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Issue 1,389 Wednesday 25 May 2011 FREE

BARACK Obama will today meet with David Cameron in Downing Street to discuss the use of

for aircraft to fly in. tioned the accuracy of Ryanair’s test military force in Libya, as well as the war in Afghanistan and the global economy. The US
BY RICHARD PARTINGTON “There is no safety threat to aircraft flight. president is on the second day of his state visit to the UK. Last night, he attended a banquet
in this mythical ‘red zone’, which is “Radar tracking has shown that at hosted by the Queen. Earlier in the day, he visited a south London school with the Prime
A ROW between airlines and aviation another misguided invention by the no point did the Ryanair flight fly Minister, where the two gave each other a high five (above) after a game of table tennis.
officials broke out yesterday over fears UK Met Office and the Civil Aviation directly through the notified area of
the volcanic ash cloud blowing in Authority,” the airline said. high ash contamination over Scotland

Goldman Sachs: oil price

from Iceland could cause a repeat of The operator was amongst several so it is unsurprising that it found no
last summer’s mass flight disruptions. carriers in the UK to cancel flights, ash,” a department for transport
Planes due to fly to and from including BA, easyJet and KLM. spokesperson said.
Scotland were grounded yesterday, Shares of airline firms slumped on Transport secretary Philip

will bounce back to $120

including flights from London air- the news, as well as on fears of further Hammond rushed to calm fears the
ports. However, late last night, UK air disruption. impact of the eruption would cause a
traffic control service NATS said flights Ryanair had conducted a test flight repeat of last year’s travel chaos.
would not be affected from today. in Scottish airspace yesterday morn- “We are in a much better place this
Irish carrier Ryanair had blasted the ing. The airline claimed it had flown year because we have worked with air-
UK Met Office and the Civil Aviation within the red zone and had found lines and regulators to build a regime

Authority (CAA) for the creation of “no evidence of volcanic ash”. that puts safety first, but with far recovery is nearing a trough, “creat-
“red zone” areas designated as unsafe But authorities last night ques- more flexibility,” he said. BY RICHARD PARTINGTON ing upside to metal prices”, and that
GOLDMAN Sachs, which caused a brent crude is now expected to end
ANALYSIS l EasyJet commodities sell-off last month the year at $120 a barrel, up from an
345.00 ANALYSIS l International Consolidated Airlines Group ANALYSIS l Ryanair Holdings
p 24 May 260 230.80 when it predicted the short-term earlier prediction of $105.
p 3.7
€ 3.40 peak of the market, said yesterday The bullish note came as a UK par-
360 24 May 24 May
250 3.6 that investors should pile back in. liamentary committee raised con-
Analysts said “the risk/reward cerns about anti-competitive trading
240 once again favours being long com- on the London Metal Exchange.
3.4 modities” following a 10 per cent The science and technology com-
average dip in a basket of materials mittee said it would refer the matter
340 220
including crude oil, copper and plat- to the Office of Fair Trading, after it
3.2 inum. noted that the same companies that
350 210 3.1
A note to investors said the mid- dominate the metal trade also store
28 Feb 18 Mar 7 Apr 3 May 23 May 28 Feb 18 Mar 7 Apr 3 May 23 May cycle pause in global economic the materials.
28 Feb 18 Mar 7 Apr 3 May 23 May

FTSE 100 ▲5,858.41 +22.52 DOW ▼12,356.21 -25.05 NASDAQ ▼2,746.16 -12.74 £/$ 1.62 ▲+0.01 £/¤ 1.15 unc ¤/$ ▲1.41 +0.01 Certified Distribution
04/04/11 - 01/05/11 is 103,899
2 News CITYA.M. 25 MAY 2011

Britain’s long journey back to sanity NEWS | IN BRIEF

AIG share sale hands US $8.7bn
The sale of shares in insurance giant
American International Group (AIG)
interest shot up 26.6 per cent; but is “cutting the UK’s debt”, don’t forget interest payments are soaring, reduc- has raised $8.7bn (£5.3bn), taking the
most other kinds of expenditure also to laugh out loud. It is merely reduc- ing the funds available for public serv- state-backed firm closer to independ-
rose. In April alone, the UK govern- ing the rate at which more debt is ices by a lot more than the 0.6 per ence after its 2008 bailout. A com-
ment borrowed £10bn, the most ever being accumulated. cent overall cut. But this should also bined total of 300 shares of the
for that particular month, equivalent There was some good news in the be put into context. Barack Obama, company were sold by the US Treasury
to £333m every single day. The excheq- figures for George Osborne, the chan- who was in London yesterday, wants and AIG at $29 per unit. The govern-
uer was caught by a double whammy: cellor. Public sector net borrowing to cut public spending by 3.8 per cent ment, which retains a majority stake in
total receipts fell slightly, primarily (excluding financial interventions) next year, more than the 3.7 per cent the firm, needed to sell shares at about
EDITOR’S LETTER because £3.5bn was raised a year ago in was revised down to £139.4bn in pencilled in over four years by $28.7 per unit in order to recover a
a special one-off bank tax, while spend- 2010/11, down from £156.5bn last Osborne. In other words, Obama’s $47.5bn investment. The sale repre-
ALLISTER HEATH ing went up in all categories except year. The Office for Budget cuts – which many in the US want to sents the government’s first step
capex, which fell by £200m. Responsibility’s March Economic and make even larger – are four times toward exiting its ownership of the
HERE is a little test for you, dear read- Eventually, debt must be repaid: Fiscal Outlook had forecast net bor- larger than the average annual cuts firm, which received more than $182bn
er. How much do you think public the bill will fall on us taxpayers as rowing of £145.9bn, so the chancellor proposed by slowcoach Osborne. in aid during the financial crisis.
spending has been cut over the past well as on our children – unless the has done better than expected. The So it is no wonder really that the
year? Five per cent? 10 per cent? government tries to inflate its liabili- trend is down, something which the UK’s credit rating was downgraded Diageo eyes Jose Cuervo for $2bn
Maybe 20 per cent? I’m afraid you will ties away, which will only work for markets are focusing on. yesterday by (wait for it) Chinese rat- Drinks maker Diageo is in talks to buy
be disappointed. Total spending is up non-indexed gilts and which will end But next time you are told that ing agency Dagong, which cut the UK tequila brand Jose Cuervo for more than
by well over four per cent in cash up costing all of us dear through Osborne is imposing savage, reckless by one notch to A+, from AA-, and $2bn (£1.2bn). Cuervo is in exclusive
terms and by more than the public higher interest rates. Public sector net cuts on the UK, remember that the placed it on a negative outlook. You talks with Diageo, which has the first
sector’s special inflation measure, debt (excluding financial interven- figures tell a different story. So far, may snigger – but unless the UK is option to buy the company because of
according to the latest data for April tions) was £910.1bn (equivalent to spending is still going up. The plan is able to deliver on its fiscal austerity its international distribution rights to
2011 released yesterday by the Office 60.1 per cent of GDP) at the end of for total spending to go up in cash not just this year but for the next the brand. Casa Cuervo, the maker of
for National Statistics. April 2011. This compares to £765.5bn terms overall this financial year and four, our creditors will soon start pan- the world’s best-selling tequila brand, is
In fact, current spending was the (53.0 per cent of GDP) as at the end of to fall by 0.6 per cent in real terms icking again, with good reason. renegotiating a distribution deal with
highest it has ever been last month April 2010. So next time you hear (the measure that really matters). This Diageo, which could have led to the sale
and up five per cent. Spending on somebody claiming that the coalition will hurt, especially given that debt Follow me on Twitter: @allisterheath talks.

7th Floor, Centurion House,

24 Monument Street, London, EC3R 8AJ
Tel: 020 7015 1200 Fax: 020 7283 5334
UK deficit hits
an April high
Editor Allister Heath
Deputy Editor David Hellier
News Editor David Crow
Night Editor Katie Hope
Business Features Editor Marc Sidwell
UK ECONOMY bank payroll tax which distorted the

Lifestyle Editor Zoe Strimpel

Sports Editor Frank Dalleres BY JULIAN HARRIS figures for April 2010. Lord Sebastian Coe warned against unofficial tickets Picture: Micha Theiner/City A.M.
Art Director Craig Gaymer The government’s new bank levy

Olympic ticket warning

Pictures Alice Hepple OUT of control government spending will show up in the figures over the
Commercial sent the deficit soaring to a record course of this fiscal year, it said.
Sales Director Jeremy Slattery high for the month of April, official “It is clear from the downward revi-
Commercial Director Harry Owen data exposed yesterday. sion to last year’s borrowing figures
Current spending by the central that the government’s deficit reduc-
Head of Distribution Nick Owen
government (excluding capex) hit tion strategy is making headway in
£54.1bn last month, a five per cent dealing with our unsustainable BUSINESS OF SPORT But Lord Coe has advised those des-

Distribution helpline jump from the same point last year. deficit,” a spokesperson hit back. perate to secure coveted tickets “not
If you have any comments about the distribution BY JAMES GOLDMAN
of City A.M. Please ring 0207 015 1230, or email Government borrowing for April The deficit for 2010-11 was revised to panic” and insisted they should struck £10bn, up from £7.3bn in April down to £139.4bn; yet government LONDON 2012 organising committee not be tempted to visit sites which
2010. debt now totals £910.1bn, equivalent chair Lord Sebastian Coe has may not be authentic.
Editorial Statement “Chancellor Osborne’s target of to 60.1 per cent of Britain’s GDP. implored the British public to steer “Do not panic,” he said. “Do not be
This newspaper adheres to the system of reducing borrowing by £30bn in 2011- clear of unofficial ticket websites as tempted to go to [fake] websites. You
self-regulation overseen by the Press Complaints 12 looks more stretching than ever, April’s record high the clamour to attend high-profile should punch in urls (web links) on
Commission. The PCC takes complaints about the especially with economic growth look- Olympic events intensifies. our website to check if they are
editorial content of publications under the Editor’s deficit provided a
Code of Practice, a copy of which can be found at ing likely to disappoint,” said Nida Ali Earlier this week it was revealed authentic but I doubt whether that’s of the Ernst and Young Item Club. headache for the UK that British fans were attempting to the case.
Printed by Newsfax International,
Tax receipts fell slightly compared- chancellor George utilise foreign-based websites in order “There is no perfect system. There
Beam Reach 5 Business Park, with the same point in the last fiscal Osborne. to purchase tickets on a first-come- is no ticket process of this scale. This
Marsh Way, Rainham, Essex, RM13 8RS year, said the Treasury citing a one off first served basis. is an extraordinary scale.”


TPG has poached one of Goldman
Almost eight in 10 UK institutional its team in China following a number CRISIS A sharp jump in the number of Volkswagen AG will decide in the
investors exercise their voting rights of recent defections. Steve Sun, a prin- Britain’s most senior judge could Chinese tourists has brought a £200m next 12 months whether it will build
in all the companies in which they cipal in Goldman’s private equity appear before a committee to tackle windfall for retailers in central Audi luxury cars in the US in addi-
own shares, according to a survey by firm in Hong Kong, is set to join TPG’s the crisis over privacy laws in an London, the government will tion to VWs it is churning out at a
the Investment Management China group alongside Sing Wang, attempt to defuse the situation. Lord announce today. The Chinese are new factory here, the company’s
Association. The finding, in a report also a former Goldman executive, and Judge, the Lord Chief Justice, said yes- already outgunning their Russian chief executive said yesterday. The
setting out the extent of shareholder Ricky Lau. Sun has been offered the terday that the judiciary would assist counterparts – spending an average of German auto maker hopes to dramat-
involvement in the early days of the prospect of a percentage of the profits the new parliamentary committee £600 each time they walk into a store - ically increase US sales of VWs and
stewardship code of conduct on any deal he completes. set up by the Prime Minister to look but they cannot yet match the eye- Audi luxury cars over the next five
launched last year, confirms the UK into the current crisis over privacy watering largesse of the Arabs, who years. It is counting on its new
as the market where shareholders are BUY-OUT GROUPS IN RECORD SALES orders imposed by the courts. spend £1,800 on average. Chattanooga plant to lower produc-
most likely to engage with the compa- SPREE tion costs of a key VW sedan.
nies through voting. Private equity groups have cashed in HOTELS TO CASH IN ON CHINA’S EUROPE DEBT CRISIS POSES THREAT TO
BRUSSELS URGED TO MORE FLEXIBLE companies in the past two months as InterContinental Hotels Group is RESERVE’S JAMES BULLARD TRADING
OVER BASEL RULES they aim to hand cash back to about to unveil a deal with a state- The intensification of Europe’s debt Federal securities regulators are tak-
Brussels is being urged to give investors to attract them into their owned Chinese property group to crisis poses a threat to the US econom- ing a deeper look at the role of big
European Union countries more flex- next funds. The value of companies develop six hotels costing more than ic recovery, a senior official from the banks in executing currency trades
ibility when it tries to implement the sold by buy-out groups worldwide £350m in total. It expects China to Federal Reserve has warned. The tur- for clients. The SEC is examining
new Basel III rules on banking capital reached a high of $85bn (£52.5bn) in account for a quarter of all new moil in financial markets leading up whether two major banks made prop-
across the 27-country bloc later this April and May, data by Preqin, which rooms globally over the next five to Greece’s bail-out last May may have er representations to pension-fund
year. collects industry data, shows. years. added to a slowdown in US growth. clients about currency trading.
CITYA.M. 25 MAY 2011 News 3


ADITYA Mittal, the son
of Britain’s wealthiest
Lagarde set to formally enter
race for top role at the IMF
man Lakshmi, yester-
day moved a step clos-
er to succeeding his
father as chief executive
of the world’s largest
steelmaker. He has
been handed control of

the biggest and most WORLD ECONOMY who quit last week over sexual assault South Africa and Russia, or BRIC
problematic unit – Flat BY RICHARD PARTINGTON charges. countries, argued that the conven-
Carbon Europe instead Lagarde is seen as the frontrunner tion undermines the legitimacy of
of Flat Carbon FRENCH finance minister Christine for the job, although she faces strong the IMF as a global institution.
Americas, as well as Lagarde is expected to formally opposition from developing nations. “If the Fund is to have credibility
remaining chief finan- announce her bid to run the IMF directors for five key emerging and legitimacy, its managing director
cial officer, putting him International Monetary Fund (IMF) market economies yesterday hit out should be selected after broad consul-
on course to head up this morning. at what they call an “obsolete unwrit- tation with the membership,” the
ArcelorMittal when his The European Union is said to have ten convention” that the head of the IMF directors said, adding that the
father, Lakshmi Mittal, reached a consensus on backing her organisation should be a European. new boss should be chosen on the
60, steps down. to replace Dominique Strauss-Kahn, Directors from China, Brazil, India, basis of competence, not nationality.

