Business With Personality

BUSINESS WITH PERSONALITY
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IMF slashes
UK growth
forecasts
THE UK ECONOMY will grow much
more slowly than was forecast just
three months ago, the International
Monetary Fund (IMF) warned yester-
day, hampering efforts to bring
down the huge budget deficit.
The rapid worsening of the debt cri-
sis in the Eurozone was largely to
blame, although the IMF also
warned in its global update that the
US must avoid letting tax breaks and
spending projects expire this year.
But the IMF saved its most dramat-
ic outlook cuts for the UK.
GDP is now expected to grow by
just 0.2 per cent this year down
sharply from Aprils forecast of 0.8
per cent and last Junes prediction of
2.3 per cent. Growth in 2013 is set to
reach 1.4 per cent, down 0.6 percent-
age points from Aprils prediction.
That compares with US growth of
two per cent in 2012 and 2.3 per cent
in 2013, each down 0.1 percentage
point on the previous outlook.
As a result the IMF now expects the
UKs budget deficit to come in at 8.1
per cent of GDP, worse than the 7.9
per cent predicted in April.
Meanwhile Germanys outlook has
been upgraded the IMF expects its
GDP to expand by one per cent this
year, up 0.4 percentage points on the
previous forecast.
The IMF also argued only a real res-
olution to the Eurozone crisis would
lift global growth, calling for a full
banking union and sustained
reforms to the peripheral economies.
The IMF also trimmed its outlook
for France by 0.1 percentage point,
and now expects economy to con-
tract 0.3 per cent in 2012. It has also
approved Portugals latest 1.48bn
tranche of loans linked to its bailout.
Del Missier (l) contradicted Diamond, while the FSAs Turner (r) said he had pushed for the CEO to go
REGULATORS claimed last night that
they felt gamed by Barclays as for-
mer executive Jerry del Missier told
MPs that Bob Diamond had instructed
him to lower the banks Libor rate sub-
missions.
Appearing in front of the Treasury
select committee del Missier, Barclays
ex-chief operating officer, admitted
instructing traders to reduce Libor sub-
missions but said he would not have
given the order if he did not think it
had the backing of the Bank of
England.
Mr Diamond told me [deputy gover-
nor of the Bank of England] Mr Tucker
had given the instruction, he said.
What was communicated to me by
Mr Diamond was that there was politi-
cal pressure on the Bank regarding
Barclays health and that we should
get our Libor rates down.
This is in stark contrast to Diamonds
account of the same conversation. The
former boss has claimed there had
been no direction from the Bank of
England and he had not told del
Missier to alter the Libor rate.
Despite this del Missier struggled to
explain to MPs why he did not double-
check the instruction.
At the time it seemed appropriate
given everything that was going on...it
didnt seem a significant event.
In a new development it was
revealed that Barclays compliance
department was informed of the
October 2008 instruction to lower
Libor submissions at the time but
apparently took no action.
The money market desk informed
compliance of the request that had
come in. There was no follow up with
me or anyone in senior management,
del Missier told the committee.
At the same hearing Andrew Bailey,
head of the prudential business unit
BY TIM WALLACE
FTSE 100 M5,662.43 -3.70 DOW M12,727.21 -49.88 NASDAQM2,896.94 -11.53 /$ 1.56 unc / 1.27 unc /$ 1.23 +0.01
BUSINESS WITH PERSONALITY
LONDON2012
days to go
See The Capitalist Page 9, Debate Page 17, Sport Pages 23-24
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BY JAMES WATERSON
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28/05/2012 till 01/07/2012 is 132,857
at the Financial Services Authority
(FSA), said Barclays had a culture of
gaming and gaming us that came
from board level.
Although I could not find the evi-
dence that [Bob Diamond] had his
hands on these things, you couldnt
escape the fact that the culture was
coming from the top. The relationship
was not antagonistic. He would come
in and say I hear what youre saying.
But I could not see action.
Yesterday minutes were released of a
Barclays board meeting held in
February this year and addressed by
Bailey. He told directors that some reg-
ulators felt Barclays was not all that it
should be and that the bank can be
seen as relatively aggressive.
FSA chairman Lord Turner said
Barclays was the only bank he has writ-
ten to with concerns about corporate
attitude, adding he told Barclays chair-
man Marcus Agius that Diamond
would have to go on 29 June, two days
after news of the Libor scandal broke.
His colleague Tracey McDermott con-
firmed that the FSA is investigating
seven institutions over their alleged
involvement in Libor-fixing, adding
that not all are British.
FSA: BARCLAYS
WASGAMINGUS
Del Missier says he
believes Bob Diamond
told him to rig rates
Head of watchdog
gave clear message
Barclays boss must go
Regulator says it is
investigating seven
banks in Libor probe
Claims that Barclays
compliance team knew
of market manipulation
FIRST ATHLETES HIT LONDON
HEATHROW COPES BUT OLYMPIC LANES TRIGGER TENSIONS
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
IN BRIEF
Pension pots to be more portable
nPension pots will follow workers as
they change jobs, according to new
plans announced by pensions czar Steve
Webb today. Many employees pensions
are tied to their employer under current
rules, meaning that when they move job
they can lose access. But the new plans
will consolidate the small individual
funds built up at different firms into one
individual-centred pot. The Association
of British Insurers came out firmly
behind the measure, saying the plans
will cut down on the number of lost
pots and increase choice for savers.
Hedge fund pioneer dies at 79
nBarton Biggs, a former chief global
strategist for Morgan Stanley who
predicted that the internet bubble
would burst a year before it did, has
died, the bank said yesterday. Biggs
also played a significant role in the
hedge fund industry where he co-
founded one of its first firms, Fairfield
Partners, in 1965. Nearly four decades
later in 2003 he founded hedge fund
firm Traxis Partners and remained one
of its portfolio managers until the end
of his life.
Banks state support halved
nThe taxpayer was still supporting the
banking sector to the tune of 228bn in
March, said the National Audit Office
yesterday. This is down from last years
figure of 456bn and an earlier peak of
1.2 trillion. The Treasury estimates that
accounting for all economic costs, the
support schemes have represented a
transfer of 5bn or more from taxpayers
to the financial sector.
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PTT to take over Cove as
Shell pulls out of auction
SHELL dramatically pulled out of
the bidding war for Cove Energy
yesterday, leaving the path clear
for Thailands PTT to buy the
British explorer for 1.2bn.
Shell, which initially had the
blessing of Coves board for its
takeover advances, said yesterday
it would not improve its latest
1.12bn offer for the Mozambique-
focused energy firm.
Coves Aim-listed shares tumbled
13 per cent to 238p below PTTs
240p offer price after investors
wanting to see the next round of a
bidding ding-dong were disap-
pointed.
Shell gave no reason for its depar-
ture from the fight, on the same
day the Takeover Panel prepared to
flush out the firms final offers by
starting a sealed auction process.
PTT, which muscled in on the
sale process in February, has
extended its offer until 25 July and
hopes to close the takeover within
months.
Last week it had secured accept-
ances from just 0.25 per cent of
investors, who after months of
takeover interest were made up
chiefly of hedge funds sitting on
their hands while the chance of an
improved bid remained.
Philip Wolfe, one of the bankers
Greece cuts executive rewards
Greeces coalition government has
stripped the executives of loss-making
state electricity producer of a monthly
3,500 allowance paid on top of their
salaries, in a move signalling their
intention to cut wasteful public sector
spending.
Delancey bids to use park media
centre as a data store
Delancey, the property company that
teamed up with Qatari investors to buy
the Olympic village for 557m, is funding
a bid to convert the games media centre
into a data storage facility.
Google revises Brussels offer
Google has submitted a revised package
of concessions to address the concerns of
Europes top competition authority,
bringing the talks to settle the EU
antitrust investigation to a critical
juncture. Joaqun Almunia, the EUs
competition commissioner, recently spoke
to Eric Schmidt, Google chairman, and
requested the US group clarify its informal
offer submitted two weeks ago. The initial
google proposal came after Almunia
delivered an ultimatum demanding a
change in Googles business practices.
Coalition support plunges
Public confidence in the Conservatives to
run a competent and united government
has plunged since the Budget, a Populus
poll reveals today after more dire
economic news.
Third of BBC presenters paid off
payroll
The BBC has revealed that it pays 148 out
of its 467 regular presenters almost one
in three as well as thousands of other
staff, through limited companies that can
be used to avoid tax.
Ryanair in bid to thwart UK probe
into Aer Lingus stake
Ryanair has made an opportunistic move
to quash the UK Competition
Commissions investigation into its 29.8
per cent stake in Aer Lingus. The low cost
airline mounted a legal challenge against
the investigation yesterday.
Banks bid for Cinvens 1bn IPO
Private equity firm Cinven has held a
selection process for investment banks to
oversee the 1bn flotation of its pension
company Partnership Assurance.
Merkel calls for new Kyoto
agreement
German Chancellor Angela Merkel
yesterday urged international
environment ministers to follow through
on commitments made in the landmark
Kyoto treaty to reduce greenhouse gases.
GM sees expanded European losses
General Motors expects to report
substantial losses in Europe for the rest of
the year, damping hopes of a second-half
recovery that the auto maker earlier had
anticipated, according to sources.
RATINGS agency Moodys
downgraded eight Italian banks
yesterday, due to worsened feelings
about Italian government debt,
following Italys sovereign
downgrade on Friday.
The UniCredit and Intesa
Sanpaolo groups saw their
members long-term ratings cut
across the board, to Baa2 or Baa3.
Smaller banks Instituto Servizi
Mercato Agricolo Alimentare, GE
Capital, Cassa Depositi e Prestiti,
Credito Emiliano, Banca Carige
and Cassa di Risparmio di Parma e
Piacenza also saw their ratings cut.
Moodys cuts
Italian lenders
Cove, led by John Craven, will be taken private by Thailands energy firm PTT
2
NEWS
BY BEN SOUTHWOOD
BY MARION DAKERS
To contact the newsdesk email news@cityam.com
N
O other trend is as important as
the population explosion since
the Industrial Revolution: there
are now more human beings
than ever before. This holds true also
for the UK: yesterdays 2011 UK census
results showed another huge rise. The
population of England and Wales
surged by 3.7m in the last decade
7.1 per cent reaching 56.1m, aged 39
on average. This was the largest rise
in any 10-year period and compares
with a 1.6m rise in 1991-2001. The UK
population is now around 63.1m up
4m. The stats came as a shock to the
authorities: there are 476,000 more of
us than they predicted, which helps
to explain why our infrastructure is
creaking at the seams.
Only four EU countries Cyprus,
Ireland, Luxembourg and Spain
grew faster than the UK. The number
of households is up 7.5 per cent, 0.4
EDITORS
LETTER
ALLISTER HEATH
Britains booming population has reinforced Londons power
TUESDAY 17 JULY 2012
points more than the population, sug-
gesting average sizes are stabilising
(partly because kids are staying longer
with their parents).
Twenty years ago, the North and
London/South East had almost identi-
cal populations; today, the latter are
ahead by a combined 1.9m. Londons
population is 8.174m, up 11.6 per cent
over the past 10 years and 19.7 per
cent over the past twenty. The South
East now houses 8.635m, up 7.6 per
cent over ten years and 13.1 per cent
over 20. But while Londons popula-
tion has rocketed, its population of
over-65s has remained static since
2001. All of these figures are crucial
for marketers: more of their wealthi-
est, working audiences are now based
in London and its commuter belt,
while the UK counts more women
and young people than expected.
The UKs booming population also
reminds us that GDP growth is a mis-
leading indicator what counts is
GDP growth per person. The UKs
recent performance has thus been
even poorer than previously thought.
The largest jumps in population
were seen in Tower Hamlets (up 26.4
per cent) and Newham (up 23.5 per
cent), with Hackney, Hounslow,
Greenwich and Waltham Forest also
growing strongly. These surges were
fuelled by immigration and redevel-
opment of derelict industrial areas
that there are not huge problems,
especially when the framework is
flawed: the government, which con-
trols education, health and infra-
structure, is hopeless at planning. We
need a welfare system that encour-
ages the integration of migrants.
Those who move here must embrace
their new country. There should be
zero tolerance of extremists.
Immigration has partly been fuelled
by the inadequate skills and attitudes
of too many UK-born citizens: we
need welfare and educational reform
to increase the supply of domestic
labour and thus reduce the demand
for migrants. But the pessimists
should remember this: there is some-
thing worse than a growing popula-
tion, and that is a shrinking one.
into residential properties (Tower
Hamlets, home of the Isle of Dogs and
Canary Wharf, is a case in point). The
biggest jump in the South East was in
Milton Keynes, up 17 per cent.
Kensingtons population dropped 2.2
per cent its properties are now more
often used as part-time pads, and
young families have been priced out.
Overall, 56 per cent of the increase
was caused by immigration, with the
difference between deaths and births
accounting for the rest (though there
too immigration played a part). I am
relaxed about this and population
increases more generally. Like Julian
Simon, the US academic, I believe
that human beings are the Ultimate
Resource. Malthusians are wrong.
With the right institutional frame-
work, an increased population can be
accommodated and lead to increased
prosperity. But that doesnt mean
at UBS working for PTT, told City A.M.
the acquisition will be in
Thailands national interest. Its by
far the biggest deal that PTT has ever
done, and it gets them ahead of
other Asian national oil companies
[in Africa].
Market-watchers said Shell could
now turn to other stakeholders in
Mozambiques gas resources, such as
Anadarko, as a route into the region.
Coves key asset is an 8.5 per cent
stake in the Rovuma offshore fields,
thought to be among the worlds
biggest gas deposits.
Energy majors including BP, Total
and Exxon were among the firms
looking at Coves data room when it
revealed it hoped to sell out at the
end of 2011.
The Takeover Panel said last week
that it would kick off a sealed auc-
tion today if a clear winner did not
emerge. The firms would have sub-
mitted bids with a daily deadline
until one company bested the other.
Had it gone ahead, the auction
would have been the first time since
2008 that the panel had used this
power.
Cove Energy PLC
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The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
YAHOO unveiled Marissa Mayer as
president, chief executive, and
board member last night, its fifth
boss in four years not counting
caretaker heads.
