.1
1921.0
224.8
2901.0
336.0
452.5
2015.0
873.0
3499.0
900.0
418.8
1170.0
1444.0
1480.0
1962.0
260.9
2229.0
4252.0
284.0
1294.0
390.6
685.9
1030.0
405.0
625.5
165.1
610.0
166.5
84.1
437.0
1408.0
1068.0
145.6
645.0
635.0
3191.0
765.8
575.0
1832.0
192.4
1727.0
3512.0
240.0
903.5
1560.0
560.0
267.2
1253.0
P/E
Mkt Cap
(£m)
4.0 26.3
2.6 19.0
0.6
2.8 8.2
4.0 16.3
1.5 9.4
0.6 26.0
2.1 25.2
3.0 24.8
1.9 16.8
2.6 11.6
2.1 21.1
2.8 17.1
0.5
2.0 281.1
1.3 32.2
- 13.5
6.9 9.8
0.8 41.7
- 1803.0
2.7 52.4
4.5 20.1
4.1 12.9
0.9 11.1
1.0
- 36.6
0.4 161.6
3.2 33.6
2.9 512.3
3.6 13.2
3.0 33.0
1.2 36.9
2.9 22.4
5.1 12.2
4.5
1.8 23.0
5.7
2.0 74.0
2.5 15.2
3.7 17.9
1.7
- 18.2
3.7
0.5 51.8
4.2 10.0
5533.3
9644.0
6596.3
5736.8
4756.6
3114.9
32506.2
17362.1
5368.1
11081.5
6533.2
2408.1
6001.0
2988.8
3116.3
4195.5
2044.8
13321.0
3150.8
27414.1
6567.7
13133.2
3183.1
6473.5
2227.3
16776.6
1985.9
2938.0
3859.0
9316.3
3240.6
2913.0
1968.0
49185.7
5221.9
2523.8
2292.8
61176.4
4810.2
7154.2
2876.2
1975.3
2042.8
4689.6
8708.0
17262.7
Price/earnings ratios are based on historic data, with yield and p/e values
calculated from the most recent reported dividends and earnings per share,
using trailing 12-month figures. 52-week highs and lows are end of day.
nc = no change Data provided by Morningstar. Any enquiries please contact:
dataquestions.uk@morningstar.com
MONEY
11
The Sunday Times January 14, 2018
MONEY
ONE YEAR ON, I’M STILL
ENJOYING THE RIDE
IIAN
AN CCOWIE,
OWIE, PAGE
PAGE 13
13
12
14
‘DO YOU THINK I CAME
UP THE CLYDE ON A
BANANA BOAT?’
HUNTER DAVIES,
PAGE 14
WHAT SUPERSTAR DJ
JUDGE JULES DID NEXT
FAME & FORTUNE,
PAGE 18
PUZZLES
CROSSWORDS,
SUDOKU & MORE
PAGES 16-17
Follow us on Twitter @ST_Money
Halifax’s policy . . . is to milk our loyalty
FRANCESCO GUIDICINI
My insurer tried to
charge me £780 for
cover it would have
offered to a new
customer for £310.
But I saw through its
weaselly ways, says
Stephen Bleach
L
ast week I received a very
tempting insurance quote. It
was from Halifax and offered to
cover my house and contents
for just £310 a year. There’s only
one problem: Halifax quoted
that price thinking I was a new
customer. I’m not; I’ve been
with the company for 15 years
— and last month it tried to
charge me £780 to renew my policy.
That’s 2½ times as much for almost
identical cover. This is how one of the
biggest names in personal finance
rewards a decade and a half of loyalty.
There are many words you could use
to describe that sort of behaviour — and I
have used them, in private and at high
volume. But the Money section believes
in restraint, so all I’ll say here is they’ve
got a nerve.
It took me a long time to realise Halifax
Home Insurance had been taking me for
a chump. When my wife, Jaqui, and I
bought our bog-standard terraced house
in southwest London back in 2002, we
had a mortgage with Halifax, so we took
its insurance too.
Even when we switched mortgage provider, we stuck with the company to
insure the place; we naively assumed it
was giving us a fair deal.
We’d still be assuming that, and happily handing over large lumps of cash,
if it hadn’t pushed its luck a bit too far.
OK, we’re stupid — I’ve had to accept that
and it’s hard — but we’re not quite as stupid as the company thought.
Last month Halifax Home Insurance
sent us a brightly coloured letter headed
“It’s renewal time!”. It quoted a figure of
£780 to renew our home, contents and
personal belongings policy for another
year. Last time, though, the annual cost
was £625. Quite a hike, so Jaqui phoned to
ask for an explanation.
“The call centre guy told me he’d
look at it,” she reported when I got home
that evening, “and in about five seconds
he said, ‘OK, I could do it for £648.’ He
didn’t change the cover or the excess, he
didn’t check with a supervisor or even
put me on hold. He just dropped the
price. So I said OK and renewed.”
Stephen and Jaqui Bleach have been Halifax insurance customers for 15 years — but that meant nothing at renewal time
Surely Halifax
wasn’t just trying
its luck, to see if
customers were
mugs . . . was it?
On the face of it, that was a bit of a
result. But hang on, if Halifax would
instantly drop the price by £132, why was
it asking £780 in the first place?
Surely the company wasn’t just trying
its luck, to see if customers of 15 years
standing were mugs . . . was it?
I put on my journalistic hat (it’s a fraying trilby) and contacted the Halifax
press office. How were its premiums calculated? If £780 was a fair price, how
could it be cut by so much with hardly a
moment’s consideration? And if it wasn’t
a fair price, why had Halifax tried it on?
The press office sent me a statement:
“We continually review and assess our
pricing structures. The premium
charged depends on a number of factors,
including introductory discounts or
offers, the level of cover provided, the
level of risk and past claims history.
“We communicate the renewal price
to customers clearly every year prior to
renewal. If any of our customers wish to
review their policy we encourage them
to contact us directly. Our customer relations team is authorised to apply discounts if applicable.”
All that may be true, but it didn’t
answer my questions. Perhaps the term
“fair price” isn’t one with which the press
office is familiar. In fact, it made me wonder if Halifax had been gouging us all
along. So I took off my journalistic trilby,
put on my penny-pincher’s bobble hat
and went on a comparison website to
check what its rivals would ask to insure
my house, contents and belongings.
And that’s when I got cross. The top
result on GoCompare was a premium of
just £198, but it came from an outfit that
appeared to be called quotelinedirect,
whose lack of respect for the norms of
written English made me nervous. I
moved on in search of offers from bigger
players.
Next came Lloyds bank. It is definitely
a bigger player — so big, in fact, that it
owns Halifax. The Lloyds premium was
£233. Less than a third what its trading
division had asked for.
Feeling slightly dazed, I scrolled down
the list of 46 quotes from names such as
Churchill, the Post Office and Admiral. As
I went, I idly totted up what we’d paid
for our unthinking loyalty to Halifax: say,
£500 a year, for 15 years — ouch.
And then I noticed a familiar name,
offering a premium of £242. Yes, it was
Halifax.
When I’d finished swearing, I decided
I wanted to be scrupulously fair to the
company, even though it was starting to
look like it had been less than fair to me.
Premiums vary depending on the
excess, type of cover and so on, and it is
important to compare like with like. So I
phoned the call centre, went on the website and adjusted the details, doing my
best to make sure this new quote covered
the same as the initial £780 renewal offer.
By the time I was done — and had a
quote for cover that looked rather better
than that offered by my existing policy (it
included unlimited cover for the outbuildings that I don’t have) — the price
had risen to £360. But since I was a valued
new customer, Halifax said I could have
£50 cashback, which made it £310.
I sat back and took stock. I had stayed
loyal to Halifax and assumed that would
Sale
mean something. But when I’d pretended to be a new customer, it had
offered to insure the same building and
contents for less than half the price.
Restraint be damned. I need to vent.
The people at Halifax Home Insurance
are a pack of weaselly, dissembling
poltroons with the moral compass of a
10th-hand car dealer. I don’t believe its
prices are related to costs at all: I believe
they’re purely calculated on what the
company thinks it can get away with
charging mugs like me.
For many years, the company, which
also has millions of banking customers,
has been running a deeply irritating
advertising campaign that alleges the x
in its name stands for “extra”. That’s getting stale. It needs to freshen things up
and add some other plays on that final
letter. Here are some suggestions for the
next brainstorming meeting: how about
“extortionate”, or “exploitative”? Or, in
my case, “ex-customer”?
Ah, about that last one. I still need to
take advantage of the 14-day cooling-off
period, cancel the Halifax policy and sign
up for a new insurance deal. It’s a soulsapping chore and one I don’t want to
have to repeat every year. If there are any
insurers out there that actually reward
loyalty, I’d love to hear from you. Who
knows, I might still be with you in 15
years’ time.
Stephen Bleach is travel editor
of The Sunday Times
YOUR STORY
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DON’T BE SCARED. IF YOU WANT A BETTER PRICE, ASK FOR ONE
Insurers are not the only
companies that penalise
customers for being loyal
— or for being too busy or
lazy to switch regularly.
The same applies to
energy, telephone and
broadband suppliers, which
seem never to miss the
opportunity to charge
existing customers more if
they can get away with it.
Those who stay loyal pay
about £725 a year more than
they need to, according to
research by the consumer
group Which?.
So it pays to switch or, as
Stephen Bleach found, to
haggle with your existing
provider — it will be
expecting you to do so.
Halifax renewal letters
invite insurance
policyholders to get in
touch with its call centre.
“By contacting us, we may
be able to offer you a better
price,” the letter says.
Across the market,
customers who pushed for
a better deal on home, car
and car breakdown policies
made a total average
saving of £125 in a year,
according to Which?.
About nine in 10 (86%)
of broadband and pay-TV
customers who asked for a
better deal were offered a
HOW MUCH YOU CAN SAVE IF YOU HAGGLE
breakdown
£35 Car
cover
£120 Standalone
broadband
£40 Home
insurance
£216 Broadband
and pay TV
£50 Car
insurance
£312 Energy
£72
Source: Which? survey of 1,169
people who had haggled in the
previous 12 months, October 2017
Mobile phone
service
discount or an incentive
by their provider.
Don’t be embarrassed to
ask for a better deal. A
company’s pricing “is set
up so they’re able to offer
discounts to hagglers”,
Which? said.
You stand a better chance
of making a saving if you
come prepared for battle.
Use a comparison service
such as MoneySuperMarket,
uSwitch or GoCompare to
see how much you can save
by switching to a rival.
Ask your existing provider
to at least match the price of
your chosen rival or threaten
to leave — and be ready to
do so if it doesn’t.
One note of caution:
cheapest is not always best,
especially with insurance.
Price comparison sites
list all the products that
match the search criteria
input by consumers, with
the cheapest usually at
the top — though bear in
mind the rankings may be
affected by the websites’
commercial arrangements
with providers.
Many insurers have
reacted to this by stripping
back cover to the bare
minimum, so their policies
appear higher up the list.
This can mean high
excesses or exclusions.
Read the key facts and
policy documents to
ensure you are adequately
protected. With home
insurance, don’t look at just
the overall amount of cover
— check if there are limits to
what the insurer will pay out
for high-value or high-risk
items, such as jewellery or
electronic gadgets.
Since last April, insurers
have been required to state
the previous year’s premium
for comparison purposes
on renewal letters. Prices
generally increase every
year — but do let us know
if you receive a renewal
quote that is lower.
Although such prompts
are undoubtedly useful,
the system tends to work
against elderly people or
those with learning
difficulties, who may be less
able or willing to switch.
Money has highlighted
particularly egregious cases
of people in their late
eighties or nineties paying
significantly more than
necessary — for many years,
in some cases. They were
able to change provider
only thanks to the help of
relations or neighbours.
So do help yourself by
regularly switching or
haggling — and help others
to do so too, if you have
time.
Ali Hussain
It’s going to be another busy year.
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12
The Sunday Times January 14, 2018
MONEY
BRIEFING
SMART METERS MAY
BE A DUMB MOVE
HOUSE PRICES RISE IN HUGE JUMP IN CLAIMS
WALES AND MIDLANDS FOR HOLIDAY ILLNESS
If you would like to receive the
free weekly Money email bulletin,
visit thesundaytimes.co.uk/
moneybulletin. The bulletin is
exclusive to digital subscribers.
The government will review
its plan to install smart
energy meters in all homes
after a series of problems
faced by those who have
had them fitted, including
inaccurate bills and the
loss of the device’s “smart”
features when customers
switch suppliers.
The National Audit Office
will investigate whether
the £11bn rollout will save
customers money. The
government wants 53m
meters to be installed by
2020, but only 8.6m have
been fitted since 2012.
Home prices in Wales and
the East Midlands rose the
most last year, increasing
by 8%, according to Halifax.
Values in Northern Ireland
fell the most, dropping 5.6%.
Contact us Money,
The Sunday Times,
1 London Bridge Street
London SE1 9GF
Email money@sundaytimes.co.uk
Advertising If you would like to
buy an advertisement in Money,
email Paul Douglass at
paul.douglass@news.co.uk
or call him on 07917 598 422
PENSION SAVINGS
GENDER GAP ENDED
The gender gap in workplace
pension saving has ended. In
2016 73% of men and women
paid into a pension, up from
43% and 40% respectively in
2012, said the Department
for Work and Pensions.
One in five holidaymakers
has been approached
about filing a compensation
claim for being sick while
travelling, according to
the travel trade association
Abta.
Claims management
companies most commonly
contact potential claimants
by telephone, but also in
person, including at airports
or while on holiday. Since
2013, there has been a
500% rise in the number of
claims received by travel
companies for holiday
sickness, Abta said.
We could
have done
better — and
should have
done better
Dermot Nolan,
head of the
energy
regulator
Ofgem,
apologises for failing to
protect vulnerable customers
PHONE SHOP FINED
OVER DATA HACK
HOW THE FOOTSIE
HAS PERFORMED
Carphone Warehouse has
been fined £400,000 after
hackers stole the data of
more than 3m customers
and about 1,000 employees
during a cyber-attack in
2015.
