BUSINESS WITH PERSONALITY

CHELSEA OWNER COULD BGC SUES

TULLETT
FACE £1BN MOVING BILL LAWSUIT FILED IN
US ALLEGING
BLUES LOOK AT OPTIONS P34 DATA THEFT P2
Issue 1,260 Wednesday 10 November 2010 www.cityam.com FREE

HUGE FINES FOR StanChart

hires 4,000
staff in Asia
AIRLINE CARTEL
▲
BANKING
BY STEVE DINNEEN
STANDARD Chartered yesterday
AVIATION British Airways revealed it will create 4,000 jobs in
▲

Cargolux Airlines Japan Airlines

BY MARION DAKERS
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 com-
petition 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
FTSE 100 ▲5,875.19 +25.23
€104M €79.9M
LAN Chile
€8.2M
SAS fined
€70.2M
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 detrimen-
tal 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 NASDAQ ▼2,562.98 -17.07
€35.7M
Cathay
Pacific
€57.12M
Qantas
€8.9M
Air Canada
€21M
“does not seem to reflect a discount to
take into account the financial turbu-
lences that recently affected cargo car-
riers generally and Cargolux in
particular. When added to fines
already due to other anti-trust author-
ities this seems a very harsh punish-
ment indeed.”
The decision leaves the firms vulner-
able to lawsuits from customers.
Claims Funding International, which
has already filed a €500m group law-
£/$ ▼1.60 -0.01 £/¤ 1.16 unc
Singapore Martin
Airlines Air
€74.8M €29.5M
Air France-KLM
€310M
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.
¤/$ ▼1.38 -0.01
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 bal-
ance that against our national inter-
est. Banks have to be safe and that
means that the regulations have to
take into account the potential prob-
lems created by cash bonuses,” he told
Bloomberg TV.
Cable was responding to RBS chair-
man 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 quit-
ting its UK base. Standard Chartered
has also considered its position but has
no immediate plans to relocate.
ALLISTER HEATH: P2
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30/08/10 – 03/10/10 is 110,015

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 2 News
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 con-
tracts 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
Editor Allister Heath
Deputy Editor David Hellier
News Editor Ben Griffiths
Night Editor Katie Hope
Associate Editor David Crow
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
Pictures Alex Ridley
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Commercial Director Harry Owen
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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 advis-
er to Rupert Murdoch, as the compa-
ny looks to make investments in
educational start-ups.
ASIAN EQUITY HEDGE FUNDS
OUTPERFORM
Asian equity hedge fund managers
are enjoying some of their biggest
returns so far this year, trouncing
their peers in European and US mar-
kets 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
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 appre-
ciate – 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 central-
ly-planned doubling in commerce?
Trade is not something that happens
between governments and bureau-
crats locked in smoke-filled rooms, it
is something that emerges sponta-
neously from the interaction of pri-
vate individuals and firms, as well as a
IMF: UK faces
faster growth
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 lit-
tle expectation of recession.
The forecasts are in line with the
IMF’s previous estimates issued in
October.
The IMF also sounded a note of cau-
tion 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
returns are 32 per cent, making it one
of the industry’s top performers
worldwide.
LABOUR ALLIES RALLY BEHIND
WOOLAS
Labour will not pick a candidate to
replace Phil Woolas until the dis-
graced former MP has exhausted
legal attempts to clear his name, it
emerged yesterday, as colleagues ral-
lied behind him.
FOOD PRICE FEARS AS US WARNS ON
CROP YIELDS
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 soy-
abean 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.
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 contin-
uing 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 reduc-
ing 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 UK-
based banks are reallocating their
resources to the region and how thou-
sands of jobs that could have been cre-
ated 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:
in some areas”.
“In the unexpected case of a signif-
icant 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.
The IMF has warned
that chancellor
Osborne’s cuts may
have to be adapted if
there is a fresh slump
BIG BROTHER IS HAILED AS THE WAY
TO SAVE
The president of the AA said that pre-
miums were becoming “unsustain-
able” 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 behav-
iour, with a related insurance prod-
uct scheduled for launch next year.
ers.
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 reserv-
ing a seat in advance, under plans
being considered by Virgin Trains.
two friends of mine are shortly relo-
cating to Singapore, which is fast posi-
tioning itself as a new centre for
wealth management, an Asian
Switzerland even. Another is moving
to Hong Kong. All three will be work-
ing 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 miss-
ing 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 conduct-
ed 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.
allister.heath@cityam.com
Tullett chief executive Terry Smith
BGC sues Tullett for theft
LEGAL
▲
BY MARION DAKERS
BGC Capital Markets has accused its
fellow inter-dealer broker Tullett
Prebon, run by Terry Smith, of steal-
ing 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-
EC MARKETS HEAD MICHEL BARNIER
REFUSES LONDON CLASH WITH MPS
When it comes to imposing regula-
tions on the City, Michel Barnier is
fond of promising: “We will go fur-
ther.” But not as far as actually com-
ing 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.
EU THREATENS TO BLOCK CHINESE
BIDS FOR PUBLIC CONTRACTS
The European Union will block access
for Chinese companies bidding for
publicly funded contracts unless busi-
nesses from Europe get the same
access in China, under new proposals.
CITYA.M. 10 NOVEMBER 2010
NEWS | IN BRIEF
Fitch fired by Portugese bank
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 bank-
ing 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.
stances as part of a Treasury swaps
joint venture. BGC claims that Tullett’s
brokers used the data without permis-
sion to gain an unfair lead in the mar-
ket. The firm, which is suing for
unjust enrichment, unfair competi-
tion and computer fraud, claimed in
the court filing: “Tullett Americas and
its affiliates have a long history of steal-
ing 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.
ROLLS DRAWS FLAK FOR QUIET ON
ENGINE FIRE
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
HERMÈS CLAN PLAYS DEFENCE
The family behind French fashion
house Hermès is considering funnel-
ing its shares into an unlisted holding
company, as a way to defend Hermès
from its big, new and unwanted
shareholder, LVMH.
CITYA.M. 10 NOVEMBER 2010 News 3

Collins Stewart to
BP’s chief executive
Bob Dudley is a
new broom,
brought in after
the spill at the

enter big league

Deepwater Horizon
oil rig, which inves-
tigators say
occurred after the
firm developed a
culture of compla-
cency.
Lynch.

▲
FINANCIAL SERVICES
Picture: REUTERS BY JENNY FORSYTH
BROKER and financial services group
Collins Stewart has picked up its first
FTSE 100 client.
Randgold Resources, an Africa-
focused gold mining and exploration
company with a market capitalisa-
tion of £5.5bn, has hired Collins
Stewart as its joint corporate broker,
along with Bank of America Merrill
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 traditional-
ly 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 100-
listed Alliance Trust.

Complacent
culture at BP
led to oil spill
engineer at Seldovia Marine Services
▲

ENERGY
BY MARION DAKERS
A CULTURE of complacency at BP,
Transocean and Halliburton con-
tributed to the Gulf of Mexico oil spill
in April, an investigation into the dis-
aster heard yesterday.
William K Reilly, co-chairman of the
US government’s probe into the explo-
sion on the Deepwater Horizon rig,
said yesterday investigators had uncov-
ered “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 deter-
mine 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 untan-
gle 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
who said he had often worked with
BP.
Bob Graham, a former Democratic
senator who is also chairing the com-
mission, 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 hear-
ings to investigate the cause of the dis-
aster. It has until 12 January to present
its findings, and has the power to rec-
ommend a change in the law and
industry practices.
ANALYSIS l BP 454.45
460
p 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
▲

LEGAL
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, com-
pared 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.
LEGAL
COMMERCIAL law group Nabarro
reported a three per cent rise in rev-
enue 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
CITYA.M. 10 NOVEMBER 2010 News 5

Bank well-placed to outperform rivals

D
ESPITE Barclays having avoided
a taxpayer bailout, there’s plen-
ty of fodder for populist banker-
bashing 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 fluctua-
tions in value and the fact that invest-
ment bank staff numbers are up
2,000. Even discounting mark-to-mar-
ket 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 gen-
eral have been struggling and
Barclays’ exposure to the Spanish
economy has not helped matters.
So it’s no surprise that outgoing
CEO John Varley was keen to empha-
sise the bank’s more friendly sound-
ing 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 impair-
ments, 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
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 well-
placed to outperform its peers.
BOTTOMLINE
Analysis by Juliet Samuel

Incoming Barclays CEO Bob Diamond Picture: Micha Steiner/City AM

Mystery blight decimates a) De-fur the kettle and switch

Barclays sees
to tea.
world coffee crop.
b) Short coffee shop stocks and
Do you: go long on coffee futures.

profits tumble
profits. Pre-tax profit was wiped out,
▲

BANKING
BY JULIET SAMUEL
INVESTORS reacted positively yester-
day despite Barclays unveiling quarter-
ly 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 divi-
dend 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
dropping 149 per cent to record a
£182m loss. The bank blamed the fig-
ures on mark-to-market write-downs
combined with a generally difficult cli-
mate 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
320 9 Nov
300
280
260
31 Aug 20 Sep 8 Oct 28 Oct

Lloyds sheds 420 jobs and has

cut 22,500 since buying HBOS Spread betting and CFD trading carry a high level of risk to your capital and
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BANKING in this advert should be construed as investment advice.

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 govern-
ment-owned after accepting taxpayer-
funded support during the financial
Horse Personal Finance to new busi-
ness, 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 Capital Spreads is a trading name of London Capital Group Ltd, which is authorised and regulated by the Financial Services Authority and a
2008 government-brokered takeover. member of the London Stock Exchange. Registered address: 12 Appold St, London, EC2A 2AW. Registered number: 3218125.
Lloyds’ Black Horse motor finance
unit remains open for business, and
the bank said Black Horse Personal
Finance customers will be unaffected.
CITYA.M. 10 NOVEMBER 2010
L&G expects to
meet cash aim
as revenues rise
▲
INSURANCE
BY MATTHEW WEST
UK Insurance group Legal & General
(L&G) said it was on target to beat its
cash generation target for the full-
year 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
News 7
L&G group chief
executive Tim
Breedon (left) and
chairman John
Stewart said the
firm’s revenues are
rising
Management (LGIM) increased assets
under management (AUM) and diversi-
fied 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 inter-
national clients.
The results come after L&G pub-
lished 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
 8 Consumer News
IHG performs
below par as
costs kick-in
▲
LEISURE
BY HARRY BANKS
INTERCONTINENTAL Hotels Group
(IHG), the world’s biggest hotel opera-
tor, reported third-quarter earnings
below expectations after staff incen-
tive costs turned out higher than
anticipated.
The group, which operates seven
chains including InterContinental,
Crowne Plaza and Holiday Inn, yester-
day said third quarter operating prof-
it 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 dis-
appoint 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 meas-
ure, 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.
ANALYSIS l IHG 1,140.00
9 Nov
p
1,200
1,100
1,000
9 Aug 27 Aug 17 Sep 7 Oct
Primark has performed well in the downturn
AB Foods hits £10bn but
warns over price rises
RETAIL
▲
BY JOHN DUNNE
THE company behind clothes chain
Primark and kitchen staples such as
Kingsmill bread and Ovaltine yester-
day 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
27 Oct £825m. That allowed ABF to up its div-
Picture: Micha Theiner/ CITY A.M
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 negoti-
ating 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.
CITYA.M. 10 NOVEMBER 2010
NEWS | IN BRIEF
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 lower-
priced silver range last month, which it
said had been well received. For the
March to September period, the compa-
ny 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 execu-
tive Barbara Snoad said: “The new range
is helping us and people are willing to
buy quality items at a reasonable price.”
Frozen food fall hits Northern
Northern Foods yesterday posted a 34
per cent fall in first-half underlying pre-
tax profit as it was hit by lower demand
at its Frozen division, which makes piz-
zas to pies. The company, which makes
own-label products for retailers as
diverse as premium food seller Marks &
Spencer and discounter Aldi, said trad-
ing conditions at its Frozen unit
remained tough. For the 26 weeks to 2
October pre-tax profit before restructur-
ing 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 com-
pany said it was changing the structure
of its business, by shifting from five busi-
ness 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.
CITYA.M. 10 NOVEMBER 2010 Consumer News 9

