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BUSINESS WITH PERSONALITY

BUSINESS WITH PERSONALITY
www.cityam.com Issue 1,293 Wednesday 5 January 2011 FREE
FTSE 100 ▲6,013.87 +113.93 DOW ▲11,691.18 +20.43 NASDAQ ▼2,681.25 -10.27 £/$ 1.56 ▲+0.01 £/¤ 1.17 ▲+0.01 ¤/$ ▼1.33 -0.01
Certified Distribution
1/11/10 - 28/11/10 is 113,348
VAT Focus:
THE IMPACT
OF THE TAX
RISE p10
POSITIVE economic news from across
the globe saw a sharp rise in London
stocks, with the FTSE jumping above
the psychologically-important 6,000
barrier.
It finished the day up almost two
per cent at 6,013.87 – its highest close
since the start of June 2008.
And US markets also reacted posi-
tively after being reassured by the
minutes of the Federal Reserve’s
December meeting, which showed
cautious optimism for the economic
outlook. The Dow Jones Industrial
Average closed 0.18 per cent higher at
11,691.18 after the announcement.
“With the recent data on produc-
tion and spending stronger, on bal-
ance, than anticipated, the staff
revised up its projected increase in
real GDP in the near term,” the min-
utes said.
“Conditions in the labour market
appeared to be improving on bal-
ance,” the Fed also recognised.
However, the Fed still views
progress towards its goals of maxi-
mum employment and price stability
as “disappointingly slow” and shows
no signs of reversing its programme
of quantitative easing (QE2).
“While the economic outlook was
seen as improving, members general-
ly felt that the change in the outlook
was not sufficient to warrant any
adjustments to the asset-purchase
programme,” the minutes said
Several members said they had a
“fairly high threshold for making
changes to the programme.”
In the UK, exceptionally strong
manufacturing data spurred market
sentiment earlier in the day.
Economists were predicting a decline
in December’s factory activity, but it
soared to a 16-year high.
“The manufacturing sector ended
2010 in really good shape and made a
healthy contribution to fourth quar-
ter GDP growth,” said Howard Archer
of IHS Global Insight, commenting
on the purchasing managers’ index
(PMI) results.
Economists had expected the win-
ter’s blizzards to hamper the resur-
gent UK manufacturing sector.
Even the British housing market
received some rare good news, as
mortgage approvals unexpectedly
increased in November to over
48,000, the Bank of England said.
The stockmarket boost came after
similar rises on Monday in the US,
Europe and Asia, when London was
closed for the Bank Holiday.
Meanwhile, US data yesterday
showed that American factory orders
rose in November, surprising econo-
mists who had expected stagnation
or even a fall in US manufacturing.
US auto sales were also up in
December, reaching their highest
level for 16 months – far outperform-
ing Wall Street expectations and indi-
cating a strong recovery in the
coming year. Vehicle sales exceeded
13m in the 12 months to December,
closing a year in which car sales rose
by 11 per cent -- a strong turnaround
for the formerly beleaguered industry.
The stream of positive economic
reports came ahead of the publica-
tion of the minutes of the Federal
Reserve’s (Fed) December meeting.
ECONOMICS: P13
FTSE BOUNCES IN
NEW YEAR RALLY
BY JULIAN HARRIS
WORLD ECONOMY

Ben Bernanke’s Federal Reserve has revised up its short run growth projections for the US economy, after a series of optimistic data releases and stock market surges
Oberthur
plays nasty
with De La
Rue offer
FRENCH money-printer Oberthur
Technologies tried yesterday to stir up
a row among shareholders of its
takeover target, De La Rue.
On the first day for De La Rue’s new
chief executive Tim Cobbold, Oberthur
said the company had lost its largest
client, the Reserve Bank of India, and
called on the board to inform share-
holders. “The tender for the supply of
16,000 tons of currency paper by the
Reserve Bank of India has been award-
ed to four competitors of De La Rue,”
Orberthur said.
The four competitors in question are
Arjo Wiggins, Louisenthal, Crane and
Fabriano, said an industry source. The
person also said that Oberthur had
learned of the contract decision
through the grapevine in the money-
printing community.
In response, De La Rue stated its con-
tract with the client in question is still
up in the air, with negotiations “ongo-
ing”. But RBI’s decision not to invite its
former printer to pitch for the new
contract suggests that it is keen to
replace the company.
The likely loss of RBI is a severe blow
for De La Rue, meaning it is would
miss out on several thousand tons of
business – a significant proportion of
its annual banknote production of
around 15,000 tons. However, since its
contract with RBI was suspended in
July last year, it has won new contracts
to put volumes for 2010 on a par with
those in the previous year.
Shareholders will now be on the
receiving end of a campaign of
phonecalls from both Oberthur and
De La Rue as they attempt to persuade
them of the pros and cons of the 905p
bid. De La Rue’s board is said to be set
on a price over £10.
The privately held Oberthur, which
approached De La Rue in early
December with a bid, has been court-
ing shareholders ever since its offer of
905p was rejected as “opportunistic”.
ANALYSIS: P4
BY JULIET SAMUEL
MANUFACTURING

11,630
11,640
11,650
11,660
11,670
11,680
11,690
11,700
09:30 11:00 12:00 13:00 14:00 15:00 16:00
ANALYSIS l Dow
11,691.18
4 Jan
ANALYSIS l FTSE
6,020
5,980
5,940
5,900
6,060
08:00 10:00 12:00 14:00 16:00
6,013.87
4 Jan
News
2 CITYA.M. 5 JANUARY 2011
Morgan Stan
gets new COO
MORGAN STANLEY has appointed its
head of technology as chief operat-
ing officer.
The bank yesterday named Jim
Rosenthal to succeed Tom Nides,
who departed late last year to join
the US State Department under
Hilary Clinton as deputy secretary
for management and resources.
Rosenthal will handle the integra-
tion of the New York investment
bank’s brokerage joint venture with
Citigroup’ Smith Barney, of which it
holds a 51 per cent stake.
He will also oversee human
resources, corporate communica-
tions, marketing, community affairs
and corporate services.
Rosenthal joined from commer-
cial real estate business Tishman
Speyer in 2008, where he had
worked as chief financial officer
since 2006.
The Harvard Law School graduate
has worked for Lehman Brothers and
McKinsey & Co, the consulting firm
where he and Morgan Stanley chief
executive and president James
Gorman got their Wall Street starts.
“[Rosenthal is] a talented and sea-
soned executive who will continue
to provide broad leadership to our
Firm as [a] member of the Operating
Committee,” said Gorman in an
internal staff memo.
BY RICHARD PARTINGTON
BANKING

We are barking up the wrong tree
ANOTHER day, another set of strong
global economic figures. UK manufac-
turing is expanding at its fastest rate
since 1994, according to a key survey.
US factory orders are accelerating and
the Fed upped its growth outlook last
night. The world is undergoing an
emerging-markets led rebound; bar-
ring an implosion in the Eurozone or
some other geopolitical catastrophe,
2011 ought to be another decent year,
including for the UK, as I argued in
this space yesterday. I’m more con-
vinced than ever that Britain will
expand by around two per cent.
But decent should not be good
enough. This ought to be a new gold-
en age, just as it is in Asia, Latin
America and many other parts of the
world. The continued hangover from
the unwinding of the bubble is only
part of the reason why we are still suf-
fering so much and failing to grasp
the opportunities that ought to be in
our reach. The biggest problems are
more deep-seated in nature: years of
blunders on public spending, tax, reg-
ulation, education, welfare and infra-
structure. Bogged down by the need
to sort out the mess left by the previ-
ous government, and opposition to
cuts from a public which has got used
to living beyond its means, the coali-
tion’s welfare and education reform
agenda is faltering.
Britain’s commentariat and politi-
cal classes have been barking up the
wrong tree for months, obsessing
with short-term growth figures that
were always going to turn out better
than they thought (and over which
they have no control) and waging a
misguided and destructive war
against the City, rekindling the poli-
tics of envy. The result is that the real
issues facing the country – how to try
and cash in better on the emerging
markets boom and the technological
revolution by tearing up failed 20th
century institutions; and how to
reform policy to prevent another bub-
ble – have been woefully overlooked.
So far, the coalition has semi-suc-
cessfully undertaken emergency sur-
gery on the UK, preventing it from
going the way of Greece, though cen-
tral government spending was still up
an absurd 10.8 per cent in the year to
November. But while fiscal policy is
on the mend, tax policy is increasing-
ly damaging to enterprise, monetary
policy is much too loose and failing to
control inflation, and the attack on
the City is costing jobs.
Part of the problem is that the
world remains enthralled to intellec-
tually bankrupt ideologies. The worst
is the belief that central banks can
and should act to prevent all econom-
ic fluctuations or even stock market
slumps by cutting interest rates or
buying bonds; this has been pushed
to a new extreme since the late 1990s
and was one of the main drivers of
moral hazard and excessive risk-tak-
ing during the bubble. America’s
renewed QE policy is a perfect exam-
ple of such extreme monetary
activism; as a result, the global bonds
market is in a dangerous bubble.
Another idiotic belief is that debt
holders should never have to bear any
losses and that financial institutions
should not be allowed to fail; again,
this is fuelling moral hazard and
threatening to bankrupt weaker gov-
ernments, who are bailing out the
credit markets.
So not only are we failing to cap-
ture enough of the benefits of the
global boom but we are yet again lay-
ing the seeds for another bust at some
point. Just think how good things
could be today if policy-makers didn’t
keep getting it wrong.
allister.heath@cityam.com
SUPERMARKET Asda said yesterday
its chairman Andy Bond stood down
on 1 January after less than a year in
his part-time role.
Bond, who left the chief executive
job in April 2010, will also leave par-
ent company Walmart once its 16.5bn
rand (£1.5bn) purchase of a majority
stake in South African supermarket
Massmart goes through. The firm
said this was likely to take place by
the end of March.
Walmart president Doug McMillon
said in an internal email to staff that
Bond “has been and will continue to
be instrumental in our efforts to
acquire a majority interest in
Massmart”.
Asda chief executive Andy Clarke
said Bond had made the handover
process “smooth and seamless”.
Bond worked for Asda for 16 years,
five of those as chief executive. He
said yesterday he is leaving to pursue
new challenges.
BY MARION DAKERS
RETAIL

Asda’s Bond steps down
Asda chairman Andy Bond is leaving to pursue new challenges Picture: REX
NEWS | IN BRIEF
Ocado shares top float price
Shares in online grocer Ocado
rocketed past their 180p float price for
the first time yesterday, hitting
196.7p ahead of its first update since
joining the stock market last July. The
company, which is yet to post a profit,
gained 10 per cent in trading, its steep-
est rise in more than a month. It will
update investors on Monday on its per-
formance since going public in a
£369m float, when it was forced to
slash its initial price from a range of
200p to 275p down to 180p.
AIG sued by former employee
A former employee of AIG is suing her
employers and PwC, claiming that audi-
tors were negligent in checking the
insurer’s financial strength and that AIG
has failed to pursue a claim. Wanda
Wimms has brought a case in the New
York Southern District Court on behalf
of the AIG Inventive Savings Plan,
which lost out when the insurer col-
lapsed in 2008. She has argued that
PwC should have known that AIG’s
share price was inflated by inaccurate
financial statements. PwC and AIG
declined to comment last night.
EDITOR’S LETTER
ALLISTER HEATH
7
th
Floor, Centurion House,
24 Monument Street, London, EC3R 8AJ
Tel: 020 7015 1200 Fax: 020 7283 5334
Email: news@cityam.com www.cityam.com
Editorial
Editor Allister Heath
Deputy Editor David Hellier
News Editor David Crow
Night Editor Katie Hope
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
Sports Editor Frank Dalleres
Art Director Craig Gaymer
Pictures Alex Ridley
Commercial
Sales Director Jeremy Slattery
Commercial Director Harry Owen
Head of Distribution Nick Owen
Editorial Statement
This newspaper adheres to the system of
self-regulation overseen by the Press Complaints
Commission. The PCC takes complaints about the
editorial content of publications under the Editor’s
Code of Practice, a copy of which can be found at
www.pcc.org.uk
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Jim Rosenthal has
been appointed chief
operating officer at
Morgan Stanley, taking
over from Tom Nides.
BOND SURGE ON BOTH SIDES OF THE
ATLANTIC AS COMPANIES VIE FOR
FUNDS
Companies have embarked on an
early-year rush to issue debt in an
effort to beat rivals and secure financ-
ing before any rise in borrowing costs.
The surge in bond issuance on both
sides of the Atlantic on Tuesday came
as equity markets rallied on better
growth prospects for the US economy
and corporate earnings. Almost
$12bn of bonds were sold by the end
of the European day, according to
Dealogic, with billions more due to
price in the New York afternoon.
ITV AND BSKYB CAME CLOSE TO
MERGING NEWS
British Sky Broadcasting and ITV dis-
cussed merging their news opera-
tions in 2006, according to people
involved in the talks. The talks,
which involved Dawn Airey, then con-
troller of Sky Television, and the chief
executives of ITV and ITN, its news
supplier, reached an advanced stage
and identified major savings for both
broadcasters before they were
dropped because BSkyB bought a
£940m stake in ITV.
SONY MUSIC CLOUD RISES OVER
RIVALS
Sony is set to steal a march on rivals
Spotify and Apple by becoming the
first company to launch a cloud-based
music streaming service in the highly
lucrative US market.
PETROBRAS IN TALKS OVER ENI’S
GALP STAKE
Petrobras, Brazil’s national oil compa-
ny, said yesterday that it was in talks
with Eni, the Italian energy group, to
acquire its 33 per cent stake in Galp,
the Portuguese oil company. It fol-
lowed press reports in Portugal that
Petrobras was ready to pay €3.5bn
(£3bn) for the stake, less than the ask-
ing price of €4.7bn.
TESCO DISMISSES FRAUD LINK TO
CASH FOR GOLD DIRECTOR
The man running Tesco’s new cash-
for-gold service was a boss of a fraudu-
lent college that swindled nearly
80,000 students. Peter Kenyon, chief
executive of Ramsdens Financial
Services, was a director of National
Distance Learning College. His busi-
ness partner, Michael Smallman, is
serving a seven-year sentence for
fraudulent trading and money laun-
dering after he was convicted in 2008
of tricking students into believing
they would receive a recognised qual-
ification. Mr Kenyon was cleared of
any wrongdoing and there is no sug-
gestion that he acted improperly.
THE TRAIN NOW LEAVING IS THE
PENSION EXPRESS
Britain’s train barons are steaming
towards retirement with multimil-
lion-pound fortunes.
MICROSOFT’S INTERNET EXPLORER
LOSES TOP SPOT TO FIREFOX
Mozilla’s Firefox has replaced
Microsoft’s Internet Explorer as the
most widely-used web browser in
Europe. Internet Explorer appears to
have been dethroned because
Google’s Chrome is stealing share
while Firefox is mainly maintaining
its existing share. The search engine
took a 38.1 per cent market share
across the continent in December, sur-
passing Internet Explorer’s 37.5 per
cent.
US MARKET WILL RALLY FOR THIRD
YEAR, BLACKROCK PREDICTS
Blackrock, the world’s biggest asset
management firm, has predicted that
US stock markets will record their
third straight year of gains since the
financial crisis, brushing off anxieties
about Europe’s debt woes and the
scale of stimulus in the US.
COURT CHANGES LAW ON PATENT
DAMAGES
A federal appeals court Tuesday
restored a jury verdict that Microsoft
Corp. infringed a patent related to
combating software piracy, but ruled
that the software giant was entitled
to a new trial on damages. Though
Microsoft lost on the patent at issue
in the case, it may have won a larger
legal battle because the court's ruling
could be used to limit the size of
monetary damages in patent-
infringement cases.
INSURERS SUE TOYOTA OVER
ACCELERATION CLAIMS COSTS
Seven insurance companies have filed
lawsuits against Toyota seeking a
minimum of $230,000 to cover the
cost of claims paid for accidents relat-
ed to the unintended acceleration
problems identified in Toyota vehi-
cles in the past several years.
WHAT THE OTHER PAPERS SAY THIS MORNING
FACEBOOK could be forced to go pub-
lic by the US Securities and Exchange
Commission (SEC) after Goldman’s
$500m (£320m) investment, which
valued the online giant at around
$50bn.
Goldman’s cash injection is to be
structured as an investment vehicle
and sold on to clients, who can then
trade their stakes on secondary mar-
kets.
Goldman has given clients until
the end of the week to decide
whether they want to invest in the
social networking firm, with an
expected minimum investment of
$2m.
The SEC watchdog is looking close-
ly at secondary trading markets to
see whether Facebook falls under a
rule stipulating that firms with more
than 499 shareholders must go pub-
lic.
Experts are divided on whether
Goldman’s vehicle will count as a sin-
gle investor or create hundreds of
new Facebook shareholders.
Facebook gained an exemption
from this rule in November 2008 by
arguing that most of its shares are
held by staff, but it has not released
details of all its investors.
SecondMarket, a platform that
allows traders to exchange stakes in
private companies, admitted yester-
day that the SEC had requested infor-
mation linked to secondary trading.
“We have now received a voluntary
request for information from the SEC
regarding ‘pre-IPO pooled investment
funds’”, said Mark Murphy, a
spokesman for the New York-based
broker. “We are fully cooperating.”
The SEC declined to comment.
Facebook may
be forced to
trade publicly
US BANKING regulators have autho-
rised lawsuits against 109 bank offi-
cials so far as they seek to recover at
least $2.5bn (£1.6bn) in losses con-
nected to recent bank failures.
The Federal Deposit Insurance
Corp said yesterday the suits target
bank directors and officers for
“either gross or simple negligence”.
It is seeking to recoup money for
its deposit insurance fund, which
backs customer accounts.
It is the first time the FDIC has
published the number of bankers
facing legal action.
The regulator’s website will be
updated monthly with a running
tally of the amount of lawsuits
authorised and how much the
agency is seeking to recover. So far,
however, the FDIC has only filed
suits against directors and officers
from two banks.
In November, the agency sued for-
mer executives of Heritage
Community Bank of Illinois. When
the bank failed in February 2009, the
FDIC estimated it would cost the
insurance fund $41.6m.
In 2010, 157 banks with total
assets of $92bn failed. FDIC chair-
man Sheila Bair has said the agency
expects the number of failures to
drop in 2011.
US could bring
lawsuits against
109 bank staff
Citigroup chief Vikram Pandit has been named in the fraud case Picture: Getty
BY MARION DAKERS
TECHNOLOGY

