Issue 1,229 Tuesday 28 September 2010

BUSINESS WITH PERSONALITY FREE

www.cityam.com

IMF: WE BACK TOO BIG

TO FAIL
OSBORNE’S CUTS WE INTERVIEW
AUTHOR
ANDREW
▲

UK ECONOMY
BY MATTHEW WEST
THE International Monetary Fund (IMF) gave
its full backing to the coalition govern-
ment’s deficit reduction plans yesterday,
SORKIN
announcing that the UK economy is on the
mend after the longest and deepest reces-
sion of the post-war era.
In its annual health check of the UK econ-
P21
omy the IMF said the recovery was under-
way, unemployment had stabilised and the
health of the financial sector had improved.
Calling the government’s deficit reduc-
tion plan “appropriately ambitious” the IMF
report said: “The government’s strong and
credible multi-year fiscal deficit reduction
plan is essential to ensure debt sustainabili-
ty.” It added the plan “greatly reduces the
risk of a costly loss of confidence in public
finances and supports a balanced recovery.”
Fiscal tightening would dampen short-
term growth, said the report, but not stop it
as other sectors of the economy emerged as
drivers of recovery, supported by continued
monetary stimulus.
The backing of the IMF will come as a
huge vindication of chancellor George
Osborne’s proposals to cut public spending
by £83bn in order to get the £155bn budget
deficit under control. The chancellor will
reveal where the cuts will come when he
announces the results of the comprehensive
spending review on 20 October. Chancellor George Osborne’s
The chancellor welcomed the IMF report deficit reduction plans were
saying: “They have made it pretty clear that called “strong and credible”
the deficit reduction plan that we have set by the IMF yesterday
out is essential for bringing about sustain- Picture: GETTY
ability in our budget. It reminds us that if we
divert from the course the new government
has set out then we really will be heading
back into a disastrous period of economic cautious pace in a way that is going to help Inflation should also fall back to the govern-
instability for Britain.” our economy, not hinder it”. ment’s two per cent target by early 2012.
The report puts the new Labour leader, Ed But while there were risks to economic In another boost for the government the
Miliband, under immediate pressure ahead recovery given the “continued fragility of IMF said financial sector reform ”would be
of his conference speech today. Earlier this confidence and “signs of renewed housing crucial to move to a safer system that fea-
week the Labour leader described the gov- market weakness,” the IMF predicted GDP tured stronger capital and liquidity buffers,
ernment’s policies as “economically danger- growth would be two per cent in 2011, rising supported by tighter regulation and supervi-
ous” and called for deficit reduction “at a gradually to 2.5 per cent the following year. sion.” ALLISTER HEATH: P2

RBS AXES 500 MORE STAFF

BANKING arm. Those jobs losses were described by wealth management division which
▲

BY STEVE DINNEEN & MATTHEW WEST
ROYAL Bank of Scotland (RBS) will shed up to
500 jobs from its investment banking arm, it
announced to staff yesterday.
City A.M. understands the redundancies –
most of which will affect London-based
employees – will be in the bank’s backroom
departments with its IT and marketing
departments likely to be most affected .
Client-facing staff are thought to be safe
for the time being.
The news comes less than a month after
RBS announced that up to 3,500 support
staff jobs will go from its consumer banking
Unite, which represents staff at the bank as
“horrific”. National officer Rob MacGregor
said it would be particularly difficult for
staff to accept as RBS had decided to move
some of the jobs abroad.
At the time he said: “Just three weeks ago
staff were boosted to hear of the £1.1bn half
year profit yet today thousands of them are
told that they have no future at the bank.
Unite is appalled that this 84 per cent tax-
payer-supported institution has since 2009 –
under the banner of a strategic review – cut
21,500 staff.”
Just three months earlier RBS announced
redundancies among back-office staff in its
includes Coutts, the bankers to the Queen,
and Adam & Co. In May it said 2,600 posi-
tions would go at its insurance and retail
banking arms.
An RBS spokesman said: “We continue to
make efficiencies across our business to
ensure that we have the right people and
resources in place to meet our client needs.
We will do all we can to support our staff,
offer redeployment opportunities wherever
possible and keep compulsory redundancies
to an absolute minimum.”
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 2 News
IMF is right – but savings crisis looms
EDITOR’S LETTER
ALLISTER HEATH
GEORGE OSBORNE was a happy man
yesterday, courtesy of the usually dour
International Monetary Fund (IMF),
which released an unusually effusive
and gushing endorsement of the coali-
tion’s macroeconomic policies.
The IMF is upbeat for 2011, predict-
ing growth of two per cent. It makes it
clear that slashing the deficit and con-
trolling public spending is the only
way forward to avoid a sovereign debt
crisis. While squeezing state spending
will slow growth, the IMF is confident
that liberating resources for the pri-
vate sector will ensure that the recov-
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WHAT THE OTHER PAPERS SAY THIS MORNING
BRAZIL IN GLOBAL CURRENCY WAR’
ALERT
An “interntaional currency war” has
broken out according to Guido
Mantega, Brazil’s finance minister, as
governments around the world com-
compete to power their exhange rates
to boost competiveness. Mantega’s
comments in Sao Paulo follow a
series of interventions by central
banks in Japan, South Korea and
Taiwan in an effort to make their cur-
rencies cheaper.
REVERSAL ON CARILLION’S
RECLASSIFICATION
Carillion has successfully persuaded
the body responsible for deciding the
sectors in which listed companires
are categorised to backtrack on a
recent decision to reclassify it as a
constrution company. Carillion called
on the Industry Cassification
Benchmark committee to ‘correct’
ery continues strongly. More emphasis
should be given to reducing public sec-
tor compensation wage premia and
achieving savings in benefits through
better targeting, it argues, policies
that will be music to Osborne’s ears as
he prepares for next week’s party con-
ference in Birmingham.
But while the IMF is right to high-
light Britain’s economic recovery and
cyclical upswing, many longer-term
challenges remain for Britain. Two in
particular stole the limelight yester-
day. First, pensions. According to a
study by A.T. Kearney, the manage-
ment consultancy, 95 per cent of
Britons will find themselves having to
downgrade their lifestyle significantly
or be plunged below the poverty line
in retirement.
The bottom 88 per cent of British
households own only £7,000 on aver-
age in liquid assets, with many relying
on downsizing their homes when
they get older. The next four per cent
own an average of just £71,000, with
the next 2.8 per cent an average of
Moody’s adds to euro woes
EUROZONE
▲
BY HARRY BANKS
CREDIT ratings agency Moody’s
slashed its ratings on Anglo Irish
Bank’s lower-grade debt yesterday,
unnerving investors as Dublin tots up
the final cost of rescuing a lender
whose soured loans have crippled the
country’s economy.
Yields on 10-year government
bonds increased to 430 points above
the equivalent German securities as
investors fretted over a writedown of
debt.
Moody’s cut the nationalised
bank’s senior unsecured debt by
three notches to Baa3 -- just one notch
above junk status -- citing a small risk
the government would not continue
to support that class of debt, the
agency said. It slashed Anglo Irish’s
subordinated debt by six notches to
Caa1.
The steadily mounting scale of the
bank’s rescue has put massive pres-
sure on already strained public
finances, propelling the former
“Celtic Tiger” economy to the fore-
the move.
GERMANY PRESSES FOR SHAKE-UP OF
LANDESBANKEN
The German government believes it
could take until spring for the trou-
bled publicly owned Landesbanken to
agree the first steps of a reorganisa-
tion after the global financial melt-
down and Eurozone crisis. Steffen
Kampete, deputy finance minister
said consolidation was vital to “win
back the confidence” of the markets.
“I don’t think we’ll get anythinng
definitive by year’s end. But we’ll see
the contours by spring 2011,” he said.
AIG TO FACE SHARE LOCK UP AFTER
AIA HONG KONG LISTING
AIG will keep a minimum stake of 30
per cent in AIA for at least a year after
its Asian businesses are listed in Hong
Kong next month. It will also be
banned from selling any shares at all
for six months after the listing. The
lock up will also apply to AIA itself
and cornerstone investors.
£141,000. Only the top five per cent of
households have any substantial
amount of liquid assets – and even
then only the truly rich have anything
like enough. Someone aged 54 and
earning £150,000 with £200-£500,000
in liquid wealth will only take home
an annual retirement income of
£20,000-£31,000.
The study demolishes the myth that
“my house is my pension”.
Downsizing won’t unlock enough
cash for the majority of the popula-
tion; most would only have £30,000
left in equity, after stamp duty and
other costs. The government’s Nest
scheme to auto-enrol those on lower
incomes into approved pension plans
will be a case of too little, too late.
Charlie Bean, the Bank of England’s
deputy governor, was being too short-
termist when he called yesterday on
consumers to save less and spend
more – low savings are a much greater
threat to the UK’s prosperity than a
couple of years of weak consumer
spending and sluggish GDP growth.
Irish finance minister Brian Lenihan says its “unthinkable” Ireland will default on debt
front of investor concerns about the
sustainability of sovereign debt in the
Eurozone.
The government has previously
indicated the bailout of Anglo Irish
will cost around €25bn (£21.3bn),
although Standard & Poor’s has esti-
mated it could be as high as €35bn.
STANDARD LIFE CHIEF HITS BACK AT
VINCE CABLE
The man who runs one of the City’s
most respected institutional investors
has hit back at Vince Cable, describ-
ing his attack on shareholder short-
termism as “disappointing”. Keith
Skeoch, chief executive of Standard
Life Investments, accused the
Business Secretary of ignoring “all
the good work done” by investors in
improving the way they hold compa-
nies to account in the past year.
P&G LOOKS AT THE LONG TERM
THROUGH GREEN-TINTED LENS
Procter & Gamble has pledged to
power its factories with 100 per cent
renewable energy. The world’s largest
consumer products company also
said it would use only renewable and
recycled materials in all its products
and packaging and would report on
its progress annually.
Second, the corporate exodus.
Wolseley, a heating and plumbing
firm with a turnover of £13.2bn, will
adopt a Jersey structure and base itself
in Switzerland for tax reasons. The
move will save it millions of pounds
and lower its tax rate substantially.
The result for Britain will be an even
higher deficit, fewer jobs and less
investment. The government is con-
sulting on a reform of the tax system
but UK Plc has run out of patience –
understandably, given the growing
anti-capitalist mood music. Britain is
the only country in the world which
appears actively to want to chase away
its multinationals.
So the IMF is largely right about the
short-term – but Britain’s longer-term
prospects remain dire. Osborne is
understandably concerned primarily
with fire-fighting right now, but he
will eventually also have to address
those extraordinarily difficult issues if
he truly wishes to make his mark as a
reforming chancellor.
allister.heath@cityam.com
Finance minister Brian Lenihan
has said it is unthinkable that Ireland
would default on senior debt but, in
the absence of such assurances given
on subordinated paper, analysts say
those might face a buyback at well
below par.
“Anglo Irish is the millstone
BP WARNS RESTART OF DRILLING IN
GULF OF MEXICO WILL BE SLOW
BP has admitted that a resumption of
deepwater drilling in the Gulf of
Mexico is likely to be slow, delivering a
blow to the thousands in the region
whose livelihoods depend on it. It’s
likely to be “a phased restart,” Doug
Suttles, BP’s chief operating officer for
exploration and production,” told the
Presidential commission investigating
the spill.
TOPSHOP TO OPEN SECOND US STORE
Topshop, the fashion retailer owned
by Sir Philip Green, has signed a lease
on its second US shop, in Chicago. The
35,000 sq ft store on the city’s North
Michigan Avenue will open in
autumn 2011. He is also in talks to
open shops in Los Angeles and Las
Vegas, and is considering San
Francisco. Topshop opened its first US
store – in New York – in 2009.
CITYA.M. 28 SEPTEMBER 2010
NEWS | IN BRIEF
Rolls-Royce sued over patent
In a continuing battle over engine part
designs, jet engine-maker Pratt &
Whitney yesterday sued Rolls Royce,
accusing the British company of mis-
leading the US Patent and Trademark
Office to obtain a patent. Pratt &
Whitney, a subsidiary of United
Technologies, said in its lawsuit that
Rolls-Royce’s patent is invalid and unen-
forceable. The East Hartford-based com-
pany accused Rolls Royce of unlawfully
using its patent and taking other actions
to harm Pratt & Whitney.
Crossrail plans efficiencies
Crossrail set out a series of cost savings
to its £16bn budget yesterday but said
there would be no cuts in its planned
stations or branches. Instead efficien-
cies would be found by making use of
existing train designs, rather than build-
ing new carriages from scratch as origi-
nally planned. The latest cuts are part of
Crossrail's ongoing review of costs on
the line, which will run for more than 73
miles from Maidenhead and Heathrow in
the west, through new, twin-bore 13-
mile tunnels under central London to
Shenfield and Abbey Wood in the east.
around our necks,” says Bill Blain, a
fixed income trader at Matrix in
London.
Meanwhile, in another part of the
fragile Eurozone area, the OECD rec-
ommended that Portugal swiftly con-
solidate public finances to restore
investor confidence and stand ready to
raise value-added and property taxes if
necessary. The OECD warned that the
country’s high sovereign debt spreads
could put recovery at risk, and urged
labour market reforms to boost com-
petitiveness. “I am confident Portugal
will weather this crisis,” OECD
Secretary-General Angel Gurria said.
The OECD’s warning came as the
Financial Stability Board said yester-
day that the global financial system
remains vulnerable because of contin-
uing fiscal tensions in developed
economies and fragile banks, and
warned that these risks could be
amplified by weakening economic
conditions. “The potential for adverse
feedback loops between weak
economies, fragile banking systems
and fiscal strains remain significant,”
it said.
UK'S IMMIGRATION RULES SLAMMED
Large corporations and other employ-
ers are turning up the heat on the UK
government as it finalises new immi-
gration rules that industry says
would restrict their ability to recruit
key talent. Border authorities in June
introduced a temporary cap on how
many skilled and highly skilled work-
ers employers can hire from outside
the European Union. In the coming
months the government is expected
to announce the permanent rules
that will take effect in April.
FORD CEO EXPECTS SOLID PROFIT
Ford still expects to make a “solid
profit” this year and plans to invest
£1.5bn in the UK over the next five
years, the car manufacturer's presi-
dent and chief executive Alan Mulally
said yesterday. He added he expects
the car manufacturer to post an
improvement in performance in 2011.
CITYA.M. 28 SEPTEMBER 2010
JPM sets up
alternatives
unit in the US
▲
BANKING
BY HARRY BANKS
JPMORGAN Chase is starting a new
alternatives unit in its asset manage-
ment business, formed from traders
who are no longer allowed to trade
for the bank’s own account under
new US rules, according to a company
memo.
The fate of the JPMorgan traders
has been up in the air as banks scram-
ble to come to terms with the so-
called Volcker rule restricting banks
from betting with their own money,
among other regulatory changes.
A person familiar with JPMorgan’s
changes said about 45 traders will
move from its investment bank to a
new unit within its asset manage-
ment business.
“We are confident that clients will
benefit from their investment experi-
ence and insight,” wrote investment
bank and asset management heads
Jes Staley and Mary Erdoes in the
memo to employees.
Mike Stewart, co-head of the invest-
ment bank’s global emerging mar-
kets business, will run the new
business, according to the memo.
Stewart will work with Larry
Unrein, head of private equity and
hedge funds within asset manage-
ment, in establishing the business.
JPMorgan expects to complete the
transition over several years, accord-
ing to the memo.
Chief Executive Jamie Dimon had
said earlier this month the bank
would remove some traders from its
investment bank unit because of reg-
ulatory changes.
Dimon has complained about the
scattershot nature of US financial
reform, which he says is making
banking businesses more complicat-
ed rather than improving the finan-
cial system.
JPMorgan, the second-largest US
bank by assets, also expects revenues
to be hurt by new rules that limit the
charges it can apply to credit card and
current account customers.
RIM founder Mike Lazaridis with the new Blackberry PlayBook
RIM unveils Blackberry
PlayBook as rival to iPad
TECHNOLOGY
▲
BY MATTHEW WEST
RESEARCH in Motion (RIM) unveiled
its own tablet computer to rival
Apple’s iPad yesterday.
The computer, named BlackBerry
PlayBook, has a seven-inch screen and
dual facing cameras.
It is WiFi and Bluetooth enabled
but needs to link with a BlackBerry
smartphone to access the mobile
phone network.
Picture: REUTERS
Shares of RIM jumped nearly two
per cent to $49.29 in after hours trad-
ing following the announcement at
the company’s annual developers’
conference in San Francisco.
RIM expects to ship the device to
corporate customers and developers
in October. It will become commer-
cially available early in 2011.
While yet to set an exact price RIM
said the PlayBook will fall in the
lower range of prices for consumer
tablets already on the market.
News 3
Former US
Treasury chief
joins BA board
TRANSPORT
▲
FORMER US Treasury secretary John
Snow, and Telefónica chairman César
Alierta, are to join the board of the
newly formed International Airlines
Group (IAG) as non-executive direc-
tors, it was announced yesterday.
The company, which is being
formed by the planned merger of
British Airways and Iberia, will create
Europe’s second-largest airline by
market value after Lufthansa. Under
the rules of the merger, BA had to
nominate a Spaniard to the board,
Iberia had to choose a Briton and
both had to pick someone who was
neither Spanish nor British.
Alierta and Snow, an appointee of
former US president George W. Bush,
are two of four new faces on the 14-
member board of IAG, which will be
chaired by Antonio Vázquez, current
Iberia chairman.
Willie Walsh, BA chief executive,
will become chief executive of IAG.
Patrick Cescau, former Unilever chief
executive and Kieran Poynter, former
chairman of PricewaterhouseCoopers
are the other two non-executive direc-
tors.
Last week the merger cleared a sig-
nificant hurdle when Iberia said it
had decided not to exercise its right
to cancel the deal over a BA employ-
ees’ pensions deficit of £3.7bn.
4 Focus on Unilever CITYA.M. 28 SEPTEMBER 2010

