18 ★ † FINANCIAL TIMES FRIDAY SEPTEMBER 12 2014

COMPANIES

Special Ayr Service parachutes in to Scottish vote debate

Scottish banks are readying plans tobecome English following a Yes vote, whichGordon Brown hopes to forestall with adevolution plan by Burns Night. Lombardimagines how the Bard of Ayrshire mighthave responded.*“Wee, cow’rin, timorous risk committeeWhat a panic’s in thy breastieIt’s clear to all that Eck’s dominionMay put the kybosh on the union.

Thus Clydesdale, Lloyds and RBSDecide that maybe England’s bestIf balance sheets the winds are strewin’Then Carney may avert their ruin.

E’en TSB, from Dumfries hailin’,

Foresees bold Swinney’s largesse failin’,And Tesco Bank, borne wi’ the tide,In Edinburgh nae mair may bide.

Now Ian Cheshire and Dougie FlintSay plainly what before they’d hint,Tell Scotia no tae play the foolAnd loose the bogle ca’ed self-rule.

Brown, pudin’ o’ the chieftain raceFor No votes shows his glowrin’ face.Thus Cameron, before so precious,With devo max becomes mair gracious.

Still, rank is but the guinea’s stamp,Whilst threats from business to decampImply financial calculationCounts mair than self-determination.

Too late? The fight they a’ hae fumbledThe warnins dire nae nats have humbled.Wealth managers, doon in the mouth,A’ scramble tae send savin’s south.

Yet Salmond’s plans may gang agley,If auld acquaintance wins the dayIgnairin’ fiscal spats in time,

Scots may vote No for auld lang syne.”* NB: a) Robert Burns would probably havevoted Yes. b) Lombard’s poetic skills arecloser to McGonagall’s than those of Burns.

DunhelmingThe Dunelm website is awash with softfurnishings, but it is a hard decision thatsees chief executive Nick Wharton leavingthe homeware retailer with immediateeffect, writes Alison Smith.

Succeeding the first outside boss of thefamily business set up on a Leicestermarket stall in 1979 is Will Adderley,executive deputy chairman, Mr Wharton’spredecessor, and representative of a familythat still owns 54 per cent of the shares.

The group and its share price haveperformed strongly under Mr Wharton. Itseems to have come as a surprise to himas well as the City that the operationaltalents that won him the job less thanfour years ago were not enough to keephim in post.

The process has been messy. It is rarefor an executive to sit on the nomination

committee as Mr Adderley does. It is alsorare for nomination committee members tobe contenders for the jobs they seek to fill– and for good reason – no matter howquickly they excuse themselves. If MrAdderley had lost to the shortlistedexternal candidate, or Mr Wharton kepthis job, the next nomination committeemeeting could have been a bit tense.

Meanwhile, the business producedanother year of solid growth, crowned bya 25 per cent rise in the full-year dividend.It was a reminder why Dunelm trades ona premium to peers, with a 2015price/earnings rating of about 17.5x. Sodiehard Adderley family fans can becontent and, really, anyone else in thestock probably shouldn’t be there.

Gold buggedSouth Africa’s subterranean gold minerslabour between a rock and a hard place.As does Srinivasan Venkatakrishnan, chiefexecutive of AngloGold Ashanti. His rockis the state, which insists the domesticchunk of the business should be debt-free.

His hard place is 6.6 per cent shareholderJohn Paulson, who opposes the termsunder which AngloGold’s internationalbusiness may be spun off via a Londonlisting.

Mr Paulson supports a partial demerger,which should unlock value via the shareprice of the new business. The threat ofmine nationalisation depresses prices formining stocks with South Africanexposure.

However, the hedge fund manager isunhappy with the scale of the rights issue– $2.1bn – that Anglogold would deploy topay the newco’s debt down to $1.1bn. Thefact that Anglogold would keep a fat 65per cent stake also bugs him.

Mr Venkatakrishnan may be able tocompromise on the size of the rights. Butthe untidy tie to South Africa looks like asop to politicians. After three years ofsteep falls in the gold price, neitherinvestors nor governments are provingeasy to deal with.

jonathan.guthrie@ft.comDunelm: alison.smith@ft.com

JonathanGuthrieLOMBARD

By Josephine Cumbo,Pensions Correspondent

Annuity sales dropped by athird in the months afterGeorge Osborne announcedradical reforms of the UKpension rules, according toindustry figures.

In the second quarter ofthis year, annuity sales fellto £1.8bn, from £2.5bn in theprevious three months – adrop of 32 per cent, as sav-ers took advantage of ameasure in the MarchBudget relaxing the require-ment to buy retirementincome products.

On a year-on-year basis,annuity sales fell even fur-ther: from £3.1bn to £1.8bn,or 42 per cent, according todata compiled by the Asso-ciation of British Insurers,the trade body for pensionproviders.

This sharp fall in salesfollowed the chancellor’sannouncement that hisreform of pension ruleswould mean “no one wouldhave to buy an annuity”.