ENFORCEMENT

● The Exchange Act forces a company with
$10m or more in assets to go public if it has
500 or more shareholders.
● The rules allow some groups such as trusts
to count as a single investor.
FAST FACTS | US PUBLIC TRADING LAW
News
3 CITYA.M. 5 JANUARY 2011
CITIGROUP chief executive Vikram
Pandit was among the executives
named in a fraud case registered by
the Indian police yesterday.
The bank has been accused of
investment fraud by one of its New
Delhi customers, Sanjeev Agarwal,
who put the cost of the alleged fraud
at around 324m rupees (£4.6m) in a
written complaint.
The bank said in a statement that it
identified a fraud and immediately
reported it to regulators and law
enforcement agencies.
It added that the claims against
senior executives “are completely
without basis and we intend to con-
test them vigorously”.
A Citigroup employee in New Delhi
was arrested last month and has been
suspended by the bank.
The police said yesterday that they
had registered the case and will inves-
tigate the charges.
Citigroup’s Indian investment
bank branch accused of fraud
ENFORCEMENT

THE fate of British money-printer De
La Rue lies in its shareholders’ hands
this week, as Oberthur Technologies
tries to sell them on its takeover bid of
905p, worth £895m in total.
Oberthur, which is being advised by
Lazard & Co and HSBC, upped the
stakes yesterday by claiming that De La
Rue has lost its biggest client, without
which some analysts have said it
would be worth only 620p per share.
Shareholders will have to decide
whether to hold out for more when
they could take a safe bet at £9.
Oberthur has tried to boost its
appeal further by promising not to
take jobs abroad if it gets control of the
UK firm, which prints sterling ban-
knotes for the Bank of England.
In its statement yesterday, it said:
“Oberthur intends to maintain the
production of all sterling banknotes in
the UK.” However, the company would
not make a commitment on the pro-
duction of passports. Unite the union
said in December that it was opposed
to the French takeover.
De La Rue’s biggest shareholders
include Capital World Investors, which
owns 15 per cent, Prudential, which
has 12 per cent, and Capital Research
and Management, which owns nine
per cent of its stock. The company is
advised by JP Morgan Cazenove and
Rothschild.
Shareholders
to decide fate
of De La Rue
THE TAKEOVER Panel issued a “put up
or shut up” deadline on food tycoon
Ranjit Boparan yesterday over his
interest in taking over Northern Foods.
Boparan has until 21 January to
make a firm bid for Northern, which is
currently working with Irish conven-
ience food maker Greencore on a
merger that would create a company
with turnover of £1.7bn.
His firm Boparan Holdings, which
owns Harry Ramsden’s fish shop
chain, has been given access to
Northern’s books to conduct due dili-
gence but has not put a value on its
potential offer.
Northern welcomed the decision
and said it would continue to recom-
mend that shareholders approve the
merger with Greencore at a vote on 31
January.
Boparan told to put up or shut up
over Northern takeover interest
M&A

News
4 CITYA.M. 5 JANUARY 2011
Tim Cobbold (bottom) is De La Rue’s new chief executive and Nicolas Brookes is chairman
ANALYSIS | Oberthur’s overtures to De La Rue’s
shareholders have just begun, says Juliet Samuel
550
600
700
650
750
800
850
900
11 Nov 1 Dec 21 Dec 4Oct 22Oct
ANALYSIS l De La Rue
p
837.50
4 Jan
PINK Floyd has agreed to a five-year
deal with record label EMI, following
a year of legal disputes.
The British rock group took EMI to
court last year in an effort to protect
its albums, with a high court judge
ruling that the label could not sell
individual songs without consent.
However, yesterday’s deal with the
loss-making label will reportedly
allow the sale of digital downloads of
single songs from the Pink Floyd’s
back-catalogue for the first time.
EMI has not disclosed the terms of
the agreement, but chief executive
Roger Faxon said the label is “looking
forward to continuing to help the
band reach new and existing fans
through their incredible body of
work.”
EMI has lost several high profile
bands since being bought by Guy
Hands’ Terra Firma private equity
vehicle in 2007.
Hands has until 31 March to pre-
pare the label for its next loan
covenant test. If EMI fails, lender
Citigroup could seize the company.
EMI reaches a five-year deal
with Pink Floyd after lawsuit
BY MARION DAKERS
LEISURE

Pink Floyd, including
guitarist Dave Gilmour,
took record label EMI
to court in March in a
fight over digital sales
HEALTH product producer Danone
yesterday saw its share valuation
downgraded by analyst Sanford C
Bernstein.
Growth expectations for this year
and the medium-term have been
downgraded for the world’s largest
yogurt maker, despite a strong stock
performance in 2010.
It now carries a “market-perform”
rating, down from “outperform”, due
to risks facing its business.
Legal rulings recently blocked the
promotion of health benefits on its
products, including Actimel and
Activia, which could hit performance.
ANGLO American has sold its Moly-
Cop and AltaSteel businesses to
Australian steel manufacturer
OneSteel for $1,076bn (£641m), in the
latest move to streamline the mining
company’s business and renew its
focus on core commodity assets.
The sale was initially priced at
$932m on a debt and cash-free basis
on 14 November 2010, but the final
figure has been adjusted to include
cash, debt, and certain other adjust-
ments.
Moly-Cop, based in Santiago, Chile,
manufactures grinding metal and
owns facilities across Latin America
as well as in Canada. AltaSteel is one
of its steel bar suppliers – a mini-mill
based in Edmonton, Canada. Control
of the companies will pass to
OneSteel on 1 July, though approval
for the deal is still subject to
Canadian antitrust clearance and reg-
ulatory review in both Australia and
Brazil.
The sale also includes joint venture
interests in the Donhad grinding
media business in Australia, and in
GenAlta Recycling in Edmonton,
Canada.
Anglo announced a programme of
intended divestments in October
2009, which comprised a portfolio of
non-core assets including the Scaw
Metals Group, of which Moly-Cop and
AltaSteel are a part.
The majority of the assets planned
for disposal have since been sold,
though certain UK, South African
and Latin American assets are still up
for grabs. This latest transaction fol-
lows the sale of Anglo’s zinc portfolio
for £1.3m in May last year.
A spokesman from Anglo said that
though the rump of the non-core
assets had been sold, disposals of its
Tarmac UK assets, Scaw South Africa,
and phosphate miners Copebrás and
Catalão were still in the pipeline.
The spokesman said that though
plans to sell the remaining assets
were underway, timing on the poten-
tial deals was yet to be confirmed.
Anglo American’s South African
shares gained 3.31 per cent on the
news, boosting the Johannesburg
Stock Exchange Top 40 by 0.39 per
cent to close at R28,933.58.
The company’s stock on the LSE
closed 2.14 per cent up at 3,407p, hav-
ing surged to 3,468.5p earlier.
Anglo in $1bn
sale of foreign
steel assets
STANDARD Life has extended the
deadline of its cash offer for Focus
Solutions after failing to gain accept-
ances on all Focus’ shares.
It received acceptances from share-
holders holding 82.7 per cent of Focus
by the offer’s initial closing date of 31
December. It has now extended the
deadline until 1pm on 14 January.
The original offer of 140p a share
was announced on 10 December and
valued Focus at £42m.
Shore Capital analyst Eamonn
Flanagan said the extension was a nor-
mal book-keeping exercise and the
offer should reach full acceptance.
Standard Life
offer extended
Legal decision
harms Danone
BY ELIZABETH FOURNIER
MINING

MARKETS

INSURANCE

CHINESE vice premier Li Keqiang
arrived in Madrid yesterday for a three-
day visit.
He met finance minister Elena
Salgado and industry minister Miguel
Sebastian yesterday, and today will
meet King Juan Carlos and Prime
Minister Jose Luis Rodriguez Zapatero.
The visit follows the publication of
an editorial by Li on Monday in Spain’s
El País newspaper, in which he said
that China was and will remain a long-
term investor in Spanish sovereign
debt. China’s public support could
prove crucial when the Eurozone crisis
flares up again, with bond markets’
eyes on Spain and Portugal as requir-
ing potential bailouts.
Chinese backing saw the cost of
Spain’s borrowing drop from a 5.5 per
cent yield on 10-year bonds to a 5.3 per
cent yield yesterday.
Chinese visit Spain
to confirm support
EUROZONE CRISIS

Anglo American
chief executive
Cynthia Carroll
said yesterday that
the company had
completed the sale
of two of its steel
businesses.
Picture: REUTERS
News
6 CITYA.M. 5 JANUARY 2011
EUR/USD
1 pip, 1% deposit
and no re-quotes.
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The Capitalist
8 CITYA.M. 5 JANUARY 2011
EDITED BY
JULIET SAMUEL
GOT A STORY? EMAIL
thecapitalist@cityam.com
NICK HEADS
TO ARGOS
BEFORE VAT
BOMBSHELL
PROOF that it pays to keep your eyes
peeled, no matter where you are. A
Capitalist source was in touch yesterday to
mention a sterling spot he made while
browsing Argos catalogues in his nearest
store on Monday.
Who should show up but Deputy
Prime Minister Nick Clegg? But pray,
what was the illustrious DPM doing in
one of the mail-order vendor’s branches,
with its wide selection of big-ticket white
goods? Could he have been, erm, getting
his expensive purchases in just before
the introduction of the coalition govern-
ment’s “VAT bombshell” yesterday (slo-
gan copyright of the Lib Dem press
office)?
After all, any personal finance adviser
worth her salt was telling clients to get
their big buys in before the tax jumped.
Surely Clegg, who posed proudly in front
of Lib Dem posters denouncing the
Tories’ VAT policy during the general
election campaign, must be feeling the
rise most keenly?
Sadly, Clegg’s office wasn’t able to tell
us exactly what he might have been
stocking up on. But we hear Argos does a
great line in cheap sackcloth and ashes.
HARD CLIMBS
You might think that a former cabinet
minister, former deputy chairman of JP
Morgan UK and current member of the
Lords’ Economic Affairs Committee and
director of several companies might have
had enough of chasing challenges, but it
seems Lord Michael Forsyth (see above) still
has some mountains to climb – specifical-
ly, the highest mountain in Antarctica.
The climb is sponsored, so far to the tune
of £337,000, with the money going to
Marie Curie Cancer and Indian street chil-
dren charity CINI UK.
He wrote yesterday to let us know that
he’s reached “High Camp”, from which
he’ll make the exhausting climb to the
16,000-foot peak of Mount Vinson: “By the
time we get to the (camp) I am absolutely
exhausted,” he reports. Luckily, his com-
panions soon “administer hot tea” to take
the chill out of his bones.
“A valuable lesson has been learned,” he
says, of his inadequate clothing choices for
the climb. It is the Antarctic, milord! Wrap
up warm!
DOWDY WRAPPING
With former M&S chief exec Sir Stuart
Rose seeking greener pastures, BGC
Partners’ David Buik has some reminis-
cences about the UK’s favourite ready-
meals producer. Praise is due, he says, but
there’s one problem Rose never got to
grips with: “The fashion leaves something
to be desired – probably too dowdy for
2011 to compete with the likes of Primark,
Top Shop, Next and the like.”
“Too dowdy” – a harsh analysis indeed,
and Buik recommends appropriately
harsh penalties: “No doubt new chief exec-
utive officer Marc Bolland and (clothing
director) Kate Bostock will eventually get it
right or Kate will have to be replaced,” he
declares.
The Capitalist was hungry for further
fashion advice, so we gave him a ring.
“You sound young enough to be my
grand-daughter,” said Buik politely,
“and I’m sure someone as fashion-
conscious as you wouldn’t be seen
dead in their stuff! They have to
sharpen up. There’s just nothing
that’s going to make me turn my
head in the street at my age.”
As for his own clothing require-
ments, Buik heads to a City tailor.
But he says it’s not out of snobbery:
“I’m like a badly wrapped present –
I couldn’t get into an M&S suit!”
Aw, David – it’s the contents that
counts.
Clegg was out shopping the day before sales taxes went up yesterday. Picture : REX
Browsing
mail-order
catalogues,
our source
gets in touch
to report a
chance
encounter on
Monday.
BLACKS Leisure said it had been
boosted by sales over the festive peri-
od with total sales in its outdoor busi-
ness up 12.9 per cent in December.
Blacks confirmed that it is still in
talks with parties – which it has not
named – about a possible takeover of
the company.
Like-for-like sales were up 10.2 per
cent last month boosted by the recent
sub-zero temperatures. At the peak of
Christmas trading, the retailer was
selling 10 winter jackets and four
pairs of boots every minute.
The company, which runs the
Blacks Outdoor and Millets chains,
appointed McQueen as adviser in
October to assess a number of unso-
licited approaches.
Blacks expects to make a pre-tax
loss of £2m in 2010-11 before break-
ing-even in 2011-12.
Chief executive Neil Gillis said:
“The group has performed strongly
during the key Christmas trading
period highlighting the strength of
our offering.The turnaround pro-
gramme remains on track and we
enter the New Year in a positive finan-
cial position and focused on continu-
ing to deliver the benefits of the
turnaround strategy.”
Blacks came close to administra-
tion in 2009 before striking a rescue
deal with creditors that saw it close
over 100 stores.
Blacks sales
in festive rise
BY JOHN DUNNE
RETAIL

News
9
30
32
36
34
38
40
42
44
11 Nov 1 Dec 21 Dec 4Oct 22Oct
ANALYSIS l Blacks Leisure Group
p 42.25
4 Jan
ANALYST VIEWS: IS BLACKS LEISURE FINALLY
TURNING A CORNER? Interviews John Dunne

KEITH BOWMAN | HARGREAVES LANSDOWN
Blacks continues to inch its way out of intensive
care. Same store sales have hit double digit territory, whilst
the group’s restructuring plan remains ongoing. Market
consensus opinion currently denotes a strong ‘hold’.


DAVID STODDART | FINNCAP
Blacks has taken sales into positive territory and
also seen a boost in gross margins. The process of reviewing
the various approaches to the company continues. That
underpins our ‘hold’ recommendation.

