BUSINESS WITH PERSONALITY

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Bosses clash
on EU –but
speech is off
TULLETT PREBON boss Terry Smith
has thrown his weight behind the
City campaign for an EU referendum
– but David Cameron has been forced
to cancel today’s long-awaited speech
on Britain’s future in Europe due to
the hostage crisis in Algeria.
Smith, chief executive of the FTSE
250 broker, told City A.M. that he sup-
ports yesterday’s public letter from
Eurosceptic business leaders who
want a vote on whether the UK
should stay in the 27-member bloc.
“Ken Clarke and others say if Britain
leaves the EU it will have a reduced
role in the political world.
Platitudinous guff,” Smith said. “I am
a supporter of a full in/out referen-
dum and the UK leaving the EU.”
But the pro-referendum lobby faces
opposition from industry groups as
business leaders take sides. Sir Roger
Carr, chair of both the CBI and British
Gas owner Centrica, last night
claimed leaving the EU may lead to a
“long-term economic future that ulti-
mately few may envy”.
The PM was due in Amsterdam this
morning to deliver a speech calling
for the repatriation of some powers
from the EU, but the event was called
off after reports of further casualties
in the Algerian hostage crisis.
“Due to events in Algeria, Prime
Minister David Cameron’s speech in
the Netherlands tomorrow has been
postponed,” his office said.
Algerian sources last night said 25
hostages escaped and six died, includ-
ing two Britons, in a battle with mili-
tants demanding a halt to French
military operations against al Qaeda-
linked Islamist fighters in neighbour-
ing Mali. Britain and Norway, whose
oil firms BP and Statoil run the plant
with Algeria’s state oil company, said
they had been told that a military
operation was under way.
THE UK exported more cars than ever
before in 2012, figures revealed yester-
day, providing a much-needed boost
for the country’s manufacturing
sector.
British factories made 1.46m cars
last year, a rise of nine per cent and
the highest number since 2007 – and
experts predict further growth in the
years ahead,
Of these, 1.21m were sold abroad,
beating a previous record of 1.19m
set in 2007.
Exports have more than doubled in
the last 20 years, and more than
four-fifths of cars made in Britain are
now sent overseas.
Many firms have brushed off dwin-
dling demand from recession-hit
Europe, which earlier in the week
reported an 8.2 per cent slump in
new car registrations to an 18-year
low, in favour of fast-growing
economies in Asia and Latin
America.
Jaguar Land Rover, which has five
British factories, this week revealed
that China had leapfrogged the UK
to become its biggest market, help-
ing the company post record-break-
ing sales. The firm also said it would
create up to 800 new jobs at its
Solihull factory, following a remark-
able turnaround from near-collapse
in 2008, when it was taken over by
Tata Motors.
The Society of Motor
Manufacturers and Traders (SMMT),
which compiled the export figures,
www.cityam.com FREE
said the overall outlook remains
good for 2013.
“The £6bn of investment commit-
ted to UK facilities, new model pro-
grammes and R&D signals a bright
future and many new opportunities
for companies in the supply chain,”
said SMMT chief executive Paul
Everitt.
John Leech, UK head of
automotive at KPMG, said
the sector could produce
2m cars by 2016.
“This will be driven by new vehicle
production plans in place at Nissan,
JLR and other UK car plants that
should be resilient to continuing
Eurozone weakness,” he said.
In spite of the bumper sales, com-
panies that rely on European cus-
tomers have struggled to remain
profitable during the downturn.
Ford shocked workers in October
when it announced the closure of its
Transit van factory in Southampton
and parts of its Dagenham plant,
costing 1,400 UK jobs. Honda last
week cut 800 roles at its factory in
Swindon. Further afield, French
firm Renault said it plans to shed
7,500 jobs.
Overall sales of commercial vehi-
cles such as vans and lorries dropped
6.8 per cent to 112,039 in 2012, while
exports fell 8.1 per cent, the SMMT
said. Engine sales also fell 0.3 per
cent last year.
Business secretary Vince Cable said
yesterday there is “no room for com-
placency” in the coalition’s attempts
to support UK car firms.
“The government is creating a
highly supportive business environ-
ment to ensure that UK manufactur-
ers continue to flourish as well as
encouraging further investment in
the UK automotive sector, including
the supply chain,” he said.
The sector supports 135,000 direct
jobs and accounts for 0.5 per cent of
UK output, according to govern-
ment estimates.
The country is also the second-
biggest buyer of cars in Europe,
behind Germany, as customers
confounded forecasts in 2012 after
the financial crisis laid sales low
for several years.
WHY DJANGO UNCHAINED IS COMPULSIVE VIEWING
BY JAMES WATERSON
BY MARION DAKERS
ISSUE 1,800 FRIDAY 18 JANUARY 2013
STOP HORSING
AROUND
Tom Welsh in The Forum, Page 21
See Page 23
Certified Distribution
from 26/11/12 to 30/12/12 is 127,678
UK CAR EXPORTS HIT A NEWRECORD
UK CAR MANUFACTURING
2012
TOTAL EXPORT
2011 2010 2009 2008 2007
1,600,000
1,400,000
1,200,000
800,000
1,000,000
600,000
TOPUKCARSFOREXPORT TOPUKEXPORTDESTINATIONS
#1 EU 50% of sales
#2 Asia 16%
#4 Americas 13%
#5 Africa 3%
#1 Nissan Qashqai
(built inSunderlandsince 2007)
#2 Mini
(newmodel built inOxfordsince 2001)
#3 Nissan Juke
(built inSunderlandsince 2010)
#3 Rest of Europe 15%
[Of which Russia 12%]
BMW’s Mini is one of the most
popular cars made in Britain
UK CAR EXPORTS
HIT RECORD HIGH
FTSE 100 6,132.36 +28.38 DOW 13,596.02 +84.79 NASDAQ 3,136.00 +18.46 £/$ 1.59 unc £/€ 1.20 unc €/$ 1.33 unc
TARANTINO’S BACK
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Snow set to blast London
as train services scrapped
COMMUTERS were last night braced
for travel chaos today as train opera-
tors cancelled services ahead of a
snow blizzard set to batter the UK.
Up to six inches are expected to
fall across London throughout this
morning.
The Met Office last night placed
much of the South East on an
amber warning, the second most
critical level ahead of the blizzard.
Train operator South West trains
said it will run a revised timetable
focusing on key lines to cope with
the expected snow disruption.
Southeastern trains also warned
snow would also disrupt its services.
A Southeastern spokesman said:
“Given the weather forecast, there
may be disruption on some routes
through the day.
“Our staff will be out working to
clear platforms and treat icy sur-
faces and Network Rail will be run-
ning snow and ice clearance trains
day and night to help keep the net-
work open.”
Snow is expected to hit London
heavily from around 9am this
morning and the Met Office last
night issued its first red warning in
two years for parts of southern
Wales.
Met Office chief forecaster Andy
Page said: “The snow is expected to
Senators seek energy drinks data
US senators stepped up their
investigation into energy drinks on
Thursday, demanding that companies
making products such as Monster, AMP,
Red Bull and Rockstar hand over internal
documents that prove they are safe.
Senators Richard Blumenthal and Richard
Durbin and Representative Ed Markey
asked 14 energy drink companies to
explain why they classify themselves as
supplements and to provide information
about the caffeine content of their drinks
and any safety studies.
KKR and Canada fund to give loans
A leading Canadian pension fund is
joining with KKR and its partners to
provide financing for middle-market
companies, highlighting the trend for
investment firms to take over traditional
banking business.
UnitedHealth eyes higher earnings
UnitedHealth, the biggest US health
insurer by revenues, said yesterday that it
expects to increase earnings next year in
spite of changes associated with
President Barack Obama’s healthcare law.
Reed Elsevier nets $300m
Shares in Reed Elsevier hit a five-year
high yesterday after it sold a business that
screens CVs on behalf of large companies
to weed out inappropriate applicants. The
sale netted the media group up to $300m.
Deals seals future of hotel groups
More than £1bn of hotel assets are
expected to change hands in the coming
weeks as talks over the future of three of
Britain’s biggest hospitality companies
conclude.
Financial Times touted by banks
The Financial Times is being touted for
sale by investment banks including
Nomura and Bank of America Merrill Lynch
for up to £1bn.
Wonga to get tougher on bad debtor
Wonga, one of the biggest payday
lenders, told MPs yesterday that it was
considering using debt collection services
in future, and aimed to start a trial shortly.
Chipotle prepare to raise prices
Chipotle Mexican Grill said it is likely to
raise prices later this year to mitigate the
rising cost of ingredients, a potentially
risky move when consumers are still
feeling tight-fisted.
American Airlines gets paint job
American Airlines parent AMR unveiled a
new brand and paint job on Thursday, a
sign that the company is preparing to
soar again after nearly completing its
bankruptcy-court reorganization.
COLLAPSED retailer HMV is being
circled by up to 50 potential
suitors keen to buy parts of the
chain, it emerged last night.
HMV, which appointed Deloitte
as administrators on Monday, has
received expressions of interest
from a variety of potential buyers,
including private equity groups
and trade buyers, Deloitte said.
Game, the video game retailer
owned by private equity firm
OpCapita which also oversaw
Comet, emerged as a potential
buyer for a number of stores last
night.
Buyers start to
circle HMV sale
2
NEWS
BY CITY A.M. REPORTER
The S&P 500 advanced to a five-
year intraday high yesterday on
signs of strength in the housing
and job markets and on better-
than-expected results from online
marketplace eBay.
The S&P stayed on track for its
third consecutive advance, which
pushed the index above an
intraday peak set in September to
its highest since December 2007.
Equity markets have rallied
since the start of the year, with
investors starting to rotate away
from low yielding bonds.
S&P 500 soars
to five year high
BY CITY A.M. REPORTER
BY MICHAEL BOW
To contact the newsdesk email news@cityam.com
T
HERE was a time when a weaker
pound used to boost exports.
These days, it doesn’t appear to
make a noticeable difference, in
the short term at least. Last year’s
brilliant growth in car exports – the
UK sold more cars abroad than ever
before in its history, one of the most
cheerful news stories of the year so
far – wasn’t noticeably impacted by
the level of sterling. Of course, large,
permanent movements in the pound
will have an impact on the
competitiveness of goods and services
sold abroad, but most these days
seem to be relatively price-insensitive.
This is because the mix of UK goods
and services exported has changed;
most are now very high valued added
premium products.
The biggest impact of a weaker
pound these days is its effect on the
price of imports, which are inevitably
EDITOR’S
LETTER
ALLISTER HEATH
Why sterling’s decline could push up inflation once again
FRIDAY 18 JANUARY 2013
pushed up. That is why I’m worried
about sterling’s recent decline: it fell
below €1.20 and $1.60 yesterday, for
the first time since March 2012. As
PwC’s excellent Andrew Sentance has
pointed out, sterling’s sustained sub
€1.20 level in 2011 contributed to the
last big inflation spike (to over five
per cent). Even a minor rise in infla-
tion would hurt: the consumer price
index is still growing too quickly at
2.7 per cent, and the retail price index
is doing even worse at 3.1 per cent.
There seems little hope that this will
fall sustainably if sterling continues
to weaken, though of course there are
always long and variable lags in
monetary policy.
It is important to remember the
extent of the inflation overshoot of
recent years. The CPI measure of the
price level is 8.4 per cent higher than
it would be had annual inflation been
kept to two per cent, the central value
of the official target, since the year
that ended in March 2007, when the
rot started, according to calculations
by Europe Economics. In other words,
the cumulative miss has slashed the
purchasing power of the pound by
almost an extra tenth, on top of the
inflation allowed under the target.
This is not something that can be
laughed off as irrelevant. It represents
a very serious reduction in real values
and especially of real wages and sav-
experiment failed lamentably.
Let us hope that the new rules Mark
Carney, the incoming Bank Governor
who starts in six months’ time, and
George Osborne agree to will not turn
out to be yet another ruse to allow
inflation through the back door.
ALGERIAN CRISIS
The tragic hostage crisis in Algeria, as
well as the horrific events in Mali
remind us that geopolitical shocks
remain the greatest of Black Swans.
Such events have a tendency to spiral
out of control. Few in London would
have thought Mali would turn into
such a flashpoint; there is nothing
more dangerous than what Donald
Rumsfeld called the unknown
unknowns.
ings. There are, of course, advantages
to inflation; an over-indebted society
can effectively default quietly and in a
more controlled manner by inflating.
One reason why employment has
done so well is that the real, inflation-
adjusted cost of employing somebody
has dropped, boosting the demand
for labour.
But over time such benefits are far
outweighed by the costs of inflation.
If the past few thousand years teach
us anything, it is that price stability
and sound money are the answer, not
inflation, and that it is nigh-on impos-
sible for central banks to generate
controlled bursts of inflation. We
finally understood this in the UK in
the 1970s; but even though price sta-
bility (or something close) was sup-
posedly enshrined in the rules at the
heart of Gordon Brown’s monetary
policy reforms of 1997, that
be heaviest during [this] morning
across Wales and the southern half of
England.
“Clearly there is the potential for
significant disruption to peoples
plans. We should follow the advice of
the emergency services and local
authorities to help keep ourselves,
our families and our communities
safe in light of the forecast.”
Rick Cudworth, lead partner at pro-
fessional service firm Deloitte said
businesses would be prepared for
extreme weather conditions and
could cope by allowing people to
work from home.
“Some of the lessons learned prepar-
ing for the 2012 Olympic and
Paralympic Games could be just as
useful now,” he said.
As Brits prepared for the heavy snow
covering, Duvet and Pillow
Warehouse reported they had seen a
“massive” spike in sales over the past
few days, in anticipation of the snow-
fall.
US ECONOMIC NEWS: Page 15

The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
IN BRIEF
Tesco cuts US jobs ahead of exit
Retail giant Tesco has slashed 50
jobs at its US company Fresh & Easy as
it gears up to pull out of North
America. Most of the cuts are coming
at its head office in Los Angeles.
Tesco said: “We have cut a small
number of positions in the head office
as we continue the strategic review of
the business. All our stores remain
open and it is business as usual for
customers and store employees.”
Temasek dismisses Dell deal
Singapore state investor Temasek
is not interested in investing in
computer giant Dell as part of a
consortium led by private equity firm
Silver Lake Partners, a source said.
Temasek was named as one of the
potential investment partners Silver
Lake has tapped to join. “It's not
happening,” a source said. Silver Lake
is exploring plans to back a buyout of
Dell and take it private.
City A.M. reporter recognised
A CITY A.M. reporter has been
named in the second annual 30 to
Watch young journalists by MHP
Communications. Michael
Bow (right) was named
in a top 30 list unveiled
at an event in London
last night. Nominees
had to be under 30 to
qualify for the awards,
which recognise those who
have contributed
quality journalism
in their careers so
far.
Commuters
will hope the
blizzard fails to
match the fall
on 2 February
2009, when
Transport for
London was
forced to
cancel all bus
services for the
day after
heavy snow
fell throughout
the capital
STAFF at Barclays must obey a new
code of conduct or leave the bank,
chief executive Antony Jenkins said
yesterday, in an internal memo sent
to staff.
Six months on from the bank’s
£290m Libor fine and several years
into the payment protection
insurance (PPI) scandal, Jenkins has
laid down a set of five basic values,
insisting all staff must meet them in
all that they do.
Those are respect; integrity;
service; excellent; and stewardship.
The rules will be drilled into staff
in the coming weeks, ahead of a
wider review that is expected to
close down parts of the business
which could harm the bank’s image,
such as its controversial tax
planning unit.
The chief – who took over after
Bob Diamond quit in the wake of the
Libor scandal – told staff their
bonuses depend on behaving well.
And he warned any dissenters:
“Barclays is not the place for you.
You won’t feel comfortable at
Barclays and, to be frank,
we won’t feel
comfortable with you
as colleagues.”
Barclays tells
staff to behave
well or get out
BY TIM WALLACE
BANK of America Merrill Lynch’s
(BoAML) profits recovered strongly
through 2012, the institution report-
ed yesterday, though mortgage
charges hit profits in the last quarter.
Profits came in at $4.188bn
(£2.62bn) for 2012, almost three times
the $1.446bn recorded in 2011.
Over the past three quarters mort-
gage origination has grown by an
average of 10 per cent, while client
balances in wealth management rose
seven per cent and total deposits rose
1.6 per cent to $1.05 trillion.
Costs have also been slashed – the
bank cut headcount by 14,601 on the
year to 267,190, contributing to a six
per cent fall in expenses.
And the bank continued to build up
capital levels, with the crucial ratio
under incoming Basel III rules esti-
mated at 9.25 per cent, up from 8.97
per cent in the third quarter.
But fourth quarter profits slumped
to $732m, down 63.2 per cent from
$1.991bn in the same period of 2011.
That is largely down to a $2.7bn
blow from legal fees and compensa-
BoAML recovery
hit by crisis-era
mortgage costs
BY TIM WALLACE
tion paid to Fannie Mae to end a long-
running row over bad mortgages it
sold to the state agency, and a $1.1bn
provision for the independent foreclo-
sure review settlement.
“We addressed significant legacy
issues in 2012 and our strengths are
coming through,” said chief financial
officer Bruce Thompson.
“Capital and liquidity remain strong
and credit continues to improve. Our
primary focus this year is to grow rev-
enue, manage expenses and drive core
earnings growth.”
The bank’s shares dropped 4.24 per
cent on the weak fourth quarter
numbers.
E*TRADE TO NAME IDZIK AS CHIEF EXECUTIVE
E*Trade is expected
to name former
Barclays chief
operating officer
Paul Idzik as its chief
executive, according
to Sky News. Idzik,
who left Barclays in
2008 and then
headed estate agent
DTZ until 2011, would
be the US online
retail brokerage’s
fifth chief executive
since 2009. E*Trade,
which made a $157m
profit in 2011, after
four years of losses
has been hit by low
trading volumes.
Bank of America Corp
17Jan 11 Jan 14Jan 15Jan 16Jan
11.40
11.50
11.60
11.20
11.30
11.70
$
11.28
17Jan
Antony Jenkins
wants to restore
Barclays’ image
CITI’S profits dropped sharply on
the year as legal bills and layoff
costs took a major chunk out of its
rising revenues, the bank said
yesterday.