The Information
Commissioner’s Office,
which issued the fine,
identified “multiple
inadequacies” in Carphone
Warehouse’s approach to
data security, adding that
the retailer “had failed to
take adequate steps to
protect the personal
information”.
The FTSE 100 hit another record high, led by a surge in
energy and mining stocks around the world. The index rose
85 points to end the week at 7,779.
+6.7%
over a year
(up 10.7% with dividends)
+19.7%
over three years
(up 34.2% with dividends)
+27.1%
over five years
(up 53% with dividends)
10 years
+25.4% over
(up 82.8% with dividends)
Inflation: in November, CPI was 3.1% and RPI was 3.9%
Stamp duty stumps even the taxman
AKIRA SUEMORI
With Money’s help,
a couple have won
a £14,000 refund
of the buy-to-let
surcharge, reports
Ruth Jackson
It is almost two years since the additional
3% rate of stamp duty came into force,
but there is still widespread confusion
about who has to pay it.
Buy-to-let investors and holiday home
owners were the government’s main targets when the measure was introduced.
Put simply, if you buy any property
beyond your main home, you must pay
an extra 3% on top of the regular stamp
duty land tax.
However, Money has found that tax
advisers, solicitors and even HM Revenue
& Customs (HMRC) are giving conflicting
advice that leaves thousands of buyers
confused about whether they are liable
for the levy — and potentially paying
thousands of pounds in unnecessary tax.
To make things worse, the Revenue
does not double-check who should be
paying the surcharge, which is added to
the standard rate of stamp duty — tiered
from 0%-12%, depending on the value of
the property.
If you pay the surcharge by mistake,
no one is going to realise and give you a
refund. It is up to property buyers to
establish whether or not they have to pay
— and it can be difficult to find someone
to explain the system and give the right
advice on what is owed.
“The application of these rules is
fraught with confusion, with solicitors
and tax advisers frequently arriving at
different views,” said Rachel Marsdin,
tax partner at the adviser MHA Moore &
Smalley. “This is a prime example of why
the tax system needs to be simplified.”
One person who knows exactly how
complicated it can be is David Poole, an
estate agent from Yarm, North Yorkshire.
He and his wife, Emma, began looking
to buy their first home together. The couple were moving from a property they
had rented since Poole sold his previous
home more than a decade ago.
Since this was to be their main residence, it never occurred to them that
they would have to pay the additional
rate of stamp duty.
They were in for a nasty shock, however: they were told their new home
would be classified as an additional property because Emma owned two buy-tolets, and they would have to fork out
£14,160 on top of the standard stamp
duty bill.
“I have worked in the property industry for 18 years and find it hard to believe
how little information is available on the
second-home charge,” said Poole, 35.
“We didn’t think we would have to pay it
until I received a phone call from my
solicitor with bad news.”
Poole was horrified, so he sought
advice from other solicitors and tax
experts. “I consulted a few different companies and was told the same by them
all,” he said. “We were lucky we had some
money put to one side or we would have
pulled out of the sale.”
The couple paid almost £28,000 in
stamp duty, half of which was made up of
the additional levy.
Poole, however, was still not convinced that they were liable for the sur-
HOW THE
RULES WORK
Q Jane and John have a main home
and another they use at weekends.
They want to sell their main home
and buy another one instead. Must
they pay the 3% second-home levy?
A If Jane and John buy their new
home on or before November 26,
2018, and have sold their previous
main residence before or on the
same day as they acquire the
new one, the standard stamp duty
rate applies. If they buy it after
November 26, the purchase will need
to be within three years of the sale of
the previous main residence for them
to avoid the second-home levy.
If Jane and John still own their
previous main residence at the end
of the day on which they buy the new
one, they will have to pay the extra
3% — but will be able to claim it back
if they sell within three years.
Q Alex lives in a rented flat in London
and owns a buy-to-let property in
Manchester. He has now decided to
buy a home that will become his
residence, while retaining the
investment property. Must he pay
the 3% levy?
A Yes, assuming both properties
have a market value of £40,000 or
more.
A garden for Poppy: Nick Cross and his fiancée are moving so their dachshund has more room to play. They paid down a mortgage to cut their stamp duty bill
TWO FLATS OWNED,
ONE HOUSE BOUGHT
AND A £5,700 SAVING
charge — even though HMRC’s online tax
calculator said they were.
That was when Money became
involved. After two months of talking to
tax experts and conveyancing solicitors,
and a steady stream of emails to and from
HMRC, it turned out he was right — a fact
eventually acknowledged by HMRC.
The Pooles are spared the surcharge
because of a transitional rule, which even
several tax experts we contacted were
not aware of. This states that a buy-to-let
owner who sold their principal residence
before November 25, 2015 — the date the
additional stamp duty rate was announced — does not have to pay the extra
levy if they complete the purchase of a
new main residence on or before November 26 this year.
Poole sold his previous home back in
2005, so he can benefit from the exclu-
Nick Cross, 34, and his
fiancée Hannah Goodwin,
32, have just exchanged
on their dream home in
Highbury, north London —
and have saved themselves
£5,700 in stamp duty thanks
to a little-known quirk in the
tax rules, writes Ruth Emery.
They both owned their
own properties before they
started their relationship.
They are at present living in
Goodwin’s flat, while Cross
lets out his property in
Watford.
In order to raise money to
buy their new house, the
couple wanted to increase
the mortgage on Goodwin’s
flat, which they intend to let
out. This meant adding
Cross’s name to the
mortgage and the deeds.
Since Cross already had
a property, this transfer of
ownership could have
triggered liability for the
3% additional stamp duty
charge on second homes.
Based on the outstanding
mortgage being split evenly
between them, the couple
faced having to pay an
extra £5,700 to the taxman.
“This was a bit annoying,”
said Cross, with some
understatement.
A specialist stamp duty
solicitor came up with a
Money back: Emma and David Poole
solution. Under HM Revenue
& Customs rules, no
stamp duty is payable on
properties bought for less
than £40,000 — or, in the
case of ownership, where
the mortgage taken on is
less than £40,000 per
person.
So the couple used
their savings to pay down
the mortgage on Goodwin’s
flat to below £80,000,
before it was put into joint
ownership and Cross took
on half the loan.
The couple, who are both
accountants, will still have
to pay the extra 3% on their
new home, as it will be an
sion. That puts him and Emma, 32, who
paid £472,000 for their home, in line for
a refund. “It has taken a long time, but
finally we can look forward to a hefty
cheque from HMRC,” he said.
Obtaining confirmation of the overpayment from the taxman came only
after a long slog, during which the couple
received varying advice. Surely it should
not be difficult to find out whether or not
you owe tens of thousands of pounds?
“This needs tackling by HMRC as a
matter of urgency. It shouldn’t be this
complicated,” said Henry Pryor, an independent property expert. “As a professional buyer, even I find it difficult to
always be clear what is due. I’m sure
there are people who have miscalculated
their tax and not moved as a result of the
mistake, as well as people who have paid
too much tax on their purchase.”
extra property on top of
their primary residence,
which is Goodwin’s flat.
There could be a way to
get round that as well. If the
couple sell that flat within
the next three years they
will be able to claim a refund
on the stamp duty on their
Highbury home, as it will
count as replacing their
former residence.
In the meantime, the
couple are looking forward
to enjoying their new home
along with Poppy, their
miniature dachshund.
“We’re buying the house so
she has a garden to run
around in,” said Cross.
What is the best way to find out, without any doubt, if you are liable for the
additional rate of stamp duty, which
came into force in April 2016?
HMRC said buyers should use its
“helpful stamp duty land tax calculator”
(bit.ly/SDLT-calculator). This can be misleading, though: for example, it asks if
you are replacing your main residence,
without defining exactly what a main residence is.
The examples in the panel, right, give
an idea of when the surcharge is payable.
Contact HMRC directly to discuss your
personal circumstances. You can call
0300 200 3510 or post details to BTStamp Duty Land Tax, HM Revenue &
Customs, BX9 1HD. More information at
gov.uk/stamp-duty-land-tax. For details
on Scotland’s land and buildings trans–
action tax, go to bit.ly/Scot-duty.
Q Wilfred is moving into his
boyfriend Ben’s house and is going to
be given a 50% stake and be added
to the deeds and the mortgage in
return for paying part of the running
costs. Wilfred owns a holiday home
in France. Will he have to pay the 3%
levy and, if so, on the value of the
whole property or just half?
A Wilfred will be treated as acquiring
half the property for a purchase price
equal to half the outstanding
mortgage. If that purchase price is
£40,000 or more, his purchase will
be subject to the levy.
Q Sarah owns her own home in
Basingstoke. Her grandmother has
just died and she will inherit her
house. Does she have to pay any
stamp duty on inheriting this extra
property?
A Sarah will not have to pay the
higher rate of stamp duty on the
property, but the fact that she owns
it will be taken into account in
deciding her tax liability if she buys
another property in future.
Q Matt is about to get married to
Angie. They live together in a rented
home, although Angie also owns a
buy-to-let property in Scotland.
Matt buys his first home on his own,
before the wedding takes place. They
both intend to live in Matt’s home
once they are married. Do Matt or
Angie have to pay the 3% levy after
they get married?
A No higher-rate stamp duty is due
on Matt’s purchase; Angie’s property
is not taken into account as they are
not yet married.
Psst! The boss can save you up to £310 on pensions advice
A new voucher
scheme can slash
your costs but
take-up has been
low. By Ruth Emery
Employees are missing out on
a valuable tax perk that cuts
the cost of financial advice
by up to £310 a year.
Launched last November,
pension advice vouchers
are a government initiative
similar to childcare vouchers
and the cycle to work
scheme. But they have gone
largely unnoticed, with few
companies offering the
benefit to workers.
Staff are entitled to swap
up to £500 of their pay each
tax year for a pension advice
voucher through a salary
sacrifice scheme. The
voucher can be used to
obtain financial advice about
any sort of pension the
employee has; it does not
have to be about their
company scheme.
Depending on the
employee’s wages, the
voucher costs them as little
as £190, thanks to the tax and
national insurance saved.
“Very few employers are
offering the scheme, hence
few employees are aware of
it,” said Adam Price, founder
of the financial adviser review
website VouchedFor.
“Access to good financial
advice is so important right
now — and this government
initiative reduces the cost by
up to 62%. I would urge all
employees to lobby their
employers for access to this
scheme.
“It’s especially urgent for
the 1.2m employees who
already pay for advice each
year; they have only until
April if they want to capture
their first year’s savings.”
The £500 advice voucher
broadly costs £340 for basicrate taxpayers and £290 for
higher-rate payers. For those
earning £100,000-£123,000,
it costs just £190. Workers
earning above this pay £210.
Brian Henderson, partner
at the human resources
consultancy Mercer, said
there were “few, if any”
employers offering
the benefit. “The scheme can
work really well in principle,
but we haven’t seen masses
of interest,” he said. “If
employees want it they
should argue very heavily
that they want it in place.
“There’s an underlying
challenge with employers
offering an advisory service
such as the vouchers and
highlighting advisers to
choose from, as they worry
the advice could go wrong
and they’re on the hook for it.
“Also, there’s probably
just a lack of knowledge. It
hasn’t been well publicised.”
Workers can use the
voucher with any financial
adviser; they do not have to
use one chosen by their
employer. According to
HM Revenue & Customs, the
advice can be about financial
If employees
want this
they should
argue for it
and tax issues relating to
“pension arrangements or
pension funds, allowing
individuals to make informed
decisions about saving for
their retirement”.
The advice can cost more
than £500. Anything above
this will be taxed and incur
national insurance as usual.
Workers with more than one
employer can benefit from
several vouchers in a tax year,
gaining one voucher from
each employer who provides
the scheme.
VouchedFor offers a
pension advice salary
sacrifice scheme available
to employers. Clients that
have already paid for
financial advice can submit
a request via the website
pensionadvicevouchers.
co.uk. It will then contact the
client’s employer to see if it
wants to set up the scheme.
The £500 limit replaces
old rules whereby employees
were allowed a tax-exempt
benefit of £150 of pensions
advice a year.
Emma Roberts of JLT
Employee Benefits believes
more companies may start
offering the perk after April,
as employers traditionally
review their benefits
arrangements at the start of
each tax year.
“By the time the increased
limit was confirmed in
legislation, most companies
will have already been well
down the line of finalising
any new benefits for the
year,” she said.
Another scheme
connected to pensions advice
was launched last year. Since
April, savers of any age can
withdraw three tax-free
instalments of £500 from
their pension pot to pay for
advice. This £1,500 is on top
of the 25% tax-free lump sum
savers can typically access
when they retire.
As with the pension advice
vouchers, few people seem to
have heard of this allowance.
Pension providers are not
required to offer the facility.
Many are not offering it and,
as a result, take-up appears
low across the industry.
13
The Sunday Times January 14, 2018
MONEY
They keep saying the Trump bump
won’t last, and they keep being wrong
Economists have been making dire predictions about markets since the president’s inauguration a year ago. But it’s so far, so good
PERSONAL
ACCOUNT
IAN COWIE
T
ime flies when you’re having
fun. So stock market investors
enjoying record highs could
be forgiven for feeling slightly
surprised that Saturday will
mark one year since Donald
Trump’s inauguration as US
president. The Dow Jones
index of American blue chips
has surged by 30% since then,
dragging global equity valuations in
its wake.
Yes, I know the Dow is a questionable
measure of the world’s biggest economy
and stock market, because it tracks only
30 shares and is based on their price
rather than total value.
But it is by far the most widely followed
benchmark and even the Standard &
Poor’s 500, a wider measure of the American market, is up by 22% over the same
period.
The Nikkei benchmark shows that
Japanese share prices are 24% higher
than when Trump took the oath of office
and Germany’s Dax is 14% ahead on the
year. By contrast, the FTSE 100 index of
Britain’s biggest shares, somewhat
blighted by uncertainty over Brexit, has
advanced by 8% on the same basis — that
is, before dividends are taken into
account.
Several blue-chip stocks have done
even better — such as the aerospace giant
Boeing, the third most valuable holding
in my “forever fund”, which has risen by
112% over the past year and soared into
the stratosphere.