Blacks chief executive Neil Gillis (inset) said he was hoping for more snow Picture:NEWSCAST
SINGER Capital Markets was
appointed Blacks’ adviser in August
2009 and worked on its £20m share
placement in February 2010.
It advises small and mid-cap growth
companies and has built up a
strong reputation in the retail sec-
tor. The team on the Blacks transac-
tion is led by Jeff Keating (pictured,
left) and Jos Trusted.
Blacks appointed McQueen, a retail
and leisure-focused financial advi-
sory firm, in October 2010.
Financial veteran Clive Baker (pic-
tured, right) co-founded McQueen
in 2002 after 19 years at corporate
finance house Hawkpoint.
JEFF KEATING CLIVE BAKER
SINGER CAPITAL MCQUEEN
RETAILERS may be promising to bear
the brunt of the VAT rise but con-
sumers will be hit by higher prices
over time, experts said yesterday.
Large retailers such as Tesco, Marks
& Spencer and Sainsburys have
rushed to promise consumers they
will not bear the burden of the tax
rise from 17.5 to 20 per cent.
But once January sales are over
prices may well rise as firms struggle
to retain profit margins, according to
Lorraine Parkin, head of VAT at
accountant Grant Thornton.
“In certain sectors retailers will
probably take on the VAT increase
and will not immediately raise their
prices, so the differential will be a
slight hit to their profits,” she said.
“It might not be in force for a few
weeks but we will see this passed on.”
The increase is expected to cost UK
households about £520 per year and
raise £13bn for the Treasury this year.
An electrical retailer told City A.M.
that although it anticipated a small
reduction in sales after the rise, the
aspirational nature of electronic
goods meant sales would “level out
over about a six week period.”
“A rise like this won’t put someone
off buying a new television if they
have their heart set on it,” they said.
A new survey by Lloyds TSB
Commercial found retailers more wor-
ried than other sectors about waning
domestic demand in 2011. “Many busi-
nesses will be planning price increases
to keep profits at current levels,” said
Lloyds TSB Commercial managing
director John Maltby.
Prices to go
up after VAT
rise squeeze
BY ALISON LOCK
RETAIL

Focus on VAT hike
10 CITYA.M. 5 JANUARY 2011
George Osborne’s VAT hike will raise £13.5bn a year by 2014-15, but Alan Johnson (bot-
tom) said Labour would raise employer National Insurance instead Pictures: REUTERS
Small shops to
gain as sales tax
hits big retailers
NOT all retailers face a painful squeeze
from the VAT rise to 20 per cent.
Smaller companies such as inde-
pendent retailers, corner shops and
convenience stores that fall below the
threshold at which VAT is paid will not
have to accommodate the change.
Retailers that generate turnover of
£70,000 or less per year do not have to
register for VAT, so won’t need to put
up prices, said Lorraine Parkin, head
of VAT at accountant Grant Thornton.
“That might make independent
retailers a little more competitive.”
Small businesses or sole traders
with gross turnover of less than
£150,000 are also eligible for HMRC’s
flat rate scheme, which allows them
to calculate VAT at a lower level. The
scheme reduces VAT on items such as
cosmetics to eight per cent, or vehi-
cles to six per cent.
“Many business turning over less
than £150,000 can avail themselves of
the flat rate scheme so they will be
paying lower percentages of VAT than
the other retailers. It is medium to
large businesses that will have to take
the hit for the increase,” she said.
RETAIL
“No. I think retailers
should be made
to absorb the
rise, so I'm not
at all
concerned
about
higher
costs.”
TIM BLACK |
QBE INSURANCE
CITY VIEWS: DID YOU BRING FORWARD ANY BIG PURCHASES TO BEAT THE
RISE IN VAT? Interviews by Lottie Mungavin
"Yes. I took advantage of
the extra savings
and made a
spontaneous
purchase of a
plasma
screen
televi-
sion."
EMRE ORAL |
FARADAY
"Definitely not. I’m not one
to subscribe to
knee-jerk buy-
ing. The VAT
rise has turned
into an excuse
to go
shop-
ping."
BORYS BODNAR |
DAIWA CAPITAL MARKETS
ALAN Johnson yesterday indicated a
Labour government would hike
employer National Insurance contribu-
tions (NICs) by three per cent instead
of increasing VAT.
Labour would need to raise £13.5bn
by raising NICs – the same amount
that George Osborne’s VAT hike will
earn the Treasury annually by 2014-15.
It has ruled out any increases in per-
sonal taxation, meaning employer
NICs would have to rise by three per
cent.
Johnson also said the Labour party
would have imposed a bonus tax on
British banks.
“People will scratch their heads and
think ‘Why are we taking less from the
banks who are actually at the heart of
the global financial crisis?’” he said.
But Justine Greening, the
Conservative Treasury minister, said
Labour’s “tax on jobs” was not a credi-
ble alternative to higher VAT.
She said: “All Labour can do is jump
on every passing bandwagon. The
shadow chancellor has no idea how to
clean up this economic mess.”
Johnson: We would raise
National Insurance instead
POLITICS


SIR Stuart Rose said farewell to Marks
& Spencer (M&S) yesterday, drawing
to a close a colourful six years at the
helm of the retailer.
He formally hands over the reins of
chairman to former City banker
Robert Swannell today.
Sir Stuart, 61, was hailed as an
inspiration after steering M&S to a
£1bn profit, but fell foul of sharehold-
ers after a period in which he acted as
chairman and chief executive, spark-
ing fears that he was wielding too
much power.
The move was also against corpo-
rate governance guidelines.
Former Wm Morrison boss Marc
Bolland joined as chief executive in
May, paving the way for Rose to step
down as chief executive, and now
chairman.
Sir Stuart started his retail career
in 1972 when he joined M&S as a
management trainee.
He left the firm to work in a series
of posts at rival retailers including
Debenhams and Argos.
However, he made his mark at fash-
ion firm Arcadia after presiding over
the sale of the company to Sir Philip
Green. He reportedly made £25m
from the deal.
After returning to an ailing M&S in
2004, he put the company back on
track by reviewing the ranges offered
by the company as well as launching
a series of successful advertising cam-
paigns. New chairman Swannell has
retail experience from his time as
chairman of HMV Group. He also
advised M&S during the hostile
takeover battle with Green.
Rose said: “I feel I have done the job
I was hired to do at M&S. People for-
get what a dilapidated state it was in
when I took over.”
He has taken on an advisory role at
private equity firm Bridgepoint.
Rose leaves
M&S as new
era begins
3
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3

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BY JOHN DUNNE
RETAIL

Focus on M&S
11 CITYA.M. 5 JANUARY 2011
● 1972 to 1989
Sir Stuart began his retailing career as a
management trainee at M&S, working
there from 1972 to 1989.
● 1989 to 2000
Works in management positions at retail-
ers including Burton Group, Debenhams
and as chief executive of Argos.
● 2000
Becomes chief executive of Arcadia
Group – which he sold to Sir Philip Green
in 2002. Made £25m himself.
● 2004
Returns to M&S in the position of chief
executive. Taken on to steady the ship
after share price plunge. Sees off a bid
for the business from Green.
● 2007
Rose is given a knighthood in recognition
of his services to business after steering
M&S back to health and re-thinking the
company’s ranges.
● 2008
Applauded by shareholders for steering
firm to a £1bn profit in tough economic
times.
● 2009
His reputation is dented as he is attacked
for taking on the dual role of chairman
and chief executive, and allowing over-
excessive boardroom pay.
● 2010
Former Morrisons chief Marc Bolland
takes over as chief executive but Rose
continues to oversee the business as he
assesses the changes he wants to make.
His strategy statement eventually reveals
that he would not radically change the
firm.
● 4 Jan 2011
Officially steps away from M&S leaving
Robert Swannell as new chairman.
TIME LINE | THE CAREER OF SIR STUART ROSE
370
380
390
400
410
420
430
11 Nov 1 Dec 21 Dec 4Oct 22Oct
ANALYSIS l Marks & Spencer
p
374.40
4 Jan
Marc Bolland (left) has been
chief executive of M&S since
May, Robert Swannell
(right) officially becomes
chairman today
Sir Stuart Rose
officially steps
down from
M&S today
Pictures: REX/
REUTERS
BRITISH manufacturing growth hit a
massive 16-year high in December, it
was revealed yesterday.
Extreme weather and tough eco-
nomic conditions had led economists
to expect a fall in the Purchasing
Managers’ Index. Yet the measure of
business activity improvement rallied
to 58.3, its fastest rate of growth since
1994.
The index, compiled by Markit and
the Chartered Institute of Purchasing
& Supply’s, has now remained above
50 – signalling growth in the manu-
facturing sector – for 17 straight
months.
Broad based improvements were
behind the rise, with factory output
and new orders both jumping to
seven month highs.
“This is a fantastic report,” com-
mented Howard Archer of IHS Global
Insight. “Healthy orders growth in
December bodes well for manufactur-
ing output in early 2011.”
To cope with the backlogs, and
more new orders, firms increased
their levels of employment so that
jobs growth was recorded for the
ninth successive month.
“This boosts hopes that the private
sector may be able to compensate for
the public sector job losses that are
increasingly on the way,” said Archer.
“However, manufacturing output
only accounts for 12.8 per cent of
GDP,” Archer warned, while manufac-
turing provides less than nine per
cent of jobs in the economy.
The rise in manufacturing was
“underpinned” by new export busi-
ness, the report said, “reflecting
increased sales to clients in mainland
Europe, the US and East Asia.”
Export orders upticked by two
points to 59.9, the second highest rate
of 2010. “Exports will be key to the
outlook for 2011,” said Andrew
Goodwin of the Ernst and Young Item
Club. “The index contains evidence of
strong demand, even from the
Eurozone where the sovereign debt
crisis has seemingly been unable to
dent demand for UK goods at this
stage,” he said.
However, the news was slightly
dampened by rising prices, as the UK
faces the prospect of even higher
inflation. Growth was recorded in
both input and output prices, with
input prices seeing the steepest rise in
inflation since the survey began in
January 1992.
INFLATION across the Eurozone
increased to 2.2 per cent in
December, its highest level for over
two years, it was estimated yesterday.
The jump of 0.3 per cent from
November’s rate takes consumer
price index (CPI) inflation above the
European Central Bank’s (ECB) target
of “just below” two per cent.
It is the first time since November
2008 that the target has been
breached in the Euro area, according
to statistics compiled by the
European Union’s Eurostat office.
Yet analysts believe that the higher
than expected rise was due to global
increases in energy and food prices.
“Core inflation, excluding food,
energy, alcohol, and tobacco probably
stayed at around one per cent, con-
firming that underlying price pres-
sures in the Eurozone have remained
subdued,” said ING’s Martin van Vliet.
“Today’s above target reading will
probably raise some eyebrows at the
ECB,” van Vliet added, “but it should
not be cause for alarm -- the chances
of a rate hike from the ECB before the
end of this year still appear modest.”
However, some economists expect
the ECB to be forced to raise rates.
“We predict Eurozone inflation of
two per cent this year – so it will no
longer look appropriate for the ECB
to keeprates at historical lows,” said
Thomas Mayer of Deutsche Bank.
“We think that the ECB will have to
move interest rates upwards in the
second half of the year,” he said.
Eyes on ECB interest rates, as inflation
in Eurozone jumps to a 26-month high
MORTGAGE approvals unexpectedly
increased to their largest number in
four months in November, the Bank
of England revealed yesterday.
The Bank also released data on the
money supply, with its favoured
measure increasing by 0.2 per cent on
the previous month, and 3.5 per cent
year-on-year in the three months to
November.
And after a fall in October, the
number of loans for house purchases
rose to 48,019 for the month.
The number of loans for remort-
gaging shot up to 34,262, from 30,429
the previous month.
The figures mirrored last month’s
survey from the British Bankers’
Association (BBA) which showed far
greater annual growth in mortgage
lending in November (3.2 per cent)
than in October (0.8 per cent).
However, the slim rise is “nothing
to write home about,” according to
Hetal Mehta of Daiwa Capital.
And consumer credit fell by £0.1bn
in November, the Bank reported.
Yet confidence in the economy
improved in November, according to
an IPSOS Mori survey that showed UK
confidence rose by three per cent.
“This is also an endorsement of the
deficit reduction plan,” said Ashish
Prashar of Ipsos MORI. “The public
seem to be saying that dealing with
this deficit is not an alternative to
growth -- the two go hand in hand.”
Mortgage
approvals
edge up
UK ECONOMY

AMERICAN auto sales hit their high-
est level in 16 months in December, it
was revealed yesterday.
The figures surpassed expectations
and marked the end of a strong year
for the formerly troubled industry.
Economists had predicted sales of
12.3m, yet the annual sales rate for
December jumped above 13m, accord-
ing to initial data from major
automakers.
US vehicle sales rose more than 11
per cent in 2010, reversing a four-year
slide. The figures are a snapshot of
consumer demand and bode well for
the economic recovery in the new
year.
The previous decline in the indus-
try had ended in controversial gov-
ernment bailouts for GM and
Chrysler.
Ford, however, avoided a bailout.
Car makers now believe that sales for
2011 can also exceed 13m.
“It was stronger than we thought,”
commented Ford’s George Pipas on
the results.
And there was also good news for
US manufacturing, as factory orders
rose 0.7 per cent in November.
Orders excluding transportation
recorded their largest gain in eight
months, fueling dollar buying versus
the euro.
The result surprised analysts who
had expected orders to either level
out or actually decline, after orders
fell by 0.7 per cent the previous
month.
American auto sales top 13m
BY JULIAN HARRIS
US ECONOMY

UK’s factory
growth hits a
16-year peak
BY JULIAN HARRIS
UK ECONOMY

BY JULIAN HARRIS
EUROZONE ECONOMY

l General Motors annualised sales
rose 7.5 per cent in December.
lFord sales increased by 6.7 per cent
over the same period, while shares
rose by over 70 per cent.
FAST FACTS | US AUTO SALES
Economic News
13 CITYA.M. 5 JANUARY 2011
Mervyn King’s Bank reported positive news for the house buyers Picture: REUTERS
NEWS | IN BRIEF
UK wheat prices hit record high
The cost of UK wheat hit a nominal
record high in the London market yester-
day at £203.30 per tonne, up 90 per cent
over the past year and above the previ-
ous peak of £197.50 a tonne set in
September 2007. Prices have been
underpinned by tightening world
supplies as floods disrupted exports from
Australia, compounding supply worries
after Russia's severe drought this summer.
Snow blamed for German jobs drop
German unemployment edged up very
slightly last month, rising by 3,000 on
November. Unemployment had fallen in
November and October, as the German
recovery continued to build up pace. And
employment reached almost 40.5m in
November, according to ILO statistics.
Economists had expected a further fall in
unemployment for December. “The
monthly rise in unemployment should be
largely attributable to particularly harsh
winter weather,” said Thorsten Polleit of
Barclays Capital. The unemployment rate
stood unchanged at 7.5 per cent.
Singapore: manufacturing boost
New data yesterday showed ongoing
growth in Singapore’s manufacturing
sector as a purchasing managers’ index
(PMI) reading remained above the 50
“no change” point. Meanwhile, Asian
manufacturing also received a new year
boost as in both South Korea and Taiwan
the sector moved from contraction to
growth, jumping above the 50 “no
change” mark. And PMI in India
remained above the 50 level.
0
1
2
3
4
5
ANALYSIS l Comparison of European Inflation Levels
C
o
n
s
u
m
e
r

P
r
ic
e

I
n
d
e
x

I
n
f
la
t
io
n
N
o
v
e
m
b
e
r

2
0
1
0
Dec
ECB & Bank of England target rates
Eurozone Greece Hungary UK Spain Portugal France Italy Sweden Germany Norway
P
e
r
c
e
n
t
a
g
e
(
%
)
ANALYSIS | YELL’S TOP SHAREHOLDERS
Investors Holding
1 Invesco Asset Management 23%
2 Fidelity International 13.2%
3 Standard Life Investments 9.97%
4 Taube, Hodson & Stonex 5.74%
5 Deutsche Bank 3.87%
6 Capital International 3%
7 Ignis Investment Services 3%
BUDGET airline easyJet yesterday
purchased 15 new Airbus A320 air-
craft, as well as buying options for 33
additional jets.
The order comes despite warnings
from the airline’s founder and largest
shareholder, Sir Stelios Haji-Ioannou,
who recently expressed concern over
easyJet’s expansion plans.
The Athens-born entrepreneur
pressed the firm over its intentions to
purchase additional aircraft in
November following full-year results,
urging the company to “carefully
assess the financial viability of any
fleet expansion”.
He added: “I remain very con-
cerned with the strategy of the previ-
ous management which expanded
the fleet to develop summer holiday
routes leaving it with approximately
40 aircraft parked over the winter.
Parked aircraft lose money.”
Despite Sir Stelio’s protests, the carri-
er yesterday pressed ahead to convert
an existing option to buy the new
planes, which have a list price of a com-
bined $1.1bn (£710m), or $73m each.
easyJet also converted an order for
20 Airbus A319s to the more fuel effi-
cient A320s, in a deal financed
through cash, operating leases and
debt.
Although the airline would not dis-
close the value of the deal, which
comes as part of its existing supplier
contract with Airbus, it said it had
secured “substantial” price conces-
sions on the latest purchase.
European manufacturer Airbus has
been easyjet’s supplier since 2002,
when the carrier turned away from
US manufacturer Boeing.
The airline has a fleet of 192 air-
craft, including nine Boeing jets, and
options to purchase a further 73
planes.
The latest additions will be brought
on line by 2013, with no specific
routes earmarked for operation.
A SURGE in private investor-owned
shares has seen them end 2010 at the
highest level since the recession
began.
UK private equity holdings ended
December at £207bn, recording the
strongest performance since May
2008, according to research from
Capita Registrars.
The figure jumped from £194bn at
the end of November to break the
£200bn mark by the new year.
The surge sees the proportion of
the UK stock market in private
investors hands hitting 10.95 per cent
in December, up from a slump of
10.27 per cent in May last year and at
its highest measure since the sum-
mer of 2009.
Activity on the stock market for pri-
vate investors during the previous
year was the highest in four years,
with a total of £6.34bn traded in total.
A stronger than expected recovery
in the UK economy is believed to
underpin the return of private share-
holders to the stock market, accord-
ing to Capita Registrars, with
confidence amongst investors
remaining strong despite the down-
turn.
Chief executive Charles Cryer said:
“Private investors began buying in a
concerted way in the early summer
when the stock market plunged. They
have continued to invest new money
in equities throughout the rest of the
year as the index has steadily climbed
back to pre-recession levels.”
Value of private investor shares surges
to highest level since before downturn
DIRECTORIES group Yell yesterday
made a £150m early repayment of its
senior bank debt.
The repayment saves the firm
around £3m of interest and leaves it
with £66m to repay by May under a
debt restructuring agreement made
last year.
Shares in the company closed 1.7
per cent higher at 14.75p as it looked
likely to meet its May deadline.
Half-year results indicated strong
cash flow revealing the business held
£261m in cash reserves with a total
net debt of £2.9bn.
Yell has managed to reduce its debt
mountain gradually, including secur-
ing a strong refinancing agreement
two years ago to alleviate pressure.
However analysts still view the
business with caution, pointing to
reluctance amongst small businesses
to advertise during the downturn
and growing competition online.
Alex DeGroote analyst at Panmure
Gordon said: “The quantum of debt is
so large that it really obscures equity.
“Its online business isn’t totally out
of the game but if you’ve got 85 per
cent of business in print declining
you need to have high growth in
other areas to compensate for that.
“It has got appeal if there’s a turn-
around in the advertising climate for
smaller businesses.”
Yell saves £3m with payment
BY RICHARD PARTINGTON
MEDIA