In contrast with JP Morgan and
Goldman Sachs’ healthy figures,
Citi’s income dropped 32 per cent
to $7.54bn for 2012 as a whole.
Profits increased in the fourth
quarter, rising 25 per cent on the
same period of 2011 to $1.2bn.
But that improvement was hit
hard by a $2.32bn bill from legal
actions and layoff payments.
Citi falls behind rivals as profits
dip on legal and layoff costs
BY TIM WALLACE Headcount fell three per cent on
the year to 259,000, which should
help keep a lid on costs in the
longer term.
“Our bottom line earnings reflect
an environment that remains
challenging – with businesses
working through issues like spread
compression and regulatory
changes – as well as the costs of
putting legacy issues behind us,”
said new chief executive Michael
Corbat. He added that progress had
been made in some areas, with
Citi’s Basel III tier one common
ratio rising to 8.7 per cent, its
target for the year.
FRIDAY 18 JANUARY 2013
3
NEWS
cityam.com
THE CHIEF executive of miner Rio
Tinto quit his post immediately yes-
terday, in a surprise move following a
$14bn (£8.7m) write-down on two of
his recent acquisitions.
Outgoing Tom Albanese, who
joined Rio two decades ago, will be
replaced by Rio Tinto’s iron ore chief
Sam Walsh with immediate effect.
The $14bn charge includes around
$3bn relating to Rio Tinto Coal
Mozambique, as well as reductions
in the carrying values of Rio Tinto’s
aluminium assets in the range of
between $10bn and $11bn.
It is thought his position as chief
executive was untenable in light of
the write-downs.
Doug Ritchie, who led the acquisi-
tion and integration of the
Mozambique coal assets when he
was head of Rio’s energy division,
has also stepped down.
The FTSE 100 miner also expects to
report several other smaller write-
downs to the tune of around $500m.
Rio chairman Jan du Plessis yester-
day said that the board acknowl-
edges the scale of the write-down is
“unacceptable”.
“We are also deeply disappointed to
Rio Tinto chief
resigns after
$14bn write-off
BY CATHY ADAMS
have to take a further substantial
write-down in our aluminium busi-
nesses, albeit in an industry that con-
tinues to experience significant
adverse changes globally,” he added.
Albanese yesterday conceded that
accountability for “all aspects of the
business” laid at the door of the chief
executive.
The write-downs will be included in
Rio Tinto’s full-year results on 14
February.
Earlier this week, the miner beat
forecasts as it said global iron ore out-
put hit 253m tonnes over 2012.
On the back of the announcement,
Rio shares plunged yesterday morn-
ing, although had recovered some
ground by the end of play, closing
down just 0.53 per cent.
INCOMING Rio Tinto chief executive Sam Walsh, 62, has been
chief executive of Rio Tinto’s iron ore division since 2004,
where he overlooked operations in Australia, Canada and
India.
Australian Walsh, who joined the miner in 1991 following a
long career in the car industry with companies including
General Motors and Nissan Australia, has held a number of
management positions within the group, including chief
executive of the aluminium group.
He was appointed as an executive director to the Rio
Tinto board in 2009.
The incoming chief executive’s other appoint-
ments include non-executive director of Seven
West Media and president of the Western
Australia branch of Scouts Australia.
The veteran miner has a degree in commerce
from Melbourne University, and is a fellow of
the Australian Institute of Management and
the Australasian Institute of Mining and
Metallurgy, among others.
BOTTOM
LINE
MARC SIDWELL
Rio Tinto PLC
17Jan 11 Jan 14Jan 15Jan 16Jan
3,300
3,350
3,400
3,450
3,500
3,550 p
3,439.50
17Jan
FRIDAY 18 JANUARY 2013
4
NEWS
cityam.com
PROFILE: SAM WALSH
Buy high, sell low: The price of aluminium’s meltdown
R
IO Tinto’s share price dropped
sharply on its announcement
of a $14bn (£8.7bn) impairment
charge and the resignation of
its chief executive Tom Albanese but
the miner went on to recover most of
that value over the course of the day,
proving a certain amount of market
respect for such decisive action.
What went wrong? Rio Tinto says
$3bn relates to its Mozambique
acquisition, for which Doug Richie,
who led that project, has also
resigned. This seems to have been
the load that broke the camel’s
back. But most of the loss, $10-11bn,
related to further reductions to the
group’s aluminium assets, bought
under Albanese just before the
crash in 2007.
In historical terms, few things
have changed their value as
comprehensively as aluminium. In
the Paris Exposition of 1855, bars of
pure aluminium were displayed
alongside the French crown jewels.
Napoleon III once gave banquets
where the top table had aluminium
cutlery and everyone else made do
with gold. But aluminium is the
most plentiful metal on earth; it
was just that no one knew a cheap
method to reduce its oxides and
obtain the pure metal. In 1886,
chemists discovered that secret, and
now it can be used for throwaway
drink cans.
Rio Tinto didn’t see quite such a
drastic price fall in 2008, but it was
still painful. Aluminium more than
halved in value, falling from a top
above $1.4/lb at the start of March
2008 to below $0.6/lb in early 2009.
It has recovered, but still trades at
only $0.9/lb. As a result, it isn’t
surprising that Rio Tinto has now
cumulatively written off two thirds
of the $38bn purchase price. From a
precious acquisition to throwaway
assets indeed.
WALL STREET II
What a difference a day makes.
After a storming performance from
Goldman Sachs and JP Morgan, it
was probably hard for Citi and
Bank of America Merrill Lynch
(BoAML) not to disappoint.
However, while their results for the
fourth quarter might appear
lacklustre, there are signs of
solidity beneath some one-off
regulatory and legal costs hurting
the headline numbers.
For instance, BoAML’s fourth
quarter profit fell from $2bn the
year before to $0.7bn in 2012, on
$18.9bn of revenue. However, that is
largely due to a $2.7bn settlement
with US mortgage association
Fannie Mae. In other respects,
BoAML performed rather well – its
fees were up by a fifth on the
previous quarter and 58 per cent
year-on-year.
Citigroup reported $1.2bn profit
on $18.2bn in revenue, up from
$0.956bn the year before on $17.2bn
of revenue, missing estimates. But
the quarterly results did include
$1.3bn in legal fees. Over the year,
its numbers also notably suffered
from the $4.7bn writedown it
suffered on its stake in the Morgan
Stanley Smith Barney joint venture.
Wall Street is still recovering
from the consequences of the
financial crisis, but as those short-
term effects pass out of the
numbers, things should start to
seem brighter.
INTEL’S $13BN INVESTMENT UNNERVES WALL ST
6
NEWS
cityam.com
FUND titan BlackRock soared to a
three year share price high yesterday
after posting a 24 per cent increase
in profits, led by high demand for its
exchange traded funds (ETFs).
The New York based money manag-
er, the world’s biggest with $3.8 tril-
lion of assets under management,
attracted $47bn of extra cash from
investors in the three months until
the end of 2012.
Around $36bn over the quarter
flooded into its ETF range iShares.
This helped translate into a 24 per
cent jump in profit, with $690m of
net income versus $555m a year ago.
BlackRock, which snapped up
Credit Suisse’s ETF business last
week, now accounts for more than a
third of the global ETF market
through its iShares products.
Shares in BlackRock closed up 4.4
per cent to hit their highest level
since the start of 2010.
The firm, listed on the New York
Stock Exchange, has seen a 20 per
BY MICHAEL BOW
cent increase in its share price since
November on the back of strong
numbers.
“Our results demonstrate not only
the diversity of our platform and the
breadth of our global product offer-
ing, but how we have differentiated
the firm and continued to evolve in
anticipation of our clients’ needs,”
chief executive Larry Fink said.
The recent surge in equity markets
also helped BlackRock add $62bn to
the value of its portfolio, an increase
of three per cent over the quarter and
eight per cent over the year.
OUTGOING Intel chief executive Paul Otellini said yesterday the chipmaker would spend
$13bn (£8bn) in 2013 on expansion, higher than the $10bn forecast, as it reported net
income for the last three months of 2012 fell 27 per cent to $2.47bn. Its shares fell three
per cent in after-hours trading as analysts said the higher spend was a concern.
BlackRock Inc
17Jan 11 Jan 14Jan 15Jan 16Jan
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$
232.00
17Jan
BlackRock sees
profits surge on
equity demand
AIRLINES were left racing to
rearrange flights yesterday after reg-
ulators decided to temporarily
ground the entire 50-strong fleet of
Boeing’s 787 Dreamliner planes due
to safety fears.
Europe, India and Qatar followed
Japan and the US in keeping the new
planes indefinitely confined to air-
ports following several reports of
burning batteries as well as brake
issues and a cracked window.
Polish airline LOT said it may seek
compensation as its two new
Dreamliners were grounded, and
hinted that it could scrap an order
for three more aircraft if the prob-
lems linked to the model’s lithium
ion batteries were not fixed soon.
The US Federal Aviation
Administration late on Wednesday
decided to limit movements on US-
registered Dreamliners after sending
a team to Japan to inspect a plane
that made an emergency landing
when the pilot spotted signs of burn-
ing.
Other airlines which have tem-
BY MARION DAKERS
porarily grounded Dreamliners are
Ethiopian Airlines and Chile’s LAN
Airlines.
Boeing has said it is confident that
the planes are safe.
The new model, which has been in
service since October 2011, helped the
US firm retake its place as the world’s
biggest passenger jet manufacturer
in 2010, ousting EADS-owned Airbus.
Boeing recorded net orders of 1,203
aircraft, battering Airbus’s 833 orders
into second place.
But with the new Airbus A350 jet
due this year, the European firm
expects to make up some of the
difference.
Boeing Co
17Jan 11 Jan 14Jan 15Jan 16Jan
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76
73
74
$
75.26
17Jan
FRIDAY 18 JANUARY 2013
7
NEWS
cityam.com
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Hammerson and Westfield
call truce in battlefor Croydon
AUSTRALIAN mall owner Westfield
Group has made peace with Anglo-
French developer Hammerson in a
long-running battle over an ageing
Croydon shopping centre, agreeing
to redevelop it together.
The two have been wrangling for
over a year about the Whitgift
Centre in Croydon whose owners
sided with both developers on the
right to redevelop the site,
resulting in deadlock.
The pair said yesterday that the
joint venture will purchase a 25 per
cent interest in the 42-year-old site.
BY HARRY BANKS
Hammerson had previously
agreed to buy the stake from one of
the centre’s leaseholders, Royal
London Asset Management, on its
own for £65m.
Westfield will also buy a 50 per
cent stake in the Centrale shopping
centre, a mall opposite the Whitgift
Centre which Hammerson already
owns.
“Croydon has huge potential to
return to its former glory as one of
London’s most vibrant town
centres, and a major driver of its
economy. The redevelopment of the
Whitgift Centre at its heart is
crucial to this vision,” London’s
Mayor Boris Johnson said.
Air watchdogs
ground all 50
Dreamliners
Primark helps boost
AB Foods’ revenues
PRIMARK, the budget clothing
retailer, has outsmarted its rivals on
the high street after reporting a 25
per cent increase in sales yesterday.
Its parent company Associated
British Foods (ABF) said the launch
of 14 new stores in Spain, the UK,
Austria, Germany and the
Netherlands helped to lift sales in
the 16 weeks to 5 January. Primark
now has 256 stores and 8.9m square
feet of selling space.
Like-for-like sales growth was also
“very strong”, helped by weak
comparatives on last year when the
unusually warm weather impacted
sales of winter clothing, ABF said.
“Even allowing for an easy
autumn comparison, this
performance is well ahead of
expectations,” Panmure Gordon
analyst Philip Dorgan said yesterday.
Primark, whose website boasts a
women’s denim shirt for £12 and a
men’s hooded top for £10, has
benefited as recession-hit
consumers facing squeezed
BY KASMIRA JEFFORD household budgets have been forced
hunt for bargains.
The retailer’s performance
contrasts with that of rivals like
Marks & Spencer, which posted a 3.8
per cent fall in like-for-like
merchandise sales in the 13 weeks to
29 December.
ABF said group revenue was 10 per
cent ahead of last year. Revenues
were hit by the strengthening of
sterling against all of the group’s
main foreign currencies except the
Australian dollar. Without the
impact group revenues would have
been up 13 per cent, it said.
The company, which also sells
Silver Spoon sugar and Twinings tea,
said sales at its profitable sugar
business rose 12 per cent in the
period, on higher sales volumes and
slightly higher sugar prices. But in
the UK, poor growing conditions in
2012 led to a lower beet yield and
sugar content.
ABF said that this year’s
production will be lower at 1.13m
tonnes compared with 1.32m last
year.
FRIDAY 18 JANUARY 2013
8
NEWS
SHARES in Home Retail Group
jumped 14 per cent yesterday after
the group raised its full-year
profit forecasts and announced
third quarter sales showed signs
that efforts to turn Argos into a
digital-led retailer were paying
off.
Chief executive Terry Duddy
said he now expects full-year
group profit before tax to be about
£10m ahead of the current market
consensus of £73m.
Booming tablets sales helped
drive like-for-like sales at Argos up
by 2.7 per cent in the 18 weeks to 5
January. Total sales at Argos grew
by 1.6 per cent to £1.7bn.
However, Homebase fared worse-
than-expected by analysts, with
like-for-like sales at the DIY group
falling 3.9 per cent in the period.
Argos owner
lifts forecasts
BY KASMIRA JEFFORD
IN BRIEF
Solid quarter for Premier Foods
Premier Foods said yesterday it
delivered a “solid” fourth quarter and
that trading for 2012 was in line with
expectations, as the momentum
behind its so-called power brands
continued to build. Analysts expect
the maker of Hovis bread and Mr
Kipling cakes to post earnings before
interest and tax of £117m to £120m.
Amazon fights US tax claim
Online retailer Amazon is fighting
the US Internal Revenue Service (IRS)
over a $234m (£146m) international
tax bill, a dispute similar to others in
which the agency has struggled to
collect corporate taxes. The IRS claims
that a sum transferred from Amazon’s
European subsidiaries to its US parent
company is taxable.
SDL warns of lower profits
Translation software firm SDL said
profits would be lower than expected
for the second time in three months
yesterday, even as turnover improves.
The firm, which forced out chief
executive John Hunter last year, said
profits would be between £35m and
£36m, slightly below forecasts. Shares
in the company fell 2.6 per cent.
ABU DHABI Capital Management-owned Spadille has agreed a £25.65m deal to buy Northacre,
the residential property developer that has a portfolio of prime London addresses across Mayfair
and Kensington, including The Phillimores (above). The recommended 96p per share offer is a
premium of around 21.5 per cent to the closing price in December, when the stock last traded.
ABU DHABI CAPITAL INKS NORTHACRE DEAL
For now, management appears to have moved some way in
convincing investors that the company can prosper in the
internet age...In all, analyst opinion has thawed from a ‘sell’ to a weak
‘hold’, with the group becoming a surprise Christmas winner.
ANALYST VIEWS


This is a much better than expected statement ... However, it is but
one quarter against very soft comparables and is not enough for us
to change our fundamental view. Argos’s competitors are too big, too
nimble and its plans for change will take too long to implement.

Yesterday’s figures highlight a good performance from Argos
over peak albeit further weakness at Homebase... We remain
cautious on the longer term outlook for the business believing more
radical action is needed, especially around the store portfolio.

WHAT DO YOU
THINK OF HOME
RETAIL’S RESULTS?
Interviews by Kasmira Jefford
KEITH BOWMAN HARGREAVES LANSDOWNE

PHILIP DORGAN PANMURE GORDON

MARK PHOTIADES N+1 SINGER
Mothercare knocked by poor
performance in home market
BY KASMIRA JEFFORD
FRIDAY 18 JANUARY 2013
9
NEWS
cityam.com
RECORD tablet sales have caused
the number of consumers shopping
on the mobile devices to jump an
eye-watering 304 per cent this year.
A report by industry body IMRG
and analyst Capgemini released
yesterday also showed consumers
spent a total of £78bn online in
2012, up by 14 per cent on 2011.
However, online growth is set to
slow to 12 per cent next year, with
shoppers expected to spend around
£87bn, as the market matures.
Chris Webster, head of retail and
technology at Capgemini, said.
“We’re already seeing growth in
traditional e-retail channels
slowing and whilst mobile
commerce is growing extremely
quickly it remains a small part of
the overall market.”
Sales in the key December month
grew 17.5 per cent year-on-year, in
line with other industry figures.
Tablet sales fuel
online growth
BY KASMIRA JEFFORD
Dixons boss says high street
is in midst of seismic change
DIXONS Retail’s chief executive
yesterday warned that Britain’s
high streets were undergoing “a
seismic change” as the electricals
group saw sales benefit from its
rival Comet’s demise.
Sebastian James said it was
“heartbreaking” to see great brands
disappear from the high street.
He added that “the winners are
those that can offer a great multi-
channel offer” and admitted that if
Dixons had not upped its game “[it]
would be gone too”.
The retailer, which trades as
Currys and PC World, said group
like-for-like sales rose seven per cent
in the 12 weeks to 5 January, while
same store sales in the UK and
Ireland jumped eight per cent in
the period.
This was despite collapsed rival
Comet launching a fire sale over the
first eight weeks of the quarter.
BY KASMIRA JEFFORD
James said the group sold “well
over 1m tablets” in the period,
three times as many as it did last
year. More than five tablets a second
were snapped up in the week before
Christmas.
Dixons has a 19 per cent share of
the electronics market. James said
he expects this to increase by one or
two percentage points this year on
the back of rivals like Comet and
Jessops closing down.
MOTHERCARE, the baby and
maternity products retailer,
suffered a decline in sales in its
third quarter, as recent
improvements to its UK arm failed
to pull in the Christmas sales.
The group, which has over 1,300
stores worldwide including 269 in
the UK, said UK like-for-like sales
fell 5.9 per cent in 13 weeks to 12
January, compared with a three
per cent decline in the same
period last year.
Chief executive Simon Calver
said Mothercare was up against
tough comparatives on last year
when it joined in the aggressive
discounting on the high street to
keep up with rival retailers.
Online sales rose by 0.9 per cent
compared with an 11 per cent rise
in the second quarter after a late
start to Christmas shopping, with
sales up 12 per cent in December.
