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04/10/10 - 31/10/10 is 110,406
SENIOR bankers at HSBC are to have
their salaries doubled, as the bank
attempts to head off a bonus row
amid political pressure.
The 100 per cent rise for hundreds
of top bankers across HSBC’s global
banking and markets (GBM) opera-
tions, including in the financial cen-
tres of London, Hong Kong and New
York, will take immediate effect.
The move comes as Treasury min-
ister Mark Hoban urged banks to
“think very carefully” about the
upcoming round of bonuses, as the
government seeks to quash extrava-
gant City rewards during a period of
public austerity.
HSBC could use the move to avoid
political tension and negative public-
ity over large bonuses, whilst simul-
taneously using the salary hike to
placate bankers.
The measures ensure the bank
remains a competitive employer for
top City workers, as many of its
rivals, including RBS, have upped
salaries over the past two years.
The change also lifts pressure
from the bank to provide top
bankers with high bonuses. Senior
staff have seen their personal cash-
flow squeezed, as annual bonuses
have been deferred for several years,
or have been paid in share options.
The rebalancing of remuneration
away from variable pay toward fixed
salaries will also be welcomed by reg-
ulators, who have been urging banks
to take a more sustainable approach
to pay.
HSBC had just two weeks ago com-
plained about new bonus rules,
which it said could force it to consid-
er moving its London headquarters
overseas.
HSBC last night declined to com-
ment.
BY RICHARD PARTINGTON
BANKING

www.cityam.com Issue 1,265 Wednesday 17 November 2010 FREE
BUSINESS WITH PERSONALITY
A FRESH round of misery spread
through Europe yesterday as Ireland’s
continued insistence that it does not
need a bailout sent stocks plunging on
both sides of the Atlantic.
The FTSE 100 recorded its biggest
drop since August, falling 1.5 per cent
yesterday to close at 5,690. The Dax
dropped 1.2 per cent to close at 6,672
and the Eurostoxx 50 slipped 0.4 per
cent to close at 2,810. In the US, the
Dow Jones fell 1.6 per cent, to
11,023.50 – its lowest level in a month.
Eurozone finance ministers will
today meet for a second day of talks,
with the likelihood of an Irish bailout
at the top of the agenda.
EU President Herman Van Rompuy
yesterday spooked investors by saying
that the crisis was a matter of “sur-
vival” for the EU’s institutions. He said:
“If we don’t survive with the
Eurozone, we will not survive with the
European Union.”
Funding for a bailout is most likely
to come both from the EU and the
International Monetary Fund, but
there is also the possibility of bilateral
loans from the UK, due to Britain’s
heavy reliance on trade with Ireland.
Chancellor George Osborne yesterday
said he did not want to add to specula-
tion by commenting.
The latest shocks came as the Irish
government yesterday disappointed
markets by clearing its parliamentary
schedule for a special statement and
then failing to announce any measures
to deal with its spiralling debt crisis.
“What we are doing is discussing
with our European partners as to what
stabilisation (measures are)... neces-
sary,” Prime Minister Brian Cowen
said. He also tried to deflect pressure
by saying that the insolvency crisis was
in Ireland’s banking sector, not its pub-
lic finances.
However, the government has prom-
ised to guarantee all Irish bank debt. In
response to Cowen, the yield on Irish
ten-year bonds jumped back over 8.2
per cent and opposition leader Eamon
Gilmore said: “I’m not quite sure why
you made this statement today.”
As fears grew that the Irish situation
is becoming a European contagion,
ten-year Portuguese and Spanish gilt
yields also rose yesterday, to 6.8 per
cent and 4.6 per cent respectively.
Investors have now begun to ques-
tion whether Portugal could be next.
Its government was yesterday forced to
deny that, like Germany, it has been
pressuring Ireland to accept a bailout
in order to calm the markets and save
itself from a similar fate. The cost of
Greek debt also rose as Austrian
finance minister Josef Proell said that
Austria would withhold its €190m con-
tribution to the country’s rescue pack-
age until Greece fulfilled its promise
to get its deficit down to 8.1 per cent of
GDP for this year. IRELAND FOCUS: P2
EU PRESIDENT:
SURVIVAL OF
EURO AT RISK
BY JULIET SAMUEL
WORLD ECONOMY

Hundreds of HSBC bankers enjoy 100 per cent salary increase
ROYAL WEDDING BELLS AT LAST
A ROYAL wedding between prince William and his fiance Kate Middleton could come
as early as spring next year, after the pair announced yesterday that they are to tie the
knot. Prince William proposed whilst on a holiday in Kenya last month, and used the
engagement ring his father gave to his mother, Princess Diana, in 1981. Picture: PA
German chancel-
lor Angela Merkel
is being blamed by
some for exacer-
bating the crisis for
her blunt remarks
on sovereign debt.
News
2 CITYA.M. 17 NOVEMBER 2010
Anti-banker populism is backfiring
THIS is turning out to be a decent year
for the global investment banking
industry, despite weaker trading
results and even though some firms
are doing better than others. True,
Wall Street’s total profitability – as
defined by the broker-dealer opera-
tions of New York Stock Exchange
members – will collapse 69 per cent
this year to $19bn, from the exception-
al and unsustainable $61.4bn collect-
ed in 2009. But this would still make
2010 the fourth-most profitable year
on record, New York State’s comptrol-
ler said yesterday.
Thomas DiNapoli also confirmed
that a net 31,000 – one-sixth – of all
Wall Street jobs have disappeared
since the end of 2007. Bonuses totaled
$20.3bn in 2009, up 17 per cent from
2008 (they collapsed 47 per cent in
2008). US investment banking bonuses
could be up 0-5 per cent this year; but
total compensation will slip for the
big firms, dragged down by trading.
The situation will be different in
London, however, where UK and
European regulators are obsessed
with reducing compensation and
especially bonuses. That is the reason
for HSBC’s decision to double the basic
pay of many of its bankers yesterday,
in return for much lower bonuses.
The Centre for Economics and
Business Research estimates City
bonuses this year will be £7bn if mar-
ket forces are allowed to operate,
down from £11.6bn in 2007. Yet there
is now discussion that banks (how
these are defined remains to be seen)
should get together to cut total bonus-
es to no more than £4bn; it is unclear,
however, how much of this is purely
spin. Does the £4bn refer to cash – or
also to equity? London players may
have suffered more than Wall Street
and bonuses may be set to fall of their
own accord. There are also probably
fewer investment bankers employed
at the largest banks in London.
More likely, the real drivers are the
rules forcing a much greater emphasis
on basic pay, deferred compensation
and reduced cash payouts. All of these
will automatically cut cash compensa-
tion this year; there will be no need
for legally dubious cartels or secret
meetings in smoke-filled rooms. If so,
the government and the industry
could pretend to have successfully
pandered to the City’s enemies while
not actually doing anything other
than implementing the new rules.
Even if compensation does fall, the
envious and the left-wing commen-
tariat should not rejoice too soon: the
largest single gainer from bonuses is
the taxman. If bonuses are £7bn, the
taxman would get £4.1bn, with the
315,000 City workers keeping just
£3.8bn. If bonuses fall to £4bn, the tax-
man will lose £1.8bn in revenue, since
some banks are not yet paying corpo-
ration tax because of losses made in
previous years. Lower compensation
would force greater spending cuts and
additional tax hikes on ordinary folk.
It would chase away jobs to parts of
the world where financiers are wel-
come, including New York, Singapore
and Hong Kong. The anti-bonus rules
will also make the industry less flexi-
ble: fixed costs will increase hugely,
making banks much more vulnerable
in the event of a downturn and guar-
anteeing far more job cuts.
Populism and the politics of envy
always backfire; it’s a tragedy hardly
anybody understands this.
ROYAL WEDDING
Congratulations to William and Kate,
a lovely couple. Their engagement is
wonderful news. We wish them the
very best and a life full of happiness.
allister.heath@cityam.com
At a glance: events that brought Ireland to its knees
NEWS | IN BRIEF
Abercrombie beats consensus
Teen clothing retailer Abercrombie &
Fitch yesterday smashed consenus
expectations for its third-quarter results
to report a 27 per cent rise in earnings
per share (EPS) to 56 cents. Analysts
had anticipated an EPS of 51 cents, but
the firm’s global reach has helped to off-
set slow demand in its home market of
the United States. Shares in the compa-
ny are up 29 per cent since its second-
quarter results report in August but
closed down slightly yesterday at
$45.68.
Banco Popular addresses capital
Spanish bank Banco Popular is to rein-
force its position ahead of the new Basel
III regime on capital adequacy, with
plans to raise up to €679m (£577m) of
new capital. The bank will strengthen its
capital base by €579m-€679m with a 3
per cent capital increase taken up by
France’s Credit Mutuel-CIC, and a €400-
500m bond issue for retail investors
compulsorily convertible into shares.
Chairman Angel Ron said: “Banco
Popular’s capital will be well above the
minimum core capital requirements and
will thus achieve a position of advantage.”
EDITOR’S LETTER
ALLISTER HEATH
7
th
Floor, Centurion House,
24 Monument Street, London, EC3R 8AJ
Tel: 020 7015 1200 Fax: 020 7283 5334
Email: news@cityam.com www.cityam.com
Editorial
Editor Allister Heath
Deputy Editor David Hellier
News Editor Ben Griffiths
Night Editor Katie Hope
Associate Editor David Crow
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
Pictures Alex Ridley
Commercial
Sales Director Jeremy Slattery
Commercial Director Harry Owen
Head of Distribution Nick Owen
Editorial Statement
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self-regulation overseen by the Press Complaints
Commission. The PCC takes complaints about the
editorial content of publications under the Editor’s
Code of Practice, a copy of which can be found at
www.pcc.org.uk
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● May 2008
Brian Cowen is elected Irish prime minis-
ter. His allies and opponents warn he
faces a tough task steering the country
through economic slowdown.
● September 2008
Ireland becomes the first euro zone
country to slip into recession after its
property bubble bursts.
● December 2008
Ireland agrees to inject €5.5bn (£4.6bn)
into its three main banks, taking Anglo
Irish Bank under its control.
● March 2009
Standard & Poor's downgrades Ireland's
credit rating from prized AAA ranking to
AA+ and warns it could drop further, in a
vote of no-confidence in Dublin's efforts
to get its public finances under control.
● April 2009
Irish finance minister Brian Lenihan out-
lines €10.6bn (£9bn) in spending cuts for
2010-2011 and forecasts additional
€3.25bn from taxation in that period in
emergency budget, the second in six
months. Fitch also strips Ireland of its top
AAA credit rating, reducing it to AA-plus.
● August 2010
Standard & Poor's cuts Ireland's long-
term rating by one notch to 'AA-' and
assigns the country a negative outlook.
● September 2010
Ireland discloses worst case price tag of
over €50bn (£42bn) for bailing out its
banks and announces it will have to make
more budget savings.
● November 2010
EU Economics Commissioner Olli Rehn,
visits Ireland and says he has not dis-
cussed any need for EU bailout, adding he
believes market confidence would be
restored once the country published its
four-year plan to cut debt, which is set
for release before a 25 November by-
election.
TIME LINE | IRISH DEBT CRISIS
Q & A : THE IRISH BAILOUT
Q.
WHAT HAPPENS NOW?
A.
The timeline is highly uncertain,
which is in part what has fuelled
market turmoil. Ireland is still deny-
ing that it is in need of a bailout, but
many observers expect a capitulation
within the week. A major point of
interest will be the close of Eurozone
finance minister negotiations today,
with expectations that the talks
could provide a framework for
bailouts and suggest some general
conditions for aid money in the
future. In addition, Ireland is meant
to be outlining a four-year plan for
getting its deficit under control in
the next two weeks. Much will
depend on the credibility of the plan.
Q.
CAN IRELAND AVOID A
BAILOUT?
A.
It is looking increasingly unlike-
ly, although the Irish govern-
ment is likely to continue to offer
strong resistance due to the unpopu-
larity of submitting to the conditions
of any aid package. One possible
alternative to a sovereign
bailout could be a bailout of
the banking sector, whose
debts the government has
guaranteed. However, most EU states
would be reluctant to lend without
channelling the money through the
Irish government and subjecting it
to strict conditions.
Q.
WHAT CONDITIONS WOULD AID
CARRY?
A.
The EU could insist Dublin
reneges on an agreement with
public sector unions not to cut jobs
or push through further wage cuts.
Brussels may also demand Ireland
raises its corporation tax rate, viewed
as sacrosanct by Dublin, from its cur-
rent low level of 12.5 per cent.
Q.
WHY IS IRELAND NOT KEEN ON
EU HELP?
A.
An EU bailout would mean a big
loss of face fiercely proud of its
independence. It would also mean
significant international interfer-
ence in sovereign affairs.
?
ABU DHABI MOVES TO SECURE FOOD
SUPPLY
Abu Dhabi is to make a bold foray
into commodities with the establish-
ment of a government-owned trading
house aimed at securing food sup-
plies for the import-dependent nation
and capturing profit margins in met-
als and agriculture trading. People
familiar with the plans say the com-
pany, which is called Abu Dhabi
Sources or ADS, is likely to be started
with a capital base of several hundred
millions of dollars.
SHADOW BANKS FACE REGULATORS’
SCRUTINY
Global regulators will turn their
attention to the lightly supervised
shadow banking market, according to
Lord Turner, chairman of the UK’s
Financial Services Authority and one
of the world’s leading voices on regu-
lation. In an interview with the
Financial Times, Lord Turner said it
had been one of the “fundamental
failures” of regulators not to think in
systemic terms about the role that
shadow banks – such as money mar-
ket funds and non-bank investment
vehicles – had played in the run-up to
the financial crisis.
INTERNET BLOW FOR GOOGLE AND BBC
Internet service providers should be
free to favour traffic from one con-
tent provider over another as long as
they inform customers, the commu-
nications minister will say on
Wednesday at the FT’s telecoms con-
ference in London. The government’s
refusal to back so-called net neutrali-
ty principles will come as a blow to
companies such as Google and the
BBC that believe unfettered access to
the internet fuels innovation. This
position paves the way for new rev-
enue streams for ISPs such as BT,
TalkTalk and Virgin Media by allow-
ing them to charge media companies
for “fast lane” access.
CITY URGED TO INVEST IN ASSET OF
THE FUTURE BY HONG KONG
City of London institutions were
urged yesterday to invest in Hong
Kong to take advantage of a potential-
ly huge new asset class: renminbi-
denominated securities. The former
British colony was perfectly placed to
exploit growing trade in the securi-
ties, its finance minister said.
HOLIDAY CASH VICTIMS ON A LOSER
Administrators to the holiday curren-
cy broker Crown Currency Exchange
warned yesterday that compensation
to thousands of customers was likely
to be minimal. MCR and SPW,
brought in as joint administrators to
the Cornwall-based company last
month, said that they had received
more than 8,000 valid claims
totalling more than £16 million. They
said that demands ranged from £100
to £20,000.
CLAIMANT COUNT SET TO REACH 1.5M
The number of people claiming
unemployment benefit is expected to
have edged closer to 1.5m in October,
according to economists. Ahead of the
official unemployment figures out
tomorrow, economists predict the
claimant count rose by 5,000 last
month, reaching 1.48m. It would be
the third consecutive month the UK
claimant count has grown, rising
from a 16-month low of 1.46m in July.
FED DISMISSES IDEA THAT QE IS SOME
SORT OF CHAPTER IN A CURRENCY WAR
The Federal Reserve has robustly
defended its latest efforts to reignite a
US recovery, with the central bank’s
vice chairman dismissing the idea
that they're writing “some sort of
chapter in a currency war.” In an
unusual move, Janet Yellen, the Fed’s
vice chairwoman, spoke to US newspa-
pers to defend the central bank’s move.
EUROPE CAR REGISTRATIONS FALL 16
PER CENT
New-car registrations in Europe fell
16% from a year earlier in October,
the seventh-consecutive month of
declining registrations after the state-
backed car scrapping schemes ran
out, the European Automobile
Manufacturers Association said yes-
terday.
ADIDAS TAKES ON RIVALS IN CHINA
Adidas AG is expanding its business
in China in an attempt to overtake
rivals that have gained market share
in recent years. The German sporting-
goods company on Tuesday
announced plans to add 2,500 stores
in China by 2015, including 500 by
the end of next year, up from 112
now. Upscale outlets, featuring
Adidas's high-end fashion lines, are
planned for larger cities, where many
consumers favor Nike.
WHAT THE OTHER PAPERS SAY THIS MORNING
AN ADVISORY panel for the US Food
and Drug Administration (FDA) last
night recommended that the agency
approve a new treatment for lupus
developed by GlaxoSmithKline (Glaxo)
with peer Human Genome Sciences.
The committee voted 13-2 in favor
of a drug called Benlysta – which ana-
lysts estimate could see annual global
sales of $2.2bn by 2014 and exceed
$5bn by 2020.
Profits from the drug would be
split equally between currently
unprofitable biotech firm Human
Genome and Glaxo.
The FDA, which should make a
decision by early December, isn’t
required to follow the advice of its
panels, but usually does.
Benlysta is important for both com-
panies as it’s one of the most impor-
tant new drugs in Glaxo’s pipeline
and Human Genome has no products
on the market.
The drug’s success in two large
studies has produced consistent spec-
ulation that Glaxo would acquire
Human Genome.
There have been no new treat-
ments in the last few decades for
lupus, a disease in which the body’s
immune system attacks its own
organs and tissues and is most often
seen in women of child-bearing age.
Symptoms can include fever,
swollen joints, skin rashes and severe
damage of the kidneys, lungs or cen-
tral nervous system. US-listed Glaxo’s
shares gained 3.4 per cent to $39.85 in
after-hours US trading.
Glaxo’s lupus
drug cleared
by US panel
BRITAIN will oppose the introduction
of an EU-funded credit rating agency
(CRA), after ministers dismissed it as a
waste of European taxpayers’ money.
Earlier this month Michel Barnier,
the EU internal market commissioner,
floated the idea of a new European
CRA to boost competition in a sector
that is dominated by three big players:
Moody’s, S&P and Fitch.
He said the agency might need to be
funded at least in part by public
money, due to high barriers to entry
for new players.
European officials believe that a
lack of competition was partly to
blame for agencies giving investment-
grade ratings to products based on
subprime mortgages, which helped
fuel the financial crisis.
But financial secretary to the
Treasury Mark Hoban yesterday said
Britain would oppose the use of public
money in establishing a new CRA.
He said: “Credit rating agencies
must have a sound business model
that doesn’t depend on money from
the EU.”
Chuka Umanna, a Labour member
of the Treasury select committee, said
Hoban was wrong to dismiss the idea.
“It’s extraordinary to think that tax-
payers wouldn’t want a more compet-
itive CRA market. A new agency might
need public money to get started”.
UK to oppose
EU-funded
rating agency
BY KATIE HOPE
PHARMACEUTICALS

News
3 CITYA.M. 17 NOVEMBER 2010
BY DAVID CROW
POLITICS

TELECOMS giant BT has warned it
could sue regulator Ofcom, after it
refused to allow a rise in wholesale
fees to rivals to help repair BT’s oner-
ous pension deficit.
An interim ruling in July by the
regulator denied BT the opportunity
to raise charges on its Openreach
business, the subsidiary used by rivals
to access BT’s network. If confirmed
in December by Ofcom, the operator
could pursue a legal challenge.
Companies in other sectors are
allowed to raise wholesale charges to
rivals in order to address pension
deficits, including in the gas and elec-
tricity market.
Worries over BT’s pension pot were
raised by the Pensions Regulator in
February over the company’s plans to
remedy its deficit, which stood at
£9bn, according to a December 2008
actuarial valuation.
BT warns Ofcom of legal
challenge ahead of ruling
BT Group chief executive Ian Livingston could pursue a legal challenge Picture: REUTERS
BY RICHARD PARTINGTON
TELECOMS

1,240
1,280
1,320
1,200
24Sep 6Sep 16Aug 14Oct 3Nov
ANALYSIS l GlaxoSmithKline
p
1,213.50
16 Nov
GENERAL Motors (GM) is boosting the
size of its common stock offering by
more than 30 per cent to $15.5bn,
potentially making its landmark IPO
the largest US offering ever.
The expansion is in response to
surging demand from investors, who
had put in orders worth $70bn for
GM’s common shares by late on yes-
terday.
GM’s initial public offering, which
will reduce the US Treasury to a
minority shareholder in the top US
automaker, could raise nearly $23bn
if underwriters exercise the full over-
allotment option. The largest US IPO
so far is Visa’s $19.7bn stock sale in
2008. The increased size of the IPO
reflects renewed investor confidence
in the world’s second largest
automaker less than a year and a half
after dwindling cash and falling sales
pushed it into a bankruptcy funded
by the Obama administration.
GM plans to sell 478m common
shares for $32 to $33 each, raising
about $15.5bn at the mid-point.
GM earlier yesterday increased the
size of its preferred stock offering by
$1bn to $4bn in a move that will
strengthen its balance sheet by pay-
ing down pension debt – one of the
concerns investors had cited heading
into the IPO.
Including an overallotment provi-
sion for both common and preferred
shares, the GM deal is now set to raise
about $22.7bn n if it prices at the
high end of the new price range.
The final terms for GM’s IPO are
expected today. The stock is set to
begin trading on the New York and
Toronto stock exchanges on Thursday.
GM, which lost $88bn from 2005 to
its 2009 bankruptcy, earned a $4.1bn
net profit in the first nine months of
the year.
GM ups stock
offer by 30pc
BY HARRY BANKS
AUTOMOTIVE

CROSSBRIDGE Capital, a London
wealth manager set up by former
Credit Suisse bankers, has joined the
chase for Asia’s tycoons and set up a
Singapore unit seeking $1bn of new
assets, its chief executive said.
Chief executive Tarek Khlat said
yesterday that Crossbridge hoped to
reach the target, a 50 per cent
increase in assets under manage-
ment, within three years through the
new business division, which opens
today. The plans mark a significant
strategic move for the company, part
owned by Swiss bank Julius Baer,
beyond its established Middle
Eastern, London-focused client base.
Crossbridge currently manages
about $2bn in assets from its London
base, with an average account size of
$20m. It is seeking 50 new client rela-
tionships to hit its target.
London’s Crossbridge Capital sets
up Singapore unit seeking $1bn
FINANCIAL SERVICES

