Cityam 2010-11-10

BUSINESS WITH PERSONALITY

CHELSEA OWNER COULD FACE £1BN MOVING BILL BLUES LOOK AT OPTIONS P34

Issue 1,260 Wednesday 10 November 2010

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FTSE 100 ▲5,875.19 +25.23

British Airways

Cargolux Airlines

Japan Airlines

€104M

€79.9M

€35.7M Cathay Pacific

Singapore Airlines

Martin Air

€57.12M

€74.8M

€29.5M

LAN Chile

Qantas

€8.2M

€8.9M SAS fined

Air Canada

€70.2M

€21M

Air France-KLM

€310M

Eleven airlines have been fined for price-fixing, with Air France-KLM being dealt the heftiest fine night they will fight the EU’s decision, while Air Canada and Cargolux said they were considering appeals. Air France said it considered the fine disproportionate and that “the actions in question had no detrimental effect on the freight shippers nor the freight forwarders.” British Airways said it put money aside in 2006 to pay its fine. Cargolux’s chief financial officer David Arendt said the punishment

DOW ▼11,346.75 -60.09

“does not seem to reflect a discount to take into account the financial turbulences that recently affected cargo carriers generally and Cargolux in particular. When added to fines already due to other anti-trust authorities this seems a very harsh punishment indeed.” The decision leaves the firms vulnerable to lawsuits from customers. Claims Funding International, which has already filed a €500m group law-

NASDAQ ▼2,562.98 -17.07

suit against Air France on behalf of affected companies, said hundreds more claimants are likely to emerge. Five companies, not named by the EU, asked for a reduction to their fine because they could not afford to pay. The watchdog dismissed these claims, but granted all the firms except Singapore Airlines a discount of between 10 and 50 per cent on their penalties for co-operating with the investigation.

£/$ ▼1.60 -0.01 £/¤ 1.16 unc

¤/$ ▼1.38 -0.01

StanChart hires 4,000 staff in Asia ▲

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ELEVEN airlines including British Airways have been handed massive fines for running a price-fixing cartel on cargo flights, paving the way for a flood of compensation claims against the firms. The EU competition commission said the cartel was “deplorable” and fined the companies €799m (£688.4m), following a four-year investigation. The firms illegally fixed surcharges for fuel and security in Europe between 1999 and 2006, the watchdog ruled. “It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers,” said competition commissioner Joaquin Almunia. Air France-KLM was slapped with the biggest penalty, €340m, while BA was fined €104m. Scandinavian group SAS was fined €70.2m, which the EU said was higher because the company had previously been caught fixing prices. Other firms involved in the cartel were Singapore Airlines, Cathay Pacific, Qantas, Japan Airlines, LAN Chile, Cargolux and Martinair. Lufthansa, which blew the whistle on the secret deals, was found guilty of price fixing but was not given a fine. Air France-KLM and SAS said last

LAWSUIT FILED IN US ALLEGING DATA THEFT P2

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HUGE FINES FOR AIRLINE CARTEL AVIATION BY MARION DAKERS

BGC SUES TULLETT

BANKING BY STEVE DINNEEN

STANDARD Chartered yesterday revealed it will create 4,000 jobs in Asia, fuelling fresh fears that London is missing out on a global banking jobs boom. A StanChart spokesman told City A.M. the majority will be based in Singapore, with some in Indonesia. The announcement came as David Cameron and George Osborne arrived in Beijing to promote UK exports to China. Meanwhile business secretary Vince Cable, also part of the China convoy, claimed banks threatening to quit the UK over regulation and tax are merely sabre-rattling. He said banks reconsidering their domicile is “a familiar negotiating technique,” albeit one that should “be taken seriously”. “You have got to balance that against our national interest. Banks have to be safe and that means that the regulations have to take into account the potential problems created by cash bonuses,” he told Bloomberg TV. Cable was responding to RBS chairman Sir Philip Hammond who warned banks could be forced out of Europe as a result of draconian new rules, which include strict capital requirements. HSBC also slammed UK and EU policies last Friday. Last month City A.M. revealed Barclays is weighing up the costs of quitting its UK base. Standard Chartered has also considered its position but has no immediate plans to relocate. ALLISTER HEATH: P2 Certified Distribution 30/08/10 – 03/10/10 is 110,015

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News

CITYA.M. 10 NOVEMBER 2010

PM’s trade targets missing the point EDITOR’S LETTER

ALLISTER HEATH TRADE missions look good on TV but in reality are little more than an expensive distraction. They allow politicians, including David Cameron, to travel to China, a bevy of CEOs in tow, and to take the credit for contracts and deals. Nearly all of these would have happened without the PM’s help; unfortunately, he appears to believe otherwise, going as far as to imply that trade is somehow being driven by centrally imposed “targets”. Don’t believe me? Then take a look at his comments yesterday, where he claimed that “we are working to agree

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Editorial Allister Heath David Hellier Ben Griffiths Katie Hope David Crow Marc Sidwell Zoe Strimpel Alex Ridley

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two friends of mine are shortly relocating to Singapore, which is fast positioning itself as a new centre for wealth management, an Asian Switzerland even. Another is moving to Hong Kong. All three will be working in financial institutions. On Friday, HSBC became the latest giant firm to warn of London’s declining attractiveness; today, we report that Standard Chartered is recruiting an extra 4,000 people in Asia. The City will remain a very large employer. But we in Britain are missing a huge opportunity to properly leverage centuries of expertise in finance, investment and professional services to cash in on Asia’s growth. Much of the action could be conducted from London; instead, it will take place in regional financial centres. The tragic truth is that Cameron’s trip to China won’t have made a blind bit of difference to London’s gradual emasculation in the global race for capital, jobs and prosperity. [email protected]

UK ECONOMY BY KATIE HOPE BRITAIN’S recovery is on track and it will continue to grow both this year and next, according to influential international body the IMF. In its annual forecast for the UK, it said that GDP would grow 1.7 per cent this year and two per cent next year, accelerating thereafter, with little expectation of recession. The forecasts are in line with the IMF’s previous estimates issued in October. The IMF also sounded a note of caution over the government’s £81bn in spending cuts announced last month. While welcoming the cuts, the IMF said the government had to be prepared if necessary to rethink its strategy which it said was risky and could “strain public service delivery

in some areas”. “In the unexpected case of a significant and prolonged new downturn, some directors considered that the pace of structural fiscal consolidation could be adapted,” the report said. Meanwhile, think-tank the National Institute of Economic and Social Research (NIESR) yesterday reported slowing UK economic growth over the past quarter. Economic growth in Britain is likely to have slowed to 0.5 per cent in the three months to October from 0.8 per cent in the three months to September, it said.

Tullett chief executive Terry Smith

One of Portugal’s biggest banks fired credit-rating agency Fitch yesterday after it was downgraded for the second time since July. Banco Espirito Santo told the stock market the move from an A rating to BBB+ did “not reflect the financial soundness of the bank”, which it said was in a “strong position…to face current challenges”. Millennium BCP, another Portugese bank that has endured numerous downgrades said yesterday that Fitch’s treatment of the banks “does not reflect the results of the Portuguese banks in the Stress Tests carried out by the CEBS [Europe’s banking supervisor]”.

Morgan Stan sells Invesco stake Morgan Stanley yesterday filed to sell the 30.9m shares of money manager Invesco, which it acquired in June as part of the sale of its retail fund unit. The bank said in a statement it will sell the shares, worth over $717m (£448m) at yesterday’s prices, in a public offering. Executives from both firms said the sale was not meant to signal a change in the relationship between the fund manager and the brokerage.

Picture: Micha Theiner/City A.M.

BGC sues Tullett for theft BGC Capital Markets has accused its fellow inter-dealer broker Tullett Prebon, run by Terry Smith, of stealing proprietary pricing data and began a lawsuit yesterday to recover the resulting profit. BGC filed a complaint at the New York supreme court yesterday that centred around US Treasury data that BGC supplies to Tullett Americas for use in limited circum-

stances as part of a Treasury swaps joint venture. BGC claims that Tullett’s brokers used the data without permission to gain an unfair lead in the market. The firm, which is suing for unjust enrichment, unfair competition and computer fraud, claimed in the court filing: “Tullett Americas and its affiliates have a long history of stealing price data from [BGC] in order to gain a competitive advantage.” Tullett Prebon, which is expected to defend the case, declined to comment last night.

BIG BROTHER IS HAILED AS THE WAY TO SAVE

EC MARKETS HEAD MICHEL BARNIER REFUSES LONDON CLASH WITH MPS

ROLLS DRAWS FLAK FOR QUIET ON ENGINE FIRE

The president of the AA said that premiums were becoming “unsustainable” for consumers, with younger drivers facing costs of £2,000 to £3,000 a year — often more than the value of their cars. Edmund King said that better education would help to bring down costs and that the AA was sponsoring a BTEC in driving behaviour, with a related insurance product scheduled for launch next year. ers.

When it comes to imposing regulations on the City, Michel Barnier is fond of promising: “We will go further.” But not as far as actually coming to London, it seems. Mr Barnier has declined to appear before MPs, offering a senior official to answer questions in his place. The European Commission’s head of Internal Markets - the man in charge of the machinery of financial regulation has refused a request to explain his reforms to the Treasury Select Committee.

Rolls-Royce PLC is drawing flak for its scant public response to the failure of one of its engines on an Airbus A380 superjumbo jet, but aviation experts said that quickly finding a solution will minimize any serious damage to the turbine maker's reputation. The fiery blowout of a Rolls-Royce Trent 900 engine on a Qantas Airways Ltd. superjumbo last Thursday has drawn global attention because the A380 is the world's biggest passenger plane and Qantas quickly grounded its fleet of six double-deck airliners

EU THREATENS TO BLOCK CHINESE BIDS FOR PUBLIC CONTRACTS

HERMÈS CLAN PLAYS DEFENCE

The IMF has warned that chancellor Osborne’s cuts may have to be adapted if there is a fresh slump

LEGAL BY MARION DAKERS

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myriad of other variables. These sorts of trade missions are merely a way of distracting attention from the real problem, which is Britain’s declining competitiveness. While the coalition understands that the UK’s education system and labour force need radical reform, and is doing something about it, it is continuing to allow London’s attractiveness to be eroded. The only good news is that corporation tax will gradually drop to 24 per cent; on everything else, for all the rhetoric about reducing red tape, removing restrictions or ensuring that the UK is now open to business, the situation for firms small and large is deteriorating. The real story is the relentless rise of Asia as a financial centre, how UKbased banks are reallocating their resources to the region and how thousands of jobs that could have been created in the UK are now being created instead in places such as Singapore, where income tax is a tiny fraction of what it is here. I know this first hand:

Fitch fired by Portugese bank

IMF: UK faces faster growth ▲

Editor Deputy Editor News Editor Night Editor Associate Editor Business Features Editor Lifestyle Editor Pictures

a new target to double the value of our bilateral trade with China by 2015 to more than $100bn a year…we intend to raise UK exports to China to $30bn…”. I’m sorry, Prime Minister, but that’s not how it works. That is the kind of error Gordon Brown might have made, or a Marxist technocrat schooled in 1960s-style development pseudo-economics, not something one would expect of a Tory PM. Of course, it is vital that the British government helps to eliminate trade barriers and puts pressure on the Chinese to allow its currency to appreciate – but that’s all it can achieve. It cannot set meaningful “targets”, merely come up with forecasts of what might happen. And who is the “we” who are working on the centrally-planned doubling in commerce? Trade is not something that happens between governments and bureaucrats locked in smoke-filled rooms, it is something that emerges spontaneously from the interaction of private individuals and firms, as well as a

NEWS | IN BRIEF

WHAT THE OTHER PAPERS SAY THIS MORNING EX-CLINTON AIDE TO ADVISE NEWS CORP ON EDUCATION Joel Klein, the chancellor of New York City’s schools and former deputy White House counsel to Bill Clinton, is joining News Corp as a senior adviser to Rupert Murdoch, as the company looks to make investments in educational start-ups.

returns are 32 per cent, making it one of the industry’s top performers worldwide.

LABOUR ALLIES WOOLAS

RALLY

BEHIND

Labour will not pick a candidate to replace Phil Woolas until the disgraced former MP has exhausted legal attempts to clear his name, it emerged yesterday, as colleagues rallied behind him.

ASIAN EQUITY HEDGE FUNDS OUTPERFORM

FOOD PRICE FEARS AS US WARNS ON CROP YIELDS

Asian equity hedge fund managers are enjoying some of their biggest returns so far this year, trouncing their peers in European and US markets on the back of rebounding Asian equities and strong performance from businesses. Janchor Partners – the equity long-short fund launched in January by John Ho, the former Asian chief of activist The Childrens’ Investment Fund – returned eight per cent in October. Its year-to-date

The spectre of inflation loomed over agricultural markets after the US slashed key crop forecasts and warned of shortfalls in grains. The agriculture department yesterday cut estimates of US corn yields for a third successive month, forecast record soyabean exports to China and warned of the slimmest cotton stocks since 1925. The production shortfalls mean a much tighter supply picture than a few months ago, the agency said.

OVERCROWDED TRAINS COULD FORCE SWITCH TO AIRLINE-STYLE RESERVATIONS Overcrowded trains could force switch to airline-style reservations Passengers will be unable to travel on trains at peak times without reserving a seat in advance, under plans being considered by Virgin Trains.

The European Union will block access for Chinese companies bidding for publicly funded contracts unless businesses from Europe get the same access in China, under new proposals.

The family behind French fashion house Hermès is considering funneling its shares into an unlisted holding company, as a way to defend Hermès from its big, new and unwanted shareholder, LVMH.

News

CITYA.M. 10 NOVEMBER 2010

BP’s chief executive Bob Dudley is a new broom, brought in after the spill at the Deepwater Horizon oil rig, which investigators say occurred after the firm developed a culture of complacency.

Collins Stewart to enter big league ▲

Picture: REUTERS

FINANCIAL SERVICES BY JENNY FORSYTH

BROKER and financial services group Collins Stewart has picked up its first FTSE 100 client. Randgold Resources, an Africafocused gold mining and exploration company with a market capitalisation of £5.5bn, has hired Collins Stewart as its joint corporate broker, along with Bank of America Merrill

Complacent culture at BP led to oil spill ▲

ENERGY BY MARION DAKERS

A CULTURE of complacency at BP, Transocean and Halliburton contributed to the Gulf of Mexico oil spill in April, an investigation into the disaster heard yesterday. William K Reilly, co-chairman of the US government’s probe into the explosion on the Deepwater Horizon rig, said yesterday investigators had uncovered “a suite of bad decisions” that showed there was “emphatically not a culture of safety on that rig”. Reilly said the three firms were in need of a top to bottom safety reform, and added: “We are aware of what appeared to be a rush to completion at Macondo, and one must ask whether the drive from that made people determine they couldn’t wait for sound cement, or the right centralisers.” The panel, which was set up by President Barack Obama a month after the spill, yesterday heard from industry experts who tried to untangle the decisions made by rig workers leading up to the blast. “I know that there was pressure on this group of people to get done and move on,” said Steve Lewis, a drilling

engineer at Seldovia Marine Services who said he had often worked with BP. Bob Graham, a former Democratic senator who is also chairing the commission, emphasised that “there was no evidence that there were conscious decisions made to trade-off safety for profit” but added “there were a series of almost inexplicable failures” ahead of the disaster. The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling has held five hearings to investigate the cause of the disaster. It has until 12 January to present its findings, and has the power to recommend a change in the law and industry practices.

ANALYSIS l BP 460

p

454.45 9 Nov

440 420 400 380 9 Aug

27 Aug

17 Sep

7 Oct

27 Oct

Income jumps ...while Nabarro at Norton Rose... posts slight rise CITY law firm Norton Rose announced a nine per cent increase in revenues for the first half of the financial year yesterday. Fee income for the six months to November was around £155m, compared with £142m last year. Norton Rose, which took over Australian law firm Deacons in June last year, recently revealed revenue for the whole of last year to the end of April of £307m, two per cent down from the previous year’s £314m. The news follows strong growth announced this week at City rivals Allen & Overy and Wragge & Co.

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LEGAL

COMMERCIAL law group Nabarro reported a three per cent rise in revenue for the six months to November yesterday. The London and Sheffield-based firm generated £53.5m turnover in the period, compared to a stark 18 per cent income drop at the same point last year. Nabarro, whose client list includes Land Securities and Nationwide Building Society, reported a ten per drop in turnover for last year as a whole, which meant a 15 per cent decrease in profit per equity partner to £320,000. LAW: P29

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Lynch. HSBC, which has advised Randgold since before it listed on the London Stock Exchange in 1997, remains the group’s financial adviser. While the FTSE 100 has traditionally been served by global investment banks, smaller players are starting to win accounts. Earlier this year fellow small-cap broker Numis was taken on as joint corporate broker for FTSE 100listed Alliance Trust.

News

CITYA.M. 10 NOVEMBER 2010

5

Bank well-placed to outperform rivals

D

ESPITE Barclays having avoided a taxpayer bailout, there’s plenty of fodder for populist bankerbashing in its third-quarter results. Pre-tax profits were down 76 per cent and £1.6bn has been set aside for bonuses. These headline figures ignore the impact of mark-to-market fluctuations in value and the fact that investment bank staff numbers are up 2,000. Even discounting mark-to-market effects, pre-tax profits fell 28 per cent to £1.27bn, with BarCap and the retail business in western Europe the main drags. Investment banks in general have been struggling and

Incoming Barclays CEO Bob Diamond

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INVESTORS reacted positively yesterday despite Barclays unveiling quarterly pre-tax profits of £1.27bn (excluding own credit), a 28 per cent drop on last year. Including own credit losses – the effect of mark-to-market write-downs – profit plunged 76 per cent to £327m. Barclays stock climbed by over three per cent throughout the day in part due to an unexpectedly speedy improvement in impairments, which fell 31 per cent. Basic earnings per share were down seven per cent to 21.3p, but the bank decided to re-issue a quarterly dividend of 1p. It reported that it has set aside £1.6bn for bonuses as outgoing CEO John Varley called the results “resilient despite a subdued economic environment and moderate volumes”. Varley is to be replaced by current Barclays Capital chief Bob Diamond, whose division was the biggest drag on

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BAILED-OUT lender Lloyds Banking Group yesterday announced it would shed a further 420 jobs, taking the total number of job cuts since it bought rival HBOS two years ago to 22,500. The latest round of redundancies come as Lloyds, 41 per cent government-owned after accepting taxpayerfunded support during the financial

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profits. Pre-tax profit was wiped out, dropping 149 per cent to record a £182m loss. The bank blamed the figures on mark-to-market write-downs combined with a generally difficult climate for investment banks. There was good news on the bank’s capital ratio. It reported a core tier one ratio of 10 per cent, no change from last quarter. The bank said it estimated the costs of complying with Basel III would be £150bn, with £50bn to be absorbed by management decisions.

ANALYSIS l Barclays 340 p

297.00 9 Nov

320 300 280 260

31 Aug

20 Sep

8 Oct

28 Oct

Lloyds sheds 420 jobs and has cut 22,500 since buying HBOS BANKING

expect a 15-20 per cent drop in impairments, up to 30 per cent. And the improvement is across the board: nine-month retail impairments dropped 14 per cent while wholesale impairments fell 37 per cent. This reflects the bank’s limited exposure to the shaky mortgage market, which can only be a positive in comparison to other high-street lenders. The good news has been priced in for now, but it makes Barclays wellplaced to outperform its peers.

Picture: Micha Steiner/City AM

Barclays sees profits tumble BANKING BY JULIET SAMUEL

Barclays’ exposure to the Spanish economy has not helped matters. So it’s no surprise that outgoing CEO John Varley was keen to emphasise the bank’s more friendly sounding activities: lending to UK households and businesses was up 30 per cent on last year to £35bn. But more important for investors will be the positive news on impairments, which are falling at a faster rate than at the bank’s peers. While Lloyds recorded a slowdown in its progress on impairments, Barclays is exceeding expectations. The bank has even revised its 2010 guidance, which told investors to

crisis, closes personal loans unit Black Horse Personal Finance to new business, the bank said yesterday. Lloyds, Europe’s fourth-biggest bank, has been cutting jobs as part of its effort to integrate ailing mortgage lender HBOS, which it acquired in a 2008 government-brokered takeover. Lloyds’ Black Horse motor finance unit remains open for business, and the bank said Black Horse Personal Finance customers will be unaffected.

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News

CITYA.M. 10 NOVEMBER 2010

L&G expects to meet cash aim as revenues rise UK Insurance group Legal & General (L&G) said it was on target to beat its cash generation target for the fullyear on the back of cutting costs and higher sales for the first nine months of the year. Cash revenues rose 14 per cent in the first nine months to 30 September to £526m compared to £461m a year earlier, leaving L&G on course to meet its £600m target for the full-year, it said yesterday. It added it generated £168m in cash in the third quarter. Worldwide sales of £1.3bn for the first nine months were 27 per cent higher than at the same time last year and nearly as high as the sales figure for the whole of 2009, L&G said. Meanwhile L&G Investment

Management (LGIM) increased assets under management (AUM) and diversified its revenue. In the first nine months, 18 per cent of LGIM gross sales were to non-pension clients and 13 per cent of gross sales were to international clients. The results come after L&G published most of its sales figures for the third quarter on 22 October, two weeks early, after they were e-mailed to analysts by mistake. Tim Breedon, group chief executive, said: “We are optimistic about the group’s medium term growth prospects. We see strong organic growth opportunities across our risk, savings and investment management franchises where we have built market leading positions.” L&G said it had scope for further dividend increases, building on a 33 per cent hike in 2009 and a 20 per cent rise earlier this year.