“People chase unprofitable sales
online – clearly we were not going
to get into that space,” he said,
adding that the group had
decided to discount less to protect
margins. Calver, who was hired by
movie rental firm Lovefilm last
April to spearhead the group’s
turnaround, insisted Mothercare
was on track to return to profit
within three years.
The group, which also owns the
Early Learning Centre chain, has
been cutting down its presence on
the high street and now has 269
stores, compared with 311 last
April. It eventually plans to have
an estate of just 200 stores.
Calver has also cut clothing
prices, lowered head office costs
and launched new ranges like the
Little Bird range from Jools Oliver,
wife of TV chef Jamie Oliver.
“Our continued progress with
improving value, choice and
service for our customers is
evident in better prices, new and
innovative product and better
staff engagement with customers.”
Mothercare’s overseas business
continued to grow strongly, with
underlying sales up 14.8 per cent.
Mothercare opened 31 stores
during the quarter and now has
1,129 shops across 61 countries.
Analysts however remained
bearish on Mothercare’s prospects
yesterday. Seymour Pierce analyst
Kate Calvert said: “We do not
believe Mothercare is an easy fix
and brand repositions tend to take
longer than expected. It will be
difficult to make Mothercare
relevant again for the modern
mother as it has strong
competition from Amazon and
the supermarkets.”
Mothercare PLC
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Dixons Retail PLC
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ONLINE fashion retailer ASOS yesterday said its retail sales rose 41 per cent to £78.1m in
December, helped by a strong showing in its home market over Christmas. UK retail sales were
up by a better-than-expected 34 per cent to £35.7m, driven by its decision to the trim prices of
its own-branded products. International sales jumped 47 per cent to £42.4m.
BUMPER CHRISTMAS BOOSTS ASOS
BROKER Panmure Gordon
yesterday said its expanding
corporate transaction business
had driven it to profit in the
second half of last year.
Despite a gloomy IPO market
and depressed market volumes,
the stockbroker was profitable for
each month due to increased
revenues on transactions, it said in
a trading statement.
The company hired a former
Matrix Corporate Capital funds
team in November, which helped it
add 26 new clients to its roster.
It also said yesterday it had
reintroduced a provision for
bonus payments to some of its top
staff, while also keeping a tight
control on costs.
Panmure gains
from new hires
BY MICHAEL BOW
CHRIS Rokos, co-founder of hedge
fund firm Brevan Howard, is
focusing on managing his own
fortune, it emerged yesterday, the
latest star trader to set up a so-called
family office rather than work for
others amid tighter regulations.
The former Goldman Sachs
trader, who left Brevan last summer
after the amount of money he
managed was cut, has set up the
office in the heart of London’s
upmarket Mayfair district, close to
Berkeley Square, a source said.
Rokos has been joined by former
Brevan Howard partner Andy
French, the source added. French
also left Brevan last year and is now
chief operating officer at an
unnamed family office.
Ex-Brevan star
in solo venture
BY CITY A.M. REPORTER
SCOTTISH-based money manager
Aberdeen Asset Management yester-
day said it had attracted £1.1bn more
assets from customers in the last
quarter as cash flowed into higher
margin products, boosting revenues.
The FTSE 100 firm, said it had won
£10.8bn of new business in the last
three months of 2012, an increase of
one fifth on the previous quarter.
Outflows of £9.7bn meant a £1.1bn
overall boost to net inflows.
Most of the cash flooded into its
high margin equity desks, while low
margin products saw outflows.
Aberdeen, headquartered in the
granite city but renowned for its
emerging markets expertise, estimat-
ed the trend for high margin prod-
ucts would add £30m to annual
revenues through fee income.
Aberdeen has seen its share price
surge more than 70 per cent over the
past year as institutional investors,
like pension funds, flooded cash into
its flagship emerging market equity
Aberdeen adds
more assets to
better margins
BY MICHAEL BOW
products.
Aberdeen has been a top stock pick
in the listed fund management space
but now trades at a 17 per cent premi-
um to the sector average, leading ana-
lysts to sound a note of caution on its
price.
Shares in the firm closed down 1.73
per cent as investors took profits yes-
terday. “Aberdeen is no longer cheap
enough to be a buy on an absolute
basis, but remains fairly attractive rel-
ative to most in the sector in our
view”, Numis analyst David McCann
said.
FRIDAY 18 JANUARY 2013
10
NEWS
cityam.com
INSIDE
TRACK
DAVID HELLIER
THERE is little more certain in life
than this: one firm’s misfortune will
be seized on by rivals desperate to
take advantage of another’s woes.
So it is that a host of financial pub-
lic relation agencies have been bend-
ing the ears of Marks & Spencer
executives to test the retailer’s loyalty
to its incumbent agency Tulchan.
Their interest in contacting the
retailer was sparked by a decision by
Tulchan to rush out a disappointing
M&S results statement owing to a
leak.
The decision put M&S on the back
foot ahead of a difficult announce-
ment, in which the company’s per-
formance in certain sectors was
below market expectations.
By midweek more than one source
tried to convince me that Tulchan
had lost the account, which it has
held since 2005. Some said Brunswick
supremo Alan Parker had been in
touch and that it was only a matter of
time before his firm would be
instructed. For the time being,
though, M&S, Tulchan and
Brunswick, insist that nothing has
changed.
For its part, Brunswick might have
difficulty in acting for M&S since it
also acts for Tesco, whose chief exec-
utive Philip Clarke has made it clear
he would not be happy with such a
conflict. RLM Finsbury is also con-
flicted, being Sainsbury’s main
external financial adviser.
As for Tulchan, for whom M&S is a
large client, this has been a tricky
few days. Friends said it had no
choice but to bring forward the
M&S results after a leak to Sky’s
Mark Kleinman (also a City A.M.
columnist) in the early evening
ahead of a scheduled morning
announcement.
The company’s lawyers advised
that there had been a leak of the
results resulting in uneven knowl-
edge in the market which would be
unfair to shareholders. “There was a
choice,” said one person privy to the
discussions. “Either suspend share
dealings or accelerate results.
Suspension is unpopular and not a
complete fix (eg. derivatives might
still trade, affects indices, company
not able to articulate its story) so as
all virtually ready for announcement
just accelerate the process.”
In the past there have been exam-
ples when companies have brought
results forward (Kingfisher, after
numbers were leaked to analysts, for
example) but such a dramatic release
of results after hours is virtually
unprecedented.
Some say Tulchan should have over-
ridden the legal advice and waited
until the morning to announce
results as usual. But to do so would
have almost certainly risked the
wrath of the ever watchful regula-
tors. In any case it seems unfair to
blame the firm for adhering to the
advice of the lawyers. Tulchan’s
Andrew Grant has served M&S well
over the last eight years and deserves
to ride out this particular storm.
ORCEL’S WOMEN
Andrea Orcel’s view, articulated at a
recent parliamentary committee on
banking standards, that UBS suffers
from a lack of women, will no doubt
face scrutiny going forward.
So far the investment bank chief
executive has made at least three sen-
ior female appointments; Beatriz
Martin Jimenez is his chief of staff;
Sara Ferrari has become head of strat-
egy and Michelle Bereaux is interim
chief operating officer.
david.hellier@cityam.com
Fiasco over results tests M&S’s loyalty to Tulchan
Aberdeen Asset Management PLC
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NEWS
THE OFFICE of Fair Trading (OFT) yesterday launched
an investigation into workplace pensions amid fears
that savers have little control over how their money
is administered.
The decision to probe defined contribution
schemes comes ahead of an impending influx of
savers who have had little direct contact with the
pensions industry.
At the moment just four million Britons pay into a
defined contribution scheme but the government’s
decision to introduce automatic enrolment – which
requires employers to pay into a pension scheme for
all staff unless they opt out – could see this rise to
13m by 2018.
This has raised fears that inexperienced investors
at both company and individual level may not be
able to seek out the best return on their investment.
“We want to ensure that providers are competing
to offer the best possible deals, and that the choices
made by employers mean that employees are saving
into good pension schemes for their retirement,”
said Mary Starks of the OFT. The investigation will
consider whether there is enough competition and
enough pressure to keep administration charges low.
This week the government announced a flat £144-
a-week state pension for anyone who has made 35
years of National Insurance contributions. It is
hoped this simple figure will encourage more
people to contribute to a workplace scheme.
OFT to investigate
pensions industry
BY JAMES WATERSON
INSURANCE giant Aviva yesterday announced the
disposal of its stake in a Malaysian business for
£152m, the latest unit to be sold as part of a
radical streamlining plan.
CIMB-Aviva, a joint venture with one of
Malaysia’s biggest banks, was only founded in
2007. But it fell victim to the British company’s
decision to retreat from many mid-sized markets
with the intention of boosting its capital surplus.
Sun Life Assurance Company of Canada
successfully fought off competition from the
UK’s Prudential and Canada’s Manulife Financial
to buy Aviva’s 49 per cent stake in the business.
Earlier this month Aviva sold its remaining
stake in Dutch insurer Delta Lloyd, having
completed a string of disposals during late 2012.
Barrie Cornes, an analyst at Panmure Gordon,
said the sale of the Malaysian business will be the
last of the company’s big deals: “Not only has
Aviva disposed of businesses quicker than we had
anticipated but it has achieved better prices too.”
Aviva sells Malaysian
business for £152m
BY JAMES WATERSON
CREDIT card firms Capital One Financial and
American Express both reported disappointing
fourth quarter results last night.
Capital One said net income for the fourth
quarter rose to $843m (£527m), or $1.41 per
share, from $407m, or 88 cents per share, a year
earlier. The result was lower than average analyst
expectations of $1.58 earnings per share.
Total net revenue came in at $5.62bn, with the
firm saying it expected similar revenue for the
first quarter, again disappointing analysts who
had forecast $5.71bn. Capital One said it had
been forced to set aside $1.15bn to cover bad
loans in the fourth quarter, up 13.5 per cent from
the third quarter. Its shares plunged seven per
cent in after-hours trading.
Meanwhile, American Express reported net
income 47 per cent lower in the fourth quarter,
due to hefty charges related to restructuring
costs and other one-time expenses.
The firm, which last week announced 5,400 job
cuts, posted net income of $637m, or 56 cents per
share, for the three months to the end of
December. That compares with net income of
$1.2bn, or $1.01 per share, in the same period last
year.
AmEx and Capital One
disappoint Wall Street
BY KATIE HOPE
BUMI co-founder Nat Rothschild yes-
terday hit out at the board of the
miner, and called for full disclosure
of the Macfarlanes report.
Beleaguered coal miner Bumi com-
missioned City law firm Macfarlanes
to carry out the legal review into its
Indonesian operations in September,
following alleged financial irregulari-
ties at Bumi Resources.
The billionaire financier yesterday
wrote to the FTSE 250 coal miner to
express a lack of confidence in the
investigation. He said that leaks from
the investigation “appear designed to
generate spurious embarrassment”
for both Rothschild and his invest-
ment vehicle NR Investments.
He said in a statement last night
that he had written to Sir Julian
Horn-Smith, senior independent
director at Bumi, to demand an inde-
pendent legal investigation to
“review expeditiously all relevant
matters” concerning the Macfarlanes
investigation and report.
“This will provide minority share-
holders with the information and
confidence in Macfarlanes’ findings
they need in order to make informed
decisions at the forthcoming general
meeting of Bumi,” he said.
Rothschild calls
for full release
of Bumi report
BY CATHY ADAMS
Last week, Rothschild demanded
that Bumi hold a general meeting to
push through his proposal for a board
overhaul. He is seeking to remove 12
of the current 14 directors – including
the chief executive and chairman –
and replace them with new directors
including himself, a notion that has
gained support from several large
institutional investors. The meeting is
expected to take place around 24
February.
Broking house Liberum Capital yes-
terday said that it judged the Bumi
board’s current proposal – to divorce
itself from co-founder the Bakrie fam-
ily and Bumi Resources – “the only
workable solution”.
A Bumi spokesperson had no initial
comment last night.
FRIDAY 18 JANUARY 2013
12
NEWS
cityam.com
Bumi PLC
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17Jan
PAYMENT protection insurance
(PPI) was a good product for certain
bank customers and was sold with
the best intentions by the majority
of bank staff, former bosses at RBS
claimed yesterday.
Ex-UK retail boss Paul Geddes
told the parliamentary commission
on banking standards that the
product passed “the sniff test”
when he joined the bank in 2004.
“Customers were satisfied with
Ex-RBS directors defend PPI as
a useful product for customers
BY TIM WALLACE
the product, complaint rates were
normal, the financial ombudsman
found with the bank in 80 per cent
of cases, there was a need for the
product,” he said.
Yet by 2010, the FSA published
updated guidance on sales which
found the bank’s earlier sales
practices were wrong, he said,
leading to the scandal.
The former bosses added that
PPI was a suitable product for
those with low or uncertain
incomes.
FAKE property tycoon Achilleas Kallakis (above) was yesterday sentenced to seven years
in jail for defrauding Allied Irish Banks and Bank of Scotland out of over £700m, and co-
defendant Alexander William was jailed for five years. The judge said the banks deserved
some blame for poor risk controls, after approving loans based on fake guarantees.
PROPERTY FRAUDSTER JAILED FOR SEVEN YEARS
THE INCOMING head of the new
Financial Conduct Authority (FCA)
must do more to actively promote
competition in banking, rather than
take the route of increased
regulation, MPs warned in a report
out today.
“Getting competition into the
culture of the FCA will also be a
huge challenge for its leadership,”
said Treasury Select Committee
chairman Andrew Tyrie MP.
“The government’s new Financial
Services Act fell short of providing
the new regulators with the
accountability structures that were
needed.”
Call for bank
competition
BY TIM WALLACE
THE GOVERNMENT will take
forward plans to limit the
maximum pay-out employees can
win from unfair dismissal cases, it
said yesterday.
The move follows consultation
on a range of reforms designed to
limit the use of costly
employment tribunals and give
businesses the confidence to hire
new staff.
Proposals confirmed yesterday
include capping the
compensation paid following a
successful unfair dismissal case at
12 months of wages, as well as
encouraging greater use of
Unfair dismissal compensation
to be capped at 12 months’ pay
BY JAMES WATERSON
template letters.
“Employment tribunals are
costly for everyone, in terms of
money but also time and stress,”
said employment minister Jo
Swinson.
“We need to tackle unrealistic
expectations about the levels of
compensation awards, especially
when only 1 in 350 people who
make a claim for unfair dismissal
receive an award of more than
their own salary.”
Ronnie Fox of City employment
law firm Fox welcomed the move
but warned many claims “involve
allegations of discrimination or
whistle-blowing, compensation
for which is to remain uncapped”.
SEVEN partners from Deloitte
shared a kitchen with
MasterChef’s Michel Roux Jr this
week. And not just in an attempt
to improve the staff canteen, but
to raise money for the charity
Wildhearts.
Affectionately known as the
Deloitte MasterChef Canapé
Challenge, the office competition
saw seven senior partners cook
live under the strict judging eye
of Michel Roux Jr.
Partner Jane Curran told The
Capitalist: “I never knew there
were so many uses for a syringe in
a kitchen. I spent 45 minutes
making rhubarb caviar, and
[fellow partner] Richard Punt
ended up wearing more chocolate
than he used.”
And if you thought the world of
accountancy wasn’t glamourous,
think again. The Capitalist hears
one female partner refused to
take off her five-inch heels in the
kitchen, much to the amusement
of chef Michel.
Deloitte partners roll up their
sleeves for charity cook-off
WHAT would a Capitalist diary
entry be, without a weekly update
on loveable London Mayor Boris
Johnson?
And so, to the City’s Mansion
House last night, where the Lord
Mayor hosted the City Mayor for
the London Government Dinner.
Among the 300 guests gathered
to hear BoJo’s musings on Europe
were chair of London Councils
Jules Pipe, MP for the Cities of
London and Westminster Mark
Boris talks up
London charm
at City dinner
Field, head of TfL Peter Hendy, the
Mayor’s economic adviser Gerard
Lyons, Johnson’s chief of staff Sir
Eddie Lister and the Deputy Mayor
of London Kit Malthouse.
As well as discussing London’s
strategic role in Europe, Boris was
talking up London in his after din-
ner speech – fewer murders than
New York, less tax than Paris, more
green space than any other
European city and, crucially, better
nightlife than Zurich.
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THECAPITALIST
The Capitalist reported only days
ago that HMRC chief executive Lin
Homer had been voted Most Influential
Person in the annual Financial Power list
compiled by Accountancy Age. Quite an
unexpected accolade given all the recent
chatter of HMRC’s lack of action towards
Starbucks, Google and other
multinationals’ tax arrangements.
Rather embarrassing then, that
members of Homer’s department
seemed unable, to put it bluntly, count.
A press release sent to City A.M. bearing
the title “HMRC’s affluent unit to double
in size” went on to explain its numbers
would be rising from 200 to, err, 300.
FRIDAY 18 JANUARY 2013
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
MOST City workers down a speedy
sandwich during their lunch hour,
while others make a dash for the
gym – but how many actually relax
when away from their desk?
This is the question being posed
by the City of London Festival,
which is touting its annual free
Winter Concerts programme to
encourage us all to spend 55
minutes listening to music in
churches around the Square Mile.
Jazz features heavily this year,
but there are also classical recitals
on the bill.
Sadly, there is no sign of Lord
Mayor Roger Gifford’s name on
the list. Gifford, who has recently
set up The City Music Foundation
to nurture emerging talent, is an
accomplished pianist and a dab
hand on the recorder, not to
mention a choirist in several
choirs. The Capitalist wonders why
he isn’t relishing the chance to
show off his musical skills, for the
greater entertainment of the City,
obviously. All in favour, say aye.
Mayor Boris Johnson giving his speech at the Goverment Dinner last night
MasterChef’s Michel Roux Jr puts the seven Deloitte partners through their paces
Relax to the sounds of the City
Rents still up despite end of 2012 slip
Dec ‘11 Jun‘11 Jun‘12 Dec ‘10 Jun‘10 Dec ‘12
660
640
620 4.0
4.2
4.4
4.6
4.8
5.0
5.2
5.4
5.6
680
700
720
740
760
Avgrentpermonth, £
Rents
Yield
Avgyieldonbuy-to-letinvestment, %
FRIDAY 18 JANUARY 2013
15
NEWS
cityam.com
EUROPEAN house prices are set to
decline yet further in 2013,
according to predictions from
credit ratings agency Standard &
Poor’s (S&P).
