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Sterling hits
seven-month
low on dollar
STERLING slid to a seven-month
low against the dollar yesterday,
after the Bank of Englands Martin
Weale suggested on Friday that
rate-setters wanted the pound to
weaken in order to boost demand.
The pound fell 0.5 per cent
during the day to reach $1.5438, its
lowest point since July last year,
and five per cent below where it
started 2013.
This came after a speech in
which Weale said the Bank should
hold off from counteracting any
rise in inflation that is caused by a
weakening exchange rate. To do
any different would be to veer
towards deflation as a means of
restoring equilibrium, Weale said.
In the same day, the yen
resumed its falls, after the G20
group of major economies decided
not to censure Japanese monetary
easing that has seen the currency
weaken 20 per cent against the
dollar since November last year.
And analysts said the yen would
weaken further as Bank of Japan
(BoJ) boss and monetary hawk
Masaaki Shirakawa stepped down
from his post, and premier Shinzo
Abe said he would change BoJ law if
the Bank did not boost inflation.
Boris Johnson called for banks to be allowed to set their own bonus levels but also to pay a better wage to those at the bottom of the pay scale
BORIS Johnson last night told City A.M.
that we dont need Europe butting in
on bonuses, as he launched a staunch
attack on the EUs plan to cap bonuses
at the same level as salaries.
Ill always be the first to defend the
City we need to remain competitive,
said the Mayor, as he defended London
banks right to pay their workers what
they want. Negotiations have heated
up in recent days as politicians try to
hammer out a deal on new reforms.
Johnson fears a cap would have unin-
tended consequences, pushing up
salaries and making the sector less
flexible. It is understood the Mayors
office is also concerned that the plans
would make it harder for banks to cut
costs in a downturn, as well as affect-
ing Britains competitiveness com-
pared to other financial centres such
as New York and Hong Kong.
But Johnson insisted banks must also
convince the British public that they
benefit the wider economy by paying
generous wages to low-level staff and
taking part in philanthropic activities.
If our banks and our finance houses
reward top staff so handsomely then
they need to give something back.
That starts with the London Living
Wage, the Mayor said. He is backing a
campaign for London firms to pay all
staff a minimum of 8.55 per hour.
European parliamentarians have
been pushing hard for the cap on
bonuses, and countries led by France
www.cityam.com FREE
have taken up the demands. If
approved, bonuses will be capped at
the same level as the workers salary,
though a two-thirds vote of sharehold-
ers could double that level.
The Irish presidency of the EU has
made the reforms a priority for the
next six months, while Germany has
dropped its opposition to the cap.
That leaves Britain alone in publicly
opposing the plan. The UK favours
pushing banks to pay more in shares,
deferred for several years to allow
banks to claw back the bonuses if long
term performance is poor.
The industry fears the UK will now
be defeated, hitting the sector.
George Osborne doesnt want to
stand up alone and argue for bigger
bonuses, so we will lose out by default.
The banks have no friends on this one,
so the end result will be another loss
to Londons competitiveness, said one
industry insider.
This cap will make other parts of
the world more attractive to bankers
looking at where they want to work,
added TheCityUKs Chris Cummings.
The banks themselves are concerned
that pay packages designed to encour-
age long-term success will now be
scrapped in favour of the capped one-
year bonuses. This simply stops share-
holders from having any redress
against bad performance, warned a
source at a major UK lender.
The Treasury declined to comment.
BY BEN SOUTHWOOD
FTSE 100 6,318.19 -10.07 DOW CLOSED YESTERDAY NASDAQCLOSED YESTERDAY /$ 1.55 unc / 1.16 unc /$ 1.34 unc
ISSUE 1,822 TUESDAY 19 FEBRUARY 2013
DONT TAX
FIZZY DRINKS
See the Forum, Page 21
See Sport, Page 26
EXCLUSIVE
BY TIM WALLACE AND
JAMES WATERSON
ALLISTER HEATH: Page 2

