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Euro debt
RAGE AS MUBARAK crisis rears
REFUSES TO RESIGN ugly head

▲
EUROZONE
BY JULIET SAMUEL
THE euro crisis moved dramatically
WORLD ECONOMY back into the spotlight yesterday as a
▲

BY MARION DAKERS sharp spike in Portuguese bond yields

EGYPTIAN President Hosni Mubarak
refused to stand down last night,
sparking fury across the country and
fuelling talk of a military coup.
Mubarak said in a televised speech
that he would delegate powers to his
deputy Omar Suleiman, but pledged
to remain as leader until elections in
September and repeated his vow to die
on Egyptian soil.
“I am conscious of the dangers of
this crossroad... and this forces us to
prioritise the higher interests of the
nation,” he said.
His late-night speech was met with
furious chants of “leave, leave” from
tens of thousands of protesters in
Tahrir Square in Cairo, the focal point
of the unrest since late January.
Egypt’s emerging opposition leader,
Mohamed Elbaradei, said on Twitter
after the speech: “Egypt will explode.
Army must save the country now.”
Robert Springborg, professor of
national security affairs at the US
Naval Postgraduate School, said: “The
speeches [last night] are not intended
to bring an end to the crisis in a peace-
ful way but to inflame the situation so
Furious protesters chanted “leave, leave, leave” after President Mubarak said he would not immediately stand down Picture: REUTERS
Cario’s military head General
Hassan al-Roueini had told protesters
in Tahrir Square earlier in the day that
“all your demands will be met today”.
Foreign secretary William Hague,
who is in Bahrain, said it was not
during Mubarak’s speech, on hopes
that it would end weeks of uncertainty.
London Brent oil also gave up gains
to close at $101.52 (£63.09) for March
delivery on expectations that Mubarak
would use his speech to resign, but
at a €3bn (£2.5bn) debt sale forced the
European Central Bank to plunge back
into the market.
After two weeks of inaction, the ECB
swooped in to buy what analysts said
could be up to €2bn worth of bonds –
two thirds of the day’s issuance – in a
desperate attempts to keep a lid on
Portugal’s borrowing costs.
In a case of what one analyst called
“déjà vu”, the yield on Portuguese ten-
year bonds shot up more than 20 basis
points to an all-time Eurozone high of
7.6 per cent, but stayed there less than
an hour before retreating down to 7.3
per cent.
The sharp spike in yields comes in
the wake of a European Council sum-
mit last weekend that Eurozone lead-
ers had said would result in a
“comprehensive” package to solve the
crisis, but which in the event produced
very little.
rich Middle East.” ANALYSIS l Yield on 10-year
Oil cartel OPEC said yesterday that it Portuguese bond spikes
is increasing production to help ease 7.6
the ongoing pressure on prices.
Deputy governor of the Central 7.5
Bank of Egypt, Hisham Ramez, said
YIELD %

there is justification for the imposition
of direct military rule.
“They are risking not only the coher-
ence of the military but even indeed,
and I use this term with advisement
here, civil war.”
“immediately clear” which powers
Mubarak planned to transfer, and that
the UK government would closely fol-
low any developments.
In the US, the S&P and Nasdaq were
slightly higher as the markets closed
head of trading consultant Cameron yesterday that the Egyptian markets 7.4
Hanover, Peter Beutel, said last night: were “functioning in a normal way”
“The great fear of the oil market is that with some foreign investors taking 7.3
violence and protests which seem like- part in the first bond auction since the
ly to intensify after the speech may be unrest, though the bank had to offer
transferred to other parts of the oil- yields of 11.8 per cent. 9am 11am 1pm 3pm 5pm

FTSE 100 t6,020.01 -32.28 DOW t12,229.29 -10.60 NASDAQ ▲2,790.45 +1.38 £/$ 1.61 unc £/¤ 1.18 ▲+0.01 ¤/$ t1.36 -0.01 Certified Distribution
29/11/10 till 02/01/11 is 98,444

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 2 News
Some good news in a gloomy world
EDITOR’S LETTER
ALLISTER HEATH
BRITAIN is losing market share in glob-
al investment banking, retail banking
and private equity – and has been
hammered especially badly in hedge
funds and energy trading, where firms
and people have upped sticks to
Switzerland. But it is not all grim for
the City. Two areas that are still doing
well are foreign exchange trading and
legal services, according to research
from CityUK.
So far at least, these sectors have suc-
cessfully resisted decline, despite the
sweeping increases in tax and regula-
tion, restrictions on non-EU migrants
7th Floor, Centurion House,
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WHAT THE OTHER PAPERS SAY THIS MORNING
BIG SOCIETY PLAN “WILL NOT PLUG
CUTS GAP”
The Big Society Bank and other social
finance initiatives will not be enough
to replace charitable projects hit by
government spending cuts, according
to figures compiled by the Financial
Times and the Young Foundation
think-tank. Geoff Mulgan, former
strategy director at Number 10 and
head of the Young Foundation, said:
“There are a lot of fertile ideas about
[raising money] and things are start-
ing to happen. But even on the most
optimistic scenarios there is a vast
gap between the scale of new money
coming into social ventures and the
sheer speed and scale of the spending
cuts.”
STUDENT LOAN COST FEARS SPARK
TUITION FEES THREAT
Ministers have warned universities
that the government will seek new
and the general anti-business climate
that are slowly throttling large parts of
the private sector.
Forex trading – loathed by propo-
nents of the destructive Tobin tax – is
one of the few bright spots in the City.
London increased its share of global
forex trading to 37.2 per cent in
October 2010, from 36.7 per cent six
months earlier. We are up from 31 per
cent at the start of the decade. The US
is on 17.2 per cent, Japan 6.2 per cent
and Singapore 5.9 per cent. The UK’s
daily trading averaged $1.821 trillion
in October 2010, up 8 per cent on April
2010 and a quarter higher than a year
earlier. Twice as many dollars are trad-
ed on the foreign exchange market in
the UK than in the US; more than
twice as many euros are traded in the
UK than in the Eurozone. Foreign
owned institutions account for around
70 per cent of foreign exchange trad-
ing in London, confirming the need to
retain global firms and their staff in
London. The industry is a great success
story, paying tax and employing staff.
Further audit
rules planned
REGULATION
▲
BY ALISON LOCK
AUDITORS’ work came under fresh
scrutiny yesterday by EU and UK regu-
lators.
EU internal market commissioner
Michel Barnier told a Brussels confer-
ence he was preparing a directive for
November to overhaul audit oversight.
He said auditors should be more
accountable to wider economic stake-
holders – investors, stock exchanges,
clients and suppliers – and auditors’
independence should be reasserted.
Conflicts of interest that have “tar-
nished” the profession, such as when
auditors supply extra non-audit serv-
ices to clients, could be prohibited
under new rules, he said.
“The status quo is not an option for
the auditing world,” he said.
Barnier said EU authorities would
power to contain tuition fees if too
many institutions attempt to raise
their charges close to the maximum.
CAIRN TAKES TOUGH LINE ON OIL-
FIELDS SALE
Cairn Energy, the UK-listed oil and gas
company, has hardened its stance in
its battle to secure the Indian govern-
ment’s approval for its proposed
$9.6bn sale of oilfields in Rajasthan,
rejecting conditions being placed on
the transaction. The directors of
Cairn’s Indian subsidiary on
Thursday said they “cannot accept”
any interference that might change
the value of the sale of a controlling
stake in the company to UK-listed
Vedanta. They said uncertainty over
the deal was affecting the business.
EUROFIGHTER TO OFFER INDIA A ROLE
The Eurofighter consortium is pre-
pared to offer India a manufacturing
role, as the international race intensi-
fies to supply 126 jet fighters worth
$11bn to New Delhi.
It would be a total disaster were left-
wing activists to get their wish and
Britain to slap a transactions tax on
currency trading.
Law is another successful yet under-
appreciated part of the economy.
Exports from the UK of law firms
totalled £3.2bn in 2009, up nearly
three times over the past decade. Two
of the top five global 100 firms, based
on gross revenue, are from the UK.
Overall, London firms generated an
astonishing 14 per cent of the global
100 gross revenue (against 54 per cent
for the US and 19 per cent for the
whole of Europe ex-UK). The real dan-
ger is the growth of Asia (already at 10
per cent) and the fact that some of the
business being conducted there could
have been done here. So far, there has
been no decline in UK market share: in
2009-10, the downturn triggered a 6
per cent reduction in fee revenue of
law firms globally to $74.6bn – but UK
law firms’ fee revenue outperformed,
dropping by 4 per cent to £13.7bn.
English law is, like the English lan-
also consider making firms change
auditor regularly and would encour-
age new market entrants.
Separately, the Bank of England
and Financial Services Authority
issued a draft code of practice for
auditors to ensure they coordinate
their work better with regulators.
Richard Thorpe, FSA auditing and
accounting sector leader, said: “The
FSA and its successor organisations, as
supervisors, need to have confidence
in audited financial information to
ensure that we are making informed
judgements and the right decisions.”
Richard Thorpe of the
FSA says there needs
to be more information
passing between audi-
tors and the regulator
INQUIRY SOUGHT TO STOP AIRLINES
CASHING IN ON CARD PAYMENTS
Budget airlines could face an official
inquiry into “rip-off” credit and debit
card charges after the Which? con-
sumer group lodges a “super-com-
plaint” next month. The charity is
using its statutory powers to ask the
Office of Fair Trading to investigate
the fees, which can reach hundreds
of pounds for some transactions.
CHANNEL 4 PLANS TO BECOME
CHANNEL 6 WITH LOCAL NEWS
OUTLET
Channel 4 will bid to become the host
broadcaster for the government’s
new network of city-based television
stations. It is understood to be consid-
ering plans to overhaul one of its dig-
ital channels, E4 and More4, or their
timedelayed “+1” counterparts, to act
as a national “spine” for a host of
local news providers.
guage, commonly used in internation-
al commerce, international dispute
resolution and arbitration: the num-
ber of disputes involving international
parties resolved in London rose 59 per
cent to 5,297 between 2007 and 2009.
It is not David Cameron or George
Osborne’s job to pick winning econom-
ic sectors. It makes no sense for the
coalition to pontificate about those
areas of the economy it claims to know
will do well and create jobs – and
promptly humiliate itself when one of
the key ones, pharmaceuticals, actual-
ly turns out to be in long-term crisis, as
demonstrated by Pfizer’s cuts to its
R&D division in Kent.
But equally the coalition should
stop deliberately downplaying and
hammering unfashionable industries
in which we evidently have a compara-
tive advantage. London still excels in
many areas; the private sector should
be given the freedom to continue to do
what it does best.
allister.heath@cityam.com
Follow me on twitter: @allisterheath
Michel Barnier warned he could crack down again on bonuses
Barnier threatens bonuses
POLITICS
▲
BY MARION DAKERS
THE EU’S new rules restricting bank
bonuses might not be enough to
limit risky behaviour, the bloc’s
financial services chief Michel
Barnier said yesterday.
The French commissioner warned
an industry gathering yesterday that
the EU “will look into current meas-
ures on remuneration and we will
look into whether or not it is
enough”, alongside examining
SPAIN ORDERS DRASTIC CAJA CLEAN-
UP TO WIN CONFIDENCE AND FIGHT
OFF EMU DEBT CONTAGION
Spain has imposed draconian rules on
its saving banks and is preparing for
part-nationalisation of the industry to
restore confidence and boost the
country’s defences against contagion
from the debt crisis in Portugal. The
weaker banks, or “cajas”, must raise
Tier 1 core capital to 10 per cent by
September if they depend on whole-
sale capital markets for over a fifth of
their funding or if less than a fifth of
their shares are in private hands.
INTERNATIONAL MONETARY FUND
DIRECTOR DOMINIQUE STRAUSS-KAHN
CALLS FOR NEW WORLD CURRENCY
Dominique Strauss-Kahn, managing
director of the International
Monetary Fund, has called for a new
world currency that would challenge
the dominance of the dollar.
CITYA.M. 11 FEBRUARY 2011
NEWS | IN BRIEF
Briton to head up Olympus
A British businessman will become head
of Japanese camera-maker and technol-
ogy group Olympus, the firm announced
yesterday, as the firm tries to turn itself
around following the downturn.
Liverpool-born Michael Woodford, who
has been with Olympus for three years,
will take over as president when
Tsuyoshi Kikukawa moves to become
chairman on 1 April. Kikukawa said yes-
terday that Woodford’s promotion to
the top job is part of an effort to reach
more global markets.
More suitors emerge for Eon
Utility giant Eon is thought to have field-
ed several fresh bids for its UK electrici-
ty grid distribution business. US energy
supplier PPL, Hong Kong-based CKI and
MidAmerican Energy Holdings, owned
by Warren Buffett’s Berkshire
Hathaway, were among those named
yesterday as potential suitors for the
business. All three firms already have
operations in the UK. Eon, which has
taken on JP Morgan Chase and Barclays
to advise it during a €15bn (£12.7bn)
asset sale over the next three years, was
unavailable for comment last night.
whether the current rules are being
followed properly.
European rules dictating that at
least half of bank bonuses must be
deferred for three years, plus limits
on cash awards, were introduced in
January, and are already seen as the
toughest bonus curbs in the world.
“Remuneration, bonuses – these
are the things that are shocking for
people who find it difficult to get to
the month’s end,” he said. “Banks are
part of European society. They
should take this into account.”
FOR UK BANKS, A CALAMITY IS BORN
UK bank regulators are launching a
new type of “stress test” that forces
banks to consider unlikely but poten-
tially disastrous scenarios like a flu
pandemic or disruptions to the coun-
try’s food-supply chain. The latest
exercise, which the UK’s Financial
Services Authority instructed banks
to start conducting in mid-December,
is dubbed a “reverse stress test”.
BLOCKBUSTER HEADS TOWARD SALES
BLOCK
Blockbuster is preparing to put itself
up for sale after creditors disagreed
on plans to give the movie-rental
chain more cash to help it exit bank-
ruptcy protection, people familiar
with the matter said. Blockbuster
now plans to seek buyers instead of
reorganising in bankruptcy court and
could ask a judge to approve bidding
procedures as soon as next week.
CITYA.M. 11 FEBRUARY 2011
Two years of record low rates
UK ECONOMY
▲
BY JULIAN HARRIS
INTEREST rates will stay at half a per
cent for the 24th month in a row, the
Bank of England announced yesterday.
Analysts were unsurprised by the
decision to keep rates at a record low,
but expect the meeting’s minutes,
published on 23 February, to reveal a
fractious and increasingly hawkish
feel to the committee.
“The Bank’s decision likely followed
an intense, heated debate and could
well have been the result of a very
Russian IPOs
pulled due to
Egypt unrest
CAPITAL MARKETS
▲
BY RICHARD PARTINGTON
NORD GOLD, the gold mining unit of
steel giant Severstal, has become the
latest Russian firm to scrap plans for a
London initial public offering (IPO).
The miner, led by billionaire Alexey
Mordashov, is the latest casualty of
the ongoing volatility in emerging
markets, fuelled by unrest in Egypt.
Nord Gold had been seeking to raise
up to $1bn (£622m) to pay down debt,
yet sources close to the deal said last
night it would be postponed.
It is the biggest of three aborted
Russian IPOs, following steel pipe
maker Chelpipe’s $688m attempt and
coking coal producer Koks $500m
effort.
Chelpipe yesterday blamed “unusu-
al market sentiment” for the decision
to pull its IPO altogether, whilst Koks
last week postponed its listing as a
result of “market conditions”.
The firms were hoping that emerg-
ing markets funds would become
institutional shareholders, but
close vote,” said Howard Archer of IHS
Global Insight.
“Given the difficult inflation envi-
ronment we suspect there was a con-
siderable debate at the meeting over
whether or not to raise rates,” echoed
Investec economist Philip Shaw.
Andrew Sentance and Martin Weale
may have been joined by another col-
league voting for a quarter point
increase in rates, suggested Alan
Clarke of BNP Paribas. “Given the
worse news on inflation we would not
be surprised if there was an additional
dissenter,” Clarke said.
investors pulled more than $7bn from
such funds in the week to 2 February,
largely due to unrest in Egypt.
Earlier this week, pump manufac-
turer HMS Hydraulic was forced to cut
its price range in order to list in
London.
It will now raise just $360m, as
opposed to between $396m and
$580m as originally planned.
Sources close to the Nord Gold,
Chelpipe and Koks IPOs said the firms
were unwilling to cut their list price
in order to come to market.
A planned privatisation drive by the
Russian government later this quarter
will make it tougher still for the coun-
try’s corporations to list.
Head of research at Moscow-based
Unicredit Securities Rustam Botashev
said: “The government plan made
Russian corporations look to tap the
markets before it privatised compa-
nies.
“When the government comes to
the market, it will be more difficult
for Russian corporations to raise
money.”
“We expect rates to rise soon and
rise further than markets price in,”
said Michael Saunders of Citigroup.
The Bank’s inflation report, pub-
lished next Wednesday, will provide
new evidence on how seriously it con-
siders the threat of lingering price
inflation, as well as the fragility, or
strength, of the British economy.
“We expect an upward revision to
the inflation projection, particularly
at the two year ahead horizon,” Clarke
said. “At the very least that is likely to
show that the committee is moving
closer to a rate hike.”
Alexey Mordashov’s Nord Gold IPO has been postponed
ANALYSIS: RUSSIAN IPOS IN LONDON
Company Price Range
NORD GOLD $4.80 - $6.25 postponed
(part of Severstal Group per share
CHELPIPE $3.50-$4.60
HMS $9.25 - $12
HYDRAULIC
KOKS $6.25 - $8
News 3
US budget deficit widens
to near $50bn in January
expecting a $70bn shortfall.
▲
US ECONOMY
The deficit for the fiscal year to
THE US budget deficit widened less date narrowed to $419bn from
than expected in January but was still $431bn but is expected to expand as
the second-highest on record for the the effects of payroll and business tax
month, underscoring the liability it cuts kick in.
has become for the Obama adminis- The figures came as the US House
tration. Speaker, Republican John Boehner,
The gap broadened to $49.8bn called for the biggest budget cuts in
(£30.9bn), held back in part by a rise US history as part of the Congress
in tax receipts, the Treasury debates on President Obama’s federal
Department said. Analysts were budget for 2012.
MPs decide
prisoners have
no right to vote
POLITICS
▲
MPs yesterday voted overwhelmingly
in favour of a ban on prisoners having
the right to vote.
The cross-party motion, tabled by
Jack Straw and David Davis, was
passed by 234 votes to 22.
But parliament is likely to have to
agree on a watered-down version of
the ban, as it puts the government on
a collision course with the European
Court of Human Rights.
In 2005 the European court ruled
the voting ban was contrary to the
Picture: Reuters European convention on human
rights. The British government was
given until this summer to pass more
relaxed legislation.
Status Advisers Initially, the government proposed
giving the vote to prisoners serving
Morgan Stanley, Credit sentences of less than four years.
But MPs from across the political
Suisse, Troika Dialog divide backed yesterday’s motion,
which rejects the European court’s
ruling.
scrapped JP Morgan The government has been warned
it faces hundreds of compensation
claims from disgruntled inmates.
listed at $8.25 JP Morgan, Morgan Prime minister David
Stanley, Renaissance Capital Cameron said he believes
prisoners should not have
voting rights because of
postponed Citi, UBS, VTB Capital their crimes
 4 News
Sir Stelios hits
out at easyJet
pay decisions
▲
AVIATION
BY MARION DAKERS
EASYJET’S largest shareholder Sir
Stelios Haji-Ioannou has spoken out
against an ex-chief executive’s pay, in
the latest flare-up between the budg-
et airline and its founder that could
cause fireworks at next week’s AGM.
Sir Stelios, whose family owns a 38
per cent stake in easyJet, wrote to
chairman Michael Rake to complain
that former chief executive Andy
Harrison was paid £2.2m between
April and September 2010, despite
leaving his full-time post in July.
“The main criticism… is that by
insulating the pay of Harrison from
the actual results in the 2009 deal, he
gave the CEO the right to destroy
shareholder value in the summer of
2010 with impunity,” Sir Stelios said.
Harrison, who is now the chief
executive of Whitbread, replied in a
statement: “As chief executive of
easyJet, my job was to implement the
strategy agreed by the board.
“All aspects of my remuneration
were determined by the remunera-
tion committee and to the best of my
knowledge were communicated to
the full board.”
Sir Stelios wrote that he plans to
vote against a resolution to approve
directors’ pay at the shareholder
meeting next Thursday, and will also
abstain from a vote to re-elect David
Michels as senior independent direc-
tor.
EasyJet shares, which took a batter-
ing last month after forecasting
£160m half-year losses, fell 2.2 per
cent yesterday to close at 380.5p.
ANALYSIS l easyJet
p 380.50
10 Feb
460
420
380
15 Nov 3 Dec 23 Dec 17 Jan 4 Feb
Sir Stelios (top) and former chief executive Andy Harrison
CITYA.M. 11 FEBRUARY 2011
TIMELINE | EASYJET’S FIGHTS
WITH FOUNDER SIR STELIOS
March 1995
Stelios Haji-Ioannou sets up easyJet using
funds from his family’s shipping business
22 November 2000
EasyJet floats on the London Stock
Exchange, valuing the firm at £777m
26 November 2002
Stelios resigns as easyJet chairman to
spend more time on other ventures
May 2005
Stelios returns to the board as a non-exec;
seven months later Andy Harrison joins as
chief executive
August 2008
Stelios takes easyJet to court for using the
“easy” brand to make money from ventures
that compete with his other businesses
November 2008
Stelios raises his stake in easyJet and
demands two additional board seats, after
refusing to sign off the firm’s accounts
July 2010
Harrison quits after a row over strategy
and is replaced by Carolyn McCall
14 May 2010
After failing to nominate board members,
Stelios resigns again in order to lobby for
strategy change as an investor
11 October 2010
EasyJet agrees a deal to pay Stelios to use
the “easy” brand name on certain non-air-
line services
Pictures: GETTY/ REUTERS
CITYA.M. 11 FEBRUARY 2011 News 5