Spanish houses will lose around
7.8 per cent during the coming
year, it forecasts, as the Eurozone
debt crisis continues to hit the
bloc’s fourth biggest economy.
Core countries like France and
the Netherlands will fare little
better, the outlook predicts. The
Dutch and French housing declines
look to be accelerating, according
to S&P, and will see a further five or
six percentage points wiped off
housing values in 2013.
Only the region’s powerhouse
economy, Germany, will be able to
shrug off debt and demand woes,
with S&P predicting growth of
around three per cent in German
residential prices, as a robust
labour market delivers solid wage
hikes even in the dire European
economic climate.
But the ratings group sees the
gloom as mainly short-term, and
expects the long-term to herald
continued growth, with population
growth, particularly in France, the
UK and the Netherlands squeezing
an inelastic supply of housing stock.
S&P says euro
crisis will drive
housing lower
BY BEN SOUTHWOOD
UK RENTS fell back from autumn’s
record highs in December, data
released this morning has shown.
Rents dropped 0.9 per cent in
December, according to LSL Property
Services’s buy-to-let index, bringing
the average monthly rent to £734
per month.
This consolidated November’s 0.4
per cent decline, which pulled rents
down from the all-time high of £744
per month recorded in October.
This downward push was felt espe-
cially keenly in London, where aver-
age rents sunk 1.5 per cent in just a
month, bringing them to £1,087 per
month. But in London, and across
the country, decline over the past
two months did not erase the gains
the market has made over the year.
London rents soared 6.3 per cent
over the year, with the south east
propelling England and Wales-wide
growth of 3.2 per cent.
LSL director David Newnes said the
monthly decline was mainly down
December sees
rents slip from
all-time highs
BY BEN SOUTHWOOD
to seasonal factors, rather than any
correction in the market.
Newnes said that the structural
determinants of rental growth – par-
ticularly limited mortgage finance –
would drive continued upward
movement.
The seasonal decline in rents did
not prevent an upturn in total
arrears, the data showed. Total rent
late or unpaid climbed £85m in
December to hit £326m – or 10.1 per
cent of all rent across England and
Wales, 2.7 percentage points more
than in November.
Big four make up lion’s share of
£11bn accountancy fee income
FEE income at Britain’s 60 biggest
accountancy firms totalled almost
£11bn last year, as the biggest
firms gained work in consulting
and corporate finance while the
mid-tier firms fought to grow.
The big four professional
services firms – PwC, Deloitte,
Ernst & Young and KPMG – made
up £8.35bn of the top 60 firms’
earnings, according to a survey by
Accountancy magazine. This
represents an average rise of 9.6
per cent on the previous year.
By comparison, the sixth to 10th
largest firms posted flat fee
BY MARION DAKERS
income of £1.39bn.
The top 60 accountancy groups
posted net fee income up 7.9 per
cent from last year to £10.98bn.
The sector is awaiting the results
of a Competition Commission
investigation into the big four’s
hold on the statutory audit
market, which is due within
weeks.
Firms will also learn this year
whether Europe will impose tough
new rules compelling companies
to put their audit work out to
tender after a certain period.
Industry income has increased
steadily for the past two years, but
outside the big four the sector has
seen both stellar growth and
difficult trading.
A number of small and mid-tier
firms have announced mergers in
the last year, a trend that many
accountants expect to continue.
“We were both keen to lead the
way and do it from a position of
strength,” BDO managing partner
Simon Michaels, who last month
announced a tie-up with PKF, told
Accountancy.
In spite of a patchy performance
across the sector, the top 60 firms
added more than 4,000 jobs in the
year to take their total to almost
74,000, around 6,000 of which are
partners.
Shock collapse in Philly Fed poll
contradicts upbeat jobless data
FACTORY activity in the key mid-
Atlantic region fell back into
decline in January, US data
revealed yesterday.
But across the US as a whole,
37,000 fewer new unemployment
insurance claims were made in
the week ending 12 January, when
adjusting for seasonal variations
– giving a much more optimistic
picture of the economy.
However, the broader thrust of
this Department of Labor data was
less positive, with total insured
unemployment rising 87,000 in
the previous week, again when
BY BEN SOUTHWOOD
adjusting for seasonal movements,
bringing it just 283,000 shy of last
year’s figure for the same week.
The widely regarded Philly Fed
index, which tracks
manufacturing activity in the mid-
Atlantic region of the eastern USA,
slid from 4.6 in December to
minus 5.8 this month.
The outcome defied analyst
expectations the survey was set to
show improvement, and indicating
difficulty in the struggling
manufacturing sector.
But the poll of firms still showed
impressively solid hopes in the
coming six months, with a score of
29.2 – up from 23.7 in December.
And figures for housing starts
also lent support to hopes that the
US economy is finally battling its
way into a more robust recovery
from the credit crunch than it has
so far enjoyed.
Private housing starts rocketed
up 12.1 per cent between
November and December to reach
954,000 – a full 36.9 per cent
higher than in December 2011.
And though permits for private
building edged up just 0.3 per cent
between November and December,
according to the Census Bureau
numbers, the December figure
remained 28.8 per cent higher
than in 2011.
JEROEN Dijsselbloem, the
recently-appointed Dutch finance
minister, will today formally
apply to succeed Luxembourg
Prime Minister Jean-Claude
Juncker as the Eurozone’s finance
chief.
“I intend to present myself as a
candidate tomorrow,” the 46-year
old Labour politician told the
Dutch parliamentary finance
committee yesterday.
The Dutch lawmaker, appointed
only in November, has already
toured European capitals and
Dutch minister puts himself up
for Eurozone finance chair role
BY BEN SOUTHWOOD
spoken with European Council
President Herman van Rompuy.
Under Juncker the Eurogroup
of ministers had a large impact
on the response Eurozone
members took to the bloc’s
sovereign debt crisis.
The career politician was a
member of the Netherlands’
house of representatives between
2000 and 2012, with a short break
during 2002.
On his government page, he
promises to devote himself to
“sound government finances, a
further regulation of the
financial sector and a strong
Europe.”
Dutch finance minister Jeroen Dijsselbloem has under 11 weeks of ministerial experience
THE EURO area construction
industry came in for another
hammering in November, data
revealed yesterday.
Construction output fell 0.4
per cent between October and
November, Eurostat said
yesterday, adding to the deep
slump the construction industry
has been suffering since 2007.
The decline has seen almost 30
percentage points wiped off the
sector’s output since highs at the
end of 2006, and left output
nearly a fifth lower than the
average reached in 2005.
The wider EU saw an even
bigger 0.9 per cent fall in
November, but has proved
Eurozone construction industry
dives deeper into depression
BY BEN SOUTHWOOD
somewhat more resilient than
the crisis-hit core of the bloc,
with output around 85 per cent
of the 2005 level.
Within the supranational body,
Italy (minus 3.4 per cent), the UK
and Poland suffered the worst
monthly declines, while Slovenia
(14.9 per cent), Romania and
Sweden enjoyed healthy
improvement on the month.
Yet looking at the year as a
whole Slovenia fared worst,
suffering a 20.4 per cent collapse
in output, followed by Italy and
Portugal. The only annual
improvements came in
beleaguered Spain, where output
grew 10.3 per cent, and Sweden,
which enjoyed a more modest 1.5
per cent improvement.
THE INTERNATIONAL Monetary
Fund (IMF) is this month sending
a mission to Ukraine to discuss a
new loan package, after the
former Soviet republic was hit
with collapsing industrial
activity.
The IMF confirmed it would
send a team on 29 January, after
deputy prime minister Serhiy
Arbuzov said the country wanted
around $15bn (£9.4bn) credit
earlier this week.
IMF loans had previously been
halted after the government
refused to reduce energy
subsidies, fearing a public
backlash. This raises the prospect
Ukraine seeks fresh IMF loans
as industrial output plummets
BY BEN SOUTHWOOD that similar issues will prove a
sticking point in the new deal,
with analysts sceptical about the
possibility of an agreement in the
forthcoming talks.
“I don’t think we should
necessarily think that the
mission will conclude with an
agreement as negotiations are
likely to be very, very tough,” said
Standard Bank’s Timothy Ash.
The new package comes as
Ukrainian industrial output
collapsed 7.6 per cent over the
year to December, according to
official statistics out yesterday.
This plunge came after the
steel-dominated sector enjoyed a
7.6 per cent climb in industrial
production last year.
SOURCE: LSL PROPERTY SERVICES
ADVERTISING spending on mobile
phones is forecast to double in the
next three years, with the market set
to become worth almost $25bn
(£15.6bn) by 2016.
Figures from research firm
Gartner claim that the increasing
number of people browsing the web
and using apps on smartphones and
tablets mean advertising revenue
will rocket from $9.6bn last year to
$11.4bn in 2013, and will then hit
$24.6bn by 2016.
Mobile phones are seen as an
opportunity for many advertising
companies, offering the ability to
use a phone’s geo-location data to
target location-specific adverts,
such as those for local restaurants.
Tablets, which are often used
while people watch TV, are also seen
as a big growth area in marketing,
with advertisers able to offer
relevant games or videos on a tablet
to embellish TV adverts.
“Smartphones and media tablets
extend the addressable market for
mobile advertising in more and
more geographies as an increasing
population of users spends an
increasing share of its time with
these devices,” said Andrew Frank,
Gartner’s vice president in charge of
research.
Mobile advert
spending set to
double by 2016
BY JAMES TITCOMB
ASML Holding NV
17Jan 11 Jan 14Jan 15Jan 16Jan
48
49
50
46
47
51
52 €
51.49
17Jan
Computacenter PLC
17Jan 11 Jan 14Jan 15Jan 16Jan
410
420
430
440
450 p
450.00
17Jan
FRIDAY 18 JANUARY 2013
16
NEWS
cityam.com
BRITISH game developer King.com
has leapfrogged US giant Zynga to
the top of Facebook’s gaming charts.
The company has seen its Candy
Crush Saga puzzle game overtake
FarmVille, the game that brought
Zynga to prominence before it went
public in December 2011. Candy
Crush Saga is played by 9.7m people
a day, to FarmVille’s 8.8m.
King.com, which is itself tipped for
an initial public offering on New
York’s Nasdaq exchange, said the
rapid rise of Facebook users playing
games on their smartphones and
tablets had led to its success. Its sim-
ple puzzle games appeal to a grow-
ing audience of casual gamers, in
contrast to more time-consuming
games such as FarmVille.
“People are playing more and more
on tablets and smartphones, and our
casual formats work very well there,”
King.com’s chief marketing officer
Alex Dale told City A.M. “It’s a lot eas-
ier to pick up and play a puzzle
King.com beats
Zynga to steal
Facebook crown
BY JAMES TITCOMB
game, and with mobiles people can
play when they want to.
“King is able to address that because
we are focused on those casual games
and we are leaders in synchronising
games across platforms.”
Dale said the company is not seeing
the same growth problems as Zynga,
which has seen its shares lose almost
three-quarters of their value in just
over a year on the market, and that
the company is rapidly expanding.
Having employed just 100 staff in
mid-2011, King.com now has 330 in
offices in London, San Francisco and
seven European cities, and is looking
to hire 300 more people this year.
Julien Codorniou, Facebook’s head
of European gaming partnerships,
said King.com was a “poster child for
the fast-growing European gaming
industry”. “Only a few technology
companies in the world have reached
so many people so quickly,” he said.
King.com saw revenues of €44.7m
(£37.3m) in 2011, the year it began
making Facebook games, but this is
expected to have exploded last year.
Strong IT spending in UK boosts
Computacenter in spite of euro
IT FIRM Computacenter said
yesterday strong demand for services
in the UK had propelled rising
revenues, even as a weak euro
threatened to hit turnover.
The company, which operates in
more than 100 countries, said in
constant currency terms its revenues
had increased six per cent last year,
but accounting for currency
fluctuations, this was decreased to a
two per cent rise. This performance
was far better than expected, and
sent shares in the FTSE 250 company
up around seven per cent.
The UK was Computacenter’s best
BY JAMES TITCOMB
market, with total revenues up nine
per cent, driven by customers
including Morrisons. The other key
markets, France and Germany, saw
revenues increase on a constant
currency basis.
Computacenter said that trading
in Germany, where the firm has been
hit by unexpected costs, had
improved in the fourth quarter.
“We expect to make further
progress in improving the
performance of our problem
contracts in Germany, where we will
focus primarily on margin
improvement,” the company said.
Investec analyst Julian Yates said:
“The update details results
marginally ahead of expectations, a
strong cash balance, but most
importantly highlights a base has
been set for improving German
contract margins into 2013.”
Technology supplier ASML sees
bookings drop as sector slows
ASML, the world’s largest supplier
of equipment for making
microchips, said yesterday it had
seen a fall in new orders during
the fourth quarter of 2012,
suggesting a slowdown in the
market.
Since ASML supplies much of the
technology used to make the
processors and graphics cards used
in computers and smartphones, its
performance is seen as a
bellwether for the global
technology sector.
Netherlands-based ASML said
bookings had declined by a fifth,
BY JAMES TITCOMB from €831m (£693m) in the third
quarter to €667m in the fourth.
The company reported sales of
€1.02bn in the period, and €4.7bn
for the whole of 2012, against
€5.7bn in the previous year.
The company said it expects a
slow start to 2013, with sales
declining in the first quarter, but
said that things will pick up later
on in the year, as companies invest
in 4G technology.
“We plan net sales for 2013 at a
similar level to that of 2012, with a
slow first-quarter start, recovering
in the second quarter and a
relatively large second half,” it said.
Despite the slowdown in
bookings, shares in ASML rose
seven per cent in Amsterdam
yesterday, as the firm managed to
increase profits to €298m (£249m)
despite the revenue drop.
BRITISH mobile payments
company Bango saw its shares rise
almost nine per cent yesterday as
the company launched a tie-up
with Telefonica that will allow O2
users to pay for apps via their
mobile bill.
Bango is bringing the service to
Telefonica’s 314m customers
across the world, including UK
network O2, which the Spanish
telecoms giant owns.
The deal means O2 users will be
able to pay for apps on Android,
Windows and BlackBerry
smartphones, and on Facebook’s
mobile app centre, for adding
games and programmes that run
on Facebook.
Mobile app payments company
Bango soars on tie-up with O2
BY JAMES TITCOMB
Bango says that mobile users are
more likely to finish transactions
using its software than by credit
cards or text messages, which take
longer to complete.
The company, which takes a cut
of any transaction, has seen its
market value more than double in
the last year as it has signed
agreements with the likes of
Facebook and Google.
It sees greater gains as it
expands into developing markets,
where many customers do not
have credit cards. Yesterday’s
Telefonica deal is crucial to this
strategy, given its strong presence
in South America.
Despite its growth, Bango is not
yet in profit. It saw £2.4m of losses
in the nine months to January.
UK real estate giant Land Securities
yesterday took control of X-Leisure,
the owner of venues including the
Xscape indoor ski slopes and
Brighton Marina, for £111.9m.
The property giant said it had
completed the deal, first outlined
in December, with Capital and
Regional and Area Property
Partners to buy a further 42 per
cent stake in X-Leisure Unit Trust
and also buy outright the company
that manages the £580m fund.
X-Leisure staff will remain with
the firm under its new ownership,
but chief executive Pierre-Yves (PY)
Gerbeau, the French entrepreneur
credited with turning around the
Land Securities takes control of
X-Leisure as PY Gerbeau leaves
BY KATIE HOPE loss-making millennium dome,
now the O2, said he would step
down “to take on new challenges.”
“I am extremely happy to have
such a significant player taking X-
Leisure forward and bringing
additional credibility and gravitas
to the industry,” said PY Gerbeau.
Land Securities has been on a
buying spree this year to increase
its exposure to the leisure and
eating-out sector, which it views as
being under less threat from the
internet.
It acquired its initial 12 per cent
stake in X-Leisure last year and in
May the developer snapped up
Manchester’s leisure complex the
Printworks for £95m as well the
Cornerhouse in Nottingham £50m.
GOOGLE confirmed yesterday it has bought a 2.4 acre site at King’s Cross to develop its
new British headquarters, which the internet giant expects to open in 2016. The deal,
described by developers King’s Cross Central as “one of the biggest ever commercial
acquisitions in the UK”, will move Google from its current offices in Soho.
GOOGLE ENDS SEARCH FOR NEW UK HOME
LONDON-listed gold miner African
Barrick Gold (ABG) yesterday posted a
nine per cent drop in annual produc-
tion, just weeks after takeover talks
with a Chinese gold firm collapsed.
Over the full year, gold production
came in at 626,212 ounces, nine per
cent lower than 2011.
Gold sales for the African-focused
miner also slumped 13 per cent to
reach 609,252 ounces.
However ABG, a unit of the world’s
largest gold producer Barrick Gold,
said output ticked up in the fourth
quarter to 180,684 ounces – a 22 per
cent increase on the previous quarter
and up 13 per cent year-on-year –
thanks to higher qualities of gold
mined at its North Mara and
Buzwagi mines.
Chief executive Greg Hawkins
added yesterday that the company
had renewed mining licences and
acquired early stage exploration
licences in Kenya. Earlier this month,
Output slump
rocks African
Barrick Gold
BY CATHY ADAMS
shares in the Tanzania-focused miner
plunged almost 20 per cent as its
Canadian parent Barrick said it was
no longer in talks over a deal to sell
the unit to China Gold.
Following the end of talks, ABG,
which has suffered three consecu-
tive years of declining gold output,
kicked off an operational review of
the business, aimed at improving
returns from its four gold mines in
Tanzania.
Shares closed up 0.43 per cent yes-
terday at 350p.
Minority partner looks to block
sale of Canadian diamond mine
HARRY Winston Diamond’s plan
to buy BHP Billiton’s Ekati
diamond operations in Northern
Canada hit a snag yesterday, with
a minority partner filing a lawsuit
to try to block the deal.
C Fipke Holdings, which has a
right of first refusal on the sale, is
alleging that BHP Billiton failed to
comply with their joint venture
agreement, in an legal action in
the Ontario Superior Court of
Justice.