DEBATE: Page 21

MORE: Page 16, TRADING: Page 22

Certified Distribution
from 31/12/12 to 27/01/13 is 127,008
WENGER ON THE ROPES
ARSENAL BOSS UNDER PRESSURE AHEAD OF CRUCIAL BAYERN MATCH
BORIS TO EU: BACK
OFF ON BANK PAY
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Cameron demands India
opens up economy to City
DAVID Cameron yesterday called on
India to open up its economy to
British banks and insurers, in return
for relaxing UK visa rules for execu-
tives from the subcontinent.
But the Prime Minister faced diffi-
culty as he waded into the debate
over two troubled defence contracts
and tried to convince India to hand
major infrastructure contracts to
British businesses.
Britain is an open economy and
we encourage that investment,
Cameron said in New Delhi. I think,
in return, we should be having a con-
versation about opening up the
Indian economy, making it easier to
do business here, allowing insurance
and banking companies to do more
foreign direct investment.
The Prime Minister is in the coun-
try with a 100-strong trade delega-
tion, as well as four ministers and
nine MPs, in the hope of boosting
business links with one of the
worlds fastest growing economies.
Yesterday he unveiled plans to
allow Indians to receive a same-day
visa if they want to visit the UK on
business by streamlining the exist-
ing bureaucracy-heavy process.
However large state-backed con-
tracts remain the top prize. Cameron
continues to argue that India should
reconsider its decision to order 126
Employers work to avoid Obamacare
US companies that employ millions of
workers are considering cutting their
hours or paying fines rather than
enrolling staff in health insurance plans
under Barack Obamas landmark
healthcare law. Employers are concerned
that the law increases the cost of insuring
low-wage employees on existing plans,
partly by broadening their benefits, as
well as requiring companies to insure
workers not previously covered. The
penalty for not providing coverage is
$2,000 (1,292) per worker.
EasyJet risks row with founder
EasyJet is weighing an aircraft order that
would eventually return its fleet to one
composed entirely of Boeing jets, a move
that could raise tensions with the low-cost
carriers founder, Sir Stelios Haji-Ioannou,
who believes the group already has too
many aircraft.
Dublin faces suits over liquidation
Ireland faces a raft of potential lawsuits
and a possible constitutional challenge
over its decision to liquidate one of its
failed banks as part of a deal to
restructure 28bn (24.2bn) in bank
debts.
Austerity bites in Year of the Snake
A clampdown on bribery and extravagance
has also applied the brakes to Chinese retail
sales. Despite being in the critical new year
spending period, they grew last week at
their weakest pace for four years.
Push for Republic to return to founder
Carl Brewins, the founder of Republic
has won support from Denmark in his
attempt to reclaim the failed fashion
chain, which has 121 stores, out of
administration.
Arms sales fall as BAE slips in league
Pressure on the global defence industry
was laid bare as arms sales fell for the first
time since the mid 1990s, while BAE
Systems slipped from second to third in a
league table of the biggest arms makers.
Royal Mint strikes coin in India
The Royal Mints gold Sovereign
commemorative coins will be struck in
India for the first time in nearly a century.
The Royal Mint has licensed MMTC-PAMP
to strike and market the Sovereign.
German recovery hinges on Eurozone
German Economy Minister Philipp Rsler
warned that the return to strong growth in
Europes largest economy later this year
depends on stabilisation of the Eurozone.
Hugo Chvez Returns to Venezuela
Venezuela President Hugo Chvez made a
surprise return home yesterday after more
than two months in Cuba for treatment of
cancer, a move that is unlikely to quell
speculation that his health could force him
from office after 14 years as premier.
TOP EUROCRATS yesterday came
out against the historic budget
deal that would cut the limit on
their spending for the first time.
All 27 premiers of the EUs
constituent states came to an
agreement on a package
pencilling in 908.4bn (784.3bn)
of spending between 2014 and
2020, with a limit of 960bn.
This is down from the 994bn
limit in the previous seven year
budget cycle, and from the 1.05
trillion eurocrats had originally
demanded.
But senior figures in the three
biggest parties in the European
Parliament, whose approval is
needed to pass the long-term
plans, slammed the proposals,
despite recession and austerity
across Europe.
Hannes Swoboda, who leads
the second-biggest faction in the
chamber, called the proposals
unacceptable. Guy Verhofstadt,
president of a liberal coalition,
and Joseph Daul, chairman of the
biggest bloc, the European
Peoples Party, joined the chorus
of parliamentary displeasure.
The budget deal was hailed as a
historic victory for UK Prime
Minister David Cameron, at a
time when his authority is being
questioned by his own party,
which trails Labour in the polls.
MEPs hit out at
reduction to EU
budget ceiling
Prime Minister David Cameron is in talks with Indian prime minister Manmohan Singh
2
NEWS
BY BEN SOUTHWOOD
BY JAMES WATERSON
To contact the newsdesk email news@cityam.com
O
NCE again, Britain is about to
shoot itself in the foot. The
latest proposals from Brussels
this time, to impose a cap on
bank bonuses look like they may
shortly be nodded through, with
George Osborne seemingly too
frightened by anti-City sentiment to
block them. Bonuses may have to be
no more than 100 per cent or at most
200 per cent of base pay, though the
devil will be in the detail.
Before I tell you why I think this lat-
est EU plan is bonkers, bad for the UK,
bad for jobs, bad for London, bad for
tax receipts and bad for the stability
of the financial system, let me remind
readers of what reforms I do support.
Prior to 2007, profits were privatised
but risks nationalised, with an
appalling regulatory model eliminat-
ing some core market disciplines but
replacing them with nothing.
EDITORS
LETTER
ALLISTER HEATH
Brussels plans to cap bonuses will be a disaster for London
TUESDAY 19 FEBRUARY 2013
Some of the extensive reforms since
then have been good, including the
requirements to hold more capital
and liquidity (though some of the
changes have been too quick).
Pay is rightly now structured differ-
ently, with bonuses deferred to align
shareholder interests with staff com-
pensation and to allow banks to can-
cel payouts if they turn out to have
been based on false or excessively
hopeful accounting. We still urgently
need proper resolution mechanisms
and specially tailored bankruptcy
rules to allow even the largest banks
to be wound down without destroy-
ing the overall economy or triggering
a Lehman-style panic in the event of
failure, protecting depositors but wip-
ing out bondholders, shareholders
and senior staff. There should never
be any more taxpayer bailouts.
But the bonus cap plan is wrong. It
involves the biggest violation of the
right of companies and employees to
freely determine pay since the price
and wage controls of the 1970s, huge-
ly distorting price signals. What will
start with banks will end up being
applied to everybody.
It wrongly assumes that success
should not be rewarded of course,
badly designed contracts can incen-
tivise bad outcomes, but the chal-
lenge is to design contracts properly
and put in place strict monitoring sys-
apply these rules globally, which
means they will become utterly
uncompetitive in overseas locations.
Some UK and EU universal banks may
have to quit investment banking alto-
gether. It may even make more sense,
under these rules, for the likes of
Barclays to float their investment
bank in New York and move as many
bankers out of the EU as possible.
Given all of this, I have two ques-
tions: why are so many City firms still
so keen on the EU, given its apparent
determination to inflict as much
harm as possible on London; and why
is the industry so shy at making its
case publicly and on the record, given
that so many of its staff are about to
suffer the consequences?
Its truly baffling.
tems to prevent unintended conse-
quences such as excessive risks,
Libor-style fraud, or other improper
behaviour motivated by the hope of
making higher bonuses. Its not rock-
et science to design a system that
works; yet the EU wishes to throw out
the baby with the bath water.
The cap will lead to further boosts to
base pay, increasing fixed costs and
risk. When business volumes drop,
the only answer will be to sack peo-
ple, rather than cutting bonuses. This
is tricky and will further increase
cyclical risks for the banking system.
A banker at a US, Singapore, Swiss
or Tokyo branch of a large non-EU
bank will be able to earn a large
bonus, but not those in the London
office. People doing the same job, in
the same team and performing iden-
tically will be paid differently. British
or European banks will be forced to
French-built Rafale fighter jets in
favour of the part-British Eurofighter,
which he calls a superior aircraft.
It appears that the UK is just as likely
to lose a major defence contract with
the Indian government. On Friday
New Delhi said it wanted to cancel a
480m deal to buy a dozen helicopters
from Anglo-Italian business
AgustaWestland, which has a major
manufacturing base in Yeovil, over
allegations of bribery which have
resulted in the arrest of the companys
chief executive Bruno Spagnolini.
The Prime Minister insisted the man-
ufacturer was an excellent company
who make brilliant helicopters and
said Britains Serious Fraud Office
would decide whether to investigate
the allegations.
Cameron also said he wanted British
businesses to help develop the corridor
between Mumbai and Bangalore, as
wants the rules on the operations of
foreign chains to be relaxed paving
the way for businesses such as Tesco to
expand in the country.
Representatives of major firms such
as BP, BAE Systems and the London
Stock Exchange are also on the trip.
WHAT THE OTHER PAPERS SAY THIS MORNING
IN BRIEF
Oscar Pistorius back in court
nSouth African athlete Oscar Pistorius
is due back in court today to apply for
bail after being charged with
murdering his girlfriend. Model Reeva
Steenkamp was found shot dead in his
Pretoria home in the early hours of last
Thursday. Police say Steenkamp was
killed by more than one gunshot, that
Pistorius, 26, was the only suspect and
neighbours heard earlier disturbances.
Pistorius stated he disputes the charge
in the strongest possible terms.
Greece fails to cut state payroll
nGreece yesterday refused to fire
almost 1,900 civil servants earmarked
for possible dismissal, despite
promising foreign lenders it would
seek to cut the public payroll. Workers
were put last year into a labour
mobility scheme, meaning they
would receive about two thirds of
their salary and be dismissed within 12
months if no other public sector jobs
were found for them. Yesterday a
Greek ministry found 2,400 vacancies.
Spain to take over small lender
nThe Spanish authorities will take a
majority stake of 65 per cent in small,
unlisted lender BMN after a cash
injection and the conversion of shares
into capital, a source said yesterday. In
a statement to the Spanish stock
exchange regulator released earlier on
Monday, BMN had said the country's
bank restructuring fund would convert
915m (788.7m) in preference shares
into capital as well as fully subscribe a
capital increase of 730m.
Find your next step at
CITYAMCAREERS.com
THE Big Four accounting firms will
learn this week whether the UK
Competition Commission plans to
shake up the industry to give
smaller challengers a better shot at
winning audit work.
KPMG, PwC, Ernst & Young and
Deloitte, which together audit all
but a handful of Britains biggest
firms, have told the commission
that the industry is already
competitive, giving firms adequate
chance to change auditor.
The House of Lords found in 2011
that the average listed company
keeps the same auditor for 48 years.
What were hoping for is a
package of interconnected reforms
that would help create a more level
playing field, giving additional firms
a chance to prove themselves, said
David Herbinet, a partner at Mazars.
The commission, which started its
probe in 2011 and has twice delayed
reporting its findings on the audit
market for FTSE 350 firms, said it
hopes to reveal its recommendations
this week.
The findings will be closely
examined by politicians in Europe,
who have drafted laws that would
force companies to rotate auditor
every six years.
The UKs Financial Reporting
Council already wants firms to put
their audit contract out to tender
once a decade.
Anti-trust body
to rule on audit
work this week
BY MARION DAKERS
THE BITTER battle for control at coal
miner Bumi was blown wide open yes-
terday as a key Indonesian investor
sold his 10 per cent stake just days
before the crunch vote, potentially
scuppering co-founder Nat
Rothschilds bid to gain control of the
coal miner.
Recapital Group, which owns 13 per
cent of Bumi voting rights, offloaded
its stake yesterday just days before the
emergency meeting on Thursday,
where investors will vote on proposals
by Rothschild to remove 12 out of 14
current directors.
Controlled by former Bumi non-
executive director Rosan Roeslanis,
Recapitals stake has been sold to the
Tanoesoedibjos family Flaming Luck
Investments and to hedge funds
Avenue Asia Capital Management and
Argyle Street Management. Sources
with knowledge of the situation said
the last-minute share sale could prove
positive for the Bumi board.
Yesterdays sale lifts voting restric-
tions on the shares. The UK Takeover
Panel ruled in December that major
Indonesian shareholders the Bakrie
Bumi stock sale
deals blow to
Nat Rothschild
BY CATHY ADAMS
family and Roeslani should be consid-
ered a concert party and have their
voting power reduced to 29.9 per cent.
Recapital said in a statement yester-
day that the Takeover Panel confirmed
the buyers of Roeslanis shares are not
considered a concert party with the
Bakries, which is likely to tip the vote
in Bumis favour.
Many investors have already shown
their hand in advance of this
Thursdays meeting.
Schroders, Taube Hodson Stonex and
Artemis are three large shareholders
that have declared support for
Rothschild. And, St Jamess Master
Fund, led by Rothschilds cousin Tom
Daniel, has recently bought shares in a
move understood to have raised their
combined stake to 25 per cent.
However, hedge fund Route One has
spoken out in favour of the board.
The Abu Dhabi Investment Council
is one of the last Bumi investors yet to
voice support for either side, but its
four per cent holding could be enough
to sway the vote.
A spokesman for Rothschild had no
comment yesterday.
Shares in Bumi closed up 4.4 per
cent.
AUTOMOTIVE icon Ferrari shifted
up a gear in 2012 despite a
troubling world economic climate,
boasting its best ever sales.
The legendary carmaker enjoyed
record sales in the US, Germany,
China and the UK, selling 7,318
road cars 4.5 per cent up on
2011 and turning over 2.43bn
(2.1bn).
And despite poor economic
conditions in the UK, US and
Eurozone, most of the companys
growth came from these mature
markets and not rapidly growing
China, Ferrari said.
Ferrari races to all-time record
of 7,318 car sales despite crisis
BY BEN SOUTHWOOD Sales in the UK soared 20.4 per
cent between 2011 and 2012, the
firm said, while sales climbed 14.6
per cent across the US and Canada,
and 8.2 per cent in Germany.
Similarly, Japanese customers
bought 14.4 per cent more Ferraris
last year than the year before.
By contrast, China, Hong Kong
and Taiwan only boosted their
Ferrari purchases by four per cent.
This sales boom drove pre-tax
profits up 12.1 per cent, to reach
350m, according to Ferrari.
This came as Ferrari was ranked
the worlds number one brand,
ahead of Google, Coca-cola and
PwC, in a list by Brand Finance.
TUESDAY 19 FEBRUARY 2013
3
NEWS
cityam.com
The cheapest new Ferrari retails at around 150,000 in the UK
BRITAINS battered retail sector
gained no respite this week as the lat-
est research showed vacancy rates
remained stubbornly above 14 per
cent last year as retailers continue to
shut up shop across the country.
The Local Data Companys (LDC) lat-
est report published today shows
vacancy levels fell slightly from 14.3
per cent to 14.2 per cent last year,
although this does not include the lat-
est spate of collapses seen on the high
street this year.
LDC warned last month that more
than 1,400 stores are now at risk of
closure after Comet, HMV,
Blockbuster and Jessops among oth-
ers entered into administration.
The retail specialist, which surveyed
278,915 retail and leisure sites across
the country, said shopping centres
suffered the highest average vacancy
rate at 15.6 per cent.
Town centres had the second high-
est average vacancy rate (14.2 per cent)
followed by retail parks, which have
Shop vacancy
figures expose
UK retail woes
BY KASMIRA JEFFORD
proved more robust at 8.8 per cent.
Wales was the worst performing
country, with 18 per cent of its stores
lying vacant at the end of 2012 fol-
lowed by Scotland (15.5 per cent) and
England, which was the best per-
former at 13.8 per cent.
London, east Midlands and Yorkshire
& the Humber were the only regions
to report a decline in the number of
empty stores. All other regions suf-
fered a rise in vacancies, with the west
Midlands hit the hardest.
The picture is one of increasing
polarisation of performance between
town centres, shopping centres and
retail parks in every part of the coun-
try, Matthew Hopkinson, LDC direc-
tor said. Online is driving growth for
a majority of retailers and so 2013 is all
about the supporting role that shops
will have as customer experience cen-
tres and showrooms as much as trans-
actions through their tills.
He added: Inevitably this means
fewer shops will be required... and as
such one can expect this divergence in
performance to grow.
4
NEWS
cityam.com
ONLINE retail sales are
endangering the profits of bricks
and mortar stores and threatening
to put commercial landlords out of
business, a new report claims.
The boom in web business means
investors should tread carefully
before investing in physical retail
sales because there is unlikely to
be a return to the heyday of store
spending, says the Market Edge
research paper, published by Axa
yesterday.
According to Axa Real Estates
forecasts, a whopping 90 per cent
of future growth in retail sales in
the UK, France and Germany from
2012 to 2016 around 91.5bn
(79bn) will be captured by online
Landlord profits under threat
from online growth, Axa warns
BY KASMIRA JEFFORD spending. And it warns that
investors have so far been unable to
spot the weakening of physical
sales due to the shift online
because they have blamed the
recession.
Axa believes current predictions
that 25 per cent of total UK retail
sales may be captured online by
2020 are understated, with the
figure more likely to be 30 per cent.
Alan Patterson, global head of
research said: [These] conclusions
...do not mean that retail as a
sector is a poor investment, but
investors need to consider very
carefully whether the mediumto-
long term risks associated from
expanding online retail sales are
appropriately priced into the assets
that they are buying.
THE NUMBER OF SHOP VACANCIES REMAINS ELEVATED IN THE UK
AVERAGE SHOP VACANCY IN
GREAT BRITAIN FELL FROM
WORST PERFORMING COUNTRIES
SHOPPING CENTRES
HAVE THE HIGHEST
VACANCY RATE
AVERAGE OF 15.6%
FOLLOWED BY TOWN
CENTRES (14.2%) AND
RETAIL PARKS (8.8%)
ALL REGIONS EXCEPT
FOR YORKSHIRE
& THE HUMBER,
LONDON AND
THE EAST MIDLANDS
SAW A RISE
IN SHOP
VACANCY RATES
THERE ARE 35,516 VACANT UNITS ACROSS 1,914 RETAIL CENTRES
14.3% TO 14.2% CLOSED
CLOSED
CLOSED
WALES
18% 15.5%
SCOTLAND
13.9%
ENGLAND
15.6%
14.2%
8.8%
S
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P
P
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N
G
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E
N
T
R
E
S
T
O
W
N
C
E
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S
EUROPEAN regulators threatened
action against Google yesterday over
recent changes to the web firms
privacy policy.
French data commissioner CNIL,
which has led the EUs 27 data regu-
lators in pursuing Google, yesterday
said the company had failed to ade-
quately respond to demands to
change its privacy rules.
Last year, Google
merged 60 policies
into just one, allow-
ing it to share
user information
between services
such as Gmail
and YouTube. The
move allows it to
target its advertise-
ments more effective-
ly, but regulators
raised concerns that it
would place users at
risk.
In October,
Google faces EU
measures over
privacy policy
BY JAMES TITCOMB
they wrote to Google with a list of rec-
ommendations, and gave it four
months to respond.
The company claims to have
responded to the regulators con-
cerns, but yesterday CNIL said that
Google did not provide any precise
and effective answers.
In this context, the EU data protec-
tion authorities are committed to act
and continue their investigations.
Therefore, they propose to set up a
working group, led by CNIL, in order
to coordinate their reaction, which
should take place before summer.
The regulators have not yet claimed
that the policy is illegal under EU law.
Our privacy policy respects
European law and allows us to cre-
ate simpler, more effective services,
Google said. We have engaged fully
with CNIL throughout this process,
and we will continue to do so going
forward.
Margaret Hodge says the die are loaded in favour of the promoters of tax avoidance
Google, led by Larry
Page, may face action
over privacy issues
TUESDAY 19 FEBRUARY 2013
5
NEWS
cityam.com
THE ENVIRONMENT Agency is to
relaunch the competition for a
major contract to build flood
defences after the process was
delayed by the West Coast Mainline
fiasco.
The procurement process was
delayed after last years decision to
award control of one of the
countrys main railway routes to
FirstGroup. Existing operator
Virgin Rail successfully challenged
the decision in the court,
highlighting major issues with the
tendering process for large
government contracts such as the
flood defences.
More than a dozen bidders are
thought to be interested in the
flood defence contract and now
Flood defence contract delayed
after West Coast Mainline fiasco
BY JAMES WATERSON face additional costs associated
with adjusting their bids.
A spokesperson for the agency
said: We have slightly delayed this
procurement process in order to
give complete transparency to
bidders and will be re-issuing the
invitation to tender on 26 February.
The new framework will be
awarded in June 2013.
We do not believe that delivery
of flood defence projects will be
held up by the re-tendering and are
confident that the amount of new
work which bidders are required to
do will be minimal.
Meanwhile discussions are
ongoing on a new deal to guarantee
flood insurance for all homes in
Britain, with Conservative minister
Oliver Letwin locked in discussions
with industry representatives.
MPs demand tax avoiders are
named and shamed by HMRC
INDIVIDUALS who take part in tax
avoidance schemes should have
their names made public by HM
Revenue & Customs, according to
the chair of an influential
parliamentary select committee.
Labours Margaret Hodge MP
says the taxman should name and
shame those who sell or use tax
avoidance schemes, directing
public anger at those who attempt
to shelter taxable income from
the state.
A report published today by
BY JAMES WATERSON
Hodges public accounts committee
draws parallels with last years
backlash over unusual tax
arrangements at coffee chain
Starbucks, suggesting the weight of
public opinion should be harnessed
to force tax avoiders to pay their bill
in the full.
Although HMRC does publish
details of tax avoidance schemes that
do not work, it does not currently
name the companies who devised
them.
The select committee report also
point out that while promoters of
such schemes are required to declare
them to HMRC under law, only 11
companies have been fined for non-
compliance in the last nine years,
with the average fine being just
5,000.
It is a game of cat and mouse and
HMRC is losing, Hodge added.
In response an HMRC spokesman
said: We are glad the report the
practices of promoters who sell tax
avoidance schemes to wealthy
individuals. In the last year alone the
courts have ruled in HMRCs favour
in multiple tax avoidance cases
where over 1bn has been
protected.
IRISH food group Greencores shares
bounced back by eight per cent
yesterday after it said that tests had
found no other traces of horsemeat
in its products or at its convenience
food sites.
Shares in the company sunk more
than 12 per cent at the end of last
week when Asda withdrew its own-
brand beef bolognese sauce
supplied by the firm after it tested
positive for traces of horse DNA.
Greencore, which makes own
label sandwiches and chilled
convenience food for major
supermarkets, said it has restarted
production at its Bristol facility
after a deep clean this weekend.
It said Asda remains supportive of
the group and that it is working
with suppliers and customers to
investigate how the Chosen By You
product came to contain 4.8 per
cent of horse DNA.
Greencore rises
on proof of no
contamination
BY KASMIRA JEFFORD
ENVIRONMENT minister Owen
Paterson last night said food retail-
ers will conduct tests for horse-
meat in processed beef products
every three months, in an attempt
to restore consumer confidence in
the industry.
There was absolute determina-
tion in the industry to restore con-
fidence in their products, and Im
pleased to say we look forward to
meeting on a regular basis to make
absolutely clear that when con-
sumers buy a product they get
what they bought, Paterson told
the BBC, after spending yesterday
afternoon with representatives of
the food industry.
In a meeting at Westminster dur-
ing the parliamentary recess yester-
day, Paterson met bosses from the
big four grocers Tesco, Asda,
Morrisons and Sainsburys, as well
as representatives of the Institute
of Grocery Distribution and the
Food and Drink Federation.
Meanwhile a survey of 2,200
adults released yesterday by retail-
er research group Consumer
Suppliers back
quarterly tests
for horsemeat
BY JAMES WATERSON
Intelligence found that a fifth of
respondents said they had started
buying less meat after traces of
horse DNA were found in some
products.
The government has repeatedly
insisted that retailers must lead the
way in convincing consumers to
have confidence in food labelling,
with no sign that the scandal poses
a health risk to consumers.
The Food Standards Agency last
week said that an initial check of
more than 2,500 processed beef
products had found 29 cases of
horsemeat contamination, all of
which had been previously reported
and the products cleared from the
shelves.
The organisation is due to release
another tranche of results on
Friday, with further updates due on
1 March.
French meat processing firm
Spanghero, which has been accused
of knowingly selling horsemeat as
beef, yesterday had its production
ban partially lifted.
The French government said that
it did not want ordinary workers to
lose their jobs due to the crisis.
HAVE YOU CHANGED YOUR EATING HABITS
BECAUSE OF THE HORSEMEAT SCANDAL?
Interviews byAmy-JoCrowley
I eat very little processed meat, so it hasnt
changed my habit. I wouldnt be surprised if a
lot of people haveIts not a food safety issue, but
people should know what theyre consciously eating.
These views are those of the individuals above andnot necessarily those of their company
CHRIS DUNNE
VOCALINK

No. I dont eat a lot of burgers and at the places


I eat, I tend to know what Im eating. Its not so
much about horsemeat, its about poor labelling and
traceability. If they get that sorted, it might help.
KHALID AZIZ
AZIZ CORPORATION
Ive a reputation for eating ready-made meals in
the ofce from nearby supermarkets. People
would laugh at me with good reason, now I see. So I tend
to eat salads now or go to the Vietnamese restaurant.
ARCHIE MAITLAND
ACCENTURE

Owen Paterson met food industry executives at Westminster yesterday


CITYVIEWS
Greencore Group PLC
18Feb 12Feb 13Feb 14Feb 15Feb
105
100
90
95
80
85
110 p
100.00
18Feb
TUESDAY 19 FEBRUARY 2013
6
NEWS
cityam.com
CREST Nicholson kicked off its first
official day of trading on the London
Stock Exchange yesterday after the
housebuilder last week completed
Londons largest public listing so far
this year at 553m.
Shares in the company edged down
by 0.75 per cent to 262.38p still sig-
nificantly above its original listing
price of 220p and up on the overall
housebuilding sector, which was
down by more than one per cent.
Opening the London Stock
Exchanges UK markets yesterday,
Stephen Stone, Crest Nicholson chief
executive, said: Our listing is the first
significant IPO of 2013, and the posi-
tive response we have received from
the investment community is good
news for our industry and the wider
market.
Shares have soared since their first
day of trading in the institutional or
grey market last Wednesday,
although private investors were not
able to buy or sell shares until they
started trading with a full listing yes-
Crest Nicholson
rejoins market
with 107m lift
BY KASMIRA JEFFORD terday. Stone and his wife Lesley
cashed in over 2.5m worth of shares
following its admission, the compa-
nys prospectus shows.
Liberum analyst Charlie Campbell
said Crest Nicholson is likely to receive
another welcome boost as house-
builders begin this week to release
trading statements this week showing
a positive start to the important
Spring selling season.
The 50-year-old firms IPO marked a
return to the stock market, five years
after it was taken over as a result of the
market crash. Last nights closing price
valued the company at around 660m.
BOTTOM
LINE
MARC SIDWELL
Crest Nicholson boss Stephen Stone opened the London Stock Exchange yesterday
Crest Nicholson Holdings PLC
18Feb 12Feb 13Feb 14Feb 15Feb
265
260
250
255
270 p
261.25
18Feb
TUESDAY 19 FEBRUARY 2013
8
NEWS
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Crest Nicholson started trading last Wednesday in the grey market, so
most of the trading happened last week... I thought it would go well but I am
surprised the extent it has continued to trade well. Now with all the house-
builders we are waiting to see how the spring selling season has kicked off. If
the world takes the view that the season has started well, Crests shares
are likely to benet and rise further.
ANALYST VIEWS

Crest Nicholsons initial public offering went at a pretty sensible valua-


tion and its great to see that it has been exceptionally well received and full of
the blue-chip institutional shareholders. It hasnt surprised us that it has gone
to a premium post the issue and the demand is testament to the attractions of
the stock in terms of returns, geography, and management.

