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Japanese
£56,800,000,000 snap up
Kwik-Fit
The amount of tax paid by the UK’s

▲
EXCLUSIVE

100 biggest companies last year

BY JULIET SAMUEL
BRITAIN’S largest tyre retailer, Kwik-
Fit, has been sold to a Japanese con-
glomerate, ITOCHU Corporation, City
A.M. can reveal.
The deal, details of which will be
announced publicly this morning fol-
TAX
■ £56.8BN COULD BUY....
▲

lowing its signing yesterday, sees

BY JULIET SAMUEL
THE UK’s 100 largest companies
accounted for 11.9 per cent of the
Treasury’s total tax receipts last year, a
survey by PricewaterhouseCoopers has
velodromes at
revealed, equal to total payments of
£56.8bn.
Two thirds of the taxes collected
were paid by just a third of the top 100
£93m
companies, with oil and gas producers,
banks, insurance firms and retailers
making the biggest contributions.
The £56.8bn figure includes all taxes
the companies handed over to the
European private equity firm PAI
Partners cash out of its six-year owner-
ship of the auto repair chain for
611 Olympic 22 new aircraft £637m, which includes net debts of
carriers at £457m.
The sale follows a bidding process
each
£2.5bn
each
that kicked off in December, with law
firm Baker & McKenzie advising
ITOCHU and investment banks
Morgan Stanley and Credit Suisse run-
ning the auction. Though signed, the
deal is still subject to regulatory
3.3 high speed rail
2.5m
librarians
projects at
approval by European competition
authorities.
PAI bought Kwik-Fit, which includ-

state, mostly made up of corporation
tax, VAT, national insurance, business
rates and income tax paid on behalf of
employees.
The survey shows that companies’
total tax rate on earnings, at 51.8 per
cent, has remained higher than the
pre-crisis norm so that for the second
year running, Britain’s biggest firms
saw more than half of their profits
taken by the taxman.
Corporation tax is still the biggest
burden, despite dropping off as profits
have suffered since the crisis. Over a
third of the tax paid by the companies
surveyed was in corporation tax: this is
down from 2009 when it accounted
for 44 per cent of taxes paid, but still
at £23,000 a
year each
much higher than in all other previ-
ous surveys.
And despite the drop in corporation
tax receipts, PwC says that the overall
tax burden has increased since 2008
because “unlike corporation tax, pay-
ments of other taxes borne do not fall
with declining profitability and thus
become relatively more expensive”.
The research also highlights that
the country’s largest 100 companies
£17bn
each
paid 12.1 per cent of the Treasury’s
total VAT receipts, or £8.5bn, and
employ 6.1 per cent of the UK’s work-
force, for which they hand over
£16.6bn in employment taxes (nation-
al insurance and employees’ income
tax combined).
The findings coincide with a report
released today by the Oxford
University Centre for Business
Taxation showing that the UK’s
biggest one per cent of companies pay
81 per cent of the country’s corpora-
tion tax.
The research also reveals that the
UK’s relatively low corporation tax is
an aid to Treasury revenues: “The UK
was able to collect higher revenues on
average than other G7 countries
despite having a significantly lower
tax rate,” it says.
MORE: ALLISTER HEATH P2
ed a collection of businesses, for
£800m in 2005. But it has sold off
many divisions separately since then,
making a direct price comparison dif-
ficult.
ITOCHU’s purchase of the remain-
ing piece of Kwik-Fit marks a rare case
of Japanese capital snapping up a UK-
based retailer, although it fits natural-
ly within the group’s portfolio, which
also includes Stapleton Tyre Services.
Kwik-Fit currently accounts for 20
per cent of the UK tyre market and
employs 4,602 people nationally
across 673 branches. It has a further
545 branches across Europe, making it
the most widespread tyre services
company on the continent.

FTSE 100 t5,935.76 -58.25 DOW t12,058.02 -168.32 NASDAQ t2,737.41 -44.86 £/$ 1.63 unc £/¤ 1.18 unc ¤/$ 1.38 unc Certified Distribution
03/01/11 till 30/01/11 is 97,465

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 2 News
Why gazelles and giants both matter
EDITOR’S LETTER
ALLISTER HEATH
SHOULD you work for a big company
or a small one? To me, the answer is
simple: the smaller, nimbler and the
more entrepreneurial the firm, the
better. But as figures out yesterday
demonstrate, there is a reason why
many people would prefer to work for
larger institutions. The top 100 firms
in the UK employ just six per cent of
the UK workforce – but they pay much
higher wages on average.
The study out today from
PricewaterhouseCoopers for a group
of Britain’s top finance directors
reveals other interesting facts. The
7th Floor, Centurion House,
24 Monument Street, London, EC3R 8AJ
Tel: 020 7015 1200 Fax: 020 7283 5334
Email: news@cityam.com www.cityam.com
Editorial
Editor Allister Heath
Deputy Editor David Hellier
News Editor David Crow
Night Editor Katie Hope
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
Sports Editor Frank Dalleres
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Beam Reach 5 Business Park,
Marsh Way, Rainham, Essex, RM13 8RS
WHAT THE OTHER PAPERS SAY THIS MORNING
TOP 10 HEDGE FUNDS MAKE $28BN
The top 10 hedge funds made $28bn
for clients in the second half of last
year, $2bn more than the net profits
of Goldman Sachs, JPMorgan,
Citigroup, Morgan Stanley, Barclays
and HSBC combined, according to
new data. Even the biggest of the
hedge funds have only a few hun-
dred employees, while the six banks
employ 1m between them.
SAUDI STOCKS HIT BY FEARS OF
UNREST
Saudi Arabia’s stock market, the
largest and most liquid in the Arab
world, suffered its worst decline
since November 2008, amid con-
cerns that unrest in the Middle East
could spread to the world’s largest
oil exporter. The Saudi Tadawul All-
Share Index slid 6.8 per cent yester-
day. The index has now declined for
12 consecutive trading sessions – its
average salary paid by Hundred Group
members in 2010 was £46,550, consid-
erably more than the UK national
average wage in the same period of
£25,900. There are plenty of good rea-
sons for this. Productivity (the value of
output per worker) is higher in big
multinationals. There are, of course,
myriad exceptions: small hedge funds
pay well, for example. But large multi-
nationals employ better educated, bet-
ter trained and higher skilled people,
on average, than smaller firms, and
have better know-how. Tesco is a good
example of this.
It is not just the top 100 firms,
which last year handed over £56.8bn
to HMRC, 11.9 per cent of the total tax
take, that matter. The top one per cent
of all companies account for most
wealth-creation. A good proxy of that
is tax. According to a report out today
from the Oxford University Centre for
Business Taxation at Saïd Business
School, the top one per cent pay 81 per
cent of all corporation tax. And over
the last 10 years, multinational com-
King: Inflation
will drop back
UK ECONOMY
▲
BY JULIAN HARRIS
SENIOR doves from the Bank of
England saw off their hawkish col-
leagues at a Treasury select committee
in Westminster yesterday, insisting
that inflation will fall back to target.
Leading the way was Bank governor
Mervyn King, who said the “broad
judgement” on his monetary policy
committee (MPC) showed a drop in
prices once “temporary” factors wane.
“Raising interest rates to make a ges-
ture is self-defeating,” said King.
Consumer price inflation hit four
per cent in January, and could rise to
five per cent in coming months.
Conservative MP Michael Fallon
turned on the Bank’s senior officials
for wildly underestimating inflation
in their forecasts this time last year.
MPC members Charlie Bean and
longest losing streak since 1998.
SCANDAL LEADS DIOR TO FIRE
GALLIANO
Christian Dior moved to protect its
reputation by firing John Galliano,
its star designer, for professional
misconduct over the scandal sur-
rounding allegedly anti-Semitic com-
ments. The fashion house said its
decision was prompted by the
release of “particularly odious” com-
ments in a video of Mr Galliano on
Monday.
HSBC SUSPENDS US HOME SEIZURES
HSBC has temporarily suspended US
foreclosures after regulators found
“deficiencies” in its procedures. The
bank could face monetary fines as a
result. The disclosure, contained in
the annual report, is the first time
HSBC has publicly admitted to prob-
lems with its foreclosure processes.
Last autumn, the largest mortgage
servicers temporarily suspended
home seizures
panies have paid 86 per cent of all cor-
poration tax.
This is not to say that small firms
don’t matter: they are critical. But it is
a small-minority of super-fast growth
firms – the gazelles – that really make
a difference. The vast majority of
small businesses remain tiny all their
lives – one man or one-woman opera-
tions. Nothing wrong with that: it
allows people to earn a living on their
own terms. But the growth-producing
stars are the small minority of firms
that eventually employ hundreds and
even thousands of people, invent new
ways of doing things, shake-up the
established order and become new
global multinationals, displacing
older behemoths – the dinosaurs.
There are several lessons to be
learnt. First, it is a myth that large
firms don’t pay corporation tax: 15 per
cent of profitable UK companies that
are part of multinational groups pay
no corporation tax, while 14 per cent
of profitable UK companies that are
not part of a multinational group pay
Paul Tucker blamed the unforeseen
rise on the depreciation of the pound
and the hike in VAT to 20 per cent.
However, Bean showed signs of lean-
ing towards the hawkish sign of the
MPC, in a written statement to the
Treasury select committee. “I have
become rather more concerned that
the period of elevated inflation may
persist for somewhat longer than I
originally thought,” admitted Bean,
while colleague Martin Weale repeat-
ed his concern that inflation expecta-
tions could become entrenched.
ECONOMICS: P12-P13
Bank governor Mervyn
King said that interest
rates will not be hiked
as a “gesture” to the
markets.
UNILEVER LANDS DISCOUNT BLOW IN
CLEANING BATTLE
India’s biggest shopkeepers have
stopped ordering Dettol and Harpic
after a bitter dispute over Reckitt
Benckiser’s prices — and Unilever has
swooped to capitalise on the boycott
by offering discounts on its rival
cleaning products. The two British-
listed groups are fighting to control a
booming consumer goods market.
EIRCOM SEEKS EXTRA CASH TO KEEP
BANKS AT BAY
Eircom will hold crucial talks with its
lenders next month after admitting
that it was in serious danger of
breaching its banking covenants
within three months. Eircom, majori-
ty-owned by a unit of the Singapore
sovereign wealth fund Temasek, car-
ries €3.75bn (£3.2bn) of debt on its
books and will seek an injection of
new funds from shareholders.
no UK corporation tax. There is no real
difference. Second, the UK needs to do
more to attract large multinationals:
this is key to the survival of many
high-paying industries, from finance
to car-making. Third, anybody can
start up a new firm. What’s difficult is
growth – and especially very fast and
sustained growth that turns a start-up
into a profitable, innovative success
story with many employees. The gov-
ernment needs to stop making this
process more difficult than it needs to
be. High labour taxes, a poor and cost-
ly infrastructure, skills shortages, poor
education and the constant threat of
litigation are massive hurdles for
wannabe gazelles.
So which kind of company would be
the best employer for an ambitious
individual – and the best hope for eco-
nomic recovery? Either a large, power-
ful global multinational – or a young,
nimble gazelle which aspires to be a
great success story. Take your pick.
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Former Goldman Sachs director Rajat Gupta faces insider trading charges. Picture: GETTY
Gupta is charged by SEC
REGULATION
▲
BY HARRY BANKS
A FORMER Goldman Sachs Group
director leaked secret details to
Galleon Group hedge fund manager
Raj Rajaratnam about Warren
Buffett’s plan to invest $5bn (£3bn) in
the Wall Street bank at the height of
the financial crisis, according to US
securities regulator charges yesterday.
The US Securities and Exchange
Commission (SEC) said the director,
Rajat Gupta, tipped Rajaratnam by
BRITISH TROOPS ON FRONT LINE IN
AFGHANISTAN TOLD THEY FACE THE
SACK
Almost the entire contingent of
Britain’s 10,000 troops in Afghanistan
have been told they could be sacked
within months after ministers dis-
closed plans to get rid of one in 10
members of the Armed Forces. The
Ministry of Defence has announced
the full scale of redundancies that
will take place in the Army, RAF and
Royal Navy.
SUPERMARKETS ARE RAISING PRICES
FASTER THAN INFLATION, SAYS UBS
Supermarkets are ripping off British
shoppers by raising food prices faster
than inflation, risking another com-
petition inquiry, the investment bank
UBS has warned. According to the
bank's analysis, commodity price
inflation in the past few months
would justify a 3-3.5 per cent increase.
CITYA.M. 2 MARCH 2011
Morrison sells
off his stake in
grocery chain
▲
RETAIL
SIR Ken Morrison, former chairman
of Wm Morrison Supermarkets, has
sold off his 6.07 per cent share in the
grocers to less than one per cent over
the last 18 months, the company has
revealed. Wm Morrison said that it
was notified yesterday of its former
chief’s dealings, which have seen him
sell over 130m shares since
September 2009.
The company said the sell-off was a
result of Morrison “retiring as one of
the trustees of certain family trusts
and other estate and tax planning
exercises undertaken by Sir Ken
Morrison”. It added that the wider
Morrison family still controls nine
per cent of its stock. There were
reports last night that the supermar-
ket is on the cusp of launching a £1bn
share buy-back. MARKETSHARE: P14
phone just minutes before the public
learned of the investment by Buffett’s
Berkshire Hathaway, which helped
ensure Goldman’s stability.
Gupta, 62, a former worldwide
managing director at consulting firm
McKinsey & Co, was also accused of
tipping Rajaratnam about quarterly
earnings at Goldman and Procter &
Gamble, where he was a director
before resigning yesterday.
Rajaratnam, who faces a 8 March
criminal insider trading trial, alleged-
ly reaped over $18m from the tips.
MARKETS REACT TEPIDLY TO
HUNGARY DEBT PLAN
Hungary’s government, under pres-
sure from capital markets and
European Union budget monitors,
pledged to sharply shrink its deficit
and slash public debt over the next
three years, but investors reacted
coolly, with many saying the plans
were too short on specifics. The over-
all size of spending reductions laid
out Tuesday appeared larger than
many had expected.
TWITTER BIG ON SMALLER
ADVERTISERS
Twitter is a hot property among
investors, who are pumping up the
company's valuation. But whether
the start-up can live up to its multibil-
lion-dollar appraisal depends on the
likes of David Szetela, who holds the
purse strings of numerous small and
medium-sized advertisers.
CITYA.M. 2 MARCH 2011 News 3

Ofcom sides with Virgin in

the battle of the broadband
Ofcom found that the average UK its broadband customers extra for its

▲
TELECOMS
BY STEVE DINNEEN
OFCOM yesterday sided with Virgin
in the broadband war, ruling that
firms must advertise “typical” rather
than “maximum” internet speeds.
BT – the major loser from the ruling
given its high proliferation in low-
speed rural areas – said it has “real con-
cerns” with the decision, which it said
A vandalised billboard of Libyan leader Gaddafi in Benghazi yesterday Picture: GETTY could encourage “digital exclusion”.
broadband speed is 6.2Mbits a sec-
ond – just 45 per cent of the average
advertised speed of 13.8Mbits.
Virgin, which boasts the fastest
average speeds but is typically con-
fined to densely populated areas, said
the ruling “provides another clear
mandate to stop advertising ‘up to’
speeds that nobody can actually
receive.”
BT pointed out it does not charge
faster services.
Ofcom has recommended that the
Advertising Standards Authority
clamps down on the misleading
prices.
Although Virgin boasts the quick-
est speeds, Sky says it has been the
fastest growing internet service
provider, offering low margins on its
broadband to lure customers to its TV
products.