Easyjet order
flies against
Stelios ideas
BY RICHARD PARTINGTON
AVIATION

BY RICHARD PARTINGTON
MARKETS

News
14 CITYA.M. 5 JANUARY 2011
11
12
13
14
15
16
17
11 Nov 1 Dec 21 Dec 4Oct 22Oct
ANALYSIS l Yell Group
p
14.75
4 Jan
£240
£220
£200
£180
B
illio
n
s
£160
£140
£120
14%
13%
12%
11%
10%
M
a
r
-
M
a
y
0
6
J
u
n
-
A
u
g
0
6
S
e
p
-
N
o
v
0
6
D
e
c
0
6
-
F
e
b
0
7
M
a
r
-
M
a
y
0
7
J
u
n
-
A
u
g
0
7
S
e
p
-
N
o
v
0
7
D
e
c
0
7
-
F
e
b
0
8
M
a
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-
M
a
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0
8
J
u
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-
A
u
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0
8
S
e
p
-
N
o
v
0
8
D
e
c
0
8
-
F
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b
0
9
M
a
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-
M
a
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0
9
J
u
n
-
A
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g
0
9
S
e
p
-
N
o
v
0
9
D
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c
0
9
-
F
e
b
1
0
M
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1
0
J
u
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-
A
u
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1
0
S
e
p
-
N
o
v
1
0
9%
ANALYSIS l Rise in private shareholders
Private investor holdings Proportion of FTSE Allshare
owned by private investors
Easyjet
founder Sir
Stelios (top)
had warned
against new
expansion
plans pushed
through by
easyJet chief
executive
Carolyn
McCall (bot-
tom) Pictures:
REUTERS/
REX
360
380
400
420
440
460
480
11 Nov 1 Dec 21 Dec 4Oct 22Oct
ANALYSIS l easyJet
p
457.60
4 Jan
Airline should
continue its
expansion
EASYJET’S decision to convert
options on 15 aircraft is good news
for the company. Passenger num-
bers are still growing, up 8.2 per
cent in November, while budget
airlines are stealing market share
from full-service carriers, helped by
a cabin crew dispute at British
Airways.
But the 15 orders represent less
than a fifth (17 per cent) of the 88
options and purchase rights that
easyJet has outstanding with
Airbus. The firm should press
ahead and convert yet more of
these options, which were agreed
in the downturn and come with a
hefty recession discount.
Stelios Haji-Ioannou disagrees.
He wants to cap aircraft numbers
at 200 (compared to the 211-strong
fleet that easyJet will fly after yes-
terday’s announcemnt); to operate
year-round routes only (rather than
grounding some planes in winter);
and to reduce the annual target for
growth in seats to “GDP plus some-
thing” (as opposed to the current
7.5 per cent).
He is being too cautious. easyJet
still has room to grow, especially
compared to Ryanair, which will
fly a fleet of 299 planes by 2013. It
can win share from regional play-
ers, while flying medium-haul
routes like the London-Luxor serv-
ice it launched at the end of 2010.
Patience isn’t always a virtue.
BOTTOMLINE
Analysis by David Crow
News
15 CITYA.M. 5 JANUARY 2011
SHARES in Desire Petroleum plunged
more than 26 per cent yesterday after
the Falkland Islands-focused oil
explorer said it had abandoned its lat-
est well, the Dawn/Jacinta prospect in
the southern part of the North
Falklands basin.
The mile-deep well is Desire’s latest
disappointment, having found no
hydrocarbons at its Rachel prospect
in the same region in October.
“We now believe that Desire
Petroleum has some major problems
in that the company is now starting
to run out of cash,” says Panmure
Gordon analyst Peter Hitchens.
Oil exploration in the Falklands
has resulted in only one commercial
discovery at Rockhopper’s Sea Lion
well last spring in the northern part
of the North Falklands basin, some
100km away from the Dawn/Jacinta
prospect.
The oil rig that was used by Desire
will now be subcontracted to
Rockhopper, which plans to drill one
or two separate wells. Desire will then
use the well to explore one well in an
undisclosed location.
“It [the dry hole] really shouldn’t
come as too much of a surprise to
people. It had just an eight per cent
chance of working,” says Evolution
analyst David Farrell, adding that
Rockhopper’s Ernest well is the only
other well to be drilled in the vicinity
and that was also a dry hole.
Analysts at Oriel Securities retain
their “hold” recommendation on
Desire as they see longer term poten-
tial in Desire’s acreage in the
Northern part of the North basin.
AIM-listed shares in Desire closed
12.75p down at 35.25p. The stock has
lost more than 80 per cent of its value
since the firm revealed the failure of
the Rachel prospect in October.
Meanwhile, shares in AIM-listed
colleague Rockhopper closed up 0.7
per cent at 370p.
OIL and gas firm Cairn Energy said it
has secured two rigs for its controver-
sial Greenland drilling campaign yes-
terday, boosting Arctic exploration
hopes and sending its shares higher.
Cairn is optimistic it will find sub-
stantial oil reserves in largely unex-
plored Greenland, saying it
contracted the rigs to drill up to four
wells in the Arctic region in 2011.
The deepwater rigs will be operated
by their owner, Norwegian-based
Ocean Rigs.
“We would view this update as pos-
itive given concerns that Cairn would
struggle to secure rigs for this year’s
campaign,” said Oriel analyst Richard
Rose.
Cairn said it would give further
details on its drilling plans in due
course, which the analyst said could
start as soon as April if the company
opts to drill in Southern Greenland,
as it secured a $900m (£578m) debt
facility to help secure the rigs.
Standard Chartered, Bank of
Scotland, Crédit Agricole, HSBC and
Société Générale are providing the
debt facility, which will also be used
to fund general corporate purposes.
Chief executive Bill Gammell said:
“By contracting two vessels for the
Greenland exploration programme
Cairn has increased operational capa-
bility and flexibility and continues to
demonstrate its focus on safety.”
Shares in Cairn yesterday closed
11.60p higher, or 2.76 per cent, at
431.6p.
Cairn Energy secures two rigs for its
drilling campaign off Greenland coast
JUBILANT Energy has started drilling
a second appraisal well in the Deen
Dayal East area of Krishna Godavari
block, off the coast of India.
The appraisal well DDE-APP-1,
located in 101m of water, was spud-
ded – or drilled into – on Saturday by
the “Deep Driller-1” rig from Aban
Offshore.
Jubliant said the target depth of
the well is 4,750m true vertical depth
with the objective of appraising the
hydrocarbon bearing sands of the KG-
16 discovery well.
This is the 17th well to be drilled by
the consortium in the block. The last
12 of the wells drilled all contained
gas and condensate.
Jubilant holds a 10 per cent partici-
pating interest in this block through
its subsidiary Jubilant Offshore
Drilling Private Limited in India.
Gujarat State Petroleum
Corporation, with an 80 per cent par-
ticipating interest, is the operator for
the block.
Jubilant begins testing
on second appraisal well
GAS & OIL

OIL explorer Xcite said yesterday it
has suspended its well in the Bentley
field of the North Sea while it exam-
ines the quality of the oil found in
December.
The company said the oil find is a
“transformational well for the com-
pany” and that it remains ready to
be used as a production well in the
future.
The Ocean Nomad drilling rig
used to explore the hydrocarbon
deposit is now off hire from the
Bentley field around 160 kilometres
off the coast of Shetland.
Xcite awarded 12 of its executives
involved in the development a total
of 1.6m share options yesterday, ,
worth £6.2m in total, as a bonus for
the success of the Bentley 9/3b-6 well.
The company’s London-listed
shares have rocketed seven-fold in
the last twelve months, with the
gain accelerating in December when
the firm said it had successfully
struck oil at Bentley after months of
delays.
The firm has exploration licences
for several blocks in the North Sea
following the Department of Energy
and Climate Change’s latest round of
offshore licensing in October.
The AIM-listed stock lost 5.3 per
cent yesterday to close at 363p. Its
shares on the Toronto Stock
Exchange also fell 5.4 per cent to
C$5.60.
Xcite seals
North Sea
discovery
OIL & GAS

OIL prices fell from a 27-month high
yesterday as the commodities sector
saw a sharp sell-off.
Traders said the abrupt selling
across energy, metal and agricultural
markets reflected a correction to the
rally that had capped 2010, rather
than a sudden reversal of the opti-
mism that made commodities the
top asset class last year. Trading vol-
ume recovered to its highest level
since mid-December.
Additional pressure came from a
rebound in the dollar, after news of
an improving US economic outlook.
In London, ICE Brent crude for
February delivery fell $1.93 to $92.91
a barrel, well off an early $95.74 peak.
US crude oil for February delivery
slid from an intraday peak of $92.07 a
barrel to as low as $88.72 – the biggest
one-day fall since November.
Traders will be turning today to an
update on US oil and fuel inventory
levels from the US Department of
Energy.
Oil price dips from its 27
month peak after sell-off
GAS & OIL

SHARES in oil major BP hit a six-
month high yesterday after reports
rival Royal Dutch Shell considered a
takeover bid, and that economic dam-
ages from its oil spill will be lower
than forecast.
BP shares were up 5.9 per cent to
492.90p by the close of trading.
The Daily Mail newspaper, citing
sources close to the Anglo-Dutch
group, reported Shell weighed an
opportunistic bid for BP as crude
gushed into the Gulf last summer,
but was discouraged by the potential-
ly uncapped legal liabilities.
The newspaper said Shell could yet
bid for BP if another suitor emerged
but Europe’s largest oil company by
market value was unlikely to be the
“first mover” for number two, BP.
Dealers and analysts including Mic
Mills, head of electronic trading at
ETX Capital, said BP was also being
boosted by comments late on 31
December from the lawyer running
BP’s gulf oil spill compensation fund
that suggested damage payments
could be half the expected level.
Ken Feinberg, the independent
administrator of the $20bn (£12.8bn)
fund set up by BP, told Bloomberg
Television about half the fund’s assets
should be adequate to cover claims
for economic losses.
One dealer said the reports high-
lighted the fact BP shares were cheap
compared to rivals. “BP remains cheap
and vulnerable at these levels but I do
not think a bid is likely,” he said.
BP jumps on talk of Shell bid
BY HARRY BANKS
GAS & OIL

Desire gives
up on well in
the Falklands
BY MARION DAKERS
ENERGY

BY HARRY BANKS
GAS & OIL

● BP posted a 63 per cent drop in quarterly
profit when it last reported in November.
● The UK-listed oil giant said the April oil spill
had cost $39.9bn to date, including the $20bn
set aside for compensation claims.
FAST FACTS | BP
The Dawn/Jacinta prospect in the Falklands is Desire’s latest disappointment
40
60
80
100
120
140
160
180
11 Nov 1 Dec 21 Dec 4Oct 22Oct
ANALYSIS l Desire Petroleum
p
35.25
4 Jan
UNIONS at Sanofi-Aventis have
called on staff in France to strike
today to fight plans to cut jobs at
the French drugmaker.
A group of nine trade unions rep-
resenting staff at Sanofi said the
company was seeking to scrap 916
jobs, adding that 2,700 jobs had
been cut at the company since the
merger between Sanofi and Aventis
in 2005.
“The reality is that these job cuts
are part of a vast €2bn (£1.7bn) sav-
ings plan that group management
wants to achieve by 2013. All the
group’s businesses are affected,” the
unions said in a statement yester-
day.
A spokesman for Sanofi said the
group had not announced any new
job cuts since unveiling a reorgani-
sation of its French commercial divi-
sion last month that would lead to
575 out of 2,800 jobs going by the
end of this year.
The spokesman said the unions
had reached the figure of 916 by
adding 260 unoccupied posts, and
81 staff who will be expected to
change roles.
Sanofi-Aventis unions call
for strike action in France
UNIONS

US PRESIDENT Barack Obama is con-
sidering tapping JP Morgan Chase
executive William Daley for a senior
role in the White House, such as chief
of staff.
Daley, who is Midwest chairman of
JP Morgan Chase and head of corpo-
rate social responsibility, was also a
former commerce secretary.
If he were chosen, the move would
help satisfy a clamour in the business
community to have greater represen-
tation for private industry within the
administration.
Daley would bring with him a
breadth of experience in business. He
serves on the board of Boeing and has
served in the past as director at
Merck. He is also a past president of
SBC Communications.
A source close to the matter cau-
tioned that no decision had been
made. Obama, on the last leg of his
Hawaiian vacation, has been consid-
ering an array of staffing decisions
during his break.
One of the biggest decisions con-
fronting him when he returned yes-
terday is a replacement for top eco-
nomic adviser Larry Summers.
Democratic sources say senior
Treasury official Gene Sperling has
emerged as the leading candidate.
Many businesspeople had hoped
Obama would fill Summers’ job as
director of the National Economic
Council with a private sector figure,
but Sperling’s career has been heavi-
ly focused on public policy.
In another staff move, Obama is
weighing whether to elevate Ron
Bloom to a broader manufacturing
post at the White House. The leader
of Obama’s automotive task force is
currently focused on overseeing the
restructuring of GM and Chrysler.
Obama woos JP Morgan exec
BY HARRY BANKS
US POLITICS

News
16 CITYA.M. 5 JANUARY 2011
SPANISH builder ACS has secured a
crucial 30 per cent holding in
Hochtief following a hotly contested
takeover bid, allowing it to build a
controlling interest in the German
construction group.
The Spanish construction group
wants to get control of Hochtief’s
strong balance sheet to ease the bur-
den of its own debt of more than
€9bn (£7.7bn), and continue to diver-
sify away from Spain’s struggling
construction and property sectors.
Hochtief is not the only iron ACS
has in the fire. It is also pursuing
board seats at Iberdrola by increas-
ing its stake in the Spanish utility,
which would allow it to consolidate
a proportion of Iberdrola’s earnings.
ACS said yesterday it holds 30.34
per cent in Hochtief, adding it had
extended its bid to 18 January in an
attempt to get more shareholders to
accept its all-share offer.
Its improved nine-for-five share
offer closed on 29 December. By
achieving the key 30 per cent thresh-
old, German takeover rules allow
ACS to buy more shares on the mar-
ket without making a new formal
offer for the whole of the company.
ACS , whose projects range from a
dam in Puerto Rico to a Spain-France
high-speed train, is aiming for a 50
per cent shareholding in Hochtief.
Hochtief’s shares fell 1.4 per cent
following confirmation that ACS
had achieved its goal of more than
30 per cent. Many had anticipated
the result after US investor
Southeastern Asset Management,
which has holdings in both compa-
nies, said it would tender half its
Hochtief shares to the bid.
Spanish ACS
closes in on
Hochtief deal
BY HARRY BANKS
M&A