WHAT IS YOUR REACTION


TO CREST NICHOLSONS
MARKET DEBUT? Interviews by Kasmira Jefford
CHARLIE CAMPBELL LIBERUM

CHRIS MILLINGTON NUMIS


A weak pound helps UK exports
but it risks a currency civil war
AS David Cameron talks up British
exports in India, it might seem
good news that the pound sank
yesterday. A weaker currency makes
exports cheaper (to pay the price in
pounds takes less foreign currency).
In theory that boosts demand and,
so the argument goes, rebalances
the economy towards opportunities
in emerging markets. It also boosts
profits for UK multinationals that
conduct most business overseas but
report in pounds.
But UK exports are higher-grade
than in the past and there isnt
much evidence todays buyers are
price-sensitive enough for this to
work. Meanwhile, accounting tricks
aside, on the home front we all feel
the cost of a weaker pound. With
the UK high street in crisis, the last
thing we need are rising domestic
prices, yet that is the other side of
the devaluation equation: a weak
pound buys fewer imports, of both
raw materials and foreign-made
items, raising the costs of consumer
goods. That effect is worsened by
high inflation, not due to fall to the
official Bank of England target for
two more years according to
Britains outgoing central bank
governor Sir Mervyn King last week.
As fear recedes somewhat from
the Eurozone, sterling has found
itself exposed. Any theoretical short
term boost isnt worth the long
term hurt to businesses and
household balance sheets at home.
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MANCHESTER Airports Groups
purchase of Stansted Airport is on
track to close by the end of the
month, but the firm was hit by a
debt rating downgrade from
Standard & Poors yesterday.
S&P lowered its rating on MAG
from A to BBB, repeating its
concerns that the 1.5bn purchase
will push the groups debt pile to
900m, weakening its financial risk
profile from modest to
significant.
The agency said it was also
withdrawing its rating on MAG at
the firms request. The company
declined to comment on why it
asked S&P to end its debt coverage.
MAG and its new partner Industry
Funds Management have not yet
made public the debt structure of
last months deal, but it has been
reported that the firm has agreed a
1.2bn club loan from 13 banks and
is mulling a bond auction within the
next 18 months.
As part of the deal, set to close
before 28 February, IFM is buying
35.5 per cent of the enlarged group.
Stansted deal
prompts MAG
downgrade
BY MARION DAKERS
HEATHROW yesterday posted an 11
per cent rise in adjusted yearly earn-
ings thanks to a hike in airline fees, as
its chief executive called for speed
from the governments commission
on the future of UK aviation.
Revenues at Heathrow Limited
rose 8.1 per cent to 2.46bn in
2012 despite flat passenger traf-
fic of 87.4m.
Adjusted earnings before
interest, tax, depreciation and
amortisation jumped to
1.27bn.
The results included
Stansted Airport,
which was sold
to Manchester
Airports Group
for 1.5bn in
January.
Heathrow feels
need for speed
as earnings rise
BY MARION DAKERS Heathrow will use the proceeds of
the sale to pay down its debt pile,
which last year rose 9.9 per cent to
12.1bn.
The group reported an unadjusted
pre-tax loss of 32.8m, down from
255.8m in 2011.
Chief executive Colin Matthews said
the group would prefer to hear the
Davies Commissions recommen-
dations on air capacity before its
2015 deadline.
In terms of timing, wed like
the decision quicker ... we think
its urgent, he said.
Heathrow, owned by Spanish infra-
structure firm Ferrovial, last week set
out its 3bn investment plan
for the five years to 2019.
Man Group shake up begins as
Ellis moves in to be president
EMMANUEL ROMAN, the incoming
boss of Man Group, has already
begun making changes at the hedge
fund ahead of officially taking the
reins next week, appointing former
colleague Luke Ellis as president of
the company amid a raft of changes
to the companys executive
leadership.
Ellis, a big hitter once tipped to
take the top spot at Man, will be
formally named as president when
Roman starts on 28 February, but
has already taken up the mantle
and now oversees the investment
activities of all three Man divisions,
its fund of fund business Financial
Risk Management (FRM), hedge fund
GLG Partners and quant strategy
ALM, which comprises its biggest
fund AHL.
BY MICHAEL BOW
Ellis and Roman worked together
at GLG before the hedge fund, co-
founded by Pierre LaGrange, was
snapped up Man Group in a 2010
mega deal.
As part of a series of changes that
will see GLG employees move into
more senior roles at Man when
Roman takes over from
departing boss Peter
Clarke, AHL has been
merged with Man
Systematic Strategies
(MSS). Man is also
understood to be
mulling plans to rename
the unit.
AHL chief
executive Tim
Wong has been
moved on to
become
executive
chairman of the fund he founded,
with GLGs Sandy Rattray stepping
up to become chief executive.
Chief operating officer at GLG
Mark Jones has also been made co-
chief executive of the unit along
with Teun Johnston. The changes
mark an acceleration in moves to
show the market the firm is turning
the business around following
poorer than expected performance
over the year.
At the start of January it
appointed figures from global bond
manager Pimco to help direct its
GLG unit ahead of plans for fresh
fund launches. Markets cheered the
changes yesterday and sent the
firms stock up 1.86 per cent in
trading to close at 109.6p.
New Man Group president
Luke Ellis takes the helm
STRIKING union workers clashed
with police at Madrids Barajas
airport yesterday on the first day
of a week-long strike over more
than 3,800 pending job cuts at
British Airways sister airline
Iberia, part of London-listed IAG.
More than 80 Iberia flights were
cancelled as workers at the carrier
began a series of five-day walkouts
that are expected to cost the
IAGs Iberia endures first day of
strike action at its Madrid hub
BY CITY A.M. REPORTER airline and struggling national
economy millions of euros in lost
business.
Hundreds of workers flooded
into the airport to noisily protest,
chanting and whistling, with one
group staging a sit-in. About 2,000
people demonstrated outside the
terminal.
Demonstrators waved Spanish
flags and banners saying British
go home. At least five people
were arrested.
More than 80 Iberia flights were cancelled yesterday as workers walked out
TUESDAY 19 FEBRUARY 2013
10
NEWS
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I
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A
M
C
A
R
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E
R
S
.
c
o
m
Heathrow chief Colin
Matthews wants a decision
FIRST Capital Connect delivers
the worst train service in Britain,
according to a survey of
thousands of passengers by
consumer group Which?.
Virgin retained the top spot in
a poll about value, punctuality
and reliability, with a satisfaction
score of 67 per cent, closely
followed by the London
Overground and C2C.
This compares to just 40 per
cent satisfaction at FCC, whose
score dips to 37 per cent on
commuter routes.
But it was Greater Anglia that
scored lowest with commuters,
achieving just 36 per cent
First Capital Connect comes last in passenger
satisfaction poll as Virgin retains the top spot
BY MARION DAKERS
satisfaction in the annual survey
released yesterday.
First Groups other franchises
fared better, with the Great
Western line scoring 43 per cent,
and the Transpenine Express
service achieving an above-
average score of 54 per cent.
More than half of the UKs
train companies had a score of 50
per cent or lower, and a mere 22
per cent of the 7,500 regular train
users surveyed by Which? believe
that services are improving.
Which? executive director
Richard Lloyd said: Passengers
tell us they are fed up with trains
that are delayed, overcrowded
and dirty. This is especially
disappointing as many
commuters cant shop around or
change the company they travel
with.
Train companies need to play
fair with their customers,
especially when they are being
asked to pay more for their
journeys.
The Association of Train
Operating Companies countered
that a larger poll by watchdog
Passenger Focus last month
found that a record 85 per cent of
train users are satisfied with the
service.
Rail fares rose by an average of
3.9 per cent in January, with some
tickets on unregulated journeys
soaring by as much as 12 per cent.
SPARE a thought for the latest intake
of trainees over at Berwin Leighton
Paisner, who started last week. The
law firm is not only sending the fresh
recruits off today for a relaxed day of
team bonding at Army officer train-
ing centre Sandhurst a video of
their exploits will feature on the web.
The charming title of the online
tribute? From the horses mouth
putting our trainees through their
paces at Sandhurst.
We send our new trainees to
Sandhurst every year, BLP partner
Tim Smith told The Capitalist. It is a
fun and unusual start to their training
contracts but there is a serious side
too. It helps develop the team building
skills that will be vital to their future
careers.
One former Sandhurst survivor rem-
inisced on the experience: We board-
ed the coach with mixed feelings ...
excitement, fear and disgust at the
6:30am departure time.
At the end of the video trainees sing
enthusiastically: At Sandhurst we roll
in the mud. We might have hurt our
knees, but its all good.
Presumably the lack of sleep, and
not the dirt-rolling, is the career prepa-
ration the firm had in mind.
BLP trainees at a Sandhurst sing-a-long
WHEN IS being chairman of a
unit of one of the worlds most
prestigious investment banks not
really as powerful a job as it seems?
When it is Lord Mandelsons
chairmanship of Lazard International,
perhaps. The Labour Party broker and
former minister for business joined
Lazard International as an adviser last
November but is yet to pick up a
registration from the Financial
Services Authority, which he would
need if he were to execute deals and
give advice to clients. Mandelson is
there merely as an adviser, The
Capitalist hears, and theres no need
for him to gain FSA authorisation.
Unlike the previous chairman, Lord
Mandelson does not work full time at
the bank. The units former chairman
was Ken Costa, a seasoned dealmaker
who joined from UBS, and who
incidentally, is still registered with the
FSA.
BANK of America Merrill Lynch,
sponsor of the Tate Moderns
highly anticipated Lichtenstein
exhibition, is also backing a far less
traditional venture an outdoor
graffiti art project.
With the retrospective finally
opening this week, the firm is
getting involved with a
Lichtenstein-inspired art education
project with Graffiti Life a
collective of tattooists and graphic
and interior designers.
The collaboration will see 60
young unemployed people who live
in Southwark produce a giant
public display on the outside of a
local building. Art appreciators will
have to wait until March to judge
the finished result for themselves.
Whaam! Merrill seeks street cred
with graffiti and tattoo project
BLPs trainees
told to march to
the firms tune
11
cityam.com
TUESDAY 19 FEBRUARY 2013
cityam.com/the-capitalist
THECAPITALIST
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
Lazard adviser Lord Mandelson