GLOBAL miner BHP Billiton is still
interested in big acquisitions and
does not regret spending $875m pur-
suing three major deals that col-
lapsed in the past two years, its
chairman said yesterday.
“For me, the juice is worth the
squeeze on every one of those,” Jac
Nasser said after BHP’s annual share-
holders meeting in the Australian
city of Perth. “No pain, no gain.”
Nasser was speaking a day after
BHP withdrew a $39bn bid for top fer-
tiliser maker Potash Corp after
Canada blocked the offer.
BHP scrapped an iron ore joint ven-
ture with rival Rio Tinto a month ago
after running into competition con-
cerns in Europe, Australia and Asia. It
also abandoned a full takeover of Rio
Tinto in 2008.
Nasser dismissed speculation BHP
would turn to smaller deals because
it is too big to win regulatory
approval for major takeovers, and
said top quality acquisitions were still
available although he declined to
name any. “Don’t look to us to be
chasing smaller acquisitions of lower
quality,” he said. Shareholders have
continued to back chief executive
Marius Kloppers, at the helm during
all three failed acquisitions.
BHP has no regrets as vows
to continue the takeover hunt
BY HARRY BANKS
MINING

News
5 CITYA.M. 17 NOVEMBER 2010
GM chief exec Dan Akerson has helped turnaround the firm’s fortunes Picture: REUTERS
UBS could lose about 10 per cent of
its European client assets as a result
of deals Switzerland is striking with
other countries over untaxed secret
bank accounts.
The bank, which confirmed ambi-
tious medium-term goals yesterday,
said up to SwFr40bn (£26bn) were at
risk from changes in tax regulations.
Switzerland agreed last month
with Germany and Britain to resolve
the issue of untaxed accounts and to
impose a withholding tax on future
deposits. It is expected to seal similar
deals with other European nations
imminently.
UBS faces demands for clients’
unpaid tax and the possibility of
more clients withdrawing money
from offshore accounts.
The bank said clients from Austria,
Britain, France, Germany and Italy
had already withdrawn SwFr20bn
from its accounts in the past 12
months, according to slides in an
investor presentation in London.
“We believe that SwFr15-40bn are
still at risk as a result of changes in
tax regulations,” said Juerg Zeltner,
head of UBS wealth management,
adding the bank had SwFr320bn
invested client assets in Europe at the
end of September.
However, UBS said it remained on
track to reach an annual pre tax
profit of SwFr15bn by 2014 at the lat-
est, despite a shock third-quarter
investment banking loss due to low
client activity after UBS cut risky but
potentially lucrative proprietary
trading.
Investment bank head Carsten
Kengeter said UBS was well placed to
benefit from an upturn in client
activity after hiring new staff,
though trading growth would also
mean more risk.
Separately the Swiss government
said US tax authorities had with-
drawn a summons against UBS after
the bank was forced to hand over
details of 4,000 accounts of clients
suspected of tax evasion.
Clients ditch
UBS following
new tax rules
THE City’s financial services sector saw
a five per cent rise in the number of
jobs created last month to 4,977, a sur-
vey will say today.
The Morgan McKinley London
Employment Monitor claims job avail-
ability also increased by 13 per cent
year-on-year.
The number of professionals look-
ing for new roles in the City last
month decreased by 16 per cent to
9,100 from 10,850 in September. But
this was a 26 per cent increase on the
same time last year when 7,210 profes-
sionals were seeking new positions,
the report says. The average City salary
fell four per cent from £53,400 to
£51,245.
The modest rise in the number of
jobs was attributed to the increase in
the UK’s GDP in September, as well as
a notable increase in merger and
acquisition (M&A) activity.
But Andrew Evans at Morgan
McKinley Financial Services warned
hiring activity was slowing.
“Traditionally the fourth quarter
sees a decline as managers focus their
attention on the following year’s
resource requirements,” he said,
adding it was unlikely there would be
a significant increase in hiring before
Christmas.
Modest rise in number of City roles in October
BY MATTHEW WEST
BANKING

UK ECONOMY

News
6 CITYA.M. 17 NOVEMBER 2010
14,000
12,000
10,000
8,000
6,000
4,000
2,000
May10 Feb10 Nov09 Aug10
ANALYSIS l New jobs vs new candidates
newJobs
newCandidates
The average City
salary dipped by
four per cent year-
on-year to £51,245
in October
HIT show The X Factor helped push
ITV to revenue growth of 11 per cent,
driven by strong advertising sales.
A 30-second slot during the final
of Simon Cowell’s talent show will
set advertisers back an astonishing
£200,000.
Overall TV advertising revenues
for the third quarter rose 16 per cent
year-on-year, narrowly beating the
market, and fourth quarter advertis-
ing is expected to rise 10 per cent.
But ITV Studios saw a drop in rev-
enue to £205m as the firm struggles
to come up with a new exportable
formula to emulate the success of
hits such as 2006’s Dancing on Ice.
ITV admitted the dip “emphasised
the need for creative renewal”.
The firm also saw the number of
video users on ITV.com fall six per
cent to 15.6m, despite chief execu-
tive Adam Crozier saying the web-
site was an important aspect of his
plans for the broadcaster. Overall
unique internet users increased 13
per cent.
Crozier said: “The television adver-
tising market has continued to
recover strongly. However this does
not disguise the significant chal-
lenges ITV faces.
“We are forging ahead with imple-
menting our first phase priorities;
we have launched HD versions of
ITV2, ITV3 and ITV4 on the Sky plat-
form, we have agreed a new three-
year deal for both The X Factor and
Britain’s Got Talent and we have
completed the sale of Screenvision.
Cowell reigns
but ITV lacks
The X Factor
BY STEVE DINNEEN
MEDIA

The X Factor helped push ITV to revenue growth of 11 per cent Picture: REX
News
7 CITYA.M. 17 NOVEMBER 2010
A RAFT of big-hitting City firms have
agreed to pay their employees the
London Living Wage, as part of Boris
Johnson’s drive to push up wages for
the low paid.
Investment banking giants UBS,
Bank of America Merrill Lynch and JP
Morgan yesterday added their names
to the growing list of firms promising
to pay all staff a minimum of £7.85 per
hour.
Law firms Allen & Overy, Freshfields
Bruckhaus Deringer, Norton Rose and
Slaughter and May also signed up to
the scheme, bringing the total num-
ber of participating companies to 115.
Johnson said: “There is an army of
workers... who keep this city function-
ing, and it is only right that they are
rewarded with a wage that will help
keep them out of poverty.”
Raft of City firms promise to give
London Living Wage to low paid
Make no mistake: Big challenges remain
EVERYONE likes a story with a happy
ending, but ITV has merely changed
chapter. Now that recovery kings
Archie Norman and Adam Crozier
are firmly ensconced, it would be
easy to read higher advertising rev-
enues as proof the free-to-air broad-
caster is on the mend.
To be sure, a 16 per cent rise in
third quarter ad sales followed by an
expected ten per cent lift in the final
three months of the year should not
be sniffed at – especially now that
comparatives are getting tougher.
Finance director Ian Griffiths has
repaired the firm’s balance sheet,
pushing debt down to £366m at the
end of September (compared to
£437m at the end of June), while
extending maturities and diversify-
ing sources of funding.
Higher revenues and stronger
finances have given ITV something it
hasn’t had in over two years: think-
ing time.
And think it must, because Crozier
himself warns that higher ad sales
should not “disguise the significant
challenges ITV faces”. Revenue from
ITV Studios was down 10 per cent on
2009, proving the broadcaster is still
struggling to come up with content
that it can market elsewhere.
Other important metrics are also
decidedly lacklustre. Its share of com-
mercial impact (SOCI) among fami-
lies fell almost one per cent on a year
earlier to 39.3 per cent, while its
adult SOCI was down five per cent at
26.8 per cent. The number of viewers
on its iPlayer-style Net Player was
down 1m, or six per cent, to 15.6m.
Taken alone, these figures hardly
represent a crisis – but they do sug-
gest that the revival in ITV’s fortunes
has been almost entirely cyclical.
Norman and Crozier find themselves
in fortunately auspicious circum-
stances: it’s now time for that oft-
mentioned “creative renewal”.
BOTTOMLINE
Analysis by David Crow
BY DAVID CROW
POLITICS

55
65
75
24Sep 6Sep 16Aug 14Oct 3Nov
ANALYSIS l ITV
p
67.10
16 Nov
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THE governor of the Bank of England
(BoE) was forced to write a fourth let-
ter to the chancellor of the exchequer
yesterday as official figures showed
consumer inflation rose unexpected-
ly to 3.2 per cent in October.
Mervyn King wrote to George
Osborne saying the 0.1 per cent rise
in the UK Consumer Prices Index (CPI)
last month was the result of a sharp
rise in fuel prices, meaning it
remains more than one per cent
above target
The Office of National Statistics
said the price of fuel and lubricants
rose 1.8 per cent in the month partly
as a result of the increase in fuel duty
which came into effect on 1 October.
Meanwhile, the Retail Prices Index
(RPI) inflation fell slightly to 4.5 per
cent, down from 4.6 per cent a month
earlier. RPI contains a bigger share of
housing costs, and is used to calculate
many benefits payment and pen-
sions.
In his letter to Osborne the gover-
nor of the BoE said: “The outlook for
inflation remains highly uncertain
with substantial risks in both direc-
tions. The mid-term strength in infla-
tion may be more pronounced if the
prices of commodity and other
imported goods and services increase
further. And that would exacerbate
the risk that the prolonged period of
above target inflation may cause
inflation expectations to rise, mak-
ing it more costly to bring inflation
down.”
King added that CPI inflation was
“expected to remain above target and
at a somewhat higher level than
expected three months ago, for a
period of a year or so.” It has been
above target now for the past 11
months.
In his written response, the chan-
cellor noted the BoE’s inflation fore-
cast was “broadly in line” with those
of most independent forecasters
which expected inflation to return
close to the two per cent target by
2012.
King writes
to Osborne as
inflation rises
Mervyn King has had to write to the chancellor Picture: REUTERS
George Osborne noted the Bank’s readiness to act Picture:REUTERS
BY MATTHEW WEST
UK ECONOMY

Economic News
8 CITYA.M. 17 NOVEMBER 2010
I take note of your assessment of the factors behind the
continued elevated rate of COP inflation for October of 3.2
per cent. I agree the precise impact of these factors is diffi-
cult to calibrate. The MPC’s forecast of above-target infla-
tion in the short term, which falls back in the medium term
is broadly in line with other forecasters. I re-emphasise here
that the MPC’s symmetric inflation target ensures vigilance
on both upside and downside risks. In this light I recognise
the Committee’s continued readiness to respond in either
direction as the balance of risks evolve.
The MPC expects the prospective increase in VAT in
January to 20 per cent will mean inflation is likely to remain
elevated throughout 2011. In addition, commodity and
other export prices have increased adding to companies’
costs and so to inflationary pressure. As a result, CPI infla-
tion is likely to remain above target, and somewhat higher
than expected three months ago, for a year or so. Indeed,
the inflation rate might rise further. The outlook for inflation
remains uncertain, with substantial risks in both directions.
Overall the MPC judges that, conditional on the current
stance of policy, the chances of inflation being above or
below target in the medium term are evenly balanced.
CHINA will unveil food price controls
and crack down on speculation in
agricultural commodities to contain
inflationary pressure that its central
bank governor highlighted as a risk
yesterday.
With consumer prices rising at their
fastest pace in more than two years,
the National Development and
Reform Commission, the country’s
top planning agency, is preparing a
“one-two punch” of actions to rein in
food costs, official media reported.
Such direct intervention would
mark an escalation of the govern-
ment’s efforts to tame inflation and
underline its worries over the rapid
run-up in food prices.
Possible steps include price controls,
subsidies for shoppers, a crackdown
on hoarding and price gouging as well
as a system whereby mayors are made
responsible for a basket of food items,
the China Securities Journal reported.
Those found speculating on corn or
cotton will also be punished severely, it
added.
Consumer price inflation sped to a
25-month high in October, with prices
rising 4.4 per cent from a year earlier.
Food, which makes up about a third of
China’s consumer price index, led the
way, climbing 10.1 per cent. Non-food
items increased just 1.6 per cent.
CORE US producer prices recorded
their largest fall in more than four
years in October and industrial output
was flat, underscoring concerns at the
Federal Reserve about low inflation
amid moderate economic growth.
Economists said the data supported
the US central bank’s 3 November deci-
sion to ease monetary policy further
even if the 0.6 per cent drop in the
core Producer Price Index largely
reflected the annual launch of new
motor vehicle models.
Stripping out the sharp declines in
vehicle prices, core producer prices –
which exclude volatile food and ener-
gy costs – would have risen by 0.2 per
cent, the Labor Department said yes-
terday, a modest gain consistent with
the economy’s sluggish growth trend
and tepid domestic demand.
The overall decline in the core index
was the biggest since July 2006 and fol-
lowed a 0.1 per cent gain in September.
A similar increase had been expected
in October.
Concerns that low inflation could
spiral into a damaging phase of defla-
tion prompted the US central bank
this month to ease monetary policy
further, a step that will see it buy
$600bn worth of government bonds
through the middle of 2011.
That measure has been criticised by
some economists, amid signs that the
recovery is regaining some strength
after losing momentum in the sum-
mer.
Despite brighter signs, soft demand
is forcing retailers to continue with
price discounting to lure customers.
A separate report from the Fed
showed industrial production was flat
last month, short of economists’
expectations for a rise of 0.3 per cent,
largely because of weak utility output
that reflected unusually warm weath-
er. But manufacturing production
rose 0.5 per cent, its biggest gain since
July.
Economists do not expect the distor-
tions from the annual introduction of
new vehicle models to spill over into
data on consumer inflation, which is
due today. Core consumer prices are
expected to have edged up 0.1 per cent
after being flat in September.
The core PPI was depressed by a 4.3
per cent drop in the price of light
motor trucks and a three per cent
drop in prices for passenger cars.
US wholesale
prices fall as
output falters
THE fall in house prices in September
was confirmed by the Department
for Communities and Local
Government (DCLG) yesterday
It published figures which showed
house prices fell 0.8 per cent in
September. Prices also fell 0.7 per cent
in the third quarter compared to a 1.6
per cent rise during the preceding
three months. The September fall in
house prices pushed the cost of the
average UK home down to £211,815,
just 6.1 per cent up on a year ago.
The figures also confirmed data
from both the Halifax and
Nationwide building societies, which
showed significant falls in average
house prices across the UK in
September. Halifax said £6,000 had
been wiped off the price of an average
property in the month.
Simon Rubinsohn, chief economist
at the Royal Institution of Chartered
Surveyors (RICS) said although prices
could slip a little further the down-
side would be quite limited. “The
more pressing issue remains the rela-
tively low level of transaction activity.
This has more direct ramifications
both for the health of the economy
and the ability of those made unem-
ployed to move to find work else-
where in the country,” he said.
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a) Think eight poppadoms and
a Lamb Bhuna might hit the
spot.
b) Take another look at oil
exploration stocks.
Delhi’s demand for
energy continues
unabated. Do you:
Official figures confirm fall in
house prices in September
China readies price controls as it
tries to tackle rising food inflation
BY HARRY BANKS
WORLD ECONOMY

WORLD ECONOMY

House prices fell 0.8 per cent in September said DCLG Picture: REX
BY MATTHEW WEST
HOUSE PRICES

Economic News
9 CITYA.M. 17 NOVEMBER 2010
Spitalfields Market last week as they
participated in the sixth annual
Centrepoint sleep-out, a fundraiser for
homeless charity Centrepoint, which
helps around 70,000 homeless people
a year. And the gaggle of celebrities,
including singers from The Feeling
and TV producer Alex Reid was joined
by some business interests, as Metro
Bank chairman Anthony Thompson
cuddled up alongside a host of his
employees to stay warm. Making their
beds alongside Thompson and his col-
leagues were also City workers from
Deloitte, BSkyB, Herbert Smith,
Forsters, IFDS, King Sturge and Latham
& Watkins. Whoever said Christmas is
all about bonuses?
ONE NIGHT ONLY
The merry fellows of Land Securities
finally celebrated the opening of the
One New Change mall’s roof terrace
last night, with mulled wine and chest-
nuts aplenty. With smoking allowed
on the roof for this one night only
before it opens to Joe Public, they at
least had something to do with their
hands as they watched a chilly Alisha
Dixon – braving the cold in a red strap-
less number – performing against the
dramatic backdrop of St Paul’s.
She was in high spirits despite the
weather, dedicating The Boy Does
Nothing “to all the men in suits”,
which suited just about everyone pres-
ent. Alas, Tara Palmer-Tomkinson was
apparently forced to bow out for some
vital royal wedding-related duties but,
as the events staff hastily shepherded
the chestnut roaster out of close prox-
imity to the building’s fire alarms, the
ladies and gents of Land Securities
were unbothered, happy to drink –
and smoke – the night away.
LSE GIVING
The London Stock Exchange
has announced the launch of
a foundation to bring togeth-
er all of its charitable activi-
ties under one umbrella. It
will focus its funding on
children and young peo-
ple, healthcare and arts
and culture, with its first investment
already supporting a housing project
in Sri Lanka for displaced families in
partnership with Habitat for
Humanity. And LSE employees will be
able to donate through their payroll, a
group matching scheme and by help-
ing with fundraising events. After all,
it never hurts to have yet another
avenue for City philanthropy.
ALL YE FAITHFUL
With a bonus crackdown in the works,
2010 could prove to be the year of the
“significant other” (SO), as events com-
panies report a rise in the number of
firms inviting staff to bring their other
halves to the Christmas party. Venturi’s
Table Corporate Cookery Centre has
seen a jump of 35 per cent, with more
than half of its festive bookings now
including an open invitation to spous-
es. London-based Elysium Global
Events, meanwhile, has seen one in six
events this year including SOs versus
just one in 13 last year.
Venturi’s MD Anna Venturi reports:
“The atmosphere is definitely different
when other halves are involved. They
tend to be more civilised affairs, with
people spending more time talking
and less time drinking.” Well, quite!
There’s nothing like the watchful eye
of the boss’ spouse to keep the office
culture at its more, ahem, well-
behaved end.
ROYAL FLUTTER
As news stations rolled out coverage
from Nairobi to Angelsey and “Kate
Middleton bikini” moved up the
Google rankings, one dedicated indus-
try was busy crunching numbers for
the royal wedding. Top of Paddy
Power’s “wedding wagers” list? The
date – favourite currently being 13
August 2011.
Other factoids available for a flut-
ter include who will design Kate
Middleton’s dress (Amanda Wakeley
is favourite at 4/1), how long her train
will be (most reckon less than two
metres, at 2/1), the colour of the
queen’s hat (pink at 9/2) and how
many people will tune in to
watch the palaver (less than
26m at 9/2).
Punters on Boylesports,
meanwhile, can bet on the
honeymoon and stag party
locations and as the odds
move around going into
the new year, The
Capitalist is just waiting
to see which spread-
betting provider
cracks out the royal
wedding charts for
some serious tech-
nical analysis.
IRISH BOW OUT OF POWERSCOURTS
BASH AS DUBLIN FENDS OFF EU AID
CITY comunications advisory Powers-
courts last night held its annual bash
in Paramount, the 31st-floor bar of
Centrepoint, but there were a few old
favourites missing from the crowd.
CEO Rory Godson, originally from
Ireland, said he could only pass on his
apologies from his Irish chums: “Our
friends in Dublin have stayed at home
to prepare for the German invasion,”
he said, as Irish Prime Minister Brian
Cowen tries to fend off an EU bailout.
But Godson added that the past expe-
rience of his English friends had at
least assured the Irish that there was
little to worry about on that front.
The party went on anyway, quieter
than usual in the absence of its regu-
lar attendees. Usual suspects include
former Bank of Ireland governor
Richard Burrows, U2 manager Paul
McGuinness (whose band has been
criticised over its tax status) and for-
mer Irish European Commissioner
Charlie McCreevy.
They had apparently decided that
they had more appropriate things to
do than partying as Rome burns.
SLEEPING OUT
400 City workers and celebrities had a
cold night on the tarmac in Old
Former Bank of Ireland governor Richard Burrows skipped the party Picture: PA
5&/
The Capitalist
10 CITYA.M. 17 NOVEMBER 2010
EDITED BY
JULIET SAMUEL
GOT A STORY? EMAIL
thecapitalist@cityam.com
Metro Bank’s Anthony Thompson (left)
THE NEW Google phone is set to hit
UK stores in the next few weeks, as
exclusively revealed by City A.M. last
month.
Google chief executive Eric
Schmidt has unveiled a new phone
running its Android operating sys-
tem – believed to be the second ver-
sion of its Nexus branded handset –
that will hit stores in the “next few
weeks”.
The phone is understood to be tied
to an exclusive deal with Best Buy in
the US. Last month we revealed a new
Nexus phone will hit the UK before
Christmas through an exclusive tie-
up with the Carphone Warehouse –
the European partner of Best Buy.
The new phone, which will run
“Gingerbread” – the latest version of
the Android operating system – will
also feature new contactless payment
technology, allowing users to pay in
stores by swiping their phones.
Schmidt says the technology – which
was previewed in Barcelona last
month – could replace credit cards.
The new handset, which will likely
be called the Nexus S, will be the first
released through an exclusive tie-up
with a retailer. The Nexus One was
released through an exclusive deal
with carrier Vodafone in the UK.
The phone’s manufacturer was not
revealed but HTC – maker of the Nexus
One – is seen as the frontrunner.
Registered Charity No: 211645 Scottish Registered Charity No: SC039189
HJEEDGI>C<78<J>;IEB:?;HIÊ9>7H?JO
HJEEDGI>C<78<J>;IEB:?;HIÊ9>7H?JO
On Wednesday 6th April 2011 the City will once
again come together to support ABF The Soldiers’
Charity at the fourth annual Lord Mayor’s Big Curry
Lunch at Guildhall.
1,000 people will enjoy curry, wine, beer – all for
£95 a head – and an amazing Silent Auction.
Just £200 paid to have a ramp installed so that
Paul could get back into his own home after losing
both his lower legs in an IED attack in Afghanistan
during an intelligence mission.
All the money raised goes to the
charity’s Current Operations Fund
which supports soldiers and
former soldiers, like Paul.
Buy your ticket
or find out more:
Visit bigcurry.org
Call 0845 0347965
quoting: LMBCL3
TWO CURRIES
HELPED TRANSFORM
PAUL’S LIFE
New Google Nexus set to
hit UK in next few weeks
BY STEVE DINNEEN
TELECOMS