The tractor maker John Deere,
another top 10 holding in my fund, is
63% up and chugging along nicely. The
burger chain McDonald’s, my most valuable stake, has been super-sized by 45%.
I’m lovin’ it.
Never mind the past, though. The
important question is: what might happen next? Share prices expressed as a
multiple of company earnings look
stretched, prompting fears this is a bubble that will burst soon.
Expressing share prices as a multiple
of corporate earnings is one way of
assessing whether they are cheap or
expensive. On this basis, American
markets are trading at levels last seen
immediately before the dotcom bubble
burst in 2000.
The previous time when price/earnings ratios got this high was 1929, when
the Wall Street crash triggered the Great
Depression.
Analysts at StarCapital Research calculate the average American share is
now priced at more than 30 times earnings; in Japan the average is nearly 29,
in Germany it is 21, while in Britain it
is 16½.
Against all that, rising corporate earnings, plus low interest rates on cash
and meagre yields on bonds, could continue to push equity valuations higher
because investors cannot find a better
hole to go to.
Mouhammed Choukeir, chief investment officer at Kleinwort Benson and a
shrewd observer, told me: “We share
concerns about high valuations but the
American market looked expensive five
years ago — and it has nearly doubled
since then.
“Valuations are not enough to assess
the potential for equity market performance. Earnings fundamentals, momentum and the economic backdrop are also
relevant — and they are currently supportive for the market.”
Anyone bewildered by cyclically
adjusted price/earnings ratios and other
technical considerations can take comfort from experts’ inability to predict the
future in the past.
Pole position in that fiercely contested
field of failure must go to the Nobel prizewinning economist Paul Krugman who,
when commenting on Trump’s election
victory in The New York Times, sagely
observed that: “If the question is when
markets will recover, a first-pass answer
is never.”
Since then the economist has been
telling anyone who will listen that the
president and his tax cuts — the biggest in
30 years — have nothing to do with the
economy or share prices. Maybe so, but
the recovery that never was seems to be
going well.
No wonder City traders define an
economist as a man who knows 69 different ways to make love but doesn’t know
any women. In the absence of a crystal
ball, this DIY investor intends to hang on
— despite all the warnings from wise virgins who have called the top of this bull
market all the way up.
Having tried to play Mystic Meg
last year, when I ceased reinvesting dividends for a few months because of fears
of a crash, I watched these cash deposits
earn next to nothing while the shares
that generated them continued to rise
in value.
This reminded me that time in the
market is a surer way to make money
than attempting to time the market. As
reported here last October, I resumed
reinvestment and have been fully
invested since then.
Share prices are as likely to melt up
this year as they are to melt down. Some
of the biggest gains are seen in the final
months of an upswing when investors
become euphoric. Having lived through
1987 and 1999, I would say sentiment is
some way short of that now.
The moment to bale out will come
when the crowd who have been sitting on
the sidelines in cash deposits decide they
can’t bear to miss out any longer. When
they buy, I will sell.
That turning point may not be far
away. The Investment Association
reports that net inflows into unit trusts hit
£39bn in the first three quarters of 2017 —
or more than double the inflow seen in
2006, just before the global credit crisis
began. Here and now, I aim to continue
enjoying the ride as this bull market
climbs a wall of fear.
ian.cowie@sunday-times.co.uk
or Twitter @iancowie
ST DIGITAL
Read a breakdown of
Ian Cowie’s ‘forever’ fund
thesundaytimes.co.uk/cowieholdings
KEVIN DIETSCH
Party animal: Donald Trump with his wife Melania at an inauguration ball last January. America’s S&P 500 index has marched ahead by 22% since then
£39bn
63%
GRAB THOSE
CAPITAL GAINS
THE TAX CASE FOR
SELLING SHARES
Net inflows into unit trusts in the
first three quarters of 2017
One good reason to sell
some shares or stock market
funds sooner rather than
later is provided by the
tax system.
While it is usually a bad
idea to let the tax tail wag
the investment dog, there
is a valuable exception to
the rule that is topical ahead
of this month’s deadline
to file self-assessment
Rise in share price for the tractor
maker John Deere during 2017
returns to HM Revenue &
Customs.
The annual allowance for
capital gains tax — or the
profit everyone is allowed to
receive before they must
pay CGT — is £11,300. To put
that in context, the annual
personal allowance — or the
amount most people can
earn before having to pay
income tax — is £11,500.
So, investors who have
generated gains above the
CGT allowance can use it
to almost double their total
tax-free returns. Better still
for individual investors in the
stock market with even
bigger gains, the top rate of
CGT was cut to 20% in 2016.
This is less than half the top
rate of income tax and looks
low by historical standards.
True, it is no longer
possible to strip out the
illusory uplift of inflation
when assessing profits liable
to tax, because indexation
has been abolished.
However, many individual
investors may regard being
spared such mind-boggling
calculations as a valuable
relief in its own right.
Of course, the simplest
way to avoid CGT is to hold
investments in an Isa, which
immediately renders any
gains tax-free without any
maximum value or minimum
age before withdrawals are
allowed.
Assets held in pensions
are also completely free of
CGT, although the minimum
age before most people can
make withdrawals is 55
and the maximum value of
these funds is set at £1m —
beyond which, punitive tax
rates may apply.
Another good reason to
consider taking gains now is
that paper profits are all very
well, but you haven’t really
made a penny until you sell.
Hello, it’s your bank here. We’d like to manage your investments
You might find it
simpler to keep
all your money in
one place, but it
will cost you more,
says Ali Hussain
Customers of NatWest logging
on to the bank’s home page
are confronted with a bold
purple banner trying to
lure them to its new
investment site.
“Would you like cashback
on your investments?” it asks,
offering 1% back on up to
£25,000 invested until
April 5.
NatWest is not the only
high street bank attempting
to persuade customers to
use its services when they
invest in the stock market.
In the next few months,
Santander is also due to start
a cashback scheme on its
Investment Hub, which it
launched in 2016 but only
began to promote last year.
Barclays has been
highlighting its Smart
Investor service; last August
200,000 customers from
Barclays Stockbrokers
were transferred to the
new platform.
It’s no surprise the big
banks are pitching for the
work: there are £1.2 trillion
of investments under
management in the UK,
but non-banks such as
Hargreaves Lansdown
and Fidelity dominate the
industry.
For customers, investing
through the organisations
that already handle their
current or savings account
can make it easier to keep an
eye on their portfolio.
However, critics urge
people to think about
alternative options.
“While it may be easy and
convenient to just stick with
your bank and have all your
finances in one place, it is
worth shopping around
to get the best deal,” said
Justin Modray of Candid
Financial Advice.
Robo-advisers
can charge
lower fees
than the high
street banks
“Although the investment
options offered by the high
street banks are significantly
better than in the past,
specialist providers can offer
a cheaper way to invest.”
Not all the high street
banks are providing the
same services. Lloyds
Banking Group (which
includes Halifax), Santander,
HSBC and Barclays are
offering access to a wide
range of funds and individual
shares from third-party
providers — as well as their
own ready-made portfolios.
NatWest and Nationwide
building society provide
only ready-made portfolios
as they are focusing on
customers who are less
confident about picking their
own investments.
Those offering ready-made
products require you to
decide how much risk you
want to take. If you are not
sure, NatWest offers an
automated advice service
that asks about your goals
and financial situation.
On the basis of the
answers, it will recommend
one of five ready-made
products that invest in a
range of funds tracking
different market indices.
The bank’s advice is
fully regulated, which means
if it turns out not to match
THE COST OF READY-MADE PORTFOLIOS
YOU CAN PICK THE HIGH STREET FOR EASE ...
Annual platform fee
HSBC
... BUT THESE ALTERNATIVES ARE CHEAPER
Underlying investment fee
0.25%
1.06% Nutmeg
total
0.81%
World Selection Balanced
Nationwide 0.71%
1.05%
0.34%
L&G Mixed 20%-60%
NatWest
0.35%
0.35%
0.17% 0.62%
Fidelity
0.35%
0.25%
0.6%
Multi Asset Allocator
0.6%
0.95%
Vanguard 0.15% 0.22%
0.37%
LifeStrategy
RBS Growth
Santander
0.45%
Tracker portfolio
0.84%
0.49%
Multi Index
Lloyds
0.24%
0.45%
0.69%
Managed Growth
Barclays
0.2%*
0.45%
0.65%
Global Markets
your appetite for risk,
you will have the right to
complain to the Financial
Ombudsman Service.
The move by the banks
comes amid the growing
popularity of so-called
robo-advisers, where instead
of a traditional face-to-face
meeting with a financial
adviser — at some cost —
investments are
recommended based on
online questions about how
much risk an individual is
happy to take and for how
long they want to invest.
These can be cheaper
than the services from the
high street banks, which can
*For investment in funds
Source: Candid Financial Advice
All figures based on a £25,000 investment. In-house portfolios used where applicable
charge more than 1% for a
ready-made portfolio.
Nutmeg, one of the most
successful robo-advisers,
charges 0.45% for the
platform, plus 0.17% for the
underlying investments — a
total of 0.62% a year. If you
invest more than £100,000,
the fee falls to 0.42% in total.
Another non-bank
provider is Fidelity
International. Its Multi Asset
Allocator, a ready-made
portfolio, costs a total
of 0.6%.
An even cheaper option
is Vanguard, which
specialises in low-cost
tracker funds. Its LifeStrategy
product levies combined fees
of 0.37%.
High street banks used to
be among the most popular
routes for individuals looking
to invest, but they withdrew
from the market in 2012
after the introduction of
stringent rules about selling
investments.
Around this time, the large
banks were found to have
given inappropriate advice
or mis-sold complicated
investments and were fined
for doing so. Barclays and
HSBC were fined £7.7m and
£10m respectively in 2011.
Lloyds was ordered to pay
£28m in 2013; Santander was
fined £12.4m in 2014.
There are still significant
sums invested in funds
recommended by the banks
in the past, which continue
to perform relatively badly.
The Halifax UK Growth
fund, with £4.96bn invested,
has returned 52% over the
past five years compared with
a sector average of 66%.
The £2.81bn Scottish
Widows UK Growth fund,
sold via Lloyds, has returned
47% over the past five years
against the average of 66%.
In the same sector is the
Santander UK Growth fund,
which has £892m invested
and has returned 44% over
five years.
14
The Sunday Times January 14, 2018
MONEY
And just 80
emails later,
we found
the culprit
QUESTION
ON
OF MONEY
EY
JILL INSLEY
LEY
Fighting your financial
and consumer battles
M
y family and I invested
£111,000 in the Fidelity
Index UK Income Class W
fund early last year
through our investment
platform, Hargreaves
Lansdown. The
Hargreaves Lansdown
website stated that the
fund paid a historic yield
of 2.83% and it was going “ex dividend”
on March 1, 2017, with a payment date
of April 30, 2017. [Going ex dividend
refers to the timing of dividend
payments. If units in a fund are sold
before the ex-dividend date, the
dividends belong to the new owner.]
We were expecting to receive about
£3,140 in dividends, so when we did
not receive anything like this sum I
asked Hargreaves Lansdown for an
explanation. We waited months and
then were told the information on the
website was incorrect and the company
declined to pay the dividend we were
expecting.
It was not the first time that this had
happened to us. In the past, after several
months of email exchanges, Hargreaves
Lansdown agreed it had a responsibility
to clients to pay the dividend regardless
of whether it or the fund were at fault
for the incorrect information on its site.
The last time this happened in 2016,
Hargreaves Lansdown sent me an email
confirming that we should not be
disadvantaged because of “erroneous
errors on the website”. It now says it
takes no responsibility for third-party
information on its site.
I contacted the Financial Ombudsman
Service, which agreed the information
provided on the Hargreaves Lansdown
site was wrong, but stopped short of
compelling the firm to pay my dividend.
Can you help me get our dividend
payment — and ask Hargreaves
Lansdown to stick to its pledge to
honour payments regardless of whose
fault it is that incorrect information has
been provided?
Jill replies
You told me your tactic is to invest in
funds just before they go ex dividend —
and to sell up after they have paid out.
This can be an expensive way to invest.
Unit prices tend to be higher in the
run-up to a fund going ex dividend and
to drop once it hits the ex-dividend date.
There can also be a bid offer spread
on some funds. This is the difference
between the price at which units are
bought and sold at any one time. It can
range from 0.3% to more than 5%,
wiping out any profit you might make
from the dividend. This did not apply in
the case of the Fidelity fund, however,
whose units have a single price.
You bought units in this particular
fund before the ex-dividend date in
March last year, but this does not mean
you are entitled to the full year’s
dividend: payments can be made
annually, half yearly or quarterly,
depending on the terms of the fund.
Hargreaves Lansdown says the
fund information provided to it — by a
data supplier called Funds Library that
is actually part of the Hargreaves
Lansdown group — incorrectly indicated
that the dividend was paid annually
rather than quarterly.
This led you to believe you would
receive the full year’s worth, but
dividends on this fund — which is now
called the Fidelity Index UK Fund
P Shares — are paid every three months.
You received £189, not even one-quarter
of the sum you were expecting, but
Danny Cox of Hargreaves Lansdown
tells me quarterly dividends are not
in September so he will be well below
the minimum threshold for tax this year.
However, he is having income tax
deducted at source. Should we wait till
the end of the tax year to reclaim it?
In addition to his salary, he gets 13 free
cinema tickets a month — and I noticed
on his payslip that an extra £29.80
income tax has been deducted, over and
above what he was paying at 20% of his
salary, and his gross pay is recorded as
£149.01 higher than the sum he is due.
Does that mean he is being taxed on this
benefit of 13 free tickets a month, which
would roughly equate to £149? Do you
pay tax on taxable benefits even if you
are below the tax threshold? If he does
not use the tickets, it seems a bit mean
to tax him on them.
‘Apparently they’re not responsible for the accuracy of their website’
necessarily split into four equal
amounts.
A mistake about the fund’s data had
clearly been made at some stage, but
initially none of the participants was
prepared to take responsibility. Finally,
after a wrangle that involved more than
80 emails and what felt like a similar
number of telephone calls, Fidelity
admitted it had supplied the wrong
information to Funds Library.