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Roy Lichtensteins 1963 Whaam! installation at the Tate Modern
EQUISTONE, the private equity
group, yesterday exited its majority
stake in oil and gas company
Hydrasun after selling it to a
Bahraini-listed investment
company.
The sale, which comes over five
years after Equistone backed a
management buyout of the firm,
represents more than a 2.5x
premium to the firms original
money investment of 38m. The
firm was valued at around 75m at
the time of the deal.
It is understood the buyer of the
stake, listed alternative investment
manager Investcorp, paid an
enterprise value of around 145m
to take on the company, which is
based in Aberdeen and started life
in 1976 servicing offshore oil rigs in
the North Sea.
Equistone held Hydrasun whose
performance is closely aligned to
oil prices over a period when oil
spiked to $140 in 2008 before
falling to $35 in the first part of
2009. The firm grew revenues over
the period from 50m to 105m
Rob Myers, Equistone UK
managing director, told City A.M.:
The biggest decision we made was
to back the management team. We
made a decision in 2009 to relocate
business premises and we started
hiring a number of key executives
to grow the business.
When the market was hard we
spent a lot of time investing in the
business.
Yesterdays deal is the first sale by
Equistone, which was spun out of
Barclays in 2011, since it closed its
fourth buyout fund last month
after raising 1.5bn (970m).
Equistone exits
UK energy firm
at a premium
BY MICHAEL BOW
EDMOND de Rothschild, the wealth
manager chaired by an heir of the
Rothschild banking dynasty, is to
launch a UK merchant bank after
winning regulatory approval for the
plan.
The new outfit, which was given
consent to launch by the Financial
Services Authority in mid-January,
will be called Edmond de
Rothschild Private Merchant
Banking and offer a range of corpo-
rate advisory services to private
backed companies, entrepreneurs
and family offices.
It will be the third arm of Edmond
de Rothschild Groups UK opera-
tions, which also include Edmond
De Rothschild Securities and
Edmond de Rothschild Asset
Management.
Despite not being ready to
take on customers, the firm
already has staff working at
the company.
Edmond de Rothschild was
set up and named after the
father of current chair
Benjamin de Rothschild.
He is the great, great, great
grandson of Mayer Amschel
Rothschild, the originator of
the Rothschild dynasty which
BY MICHAEL BOW
now runs to seven generations of
financiers.
The merchant bank, which will not
hold client money but will offer
advice on mergers and acquisitions
and private share placings, is backed
by a trio of heavyweight former pri-
vate banking executives.
Christoph Ladanyi, ex-managing
director at Lehman Brothers and
Barclays Wealth, and Richard
Madeley, who worked at JP Morgan
Private Bank are both partners at the
new merchant bank.
Former co-head of defunct advisory
company Hawkpoint Henrik
Schliemann is also involved, joining
his old partner Richard Briance, who
was the former chief executive and
deputy chairman of
Hawkpoint.
Briance joined
Edmond de
Rothschild in
2010.
The move
to launch a
me r c h a n t
bank harks
back to the
pre-Big Bang
era City when
tasks now under-
taken by invest-
ment banks were
traditionally carried
out by merchant
bankers.
Leading Equistone Partners Europes sale of
Hydrasun to Investcorp was the Equistone
UK managing director Rob Myers and
director Tim Swales.
The company used independent investment
bankers Simmons & Company International
Limited, which specialises in mergers and
acquisition activity in the energy industry, as
its lead corporate nance adviser on the
deal.
Simmons, which was founded in 1974, has
four ofces around the globe and about 150
employees. The deal was advised out of its
Aberdeen and London.
Leading the deal out of Aberdeen was
Simmons & Company managing director
Nick Dalgarno.
Dalgarno, who graduated from the
University of Glasgow and subsequently
earned a diploma in legal practice at the
University of Aberdeen, celebrates his ten
year anniversary at the rm this year, hav-
ing joined in 2003.
Prior to this, Dalgarno was vice president in
commercial and legal at oil services compa-
ny ASCO for three years.
Before 2000, Dalgarno worked as a corpo-
rate lawyer specialising in oil service M&A
transactions at Paull & Williamsons, a rm
of solicitors in Aberdeen.
ADVISERS EQUISTONE DEAL
NICK DALGARNO
SIMMONS & CO
WH Ireland snaps up 270m of
Seymour Pierce wealth assets
CITY broker WH Ireland yesterday
announced it had swooped on the
remnants of bankrupt broker
Seymour Pierce and snapped up its
wealth management business for
just 25,000.
The acquisition struck between
Tenebris Realisations Seymour
Pierces moniker since
administration and WH Ireland
on Friday follows rival broker
Cantor Fitzgeralds agreement to
buy substantial portions of
Seymour Pierce after it fell into
BY MICHAEL BOW
administration a fortnight ago.
WH Ireland chief executive
Richard Killingbeck said he
expected the wealth management
division, which has some 270m of
assets under management, to help
increase the firms full year profits.
These came in at 2.2m last year
adjusted for impairments. The
assets acquired generated a profit of
about 200,000 for Seymour Pierce,
one of the oldest stockbrokers in
the City with a 130-year pedigree,
last year.
Part of our private client growth
strategy is to seek to acquire private
client teams and assets in existing
WH Ireland office locations and this
transaction will add considerably to
our London based assets under
management, Killingbeck said in a
statement.
Cantor Fitzgerald took over
Seymour Pierces broking business
at the start of February as part of a
pre-pack insolvency, adding 70
clients and a host of analysts to
boost its stock research coverage.
Grant Thornton was appointed as
administrator after the company
failed to find a backer to bail out
the business.
IN BRIEF
UBS fund managers go passive
n UBS Global Asset Management is set
to push into the passive management
space for the first time, it said
yesterday. The outfit, traditionally
known as an active fund manager, is
bringing out a passive bond fund for
institutional investors. The move could
put them into competition with other
big passive management houses like
Legal and General Investmnent
Management and BlackRock. The fixed
income fund is set to launch next month
or in April.
Vietnam Infrastructure in buyback
n Vietnam Infrastructure, the London
listed fund on the junior stock market,
yesterday said it had bought more of its
shares as part of a pre-announced share
buyback programme. The fund, formed
in 2007 to invest in Vietnamese
infrastructure, bought one million
shares at $0.3225 a share, equivalent to
$322,500 (208,491), it said in a stock
market statement yesterday. It takes the
firms total buyback since last July to
$5.7m, or 4.54 per cent of the total
shares in issue.
Benjamin de Rothschild
is chair of the firm
Equistone UK managing director Rob Myers led the sale of Hydrasun to Investcorp
TUESDAY 19 FEBRUARY 2013
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Rothschild heir
backs launch of
merchant bank
IN BRIEF
BBC strikes hit flagship shows
nBBC staff yesterday disrupted
prominent news programmes,
including Newsnight and Radio 4s
Today, by staging a 24-hour walk-out
in a row over job cuts. Thousands of
strikers picketed the corporations
offices across the country in protest
against the 2,000 jobs being axed
across the BBC under its restructuring.
Prime Minister David Cameron insisted
yesterday that the BBC is well funded.
BATM returns to annual profit
nTelecoms company BATM Advanced
Communications returned to profit in
2012, the firm announced yesterday.
The London-listed company, which is
based in New York and Israel, provides
technology and equipment for
network builders such as Nokia
Siemens Networks, its biggest
customer. The company said it
managed a profit of $0.7m (0.45m)
on $107.8m of revenues.
BT and Barclays in Wi-Fi tie-up
nBarclays is set to become the first
bank in the UK to offer Wi-Fi in its
branches. The bank is introducing the
service after reaching an agreement
with BT, which has thousands of its
own Wi-Fi hotspots around the
country. Barclays hopes the move will
encourage more of its customers to
use banking services on their mobile
phones and tablets. The service will
come to 1,500 Barclays branches.
SONY has slashed the cost of its PS
Vita handheld games console, sug-
gesting poor sales of the device ahead
of tomorrows crucial launch of the
next PlayStation.
The company, which has previously
cut sales forecasts for the Vita, said
the device would now retail for up to
a third less than before in Japan,
Sonys home market.
The move comes as chief executive
Kazuo Hirai attempts to focus the
company on gaming as sales of its dig-
ital cameras and TVs decline.
However, both Sony and its rival
Nintendo have seen sales of portable
consoles hit by the popularity of
cheap and free games on smart-
phones and tablets.
The Vita, released
in the UK around
12 months ago as
Hirai took the
reins at Sony, is
expected to sell
Sony cuts prices
ahead of crucial
console launch
BY JAMES TITCOMB
around 10m this financial year, lower
than previously forecast, although a
weak yen is expected to have boosted
sales outside of Japan, where Vita
prices are not yet being cut.
Sony will unveil its next home con-
sole, expected to be named the
PlayStation 4, at an event in New York
tomorrow. The console will be more
powerful than its predecessor, and is
expected to have a touch-sensitive con-
troller as well as being able to stream
games over the internet.
Crucially, the console is being
unveiled before Microsofts new Xbox
console, and is expected to be priced
cheaper than the PlayStation 3 was
when it went on sale in 2006.
The console has since seen sales of
70m, less than half that of its predeces-
sor, the PlayStation 2, which
remains the bestselling
home console of all time.
ITV shares hit six-year highs as
takeover speculation returns
SHARES in ITV hit their highest
levels in almost six years yesterday
on suggestions the broadcaster
would be the latest target in a wave
of blockbuster acquisitions.
The company has long been seen
as an attractive property for
overseas media giants, and with a
market re-energised by recent deals
for Virgin Media and NBCUniversal,
ITV has been highlighted as a
potential target, sending shares in
the company up 2.8 per cent
yesterday to value the FTSE 100
BY JAMES TITCOMB
constituent at 4.85bn.
The definitely tick the right
boxes, they are a very good business
and have cleared up a lot of their
problems, Liberum Capitals Ian
Whittaker said yesterday. People
are feeling a lot more confident
about free-to-air broadcasting and
there are people interested in the
UK market.
Potential buyers could include
RTL, the European broadcaster
owned by German media giant
Bertelsmann. The German company
is seeking to reduce its stake in RTL
in a bid to finance acquisitions.
ITVs shares last reached their
current level in 2007, when it was
believed to be a target for Apax.
ITV PLC
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118
114
116
122 p
120.30
18Feb
TUESDAY 19 FEBRUARY 2013
14
NEWS
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u
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fixed
grin
for ve years
Sony expects to sell 10m
PS Vitas this year
LIVE TV CONTINUES TO DOMINATE WATCHING
BRITISH TV VIEWERS CONTINUE TO WATCH LIVE BROADCASTS IN
OVERWHELMING NUMBERS, DESPITE THE RISE OF ON-DEMAND
INTERNET SERVICES, SMART TVs, AND DIGITAL VIDEO RECORDERS,
ACCORDING TO FIGURES FROM THE BROADCASTERS AUDIENCE
RESEARCH BOARD. JUST 1.2% OF TV WATCHING IS DONE VIA
ON-DEMAND SERVICES, WITH CONSUMERS STILL WATCHING
MORE THAN THREE AND A HALF HOURS OF LIVE TV PER DAY.
ALTHOUGH HALF OF
HOUSEHOLDS NOW OWN
A DIGITAL TV RECORDER
TWO-THIRDS OF VIEWING WAS ON
COMMERCIAL CHANNELS IN 2012,
WITH THE REST ON BBC
VIEWERS WATCH ON AVERAGE
3 MINUTES OF CATCHUP TV
PER DAY ON LAPTOPS,
TABLETS AND SMARTPHONES
OF TV IS STILL
WATCHED LIVE 90%
COMMERCIAL
CHANNELS
BBC
THE AVERAGE BRIT WATCHES
ROUGHLY THE SAME
AS A YEAR AGO
10 YEARS AGO THE AVERAGE WAS
4 HOURS AND 1 MINUTE
OF TV PER DAY
3 HOURS AND
34 MINUTES
OF TV PER DAY
EQUIVALENT TO THREE HALF-HOURS SHOWS A MONTH
THE PUBLISHER of Readers Digest
US magazine has filed for
bankruptcy in America in an effort
to cut its $465m (300m) debt pile.
RDA Holdings, the parent
company of the 91 year-old general
interest magazine, applied for the
measure on Sunday night in New
York, the second time the company
has done so in four years. RDA said
a restructuring would enable it to
cut around 80 per cent of its debts,
leaving it owing around $100m.
The restructuring, supported by
Wells Fargo, will see most of the
debt turned to equity.
RDA had also filed for
Readers Digest publisher files
for bankruptcy over debt pile
BY JAMES TITCOMB
bankruptcy in August 2009, citing
a fall in advertising revenues as its
readers shifted to the internet, but
emerged the year after a
restructuring. It had gone public
in 1990 but was sold to private
equity firm Ripplewood Holdings
in 2007 for around $1.6bn.
After considering a wide range
of alternatives, we believe this
course of action will most
effectively enable us to maintain
our momentum in transforming
the business, RDA chief executive
Robert Guth said.
Readers Digest, which features
recipes, financial advice and health
tips, claims around 25m readers in
the US.
IN BRIEF
Land Secs submits Oxford St plans
nLand Securities has submitted plans
for a new residential scheme on
Oxford Street, one of Londons busiest
shopping streets, the property giant
revealed yesterday. The proposals,
submitted to Westminster City
Council, will see Oxford House at the
east end of Oxford Street refurbished
and extended to provide 89
apartments, including studios and
penthouses, on the second to ninth
floors, above two levels of retail space.
Lend Lease posts 39pc profit rise
nLend Lease Corp, Australias largest
property developer, posted a 39 per
cent rise in first-half net profits
yesterday, boosted by land sales on its
flagship A$6bn (4bn) Barangaroo
Sydney waterfront development. The
company, which last month gained
planning consent for its 1.5bn
redevelopment of the Heygate Estate
in Elephant & Castle, said net profit
after tax was A$302.3m compared
with A$217m a year ago.
Grainger wins Newbury contract
nWest Berkshire Council and Network
Rail have appointed Grainger to
redevelop a 5.5 acre site in the centre of
Newbury, the residential landlord said
yesterday. The contract, worth between
45m-55m, will see Grainger work up
plans for a residential-led development
on the site, which lies between the
railway station and Market Street. It is
being funded as a private sector project
through Grainger, with the land owned
by the council and Network Rail.
A JOINT venture between engineers
Costain and Skanska has bagged a
construction contract worth 110m
to help Bond Street station cope with
the 70,000 extra passengers a day it is
expected to see once the Crossrail
line is completed.
The project will include building
two new ticket halls at the popular
West End shopping hub, as well
as providing step-free access to
both Underground and Crossrail
platforms.
Around 155,000 people travel
through Bond Street every day, with
traffic expected to rise to more than
220,000 once Crossrail is running.
The Costain and Skanska joint ven-
ture was awarded the initial con-
struction contract for the West End
Crossrail station in 2011.
Since 2010, the joint venture has
won seven Crossrail contracts, includ-
ing working on Paddington Station,
work around Eleanor Street and Mile
End shafts in east London and the
Pudding Mill Lane portal in the
Docklands.
Work on the Bond Street station
Costain snags
Bond St deal
with Skanska
BY CATHY ADAMS
improvements will start this month
and is expected to complete in
February 2017, ahead of Crossrails
opening the following year.
This contract further contributes to
the strength of our order book, which
comprises approximately 90 per cent
repeat business, Andrew Wyllie, chief
executive of Costain said yesterday.
Crossrail, which was finally
approved in 2007, will link
Maidenhead and Heathrow to the
west of London, to Shenfield and
Abbey Wood to the east, using 21km
of new tunnels under central London.
Shares in London-listed Costain
closed up 3.42 per cent yesterday at
272p.
Bond Street is getting an 110m makeover to cope with Crossrail traffic
Costain Group PLC
18Feb 12Feb 13Feb 14Feb 15Feb
276
272
274
266
264
268
270
278 p
272.00
18Feb
TUESDAY 19 FEBRUARY 2013
15
NEWS
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A REFRESHINGLY DIFFERENT APPROACH TO HOSPITALITY
HURLINGHAM 7
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INVESTORS at last believe the
European economy is on the right
track, with investment beginning to
flow back into the stricken continent,
surveys and data showed yesterday.
For the first time since 2010, a Fitch
survey showed more investors are
optimistic than pessimistic, as respon-
dents were swept up on a wave of
new year enthusiasm.
Market sentiment had been weak
over the past years with the sovereign
debt crisis raising fears that countries
like Greece and Spain could leave the
single currency, as well as uncertainty
over governments bailouts.
But markets appear to have calmed
down, particularly in light of
European Central Bank (ECB) promis-
es to buy bonds of bailed out nations.
A total of 51 per cent told Fitch they
now expect the Eurozone to muddle
through rather than break up, a
sharp improvement on the 31 per
cent in the July 2012 survey.
And ECB data showed an improve-
ment in investment flows into the
currency area.
Net portfolio investment inflows
came in strong in the year to
December, with a net 82.4bn
(71.1bn) in equity investments and
Investors start
to regain faith
in the Eurozone
BY TIM WALLACE
28bn in bonds and notes.
Those inflows more than outweigh
the net outflows of from money mar-
ket instruments and direct invest-
ment, leaving net investment flows at
13bn for the 12-month period.
But Fitch warned the growing signs
of recovery do not mean the crisis is
entirely behind the Eurozone.
Volatility will stay high, and
investor confidence will not be fully
restored until a tangible economic
recovery is underway, it noted.
Policy momentum towards a deep-
er economic and monetary union
needed to secure the Eurozones long-
term viability will probably slow in
2013. This is in part because market
pressures have receded, but also due to
other factors such as the approach of
German elections.
ECB boss Mario Draghi says the euros strength is pulling down inflation too far
IN BRIEF
France plays down budget worries
n The French government will wait
until the European Commission releases
new growth forecasts before updating
its borrowing plans, finance minister
Pierre Moscovici said yesterday. He did
not rule out adding to the 60bn cuts
planned, but did argue pushing back
the three per cent deficit target would
not be a serious concern. I dont think
our credibility will be damaged if
something exceptional intervenes,
Moscovici said. Credibility lies with the
structural deficit above all. It comes
after Prime Minister Jean-Marc Ayrault
last weak said weak growth was
pushing the deficit goal out of reach.
French GDP shrank 0.3 per cent in the
final quarter of 2012.
Natixis shares up on dividend plan
n French investment bank Natixis saw
its shares leap 22.47 per cent yesterday
after announcements it will pay higher
dividends to investors. The institution
had to be rescued in a government-
backed merger in 2009, but is now
planning to ownership changes that
would improve payouts for
shareholders. It plans to get rid of its 20
per cent stake in a group of savings
banks tied to its parent firm BPCE,
freeing up capital and allowing a one-
off 2bn (1.73bn) dividend. The bank
will shift the stake by selling 12bn in
investment certificates which gave it a
one-fifth ownership of the retail
lenders. It comes ahead of a three-year
plan to be unveiled later this year.
TUESDAY 19 FEBRUARY 2013
16
NEWS
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An epic 65 or 90 mile ride along iconic routes. Experience the highlights
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FOLLOW IN THE TRACKS
OF THE PROFESSIONALS
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g ational.or