M&S pledges to launch

new lines as profit rises
Bolland, who took over from Sir ble through a deal with the El Corte
▲

RETAIL
BY JOHN DUNNE
MARKS & SPENCER will launch hun-
dreds of new lines as it relies on its
“special” image to fuel profit over the
next three years, its new chief execu-
tive said yesterday.
Marc Bolland unveiled his blue-
print for the retailer while also
announcing a 17 per cent rise in half-
year pre-tax profit to £348.8m.
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 interna-
tional expansion put on the back
burner. He rejected suggestions that
the company was in advanced negoti-
ations over a move into Spain – possi-
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 invest-
ment 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.” Marc Bolland has pledged to build on his predecessor’s achievements. Picture: GETTY

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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 The Capitalist
10 CITYA.M. 10 NOVEMBER 2010

Above: Dragon
Peter Jones with
Ayo Jenyo, the
National
Enterprise
Academy’s stu-
dent entrepre-
neur 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 Right: Outgoing Tesco boss Sir Terry Leahy
Everywhere, with Mike King of IBM received an award to celebrate a decade of
Pictures: Micha Theiner/City A.M. excellence in business
CITYA.M. 10 NOVEMBER 2010
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 cel-
ebration the ceremony was too, hon-
ouring 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 vac-
uum 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 sharehold-
er 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 busi-
nessmen and women thronged the
hall, from Sir John Banham, chair of
11
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com
Right: Orange Leader
of the Year Martin
McCourt, chief exec-
utive 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)
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 push-
ing 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 news-
reader 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’ char-
ity 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 compa-
ny has risen or sunk in the eyes of the
general public: get nominated for an
award. Booze and leisure firms yester-
day elicited the largest cheers, mov-
ing down the scale towards the Royal
Bank of Scotland – half hisses, half
cheers – and finally hitting rock bot-
tom with HMRC, greeted with a bar-
rage of pantomime booing.
 12 News CITYA.M. 10 NOVEMBER 2010

Embattled Symbian boosted £7.4bn £22.6bn

by 11 new Japanese handsets First half
core earnings: First half
revenues:
iPhone in 2007, and Japan is the only Foundation to run only a few years
£4.3bn
▲

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 pop-
ular smartphone operating system,
activated on more than 400m
phones since 2000, it has lost ground
since the introduction of Apple’s
market where other manufacturers ago. China Mobile
than Nokia are still taking it on. The cross-industry Symbian stake sale:
It has been squeezed further since Foundation will in the future take
the introduction of Google’s critical- care of only licensing of the soft-
ly acclaimed Android operating sys- ware.
tem, which is now seen as the main Although Nokia receives no direct
competitor to Apple’s iOS.
On Monday Nokia said it would
take over development of the plat-
benefit from other makers using the
platform, its own portfolio is helped
by the breadth of independent soft-
£3.1bn
form from April 2011, resuming ware developed for use on the SoftBank
management of a key asset it gave to phone, which in turn is increased by stake sale:
the independent Symbian a bigger user base.

FLIGHTS TO THE
BIG APPLE. Vittorio Colao is bullish about Vodafone’s strategy Picture: Micha Theiner/City A.M.

ONE OF OUR Vodafone sells

FIVE A DAY. £3.1bn stake
®
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Heathrow to New York with 180º flat bed seats.
If you want to arrive fresh in New York, fly BusinessFirst. We’ve installed larger video screens,
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▲

TELECOMS that he says will be “better and fairer”.

little difference makes all the difference. Now that the flight schedule
BY STEVE DINNEEN
is even more convenient, try the business class that’s big on the
small stuff. Welcome to BusinessFirst. Flying from Heathrow VODAFONE yesterday continued its
to Newark Liberty International Airport, our New York purge of non-core assets, as it
area hub. For reservations and information, announced a £3.1bn sale of its stake
go to continental.com 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 inter-
ests 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 – generat-
ed by calls – to data.
Mobile data is now worth in excess
of £5bn a year to Vodafone and grow-
ing exponentially.
Colao, watching the analyst
slideshow on his iPad, outlined plans
Flat bed seats may not be available in the event of aircraft substitution. Fifth daily service begins on 31 October, 2010. © 2010 Continental Airlines. Inc. for a tiered system for data payments
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 guid-
ance, 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.
174.00
ANALYSIS l Vodafone
9 Nov
175 p
170
165
160
155
150
9 Aug 27 Aug 17 Sep 7 Oct 27 Oct
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CITYA.M. 10 NOVEMBER 2010 Economic News 15

House prices to surge in 2014

if Bank of England intervenes
economic consultancy the Centre for impact of weak disposable incomes..

▲
UK ECONOMY
BY MATTHEW WEST
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 intro-
duced by last month’s comprehensive
spending review, a report will say
today.
The BoE needs to do more quantitative easing to boost house prices, says the CEBR The latest forecast from leading
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 purchas-
es. It also suggests housing supply
constraints will work to offset the
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 quantita-
tive 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
Separate figures from the ONS
▲

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 quarry-
ing 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 pre-
vious year and 0.9 per cent on
August.
showed Britain’s trade deficit nar-
rowed to a four-month low, falling to
£4.6bn in September, compared with
We understand expat life
a revised trade gap of £4.9bn in
August – the highest figure for five
DGECWUGYGoTGNKXKPI
years.
Exports rose by £0.5bn and
it every day
imports rose by £0.2bn.
The UK’s trade gap with its biggest 40°N – New York, USA
trading partner, the European Union
(EU), also narrowed to £3.6bn in
September, compared with a deficit
of £3.8bn in August. Exports and 9JGPKVEQOGUVQ[QWTUCXKPIUCPFKPXGUVOGPVUKVoUIQQFVQVCNMVQRGQRNG
imports cancelled each other out
with exports rising by £0.1bn while YJQWPFGTUVCPF[QWTURGEKƂEPGGFUCPFEKTEWOUVCPEGUCPFYJCVKVoUNKMGVQ
imports fell by £0.1bn. be an expat. As the part of the HSBC Group dedicated to expats, HSBC Bank
Alan Clarke, economist at BNP
Paribas, said he believed the data sig- International has been serving the needs of people living and working abroad
nalled a period of sluggish economic for over 40 years.
growth but said the figures were
more promising than previously.
“Manufacturing growth at 0.1 per r2GQRNGYJQWPFGTUVCPFGZRCVNKHGDGECWUGVJG[FGCNYKVJGZRCVUGXGT[FC[
cent is pretty sluggish. But I don’t
think we’re going to fall into nega- r'ZRGTVUQPVJGITQWPFKPMG[NQECVKQPUCETQUUVJGINQDG
tive territory, we are just not going
to expand as quickly as we were,” he r1HHUJQTGUQNWVKQPUFGUKIPGFVQOCZKOKUGRQVGPVKCNVCZGHƂEKGPEKGUHQTGZRCVU
said. “I did forecast negative growth
for 2011. But now I think we will be r1PNKPGDCPMKPIVJCVNGVU[QWXKGYCNN[QWTGNKIKDNG*5$%CEEQWPVUYQTNFYKFG
bobbing along the bottom so I’m a and make free transfers between them
little more optimistic. I expect one
per cent GDP growth for next year,”
he added. Talk to people who understand expat life:
Call +44 1534 616079

J Sainsbury outpaces rivals as it Visit www.offshore.hsbc.com/am

sees its market share inch higher

sales growth of 6.1 per cent on the
▲

CONSUMER
UK SUPERMARKET sales are rising
slightly more than food price infla-
tion, 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
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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 16 News
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 uncon-
ventional 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 projec-
tion was according to the report’s cen-
tral case, the New Policies scenario.
The Paris-based IEA, which advises
28 industrialised countries, also raised
its mid- and long-term oil price fore-
casts, despite slashing oil demand esti-
mates by 2035, citing growing supply
CITY VIEWS: WILL DAVID CAMERON’S VISIT TO CHINA
GENERATE MORE TRADE FOR THE UK? Interviews by Juliet Samuel
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 coun-
tries 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 high-
est since October 2008, after hovering
around $70-80 most of the year.
CITYA.M. 10 NOVEMBER 2010
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. ”
CITYA.M. 10 NOVEMBER 2010
Rolls-Royce
wins $1.2bn
China order
▲
POLITICS
BY VICTORIA BATES
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 with-
in 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 one-
party communist state. Some rights
groups have accused London of soft-
pedalling 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 air-
craft 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 agree-
ments 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 dis-
putes 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 17
Trade envoys
named as Cable
signs pigs deal
POLITICS
▲
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.
Clockwise: Victor The ambassadors include the CBI’s
Blank, Tamara outgoing chief Richard Lambert,
Mellon, Chris Patten fomer governor of Hong Kong Chris
and Anya Hindmarch Patten, Brunswick’s Alan Parker,
Pictures: Boeing’s Sir Roger Bone, BAE’s Dick
GETTY/REX/REUTERS 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 poli-
cy, and why I am determined to pur-
sue 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 popula-
tion. He said: “This agreement gives a
valuable boost to the British pig indus-
try and is already delivering results.”
 18 News CITYA.M. 10 NOVEMBER 2010

Aldermore gets
Fair weather City veteran as
for Munich Re new chairman

as profits rise
BANKING

▲
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 invest-
INSURANCE dred millions of euros for the ment banking firm Numis and is a
▲

BY JEREMY HAZLEHURST Deepwater Horizon spill. This is non-executive director at Telefonica,

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-
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 earth-
quake, 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.
Excel and Pearson. His sparkling cor-
porate 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 govern-
mental circles, having previously
advised the coalition on regulatory
policy and chaired the Labour govern-
ment’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
Sir David Arculus, currently chairman of Numis, has joined Aldermore as chairman its new chief financial officer.

New boss for directories firm JP Morgan faces lawsuits

over mortgage foreclosure
Yell as faltering sales hit stock
▲

BANKING
refiling the foreclosure documents
JPMORGAN Chase faces two possible within weeks.
▲

MEDIA
YELLOW-pages publisher Yell yesterday
named ex-Cisco manager Michael
Pocock as its new chief executive and
reported an accelerated slide in quar-
terly sales, sending its shares down 20
per cent.
Yell, whose CEO and last chief finan-
cial officer both announced their
departure in May, said its customer
base of small businesses had not yet
regained economic confidence, result-
ing 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 amorti-
sation 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 con-
sumers 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
class action lawsuits, including fraud,
related to its decision to halt foreclo-
sures, the US bank said in a regulato-
ry 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 temporari-
ly halted home seizures after finding
glitches in foreclosure documents.
Last week, it said it planned to start
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 mortgage-
backed 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.