This purchase makes financial sense

INVESTORS should keep their hair
on. Financially, this deal makes sense.
Unilever’s $37.5bn-a-share offer,
which values Alberto Culver at
around $3.6bn, is good value. The
offer, which is worth around 12 times
prospective earnings for 2011, is pret-
ty cheap when compared to similar
deals.
Which is just as well, because the
deal – while sensible – is not going to
change the world. It will strengthen
Unilever’s number three position in
the haircare market, but that’s about
it. Procter & Gamble has a 23 per cent
share of the global haircare space,
compared to 18 per cent for L’Oreal
and 11 per cent for Unilever. Alberto’s
share is just two per cent, however, ing – acquisition.
although it does have a strong show-
ing in North America, where it has 11 ANALYSIS l Unilever
per cent of the market compared to 1,950 p
1,817.00
six per cent for Unilever. 27 Sep
Still, the North American strength
belies an international weakness. 1,850
Around 75 per cent of Alberto’s rev-
enues come from more mature mar-
kets. Hopefully Unilever will be able 1,750
to squeeze value from the acquisition
by using its strong emerging markets
network to distribute brands like VO5 1,650
and TRESemme. 7 JJul 27 Jul 16 Aug 6 Sep 24 Sep
Savings of around €150m a year,
while welcome, are hardly big news
either. This is what Unilever does
best: a sensible – if somewhat bor-
BOTTOMLINE
Analysis by David Crow

Unilever boss
Paul Polman said
the personal care
sector is growing
fast

Picture: GETTY

Unilever is
hoping for a
good hair day
unspecified cost savings.
▲

CONSUMER
BY STEVE DINNEEN
UNILEVER yesterday announced it
will buy US hair and skin care special-
ist Alberto Culver in a deal worth
$3.7bn (£2.34bn).
The acquisition of the firm behind
household names such as V05 and
TRESemme marks the single biggest
Unilever acquisition in almost a
decade.
The new brands will complement
Unilever’s existing portfolio, which
includes Dove, Clear and Sunsilk in
hair care, and Vaseline in skincare. It
will also enhance Unilever’s presence
in key emerging markets such as
Mexico.
Moreover, the deal will bolster
Unilever’s flagging hair care sales in
its core US market. In the last year
Alberto Culver generated sales of
$1.6bn and earnings of $250m.
It is also likely to herald as-yet
Execution Noble called the deal
“more evidence of a strategically and
financially sound re-investment phi-
losophy at Unilever” and Charles
Stanley reiterated its “accumulate”
recommendation in the wake of the
news.
The acquisition follows a yet-to-be
completed deal to buy Sara Lee’s
body care division for $1.3bn. The
firm’s largest value acquisition was
the massive $20.3bn acquisition of
Bestfoods in 2000.
Chief executive Paul Polman said:
“Personal care is a strategic category
for Unilever and growing rapidly.
“Ten years ago it represented 20 per
cent of our turnover; strong organic
growth has driven it to now reach
over 30 per cent, with strong posi-
tions in many of the emerging mar-
kets.”
Unilever shares closed up 1.28 per
cent on the back of the news yesterday.

Unilever takeovers

Bestfoods Inmarko TIGI Sara Lee Alberto

$20.3bn $? haircare Bodycare Culver
$412m $1.3bn $3.7bn
2000 2008 2009 2010 2010
CITYA.M. 28 SEPTEMBER 2010 News 5

The new shape of business travel.

The resignation of star manager Gervais Williams has led to further changes at Gartmore

New setback
for Gartmore Speedy Boarding
▲

FINANCIAL SERVICES of the trust’s issued share capital. If

BY STEVE DINNEEN
EMBATTLED fund manager Gartmore
suffered a fresh setback yesterday
when it lost the mandate to run a
£50m investment trust following the
resignation of a star manager.
The Gartmore Growth Opportunities
fund (GGO), said it has reached agree-
ment in principle with Artemis Alpha
Trust for a merger of the two compa-
nies’ assets. The proposal will be put to
a shareholder vote in December.
GGO said earlier this month it was
considering its management arrange-
ments after the resignation of smaller
companies manager Gervais Williams
from Gartmore.
Shareholders in GGO can opt for a
cash exit at 95 per cent of asset value
but that will be limited to 30 per cent
they stay invested they will receive Add it to your reservation and you’ll get the pick of the seats.
shares in the Artemis fund at 98.5 per
cent of asset value.
After GGO started its review of man-
agement, 14 investment managers
including Gartmore submitted propos-
als. Artemis Alpha Trust said the
enlarged fund will be managed by John
Dodd and Adrian Paterson.
Williams’s departure from Gartmore
marked the latest in a succession of set-
backs this year for the fund manager.
Star manager Guillaume Rambourg No hand We fly you to Change to an We charge Missed your flight
quit in July to focus on a regulatory baggage weight main airports earlier flight you less home? Catch the
probe, having been suspended as part limit home for free next available
one for only £43
of an internal investigation which
sparked heavy outflows of assets as
clients took their money elsewhere.
The company’s shares have lost near-
ly half their value since listing last
December.

WILL ROGERS
CENKOS
WILL Rogers is advising Gartmore on
the Artemis deal.
The former head of investment
companies corporate finance at UBS
has launched over 50 investment com-
panies with a total value of over £35bn.
He has advised on a wide range of recon-
structions, equity and debt issuance, buy
back programmes, remuneration struc-
tures and other corporate finance mat-
ters.
He has recently worked with the UKLA
and AIC on the proposed changes to the
listing rules for investment companies.
Rogers qualified as a corporate lawyer
at Allen & Overy in 1989 and joined SG
Warburg in 1994, becoming head of
investment companies corporate finance
in May 2000.
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 6 News CITYA.M. 28 SEPTEMBER 2010

Wolseley boss Ian

Meakins says the
move to
Switzerland will
save the firm
£23m in tax
receipts

Wolseley blames UK
tax for Swiss move
REGULATION
▲

Chief financial officer John it of £450m last financial year, it

BY MARION DAKERS
PLUMBING group Wolseley sparked
talk of another exodus of firms
from the UK yesterday by announc-
ing plans to move its base to
Switzerland for tax reasons.
The group said it expects to save
£23m a year by setting up a Swiss-
based holding company, but
stressed that it will continue to pay
tax on its UK operations.
“Clearly if there hadn’t been the
difference in the tax rate we would-
n’t have made this proposal,” chief
executive Ian Meakins said on a call
with journalists yesterday.
The company spoke to the
Treasury and HMRC before making
the decision. It blamed the move
Martin said: “It is 100 per cent the
CFC regime in the UK. It’s not very
helpful to Wolseley. The principle
reason for that is 81 per cent of our
revenue is from outside the UK.”
The CBI called yesterday for the
government to do more to keep
companies here: “We hope the cor-
porate tax roadmap due to be
announced in the autumn will pro-
vide companies with greater clarity
on planned reforms.”
The government said it could
not comment on individual compa-
nies, but a Treasury spokesperson
said: “The Government is commit-
ted to reform of the CFC rules and
will introduce new rules in 2012.
Any changes will deliver a more ter-
ritorial approach refocusing on
announced yesterday, driven by
cost cutting. Revenue fell nine per
cent to £13.2bn.
Wolseley added that Gareth
Davis, the former boss of Imperial
Tobacco, would succeed John
Whybrow as chairman after the
annual shareholders meeting in
January.
Shares closed down 0.65 per cent
at £15.16 yesterday.
ANALYSIS l Wolseley
1,550 p 1,516.00
27 Sep
4,150
1,350

on controlled foreign companies artificially diverted UK profits and

(CFC) rules, which tax UK compa- exempting genuine commercial 1,250
nies for certain profit made activities.”
abroad. Wolseley made flat trading prof- 7 Jul 27 Jul 16 Aug 6 Sep 24 Sep

ANALYST VIEWS: WHAT WILL THE MOVE TO SWITZERLAND

MEAN FOR WOLSELEY? Interviews by Marion Dakers

CHRIS ALEXANDER | BNP PARIBAS

“ ”
Wolesley’s news has come out of the blue. But the question is whether it will make much difference to the compa-
ny; I think probably not. It's symptomatic of the tax situation in this country. Wolesley has the majority of its busi-
ness abroad, and it’s logical to move to benefit shareholders. It’s absolutely a part of an exodus to overseas.

ANDY BROWN | PANMURE GORDON

“ ”
The move doesn’t really change the way we should look at the shares. It’s financial management rather than an
operational change; they will still have a sizeable plumbing business in the UK. For shareholders, it’s clearly a helpful
move, if an international company is in the position to do it. The results as a whole were largely as expected.