It said: “We acknowledge that at the
beginning of 2017 there was a mistake
in the data we provided to Funds Library
with respect to the fund our client was
investing in. We are disappointed this
has happened and sincerely apologise.
We would like to offer a goodwill gesture
of £250 for the inconvenience and
confusion it has caused him.”
Hargreaves Lansdown’s terms and
conditions state that it is not liable for
any inaccuracy, errors or omissions in
information provided by third parties.
Readers should also pay careful
attention to its website disclaimer, which
says: “Before making any investment
choice clients should always take
adequate steps to verify the accuracy
and completeness of any information
contained on the sites.”
Nevertheless, it has also offered you
£250 as a gesture of goodwill. You are
still unhappy because you believe
Hargreaves Lansdown has not been
consistent in the way it has compensated
you. Two years ago, when incorrect
information on its site resulted in you
selling HSBC units before the fund went
ex dividend, it paid £775 to make up
for the dividends you missed out on.
Hargreaves Lansdown says the
circumstances are different this time:
“The client didn’t suffer a financial loss
on the dividend this time — he received
everything he was entitled to.”
You think other readers should be
aware that information on such sites
as Hargreaves Lansdown’s may be
incorrect — and that terms and
conditions mean it may be impossible to
hold the website owners accountable.
However, you are prepared to accept
the £250 from both companies provided
the same offer is extended to your wife
and two sons, who also have accounts
with Hargreaves Lansdown and invested
in the Fidelity fund.
Cashing an old cheque
My bank, Lloyds, advised me that
Equiniti, a payment administration and
investment service provider, would
refuse to honour a cheque for £2,720
because it had been issued 15 months
ago. The money was for 160 shares in
ARM, which had been bought out by
SoftBank. Lloyds said I must ask Equiniti
to reissue the cheque.
I understand there is no legal basis
for rejecting an unstopped cheque. But
in return for one brief phone call to
identify me and my original cheque,
cancelling the cheque and posting a new
one, Equiniti will charge a fee of £135.
Even allowing for company overheads,
this seems like predatory pricing.
Jill replies
I find it bewildering that you could leave
a cheque for nearly £3,000 unbanked
for more than a year. I also suspected it
was your bank that would make a fuss
about the cheque’s age — not Equiniti.
I contacted the company, which
confirmed that it would not have
blocked the cheque and advised you to
cash it. It added that if a cheque does
have to be reissued, the fees are based
on the value of the cheque as this
influences the process involved. It
refused to waive the fee you might have
to pay if the cheque was blocked by
Lloyds “as this would be unfair to
customers who go through this process
and pay the fee for the extra work done”.
I told Lloyds that Equiniti was happy
to honour your elderly cheque and
asked it to make sure your local branch
in Chichester would also accept it. The
bank said that although the cheque does
clearly state it must be encashed within
12 months of the date of issue, it would
do this as a goodwill gesture. You were
just about to pay in the cheque when a
fresh one for £2,720 arrived in the post
from Equiniti.
You tell me that the detachable upper
part of the original letter included a
paragraph that suggested future
payments, dividends and interest should
be credited directly to your bank or
building society account. “You will
automatically receive cleared funds, and
without the risk and inconvenience of
lost, stolen or spoiled cheques,” it read.
You agreed that this was a good idea
— so good that you had already been
receiving all your dividends this way for
several years, “which is precisely what
caused me to regard the original cheque
as only a notification in the first place”.
Tax on an unused perk
My teenage son has started working at
a cinema in Leicester Square, central
London, earning £7.60 an hour and
doing about 33 hours a week. He began
Jill replies
The default tax code for each individual
is 1150L, which means they are entitled
to earn £11,500 a year before paying
tax. Tim Stovold, head of tax at the
accountancy firm Kingston Smith,
says this allowance is usually given
cumulatively so a person who starts
work in September can earn up to
6/12ths of £11,500 in the tax year before
they pay tax.
If this were operating correctly, he
says, there should be no income tax
deducted at source from your son’s pay
as his earnings would be within his
tax-free allowance for the year.
Stovold says the most likely
explanation is that his tax code is being
operated on a “Month 1” basis, so will be
shown as 1150LM1 on his payslip. This
code is used when the payroll system
thinks the employee has had another job
in the tax year before their current job,
so gives only 1/12th of the tax-free
allowance each month rather than giving
the allowance cumulatively.
Your son can update his tax code by
calling 0300 200 3300. He can also do
this online at gov.uk/check-income-taxcurrent-year — but a phone call may be
quicker. If he does not amend his tax
code, the PAYE system should reconcile
the situation after the end of the tax year
and he should be issued with a P800 tax
calculation and a cheque with the
refunded tax.
The cinema tickets are being taxed as
a non-cash voucher. This is one that can
be exchanged for goods or services —
and is taxable whether or not the goods
or services are actually received. For
2017-18, if your son can sort out his tax
code, there is no downside in receiving
the tickets as his earnings plus the value
of the tickets should still be within his
£11,500 tax-free allowance. However,
Stovold says: “If he continues to work in
2018-19, he will need to make a decision
over whether to continue with the
tickets as they will be taxable if he has a
full year of earnings which will exceed
his tax-free allowance.”
CAN WE HELP YOU?
Please email Jill Insley at
questionofmoney@sunday-times.co.uk
or write to Question of Money,
The Sunday Times, 1 London
Bridge Street, London SE1 9GF.
Please send only copies of original
documents. Letters should be
exclusive to The Sunday Times. Advice
is offered without legal responsibility.
We regret Jill cannot reply to everyone
who contacts her.
Read all about it!
Hunter’s secret to
happiness revealed
Hunter Davies says
we shouldn’t spend
our lives fixated
on finances, but he
still haggles over
the price of fruit
Younger generation, eh? Too
bloomin’ lazy to get off their
bums and make a bit of
money. I asked my older
granddaughters a year ago
if they would deliver my
evening paper to me. I said
I would pay them 50p each
time — and if they delivered to
20 people, they would make
£10 an evening and £50 a
week.
No reaction, except
eye-rolling. When I was
their age, I had three jobs,
delivering newspapers
before and after school, and
groceries, plus down the pit
and up chimneys. Eee by gum.
For some years I have
shared the task of collecting
the evening paper with a man
in my street, but he has just
moved — so selfish.
It means I have to trail
down each evening to
Kentish Town Tube in north
London, hang around in
the cold and horrors and
fumes, waiting for the
appearance of the stupid
Evening Standard van,
which is always late.
Last week, when it
eventually came and I
pounced to get the first one,
I noticed an elderly, rather
scruffy man — a bit like me,
really — picking up 10 copies.
I knew him by sight but had
never spoken to him.
I asked him who the
papers were for. Some old
chaps in his council block
who could not get out any
more, he said. Which block?
Turned out to be near me.
I told him my street and
asked if he would consider
delivering to me as well, for
a fee of course.
He put down his papers,
looked at me and sighed.
“No, I am not interested in
making money any more.”
Then he shuffled off.
On the way home, I
thought that is spot-on — that
is how I now feel.
I look at the interest rates
each week in these pages —
out of habit, really, just to
check they are still rubbish —
and I move on quickly. Even
if they were half-decent,
I would not be tempted.
Why would I want a higher
rate of return? I would just
have to pay tax on it.
Plus the faff of filling in
forms or, even worse, going
online, which I find a
nightmare, and then having
to keep all the paperwork or
my accountant will shout at
me. Well, the old one often
did — I haven’t started with
the new one yet.
I have my trillions saved in
Nat Savings certs, on which I
will pay no tax when I start
cashing them in. So I don’t
have to think about
investments any more.
Money, such a boring
subject.Why do people
make such a fuss about it?
Yes, I know it blights your
life if you don’t have enough
and is the biggest single
worry in most households,
but it really is such a waste
of time and energy.
So many people go
through life fixated by it,
wanting to earn more and
more, moving money
around, watching it, counting
it, obsessed by it, feeling that
it is how they will always be
judged, that it is what makes
them happy.
Which is all nonsense.
Money is hardly in the top 10
of what makes most normal
people happy in life.
Health is clearly No 1.
Love is second. Family next.
Then social relationships,
followed by activity, which
can mean work or just
interests, hobbies, walking.
Then something to
look forward to, such as a
holiday, the next meal, the
first glass of the evening,
something good on the
telly, Spurs winning the
league.
You never hear of people
on their deathbed saying
their one big regret is they
wish they’d had more money.
The poet Sir John Betjeman
said he wished he’d had more
sex. Now that did sound
understandable.
TOLGA AKMEN
Hunter collects his evening
paper in north London
I was very
interested in
money once,
which my wife
thought sad
Yet so many people spend
their whole lives letting
money dominate them. Must
be worse if you happen to
work with money for a living,
making your money by
handling other people’s.
Poor sods. Wasting a life. No
wonder they retire early. It
must eat into their soul.
I was very interested in
money for most of my early
and middle life, seeing how
much I could get, how much I
could save, how much I could
own, which my wife thought
sad and pathetic. But it was
in the margins of my mind,
only in the margins of my life.
I am still working and
earning, and still keen to get
the maximum out of those
bastards who employ me, but
it’s a game, an amusement —
to see if I can do it, get away
with it. Then I just laugh if
they say, “No chance”.
And, of course, I am as
mean as ever, going for the
cheapest fruit, however
mouldy. But that is my
character and with age it has
become a sport.
What? Your blueberries
are £1.50? Do you think I am
made of money? Do you think
I came up the Clyde on a
banana boat? That was one
of my mother’s sayings. For
some reason, it always
receives blank looks in
Kentish Town.
I looked yesterday at the
fall in house prices round
here, and thought, hmm, this
would be a good time to buy
a flat as an investment. Then
I thought, why would I want
to make more money?
I can’t afford to spend
time making money. I can’t
afford to spend time thinking
about money. I want to spend
what time I have left living.
Which is what all people
should consider as their
first priority.
It was my birthday last
week — 82, yes. How kind,
thanks, of course I don’t look
it. But no presents please.
And certainly no money. Last
thing I want.
I am now off to the West
Indies to my favourite island,
Bequia. I wonder if I will still
have this column when I
return. Will they think, that’s
it. How can we employ this
eejit on a Money section
when he is rubbishing
money, telling us it is all
pointless and boring? It’s
OK for him.
See you in four weeks. I
hope. If I still have this job . . .
15
The Sunday Times January 14, 2018
MONEY
Best Buys
CURRENT ACCOUNTS
FOREIGN
CURRENCY
CREDIT INTEREST
Provider
Account name
Account fee
Interest rate 1
TSB
Classic Plus
None
3% + £10 a month 2 £1-£1,500
Balance
0345 975 8758
Contact
Halifax
Reward
None
£3 a month
£1+
0345 720 3040
Nationwide
FlexDirect
None
5% 3
£1-£2,500
0800 302 010
These are the interbank
rates at 5pm on Friday,
which show where the
market is trading.
They are not indicative
of the rate you will be
able to get.
OVERDRAFTS *
Provider
Account name
Account fee
First Direct
1st Account
£10 a month 5 15.9%
M&S Bank
M&S Current Account None
Post Office Money Standard Account
Interest rate 4
None
0% overdraft limit Contact
£250
0800 242 424
15.9%
£100
0345 900 0900
14.9%
£0
0345 266 8977
EURO
GBP>EUR
1.13
1.37
1.33
1.74
1 Based on funding of £1,000 a month. 2 To receive £10 you must have two direct debits and make 20 card payments a month. 3 Introductory rate for one year, then 1%. 4 Equivalent annual
rate. 5 Fee waived if minimum funding of £1,000 is met. * Based on overdraft of £500 for 15 days a month. Some accounts require minimum funding to open or receive rates shown.
Source: Moneyfacts.co.uk
AMERICA
GBP>USD
CREDIT CARDS
INTRODUCTORY RATES
Provider
Card type
Sainsbury’s Bank Purchase Mastercard
Halifax
30-Month Purchase Mastercard
Sainsbury’s Bank Dual Offer Mastercard
Introductory purchase
APR 1
Reward
Contact
0% for 31 months
18.9%
Yes
0808 540 5060
0% for 30 months
18.9%
No
0345 944 4555
0% for 30 months
18.9%
Yes
0808 540 5060
SWITZERLAND
GBP>CHF
BALANCE TRANSFERS
Provider
Card type
Introductory purchase Transfer fee
APR
Contact
Barclaycard
Platinum 38-Month Visa
0% for 38 months
1.4%
19.9%
0800 731 0200
MBNA
Platinum 38-Month Visa
0% for 38 months
1.44%
19.9%
0345 606 2062
Nuba
Transfer Mastercard
0% for 38 months
2.49%
19.9%
0345 606 2062
2
AUSTRALIA
GBP>AUD
3 £3 minimum.
CASHBACK CARDS
Provider
Card type
APR 1
Cashback
28.2%
1%-1.25%. Intro 5% for 3 months (up to £125) 0800 917 8047
American Express Platinum Cashback Everyday 22.9%
0.5%-1%. Intro 5% for 3 months (up to £100) 0800 917 8047
American Express Platinum Cashback
World Elite Mastercard
Santander
49.8%
Contact
0.5%
0800 389 9905
1 APR = annual percentage rate, dependent on credit rating. 2 Fee charged on the amount of each balance transfer during the introductory period.
Source: Moneyfacts.co.uk
Source: timescurrencyservices.co.uk
020 7294 7970
MORTGAGES
MONEY
MADE EASY
BRUSSELS BANS
CARD FEES
2-YEAR FIXED RATES
Lender
Rate
Scheme
Deposit
Fee
Notes
Contact
Sainsbury’s
1.19%
Fixed to 31.3.20
40%
£745
LV
0345 111 8010
Nationwide
1.34%
Fixed for 2 years
20%
£999
GV
0800 302 010
Barclays
1.94%
Fixed to 30.4.20
10%
£999
LV
0333 202 7580
Lender
Rate
Scheme
Deposit
Fee
Notes
Contact
Nationwide
1.59%
Fixed for 3 years
40%
£999
GV
0800 302 010
HSBC
1.64%
Fixed to 28.2.21
25%
£999
LV
0800 494 999
Barclays
2.19%
Fixed to 31.4.21
10%
£999
LV
0333 202 7580
Customers will no longer
be charged a fee when
paying for goods or
services by debit or credit
card, after EU rules
banning the practice
came into force yesterday.