. 292506 O CHARITY REG N







12-Month cumulated transactions
Current account balance
Net portfolio investment
Net direct investment
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2011 2012
2.0
3.0
1.0
-1.0
0.0
-2.0
-3.0
4.0 %of GPD
Draghi warns currency war may
hurt European growth this year
THE STRENGTH of the euro risks
harming economic growth and
pulling down inflation too far,
European Central Bank boss Mario
Draghi told European
parliamentarians yesterday.
The bank president hit out at talk
of a currency war between states
vying to push down their exchange
rates and improve their economies
competitiveness, insisting the
policies affecting currencies are
validly targeting growth.
But he also said he will keep a
BY TIM WALLACE
close eye on the euros value as it
could hurt the blocs emerging
economic recovery.
Most of the exchange rate
movements that we have seen were
not explicitly targeted, they were
the result of domestic macro
economic policies meant to boost
the economy, Draghi said.
In this sense, I find really
excessive any language referring to
currency wars.
The G20, which met in Moscow
last week, argues that exchange
rates must not be targeted explicitly,
with policies that devalue a
currency only used for other ends,
with the side effect of cheapening a
countrys exports.
Quantitative easing has played a
major part in driving down the
sterling, yen and US dollar, making
the euro more expensive.
And with Japans central bank
adopting a new, higher inflation
target, downward pressure on the
currency is set to increase.
We will have to assess in the
coming projections whether the
exchange rate has had an impact on
our inflationary profile, Draghi
said.
IN BRIEF
BAE wins $23m Oman contract
nDefence group BAE Systems
yesterday said it had snapped up a
$23m (14.8m) contract with the
Oman government. The deal will see
FTSE 100-listed BAE provide support
equipment, test systems and spares
for the fleet of F-16 aircraft operated
by US allies. BAE will develop and
deliver the equipment at its Fort
Worth plant by early next year. In
December, BAE signed a deal, to start
in 2017, with Oman to supply aircraft.
Amplats employees injured
nNine Anglo American Platinum
employees were injured yesterday
when they were hit by rubber bullets
fired by security personnel during a
clash between unions, the South
African-focused miner said yesterday.
The employees were fired at near the
Siphumele mine in the Rustenberg
area, outside Johannesburg. Three
security guards also sustained minor
injuries in the scuffle, but no-one was
fatally injured, the miner said.
Salamander in Thai well success
nSouth east Asia focused
Salamander Energy said yesterday
that its offshore Thailand drilling
programme was performing ahead of
expectations. The first four wells, of its
16 well-strong development
programme, have encountered
between 495m to 530m of good-
quality oil. In the year to date the
Bualuang field has produced 10,531
barrels of oil a day, and full-year
production is slated to be between
11,000 and 14,000 barrels a day.
DANISH brewer Carlsberg said yester-
day it had scrapped its profit margin
target for eastern Europe, blaming
volatile markets and raw material
costs, and dampening hopes the
region can offset sluggish demand in
western Europe.
The worlds fourth-biggest brewer
said that sales growth had stalled in
its key Russian market and the cost of
an efficiency drive in western Europe
would cap earnings growth this year,
sending its shares down as much as
seven per cent.
Several events, both within and
beyond our control, have and will con-
tinue to impact margins, Carlsberg
said as it scrapped its target for an
operating profit margin of 26-29 per
cent for eastern Europe by 2015. The
group made an operating margin in
the region of 21.7 per cent in 2011.
Carlsberg did give a longer-term tar-
get for average growth in adjusted
underlying earnings per share of
more than 10 per cent per year.
However, it forecast operating earn-
Carlsberg hit
by Russia sales
and rising costs
BY HARRY BANKS ings this year would reach only
around 10bn Danish crowns (1.16bn)
from 9.8bn in 2012.
Carlsberg said an efficiency drive in
western Europe, which includes cen-
trally managing all procurement, pro-
duction, planning and logistics, would
hurt in the short term. The revamp,
while helping operating margins in
the region in the long term, will cost
300-400m crowns this year, 400-500m
in 2014 and 500m in 2015, it said.
Fourth-quarter operating profit
before one-off items was 2.15bn
crowns, missing analysts average fore-
cast of 2.3bn.
BIOTECH firm Phytopharm said
yesterday its major drug hope for
treating Parkinsons disease had
failed in a clinical trial, the latest
in a string of firms to disappoint
after showing early promise.
Shares in Phytopharm fell more
than 80 per cent yesterday after it
said its drug, Cogane, showed no
benefit over placebo in the
treatment of more than 400
patients with early-stage
Parkinsons, a neurodegenerative
disease.
Chief executive Tim
Sharpington said he was
disappointed.
Cogane had demonstrated
encouraging efficacy in a wide
BY CITY A.M. REPORTER
range of industry standard pre-
clinical models but this promise
has not translated into clinically
meaningful efficacy, he said.
Phytopharm hoped its
compounds had the potential to
be a new class of therapy for
neurodegenerative diseases, motor
neuron disease and glaucoma.
Cogane demonstrated
neuroprotective effects in
preclinical models, the company
had said, with indications that it
could ease the symptoms and slow
the progression of Parkinsons, a
condition where part of the brain
becomes more damaged over time.
Phytopharm said yesterday it
had halted all research and
development spending while it
reviewed its drugs pipeline.
Analyst Paul Cuddon at Peel
Hunt said the result was a failure
for Phytopharms key asset, and he
attributed no value to the groups
remaining pipeline of drugs.
Shares in the firm lost 81 per
cent of their value yesterday,
closing at 1.9p.
Carlsberg
18Feb 12Feb 13Feb 14Feb 15Feb
580
690
600
560
570
610 DKK
567.50
18Feb
Phytopharm PLC
18Feb 12Feb 13Feb 14Feb 15Feb
10
8
4
2
6
12 p
1.9
18Feb
TNT Express, whose $7bn (4.5bn)
takeover by United Parcel Service
was blocked last month, reported a
fourth-quarter loss yesterday and
said it was looking to sell troubled
businesses in Brazil and China.
The collapse of the UPS deal
leaves the Dutch express delivery
firm having to confront a weak
European market on its own.
It reported a net loss for the final
quarter of 2012 of 148m, down
from a loss of 173m a year ago on
TNT Express planning emerging
market disposals on fresh losses
BY CITY A.M. REPORTER
flat revenue of 1.86bn, while
analysts had on average forecast a
net profit of 32.2m on revenue of
1.886bn.
There are many positive actions
we can take to improve profitability
and we look forward to providing a
full update on 25 March, said
Bernard Bot, interim chief
executive. He also said the company
was looking to make disposals
abroad. Divestment opportunities
for our domestic activities in Brazil
and China are being secured," he
said.
TUESDAY 19 FEBRUARY 2013
17
NEWS
cityam.com
TNTs takeover by US peer United Parcel Service was blocked last month
Barings
The asset management firm
has announced the
appointment of Angus
Woolhouse as global head of
distribution. Woolhouse has
over 20 years experience in
the asset management
industry, and has held senior
roles at Gartmore, Invesco
and HSBC Asset Management.
Colliers
The commercial real estate services company has
appointed Mark Emburey as a director in its national
offices team. He has previously worked at Jones Lang
LaSalle, and was most recently a senior director at
CBREs South East office agency.
RBC Wealth Management
Luke Dugdale has joined Royal Bank of Canada as a
director in its London-based UK private client wealth
management team. Dugdale has 10 years experience
in private banking and has held senior roles at Citi
Private Bank and UBS. He joins from Deutsche Bank
Private Wealth Management, where he was a senior
director in charge of the London ultra-high net worth
desk.
Aon Hewitt
The resource solutions firm has announced the
appointment of Dan Morris as a partner in its
investment consulting team. Morris joins from Towers
Watson, where he was a senior investment strategy
consultant. He has previously worked at PwC and
HSBC Actuaries and Consultants.
Faegre Baker Daniels
Katrina Cooper has joined the law firm as a senior
solicitor in its immigration and global mobility law
practice. Cooper has spent the past six years as a
senior solicitor and manager at Fragomen in London,
where she was responsible for its regional
coordination centre for immigration advice.
Citation
Chris Morris has been appointed chief executive of
the consultancy firm following its acquisition by ECI
Partners in December 2012. Morris joins from
LateRooms.com, where he was most recently
managing director.
Cooke, Young and Keidan
The litigation firm has announced the appointment of
Tina Asgarian as a senior associate. Asgarian was
previously at off-shore law firm Babbe, where she
worked in high value commercial litigation.
WHOS SWITCHING JOBS Edited by Annabel Palmer CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
Phytopharm plummets after
Parkinsons drug fails in trials
C
I
T
Y
A
M
C
A
R
E
E
R
S
.
c
o
m
TUESDAY 19 FEBRUARY 2013
18
cityam.com
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a) Tell yourself you must get on with
redecorating the bedroom
b) Sell the Wall Street index in anticipation
of a stock market crash
Rising US debt levels are scraping
the ceiling again, do you:
In association with
LONDONREPORT
B
RITAINS top share index fell
yesterday, with the mining
sector hit by low commodity
prices and a resurgence in
industrial unrest.
However, the index remained above
the key support level of 6,300, keeping
it around five-year highs.
The mining sector was the main drag
on the FTSE 100, losing 0.9 per cent
after copper fell to a three-week low.
Volatile copper miner Kazakhmys
was a top faller on the index, losing 2.8
per cent.
Miners specialising in gold fared lit-
tle better, with the commodity having
hit a six month low last session.
Fresnillo lost 0.7 per cent.
Base metal prices are not at the high
levels we expected for the start of 2013,
and thats hit miners. We dont see
that much high demand from the
Eurozone, US and Asia, Myrto Sokou,
senior research analyst at Sucden
Financial Private Clients, said.
Anglo American saw losses and vol-
ume pick up in afternoon trade after a
clash at Anglos Amplats platinum
mine in a labour dispute.
Anglo American shed 2.8 per cent,
among the top FTSE fallers. On Friday,
it had managed gains despite poor
earnings, as investors had hoped it had
put a torrid 2012 in which produc-
tion was marred by industrial dis-
putes behind it.
Miners had rallied since November
on hopes of renewed demand from
China as growth picked up after a peri-
od of political transition at the end of
last year.
Miners have done very well as a
China play, and theres an element of
unwind to that. Im pretty cautious on
Chinese infrastructure plays, so I think
theres more weakness in the miners
to come, Robert Quinn, chief euro-
pean equity strategist at Standard &
Poors Capital IQ, said.
At the close, the FTSE 100 was down
by 10.07 points, or 0.2 per cent lower,
at 6,318.19 points, with the materials
sector which includes commodity-
related stocks such as miners taking
6.6 points off the index.
The session was a quiet one, with the
US equity market closed for the
Presidents Day holiday. Only half of
the average 90-day volume was traded
across the index as a whole.
Lawmakers in the United States are
on holiday this week, leaving four days
for members of Congress to negotiate
a deal to avoid automatic budget cuts
due to kick in at the beginning of
March, which could crimp demand in
the worlds biggest economy, and
impact company earnings.
However, despite the sessions falls,
the FTSE did not test support at the
6,300 level, indicating that there was
still good underlying strength in the
index. After the best January since
1989, the FTSE has traded sideways
this month, dipping below 6,300 for
over a week in early February.
Low commodity
prices drag on
mining shares
CITY
YOUR ONE-
STOP SHOP
BROKER VIEWS AND
MARKET REPORTS
FTSE
18 Feb 12 Feb 13 Feb 14 Feb 15 Feb
6,300
6,275
6,325
6,350
6,375
6,400
6,318.19
18 Feb
DASHBOARD
Hangover from
Carlsberg hits
European stock
E
UROPEANshares dipped for a
third straight session yesterday,
led by Danish brewer Carlsberg
after disappointing earnings,
and some analysts expected further
weakness in the market in the near
term.
The worlds fourth-biggest brewer
posted a weaker-than-expected quar-
terly profit as sales stalled in key mar-
ket Russia and remained sluggish in
western Europe, sending its shares
tumbling 5.8 per cent.
Trading volume in Carlsberg was
robust, at almost five times its 90-day
daily average.
The FTSEurofirst 300 closed down
0.2 per cent at 1,159.29, after a lacklus-
tre session with Wall Street closed for
Presidents Day and retreating further
from a two-year closing peak of
1,177.79 scaled at the end of January.
Trading volume on the index stood
at just 68 per cent of its 90-day daily
average.
Some strategists reckoned the
recent sell-off was more of a pause
than the start of a serious correction,
following a rally that has propelled
the FTSEurofirst 300 some 22 per cent
above lows seen last June, and that
any dips should be seen as a buying
opportunity.
Theres every chance that markets
could go a little bit lower in the short
term, Henk Potts, market strategist at
Barclays, said, although he was more
confident further out. I still think in
the medium to long term the funda-
mentals remain incredibly supportive
around corporate profitability,
growth, around M&A activity, health
of balance sheets, and undemanding
valuations.
The Eurozones blue-chip Euro
STOXX 50 index, however, ended up
0.1 per cent at 2,616.65. It stabilised
after two sessions of losses, which
drove it below a support line drawn
from its low in July through its
trough in November.
BESTof theBROKERS EUROPEAN
REPORT
ASSOCIATED BRITISH FOODS
UBS has a buy rating on the clothing-to-sugar conglomerate and has raised its
target price from 1,705p to 2,000p as currency tailwinds lift the firm. The broker
also expects Primark to accelerate further this year, which combined with lower
restructuring costs in grocery and ingredients should help deliver double digit
earnings growth in 2013.
Associated British Foods PLC
12Feb 13Feb 14Feb 15Feb 18Feb
p
1,820
1,810
1,770
1,760
1,790
1,780
1,800
1,815.00
18 Feb
WM MORRISON
WM Morrisons decision to buy 49 ex-Blockbuster stores, following on from their
purchase of seven ex-Jessops stores, could not save the supermarket from being
downgraded to sell by Shore Capital. Shore said recent poor trading figures, which
prompted the rating cut, were not down to Morrisons lack of presence online or in
convenience stores but deficiencies in its core business.
WM Morrison Supermarkets PLC
12Feb 13Feb 14Feb 15Feb 18Feb
p 266
264
262
258
260
263.90
18 Feb
DARTY
N+1 Singer boosted its recommendation on Darty, the electronics retailer, to buy,
after a 30 per cent slump in the firms share price since the third quarter last year.
Though the broker also slashed its target price over that period, by nine per cent,
the bigger fall in the share price leaves space for appreciation to the current 60p
target.
Darty PLC
12Feb 13Feb 14Feb 15Feb 18Feb
p 54
52
50
46
44
48
46.75
18 Feb
To appear in Best of the Brokers, email your research to notes@cityam.com
M
ILTON Friedman once said,
I am in favour of cutting
taxes under any
circumstances and for any
excuse, for any reason,
whenever its possible. I agree,
particularly for taxes on income.
There is a strong moral case for easing
the burden, especially now the cost of
living is rising above nominal wages.
Yet Ed Milibands suggestion to
reintroduce the 10p income tax rate
is not the sort of tax cut our economy
needs. First, lets look at the specifics.
Hed finance the 10p rate with the
proceeds of a mansion tax targeted on
properties worth 2m or more, and
would restrict the new tax band to
basic rate taxpayers. As one
newspaper put it, this means taking
I
TS been described as the $4.2
trillion (2.7 trillion) opportunity.
According to the Boston
Consulting Group, there will be
3bn internet users globally by 2016.
If it were a nation, the internet-based
economy would rank in the worlds top
five. And the UK sits at the forefront,
with 8.3 per cent of GDP now online
the highest proportion in the G20.
London has also emerged as a global
hub for technologists to start their busi-
nesses. There are at least 20 home-
grown break-out companies in this
category in the UK today. Yet the vast
majority of institutional investors are
missing out. Those leveraging this part
of the economy are early-stage investors
and technology angels. More recently,
private equity firms like KKR, Permira
and Silverlake have become involved.
But many young internet businesses
are now maturing into significant com-
panies, growing by 30, 60, or 80 per
cent per annum. Many are highly prof-
itable they scale quickly and efficient-
ly. Rightmove, for example, has
disrupted the property advertising mar-
ket, and its profit margins sit at levels
cityam.com/forum
We need a fresh way
of analysing ecommerce
its hard to accurately
assess performance
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