Pearson stops “It’s a privilege to be nominated by a

range of other asset managers and
Libya payout professionals in the city”
Richard Swan, INFLEXION (Alternative Manager of the Year)

as oil surges
escalating troubles in the Middle East.
▲

WORLD
BY STEVE DINNEEN
PENGUIN publisher Pearson yesterday
took the unprecedented step of freez-
ing dividend payments to Libya as
pressure on the crumbling regime
reached fever pitch.
The firm cut all payments for the
Libyan Investment Authority’s (LIA)
3.27 per cent holding “until further
notice,” pointing to UN security sanc-
tions on the country.
The shock move came as oil prices
continued to push higher, with Brent
crude futures for April delivery hitting
$114.5 yesterday, a new two-and-a-half
year high. Oil production from fields
operated by the Arabian Gulf Oil Co
(Agoco), a firm based in east Libya, is
down to about a third of normal levels
as a result of the revolt against leader
Muammar Gaddafi.
Fears over oil sent petrol prices surg-
ing past the 130p a litre mark yester-
day – only 2p away from £6 a gallon.
The cost of filling up a typical 50-litre
tank now costs £8.65 more than a year
ago.
Spot gold also hit three-month
highs of $1,423.65 an ounce, as
investors sought a safe-haven from the
Meanwhile, in Saudi Arabia shares
fell to their lowest level since
November 2008, amid concerns that
the unrest could spread to the region.
Libyan rebels celebrated yesterday
after fending off attacks from Gaddafi
loyalists. Pro-democracy protesters
managed to keep control of Zawiya,
the closest city to capital Tripoli, and
third city Zintan.
The battles came as more senior mil-
itary figures defected to the rebels and
Gaddafi’s grip on power slipped fur-
ther. The opposition now count tanks,
anti-aircraft guns and machine guns
among their growing arsenal.
UK Prime Minister Cameron again
called on Gaddafi to step down yesterday.
ANALYSIS l Pearson
1,030.00
1,080 1 Mar
p
1,040
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Senior HSBC bankers in London

get half the pay of those abroad
highlighted the growth of wage infla-
▲

BANKING
BY JULIET SAMUEL
SENIOR HSBC bankers based in
London are getting less than half the
pay of their non-UK counterparts, fig-
ures released by the bank have shown.
UK-based senior staff pocketed an
average of £1.22m in total pay last
year, of which £927,000 was bonus
payments, whereas equivalent staff
based outside the UK took home
more than double that, with average
pay of £2.59m of which £2.14m was
bonus.
Most of the more highly paid staff
are based in emerging markets in
Asia and Latin America, where HSBC
tion during its annual results
released on Monday. headline sponsor
The numbers show that base champagne reception sponsor
salaries are relatively more important
for UK staff, with three quarters of
their pay coming from bonuses versus
over four fifths for non-British official venue partner
employees.
The disparity in pay between UK
and non-UK staff will fuel fears that
the City could lose out in the competi-
tion for top talent.
The data follows revelations by City
A.M. last month that “regretted loss-
es” – the departure of top-rated staff
that the banks have tried to keep – are
on the rise at both Barclays and RBS.
4 News
Horta-Osorio speeds-up Lloyds sale plans on day one
BANKING
▲
BY RICHARD PARTINGTON
THE NEW chief executive of Lloyds is
stepping up plans to sell more than 600
branches operated by the state-
backed lender.
António Horta-Osório, the
former head of Spanish
bank Santander’s UK opera-
tions, took his place at the
helm yesterday.
His tenure began with a
bang, as the bank revealed
it would push ahead
with plans to dispose of
ANTÓNIO HORTA-OSÓRIO
billions of pounds worth of assets to
meet European Commission competi-
tion rules.
The so-called “state aid” require-
ments, drawn up following the
lender’s £23bn bailout from the UK gov-
ernment and its purchase of crisis-hit
rival HBOS, force Lloyds to reduce its
influence.
However, the bank yesterday said it
would not announce the closure of any
more branches in the UK this year.
Instead, it will look to find a buyer for
Cheltenham & Gloucester, Lloyds TSB
Scotland and about 200 UK Lloyds and
Halifax branches by the end of this year.
Potential suitors could include Virgin
Money and NBNK – the banking ven-
ture operated by City grandee Lord
Levene and former Northern Rock boss
Gary Hoffman.
Investment bankers are currently
being lined up by Lloyds to oversee
the sale – dubbed “Project Verde” – with
an appointment expected over the com-
ing weeks.
An accelerated sale could pre-empt
the government’s Independent
Commission on Banking, due by the
end of this year, with the hope that it
could stave off a full-scale break up of
the bank.
Citi sells Egg
credit cards
▲
to Barclays
FINANCIAL SERVICES
BY ELIZABETH FOURNIER
BARCLAYS is buying the UK credit
card portfolio of Egg from the
online bank’s US owner Citi, trans-
ferring more than 1m customer
accounts to the Barclaycard brand.
The value of the deal, which is sub-
ject to regulatory approval, has not
been disclosed, but Barclay’s said it
was buying the assets at a “signifi-
cant discount” to the gross value of
the accounts involved. Citi expects to
realise an after-tax gain from the
sale.
Due to divergent accounting poli-
cies at the banks, Barclays and Citi
released different valuations of the
portfolio.
Barclays’ calculation of £2.3bn
uses IFRS standards, which includes
any overdue accounts from the past
12 months. Citi’s US GAAP treat-
ment of the figures means those
accounts are excluded – valuing the
portfolio at £1.8bn.
Barclays group finance director
Chris Lucas said he expected the deal
to exceed the financial return tar-
gets set out at the bank’s recent
results announcement.
In October, when a potential deal
with Barclays was first mooted, ana-
lysts valued the online bank at
between £300m-£500m.
UBS names four new securities
co-heads in a division reshuffle
▲
BANKING
UBS restructured its profitable securi-
ties division yesterday, unveiling four
co-heads that will cover equity and
fixed income, currencies and com-
modity sales and trading.
The Swiss bank told staff in a memo
that co-heads Rajeev Misra, Yassine
Bouhara, Francois Gouws and Roberto
Hoornweg will report to its invest-
ment bank head Carsten Kengeter.
CITYA.M. 2 MARCH 2011
Horta-Osório has also initiated a
strategic review of the bank’s entire
retail and commercial operations,
which will report to the market by the
end of June.
Known as a ruthless cost cutter,
Horta-Osório replaces long-serving
chief executive Eric Daniels, a career
retail banker who received a £1.45m
deferred share bonus for his final year
in charge.
Horta-Osório started his career at
Citibank Portugal where he was head of
capital markets. He then worked for
Goldman Sachs in New York and London
before joining Santander in 1993.
Egg, which is based in Derby, has
long been the subject of takeover
speculation, with owner Citi under
pressure to shrink its balance sheet
after its bailout by the US govern-
ment.
Citi bought Egg from British insur-
er Prudential in 2007 for £575m.
The sale will affect 1.2m Egg cus-
tomers, who will have to wait for the
deal’s final terms to find out if they
will still be entitled to their existing
rewards programme once the two
systems are integrated.
Holders of Egg credit cards can
currently get cashback on a variety
of purchases, including Apple iPads
and iPods, Debenhams products, and
RAC home insurance.
New customers of the Egg Money
card also get one per cent cashback
on all purchases between £500 and
£20,000, up to a value of £200 each
year.
ANALYSIS l Barclays
314.40
340 1 Mar
p
320
300
280
260
21 Dec 10 Jan 28 Jan 17 Feb
But Dmitrios Psyllidis, its global co-
head of fixed income, is to leave the
bank to return to his family in his
native Greece. A UBS spokesman said
Psyllidis “had done a brilliant job”
and was leaving for personal reasons.
The reshuffle has however not
named a position for head of securi-
ties Neal Shear. The rejig follows a
major securities division recruitment
drive by UBS over the past year.
CITYA.M. 2 MARCH 2011
TNK-BP talks
up chances of
Rosneft deal
▲
ENERGY
BY MARION DAKERS
EXECUTIVES at TNK-BP are keen to join
BP’s Arctic drilling deal with Russian
oil company Rosneft, its chief financial
officer confirmed yesterday.
“In relation to Arctic opportunity it
has been accurately reported that
management at this point has pro-
posed that the board consider partici-
pation in the Arctic opportunity,”
Jonathan Muir told a conference call,
adding that the board was still consid-
ering the proposals.
The board of TNK-BP, which includes
members from joint investors BP and
Russia’s AAR, is due to meet in Berlin
on Friday to consider TNK’s plan to
join the venture.
Muir told reporters yesterday that
TNK’s balance sheet could withstand
the level of investment needed to par-
ticipate in the £10bn deal.
The firm said in its 2010 results yes-
terday that net debt fell 21.6 per cent
to $4.68bn (£2.88bn) during the year as
revenues rose 28.4 per cent to $44.6bn.
TNK-BP also raised $773m yesterday by
selling gas field rights to Gazprom.
Rosneft’s share-swap and explo-
ration deal with BP was announced in
January, but two weeks later AAR won
an injunction to halt progress, claim-
ing TNK-BP’s rights to BP operations in
Russia had been breached.
The three firms are due to enter for-
mal arbitration talks next week.
Rosneft has not publicly ruled out
bringing TNK-BP into the deal, but its
chief financial officer fuelled doubts
last month, telling reporters: “They
have neither the technology, nor the
experience, nor the personnel.”
ANALYSIS l BP
492.40
520 1 Mar
p omy.
480
440
6 Dec 24 Dec 18 Jan 28 Jan
FORMULA ONE’S WILLIAMS SEES IPO SUCCESS
WILLIAMS priced its Frankfurt listing at €25 per share yesterday, putting the Formula
One motor racing team’s founders on the road to around €52m (£44m) from selling some
of their stake. The IPO valued the firm, founded by Frank Williams and Patrick Head, at
€250m. Around 97 per cent of the shares were bought by institutional investors. Shares
25 Feb are due to start trading in Frankfurt today.
News 5
Ministers could
find savings of
£3.5bn per year
POLITICS
▲
MORE THAN £3.5bn of savings could
be found by the government each year,
a new report claims.
The savings, equivalent to 75,000
average salary jobs, are outlined in a
new report being handed to ministers
tomorrow by business lobby group
London First.
Set to coincide with a speech by
business secretary Vince Cable at the
Mansion House, the organisation’s
“growth white paper” lists a raft of rec-
ommendations to boost growth.
More than £1bn of the savings could
be made if the government were to say
it planned a new, lighter tax regime.
According to a Policy Exchange
report, 11 per cent of individuals work-
ing in the financial services sector said
they were considering a move away
from Britain because of tax.
The London First report estimates
that if only one quarter of them left,
£1.375bn would be lost to the UK econ-
Airports operator BAA yesterday
backed London First’s call to get rid of
“needless red tape” to boost UK
tourism.
A business department spokesper-
son said: “We are working closely with
business on the growth review to
remove barriers, promote and support
Picture: ACTION IMAGES innovation and entrepreneurialism.”
 6 Focus on Persimmon CITYA.M. 2 MARCH 2011

Profits double
at Persimmon
Persimmon group chief exec-
utive Mike Farley warned the
weak mortgage market
would continue to hit sales
this year
as sales falter
Picture: MICHA

▲
PROPERTY
THEINER/CITY A.M. BY MARION DAKERS
HOUSEBUILDER Persimmon warned
ANALYST VIEWS: WHAT DO YOU THINK OF PERSIMMON’S RESULTS? yesterday that the weak mortgage
market will continue to dampen sales
By Marion Dakers this year, after almost doubling its pre-
tax profit to £153.9m in 2010.
CHRIS MILLINTON| NUMIS RACHAEL WARING| PANMURE While Persimmon sold 4.5 per cent
“We are keen to grow our margins
and I think volumes for 2011 are prob-
ably going to be similar to where we
left it in 2010.”
Persimmon said 28 per cent of its
sales volumes in 2010 were supported
by shared equity schemes such as the
government’s HomeBuy Direct pro-
gramme that ended last summer,

“ “
more homes last year, the firm said allowing first-time buyers easier access
completions tailed off towards the end to the housing ladder.
We feel the 2010 results are strong and The group appears to have enjoyed a of 2010 amid a tough mortgage mar- “We will continue to provide sup-
the margin progress is creditable. We continue to good start to 2011, in line with commentary from ket and economic fears. port for a little while yet, although
“This scale of [mortgage] activity what we are seeing in the market cur-
hold Persimmon in high regard with respect to its other housebuilders, giving us confidence in full remains significantly below normal rently is that people are keen to take
landholdings and management. On trading the year assumptions. Underlying pricing is said to levels and reflects the much reduced advantage of part-exchange offers,”
group states that the year has started encourag- remain stable, but operating margins have

” ”
risk appetite of mortgage lenders,” the said Killoran.
ingly with visitors up 10 per cent, cancella- improved further, meaning the value of for- firm said in a statement. Persimmon shares lost 3.2 per cent
tion rates low and reservations up. ‘Buy’. ward sales continues to increase. The Bank of England yesterday yesterday to close at 455.3p.
echoed this sentiment, showing that
mortgage approvals in January were FAST FACTS | PERSIMMON
KEITH BOWMAN| HARGREAVES LANSDOWNE around half the long-term average.

“
Persimmon’s sales revenue last year ● The York-based housebuilder is one of the
rose 10.5 per cent to £1.57bn, as sale biggest in the country, selling 9,384 properties
Like rivals, Persimmon has sculpted a rebound in profitability, reducing costs, adjusting the sales mix away from prices rose 5.7 per cent to £167,249. last year.

”
buy-to-let flats and towards family homes, whilst increasing its dependency on the south of the country, as the UK north- “We have always been a margin- ● Persimmon bought 165 new sites last year
south divide continues to intensify. Strong cash flow has remained the focus. focused business,” chief financial offi- to profit from the continued lack of new homes.
cer Mike Killoran told City A.M..
CITYA.M. 2 MARCH 2011 Focus on ECJ insurance ruling 7

HOW THE INSURANCE RULING COULD AFFECT YOU

Q. WHAT IS THE RULING? risk factor in insurance contracts

A. The European Court of Justice
(ECJ) has ruled that insurance
companies cannot charge different
premiums to men and women based
on their gender. It also bans use of
actuarial factors to calculate men’s
and women’s pension contributions.
constitutes discrimination.”
Q. WHICH PRODUCTS WILL BE
AFFECTED?
A. The ruling will affect car, life
and medical insurance premi-
ums and annual annuity payments
to men and women. Insurers use sta-
tistical differences between men and
Q. HOW MAY
PREMIUMS
Q&A
CHANGE?
A. Women are expected to have to
pay 25-50 per cent higher insur-
ance premiums while men pay
slightly less. Men approaching retire-
ment could lose about eight per cent
of their annuity rate while women’s
rates could rise by six per cent, the

Q. WHY HAS IT HAPPENED? women such as frequency and seri-

ousness of car accidents and life
ABI said. Women’s life premiums
could rise by a fifth while men could

A. The ruling amends the Gender

Directive, which came into
effect in 2004 but allowed insurers to
continue to use gender in risk profil-
ing. A Belgian consumer group, Test-
Achats, challenged the exemption
and the ECJ upheld the challenge,
expectancy to calculate premiums. It
means women pay up to half the car
insurance premiums of men, but
receive lower annuity payments.
Q. WHEN DOES IT START?
pay ten per cent less. Insurance firms
may also start to look at different
ways to calculate premiums, such as
using in-car devices that monitor
when and how you drive, or pay-as-
you-drive schemes that charge you by
distance driven. Pension benefits will

Insurers like female-focused brand Sheila’s Wheels disagree with the ruling Picture: REX
saying: “Taking the gender of the
insured individual into account as a
A. All policies must be non-discrim-
inatory from 21 December 2012.
be repriced and tax credits and tax-
free lump sums will be recalculated.

City backlash
against ECJ
insurance rule
logic, insurers will be barred from
▲

INSURANCE
BY ALISON LOCK
MOTOR insurers and annuity
providers attacked a European Court
of Justice (ECJ) ruling that banned
insurers from using gender to calcu-
late policy prices yesterday.
The ruling will mean women no
longer pay lower car insurance premi-
ums than men despite male drivers
under 21 being twice as likely as
young women to have a crash.
Annuity providers will also be
unable to offer men higher payments
than women although they live about
two-and-a-half years less. Life and
medical cover will also be affected by
the ban, which takes effect in 2012.
City experts condemned the move.
“In defiance of common sense and
pricing their products on the basis of
risk,” said Ros Altmann, director-gen-
eral of over-50s insurer Saga.
The Association of British Insurers
estimates the ruling will add 25 per
cent to car insurance for women
under 25; reduce men’s retirement
income by eight per cent and add 20
per cent to women’s life insurance.
Darren Philp at the National
Association of Pension Funds said the
ruling would “lead to a worsening of
people’s pension incomes.”
Mohammad Khan, director of PwC’s
actuarial practice, said: “The majority
of motor claims arise from young
male drivers and there is a real risk
that if their premiums drop, it could
encourage them to buy more powerful
cars causing even worse accidents.”

DO YOU AGREE WITH THE NEW EUROPEAN RULING?