Greece pushed
to sell assets

EUROZONE ECONOMY (IMF). Dutch finance minister Jan Kees

BY RICHARD PARTINGTON de Jager said that Greece should set
up a privatisation authority along the
GREECE could be forced to sell up to lines of the “Treuhand” agency that
€50bn (£44bn) in state-owned assets by sold off state companies in the former
European officials, as the nation tries East Germany after unification in
to mend its battered finances. 1990. “We could package their state
European leaders want to push for companies into a fund, with inde-
measures to ensure the Greek govern- pendent advisers or IMF oversight,” he
ment completes its promised €50bn said, adding that state assets could be
privatisation drive, but believe a state used as collateral for loans.
asset sale programme could ultimate- Delays in the state asset sell-off will
ly net it between €250bn and €300bn – jeopardise both payment of the rescue
almost all of Greece’s outstanding package’s next instalment, of €12bn
debt. due in June, as well as ongoing talks
But there are fears over Greece’s over a second bailout, of as much as
resolve to carry out the privatisation €60bn. The European Central Bank
plan – which EU officials see as the has already made it clear that it is
only way for the beleaguered country against a fresh restructuring of greek
to avoid insolvency. debt.
Yesterday the biggest opposition Moody’s became the latest agency
party in the country rejected Prime yesterday to warn of a chain reaction
Minister George Papandreou’s bid to of severe consequences for the 17-
build support for €78bn of budget nation euro area if Greece were
measures and asset sales – a key condi- allowed to default next month, when
tion for extra European Union finan- it faces a €13.4bn funding crunch.
cial assistance. The political wrangling came as Vince This is how much Spread Co charge to be
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to place the Greek asset sale in the to have a rescheduling of their debt And with spreads starting from 0.8, if you’re
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impression of tight supplies that that exceed your initial deposit

would boost oil prices.
Later they dumped those barrels
US regulators launched one of the back onto the market, causing prices
biggest ever crackdowns on oil price to crash and racking up profits from
manipulation yesterday, suing two short positions they had accrued in
well-known traders and two trading futures markets, the suit said.
firms owned by Norwegian billion- “Defendants conducted a manipu-
aire John Fredriksen for allegedly lative cycle, driving the price of WTI
making $50m by squeezing markets
in 2008.
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4 News CITYA.M. 25 MAY 2011


Huhne over

credit rating



Vickers: ICB
driving row HSBC




Under review for downgrade

plans will cut
state subsidy

POLITICS RBS Baa2 5 Under review for downgrade

EMBATTLED cabinet minister Chris NatWest Baa2 5 Under review for downgrade
Huhne was last night interviewed by
police over allegations that he asked
someone else to take driving licence Santander UK Baa1 2 Under review for downgrade REGULATION month, Vickers said that while remu-

penalty points on his behalf. BY JULIET SAMUEL neration is not directly within the
The energy secretary is fighting for commission’s remit, “some of the

Moody’s puts 14 UK banks

his political life over the accusations, BANKS will see their implicit subsidy issues we’re focusing on could well
made by his estranged wife Vicky from the state significantly cut down bear on that kind of issue (bonuses)”.
Pryce, that he made her accept the if the government implements recom- He added that the report sought to
points incurred for a speeding mendations from the Independent protect “ordinary, core banking”, but

on negative rating outlook

offence. Commission on Banking (ICB), its chair did not detail what that includes.
The alleged offence is said to have John Vickers (pictured) said yesterday. He also told members of the public
occurred in March 2003 while Huhne “Our measures would have a major gathered to discuss banking: “If banks
was returning from Stansted Airport. effect on reducing the subsidy,” do ... get into trouble it’s got to be
Huhne was a member of the Vickers said when speaking before the much easier to sort them
European parliament at the time and Treasury Select Committee yesterday. out.”
regularly travelled between his BANKING TSB, NatWest, HBOS, RBS and His views appeared to be well-support- The ICB is con-

London home and the Essex airport, BY JULIET SAMUEL Santander UK, while the outlook on ed by Moody’s decision to launch a sulting on propos-
where he would fly in from Brussels. Barclays’ senior debt was revised to review into the credit ratings of the als in its interim
Essex police also interviewed Pryce MOODY’S has put 14 of the UK’s “negative”. HSBC has escaped a change UK’s major banks (see left). report, which rec-
last night, according to her lawyer. biggest banks on review for a ratings but remains on a negative outlook. But Vickers added that it is impossi- ommended a
No arrests have been made by the downgrade due to regulatory efforts to Moody’s said that the review was ble to solve the “too big to fail” prob- “ringfence” around
police force in connection with the resolve the “too big to fail” problem. sparked by regulators’ desire to create lem entirely: “Total abolition is the retail opera-
inquiries. The move could significantly resolution plans that will make it easi- unlikely. There are always going to be tions of major
A spokeswoman for Huhne said: increase borrowing costs for banks as er to wind up collapsing banks rather circumstances when the government lenders to
“Chris Huhne helped Essex police regulators draw up plans to reduce the than bail them out. “Current levels of will feel committed to come to the res- insulate them
with their inquiries today and looks likelihood that taxpayers will have to systemic support account for two to cue of banks.” from global
forward to an early resolution of this bail out failing banks in future. five notches of uplift for the large UK Later, at the ICB’s first public hear- financial
issue.” Those under review include Lloyds banks,” the agency said. ing on its interim report, released last instability.

One Finsbury Circus is sold
The former City headquarters of BP has
been sold to a real estate fund for
£141.5m, the vendors said yesterday.
One Finsbury Circus has been snapped
up by Invesco Real Estate’s pan-
European fund after months of bidding.
Hermes Real Estate and LaSalle, which
acted on behalf of the sellers, said the
sale of the multi-let, 210,000 square
foot building allows their clients to

spend on new investments. GM Real
Estate acted for the joint owners, while
Knight Frank represented Invesco.

It’s all
all about
about s
tyle Armani rules out sales or listing
Designer Giorgio Armani yesterday ruled
usiness cla
ss out selling or listing his company as it
posted annual revenues up 4.6 per cent
to €1.59bn (£1.4bn). Net profit jumped
81 per cent to €161m and cash was a
Dubai from
from £
1,391 record €604m. “I have always associat-
ed good cash liquidity with the concepts
of independence and solidity,” said
Mumbai from
from £
1,572 Armani, 76. He also did not exclude pos-

sible acquisitions.

Shanghai from
from £
1,821 Yandex surges on first day
Shares of Russian internet company
Yandex surged more than 40 per cent in
Bangkok from
from £
1,886 their debut yesterday, in the largest US
initial public offering in the internet sec-
tor since Google. Yandex raised $1.3bn
Cape Town
Town from
from £
1,927 (£803m) in its IPO on Monday by selling
52.2m shares for $25 each. The offering
valued the overall company at about
Lima from
from £
2,244 $8bn. Morgan Stanley, Deutsche Bank
and Goldman Sachs led the underwrit-
turn ffares
ares fr
om H
eathrow, incl
incl ttaxes
axes ers on the offering. Shares were up 40
per cent at $35, after pricing at $25.
More offers on Google to reveal phone payments
Google will take the wraps off a mobile

payment system tomorrow that lets

consumers pay at checkout with phones
Fares quoted are for return business class flights from Heathrow via Amsterdam, including taxes and charges, and are instead of cards, a source said, hoping to
subject to change. Please check for correct fare at at time of booking. Book by 16/06/11. Travel periods vary. beat Visa and others to the punch. The
Fares are subject to availability. Credit card surcharge will apply. Specific booking conditions and the General Conditions
of Transportation of KLM and AIR FRANCE apply. Prices correct at 11/05/11.
Internet search and advertising leader
will work with MasterCard, the world’s
second-largest credit and debit card
processing network, to launch the sys-
tem. It has now signed up retail part-
ners Macy’s, American Eagle Outfitters
and Subway.
Here’s one little reason
why we make tyres that stop
shorter in the wet.

Bridgestone Europe
For your nearest Bridgestone authorized dealer,
visit our website
6 News CITYA.M. 25 MAY 2011

AssetCo faces
new payment
call from bank

TROUBLED fire engine provider
Give us your views on NHS reforms AssetCo is being pursued by one of
its banks for repayment of a £1.3m
Our latest questions for our panel of •Maybe overdraft facility, it said yesterday.
business professionals are online now Do you support plans for a regulator Northern Bank has filed a credi-
- apply to join at to to promote competition in the NHS? tor’s petition but AssetCo said it
give us your views on the proposed •Yes would not pay it while it was still
changes to the how the NHS is run: •No renegotiating its banking arrange-
Do you have private healthcare? •Don’t know ments. “This effectively seeks to
•I rely solely on NHS services Which of the below do you approve of improve the bank’s position, and the
•I have a private healthcare plan most in handling of NHS reforms? position of its guarantor, ahead of
through work •David Cameron other banks and creditors,” it said.
•I have my own private health plan •Ed Miliband City A.M. understands AssetCo was
The health reforms propose that ‘any •Nick Clegg expected to repay the loan from pro-
willing provider’ could provide NHS •Andrew Lansley ceeds of its £16m share placement.
services. Do you support this plan? •Andy Burnham One source told City A.M. former
•Yes •None chief executive John Shannon
•No •Other remains the overdraft guarantor
despite being sacked in March, and
AssetCo was trying to force the bank to collect on Shannon’s guarantee
rather than repay the loan.
In association with Apply to join today at AssetCo’s executive chairman
Tudor Davies told City A.M. he did not know who the guarantor was.

De La Rue plans cuts

as production fades
£35m. Technologies walked away from a

“Discussions remain ongoing bid for De La Rue after a higher

with the principal customer con- indicative offer failed to engage the
BRITISH banknote printer De La cerned and the authorities, and banknote printer’s board in talks.

Rue yesterday reported a 68 per therefore there remains uncertain-
cent drop in full-year profit due to ty as to the ultimate outcome of ANALYSIS l De La Rue
paper production problems and these issues, including their finan-
said it was unable to predict the cial impact,” the company said yes-
p 838.45
840 24 May
outcome of talks with the key cus- terday.
tomer still affected. De La Rue, which produces over
De La Rue said production of 150 national currencies and securi- 800
banknote paper for one of its top ty documents including passports, 780
customers -- named by a source said pre-tax profit before exception- 760
MORE NEWS close to the matter earlier this year al items for the year to 26 March 740
ONLINE AT as the Reserve Bank of India -- was fell to £33.3m from £104.1m in the 720
still suspended after faults were previous financial year. found with it in July, at a cost of In January, France’s Oberthur
28 Feb 18 Mar 7 Apr 3 May 23 May
CITYA.M. 25 MAY 2011 News 7

Glencore rises A sorely needed

IPO success story
2pc in first L
ondon’s float market badly
needed a success story after a
run of false starts and post-
ponements this year. And
Glencore’s moderate price move-

day’s trading
ment during its first day’s trading
seems to have supplied just that.
Observers looking for a superstar
rally, to fit hype from bankers last
week that a five to 10 per cent rise
was expected on day one, were
understandably disappointed. But
as one analyst put it: “It’s a miner,
Numis Securities’ Andy Davidson, not a tech company.”

metals and mining analyst. “I think Of course, Glencore is not a pure
BY JULIET SAMUEL the best we could hope for was stabil- miner and in fact derives the lion’s
GLENCORE saw its share price close ity and we seem to have got that so share of its revenues from commod-
up 2.14 per cent in its first day of far. It’s still early days.” ity trading, where it has close to a
public trading on the London Stock RBC Capital Markets’ Tim Huff 50 per cent market share in a range
Exchange yesterday in what the LSE said: “I think it’s going pretty well – of commodities. The company’s
confirmed is London’s largest ever it’s traded in line with the sector.” trading arm uses its global scale to
float, with $10bn raised. With a market cap of $59.2bn at take advantage of price differences
The stock closed at 525p, failing to the close of its first day’s trading, faster than rivals, shipping materi-
break above its original float price of Glencore will be the first company to als across the world in bulk to meet
530p when conditional trading be fast-tracked into the FTSE 100 demand.
began last week. index in 25 years. It could see its This makes it more complex than
Some questioned why the share price rise today on the back of a FTSE 100 miner, as it benefits
price was not above its float price demand from index-trackers. from commodity price volatility,
given that the order book was said to not just rises. Its trading operation
be many times oversubscribed last ANALYSIS l Glencore has been criticised for being a
week. 550 p “black box” without enough infor-
But most analysts were moderate-
525.00 mation telling investors how it
ly positive on the stock, with many 24 May works. But as Numis Securities’
saying that successfully launching a 530 Andy Davidson said: “The moment
huge float in the current volatile we do know exactly how it works,
market for commodities was in itself 520 then Glencore will lose its edge.”
“I don’t think it’s been a disap- 510
pointing week given the softness in
the commodities space since 500
19 May 20 May 23 May 24 May Analysis by Juliet Samuel
Glencore announced its float,” said Glencore chairman Simon Murray and colleagues at the LSE yesterday
8 Consumer News CITYA.M. 25 MAY 2011

Tesco market
M&S in store share rises as
revamps as Asda sees dip

profit climbs

TESCO’S market share rose for the
M&S boss Marc Bolland is planning to tailor his stores to their location first time since November last year,
according to Kantar Worldpanel mar-
For the 12 weeks to 15 May Tesco’s
STORES NEED A REVAMP? Interviews by Shiba Babamiri and Phoebe Torrance market share rose to 30.7 per cent,