Irish recaps could

Credit Suisse chief
executive Brady
Dougan said lower
bonuses had been
partly offset by

wait for stress test

higher base
salaries.

Picture:
GETTY

25 February election, said a new

▲
EUROZONE
BY HARRY BANKS
A NEW Irish government is likely to
wait until a fresh round of stress tests
are completed before recapitalising
the country’s top lenders, giving the
only bank left trading on the main
index more time to avoid state con-
trol.
The main opposition party, expect-
ed to lead the next government after a
administration should wait until after
the central bank completes its sector
review, at the end of March, before
putting more capital into lenders.
“If there is no government until 9
March or beyond that, I think it is pru-
dent for (an) incoming government to
wait until stress testing before putting
capital in,” Fine Gael’s finance
spokesman Michael Noonan said yes-
terday.

Credit Suisse
cuts bonuses
and dividend
of banks: “The industry is facing a
▲

BANKING
BY JULIET SAMUEL
CREDIT Suisse has cut back on bonus-
es dramatically, announcing at its
full-year results yesterday that 2010
bonus payouts were down 25 per cent
per employee compared to last year.
The bank also downgraded its all-
important return on equity forecast –
a key prediction of mid-term prof-
itability – from 18 per cent to 15 per
cent, citing strict Swiss capital
requirements as a drag on earnings.
The bank’s overall compensation
costs fell nine per cent per person,
however, ahead of a six per cent fall in
revenues to SwFr31.4bn (£20.1bn).
Chief executive Brady Dougan said
that lower bonuses had been partly
offset by bigger base salaries, while
there was a five per cent increase in
global headcount to 50,100.
Unlike many global investment
banks, Credit Suisse does not link
bonuses purely to revenues but uses a
range of other metrics to generate
bonus payments.
Overall, the bank’s results disap-
pointed, with pre-tax profit down 21
per cent on 2009 to SwFr6.8bn.
Chief executive Brady Dougan said
new environment with more capital
requirements and new business con-
ditions.”
The bank’s profitability was hit by
stringent Swiss capital requirements
that go beyond the Basel III regula-
tions. It announced a core tier one
capital ratio of 17.2 per cent, up from
16.3 per cent last year.
Credit Suisse also cut its full-year
dividend by more than expected. It
will fall to SwFr1.30 a share for 2010
from SwFr2.00 the prior year.
Like many of its rivals, its invest-
ment banking division was also hit
hard by slow trading due to market
uncertainty in the second half of last
year.
Despite gaining market share, pre-
tax profits at the investment banking
arm plunged 48 per cent to SwFr3.5bn.
The bank said it was hit hard by the
strong Swiss franc, with many of its
revenues in dollars and costs in francs.
Despite the drag from Swiss regula-
tions, however, Dougan said that the
rules had at least given them the abil-
ity to plan, saying: “We have emerged
from the regulatory uncertainty that
the rest of the industry is still experi-
encing.”

Investors balk at bad news

INVESTORS didn’t like the bevy of
bad news from Credit Suisse. Lower
profits – and lower expectations in
the medium term – were com-
pounded by a bigger-than-expected
drop in the dividend. Shares lost
almost six per cent yesterday to
close down at SwFr42.10 (£27).
Chief executive Brady Dougan
will likely be miffed. In many ways,
he has steered the bank through the
crisis remarkably well, especially
compared to closest rival UBS
(which had to contend with the
highly-damaging US tax agree-
ment). Credit Suisse pulled in net
new assets of SwFr68bn over the
year, compared to an annual net
outflow of SwFr14.3bn for UBS.
So why did investors walk? Firstly,
the dividend cut of more than a
third was too steep for some. In a
way, Credit Suisse has over-promised
and under-delivered. It has repeated-
ly told shareholders that their
returns wouldn’t be hurt by
Switzerland’s famously tough capi-
tal requirements. But with mid-
term profitability expectations
downgraded and lower dividends,
that isn’t the case.
UBS, although in a worse shape,
has been incredibly cautious, deny-
ing investors even the prospect of a
dividend for several years.
Still, yesterday’s sell-off was likely
over-done, providing a buying
opportunity for others.
BOTTOMLINE
Analysis by David Crow
 6 News CITYA.M. 11 FEBRUARY 2011

Bloomberg backs merger of BLACKS LEISURE CHIEF TO STEP DOWN

Deutsche Boerse and NYSE

intense scrutiny from German regula- tor with unprecedented global reach
▲

CAPITAL MARKETS
BY HARRY BANKS
NEW York Mayor Michael Bloomberg
yesterday gave his full-throated sup-
port to Deutsche Boerse’s planned
takeover of NYSE Euronext.
He said of the proposed deal: “It’s
going to give us access to Europe, and
Europe access to the US in a way our
competitors like London will not
have.”
However, the deal is likely to face
tors and European anti-trust authori-
ties, potentially putting the
blockbuster exchange tie-up in peril.
It could also face hurdles in
Washington as US lawmakers and reg-
ulators consider whether they are pre-
pared to allow such an iconic
institution to fall into foreign hands,
although early criticism was muted.
The companies said on Wednesday
they are in “advanced talks” to join
forces and create an exchange opera-
and -- most worrisome for regulators –
a dominant grip on Europe’s lucrative
derivatives markets.
While executives from Frankfurt
and New York have hatched a tentative
agreement, there are still obstacles
that must be overcome -- hurdles that
have scuppered attempts to combine
Deutsche Boerse with Paris-based
Euronext. “These key questions are not
yet resolved,” a senior German finan-
cial source said yesterday.

NEIL Gillis, chief executive of Blacks Leisure, has announced he will leave his role, two

The Great
weeks after the outdoors retailer said it had been unsuccessful in its search for a bidder.
Gillis, who has been chief executive at Blacks since November 2007, will not receive a pay-
off, and will work his six months notice period. Gillis said it is “right for another individ-
ual to lead the business in the final phase of the turnaround programme”.

Getaway! Hargreaves
lambasts bill
for bust firms
Yet some City firms have spoken
▲

FINANCIAL SERVICES
BY RICHARD PARTINGTON out against the levy, which they say is
unrelated to their area of business.

.99*
THE FOUNDER of fund manager The Association of Private Client

29
Hargreaves Lansdown has warned a Investment Managers and
controversial compensation scheme Stockbrokers, along with several of its
could put firms out of business, members, will next week meet with

£
resulting in spiralling costs for the
financial services industry.
Peter Hargreaves said the Financial
Services Compensations Scheme
(FSCS) levy, which hit his firm for £3m
for 011
last year, said some companies would
the FSCS to voice concerns over the
current system.
The firms could lobby for several
options, including an extended pay-
ment period or staggered instal-
ments.

ly 2 be unable to pay the charge. The Investment Management

13 Ju
“There are firms that might not be Association is also considering a judi-
as profitable as mine that might have cial review of the FSCS levy on behalf

rch to to pay this amount of money and of its members.

1 Ma
they can’t,” he told City A.M.. Hargreaves Lansdown yesterday
“They could go out of business, not posted a 41 per cent increase in half-

l from pay the levy and then not pay com- year pre-tax profits to £56.3m, despite

e
pensation to clients. being hit by the FSCS levy.

Trav
“There could be a domino effect
and we could get loaded with bigger
and bigger bills.”
The FSCS levy demands investment
firms pay into a £450m pot used to
compensate investors in funds that
have gone bust.
Hargreaves said: “We’re footing the
bill for liabilities of which we know
nothing about and we have no say in
whether we should foot the bill or
not.
“We’re being asked to pay taxes
without any vote.”

BP’s Russian deal is put on hold

until March by arbitration panel
Hurry, book now
rights to BP’s activities in Russia
▲

ENERGY
through arbitration.
BP must wait until at least March to “The arbitral tribunal has ordered

while stocks last!

learn the fate of its £10bn share-swap
with Russian oil firm Rosneft, after an
arbitration tribunal yesterday extend-
ed the injunction blocking the deal.
Russian investor group AAR, which
*Price single inc. taxes, availability and prices correct as at 7 February 2011. Available to book now while stocks last. Offer valid owns half of BP’s Russian venture
on 2.5 million selected seats across our European network available for £29.99 or less. For travel from 1 March to 13 July 2011 TNK-BP, obtained an injunction last
inclusive. Variable charges for hold baggage apply and some payment methods attract a handling fee. See website for details. week to halt the deal until 25
February while it tries to establish its
that a final hearing on certain mat-
ters to be agreed will take place in the
week commencing 7 March 2011,” BP
confirmed in a statement.
“The injunction which has put on
hold the Rosneft transaction
announced on 14 January has been
extended by the tribunal pending the
outcome of this arbitration hearing.”
CITYA.M. 11 FEBRUARY 2011 News 7

Dotcom fears
DOT COM MADNESS RETURNS *SOME FIGURES ARE MARKET ESTIMATES

Fantasy tweets...*
facebook: @twitter
Hey, liking your style,

amid $10bn Value: $315m Value: $6bn

how about me and you
hook up??? Enjoying
being single? How
does $10bn sound? I’m
the CEO &*^%$

Twitter talks
2010 revenue: $50m 2010 revenue: $350m
Multiple: 6.3x Multiple: 17x twitter: @facebook
2010 profit: $15m 2010 profit: $50m $10bn???? SRSLY????
I mean, yeah, let’s talk.
Call me!!!
▲

TECHNOLOGY placed a number of its privately held

BY STEVE DINNEEN shares. Facebook brought in revenues
of around $2bn last year.
FEARS that a second dotcom bubble is Ian Maude of Enders Analysis told google: @twitter wait!!!
rising grew yesterday, with Google City A.M.: “It looks like March madness will pay whatever
and Facebook both understood to be has come early. There have been a @facebook is offering.
in talks to buy Twitter for up to $10bn number of pretty crazy valuations Must control everything
Value: $50bn Value: $10bn on internet. Don’t be
(£6.23bn). recently but this one wins the prize. evil!!!
The Silicon Valley giants are in
“very speculative” negotiations to
“Facebook has a high valuation
but it has a much deeper relation-
2010 revenue: $2bn 2010 revenue: $45m
take control of the hugely popular ship with its customers than Twitter Multiple: 25x Multiple: 222x
microblogging site for a valuation of does. There may be ways to better 2010 profit: $400m 2010 profit: Small loss
between $8-10bn, according to people monetise the service but $10bn is apple: OMG!!!!!
close to the deal. astronomical.” @facebook and
In its recent financing round, But Nic Brisbourne, an investment
Twitter was valued at $3.7bn, after manager for DFJ Esprit, said: “It’s a @google have gone
selling $200m worth of shares. The big multiple, but they are clearly not mad!!!! LOLZ!!!!!!
site has 175m registered users who looking at Twitter on a multiple
send 95m “tweets” of up to 140 char- basis.
acters every day. “Google bought YouTube for
The talks follow the rejection of a $1.65bn on revenues of virtually zero. AOL: #twitter staying
$6bn Google bid for online deal site “It looked at the market and decid- well away from this.
Groupon in December. LinkedIn, the ed that was an important sector to #HuffPo risky enough.
professional networking site, is control. It could apply the same logic
Value: $2bn Value: $200m Didn’t really enjoy the
expected to reach a valuation of to Twitter. It is a fantastic service – 2010 revenue: $205m 2009 revenue: $97m first dotcom bubble
#time_warner #bebo :(
around $2bn after filing plans for an
IPO. And Facebook has been valued at
any valuation is going to be based on
where the market is at and the mar-
Multiple: 10x Multiple: x2
a staggering $50bn after Goldman ket is very frothy right now.” 2010 profit: $2.3m 2009 profit: £1m loss * as imagined by City A.M.
CITYA.M. 11 FEBRUARY 2011 News 9

Record profit PROFILE | SIR JOHN ROSE

AT the end of yesterday’s analysts’

for Rio Tinto

briefing on the Rolls Royce results,
Sandy Morris of RBS, the doyen of
the aerospace sector, stood up and
gave a vote of thanks to Sir John
Rose, one of British industry’s
iconic figures. Applause from the

on iron prices
60-odd analysts present followed.
It was a fitting tribute to a man
who has led the company as chief
executive since 1996 and whose
reign has in the main been an out-
standing one.
True, the last few months of Sir
John’s tenure were marred by the
failure of the group’s Trent 900
▲

MINING Chief executive Tom Albanese said: engine on an Airbus plane, but as
BY MARION DAKERS “Rio Tinto is reinvigorated, running industrial catastrophes go this
strongly and benefiting from Sir John Rose reported his last results before retirement Picture: REX was a manageable one, if there
RIO TINTO was the latest miner to post favourable markets.” can ever be such a thing.