“Increasingly, the common language of business

is the language of corporate finance.”
Ian Cooper, Professor of Finance

Corporate Finance Programme Portfolio

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CITYA.M. 10 NOVEMBER 2010
Schroders boosted by inflows Gartmore investment
▲
FINANCIAL SERVICES
BY JEREMY HAZLEHURST
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 yester-
day 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-
ANALYSIS l Estimated aggregate balance (on a section 179 basis) and
funding ratio of schemes in the PPF universe
200
150
100 p
50
0 100%
-50
-100 Aggregate balance (LHS)
-150
Funding ratio (RHS)
-200
-250
Oct 04 Oct 05 Oct 06
Hedge funds forced
to drop their fees in
wake of meltdown
▲
HEDGE FUNDS
BY VICTORIA BATES
INVESTORS are enjoying more negoti-
ating power than ever before when it
comes to investing in hedge funds,
putting increasing pressure on man-
agers to lower fees and offer greater
liquidity in the wake of the credit cri-
sis, 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 actual-
ly 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
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 mar-
ket 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
120%
110%
90%
80%
70%
Oct 07 Oct 08 Oct 09 Oct 10
Picture: GETTY
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 perform-
ance is the key criterion for selecting
a manager. But investors said clarity
and consistency of investment philos-
ophy are the next most important fac-
tors, contrasting with the view of
managers, who picked reputation
and recent performance.
shares in Schroders. They were the
biggest riser by price on the FTSE yes-
terday, 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
1,620
1,580
1,540
1,500
11 Oct 18 Oct 25 Sep 1 nov
Private pensions
back in the black
▲
PENSIONS
BY JEREMY HAZLEHURST
PRIVATE pension schemes in the UK
have motored back into surplus,
driven upwards by healthy stock
markets. say the new monthly fig-
ures out from the Pension
Protection Fund (PPF), the body that
insures pension schemes.
The aggregate balance of the
6,653 schemes in the pension pro-
tection fund’s PPF 7800 index is esti-
mated 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
trust reviews manager
▲
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
9 Nov
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.
8 Nov Guy’s resignation, which came
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 liabili-
ties 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 mar-
kets. Much of the movement in the
figures can be attributed to the per-
formance of the FTSE All-Share,
which rose by 13.6 per cent In the 12
months to October 2010 while 15-
year 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.
News 19
alongside news that chief investment
officer Dominic Rossi and senior port-
folio 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 securi-
ties it sold and the risk related to those
securities. US Judge Sidney Stein ruled
yesterday that shareholders could pur-
sue 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 compa-
ny 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 execu-
tive 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

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
BRANDINDEX between public and private sector
Spending Review has started to make
public sector workers nervous.
Widespread feelings of employ-
ment insecurity exist in spite of a per-
ceived increase in the level of
business activity in the UK: both pri-
vate and public sectors recorded posi-
tive net increases in this regard (four
per cent and 14 per cent respectively).
in the need for additional borrowing services will cost more this time next
in respect of Credit Cards, overdrafts year, with unemployed people regis-
and other unsecured loans. tering the lowest level of confidence
The consumer prognosis for next that prices will remain stable.
year is also grim. YouGov respondents Stephan Shakespeare is chief executive
overwhelmingly believe goods and and co-founder of YouGov
ANALYSIS l Total consumer job security, Feb 2009-October 2010
0

STEPHAN SHAKESPEARE employees. By subtracting the per-

centage of people who currently feel
Similarly, from September to October
a net zero per cent level of income -0.05

secure in their position from those change was recorded. -0.01

I
N the run up to the Christmas sea- fearing impending job loss, YouGov Despite this, those employed are
son feelings of insecurity sur- SixthSense calculated a net -31 per still feeling the pinch as 67 per cent -0.15
rounding employment situations cent level of confidence in job securi- said price changes have negatively -0.20
can become more acute. ty amongst public sector workers, affected them, with only two per cent
A monthly Household Economic while confidence amongst private welcoming recent price fluctuations. -0.25 Job security Trend Six Month
Moving Average
Activity Tracker (HEAT) produced by sector employees stands at a net -14 YouGov SixthSense also recorded a
YouGov SixthSense has found that a per cent. The Comprehensive nine per cent net increase this month Feb 09 Apr 09 Jun 09 Aug 09 Oct 09 Dec 09 Feb 10 Mar 10 May 10 Aug 10 Oct 10

Ex-Sportingbet
Post Office to boss floats jet
serve banks’ charter firm

▲
AVIATION

customers Former chief of

Sportingbet Nigel
Payne is floating
a new private jet
SPORTINGBET’S former chief execu-
tive 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
launch it as quickly as possible. venture (Aim).
▲

POSTAL SERVICES
BY HARRY BANKS
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 state-
backed 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 ... fund-
ing 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
HSBC and Santander will be the
only banks in Britain that do not
enable all their current account hold-
ers to use post offices, and the govern-
ment 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 finan-
cial 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 branch-
es 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.
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 mar-
ket.
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.
Payne – who led Sportingbet from
2000 to 2006 and has since been a
non-executive director – is non-execu-
tive 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 mainte-
nance of its aircraft in-house, hoping
to achieve cost savings and boost mar-
gins.

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CITYA.M. 10 NOVEMBER 2010 News 21

Black Ops sells 5m

Carlsberg chief
executive Jorgen
Buhl Rasmussen
said conditions
remain challeng-

copies on first day

ing in several
northern and west-
ern European mar-
kets.

Picture: GETTY

Shares in the firm surged more

▲
MEDIA
BY STEVE DINNEEN
ACTIVISION Blizzard’s new install-
ment 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.
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 his-
torical and fictional warzones includ-
ing Berlin during WWII and guerilla
warfare against modern terrorists.

Carlsberg hit
by rising input
costs in 2011
Europe have clearly had an effect in
▲

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 mar-
ket leader, to a mid-single digit per-
centage 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 con-
sumer 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 challeng-
ing 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
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 com-
pared 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 satu-
rated, 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
82 € 9 Nov
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 dra-
matically 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 reces-
sion in January 2009.
In London this grows to 84 per
cent – more firms in trouble than in
2009. Virtually every commercial sec-
tor shares in the pain, with the most
dramatic deterioration seen in proper-
ty services.
Nick Hood, partner at Begbies
Traynor says the situation could deteri-
orate 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 win-
ter months and through into 2011
with public spending cuts biting ever
deeper.
22 News
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 director in RBC’s wealth management
The bank has hired Sandy Swinton as a division in the UK.
To appear in CITYMOVES please email your career
updates and pictures to citymoves@cityam.com SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
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 man-
age discretionary client portfolios.
Langrish joins in January from
Rothschild Private Banking & Trust,
where he was deputy head of portfolio
in association with
management and head of UK equities.
Prior to that, he spent three years at JP
Morgan Fleming Private Asset
Management.
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.
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 coun-
cil 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 sup-
plies failed to stop parliament pass-
ing the pension bill last month, in a
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CITYA.M. 10 NOVEMBER 2010
BTIG
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.
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
morganmckinley.com
victory for the conservative president
as he tries to reassure financial mar-
kets 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 sys-
tem where other governments gave
in to unions has bolstered his stand-
ing within his centre-right UMP
party.
Turnout has flagged at recent
street marches against the reform,
which will gradually raise the mini-
mum and fully pensionable retire-
ment 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.
Account Value % Difference
£102,796.76 928
£94,797.19 848
£78,606.50 686
£49,553.48 396
£42,162.97 322
£41,809.79 318
£40,281.83 303
£28,999.82 190
£28,525.97 185
£27,695.07 177
CITYA.M. 10 NOVEMBER 2010
CityA.M. reader
wins £1,000 of
prize art works
ARTS
▲
CONGRATULATIONS to City A.M. read-
er Sarah Graves-Woods, a senior con-
sultant 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 exhi-
bition showing small works inde-
pendently 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.
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
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 bet-
ting that the fuel will become a key
global energy source in the coming
decades.
Chevron’s move into the
From left: Sarah Graves-Woods, ING’s Gerlach Jacobs and City A.M.’s Tim Barber
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, maca-
roon seller Laduree and outdoor-
wear firm Jack Wolfskin.
Pop-up stores have also boosted
the area’s credibility, with both
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 tril-
lion 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 rea-
sonable.”
Chevron, the second-largest US
oil and gas company, will pay
News 23
BEST OF THE BROKERS
ANALYSIS l Spirax-Sarco Engineering
1,900 p
1,809.00
9 Nov
SPIRAX SARCO
RBS rates the engineering group a “hold”
with an increased target price of £19.25. The
1,800
broker has upgraded its full year 2010 earn-
1,700
ings per share forecasts by four per cent fol-
1,600 lowing a healthy interim management
statement, and sees sales growth of five per
1,500
cent in 2011 with strong growth in Asia.
9 Aug 27 Aug 17 Sep 7 Oct 27 Oct
ANALYSIS l ASOS ASOS
1,500 p Singer Research rates the online retailer a
1,294.00
9 Nov “sell” but has raised its target price 38 per
1,300
cent to £10. The broker believes the firm’s US
launch is going well, and that moving into
1,100
other markets is key to growth next year. A
900 rise in the firm’s spending can be explained by
stocking up for this expansion, it adds.
9 Aug 27 Aug 17 Sep 7 Oct 27 Oct
ANALYSIS l Deutsche Post DEUTSCHE POST
14.2 €
13.80 S&P rates the company a “buy” with a 21-
9 Nov month target price of €15. The broker
13.8
believes the recent outperformance was due
13.4 to a rebound in global trade, but maintains its
2010 earnings before tax and interest fore-
13
cast at €2.16bn. S&P believes a successful
refinancing could drive shares higher.
9 Aug 27 Aug 16 Sep 6 Oct 26 Oct
To appear in Best of the Brokers email your research to notes@cityam.com
singer Lily Allen and American
Financial TV at your fingertips
label Kate Spade opening outlets.
C&C owns 46 properties in
Covent Garden, and plans to buy
more. Its chief executive officer Download our new app now!
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
$43.34 per share, or a 37 per cent
premium to Atlas’ closing price on
Monday. That offer consists of Get our FREE app for the iPhone and iPad. Watch all of our
$38.25 per share in cash for each fantastic Interactive Investor TV content, interviews and investor
Atlas share, plus a distribution of
units in Atlas Pipeline Holdings commentary, iBall and personal finance coverage from
worth about $5.09 per share. Moneywise TV. Whenever you want wherever you are. Financial
Chevron will also assume net
debt from Atlas of about $1.1bn, for
TV at your fingertips.
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 www.iii.co.uk/tv
opportunity to exploit the dense Apple, the Apple logo, and iPhone and iPad are the trademarks of Apple Inc., registered in the U.S. and other countries.
App Store is a service mark of Apple Inc.
rock formations that have changed
the US energy outlook in recent
years.
 Markets&Investment
24 CITYA.M. 10 NOVEMBER 2010