FLOODWATERS have eased in
Australia’s major coal mining region,
allowing some mines to resume pro-
duction, although most remain idle
as floods force towns to be evacuated.
Queensland is the world’s biggest
exporter of coal used in steel making,
but floodwaters have brought pro-
duction and shipments overseas to a
virtual standstill, pushing world coal
prices higher.
Queensland Resource Council said
it would take until next week to
determine when exports would
return to normal.
“This is a three part drama: first
mining production has to resume,
then transport and then ports,” said a
council spokesman.
Australia accounts for more than
half of global coking coal exports,
which are especially important for
Asian countries such as China.
Wesfarmers said it was resuming
output at its Curragh mine, but that
the act of God would continue to
dampen exports and that it would
take until early February to return to
normal production.
Spot coking coal prices have risen
around 10 per cent in a month and
look set to move sharply higher as
Australian customers look for new
supplies to cover lost output.
Mining resumes in flood-hit Australia
MINING

BEST OF THE BROKERS
ANALYSIS l BAE Systems
340
350
330
360
370
22 Oct 11 Nov 21 Dec 1 Dec 4 Oct
p
342.30
4 Jan
BAE SYSTEMS
Espirito Santo Investment Bank, which
incorporates Execution Noble, recommends
a “buy” on BAE Systems, saying the stock
“has sunk back towards the bottom end of
its historic price-to-earnings ratio range”.
The broker says that the risk-reward trade-
off now “looks attractive heading into
results”.
ANALYSIS l Domino’s Pizza
520
540
500
480
460
560
580
22Oct 11 Nov 21 Dec 1 Dec 4Oct
p 556.00
4 Jan
DOMINO’S PIZZA
Numis rated the stock a “buy” yesterday,
ahead of its trading update today. It expects
the profit and loss statement to have been
affected by tough comparisons with last
year and snow-related disruption, but antici-
pates a strong update nonetheless. The bro-
ker says the stock should be driven higher
by successful marketing campaigns.
ANALYSIS l President Petroleum
70
80
60
90
100
22Oct 11 Nov 21 Dec 1 Dec 4Oct
p
79.50
4 Jan
PRESIDENT PETROLEUM
RBS rates the AIM-listed oil and gas produc-
er a “buy” despite well delays and increasing
costs. It says the growing costs are “not par-
ticularly significant in the context of the cur-
rent share price” says that the drilling is
overall in a good position. However, if the
company finds as much oil as predicted,
development costs could escalate further.
To appear in Best of the Brokers email your research to notes@cityam.com
RBC Capital Markets
The corporate and investment banking
arm of the Royal Bank of Canada has
made a new appointment, hiring Carlo
Mareels as a director and senior finan-
cials credit analyst in its European cred-
it research team. He will report to Roger
Appleyard and will be based on London.
He joins the company with over a
decade’s experience in the financials
industry. Most recently, he has worked
at HSBC, covering European banks and
previously he worked at Morgan
Stanley.
J O Hambro Capital Management
The boutique investment firm has
added two new European equity fund
managers, Trygve Toraasen and Carlos
Moreno, ahead of the launch of its
European dynamic growth fund next
month. Both recruits come from Thams
River Capital, where they were manag-
ing an equivalent fund focused on
dynamic growth in European region.
Toraasen has also worked at Fidelity
for 14 years, while Moreno worked
there for 15 years, rising from research
analyst to fund manager.
Electra Private Equity
Electra has appointed a new non-exec-
utive director: Geoffrey Cullinan. He has
previously been a director at Bain &
Company from 1997 to 2005 and
founded their private equity business in
Europe. Cullinan has also been a chief
executive of Hamleys and a non-exec of
Datamonitor. He also co-founded OC&C
Strategy Consultants in 1986.
National Institute of Economic
and Social Research
The NIESR has appointed a new direc-
tor: Jonathan Portes, currently chief
economist at the Cabinet Office. He will
take over on 1 February. He replaces
Martin Weale, who has been appointed
to the Bank of England’s Monetary
Policy Committee.
Ascent Resources
The AIM-listed oil and gas firm has
appointed Scott Richardson Brown as
a full-time executive finance director.
He replaces Simon Cunningham, who is
moving to Australia.
CITY MOVES | WHO’S SWITCHING JOBS Edited by Juliet Samuel
PricewaterhouseCoopers
PwC has appointed a new technology leader in
the UK: Jass Sarai. He will be replacing Barry
Murphy, who has been the company’s technolo-
gy leader in Britain for the last two years. Sarai
has worked on the technology sector for the
last decade, having joined PwC straight from
university, and will now be responsible for lead-
ing the analysis of new opportunities in the sec-
tor for the company’s clients. He has worked in
Birmingham, the US and now London.
+44 (0)20 7557 7245
morganmckinley.com
To appear in CITYMOVES please email your career
updates and pictures to citymoves@cityam.com SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
in association with
56
60
58
62
64
66
Nov2010 Dec 2010 Oct 2010
ANALYSIS l Hochtief
p
63.91
4 Jan
JP Morgan Chase exec
William Daley is tipped
for a White House role,
having already served as
commerce secretary
17
Wealth Management
3i Group 337.50 9 337.50 250
3i Infrastructure 123.50 3.50 125.25 101
A.B. Foods 1164 -17 1182 820
AberdeenAsset.Man. 205 2.25 205 112.75
Admiral Group 1548 33 1693 1114
Aegis Group 141.25 0.75 145.50 103.50
Afren 150 2.50 150 79
AfricanBarrickGold 613.50 2.50 670 503
Aggreko 1486 4 1685 882
AllianceTrust 375 2.50 377 293.50
Amec 1175 25 1175 733.50
Amlin 408.50 -0.50 433 362.50
AngloAmerican 3407 71.50 3407 2254
Antofagasta 1622 10 1634 761
Aquarius Platinum 346 -6 458 227
ARMHoldings 438 14.50 440.25 185.75
AshmoreGroup 345 10 383.75 218
AshteadGroup 171.75 -1.25 177 77
AstraZeneca 2990 68 3385 2732
Atkins (WS) 710 9.50 792.50 556.50
Autonomy 1553 48 1975 1271
AvevaGroup 1654 40 1654 1007
Aviva 407 14 423.50 294.25
AZElectronicMaterials SA(WI)299.25 -10.75 310 249
BabcockInternational 575 4 635 492.75
BAESystems 342.25 12.25 388.75 294.75
Balfour Beatty 318.25 5.50 318.25 229.75
Barclays 272.75 11 383.25 255.25
Barratt Development 93 4.50 142 70
BBAAviation 219.50 -2 221.50 158
Bellway 684 14 826 511
BerkeleyGrpHldgs 937.50 47.50 937.50 742
Betfair Group 971.50 7.50 1550 964
BGGroup 1330.50 34.50 1337.50 984
BHPBilliton 2553.50 2.50 2616 1684.50
BlackRockMining 810 -1 811 492
BlueCrest AllBlue 170.75 0.75 174.50 156.25
Booker Group 60.25 0 60.50 38.75
BP 493 27.25 655.50 303
Brit Insurance 1050 8 1050 728
BritishAirways 286 13.50 286 184.25
BritishAmer.Tob 2488 24.50 2521 1959
BritishEmpireTst 503 17 503 396.50
BritishLand 531 6.50 537 418.25
Britvic 471 -2.25 518 398
Brown(N.) Group 300 1.75 301.75 206.50
BSkyB 744.50 8.50 746.50 524.50
BTGroup 185 4.25 187.75 110
Bunzl 731.50 12.50 777 616.50
BurberryGroup 1142 18 1156 581
C&WComms 49.25 0.75 63.75 44.25
C&WWorlwide 68.75 3 100 60.50
CairnEnergy 431.50 11.50 493.25 318.25
CaledoniaInv. 1921 21 1921 1512
CapitaGroup 712 15.50 826 635.50
Capital &Counties 148.25 -2.50 157 100
Capital ShopCentre 424.75 7.25 424.75 301
Carillion 386 1.50 386 273
Carnival 3096 114 3096 2037
CatlinGroup 373.50 3.50 393 320
CentaminEgypt 176 -0.25 197 106.75
Centrica 332 0.50 346 264
Charter 853.50 9 853.50 567
ChemringGroup 3031 127 3663 2598
CloseBrothers 866.50 15 866.50 664
COBHAM 209.25 5.75 276 192.25
Colt Telecom 137.75 0 142.50 109
Compass Group 568 -13 594 425
CooksonGroup 687.50 29 687.50 367.50
CrodaInternational 1566 -50 1616 751
DailyMail &Gen 573.50 -0.50 574 423
Davis Service 439.75 3.25 441.25 360.25
DeLaRue 837.50 18 1005 549.50
Debenhams 73 2.25 80 53
Derwent London 1568 7 1605 1208
Diageo 1197 12 1215 1000
Dixons Retail 24 1 37.50 22.75
Domino’s Pizza 556 4.50 560.50 305.25
DraxGroup 381 12.75 444 326.25
DSSmith 206 3.75 210 104
Dunelm 525 14.50 550 325.25
easyJet 457.50 17.50 496.50 348.50
Edin.Inv.Tst. 464.75 10.75 464.75 364
Electrocomponents 269 3 279.50 165
Enquest 145.25 5.75 146.50 89.25
Essar Energy 572 -8 589.50 383
EurasianNat Res 1081 33 1266 818
EuromoneyInst. 700 8 727 441
ExperianGroup 800 2 819 572
Ferrexpo 417.50 1.50 417.50 197
FirstGroup 412.50 14.25 424 336
For.&Col.Inv.Tst 310.25 0.50 311 251.50
Fresnillo 1682 14 1682 669.50
G4S 254.50 0 283.50 237.75
Genesis E.m.f. 560.50 6.50 560.50 399
GKN 219.50 -2.50 226 102
GlaxoSmithKline 1269.50 29.50 1318.50 1095
Great PortlandEst. 362 1.25 364 279
GreeneKing 480 0.50 491.50 376.25
Halfords Group 454.50 -2.50 550 372.75
Halma 360.50 1.50 366.50 223
Hammerson 429 11.75 434.50 336.25
Hargreaves Lansdown 597.50 11.50 597.50 276.50
Hays 133.50 4.75 133.50 88.50
HendersonGroup 136 0.50 151.75 112.75
HeritageOil 457.75 9 581 296.75
Hikma 837 25.50 837 514
Hiscox 389.50 8 389.50 320.75
HochschildMining 635 -5 658 234
HomeRetail Group 196 7.50 295 188.50
Homeserve 445.50 2.25 487.50 326.25
HSBCHoldings 668 17 740.50 596.25
Hunting 750.50 19.50 750.50 439.50
ICAP 543 8 543 294
IGGroup 524 14 553 362.50
ImaginationTech 372.25 11.75 441.75 215
IMI 932.50 -12.50 948 530.50
Imperial Tobacco 1985 17 2154 1753
Inchcape 370 13.25 370 237
Informa 420 12.50 448 304.50
Inmarsat 674 0.50 821 606.50
InterContinental Htl 1264 21 1266 887
IntermediateCap.Grp 342.50 9.75 351 240.50
International Pers Fin 386.50 2.50 386.50 183.25
International Power 431 -6.75 448.50 284.50
IntertekGroup 1799 24 2000 1150
Invensys 361 7 361 230.25
Investec 531 4 562 417.75
ITV 74 4 74.25 48.25
JardineLloyd 622.50 -6.50 629 459
JohnWoodGroup 570 11 570 293
JohnsonMatthey 2051 13 2100 1446
Jupiter FundMan 305.50 5 310 180.25
Kazakhmys 1649 35 1649 965
KenmareRes. 35 2.25 35 9.25
KesaElectricals 161.25 2 174 99.25
Kingfisher 267 3.50 267 198.50
Ladbrokes 124.50 1.75 162.75 122.75
Lancashire 552 -1 647 435
LandSecurities 680.50 6.50 696.50 545
Legal &General 100.25 3.50 106.25 69.75
Lloyds BankingGrp 67.75 2.25 77.50 46.50
Logica 136.50 5.50 148 101.75
LondonStockEx. 852 14 852.50 544
Lonmin 1948 -18 2157 1355
ManGroup 305.75 9.75 327.50 202
Marks &Spencer 374.50 5.50 427.50 323.50
Meggitt 373 3 375.50 251.50
Melrose 318 7 318 162
MercantileInvTst 1086 1 1096 828
Michael Page 551.50 -3.50 565.50 346.50
MicroFocus 393.25 4.50 546.50 276
Millennium&Cop. 585 -5.50 590.50 368.50
Misys 334 -9 343 201.50
Mitchells &Butlers 358 8 360 247.50
MitieGroup 240.50 6.50 241 188.75
Mondi 527.50 14 557.50 338.25
Monks Inv.tst. 357 0.50 363 271
Morrison(Wm) 271.25 3.75 306.25 257.50
MurrayInt.Tst 966 25 966 736.50
National Express 250.25 -0.75 259.50 194
National Grid 568 15 613.25 484.25
Next 2015 40 2344 1817
NorthumbrianWater 332.50 1.50 361.50 252.75
OcadoGroup 196.75 18.50 196.75 123.50
OldMutual 124 1 145.25 97.25
PartyGaming 212 6.50 334.50 205.25
Pearson 1017 9 1051 855
PennonGroup 635 -5 646 483
Persimmon 429.75 13 507.50 336.50
Petrofac 1622 35 1622 876.50
Petropavlovsk 1132 -12 1365 852
PhoenixGroupHldgs 617 6 758 557.50
Premier Farnell 295.25 8.50 304.50 173
Premier Oil 2018 68 2018 1017
Provident Financial 862.50 -11.50 974 728.50
Prudential 677.50 9.50 681 487.50
PZCussons 401 0.25 409 234.75
QinetiQGroup 132.25 2.25 167 96.75
RandgoldRes 5175 -100 6655 4209
RDS‘A’ 2162 23.50 2162 1624
RDS‘B’ 2159.50 44.50 2159.50 1554
Reckitt Benckiser 3617 92 3655 3037
ReedElsevier 541.50 0 563 460.50
Regus 87.25 1 120 66
Renishaw 1286 56 1306 548
Rentokil Initial 97.50 0.75 138.50 87.75
Resolution 235.50 1.50 346 211.25
Rexam 338.75 6 346.75 276.50
Rightmove 812 33 812 500.50
RioTinto 4502 15.50 4584 2812
RITCapital Partners 1198 -1 1250 971.50
Rolls-RoyceGroup 648.50 25.50 654.50 473.50
Rotork 1850 22 1895 1214
Royal Bankof Scot 40.75 1.50 58 31.25
RSAInsuranceGrp 128.75 3.50 136.50 114.75
SABMiller 2254 -2.50 2306 1650
SageGroup 275 1.50 289 222
Sainsbury(J) 384 7.50 395 313
Schroders 1893 38 1900 1116
Schroders NV 1486 28 1502 929.50
Scot.&Sth. Energy 1239 14 1258 1010
ScottishMortgage 712.50 4.50 712.50 475
SEGRO 295.50 9 352 250.25
SercoGroup 570 14.50 651 494.25
SevernTrent 1486 8 1499 1072
Shaftesbury 451.25 3.25 460 349.25
Shire 1566 23 1567 1220
SIG 132.75 4 137.75 90.75
Smith&Nephew 679 2.50 696.50 537.50
Smiths Group 1299 54 1299 995.50
SocoInternational 378.25 8.75 484.25 292
Spectris 1335 24 1335 735
Spirax-Sarco 1934 0 1987 1235
Spirent 149.50 1.75 160.25 102.75
Sports Direct 166 5.75 166 92.25
St James’s Place 274.50 8.75 292 204.25
StagecoachGroup 215.50 3.50 224 160.75
StandardChartered 1750 24.50 1950 1351.75
StandardLife 219.75 3.75 236 173
Supergroup 1317 20 1638 535
TalkTalk 161.50 1.50 168.25 108.50
TalvivaaraMining 620 24.50 620 342.50
Tate&Lyle 532.50 14.50 544.50 388.75
Taylor Wimpey 32 0.50 44 22.25
TelecityGroup 484 13.75 532.50 360
TempletonEmrg. 685 11.50 685 471.50
Tesco 433 8 454.50 377.50
Thomas CookGroup 195.25 5.50 272 171.75
Travis Perkins 1043 -15 1058 664.50
TUI Travel 255.75 9.50 308.50 190
Tullett Prebon 396 13.25 417.25 262
TullowOil 1308 47 1369 991.50
UKCommercial Prop 81.75 -0.50 85 72.75
UltraElectronics 1710 14 1895 1265
Unilever 1972 9 1997 1688
UnitedUtilities 597.50 5.50 628.50 488.25
UtdBusiness Media 703 13 703 409.75
Vedanta 2485 -32 2934 1839
Victrex 1484 1 1522 806
VodafoneGroup 170 4.25 175 129.50
Weir Group 1775 -5 1861 735.50
WellstreamHoldings 791 1 793.50 436
WHSmith 502 15 523 398.25
Whitbread 1826 36 1826 1266
WilliamHill 171 0.25 216.50 155.50
WitanInvTrust 519.50 3 519.50 410
WOLSELEY 2087 41 2087 1223
WPPGroup 798 8.50 798 572.50
Xstrata 1510 4.50 1535 845.75
LONDON’S TOP 250
LONDON TOP 250 BY MARKET CAPITALISATION
POWERED BY
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Company Name Closing Price Price Change 52wk high 52wk low
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Company Name Closing Price Price Change 52wk high 52wk low
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(p) (p) (p) (p)
US rally peters out
as oil prices weigh
U
S stocks fell yesterday as
declines in oil and metals
prices dragged down energy
and materials shares, while
concern about lower supermarket
profits hit consumer stocks.
The S&P materials index slid 1.6 per
cent while the energy index dipped
1.1 per cent as metals and oil prices
dropped after recent gains.
Shares of Supervalu fell nearly 7
per cent after Morgan Stanley told
investors to cut holdings in the stock,
saying rising food costs will crimp
margins. Safeway and Whole Foods
Market also slid.
The market’s fall followed a strong
start to the new year on Monday and
a robust rally through the end of
2010.
The Dow and S&P 500 recently hit
two-year highs as economic data
pointed to solid US recovery.
“It’s just a bit of a hangover, but no
big deal,” said Scott Marcouiller, chief
technical market strategist at Wells
Fargo Advisors in St. Louis.
He tied declines to the pullback in
commodities, but he said commodity
prices longer term should continue
their upward trend.
“With the continuing recovery
you’ll need demand for raw materi-
als,” he said.
The Dow Jones industrial average
added 20.43 points, or 0.18 per cent,
to 11,691.18. The Standard & Poor’s
500 Index slid 1.69 points, or 0.13 per
cent, to 1,270.20. The Nasdaq
Composite Index dropped 10.27
points, or 0.38 per cent, to 2,681.25
Materials and energy were among
top-performing sectors in 2010.
While many analysts see another
year of gains for the S&P 500, Morgan
Stanley offered a more contrarian
view, forecasting a year-end target for
the S&P 500 below 2010’s close.
Monday’s move was accompanied
by a rise in volume, with more than
7.7bnn shares traded on the New York
Stock Exchange, the American Stock
Exchange and Nasdaq – above the 50-
day moving average. The pace held
strong for a second day, with 3.27bn
shares traded near midday.
Shares of Supervalu dropped 6.7
percent to $8.97, while Safeway was
down 3.3 per cent at $21.76, and
Whole Foods fell 3.5 per cent to
$49.00.
B
RITAIN’S top shares rose
sharply yesterday, the first ses-
sion of 2011, lifted back above
the key 6,000 level by heavy-
weight oil stocks and banks, as solid
economic data prompted a return of
investor risk appetite.
Fresnillo, the Mexican silver miner,
jumped 85p to £17.53 on revived talk
that billionaire Carlos Slim might be
taking a look at the company.
The tale comes courtesy of the
KingWorld News blog, but it is worth
mentioning that the suggestion of
interest in Fresnillo by Slim – said to
be the richest individual in the world
thanks to his telecoms and cement
empire – has been kicking around for
several months now.
The FTSE 100 ended up 113.93
points, or 1.9 per cent, at 6,013.87, its
highest close since the start of June
2008, easily recovering the 1.2-per
cent loss it suffered on New Year’s
Eve.
Yesterday’s advance followed
strength from US and European mar-
kets on Monday when London was
closed.
Trading volumes came back to
more normal levels after the thin ses-
sions seen over the holiday period,
with 104 per cent of its 90-day daily
average having traded.
BP was the standout blue-chip gain-
er, up 5.9 per cent at a seven-month
high, after reports rival Royal Dutch
Shell considered a takeover bid, and
that economic damages from its oil
spill will be lower than forecast.
Shell gained 1.1 per cent.
“We’re playing catch-up to the
European markets which had a good
start to the year ... the rally is being
supported by some very good eco-
nomic data,” said Angus Campbell,
head of sales at Capital Spreads.
Data yesterday showed that British
manufacturing activity grew at its
fastest pace in more than 16 years in
December, complementing data from
the US on Monday showing its manu-
facturing sector grew for a 17th con-
secutive month in December.
Meanwhile China’s factory infla-
tion cooled in December, while man-
ufacturing in Europe accelerated.
Buyers came in for the banks, as
worries over Eurozone sovereign debt
faded further into the background,
with Barclays adding 4.2 per cent and
Royal Bank of Scotland up 4.1 per-
cent.
An Exane BNP Paribas upgrade to
“outperform” also helped RBS, with
the broker saying a sharp sell-off on
the bank’s exposure to debt-hit
Ireland presents a buying opportuni-
ty.
Among individual blue-chip gain-
ers, Carnival took on 3.8 per cent
after being upgraded to “buy” from
“hold” by Deutsche Bank with an
increased target of 3,700 pence.
The main losers were stocks seen as
defensive. Food producer AB Foods
was down 1.4 per cent, while utility
International Power slipped 1.5 per
cent.
Oil prices dipped as the US Monday
rally was corrected and investors sold-
off commodities.
New Year boom sees FTSE
lifted over the 6,000 mark
THELONDON
REPORT
THENEW YORK
REPORT
ANALYSIS l FTSE
6,100
5,900
5,700
4Oct 22Oct 11 Nov 1 Dec 21 Dec
6,013.87
4 Jan
SAYING YOU HAVE THE
TIGHTEST SPREADS
IS LIKE BRAGGING BECAUSE YOU HAVE A BELLY BUTTON.