She joins the ailing web giant with
13 years of experience
at Google, having
started as its 20th
employee in 1999. She
said she was
honoured and
delighted to
start in her
new post as of
today.
Yahoo taps up
Googles Mayer
BY BEN SOUTHWOOD
MICROSOFT last night unveiled a new
version of Office, its flagship software
suite, in an attempt to drive usage of
its upcoming Windows 8 operating
system and Surface tablets.
The technology giants chief execu-
tive Steve Ballmer, called it the most
ambitious release of Office weve
ever done at yesterdays press con-
ference in San Francisco.
The new version is the first to be
designed for tablets as well as PCs,
and was revealed weeks after
Microsoft announced Surface, its
competitor to Apples iPad.
The latest software, called Office
2013, will also store and edit docu-
ments online in the cloud, so that
they are available on other comput-
ers, tablets and phones.
Office is Microsofts most prof-
itable division, and dominates the
business application market. Its suc-
cess is seen as crucial to Microsofts
plans for Surface and Windows 8.
The smaller of the two Surface
models will run the Windows RT ver-
sion of the operating system, which
includes the touchscreen release of
Office, while the desktop version will
only run on Windows 7 and 8, mean-
ing those running older software
will have to upgrade.
Microsoft did not reveal Office
2013s price or release date.
Microsoft looks
at Office 2013
to drive sales
BY JAMES TITCOMB
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PHARMACEUTICAL mammoth
GlaxoSmithKline (GSK) has acquired
Human Genome Sciences (HGS) in a
friendly $3bn (1.9bn) cash offer, fol-
lowing months of hostile pursuit.
The sweetened offer of $14.25 per
share is a premium of 99 per cent
over HGSs undisturbed share price.
HGS had previously rejected as
insufficient an offer of $13 per
share, which valued the company at
just under $2.6bn.
But the British behemoth ended
up persuading its long-time partner
to sell out, in a tie-up that is expect-
ed to achieve $200m cost savings by
2015.
We are pleased to have reached a
mutually beneficial agreement with
HGS on friendly terms and believe
the combination of GSK and HGS
represents clear financial and strate-
gic logic for both companies and our
respective shareholders, said GSK
chief executive Sir Andrew Witty.
Both Witty and the boss of HGS, H
Glaxo clinches
HGS with new
$3bn cash offer
BY BEN SOUTHWOOD
Thomas Watkins, pointed to
Benlysta, the blockbuster lupus
drug, as a major reason for the deal.
HGS has had a long and produc-
tive working relationship with GSK,
and together we will be uniquely
positioned to achieve the full poten-
tial of Benlysta for the benefit of
those battling serious disease
around the world, Watkins com-
mented.
GSK will also get full ownership of
albiglutide and darapladib, experi-
mental medicines for diabetes and
heart disease in the later stages of
development.
GLAXOSMITHKLINE took advice from
Lazard and Morgan Stanley throughout its
multi-billion dollar acquisition of Human
Genome Sciences.
The Morgan Stanley team was made up of
Clinton Gartin, Thomas Sheehan, Susan
Huang, Steven Harr and Ari Terry, all man-
aging directors.
Although a Morgan Stanley spokesperson
said the banks culture was more about
teamwork than individual stars, Clinton
Gartin has long been the banks rainmaker
in the sector, thought to be involved in
more than $110bn of healthcare deals in
2009 alone.
Gartin advised on both US drugmaker
Pfizers $68bn capture of rival Wyeth, and
Mercks $46bn reverse merger with
Schering-Plough.
The Lazard team was led by Antonio
Weiss and David Gluckman, the latter a
former physician and co-founder of the
firms biotechnology practice.
Glaxos legal advisers were Cleary
Gottlieb Steen & Hamilton, and Wachtell
Lipton Rosen & Katz.
Human Genome Sciences took financial
advice from Goldman Sachs and Credit
Suisse, and for legal advice it turned to
Skadden Arps Slate Meagher & Flom.
ADVISERS MORGAN STANLEY, LAZARD, GOLDMAN SACHS, CREDIT SUISSE
CLINTON GARTIN
MANAGING DIRECTOR,
MORGAN STANLEY
Olympic blow at G4S
SHARES in security giant G4S
plummeted 8.5 per cent yesterday
on investor fears that the firms
failure to provide enough Olympic
guards will cause long-term
reputational damage.
Chief executive Nick Buckles will
appear in front of parliaments
home affairs select committee
today to explain what went wrong.
But he is fighting to stay in his
job as the 50m cost of paying for
3,500 members of the armed forces
to make up the shortfall looks set
to be dwarfed by the public
relations disaster.
BY JAMES WATERSON
G4S has evidently over-stretched
itself with a high profile contract,
which could have wider
implications for the groups ability
to win work, said Espirito Santo
analyst David Brockton. [This]
could result in either senior
management change or loss of
future prospects.
Robert Plant at JP Morgan
Cazenove added: Around 10 per
cent of G4S revenue is for UK
public sector contracts and
management had said that the UK
public sector was one of the more
active parts of the pipeline.
G4Ss stock dropped to 254.6p
yesterday, leading the FTSE 100
loserboard.
GlaxoSmithKlines chief executive Sir Andrew Witty wanted Human Genome for months
GlaxoSmithKline PLC
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NEWS
cityam.com
FORMER AstraZeneca chief
executive David Brennan has
waived his right to a 2012 bonus
and will lose out on two yearss
worth of performance-related
shares, the pharmaceuticals giant
revealed yesterday.
Brennan was one of the first
scalps of this years so-called
shareholder spring, stepping down
in June after investors voiced their
anger over declining share prices
and loss of patents.
At the end of 36 years with the
Brennan waives AstraZeneca
bonus but leaves with millions
BY JENNY FORSYTH
firm, Brennans severance pay
includes 11 months salary, worth
914,122, plus shares awarded in
2010 worth 1.5m. He also has a
pension pot of around 14m.
In a statement, AstraZeneca
said: Mr Brennan informed the
remuneration committee that he
did not wish to be considered for a
bonus in respect of that part of
2012 during which he was chief
executive officer.
After Brennans resignation,
Aviva boss Andrew Moss and
Trinity Mirrors Sly Bailey also
succumbed to investor pressure.
HSBC executives are set to face the
US Senate today to answer questions
on the banks money laundering
controls.
A Senate committee last night
published a scathing report
following a year-long inquiry into
HSBCs efforts to stop illegal money
flows between its US and
international offices.
Politicians are due to question
bank staff and regulators today.
HSBC chief exec Stuart Gulliver has
said the bank will acknowledge
and apologise for its shortcomings.
Senate to grill
HSBCs execs
BY CITY A.M. REPORTER
CITIGROUP profits fell again in the
second quarter, its results revealed
yesterday, as a loss on the sale of its
stake in Turkish institution Akbank
added to the headwinds it faces from
the Eurozone crisis and a substantial
drag from troubled assets left over
from the financial crisis.
Net income came in at $2.95bn
(1.85bn), down 12 per cent from
$3.34bn in the same three-month
period of 2011, while revenues slid 10
per cent to $18.4bn. This is the banks
the third consecutive fall in profits.
But the drop was smaller than mar-
kets expected, pushing shares up six
per cent to $26.81 last night.
Citi lost $424m on the sale of its
10.1 per cent stake in Akbank and
$920m on bad housing assets in Citi
Holdings, while investment bank rev-
enues slumped 21 per cent to $854m
on lower market activity in large
part due to the uncertainty created
by the Eurozone crisis.
But the bank continued to build up
its capital buffers in advance of the
Basel III rules coming into force.
Eurozone woes
and bad assets
hit Citi profits
BY TIM WALLACE
Citis core tier one capital ratio now
stands at 7.9 per cent under the latest
guidelines, up from 7.2 per cent in
the previous quarter. That is expect-
ed to hit eight per cent by the end of
2012.
Meanwhile chief finance officer
John Gerspach sounded quietly confi-
dent on the Libor scandal.
With Barclays Libor settlement it
certainly raised questions about other
Libor submitting banks, he told the
conference call, adding that Citi is co-
operating fully with the authorities.
But I would caution you that one
should not infer from the situation of
one Libor submitting bank that every
bank is the same or similar.
Chief executive of Citigroup Vikram Pandit said it remained focused on managing risk
C
ITIGROUPS shareholders
rejected chief executive Vikram
Pandits $15m (9.6m) pay
award in March, amid
complaints that it didnt sufficiently
reflect company performance.
Yesterday, Americas third-biggest
bank did its best to show them its
performance was on the up. Its share
price did rise, although only because
things were less bad than feared.
The trouble is, back in March Citi
also failed the Federal Reserves stress
test. As a result, its near-term mission,
as its presentation yesterday
indicated, is maintaining strong
capital and liquidity levels.
After its $476bn bailout, regulators
will do everything they can to stop
this systemically-important financial
institution from taking more risks.
Whatever the consequences for the
global economy, that cant be good for
equity-holders returns. Pandit has
mooted an increased dividend by the
end of the year, but for now it remains
an aspiration as the repairwork goes
on.
It may have been a mistake for
Pandit to agree to be paid $1 a year
when things were at their worst. In
Citis constrained circumstances, it
might just give shareholders ideas.
Marc Sidwell is City A.M.s managing
editor
Citigroup Inc
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16Jul
SWEDISH banking group SEB said
yesterday it had the right buffers in
place to protect it from Europes
deep sovereign debt problems, as it
posted second-quarter operating
profit well above forecast.
SEBs core tier one capital level
rose to 15.3 per cent in the quarter
from 13.9 per cent in the first
quarter. The banks core net
interest income was 4.5bn Swedish
crowns (408m), beating a 4.2bn
crown forecast by a poll of analysts.
Operating earnings from April to
June were 3.95bn crowns.
SEB buffers and
takings pick up
STOCKBROKER Arden Partners
revealed a 50 per cent fall in pre-tax
profits yesterday, as chief executive
Jonathan Keeling blamed the
Eurozone crisis for challenging
trading conditions.
Pre-tax profits fell from 1.2m to
600,000 in the six months to 30
April, on revenues that slipped to
5.6m from 7.4m a year earlier.
During the period it took a one-off
hit of 400,000 for share payments
and reorganisation costs. The firm
also said yesterday it would pay an
interim dividend of 0.65p per share.
Profits fall at
broker Arden
BY ELIZABETH FOURNIER
4
NEWS
cityam.com
The cost of a bailout continues
to bite after a flunked stress test
BOTTOM
LINE
MARC SIDWELL
MARKETS took a hit across the pond
yesterday after data revealed that US
retail sales have sunk for three
straight months, prompting fears
over the strength of the recovery.
Despite the old adage to never
underestimate the American con-
sumer, retail sales last month fell 0.5
per cent disappointing analysts
who had predicted a small rise.
The last time US retail sales fell for
three months on the trot was late
2008, Capital Economics noted.
And we know what happened then.
Stocks dipped both in New York
and elsewhere in the world, the dol-
lar lost ground, and the yield on 10-
year Treasuries fell to a record low.
The Dow Jones
dropped 0.7 per
cent in early trad-
ing, ending down
0.39 per cent at
12,727.21 despite
paring some of its
US consumers
thrift prompts
recovery fears
BY JULIAN HARRIS
losses during the day.
The yield on benchmark 10-year
Treasury notes fell to 1.442 per cent,
matching the level set on 1 June,
which was the lowest going back to
the early 1800s.
Investors will continue to look for
hints of further stimulus measures
from the Federal Reserve when its
chairman Ben Bernanke takes the
stand for his latest testimony before
congressional panels today and
tomorrow. The Fed recently decided
to extend its so-called Operation
Twist programme, yet resisted more
quantitative easing (QE3).
The New York Fed yesterday report-
ed a rise in manufacturing activity
for July across the state. Yet the break-
down of the figures ensured that it
would remain a blue Monday for US
economic data, revealing a worrying
decline in new orders. Forward-look-
ing new orders contracted to minus
2.69 in the index, the lowest level
since September last year.
Meanwhile separate data from the
US Census Bureau showed that man-
ufacturers and trade inventories
were up 0.3 per cent in May, although
sales were down 0.1 per cent.
EUROPES banks could be tens of
billions further behind their Basel
III capital targets than previously
expected if planned new trading
book rules to calculate buffers are
adopted, researchers from Espirito
Santo warned yesterday.
The Basel Committee is
consulting on changes to the way
tail risks and market liquidity risks
are measured, and wants increased
standardisation of the models used
by banks to calculate requirements.
In its preliminary estimates of
the impact of the mooted changes,
Espirito Santo believes banks core
Capital requirements could get
stiffer with trading book tweak
BY TIM WALLACE
tier one ratios could be hit by as
much as 88 basis points
amounting to several billion euros
for some banks, and a total of tens
of billions across the sector.
However, the impact remains
uncertain. The consultation runs
until September, and Basel III is not
coming fully into force until 2019.
Meanwhile Ernst & Young
warned banks who appear to have
met the nine per cent capital target
will have a tough time maintaining
that as capital deductions are
phased in and instruments phased
out next year. That means more
must be raised next year a
pressure which could hit lending.
MORE ECONOMICS: Page 13

7
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OUR NEW SPREAD BETTING
PLATFORM HAS ARRIVED
W
ITHUK institutional
shareholders effectively
closing the door on
supporting money-raising
for anything that has the smell of
risk about it, like an IPO or new
issue for instance, some companies
and their financial advisers have
been scurrying around to find new
methods of raising capital.
One such instrument that has
been gaining currency in recent
months has been the retail bond,
which plays well to the needs of
investors whose savings choices are
limited by the historically low level
of interest rates.
These instruments tend to offer
a coupon of around five per cent
or more per year, far higher than
rates of interest currently being
offered in bank or building society
accounts (even though there is
obviously greater safety in leaving
ones money in a bank or building
society).
Last week Primary Health
Properties, a company that builds
and manages doctors surgeries and
pharmacies, raised 75m, reaching
its target a week earlier than
expected due to the strong demand.
Managing director Harry Hyman
said: The demand for the issue was
incredibly strong. The chance to get
five per cent plus interest is
attractive to investors whereas the
conditions in the market for a large
equity raise are not strong.
Most strong companies such as
Primary Health, with highly certain
revenues from long rental
agreements with government
agencies, would be able to raise
equity, even in these below par
market conditions.