Interviews by Maria Tadeo

ALEX SHEPHERD | ROYAL BANK OF SCOTLAND

“The cost of insurance should be linked to
risk assessment and women are considered
to be safer drivers. How is this supposed to
be sexist? Unisex rates are a punishment
for responsible female drivers.” London to
RAMESH SIVARAM | WILLIS INSURANCE
“Why should women pay less than men for
Copenhagen
from
29
the same service? Lower insurance premi-
ums for females only is definitely a case of
discrimination. Insurance cost should
£ .99 single
depend on individual needs, not gender.” inc. taxes

HEATHER ANDREWS | INSURANCE BROKER

“Women are safer drivers and have fewer
accidents than men. This is not sexism but
logic; we make fewer claims and cost less We fly from London Gatwick, London Stansted and Manchester. Price correct on 14 February for travel between
in terms of insurance. Why should we be 28 February and 17 April 2011. Variable charges for hold baggage apply and some payment methods attract a
handling fee. See website for details. Photo credit: Nicolai Perjesi.
punished by European laws?”
 8 News
HMV shares
dive as profit
warning bites
▲
RETAIL
BY JOHN DUNNE
HMV shares plunged yesterday after
the struggling retailer warned that
its profit was likely to miss targets.
The book, CD and DVD company
also said it would have to renegotiate
some of its loan agreements as it
struggles to steady the business.
HMV insisted it is not yet in breach
of any of its lending rules and its
banks remain supportive, but says it
is now trying to renegotiate terms.
But it admitted that its net debt
was expected to be not less than
£130m.
Meanwhile the trading statement
said pre-tax profit for the year was
likely to be below the £45m forecast.
HMV paid £18.25m for a 50 per cent
share in the Aim-listed Mama enter-
tainment group in 2009. The deal
handed HMV branding rights with
Hammersmith, for example, to be
renamed the HMV Apollo. But the
move to diversify also saddled it with
more debt.
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CITYA.M. 2 MARCH 2011
Troubled HCL
loses another
board member
HEALTHCARE
▲
CRISIS-HIT medical recruiter
Healthcare Locums lost another direc-
tor yesterday, after its chief operating
officer Mo Dedat stepped down from
the board with immediate effect.
HCL, whose shares remain suspend-
Chief executive Simon Fox yester- ed from AIM pending an internal
day defended the company’s strategy Chief executive Simon Fox defended the company strategy despite the profit warning probe into accounting problems, now
in the face of the competition from has four directors including suspend-
downloads ANALYSIS l HMV Group ed chief financial officer Diane Jervis.
He said: “We are confident that our
p
1 March Chairman Peter Sullivan, who
plans will ensure HMV’s long-term 35 Isues profit warning: joined the firm last month, said Dedat
and sustainable future.” chairman Robert will continue to work for the company
The company is closing 40 HMV 6 Jan 2011 Swannell stands down but has left the board to help “intro-
Reports poor replaced by
stores and 20 of its Waterstone’s book- Christmas performance Philip Rowley
duce new and independent talent”.
shops, in a bid to rein in costs. and announces plans The company refused to say
Its shares plummeted 19.6 per cent
yesterday to 16.69p after having been 30
to close 60 stores
19 Jan whether or when new directors will be
appointed.
Shares slump after
boosted last week amid speculation some suppliers of CDs 28 Feb “There are no strict rules for AIM
that Russian tycoon Alexander and DVDs to the retail Shares rise after rumour companies’ corporate governance, but
Mamut was planning a bid for chain are no longer that Waterstone’s you would expect as a minimum a
Waterstone’s. able to obtain could be sold to a chief executive and a chief financial
25 credit insurance Russian billionaire
Arden analyst Nick Bubb said yes- Alexander Mamut
officer, and a balance of non-execu-
terday: “The shock is that HMV has tives,” Philip Quigley, head of transac-
flagged that year end net-debt will be tion services at Smith & Williamson,
way higher than expected at around told City A.M..
£130m (we had a £70m debt forecast), An investigation into HCL’s accounts
because of a working capital squeeze 20 is due to report its findings “in a mat-
and what it calls “changes in product ter of weeks”.
mix”. The firm’s founder Kate Bleasdale
HMV also confirmed Philip Rowley, a was suspended and stepped down two
former chairman and chief executive 16.69 weeks ago, followed by several other
1 Mar
of AOL Europe, will replace Robert 15 board members amid a shareholder
Swannell as non-executive chairman. Jan 2011 Feb Mar rebellion.
3 cheers for
E.ON customers.
Now E.ON customers can cap
their energy prices for 3 years.
Helping you control your energy bills
We’re on it
CITYA.M. 2 MARCH 2011 News 9

Profits grow at
JLT sees soft
COST-CONSCIOUS BOOST MONEYSUPERMARKET

Provident as
collections rise
rates ending
▲

FINANCIAL SERVICES

SHARES in subprime lender INSURANCE comments about companies under-

Provident Financial closed more than
five per cent lower yesterday despite
its profits rising 11 per cent in 2010.
Growing demand for loans and bet-
ter debt collection pushed pre-tax
profit to £144.5m from £130.1m in
2009, while earnings per share also
gained ten per cent to 78.6p, from
71.4p in 2009.
Profits at Provident’s credit card
division Vanquis soared 89.4 per cent
last year, to £26.7m from £14.1m in
2009, as its customer numbers grew
by 28 per cent. Profits also rose slight-
ly to £129m in its home credit arm
after a pick-up at the end of 2010.
But the market had expected a
higher profit result after the group,
which lends to below-average earners,
said its results would be better than
forecasts. Its shares ended down 5.18
per cent at 979.5p.
Chief executive Peter Crook said it
was “well placed to continue to deliv-
er good quality growth” in 2011.
▲
BY ALISON LOCK
INSURANCE broker Jardine Lloyd
Thompson (JLT) pushed into emerging
Asian and Latin American markets to
deliver double-digit profit growth in
2010, it said yesterday.
JLT beat market expectations with
underlying pre-tax profit growth of 24
per cent, to £130.1m from £104.8m in
2009. Underlying earnings per share
rose 20 per cent to 40.5p from 33.8p the
previous year as it shrugged off the
insurance market’s current low premi-
um environment.
Chief executive Dominic Burke told
City A.M. he felt the insurance market
was close to “an inflection point” as
companies started to show signs associ-
ated with returning to premium rises.
COST-CONSCIOUS consumers helped boost underlying profits at price comparison web- “We are seeing some important indi-
site moneysupermarket.com 14 per cent to £41m in 2010, it said yesterday. The site, cators to lead us to suggest we may be
whose adverts feature comedian Omid Djalili (pictured, left) and Starsky And Hutch coming to the end of the softer mar-
actor David Soul (right), grew revenues nine per cent to £148.9m as demand for its insur- ket,” he said. “We are seeing people
ance, money and home services business increased. It said 2011 had also started strongly. write business for market share, and
writing without discipline.
“There seems to be evidence indicat-
ing that the market is getting to a turn-
ing point. We see this inflection point
coming because the current model is
not sustainable.”
JLT’s total revenue increased 21 per
cent to £746.3m from £619.3m in 2009
including seven per cent organic rev-
enue growth, seven per cent growth
from acquisitions and seven per cent
due to exchange rate benefits.
Revenues rose 17 per cent to
£576.6m in its risk and insurance divi-
sion, which accounts for almost 80 per
cent of its business through its retail
and London market lines.
Its retail business grew 23 per cent as
Latin American revenues rose 44 per
cent while Asia revenues rose 26 per
cent. In contrast, its European arm
remained flat at one per cent growth.
“We are very excited about our per-
formance in developing markets,”
Burke said.

RBS losses weigh

on brand image
but Lloyds is flat
tion talking about each of them. HSBC
only announced its numbers on
Monday but its attention score is also
now starting to rise.
LLOYDS FLATLINES
So how have recent announcements
affected buzz scores (all positive men-
BRANDINDEX tions in attention minus any negative
STEPHAN SHAKESPEARE ones)? Following its £2.2bn profit
announcement, Lloyds has main-
tained an essentially flatline score

T
HE beauty of continuous daily
data is that it allows for an
instant assessment of how the
public is reacting to advertising
or events.
Over the last week we have seen
around the zero mark. i.e. a sixth of
people are hearing positive things
and a sixth of people negative things
about them – so more people are
hearing news, but the proportion
hearing good versus bad remains the

The Cass Executive MBA is

three of the major banks – HSBC, same.
Lloyds Banking Group and RBS – RBS’s £3.6bn losses, however, have
announce their annual results and we seen its buzz scores nosedive again.
can already look at BrandIndex to see The -8 reading at the start of last week

proof you’re going places.

how the public has reacted to that. had fallen to -29 by Monday, indicat-
ing that nearly all news heard about
PAY ATTENTION RBS has been negative.
The first thing to note is the attention Although it is very early days for
score – this is the total number of peo- HSBC, it saw a minor bump in buzz on
ple who have heard anything about a Monday (the day it announced) and Ranked second in the UK, fourth in Europe and tenth in the world by the
brand in the past two weeks, whether over the next couple of days we will be
it be positive or negative. able to start fully appreciating the Financial Times in 2010, the Cass Executive MBA is an intensive yet flexible
Over the past week RBS and Lloyds’ impact for the bank. two-year programme for ambitious professionals keen to accelerate their
attention have both doubled with Stephan Shakespeare is founder and chief career development while remaining in full-time employment.
approximately a third of the popula- executive of YouGov
The Cass Executive MBA is delivered in the heart of the City of London
ANALYSIS l Banks' attention scores ANALYSIS l Banks' buzz scores and blends academic excellence with practical relevance to attract the
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w
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Lloyds TSB -30 Lloyds TSB
0
22 Feb 24 Feb 26 Feb 28 Feb 22 Feb 24 Feb 26 Feb 28 Feb
 The Capitalist
10 CITYA.M. 2 MARCH 2011
EDITED BY
HARRIET DENNYS
GOT A STORY? EMAIL
thecapitalist@cityam.com

HEDGE FUND TYCOON All being

TRIFON NATSIS IS
SAFE AS HOUSES
GOOD news for hedge fund tycoon
Trifon Natsis, co-founder of Brevan
Howard Asset Management, as The
Capitalist can reveal his planning appli-
cation for major improvements to his
Hampstead home has been recom-
mended for approval by Camden
Council.
The planning officer dealing with
the application has recommended the
scheme receives the go-ahead in an
internal report, as he doesn’t believe
the lavish development will have a neg-
ative impact on the character of the
Hampstead conservation area. Nor
does he think it poses issues of struc-
tural instability.
All being well, then, the grand
designs will get the green light from
Camden’s councillors at the
Development Control Committee
meeting on 17 March, and Natsis’
home will soon be the talk of the
neighbourhood.
well, the
grand
designs
should get
Of particular note, The Capitalist the green
hears, is the south-facing terrace
ringed with a balustrade, which light from
sounds like the perfect place for Natsis
to host a housewarming party. Just a councillors
shame that since Natsis is now based
in the fund’s Geneva office – where he on 17 March
also has a home – those London-based
soirees may be limited.
TRUSTING FUNDS
BANKERS beware: the world of private
funds will be exploded next Monday
when Justin Cartwright’s latest novel
Other People’s Money hits the book-
shelves.
Cartwright’s fiction focuses on an
“old posh bank in trouble”, Tubal & Co,
and as part of his research he inter- Trifon Natsis’
viewed scores of characters at small Hampstead home
investment firms to see just how far is getting an exten-
they would go to prop up a failing sion
bank.

He recalls:

@
“I asked [one
banker]
whether it
ANIMAL KINGDOM
IT’S a leap year for Deloitte, after
would be pos- the firm’s work to help preserve
sible that my the Rubeho Forest in Tanzania was
small – fiction- recognised by having a species of
al – private frog named after it – the
bank would Nectophrynoides deloittei, to be
pad its assets in precise.
a crisis by using If this trend for renaming rep-
family money, or tiles after global corporates con-
whether they tinues, things could get very
would use client silly indeed, with the
money. PricewaterhouseCooper lizard
Without a going head to head with the
moment’s hesita- Ernst & Young gecko. Safe to
tion he said they say, though, that the sea birds of the
would use client Gulf of Mexico will be spared being
money, which could be easily chan- tarred with oil giant BP’s “safety
nelled into the bank ... before any regu- record” brush.
lators or auditors started to ask
questions.”
So who is this source – “the most
controversial person, no question” –
that Cartwright questioned? “Someone
who deals in international trusts,” was
all the author would reveal, adding
that “none of [the bankers] wanted to
be quoted”. Funny, that.

“ My business needed another

office, but it was important that

I DIDN’T BREAK
THE BANK ,
or get tied down to a long lease.
I now have the best of both worlds. ”

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MORE NEWS Call: 0800 056 1848 quoting

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www.cityam.com
CITYA.M. 2 MARCH 2011
Silver boom boosts Fresnillo
MINING
▲
BY MARION DAKERS
MEXICAN silver miner Fresnillo was
yesterday the latest firm to post
bumper gains from the commodities
boom, more than doubling its pre-tax
profit to $1bn (£615m).
The firm said the price charged for
its gold and silver rose 27 and 40 per
cent respectively during the year, on
production up 33.4 and 1.7 per cent –
all record highs for Fresnillo.
The company had no debt and a
cash position of $559.5m at the end
GKN profits
jump on car
sales growth
INDUSTRY
▲
BY MARION DAKERS
ENGINEERING group GKN quadru-
pled its profit to £363m last year, the
firm said yesterday, on the back of
strong sales of car and plane parts.
The FTSE 100-listed firm, which
makes engines and frames for Airbus
and Boeing, said total sales rose 20 per
cent to £5.08bn.
“The aerospace market has
remained subdued although civil
aerospace is now moving into a strong
growth phase,” said chief executive Sir
Kevin Smith.
“The ramp up of a number of new
aircraft programmes and further
increases in civil volumes should
return aerospace to its strong growth
trend.”
The company said car sales are
expected to grow five per cent in 2011,
with strong demand coming from
China and India making up for flat
production in Europe.
GKN produced parts for 74.6m light
vehicles in 2010 – a 24 per cent rise on
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EMPOWERMENT 
 
of the year, more than enough to
fund its planned capital expenditure
as it looks to expand or start six
mines in 2011.
The London-listed miner said it
expects silver production to rise five
per cent this year to 44m ounces.
Gold output is anticipated to
increase five to six per cent to around
390,000 ounces, not as fast as the
eight per cent rise the company had
targeted in January.
However, the firm said it was on
track to produce 65m ounces of silver
and over 400,000 ounces of gold
the previous year. It reinstated its divi-
dend payments with an end-of-year
payment of 3.5p per share.
Evolution Securities said the firm
was well-placed to double its earnings
per share in 2011, possibly through
acquisitions, after producing “a very
solid set of numbers”.
“The market outlook remains posi-
tive and we expect further positive
momentum,” added Investec analyst
Andrew Gollan.
GKN investors reacted badly to the
figures, sending the shares down four
per cent to 201.50p.
ANALYSIS l GKN
240
p than expected, suggesting it was the
201.50
1 Mar
220
200
6 Dec 24 Dec 18 Jan 7 Feb
    
  
 
   