News
12 CITYA.M. 17 NOVEMBER 2010
Google and
Carphone in
mobile deal
THE SECOND Google-branded mobile
phone will hit the UK in time for
Christmas through an exclusive deal
with Carphone Warehouse, City A.M.
has learned
BY STEVE DINNEEN
EXCLUSIVE
Google boss Eric Schmidt unveils the new Nexus
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Subject:
To: Lisa Andrews
Lunchtime at the aquarium
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In the race to be the first to share that must-see clip, every second counts.
0:00 / 8:34
ASDA, owned by Wal-Mart, yesterday
reported a return to underlying sales
growth in its fiscal third quarter,
helped by a focus on low prices and
the relaunch of its core own-brand
grocery range.
The country’s second-biggest super-
market chain behind Tesco also said
yesterday it would create more than
7,500 jobs next year by opening new
stores, growing in home shopping,
and through its purchase of Netto UK.
Sales at stores open over a year rose
1.3 per cent in the three months to 30
September. That compared with a 0.4
per cent fall in the second quarter
and is the first increase since the
fourth quarter of 2009.
Asda has lagged behind its major
rivals in sales growth for most of this
year, hit by a step up in promotions
which the chain says has clouded its
low-price message.A growing demand
for premium ranges which has
favoured upmarket rivals like
Waitrose has also taken its toll. Asda
responded in April by launching a
price guarantee offering to refund
shoppers the difference if they can find
their shopping cheaper elsewhere.
International sales, which include
the UK, outstripped Walmart’s
domestic business during the quar-
ter, rising 9.3 per cent to $26.9bn
against the period a year ago, boosted
by a foreign exchange gain of $349m.
The retailer’s overall sales increased
2.6 per cent to $101.2bn. Earnings
rose nine per cent to $3.44bn against
a year ago.
Asda sales up
as it creates
7,500 UK jobs
SPORTINGBET said yesterday that
Swedish rival Unibet had withdrawn
from merger talks.
The online betting company, how-
ever, remains in talks with several
other parties over potential deals.
The companies had held talks to
create a merged group worth £600m.
Sportingbet was seen as a likely tar-
get in the wake of the industry-trans-
forming merger between
PartyGaming and Austria’s bwin,
which piled pressure on rivals and
traditional bookmakers to keep pace.
In September, Sportingbet came
under the spotlight for acquisitions
again after it agreed to pay $33m
(£20.7m) to settle a US investigation
over alleged illegal internet gambling.
A 2006 US law effectively outlawed
internet gaming.
In settling, Sportingbet agreed to
cooperate with the government
probe, and make employees available
for interviews.
Sportingbet has long been consid-
ered an attractive M&A play in the
consolidating betting sector, especial-
ly after it settled in the US.
The company has confirmed that it
“has had and will continue to have
discussions with different parties in
relation to a variety of potential
opportunities”.
Sportingbet’s
merger talks
with Unibet off
BY JOHN DUNNE
RETAIL

LEISURE

Consumer News
14 CITYA.M. 17 NOVEMBER 2010
BURBERRY SEES PROFIT FUELLED BY ASIA
PROFITS have soared at fashion company Burberry after strong sales in Asia. The luxury
goods group beat forecasts with a 49 per cent rise in first half pre-tax profits to £129m
China has become one of the fastest growing markets for the company’s red and black
checked patterned goods. Meanwhile luxury brand Barbour, famous for its wax jackets,
produced a £10m profit last year on sales of £74.5m.
52
50
54
56
24Sep 6Sep 16Aug 14Oct 3Nov
ANALYSIS l Wal-Mart
$
54.28
16 Nov
ENTERPRISE Inns said yesterday it
would not pay a dividend in the cur-
rent year and expected trading condi-
tions to remain challenging.
Shares in Britain’s biggest pub
group went down by more than ten
per cent at one stage.
The company stopped paying divi-
dends in May 2009 to help reduce
crippling debt of nearly £4bn.
It left the door open to a resump-
tion of dividends next year if market
conditions improve as it reported full-
year results in line with market fore-
casts. Shares had jumped since
August in anticipation of a restored
dividend.
Chief executive Ted Tuppen said:
“Given the current degree of market
uncertainty, the board does not con-
sider that the resumption of divi-
dends now would be appropriate.”
He said subject to market condi-
tions, the board expected further sta-
bilisation in the pub estates'
performance and to cut debts via
cash from the sale of some pubs.
“The board is confident that the
business is in a sound position to
deliver positive returns to sharehold-
ers over the medium term, including
the resumption of dividend pay-
ments.”
Enterprise puts dividend
on ice amid tough trading
Enterprise Inns’ chief executive Ted Tuppen forecast a dividend in the “medium term”.
BY JOHN DUNNE
LEISURE

Consumer News
15 CITYA.M. 17 NOVEMBER 2010
NEWS | IN BRIEF
Amazon tops customer poll
Amazon has been voted the UK’s most
customer friendly company in a poll.
The online retailer beat 17O other nation-
al and international brands, with banking
firm First Direct taking second spot and
supermarket chain Waitrose third. The
survey of 5,500 shoppers, carried out by
research company Nunwood, showed
that Nando’s was the most popular
restaurant chain with diners.
Punch finance chief leaves
Ian Dyson's shake-up of Punch Taverns
continued yesterday when the company
announced it was parting company with
finance director Phil Dutton. Dutton will
depart in March. Dyson, a former finance
director of Marks&Spencer, is trying to
turn around a business that has been
fighting debts of about £4bn. The com-
pany said in a statement that it was on
the hunt for a replacement.
Aviation News
16 CITYA.M. 17 NOVEMBER 2010
CHINA yesterday announced a 100-
plane order for its first commercial jet-
liner, a first step in its ambitions to
challenge Airbus and Boeing for a slice
of a global market worth $1.7 trillion.
State-owned COMAC, or Commercial
Aircraft Corp of China, unveiled the
orders at the country’s largest air show
yesterday, ending a dearth of orders in
the two years since it launched designs
for the 150-seat C919.
As air travel expands with a billion
Chinese predicted to be flying for busi-
ness and leisure early next decade,
China wants to reduce its reliance on
foreign planes and foster a domestic
industry worthy of a country capable of
putting a man in space.
COMAC said the orders came from
four Chinese airlines, which was no sur-
prise given government encourage-
ment for the project, but also the
leasing arm of General Electric, which
will supply the C919 engines together
with France’s Safran.
It is the first time buyers have com-
mitted to the aircraft, which COMAC
expects to start building next year, fol-
lowed by a maiden flight in 2014 and
first delivery in 2016.
Officials did not give a value for the
deal or break down the orders by air-
line. A similar deal for Airbus or Boeing
jets would be worth about $7bn.
EASYJET said it will pay its first ever
dividend in 2012 yesterday, as it post-
ed a near three-fold rise in full-year
profit thanks to rising passenger
numbers and a lower fuel bill.
The budget airline will also launch
flexible fares this year in a bid to
boost its share of business travellers,
the company’s new chief executive
Carolyn McCall said yesterday.
Pre-tax profit at the firm rose to
£154m for the year to the end of
September, up from £54.7m last
year, on revenues up 11.5 per cent to
£2.97bn.
McCall, who joined from the
Guardian Media Group in July, said
the decision to shell out for a divi-
dend was not entirely down to pres-
sure from the firm’s founder, Stelios
Haji-Ioannou.
“The time is right to set in place a
formula to trigger a dividend pay-
ment in years when the company is
profitable whilst at the same time
ensuring that it retains a conserva-
tive capital structure,” said McCall.
“I think [Stelios] has been extreme-
ly constructive and we have a work-
ing relationship and a dialogue,
which is a move forward,” she said
yesterday.
Stelios released a statement wel-
coming the dividend, though he
added that the payment should be
increased to 50 per cent of earnings
per share over time.
McCall said her wholesale review
since joining the business has
revealed “a strong business model
and sound strategy with which to
build”.
She said easyJet would start to
publish punctuality statistics from
January 2011 and improve the crew
rota to try and minimise disruption
from outside events such as industri-
al action or volcanic ash.
easyJet pays
first dividend
as profits fly
China secures 100-aircraft order
for its first commercial jetliner
BY MARION DAKERS
AVIATION

AVIATION

AIRBUS is targeting higher revenue
and deliveries despite the chaos
caused by the break-up of a Rolls-
Royce engine on one of its super-jum-
bos, it emerged yesterday.
The Toulouse-based aircraft giant
expects revenue to rise more than five
per cent in the next five years, accord-
ing to finance chief Hans Peter Ring.
Airbus, part of aerospace group
EADS, expects to deliver two A380
super-jumbos per month next year
and about three a month in 2012,
compared with the 20 deliveries it
still expects for this year.
The news comes despite possible
delays arising from a need to switch
engines on aircraft already in service
after the A380 accident.
A Rolls Trent 900 engine on a
Qantas A380 partly disintegrated
mid-flight on 4 November, forcing
the jet to make an emergency land-
ing in Singapore.
Rolls-Royce has asked Airbus to
return some Trent 900s from produc-
tion lines to replace faulty ones on
jets already in service.
The move could further hit a
much-delayed A380 programme as
Airbus is due to deliver over a dozen
Rolls-powered A380s – mainly to
Singapore Airlines, Qantas and
Lufthansa by the end of next year.
Airbus aiming to gain altitude
despite its A380 engine woes
AVIATION

easyJet boss Carolyn
McCall said easyJet
would start to pub-
lish punctuality sta-
tistics from next
year
Picture:
Micha Theiner
400
360
440
480
24Sep 6Sep 16Aug 14Oct 3Nov
ANALYSIS l easyJet
p
449.30
16 Nov
News
17 CITYA.M. 17 NOVEMBER 2010
UK TECHNOLOGY firm Smiths Group
said cost cuts and a focus on margins
should help it deliver a good perform-
ance in the first half, as delays on gov-
ernment orders crimped sales for
airport security devices.
Technology group Smiths, whose
products range from bomb detectors
to medical devices and fuel hoses,
said it had seen underlying sales
growth in the three months to 30
October, supported by improvements
at its Medical division.
Sales at Smiths Detection, which
makes X-ray scanners used at airports
and advanced explosion scanners,
lagged those of a year ago due to a
delay in large orders from govern-
ment agencies, as lawmakers debate
changes to military spending.
“Sales in the period are behind last
year as some large orders from vari-
ous government agencies have been
delayed,” the company said in a state-
ment yesterday.
Governments are scrambling to
tighten aviation security after bombs
were found in air cargo bound for the
United States two weeks ago and
Smiths said it was well-placed to sup-
port such changes, but expected fur-
ther delays to orders as reforms are
finalised.
Smiths confident as margin focus delivers
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BET N W
LLOYDS has added a new non-execu-
tive director to its board, with current-
Victrex chair Anita Frew joining from
1 December.
Victrex is a FTSE 200 manufactur-
ing firm, but Frew also has experience
in investment and banking from her
time at the Royal Bank of Scotland
and through her non-executive posi-
tion at Aberdeen Asset Management.
Her appointment will be voted on at
the bank’s next annual general meet-
ing.
The announcement came as
Centrica chair Roger Carr spoke last
night on the importance of increasing
the number of women on the boards
of major British companies.
“It cannot be right that today in the
FTSE 100, women occupy only 12.2 per
cent of board seats,” he said to a City
audience at the ISCA Hermes trans-
parency in governance awards,
adding that “boards are intellectually
and socially enriched by the presence
of women”.
Also recently the City has seen the
launch of The 30 per cent Club, which
aspires to make the boards of major
UK firms 30 per cent female by 2015.
New non-exec for Lloyds
BY JULIET SAMUEL
BANKING

THE ADMINISTRATORS for housing
repair firm Rok made a further 1,800
people redundant yesterday, after it
failed to find an interested buyer for
large parts of the business.
A total of 2,600 staff, around
three quarters of Rok’s total staff,
have now lost their jobs, with
administrator PwC still in last-ditch
talks with rivals to sell on viable
parts of the business.
“Regrettably, the redundancies
made today were necessary as it
became clear in the last 24 hours
that we were not going to be able to
find a purchaser for these parts of
the group,” said Rob Hunt, joint
administrator and partner at PwC.
Hunt said talks were ongoing to
sell the firm’s construction and
social housing division in England,
which employs 500 people.
Rival firms such as Mears, which
took some of Connaught’s contracts
when it went under in September,
are still in discussions about a pur-
chase, while others including
Morgan Sindall are understood to
be chasing clients rather than tak-
ing on Rok’s operations.
PwC is thought to have planned
for a much swifter disposal of parts
of the business, but circling rivals
have been put off by the low returns
Rok had accepted in order to win
contracts.
Before going into administration,
Rok had already begun to look into
a debt refinancing, even though its
£90m revolving credit facility is due
to expire in March 2012 and its bur-
den was far less than that seen at
social housing peer Connaught,
which went under in September.
Royal Bank of Scotland and HSBC
were two of Rok’s main creditors.
Rok’s shares were suspended at
18¾p last Monday.
More jobs
go at Rok,
says PwC
INDONESIA’S powerful Bakrie family
has joined forces with the Rothschild
banking dynasty to cement its domi-
nance of Indonesia’s booming coal
exports sector through a London-list-
ed company.
The deal combines stakes in three
companies. Bakrie Group, run by the
family of politician and tycoon
Aburizal Bakrie, is joining miner
Berau Coal with prize asset PT Bumi
Resources in a share swap deal with
Vallar – the mining investment fund
established by financier Nathaniel
Rothschild earlier this year.
Bakrie will gain majority control of
London-listed Vallar and rename it
Bumi, a symbol of a move that means
Indonesia’s biggest coal producer
gains a greater share of the global
market.
“This is a reverse takeover where
the Bakrie Group is regrouping its
coal mining assets,” said Norico
Gaman, the head of research at
Jakarta brokerage PT BNI Securities.
“Vallar is only a vehicle for the Bakrie
Group to consolidate its assets.”
“Bumi is now aiming to become
one of the biggest global players in
the coal industry,” Gaman added.
As part of the deal, Vallar will pay
$3bn in cash and new shares to buy a
75 percent stake in Berau and 25 per
cent of Bumi in its first deal since rais-
ing $1.1bn and listing in July.
“We’ve announced the creation of
an Indonesian coal champion... (that)
is going to be the largest supplier of
thermal coal to China,” Rothschild
said.
China’s total imports in 2009 were
a record 126m tonnes, triple the 2008
level.
Bakrie Group will own 43 per cent
of Bumi, while 28.3 per cent will be
owned by exisiting Vallar ordinary
shareholders.
Vallar in a
$3bn Asian
coal deal
THE UNION representing engineers
and scientists working on nuclear
warheads for Britain’s Trident mis-
siles said they are to take industrial
action in protest over the latest pay
offer from their employer, the Atomic
Weapons Establishment (AWE).
Prospect union spokesman
Graham Stewart said its 1,300 mem-
bers, who represent the majority of
specialist staff at AWE’s Aldermaston
and Burghfield sites in Berkshire,
west of London, would demonstrate
at the site on 23 November.
AWE, which supplies and main-
tains Britain’s nuclear missile war-
heads, is managed for the
government by AWE Management, a
consortium of Jacobs Engineering
Group, Lockheed Martin UK and
Serco. The 25-year management con-
tract runs until March 2025.
Trident staff in pay revolt
INDUSTRY

New Lloyds non-executive director Anita Frew
BY HARRY BANKS
MINING

BY HARRY BANKS
INDUSTRIAL SERVICES

BY MARION DAKERS
PROPERTY

MORTGAGE sellers could face tough
new rules under proposals by the
Financial Services Authority (FSA).
The watchdog is calling for sellers
to hold professional qualifications
before they can approach potential
home buyers.
The FSA has conducted a major
review of the market as it seeks to
protect buyers from being sold home
loans they cannot afford.
Part of the review calls for new
affordability rules which would
require strict verification checks on
customers that would take into
account hikes in the rate of interest.
The FSA is also calling for clarity
over firms selling only a restricted
number of mortgage options, rather
than loans from across the market.
But the Council for Mortgage
Lenders (CML) says the rules could
exclude creditworthy buyers from the
market.
CML director general Michael
Coogan said: “This set of proposals
would end up doing more harm than
good. We strongly urge both the FSA
itself and relevant government minis-
ters to take stock of all the evidence
before proceeding.
“These rules would likely have the
effect of creating significant financial
exclusion among perfectly creditwor-
thy borrowers. In turn, this has wider
consequences for housing and wider
society, and would exacerbate the
generational wealth divide that
already exists. We urgently need a
proper public policy debate on how
housing finance can help the govern-
ment deliver its housing policy, and
to review whether the risk-averse
approach which the FSA has adopted
would serve mortgage borrowers or
undermine their reasonable aspira-
tions to become home owners.”
New rules for
loan sellers
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BY STEVE DINNEEN
MORTGAGES

THE EUROPEAN Commission’s plans
to regulate short selling have the
potential to wreck the City’s reputa-
tion as a global trading centre, a
London MEP said yesterday.
Conservative MEP Syed Kamall said
that, while the Commission consulted
with industry figures widely before
drafting the rules, European politi-
cians hoped to strengthen the new
regulation to stifle the market, dispro-
portionately hitting the Square Mile.
France and Germany wrote a letter
to the Commission over the summer
urging it to ban short selling of shares
and sovereign bonds.
“Short selling is socially useful,”
said Kamall. “It is vital that we do not
over-regulate the EU market, as those
that operate here will not just take
their short positions out of the EU
but their long positions as well.”
City could be hammered by new
EU short selling rules, says MEP
REGULATION

WEALTH management firm Collins
Stewart yesterday said it had made
steady progress since the first half of
the year, as it reported total revenue
increased nearly 30 per cent in the
third quarter, despite difficult mar-
kets in which trading volumes in the
US and UK remained subdued.
The wealth manager said total rev-
enues were £75m for the three
months to 31 October compared to
£58m in the second quarter. It added
its net cash balance stood at £88m in
the third quarter compared to £75m
three months earlier.
Projected financial performance
for the period was 17 per cent ahead
of the first half of 2010.
Meanwhile, assets under manage-
ment rose by almost £1bn to £7.6bn
in the third quarter from £6.8bn in
the previous quarter. The integration
of both Corazon Capital and
Andersen Charnley was also going
according to plan, the firm said.
Mark Brown, chief executive, of
Collins Stewart said: “Markets are still
pretty tough but we are now more
than holding our own. We continue
to strengthen the business with sen-
ior hires as we re-calibrate the group
and equip ourselves for the opportu-
nities ahead.”
Shares in Collins Stewart closed 1.8
per cent lower at 80p following the
announcement.
Collins Stewart sees growth
despite lower trade volumes
BY MATTHEW WEST
BANKING

News
18 CITYA.M. 17 NOVEMBER 2010
PINK DIAMOND SELLS FOR RECORD £28M
A RARE pink diamond fetched 45.44m Swiss francs (£28.6m) yesterday, doubling the pre-
vious record to become the most expensive stone ever sold at auction, Sotheby’s said.
The rectangular pink diamond, which weighs 24.78 carats and is about the size of a pin-
ball, was the star lot among 550 on the block at the semi-annual jewellery sales in
Geneva yesterday. Picture: REUTERS
THE SITE earmarked for the 53-
storey Beetham Tower on the south
bank has been put back on the mar-
ket by administrators BMO.
The site at 1 Blackfriars Road, once
owned by Beetham Organisation and
Russian developer Mirax, will be for-
mally marketed by CB Richard Ellis
in early 2011.
Royal Bank of Scotland placed the
developers’ subsidiary into adminis-
tration in October, after the pair
failed to agree on further funding.
The Beetham Organisation and
Mirax said in a statement they
expected to be taking the project out
of administration “very shortly, in
association with new investors”, but
no offer to buy back the plot has
emerged.
BMO said it expects the site to
bring in excess of £150m.
The developers gained planning
permission in 2007, and estimated
the cost of developing the skyscraper
at £1bn. The pair had planned to
build 64 luxury apartments and a
261-bedroom hotel in the tower.
Beetham Organisation hoped to
emulate the success of its project in
Manchester, also named the
Beetham Tower, which attracted ten-
ants including the Hilton Hotel to
the city centre.
LONDON landlord British Land
intends to sell assets in the City finan-
cial district as it takes a more trading-
focused investment strategy, adding
an uptick in its exposure to prime
offices may not last long.
The company said yesterday its £1bn
share in developing 2.1m square feet
of prime offices in central London
would see its portfolio exposure to the
sector rise to about 40 per cent, from
33 per cent.
“We will be driven, to some extent,
as we see opportunities going for-
ward,” chief executive Chris Grigg said.
“We would intend over time to be
more trading orientated in the City, so
in a way that you could see that (port-
folio weighting) going up in the short
term, but potentially down longer
term as we seek to take advantage of
the value we create by development.”
His comments came as British Land
posted improved results for the six
months to 30 September, with portfo-
lio value, net asset value (NAV) and
occupancy all rising, while the compa-
ny’s interim dividend remained flat.
Collins Stewart analyst Nan Rogers
kept her “Sell” rating and 450p price
target on British Land, preferring
Great Portland Estates and Land
Securities for their higher exposure to
London’s West End and better per-
formance. British Land’s 2.6 per cent
hike in portfolio value to £8.9bn was
below the 7.3 per cent reported by
Great Portland and 3.4 per cent
booked by Land Securities. British
Land’s net asset value rose 4.2 per cent
to 525p a share in the six months to 30
September, against 504p at the end of
March 2010. In the prior first-half peri-
od, its net asset value was 372p. Supply
of new-build London offices is expect-
ed to undershoot demand in the next
three years following a three-year hia-
tus in construction.
British Land
eyes disposal
of City assets
HOUSEBUILDER Taylor Wimpey said it
expects profit to be at the high end of
estimates this year thanks to stable
sales, while a £950m refinancing deal
will give the firm more flexible trad-
ing conditions next year.
The company has an order book
worth £883m, down 8.4 per cent on
last year, though the firm said the
focus was on margins rather than
sales growth in an interim manage-
ment statement.
Taylor Wimpey also said finance
director Chris Rickard would step
down and be replaced by Ryan
Mangold, the current financial con-
troller.
““It has been the plan for a while,”
chief executive Pete Redfern told City
A.M. “Our new finance director has
been with us for 18 months getting to
know the business. While we have
some refinancing left to do, it should-
n’t be as intensive as the last round so
Ryan should be refocusing on the day-
to-day UK business.”
Redfern said the firm’s new debt
facility frees the business from previ-
ous limits, including a £150m annual
ceiling on land purchases.
Taylor Wimpey’s banks include
Lloyds, HSBC, Barclays and RBS, as well
as company broker JP Morgan.
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Taylor Wimpey sees profits
at top end of market views
Beetham Tower site is put back
on the market by administrators
BY HARRY BANKS
PROPERTY