JONATHAN JACKSON | KILLIK & CO

“ ”
It’s obviously a beneficial move for the company, though it does raise the broader question of whether companies
have the proper incentive to stay in the UK. The company’s performance has improved as the year has gone on, and
they have cut costs. The share price has gone up recently, and we saw some profit-taking after the announcement.”
CITYA.M. 28 SEPTEMBER 2010
Tax rules create a hole in
coalition plans for growth
COMMENT
MARC SIDWELL
T
HE coalition is well aware of
Britain’s problems with its
Controlled Foreign Company
(CFC) rules. George Osborne’s
June budget promised that the gov-
ernment was “committed to
reform”: new CFC rules are to be
legislated in the spring of 2012 and
interim measures to improve the
current rules will be legislated in
the spring of 2011.
The CFC rules allow the UK to tax
the profits of some subsidiaries of
UK firms that are resident in low-
tax jurisdictions. Wolseley is only
the latest company to be affected
and to find the promised timetable
for reform too slow. CFC rules have
been a problem for years, with
Vodafone’s decade-long legal battle
only ending this summer.
Vodafone agreed to pay £1.25bn
after losing an appeal that the CFC
rules should not apply to them
under EU law. That case was not
DEPARTURES FROM THE UK
COMPANY MOVED TO
Wolseley Switzerland
November 2010
Informa Switzerland
May 2009
Ineos Switzerland
April 2010
WPP Ireland
September 2008
Henderson Ireland
August 2008
UBM Ireland
April 2008
Shire Ireland
April 2008
Tax Exodus: The companies which have lost
patience with waiting for a change in rules
WOLSELEY’S announcement yes-
terday has sparked fears in govern-
ment of a second wave of
UK-based companies decamping
to Switzerland as frustration
grows with the long wait until
2012 before the pledged improve-
ments to Controlled Foreign
Company (CFC) rules are unveiled.
It was a row over profits gener-
ated overseas that prompted the
first exodus of major businesses
in 2008 with several high-profile
businesses quitting to take up res-
idence in low-tax havens.
Ineos, the world’s third-largest
chemicals group and the UK’s
largest private company, moved to
Switzerland in April this year
where it said the company could
unreasonable, given the 2006 rul-
ing of the European Court of
Justice (ECJ) in a case involving
Cadbury Schweppes that UK CFC
rules restricted the right to free-
dom of establishment.
Unfortunately the ECJ argued that
the rules could continue if they
were restricted to “wholly artifi-
cial” cases. Vodafone found itself at
the mercy of an unclear legal posi-
tion on what constituted genuine
economic activity overseas. It is
scarcely a surprise that in the face
of such certain costs and uncertain
outcomes, companies with large
overseas operations are moving.
The coalition government finds
itself in a disastrous position, and
not entirely an inherited one.
Despite fine words, plans for a
slow, careful review with full
industry consultation were not just
a matter of good practice. They are
also George Osborne’s attempt at
footdragging to maintain tax
receipts in the face of the vast gov-
ernment deficit. That thinking is
clear in the promised review: the
new rules promised for 2012 are
“to provide adequate protection of
the UK tax base”.
But if our economic situation is
hard on Britain’s government, it is
harder still on private enterprise.
Despite a nascent recovery, the eco-
nomic environment remains too
OLD AND NEW TAX RATES
was taxed in the UK at 34%, new tax 28%
26 - 27%, new tax 26 - 27%
tax rates unknown
25.3%, new tax 23.8%
28%, new tax 20%
17%, basic new rate of 12.5%
22%, basic new rate of 12.5%
expect to save €450m (£390m) in
tax over four years.
Many of the biggest US firms
operating in Europe, including
Kraft and McDonald’s, which
moved its European headquarters
to Geneva, followed suit.
Switzerland and its 26
autonomous cantons have also
welcomed publishing and confer-
ences group Informa – the profes-
sional publisher behind Lloyd’s
List – which generates four fifths
of its earnings overseas.
At the time, Informa said that
Switzerland had “a less complex
taxation system which offers
upfront certainty of treatment”
and in a direct complaint about
“double taxation” it said that
News 7
difficult for companies to wait for
much-needed reforms, especially if
at the end of the process they find
that changes are neutralised by the
desire to keep milking them for
their money.
Britain needs growth, and com-
panies that locate themselves here
need the freedom to grow if they
are not to move elsewhere. We
need to remember the lessons of
nations that have lowered taxation
on the productive economy radical-
ly and reaped great rewards. Angus
Maddison’s 2003 research for the
OECD shows that from the 1950s to
the 1990s, Hong Kong, with a 15
per cent tax rate, grew by 800 per
cent while Britain, with a 98 per
cent top rate in the 1970s and a 35
per cent basic rate, grew by 175 per
cent. Low tax regimes like
Switzerland dominate the list of
the wealthiest global jurisdictions,
according to World Bank figures.
Light taxation drives growth and
increases the pie from which tax
receipts are taken. The coalition
has apparently decided that if com-
panies are pressed artfully they
will still pay out as they used to. It
is the difference between wasting
time trying to find a better milk-
maid instead of aiming to build a
bigger herd. Only a serious ambi-
tion for growth can help Britain
thrive in the hard years ahead.
AMOUNT SAVED
£23m a year saved
£50m a year saved
£100m a year saved
unknown amount saved
unknown amount saved
unknown amount saved
unknown amount saved
Switzerland “does not seek to
impose tax on the unremitted
profits of subsidiary companies in
other jurisdictions”.
Its move follows similar deci-
sions from fellow publisher
United Business Media (UBM)
which generates 85 per cent of its
earnings overseas and WPP, the
advertising group, both of whom
moved to Ireland.
Ireland has proved a haven for
several companies keen to reduce
their tax bills, with Dublin’s 12.5
per cent corporation tax rate
attracting pharmaceutical firm
Shire, engineering business
Charter, Sir Martin Sorrell’s adver-
tising group WPP and the invest-
ment firm Henderson.
 8 News
Charlie Bean says the Bank of England wants people to start spending
Eurozone
lending up
in August
▲
EU ECONOMY
BY MATTHEW WEST
LENDING in the Eurozone increased
in August by the fastest rate in more
than a year, the European Central
Bank (ECB) said yesterday.
Loans to the private sector were 1.2
per cent higher in August than a year
earlier, the fifth monthly rise in a row
and the fastest growth since June last
year, the ECB said.
Meanwhile, loans to companies
also rose in August but remained neg-
ative over the year down 1.1 per cent.
The ECB stressed loans to compa-
nies typically lag the economic cycle
but added it was keen to see a sus-
tained resumption in lending to
firms, especially after banks had ben-
efitted from two years of cheap and
generous liquidity supply.
Loans to households rose at an
annual rate of 2.9 per cent in August
up from 2.7 per cent the previous
month, with loans for house pur-
chase up 3.5 per cent over the year.
Overall, money supply growth also
jumped, although it remained short
of the level the ECB sees as a warning
of inflation.
M3 money supply, the amount of
cash readily available to spend, which
is a leading indicator of inflation,
jumped 1.1 per cent in August com-
pared with a year earlier and against
expectations of a 0.3 per cent rise. It
was also the strongest growth in a
year.
At 0.5 per cent, the three-month
moving average of M3 growth
remains well below the ECB’s refer-
ence rate of 4.5 per cent, above which
the bank would see a danger to medi-
um-term price stability.
Societe Generale economist James
Nixon warned: “If this kind of growth
is sustained month after month, then
maybe in six months time the ECB
will start thinking about raising inter-
est rates, but it is still early days.”
CFOs call for less rules in financial narrative FSA slams asset auditing
▲
FINANCIAL SERVICES
BY EMMA SADOWSKI
MORE discretion and less regulation
is needed when auditors deliver
financial commentary at the front of
annual reports, according to a raft of
chief financial officers (CFOs) at large
commercial companies.
A new report published by Deloitte
and the Association of Chartered
Certified Accountants (ACCA) found
that over 65 per cent of some 230
CFOs interviewed said they would like
a reporting environment with more
discretion and less regulation.
Almost 60 per cent said there
should be an emphasis on forward
looking information in narrative
reporting found at the front of annu-
al accounts.
Meanwhile, meeting legal and reg-
ulatory requirements were the most
important drivers for narrative disclo-
BoE says spend not save
▲
UK ECONOMY
BY MATTHEW WEST
THE deputy governor of the Bank of
England called for Britain’s 22m
savers to eat into their reserves and
spend more to help stimulate the
economy yesterday.
Charlie Bean said the BoE wanted
households to spend more rather
than save. Bean’s comments come as
sures, according to 83 per cent of
CFOs, while meeting the needs of
shareholders came marginally below
this at 82 per cent.
Isobel Sharp, Deloitte audit part-
ner, said: “Companies are trying to
serve two masters at the same time.
They want to inform shareholders of
what is happening in the business.
They need to satisfy regulators by
meeting all the disclosure rules. To
achieve both is a major challenge.”
British savers suffer poor returns on
their deposits following the Bank’s
intervention in the financial crisis
which have brought interest rates to
their lowest level in history.
Bean said this was part of an
“aggressive policy” designed to deal
with a “once-in-a-century” financial
crisis.
In an interview with Channel 4
News Bean added that while savers
REGULATION
THE Financial Services Authority
(FSA) has launched a review into the
auditing standards of client assets
after deeming current practices as
flawed.
After reviewing auditors’ reports of
client assets, the watchdog said it
found “a number of serious failings”
that indicated a raft of general defi-
ciencies within the practice.
CITYA.M. 28 SEPTEMBER 2010
might be suffering now “there will be
times in the future as there have been
times in the past when they will be
doing very well out of the fact that
interest rates are at a relatively high
level.”
The deputy governor added it was
Bank policy to “encourage more
spending” although he admitted the
BoE would prefer to see that in the
form of more business spending.
Price of
gold could
hit $1,500
▲
WORLD ECONOMY
BY HARRY BANKS
THE price of gold could reach record
highs of up to $1,500 (£949) an ounce
in the next twelve months delegates
at the London Bullion Market
Association (LMBA) annual confer-
ence said yesterday.
The majority of delegates saw the
price of gold rising to $1,406 an ounce
by September next year but 32 per
cent of delegates believed the price
could rise beyond that.
The news came as spot gold hit a
record $1,300 an ounce as an initially
weaker dollar and speculation that
the US Federal Reserve might further
resort to quantitative easing to give
the economy a leg up, supported sen-
timent.
The Fed said last week it was pre-
pared to take action to help the recov-
ery and lift inflation. Many analysts
expect it to resume buying longer-
term government debt later in the
year to drive borrowing costs down
further.
In the last 12 months, the gold
price has risen by 30 per cent against
a backdrop of volatile currencies,
stocks and bonds and doubt over the
resilience of the global economy.
With investors looking to protect
against potential inflation, or defla-
tion, analysts have also said that gold
is a viable investment for both scenar-
ios.
One of the major forces feeding
investor demand has been the prolif-
eration of exchange-traded funds
backed by physical metal held in
vaults. This has made investing in
gold a reality for retail investors for
the first time.
At the LBMA’s event in Edinburgh
last year, at which the association
conducted a formal price poll on the
last day of the conference, delegates
forecast a gold price of $1,18 by this
September.
As a result it will work alongside
the Auditing Practices Board for the
next three months to review the cur-
rent landscape. It will focus on clarify-
ing current standards, improving
firms’ governance oversight and cre-
ating more consistency in the sector.
The review comes after the FSA
slapped JP Morgan with a mammoth
£33.3m fine for “failing to protect
client money” in June.
A policy statement is due in 2011.
CITYA.M. 28 SEPTEMBER 2010 Labour Conference 9

Alistair Darling
warned the party
to stick to the cen-
tre ground and
Ignoring the deficit
would be a disaster,
not tack to the left

The new leader of

the Labour party
Darling warns party
Ed Miliband
wants his brother POLITICS Labour leadership campaign.

▲
to be shadow BY DAVID CROW
chancellor
ALISTAIR Darling yesterday warned of
“disastrous consequences” if the Labour
party ignores Britain’s £160bn budget
deficit.
Darling, who as chancellor pledged to
halve the deficit within four years, said
the party needed to set out a “credible
plan with conviction and confidence”.
But David He added: “People know there is a
Miliband is refus- deficit, they know it needs to come down
ing to be drawn and if you deny that, frankly, people will
on his future not listen to you, they will walk away and
it will have a disastrous consequence.”
Pictures: PA/ The former chancellor has previously
REUTERS said Labour lost the election because it
was dishonest about the deficit.
Darling’s remarks will be seen as a
thinly-veiled attack on Ed Balls, the for-
mer schools secretary who argued for a
slower pace of deficit reduction in the
His comments come as new Labour
leader Ed Miliband tries to convince his
brother David, who he defeated in the
contest to lead the party, to become shad-
ow chancellor.
But while David Miliband is fully
signed up to Darling’s deficit reduction
proposals, his younger brother this week
said it was a plan that needed to be
“improved”.
David Miliband has refused to say
whether he will serve in his brother’s
shadow cabinet, leading to speculation
he will quit frontline politics this week.
Sources close to Ed Miliband are
annoyed at his brother’s refusal to set
out his position. “The will he stay, will he
go show is a massive distraction,” a cam-
paign aide said yesterday.
Balls and wife Yvette Cooper are being
considered as contenders for the top eco-
nomic brief if David Miliband does quit.

Miliband the elder

wows the crowds
The elder brother has
left the crowd wanting
more, says David Crow
WHEN Tony Blair stood down as
Prime Minister, an embarrassing
memo detailing plans for his exit
from office was leaked to the press.
“He needs to go with the crowds
wanting more. He should be the star
who won’t even play the last
encore,” it read.
In the end, Blair’s departure left
the public – and the party –
strangely cold. But his disciple
David Miliband, who narrowly lost
out in the race to become Labour’s
new leader, seems to have tri-
umphed where his tutor failed.
Yesterday, he delivered a barn-
storming speech, his best confer-
ence address ever. He was gracious
in defeat, but also had a stark warn-
ing for those who want the party to
tack to the left under his brother
Ed. Labour went into politics “not
to practice class war, but to end it,”
he said.
The elder Miliband also appeared
to contradict his brother and leader
on foreign policy. In his campaign,
Ed promised a foreign policy based
on “values” not “alliances”, a nod to
those Labour members who think
the former government was slavish-
ly pro-American. But yesterday
David Miliband said: “It’s not the
opposite of an independent foreign
policy to choose to work with
President Obama and Secretary
Clinton. Britain’s values and inter-
ests are best pursued with a super-
power whose leaders share our
values and interests.”
David Miliband is refusing to say
whether he will serve under Ed, but
this speech sounded more like a
swansong than a pitch for a shadow
cabinet job. He won’t announce his
intentions until tomorrow after-
noon, for fear of overshadowing his
brother’s big speech today. If he
does go, it will certainly be with the
crowds wanting more.

CITY VIEWS: DID THE LABOUR PARTY PICK THE RIGHT MILIBAND BROTHER?
Interviews by Victoria Scholar

ELLIOTT BONASSERA | ROB TAYLOR | NICK ANDERDON |

ICAP A&T CONSULTING PROMONTORY FINANCIAL GROUP

“No – Ed’s policies are far Yes, because with Ed as leader the “If the Labour Party wants to strangle
too anti-business and Labour Party will never beat the the UK’s dominant wealth
I think it is a real Conservatives. I generating sector
shame. His policies think Ed’s reformist then Ed was the
are not conducive views are mis- right choice. Ed
to recovery nor aligned with the Miliband and Vince
with the much needs of today’s
Cable seem to
needed re-estab- economy. We need
have been living in
lishment of the to encourage
City’s reputation for entrepreneurialism a dream world and
successful wealth rather than head have no chance of
creation in the towards a situa- tackling today’s
aftermath of the tion of more over- economic
2008 crisis.” regulation.” challenges.”
 The Capitalist
10
GOVERNANCE TRAINSPOTTERS GET
KNICKERS IN A TWIST OVER FLINT
IT’S been a tiring week for HSBC,
which is currently juggling the han-
dling of a full-scale management
game of musical chairs, the fallout
from its leaky succession-planning
AND a band of disgruntled sticklers
for corporate governance among its
shareholder base.
So it’ll come as a welcome surprise
for the bank to learn that a conserva-
tive core of its investors remains as
married as HSBC itself to the bank’s
traditional policy of appointing man-
agement from within.
Corporate governance concerns
have centred around the appoint-
ment of the finance director to the
chairman’s position – particularly as
Douglas Flint has worked so closely in
the past with new chief executive
Stuart Gulliver – and the practical
problems associated with the geo-
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com
graphic separation of the chairman
in London and the chief in Hong
Kong. (The latter, of course, has been
a problem for far longer – with
Standard Life’s head of corporate gov-
ernance Guy Jubb raising the issue,
along with his concerns over board
remuneration, at the group’s AGM
back in May. “Our experience and
sharpened sense of stewardship sug-
gests to us that the arrangement is
Flint’s appointment to chair HSBC has governance sticklers hot under the collar Pic: REX
not sustainable,” Jubb warned.)
But one large investor The Capitalist
chatted to yesterday, who wished to
proffer his support to the bank’s
embattled board anonymously, hit
back at the boffins with the rule
book. “This is bureaucracy gone mad
– who cares!” he roared. “If the
finance director is the best person to
be chairman, then so be it – and sucks
to the legions of trainspotters in the
City getting their knickers in a twist.”
That’s told’em.
MAKING A DEBUT
Despite less-than-enthusiastic reviews BRAGGING RIGHTS
from critics, the second Wall Street Ping! In zooms an invitation to a
The cast of Wall Street 2: Money Never Sleeps
movie, “Money Never Sleeps”, man-
aged to clean up on its opening week-
end at the US box office.
The film made $19m (nearly £12m)
at US cinemas – hardly a record-break-
er in itself, but not at all shabby for
director Oliver Stone, representing
the biggest gross debut weekend
of his career, behind the $18.7m
opening of World Trade Center.
And for Michael Douglas – aka
the film’s star “Gordon Gekko”,
it’s his second-biggest debut ever,
behind You, Me and Dupree’s
$21m.
FINGER SALUTE
The Italians aren’t exactly
known as a nation of
shrinking violets, but a
new sculpture erected
in front of the Milan
Stock Exchange has
challenged even their
free-and-easy attitude to
life.
The sculpture, which
stands 11 metres high and is
called “L.O.V.E.”, features a
hand with the middle finger
sticking up in the tradition-
al gesture of profanity.
It is part of a retrospec-
tive dedicated to the work
of contemporary Italian
artist Maurizio Cattelan,
labelled “Against
CITYA.M. 28 SEPTEMBER 2010
Ideologies”. It’s not the first time
Cattelan has courted controversy,
either – his work includes a sculpture
of Pope John Paul being hit by a mete-
orite, as well as an installation of
three baby puppets hanging from the
branch of a tree – both of which,
unsurprisingly, have provoked heated
protests in the past.
Luckily for the financial workers at
the Italian exchange, Cattelan insists
the hand sculpture is meant more as
an “act of love” than a middle-finger-
up to the banking villains-du-jour…
whole host of debates being organised
by Mayor of London Boris Johnson as
part of the Story of London festival at
the beginning of October – including
one, the first of the bunch, on the role
of the City.
“Bankers and Bonuses: What has
the City ever done for London?” is its
acerbic title, and it will feature,
among others, entrepreneur Luke
Johnson, financial journalist Daniel
Ben-Ami (author of “Cowardly
Capitalism: The Myth of the Global
Financial Casino”) and… musician
Billy Bragg.
That’s the same Billy Bragg who
earlier this year threw his penny’s
worth into the debate by refusing to
pay his taxes unless the government
acted to curb RBS bonuses. Should
turn out to be an insightful spectacle,
then…
RUNNERS AND RIDERS
Something of a fillip for Nationwide
chief executive Graham Beale, who
Paddy Power has decided is top of the
list of runners and riders to succeed
Eric Daniels as the next chief execu-
tive of Lloyds Banking Group.
The bookie has Beale at 5/2, with
Lloyds insider favourite Helen
Weir coming in at 11/4.
Former trade minister
and Standard Chartered
boss Lord Davies and RBC
boss Gordon Nixon are at
4/1 and 6/1 respectively.
Given those odds, it
might bode well to have a
quick flutter on ex-Barclays
retail and commercial bank-
ing boss Fritz Seegers, con-
sidered a top contender by
the City but looking long
with at 12/1.
Or perhaps former
JP Morgan Cazenove
chief executive
Naguib Kheraj, who
doesn’t get a look-
in with Paddy at
all?
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 12 News CITYA.M. 28 SEPTEMBER 2010

AIG forced to defend suit

over subprime exposure
go forward and could pave the way default swaps (CDS) and a securities
▲