Rose’s last hurrah at Rolls

record profits on the back of soaring Chairman Jan du Plessis added that Mercifully there were no
commodity prices yesterday, as it sur- the firm will continue to make small human casualties related to the
prised investors by more than dou- to medium sized acquisitions. failure and after a few days of
bling its full-year dividend and Rio’s shares dipped 2.4 per cent to unhelpful headlines the group

as it posts rising revenue

announcing a $5bn share buy-back.
The Anglo-Australian miner said
pre-tax profit for 2010 more than dou-
bled to $20.6bn (£12.8bn), while under-
lying earnings rose 122 per cent to
around $14bn.
Rio said the price movements on
£45.49 yesterday, faring worse than has come out the other side with
the rest of the FTSE 100, as earnings its reputation intact. This was no
fell one per cent short of estimates BP-style disaster.
and on disappointment that the buy- Under Sir John’s stewardship
back will not return cash to sharehold- Rolls-Royce became a truly global
ers more quickly. player, with an order book that
ENGINEERING Rishton. has grown from £7.6bn in 1995 to
▲

commodities including diamonds and
iron ore made a $9.5bn contribution
to the earnings rise, though produc-
tion volumes also rose thanks to the
major expansion of its iron ore project
in Pilbara, Western Australia.
The firm also reduced its debts from
$18.9bn to $4.3bn during the year.
Rio raised its dividend to $1.08 per
share, 20 per cent above previous guid-
ance, and unveiled plans to return
$5bn to investors by the end of 2012.
A Daimler Brand
ANALYSIS l Rio Tinto BY MARION DAKERS “The view for 2011 is that we’ll con- £58.3bn now and a share price
tinue with good growth in underlying that has grown from 188p to 645p.
4,800 p 4,549.00 ENGINE-MAKER Rolls-Royce reported a profit, supported by services growth One would imagine the govern-
10 Feb
four per cent rise in underlying annu- in the civil aerospace and marine sec- ment will be keen to use Sir John’s
4,600 al pre-tax profit to £955m yesterday, tors,” said Rose yesterday. services as it strives to find a con-
and told investors most of the costs Revenues rose six per cent to vincing growth strategy for the UK
4,400 linked to last year’s A380 engine prob- £11.1bn, and the firm raised its final economy. Business Secretary Vince
lems have been dealt with. dividend 6.7 per cent to 9.6p. Cable speaks of Sir John’s “huge
4,200 The results announcement was the Operating profits fell slightly as contribution”. At Rolls, he will be
last for chief executive Sir John Rose, £56m costs linked to the A380 engine, a hard act to follow.
who retires next month and will be which malfunctioned on a Qantas By David Hellier
15 Nov 3 Dec 23 Dec 17 Jan 4 Feb replaced by former Ahold boss John plane last year, were absorbed.

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 10 News
Chief executive Indra Nooyi says the commodities market is uncertain
Kraft hit by
Cadbury and
commodities
▲
CONSUMER
BY MARION DAKERS
KRAFT FOODS saw its quarterly
income drop 24 per cent on last year
as the cost of taking over UK confec-
tioner Cadbury began to bite.
Net income at the owner of Oreo
cookies and Philadelphia cheese fell
to $540m (£335.5m) from $710m a
year ago, in part due to costs linked to
Cadbury and to the rising price of
corn, sugar and cocoa.
Revenues rose 30 per cent to
$13.8bn, slightly ahead of consensus
estimates, including a 26.2 percent-
age point gain from acquiring
Cadbury in a controversial deal last
February.
Cadbury fared badly in North
America in the fourth quarter, with
net revenues dropping 6.1 per cent
after lower sales of Trident and Stride
chewing gum.
Cadbury turnover in Europe was
flat, with a decline in southern
Europe offsetting what Kraft said
were strong sales in the UK.
Operating income in Europe fell
27.7 per cent to $159m, as costs linked
to integrating Cadbury wiped out
half of the division’s profit.
In emerging markets, where Kraft
hopes to grow through its takeover of
Cadbury, the group saw revenues rise
73.5 per cent with 61 percentage
points coming through Cadbury.
Kraft forecast profit growth of
between 11 and 13 per cent excluding
integration costs this year, which has
been scaled back from predictions of
“mid-teens” growth in November’s
update.
Kraft chief executive
Irene Rosenfeld hopes
to see profit growth of
13 per cent next year
after a tough quarter
Owen-Jones resigns as L’Oreal chair Sprint Nextel adds users
▲
CONSUMER
BY HARRY BANKS
L’OREAL, the world’s biggest cosmet-
ics maker, has confirmed the resigna-
tion of charismatic chairman Lindsay
Owen-Jones and elevated current
chief executive Jean-Paul Agon to
executive chairman.
Owen-Jones, widely regarded as the
man who transformed L’Oreal from a
French into a global business, will
Picture: GETTY
stay on its board and become hon-
orary chairman as of next month.
The group also asked for share-
holder Liliane Bettencourt, descen-
dant of the group’s founder, to
remain on the board with the same
terms, dismissing analysts’ specula-
tion she could leave in favour of
younger members of her family.
Having benefited from the mar-
ket’s recovery last year, Owen-Jones
proposed to raise the dividend by 20
Pepsi lowers its targets
▲
FOOD AND DRINK
BY HARRY BANKS
PEPSI cut its earnings growth targets
for 2011 and beyond yesterday, citing
higher commodity costs, a difficult
economy and investments in emerg-
ing markets.
Chief executive Indra Nooyi, who
was peppered with tough questions
by analysts during a tense conference
per cent for 2010 to €1.80 (£1.52) a
share for 2010 and pledged to lift
profits and revenue again this year.
The group also said like-for-like
sales rose 4.1 per cent in the three
months to 31 December, undershoot-
ing growth expectations of 5.3 per
cent.
The maker of Lancome creams
and Garnier shampoos made an
operating profit of €3.06bn on sales
of €19.5bn.
call, said the lowered longer-term out-
look was prudent given the uncertain
economic conditions.
“We have no idea what the com-
modity markets are going to look like
in 2012 and beyond,” Nooyi said on
the call.
The results come a day after rival
Coca-Cola surprised the market with
sales volume increases in all of its seg-
ments.
TELECOMS
SPRINT Nextel added mobile sub-
scribers for the first quarter in more
than three years, sending its shares
up five per cent.
The Number Three US mobile serv-
ice added 58,000 subscribers in the
quarter, ahead of the average expecta-
tion for almost 17,000 customer addi-
tions from analysts.
While the customer number was
CITYA.M. 11 FEBRUARY 2011
Pepsi said it now expects 2011 earn-
ings to rise seven per cent to eight per
cent, with high single-digit growth
beyond that. It had earlier forecast
low double-digit percentage rate
growth for 2011 and 2012.
In the fourth quarter, Pepsi’s net
income fell five per cent to $1.37bn
(£850m), or 85 cents per share. Its
sales jumped 37 per cent to $18.16bn,
helped by buying two bottlers.
Thomson
Reuters sees
revenue lift
▲
MEDIA
BY HARRY BANKS
THOMSON Reuters yesterday said it
expects revenue to rise in 2011 after
stronger growth in the fourth quarter
and more signs that its financial and
professional customers are recovering
from the recession.
The company, which provides news
and information to financial, legal,
accounting and healthcare profes-
sionals, expects 2011 revenue to rise
by a “mid-single digit” percentage.
Analysts on average expect 2011 rev-
enue to rise about four per cent,
according to Thomson Reuters.
As a result, the company raised its
annual dividend by seven per cent to
$1.24 per share.
The revenue forecast suggests that
the company’s customers are recover-
ing from the economic downturn
that caused a pullback in spending
and widespread layoffs.
“A shock like the world went
through leaves a caution that hangs
around for a while,” Chief Executive
Tom Glocer said in an interview. “But
there’s no question that the condi-
tions themselves are getting better in
many of our markets.”
Total revenue from ongoing busi-
nesses rose four per cent in the fourth
quarter to $3.46bn (£2.15bn), before
currency adjustments. Underlying
operating profit rose three per cent to
$669m.
ANALYSIS l Thomson Reuters
$
41 40.09
10 Feb
39
37
2010 6 Dec 27 Dec 18 Jan 7 Feb
tiny compared with growth at bigger
rivals Verizon Wireless and AT&T, it
marked a milestone for Sprint, which
last reported contract customer
growth in the second quarter of 2007.
While several analysts expect
Sprint to revert to a customer loss
again this quarter, they applauded its
promise to report subscriber addi-
tions for the full year 2011, which
would mark the first full year of
growth since 2006.
CITYA.M. 11 FEBRUARY 2011
Catlin, headed by chief executive Stephen Catlin, beat analyst expectations
NEWS | IN BRIEF
Boparan to forfeit his dividend
Ranjit Boparan will forfeit £36m of divi-
dend payments over three years while
he overhauls convenience foods maker
Northern Foods, according to his
takeover documents lodged this week.
Boparan has brokered a deal with
Northern’s pensions trustees to plug the
£142m deficit in the fund, which will
involve pouring in £15m a year, funded
in part by Boparan’s annual dividend
award from his existing business,
2Sisters Food Group. The deal is the
same one that Greencore had promised
Northern as part of their planned merg-
er in November.
Geo-Alliance gives up Regal bid
Energees came closer to taking over
AIM-listed explorer Regal Petroleum
yesterday, as rival bidders Geo-Alliance
and Heamoor walked away from making
an improved offer. Energees, whose
£85m bid won the support of Regal’s
board last Sunday, also received irrevo-
cable undertakings from Ukrainian fund
manager Timur Khromaev yesterday,
taking total support for the bid up to
14.54 per cent. Regal shareholders have
until next Thursday to accept the 38p
per share offer for 70 per cent of the
firm.
Zurich profit slips 13 per cent
Insurer Zurich Financial Services saw
its 2010 profit fall 13 per cent to
$4.9bn (£3.04bn) from $5.54bn in
2009, as catastrophe claims rose and it
paid one-off costs in Russia and the US.
Zurich, which wrote premiums of
$33.1bn in 2010, made $3.45bn net
profits, in line with market forecasts,
and increased its dividend six per cent
to SwFr17 (£11). But S&P analyst Tony
Silverman downgraded his 2011 income
forecasts by four per cent, saying he
saw little potential for share price rises
despite its effort to improve its non-life
underwriting.
Nova Ljubljanska loses €202m
Nova Ljubljanska Banka, Slovenia's
largest bank, made a net loss of €202m
(£170.7m) last year, compared with an
€86.8m loss in 2009. “A higher loss was
due to high weakenings and provisions,”
unlisted NLB said yesterday. NLB, which
barely passed the EU stress test in July
and plans a capital hike of €250m by
the end of March to meet tougher EU
capital requirements, confirmed the new
shares would be sold at €116.
Expedia profits slip due to higher taxes Willis results top forecasts
▲
CONSUMER
BY HARRY BANKS
ONLINE travel agency Expedia said
yesterday its quarterly profit slipped
30 per cent due to a higher tax rate
and increased interest expense.
The largest online travel agency
said fourth-quarter net income
amounted to $71.3m (£44.3m), or 25
cents per share, compared with
$102.2m, or 35 cents per share, a year
ago.
Excluding one-time items, Expedia
said it earned 32 cents per share, com-
pared with analysts’ average estimate
of 36 cents per share.
The total value of Expedia’s book-
ings rose 14 per cent in the quarter
from a year ago to $5.75bn.
The company posted revenue of
$808.4m, compared with forecasts for
$801.3m. Revenue was $697.5m in the
same period a year ago.
Catlin shakes off cat loss
▲
INSURANCE
BY ALISON LOCK
LLOYD’S insurer Catlin returned solid
full-year results yesterday despite tak-
ing a $218m (£136m) hit from catas-
trophe-related losses.
Catlin saw pre-tax profit fall by a
third to $406m from $603m last year,
but beat analysts’ forecasts of $382m.
Underwriting profits grew five per
Expedia’s operating margin nar-
rowed to 18.5 per cent from 20.2 per
cent. Gross bookings climbed 14 per
cent, while transactions rose 13 per
cent. Worldwide hotel revenue
climbed 15 per cent, with nights
stayed rising. Air revenue also
increased 15 per cent.
Shares of Expedia fell 5.3 per cent
to $24.33 following the release of its
earnings from their $25.69 close in
regular trading on Nasdaq.
cent to $683m, as it added ten per
cent to the net premiums it wrote, to
a total $3.2bn. It wrote $4.07bn gross
premiums, up from $3.71bn in 2009.
Chief executive Stephen Catlin said
the results were achieved “despite the
catastrophe losses and the low inter-
est rate environment” that continued
to make the market challenging.
Chief operating officer Paul Jardine
said 2010’s losses were normal. “Our
INSURANCE
WORLD top three insurance broker
Willis saw its net profits hit $455m
(£283m) or $2.66 a share in 2010, up
four per cent from the $436m, or
$2.58 a share, made in 2009.
Fourth-quarter profits beat expecta-
tions, rising 24 per cent to $98m or 57
cents a share, up from $79m or 47
cents a share in 2009. Analysts had
forecast 54 cents a share profit.
News 11
risk appetite has remained pretty
constant,” he said. “It is within what
we would expect in any year.”
Jardine added that Catlin, Lloyd’s’
largest syndicate with an 8.5 per cent
market share, was not involved in UK
M&A activity. “From a London per-
spective I don’t see what a further
acquisition would do for us,” he said.
Catlin expects to make a $50m loss
from Australian floods in January.
Dynegy in
defence of
Icahn bid
▲
M&A
BY HARRY BANKS
DYNEGY yesterday defended its bid to
sell itself for $665m (£413m) to bil-
lionaire Carl Icahn, arguing weak
market conditions could force the
power company into a liquidity crisis
unless the deal goes through.
The $5.50-a-share deal has come
under fire from hedge fund Seneca
Capital, which led a similar effort to
oppose the company’s previous deal
to sell itself to private equity firm
Blackstone Group. Shareholders voted
that deal down in November.
“Given Dynegy’s cash flow position,
we believe there are serious questions
as to whether Dynegy will have suffi-
cient liquidity available to reach even-
tual market recovery,” the special
committee of Dynegy’s board of direc-
tors said in a letter to the company’s
shareholders.
Dynegy, which sells power at com-
petitive rates into the open market, is
trying to sell itself in the face of weak
natural gas prices, which often dic-
tate power prices.
But Seneca has said that manage-
ment has consistently undervalued
the company, and is arguing that
Dynegy is worth $7.50 to $8.50 a
share. Dynegy shares closed at $5.74
on the New York Stock Exchange yes-
terday
The Dynegy directors argued in the
letter that accepting the Icahn bid
was superior to the risks of remaining
an independent company.
They also asserted that Seneca had
made various errors in its presenta-
tion materials and called some of the
assumptions behind Seneca's valua-
tion “exceedingly wishful”.
Icahn extended his tender offer yes-
terday, saying he needed more time to
receive approval from the Federal
Energy Regulatory Commission. Only
about 4.4 per cent of Dynegy’s shares
have been tendered into the bid.
Annual revenues rose two per cent
to $3.34bn as fee and commission
income rose six per cent in all busi-
ness units apart from its North
American operations, which
remained flat both in the fourth
quarter and in the year overall.
Growth drivers were reinsurance
broking, which saw double-digit
growth; energy, aerospace and
marine insurance; and Latin
American and Asian markets.
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CITYA.M. 11 FEBRUARY 2011 News 13

ANALYST VIEWS: WHY DID DIAGEO’S RESULTS

Diageo hit as sales LEAD TO A DROP IN SHARE PRICE?
Interviews by John Dunne

slow down in Europe MARTIN DEBOO | INVESTEC

“ Given the momentum around the stock in recent months, where we

sense that enthusiasm for a gradual American recovery, buoyant M&A speculation
and anticipation around a compelling first-half profit story have galvanised the

”
CONSUMER proving popular – particularly with growth over the period. share price. This is a a poor result with further hangovers to come. The
▲

BY JOHN DUNNE
SHARES in drinks giant Diageo
dropped yesterday after the company
said that European sales were weak-
ening and that it was pinning its
middle class customers. Despite
shares dropping by around four per
cent after the half yearly results, chief
executive Paul Walsh said the compa-
ny was performing well and was hik-
ing the interim dividend.
Total group marketing spending in market had assumed there would be an upgrade to the full-year earnings
the half increasing 12 per cent to guidance.
£813m.
Meanwhile Walsh said that Diageo
would continue to be based in the UK PHIL CARROLL | SHORE CAPITAL
for the time being as the coalition’s

growth hopes on middle class
drinkers in emerging markets.
The company said like-for-like sales
in the six months to 31 December
“Emerging market sales in scotch
have been very strong.
“Middle class customers in these
are on the rise. Our super-premium
corporate and personal tax plans
would not be detrimental to the busi-
ness.
“We do not feel compelled to be
“
We expect that there may be some disappointment on the bottom-line
performance with worries on how [Diageo’s operations in] Europe may fare during
the rest of the year but some comfort may be taken from the reiteration of man-

rose four per cent to £5.3bn.
Operating profit increased two per
cent to £1.7bn, but fell short of the
five per cent forecast by analysts.
Diageo, which has brands includ-
ing Guinness and Johnnie Walker,
said European sales had been dragged
”
ranges are very popular. talking about leaving,” he said.
“There have been problems in agement’s profit guidance. Overall, we expect that there maybe some dis-
Europe and consumers have been hit appointment with worries on how Europe may fare over the year.
in Spain, but particularly Greece.” ANALYSIS l Diageo
1,260
But Russia and East Europe saw net p
1,195.00
sales up 20 per cent, driven by spirits.
In the UK net sales grew by one per 10 Feb RICHARD HUNTER | HARGREAVES LANSDOWN
1,220

down by the economic crisis in Spain
and Greece where consumers’ spend-
ing power has been hit. Net sales fell
by 38 per cent in Greece, where excise
tax rises also took their toll.
cent, with sales of wine like Blossom
Hill up at the expense of beer.
North American sales were solid,
with Canada the star performer. Net
sales rose seven per cent to £1.8bn
“
1,180 The initial share price weakness belies a progressively strong underly-
ing story. Whilst demand in Europe remains relatively weak, Diageo has continued
to benefit from its geographical diversification. In all, Diageo may have narrowly

”
1,140
However, the company said emerg- across the region. missed estimates but prospects remain positive in what is a globally diffi-
ing markets were driving growth Johnnie Walker contributed more cult environment.
with beer in Africa and scotch in Asia than a third of all Diageo’s sales 15 Nov 3 Dec 23 Dec 17 Jan 4 Feb