But often issuers find they have
to do so at a big discount to their
existing share price, which becomes
dilutive to investors that do not
wish to participate.
In the case of Primary Health the
bond that was issued had a 5.4 per
cent coupon, which compares very
favourably with seven year gilt
yields that are currently around one
per cent.
Most of the recent issues are
regulated by the London Stock
Exchange and the bonds issued are
tradeable in the event of investors
wishing to trade ahead of their
fixed term, although some, such as
the John Lewis one, arent.
Those that have tried the retail
bond market include some large
companies such as National Grid,
Severn Trent, Tesco Bank and
Provident Financial with advisers
including Barclays Capital,
Evolution and Investec.
The advisers to the Primary
Health issue are Independent Debt
Capital Markets, a firm co-founded
by former ABN Amro executive
Stuart Bell in 2009. He told me that
the retail market has provided
another source of capital in a
reasonably efficient manner where
the pricing of an unsecured bond is
set between the cost of equity and
secured finance.
In 2011, there were 10 new issues
on the official stock exchange
market, raising more than 1.1bn.
As equity issues continue to
struggle, this is a market looking
set to expand.
INSIDE
TRACK
DAVID HELLIER
Retail investors step in where others fear to tread
david.hellier@cityam.com
Follow me on Twitter: @hellierd
Feds Ben Bernanke
testifies today
Its not quite another prawn
cocktail offensive but Labour
leader Ed Miliband is tonight
launching a drive to get individuals
with a business background to
seek election as candidates for the
party.
Says shadow business secretary
Chuka Umunna: We want more
people from the world of business
in our ranks from our
councillors to our MPs. There are
some already: like our MPs in the
shadow business team; all of whom
have set up and run businesses or
worked for business.
Labour seeks
business types
A
THLETES from around the
world started arriving in
London yesterday ahead of
the Olympics, just in time for
a snarl-up caused by confusion over
Olympic lanes, giving the first sign
of the widely predicted chaos on
the capitals congested roads.
The immediate cause of the hold-
up appeared to be the launch of the
first section of road reserved for
Olympic athletes and officials. One
lane of the M4 linking Heathrow
with the western edge of the capital
was yesterday closed to all non-
Olympic traffic.
This lane will form part of a 30
mile (48km) network of road lanes
designed to whisk 82,000 athletes
and officials through Londons
streets.
Observers yesterday said that some
drivers on the A4 (pictured right)
believed the Olympics lane had
come into force, when it hadnt.
Critics have nicknamed the
Olympic lanes Zil lanes after the
roads reserved for the limousines of
senior officials in the old Soviet
Union.
Traffic jam chaos greets athletes
London mayor Boris Johnson said
the city was ready for the Games, the
transport system would cope and vis-
itors would be safe. Johnson tried to
laugh off the fact that a bus trans-
porting hurdles champion Kerron
Clement got lost for four hours.
Given the problems, it may not
have been the best time for London
Councils, a body representing the
capitals 33 local councils, to publish
the findings of a survey suggesting
the majority of Londoners didnt
expect the Games to affect their
work and travel arrangements.
Perhaps Ipsos Mori, the polling
firm, would get different results if it
conducted the survey again.
Better sporting facilities are the
most-cited benefit among all age
groups with the exception of 18- to
24-year-olds, who are more likely to
identify increased tourism, econom-
ic benefits and better transport.
One in four Londoners say they do
not see any legacy or benefit, one in
10 say they dont know and just one
per cent said there would be a nega-
tive impact from debt or the cost to
the taxpayer of hosting the Games.
But new poll say Londoners positive about
the benefits stemming from the Olympics
Because we want to make sure were doing a good job, we may monitor and/or record our calls. We hope you dont mind.
HSBC Bank plc 2012. All Rights Reserved. first direct 40 Wakefield Road, Leeds LS98 1FD.
Join us, call
0800 24 24 24
Or visit
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Its not one. Not two. But three awards.
For the third year running, first direct have been
named Best Financial Services Provider in the 2012
Which? awards.
How did we do it? With competitive products and first
class customer service, online and over the phone.
Speaking of which, the judges were once again wowed
by our magic number, which lets our customers talk to
a real, friendly person 24 7 365. You see, when you call
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Got A Story? Email
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THECAPITALIST
Taxi hire firm Addison Lee is
mixing business with pleasure
or should that be little treasures by
allowing staff to care for babies while
working in the office. What may seem
an absurd idea is apparently an
effective way of encouraging staff to
return to work following maternity
leave. So far, eight babies have been
accepted at the Euston HQ as part of
the trial. According to MD Liam Griffin,
each mother is assigned a buddy so
when she is needed at meetings they
can take over her role. As you can
imagine, no worker wanted to take over
nappy changing duty, so thats down to
the parents taking it in turns.
The new Olympic lanes causes chaos on the A4 yesterday, with drivers shown here on
Sky News merging into two lanes, unaware the new lane rules are not yet enforced
S
K
Y

N
E
W
S
NATIONAL Grid hit out at Ofgem
over its plans to curb the cost of fuel
bills yesterday, with the regulators
initial 22bn proposals for upgrad-
ing Britains networks falling short
of expectations.
Ofgem will allow bills to rise by on
average 11 a year for the next eight
years, with a 7 increase next year
rising to 15 in 2021.
National Grid, which had been
pushing for an increase of up to 20
a year to fund an investment of over
30bn, said yesterday it was clear
that Ofgems plans differ substan-
tially from its own in several
important areas.
National Grid will spend 15bn on
upgrading electricity networks and
high pressure gas networks in
England and Wales, including
National Grid in
energy bill spat
with regulator
BY JAMES TITCOMB
attaching new offshore wind farms
to the energy grid, and 7bn on gas
lines for homes and businesses.
Ofgems chairman Lord Mogg said
Britain has an unprecedented
need to replace ageing infrastruc-
ture and meet environmental tar-
gets.
Ofgems final proposals are due to
be published at the end of the year.
WHAT DO YOU MAKE OF OFGEMS
INVESTMENT PLANS?
Interviews by Jamie Sutherland and Francesca Davie
I think you expect these increases, but there are ways
to avoid them. With newdevices on the market, you
can cut your own costs. There are a lot of things people can do to
drive costs down without going through the normal networks.
These views are those of the individuals above andnot necessarily those of their company
RICHARD
WHITEHEAD
EUROPA
The cost of living is increasing, and so are our bills

surely there should be a concerted effort to keep bills
down in the current economic situation. Renewable energy is a
good thing but Imnot sure this is the right time to invest.
CHRIS JONES
COMMERZBANK
Regulators should be staying away fromincreasing
our costs. Most businesses margins are coming
down, and so should those of energy companies. These costs
shouldnt be passed on to the average household.
FRANK THOMAS
ALAN DAY VW
National Grids chief executive Steve Holliday wants to raise bills by up to 20

CITYVIEWS
National Grid PLC
682.5
685.0
677.5
680.0
687.5
690.0
692.5
695.0 p
682.50
16Jul
THE COST of comprehensive car
insurance has fallen by 47 in the
last six months and now costs an
average of 797 across the UK,
according to analysis of 5m quotes
from Confused.com by consultants
Towers Watson. East London is the
area with the highest premiums at
1,628. The average quote for third
party, fire and theft cover is
around 1,149.
Car insurance
cost drops 50
BY JAMES WATERSON
CHINESE telecoms equipment maker
ZTE saw shares fall 17 per cent to
their lowest level for three years
yesterday after it warned that half-
year profits could fall by 80 per cent
compared with last year.
The smartphone and tablet
manufacturer blamed a drop in
domestic demand, foreign exchange
rates and lower investment income.
ZTE plummets
on profit fears
BY JAMES TITCOMB
11
NEWS
cityam.com
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and
12 Needham Road | Notting Hill | W11 2RP
Wednesday 18
th
Sunday 22
nd
July
week 12-8pm | sat. 10-7pm | sun. 12-6pm
Dave and Nick renew vows as
business heads back rail plans
PLANS to invest 9.4bn in rail
projects between 2014 and 2019
were given a warm reception by
business leaders yesterday, as the
coalition partners insisted they
would spend the entire
parliamentary term together.
As expected, the government
yesterday confirmed a programme
of investment that will see the
Midland Main Line electrified
between Sheffield and London
and bottlenecks removed across
the north of England and on the
East Coast Main Line.
Speaking at the launch, Prime
Minister David Cameron and his
deputy, Nick Clegg, dismissed
suggestions they were like a
warring couple, adding that the
Tories and Lib Dems plan to work
together until an election in 2015.
Its tough to be in government
in difficult times, its not always a
walk in the park, or in the rose
garden, Clegg said. None of that
will stop us from continuing to
govern in the national interest for
the whole country.
Transport commentator
Christian Wolmar told City A.M.
the coalition has shown it is
committed to rail. Politically its
interesting because it shows the
government sees the railways as
good news. A generation or two
ago they were seen as a Victorian
backwater that needed closing
down. Even when privatised the
railways were seen as industry in
decline, he said. The various
projects around the country are
politically motivated but that
doesnt mean theyre wrong.
John Longworth, director general
of the British Chambers of
Commerce, also applauded the
spending plans: Investment in our
rail infrastructure is important to
British business. So these
announcements are welcome, if in
many cases long overdue.
The coalition said the plan also
includes the electrification of
branch lines across the Thames
valley and a commitment to
electrifying freight lines across the
Midlands.
BY JAMES WATERSON
IN BRIEF
Tata vehicle sales rise six per cent
nTata Motors global vehicle sales rose
six per cent in June from a year earlier,
the Indian company said yesterday,
mainly helped by a 39 per cent rise in
sales of its luxury Jaguar Land Rover
vehicles. Tata Motors, part of the salt-to-
steel Tata Group conglomerate, sold
94,055 vehicles in June. The firm sold
28,215 Jaguar Land Rover vehicles in the
month.
H&M figures buck retail gloom
n Hennes & Mauritz, the worlds
second-largest clothing retailer, grew
annual sales at established stores in
June. The Swedish budget fashion firm
said yesterday sales growth at stores
open a year or more was steady in the
month the first of its fiscal third
quarter at three per cent in local
currencies. Total sales were up 13 per
cent from a year earlier.
Profits fall at recruiter SThree
n White-collar recruiter SThree said
yesterday its profits before tax fell 16.9
per cent to 9.3m in the half year ended
27 May, on revenues that grew by nine
per cent to 278.4m. The firm blamed
high property costs and an increase in
new sales heads for the fall in profits, but
also said it planned to maintain its
interim dividend at 4.7p per share.
SThree announced last month that chief
executive Russell Clements will retire
next April.
LAW firm Travers Smith said
yesterday its profits per equity
partner (PEP) grew by a huge 24
per cent in 2011-12, as revenues
jumped by 16 per cent.
Turnover at the firm was
83.8m, up from 72m in the
previous 12 months, helping
net profit increase by a quarter.
PEP for the year hit 804,000,
its highest level since before
the financial crisis in 2006-
2007. The average size of the
partnership firm edged up very
slightly, from 43 to 43.66.
Profits per
partner soar
at Travers
BY ELIZABETH FOURNIER
G
E
T
T
Y
SKY launches its own internet tel-
evision service Now TV today in
an attempt to compete with film-
streaming rivals Netflix and
LoveFilm.
The broadcasting giant, which
is trying to reach the 13m British
households without a paid TV
subscription, will charge 15 a
month for on-demand access to
hundreds of movies, and offer a
pay-per-view service for between
99p and 3.49 a film.
The service will expand to
include sports coverage later
in the year, followed by shows
from Skys entertainment
channels. Now TV will launch
on PCs, Android phones
and Macs today before
becoming available for
iPhone, iPad, games con-
soles and the forthcom-
Skys Now TV
launches to
rival Netflix
BY JAMES TITCOMB
ing YouView set-top box later in
the year.
Sky has seen its dominance of
pay television threatened by inter-
net services such as Netflix and
Amazons LoveFilm, which charge
5.99 and 4.99 a month respec-
tively for on-demand films. A Sky
TV package with movie channels
costs at least 37.50 a month.
BSkyBs managing director of
sales and marketing Stephen Van
Rooyen said Now TV is purposely
designed to attract new cus-
tomers.
The broadcaster is betting on
customers being willing to pay
extra for Now TVs offering of
exclusive content, with new
films available to subscribers
a year before they appear
on other services.
STANHOPE SNAPS UP BBC TELEVISION CENTRE
THE BBC has sold its
Television Centre
complex in the White
City area of London to
developer Stanhope for
about 200m. The BBC
put the 14-acre site on
the market in June 2011
and exchanged
contracts with
Stanhope at the
weekend, it said
yesterday. Stanhope,
reportedly backed by
Japanese property
company Mitsui
Fudosan, has not
revealed what it will do
with the doughnut-
shaped site, part of
which has protected
status. The BBC intends
to vacate Television
Centre by 2015.
The Woman in Black is on
Now TV before its rivals
12
NEWS
cityam.com
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MORNING UPDATE
Sign up to
our 10:30am
newsletter at
cityam.com
IN BRIEF
German delays over bailout fund
nThe German constitutional court
said yesterday that it would keep
Brussels waiting for nearly two more
months before announcing on 12
September whether the core Eurozone
country can legally ratify Europe's
permanent bailout scheme and the
fiscal pact for budget discipline.
Constitutional experts see the court
approving the European Stability
Mechanism (ESM) and fiscal pact,
albeit with warnings, while
parliament's approval of Spains
banking bailout on Thursday requires
only a simple majority, providing
some relief for under-pressure
Chancellor Angela Merkel.
Euribor rates hit new record lows
nEurozone bank-to-bank lending
rates hit new all-time lows yesterday,
pulled down by record low ECB interest
rates and its move to stop paying banks
interest on their overnight deposits.
The ECBs overnight deposit rate, which
it cut to zero on 5 July, acts as a floor
for money market rates as banks only
lend to rival banks if they are able to
earn a better rate of interest than at the
ECB. Three-month Euribor rates hit a
new all-time low of 0.477 per cent
yesterday, down from 0.486 per cent.