However, companies
can instead add booking
or admin fees to all forms
of payment, raise prices
or even refuse to accept
cards at all.
Last week the takeaway
food app Just Eat replaced
its 50p surcharge on debit
and credit card payments
with a 50p service charge
on all orders.
3-YEAR FIXED RATES
LONG-TERM FIXED RATES
Lender
Rate
Scheme
Deposit
Fee
Notes
Contact
Coventry
1.75%
Fixed to 31.3.23
35%
£999
LV
0800 121 8899
HSBC
1.99%
Fixed to 28.2.23
20%
£999
LV
0800 494 999
Principality
2.55%
Fixed to 30.4.23
10%
£0
LV
0800 678 1000
First Direct
2.69%
Fixed for 10 years
25%
£0
LV
0800 482 448
Deposit
TRACKERS */ DISCOUNTS
Lender
Rate
Scheme
Fee
Notes
Contact
HSBC
1.24%
Tracker +0.74% for 2 years 40%
£999
ELV
0800 494 999
Leek United
2.02%
SVR -3.42% for 2 years
10%
£199
EV
0845 219 0250
Nationwide
1.94%
Tracker +1.44% for 5 years 25%
£999
EGV
0800 302 010
Hanley Economic
1.75%
SVR -3.44% for term
£950
ELV
01782 255 000
25%
What has changed?
Retailers, airlines,
government departments
and others used to levy a
fee for paying with plastic,
in some cases as much as
3%. This is now outlawed
across the EU. The ban
includes PayPal, Apple Pay
and other payment
methods linked to a card.
FIRST-TIME BUYER / LOW DEPOSIT
Lender
Rate
Scheme
Deposit
Fee
Notes
Contact
Yorkshire BS
3.29%
Fixed to 29.2.20
5%
£995
DP
0345 166 9510
Hanley Economic
3.1%
SVR -2.09% for 2 years
5%
£250
PV
01782 255 000
Barclays
2.69%
Fixed to 30.4.21
0%
£0
FP
0333 202 7580
BUY TO LET
Lender
Rate
Scheme
Deposit
Fee
Notes
Contact
Virgin Money
1.79%
Tracker +1.29% to 1.5.20
40%
£995
D
0345 605 0500
Barclays
1.84%
Fixed to 30.4.20
25%
£1,950
R
0333 202 7580
Leeds
2.19%
Fixed to 31.3.23
40%
£1,999
LV
0345 045 4049
How are businesses and
agencies responding?
The Driver & Vehicle
Licensing Agency has
dropped its £2.50 fee for
credit cards, while Ryanair
has scrapped its 2% fee.
HM Revenue & Customs
replaced its credit card
charge of up to 0.6% with
a blanket ban on personal
credit cards; corporate
cards are still accepted.
“Some merchants may
increase their prices
or refuse to take card
payments to compensate
for the lost revenue but,
overall, customers will
benefit,” said Stephen
Ley, UK head of payments
at the accountancy firm
Deloitte.
Early repayment charge applies unless otherwise stated. * Most deals track Bank of England base rate. Notes: SVR = Standard variable rate;
D = £500 cashback; E = No early repayment charge; F = Family Springboard, 10% deposit must be in a Barclays Helpful Start account;
G = £500 cashback for first-time buyers and remortgages; L = Free legal work for remortgages; P = Purchases only; R = Free valuation and legal
work for remortgages; V = Free valuation.
Source: landc.co.uk — 0800 373 300
SAVINGS ACCOUNTS
INSTANT ACCESS
Provider
Account name
Min deposit
Interest rate
Contact
AA 1
Easy Saver — Issue 6
£100
1.32%
theaa.com
Online Saver Issue 28
£1
1.3%
postoffice.co.uk
Freedom Savings
£100
1.3%
rcibank.co.uk
Post Office Money
2
RCI Bank
1 Rate includes 1.12% bonus for first 12 months. 2 Rate includes 1.05% bonus for first 12 months.
NOTICE ACCOUNTS
Provider
Account name
Notice period
Min deposit
Interest rate
Contact
Secure Trust Bank 1
180-day notice
180 days
£1,000
1.65%
securetrustbank.com
Secure Trust Bank 1
120-day notice
120 days
£1,000
1.55%
securetrustbank.com
Bank and Clients
90-day notice
90 days
£1,000
1.45%
bankandclients.com
1 Maximum three capital withdrawals a year subject to required notice.
CASH ISAS
INSTANT ACCESS
Provider
Account name
Min deposit Interest Transfers in Contact
Paragon Bank
Limited Edition (Issue 3)
£1
1.16%
Yes
paragonbank.co.uk
Leeds
Limited Issue Online (Issue 4)
£1,000
1.16%
Yes
leedsbuildingsociety.co.uk
FIXED RATE
Provider
Account name
Post Office Money 1-Year Fixed Rate Issue 11
West Brom BS
Fixed Rate Isa
Term
Min deposit Rate
1 year
£500
1.45% Yes
Transfers in Contact
postoffice.co.uk
2 years
£1,000
1.65% Yes
westbrom.co.uk
Source: Savingschampion.co.uk — 0808 178 5354
FIXED-RATE BONDS
Provider
Account name
Atom Bank 1
Term
Min deposit
Interest rate
Contact
Fixed Saver
1 year
The Access Bank UK
Fixed Rate Bond
2 years
£50
1.8%
atombank.co.uk
£5,000
2.05%
The Access Bank UK
Fixed Rate Bond
3 years
£5,000
sensiblesavings.co.uk
2.25%
sensiblesavings.co.uk
1 Atom Bank accounts are available only via an app, which can be downloaded from the Apple App Store or Google Play Store.
DEALS ARE LISTED ONLY IF THEY ARE COVERED BY THE UK FINANCIAL SERVICES COMPENSATION SCHEME (FSCS) OR A EUROPEAN EQUIVALENT
Source: Savingschampion.co.uk — 0808 178 5354
What happens
after Brexit?
The EU regulations have
already been written into
UK law, so the ban will
continue.
CHILDREN’S ACCOUNTS
Provider
Account name
Account type
Min deposit
Interest rate
Contact
Halifax
Kids’ Regular Saver
Regular Saver
£10-£100
4.5%
halifax.co.uk
Santander 1
123 Mini Current Account
Current Account
£300
1%-2.96%
santander.co.uk
Cambridge
3-year Fixed Rate Bond (Issue 1) Fixed Rate Bond
£1,000
2%
cambridgebs.co.uk
1 Interest rates are tiered: 1% on balances of £100-£199; 1.98% on £200-£299; 2.96% on £300-£2,000.
ENERGY DEALS
Table shows the cheapest tariff from the 3 cheapest
suppliers.Excludes
suppliers.
Excludesfixed
fixedtariffs
tariffsof
ofless
lessthan
than12
12
months’ duration. Excludes tariffs that do not have
national coverage. Excludes tariffs where payments
are taken in advance of the customer coming on
supply. F=Fixed rates V=Variable rates
HAVE
YOUR SAY
EDITED BY
RUTH EMERY
Open to fraud
There is no way I would agree
to my details being freely
circulated to other banks — as
proposed under “open
banking” (“Fraud fears over
‘open banking’ revolution”,
last week). I use my current
account banking app to
transfer funds between my
accounts, but I only do this
on my secure wi-fi in my
own property. I also prefer
to enter my Pin than to wave
my bank card at a contactless
terminal. I know this takes
longer, but reporting funds
missing from my account
and getting new cards also
take time.
PR, Shrewsbury, Shropshire
Open banking is the most
stupid and potentially
dangerous financial
development I have ever
heard of. The old and the
vulnerable have enough to
contend with — and now this.
I can hear the scam factories
tooling up already. What on
earth possesses anyone to
think this is a good idea?
A lot of unfortunate
individuals are going to be
fleeced of their savings and
endure misery as a result,
with the banks saying it’s
not their fault. And then the
authorities will try to put the
genie back in the bottle.
SC, by email
Average annual bill
Rate
Contact
Provider
Account name
Min deposit
Interest rate
Rate
Contact
Tonik
£842
F
0333 344 2686
Coventry
Junior Cash Isa
£1
3.5%
V
coventrybuildingsociety.co.uk
Bulb
£855
V
0300 303 0635
Nationwide
Smart Junior Isa
£1
3.25%
V
nationwide.co.uk
People’s Energy
£868
V
0131 285 5510
Tesco Bank
Junior Cash Isa
£1
3.15%
V
tescobank.com
Source: TheEnergyShop.com — 01259 220 270
I use my banking app at least
once each weekday and use
other apps for credit card
and savings accounts.
However, I would not be
happy sharing data between
accounts. I have already
had trouble with my main
credit card, with the bank
having to contact me to
verify a transaction that
would have taken me over
my credit limit.
I had no knowledge of the
transaction so had to cut up
my card and wait for a
replacement. Then a Netflix
subscription appeared on
my account that I had not
initiated. I had to ring the
bank twice and Netflix once
to stop further charges after a
second transaction appeared
the following month, despite
a stop supposedly having
been applied.
I read the Money pages in
The Sunday Times and am a
member of Which? so feel
well-informed. I can hunt
for the best banking and
savings deals myself.
NB, Crawley, West Sussex
The government and
Competition and Markets
Authority have got this
wrong: there is no such thing
as 100% security. Financial
fraud is on the increase. From
what I have read, open
banking will leave the door
open to even more fraud.
Last week you also
reported on customers being
erroneously transferred to a
power company — if it can
happen in the energy sector,
it can happen in the finance
industry. What are the
safeguards? I don’t think the
government is even looking
— ministers are too busy
fighting among themselves.
PF, Orpington,
southeast London
I couldn’t agree more with
Peter Conradi’s column on
V = variable rate. Source: Savingschampion.co.uk — 0808 178 5354
‘Open banking’, which came into force yesterday, allows
consumers to share account details with budgeting apps
security (“You can try ‘open
banking’, but my account is
for my eyes only”, last week).
If it goes wrong it will
invariably be our fault.
We are regularly
bombarded with “Changes
to terms and conditions”
correspondence about our
accounts and credit cards.
These are presumably a
legal “tick box” exercise in
informing the consumer.
I suspect 99.9% of these
communications go straight
in the bin. However, I
recently read one indicating
that if I authorised a third
party to see my bank details,
the bank could not be held
responsible for things such
as transfers going wrong.
There is going to be a lot of
trouble with this.
TN, Angmering, West Sussex
Waste of energy
Last year I heard
advertisements on the radio
and saw pop-ups on my iPad
saying I could save money
by switching energy firms
(“I have never seen such
appalling service”, last week).
So I contacted a small energy
provider to transfer to them.
However, we did not
receive the paperwork and
when I tried to phone I had
great difficulty getting a
response. We did not want
to proceed with the switch,
but then we got a letter from
British Gas, our previous
supplier, saying our gas had
been transferred to the new
firm. How do they do this
without meter readings?
Then we received a letter
from the new supplier saying
we could not move our
electricity as we were in debt.
We have never been in debt.
It took a lot of phone calls and
letters to say we did not want
to be with the new supplier,
but finally it was settled. We
are both in our eighties and
really do not need this hassle.
EH, Ramsbury, Wiltshire
I too have experienced the
shameful behaviour of energy
companies. I am in dispute
with my new LPG [liquefied
petroleum gas] supplier. The
firm was keen to get my
business when my contract
was up for renewal last April.
It was a two-year contract —
the price was fixed for the
first 12 months and in the
second year the increase was
capped at 3p a litre.
However, last month I
received a letter informing
me of a price rise effective
immediately of 4p. I queried
this, but was told the contract
did not mean anything and a
“surcharge” price had to be
imposed on a temporary
basis. We are in discussion
with the supplier, but so far
to no avail. My concern is
they might refuse to supply
gas through the winter.
MW, Kirklinton, Cumbria
I am very disturbed by my
energy supplier. The monthly
payments increased from
£130 to £260 as my meter
readings were ignored and a
£300 credit turned into an
£800 debit overnight. I had
to send a photograph of my
meter and I even had the
pressure checked to make
sure I did not have a leak.
After selling my house I
tried to close the account. I
supplied final meter readings
but they were lost. I then
received two “final” account
totals — I paid the first one,
but have received another
bill for £148.
Am I being robbed or are
they incompetent?
MH, Bideford, North Devon
Taxing task
Like Ruth Emery, I was one of
the sad individuals trying to
fill in their self-assessment
form before the end of the
year (“No champagne for me,
darling. Not until I’ve filed my
tax return . . .”, last week).
The self-assessment
website is clunky and sloppily
written. It also required
several bits of ID. I didn’t
expect to need a passport
and driving licence in my
hands when I sat down to
fill in the blasted form.
HM Revenue & Customs
obviously doesn’t have the
bandwidth to cope with the
numbers trying to complete
forms on the last Saturday
of the year — mine crashed
several times and I had to
log back in. When it wasn’t
crashing, saving the page
was very slow.
What should have been a
15-minute task took almost
three hours — all to prove the
Revenue owed me £5.21.
RD, Old Windsor, Berkshire
In November I registered for
online self-assessment. Once I
had my user ID, it was simple.
If you made a mistake, you
could amend at any time —
and many of the pages did not
apply to me. Total time?
Thirty minutes. Simple.
MS, Chigwell, Essex
We love to receive your
feedback on stories and
your views on any issues
you would like us to
investigate. Always
include your name and
address when contacting
us. Letters may be edited.
WRITE TO
Money, The Sunday Times
1 London Bridge Street
London SE1 9GF
EMAIL
money@sundaytimes.co.uk
TWITTER
@ST_Money
ICONS BY JAMIE JONES
JUNIOR ISAS
Supplier
Top tip
If you spot a company
charging a fee for paying
by card, report it to
Trading Standards
(tradingstandards.uk/
consumers or 0345 404
0506). You can claim a
refund or take legal action
to recover charges.
Ruth Emery
MONEY’S
GOLD
MEDALLIST
If you have a story to
tell, email money@
sunday times.co.uk
Money’s Gold Medallist is
your chance to tell us about
the businesses — from banks
and department stores to
energy suppliers and travel
companies — that have
treated you well.