DIAGEO SALES GROWTH BY CATEGORY

SCOTCH BEER
sales up sales up
6
per cent *
3
per cent

VODKA
sales up Overall
8
per cent *
sales up

WINE
sales up
5
per cent *
4
per cent **
*annual organic net sales growth
** annual like-for-like sales growth Source: Diageo

NEWS | IN BRIEF
Arena bags Olympic contract
The UK’s largest racecourse operator
Arena Leisure said yesterday it had
won a catering contract for the 2012
London Olympics, which was expected
to boost its profit. The company, which
would provide catering services at two
venues for the Olympic and Paralympic
Games in 2012, said its 2012 net profit
contribution from the contract would
be up to £1m. For the six months
ended June, the company had posted
an adjusted pre-tax profit of £1.2m.
Arena, which supplies catering servic-
es across each of its seven racecourse
venues, established its own catering
business in 2007.
Esprit profit drops
Clothing retailer Esprit Holdings post-
ed a 21 per cent fall in first-half net
profit and will switch its textile sourc-
ing to Bangladesh from southern
China to cut costs. Esprit, like rivals
such as the world’s No3 fashion retail-
er Hennes & Mauritz faces the chal- along with our Jaeger Black and
lenge of rising raw material costs, Boutique by Jaeger collections,”
such as cotton, which will pressure Belinda Earl, Jaeger Group's chief
sales of budget clothing chains. “We executive, said.
have identified the opportunities to
diversify our portfolio in different La Rinascente in sale talks
countries. One of the countries that Italian department store chain La
we have identified is Bangladesh,” Rinascente could be put up for sale,
Esprit’s chief executive Ronald Van der after its three major stakeholders
Vis said. “We will open selectively new started discussions about selling their
sourcing offices in future in markets shares. Investment bank Deutsche
where we believe there are opportuni- Bank, which owns just under a third of
ties for us.” Esprit shares ended down the 13-store chain, Italian landlord
0.3 per cent. Prelios, which owns a fifth, and Italian
private equity firm Investitori
Jaeger moves into Russia Associati, which owns 46 per cent, are
Jaeger has signed a deal with JamilCo, all in talks to sell their shares. The
one of Russia's leading luxury brand three companies acquired their respec-
distributors, to bring the British brand tive stakes in La Rinascente, an upmar-
to Russia. The first two stores are set ket store seen as the Italian equivalent
to open in spring 2011 in Moscow, of Selfridges, in 2005. One Italian
with more to follow in autumn 2011 in newspaper suggested that Prada,
Moscow and St. Petersburg. “We are LVMH and PPR could be in the running
delighted to be expanding into the to snap up shares. It is not known if a
Russian market with Jaeger London, formal sales process has started.
 The Capitalist
14 CITYA.M. 11 FEBRUARY 2011
EDITED BY
DONATA HUGGINS
GOT A STORY? EMAIL
thecapitalist@cityam.com

Left: Boris Johnson.

Right: guests at the
Square Mile Salute

Above: Carmen
Windsor, a guest.
Left: General Sir Mike
Jackson, former chief
of the general staff.
Right: Alexander
Michaels,
Toastmaster

A.M.’s managing director, took another

FORCES, FOOD AND FINANCE
YESTERDAY at the Square Mile Salute
fundraising banquet, Boris Johnson
said: “There are three things I want to
share my appreciation for tonight, one
– my appreciation for the armed
forces, two – for Britain’s financial
services and three – food.” The audi-
ence of the City’s finest chuckled
while a fleet of waiters sailed round
them offering canapés made by
London’s best chefs.
The waiters’ military-style proficien-
cy, however, was not what the assem-
bled guests had turned out for. The
banquet, held at the Guildhall, was an
event offering the City an opportunity
to support troops through Help for
Heroes and meet Boris, General Sir
Mike Jackson, former head of the
army, and, er, Jeremy Clarkson of Top
Gear fame.
The fundraiser was launched last
year by Paul Gayler, the head chef at
the Lanesborough hotel, with the help
of his friends and rivals at London’s
top restaurants, including Sheraton
Park Lane, the Hilton and Koffmann’s
among others. Gayler says they came
together because his son was injured
in Afghanistan: “He wasn’t too serious-
ly hurt. He was shot in the groin after
ten days and can’t go back. It just
brought home to me how important it
is to support our boys.”
So what is the connection to the
City? Gayler laughs: “It’s where the
money is, of course. Plus City A.M. and
others pitched in to make it happen.”
Enthusiastic supporters bid a whop-
ping £8,000 for a two-week internship
at City A.M in the auction. And in after
hours trading, Lawson Muncaster, City
£8,000 for the worthy cause in return
for a second internship for the auc-
tion’s rival bidder.
Johnson showed some more love for
the City by regaling the audience with
stories from classical antiquity:
“Boudica was this country’s first and
most disastrous banker basher. It took
more than a century for Britain’s econ-
omy to recover from it.”
Johnson’s aide shuffled him
away before he could tell City A.M.
whether he thought big bonuses – if
donated to Help for Heroes – were a
good idea. He did say, however, that
the City’s “downstream effect was vital
for growth.” An effect probably also Left to right: Alex Hogg, Finclass; Martin
true of the guests’ stomachs after the Powell, the Royal Automobile Club; and
fifth course. Chloe Hogg, Google.

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CITYA.M. 11 FEBRUARY 2011 News 15

Rates risk for repossessions Inflation expectations

ber of people facing payment pres- tinued to fall in the final three
rise across the Eurozone
▲

MORTGAGES
sures may increase if interest rates months of 2010, to 7,900, down 11 per
BY JULIAN HARRIS rise,” said director general Michael cent from the third quarter of the
REPOSSESSIONS fell by 24 per cent Coogan. year – the fifth quarter in a row to “Although the forecasts are still in

last year, while the number of mort-
gages in arrears also dropped, the
Council of Mortgage Lenders (CML)
said yesterday.
Yet stubbornly high inflation has
heightened the risk of a hike in inter-
est rates, which would lead to an
upturn in repossessions, the CML
said.
“As we go through 2011, the num-
The CML expects there to be 40,000
repossessions this year, up from
36,300 in 2010.
At the end of last year, the number
of mortgages with arrears of 2.5 per
cent or more of the outstanding bal-
ance fell by 13 per cent.
Of all loans, just 1.49 per cent were
in arrears.
The number of repossessions con-
have recorded a drop.
In a separate statement, the CML
revealed a 22 per cent rise in the
value of buy-to-let mortgages last
year, which now account for 11.5 per
cent of all mortgages.
“Tenant demand seems set to
remain high in the face of continuing
deposit constraints to entering the
owner-occupier market,” Coogan said.
▲
EUROZONE ECONOMY
INFLATION expectations in the
Eurozone have shot up, according to
an official survey released yesterday.
The anticipated rate of consumer
price inflation for this year jumped
from 1.5 per cent to 1.9 per cent, the
European Central Bank (ECB) revealed.
For 2012, expectations rose from 1.6
per cent to 1.8 per cent.
line with ECB’s definition of price sta-
bility, the trend is alarming,” said
Dominique Barbet of BNP Paribas.
Worryingly, the rise is “not entirely
due to higher raw material prices,” she
added.
The news came after a Reuters poll
showed inflation expectations for the
single currency area rising to 2.1 per
cent for 2011, up from 1.9 per cent.

DO YOU AGREE WITH THE BANK’S RATES DECISION? City will drive
Winter freeze ANDREW CLAUDET | CHEESWORTHS
Interviews by Juliet Samuel

Britain out of
sees jump in “My gut feeling is they should have raised rates.
It’s a tough call really. But I am worried about
inflation because I think the rates they publish are
the recession

▲
UK ECONOMY
not always indicative of costs, for example with

energy supply petrol prices. I’m a saver so my savings

aren’t going to be worth much.”

GAJ PILLAI | GUY CARPENTER

FINANCIAL services will be at the
heart of the economic recovery this
year, an academic research group
said today.
Along with Britain’s resurgent
manufacturing sector, “growth in
2011 will be driven by financial and
However, underlying growth in business services and by computing
▲

UK ECONOMY
BY JULIAN HARRIS
INDUSTRIAL production jumped by
half a per cent in December, fuelled by
a surge in energy supply as households
cranked up the heating, official data
showed yesterday.
Spikes in the supply of electricity
(up 12.3 per cent) and gas (up 10.3 per
cent) drove up the UK’s index of pro-
duction, recorded by the Office for
National Statistics (ONS).
Yet there was surprisingly bad news
from British factories, as manufactur-
ing fell by 0.1 per cent compared to
November.
Some observers blamed the surprise
drop on December’s freezing condi-
tions, although the ONS reported only
“a small amount of anecdotal evi-
dence” for the effect of snow.
manufacturing remains strong. In the
fourth quarter of the year, manufac-
turing was up 1.1 per cent compared
to the previous three months.
The ONS recommends observing
this measure to remove inherent
volatility in the monthly figures.
On this three monthly comparison,
over industrial production – which
includes mining and energy, as well as
factory activity – was up 0.7 per cent.
For 2010 as a whole, British industry
grew by two per cent, driven by manu-
facturing’s expansion of 3.6 per cent.
“The prospective weather-related
bounce-back, together with additional
strong business survey readings, sug-
gests there might be a sizable jump in
manufacturing output in January,”
predicted Blerina Uruci of Barclays
Capital.
“Personally for me, the decision was good. I’ve got services,” Cambridge Econometrics
found. Banking and finance will
an interest-only mortgage. It’s hard to borrow at stimulate growth in several key busi-
the moment and a lot of guys my age are trying ness services, it said.
“We expect financial and business
to get on the property ladder. I’m not too wor- services to account for larger shares
ried about inflation. Savings get hit but I’m of value-added and employment
than it did in 2007,” it said.
watching my spending.” And the private industry will more
than make up for job losses in the
JOHN HUTTON-ATTENBOROUGH | government sector, it said.
ASHCOURT ROWAN “Between 2010 and 2015 we expect
employment in the public sector to
“It’s fine as a decision. I work on the basis that if fall by just over 400,000, and employ-
ment in the private sector to
interest rates go up too quickly, it could trigger a increase by more than 700,000,” the
downturn. I would worry if inflation goes above report said.
However, the group warned that
five per cent, but if it stays below then I’m the labour market faces a “bleak”
not too worried about it.” year, before recovering from 2012
onwards.

NEWS | IN BRIEF
Tax guide takes 20 hours to read Industry up in France and Italy
The UK’s tax system is so complex that
guides for individual taxes are even
longer than War and Peace, the
Taxpayers’ Alliance (TPA) said today. All
tax guides except one (inheritance tax)
have over 1,204 pages, the length of Leo
Industrial output increased in both
France and Italy at the end of 2010, offi-
cial data showed yesterday. The boosts
to industry in the Eurozone countries
contrasted with a decline in German out-
put, after a severely snow-affected
January rebound for UK
after winter snow slump
Moec of Deutsche Bank.
Jobless claims plummet in US
Claims for unemployment benefit in the
US fell to 383,000 in the week ending 5
February, it was revealed yesterday. The
considerable drop (from 419,000 the (NIESR).
▲

Tolstoy’s epic novel. Tolley’s guide on cor-
poration tax guide is 1,897 pages long,
the TPA said. The document is 185 per
cent longer than it was in 1999-2000
and would take 20 hours to read aloud.
“This shows just how burdensome it has
become,” said TPA director Matthew
Sinclair. “It is now so complex that fami-
lies and businesses are often not aware
how much tax they are actually paying.”
December. Italy’s output rose 0.3 per
cent compared to the previous month,
slightly above the expectations of econo-
mists. French industrial production rose
0.3 per cent in December, confounding
average expectations of a 0.4 per cent
fall. “Germany was hit by very adverse
weather conditions at the end of the
fourth quarter while the shock was felt
much less in Italy and France,” said Gilles
previous week) surprised observers and
was a two and a half year low – pointing
to a firming undertone in the labour mar-
ket as the economic recovery gathers
momentum. Although the decline partial-
ly reflected the unwinding of a weather-
related spike in late January, analysts
said it was consistent with other indica-
tors suggesting a strengthening jobs
market.
UK ECONOMY
THE economy bounced back in
January, expanding by 0.6 per cent, a
Westminster-based economic think
tank said yesterday.
However, the UK is still in a
“depression”, with GDP 4.5 per cent
below its pre-recession peak, accord-
ing to the National Institute for
Economic and Social Research
While the recession is over, the
economy needs to improve its “flat”
GDP to return to pre-recession levels,
it said.
The economy may not fully recov-
er until 2013, NIESR forecast.
January’s spike in output “is large-
ly related to recovery from the
impact of adverse weather at the end
of last year,” NIESR said.
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CITYA.M. 11 FEBRUARY 2011 News 17

CITY MOVES | WHO’S SWITCHING JOBS Edited by Elizabeth Fournier in association with

Alvarez & Marsal
The global independent professional services
firm, today announced the appointment of
Stuart Ells, a seasoned media and entertain-
ment expert, to its European performance
improvement business. His arrival marks the
formation of a specialist media & entertain-
ment team focused on supporting both cor-
porates and portfolio companies of private
equity firms in this sector, which Stuart will
lead.
Grafton Advisers appointed Claudia Kemp as senior
The strategic property advisers has investment executive, as part of its
expansion plans following its new part-
nership with AION Global last year.
Claudia joins from DTZ where she pre-
viously held the position of senior sur-
veyor in the West End of London
investment team. At Grafton Advisors,
she will work closely with Nigel
Kempner and Paul Connellan in under-
taking existing asset management ini-
tiatives and sourcing new business
opportunities primarily in Central
London.
Jones Lang LaSalle
The commercial property consultants
has hired two new senior planning con-
sultants. Federica Ambrosini and
Caroline Harper. Ambrosini joins from
Cluttons, where she worked as a senior
consultant advising on residential and
mixed-use schemes and on Greenfield
site development strategies. Harper
previously worked in the CB Richard
Ellis General Planning Team. The con-
sultant has also appointed Katie
Patterson as a senior surveyor in its
retail agency team in London.
Corporate Broking
Charlie Leigh-Pemberton will be joining
Corporate Broking on 14 March
as an associate. Charlie’s most recent
job was at Finsbury PR where he has
been for the last three years
advising a broad section of FT250
clients.
CPA Global
CPA Global, the world’s leading
provider of legal services outsourcing
(LSO) and intellectual property (IP)
management services, today
announced the appointment of David
Harrel as chairman. Harrel, former sen-
ior partner at City law firm SJ Berwin,
succeeds Geoffrey Grime who will
remain on the board as a non-executive
director.

To appear in CITYMOVES please email your career

updates and pictures to citymoves@cityam.com SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT +44 (0)20 7557 7245
morganmckinley.com

NEWS | IN BRIEF
The global man for the job Sareum raises funds for Xcap
Cancer drug discovery company Sareum
leukaemia drug programme, and for working
capital.
Holdings has conditionally raised £500,000
Boeing submits refuelling tender
▲

PROFILE
BY ELIZABETH FOURNIER
AFTER leaving his post at the
helm of French pharmaceuticals
and cosmetics company Pierre-
Fabre a few weeks ago, Olivier
Bohuon will step into David
Illingworth’s shoes at Smith &
Nephew on 1 April.
Bohuon had been at Pierre-
Fabre just five months when he
stepped down, having succeeded
Jean-Pierre Garnier in September
last year. He previously worked
with Garnier at Abbott, where
Bohuon headed up the pharma-
ceutical products unit.
Bohuon brings an international
twist to the top of Smith &
Nephew, having spent time in
France, the UK and Saudi Arabia Swiss orthopaedics before expenses via a placing at 1p a share,
during his career. group it had representing a 40 per cent discount to the Boeing said yesterday it submitted its final
Before joining Abbott he spent acquired in closing market price of 1.65p on Tuesday. proposal to capture US refuelling aircraft
ten years at GlaxoSmithKline, and 2006. The company said the shares were issued to orders valued at up to $50bn (£31bn).
was president of SmithKline meet investor demand from clients of Xcap Boeing and European rival EADS, the parent
Beecham at the time of its merger Securities. Sareum will use the proceeds to of Airbus, had been asked to submit their
with Glaxo Wellcome in 2000. accelerate its Aurora+FLT3 Kinase final proposal revisions by 11 February.
His appointment is likely to
reignite takeover speculation, and
analysts have pointed out that his
heavily pharmaceuticals-focused
background could drive a change
in direction for Smith & Nephew.
Illingworth’s legacy at Smith &
Nephew will be the three-year
earnings improvement drive he
led at the UK firm, turning it
round from a $80m revenue
warning it issued in 2007 follow-
ing the discovery of “unaccept-
able sales practices” at Plus, the OLIVIER BOHUON

Change at the top

for optimistic S&N
PHARMACEUTICALS The companies shares reacted Illingworth said that his depar-
▲

BY ELIZABETH FOURNIER
PERENNIAL takeover target Smith
& Nephew posted strong fourth-
quarter profits yesterday, as chief
executive David Illingworth
announced he would be stepping
down on 1 April, to be replaced by
Olivier Bohuon.
Pre-tax profits for 2010 were up
33 per cent at the medical devices
manufacturer, rising to $890m
(£552m) from $670m the year
before.
Sales were up at $4bn compared
to $3.8bn in 2009, and earnings
per share rose from $0.53 to $0.69.
well to the positive figures yester- ture was in no way linked to the
day, closing 2.1 per cent up on the speculation, and that he had no
previous day at 727p. immediate plans to take on a role
Smith & Nephew has been the elsewhere.
subject of various takeover
rumours since the end of last year, ANALYSIS l Smith & Nephew
with its share price reflecting the p
interest with a rise of more than 700 727.00
20 per cent since December. 10 Feb
Industry names Biomet, 660
Johnson & Johnson, Zimmer and
Stryker have all been touted as
potential buyers, though Smith & 620
Nephew said last month that it
was not engaged in any talks that 580
might lead to a takeover or merg-
er. 15 Nov 3 Dec 23 Dec 17 Jan 4 Feb