Renters cant afford to buy
nProspective first time buyers in the
UK are being squeezed out of the
property market, according to a survey
released yesterday. Over four in 10 (42
per cent) of renters are unable to save
for a deposit, while just under a third
(31 per cent) are spending over half
their post-tax income on rent, the
website spareroom.co.uk found. Sky-
high house prices inflict a double
whammy of pain on renters and
would-be first time buyers, said
Duncan Stott of the Priced Out
campaign group.
HOUSEHOLDS spending power
increased in June the first rise in a
year as the long squeeze on
incomes at last begins to ease,
according to a Lloyds report out
today.
Spending power in June was 0.7 per
cent higher than in the same month
of 2011, the bank revealed, as income
growth outstripped inflation for the
first time in 12 months.
That leaves consumers an average
of 80 per year, or 7 per month,
more to spend on discretionary
items.
Income growth came in at 2.8 per
cent on the year, while growth in
essential spending rose 3.3 per cent.
Growth in spending on non-essen-
tials fell to 1.9 per cent, leaving con-
sumers with more discretionary
spending power.
The improvement was driven by
debt repayments falling 0.6 per cent
and petrol and diesel spending
growth slowing to 1.6 per cent a
sharp fall from 11 per cent at the
start of the year.
That has contributed to a six per-
centage point jump in the number
reporting they have money left over
at the end of the month.
But that takes the total to only 50
per cent, leaving the other half of the
population still feeling squeezed and
Long squeeze
on pay eases as
inflation slides
BY TIM WALLACE failing to save.
We are still a long way from con-
sumers having a huge amount of con-
fidence in the economy, but there are
small signs that inflation is one thing
they are worrying less about, said
Lloyds TSBs Jatin Patel.
That more people have money left
over once they have covered their
monthly outgoings is positive, but
with many still negative about the
outlook for employment, it is unlike-
ly that this will translate into a lot
more spending in the high street.
It is more likely that we will see
people concentrating any spare cash
on paying down debts or savings for a
rainy day.
The survey found 91 per cent believe
the countrys employment situation
is not good down just one per-
centage point on Mays figure despite
positive official jobs data for the
month.
Economists urge UK to work smarter
WORKING smarter would boost
the UK economy by up to 52bn,
adding 455,000 jobs, according
to a study released this morning
by the Centre for Economics and
Business Research (CEBR).
The UK has room for
improvement when it comes to
good management practices, the
report reveals, with public sector
industries particularly culpable.
In a ranking of sectors,
BY JULIAN HARRIS
education comes bottom with a
score of just three out of 10, while
public administration, defence
and social security is second
bottom with five out of 10, and
health and social work is third
from bottom on six out of 10.
The UK can boost its economy
hugely by focusing on increasing
the quality of the processes used
to produce all goods and
services, the CEBR said.
So-called quality management
techniques already add 90bn, or
six per cent of GDP, to the UK
economy, the groups analysts
have calculated.
Despite public sector areas
faring worst in the analysis,
improvements in the UKs
biggest sector services could
provide the strongest shot in the
arm for the economy.
Better quality management
practices in the service sector,
including finance and related
businesses, would add 12bn a
year to UK GDP, estimates show.
If businesses and the public
sector redoubled their efforts to
close the quality gap, this
could go some way to pulling
the UK out of recession, the
CEBR said. In particular,
improving the quality of public
service delivery could protect
frontline services while tackling
the deficit.
Emerging economies are
benefiting from improved
quality management combined
with lower costs, the report said.
Discretionary spending power rose in June
Jun12 Dec11 Jun11 Dec10 Jun10
-2
-4
-6
0
2
4
6
8
%
c
h
a
n
g
e
o
n
y
e
a
r
e
a
r
lie
r
Income growthafter inflation
After inflation
Before inflation
INSOLVENCY among small firms
slid last month, as the number of
bigger firms going out of business
climbed, according to research
released today by information
services firm Experian.
Firms with between one and 100
employees saw their rate of
insolvency slump from 0.19 per
cent in June last year to 0.12 per
cent this June.
But firms with between 101 and
500 employees were twice as likely
to fail compared to last year, at 0.16
per cent. Firms with more than 500
employees had a failure rate of 0.15
per cent, up from 0.12 per cent.
Overall there was a decrease on
both the month and the year, as
Small firms stay in business as
bigger enterprises get battered
BY BEN SOUTHWOOD
1,650 businesses became insolvent
last month, compared to 1,841 in
May and 1,783 in June 2011.
Although the overall figures for
June show a fairly stable
environment, the higher rate at the
top end will have an impact on the
supply chain, said Experians
managing director Max Firth.
Many smaller suppliers will find
themselves short of a major
customer... They will need to move
quickly to fill the gap in their
customer base, he added.
Separate data from the
Federation of Master Builders said
37 per cent of small and medium
sized constructors had lower
employment levels in the second
quarter, slightly worse than at the
start of the year.
13
NEWS
cityam.com
Eurozone recovery hopes raised
by healthy export growth spurt
EUROZONE exports rose in May,
according to official data out
yesterday, which could substantially
reduce the depth of the recession.
Meanwhile Eurostat figures also
showed inflation slowly falling in
line with economists expectations,
continuing the downward trend
which led the European Central
Bank to cut rates further at the
start of this month.
Goods exports rose 0.3 per cent
on the month while imports fell 0.9
per cent, leaving a surplus of 6.9bn
(5.4bn) with the rest of the world
in May, compared with a deficit of
BY TIM WALLACE
1.2bn in the same month of 2011.
Countries on the periphery of the
currency union provided much of
the lift figures for the year to April
show Greek imports fell 13 per cent
while exports rose 13 per cent and
Portuguese exports rose nine per
cent and imports fell five per cent.
To soften the impact of tough
front-loaded austerity and reforms
in the Eurozone, external demand
needs to offset some of the hit to
domestic demand fortunately, the
trade data for the Eurozone shows
that, said Berenberg Banks
Christian Schulz.
In terms of goods trade, the
southern European crisis countries
still have a long way to go to
rebalance, but the trend is clearly
positive.
Meanwhile consumer price
inflation came in at 2.4 per cent in
the year to June, unchanged on the
year to May.
But within that headline number
energy price inflation slowed from
7.3 per cent to 6.1 per cent, food
slowed from three per cent to 2.7
per cent, and alcohol and tobacco
slid from 4.4 per cent to 2.6 per cent.
For this year, we continue to
expect an annual inflation rate of
2.3 per cent, which is likely to
decline to two per cent in 2013, said
Fabio Fois of Barclays.
WERE GETTING OLDER...
1 in 6 people were 65 and over
The median age in England
and Wales
was 39.
In 1911,
it was 25.
40
2011
2001
1911
38
430,000
340,000
13,000
Number of residents aged 90 and over
27.6m
56.1m
28.5m
3.1m
53m
Population of
Wales
Population of
England
The population across the whole of
England and Wales increased by 7% to
+
8.2m
population
increase of 12% from 7.3m in 2001
Average population density
VS
LONDON
5,200 people
per km2
LONDON
ENGLAND AND WALES
371 people
per km2
LONDONS population grew at a far faster rate than in any other part of England or
Wales across the most recent decade measured by the Census, the Office for National
Statistics revealed yesterday. In the capital the population expanded by 12 per cent,
compared to an average of seven per cent across all of England and Wales.
CENSUS 2011 REVEALS GROWING, AGEING POPULATION
IN BRIEF
Tullow drops on well worries
nTullow Oil yesterday said it had
stopped drilling a well off the coast of
Guyana due to safety concerns, adding
that it had already discovered some oil
in the shallower parts of the well, which
the firm and its partners have spent five
months drilling. Tullows shares fell
3.28 per cent on the news.
Glencore cleared for Viterra deal
nGlencore has won a Canadian
regulators approval for its roughly
C$6.1bn (3.8bn) takeover of grain
handler Viterra, bringing the deal a
step closer to completion. Glencore in
March offered to pay C$16.25 per share
for Viterra, which owns the largest
share of Western Canada's grain
storage and farm supply outlets.
Evraz reports fall in production
nRussian steel and mining group
Evraz said yesterday steel production
fell six per cent in the second quarter
from previous three months, due to
maintenance work at its mills and
weaker demand in Europe and South
Africa. FTSE 100-listed Evraz said in an
update that prices for most steel prod-
ucts were marginally flat.
Menzies to cut aviation cargo arm
nJohn Menzies said its aviation servic-
es arm would shut cargo operations at
four airports in the UK by next month
and take a related charge of 3m.
Menzies Aviation will exit its cargo
operations at Glasgow, Birmingham,
East Midlands and Manchester airports,
to return its UK cargo business to prof-
itability, it said yesterday.
BRITISH software group Sage yester-
day said anticipated growth in main-
land Europe had not materialised
due to what it called a toughening
economic environment.
The company, which is Britains
largest listed software firm based on
market capitalisation, said trading in
Europe had been flat and was below
previous forecasts, although sales on
the whole had been broadly in line
with expectations.
The firm reported growth in the UK
and Ireland and in North America,
but poor sales in mainland Europe
which makes up 60 per cent of Sages
business meant its shares dropped
by over three per cent yesterday.
Sage had previously said it expected
trading in Europe to pick up after
reporting disappointing first-half fig-
ures in May.
Whilst we remain cautious on the
outlook for Europe, and watchful of
this regions economic climate, the
strong fundamentals of our business
model remain and we continue to
make good progress, Sages chief
executive Guy Berruyer said.
European woes
lead to stalled
growth at Sage
BY JAMES TITCOMB
The company has attempted to
reduce its reliance on Europe by tar-
geting growth in emerging markets,
including purchasing a 75 per cent
stake in Brazilian software firm
Folhamatic for 125m last month.
Sage also saw strong performances
in South Africa and Australia.
The firm, which sells software to
small and medium-sized businesses,
has suffered from the difficult condi-
tions in mainland Europe, especially
in Spain, where 23 per cent of busi-
nesses employing between 10 and 100
people have closed down since the
downturn started. Analysts warned
yesterday that Sages problems could
spread to France and Germany.
Sage chief Guy Berruyer said the business was continuing to make good progress
Sage Group PLC
276
278
280
282
284
286 p
276.00
16Jul
While UK growth has been good, Europe overall is at, implying that
mainland Europe is into negative territory. It is appropriate to be cautious about
Q4 and beyond and we pull our recommendation back to Hold from Add.
ANALYST VIEWS
WHAT DOES THE FUTURE

HOLD FOR SAGE?
Interviews by James Titcomb
14
NEWS
cityam.com
While the US is slowly improving and emerging markets are solid,
mainland Europe seems to have slightly worsened. The stock is not par-
ticularly cheap and post the recent bounce, we expect it to fall back.
With a lean summer ahead, in our view, Euroland gets worse before it
gets better. The valuation looks toppy for Sage and in the absence of
growth, we retain our Hold recommendation.
WILL WALLIS NUMIS
JULIAN YATES INVESTEC
GEORGE OCONNOR PANMURE GORDON

15
ENGINEERING group Smiths said
yesterday it had sold its interest in
US biometric specialist Cross Match
Technologies for $77m (49.4m).
The sale to Francisco Partners is
part of Smiths move to offload non-
core businesses. Smiths will receive
$69m in cash on completion from
the Florida-based private equity
firm.
A further $8m will go into an
escrow account to meet any possible
legal claims for up to 15 months.
Smiths landed the stake in Cross
Match as part of a deal for the
Heimann Biometrics business in
2005.
Chief executive of the FTSE 100
BY JOHN DUNNE
company Philip Bowman said: As I
indicated at our interim results in
March, we are looking to simplify our
portfolio.
This disposal helps us to focus on
our core businesses in driving rev-
enue growth, operational improve-
ments, enhanced margins and strong
cash conversion.
At the end of May the company
announced that Paul Cox, president
of its oil and gas subsidiary John
Crane, was stepping down immedi-
ately.
Meanwhile in its most recent trad-
ing update Smiths said that in the
nine months to 28 April sales had
risen thanks to the acquisition of
Power Holdings. It paid $235m for
the engineering business last year.
cityam.com
DASHBOARD CITY
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
BORDERS & SOUTHERN Petroleum
said yesterday its latest well drilled
in the Falkland Islands as part of a
controversial exploration drive did
not find oil or gas, pushing its
shares down 71 per cent.
Borders & Southern, which is lead-
ing efforts to find oil off the south
coast, chalked up an initial success
April, when it found gas condensate,
a liquid which often trades at a pre-
mium to crude oil, at its first well.
Analysts said investors should not
give up on the southern area.
This is clearly a disappointing
result, but one that we believe does
not completely write-off the south-
ern Falkland basin, Numis analyst
Sanjeev Bahl said.
The fact is that they have found
hydrocarbons in both wells. In the
Borders & Southern shares
plunge on Falklands results
worst case, its going to be a very
gassy basin, but if were looking at
multi-trillion cubic feet discoveries
in terms of volumes, its still very
commercial.
Borders has said it expects the
results of tests in August on the dis-
covery it made at its Darwin well.
The firms fortunes contrast with
those of Rockhopper, which struck
oil in the Sea Lion field in the
remote Falklands, home to 3,000
inhabitants. The explorations have
inflamed tensions between Britain
and Argentina, which claims sover-
eignty over the islands.
A $1bn deal between Rockhopper
and Premier Oil for development of
oil found north of the Falkland
Islands in 2010 was announced last
week. Companies looking for oil in
the Falklands have ignored legal
threats from Argentina.
LONDONREPORT
Pioneer Investments
The investment management
group has appointed Neal
Jenkins as head of sales, Middle
East, Central Asia and Africa. He
joins from Janus Capital, where
he was head of Middle East and
Africa business. Jenkins has over
20 years financial markets
experience, and previously
worked at Merrill Lynch.
KPMG
Tom Brown has been appointed global head of investment
management at the advisory firm. He is currently European
head and deputy head of investment management, and he
has been a partner at KPMG since 1999.
Kentz
Eli Wawi has been appointed group director of engineering
at the engineering solutions provider. He has over 25 years
experience in oil and gas engineering and has formerly held
positions at KBR and Shaw Group. Wawi joins Kentz from
CH2M Hill Energy and Chemicals UAE, where he was vice
president for Middle East, North Africa and India.
Barings Asset Management
Mike Levy has been appointed to the role of senior
investment manager in the Europe, Middle East and Africa
equity team at the investment management firm. He joins
from AllianceBernstein.