.com

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INSURANCE BY MATTHEW WEST

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L&G group chief executive Tim Breedon (left) and chairman John Stewart said the firm’s revenues are rising

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Consumer News

CITYA.M. 10 NOVEMBER 2010

IHG performs below par as costs kick-in ▲

LEISURE BY HARRY BANKS

ANALYSIS l IHG 1,200

p

1,140.00 9 Nov

1,100 1,000 9 Aug

27 Aug

17 Sep

7 Oct

27 Oct

Theo Fennell narrows losses Jeweller Theo Fennell yesterday posted a narrower first-half pre-tax loss as its turnaround strategy began to pay off and said it was well positioned to return to profitability. The jeweller, used by celebrities including Elton John and Naomi Campbell, launched a new lowerpriced silver range last month, which it said had been well received. For the March to September period, the company posted a pre-tax loss of £877,330 compared with a loss of £1.1m a year ago. The company said its shop in the Royal Exchange in the City was among those with a loyal client list. Chief executive Barbara Snoad said: “The new range is helping us and people are willing to buy quality items at a reasonable price.” Primark has performed well in the downturn

Picture: Micha Theiner/ CITY A.M

AB Foods hits £10bn but warns over price rises RETAIL BY JOHN DUNNE

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INTERCONTINENTAL Hotels Group (IHG), the world’s biggest hotel operator, reported third-quarter earnings below expectations after staff incentive costs turned out higher than anticipated. The group, which operates seven chains including InterContinental, Crowne Plaza and Holiday Inn, yesterday said third quarter operating profit fell by seven per cent to $115m (£71m). This was below forecasts of $120m to $125m. InterContinental, which runs more than 4,500 hotels worldwide, said the operating profit fall reflected a $35m increase in costs, including a $25m rise in expected staff payments under long-term incentive plans (LTIP). “Although Revpar (revenue per available room) trends are tracking ahead of expectations, the impact of higher than expected LTIP costs are likely to cap any upside. This may disappoint the market after recent

upgrades at industry peers,” Citigroup analysts said in a note. US rivals Hyatt and Starwood have both posted quarterly earnings which were ahead of expectations. InterContinental said revenue per available room, a key industry measure, rose by 8.1 per cent, including growth in China of 24.4 per cent and the fastest rate of growth in the Europe, Middle East and Africa region for two years. “The quarter saw a return to rate growth for the first time since early 2009, a clear sign that the recovery is gathering pace,” chief executive Andrew Cosslett said in a statement.

NEWS | IN BRIEF

THE company behind clothes chain Primark and kitchen staples such as Kingsmill bread and Ovaltine yesterday reported that sales passed £10bn for the first time. Revenues at Associated British Foods (ABF) rose 10 per cent to £10.2bn in the 53 weeks to 18 September, while profits jumped 26 per cent to £825m. That allowed ABF to up its div-

idend 13 per cent to 23.8p. But the group also warned that the price of cotton for clothes and wheat for bread is rising. Chief executive George Weston said: “In the UK we are negotiating higher prices now, although we have been paying higher wheat costs for a couple of months already.” The company’s grain wholesale and animal feed business should benefit from the increase in prices. Sales at Primark were up 18 per cent to £2.7bn, while operating profits hit £341m.

Frozen food fall hits Northern Northern Foods yesterday posted a 34 per cent fall in first-half underlying pretax profit as it was hit by lower demand at its Frozen division, which makes pizzas to pies. The company, which makes own-label products for retailers as diverse as premium food seller Marks & Spencer and discounter Aldi, said trading conditions at its Frozen unit remained tough. For the 26 weeks to 2 October pre-tax profit before restructuring items was £9.6m, compared with £12.9m last year. Revenue fell three per cent to £453m, while like-for-like sales grew 2.7 per cent. Last month, the company said it was changing the structure of its business, by shifting from five business units to two divisions – branded and chilled, to save money as it braced for a possible double-dip recession. Northern Foods shares have lost 32 per cent of their value since the start of the year as the downturn took its toll.

Consumer News

CITYA.M. 10 NOVEMBER 2010

9

M&S pledges to launch new lines as profit rises ▲

RETAIL BY JOHN DUNNE

MARKS & SPENCER will launch hundreds of new lines as it relies on its “special” image to fuel profit over the next three years, its new chief executive said yesterday. Marc Bolland unveiled his blueprint for the retailer while also announcing a 17 per cent rise in halfyear pre-tax profit to £348.8m.

Bolland, who took over from Sir Stuart Rose earlier this year, said: “We are going to offer 1,000 new lines, making sure people can do a fuller shop. There will also be more clothing lines. We want to keep M&S innovative.” He said his focus would be on the UK market with international expansion put on the back burner. He rejected suggestions that the company was in advanced negotiations over a move into Spain – possi-

ble through a deal with the El Corte Ingles chain. He said the retailer was targeting total revenue of £11.5bn to £12.5bn by 2013/14 – while also triggering an £850m investment plan to spruce up the business. Two thirds of the investment is to be used on the UK, he said. “These changes will not be radical. We want to build on the good work already done. The (profit) figures are good, this is a business to build on.”

ANALYST VIEWS: IS BOLLAND’S PLAN LIKELY TO PROPEL PROFIT AT M&S? Interviews by John Dunne KEITH BOWMAN | HARGREAVES LANSDOWN

“ “ “

In all, the new strategy does come with risks. The M&S brand has relied on an ageing customer base for some time, so trying to attract the young is a risk.

FREDDIE GEORGE | SEYMOUR PIERCE

” ” ”

Overall, we believe the market will like these plans, which are focused on strengthening the M&S brand. We expect consensus projections to be upgraded.

SAM HART | CHARLES STANLEY

Trading conditions are likely to be tough in 2011 and a slowdown in sales momentum is almost inevitable, but we think M&S can continue to make steady progress.

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Marc Bolland has pledged to build on his predecessor’s achievements.

Picture: GETTY

10

The Capitalist

Above: Dragon Peter Jones with Ayo Jenyo, the National Enterprise Academy’s student entrepreneur of the year

Above: Deputy Prime Minister Nick Clegg was guest speaker at the event

Above: Sir John Banham, Johnson Matthey

Right: Max Taylor and Ray Ferris of Everything Everywhere, with Mike King of IBM Pictures: Micha Theiner/City A.M.

Right: Outgoing Tesco boss Sir Terry Leahy received an award to celebrate a decade of excellence in business

CITYA.M. 10 NOVEMBER 2010

CITYA.M. 10 NOVEMBER 2010

EDITED BY VICTORIA BATES GOT A STORY? EMAIL [email protected]

Right: Orange Leader of the Year Martin McCourt, chief executive of Dyson Left: Whitbread chief executive Alan Parker chats with Alan Marshall of Coutts & Co Below left: ASOS chief executive Nick Robertson and his wife Jan (sporting a shimmering number new in on the site)

NATIONAL BUSINESS AWARDS CELEBRATE VERY BEST OF BRITISH “CELEBRATING” the Best of British was how Prime Minister David Cameron described the National Business Awards last night, speaking via a video link recorded before his trip to China this week. And a fine celebration the ceremony was too, honouring companies of all sectors and sizes across the UK economy, from niche tiddlers such as organic baby food group Ella’s Kitchen, to giants such as supermarket groups Waitrose and Tesco. Martin McCourt scooped one of the two headline awards of the evening, the Orange Leader of the Year, for his role as chief executive of Dyson, the entrepreneurial maker of whizzy vacuum cleaners (don’t use the H-word, or you’ll be lynched, apparently). The other went to retiring Tesco grandee Sir Terry Leahy, who is to leave the group next year after no less than 14 years at the helm. Not for our straight-talking Liverpudlian a future life of leisure, though. “There’s no such thing as leaving – I’ll be with Tesco for life,” Leahy told The Capitalist. “It’s important to let the new management team get on with it, but I will always be a big shareholder and will always be involved…” More directorships could also be on the cards, he admits, as well as ploughing more time into his care home charity foundation back in Liverpool. It’s a good job he doesn’t care much for golf.

DRESS TO IMPRESS Quite apart from the numerous award winners, high-profile City businessmen and women thronged the hall, from Sir John Banham, chair of

Johnson Matthey, to Whitbread’s Alan Parker and Nick Robertson, boss of online retailer ASOS. Robertson, chatting happily about a subject close to The Capitalist’s heart – fashion – is looking forward to pushing into new markets in Europe, much to the horror of the Brit fashion pack who pride themselves on their eclectic home-grown style. “I thought you might say that,” Robertson laughed. “It’s been the biggest barrier to our growth so far – the fact that ladies don’t like to share the secret of where they bought their stuff!” Can anyone blame us, I ask?

JOKER’S CORNER Gag of the evening went not to newsreader Huw Edwards, presenting the awards, nor to guest speaker Nick Clegg, the deputy Prime Minister, but to Tom Bewick, the little-known chief executive of Dragon Peter Jones’ charity the National Enterprise Academy. “I feel like Pamela Anderson’s fifth husband,” Bewick began, addressing the audience between courses. “I know what I’ve got to do, it’s merely a question of making it interesting...”

BOO HISS Finally, a note on how to quickly gauge the level to which your company has risen or sunk in the eyes of the general public: get nominated for an award. Booze and leisure firms yesterday elicited the largest cheers, moving down the scale towards the Royal Bank of Scotland – half hisses, half cheers – and finally hitting rock bottom with HMRC, greeted with a barrage of pantomime booing.

11

12

News

CITYA.M. 10 NOVEMBER 2010

Embattled Symbian boosted by 11 new Japanese handsets ▲

TELECOMS BY STEVE DINNEEN

IN A rare show of support for Nokia’s embattled smartphone operating system Symbian, Japan’s Fujitsu and Sharp yesterday unveiled 11 new handsets powered by the software. Though Symbian is the most popular smartphone operating system, activated on more than 400m phones since 2000, it has lost ground since the introduction of Apple’s

iPhone in 2007, and Japan is the only market where other manufacturers than Nokia are still taking it on. It has been squeezed further since the introduction of Google’s critically acclaimed Android operating system, which is now seen as the main competitor to Apple’s iOS. On Monday Nokia said it would take over development of the platform from April 2011, resuming management of a key asset it gave to the independent Symbian

£7.4bn £22.6bn First half £4.3bn

Foundation to run only a few years ago. The cross-industry Symbian Foundation will in the future take care of only licensing of the software. Although Nokia receives no direct benefit from other makers using the platform, its own portfolio is helped by the breadth of independent software developed for use on the phone, which in turn is increased by a bigger user base.

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China Mobile stake sale:

£3.1bn SoftBank stake sale:

Vittorio Colao is bullish about Vodafone’s strategy

Picture: Micha Theiner/City A.M.

Vodafone sells £3.1bn stake in SoftBank ▲

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First half revenues:

core earnings:

TELECOMS BY STEVE DINNEEN

VODAFONE yesterday continued its purge of non-core assets, as it announced a £3.1bn sale of its stake in Japanese carrier SoftBank. The announcement comes after the £4.3bn sale of its interests in China Mobile. Other non-core ventures likely to be disposed of soon include Vodafone’s 25 per cent stake in Poland’s Polkomtel and a 44 per cent stake in SFR, its French joint venture with Vivendi. A decision on its large minority stake in US-based Verizon Wireless is not expected until 2012 but analysts expect Vodafone to maintain its interests in the hope dividend payments will resume. Half of the cash from the Softbank sale will be used to pay down debt with Vodafone saying it is unsure how the second half will be spent. Two-thirds of the proceeds from the China Mobile sale will be returned to investors through a share buy-back programme. Chief executive Vittorio Coalo also stressed the firm’s shift away from reliance on “voice” revenue – generated by calls – to data. Mobile data is now worth in excess of £5bn a year to Vodafone and growing exponentially. Colao, watching the analyst slideshow on his iPad, outlined plans for a tiered system for data payments

that he says will be “better and fairer”. The new system will see the six per cent of users responsible for 54 per cent of data traffic pay more. Coalo was also bullish about Vodafone’s Indian venture, which he sees eclipsing the firm’s European operations. He pointed to the relatively small (six per cent) data penetration in the market as a potential goldmine as smartphones continue their shift to the mainstream. Vodafone raised its full-year guidance, saying it now expects adjusted operating profit of £11.8 to £12.2bn, versus an earlier forecast of £11.2 to £12bn, after sales grew faster than expected. First-half core earnings fell 2.8 per cent on an organic basis to £7.4bn, compared with a forecast of £7.3bn. Ebitda margins declined by 1.7 per cent. First-half revenue rose 1.8 per cent organically to £22.6bn, beating a poll forecasting £22.3bn, as all regions performed well, including Verizon Wireless.

ANALYSIS l Vodafone

174.00 9 Nov

175 p

170 165 160 155 150 9 Aug

27 Aug

17 Sep

7 Oct

27 Oct

When we first started out, way back in 1966, life was less complicated. If you needed a plumber, you looked in Yellow Pages. If you needed a builder, you looked in Yellow Pages. If you needed a mechanic

What we do hasn’t changed in 40 years. How we do it has. who knew his way around a Ford Cortina MkII... well... you get the idea. These days there are more tradesmen, more services and more ways to search. And that can make finding the right business a tricky business. It’s why, at Yell, we’ve been busy developing new ways to help you find exactly what you’re looking for. Yell.com now features business videos and customer reviews, so if you fancy having a butcher’s at a barber’s, you can. We’ve also introduced Yell iPad and mobile apps so you can find whatever you’re after wherever you are. Even our 118 24 7 directory service has won awards (yes, there are awards for telephone directory services).* So next time you’re looking for the right plumber for your plumbing, the right builder for your building, or even the right mechanic for your Ford Cortina MkII, you only need Yell.

*Calls to 118 24 7 cost 39p per minute plus 129p connection charge. Network costs vary. Customer service: 0800 900600. The 118 tracker International Directory Assistant ‘Best UK Service’ accolade has been awarded four times (2004, 2005, 2006 and 2009).

Economic News

CITYA.M. 10 NOVEMBER 2010

15

House prices to surge in 2014 if Bank of England intervenes ▲

UK ECONOMY BY MATTHEW WEST

The BoE needs to do more quantitative easing to boost house prices, says the CEBR

HOUSE prices are set to rise by only 2.2 per cent next year as they are squeezed by falling disposable income and higher unemployment as a result of public sector cuts introduced by last month’s comprehensive spending review, a report will say today. The latest forecast from leading

economic consultancy the Centre for Economics and Business Research (CEBR) suggests house price growth in the next twelve months will drop from 6.9 per cent year-on-year to just 2.2 per cent. But it adds house prices could rise by as much as 16 per cent by 2014 if the Bank of England (BoE) goes ahead with a second round of asset purchases. It also suggests housing supply constraints will work to offset the

impact of weak disposable incomes.. Owen James, economist at the CEBR, predicts 2011 will be a tough year but believes the BoE’s Monetary Policy Committee is “highly likely” to follow the Federal Reserve’s policy move of introducing more quantitative easing leading to a reduction in the cost of borrowing and an increase in bank mortgage lending. He also predicts mortgage approvals will increase by almost half.

Output rises as UK trade gap narrows ▲

UK ECONOMY BY MATTHEW WEST

OVERALL production output grew in line with expectations in September but manufacturing growth was weaker than expected, suggesting that the UK economy’s rebound could be beginning to slow. Manufacturing output grew by only 0.1 per cent month on month in September, down from 0.4 per cent in August, according to figures from the Office for National Statistics (ONS) published yesterday. But it said total manufacturing output was still 4.8 per cent higher than a year earlier. Overall industrial output growth was unchanged from August at 0.4 per cent, although it was 3.8 per cent higher than a year earlier as mining, utility and energy industries all picked up. Output in the mining and quarrying sectors increased by 2.2 per cent in September compared to a year ago, increasing by 1.3 per cent on the previous month. Meanwhile, oil and gas extraction increased by 1.7 per cent on the previous year and 0.9 per cent on August.

Separate figures from the ONS showed Britain’s trade deficit narrowed to a four-month low, falling to £4.6bn in September, compared with a revised trade gap of £4.9bn in August – the highest figure for five years. Exports rose by £0.5bn and imports rose by £0.2bn. The UK’s trade gap with its biggest trading partner, the European Union (EU), also narrowed to £3.6bn in September, compared with a deficit of £3.8bn in August. Exports and imports cancelled each other out with exports rising by £0.1bn while imports fell by £0.1bn. Alan Clarke, economist at BNP Paribas, said he believed the data signalled a period of sluggish economic growth but said the figures were more promising than previously. “Manufacturing growth at 0.1 per cent is pretty sluggish. But I don’t think we’re going to fall into negative territory, we are just not going to expand as quickly as we were,” he said. “I did forecast negative growth for 2011. But now I think we will be bobbing along the bottom so I’m a little more optimistic. I expect one per cent GDP growth for next year,” he added.

J Sainsbury outpaces rivals as it sees its market share inch higher ▲

CONSUMER

UK SUPERMARKET sales are rising slightly more than food price inflation, with the third largest grocer J Sainsbury outpacing its major rivals, market researchers Kantar Worldpanel said yesterday. Grocery sales climbed four per cent in the 12 weeks ended 31 October, helped by a three per cent rise in inflation -- little changed from the growth rates reported last month, Kantar said. Sainsbury, which reports first-half results today, outperformed with

sales growth of 6.1 per cent on the same period last year. Smaller rival Wm Morrison Supermarkets saw growth of 3.8 per cent, followed by industry leader Tesco on 3.7 per cent and Wal-Mart’s Asda on 3.4 per cent. “The large customer base of the top four retailers means that they must strike a balance between price and quality – low prices alone will not be enough to lure shoppers this Christmas. Sainsbury’s has hit a sweet spot with this balance,” said Edward Garner, communications director at Kantar Worldpanel.

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9JGPKVEQOGUVQ[QWTUCXKPIUCPFKPXGUVOGPVUKVoUIQQFVQVCNMVQRGQRNG YJQWPFGTUVCPF[QWTURGEKƂEPGGFUCPFEKTEWOUVCPEGUCPFYJCVKVoUNKMGVQ be an expat. As the part of the HSBC Group dedicated to expats, HSBC Bank International has been serving the needs of people living and working abroad for over 40 years. r2GQRNGYJQWPFGTUVCPFGZRCVNKHGDGECWUGVJG[FGCNYKVJGZRCVUGXGT[FC[ r'ZRGTVUQPVJGITQWPFKPMG[NQECVKQPUCETQUUVJGINQDG r1HHUJQTGUQNWVKQPUFGUKIPGFVQOCZKOKUGRQVGPVKCNVCZGHƂEKGPEKGUHQTGZRCVU r1PNKPGDCPMKPIVJCVNGVU[QWXKGYCNN[QWTGNKIKDNG*5$%CEEQWPVUYQTNFYKFG and make free transfers between them Talk to people who understand expat life: Call +44 1534 616079 Visit www.offshore.hsbc.com/am

HSBC Bank International is regulated by the Jersey Financial Services Commission for Banking, General Insurance Mediation, Investment and Fund Services Businesses and licensed by the Guernsey Financial Services Commission for Banking, Collective Investment Schemes and Investment Business. Licensed by the Isle of Man Financial Supervision Commission. Deposits and KPXGUVOGPVUOCFGYKVJQWTQHƂEGUKPVJG%JCPPGN+UNCPFUCPFVJG+UNGQH/CPCTGPQVRTQVGEVGFD[VJGTWNGUOCFGWPFGTVJG7-oU (KPCPEKCN5GTXKEGUCPF/CTMGVU#EVHQTVJGRTQVGEVKQPQHTGVCKNENKGPVUKPENWFKPIVJG7-(KPCPEKCN5GTXKEGU%QORGPUCVKQP5EJGOG CPFVJG7-oU(KPCPEKCN1ODWFUOCP5GTXKEG*QYGXGT*5$%$CPM+PVGTPCVKQPCN.KOKVGFKUCOGODGTQHVJG&GRQUKVQTU%QORGPUCVKQP Scheme as set out in the Banking (Depositors Compensation) (Jersey) Regulations 2009. HSBC Bank International Limited is a RCTVKEKRCPV KP VJG )WGTPUG[ $CPMKPI &GRQUKV %QORGPUCVKQP 5EJGOG6JG 5EJGOG QHHGTU RTQVGEVKQP HQT nSWCNKH[KPI FGRQUKVUo WR VQ UWDLGEVVQEGTVCKPNKOKVCVKQPU6JGOCZKOWOVQVCNCOQWPVQHEQORGPUCVKQPKUECRRGFCVKPCP[ƂXG[GCTRGTKQF &GRQUKVUOCFGYKVJQWTQHƂEGUKPVJG+UNGQH/CPCTGRTQVGEVGFD[VJG+UNGQH/CP%QORGPUCVKQPQH&GRQUKVQTU4GIWNCVKQPU(QT further information on these Schemes, please visit the Important Information section on our website www.offshore.hsbc.com/1/2/ KORQTVCPVKPHQTOCVKQP%QRKGUQHNCVGUVCWFKVGFCEEQWPVUCTGCXCKNCDNGQPTGSWGUV#RRTQXGFHQTKUUWGKPVJG7-D[*5$%$CPMRNE6Q help us to continually improve our service, and in the interest of security, we may monitor and/or record your communications with us. © HSBC Bank International Limited 2010. All Rights Reserved. MC8364AC19673

16

News

CITYA.M. 10 NOVEMBER 2010

Oil will hit $200 a barrel as suppy peaks, says IEA ▲

ENERGY BY HARRY BANKS

GLOBAL oil supplies will come close to a peak by 2035 when oil prices will exceed $200 a barrel, the International Energy Agency said yesterday, as China and other emerging economies drive demand higher. The IEA, in its 2010 World Energy Outlook, said crude oil output had already peaked and would flatten out in the next 10 years, boosting reliance

on costlier and more polluting unconventional sources such as oil sands. “Production in total does not peak before 2035, though it comes close to doing so,” the IEA said in the executive summary of the report. That projection was according to the report’s central case, the New Policies scenario. The Paris-based IEA, which advises 28 industrialised countries, also raised its mid- and long-term oil price forecasts, despite slashing oil demand estimates by 2035, citing growing supply

uncertainty. Oil prices would rise even further if governments did not act to curb consumption, said the IEA’s chief economist and lead author of the report, Fatih Birol. “The message is clear, the price will go up, especially if consuming countries do not make changes in the way they consume oil, especially in the transport sector,” Birol said. Oil has hit $87.63 a barrel – its highest since October 2008, after hovering around $70-80 most of the year.