Fipke is seeking a court order
to stop the sale, unless
provided with a revised offer
from BHP, Harry Winston said.
BHP agreed in November to sell
BY CITY A.M. REPORTER
its Ekati operations to Harry
Winston for $500m (£312m). The
smaller company said it would
fund the cash deal through
existing resources and debt,
including a $400m term loan and a
$100m revolving credit facility.
Premier Oil increases spending
as it eyes jump in production
BRITISH oil producer Premier Oil
expects a significant jump in
production this year, as it increases
its spending to $1.1bn (£688m).
Output ramped up by 43 per cent
last year as Premier reported
average production of 57,000
barrels of oil a day, up from 40,400
barrels a day in 2011.
Production guidance for this year
is in the range of 65,000 to 70,000
barrels of oil a day. Premier added
that it would drill at least 14 wells
this year, targeting more than
200m barrels of prospective oil.
Premier Oil, whose operations
BY CATHY ADAMS
span the UK and Asia, said that total
revenues for last year are expected
to come in at $1.4bn, up from
$826.8m in 2011.
Meanwhile, it has increased its
capital expenditure from $730m in
2012 to a total of $1.1bn this year,
with $900m spent on development
and a further $200m on
exploration.
However, the FTSE 250 firm said
yesterday that it would take a hit of
$160m for exploration write-offs.
Numis analyst Sanjeev Bahl said
that the statement contained “little
in terms of surprises”.
“We believe that Premier needs to
demonstrate its ability to meet/beat
production guidance, and higher
exploration success rates in order to
re-rate,” he added.
Premier Oil shares fell 1.29 per
cent yesterday, closing at 366.4p.
Premier Oil PLC
17Jan 11 Jan 14Jan 15Jan 16Jan
365.0
367.5
362.5
370.0
372.5
375.0 p
366.40
17Jan
African Barrick Gold PLC
17Jan 11 Jan 14Jan 15Jan 16Jan
350
355
345
360
365
370 p
350.00
17Jan
Bh pBilliton PLC
17Jan 11 Jan 14Jan 15Jan 16Jan
2,060
2,080
2,100
2,120
2,140 p
2,052.82
17Jan
Aerro Mining Inc
17Jan 11 Jan 14Jan 15Jan 16Jan
85
90
80
95
100
105 p
85.10
17Jan
PETROPAVLOVSK’S shares soared
yesterday as the Russian gold miner
lifted its production targets and
announced a potential $238m
(£149m) investment in subsidiary IRC
by new shareholders.
The investment, from General
Nice Development and Minmetals
Cheerglory, will be used to fund
production growth.
The FTSE 250 miner posted a 13
per cent year-on-year increase in
gold production to 710,400 ounces
over 2012. It has hiked this year’s
output forecast to between 740,000
and 780,000 ounces, a year-on-year
increase of between four and 10 per
cent.
Petropavlovsk
ups gold goal
BY CATHY ADAMS
FRIDAY 18 JANUARY 2013
17
NEWS
cityam.com
Naveen Jindal, chair of New Delhi-based Jindal Steel, is in talks to buy Afferro Mining
SWEDISH car maker Volvo, owned
by Chinese group Geely, detailed
dramatic cost cuts yesterday as
part of its bid to become
profitable again within the next
two years.
Chief executive Hakan
Samuelsson, said the firm would
need to slash costs by over 1bn
Swedish kronor (£95.6m) to enable
it to break even.
Earlier this month, the car
maker said sales fell 6.1 per cent
last year, including double digit
drops in China and Sweden and a
small rise in the United States.
And it warned that it expected a
tough 2013.
The six per cent drop in sales
Volvo details dramatic cost cuts
in bid to be profitable by 2014
BY CITY A.M. REPORTER
means “considerable cost cutting
is required to counter that,
especially when you consider that
we didn’t even start at a break-
even point,” Samuelsson told The
Wall Street Journal.
Samuelsson also said that except
for investments in long-term
product development, cuts across
the company’s operations are on
the table, from marketing and
consulting contracts to other
administrative functions.
Volvo, bought from Ford Motor
by Zhejiang Geely Holding for
$1.8bn in 2010, aims to spend
about $11bn to double total
annual sales to 800,000 cars by
2020 and boost sales in China to
200,000, from only 41,000 last year,
which was a drop of 10.9 per cent.
STOBART Group’s shares fell by
almost three per cent yesterday
after the FTSE 250-listed lorry
firm warned it would fall short of
profit forecasts and announced
the closure of its chilled business.
The firm said its operating
performance for the year will be
slightly below market
expectations, due to slower than
hoped progress on its site
development and asset sale plan,
which has been hit by the dour
economic outlook.
Stobart said its transport and
distribution division, which
makes up about 90 per cent of the
company’s overall revenue, would
Stobart Group shares skid after
haulage firm warns on profits
BY CITY A.M. REPORTER
focus on controlling costs during
January and February.
The company, whose transport
and distribution business has
been hurt by a downturn in the
retail sector, recently diversified
into airport support services and
biomass energy.
Stobart, which counts Tesco
among its customers, said it
would close its underperforming
chilled operation unit following a
review.
The company’s stock has lost
about 22 per cent in value in the
past year.
Shares in the firm closed 2.6 per
cent lower at 92.55p, missing out
on the broader market rise
yesterday.
NEIL Elliot and Chris Sim from Investec are
working with Afferro Mining.
Elliot, the nominated adviser, joined
Investec in January 2012 following the
takeover of Evolution Securities, and has
acted for a number of natural resources
companies including Kentz Corporation,
Gulf Keystone, European Goldfields and
Sterling Energy. He was a key member of
the team advising Firestone Diamonds on its
takeover of Kopane Diamonds in 2010 and
ENK on its acquisition by DMCI Holdings and
D&A Income Limited in 2012. Elliot also
recently advised on the takeover of Nautical
Petroleum by Cairn Energy.
Sim, acting as the corporate broker,also
joined Investec in January 2012 from
Evolution. While at Evolution he worked on
a number of transactions including
fundraisings for Coal of Africa, Afferro
Mining, UK Coal, Circle Oil and Nautical
Petroleum and the IPO of Kentz
Corporation. Since joining Investec, Sim has
advised on the takeover of Nautical
Petroleum for £414m by Cairn Energy and
the accelerated book build for £65m in
Kentz Corporation. RBC Capital Markets is
working as Afferro’s joint corporate broker,
and Pelham Bell Pottinger is working as the
public relations adviser.
ADVISERS AFFERRO’S SALES PROCESS
NEIL ELLIOT CHRIS SIM INVESTEC
AFRICAN-focused Afferro Mining yes-
terday confirmed it was still in active
talks regarding a potential takeover
offer with several buyers, including
with New Delhi-based Jindal Steel and
Power Limited.
The AIM-listed miner said it had
received approaches from a number
of interested parties, but stressed
that there was no certainty that an
offer would be forthcoming,
although it is thought that the
Indian energy firm is a serious
contender.
Earlier this month, Afferro Mining
said it was in talks with fellow junior
stockmarket-listed miner
International Mining &
Infrastructure Corporation
regarding a takeover. Talks with this
firm are understood to be ongoing.
Afferro in talks
with Indian
energy firm
BY CATHY ADAMS
FRIDAY 18 JANUARY 2013
18
cityam.com
LONDONREPORT
Carmignac Gestion
Pierre Verlé has been appointed
as a credit analyst within the
asset management firm’s fixed
income team. Before joining
Carmignac, he was co-manager
of the distressed debt fund at
Butler Investment Managers in
London. Verlé has also
previously worked as an analyst
at Morgan Stanley.
Espirito Santo Investment Bank
The investment bank has appointed John Dean and Robert
Morton to its industry specialist group within capital
markets. Dean was most recently head of UK and
European industrials equity research at Jefferies
International. He has also held roles at UBS, Bridgewall and
Albert E Sharp. Morton joins from Investec, where he was
head of UK support services equity research. He has also
held roles at West LB Panmure, Charterhouse and BZW.
Sacker & Partners
Joanna Smith has been promoted to associate at the
pensions law firm. She joined Sackers from Hogan Lovells in
2011, and advises employer and trustee clients on corporate
transactions, managing debts, and reorganisations.
Grant Thornton
Jonathan Riley has been appointed head of tax at the
business and financial advisory firm. He has been a partner
at Grant Thornton UK since 1997, and will take up the new
position in April. Riley started his career in the Civil Service,
working as an inspector of taxes. He latterly became a tax
policy adviser to the president of the Board of Trade.
Menzies Corporate Finance
Stuart Marcy has been appointed director in the
accountancy firm’s London office. He joins from Paxton
Associates, the corporate finance boutique he established
in 2010. Marcy has also previously worked in the
corporate finance divisions of Deloitte and Smith &
Williamson.
Baillie Gifford
The investment partnership has announced that it will
appoint three new partners. Spencer Adair is currently an
investment manager in its global alpha team. Kathrin
Hamilton is a director in its clients department. Graham
Laybourn is director of legal and regulatory risk.
De Poel
The labour consultancy has appointed Charles Gray as its
sales and marketing director. He joins from Unipart Group,
another consultancy, where he was its sales and
marketing director for 11 years. Gray will report directly to
Joe Tully, de Poel’s managing director.
WHO’S SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
S&P reaches its
highest level
for five years
S
TRONGER-than-expected data
on US housing starts and
jobless claims lit a fire under
stocks yesterday, pushing the
S&P 500 to a five-year high and its
third day of gains.
Shares of chipmaker Intel rose in
extended-hours trading after the
company forecast better-than-expect-
ed first-quarter gross margins. Intel
gained 1.85 per cent after closing up
2.6 per cent at $22.68. Semiconductor
shares rose two per cent to the high-
est close in eight months.
A pair of economic reports lifted
investors’ sentiment. The number of
Americans filing new claims for
unemployment benefits fell to a five-
year low last week and housing starts
jumped last month to the highest
since June 2008.
Strength in the housing and labour
markets is key to sustained growth
and higher corporate profits, helping
to bring out buyers even on a day
when earnings reports were mixed.
Gains were tempered by weakness
in the financial sector, with Bank of
America down 4.2 per cent to $11.28
and Citigroup off 2.9 per cent to
$41.24 after their results.
The S&P 500 ended at its highest
since December 2007 and now sits
just 5.6 per cent from its all-time clos-
ing high of 1,565.15.
“Having consolidated really for the
last two weeks, the fact that we broke
out, I think that that is sucking in
quite a bit of money,” said James
Dailey, of TEAM Asset Strategy Fund
in Harrisburg, Pennsylvania.
The Dow Jones industrial average
was up 84.79 points, or 0.63 per cent,
at 13,596.02. The Standard & Poor’s
500 Index was up 8.31 points, or 0.56
per cent, at 1,480.94. The Nasdaq
Composite Index was up 18.46 points,
or 0.59 per cent, at 3,136.00.
Better-than-expected earnings and
revenue reported by online market-
place eBay late Wednesday helped
the stock gain 2.7 per cent to $54.33.
In the housing sector, PulteGroup
shares gained 4.9 per cent to $20.29
and Toll Brothers advanced 3.1 per
cent to $35.99.
The PHLX housing sector index
climbed 2.4 per cent, reaching its
highest close since August 2007.
Financials were the only S&P 500
sector to register a slight decline for
the day.
Bank of America’s fourth-quarter
profit fell as it took more charges to
clean up mortgage-related problems.
Citigroup posted $2.32bn of charges
for layoffs and lawsuits.
Energy shares led gains on the Dow
as US crude oil prices jumped more
than one per cent. Shares of Exxon
Mobil were up 0.8 per cent at $90.20
while shares of Chevron were up 0.7
per cent at $114.75.
S&P 500 earnings are expected to
have risen 2.3 per cent in the fourth
quarter, Thomson Reuters data
showed. Expectations for the quarter
have fallen considerably since
October when a 9.9 per cent gain was
estimated.
B
RITAIN’S blue-chip shares reversed
early losses to hit a four and a half
year high yesterday after several
big fallers bounced back to
expunge sellers from the market.
Banks gained 0.9 and are now up
around 2.5 per cent since the previous
session’s lows, boosted by forecast-beat-
ing earnings from JP Morgan Chase and
Goldman Sachs on Wednesday.
Appetite for banks was maintained
despite hits to the profits of both
Citigroup and Bank of America, while
early selling pressure on Rio Tinto
reduced dramatically throughout the
day to lift the main weight on the index.
The heavyweight miner had been down
as much as five per cent after it
announced a $14bn non-cash impair-
ment charge and the resignation of CEO
Tom Albanese.
Rio closed only 0.5 per cent lower, while
Dutch technology company ASML turned
a seven per cent fall into a seven per cent
gain after its profit update. Such turn-
arounds scared off sellers in the market
even before the Citigroup and Bank of
America results, said Andy Ash, head of
sales at Monument Securities.
“The reversal had already happened
before the US got in. I think it’s more sim-
ply the way Rio and ASML behaved today,”
he said.
“There’s not a lot of business behind it,
but we saw a couple of stocks being ham-
mered first thing in the morning and
then suddenly they reversed. That’s prob-
ably got people a little bit scared and
they’ve followed it.”
Rio benefited as several banks issued
notes saying that the miner’s dip provid-
ed a buying opportunity.
“The market will perceive today’s write-
downs and management changes nega-
tively in the short term but that these
will be positive for the stock and the sec-
tor longer term,” analysts at Citi write in
a note, upgrading the stock to “Buy” from
“Neutral”.
“We believe the announcement could
significantly realign Rio Tinto with share-
holder interests through reduced M&A
and reduced capex spend.”
The FTSE 100 closed up 28.38 points, or
0.5 per cent, at 6,132.36, its highest close
since May 2008.
Few investors are expected to roll over
their downside protection at today’s
options expiry, with 60 per cent more
puts than calls due to expire on the FTSE
100. While this leaves the market vulner-
able to a correction, few investors are
willing to spend money on downside
insurance on an index that has gained
nearly four per cent this year and has left
98.2 per cent of put options worthless.
With so few people prepared to bet on
the market falling, weakness such as that
exhibited this morning is an opportunity
to get into a rising market at slightly
more affordable levels, said Robert
Quinn, chief European equity strategist
at Standard & Poor’s Capital IQ.
“I think that if the market comes off a
little, it’s a nice buying opportunity,”
Quinn said.
British Airways parent firm
International Airlines Group (IAG) was
up 4.3 per cent yesterday, ending on
211.8p. IAG, was boosted by BA announc-
ing new routes for the upcoming
summer season.
Additionally, IAG – which also owns the
airline Iberia – saw their stock in demand
“on reports that their Spanish division
have reached a resolution to a long run-
ning dispute with the unions which has
long been a major concern for sharehold-
ers,” Matt Basi of CMC Markets said.
Associated British Foods was up 3.2
per cent. “Its subsidiary, discount-cloth-
ing chain Primark, showed a 25 per cent
jump in sales for the last quarter,” Basi
added in a note.
FTSE hits another 4.5 year peak as
afternoon session scares off bears
BESTof theBROKERS
Barratt Developments PLC
11Jan 14Jan 15Jan 16Jan 17Jan
p 230
228
226
224
222
225.70
17 Jan
BARRATT DEVELOPMENTS
UBS has raised its target price on the housebuilder from 210p to 250p and
maintained its “buy” recommendation after first half results in line with
expectations. The broker expects further margin improvements as profit
and loss contributions from recent land acquisitions increases, and expects
the group to be debt free by 2015. UBS also said the 35 per cent year-on-
year increase in its private order book bodes well for the second half.
FTSE
17Jan 11Jan 14Jan 15Jan 16Jan
6,140
6,130
6,120
6,100
6,110
6,090
6,080
6,132.36
17 Jan
DASHBOARD CITY
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
NEW YORK
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YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
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Cineworld Group PLC
11Jan 14Jan 15Jan 16Jan 17Jan
p 272.0
271.5
271.0
270.5
269.0
269.5
270.0
270.00
17 Jan
CINEWORLD
Panmure Gordon has maintained its “sell” rating on the cinema group but
upped its target price to 238p from 229p, after reducing its underlying
2013-14 forecasts in light of a cautious outlook on the cinema market. The
broker says Cineworld’s enterprise value to Ebitda ratio of 7.4 times is too
rich given its short and medium-term outlook, and makes modest
downgrades of 0.3 per cent to its 2013 earnings per share forecast.
Xcite Energy Ltd
11Jan 14Jan 15Jan 16Jan 17Jan
p 108
106
104
102
96
98
100
104.00
17 Jan
XCITE ENERGY
Merchant Securities has initiated coverage of the oil appraisal and
development company with a “buy” rating and a target price of 167.8p. The
firm holds 100 per cent of the undeveloped Bentley oil field in the North
Sea, where reservoir risks have been reduced by extensive testing and a
lengthy production test, which coupled with its geological characteristics
gives Merchant extra confidence in its production estimates.
I
T HAS been a week of crushing
victories for the internet. It
continues to claim victims
among retail firms blindsided by
the web’s 24/7 stores, with their
limitless inventories and weightless
products. With thousands of jobs on
the line, and hundreds of shops at
risk of closure, it would be easy to see
the change as a bad thing.
But this process of creative
destruction, while cruel for those
caught up in it, works to enlarge
opportunities while better satisfying
human needs. In 1900, America
employed 109,000 carriage and
harness makers. The rise of the
automobile relegated buggy whips
and related paraphernalia to a niche
industry, but the fresh
I
T’S been more than two years since
the Dodd-Frank Wall Street Reform
and Consumer Protection Act was
signed into law by Barack Obama.
Passed in the aftermath of the
financial crisis, and involving some of
the most significant changes to
regulation since the Great Depression,
regulators have been writing rules at
an astonishing pace ever since.
At this point, it’s worth taking a
breath and asking, “Where are we
going, anyway?” The unwelcome
answer is that the US is proceeding
down the same road that led it to the
financial crisis in 2008.
Dodd-Frank did not address the issue
central to the crisis – the US govern-
ment’s deep involvement in housing
finance. Implicit government guaran-
tees of mortgage giants Fannie Mae and
Freddie Mac became explicit during the
crisis. Yet the only acknowledgement of
the issue in Dodd-Frank was a mandate
to study the issue further. The Obama
Administration released a brief report,
with three pages of recommendations
in February 2011, but has done nothing
since. In the interim, the problem has
cityam.com/forum
The largest financial
institutions have now
become the equivalent
of state corporations
THEFORUM
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Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

20
FRIDAY 18 JANUARY 2013
HESTER PEIRCE
Why Dodd-Frank is pushing the US
towards impending financial crisis
only become worse, with 90 per cent of
American mortgages now guaranteed
by the government.