This week’s winner is
Maine Exotics, a chauffeur
service in Birmingham. It
was nominated by Karen
Lockley, who lives in York.
She told us: “My husband
was a Birmingham City
supporter and when he was
diagnosed with terminal
lung cancer, he wanted to
see them play at home with
his son one last time.”
After booking tickets
for a match at St Andrew’s
stadium, as well as a hotel
room, she wanted to ensure
her husband could get to
the game easily.
“I knew he wouldn’t be
able to walk far so thought
a car to the stadium would
make it special as well as
practical,” said Lockley.
She contacted Maine
Exotics and explained the
situation. “They couldn’t
have been more helpful.
They agreed to pick up my
husband and his son at the
hotel with two drivers, one
to meet them and one to
bring the car around so my
husband would have the
least time and distance to
walk,” she said.
The company said the
drivers would not only take
her husband to the entrance
of St Andrew’s, but would
also help him to reach his
seat in the stadium.
“They charged no extra
for all this, which was
very kind,” said Lockley,
who paid up front.
Sadly, her husband died
before he could attend
the match.
Lockley let Maine Exotics
know that she needed to
cancel and, again, was
pleasantly surprised by
its response.
“Not only did they refund
my money immediately,
which I did not expect,
they also sent flowers and
a card to me, which I was
extremely touched by,”
she said.
The experience has made
Lockley feel that “kind
people do still exist in the
world”. She would like to
thank the company and
would recommend it
wholeheartedly.
16
The Sunday Times January 14, 2018
MONEY
Puzzles
FEEDBACK
Comments about our puzzles
can be sent to puzzle.feedback@
sunday-times.co.uk or Puzzles
Editor, The Sunday Times,
1 London Bridge Street,
London SE1 9GF
GENERAL KNOWLEDGE JUMBO CROSSWORD 92
1
2
3
4
5
6
7
13
Across
8
9
10
11
12
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
36
34
37
38
35
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
1 Plant whose fibre is used in rope-making (5)
4 In cricket, the area within 15 yards of a line between the
wickets (7)
8 “Find New Roads” is the slogan of this American car
manufacturer (9)
13 Dish of lettuce, croutons, Parmesan cheese, and
dressing (6,5)
14 The biggest UK hit for Haircut One Hundred (4,4,3)
15 Female sidekick of Lord Voldemort in the Harry Potter
books (9,9)
16 Cheese from Cornwall, wrapped in nettle leaves (4)
18 An old informal name for the speaking clock (3)
19 Lightweight fabric often used for nightclothes (10)
20 ____ Water was the site of five successful attempts at the
world water speed record (8)
23 Film director who won an Oscar for Oliver! (5,4)
24 Jamaican-born sprinter who won nine Olympic medals,
though no golds (7,5)
26 Sonny ____ is the only boxer on the Sergeant Pepper’s
Lonely Hearts Club Band album cover (6)
27 Gary ____ is the only non-American male golfer to achieve a
career grand slam (6)
29 New York, New York is a song featured in this musical (2,3,4)
31 In rhetoric, anticipation and answering of objections (9)
33 To protrude or cause to protrude (6)
34 Italian for “plaster” (6)
36 Arm or leg cramp as a result of exercise (7,5)
38 A bike or other vehicle designed for use on rough terrain (3-6)
41 ____ di Roma is a low-lying area of Italy (8)
42 Serving to alleviate rather than cure a problem (10)
43 To soften fibre by soaking it (3)
46 Cheek, lip and ____ are all forms of impudence (4)
48 1969 techno-thriller novel by Michael Crichton (3,9,6)
51 Mexican revolutionary (pictured) who starred as himself in
Hollywood films (6,5)
52 A hermit in Saint Augustine’s
order (6,5)
53 Musical instruction to play a
note with strong attack (9)
54 ____ Hill is the eastern
continuation of London’s
Fleet Street (7)
55 Indian state and a variety of
black tea (5)
NEWS QUIZ
1
Solution to 91
Across: 1 Battenberg, 6 Webb, 9 Defame, 13 The Devil’s Dictionary, 15 Duo, 16 Mine, 17 Headington, 18 Convent, 20 North Country, 22 Paranormal, 24 Hash over, 26 Bore,
27 Manifesto, 30 Paolo Veronese, 31 The Change, 33 Come out in, 34 Hang one’s hat up, 37 Rod Liddle, 39 Pisa, 40 Rio Negro, 42 Mascarpone, 44 Making play of, 47 Cui
bono, 48 Cacography, 50 Tree, 52 OTT, 53 Diary Of A Chambermaid, 54 Murray, 55 Ecru, 56 Auctioneer
Down: 1 Batsmanship, 2 Tweener, 3 Ewer, 4 Bride, 5 Resident, 7 Estate, 8 Brownian motion, 9 Drag chain, 10 Flying off the handle, 11 Midterm, 12 Postal code, 14 Inner sole,
19 Chronological order, 21 Overeat, 23 Pelé, 25 Stormed, 28 Sonntag, 29 Bonnie And Clyde, 32 Evening, 33 Ceramic hob, 34 Hope, 35 Nostalgic, 36 Proofreader,
38 Diplomacy, 41 Kinabalu, 43 Shih-tzu, 45 Yardage, 46 Act for, 49 Habit, 51 Arno
2
3
4
CONCISE CROSSWORD 1556
1
2
3
Across
4
5
8
6
7
9
10
11
12
13
14
1
5
8
10
11
12
14
16
18
20
21
22
Down
Nixed (6)
Deck (5)
Vanish (9)
Countless (6)
Leaf (4)
Stave addition (6,4)
Invented (10)
Puncture (4)
Small shock (6)
Lack of knowledge (9)
Song (5)
With pleasure (6)
1
2
3
4
6
7
9
11
13
15
17
19
There you go! (5)
Journey (6)
Outlay (11)
Taxi passenger (4)
Source (6)
Drivel (8)
Figurative (11)
Gained (8)
Bear (6)
Savvy (6)
Fortunate (5)
Agate form (4)
15
16
18
17
Solution to 1555
Across: 1 Syllabus, 8 Quaint, 9 Fracas, 10 Teamwork, 12 Pull, 13 Understand,
16 Jettisoned, 17 Ruin, 18 Lozenges, 21 Newbie, 22 Pinkie, 23 Depilate
Down: 2 Yarmulke, 3 Lacklustre, 4 Best, 5 Squadron, 6 Lido, 7 Stoked,
11 Withdrawal, 14 Designed, 15 Nihilist, 16 Jalopy, 19 Zany, 20 Snip
21
22
HARDER
11
+ 14 x 2
120 OF2/3IT
x5
96
x6
+ 25%
OF IT
+6
HALF OF
IT
- 5/8
OF IT
TRIPLE
IT
CELL BLOCKS
÷4
+ 25 + 2/5
OF IT
÷5
TRIPLE
IT
–2
HALF OF
IT
– 15 x 6
÷ 7 + 13 x 3
+ 146
TRIPLE
IT
+ 36
HALF OF
IT
÷8
ANSWER ANSWER ANSWER
BRAIN TRAINER
MEDIUM
1 Historically, a synonym for “trombone”, now meaning one
from before about 1700, or a replica (7)
2 Another name for the star Polaris (6,5)
3 A woody climbing plant, especially in a tropical rain forest (5)
4 In blackjack, the option given to a player if the dealer’s first
card is an ace (9)
5 Composer of Songs Without Words, for piano (5,11)
6 Actor who played Stephen Hawking in The Theory of
Everything (5,8)
7 An expanding muscle (9)
8 Legal proviso or condition (6)
9 Bolt used to fasten a French window (12)
10 Sauce base of fat and flour (4)
11 Drug used in the treatment of Parkinson’s disease (1-4)
12 An account of the lineage of gods (8)
17 TV quiz launched in 1988, now hosted by Sandi Toksvig (7,2,3)
19 Company which operates the UK’s second largest chain of
motorway service areas (7,5)
21 Exercise system combining elements of aerobics and
martial arts (3,2)
22 Chiyo Sakamoto is the protagonist of this Arthur Golden
novel (7,2,1,6)
23 Historically, the chief Muslim civil and religious ruler,
regarded as the successor of Muhammad (6)
25 ____ relief was given to workhouse paupers (6)
28 A former regular panellist on Mock the Week (7,6)
30 Ajax, Feyenoord, and ____ are regarded as the “big three” of
Dutch football (3,9)
32 Early alphabet using parallel strokes and a continuous line (5)
35 Iowa city, setting of the musical The Pajama Game (5,6)
37 Author of Tales of the Unexpected (5,4)
39 The type of consonant ending “buzz”, “hiss” and “puff” (9)
40 Strong alcoholic drink resembling gin (8)
44 Puzzle (pictured) in which
seven pieces are arranged
in various shapes (7)
45 Peru’s chief sea port, close
to Lima (6)
47 Main division of a long
poem (5)
49 A cheap variety of rum (5)
50 Nom de plume of Hablot
Knight Browne, illustrator
of Dickens books (4)
5
Which sport was named
Britain’s dullest to watch?
How much did it cost
to have a Chinese meal
with David Cameron,
pictured?
Who admitted he wasn’t
9cm taller after all?
What job has been done
by John Hewer, Thomas
6
7
Pescod, Mitch Commins,
and now Riccardo Acerbi?
What was unusual about
the football game
between Al-Ahli and
Al-Batin in Saudi Arabia?
Which city is considering
introducing the UK’s first
tourist tax?
Who was Helen Gundry
surprised to see on Ant
and Dec’s Saturday Night
Takeaway?
How much leisure time
does the average man
enjoy each week? (Clue:
women have just
over 38 hours and
20 minutes)
9 Who was caught selling
Tesco Finest tea bags for
£2.88 (normal price:
£2.99)?
10 What does the average
family do 1,435 times a
year?
8
MARK MY
WORDS 90
Readers are invited to guess
what was said last week when
Thailand’s prime minister,
Prayuth Chan-ocha, told
journalists in Bangkok to
address their questions to a
cardboard cutout of himself.
See right for how to enter.
Send your entries to: puzzle.entries@
sunday-times.co.uk by no later than
Tuesday. Entries should include a postal
address and ‘Mark My Words 90’ in the
subject line of the email. The best entry as
judged by The Sunday Times will win The
Chambers Dictionary of Great Quotations.
Terms and conditions: Competition closes at midnight on Tuesday.
Over 18, residents of the UK and ROI only. One entry per person. The
winner will be the best entry as judged by The Sunday Times. No cash
alternative to prize in whole or in part. Prize is non-transferable. Your
information will only be used for the purposes of this competition.
Promoter is Times Newspapers Ltd. Not open to staff of the Promoter
and promotional partner or their families.
Last week’s winning caption,
for this picture of Theresa
May being given a hospital
tour, was: “And this is where
we undertake some of our
most complex medical
procedures. It’s called a
corridor.” It was suggested by
Brian Bowles, of London N8.
19
20
EASY
Down
Just follow the instructions from left to right, starting with the
number given to reach an answer at the end
2
2
2
3 2
7
3
4
6
6 4
6
Divide the grid into blocks.
Each block must be square or
rectangular and must contain
the number of cells indicated
by the number inside it.
2
TETONOR
HARD
Each number in the main grid
can be formed by adding or
multiplying a pair of numbers
in the strip below the grid.
Each pair of numbers should
be used twice: once as part of
an addition and once as part
of a multiplication. For
example, a 10 and 24 in the
main grid may be solved by
the sums, 4 + 6 and 4 x 6,
respectively. Enter each sum
in the boxes below its answer.
Any blanks in the strip must
be deduced, bearing in mind
the numbers are listed in
ascending order.
36
19
108
60
84
54
13
24
17
15
42
21
20
63
16
64
3 3
9
14 15
POLYGON
From these letters, make
words of four or more letters,
always including the central
letter. Answers must be in the
Concise Oxford Dictionary,
excluding capitalised words,
plurals, conjugated verbs
(past tense etc), adverbs
ending in LY, comparatives
and superlatives.
How you rate
22 words, average; 30, good;
35, very good; 41, excellent.
EVENT
Cookery masterclass with
Merchant Gourmet
A n e xc l u s i ve o p p o r t u n i t y fo r s u b s c r i b e r s
Join us during February for a series of intimate cookery classes to get your year off to
a wholesome and nutritious start. Merchant Gourmet cook, Alex Mackay, will guide you
through three tasty recipes along with plenty of tips and tricks for quick, healthy meals.
Book tickets today at mytimesplus.co.uk
This Times+ event is open to UK subscribers only. For full terms and conditions, visit mytimesplus.co.uk
17
The Sunday Times January 14, 2018
MONEY
MEPHISTO 2994
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
21
22
24
25
19
20
23
26
27
28
29
30
31
32
NAME
33
...................................................................................
ADDRESS ...................................................................................
...................................................................................
Post your solution to The Sunday Times Mephisto 2994,
PO Box 29, Colchester, Essex CO2 8GZ, or email
puzzle.entries@sunday-times.co.uk
The first correct solution picked at random after next
Saturday wins Whitaker’s Concise, worth £25. Four
runners-up will each receive £20.
The Chambers Dictionary 13th edition is the primary
reference. Readers may email comments or queries to
Paul McKenna at paul.auctor@gmail.com
Solution to 2993
Across: 1 Perfumy, 7 Coss, 10 Snool, 11 Axolotl, 12 Dosimetry, 13 Soli, 16 Quaere,
17 Weirdo, 18 Giron, 19 Tico, 21 Idol, 22 Cause, 23 Mought, 25 Nudies, 27 Stow,
29 Quillaias, 30 Alamein, 31 Toked, 32 Mity, 33 Agelast
Down: 1 Psis, 2 Enround, 3 Roll-about, 4 Ulotrichales, 5 Masterate, 6 Commensurate,
7 Cleg, 8 Strad, 9 Slyboots, 14 Swounding, 15 Tripitaka, 16 Qaimaqam, 20 Creoles,
24 Oculi, 26 Elmy, 28 Wadt
SUDOKU
WARM-UP
9
3
6
2
8
7
4 3 5
6 2
Hard
8
6
7
3
7
19
4
15
19
12
6
13
2
26
26
10
15
(including 1 and the number),
and they had only the factor 1
in common. The same applied
to the other cut blocks.