  
annually by 2018.
Fresnillo said its production costs
were in the lowest quartile of the
industry at $3.30 an ounce for silver
and below $400 an ounce for gold.
“For 2011, despite the uncertain
outlook for economic and metal price
performance, we expect that our
high quality resource base and low-
cost production profile will enable
Fresnillo to deliver growth,” it said in
a statement.
Fresnillo shares gained slightly
after the announcement, closing up
0.13 per cent at £15.96.
Chief executive Sir Kevin Smith said strong sales of car and plane parts boosted figures
Sell-off creates opportunity to
get exposure to surge in car sales
INVESTORS in GKN voted with their
feet yesterday. Pre-tax profit from
continuing operations might have
quadrupled to £363m, but in the
event it wasn’t good enough. The
shares closed down by four per cent
at 201.50p.
We think the reaction is likely
overdone. For most analysts, the
results were either bang on or better
outlook that spooked the markets.
There was the usual stuff about
“uncertainty around market condi-
tions” in 2011, but there is plenty of
positive sentiment too.
The automotive sector is likely to
enjoy particularly strong growth in
2011, with external forecasts show-
28 Feb
ABARTH 500 - WITH ATTITUDE
Xchanging warns of hard
road after earnings dip
▲
PROFESSIONAL SERVICES
OUTSOURCING firm Xchanging failed
to hit expectations as it warned the
year ahead would be a period of transi-
tion.
The Cambridge-based firm reported
a 0.8 per cent decline in 2010 adjusted
operating profit to £55.5m, down 0.4
per cent on the previous year.
It also reported a statutory operat-
ing loss of £55.6m after one-off excep-
ing that global light vehicle produc-
tion should reach just over 78m vehi-
cles, an increase of 5 per cent, thanks
to China and the US. That is good
new for GKN’s all-important
Driveline business, which is turning
80 per cent of quotations into busi-
ness. Elsewhere, especially in aero-
space, the picture is less good.
But there is still much to recom-
mend in these shares, which are
well-exposed to the cyclical recovery
in the automotive sector. With the
shares trading on 10x 2011 earnings,
investors could do much worse.
BOTTOMLINE
Analysis by David Crow
News 11
tional costs of £112.5m.
Last month, Xchanging warned
that profits would be below the lower
end of analyst estimates, citing a
range of £55.5m to £80.2m.
The company, which operates back-
office administration, announced an
action plan to reshape the business.
Executive chairman of Xchanging
Nigel Rich said: “This will be a year of
transition as we address and resolve
clearly defined problems.”
NEWS | IN BRIEF
Lavendon pre-tax profits slide
Industrial equipment rental firm
Lavendon Group posted a slight dip in
underlying pre-tax profit to £13.1m yes-
terday, which it blamed on the continued
market slowdown. The company, which
rejected two takeover offers from TVH
and Ashtead in the last three months,
said revenues were broadly flat at
£225.4m and said the severe weather
during 2010 heavily impacted sales.
Ricardo celebrates contract wins
Engine-maker Ricardo said its half-year
profit from continuing operations rose
32 per cent to £5m, after an 11 per cent
rise in revenue from new contracts. The
firm said it expects further contract
wins this year to build on its £117m
order book, which includes an agree-
ment to supply the transmission for the
2012-2014 World Series by Renault.
Meggitt expects recovery
Meggitt, which supplies flight displays
and wheels to planemakers, reported a
nine per cent rise in full-year underlying
profit to £256m yesterday, boosted by
strong growth at its civil aerospace and
energy units. Revenue rose one per cent
to £1.162bn, helping to fund a nine per
cent dividend hike to 9.2p. The firm
expects medium-term organic growth of
between six and seven per cent.
Cookson reinstates dividend
Shares in Cookson Group rose five per
cent yesterday after the industrial mate-
rials group posted a forecast-beating
surge in full year pre-tax profit, reinstat-
ed its dividend at 11.5p and predicted an
even better performance in 2011. The
firm said headline profit before tax rose
193 per cent to £222.1m in 2010.
BOOK YOUR
TEST DRIVE
TODAY!
 12 Economics
BoE: Supply of
money in Britain
takes an upturn
UK ECONOMY
▲
THE Bank of England’s overall meas-
ure of the money supply grew by 0.8
per cent in January, it announced yes-
terday.
Over 12 months total “M4” fell by 1.7
per cent, but some analysts point to
signs of a pick up in the figures.
The Bank’s preferred “core” money
measure – excluding intermediary
non-bank financial companies – rose
0.7 per cent in the first month of the
year, and was up 4.9 per cent annu-
alised in the three months to January.
“This is above a level likely to be con-
sistent with the two per cent inflation
target over the medium term,” said
Henderson economist Simon Ward.
“Governor Mervyn King has repeat-
edly cited sluggish broad money
growth as a reason for nonchalance
about the current inflation overshoot,”
Ward said.
“But an increase in velocity has the
same economic impact as monetary
expansion – and velocity climbed 2.1
per cent in 2010, the largest annual
rise since 1979.”
The upturn in the money supply
was largely driven by the government
sector, analysts noted.
“A breakdown reveals UK institu-
tions to be a significant net seller of
paper in January,” said David Owen,
economist at Jefferies International.
Eurozone on track, says Rehn
▲
EUROZONE ECONOMY
GROWTH in the Eurozone will hit 1.6
per cent in 2011, higher than previous
forecasts of 1.5 per cent, the EU’s eco-
nomics chief said yesterday.
However, commissioner Olli Rehn
warned that oil prices will average
$100 (£61) this year, on the day that
consumer price inflation in the euro
area was announced at 2.4 per cent in
February.
Inflation was up from a downward-
ly revised 2.3 per cent in January.
Factories still
growing at
record speed
UK ECONOMY
▲
BY JULIAN HARRIS
BRITAIN’S manufacturing boom con-
tinued into February, maintaining
the record high level of growth seen
at the start of the year, according to a
business survey released yesterday.
The sector recorded 61.52 in last
month’s purchasing managers’
index, virtually unchanged from
January’s level of 61.49 – the highest
since records began in 1992.
All scores above 50 indicate eco-
nomic growth.
Expansion in the factory industry
has accelerated for five straight
months, up eight points in the index
from September’s reading of 53.5.
However, the survey exposed more
danger for inflation in the UK, with
output prices jumping at the second
fastest speed in the records’ history.
Factory gate prices shot up to 63.6
in the index, up 6.5 points in the last
four months.
“Inflationary pressures remain ele-
vated, which may raise a further eye-
The ECB’s latest interest rate deci-
sion is announced tomorrow.
Meanwhile, manufacturing surveys
across the euro area were yesterday
confirmed at 59 in the Markit purchas-
ing managers’ index (PMI), the fastest
rate of growth since June 2000.
And cost inflation peaked at record
highs in all single currency countries
apart from Ireland and Greece, the
survey revealed. Across the whole
Eurozone, inflationary pressures
surged as both output and input
prices rose at a record pace.
CITYA.M. 2 MARCH 2011
Manufacturing
remains the
UK’s fastest
growing sector.
Picture: GETTY
brow amongst the members of the
Bank of England’s Monetary Policy
Committee,” said Rob Dobson of
Markit, which conducts the survey
along with the Chartered Institute of
Purchasing and Supply.
Employment in the UK manufac-
turing sector also hit a record rate of
growth in February, climbing to 61.7,
from 59 in January, and 57.9 in
December. ANALYSIS l UK manufacturing: industry growth and input price inflation
90 65
In September, job creation was vir-
tually flat, at 50.24, yet has rebound-
60
ed strongly since. 80
“A jobless recovery would be a weak
55
recovery, so it is positive to see jobs 70
growth hit a fresh record high,”
50
Dobson said.
60
“However, the strong performance
45
of the sector, which makes up just 13
per cent of GDP, can only partly offset 50
40
the weaker parts of the economy such
as services and construction,” he 40 Input Price Index
warned. 35
Manufacturing PMI
PMI data for the construction Source: Markit and Barclays Capital
industry is released today, while 30 30
Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Feb 11
progress in the UK’s largest sector --
services -- is published tomorrow.
Caution rules on high street as
borrowers look to repay debts
Factory growth in the region was “December’s rise in credit likely
▲
UK ECONOMY
led by its largest economy, Germany, reflected people borrowing modestly
along with Austria and the APPETITE for borrowing has dropped to buy Christmas presents and cele-
Netherlands. In all three nations, in 2011, data from the Bank of brate the festive season,” comment-
manufacturing PMI showed record lev- England revealed yesterday. ed Howard Archer of IHS Global
els of growth. Consumer credit showed a net Insight.
Unemployment also fell in Germany repayment of £333m in January, Credit card lending increased by
in February, from 7.4 per cent to 7.3 per appearing to reflect caution on the £75m in the first month of the year,
cent. high street, and people’s desire to but other loans saw a net repayment
The fall reflected positive labour reduce personal debts. of £407m.
market news for the Eurozone as a Net borrowing had averaged The decline caused the 12-month
whole, where the unemployment rate around £200m over the previous six growth rate in consumer credit to
declined to 9.9 per cent in January, months, while in December credit slip to £0.8bn, from £1.1bn in
from 10 per cent at the end of last year. had risen by £793m. December.
CITYA.M. 2 MARCH 2011
Bernanke dismisses oil price
threat as US recovery rolls on
▲
US ECONOMY
SOARING oil prices pose only a “tempo-
rary” threat to inflation, Federal
Reserve chairman Ben Bernanke said
yesterday.
The dollar, tumbling to a three and
a half month low against the euro,
received little support from
Bernanke’s testimony to the Senate’s
banking committee, in which he
showed no inclination of a move
towards monetary tightening.
“The tone of his remarks suggest
that the turn in the rate regime is dis-
tant, and still likely more distant than
UK housing market in moderate pick up
▲
HOUSING
SIGNS of life emerged from the UK’s
ailing housing market yesterday,
with mortgage approvals edging
upwards and house prices record-
ing an unexpected rise.
Approvals rebounded by seven
per cent from December’s slump, to
number 45,723 in January, accord-
ing to the Bank of England.
what the market is now expecting,”
said Eric Green of TD Securities.
However, Bernanke also said the
threat of deflation is now “negligible.”
His testimony coincided with the
release of the latest ISM manufactur-
ing index, which delivered more posi-
tive news for the US recovery.
America’s factory sector shot up to
Fed chairman Ben
Bernanke said oil prices
will cause only “modest”
and “temporary” rises in
America’s inflation.
Meanwhile, the Nationwide house
price index was up 0.3 per cent in
February, compared to the previous
month.
However, mortgage approvals
remain below the six month aver-
age – of 46,686 per month –, and
significantly below their long term
average.
“Mortgage approvals have actual-
ly averaged 90,000 a month since
61.4 in the index last month -- its high-
est level since May 2004, and up from
60.8 in January.
The ISM index showed an increase
in prices paid for goods to a two and a
half year high of 82, from 81.5 in
January.
“However, this index follows the oil
price and tells us very little about the
ability of firms to pass higher costs
on,” said Paul Dales of Capital
Economics.
There was bad news from the US
construction industry, meanwhile,
with spending in the industry down
0.7 per cent in January.
1993,” said Howard Archer of IHS
Global Insight.
“This was still the second lowest
level since March 2009 and mort-
gage approvals may well have been
held back in December by severe
weather.”
Nationwide’s house price report
still left prices 0.1 per cent lower
than the same time last year, aver-
aging £161,183 per house.
Economics 13
NEWS | IN BRIEF
European car registrations rise
Eurozone car registration rose 3.2 per
cent in February boosted by France and
Italy which recorded a jump in the annu-
al automobile rate of 3.9 to 13.9 per cent
and 3.5 to 5.0 per cent respectively.
Germany's new car registrations rose 17
per cent during the past month and
Spain registered the strongest increase
since September 2010, rising by 3.6 per
cent.
Mergers and acquisitions tumble
The value of acquisitions in the UK by
British companies plummeted to
£10.1bn in 2010, compared with
£12.2bn registered in 2009. Expenditure
on acquisitions in the UK by foreign
companies fell to £9.8bn from £12.1bn.
Net transactions abroad by UK compa-
nies were at their lowest value since
1987 at £2.2bn.
Canada holds interest rates low
The Bank of Canada is set to keep its
benchmark one per cent interest rate
unchanged, despite the recovery “pro-
ceeding slightly faster than expected.”
According to ING’s Rob Carnell: “The
general tone did not suggest any return
to raising rates at the next meeting.”
Ongoing growth in Scandinavia
Sweden's GDP grew by 1.2 per cent in
the fourth-quarter of 2010, delivering
7.3 per cent annualised growth.
Meanwhile, its manufacturing PMI fell
by 0.6 to 60.9 last month. The index is
now 5.1 points below its peak in May
last year. In direct contrast, Norway's
PMI rose for the second month in a
row, to 58.7 in February. The index is
now at its highest level since October
2007.
 14 Consumer News CITYA.M. 2 MARCH 2011

Supermarket sales slowing GOK WAN TO DESIGN FOR SAINSBURY’S

as shoppers rein in spending

week period reported last month. recent outperformance with its mar-
▲

RETAIL
BY HARRY BANKS
SALES growth at grocers slowed in
February, despite higher prices,
according to market research pub-
lished yesterday, adding to signs of
growing caution among consumers
since the start of the year.
Kantar Worldpanel said grocery
sales rose 3.9 per cent year-on-year in
the 12 weeks to 20 February, down
from 4.2 per cent growth for the 12-
Heavy discounters Aldi and Lidl
both saw sales surge more than 13
per cent as their existing shoppers
spent more with them.
Kantar said customers were not
defecting from the major supermar-
ket groups and many were still pre-
pared to treat themselves, with
upmarket chain Waitrose achieving
its highest ever market share.
Among the top four supermarket
groups, Sainsbury’s continued its
ket share rising to 16.5 per cent over
the 12-week period, from 16.3 per
cent a year earlier – its 25th consecu-
tive rise. Tesco, the UK’s largest retail-
er by sales, saw its market share slip
to 30.3 per cent from 30.4 per cent,
and Asda’s share fell to 16.9 per cent
from 17 per cent. Outside the top
four, WM Morrison maintained its
market share at 12.3 per cent in the
period. Waitrose’s market share rose
to 4.4 per cent, from 4.3 per cent.

TV FASHION guru Gok Wan is set to create a number of womenswear collections for
Sainsbury’s with the first due to hit the shelves this autumn. He will design for the retail-
er’s TU clothing label as part of a move to expand its clothing category. Wan said:
“While I’ve styled thousands of women over the years, soon millions of women are going
to be able to wear something I’ve created.”

Ocado lifted
by upgrade
accuracy), hence, the company is well
▲

RETAIL
BY JOHN DUNNE placed to deliver strong growth.”
Earlier this month the John Lewis
OCADO shares were boosted yester- Pension fund sold its stake in the
day after broker Goldman Sachs online retailer – sending its share
upgraded its rating on the shares. price down. The sale came as
The stock has fallen by almost a Waitrose revealed it was working on
quarter since 11 February, when expanding its delivery service within
Goldman – Ocado’s house broker – the M25, with some analysts conclud-
placed ten per cent of the company’s ing that Ocado would be hit by the
shares at 265p each. competition. Ocado floated last year
Goldman raised its rating on the at 180p per share and dipped below
online delivery company from “hold” that before rallying.
to “buy”, with an unchanged price
ANALYSIS l Ocado
target of 304p yesterday. 215.80
Ocado’s shares surged after the 300
p 1 Mar
upgrade, closing 7.4 per cent higher
at 215.8p. Goldman said: “We retain 260
our view that Ocado’s differentiated
business model (proprietary cen- 220
tralised, semi-automated distribution
and delivery network) results in a 180
superior customer offering relative to
other UK online grocers (e.g. more
140
flexible delivery slots, higher order 6 Dec 24 Dec 18 Jan 7 Feb 25 Feb

Nestle joins the hunt for Yoplait

as suitors line up with offers
Bloomberg. China’s Bright Dairy &
▲

CONSUMER
NESTLE and General Mills are among
leading candidates to buy a 50 per
cent stake in French yoghurt maker
Yoplait.
General Mills and Nestle have sub-
mitted offers for the Yoplait stake
being sold by private equity firm PAI
Partners, valuing the yoghurt maker
at about €1.6bn (£1.35bn) according to
Food Co submitted the highest offer
that valued Yoplait at about €1.7bn.
PAI is expected to select a final bid-
der in the next few weeks. Axa Private
Equity is the only remaining buyout
firm in the race. Yoplait said earlier
this month that it had received nine
preliminary offers for a 50 per cent
stake in the world’s second-largest
yoghurt maker.
CITYA.M. 2 MARCH 2011
Morgan Stanley in hacker hit Telenor in key ruling to
▲
TECHNOLOGY
BY STEVE DINNEEN
MORGAN Stanley was the target of a
“very sensitive” attack by Chinese
hackers, according to a series of
leaked emails.
It is understood the firm was tar-
geted by the same hackers that
gained access to Google a year ago.
Morgan Stanley is thought to be
the first financial institution to be hit
by “Operation Aurora” hackers.
Attacks first surfaced in 2009 and
have now affected more than 200
companies.
It is not clear what information the
Vivendi sees
profit growth
in Brazilian TV
▲
TELECOMS
BY HARRY BANKS
EUROPE’S biggest telecom and
entertainment group, Vivendi,
which owns Lady Gaga’s record
label Universal Music Group, said it
expects profits to grow slightly in
2011 despite economic and regula-
tory pressures as it reaps the benefit
of emerging markets growth.
Vivendi yesterday reported 2010
results that were above forecasts,
helped by growth at Brazilian tele-
com subsidiary GVT and video-
games unit Activision Blizzard.
In 2011, GVT – which Vivendi
bought in 2009 – should see rev-
enue grow by 35 to 40 per cent as it
accelerates geographical expansion,
Vivendi chief executive Jean-
Bernard Levy said.
“Growth should be in the mid-to-
high thirties... GVT is in very good
shape,” he said. GVT saw earnings
before interest, tax and amortisa-
tion (Ebitda) jump to €108m
(£91.4m) in the fourth quarter, from
€20m a year earlier.
Music unit Universal, which has
suffered from the structural decline
of compact discs and other prod-
ucts, is expected to cut €100m in
Revenue up at Promethean World but UBM invests in emerging
forecasts fall as government cuts bite markets as shifts focus
▲
TECHNOLOGY
BY HARRY BANKS
INTERACTIVE education technology
company Promethean World report-
ed better-than-expected annual rev-
enue yesterday, sending shares up
more than one per cent, but forecast
lower 2011 revenue.
Revenue for the year was up 15 per
cent at £235.3m. However, chief exec-
utive Jean-Yves Charlier said that
2011 revenue would be lower, but
would not say by how much.
hackers could have stolen and
Morgan Stanley declined to elaborate
on the attacks.
A spokesman for Morgan Stanley
said: “At the time of the incident over
a year ago, Morgan Stanley notified
the handful of retail clients who may
have been potentially affected by the
security breach, as well as its regula-
tors and law enforcement agencies.
“Morgan Stanley invests signifi-
cantly in IT Security and manages a
robust programme to deal with mal-
ware and attempted computer com-
promises. Like any other company in
our industry, we deal with these mat-
ters in the normal course of conduct-
costs in 2011, Vivendi said.
Levy declined to comment on
Vivendi’s planned purchase of the
remaining 44 per cent stake in tele-
coms operator SFR that it does not
already own from Britain’s
Vodafone. Vivendi aims to own SFR
as well as pay-TV unit Canal Plus,
which is part-owned by Lagardere.
The SFR purchase would simplify
Vivendi’s structure and help reduce
the conglomerate discount on its
share price.
The group has extra financial
firepower since receiving $5.8bn
from selling its stake in NBC-
Universal.
Vivendi said it expected slight
growth in 2011 earnings on a like-
for-like basis and pledged to main-
tain a “high” dividend.
ANALYSIS l Vivendi
20.64
22
€ 1 Mar
21
20
19
6 Dec 24 Dec 13 Jan 2 Feb
“While market conditions are chal-
lenging, we think they will remain so
through 2011,” Charlier said.
Promethean World, whose biggest
competitor is Canada-based Smart
Technologies, said revenue from
emerging markets grew at about 55
per cent in 2010.
“We expect in the course of 2011
that it will also be our fastest grow-
ing segment given that austerity
measures haven’t necessarily impact-
ed the demand for these technolo-
gies,” Charlier said.
ing business.”
The details emerged after a second
attack on computer security firm
HBGary, which is contracted by the
bank. HBGary’s emails were hacked
by a group called Anonymous, which
posted conversations about the
Aurora hack online.
FAST FACTS | OPERATION AURORA
● The attack on Morgan Stanley occurred a
year ago but only came to light this week.
● At least 200 firms are understood to have
been hacked by Chinese hackers, dubbed
“Operation Aurora” by security firm McAfee.
22 Feb
Vivendi owns Lady Gaga’s record label, Universal Music Group
The company, which supplies
interactive white boards and learn-
ing software to schools, reported a
seven per cent drop in its full-year
adjusted operating profit because of
a decline in margins and budgetary
constraints in the US.
The company posted a full-year
adjusted operating profit of £27.4m,
and a pre-tax profit of £17.1m.
Numis Securities analyst Nick
James cut his 2011 revenue estimates
for the company by 10 per cent to
£211m.
stop Vimpelcom dilution
▲
TELECOMS
NORWAY’S Telenor faced a London
court for a second time yesterday, seek-
ing to protect its voting rights in
Russian cellphone company
Vimpelcom.
Telenor is asking for an injunction
to prevent the dilution of its 36 per
cent stake in Vimpelcom, which is buy-
ing $6bn (£3.7bn) in telecom assets
from Naguib Sawiris’s Wind Telecom.
Telenor is resisting that deal ahead
of a special general meeting to vote on
Picture: REX
▲
MEDIA
UNITED Business Media (UBM) yester-
day posted a 5.3 per cent drop in full-
year pre-tax profit as the events and
publishing group increased invest-
ment in data services and emerging
markets.
UBM, which has rationalised its
print titles as advertising has
moved online and shifted its focus
to events and data services in faster-
growing emerging markets and the
US, said it had made a good start to
News 15
the transaction on 17 March.
“A ruling against Telenor means
that the deal will probably get done. A
ruling in favour gives them a fighting
chance,” said an investment banker.
If the deal is approved, Sawiris will
receive 30.6 per cent of Vimpelcom vot-
ing stock, reducing Telenor’s holding
to 25 per cent.
If Telenor wins the injunction,
Vimpelcom must put enough new
shares into an escrow account so that
Telenor’s stake would not change if
the deal is voted through by investors.
NEWS | IN BRIEF
GAM plans to buy back shares
Swiss fund manager GAM Holding
said yesterday it would buy back up
to 20 per cent of its shares and
reported strong new money inflows
as clients invested in emerging mar-
kets and in US and Asian equities.Net
new money rose to SwFr8bn (£5.3bn)
from less than SwFr500m the previ-
ous year, the highest since the start
of the financial crisis. Inflows com-
bined with positive market perform-
ance to outweigh the negative effects
of a strong Swiss franc and push
assets up 4.2 per cent.
Carlyle buys bearings maker
Carlyle Group will buy Japanese ball
bearing maker Tsubaki Nakashima
from Nomura Holdings for about
$800m (£491.5m), the largest acquisi-
tion by a buyout firm in Japan in more
than a year. Nomura said yesterday
that its principal finance arm would
sell a 95.56 per cent stake in Tsubaki
Nakashima to Carlyle, estimating the
company’s value at 66bn yen. Carlyle
launched a 215.6bn yen Japan fund in
2006. A significant portion of the
money has yet to be spent. Co-founder
David Rubenstein also said Carlyle was
looking at deals in the Middle East
region, saying that the unrest has not
yet had an impact on the private equi-
ty firm’s portfolio companies there.
KGHM doubles quarterly profit
The fourth-quarter net profit of
Poland’s KGHM almost doubled to
1.324bn zlotys (£283.3m), coming in
above market expectations, as
Europe’s number two copper producer
benefited from surging metal prices.
Analysts saw the state-controlled
miner earning 1.22bn zlotys in the last
three months of the year. The figure
pegs KGHM’s full-year bottom line at
4.57bn zlotys, above the company’s
own forecasts of 4.46bn zlotys.
the year.
Chief executive David Levin said:
“We’ve come through the massive
shock of the wider financial markets
in the last couple of years and in addi-
tion to that we’ve had to grapple with
the structural change in our industry.”
He said the group’s performance
was bolstered by 20 per cent revenue
growth in China, India and Brazil,
and strong trading in events, such as
the Hong Kong Jewellery & Gem Fair,
which accounted for 54 per cent of
profit.
 16 News CITYA.M. 2 MARCH 2011