20
TUESDAY 19 FEBRUARY 2013
ROBIN KLEIN
Britains Facebook is already here
but we lack the tools to identify it
rarely seen by publishers before.
Investors have benefited from
Rightmove and the few other pure
internet businesses that have gone pub-
lic (like MoneySupermarket and Asos).
But these are the exceptions.
Most home-grown internet success
stories either decide not to go public
and sell themselves too early to a large
US corporation, or they seek to list on
Nasdaq, tempted by higher valuations.
Thats a great pity for the UK.
Part of the problem is that many
potential investors are gun-shy. A once-
bitten attitude lingers from the 2000
internet and telecom bubble, and there
are fears that some firms that have
come to market have been overpriced.
But the most significant dimension is
insufficient knowledge among fund
managers about how these new com-
panies operate, and the nature of their
profit dynamics.
New business models need fresh ways
of analysing raw data. Take retail. One
of the primary means of analysing a
retail business is its sales productivity.
A company is benchmarked against
another on a sales per square foot basis.
But there is no concept of sales per
square foot online. Nor is there one of
sales per page you can have an infi-
nite number of pages at almost zero
cost. Should Asos, for instance, be listed
as a retailer or an internet company?
The metrics required to analyse an
ecommerce company are different.
Instead of sales per square foot, you
might consider on-site conversion
rates, the lifetime value of the cus-
tomer, the cost of customer acquisition,
and time spent on site. If I was an equi-
ty analyst without in-depth knowledge
of how a digital company works, it
would be impossible to assess accurate-
ly how that business was performing,
how it compared to its peers, or
whether to advise clients to invest in it.
The best way of encouraging invest-
ment houses to recruit internet-special-
ist analysts would be for European
stock markets to create a separate clas-
sification for internet companies. This
classification could encompass any
company doing the majority of its busi-
ness online, while including incum-
bent companies making the transition.
Not only would this shine a much-
needed light on the internet economy,
it would generate specialist coverage of
the internet category to the benefit of
investors.
I welcome the London Stock
Exchanges proposals to launch a new
technology segment to kick-start
Londons market for high growth
firms. But this is not enough in itself.
Investors must bring their best compa-
nies to market, and the investment
community must develop its analytical
skill in the sector and start investing.
The pipeline of companies capable of
listing over the next couple of years is
very long indeed. It doesnt just include
UK firms, but European, Israeli and
Russian businesses, many of which
would choose to list in London if only
they thought it had an established rep-
utation for internet floatations, and
that there were investors who were
ready to invest in the sectors stock.
For years weve heard the same ques-
tion asked: why cant Britain produce
the next Google or Facebook? The
answer is we can. We are already seeing
dozens of home-grown companies scal-
ing rapidly. But faced with the choice of
selling to a US giant or staying inde-
pendent, many are going to take the
first option. Unless, that is, we develop
the capital markets and specialism
among analysts and fund managers
to persuade them to stay.
Robin Klein is venture partner at Index
Ventures and founder of The Accelerator
Group.
large amounts of money from a small
number of people and giving a tiny
amount of money to a large number
of people. Our research last year
estimated that a mansion tax would
raise around 1bn. Others have
suggested 1.7bn. This could fund a
very small 10p band of about 1,000
over the personal allowance,
meaning a tax cut of 100 per basic
rate taxpayer per year (2 per week).
This is not the full story, however.
Interaction with benefit withdrawal
means the actual effect on peoples
net after tax income would be just
67p per week. Labour has also hinted
that the mansion tax
implementation would require a full
property revaluation of council tax
bands. Further still, restricting the
10p tax rate cut to basic rate
taxpayers would mean dragging
more people into the 40p tax band.
What about the general principle
of reintroducing the 10p rate? The
idea has also been pushed by Tory MP
Robert Halfon, who wanted it to
operate over a much larger range
than Miliband (9,440 to 12,000). Yet
economically, continuing to raise the
personal allowance by the same cost
has a much better targeted benefit to
poor income workers, and would
avoid complicating the tax system
further. The rough 6bn cost of
Halfons variant on Milibands
proposal, for example, could be used
to raise the personal allowance to
10,620. This would see someone on
11,000 pay just 76 in income tax (20
per cent of 11,000-10,620) compared
to 156 under his 10p proposal (10 per
cent of 11,000-9,440).
Why then is the 10p rate pursued?
The cynical answer is the politics.
Some Tories like Halfon want a tax
cutting policy unique from raising
the personal allowance, which many
credit the Lib Dems for pursuing.
Similarly, Miliband wants a tax policy
unique from the coalitions.
But when Ive pushed people on
both sides for a more principled
justification, they usually say: its
good to keep people contributing to
the system but to cut their burden.
This is a bizarre argument, not least
because that principle has already
been surrendered by the existence of
a personal allowance at all. And given
Conservative party chairman Grant
Shapps has now hinted the Tories will
instead raise the personal allowance
further, it gives the party a powerful
message: Labour wants to tax low
income workers. The Conservatives
want to take them out of tax
altogether.
Ryan Bourne is head of economic
research at the Centre for Policy Studies.
You can follow him on Twitter @RyanCPS
FRONTLINE
ECONOMICS
RYAN BOURNE
The 10p rate is pure politics lets raise people out of income tax altogether
In association with
ST ANDRE
Up to 3 ights a day to Dundee from London City Airport. From 169 rtn.
SSTAND N R D E RE S
Up to 3
STT
ights a day
AN
to Dundee f
D N
om London r
R D
t. y Airpor Cit
E R
om r . F 9 16
E
9 rtn.
21
TUESDAY 19 FEBRUARY 2013
The capitals roads
[Re: Congestion charge after ten years:
its time to be bolder, yesterday]
Baroness Valentine is right that the
congestion charge scheme could be
bigger, bolder and more sophisticated. But
this is unlikely to be acceptable to
motorists, or to deliver sustainable
improvements to the quality of roads in
London, given our existing governance
structures. Car drivers know they already
pay a lot through motoring taxes (four
times what is spent on roads). And often
all they get is poorly-maintained roads
and bottlenecks. Major projects begin and
end according to local and central
government electoral cycles. The Thames
Gateway Bridge/Silvertown Tunnel is just
the latest example of a long line of similar
projects in London. The capitals strategic
roads should instead be transferred to a
new commercial company, which can use
parking, lane rental and congestion
charging revenues to deliver improved
services to users. London could encourage
the private sector to develop self-funding
new toll routes, like the tunnels Valentine
envisages. Finally, the city could propose a
London-wide congestion charge. Since
this would entail an end to direct funding
by the Treasury, drivers should be
compensated by being offered a partial
refund in fuel tax at the pump. Motorists
who drive on uncongested roads should
feel that they are not simply being taxed
more.
Scott Wilson
A
MONG the ten point plan
published yesterday by the
Academy of Medical Royal
Colleges in its prescription
for the nations medical
crisis, the headline-grabber was a
tax on sugary drinks. An additional
20 per cent charge would be an
experimental measure, looking at
price elasticity, substitution effects,
and to what extent it impacts upon
consumption patterns. The mealy-
mouthed terms in which the
proposal was couched reflects the
fact that those who have seriously
looked at the idea realise it would
have little or no beneficial effect.
Even the report itself notes that evi-
dence from France, which has a tax
of five cents per litre, and Hungary,
which has a junk food tax, is hard-
ly overwhelming. It could also have
mentioned the failure of Denmarks
tax on food containing more than
2.3 per cent saturated fat. This didnt
change diets. It encouraged Danes to
hop across to Germany to buy their
butter. And whatever the authors
claim now, if previous attempts to
regulate behaviour are indicative, a
20 per cent levy would just be for
starters.
There are also good reasons to
believe the health effects would be
minimal. If a sugary-drink tax were
introduced, some would react as
intended: they would consume less
or move to a sugar-free alternative.
But others would spend less on other
products possibly the foods that
doctors regard as desirable to carry
on consuming their favourite drinks.
Many more will switch brands. At
Tesco, a two-litre bottle of Coca Cola
costs 1.98. A two-litre bottle of
Tescos own-brand cola costs 57p.
That differential is far bigger than
any soda tax is likely to be. In 2011,
professor Jack Winkler noted in the
British Journal of Nutrition that con-
Would an EU cap on bankers pay damage
Londons ability to attract the best talent?
YES
The latest EU proposals to fix bonus rates will strangle the life out of
the City of London. Perhaps that is part of the intention: other EU
financial centres envy Londons superiority. Pay policy is a key part
of attracting and retaining the top-rate staff that City firms need to
run their businesses and give customers good service. Firms
differentiate their pay scales to attract the particular kinds of skills,
talents and abilities they require. Brussels bureaucrats simply do not
understand what they are regulating and what the effects will be.
Finance is an up and down business. So bonuses are a key way to
keep down core pay costs in the bad times and reward loyal workers
in the good times. They are a key management tool, motivating staff
to reach targets and reward commitment. City firms may not always
pick the right targets, but their commercial instincts are probably
better than the meddling of any bureaucrat.
Eamonn Butler is director of the Adam Smith Institute.
Eamonn Butler
NO
Paul Chapman
Any EU-wide limit on bankers remuneration will, in likelihood,
create anguished complaints of business prevention , restraint of
trade and anti-capitalist tendencies. But in reality, it will not
cause too much physical upheaval. Most bankers either do not earn
enough, or are not sufficiently mobile, to allow them to move to an
appropriate location outside the EU like New York or Hong Kong.
Indeed, such is the shrinkage within global financial services hiring
at present, there is no guarantee that even a senior banker could
move to one of these locations unless there was a strong need
within their existing company, or they had specific skills in demand
in those places. Of course, the size of the cap is pivotal. Theres a
reason remuneration is also termed compensation. If the cap is
sufficiently harsh, it could force some people to move abroad for
more junior roles than they might have otherwise accepted.
Paul Chapman is managing director of Hornby Chapman.
Sugar drinks levy:
More interference
wont end obesity
sumers regularly pay 950 per cent
extra for a well-known brand. A 20
per cent levy is tiny by comparison.
The effect on health is likely to be
even smaller. First, according to a
2011 study by Zenith International,
61 per cent of UK soft drinks con-
sumption is products that contain
no added sugar. Secondly, sugary
drinks are just one among a myriad
of factors that affect the size of a
waistline. While the consumption of
soft drinks containing added sugar
fell by 9 per cent over the last ten
years, incidence of obesity has
increased by 15 per cent.
Campaigners obsession with fizzy
pop reflects the fact that this is a pol-
icy that just might get taken up par-
ticularly by a government desperate
to grab more tax.
There is also a more fundamental
issue: is it the place of the state to
influence such basic choices as what
we drink? The freedom to make our
own choices even wrong ones is at
the core of being a free citizen.
Underpinning the idea of lifestyle
taxes is the view that an enlightened
caste in society must make decisions
on our behalf because we are too
ignorant to decide for ourselves.
The medical profession would be
better served by figuring out effective
ways of treating the relatively small
minority who are really seriously
overweight. Leave the rest of us to
enjoy our little indulgences in peace.
Rob Lyons is author of Panic on a Plate:
How Society Developed an Eating Disorder
www.paniconaplate.com
ROB LYONS
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S
Just ten London boroughs pay some 1.1bn
in stamp duty payments each year. Thats 26
per cent of UK total.
@LucianCook
Labours 10p tax gimmick is silly. Those
paying the 10p rate now pay no income tax
at all. We need simpler, flatter, lower taxes.
@DanHannanMEP
A tax on soft drinks would mean more
people drinking more diet drinks. And
theyre not exactly better for you.
@petercohen
The Conservative party doesnt deserve to
win another majority until its absolutely
focused on the rising and striving classes.
@TimMontgomerie
BEST OF TWITTER
LETTERSto the editor
WE WANT TO HEAR YOUR VIEWS
E: theforum@cityam.com | Comment: cityam.com/forum | @cityamforum
TUESDAY 19 FEBRUARY 2013
22
cityam.com
W
ILL 2013 be the year the bulge
bracket banks have been
waiting for? Since 2008,
headline-grabbing mergers
and acquisitions (M&A) deals have been
few and far between. But the flurry of
activity at the start of February, the
most since 2005, suggests things may
be about to change.
Last week, Warren Buffetts Berkshire
Hathaway teamed up with 3G Capital,
the private equity firm backed by
Brazils richest man Jorge Paulo
Lemann, in a move to take ketchup
maker Heinz private in a $23bn
(14.9bn) cash deal. This followed Dell
chief executive Michael Dells plans to
clinch a $24.4bn deal to take the
worlds third largest PC manufacturer
private. Add last Thursdays $11bn
merger between American Airlines and
US Airways, forming the worlds
biggest airline, and Liberty Globals
$23.3bn Virgin Media deal, and were
up to $81.3bn worth of M&A activity in
the space of two weeks.
RETURN TO LIFE
So why is Wall Street M&A activity
returning to life? First, thanks to cen-
tral banks keeping interest rates at arti-
ficially low levels, many companies are
sitting on cash that yields very little,
but have access to cheap debt. We have
seen this drive a flurry of overseas M&A
activity by Japanese firms, and it seems
Wall Street is following suit. But these
conditions have been in place since the
Fed unleashed the first wave of its
quantitative easing programme in
November 2008. Why has it taken until
now for companies to start looking for
acquisition targets?
When the recession first hit, firms
aggressively slashed costs and cut their
workforce. But many have now run out
of fat to trim. With debt so cheap, deals
seem the most attractive way of appeas-
ing shareholders looking for growth.
And it makes sense to go on the hunt
Traders can profit from
the flurry of mega-deals
TRADING MANAGEMENT WEALTH
that the predator has paid over the
market rate. By going long on the
acquired company and short on the
predator, you stand to profit from both
sides of the deal.
Spread betters should, however, tread
carefully when trying to arbitrage M&A
deals in this manner. Your two bets
leave you twice as exposed to losses
should the deal go awry.
now, while markets are at the bottom
of the cycle.
HOW TO PROFIT
The key to profiting from an M&A deal
with spread betting is a pairs trade. This
is because you will often see shares in
the acquiring company fall, while those
of the acquired company shoot up
particularly when there is a suspicion
RHETORIC RARELY
SHIFTS CURRENCIES
DAVID BUIK
VIEWFROM THE CITY
D
URING the first Obama
administration, Treasury
secretary Tim Geithner
took as many
opportunities as possible to
bleat about China refusing to
devalue its currency the yuan
or the renminbi against the
dollar. The US and other
countries were nursing
gargantuan trade deficits with
China.
Clearly, the Chinese economic
star was then in the ascendancy.
And when such huge trade
balances prevail, it is unrealistic
and nave to think that political
rhetoric alone can persuade a
country of Chinas immense
commercial influence to bow to
US bully-boy tactics. The
relationship between the US and
China is more cordial than it
once was, but China is not
known for being a philanthropic
nation. Until there is massive
global coordination to iron out
these enormous imbalances, the
political will to manipulate
currencies more equitably will
only be of peripheral influence
at best.
Some of the rhetoric reputed
to have emanated from G20
politicians in Moscow about the
so-called currency war beggars
belief. I have never heard such
claptrap as that attributed to
French President Francois
Hollande. He begged for a
medium-term target for the
euro. Clearly Hollande has never
heard of markets and the fact
that they are always right. He
should perhaps reflect on the
case of Japan.