Dodd-Frank also solidified the govern-
ment’s alliance with the largest finan-
cial institutions – a troubling
phenomenon that bore its rotten fruit
during the bailouts of 2008. On the
most basic level, the sheer mass of regu-
latory obligations created by Dodd-
Frank protects large firms by serving as
a barrier to entry for small, innovative
financial institutions. Large firms, with
armies of lawyers, are better able to
keep up with the new regulations.
More subtly, this alliance manifests
itself in the directive that certain finan-
cial entities are subject to special regu-
lation by the Federal Reserve. All big
banks are in this class. The added layer
of regulation will be costly, but it comes
with a priceless too-important-to-fail
certification from the government. In
this vein, the Fed’s unwavering support
for its troubled charge Citigroup fore-
shadows bailouts to come. And the
inevitability of the survival of these
firms gives them a funding advantage
over their non-designated competitors.
Creditors are more willing to lend
when they know that the government
stands behind the debtor.
As a consequence, the largest finan-
cial institutions have become the equiv-
alent of state corporations. They are
guaranteed a lucrative survival and, in
return, they adhere to a complex set of
sometimes unwritten regulations gov-
erning their mix of borrowers, the
scope of their activities, and even the
positions they are permitted to take on
public policy issues. Big banks will
increasingly spend their time trying to
please government officials, not con-
sumers. With more than 40 per cent of
US deposits in the largest five banks, we
are well on our way to a market domi-
nated by the largest institutions.
Dodd-Frank also solidifies the central
role of regulators in financial markets.
It is infused with unwarranted confi-
dence in the ability of regulators to
foresee future crises, and to act in time
to prevent them from coming to pass.
The new Financial Stability Oversight
Council, which brings together the
heads of all the financial regulators, is
charged with this mission on a grand
scale.
And regulators have welcomed Dodd-
Frank’s invitation to aggressively inter-
pret their missions. The Commodity
Futures Trading Commission (CFTC),
for instance, intoxicated with its new
responsibilities for over-the-counter
derivatives, is angering international
counterparts by its insistence that its
jurisdiction is unbounded. In our inter-
connected world, any transaction any-
where in the world could – in the
words of Dodd-Frank – “have a direct
and significant connection with activi-
ties in, or effect on, the commerce of
the United States.” Never mind that the
CFTC’s capabilities (before the crisis,
the agency relied on fax machines to
receive data) are not up to the task of
monitoring the US, let alone the rest of
the world. Another regulator, the
almost entirely unaccountable Bureau
of Consumer Financial Protection, is
wielding its power in a way that will
harm consumers by forcing them into
the plain vanilla products and services
blessed by bureaucrats who do not
appreciate consumers’ unique needs.
In sum, Dodd-Frank is speeding
America’s trip down the road towards
government management of the finan-
cial markets and taxpayer responsibili-
ty for losses. We ought to turn around
and head towards a place where mar-
ket participants make their own choic-
es, and bear their own losses.
Hester Peirce is a senior research fellow at
the Mercatus Centre at George Mason
University.
entrepreneurial energies released
expanded the US economy sixfold
and job opportunities fourfold
between the 1890s and the 1940s.
I was reminded on Tuesday of
another way in which modern
information and communication
technologies are changing our world
for the better. I attended a
performance of La Boheme, not at
the Royal Opera House but at the
Empire Leicester Square.
The arts have long been viewed as
a model case of Baumol’s cost disease
– the hypothesis that certain sectors
are unable to increase their
productivity at the same rate as the
rest of the economy, resulting in
either relative wage declines or the
need to push up the cost of their
products to consumers at far more
than the rate of inflation. Healthcare
and education are often cited as
other sectors plagued by the disease.
As a diagnosis, Baumol’s cost
disease can be questionable. It risks
being used as a cover for inefficiency.
For example, the cost of medical care
in the US has grown by 250 per cent
since the 1980s, while university fees
have risen by 440 per cent. But
perverse incentives in the structure
of the markets, and a proliferation of
highly-paid administrators, have also
had a role to play in both cases.
Yet the productivity challenge is
real. Just as it is impossible to
perform a Bach cantata significantly
faster than it was in the eighteenth
century, school days, class sizes and
doctor visits all have natural limits.
At least until now. I was delighted
to see Bank of America Merrill Lynch
supporting this week’s cinema
screening of La Boheme. But opera’s
bottom line is also boosted simply by
its newfound ability to sell one
performance simultaneously across
800 extra venues worldwide. In the
same way, disruptive technological
projects now in progress could
radically reduce medical and
educational costs. These include the
$10m (£6.3m) Qualcomm tricorder X
Prize – a competition for a device
that can diagnose diseases without a
doctor – or the Khan Academy and
the Minerva Project, respectively
reinventing school and university
education for the internet age.
My own profession faces almost as
many challenges from the web as
retail. But the only way to deal with
such shattering change is to accept
its consequences and embrace its
potential: cheaper medicine and
education, wider access to great art,
and retail products at cheaper prices
from virtual stores that never close.
Mark Sidwell is managing editor of City
A.M.
THE LONG
VIEW
MARC SIDWELL
An operatic reminder of how the internet disrupts our world for the better
In association with
TGIFLY
21
FRIDAY 18 JANUARY 2013
The Forum is open for you to take part. Got a sharp comment on
one of today’s columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
HMV revisited
[Re: The rise and fall of HMV: Why great
companies find it so hard to adapt,
Wednesday]
The demise of HMV is, of course, sad. I was
its finance director between 1983 and 1987,
and the growth in those days was stellar.
Revenue grew fourfold, and profit growth
was even higher. During that period,
cassette sales overtook records, and
eventually the CD was launched. Digital
music storage was still in the research labs. I
agree with the author that HMV could have
worked on its online offering earlier. But
there was also, perhaps, still a place for its
high street stores. I might be atypical, but I
carried on buying physical products from
HMV at the same time as using Amazon.
MikeJones
EU alternatives
[Re: Would other member states allow the
UK to renegotiate the terms of its EU
membership?, yesterday]
It would be easy for the UK to have a simpler
relationship with the EU. There are countless
off-the-shelf alternatives to pick from. The
European Economic Area offers free
movement of goods, services, people and
capital. Norway has this arrangement and
can run its own agriculture, fisheries, home
affairs, justice and more. Instead of being
forced to accept over 1,000 regulations a
year, it only has to implement around 350.
Switzerland’s bilateral agreements are
another suggestion. Or perhaps even
Turkey’s loose trade relationship might be
suitable for Britain.
HugovanRandwyck
T
AINTED food scandals are as
old as the hills. In 1858, more
than 200 were poisoned when
a Bradford confectioner,
known as Humbug Billy,
accidentally mixed arsenic into his
peppermint lozenges. More recently,
mad cow disease led to the slaughter
of 4.4m cattle. Poor quality has also
never respected rank. Back in 1135,
King Henry I died after an over-
fondness for eels gave him a severe
case of food poisoning.
All this puts the news that one of
Tesco’s suppliers contaminated its
burgers with horse meat (with no risk
to health) into perspective. Breaches
of food standards are relatively
uncommon, and rarely deadly.
According to the government’s 2012
food statistics, Britain has seen a
downward trend in most dangerous
food infections. Salmonella preva-
lence declined by 45 per cent between
2000 and 2010. E.coli contamination
fell by 10 per cent over the same peri-
od. Regulation is strict, with 186,050
enforcement actions taken by food
standards authorities in 2011.
That’s not to say we should shrug
our shoulders and polish off our
horse burgers. But a perverse theory
has emerged. Some argue that this
adulteration of quality was linked to
the cheapness of the final product –
that Tesco’s willingness to bear down
on costs encouraged suppliers to
make good meat go further. Some say
we should make food more expensive.
The benefits of cheap food need
restating. Despite price spikes since
2007, British food in 2012 was about
20 per cent cheaper than in 1980, in
terms of cost relative to other goods.
And this has coincided with the huge
expansion of supermarkets. Historical
data on who sells desserts (one way of
measuring food market penetration)
shows Tesco’s share increased from 7.2
per cent in 1971 to 29.7 per cent in
Would leaving the European Union be a
positive move for businesses in Britain?
YES
The EU is a slow-moving caravan, forced to move at the speed of its
slowest member. It imposes job-destroying, one-size-fits-all
regulations and policies, in a centralised manner. But to prosper,
companies (and countries) need policy flexibility, which the EU does
not offer. Unfortunately, we have little democratic capacity to
overturn bad EU laws. Ever-growing regulation will continue, and I
am not aware of any business-friendly rules coming out of Brussels,
nor of any attempt to help the City of London maintain its
prominence in financial services. We are exporting more to
emerging markets now. Our exports to the EU are falling, and the
continent is undergoing demographic decline. I do not fear being
outside this caravan. I have enjoyed building a small, agile company,
able to out-manoeuvre my larger competitors and, in reality, the
Eurozone could not afford to wage a trade war with the UK.
Robert Hiscox is chairman of Hiscox Insurance.
Robert Hiscox
NO
Roland Rudd
Walking away from Europe – the UK’s biggest trading partner –
would damage British business for decades. The UK is one of the
most attractive EU countries to investors, but this would quickly
cease to be the case if we left, as our access to the single market
would be lost. Last week the head of Honda UK echoed this warning,
saying that Britain needs to remain at the heart of Europe to avoid
losing out on investment. Many of the 700,000 jobs dependent on
the car industry would be put at risk were the UK to leave, as tariffs
would be imposed on UK cars exported to the EU. According to
TheCityUK, 50 per cent of corporation tax revenue from financial
services could leave the UK, and erecting barriers to the free
movement of services would jeopardise London’s place as a global
financial centre. Europe is the bedrock of the UK’s trade and remains
a platform not only to European markets, but to the whole world.
Roland Rudd is chairman of Business for New Europe.
Tesco horse meat
mustn’t shake our
faith in cheap food
2012. And the result? Although policy-
makers rightly worry about poor
diets, the Department of Health’s def-
inition of food poverty is no longer
concerned with starvation.
Cheapness has also come with
choice. Kiwis crowd with kumquats
on all but the most remote supermar-
ket shelves. And brutal competition
between supermarkets is leading the
industry to become even more effi-
cient. Total factor productivity across
Britain’s food chain, excluding agri-
culture, has been rising since 2002.
But is cheap food making us
unhealthier? Are we eating like kings
on a pauper’s budget? Yes, obesity lev-
els are rising. But, according to the
National Food Survey, while food has
become cheaper, the average daily
calorie intake has declined from 2,630
in 1960 to 2,009 in 2011. Daily con-
sumption of saturated fats fell from
46.8g in 1980 to 29.2g in 2000. The
amount of salt in our diets has also
dropped. Although the quality of
some foods has deteriorated, the old
canard that supermarkets are ruining
our diets for profit is false.
In the wake of this scandal, more
shoppers may opt for expensive “ethi-
cal” products – now just 6.5 per cent
of sales. But at least they have a choice.
Cheap food has dragged millions out
of poverty globally. And while errors
by one supplier in the food chain may
give us reason to pause, it shouldn’t
shake our fundamental trust in the
power of supermarkets for good.
Tom Welsh is business features editor at
City A.M.
TOM WELSH
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DAY
Get away for the weekend
with a choice of 22 European
destinations from London City.
visit cityjet.com
David Cameron is right. The situation in
Algeria is now top of the list of things that
are more important than a referendum.
@VeryBritishDude
Cameron may have been right to cancel, but
isn’t this the third time? Indecisiveness
doesn’t win elections.
@DunnMcAffee
Cameron’s postponed speech looks like
more than concern for the situation in
Algeria. It looks like he’s terrified to make it.
@richardevans1
Cameron may be right to postpone his
speech, but he can’t postpone the crisis
brewing in his party much longer.
@mattbryant
BEST OF TWITTER
LETTERSto the editor
LIFE&STYLE
FRIDAY 18 JANUARY 2013
22
cityam.com
GOING OUT LIFE&STYLE
WHERE
TO DRINK
TIM BADHAM
I
f you aren’t firmly situated on the
wagon, January can be a fantastic time
to discover London’s new venues. After
11pm, Hakkasan Hanway Place’s dark
and provocative dining room transforms
into a late lounge named Ling Ling, which
kicks off from Thursday to Saturday.
It’s already played host to guest DJ Daisy
Lowe, as well as Parisian pop-up club Le
Baron, with a list of big names queueing up
to hit the decks. The Hakkasan Group have
also launched HKK in the City, a Michelin-
baiting, high-spec opening that draws
inspiration from the Cantonese banqueting
tradition. The HKK Bar is crafted from a
natural quartz material named Silestone,
which looks phenomenal when illuminated
by recondite LED fittings, and a sommelier
station with a by-the-glass enomatic wine
display behind it in case you’re thirsty for a
glass of an interesting vintage.
The ME Hotel in Aldwych is housed in
the historic site that was the BBC’s first
office at The Marconi House. It now plays
host to an array of successful
contemporary concepts imported from
the US. The first of these is STK, a female-
friendly steakhouse complete with DJ
and lounge bar with a lively vibe that will
get you prepped for sociable late night
revelry. There are plenty of top-shelf
cocktails to facilitate this process, not to
mention a sultry design scheme replete
with smokey mirrors and glossy black
surfaces. The adjoining venue, Cucina
Asselina, features a more family-oriented
atmosphere, a prepossessing wine
display, an open kitchen and a bar
running the length of the dining room.
The Marconi Lounge Bar next door
doubles as the hotel lounge during the
day but cranks up the music at dusk to
create a sophisticated yet relaxed space
to enjoy the bespoke cocktail list. If you
get the opportunity, take the time to
investigate the breathtaking nine storey
Atrium, which ascends from the ground
floor to the building’s summit. There is
more to come with Radio officially
opening on the top floor next month.
The Blue Boar Bar recently opened in
the St James Intercontinental and is an
interesting fusion of London and the
Deep South, juxtaposing Chesterfields
with exposed brick, dark leather
banquettes with exposed filament lights.
The cocktails do the same, mashing
modern British flavours into Prohibition-
style cocktails to great effect.
Tim Badham is the founder of
Innerplace, London’s most personal
concierge service. www.innerplace.co.uk
Now is a great
time to fall off
the wagon
The ME Hotel at Aldwych
The London Art Fair returns –
and it’s bigger than ever before
W
HETHER YOU’RE a serious
art connoisseur or have a
more general interest,
make sure to head down to
the London Art Fair this weekend. In
recent years it has struggled to
compete with the likes of Frieze but
if there was ever a time to visit, it’s
now.
This year’s event sees 100 leading
British and international galleries
housed under one roof, presenting
their wares in the fair’s biggest
offering to date. Over the years it’s
grown from being a small showcase
to one that attracts art lovers from all
corners of the world, luring many of
the industry’s biggest exhibitors.
The work of established names like
English painter David Hockney,
conceptual artist Helen Chadwick
and painter LS Lawry will be on show
in the main fair but the real buzz
this year comes from the Arts Project,
an initiative launched in 2005 to help
offer something new and fresh to the
classic museum-quality works the
fair is known for.
Thirty galleries, none of which are
more than a few years old, are taking
part, offering guests the opportunity
to enjoy a finely curated selection of
solo shows, installations and group
displays, along with accessibly priced
pieces.
“The works in Art Projects are
characterised by a gentle questioning
that looks at gradually-unravelling
developments from a critical new
angle, one that is never cynical or
simplistic,” says curator Pryle
Behrman. “These are artists who find
questions where perhaps none were
seen before, and never have the
hubris to suggest that the answers
are easy to find.”
Make sure to head over to Poppy
Sebire’s gallery to see the work of
painter George Huntoon, which pose
the question of the relationship
between nature and culture, or to
the Limoncello gallery. Owned by
Rebecca Nay Marston, Limoncello is
one of the most buzzed about
galleries in the space, having gained
a huge international presence
through showing at Frieze New York
and Liste in Basel. Instead of just
displaying their artists’ work, this
year’s booth was inspired by the ITV
dating show ‘Take Me Out,” and sees
30 female artists lined opposite one
male artist, Sean Edwards.
Photo50 is another must see
exhibition. After the success of last
year’s theme “The New Alchemists,”
which looked at photographers who
transform or subvert photographic
print though decoration, the
exhibition is back with a brand new
theme. Titled A Cynical Poem, the
showcase brings together the work of
eight photojournalists and
documentary photographers who
have lived in Britain between the
1970s and today, and looks at the
relationship between photography
and themes like repetition, time and
memory.
Photography also plays a major
part in the master classes on offer,
the biggest one running over the
weekend being The Macallan master
class. The Scotch brand has
commissioned famed photographer
Annie Leibovitz for the third time to
shoot breathtaking photographs
featuring Kevin McKidd and the class
gives a rare opportunity for
photographers of all levels to discuss
the images and quiz Royal
Photographic Society president Roy
Patterson on his top tips for taking
standout photographs.
The fair also makes a big focus on
films that have inspired some of the
artworks, so expect to see many on
loop throughout the day including
2008 film Waiter Waiter There’s a
Sculpture in my Soup and 2010 series
The Mourners. And just in case that’s
not enough, why not book onto one
of the many tours on offer. At noon
on Saturday broadcaster and author
of Art Crazy Nation Matthew
Collings and The Arts Desk critic
Mark Hudson will be amongst a
panel talking about the impact sky
high auction prices have on our
experiences of art. Visitors can also
join a 50 minute tour, on topics
ranging from photography to the
popular Own Art Tour, which is
designed to help visitors pick pieces
to start or develop an art collection.
The London Art Fair runs until Sunday
20 January at the Business Design Centre,
52 Upper Street, N1 0QH. Day tickets cost
from £16-£30 on the door, or £12-25 in
advance. Some concessions are available.