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

Safestore Holdings
The self-storage retailer has appointed Peter
Gowers as chief executive, following the retire-
ment of his predecessor Steve Williams.
Gowers, 38, joins from InterContinental Hotels
Group (IHG), where most recently he was chief
executive, Asia Pacific. Gowers began his
career at Arthur D. Little before joining the
strategy group of Bass in 1999. He joined
Bass’s hotel division as head of strategy in
2001, before taking up the role of head of
global brand services for IHG in 2003.
announced that Tony Pitcher has joined
Barclays Wealth the firm as client director within its
The global wealth manager has wealth advisory division in Jersey.
Reporting to Martin Pollock, head of the
wealth advisory business in Jersey, Tony
will be responsible for client relation-
ships as well as increasing the firm’s
client base in Jersey.
Renaissance Capital
The emerging markets investment bank
has hired six senior traders for its global
cash equities team. The new additions
are Payam Akhavan-Malayeri as global
head of cash equities trading, Scott
Duxbury as head of ADR trading, Stuart
McSporran as head of resources trad-
ing, Cameron Macklin as equity arbi-
trage trader, John Seheri as equity
trader, and Grant Nader as derivatives
trader.
Crest Nicholson
Housebuilder Crest Nicholson has boost-
ed its senior management team with
the promotion of Steve Evans to the
main board. In his new role as group
production director, Evans will work
across all the group divisions to develop
a series of best-practice guidelines.
Nomura Code
Nomura Code has appointed Ian
Mitchell as executive director, equity
research analyst, covering the technolo-
gy sector. Mitchell will report to Michael
King, executive director, head of
research. 
Global Investment Strategy UK
The independent stockbroker and corpo-
rate finance boutique has strengthened
its equity capital markets division with
the appointment of Graeme Irwin and
Jeremy Austin-Olsen as directors, equity
capital markets. They previously worked
together at JM Sassoon, Daiwa SMBC
Europe and Dawnay Day Investment
Banking. They specialise in Asian private
equity, capital raising and renewable
energy sectors.

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ANALYSIS l Logica 135.50 ANALYSIS l HSBC ANALYSIS l Antofagasta

150 1 Mar 740
656.70 1650
p p 1 Mar p 1410.00
720 1 Mar
140 1550
700
1450
130 680
1350
120 660

1250
6 Dec 24 Dec 18 Jan 7 Feb 25 Feb 6 Dec 24 Dec 18 Jan 7 Feb 25 Feb 6 Dec 24 Dec 18 Jan 7 Feb 25 Feb

LOGICA HSBC ANTOFAGASTA

JP Morgan Cazenove rates the technology group “underweight” and has
raised its target price from 100p to 130p. The broker has lifted its revenue
forecasts to £3.825bn in advance of an expected recovery in the Benelux
market, which has previously dragged on growth. The broker expects mar-
gins of 6.2 per cent during the first half of 2011, slightly below the 6.7 per
cent achieved at the start of 2010.
Nomura rates the bank “neutral” with a target price of 725p. The broker
expects returns on equity to lurk near the bottom of the bank’s 12 to 15
per cent target after its disappointing results on Monday, with revenue
momentum challenged by low interest rates and the run-off from non-core
positions. Nomura also flags up the bank’s rising costs, which rose eight
per cent on an underlying basis last year.
Evolution Securities retains its “sell” rating on the miner but has raised its
target price from £10.10 to £12 ahead of its results on 8 March. The bro-
ker expects the firm to miss its production growth targets for 2010, but
predicts a pre-tax profit of $2.18bn (£1.34bn) thanks to ballooning copper
prices. Evo sees Kazakhmys and other miners as better picks for exposure
to copper demand.

FTSE falls on worry political Wall Street’s fear

unrest will increase oil price gauge leaps 13pc
would be an interruption to supply in talks with Zurich Financial

THELONDON from Saudi Arabia, which holds most

of the world’s spare crude output
Services about an extension of the
term of Capita’s existing contract. THENEW YORK Stocks have taken their cue from
oil since the start of turmoil in the

REPORT REPORT
capacity. Associated British Foods Middle East and North Africa in
The wider fear is that sustained rebounded 2.7 per cent in heavy vol- January. The S&P had its weakest per-
higher oil prices could dampen ume after Evolution Securities formance since November last week
global growth. upgraded the owner of discount fash- but still tallied three months of gains.

B C
RITAIN’S leading share index
fell one per cent yesterday on
concerns that political unrest
could spread to top oil exporter
Saudi Arabia, pushing crude prices
higher and sending oil-sensitive
travel firms lower.
Brent crude rose 1.8 per cent to
above $113 a barrel on a report,
promptly denied, of Saudi involve-
ment to try and quell protests in
Bahrain. Nevertheless, the report in
an Egyptian newspaper rattled
investors.
Travel-related stocks bore the
brunt. Cruise operator Carnival shed
6 per cent in heavy trade,
InterContinental Hotels lost 4 per
cent, and International Airlines
Group slipped 0.8 per cent after trad-
ing as much as 3 per cent higher ear-
lier.
“Libya is a sideshow; it’s not as big
a show as a week ago. Saudi Arabia is
a big concern,” said Jawaid Afsar,
trader at Securequity. “The slightest
of rumours will make this market
roll over very quickly.”
Revolt in Libya has cut as much as
half of the OPEC member’s output,
though Saudi Arabia has stepped in
and plugged the supply gap. The
worst-case scenario for oil markets
The FTSE 100 closed down 58.25
points at 5,935.76 after trading as
high as 6,040.43 earlier. Volumes on
the benchmark were about 109 per-
cent of its 90-day daily average.
Meanwhile the FTSEurofirst 300
index of top European shares ended
0.6 per cent lower at 1,161.92 points,
resuming last week’s pull-back that
was triggered by escalating violence
in OPEC member Libya.
Index heavyweight HSBC shed 3
per cent in strong volume after bro-
kers Deutsche Bank and UBS down-
graded their ratings. Yesterday’s fall
extended the previous session’s 4.7
per cent drop after HSBC cut prof-
itability targets and its annual profits
fell short of expectations.
“The results are not that bad to
warrant such a big drop in the share
price ... The shares are coming back to
reasonable valuation levels,” a dealer
said, adding that he was looking to
buy at a price range of 650 to 665
pence.
HSBC shares are approaching over-
sold territory, with the 14-day relative
strength index (RSI) reaching 36.1.
Thirty and below is considered over-
sold.
Outsourcing group Capita, howev-
er, rose 5.2 per cent after saying it was
ion retailer Primark to “buy” from ONCERNS that rising oil prices
“neutral”. could hurt economic recovery
The stock lost 5.9 per cent on prompted investors yesterday
Monday after it reported a slowdown to sell stocks and hedge against
in growth at Primark, a major driver further declines.
of its performance. The CBOE Volatility Index (VIX),
FTSE 100 companies are expected Wall Street’s so-called fear gauge,
to post a 21 per cent increase in earn- jumped 13.1 per cent to 20.75 on
ings in 2011 after an estimated 55.2 growing uncertainty about oil. The
per cent rise last year, according to index measures the cost of using
Thomson Reuters. options as insurance against a decline
That compares with an estimate of in the S&P 500 index.
15.7 per cent earnings growth for “We’ve been seeing how quickly
STOXX Europe 600 companies this the VIX can spike up, and there is no
year and 14.5 per cent for US S&P 500 reason to believe that it won't double
companies. from where it is now,” said Harry
But the UK index, with a one-year Rady, CEO of Rady Asset Management
forward price-to-earnings (P/E) of 10.5 in San Diego, California.
times, is cheaper than the other two Brent crude rose above $115 a bar-
indexes, Thomson Reuters rel as supply disruptions persist and
Datastream showed. political violence spreads in the
ANALYSIS l FTSE 5,935.76 Middle East and North Africa. Higher
6,100 p 1 Mar oil translates into increased energy
and gasoline costs for consumers.
Federal Reserve Chairman Ben
Bernanke said the recent surge in oil
5,900 was unlikely to derail the economy,
but his comments did little to reas-
sure investors worried that turmoil in
the Middle East could hit Saudi
5,700
Arabia, the world’s largest oil
exporter. The Dow Jones Transports
6 Dec 24 Dec 18 Jan 7 Feb 25 Feb index fell 2.5 per cent.
The Dow Jones industrial average
fell 168.32 points, or 1.39 per cent, at
12,058.02. The Standard & Poor’s 500
Index dropped 21.04 points, or 1.59
per cent, to 1,306.18. The Nasdaq
Composite Index lost 44.86 points, or
1.61 per cent, to 2,737.41.
About 8.67bn shares traded on the
New York Stock Exchange, NYSE
Amex and Nasdaq, higher than last
year’s daily average of 8.47bn.
Volume has recently been solid on
days when the market falls, but often
comes under 7bn on up days.
Investors took a cautious stance as
cyclical sectors experienced the
biggest losses, while defensive sectors
such as utilities, healthcare and con-
sumer staples limited losses.
Wal-Mart Stores and Coca-Cola
helped the Dow to limit losses. Wal-
Mart rose 0.2 per cent to $52.06, while
Coca-Cola was up 1.5 per cent to
$64.91.
Gasoline and heating oil futures
each gained about 3.5 per cent to $3.
The S&P’s materials index dropped
2.3 per cent while the industrials
dropped 2.2 per cent.
According to AAA, the national
average price of regular unleaded
gasoline is currently at $3.35 per gal-
lon.
CITYA.M. 2 MARCH 2011
CNBC’s Maria Bartiromo shares the
secrets of her long-running success
Emmy winner and
author of two new
books, the “Money
Honey” makes it all
seem straightforward
LOVE this city!” Maria Bartiromo
I waves her arm, indicating not just
the art deco luxury of Claridge’s,
where we meet over breakfast, but
London in its teeming, cosmopolitan
entirety. “Chic, sophisticated… great for
business. I feel jazzed to be here. I grab
the chance to come.” Bartiromo is a long-
time New Yorker, famous for broadcast-
ing her CNBC show Closing Bell from the
floor of the New York Stock Exchange
every weekday, and her role as a business
reporter takes her around the world, to
the booming cities of the emerging mar-
kets, places like* Hong Kong and
Singapore, so it is comforting to find
that it is the two traditional business
titans, London and New York, that she
says together “have my heart”.
It’s an upbeat assessment, and
Bartiromo goes on to say that anyone
who wrote off the West’s great financial
centres as in danger of losing their pre-
eminence to new eastern rivals would be
making the wrong bet. But that’s not
born of a willingness to cast her home in
a rosy light. Turning to America, she sees
Ben Bernanke’s second round of quanti-
tative easing as “debatable” if not neces-
sarily negative, saying “the numbers are
mind-boggling” and the downside risk
WORDS BY MARC SIDWELL
unclear. Whatever the merits of QE2, her
overall message is simple, after the crisis,
people need to understand the old-fash-
ioned lesson of good financial manage-
ment and stop living beyond their
means: “I’m questioning where the aus-
terity is in the US.” She praises Chris
Christie, the no-nonsense governor of
New Jersey as a politician who is “not
afraid of making tough choices”, and
says that in the UK George Osborne has
impressed her with the character he dis-
plays in his confident plans for cuts.
Over twenty years, it has been this abil-
ity both to mix with the most powerful
figures in finance and to explain the
issues at the heart of the markets to a
general audience in straightforward
terms that has helped make Bartiromo
famous, gaining her the nickname of
“Money Honey” and leading to a walk-on
role as herself in Wall Street II last year.
She owes all her success as she explains
it, to her mother.
IN ON THE GROUND FLOOR
“I was at NYU studying economics, and
my mother said: ‘Take journalism, I
think you’d be good at it.” Bartiromo
switched major and found that when she
left university she was in on the ground
floor of the infant industry of business
television. Interning for Lou Dobbs at
CNN, she soon realised she relished the
urgency of the news business and watch-
ing so many major trends from a ring-
side seat, from the dot-com bubble and
bust to globalisation and, most recently,
the financial crisis.
Bartiromo’s superb contacts book has
sometimes got her into hot water – in
2006, Ben Bernanke’s apparently
unguarded comments to her at the
Maria Bartiromo loves
London almost as
White House Correspondents’
Association dinner caused stocks to
much as New York plunge when she reported that the mar-
kets had misunderstood him, although
Picture: she suggests that Bernanke’s words were
Micha Theiner carefully chosen. But that exceptional
/City A.M. access has been put to less controversial
use in her two new books, published in
quick succession.
SUCCESS AND CRISIS
The first is a guide to success – The 10
Laws of Enduring Success – based on her
interviews with some of the world’s
most successful and enterprising indi-
viduals, including Condoleeza Rice, Bill
Gates and Jack Welch. The second, The
Weekend That Changed Wall Street, is an
account of the financial crisis from
someone who knows the industry from
the inside, based on wide-ranging inter-
views with the main players. Two books
in a year on top of a fast-paced job is
quite an achievement, I suggest to
Bartiromo and she laughs. “I worked
“Capitalism, weekends, I slept upside down in my
closet.”
the freedom If she’s an insider on Wall Street now,
it is a position she had to earn. The first
it implies, journalist to report live from the floor of
the New York Stock Exchange, Bartiromo
gives people recounts the unease some traders felt at
her presence. One in particular, two or
hope... three times her age, told her to, “run
along little girl, this is not your busi-
For my part, I ness.”
Bartiromo dealt with this with a com-
choose to be mitment to hard work that seems to be a
defining feature. “I kept coming back. I
on the side of said to myself: I have to know my stuff.
Five years later, he asked to shake my
freedom.” hand and apologised.”
Despite its reputation as a male-domi-
Interview 17
CV | MARIA
BARTIROMO
Born: Brooklyn, NY,
1967
Education:
Fontbonne Hall
Academy; New
York University,
Journalism and
Economics
Career: Five years
with CNN before
joining CNBC. First
journalist to
report from NYSE
floor; Host of
Closing Bell; Host
and managing edi-
tor of Wall Street
Journal Report
with Maria
Bartiromo
Awards: 2008
documentary
Emmy for Bailout
talks collapse;
2010 Emmy for
Inside the mind of
Google
Books: Use the
News (2002); The
10 Laws of
Enduring Success
(2010); The
Weekend That
Changed Wall
Street (2010)
nated world, and the exclusive boys’ club
atmosphere of the exchange when
Bartiromo started, she says that she
never really felt she was not taken seri-
ously as a woman. She shrugs off the
Money Honey nickname, “I’m flattered
to be noticed. It’s important to relax a lit-
tle about all this – it’s serious stuff, but
we’re not curing cancer.”
After twenty years, with two new
books and two Emmy awards, one for
her reporting on the financial crisis and
the second for an investigation inside
the mind of Google (“There is no priva-
cy,” she comments in passing), Maria
Bartiromo doesn’t have to apologise for
her presence on the stock exchange any
more. Both elegant and outgoing, smart
and straightforward, she is an optimist,
but an honest one. As she writes in her
latest book: “Are we going to avoid
another September 2008? My belief is
that in the long run, no, we won’t… Free
markets are free markets. It’s messy, but
this very freedom is what we prize above
all else… Capitalism, and the freedom it
implies, has the power to give people
hope and help them rise above restric-
tive regimes. For my part, I choose to be
on the side of freedom.”
Bartiromo clearly delights in her suc-
cess as much as she works hard to
achieve it. And, having just written a
book on the topic, she is keen to share
her secret: be adaptable but above all
“love what you do”. A voice of clarity
championing free markets and fiscal
responsibility, Maria Bartiromo’s passion
for her work is clear.
Maria Bartiromo’s show US Closing Bell can
be watched on CNBC in the UK between 8-10pm
Monday-Friday and she also anchors the Wall
Street Journal Report at the weekend.
 18 CITYA.M. 2 MARCH 2011