RETAIL powered by China, India and Europe from 30.6 per cent. The only other
BY JOHN DUNNE while Bolland said any move to the US retailer in the top four to increase its
wold be “long term”. STEVE HART | SAGICOR share was fourth-placed Morrisons. Its
MARKS and Spencer (M&S) yesterday M&S made profit before tax and share rose for the third consecutive
unveiled a far reaching shake-up of its one-off items of £714.3m in the year to period to 11.9 per cent, from 11.8 per
stores which will see branches in rich- 2 April, a rise of 13 per cent on the pre- “I don’t shop there because I find it is very old cent a year earlier.
er areas being stocked with more vious year. fashioned and hard to find what you are look- Sainsbury’s, the UK’s third-largest
expensive lines.
Chief executive Marc Bolland said
But Bolland warned that times
would remain tough on the high
ing for. I think the stores need a revamp to retailer by market share, saw its mar-
ket share unchanged at 16.3 per cent.
the move – based on the spending street. He said: “The consumer is con-
attract a younger range of customers.” Up until March, Sainsbury’s market
power and demography of a local cerned about job security. April was share had increased consecutively for
area – would see products better
reflect the requirements of shoppers.
good but that was a distortion because
of holidays, nice events and sunshine.”
ELLIOT CAPLAIN | ASPEN INSURANCE 25 periods. Asda, the second biggest,
saw its market share slip to 17.2 per
Announcing a catalogue of sweep- Its shares closed 2.9 per cent lower cent, from 17.5 per cent. Outside the
ing changes he also said M&S would be at 385.6p yesterday. “Yes I am a big fan, the food is great quality. A top four, Waitrose’s market share rose
opening a series of pilot stores to test
new layouts. Allied with the store ANALYSIS l Marks & Spencer revamp could be a good idea because the to 4.3 per cent, from 4.1 per cent,
according to Kantar, which monitors
revamps he said the retailer would 410
p 385.60
stores should provide what the area needs but household grocery purchasing habits.
fight competitors to become a heavy- 400 24 May overall the stores are very well organised.” The collective market share of dis-
weight online retailer. 390 count retailers Aldi and Lidl rose to
He said the fact that online retailers 380 six per cent, from 5.4 per cent a year
trading only three years were selling 370
RORY DUNCAN | FARADAY INSURANCE earlier. Edward Garner, communica-
goods in the US while M&S lagged 360 tions director at Kantar, said that in
behind signalled that its web offering
needed an overhaul. “Our business is
“I shop in Marks and Spencer for food but not the four weeks leading up to 15 May
the year-on-year grocery growth rate
changing and we must change with 330
for anything else. The stores are pretty rose to 7.8 per cent, fuelled largely by
it,” he said. 320 straightforward but they could expand on the Easter shopping, the good weather
International growth overall will be 28 Feb 18 Mar 7 Apr 3 May 23 May
variety of the food they offer.” and, the Royal Wedding.
CITYA.M. 25 MAY 2011 News 9

Busy lives and tight belts drive HomeServe growth

SUPPORT SERVICES the Midlands-based firm up 16 per multi-country giant with access to four per cent to 3m, it is expanding far
▲ BY ALISON LOCK cent to £117.1m, while earnings per 68m households, but says there is still faster in its international markets such
share rose 17 per cent to 25.9p. vast room for growth. Only 22-23 per as the US, France and Spain. In the US
HOMESERVE founder Richard “It’s reinforcing the fact that people cent of UK homes have plumbing and new policies rose by 55 per cent to
Harpin (pictured) yesterday said are living busier and busier lives,” said drainage protection while just 30 per 450,000 and it delivered £6.1m operat-
penny wise homeowners keen to Harpin. “And particularly in difficult cent have boiler cover – compared ing profit, up from 1.5m in 2010.
avoid costly disasters such as boil- economic conditions when people are with 65 per cent of people that have HomeServe’s next steps will be to use
er breakdowns helped it grow last feeling a bit hard up it’s so they can vehicle breakdown cover, he said. its high cash generation – up to £86.1m
year. avoid the cost of a big repair bill.” Harpin says HomeServe has “older in 2011, from £26.3m the previous year
Revenues at HomeServe, He is no exception: his house dates customers that have older properties, – to buy the in-house service books of
which repairs and protects sys- from 1660 and he’s had “more than they worry about things going wrong, established utility companies in new
tems such as plumbing and my fair share” of HomeServe claims. “I and they want to have somebody to and existing markets. Harpin says it is
heating, increased by 27 per think on average I’ve had at least a sort it out.” They are also loyal – more currently negotiating deals in Belgium,
cent to £467.1m in the year to claim a year,” he sighs. than 80 per cent are repeat customers. Germany, and Canada and will target
March 2011 compared with Harpin has grown HomeServe to a While UK new customers were up more, at up to £20m, this year.
2010, as it sold 15 per cent
more insurance policies.
That pushed pre-tax profit at

ANALYSIS l HomeServe
p 509.50
24 May




28 Feb 18 Mar 7 Apr 3 May 23 May

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GLENCORE Shortly after

ENCOUNTER flotation,
AT CHELSEA Glasenberg
was straight
IT WAS unseasonably cold at the preview of
this week’s Chelsea Flower Show – so the on a flight to
Queen, mindful of her constitution, didn’t tured below) was already halfway to Asia
stop to admire every single show garden. Hong Kong on a plane to Hong Kong.
However, she did manage to drop in on
the Royal Bank of Canada’s New Wild
Garden, designed by Nigel Dunnett of
The Landscape Agency, where Lynn
ON THE subject of Glasenberg, The
Patterson, the bank’s director of corpo- Capitalist hears there was an amusing
rate responsibility and John Burbidge, Nigel Dunnett and Lynn Patterson at RBC’s New Wild Garden Picture: Micha Theiner/CITY A.M. exchange of presents yesterday between
chief executive of RBC Capital Markets the Glencore chief and Xavier Rolet of the
for Europe and Asia, were “deeply hon- show’s sponsor M&G Investments and its who caught up with spinner Guy London Stock Exchange (LSE).
oured” to meet her Majesty. owner Prudential – Prudential chief Lamming of Finsbury, which handles the Before hotfooting it to Hong Kong,
Burbidge stayed on for the evening’s executive Tidjane Thiam, chairman PR for the commodities giant. Wormsley Glasenberg took time to celebrate
gala dinner, where he and Ross Jennings, Harvey McGrath and M&G chief execu- also no doubt had a word with Glencore’s London’s largest-ever flotation with some
director of RBC Wealth Management, tive Mike McLintock – held court for the boss Ivan Glasenberg himself (pictured of his extremely athletic-looking manage-
hosted a client party alongside RBC evening, while Deutsche Bank managing right), who made his flower show debut ment team at the LSE headquarters.
Capital Markets’ Patrick Meier, head of director Charles Wilkinson hosted a at the Monday night gala. Glasenberg presented Rolet with a huge
investment banking for Europe, and Josh party for the new CEO of software firm “Did Glasenberg try and buy the toy truck to represent the commodity
Critchley, head of equity capital markets. Sage, Guy Burruyer, on his first Chelsea flower show?” wondered one mole giant’s heritage, which Rolet duly prom-
Elsewhere at the Chelsea show- outing as a FTSE 100 leader. of the commodities billionaire. ised to give pride of place among the
grounds, Stephen Hester, group CEO of Former PM John Major was “on good An interesting question, but stock’s exchange’s other top
RBS, braved the wind to admire the form”, as was the “charming” former The Capitalist will have to mementoes.
award-winning flowerbeds, as former Barclays chairman Sir Peter Middleton, find that out another It sounds like Glasenberg got a
Channel 4 chairman Luke Johnson and who attended the gala with his wife. time – by the time the good deal, though, since Rolet
ITV chairman Archie Norman retreated Also escorting his other half was Citi’s dust settled on this then presented him with a
inside the marquee for “a bit of a chat” head investment banker David year’s horticultural 1996 bottle of Boerl & Kroff
in a more sheltered corner. Wormsley, fresh from his bank’s co-advi- power gathering, champagne, thought to be
A “very tall” power trio from the sory role on Glencore’s float this month, Glasenberg (pic- worth around £1,000.

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12 News CITYA.M. 25 MAY 2011

Twitter is the winner in super-injunction saga

media platform deemed to have super-injunction controversies saw that measure. able +68 we can see that it still has a
changed the dynamics of the saga it rise again, this time to 39. So good news for Twitter in terms long way to go in terms of turning
and elevated freedom of speech to of making noise but when we com- that noise into positive sentiment.
dazzling heights: the conqueror of GOOGLE AND FACEBOOK HIGH PROFILE pare its impression score with Stephan Shakespeare is chief executive
tyrants and celebrities who would This has enabled it to move from Facebook’s +19 or Google’s remark- of YouGov
rather their lives remained private. 6th to 2nd in terms of the most
talked about online brands edging ANALYSIS l Attention chart ANALYSIS l Impression chart
GOOD YEAR FOR TWITTER MINDSHARE above Google, with only Facebook 60.0 80
BRANDINDEX Facebook 70 Google
In terms of mindshare it has been a above it.
STEPHAN SHAKESPEARE good year for Twitter. It started 2011 Despite this rise in profile, Twitter
50.0 60
with an attention score of 26 i.e. a has yet to really see a significant 40.0 Google 40

HO has done well out of quarter of people were hearing gain in terms of sentiment. Its over-
30.0 30
the super-injunction saga? something about them (whether all impression scores have edged up Facebook
Those celebrities whose good or bad) and got a small bump through May from -7 to -3 but it will Twitter 20
20.0 10
names have now been (to 31) from the beginnings of the want to see the increased mind- 0
revealed? Not at all. The lawyers? Arab Spring. share get it bigger gains than that 10.0
Presumably. It trended around this level for and it still remains down in 20th Twitter
0 -20.0
But what of Twitter? The social the next four months before the position out of 25 online brands on 3 Jan 7 Feb 7 Mar 4 Apr 2 May 23 May 2 May 5 May 10 May 13 May 18 May 23 May

Microsoft fights EU fine Chrysler repays $7.6bn loan
An €899m (£783m) EU antitrust fine was Chrysler yesterday paid back $7.6bn
excessive and undeserved, Microsoft told an (£4.7bn) in US and Canadian government
EU court yesterday in a case which could loans from its 2009 bailout, a move that
draw a line under a decade of legal battles. allows the US automaker to distance
The 2008 European Commission fine – a itself from an unpopular bailout and
record at the time – penalised Microsoft for deepen its ties with Italian automaker
failing to comply with the regulator’s order Fiat SpA. Chrysler said it transferred
four years earlier to provide information $5.9bn to the US Treasury and $1.7bn to
that would allow other products to work the governments of Canada and Ontario
with computers running its software. to repay loans it received in June 2009.
CITYA.M. 25 MAY 2011 News 13

Greencore: we
are not for sale
Tweetdeck founder a millionaire after
says chief exec Twitter pays £25m for London start-up
of the deal.

SERVICES MEDIA He declined to say how much his
BY STEVE DINNEEN interest was worth but said he made a
SANDWICH and chilled foods maker “healthy return”.
Greencore posted a net half-year loss yes- LONDON-BASED TweetDeck founder He also said it was a “very good”
terday as costs from its failed merger Iain Dodsworth became an overnight deal for Dodsworth, adding:
with Northern Foods wiped out gains millionaire yesterday after selling the “TweetDeck is a brilliant product that
from a steady sales rise. firm to Twitter for around $40m has been recognised by one of the top
The Irish group booked a €13.4m (£25m) in cash and shares. internet firms in the world.”
(£11.7m) charge for its bid to merge It is not yet clear if Dodsworth, who Hoberman said he doubts Twitter,
with Northern Foods, a convenience founded TweetDeck in 2008, will which recently signed an ad sharing
food specialist that was prised out of its retain a stake in the company or agreement with TweetDeck will close
hands by chicken tycoon Ranjit Singh become part of the management the site to remove the distraction from
Boparan in January. Revenues rose 7.9 team. The former BSkyB and Pru pro- its homepage, as has been speculated.
per cent in the six months to the end of grammer, who “It’s a lot to spend to
March, giving the firm a pre-tax profit describes himself on just close some-
of €2.4m – a fall of more than 76 per his Twitter page as an thing,” he said.
cent on the same period last year, and a “F1 obsessive”, could TweetDeck is
sum that is more than wiped out by tax not be reached for also backed by
bills. comment yesterday. Betaworks, TAG,
Greencore said it would continue to and angel investors
expand, but “does not feel compelled to founder Brent from the US and
do a transaction at this stage”. Hoberman, whose Europe.
Chief financial officer Andy Williams PROfounder Capital TweetDeck
dismissed reports that Greencore had Tweetdeck founder vehicle invested organises Twitter
asked private equity players to examine Iain Dodsworth has £1.2m in TweetDeck, and other social
a sale of the firm, telling City A.M.: “I can sold his business to yesterday confirmed media feeds into
categorically confirm that the business Twitter for £25m to City A.M. he has easy to navigate
is not for sale. sold his stake as part columns.