INSURANCE
BY HARRY BANKS
A JUDGE yesterday refused to dismiss
a securities fraud lawsuit accusing
American International Group (AIG)
of misleading investors about its
exposure to subprime mortgages,
which led to a liquidity crisis and
$182.3bn of federal bailouts.
The ruling by US district judge
Laura Taylor Swain allows the case to
for a trial over AIG’s near collapse.
The government rescue led taxpayers
to take a nearly 80 per cent stake in
the New York-based insurer.
AIG spokesman Mark Herr
declined to comment.
Investors led by the State of
Michigan Retirement accused AIG,
executives and directors of failing to
disclose the risks that AIG had taken
on through its portfolio of credit
lending program.
Swain wrote that the allegations in
the class-action lawsuit were suffi-
cient to suggest there was “a strong
inference of fraudulent intent” in
how AIG communicated publicly
about the risks in the portfolio of
credit default swaps. The lawsuit cov-
ers investors who owned AIG securi-
ties between 16 March 2006, and 16
September 2008. Among the defendants are former AIG chief executive Martin Sullivan Picture: REUTERS

NEWS | IN BRIEF
EU ends Apple probe
European Union competition regulators
said yesterday they will drop an investi-
gation into US computer giant Apple
after the company eased restrictions on
programming tools and cross-border
warranties for the iPhone. The move
comes after Apple changed its policies to
make it easier for iPhone users to get
repairs under warranty in an EU country
other than where it was bought.
Flash crash sparked by order surge
A surge in quote traffic immediately fol-
lowed by heavy sales of key securities
sparked the “flash crash” on US stockmar-
kets on 6 May, datafeed vendor Nanex
said yesterday. The sale of $125m worth
of Chicago Mercantile Exchange S&P500
stock index e-mini futures contracts fol-
lowed 25 milliseconds later by the sale of
more than $100m worth of exchange-
traded funds triggered the sell-off it said.
CITYA.M. 28 SEPTEMBER 2010
Aberdeen inflows
up on equity sales
ASSET MANAGEMENT
▲
BY HARRY BANKS
FUND firm Aberdeen Asset
Management said yesterday that
inflows accelerated over the sum-
mer, with clients favouring equity
funds despite volatile markets
which have made investors cau-
tious.
The firm reported a net £621m
of new inflows during July and
August, above the £337m in the
previous three months.
The firm’s equity and money
markets funds saw net inflows,
while its bond funds and alterna-
tive portfolios – which include
higher-margin funds of hedge
CHINA AIRLINES TO PAY $40M FINE
CHINA Airlines yesterday pleaded guilty and agreed to pay a $40m (£25.2m)
fine in the US for price-fixing related to its cargo business. The US Department
of Justice has said that the Taiwan-based airline conspired to fix cargo prices
between January 2001 and February 2006. China Airlines will pay the fine in
annual instalments over the next five years.
News 13
funds and multi-asset funds – saw “We remain firmly focussed on
clients exit. organic growth, generating cash
The numbers appear to counter and strengthening our balance
the wider sector short-term trend, sheet further,” said chief executive
with flows statistics for July from Martin Gilbert.
Lipper FMI showing sustained
strength in sales of bond funds ANALYSIS l Aberdeen Asset
while new money invested in equi- p
Management
ty products slumped. 43
844.00
Combined with buoyant markets, 27 Sep
the inflows lifted Aberdeen’s assets 41
under management – on which
fund firms earn fees – 2.6 per cent 39
to £168.8bn. Almost 70 per cent of
that is evenly split between equities 37
and fixed-income products, with
alternatives and property at about
17 and 13 per cent respectively. 7 JJul 27 Jul 16 Aug 6 Sep 24 Sep
Japan set for
fresh stimulus
as growth slows
▲
WORLD ECONOMY
JAPANESE Prime Minister Naoto Kan
ordered his ministers yesterday to
plan a second budget for the remain-
der of the financial year amid con-
cern the country’s economy is
faltering.
A government official said spend-
ing could total 4.6 trillion yen
(£34.5bn) but would not require addi-
tional government bonds to be issued.
However, economics minister Banri
Kaieda called for Japan’s central
bank – Bank of Japan (BoJ) – to lift its
ceiling on government bond purchas-
es effectively calling for a resumption
of quantitative easing. The BoJ could
lift the ceiling by as early as next week.
The news came as official figures
from the ministry of finance showed
exports slowed for the sixth straight
month. For the twelve months to
August exports grew by 15.8 per cent,
well down from a peak in February of
45.3 per cent.
 14 News CITYA.M. 28 SEPTEMBER 2010

Carlyle launches student

housing investment push
and Islington and are progressing The excess demand has led to long-
▲

PRIVATE EQUITY
BY VICTORIA BATES
CARLYLE Group, the private equity
firm known for its large-scale invest-
ments in the defence industry, yester-
day sealed a joint venture deal with
Generation Estates, kickstarting its
next big push in the student accom-
modation sector.
Carlyle, led by co-founder David
Rubenstein, and Generation said they
had acquired one site in Highbury
work on a further three sites in
London, to build an initial portfolio
worth around £350m.
The private equity giant believes
student housing is an attractive long-
term investment proposition due to
excess demand and a shortfall of sup-
ply, particularly in London. There are
currently over 260,000 full time stu-
dents in the capital, yet purpose-built
accommodation can only cater for
around 16 per cent of them.
term average rental growth of around
seven per cent – a figure which grew
to 10 per cent in 2009, Carlyle said.
The firm expects the number of
post-graduate and overseas students -
a group which tends to favour secure
purpose-built accommodation – to
grow by around 15 per cent over the
next couple of years. But it said cur-
rent supply will struggle to keep up,
with only 4,000 new beds due for
delivery between 2010 and 2012.

Flybe, the best case Carlyle co-founder David Rubenstein sees

student accommodation in London as an

for doing business in attractive investment

Picture: PA

a day from London.

10.15am
8.30am e Meet
7.10am me Catch Flyb clients
Leave ho flight

3.00pmFlybe
Wifi in
lounge
7.30pmr with
m
6.00p ii with Dinne
W family
m Play ds
4.00p flight the ki
Catch
home

Keeping Business on the move

Based on a London Gatwick to Jersey day return.

CITYA.M. 28 SEPTEMBER 2010 News 15

3i ramps up debt operations

with £18m Mizuho purchase
infrastructure arms. Jeremy Ghose will move over to 3i

▲
PRIVATE EQUITY
BY VICTORIA BATES
PRIVATE equity group 3i yesterday
moved to expand its reach into the
debt management space, snapping
up debt specialist Mizuho Investment
Management (MIM) for £18.3m.
China’s Bright Foods is weighing MIM will merge with 3i’s existing
a bid for United Biscuits and its small-scale debt activities to create a
iconic brands third substantial string to the firm’s
bow, alongside its private equity and
The new business – 3i Debt
Management – will have assets under
management of around £4bn, almost
£3.7bn of which come from MIM.
MIM’s management and 3i’s exist-
ing debt management employees are
to sink their own capital into the new
business to acquire a 45 per cent
stake, while 3i will retain a 55 per
cent controlling interest.
MIM’s current chief executive
with his 28-strong team as chief exec-
utive of the debt management arm.
The move by 3i comes just over a
week after chief executive Michael
Queen initiated a revamp of the
group’s private equity operations,
merging the buyout team with its
growth capital arm.
3i lost one of its top dealmakers,
head of buyouts Jonathan Russell, as
a result of the shake-up.

China bid for

UB gives Cable
a headache
Food. Other parties linked with the
▲

FOOD AND DRINK

BY STEVE DINNEEN
UNITED Biscuits could be the next
iconic British firm to be snapped up
by a foreign buyer, posing a fresh
problem for embattled business secre-
tary Vince Cable.
China’s Bright Food Group has its
eye on a $3.2bn (£2bn) bid for the
maker of Jaffa Cakes and McVities bis-
cuits.
Cable has campaigned for tougher
regulation to make it more difficult
for foreign firms to buy UK compa-
nies after Kraft’s controversial
takeover of Cadbury earlier this year.
However, he appears to be power-
less to stop the deal going through if
owners Blackstone and PAI Partners
decide to cash in on the business they
bought for £1.6bn four years ago.
It would be the first time a Chinese
firm has taken outright control of a
major European food firm.
Bright Food has hired Rothschild to
help broker the deal, although both
firms declined to comment.
It is understood US-based
Blackstone and French PAI had been
planning an auction for the firm but
are now in exclusive talks with Bright
group included Kraft and Campbell
Soup.
United Biscuits has struggled in
recent years, with analysts criticising
it for failing to take the initiative in
emerging markets.
The Chinese firm, which recently
lost a bidding war for Australian
sugar refiner CSR, has a diverse port-
folio that includes a taxi business in
Shanghai, ham and milk production
facilities, a property empire and a
tourism business.
Despite being formed just four
years ago, Bright Food now has sales
topping £4.3bn and profits of £200m.
United Biscuits employs 7,000 peo-
ple in Britain at 11 factories.
The company, which has been in
business for over 100 years, has other
of well-known brands including
Jacob’s, Carr’s, McCoy’s and Hula
Hoops.
United Biscuits grew its profit for a
fifth straight year in 2009, when its
earnings grew by 13.7 per cent to
£223.4m. That year, the firm notched
a 5.1 per cent rise in its revenues to
£1.3bn. The food firm in recent years
has made inroads to the US and
Australian markets.

Third time lucky for Cinven as it

snaps up Spice at 70p per share
ible institution with substantial
▲

PRIVATE EQUITY
SPICE, the UK’s biggest installer of
water meters, yesterday succumbed
to a £251.1m takeover bid from
Cinven, after the private equity group
twice sweetened its offer.
Cinven submitted its recommend-
ed bid through its investment vehicle
Cilantro Acquisitions at 70p per
share, after offering 54p a share for
the firm in May and raising the bid to
62p-65p in July.
Spice chief executive Martin Towers
said the offer would prove “good for
customers, employees and sharehold-
ers” alike.
He added: “Cinven is a highly cred-
funds at its disposal. As an investor,
Cinven will take a long-term perspec-
tive on our business with a view to
supporting continued delivery of
excellent service levels to our cus-
tomers and opportunities for our
employees.”
The 70p-per-share offer represents a
5.3 per cent premium to Spice’s clos-
ing share price of 66.5p last Friday,
though it remains substantially lower
than the 130p highs at which the
stock was trading prior to the finan-
cial crisis in 2007.
Spice was advised by boutique
Hawkpoint and Cinven by investment
bank Altium.
CITYA.M. 28 SEPTEMBER 2010 News 17

Sirius completes share placing WYG says it will continue

ENERGY announce the results of the share company will receive 40 per cent.
to slim down after cuts
▲

BY MARION DAKERS placing later this week, before Sirius has signed four joint ven-
resuming its AIM listing. ture agreements with local compa-
SIRIUS Petroleum is close to complet- Sirius froze its shares in February nies, who will work with Chevon, ed in the current financial year, said

ing a $40m (£25.2m) money-raising
drive to pay for its first oil field in
Nigeria, more than seven months
after suspending its shares on the
AIM market.
Sirius is set to beat its $40m target
with both a share placing with insti-
tutional investors and a debt agree-
ment, a person close to the company
said yesterday.
The group is expected to
to work on a $2m takeover of the Ke
field from a Nigerian company, Del
Sigma Petroleum. The firm said the
rest of the cash would be spent on
developing the field in the Niger
delta.
Under the terms of the deal, Sirius
will receive a net preferential cash
flow of 78 per cent from revenues
once oil is produced, until full recov-
ery of its investment. After this the
Shell and Mobil to develop oil
deposits in the region.
Emerging markets investment
banks Renaissance Capital and
Strand Hanson are working on the
equity raise with Sirius, which was
set up in 2009 with the aim of invest-
ing in Nigerian oil assets.
Shares in the company froze in
February at 9p, valuing the company
at £46.87m.
▲
ENGINEERING
TROUBLED engineering consultant
WYG said yesterday its major restruc-
turing was on track, after announcing
pared losses for the year of £21.9m.
The company, which undertook a
debt for equity swap with its lenders
in January, said it cut 620 jobs in the
year to 30 June, costing £8m in redun-
dancy payments and office closures.
More cost-saving measures are expect-
chairman Mike McTighe.
“The much awaited outcome of
both the comprehensive spending
review and the strategic defence
spending review continues to induce
paralysis across both the public and
private sector markets,” said Tighe
Revenue at the firm fell 16 per cent
to £220.6m. Shares in the firm, which
was recently demoted to the AIM
market, dropped 8.8 per cent to 28.5p.

US vote over
OFT puts off TFL HANDS OUT £320M IN TUBE REPAIR JOBS

firms too big to

decision on fail postponed

Travis Perkins

▲
REGULATION
US BANKING regulators yesterday put
off proposing how the government
would use its new authority to dis-
mantle large, collapsing financial
companies, saying they need more
time for industry and other regula-
PROPERTY group would overtake Wolseley, the tors to weigh in.
▲

BY MARION DAKERS
BUILDING merchant Travis Perkins
said yesterday its £558m purchase of
BSS Group has been delayed after the
Office of Fair Trading (OFT) said it
needed more time to examine the
deal.
Travis Perkins, which also runs the
Wickes DIY chain, told the stock mar-
ket the OFT had extended the deci-
sion date on whether to approve the
deal to 19 October.
The company’s original timetable
for completing the deal will now not
be met and it said will update the
market in due course. It had planned
to complete the acquisition on 22
October.
Travis Perkins said in May it was
interested in buying BSS, and agreed
a 435.8p a share deal in July.
The deal would create the biggest
plumbing and heating trade and
retail distribution business, with
19,000 employees and a combined
turnover of more than £4bn. The
current market leader that yesterday
said it was moving its base to
Switzerland.
The enlarged group would repre-
sent around a quarter of the sector,
prompting the OFT to open a consul-
tation shortly after the deal was
agreed in July.
Travis Perkins has said the deal
will deliver £25m in savings by 2013,
and become profit-making the fol-
lowing year.
Shares in Travis Perkins fell 1.6 per
cent to 840p yesterday, while BSS
closed down one per cent at 450p.
ANALYSIS l Travis Perkins
43
p 840.00
27 Sep
41
39
37
7 JJul 27 Jul 16 Aug 6 Sep
The Federal Deposit Insurance Corp
(FDIC) had tentatively planned to vote
yesterday on issuing an interim final
rule that would have put in place
some aspects of how the agency
would handle the winding down of
large financial firms previously con-
sidered “too big to fail.”
The so-called resolution authority
was a main plank in the financial
reform legislation, and is designed to
avoid massive government bailouts
such as the one for AIG, and destruc-
tive bankruptcies like Lehman
Brothers.
On a separate matter, the board
approved yesterday a final rule that
gives federal protection to securities
backed by home loans and other con-
sumer debt if they meet higher stan-
dards and banks retain some of the
risk associated with the products.
TFL named the 17 companies it had chosen to make £320m worth of repairs to the Tube Industry officials criticised this
network yesterday. The work includes new plumbing, fire prevention and an upgrade to move, saying the FDIC rule only
the communications system. Companies that have won three-year contracts include applied to some parts of the market,
Siemens, Atkins and MJ Quinn, which will focus on the stations previously maintained creating an uneven and unfair play-
24 Sep by Metronet. Picture: PA ing field.