Exponent Private Equity
Simon Davidson has been promoted to the partnership at
the private equity firm. He joined in 2008 from Apax
Partners, and works on retail, consumer and leisure
investments.
British Property Federation
Bill Hughes, managing director of Legal & General Property,
has been appointed junior vice president of the British
Property Federation. He will subsequently become
president of the membership organisation in two years.
Hughes joined Legal & General in 2007, and was previously
UK head of real estate at RREEF.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
Citigroup lifts
market despite
decline in retail
A
SURPRISE decline in June retail
sales was the latest worrying
sign from the economy,
pushing stocks slightly lower
yesterday, but Citigroup earnings
limited losses in another forecast-
beating report from a bank.
The S&P 500 has fallen in seven of
the last eight sessions, weighed down
by concerns about the economy. Still,
in a sign of resilience, the index is up
roughly seven per cent from a low hit
early in June despite the worsening
economic data.
The drop in retail sales in June, the
third consecutive monthly decrease,
contrasted with economists expecta-
tions for a small increase and was the
latest sign the recovery is flagging, a
major concern for investors.
Shares of Citigroup gained around
one per cent after the third largest US
bank reported profit that came in
above analysts estimates. That was
despite a 12 per cent drop in quarterly
earnings due to losses from credit cri-
sis-era assets.
Citigroup earnings follow results
from JP Morgan Chase on Friday that
sparked a rally and broke a six-day
streak of losses by the Dow industrials.
The Dow Jones industrial average
dropped 28.65 points, or 0.22 per cent,
to 12,748.44.
The Standard & Poors 500 Index fell
1.63 points, or 0.12 per cent, to
1,355.15. The Nasdaq Composite Index
dropped 7.42 points, or 0.26 per cent,
to 2,901.05.
Three months in a row of lower
retail sales is pretty concerning. People
are going to have to lower their GDP
estimates, said Paul Zemsky, of ING
Investment Management in New York.
Given that, Im surprised the market
is holding so well.
B
RITAINS top share index edged
lower in low-volume trade
yesterday, led by banks and mining
stocks, as concern about the
outlook for corporate earnings kept
investors cautious.
The FTSE 100 ended down 3.7 points, or
0.1 per cent, at 5,662.43 in volume, just
under two-thirds of its 90-day daily average.
Investors are not keen to make major
shifts to their portfolios at this stage as
there is nervousness about earnings, said
Ian Williams, a strategist at Peel Hunt.
The market has been short of inspira-
tion growth data continued to disap-
point last week and the US earnings season
did not kick off to a great start.
Security firm G4S led individual fallers,
down 8.7 per cent, dropping for the third
straight session to its lowest level since late
December.
G4S shares were traded at more than
seven times their daily 90-day average after
a number of bearish broker notes prompt-
ed by the companys admission it would be
unable to fulfil a contract to supply guards
for this months Olympics.
Weakness in several heavyweight cyclical
sectors, including mining, prevented the
broader market from rising and suggested
that Fridays sluggish growth data from
top metals consumer China would contin-
to put pressure on the industry.
Banks were also among the worst-per-
forming sectors, mirroring weakness
across Europe, with Barclays the top faller,
down 2.7 per cent, weighed further by the
Libor scandal. But US peer Citigroup got a
boost from stronger-than-expected second
quarter profits.
FTSE dips on mining and banking
while security firm G4S is top faller
BESTof theBROKERS
Ashmore Group PLC
10Jul 11Jul 12Jul 13Jul 16Jul
p
340
335
330
325
320
315
310
305
321.10
16 Jul
ASHMORE
Peel Hunt has
downgraded its forecasts
for the fund manager by
seven and fifteen per cent
in 2012 and 2013
respectively, but keeps a
buy rating on a lower
target price of 390p.
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
NEW YORK
REPORT
in association with
FTSE
5,700
5,680
5,660
5,640
5,620
5,600
5,662.43
16 Jul
Provident Financial PLC
p
1,240
1,230
1,220
1,210
1,200
1,190
1,180
1,170
1,216.00
16 Jul
PROVIDENT
FINANCIAL
Numis has downgraded
the personal credit
provider from buy to
hold with a target
price of 1,321p, saying
the firm now justifies its
premium valuation.
METRO AG
21.20
21.00
20.80
20.60
20.40
20.20
20.00
20.89
16 Jul
METRO
UBS has upgraded the
German retailer from
sell to neutral with a
target price of 20, saying
forecasts are more
realistic and its share
levels now reflect a fair
valuation for the stock.
Smiths sells stake in
Cross Match for $77m
IN BRIEF
Revenue growth returns to Emap
nBusiness to business publisher Emap
saw its revenues grow by two per cent
in the first half of 2012 the first
increase in more than five years as its
awards business did particularly well.
Parent company Top Right said its
overall revenues were up by eight per
cent on a like-for-like basis, as its i2i
Events business and digital information
group 4C also saw an improvement.
London hotel prices rise by 70pc
nThe average daily rate for a hotel
room in London has soared to an aver-
age of 189 over the Olympics period,
up more than 70 per cent compared to
the same period last year. According to
hotel data provider TravelClick, com-
mitted occupancy across the capital
shows rooms currently reserved for the
Olympics stands at 77 per cent
though this could decrease due to a
recent return of rooms by organiser
Locog, which could see prices slashed.
I
LIVE just outside Hemel
Hempstead, where one of its
most famous landmarks has
recently been converted into an
apartment complex. Kodak
Tower, as it is commonly known,
was built in the 1960s as Kodak
Eastmans European headquarters.
Its a beaming symbol of the
companys presence in the town.
Designed by Thomas Bennett, it was
architecturally bold and divisive.
When it was built, the American
imaging company was one of the
most famous in the world.
Its degeneration into a tacky
residential edifice is a stark
reminder of the forces of creative
destruction. The Austrian
economist Joseph Schumpeter
coined this phrase to capture the
I
S ELECTRIFYING branch lines in
Wales a top priority for transport
investment? It seems unlikely. But
then again the governments
plans to invest 9.4bn in rail
infrastructure show scant regard for
economics. Cynical political
calculation seems to be the driving
force.
Regional interests have long com-
plained that London receives a dispro-
portionate share of transport
spending. Now the provinces will get
their pet projects: the north of
England gains more services through
the much-hyped Northern Hub; the
East Midlands benefit from the electri-
fication of the Midland Main Line; and
so on.
But most of these schemes are diffi-
cult to justify from an economic per-
spective. In commercial terms they are
loss-making and require substantial
taxpayer support. Indeed, it seems like-
ly that, as the number of train services
increases, additional operating subsi-
dies will be required. Taxpayers
already pay around 5bn per year
towards the railways.
in association with category sponsors venue sponsor champagne reception sponsor
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Extended deadline: 20 July
Four days left to register.
cityam.com/forum
London commuter
routes generally
receive little funding
In association with
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.
16
RICHARD WELLINGS
The government is off track with
its uneconomic transport policy
The government has claimed that
much of the cost will be recouped
from higher passenger numbers and
efficiency gains. This is doubtful.
There are numerous examples of rail
planners forecasting passenger
growth that failed to materialise. And
while efficiency gains are possible,
they will be difficult to deliver given
the complex artificial structure
imposed on the industry.
Then there is the argument that rail
improvements deliver wider regenera-
tion benefits, boosting growth. This is
also questionable. There is little evi-
dence of economic resurgence in
many of the provincial towns already
enjoying fast rail links, such as
Doncaster, Darlington or Wigan.
Worse still, new rail projects often
become magnets for expensive taxpay-
er-funded regeneration schemes, pro-
moted by local political elites. The
government has spent billions along
the route of High Speed 1, for exam-
ple. Such regeneration efforts are
counterproductive. If favoured areas
improve, others tend to decline, due to
the redistribution of taxpayers
money.
The railways are a classic example of
a politically distorted market. There is
huge variation in the level of subsidy
to different parts of the network.
London commuter routes generally
receive little funding from govern-
ment, in marked contrast to rural
provincial routes that are almost
entirely dependent on handouts. This
system means passengers on more
profitable lines (including in and
around London) may end up cross-sub-
sidising those on loss-making ones. At
the same time, those choosing to drive
instead of travelling by train face very
high rates of taxation through the
imposition of both VAT and fuel duty
a clear instance of unfair competition.
Many of these distortions are deliber-
ate. New Labour pursued policies to
force people out of their cars and on to
the trains. A combination of strict
planning policies and regeneration
subsidies was used to push economic
activity into congested city centres
and around public transport hubs. At
the same time, measures were intro-
duced that artificially raised the costs
of commuting by car and road invest-
ment was slashed. As peak-time trains
became more and more crowded, the
pressure increased for investment in
new capacity, even though demand
had been artificially inflated by vari-
ous government interventions.
In this context, the government
should be extremely cautious about
investing in rail. Rather than risking
billions of pounds of taxpayers
money, it should focus on creating a
level playing field in transport so that
investment can be based on genuine
patterns of demand.
Phasing out taxpayer subsidies to
uneconomic lines should be a key pri-
ority. Another important step would
be to introduce more flexibility for
train operators to tackle overcrowding
without the need for expensive new
track infrastructure, for example by
providing more frequent services and
extra rolling stock. Further action is
also needed on planning controls.
Businesses should be free to operate in
uncongested, out-of-town locations,
even if this means fewer people using
public transport.
A radically different policy on invest-
ment is needed. Ideally it should be
left to the private sector, which would
only undertake rail schemes that were
commercially viable. However, in the
absence of a larger role for private
investors, the government should take
a far more rigorous economic
approach to new infrastructure.
Dr Richard Wellings is head of transport
at the Institute of Economic Affairs.
process of capitalism, whereby
innovation always generates
disruption. In no company is that
better exemplified than Kodak.
Founded in Rochester in 1889,
Kodak became a global giant, at its
height commanding about 90 per
cent of the market for
photographic film. And yet, at the
turn of this year it filed for
bankruptcy. Despite creating the
first digital camera in the 1970s, its
profits were driven by selling and
developing film. It is a classic
example of the difficulty in
knowing when to lead innovation
without undermining your existing
strengths. The bottom line:
monoliths are inherently
vulnerable.
One of Karl Marxs critiques of
capitalism was that it generates an
increasing concentration of capital.
Indeed, the fear that theres a
vicious circle between efficiency
and scale still drives anti-monopoly
legislation. But what is the
empirical evidence?
In 1987, Forbes magazine
released a study looking at how
large companies fare over time. It
took the 100 biggest companies in
1917 and looked at what had
happened to them since. Rather
than see the big companies getting
bigger, they found the opposite. As
the chart shows, 61 per cent of the
companies became
defunct. 21 per cent
still existed, but
had fallen
outside the top
100. That left
only 18 of the
biggest 100
companies in
1917 still
there 70 years
later. Of those,
16 companies
underperformed
the market as a
whole, leaving just
two companies that managed to
beat the market. One of those
companies was GE, and the other
was Kodak.
Fast forward 25 years, Kodaks
bankruptcy shows how rare it is for
large firms to retain their strength.
Consumers shouldnt fear
corporate giants these
behemoths should be
fearful of becoming the
next Kodak.
Anthony J. Evans is associ-
ate professor of economics at
ESCP Europe Business School.
www.anthonyjevans.com
FRONTLINE
ECONOMICS
ANTHONY J. EVANS
Creative destruction means corporate giants rarely outlast their usefulness
%
61
21
16
2
Defunct
Outside top
Behind mar
Beat market
Defunct
Outside top 100
Behind market average
Beat market average
General enquires: 020 8267 4043 | jo.pead@cityamawards.com | Awards night: Wednesday 17 October.
17
Building problems
[Re: London homes still horribly expensive
for first time buyers, yesterday]
Unfortunately, policy-makers are stuck in a
house building dilemma. If they supply
more homes to help first-time buyers, the
price of the average home will drop
therefore moving many existing
homeowners into negative equity.
StephenBishop
Private sector contractors are certainly
better than public ones, but only provided
there is competition and not one company
providing the service. For example, if the
managers running the Oyster card system
were incompetent, could the government
easily replace them with an alternative?
SteveOkare
Better capitalists
[Re: Supporters of capitalism must help
expose blundering firms, Thursday]
Theres no problem with capitalism. It just
doesnt work if long-term goals are ignored,
if unrealistic yearly growth is blindly chased,
and if governments step in and distort the
market with bailouts, tariffs and subsidies.
Jonathan King
[Re: Shareholders can find a potent ally in
activist funds, yesterday]
Gil Shidlo may be right to be optimistic
about a better approach to reforming
company management by activist funds.
But can we be certain that they can override
the anti-capitalist crowing of Shareholder
Spring proponents?
Karl Carter
D
AVID Cameron risks facing
his own personal European
groundhog day. A watershed
European summit last
month advanced proposals
for a Eurozone banking union. Final
approval is due in December. The
aim is to break the fatal link between
euro area banks and sovereigns. Less
painful for Germany than
eurobonds, but seen as credible by
financial markets, it will turn the
European Central Bank (ECB) in
Frankfurt into a Bank of England
style super-regulator.
Unlike the fiscal compact the Prime
Minister vetoed last December, bank-
ing union is an essential step towards
resolving the Eurozone crisis. For
Britain, the risks or rewards of new
Eurozone banking structures depend
on how they interact with the single
market, arguably the EUs greatest
unifying achievement.
About a quarter of the firms based
in London are headquartered in the
Eurozone, and whatever rules the
new banking union established will
apply to them.
One example of potential risk is the
ECBs demand that central counter-
parties offering euro-denominated
clearing must be based within the
Eurozone. The UK has rightly taken
the ECB to the European Court of
Justice over this on the grounds that
such a requirement is discriminato-
ry. If allowed to stand, big clearing
houses based in London may up
stakes and move into the Eurozone.
A single market compatible bank-
ing union requires consultation with
non-euro members, including
Britain, to ensure that common
rules safeguard the free movement
of capital and financial services are
applied equally. It also means
upholding the mandates of the
European Banking Authority based
in London and the European
TOP TWEETS
Its not only first time buyers with problems in
London. Moving from a flat to a house is
impossible because of the price difference.