FSA gives £1m fine

for market abuse

ising Event

BY STEVE DINNEEN drawn from a third party’s bank &
account and delivered to Kahn, who BIGLAND
THE Financial Services Authority (FSA) has never worked at an authorised GREEN
has fined a man more than £1m for firm regulated by the FSA. CENTRE
market abuse in the first use of a tough Tracey McDermott, acting director
new penalty system. of enforcement and financial crime,

or MMulberry
ulberry a
The FSA also took out a high court said: “Kahn undertook a month-long
injunction against the individual – campaign of market abuse. The FSA
repeat offender Samuel Kahn – mean- will not tolerate this type of repeat
ing he could face jail for contempt of behaviour and will use all of our pow-
court if he is caught again.
Kahn co-ordinated a scheme to delib-
erately inflate the share price of Global
ers to ensure credible deterrence.”
Simon Morris of CMS Cameron
McKenna called the punishment a
BBigland Green
igland G Centre
reen C entre
Brands Licensing (GBL), a company
quoted on the PLUS Stock Exchange.
“remarkable first” for the FSA but said
it must now prove it can nail more
day 16
th June 201
He disguised his involvement in the “mainstream” cases.
scheme by repeatedly impersonating He said: “This is a typical case of a Goldsm
miths’ Ha
Goldsmiths’ Hall, London – 6.30pm
Hall, 6 - 9.00pm
other people when placing orders to fringe operator flouting the rules. Until
trade in GBL’s shares and co-ordinating the FSA digs into mainstream insider
trades conducted by third parties. dealing the risk remains that the City
The FSA says the profits were with- will not take the message seriously.” Ann ev
evening musical
sical extrav
extravaga anz ffr
m ar
ouund the
world led by Jeremy
emy Jack
Jackman naand Mulberry
ulberryy Schh
NEWS | IN BRIEF for Girls
Girls.. There
here will b
bee a champagne rreception
eception with
Holidaybreak hit by weather sumers by giving secure funding lines to
raf fle p
raffle prize
prizeses and goodie
goo odie bagss.
Outdoor European specialist holiday group work with suppliers. GO Outdoors oper-
Holidaybreak yesterday posted a wider ates from 30 outlets across the UK and All ffunds
All unds rraised
aised aare
re iinn aaid
id o
off tthe
he M
ulberry aand nd B
igland GGreen
first-half pre-tax loss as cash-strapped plans to open ten stores per year. It said it
consumers preferred to stay home amid also intends to increase investment in its
C entre. T
Centre. he p
The urpose iiss tto
purpose op rovide iits
provide ts llocal
ocal c ommunity iinn S
community hadwell,
last year’s harsh winter on top of a diffi- online retail offering. 3i recently completed T
Toower H
Tower amlets w
Hamlets ith o
with pportunities ffor
opportunities or aadult
dult aand
nd ffamily
amily llearning,
cult economy. For the six months ended 31 an investment in GO Outdoors to acquire a
March, pre-tax loss widened to £19.2m significant minority shareholding. hhealth
ealth aadvice
dvice aand
nd ssupport,
upport, aaccess
ccess ttoom meeting
eeting ffacilities
acilities aand
nd uuse
from £17.7m last year. Revenue fell seven
per cent to £139.6m. The company, which Big Yellow says UK recovery slow off a p
o professional
rofessional ttheatre.
provides residential outdoor education and UK self-storage company Big Yellow
adventure trips for school children, said it Group said yesterday that a recovery in
was looking to further strengthen the edu- the sector was unlikely until the economy
cation share of the group. improves but still increased profit. April to
March adjusted pre-tax profit rose to Suppor
ted by
Go Outdoors in refinance deal £20.2m from £16.5m a year ago. Revenue
Outdoors retailer GO Outdoors has rose seven per cent to £61.9m. “In the UK, For mor
m e information,
secured a £30m financial package from at the moment we’re operating in a very
Lloyds Banking Group to fund its growth subdued environment, where the economy
conta headspa@m
contact mulberry
plans. The business said the three-year re- did not really do very much since T:: 020
T 0 7790 0 6327
finance deal included £12.2m for trade September," chief executive James Gibson
finance to help deliver new lines to con- said.
CITYA.M. 25 MAY 2011 News 15

English Heritage
has called the
Broadgate estate
cost of up to
English Heritage to BROADGATE
“among the best LIST BROADGATE?
of its type and for the new
period” building A. The final decision will rest with
the culture secretary, Jeremy
Hunt. He is obliged to consider what
English Heritage wants, as it is a
statutory adviser on conservation
British Land, which owns the matters. It is unusual for a listing to

BY HARRY BANKS Broadgate complex of 16 buildings in a defy English Heritage’s wishes, but
joint venture with Blackstone, wants not unheard of – for example, when
A PANEL of planning and architecture to keep UBS on its estate with a £340m a stakeholder, owner or other state
experts will today meet to decide purpose-built headquarters, due for body disagrees with its findings.
whether to push for listed status of the completion in 2016.
Broadgate estate near Liverpool Street.
English Heritage is due to announce
But conservationists want the site to
be protected as a leading example of Q. IS A LISTING LIKELY?
shortly afterwards whether plans to
knock down two buildings on the
estate should be put on ice, pending
1980s architecture.
English Heritage declined to com-
ment on confidential proceedings yes-
A. It is not standard practice to list
buildings less than 30 years old,
though exceptions can be made if a
government approval. terday. site is under threat.
British Land has
said a listing
“sends a terrible
signal” and that
the case for list-
ing is “weak”

UBS and the site owners are due to learn English Heritage’s decision as soon as today

New projects Cell,

steal the show cell,
at Portland cell.
expected to deliver almost 1m square

BY MARION DAKERS feet of City office space.
GPE said during an analyst presen-
LONDON real estate investor Great tation that more than one investor is
Portland Estates (GPE) yesterday interested in buying some of its 50
reported a 78 per cent rise in profits per cent stake in the site, to take its
to £50.4m, as it unveiled planning stake down to a quarter and reducing
approval for its Hannover Square proj- its costs to £152.9m.
ect and the sale of some of its stake in The names of the potential buyers
100 Bishopsgate. were not disclosed. Existing partner
The firm’s West End-focused prop- Brookfields declined to comment on
erty portfolio gained 15.5 per cent in whether it would increase its stake.
value to £1.65bn over the year to the
end of March, while rental growth ANALYSIS l Great Portland Estates
rose 10.8 per cent, beating consensus 430
analyst forecasts by seven per cent. p
420 413.10
Westminster City Council has given 24 May
the green light to GPE’s £500m luxu- 410
ry flats and office space in Hanover 400
Square, which is due for completion 390
in 2016 to tie in with nearby Crossrail
construction. 380
But GPE said it hoped to sell off 370
some of its stake in the 100 360
Bishopsgate tower, a 40-storey block 28 Feb 18 Mar 7 Apr 3 May 23 May React instantly with our new free iPhone app.

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dation helped push profits up at buy- growth, credit performance and cash
to-let specialist Paragon, with the generation during the first half of the
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CITYA.M. 25 MAY 2011 News 17

Sarko urges web Endemol star to take over Mecom

TECHNOLOGY commercial activities. His remit tions with rapidly growing online

BY STEVE DINNEEN included the expansion of the com- and new media operations. It has
TECHNOLOGY pany’s distribution business and considerable potential to develop

RISING Endemol star Tom Toumazis worldwide sales its multi-media platforms and
NICOLAS Sarkozy urged internet will become the new chief executive He was previously executive vice build strong digital revenues
leaders gathered in Paris for the e-G8 of European publisher Mecom when president with Walt Disney, where and I am excited to be given the
talks to work with governments and Stephen Davidson, currently execu- he was in charge of programming, opportunity to lead the compa-
share fairly the benefits of a revolu- tive chairman, steps aside in August. new media and channel distribution ny.”
tion he compared to the discoveries Toumazis (pictured) has worked in for Europe, the Middle East, Africa Davidson, who became exec-
of Columbus, Galileo and Newton. the media industry since 1983 and and Canada. utive chairman after the for-
Opening a forum at which has held senior international and UK He also held senior roles at UK- mer boss of Mirror newspapers
Google’s Eric Schmidt and Facebook’s positions in print, online, TV and based publisher Emap. David Montgomery stepped
Mark Zuckerberg will be among the radio. He said of his new role: “Mecom aside over a row with share-
speakers, Sarkozy heaped praise on He served as chief commercial has an impressive European foot- holders, will stay on as non-
an industry that has democratised officer at Endemol from 2009, print, which combines powerful executive chairman of the
information and helped enable the where he headed up its worldwide national and local print media posi- firm.
revolutions of the Arab Spring. TOM TOUMAZIS

C&WW sees
its cashflow Waste not,
go into black want more?
WorldSpreads Platinum Account holders have already

ly flat.
BY STEVE DINNEEN It maintained its dividend at 4.5p a saved on average £6,600 by switching to Zero Spreads
CABLE & Wireless Worldwide share, reassuring investors who
(C&WW) yesterday released a work- feared it could be cut.
manlike set of results that reassured Chief executive Jim Marsh said:
investors who had been spooked by a “This year we passed the important
torrid few months. milestone of turning cash positive for
The firm slashed costs to push pre- the first time. The movement to
tax profit up 23 per cent to £143m on cloud, along with the ongoing con-
slightly lower revenues of £2.3bn. vergence between mobile and fixed
Shares in the firm, which concen- line communications and the rapid
trates on the global corporate market growth in global data traffic create
and has a large presence in the UK, good opportunities for our business.”
closed 4.91 per cent higher. They have
lost more than 40 per cent of their ANALYSIS l Cable & Wireless Worldwide
value since the demerger. 75
The business, which split from the
former Cable & Wireless Group in
2009, turned cashflow positive for the 65
first time. It reported free cash flow
generation of £61m. In 2006 it was 60
burning through well over £400m in 55 24 May
The firm says it now expects trad-
ing cashflow to continue to improve

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18 Economics CITYA.M. 25 MAY 2011

Dagong slashes UK credit

UK’s retail sales hold steady rating over new debt fear

BY JULIAN HARRIS sales, compared to 21 per cent in April wage growth have squeezed British
when sales were boosted by the Royal households and placed pressure on
Wedding. retailers.

ACTIVITY on the UK high street is “sub- Price pressures eased very slightly in “Family spending power is at a very deficit figures.
dued, but steady,” according to the lat- May, yet remain extremely high by his- low level, and with the continuing bite THE UK’s credit rating was downgrad- The British economy will expand by
est research by the Confederation of torical standards. of rising utilities and fuel, we are not ed yesterday, by Chinese rating agency just 1.3 per cent this year and 1.5 per
British Industry (CBI). A positive balance of 65 per cent of likely to see an improvement in this Dagong. cent next year, Dagong expects.
Retail sales are “holding up about as traders said they were selling at higher situation any time soon,” said Judith China’s first domestic credit rating Conversely, the outlook for China’s
well as can be expected,” the CBI said prices in the three months to May, a McKenna, chief financial officer for group cut the UK’s rating by one level economy was also cut yesterday, in a
yesterday, after announcing that sales minimal drop. ASDA. to A+, from AA-, and placed it on a neg- statement from Goldman Sachs.
have remained surprisingly resilient “We are still anticipating higher “Given these challenging consumer ative outlook. China’s double-digit growth will slow
this month. inflation later in the year,” said CBI conditions, it is good news that retail The agency cited a reduction in the this year to 9.4 per cent, the bank now
A positive balance of 18 per cent of economist Lai Wah Co. sales growth is stable, not falling,” con- UK’s capability to repay debts coincid- predicts, and drop to 9.2 per cent in
retailers reported a higher volume of High inflation, taxes and sluggish cluded CBI chief John Cridland. ing with extremely disappointing 2012.


Investment to London keeps up
London attracted more foreign direct
investment in 2010 than every European

on track with country apart from France, Germany

and Russia, a report from Ernst and
Young revealed today. The UK as a
whole continues to attract the highest
level of investment in Europe, up seven
per cent in 2010 from the previous year.

high morale While almost half (46 per cent) of exist-

ing investors would like to invest more,
the UK could do more to attract funds
from upcoming emerging economies, the
report said.

Private equity exits at fresh high

EUROZONE ECONOMY these dynamics, but there is very Private equity firms have been cashing

BY JULIAN HARRIS strong momentum in the economy.” in on their investment at a record level,
German manufacturing saw a analysts Preqin revealed yesterday.
GERMAN business confidence has decline for the third consecutive Preqin announced 201 private equity-
defied expectations by holding strong month, however, from 28.7 to 27.8 in backed exits already in the second-quar-
this month, despite drops in French the sub-index. ter of this year, valued at $85bn
and Belgian morale and tumbling In France the business climate (£52.5bn). This is already five per cent
industrial orders across the among factories also dropped, for the higher than the final quarter of 2010,
Eurozone. second straight month, according to according to the report. European exit
Sentiment in the business climate the statistics office INSEE. value has reached $57.9bn, double the
stuck at 114.2 in May, according to the The index slipped from 109 in April first-quarter of the year, and almost five
highly regarded survey from Munich- to 107 in May, yet remains above its times the $12.7bn in exits seen during
based think tank Ifo. long term average. the same quarter in 2010.
And the index measuring the cur- A sharper drop was recorded in
rent business situation climbed to a Belgium, where a confidence index Norwegian GDP growth slows
fresh high of 121.4, from 121 in April. plummeted from 2.8 to -0.5, dragged Norway’s mainland GDP grew slower
The news coincided with official down by the manufacturing sector. than the market expectation in the first
data confirming that the German “It’s reached its lowest level since three months of the year. The economy
economy grew 1.5 per cent in the first October 2010,” said BNP’s Steven expanded by 0.6 per cent, after 0.3 per
three months of year. Vanneste. “At current levels, the indi- cent growth in the final quarter of last
“It is important to emphasise just cator is indicative of growth around year.
how elevated these indices are, espe- two per cent, a notable slowdown
cially in the context of the bad run of from the three per cent registered in New home sales pick up in US
news in recent months,” said Eoin the first-quarter.” The US housing market showed signs of
O’Callaghan of BNP Paribas, citing New industrial orders dropped by BANK of England rate-setter Paul Fisher showed a dovish outlook yesterday during a speech improvement in April, data showed yes-
high oil prices and knock-on effects 1.8 per cent in March across the on the UK’s economic outlook. Downside risks to growth have prompted Fisher to “pause to terday. Sales of new homes increased by
from the Japanese earthquake. Eurozone, according to a separate consider when policy should start to be normalised or even whether further loosening might 7.3 per cent to 323,000 in April from a
“Germany cannot be immune to data release from the Eurostat office. be justified,” he said, insisting that rate hikes were not urgently needed. Picture: GETTY revised 301,000 in March.