PROPERTY

BY MARION DAKERS
PROPERTY

News
19 CITYA.M. 17 NOVEMBER 2010
480
500
520
460
24Sep 6Sep 16Aug 14Oct 3Nov
ANALYSIS l British Land
p
489.70
16 Nov
Chief executive
Chris Grigg saw
British Land’s
portfolio value
rise 2.6 per cent
to £8.9bn in the
six months to the
end of September
News
20 CITYA.M. 17 NOVEMBER 2010
Consumers are not willing to splash the cash
T
HE Christmas spending season
is well under way, but there are
some worrying signs for UK
retailers in the latest
Bloomberg/YouGov Household
Economic Activity Tracker (HEAT).
Particular concern is warranted
around consumers’ willingness to
purchase big ticket items, which can
make or break a brand’s Christmas
retail season.
The report found that UK con-
sumers have considered themselves
less capable of making major pur-
chases as 2010 has progressed.
CONSUMERS LESS CONFIDENT
As the graph shows, since June this
year consumers have become steadily
less confident that it is a good time to
spend money on big ticket items:
October’s net buying intention score
was -31 per cent.
These figures put consumer spend-
ing intentions below what they were
in October 2009 (net -24 per cent), sug-
gesting that November and December
2010 could also struggle in compari-
son with last year.
Some retailers are looking to head
off upcoming difficulties by offering
time-sensitive promotions, like Sony’s
promise to return VAT on pre-
Christmas purchases.
This unwillingness to commit to
big spending is also concerning when
considered in the context of the fact
that one in four respondents said that
their household had saved less money
in October than in September.
Consumer attitudes to spending
suggest that money not saved is not
being spent immediately: YouGov
respondents were asked what they
would do with a windfall of one
month’s income; a question which
acts as a proxy to judge how bullish
consumers are feeling about spend-
ing. A majority of 80 per cent claimed
they would either save it or use it to
pay off existing debt, rather than
spend it.
Brands will have to work hard in
order to get consumers to part with
their hard-earned pounds this year.
Stephan Shakespeare is co-founder and
chief executive of YouGov.
THE London Stock Exchange, which is
losing market share to low-cost rivals,
has hired a technology specialist to
attract business from controversial
high-frequency trading (HFT) firms.
The LSE is keen to attract more flow
from HFTs in a bid to claw back busi-
ness lost to rivals such as Chi-X Europe
and Bats Europe, that have grown
quickly off the back of high-volume
trading firms.
The UK exchange has hired Audrey
Faveeuw as a business development
manager reporting to Pinar Emirdag,
the LSE’s head of business develop-
ment since her appointment in July.
Faveeuw, who joined the exchange
from technology firm Atrium
Network, is charged with building rela-
tionships with Europe’s elite high-fre-
quency trading firms (HFTs).
“Audrey has a strong track record of
City experience, including a number
of key business development roles,”
Emirdag said in an emailed statement.
The LSE’s share of UK equity trading
has fallen to 51.2 per cent so far this
month, compared to 95.8 per cent at
the start of 2008, according to data
from Thomson Reuters.
The UK exchange had planned to
upgrade this month the technology
behind its main UK order book to
make it more attractive to HFTs.
But the LSE postponed the switch
until next year after it launched on 2
November an investigation into “suspi-
cious circumstances” after its
European share trading system
Turquoise crashed for two hours that
morning. Turquoise has been trading
normally since and the investigation is
ongoing, a spokesman said.
HFTs, typically computer driven
hedge funds, have grown rapidly in
Europe since the European
Commission’s Mifid trading reforms.
LSE tech expert
to help lure HFT
BY HARRY BANKS
FINANCIAL MARKETS

BRANDINDEX
STEPHAN SHAKESPEARE
Audrey Faveeuw has been hired as a business development manager for the LSE
Champion Trader - Week 3
l
Day 2
User Name Account Value % Difference
All change on the leaders, sbwilliams has come from outside the top ten
today to lead the way with a massive £177,521 account value, fantastic
trading or just good luck ?
There is still time to play and it is free with £8,000 prize pot still available.
To register and the full standings, visit www.intertrader.com/champion
1 sbwilliams £177,521.40 1675
2 jasonkhan £111,292.92 1013
3 alonsove £95,033.40 850
4 shuping £65,453.22 555
5 rhona45 £64,683.91 547
6 urosbric3 £62,793.00 528
7 shidong £61,121.03 511
8 TheMysteryTrader £38,499.37 285
9 Gekko1981 £38,496.73 285
10 garnz123 £34,911.50 249
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ANALYSIS l Willingness of consumers to buy big ticket items, Feb 09-Oct 10
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US BANKS and a task force of the
nation’s 50 state attorneys general are
nearing a settlement of an investiga-
tion into the lending industry’s fore-
closure practices.
A settlement would call for Bank of
America Corp, JPMorgan Chase & Co
and others to contribute money to a
fund to assist borrowers who lost
their homes to foreclosure and which
would be administered by the regula-
tors.
It would also involve a promise by
banks to do away with “dual-track”
modifications and foreclosures, a
much-criticised practice in which
they begin foreclosure proceedings
before exhausting attempts to modify
home loans, according to CNBC.
The task force is being led by Tom
Miller, the attorney general of Iowa. A
settlement might not be reached for
at least one month, CNBC said.
FINANCIAL SERVICES

US banks face
calls to pay into
mortgage fund
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Technology and Telecoms News
21 CITYA.M. 17 NOVEMBER 2010
GERMANchipmaker Infineon plans
to pay shareholders its first divi-
dend for a decade, underlining con-
fidence in the future after clawing
its way back from the downturn.
Chief executive Peter Bauer, a life-
long chip specialist who grew into
the role of restructurer, said
Infineon planned to pay out divi-
dends on a regular basis just like
other companies.
Infineon, whose chips can be
found in mobile handsets ranging
from Nokia to Apple, said its man-
agement will recommend a divi-
dend per share of €0.10, as it
reported strong fourth-quarter
results.
The proposed dividend is above
the average forecast of €0.08 per
share in a Reuters poll of analyst.
Infineon last paid a dividend for the
financial year 1999/2000.
In addition, Infineon will consid-
er a share buyback of up to 10 per
cent of outstanding shares.
Fourth-quarter sales were €942m
(£793m), up 55 per cent year-on-year.
Its segment result, excluding its
wireless operations, was €171m, up
33 per cent.
Chief executive Bauer also
addressed investor hopes of a spe-
cial dividend from proceeds of an
asset sale, saying Infineon will pass
on more money to shareholders if
“we do not know what to do with
our cash”. It sold its wireless chip
unit to bigger rival Intel for $1.4bn
in August.
The company struck an opti-
mistic tone for the coming financial
year, saying it expects revenue
growth of almost 10 per cent and an
operating margin in the mid to
high teens percentage of sales. Still,
Bauer said, there was an element of
caution built into the outlook.
Infineon to pay first
dividend in a decade
BY HARRY BANKS
TECHNOLOGY

TELECOMS firm Cable & Wireless
Worldwide is comfortable with
full-year expectations after posting
first-half sales and earnings in line
with forecasts despite pressure
from cuts to UK public spending.
C&W Worldwide (CWW), which
concentrates on the global corpo-
rate market and has a large pres-
ence in Britain, said the
“satisfactory” results had been held
back by the challenges in the UK
public sector but said they had
developed good momentum by the
end of the first half.
The group posted revenues down
1.6 per cent to £1.12bn, in line with
a company-supplied forecast.
Earnings before interest, tax,
depreciation and amortisation
(EBITDA) were up 4.4 per cent to
£214m, also in line with forecasts.
Pre-tax profit at £53m was com-
fortably ahead of the forecast of
£40m.
C&W Worldwide said the strong
finish to the first six months had
given it good momentum going
into the second half of the year and
said a Memorandum of
Understanding it had with the
British government would help it
build its presence in this market.
“Overall we remain comfortable
with full year expectations,” chief
executive Jim Marsh said in a state-
ment.
The company yesterday
announced two new deals with
Tesco Bank to provide data centre
services and a hosted contact cen-
tre solution. It also announced a
deal with UK business of pharmacy
retailer Alliance Boots and has
existing contracts with the Foreign
& Commonwealth Office.
Cable & Wireless Worldwide says it
is happy with current full-year target
TELECOMS

EXPERTS expect Facebook’s new email
service to provide a real threat to rivals
such as Google and Microsoft.
Facebook chief executive Mark
Zuckerberg says the platform will
offer integrated email, chat and text
messaging to its users. The firm
believes it can take advantage of a
fragmented communications mar-
ket where internet users must
switch between websites for differ-
ent services.
Phil Story, consultant at email
marketing firm eCircle told City
A.M.: “Even if just 10 per cent of
Facebook users adopt the service,
that’s 50m people using it for every-
day personal use. It will undoubted-
ly send shock waves through
existing email services.”
Both Microsoft, through its
Hotmail platform, and Google
through Gmail have attempted to
integrate social networking into
their email offerings with limited
success. Google this year scrapped its
much-hyped Buzz social networking
add-on to Gmail after a poor take-up
from its users.
Facebook to shake up email
BY STEVE DINNEEN
TECHNOLOGY

5.5
6
6.5
5
4.5
24 Sep 6 Sep 16 Aug 14 Oct 3 Nov
ANALYSIS l Infineon

6.25
16 Nov
“I wouldn’t switch from my Yahoo account. I’m too
used to it and have it customised. Another problem is
that my work bars Facebook from our computers
so I wouldn’t be able to access my email
there.”
EMMA GALLIVAN | ANGLO ROMANIA BANK
“I’m very IT literate and I will be sticking to my Gmail
account. I don’t have a Facebook account and I don’t
want one so I don’t see why I’d use their email. I have
a problem with the security and privacy of
Facebook.”
JOHN PICKETT | LLUK
“Facebook is for women and single men and I’m nei-
ther. I use Yahoo and email is one of the few things
they do well. I’d be interested in seeing what it is like
but I doubt I’d make the switch.”
PAUL KINGDON | AMPHORA
Facebook chief execu-
tive Mark Zuckerberg
says his email service
will be a threat to
Google and Microsoft
Picture: REUTERS
CITY VIEWS: WOULD YOU SWITCH TO A FACEBOOK
EMAIL ACCOUNT? Interviews by Steve Dinneen
UK OIL and gas explorer Cairn Energy
yesterday cast doubt on the planned
sale of most of its Indian business to
miner Vedanta Resources for up to
$8.5bn (£5.4bn) , but said it still hoped
to seal the deal next year.
Cairn said there was no guarantee
it would sell 40 to 51 per cent of its
62.4 per cent stake in Cairn India to
London-listed Vedanta due to regula-
tory uncertainty.
Cairn investors had hoped the deal
would close by the end of the year,
but the government is still deciding
whether to back it in the face of com-
plaints from state-controlled ONGC,
Cairn India’s partner in the massive
Rajasthan oilfields. ONGC would like
the tax rules changed to reduce its
tax burden as part of the deal.
Cairn’s deputy chief executive
Michael Watts told the Independent
and Junior Oil Congress in London
that the group still expected the deal
to close in the first quarter of 2011,
but he added: “You can’t guarantee
these things because there are three
parties: the government, ourselves
and Vedanta.”
Watts said Cairn had not sought
out the sale and that the company
was happy to keep the 40 to 51 per
cent stake in Cairn India that it
agreed to sell.
“If it goes through or it doesn’t go
through, it doesn’t change the reality
that it’s a hell of a good project,”
Watts said.
Vedanta, which mines zinc, alu-
minium, copper and iron in India,
hopes to use the Cairn stake to
expand in the oil and gas market.
Cairn plans to use the proceeds of
the sale to return billions of dollars to
shareholders and to fund exploration
in Greenland.
Cairn India’s main asset is a 70 per
cent stake in the Rajasthan oil devel-
opment project with an estimated
6.5bn barrels of oil and gas.
HELMUT Kiener, founder of German
hedge fund group K1, is being
charged with fraud, forgery of docu-
ments and tax evasion more than a
year after he was arrested in a multi-
million-dollar investigation.
He is accused of having swindled
investors out of about €345m
(£293.6m) with an elaborate Ponzi
scheme, the public prosecutors’ office
in Wuerzburg, Germany, said in a
statement yesterday.
Kiener was arrested in October
2009 as authorities said Barclays and
BNP Paribas may have lost millions of
dollars in the case, which prosecutors
said spanned the Atlantic and fea-
tured lavish personal spending on
planes, a helicopter and luxury prop-
erties. Investors were duped into
investing in funds K1 Global and K1
Invest by pretending the funds were
posting significant profits and would
continue to do so, even though both
of them had suffered “massive loss-
es”, the prosecutors’ office said.
K1 founder charged with
fraud for Ponzi scheme
FINANCIAL CRIME

RETAIL group Maxeda Retail Group
B.V. said yesterday it has agreed to sell
the Dutch luxury department store
chain, De Bijenkorf – or “the beehive”
to Selfridges Group for an undis-
closed sum.
The transaction is part of an over-
haul of the Dutch non-food retail sec-
tor, with KKR’s Maxeda also selling
the Hunkemoeller lingerie stores and
private equity group Lion Capital try-
ing to sell the Hema mid-market
department store chains.
De Bijenkorf, whose flagship store
is a landmark building in
Amsterdam’s main Dam square, has
12 department stores in the
Netherlands’ biggest cities including
Rotterdam and The Hague.
“This is an exciting opportunity for
us to enter the Dutch marketplace
with the acquisition of this iconic
retailer,” said W. Galen Weston, chair-
man of Selfridges Group, in a state-
ment.
Selfridges Group, a subsidiary of
Canada-based Wittington
Investments, operates luxury retailers
Selfridges in the UK, Brown Thomas
in Ireland, and Holt Renfrew in
Canada. With the addition of De
Bijenkorf, its turnover will be close to
£2bn, the firms said in a joint state-
ment. Maxeda, owned by Kohlberg
Kravis Roberts, has international
retail outlets in Europe, Russia and
the Middle East.
Selfridges
snaps up
Dutch store
CONSUMER

CAR sales in the UK and Europe
plummeted in October as the end of
government help for the car industry
and uncertainty about spending cuts
took their toll.
New car registrations in the EU fell
16.6 per cent to 1.03m versus October
2009, the European Automobile
Manufacturers Association said.
Demand dipped 5.5 per cent to 11.3m
this year so far, the figures showed.
Sales in all big European markets
fell, with UK demand dipping 22.2
per cent, in Germany by a fifth, in
France 18.5 per cent, in Italy by 28.8
per cent and in Spain by 37.6 per cent.
Among carmakers, Italy’s Fiat,
America’s Ford and Chrysler and
Japan’s Toyota were the biggest losers,
falling 32.9 per cent, 29.5 per cent,
43.6 per cent and 28.7 per cent respec-
tively.
The best performers was BMW, up
5.1 per cent, Volvo rising two per cent
and Mitsubishi gaining 43.2 per cent.
Industry experts said the data
showed the impact of economic
uncertainty and the end of state
scrappage schemes, which help peo-
ple to buy new cars in return for trad-
ing in old vehicles.
President of the Centre for
Automotive Industry Research at
Cardiff Business School, Garel Rhys,
said the UK scrappage scheme boost-
ed the market by 300,000 cars in 2009
and by 100,000 this year, but he said it
benefited the car retail and wholesale
industry more than manufacturers.
It was likely to be 2013 before the
car market returned to the pre-reces-
sion level of 2.4m cars sold in 2007, he
said. “The fall in the car market is
entirely in keeping with the anaemic
growth in the economy,” he said.
“People are worried about what
will happen to their job prospects in
the next couple of years.”
New car sales fall in Europe
BY PHILIP WALLER
AUTOMOTIVE

Doubts hang
over Cairn’s
Indian sale
BY PHILIP WALLER
ENERGY

News
22 CITYA.M. 17 NOVEMBER 2010
BEATLES EAT INTO APPLE CHART
BEATLES albums yesterday flooded iTunes top 200 chart on their first day on sale.
Analysts predict they could topple top selling albums by Michael Jackson and Black Eyed
Peas. The release of the rights to iTunes after a lengthy legal wrangle is good news for
Terra Firma boss Guy Hands, whose embattled music firm EMI holds the rights to
Beatles recordings. Picture: REX
Investec
Investec Investment Banking and
Securities has expanded its research
team with the appointment of five new
senior analysts. Paul Leyland will be initi-
ating coverage of the gaming sector, hav-
ing spent two years at Collins Stewart
covering the gaming and pub sectors.
Gareth Hunt will be covering the bank-
ing sector. Kevin Ryan will be covering
insurance, drawing on his 23 years’ expe-
rience as a buy and sell-side insurance
analyst. Angelos Anastasiou will cover
the utilities sector, having two decades’
experience in this area. Finally, Morten
Singleton will be on the telecoms team.
In addition to these senior appoint-
ments, Investec has also added to its jun-
ior analyst team.
Mercer
Mercer’s Human Capital business has
added a new principal and senior consult-
ant, Alexander Bartfield. He will be devel-
oping the company’s new rewards and
talent management programme, Human
Capital Connect, for Europe, the Middle
East and Africa. In his previous position
he was a vice president at Softscape in
London, and has also worked at
Accenture in Boston.
Deloitte
Peter O’Donoghue has joined the firm as
leader of the technology sector for
Deloitte’s technology, media and telecoms
industry practice, which provides adviso-
ry services for companies in these sec-
tors.
Ratio Asset Management
Alice Squires has joined the the
European equities specialist as head of
investor relations, as part of a driving to
intensify its marketing intiatives. Squires
has moved from Deutsche Bank, where
she was director and head of pan-
European small and mid-cap equity sales.
She began her career at Natwest
Securities in 1994.
CITY MOVES | WHO’S SWITCHING JOBS Edited by Juliet Samuel
Barclays Corporate
Barclays Corporate has appointed a new head
of financial institutions. Matt Tuck will return
to the bank where he started his career, having
worked for the last eight years for Deutsche
Bank. In his new role, he will be responsible for
enacting a new stage in the expansion of the
bank’s financial institutions business. While at
Deutsche, he has held numerous management
positions, before which he worked at Citibank
and JP Morgan.
+44 (0)20 7557 7245
morganmckinley.com
To appear in CITYMOVES please email your career
updates and pictures to citymoves@cityam.com SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
in association with
460
500
380
420
24Sep 6Sep 16Aug 14Oct 3Nov
ANALYSIS l Cairn Energy
p
370.00
16 Nov
RICHARD Alderman, director of the
UK Serious Fraud Office (SFO), has
told the Anglo-Russian business com-
munity that his organisation will
actively seek to exercise new powers
worldwide in the global fight against
corruption.
Referring to new powers available
to the SFO following the implementa-
tion of the Bribery Act in April 2011,
Alderman told an event hosted by
McGrigors, the UK law firm: “I shall
have jurisdiction where a foreign cor-
poration carries on a business in the
UK and commits an act of bribery in a
third country. This will be an offence
even if the act of bribery has nothing
to do with the UK business.”
Alderman signalled an increasing
level of attention on the activities of
Russia-based businesses. He indicated
that working with foreign law
enforcement agencies was, and
would continue to be, an increasingly
important area of the SFO’s work, say-
ing: “We stand ready to help them in
what they are doing in the fight
against corruption in Russia.”
These views were echoed by Vadim
Alexandrovich Yalovitsky, his approxi-
mate counterpart at the General
Prosecutor’s Office, who told the dele-
gates: “Given that a number of indi-
viduals prosecuted for such crimes
are hiding beyond the reach of the
jurisdiction of the Russian
Federation, and that the ill gotten
profits from crime are transferred
abroad, we put a great deal of atten-
tion and energy into international
cooperation on criminal matters”.
Alderman said that up until 18
months ago the SFO had no success
in bringing cases involving corrup-
tion in overseas countries to court.
“We are now in a very different posi-
tion,” he said.
“At present I have no jurisdiction
over foreign corporates who commit
offences in other countries. That will
change when the Bribery Act comes
into force,” said Alderman.
LAW: P:28
SFO chief in
vow to chase
Russian fraud
PREMIER Oil, the British explorer and
producer, yesterday maintained its
production guidance and said a bank
refinancing had increased its facilities
by $470m (£295m).
The firm, which has assets in the
North Sea, Congo, Indonesia, Vietnam
and Pakistan, said it was forecasting
production at around 44,000 barrels of
oil equivalent (boe) in 2010. Premier
reiterated its targets of 75,000 boe/d in
2012 rising thereafter to 100,000 boe/d
from existing reserves and resources.
The firm reported good progress on
its key Asian developments, with facil-
ities in place on both the Chim Sao
and Gajah Baru projects and develop-
ment drilling under way.
It is also making progress on com-
pleting commercial agreements for
the Huntington project in the UK and
in North Sumatra.
Premier also noted a gas and con-
densate discovery at West Rochelle. It
said 23 wells were planned over the
next 13 months with unrisked poten-
tial of around 400m boe.
The firm added that the bank refi-
nancing, which took total facilities to
$1.8bn, was achieved at a significantly
reduced margin.
Premier Oil sticks to current production guidance
BY HARRY BANKS
LEGAL