Under the changes thatcame into effect on March 19– the day after the Budget –individuals with total pen-sion savings of £30,000 orless are now permitted totake this money in cash.Previously, only savers with

less than £18,000 wereallowed to do this.

“The 2014 pensionreforms radically over-hauled the pensions mar-ket,” said Yvonne Braun,head of savings, retirementand social care with theABI. “[The sales figures]suggest customers withsmaller pots have immedi-ately started to use the newfreedoms to take their cashlump sum, which is some-thing the industry has cam-paigned for.”

When the remainder of

the chancellor’s pensionreforms take effect in April,all savers in defined contri-bution pension schemes willbe able to take their savingsas a cash lump from the ageof 55, subject to tax at theirmarginal rate.

Some of the country’s topannuity providers forecastthat this will result in acontinuing contraction ofthe market into 2015. Legal& General recently warnedthat it expects its individualannuity volumes to fall afurther 50 per cent in 2015.

“It’s not surprising to seeannuity sales plummet inthe wake of the Budgetannouncement,” said TomMcPhail, head of pensionsresearch with HargreavesLansdown, the investmentmanagers. “We know fromour own research that manyinvestors are treading waterto see what their options arebefore committing to aretirement income strat-egy.”

By contrast, sales ofincome drawdown plans –which allow retirees todraw a regular retirementincome from funds thatremain invested – rosesharply as savers turnedtheir backs on annuities,which provide a guaranteedincome for life.

Drawdown sales for thesecond quarter rose to£669m, from £487m in theprevious quarter, as someproviders relaxed the mini-mum investment require-ments on their plans toattract customers withlower pension savings.

Annuity salesfell by a thirdafter reformsGENERAL FINANCIAL

Second quartersaw 32% plunge

Further changes totake effect in April

MasterCard has definitivelylost its seven-year legalquest to overturn an EUantitrust decision, leaving itvulnerable to hefty damagesclaims and further regula-tory action to cap interbankfees for card transactions.

The ruling from the EU’shighest court yesterday dis-missed MasterCard’s appeal,closing an antitrust sagathat started in 1992 whenBritish retailers complainedabout being overcharged forcross-border card transac-tions. Although the out-come was widely expected,the legal certainty the judg-ment brings could presage anew era for European cardcompanies, with big com-pensation claims andtightly regulated fees thatare more transparent toconsumers.

Most card users are una-ware of the charges. About€13bn a year is paid byretailers in Europe to banksfor handling transactions,about 70 per cent of whichis accounted for by inter-bank fees.

While retailers and regu-lators want to stamp outprofiteering through over-charging, the big two cardgroups – MasterCard andVisa Europe – see the feesas underpinning cheap andsecure service with benefitssuch as insurance and loy-alty rewards.

The defeat confirms theEuropean Commission deci-sion in 2007 that found thegroup restricted competi-tion and inflated prices forretailers and consumers.Following that decision,MasterCard cut its inter-bank rates while it awaitedthe appeal.

Yesterday MasterCardsaid the “negative judgmentwill have little or noimpact” on how it operateswith regard to these cross-border interchange fees,where a consumer’s banklevies on a merchant’s bankfor retail sales transactions.

The judgment gives somemomentum to damagesclaims against MasterCard.

Alex Barker

MasterCardloses appealon foreignbank fees

GENERAL FINANCIAL

Recruit, Japan’s biggeststaffing company, is plan-ning to raise $1.8bn throughan initial public offeringnext month, in what wouldbe one of the country’s larg-est listings this year.

The growth of Recruit –which was hit by a corrup-tion scandal that shookJapan’s political world inthe late-1980s – has hingedon the rise of temporaryemployment that hasaccompanied Prime Minis-ter Shinzo Abe’s economicrevival plan dubbed “Abe-nomics”.

The number of non-per-manent employees includ-ing part-timers and contractworkers has risen to nearly40 per cent of Japan’s work-force from less than a thirda decade ago, as companiescoped with sluggish eco-nomic growth by bringingdown labour costs.

For the fiscal year ended

in March, Recruit reporteda 14 per cent year-on-yearincrease in revenue to arecord $11bn, about half ofwhich was generated fromtemporary staffing services.

Stock is tentatively pricedat Y2,800 a share, whichwould value Recruit at$15bn – a larger market cap-italisation than Swiss staff-ing group Adecco’s $13bn.

The valuation putsRecruit on a forward price/earnings ratio of 24, com-pared with Adecco’s 13.Recruit’s offering is sched-uled for October 16.

Analysts say Recruit hasbenefited as fees for jobplacement ads rose on theback of Japan’s tighterlabour market.

Kana Inagaki

Japanese staff ing groupRecruit plans $1.8bn IPO

SUPPORT SERVICES

BlackBerry has bought UKstart-up Movirtu, a “virtualsim” company that letsusers operate multiplephone numbers and profileson a single device, as theCanadian handset-makersteps up its turnround strat-egy of trying to woo corpo-rate consumers.