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20 News CITYA.M. 25 MAY 2011

Pennon flush with profit
Toshiba shifts focus
from nuclear to
Waste and water company Pennon yes-
terday reported a pre-tax profit rise of
1.5 per cent to £188.5m for the first
three months of the year and recom-
mended a final dividend per share up 9.9

offset order delays

per cent to 17.15p. The company says it
is well positioned in the current econom-
ic conditions with South West Water
continuing to improve its operational
performance while revenues from its
waste management segment Viridor
soared by 13.6 per cent. ENERGY dependence on nuclear power by

BY HARRY BANKS investing in renewable energy sources.
Victrex plastics has strong sales Tepco has admitted that meltdowns occured at three reactors Picture: REUTERS It now targets sales of 350bn yen in
Hi-tech plastics company Victrex TOSHIBA said yesterday it may not solar, hydroelectric, geothermal and

Tepco admits rod damage

announced a rise in pre-tax profit of 57 reach its target of 39 orders for nuclear wind power, 900bn yen in smart grid
per cent to £48.3m boosted by strong reactors until two to three years later products and 800bn yen in low-power
sales of its polymer products used in air- than expected, and that it would consumption motors and batteries.
craft components and car parts. The increase focus on renewables as the cri- It said it could spend more than
company, whose revenues increased as sis rumbles on at the Fukushima three trillion yen on capital outlays,
major markets showed a significant Daiichi nuclear plant. research and M&A through 2014.

recovery, raised its dividend by 25 per downs of fuel rods at the plant’s No.2 Despite the setback, Toshiba said it
cent for the first-half of 2011 and said it BY HARRY BANKS and No.3 reactors early in the crisis. aims to more than double its operating ANALYSIS l Toshiba
would pay 8p per share compared to The disaster has triggered a drop of profit to 500bn yen (£3.7bn) by the year 520
6.4p one year ago. TOKYO Electric Power (Tepco), the more than 80 per cent in Tokyo to March 2014. 510
24 May
operator of the Fukushima Daiichi Electric’s share price and forced the Engineers are still battling to bring 500
Extended use for Roche drugs nuclear power plant disabled by the 11 company to seek government aid as it the Fukushima nuclear plant under 490
Roche’s cancer drug MabThera has been March earthquake and tsunami, con- faces compensation liabilities that control more than two months after 480
recommended as a maintenance drug firmed yesterday that there were melt- some analysts say could top $100bn. the earthquake and tsunami that dev-
for NHS patients with follicular non- downs of fuel rods at three of the The Tepco officials said damage to astated a swathe of Japan’s coastline. 450
Hodgkin’s lymphoma by the National plant’s reactors early in the crisis. the No.2 reactor fuel rods began three “If everyone around the world is 440
Institute for Health and Clinical It had said earlier this month that days after the quake. A delegation against nuclear power, there is no point 430
Excellence (NICE). NICE said it could fuel rods in the No.1 reactor had melt- from the International Atomic Energy in us saying it is a pillar of our strategy,” 420
postpone the spread and growth of can- ed, but officials of the utility confirmed Agency (IAEA) will present a report, Toshiba president Norio Sasaki said. 28 Feb 18 Mar 7 Apr 3 May 23 May
cer by up to four years. yesterday that there were also melt- based on their inspection, on 20 June. Toshiba has been trying to lower its

Nestle makes $1bn

The Royal Ascot
Golf Day and Charity Ball
in aid of Cancer Research UK
move in US pharma

hosted by Derek Thompson and horseracing stars products like Peptamen and own research.
BY HARRY BANKS Novasource. “We will incorporate the nutri-
While Nestle declined to give tion dimension through existing
NESTLE, the world’s biggest food financial details, analyst Jean- products and new products we are
group, has agreed to buy US gas- Philippe Bertschy at bank and asset going to develop,” he said.
trointestinal diagnostics firm manager Vontobel estimated Nestle “Significant innovations in the next
Prometheus Laboratories for an esti- might have paid more than 1bn 12 to 24 months will be added to the
mated $1.1bn (£680.5m) as part of Swiss francs ($1.1bn) for the compa- existing platform.”
the Swiss group’s drive into health ny.
sciences. “The combined entity will be able ANALYSIS l Nestlé SA
Nestle said Prometheus, which is to leverage the products and geo- 53.5 CHF 54.60
expected to have annual sales of graphic presence in gastrointestinal 52.5 24 May
around $250m in 2012, makes tests diagnostics. We see that acquisition 51.5
to help doctors diagnose conditions as a decisive step for Nestle,” he said. 49.5
such as inflammatory bowel dis- Luis Cantarell, head of Nestle’s 48.5
eases, including Crohn’s disease health science unit created at the 46.5
and ulcerative colitis. beginning of the year, said the com- 45.5
Nestle, maker of Nescafe coffee, pany hoped to develop personalised 43.5
KitKat chocolate bars and Maggi nutrition offerings with 42.5
soup, hopes Prometheus’s sales Prometheus’s diagnostics and 41.5
force will push its hospital nutrition expected the buy to accelerate its 26 Apr 3 Mar 10 May 17 May 24 May

Sony shares rise on upbeat outlook

despite fresh hacking of online info

TECHNOLOGY Morgan Stanley, Credit Suisse and ted its websites in three countries
UBS reiterated their “overweight”, had been hacked, with 8,500 Greek
SONY’S shares bounced from two- “buy” and “outperform” ratings user accounts compromised.
month lows yesterday as expecta- respectively. Sites in Thailand and Indonesia
tions were raised that it might have Analysts said Sony had provided had also been affected, it said.
put its troubles behind it after it said markets with a realistic view of the The Japanese entertainment and
this year’s operating profit would impact of the quake and a technology giant said data taken
match last year’s, easing worries PlayStation network hacking inci- from Greek accounts included email
about the impact of the March earth- dent, both of which had weighed on addresses, telephone numbers,
quake. the shares. Sony expects to report a names and passwords but that credit
In its first estimate for the year to net loss of 260bn yen for the year card data had not been stolen in the
March 2012, Sony said its operating ended 31 March, its third straight latest attacks.
Cancer Researcch UK is a registered charity
profit would come in around 200bn annual net loss, after writing of tax Sony has seen a series of hacking
in England & Waales (1089464) and in
Scotland (SC041666) yen (£1.5bn), prompting Macquarie credits following Japan’s earthquake attacks that have exposed more than
to upgrade its rating on the stock to and tsunami. 100m accounts on its online gaming
“outperform” from “neutral”. The outlook came as Sony admit- network to possible data theft.
CITYA.M. 25 MAY 2011 News 21

CITY MOVES | WHO’S SWITCHING JOBS Edited by Harriet Dennys in association with

recently as chief financial officer of Currie Investment, where he also held where he was chief financial officer.
May Gurney BT Global Services. the role of head of emerging markets.
Margaret Ford, Baroness Ford of Cunninghame, Religare Capital Markets
will become non-executive chairman at the com- Arqiva CAPCO The investment bank has appointed
pany’s AGM on 7 July 2011. In the interim she The communications infrastructure firm The business technology consultancy Gautam Trivedi as managing director
will be appointed to the board as a non-execu- has appointed Phil Moses as chief has appointed Alex Corsi as partner in and head of institutional equities for
tive director, with immediate effect. Gurney, 53, financial officer. Moses joins from BT, the firm’s London office. Corsi was India. Trivedi joins from Goldman
recently retired from Serco as senior independ- where he was chief financial officer of formerly executive partner of Sachs, where he was head of sales.
ent director and has extensive public company BT’s Openreach business, an operation Accenture’s Capital Markets.
experience, including Grainger Trust and English with a turnover approaching £5bn. VTB Capital
Partnerships. She replaces outgoing chairman TNT Post The investment bank has appointed
David Sterry, who will stand down in July. Midmar Capital Manoj Parmar has been appointed as Atanas Bostandjiev as its chief execu-
Dariusz Sliwinski has been appointed by group finance director for the private tive for UK and international.
the asset management firm to join the postal sector operator. Parmar qualified Bostandjiev, who was formerly a part-
Logica director of the Logica board, with investment team of Michael Nicol and as a chartered accountant with PWC, ner at Goldman Sachs, will be responsi-
Logica has appointed Himanshu Raja effect from 5 September. Raja has Alistair MacDonald. Previously, and joins TNT Post UK from a private ble for the bank’s operations at an
as chief financial officer and executive spent the last ten years at BT, most Sliwinski was a director at Martin equity-backed technology business, international level, based in London.

To appear in CITYMOVES please email your career

updates and pictures to

BEST OF THE BROKERS To appear in Best of the Brokers email your research to

ANALYSIS l BT 196.60 ANALYSIS l SABMiller 2,210.50 ANALYSIS l Go-Ahead 1,450.00

205 p 24 May 2,300 p 24 May 1,550 p 24 May

195 2,200
185 2,100

2,000 1,350

28 Feb 18 Mar 7 Apr 3 May 23 May 28 Feb 18 Mar 7 Apr 3 May 23 May 28 Feb 18 Mar 7 Apr 3 May 23 May


UBS has upgraded the telecommunications company to a “buy” and has Citi rates the brewer “buy” and has a target price of £27. The broker sees Morgan Stanley has upgraded the transport provider from “underweight”
raised its target price to 230p. The broker has raised its earnings per share potential for bolt-on acquisitions but unless the firm makes a significant to “equalweight” on the back of improved trading, and has raised its target
forecast ahead of consensus, and notes the firm’s positive earnings growth, acquisition in the next year, it thinks that buybacks could be on the agenda price by 290p to 1535p. The broker thinks the current share price reflects
which contrasts with mobile-driven earnings cuts for other telecoms firms. at an annual rate of $1.5bn (£722m). Citi adds that SABMiller is unlikely to strong passenger growth, now forecast at 1.5 per cent a year, and believes
UBS is also upbeat about BT’s pensions deficit, forecasting a more opti- be interested in buying Foster’s at a premium to its current price, leaving Go-Ahead can work to offset lower state subsidies for bus routes over the
mistic dividend outlook from 2012. earnings per share growth to continue at a rate in the mid-teens. next few years.

FTSE rallys on commodities Manufacturing dip

but Eurozone doubts linger affects US shares
hiked its oil price forecasts, led by a best in Europe,” Espirito Santo expected New York and Philadelphia

THELONDON 2.5 per cent advance in BG Group as

the same broker hiked its target price
for the company.
Investment Bank said in a note.
British Airways owner
International Airlines Group fell 1.8
THENEW YORK Fed manufacturing surveys last week,
the Richmond Fed survey showed yes-
terday that manufacturing in the cen-

REPORT Cairn Energy added 4 per cent in

heavy trading as the oil explorer
announced a drilling campaign off-
per cent as flights in northern Britain
and elsewhere in north Europe were
cancelled over worries about a vol-
REPORT tral Atlantic region stalled in May
after expanding for seven months.
“We don’t really have jobs strength-

RITAIN’S top shares rose yester- shore Greenland. canic ash cloud from Iceland, though ening,” Forrest said.

day as rallying commodity Marks & Spencer was the biggest officials reckoned the disruption S stocks dipped in light volume Energy shares were helped by a
stocks helped the index recover blue-chip faller, off 2.9 per cent after would not be as bad as last year. yesterday as lingering concerns near 2 per cent rise in US and Brent
some of its poise, but the the food and clothing retailer said it In Europe, shares edged up yester- about a slowdown in growth crude futures. Oil rallied after
advance may be short-lived as had made a good start to the new day, with miners among those recov- more than offset gains in ener- Goldman Sachs raised its forecast
investors find themselves hemmed in financial year but expected trading ering some ground lost in a sharp gy shares. price for the commodity and as the
by Eurozone debt concerns. conditions in the year ahead to be sell-off in the previous session, Investors kept trimming large-cap euro erased some of the previous
The FTSE 100 closed up 22.52 challenging. though analysts said markets might technology positions, pushing the day’s losses.
points or 0.4 per cent at 5,858.41, hav- Primark owner Associated British struggle to make much progress in tech-heavy Nasdaq Composite lower. The Dow Jones industrial average
ing hit a two-month closing low on Foods slipped 1 per cent and super- the short term. The S&P energy sector index rose lost 25.05 points, or 0.20 per cent, to
Monday after a downgrade of Greek market chain Tesco drifted 0.4 per- The pan-European FTSEurofirst 300 1.3 per cent, while its industrials 12,356.21. The Standard & Poor’s 500
debt, a ratings outlook warning on cent lower. index of top shares rose 0.2 per cent index slipped 0.6 per cent, sending Index dropped 1.09 points, or 0.08 per
Italy and doubts about austerity “We remain very wary of direct to close at 1,118.76 points, having fall- the market down for a second day. cent, to 1,316.28. The Nasdaq
measures in Spain. exposure to the UK consumer, in par- en 1.7 per cent on Monday. The index Sectors associated with cyclical Composite Index fell 12.74 points, or
“We’ve got quite a lot of negative ticular the retail sector,” said Jamie remained below its 50-day moving growth have suffered recently, with 0.46 per cent, to 2,746.16.
sentiment out there ... if traders are Seaton, manager of the £64.6m SVG average, a bearish signal. industrials down more than 5 per Gold miners’ stocks advanced as
going to take on a bit of risk, it’s UK Focus Fund, run by SVG It is just below the middle of a cent so far this month. bullion rose to its highest in about
mainly with a view to just a very Investment Managers. range defined by the 2011 high of “I don’t see any strong positive three weeks on concerns about a
short-term bounce and nothing more “With upward pressure on con- 1,190.51, hit in mid-February, and a momentum,” said Kim Caughey spreading debt crisis in the Eurozone.
long-term than that,” Joshua sumers’ non-discretionary spend, bor- low of 1,066.62, hit in mid-March. Forrest, senior equity research analyst Freeport-McMoRan Copper & Gold
Raymond, market strategist at City rowing costs, energy bills, petrol etc, at Fort Pitt Capital Group in gained 3 per cent to $48.82.
Index, said. this is putting a significant squeeze ANALYSIS l FTSE 5,858.41 Pittsburgh. Volume was light, with roughly
Bargain hunters moved in on min- on disposable income.” 6,100 24 May The S&P 500 closed at its lowest 6.6bn shares traded on the New York
ers, which recovered along with met- Banks were out of favour after cred- level in over a month and ended Stock Exchange, NYSE Amex and
als prices after Monday’s falls, with it rating agency Moody’s said it might below its 50-day moving average for a Nasdaq, below last year’s estimated
Antofagasta among the best off, up cut its rating on 14 British financial 5,900 second straight day. The 50-day MA, daily average of 8.47bn.
3.1 per cent. groups, including Lloyds and Royal now at 1,324.59, could turn into a Decliners outnumbered advancers
Glencore added 2.1 per cent but Bank of Scotland, off 2.2 per cent and hurdle for the benchmark to reestab- on the NYSE by a ratio of about 8 to 7,
remained below its issue price as 1.1 per cent respectively. 5,700 lish a strong uptrend. while on the Nasdaq, about eight
unconditional trading began in the “While there is certainly a fair Occidental Petroleum, rose 3.6 per stocks fell for every five that rose.
commodity trader’s stock. amount of credibility to Moody’s cent to $102.50, while Joy Global fell Shares of Russian Internet compa-
Integrated oil stocks found favour actions, we also note the capital posi- 5,500 1.8 per cent to $85.96. ny Yandex surged as much as 68 per
as crude rose after Goldman Sachs tion of the UK banks is among the 24 Feb 11 Mar 21 Mar 20 Apr 16 Mar Following much weaker-than- cent in their debut.
22 CITYA.M. 25 MAY 2011