Wealth Management Foreign Exchange |

LABOUR DATA
WILL BE KEY How Egypt and
FOR DOLLAR
BORIS SCHLOSSBERG
Libya saw risk
D
DIRECTOR OF CURRENCY RESEARCH, GFT

ESPITE continued turmoil in the Middle East,

concerns over the Irish rescue deal and fears that
rising commodity prices could snuff out the glob-
al economic recovery, the dollar can’t find a bid.
Typically, in times of stress, the greenback rallies as
investors seek safety and liquidity. So why is the dollar
losing its position as a safe haven attraction?
While the rest of the G4 nations have made serious
attempts at curbing their fiscal deficits, US legislators
are locked in an ideological war of attrition, squabbling
over the funding for various social policy programs
while leaving the major defense and social security
appropriations largely untouched. The debate has esca-
lated to a point that Republicans now threaten to shut
down the US government if they are unable to achieve
the budgetary cuts they seek. Such acrimony shakes
the confidence of the currency market and it is not sur-
prising that the dollar has ceded its safe haven status
to the Swiss franc, which continues to trade near
record highs.
being redefined
Dean Popplewell of was happening on OANDA’s real-time, on-
line order book.
OANDA watched the What his screen revealed was that the
market itself was rewriting the way it
managed risk.
unfolding Arab crisis “The risk on, risk off strategies and per-
fect correlation – implying that, as one
shift the world’s view security moves, up or down, the other
security will move in lockstep, in the
of safe currencies, same direction – has disappeared from
the market,” he says. “Now it’s about safe
writes John Lawless haven plays, rate expectations and cen-
tral bank policies.”
And, instead of running, lemming-like,
for the greenback, traders headed for cur-

The greenback is also under pressure on the interest
rate front. When it comes to interest rate hikes
amongst the G4 economies, the currency market now
has a very clear pecking order. The Bank of England is
expected to raise rates first, followed by the European
Central Bank. The Federal Reserve, on the other hand,
is projected to remain stationary for the rest of the
year. With the exception of the Bank of Japan, the only
other central bank less likely to raise rates than the Fed
is the Swiss National Bank.
That’s why this Friday’s US non-farm payroll (NFP)
report is shaping up to be a critical event for the dollar-
Swiss franc pair. If US labour data shows marked
improvement with NFPs recording a net gain of
200,000 jobs or more, the dollar-franc pairing, which
has been pounded mercilessly over the past several
weeks, could see a short covering rally. However, if the
NFP proves disappointing for the second month in a
row, the dollar-franc could slide below the SFr0.9200
level and target the key SFr0.9000 figure as the green-
back continues to lose its lustre.
S
PEND 10 years as a professional for-
eign currency trader, another four
as a fixed income trader, then head
up several global trading desks
and you get a very close look at that
rarest of forex animals: Speculatorus
Supersuccessfulus.
“Those who make the greatest gains,”
says Dean Popplewell, “are always the
most silent.”
Popplewell himself is now very voluble.
As chief currency strategist at forex plat-
form OANDA, he’s one of the best-read
bloggers.
And what the 43-year-old Irish-
Canadian has to say, exclusively to City
A.M. – about new rules for both manag-
ing risk and making a profit – is worth
hushing-up for.
“Historically,” says Popplewell, “the US
dollar was always the go-to currency.
When a global crisis loomed, the market
reaction was always a) you thought about
it briefly, like, would it occur?, b) you
bought the dollar, and c) you banked any
opportunity profit.”
In just the last six weeks, the knee
jerked entirely differently.
From the outbreak of unrest in Tunisia
until 11 February, when Mubarak surren-
dered in Egypt, Popplewell followed what
rencies they understood best, and trust-
ed.
“Because of Europe’s investment in the
Middle East,” says Popplewell, “it became
the thing to revert to own-home curren-
cies, especially sterling and the euro. But
they ran for home first and only then
started to look at the big picture.”
The Arab crisis should have been no
different to any previous global upheaval.
“In 1998, we had the Asian crisis,” says
Popplewell. “But the markets did as they
always did in those days and ordered
plain vanilla, going straight into the US
dollar.
“The same happened with September
11. Everyone could see every second on
television, it was actually happening in
the US. Again, everyone gravitated
toward the US dollar.”
What changed things is the speed at
which, not images, but information
flows. “On the big picture today,” he
adds, “there are so many more variables.
But all the data, on, say, currency flows
created by hedge funds is accessible. And
because of the ease of trading, and its
total transparency, individuals can invest
and divest, hour by hour.”
What happened – is happening –
shows how individuals, armed with up-
to-the-second expert analysis, stayed on
top of the fast-moving situation, switch-
ing an appetite for risk quickly back on.
“Egypt was seen as the pinnacle, and
an appetite for risk returned when it
became clear it was not in meltdown,”
says Popplewell.
Libya has been more violent. “But,”
stresses Popplewell. “the major concern
was contagion. Would it engulf Saudi
Arabia?”
As soon as the Saudis opened the oil
taps again, forex speculators applied risk
principles again. “The market was trying
to get ahead of itself,” says Popplewell,
“as always happens.”
What it exposed was a huge divergence
between the European Central Bank
(ECB) and the US Fed. “For 10 days,” says
Popplewell, “the ECB rhetoric became
hawkish. It feared a spike in oil prices
would cause inflation. The Fed saw it as
being of deflationary concern.”
With a ballooning deficit having

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CITYA.M. 2 MARCH 2011 19

“The Canadian dollar will never trump

the Swiss franc, but the rest of the world THE
now holds it in high esteem. Suddenly,
for strong financial and economic rea-
sons of its own, the Canadian dollar, not
TIPSTER
US, is the one the world wants.”
But super-fast information dissemina-
STERLING
tion also makes the “lemming trade”, as
Popplewell describes it, even more likely
ON A HIGH
to happen. “The important thing for any
individual to understand is that they
VS DOLLAR
have to do the same due diligence on

already made it difficult to see the US as
a safe haven, the real-time activity of
forex traders, as Toronto-based
Popplewell noted minute by minute,
showed the market increasingly putting
its belief in anything but the US dollar.
Nothing better defined that than what
happened to the currency of his own
country. “Because 70 per cent of Canada’s
exports go to the US, the Canadian cur-
rency has, traditionally, been tied to that
of its mighty neighbour, lumped togeth-
er in North America,” he says.
“Now, while the world is watching the
US dollar’s inability to attract the tradi-
tional geopolitical safe haven bid, our
dollar has become a safe currency in its
own right.
every trade, whether it be as a result of
immense research or a snap, gut feeling
decision.
“Forex today is the largest undefined
asset, and has to be examined and valued
just like fixed income and equities.
Nowadays, you are not just investing in
the movement of a currency. You are also
investing in the FTSE or the Hang Seng,
because of the interaction and impact
they have upon each other.”
But what is the secret of winning silent
bragging rights?
“What separates the amateur from the
professional,” he says, “is that the inexpe-
rienced trader lets losses run far too long.
Gets far too far under water. Yet they’re
also far too ready to say ‘Oh, my God, I
made a profit’ and cash in.
“The pro will cut his loss far quicker,
but will ride a winning position, always
asking, Can I squeeze more out of it? He
will say ‘I’m right! But how right?’.
“But they never let you know how
they’ve done. One thing you can guaran-
tee, though: the bigger the silence, the
bigger the gain.”
ANALYSIS l Dollar-Canadian dollar over the
last five days
Ca$
Canada is looking 0.99
trustworthy
0.985
Picture: GETTY 0.98
0.975
0.97
23 Feb 24 Feb 25 Feb 28 Feb 1 Mar
T
HE pound has broken through
£1.6300 against the greenback for
the first time in over a year, amidst
signs of an upturn in the UK housing
market. Strength here is going to make it
that bit easier for the Bank of England to
start hiking interest rates in the months
ahead. Combined with renewed investor
appetite for risk, this could keep sterling
supported for some time yet. The current
IG Index price is £1.6305-£1.6307.
Despite the concerns over the Middle
East situation, data released from the US
earlier in the week boosted the markets,
encouraging investors out of safer curren-
cies, including the Japanese yen. US manu-
facturing was the highest since May 2004,
which saw the yen fall against the euro.
Technicals for this pair suggest the relative
strength index is directing towards an
uptrend, with potential for a ¥113.90 tar-
get. Capital Spreads quotes ¥113.61-
¥113.64.
Yesterday, the Bank of Canada left
interest rates unchanged at 1 per cent,
while a stronger than expected fourth
quarter GDP and an upward revision to the
previous quarterly reading has kept the
Canadian dollar well supported over the
past few days. In the short term expect
US dollar-Canadian dollar to continue to
probe lower, following last week’s break-
down below the important Ca$0.9830-
Ca$0.9820 support area, and look for a
break and close below the key Ca$0.9700-
Ca$0.9710 support zone. London Capital
Group is offering a spread of Ca$0.9705-
Ca$0.9709.
Philip Salter

FOREX ANALYST PICKS

FOREX STRATEGIST FOREX STRATEGIST FOREX STRATEGIST
ILYA SPIVAK JOHN KICKLIGHTER JOEL KRUGER

My pick: Short New Zealand dollar-US dollar My pick: Long dollar-yen; Short Australian dollar-US dollar & euro-yen My pick: Short Australian dollar-US dollar
Expertise: Global Macro Expertise: Fundamental and technical analysis with risk management Expertise: Technical analysis
Average time frame of trades: 1 week-6 months Average time frame of trades: 1 day-1 week Average time frame of trades: 1 week-6 months

Last week, New Zealand dollar-US dollar broke through rising trend
line support established from the lows in June 2010, suggesting a
major bearish reversal is at hand. I will enter short from here
($0.7516), looking for an initial decline to $0.7362. A stop-loss will be
activated on a daily close above the $0.76 figure. Near term, upside
momentum is capped by a falling trend line connecting swing highs
since the beginning of the month, now at $0.7574.
We had a great opportunity for meaningful reversals last week; but that
fundamental drive has eased recently. That said, I’m maintaining my
setup for a short Australian dollar-US dollar setup below $0.99 and my
open euro-yen short on ¥113 (stop and first target 150 points) is still in
place. In addition, I have taken a long US dollar-Japanese yen position
from ¥81.85 looking for a slight risk-positive drift and natural reversal,
keeping a stop and first target of 85 points.
We continue to favor risks for additional downside and like the idea
of selling into current rallies. Ultimately, we see the market in the
process of carving out a major top and any rallies from here should
be well capped below $1.0200 on a close basis. Only back above
$1.0260 gives reason for concern, while below $0.9800 should
accelerate towards our objective. Short at $1.0170 for a $0.9500
objective. Stop at $1.0320.
 20 Wealth Management | Foreign Exchange
TRADING THE
NEWS IN JUST
FOUR STEPS
TOM HOUGAARD
CONSULTING ANALYST, INTERTRADER
F
ORMAL education doesn’t help you become a
good trader. My own mentor told me that “you
only see what you have trained your eyes to see.”
This short run-through is an insight into how I
have trained my eyes to trade news-driven markets.
Step 1: First duty every morning is to check the calen-
dar for economic news. Stick it on your screen so you
don’t forget.
Step 2: I don’t anticipate what the news will be. I am
too stupid. Instead I put my chart on “one-minute
mode”. Whichever way the market breaks after the
news is released is the direction I want to trade.
Step 3: Once news is out and the direction has been
set, I do my very best to get into the market on any
kind of retracement against the news spike. It helps
to have watched the market 10 hours a day for a few
years. You get to understand price action.
Step 4: I don’t look for a big move. If I can pick up
10-15 pips I will take it. My studies have shown con-
clusively that although there is no guarantee that the
direction of the news spike will last for long, the mar-
ket in question will almost 80 per cent of the time do
a retest of the low it made on the news spike.
Two examples from the week just past:
23 February: The MPC minutes are released. Cable
spikes violently higher. After one minute I see a 20
point retracement. I buy it. I wait almost 10 minutes.
Nothing happens. I get out for a small (but annoying)
10 pip loss. The market continues lower for the next
hour.
25 February: The GDP numbers are released. I don’t
even register the number. Price is my God. Sterling-
dollar spikes lower. I wait for a 20 pip retracement
against the spike. I enter, with a 20 point stop. I take
a handful of deep breaths. I am out, 30 pips richer.
The principle is always the same: wait for direction,
enter on a retracement, and don’t be (too) greedy.
Happy Trading.
The views and comments in this article are not the
views of InterTrader.com. The provision of this infor-
mation should not be construed in any circumstances
as a recommendation or solicitation to buy or sell any
security or financial instrument.
Pulling dead weight through
Donata Huggins asks how much longer
Germany can keep the single currency stable
E
UROPE’S strongest man is
Lithuanian this year. But its
strongest economy is clearly
German. The two have more in
common than you think. Both are break-
ing records and are familiar with lug-
ging around dead weight.
The German economy has been pump-
ing out positive figures. Yesterday it
announced that unemployment fell to a
19-year low and vacancies shot up by
15,000 since January. Rising Portuguese
bond yields and periphery woes seem to
have shrunk from the market’s atten-
tion. This has worked rather nicely for
the euro. It has been edging upwards or
holding steady for the last few weeks (see
chart).
But traders know all good things
come to an end. How much longer can
they bank on Germany pulling the euro
through?
GERMAN WILLING
Duncan Higgins of Caxton FX says: “It
seems less of case of whether Germany is
strong enough to pull Europe through,
and more a case of whether Germany is
willing.” The German public gave their
chancellor’s party a kicking at the recent
regional elections for her soft approach
to their ailing neighbours.
Any measures proposing to redistrib-
ute German funds to shore up weaker
economies will now be far trickier to
push through. Market doubts about the
whole of the Eurozone economy could
send the euro tumbling.
MIDDLE EAST RISK
But until those big decisions edge closer,
Michael Hewson of CMC Markets thinks
the euro will be remain steady: “If the
Middle East situation does not escalate
any further, the euro will stay range
bound against the dollar. It hasn’t been
acting as the world’s safe haven just yet.”
Traders have so far been diversifying
Middle Eastern risk through currency
investments into Swiss francs and the
Canadian dollar. This may change,
believes Hewson, if the political situa-
CITYA.M. 2 MARCH 2011
German economic
strength is dragging its
weaker neighbours
through
Picture: REX
tion worsens.
Simon Derrick, a managing director at
the Bank of New York Mellon, has a sim-
ilar view, but thinks that we are reliving
last September’s euro story.
He explains: “The market totally
ignored the fact that Ireland was head-
ing towards a crisis. It wasn’t until it
reached a sort of tipping point that the
euro suffered.” Likewise, he rapidly ris-
ing Portuguese bond yields have sunk in
importance in the media.
Euro traders should therefore expect
the German strongman to deliver stabil-
ity for a while longer. Only an escalation
of the Middle East crisis and a German
backlash at the March EU summit stand
in his way.
ANALYSIS l The performance of the euro
against the dollar over the last three months
1.38
$
1.36
1.34
1.32
1.30
13 Dec 27 Dec 10 Jan 24 Jan 7 Feb 21 Feb
CITYA.M. 2 MARCH 2011 Wealth Management | Markets 21