Curiously, the six digits of
the width, height and length
of the first cut block were also
all different.
19
14
21
10
4
15
22
3
13
26
19
13
13
22
22
9
6
7
22
19
13
19
22
3
13
17
19
13
4
15
13
26
17
6
17
16
1
4
16
4
26
18
4
3
Send your solution to: The Sunday
Times Teaser 2886, PO Box 29,
Colchester, Essex CO2 8GZ or email
puzzle.entries@sunday-times.co.uk.
The first two correct solutions opened
after next Saturday win £20.
BRIDGE
6
16
19
1
12
4
16
22
3
25
4
26
3
24
5
26
16
1
4
6
15
7
19
3
4
2
19
13
3
16
19
4
4
15
Neither vulnerable, Dealer West
5
16
11
16
/ AK864
. A8
vK2
, 10 8 4 3
25
11
13
19
22
6
26
6
15
23
22
13
3
7
/
.
v
,
17
13
15
6
Q2
Q642
A 10 8
AQ95
N
W
2
3
8
14
15
16
4
5
6
7
8
9
10
11
12
13
17
18
19
20
21
22
23
24
25
26
N
5
6
7
8
11
12
13
14
15
16
17
18
19
20
21
22
23
25
24
26
27
28
29
NAME
...................................................................................
ADDRESS ...................................................................................
...................................................................................
áWDWDWDkD]
àDpDWDW0W]
ßpDbDpDrD]
ÞDWDW)WDp]
ÝPDWDWDW1]
ÜDPDW0W)W]
ÛWDWDQ)W)]
ÚDWGW$WIW]
ÁÂÃÄÅÆÇÈ
Across
Down
1 Some food said to be
lacking taste (6)
4 Station providing drink
before the office (8)
10 Stars with European city
lawyer (9)
11 Anger about loud gun (5)
12 Important member of the
great and good welcoming
a foreigner (7)
14 Centre of learning’s
large book about Celtic’s
result (7)
15 This could be rude (4-6,4)
18 Comic’s cleaner story
when with vicar on the
radio (7,7)
22 Grates start to rust on
joints (7)
24 Tart sometimes looked
stewed (3-4)
25 Row about good golfer (5)
26 Will one snap when
gatecrashers do this? (9)
28 Stupid person starts to
deliver smart answers (8)
29 Something rude to do is
eating very fast (6)
Grandelius-Antipov, Stockholm
2018. How did Black break his
opponent’s defences?
1 Stylish clothing one
female’s to organise (8)
2 Matilda oddly ignored
assistant (3)
3 Small hole by the foreign
river for a duck (9)
5 A black sole circles a
shellfish (7)
6 Mourn headless heron (5)
7 Swimming Liffey and
Loire for a carefree
existence (4,2,5)
8 Cook’s key? (6)
9 Act stupidly and get
lost (4,2)
13 Doctor haggling about
gold and sulphur —
chemical inducing
euphoria (8,3)
16 Vessel that may dispatch a
pod (9)
17 Bile about fashionable
journalist initially hard to
take in (8)
19 At home drink I had is
flavourless (7)
20 Guard's request to turn in
vehicle (6)
21 Provide refreshment? It’s
right to fill this hole! (6)
23 Mostly big, old and slow (5)
27 Put gold round a blade (3)
/
.
v
,
None
Q64
None
AQ
1,
Pass
All Pass
North
East
1/
2NT
Pass
Pass
E
S
/
.
v
,
South
1NT
3NT
W
/
.
v
,
AQJ52
KJ2
K62
87
/
.
v
,
J 10
J7
None
J
None
K 10 9
None
K7
Declarer was clearly at the
top of his game and not
going to go wrong now. He
exited with the king of clubs,
S
North
18
CODEWORD
21
12
4
14
22
4
23
20
12
11
17
23
9
16
22
4
10
12
8
22
20
9
12
M I X E R
P
G M C M
AB A S HME N
F
G
I
A
F J ORD
D I
E
N O
B R E A DW I
O
S
S O R R OW
Z
K
E
E
OR E
P R E C
O R
E
T
MA Y F L Y
A
L AQU E
O U
S
T
I MP
U
N
Y
S T I L
N
NN E R
I
P
T ANGO
R
A
L
OC I T Y
U
V
P
S S E T
East
TETONOR
17 90
11
SPOT THE MOVE 1096
1…Qh3+! wins immediately: 2 Kxh3
Rh1 mate
Each row, column and 3x3 box must contain the digits 1 to 9.
The digits within each group of cells joined by dotted lines
must add up to the figure in the top-left-hand corner of each
group. Within each dotted-line group, a digit cannot be
repeated.
TEASER 2885
90cm
NEWS QUIZ
BRAIN TRAINER
POLYGON
KENKEN
30
CELL BLOCKS
22
19
42
13
10
9 19 5 14 6 x 7 6 7
72
42
17
4
171
120
23
70
23
4
2
10 x 12 5 18 5 x 14 2 21
2 2 5 5 6 7 8 9 9 10 12 14 15 18 19 21
SUDOKU
WARM-UP
KILLER SUDOKU
7
9
3
5
1
6
4
8
2
2
1
6
4
8
9
7
5
3
4
5
8
3
7
2
9
6
1
6
2
5
9
3
4
8
1
7
1
7
4
6
2
8
3
9
5
3
8
9
7
5
1
2
4
6
5
6
2
8
9
7
1
3
4
8
3
7
1
4
5
6
2
9
9
4
1
2
6
3
5
7
8
4
2
3
9
6
8
7
5
1
7
9
5
4
2
1
3
8
6
6
1
8
5
3
7
9
4
2
5
6
4
7
1
2
8
9
3
1
3
7
8
9
5
6
2
4
PRIZE 1198
9
8
2
3
4
6
1
7
5
3
7
9
6
5
4
2
1
8
2
5
6
1
8
9
4
3
7
8
4
1
2
7
3
5
6
9
3
2
4
2
2
8
8 x 9 2 x 21 8 9 9 x 19
UN Y I S T KB F RQH E
P G J D Z L V OMX CWA
11
TODAY’S SOLUTIONS
Pass
Pass
All Pass
2 15 5 x 18 2 x 15 10 12
28
T
H
E
P
E
N
N
Y
D
R
EMPO
A P
S T EP
C E
CHED
Winners Crossword 4778 M Beaton, Corby Glen, Lincolnshire, C Macallan, East
Bergholt, Suffolk, O Richards, Bristol, P Wild, Oldham, Greater Manchester
Mephisto 2991 P Whitehead, Sherston, Wiltshire, T Ashby, Hayes, Greater London,
C Clarke, Boughspring, Gloucestershire, A Deas, Slaley, Northumberland, S Edouard,
Bexhill-on-Sea, East Sussex Teaser 2883 R Green, Llangynidr, Powys, E Marshall,
Harpenden, Hertfordshire Chess 1094 V Muller, Chelmsford, Essex Sudoku
December 24 D Jackson, London SW13
South
Pass
2.
4/
7
8
K 10 9 3
A5
743
A543
Plan the play on the king
of clubs lead.
Duck the club, win the
continuation, ruff a club
high, trump to dummy,
ruff a club high and draw
the last trump. Now play
the ace, king and jack of
hearts, discarding a
diamond from dummy
and endplaying North.
LAST WEEK’S SOLUTIONS
6
/
.
v
,
E
74
10 9 3
J 10 9 5
J 10 6 2
1.
Pass
Pass
D I S
L
U LG
S
TUR
I
S TU
E
ADE
Winner 1688: Lynne Davis, London NW7
Wassail: Nana’s keen about this festive tipple!
For a full report, visit thesundaytimes.co.uk/cluewriting
N
/
.
v
,
RT I F ACT NU
R L H S P
H AMOME N T B
C O A R E
AKED PREMA
I
S T
ENANT L ESS
O G E E S
A T E HARDHE
O S N
N
ARDEN I NG T
I
V N R
I
DOR E GOOS E
U R S W N
ES T ED SNA T
Readers are invited to compose a clue for the word above.
Clues must be original, cryptic, and similar to those in the
Sunday Times crossword. Send your entry by email to
puzzle.entries@sunday-times.co.uk. The best entry selected
after next Saturday wins £20.
86
Q8764
AQ8
KQ9
W
KILLER SUDOKU MODERATE
17
All the digits 1 to 6 must appear in every row and column. In
each thick-line “block”, the target number in the top left-hand
corner is calculated from the digits in all the cells in the block,
using the operation indicated by the symbol.
/
.
v
,
A
G
A
I
N
S
T
T
H
E
G
R
A
I
N
CLUE WRITING CONTEST 1691: MACROPOD
Last week’s problem
1/
2NT
N
The first correct solution opened after
next Saturday wins a 10-carat rolled
gold Cross Century II fountain pen worth
£230. The next three win £120 10-carat
rolled gold Cross Century Classic ball
pens. All have lifetime guarantees. Post
solutions to The Sunday Times
Crossword 4781, PO Box 29, Colchester,
Essex CO2 8GZ, or email
puzzle.entries@sunday-times.co.uk
forcing West to win, cash
the queen of clubs and give
declarer a third heart trick
at the end.
West
/ 864
. 8
v None
, 10
/
.
v
,
The Daily Bulletin journalist
was critical of North’s raise
KENKEN
to 2NT. Maybe it is a little
pushy, non-vulnerable, but it
is a matter of style and OK
with me, specially if partner
plays the cards as if he can
see all 52.
West led a low heart and
Klukowski won with
dummy’s ace and played
the king of diamonds. When
that held he cashed the ace
and king of spades before
playing a second diamond.
West won his ace and
continued the suit. Declarer
now ran his diamonds and
this was the position:
J 10 5 3
J73
965
J62
97
K 10 9 5
QJ743
K7
Solution to 4780
To enter, complete the Hard or Very Hard puzzle and call 0901 292 5275 (ROI 1516
303 500), leaving your answer (the numbers in the three shaded squares) and
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SP: Spoke, 0333 202 3390 (Mon-Fri 9am-5.30pm)
When the Poles were North/
South the bidding went:
West
I
E
S
/
.
v
,
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
1
Sally Brock
Poland are one of the top
open bridge teams. Many of
their players have been
around a long time, but
Michal Klukowski is only 21
years old, and already a true
superstar. Watch him at work
on today’s deal from an
international tournament.
I
3
4
10
VERY HARD — PRIZE 1201
In ascending order, what
were the dimensions, in
inches, of the shortest block?
N
23
3
5
CODEWORD
20
2
Jeff Pearce
9
4 3
3
5 1 4
7
6
9
4
5
When cool, it was cut, parallel
to this face, into blocks of the
same width and height, but
unequal length. For the first cut
block, its width, height and
length, in inches, were
different two-figure whole
numbers with only four factors
1
1
9
1
2
Stephen Hogg
Metal arithmetic
The area of one face of a hot,
steel cuboid block was a singlefigure whole number of
square feet; and it was within
one per cent of this after
cooling and contraction.
16
and long-lasting. The lead in
development and open files
for his rooks make his
position easier to handle.
11…Na6 12 0-0 Bc5 13 Rab1
Bxd4 14 Nxd4 0-0-0 15 Nb3
15 Bxc6! would have been a
logical conclusion of White’s
concept: 15…bxc6 16 Nxc6
Rd7 17 N6e5 and the attack is
irresistible. 15…Rd7 16 Nba5
Rhd8 17 Rb2 Rc7 18 Rfb1
Nc5 19 Ne5 Ng4 20 Naxc6
White misses another big
opportunity. 20 Nexc6! was
the correct capture. After
20…bxc6 21 Bxc6 the black
king is in mortal danger. 20…
Nxe5 21 Nxe5 f6 22 Nc4 e5
23 Rc1 b6 Now Black
consolidates and chances are
level. 24 Na3 Kb8 25 Nb5
Rcc8 26 Rb4? A sad end to
an intriguing game. 26…
Nxd3! White resigns Black
wins after 27 Rxc8+ Rxc8 28
exd3 Rc1+ 29 Bf1 Bh3.
Spot the Move 1097:
Black
to play.
________W
Send your solution (first move only), to Sunday Times Spot the Move 1097,
The Sunday Times, PO Box 29, Colchester, Essex CO2 8GZ, or email to
puzzle.entries@sunday-times.co.uk. The first correct answer drawn after next
Saturday wins £20.
TEASER 2886
In the grid, each number
represents a letter of the
alphabet — all 26 letters are
used. Use the initial clues in
the code table to work out the
rest of the code.
STUCK? To get four random
extra letter clues, call 0901
322 5309 (ROI 1514 415128) or
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only). Calls cost 75p (ROI 75c)
plus your telephone
company’s network access
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charge. SP: Spoke, 0333 202
3390 (Mon-Fri 9am-5.30pm).
Vladimir Kramnik once said
that he trawls through 10,000
games each month in order to
avoid missing any new ideas
or trends. This may seem
excessive, but it is a glimpse
of how the top players stay
ahead of the curve.
While following the recent
Rilton Cup in Stockholm,
where I claimed my
grandmaster title 11 years ago,
I found myself thinking about
how chess has evolved over
the past decade. Today’s
game is one such example of
a modern trend: the
positional pawn sacrifice.
White: Tiger Hillarp Persson
Black: Kirill Alekseenko
Rilton Cup, Stockholm
2017-18
Reti Opening
1 Nf3 Nf6 2 g3 d5 3 Bg2 c6
4 c4 Bf5 This move,
condemned in the 2000s, is
back in fashion due to fresh
analysis. 5 Qb3 5 cxd5 cxd5
6 Qb3 was formerly
considered favourable for
White until the discovery of
6…Nc6!, when Black obtains a
strong initiative. 5…Qb6 6 d3
e6 7 Be3 dxc4 8 Qxc4! The
aforementioned positional
sacrifice. 8…Qxb2 9 Bd4
Qb4+ 10 Nbd2 Qxc4 11 Nxc4
It appears Black should be
happy: he is a pawn up and
has exchanged queens.