Wealth Management Foreign Exchange |

WITH THE EURO Forex traders
can get a free
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S CURRENCY markets opened this week in
Asia, euro-dollar traders were already on edge,
after the Socialists lost badly in Spain and
Standard & Poor’s (S&P) downgraded Italy’s
sovereign debt. In a report published over the week-
end, the ratings agency affirmed Italy’s A+ long-term
rating and its top-ranked A-1+ short-term rating but
lowered the credit rating outlook to negative from
stable. S&P pointed to slowing economic growth and
“diminished prospects for a reduction of government
debt”, as the primary reason for its action. The rating
they go online
agency said Italy’s debt had a one-in-three chance of
being downgraded in the next two years.
Italian officials quickly challenged the S&P report,
The internet offers a wealth of information and
with Giulio Tremonti, the finance minister, noting
that “the only new element (in the report) is that
access to learn from the best, says Philip Salter
there apparently is a risk of political gridlock. This is
absolutely out of the question.” Meanwhile, the cred-

it markets were far less sanguine, with credit HERE is no shortage of online infor- about the FX market and can really
spreads on Italian sovereign debt widening out to mation for forex traders, whether enhance your knowledge about the FX
new highs. through newswires, providers, dedi- market.” She adds: “It also has a trading
Yet despite the continued focus on the political cated websites, blogs or Twitter. Our forum that allows you to discuss trading
and economic problems in the periphery, the real favourite, of course, is, which ideas and strategies with your peers and
trouble for euro-dollar could lie within the Eurozone you should all visit. Here are some others. enhance your trading style by learning
core. This past Monday, traders got a glimpse of from the success, or mistakes, of others.”
German PMI Manufacturing data and the news was WORD ON THE FX STREET Brooks says that Forex Factory “has
not good. While German PMI readings remained Kathleen Brooks of says “the forums, communities and conversation
above the 50 boom/bust level, the flash results for Reuters market reports along with FX threads where you can post a question or
May printed at 58.2 versus 61.2 eyed. The data for Street and the Bloomberg currencies sec- make a statement and get instant feed-
the services sector was even worse as it came in at tion are a great way to get up-to-date on back.”
54.9 versus 57.1 forecast. This was the weakest which currencies are moving and how
reading since October of last year, indicating that they have performed.” Richard Nehme of FUNNY MONEY
growth in the Eurozone’s largest economy is deceler- International FX also recommends FX For a forex site with a slightly satirical
ating at an alarming rate. Street ( He likes its eco- bent, ForexLive ( comes
If growth in the Eurozone’s core economies con- nomic calendar, which shows the impor- highly recommended. For those new to
tinues to slow as the summer progresses, the chance tance of the release relative to currencies, forex trading, it offers an easier and more
of any additional European Central Bank rate hikes as well as good synopses of what the entertaining read than the jargon-
will become minimal at best, even if inflation pres- releases are about, making it good for swamped commentary aimed at those its directors, Kathy Lien and Boris
sures remain elevated. The break below the critical training junior traders. familiar with the various forex dialects. Schlossberg, as well as access to charts,
$1.40 level on Monday morning indicates that mar- New Yorker Jamie Coleman launched videos and technical analysis. Your trading
kets no longer view euro-dollar as a possible yield FREE RANGE TRADING ForexLive. He used to be chief dealer at platform can also provide you with
play and, as that change in sentiment takes hold, the For the more advanced trader in need of Baring Securities, until Nick Leeson lost research through a third party.
pair could see more selling in the days ahead. some actionable ideas, Brooks suggests a £827m down the back of the futures mar- Among others, Alpari and IG both offer
couple of blogs dedicated to FX fans. She ket. The best way of keeping up with the access to Trading Central, which supplies
particularly likes Trade2Win content of ForexLive is to sign up to its plenty of detailed technical commen-
( and Forex Factory email bulletin. taries.
( She says:
“Trade2Win has a section with articles TRADING IDEAS TWEETING TRADERS
from FX experts that discuss topics such as Most of the major trading platform To plug into IG’s analysis of the four major
how to read candlestick charts to learn providers have plenty of free educational currency pairs follow @IG_ForexFocus on
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CITYA.M. 25 MAY 2011 23

Tapping into the

power of computers
(left) Picture: PA

Learning your trade

on (right)

Forex & CFD Trading.
Trading. Worldwide.

Focus your Forex trading potential

O’Sullivan of Spread Co (@Spreadco) share ideas, answer questions and

recommends the tweeters: @50pips, generally share their knowledge.
@FxGuy, @SE1 and @FX Forex. James That, for me, is what using Twitter
Hughes (@JHughes00) of Alpari for market data is best for. Sharing
(@alpariukforex) also recommends knowledge and ideas is what is all
@50pips, whose “insightful little about.”
nuggets throughout the day,” he Forex traders and people who
says, are “very comprehensive and work in the industry are remarkably
very helpful.” Hughes also advises willing to give away their knowledge
following the big newswires to con- online. It would be a mistake to
firm stories from independents. ignore the virtual forex community
Hughes suggests that Twitter is that has sprung up. Anyone serious
not just about garnering informa- about their trading should listen to
tion, but sharing ideas: “You want to the online gurus making serious
follow people who are willing to money.

Sterling rallied against the dollar With MetaTrader

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and news that the Chinese down- signs that we could see the beginning commentary, technical analysis reports from Trading Central,
graded UK sovereign debt took the of a deterioration with respect to the
and chart-pattern recognition from Autochartist.
shine off sterling in yesterday’s yen. The dollar-yen pair has struggled
trade, but there’s little reason to be cheering to overcome ¥82.10, but if it does we
Alpari (UK) is authorised and regulated by the Financial
the euro now, either. Eurozone debt con- could well see further gains. CMC
cerns remain high and even the release of Markets spread on dollar-yen is Services Authority. Forex and CFDs are leveraged products.
some marginally better than expected eco- ¥82.062-¥82.08. They may not be suitable for you as they carry a high degree
nomic readings from Germany isn’t going to Our recommended sell of sterling- of risk to your capital and you can lose more than your initial
Trading Central Alpari Squawk
provide much support. IG Index is quoting Swiss franc for the last two weeks investment. Yo ou should ensure you understand all of the risks. Autochartist
euro-sterling at £0.8727-£0.8729. has worked out well, but the repeated
Earlier this week, the euro fell sharply failure to break SFr1.420 on each of
after ratings agencies shifted Italy and the last five days suggests someone is
Belgium to a negative outlook. We may keen to keep it above this level. So
find the theme is towards safe haven cur- look to close any shorts and go long
rencies such as the Swiss franc. The euro is around SFr1.420 and play a bounce
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Spreads quotes euro-Swiss franc at SFr1.4221-SFr1.4228.
SFr1.2412- SFr1.2416. Philip Salter
24 Wealth Management | Foreign Exchange CITYA.M. 25 MAY 2011

Stopping the rot: Eurozone contagion

Greek debt looks unsustainable; Spain’s electoral rout has put its reforms in question; now Belgium
and Italy are shaky. As the single currency’s crisis continues, we asked the forex experts for their views

GLOBAL REACH PTNRS more. By implication the equity markets and the FOREX.COM world. If Greece doesn’t get the funds, then
pound will suffer as risk downgrades for banks the state won’t be able to pay its wage bills.
MARK play out. Before this can happen, it is the euro KATHLEEN This could quickly lead to rioting and social
THOMPSON that will be shorted as Greece moves towards
default and Spain, Italy and Belgium vie for posi-
BROOKS unrest on a massive scale. As we have seen in
the Middle East, popular uprising during
The resurgence of tion on the Eurozone bailout grid. The recovery in the times of economic stress can spread across
Eurozone sovereign debt The repercussions here stretch beyond the eco- markets after Monday’s regions very fast – leaving Spain, Portugal
fears has driven the euro nomic picture and challenge the philosophy of sell-off suggests to us and Ireland vulnerable.
to two month lows the euro itself. Will the European taxpayer’s tol- that they aren’t willing If Greek banks are forced to default, this
against the dollar in the erance of funding foreign bailouts reach its limit? to ditch risk when it is would hurt German and French banks with
last two trading sessions Perhaps a fourth round of bailouts could reveal only Greece in the Greek subsidiaries and probably cause their
and looks likely to keep the common currency the answer. In the meantime, risk warnings, immediate line of fire. share prices to crash. Back in 2008 it was
under pressure in the days to come. Investors credit downgrades and European unrest will However, elements of one investment bank – Lehman Brothers –
are right to be anxious about the implications of keep the euro in the short seller’s crosshairs. the Greek crisis are that set off the financial crisis that caused a
further negativity as Moody’s overnight risk With markets on geopolitical amber alert due to extremely concerning. There’s the risk that global recession. The same could happen in
warning on UK banks shows. the Grimsvotn ash cloud, they will be susceptible the EU/IMF won’t extend the next tranche of Europe: some Greek banks get into trouble
The fallout from the inevitable restructuring of to negative Eurozone news. The dollar will be the funds to Athens and also that the ECB refus- and all of a sudden the whole banking sector
Greek debt proves that it is not just sovereign main beneficiary of this shift in sentiment, es to take collateral from Greek banks, thus is on the line. So while these scenarios are
states that will shoulder the burden - fears of although UK importers should see improvements freezing them out of the capital markets. extreme, the markets are jittery and won’t go
writedowns and defaults stalk the markets once in pound to euro exchanges in the short term. Both would cause havoc across the financial up or down in a straight line from here.

CAXTON FX uations like dominoes. These Eurozone ripples LONDON CAPITAL GROUP upheaval and so doubts about their austeri-
RICHARD could make their way across the pond sooner
than some might think. With the US debt levels ANGUS CAMPBELL ty drive have come to the fore. This time
round it’s serious and investors are nervous
DRIVER soaring, safeguarding investor confidence in sov- There is some seriously which has been reflected by a weakening
This is not just an isolat- ereign debt is crucial. negative sentiment euro which has fallen from near $1.5000 to
ed Greek debt problem. Additional IMF/EU aid is an option, but an exten- towards the Eurozone $1.4000 against the dollar. The reason why
American banks, as well sion of maturities seems the most likely path. at the moment and the it’s serious this time is because when we
as European banks, have Haircuts must be avoided; they would inflict British press is full of saw Portugal succumb to an EU and IMF
substantial exposure to enormous losses on European banks that could euro doom mongering, bailout the euro didn’t bat an eyelid and car-
Greek debt, so the impli- realistically send the global economy back into saying a break-up is ried on climbing.
cations of a default recession. inevitable and Greece But we must not forget Greece, which is
would be felt throughout the financial markets. Equities have tumbled since last Friday and safer will have to go it alone. In reality, the looking increasingly like it will eventually
Moreover, a Greek default would only be the assets are clearly benefiting from the current Eurozone is almost certain to survive. The default on its debt – the ramifications of
beginning. We have already seen the grass roots risk averse environment. The yellow metal has political willpower is far greater than the which will be severe, across the continent
of contagion; Greek concerns triggered rating been a popular target but gold is currently well economic reality. and around the world. European banks
agencies to downgrade the economic outlooks of off its pre-correction highs. Despite the debt cri- This doesn’t mean, however, that the euro have huge exposure to Greek debt and such
both Italy and Belgium. A Greek default would sis and growing concerns over a global economic isn’t immune to a catastrophe. The ele- a sovereign default could trigger another
also drive up the borrowing costs of other slowdown, risk appetite hasn’t shied away alto- phant in the room though at the moment is banking crisis. That is not a happy
peripheral nations, pushing them into similar sit- gether. Spain, which is going through a political prospect.



My pick: Short euro-dollar; Short Australian dollar-dollar My pick: Stay long dollar-yen My pick: Buy sterling-Swissie at SFr1.4250
Expertise: Fundamental and Technical Analysis with Risk Management Expertise: Global Macro Expertise: Technical Analysis
Average time frame of trades: 1 day to 1 week Average time frame of trades: 1 week to 6 months Average time frame of trades: 6 months
The long dollar-Swissie position above SFr0.88 has been slow to I entered long dollar-yen two weeks ago at ¥81.09 as it put in a bullish This market trades just off some record lows and, with longer-term
gain ground; but clear bearish breaks for euro-dollar below $1.4000 Piercing Line candlestick pattern and broke above a falling channel top set studies finally starting to cross up from oversold levels, we like the
(with a 175 point stop and first target) and Aussie dollar-dollar from April. I am expecting prices to follow Treasury yields higher as QE2 idea of building a meaningful long position at current levels in antici-
below $1.0500 (holding a 150 point initial stop and objective) expires against a backdrop of increasing fiscal stress in the US, pressuring pation of some significant upside over the coming weeks and
would likely play out quickly. Yet that potential is heavily dependent borrowing costs higher. The pair met my initial target at ¥81.83, the 38.2 per months. The added bonus with counter-trending this market is that
on risk appetite trends; and that is my reasoning for a conditional cent Fibonacci retracement of the 4/6-5/5 drop, and I have moved my stop to it also offers a positive carry. Strategy: buy at SFr1.4250 for an open
and complementary S&P 500 tumble – preferably below 1,300. breakeven as well as revised the target to ¥82.54, the 50 per cent Fib. objective; stop at SFr1.3950.
CITYA.M. 25 MAY 2011 Wealth Management | Markets 25