Shire expects sales growth in 2011

▲

PHARMACEUTICALS
PHARMA firm Shire said it would
sustain the strong sales growth of
2010, when its rare disease business
reaped a windfall from problems at
US rival Genzyme.
Shire, which also makes hyperac-
tivity and gastrointestinal drugs,
said sales would again rise by about
16 per cent in 2011, against its target
to grow revenue in the mid-teens,
after it posted fourth-quarter profit
matching in-house forecasts.
“We are increasingly confident
about achieving our aspirational
growth targets,” chief executive
Angus Russell said. “It’s a marginal
improvement on people’s expecta-
tions.”
Shire posted a seven per cent
drop in fourth-quarter non-Gaap
earnings per American depository
share to $1.03, in line with analysts’
forecasts. Total revenue for the final
three months of the year rose four
per cent to $931m (£578m).
 18 News
PetroChina invests
£3.4bn in Encana
▲
ENERGY
PETROCHINA is buying half of a prolif-
ic shale gas project from Canada’s
Encana for C$5.4bn (£3.4bn), marking
the largest Chinese investment yet in a
foreign natural gas asset.
Chinese companies such as
PetroChina and CNOOC have been
scouring globally for unconventional
gas assets to reduce reliance on coal
and satisfy its energy hunger to fuel its
RENAULT CONFIRMS PLANS FOR GROWTH
economy, now the world’s second-
largest. In January, CNOOC struck a
$570m shale deal with US natural gas
company Chesapeake Energy, its sec-
ond such deal with the American com-
pany in about four months.
Shares of PetroChina, Asia’s largest
oil and gas producer, fell more than
two per cent yesterday in Hong Kong
trade, lagging the Hang Seng’s 0.7 per
cent fall, as analysts said the deal, to be
paid all in cash, was pricey.
Danske Bank
plans £2.3bn
rights offer
▲
BANKING
BY HARRY BANKS
DANISH lender Danske Bank said it
would raise 20bn crowns ($3.7 bn) in
new capital as it posted fourth-quar-
ter profits below market consensus,
as loan impairments remained high.
The bank reported a 12 per cent
rise in fourth-quarter pre-tax profits
to 1.45bn crowns, aided by a 40 per
cent drop in loan losses, but missing
market consensus for 2.85bn.
Denmark’s biggest financial insti-
tution said it recommended no divi-
dend be paid for 2010 and that it had
requested permission from the gov-
ernment to repay early a hybrid loan
it received from state coffers during
the financial crisis.
These measures, combined with
the capital increase, would strength-
en group capital, Danske said in the
statement.
It said fourth-quarter loan impair-
ment charges fell 40 per cent to
2.98bn crowns, still above the 2.22bn
expected by analysts.
As Nordic banks start to emerge
from the worst of the financial cri-
sis, supported by robust economies
in the region, pressure is building to
NEWS | IN BRIEF
Snam Rete Gas beats forecasts
Italian gas grid operator Snam Rete Gas
beat forecasts on its 2010 dividend and
operating profit yesterday, sending its
shares to a near four-year high.
Continental Europe’s biggest regulated
gas operator raised its dividend 15 per
cent to €0.23 per share after posting a
17 per cent rise in operating profit to
€1.86bn euros (£1.6bn), helped by gas
assets bought from parent Eni.
Profit warning hits Air France
Shares in Air France fell to their lowest
level since October, dragging the sector
more than one per cent lower. At mid-
session it was down 7.1 per cent at
€12.65 with more than three per cent of
its capital having traded. Air France-
KLM has said it would miss its target for
operating profit of €300m in the year to
CITYA.M. 11 FEBRUARY 2011
FRENCH carmaker
Renault said yester-
day it would target
an operating mar-
gin above five per
cent of sales in
2013 as part of a
long-awaited six-
year strategic plan
for growth.
Renault said 2010
net profit reached
€3.42bn (£2.9bn),
compared with a
net loss of €3.13bn
in 2009.
Picture: GETTY
hand back capital to shareholders.
The expiry last year of a govern-
ment aid package to banks, ending a
restriction on dividends, has
increased pressure on Danske Bank
to resume payouts.
Meanwhile, DnB NOR, the biggest
Norwegian bank, reported fourth-
quarter profits surpassing all fore-
casts and said it saw low loan losses
this year.
The contrasting results released
yesterday, and earlier strong profits
from major Swedish banks, reflect
the different pace of economic recov-
ery, with Denmark clearly lagging its
Nordic neighbours. On Tuesday
Swedish lender Swedbank reported
it had swung back into the black.
ANALYSIS l Danske
€
125.10
132 10 Feb
128
124
15 Nov 3 Dec 23 Dec 17 Jan 4 Feb
end-March, but would remain in the
black.
Mondi expects earnings to rise
Paper and packaging firm Mondi said
underlying operating profit for the year
ended 31 December 2010 is expected to
be considerably higher than the same
time a year earlier. The group, listed in
London and Johannesburg, said it
expects basic underlying earnings per
share for the year to be in the range of
44-49 cents compared to 18.7 cents a
year before. Mondi also said restructur-
ing costs will be greatly reduced. Special
item charges before tax and non-con-
trolling interests in aggregate of €133m
(£112m), mainly relating to impairments
of assets and restructuring and closure
costs in 2009 will mean the equivalent
special item charge of €22m this year.
CITYA.M. 11 FEBRUARY 2011 News 19

BEST OF THE BROKERS To appear in Best of the Brokers email your research to notes@cityam.com

ANALYSIS l ARM Holdings ANALYSIS l Barclays 318.85 ANALYSIS l International Consolidated Airlines Group
650 595.00 320 10 Feb 310
p
10 Feb p p 251.00
10 Feb
550 300 290

450 280 270

350 260 250

24 Nov 14 Dec 6 Jan 26 Jan 30 Nov 20 Dec 7 Jan 27 Jan 24 Nov 14 Dec 6 Jan 26 Jan

ARM HOLDINGS BARCLAYS INTERNATIONAL AIRLINES GROUP

RBS rates the technology company “buy” with a target price of 625p.
Hewlett Packard’s introduction of the Palm operating system on its PCs
later this year could help ARM penetrate the notebook PC market, moving
its market share from one per cent in 2011 to 20 per cent by 2015. RBS
estimates that ARM’S earnings per share would be boosted by 2.25p for
every 10 per cent unit share gain.
Morgan Stanley rates the UK bank “overweight” but has cut its target
price from 400p to 380p. The broker believes better visibility on returns
in several aspects of the business, including Barclays Corporate and
impairment charges, could fuel better returns on equity. Morgan Stanley
looks to Barclays’ full-year results on 15 February for an update on this
strategy.
Investec has begun covering the newly-merged airline with a “hold” rating
and a target price of 281p. The broker believes that the recent hike in jet
fuel prices has more than offset any synergy gains from the British
Airways / Iberia tie-in and predicts that the firm will underperform in the
short-term. Investec forecasts earnings per share of 15 cents (12.7p) in
2011, nine cents below consensus forecasts.

FTSE falls due to poor results S&P climbs after

as banks and miners weigh Mubarak delegates
“There’s a bit of nervousness as media reported that Egypt’s embat-

THELONDON around now, but there are always

going to be a couple of disappoint-
ments, but overall earnings have gone
tled president of 30 years might step
down, helping to push crude higher.
BP edged up 0.1 per cent.
THENEW YORK uneasiness among global investors on
fears that political instability could
spread through the region and impact

REPORT reasonably well, and there’s no reason

for the market to be depressed for a
long period of time,” said Peter Dixon,
economist at Commerzbank.
On the upside, Smith & Nephew,
Europe’s largest artificial knees and
hips maker, rose 2.1 per cent after it
REPORT commodities. Mubarak’s move, howev-
er, failed to meet the demands of
enraged protesters that he step down
posted a 9 per cent rise in fourth-quar- immediately.

D T
isappointing corporate results
crimped confidence on the out-
look for risk-sensitive banks and
miners, pushing Britain’s top
share index lower by yesterday’s close.
Diageo shed 4.6 per cent as half-year
results from the world’s biggest spirits
group missed forecasts, prompting
broker Espirito Santo to downgrade its
rating to “hold”.
International Consolidated Airline
Group was also sharply lower, off 3.3
per cent as peer Air France-KLM slid
after warning it would miss a key
profit target after being hit by a triple
whammy of snow, strikes and security
problems.
The FTSE 100 ended down 32.28
points, or 0.5 per cent, at 6020.01,
extending Wednesday’s retreat after
hitting its best closing level since May
2008 on Tuesday.
The index is still up 2 per cent in
2011 after a 9 per cent rise last year,
and many analysts remain fairly
upbeat about prospects for equities.
There was little reaction to the
expected decision by the Bank of
England to leave interest rates
unchanged following its latest mone-
tary policy committee meeting.
Banks were the worst blue-chip per-
formers, with HSBC down 1.1 percent,
hit by a profits disappointment from
Swiss peer Credit Suisse.
Renewed sovereign debt concerns
also weighed on the lenders as
Portugal’s government bond spreads
widened.
Insurers retreated, too, with
Prudential down 1.9 per cent, revers-
ing gains made on Wednesday after a
broker upgrade.
Miners extended Wednesday’s
declines, reflecting weaker metals
prices after China raised interest rates
earlier in the week.
Rio Tinto shed 2.4 per cent despite
announcing a doubling in its divi-
dend payout and promising to return
$5bn to shareholders by 2012.
Energy stocks recovered from lows
ter trading profit. he S&P and Nasdaq eked out-
Advertising group WPP climbed 1.5 gains in the final minutes of trad-
per cent to a nearly nine-year high, ing yesterday as Egyptian
with traders citing a positive read- President Hosni Mubarak said he
across from the results of French rival would delegate powers to the vice pres-
Publicis. And software maker ident.
Autonomy rose 2.2 per cent as UBS Weakness in Cisco Systems brought
upgraded the stock to “buy”. the Dow’s eight-day rally to an end
On the economic data front, British after the network equipment maker
manufacturing output unexpectedly gave a weak outlook.
fell in December, but a surge in ener- The S&P and Nasdaq wavered in
gy production meant overall industri- volatile late-day action as Mubarak
al output rose as expected. began a speech in response to the
weeks of civilian protests. Earlier in
ANALYSIS l FTSE the day, as media reports spread that
6,100 p
6,020.01 Mubarak might resign, equities
10 Feb rebounded off early lows sparked by
the disappointment over Cisco.
5,900 The Van Eck Market Vectors
exchange-traded fund ended up 0.45
per cent, cutting gains late when it
5,700
appeared that Mubarak was not step-
ping down. Previously, the fund had
5,500 risen as much as 5.8 per cent.
More than two weeks of civilian
15 Nov 3 Nov 23 Dec 17 Jan 4 Feb unrest in Egypt have created some
Volume on Wall Street was stronger
than in recent days, which had seen
some of the thinnest trade of the year.
But with a total of about 8.15bn shares
traded on the New York Stock
Exchange, the American Stock
Exchange and Nasdaq, volume was
still below last year’s daily average of
8.47bn.
“Egypt stopped us from dropping
lower, but the low volume means that
people are skeptical of the climb we’ve
had,” said Michael Nasto, senior trader
at US Global Investors in San Antonio,
Texas.
Cisco shares tumbled 14 per cent to
$18.92 on heavy volume a day after the
outlook, but shares in its chief com-
petitors surged.
The Dow Jones industrial average
was down 10.60 points, or 0.09 per
cent, at 12,229.29. The Standard &
Poor’s 500 Index was up 0.99 points, or
0.07 per cent, at 1,321.87. The Nasdaq
Composite Index was up 1.38 points, or
0.05 per cent, at 2,790.45.
20
Wealth Management | Listed Products
The Malthusian bull
market carries on
Long-run commodity investors are betting on the end of
economic history as we know it, writes Daniel Knowles
Famine, pestilence and death – history’s most dismal scientist
I
N 1980, two academics, Julian
Simon and Paul Ehrlich, agreed a
now famous wager. Ehrlich chose
five commodity metals and bet
that over the next 10 years, they would
get more expensive. Ultimately, Simon
won, and all five metals – copper,
chromium, nickel, tin and tungsten –
got progressively less expensive all the
way up to 2002.
For much of the last nine years how-
ever, that trend has gone in reverse, in a
pattern known as the commodity
super-cycle. A barrel of oil, which went
for $20 in 2002, now costs $100. Copper
recently passed through the $10,000 a
tonne level. Even food prices are rocket-
ing, creating uncomfortable conditions
for third world dictatorships.
What has hurt dictators (and their
subjects) has, however, benefitted some
canny speculators. Over recent years,
exchange traded commodities (ETC)
have offered an easy way to place a
long-run bet on rising commodity
prices. But should investors want to?
Commodity prices may seem to be
going up relentlessly, pushed up by
unquenchable Chinese and Indian
demand, but as Simon’s and Ehrlich’s
bet showed, they are not guaranteed to
climb – the price of stuff quite often
falls.
As analysts from Barclays Capital
observe, the question is essentially a
Malthusian one. Thomas Malthus, writ-
ing at the end of the 18th century,
argued that the demands of humani-
ty’s endlessly growing population
would eventually outstrip the available
natural resources. The population
would then inevitably be checked by
“Malthusian crises”, where the natural
resources available run out.
Quite clearly, based on history,
Malthus was wrong. Despite growing
from less than 1bn in 1800 to nearly
7bn now, the human population is bet-
ter fed, housed and clothed than ever.
This month, the London Stock Exchange is celebrating
the first anniversary of the launch of its Order book for ANALYSIS l Real commodity prices have gone nowhere
Retail Bonds (ORB). On ORB, private investors can invest 1,000,000
and trade in bonds as simply as they trade shares. The bonds T-Bill total real return
are tradable in low denominations, typically £1,000, and have 10 y bonds total real return
100,000 AAA corp bonds total real return
continuous buy and sell prices displayed throughout the trading
day. The market hosts a range of corporate, government and S&P500 total real return
supranational debt. 10,000 Economist All-Commodity Index
For further information on ORB,
1,000
go to www.londonstockexchange.com/bondsmadeeasy
or email us at bonds@londonstockexchange.com
100
10
1871 1882 1893 1905 1916
CITYA.M. 11 FEBRUARY 2011
Picture: GETTY
But according to the Barclays ana-
lysts, he was not completely wrong.
Instead, they argue, we are currently
entering a tightening period for com-
modities. While there is still supply
growth, the sheer pace of demand
growth in China and India is likely to
outpace it, pushing up prices for much
of the foreseeable future. As they put it,
“The very fast rate of growth in some
large emerging markets would then
support the Malthusian prediction
across a broad spectrum of commodi-
ties.” Investors would seem wise then to
buy up commodities.
But nothing is assured. As Dylan
Grice of Societe Generale points out,
the expected long run real return of
commodities is nothing – and all com-
modity bull runs eventually come to an
end. As Grice puts it: “When you buy
commodities, you’re selling human
ingenuity.” He says that while informed
speculators might be able to make
money from fluctuations, even over
several years, over a long enough peri-
od, even the most conservative invest-
ments will still outperform
commodities – as the chart below
demonstrates.
According to Grice: “Prior commodi-
ty bull markets have been much like
England football managers: they prom-
ised much, burned brightly for a while,
but ultimately crashed, breaking the
hearts of those who believed in them
most.” He recommends that commodi-
ty bulls buy shares in the companies
that produce them, rather than the
products themselves, since then they
will also benefit from improvements in
technology and labour productivity, as
well as from rising demand.
Because what long-run ETC investors
are ultimately betting on is the long
trend of history reversing now. That is
not an uncommon view these days, but
as Ehrlich discovered in the 1980s, it
can be a dangerous bet to make.
Source: SG Cross Asset Research, GFD
1922 1939 1950 1961 1973 1984 1995 2007
CITYA.M. 11 FEBRUARY 2011 Wealth Management 21