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with a glass of
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Restaurant
Magazine 2008
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 18 News
System C sees profit up 32pc AstraZeneca drug fails in
▲
HEALTH
BY HARRY BANKS
HEALTH and social care solutions
provider System C Healthcare yester-
day reported a 32 per cent rise in pre-
tax profit to £5.4m from £4.1m for
the year to 31 May.
Revenue surged by 75 per cent to
£38.3m from £21.9m. Excluding new
acquisitions, revenue increased by 44
per cent to £31.5m. Meanwhile, earn-
ings per share were up nine per cent
at 4.07p from 3.72p.
System C said its strong cash gener-
ation had been strong, with a net
position at the year-end of £18.6m, up
Nestle in plan
to open new
nutrition unit
▲
HEALTH
BY JOHN DUNNE
NESTLE, the world’s biggest food
group, is setting up a new company to
develop products it says will treat dis-
eases like diabetes.
The maker of Nescafe coffee, and
KitKat chocolate bars has been
advancing into healthy foods to tap
into growing consumer awareness of
the benefits of a healthier diet.
Nestle chief executive Paul Bulcke
said the market was still crystallising,
with some estimating it to be worth
up to $150bn (£94bn). The firm said
Nestle Health Science, to be opera-
tional from 1 January 2011, will con-
duct research into foods that can
improve health and longevity.
The parent company will invest
around SwFr500m (£321m) the next
decade and the new offshoot will
compete with companies such as
Abbott Laboratories, chairman Peter
Brabeck said. It will be run at arm’s
length from Nestle’s main food, bev-
erages and nutrition activities, and
will incorporate its HealthCare
Nutrition unit. The HealthCare
Nutrition unit had a turnover of
SwFr1.6bn in 2009.
Nestle as a group is one of the
Actelion shares fall after haemorrhage Healthcare Locums sees
drug fails to impress in experts’ study profits drop as cuts bite
▲
PHARMACEUTICAL
BY HARRY BANKS
ACTELION’S experimental drug
Clazosentan is unlikely to make it to
market after it failed in a late-stage
study, dealing the biotech group
another blow following a setback for
its key drug Tracleer.
Shares in the Swiss group closed
down almost eight per cent at SwFr
40 yesterday.
“The failure of clazosentan is bad
news for Actelion,” said Sarasin ana-
from £14.7m. Final dividend was
increased to 0.50p from 0.44p, with
total dividend up 14 per cent to 0.75p.
The acquisition of Liquidlogic in
July 2009 for £10.2m had given
System C entry into the social care IT
market, while acquisition of Conscia
Enterprise Systems in October for
£0.8m had strengthened the group’s
expertise in web-based technologies.
Chief executive Ian Denley said:
“This is a time of great upheaval for
the NHS, in both policy and econom-
ic terms, with changes under way
that are generating both risks and
opportunities.
world’s biggest producers of
processed foods, including Nesquik
drink and Haagen-Dazs ice cream,
with sales of SwFr108bn last year. Luis
Cantarell, currently head of opera-
tions in the Americas, will head the
new company from the start of next
year. Nestle chairman Peter Brabeck-
Letmathe said: “Personalised health
science nutrition is about finding
efficient and cost effective ways to
prevent and treat acute and chronic
diseases in the 21st century.”
Around 285m people have dia-
betes, one of the major causes of pre-
mature illness and death worldwide.
Vevey-based Nestle said as a result
of Cantarell’s move, Chris Johnson
would join the Nestle executive
board.
ANALYSIS l Nestle 52.80
27 Sep
43 CHF
41
39
37
7 JJul 27 Jul 16 Aug 3 Sep
lyst David Kaegi.
“The study was potentially the
most important catalyst for Actelion
shares this year.
“According to my estimates, cla-
zosentan had sales potential of up to
SwFr1bn (£850m),” he said.
Actelion, which is trying to cut its
dependence on heart and lung treat-
ment Tracleer, said clazosentan failed
to meet its primary endpoint in the
Conscious-2 trial in patients with
aneurysmal subarachnoid haemor-
rhage, a type of bleeding in the brain.
“At System C, we are completing
our five-year strategic investment in
our Medway software and bringing
the products to market at a time
when NHS Trusts have been newly
freed from central purchasing obliga-
tions.
“We are now experiencing a surge
in procurement activity and have
already achieved strategic contract
wins, including The Royal Devon &
Exeter NHS Foundation Trust.”
Denley added that services rev-
enues were down but holding steady
and the sales pipeline for Medway
had “never been stronger”.
PZ CUSSONS BUYS ST TROPEZ FOR £63m
Sanofi-Aventis sticks to its $69 per
share offer for drugmaker Genzyme
▲
PHARMACEUTICAL
SANOFI-AVENTIS has not changed its
offer of $69 per share for drugmaker
Genzyme, it said yesterday.
Genzyme rejected Sanofi’s offer,
claiming it had dramatically under-
valued the US company.
But Sanofi spokesman Jean-Marc
Podvin said yesterday: “We have one
23 Sep offer at $69. No other offer has been
The failure in the long-awaited
Phase III study means it is very unlike-
ly that clazosentan will make it to
market, although a company
spokesman said all the data still need-
ed to be evaluated and the group
would provide an update with
Actelion’s third-quarter results on 21
October.
Another late-stage trial is still ongo-
ing.
“We have four drugs on the market
and a growing revenue stream,” the
spokesman said.
key prostate cancer trial
▲
PHARMACEUTICAL
ASTRAZENECA’S experimental
prostate cancer pill Zibotentan failed
to improve survival in a late-stage clin-
ical trial, dealing a fresh blow to the
company’s drug pipeline.
As a result, AstraZeneca plans no
regulatory submissions for ziboten-
tan at this time and a spokesman said
yesterday it was discussing the impli-
cations of the setback with investiga-
tors working on other studies
involving the drug.
made ... We would like to enter into a
dialogue.”
He declined to comment on a Wall
Street Journal report released over
the weekend that said Sanofi had
approached Citigroup and Bank of
America about additional financing
as it contemplates raising its $18.5bn
(£11.6bn) bid.
Industry analysts said the fact that
Sanofi may have roped in more
▲
HEALTH
SPENDING cuts by NHS managers
have hit profits at medical staffing
company Healthcare Locums.
The firm said yesterday pre-tax
profits dived 21 per cent to £6.8 m in
the first half of 2010.
Executive vice-chairman Kate
Bleasdale said: “We have experienced
challenging trading conditions in our
NHS operations as a consequence of
managers’ uncertainty over spending
CITYA.M. 28 SEPTEMBER 2010
The failure of zibotentan to
improve overall survival in the late
stage, or Phase III, study follows simi-
larly unsuccessful trials for two other
AstraZeneca pills, Recentin in colon
cancer earlier this year and
Vandetanib in lung cancer in 2009.
Vandetanib has since gone on to
show benefits in thyroid cancer, a
smaller potential market.
Zibotentan, a once-daily tablet, is
being studied in more than 3,000
men with prostate cancer in a pro-
gramme of clinical trials.
SELF-TANNING
products company
St Tropez, whose
fake tan spray is
used by celebrities
such as Victoria
Beckham (left), has
been sold again. Its
UK owner LDC, the
private-equity arm
of Lloyds Banking
Group, sold the
firm for £62.5m to
PZ Cussons, the
maker of Imperial
Leather soap and
Carex handwash, it
announced yester-
day.
Picture: GETTY
lenders did not change prospects for
a deal as funds were already available
for the move. Sanofi has said it
already has financing from JP
Morgan Chase, BNP Paribas and
Societe Generale.
The French drugmaker wants to
reach an agreement but has not ruled
out a hostile offer made directly to
Genzyme shareholders if its efforts
continue to be blocked.
priorities in the run-up to the general
election.”
The firm places medical staff
including doctors, specialist nurses,
and physiotherapists with the NHS
and private-sector clients. However,
the NHS accounts for less than half of
Healthcare’s revenues and the pres-
ent uncertainty in the UK has been
partly offset by strong international
growth, it said. Bleasdale said trading
would improve as the coalition had
secured frontline spending.
CITYA.M. 28 SEPTEMBER 2010
Google keeps
top ranking as
best employer
▲
RECRUITMENT
BY EMMA SADOWSKI
GOOGLE is the most attractive
employer in the world, according to
new research, which shows that
fewer students and graduates are
turning to the financial services
industry for work.
Up to 130,000 job seekers with
either a business or engineering back-
ground have voted the internet giant
into the top spot in employment con-
sultancy Universum’s annual survey.
Google has maintained the leading
ranking both as a business and as an
engineering employer for the second
year in a row.
Universum cited Google’s profes-
sional training opportunities and its
strong brand as some of the reasons
why it held on to the top spot.
However, the search engine is fac-
ing increasingly stiff competition
from the world’s largest accounting
firms, as KPMG, Ernst & Young,
PricewaterhouseCoopers and Deloitte
News 19
WORLD'S MOST ATTRACTIVE EMPLOYERS
World’s Top 10 acc to BUSINESS STUDENTS World’s Top 10 acc to ENGINEERING STUDENTS
1. Google (1) 1. Google (1)
CEO: Eric Schmidt CEO: Eric Schmidt
2. KPMG (8) 2. Microsoft (2)
CEO: Timothy Flynn CEO: Steven Ballmer
3. Ernst & Young (5)
CEO: Jim Turley
4. PricewaterhouseCoopers (2)
3. IBM (3)
CEO: Sam Palmisano
4. Sony (7)
CEO: Dennis Nally CEO: Howard Stringer
have also climbed up the business
table.
“We’re witnessing the auditing 5. Deloitte (10) 5. BMW (4)
firms and consumer goods compa- CEO: Jim Quigley CEO: Norbert Reithofer
nies re-conquering their talent group
after a brief love-affair with the IT
industry,” said Universum chief exec- 6. Procter & Gamble (6) 6. Intel (5)
utive Michal Kalinowski.
CEO: Bob McDonald CEO: Jane Shaw
IT companies such as Microsoft,
IBM and Sony remain popular choices
among students looking to start an 7. Microsoft (3) 7. General Electric (6)
engineering degree, according to the
survey results. While BMW is still the CEO: Steven Ballmer CEO: Jeff Immelt
most powerful employer brand in the
automotive sector, according to the
survey. 8. The Coca-Cola Company (13) 8. Siemens (8)
But employers within the banking, CEO: Muhtar Kent CEO: Peter Löscher
oil and gas, and management consul-
tancy sectors which were once popu-
lar among young jobseekers, are now 9. J.P. Morgan (7) 9. Procter & Gamble (10)
perceived as responsible for the finan-
CEO: Jamie Dimon CEO: Bob McDonald
cial crisis and are therefore less
attractive, said Universum. Goldman
Sachs, which ranked as the fourth 10. Goldman Sachs (4) 10. Apple (NEW ENTRY)
most popular business to work for in
2009 fell to tenth place, while JP CEO: Lloyd Blankfein CEO: Steve Jobs
Morgan dropped to ninth place.
 20 News
Vivendi sells its NBC stake
seven-year lows – largely underper-
▲
MEDIA
forming peers – on concerns about
BY STEVE DINNEEN acquisitions, the cost of a US class-
VIVENDI has offloaded its stake in action lawsuit and intensifying com-
NBC Universal to General Electric (GE) petition in the French telecom
for $2bn (£1.26bn). sector.
The French conglomerate sold a Vivendi’s company structure –
third of its 20 per cent stake and says under which it does not wholly own
it will sell the remainder for $3.8bn its major divisions – has led investors
when GE completes a separate deal to apply a 25 to 40 per cent conglom-
with entertainment firm Comcast. erate discount. Earlier this month
Earlier this month Vivendi chief Vivendi, Europe’s largest telecom and
executive Jean-Bernard Levy said the entertainment group, raised its profit
group could use the NBC sale pro- targets on the back of forecast-beat-
ceeds to buy telecom operator SFR, of ing first-half results.
which it currently owns 56 per cent. It also attempted to reassure
Vivendi has seen its shares slide to investors on its acquisition strategy,
Wal-Mart set
to offer $4bn
for Massmart
ing on cost cuts and international
▲
RETAIL
growth.
BY HARRY BANKS
“Massmart is a very good fit with
WAL-MART is in talks to buy South their business,” said Bryan Roberts,
Africa’s Massmart, in a $4bn global research director at London
(£2.52bn) deal that would give the US industry research firm Planet Retail.
retailer a big presence in fast-grow- Some analysts have said the acqui-
ing Africa and boost its emerging sition might not be the best use of
markets strategy. Wal-Mart’s cash.
Wal-Mart has made a non-binding “Wal-Mart should be allocating its
proposal of 148 rand (£13) per capital first and foremost to develop-
Massmart share, valuing it at around ing US urban stores and then return-
30 billion rand (£2.7bn), a premium ing cash to shareholders,” said Wall
of nearly 10 per cent over its last clos- Street Strategies analyst Brian Sozzi.
ing price of 134.75 rand. Wal-Mart would become the first
Massmart said it has granted the major international retailer to enter
US firm an exclusivity period and South Africa, but others could soon
there is no certainty of a formal offer. follow by targeting one of
But Massmart’s share price jumped Massmart’s local competitors,
11 per cent to 150 rand, above the Roberts said.
value of the proposed offer.
Buying Massmart, South Africa’s ANALYSIS l Massmart
third-largest listed retailer by value, 15,000 rand 149.00
would give Wal-Mart a considerable 14,000 27 Sep
network in Africa’s biggest economy
13,000
and a foothold in 13 other countries
in sub-Saharan Africa. 12,000
The world’s largest retailer has 11,000
recently been hit by weakness in the
10,000
United States where low-income
shoppers are particularly vulnerable 9,000
to unemployment and higher gaso- 9,000
line prices. It has responded by focus- 12 Oct 09 4 Mar 10 27 Aug
CITY MOVES | WHO’S SWITCHING JOBS
London Stock Exchange
The exchange has named Paolo Scaroni (pic-
tured), the chief executive of Italian oil and gas
group Eni and one of its non-executive direc-
tors, as its new deputy chairman.
The LSE also said Massimo Tononi has joined
the board as a non-executive director. Tononi
was a partner at Goldman Sachs until July this
year and, between 2006 and 2008, was
Treasury undersecretary at the Italian Ministry
of Economy and Finance in Rome.
GAM hired Andrew Jenkins as a portfolio
The investment management firm has director in its UK private client team.
