City Veteran Backs Rothschild In Mining Row

By Mark Kleinman, City Editor

One of the City's best-known fund managers is poised to back the billionaire financier Nat Rothschild in his battle to wrest control of a London-listed coal mining group.

I understand that John Duffield, a City veteran whose exploits at Jupiter and New Star made him a regular and colourful fixture on the financial pages of the national media, has decided to support Mr Rothschild's effort to unseat 12 of the 14 board directors of Bumi plc.

Mr Duffield's latest venture, Brompton Asset Management, owns approximately 1 per cent of Bumi. Earlier this week, Schroders, which owns about 3.5 per cent, and Sofaer Capital, another major investor in the miner, came out in support of the controversial financier.

The battle for control of Bumi promises to be one of the year's most fractious shareholder battles. Winning Mr Duffield's backing will be viewed in the City as a significant vote of confidence in Mr Rothschild's campaign to wrest control of Bumi, for which he has proposed a slate of new directors.

Mr Duffield has maintained a comparatively low profile since establishing Brompton Asset Management in 2010. He made his name, and fortune, at Jupiter, notching up a £175m fortune from its sale to Commerzbank in 1995. He departed in acrimony, though, and in 2000 set up New Star, which enjoyed early success and floated in 2005. It was later hit by the slump in commercial property, and was sold for a fraction of its peak value.

Mr Rothschild helped to create Bumi by raising funds for a vehicle called Vallar more than two years ago. Listed on the London Stock Exchange, Vallar acquired a range of assets in Indonesia that took Mr Rothschild into business with the south-east Asian country's powerful Bakrie family.

Tensions emerged shortly after the deal's consummation, however, and Mr Rothschild quit the board late last year, citing a breakdown in the relationship.

Among the directors he is trying to oust is Sir Julian Horn-Smith, a grandee of corporate boardrooms. In a statement earlier this week, Sir Julian accused Mr Rothschild of being "highly confrontational".

"As a board we have been working extremely hard to solve the various highly complicated and challenging governance, operational and legal issues at the Company and to maximise value for shareholders.  All of these issues essentially derive from the original deal that Nat Rothschild was instrumental in putting together.

"The Company is moving ahead with its investigation into evidence of financial irregularities at Bumi Resources and Berau while overseeing a focus on improved operational and financial management, as evidenced by this morning's trading update.  The Board is also progressing its proposal to unwind the relationship with Bumi Resources and the Bakrie Group in a transaction that will result in an operating group focused on Berau and with significant cash resources.

"Nat Rothschild's time as a director of Bumi was characterised by taking highly confrontational positions that proved counterproductive to addressing the Company's issues and we cannot see how re-instating him to the Board will be beneficial to shareholders."

Mr Duffield could not be reached for comment. A spokesman for Mr Rothschild declined to comment.

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Exclusive: Supermarket Row Over Festive Sales

By Mark Kleinman, City Editor

Tensions between two of Britain's biggest supermarket chains have burst into the open after an executive at Sainsbury's urged City analysts to question market-leading Christmas sale figures produced by rival Tesco.

In an email sent to food retail analysts, a copy of which has been sent to Sky News, a senior member of Sainsbury's investor relations team accused Tesco of being "a bit disingenuous" when it reported UK like-for-like sales growth for the six weeks to January 5 of 1.8%.

The allegation referred to the fact that Tesco's headline sales number was based on an accounting rule that allows it to include sales where customers have used Clubcard vouchers.

"I thought it worth pointing out that the UK [like-for-like] number of 1.8pc that Tesco are reporting this morning is non-IFRIC compliant," the email said. "This is a bit disingenuous, they should be using the 1.4pc number in their headline. All of our reported numbers are IFRIC compliant, as they have to be under IAS18!"

Sainsbury's on Wednesday reported like-for-like sales growth over a longer period of 0.9 per cent. Sources said that if it had used the same accounting benchmark as Tesco and included sales using points under its Nectar loyalty scheme, its growth figure would have been 1.4%.

Tesco insiders said that Sainsbury's was attempting to "smear" its Christmas trading performance.

Philip Clarke, Tesco chief executive, declined to comment on the performance of its competitors, saying that he was focused on "building a better Tesco".

The row underlines the heightened sensitivity within Britain's biggest food retailers about their performance in a lacklustre UK economy.