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Sterling is stuck in the
middle of a tug of war
THREE FOREX
QUESTIONS TO
ASK FOR 2011
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT
The pound is wedged
between equal forces,
writes Daniel Knowles
THE THREAT OF EURO FRACTURE
As 2011 began, Estonia became the 17th coun-
try to join the Eurozone but sceptics still insist its
days are numbered. Just as in 2010, the sover-
eign debt issue will haunt the currency while
credit markets will be the primary catalyst of
the FX trade. The focus will turn to Spain, which
faces nearly €200bn of refinancing this year. If
it suffers the type of funding crisis that befell
Greece and Ireland, the euro may become
stressed to the point of fracture – the region’s
fourth largest economy may be too big to res-
cue.
CHINA’S HARD LANDING
News out of China suggests the fastest-growing
major economy may be heading for a hard land-
ing or a slowdown at the very least. The latest
manufacturing purchasing managers’ index was
weaker than expected while the recent rate hike
by the People’s Bank of China could curtail con-
sumer spending. Any slowdown will be felt in
Australia first. Up to now, the Australian dollar
has been unstoppable, rallying to fresh post-float
highs of US$1.2057 on the back of strong com-
modity prices, although its prospects have been
dented by the recent floods. But it could easily
head towards US$0.9000 in 2011 if investors
cut their growth expectations for the region.
US: RECOVERY OR BACK TO DOUBLE DIP?
Recent US data has generally surprised to the
upside but labour markets remain depressed.
The latest weekly jobless claims dropped below
400,000 but the reduction has yet to translate
into any pick-up in labour demand. This week’s
non-farm payrolls report could be crucial in
determining whether the US labour market has
turned the corner. Until now, dollar-yen has
failed to rally because traders are sceptical
about the US rebound. But if the market is con-
vinced by the US recovery, then dollar-yen could
trade to ¥90.00 by end-2011.
Boris Schlossberg and Kathy Lien are direc-
tors of currency research at GFT. Read com-
mentary at www.GFTUK.com/commentary or
e-mail borisandkathy@gftuk.com.
prove easy. If markets begin to believe that
the Federal Reserve is simply monetising
the USA’s debt then they could start selling
the dollar. As a result, if the pound man-
ages to climb above the psychologically
important $1.60 level, Ladwa reckons “it
could well outperform further”.
Conversely, against the euro, any rally
might be weaker. Though sovereign debt
fears in Europe have not disappeared, they
have lessened of late. The Chinese govern-
ment recently expressed its intention to
buy up more Spanish sovereign debt, while
the European Central Bank is providing
much needed liquidity.
That, in combination with robust
growth in Germany and even now in other
economies, means that the euro could well
push higher against the pound – even if, as
is likely, the British economy also contin-
ues to recover. Traders need to make sure
they are aware of the relative performance
of the British economy – not just the
absolute.
At the moment though, the prospects
look good, and sterling will probably even-
tually appreciate. But with uncertainty
still ubiquitous, traders might do better to
try to profit from volatility. The tug of war
will take a while to be won yet.
W
ITH higher rail fares, energy bills
and from yesterday, VAT, 2011 is
so far not looking like a very
happy New Year for many British
consumers. But despite the higher costs,
they can at least take solace from the fact
that the economy does seem to be recover-
ing fairly remarkably. And the pound
seems to be following it up. Sterling rose
0.9 per cent against the dollar and 0.5 per
cent against the euro yesterday after the
release of unexpectedly positive British
manufacturing data.
So should traders bank on the further
appreciation of sterling?
“It’s a difficult one” says David Jones,
chief market strategist at IG Markets. “In
three months time, I wouldn’t be sur-
prised if we’re roughly where we are now,
but in the meantime, there should be a lot
of volatility”.
According to Jones, sterling is balanced
rather perilously between two approxi-
mately equal forces, rather like a rope in a
well matched tug of war.
At one end of the rope, a recovering
economy, a declining fiscal deficit and the
possibility for interest rate increases to
combat inflation all ought to boost confi-
dence in the pound. At the other end, how-
ever, ongoing fears that austerity measures
will cut into the ground beneath the recov-
ery will encourage short sellers, as will the
possibility of new global crises.
Jones says that it will take “probably
until the summer” until that battle is
resolved – if not longer – and in the mean-
time, sterling is likely to see big swings as
and when news comes in. Jones argues
that it is probably “sensible to be on the
longish side, but also ready to take profits”.
If traders do want to go long on the
pound, Manoj Ladwa, senior trader at ETX
Capital, reckons that the sterling-dollar
pair might be a better trade than sterling-
euro.
With Barack Obama’s administration
facing deadlock in the now Republican
controlled House of Representatives, tack-
ling America’s fiscal deficit is unlikely to
Revaluing the pound
will take a fight
ANALYSIS l The pound leapt up by 2 cents
yesterday morning
1.562
1.568
1.566
1.554
1.550
1.546
6am 12pm 12am
$
Wealth Management | Foreign Exchange
18 CITYA.M. 5 JANUARY 2011
FOREX ANALYST PICKS
FOREX STRATEGIST
JOHN KICKLIGHTER
My pick: Long sterling-yen from ¥126.75, long dollar-Loonie above Ca$1.0000
Expertise: Fundamental and technical analysis with risk management
Average time frame of trades: 1 day-1 week
FOREX STRATEGIST
JOEL KRUGER
My pick: Buy dollar-Swiss franc on a daily close above SFr0.9400
Expertise: Technical analysis
Average time frame of trades: 1-6 weeks
The latest price movement in this pair is certainly concerning with
the market dropping to fresh record lows by SFr0.9300. But cyclical
studies are showing that it is now oversold and any additional
declines below SFr0.9300 are not seen as sustainable. Therefore,
our strategy is to continue to take shots at buying, but ultimately,
look for a break and a daily close back above SFr0.9400 to confirm
a short-term reversal and relieve immediate downside pressures.
Target SFr1.0000 and put a stop at SFr0.9240.
We have an unusual couple of weeks ahead of us as the market devel-
ops a clearer bearing on speculative convictions (risk appetite) as liquid-
ity returns to the market after the break. Therefore, it is good to take
short-term setups – which US dollar-Canadian dollar and sterling-yen
both seem to offer. After a 10-day decline, I’ll look for a dollar-Loonie
move above parity and maintain a 75 point initial stop and target. The
same goes for sterling-yen above ¥126.50 with a 100-point stop and
first target for the trade.
FOREX STRATEGIST
ILYA SPIVAK
My pick: Stay short euro-US dollar
Expertise: Global macro
Average time frame of trades: 1 week-6 months
I sold euro-US dollar at $1.3315 on 15 December expecting the euro
to slump in 2011 as economic growth in the currency bloc continues
to underperform that of the US. Furthermore, the debt crisis is
spreading from Euroland’s periphery to larger countries beyond the
scope of a bailout using EFSF funds, like Spain. Prices have put in a
bearish Harami candlestick below the $1.34 figure and I will remain
short, initially targeting $1.2969 with a stop-loss on a daily close
above $1.3499.
Wealth Management | Foreign Exchange
19 CITYA.M. 5 JANUARY 2011
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T
HE US dollar has risen for the second
consecutive day against the yen
thanks to increased optimism for the
US recovery – factory orders are
falling at a slower pace than expected and
the labour market is also starting to show a
glimmer of improvement. Following the
latest fall in weekly jobless claims, analysts
are upping their expectations for a better
non-farm payrolls number this Friday, which
could lead to further upside for the dollar.
Capital Spreads is quoting ¥82.12-¥82.14 on
US dollar-yen.
Better-than-expected mortgage approvals
and the UK purchasing managers’ index
(PMI) data combined with the prospect that
interest rates may be hiked sooner than
expected has lent support to the pound lately.
But whether the rally can be sustained
remains to be seen.
Much will depend on the non-farm payroll
figure due at the end of the week. The high
level of volatility that has been seen in
recent months makes this release a difficult
one to call. A slightly negative number has
THE
TIPSTER
GREENBACK
DEPENDS ON
US JOBS DATA
the potential to support the pound, but a big
decline could certainly initiate another
round of investors exploiting the green-
back’s perceived safe haven status. The cur-
rent IG Index price on sterling-dollar is
$1.5613-$1.5615.
The Swiss franc was a big loser for the
first time in a long while yesterday as
reports of aggressive macro fund buying
pushed the safe haven currency lower. Euro-
Swiss franc gained 160 basis points to
SFr1.2634, dollar-Swiss franc added 100
basis points to SFr0.9430 and sterling-
Swiss franc rocketed some 200 basis
points to SFr1.4757, helped by the stronger
UK PMI figures. Spread Co is currently
offering spreads on euro-Swiss franc of
SFr1.2637-SFr1.2640, dollar-Swiss franc of
SFr0.9437-SFr0.9440 and sterling-Swiss
franc of SFr1.4758-SFr1.4765.
With doubts over the future of the euro
still hanging around from the end of last
year, the dollar has been performing well
against the single currency so far in 2011.
The robust US Institute for Supply
Management's manufacturing data, which
was published on Monday, showed the high-
est levels for six months. This positive news
sparked a rally in the greenback in yester-
day’s trading, which pushed the pair close to
the important resistance level of $1.3420 in
the morning. This level could well remain a
psychological barrier for foreign exchange
traders. Cantor Index is offering a spread of
$1.33952-$1.33962 on euro-dollar.
Donata Huggins
BRAZIL TO DISCUSS YUAN WITH CHINA
Brazilian president Dilma Rousseff will priori-
tise discussions with China over its currency
and trade policies, according to the country’s
trade minister Fernando Pimentel.
Discussions are expected to occur when the
Bric countries meet in April. Pimentel also
said that Brazil may consider increasing poli-
cies to stem further appreciation of the real
against the US dollar. This follows finance
minister’s Guido Mantega’s pronouncement
of a currency war at the end of last year.
STRONG COMMODITIES BOOST LOONIE
The Canadian dollar – also called the Loonie –
is trading near its highest level in almost two
and a half years following surging commodity
prices. Copper for delivery in three months
hit a record high of $9,728 a tonne during
London trading and oil managed to hold up
above $91 a barrel. The Loonie was trading at
US$0.9966 yesterday, having previously trad-
ed at US$0.9889, its strongest since the end
of May 2008.
FX NEWS
BY JESSICA MEAD
Brazil’s president
Dilma Rousseff will
discuss weak yuan
with China
Picture: REUTERS
CHILE TO ENTER FOREIGN FX MARKET
The Chilean peso slumped 4 per cent against
the US dollar yesterday after the government
announced plans to buy $12bn in the foreign
exchange market in order to weaken the cur-
rency. The central bank president Jose De
Gregorio said on Monday that $50m would
be bought each day between 9 January and
9 February. The peso was the best perform-
ing currency in Latin America in 2010 and is
currently trading near three-year highs
thanks to booming copper prices.
CARRY TRADE LOSSES AT RECORD HIGH
According to UBS, currency traders employ-
ing a carry strategy – where they borrow in
countries with low interest rates to fund pur-
chases of higher-yielding assets – lost more
money in 2010 than at any other point in the
last decade. The UBS index shows the strate-
gy lost 2.5 per cent last year as the dollar
strengthened. This compares to the 0.98 per
cent lost in 2008 when the credit crisis
forced many to unwind their carry trades.
Not such a safe haven anymore Picture: SXC
US jobs data is due on Friday Picture: REUTERS
Solicitors have to become businesslike
Sometimes you have
no choice but to leave
empty-handed
Picture: GETTY
T
HERE is a sense of pessimism about
the future of the legal profession.
The downturn has hit the law hard,
with many City firms making redun-
dancies, and it has triggered much debate
about the future of such fundamental
things as the partnership model and the
fees structure. Add the fact that the Legal
Services Act comes into effect this year and
the future is uncertain. The new act, some-
times called Tesco Law, will open the door
for non-law firms such as supermarkets to
provide legal services and may start to bite
into more established firms.
Many in and outside the law have their
pet theories about what needs to be done.
But it is clear that before anything else can
happen one simple change in focus is need-
T
HE decorations are back in the loft,
the shops would be full if it wasn’t
for the VAT rise. It must be January.
And that also means that it is
bonus season, the time when managers
start to take a close look at the bonus pot
and wonder how to divide it between
their staff.
This year more than many in recent
times, many in the City are holding their
breath to discover if they will be one of
the unlucky ones to receive a donut – a
big, fat zero – or worse, to be fired. This is
the time of year when an employer has
the best chance to reap the maximum
benefit from your work without having to
pay you.
For that reason, just as February to May
is known as the hiring season, because
that is when people working in financial
services can leave without jeopardising
the previous year’s bonus and without
having worked too much of the current
year to make them too expensive to buy
out, this time of year is the firing season.
So, what should you do if you find your-
self staring at a P45 when you thought
Business Features| Law
20 CITYA.M. 5 JANUARY 2011
Before bonuses
come firings, so
watch your back
ed: law firms need to start behaving more
like businesses. True, the very largest ones
do, but many mid-sized firms are still
stuck in the cosy past. With people seeking
better and cheaper legal services, severe
commercial pressures are being placed on
firms’ business models. The future will be
less forgiving.
Over the years, we have helped a num-
ber of law firms become more profitable,
and we have learned that for meaningful
change to happen they must address sever-
al issues. First, a firm needs to understand
the risk/reward balance in its business
model. A surprising number of partners
are unclear about this. This is not just
about taxes and expenses – a successful
firm must look at the bigger picture, spot
opportunities and take advantage of them.
Many risks can be removed without
hurting competitiveness. For example,
overheads and office costs, when they are
large, can pose a risk to a company’s prof-
itability and ultimately its survival. Bad
debts are another pitfall for many firms.
For example, we’ve seen several firms fail
to bill promptly and chase clients that
don’t pay within their terms of trade, put-
ting themselves in real jeopardy. To tackle
this, law firms should try putting more
emphasis on individual partners’ cash col-
lections and drawings – this will lead to
more focus on profitability.
Secondly, law firms are often bad at
planning. Firms can no longer afford to
continue doing work just because they
have done so in the past. That is just to
ignore that the world is changing. So part-
ners must identify what their firm does
well and badly. Look at the needs of clients
and potential clients, and think about
ways to help them – it might not be what
you have done for them in the past.
Then look at your people and evaluate
what their strengths are and what new
skills they may need to develop. In the cur-
rent climate, for example, firms that do a
lot of public sector work need to consider