To appear in CITYMOVES please email your career
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
updates and pictures to citymoves@cityam.com
temporarily lifting its flagging stock.
Vivendi raised its 2010 guidance to
an “increase” in Ebitda, compared
with a previous forecast of “slight
growth”. It also gave guidance on its
adjusted net income for the first
time, forecasting it would rise from
€2.59bn (£2.15bn) in 2009. First-half
operating profit rose to €3.24bn.
Vivendi chief executive
Jean-Bernard Levy has
tried to reassure
investors about his
firm’s acquisitions
BEST OF THE BROKERS
ANALYSIS l Lukoil
53
€ 52.74
27 Sep
52.6
52.2
51.8
28 Jun 16 Jul 5 Aug 25 Aug 15 Sep
LUKOIL
UBS sees Lukoil as cheap stock with a
number of positive short-medium term cat-
alysts not yet priced in. The broker, which
reiterates a “buy” rating for the Russian
energy group, says on a relative basis,
Lukoil is starting to receive tax breaks and
is probably set to acquire the most desired
upstream assets at a reasonble price.
Takefuji eyes bankruptcy as it becomes
the biggest Japanese lender to collapse
▲
BANKING
JAPAN’S Takefuji Corp is preparing to
file for bankruptcy with $5.2bn
(£3.2bn) in debts, making it the
biggest consumer lender to fail under
the weight of court-ordered interest
repayments and tighter lending
rules.
Takefuji, which has been consid-
ered at risk for failure because it does-
Edited by Victoria Bates
Jenkins joins from Barclays Wealth,
where he spent the past three years,
latterly as a director. He was previously
head of investments for the Americas
at Ansbacher in the Cayman Islands.
Drax Group
The power group has taken on Tim
Cobbold, the former chief executive of
Chloride Group, as a non-executive
director.
Following Emerson Electric’s $1.5bn
takeover of Chloride earlier this year,
Cobbold now holds responsibility for
the Chloride group of companies within
Emerson.
Southwest to expand its
presence with AirTran buy
▲
AVIATION
SOUTHWEST Airlines is to purchase
AirTran Holdings for $1.04bn (£656m)
in cash and stock in a deal that will
allow Southwest to expand its pres-
ence in major East Coast US markets.
The merger, announced yesterday,
is the first among leading low-cost US
airlines and the second notable deal
this year after United Airlines and
Continental Airlines. Delta Air Lines
bought Northwest Airlines in 2008.
“The acquisition of AirTran repre-
ANALYSIS l Virgin media
1,500
P
1432.00
27 Sep
1,400
1,300
1,200
1,100
28 Jun 16 Jul 5 Aug 25 Aug 15 Sep
VIRGIN MEDIA
Like all telecoms companies, Virgin Media
is heavily operationally geared with high
gross margin services layered on top of
fixed network running costs, according to
JP Morgan Cazenove. The broker forecasts
70 per cent of additional revenue added in
2010-15 to drop through to cash flow and
gives Virgin Media an “overweight” rating.
To appear in Best of the Brokers email your research to notes@cityam.com
n’t have the financial backing of any
of Japan’s big banks, is making final
preparations to file for bankruptcy
protection.
Once Japan’s largest moneylender,
Takefuji said it had not decided to file
for bankruptcy, but would not com-
ment on whether it was considering
such a move.
“It is untrue that we made such a
decision as some media have report-
in association with
Arbuthnot Securities
The bank has appointed Adam Lloyd as
its new director of corporate broking.
Lloyd joins from Evolution and has also
worked at Albert E Sharp, James Capel,
Merrill Lynch and Durlacher.
Arbuthnot has also hired Andrew
Kitchingman from Brewin Dolphin as a
director in corporate finance and Emma
Harrison from Altium as an investor
relations manager.
Collins Stewart
The bank’s wealth management arm
has hired Murray Montgomery as head
CITYA.M. 28 SEPTEMBER 2010
sents a unique opportunity to grow
Southwest Airlines’ presence in key
markets we don’t yet serve and takes
a significant step toward positioning
us for future growth,” said Southwest
chief executive Gary Kelly.
He also said the deal with Atlanta-
based AirTran would allow Southwest
to expand in markets such as New
York LaGuardia, Boston Logan, and
Baltimore/Washington.
It also allows the airline access to
leisure markets in the Caribbean and
Mexico.
ANALYSIS l InterContinental Hotels
1200
P
1,432.00
27 Sep
1,150
1,100
1,050
1,000
28 Jun 16 Jul 5 Aug 25 Aug 15 Sep
INTERCONTINENTAL HOTELS
InterContinental Hotels has seen asset
ownership diminish, while growth is
skewed more to Asia, says Credit Suisse.
An “outperform” rating is retained by the
broker, which has increased the price tar-
get for the hotels group to 1343p. The bro-
ker expects concerns about the US system
to be compensated by Asian profit impact.
ed,” it said in a statement.
Shares of Takefuji closed untraded
yesterday due to a glut of sell orders.
Trading in the stock had been sus-
pended by the Tokyo bourse for most
of the day due the news.
Analysts have said this highlights a
major risk to the industry. A Japanese
court in 2006 ruled the lenders had
charged too much in interest and
ordered them to repay borrowers.
of business development in the Channel
Islands. Murray joins from Kleinwort
Benson, where he spent the past 13
years as head of business development,
head of product development and a
senior private banker.
Equatorial Palm Oil
The Aim-listed sustainable oil palm
plantation group has appointed
Shankar Varadharajan, a representative
of its strategic partner the Siva Group,
as a non-executive director.
Varadharajan, 36, has over 13 years
of experience in management positions
at Motorola and the Tata Group.
+44 (0)20 7557 7245
morganmckinley.com
 CITYA.M. 28 SEPTEMBER 2010
Lurking behind the financial crisis:
the Fed puppeteer and the trader
Wall Street’s bankers
always thought they
had another card to
play: the US bailout
proved them right
I
“ WANTED it to be like that Quentin
Tarantino movie: every person should
come away with a different picture. I
wanted to almost do it with no judg-
ment.”
Andrew Ross Sorkin is in London for the
Samuel L Johnson literary awards after
Too Big To Fail, his best-selling account of
the financial crisis, was short-listed for the
prize. But before heading off to a string of
other engagements, he finds time for a
leisurely iced tea with City A.M., to talk all
things Wall Street.
His desire to write the book “without
judgment” is hardly surprising coming
from the star finance reporter of the New
York Times, a paper that regards itself as a
keeper of historical records.
But Sorkin has a further reason to write
this particular story “without judgment”:
his aim was to complicate the convention-
al narrative about “greedy bankers” bring-
ing down the economy. “Part of the goal of
the project was to put the reader in the
room with them. When you get inside the
room, your field of vision changes,” he
says. His tactic is to take readers so close to
the main characters of his story – charac-
ters that include former US Treasury sec-
retary Hank Paulson and former Lehman
Brothers CEO Dick Fuld – that we can see
the dandruff on their collars. At this mag-
nification, a simple reading of who is to
blame for what becomes easily confused.
And he applies this nuanced narrative
about blame and hindsight to his views on
the need for regulatory changes prompted
by the financial crisis. “It’s about the poli-
tics of the regulation – somebody has to be
the policeman,” he says. But on the other
hand: “You can’t prevent the next crisis.
The only thing you can do is create param-
eters to limit the damage and give regula-
tors tools to mitigate the crisis.”
As a man who has spent years getting as
close as possible to the behemoths of Wall
Street and their Treasury counterparts
(since they are often the same people),
Sorkin seems vaguely resigned to the
imperfections and contradictions of regu-
lation. After all, a man who chronicled the
making of Paulson’s bailout plan (see box
CV | ANDREW ROSS SORKIN
Age: 33
Education: Cornell University
Career: After stints writing for the New
York Times as an intern during university,
Sorkin joined the paper in 1999 and lived
in London covering mergers and acquisi-
tions (M&A). In 2000 he moved to New
York where he also covers M&A on Wall
Street.
Biggest moment: The 2008 financial cri-
sis and the publication of his book. “It was
a very terrible thing for most of the world
and I’ve been an odd beneficiary in a way.
The book allowed me to use all I’d learned
over the past decade covering Wall Street.
As a journalist, you’re almost sitting, wait-
ing for this moment,” he says.
WORDS BY JULIET SAMUEL
bottom right) could hardly maintain faith
in the cool effectiveness of centrally
planned regulation.
TRADER’S PHILOSOPHY
And more broadly, he does not believe
that rules can prevent financial misdirec-
tion. As he says: “The desire for power and
pride is something you can’t legislate.”
This might sound like typical banker-bash-
ing, but there is a subtle difference
between Sorkin’s view and the usual “Wall
Street versus Main Street” lament. Asked
why “greed” was supposedly allowed to
trump self-interest in the pursuit of exces-
sive risks, he disputes the premise: “To me,
Wall Street is less about greed than it is
about power and pride – it wasn’t greed
that made Dick Fuld ride his $1bn in stock
down to something like $56,000.”
Instead, Sorkin blames Fuld’s over-
whelming desire to win and, when every-
thing went pear-shaped, not to lose face
for driving Lehman off a cliff. In his book,
Sorkin is at pains to convey the fierce cul-
ture that made beating rivals the be-all
and end-all for Wall Street’s CEOs: money
is important, undoubtedly, but above a
certain level of wealth, it serves more as a
measure of one’s prowess and superiority
than as a measure of buying power. And as
Sorkin chronicles the thrill of deal-mak-
ing and the cut and thrust of the trading
floor, it becomes clear that this is a story
being told by a man who cannot help but
empathise with Wall Street’s culture. As
he comments of his book: “To write it, you
have to want to live with the characters for
a year.”
This makes Too Big To Fail as much a
psychological study as it is a historical nar-
rative. Because, to Sorkin’s mind,
although the banking system was flawed
in its interconnectedness and systemic
importance, it was not merely the banks
that were “too big to fail”; it was the men
running them.
“All this stems from a trader’s philoso-
phy,” he explains. “There’s always another
trade, a way out or another card to play.
Dick Fuld always thought he had one
more card in his back pocket.” The book
Sorkin has become a portrays this society of “masters of the
regular talking head universe”, many of them self-made, who
on all things Wall thrived by pursuing their goals relentless-
Street ly in the face of setbacks and losses. These
were CEOs who, until the dying days of
Picture: REX their empires, were unable to really com-
prehend the idea of final, total failure. In
Sorkin’s words: “There was a collective
failure to imagine how bad it could be.”
PLAYING THE LAST CARD
And as it turned out, many of them – with
the exception of Dick Fuld – were vindicat-
ed in their denial. A forced merger in
unfavourable conditions is hardly a good
outcome, but it is a far cry from bankrupt-
cy and defaulting on creditor loans. In
that sense, that one card in the back pock-
et turned up trumps, in the form of a gov-
ernment bailout – and numerous
state-brokered deals. So deeply involved
was the Treasury that, during bankruptcy
court proceedings, the judge deemed
Lehman a “victim” whose “real tragedy”
was to have been the only firm not includ-
ed in the government’s rescue package.
In fact, for a financial collapse so often
blamed on the untamed forces of capital-
ism, what is striking about Sorkin’s book
is how central a role the government takes
in backroom deal-making from the very
beginning. As Sorkin wrote after the sale
of Bear Stearns: “Adam Smith’s invisible
“This stems EXTRACT | HOW THE BAILOUT WAS COSTED
from a “What about $1 trillion?” Kashkari said.
trader’s “We'll get killed,” Paulson said grimly.
“No way,” Fromer said, incredulous at the
philosophy – sum. “Not going to happen. Impossible.”
“Okay,” Kashkari said. “How about $700
there’s always billion?”
another trade, “I don't know,” Fromer said. “That's better
than $1 trillion.”
a way out or The numbers were at best, guestimates,
and all three men knew it. The relevant fig-
another card ure would ultimately be the one that repre-
sented the most they could possibly ask from
to play.” Congress without raising too many ques-
News 21
“It wasn’t
greed that
made
Lehman CEO
Dick Fuld ride
his $1bn in
shares right
down to
$56,000.”
hand has a puppeteer: the Federal
Reserve”. It was not until later he discov-
ered the full extent of it: “Really, I don’t
think I ever appreciated how active a role
the US government was playing behind
the scenes,” he tells me.
Active, of course, does not mean compe-
tent and Sorkin does not gloss over the
Treasury’s chaotic interventions. He just
doesn’t see a better option.
The problem is that Sorkin’s thinking
brings him to a dead-end. He readily
admits the incentive problem created by
government bail-outs, but his suggested
solutions – a resolution authority, higher
capital ratio requirements, a bank-funded
“rainy day fund” for bailouts and a return
to banking by private partnerships – carry
an air of compromise, the echo of a shrug
about the how and when: “What’s
depressing is you have to do it on a global
basis,” he says. “And if you’re a bank not
lending now, you won’t be lending under
Basel III.”
It is clear that Sorkin’s instincts push
him towards regulating the actions of the
hubristic characters he covers on Wall
Street. But his tendency is tempered by an
awareness of the practical pitfalls of law-
making: do it wrong, he says, “and you
have yourself a sequel!” And even with the
acclaim his first book has brought, not
even Sorkin wants that.
tions. Whatever the sum turned out to be,
they knew they could count on Kashkari to
perform some sort of mathematical voodoo
to justify it… As he plucked numbers from
thin air even Kashkari laughed at the absurd-
ity of it all.
Too Big to Fail: Inside the Battle to Save
Wall Street by Andrew Ross Sorkin is pub-
lished by Penguin Books for £12.99.
The book is shortlisted for the 2010
FT/Goldman Sachs Business Book of the
Year Award.
 22 Markets & Investments CITYA.M. 28 SEPTEMBER 2010