It also highlights the difficulty of relying on a measurement such as like-for-like sales, which gives little clue about the profitability of a business during a given period. The numbers announced by Tesco covered 42 trading days, while Sainsbury's statement covered 98 days, further pointing to the danger of relying on comparisons which can be misleading.

The respective Christmas trading statements of Sainsbury's and Tesco contained few surprises. Analysts had expected Tesco to rebound from a dire festive period in 2011-12, when it had to issue its first profit warning for decades, while Sainsbury's has seen like-for-like sales grow for 32 consecutive quarters under the leadership of Justin King, its chief executive.

So far, Marks & Spencer, which saw clothing sales fall by nearly 4% over Christmas, and Wm Morrison, the supermarket group, have been the biggest losers from a tough Christmas. At the other end of the spectrum, Next and John Lewis Partnership registered a performance that was well-received by investors.

It is far from unusual for companies to raise questions about the performance of their competitors with City analysts, although it is less common for those suggestions to find their way into the public domain.

Tesco and Sainsbury's both declined to comment further.

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HMV Sale: Price Cuts Ahead Of Bank Deadline

HMV is holding a massive sale from Saturday after admitting it could breach crucial banking conditions at the end of January.

The 25% Blue Cross Sale on CD's, DVD's, Blu-rays, box sets and games across 230 stores and online comes just weeks after the traditional Boxing Day sale.

Last month the company admitted it is likely to breach its banking covenant - throwing the entertainment retailer's financial future into doubt.

A failure to fulfil lending requirements often signals a company is close to administration, retail analyst Robert Clark told Sky News.

"A lot becomes clear after Christmas - the sale suggests that they didn't have a good one and are trying to reel in as much cash to tie things over," he said.

"I'm not sure how much time they've got. I don't think they'll be able to sway their bankers. Financial institutions are less likely to show patience in this climate."

But HMV's chief executive Trevor Moore said in December that closing more stores or placing the business into administration was not "part of our plan" and that the firm was in "constructive discussions" with banks about its performance.

HMV spokesman Gennaro Castaldo told Sky News the Blue Cross Sale was not unusual for this time of year.

 "Normally we'd look to run a multi-buy campaign of some kind at this time of year, but we thought we'd freshen our promotional mix up a bit and try something a bit different that will hopefully stand out from all the other sale offers on the high street right now," he said.

The retailer has taken a huge hit in the face of competition from online retailers like Amazon and Play.

But analysts argue that HMV has failed to reinvent itself in the last 15 years and invest in its stores to keep up with the modern technology revolution.

In December, despite numerous promotions,it announced total sales had fallen 13.5%, while like-for-like sales were down 10.2% in the six months to October 27.

HMV reported a loss before tax of £37.3m - an improvement on the £48.1m loss over the same period the year before. But net debt at the 91 year-old company increased from £163.7m to £176.1m.

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Fuel Costs: OAP Bills 'Doubled Since 2005'

Older people have seen their energy bills more than double since 2005, research from Saga has found.

The average annual spend on fuel bills for the over-65s soared to £1,355.90 last year, amounting to more than twice as much as the average of £668.98 in 2005, the group's analysis found.

Across the UK, some 12.9 million pensioners spent an estimated £17.4bn on electricity and fuel bills in 2012, Saga said.

Saga said that its recent research among the over-50s showed that almost three in five (58%) are worried about heating costs this winter and more than a third (35%) are already struggling with heating bills.

Its figures do not take into account the effects of a recent string of price hikes announced by energy companies, pushing costs up further this winter.

Research by MoneySupermarket.com found earlier this month that energy customers on standard tariffs could be facing average quarterly bills of £530 in the coming months. Consumers typically use around 40% of their annual energy consumption during winter.

Saga has argued that older people are disproportionately affected by increases to living costs, as they are often trying to live off a fixed income or savings.

Ros Altmann, director-general of Saga, said that its research had found that 29% of older people are raiding their savings every month to make ends meet.

Saga: rising energy costs hit older people particularly hard

She said: "We are still to feel the full effects of the latest price rises so energy costs are likely to put even more of a financial strain on households in 2013.

"While incomes have increased in the last seven years, they have not kept pace with the rate that energy and fuel costs have risen, meaning that people are spending more of their income on fuel.

"This is especially true for older people who are often on lump or fixed incomes or whose savings income has fallen."

The findings come after Prudential said this week that people planning to retire this year expect to be living off the lowest average incomes recorded in six years.