Japan has been in trouble since
1987, when the Nikkei stood at
38,000, and all its asset classes
were hopelessly over-valued.
Today the Japanese index stands
at 11,000 plus change, and that is
after a 25 per cent rally in the last
year. Recent upward movements
come courtesy of monetary
action proposed by the
opposition party, and then
adopted by the current Prime
Ministers government. In other
words aggressive and unabashed
loosening of monetary policy has
seen the yen drop by 20 per cent
against the dollar in recent
months, thus stimulating exports
across the globe.
When 125m people live along
the eastern and southern coast of
a country that is basically
mountainous with most
inhabitants living in very small
dwellings there is a limit to
how many goods consumers can
buy. There is nowhere to put
them; so stimulating wealth from
exports is fundamental.
The Japanese government has
achieved the start of its goal. Just
look how the likes of Toyota,
Honda and Nissan have
recovered since the tsunami that
struck in 2011. But the lesson is
to never give the market
rhetorical instructions. Countries
will decide their own destiny.
Firms are putting low yielding cash to good use, writes Craig Drake
Warren Buffett tastes quality in his proposed acquisition of Heinz
Chief Market Strategist, Cantor Index
THE TIPSTER
KINGFISHING FOR A FIX
T
HE challenging consumer
backdrop doesnt augur well for
Kingfisher, and this will show
when the retailer issues its trading
update on Thursday. Shares have
traded within a range between 270p and
290p for the last year. But some in-house
refurbishments, like improving cost
structures and gross margins, may be just
the fix it needs. ETX Capital quotes a price
of 271.08p-271.72p.
One retailer in much better shape is
Sports Direct International. Recent
sales have comfortably outperformed
competitors. The sports retailer is now
building on its international presence, and
adding new units. Although valuations
are high, currently around 23 times
earnings, double-digit sales growth
should score a few points with investors.
GFT quotes a price of 425.57p-427.03p.
YOGESH CHANDARANA
CNBC
COMMENT
EUNICE YOON
The Year of the Snake is expected to be a prosperous one for the Chinese economy
support the economy. But like four years
ago in the aftermath of the financial cri-
sis, economists fear China is hooked on
credit.
The main concern is that credit is
fuelling overcapacity on the back of ram-
pant corporate investment, Mark
Williams of Capital Economics wrote in
a research report. The most recent data
[in January] has added to these con-
cerns.
Frederic Neumann, Asia economist
with HSBC in Hong Kong, believes the
economy has turned a corner but could
run out of steam amid rising inflation
fears. We count on the monetary
impulse to carry growth for a while
longer, Neumann said of the region in a
recent research note. But its exactly this
My pick: Short Aussie-dollar and sterling-dollar
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few days
As European currencies have come under intense pressure
recently, and the yen resumed its slide after a tepid response
from the G20 nations last weekend, the dollar continues to
shine. Both the Bank of England and Reserve Bank of
Australia release minutes from their latest policy meetings
this week. And given that both central banks are maintaining
a dovish outlook, I still favour being short on Aussie-dollar
and sterling-dollar.
ANALYST PICKS
Uncertainty threatens China growth
C
HINA is back at work after a
week-long vacation for the
Lunar New Year. Around the
holiday, many Chinese, eager
to learn more about the year ahead,
visit a feng shui master to see if the
new year will bring good fortune.
Veteran Beijing-based soothsayer
Chen Shuaifu, who regularly advises
Chinese companies, predicted the
Year of the Snake would be a prosper-
ous one for China. The year 2013, he
said, should bring rapid economic
development for the nation with
GDP growth at 9 per cent. Though
most see astrological predictions as
only a bit of good fun, there is reason
to believe the Chinese economy will
recover. Already, the data is indicat-
ing a rebound. Factory activity is pick-
ing up. Inflation, though rising, is
still within the governments targets.
Chinas stock markets are nowhere
near as dire as they were at the end of
2012.
However, concerns are rising about
the sustainability of growth. A flurry
of investment projects has helped
STRATEGIST
ILYA SPIVAK
My pick: Short euro-Swedish krona and sterling-dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
I expect the Swedish Riksbank to keep rates on hold in 2013,
and the European Central Bank to begin easing as recession
lingers. Therefore, I went short on euro-krona in December. I
added to this position in January. My initial target price of
Kr8.4994 has been met, and I am now aiming for a price of
Kr8.4150. I also went short on sterling-dollar at $1.5662, as
the currency pair began its downtrend. The pair continues to
slide, and I am initially targeting a price of $1.5440.
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Short dollar-yen, euro-dollar and euro-Aussie
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
As traders digest a deepening recession in the Eurozone, the
European Central Bank needs to respond to help engineer
growth, or risk a return to the crisis days. Therefore, Ill be
keeping an eye on euro-dollar for breaks below $1.3250, and
for the euro-Aussie to fall below Au$1.30. Dollar-yen is also in
overbought territory now, so I will be watching for breaches
of the current support level, around the 92 mark, to go short
on the currency pair.
that also reveals the regions vulnera-
bility.
Add to this uncertainty over Chinas
new leadership. The incoming admin-
istration is officially installed in March.
Already public pressure is building for
the new president Xi Jinping to push
through reforms. Xi has promised to
root out corrupt officials and bridge
the wealth gap. He has even called on
Communist Party cadres to scale back
on the national toasting drink, the pre-
mium spirit moutai. However, no one
is sure how willing Xi is to reform a sys-
tem that has supported him, or
whether the calcified vested interests
will allow his government to address
the increasing calls for change.
Xi was born in 1953 the Year of the
Snake. According to tradition, luck is
not on your side in the year of your
zodiac sign. Feng shui master Chen,
though, through a myriad of ancient
techniques, has determined that the
nations leader is exempt from this
belief fortunately for Xi and China.
Eunice Yoon is senior correspondent at
CNBC.
TUESDAY 19 FEBRUARY 2013
23
TRADING
CURRENCY STRATEGIST
CHRIS VECCHIO
S
OMEWHERE IN the latest
Porsche Cayman are 12
loudspeakers. How theyve
squeezed them in is anyones
guess. Its the fastest concert hall in
the world, according to Hans Jrgen
Whler, chief of mid-engined cars at
Porsche. Despite the fact no one is
going to buy this car for its audio
system, Whler can barely contain
his excitement, only just resisting
the urge to headbang during the
press presentation.
As I was driving the latest Cayman
S through the mountain roads
around Faro and at the Autodrome
Algarve racetrack, it hadnt once
occured to me to turn on the audio
system. Not with the howling racket
that is coming from the engine. And
make no mistake: the noise is the
first thing you notice. The second is
the speed.
The Cayman has been the car to
beat since its introduction in 2005.
Porsche has its work cut out to better
a car that many people believe is
already the purest Porsche currently
in production. The Cayman only had
itself to compete with.
The most obvious improvements are
aesthetic. Its predecessor was awk-
ward looking. This one is a sports car
youd buy for looks alone. For the first
time, the Cayman rivals the iconic
911 for looks. It might even be the
best-looking Porsche on the market.
Its also in better physical shape.
Weighing 30kg less than its predeces-
sor, it is more powerful, has a body
shell that is 40 per cent stiffer and is
now almost twice as rigid as the lat-
est Boxster. Stronger, lower, longer
and wider, this Cayman promises
even better handling.
I drove the Cayman S, with its 3.4-
litre, six-cylinder Boxer engine (pro-
ducing 321bhp), in both the
six-speed manual transmission and
seven-speed PDK automatic transmis-
sion versions. Gear changes are easi-
er and quicker using the PDK version
than they are using the manual. The
PDK version is already proving a pop-
ular choice with Porsche buyers as
its a faster, cleaner and more eco-
nomical option. Purists may bark
that a manual gearbox gives a more
authentic driving experience, but
the PDK system is now so good that
arguments against it are increasingly
less convincing.
Over two days in Portugal, the
Cayman S proved to be an exception-
ally enjoyable ride. With an accelera-
tion time of zero to 62mph in just 4.7
seconds (my test cars were fitted
with the Sport Chrono package),
Porsches mid-engined, rear-wheel
drive coupe certainly feels quick. But
its on the bends that it is most
impressive. Through twisting moun-
tain roads its a wonderful car to
drive quickly. It is agile, well-bal-
anced and has a lot of grip.
The cockpit is well put together
and essentially the same as the latest
Boxster and 911 models. Its comfort-
able, stylish and ergonomic. Best of
all, with 425 litres of stowage room
in the nose and the rear, theres
enough space for a week away.
The only difficult question is
whether you should buy the 911,
which is still very popular among
City men, instead. I say save yourself
thousands and go with the cheaper
Cayman S. Its easier on the eye and
the Burmester sound is pretty
impressive too.
The new Cayman is beter looking than its predecessor.
This new Porsche sounds like a hit
With a new and improved appearance and quality audio system, the latest model certainly rivals the iconic 911
24
TUESDAY 19 FEBRUARY 2013
LIFE&STYLE
cityam.com
MOTORING
CAR TALK
RIVALS WORTH CONSIDERING...
Audi TT RS Plus 48,945
The Audi TT has beefed up. The TT RS Plus packs a 355bhp 2.5-litre
turbo-charged five-cylinder engine that sends power to all four
Quattro-driven wheels via a six-speed manual transmission. It takes 4.1
seconds for the 0-62mph sprint and tops out at 174mph.
BMW Z4 sDrive35i Roadster M Sport 42,850
Available with manual or seven-speed double clutch automatic
transmission, the BMW Z4 sDrive35i Roadster M Sport is powered by a twin-
turbocharged 3.0-litre, 306hp engine, which can hit 62mph in 5.1sec and on
to 155mph. Its folding tin top means its a coup and a roadster.
Jaguar F-Type S 67,500 (est)
The coup version of Jaguars F-Type roadster is on its way. Expect it to have
similar figures to this roadster. The 375bhp 3.0-litre V6 F-Type S with eight-
speed quickshift can hit 62mph in 4.9 seconds and on to 171mph. Its
expensive the price pushes it towards 911 territory but its British.
BY RYAN BORROFF
THE VERDICT:
DESIGN hhhhh
PERFORMANCE hhhhh
PRACTICALITY hhhii
VALUE FOR MONEY hhhhi
THE FACTS:
PORSCHE CAYMAN S
PRICE: 48,783
0-62MPH: 4.7 secs
TOP SPEED: 174mph
CO2 G/KM: 188g/km
MPG COMBINED: 35.3mpg
25
TV & GAMES
cityam.com
T
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S
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BBC1
SKY SPORTS 1
7pmSporting Greats 7.30pm
Soccer Special 10pmRevista De
La Liga 11pmFootballs Greatest
Managers 11.30pmUEFA
Champions League Goals
12.30am-6amLive International
One-Day Cricket
SKY SPORTS 2
7pmLive UEFA Champions
League 10.15pmSuper League
Backchat 10.45pmSporting
Greats 11.15pmPool 12.15am
Super League Backchat 12.45am
Football Gold 1amRevista De La
Liga 2amFootballs Greatest
Managers 2.30amFootball Asia
3amUEFA Champions League
Goals 4amRevista De La Liga
5amFootballs Greatest Managers
5.30am-6amFootball Asia
SKY SPORTS 3
7pmBritish Basketball 9pmPool
10pmPoker 11pmSports
Unlimited 12amBritish Basketball
2amPoker 3amIRB Sevens Show
3.30amBritish Basketball
5.30am-6amSporting Greats
BRITISH EUROSPORT
7pmBoxing 9pmAlpine Skiing
11pmBiathlon 12am-12.30am
Bobsleigh
ESPN
7pmESPN FC Press Pass:
Football-related debate. 7.30pm
ESPN Kicks: Serie A 7.45pm
NASCAR Now8.15pmNBA
Basketball: The All-Star Game.
9.15pmNHRA Special 2012
Thrills and Spills 9.45pmESPN
Kicks: Bundesliga 10pmESPN
Kicks: FA Cup 10.30pmESPN
Game of the Week 11pmESPN FC
Press Pass 11.30pmCopa
Libertadores 12amESPN Kicks:
Serie A 12.15amESPN Kicks:
Bundesliga 12.30amPlanet Speed
1amPremiership Rugby Union
2amUFC: The Ultimate Fighter
3am-6amNHRA Drag Racing
SKY LIVING
7pmCriminal Minds 8pmBones
9pmCSI: Crime Scene
Investigation 10pmCriminal
Minds 11pmJerry Bruckheimers
Chase 12amBones 1am
Caribbean Cops 1.50am
Supernatural 2.40amMedium
3.30amBones 4.20amNothing
to Declare 5.10am-6am
Motorway Patrol
BBC THREE
7pmTotal Wipeout 8pmThe Year
of Making Love 9pmSun, Sex and
Suspicious Parents 10pm
Pramface 10.30pmEastEnders
11pmFamily Guy 11.45pm
American Dad! 12.30amSun, Sex
and Suspicious Parents 1.30am
Pramface 2amWay to Go 2.30am
Worlds Craziest Fools
3am-3.55amSun, Sex and
Suspicious Parents
E4
7pmHollyoaks 7.30pmHow I Met
Your Mother 8.30pmThe Big
Bang Theory 9pmDerren Brown:
Apocalypse 10pmThe Cleveland
Show10.35pmThe Inbetweeners
11.05pmRude Tube 12.10amThe
Big Bang Theory 1.05amHappy
Endings 1.35amThe Ricky Gervais
Show2.05amThe Cleveland
Show2.25amDerren Brown:
Apocalypse 3.20amThe Secret
Life of Us 4.10amHappy Endings
4.30am-6amMade in Chelsea
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 9pmStorage Wars 10pm
Grave Trade 11pmStorage Wars
11.30pmPawn Stars 12am
Storage Wars 1amGrave Trade
2amAmerican Pickers 3amIce
Road Truckers 4amAmerican
Restoration 5amPawn Stars
5.30am-6amStorage Wars
DISCOVERY
7pmBear Grylls: Born Survivor
8pmIce Pilots 9pmWheeler
Dealers 10pmYukon Men 11pm
Auction Hunters 11.30pmAuction
Kings 12amWheeler Dealers 1am
Yukon Men 2amSons of Guns
3amWheeler Dealers 3.50am
Yukon Men 4.40amAmerican
Chopper: Senior Versus Junior
5.30am-6amMeerkat Manor
DISCOVERY HOME &
HEALTH
7pmBaby Whisperer 8pmJon
and Kate Plus 8 9pmMy Strange
Addiction 10pmA Haunting 11pm
A&E 12amMy Strange Addiction
1amA Haunting 2amA&E 3am
Jon and Kate Plus 8 4amBaby ER
5am-6amBringing Home Baby
SKY1
8pmA League of Their Own 9pm
Stella 10pmFILMMoney Train:
Action comedy, starring Woody
Harrelson. 1995. 12.10amArmed
and Dangerous: Ultimate Forces
1.10amRoad Wars 3amTerra
Nova 4am-6amStargate SG-1
BBC2 ITV CHANNEL4 CHANNEL5
S
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&
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6pmBBC News
6.30pmBBC London News
7pmThe One Show
7.30pmEastEnders: BBC News
8pmHolby City
9pmDeath in Paradise
10pmBBC News
10.25pmRegional News;
National Lottery Update
10.35pmLitter Wars
11.25pmCHOICE Who Do You
Think You Are? US
12.05amFILMThe Breakfast
Club: John Hughes drama,
starring Emilio Estevez. 1985.
1.40amWeatherview1.45am-6am
BBC News
6pmEggheads
6.30pmFlog It! Trade Secrets
7.30pmGreat British Menu:
The North East chefs prepare
seafood courses.
8pmAlex Polizzi: The Fixer
9pmThe Railway: Keeping
Britain on Track
10pmThe Sarah Millican
Television Programme
10.30pmNewsnight: Weather
11.20pmSwinging into the
Blitz: A Culture Show Special
12.20amSign Zone: Britains
Hidden Heritage
1.20amClose 4am-6amBBC
Learning Zone
6pmITV News London
6.30pmITV News
7pmEmmerdale: Lisa confides
in Charity over her concerns
for Belle.
7.30pmLive UEFA Champions
League: Arsenal v Bayern
Munich (Kick-off 7.45pm).
10pmITV News at Ten
10.30pmITV News London
10.35pmUEFA Champions
League: Extra Time
11.35pmGrimefighters
12amJackpot247
3amLoose Women 3.50amITV
Nightscreen 5.05am-6amThe
Jeremy Kyle Show
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
8pmSupersize vs Superskinny
9pmCHOICE The Fried
Chicken Shop: Life in a Day:
10pmUtopia
11.25pmRandom Acts 11.30pm
Derek 12amOne Born Every Minute
1amEuropean Poker Tour 1.55am
KOTV Boxing Weekly 2.25am
Sailing: Americas Cup Discovered
2.50amFootball Short:
Kingsmeadow3.20amInside
Natures Giants: The Crocodile
4.15amGreat Migrations
5.10am-6.05amDeal or No Deal
6pmHome and Away
6.30pm5 News at 6.30
7pmMonkey Life
7.30pmHighland Emergency: 5
News Update
8pmBenidorm ER: 5 News at
9
9pmCSI: Homecoming
10pmCHOICE Brain Hospital:
Saving Lives
11pmDallas
12amCSI: NY
12.55amSuperCasino
3.55amHouse Doctor 4.20am
House Doctor 4.45amMichaelas
Wild Challenge 5.10amWildlife
SOS 5.35am-6amWildlife 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
digits1-9 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 nd 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 ISSUES
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 23
15 6 11
24 6
13 27
13 13
8 37
10 12
38 10
16 16
29 3
7 39
10 24 8
13
28
11
29
23
14
11
3
36
12
9
6
17
41
16
21
9
22
32
7
30
5
ACROSS
1 Vehicle test (inits) (3)
3 South American
republic (7)
6 Nudity (9)
8 Boat built by
Noah (3)
10 Smaller in
amount (6)
13 Mild yellow Dutch
cheese (4)
14 Common fruit (5)
16 High in stature (4)
17 Small-seeded species
of cereal crop (6)
20 Brother of George
Gershwin (3)
21 Mutiny (9)
22 Receive a
share of (7)
23 Earths nearest
star (3)
DOWN
1 Wall painting (5)
2 Military vehicles (5)
3 Maintenance (6)
4 Marked by
renement in taste
and manners (7)
5 Positive answer (3)
7 Someone who skims
across ice (6)
9 Provide with choice
food or drink (6)
11 Most noticeable
or important (7)
12 Number of turns in
60 seconds (inits) (3)
15 Intercede (6)
18 Actors words (5)
19 Bird of preys claw (5)
21 Style of music
with a strong
background beat (3)
D
Y
E
I
A G
F
N
R
4