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Business Features Structured Finance |


the direction
N the past decade, the European struc-
tured finance market has undergone
radical change. The global economic
downturn was the most severe stress
ticipants. Furthermore, improving loan-
level transparency puts investors on an
even footing with issuers, enabling them
to ramp up their analytics capabilities to
of this year’s
test for securitisations in decades. Indeed,
the fallout from the collapse of US residen-
tial mortgage backed securities (RMBS)
and collateralised debt obligations (CDOs)
resonates on trading floors to this day.
However, while the performance of the US
structured finance market has not recov-
examine transactions with equal precision.
Part of the reason why the crisis hit
structured finance so hard was that, prior
to the economic downturn, structured
finance transactions were often heavily
oversubscribed. Compared to supply,
demand for structured finance bonds was
Mifid review
ered to pre-crisis levels, global trends sug-
gest that increasing transparency among
so high that not enough effort was spent
on risk analysis. Yet this represents a
Craig Drake looks at the revision of the
market actors is leading a positive wave of
great opportunity for investors to utilise
loan-level data in their analysis of underly- Markets in Financial Instruments Directive
In 2010, Europe's economic recovery ing risks – such as loss severity, default
contributed to improved aggregate credit rates and recovery lag – which are

performance among structured finance increasingly relevant in the current eco- T’S simple really. The outcome of some way to go.
transactions. Last year was the first year nomic environment. Going forward, the Mifid II will include: more strin-
since the economic downturn in which ability to forecast cash-flows more confi- gent regulation of best execution EFFECTS OF THE REVIEW
structured finance transactions exhibited dently will be critical. obligations, a move towards the It is difficult to predict the effects two
more upgrades and fewer downgrades As a further aid to investors, risk ana- introduction of a consolidated tape, or three years down the line, but, as a
from the major ratings agencies. Indeed, lytics providers are increasingly able to an increased push for transparency, a result of the changes to rules, the
market sentiment appears to be changing offer cash-flow models for transactions higher number of trades at a higher structure of the markets in financial
as more and more transactions are being which have yet to be issued. Indeed, speed, lower fees, tighter spreads, the instruments will be reformatted.
issued publicly in response to renewed Standard & Poor’s ABSXchange continues introduction of a single passport to According to Derek McGibney,
demand. Even in a highly challenging cred- to seek new ways of improving cash-flow give improved access to a single, pan- management consultant for the IMS
it environment, the European structured analysis of structured assets, as new data European market, and further liquid- group, “the aim of the review is to
finance sector has proven resilient. sets become available and in response to ity fragmentation. give participants greater transparen-
But what has led to the improvement in the changing needs of investors. In this The original Mifid changes broke cy. However, this increase in trans-
market confidence? Principally, it has been way, ABSXchange develops products and the LSE monopoly to some degree in parency may in certain markets have
an evolution in the approach that all levels services that provide true added value to a push for best execution (see the the side effect of reducing incentives
of market participants – investors, regula- the investment and portfolio monitoring Fidessa chart below) but this still has through reduced risk and with it
tors and banks – take towards underlying process.
data. While some uncertainty regarding
ANALYSIS l Fragmentation of FTSE 100 trades reduced exposure to returns.”
Investors are requesting loan-level data future regulatory development may sup- According to McGibney, this
Equiduct (.09%) Nomura NX (.21%)
to better understand the risks inherent in press market confidence, the nuts and Lit Venues Dark Venues increased transparency is a double
ABS instruments on offer and hence make bolts of the financial services industry in edged sword: “While this increased
better investment decisions. While a lot of the future will hinge on clarity and trans- Nyse Arca (.2%) Liquidnet (.25%) transparency is a good thing for par-
investors might be reticent to invest in parency of information for all parties. ticipants who are less experienced
certain markets, the ability to look deeper Certainly, information transparency in the investors, for the professional
into deals on a loan-level basis has seen structured finance market is no longer Turquoise (2.92%) Bats Dark (.27%) investor, this leaves less incentive as
investors return to the structured finance simply a desirable objective. It is a reality. there is less reward for taking on risk.
market with more confidence. What’s more, it is a reality where, as eco- Bats Europe (5.26%) These investors will naturally be
Smartpool (.32%)
Regulators are moving in a similar nomic actors adjust to a new environment incentivised to migrate to areas
direction. The European Central Bank and with greater emphasis on risk analysis, all where there is less transparency, ergo
the Bank of England have both indicated parties stand to benefit. Chi-X (14%) greater risk and potential for
Turquoise Dark (.59%)
they are going to compel originators to returns.”
make loan level data widely available. LSE (30%)
Should the measures that are pre-
Regulatory standardisation in the markets Chi-Delta (.62%) dicted from the Mifid review be
is certainly something that can help 0 10 20 30 1.5 1 0.5 0 applied uniformly and in Europe in
increase the comfort levels of market par- isolation, then this kind of arbitrage
Source: Fidessa

The Two Musketeers?

If you’re not getting analysis, support and DATA,
you’re not fully armed.
The credit-related analyses, including ratings, of Standard & Poor's and its affiliates are statements of opinion as of the date they are expressed and not statements of fact or recom-
mendations to purchase, hold, or sell any securities or to make any investment decisions. Ratings, credit-related analyses, data, models, software and output therefrom should not be
relied on when making any investment decision. Standard & Poor's opinions and analyses do not address the suitability of any security. Standard & Poor's does not act as a fiduciary
or an investment advisor.
© 2011 Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. STANDARD & POOR’S and ABSXCHANGE are trademarks of
Standard & Poor’s Financial Services, LLC

The original
Mifid directive
THE original Markets in Financial
Instruments Directive (Mifid) was draft-
ed in 2004 and implemented 4 years ago.
The directive is up for review. So what
were the shortcomings of the original
European Commission directive?
One of the core tenets of the original
review was to shore up protection for
clients that were classed as sophisticated,
breaking them up into three broad
groups – retail clients, professional
clients and eligible counterparties. (See
box, left.)
The smallprint of The aim was to give certain parties a
the review is not looser rein so as to allow them to com-
yet certain plete an increased number of trades
without being burdened with excessive
Picture: GETTY regulation.
In the original Mifid regulations,
municipalities and public authorities
were included in the category of eligible
counterparties. Given the losses accrued
by these parties, and the subsequent
pleas of mis-selling, it is expected that we
will see a limiting of the availability of
the classification of eligible counterpar-
ty in certain circumstances.
A second area where some see that the
directive failed is in terms of providing
guarantees in terms of best execution of
trades – at the best price, cost and speed
of processing.
It is also felt that it fell down in terms
of the transparency of trading because of
liquidity fragmentation.
According to a CFA Institute survey, 68
percent felt that liquidity fragmentation
has created difficulties in trade report-
ing obligations. Although it is difficult to
measure the degree to which the frag-
mentation of trading and pricing has
will be a real concern. According to
McGibney: “While we welcome
increased transparency where it is
ing whether the product was appro-
priate – and in doing so allow high
speed traders to escape being bogged
out of the eligible counterparty tree
house completely. Original Mifid been detrimental to price formation, it
does form the basis of arguments for a
need for a consolidated tape for quote
expected, the risk is that – if this
type of legislation is not adopted
down by regulatory red tape.
In the review, it is expected that
With this slew of regulations, there
classifications and trade data for European equity mar-
similarly across the globe – there there will be a limiting of the eligi- will come the inevitable expense as Currently there are multiple trading
may be scope for arbitrage across ble counterparty regime. In a consul- institutions rush to comply with the l Retail clients – afforded the most venues, and users have to increase their
markets, which is a valid concern.” tation document in December, it directives. Though these will initial- regulatory protection connectivity to a much wider range of
was recommended that the new ly be shouldered by institutions, it is l Professional clients – considered to venues than ever before. With each con-
REVIEW OF PARTY CLASSIFICATION directive would exclude products likely that they will later be pushed be more experienced, knowledgeable nection costing around £10,000 per
Under the original directive, certain such as asset backed securities and down the chain. These costs will and sophisticated, and are able to assess month, that’s a high cost that can
organisations were classed as eligi- non-standard over-the-counter (OTC) eventually be spread across the mar- their own risk. Professional clients are mount up.
ble counterparties. Those within this derivatives from this waiver. ket via transaction costs. And soaked afforded fewer regulatory protections On the buy-side, the cumulative cost
category were allowed to waive con- Furthermore, given the losses up by consumers. l Eligible counterparties – investment of these fees charged by exchanges and
duct of business obligations when accrued by municipalities and pub- As with all heavy handed firms, credit institutions, insurance com- trade reporting services has created a sig-
executing trades with investment lic authorities under the previous European regulation, one hopes that panies and other regulated financial nificant barrier to adoption of a consoli-
firms. This meant that dealers could regime, it is expected that these non- they will not throw out the baby institutions given light touch regulation dated tape and in doing so has
execute an order without first assess- financial institutions will be booted with the bathwater. diminished overall transparency.

Standard & Poor’s ABSXchange™ allows you to streamline To find out more about how we can help,
data gathering across the entire universe of RMBS, CMBS, call +44 20 7176 3566 or email
ABS and CLO transactions.
• ABSXchange™ Data Benchmarks
• RMBS Loan Level Data ABSXchange™
• RMBS Consensus Survey One platform to monitor all your transactions.
• Data Rich Web API w/ Loan Level
• Index Forward Curves
• US RMBS Data with VEROS
28 CITYA.M. 25 MAY 2011

| Motors WORDS BY

The new Sharan: big AND clever

The first MPVs may
have been large and
unwieldy. This new
VW is anything but

ACK in the early 90s it felt like MPVs
were everywhere. Created to solve
the challenge of how to move big
families about, they were sold as
useful and trendy until the public caught
on to the fact that the reality was rather
different. Though big, these lumbering
beasts often proved impractical, with
minimal luggage space and a lack of inte-
rior flexibility. Also, they were rubbish to
Since then SUVs – and increasingly
their “soft roader” siblings – have eroded
the market for these cars once known as
“people carriers”, as people choose to
transport their families in SUVs and more
compact MPVs instead. But there are still
some large MPVs on sale and 20 years of
continuous development means they are
much better than their forebears.
VW’s latest Sharan MPV may not ignite
your emotions in terms of its driving abil-
ity but it’s still very, very good.
Dependable, comfortable and surprisingly
refined, driving it proved a very positive
experience. The model we tested was the
2.0-litre, turbo diesel-powered 138hp ver-
sion. We found the car to be a genuine sur-
prise in the sense that it had a far higher
quality feel than we were expecting. The They pop up when a tag is pulled and kids
car felt sprightly – 10.9sec feels pretty seem to think they’re very cool.
quick in a vehicle so big – and it was also Ours was a relaxing trip and the Sharan
easy to throw around and, importantly, proved a happy ship. Quiet and refined, it
felt very safe doing so. We were soon waft- was just easy. As easy as carrying two fam-
ing along like a bunch of company execu- ilies about gets, in any case.
tives such was the ride quality and level of
interior comfort. In short, the Sharan is
very easy to drive and feels much smaller THE FACTS:
than it is. It also has a great driving posi- VW SHARAN MPV
tion which affords a good view. Even park-
ing it is easy thanks to its light steering
and the gear change of the six speed man- PRICE: £26,970
ual gearbox was smooth too. 0-62MPH: 10.9secs
And as a practical proposition there’s a TOP SPEED: 121mph
lot to be said for it. Over the years large already a sizeable boot. Seat flexibility could transport an Ikea kitchen. Driving Main picture, VW
MPVs like this Sharan have been revolu- thanks to some clever design means the out from London into the countryside for Sharan MPV on the
CO2 G/KM: 146g/km
tionised by the development of versatile, middle row seats slide forward and back the weekend, our Sharan easily swallowed road. Above, the MPG COMBINED: 50.4 mpg
folding seats that have turned their spa- independently of one another. What’s four adults and two kids – one in a child- Sharan’s interior
cious interiors into highly flexible places more you can choose which of the five seat and one in one of the excellent built-
to be. We find that we can seat six easily seats in the middle row and back row in child booster seats – plus all of our stuff. Pictures: Courtesy DESIGN hhhhi
while folding the seventh seat down to seats you want to fold into the floor. And If you do have kids that need booster seats PERFORMANCE hhhhi
increase our luggage space on what is with all five seats folded into the floor you these built-in child seats are a marvel. PRACTICALITY hhhhi


To celebrate the 50th anniversary of the iconic DB4GT Zagato, Fiat is introducing a Gucci-trimmed version of its 500 city car. If you thought active aerodynamics was just for F1 race cars you’re
Aston Martin has created an elegant, new V12 Zagato concept with Called “500byGucci” and customised by Gucci’s creative director mistaken. Ford’s new active grille shutter system – which is fitted to
the Italian design house Zagato. The car has a handcrafted alumini- Frida Giannini, the car comes in black or white and has branded some models of Focus, Mondeo, Galaxy and S-Max – has motorised
um body and features the iconic Zagato double bubble roof. The car alloy wheels. The trademark Gucci stripe runs along the side of the vanes to reduce or block air flow to the car’s cooling system
premiered at the Villa D’Este Concours, Lake Como, Italy on car and is on the seats, carpets and seat belts inside. Prices start at depending on driving requirements. The result is improved fuel effi-
Saturday. £14,565 and the car is only available. ciency and lower emissions thanks to reduced drag.
CITYA.M. 25 MAY 2011 Lifestyle | TV& Games 29


6pm BBC News 6pm Eggheads: 6pm London Tonight 6pm The Simpsons: 6pm Home and Away
6.30pm BBC London News 6.30pm Great British Menu: 6.30pm ITV News 6.30pm Hollyoaks: 6.25pm OK! TV
7pm The One Show 7pm The Sounds of Hugh 7pm Emmerdale 7pm Channel 4 News 7pm 5 News at 7
7.30pm Waterloo Road: Laurie: A Culture Show Special: 7.30pm Poms in Paradise: The 7.55pm 7.30pm Pawn Stars:
BBC News 7.30pm Two Greedy Italians: stories of British expats living 8pm CHOICE Diagnosis 5 News Update
8.30pm Life of Riley 8.30pm CHOICE RHS Chelsea in Queensland, Australia. Live from the Clinic 8pm CHOICE Giant Animal
9pm The Apprentice Flower Show 2011: 8pm Midsomer Murders: Jones 9pm 24 Hours in A&E Moves: 5 News at 9
10pm BBC News 10pm The Apprentice: infiltrates a cult to investigate 10pm Desperate Housewives 9pm NCIS
10.25pm Regional News You’re Fired! a woman’s disappearance. 11.05pm The Big Bang Theory 10pm Law & Order:
10.35pm The National Lottery 10.30pm Newsnight: Weather 10pm ITV News at Ten Criminal Intent RHS CHELSEA FLOWER SHOW
11.35pm The Big Bang Theory
Wednesday Night Draws 10.45pm 11.20pm Stewart Lee’s 10.30pm London News 12.05am Inside Incredible
10.55pm Law & Order: Special 2011 BBC2, 8.30PM
Not Going Out 11.15pm FILM It’s a Victims Unit 11.55pm Poker: Aussie Alan Titchmarsh and Joe Swift
Comedy Vehicle: 10.35pm Cops with Cameras Athletes
Boy Girl Thing: 2006; National Millions 12.50am SuperCasino present an extended edition charting
Lottery Update 12.50am Sign 11.50pm The Sounds of Hugh 11.35pm Long Lost Family 1.35am FILM The Sunchaser: 4am Meals in Moments 4.10am the evolution of the modern mixed
Zone: See Hear 1.20am Watchdog Laurie: A Culture Show Special: 12.30am The Zone; 1996. 3.45am Husk: Short South Michaela’s Wild Challenge border.
2.20am British at Work 3.20am 12.20am French Open Tennis ITV News Headlines African film. 3.55am Wild Thing I 4.55am Rough Guide to
One Man and His Campervan 1.20am BBC News 3.50am-6am 2.35am FILM Space Jam: 1996. Love You 4.55am Wogan’s Perfect Adventures 5.10am Wildlife SOS
3.50am-6am BBC News Close 4am-5.30am ITV Nightscreen Recall 5.25am-6.10am Countdown 5.35am-6am House Doctor