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
3i . . . . . . . . . . . . . . . . . . . . . . . .286.50 –1.50 310.00 246.90 Compass . . . . . . . . . . . . . . . . . .538.50 –5.00 574.50 353.00 JPMorgan Emerg Mkts . . . . . . . .581.50 +1.50 587.50 441.00 SABMiller . . . . . . . . . . . . . . . . .2013.00 –14.00 2090.00 1450.00
3i Infrastructure . . . . . . . . . . . . . 113.80 –0.30 115.00 97.00 Cookson . . . . . . . . . . . . . . . . . . . 511.00 –4.00 616.00 347.60 Jupiter Fnd Mgmt . . . . . . . . . . . .251.90 +12.90 256.50 180.00 Sage . . . . . . . . . . . . . . . . . . . . . .266.30 +8.10 268.30 208.20
A.B. Foods . . . . . . . . . . . . . . . .1061.00 –10.00 1096.00 790.00 Croda Intl . . . . . . . . . . . . . . . . .1458.00* +8.00 1468.00 637.00 Kazakhmys . . . . . . . . . . . . . . . .1442.00* +21.00 1634.00 955.00 Sainsbury(J) . . . . . . . . . . . . . . . .390.30 –4.70 395.60 307.60
Aberdeen Asset Man . . . . . . . . . .161.00 +1.20 163.20 111.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .525.00 +13.50 539.00 381.00 Kesa Electricals . . . . . . . . . . . . .144.20* +2.50 162.00 98.45 Schroders . . . . . . . . . . . . . . . . .1436.00 –4.00 1454.00 1055.00
Admiral. . . . . . . . . . . . . . . . . . .1623.00 –9.00 1686.00 1003.00 Dana Petroleum . . . . . . . . . . . .1801.00 +4.00 1817.00 968.50 Kingfisher . . . . . . . . . . . . . . . . . .232.50 +1.20 255.00 196.50 Schroders N/V. . . . . . . . . . . . . . 1165.00 –5.00 1187.00 864.00
Aegis . . . . . . . . . . . . . . . . . . . . .123.40* +0.60 137.30 103.10 Davis Service . . . . . . . . . . . . . . .404.90* +3.10 442.30 356.00 Ladbrokes . . . . . . . . . . . . . . . . .138.40* +0.60 171.31 114.60
Afren . . . . . . . . . . . . . . . . . . . . . 110.30 +1.80 111.10 73.00 Debenhams . . . . . . . . . . . . . . . . .66.30 +0.70 90.00 51.95 Lamprell . . . . . . . . . . . . . . . . . . .342.00* — 349.90 156.70 Scot. & Sthrn Energy. . . . . . . . . 1125.00* — 1206.00 357.50
African Barr Gold . . . . . . . . . . . .578.50* –18.00 685.00 520.50 Derwent London . . . . . . . . . . . .1522.00 –18.00 1562.00 1174.00 Lancashire Hldgs . . . . . . . . . . . .563.50* +4.00 565.00 416.70 Scottish Mortgage. . . . . . . . . . . .630.50 –1.50 637.50 475.00
Aggreko . . . . . . . . . . . . . . . . . .1536.00* +2.00 1639.00 664.50 Dexion Absolute . . . . . . . . . . . . .140.80 +0.60 148.00 128.30 Land Securities . . . . . . . . . . . . . .641.50* +3.00 743.50 543.00 SEGRO . . . . . . . . . . . . . . . . . . . .267.50* +0.50 389.90 244.00
Alliance Trust . . . . . . . . . . . . . . .333.80 –3.00 352.70 292.80 Diageo . . . . . . . . . . . . . . . . . . . 1100.00* +2.00 1176.00 930.50 Legal & General . . . . . . . . . . . . .103.90* +0.90 105.00 69.05 Serco . . . . . . . . . . . . . . . . . . . . .621.00* –4.50 656.50 485.60
AMEC . . . . . . . . . . . . . . . . . . . . .985.50 –8.00 1002.00 724.50 Dimension Data . . . . . . . . . . . . . 119.50 –0.30 125.50 59.30 Lloyds Banking Gp . . . . . . . . . . . .75.84 –0.81 79.15 45.30 Severn Trent . . . . . . . . . . . . . . .1330.00 –10.00 1404.00 939.50
Amlin . . . . . . . . . . . . . . . . . . . . .395.00* –3.40 437.60 350.80 Dixons Retail . . . . . . . . . . . . . . . .24.87 +0.63 39.75 23.07 Logica . . . . . . . . . . . . . . . . . . . .126.20* +1.00 149.10 100.80 Shaftesbury . . . . . . . . . . . . . . . .445.50 –6.50 456.00 341.70
Anglo American . . . . . . . . . . . .2531.00 –4.00 3015.50 1846.50 Domino’s Pizza . . . . . . . . . . . . . .470.50 –2.30 481.10 273.10 London Stk Exchange . . . . . . . . .706.50 +4.00 949.50 540.50 Shire. . . . . . . . . . . . . . . . . . . . .1458.00* –14.00 1532.00 999.00
Antofagasta . . . . . . . . . . . . . . . 1195.00* +14.00 1222.00 699.50 Drax . . . . . . . . . . . . . . . . . . . . . .400.40 +5.70 479.30 321.50 Lonmin . . . . . . . . . . . . . . . . . . .1692.00 –26.00 2198.00 1344.00 Smith & Nephew . . . . . . . . . . . . .569.50 –7.00 700.50 525.50
Aquarius Platinum . . . . . . . . . . .340.30* +3.20 490.00 211.50 Dunelm . . . . . . . . . . . . . . . . . . . .387.90 –3.00 438.40 303.00 Man . . . . . . . . . . . . . . . . . . . . . .219.30 –2.50 373.60 199.60 Smiths . . . . . . . . . . . . . . . . . . .1207.00 –20.00 1253.00 814.00
ARM Holdings . . . . . . . . . . . . . . .409.50* –5.10 419.50 134.40 Easyjet . . . . . . . . . . . . . . . . . . . .375.10 –2.90 499.90 339.80 Marks & Spencer. . . . . . . . . . . . .378.80 –1.70 412.70 321.90 SOCO Intl . . . . . . . . . . . . . . . . . .435.30 –6.40 510.00 380.60
Ashmore . . . . . . . . . . . . . . . . . . .335.10 +5.00 338.00 215.00 Edinburgh Inv Tst . . . . . . . . . . . .424.00 –3.10 436.00 338.00 Meggitt . . . . . . . . . . . . . . . . . . . .300.20* +0.30 331.00 220.10 Spectris . . . . . . . . . . . . . . . . . .1043.00 +27.00 1046.00 653.00
Astrazeneca . . . . . . . . . . . . . . .3280.00 –54.00 3389.50 2668.00 Electrocomponents . . . . . . . . . . .231.70 –2.10 246.30 142.90 Melrose . . . . . . . . . . . . . . . . . . .269.40* +3.90 275.10 160.00
Atkins(Ws) . . . . . . . . . . . . . . . . .745.00* +6.00 801.00 532.50 EnQuest . . . . . . . . . . . . . . . . . . . 116.80 +1.10 125.90 87.35 Mercantile IT . . . . . . . . . . . . . . . .965.00 +4.00 1002.00 822.50 Spirax-Sarco Eng . . . . . . . . . . .1790.00 +26.00 1799.00 1005.00
Autonomy Corp . . . . . . . . . . . .1800.00 +29.00 2012.00 1278.00 Essar Energy . . . . . . . . . . . . . . .438.50 –2.50 475.90 358.50 Michael Page Intl. . . . . . . . . . . . .454.70* –3.20 470.70 314.40 Spirent Comms . . . . . . . . . . . . . .139.00 –0.90 145.10 84.15
Aveva . . . . . . . . . . . . . . . . . . . .1455.00 +20.00 1487.00 856.50 Eurasian Nat Res . . . . . . . . . . . .907.00* +4.00 1276.00 781.00 Micro Focus . . . . . . . . . . . . . . . .385.20* +19.20 550.00 272.20 Sports Direct Intl . . . . . . . . . . . . .131.70 –3.10 136.50 89.85
Aviva . . . . . . . . . . . . . . . . . . . . .398.70* –2.20 474.00 290.20 Euromoney Inst Inv . . . . . . . . . . .613.50 +12.50 630.00 308.50 Millen & Copthorne . . . . . . . . . . .527.50* +4.00 547.00 321.40 SSL Intl . . . . . . . . . . . . . . . . . . . 1157.00 –1.00 1190.00 603.50
Babcock International . . . . . . . . .554.00 +3.50 660.50 489.00 Experian . . . . . . . . . . . . . . . . . . .681.50 +3.00 686.50 516.50 Misys . . . . . . . . . . . . . . . . . . . . .289.40 +1.10 295.80 192.60 St James’s Place . . . . . . . . . . . . .288.30 –0.60 296.90 203.40
BAE Systems . . . . . . . . . . . . . . .346.40 –1.10 389.90 288.10 Ferrexpo . . . . . . . . . . . . . . . . . . .293.20 –0.50 396.20 138.00 Mitchells & Butlers . . . . . . . . . . .296.30 –5.30 343.90 228.30 Stagecoach. . . . . . . . . . . . . . . . .184.60 +0.40 204.90 137.00
Balfour Beatty . . . . . . . . . . . . . . .269.40 +1.20 304.80 228.60 FirstGroup . . . . . . . . . . . . . . . . .348.60 –2.30 443.90 331.20 MITIE . . . . . . . . . . . . . . . . . . . . .199.00 +0.60 257.00 187.80 Standard Chartered . . . . . . . . . .1910.50* –19.00 1946.00 1366.50
Barclays . . . . . . . . . . . . . . . . . . .310.75 –1.00 394.25 253.40 Foreign & Col Inv Tst. . . . . . . . . .285.10 –0.20 297.20 248.70 Mondi . . . . . . . . . . . . . . . . . . . . .504.50 –5.00 519.00 300.70 Standard Life . . . . . . . . . . . . . . .231.10* –0.70 237.00 170.00
Barratt Development . . . . . . . . . .104.00 –0.10 178.75 89.10 Fresnillo . . . . . . . . . . . . . . . . . .1225.00 –7.00 1240.00 647.00 Monks Inv Tst . . . . . . . . . . . . . . .317.00 –5.00 324.80 265.00 SuperGrp . . . . . . . . . . . . . . . . .1223.00 –7.00 1312.00 499.00
BBA Aviation . . . . . . . . . . . . . . .190.50* –2.50 220.00 145.90 G4S . . . . . . . . . . . . . . . . . . . . . .252.90* –7.30 285.70 217.70 Morrison Wm . . . . . . . . . . . . . . .301.70 –0.20 307.10 255.00 TalkTalk . . . . . . . . . . . . . . . . . . .149.50 +3.90 150.50 106.60
Bellway. . . . . . . . . . . . . . . . . . . .593.50 –6.50 848.50 510.00 Genesis Emerging Mkts Fd . . . . .506.00 –0.50 511.50 370.00 Murray Intl Tst . . . . . . . . . . . . . . .879.00 –3.00 907.50 720.00 Talvivaara Mining . . . . . . . . . . . .472.00 +9.40 501.50 341.40
Berkeley . . . . . . . . . . . . . . . . . . .818.50 –11.50 949.50 735.00 GKN . . . . . . . . . . . . . . . . . . . . . .165.00* –1.90 172.60 100.40 National Express. . . . . . . . . . . . .238.50 +2.10 258.60 155.86 Tate & Lyle . . . . . . . . . . . . . . . . .468.30 –4.30 509.00 388.00
BG . . . . . . . . . . . . . . . . . . . . . . 1166.00 –3.00 1248.00 966.90 GlaxoSmithKline . . . . . . . . . . . .1272.50* +8.00 1347.00 1088.00 National Grid . . . . . . . . . . . . . . .543.00 — 607.65 474.80
BHP Billiton . . . . . . . . . . . . . . .2010.00* +0.50 2346.00 1583.50 Great Portland Estates . . . . . . . .339.40 –2.40 346.60 236.60 Next . . . . . . . . . . . . . . . . . . . . .2200.00 –19.00 2360.00 1726.00 Taylor Wimpey . . . . . . . . . . . . . . .28.89 –0.07 46.34 24.29
BlackRock Mining . . . . . . . . . . . .627.00 –2.50 654.50 474.00 Greene King . . . . . . . . . . . . . . . .421.90 –3.80 484.00 372.50 Northumbrian Water . . . . . . . . . .335.40 –1.00 353.00 225.20 Telecity . . . . . . . . . . . . . . . . . . . .532.50 +17.50 546.00 311.30
BlueBay . . . . . . . . . . . . . . . . . . .347.10 +5.10 393.00 251.00 Halfords . . . . . . . . . . . . . . . . . . .440.00 –3.20 562.50 339.40 Ocado Grp . . . . . . . . . . . . . . . . .136.80 –1.20 169.00 132.00 Templeton Emrg Mkts . . . . . . . . .610.00 +3.00 614.00 449.00
Bluecrest Allblue GBP . . . . . . . . .169.00 +0.40 169.00 144.40 Halma . . . . . . . . . . . . . . . . . . . . .305.50 –0.20 320.50 210.30 Old Mutual . . . . . . . . . . . . . . . . .138.30 –1.40 140.50 94.75 Tesco . . . . . . . . . . . . . . . . . . . . .434.00 –5.00 454.90 368.40
Booker . . . . . . . . . . . . . . . . . . . . .48.39 +0.20 49.99 37.50 Hammerson . . . . . . . . . . . . . . . .403.60* –2.60 460.30 332.20 Partygaming . . . . . . . . . . . . . . . .280.10 –3.90 339.70 205.80 Thomas Cook . . . . . . . . . . . . . . .183.30* –0.80 277.20 172.30
BP . . . . . . . . . . . . . . . . . . . . . . .403.90 –1.00 658.20 296.00 Hargreaves Lansdown . . . . . . . .435.00* –2.00 478.00 259.40 Pearson . . . . . . . . . . . . . . . . . . .985.00 –7.50 1069.00 751.50 Travis Perkins . . . . . . . . . . . . . . .840.00 –14.00 915.00 647.50
Brit Insurance . . . . . . . . . . . . . .1028.00 –1.00 1045.00 709.00 Hays . . . . . . . . . . . . . . . . . . . . . . 111.50 +0.60 119.00 82.50 Pennon . . . . . . . . . . . . . . . . . . . .581.00* –3.50 616.50 440.40 TUI Travel . . . . . . . . . . . . . . . . . .221.20* –2.80 313.90 189.20
British Airways . . . . . . . . . . . . . .243.60 –0.30 255.80 172.40 Henderson . . . . . . . . . . . . . . . . .123.50* –1.30 157.80 112.10 Persimmon . . . . . . . . . . . . . . . . .404.50 –2.00 520.00 335.90 Tullett Prebon . . . . . . . . . . . . . . .406.20 +9.80 436.20 261.20
British Amer. Tob . . . . . . . . . . .2395.00* –35.50 2439.00 1832.00 Heritage Oil. . . . . . . . . . . . . . . . .303.80 –7.00 585.00 298.20 Petrofac . . . . . . . . . . . . . . . . . .1391.00* –20.00 1446.00 900.00 Tullow Oil . . . . . . . . . . . . . . . . .1295.00 –4.00 1375.00 979.50
British Empire Tst . . . . . . . . . . . .461.60 –1.10 467.90 338.50 Hikma Pharma . . . . . . . . . . . . . .719.00* +17.50 813.00 445.00 Petropavlovsk . . . . . . . . . . . . . .1226.00 +1.00 1370.00 834.00 UK Commercial Prop. . . . . . . . . . .79.15 –1.15 84.90 69.10
British Land . . . . . . . . . . . . . . . .472.20 –0.10 515.00 416.00 Hiscox . . . . . . . . . . . . . . . . . . . .364.90* –5.10 371.60 299.60 Phoenix Group . . . . . . . . . . . . . .680.00* — 775.00 550.50 Ultra Electronics . . . . . . . . . . . .1722.00* +40.00 1774.00 1198.00
Britvic. . . . . . . . . . . . . . . . . . . . .475.60 +1.20 518.00 340.00 Hochschild Mining . . . . . . . . . . .445.00 +7.00 449.80 220.00 Premier Farnell . . . . . . . . . . . . . .258.10* –0.80 272.60 140.60 Unilever . . . . . . . . . . . . . . . . . .1816.00 +23.00 2024.00 1662.00
Brown(N.) . . . . . . . . . . . . . . . . . .237.10 –4.70 284.30 204.80 Home Retail . . . . . . . . . . . . . . . .208.20 –3.00 326.30 207.40 Premier Oil . . . . . . . . . . . . . . . .1658.00 –1.00 1703.00 984.00
BSkyB . . . . . . . . . . . . . . . . . . . .710.00 +1.00 732.00 521.00 Homeserve . . . . . . . . . . . . . . . . .478.40 +5.40 502.00 435.40 Provident Financial . . . . . . . . . . .820.00 –7.00 986.00 795.00 United Utilities . . . . . . . . . . . . . .572.00 +1.00 620.00 429.00
BT . . . . . . . . . . . . . . . . . . . . . . .140.70 –2.40 151.00 108.40 HSBC Hldgs . . . . . . . . . . . . . . . .660.90* –5.40 766.80 595.20 Prudential . . . . . . . . . . . . . . . . . .615.50 — 665.00 475.70 Utd Business Media . . . . . . . . . .624.50* +4.00 656.50 408.30
Bunzl . . . . . . . . . . . . . . . . . . . . .760.50 –11.00 784.50 613.50 Hunting . . . . . . . . . . . . . . . . . . .622.50 –1.50 659.50 429.10 PZ Cussons . . . . . . . . . . . . . . . .364.00* –0.80 382.70 230.10 Vedanta Resources . . . . . . . . . .2292.00 +11.00 2967.00 1795.00
Burberry . . . . . . . . . . . . . . . . . . .998.00 –4.00 1007.00 483.90 ICAP . . . . . . . . . . . . . . . . . . . . . .432.70 +1.20 478.30 291.70 Qinetiq . . . . . . . . . . . . . . . . . . . . 112.20 +1.20 179.10 103.50 Victrex . . . . . . . . . . . . . . . . . . .1266.00 +21.00 1320.00 726.50
Cable & Wire Comms . . . . . . . . . .59.15 –1.60 150.00 53.00 IG . . . . . . . . . . . . . . . . . . . . . . . .503.50* +2.00 532.00 291.00 Randgold Resources. . . . . . . . .6370.00 –115.00 6620.00 3930.00 Vodafone . . . . . . . . . . . . . . . . . .159.05 –1.90 164.95 126.50
Cable & Wire Wwide . . . . . . . . . . .74.55 –0.40 94.80 60.05 Imagination Tech Gp . . . . . . . . . .388.30 +3.50 399.00 154.00 Reckitt Benckiser . . . . . . . . . . .3515.00* –23.00 3667.00 2945.00 Weir . . . . . . . . . . . . . . . . . . . . .1405.00 +25.00 1459.00 635.00
Cairn Energy. . . . . . . . . . . . . . . .464.30 +4.40 497.60 306.80 IMI . . . . . . . . . . . . . . . . . . . . . . .765.00* +7.00 786.00 410.00 Reed Elsevier . . . . . . . . . . . . . . .535.50 –5.00 566.00 454.60 Wellstream Hldgs . . . . . . . . . . . .775.00* –1.00 810.00 429.70
Caledonia Invs . . . . . . . . . . . . .1625.00 –15.00 1759.00 1496.00 Imperial Tobacco. . . . . . . . . . . .1923.00 –17.00 2159.00 1728.00 Regus . . . . . . . . . . . . . . . . . . . . . .77.50* +1.50 125.50 64.05 WH Smith . . . . . . . . . . . . . . . . . .449.90 +1.50 551.00 392.20
Capita . . . . . . . . . . . . . . . . . . . . .766.00* –5.00 829.50 693.00 Inchcape. . . . . . . . . . . . . . . . . . .307.60 +3.00 347.00 235.00 Renishaw . . . . . . . . . . . . . . . . .1039.00* +17.00 1048.00 479.00 Whitbread . . . . . . . . . . . . . . . . .1628.00 +6.00 1650.00 1141.00
Capital & Counties . . . . . . . . . . .132.50 — 137.50 99.60 Informa . . . . . . . . . . . . . . . . . . . .420.90 +2.60 439.40 263.30 Rentokil Initial . . . . . . . . . . . . . . .102.50 –1.10 140.20 91.15 William Hill . . . . . . . . . . . . . . . . .172.40 –0.50 217.80 160.50
Capital Shopping Centres . . . . . .370.00 +1.40 533.50 300.10 Inmarsat . . . . . . . . . . . . . . . . . . .688.50 –14.50 831.00 526.00 Resolution . . . . . . . . . . . . . . . . .235.90* +2.60 264.80 220.10 Witan Inv Tst . . . . . . . . . . . . . . . .463.30 –1.70 487.00 396.30
Carillion . . . . . . . . . . . . . . . . . . .317.60* –0.20 361.90 263.90 Intercontl Hotels . . . . . . . . . . . . 1133.00* –1.00 1244.00 762.50 Rexam . . . . . . . . . . . . . . . . . . . .309.50* –1.00 348.80 253.40
Carnival . . . . . . . . . . . . . . . . . .2485.00 –26.00 2937.00 1876.00 Intermediate Capital . . . . . . . . . .298.40 +5.40 308.30 233.50 Rightmove . . . . . . . . . . . . . . . . .735.00 –7.00 796.50 456.90 Wolseley . . . . . . . . . . . . . . . . . .1520.00 –10.00 1742.00 1155.00
Catlin . . . . . . . . . . . . . . . . . . . . .341.10* +0.80 394.60 303.20 Intertek . . . . . . . . . . . . . . . . . . .1813.00 –14.00 1863.00 1136.00 Rio Tinto . . . . . . . . . . . . . . . . . .3703.50 +8.00 4104.00 2435.00 Wood Group (John). . . . . . . . . . .430.30 +4.50 432.80 279.60
Centamin Egypt . . . . . . . . . . . . .182.00 –1.80 194.40 92.00 Intl Personal Fin . . . . . . . . . . . . .278.10* +12.60 283.00 137.00 RIT Capital Partners . . . . . . . . . 1118.00 –15.00 1215.00 940.00 WPP . . . . . . . . . . . . . . . . . . . . . .720.00 –2.50 744.00 520.50
Centrica . . . . . . . . . . . . . . . . . . .327.50 –5.80 347.00 236.30 Intl Power . . . . . . . . . . . . . . . . . .387.00 –0.80 396.80 248.20 Rolls Royce . . . . . . . . . . . . . . . .589.00 –1.50 631.50 434.50 Xstrata . . . . . . . . . . . . . . . . . . .1220.50* –14.00 1344.50 815.00
Charter Intl . . . . . . . . . . . . . . . . .683.50 +22.50 855.50 563.50 Invensys . . . . . . . . . . . . . . . . . . .294.40 +0.70 350.30 224.90 Rotork . . . . . . . . . . . . . . . . . . .1716.00* +62.00 1732.00 1091.00 LONDON TOP 250 BY MARKET CAPITALISATION
Chemring . . . . . . . . . . . . . . . . .3000.00 +6.00 3711.00 2365.00 Investec . . . . . . . . . . . . . . . . . . .500.00 –2.50 565.00 411.50 Royal Bank Of Scot . . . . . . . . . . . .48.81 –0.48 58.95 28.25
Close Bros . . . . . . . . . . . . . . . . .727.00 +5.00 806.50 657.00 ITV . . . . . . . . . . . . . . . . . . . . . . . .58.70 –0.25 71.75 41.04 Royal Dutch Shell A . . . . . . . . . 1911.00 +4.00 2068.50 1621.00 * Ex-Dividend † Suspended
Cobham . . . . . . . . . . . . . . . . . . .233.40 –0.60 278.60 205.50 Jardine Lloyd Thompson. . . . . . .572.00* –5.00 604.50 420.70 Royal Dutch Shell B . . . . . . . . .1849.00 +4.00 1997.50 1550.00
COLT Group . . . . . . . . . . . . . . . .122.30 –1.50 144.20 107.70 Johnson Matthey . . . . . . . . . . .1760.00 –3.00 1814.00 1302.00 RSA Insurance . . . . . . . . . . . . . .130.60* +0.10 142.00 114.10 www.interactivedata.com