the impact of the public spending cuts:
what work might you lose? Will some of
your contacts be made redundant? Do
your firm’s fee earners need training to
help them develop a “private sector”
approach? We can all understand that, but
as the economy rebalances the private sec-
tor will face changes just as big that must
be understood and dealt with.
Connected to planning is thinking
about growth. Where is new business
going to come from? The 80/20 rule says
that 80 per cent of your profit will come
from 20 per cent of your clients. Identify
these 20 per cent and spend time investi-
gating their business plans and strategies.
One firm that we worked with made itself
an integral part of its clients’ expansion
plans, getting involved in restructuring,
employment and property issues, even
though it hadn’t previously advised on
these areas. This involvement, together
with an attractive fee structure, meant the
firm was able to bring in a greater propor-
tion of the client’s work.
Eliminating risk and scrutinising cash
flow will bring not only reward in the
form of profitability, but also security:
security in finance, clients, people, succes-
sion, infrastructure and communication.
It might sound melodramatic, but now
is the time to look to the future. New regu-
lation, financial funding, changes in the
professional indemnity rules and other
changes might well combine to make law
unprofitable for many mid-level practices.
Law firms might often not behave like
other businesses, but they can certainly go
bust like them.
Roger Flaxman of Flaxman Partners Limited and
Anthony Barling of Think Profit Ltd also con-
tributed to this article
you would be looking at a big bonus
award? Will the law really allow your boss
to get away with it?
The first place to start is by looking at
your contract. The good news if you have
been sacked is that if your contract does
not specifically include words to the
effect that you have to be in employment
at the time when bonuses are paid to
receive one, then you could still be enti-
tled to one.
In other words, the good news is that
the default position is that in the absence
of any contrary wording in your contract,
even if you are not working for an employ-
er at the time bonuses are paid, if you
have worked the year (or most of it) the
law will say that your employer must still
pay you a bonus. That still leaves you with
the problem that any bonus is paid at the
discretion of the employer. But the law
does imply that discretionary bonus deci-
sions must be “rational”, so the case for a
bonus can clearly be made.
But what if your contract does have
that kind of wording in it (and most do)?
The short answer is that, unfair as it may
seem, you are going to have to work very
hard legally to get around it. The nub of
the problem is that in most cases it is
unfair but nothing more. Contract law is
not about fairness; it is about enforcing
agreements, so that will not help.
There is the Unfair Contracts Terms Act
which disapplies unfair contract terms
but that has been held only to apply to
consumer contracts (and specifically not
bankers’ employment contracts) and so
that is no help in this context.
GARETH BRAHAMS
STEWARTS LAW
The law does put a price on fairness via
the unfair dismissal legislation, but that
is at about £65,000 – unless you can get
yourself reinstated, which is very rare. For
most bankers that figure is much less
than they expected to be paid.
In short, unless you think the reason
you were fired was because you were a
whistle blower (for example, you had
accused your firm or a client of malprac-
tice) or was the result of discriminatory
attitudes (because of your age, nationali-
ty, sex etc) then you are going to need a
creative lawyer, a large appetite for risk
and a sympathetic judge to stand a
chance of getting your money.
So, happy New Year, but watch your
back.
DAVID FURST
CROWE CLARK WHITEHILL
T
HIS is the first Saab to be launched
since GM handed the brand over to
Dutch supercar maker Spyker, and
one that gives a flavour of what
Saab might look like in the future.
It’s been a long, long 13-year wait since
the previous 9-5. Thankfully this one is a
lot more attractive and slick than the last
generation, and indeed, a whole lot more
authentic. Triumphant in styling terms
for a car that is so big and so heavy,
almost all of the 9-5 was created in
Sweden and so this car is definitely not a
Vauxhall. It is a Saab and it feels like one,
mostly. It’s smooth but butch, with a
bulky and domineering bonnet and an
elegant rear end which features distinc-
tive horizontal rear lights.
There’s also a lot of this car to love. First
of all, it’s very wide so you need to be vigi-
lant in order not to shred your wheels.
Second, at a whopping 5.1 metres long,
the car is a similar size to the BMW 7-
The new Saab takes
care of Ryan Borroff’s
festive family needs
Lifestyle | Motoring
NOTEBOOKS THAT
MEAN BUSINESS
IN TOMORROW’S
TECHNOLOGY SECTION
21
Swedish, swift and very swish
MERC’S C-CLASS GETS AN UPGRADE
This is the new C-Class – Mercedes’ best selling model – which will be
shown to select media at next week’s North American International Auto
Show (NAIAS) in Detroit, then to the public at the Geneva Motor Show
in March. The car has a new, more dynamic look and will sport more effi-
cient performance thanks to new engines, improved automatic transmis-
sion and stop/start technology. The new C-Class will also have a variety of
new safety technology including a drowsiness detection system.
CAR TALK BY RYAN BORROFF
GET FIT WITH PORSCHE AND MARK WEBBER
If you fancy yourself a bit of a racer, why not take a Get Race Fit pro-
gramme with Porsche? The half-day coaching session – with advice from
F1 driver Mark Webber and MotoGP rider Bradley Smith – teaches tech-
niques for motorsport-specific strength and conditioning training and
tests vision and reaction abilities. The course, which takes place at The
Porsche Human Performance Centre on 29 January, is limited to just 40
places and costs £195 per person. www.porsche.co.uk/experience
HAPPY NEW KIA
Kia is hoping to follow the success of its POP compact urban electric
concept car – unveiled at September’s 2010 Paris Motor Show – with
another successful introduction at next week’s 2011 North American
International Auto Show (NAIAS) in Detroit. Kia’s KV7 large
crossover concept has a clever clamshell tailgate and unusual rear
gullwing doors.
www.kia.co.uk
Series, even if the target market is Audi
A6 and BMW 5-Series buyers. It’s such a
long car that you’re left with a sizeable
overhang when you pull into a car park-
ing space.
Still, all that space on the outside spells
lots of room on the inside, as I found over
the festive break. The boot is pleasingly
large, enough to fit in a week’s’ worth of
smart Christmas day get-up and Boxing
Day muddy-walk-wear, plus booze, food
and gifts for 14 family members. The only
flaw with the boot is a pair of ridges in
the far end of the floor. These prevent you
from sliding your luggage all the way to
the back. Fine if it’s squashy luggage that
you can push over the ridges but irritat-
ing if you have, say, a heavy cardboard
box, especially if you need to use all the
space available.
DVD SYSTEM
Meanwhile the inside is accommodating-
ly generous; the seats are comfortable
and there’s plenty of space. Our particu-
lar car had an optional rear seat DVD
entertainment system, which was ideal
for passengers being ferried between fam-
ily in both Kent and Essex, on the classic
two-centre Christmas holiday. It also has
tinted glass in the rear windows; great if
you’re a wife-cheating footballer trying to
dodge the paparazzi, but unexpected if
you’re just a regular Londoner going
about your business – the result was that
my wife kept thinking the weather was
turning gloomy and miserable every time
we pulled away from the kerb.
Presumably it’s there to keep the sun off
the rear DVD screens.
Priced at £37,795, the 4x4, 300bhp, 2.8-
litre V6 turbo, top of the range 9-5 Aero is
powerful and thanks to the the 4x4 drive
system, has great grip.
The lag-free turbo means the car is com-
fortable and refined at motorway speeds
and great for cruising and overtaking –
driving the car on the motorway is a
pleasure.
It’s a lot of car for the money whichever
way you look at it and a breath of (Nordic)
fresh air if you like to be different.
THE VERDICT:
DESIGN hhhhi
PERFORMANCE hhhhi
PRACTICALITY hhhhi
VALUE FOR MONEY hhhhi
THE FACTS:
SAAB 9-5 2.8T
XWD AERO
PRICE: £37,795
0-62MPH: 6.6 secs
TOP SPEED: 155mph
CO2 G/KM: 244g/km
MPG Combined: 26.6
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NEVER MIND THE BUZZCOCKS
BBC 2, 10PM
David O’Doherty presents highlights of
series 24, as he reunites all of the guest
hosts for a star-studded compilation
show. Last in the series.
BARBARA WINDSOR: A COMEDY...
CHANNEL 4, 10.35PM
A comedy tribute to the actress,
featuring a line-up of friends and
comedians including Alan Carr, Sean
Lock, Rich Hall and Patrick Kielty.
NCIS
CHANNEL5, 9PM
Newseries. Tony travels to north Africa
on the trail of missing agent Ziva, but is
taken hostage by terrorists in Somalia
where he is given an ultimatum.
BBC1
SKY SPORTS 1
7pmSky Sports News at
Seven 7.30pmSoccer Special.
News and results from
tonight’s matches. 10pm
You’re on Sky Sports!: 11pm-
6amThe Ashes Live
SKY SPORTS 2
7pmLive Football Special:
Arsenal v Manchester City
(Kick-off 7.45pm). Coverage of
the Premier League clash at
the Emirates Stadium, as two
of the title contenders meet for
the second time this season.
10.30pmFootball First 3am
Spanish Cup Football 5am
Kings of the Snow5.30am-
6amSports Adventure
SKY SPORTS 3
7pmTest Cricket. South Africa
v India. 8pmThe Ashes
Highlights 10pmSpanish Cup
Football 12amTennis 3am
Watersports World 4am-6am
Premier League Years
BRITISH EUROSPORT
6.45pmDakar Rally 7.15pm
Live Dakar Rally 7.45pm
Wednesday Selection 7.55pm
Show Jumping 9.55pmRiders
Club 10pmGolf Club 10.05pm
Yacht Club 10.20pmDakar
Rally 10.45pmOlympic
Magazine 11.15pmSki Jumping
12am-12.30amDakar Rally
ESPN
7pmNHL Ice Hockey 9pmNBA
Tonight 9.30pmSki World Cup
Report 10pmPremier League
World 10.30pmSerie A
12.30amLive NBA Basketball
3amLive NHL Ice Hockey
5.30am-6amPress Pass
LIVING
7pmGhost Whisperer 8pm
Half Ton Teen 9pmBones
10pmGrey’s Anatomy 11pm
Criminal Minds 12amCSI:
Crime Scene Investigation
2.50amCharmed 4.30amFour
Weddings 5.20am-6amMaury
BBC THREE
7pmTop Gear 8.20pmAlmost
Famous IV 9pmMusic, Money
and Hip-Hop Honeys. The
controversial world of the
music video industry. 10pm
FILMMeet the Fockers 2004.
Comedy sequel, starring Ben
Stiller. 11.50pmFamily Guy
12.35amHow Not to Live Your
Life 1.35amMusic, Money and
Hip-Hop Honeys 2.30am
Almost Famous IV 3.15am
How Not to Live Your Life
4.15am-5.15amMad About
the House
E4
7pm Hollyoaks 7.35pm Friends
9pm Big Fat Quiz of the Year
2010 11.10pm Rude Tube
11.40pm Alan Carr: Chatty
Man 12.45am Scrubs 1.45am
Big Fat Quiz of the Year
2010 3.35am Beauty and the
Geek 4.15am Being Erica
5am-6am Switched
HISTORY
7pmHeir Hunters. An anti-
apartheid activist with an
estate worth £250,000. 8pm
Ax Men 10pmIRT Deadliest
Roads: 11pmThe Sword 12am
Ax Men 2amThe Nostradamus
Effect 3amMega Movers 4am
UFO Files 5am-6am
Barbarians
DISCOVERY
8pmHow Do They Do It?.
The making of the world’s
strongest knives. 8.30pmHow
It’s Made. The manufacture of
replica foods, rocking horses
and London taxis. 9pmAre
UFOs Real? 11pmSwamp
Loggers 12amBear Grylls:
Born Survivor 1amDeadliest
Catch 2amDays That Shook
the World 3amTreasure
Quest 3.50amChris Barrie’s
Massive Speed 4.40am
X-Machines 5.30am-6amHow
Does That Work?
DISCOVERY HOME &
HEALTH
7pmA Baby Story 8pmYou
Are What You Eat 9pm
Emergency: Life in the ER
10pmHospital Sydney 11pm
Trauma Team12am
Emergency: Life in the ER 1am
Hospital Sydney 2amTrauma
Team3amYou Are What You
Eat 4amBaby’s Room5am-
6amA Baby Story
SKY1
8pmDreamLives for Sale. New
series. Searching for business
opportunities abroad. 9pm
Louie Spence’s Showbusiness:
The choreographer tries to
create a dance revue show.
10pmRaising Hope 11pm
200kg Kid 12amRoad Wars
1.50amRoss Kemp on Gangs
2.40amOops TV 3.30amThe
4400 4.20amSell Me the
Answer 5.10am-6amAre You
Smarter Than a 10 Year Old?
BBC2 ITV1 CHANNEL4 CHANNEL5
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TVPICK
6pmBBC News
6.30pmBBC London News
7pmCelebrity Mastermind
7.30pmRip Off Britain: BBC
News
8.10pmFILMRaiders of the
Lost Ark. 1981.
10pmBBC News
10.25pmRegional News
10.35pmThe National Lottery
Wednesday Night Draws
10.45pmMatch of the Day:
National Lottery Update
12.10amSign Zone: David
Attenborough’s First Life
1.10amSign Zone: Ian Hislop’s Age
of the Do-Gooders 2.10amSign
Zone: Turn Back Time – The High
Street 3.10am-6amBBC News
6pmEggheads
6.30pmGreat British Railway
Journeys
7pmLive Darts: BDO World
Championships: Second-round
coverage at the Lakeside
Country Club.
8pmStargazing Live: Jonathan
Ross joins Brian Cox and Dara O
Briain. Last in the series.
9pmThe Bear Family and Me
10pmCHOICE Never Mind the
Buzzcocks
10.30pmNewsnight: Weather
11.20pmDarts: BDO World
Championships
12.10amDarts Extra
2.10amBBC News
3.10am-6amClose
6pmLondon Tonight
6.30pmITV News
7pmEmmerdale
7.30pmSnatched Kids – Too
Much Too Young: Tonight
8pmThe Unforgettable Bob
Monkhouse
9pmAbove Suspicion: Deadly
Intent
10pmITV News at Ten
10.30pmLondon News
10.35pmFILMFrantic: Kidnap
thriller, starring Harrison Ford
and Emmanuelle Seigner. 1988.
12.50amThe Zone; ITV News
Headlines
2.50amFILMTo Kill a Mockingbird:
Drama, starring Gregory Peck. 1963.
5am-5.30amITV Nightscreen
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
8pmFamous and Fearless: Day
four of the extreme sports
challenge.
9.35pmBritain’s Fattest Man
10.35pmCHOICE Barbara
Windsor: A Comedy Roast
11.40pmPeep Show
12.15amThe Morgana Show
12.45amMusic on 4: Russian
Standard Originals Presents
1amMy Family’s Crazy Gap Year
1.55amThe Twins Who Share a
Brain 2.50amThe Hospital
3.45amER 4.35amER 5.20am-
6.10amHill Street Blues
6pmCowboy Builders
7pmFive News at 7
7.30pmHighland Emergency:
Five News Update
8pmThere’s a Rhino in My
House!: The story of a couple
who raised a rhino calf; Five
News at 9
9pmCHOICE NCIS
10pmLaw & Order: Criminal
Intent
10.55pmLaw & Order: Special
Victims Unit
11.50pmPoker
12.50amSuperCasino
4amBrian Sewell’s Grand Tour.
Brian arrives in Rome. 4.45am
HouseBusters 5.10amWildlife
SOS 5.35am-6amHouse Doctor
1 2 3 4 5
6
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10 11
12 13 14
15
16 17 18
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16 24
16 7
14 6 17
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9 4 5
16 8
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45
19 6
5
11
23
6
42
30
15
8
38
13
7
9
16
7
34
20
10
11
40
10
10
3
14
Fill the grid so that each block
adds up to the total in the box
above or to the left of it.
You can only use the digits 1-9
and you must not use the
same digit twice in a block.
The same digit may occur
more than once in a row or
column, but it must be in a
separate block.
COFFEE BREAK
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUE’S
SOLUTIONS
KAKURO
WORDWHEEL
Using only the letters in the Wordwheel, you have
ten minutes to find as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
SUDOKU
Place the numbers from 1 to 9 in each empty cell so that each
row, each column and each 3x3 block contains all the numbers
from 1 to 9 to solve this tricky Sudoku puzzle.
SUDOKU
QUICK CROSSWORD
ACROSS
1 Skilled trades (6)
6 In a slumber (6)
7 Give a cat-like sound
of pleasure (4)
8 Harsh criticism or
disapproval (7)
10 Circuit (3)
12 Large entrance,
reception room, or
waiting area (11)
15 Period of time (3)
16 Shakespeare play (7)
19 Sea vessel (4)
20 Domed tent-like Native
American dwelling (6)
21 Reflect deeply on
a subject (6)
DOWN
1 Domed roof (6)
2 Exceedingly sudden
and unexpected (6)
3 Mentally healthy (4)
4 European mountain
range (4)
5 Make a new request to
be supplied with (7)
8 Hidden storage
space (5)
9 Welsh town to the
east of Swansea (5)
11 Substance taken to
counter indigestion (7)
13 Further than (6)
14 Carnivorous bird, such
as the eagle (6)
17 Basin (4)
18 Press down tightly (4)
E
A
E
O
T C
R
D
L