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
3i . . . . . . . . . . . . . . . . . . . . . . . .326.00 +9.00 327.00 246.90 Compass . . . . . . . . . . . . . . . . . .542.50 +5.50 574.50 399.30 Kazakhmys . . . . . . . . . . . . . . . .1553.00 +46.00 1634.00 955.50 Schroders . . . . . . . . . . . . . . . . .1667.00 +87.00 1670.00 1096.00
3i Infrastructure . . . . . . . . . . . . . 114.90 +1.20 115.00 97.00 Cookson . . . . . . . . . . . . . . . . . . .576.50 +15.50 616.00 364.80 Kesa Electricals . . . . . . . . . . . . .160.50 +3.00 172.40 98.45 Schroders N/V. . . . . . . . . . . . . .1307.00 +55.00 1330.00 912.50
A.B. Foods . . . . . . . . . . . . . . . . 1107.00 +34.00 1113.00 790.00 Croda Intl . . . . . . . . . . . . . . . . .1482.00 –18.00 1540.00 735.00 Kingfisher . . . . . . . . . . . . . . . . . .237.40* –1.90 255.00 196.50 Scot. & Sthrn Energy. . . . . . . . . 1118.00 –4.00 1206.00 1006.00
Aberdeen Asset Man . . . . . . . . . .188.50 +1.00 191.60 111.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .567.50 +2.00 573.50 401.70 Ladbrokes . . . . . . . . . . . . . . . . .135.00* –1.10 164.60 114.60 Scottish Mortgage. . . . . . . . . . . .683.00 — 684.00 475.00
Admiral. . . . . . . . . . . . . . . . . . .1671.00 –9.00 1721.00 1003.00 Davis Service . . . . . . . . . . . . . . .413.00 –3.60 442.30 356.00 Lamprell . . . . . . . . . . . . . . . . . . .390.00 +2.00 393.30 157.30 SEGRO . . . . . . . . . . . . . . . . . . . .303.00 +0.50 389.30 244.00
Aegis . . . . . . . . . . . . . . . . . . . . .131.40 +3.40 137.30 103.10 Debenhams . . . . . . . . . . . . . . . . .74.90 +0.75 90.00 51.95 Lancashire Hldgs . . . . . . . . . . . .609.50 +23.50 615.50 416.70
Afren . . . . . . . . . . . . . . . . . . . . .129.20 +5.50 135.90 77.00 Derwent London . . . . . . . . . . . .1505.00 –20.00 1633.00 1183.00 Land Securities . . . . . . . . . . . . . .696.50 +3.50 743.50 543.00 Serco . . . . . . . . . . . . . . . . . . . . .575.00 +15.00 656.50 491.20
African Barr Gold . . . . . . . . . . . .555.00 +16.50 685.00 520.50 Dexion Absolute . . . . . . . . . . . . .140.00 +1.90 148.00 131.20 Legal & General . . . . . . . . . . . . .102.50 –0.70 107.50 69.05 Severn Trent . . . . . . . . . . . . . . .1429.00 +10.00 1450.00 944.00
Aggreko . . . . . . . . . . . . . . . . . .1596.00 –13.00 1698.00 727.50 Diageo . . . . . . . . . . . . . . . . . . . 1155.00 –3.00 1240.00 988.00 Lloyds Banking Gp . . . . . . . . . . . .68.48 –0.15 79.15 45.30 Shaftesbury . . . . . . . . . . . . . . . .438.00 –5.20 465.00 348.00
Alliance Trust . . . . . . . . . . . . . . .356.20 –0.60 357.50 292.80 Dixons Retail . . . . . . . . . . . . . . . .26.49 –0.35 39.75 23.07 Logica . . . . . . . . . . . . . . . . . . . .130.50 +0.60 149.10 100.80 Shire. . . . . . . . . . . . . . . . . . . . .1486.00 –11.00 1532.00 1108.00
AMEC . . . . . . . . . . . . . . . . . . . . 1114.00 –20.00 1144.00 728.00 Domino’s Pizza . . . . . . . . . . . . . .519.50 +1.00 520.00 278.20 London Stk Exchange . . . . . . . . .750.50 +2.00 938.50 540.50 SIG . . . . . . . . . . . . . . . . . . . . . . . 114.40 +2.70 142.10 89.55
Amlin . . . . . . . . . . . . . . . . . . . . .396.00 –4.10 437.60 357.30 Drax . . . . . . . . . . . . . . . . . . . . . .377.80 +3.60 467.60 321.50 Lonmin . . . . . . . . . . . . . . . . . . .1894.00 +25.00 2198.00 1344.00 Smith & Nephew . . . . . . . . . . . . .594.00 +7.00 700.50 532.00
Anglo American . . . . . . . . . . . .2959.00 +3.50 3038.50 2210.00 Dunelm . . . . . . . . . . . . . . . . . . . .493.10 –11.90 515.00 319.40 Man . . . . . . . . . . . . . . . . . . . . . .299.70 +6.60 373.60 199.60 Smith(Ds) . . . . . . . . . . . . . . . . . .181.10 +0.80 185.90 103.00
Antofagasta . . . . . . . . . . . . . . .1461.00 +33.00 1470.00 755.50 Easyjet . . . . . . . . . . . . . . . . . . . .477.30 +7.60 499.90 339.80 Marks & Spencer. . . . . . . . . . . . .406.00 –7.20 431.40 321.90 Smiths . . . . . . . . . . . . . . . . . . .1202.00* –21.00 1297.00 930.00
Aquarius Platinum . . . . . . . . . . .397.00 +3.80 490.00 211.50 Edinburgh Inv Tst . . . . . . . . . . . .461.90 +0.90 466.80 345.50 Meggitt . . . . . . . . . . . . . . . . . . . .330.10 +1.20 336.70 234.50 SOCO Intl . . . . . . . . . . . . . . . . . .323.90 +7.90 510.00 287.40
ARM Holdings . . . . . . . . . . . . . . .356.00 +5.00 419.50 150.00 Electrocomponents . . . . . . . . . . .253.10 –3.40 261.50 155.00 Melrose . . . . . . . . . . . . . . . . . . .303.40 +6.00 304.90 160.00 Spectris . . . . . . . . . . . . . . . . . . 1136.00* +14.00 1146.00 653.00
Ashmore . . . . . . . . . . . . . . . . . . .381.50* +1.70 400.50 215.00 EnQuest . . . . . . . . . . . . . . . . . . .134.20 +0.80 138.50 87.35 Mercantile IT . . . . . . . . . . . . . . .1028.00 +13.00 1029.00 822.50 Spirax-Sarco Eng . . . . . . . . . . .1809.00* +4.00 1888.00 1060.00
Ashtead . . . . . . . . . . . . . . . . . . .135.00 +8.10 135.00 61.25 Essar Energy . . . . . . . . . . . . . . .542.00 –5.00 566.50 358.50 Michael Page Intl. . . . . . . . . . . . .503.50 +2.00 507.50 326.00
Astrazeneca . . . . . . . . . . . . . . .3093.00 +16.00 3389.50 2680.50 Eurasian Nat Res . . . . . . . . . . .1009.00 +23.00 1276.00 801.00 Micro Focus . . . . . . . . . . . . . . . .364.00 –1.00 550.00 272.20 Spirent Comms . . . . . . . . . . . . . .156.00 +1.30 158.30 90.45
Atkins(Ws) . . . . . . . . . . . . . . . . .760.00 –2.50 801.00 539.00 Euromoney Inst Inv . . . . . . . . . . .655.00 +5.00 660.00 377.90 Millen & Copthorne . . . . . . . . . . .554.50 –5.00 585.00 329.20 Sports Direct Intl . . . . . . . . . . . . .128.50 –2.10 154.30 89.85
Autonomy Corp . . . . . . . . . . . .1437.00 +8.00 2012.00 1319.00 Experian . . . . . . . . . . . . . . . . . . .735.50 –1.50 763.50 559.00 Misys . . . . . . . . . . . . . . . . . . . . .298.20 +1.20 300.00 196.60 SSL Intl . . . . . . . . . . . . . . . . . . . 1163.00 — 1190.00 633.00
Aveva . . . . . . . . . . . . . . . . . . . .1520.00 –7.00 1572.00 893.00 Ferrexpo . . . . . . . . . . . . . . . . . . .371.40 +6.50 396.20 164.20 Mitchells & Butlers . . . . . . . . . . .348.50 +0.70 351.60 242.50 St James’s Place . . . . . . . . . . . . .262.40 –0.70 298.00 203.40
Aviva . . . . . . . . . . . . . . . . . . . . .423.10* +4.30 428.70 290.20 FirstGroup . . . . . . . . . . . . . . . . .403.30 –3.30 428.40 331.20 MITIE . . . . . . . . . . . . . . . . . . . . .204.00 +2.70 248.60 187.60 Stagecoach. . . . . . . . . . . . . . . . .217.20 –4.80 226.10 138.40
Babcock International . . . . . . . . .596.00 +24.50 660.50 489.00 Foreign & Col Inv Tst. . . . . . . . . .299.70 +1.60 299.70 250.00 Mondi . . . . . . . . . . . . . . . . . . . . .525.50 +15.50 562.00 304.70 Standard Chartered . . . . . . . . . .1913.50 –20.50 1975.00 1316.50
BAE Systems . . . . . . . . . . . . . . .348.50* +6.50 389.90 288.10 Fresnillo . . . . . . . . . . . . . . . . . .1448.00 +38.00 1455.00 647.00 Monks Inv Tst . . . . . . . . . . . . . . .349.20 +2.10 349.70 265.00 Standard Life . . . . . . . . . . . . . . .232.70* +0.30 238.00 170.00
Balfour Beatty . . . . . . . . . . . . . . .284.50* +4.80 304.80 228.60 G4S . . . . . . . . . . . . . . . . . . . . . .253.60 –5.30 285.70 238.70 Morrison Wm . . . . . . . . . . . . . . .272.50* –2.60 307.10 255.00 SuperGrp . . . . . . . . . . . . . . . . . 1211.00 –25.00 1312.00 499.00
Barclays . . . . . . . . . . . . . . . . . . .297.00 +11.35 394.25 253.40 Genesis Emerging Mkts Fd . . . . .540.00 — 542.50 383.00 Murray Intl Tst . . . . . . . . . . . . . . .923.50* –4.50 938.50 720.00 SVG Capital . . . . . . . . . . . . . . . .224.30 +1.30 225.00 118.30
Barratt Development . . . . . . . . . . .85.35 +1.85 149.90 75.50 GKN . . . . . . . . . . . . . . . . . . . . . .179.50 +3.90 188.40 100.40 National Express. . . . . . . . . . . . .254.00 –2.60 261.30 155.86 TalkTalk . . . . . . . . . . . . . . . . . . .139.60 +6.30 153.80 106.60
BBA Aviation . . . . . . . . . . . . . . .207.50 –0.10 220.00 145.90 GlaxoSmithKline . . . . . . . . . . . .1235.50* –18.50 1347.00 1088.00 National Grid . . . . . . . . . . . . . . .575.50 –8.50 607.65 474.80 Talvivaara Mining . . . . . . . . . . . .550.00 –6.00 597.00 341.40
Berkeley . . . . . . . . . . . . . . . . . . .847.50 +12.50 917.50 735.00 Great Portland Estates . . . . . . . .347.40 –1.10 368.60 259.00 Next . . . . . . . . . . . . . . . . . . . . .2140.00 +6.00 2361.00 1816.00 Tate & Lyle . . . . . . . . . . . . . . . . .529.50 –0.50 534.50 388.00
BG . . . . . . . . . . . . . . . . . . . . . .1282.00 +3.50 1302.50 966.90 Greene King . . . . . . . . . . . . . . . .434.40 –1.60 484.00 372.50 Northumbrian Water . . . . . . . . . .351.90 –0.10 364.00 231.70
BHP Billiton . . . . . . . . . . . . . . .2469.00 +38.50 2489.00 1678.00 Halfords . . . . . . . . . . . . . . . . . . .425.60 –1.40 562.50 370.10 Ocado Grp . . . . . . . . . . . . . . . . .141.00 +0.90 169.00 120.90 Taylor Wimpey . . . . . . . . . . . . . . .25.79 +0.68 46.34 22.12