CITY VIEWS: WILL DAVID CAMERON’S VISIT TO CHINA GENERATE MORE TRADE FOR THE UK? Interviews by Juliet Samuel SASCHA KLAMP | SITE INVESTMENTS “It’s a good thing. The more the better. China is one of the highest-growth countries. I’m not sure what deals he’s trying to strike but if it’s in areas like clean technology and green energy that’s a good thing.”

STEVE ATKINSON | AUKETT FITZROY ROBINSON “Cameron’s visit to China will help things, I think. I’m an architect and British architects have been doing very well out of China. I expect this visit will generate more trade, which should be good for my industry.”

ANDY JORDAN-SMITH | JORDAN-SMITH ASSOCIATES

“David Cameron is doing something we’ve been doing for a while – it’s the way forwards. China’s the market to be in; they’re not minnows any more. Anything for the UK could be good if it means jobs here or there and it can only bring benefits in the long-run. ”

Politics

CITYA.M. 10 NOVEMBER 2010

Trade envoys named as Cable signs pigs deal

Rolls-Royce wins $1.2bn China order PRIME Minister David Cameron’s efforts to double trade with China by 2015 received a boost yesterday, as aero-engine maker Rolls-Royce won a $1.2bn (£747.4m) order from China Eastern Airlines. Cameron, making his first visit to the Asian powerhouse since taking office in May, has targeted annual trade of more than $100bn with the world’s second-largest economy within five years. The Prime Minister told reporters he would raise human rights issues with Beijing but it wasn’t Britain’s role to lecture or heckle China, a oneparty communist state. Some rights groups have accused London of softpedalling on sensitive political issues to avoid harming its trade prospects. The Rolls-Royce order, signed in Cameron’s presence, is for Trent 700 engines to power 16 Airbus A330 aircraft and is by far the biggest such

deal sealed during a trip by the largest British delegation ever to visit China. Foreign secretary William Hague told MPs back in the UK that agreements to be signed during Cameron’s trip might total around £1.7bn. Britain is competing with other Western nations to sell more to China and its vast population. China and France clinched deals valued at around $20bn last week during an overseas trip by President Hu Jintao, while Germany remains by far Beijing’s biggest European trade partner. Cameron yesterday called for progress on the Doha round of world trade talks, long paralysed by disputes over farm trade centred on the United States, China and India. His 36-hour visit to China comes ahead of a G20 summit in South Korea starting tomorrow. “Next year has to see the deal done, and that means action now,” he wrote in a newspaper column.

POLITICS

▲

▲

POLITICS BY VICTORIA BATES

17

Clockwise: Victor Blank, Tamara Mellon, Chris Patten and Anya Hindmarch Pictures: GETTY/REX/REUTERS

DAVID Cameron has named a raft of new business ambassadors to be responsible for promoting British trade interests abroad. The positions are not paid but give the envoys the chance to strike profitable deals for the UK abroad. The ambassadors include the CBI’s outgoing chief Richard Lambert, fomer governor of Hong Kong Chris Patten, Brunswick’s Alan Parker, Boeing’s Sir Roger Bone, BAE’s Dick Olver, Tesco’s David Reid, Tamara Mellon of Jimmy Choo, fashion designer and businesswoman Anya Hindmarch and former Lloyds boss Sir Victor Blank. Cameron said: “It is of critical importance that we do everything we can to demonstrate that the British economy is open for business. That is why we have placed international trade at the heart of our foreign policy, and why I am determined to pursue with zeal every opportunity to further British business success.” Meanwhile, business secretary Vince Cable has struck a £45m export deal for thousands of British breeding pigs to be sent to China – already home to half of the world’s pig population. He said: “This agreement gives a valuable boost to the British pig industry and is already delivering results.”

18

News

CITYA.M. 10 NOVEMBER 2010

Aldermore gets City veteran as new chairman

Fair weather for Munich Re as profits rise A RELATIVELY calm hurricane season in America has helped to push up profits at Munich Re, despite massive payouts for the Chilean earthquake and the Deepwater Horizon disaster. The insurer said that its net profits for the first three quarters of 2010 were 19 per cent higher than for the same period last year at €764m (£660.3m), up from €643m. It now predicts that its profits for the full year will be in the region of €2.4bn, slightly down on the €2.56bn it made in 2009. The previous estimate for 2010 was €2bn, a number that has already almost been reached. In the first nine months Munich Re paid out €523m for man-made losses including a figure in the low hun-

dred millions of euros for the Deepwater Horizon spill. This is added to €1.1bn for natural disasters, a figure that was almost three times bigger than the €300m paid out the year before. The biggest loss-event so far this year was the Chilean earthquake, which cost the insurer €1bn. Claims for the hurricane season have so far been low. Despite the positive news, Munich Re remained cautious for 2011. It does not expect capital market interest rates to rise significantly so regular income from fixed-interest securities and loans is likely to be lower. The group expects a return of under four per cent on its portfolio next year. The good results will be cheered by Warren Buffett, who is the largest shareholder in Munich Re with a holding of around 10 per cent.

▲

▲

INSURANCE BY JEREMY HAZLEHURST

BANKING

Sir David Arculus, currently chairman of Numis, has joined Aldermore as chairman

ALDERMORE, one of the new banks to spring up in the UK in the wake of the credit crisis, has scored a coup with the appointment of City veteran Sir David Arculus as its new chairman. Arculus currently chairs investment banking firm Numis and is a non-executive director at Telefonica, Excel and Pearson. His sparkling corporate career has spanned several decades and some of the UK’s biggest firms, including a stint as chairman of O2, during which he led its sale to Telefonica for £18bn in 2006, and 24 years at media group Emap, latterly as group managing director. Arculus is also active in governmental circles, having previously advised the coalition on regulatory policy and chaired the Labour government’s Better Regulation Task Force between 2002 and 2006. Aldermore, which specialises in lending to smaller businesses, also yesterday said it had lured John Baines, the former chief executive of RBS’ wealth management division, as its new chief financial officer.

New boss for directories firm JP Morgan faces lawsuits over mortgage foreclosure Yell as faltering sales hit stock ▲

▲

MEDIA

YELLOW-pages publisher Yell yesterday named ex-Cisco manager Michael Pocock as its new chief executive and reported an accelerated slide in quarterly sales, sending its shares down 20 per cent. Yell, whose CEO and last chief financial officer both announced their departure in May, said its customer base of small businesses had not yet regained economic confidence, resulting in a second-quarter sales decline of 12.1 per cent. For the first half, revenue fell 11.2

per cent at constant exchange rates to £896m, and adjusted earnings before interest, tax, depreciation and amortisation fell 12.2 per cent to £265m. “Our revenues are directly related to the confidence small businesses feel, and small businesses continue to see little evidence of economic recovery,” outgoing chief executive John Condron said in a statement. The company said it would still meet full-year profit expectations by cutting costs. Yell shares fell 3.19p to close at 12.37p – a 20 per cent loss. “Yell remains our least preferred

stock in the sector and has to be seen as a high risk, speculative investment,” Numis analysts wrote in a note. Yell has been struggling as consumers increasingly use Google and other search engines to find details of local businesses instead of using Yellow Pages directories.

Former Cisco manager Michael Pocock has been named as the new chief executive of publishing giant Yell

BANKING

JPMORGAN Chase faces two possible class action lawsuits, including fraud, related to its decision to halt foreclosures, the US bank said in a regulatory filing yesterday. The suits allege “common law fraud and misrepresentation, as well as violations of state consumer fraud statutes,” JPMorgan said, adding to the chorus of major banks facing legal action after underwriting and securitising mortgages. In September, JPMorgan temporarily halted home seizures after finding glitches in foreclosure documents. Last week, it said it planned to start

refiling the foreclosure documents within weeks. The lawsuits were filed against Washington Mutual Bank and JPMorgan Chase & Co in the United States District Court for the Northern District of Illinois, and against Chase Home Finance in California state court, the 10-Q filing said. JPMorgan also acknowledged it faced suits related to mortgagebacked securities, brought by hedge fund Cambridge Place Investment Management and brokerage Charles Schwab. Bank of America and Citigroup last week disclosed suits related to mortgage underwriting.

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News

CITYA.M. 10 NOVEMBER 2010

19

Schroders boosted by inflows Gartmore investment ▲

FINANCIAL SERVICES BY JEREMY HAZLEHURST

shares in Schroders. They were the biggest riser by price on the FTSE yesterday, closing 87p, or 5.79 per cent, higher on the day at 1,667p. Its previous high was way back in July 1998.

ANALYSIS l Schroders

1,660 p

1,667.00 9 Nov

1,620 1,580 1,540 1,500

11 Oct

18 Oct

25 Sep

1 nov

8 Nov

trust reviews manager ▲

SCHRODERS share price hit a 12-year high yesterday afternoon after it announced a pre-tax profit of £282.7m for the first nine months of 2010, compared with £79.9m for the same period in the previous year. The pre-tax profit has more than doubled to £94.5m for the quarter, up from the figure of £43.6m in the same three months a year earlier. The investment bank also yesterday revealed that there have been inflows of £21.5bn of new money since the start of the year, including £5.4bn in the past three months, double the amount that some ana-

lysts had predicted. Seventy-nine per cent of the new investment in 2010 has come from overseas investors, and the Asia Pacific region was responsible for £7.3bn of institutional investment in the first nine months, said Schroders, although its traditional stronghold of Europe is still its strongest region. It is the largest publicly traded asset-management company by market value in Europe. As of 30 September the wealth manager said that it had £181.5bn under management, a big increase from the figure of £138.9bn at the same time last year. The news was a shot in the arm for

FUND MANAGEMENT

BOARD members at Gartmore’s European investment trust yesterday said they would review the group’s role as manager of its portfolio, acknowledging the risks posed to the business by the departure of star fund manager Roger Guy earlier this week. “The board is mindful of the impact that these developments may have in relation to the management of the company’s portfolio and will review the situation with Gartmore,” the trust said in a statement. Guy’s resignation, which came

Private pensions back in the black ▲

PENSIONS BY JEREMY HAZLEHURST

ANALYSIS l Estimated aggregate balance (on a section 179 basis) and funding ratio of schemes in the PPF universe

200

120%

150 100 p 50

110%

0

100%

-50 -100

Aggregate balance (LHS)

-150

Funding ratio (RHS)

-200 -250 Oct 04

Oct 05

Oct 06

90% 80%

Oct 07

Oct 08

Oct 09

70% Oct 10

Picture: GETTY

Hedge funds forced to drop their fees in wake of meltdown ▲

HEDGE FUNDS BY VICTORIA BATES

INVESTORS are enjoying more negotiating power than ever before when it comes to investing in hedge funds, putting increasing pressure on managers to lower fees and offer greater liquidity in the wake of the credit crisis, a new survey has shown. Over half of the investors polled for an Ernst & Young report on the industry said they now have more power than before the crisis, while over 40 per cent said they had actually managed to pressure their hedge fund managers to lower management and incentive fees. One in three institutional investors now say they need more liquidity to

invest than before Lehman Brothers collapsed in 2008, while three in ten say the maximum lock-up they will accept is now less than before. But the survey showed hedge funds are already proactively addressing investor concerns, with almost 45 per cent of funds surveyed having made changes to fees, liquidity or structure in order to attract new capital. The majority of both hedge fund managers and investors polled agreed that long-term investment performance is the key criterion for selecting a manager. But investors said clarity and consistency of investment philosophy are the next most important factors, contrasting with the view of managers, who picked reputation and recent performance.

PRIVATE pension schemes in the UK have motored back into surplus, driven upwards by healthy stock markets. say the new monthly figures out from the Pension Protection Fund (PPF), the body that insures pension schemes. The aggregate balance of the 6,653 schemes in the pension protection fund’s PPF 7800 index is estimated to have improved over the month to a surplus of £13.5bn at the end of October 2010, a sharp jump upwards from a deficit of £20.4bn at the end of September. Total assets of private pension schemes were £967.1bn as of 31 October, slightly outstripping total liabilities of £953.6bn. The position has improved dramatically from the figure that was announced 12 months earlier on 31 October 2009

when the deficit was £44bn. Total scheme assets increased 0.6 per cent over the month and 11.8 per cent over the year. Total liabilities were 2.9 per cent down over the month and 4.9 per cent over the year. The balances of pension schemes tend to be volatile and are strongly influenced by gilt yields and major asset classes, especially equity markets. Much of the movement in the figures can be attributed to the performance of the FTSE All-Share, which rose by 13.6 per cent In the 12 months to October 2010 while 15year gilt yields were down by 28 basis points. At the end of October 2010 62 per cent of the 6,653 defined benefit schemes were in deficit, a figure that is well down from 4,632 at the end of October 2009. Around 500 more schemes are in surplus than at the end of October 2009.

alongside news that chief investment officer Dominic Rossi and senior portfolio manager Darrell O’Dea are also leaving the firm, prompted Gartmore to appoint Goldman Sachs to lead a review of its options, including a potential sale of the business. Schroders, the largest listed European fund manager, yesterday ruled itself out, with chief executive Michael Dobson confirming it is “not looking” at Gartmore. Possible buyers include Henderson, Gartmore’s ex-private equity owner Hellman & Friedman and buyers from overseas.

NEWS | IN BRIEF Citigroup CDO cases to go ahead A US judge yesterday dismissed part of a Citigroup shareholder lawsuit alleging securities fraud, but allowed the investors to pursue some of their claims against the bank. Citigroup shareholders claim that the bank knowingly misled them about the value of various securities it sold and the risk related to those securities. US Judge Sidney Stein ruled yesterday that shareholders could pursue their lawsuit against the bank and some former officials, but only for claims related to the bank’s collateralised debt obligations (CDOs) between February 2007 and April 2008.

Mexican group to buy Sara Lee Sara Lee will sell its North American bakery business to Mexico's Grupo Bimbo for $925m (,£579m), the latest move to shrink a once-sprawling company that sold everything from hot dogs to underwear.

General Electric healthcare up General Electric’s healthcare arm can grow operating profit at 10 per cent per year over the long term, its top executive said yesterday. The US conglomerate has also seen US demand for medical equipment and services pick up following the landmark US healthcare reform law.

20

News

CITYA.M. 10 NOVEMBER 2010

Public sector increasingly nervous about jobs BRANDINDEX

STEPHAN SHAKESPEARE

I

N the run up to the Christmas season feelings of insecurity surrounding employment situations can become more acute. A monthly Household Economic Activity Tracker (HEAT) produced by YouGov SixthSense has found that a

net percentage of employees were more fearful for their jobs in October (net -20 per cent) than they had been during September (net -17 per cent). This ties in with the general trend of increasing fears over job security since spring 2010 (see graph). Concern about job security differs between public and private sector employees. By subtracting the percentage of people who currently feel secure in their position from those fearing impending job loss, YouGov SixthSense calculated a net -31 per cent level of confidence in job security amongst public sector workers, while confidence amongst private sector employees stands at a net -14 per cent. The Comprehensive

Spending Review has started to make public sector workers nervous. Widespread feelings of employment insecurity exist in spite of a perceived increase in the level of business activity in the UK: both private and public sectors recorded positive net increases in this regard (four per cent and 14 per cent respectively). Similarly, from September to October a net zero per cent level of income change was recorded. Despite this, those employed are still feeling the pinch as 67 per cent said price changes have negatively affected them, with only two per cent welcoming recent price fluctuations. YouGov SixthSense also recorded a nine per cent net increase this month

in the need for additional borrowing in respect of Credit Cards, overdrafts and other unsecured loans. The consumer prognosis for next year is also grim. YouGov respondents overwhelmingly believe goods and

ANALYSIS l Total consumer job security, Feb 2009-October 2010 0

-0.05 -0.01 -0.15 -0.20 -0.25

Job security Feb 09

Apr 09

Jun 09

Aug 09

Oct 09

Dec 09

▲

▲

ROYAL Bank of Scotland (RBS) and NatWest customers will be able to access current and business accounts at Britain’s 12,000 post offices after the government ditched plans for a statebacked Post Office bank. The agreement means post offices will provide services for 80 per cent of current accounts in Britain, postal affairs minister Edward Davey said. “Setting up and capitalising a bank would be time-consuming and extremely expensive,” Davey said in a statement. “At a time when public finances are under huge strain ... funding is better spent modernising and maintaining the network.” An RBS spokesman said no start date had been set because the two sides were still finalising details of the agreement, but they were aiming to

launch it as quickly as possible. HSBC and Santander will be the only banks in Britain that do not enable all their current account holders to use post offices, and the government is encouraging them to join their peers, a Department for Business spokesman said. The government is also eager for the Post Office to branch into other financial services, the department said. It said the Post Office would offer new products through its relationship with Bank of Ireland and look into ways it and credit unions could work more closely together. The government also wants branches to become its “front office” and a pilot project had been agreed for the Post Office to print government forms on demand, the department said. Last month the government said it would provide £1.3bn of extra funding to the Post Office.

Trend Six Month Moving Average Feb 10

Mar 10

May 10

Aug 10

Former chief of Sportingbet Nigel Payne is floating a new private jet venture

PAUL SHACKLETON HEAD OF CORPORATE FINANCE, DANIEL STEWART PAUL Shackleton has specialised in the small to mid cap corporate finance sector since 1996, having previously worked in the small company team at UBS and helped to found Bridgewell Securities before joining Daniel Stewart seven years ago. Shackleton’s link with Nigel Payne, the former Sportingbet chief executive and now chairman of Hangar 8, is

well-established: his team at Daniel Stewart acted as nominated adviser (Nomad) and broker to Sportingbet for many years on the Alternative Investment Market (Aim), before it moved over to the main list of the London Stock Exchange in May this year. Daniel Stewart is still retained as a secondary broker and adviser to the online gaming firm on the main market. Shackleton was partnered on the Hangar 8 advisory team at Daniel Stewart by Emma Earl, who joined the firm in November 2009 from NCB. She had previously spent five years working at accountancy firm Grant Thornton.

Your financial success depends on making informed investment decisions. Learn the experts’ personal strategies for profiting from the markets at The World MoneyShow.

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SPORTINGBET’S former chief executive Nigel Payne will this morning storm back into the market spotlight with the flotation of his new venture, private jet charter firm Hangar 8, on the Alternative Investment Market (Aim). Payne – who led Sportingbet from 2000 to 2006 and has since been a non-executive director – is non-executive chairman of Hangar 8, which says the charter market is set to balloon by five per cent per annum from 2011 as business travel returns strongly. The firm has raised £2m on its admission to Aim through a placing of 1.33m shares – representing around 21 per cent of its total share capital – at 150p per share. Hangar 8, which manages private jets for wealthy owners as well as chartering planes, said it would use the proceeds to increase spend on marketing, in order to attract new jet owners and high net worth charter customers to the business. It also plans to bring the maintenance of its aircraft in-house, hoping to achieve cost savings and boost margins.