ENERGY

News
23 CITYA.M. 17 NOVEMBER 2010
BEST OF THE BROKERS
ANALYSIS l Reed Elsevier
540
520
560
570
16 Aug 6 Sep 24 Sep 14 Oct 3 Nov
p
530.00
16 Nov
REED ELSEVIER
Execution Noble rates the publisher a
“hold” with a fair value price of 480p.
The broker says Reed’s recent disposal of
legal, tax and regulatory work in Germany
could lead to further asset disposals such
as the LexisNexis business, creating value
and limiting the firm’s exposure to a diffi-
cult legal market.
ANALYSIS l Cable & Wireless
Worldwide
75
65
70
60
80
16Aug 6Sep 24Sep 14Oct 3Nov
p
68.90
16 Nov
C&W WORLDWIDE
RBS rates the telecoms group a “buy” with
a target price of 105p. The broker believes
the firm’s recent results should reassure
investors that the company is trading in
line with expectations despite a slowdown
in the public sector. However, capital out-
flow was double consensus estimates due
to the phasing in of VAT payments.
ANALYSIS l Majestic Wine
340
320
360
380
400
16Aug 6Sep 24Sep 14Oct 3Nov
p
381.00
16 Nov
MAJESTIC WINES
Numis Securities rates the retailer a “hold”
with a target price of 360p. The broker
believes the firm’s recent half-year results
were strong, with a 20 per cent rise in pre-
tax profit. It said the lower minimum pur-
chase price in stores was helping to attract
younger customers. The broker now pre-
dicts £18.9m pre-tax profit for the year.
To appear in Best of the Brokers email your research to notes@cityam.com
“Metal prices and commodities are
all going down on the back of the
Irish story and fears of yet another
euro crisis rearing its head. And no-
one knows what sort of exposure the
banks have got to Irish debt.”
Elsewhere among financials Man
Groupwas a big faller, off 4.4 per cent,
with traders saying that its flagship
AHL fund was having a tough week.
Mining and energy stocks were also
knocked by lingering fears of interest
rate hikes in China, the world's
largest commodities consumer.
Also weighing on confidence was
weaker-than-expected data out of the
United States where core producer
prices recorded their largest decline
in more than four years and
November homebuilder sentiment
was up less than expected.
Earlier, inflation in Britain rose
unexpectedly to a four-month high in
October.
Rexam was the standout FTSE 100
riser, adding 2.3 per cent, after the
drinks can maker said it expected its
second half results to be in line with
its expectations, prompting Seymour
Pierce to repeat its “buy” rating on
the stock. Capita Group, up 0.5 per
cent, was also boosted by positive bro-
ker sentiment after Numis Securities
lifted its rating on the outsourcer to
“buy” from “add”.
5,200
ANALYSIS l FTSE
6,000
5,600
5,800
5,400
5,000
24Sep 6Sep 16Aug 14Oct 3Nov
5,681.90
16 Nov
LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
3i . . . . . . . . . . . . . . . . . . . . . . . .314.90 –4.50 328.30 246.90
3i Infrastructure . . . . . . . . . . . . . 118.40 +1.00 118.50 97.00
A.B. Foods . . . . . . . . . . . . . . . .1072.00 –22.00 1113.00 790.00
Aberdeen Asset Man . . . . . . . . . .177.20 –2.80 191.60 111.00
Admiral . . . . . . . . . . . . . . . . . . .1565.00 –17.00 1721.00 1003.00
Aegis . . . . . . . . . . . . . . . . . . . . .127.90 –6.20 137.30 103.10
Afren . . . . . . . . . . . . . . . . . . . . .125.90 –1.80 135.90 77.00
African Barr Gold . . . . . . . . . . . .551.00 –19.50 685.00 520.50
Aggreko . . . . . . . . . . . . . . . . . .1502.00 –77.00 1698.00 727.50
Alliance Trust . . . . . . . . . . . . . . .350.90 –10.10 363.00 292.80
AMEC . . . . . . . . . . . . . . . . . . . . 1116.00 +4.00 1144.00 728.00
Amlin . . . . . . . . . . . . . . . . . . . . .399.40 –4.40 437.60 357.30
Anglo American . . . . . . . . . . . .2886.50 –149.50 3069.00 2210.00
Antofagasta . . . . . . . . . . . . . . .1359.00 –79.00 1482.00 755.50
Aquarius Platinum . . . . . . . . . . .354.20 –22.00 490.00 211.50
ARM Holdings . . . . . . . . . . . . . . .352.30 +0.70 419.50 150.60
Ashmore . . . . . . . . . . . . . . . . . . .352.00* –11.10 400.50 215.00
Astrazeneca . . . . . . . . . . . . . . .3028.00 +12.00 3389.50 2680.50
Atkins(Ws) . . . . . . . . . . . . . . . . .729.00 –12.00 801.00 549.50
Autonomy Corp . . . . . . . . . . . .1398.00 –11.00 2012.00 1319.00
Aveva . . . . . . . . . . . . . . . . . . . .1470.00 +51.00 1572.00 930.00
Aviva . . . . . . . . . . . . . . . . . . . . .395.90* –7.90 428.70 290.20
Babcock International . . . . . . . . .567.00 –12.50 645.50 489.00
BAE Systems . . . . . . . . . . . . . . .345.20* –7.30 389.90 288.10
Balfour Beatty . . . . . . . . . . . . . . .278.70* –6.00 304.80 228.60
Barclays . . . . . . . . . . . . . . . . . . .273.80 –8.65 394.25 253.40
Barratt Development . . . . . . . . . . .73.55 –3.35 149.90 73.55
BBAAviation . . . . . . . . . . . . . . .194.90 –4.40 220.00 145.90
Berkeley . . . . . . . . . . . . . . . . . . .795.00 –12.00 917.50 735.00
BG . . . . . . . . . . . . . . . . . . . . . .1208.50 –48.00 1302.50 966.90
BHP Billiton . . . . . . . . . . . . . . .2318.00 –88.00 2500.00 1678.00
BlackRock Mining . . . . . . . . . . . .708.00 –23.00 737.50 490.00
BlueBay . . . . . . . . . . . . . . . . . . .481.50* — 495.00 251.00
Bluecrest Allblue GBP . . . . . . . . .174.00 –0.50 174.50 151.60
Booker . . . . . . . . . . . . . . . . . . . . .54.80* –0.50 56.00 37.50
BP . . . . . . . . . . . . . . . . . . . . . . .435.65 –13.05 658.20 296.00
Brit Insurance . . . . . . . . . . . . . .1041.00 –1.00 1052.00 709.00
British Airways . . . . . . . . . . . . . .259.50 –10.90 290.00 180.20
British Amer. Tob . . . . . . . . . . .2382.50 –16.50 2490.50 1832.00
British Empire Tst . . . . . . . . . . . .480.00* –10.50 497.00 338.50
British Land . . . . . . . . . . . . . . . .489.70 –17.30 525.00 416.00
Britvic . . . . . . . . . . . . . . . . . . . . .484.40 +4.00 518.00 360.70
Brown(N.) . . . . . . . . . . . . . . . . . .280.00 –4.70 308.00 204.80
BSkyB . . . . . . . . . . . . . . . . . . . .724.00 –5.00 737.00 521.00
BT . . . . . . . . . . . . . . . . . . . . . . .165.10 –4.20 170.10 108.40
Bunzl . . . . . . . . . . . . . . . . . . . . .719.00* –5.00 784.50 614.00
Burberry . . . . . . . . . . . . . . . . . .1004.00 –16.00 1065.00 555.50
Cable & Wire Comms . . . . . . . . . .49.00* –0.50 150.00 46.51
Cable & Wire Wwide . . . . . . . . . . .68.90 –0.20 94.80 60.05
Cairn Energy . . . . . . . . . . . . . . . .370.70 –8.30 497.60 306.80
Caledonia Invs . . . . . . . . . . . . .1765.00 –32.00 1833.00 1496.00
Capita . . . . . . . . . . . . . . . . . . . . .735.00 +3.50 829.50 693.00
Capital & Counties . . . . . . . . . . .148.00 –2.20 159.00 99.60
Capital Shopping Centres . . . . . .372.60 –11.90 523.50 300.10
Carillion . . . . . . . . . . . . . . . . . . .341.20 –6.50 361.90 272.00
Carnival . . . . . . . . . . . . . . . . . .2631.00 –46.00 2937.00 1963.00
Catlin . . . . . . . . . . . . . . . . . . . . .351.50 –9.40 394.60 303.20
Centamin Egypt . . . . . . . . . . . . .171.50 –4.50 202.80 103.50
Centrica . . . . . . . . . . . . . . . . . . .333.40* –4.30 347.00 244.70
Charter Intl . . . . . . . . . . . . . . . . .695.50 –20.00 855.50 563.50
Chemring . . . . . . . . . . . . . . . . .2801.00 –26.00 3711.00 2551.00
Close Bros . . . . . . . . . . . . . . . . .793.00* –13.50 834.00 657.00
Cobham . . . . . . . . . . . . . . . . . . .204.50 –1.70 278.60 199.20
COLT Group . . . . . . . . . . . . . . . . 119.50 — 144.20 107.70
Compass . . . . . . . . . . . . . . . . . .530.00 –10.50 574.50 399.30
Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p)
Cookson . . . . . . . . . . . . . . . . . . .513.00 –26.50 616.00 364.80
Croda Intl . . . . . . . . . . . . . . . . .1367.00 –45.00 1540.00 735.00
Daily Mail ‘A’ . . . . . . . . . . . . . . . .546.50 –18.50 573.50 401.70
Davis Service . . . . . . . . . . . . . . .400.30 –4.40 442.30 356.00
Debenhams . . . . . . . . . . . . . . . . .70.00 –1.15 90.00 51.95
Derwent London . . . . . . . . . . . .1435.00 –25.00 1633.00 1183.00
Dexion Absolute . . . . . . . . . . . . .137.10 –2.40 148.00 131.20
Diageo . . . . . . . . . . . . . . . . . . . 1159.00 –9.00 1240.00 988.00
Dixons Retail . . . . . . . . . . . . . . . .25.38 –0.92 39.75 23.07
Domino’s Pizza . . . . . . . . . . . . . .523.00 –11.50 535.50 278.20
Drax . . . . . . . . . . . . . . . . . . . . . .365.80 –2.70 464.80 321.50
Dunelm . . . . . . . . . . . . . . . . . . . .496.40 –7.60 521.00 319.40
Easyjet . . . . . . . . . . . . . . . . . . . .449.30 –22.80 499.90 339.80
Edinburgh Inv Tst . . . . . . . . . . . .441.00 –10.50 466.80 345.50
Electrocomponents . . . . . . . . . . .260.60 –4.40 266.60 159.50
EnQuest . . . . . . . . . . . . . . . . . . .128.90 –2.10 138.50 87.35
Essar Energy . . . . . . . . . . . . . . .505.00 –19.50 566.50 358.50
Eurasian Nat Res . . . . . . . . . . . .919.50 –45.00 1276.00 801.00
Euromoney Inst Inv . . . . . . . . . . .677.00 –8.00 685.00 383.00
Experian . . . . . . . . . . . . . . . . . . .703.50 –16.00 763.50 559.00
Ferrexpo . . . . . . . . . . . . . . . . . . .361.00 –31.80 401.60 169.00
FirstGroup . . . . . . . . . . . . . . . . .377.30 –11.20 428.40 331.20
Foreign & Col Inv Tst . . . . . . . . . .288.00 –6.60 300.00 250.00
Fresnillo . . . . . . . . . . . . . . . . . .1361.00 –92.00 1480.00 647.00
G4S . . . . . . . . . . . . . . . . . . . . . .249.50 –1.70 285.70 238.70
Genesis Emerging Mkts Fd . . . . .514.00 –13.00 542.50 383.00
GKN . . . . . . . . . . . . . . . . . . . . . .181.60 +1.60 188.40 100.40
GlaxoSmithKline . . . . . . . . . . . .1213.50* –8.50 1347.00 1088.00
Great Portland Estates . . . . . . . .334.30 –1.70 368.60 265.40
Greene King . . . . . . . . . . . . . . . .439.30 –7.50 484.00 372.50
Halfords . . . . . . . . . . . . . . . . . . .408.50 –4.50 562.50 370.10
Halma . . . . . . . . . . . . . . . . . . . . .325.90 –3.40 345.50 221.80
Hammerson . . . . . . . . . . . . . . . .408.50 –10.50 460.30 332.20
Hargreaves Lansdown . . . . . . . .479.40 –15.40 502.50 259.40
Hays . . . . . . . . . . . . . . . . . . . . . .108.10* –1.80 125.30 82.50
Henderson . . . . . . . . . . . . . . . . .128.90 –2.80 157.80 112.10
Heritage Oil . . . . . . . . . . . . . . . . .389.30 –1.70 585.00 295.90
Hikma Pharma . . . . . . . . . . . . . .750.50 –13.00 813.00 480.00
Hiscox . . . . . . . . . . . . . . . . . . . .360.30 +1.80 371.60 299.60
Hochschild Mining . . . . . . . . . . .547.50 –33.00 580.50 220.00
Home Retail . . . . . . . . . . . . . . . .212.50* –1.80 326.30 201.70
Homeserve . . . . . . . . . . . . . . . . .429.60 +15.80 502.00 405.40
HSBC Hldgs . . . . . . . . . . . . . . . .665.00 –16.80 766.80 595.20
Hunting . . . . . . . . . . . . . . . . . . .622.50* –22.50 663.50 429.10
ICAP . . . . . . . . . . . . . . . . . . . . . .465.90 –11.40 501.50 291.70
IG . . . . . . . . . . . . . . . . . . . . . . . .494.10 –13.40 560.00 312.60
Imagination Tech Gp . . . . . . . . . .325.00 –5.00 445.00 200.00
IMI . . . . . . . . . . . . . . . . . . . . . . .823.50 –17.50 855.50 483.10
Imperial Tobacco. . . . . . . . . . . .1988.00 –11.00 2159.00 1728.00
Inchcape . . . . . . . . . . . . . . . . . . .334.50 –2.70 358.00 235.00
Informa . . . . . . . . . . . . . . . . . . . .417.40 –13.60 450.50 263.30
Inmarsat . . . . . . . . . . . . . . . . . . .672.50 +0.50 831.00 603.50
Intercontl Hotels . . . . . . . . . . . .1081.00 –22.00 1244.00 803.00
Intermediate Capital . . . . . . . . . .332.90 –5.80 352.80 233.50
Intertek . . . . . . . . . . . . . . . . . . .1931.00* –28.00 1964.00 1136.00
Intl Personal Fin . . . . . . . . . . . . .307.10 –6.70 340.90 181.40
Intl Power . . . . . . . . . . . . . . . . . .417.90 –2.60 438.10 265.90
Invensys . . . . . . . . . . . . . . . . . . .330.40* –17.50 350.30 224.90
Investec . . . . . . . . . . . . . . . . . . .497.80 –12.20 565.00 411.50
ITV . . . . . . . . . . . . . . . . . . . . . . . .67.10 –3.95 73.00 46.77
Jardine Lloyd Thompson. . . . . . .579.50 — 604.50 420.70
Johnson Matthey . . . . . . . . . . .1829.00 –79.00 1999.00 1435.00
JPMorgan Emerg Mkts . . . . . . . .592.00 –9.00 618.00 448.00
Jupiter Fnd Mgmt . . . . . . . . . . . .286.50 –3.50 310.00 180.00
Kazakhmys . . . . . . . . . . . . . . . .1421.00 –93.00 1634.00 955.50
Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p)
Kesa Electricals . . . . . . . . . . . . .162.00 –1.60 172.40 98.45
Kingfisher . . . . . . . . . . . . . . . . . .236.70 –5.90 255.00 196.50
Ladbrokes . . . . . . . . . . . . . . . . .132.50* –1.90 164.60 120.00
Lamprell . . . . . . . . . . . . . . . . . . .352.30 –2.60 393.90 157.30
Lancashire Hldgs . . . . . . . . . . . .629.50 +9.00 630.00 416.70
Land Securities . . . . . . . . . . . . . .673.00 –23.50 743.50 543.00
Legal & General . . . . . . . . . . . . . .96.45 –2.90 107.50 69.05
Lloyds Banking Gp . . . . . . . . . . . .66.60 –3.27 79.15 45.30
Logica . . . . . . . . . . . . . . . . . . . .122.90 –3.40 149.10 100.80
London Stk Exchange . . . . . . . . .733.50 –7.00 888.50 540.50
Lonmin . . . . . . . . . . . . . . . . . . .1759.00 –79.00 2198.00 1344.00
Man . . . . . . . . . . . . . . . . . . . . . .280.90 –12.80 373.60 199.60
Marks & Spencer . . . . . . . . . . . . .396.00 –7.90 431.40 321.90
Meggitt . . . . . . . . . . . . . . . . . . . .317.90 –0.30 336.70 234.50
Melrose . . . . . . . . . . . . . . . . . . .278.00 –12.00 304.90 160.00
Mercantile IT . . . . . . . . . . . . . . . .998.50 –26.50 1029.00 822.50
Michael Page Intl . . . . . . . . . . . . .479.50 –13.90 507.50 326.00
Micro Focus . . . . . . . . . . . . . . . .327.00 –12.30 550.00 272.20
Millen & Copthorne . . . . . . . . . . .513.50 –23.50 585.00 329.20
Misys . . . . . . . . . . . . . . . . . . . . .289.80 –4.70 300.00 196.60
Mitchells & Butlers . . . . . . . . . . .340.70 –2.80 351.60 242.50
MITIE . . . . . . . . . . . . . . . . . . . . .200.00 +4.40 248.60 187.60
Mondi . . . . . . . . . . . . . . . . . . . . .492.20 –17.30 562.00 304.70
Monks Inv Tst . . . . . . . . . . . . . . .335.00 –5.30 349.70 265.00
Morrison Wm . . . . . . . . . . . . . . .276.00 –2.50 307.10 255.00
Murray Intl Tst . . . . . . . . . . . . . . .894.00* –14.00 938.50 720.00
National Express . . . . . . . . . . . . .237.90 –2.20 261.30 164.80
National Grid . . . . . . . . . . . . . . .582.00 –8.00 607.65 474.80
Next . . . . . . . . . . . . . . . . . . . . .2108.00 –49.00 2361.00 1816.00
Northumbrian Water . . . . . . . . . .350.10 –2.90 364.00 238.90
Ocado Grp . . . . . . . . . . . . . . . . .132.20 –2.20 169.00 120.90
Old Mutual . . . . . . . . . . . . . . . . .126.40* –4.70 146.90 95.30
Partygaming . . . . . . . . . . . . . . . .218.90 –6.10 339.70 205.80
Pearson . . . . . . . . . . . . . . . . . . .930.00 –19.00 1069.00 812.00
Pennon . . . . . . . . . . . . . . . . . . . .629.00 –7.50 644.00 458.90
Persimmon . . . . . . . . . . . . . . . . .356.60* –0.70 520.00 335.90
Petrofac . . . . . . . . . . . . . . . . . .1486.00 –43.00 1545.00 900.00
Petropavlovsk . . . . . . . . . . . . . . .998.00 –74.00 1370.00 834.00
Phoenix Group . . . . . . . . . . . . . .671.00 –5.00 775.00 550.50
Premier Farnell . . . . . . . . . . . . . .294.00 –0.50 299.20 150.80
Premier Oil . . . . . . . . . . . . . . . .1831.00 –29.00 2032.00 984.00
Provident Financial . . . . . . . . . . .738.00* –5.50 983.50 725.50
Prudential . . . . . . . . . . . . . . . . . .608.00 –15.00 665.00 475.70
PZ Cussons . . . . . . . . . . . . . . . .386.10 +1.10 406.80 231.70
Qinetiq . . . . . . . . . . . . . . . . . . . . .97.70 –2.30 179.10 96.00
Randgold Resources . . . . . . . . .5930.00 –170.00 6755.00 4126.00
Reckitt Benckiser . . . . . . . . . . .3475.00 –52.00 3667.00 3019.00
Reed Elsevier . . . . . . . . . . . . . . .530.00 –6.50 566.00 454.60
Regus . . . . . . . . . . . . . . . . . . . . . .79.40 –2.60 125.50 64.05
Renishaw . . . . . . . . . . . . . . . . . 1158.00 –33.00 1250.00 479.00
Rentokil Initial . . . . . . . . . . . . . . . .95.70 +0.15 140.20 89.40
Resolution . . . . . . . . . . . . . . . . .242.50 –7.10 280.50 220.10
Rexam . . . . . . . . . . . . . . . . . . . .318.20 +7.20 348.80 271.40
Rightmove . . . . . . . . . . . . . . . . .755.00 –19.50 830.00 456.90
Rio Tinto . . . . . . . . . . . . . . . . . .4120.00 –209.50 4477.50 2751.00
RIT Capital Partners . . . . . . . . . 1131.00 –22.00 1215.00 940.00
Rolls Royce . . . . . . . . . . . . . . . .589.00* –8.00 661.50 466.10
Rotork . . . . . . . . . . . . . . . . . . .1674.00 –38.00 1906.00 1101.00
Royal Bank Of Scot . . . . . . . . . . . .40.86 –1.46 58.95 28.25
Royal Dutch Shell A . . . . . . . . .2006.50* –42.50 2106.50 1621.00
Royal Dutch Shell B . . . . . . . . .1969.00* –46.00 2071.00 1550.00
RSA Insurance . . . . . . . . . . . . . .126.20* –0.70 137.40 114.10
SABMiller . . . . . . . . . . . . . . . . .2014.50 –15.50 2103.00 1638.00
Sage . . . . . . . . . . . . . . . . . . . . . .263.00 –2.20 286.80 208.20
Sainsbury(J) . . . . . . . . . . . . . . . .373.70 –5.30 397.00 307.60
Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p)
Schroders . . . . . . . . . . . . . . . . .1577.00 –42.00 1670.00 1096.00
Schroders N/V. . . . . . . . . . . . . .1248.00 –29.00 1330.00 912.50
Scot. & Sthrn Energy . . . . . . . . . 1147.00 –17.00 1206.00 1006.00
Scottish Mortgage . . . . . . . . . . . .649.00 –22.00 684.00 475.00
SEGRO . . . . . . . . . . . . . . . . . . . .296.50 –5.70 389.30 244.00
Serco . . . . . . . . . . . . . . . . . . . . .561.50 –10.00 656.50 491.20
Severn Trent . . . . . . . . . . . . . . .1436.00 –23.00 1468.00 981.50
Shaftesbury . . . . . . . . . . . . . . . .434.90 +0.90 465.00 348.00
Shire . . . . . . . . . . . . . . . . . . . . .1510.00 –10.00 1534.00 1117.00
SIG . . . . . . . . . . . . . . . . . . . . . . . 118.00 –2.50 142.10 89.55
Smith & Nephew . . . . . . . . . . . . .581.00 –8.50 700.50 532.00
Smith(Ds) . . . . . . . . . . . . . . . . . .178.60 –2.60 185.90 103.00
Smiths . . . . . . . . . . . . . . . . . . . 1142.00* –53.00 1297.00 930.00
SOCO Intl . . . . . . . . . . . . . . . . . .348.00 –2.80 510.00 287.40
Spectris . . . . . . . . . . . . . . . . . . 1181.00 –41.00 1234.00 653.00
Spirax-Sarco Eng . . . . . . . . . . .1724.00 –21.00 1888.00 1060.00
Spirent Comms . . . . . . . . . . . . . .147.20 –3.10 158.30 90.45
Sports Direct Intl . . . . . . . . . . . . .128.20 –3.00 154.30 89.85
SSL Intl . . . . . . . . . . . . . . . . . . . 1163.00 — 1190.00 655.50
St James’s Place . . . . . . . . . . . . .248.10 –8.40 298.00 203.40
Stagecoach . . . . . . . . . . . . . . . . .203.50 –2.50 226.10 144.10
Standard Chartered . . . . . . . . . .1818.00 –83.50 1975.00 1316.50
Standard Life . . . . . . . . . . . . . . .220.10* –5.80 238.00 170.00
SuperGrp . . . . . . . . . . . . . . . . .1450.00 +49.00 1465.00 499.00
SVG Capital . . . . . . . . . . . . . . . .205.70 –7.30 225.00 118.30
TalkTalk . . . . . . . . . . . . . . . . . . .153.00 +8.90 154.10 106.60
Talvivaara Mining . . . . . . . . . . . .524.00 –18.00 597.00 341.40
Tate & Lyle . . . . . . . . . . . . . . . . .513.00 –7.00 534.50 388.00
Taylor Wimpey . . . . . . . . . . . . . . .24.82 –0.13 46.34 22.12
Telecity . . . . . . . . . . . . . . . . . . . .453.30 –10.60 546.00 323.50
Templeton Emrg Mkts . . . . . . . . .642.50 –15.50 688.00 470.00
Tesco . . . . . . . . . . . . . . . . . . . . .420.20* –2.40 454.90 368.40
Thomas Cook . . . . . . . . . . . . . . .184.90 –2.70 277.20 167.50
Travis Perkins . . . . . . . . . . . . . . .839.50* –22.50 915.00 647.50
TUI Travel . . . . . . . . . . . . . . . . . .198.70 –4.00 313.90 189.20
Tullett Prebon . . . . . . . . . . . . . . .348.00* –14.50 427.00 261.20
Tullow Oil . . . . . . . . . . . . . . . . . 1196.00 –57.00 1375.00 979.50
UK Commercial Prop . . . . . . . . . . .76.75* –0.60 84.90 71.00
Ultra Electronics . . . . . . . . . . . .1585.00 –37.00 1903.00 1198.00
Unilever . . . . . . . . . . . . . . . . . .1835.00* –18.00 2024.00 1662.00
United Utilities . . . . . . . . . . . . . .619.50 –7.50 634.50 467.40
Utd Business Media . . . . . . . . . .648.50 –18.00 692.00 408.30
Vedanta Resources . . . . . . . . . .2194.00 –86.00 2967.00 1795.00
Victrex . . . . . . . . . . . . . . . . . . . 1185.00 –10.00 1355.00 753.00
Vodafone . . . . . . . . . . . . . . . . . .170.45 –3.60 179.90 126.50
Weir . . . . . . . . . . . . . . . . . . . . .1660.00 –46.00 1720.00 660.00
Wellstream Hldgs . . . . . . . . . . . .740.00 –14.50 810.00 429.70
WH Smith . . . . . . . . . . . . . . . . . .453.80 –12.20 551.00 392.20
Whitbread . . . . . . . . . . . . . . . . .1691.00* –43.00 1807.00 1260.00
William Hill . . . . . . . . . . . . . . . . .159.40* –3.20 217.80 157.20
Witan Inv Tst . . . . . . . . . . . . . . . .472.60 –8.90 492.00 397.30
Wolseley . . . . . . . . . . . . . . . . . .1707.00 –54.00 1837.00 1155.00
Wood Group (John) . . . . . . . . . . .486.90 +8.20 492.60 279.60
WPP . . . . . . . . . . . . . . . . . . . . . .721.50 –13.00 758.50 562.50
Xstrata . . . . . . . . . . . . . . . . . . . 1311.50 –70.50 1462.50 832.50
LONDON TOP 250 BY MARKET CAPITALISATION
* Ex-Dividend † Suspended
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Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p)
B
RITAIN’S top share index
recorded its biggest fall in three
months yesterday as concerns
over Irish government debt and
the prospect of another euro zone
bailout dragged banking and com-
modity-related stocks lower.
At the close the FTSE 100 was down
138.51 points, or 2.4 per cent, at
5,681.90, its biggest daily fall since 11
August.
Banks were the worst hit sector,
with Lloyds Banking Group and
Standard Chartered shedding 4.7 per
cent and 4.4 respectively.
Ireland has so far resisted calls to
request a state bailout, as Greece did
in May, and insisted only its banks
need assistance, despite government
bond yield spreads blowing out to
record levels in recent weeks.
“This will be a continual roller-
coaster over the next few weeks. It's a
broken record, but markets hate
uncertainty,” said James Hughes, ana-
lyst at CMC Markets.
Irish bailout
concerns hit
FTSE hard
THELONDON
REPORT
Worldwide
uncertainty
rocks Wall St
U
S stocks fell nearly two per cent
yesterday as the prospect of
more European bailouts and
worries China will rein in infla-
tion prompted investors to abandon
risky assets.
One result was a slide in resource
stocks, such as Alcoa, which fell 2.8
per cent to $13.03, and Exxon
Mobil, which dropped 2.2 per cent
to $68.94. U.S. crude oil futures set-
tled 3 per cent lower at $82.34 a
barrel, gold and metal prices fell
and the dollar index jumped 0.9
per cent. The Dow Jones industrial
average dropped 178.47 points, or 1.59
per cent, to 11,023.50. The Standard &
Poor’s 500 Index shed 19.41 points, or
1.62 per cent, to 1,178.34. The Nasdaq
Composite Index gave up 43.98
points, or 1.75 per cent, at 2,469.84.
Declining stocks handily out-
numbered advancing ones on the
NYSE by 2,642 to 405, while on the
Nasdaq.
THENEW YORK
REPORT
24
Markets&Investment
CITYA.M. 17 NOVEMBER 2010
MANAGED FUTURES TOP HEDGE FUNDS
Hedge funds performed strongly in October
with the Dow Jones Credit Suisse Hedge
Fund Index rising 1.92 per cent in October.
Managed futures was the top performing
sector, finishing up 4.29 per cent as trend fol-
lowers profited from positive commodity
market performance, driven by concerns over
limited sugar and wheat supplies and further
QE. Only dedicated short bias hedge funds
lost ground last month, but their 3.6 per cent
drop was an improvement on September.
VAM FUNDS’ NEW COMMODITY EQUITY FUND
Specialist investment company VAM Funds
has joined up with FF&P Asset Management
to launched the VAM Commodities Equity
fund. The fund will operate a core-satellite
approach and the core will comprise an opti-
mised basket of liquid large cap stocks. The
high alpha generating satellite layer is a collec-
tion of less liquid catalyst rich stocks. Managed
by Jason Webster, the new fund is UCITS III
compliant. The annual management charge for
the fund is 2.25 per cent.
TOP RATING FOR SCHRODER UK ALPHA PLUS
The Schroder UK Alpha Plus fund has been
rated AAA, the highest rating possible by
OBSR, a Morningstar company. This marks an
upgrade from AA. Richard Romer-Lee, head of
research at OBSR, said: “Richard Buxton has
managed the fund since launch in June 2002,
and OBSR holds him in the highest regard. His
high conviction, concentrated approach, while
volatile, has significantly rewarded investors
who are willing to be patient and long term in
their approach.”
FUND MANAGEMENT NEWS
BY JESSICA MEAD
A
FTER a decade in the financial
wilderness, investment trusts are
emerging, blinking, back into the
mainstream. Tainted by the split-
cap scandal at the end of the Nineties,
investors have favoured their open-ended
cousins for the past decade.
Yet investment trusts have, on the
whole, outperformed the FTSE All Share
and the FTSE World ex UK indices over this
period. They have also outperformed or
done as well as OEICs in most major sec-
tors apart from Japan, according to data
from Winterfloods.
In spite of their better performance,
there are almost six times as many assets
invested in UK authorised unit trusts and
open-ended investment companies (OEIC)
than in investment trusts according to
data from the Investment Management
Association (IMA) and the Association of
Investment Companies (AIC).
Over the next five to 10 years this imbal-
ance is likely to be redressed for two main
reasons. The first reason is their capacity to
have revenue reserves, which help an
investment trust to maintain its dividend
payout even when the companies that it is
invested in cut their dividends.
Morningstar’s director of closed-end fund
research Jackie Beard says: “Clients who
really need income from their investments
have struggled recently. Investment trusts
offer a way of looking elsewhere for that
income and meeting their needs. Their rev-
enue reserves give more certainty of
income payments and can avoid the need
to draw on capital.”
Unlike open-ended funds, investment
trusts only have to pay out 85 per cent of
their dividend income. Although most pay
out 90-95 per cent, this small percentage
can build up over time to create significant
reserves. Investment trusts have a long his-
tory – the first was set up in 1868 by F&C.
This has been reflected in their dividend
performance relative to open-ended funds.
For example, if you compare the dividend
change for the Invesco High Income and
the Edinburgh Investment Trust, the for-
mer has had to cut its dividend by 2.5 per
cent this year whereas the trust increased
it by 1 per cent. This is despite the fact that
both are managed by Neil Woodford and
hold approximately (although not exactly)
the same stocks.
This also holds true for Investec
Managed Distribution and Temple Bar –
managed by Alastair Mundy – and for
Karen Robertson’s Standard Life Equity
Income and Standard Life Equity Income
Investment Trust. “It’s an uphill struggle
Steady income and performance to
boost investment trusts’ popularity
Eventually investors
will recognise their
many advantages,
writes Jessica Mead
for unit trusts to maintain dividends,” says
Peter Hewitt, manager of the F&C
Managed Portfolio Trust – a trust that
invests in other trusts.
The second major reason is the Retail
Distribution Review (RDR), which is sched-
uled to come into force in December 2012.
Since the commission bias will be removed
from the system – investment trusts have
almost exclusively never paid commission
to financial advisers – this will level the
playing field. The availability of trusts on
platforms should also increase, improving
the distribution channels and the take-up
among private investors.
But these two factors are not the only
advantages that investment trusts have.
Their closed-end structure means that
once the money has been raised, the fund
manager is free to focus on running the
money raised without worrying about
potential or actual inflows or outflows of
money. Since retail investors tend to buy
high and sell low, an OEIC manager might
find himself at the top of a bull market
with a lot of money to invest. Equally, in a
bear market as investors rush for the exit,
he may have to sell at the trough.
Investment trusts are also structured as
companies, which means that if a manager
underperforms, the board can take corpo-
rate action and potentially replace him.
Since they are listed companies, they also
have to be transparent about their per-
formance, which is not required of open-
ended funds to the same extent. Finally,
the average total expense ratio of invest-
ment trusts tends to be around 25 to 50
basis points cheaper than that of OEICs,
says F&C’s Hewitt.
As the need for income continues and
regulations change , trusts should become
a more popular way of investing over the
next decade. But given their superior per-
formance track record, why wait for them
to become popular to buy them?
Poor sugar supply helped managed futures hedge funds Picture: GETTY
Keep your income
flowing with an
investment trust
Picture: GETTY
Investment | Fund Management
25 CITYA.M. 17 NOVEMBER 2010
DIFFERENCE BETWEEN INVESTMENT TRUSTS AND OEICS Source: Morningstar
11/11/09 09/11/07 11/11/05 Latest Total
11/11/10 11/11/10 11/11/10 Portfolio Expense
% Performance % Performance % Performance Size Ratio
Change Change Change (£m)
BlackRock New Energy -10.4 -42.03 -1.44 116 1.3
Investment Trust
BGF New Energy A2 USD -9.79 -36.46 13.86 1,812 2.09
BlackRock World Mining Trust 39.18 7.98 148.2 1,537 1.4
BGF World Mining A2 USD 28.16 7.74 147.95 9,175 2.09
Dunedin Smaller Companies Ord 36.41 15.61 48.41 73 1.4
Aberdeen UK Smaller Companies A 24.06 0.18 24.15 154 1.61
EP Global Opportunities 9.88 18.82 21.49 50 1
Edinburgh Partners Glbl Opps USD I 7.07 6.14 21.79 1,432 N/S
JPMorgan Emerging Markets ORD 28.65 35.6 119.06 769 1.05
JPMorgan Emerging Markets A Acc 24.03 26.29 109.54 950 1.67
Standard Life UK Smaller Companies 63.92 65.13 168.96 121 1.2
Standard Life UK Smaller Cos R 41.33 20.72 100.58 784 1.59
T
HE currency market just doesn’t
care about Japan at the moment. It
didn’t even flinch when Monday’s
third quarter GDP figures showed
that its economy is expanding at a whop-
ping annualised pace of 3.9 per cent. It
just wasn’t interested in the fact that the
manufacturing sector was boosted by the
mass purchasing of air conditioners – not
one bit. It’s all about the dollar at the
moment. Or US bond yields to be more
specific.
Ten-year US bond yields have – some-
what unexpectedly – hit a three-month
high. Everyone was expecting bond
prices to rise and yields to fall after the
second round of quantitative easing (QE),
but now the opposite has happened,
traders are linking the change to the rise
of the dollar against the yen.
“For as long as US bond yields are
going up so will the dollar,” says Michael
Hewson of CMC Markets. “It’s a dollar
story and it could be for a while.” So con-
fident, he has his sights on a target of
¥84.20, heading all the way back to the
200-day moving average, and then maybe
even returning to the giddy summer
heights of ¥88.00.
QE CHEERLEADERS
So what will keep the bond yield rising?
QE’s cheerleaders say that the market has
been given a fright from Richmond
Federal Reserve president Jeffrey Lacker’s
comment that the Fed might need to
tighten monetary policy and a strength-
ening campaign against QE. This – they
suggest – means that the amount of QE
already announced could be reduced.
The reality for the bond yield is probably
more complex.
Kit Juckes, a forex expert at Societe
Generale, pins the unexpected rise on
those who believed “the world was end-
ing” in the lead up to QE and bought
bonds at low yield. Late entrants who
US Treasuries are the
deciding factor for
the dollar-yen trade,
says Donata Huggins
The market only cares
about American yields
T
HE euro-dollar opened for trade this
week haunted by the same sovereign
debt concerns that dogged it the
previous week. The problems with
Ireland remained unresolved and media reports
were rife with speculation that the ECB, EU
Commission and the IMF all pressured the Irish
government to accept a rescue package. So far,
Irish authorities have resisted any attempts at
a bailout, insisting they have enough capital to
operate until the middle of next year.
It is true that with approximately €18bn of
cash on hand, Irish fiscal officials can keep the
government running until June 2011. Despite
their bluster, market pressure on the Emerald
Isle is unlikely to let up as speculators now see
the situation as essentially irreparable. With
Ireland now shut out from the credit markets
as the cost of borrowing has become prohibi-
tively expensive, the country is in an increas-
ingly precarious financial state.
Meanwhile, EU officials are no doubt eager
to prevent any further erosion of confidence
and to allay fears over the possible fracture of
the union. Last weekend Portuguese foreign
affairs minister Luis Amado aggravated the
situation, saying Portugal faces "a scenario of
exit from the Eurozone" if it fails to tackle its
economic challenges. This is precisely the type
of rhetoric EU officials would like to avoid.
After several months of ignoring the issue
the markets are focusing again on Europe’s
sovereign debt problems and stability con-
cerns could weigh on the currency for the
foreseeable future. Another concern is that
German data has started to falter after
recording strong growth for most of the third
quarter. Since Germany is the financial back-
stop for the whole EU, any problems there
could threaten possible rescue attempts.
That’s why yesterday and today’s meeting of
European finance ministers could prove critical
to the near-term direction of the euro.
Boris Schlossberg and Kathy Lien are direc-
tors of currency research at GFT. Read com-
mentary at www.GFTUK.com/commentary or
e-mail borisandkathy@gftuk.com.
EURO WILL BE
HIT BY FEARS
OF FRACTURE
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT
SPREAD BETS | CFDs | FOREX / gftuk.com / free phone 0800 358 0864
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CD03UK.113.073010
bought at the height of bond prices are
now bailing out of the trade. Now the
world has not ended and the economic
indicators are looking more robust, these
doom merchants are pulling out of
bonds and looking for a better return.
The knock on effect is that the yields are
rising despite the Fed’s intervention.
But be warned, Juckes says he doubts
this will last long: “This is a short-term
watershed for Japan, soon the fate of dol-
lar-yen will rest on the performance of
the Asian economies. I know this doesn’t
correlate to the US bond yield pattern,
but correlations are made to be broken.”
So the bullish on dollar-yen should go
long on the pair for the meantime, but
bear in mind that the factors in play will
not be around for forever. Choosing your
exit will be the challenge.
Investment | Foreign Exchange
26 CITYA.M. 17 NOVEMBER 2010
ANALYSIS l The performance of the dollar against the yen over the last six months
88
90
92
86
84
82
2010 June July Aug Sep Oct Nov