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 Living
22
Live at the most
famous 18th hole
Opulent flats are for sale overlooking the Old
Course at St Andrews, writes Timothy Barber
T
HE most famous building in golf is,
without question, the Royal &
Ancient Clubhouse at St Andrews.
But the most recognisable? Arguably
it’s the tall, turreted eruption of high
Victoriana that overshadows it, the
Hamilton Grand. So the story goes, it was
originally built by a chap named Thomas
Hamilton in 1895, after he was turned
down for membership of the Royal &
Ancient – he decided on a course of archi-
tectural one-upmanship. The gothic, red-
brick result – originally built as a grand
hotel – now towers over the 18th green of
the Old Course, the backdrop to the closing
moments of many golf’s greatest contests.
Anyone inside, therefore, arguably has
the greatest view in golf, if not world sport.
Up until a few years ago that meant stu-
dents at St Andrews University. But now the
building is being converted into luxury
apartments, with 26 in total up for grabs.
For golf fans, there’s never been an oppor-
tunity like it.
In the early 20th century it was
Scotland’s equivalent of the Ritz – an opu-
lent, glamorous hotel which attracted the
likes of Douglas Fairbanks, Mary Astor and
Bob Hope, was patronised by royalty and
had the quirky claim to fame of being
Scotland’s first hotel with running hot and
cold water in every room.
During World War Two it housed RAF
officers, before being acquired by the uni-
versity and converted into a hall of resi-
dence. In 2005 an American businessman
bought it with plans to develop it, only for
the recession to come crashing down, and
it has lain dormant for five years.
Billionaire US businessman and golf fan
Herbert Kohler, whose Wisconsin-based
company Kohler Co also happens to own
and operate the Old Course Hotel at St
Andrews, bought it in 2009. Following con-
sultations, Kohler Co is now in the process
of transforming the building. The apart-
Hhme is where the heart is...
Looking for a place of your own in 2011?
Let L&Q find your heart a part buy, part rent home in North, South, East or West London.
Register with L&Q today and you could win an iPhone 4*.
Register at www.lqgroup.org.uk/heart alternatively text HEART to 60123
To get your heart into a new home call
0844 406 9800
Follow Us. Like Us. Watch Us.
CITYA.M. 11 FEBRUARY 2011
| Luxury Property
The 18th hole at
St Andrews over-
looked by the
Hamilton Grand
in the centre.
PROPERTIES AT OTHER FAMOUS GOLF COURSES:
ments are expected to be ready next sum-
mer.
Starting prices for two bedrooms are
£1.35m, while larger apartments, including
the sixth floor penthouse and a fifth floor
property which includes a living room in
the famous “pepper pot” turret, will
require offers of over £5.1m and £5.5m
respectively. They can be bought without
furnishings, or designed down to the last
bit of linen by Kohler Co. There’s the option
to of renting them out through the hotel
when owners are not in residence, splitting
the takings.
You’ll want to be in residence though. As
well as the stupendous views over the six
links courses and out to sea, there will be a
restaurant and bar (open to the public), pri-
vate members’ room with log fire and a
roof garden. Butler service is laid on by the WENTWORTH SUNNINGDALE
Old Course hotel, as is valet parking, use of Price: £6.75m Price: 4.65m
its magnificent spa and of the Duke’s golf A six bedroom family home, built two years ago, on A restored house with beautiful Dutch gables, this
course. For golf nuts, the phrase “once in a Wentworth Estate. overlooks the ladies’ course at Sunningdale.
lifetime” in this case rings absolutely true. Contact: Knight Frank on 01344 840 020 Contact: Barton Wyatt on 01344 843000
Reservations are being taken now. Call Savills on www.knightfrank.com www.bartonwyatt.com
0207 016 3740. www.savills.co.uk
rom
Prices
£722
sta r t f * *
pcm
DISCLAIMER: Industrial and Provident Society 30441R exempt charity. Details correct
at time of going to print 01/11. Your home is at risk if you fail to keep up repayments on
a mortgage, rent or other loan secured on it. Please make sure you can afford the
repayments before you take out a mortgage.* Register today to be entered into
the prize draw for an iPhone 4. **The figure quoted is a percentage share and is a
guideline and may vary according to individual incomes and circumstances. TERMS &
CONDITIONS apply: please see www.lqgroup.org.uk/heart for details. Imagery depicts
a typical L&Q show home.
 24 Living | London
Chelsea’s superluxe
new development
For the first time in a decade, a high calibre new-build
scheme will be completed in Chelsea, raising the bar for
jetsetters and home-makers alike, says Zoe Strimpel
L
IKE bees to a hive, wealth comes to London
property. Certain prime areas of the capital are
magnets for international superstars in
finance and business – Belgravia,
Knightsbridge and Mayfair. But if you’re truly dis-
cerning, do you aim to be Harrods’ neighbour?
Perhaps not, according to the people behind
Henry Moore Court, a super-luxe development in
Chelsea, off the Fulham Road in the former Chelsea
School of Art building – and the first of its kind in
the last ten years. “This part of Chelsea is known for
more discerning Londoner or European – it’s for
people who want a discreet London base,” says
Charles Symons Jones, the development’s sales man-
ager. “It’s an antidote to flashy Knightsbridge, with a
much more village atmosphere. There are good qual-
ity schools locally, too.”
Pure new-builds are a rarity in Chelsea. Henry
Moore Court provides a kind of shiny big space that
older properties simply can not and this is a good bit
of its appeal. Certainly the flats aren’t cheap, rang-
ing from £5m to £14.
But they are spacious and well-designed. It’s what
is known as a low-density scheme – just 15 apart-
ments and two houses, with a secure underground
carpark and gym.
Of particular pride to the developer is the fact
NG
M LD
NI
RE O
AI
W S
FE %
ST 5
LA 7
CITYA.M. 11 FEBRUARY 2011
that the service charge is 50 per cent below equiva-
lent schemes in London at £7 per square foot per
year – you’re paying for security and maintenance of
the common areas but not for collective air condi-
tioning and heat and water. So when you lock up
and leave (you can, of course, control the systems in
your property from wherever you are in the world),
you aren’t wasting your money keeping other
flats temperate.
Asia, naturally, is a big target market and the
scheme will be marketed heavily in Singapore
from next month. Indeed, research produced by HENRY MOORE COURT, MAN-
leading UK agents suggests that 60 per cent of RESA ROAD
prime central London property purchases are Price: £5-£14m.
completed by people living in Hong Kong and Flats have two-four bedroom to hous-
Singapore (many are expats). es of six bedrooms. Decor includes
But Symons Jones is keen to stress that this double height luxury reception area,
development is not simply being branded as a finished with Spanish origin polished
cash depot for wealthy Asians. “We’ve always had Azul Naif marble, European oak hard-
local interest and support,” he says, “from the wood floors, bespoke solid timber
planning process right through to building. The reception desk and French origin Noir
important thing is that this development is not Saint Laurent worktop, and feature
necessarily for Chinese buyers, but for expat slot fireplace. Bedrooms come with
Brits and Europeans. We do expect a lot of for- Spanish origin Crema Marfil Natural
eign investment as the pound is weak.” Launching Stone slabs and floors made of Italian
Spring 2011, completing Autumn 2012. Prices £5-14m. Porcelain tiles. Contact: Aylesford on
www.henrymoorecourt.com. 351 2383, www.aylesford.com
an iconic city
an iconic address
The Barbican
Stunning studio and one bedroom
duplex apartments available
for immediate occupation
Prices from £350,000
a development by
New Homes
020 7606 8000 020 7288 0330
www.frobishercrescent.com
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26 Living | Focus On CITYA.M. 11 FEBRUARY 2011

ROCHESTER BY AMY HIGGINS FINDHORN, HIGHAM

Price: £600,000
This majestic wedding cake of a
property is currently split into
three residences, but has the
potential to be transformed into
an impressive eight bedroom
family home. An elevated con-
servatory runs the length of the
rear of the house, looking out
onto one and a half acres of gar-
den. Gads Hill School, a well-
regarded independent day
school, is directly opposite.
Contact: Geering & Colyer on
01227 477009 or go to
www.geeringandcolyer.co.uk.

NEED TO KNOW | AREA INSIGHT

Commuting: Trains from Bars and restaurants: Rochester’s
Rochester railway station will quaint Victorian high street is stud-
whisk you to Victoria in 45 minutes ded with a diverse selection of gas-
WHORNES PLACE, CUXTON and St. Pancras in 39 minutes. tronomic delights, from cream teas
Price: £850,000 at Mrs. Bumble’s Tea Rooms to
A magical home with a unique Education: There is an unusually divine French cuisine at the Atrium
blend of old and new qualities. This high number of good grammar Restaurant, voted one of Britain’s
property is grade II listed and schools in the area, including the top ten hidden gems by foodie web-
steeped in history. It even has a HIGH STREET Rochester Grammar School for girls site Toptable. Atmospheric bar the
coat of arms inscribed above the Price: £110,000
front door. However, it has been ren- and Sir Joseph Williamson’s George Vaults is the place to go for
A top floor, two bedroom flat in the Mathematical School for boys. The cocktails and dancing.
vovated to the highest standards of centre of Rochester, perfect for the
modern luxury. The walled garden first-time buyer who wants to be in the private sector is equally well
is more reminiscent of a Provencal thick of things. Along with generously catered for, with Rochester Leisure: Choc-a-bloc with muse-
gîte than a Tudor estate, with its proportioned accomodation and a sur- Independent College and King’s ums and heritage sites, namely the
garden lodge, terrace shaded by a prisingly swish kitchen, there is envi- School, which is nestled in the Cathedral and Castle. Bookworms
cedar canopy and deck area inset able access to an abundance of pubs, Rochester Cathedral’s precincts. will be charmed by the nearby
with a large sunken spa bath. restaurants and shops, plus fabulous Dickens World, an indoor theme
Contact: Geering & Colyer on views over the town. Contact: Mann Crime: Rates are in line with park celebrating Rochester’s most
01227 477009 or go to Countrywide on 01634 812697 or go national averages. famous literary export.
www.geeringandcolyer.co.uk. to www.manncountrywide.co.uk.

& 62
2 2
0 1
,1
*

Computer generated images

for illustrative purposes only

Keston W aaterside, is a development of eight exclusive thr

Waterside, ee-
three- AApartments
partments rrange
ange ffrom
rom aapprox.
pprox. 2,2,100
100 ––2,900
2,900 sq ft
bedroom apartments and duplexes including two penthouses with
bedroom PPrices
rices sstarting
tarting ffrom
rom £940
£940,000
,000
roof gardens
roof gar dens in a brbreathtaking
eathtaking lakeside setting. Just 20 minutes
by rail from
from Central London… yet a world away away.. Savills: 0
01689
1689 860 999
Alan de Maid: 0 01689
1689 8813
13 333
Another development by In joint ventur
venturee with Viewings
Viewings strictly by appointment

www.kestonwaterside.com
www.kestonwaterside.com
Keston W
Waterside
aaterside Apartments,
Apartm Keston, BR2 6EA
 Superb new homes
with incentives to match
at Liberty Park!
Crest Nicholson at Liberty Park are now
Liberty Park is an exciting development of traditional homes ideally located in the offering a number of tailored incentives
village of Wainscott. Enjoy being within easy reach of local amenities, stunning to suit your circumstances. Choose from:*
countryside and motorway connections, whilst being close to Rochester.
Part Exchange – Enjoy a cash buyer for your
Move to Liberty Park and benefit from: existing property, as well as a hassle free
move with no chain and no delays!
Q Easy access to the M2 for the M25, via the A289
Q Excellent connections via the High Speed 1 service from nearby Strood station. OR
Arrive in London in just 35 minutes
5% deposit PAID!
Q Close to local shops and schools, as well as the picturesque North Downs countryside

The Farleigh The Kelvendon The Faversham

2 bedroom coachouse from £149,500 3 bedroom house from £209,500 4 bedroom, 3 storey house from
Q Fully fitted kitchen/living/dining area Q Fully fitted kitchen and dining area £357,500
Q Master bedroom with fitted wardrobe Q Spacious living area with French doors Q Fully fitted kitchen with integrated
and en suite to the garden Bosch appliances
Q Allocated parking Q Master bedroom with fitted wardrobe Q Spacious living area with French doors
Q 5% Deposit Paid* and en suite to the garden
Q Two further good sized bedrooms Q Master bedroom with dressing area and en suite
Q Two parking spaces Q Three further good sized bedrooms
Q 5% Deposit Paid* Q Flooring and light fittings throughout
Q Part Exchange available*

Want to know more? Call 0870 752 4382 today!

Liberty Park
Marketing Suite & Show Home open daily 10am to 5pm
Hoo Road | Wainscott | off the A289 | ME3 8AA
Email: libertypark@crestnicholson.com
Selling Agents: RPC Land & New Homes 01634 835 900

www.crestnicholson.com/libertypark 0870 752 4382

*5% deposit paid is available on The Farleigh and The Kelvendon only. Part Exchange is available on The Faversham only. Subject to Crest Nicholson’s terms and conditions. Prices correct at time of going to press. Travel times are approximate.
Photography taken at Liberty Park.
 28 Living | Focus On CITYA.M. 11 FEBRUARY 2011

CURRENT MORTGAGE DEALS BY AMY HIGGINS BUYING

Lender Fixed/Flexible Rate
(per cent)
Until Standard Rate
(per cent)
APR
(per cent)
Source: MoneySupermarket.com

Maximum Loan
to Value (per cent)
Q&A
First Direct Flexible 1.99 2 years 3.69 3.5 65
Santander Flexible 2.19 2 years 4.24 4 60
HSBC Flexible 2.29 Term 3.94 2.3 60
Camilla Dell
MANAGING PARTNER AT LONDON PROPERTY CONSULTANCY, BLACK BRICK
Yorkshire BS Flexible 2.29 Feb 2013 4.99 4.7 60

Q.
NatWest Flexible 2.39 April 2013 4 3.9 60 I am thinking of buying a buy-to-let found anything suitable. However, since I
property in central London. What live in London, I am reluctant to spend
Santander Fixed 2.65 April 2013 4.24 4.2 60 type of property makes the best money on a buying agent. What the bene-
Mansfield BS Fixed 3.09 2 years 5.59 5.3 75 rental and which tenant market should I fits are of working with a buying agent?
Loughborough BS Fixed 3.55 2 years 4.99 5 80 be going after?

A.
This is becoming a more and more
Leek United BS Fixed 3.75 March 2014 5.19 5.1 75

Skipton BS Fixed 3.78
PROPERTY NEWS BY AMY HIGGINS
HEATHROW GETS PROPERTY BOOST
The regeneration of West London’s
“Heathrow Quarter” has been given a
further boost by the launch of The
Hurley Apartments at St George’s inno-
vative Parkwest development. The antic-
ipated arrival of Crossrail is giving this
April 2014 4.95
THUMBS UP FOR POWER STATION
Eric Pickles, the Minister for Communities
and Local Government, has given the final
seal of approval to the £4bn redevelop-
ment of Battersea Power Station.
Developer Treasury Holdings says that it
is “delighted” and will start the planned
4.9 60
RENTS TO GROW BY 3 PER CENT
Residential rents in Central London are
set to grow by 3 per cent this year,
slightly ahead of the predicted increase
in average income, according to property
consultants, Cluttons. Head of Residential
Consultancy Andrew Stanford put the
A.
We tend to advise our investment
clients to opt for a two double bed-
room, two bathroom configuration
for a rental investment. This set-up will
appeal to a wide tenant market: professional
sharers, but also single professionals who
want the luxury of a second bedroom. Three
bedrooms are to be avoided because whilst
you will inevitably end up paying more for the
property, three beds are often too small for
families and too big for sharers/singles. Other
things to consider are proximity to transport
links and shops. Buildings with porters will
also attract a premium, and will help you get
a corporate tenant. This is the best type of
tenant, as corporate lets tend to be secure
and lengthy, with the company often footing
the rent bill. The corporate tenant market is
very strong in central London at the moment,
but in order to secure such a tenant, you must
ensure that the property is professionally
managed during the tenancy, as many com-
panies will insist upon this.
common scenario for us at Black
Brick due to incredibly low stock lev-
els, especially in central London. The difficulty
in this kind of market is that there are many
buyers competing for very little good quality
stock. To be in with a chance, you need to
have the time to build relationships with
estate agents to ensure you are the first per-
son they call when they take on a new prop-
erty. Most buyers don’t have the time to do
this, and this is where a good buying agent
can make all the difference. Because estate
agents know us, and know that we represent
clients who are committed to buying, we are
often the first to hear about properties before
they come onto the open market. This means
we can alert our clients to suitable properties
before anyone else, and enable them to buy a
property without it ever appearing on the
open market. Through our extensive connec-
tions, we also have access to properties that
are entirely off market. A good buying agent
should also be able to negotiate you a great
deal, because we know the market and prices,

up-and-coming area an added edge, and
investors in The Hurley’s apartments can
look forward to a rental yield of 7 per
cent. Prices start at £179,950. For more
information go to www.park-west.co.uk.
building of offices, shops and apartments
on the site in 2012. However, the project’s
finance is on shaky ground: Treasury
Holdings is still in need of an investor to
buy a 50 per cent stake in the scheme.
strength of the market down to foreign
investors, particularly those from China,
where rising interest rates are encourag-
ing investors to put their money in
English bricks and mortar.
Q.
I have been looking to buy a two
bedroom property in South
Kensington for around £800,000
for the last six months, and I have not
so we can negotiate aggressively and ensure
our clients end up getting not only the right
property, but acquiring it at the best possible
price.

www.apdinteriors.com

No need to move, improve

Is your home looking tired?
In need of a makeover?
Need to entertain in a beautiful
new kitchen or lounge?