This year's retirees expect to have a typical annual income of £15,300, making them around £3,400 a year worse off than workers who retired in 2008, Prudential said.

Financial information website Moneyfacts also reported this week that annuity rates, which set the size of someone's retirement income, plunged over 2012 for men at their steepest rate in 14 years.

However, retirees were given some welcome news on Thursday, when the UK's top statistician announced that a key measure of inflation which is often linked to retirement incomes should remain unchanged.

Many annuities are linked to RPI (Retail Prices Index) and even a small change could have knocked thousands of pounds off someone's income over the course of their retirement, pensions experts had warned.

Saga used analysis of official figures for its research.

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Japan Unveils Huge Economic Stimulus Package

Japan Increases Defence Spending

Updated: 10:54am UK, Friday 11 January 2013

By Mark Stone, China Correspondent

Japan has announced plans to increase its defence budget for the first time in a decade as tensions with China continue to increase.

As part of a broad stimulus package announced by Shinzo Abe, Japan's new prime minister, the military budget will be boosted by more than 100bn yen (£695m) from the 4.6trn yen (£30bn) budget in 2012.

A defence ministry spokesman said the funds were needed "to prepare for the changing security environment surrounding Japan".

Tensions between Tokyo and Beijing are at their highest in decades over a small group of islands in the East China Sea.

Both countries claim the five islands and three reefs which are located due west of Okinawa and to the northeast of Taiwan.

American and British diplomatic sources have told Sky News they are very concerned about the tensions.

One source said an accidental clash between the two countries' militaries which are increasingly active in the region could spark conflict.

Known as the Senkaku Islands in Japan and as the Diaoyu Islands by China, the uninhabited outcrops were 'officially' bought by the government of Japan from their private Japanese owner last year.

It was an attempt by the Japanese government to prevent the nationalist and right-wing governor of Tokyo, Shintaro Ishihara, from buying them himself - a move which would have sparked even greater tensions.

However, the government purchase caused huge anger in China with protests at Japanese institutions across the country. An unofficial but widespread boycott of Japanese goods in China hit an already struggling Japanese economy.

The governments of both countries have been accused of stoking nationalism to ramp up tensions and deflect from their own domestic political struggles.

An increased military presence in the East China Sea, a vital international shipping lane, is also causing some concern in the region and beyond.

On Thursday, the Japanese media said Tokyo had scrambled fighter jets in response to a sighting of Chinese 'military' planes near the disputed islands.

The Chinese planes were not within Japanese airspace but were within a Japanese designated 'air defence identification zone'.

It is the second time in two months that Japan has scrambled jets in response to Chinese aerial activity.

In December, Japanese F-15 fighter jets were dispatched from an air base in Okinawa after a light-aircraft belonging to China's Maritime Surveillance Organisation was spotted over the islands.

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Honda Job Losses: 800 Swindon Staff To Go

Honda plans to cut 800 jobs at its Swindon plant because of "low demand" for its vehicles across Europe.

The surprise move - which marks the first time the Japanese carmaker has made UK redundancies - comes after the company hired 500 workers last year and invested £267m in its Swindon factory.

But Honda, which has 3,500 UK employees, said the expected increase in demand had not happened, with sales of cars in Europe, including Spain, Italy and Greece, falling by a million over the past year.

The company's European vice president Ken Keir told Sky News it was a "tough day" for its workers in Swindon.

"While the UK market is stable and there's opportunity for growth, we don't see the same opportunity in mainland Europe for growth," he said.

But Mr Keir insisted the UK "still is" the cornerstone of Honda's European operation.

"Quite categorically, we have a future at Swindon and producing cars in Europe for Europe, regardless of this decision," he said.

"We've got to realign our business with the opportunity in Europe."

The company said it would hold discussions with workers in Swindon and would seek to avoid compulsory redundancies.

Last year, a third of the 150,000 cars built at the Swindon factory were sold in the UK, with the rest exported to 26 countries, mainly in Europe.

The Jazz, Civic and CR-V Honda models are built at the plant, which has an annual capacity of 250,000.

A Department for Business, Innovation and Skills spokesman said: "This will be a bitter blow to the workforce and the local area and we will be working with local partners to minimise the impact of the job losses."

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Cameron Issues Warning On Corporation Tax

By Mark Kleinman, City Editor

David Cameron has warned the bosses of some of Britain's biggest companies to think "long and hard" about their tax contributions to the Treasury amid the ongoing row about corporation tax avoidance.