¥
Look at that yield
rise
Picture: GETTY
I
N 2004, Alan Greenspan denied that
it was possible to make money by pre-
dicting what is going to happen to
currencies. As he put it: “My experi-
ence is that exchange markets have
become so efficient that virtually all rele-
vant information is embedded almost
instantaneously in exchange rates to the
point that anticipating movements in
major currencies is rarely possible”.
In that, he echoed the economist
Burton Malkial, who once said that specu-
lators “might as well be monkeys throw-
ing darts at the Wall Street Journal”. What
they were essentially saying is that unless
you know the news before other people, it
should be impossible to make a profit
from trading currencies – if you can pre-
dict the future, so should everyone else be
able to, and so the possibility to make a
profit will instantly disappear.
And as recent events have shown, that
makes markets particularly responsive to
news. Fears of a sovereign debt crisis in
Ireland drove the euro to a seven week low
yesterday, while dovish comments by the
New York Fed president, William Dudley,
drove the dollar down too. Even though
Ireland hasn’t gone bankrupt, and the
Federal Reserve hasn’t actually changed
its policy, the hint that either event might
come to pass changes the potential funda-
mentals – forcing traders to react, not pre-
dict.
FOCUS ON FUNDAMENTALS
So does that mean that traders should
give up? Surely not. As Amos Galvin, of
Macro Currency Group, explains, markets
aren’t perfectly efficient – in fact, many
traders are very distracted from the funda-
mentals. In his opinion, the important
thing is to watch indicators like interest
rates and investor positioning to work out
when the market has accurately priced in
news – and when they haven’t, to profit
from it. Profits are made not from predict-
ing the future, but rather from accurately
interpreting news.
But as Nick Hocart, of Xenfin Capital,
says, it is also possible to make a profit
simply by being systematic and fast. In
Hocart’s opinion, there is no point in try-
ing to predict where markets will go –
instead, the best strategy is to “find trends
and get onto them” before too many oth-
ers do, like surfers looking for waves. He
says that he has a lot more losing trades
than winning ones – but the winning ones
tend to win a lot more.
What traders must remember is what
they are up against. In recent months,
markets have been exceptionally volatile
and news driven, and that is not likely to
T
HE aftermath of the G20 seemed to
trigger a bout of dollar short covering
this week as the greenback has gained
against most majors. Dollar-yen was
breaking through the strong ¥83.20 resist-
ance level yesterday, above which there are
rumoured to be large stops located. If the
dollar breaks through with conviction then it
could easily take the ¥84.00 level in a matter
of days. Spread Co offers a spread on dollar-
yen of ¥83.115–¥83.145.
Despite higher than expected inflation
data in Britain yesterday, traders are not
getting much more bullish about sterling-
dollar. The pound failed to hold onto gains
against the dollar and dipped back below the
$1.6000 level. Not being able to hold onto
such an important psychological level could
well lead to further weakness. Capital
Spreads quotes a spread of $1.5993-$1.5995
for sterling-dollar.
But sterling-euro may still have space to
climb. In fact, higher than expected inflation
might even help push it back towards the
recent low of around £0.8100. CMC Markets
offers a spread on euro-sterling of
£0.84956-£0.85974.
Traders should watch out, however.
Thanks to Irish fears and crisis talks in the
eurozone, the greenback has been perform-
ing well, whereas the euro has been slipping
since the end of October, but if the market
decides that a bailout is likely for Ireland
then the trend may reverse. Cantor Index
offers a spread of $1.35913–$1.35923.
The South African economy has been
overheating for a while, and it could be
about to burn up. Yesterday the South
African rand fell to a seven week low
against the dollar, as European uncertainty
weighed on commodity prices. With the dol-
lar on the up, traders would seem wise to
consider selling the rand against the dollar.
IG Markets offers a spread of R7.05725-
R7.07700 on US dollar-South African rand.
Daniel Knowles
THE
TIPSTER
THE YEN IS
ON THE WAY
BACK DOWN
Profiting from
currencies is a
difficult game
Traders need to stay
alert to stay on top
Picture: REUTERS
ANALYSIS l Trade weighted index for the US dollar
79
78
77
76
2010 20 Oct 26 Oct 28 Oct 2 Nov 4 Nov 8 Nov 10 Nov 12 Nov 22 Oct