Then make the most of our special offer and have the home you
want this year without breaking the bank.
We can deliver a complete home renovation, extensions or loft/
basement conversions, interior design or the redesign of a single
room, without disrupting your busy life.
Increase the value of your home by up to 22%* by investing in any
one of our services. For a free consultation and to make the most of
our offer, quote APDCAM

Tel. 020 7687 6288 Twitter. @andrewdunning

Email. info@apdinteriors.com Web. www.apdinteriors.com
*Nationwide Building Society.
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ALBION STREET
HYDE PARK, W2
A stunning newly refurbished four
bedroom flat on the second floor (with
a lift) of this portered building close
to Hyde Park.
• Four Bedrooms

$GYHUW
• Three Bathrooms
• Wooden Floors
• Views of Hyde Park

£1,700 Per Week

Hyde Park & Bayswater
020 7262 2030

CRAWFORD STREET
MARYLEBONE, W1
A bright and contemporary two
bedroom flat on the fourth floor (walk
up) of this modern conversion close
to Baker Street underground station
HANWAY PLACE, FITZROVIA, W1 and Marylebone High Street.
A stunning, rarely available loft style duplex apartment arranged over the top two floors (with • Two Bedrooms
lift) of this converted school building located in a quiet backwater just off Oxford Street. • Two Bathrooms
• Juliet Balcony
Two Bedrooms • Two Bathrooms • Two Reception Rooms • Double Volume Ceilings • Wooden Floors
Large Roof Terrace
£695 Per Week
Offers in Excess of £2,050,000 • Leasehold
Marylebone & Regent’s Park
Marylebone & Regent’s Park 020 7486 6338 020 7486 6338

London Estate Agents | Investment & Development Consultants | Block Managers | Established 1982 kayandco.com
 Lifestyle
From scruffy hack
to dashing banker
Daniel Knowles didn’t know a good suit
from a bad...until Selfridges stepped in
MUST make a confession.
I Before researching this piece,
I had only visited Selfridges
once, and only then to buy
Lucky Charms and jelly beans. So
going in to meet Ben Leaver,
Selfridges’ exceedingly well-
dressed men’s formal wear buyer,
was frankly rather daunting.
What would he make me wear?
What are these … looks? Surely an
ordinary suit cannot be much
improved on?
LOOK 1: The Interview Suit
THERE are suits, then there are suits. This
one, from Savile Row tailor Richard James,
is definitely one of the latter. Together with
a Mad Men inspired tie, it made me feel like
a CEO of the finest sartorial sense. The
navy colour is conservative but not dull,
while being dressed entirely in silk instantly
lifts your confidence. The cut is also mag-
nificent, and rarely for someone skinny like
me, doesn’t hang like something construct-
ed out of sackcloth around the shoulders. I
saw myself blissfully in a boardroom, like
Gordon Gekko, but with decorum. “That’s
actually quite good,” said City A.M. lifestyle
editor Zoe, sounding more surprised than I
felt was justified. But she was right, and I
didn’t want to take it off.
Prices: Navy silk suit, Richard James: £850.
Tie, Charvet: £125. Lilac shirt, Charvet: £265.
www.selfridges.com
JEANS and a jacket is something I’ve been doing for years. You can look effortlessly sophisticated
just by adding a little tailoring to your lounging around gear. Or, as an ex-girlfriend once put it to me,
you can look like the top and bottom halves of two different people sewn together at the waist.
Unlike the attempts that provoked that quip, Ben’s version definitely felt right. Not only does it turn
out you can wear a polo neck without a shirt, you can also wear black shoes with jeans, and some-
how it all actually works. Of course, the jacket is the key, but it is also important to get jeans with a
smart, traditional cut like these. Perfect for dinner parties or simply for impressing your girlfriend.
Prices: Shoes, Churches: £340. Jeans, Ralph Lauren: £270. Black v-neck, Aquascutum: £170. Jacket,
Ralph Lauren: £1350. www.selfridges.com
| Fashion
How wrong I was. Like so many
young men in the City, I have
learned how to make myself look
truly sharp. Though I now wear a
jacket, and sometimes even a tie,
spiritually I am still wearing the
hoodie and jeans that got me
through university. But while that
might do for journalists, it will
never do for my peers in the City’s
banks and law firms. Here are my
new favourite looks – and I’m fair-
ly sure they’d lift any wardrobe.
LOOK 4: Urban sophisticate about town
THE JOYS OF A 29
HALF TERM SKI
IN TRAVEL ON
MONDAY
BEFORE
THIS is how I arrived. Quite scruffy and colour-
less, in a suit I bought from a rather strange lit-
tle shop in Camden. Or as I always thought of
myself, kind of smart but mostly battered, as a journalist
should be. “It’s very, well, washed out?” said Ben, his
head tilted quizzically. Somehow I think he had
more scathing things to say. He was right though.
My grey suit is a little bit of a disgrace, while my
coat is quietly falling apart from the inside. And
after trying on the best of Selfridges’ range, I can’t
say I felt too happy putting it back on.
LOOK 3: Corporate entertainment
Even in the harshest of City jobs, occasions arise that
involve looking smart somewhere a bit glamorous. In
my case, I was to spend the weekend after we did
this shoot with a bank in Klosters, Switzerland, to
cover a snow polo match with a bank, and this was
how Ben thought I should dress. The woolen navy blue
jacket is suitably elegant, touched off by its beautiful
silver buttons. The jeans are from Etro, turned up and
paired with some astonishingly nice brown brogues. My
favourite bit though was the tie; hand knitted and worn
with a smart blue shirt, it shows that a tie needn’t just
be part of a corporate uniform, it can be casual too.
Prices: Blazer, Ralph Lauren: £1055. Jeans, Etro: £210.
Tie, Ermenegildo Zegna: £105. Navy v-neck, Aquascutum:
LOOK 2: £170. Brogues, Grenson: £165. www.selfridges.com
The Silicon Valley entrepreneur
MUCH though I wanted to after trying on
the job interview look, you can’t wear a suit
all of the time. My next ensemble consisted
of a Ralph Lauren check jacket, Ralph
Lauren black jeans and a Ralph Lauren polo
neck. So it was very Ralph Lauren. The aim
was for a sort of casual, entrepreneurial
style – but more Steve Jobs than Bill
Gates – and it does seem to work. And
while some might question a polo neck as
business wear, I was assured that this is
how all the really successful people are
dressing. Together with the world’s Bond
villains.
Prices: Polo-neck, Ralph Lauren: £545.
Jacket, Ralph Lauren: £1350, Jeans, Ralph
Lauren: £270. www.selfridges.com
Pictures: Alex Ridley City A.M.
CITYA.M. 11 FEBRUARY 2011
Coens inspire with a gritty Western
Hollywood’s first
siblings have struck
gold again with this
remake of an old
John Wayne classic
Film
TRUE GRIT
Cert: 15
hhhhI
IN this Coen Brothers-directed re-make of a
John Wayne Western, Jeff Bridges is the
maverick, whisky-slugging gun-slinger
Marshall Rooster Cogburn, a self-professed
"foolish old-man who has been drawn into
a wild goose chase by a harpy in trousers
and a nincompoop".
The harpy is 14-year-old Mattie Ross
(Hailee Steinfeld), who, thanks to a mother
who is “indecisive and hobbled by grief”
has taken it upon herself to avenge her
father’s recent slaying by wanted criminal
Tom Chaney (Josh Brolin). The nincompoop
is the pleasantly dim-witted Texas Ranger
Laboeuf (Matt Damon). Together they
embark on a mission to get Chaney.
With its crisp, wide-angled vistas, the
film earns its Best Cinematography Oscar
nod. Likewise Steinfeld and Bridges’ per-
formances are both superb. The script is
infused with the hilarious, machine-gun
verbosity that’s been the Coen brothers'
trademark for 25 years.
ALSO OUT THIS WEEK
FILMS, MUSIC, GAMES
FILM
JUST GO WITH IT Rom com with Adam Sandler and
Jennifer Anniston. For masochists only.
YOGI BEAR New animated version of the Sixties car-
toon, with Dan Ackroyd on “pick-a-nick basket” duties.
SON OF BABYLON Iraqi drama about a boy and his
grandmother in the chaos of modern Iraq.
Mixing the drama of No Country For Old
Men with the humour of Oh Brother,
Where Art Thou?, True Grit is among the
finest of the Coen Brothers’ films.
Tom Latter
NEVER LET ME GO
Cert: 12A
hhIII
Richard Nixon used to tell his psychiatrist
that when he looked into the mirror in the
morning, he saw no one there. I felt a simi-
lar sensation watching the spectral Keira
Knightley’s void-like performance in this
drab adaptation of Kazuo Ishiguro’s novel.
Kathy (Carey Mulligan), Tommy (Andrew
Garfield) and Ruth (Knightley) grow up
together in the 1970s and ‘80s at a seeming-
ly-idyllic English boarding school. But all is
not as it seems. The pupils are special.
Because when they hit adulthood, they will
be systematically harvested for their
organs, until their skin drapes over their
empty skeletons like a withered balloon
and they die.
Mulligan – with her ruddy, English
Cream Tea charms – is watchable as the lik-
able Kathy. Garfield (The
Social Network) does his best
with the irritating script.
Knightley floats through
the film with dead-eyed
vacuity; half mannequin,
half human abyss.
The film hints at Big Issues
– being human, science and
morality, the brevity of life – but the
trite, laughably earnest love triangle
saps away all life from it. Awful.
TL
DVD
EAT PRAY LOVE Julia Roberts stars in saccharine
adaptation of Elizabeth Gilbert’s hit book.
THE RUNAWAYS Dakota Fanning and Kristen Stewart
star in this film about the seventies girl rockers.
UPSTAIRS DOWNSTAIRS DVD release for the Beeb’s
good-but-not-as-good-as-Downton costume revival.
Hailee Steinfeld and
Jeff Bridges in True
Grit.
GNOMEO & JULIET
Cert: U
hhhhI
The greatest love story ever told… re-told
with animated garden gnomes and an
Elton John soundtrack. Gnomeo and
Juliet does not, it must be said, look
promising on paper. Yet on the big
screen, what is conceptually unconvinc-
ing becomes a high-camp, off-the-wall,
seriously enjoyable romp that kids and
their parents will love.
In fair suburbia where we lay our scene,
the ongoing feud between warring neigh-
bours Mr Capulet and Miss Montague has
been taken up by their respective garden
gnomes, the Reds and the Blues. When
bright young Blue thing Gnomeo (James
McAvoy) meets feisty Red stunner Juliet
(Emily Blunt) on a rare trip outside the Blue
garden, cupid strikes and, well, you know
the rest.
What Gnomeo and Juliet lacks in faith-
fulness to Shakespeare (the tragic third act
is ditched in favour of a fairytale ending,
naturally), it makes up for with an imagina-
tive and irreverent playfulness. It is also
packed with familiar-sounding voices (Ozzy
Osbourne, Hulk Hogan and
Dolly Parton among many
others) – no doubt
thanks to the showbiz
connections of the
film’s producer
David Furnish.
And, if nothing
else, viewers can
have great fun
working out who
is who.
Amy Higgins
MUSIC
JAMES BLAKE Debut album from the non-tennis-
playing, electro songwriting whiz kid.
THE STREETS Mike Skinner has suggested Computers
and Blues may be his last album as The Streets.
THE BOXER REBELLION Third album, the Cold Still,
from the London-based Coldplay-alikes.
Lifestyle 30
Above, Elizabeth
Moss and Keira Theatre
Knightley in The
THE CHILDREN’S HOUR
Chrildren’s Hour;
below left, Gnomeo Comedy Theatre
& Juliet.
Ihhhh
THE excitement of seeing Keira Knightley
and Elizabeth Moss – Peggy in cult TV series
Mad Men – in the flesh seems at first to over-
shadow the play. The first time they share
the stage, it feels as though Keira is being
Keira (that controversial mouth and skinny
frame working overtime) and Moss is, well,
not quite sure what to do with her hands
and talks a bit loudly.
But as the the spell-binding action of the
play unravels (Hellman, a German Jew from
New Orleans, wrote it as the Nazis are com-
ing to power but the play is in the midwest),
the two become riveting.
Karen (Knightley) and Martha (Moss) have
spent their twenties slaving away to set up a
school for girls in a farmhouse in Michigan
while other girls their age were out at par-
ties. Among the pupils at their school is
Mary, a spooky, deranged girl and a compul-
sive liar (played brilliantly by the androge-
nous Bryony Hannah). Finally, one of her
lies – inspired by a row that her two friends
overhear – has grave consequences. But it is
Mary’s doting grandmother – who chooses
to believe Mary and the friend she manipu-
lates into slandering Martha and Karen –
who becomes the moral focus of the play.
Hellman’s preoccupation here is the wreck-
age that lies – particularly those containing
tiny grains of truth – can do. And so the play
becomes a gripping moral piece, with a host
of riveting performances.
Zoe Strimpel
GAMES
TEST DRIVE UNLIMITED 2 (PS3, X360, PC) Race fast
cars around Ibiza.
STACKING (PS NETWORK, XBOX LIVE ARCADE)
Puzzle game based on stacking Russian dolls.
TRINITY: SOULS OF ZILL O’LL (PS3) Swords, sorcery
and silly words-based action adventure.
CITYA.M. 11 FEBRUARY 2011 Lifestyle | TV& Games 31

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
7pm The One Show
7.30pm A Question of Sport
BBC News
8pm EastEnders
8.30pm QI
9pm Hustle
10pm BBC News
10.25pm Regional News
10.35pm The Graham Norton
Show
11.20pm The National Lottery Friday
Night Draws 11.30pm FILM Right
at Your Door 2006; Weatherview
1.05am Sign Zone: At Home with
the Georgians 2.05am Horizon:
What Is Reality? 3.05am Climbing
Great Buildings 3.35am Save My
Holiday 4.20am-6am BBC News
6pm Eggheads
6.30pm One Man and His
Campervan
7pm Julia Bradbury’s German
Wanderlust
7.30pm An Island Parish
8pm Mastermind
8.30pm Life in a Cottage
Garden with Carol Klein
9pm Can’t Take It with You
10pm CHOICE Fast and Loose
10.30pm Newsnight
11pm The Review Show
Weather
11.50pm FILM A Guide to
Recognising Your Saints 2006.
1.25am FILM Alpha Male: Drama,
starring Jennifer Ehle. 2005. 3am
BBC News 4.20am-6am Close
6pm London Tonight 6pm The Simpsons 6pm Home and Away
6.30pm ITV News 6.30pm Hollyoaks 6.30pm Zoo Days
7pm Emmerdale 7pm Channel 4 News 6.55pm Meals in Moments
7.30pm Coronation Street 7.25pm 4thought.tv 7pm Five News at 7
8pm Children’s Hospital 7.30pm CHOICE Father Ray 7.30pm Vets in Action: Five
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9pm CHOICE Comedy Rocks 8pm Relocation: Phil Down 8pm Ice Road Truckers: Ray
with Jason Manford: Variety Under Veilleux encounters large
show, with Julian Clary, Alfie 9pm Embarrassing Bodies snowdrifts; Five News at 9
Boe and Matt Lucas. 10pm The Million Pound Drop Live 9pm The Mentalist: A corporate
10pm ITV News at Ten 11.20pm 10 O’Clock Live 12.25am financier falls to his death. FAST AND LOOSE
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10pm Law & Order BBC2, 10PM
Awards 2011 12.45am CTRL MX
10.35pm 30 Years of An 10.55pm NCIS Hugh Dennis presents the improvised
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Audience With Introduces Clare Maguire 1.20am 11.55pm Cops in Crisis comedy show, featuring Greg Davies,
11.35pm Take Me Out My Name Is Earl 2.05am FILM 12.15am SuperCasino Justin Edwards, Pippa Evans,
12.45am The Zone; ITV News Lemming 2005. 4.15am Hair: It’s 3.55am Motorsport Mundial Humphrey Ker and Marek Larwood.
Headlines All Good 4.20am MESH 4.30am 4.20am Royal Navy Caribbean
2.45am October Road 3.30am- Brothers & Sisters 5.15am-6am Patrol 5.10am Wildlife SOS
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SKY SPORTS 1 5am Kings of the Snow 5.30am- Minds 12am CSI: Crime Scene 1.10am Gok’s Clothes Roadshow DISCOVERY HOME &
SATELLITE & CABLE

7pm Sky Sports News at Seven
7.30pm Live Premiership Rugby
Union 10pm Take It Like a Fan
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11pm Football League Weekend
12am Boots ’n’ All 1.30am Take
It Like a Fan 2am Premier League
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5am Take It Like a Fan 5.30am-
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7pm Tight Lines 8pm Boots ’n’ All
9.30pm Airsports World 10pm
Tight Lines 11pm NFL: Total
Access 12am Premiership Rugby
Union 1.30am Elite League Ice
Hockey 2.30am Tight Lines
3.30am Premiership Rugby Union
5am-6am NFL: Total Access
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6pm European Tour Golf 8pm
Live PGA Tour Golf 11pm
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7pm Doctor Who 7.45pm Doctor
Who Confidential 8pm The Real
Hustle on Holiday 8.30pm The
Lock Up 9pm Little Britain
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EastEnders 10.30pm Sun, Sex
and Suspicious Parents 11.30pm
Him and Her 12am Family Guy
12.45am The Lock Up 1.15am
Lunch Monkeys 1.45am Coming
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That Work? Sell Me the Answer the revelation among the community.