I understand that at a breakfast meeting at 10 Downing Street, the Prime Minister said that the "fair payment" of tax was an issue that would remain high on the political and public agenda.

He hinted that further Government-led initiatives on the subject were being contemplated as part of a push for collective international action during Britain's presidency of the G8 group of wealthy nations later this year.

A Downing Street source said that Mr Cameron's comments on corporation tax were made in response to a question from one of the attendees.

"The Prime Minister was clear that corporation tax is being cut to make the UK even more competitive, and with such a competitive rate, companies need to make sure that they pay it," said the source.

Some of the executives at the talks have complained privately that they are operating on an unlevel playing field following the emergence of ultra-low UK corporation taxes paid by online retailers such as Amazon.

Among those who attended Friday morning's meeting were Marc Bolland, chief executive of Marks & Spencer; Ian Cheshire, chief executive of Kingfisher; Andy Clarke, Asda chief executive; Mike Coupe, J Sainsbury commercial director; Fiona Kendrick, chief executive of Nestle UK and Ireland; Paul Polman, Unilever chief executive; Sir Martin Sorrell, chief executive of WPP Group; and Martyn Wates, deputy chief executive of the Co-operative Group.

Vince Cable, the Business Secretary, and Michael Fallon, the Business Minister, also attended the meeting.

Sources familiar with the discussion said it covered a broad array of subjects, including Britain's membership of the European Union; the Funding for Lending Scheme launched last year to stimulate bank lending; the digital single market in Europe; and the importance of apprenticeships.

"On Europe he was clear that he wants Britain to be part of it but said there is a need for clarity now," said one of the people who was at the meeting.

A Downing Street spokesman said the meeting was private and declined to provide details of the discussion.

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Dreamliner Safety And Design Review Ordered

America's aviation watchdog has ordered a comprehensive review of the Boeing 787 Dreamliner after a spate of incidents involving the aircraft.

The head of the Federal Aviation Administration (FAA) said he is confident the Boeing 787 is safe, but he remains concerned about recent events, including a fire and a fuel leak earlier this week.

Michael Huerta, the FAA administrator, said there is nothing in the data the agency has seen to suggest the plane is not safe.

The watchdog announced it is undertaking a comprehensive review of the 787 to include "critical systems, including design, manufacture and assembly".

The manufacturer responded to fears over the plane and said: "Boeing is confident in the design and performance of the 787. It is a safe and efficient airplane that brings tremendous value to our customers and an improved flying experience to their passengers.

"The airplane has logged 50,000 hours of flight and there are more than 150 flights occurring daily."

Boston fire crews attend the JAL plane after it filled with smoke

The move by the US aviation authority was prompted after a fifth Dreamliner fault this week was reported on Friday morning.

Oil was discovered leaking from the left engine of a Boeing 787 Dreamliner flight operated by All Nippon Airways (ANA).

An ANA spokeswoman said the leak was found after the domestic flight landed safely at Miyazaki airport in southern Japan.

It came on the same day another Japanese 787 suffered a cracked cockpit window while in flight on a domestic route.

ANA said crew noticed a spider web-like crack in a window in front of the pilot's seat about 70 minutes into Friday's flight, which was close to its destination.

The Dreamliner, the world's first carbon-composite airliner, which has a list price of $207m (£128m), has been beset by problems this week.

The plane was designed to use power plants made by General Electric and Britain's Rolls-Royce.

On Wednesday, a domestic flight was halted by ANA because brake parts to the rear left undercarriage needed replacing, a spokesman at Yamaguchi Ube Airport said.

An investigator in the US examines a Boeing 787

A Japan Air Lines (JAL) jet was also grounded at Boston Logan International airport in the US following an engine fuel leak.

About 40 gallons of fuel spilled from the jet that was supposed to be bound for Tokyo.

That event followed the first incident of the week, which also occurred at Boston, on Monday.

Emergency services had been called after another JAL 787 filled with smoke shortly after passengers and crew had disembarked.

Firefighters used infrared cameras to locate the fire in a battery pack in the belly of a different Boeing 787 and extinguished the blaze within 20 minutes.

Sky sources revealed that if the battery fire had occurred during a transocean flight the aircraft may have been brought down.

The 787 Dreamliner made its first commercial flight in late 2011, after a series of production delays put deliveries more than three years behind schedule.