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 Business Features
22
Companies stuck in the Middle
East mayhem must act swiftly
A good contract will
prevent permanent
damage to businesses
and their reputations
JOHN ENSTONE
W
HILE the headlines from north
Africa and the Middle East speak
of the human toll and the fate of
Britons, the threat to British
companies who have contracts in the
region which generate substantial revenue
remain near the top of company agendas.
Having spent 30 years working in Middle
Eastern business and law, including in
Baghdad during the Iran-Iraq war, I have
noted that sometimes the brave commer-
cial decision pays off in the end, even if
subsequently companies have to negotiate
through the legal and commercial conse-
quences. Taking care of employees and
their dependants is paramount and it is
essential that companies operating in
these environments take swift and decisive
action to ensure they will not face action
later. Apart from the detrimental effect on
employees, the reputational damage to a
company for failing to act or for acting
ineffectually can be severe.
Companies doing business in the Middle
East need to check employees’ employ-
ment contracts for responsibilities in these
situations. The relevant provisions may be
in a contingency plan or expatriate policy.
Making sure that employees understand
them and ensuring that everyone is pre-
pared to act quickly is an important part of
good practice in these scenarios. If compa-
nies do not have a plan they should get one
in place very quickly. Ultimately, they need
to be able to demonstrate they have acted
reasonably in all circumstances.
The Foreign and Commonwealth Office
(FCO) will give companies the latest status
and regular updates of events in the affect-
CASE STUDIES| NEWS FROM THE COURTS THIS WEEK
BGC/TULLETT PREBON APPEAL FAILS
The Court of Appeal has rejected an
appeal by interdealer broker BGC over its
poaching of staff from rival Tullett
Prebon. When the CEO of Tullett, Tony
Verrier, joined BGC from Tullett Prebon
he tried to persuade 13 brokers to go
with him. Ten joined but three stayed
with Tullett. The court at first instance
held that BGC had used unlawful means
to induce the brokers to break their con-
tracts with Tullett Prebon and that the
three who stayed were entitled to break
their contracts with BGC. BGC’s appeal
of this judgment failed.
ed country directly. Companies must
ensure that the local British Embassy
knows where employees and their depen-
dants are based and the affected employees
should be advised to stay in touch with the
British Embassy at all times.
Insurance policies need to be checked to
see if the current circumstances and the
planned course of action in response to
them are covered. If they are, the policy’s
requirements for successfully making a
claim should be followed to the letter and
everything needs to be documented.
The question of when to evacuate per-
sonnel is always challenging. Legally,
unless the contract allows a company to
stop, the obligations to perform almost cer-
tainly continue and any decision to pull
employees out of a country prematurely
may be fraught with legal risk. Also, local
customers and partners are unlikely to
view an early departure favourably, even if
the contract permits it.
Unfortunately, airlines rarely give much
notice of flight suspensions and anyway
the chance of getting seats at the last
minute is slim to nil. Neighbouring coun-
tries can and will close their borders with-
out taking a company’s employees’ needs
into consideration. So companies must act
when they have the chance, or the choice
BANK CAN’T ENFORCE GUARANTEES
The High Court has rejected Close
Brothers’ claim against the personal
guarantor of a loan made to Air Touring
Limited. Michael Pearce personally guar-
anteed loans up to one quarter of the
debt level of Air Touring, in which he
had a substantial interest. Following the
company’s floatation in 2006, Pearce
claimed that he was no longer guarantor
of loans and that he revoked the existing
guarantees. The judge found that Pearce
had revoked the guarantees as his signa-
ture appeared on pre-float documenta-
tion, but not on those created after.
| Law
Riots shouldn’t cause may be taken away from them.
you long-term pain After taking care of employees and their
dependants, how should companies pro-
Picture: REUTERS tect their commercial position when they
can’t perform or are not being paid? First,
examine the contract for terms that deal
with insurrections, political unrest and a
resulting inability to perform. These force
majeure clauses may not list the exact event
that has occurred, but most will excuse
performance in the face of “events beyond
a party’s reasonable control”.
Companies must notify their local cus-
tomer or partner of the problem. There is a
good chance the contract contains instruc-
tions on how to do this. The current poor
communications with the affected coun-
tries means that companies should use
more than one of the available means to
notify them. The contract may also require
that companies try to get the project up
and running again as soon as possible and
allow the other party to terminate after a
stated period. Well negotiated contracts
will also say that a failure to pay is not
excused. My advice is to make clear to cus-
tomers or partners that their obligation in
this regard continues.
John Enstone is an international trade lawyer
and Middle East expert with Faegre & Benson LLP
in London
by Henry Farris, of City Law LLP
EXECS JAILED FOR FINANCING SADDAM
Two former directors and a sales manag-
er of engineering firm Mabey & Johnson
were found guilty of making illegal pay-
ments to Iraq during 2001/02 in breach
of UN sanctions. The trio inflated con-
tract prices and channelled disguised
illegal payments through Jordanian
banks. The Berkshire-based engineering
firm paid over €420,000 to secure a con-
tract supplying steel bridges to Saddam
Hussein’s government. All three were
sentenced to prison and ordered to pay
prosecutions’ costs. The two former
directors have been disqualified.
CITYA.M. 2 MARCH 2011
Lawyers on
boards would
benefit City
MATTHEW RHODES
T
HE corporate headlines last week
focused on women being overlooked for
board positions in FTSE companies.
They’re not alone: other than as general
counsel there’s a similar paucity of lawyers.
Presumably female solicitors don’t have any
chance at all.
This is pretty curious given the many skills
that lawyers can add, most notably a willing-
ness to ask difficult questions and an in-
depth understanding of directors’ duties.
And also given the comparatively large num-
ber of lawyers on the boards of companies in
the United States.
There are many reasons that this problem
exists. Part of it is that lawyers tend only to
think about life outside the law on the eve of
retirement. They launch themselves into a
very competitive market from a standing
start, often with no brand behind them, in
their late 50s or 60s. Clearly some of them
make it, but by then it’s too late for all but a
handful of the top players. Anthony Salz, for-
mer senior partner of Freshfields, is on the
board of Rothschilds, while Guy Beringer,
who held the top job at Allen & Overy, is on
the board of Flemings. But they are in a tiny
minority.
Why do they leave it so late? Partners at
big City law firms will say that the punishing
hours expected of them take their inevitable
toll. Client work will always come first, and
with partners billing six days a week there’s
not a lot of time left for much else. Although
there is some – many partners manage to
find the time to be governors of schools and
trustees of charities. The real issue seems to
be one of conflict. With the SRA breathing
down their necks, firms have always been
wary of this. But clients are increasingly
demanding that their lawyers demonstrate
more commercial awareness, and as long as
it is properly disclosed, it is hard to see why
a non-executive directorship of a private
company should raise any issues.
MUTUAL BENEFIT
There’s no reason why the head of real
estate at a Magic Circle firm shouldn’t be on
the board of Knight Frank, for example. Be
open about it – put it on his or her biography
– and treat it like any other potential con-
flict. The client gets a lawyer with first hand
corporate experience, Knight Frank gets the
benefit of some fantastic expertise and the
partner gets himself geared up for a spot on
the board of British Land when he retires.
Everyone benefits.
Clearly this sort of role isn’t appropriate
for every lawyer, but it is for some. Many are
natural leaders who have managed the
equivalent of FTSE 250 companies, and they
can give more to big corporates than just
legal advice. All the managing partners to
whom I’ve spoken see the sense in this, and
HR directors are very keen to try and help
their partners gear up to a life after law. The
appetite is there, and the first firm to stick
its neck out and lead on this will kick off
what should become a very busy market.
Matthew Rhodes is a director of legal
community website, RollOnFriday,
matthew@rollonfriday.com
 Lifestyle
Meet the hottest of
HOT
HATCHES
Citroën’s DS3 Racing
has loads of chic and
cheerful va va voom
D
ESPITE the fact that Citroën has
been doing rather well these past
several years in the World Rally
Championship, it’s taken until now
for the French manufacturer to create a
road car with WRC credentials.
Citroën has created its new 204bhp 1.6-
litre DS3 Racing model to be an extremely
sporty rival to cars including Mini’s John
Cooper Works model. The figures for both
cars are suspiciously similar, with both able
to sprint from 0-62mph in just 6.5secs and
on to a top speed north of 145mph. Yet the
Citroën has better economy and lower
emissions. So what’s it like to drive?
In short it’s a belter. It certainly looks the
part with contemporary and sporty looks
that make the Mini appear outmoded. But
forget the OTT graphics (a £450 option I sus-
pect few people will choose) – it’s lairy
enough in its choice of just two colours,
orange and black or carbon grey and polar
white. And then there is that aggressive
front end and shark-like gills, not to men-
tion the beautiful Nemesis 18-inch alloys
which must be some of the finest-looking
wheels currently in production. The DS3
CAR TALK
Vauxhall’s new Zephyr
Officially it’s only a concept, but make no mistake: most of what you
see here is Vauxhall’s new Zephyr. The rakish exterior design of this
Zafira Tourer Concept has been inspired by high-speed train design
and is conceived to be a “lounge-on-wheels”. Ambient mood lighting,
a panoramic windscreen and flexible seating for seven also feature.
08/58 A 150 Classic SE from £8,790
Call
C all tthe
he UK’s
UK’s Largest
Largest Used
Used Mercedes-Benz
Mercedes - Benz Retailer
on 0
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Mercedes-Benz
M ercedes - Benz Retail
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Cars East
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London ((A13) Alfred’s
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3
23
WORDS BY
| Motors RYAN BORROFF
Racing is designed to get
noticed and understated it isn’t.
hatches you can buy
but also one of the most fun
steering
wheel feels excel-
I’m in the slightly more restrained grey
and white version. The car has been devel-
to drive. Citroën UK will get just
200 of them to sell here, and
lent. The instruments are as cool as they
are in the regular DS3, but here they’re
oped by Citroën Racing and tech-wise the
turbo-charged engine is managed by a spe-
they’re so difficult to get hold of that I can
only have the car for a two-hour test. But The Citroen DS3 is a
enhanced with racing red and they look
great illuminated in the Hatfield Tunnel.
cially-tweaked engine control unit. It also what a rush it is to drive. wonderfully quick Overall, the car feels strong and well built.
gets remapped sports steering, a 30mm The car feels very quick, feels stable at bundle of energy. What’s perhaps most surprising is how
wider running track, stiffer suspension, speed and the ride quality is good. It cer- easy to drive the car is around town and
upgraded brakes – which include four-pis- tainly handles very well, enough to keep during normal driving. It seats four, even
ton Brembo racing calipers and bigger disc me happy and confident. The engine is not five adults, and has a sizeable boot, so in
brakes at the front – and a modified as throaty as I would like and I would have practicality terms it’s not a massive com-
exhaust system with a special twin tailpipe preferred stiffer side bolsters in the sports promise and should be very easy to live
at the back. The car has a 15mm lower ride seats. The gear shifting on the six-speed with.
height and weighs less due to a bunch of manual gearbox felt a little lightweight at The difficult part will be getting one.
carbon fibre components around the car first though I did get used to it quickly. There’s already a lead time of six months
including the radiator grille, air diffuser, Inside, the cockpit is trimmed in but it would be well worth the wait.
front bumper spoiler and lower body trim. Alcantara and leather, while aluminium It is not only
And it’s not only one of the fastest hot drilled pedals complete the racer look. The
one of the THE FACTS:
CITROEN DS3 RACING
fastest hot PRICE: £23,100
hatches you 0-62MPH: 6.5secs
TOP SPEED: 146mph
can buy, but CO2 G/KM: 149g/km
it is also MPG COMBINED: 44.1mpg
one of the THE VERDICT:
hhhhi
most fun to DESIGN
PERFORMANCE hhhhh
hhhhi
drive PRACTICALITY
VALUE FOR MONEY hhhhi
BY RYAN BORROFF
Saab 9-5 Aston Martin Virage
Here’s the estate version of Saab’s new 9-5. The much anticipated Here’s Aston Martin’s new Virage model, which sits between the
Saab 9-5 SportWagon has just debuted in Geneva. The five-door DB9 and DBS in the AM range. At around £150k, the 490bhp is
wagon has always sold well in the UK and with looks like these it midway between its two siblings in power and price and should be
should continue to do so. The car was joined by a new concept that less of a handful than the DBS to drive. It is certainly more ele-
points the way to Saab’s increasingly bright future. gant to look at.
Wide choice, great value, first class service.
Mercedes-Benz Retail Used Cars.
0845
092 1026.
1026.
Way,
Barking,
ay, B arking, Essex
Essex IG11
IG11 0TS www.mercedes-benzretailusedcars.co.uk
0TS w w w.mercedes - benzretailusedcars.co.uk
3ULFHFRUUHFWRIWLPHRIJRLQJWRSUHVV3LFWXUHIRULOOXVWUDWLRQSXUSRVHRQO\&DOOVPD\EHUHFRUGHG5HJLVWHUHGRɇFH0HUFHGHV%HQ]5HWDLO*URXS8./WG7RQJZHOO0LOWRQ.H\QHV0.%$
U LFHFRU UHFWRIWLPHRIJRLQJWRSUHVV3LFWXUHIRULOOXVWU DWLRQSXU SRVHRQO\&DOOVPD\EHUHFRUGHG5HJLVWHUHGRɇFH0HUFHGHV  % HQ]5HWDLO*URXS8./WG7RQJ ZHOO0LOWRQ.H\ QHV0.%$ 
 24 Lifestyle | TV& Games CITYA.M. 2 MARCH 2011

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

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Deadliest Catch 2am Future DDS 3.30am Threshold New series. Jamie Oliver offers 20
Weapons 3am World War Two: 4.20am Guinness World teenagers with few qualifications a
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Rory McGrath’s Best of British 6am Sell Me the Answer from a line-up of teachers.