However, White’s
compensation is powerful
HARD — PRIZE 1200
1
Each row, column and 3x3
box must contain the digits 1
to 9. Winners will receive a
Collins English Dictionary &
Thesaurus.
1 Predator about to get into
post of authority (6, two
words)
2 Potted perennial with
another one outdoors
pour nos voisins (10, three
words)
3 Rude about sure thing,
not quite fitting (7)
4 Book dropped old prayer
containing humourless
lyric (5)
5 Pert flirt capturing
Gussie’s heart (5)
6 Free companion over a
note set alight (7)
7 Bampot rejecting number,
heaven knows how
many! (5)
8 Top up Her Grace as
needs be (8)
9 Street supported by
vulgar Cockney like
Hollywood Boulevard? (6)
12 I sigh embroiled with large
hostess (10, two words)
15 Plain deck such as DIYer
gets (8)
18 Biblical beast in terms of
Apocrypha that’s
inexorable (7)
20 Clearly grease supporter
of black economy? (7, two
words)
21 Influence the process of
old-fashioned graft? (6)
23 High belter! (6)
25 Do what! Mountain of
rubbish going up river (5)
26 Market place’s first flower
food (5)
27 Capuchin-esque? Very (5)
eerie, emir, emit, empire, epimer, eremite, item, kepi, kite, merit, métier, mike,
mire, mirk, mite, miter, mitre, peerie, peri, permit, pier, pike, piker, preemie, prim,
prime, remit, retie, rime, ripe, rite, tier, tike, time, timekeeper, timer, tire, trike,
trim, trip, tripe
3
1 Morning service put
back after Saint hushed
prayer (6)
6 Reports of, eg, cricket
children: as objective we’ll
get in run after run (6)
10 Manners: answer must
be first found in olive
branch (10)
11 Consequences? A school
suggests sacking head (8)
13 Obscure college gaudy (5)
14 Drawing conclusion to the
fore, parents stifle (7)
16 Times mate quietly
dropped in a crate? (5,
two words)
17 Topper in Edinburgh?
Local channel about
Henry opens list (7, two
words)
19 Somewhat uppish or
symbolic of the
Badminton racket? (5)
21 Playing passionate in need
of wife’s embrace (5)
22 Gourmet’s outlet? Great
stocking hot relish (7)
24 In short it’ll cut overseas
pain of limey (5)
28 Kelly, say, married dad’s
mate in the afternoon (7,
two words)
29 Old border with cracking
wood germander, eg (5)
30 Unfaithful wife finds
loose-ish part of support
structure (8, two words)
31 So Chile can supply desert
insects (10)
32 Suffer no more pain in
Bristol presumably (6, two
words)
33 Whimper popping one
large tablet (6)
CROSSWORD 4781
David Howell
Easy 30; Medium 87; Harder 120
2
CHESS
Down
1 Golf, according to a survey 2 Chinese businessmen paid “up to
£12,000” each 3 Japanese astronaut Norishige Kanai apologised for the
mistake while measuring himself in space 4 Have all played Captain Birds
Eye 5 First game that women were allowed to attend 6 Bath 7 Her
husband, supposedly working in the Middle East, with his second wife —
and now jailed for bigamy 8 43 hours 9 Morrisons, Bracknell (which said it
was a mistake) 10 Hug, according to a Virgin Money survey
1
Across
Paul McKenna
2
PRIZE 1199
4
2
18
The Sunday Times January 14, 2018
MONEY
FAME AND FORTUNE
JUDGE JULES
My career?
I’ve given it
a banging
remix
TOM STOCKILL / EDD WESTMACOTT
He was one of the first superstar DJs and
still plays around the world — but by day,
he works as a lawyer, he tells Sarah Ewing
J
udge Jules — real name Julius
O’Riordan — was one of the
first DJs to become a global star.
He was studying law at the
London School of Economics
(LSE) when he launched his
music career, which is how he
got his moniker. He started out
at the London radio station Kiss
and moved to BBC Radio 1 in
1997, where he stayed until 2012. During
that period, he launched weekly club
nights in Ibiza, stadium tours and
branded dance compilation albums.
Five years ago he qualified as a lawyer
and he now practises entertainment law
at Sheridans during the week, while
DJing at weekends. Now 51, he is married
to Amanda, a singer, and they have two
children: Jake, 18, and Phoebe, 13. The
family lives in north London.
all take cards. I wish that was the case
across the board with black cabs.
How much money do you have
in your wallet?
Frequently I don’t have any cash on me,
just cards. You could say that’s because
I’ve got two teenagers. Recently, I’ve
been to the US, the Middle East and
Australia for work and I never take
overseas currency. If I need any foreign
cash, I’ll get it from a cash dispenser
while I’m there. The rate charged by
your credit card is going to be better
than that at a currency place.
While I may not like all of Uber’s
business practices, I love the fact they
As I got into my
thirties and
forties, I was
mindful that my
job has a shelf life.
That’s why I
retrained
What credit cards do you use?
A BA Amex because of the air miles and
free flights — but have you ever tried to
redeem them?
Are you a saver or a spender?
I’m pretty sensible. I had a relatively
slow start: it took a good decade for me
to achieve worldwide success as a DJ, so
I was more prudent with my earnings.
With my legal background from my LSE
degree in the 1980s, I got involved in
property and pensions early on in my
Two turntables and a law degree: Julius O’Riordan, 51, says his music career as Judge Jules has made him a better entertainment lawyer
career. I was probably one of the first
international DJs to make a lot of money
— enough to have slightly parasitic
financial people around me.
As I got into my thirties and forties,
I was mindful that as a DJ, I’m involved
in a job that is very youth-oriented and
has a shelf life. That’s why I retrained
to become a lawyer five years ago and
now lead this dual existence.
Did you ever worry about how you
were going to make ends meet?
Thankfully, there have been no
worrying lean spells; when I was getting
established as a DJ, I was lucky because
I could have lived at home if I needed to.
Negotiating fees directly with clubs is
tricky. Within five years of me starting,
dedicated DJ booking agencies began
cropping up and I signed with one. My
fees went up and a lot of the stress went
away because I wasn’t having to play
good cop/bad cop all by myself.
Do you own a property?
Yes, our family home in Highgate that
we’ve had for 14 years, plus a house in
Ibiza and a house in Mallorca, which is
a great all-year-round destination.
When I bought in Ibiza, prices were
Win a holiday
to Tuscany
You could be in with a chance to win an incredible trip to Castello di
Potentino, a strikingly beautiful medieval castle in southern Tuscany.
Spend five days enjoying beautiful food, learn about wine making and
enjoy hikes in the olive groves.
To enter visit thesundaytimes.co.uk/tuscany
very cheap and since then it’s become
one of the most expensive places in
Spain, so I’ve done well on it. The island
now appeals to a slightly different
demographic. It’s more of a multigenerational destination, which has
fuelled property prices.
What’s the best lesson you learnt from
your parents about money and work?
My mother, Jane, died when I was 18.
She was a teacher and my dad, Shaun,
was a television director and actor.
Mum’s death was a big shock, but it
made me determined to succeed. I
realised you never know how long
you’re going to be around and you
have to work as hard as possible while
you can.
Dad knew what the life of a freelancer
was like, so he was forgiving of me
wanting to do my music, even though
I was pursuing a law degree.
Being a DJ has helped me to be a
better entertainment lawyer — most
importantly, it has made me realise
you’re only as good as your last gig and
have to develop your own client list
and scout for work.
What was your first job?
After I left school, I went to LSE to study
law. It seemed like a sensible option.
This gave me my DJ name and, while
studying, I was putting on gigs in north
London pubs.
What has been your most
lucrative work?
My best paid gig was New Year’s Eve at
the millennium with a bunch of other
DJs in a big-top tent in Sheffield’s Don
Valley stadium. It was a nightmare for
many reasons. There was no established
price point for that New Year’s Eve, so
tickets were vastly overpriced for events
around the globe, including mine.
Thankfully, though, our show sold out.
Then a drunk reveller climbed atop the
stage rigging, stopping the music and
threatening to shut the night down
several hours before midnight. Police
were called. I tried to coax him down
over the mic, only to be told over the
loudspeakers by the police to shut up.
What has been the best business
decision of your career?
Deciding to promote my weekly Ibiza
And what was your worst?
Opening Kasbah, my restaurant in Ibiza
in 2004 — without a doubt. The chef
Rick Stein is my uncle and I grew up
watching him make a success with his
shows, books and restaurants. I wanted
to give myself a reason to be in Ibiza
beyond the typical May to September
clubbing season and I was flirting with
the idea of living in Ibiza year-round. A
lot of Kasbah’s success depended on me
being there and being seen. It became a
real bind, so I sold my share in it.
Do you invest in shares?
No, I prefer to dabble in property,
although I have invested in start-ups in
the past and I’m not averse to doing it
again. I rent out my properties in Ibiza
and Mallorca. I’m lucky I’m fluent in
Spanish now, plus with my legal
expertise, it’s easy for me to negotiate
contracts or with builders.
What’s better for retirement —
property or pension?
Property without a doubt. Who says
otherwise?
What are your money weaknesses?
I like my cars. My current one is a
Mercedes S-class convertible; thankfully
the kids can’t drive it yet. My son, Jake,
is learning so it’s not far off. His
insurance rates could be astronomical,
but if it gets one of those black boxes
it’ll bring the cost right down. It’s peace
of mind, too, knowing he’d have to be
more careful.
Is there anything that worries
you about the financial world?
There are so many unknowns regarding
the impact of Brexit. Like a lot of
Londoners, I think it’s a stupid decision
because it puts a lot at risk, but
thankfully the capital’s economy is
pretty robust; it’s the rest of the country
that will be hit hardest.
If you could change something
about the business or financial world,
what would it be?
I’d make car purchases tax-exempt.
Do you support any charities?
I’ve been involved with the mental
health charity Calm (thecalmzone.net)
which highlights the problem of
depression in young men, the
homelessness charity Centrepoint
(centrepoint.org.uk), and Cancer
Research UK (cancerresearchuk.org).
What would you do if you won
the lottery jackpot?
I don’t think I’d want to win the jackpot
because I think that’d take away my
hunger and drive.
What is the most important lesson
you’ve learnt about money?
That if you take care of your money, it
will take care of you. I know I’m getting
really middle-aged when I actually read
what my financial advisers send me.
Judge Jules at Creamfields in 2011
Judge Jules is playing at the Ibiza Legends
event at Butlin’s in Bognor Regis on
January 19, bigweekends.com
Everyone tells us to switch, but
it’s the insurers that must change
PETER CONRADI
ADI
Competition closes 18 February 2018 23:59 pm. Open to residents of the United Kingdom and Republic of Ireland aged 18 or over only, except staff of the Promoter, its affiliated companies or promotional partners or their
families. 1 entry per person. Winners will be selected at random from all correct entries. No cash alternative and prize is non-transferable. Your information will only be used to administer this Promotion in accordance with
our privacy policy. Promoter is Times Newspapers Limited. Full T&Cs apply thesundaytimes.co.uk/tuscany
club events, Judgement Sundays, which
I did for 16 years. Not only were they
hugely successful, but they gave me a
secondary income stream beyond
my weekly Radio 1 show. DJs typically
aren’t like bands that can make a fortune
touring; they tend to have more one-off
gigs, so a club residency is key.
Luckily, I had a good business team
who handled all the marketing and
promotion. That was one of my biggest
lessons — knowing when to delegate to
the right people. My name, Judge Jules,
became a well-known brand from
compilations to clothing and even a
restaurant, some more successful
than others.
I’m not sure what made Stephen
Bleach, editor of this newspaper’s
Travel section, angrier: the fact that
Halifax, with which he had insured his
home for the past 15 years, tried to
bump up his policy by £155 when
renewal time came around — or the
ease with which it offered to knock £132
off its quote when his wife, Jaqui,
phoned the call centre.
What made his blood really boil,
though, was the discovery that, even
with the reduction, he could still
obtain the same cover for less than half
the price from — surprise, surprise —
Halifax, provided he approached it as a
new customer.
Bleach’s experience, which he
recounts in Money’s cover story this
week — and the company’s pitiful
attempts to justify its pricing policies —
should act as a warning to anyone who
simply renews their insurance when
the quote comes in.
It’s not just a matter of home cover,
though. As readers of this section will
have gathered, car insurers, energy
suppliers and broadband providers get
up to similar tricks. And don’t get me
started on the banks.
The reason lies in the underlying
business model, according to
which providers of these services
concentrate their efforts on wooing
new customers away from rivals with
introductory offers and teaser rates,
while milking their existing clients for
as much as they can — and hoping they
won’t notice.
The solution — in what has become
something of a financial mantra of
our age — is to switch supplier. Forget
loyalty: the only way for competition to
flourish, we are told, is for everyone to
be forever changing their supplier.
The government urges us to keep on
the move, as do the many comparison
websites that have sprung up over
the past few years, creating a
multibillion-pound industry where
none existed before.
At the risk of being accused of
financial heresy, wouldn’t it be nice if
we didn’t have to do this? What if the
companies themselves switched — to a
different model in which they rewarded
loyalty by saving their best deals for
existing customers?
It’s never going to happen, of course,
but imagine you could stay with your
existing supplier without feeling you
have to check constantly you are not
being ripped off. Dream on.
Your inflexible friends
Since yesterday, thanks to new EU
rules, it has been illegal for companies
to charge people extra when they pay
by credit or debit card.
The results so far have been mixed.
While most organisations have
complied, others have said they will
stop accepting credit card payments —
among them HM Revenue & Customs,
much to the fury of those planning to
put their tax bills on plastic this month.
The undoubted winners are
shareholders in the takeaway app
company Just Eat, which, as revealed
in Money last month, is abolishing the
50p levy it used to charge people who
paid with cards — and replacing it with
a 50p levy on everyone, including cash
payers. The result, say analysts at
Barclays, is likely to be a £15m boost to
the company’s annual revenues.
This, one presumes, was not what
the architects of the measure in
Brussels had in mind. If you hear of any
other companies following Just Eat’s
example, let us know.
@peter_conradi
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