Top: an Annie Leibovitz portrait of actor Kevin McKidd; Left: Sirkka Liisa
Konttinen’s Girl on a Space Hopper; Above: a Samara Scott installation;
Below: Three Blues in Red by Patrick Heron
This year’s show celebrates contemporary British art in style, says Naomi Mdudu
FRIDAY 18 JANUARY 2013
23
A funny, touching take on disability and sex that deserved an Oscars nod
FILM
DJANGO UNCHAINED
Cert 18 | By Steve Dinneen
hhhhi
THE SESSIONS, based on the
touchingly optimistic
autobiography of Mark O’Brien,
is about the quest of a paralysed
journalist and poet to lose his
virginity aged 38 (if you're
expecting the 40 Year Old Virgin
2, think again).
It is set in Berkeley in 1988,
and O’Brien (played by John
Hawkes) is “probably close to his
sell-by date”. Struck by polio
aged six, he spends most of his
time in an iron lung, unable to
move from the neck down – not
a state conducive to a life of
passion. Deprived of the
emotional and physical pleasure
that romance brings, he develops
a crush on his caregiver, only to
discover his love is unrequited
(bring tissues, you'll need them).
Determined to finally lose his
virginity, and with the help of
his priest and therapist, he
contacts a professional sex
surrogate (Helen Hunt) who
agrees to six sessions to help him
“know a woman in the biblical
sense”.
What could easily have turned
into a maudlin portrait of a man
living life in the prison of his
own body is kept light by
O'Brien's geeky humour (when
asked for a favour, he replies “do
you need help moving
furniture?”).
The following are usually dead
certs for an Oscar nod: extreme
weight loss, extreme hair loss
(see Anne Hathaway, not Demi
Moore), battling with a new
and difficult skill (ballet,
piano, boxing),
portraying someone
with a disability or
affliction (see My
Left Foot, Rainman).
And Hawkes, who
has been dancing
around the
spotlight
recently in more
sinister roles
(Winter's Bone,
Martha Marcy May
Marlene) is
excellent as the
film's protagonist.
He masters
O'Brien's physical
disabilities,
embodies his
humour and
vulnerability. It is
hard to see why he
was overlooked.
It was a joy to see
Hunt (and you will
be seeing a lot of
her in this film)
back in a leading
role, and she more
than earns the
Oscar
nomination for
Best Supporting
Actress. William H Macy is
delightful as the compassionate
priest and friend who gives
O'Brien a “free pass” for his new
adventures, although he spends
most of the film looking slightly
bewildered (perhaps he was
wondering if he'd accidentally
stumbled into the Nicholas Cage
school of dodgy coiffure).
Hunt and Hawkes perform
effortlessly together – perhaps
never meeting prior to
production helped them create
the visceral nude scenes
throughout. Director Ben Lewin,
a former polio sufferer himself,
lightly breaks taboos, resulting
in an authentic tale that
celebrates sexuality, but is a little
too light-hearted to be deeply
moving.
FILM
THE SESSIONS
Cert 15 | By Annabel Palmer
hhhhi
T
ARANTINO HAS already made a
film about a motley band of
Jewish soldiers taking bloody
revenge against the Nazis – now
he’s turned his attentions to that
great American atrocity: slavery.
Maybe next he’ll direct a caper movie
set on the Killing Fields of the Khmer
Rouge.
Django Unchained has all the oil-
spill slickness of your regular
Tarantino jaunt but is interjected with
truly horrific scenes of slaves being
abused and tortured by their Deep
South owners. No holds are barred –
branding, eye-gouging, castration
(including a gratuitous between-the-
legs shot of Jamie Foxx’s Django
chained upside-down) – it’s all here.
And it is made all the more uncom-
fortable by just how easy to digest it all
is (a few notable scenes aside – you will
know them when you see them, trust
me). The dialogue fizzes by like a hail
of bullets; the set pieces make you
wince and grin and cover your eyes.
The question is: should a movie
about slavery be this much fun?
There is certainly no shortage of
things to take offence at. The N-word
is deployed as mere punctuation; the
violence and intimidation of the
black characters is so deeply
ingrained that you find yourself
becoming numbed to it (at a sliver
under three hours long, you have
plenty of time to adapt); even a free
Django selects an outfit for himself
that is reminiscent of the horribly
racist 1950s TV series The Black and
White Minstrel Show. Tarantino just
about holds the whole thing togeth-
er – but it’s a close-run thing.
The movie falls into two loose
halves – the first being a Spaghetti
Western-inspired revenge drama,
with bounty-hunter Dr King Schultz
(a sublime Christoph Waltz) freeing
the enslaved Django (“the ‘D’ is
silent”) to help him identify a group
of wanted men. As the pair tear a
path through the spectacular scenery
of the American south, Django proves
himself to be a deadly marksman and
they strike a deal: Django will be
Schultz’s partner if Schultz helps him
to free his wife.
The second half sees a major
change of pace. It feels like an extend-
ed build-up to the most extravagant
of Tarantino set-pieces; a ramped-up,
Deep South version of the climax of
his 2003 movie Kill Bill (part one),
complete with enough blood to
drown an elephant. Tarantino revels
in every exploding gore-pack, every
slo-mo droplet of blood, every hunk of
flesh and fragment of bone. Heads
cave, kneecaps disintegrate, testicles
are spattered to the wind.
But the actual business of killing
the bad guys is light relief compared
to the barbarity of the slavery scenes.
In true Tarantino style, bullets and
one-liners take precedence over moral
ambiguity.
The whole thing survives on the
strength of its cast. Waltz is compul-
sively watchable as the softly spoken
bounty-hunter, surpassed only by
Samuel L Jackson’s terrifying,
grotesque Uncle Tom-figure, who
helps the white plantation owner stay
on top of his slaves. Leonardo
DiCaprio also shines as the slightly
dim land-owner who runs a lucrative
side-business in Mandingo (death
fights between slaves).
Django Unchained is the product
of a director who long ago stopped
caring if he offends people – and
make no bones about it: it will offend
people. But this is a slavery epic made
the only way Tarantino knows how,
and in a way no-one else could. It may
be blunt but it is spectacular in its
ambition and impeccably executed
(to use an appropriate word). It may
not be the director’s best effort but it
is not far short.
Tarantino slavery epic is
uncomfortable but brilliant
Jamie Foxx’s
Django faces
off against
slave-owner
Calvin Candie,
played by
Leonardo
DiCaprio
Tarantino revels in
every slo-mo drop of
blood, every exploding
head or shattered knee

Helen Hunt shines as
a “sex surrogate”
24
TV & GAMES
cityam.com
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BBC1
SKY SPORTS 1
7pmPremier League Preview
7.30pmLive Football League
10pmThe Fantasy Football Club
11pmPremier League Preview
11.30pmMasters of Euro Football
12amFootball League 1.30am
The Fantasy Football Club 2.30am
Premier League Preview3am
Football League 4.30amThe
Fantasy Football Club
5.30am-6amPremier League
Preview
SKY SPORTS 2
7pmNBA Action 7.30pmLive
European Cup Rugby Union 10pm
WWE: Late Night – Smackdown
12amWWE: Late Night – Bottom
Line 1amEuropean Cup Rugby
Union 3.30amInternational One-
Day Cricket 5.30am-6amMasters
of Euro Football
SKY SPORTS 3
6pmEuropean Tour Golf
8pmLive PGA Tour Golf
12amEuropean Tour Golf
2am-6amPGA Tour Golf
BRITISH EUROSPORT
7pmLive Snooker: The Masters
10pmDakar Rally 10.30pmGT
Academy: Race to Dubai 10.45pm
Ski Jumping 11.30pmGame, Set
and Mats 12am-6amLive Tennis:
Australian Open
ESPN
7pmGoal! Bundesliga Preview
7.30pmLive Bundesliga 9.30pm
French Football 11.15pmESPN FC
Press Pass 11.45pmESPN Kicks:
FA Cup 12amLive NBA Basketball
2.30amEuroleague Basketball
4.15amESPN FC Press Pass
4.45amPremier League Preview
5.15amTotal Italian Football
5.45am-6amESPN Kicks: FA Cup
SKY LIVING
7pmThe Love Machine 8pmThe
Love Machine: Love Bites 9pm
Criminal Minds 10pmJerry
Bruckheimer’s Chase 11pmThe
Love Machine 12amThe Love
Machine: Love Bites 1amBones
1.50amSupernatural 3.30am
Bones 4.20amCriminal Minds
5.10am-6amMotorway Patrol
BBC THREE
7pmPop’s Greatest Dance Crazes
7.10pmDoctor Who 8pmGavin &
Stacey 9pmWorld’s Craziest
Fools 9.30pmPramface 10pm
Russell Howard’s Good News
10.30pmEastEnders 11pmSun,
Sex and Suspicious Parents 12am
Family Guy 12.45amPramface
1.15amWay to Go 1.45am
World’s Craziest Fools 2.15am
Gavin & Stacey 2.45am-3.45am
Sun, Sex and Suspicious Parents
E4
7pmHollyoaks 7.30pmHow I Met
Your Mother 8pmThe Big Bang
Theory 8.30pm2 Broke Girls
9pmFILMSnakes on a Plane
2006. 11.05pmRevenge 12.05am
The Big Bang Theory 1.05am
Happy Endings 1.35amThe Ricky
Gervais Show2.05amThe
Cleveland Show2.30amFranklin
& Bash 3.10amBalls of Steel
Australia 4.05amMade in
Chelsea 4.55am-6amSwitched
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 8pmStorage Wars: Texas
9pmAncient Aliens 10pm
American Restoration 11pm
Storage Wars 11.30pmPawn
Stars 12amAncient Aliens 1am
American Restoration 2am
American Pickers 3amIce Road
Truckers 4amSwamp People
5am-6amAmerican Restoration
DISCOVERY
7pmBear Grylls: Born Survivor
8pmOprah Winfrey and Lance
Armstrong: A Worldwide
Exclusive 9.30pmAuction
Hunters 10pmGold Divers: Under
the Ice 11pmAuction Hunters
11.30pmAuction Kings 12am
Auction Hunters 1amAmerican
Chopper 2amBattle Castle with
Dan Snow3amAuction Hunters
3.50amAmerican Chopper
4.40amRaging Planet
5.30am-6amMeerkat Manor
DISCOVERY HOME &
HEALTH
7pmDr Oz 8pmLittle People, Big
World 9pm19 Kids and Counting
10pmSecretly Pregnant 11pm
Real ER: The Bronx 12am19 Kids
and Counting 1amSecretly
Pregnant 2amReal ER: The Bronx
3amDr Oz 4amFrom Here to
Maternity 5am-6amStudent
Midwives
SKY1
8.30pmJohn Bishop’s Only Joking
9pmStella 10pmA League of
Their Own 11pmSpartacus:
Vengeance 12.10amRoad Wars
1.10amFringe 3.10amRoad Wars
4.10am-6amStargate SG-1
BBC2 ITV CHANNEL4 CHANNEL5
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&
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6pmBBC News
6.30pmBBC London News
7pmThe One Show
7.30pmA Question of Sport:
BBC News
8pmEastEnders
8.30pmCHOICE Room 101
9pmSilent Witness
10pmBBC News
10.25pmRegional News;
National Lottery Update
10.35pmThe Graham Norton
Show
11.20pmFILMTropic Thunder.
2008.
1amWeatherview1.05am-6am
BBC News
6pmEggheads
6.30pmGreat British Railway
Journeys
7pmLive Snooker: The
Masters
8pmMastermind
8.30pmLife in a Cottage
Garden with Carol Klein
9pmItaly Unpacked
10pmQI
10.30pmNewsnight
11pmThe Review Show
11.45pmWeather
11.50pm Snooker: The Masters
12.40amSnooker Extra
2.40amSign Zone: Question Time
3.40am-6amClose
6pmLondon Tonight
6.30pmITV News
7pmEmmerdale
7.30pmCoronation Street
8pmWild Britain with Ray
Mears
8.30pmCoronation Street
9pmGreat Night Out
10pmITV News at Ten
10.30pmLondon News
10.35pmFILMRaw Deal:
Action thriller, starring Arnold
Schwarzenegger. 1986.
12.35amJackpot247
2.55amFILMThe Fugitive: Thriller,
starring Harrison Ford. 1993.
5.10am-6amITV Nightscreen
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
8pmFirst Time Farmers
9pm8 Out of 10 Cats
10pmCHOICE Paddy’s TV Guide
10.50pmAlan Carr: Tooth Fairy
Live 11.55pmThe New Normal
12.20amThe Big Bang Theory
12.40amRandom Acts 12.45am
Happy Endings 1.10amBob’s
Burgers 1.55amGlory Daze
2.40amSmallville 3.20amSt
Elsewhere 4.10amDeal or No Deal
5.05amCountdown
5.50am-6.10amQuick Bakes with
Eric Lanlard
6pmHome and Away
6.30pm5 News at 6.30
7pmThe Great Falklands
Gamble: Revealed: 5 News
Update
8pmIce Road Truckers: 5
News at 9
9pmCelebrity Big Brother:
Live Eviction
10pmCHOICE American Idol
10.55pm Celebrity Big Brother’s
Bit on the Side 11.55pmInside
Hollywood 12amSuperCasino
3.55amMotorsport Mundial
4.20amHouse Doctor 4.45am
Michaela’s Wild Challenge
5.10amWildlife SOS 5.35am-6am
Wildlife SOS
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
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.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUE’S
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6
7
8
9 10
11 12 13 14 15 16
17 18
19
20
21
22
27 12
10 28
17 3
28 29
45
8
45
11 13
16 4
17 30
26 12
8
12
3
16
18
35
34
17
12
20
8
22
9
15
10
32
16
25
33
5
17
6
8
ACROSS
3 Coalminer (7)
6 Lightweight
triangular scarf (5)
7 Having a
connection (7)
8 Domains (5)
9 Duelling sword (4)
11 Posing no difculty (4)
14 Journey in a vehicle (4)
17 Image or
representation
of a god (4)
19 Garret (5)
20 Mechanical device that
connects the ends of
adjacent objects (7)
21 Organised groups
of workmen (5)
22 Capital of Sicily (7)
DOWN
1 Remove
completely from
recognition or
memory (6)
2 Fasteners
with threaded
shanks (6)
3 Evil spell (5)
4 Person who
inspires others (6)
5 Protective fold
of skin (6)
10 For, in favour of (3)
12 Break of day (6)
13 Exclamation of
joy or victory (6)
15 Aim, purpose (6)
16 Overabundance
(6)
18 Key ___, 1948
film (5)
R
S
O
C
I F
T
A
U
4
4

4



N C H R Y S A L I S
E O E H A
W A Y N E R A I D S
L P L E E T U
Y O U R S D R Y E R
W O A P
E L E C T S P O O R
D I E E L L I
S E D A N A R I E S
E S T V E
P E R S E V E R E S
4 5 9 7 1 6
1 5 3 4 8 6 2 7 9
2 8 2 6 4 1
4 9 8 9 3 8
3 1 1 3 1 4
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1 5 2 7 9 8
9 5 8 7 5 2
5 9 8 6 1 2 3 7 4
6 8 4 2 8 4
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The nine-letter word was
MISERABLE
T
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
FRIDAY 18 JANUARY 2013
ROOM101
BBC1, 8.30PM
Frank Skinner chats to Greg Davies,
Ben Fogle and Janet Street-Porter
about their pet hates, which include
people who use suitcases on wheels.
PADDY’S TV GUIDE
CHANNEL4, 10PM
New series, which sees Paddy
McGuinness take a comic look at the
world of television, searching the
archives to highlight the good and bad.
AMERICAN IDOL
CHANNEL5, 10PM
The show’s second round of auditions,
with singers hoping to impress judges
Mariah Carey, Nicki Minaj, Keith Urban
and Randy Jackson.
TVPICK
THE boos inside Stamford Bridge on
Wednesday night would have been
music to Arsene Wenger’s ears
ahead of Arsenal’s crunch game in
West London this weekend.
Chelsea suffered more home
misery, despite early strikes from
Demba Ba and Eden Hazard setting
the Blues coasting towards a first
home victory since before
Christmas, as goals from Rickie
Lambert and Jason Puncheon
rescued an unlikely point for
Southampton.
At the Bridge, Chelsea have won
only once in six domestic games
since Rafa Benitez arrived at the
club, albeit putting eight past a
poor Aston Villa outfit. They were
also beaten 2-0 by Swansea in the
first leg of the Capital One Cup.
The news that Pep Guardiola has
opted to join German giants Bayern
Munich next summer could not
have come at a worse time for
Roman Abramovich.
Over at Emirates Stadium, Jack
Wilshere’s sumptuous strike four
minutes from
time against
Swansea
ensured that
Arsenal’s
chances of
claiming a domestic trophy this
season remained intact. It wasn’t
the best performance, yet it was
important to pick up a result
following the 2-0 defeat to
Manchester City.
Wenger praised Wilshere’s all-
round performance, with his match
fitness improving each outing, and
the clean sheet was a big positive
for them ahead of facing misfiring
Chelsea.
Although the Blues scored two
against the Saints, they have failed
to find the back of the net in four
of Benitez’s six domestic home
games. They have won only two of
those matches and I like the
Gunners’ chances of adding to their
problems.
Arsenal have hardly been prolific
in front of goal in recent times,
scoring only once in their past two
league games. With that in mind, I
like the 11/1 Blue Square Bet are
offering for there to be no
goalscorer.
In terms of head-to-heads, it’s the
Gunners who have just about had
the upper hand in recent clashes,
losing only one of the last four and
winning two. That includes a
brilliant 5-3 win at Stamford Bridge
last campaign in which former hero
Robin van Persie, now at
Manchester United, stole the show
with a hat-trick.
Bearing in mind Chelsea’s
current home form, punters may
well be keen to take the Gunners
with the +1 Asian handicap at 1.8
with Samvo, but I would rather be
backing the draw at 11/4 with Blue
Square Bet.
Chelsea have been shot shy at
home since the Spaniard
arrived in town, while Arsenal
have drawn a blank in two of
their past three visits to the
Blues in the league.
Spread bettors should
therefore sell total goals
at 3 with Sporting Index.
Park Rangers. At home against a
United side that won’t sit deep, I
expect Spurs to have their chances
and it could be an open, entertaining
game, like when the teams met in
September.
Between them, the sides have kept
only nine clean sheets this term, with
United managing five. They had
already recorded 11 at the same stage
of last season.