4


4
4
4


S C O W L A B Y S S
C O P E E
R O C O C O R O A N
I O S T Y T
P O N G T O L L S
T G R H O E C
S A M O A N E I L
T I N S C O
A G E D T Y P H U S
L G E E E
C A B E R A W A R D
9 8 9 8 5 6 4
4 1 5 8 6 2 9 7 3
2 1 7 1 3 4 2
2 3 4 6 1 8 9 7
1 4 9 2 6 8 1
6 7 5 8 9
7 9 9 3 3 1 2
5 3 1 4 1 6 2 9
9 8 4 7 2 8 4
8 6 2 5 9 4 7 3 1
3 1 9 8 6 9 6
4
4
4
4
4
4
4
4
4
WORDWHEEL
The nine-letter word was
NEUROLOGY
Lifestyle | TV&Games
CITYA.M. 5 JANUARY 2011 22
SPORT | IN BRIEF
Ancelotti admits he’s lucky
FOOTBALL: Chelsea manager Carlo
Ancelotti admits he is lucky to have
kept his job after presiding over the
worst run of form under the reign of
owner Roman Abramovich. The Blues
have taken just 10 points from their
last 10 Premier League matches ahead
of tonight’s trip to Wolves. Ancelotti
said: “I am a lucky man. I understand
that a lot of coaches are sacked with
results like these.” The Italian added he
wants to be judged on his results at the
end of the season. He said: “When you
go to a restaurant, you have to pay the
bill when finish your meal. It’s the same
here. We have to pay the bill at the end
of the season. At the end the club can
judge me. The best food would be the
Champions League. I’ve tasted it some-
times and it’s good.”
Redknapp cools Beckham talk
FOOTBALL: Tottenham boss Harry
Redknapp admits he may have to shelve
plans to sign David Beckham on loan if
the former England captain is only
available until March. Beckham, 35, is
due back in America for LA Galaxy’s
first match of the 2011 MLS season on
15 March. Redknapp said: “I’d like him,
I’m a great fan of his. But if it’s only
going to be for eight or nine games, it’s
a difficult one.”
Ronaldinho set for Gremio
FOOTBALL: Ronaldinho is set to snub
Blackburn and complete a transfer to
his former club Gremio. The 30-year-old
Brazil World Cup winner had been
offered £20m over three years by
Rovers’ Indian owners to join the
Ewood Park club, but he is believed to
have opted to return to the club at
which he started his career and last
played for in 2001.
Henson in Wales training camp
RUGBY UNION: Wales centre Gavin
Henson has stepped up his fight to win
back a place in the national side in time
for the Six Nations. The Saracens star,
who last played for his country in 2009,
joined an expanded squad of more than
40 players for a pre-tournament condi-
tioning assessment in Glamorgan.
Meanwhile, Wales back-row Dafydd
Jones has been forced to retire after
failing to recover from a shoulder injury.
Monet’s Garden critically ill
HORSE RACING: Nicky Richards-
trained chaser Monet’s Garden was
fighting for his life last night after being
forced into retirement by a foot infec-
tion. The gelding registered the last of
his 17 wins at Aintree in October, when
he triumphed in the Old Roan Chase for
a third time.
Results
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email sport@cityam.com
England must show Mitchell respect
ASHES COMMENT
ANDY LLOYD
THE ALL-ROUNDER |
STATS, CONDTIONS AND BANTER
PITCH
The surface is slowly beginning to
crack up and after serving up a
couple of decent nuts on the second
afternoon, batting last against
debutant spinner Michael Beer will
represent a tough task for
England’s batsmen.
STAT OF THE DAY
The importance of England attain-
ing a first innings lead is highlighted
by the fact that the highest suc-
cessful fourth innings run chase at
Sydney was achieved by Australia
in 2005 when the hosts reached
288-2.
FIGHTING TALK
“It’s not every day we get the
chance to retain the Ashes in
Australia, so it was just a little
reminder.” – Perth Glory striker
Robbie Fowler rubbed in Australia's
Ashes woes. The former Liverpool
star paraded and repeatedly kissed
a replica Ashes urn before Perth’s
0-0 draw with Gold Coast in
Queensland.
“Usman Khawaja, the way he
played, he had such poise, he’s defi-
nitely the future of Australian crick-
et. All I know is that Usman
Khawaja batted very well. He had a
lot of poise, temperament’s good,
he looks like he’s ready to bat No3
for Australia. Ricky has been a
great player for No3; it’s going to
be a tough call for the selectors.” –
Former Aussie captain Steve
Waugh is the latest to hail Usman
Khawaja as the messiah after a
moderately impressive 37 on his
Test debut.
DAY FOUR FORECAST
Light rain shower
HIGH
LOW
25
0
20
0
Johnson has frustrated and delighted in equal measure during this series Picture: GETTY
Sport
23 CITYA.M. 5 JANUARY 2011
Davies put Fulham ahead with his first goal
since August Picture: ACTION IMAGES
FULHAM boss Mark Hughes urged his
side to build on their recent revival
after an emphatic second win in
three games hoisted them out of the
Premier League relegation zone and
up to the heady heights of 13th.
Goals from Simon Davies, Clint
Dempsey and Brede Hangeland
earned Hughes’s men a first home
win since October and inflicted a
fifth straight defeat on West Brom.
“Draws will give you some com-
forts in terms of how you perform but
that doesn’t move you up the
league – three points and wins do,”
said the Welshman. “You wake up
and look at the table and to be 13th
makes for better reading.”
Fulham’s victory owed much to a
howler from West Brom goalkeeper
Scott Carson, who gifted the
Cottagers the lead in first half stop-
page time when he allowed Davies’
drive to slip through his fingers.
The home side doubled their lead
on 56 minutes through Dempsey’s
header from a Davies corner and
Hangeland put the gloss on the score-
line nine minutes later when he rose
unmarked from another Davies flag
kick to head home emphatically.
Hughes sleeps easier as
Davies show lifts Fulham
BIRMINGHAM defender Scott Dann
scored an 89th-minute winner to sink
Blackpool 2-1 and lift the Blues out of
the bottom three. Alexander Hleb took
advantage of a defensive cock-up to net
the opener, his first Premier League goal
for Alex McLeish’s men. DJ Campbell
equalised against his former club before
Dann’s late intervention earned
Birmingham are now up to 15th.
BLUES WIN | DANN’S THE MAN
BY FRANK DALLERES
FOOTBALL

3
0
FULHAM
WEST BROM
were of a desire to become the No1
Test side in the world.
When all is said an done, England are
a better side than Australia and
should win a five match series against
them. India this summer will provide
a much stiffer examination of
England’s credentials. MS Dhoni’s
men boast a powerful batting line-up,
a top-class spinner and a skilled new
ball attack. An intriguing summer is
in store.
O
UR cricket columnist, former
England batsman and
Warwickshire chairman Andy
Lloyd, has been poring over all
the Ashes action. Here he dissects
what he’s learned from the play so far.
HOSTILITY
It’s almost impossible to pigeonhole
Mitchell Johnson, but he’s certainly a
player who can hurt you if you don’t
respect him. He’s got bucket loads of
natural talent, but you can’t rely on
that alone and he’s not a player who
will find regular success in a poor
side, which is what Australia are.
Ironically, were he English, he would
offer Andrew Strauss the one ele-
ment his current attack lacks; gen-
uine pace. England’s failure to knock
over the tail cheaply on the second
morning had nothing to do with a
lack of ruthlessness, more a lack of
variety. Johnson, though erratic, pro-
vides the kind of hostility and venom
that Strauss can’t call upon.
TEMPERAMENT
Andrew Strauss has many years
ahead of him as England captain, but
it’s important the powers that be
plan for the future. You only have to
look at the mess Australia are in to
see what happens if you don’t. This
tour has confirmed that Alastair
Cook has all the credentials to suc-
ceed his opening partner. The Essex
man has a similar temperament to
that of Strauss and having performed
so well Down Under, I’m sure the
added pressure of captaincy won’t
impact on his ability to score runs.
EXAMINATION
After the win in Melbourne the nois-
es coming out of the England camp
24 CITYA.M. 5 JANUARY 2011
MANCHESTER UNITED manager Sir Alex
Ferguson has told his players to
ignore the criticism and focus on
recapturing the Premier League
title.
Splendid goals from Javier
Hernandez and Nani, which
came either side of Dean
Whitehead’s surprise equalis-
er, helped United open up a
three point lead over
Manchester City at the top of
the table.
Despite that healthy outlook,
United have failed to sparkle in their
usual manner, not that their manager is con-
cerned. Ferguson feels the best answer is for
United to carry on as they are.
“We are an easy target for that kind of
thing,” he said.” But we just have to dismiss it
and concentrate on our ambitions and that is
to win the league.”
Ferguson opted to rest Wayne Rooney last
night and it was his replacement, Hernandez,
who set United on their way with a superbly
taken 27th minute opener.
United worked the ball out to the right
wing and Nani’s low cross was audaciously
flicked home at the near post by the Mexican,
whose determination saw him beat Ryan
Shawcross to the ball.
Stoke had offered nothing as an attacking
force in the first-half, but stunned the home
crowd five minutes after the restart when
Whitehead, unmarked, headed home
Tuncay’s cross for his side’s first goal
at Old Traffrod in 30 years.
Parity lasted just 12 minutes,
however, with Nani finding the top
corner with a left-footed rocket
after he’d been fed by Hernandez.
The summer signing from
Guadalajara was United’s brightest
spark in another workmanlike team
performance and his manager hailed
his contribution.
Ferguson (inset) said: “He gives me a prob-
lem when Wayne is fit.
“But that is the kind of problem you want.
Over the years, the strikers I have had have
always given me that problem.
“That is Chico’s job. And as long as he keeps
putting the ball in the net, he is giving me
those problems.”
Nani’s strike put
United three
points clear
Picture: ACTION
IMAGES
Man Utd20 12 8 0 43 19 44
Man City21 12 5 4 33 16 41
Arsenal 20 12 3 5 42 22 39
Spurs 20 10 6 4 30 23 36
Chelsea 20 10 5 5 36 18 35
TOP FIVE
TEAM PLD W D L F A PTS
COOK LOOKS LIKE HE’S
CAPTAINCY MATERIAL
ANDY LLOYD’S ASHES
LOWDOWN: PAGE 23
Sport
CATCH US IF YOU CAN
United go three points
clear in race for title
BY JAMES GOLDMAN
FOOTBALL

2
1
MANCHESTER UNITED
STOKE CITY
City stars brawl ahead of Arsenal trip
FRESH cracks have broken out in
Manchester City’s mutinous squad
ahead of tonight’s crunch visit to
Arsenal after team-mates Kolo Toure
and Emmanuel Adebayor brawled dur-
ing training.
Yesterday’s skirmish appeared to be
sparked by Adebayor’s reaction to a
tackle from Toure and had to be bro-
ken up by concerned team-mates
including Patrick Vieira and Vincent
Kompany.
It is the latest fractious episode in an
eventful season for big-spending City,
who remain strong contenders for the
Premier League title despite a series of
on and off-field altercations.
Adebayor is tipped to sit out
tonight’s match against his former
side amid a growing belief he will
leave Eastlands this month, while City
are also without injured stars Mario
Balotelli and David Silva. Manager
Roberton Mancini confirmed a £27m
deal had been agreed with Wolfsburg
for striker Edin Dzeko, but played
down his side’s prospects of landing a
first top flight title for 43 years, despite
lying second in the table.
“Arsenal, Chelsea, United and
Tottenham all have more experience
than us and, probably, one of these
four teams will win the title,” he said.
“We just want to try and stay there
and improve.”
Arsenal manager Arsene Wenger
concurred with Mancini’s list of con-
tenders and called on his team to
make a strong start to 2011.
“There are five teams in the fight,”
said Wenger, who is waiting Thomas
Vermaelen’s reaction to resuming
training before deciding whether to
buy in January.
“You always have a team after
Christmas who finds momentum and
this team will win the championship.”
ROB ANDREW, the Rugby Football
Union’s elite director, will discover
today whether he is to be axed after
more than four years in the job.
The RFU’s new chief executive, John
Steele, will present the findings of his
four-month strategic review, and is
expected to shake up Andrew’s elite
department.
Steele is being tipped to create a role
for a performance director, which
could see Andrew, who has been
blamed for the senior team’s lack of
success, shifted into a technical role.
World Cup-winning coach Clive
Woodward has been linked with a
return, while South African Jake
White, who led his country to glory in
2007, is also said to be a contender.
RUGBY UNION

Andrew’s fate
in balance as
RFU mull axe
BY FRANK DALLERES
FOOTBALL

OCT: Joe Hart, Gareth Barry and Adam
Johnson drink and party with students
after 3-0 home defeat to Arsenal
DEC: Jerome Boateng and Mario Balotelli
involved in training ground fisticuffs
DEC: Carlos Tevez rants at Roberto
Mancini after being substituted in the
89th minute of the 1-0 win over Bolton
DEC: Tevez hands in a transfer request
but then retracts it within a week
INNER CITY PRESSURE | A SEASON OF CONTROVERSY
Toure (left) grap-
pled with Adebayor
in training
Picture: Xposure

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