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

QUICK CROSSWORD
  

SUDOKU KAKURO
9 15 22 12 42 23 13 5 
29 28
  
11 13
Place the numbers from 1 to 9 in each empty cell so that each 6
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 13 20
14 39 8 15
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 10 17 9
    
above or to the left of it. 16 11
You can only use the digits 1-9 45
 and you must not use the 7 17    
same digit twice in a block. 4 13 24 34 16
   The same digit may occur 45

    more than once in a row or

column, but it must be in a
6
9
12
7
16
  
10 11
    separate block.
13 8 9 11 
12 27
    30 10
 

    ACROSS DOWN
1 Give birth to (4) 1 Idyllically rustic (7)
   
   WORDWHEEL R S
3
5
Bowed, curved (6)
Gall (3)
2
3
Long raised strip (5)
Alias (inits) (3)
Using only the letters in the Wordwheel, you have 6 Compact mass 4 Leave or strike out,
 ten minutes to find as many words as possible,
E O (of earth) (4) as of vowels (5)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters S 7
9
Sour-tasting (6)
Container for clothing,
8 ___ and buts,
objections (3)

LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
N P sheets etc that need 10 Female member of a

SOLUTIONS
washing (5,6) religious order (3)
KAKURO is at least one nine-letter word in the wheel.
T A 14 Device that is 11 Long fluffy scarf (3)
very useful for a
QUICK CROSSWORD 3 6 5 2 1 5 1
12 Colourful, ornamental
7 8 1 9 6 2 5 4 3 SUDOKU          18
particular job (11)
Thoroughfare (6)
fish (3)
O C R O O S T E D
8 9 7 4 9 6 8         
13 Line touching
S N A K E H U
M T T O R R E N T 2 1 3 3 1
         20 Part of a skeleton (4) a curve (7)
O S C A R I U 1 5 3 2 7 4 7 9
         21 Be unwell (3) 15 Of the eye (5)
S H O F F E N C E 7 6 5 9 8 3 8
        
I
S
D E
I S
A
T E
O
R S
K O H
X
L
I
2 1
8 4
3 6 1
8 2
5 2 4
7
WORDWHEEL         
22 Beetle considered divine
by ancient Egyptians (6)
16
17
Stand for a golf ball (3)
Item of furniture (5)
W T W A I S T         
M A F I O S I O I
1 3 2 6 9 8 2 The nine-letter word was 23 Way out (4)
L R N O U N S 2 7 5 9 6 4 8 3 1          19 Metal ring that is pulled
F I R E B U G S T 6 9 8 4 2 9 8
DEVASTATE          to open a can (3)
 Sport
Do gifted athletes have an
obligation to realise talent?
As rugby prodigy Danny
Cipriani’s promise contin-
ues to go unfulfilled, City
A.M. asks whether the
wasters let us all down
Dedication is least
YES the paying public
deserve, argues
James Goldman
WE’VE ALL got our sporting hero. Be
it the guy who runs the 100m in the
time it takes to type Usain Bolt’s
name into YouTube, or the former
sheet metal worker who became a 14-
time world champion by dint of
being able to hurl a tungsten point
into a cork board with unrelenting
accuracy.
Whatever sets your sporting pulse
racing, without these men, and
indeed women, who go that extra
yard to extract every ounce of God-
given talent in an effort to reach per-
fection, sport would be humdrum,
run of the mill, just another form of
bland entertainment filling the space
between adverts on commercial tele-
vision.
We don’t necessarily ask our sports
personalities to sacrifice everything
so that they become devoid of person-
ality and stripped of character. But a
high level of dedication is the least we
hope for in return for the time and
money we as fans invest in following
our passions.
With the cost of attending the top
sporting events continuing to rise out
of proportion with most other forms
of entertainment – only two weeks
ago Uefa was heavily criticised for
increasing the cost of tickets for this
year’s Champions League final to
more than £150 – it is reasonable to
expect more bang for our buck.
True, the cynic in us may revel in
England proved they’re contenders
CRICKET COMMENT
ANDY LLOYD
I
F THERE was any lingering doubt
about England’s ability to sustain
a genuine challenge at this World
Cup, then they were emphatically
dispelled against India on Sunday.
The co-hosts are rightly favourites,
but that was their best side and we
would’ve won had Stuart Broad not
been ill and Eoin Morgan injured. Too
the story of the fallen hero or the dis-
graced star, but the real joy of follow-
ing sport comes from celebrating the
achievers, rather than deriding those
who fell by the wayside.
That is why Ryan Giggs is held in
such high esteem for having main-
tained a career at the highest level for
many people read far too much into
the 6-1 defeat in Australia and, while
that wasn’t ideal, critics should have
been wise enough not to put too
much stock on that result. England
had accomplished their main objec-
tive Down Under and they were enti-
tled to take their eye off the ball.
Andy Flower and Andrew Strauss
will know that if England are to go all
the way then there is still room for
improvement, especially in the bowl-
ing and fielding departments.
But we are now judging this side
on the standards they have set for
themselves. We know they are capa-
ble of achieving them.
BOWL AT THE STUMPS
As expected, conditions are favouring
the batsmen and world class perform-
PROP SHERIDAN RULED OUT OF
RBS 6 NATIONS DENOUEMENT
ENGLAND BOSS JOHNSON PUTS HIS
FAITH IN EXILES’ CORBISIERO: P27
Cipriani has been fined
by Melbourne Rebels
after an incident in a
nightclub
Picture: ACTION IMAGES
two decades, while Lee Sharpe, a foot-
baller of comparable talent, afforded
the same environment to thrive in
and opportunities as Giggs, has long
since slipped from the British public’s
sporting conscience and was last seen
scrambling for attention on Celebrity
Love Island with Abi Titmuss.
ers like Jimmy Anderson are being
made to look ordinary. I think
England, and the leader of their
attack in particular, need to rethink
their strategy.
Anderson is bowling an off-stump
line, hoping for a bit of away move-
ment that will bring the slips into
play. Other than in his first over
against India, when he could’ve had
Virender Sehwag out with his first
delivery, he failed to move the ball off
the pitch or through the air.
That’s not down to any lack of skill,
we know he’s a real star, but bowling
in the subcontinent is different to
anywhere else in the world and you
need to adjust accordingly.
Anderson needs to take a leaf out
of Tim Bresnan’s book and bowl
straighter, bring LBW into play and
Deep flaws are the
NO flipside to plenty
of geniuses, says
Frank Dalleres
SURE, the world would probably be a
better place if everyone fulfilled every
last drop of potential in their DNA,
but does that mean we all must? It
may well be their loss and possibly
ours too, but if someone wants to
waste the talent they were born with
that is fundamentally their right.
There are, after all, far greater crimes.
But more importantly, do we really
want all our sporting heroes to be
relentlessly efficient machines?
Followed to its logical conclusion, the
argument in favour of all athletes
being utterly dedicated would dis-
qualify those who briefly or intermit-
tently burn brightly despite major
question marks over their lifestyle or
temperament. And they include some
of sport’s greatest icons.
Could Ronnie O’Sullivan have
achieved more with greater applica-
tion or a steadier disposition?
Perhaps, but what would he be with-
out his impulsive, self-destructive
streak? The answer is Stephen
Hendry, winner of seven world snook-
er titles during the 1990s and the
archetypal pro but never likely to beat
O’Sullivan in a popularity contest.
Sport is littered with similar charac-
ters. George Best, John Daly, Naseem
Hamed all dazzled because they were
unpredictable, at times unfath-
omable, mavericks. Hamed’s lopsided
southpaw stance delighted fans and
knocked out 31 of 37 foes. It also
proved a weakness. But it was part of
who he was, part of the Hamed who
enjoyed the moniker ‘Prince’ and som-
ersaulted into the ring.
The same impulses that drive
geniuses to moments of greatness can
be blamed for their worst failings. Yet
by seeking to bring wayward charac-
ters into line we risk losing their edge,
their humanity, and the sparks that
make them loved and sport the end-
lessly diverting spectacle that it is.
starve batsmen of the width they
thrive on there. Anderson’s job
should be about containment and
building pressure, rather than look-
ing to bowl the magic balls he so reg-
ularly produced during the Ashes.
LAST CHANCE FOR COLLY
It’s not nice to see a guy like Paul
Collingwood struggling, but he really
needs to be bringing something to
the party, with the ball as much as
the bat, if he’s to maintain his place.
His slow off-cutters should provide
a real option in these conditions, but
with his confidence drained, it
appears Strauss doesn’t trust him
with the ball. I expect Ravi Bopara,
who rescued us against Holland, to
take his place as the tournament
reaches its later stages.
25
SPORT | IN BRIEF
Pakistan trio to fight bans
CRICKET: Former Pakistan captain
Salman Butt, along with Mohammad
Asif and Mohammad Amir have filed
appeals to the Court of Arbitration for
Sport against bans for spot-fixing. Butt
was banned for 10 years, with five of
them suspended, after being found
guilty of corruption by an International
Cricket Council tribunal. Asif was hand-
ed a seven-year ban, with two of them
suspended, while Amir was banned for
five years.
Malinga destroys Kenya’s hopes
CRICKET: Lasith Malinga claimed six
wickets – including a hat-trick – as Sri
Lanka eased to a comfortable nine-wick-
et victory over Kenya in World Cup
Group A. Five wickets in 11 balls from
Malinga dismissed the Tigers for 142
and gave the bowler figures of 6-38. Sri
Lanka breezed to their target thanks
largely to Tillakaratne Dilshan (44) and
Upul Tharanga (67 not out).
Jockey Walsh ready for his return
HORSE RACING: Ruby Walsh is set to
return to action at Newbury on Friday
after four months on the sidelines with a
broken leg. The top Irish jockey is
expected to make his comeback 11 days
before the start of the Cheltenham
Festival.
London to stage final leg of tour
CYCLING: The final stage of this year’s
Tour of Britain will return to central
London when the national stage race
finishes on Whitehall on 18 September.
The stage was moved last year due to
the Papal visit but its return to the tradi-
tional circuit will provide an opportunity
for fans to see the top cyclists compet-
ing on the streets of London less than a
year before the Olympic Games.
Results
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email sport@cityam.com
 26 Sport CITYA.M. 2 MARCH 2011

GAME ON
KEY MOMENTS

29 mins: It just had to be him. After the FA

decided not to take action for his elbow on l Chelsea comeback dents United’s title challenge
l Ferguson risks FA wrath after rant at ref Atkinson
Wigan’s James McCarthy, it was inevitable
that Wayne Rooney would get on the score-
sheet, and so it transpired. Nani worked the
ball into his path, Chelsea stood off and the
striker rifled low past Petr Cech from 20 yards

[Luiz] does Rooney clear as day,

CHELSEA 2 [Atkinson is] six yards from it, he
doesn’t do anything.”
Victory hoisted Chelsea above
Tottenham and back into the
MANCHESTER UTD 1 Champions League places, as well
as giving second-placed Arsenal a
huge boost, but the Blues remain
▲

FOOTBALL 12 points behind United and man-

54 mins: Chelsea may have spent £50m on
Fernando Torres in January, but at this early
stage centre-half David Luiz looks likely to
provide better value for money. The Brazil
centre-half was influential at both ends and
capped a fine display with a technically per-
fect volley that screamed in at the near post
79 mins: Chris Smalling performed admirably,
but it was he who conceded the decisive
penalty. Yuri Zhirkov made the most of the
challenge, but by dangling a leg Smalling left
Martin Atkinson with no choice but to point
to the spot. Frank Lampard kept calm and
smashed the spot kick down the middle
BY FRANK DALLERES, STAMFORD BRIDGE
MANCHESTER UNITED manager Sir
Alex Ferguson risked a Football
Association charge with a scathing
attack on referee Martin Atkinson
after his side’s march towards the
Premier League title was hit by a
magnificent Chelsea comeback.
Frank Lampard’s penalty decided
a pulsating encounter after David
Luiz had cancelled out Wayne
Rooney’s opener, as the champions
prevented 10-man United from
opening up a seven-pont gap at the
top of the table and boosted their
own hopes of a top-four finish.
But Ferguson, who saw captain
Nemanja Vidic sent off in stoppage
time, vented his fury at Atkinson,
in particular his failure to show
Luiz a second yellow card and his
awarding of the decisive 79th-
minute penalty.
He said: “The penalty kick was so
soft. Deary me. But we played very
well. We didn’t deserve that. That’s
three years in a row referees’ deci-
sions have changed the game [at
Chelsea].”
He added: “It was incredible. He
ager Carlo Ancelotti admits defend-
ing their title remains unrealistic.
“We are too far from United,” he
said. “They are a very strong team
and its difficult for them to lose
points. We have to focus on our
own team.”
Ancelotti again defended the
spirit in his squad, after days of tur-
moil caused by Ashley Cole acciden-
tally wounding an intern with an
air rifle. He added: “The team
tonight showed good spirit. I think
we never had a problem with unity
of the players, they always stay
together, in good and bad
moments it’s the same.”
Chelsea started brightly, Torres,
Essien and Anelka worrying the
United rearguard, but the visitors
improved and silenced Stamford
Bridge by taking the lead through
Rooney on 30 minutes.
From then on United looked in minute, when Zhirkov tumbled
charge, despite Van der Sar’s over Chris Smalling’s leg, and
double save from Lampard’s free- Lampard despatched the penalty.
kick and Ivanovic’s follow-up, until United’s night got even worse in
Luiz’s equaliser nine minutes after injury time when Vidic was shown
the restart. a second yellow card, earning him
The contest was flung open but a ban for Sunday’s heavyweight
Chelsea got their break in the 79th clash with Liverpool at Anfield.

+++++ FA CUP FIFTH ROUND REPLAY +++++ FA CUP FIFTH ROUND REPLAY +++++ FA CUP FIFTH ROUND REPLAY +++++

Koscielny still suffering from Van Persie out of

cup final gaffe, says Wenger
the Gunners an end to their six-year
ARSENAL wait for silverware.
Wenger has revealed Koscielny has
taken the disappointment harder and
LEYTON ORIENT is worried about the centre-back’s con-
fidence for the rest of a season that
could still yield three trophies.
▲
on board and we do not want that his
confidence drops because he made
certainly a mistake, he is really angry
about it. We have, as well, to show that
we support him and that we believe he
is a fantastic defender.”
Neither Koscielny nor Szczesny will
Barcelona match
STRIKER Robin van Persie has been
ruled out of next week’s Champions
League trip to Barcelona after being
told he will need at least three weeks
to recover from a knee injury.
Winger Theo Walcott will also def-
initely miss the second leg of the last
16 tie, which the Gunners lead 2-1,
but captain Cesc Fabregas “is looking
possible”, manager Arsenal Wenger
said yesterday.

FOOTBALL
BY FRANK DALLERES
ARSENAL manager Arsene Wenger
admits Laurent Koscielny is struggling
to get over his part in the fatal Carling
Cup final cock-up more than goalkeep-
er Wojciech Szczesny.
The pair’s blunder allowed Obafemi
Koscielny feels more culpable than Martins to snatch Birmingham’s
Szczesny, says Wenger Picture: GETTY shock 89th minute winner and deny
Asked if he had spoken to the two
players, he said: “I have, not too much.
More to Laurent Koscielny because he
suffered more.
“You have to be realistic, analyse in
a realistic way what you did wrong.
But, as well, Koscielny has been a great
player for us since the start of the sea-
son, so it’s important he keeps his con-
fidence level well and that he gets
encouragement. He takes everything
face Leyton Orient as Wenger rotates
his side for this evening’s FA Cup fifth
round replay.
Fit-again midfielder Abou Diaby and
goalkeeper Manuel Almunia are set to
start against the League One under-
dogs while as Arsenal look to bounce
back and avoid the collapse of their
season that has followed significant
defeats in previous campaigns,
notably 2007 and 2008.
Fabregas limped off against Stoke
last week and missed Sunday’s
Carling Cup final but is determined to
face his boyhood club, having missed
the corresponding fixture last season.
Midfielder Alex Song, who suffered
a blow to his knee at the weekend,
will miss tonight’s match but could
return for Saturday’s Premier League
visit of Sunderland.
CITYA.M. 2 MARCH 2011
Lampard struck the win-
ner from the penalty
spot in the 79th minute
Picture: PA
Skipper Matt Mills was Reading’s matchwinner
Everton stunned by Royal vintage
EVERTON 0 Liverpool en route to the last eight in
READING 1 McDermott admitted the team had
▲
FOOTBALL
READING captain Matt Mills struck
the only goal as Championship
Reading claimed another notable top-
flight scalp to reach the FA Cup quar-
ter-finals for a second successive year.
Mills fired home after 26 minutes
of their fifth-round tie at Everton to
Sport 27
So have Chelsea Crocked Sheridan out of Six Nations
blown the title
race wide open? RBS Corbisiero in the win over the
French, the London Irish front row
scrummage and world-class players
in William Servat and Nicolas Mas
6 NATIONS forward also stood in for the British and he acquitted himself well.
BY JAMES GOLDMAN and Irish Lions star during the “He had to really fight. At times
FRANK LAMPARD’S penalty looks to thumping win over Italy last month. they got one on him and at times he
have breathed new life into the title Losing Sheridan represents a sig- got one on them. He did really well.”
race. United are still in the driving ENGLAND prop Andrew Sheridan nificant blow, but the emergence of Toby Flood also had to be replaced
seat but with Liverpool up next, a will miss the remainder of the RBS 6 the New York-born Corbisiero means early against France after injuring
march towards a record 19th league Nations campaign after tearing his Johnson can at least call upon a reli- his Achilles. England expect him to
title is now not such an inevitability. calf in last Saturday’s 17-9 win over able back-up. be fit for the Scotland game a week
France at Twickenham. “When Sheridan was injured for on Saturday but they will take no
United’s run-in The news is particularly galling the Italy game it was, in a way, a risks with him in training this week.
6 Mar Liverpool (A) for the 31-year-old considering blessing in disguise,” Johnson said. Jonny Wilkinson is, therefore, set
19 Mar Bolton (H) Martin Johnson’s side are just two “It gave Corbs an opportunity and to be retained in camp and not
2 Apr West Ham (A) wins away from landing their first when he came off the bench last released to play for Toulon in their
9 Apr Fulham (H) Grand Slam since 2003. week it wasn’t all new to him. He key Top 14 game against Clermont
16 Apr Newcastle (A) Sheridan was replaced by Alex was playing against a world-class Auvergne on Friday night.
23 Apr Everton (H)
1 May Arsenal (A)
7 May Chelsea (H)
14 May Blackburn (A)
22 May Blackpool (H)
Toughest remaining games
Judging by their record on the road
any game away from Old Trafford
represents a potential stumbling
block. Other than the trip to Arsenal,
visits to the Parks, St James’ and
Ewood, could provide problems.
Other distractions
At this stage of the season United
will hope to avoid any unnecessary
replays in the FA Cup, while European
demands will place extra pressure on
a squad which is far from a vintage
one in terms of strength in depth.
Biggest threats
It has to be Arsenal. Theoretically the
Gunners’ destiny is their own hands.
It’s a tall order, but win their remain-
ing fixtures and they’ll be champions.
And Chelsea?
Too little too late. Their focus is on
cementing fourth place and
Champions League qualification.
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