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Stay afloat and ride the wave to success in volatile markets… Gillian Tett

Sandy Jadeja

Louisa Bojesen

Bill Bonner

Russ Mould

Oct 10

Ex-Sportingbet boss floats jet charter firm

Post Office to serve banks’ customers POSTAL SERVICES BY HARRY BANKS

services will cost more this time next year, with unemployed people registering the lowest level of confidence that prices will remain stable. Stephan Shakespeare is chief executive and co-founder of YouGov

Roger Bootle

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News

CITYA.M. 10 NOVEMBER 2010

Carlsberg chief executive Jorgen Buhl Rasmussen said conditions remain challenging in several northern and western European markets.

21

Black Ops sells 5m copies on first day

Picture: GETTY ▲

MEDIA BY STEVE DINNEEN

ACTIVISION Blizzard’s new installment of its Call of Duty franchise sold an estimated 5m units during its first 24 hours on sale. Call of Duty: Black Ops, released yesterday, is widely tipped to have outsold last year’s Modern Warfare 2, which shifted 4.7m copies in its first day on sale.

Carlsberg hit by rising input costs in 2011 ▲

BEVERAGES BY HARRY BANKS

CARLSBERG, the world’s fourth-largest brewer, yesterday reported a 26 per cent rise in third-quarter operating profit, but lost market share in Russia and warned of rising input costs in 2011. The maker of Carlsberg, San Miguel, and Kronenbourg raised its 2010 view on key market Russia, where it is market leader, to a mid-single digit percentage decline from its expectation in August of a high single-digit drop. It also nudged up its profit outlook after a hot summer and rising consumer sentiment in eastern Europe provided a boost. Chief executive Jorgen Buhl Rasmussen said that while the firm sees signs of recovery in eastern Europe, conditions remain challenging in several northern and western European markets. “Rising input costs will have an impact and we will therefore have to increase sales prices,” he said. Prices on malt, wheat and barley have surprised, mainly in eastern Europe, Rasmussen told Reuters. “The fires and the drought in eastern

Europe have clearly had an effect in the autumn, more than we had thought in July and August.” ING analyst Gerard Rijk said Carlsberg’s eastern Europe unit, which includes Russia, disappointed compared with rivals, as did its message on input costs and the need to raise prices. Carlsberg’s share price has quadrupled in the past two years – soaring around 60 per cent this year and outpacing larger rivals – but is still below a 2007 record. Carlsberg gets more than half its revenue in western Europe. But as those markets are saturated, it sees mid-term growth in Russia – despite a tripling of beer tax in January to combat alcoholism – and longer term in Asia.

ANALYSIS l Carlsberg

76.03 9 Nov

82 € 80 76 72 68 9 Aug

27 Aug

17 Sep

7 Oct

27 Oct

Number of London-based firms in trouble is up 84pc since 2009 for BY STEVE DINNEEN THE number of London businesses in financial difficulties increased dramatically last month according to new figures from a Begbies Traynor/City A.M. study. Across the UK a staggering 40 per cent more firms are in financial dire straits than in the depths of the recession in January 2009.

In London this grows to 84 per cent – more firms in trouble than in 2009. Virtually every commercial sector shares in the pain, with the most dramatic deterioration seen in property services. Nick Hood, partner at Begbies Traynor says the situation could deteriorate further. He said: “With the details of the Comprehensive Spending Review only emerging towards the end of the month, the worst is clearly still to come. It is hard to see a light at the end of the financial tunnel as we move into the dark winter months and through into 2011 with public spending cuts biting ever deeper.

Shares in the firm surged more than five per cent on Monday ahead of the release, although analysts doubt Black Ops can top the overall performance of its predecessor. Modern Warfare 2 has had more than $1bn (£620m) worth of sales since its release. The Call of Duty series is a first-person shooter set in various historical and fictional warzones including Berlin during WWII and guerilla warfare against modern terrorists.

22

News

CITYA.M. 10 NOVEMBER 2010

CITY MOVES | WHO’S SWITCHING JOBS Colliers International Anthony Michael Horrell has taken up the chief executive’s mantle at the real estate advisory firm. The 49-year-old was until recently head of Jones Lang LaSalle’s capital markets group in Europe, spearheading the expansion of the international capital markets business. He spent a total of 27 years at the firm and is also a member of the Royal Institute of Chartered Surveyors.

Royal Bank of Canada The bank has hired Sandy Swinton as a

director in RBC’s wealth management division in the UK.

To appear in CITYMOVES please email your career updates and pictures to [email protected]

Edited by Victoria Bates Swinton joins from Barclays Wealth, where he spent 10 years, latterly as a senior private banking director. He has also previously worked at Robert Fleming Securities, James Capel and Barclays de Zoete Wedd.

James Hambro & Partners The private client wealth manager, part of the JO Hambro Capital Management Group, has hired John Langrish to manage discretionary client portfolios. Langrish joins in January from Rothschild Private Banking & Trust, where he was deputy head of portfolio

in association with

BTIG

management and head of UK equities. Prior to that, he spent three years at JP Morgan Fleming Private Asset Management.

The broker dealer has expanded its US fixed income sales and trading platform with the appointment of Robert Hannigan as a director in high yield and distressed sales. Hannigan previously worked at UBS, JP Morgan, CRT and Knight Libertas, where he was a director.

Temenos The banking software provider has taken on Mark Winterburn as group product director. Winterburn has over 30 years of experience in IT and joins from Misys’ banking and treasury capital markets division, where he was a vice president in solutions management and product development.

Mercer The consultancy firm has re-hired Paul Enderby from Towers Watson to its retirement, risk and finance business as a senior consultant.

+44 (0)20 7557 7245

SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

morganmckinley.com

France passes controversial pensions bill ▲

WORLD ECONOMY BY HARRY BANKS

FRANCE’S Constitutional Council approved President Nicolas Sarkozy’s pension bill yesterday, clearing the last hurdle to a controversial reform that will raise the retirement age by two years to stem a huge pension deficit. Despite a late challenge by the opposition Socialist party, the council ruled that the proposed pension law does not breach constitutional rules. It is likely to be signed into law by Sarkozy in the next few days. Fierce opposition by trade unions and the French public, who staged the most sustained of a wave of protests in Europe against austerity measures, turned the pension reform into the biggest battle of Sarkozy’s presidency. Long-running port and refinery strikes that badly disrupted fuel supplies failed to stop parliament passing the pension bill last month, in a

victory for the conservative president as he tries to reassure financial markets that France can tackle its public deficit. Sarkozy’s popularity ratings are at rock-bottom 18 months ahead of a presidential election, but pushing through a reform of the pension system where other governments gave in to unions has bolstered his standing within his centre-right UMP party. Turnout has flagged at recent street marches against the reform, which will gradually raise the minimum and fully pensionable retirement ages by two years to 62 and 67 respectively. France’s main trade unions agreed late on Monday to call for a day of localised action on 23 November against the reform that could include small-scale work stoppages and workplace meetings, but their meeting made clear that momentum for large-scale nationwide protests over the pension law has waned.

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User Name 1 2 3 4 5 6 7 8 9 10

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% Difference 928 848 686 396 322 318 303 190 185 177

News

CITYA.M. 10 NOVEMBER 2010

CityA.M. reader wins £1,000 of prize art works

BEST OF THE BROKERS ANALYSIS l Spirax-Sarco Engineering 1,809.00

1,900 p

9 Nov

1,800 1,700 1,600 1,500 9 Aug

27 Aug

17 Sep

27 Oct

7 Oct

ANALYSIS l ASOS 1,500 p

▲

ARTS

9 Nov

1,100 900 9 Aug

27 Aug

17 Sep

7 Oct

27 Oct

13.80 9 Nov

13.8 13.4 13

9 Aug

27 Aug

16 Sep

RBS rates the engineering group a “hold” with an increased target price of £19.25. The broker has upgraded its full year 2010 earnings per share forecasts by four per cent following a healthy interim management statement, and sees sales growth of five per cent in 2011 with strong growth in Asia.

Singer Research rates the online retailer a “sell” but has raised its target price 38 per cent to £10. The broker believes the firm’s US launch is going well, and that moving into other markets is key to growth next year. A rise in the firm’s spending can be explained by stocking up for this expansion, it adds.

DEUTSCHE POST

ANALYSIS l Deutsche Post 14.2 €

SPIRAX SARCO

ASOS

1,294.00

1,300

CONGRATULATIONS to City A.M. reader Sarah Graves-Woods, a senior consultant at Oakleaf Partnership, who was on hand last night to select her winning art work up to the value of £1,000 from sponsor ING. ING Discerning Eye 2010 – an exhibition showing small works independently selected – opens to the public tomorrow at the Mall Galleries and runs until Sunday 21 November. The show is unusual in that it allows works by lesser-known artists to be hung alongside contributions from internationally recognised names. Among this year’s team of selectors was CityA.M.’s own feature writer Tim Barber.

6 Oct

26 Oct

S&P rates the company a “buy” with a 21month target price of €15. The broker believes the recent outperformance was due to a rebound in global trade, but maintains its 2010 earnings before tax and interest forecast at €2.16bn. S&P believes a successful refinancing could drive shares higher.

To appear in Best of the Brokers email your research to [email protected] From left: Sarah Graves-Woods, ING’s Gerlach Jacobs and City A.M.’s Tim Barber

Shoppers drawn to Covent Garden by new Apple store ▲

PROPERTY BY JEREMY HAZLEHURST COVENT Garden is reclaiming its historic role as London’s shopping hub after the opening of the new Apple store in August attracted tens of thousands more shoppers to the area. Capital & Counties (C&C), one of the area’s biggest landlords, said that the area has seen an 11 per cent increase in the number of shoppers since the store started trading. On its first day alone it attracted

over 20,000 visitors. A total of 46.4m shoppers went to Covent Garden in the year to September, about 40 per cent of them from overseas. Rents in the area have increased as a result of the increased footfall and kudos and Capital & Counties has carried out 32 rent reviews. There has recently been an influx of desirable brands to the area, including lettings to fashion brands Rugby Ralph Lauren, macaroon seller Laduree and outdoorwear firm Jack Wolfskin. Pop-up stores have also boosted the area’s credibility, with both

singer Lily Allen and American label Kate Spade opening outlets. C&C owns 46 properties in Covent Garden, and plans to buy more. Its chief executive officer said that the apple store had proved that Covent Garden can do “cool, current things”. The group also said that the borough of Hammersmith & Fulham has given it planning permission to expand the Olympia Exhibition Centre. Football club Chelsea has also recently held talks with C&C over buying the site. C&C is also on the short list to redevelop Lords Cricket Ground. CHELSEA: P34

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Chevron snaps up rival Atlas Energy ▲

ENERGY BY HARRY BANKS CHEVRON has agreed to buy US natural gas producer Atlas Energy for $3.2bn (£1.9bn), excluding debt, becoming the latest energy giant to break into into the lucrative Marcellus shale field. The field in Pennsylvania and surrounding states, one of the largest US natural gas finds in decades, has attracted a crush of industry heavyweights that are betting that the fuel will become a key global energy source in the coming decades. Chevron’s move into the

23

Marcellus follows acquisitions by Exxon Mobil and Royal Dutch Shell earlier this year, and joint venture deals there by Total, BP and Statoil. With the deal, which must be approved by Atlas shareholders, Chevron would gain access to 9 trillion cubic feet of natural gas in the Marcellus and other shale fields owned by Atlas in the eastern US. “(Chevron) doesn’t have much of a US presence in shale, and I think it’s an important place to be,” Phil Weiss, an analyst with Argus Research, said. “The price looks reasonable.” Chevron, the second-largest US oil and gas company, will pay

$43.34 per share, or a 37 per cent premium to Atlas’ closing price on Monday. That offer consists of $38.25 per share in cash for each Atlas share, plus a distribution of units in Atlas Pipeline Holdings worth about $5.09 per share. Chevron will also assume net debt from Atlas of about $1.1bn, for a total deal value of $4.3bn. . San Ramon, California-based Chevron recently bought into shale fields in Poland, Romania and Canada, and the move gives it the opportunity to exploit the dense rock formations that have changed the US energy outlook in recent years.

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24

Markets&Investment

LONDON’S TOP 250 Company Name

Closing Price Price Change 52wk High (p) (p) (p)

3i . . . . . . . . . . . . . . . . . . . . . . . .326.00 3i Infrastructure . . . . . . . . . . . . . 114.90 A.B. Foods . . . . . . . . . . . . . . . . 1107.00 Aberdeen Asset Man . . . . . . . . . .188.50 Admiral. . . . . . . . . . . . . . . . . . .1671.00 Aegis . . . . . . . . . . . . . . . . . . . . .131.40 Afren . . . . . . . . . . . . . . . . . . . . .129.20 African Barr Gold . . . . . . . . . . . .555.00 Aggreko . . . . . . . . . . . . . . . . . .1596.00 Alliance Trust . . . . . . . . . . . . . . .356.20 AMEC . . . . . . . . . . . . . . . . . . . . 1114.00 Amlin . . . . . . . . . . . . . . . . . . . . .396.00 Anglo American . . . . . . . . . . . .2959.00 Antofagasta . . . . . . . . . . . . . . .1461.00 Aquarius Platinum . . . . . . . . . . .397.00 ARM Holdings . . . . . . . . . . . . . . .356.00 Ashmore . . . . . . . . . . . . . . . . . . .381.50* Ashtead . . . . . . . . . . . . . . . . . . .135.00 Astrazeneca . . . . . . . . . . . . . . .3093.00 Atkins(Ws) . . . . . . . . . . . . . . . . .760.00 Autonomy Corp . . . . . . . . . . . .1437.00 Aveva . . . . . . . . . . . . . . . . . . . .1520.00 Aviva . . . . . . . . . . . . . . . . . . . . .423.10* Babcock International . . . . . . . . .596.00 BAE Systems . . . . . . . . . . . . . . .348.50* Balfour Beatty . . . . . . . . . . . . . . .284.50* Barclays . . . . . . . . . . . . . . . . . . .297.00 Barratt Development . . . . . . . . . . .85.35 BBA Aviation . . . . . . . . . . . . . . .207.50 Berkeley . . . . . . . . . . . . . . . . . . .847.50 BG . . . . . . . . . . . . . . . . . . . . . .1282.00 BHP Billiton . . . . . . . . . . . . . . .2469.00 BlackRock Mining . . . . . . . . . . . .737.50 BlueBay . . . . . . . . . . . . . . . . . . .481.40* Bluecrest Allblue GBP . . . . . . . . .172.10 Booker . . . . . . . . . . . . . . . . . . . . .55.50* BP . . . . . . . . . . . . . . . . . . . . . . .454.45 Brit Insurance . . . . . . . . . . . . . .1044.00 British Airways . . . . . . . . . . . . . .278.30 British Amer. Tob . . . . . . . . . . .2433.50 British Empire Tst . . . . . . . . . . . .493.10 British Land . . . . . . . . . . . . . . . . 511.00* Britvic. . . . . . . . . . . . . . . . . . . . .477.70 Brown(N.) . . . . . . . . . . . . . . . . . .291.50 BSkyB . . . . . . . . . . . . . . . . . . . .728.00* BT . . . . . . . . . . . . . . . . . . . . . . .159.20 Bunzl . . . . . . . . . . . . . . . . . . . . .733.50 Burberry . . . . . . . . . . . . . . . . . .1027.00 Cable & Wire Comms . . . . . . . . . .51.95 Cable & Wire Wwide . . . . . . . . . . .71.00 Cairn Energy. . . . . . . . . . . . . . . .386.30 Caledonia Invs . . . . . . . . . . . . .1819.00 Capita . . . . . . . . . . . . . . . . . . . . .740.50 Capital & Counties . . . . . . . . . . .150.00 Capital Shopping Centres . . . . . .390.50 Carillion . . . . . . . . . . . . . . . . . . .354.80* Carnival . . . . . . . . . . . . . . . . . .2750.00 Catlin . . . . . . . . . . . . . . . . . . . . .359.90 Centamin Egypt . . . . . . . . . . . . .197.10 Centrica . . . . . . . . . . . . . . . . . . .334.30* Charter Intl . . . . . . . . . . . . . . . . .727.00 Chemring . . . . . . . . . . . . . . . . .2862.00 Close Bros . . . . . . . . . . . . . . . . .821.50* Cobham . . . . . . . . . . . . . . . . . . .209.20* COLT Group . . . . . . . . . . . . . . . .121.50

+9.00 +1.20 +34.00 +1.00 –9.00 +3.40 +5.50 +16.50 –13.00 –0.60 –20.00 –4.10 +3.50 +33.00 +3.80 +5.00 +1.70 +8.10 +16.00 –2.50 +8.00 –7.00 +4.30 +24.50 +6.50 +4.80 +11.35 +1.85 –0.10 +12.50 +3.50 +38.50 +18.00 — –0.40 — +10.45 +1.00 –1.00 –14.50 –1.90 –2.00 +1.40 –0.20 — +0.60 +2.50 –8.00 +1.45 +0.60 +3.30 +5.00 +8.00 –2.90 +2.10 +1.30 –1.00 –5.60 +12.10 +0.50 +17.00 –8.00 +1.50 –0.20 —

327.00 115.00 1113.00 191.60 1721.00 137.30 135.90 685.00 1698.00 357.50 1144.00 437.60 3038.50 1470.00 490.00 419.50 400.50 135.00 3389.50 801.00 2012.00 1572.00 428.70 660.50 389.90 304.80 394.25 149.90 220.00 917.50 1302.50 2489.00 737.50 495.00 174.00 56.00 658.20 1052.00 290.00 2490.50 495.20 525.00 518.00 308.00 737.00 165.50 784.50 1065.00 150.00 94.80 497.60 1833.00 829.50 159.00 523.50 361.90 2937.00 394.60 202.80 347.00 855.50 3711.00 834.00 278.60 144.20

CITYA.M. 10 NOVEMBER 2010

Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk 52wk low (p)

Company Name

246.90 97.00 790.00 111.00 1003.00 103.10 77.00 520.50 727.50 292.80 728.00 357.30 2210.00 755.50 211.50 150.00 215.00 61.25 2680.50 539.00 1319.00 893.00 290.20 489.00 288.10 228.60 253.40 75.50 145.90 735.00 966.90 1678.00 490.00 251.00 151.00 37.50 296.00 709.00 180.20 1832.00 338.50 416.00 351.00 204.80 521.00 108.40 614.00 555.50 46.51 60.05 306.80 1496.00 693.00 99.60 300.10 272.00 1963.00 303.20 103.50 240.20 563.50 2551.00 657.00 199.20 107.70

Compass . . . . . . . . . . . . . . . . . .542.50 Cookson . . . . . . . . . . . . . . . . . . .576.50 Croda Intl . . . . . . . . . . . . . . . . .1482.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .567.50 Davis Service . . . . . . . . . . . . . . .413.00 Debenhams . . . . . . . . . . . . . . . . .74.90 Derwent London . . . . . . . . . . . .1505.00 Dexion Absolute . . . . . . . . . . . . .140.00 Diageo . . . . . . . . . . . . . . . . . . . 1155.00 Dixons Retail . . . . . . . . . . . . . . . .26.49 Domino’s Pizza . . . . . . . . . . . . . .519.50 Drax . . . . . . . . . . . . . . . . . . . . . .377.80 Dunelm . . . . . . . . . . . . . . . . . . . .493.10 Easyjet . . . . . . . . . . . . . . . . . . . .477.30 Edinburgh Inv Tst . . . . . . . . . . . .461.90 Electrocomponents . . . . . . . . . . .253.10 EnQuest . . . . . . . . . . . . . . . . . . .134.20 Essar Energy . . . . . . . . . . . . . . .542.00 Eurasian Nat Res . . . . . . . . . . .1009.00 Euromoney Inst Inv . . . . . . . . . . .655.00 Experian . . . . . . . . . . . . . . . . . . .735.50 Ferrexpo . . . . . . . . . . . . . . . . . . .371.40 FirstGroup . . . . . . . . . . . . . . . . .403.30 Foreign & Col Inv Tst. . . . . . . . . .299.70 Fresnillo . . . . . . . . . . . . . . . . . .1448.00 G4S . . . . . . . . . . . . . . . . . . . . . .253.60 Genesis Emerging Mkts Fd . . . . .540.00 GKN . . . . . . . . . . . . . . . . . . . . . .179.50 GlaxoSmithKline . . . . . . . . . . . .1235.50* Great Portland Estates . . . . . . . .347.40 Greene King . . . . . . . . . . . . . . . .434.40 Halfords . . . . . . . . . . . . . . . . . . .425.60 Halma . . . . . . . . . . . . . . . . . . . . .334.70 Hammerson . . . . . . . . . . . . . . . .429.70 Hargreaves Lansdown . . . . . . . .483.50 Hays . . . . . . . . . . . . . . . . . . . . . . 115.80* Henderson . . . . . . . . . . . . . . . . .138.10 Heritage Oil. . . . . . . . . . . . . . . . .352.40 Hikma Pharma . . . . . . . . . . . . . .793.00 Hiscox . . . . . . . . . . . . . . . . . . . .357.00 Hochschild Mining . . . . . . . . . . .569.50 Home Retail . . . . . . . . . . . . . . . .212.60 Homeserve . . . . . . . . . . . . . . . . .431.50 HSBC Hldgs . . . . . . . . . . . . . . . .694.40 Hunting . . . . . . . . . . . . . . . . . . .658.50* ICAP . . . . . . . . . . . . . . . . . . . . . .488.40 IG . . . . . . . . . . . . . . . . . . . . . . . .528.50 Imagination Tech Gp . . . . . . . . . .411.90 IMI . . . . . . . . . . . . . . . . . . . . . . .848.50 Imperial Tobacco. . . . . . . . . . . .2030.00 Inchcape. . . . . . . . . . . . . . . . . . .347.70 Informa . . . . . . . . . . . . . . . . . . . .442.60 Inmarsat . . . . . . . . . . . . . . . . . . .705.00 Intercontl Hotels . . . . . . . . . . . . 1140.00 Intermediate Capital . . . . . . . . . .350.90 Intertek . . . . . . . . . . . . . . . . . . .1945.00* Intl Personal Fin . . . . . . . . . . . . .329.00 Intl Power . . . . . . . . . . . . . . . . . .434.20 Invensys . . . . . . . . . . . . . . . . . . .322.20 Investec . . . . . . . . . . . . . . . . . . .521.00 ITV . . . . . . . . . . . . . . . . . . . . . . . .71.45 Jardine Lloyd Thompson. . . . . . .590.50 Johnson Matthey . . . . . . . . . . .1970.00 JPMorgan Emerg Mkts . . . . . . . .618.00 Jupiter Fnd Mgmt . . . . . . . . . . . .300.00