Quantitative easing
announced
Source: Bloomberg
FOREX ANALYST PICKS
FOREX STRATEGIST
JOHN KICKLIGHTER
My pick: Stay long dollar-yen from ¥82/short Aussie-Loonie below Ca$0.99
Expertise: Fundamental and technical analysis with risk management
Average time frame of trades: 1 day-1 week
FOREX STRATEGIST
ILYA SPIVAK
My pick: Long dollar-yen at ¥83.08
Expertise: Global macro
Average time frame of trades: 1 week-6 months
Dollar-yen has cleared resistance at the top of a falling channel that
guided the pair down since early May. A bullish Three Inside Up can-
dlestick pattern on the weekly chart reinforces the case for an upside
scenario. A correction in the US-Japan two-year bond yield spread – a
major driver of dollar-yen in recent months – following the Fed’s QE2
announcement is the fundamental catalyst. I will go long, targeting
¥85.87. A stop-loss will be activated on a daily close below ¥81.72.
My long dollar-yen setup was triggered with the range break above ¥82
and subsequent channel break at ¥82.65. Though I question the risk
reaction that further Ireland/European troubles could draw, I will keep
the stop at ¥81.40 and first target equidistant. Trying to avoid the
volatile influences of risk appetite somewhat, a potential Aussie-
Canadian dollar break below Ca$0.99 could complete a nice reversal pat-
tern and encourage a short with a 100 point stop and first target.
FOREX STRATEGIST
JOEL KRUGER
My pick: Buy US dollar/Canadian dollar at Ca$1.0090
Expertise: Technical analysis
Average time frame of trades: 1 month-3 months
Setbacks have been well supported by parity, and the market finally
looks like it could be in the process of carving out yet another base. A
break and close back above Ca$1.0100 will confirm a double bottom
that should accelerate gains well above Ca$1.0200 and then put the
focus on some more critical resistance at Ca$1.0675. Ultimately, only
a close back below Ca$0.9970 would give reason for concern. Target
Ca$1.0600 and put a stop at Ca$0.9890.
Traders need to become news junkies to
make good profits, writes Daniel Knowles
change soon. To make profits, traders will
need to keep watching the news and the
markets carefully and they will need to be
ready to react decisively and quickly to
changes. And ideally more accurately than
a monkey with a dartboard.
27 CITYA.M. 17 NOVEMBER 2010
Investment | Foreign Exchange
Bribery will be harder
when the new Act
comes in to force
Picture: GETTY
B
USINESSES are concerned that they
will have little time to meet the
demands of the Bribery Act when its
offences come into force next year.
If they wait for the government’s guid-
ance on “adequate procedures” to be pub-
lished, it may be too late to make the
required adjustments.
When the Bribery Act offences come
into force in April 2011, a corporate entity
will be automatically criminally liable if
anyone performing services for it any-
where in the world bribes to win or keep
business for it. Employees, subsidiaries
and even foreign agents can make a UK
company liable to unlimited fines, even if
management knew nothing about it. UK
companies will be expected to make sure
they know what is being done on their
behalf and to police it.
The only defence is having adequate
procedures designed to prevent bribery,
and the government’s guidance is sup-
posed to help business understand what
this requires. The Ministry of Justice (MoJ)
has just completed its consultation on the
guidance, and while the final version will
be published in the new year, the draft
makes interesting reading. Only when the
first cases are prosecuted through the
courts will matters become clear, but
there are already some obvious steps that
businesses should be taking.
The MoJ’s draft guidance is “not pre-
scriptive and is not a one-size-fits-all docu-
ment” – in other words, the guidance
won’t tell you the answer. Instead, it sets
out Six Principles for Bribery Prevention
that businesses can consider applying.
First, it demands a “top level commit-
ment” to eradicating bribery: if manage-
chose not to apply all of them.
The MoJ also published “illustrative sce-
narios” covering key areas of concern,
including intermediaries, joint ventures
and hospitality. Unfortunately, they offer
few answers and raise new questions: how
much less is expected of small and medi-
um sized companies? The scenarios sug-
gest the bar is still very high. We will have
to see what the courts make of these sce-
narios, which are not part of the guidance.
In the meantime, businesses should
review industry guidance and assume the
MoJ guidance will not change. The FSA’s
recent report on corruption in commer-
cial insurance broking is also recommend-
ed reading whatever your business. It
offers the best insight we have of how the
authorities may assess “adequate proce-
dures”. Developing anti-bribery proce-
dures is not simple and takes time if you
really want procedures that are “ade-
quate”: you can’t buy an off-the-shelf prod-
uct. Those that haven’t already got their
procedures in place should start working
on them now.
Omar Qureshi is a partner at CMS Cameron
McKenna
Six ways to prepare yourself
for the UK’s new Bribery Act
Guidelines are out in
the open and it’s time
to start making sure
you are covered
BEN STEPNEY
ment don’t really believe in it, it’s not
going to happen. Second, there must be
risk-assessment of the business, knowing
and keeping up to date with bribery risks
you face in your sector and market. Third,
due diligence should be carried out on
agents, business partners and even staff to
ensure they have the expertise required
with no conflicting interests and are paid
no more than is fair.
Fourth, businesses must set out clear,
practical and accessible policies and proce-
dures so that everyone acting on its behalf
knows what is acceptable and how to deal
with any issues. Fifth, there should be
effective implementation of the policies
and procedures: “this is about going
beyond ‘paper compliance’ to embedding
anti-bribery in your organisation’s inter-
nal controls, recruitment and remunera-
tion policies, operations, communications
and training on practical business issues,”
says the document. Finally, there must be
monitoring and review to help ensure the
procedures are working. Importantly,
none of the principles are obligatory, but
persuading a court that your procedures
are “adequate” may be difficult if you
Office jokes
are here to
stay, legally
T
HE Equality Act arrived with a fanfare
last month and was broadly welcomed
for clarifying existing discrepancies with-
in employment laws. But some employers
are concerned that the new Act could make it
easier for disgruntled members of staff who are
offended by office jokes to take their employer
to an employment tribunal. So does this spell
the end of office jokes?
There are several key concepts in the new Act.
Firstly, “associative discrimination”. This means
that an employee does not have to be, for
example, gay or of an ethnic minority to be
protected. For instance, an employee who has
a disabled child and is subjected to degrading
or humiliating comments about disabled peo-
ple is protected. Here the employee concerned
has been discriminated against because of the
disability of a person they associate with. Also,
an employee also does not need to be the sub-
ject of the joke to be protected. So a female
employee who shares an office with male col-
leagues who are verbally abusing another
female colleague on the grounds of her
gender is protected if this creates a
working environment that is intimidating or
humiliating for her.
Then there is the idea of third party harass-
ment, which protects employees who are con-
tinually harassed by a third party, for example
a customer. Such an employee can now com-
plain to a tribunal if the employer is aware of
this and takes no steps do deal with it.
So where does this leave office jokes?
Employers need to be aware of the effect that
banter has on their staff and ensure that they
take the relevant action if they deem actions
or statements to be creating an intimidating,
hostile or humiliating environment for employ-
ees. The fact is that much of the Act simply
repeats existing law – it remains unlawful for
an employer to discriminate or harass an
employee in respect of a protected character-
istic and an employer is still liable for the acts
of its employees while at work.
There is still a gap between banter or joking
and discrimination or harassment. Banning
office jokes – if it were possible – would not be
a proportionate response to the Act.
Ben Stepney is a solicitor in the Employment
Team at Thomson Snell & Passmore
OMAR QURESHI
BERWIN MERGER CALLED OFF
The long-running talks about a
merger between City firm SJ Berwin
and American firm Proskauer Rose
have been called off. It had been wor-
ried that the talks were unsettling
partners, some of whom are thought
to have been unhappy about the tie-
up. The firm said that it would still
consider an American merger next
year. Meanwhile, the London-based
firm announced that its half-year
profits were 34 percent higher than
for the same period last year.
OLD SCHOOL TIES
Lawyers are seven times more likely
to have been privately educated than
the general population, says a new
survey. Recruitment consultant
Laurence Simons questioned 50,000
City lawyers via LinkedIn and
found that 15 per cent of lawyers
went to public school, compared to
2 per cent of the population. It also
said that the number of Magic Circle
partners educated at public school
increased from 59 per cent to 71 per
cent between 1988 and 2004.
BRIEFS | LEGAL NEWS
DLA PIPER JOB-LOSSES
DLA Piper has announced another
round of job-losses in its US practice, as
part of what it calls a “right-sizing”
process. Thirty-two support staff will be
let go. It follows the giant British firm
laying off over 100 lawyers in several
rounds of redundancies in 2009.
Although American operations are not
yet recovered from the recession, with
income down by 14 per cent in 2009,
the firm’s numbers in the UK are start-
ing to look positive again, and it recent-
ly announced an 8.5 per cent increase
in revenues for the first half of 2010.
CIVIL FUNDING WITHDRAWN
The Ministry of Justice has announced
that civil funding is to be withdrawn
from large numbers of cases, most
notably family disputes, which should
save the MoJ £178m from the current
legal aid spend of £2.1bn. The changes
are expected to mean that 500,000
fewer civil cases are brought to court
each year. The MoJ is also looking at
alternative funding routes, including
recovering part of damages awarded in
successful cases. The MoJ will cut spend-
ing by 23 per cent as part of the compre-
hensive spending review.
City Focus| Law
28 CITYA.M. 17 NOVEMBER 2010
M
ARLON Abela fits the internation-
al It-Boy bill perfectly. Born in
Lebanon, he grew up among the
rich and famous of London and
the south of France, raised by a father who
owned one of the world’s top institutional
and airline catering businesses and a slew
of four and five star hotels. Recently valued
at £400m, Abela was coiffing the best wines
on earth and supping the best food on the
planet when most boys are downing cider
in the bushes.
With family millions behind him, he was
able to set up on his own in his late twen-
ties, bypassing anything as dreary as the
middle-ground and heading straight for a
Michelin star-dusted empire MARC (Marlon
Abela Restaurant Corporation), that has
provided London with three of its best
restaurants. Now divorced, he dates a
Burberry model, invests in wine and col-
lects art for personal use and for his restau-
rants. It doesn’t get more jet-set It-Boy than
that, does it?
But Abela the man – rather than the Rich
List entity – is a very different sum of his
parts than you might expect. In person he
is serious and polite, with a curious
German-sounding accent, pale brown eyes
and curly hair hinting at his Middle Eastern
origins.
After our interview at Morton’s, the
members club on Berkeley Square that he
now owns (and has turned into a bastion of
fine dining and fine art – a dinner I had
there recently left me speechless), I saw
Abela at Frieze Art Fair. Rather than
flanked by an entourage of the beautiful,
rich and famous, he was wandering
around on his own, looking preoccupied
and ever so slightly lost. In fact, he looked
just like one of the hoi polloi trying to
make sense of the labyrinthine fair. But as I
found out later during a dinner in which
he was more than happy to chat about life,
love and the universe, he said he actually
bought “a few things”. Not quite hoi polloi,
then.
Unlike many in his set, Abela seems a
substantial person. One is struck by the fact
that he can’t help but be himself – a perfec-
tionist more than a bon vivant; a thinking,
hard-working foodie rather than a mask of
moneyed international manners. He is a
person who values quality – almost to the
point of insomniac neurosis. “I only sleep
four hours a night,” he says, and you can
believe it – he has a slightly restless air and
it’s not hard to imagine him being easily
disturbed by the thought of an imperfec-
tion. It’s this obsession with the best that
has led his Michelin-starred Japanese
restaurant Umu to have the UK’s largest
sake list, and his Michelin-starred restau-
rant the Greenhouse to have the largest
wine list in Britain (this extraordinary wine
emphasis is “both passion and shrewd busi-
ness”). And although his restaurants
remained busy throughout the recession,
they have been completely flying since –
“it’s been a phenomenal year”. Morton’s
has a new nightclub downstairs; Umu had
a new lounge put in and in New York, Abela
has just launched FPB, a chocolaterie and
patisserie with French cakes-star Francois
Payard.
I am meeting Abela, 35, to discuss his
new restaurant, Cassis. Opening next week
in South Kensington, it will serve Provencal
food in a more “rustic” atmosphere than
his others, with a mixture of big dishes and
small plates – you can have three courses
for £19. You get the sense that he has a truly
personal connection with this one. “I’ve
always loved Provencal food,” he says. “I
grew up around there and it’s very pure. It
uses the most beautiful ingredients in the
world. Think of the cheese, the boullabaise.
It’s the type of cuisine I love. And it should
work very well in London.”
Abela is a stickler for location, which is
why he hasn’t expanded at the speed you
might expect. Before the recession, there
were plans to open or acquire 30 restau-
rants in Las Vegas, Atlanta, Dubai and other
global nexi but then the credit crunch
struck and he decided to return to the
“slowly slowly” approach, which is a better
way to maintain quality. “We looked east
but it’s not as classic as Mayfair. Apart from
[places like] Mahiki, I think Mayfair is very
elegant.” Faddishness bores him: “There
will always be fads in London, New York
and Paris. But those restaurants don’t con-
cern me.”
Now is MARC’s golden era because we,
the restaurant-goer, are ready. “At the end
of the day, the diner has never been more
sophisticated. I want them to walk away
and say ‘Wow’”. Thanks to those four-hour
nights, we’re doing just that. Cassis opens 25
Nov. www.cassisbistro.co.uk.
Abela the man – rather than the Rich
List entity – is a very different sum of
his parts than you might expect
Lifestyle| Profile
29
ANDY MCNAB
STRIKES AGAIN
HIS NEW BOOK REVIEWED
IN TOMORROW’S PAPER
The food entrepreneur
who’s hitting the MARC
BORN in Beirut in 1975 to Lebanese con-
tract catering giant Albert Abela, Marlon
was involved from an early age with his
father’s company: Albert Abela Corporation
(AAC), which employed 30,000 people in
40 countries, operating in the education,
healthcare and airline catering sectors, as
well as owning a string of hotels in Monaco,
London and Nice.
Abela became VP of AAC in his early
twenties until 2002 when he split ways
from the company, having founded MARC
in 2001. His first acquisition was Morton’s,
which he opened in 2004 after an exten-
sive refurb. He bought the Greenhouse in
Mayfair in 2003 and Umu in 2004, which
won a Michelin star after just four months.
He also owns several restaurants, bistros
and eateries in the US, including in New
York, Connecticut and Boston.
He was valued at £400m in 2008.
CV | MARLON ABELA
Super-restauranteur Marlon
Abela is on a winning streak,
he tells Zoe Strimpel
FOUR OF THE STARS IN MARC’S EMPIRE
With two
prime spots
at Columbus
Circle and
Madison Ave,
A Voce serves
elegant
Italian for the
well-heeled.
A VOCE, NEW YORK
Abela’s
attempts to
make this
member’s club
less stuffy
have culmi-
nated in a
new nightclub
downstairs.
MORTON’S, MAYFAIR
Said to be the
only Kyoto-
style restau-
rant in the
UK, Umu
serves bril-
liant food and
has a great
sake list.
UMU, MAYFAIR
A huge, wine
list, impecca-
ble food and a
celebrity fol-
lowing have
ensured this
Mayfair
restaurant’s
success.
GREENHOUSE, MAYFAIR
Marlon Abela at
the dining room
at Morton’s in
Berkeley Square.
Picture: Micha
Theiner/ City A.M.
Lifestyle | Motoring
30 CITYA.M. 17 NOVEMBER 2010
equivalent. I thing this must be down to
its lower weight, a drop of 75kg on the
4WD model. It’s a car that I like more the
longer I’m with it and for the first time I
completely understand why someone
might want to drive an SUV, even if they
have no intention of going off-road in it.
Yet despite all this, this two-wheel
drive Freelander eD4 is most surprising
off-road. Because it has the same high
ground clearance and suspension travel
as the more regular 4WD version, the car
does astonishingly well. With a little
oomph to help it up the hills, it feels like
old school off-roading before technology
made off-roaders so efficiently capable.
This is no bad thing because I suspect
there are some Landy faithfuls that may,
after driving it, have to admit that it’s
really rather good, even if they do so
begrudgingly. And when all is said and
done, it’s going to attract a lot of new cus-
tomers to the brand, because the eD4
feels like a premium car without the
price tag that usually goes with it. And
what can be wrong with that?
FIRST PEEK OF ASTON MARTIN’S CYGNET
Aston Martin’s controversial city car is currently making its global debut
in Harrods’ Brompton Road window display. It’s the first time the com-
pact, luxurious, two-door Aston has been seen in production guise. The
Cygnet can seat four people and can be trimmed to each customer’s indi-
vidual requirements. It will be at Harrods until Saturday 11 December
and production begins next year.
CAR TALK BY RYAN BORROFF
T.25 CITY CAR DEBUTS
Gordon Murray Design’s T.25 city car has made its first on-road debut
during the inaugural Brighton to London Future Car Challenge. The light-
weight car won both “Most Economic Small Passenger ICE Vehicle” and
“Most Economic and Environment Friendly Small Passenger ICE Vehicle”
using a conventional petrol engine. It achieved a massive 96mpg, beating
competitor vehicles powered by diesel engines.
THE CONTROVERSIAL RANGE ROVER EVOQUE
If the new 2WD Freelander is contentious, it’s nothing on the controversy
that surrounds the new Range Rover Evoque. This is the production five-
door version, which is making its debut at the Los Angeles Motor Show
today. The Evoque will be the smallest, lightest and most fuel-efficient
Range Rover ever made when it goes into production in the summer next
year. Thanks to its coupé form it will also be the coolest and best looking.
WORDS BY
RYAN BORROFF
THE VERDICT:
DESIGN hhhii
PERFORMANCE hhhii
PRACTICALITY hhhii
VALUE FOR MONEY hhhii
THE FACTS:
LAND ROVER
FREELANDER 2 ED4
PRICE: £22,000
0-62MPH: 10.9 secs
TOP SPEED: 112mph
CO2 G/KM: 158g/km
MPG COMBINED: 47.2 mpg
S
O HERE I am, driving the first
mass-produced Land Rover ever to
be designed not to go off road – the
Freelander 2 eD4 – and where I
am driving it? Off-road. For a second
I can’t help myself from thinking
that Land Rover’s communica-
tions people have gone mad.
Then I realise two things.
First, it is actually very good.
Not four-wheel drive good
but far more capable than I
could have ever expected,
and more capable than
some rival 4WD soft-road-
ers. Second, I’m actually
really enjoying the drive. It’s
a lot of fun in a “you’ve just
got to grit your teeth and go
for it” kind of a way.
Making our way up some
steep and deep ruts off-road
somewhere in Spain involves
flooring the car to maximise
its momentum, because if the
car doesn’t make it, there’s no choice
but to roll back down and start again.
This is not the usual way that one expects
to make progress off-roading in a Land
Rover, to say the least.
Which is why this two-wheel-drive
Freelander 2 eD4 has upset so many Land
Rover faithful. Yet there’s no doubt that
introducing two-wheel drive versions of
its cars is vital to the future of its brand.
Land Rover knows that 2WD soft-roader
SUV sales are up as people choose to buy
cars with an SUV shape and commanding
driving position, but which offer better
fuel economy. What’s more, such cars are
a big statement and a definite step in the
right direction from an environmental
perspective.
The Freelander 2 eD4 is driven only by
the front wheels. This means the car is
the most efficient Land Rover ever. Its 2.2-
litre turbo diesel engine is frugal indeed,
returning 47.2mpg and emitting just
158g/km of CO2 – helped by its stop-start
system. Not bad for an SUV, even a soft
one. This means that the car is cheaper to
run and, thanks to its asking price, it’s
also cheaper to buy than the regular
Freelander 2.
On-road, the car feels surprisingly
capable and it is incredibly easy to drive.
The high-up driving position offers a
commanding view, so one feels incredi-
bly safe. With a top speed of 112mph and
a 0-60mph time of 10.9 seconds, the 150ps
engine feels sprightly enough at speed,
and though the steering is a little light,
the Freelander eD4 feels slightly better
on the motorway to me than its 4WD
Die-hard Land
Rover fans may take
issue with this on-
roader. But they’d
be missing out
T
E
R
R
E
S
T
R
I
A
L
ANCIENT WORLDS
BBC 2, 9PM
Richard Miles explores the collapse of
the Bronze Age 3,000 years ago, and
how the civilisations of the subsequent
Iron Age emerged.
ANIMAL MADHOUSE
CHANNEL 4, 8PM
Vets treat sick animals with the help of
nurses Gemma Boughey and Catherine
McVeigh, including an elephant
undergoing a pregnancy ultrasound.
LAW& ORDER: CRIMINAL INTENT
CHANNEL FIVE, 10PM
A magician disappears during a live-
burial trick and is later found dead
miles away from the location of his
performance. With Vincent D’Onofrio.
BBC1
SKY SPORTS 1
7pmSky Sports News at
Seven 7.30pmLive
International Football 10pm
You’re on Sky Sports! 11pm-
7.30amLive International
Cricket
SKY SPORTS 2
7pmFootball Asia 7.30pmLive
International Football 10pm
Transworld Sport: Action and
features. 11pmFIFA Futbol
Mundial 11.30pmTotal Rugby
12amInternational Football
2amTotal Rugby 2.30am
You’re on Sky Sports! 3.30am-
5.30amInternational Football
SKY SPORTS 3
7pmLadies European Tour Golf
8pmInternational Cricket
10pmDTM Motor Racing
11pmGolfing World: Magazine
show. 12amInside the PGA
Tour 12.30amLadies European
Tour Golf 1.30amGolf 3.30am
Ladies European Tour Golf
4.30amEuropean Tour Weekly
5am-6amLive European Tour
Golf: The Hong Kong Open.
BRITISH EUROSPORT
6.40pm US Tour Golf 7.40pm
European Tour Golf 8.10pmGolf
Club 8.15pm Sailing 8.45pm
Yacht Club 9pm WATTS
10.05pmTest Cricket 12.05am-
12.35am Alpine Skiing
ESPN
7pmESPN Kicks Extra 7.15pm
ESPN Serie A Kicks 7.30pm
Live International Football
9.30pmSki World Cup Report
10pm30 for 30 11pmPoker
12amLive NBA Basketball
2.30am-5amLive NHL Ice
Hockey
LIVING
7pmCSI: Miami 8pmFour
Weddings 9pmGhost
Whisperer 10pmCriminal
Minds 1amCSI: Miami
2amFour Weddings US
3amCharmed 4.40am
Exposed: Britney Spears
5.30am-6amHome Shopping
BBC THREE
7pmRadio 1 Teen Awards
8pmMad About the House
9pmChildren in Need 10.55pm
Family Guy 11.40pmLip
Service 12.40amMad About
the House 1.40amRussell
Howard’s Good News 2.10am
Children in Need: 50 Greatest
Moments 4.05am-5.05am
Radio 1 Teen Awards
E4
7pmHollyoaks 7.30pmFriends
9pmUgly Betty 10pm
Desperate Housewives 11pm
Natalie Cassidy 12amRuPaul’s
Drag Race 1amScrubs 1.50am
Natalie Cassidy: Becoming
Mum2.45amRuPaul’s Drag
Race 3.30amReno 911!
3.50amSwitched 4.15am
Accidentally on Purpose
4.35am-6amSwitched
HISTORY
7pmHow the Earth Was Made
8pmAncient Aliens: Historical
evidence of potential alien
landings. 10pmBritain’s X Files
11pmDecoding the Past 12am
Ancient Aliens 2amTunnellers
3amMega Disasters 4am-
5amAncient Discoveries
DISCOVERY
8pmHow Do They Do It?
8.30pmHow It’s Made: How
peanut butter is made. 9pm
Did the Mob Kill JFK? 10pm
Ultimate Air Jaws 11pm
Frontline Battle Machines with
Mike Brewer 12amDeadliest
Catch 1amBear Grylls: Born
Survivor 2amRory McGrath’s
Best of British Engineering
3amWorld War Two: The
Complete History 3.50am
Special Forces Heroes 4.40am
Mystery Investigator: Olly
Steeds 5.30am-6amHow
Does That Work?
DISCOVERY HOME &
HEALTH
7pmBabes in the Wood 8pm
10 Years Younger 9pm
Emergency 10pmHospital
Sydney 11.30pmThe Real ER
12amEmergency 1amHospital
Sydney 2.30amThe Real ER
3am10 Years Younger 4am
Multiple Mums 5amFrom Here
to Maternity 5.30am-6am
Portland Babies
SKY1
8pmThe Little Couple 8.30pm
Emergency Animal Rescue
9pmFILMThe Legend of
Bagger Vance: Drama, starring
Will Smith and Matt Damon.
2000. 11.25pmUK Border
Force 12.25amInside Britain’s
Fattest Man 1.25amRoad Wars
2.15amRoss Kemp on Gangs
3.05amOops TV 3.30amLost
4.20amSell Me the Answer
5.10am-6amAre You Smarter
Than a 10 Year Old?
BBC2 ITV1 CHANNEL4 CHANNEL5
S
A
T
E
L
L
I
T
E
&
C
A
B
L
E
TVPICK
6pmBBC News
6.30pmBBC London News
7pmThe One Show
7.30pmWallace & Gromit’s
World of Invention; BBC News
8pmJimmy’s Food Factory
8.30pmNigel Slater’s Simple
Suppers
9pmThe Apprentice
10pmBBC News 10.25pmRegional
News 10.35pmThe National
Lottery Draws 10.45pmFilm 2010
with Claudia Winkleman: National
Lottery Update 11.25pmFILMThe
Crossing Guard 1995; Weatherview
1.15amSign Zone: Remembrance
Week 2amMasterChef: The
Professionals 3amWatchdog
4amRestoration Roadshow
4.30am-6amBBC News
6pmEggheads: Quiz show,
hosted by Jeremy Vine.
6.30pmStrictly Come Dancing
– It Takes Two
7pmEscape to the Country: A
couple search for a rural retreat
in Worcestershire.
8pmEdwardian Farm: The
team takes on new enterprises.
9pmCHOICE Ancient Worlds:
Richard Miles explores the
collapse of the Bronze Age.
10pmThe Apprentice: You’re
Fired!
10.30pmNewsnight; Weather
11.20pmThe Secret Life of the
National Grid
12.20amBBC News
4am-6amBBC Learning Zone
6pmLondon Tonight
6.30pmITV News
7pmEmmerdale: Moira resorts
to desperate measures after
Holly self-harms.
7.30pmLive International
Football: England v France
(Kick-off 8.00pm).
10.10pmITV News
10.40pmLondon News
10.45pmInternational Football
Highlights
11.45pmCops with Cameras:
12.40amThe Zone; ITV News
Headlines
2.45amFILMOut for Justice:
Action thriller, with Steven Seagal.
1991. 4.15amThe Jeremy Kyle Show
5.10am-5.30amITV Nightscreen
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
8pmCHOICE Animal
Madhouse
9pmGrand Designs
10pmRude Tube: Viral Ads
11.05pmThe Event
12.05amMusic on 4: On Track
12.20amMusic on 4: The Album
Chart Show Introduces Mike Posner
12.40amMusic on 4: 4Play: Frankie
and the Heartstrings 12.55am
Music on 4: The Album Chart Show
Spotlight 1.05amFILMLemon Tree
2008. 2.55amStudio 60 on the
Sunset Strip 3.35amFILMA Letter
to Three Wives 1949. 5.20amMa
Bar 5.30am-6.15amCountdown
6pmHome and Away
6.25pmLive from Studio Five
7pmFive News at 7
7.30pmHighland Emergency;
Five News Update
8pmEmergency Bikers: New
series. The paramedics help a
child who has been hit by a car;
Five News at 9
9pmNCIS
10pmCHOICE Law & Order:
Criminal Intent
11pmLaw & Order
11.55pmPoker
12.55amSuperCasino
3.55amHouse Doctor 4.20am
Emergency Bikers 5.10am
Michaela’s Wild Challenge 5.35am-
6amMichaela’s Wild Challenge
1 2 3 4 5 6
7
8 9
10 11 12
13 14 15 16
17 18
19
20
21 22
12 22 16
8 32
10 6
35 21
13 6
45
3 15
24 16
9 29
33 11
4 13 8
28
19
5
12
24
20
10
42
23
16
15
6
8
30
20
30
29
27
9
7
11
Fill the grid so that each block
adds up to the total in the box
above or to the left of it.
You can only use the digits 1-9
and you must not use the
same digit twice in a block.
The same digit may occur
more than once in a row or
column, but it must be in a
separate block.
COFFEE BREAK
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUE’S
SOLUTIONS
KAKURO
WORDWHEEL
Using only the letters in the Wordwheel, you have
ten minutes to find as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
SUDOKU
WORDWHEEL
Place the numbers from 1 to 9 in each empty cell so that each
row, each column and each 3x3 block contains all the numbers
from 1 to 9 to solve this tricky Sudoku puzzle.
SUDOKU
QUICK CROSSWORD
ACROSS
1 Decorative rufe (5)
4 Annoyed (5)
7 Framework that
supports climbing
plants (7)
8 Pieces of potato fried
in deep fat or oil (5)
10 Formal exposition (8)
13 Land measure (4)
15 Clothing (4)
17 Person who owns a
guest-house (8)
19 Holy city (5)
20 The gathering together
of livestock (5-2)
21 Mechanical bar (5)
22 Large-eyed, arboreal
prosimian having
a foxy face (5)
DOWN
1 Signboard, for
example, bearing a
shopkeeper’s name (6)
2 In an artificial
environment
outside the living
organism (2,5)
3 Momentary failure (5)
5 Woman’s loose
dressing gown (8)
6 Hair curler (6)
9 Make-believe (8)
11 Be unwell (3)
12 Caustic remark (7)
14 Select (6)
16 Cup without a
handle (6)
18 Urge or force to
an action (5)
The nine-letter word
was SUNFLOWER
T
K
E
A
L V
I
T
A
8 4 6 1 9
7 4
3 9 7
5 8 1
8 2 1
7 9 3
6 1
6 7 8 9 4
T W O T I M I N G
C H O A O P
A V E R T G O O S E
L A E L M N N
I S L A M A T E U P
B R A U
R I S K Y A B Y S S
A I E L F A H
T O N G A T I L D E
E C S E T R
Y E S T E R D A Y
4 3 7 2 6 1 8 9 5
5 1 8 4 9 7 3 2 6
9 2 6 3 8 5 7 1 4
7 6 9 8 5 3 2 4 1
8 4 2 9 1 6 5 7 3
3 5 1 7 2 4 6 8 9
6 8 4 5 7 9 1 3 2
1 7 3 6 4 2 9 5 8
2 9 5 1 3 8 4 6 7
8 6 1 8 2 2 1
7 9 8 5 6 3 7 9
5 3 1 9 5 8 6 7
9 8 6 4 1 2 3
2 1 5 7 4 9
4 3 5 2 9 7 6 1 8
1 2 3 8 1 4
1 4 2 2 1 6 3
6 7 9 4 8 9 8 7
1 4 1 6 4 5 7 2
9 5 3 4 5 9 1
Lifestyle | TV&Games
31 CITYA.M. 17 NOVEMBER 2010
Sport
32 CITYA.M. 17 NOVEMBER 2010
BRITAIN’S Andy Murray will resume
his long-standing rivalry with Roger
Federer next week in London after
the pair were drawn in the same
group for the ATP World Tour Finals.
Murray, one of a select few in the
world to enjoy a favourable head—to-
head record against Federer, will be
looking to add to his eight wins over
the Swiss 16-time grand slam winner
when they meet at the O2 Arena.
The world No5 will also face Robin
Soderling and David Ferrer in the
group stage of the elite, end-of-season
tournament, with his first match,
against Swede Soderling, on Sunday
afternoon.
Murray avoided a potentially tricki-
er draw after world No1 Rafael Nadal
and No3 Novak Djokovic were drawn
in Group A, alongside Tomas Berdych
and Andy Roddick.
The Scot goes into the Finals, which
pits the eight best performing players
of the year against each other, look-
ing for a lift after slipping down the
rankings this week.
He could feasibly end the year as
world No3 but would need to outper-
form both Djokovic and French Open
runner-up Soderling in London.
The Dunblane star lost to Federer
at the same event last year.
Murray and
Federer to
collide at O2
BY FRANK DALLERES
TENNIS