SKY SPORTS 1 Fighter 12am Poker 1am Inside 1am Live NBA Countdown 2am E4 DISCOVERY HOME &

7pm Sky Sports News at Seven the PGA Tour 1.30am European Live NBA Basketball 4.45am 7pm Hollyoaks 7.30pm Friends
7.30pm Live Nations Cup Football
Tour Weekly 2am Trans World ESPN Kicks: Extra 5am-6am WRC
9pm FILM Election 1999.
Sport 3am-4am F3 Euroseries Rally World 7pm Bringing Home Baby 8pm 10
10pm You’re on Sky Sports! 11.05pm Rude Tube: Animal
Years Younger: The Challenge 9pm
11.30pm FIFA Futbol Mundial Madness 12.05am My Name Is
12am Football’s Greatest 12.30am
BRITISH EUROSPORT SKY LIVING Earl 1am The Event 1.50am Ugly
Diagnosis X 10pm Hospital Sydney
Nations Cup Football 2am You’re
4.30pm Live French Open Tennis 7pm CSI: Crime Scene
Betty 2.35am The Event 3.20am
11pm A&E: Outback 11.30pm DIAGNOSIS LIVE FROM THE
7.30pm Game, Set and Mats Investigation 8pm Four Weddings Chopper Rescue 12am Diagnosis X CLINIC CHANNEL4, 8PM
on Sky Sports! 3.30am Nations Heartland 4.05am Style Her 1am Hospital Sydney 2am A&E:
8.05pm Wednesday Selection Revisited 9pm Bones 10pm Grey’s Health programme in which viewers
Cup Football 5am FIFA Futbol Famous 4.25am-6am Switched Outback 2.30am Chopper Rescue
8.10pm Riders Club 8.15pm PGA Anatomy 11pm Criminal Minds can call in for an appointment with Dr
Mundial 5.30am-6am Football’s 3am 10 Years Younger: The
Tour Golf 9.15pm European Tour 12am CSI: Crime Scene
Golf 9.45pm Ladies European Tour Investigation 1.50am Ghost HISTORY Challenge 4am Quint-Essential
Christian Jessen and Dr Dawn Harper,
7pm Heir Hunters 8pm Ax Men as they diagnose cases live on air.
Golf 9.55pm Golf Club 10pm Whisperer 3.30am Charmed 5am-6am Bringing Home Baby
SKY SPORTS 2 Sailing 10.30pm Yacht Club 4.20am Nothing to Declare 10pm Most Extreme Airports
4pm Live ECB 40 League Cricket 10.35pm Wednesday Selection 5.10am-6am Maury 12am Ax Men 2am Deep Wreck SKY1
10pm State of Origin Rugby 10.45pm Cycling: Giro d’Italia Mysteries 3am Heir Hunters 4am 8pm Emergency with Angela
League 11pm Boots ’n’ All 12am 11.45pm MotoGP BBC THREE The Universe 5am-6am Ax Men Griffin 9pm Brit Cops: Zero
European Tour Golf 1am British 12.15am-12.50am Eurosport for 7pm Top Gear 8pm Great Movie Tolerance: Following police officers
Rallyzone 1.30am Boots ’n’ All the Planet Mistakes 9pm FILM Lara Croft: DISCOVERY in Hammersmith and Fulham.
2.30am-3.30am State of Origin Tomb Raider – The Cradle of Life 8pm How It’s Made 9pm Britain’s 10pm Fringe 11pm The Chicago
Rugby League ESPN 2003. 10.45pm Family Guy Toughest Cops 10pm I Almost Got Code 12am War Torn Warriors
4.45pm NBA 7.30pm Live 11.35pm Two Pints of Lager and a Away with It 11pm Behind Bars 1am Martina Cole: Girls in Gangs
SKY SPORTS 3 Bundesliga 9.30pm Premier Packet of Crisps 12.05am 12am Bear Grylls 1am Deadliest London 1.50am Night Cops GIANT ANIMAL MOVES
7pm FIFA Futbol Mundial 7.30pm League World 10pm ESPN Kicks: American Dad! 3am Two Pints of Catch 2am Future Weapons 3am 2.40am Cold Case 3.25am The CHANNEL5, 8PM
Total Rugby 8pm State of Origin Extra 10.15pm Drambuie Pursuit Lager and a Packet of Crisps Hitler’s Henchmen 3.50am World 4400 4.10am The King’s Speech Documentary following efforts to
Rugby League 9pm Boots ’n’ All 10.45pm NBA Tonight 11.15pm 3.30am Great Movie Mistakes War Two in HD Colour 4.40am Special 4.20am Secret Life of relocate some of the world’s largest
10pm Cage Fighter 10.30pm UFC 12.15am ESPN Kicks: Extra 4.30am-5.30am Secrets of the Stephen Hawking 5.30am-6am Suburbia 5.10am-6am Don’t animals, beginning with an operation
Trans World Sport 11.30pm Cage 12.30am ESPN Press Pass Superbrands: Fashion Destroyed in Seconds Forget the Lyrics to move a herd of African elephants.

Copyright Puzzle Press Ltd,


18 13 11 35 29 20 6  
25 10
15 22
Place the numbers from 1 to 9 in each empty cell so that each 28    
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 16 21
39 12
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 5 21
above or to the left of it. 16
You can only use the digits 1-9 38 15 
    and you must not use the
17 7    
same digit twice in a block. 14 17 25 16 26
 The same digit may occur 11 37   
   more than once in a row or
column, but it must be in a
22 9

11 3
     separate block.
12 15 14 
23 33
    9 30

1 Island in Indonesia (4) 1 Christ (5)
3 Sybil Fawlty’s husband
in Fawlty Towers (5)
6 Flightless bird (4)
2 Vessels that carry
blood from the heart
to the body (8)
Using only the letters in the Wordwheel, you have 8 Water flow resulting 3 Asked (4)
  ten minutes to find as many words as possible,
R G from sudden rain or 4 Father Christmas (5)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters E melting snow (5)
9 Anticipated (8)
5 At high volume (4)
7 An evil spell (3)

LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
A L 13 Rise upward into
the air (4)
10 Pedestrianised
public square (5)
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
Y S 15 Tolerant or lenient (3)
16 Native of Baghdad,
11 Culminated (8)
12 Get out (4)
QUICK CROSSWORD 1 2 4 6 1 5 9 3
for example (5) 14 Collection of

7 1 2 8 2 4 7 1 SUDOKU         
17 Coat a cake with
sugar (3)
miscellaneous things (4)
18 Asian dish eaten
9 3 9 7 5 8
M R A D I I O          19 False belief (4) with rice (5)
O B E S E G G S 8 5 9 5 4 6
E A E E D I T S 7 8 9 2 8 1 21 Casserole of aubergine 20 Cut in two (5)
B E S I D E S T 7 8 5 6 2 1 3 9 4 and ground lamb 21 Celebration of the
A T R A U         
2 5 1 8 3 9 in a sauce (8) Eucharist (4)
E K R E M L I N         
2 3 1 1 7 2 24 Be superior to (5) 22 Physical magnitude
4 7 6 2 8 1 The nine-letter word was 25 Partition (4) of a thing (4)
2 7 8 9 6 8 9 7         
26 Fashion (5) 23 Range of knowledge (3)
P U G E S P A I N 1 9 6 8 1 2 4 3
27 Give a narcotic to (4)

Arsenal shareholder Usmanov Pic: GETTY

Usmanov ups Carlo firing

share offer success to Stamford Bridge. feels someone else can do better, you understand it – not completely, but


FOTBALL “I thought Ancelotti was unfortu- can understand it. So I think it’s fair the game is tough, and it is unfair. So
BY JAMES GOLDMAN BY FRANK DALLERES nate – very unfortunate,” to say we can only have a look and see you’ve got to be ready for all sorts of
Venables (right) told City A.M. whether it’s right or wrong.” things.”
UZBEK oil magnate Alisher Usmanov FORMER England manager and “But I think an owner Turkey coach Guus Hidddink, Ancelotti, who joined Chelsea two
has upped the ante in the Arsenal Chelsea captain Terry Venables has has the right to do what who enjoyed a brief spell in years ago, was dismissed on Sunday
power struggle by offering to buy shares defended owner Roman he thinks is right. This is charge of Chelsea before shortly after they lost their final
at a bigger price than majority stake- Abramovich’s decision to sack the most successful eight Ancelotti, still acts as an adviser match of the season 1-0 at Everton.
holder Stan Kroenke. Double-winning boss Carlo Ancelotti. years of the club’s history, to Abramovich and is being The club failed to win a trophy this
Usmanov, who currently owns just Venables believes the Italian was and he’s a big part of that. strongly tipped to return in a full- season and, despite a late rally, ended
over 27 per cent of the north London unlucky to lose his job just 12 months So I don’t think we should time capacity. second in the league.
club, has increased his offer to £14,000- after leading the Blues to the Premier underestimate him. Venables added: “If [Abramovich] Terry Venables is a 188BET ambassador.
a-share compared to the £12,500 he was League and FA Cup. “I think he’s got feels safe with and has The In-Play betting specialists are offering
understood to be willing to pay last But the ex-QPR, Barcelona and high stan- always hung on to great value odds on a host of markets for
week. Usmanov’s latest request to meet Tottenham chief insists it is too early dards and he Hiddink, if he’s the the Champions League Final. To check them
face-to-face with Kroenke has been to condemn the decision when expects the man who is going to out and for a free £25 bet go to
turned down. Abramovich’s reign has brought such best. If he come in, you can



What Wimbledon is to tennis and Henley the E-Type, the biggest celebration of
is to rowing, Goodwood is to motor sport.
No other motoring event can match the
Indianapolis outside America and much,
much more.
unique combination of more than 350
vehicles and around 100 motor racing
heroes, blasting up the drive of one of
The Supercar Run, a firm favourite of the
weekend, gathers the hottest and
England’s most revered stately homes. coolest Supercars from around the world
Enthusiasts attending the Goodwood for a high-velocity multi-million pound
Festival of Speed (30 June – 3 July) can
enjoy watching great machines and driv-
display of sheer tyre-smoking power. WHO IS THE CURRENT FORMULA 1 CHAMPION ?
ers at very close quarters, with the We are offering one lucky reader the
chance to actually stop and chat to some
of their motor racing idols. This year
chance to climb on board a Supercar for
a once in a lifetime, money can’t buy, A) SEBASTIAN VETTEL B) JENSON BUTTON
attendees can expect to see no less thrill-seeking ride up the famous hill-
than nine F1 teams, many of the climb in front of thousands of
World Superbike teams, a celebration of on-looking spectators! Simply email your contact number to
Your Supercar Run prize will take place on Saturday 2 July and will If you are not lucky enough to win, don’t miss out, make sure you visit or call
also include admission into the Festival for yourself plus a guest. +44 (0)1243 755055 to purchase your Festival of Speed tickets.

Terms & Conditions: The promoter is City A.M. and the promoter reserves the right to change the prize to one of equivalent or greater value without notice. Travel expenses and accommodation are not included, prize is not transferable Entry in to the promotion is free and no purchase is necessary, entrants must be aged
18 and over. The closing date is 30th May 2011 at 11:59am. The winner will be drawn at random from all the correct entries and will be notified on 31st May 2011. By entering the promotion you agree to receive further information and similar promotions from City A.M. and Goodwood. If you wish not to receive any further
information please add ‘No’ after your answer. The winners, by accepting the prize, agree to publicity if required. The Editor’s decision is final and one entry per reader.

Murray and Baltacha join

Watson in round three
Heather Watson on Monday, Elena

BY JAMES GOLDMAN Baltacha ensured that, along with
Murray, Britain will boast three play-
WORLD No4 Andy Murray cruised ers in the second round of the French
into the second round of the French Open for the first time in 27 years
Murray beat French Open with a straight sets victory over after her 7-5 6-2 over Sloane Stephens.
qualifier Prodon in qualifier Eric Prodon on another After his 6-4, 6-1, 6-3 win, Murray
straight sets momentous day for British tennis at said: “It was a tough match. There
Pic: ACTION IMAGES Roland Garros. was no rhythm really to it. He didn’t
After the heroics of teenager want to have any long rallies.”

Giggs row casts

shadow over Sir
Alex and final

FOOTBALL journalist in question be barred from Congratulations to World Match Play

BY FRANK DALLERES Friday’s pre-match press conference. champion, Ian Poulter. As an ambassador
Yet far from stamping out the row,
MANCHESTER UNITED manager Sir Ferguson found himself embroiled in for the Jaguar Academy of Sport, Ian
Alex Ferguson attempted to brush off it when a television channel later is helping us inspire the future great
the controversy engulfing Ryan Giggs broadcast footage of the Scot discreet- Britons of sport.
yesterday – but succeeded only in ly making the remarks to the club
being dragged into the storm. employee. To find out more about the growing
So keen was Ferguson to avoid Giggs, who was on Monday
the topic, which has overshad- named by Lib Dem MP John number of British sports stars who are
owed preparations for the Hemming in the House of championing the next generation go to
Champions League final, he Commons as the player at the
told an aide to ban a journal- centre of a super-injunction
ist who asked a question row, took part in last night’s
about the Welsh star. The testimonial match for long-
reporter had enquired how serving defender Gary Neville.
important Giggs would be in He played 30 minutes in the
Saturday’s showpiece match defeat to Italian side
against Barcelona, given the 37- Juventus at Old Trafford.
year-old’s vast experience. Meanwhile, Ferguson
“All of the players are impor- confirmed a deal had
tant, every one of them,” been struck to sign
replied Ferguson, who then Atletico Madrid goalkeeper
leant towards an aide and whis- David de Gea as Edwin van
pered a request that the agency der Sar’s successor.

Green back in England squad Toulon have revealed that financial con-
FOOTBALL: West Ham goalkeeper straints underpinned their refusal to
Robert Green has been called into the offer Gavin Henson a new contract.
England squad for the Euro 2012 qualifi-
er with Switzerland. Fulham's David KP has milestone in mind
Stockdale has pulled out as he is get- CRICKET: England’s Kevin Pietersen has
ting married on 3 June. hit back at claims he’s fallen out of love
with game ahead of tomorrow’s first
Toulon release Henson Test by suggesting he won’t retire until
RUGBY UNION: French Top 14 club he’s reached 10,000 Test runs.


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