@jasonjamesstone
Olympic lanes, bus lanes, cycle lanes. What
about somewhere for us hardworking driv-
ers? We pay for the roads.
@GrumpyOldEA
The IMF has downgraded UK growth more
than for any other advanced economy. Many
of our problems are clearly domestic.
@DuncanWeldon
Why do these big infrastructure projects take
years to even get underway? We need infra-
structure now, not in years.
@Donal_Blaney
Does London need designated Games lanes
to manage road traffic during the Olympics?
YES
The Olympic Road Network (ORN) is a requirement of the Host
City contract and is vital in ensuring all athletes, officials and the
worlds media get to their London 2012 Games events on time. In
total, the ORN covers 109 miles across London, although Games
lanes will only be used on 30 miles of the network. With the
athletes, coaches, technical officials and the worlds media now
in London, roads are exceptionally busy and we are working hard
to support a great Games and keep London moving. From 25 July
the Games Lanes will be enforced and our message to motorists
is clear dont get caught out, avoid driving in central London,
around the ORN or around Games venues. But if a journey is
absolutely essential, plan ahead visit
GetAheadoftheGames.com and allow extra time.
Gareth Emmerson is chief operating officer, surface transport, at
Transport for London.
Gareth Emmerson
NO
Charlie Mullins
The starting pistol has been fired on the first Olympic event, the
insane dash to total gridlock. Were pretty good at traffic jams in
London on a normal day, but these Games lanes are about to
transform doing business and commuting in the city to a gold
medal-winning performance in masochism. Having lanes for
Olympic VIPs will halve the capacity of key routes like Victoria
Embankment and Knightsbridge, leaving firms like mine, with a
fleet of more than 120 vehicles, to face weeks of major disruption.
And were not the only ones this is going to affect. Businesses will
watch their income drain away as they sit in jam after jam, as
athletes and dignitaries cruise by. Its easy to shut the roads for the
greater good of the Olympics and offer advice not to drive in central
London. Its not so easy when you run a business thats based on
driving around the capital.
Charlie Mullins is an entrepreneur and founder of Pimlico Plumbers.
RAPIDresponses
Why Britain must
not veto banking
union for Europe
Systemic Risk Board. These bodies
work for all the EUs 27 members and
would work to coordinate the ECB
and non-Eurozone national regula-
tors.
Economically liberal member states
like Germany value the integrity of
the single market and do not want to
see Britain become an associate
member of a two-tier club. George
Osborne has said the demands the
UK made at the December summit
are more relevant than ever. No UK
financial institution asked for a veto
on financial services then, nor are
any making such demands now.
The veto is a blunt instrument.
Making such demands, and wielding
it when they are not met, fatally
undermines our ability to make the
case for protecting the single market.
Perhaps this has sunk in: David
Cameron has said that any new struc-
tures should be set up in the EUs
existing treaties.
It is not difficult to imagine what
success looks like. An EU with a
strong euro. A barrier-free single mar-
ket stretching across 27 (soon 28)
members encouraging competition,
job creation and growth. A global
European financial centre in
London, with the critical mass to pro-
vide capital for projects at home and
in developing markets. We must
fight for what is essential and attain-
able rather than demanding some-
thing that is neither and ending up
with another pointless veto.
Roland Rudd is chairman of Business for
New Europe.
ROLAND RUDD
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G
E
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18
L
OOKING ahead to the start
of the Olympic Games, there
is no end of attempts to
make tie-ins official or not
with the festival of sport. But
who are going to be the real
winners and losers in business
this summer?
Much was made of the effects
of the Jubilee celebrations on
high street retailers and
increased consumer spending,
but will we see a similar boost
during the Games?
Of course, the first companies
that you might look at are the
official Olympics sponsors.
Although in many cases they
have a legal monopoly on their
products within Olympic venues,
they are mostly enormous multi-
national companies no matter
how many swimming pools
worth of Coca-Cola are sold to
spectators, it is unlikely to regis-
ter as anything bigger than a car-
bonated bubble on overall global
Coke sales and profits.
But what about listed compa-
nies closer to home? On 6 July
2005, the day that it was
announced by the International
Olympic Committee that London
had won its bid to host the 2012
Olympic Games, the FTSE rallied
by a trivial 19 points. This was in
the heady days before Lehmans
downfall, before Northern Rock
and before bundling up sub-
prime mortgages and selling
them on was seen as a risky
thing to do. A 19 point rally did-
nt really signify much. In any
case, the Paris Bourse also
jumped on the announcement of
London winning, perhaps breath-
ing a sigh of relief. Additionally,
much of the FTSE is internation-
ally focused, and heavily weight-
ed to mining and financials, two
sectors unlikely to be given much
of an Olympic boost.
But it is worth taking a look at
sectors such as construction, hos-
pitality, travel, security and retail
for opportunities to gain from a
potential high jump in perform-
ance.
HOSPITALITY
According to Brenda Kelly, senior
market strategist at CMC
Markets, Whitbread and Greene
King could be worth a look dur-
Some companies may have peaked too early
Not everybody will be on the podium, writes Craig Drake
TRADING MANAGEMENT WEALTH
Mining opportunities for profit
M
INING stocks have seen their
fair share of selling this year,
but BHP Billitons trading
update on Wednesday may
give the resources giant a chance to
shine. Following a decline in its share
price of some 10 per cent this year,
investors will be hoping for some long-
awaited good news. Capital Spreads
quotes a price of 1,798.1-1,800.9p,
Meanwhile, Billitons rival Rio
Tinto is due to publish its latest
operations review for the second
quarter of 2012. Given recent declines
in commodity prices, there is a risk
results could come in at the lower end
of expectations. Recent comments by
Chinese Premier Wen Jiabao about
the pace of Chinese recovery in the
second part of this year could also
weigh. CMC Markets quotes 2,993.52-
2,994.50p.
Beleaguered shareholders at
Mothercare will be hoping that a
trading announcement this week will
offer more than a crumb of comfort.
The UK remains a tough environment
the underperformance of this
division has dominated investors
minds, blocking out the very
promising performance of its
international business. Hopefully the
retailers current turnaround plan will
bear fruit, even if it there is a long
road ahead. IG Index quotes a price of
193-197p for Mothercare.
Severn Trent holds its annual
general meeting tomorrow. The water
company is set to face a shareholder
backlash over executive bonuses.
Despite this, and following criticism
of UK water companies in general
following droughts earlier in the year,
its share price has held up well.
Severn Trent has moved steadily
above 1,600p since late June, despite
fears that the government will
encourage competition by removing
barriers to new water and severage
market entrants. GFT Markets quotes
a price of 1,713.3-1,717.7p.
TOM WELSH
Greene King has fared well in
tough conditions this year, with
its price rising through a four-
year high as revenues jumped 9.4
per cent to 1.14bn. Food sales
were a large part of this, and the
Games may help to keep price
action elevated. But it might
struggle on this front this sum-
mer. While the European Cup
had football fans hitting Greene
King pubs, the Olympics tend to
attract a different type of fan.
ing the Games. Whitbread expe-
rienced a surprisingly strong
start to 2012 due to its expansion
of the Premier Inn and Costa
Coffee chain recently breaking
above the 2,000p level for the
first time. This strong rally may
mean that the Games is already
factored into the price. Kelly adds
that a pull back towards the 200-
day moving average could be on
the cards with 1,896p a likely
price target.
Greene King
Jul Jun May Apr Mar Feb 2012 Dec Nov Oct Sep Aug
580
560
540
520
500
480
460
440
420
400
p
200-daymovingaverage
fx360.com
US MARKET DATA POINTS TO
A SUMMER OF CHALLENGES
S&P 500 Index - April to July 2012
23Apr 30Apr 7May 14May 21May 29May 4Jun 11Jun 18Jun 25Jun 2Jul 9Jul 13Jul
1,420
1,400
1,380
1,360
1,340
1,320
1,300
1,280
twitter.com/fx360 facebook.com/fx360
The contents of this column are provided for general information purposes only. One should consider the appropriateness
of the information in light of their own objectives, financial situation or needs before trading. CD11UK.074.010612
DAVID MORRISON
SENIOR MARKET STRATEGIST, GFT
Trading hurdles at
T
ODAY well hear more from Ben
Bernanke, as the chairman of the US
Federal Reserve delivers his semi-annual
monetary policy report to the Senate
Banking Committee. Hell follow this up
tomorrow by addressing the House Financial
Services Committee. He is likely to remind
policymakers that fiscal issues must be
addressed, and that they cannot rely solely on
monetary measures.
Last week brought the release of minutes
from the Federal Market Committees
(FOMC) meeting on 20 June. The minutes
confirmed that the Committee was prepared
to take further action if necessary, but
suggested that there would need to be a
significant deterioration in the US economy
before the Fed is prepared to extend its
balance sheet with unsterilised asset
purchases. Consequently, there now seems
very little chance that the FOMC will
announce further stimulus measures at its
next meeting on 31 July and 1 August. Of
course, the June FOMC meeting took place
before yet another dire non-farm payroll
reading. But it still seems likely that attention
will now focus on the following FOMC
meeting on 12 and 13 September. Because of
this, it could be reasonably argued that
further quantitative easing looks increasingly
unlikely this year. After all, by mid-
September, were just two months away
from the US Presidential Election. The
Federal Reserve could be wary of getting
caught up in a political argument by
undertaking another controversial round of
asset purchases so close to the election.
While the Fed could be forced into action by
a sudden failure of, say, a major international
financial institution, or a rapid escalation in
the Eurozone debt crisis, such events are
currently viewed as low probability.
Recently, relatively little time and effort
has been spent discussing the merits of
quantitative easing. After all, the global
economic outlook continues to deteriorate,
despite unprecedented monetary easing and
the implementation of all the unconventional
measures taken so far. Instead, the main
question being asked is how well risk assets
will hold up without additional significant
central bank intervention.
In addition, the European Stability
Mechanism (ESM) is yet to be fully ratified
by Germany. The ESM is the permanent
bailout facility, which was due to be
operational at the beginning of July. At last
months EU summit, German Chancellor
Angela Merkel agreed that the ESM could be
used to bail out Spanish banks directly. Yet,
even as she appeared to overcome her
previous objections to this use of the bailout
facility, Merkel would have been all-too
aware that the German Constitutional Court
was considering objections to the ESM. Last
week, it was announced that the Court will
decide if German President Joachim Gaulk
can sign the law ratifying the ESM by the
end of July. But it could take another three
months to decide whether the ESM is
constitutional. Investors are assigning a very
low probability to non-ratification so, if the
Court issues an injunction preventing the
President from signing the law, we can
expect risk assets to sell off sharply.
Meanwhile, the second quarter US
earnings season steps up a couple of gears,
with 90 S&P 500 companies set to announce
their results this week. Among the big names
due to report are Bank of America, Coca
Cola, Goldman Sachs, Google, IBM, Intel,
Microsoft and Morgan Stanley. It is worth
noting that earnings expectations have been
massaged down again this quarter, so the
majority of companies should again hit
analysts targets. Assuming that they do, this
reporting season should be uneventful.
However, global economic conditions have
deteriorated significantly over the last three
months, so revenues are likely to be weak.
This also means that there will be growing
concerns about corporate profitability in the
second half of the year, as the rate of
earnings growth has fallen rapidly over the
last 12 months. If corporate forward guidance
continues to be downbeat, this could end up
being a challenging summer for investors.
THE TIPSTER
19
G
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cityam.com
Aggreko
Jul Jun May Apr Mar Feb 2012 Dec Nov Oct Sep Aug
2,400
2,300
2,200
2,100
2,000
1,900
1,800
1,700
1,600
1,500
p
200-daymovingaverage
Airlines may receive a boost from the influx to the Games
My pick: Short Aussie-dollar and euro-yen, long dollar-yen
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few days
We remain short on Aussie dollar-dollar from $1.0265, and
short on euro-yen from 98.55, as we seek fresh monthly
lows in these pairs. The euro-yen is of greater interest as it is
the cleaner technical setup, with a measured move on a
short-term head & shoulders pattern yielding a drop to
95.60. We look to buy dips in the US dollar as well, with the
Federal Reserves third round of quantitative easing (QE3) a
long way away.
ANALYST PICKS
this summers Games
Kelly thinks that it has been over-
bought recently, so profit taking is
very likely. She thinks a pull back
to 547p, if not 530p is the poten-
tial target in the near future.
SECURITY
G4S has been in the headlines
after its disastrous staffing short-
fall ahead of the Games, resulting
in the army having to step in to
cover the shortfall. But Kelly
points to Aggreko as a company
likely to see better fortunes. The
global leader in temporary power
supply won the contract to pro-
STRATEGIST
ILYA SPIVAK
My pick: Short Aussie dollar-dollar (pending)
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
The Australian dollar continues to reflect broad-based trends in
risk appetite. I am expecting this weeks semi-annual
Congressional testimony by Federal Reserve chairman Ben
Bernanke to further scatter hopes for QE3, weighing on
growth-linked assets and sending Aussie-dollar lower amid
renewed risk aversion. I will look for confirmation on a daily
close below $1.0115, with a short position triggered to initially
target the parity level.
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Short euro-dollar and Aussie-Loonie, long euro-Swissie
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
Risk trends lurched lower last week, but to hit the next gear we
need a big push. The backdrop supports risk aversion, but it is
sentiment that sets the pace. The epicentre of a secondary push
would be euro-dollar dropping below the midpoint of its
historical range at $1.2135. A more immediate and less sensitive
risk exposure is a Aussie dollar-Canadian dolar short from the
former trendline at C$1.0400. I continue to carry forward euro-
Swiss franc as we await Swiss National Bank capitulation.
vide power for 39 venues at the
Games. Additionally, despite the
challenging macro climate in the
domestic market, the company has
expanded internationally and is
gaining exposure in markets like
Brazil, Chile, Argentina and
Mozambique and expects to see a 17
per cent increase in revenues.
Recently breaking below its 200-
day moving average at the 2,033p
level, the price action has started to
turn slightly negative, which could
well see the share price head
towards the 1,838p level a 61.8 per
cent retracement of the up move
from last Octobers lows at 1,520p,
says Kelly (see chart, below). The
price action needs to get back above
the 2,033p level to reduce the down-
side risk, she says.