BlackRock Mining . . . . . . . . . . . .737.50 +18.00 737.50 490.00 Halma . . . . . . . . . . . . . . . . . . . . .334.70 +2.00 345.50 221.80 Old Mutual . . . . . . . . . . . . . . . . .132.40* +0.10 146.90 95.30 Telecity . . . . . . . . . . . . . . . . . . . .452.00 –11.80 546.00 323.50
BlueBay . . . . . . . . . . . . . . . . . . .481.40* — 495.00 251.00 Hammerson . . . . . . . . . . . . . . . .429.70 +2.80 460.30 332.20 Partygaming . . . . . . . . . . . . . . . .227.50 –3.30 339.70 205.80 Templeton Emrg Mkts . . . . . . . . .685.00 +10.50 688.00 470.00
Bluecrest Allblue GBP . . . . . . . . .172.10 –0.40 174.00 151.00 Hargreaves Lansdown . . . . . . . .483.50 –0.90 492.00 259.40 Pearson . . . . . . . . . . . . . . . . . . .972.50 — 1069.00 812.00 Tesco . . . . . . . . . . . . . . . . . . . . .413.30* –3.10 454.90 368.40
Booker . . . . . . . . . . . . . . . . . . . . .55.50* — 56.00 37.50 Hays . . . . . . . . . . . . . . . . . . . . . . 115.80* –0.20 125.30 82.50 Pennon . . . . . . . . . . . . . . . . . . . .631.00 +2.00 644.00 444.40 Thomas Cook . . . . . . . . . . . . . . .184.50 +1.30 277.20 167.50
BP . . . . . . . . . . . . . . . . . . . . . . .454.45 +10.45 658.20 296.00 Henderson . . . . . . . . . . . . . . . . .138.10 +1.90 157.80 112.10 Persimmon . . . . . . . . . . . . . . . . .372.00* +8.80 520.00 335.90 Travis Perkins . . . . . . . . . . . . . . .890.00* +9.50 915.00 647.50
Brit Insurance . . . . . . . . . . . . . .1044.00 +1.00 1052.00 709.00 Heritage Oil. . . . . . . . . . . . . . . . .352.40 +2.40 585.00 295.90 Petrofac . . . . . . . . . . . . . . . . . .1540.00 +17.00 1545.00 900.00 TUI Travel . . . . . . . . . . . . . . . . . .206.30 –2.00 313.90 189.20
British Airways . . . . . . . . . . . . . .278.30 –1.00 290.00 180.20 Hikma Pharma . . . . . . . . . . . . . .793.00 +2.50 813.00 453.10 Petropavlovsk . . . . . . . . . . . . . .1027.00 +79.00 1370.00 834.00 Tullett Prebon . . . . . . . . . . . . . . .401.00* +4.00 427.00 261.20
British Amer. Tob . . . . . . . . . . .2433.50 –14.50 2490.50 1832.00 Hiscox . . . . . . . . . . . . . . . . . . . .357.00 +1.50 371.60 299.60 Phoenix Group . . . . . . . . . . . . . .675.00 –6.00 775.00 550.50 Tullow Oil . . . . . . . . . . . . . . . . .1231.00 +5.00 1375.00 979.50
British Empire Tst . . . . . . . . . . . .493.10 –1.90 495.20 338.50 Hochschild Mining . . . . . . . . . . .569.50 +24.00 571.50 220.00 Premier Farnell . . . . . . . . . . . . . .283.50 –5.50 290.00 145.90 UK Commercial Prop. . . . . . . . . . .78.05 –2.05 84.90 71.00
British Land . . . . . . . . . . . . . . . . 511.00* –2.00 525.00 416.00 Home Retail . . . . . . . . . . . . . . . .212.60 +2.30 326.30 201.70 Premier Oil . . . . . . . . . . . . . . . .1767.00 +16.00 1780.00 984.00 Ultra Electronics . . . . . . . . . . . .1765.00 –6.00 1903.00 1198.00
Britvic. . . . . . . . . . . . . . . . . . . . .477.70 +1.40 518.00 351.00 Homeserve . . . . . . . . . . . . . . . . .431.50 –3.50 502.00 422.00 Provident Financial . . . . . . . . . . .734.00* +3.00 983.50 728.00 Unilever . . . . . . . . . . . . . . . . . .1897.00 –4.00 2024.00 1662.00
Brown(N.) . . . . . . . . . . . . . . . . . .291.50 –0.20 308.00 204.80 HSBC Hldgs . . . . . . . . . . . . . . . .694.40 +5.30 766.80 595.20 Prudential . . . . . . . . . . . . . . . . . .630.50 –12.00 665.00 475.70
BSkyB . . . . . . . . . . . . . . . . . . . .728.00* — 737.00 521.00 Hunting . . . . . . . . . . . . . . . . . . .658.50* +11.50 661.00 429.10 PZ Cussons . . . . . . . . . . . . . . . .388.50 –5.50 406.80 231.70 United Utilities . . . . . . . . . . . . . .620.00 +2.00 632.00 444.30
BT . . . . . . . . . . . . . . . . . . . . . . .159.20 +0.60 165.50 108.40 ICAP . . . . . . . . . . . . . . . . . . . . . .488.40 +6.80 493.70 291.70 Randgold Resources. . . . . . . . .6265.00 +275.00 6755.00 4126.00 Utd Business Media . . . . . . . . . .682.50 +6.00 692.00 408.30
Bunzl . . . . . . . . . . . . . . . . . . . . .733.50 +2.50 784.50 614.00 IG . . . . . . . . . . . . . . . . . . . . . . . .528.50 –5.00 560.00 312.60 Reckitt Benckiser . . . . . . . . . . .3559.00 –20.00 3667.00 2990.00 Vedanta Resources . . . . . . . . . .2411.00 +61.00 2967.00 1795.00
Burberry . . . . . . . . . . . . . . . . . .1027.00 –8.00 1065.00 555.50 Imagination Tech Gp . . . . . . . . . .411.90 +6.90 445.00 200.00 Reed Elsevier . . . . . . . . . . . . . . .538.00 +2.00 566.00 454.60 Victrex . . . . . . . . . . . . . . . . . . .1289.00 +23.00 1355.00 753.00
Cable & Wire Comms . . . . . . . . . .51.95 +1.45 150.00 46.51 IMI . . . . . . . . . . . . . . . . . . . . . . .848.50 +9.50 855.50 483.10 Regus . . . . . . . . . . . . . . . . . . . . . .83.10 –1.15 125.50 64.05 Vodafone . . . . . . . . . . . . . . . . . .174.00 –1.00 179.90 126.50
Cable & Wire Wwide . . . . . . . . . . .71.00 +0.60 94.80 60.05 Imperial Tobacco. . . . . . . . . . . .2030.00 –24.00 2159.00 1728.00 Renishaw . . . . . . . . . . . . . . . . . 1194.00 –9.00 1250.00 479.00 Weir . . . . . . . . . . . . . . . . . . . . .1709.00 +16.00 1720.00 660.00
Cairn Energy. . . . . . . . . . . . . . . .386.30 +3.30 497.60 306.80 Inchcape. . . . . . . . . . . . . . . . . . .347.70 +5.80 358.00 235.00 Rentokil Initial . . . . . . . . . . . . . . . .91.35 –3.10 140.20 89.70 Wellstream Hldgs . . . . . . . . . . . .754.50 +4.50 810.00 429.70
Caledonia Invs . . . . . . . . . . . . .1819.00 +5.00 1833.00 1496.00 Informa . . . . . . . . . . . . . . . . . . . .442.60 +7.40 450.50 263.30 Resolution . . . . . . . . . . . . . . . . .249.00 +1.20 280.50 220.10 WH Smith . . . . . . . . . . . . . . . . . .468.30 –8.10 551.00 392.20
Capita . . . . . . . . . . . . . . . . . . . . .740.50 +8.00 829.50 693.00 Inmarsat . . . . . . . . . . . . . . . . . . .705.00 +10.00 831.00 598.50 Rexam . . . . . . . . . . . . . . . . . . . .317.50 –0.60 348.80 271.40 Whitbread . . . . . . . . . . . . . . . . .1797.00* +8.00 1807.00 1225.00
Capital & Counties . . . . . . . . . . .150.00 –2.90 159.00 99.60 Intercontl Hotels . . . . . . . . . . . . 1140.00 –62.00 1244.00 803.00 Rightmove . . . . . . . . . . . . . . . . .785.00* –9.50 830.00 456.90 William Hill . . . . . . . . . . . . . . . . .164.00* –1.70 217.80 158.00
Capital Shopping Centres . . . . . .390.50 +2.10 523.50 300.10 Intermediate Capital . . . . . . . . . .350.90 +10.90 352.80 233.50 Rio Tinto . . . . . . . . . . . . . . . . . .4454.00 +123.00 4477.50 2751.00 Witan Inv Tst . . . . . . . . . . . . . . . .489.40 +1.80 492.00 397.30
Carillion . . . . . . . . . . . . . . . . . . .354.80* +1.30 361.90 272.00 Intertek . . . . . . . . . . . . . . . . . . .1945.00* +17.00 1953.00 1136.00 RIT Capital Partners . . . . . . . . .1152.00 +11.00 1215.00 940.00
Carnival . . . . . . . . . . . . . . . . . .2750.00 –1.00 2937.00 1963.00 Intl Personal Fin . . . . . . . . . . . . .329.00 –3.10 340.90 181.40 Rolls Royce . . . . . . . . . . . . . . . .606.50* –0.50 661.50 460.90 Wolseley . . . . . . . . . . . . . . . . . .1817.00 +25.00 1837.00 1155.00
Catlin . . . . . . . . . . . . . . . . . . . . .359.90 –5.60 394.60 303.20 Intl Power . . . . . . . . . . . . . . . . . .434.20 +4.80 438.10 256.30 Rotork . . . . . . . . . . . . . . . . . . .1768.00 –6.00 1906.00 1101.00 Wood Group (John). . . . . . . . . . .474.10 +7.80 476.20 279.60
Centamin Egypt . . . . . . . . . . . . .197.10 +12.10 202.80 103.50 Invensys . . . . . . . . . . . . . . . . . . .322.20 +1.90 350.30 224.90 Royal Bank Of Scot . . . . . . . . . . . .43.75 +0.11 58.95 28.25 WPP . . . . . . . . . . . . . . . . . . . . . .749.50* +1.00 758.50 561.00
Centrica . . . . . . . . . . . . . . . . . . .334.30* +0.50 347.00 240.20 Investec . . . . . . . . . . . . . . . . . . .521.00 +13.00 565.00 411.50 Royal Dutch Shell A . . . . . . . . .2063.00* +4.50 2106.50 1621.00 Xstrata . . . . . . . . . . . . . . . . . . .1407.50 +42.50 1417.00 832.50
Charter Intl . . . . . . . . . . . . . . . . .727.00 +17.00 855.50 563.50 ITV . . . . . . . . . . . . . . . . . . . . . . . .71.45 — 73.00 46.77 Royal Dutch Shell B . . . . . . . . .2022.50* –3.50 2071.00 1550.00 LONDON TOP 250 BY MARKET CAPITALISATION
Chemring . . . . . . . . . . . . . . . . .2862.00 –8.00 3711.00 2551.00 Jardine Lloyd Thompson. . . . . . .590.50 +4.50 604.50 420.70 RSA Insurance . . . . . . . . . . . . . .130.20* –1.30 137.40 114.10
Close Bros . . . . . . . . . . . . . . . . .821.50* +1.50 834.00 657.00 Johnson Matthey . . . . . . . . . . .1970.00 +8.00 1999.00 1435.00 SABMiller . . . . . . . . . . . . . . . . .2023.00 –1.00 2103.00 1638.00 * Ex-Dividend † Suspended
Cobham . . . . . . . . . . . . . . . . . . .209.20* –0.20 278.60 199.20 JPMorgan Emerg Mkts . . . . . . . .618.00 +4.00 618.00 448.00 Sage . . . . . . . . . . . . . . . . . . . . . .270.80 +1.00 286.80 208.20
COLT Group . . . . . . . . . . . . . . . .121.50 — 144.20 107.70 Jupiter Fnd Mgmt . . . . . . . . . . . .300.00 +0.20 310.00 180.00 Sainsbury(J) . . . . . . . . . . . . . . . .377.20 –4.00 397.00 307.60 www.interactivedata.com