Murray has a positive head-to-head record against Federer Picture: ACTION IMAGES
GROUP A
Rafael Nadal, Novak Djokovic, Tomas
Berdych, Andy Roddick
GROUP B
Roger Federer, Robin Soderling, Andy
Murray, David Ferrer
ATP WORLD TOUR FINALS | DRAW
Results
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SPORTS EDITORFRANK DALLERES
email sport@cityam.com
SOUTH AFRICA coach Peter de Villiers
has attempted to draw a line under
the doping storm that has derailed
preparations for Saturday’s clash
with Scotland.
The Springboks lost two men on
Monday when hooker Chiliboy
Ralepelle and winger Bjorn Basson
were sent home after testing positive
for a banned stimulant.
De Villiers admitted then he feared
his whole squad could have taken the
same substance as part of a nutrition-
al supplement, and were therefore at
risk. But yesterday, as he named his
team, the coach tried to play down
the controversy that has engulfed
the world champions.
“We have moved on, we’re
professional, we know how
to deal with tough
moments and we look for-
ward to playing the game
on Saturday,” said De
Villiers. “We have sent a lot
of stuff for testing. We don’t
want to repeat it.”
De Villiers was dealt a fur-
ther blow yesterday when
winger Bryan Habana was
ruled out of the rest of the
tour, which ends with a fixture
against England on 27
November.
Habana broke a bone in his
hand during training when
he fell awkwardly in a defen-
sive drill, enforcing one of
four changes to the team for
the Scotland Test.
Lwazi Mvovo will replace
Habana, while full-back
Zane Kirchner, scrum-
half Francois
Hougaard and No8
Ryan Kankowski all come
into the team. Gio Aplon
switches to the wing.
South Africa coach plays down crisis
as Habana injury adds to doping row
BY FRANK DALLERES
RUGBY UNION

33 CITYA.M. 17 NOVEMBER 2010
WITH little more than a week until
the first Ashes ball is bowled, the two
teams could not be on more different
trajectories. Preparations have gone
as well as they could have for
England, while Australia are a side in
chaos.
Australia’s shambolic state was
summed up this week when they
named a huge 17-man squad for the
first Test. I have never heard of any-
thing like it and find it absolutely
amazing. It’s evidence that they don’t
know their best team and, to me, a
sign of weakness.
Their recent results have also been
woeful. They haven’t just been get-
ting beaten – they’ve been getting
hammered – and I can’t remember
them going through a run like that
for a few years.
REAL DEAL
On top of all that there are doubts
about Ricky Ponting as a captain, and
whispers about whether Michael
Clarke, the vice-captain, is the real
deal. He has been around in Test
cricket for a long time but hasn’t
scored as many as some had hoped.
I have spoken to Australian friends
who are close to the team and they
have identified the first Test as being
absolutely crucial. They are desperate
to win, and, I’m told, if they don’t
then they feel England will hold the
advantage for the rest of the series.
One of the matters they seem
undecided on is which spin bowler to
favour, Nathan Hauritz or newcomer
Xavier Doherty. We don’t know much
about Doherty, he’s the new kid on
the block, but I do know that England
wouldn’t be too dismayed to be facing
Hauritz.
PIE-THROWER
Doherty is an unknown quantity,
which always forces batsmen to be a
little more circumspect, at least to
start with. And while I don’t mean to
say that Hauritz is a complete pie-
thrower, I think England would be
rubbing their hands at playing him.
As it stands, and as long as there
are no injuries we don’t know about,
I’d have no hesitation in backing
England to win the Ashes. There is
nothing to read into their final
warm-up game as they have done
their preparations.
Of course, you would be crazy to
write off the Aussies, who always
come out fighting when they’re
down. Whichever XI they pick, I’m
sure they won’t leave anything in the
dressing room.
Aussies are in chaos and showing weakness
CRICKET COMMENT
ANDY LLOYD
FORMER Australia captain Allan
Border has taken a swipe at England’s
cosmopolitan Ashes squad, branding
Andrew Strauss’s side the “Empire
XI”.
On Monday, Australia announced
an unusually large 17-man squad
ahead of the first Test which starts on
25 November, heightening the suspi-
cion that captain Ricky Ponting is still
far from certain of his best XI.
By contrast, England’s starting line-
up is all but set in stone, to the extent
that their first choice bowling attack
have flown straight to Brisbane, the
venue for the first Test, in order to
acclimatise to conditions, rather than
participate in England’s final warm-
up match against Australia A which
started last night.
Border is concerned that the usual
Pom bashing that traditionally pre-
cedes an Ashes series has been con-
spicuous by its absence and
questioned whether a side containing
South African-born stars Strauss,
Kevin Pietersen and Matt Prior, as
well as talented Irish left-handed bats-
man Eoin Morgan, should fly under
an English flag.
“England are sailing under the
radar beautifully – let’s get stuck into
them a bit,” Border smiled.
“I don’t know whether they should
be called England – it should be the
Empire XI.
“They got any Poms in their side?
They are all South Africans and
Irishmen – let’s question where these
blokes are actually from.”
Border, meanwhile, said if any-
thing, naming 17 players showed
Australia’s depth rather than the
selectors’ uncertainty.
“We’ve got 17 guys who could all
play in that first Test,” he said.
“That’s a good thing, rather than
scraping the bottom of the barrel.
“The selectors had no alternative
but to name a big squad.
“We’ve still got some Shield games
to play and there’s probably some
spots up for grabs.
“But I don’t see any dramas with it.
“I am surprised by the media. It has
been very negative.
“I am wondering if Australia
should bother turning up, that’s how
bad we are going according to what’s
been said in the media.”
Border fears Empire striking back
England’s controversial selection policy is
questioned by Australia’s former Ashes
winning skipper, says James Goldman
Pietersen and Strauss are South African-born but England regulars. Picture: PA
Invoke spirit of
Bodyline, says
ex-skipper Greig
ANDREW STRAUSS’S bowling
attack should look no further than
the infamous Bodyline series for a
method of unsettling Australia’s
batsmen, according to former cap-
tain Tony Greig.
Greig, who led England in 58 Tests,
believes Aussie skipper Ricky Ponting,
in particular, is becoming increasingly
vulnerable to the short ball.
And Greig has urged England’s
pacemen to recreate the hostility
which saw Harold Larwood deci-
mate the Australians in the contro-
versial series of 1932/33.
“If I was playing against Ponting
I’d be at his head, at his throat, with
two fieldsmen back,” Greig said.
“He’s not quite the puller he used
to be. He’s been hit a few times in
the head and been out playing the
pull shot.
“When you don’t start to hit them
or see them as well as you used to
there are doubts.”
FANS TOAST VICTORY
OVER GLAZERS
MAN UTD OWNERS PAY
OFF PIK LOANS: P34
SPORT | IN BRIEF
England 2018 bid gets Fifa boost
FOOTBALL: England’s hopes of hosting
the 2018 World Cup will be boosted by
the publication of Fifa’s technical reports,
which will categorise the bid as a low
legal risk with a high potential financial
return. Karren Brady, the West Ham
United vice-chair who is also head of the
2018 advisory board, said yesterday the
publication of the reports should help
England’s bid refocus attention on its
strong fundamentals. She said: “Our hope
is that the executive committee’s vote is
based purely around sporting credentials.
If that is the case, we know we have a
very strong chance. If it is based solely
on that, we should win on 2 December.”
Former Gunner Pires joins Villa
FOOTBALL: Aston Villa have confirmed
the signing of 37-year-old former Arsenal
star Robert Pires on a free transfer. Pires
had been released in the summer by
Villarreal and was training with the
Gunners earlier in the season in a bid to
regain his fitness. Villa’s assistant manag-
er Gary McAllister said: “It’s perfect. He’s
a player everyone can look up to because
of what he has achieved in the past with
Arsenal.”
Gayle puts Windies in command
CRICKET: West Indies batsman Chris
Gayle entered the record books on day
two of the first Test with Sri Lanka by
hitting 333. Gayle became only the
fourth player in history to register a sec-
ond triple-hundred, matching the feat of
Australian Don Bradman, fellow West
Indian Brian Lara and Virender Sehwag,
of India. The opener’s score helped the
Windies reach 580-9 declared in their
first innings, with Sri Lanka reaching
54-1. Elsewhere, Younus Khan hit an
unbeaten 131 as South Africa and
Pakistan drew the first Test in Dubai.
count of assault, and who is currently
on bail having been charged with the
same offence last month, have been
hotly debated.
But Capello, a renowned stickler
for discipline, believes Carroll will
flourish, rather than falter, under
the pressure of representing his
country.
“He’s a good player and I
think he will understand, to
stay with the senior [squad] will
be really important for him
because all the people,
the newspapers, jour-
nalists will be
focused on his life. I
think he will
improve,” said
Capello (left).
“I hope he takes
on more responsi-
bility now. He
needs to improve
things in his private
life now. It’s really
important.
“I spoke with him
about what you have to do on the
pitch and I will speak to him about
his private life.”
Carroll will be joined in a largely
experimental line-up by fellow north
east based starlet, Sunderland’s
Jordan Henderson, and Arsenal’s
Kieran Gibbs, who will make his first
senior start.
And Capello, who has been pleas-
antly surprised at the depth of talent
he is able to call on, believes it is cru-
cial the development of his young
players is not hampered by unrealis-
tic expectations or ultra harsh criti-
cism should they flounder against a
revitalised France side.
He said: “Henderson is a really
interesting player because his move-
ment is very good. He takes one
touch, or two maximum.
“The three players [Carroll,
Henderson and Gibbs], we have to
support them if the performances are
not okay.
“They are not here because of
injuries. They are here because they
are the future of England.”
Sport | Football 34 CITYA.M. 17 NOVEMBER 2010
RESTRUCTURING group Zolfo Cooper
is standing by to act as administrator
to Sheffield Wednesday today if a
High Court case verdict goes against
the club.
Wednesday face a £600,000
demand from the tax authorities and
arrive in court after the board turned
down an offer from Leicester City
chairman Milan Mandaric.
According to sources close to the
talks, former England and Leeds man-
ager and current club chairman
Howard Wilkinson was one of the
toughest critics of an offer for the
club from Mandaric that would have
seen Wednesday’s creditors repaid a
proportion of their debts.
Another vocal critic of the pro-
posed deal was Wednesday’s ex- chair-
man Dave Allen who described
Mandaric’s offer as “derisory”.
Today the club faces the possibility
of falling into administration – and
having an automatic 10 point deduc-
tion – unless it pays its tax bill.
The Co-Op Bank, the largest credi-
tor with around £23m outstanding,
was said to support the Mandaric
offer. Mandaric is still chairman of
Leicester City but he has sold that
club and would have left his position
there to join Wednesday if his bid had
been successful.
Mandaric said last night he hoped
Wednesday “have a plan B” to fall
back on in order to stave off adminis-
tration. Zolfo Cooper was founded in
2008 after a buyout of Kroll.
Wednesday
facing High
Court D-Day
FOOTBALL FINANCE

NEWCASTLE’S Andy Carroll has
made as many front page as back
page headlines during his fledg-
ling career, but England boss
Fabio Capello believes the glare of
the international spotlight will
help focus the mind of the
talented striker.
Carroll, 21, the joint
leading goalscorer in
the Premier League this
season, is set to make
his eagerly awaited
debut for the senior
England side against
France at Wembley this
evening.
The ethical rights and
wrongs of selecting a
player who has been
found guilty on one
Capello sure England
call will focus Carroll
MANCHESTER UNITED supporters
have hailed the Glazer family’s deci-
sion to pay off £220m of costly pay-
ment-in-kind loans (PIK), removing a
potential drain on the indebted club’s
resources, as a victory for fans.
But they have urged the Glazers to
show greater transparency in their
running of the Premier League outfit.
United said yesterday no money had
been taken from the club to pay off
the loans, but mystery remains over
how the Americans funded the move.
The move comes after months of
unrest among fans worried that more
than £700m of debt had started to
make United uncompetitive, a fear
heightened by wrangling over
Wayne Rooney’s new con-
tract. A mooted takeover bid
by the wealthy consortium
the Red Knights abated,
but season ticket sales suf-
fered.
Duncan Drasdo, a
spokesman from the
Manchester United
Supporters’ Trust (MUST),
told City A.M.: “It certainly
shows that the supporters have
been rewarded and the message to
them has to be to keep the pressure on
the owners.
“It seemed as if the Glazers were
just waiting for the animosity towards
them to calm down. Obviously, the
Wayne Rooney contract situation
meant the heat has been kept right on
them and this news has to be seen as a
victory and a step in the right direc-
tion.
“It’s time now for the Glazers to
reveal their plans, show some trans-
parency and give the fans the assur-
ances they’re after. It’s certainly not
celebration time though. We still
don’t know exactly where the money
to pay off this loan has come from.”
United responded to fevered debate
over how the Glazers would fund the
move by releasing a brief statement
denying money had been taken from
the club. It read: “The board notes
recent press speculation. The board
can confirm that there has been no
dividend of club cash.”
The remaining options would
appear to be that they have either sold
a stake in the club, or taken another
loan at a better rate than the 16.25 per
cent payable on the PIK.
News of the move came as United
released quarterly figures showing a
drop in losses compared to the same
period last year, from £7.7m to £4.9m.
United’s debts now stand at £509.4m,
with a cash balance of £151.7m accord-
ing to the figures, which run up to the
end of September.
The Glazers, who also own NFL fran-
chise the Tampa Bay Buccaneers, had
their wealth estimated at £1.6bn by
Forbes magazine two months ago.
Fans hail Glazers’
PIK pay-off but big
questions remain
BY FRANK DALLERES AND JAMES GOLDMAN
FOOTBALL FINANCE

Volatile off the field, but increasingly deadly on it, Toon star
can handle the pressure, says national boss, by James Goldman
United fans have asked for greater transparency from the Glazers Picture: GETTY
£509.4m
Man Utd's
debt
£4.9m
Man Utd quarterly
losses, down from
£7.7m
last year
£220m
value of
PIK loans
£1.6bn
Estimated wealth
of Glazer family
ENGLAND
FRANCE
Sport | Football
35 CITYA.M. 17 NOVEMBER 2010
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ANSWER THE FOLLOWING QUESTION:
CHELSEA’S defensive crisis deepened
yesterday when the club announced
centre-half Alex will miss up to eight
weeks with an ongoing knee injury.
The Brazilian international has
already been absent from the Blues’
last two Premier League fixtures
against Fulham and Sunderland
because of the problem, although he
had linked up with Brazil for this
evening’s friendly in Qatar.
A club statement read: “Further to
the Chelsea medical team’s diagnosis,
the Brazilian national team doctors
agree that further investigation via
arthroscopic surgery is required on
the player’s right knee. That will take
place over the coming days. He is
expected to be out for approximately
six to eight weeks.”
It is now likely that Alex and club
captain John Terry, who yesterday
revealed he could be out for months
with a nerve injury in his right leg
which has troubled him since the end
of last season, will miss the entirety
of a tricky looking December sched-
ule which includes matches against
Arsenal, Manchester United and
Tottenham.
The pair missed Sunday’s drubbing
at the hands of Sunderland and it
appears they won’t be reunited at the
Injured Alex joins Terry on
Chelsea’s treatment table
North east based stars
Carroll (left) and
Henderson are set to
make their England
debuts this evening.
Picture: GETTY
BY JAMES GOLDMAN
PREMIER LEAGUE

Newcastle’s other
England strikers
Jackie Milburn was the prototype
Newcastle No9. He only won 13
caps but scored 10 goals.
Malcolm MacDonald won 14 caps
and is best remembered for scoring
five times on debut against Cyprus.
Alan Shearer, the Toon’s all-time
leading scorer, led the nation’s line
for eight years scoring 30 goals.
Alex could miss up to eight weeks with a knee injury. Picture: ACTION IMAGES
heart of the champions’ defence any
time soon.
A Chelsea spokesman yesterday
confirmed that 29-year-old Terry
would continue to receive expert
medical care in the search for a per-
manent cure.
“John Terry reported for training
yesterday morning.
“He met with club doctors and
medical team and discussed plans to
continue seeing various specialists to
try to find a solution to the nerve
problems he has been experiencing
in his right leg,” said the spokesman.
Terry’s injury is a blow to country
as well as club, but England boss
Fabio Capello has backed his former
captain’s decision to change his poli-
cy of playing through the pain barri-
er.
“It is a good decision,” said Capello.
“He has played a lot of games with an
injection.
“I spoke with him a few times and
asked him whether he was fit to play.
You can’t play with injections all the
time. It is impossible.”
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