TRAVEL
It is the budget end of the travel
industrys spectrum that will be in
focus this summer. EasyJet is cur-
rently benefiting from lower fuel
prices and should see increased pas-
senger numbers over the summer
as tourists flock to the Games.
EasyJets share price has recently
broken three-year highs, but is
struggling to make headway above
548p. It is interesting to note that
the price gapped down from this
level in late 2007, says Kelly.
National Express is another low-
cost travel provider hoping to bene-
fit from the Games. It has lost 15m
a year in senior citizen subsidies,
but demand from festival goers and
football fans may help to temper
this loss. The price action dropped
to a low this year below 180p, but
CURRENCY STRATEGIST
CHRIS VECCHIO
should find support at 200p, says
Kelly. The 200-day moving average
remains a key target, with the coinci-
dent 220p likely to cap upside in the
short term.
TOO MUCH TOO SOON
While many high street retailers as
well as the Chancellor, George
Osborne and London Mayor Boris
Johnson may be hoping that the
Games will bring a consumer spend-
ing high jump to match that seen dur-
ing the Jubilee, it is likely that it will
fall short of expectations. I dont
think similar celebrations will attend
the Olympics, and with the weather
remaining decidedly soggy there will
be little opportunity for sport-themed
barbecues, says Christopher
Beauchamp, markets analyst at IG
Index. Retailers doubtless have their
fingers crossed, but I fear that anoth-
er consumer spending bounce is off
the cards.
Traders hoping to cash in from the
Games should keep an eye on individ-
ual companies, but the majority of
competitors may have peaked too
early.
TORRENTIAL RAIN is hardly the
best motivation to take that run
youd been planning. But
sometimes the wet makes little
difference it might even help.
INDOOR CLIMBING
Londoners are spoilt for choice
when it comes to climbing. The
Arch at London Bridge
(archclimbingwall.com,
020 7407 0999) offers some great
bouldering routes, while The
Castle (castle-climbing.co.uk, 020
8211 7000) has probably the best
selection of lead and top-roping
walls in the country. For a good
mix, try Mile End climbing wall
(mileendwall.org.uk,
020 8980 0289). And best of all
they are all under a roof, so you
wont get wet.
CANOEING
Whether its raining or not makes
little difference if youre already
in the water. There are a host of
great canoeing clubs in London,
including Putney Bridge Canoe
Club (putneybridgecc.co.uk, 020
7731 0255) and Westminster
Boating Base
(westminsterboatingbase.co.uk,
020 7821 7389). They offer a range
of activities from kayak tours for
beginners to more serious canoe
outings for the more experienced.
BRITISH MILITARY FITNESS
You might not want to go out in
the rain, but youll be glad when
it cools you down as former
military personnel put you
through your paces at British
Military Fitness (britmilfit.com,
020 7751 9742). The classes take
part at various locations across
the capital, including Battersea
Park, Canary Wharf and Hyde
Park. Prices are around 50 a
month for unlimited classes.
The best ways to stay fit despite the summer downpour
D
STRKT didnt sound like my
kind of place at all. Its part
nightclub and I hate those I
particularly dont feel like
clubbing after dinner. What with its
club, its fancy cocktails, its caviar
(theres a whole caviar section on the
menu) and its all-singing-all-dancing
restaurant (complete with tasting
menus), I thought it had the same
ring to it as Novikov in Mayfair.
Namely: crassness that caters to a
particularly Russian taste.
But I had it slightly wrong.
Because while Dstrkt may appeal to
some Russians, its own-brand of
crassness and noisy luxury is more
American-style: an exuberant menu,
prices within reason and friendly
staff. Which must be why Jay-Zs best
friend chose it, rather than Novikov,
for a birthday bash attended by Jay-Z,
Rihanna, Kanye West and Stella
McCartney.
The entrance to Dstrkt is on
Rupert Street, near Shafestbury Ave.
It looks like a club entrance: there
are ropes and a carpet later in the
Forget the dancing and eat
evening. Down the stairs you go into
a dark, multi-leveled room. Here
there is a smallish bar with a few
tables, overlooking the dining room:
a glossy, chandeliered but still very
dark affair with banquettes, lime-
light-stealing tables in the middle
and more secluded spots for two on
the raised floor. The food is tasty and
fun, ranging across many categories,
from local cheese to canapes involv-
ing puffs of liquid hydrogen, to bar-
beque baby goat.
We tried a foie gras lollipop and
found it delicious and surprising:
creamy liver coated in sour cherry
and pop rocks that fizz when you
put it in your mouth. Grilled broccol-
ini with burrata was also suprisingly
good: the cheese melty and creamy
like in Italy. Most delicious of all was
the truffle gnocchi with cheddar,
chives and nutmeg that came steam-
ing in a jar. It packed a high-density
hit of creamy carbohydrate. Divine.
We also enjoyed the Saudi prawns
with charred scallions (who would-
nt?) but found the barbecued goat a
bit slimy and odd.
There is lots to try here and lots to
enjoy all you have to do is forget
that behind a flap is a nightclub
where the worst reality TVstars, foot-
ballers and their hangers-ons go to
sink Grey Goose and Cristal.
FIT IN
THE CITY
LAURA WILLIAMS
Dstrkt has surprisingly tasty food and if youre feeling flush makes for a good night out. Mind the wannabe Wags, though.
Raining? Get in a canoe youre already wet
LIFE&STYLE
21
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EPISODE 61 SUCCESSION PLANNING
SIR RODERICK has been spuriously
dispatched to the Guards Polo Club. A
minor Saudi prince and his retinue have
been rustled up to accompany Lady
Emily and Sir Roderick and the
Chairman has been persuaded that hes
crucial to landing a major Middle
Eastern deal.
Meanwhile, back at HQ, important
and confidential business is afoot. Sir
Roderick turns 64 next month. Hes let it
be known that hell be retiring at 65 and
senior colleagues, ambitious and
obsequious in equal measure, are
determined to celebrate his 64th
birthday in Lucullan style and with it,
fire the starting gun for the big prize
money Succession Stakes, to be run over
the following 12 months.
I feel myself to be a novice in such
company and tuck myself away in a
CITY DAD
FITNESS & DIET EXPERT
Something different
for the summer...
I dont know about you but every so often
I need some life breathed into my fitness
routine. Not in the form of a wacky new
class; more like something that Id usually
do but with a twist. These are the two
things currently making me smile on my
fitness radar:
www.fit2date.co.uk:
Launched in London barely a fortnight
ago, fit2date is the home of push ups
and hook ups. Already well established
in Oz, this is an al fresco fitness
experience with a difference: you spend a
couple of hours working out in a nice
green area such as Clapham Common or
Highbury Fields then instead of heading
home with a virtuous smoothie, you all
head to the pub for further bonding.
The two-hour Mega Meets happen
quarterly but fit2date also offers four-
week training courses and eight-week run
clubs. The requirements for signing up are
a little different to usual: no hefty joining
fee and no 12-month commitment (phew
that one could be awkward, worst case
scenario) but you do have to be single
and you do need to be relatively fit.
Definitely worth a go, although ladies,
youll probably want to bin the scrunchie
and befriend the dry shampoo and
waterproof mascara for this one.
www.homerunlondon.com:
One of the biggest downsides to
combining a commute with a workout has
to be the bag carrying. No matter how
many straps and compartments a
rucksack has, running just isnt the same
with keys, phone and water bottle rattling
around. Enter Home Run, a company
offering guided group runs on commuter
routes such as Bank to Clapham Junction,
Canary Wharf to Stratford, and even
Moorgate to Finchley Road. But the best
bit? They carry your bag. The second best
bit? Home Run is currently free. With
rumoured boarding times of up to 30
minutes for some London stations during
the Games, theres never been a better
time to ditch the underground and join
some fellow fitties to burn off those Euro
2012 Kronenberg calories.
www.laurawilliamsonline.co.uk
corner of the boardroom, allowing far
greater men to pontificate about Sir
Rodericks inestimable merit and his
preferences on the celebratory front. Im
relieved when an organising committee
emerges - rather like Conservative
Party leaders of an earlier era and I find
that Im surplus to its requirements. The
committee includes the two Ancients
whove been anachronistically but quite
obliviously chuffing cigars throughout
the meeting and who, Im quite certain,
have not generated a single sou in fee
income since Britain left the revised gold
standard in 1931. They are to be
buttressed by one or two becoming
young men who, after a seemly show of
reluctance and modesty, have leapt at
the opportunity to ingratiate themselves
with Sir Roderick and the banks
grandees.
As a fearsomely knowledgeable
discussion of Grandes Marques and
volumes of champagne commences to
be poured, I slink back to the fourth floor
engine room and generate a bob or two
in fee income myself, before heading
home to middle class respectability via a
couple of pints with Nick. For previous
City Dad episodes, see cityam.com.
RESTAURANT
DSTRKT
9 Rupert Street, W1D 6DG
www.dstrkt-london.com
FOOD hhhhi
SERVICE hhhhi
ATMOSPHERE hhhii
Cost per person without wine: 50
Dstrkts nightclub is off-putting but the restaurant is actually good
BY ZOE STRIMPEL
22
TV & GAMES
cityam.com
T
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R
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S
T
R
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BBC1
SKY SPORTS 1
4pmLive ECB 40 League Cricket
10pmSpecial Report 10.30pm
Time of Our Lives 11.30pmBritish
Miler 12.30amSoccer AM1.30am
Premier League Speedway 3.30am
Time of Our Lives 4.30amSporting
Greats 5am-6amGolf
SKY SPORTS 2
6.30pmGolf Special 7.30pmLive
Premier League Speedway 9.30pm
Sporting Greats 10pmGolf Special
11pmPremier League Poker 1am
Super League Backchat 1.30am
Ladies European Tour Golf 2.30am
Golf 3.30amChallenge Series Golf
4am-6amPremier League Poker
SKY SPORTS 3
7pmWorld Match Tour Sailing
8pmLadies European Tour Golf
9pmGolf 10pmSuper League
Backchat 10.30pmWorld Match
Tour Sailing 11.30pm
Powerboating 12amGetting to
Greenwich 12.30amAustralian
Ironwoman 2.30amWorld Match
Tour Sailing 3.30am-4.30amBass
Fishing
BRITISH EUROSPORT
6.30pmLive Athletics 8.45pm
Triathlon 9.45pmCycling: Tour de
France 10.45pmWorld Series by
Renault 11.15pmFootball
12.30am-12.45amHorse Racing
Time
ESPN
6pmLive: Manchester City v
Dynamo Dresden 8pmAustralian
Football International 2012 9pm
Global Rallycross Championship
10.30pmFootball Is God 11.30pm
Press Pass 2012 12amLive Major
League Baseball 3amPlanet Speed
3.30amAustralian Football
International 2012 4.30am
American Le Mans Series Highlights
5.30am-6amPlanet Speed
SKY LIVING
7pmCriminal Minds 8pmFour
Weddings US 9pmKatie 10pm
Criminal Minds 11pmBones 12am
Katie 1amAmericas Next Top
Model 1.50amSupernatural
2.40amMedium3.30amBones
4.20amMedium5.10am-6am
Passport Patrol
BBC THREE
7pmDoctor Who 7.45pmDoctor
Who Confidential 8pmDont Tell
the Bride 9pmCan Anyone Beat
Bolt? 10pmEastEnders 10.30pm
Live at the Electric 11pmFamily
Guy 11.45pmAmerican Dad!
12.30amCan Anyone Beat Bolt?
1.25amLive at the Electric 1.55am
Russell Howards Good News
2.25amIrish Rappers Revealed
3.10amDont Tell the Bride
4.05am-5.05amIs Football
Racist?
E4
7pmHollyoaks 7.30pmHow I Met
Your Mother 8.30pmThe Big
Bang Theory 9pmNew Girl
9.30pmSuburgatory 10pmThe
Midnight Beast 10.35pm
Cleveland Show11pmRicky
Gervais Show11.35pmFacejacker
12.05amThe Big Bang Theory 1am
Scrubs 1.30amHow I Met Your
Mother 2amRules of Engagement
2.20amWar at Home 2.40am
Desperate Housewives 3.25am
90210 4.05amGreek
4.50am-6amSwitched
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 8pmAmerican Pickers 9pm
Storage Wars 10pmAmerican
Restoration 11pmStorage Wars
11.30pmPawn Stars 12am
American Pickers 1amCash
Cowboys 2amAmerican
Restoration 3amSwamp People
4amLast Days of World War Two
5amPawn Stars 5.30am-6am
American Restoration
DISCOVERY
7pmBorn Survivor 8pmWheeler
Dealers 9pmGold Rush 10pm
Deadliest Catch 11pmAmerican
Chopper: Senior Versus Junior
12amGold Rush 1amDeadliest
Catch 2amAuction Kings 3am
American Chopper 3.50amIce
Pilots 4.40amBorn Survivor
5.30am-6amDestroyed in
Seconds
DISCOVERY HOME &
HEALTH
8pmI Didnt Know I Was Pregnant
9pmThe Bubble Man 10pmUntold
Stories of the ER 11pmA&E 12am
The Bubble Man 1amUntold
Stories of the ER 2amA&E 3am
Wife Swap 4amBirth Stories
5am-6amBaby ER
SKY1
7pmThe Simpsons 8pmAshley
Banjos Secret Street Crew9pm
Trollied 9.30pmA League of Their
Own 10pmFILMUS Marshals
1998. 12.30amRoad Wars
1.55amMy Pet Shame 2.55am
Its Me or the Dog 3.45am
Customs 4.35amAirline
5.05am-6amSell Me the Answer
BBC2 ITV1 CHANNEL4 CHANNEL5
S
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6pmBBC News
6.30pmBBC London News
7pmThe One Show
7.30pmEastEnders: BBC News
8pmHolby City
9pmTurn Back Time The
Family
10pmBBC News
10.25pmRegional News; National
Lottery Update 10.35pmCHOICE
Imagine 11.45pmFILMLondon
River 2009. 1.05amWeatherview
1.10amSign Zone: The Fruit & Veg
Market: Inside New Spitalfields
2.10amThe Men Who Made Us
Fat 3.10amFood Factory
3.40amGreat British Menu
4.40am-6amBBC News
6pmEggheads
6.30pmGreat British Railway
Journeys
7pmBabies in the Office: Part
two of two. The remaining
participants try to combine
work and parenting for a
month.