FTSE lifted Stocks fall

by healthy as metals
earnings lose shine
THELONDON THENEW YORK
REPORT REPORT
B
RITAIN’S leading shares closed

W
higher yesterday, boosted by ALLStreet fell for a second
results from Barclays, day yesterday as selling
Schroders and Associated accelerated into the close,
British Foods. led by sharp losses in bank
The FTSE 100 closed up 25.23 and metal stocks.
points, or 0.4 per cent, at 5,875.19, Metals stocks gave up earlier gains
after closing down 0.4 per cent on after the price of gold and silver fell
Monday. sharply late in the day and the dollar
The index is up 8.5 per cent this strengthened.
year and has jumped around 23 per sharp improvement in its bad debts 1.7 per cent on plans by the new head ter revenue. Financial stocks took a hit as inter-
cent since hitting a year’s low on July helped lift the bank’s underlying of the British clothing, food and Miners provided strong support to est rates rose late in the day.
1, and some analysts see the FTSE third-quarter profit and boosted the homewares group to ramp up invest- the index as gold hit a record high. An index of gold and silver miners'
attacking the 6,000 level near-term. sector, with the UK banking index up ment in its core UK, online and over- shares fell 2.6 per cent after hitting an
“Solid (corporate results) updates ... 0.8 per cent. seas businesses. ANALYSIS l FTSE all-time high earlier in the day. Shares
have helped cheer investors and Investment manager Schroders Mobile phones operator Vodafone 5,875.19 of the iShares Silver Trust, which
shake off the indifference that rose 5.5 per cent after it beat third- fell 0.6 per cent, having earlier hit 6,000 9 Nov tracks the price of silver, fell 3.6 per
dogged yesterday’s session,” Anthony quarter market expectations on the highs not seen since February 2008, cent on massive volume as more than
Grech, head of research at IG Index, back of strong sales to overseas insti- after it raised its profit outlook and 5,800 150m shares changed hands.
said. tutional clients. agreed to sell its interests in Japanese 5,600 The Dow Jones industrial average
“Traders are eyeing up the 6000 Associated British Foods, owner of carrier SoftBank for £3.1bn. slid 60.09 points, or 0.53 per cent, to
level as the next target for the FTSE, low-cost clothing retailer Primark, Intercontinental Hotels slipped 5.2 5,400 11,346.75. The Standard & Poor’s 500
and at the rate that the markets have gained 3.2 per cent as it beat forecasts per cent, the heaviest FTSE 100 faller, Index dropped 9.85 points, or 0.81 per
5,200
bounced back in recent days, they with a 25 per cent rise in full-year with investors booking gains after cent, to 1,213.40. The Nasdaq
may not have to wait too long.” earnings. recent strength even though it report- 5,000 Composite Index lost 17.07 points, or
Barclays added 4 per cent after a However, Marks & Spencer dropped ed a 5 per cent increase in third-quar- 9 Aug 27 sep 17 Sep 7 Oct 27 Oct 0.66 per cent, to close at 2,562.98.
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 plough-
ing 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 eco-
nomic 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 par-
ity may not hold.
Boris Schlossberg and Kathy Lien are direc-
tors of currency research at GFT. Read com-
mentary at www.GFTUK.com/commentary or
e-mail borisandkathy@gftuk.com.
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CD03UK.115.080310
Investment | Foreign Exchange 25
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 surplus-
es, pushing down interest rates and desta-
bilising 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 confi-
dence in the strong dollar”, a statement The G20 is getting
that appeared to be an olive branch for more divided
China following a series of attacks on the Picture:GETTY
Chinese renminbi. Many thought that
some sort of agreement might be possible.
But with the announcement that the tion is which currency is “relatively ugli- make any real concessions.
Federal Reserve will print $600bn of new er” – he suggests that it might be the For foreign exchange traders then, the
money – more than anyone expected – euro. G20 is looking rather like a non-event.
that idea was blown out of the water. According to Mellor, the dollar has Traders shouldn’t use this lack of activity
China and Germany have reacted furious- been driven down over the last year by as an excuse to take a nap, however. The
ly. The German finance minister, diversification strategies, as developing problem of global imbalances is not going
Wolfgang Schäuble, described the economies have sought to reduce the pro- to go away, and eventually it will need to
American economy as in “deep crisis”. On portion of their foreign exchange reserves be solved. And sometimes big changes
America’s part, many commentators have held in US dollars. That diversification happen when no one is watching.
demanded a hard line against China over has arguably gone as far as it can, howev-
its alleged currency manipulation. er, and with murmurs of a renewed sover- ANALYSIS l Current account balance
eign debt crisis emerging in Europe, it 12 % of GDP F’cast
SCEPTICAL TRADERS might well be time for the euro to lose its
All of which has led currency traders to be recent gains. 6
exceptionally sceptical about the likeli- Nick Beecroft, senior foreign exchange China
hood of this week’s meeting producing consultant at Saxo Bank, is not convinced
0
any solid achievements. Neil Mellor, a cur- that the G20 will achieve much either. He
United States
rency strategist at Bank of New York points out that Timothy Geithner’s plan
Mellon, says that the “G20 is set to be a for a cap on current account surpluses 6
disappointment”, with all currencies, “has been self-emasculated” by a lack of
Source: Economist Intelligence Unit.
except possibly the yen, looking “ugly”. hard targets. China, for its part, seems 12
Mellor suggests that the important ques- more keen to avoid criticism than to 2000 2005 2011
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 26 Investment | Foreign Exchange CITYA.M. 10 NOVEMBER 2010

THE
The spotlight TIPSTER
THE DOLLAR

will shine on JUST KEEPS

ON FALLING

W
ITH currency wars high on the
agenda at the G20 meeting this

periphery woes 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
Sterling could gain from attention turning to area, but spread betters are eying a break
through the ¥80 level. Spreadex offers a spot
the Eurozone’s troubles, says Donata Huggins spread of ¥80.60–¥80.63 on dollar-yen.
Since breaching parity with the greenback,

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 unat-
tractive 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 sus-
pense 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 poor-
er-than-expected German industrial pro-
duction 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 con-
tinue 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 nas-
tier 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 Australian dollar has just kept on fight-
ing 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 ster-
ling. With the Bank of England’s inflation
report due out on Wednesday, it will be inter-
esting to see whether or not the pound can
sustain its recent gains against the euro.
the other 16 countries.” The pound could CMC Markets offers a spread of £0.86315-
This shifting spotlight will move money into a be centre stage £0.86333.
new market. With the US committed to QE, Indeed, the pound has been doing well
which will devalue the dollar, there are strong against the yen recently too, or at least bet-
chances that the flight from the euro and dollar Picture: ALAMY ter than the dollar. After lows of ¥127, ster-
could wind up in sterling. ling rallied to ¥132 and is in a solid uptrend
channel. Yesterday’s pullback to the 30 day
ANALYSIS l The performance of the pound against the euro over moving average and bottom of the uptrend
the last five days channel at around ¥130 was a good opportu-
nity to get long and hope for ¥132-¥135.
1.16 £
Spread Co offers a spread on sterling-yen of
1.155 ¥130.21–¥130.29.
And if it does well against the yen, sterling
1.15 should also do well against the dollar. Spread
betters have been anticipating further gains
1.145 in sterling-dollar and many are hoping for a
1.14
return to the nine-month high of $1.6300.
ShortsandLongs.com offers a spot spread on
sterling-dollar of $1.6159–$1.6162.
3 Nov 4 Nov 5 Nov 8 Nov 9 Nov 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 ris-
ing 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 long dollar-Swiss franc trade above SFr1.00 aspirations are too dis-
tant to be concerned with at the moment. For something that may hap-
pen 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.
My pick: Buy sterling-Kiwi at NZ$2.0500
Expertise: Technical analysis
Average time frame of trades: 1 month-12months
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 barri-
ers 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 Darker clouds are
forming over Mumbai
long-run should wait Picture: GETTY
for valuations to fall,
writes Jessica Mead

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 over-
shadowed 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 sec-
ond 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 ing the last up-cycle in India. IN FOCUS | INDIAN EQUITY FUNDS SOURCE:MORNINGSTAR
still desperately required to ease capacity “The good macroeconomic outlook is
constraints. India is also poised to benefit just about priced in now and I expect UK REGISTERED 15/10/07 RANK LATEST DOMICILE PORTFOLIO MANAGEMENT
significantly from its demographic divi- that the data flow is more likely to disap- INVESTMENT FUNDS: – 15/10/10 PORTFOLIO MANAGER GROUP
dend. Around a quarter of the world’s point than surprise,” he adds. INDIAN EQUITY PERFORM. SIZE (£M)
young people are in India and the coun- Consequently, he thinks that “from a CHANGE (%)
try’s age dependency ratio forecast to shorter perspective, say the next one to TOP 10
decline to 48.1 per cent by 2025 from 67.7 two years, Mumbai will most likely UTI India 1986 Shares 66.18 1 N/S MAU V Srivatsa UTI International Ltd
per cent in 1991, according to research underperform, with the high attached First State Indian Subcontinent A 65.85 2 239.37 UK David Gait First State Investment Mgmt (UK) Ltd
from Barclays Capital. risk of a steep fall for a time”.
These are certainly familiar arguments However, one factor that should sup- First State Indian Subcontinent I Acc 64.46 3 152.00 IRE David Gait First State Investments (Hong Kong) Ltd
used to support the long-term invest- port Indian equity markets in the short- Aberdeen Global Indian Equity A2 63.67 4 2,745.11 LUX Management Team Aberdeen Asset Managers Ltd (Lux)
ment case but market participants term is the flurry of upcoming initial PineBridge India Equity Y 59.30 5 334.38 IRE Peter Soo PineBridge Investments Ireland Ltd
requiring good performance in the short- public offerings (IPOs) between now and Comgest Growth India 55.30 6 189.65 IRE Wojciech Stanislawski Comgest Asset Management
term as well as in the long-term should March 2011. Coal India’s IPO at the end of International
be more cautious about investing in last month was nearly 12 times oversub- Franklin India A YDis £ 47.74 7 892.52 LUX Stephen Dover Franklin Templeton Investment Funds
Indian equities at their current levels. scribed, indicating the level of demand Jyske Invest Indian Equities 35.40 8 24.82 DMK Management Team Jyske Invest International
that should limit the Nifty 50’s (the Schroder ISF Indian Equity C Inc 28.75 9 102.00 LUX Louisa Lo Schroder Investment Mgmt (Lux)
INDIA TO UNDERPERFORM Indian stock market) downside. There are
Kevin Grice, senior international econo- at least another six or seven IPOs that are JF India 28.68 10 1,063.42 MAU Edward Pulling JF Asset Management Ltd (HK)
mist at Capital Economics, believes that already in the pipeline, including iron BOTTOM 11
India will underperform some of the ore producer NMDC, Infrastructure
other markets in Asia. “The surge in Development Finance Company and BGF India A4DS GBP 28.12 11 637.38 LUX Nicholas Scott Blackrock (Luxembourg) S.A.
Mumbai stocks has lifted valuations to Orient Greenpower Company. HSBC GIF Indian Equity A Inc 26.07 12 4,641.57 LUX Sanjiv Duggal HSBC Investment Funds
the top end of the 10-20 range in which But in a market that is already fully (Luxembourg) S.A.
markets usually trade over the long run.” valued, it’s going to be difficult for mar- Neptune India A 23.96 13 52.44 UK Ewan Thompson Neptune Investment Management Ltd
The current trailing price-to-earnings ket participants to achieve alpha. F&C Indian Investment Company 23.70 14 84.46 LUX Sam Mahtani F&C Management Ltd
(p/e) ratio is at 19.9 times and for 2010 it is Investors – whether they are retail or MS INVF Indian Equity A 23.28 15 119.89 LUX Ruchir Sharma Morgan Stanley Investment Funds
now 20 times. This compares to an aver- institutional – should wait for valuations FF - India Focus A GBP 21.53 16 2,139.98 LUX Teera Chanpongsang Fidelity (FIL (Luxembourg) S.A.)
age valuation of 15 times for emerging to become more attractive before buying JF India A (dist)-USD 21.11 17 2,088.91 LUX Ted Pulling JPMorgan Asset Mgmt (Europe) S.a.r.l.
markets and an average of 18 times dur- into Indian equities.
Invesco India Equity A USD 19.45 18 108.19 LUX Maggie Lee Invesco Global Asset Management Ltd
Pictet-Indian Equities-P USD 17.73 19 323.58 LUX David Chatterjee Pictet Funds (Europe) S.A.
ANALYSIS l India’s GDP growth: past, present and future SGAM Fund Eqs India A 16.52 20 40.65 LUX Shaun Giacomo Société Générale Asset Management
10 % Amundi Funds India C C 15.37 21 700.77 LUX Ray Jovanovich Amundi
Modest industrialisation Sector Mean/Count 35.82 21 715.45
8 before the balance of
payment crisis