Closing Price Price Change 52wk High (p) (p) (p)

+5.50 +15.50 –18.00 +2.00 –3.60 +0.75 –20.00 +1.90 –3.00 –0.35 +1.00 +3.60 –11.90 +7.60 +0.90 –3.40 +0.80 –5.00 +23.00 +5.00 –1.50 +6.50 –3.30 +1.60 +38.00 –5.30 — +3.90 –18.50 –1.10 –1.60 –1.40 +2.00 +2.80 –0.90 –0.20 +1.90 +2.40 +2.50 +1.50 +24.00 +2.30 –3.50 +5.30 +11.50 +6.80 –5.00 +6.90 +9.50 –24.00 +5.80 +7.40 +10.00 –62.00 +10.90 +17.00 –3.10 +4.80 +1.90 +13.00 — +4.50 +8.00 +4.00 +0.20

574.50 616.00 1540.00 573.50 442.30 90.00 1633.00 148.00 1240.00 39.75 520.00 467.60 515.00 499.90 466.80 261.50 138.50 566.50 1276.00 660.00 763.50 396.20 428.40 299.70 1455.00 285.70 542.50 188.40 1347.00 368.60 484.00 562.50 345.50 460.30 492.00 125.30 157.80 585.00 813.00 371.60 571.50 326.30 502.00 766.80 661.00 493.70 560.00 445.00 855.50 2159.00 358.00 450.50 831.00 1244.00 352.80 1953.00 340.90 438.10 350.30 565.00 73.00 604.50 1999.00 618.00 310.00

52wk low (p)

Company Name

399.30 364.80 735.00 401.70 356.00 51.95 1183.00 131.20 988.00 23.07 278.20 321.50 319.40 339.80 345.50 155.00 87.35 358.50 801.00 377.90 559.00 164.20 331.20 250.00 647.00 238.70 383.00 100.40 1088.00 259.00 372.50 370.10 221.80 332.20 259.40 82.50 112.10 295.90 453.10 299.60 220.00 201.70 422.00 595.20 429.10 291.70 312.60 200.00 483.10 1728.00 235.00 263.30 598.50 803.00 233.50 1136.00 181.40 256.30 224.90 411.50 46.77 420.70 1435.00 448.00 180.00

Kazakhmys . . . . . . . . . . . . . . . .1553.00 +46.00 Kesa Electricals . . . . . . . . . . . . .160.50 +3.00 Kingfisher . . . . . . . . . . . . . . . . . .237.40* –1.90 Ladbrokes . . . . . . . . . . . . . . . . .135.00* –1.10 Lamprell . . . . . . . . . . . . . . . . . . .390.00 +2.00 Lancashire Hldgs . . . . . . . . . . . .609.50 +23.50 Land Securities . . . . . . . . . . . . . .696.50 +3.50 Legal & General . . . . . . . . . . . . .102.50 –0.70 Lloyds Banking Gp . . . . . . . . . . . .68.48 –0.15 Logica . . . . . . . . . . . . . . . . . . . .130.50 +0.60 London Stk Exchange . . . . . . . . .750.50 +2.00 Lonmin . . . . . . . . . . . . . . . . . . .1894.00 +25.00 Man . . . . . . . . . . . . . . . . . . . . . .299.70 +6.60 Marks & Spencer. . . . . . . . . . . . .406.00 –7.20 Meggitt . . . . . . . . . . . . . . . . . . . .330.10 +1.20 Melrose . . . . . . . . . . . . . . . . . . .303.40 +6.00 Mercantile IT . . . . . . . . . . . . . . .1028.00 +13.00 Michael Page Intl. . . . . . . . . . . . .503.50 +2.00 Micro Focus . . . . . . . . . . . . . . . .364.00 –1.00 Millen & Copthorne . . . . . . . . . . .554.50 –5.00 Misys . . . . . . . . . . . . . . . . . . . . .298.20 +1.20 Mitchells & Butlers . . . . . . . . . . .348.50 +0.70 MITIE . . . . . . . . . . . . . . . . . . . . .204.00 +2.70 Mondi . . . . . . . . . . . . . . . . . . . . .525.50 +15.50 Monks Inv Tst . . . . . . . . . . . . . . .349.20 +2.10 Morrison Wm . . . . . . . . . . . . . . .272.50* –2.60 Murray Intl Tst . . . . . . . . . . . . . . .923.50* –4.50 National Express. . . . . . . . . . . . .254.00 –2.60 National Grid . . . . . . . . . . . . . . .575.50 –8.50 Next . . . . . . . . . . . . . . . . . . . . .2140.00 +6.00 Northumbrian Water . . . . . . . . . .351.90 –0.10 Ocado Grp . . . . . . . . . . . . . . . . .141.00 +0.90 Old Mutual . . . . . . . . . . . . . . . . .132.40* +0.10 Partygaming . . . . . . . . . . . . . . . .227.50 –3.30 Pearson . . . . . . . . . . . . . . . . . . .972.50 — Pennon . . . . . . . . . . . . . . . . . . . .631.00 +2.00 Persimmon . . . . . . . . . . . . . . . . .372.00* +8.80 Petrofac . . . . . . . . . . . . . . . . . .1540.00 +17.00 Petropavlovsk . . . . . . . . . . . . . .1027.00 +79.00 Phoenix Group . . . . . . . . . . . . . .675.00 –6.00 Premier Farnell . . . . . . . . . . . . . .283.50 –5.50 Premier Oil . . . . . . . . . . . . . . . .1767.00 +16.00 Provident Financial . . . . . . . . . . .734.00* +3.00 Prudential . . . . . . . . . . . . . . . . . .630.50 –12.00 PZ Cussons . . . . . . . . . . . . . . . .388.50 –5.50 Randgold Resources. . . . . . . . .6265.00 +275.00 Reckitt Benckiser . . . . . . . . . . .3559.00 –20.00 Reed Elsevier . . . . . . . . . . . . . . .538.00 +2.00 Regus . . . . . . . . . . . . . . . . . . . . . .83.10 –1.15 Renishaw . . . . . . . . . . . . . . . . . 1194.00 –9.00 Rentokil Initial . . . . . . . . . . . . . . . .91.35 –3.10 Resolution . . . . . . . . . . . . . . . . .249.00 +1.20 Rexam . . . . . . . . . . . . . . . . . . . .317.50 –0.60 Rightmove . . . . . . . . . . . . . . . . .785.00* –9.50 Rio Tinto . . . . . . . . . . . . . . . . . .4454.00 +123.00 RIT Capital Partners . . . . . . . . .1152.00 +11.00 Rolls Royce . . . . . . . . . . . . . . . .606.50* –0.50 Rotork . . . . . . . . . . . . . . . . . . .1768.00 –6.00 Royal Bank Of Scot . . . . . . . . . . . .43.75 +0.11 Royal Dutch Shell A . . . . . . . . .2063.00* +4.50 Royal Dutch Shell B . . . . . . . . .2022.50* –3.50 RSA Insurance . . . . . . . . . . . . . .130.20* –1.30 SABMiller . . . . . . . . . . . . . . . . .2023.00 –1.00 Sage . . . . . . . . . . . . . . . . . . . . . .270.80 +1.00 Sainsbury(J) . . . . . . . . . . . . . . . .377.20 –4.00

Closing Price Price Change 52wk High (p) (p) (p)

1634.00 172.40 255.00 164.60 393.30 615.50 743.50 107.50 79.15 149.10 938.50 2198.00 373.60 431.40 336.70 304.90 1029.00 507.50 550.00 585.00 300.00 351.60 248.60 562.00 349.70 307.10 938.50 261.30 607.65 2361.00 364.00 169.00 146.90 339.70 1069.00 644.00 520.00 1545.00 1370.00 775.00 290.00 1780.00 983.50 665.00 406.80 6755.00 3667.00 566.00 125.50 1250.00 140.20 280.50 348.80 830.00 4477.50 1215.00 661.50 1906.00 58.95 2106.50 2071.00 137.40 2103.00 286.80 397.00

52wk low (p)

Company Name

955.50 98.45 196.50 114.60 157.30 416.70 543.00 69.05 45.30 100.80 540.50 1344.00 199.60 321.90 234.50 160.00 822.50 326.00 272.20 329.20 196.60 242.50 187.60 304.70 265.00 255.00 720.00 155.86 474.80 1816.00 231.70 120.90 95.30 205.80 812.00 444.40 335.90 900.00 834.00 550.50 145.90 984.00 728.00 475.70 231.70 4126.00 2990.00 454.60 64.05 479.00 89.70 220.10 271.40 456.90 2751.00 940.00 460.90 1101.00 28.25 1621.00 1550.00 114.10 1638.00 208.20 307.60

Schroders . . . . . . . . . . . . . . . . .1667.00 Schroders N/V. . . . . . . . . . . . . .1307.00 Scot. & Sthrn Energy. . . . . . . . . 1118.00 Scottish Mortgage. . . . . . . . . . . .683.00 SEGRO . . . . . . . . . . . . . . . . . . . .303.00 Serco . . . . . . . . . . . . . . . . . . . . .575.00 Severn Trent . . . . . . . . . . . . . . .1429.00 Shaftesbury . . . . . . . . . . . . . . . .438.00 Shire. . . . . . . . . . . . . . . . . . . . .1486.00 SIG . . . . . . . . . . . . . . . . . . . . . . . 114.40 Smith & Nephew . . . . . . . . . . . . .594.00 Smith(Ds) . . . . . . . . . . . . . . . . . .181.10 Smiths . . . . . . . . . . . . . . . . . . .1202.00* SOCO Intl . . . . . . . . . . . . . . . . . .323.90 Spectris . . . . . . . . . . . . . . . . . . 1136.00* Spirax-Sarco Eng . . . . . . . . . . .1809.00* Spirent Comms . . . . . . . . . . . . . .156.00 Sports Direct Intl . . . . . . . . . . . . .128.50 SSL Intl . . . . . . . . . . . . . . . . . . . 1163.00 St James’s Place . . . . . . . . . . . . .262.40 Stagecoach. . . . . . . . . . . . . . . . .217.20 Standard Chartered . . . . . . . . . .1913.50 Standard Life . . . . . . . . . . . . . . .232.70* SuperGrp . . . . . . . . . . . . . . . . . 1211.00 SVG Capital . . . . . . . . . . . . . . . .224.30 TalkTalk . . . . . . . . . . . . . . . . . . .139.60 Talvivaara Mining . . . . . . . . . . . .550.00 Tate & Lyle . . . . . . . . . . . . . . . . .529.50 Taylor Wimpey . . . . . . . . . . . . . . .25.79 Telecity . . . . . . . . . . . . . . . . . . . .452.00 Templeton Emrg Mkts . . . . . . . . .685.00 Tesco . . . . . . . . . . . . . . . . . . . . .413.30* Thomas Cook . . . . . . . . . . . . . . .184.50 Travis Perkins . . . . . . . . . . . . . . .890.00* TUI Travel . . . . . . . . . . . . . . . . . .206.30 Tullett Prebon . . . . . . . . . . . . . . .401.00* Tullow Oil . . . . . . . . . . . . . . . . .1231.00 UK Commercial Prop. . . . . . . . . . .78.05 Ultra Electronics . . . . . . . . . . . .1765.00 Unilever . . . . . . . . . . . . . . . . . .1897.00 United Utilities . . . . . . . . . . . . . .620.00 Utd Business Media . . . . . . . . . .682.50 Vedanta Resources . . . . . . . . . .2411.00 Victrex . . . . . . . . . . . . . . . . . . .1289.00 Vodafone . . . . . . . . . . . . . . . . . .174.00 Weir . . . . . . . . . . . . . . . . . . . . .1709.00 Wellstream Hldgs . . . . . . . . . . . .754.50 WH Smith . . . . . . . . . . . . . . . . . .468.30 Whitbread . . . . . . . . . . . . . . . . .1797.00* William Hill . . . . . . . . . . . . . . . . .164.00* Witan Inv Tst . . . . . . . . . . . . . . . .489.40 Wolseley . . . . . . . . . . . . . . . . . .1817.00 Wood Group (John). . . . . . . . . . .474.10 WPP . . . . . . . . . . . . . . . . . . . . . .749.50* Xstrata . . . . . . . . . . . . . . . . . . .1407.50

Closing Price Price Change 52wk High (p) (p) (p)

+87.00 +55.00 –4.00 — +0.50 +15.00 +10.00 –5.20 –11.00 +2.70 +7.00 +0.80 –21.00 +7.90 +14.00 +4.00 +1.30 –2.10 — –0.70 –4.80 –20.50 +0.30 –25.00 +1.30 +6.30 –6.00 –0.50 +0.68 –11.80 +10.50 –3.10 +1.30 +9.50 –2.00 +4.00 +5.00 –2.05 –6.00 –4.00 +2.00 +6.00 +61.00 +23.00 –1.00 +16.00 +4.50 –8.10 +8.00 –1.70 +1.80 +25.00 +7.80 +1.00 +42.50

1670.00 1330.00 1206.00 684.00 389.30 656.50 1450.00 465.00 1532.00 142.10 700.50 185.90 1297.00 510.00 1146.00 1888.00 158.30 154.30 1190.00 298.00 226.10 1975.00 238.00 1312.00 225.00 153.80 597.00 534.50 46.34 546.00 688.00 454.90 277.20 915.00 313.90 427.00 1375.00 84.90 1903.00 2024.00 632.00 692.00 2967.00 1355.00 179.90 1720.00 810.00 551.00 1807.00 217.80 492.00 1837.00 476.20 758.50 1417.00

52wk low (p)

1096.00 912.50 1006.00 475.00 244.00 491.20 944.00 348.00 1108.00 89.55 532.00 103.00 930.00 287.40 653.00 1060.00 90.45 89.85 633.00 203.40 138.40 1316.50 170.00 499.00 118.30 106.60 341.40 388.00 22.12 323.50 470.00 368.40 167.50 647.50 189.20 261.20 979.50 71.00 1198.00 1662.00 444.30 408.30 1795.00 753.00 126.50 660.00 429.70 392.20 1225.00 158.00 397.30 1155.00 279.60 561.00 832.50

LONDON TOP 250 BY MARKET CAPITALISATION * Ex-Dividend † Suspended

www.interactivedata.com

FTSE lifted by healthy earnings

Stocks fall as metals lose shine

THELONDON REPORT

THENEW YORK REPORT

B

RITAIN’S leading shares closed higher yesterday, boosted by results from Barclays, Schroders and Associated British Foods. The FTSE 100 closed up 25.23 points, or 0.4 per cent, at 5,875.19, after closing down 0.4 per cent on Monday. The index is up 8.5 per cent this year and has jumped around 23 per cent since hitting a year’s low on July 1, and some analysts see the FTSE attacking the 6,000 level near-term. “Solid (corporate results) updates ... have helped cheer investors and shake off the indifference that dogged yesterday’s session,” Anthony Grech, head of research at IG Index, said. “Traders are eyeing up the 6000 level as the next target for the FTSE, and at the rate that the markets have bounced back in recent days, they may not have to wait too long.” Barclays added 4 per cent after a

W

sharp improvement in its bad debts helped lift the bank’s underlying third-quarter profit and boosted the sector, with the UK banking index up 0.8 per cent. Investment manager Schroders rose 5.5 per cent after it beat thirdquarter market expectations on the back of strong sales to overseas institutional clients. Associated British Foods, owner of low-cost clothing retailer Primark, gained 3.2 per cent as it beat forecasts with a 25 per cent rise in full-year earnings. However, Marks & Spencer dropped

1.7 per cent on plans by the new head of the British clothing, food and homewares group to ramp up investment in its core UK, online and overseas businesses. Mobile phones operator Vodafone fell 0.6 per cent, having earlier hit highs not seen since February 2008, after it raised its profit outlook and agreed to sell its interests in Japanese carrier SoftBank for £3.1bn. Intercontinental Hotels slipped 5.2 per cent, the heaviest FTSE 100 faller, with investors booking gains after recent strength even though it reported a 5 per cent increase in third-quar-

ter revenue. Miners provided strong support to the index as gold hit a record high.

ANALYSIS l FTSE

5,875.19

9 Nov

6,000 5,800 5,600 5,400 5,200 5,000 9 Aug

27 sep

17 Sep

7 Oct

27 Oct

ALLStreet fell for a second day yesterday as selling accelerated into the close, led by sharp losses in bank and metal stocks. Metals stocks gave up earlier gains after the price of gold and silver fell sharply late in the day and the dollar strengthened. Financial stocks took a hit as interest rates rose late in the day. An index of gold and silver miners' shares fell 2.6 per cent after hitting an all-time high earlier in the day. Shares of the iShares Silver Trust, which tracks the price of silver, fell 3.6 per cent on massive volume as more than 150m shares changed hands. The Dow Jones industrial average slid 60.09 points, or 0.53 per cent, to 11,346.75. The Standard & Poor’s 500 Index dropped 9.85 points, or 0.81 per cent, to 1,213.40. The Nasdaq Composite Index lost 17.07 points, or 0.66 per cent, to close at 2,562.98.

Investment | Foreign Exchange

CITYA.M. 10 NOVEMBER 2010

AUSSIE NOW VULNERABLE TO A SELL-OFF BORIS SCHLOSSBERG DIRECTOR OF CURRENCY RESEARCH, GFT

I

N CONTRAST to last week’s wild gyrations in the currency market, this week promises to be considerably more sedate. After the Fed announced $600bn in additional QE and the better than expected US jobs report, the FX market turned very bullish with traders ploughing into high-yield currencies like the Australian dollar. The Aussie set fresh post-float highs as it soared above parity. The combination of ultra-easy monetary policy from the Fed along with surprisingly robust data from the G10 economies has created a perfect environment for a rally in speculative assets. This week, however, the risk trade will be seriously tested by Australian jobs data and key statistics from China. The Australian employment data, due tonight, may surprise to the upside given the strength in the recent services purchasing managers’ index. The market anticipates 20,000 new jobs and should the labour report prove stronger, then the Aussie rally could get another lift and challenge the US$1.0200 level. However, the Aussie rally may be short lived as attention turns to Chinese industrial production and retail sales, which are due a few hours after the Australian data. For the risk trade to continue unabated, Chinese economic performance must maintain its double digit rate of growth. If Chinese data misses estimates, the Aussie is vulnerable to profit taking. The pair is now priced for perfection and any hint of a slowdown in Asia will spook late buyers into bailing out of it. One interesting way to play this dynamic would be through the Aussie dollar-Canadian dollar pair based on the idea that North American growth may start to pick up just as growth in Asia begins to plateau. The Aussie has been so strong that it has risen to parity against the Loonie as well. If the Chinese news disappoints, Aussie-Loonie parity may not hold. Boris Schlossberg and Kathy Lien are directors of currency research at GFT. Read commentary at www.GFTUK.com/commentary or e-mail [email protected].

The markets think that the G20 is a talking shop The Seoul meeting should disappoint, says Daniel Knowles

Y

OU HAVE to feel slightly sorry for modern diplomats. Whereas in 1944, Stalin and Churchill could carve up Europe on the back of an envelope, now, the leaders of the world’s twenty largest economies cannot even decide on the simple matter of financial reform. The G20 meeting, due to begin on Thursday, is looking like a non-starter. Almost all commentators accept that there is a problem, but no one can agree on how to solve it. China, Japan and Germany all run immense trade surpluses, pushing down interest rates and destabilising the financial system. The burden of adjustment falls on debtor nations, like the USA, who so far, have not been willing to deflate. Thanks to that unwillingness, this meeting is looking like little more than an expensive South-Korean jolly. It didn’t always look so bad. In October, US treasury secretary Timothy Geithner vowed to “work hard to preserve confidence in the strong dollar”, a statement that appeared to be an olive branch for China following a series of attacks on the Chinese renminbi. Many thought that some sort of agreement might be possible. But with the announcement that the Federal Reserve will print $600bn of new money – more than anyone expected – that idea was blown out of the water. China and Germany have reacted furiously. The German finance minister, Wolfgang Schäuble, described the American economy as in “deep crisis”. On America’s part, many commentators have demanded a hard line against China over its alleged currency manipulation.