It is a fixture that has both teams
to score written all over it and odds of
1/2 suggest as much. With that in
mind, I fancy a 2-1 Spurs victory,
which is available at 10/1 with Blue
Square Bet.
The hosts will have to cope without
Sandro, one of their most important
players, after the Brazilian went
under the knife following his knee
injury against QPR, but can welcome
Scott Parker back into their midfield.
They are also without Emmanuel
Adebayor, yet Jermain Defoe has been
top dog up front.
Ferguson has denied that United
are a one-man team, but they look a
paler force when without Robin van
Persie, as they showed in two meek
displays against West Ham in the FA
Cup, Van Persie’s late arrival and goal
in the first game aside. Spurs will
keep Van Persie on a tight leash and
Villas-Boas is blessed with impressive
defensive options, while Hugo Lloris
has bedded in nicely, showing just
why he is the France No1.
In terms of a spread bet, Sporting
Index’s quote of 3-3.2 total goals
looks bang on, so I’d prefer to sell
United’s supremacy at the 0.1 mark
with the same firm.
Tottenham have a golden chance to land a historic league double over United
FRIDAY 18 JANUARY 2013
25
THEPUNTER
FOOTBALL TRADER
BEN CLEMINSON PREVIEWS THE WEEKEND’S PREMIER LEAGUE ACTION
cityam.com
TOTTENHAM HOTSPUR..................
MANCHESTER UNITED...................
Sunday 4.00pm
nPointers…
Tottenham at 2/1 with Blue Square Bet
Tottenham to win 2-1 at 10/1 with Blue Square Bet
Sell Manchester United’s supremacy at 0.1 with
Sporting Index
Spurs can slow down
United’s title charge
T
HERE’S no doubting who the
Premier League’s form team is
at the moment. Having taken
28 points from the last 30
available, Manchester United sit
seven clear at the top of the table
and the bookies have all but given
up on the chasing pack.
Sir Alex Ferguson’s outfit are as
short as 1/4 to reclaim the title from
Manchester City, with their neigh-
bours 7/2, and no one else given a
sniff.
But history tells us that a lot can
happen between January and May.
There will be twists and turns
along the way and I think the gap
between United and City, who host
Fulham, could be down to four
points come Sunday evening.
The Red Devils are favourites, at
13/10 with Blue Square Bet, for their
visit to White Hart Lane, although
Tottenham have already shown this
season that they have the tools to
beat United. Their 3-2 victory at Old
Trafford is the highlight of Andre
Villas-Boas’s reign in north London
so far and the Portuguese can plot
United’s downfall again, at 2/1 with
Blue Square Bet.
Spurs are unbeaten at home in all
competitions since the start of
November and Villas-Boas was
named manager of the month for
December following his team’s
strong showing.
I’m not reading too much into the
Lilywhites’ goalless draw at Loftus
Road last time out. Spurs weren’t at
their best and it was a very disci-
plined performance from Queens
nPointers…
Draw at 11/4 with Blue Square Bet
No goalscorer at 11/1 with Blue Square Bet
Sell total goals at 3 with Sporting Index
No home comfort for Chelsea
CHELSEA........................................
ARSENAL .......................................
Sunday 1.30pm
BRITAIN’S Laura Robson insists she
has still not found top gear at the
Australian Open, despite claiming
another grand slam winner’s scalp in
a sapping late-night epic against 2011
Wimbledon champion Petra Kvitova.
Robson confirmed her burgeoning
reputation as one of the tour’s gutsi-
est competitors by seeing off the
Czech eighth seed 2-6, 6-3, 11-9 in a
three-hour slugfest that finished
long after midnight in Melbourne
yesterday.
The 18-year-old, who upset
Major champions Kim
Clijsters and Li Na at last
year’s US Open, has the
incentive of a likely
quarter-final against
favourite Serena
Williams if she can
beat another
American, Sloane
Stephens, tomorrow.
Robson was more perspi-
ration than inspiration against
Kvitova and admits she is yet to mine
the buccaneering streak that pro-
pelled her in New York, but could not
hide her delight at overcoming the
odds yet again.
“I have to say I feel I was playing
better in New York,” she said. “I
thought today was pretty ugly, but,
in terms of how tough it was to close
it out in the end, I think it’s right up
there with one of my best wins.”
The world No53’s triumph
ensured two British women qualified
for the third round of a grand slam
for the first time since 1991. Heather
Watson was due to face fourth seed
Agnieszka Radwanska
early this morning.
Robson and Stephens, 19,
have as old a rivalry as is possible
for two teenagers and the Florida
native can claim an edge, having
beaten the Briton in Hobart last
week and holding a world rank-
ing of 25.
“We first played each other
when I was 10 or 11,” Robson
added. “She beat me last week in
Hobart, and it was a pretty close
match, but I definitely feel like I
could play a lot better than I did
last week.”
Beating Stephens would set up
a last 16 meeting against ever-
green Kimiko Date-Krumm, 42, or
unseeded Bojana Jovanovski on
Monday, Robson’s 19th birthday,
with 15-time grand slam winner
Serena likely to follow.
Those contests might never
transpire if Robson repeats the
errors that saw her lose the first
set and trail 3-0 in the third
against Kvitova, as well as failing
to convert when serving for the
match at 6-5.
But the Melbourne-born
Olympic silver medallist drew on
the support of a home-from-
home crowd and refused to lose,
pushing Kvitova, four years her
senior, to the brink of tears before
delivering the knockout blow at
12:30am local time.
Teenager Robson
stuns Wimbledon
winner to march on
at Australian Open
FRIDAY 18 JANUARY 2013
26
cityam.com/sport @cityam_sport
BET
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*Sign up offer: New customers only. We’ll match your first bet of at least £5 up to £25 in the form of a
free bet token. Free bet stake not returned in winnings and expires after 30 days. Qualifying bet must be
placed on a win, single or multiple bets at odds of evens or greater. Void bets do not qualify for free bet
tokens. Over 18s only. Blue Square Bet encourages responsible gambling. gambleaware.co.uk
U
P
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O
£
2
5
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P
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A
Y A
T
B
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S
Q
.C
O
M
PROUD SPONSORS OF
THE BLUE SQUARE
BET SPRINT SERIES
AT LINGFIELD PARK
ENOUGH
S
A
ID
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J
U
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THEPUNTER RACING TRADER
T
HE winter has arrived with a
bang this week and it must
be doubtful that either
Haydock or Ascot will get
the green light to race tomorrow.
My weather forecasting skills
aren’t the hottest but Ascot looks
to have a slightly better chance,
and if the snow stays away, we
have a real treat in store with the
return of Sprinter Sacre in the
Victor Chandler Chase at 3.35pm.
Now, this isn’t a race for betting
purposes. The so-called Black
Aeroplane is a best-priced 1/5 and
he is as near to a certainty as you
get in this game. Somersby would
be the one for the forecast, but
I’m happy to sit back and watch
one of the best two miler chasers
we are ever likely to see.
If racing goes ahead, the one bet
I will be having is VINO GRIEGO
for the red hot Gary Moore team
in the BetVictor.com Handicap
Chase (3.00pm). He sneaks in at
the bottom of the weights, goes
well at this track and should be a
decent each-way price.
He has an alternative
engagement at Taunton, so if he
is rerouted there he will be worth
backing.
We’re now less than two
months away from the start of the
Cheltenham Festival and I’m
ready to have a decent each-way
bet on FIRST LIEUTENANTat 12/1
for the Betfred Gold Cup.
The sponsors are offering non-
runner no bet on the race and
that’s a nice insurance as Mouse
Morris’s charge could easily
switch to the Ryanair Chase.
However, I think he’ll go for
the big one and he is sure to
improve for better ground. The
eight-year-old won the Neptune
Hurdle at the Festival two years
ago and only found Bobs Worth
too good in last year’s RSA.
He seems to have improved
again this term and now heads
to Cheltenham on the back of a
break like he’s done for the last
two seasons.
Follow me on Twitter
@BillEsdaile for all my latest
views.
WITH ALAN ALGER FROM BLUE SQUARE BET
SPORT
I
T WAS GOOD to see our exclusive
blogger Luke Morris strike on his
very first ride of this year’s Blue
Square Bet Sprint Series on
Restless Bay last week. That victory
saw Morris’ price on being the top
jockey in the series come in to 9/2
from 5/1.
Violet Jordan didn’t pick up any
points last week but has three
runners this week and, with 6/4
favourite David
Evans yet to saddle
a winner, Jordan
is now just 2/1 to
scoop the top
trainer award.
Tomorrow’s
Sprint Series
action looks
competitive and
you can give a large
number of
these
chances.
In the first division (2.00pm),
Picansort would have been my
selection were it not for a poor draw
in 10.
Instead, chance GABRIAL’S GIFT to
reverse recent form with Khawatim
on 4lb better terms for a length
defeat.
In the 2.35pm, it might be worth
backing GABBIANO each-way. He’s
still lightly raced and should strip
fitter for his recent reappearance.
Welease Bwian ran well last week but
has still only ever won one race in 19
career starts.
Remember to bet with Blue Square
Bet as we will give you your money
back if you finish second, beaten less
than half a length in all Blue Square
Bet Sprint Series races.
Visit http://betting.bluesq.com/ for
more information and to read
exclusive blogs from jockey Luke
Morris and ATR all-weather specialist
Simon Mapletoft.
nPointers…
VINO GRIEGO e/w 3.00pm Ascot (tomorrow)
FIRST LIEUTENANT 12/1 e/w Gold Cup
(Cheltenham Festival)
Brits are whizz
2
2
Years since two Brit
women reached third
round of a slam
BY BILL ESDAILE
Frost is the only thing that can prevent
the Black Aeroplane triumphing again
Robson beat
Petra Kvitova
in an epic,
while Murray
swept past
Joao Sousa
BY FRANK DALLERES
27
IN BRIEF
O’Driscoll disappointed by snub
n RUGBY UNION: Forward Jamie
Heaslip has been retained as Ireland
captain for the Six Nations despite
long-standing skipper Brian O’Driscoll’s
return from injury. Heaslip led Ireland
during the autumn, while the Leinster
star was sidelined with an ankle
problem. Ireland’s record try scorer
O’Driscoll said: “While I was naturally
very disappointed not to be leading the
team in the Six Nations, I accept the
reasons behind the decision.”
Armstrong loses Olympic medal
n CYCLING: Deposed former Tour de
France winner Lance Armstrong has
been stripped of the bronze medal he
won at the 2000 Olympic Games in
Sydney. The International Olympic
Committee’s move came after the
International Cycling Union last year
revoked the American’s seven Tour de
France titles and banned him for life
over allegations of doping.
Alonso most afraid of Hamilton
n FORMULA ONE: Ferrari’s Fernando
Alonso believes Britain’s Lewis
Hamilton remains his strongest rival,
despite Red Bull Sebastian Vettel
capturing his third world title last year.
“If you ask me who the strongest driver
is it’s Hamilton,” said the Spanish two-
time world champion. “He was last year
and he is this year. I’m sure that with
Hamilton, Mercedes will be stronger.”
Nadal names date for comeback
n TENNIS: Former world No1 Rafael
Nadal has confirmed that he will make
his long-awaited comeback from injury
next month at the Chile Open. The 11-
time grand slam winner has been out
since June, when he suffered tendonitis
after his shock defeat to Lukas Rosol at
Wimbledon. The Spaniard is set to take
part in the Brazil Open and the Mexican
Open, both on clay, later in February in
a bid to rediscover form as he prepares
to defend his French Open title in May.
L
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/
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A
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M
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WASPS boosted their chances of a
home quarter-final in the Amlin
Challenge Cup with a narrow 20-19
win over Newport-Gwent Dragons
last night at Adams Park.
Nicky Robinson scored 15
points – one try, two conversions
and two penalties – as the London
club hung on in a nervy finish.
Saracens head into Sunday’s
final Heineken Cup Pool One clash
against Edinburgh in pole position
to claim a quarter-final place, but
even a win may not be enough to
secure a home draw.
Munster lie three points behind
leaders Sarries and could yet
snatch top spot if they beat Racing
Metro at Thomond Park, also on
Sunday, and the Londoners lose.
Harlequins secured their
progress from Pool Three and a
home quarter-final in advance of
tonight’s trip to Biarritz.
The weekend’s standout fixture
is Sunday’s Pool Two decider
between Leicester and Toulouse,
with Tigers needing a win to stay
in the competition.
Northampton could claim one
of the best runners-up spots, and a
last eight place, if they win in
Glasgow tomorrow.
Gloucester and Bath have
ensured their passage from Pools
One and Four in the Amlin
Challenge Cup, while Worcester
must better Perpignan’s result to
snatch first place in Pool Two.
Brought to you by Amlin, proud
sponsors of European Rugby, in their
fourth season as title partner of the Amlin
Challenge Cup and premium partner of
the Heineken Cup.
cityam.com
FRIDAY 18 JANUARY 2013
Wasps eke out win as English
sides set for crucial Euro games
kids of Oz
ARSENAL manager Arsene Wenger
has admitted his interest in signing
Napoli and Uruguay striker Edinson
Cavani and insists he is ready to raid
the club’s swelling coffers this
month for the right player.
Cavani, who has been linked with
the Gunners, caught the eye against
Chelsea and Manchester City in last
year’s Champions League and has
scored 16 goals in 17 league games
for the Italian club this season.
The 25-year-old has a £50m release
clause in his contract and Napoli
would be reluctant to sell for much
less, but that is still within cash-rich
Arsenal’s scope and Wenger has
hinted at a club record swoop.
“I like him as a player,” he said.
“Will he cost a lot of money? That’s
for sure. Nobody would deny that.
Our banker lives just next to me at
the moment and he is ready if we
find the right player.”
Wenger has shelved any bids until
forward Theo Walcott’s future is
resolved, and the Frenchman is
content to wait until nearer the end
of the January transfer window in
the hope of securing a bargain.
“The prices go always up at the
start of the transfer market and go
down in the last week,” he added.
“You know as well that 90 per cent of
transfer activity happens in the last
week, if not in the last 48 hours.”
Negotiations with Walcott over a
new contract until 2016 that, at
around £100,000 per week, would
make him the club’s best paid player
are finally close to resolution and
could be confirmed before Sunday’s
trip to Chelsea.
“It took us some time to get where
we want to get,” Wenger said. “It is
still not finalised, but hopefully it
will be done by this weekend. There
is a possibility. My optimism is at 99
per cent now.”
BY FRANK DALLERES
HEAD TO HEAD
STEPHENS
United States
19
5’ 7”
61kg
Right
25
1
4th round,
2012 French
Open
ROBSON
Britain
18
5’ 11”
67kg
Left
53
0
4th round,
2012 US Open
COUNTRY
AGE
HEIGHT
WEIGHT
HAND
RANKING
TITLES
BEST SLAM
BRITAIN’S Andy Murray will put
off-court friendships to the back
of his mind tonight when he
meets training partner Ricardas
Berankis in the Australian Open
third round, after ruthlessly
dispatching Portuguese Joao
Sousa in Melbourne yesterday.
The Scot triumphed 6-2, 6-2, 6-4
in just an hour and forty-one
minutes to ease past Sousa, a man
he admitted he knew little about.
But Murray is familiar with
Berankis, who caused an upset by
beating 25th seed Florian Mayer
in only three sets yesterday.
“I actually hit with Ricardas a
lot,” Murray said. “I trained with
him before the Australian Open
last year. I also practised with him
a couple of times this year. He is a
really nice guy.”
In his current form Murray
should not be particularly
troubled by the unseeded
Lithuanian, and forecasts suggest
he will be spared a repeat of the
blistering 39C heat he faced
during the match against Sousa.
“When the sun came out, it
was extremely hot,” said Murray.
“I tried to shorten the points,
which helps. I also served well
and there were very few long
rallies. It worked out well,
because they were really tough
conditions.”
Second seed Roger Federer kept
alive the prospect of a quarter-
final clash with Murray by
comfortably beating Russia’s
Nikolay Davydenko 6-3, 6-4, 6-4.
Clinical Murray
gunning for
pal Berankis
BY CALLUM ORR
LONDON’S Olympic Park will
provide the backdrop to a stage of
next year’s Tour de France,
organisers announced yesterday.
Day three of the 2014 Tour will
begin in Cambridge and take in
Epping Forest and Stratford before
finishing on the Mall.
The opening stage will commence
in Yorkshire on 5 July, with the
prestigious Grand Depart taking
place in Leeds, while stage two
starts in York and ends in Sheffield.
The London stage echoes the 2007
Grand Depart, which also finished
on the Mall, and last year’s Olympic
road races, which concluded in
front of Buckingham Palace.
Tour director Christian
Prudhomme said: “Bradley Wiggins’
historic victory and the enormous
crowds that followed the cycling
events in the streets of London
during the Olympic Games
encouraged us to go back earlier
than we had planned.”
BY CALLUM ORR
Olympic Stadium and the Mall
on 2014 Tour de France menu
Stratford’s Olympic Park will provide the backdrop to the third stage of next year’s race
Results
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LIVERPOOL manager Brendan
Rodgers has condemned Luis Suarez
and promised to take action against
his controversial striker after the
Uruguay star confessed to diving.
Suarez admitted in an interview
with a South American broadcaster
earlier this week that he had tried to
manufacture a penalty in October’s
goalless draw against Stoke.
“I’ve seen the comments and I
think it is wrong,” said Rodgers, who
has staunchly defended Suarez
against accusations of simulation. “It
is unacceptable. I’ve spoken to Luis
and it will be dealt with internally.”
Suarez taunted Everton boss David
Moyes by celebrating a goal in the
Merseyside derby with a dive directly
in front of the Scot. Before the
match, and just three weeks after
the Suarez’s dive against Stoke drew
criticism from their manager Tony
Pulis, Moyes had accused the 25-year-
old of going to ground easily.
The former Ajax player said this
week: “I was accused of falling inside
the box in a match, and it’s true I did
it that time.”
Rodgers blasts
star Suarez for
dive admission
BY FRANK DALLERES
BY FRANK DALLERES
The New York Knicks beat the Detroit Pistons
102-87 last night at the O2 Arena in the NBA’s
seventh appearance at the south London venue
Wenger keen on £50m Cavani
Star Deals
Ultimate Internet 500 Plan.
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