6
Average growth: 4.9% IN FOCUS | INDIAN EQUITY FUNDS
Increasing capacity
4 Grappling and the long awaited
with Rising asset demographic dividend There are 21 Indian equity funds available to UK investors that have a track record of at least three years. The aver-
liberalisation values pays off age performance of a fund over the past three years is 35.82 per cent, indicating how well the Indian stock market
2 Average Average Expected average
growth: 5.6% growth: 7.6% growth: 8.8%
has done. The average size of these funds is £715.45m. There are six investment trusts (not shown in the table above)
Source: Barclays Capital but these have suffered over the past three years with an average performance of -10.26 per cent. These closed-end
1956 1966 1976 1986 1996 2006 2016 2026 funds on average have assets under management of £145.85m.

FUND MANAGEMENT NEWS

BY JESSICA MEAD
SVM UNVEILS GLOBAL STOCKPICKING 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 equi-
ties trading at a discount to their intrinsic
value. The initial fee is 5.25 per cent and the
Picking the best for sweet profits Picture: GETTY annual management fee is 1.5 per cent.
RCM WINS THREE PENSION FUND MANDATES
Allianz Global Investors’ division RCM this
week announced that it had won three diversi-
fied 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 LAUNCHES INDEX ARBITRAGE FUND
Aviva Investors has launched an index arbi-
trage 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 one-
month 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 sup-
ported by a team of seven fund managers and
analysts.
 City Focus
The pioneers of third-party
litigation look for a market
New asset class is on
the up and is already
more common than
you might believe
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 agree-
ments by scrapping the recovery of success
fees and after-the-event insurance premi-
ums. But third-party funding could be
about to boom.
Tom Custance, head of dispute resolu-
tion at the City firm Fox Williams LLP says
that third-party funding is “the point at
which the law meets the worlds of busi-
ness 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 fund-
ing 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 fun-
der 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-
BRIEFS | LEGAL NEWS
MORE LEAVE SJ BERWIN
The movement of staff from SJ
Berwin to Irwin Mitchell continues.
Twelve associates from SJ Berwin are
to make the move, following a four-
strong 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.
| Law
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 sum-
mer, 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 “pio-
neering 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;
HAMMONDS MERGER AND DEAL
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 jurisdic-
tions where Hammonds has a pres-
ence, and Squire Sanders &
Dempsey in the US and Eastern
Europe. Squire Sanders chairman
Jim Maiwurm becomes global head
of the new firm.
THE NEW TWINGO
REVIEWED
SEE MOTORING, P 31
There’s profit in them adding that “a lot of the cases that we fund
there hills have been confidential”. Harbour has
recently raised a £60m fund (having target-
Picture:GETTY ed £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 bene-
fits of promoting access to justice for indi-
vidual 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 fun-
der are huge though,” reckons Tom
Custance, adding that the prospect of
third-party funding fuelling unmeritori-
ous legal activity is unlikely in commer-
cial cases because funders will only back
those cases with a strong chance of suc-
cess. There needs to be “a process of educa-
tion 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 fund-
ing is published by Fox Williams in association
with Jures. To order a copy email
mail@foxwilliams.com
NORTON ROSE RISES
City firm Norton Rose revealed yes-
terday 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.
29
Foundations
are the choice
for big givers
JENNIFER CHAMBERS
G
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 culti-
vate 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 phi-
lanthropy. However, once they had decided to
give, then they would all do so in the most tax-
efficient way.
Our survey also revealed an increased
appetite for “sunset clauses” in charitable giv-
ing. 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 quick-
ly at a time when their charitable objectives
are clearly understood.
Family-controlled foundations are increas-
ingly 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
NABARRO IMPROVES
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 over-
seas.
 30 City Focus | Accounting CITYA.M. 10 NOVEMBER 2010

The banks want

to lend: they
just can’t find
the businesses
Small enterprises accounts payable are equal to 19 per cent
of assets – a figure in the hundreds of bil-
have bigger things lions.
With trade credit becoming increas-
to worry about than ingly important, small business man-
agers are finding themselves running
the lack of lending, small banks; something they never
signed up for and in which they have lit-
tle expertise. Late payment may have
writes Andrew Leck receded somewhat in 2009, but at £24bn,
overdue payments to UK SMEs could
have comfortably paid off Ireland's

S
ENIOR politicians have repeatedly
called on the banking sector to
increase their lending to SMEs
(small and medium-sized enter-
prises). 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 percep-
tion, reinforced by the media and politi-
cians, 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 larg-
er counterparts, SMEs applying for addi-
tional 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 lend-
ing, 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 short-
term 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’
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 com-
panies house are rarely used beyond the
initial investigation of the newest of cus-
tomers; 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 spend-
ing 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 in-
depth 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. Banks can be intimi- currently under-used, such as credit ref- throwing money at the problem and call-
On the trade credit side of things, dating for small busi- erence information, could become con- ing each other names, it is about time for
information is again the key. Finance nesses, but they are siderably more useful if small business the government and the banks to take a
staff, financial advisers, and government trying to help access to them was improved. more constructive approach to lending.
need to educate small business managers SMEs need much more finance to help Andrew Leck is the head of the Association of
about credit management. Tools that are Picture: GETTY drive the recovery. After two years of Chartered Certified Accountants (ACCA).

ACCA EXPERTS | WHAT YOU MIGHT HAVE MISSED IN THE COMPREHENSIVE SPENDING REVIEW
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 trou-
ble even standing still, so any
cut will hurt their ability to col-
lect tax effectively. While an
extra £900m to help crack
down on evasion will be helpful
Chas Roy-Chowdhury it doesn’t make up for an over-
Head of taxation all 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.
The Chancellor didn’t speak about it specifical-
ly, but spending cuts could affect government
procurement in a big way. Government pro-
curement 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 effi-
ciency savings. This is crucial for SMEs as
while 59 per cent of local procurement spend-
ing goes to SMEs, only 16 per cent of
Whitehall spending does. Despite the govern-
ment's intention to increase the share of SME
procurement, we still estimate that SMEs
Manos Schizas could be shut out of £7bn worth of procure-
Senior policy adviser for ment. We won’t know the exact figure until
small enterprises individual departments announce more details.
Neither, importantly, will the SMEs who will
put off hiring and investment decisions until
then.
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 short-
run 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 depart-
Gillian Fawcett ments’ spending settlements. Its value for money
Head of public sector section contained a nine-question checklist. Of those
nine, four were basically about removing spending
from government control and getting it off the bal-
ance 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 synony-
mous 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 driv-
ers with a range of hot hatches developed
by Renault’s Renaultsport division, all car-
rying 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 The Twingo Gordini has
benefited from some substantial tweak- plenty of oomph.
ing. The chassis is wider at the front and
rear than the regular Twingo and stiff-
ened suspension means you get a much end. It’s also got matching 17-inch Gordini been clever with the interior, maximising It’s a special little car, even more so
firmer ride and better handling. Pootling alloys, wider front and rear wings and a space more shrewdly than in an Ikea since there are only 200, individually-
around the north circular on a busy Friday rear spoiler, which hints at this perky wardrobe system, particularly in the back. numbered Twingo Gordinis bound for the
afternoon, the car proves lively enough, little car’s oomph. Inside is a festival There are pockets big enough to host UK. So you’d better be Gordini quick if you
but it is under hard acceleration above of Gordini Malta Blue colour and any phones or music players as well want one.
4,500rpm on Berkshire’s winding country badges, including blue and dark as your guilty “grab bag” of choice
roads that the car really shines. It’s a prop- grey leather sports seats, when you make a service station
er little belter. The resulting drive is sur- matching blue leather door pit-stop. (This will be pretty THE FACTS:
prisingly spirited, helped a great deal by trims, a leather-trimmed infrequently thanks to the car’s RENAULT TWINGO GORDINI 133
an engine note that confirms the car has a steering wheel – also with impressive fuel economy). But
bark to back up its bite. Steering feels twin white racing stripes – here the most exciting thing is PRICE: £14,600
good, although a smaller steering wheel and a rev counter slapped the two rear seats, which slide 0-60MPH: 8.7secs
would have improved the experience for straight on top of the steer- individually. You can push
me. Road noise though, thanks to its low ing column; even a Gordini either seat back to ensure TOP SPEED: 125mph
profile tyres, is significant. But then that gearknob. So it is impossible extra leg room too, depending CO2 G/KM: 159g/km
really is part of the experience of driving to forget you’re driving a on how much stuff you have in MPG COMBINED: 42.2mpg
such a car. It enhances the car’s raw feel, Gordini Twingo. In truth, the the boot. It was certainly plenty
even if it’s a little tiring after a while.
With its electrifying metallic blue finish
car looks good and feels well
put together. It’s not stripped-out
big enough for the three of us
and all our weekend parapherna-
THE VERDICT:
and white racing stripes, it’s obviously a like some of Renaultsport’s other lia, which is no mean feat in a car DESIGN hhhhi
racer, but not one that you’d avoid for fear cars and actually feels rather this small given my wife’s habit of pack- PERFORMANCE hhhhi
that people would expect you to terrorise luxurious. ing at least three pairs of shoes for each PRACTICALITY hhiii
seaside promenaders for kicks at the week- It might be petite but designers have day, “just in case”. VALUE FOR MONEY hhhii

CAR TALK BY RYAN BORROFF

BMW VISION EFFICIENTDYNAMICS FOUR-SEATER
BMW has announced it is to put its stunning Vision EfficientDynamics
four-seater sports car concept into production. Powered by a diesel/elec-
tric 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.
MORGAN THREE-WHEELER
After a 58-year hiatus, British sportscar manufacturer Morgan is plan-
ning 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.
LIGHTNING ELECTRIC GRAND TOURER
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.
 32 Lifestyle | TV& Games CITYA.M. 10 NOVEMBER 2010

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
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
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 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 re-
create 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 –
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3am-6am BBC Learning Zone
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Rhona share a kiss.
7.30pm Farewell Jack
8pm CHOICE The Pride of
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Vorderman hosts the star-
studded awards show in London.
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E4
7pm Hollyoaks 7.30pm Friends
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Natalie Cassidy: Becoming
Mum 12am RuPaul’s Drag Race
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7pm Baby Whisperer 8pm 10 2010 ITV1, 8PM
HISTORY Years Younger 9pm Emergency Carol Vorderman hosts the star-
7pm How the Earth Was Made 10pm Hospital Sydney 11pm studded awards show in London,
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Men 10pm The People Speak: Emergency 1am Hospital nation’s unsung heroes.
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DISCOVERY 8pm The Middle. Mike tries to
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Machines with Mike Brewer Wars 1.40am Inside: The Prison CHANNEL4, 9PM
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Chris Barrie’s Massive Speed Answer 5.10am-6am Are You from Brighton to Brittany to create an
3am World War Two: The Smarter Than a 10 Year Old? earth-sheltered home.