SCEPTICAL TRADERS All of which has led currency traders to be exceptionally sceptical about the likelihood of this week’s meeting producing any solid achievements. Neil Mellor, a currency strategist at Bank of New York Mellon, says that the “G20 is set to be a disappointment”, with all currencies, except possibly the yen, looking “ugly”. Mellor suggests that the important ques-

The G20 is getting more divided Picture:GETTY

tion is which currency is “relatively uglier” – he suggests that it might be the euro. According to Mellor, the dollar has been driven down over the last year by diversification strategies, as developing economies have sought to reduce the proportion of their foreign exchange reserves held in US dollars. That diversification has arguably gone as far as it can, however, and with murmurs of a renewed sovereign debt crisis emerging in Europe, it might well be time for the euro to lose its recent gains. Nick Beecroft, senior foreign exchange consultant at Saxo Bank, is not convinced that the G20 will achieve much either. He points out that Timothy Geithner’s plan for a cap on current account surpluses “has been self-emasculated” by a lack of hard targets. China, for its part, seems more keen to avoid criticism than to

AMPLIFY YOUR DEPOSIT

make any real concessions. For foreign exchange traders then, the G20 is looking rather like a non-event. Traders shouldn’t use this lack of activity as an excuse to take a nap, however. The problem of global imbalances is not going to go away, and eventually it will need to be solved. And sometimes big changes happen when no one is watching.

ANALYSIS l Current account balance 12 % of GDP

F’cast

6 China 0 United States 6 12

Source: Economist Intelligence Unit. 2000

2005

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25

2011

26

Investment | Foreign Exchange

CITYA.M. 10 NOVEMBER 2010

THE TIPSTER THE DOLLAR JUST KEEPS ON FALLING

The spotlight will shine on periphery woes

W

Sterling could gain from attention turning to the Eurozone’s troubles, says Donata Huggins

I

RELAND is in trouble. The markets think it’s more likely to default on its debt than Argentina. It’s not alone though. Portugal is having a rough time too. Yesterday Portuguese and Irish 10-year bond yields hit 7.94 and 6.67 per cent respectively – record highs since the launch of the euro. The euro duly fell against both the dollar and the pound. Now that last week’s US quantitative easing (QE) announcement has dissipated the uncertainty surrounding the value of the dollar, attention has turned to the Eurozone’s troubles. This could potentially cause traders to flee both the dollar and the euro and seek sanctuary in the pound. While sterling is likely to stumble ahead of today’s Bank of England’s quarterly Inflation Report, the British economy is generally looking good. Two weeks ago GDP data showed that the economy grew twice as fast as the market expected and the rating agency Standard & Poor’s said we no longer faced risk of a downgrade. So lined up against the dollar and the euro, sterling is still the least ugly of a fairly unattractive bunch. And the signs are beginning to show: RBS’s positioning report noted a positive change for sterling this week. The forex market is behaving like a serial monogamist at the moment – focusing all its attention on just one issue at a time. Up until now, traders had been transfixed by

the US QE situation. But now that the suspense has lifted it looks as if the spotlight has refocused on to the Eurozone’s troubles in the periphery, which previously traders had been all too happy to ignore. Traders have excused their negligence of this by pointing to strong German economic data. However this comfort could soon be snatched away, especially if Monday’s poorer-than-expected German industrial production figures for September are a sign of things to come. Economists had forecast a 0.4 per cent gain, but output fell 0.8 per cent from August. Duncan Higgins of Caxton FX says this is already taking place: “We may be beginning to see the start of a shift in the market’s psychology… the euro has already dropped back below the $1.40 level and there is scope for the price to drop further if the economic woes of the Eurozone continue to hit the headlines.” We can be sure it will hit the headlines. The European Central Bank (ECB) was forced to intervene in the government bond markets last week for the first time in almost a month. Financial markets are beginning to panic that the escalating Eurozone problems are moving into a nastier phase. Ankita Dudani of RBS says: “When the ECB is talking exit strategies and starting to unwind its unconventional monetary policy, the focus will shift away from the German economy to the state of

the other 16 countries.” The pound could This shifting spotlight will move money into a be centre stage new market. With the US committed to QE, which will devalue the dollar, there are strong chances that the flight from the euro and dollar Picture: ALAMY could wind up in sterling.

ANALYSIS l The performance of the pound against the euro over the last five days 1.16 £ 1.155 1.15 1.145 1.14 3 Nov

4 Nov

5 Nov

8 Nov

9 Nov

ITH currency wars high on the agenda at the G20 meeting this week, Barack Obama may face attacks over the Federal Reserve’s quantitative easing policy. The dollar-yen pairing could be particularly worth watching, as Japan explicitly intervened in the foreign exchange market only a few months ago. Trading continues at around the ¥80–¥81 area, but spread betters are eying a break through the ¥80 level. Spreadex offers a spot spread of ¥80.60–¥80.63 on dollar-yen. Since breaching parity with the greenback, the Australian dollar has just kept on fighting its way up and it seems to show no sign of relenting. The next big hurdle for the Aussie is $1.0205. Capital Spreads offers a spread of $1.0164–$1.0166. Renewed worries about the solvency of Eurozone economies have weighed on the euro in recent days. Bond yields have shot up in Ireland and Portugal. The euro has fallen across the board but especially against sterling. With the Bank of England’s inflation report due out on Wednesday, it will be interesting to see whether or not the pound can sustain its recent gains against the euro. CMC Markets offers a spread of £0.86315£0.86333. Indeed, the pound has been doing well against the yen recently too, or at least better than the dollar. After lows of ¥127, sterling rallied to ¥132 and is in a solid uptrend channel. Yesterday’s pullback to the 30 day moving average and bottom of the uptrend channel at around ¥130 was a good opportunity to get long and hope for ¥132-¥135. Spread Co offers a spread on sterling-yen of ¥130.21–¥130.29. And if it does well against the yen, sterling should also do well against the dollar. Spread betters have been anticipating further gains in sterling-dollar and many are hoping for a return to the nine-month high of $1.6300. ShortsandLongs.com offers a spot spread on sterling-dollar of $1.6159–$1.6162. Daniel Knowles

FOREX ANALYST PICKS FOREX STRATEGIST

FOREX STRATEGIST

FOREX STRATEGIST

ILYA SPIVAK

JOHN KICKLIGHTER

JOEL KRUGER

My pick: Short euro-US dollar near $1.41 Expertise: Global macro Average time frame of trades: 1 week-6 months Euro-US dollar has fallen sharply to start the week and a deeper downward correction looks likely given that the rally can be retraced back to August when the Fed first introduced the idea of QE2. Having managed the markets’ expectations, the FOMC delivered roughly what had been priced in, removing a great deal of uncertainty and opening the door for profit-taking. I look for a quick bounce to 1.41 from the rising channel support established in late October to go short.

My pick: Short dollar-Loonie below Ca$0.9975, long dollar-yen above ¥82 Expertise: Fundamental and technical analysis with risk management Average time frame of trades: 1 day-1 week

My pick: Buy sterling-Kiwi at NZ$2.0500 Expertise: Technical analysis Average time frame of trades: 1 month-12months

My long dollar-Swiss franc trade above SFr1.00 aspirations are too distant to be concerned with at the moment. For something that may happen within the next week, I’m looking for momentum on a dollar-Canadian dollar break below Ca$0.9975 (stop and first target at 100 basis points) or dollar-yen above ¥82 (stop and first target at 125 basis points). The caveat is that I need a confirmation risk aversion or appetite move from the S&P 500 to corroborate the dollar’s appeal.

The market recently dropped back to retest and slightly exceed the record lows from late May 2010 but inability to establish any fresh downside momentum below the previous low suggests basing. We look for a longer-term base to carve out ahead of psychological barriers at NZ$2.0000. The daily chart shows the carving of a potential double bottom, and a break above the 2.2260 neckline will confirm and accelerate. Target NZ$2.5000 and place a stop at NZ$1.9500.

28

Investment | Fund Management

CITYA.M. 10 NOVEMBER 2010

Indian equities are too expensive to be attractive in the short-term Those looking at the long-run should wait for valuations to fall, writes Jessica Mead

Darker clouds are forming over Mumbai Picture: GETTY

P

RESIDENT Barack Obama’s visit to India this week affirmed its status as a rising global power and as a country that is set to assume greater importance on the world stage. Its achievements have long been overshadowed by its northern neighbour China but India has quietly marched along the path to development. It is certainly easy to make the case for investment in India. Its growth rates are still stunning relative to the developed world; it expanded 8.8 per cent in the second quarter in real terms. And although it will probably struggle to maintain this pace, this is perhaps a (healthy) sign of a maturing economy. Moreover, infrastructure investment is still desperately required to ease capacity constraints. India is also poised to benefit significantly from its demographic dividend. Around a quarter of the world’s young people are in India and the country’s age dependency ratio forecast to decline to 48.1 per cent by 2025 from 67.7 per cent in 1991, according to research from Barclays Capital. These are certainly familiar arguments used to support the long-term investment case but market participants requiring good performance in the shortterm as well as in the long-term should be more cautious about investing in Indian equities at their current levels.

INDIA TO UNDERPERFORM Kevin Grice, senior international economist at Capital Economics, believes that India will underperform some of the other markets in Asia. “The surge in Mumbai stocks has lifted valuations to the top end of the 10-20 range in which markets usually trade over the long run.” The current trailing price-to-earnings (p/e) ratio is at 19.9 times and for 2010 it is now 20 times. This compares to an average valuation of 15 times for emerging markets and an average of 18 times dur-

ing the last up-cycle in India. “The good macroeconomic outlook is just about priced in now and I expect that the data flow is more likely to disappoint than surprise,” he adds. Consequently, he thinks that “from a shorter perspective, say the next one to two years, Mumbai will most likely underperform, with the high attached risk of a steep fall for a time”. However, one factor that should support Indian equity markets in the shortterm is the flurry of upcoming initial public offerings (IPOs) between now and March 2011. Coal India’s IPO at the end of last month was nearly 12 times oversubscribed, indicating the level of demand that should limit the Nifty 50’s (the Indian stock market) downside. There are at least another six or seven IPOs that are already in the pipeline, including iron ore producer NMDC, Infrastructure Development Finance Company and Orient Greenpower Company. But in a market that is already fully valued, it’s going to be difficult for market participants to achieve alpha. Investors – whether they are retail or institutional – should wait for valuations to become more attractive before buying into Indian equities.

ANALYSIS l India’s GDP growth: past, present and future 10 %

Modest industrialisation before the balance of payment crisis Average growth: 4.9%

8 6

2

Source: Barclays Capital 1956

1966

1976

1986

UK REGISTERED INVESTMENT FUNDS: INDIAN EQUITY

SOURCE:MORNINGSTAR

15/10/07 RANK LATEST – 15/10/10 PORTFOLIO PERFORM. SIZE (£M) CHANGE (%)

TOP 10 UTI India 1986 Shares First State Indian Subcontinent A First State Indian Subcontinent I Acc Aberdeen Global Indian Equity A2 PineBridge India Equity Y Comgest Growth India

66.18 65.85 64.46 63.67 59.30 55.30

1 2 3 4 5 6

N/S 239.37 152.00 2,745.11 334.38 189.65

DOMICILE

PORTFOLIO MANAGER

MAU UK IRE LUX IRE IRE

V Srivatsa David Gait David Gait Management Team Peter Soo Wojciech Stanislawski

MANAGEMENT GROUP

UTI International Ltd First State Investment Mgmt (UK) Ltd First State Investments (Hong Kong) Ltd Aberdeen Asset Managers Ltd (Lux) PineBridge Investments Ireland Ltd Comgest Asset Management International Franklin Templeton Investment Funds

Franklin India A YDis £

47.74

7

892.52

LUX

Stephen Dover

Jyske Invest Indian Equities

35.40

8

24.82

DMK

Management Team

Schroder ISF Indian Equity C Inc JF India

28.75 28.68

9 10

102.00 1,063.42

LUX MAU

Louisa Lo Edward Pulling

Schroder Investment Mgmt (Lux) JF Asset Management Ltd (HK)

BGF India A4DS GBP HSBC GIF Indian Equity A Inc

28.12 26.07

11 12

637.38 4,641.57

LUX LUX

Nicholas Scott Sanjiv Duggal Ewan Thompson

Blackrock (Luxembourg) S.A. HSBC Investment Funds (Luxembourg) S.A. Neptune Investment Management Ltd

Jyske Invest International

BOTTOM 11

Neptune India A

23.96

13

52.44

UK

F&C Indian Investment Company

23.70

14

84.46

LUX

Sam Mahtani

F&C Management Ltd

MS INVF Indian Equity A

23.28

15

119.89

LUX

Ruchir Sharma

Morgan Stanley Investment Funds

FF - India Focus A GBP

21.53

16

2,139.98

LUX

Teera Chanpongsang

JF India A (dist)-USD

21.11

17

2,088.91

LUX

Ted Pulling

Fidelity (FIL (Luxembourg) S.A.)

JPMorgan Asset Mgmt (Europe) S.a.r.l.

Invesco India Equity A USD

19.45

18

108.19

LUX

Maggie Lee

Pictet-Indian Equities-P USD

17.73

19

323.58

LUX

David Chatterjee

Pictet Funds (Europe) S.A.

SGAM Fund Eqs India A

16.52

20

40.65

LUX

Shaun Giacomo

Société Générale Asset Management

Amundi Funds India C C Sector Mean/Count

15.37 35.82

21 21

700.77 715.45

LUX

Ray Jovanovich

Amundi

Invesco Global Asset Management Ltd

IN FOCUS | INDIAN EQUITY FUNDS Grappling with liberalisation Average growth: 5.6%

4

IN FOCUS | INDIAN EQUITY FUNDS

Rising asset values Average growth: 7.6%

1996

2006

Increasing capacity and the long awaited demographic dividend pays off Expected average growth: 8.8% 2016

2026

There are 21 Indian equity funds available to UK investors that have a track record of at least three years. The average performance of a fund over the past three years is 35.82 per cent, indicating how well the Indian stock market has done. The average size of these funds is £715.45m. There are six investment trusts (not shown in the table above) but these have suffered over the past three years with an average performance of -10.26 per cent. These closed-end funds on average have assets under management of £145.85m.

FUND MANAGEMENT NEWS BY JESSICA MEAD

Picking the best for sweet profits

Picture: GETTY

SVM UNVEILS GLOBAL STOCKPICKING FUND

RCM WINS THREE PENSION FUND MANDATES

AVIVA LAUNCHES INDEX ARBITRAGE FUND

Edinburgh-based SVM Asset Management will launch its first global stockpicking fund called the SVM World Equity Fund. SVM will change the name and objective of the SVM UK Alpha fund to form the new fund and the changes are due to take place, subject to approval, on 1 December. Managed by Neil Veitch, the fund will invest in a portfolio of 30-40 global equities trading at a discount to their intrinsic value. The initial fee is 5.25 per cent and the annual management fee is 1.5 per cent.

Allianz Global Investors’ division RCM this week announced that it had won three diversified growth mandates. RCM was chosen by the Leeds Co-operative Society Limited Employees’ Pension Fund, the Yorkshire Co-operatives Limited Employees’ Superannuation Fund and the United Norwest Co-operatives Employees’ Pension Fund, all part of the Co-operative Group. These are the first institutional clients for RCM’s dynamic, diversified growth fund, which launched in March this year.

Aviva Investors has launched an index arbitrage fund to external investors in the UK and European markets. The Ucits III fund is called the Aviva Investors Index Opportunities Fund and combines passive and active investing. The fund aims to generate absolute returns of onemonth Euribor plus 5 per cent per annum and to have volatility of less than 7.5 per cent. Lead managers Iyad Farah and Ned Kelly are supported by a team of seven fund managers and analysts.

City Focus

29

THE NEW TWINGO REVIEWED

| Law

SEE MOTORING, P 31

The pioneers of third-party litigation look for a market

Foundations are the choice for big givers

New asset class is on the up and is already more common than you might believe JENNIFER CHAMBERS

G

JON ROBINS

I

N HIS landmark Review of Civil Justice Costs published earlier this year Lord Jackson devoted a whole chapter to the nascent market in third-party litigation funding, the practice where funders are prepared to back legal claims in exchange for a share of the spoils. This has been historically regarded by courts as unlawful, but Jackson opened the door for it, writing: “I remain of the view that, in principle, third-party funding is beneficial and should be supported”. That endorsement sounded a somewhat ambivalent note in the context of a wider package of recommendations including a strong case made for contingency fees and wholesale reform of conditional fee agreements by scrapping the recovery of success fees and after-the-event insurance premiums. But third-party funding could be about to boom. Tom Custance, head of dispute resolution at the City firm Fox Williams LLP says that third-party funding is “the point at which the law meets the worlds of business and finance” and that “the prospect of a vibrant funding market has huge opportunities and some threats for the business community.” Under the Legal Services Act the legal profession is going through its own version of the Big Bang experienced by the City in the 1980s. “The question remains where third-party funding will take root in this newly liberalised legal service market,” continues Custance. The third-party funding industry is very much in its infancy with the oldest UK funder less than 10 years old and the leading ruling of Arkin – where the appeal judges endorsed funding but held funders should be exposed to liability for costs – only dat-

ing back to 2005. However there are now some 19 potential funders as listed in the Law Society magazine Litigation Funding. That number shot up by 20 per cent in light of the Jackson review. Growing numbers of funders haven’t yet translated into a significant upsurge in activity. According to the Civil Justice Council (CJC), since third-party funding’s emergence in England and Wales no more than 100 cases have been funded in this way. Robert Musgrove, who left his post as chief executive of the CJC over the summer, reckons that that number has gone up slightly. “One of the things that I’ve sensed from some of the funders coming into the market is that they have been more nervous than the funding behind it. There is a lot of money behind it, more than the funders appear prepared to risk.” Musgrove describes the industry as in “pioneering stage” with “those pioneers trying to find their place in the market”. “Just because you haven’t heard about it, doesn’t mean that it’s not going on,” says Susan Dunn, who set up Harbour Litigation Funding in December 2007 after co-founding IM Litigation Funding in 2002;

There’s profit in them there hills Picture:GETTY

adding that “a lot of the cases that we fund have been confidential”. Harbour has recently raised a £60m fund (having targeted £50m) and claims to have looked at a total of 375 cases. “We fund about 8 per cent of what we see because we find that they do not fulfil one of our criteria,” she adds. “The benefits of promoting access to justice for individual or corporate clients who can’t afford to pay legal fees or, indeed, those who would rather hedge the financial exposure of litigation by involving a funder are huge though,” reckons Tom Custance, adding that the prospect of third-party funding fuelling unmeritorious legal activity is unlikely in commercial cases because funders will only back those cases with a strong chance of success. There needs to be “a process of education both for business and indeed for the legal profession,” he adds. Jon Robins is a director of Jures and a freelance journalist. The new, new thing: A study of the emerging market in third-party litigation funding is published by Fox Williams in association with Jures. To order a copy email [email protected]

OVERNMENT spending cuts will have a major impact on public services, putting more pressure on charities. Indeed, in David Cameron’s “big society” charities will become more important than ever. Luckily, wealthy individuals are increasingly showing an interest in giving, perhaps inspired by the examples of Bill Gates and Warren Buffett. But if you are thinking of giving, what is the best way? At Maurice Turnor Gardner we recently surveyed customers on the question and found that 80 per cent said that if they had £2m to dedicate to charity, they would set up their own foundation instead of donating it to an existing charity or foundation set up by someone else. The overwhelming majority of respondents wanted to identify a specific – sometimes as-yet unknown – cause and cultivate it. One benefit of foundations is that they allow you flexibility to capture the tax relief at a point in time that is most advantageous to you, without having to fully commit yourself to who the ultimate charitable recipients are going to be. Cynics will suggest that giving is driven by tax efficiency, but half of survey respondents did not see tax as the major driver for their philanthropy. However, once they had decided to give, then they would all do so in the most taxefficient way. Our survey also revealed an increased appetite for “sunset clauses” in charitable giving. This means that there should be no legal requirement to spend money within a fixed period of time in the UK (although US private charitable foundations have to give away at least 5 per cent of their assets each year). UK donors are increasingly looking to prescribe a time limit by which funds donated by them must be spent, as donors often feel that their funds will have a greater impact if spent quickly at a time when their charitable objectives are clearly understood. Family-controlled foundations are increasingly popular because they allow giving to be highly personalised, are a mechanism for involving different generations of the family, and provide a succession plan for the family’s philanthropy for the future. Jennifer Chambers is a partner at law firm Maurice Turnor Gardner LLP

BRIEFS | LEGAL NEWS MORE LEAVE SJ BERWIN

HAMMONDS MERGER AND DEAL

NORTON ROSE RISES

NABARRO IMPROVES

The movement of staff from SJ Berwin to Irwin Mitchell continues. Twelve associates from SJ Berwin are to make the move, following a fourstrong real estate team moving last month. Three of the associates will join at partner level. The new arrivals will work in real estate, real estate finance, and construction, and four support staff are making the same move. SJ Berwin, whose office is seen to the right, is in talks with US firm Proskauer Rose, which has proved unpopular with some at the British firm.