8pmSecrets of Our Living
Planet
9pmLine of Duty
10pmTwenty Twelve
10.30pmNewsnight: Weather
11.20pmDavid Tennant on
Hamlet:
12.20amBBC News
4am-6amBBC Learning Zone
6pmLondon Tonight
6.30pmITV News
7pmEmmerdale
7.30pmBritains Secret
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8pmLove Your Garden
9pmCHOICE Superstar:
Another contestant faces the
chop.
10.30pmITV News
11.05pmLondon News
11.10pmFILMPolice Academy
1984.
12.50am Jackpot247; ITV
News Headlines
3amGolden Balls 3.50am-5.30am
ITV Nightscreen
6pmThe Simpsons 6.30pm
Hollyoaks 7pmChannel 4 News
7.55pm4thought.tv 8pmBeauty &
the Beast: Ugly Face of Prejudice
9pmGordon Behind Bars 10pm
Accused: The 74-Stone Babysitter
11.05pmKnock-Out Scousers: True
Stories 12.30amRandom Acts
12.35amBank of Dave 1.35amThe
Great Swim Series 2.35amKOTV
Boxing Weekly 3.05amSailing:
Americas Cup Uncovered 3.30am
FIVB Beach Volleyball 4.25am
Brief Encounters of the Sporting
Mind 4.30amThe Grid 5amBrief
Encounters of the Sporting Mind
5.05amBritish F3 5.30am
Ironman 2012 6am-6.30am
Canary Wharf Triathlon
6pmHome and Away
6.30pm5 News at 6.30
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5 News Update
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Scene Investigation
10pmBig Brother
11pmBig Brothers Bit on the
Side
12amBanged Up Abroad
1amSuperCasino 3.55amNicks
Quest 4.20amWildlife SOS
4.45amWildlife SOS 5.10am
House Doctor 5.35am-6amHouse
Doctor
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6
7 8
9 10
11
12 13
14 15 16
17
18
19
20 21
7 10 15
35 7
45
13 6 8
14 13
30 10
12 24
3 22 7
45
23 15
6 9 12
38
19
22
13
17
17
11
27
25
16
34
19
11
9
10
5
28
39
8
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ACROSS
1 Cut with an axe (4)
3 Melodious sounds (5)
6 Island associated
with Napoleon (4)
7 Group of countries in
a special alliance (4)
9 Agent that destroys
disease-carrying
microorganisms (9)
11 Father Christmas (5)
12 Holder on a boat that acts
as a fulcrum for rowing (7)
15 Screws, rivets (5)
17 Sudden inspiration or
bright idea (coll) (9)
18 Garden of Adam
and Eve (4)
19 Mark left by a wound (4)
20 Cooks slowly and for a
long time in liquid (5)
21 Performs an act of
transgression (4)
DOWN
1 Packs to
capacity (5)
2 Formerly the
basic unit
of money in
Spain (6)
3 Canadian
province (8)
4 Scattered in
small drops or
particles (9)
5 Shout of
approval (5)
8 Lack of
knowledge or
education (9)
10 Noteworthy
scarcity (8)
13 Shrouds (6)
14 Follows
orders (5)
16 Despatches (5)
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4

4

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S T R A T A L E
T A C R A V A T
A S I A M S V
R L M E A S L E S
T W I N E H O I S T
E N L I E T A
R O G U E A T E A M
S U S P E N D R P
T P O B A B E
R E C E S S T D
R D E X C I T E
1 7 1 5 1 2 4
3 5 1 6 8 7 2 4 9
9 4 9 6 4 8 7
8 4 8 3
6 2 1 1 2 8 9
7 1 4 6 2 9 3 5 8
9 6 9 3 1 2 5
1 8 1 7
4 3 2 5 1 1 4
9 6 4 7 2 1 8 3 5
8 9 6 8 9 7 9
4
4
4
4
4
4
4
4
4
The nine-letter word was
PUNCHBOWL
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
IMAGINE
BBC1, 10.35PM
How Glasgow has become renowned
as a centre for contemporary art, with
the past three Turner Prize winners all
having links to the city.
SUPERSTAR
ITV1, 9PM
Another live show, another
elimination as Andrew Lloyd Webber
continues his search for an actor-
singer to play Jesus.
CSI: CRIME SCENE
INVESTIGATION CHANNEL5, 9PM
Investigators search for armed
robbers who killed the groom at an
Alice in Wonderland-themed wedding.
Ted Danson heads the cast.
TVPICK
IN BRIEF
Russia to appoint Capello as coach
nFOOTBALL: Former England
manager Fabio Capello is set to be
confirmed as Russias new national
team coach. If, as I believe the case
will be, all goes as planned in terms of
the contract, it will be a splendid
adventure, said Capello. Russia are a
great nation.
Price could be right for Chisora
nBOXING: British and Commonwealth
heavyweight champion David Price
hopes to fight Dereck Chisora in 2013.
I want to fight the best fighters and
Chisora is one of the best in Britain and
would be a good test for me, said 29-
year-old Price.
PROMOTER Eddie Hearn has reacted
to the threat of a split within British
boxing by defending the British
Boxing Board of Controls (BBBofC)
role as the sports governing body.
Over the last three months, rival
promoter Frank Warren has built a
controversial relationship with the
Luxembourg Boxing Federation (FLB)
who sanctioned Saturday nights
heavyweight fight between David
Haye and Dereck Chisora and, as
exclusively revealed yesterday by City
A.M., is considering again using
them because of the success he con-
sidered that show to have had.
Hearn, however, despite agreeing
that the BBBofC has a flawed set up,
regardless continues to believe dras-
tic change to be unnecessary.
I dont see the need [for another
governing body], said Hearn, of
Matchroom Boxing. Unless were
going to start bringing over fighters
that havent got a British licence or
couldnt get a British licence, I dont
see the need.
Every governing body will be
Hearn: Its our
duty to support
flawed BBBofC
moaned at at some point but I think
in general, the BBBofC have done a
fantastic job. Theyve represented the
fighters, they care about the fighters.
Theyve got their own rules and regu-
lations in place which is supposed to
benefit the members.
Sometimes they get it wrong, but
theyre our governing body and weve
got a duty to stand by them.
Its all well and good saying they
charge too much, but you want more
people down there looking at the
medical side, looking after the fight-
ers. They dont just appear, they have
to be paid.
[The BBBofC is] coming to a period
now where theyre in a difficult situa-
tion. Theyre under threat but, mov-
ing forward, I think British boxing is
perhaps in a better state than its
been in the last three or four years.
I feel sorry for [general secretary]
Robert Smith and the board because
they have limited resources.
NEW British No1 Heather Watson won the first WTA title of her career after partnering
Marina Erakovic to victory in the Bank of the West Classic. Watson and Erakovic were
playing together for the first time but overcome top seeds Vania King and Jarmila
Gajdosova 7-5, 7-6 (9-7) in the final in Stanford, California.
WATSON WINS CAREER FIRST WTA TITLE
BY DECLAN WARRINGTON
Yesterdays story as revealed by City A.M.
SPORT
23
cityam.com
Thursday 19th July
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EPSOM LIVE! THE ENTERTAINMENT NEVER STOPS
Enjoy a great evenings racing followed by one of our fantastic outdoor concerts.
Adult tickets from 32 and children from 18.
To book now call 0844 579 3004 or visit epsomdowns.co.uk
Results
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Boxing faces shake up as Warren
considers licensing breakaway
EXCLUSIVE
EXCLUSIVE
MASTERS champion Bubba Watson
has ruled out an outsider repeating
Darren Clarkes fairytale triumph of
12 months ago at this years Open,
which starts on Thursday at Royal
Lytham and St Annes.
Watson believes only a player
ranked among the worlds top 10
will have the required mental
fortitude to overcome the current
dreadful weather and a course that
Tiger Woods has called almost
unplayable in places.
That has prompted him to tip
English pair Luke Donald and Lee
Westwood -- ranked No1 and No3
respectively but both still seeking
their maiden marquee title -- as well
as 14-time Major winner Woods.
If I dont win, youve got to think
that itll be someone whos already
up there in the top 10 in the world,
the American told City A.M. yesterday.
You have to look at someone who
has a very good mind, that can
withstand bad weather and tough
conditions, and their mental game is
going to have to stand out maybe
even more than their physical game.
This week is a tough challenge
with the weather predicted. Lee
Westwood and Luke Donald, guys
who havent won yet but are really
close, you cant bet against them.
And Tigers the only guy to have won
three times this year, so you have to
put him among the top five.
Watson, likely to be part of the US
Ryder Cup team later this year, also
warned his European rivals that he
and his compatriots are improving
and out to lay down a marker.
The last three [Majors] have been
won by three US guys, all young guys
winning their first, he added. So
America is on the up.
Read City A.M.s full exclusive interview
with Bubba Watson in our special watch
supplement on Friday.
R
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S
BRITAINS London 2012 football
team have recruited one of the coun-
trys most successful Olympians to
advise them on how to cope with the
demands of competing in their first
Games -- double gold medallist Dame
Kelly Holmes.
Liverpool forward Craig Bellamy
revealed last night that the middle
distance running great, who tasted
glory in both the 800m and 1500m at
Athens in 2004, yesterday gave Stuart
Pearces 18-man squad a timely and
illuminating pep talk.
The footballers were among those
Team GB athletes who moved into
the Olympic Village on Monday as
preparations stepped up across the-
capital and Games venues for the
start of competition next week.
Weve just had the privilege of
meeting Dame Kelly Holmes, and she
gave us a chat on what to expect
looking forward to these Olympics. It
is new to us, said Bellamy, one of
Pearces three designated overage
picks in a squad otherwise aged 23
or under.
She just told us to enjoy the
experience. Its a lot different to
what we are used to as foot-
ballers, theres a lot more
going on here -- meet-
ings; you have to be a lot
more patient; you eat
with every single other
athlete. It
all adds to
the experience.
Holmes to help
Pearces men in
Olympics bid
[Her advice] is basically to enjoy it
and embrace that, go and speak to
the other athletes, ask how they are,
and just be part of this Great Britain
experience of all trying to get medals,
all trying to do as well as we can for
Great Britain.
Team GB, who lost their first match
together 1-0 to Mexico behind closed
doors at their Spanish training camp
on Sunday, take on Brazil in their sec-
ond and final warm-up match on
Friday in Middlesbrough.
Chelsea striker Daniel Sturridge
remains a fitness worry, having only
joined the squad yesterday following
a bout of meningitis, and Pearce
admits he may have to replace him
before the first London 2012 fixture
on Thursday 26 July if he struggles
this week.
Well have a look at what happens
in the lead-up to Fridays game,
which will be the real indicator for
me to gauge his fitness, said Pearce.
AMERICAN 400m hurdler Kerron
Clement vented his spleen on
Twitter yesterday, claiming the
bus taking he and team-mates
to the Olympic Village had got
lost, causing a four-hour
delay. The two-time world
champion wrote: Um [sic],
so weve been lost on
the road for 4hrs. Not
a good first impres-
sion London.
Athletes are sleepy,
hungry and need
to pee. Could we
get to the
Olympic Village
please.
Wiggins: Froome would be my
greatest rival on another team
TEAM Skys Bradley Wiggins admits
that the greatest threat to his
ambitions of winning this years
Tour de France would come from
fellow Briton Chris Froome if he
were on another team,
Wiggins remains the Tours
leader after the races 15th stage was
won by Pierrick Fedrigo of France
but if any concerns remain that
team-mate Froome may seek glory
at Wigginss expense then the
former is clearly not in agreement.
Were first and second on GC
[the general classification], said
Wiggins, who retains the yellow
jersey and remains an overall two
minutes and five seconds in front
of Froome. It doesnt take a rocket
scientist to work that out. Hes my
team-mate. Well keep it like that.
Such an admission from Wiggins
may potentially be regarded as a sign
over confidence but the race leader
remains adamant that Saturdays
time trial will have a considerable
influence in determining who will
top the podium after the final day
on Sunday.
The last time-trial of the Tour is
not the same as the one in the first
week. Youre tired and its not easy to
put in the same amount of effort as
in the first week.
Having overcome Lymes disease
earlier this year, Fedrigos win
achieved in three hours, 40 minutes
and 15 seconds, ahead of Christian
Vande Velde after the duo both
sprinted for victory with five
kilometres remaining provided
the rider with a significant sense
of achievement.
Each stage that I have won offers
something special. The first is always
moving. The second was in Tarbes, a
few miles from my house. The third
was the Queen Stage of the Pyrenees
in 2010 they are beautiful places
for me. And this is the victory of a
comeback after a year of illness, and
that means a lot.
Bubba Watson believes the winner of this years Open will be one of the worlds top 10
BRITISH driver Lewis Hamilton will
base a decision on whether to
continue pursuing his career with
McLaren upon their ability to
deliver him a car he believes
capable of securing a second title.
McLarens deal with Hamilton
ends this year but despite the
degree of loyalty established over
the course of their 14-year
relationship, myriad operational
complications inhibiting the
performance of 2012s most potent
car, and by extension Hamiltons
season, has caused him to question
his future with the team.
There are a lot of things to take
into account, said Hamilton, 27.
These people have supported
Deliver me a car and Ill deliver
you my loyalty, says Hamilton
me; they got me into F1. But I want
to win. Im not that young any
more so I want to make sure that
whatever I do I make the right
decision so I maximise my career.
Ive been ready all year to win.
We should have won a lot more
races, but theres many more to go.
We still have a lot more chances to
get some wins, I think its possible.
Up until now weve not
developed as fast as other people.
Other people have brought some
more upgrades in the past than we
have, but we have a big upgrade
coming for the next race, so lets
hope that it does the job and gets
us in a fighting position.
In the event Hamilton decides to
leave McLaren, Mercedes remain
the most likely alternative.
24
SPORT
cityam.com/sport
BY FRANK DALLERES
AND TIM BARBER
BY FRANK DALLERES
BY SPORTS DESK STAFF
Craig Bellamy is one of
three Team GB strikers
Eddie Hearn backs British
Boxing Board of Control as
threat grows of split within
domestic scene: Page 23
EXCLUSIVE
Bubba backs
Open for top
10 winner

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