COFFEE BREAK
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QUICK CROSSWORD
   

SUDOKU KAKURO
7 15 45 8 6 18 14
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from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 34 21
 
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preparation (2-3) 3 Changes focus
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters E 11 Dynasty that ruled in Russia
until the overthrow of Tsar
rapidly (5)
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 Sport
Flower’s got
faith in Cook
▲
CRICKET
BY JAMES GOLDMAN
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 sum-
mer against Pakistan’s new-ball duo
of Mohammad Amir and Mohammad
Asif and failed twice with the bat dur-
ing 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 uncon-
cerned 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
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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 competi-
tiveness on the Test wicket is impor-
tant 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.”
Friday Saturday
DAY GOLD CUP DAY
33
DROGBA FIT TO FACE FULHAM
DESPITE MALARIA SCARE
MYSTERY ILLNESS WON’T STOP STAR
MAN FEATURING ON DERBY DAY: P35
Cook will open
against South SPORT | IN BRIEF
Australia.
Picture: PA Saracens far too strong for USA
RUGBY UNION: Saracens enjoyed a 20-
6 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.
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
ATHLETICS: Marathon great Haile
ANALYSIS l Alastair Cook's 2010 Test Scores Gebrselassie has hinted he could recon-
200 sider his decision to retire. The world
175 record holder, 37, announced his decision
150 to hang up his spikes after being forced
125 to pull out of Sunday’s New York
100 Marathon. But he said yesterday: “Now
75 it is time for me to think about a lot of
50 things. I still love running. I will always
25 run. Just give me some time to think
0 things over. I didn’t plan to come back
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
to Ethiopia this way.”
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 34 Sport CITYA.M. 10 NOVEMBER 2010

Results ckdkkcbkbcdbkcd-
kbcbkckbcbkcskbck-
BARCLAYS PREMIER LEAGUE
Stoke................................(1) 3 Birmingham.....................(0) 2 bcdkbbckbdkbkbkbck
Tottenham...................(0) 1 Sunderland.......................(0) 1 bckbckkckckcdkbcdkb-
P W D L F A GD Pts jc
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 Picture:
Newcastle 11 5 2 4 20 14 6 17 ggjcdjcjcgjcjkdjjk
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 Chelsea have been in
Annan Athletic.........(2) 2 Montrose............................(1) 2 talks over the possibili-
BLUE SQUARE BET PREMIER ty of leaving Stamford
Altrincham..................(0) 0 AFC Wimbledon ............(2) 2 Bridge for Earls Court.
Bath City........................(1) 3 Hayes & Yeading...........(0) 1
Cambridge Utd..........(1) 1 Grimsby ...............................(1) 1 Picture:
Darlington ....................(1) 1 Tamworth..........................(0) 0
Eastbourne Boro.....(0) 0 Forest Green....................(0) 0
GETTY
Fleetwood Town .....(0) 0 Gateshead.........................(0) 0
Kettering......................(0) 0 Mansfield...........................(0) 2
Kidderminster...........(1) 1 Rushden & D ....................(0) 0

£1bn
▲
JOHNSTONE'S PAINT TROPHY NORTHERN EXCLUSIVE bility of Roman Abramovich
SECTION QUARTER-FINAL (right) owned Chelsea joining the
BY DAVID HELLIER
Bury..................................(0) 0 Tranmere ............................(1) 1 project but property sources say
Carlisle............................(1) 3 Crewe...................................(0) 1 CHELSEA would have to pay this has proved complex.
Rotherham...................(1) 2 Huddersfld ........................(3) 5
around £1bn to buy up the land “If Chelsea had come on board
SOUTHERN SECTION QUARTER-FINAL earlier there might have been a
around the Earls Court exhibition
Plymouth......................(0) 1 Exeter....................................(1) 2
Southend......................(0) 0 Charlton...............................(1) 1 centre and build a new 60,000 chance of the two working togeth-
Swindon.........................(1) 1 Brentford............................(1) 1 seater stadium, City A.M. has er. But Capital & Counties has
Wycombe.....................(0) 3 Bristol Rovers .................(2) 6 learnt, if they decided to press gone so far down the road with
ahead with a proposal to move the planning processes, it would
TODAY’S DIARY from Stamford Bridge. be too complex to put a combined
(Football 7.45pm unless stated) The west London club’s chief project together now. The only
Barclays Premier League executive Ron Gourlay and com- way for them to get to Earls
Aston Villa v Blackpool, Chelsea v Fulham, Everton v Bolton (8pm), pany secretary Alan Shaw have Court now would be to buy
Man City v Man Utd (8pm), Newcastle v Blackburn, West Ham v recently held talks with Capital & the site out lock, stock and
West Brom, Wigan v Liverpool, Wolverhampton v Arsenal.
npower Football League Championship Counties, the property group that barrel,” said the source.
Leicester v Sheffield Utd, Reading v Cardiff (8pm), Swansea v owns the 77 acre Earls Court site. Property sources have
Bristol City. Discussions began when told City A.M. that Capital
Johnstone's Paint Trophy Northern Section Capital & Counties, which has & Counties would be
Quarter-Final plans to transform the Earls looking for close to £1bn
Sheffield Wednesday v Hartlepool (7.30)
Clydesdale Bank Scottish Premier League
Dundee Utd v St Mirren, Hearts v Celtic (7.30), Kilmarnock v
That’s how much property experts say Chelsea will Court site after the Olympics with
a residential plan that will com-
for selling the site out-
right. The £1bn figure,
Hamilton, Motherwell v St Johnstone, Rangers v Hibernian.
Irn-Bru Scottish Division Three have to fork out if they want to leave Stamford prise 8,000 homes, called on vari-
ous neighbours in the area to
or even something close
to it, would be a mas-
East Stirling v Arbroath

SPORTS EDITOR FRANK DALLERES

Bridge and move to Earls Court discuss their plans.
Early talks centred on the possi-
sive deterrent should
the club opt to press
email sport@cityam.com

Australia pose a bigger threat

ENGLAND TEAM | TO PLAY AUSTRALIA

15 Ben Foden Northampton

14 Chris Ashton Northampton

than All Blacks, says Johnson

13 Mike Tindall Gloucester
12 Shontayne Hape Bath
11 Mark Cueto Sale
10 Toby Flood Leicester
9 Ben Youngs Leicester
1 Andrew Sheridan Sale
▲

RUGBY UNION
BY FRANK DALLERES
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
Hartley has been rewarded for his try challenge. “In some ways they are
against New Zealand. Picture: GETTY more dangerous than the All Blacks in
the way they can break for tries,” he team whose comeback was thwarted 2 Dylan Hartley Northampton
said. “They get around you and the by the All Blacks in last week’s 26-16
support is sharp. We really need to get defeat. Johnson explained that the 3 Dan Cole Leicester
those bits sorted out. It’s about speed New Zealand-born player’s try after 4 Courtney Lawes Northampton
and intensity.” coming off the bench had helped him 5 Tom Palmer Stade Francais
Australia ended New Zealand’s 15- edge Thompson out of the XV. 6 Tom Croft Leicester
match winning streak last month and “Dylan did very well when he came
Johnson is particularly wary of the on. It’s not a knock on Thommo,” 7 Lewis Moody (c) Bath
threat posed by their backs. Johnson added. “I thought he forced 8 Nick Easter Harlequins
“They are very dangerous,” he his way in there with the way he R Steve Thompson Leeds
added. “You have to be very sharp. played. He’s been in great form after R David Wilson Bath
They play with a huge amount of vari- he missed the summer tour with R Simon Shaw Wasps
ation, maybe more than the All Blacks. injury. He’s returned with huge enthu-
They are strong runners and we need siasm and intensity. His ball carrying R Hendre Fourie Leeds
to be strong in the tackle. We also need is getting better.” R Danny Care Harlequins
to improve what we did with the ball.” Thompson drops to the replace- R Charlie Hodgson Sale
Northampton hooker Hartley’s ments bench, where he is joined by R Delon Armitage London Irish
selection is the only change to the Wasps forward Simon Shaw.
CITYA.M. 10 NOVEMBER 2010
ANALYSIS | BLUES FACE TOUGH CALL
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 bet-
ter; but sometimes having excess
demand is more sensible. And then
there's that £1bn bill.
ahead. In comparison, Arsenal
spent around £350m on develop-
ing the Emirates stadium.
Chelsea are constrained by the
capacity of Stamford Bridge – cur-
rently 42,000 – and have limited
potential to expand. Mark
Richards, a senior consultant
within the sports business divi-
sion 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 stadi-
um as an opportunity to
put cheaper price tickets
on the market,” he said.
Chelsea said yester-
day: “We always look at
proposals but we do not
have any plans to move
from Stamford Bridge at
this time.”
Haider surfaced in London and claimed he had no issues with PCB.
Drogba has
malaria but
will still face
Fulham
▲
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 dis-
ease 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 imme-
diately 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 interna-
tional 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 condi-
tion without a problem. He will play
on Tuesday.”
Midfielder Michael Essien is also set
to return but Ancelotti could be with-
out striker Nicolas Anelka and defend-
er Alex, who need late checks on back
and knee problems respectively.
Picture: GETTY
Bentley earned a booking rather than a penalty from Webb following a tussle with Zenden.
Gyan gift stalls Spurs but
Harry’s ire saved for Webb
TOTTENHAM 1 the extension of that sequence.
SUNDERLAND 1 Bentley when it appeared the winger
▲
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 misun-
derstanding 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
Threatened Haider hinting at
possibility of dramatic u-turn
▲
CRICKET
BY JAMES GOLDMAN
PAKISTAN wicketkeeper Zulkarnain
Haider last night appeared to hint he
would be prepared to return to inter-
national 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
Redknapp held Webb responsible for
The World Cup final official first
angered Redknapp for booking David
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
Pakistan. He also said he had “no
intentions” of seeking political asy-
lum 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.
Sport 35
Picture: ACTION IMAGES
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 aston-
ishment.
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.”
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.
 EUR/USD
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