The latest transatlantic law-firm merger was confirmed earlier this week when 95 per cent of partners at City firm Hammonds and American firm Squire Sanders voted to approve a tie-up, which will come into force in January. The new firm will be called Squire Sanders Hammonds in jurisdictions where Hammonds has a presence, and Squire Sanders & Dempsey in the US and Eastern Europe. Squire Sanders chairman Jim Maiwurm becomes global head of the new firm.

City firm Norton Rose revealed yesterday that it had brought in £155m in fees in the six months to November, a figure that was up from £142m in the same period in 2009. Revenue for the whole of last year was £307m, just 2 per cent lower than the £314m that it announced the year before. The top 10 firm’s turnover rose 9 per cent for the first six months of 2010/11. It said that London had brought in good profits, whereas Asia and the Middle East had also been extremely profitable regions for it.

Meanwhile, Nabarro also announced its results for the first half of the year, posting a 3 per cent rise in turnover, bringing its revenues to £53.3m. Last year the firm revealed an 18 per cent decrease at the same time last year, one of the biggest declines of any firm in 2009/10. The firm’s turnover last year was 10 per cent down on the year before, and profit per equity partner was down 15 per cent. However, Nabarro reacted positively and recently said that it is to open an office in Singapore, its second overseas.

30

City Focus | Accounting

CITYA.M. 10 NOVEMBER 2010

The banks want to lend: they just can’t find the businesses Small enterprises have bigger things to worry about than the lack of lending, writes Andrew Leck

S

ENIOR politicians have repeatedly called on the banking sector to increase their lending to SMEs (small and medium-sized enterprises). According to new ACCA/CBI research, however, they’ve got it the wrong way around: the banks are willing to lend but there are increasingly fewer and less credit-worthy businesses to lend to.

WHERE ARE THE SMES? Discouraged demand is very much a part of the problem. Banks have a long way to go before they can regain their smaller clients’ trust. Meanwhile, the perception, reinforced by the media and politicians, is that the banks won’t lend. Thanks to that, many growing SMEs aren’t even bothering to approach them. Although micro-businesses are less likely to get bank finance than their larger counterparts, SMEs applying for additional finance are more likely to receive at least some of the funds they are after than not; in fact, approval rates haven’t been as high as they are now since the beginning of the credit crunch in 2007. When banks protest that they are lending, they are telling the truth. As SMEs continue to turn their backs on the banks, especially cash poor SMEs that are traditionally more likely to apply for bank finance, they are having to rely more on their suppliers for shortterm finance. The state of trade credit has been completely obscured by the unrelenting focus on bank lending. Yet as a financial market for small businesses, trade credit is easily as important as bank lending. Trade credit flows are twice the size of bank lending and SMEs’

accounts payable are equal to 19 per cent of assets – a figure in the hundreds of billions. With trade credit becoming increasingly important, small business managers are finding themselves running small banks; something they never signed up for and in which they have little expertise. Late payment may have receded somewhat in 2009, but at £24bn, overdue payments to UK SMEs could have comfortably paid off Ireland's entire budget deficit for that year. The research confirmed that small business information on credit risk is overwhelmingly relationship-based: credit checks or accounts filed with companies house are rarely used beyond the initial investigation of the newest of customers; small businesses are happy to use information on customers that is twice as old (ranging from 21 to 37 weeks) as information that they’d use for their own management purposes. Our findings come full circle, because poor credit management leads to poor cash flow, which makes a business’s chances of obtaining funds very slim.

GOING FORWARD Inevitably, the government is relying on the private sector to grow into its spending cuts and drive the economy, but none of this is going to happen unless SMEs – which account for 51 per cent of private sector output – have secure access to finance and the confidence to use it. Both banks and government need to address the perception that banks aren’t lending. But they also need to help SMEs prepare and become more bankable. Education for business owners on the type of information that banks need to approve loans would help, as would indepth feedback on rejected applications; one way for banks to meet SMEs half way. And of course banks must take a hard look at why micro-enterprises have much more trouble accessing new finance. On the trade credit side of things, information is again the key. Finance staff, financial advisers, and government need to educate small business managers about credit management. Tools that are

Banks can be intimidating for small businesses, but they are trying to help Picture: GETTY

currently under-used, such as credit reference information, could become considerably more useful if small business access to them was improved. SMEs need much more finance to help drive the recovery. After two years of

throwing money at the problem and calling each other names, it is about time for the government and the banks to take a more constructive approach to lending. Andrew Leck is the head of the Association of Chartered Certified Accountants (ACCA).

ACCA EXPERTS | WHAT YOU MIGHT HAVE MISSED IN THE COMPREHENSIVE SPENDING REVIEW

Chas Roy-Chowdhury Head of taxation

It’s very disappointing that HMRC’s budget was cut, although given that the Treasury had its budget cut by 33 per cent, maybe a 15 per cent cut isn’t as bad as it could have been. However, HMRC is a department that is having trouble even standing still, so any cut will hurt their ability to collect tax effectively. While an extra £900m to help crack down on evasion will be helpful it doesn’t make up for an overall cut. The Chancellor needed to spend money to save money in this case; making the cuts could actually cost the Treasury in the long run.

Manos Schizas Senior policy adviser for small enterprises

The Chancellor didn’t speak about it specifically, but spending cuts could affect government procurement in a big way. Government procurement is worth over £60bn to SMEs (small or medium-sized enterprises) and despite the localist rhetoric, government procurement will have to be centralised or cut to achieve efficiency savings. This is crucial for SMEs as while 59 per cent of local procurement spending goes to SMEs, only 16 per cent of Whitehall spending does. Despite the government's intention to increase the share of SME procurement, we still estimate that SMEs could be shut out of £7bn worth of procurement. We won’t know the exact figure until individual departments announce more details. Neither, importantly, will the SMEs who will put off hiring and investment decisions until then.

Gillian Fawcett Head of public sector

Achievability, accountability, and scrutiny are the key issues with the spending review. The Public Accounts Committee has already questioned how achievable these cuts are. As a rough comparison, only one third of the savings proposed by the 2005 Gershon Review were actually achievable. Scrapping some quangos may end up costing the Government: work will still have to be done by departments, while redundancy and pension payments wipe out shortrun savings. Winding up the Audit Commission will cost £300m, for example. Value for money is an issue too. Before the review, the Treasury circulated a document to guide departments’ spending settlements. Its value for money section contained a nine-question checklist. Of those nine, four were basically about removing spending from government control and getting it off the balance sheet. There was no detail on undertaking an actual cost/benefit review.

Lifestyle

31

| Motoring

WORDS BY RYAN BORROFF

Lots of bark and plenty of bite Renault’s move on the female market is sprightly and clever

Y

OU may not have heard of Amédée Gordini but his name is synonymous with sporty Renault cars from the 1960s onwards – he had the magical ability of being able to squeeze race car-like performance out of regular petrol engines. A Le Mans-winning racer, Gordini’s master tuning helped Renault develop classic hot hatches, including the Renault 5 Alpine. Now Renault has relaunched the Gordini brand name, and this time the French car maker is targeting female drivers with a range of hot hatches developed by Renault’s Renaultsport division, all carrying the Gordini name and all boasting pretty impressive performance. The Twingo Gordini 133 is the smallest and possibly the best of these. It feels like some kind of city car alchemy has been performed in order to be able to spirit so much fun and performance out of it. Powered by a 1.6 litre VVT petrol engine producing 133hp, the Twingo Gordini has benefited from some substantial tweaking. The chassis is wider at the front and rear than the regular Twingo and stiffened suspension means you get a much firmer ride and better handling. Pootling around the north circular on a busy Friday afternoon, the car proves lively enough, but it is under hard acceleration above 4,500rpm on Berkshire’s winding country roads that the car really shines. It’s a proper little belter. The resulting drive is surprisingly spirited, helped a great deal by an engine note that confirms the car has a bark to back up its bite. Steering feels good, although a smaller steering wheel would have improved the experience for me. Road noise though, thanks to its low profile tyres, is significant. But then that really is part of the experience of driving such a car. It enhances the car’s raw feel, even if it’s a little tiring after a while. With its electrifying metallic blue finish and white racing stripes, it’s obviously a racer, but not one that you’d avoid for fear that people would expect you to terrorise seaside promenaders for kicks at the week-

The Twingo Gordini has plenty of oomph.

end. It’s also got matching 17-inch Gordini alloys, wider front and rear wings and a rear spoiler, which hints at this perky little car’s oomph. Inside is a festival of Gordini Malta Blue colour and badges, including blue and dark grey leather sports seats, matching blue leather door trims, a leather-trimmed steering wheel – also with twin white racing stripes – and a rev counter slapped straight on top of the steering column; even a Gordini gearknob. So it is impossible to forget you’re driving a Gordini Twingo. In truth, the car looks good and feels well put together. It’s not stripped-out like some of Renaultsport’s other cars and actually feels rather luxurious. It might be petite but designers have

been clever with the interior, maximising space more shrewdly than in an Ikea wardrobe system, particularly in the back. There are pockets big enough to host any phones or music players as well as your guilty “grab bag” of choice when you make a service station pit-stop. (This will be pretty infrequently thanks to the car’s impressive fuel economy). But here the most exciting thing is the two rear seats, which slide individually. You can push either seat back to ensure extra leg room too, depending on how much stuff you have in the boot. It was certainly plenty big enough for the three of us and all our weekend paraphernalia, which is no mean feat in a car this small given my wife’s habit of packing at least three pairs of shoes for each day, “just in case”.

CAR TALK

It’s a special little car, even more so since there are only 200, individuallynumbered Twingo Gordinis bound for the UK. So you’d better be Gordini quick if you want one.

THE FACTS:

RENAULT TWINGO GORDINI 133 PRICE: 0-60MPH: TOP SPEED: CO2 G/KM: MPG COMBINED:

£14,600 8.7secs 125mph 159g/km 42.2mpg

THE VERDICT: DESIGN PERFORMANCE PRACTICALITY VALUE FOR MONEY

hhhhi hhhhi hhiii hhhii

BY RYAN BORROFF

BMW VISION EFFICIENTDYNAMICS FOUR-SEATER

MORGAN THREE-WHEELER

LIGHTNING ELECTRIC GRAND TOURER

BMW has announced it is to put its stunning Vision EfficientDynamics four-seater sports car concept into production. Powered by a diesel/electric hybrid system, the 328bhp coupé will be capable of 0-62mph in 4.8 seconds and of reaching 155mph when it goes into production in 2013. Average fuel consumption should be just 75.1mpg with CO2 emissions of 99g/km. The car will be a plug-in hybrid and should be fully charged within just two and half hours, all from the wall socket at home.

After a 58-year hiatus, British sportscar manufacturer Morgan is planning to re-release the iconic Morgan Three-wheeler, a car it originally built from 1909 to 1953. The new version will be powered by a 100bhp, 1.8-litre Harley Davidson V-Twin engine and weigh just 500kg, with the same “bullet” shape body as the original. It will be capable of 0-60mph in just 4.5 seconds and of reaching 115mph when it launches at the 2011 Geneva Motor Show in March.

The first new British luxury car marque for 60 years, the Lightning Car Company, has set out to raise £15.5m to take its 700hp Lightning electric Grand Tourer supercar to full production. Advanced orders for the car have already reached more than £3m. When it’s built, the lightweight rear-wheel drive supercar will boast a 0-60mph acceleration time of under five seconds, a top speed of 125mph and have a maximum touring range of of 225 miles, with charge time as low as 10 minutes.

Lifestyle | TV& Games

SATELLITE & CABLE

TERRESTRIAL

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BBC1

BBC2

6pm BBC News 6.30pm BBC London News 7pm The One Show 7.30pm Wallace & Gromit’s World of Invention; BBC News 8pm Jimmy’s Food Factory 8.30pm Nigel Slater’s Simple Suppers 9pm CHOICE The Apprentice 10pm BBC News 10.25pm Regional News

ITV1

6pm Eggheads 6.30pm Strictly Come Dancing – It Takes Two 7pm Escape to the Country: A couple who dream of owning a hobby farm with enough land to rear livestock. 8pm Edwardian Farm: New series. An experiment to recreate Edwardian life in Morwellham Quay in Devon. 9pm Ancient Worlds 10pm The Apprentice: You’re Fired! 10.30pm Newsnight: Weather 11.20pm BP: $30bn Blowout – A Money Programme Special 12.20am BBC News

10.35pm The National Lottery Draws 10.45pm Match of the Day; National Lottery Update 12.05am FILM Nothing to Lose: 1997; Weatherview 1.45am Sign Zone: Country Tracks 2.40am Sign Zone: Watchdog 3.40am Sign Zone: MasterChef: The Professionals 4.40am-6am BBC News

6pm London Tonight 6.30pm ITV News 7pm Emmerdale: Paddy and Rhona share a kiss. 7.30pm Farewell Jack 8pm CHOICE The Pride of Britain Awards 2010: Carol Vorderman hosts the starstudded awards show in London. 10pm ITV News at Ten 10.30pm London News 10.35pm FILM Air America: Vietnam War comedy adventure, with Mel Gibson and Robert Downey Jr. 1990. 12.40am The Zone; ITV News Headlines 2.40am The Jeremy Kyle Show 3.35am-5.30am ITV Nightscreen

3am-6am BBC Learning Zone

SKY SPORTS 1

3.30am Golfing World 4.30am Inside the PGA Tour 5am-6am Live European Tour Golf

7pm Sky Sports News at Seven 7.30pm Soccer Special 10.15pm You’re on Sky Sports! 11.45pm FIFA Futbol Mundial 12.15am Total Rugby 12.45am Boxing 2.45am FIFA Futbol Mundial 3.15am You’re on Sky Sports! 4.45am FIFA Futbol Mundial 5.15am Total Rugby 5.45am-6am Sky Sports Classics

BRITISH EUROSPORT

6pm Live Women’s Football 8pm Wednesday Selection 8.10pm Equestrian 9.10pm Riders Club 9.15pm European Tour Golf 9.45pm Golf 10.15pm Golf Club 10.20pm Sailing 10.50pm Yacht Club 11pm Olympic Magazine 11.30pm Sport Traveller 11.45pm-12.50am WATTS

SKY SPORTS 2

7pm Live Football Special 10.15pm Football First 1.15am2.15am Watersports World

ESPN

7pm Live SPL 9.45pm ESPN Kicks Extra 10pm 30 for 30 11pm Poker 12am Live NBA Basketball 2.30am Press Pass 2010 3am-5.30am Live NHL Ice Hockey

SKY SPORTS 3

6.30pm Champions Tour Golf 7.30pm Live Greyhound Racing: The William Hill All England Cup and the Northern Puppy Derby. 10pm Boxing 12am Golfing World 1am European Tour Weekly 1.30am Inside the PGA Tour 2am Champions Tour Golf 3am European Tour Weekly

LIVING

7pm CSI: Miami: Drama following the work of a forensic investigation unit in Florida.

CITYA.M. 10 NOVEMBER 2010

CHANNEL4

CHANNEL5

6pm The Simpsons 6.30pm Hollyoaks 7pm Channel 4 News 7.55pm 4thought.tv 8pm Animal Madhouse 9pm CHOICE Grand Designs 10pm Rude Tube: Rude Tunes 11.05pm Rory Peck Awards 2010. People who have shot to stardom thanks to the internet. 11.10pm The Event 12.05am Music on 4: On Track 12.25am Strummerville Sessions 12.40am The Album Chart Show Spotlight 12.55am The Crush 1.20am Seasick Steve 1.35am The Tannery 1.45am FILM Alexandra: 2007. 3.25am Afterworld 3.50am ER 4.40am Hill Street Blues 5.30am-6.15am Countdown

1am Scrubs 1.50am RuPaul’s Drag Race 2.30am Natalie Cassidy: Becoming Mum 3.25am Reno 911! 3.50am Switched 4.10am Accidentally on Purpose 4.35am-6am Switched

BBC THREE

7pm How the Earth Was Made 8pm Mega Movers 9pm Ax Men 10pm The People Speak: Colin Firth presents. 12am Ax Men 1am Life After People 2am Evolve 3am Mega Disasters 4am-5am Ancient Discoveries

COFFEE BREAK

DISCOVERY HOME & HEALTH

DISCOVERY

8pm How Do They Do It? 8.30pm How It’s Made 9pm 1983: The Brink of Apocalypse 11pm Frontline Battle Machines with Mike Brewer 12am Deadliest Catch 1am Bear Grylls: Born Survivor 2am Chris Barrie’s Massive Speed 3am World War Two: The

7pm Hollyoaks 7.30pm Friends 9pm Ugly Betty 10pm Desperate Housewives 11pm Natalie Cassidy: Becoming Mum 12am RuPaul’s Drag Race

SUDOKU

KAKURO

Place the numbers from 1 to 9 in each empty cell so that each row, each column and each 3x3 block contains all the numbers from 1 to 9 to solve this tricky Sudoku puzzle.

 

Fill the grid so that each block adds up to the total in the box above or to the left of it. You can only use the digits 1-9 and you must not use the same digit twice in a block. The same digit may occur more than once in a row or column, but it must be in a separate block.



  

  

 

  

    

QUICK CROSSWORD 3 2 6 6 8 7 ( 5 ( / $ 3 5 , / , 6 7 6 8 6 ( 6 2 1 ' % 2 8 $ ( & % / ( $ 6 ( 0 (

0 $ 5 0 6 ( 6 $ , 0 / ( 6 5 ( 7 7 2 1 7 ( 6 6 & 5

* $ 2 8 5 8 0 / ( $ 1 ' 6 + $ % $ 2 8 5 * $ 3 (

2 6 9 7 8 3 4 2 6 9 1 8 5 3 8 2 8 4 6 4 1 1 1 9 6 4 6 7 9 2 1 4 3 1 3 2 7 5 9 7 3 5 3 8 9

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15 17

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8 1

SUDOKU

6 2 8 7 8 6

WORDWHEEL The nine-letter word was CAFETERIA

Carol Vorderman hosts the starstudded awards show in London, celebrating the achievements of the nation’s unsung heroes.

8pm The Middle. Mike tries to find a new job 8.30pm The Middle 9pm Bones 10pm Lie to Me 11pm FILM The Scorpion King 2002. 12.45am Road Wars 1.40am Inside: The Prison Code 2.35am Oops TV 3.30am Lost 4.20am Sell Me the Answer 5.10am-6am Are You Smarter Than a 10 Year Old?

GRAND DESIGNS

CHANNEL4, 9PM Kevin McCloud revisits the project undertaken by a couple who moved from Brighton to Brittany to create an earth-sheltered home.

        

        

        









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Using only the letters in the Wordwheel, you have ten minutes to find as many words as possible, none of which may be plurals, foreign words or proper nouns. Each word must be of three letters or more, all must contain the central letter and letters can only be used once in every word. There is at least one nine-letter word in the wheel.

KAKURO 3 8 1 7 9 3 2 1 2 2 3 1 6 2 3 9 7 1 4 5 4 1 7 2 6 8 9

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WORDWHEEL

 

LAST ISSUE’S SOLUTIONS

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THE PRIDE OF BRITAIN AWARDS 2010 ITV1, 8PM

SKY1



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7pm Baby Whisperer 8pm 10 Years Younger 9pm Emergency 10pm Hospital Sydney 11pm The Trauma Team 12am Emergency 1am Hospital Sydney 2am The Trauma Team 3am 10 Years Younger 4am Bringing Home the Babies 5am6am From Here to Maternity

QUICK CROSSWORD

Copyright Puzzle Press Ltd, www.puzzlepress.co.uk

8

BBC1, 9PM Alan Sugar challenges the remaining candidates to create a branding and advertising campaign for a new multi-purpose household cleaner.

Complete History 3.50am Clash of the Dinosaurs 4.40am Days That Shook the World 5.30am6am How Does That Work?