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

QUICK CROSSWORD
    

SUDOKU KAKURO
14 35 12 19 11 24 17 3 
27 23

29 13
Place the numbers from 1 to 9 in each empty cell so that each 37    
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 11 9
3 30 6
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 9 15 4
above or to the left of it. 19 5
You can only use the digits 1-9 8 39 
    and you must not use the
3
16  
same digit twice in a block. 10 18 15 4
  The same digit may occur 22 7     
28
     more than once in a row or
column, but it must be in a
11
13
17
16
10

16 25
  separate block.
17 6 12 
14 26
    16 10


  ACROSS DOWN
4 Boundary (5) 1 Enthusiastic (5)
    
  WORDWHEEL O G
7 Disturb (7)
8 One trained to
install, maintain
2 Money extracted
as a penalty (4)
3 Male red deer (4)
Using only the letters in the Wordwheel, you have
    ten minutes to find as many words as possible,
H D
and repair
equipment or
4 ___ Strauss, jeans
manufacturer (4)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters E wiring (11)
12 Absolving from
5 Very short skirt (4)
6 Contaminate (5)
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
T N blame (9)
9 Cut thinly (5)
15 Not absolutely
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
E U essential (11)
10 Major European river (5)
11 Counters used to represent
20 Frank ___,
QUICK CROSSWORD 9 2 8 3 9 3 8
money when gambling (5)

C I C A D A D L
7 3 9 1 7 4 9 8 SUDOKU         
nicknamed Old
Blue Eyes (7) 13 Prompting (5)
L S C A J O L E
1 5 2 3 1 5 4
         21 Bring together, 14 Little-used side road (5)
9 8 2 1 2 7 9
A F G H A N I O E          assemble (5) 16 Group created in 1949 for the
M O E R O D E D 4 5 7 6 9 8
2 4 1
         purpose of security (inits) (4)
P E E R S G L S 8 9 6 8 4
         17 Division between signs
L
M E A
O V
S U R
N A
E
S A L
8 2 1
5 1 7 4 3 2
5 6 6 1
WORDWHEEL          of the zodiac (4)
A S T R A Y B E         
M I G O R I L L A
9 8 6 7 4 4 9 The nine-letter word was 18 Grains on the beach (4)
7 3 2 1 4 2 7 1         
B R O K E R E F
SANDSTONE         
19 Pretentious (4)
S N E A S I L Y 9 3 8 2 1 5 3
 Punter
32
SPORT TRADER DAVID WILD, BEN CLEMINSON AND BILL ESDAILE TEAM
UP TO BRING YOU THIS WEEK’S BEST RUGBY, FOOTBALL AND RACING BETS
Azzurri able to surpass
low expectations at HQ
ENGLAND
ITALY
TOMORROW – 2.30PM BBC1
ENGLAND got off to a winning start at the
Millennium Stadium last week, their first
victory in Cardiff since 2003. Carrying the
confidence from Friday’s thriller, Martin
Johnson’s side returns to Twickenham
where they welcome Italy for the first of
three consecutive Tests at HQ.
After coming within three minutes of
beating Ireland at the Stadio Flaminio last
weekend, the Italians arrive in London
hoping to end a winless run of 16 matches
against the Red Rose. While Nick Mallett’s
side are not well enough equipped to do so
against the most promising England XV
for a number of years, they can be expect-
ed to get within the 23 point handicap set
by Paddy Power and should be backed at
10/11.
In their 11 years competing in the Six
Nations Championship, there’s no doubt
that Italy have struggled more than any
other side but in match terms, they are
often underrated. In 2008, the Azzurri got
to within four points of England (19-23),
while only five points separated the sides
last year. In 2009, when the Italians last
came to Twickenham, England did claim
a 36-11 victory – a winning margin of 25
points – but that can largely be put down
MANCHESTER UNITED
MANCHESTER CITY
TOMORROW – 12.45PM SKY SPORTS 1
MANCHESTER United’s defeat at Wolves
last Saturday has breathed fresh life into
the title race and a game against local
rivals Manchester City wouldn’t necessar-
ily be top of Sir Alex Ferguson’s wish list
for his side’s next fixture.
It’s true that United have been excellent
at home this season, but City are difficult
to beat and it’s likely that Roberto Mancini
will set his stall out in exactly the same
COUNTDOWN TO CHELTENHAM
Plenty of horses put their Cheltenham
Festival credentials on the line this week-
end and there is bound to be movement
in the ante-post markets.
ZAIDPOUR is a very interesting runner
at Leopardstown tomorrow and the 8.0
available on Betdaq about Willie
Mullins’ charge for the Supreme Novices
will be nearer 5.0 if he turns in an
impressive performance.
His shrewd trainer admitted that he
Join now for a risk free £20 bet and 2.5% commission
until March 31st (Betdaq T&Cs Apply, see site for details.)
www.betdaq.com 0870 178 1221
| Sports
to a crazy experiment which saw flanker
Mauro Bergamasco played as scrum-half.
I expect it to be tight in the opening
period as the Italian forwards cause the
England pack trouble. I’m particularly
looking forward to the battle between
Azzurri tight-head Martin Castrogiovanni
and his Leicester Tigers understudy Dan
Cole, but as the game progresses
England’s superior stamina and discipline
should see them pull away. Victory by a
couple of converted tries will keep the
Twickenham crowd happy and England to
win by 11-20 points at 5/2 with Paddy
Power seems a good bet. Chris Ashton
received a ticking-off for his elaborate dive
across the line for his first try against
Wales, but he confirmed his knack of
way as he’s already done this season. City
have played five games against the top
five, scoring just one goal, and their
matches at Arsenal and Tottenham, as
well as at Eastlands against United, all
ended goalless.
The Red Devils are the only side in the
league with an undefeated home record
this term and they’ve dropped just two
points out of a possible 39. They average
over three goals per game at Old Trafford,
so it’s understandable that they are a gen-
eral 4/5 shot.
However, Mancini is always defensive
against the best teams and it’s no coinci-
dence that there has been just one goal (a
90th minute Paul Scholes header) in the
two league Manchester derbies since he’s
taken the reins.
ran him back too soon when he was
beaten over Christmas and he has had
plenty of time to recover.
SO YOUNG was an extremely impres-
sive winner at Punchestown on
Wednesday and now heads to the
Neptune Investment Hurdle.
That doesn’t look to be too strong a
contest and the 10.0 available on Betdaq
looks massive.
I’d be seriously surprised if he wasn’t
in association with:
CITYA.M. 11 FEBRUARY 2011
Picture: ACTION
being in the right place at the right time.
The Italians are sure to be wary of him
after that performance, but whether they
can stop him is another matter. Three
players – Austin Healy, Jason Robinson
and Mark Cueto – have scored hat-tricks
against Italy and it’s certainly not beyond
Ashton to join that list. It’s not for the
faint-hearted, opening punters up to a
potential 47 point loss, but a buy of
Ashton’s try minutes with Sporting Index
is highly tempting for those brave enough.
POINTERS...
Italy to win (+23) at 10/11 with Paddy Power
England to win by 11-20 pts at 5/2 with Paddy Power
Buy Ashton’s try minutes at 47 with Sporting Index
United have the class to break down any
side at Old Trafford, but Arsenal couldn’t
manage to score at the Emirates against
City and I can see a similar outcome here.
The draw is available at 11/4 with Victor
Chandler, which is worth taking, as is the
9/1 on Betdaq about no goalscorer. In
United’s four games against the top five
this season there have been just three
goals and in City’s five against the same
opposition there have been only four, so a
sell of goals at 2.6 with Sporting Index is
surely the correct call.
POINTERS...
Match to be drawn at 11/4 with Victor Chandler
No goalscorer at 9/1 on Betdaq
Sell total goals at 2.6 with Sporting Index
vying for favouritism on the day and he
will surely be nearer half his current
price.
Finally, Philip Hobbs runs PERSIAN
SNOW in the last at Newbury tomorrow
and he could well develop into a serious
contender for the Champion Bumper if
he wins as expected.
He can currently be backed at 15.0 for
that particular contest and will be a lot
shorter if he sluices up tomorrow.
 Sport
Scrum laws need changing
RUGBY COMMENT
KYRAN BRACKEN
AFTER an encouraging start to their
RBS 6 Nations campaign, England will
be looking to build further momen-
tum against Italy. The Red Rose will
need the following three men to
reproduce the form they displayed at
the Millennium Stadium if they are to
make it two wins from two.
DAN COLE
It’ll be difficult for Cole, not only
because he’ll be up against his club
colleague Martin Castrogiovanni, one
of the most mobile props in the
game, but also because of the way
scrums are being refereed these days.
I hate this crouch, touch and engage
business. It’s difficult for the front
row guys to get their timing right and
the whole process takes too long. It’s
ridiculous. I’m hoping the powers
that be revert to the previous system
before too long.
CHRIS ASHTON
He may have only played eight times
for his country, but the rugby league
convert has proved a real find and is
McIlroy outshines Woods and co Cricket mourning ‘Barnacle Bill’
▲
GOLF
NORTHERN IRELAND’S Rory McIroy
put the world’s top three golfers in
the shade in the first round of the
Omega Dubai Desert Classic.
Lee Westwood, Martin Kaymer and
Tiger Woods were grouped together,
but it was the 21-year-old McIlroy who
put them in shade with a superb 65
to lead by two shots from South
fast becoming England’s talisman.
Normally that would be a label attrib-
uted to a vocal captain, a Martin
Johnson or Keith Wood for example.
Ashton might not be a leader in the
sense that he commands the side, but
he’s very quickly established himself
as England’s chief try scoring threat
and he’s the one guy in that back divi-
sion, which has come in for some crit-
Africa’s Thomas Aiken and Spain’s
Sergio Garcia.
Woods rescued what he termed a
“scratchy” 71 with a stunning closing
eagle, while Westwood and Kaymer
both carded 69s.
“I’d like to think I’m a better player
than two years ago. I’m definitely
more experienced and a more round-
ed and complete player,” said McIlroy,
who holed eight birdies.
WEST HAM SET FOR OLYMPIC
STADIUM GREEN LIGHT
TOTTENHAM CHAIRMAN LEVY
PONDERS HIS NEXT MOVE: P35
icism, who excites the crowd.
TOBY FLOOD
The Leicester fly-half has been a slow
developer, but his display against
Wales was perhaps a defining
moment in his international career. It
can’t be easy with an icon like Jonny
Wilkinson breathing down your
neck, but Flood is definitely begin-
▲
CRICKET
ENGLISH cricket is mourning the
death of former international Trevor
Bailey who died in a fire at his home
aged 87.
Bailey played 61 Tests and was a
member of a side which won three
consecutive Ashes series between
1953 and 1956. England and Wales
ning to stamp his authority on
Martin Johnson’s side. Against a team
like Italy, who’ll try and turn the
game into a dogfight, it’s important
he puts them in their place early on.
Gamesman Solutions – Managing profile
and popular sport stars – Speakers,
Leaders, Motivators, Ambassadors –
www.gameplansolutions.co.uk
Cricket Board chairman Giles Clarke
praised Bailey’s “enormous contribu-
tion to the game” and he also hailed
him as “one of the finest all-rounders
this country has ever produced.”
Bailey, who was nicknamed
‘Barnacle’ after recording the slowest
ever Test half-century, played his
entire first class career at Essex and
was later a member of the BBC’s Test
Match Special commentary team.
33
SPORT | IN BRIEF
Kubica out of intensive care
FORMULA ONE: Renault driver Robert
Kubica is out of intensive care as he con-
tinues his recovery from a rallying acci-
dent which threatens to cut short his
career. The 26-year-old Pole suffered
multiple fractures and will undergo two
operations on his foot and upper arm at
an Italian hospital on Friday. A further
operation on Kubica’s elbow has been
scheduled for Monday.
Ivanovic signs new Chelsea deal
FOOTBALL: Chelsea’s Serbia internation-
al defender Branislav Ivanovic has
signed a new contract which will keep
him at Stamford Bridge until 2016.
Cleverly gets his world title shot
BOXING: Britain’s Nathan Cleverly will
challenge Jurgen Braehmer for his WBO
light-heavyweight title on 2 April at
Wembley Arena. Cleverly, 23, unbeaten
in 21 fights, was installed as the WBO
interim champion after victories in his
last two bouts against Karo Murat and
Nadjib Mohammedi. Braehmer, like
Cleverly, is a former European champion.
Results
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email sport@cityam.com
34 Sport
Johnson urges
England to go
for the jugular
l Manager warns team against complacency
l Side unchanged for Italy visit to Twickenham
RBS
6 NATIONS
BY FRANK DALLERES
ENGLAND manager Martin Johnson
has told his team to forget the fact
they are overwhelming favourites
for tomorrow’s RBS 6 Nations clash
with Italy and show no mercy when
the perennial wooden spoon recipi-
ents visit Twickenham.
Johnson was far from
satisfied with his side’s
performance in last
week’s champi-
onship opener
against Wales,
despite leaving the
bear pit of the
Millennium Stadium
with a hard-fought vic-
tory.
And last night he warned the
same starting XV that they cannot
afford to let their guard down
against an improving Italy side who
he believes were robbed of a
deserved first-round win by Ireland.
“There was a big build-up to that
game last week, and this is not seen
as the biggest game of the week, but
they are the only team that can beat
us this week,” said Johnson.
“Right from the first meeting on
Monday we have spoken about
things we did well and things we
can improve on. We had plenty of
chances to score tries and finish the
CITYA.M. 11 FEBRUARY 2011
HEAD-TO-HEAD
The clash will pitch rival Leicester props
Dan Cole and Martin Castrogiovanni into
battle against each other. Both are strong
in the scrum but stats from the Amlin
Opta Index, which uses Heineken Cup
data, show that the Italian is a far more
prolific ball carrier, while Cole has a slight
edge when it comes to tackling.
game off last week. We had one
near the end that would have killed
the game off and we didn’t get in,
so we spoke a bit about that.
“Our No1 [priority] is a win, No2
is no serious injuries and No3 is a
good game. We know what they’re
about. They’re a good team and a
real challenge.”
Johnson has stuck with the same
l STATISTICS l
team that beat Wales, with Tom COLE CASTROGIOVANNI
Wood (inset) retained at blindside 5 Appearances 6
flanker after impressing on 8 Carries 32
debut – not that his manager 12 Metres 37
was in any mood to shower 0 Clean Breaks 0
him with more praise.
“The lad did okay on 0 Defender Beaten 1
Friday,” Johnson said. 0 Offload 1
“There are lots of bits we 0 Turnover Won 0
need to get better at, things 3 Turnover Conceded 2
that we talked about after 1 Penalties Conceded 4
the game.” 25 Tackles 22
Only a late drop goal from 0 Missed Tackles 2
replacement fly-half Ronan O’Gara
1 Passes 4
denied Italy a famous win over
Ireland in an attritional contest in 0 Lineout Steals 1
Rome, and Johnson took note.
“You have the same conversation
when you play Italy, they are tough
games,” he added. “They should
have won last week. They can play.
They keep hold of the ball and put
you under pressure. They do that
well and we are under no illusions
that this is the toughest test we can
play this week. People say we didn’t
play well against them last year but The Amlin Opta Index is the first ever player
they are a good side and they are a
different challenge.” performance comparison analysis in rugby
CITYA.M. 11 FEBRUARY 2011
Questions mount as
West Ham set for
stadium green light
▲
OLYMPICS
BY FRANK DALLERES
A DECISION may not be confirmed
until this morning, but the widely
anticipated move to award the
Olympic Stadium to West Ham
over Tottenham has already
prompted serious questions to be
raised about the bidding process.
The Hammers have been unani-
mously declared the winners of a
lengthy and increasingly bitter
battle with Spurs even though the
Olympic Park Legacy Company
(OPLC) is only due to vote on the
matter over breakfast today.
Apparent leaks suggest key
OPLC executives view West Ham’s
bid as the only one that matches
all five of its selection criteria, and
the 14-man board is expected to
fall into line and recommend it.
Barring an almost inconceivable
sea change in opinion, it means
the east London club will inherit
the £537m venue after next sum-
mer’s Games and begin work on a
£95m conversion that, crucially,
will retain a running track.
COMMENT
FRANK DALLERES
IF, as expected, West Ham are
handed the keys to the Olympic
Stadium it will be seen as a tri-
umph of idealism over pragma-
tism, of fulfilling legacy promises
over cold, hard financials.
It appears to be the popular
Rooney: Wilshere’s got what it takes
▲
FOOTBALL
BY JAMES GOLDMAN
ENGLAND striker Wayne Rooney is
confident Jack Wilshere will have a
long and distinguished interna-
tional career after the Arsenal star-
let impressed on his first senior
start against Denmark on
Wednesday.
Wilshere looked composed in
front of the back four before he
was taken off at half-time. “I
Tottenham, who joined forces
with entertainment giant AEG to
bid for the stadium, refrained
from comment other than to
express surprise at the apparent
foregone conclusion.
“Whilst we are concerned to
read that there appears to have
been a leak of information
from the OPLC about what
their recommendation and
decision may be, we regard it
as premature to make any
comment at this stage,” the
club said in a statement.
Spurs played down
suggestions that
chairman Daniel
Levy (right) is
already primed to
seek a judicial
review of the
OPLC’s verdict,
although it is
understood that
they remain
open-minded
about legal action.
Sources close to
the club, however,
choice, with high-profile politi-
cians and key figures from the
athletics world backing the
Hammers over their pledge to
retain the running track.
It may be that their bid and not
Tottenham’s meets the five crite-
ria set out by the Olympic Park
Legacy Company – the OPLC
itself, which has been privy to the
minutiae of both bids, is best
thought Jack Wilshere did really
well,” said Rooney. “He is really
composed on the ball and really
good to play with. You can see the
potential he has got.”
Wilshere aside, England’s other
standout performers were the
Aston Villa duo, Ashley Young and
Darren Bent, who were both on the
scoresheet in a 2-1 win.
Young replaced Rooney at the
break and played behind the main
striker, as he has done for his club
Sport 35
expressed surprise at suggestions
their proposals had failed to meet
two of the five criteria, given that
objections of such a serious nature
might be expected to have been
flagged up earlier.
Tottenham, who spent big on a
communications strategy, first
declared interest in October,
were shortlisted in November
and in recent weeks have
held weekly meetings with
the OPLC. Club insiders feel
that there has been ample
time to raise any funda-
mental flaws.
But the club’s
plan to knock
down and then
rebuild the stadi-
um without a
track and house
athletics else-
where drew vocif-
"Swing low,
erous opposition
from the world of
track and field, and
proved unpopular
sweet Charidee''
with the public in a Come and swing a club in aid of the Wooden
recent poll.
Spoon and challenge the ‘Tiger’ in you.
Our ‘Pebble Beach’ Golf Competition has tee’d off this week at City Golf.
placed to judge that.
But perhaps a bigger question
is: were the criteria themselves
the right ones? Is it viable for top
It’s only £10 to play 5 virtual holes (Stroke Play) all
level football to share with athlet- of which goes to this worthy cause; sponsored by
ics? And Twenty20 cricket too? Saxo Bank, and hosted at:
It would be nice to think so, City Golf, 40 Coleman Street, EC2R 5EH.
not least for the community ben-
efits West Ham promise, but suc-
cessful precedents are hard to
Just email ElliotLake@citygolfclubs.com to book your one hour
find, and only time will tell.
simulator experience.
The competition runs over six weeks and our current leader is Ian Dennis
of Saxo Bank with 1 over.
There is no limit as to the number of times you can enter.
1st prize
A custom set of 8 Irons and the chance to mingle with
rugby legends at the Prize Giving and Q&A on 22nd March.
this season, and the Manchester
United talisman was suitably
impressed by his contribution. For the live Leader board - http://tinyurl.com/4ewl4ja
“With Ashley, he has been play-
ing behind the main forward for For Blog and further details -
Villa this season. You could see he http://www.imaginegolfclub.com/blog/competitions
/wooden-spoon-virtual-golf-competition-1123.htm
has benefited from that with the
way he did against Denmark. He
Sponsored by
got his goal and he’s always a
threat in there.
“The manager is trying to give
players a chance and they are start-
ing to take those chances.”