4
4


4
N I G H B A T H S
A E R N E A W
U S S R R X I
R C O L L I S I O N
U G H Y B D U E
R E P R I E V E S
H I M I R R E T
A N A R C H I S M U
I T I H Y M N
R I S A R I I
Y A C H T A M O S
3 8 3 2 1 1 5
1 6 3 9 4 5 2 7 8
2 4 1 6 7 5 8 9
8 9 9 3 8 4
7 2 1 3 4 1
2 1 3 4 9 6 8 7
8 6 9 8 2 1
8 5 9 7 1 2
1 2 5 3 4 9 7 8
5 8 6 1 7 3 4 2 9
7 9 2 6 1 3 7
4
4
4
4
4
4
4
4
4
The nine-letter words were
FLOWERING and REFLOWING
T
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S
T
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S
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
TUESDAY 19 FEBRUARY 2013
WHO DO YOU THINK YOU ARE? US
BBC1, 11.25PM
New series. Actor Martin Sheens
investigation into his past uncovers
two relatives who shared his passion
for activism.
THE FRIED CHICKEN SHOP: LIFE
IN A DAY CHANNEL4, 9PM
Documentary exploring the popularity
of fried chicken in Britain, with access
to a fast-food chains flagship
takeaway in south London.
BRAIN HOSPITAL: SAVING LIVES
CHANNEL5, 10PM
In the critical care unit of the Walton
Centre, staff treat a patient who is in a
coma after a car crash and a man who
had a seizure while playing football.
TVPICK
MANCHESETER United
manager Sir Alex Ferguson
lavished substitute Nani with
praise after his man of the
match performance helped the
Reds reach the FA Cup sixth
round last night.
The Portuguese winger, who
reportedly fell out with
Ferguson at the end of last
year and has made just three
starts for United in 2013, came
off the bench to open the
scoring and turned provider
for Javier Hernandez to head
in the second, before Jobi
McAnuffs late goal gave
Reading some hope.
Nanis only previous goals
this season have come in
defeats to Tottenham in the
Premier League and Chelsea in
Super sub Nani notches to
send United into last eight
UNDER-FIRE Arsenal manager
Arsene Wenger believes a patient
approach to his sides daunting
Champions League last 16 tie with
German giants Bayern Munich
can see the Gunners reach the
quarter-finals for the first time in
three seasons.
The Bundesliga leaders visit the
Emirates Stadium for the first leg
tonight on the back of five
straight league wins, while
Arsenal supporters are still
coming to terms with Saturdays
humiliating 1-0 defeat to
Championship club Blackburn
Rovers in the FA Cup fifth round.
Such has been Bayerns
domestic dominance this season
Wenger urges patience
in bid to topple Bayern
they have only dropped points in
four of their 22 league fixtures,
have conceded just seven goals
and are a mammoth 16 points
clear of closest challengers
Borussia Dortmund at the top of
the table.
But Wenger, who has steered his
team through 14 consecutive
Champions League campaigns,
believes Arsenal can draw on their
wealth of European experience
and knock out one of the
tournament favourites.
What is important is that we
focus on the quality of our game,
said the 63-year-old.
We have to put in our head
that we have 180 minutes to
qualify and not rush our game.
We must play at our best and
TUESDAY 19 FEBRUARY 2013
26
SPORT
cityam.com/sport
BY JOSH RICHARDS
@cityam_sport
20%
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with belief. I believe in our
quality. The fact is that in the last
11 games in the Premier League
we have lost two, so we are on a
good run overall.
The game of the week is now
the Champions League. You
cannot compare the FA Cup to the
Champions League.
Wenger has not won a European
trophy since taking the reins at
Arsenal in 1996 and, following
their FA Cup elimination, the
Champions League remains their
only hope of lifting silverware this
season.
However, being paired with the
Bavarian club, who have reached
two of the last three tournament
finals, has left some Gunners fans
writing off their sides chances of
ending eight years without
winning a major honour
before a ball has even been
kicked in this tie.
Arsenal will have to
reshuffle their defence with
left-back Nacho Monreal
cup-tied and central
defender Laurent Koscielny
struggling with a calf
injury.
Carl Jenkinson is
available, while Thomas
Vermaelen could be
deployed at left-back.
But, despite their
uncertainty at the back,
Wenger admits his priority
is to keep Bayern at bay.
It is vital to keep a clean
sheet, he added.
0-0 is not a disaster at
home, but of course we will
try to score goals.
Bayern, who have progressed
against Arsenal over two legs in
both previous Champions League
meetings, will be without
defenders Jerome Boateng and
Holger Badstuber, while former
Chelsea striker Claudio Pizzaro is
also missing.
However, 34m summer signing
Javi Martinez is expected to be fit
after the midfielder missed
Fridays 2-0 win over Wolfsburg
with a bruised toe.
Head coach Jupp Heynckes is
anticipating a tough test.
Despite the result [against
IN BRIEF
Ince and Grayson in, Di Canio out
n FOOTBALL: Paul Ince, the former
England midfielder, has been
appointed manager of Championship
club Blackpool. On a busy day of
managerial movement Simon Grayson
was named Preston North End boss
and Paolo Di Canio resigned from his
post at Swindon Town.
Robinson takes on Bristol role
n RUGBY UNION: Former England
and Scotland head coach Andy
Robinson has been named Director of
Rugby at Bristol.
Results
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MANCHESTER UNITED...........2
READING.............................. 1
BY JOSH RICHARDS
FA CUP
the Capital One Cup, but
Ferguson was happy to admit
his winger changed the course
of the fifth round tie.
Nanis contribution was
terrific, said Ferguson. I had a
feeling he would win the match
for us.
We played some great
football and could have scored a
lot of goals. I was satisfied with
the quality of our game.
United, who last won the FA
Cup in 2004, lost Phil Jones to
injury shortly before half-time,
but his replacement, Nani,
almost made an immediate
impact with a fierce volley
which came back off the post.
The 26-year-old teed himself
up to fire United in front on 67
minutes and then crossed for
Hernandez to head in his 15th
goal of the season three
minutes later.
McAnuffs close range strike
set up a grand stand finish, but
United resisted.
The Reds will now face
Middlesbrough or Chelsea in
the quarter-final.
Arsene Wenger denied claims he has been offered a two-year extension to his current contract
27
Ben Morgan will miss Englands match with France, but could be back to face Italy
BOWLER James Anderson became
Englands all-time leading wicket
taker in Saturdays one day
international defeat to New Zealand
and team-mate Chris Woakes
believes the 30-year-old has time on
his side to smash more international
records.
Anderson, who is likely to lead
the attack again when England play
New Zealand in the second ODI at
Napier in the early hours of
Wednesday morning, claimed his
528th dismissal in all forms of the
game in Saturdays three wicket
defeat to surpass Sir Ian Bothams
record.
But Anderson still trails Botham
by 95 wickets in Test matches and is
11 dismissals short of Darren
Goughs ODI tally.
And Woakes believes there is
plenty more to come from the
Lancastrian.
Its a fantastic achievement to
have that many wickets for
England, he said.
Im sure hes got many years
ahead of him too, to go even
further.
Anderson can
achieve more
BY JOSH RICHARDS
Serena Williams has become the oldest
female world number one tennis player in
history at the age of 31 years and 145 days
cityam.com
TUESDAY 19 FEBRUARY 2013
GOLF
COMMENT
SAM TORRANCE
F
ORM and reputation go out
of the window in a
matchplay tournament but
Id still back Rory McIlroy to
enjoy a good week at the WGC
Matchplay Championship in
Arizona.
It will be tough for the
Northern Irishman matchplay
is tough for everyone but Rory
is world number one and Id
expect him to come through his
first round pairing with Shane
Lowry unscathed, when play
commences on Wednesday.
The format does not suit the
games top players.
Anyone can have an off day
and recover in a stroke play
tournament.
But a matchplay tournament,
which places golfers head-to-
head, is a wide open field in
comparison.
We dont have many of them
in the calendar because the
sponsors dont like the
unpredictability of them and
want the big names fighting for
the trophy and there are no
guarantees of that.
Tiger Woods has a difficult
draw too against fellow
American Charles Howell III
and reigning champion Hunter
Mahan who beat McIlroy in
last years final plays against
the exciting Italian teenager
Matteo Mannassero.
Its a really interesting draw,
but an impossible tournament
to predict. Any of the 64 golfers
in the draw could win it.
LEGENDARY
Fredrik Jacobson could be a
name to look out for though.
The Swede has been paired
with the legendary Ernie Els
and is in good form, though
coming so close at the Northern
Trust Open in Los Angeles last
week would have hurt.
Freddie was tied for the lead
at the 17th hole on the final day,
but missed his putt and then
misfired again on the 18th.
Hes very experienced, so Im
not sure you could put it down
to nerves, it was just one of
those things on a tough course.
It can happen to anyone.
He missed out on the play-off
at the tricky 10th, which the
American John Merrick
eventually won from
compatriot Charlie Beljan.
Elsewhere, Darren Fichardt
hung on to win the Africa
Open after bogeying three out
of four holes on the back nine
at the East London Golf Club.
DISASTROUS
Darren had a real up and
down day, pulling four shots
clear at the turn, but then
looked like he might throw it
all away with a disastrous
finish.
But, after a poor drive on the
18th, he hit a fine second shot
to clear the trees and land on
the green to make sure he got
over the line.
Darren said he began to take
his lead for granted and lost
some of his focus.
But he eventually finished
on 16 under par for the week
and won by two shots.
Being able to regroup when
youve hit a bad patch like that
and play each hole as it comes
is what good players do.
It is what sets you apart
from the rest.
Sam Torrance OBE is a multiple
Ryder Cup-winning golfer and media
commentator. Follow him on Twitter
@torrancesam
I fancy McIlroys chances, but
reputation counts for nothing
Blackburn] Arsenal have found their
rhythm again in the last few
weeks, he said.
They are very good going
forwards and are an excellent team.
They have wonderful players in
their ranks and Im wary of
underestimating them.
ARSENE VENTS HIS ANGER
ARSENE Wenger has reacted
angrily to claims he is to be
offered a new contract to
extend his stay as Arsenal
manager beyond June 2014.
The Frenchman is in the
midst of his most testing
period as manager of the
north London club since
taking charge almost 17
years ago, with the Gunners
uncertain of a place in the
top four and having lost to
lower league opposition in
both domestic cup
competitions already this
season.
How long Wenger can
continue as manager is a
topic which has caused
divisions amongst the
Gunners faithful but, keen
not to add fuel to the fire,
Wenger strongly denied he is
about to be offered a two-
year extension to his current
deal.
Its the wrong
information, he fumed.
I think I deserve a bit
more credit than wrong
information that has only
one intention; to harm.
This is wrong information
that comes from nowhere. It
is completely wrong.
Arsenal take on Bayern
Munich in a Champions
League last 16, first leg tie at
the Emirates Stadium
tonight.
ENGLAND coach Stuart Lancaster
has revealed No8 Ben Morgan will be
pushing for a return to action in the
penultimate RBS Six Nations match
against Italy on 10 March, but will
miss Saturdays visit of France.
The Gloucester forward suffered
an ankle injury in Englands
opening match of the tournament
against Scotland and will sit out
Saturdays clash at Twickenham.
However, Lancaster has played
down fears that Morgan could miss
the rest of the championships and
believes he still has a part to play in
securing England their second title
in three years.
Ben will be fine, Lancaster said.
He wants to get himself right so he
can push for selection against Italy.
Fly-half Freddie Burns and centre
Jonathan Joseph are definitely out
of Saturdays match, while full-back
Ben Foden will play for club side
Northampton as he continues to
regain match fitness following an
ankle injury.
Lancaster reveals Morgans close to return
Consequently, London-based trio
Elliot Daly, Will Fraser and Joel
Tomkins will train with England
this week and could be named in
Lancasters match-day 23, with the
selection announcement scheduled
to be made on Thursday.
England are the only remaining
unbeaten side in this years
championships, while pre-
tournament favourites France have
flattered to deceive with back-to-
back defeats against Italy and
Wales.
However, Lancaster admits it
would be a big mistake to take
France lightly.
If you look at their performances
in the autumn, the three wins over
Samoa, Argentina and Australia
show France are not a bad side, he
added.
They beat Australia 33-6 and
Australia then beat us.
While well take something out
of their first two Six Nations games,
well also take something out of
those autumn internationals and
make sure were ready for them.
BY JOSH RICHARDS