HISTORY

E4

THE APPRENTICE

4am House Doctor 4.25am How Not to Decorate 5.10am Michaela’s Wild Challenge 5.35am-6am Michaela’s Wild Challenge

8pm Four Weddings 9pm Ghost Whisperer 10pm Criminal Minds 1am CSI: Crime Scene Investigation 3am America’s Next Top Model 3.50am Charmed 4.40am CSI: Crime Scene Investigation 5.30am-6am Home Shopping 7pm Children in Need: 50 Greatest Moments 8pm Mad About the House 9pm Some Dogs Bite 10.30pm Family Guy 11.10pm Lip Service 12.10am One Non Blonde Down Under 12.40am Mad About the House 1.40am DOA 2.10am Lip Service 3.10am One Non Blonde Down Under 3.40am5.05am Some Dogs Bite

TV PICK

6pm Home and Away 6.25pm Live from Studio Five 7pm Five News at 7 7.30pm Highland Emergency; Five News Update 8pm Battle of Arnhem: Tour of Duty; Five News at 9 9pm NCIS: Part one of two. An agent’s funeral leads Shepard on a covert mission. 10pm Law & Order: Criminal Intent 11pm Law & Order 11.55pm Poker 12.50am SuperCasino

        

D S

ACROSS

DOWN

2 Revolving tray placed on a dining table (4,5) 6 Greek muse of poetry and mime (5) 8 Perform without preparation (2-3) 11 Dynasty that ruled in Russia until the overthrow of Tsar Nicholas II in 1917 (7) 12 Objects used to cordon off a stretch of road (5) 13 Formal visitor (5) 14 Assumed name (5) 17 Sharp part of a knife (5) 19 Schematic or technical drawing (7) 20 Expand abnormally (5) 21 ___ Asimov, sciencefiction writer (5) 22 Workmate (9)

1 Items of outerwear for cold conditions (9) 2 Commit to memory (5) 3 Changes focus rapidly (5) 4 Jargon (5) 5 Puzzle out (5) 7 Foot digit protector (7) 9 Capital of the Isle of Man (7) 10 Yellow flower often seen growing wild (9) 15 Perfect (5) 16 Soothing unction (5) 17 Fetch (5) 18 Dumbfound (5)

Sport

MYSTERY ILLNESS WON’T STOP STAR MAN FEATURING ON DERBY DAY: P35

Flower’s got faith in Cook

Cook will open against South Australia. Picture: PA

ENGLAND head coach Andy Flower is refusing to panic over the form of Alastair Cook and is sure the Essex opener will deliver telling runs over the course of the Ashes series. The 25-year-old struggled this summer against Pakistan’s new-ball duo of Mohammad Amir and Mohammad Asif and failed twice with the bat during England’s warm-up win over Western Australia last week. Moreover, Cook’s overall record against Australia is hardly cause for optimism. The vice-captain averages just 26.2 from 10 Tests against the old enemy. But Flower remains unconcerned and believes the left-hander will perform, starting against South Australia tomorrow. “I don’t have concerns,” said the England coach. “It’s one game, two innings [against Western Australia]. I think he’s going to do well.” Flower believes tomorrow’s match at the Adelaide Oval will give England, and Cook, more crucial

preparation in the second of three practice matches. “It was very important for us to get that middle time,” said Flower of the victory over Western Australia at the Waca. “We had one middle practice a few days before. But that sort of competitiveness on the Test wicket is important preparation for our guys. “Again this match in Adelaide will be good experience on the Test square. That will be vital preparation for us.” England are expected to field the same 11 players who beat Western Australia, with the coach explaining there was no reason to give players a match for the sake of it. Flower added: “It’s not about trying to be fair to everyone. We are trying to prepare our Test side for Brisbane. That’s the priority. “When you’ve got a squad of 16 or 17, obviously everyone wants to play. But our priority is to ensure that our Test XI is as ready as possible for the first Test.”

SPORT | IN BRIEF Saracens far too strong for USA RUGBY UNION: Saracens enjoyed a 206 victory over USA yesterday when the Premiership high-fliers returned to the City. Tries from Don Barrell and James Short ensured victory in a match played at the Honourable Artillery Company grounds in the Square Mile. Former England captain Steve Borthwick led Sarries, while Schalk Brits also featured.

▲

CRICKET BY JAMES GOLDMAN

33

DROGBA FIT TO FACE FULHAM DESPITE MALARIA SCARE

Arsenal fail in Koscielny appeal FOOTBALL: Arsenal defender Laurent Koscielny will serve a two-match ban after an appeal against his sending-off against Newcastle was rejected by the Football Association. The Frenchman will miss tomorrow’s trip to Wolves and Sunday’s tough looking encounter at Everton. Meanwhile, manager Arsene Wenger admits Thomas Vermaelen, who has been out of action since August, has suffered another setback in his recovery from an Achilles injury and has no idea when he will return to first team action.

Haile to reconsider his future ANALYSIS l Alastair Cook's 2010 Test Scores 200 175 150 125 100 75 50 25 0

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ATHLETICS: Marathon great Haile Gebrselassie has hinted he could reconsider his decision to retire. The world record holder, 37, announced his decision to hang up his spikes after being forced to pull out of Sunday’s New York Marathon. But he said yesterday: “Now it is time for me to think about a lot of things. I still love running. I will always run. Just give me some time to think things over. I didn’t plan to come back to Ethiopia this way.”

RACING & LUNCH & HOTEL Exclusive Offer for Newbury’s Winter Festival

We’re giving CityAM readers this fantastic opportunity to enjoy one of the major highlights of the Jump racing season, the Newbury Winter Festival featuring the Hennessy Gold Cup with these two exclusive deals available on the first two days of the Festival (Thursday 25th and Friday 26th November). For full details about the Winter Festival visit NEWBURY-RACECOURSE.CO.UK

DONNINGTON VALLEY & WINTER FESTIVAL: One night’s stay at the 4 star Donnington Valley Hotel & Spa, combined with racing and lunch in Newbury’s panoramic Hennessy Restaurant. Includes:

NEWBURY WINTER FESTIVAL 25 - 27 November

25 26 27 NEWBURY GENTLEMEN’S HENNESSY Friday

Thursday

DAY

DAY

Saturday

GOLD CUP DAY

featuring the Hennessy Gold Cup & the official Hennessy After Party on Saturday night

Complimentary upgrade to executive room, breakfast and 25 minute spa treatment per person Reserved table for the day Premier Enclosure ticket & car park label Official Programme Glass of Champagne on arrival, three course lunch with mineral water Tea & British cakes

£269 per person inc. VAT

THE VINEYARD & WINTER FESTIVAL: One night’s stay at Newbury’s finest boutique hotel, The Vineyard at Stockcross, combined with racing and lunch in Newbury’s panoramic Hennessy Restaurant. Includes:

Luxury double room including breakfast and a 25 minute spa treatment per person Reserved table for the day Premier Enclosure ticket & car park label Official Programme Glass of Champagne on arrival, three course lunch with mineral water Tea & British cakes

£369 per person inc. VAT FOR THE LATEST NEWS, TICKETS, PACKAGES, PHOTOS AND FAQS: NEWBURY-RACECOURSE.CO.UK/WINTERFESTIVAL 01635 40015

BOOK NOW - PLEASE CONTACT NEWBURY RACECOURSE, QUOTING CITYAM ON 01635 40015 TO CHECK AVAILABILITY OR FOR MORE INFORMATION. TO EXTEND YOUR STAY PLEASE ENQUIRE ABOUT RATES. Terms and conditions: Subject to availability. Accommodation and racing can be taken on Thursday 25th or Friday 26th November only.

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Sport

CITYA.M. 10 NOVEMBER 2010

Results

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BARCLAYS PREMIER LEAGUE Stoke................................(1) 3 Birmingham.....................(0) 2 Tottenham...................(0) 1 Sunderland.......................(0) 1 P W D L F A GD Pts Chelsea 11 8 1 2 27 5 22 25 Man Utd 11 6 5 0 24 13 11 23 Arsenal 11 6 2 3 22 11 11 20 Man City 11 6 2 3 15 10 5 20 Newcastle 11 5 2 4 20 14 6 17 Tottenham 12 4 4 4 14 15 -1 16 Sunderland 12 3 7 2 12 13 -1 16 Bolton 11 3 6 2 17 16 1 15 Liverpool 11 4 3 4 12 14 -2 15 West Brom 11 4 3 4 14 19 -5 15 Everton 11 3 5 3 12 10 2 14 Blackpool 11 4 2 5 17 23 -6 14 Fulham 11 2 7 2 13 12 1 13 Aston Villa 11 3 4 4 10 14 -4 13 Stoke 12 4 1 7 13 18 -5 13 Blackburn 11 3 3 5 11 13 -2 12 Birminghm 12 2 6 4 14 17 -3 12 Wigan 11 2 4 5 8 20 -12 10 Wolves 11 2 3 6 11 18 -7 9 West Ham 11 1 4 6 9 20 -11 7 NPOWER CHAMPIONSHIP Burnley ..........................(0) 1 Doncaster...........................(1) 1 Crystal Palace............(1) 3 Watford ..............................(0) 2 Ipswich..........................(0) 0 Derby ....................................(0) 2 Leeds................................(1) 2 Hull ..........................................(1) 2 Millwall..........................(0) 1 Norwich ..............................(0) 1 Nottm For......................(1) 2 Coventry .............................(1) 1 Portsmouth ................(0) 1 QPR.........................................(0) 1 Preston ...........................(1) 1 Barnsley ..............................(1) 2 Scunthorpe.................(0) 0 Middlesbrough ..............(2) 2 CLYDESDALE BANK PREMIER LEAGUE Aberdeen .....................(0) 1 Inverness CT....................(1) 2 THE IRN-BRU SCOTTISH FOOTBALL LEAGUE CHAMPIONSHIP THIRD DIVISION Annan Athletic.........(2) 2 Montrose............................(1) 2 BLUE SQUARE BET PREMIER Altrincham..................(0) 0 AFC Wimbledon ............(2) 2 Bath City........................(1) 3 Hayes & Yeading...........(0) 1 Cambridge Utd..........(1) 1 Grimsby ...............................(1) 1 Darlington ....................(1) 1 Tamworth..........................(0) 0 Eastbourne Boro.....(0) 0 Forest Green....................(0) 0 Fleetwood Town .....(0) 0 Gateshead.........................(0) 0 Kettering......................(0) 0 Mansfield...........................(0) 2 Kidderminster...........(1) 1 Rushden & D ....................(0) 0 JOHNSTONE'S PAINT TROPHY NORTHERN SECTION QUARTER-FINAL Bury..................................(0) 0 Tranmere ............................(1) 1 Carlisle............................(1) 3 Crewe...................................(0) 1 Rotherham...................(1) 2 Huddersfld ........................(3) 5 SOUTHERN SECTION QUARTER-FINAL Plymouth......................(0) 1 Exeter....................................(1) 2 Southend......................(0) 0 Charlton...............................(1) 1 Swindon.........................(1) 1 Brentford............................(1) 1 Wycombe.....................(0) 3 Bristol Rovers .................(2) 6

Picture: ggjcdjcjcgjcjkdjjk

Chelsea have been in talks over the possibility of leaving Stamford Bridge for Earls Court. Picture: GETTY

Barclays Premier League Aston Villa v Blackpool, Chelsea v Fulham, Everton v Bolton (8pm), Man City v Man Utd (8pm), Newcastle v Blackburn, West Ham v West Brom, Wigan v Liverpool, Wolverhampton v Arsenal. npower Football League Championship Leicester v Sheffield Utd, Reading v Cardiff (8pm), Swansea v Bristol City. Johnstone's Paint Trophy Northern Section Quarter-Final Sheffield Wednesday v Hartlepool (7.30) Clydesdale Bank Scottish Premier League Dundee Utd v St Mirren, Hearts v Celtic (7.30), Kilmarnock v Hamilton, Motherwell v St Johnstone, Rangers v Hibernian. Irn-Bru Scottish Division Three East Stirling v Arbroath

That’s how much property experts say Chelsea will have to fork out if they want to leave Stamford Bridge and move to Earls Court

SPORTS EDITOR FRANK DALLERES email [email protected]

▲

£1bn

TODAY’S DIARY (Football 7.45pm unless stated)

EXCLUSIVE BY DAVID HELLIER

CHELSEA would have to pay around £1bn to buy up the land around the Earls Court exhibition centre and build a new 60,000 seater stadium, City A.M. has learnt, if they decided to press ahead with a proposal to move from Stamford Bridge. The west London club’s chief executive Ron Gourlay and company secretary Alan Shaw have recently held talks with Capital & Counties, the property group that owns the 77 acre Earls Court site. when began Discussions Capital & Counties, which has plans to transform the Earls Court site after the Olympics with a residential plan that will comprise 8,000 homes, called on various neighbours in the area to discuss their plans. Early talks centred on the possi-

Australia pose a bigger threat than All Blacks, says Johnson ▲

RUGBY UNION BY FRANK DALLERES

Hartley has been rewarded for his try against New Zealand. Picture: GETTY

MANAGER Martin Johnson has warned his England charges that he rates Saturday’s opponents Australia as even more dangerous than New Zealand. England were narrowly beaten by the All Blacks, the world’s No1 ranked side, in last weekend’s opening Test of the autumn campaign. But Johnson, who has drafted Dylan Hartley into the starting line-up in place of Steve Thompson, believes Australia could present an even stiffer challenge. “In some ways they are more dangerous than the All Blacks in

the way they can break for tries,” he said. “They get around you and the support is sharp. We really need to get those bits sorted out. It’s about speed and intensity.” Australia ended New Zealand’s 15match winning streak last month and Johnson is particularly wary of the threat posed by their backs. “They are very dangerous,” he added. “You have to be very sharp. They play with a huge amount of variation, maybe more than the All Blacks. They are strong runners and we need to be strong in the tackle. We also need to improve what we did with the ball.” Northampton hooker Hartley’s selection is the only change to the

bility of Roman Abramovich (right) owned Chelsea joining the project but property sources say this has proved complex. “If Chelsea had come on board earlier there might have been a chance of the two working together. But Capital & Counties has gone so far down the road with the planning processes, it would be too complex to put a combined project together now. The only way for them to get to Earls Court now would be to buy the site out lock, stock and barrel,” said the source. Property sources have told City A.M. that Capital & Counties would be looking for close to £1bn for selling the site outright. The £1bn figure, or even something close to it, would be a massive deterrent should the club opt to press

team whose comeback was thwarted by the All Blacks in last week’s 26-16 defeat. Johnson explained that the New Zealand-born player’s try after coming off the bench had helped him edge Thompson out of the XV. “Dylan did very well when he came on. It’s not a knock on Thommo,” Johnson added. “I thought he forced his way in there with the way he played. He’s been in great form after he missed the summer tour with injury. He’s returned with huge enthusiasm and intensity. His ball carrying is getting better.” Thompson drops to the replacements bench, where he is joined by Wasps forward Simon Shaw.

ENGLAND TEAM | TO PLAY AUSTRALIA 15 14 13 12 11 10 9 1 2 3 4 5 6 7 8 R R R R R R R

Ben Foden Chris Ashton Mike Tindall Shontayne Hape Mark Cueto Toby Flood Ben Youngs Andrew Sheridan Dylan Hartley Dan Cole Courtney Lawes Tom Palmer Tom Croft Lewis Moody (c) Nick Easter Steve Thompson David Wilson Simon Shaw Hendre Fourie Danny Care Charlie Hodgson Delon Armitage

Northampton Northampton Gloucester Bath Sale Leicester Leicester Sale Northampton Leicester Northampton Stade Francais Leicester Bath Harlequins Leeds Bath Wasps Leeds Harlequins Sale London Irish

Sport

CITYA.M. 10 NOVEMBER 2010

ANALYSIS | BLUES FACE TOUGH CALL

FOOTBALL BY FRANK DALLERES

CHELSEA manager Carlo Ancelotti insists Didier Drogba will play against Fulham tonight despite the striker being diagnosed with malaria. The Ivory Coast international has been suffering from the tropical disease for the past month but doctors only identified the cause of his illness on Monday. Drogba was left on the bench for Sunday’s 2-0 defeat at Liverpool but, having started a course of medication, Ancelotti plans to use him as Chelsea look to bounce back in the west London derby. “He had a problem,” said the Italian. “He has this virus and, obviously, he lost power and training. He lost his condition. He’s had treatment and now he’s okay. He’ll come back immediately in the best condition. “He suffered because he wasn’t 100 per cent but now, after treatment, he’ll be better. He had malaria. He had the tests in the last day and they showed this kind of virus. Now he’s good.” Drogba first complained of feeling unwell before the October international break, and missed subsequent games against Aston Villa and Spartak Moscow. “I don’t know where he got it from,” Ancelotti added. “I gave him a few days off and he went on holiday for a few days, and now he has malaria. It’s over now. It was serious once. Now it’s a bit different and you can treat it very well and move on very quickly. “Didier was, for this month, having difficulty to train. He didn’t feel good. He was unselfish by playing when he was not at 100 per cent. Now he has the possibility to improve his condition without a problem. He will play on Tuesday.” Midfielder Michael Essien is also set to return but Ancelotti could be without striker Nicolas Anelka and defender Alex, who need late checks on back and knee problems respectively.

Bentley earned a booking rather than a penalty from Webb following a tussle with Zenden.

Picture: ACTION IMAGES

Gyan gift stalls Spurs but Harry’s ire saved for Webb TOTTENHAM SUNDERLAND

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ahead. In comparison, Arsenal spent around £350m on developing the Emirates stadium. Chelsea are constrained by the capacity of Stamford Bridge – currently 42,000 – and have limited potential to expand. Mark Richards, a senior consultant within the sports business division of Deloitte, said that Chelsea had to be careful they weren’t looking to build a new stadium that they would have difficulty filling. “You really want to retain an excess demand situation although you might see the new stadium as an opportunity to put cheaper price tickets on the market,” he said. Chelsea said yesterday: “We always look at proposals but we do not have any plans to move from Stamford Bridge at this time.”

Drogba has malaria but will still face Fulham ▲

EVEN if they could find a site at a reasonable cost, Chelsea would do well to think hard before leaving Stamford Bridge. It is true that the past few years of success has increased the following of the club but Chelsea do not yet command the type of regular following that Arsenal, Manchester United or even Tottenham have. Attendances at Chelsea's Champions League games went all the way down to 24,000 before the club sensibly decided to discount tickets in order to fill the ground. It is tempting to think that building a bigger stadium will be better; but sometimes having excess demand is more sensible. And then there's that £1bn bill.

35

FOOTBALL BY JAMES GOLDMAN

TOTTENHAM boss Harry Redknapp launched a stinging attack on referee Howard Webb after seeing his side let a second-half lead slip against Sunderland. Rafael van der Vaart kept up his record of scoring in every game he has played at White Hart Lane. But Spurs’ advantage lasted less than three minutes when a misunderstanding between Younes Kaboul and William Gallas presented Asamoah Gyan with the chance to poach his third goal in two games. It is now four Premier League games without a win for Spurs and

Redknapp held Webb responsible for the extension of that sequence. The World Cup final official first angered Redknapp for booking David Bentley when it appeared the winger had been felled by Boudewijn Zenden in the penalty area. And he was further incensed when Webb showed leniency by refusing to dismiss Lee Cattermole for an ugly challenge on Luka Modric. He said: “It was a penalty wasn’t it? I just watched the replay of it. How he [Webb] can book him? “He’s not got anything against Tottenham or anybody else but it’s how he saw it. “I’ve never been one for criticising referees; it’s never been my game. But it was a blatant penalty tonight. “If you get the penalty, it could make a big difference.” He added of the tackle by Cattermole, who has earned two red cards already this season: “I don’t know what he does other weeks; I’m

only interested in that tackle today and it was a bad tackle in my opinion. “Could have broken his leg easily. He’s [Modric] lucky he didn’t break his leg. “He [Webb] has to understand the difference between going over the top of the ball and playing the ball.” A week ago the famous old ground was rocking to a chorus of ‘Bale, Bale, Bale’ after the Wales winger destroyed Inter Milan. It was a very different story as the final whistle blew last night, however, with boos echoing out around White Hart Lane, much to Redknapp’s astonishment. In a jibe laced with irony, he said of the supporters: “They’ve had it so good over the years, you see. “When you keep winning league championships every year, you get upset when you don’t win. “What have they got to moan about? What they see here and what they’ve seen here.”

Threatened Haider hinting at possibility of dramatic u-turn ▲

CRICKET BY JAMES GOLDMAN

Haider surfaced in London and claimed he had no issues with PCB.

Picture: GETTY

PAKISTAN wicketkeeper Zulkarnain Haider last night appeared to hint he would be prepared to return to international cricket. The 24-year-old flew to London from Dubai on Monday and subsequently announced his decision to retire from international cricket, claiming he had received death threats after refusing to fix two matches. But a return to the international fold now appears to be a possibility after he told Pakistan's Geo News channel yesterday that he had “no issues” with playing again for

Pakistan. He also said he had “no intentions” of seeking political asylum in the UK. Haider, who is believed to be staying in a hotel near Heathrow, said: “If the Pakistan government is ready to give me assurance of security for me and my family, I am ready to return. “I had no intention of applying for asylum. I have put my career at stake.” Pakistan's ambassador to the UK, Wajid Shamsul Hasan, stated that Haider had not approached its embassy in London for any assistance. “I don't know what is his case. If he comes to us we will guide and assist him in every way possible,” Hasan commented.

TIMELINE | ZULKARNAIN HAIDER ● 5 November Hits the winning runs in Pakistan’s one-wicket win over South Africa in the fourth ODI in Dubai. ● 8 November Haider is reported to be missing. Rumours suggest he is spotted at Dubai airport heading for England. ● 8 November Arrives in England with his brother claiming the wicketkeeper had received death threats. ● 9 November Haider announces his retirement from international cricket before intimating he could be open to a possible return.

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