Terms of the deal werenot disclosed.

Six-year-old Movirtu hadpreviously raised $5.5mfrom a number of investors,including private equitygroup Gray Ghost Venturesand the non-profit Grass-roots Business Fund, whichfocuses on enterprises thathelp the poor in developingcountries.

BlackBerry’s share of thesmartphone marketed hasdropped precipitously inrecent years as consumersshifted allegiance to Appleand Google Androiddevices. It makes both

handsets and the softwarethat runs on them, and isbanking on getting morebusinesses to use itsproducts as work tools,building on its traditionalstrength in data securityand encryption.

Both Apple and Googleare taking aim at the corpo-rate market. Google boughta similar company to Mov-irtu in May, Divide, whichprovides split profiles onsmartphones to separatework and personal data.

The market for technolo-gies to manage corporatemobile devices is expectedto grow 30 per cent a yearand reach $1.8bn by 2016,according to research bytechnology group IDC.

The Movirtu acquisitiontaps the trend of employeesconducting ever more oftheir personal and work lifeon tablets and smartphones– the so-called “bring yourown device” generation.

Sally Davies

BlackBerry acquires UK‘virtual sim’ tech start­up

MOBILE & TELECOMS

40%Number of non­permanentstaff in Japan’s workforce

China’s anti­monopolyregulator has finedVolkswagen’s Audi and Fiat’sChrysler for fixing the priceof cars and auto parts, aspart of a probe into foreigncarmakers that hasinternational investors cryingfoul, write Lucy Hornbyand Charles Clover.

Luxury carmakers havealready announced a changein the way they sellreplacement parts in China,as the National Developmentand Reform Commissiontargets foreign companiesfor pricing violations inindustries includingpharmaceuticals, babyformula and softwaredevelopment.

The NDRC’s local bureau

in Hubei province yesterdayfined FAW­Volkswagen Sales,which markets Audis in thecountry, Rmb249m($40.6m). It also fined eightAudi dealerships a total ofRmb29m.

Chrysler’s China unit washit with a Rmb32m fine, andthree dealerships were levieda combined Rmb2m, theNDRC said.

“We accept the penaltyand have been optimisingthe management processesand sales and dealershipstructure,” said Audi inChina. Fiat Chrysler couldnot be reached for comment.

The fines came the dayafter Chinese Premier LiKeqiang reassured foreigninvestors their money was

still welcome, and that theywould be treated equally totheir local counterparts.

In recent weeks, foreignchambers of commerce havesuggested that the probeshave unfairly targetedforeign companies – anaccusation Mr Li has denied.

Xu Kunlin, a senior officialat NDRC, said yesterday: “Ifpeople say we are selective[towards foreign companies],the truth is that we do nothave the time and energy toselect. We do not selectwhich companies to lookinto – the consumers do theselecting. We investigate thecompanies where we receivewell­grounded complaints.”

He added that thecomplaint against Audi arose

in February following adiscrepancy in repairappraisals after an accidentbetween an Audi and a taxi.

In a rare rift betweenforeign companies, Europeanauto parts suppliers thisweek accused the carmakersof forcing them to signexclusivity deals thatartificially inflate prices – ineffect supporting theNDRC’s accusations.

Since the beginning of theyear, foreign car companiesincluding Mercedes, BMW,Chrysler and Audi have beenunder scrutiny for possibleinfractions of China’s 2008Anti­Monopoly Law byallegedly fixing the retailprices charged by theirdownstream dealers.

The regulator fined Volkswagen’s joint China venture, which makes Audis in China, for fixing the price of cars Getty

China punishes Audi and Chrysler

COMPANIES ROUND­UP

George Osborne: relaxed therules on buying annuities

‘Customers withsmaller pots havestarted to use thenew freedoms totake their cash’

More news atFT.com

●Luluemon sees sharesrise after testing yearShares of Lululemon, themaker of high­end yogawear, were jumpingyesterday. The stock wasup 15 per cent in pre­market trading as theCanadian companyreported second­quarterprofits and revenue thattopped forecasts.

Lululemon had netincome of $48m or 33cents per share, downfrom $56.5m or 39 centsa share, in the year­agoquarter. But revenueswere $390.7m, up from$344m. Both profits andrevenues beat expectationsfor 29 cents per share and$377m in revenue.

Although the retailer’ssame­store sales fell 5 percent in the quarter toAugust 3, the better­than­expected results sent theshares surging.

Lululemon also raised itsguidance for revenue forfiscal 2014 to a range of$1.78bn to $1.8bn,compared with expecta­tions for $1.78bn. Onceone of the hottestretailers, Lululemon hashad a testing last year. Itwas forced to recall itsblack luon yoga pant afterthe material turned out tobe too sheer. Shares ofLululemon, a once­lovedstock, are down over 34per cent so far this year.www.ft.com/retail

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