By the end of last year, Boeing had sold 848 Dreamliners, and delivered 49. JAL and ANA operate 24 of the planes.

After the Boston events, British carriers including BA, Virgin Atlantic and Thomson Airways reaffirmed their plans to integrate 787s into fleets this year and next.

In India - where state-owned Air India has taken delivery of six Dreamliners and has more on order - a senior official at the aviation regulator said there was concern at the recent spate of 787 glitches.

Meanwhile, an Air India spokesman said the airline's debut Dreamliner flight from India to Paris on Thursday went without a hitch.

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Jessops: Camera Chain Closing All Stores

Camera retailer Jessops is clearing stock from its stores after administrators announced it was unable to continue trading.

PricewaterhouseCoopers (PwC), which was appointed to the group on Wednesday, has begun the process of shutting the firm's entire network of 187 stores with the loss of 1,370 jobs

The administrators said further job losses are likely at the group's head office in Leicester.

Jessops is the first high-profile retail casualty of 2013, after suffering from online competition and a boom in camera phones in recent years hitting demand for digital cameras.

Administrator Rob Hunt said PwC had held "extensive discussions" with suppliers, but it was apparent that Jessops could not continue to trade.

A sign on the door of a Jessops shop in Birmingham

He said stock would be collected from the shops and taken to a warehouse, where it would be returned to suppliers.

As a result of the closure of the shops, Mr Hunt added that customers would not be able to return products.

Jessops was forced to call in the administrators this week after talks between the company and its lender and suppliers broke down following a poor Christmas.

Jessops had struggled since 2007, when it underwent a major overhaul with a swathe of store closures.

It came close to collapse two years later, before being rescued by its main lender HSBC in a controversial debt-for-equity swap that saw it taken off the stock market.

The camera giant's collapse comes after consumer electricals chain Comet hit the wall last year, sparking more than 6,000 job losses.

There was speculation that suppliers such as Canon were considering injecting cash into Jessops last year to help prop the business up, but no deal materialised.

The group last year also suffered the loss of its chief executive Trevor Moore, who left to head up HMV, as well as its chairman David Adams.

Martyn Everett was then appointed as chairman and Neil Old was promoted to lead the business as chief operating officer.

The firm began life in 1935 when Frank Jessop opened his first shop in Leicester.

Mr Hunt added that it was "an extremely sad day for Jessops and its employees".

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Rent Rip-Offs: Miliband Slams Rogue Landlords

Ed Miliband pledged to make the housing market fairer for private renters as he fleshed out his One Nation philosophy.

The Labour leader warned that action is needed to prevent damaging social divisions between home owners and those who rent.

His speech to the Fabian Society again saw him seeking to distance his party from some of the most controversial elements of the last Government's record.

He admitted that New Labour was "far too timid" in enforcing rights and responsibilities and "too sanguine about the consequences of rampant free markets".

"By the time we left office, too many of people of Britain didn't feel as if the Labour Party was open to their influence, or listening to them," Mr Miliband said.

Ed Miliband was speaking to the Fabian Society in London

Referring to immigration as an example, he said: "I'm proud to celebrate the multi-ethnic, diverse nature of Britain.

"But high levels of migration were having huge effects on the lives of people in our country - and too often those in power seemed not to accept it.

"The fact that they didn't explains partly why people turned against us in the last election."

Mr Miliband added that if Labour wins the next general election, the party will have to find ways of achieving change while tackling a lingering deficit.

New Labour failed to bring about change to make the economy "work for the many, not just the few", he said.

Spelling out his concerns about the housing market, the opposition leader pointed out that 3.6 million households - including one million with children - are now in privately rented accommodation.

The numbers are bigger than in the social rented sector for the first time in almost half a century.

Mr Miliband said Britain must avoid becoming a nation divided between those who own their own homes and those who rent.

"We shall root out rogue landlords, we shall stop people from being ripped off by letting agencies and we want to give new securities to families who rent."

Labour would introduce a register of landlords and powers for local authorities to find and stamp out rogues, he said, while the "confusing, inconsistent fees and charges" system would be simplified and longer-term tenancy agreements would be made possible.

A Conservative spokesman said: "Not once does Ed Miliband answer the tough questions, like how he would deal with the record deficit his Labour government left behind.

"Instead of facing up to the difficult decisions, all Labour offer is more spending, more borrowing and more debt - exactly how they got us into this mess in the first place."

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