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FTSE led lower as Smiths Group and Wall Street tumbles but
banks fall despite gains by Unilever investors remain positive
THELONDON
and high US but low emerging mar-
ket sales exposure, while leaving its
target price unchanged at 1,350p.
cash to boost its personal care busi-
ness.
On the downside, Wolseley, the
THENEW YORK month for stocks, Wall Street was on
track for one of its best months in a
decade.

REPORT Software firm Sage Group, mean-

while, topped the blue-chip leader
board, while peer Autonomy was
world’s biggest plumbing, heating
and building materials company, lost
0.7 per cent after it posted flat year
REPORT Several business deal announce-
ments lifted sentiment. Consumer
goods group Unilever plans to buy US
another good gainer after Barclays profit. It plans to move its tax status hair care group Alberto Culver for

T U
HE FTSE 100 closed down 25.06 Capital initiated coverage on the to Switzerland in search of tax sav- S stocks slipped yesterday as $3.7bn. Alberto Culver surged 19.6 per
points, or 0.5 per cent, at European Software/IT services sector ings. Banks were also weaker, down investors took a break from a cent to $37.64, while Unilever's New
5,573.42, after gaining 1.6 per with a 1-Positive view. 0.8 per cent. four-week rally, but they York-traded stock added 1.1 percent to
cent last week, with Smiths Sage, which BarCap started as remained optimistic the $28.86.
Group out of favour while Unilever “equal-weight,” and Autonomy, which ANALYSIS l FTSE advance would resume as a flurry of Meanwhile Wal-Mart Stores the
rose after a US acquisition. the broker initiated as "overweight" 5,573.42 deals suggested companies were see- world's largest retailer, offered to buy
5,800
Broker recommendation and tar- and counts among its top picks, 27 Sep ing value in the market. Massmart, South Africa's third-largest
get price changes were behind some advanced 3.1 per cent and 1.6 pe 5,600 The Dow Jones industrial average retailer by value, for more than $4bn
of the individual equity moves. rcent respectively. closed down 48.22 points, or 0.44 per as it seeks to expand on the conti-
5,400
Smiths shed 1.6 per cent after Bank of A price target hike from Goldman cent, at 10,812.04. The Standard & nent. Wal-Mart, a Dow component,
America Merrill Lynch cut its rating Sachs helped miner Kazakhmys 5,200 Poor’s 500 Index was down 6.51 slipped 1.1 per cent to $53.48.
for the engineering group to "neutral" climb 1.5 per cent. 5,000
points, or 0.57 per cent, at 1,142.16. AirTran Holdings jumped 61.3 per
from “buy” in a review of the UK Unilever climbed 1.3 per cent after The Nasdaq Composite Index was cent to $7.34 after Southwest Airlines
Capital Goods sector. the consumer goods group agreed to 4,800 down 11.45 points, or 0.48 per cent, at offered to buy the regional carrier for
The broker said it downgraded buy United States-based hair care 4,600 2,369.77. But in defiance of $7.69 per share. Southwest shot up 8.7
Smiths due to the stock's re-rating group Alberto Culver for $3.7bn in 28 Jun 7 Jul 27 Jul 16 Aug 6 Sep September's track record as the worst per cent to $13.35.
CITYA.M. 28 SEPTEMBER 2010
EQUITY RALLY
NOT MATCHED
BY OIL PRICES
DAVID MORRISON
CFD MARKET STRATEGIST, GFT
T
HE rally in equities this September has
wrong-footed those of us who felt that
the August sell-off was the start of
something more serious. Now we’re just
a few days away from October, typically anoth-
er worrisome month for markets. While the
major US indices have broken above significant
resistance levels, recent moves in the Japanese
Nikkei and Spanish Ibex look less than convinc-
ing. Similarly, although the FTSE is pushing
higher, the German Dax is struggling to break
above the highs it made earlier this summer.
The recent behaviour of crude oil suggests
that not everyone is convinced that the global
economic recovery is in place. Aside from one
brief interlude this spring, Brent crude has
spent the last 12 months trading between $65-
$85. Having tracked equities closely, oil has so
far ignored the latest rally.
If a global slowdown is in progress, then an
overall fall-off in demand would make $80
crude look very expensive in the short-to-medi-
um term. Even now, many analysts reckon that
the fair price for oil given the current levels of
supply and demand should be nearer $45-$55,
and many speculate that current prices are due
to an overestimation of Chinese growth.
Going forward, there must be questions over
future Chinese demand. The authorities have
spent this year trying to dampen speculative
activity in the property and stock markets by
tightening their banks’ reserve ratios. China’s
main export markets look vulnerable: the
European sovereign debt crisis is unresolved,
while the US has high unemployment and the
probability of a double dip in housing. There is
rising discord over trade matters between the
US, China and Japan, which could finally under-
mine investor confidence. In this situation, oil
would struggle. But a sharp sell-off could pro-
vide investors with the perfect buying opportu-
nity to get a cheap entry level to a commodity
that is getting more and more difficult and
expensive to find and extract, yet remains the
single most vital component in powering the
world’s future growth.
AMPLIFY
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Investment | Contracts for Difference 23
September was golden
but cooler days are due
US stock gains slow
but the Fed will help,
suggests Jessica Mead
S
EPTEMBER’S prodigious rally in the
American S&P 500 index has taken
many investors rather by surprise.
Despite falling yields on US
Treasuries and gold rallying, the index is on
track for its third-best monthly perform-
ance in the past decade.
The S&P 500 has been driven higher by
tech stocks, which have risen 12.71 per cent
so far this month. Consumer discretionary
and industrials also helped lift the index,
rising 11.82 per cent and 11.71 per cent
respectively. These sectors’ better perform-
ance has been caused by defensive investors
seeking yield in a low interest rate environ-
ment. It is also no coincidence that both
tech stocks and materials firms have the
highest international revenues exposure.
More than half of tech firms’ earnings come
from outside the US while the figure for
materials stocks is 41.6 per cent, according
to Bespoke Investment Group.
Should contracts for difference (CFD)
traders be expecting further gains in the
index as we head into the back end of the
year? Equity strategists are generally bullish.
The global economic expansion is expected
to continue, which should increase The S&P has
investors’ risk appetite and, by extension, been flying high
their desire to own shares in S&P 500 stocks. in September, but
While the US economic outlook is suffi- may dip lower in
ciently gloomy for the Federal Reserve to the short term
hint strongly last week at another bout of
quantitative easing (QE) come November,
this should support the equity markets.
While Barclays Capital equity strategists, term and then the year’s highs of 1,219. likely to inch steadily upwards over the next
led by Barry Knapp, don’t believe QE2 is the However, the index has started to turn couple of months.
most likely scenario, they do say: “If the eco- down towards the 200-day simple moving
nomic data continues to disappoint, there’s average at around 1,118 – a break below here ANALYSIS l S&P 500 INDEX
little doubt the Fed would make a major should make CFD traders exceedingly wary
effort to boost financial asset prices further: of adding to long positions. While either 1,200
The Greenspan put has thus become the better economic data or Fed action ought to
Bernanke put. With the economic cycle and keep the S&P relatively well supported over 1,150
central bankers decidedly supportive, how the coming months, traders should not rule
badly can financial markets perform?” out a short-term dip lower and be prepared
1,100
So what levels should CFD traders be to place stop losses appropriately if they
aware of when it comes to trading the S&P can’t stomach the volatility.
index? It is currently trading just below the The Bernanke put should ensure relative- 1,050
1,130 level, which has recently acted as a ly little downside for the US stock market
major resistance to the upside. A break but CFD traders should not be expecting a
higher would open up 1,170 in the short- sharp move higher; this is an index that is 2010 May Jun Jul Aug Sep
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CITYA.M. 28 SEPTEMBER 2010
Even without a
runway, airlines
set for take-off
British Airways tops
the list of favourites,
at least for this year,
writes Juliet Samuel
B
AA’s Sir Nigel Rudd grabbed head-
lines last week by denouncing the
ban on a third runway at Heathrow,
claiming it would make the facility a
“second-tier airport”. His comments fol-
lowed an update from the International Air
Transport Association (IATA) that forecast a
likely 2010 profit of $8.9bn for the global
aviation industry – excepting Europe,
which is still expected to be in the red.
On the surface, the news suggests bleak
prospects for UK airlines. But in fact, con-
tracts for difference (CFD) traders could
stand to gain from going long on airline
equities in the coming months. Brokers
remain almost uniformly positive about
the industry and, for many, British Airways
(BA) tops the list of favourites.
For one thing, the IATA headline find-
ings disguise what is actually an impres-
sive recovery – in Europe and elsewhere.
RBS’s Andrew Lobbenberg says: “IATA
emphasizes the weaker European
economies, but the key issue is the vol-
cano. Without that, the European industry
would be in profit.”
This recovery is driven mostly by yield
improvements, in part due to airlines decid-
ing not to add capacity during a period of
sluggish growth. But high-margin premi-
um sales (that is, sales of all non-economy
seats) have also proved more resilient than
expected, such that IATA predicts that rev-
enues will be only $4bn below those
achieved during the peak of 2008.
So airlines should be in a good position
to capitalise on higher demand until the
end of 2010. With September passenger fig-
ures due in early October, CFD traders
should keep a keen eye out for any surpris-
THE TIPSTER
LOOK FOR GOOD
GDP FIGURES TO
BE REFLECTED IN
MINING STOCKS
M
INING stocks have had a good run
recently. With some important eco-
nomic data due this week in the form
of the UK's GDP and US consumer
confidence figures today, some good numbers
could push the miners higher. Capital CFDs
offers a price of 3,699.1p-3,703.9p for Rio
Tinto.
Gold’s key resistance level of $1,300 per
ounce has fallen and major producer, Barrick,
is tipping $1,500 an ounce as being entirely
within reach. Concern over global economies
is certainly adding credibility to this idea and
the prices of precious metals still have the
potential to continue appreciating even into
these uncharted territories. Current IG
Markets price on Gold is $1,298.60-$1,299.10.
Acquisitions are frequently seen as over-
priced ventures but Unilever’s purchase of
Alberto Culver is cheering buyers and showing
that M&A activity is very much alive and well.
With the news coming at the same time as
word of United Biscuits’ possible sale to Bright
Investment | Contracts for Difference 25
ANALYSIS l European air traffic
Source: AEA
15%
10%
5%
0%
-5% Revenue passenger km, % y/y
Available seat km, % y/y
-10%
-15%
Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10
No runway? No
problem for
es. Most brokers favour BA due to its
impending merger with Iberia (IB). Iberia’s
stock owners
Picture:GETTY
balance sheet will help as BA tries to plug
the huge hole in its pensions fund, while
IB’s South American routes add coverage to
an area where BA is currently limited.
And despite the markets pricing in some
of the good news, analysts at Goldman
Sachs say BA and Iberia both still look
cheap: “The reason for this is that the
extent of change afforded by the two corpo-
rate tie-ups has yet to be absorbed and
quantified by the market due to the lack of
related disclosure from the companies,”
they write.
Moreover, the lack of a new runway at
Heathrow has a perverse effect on valua-
tions. While it will stymie BA’s ability to
grow in its central hub, the airline will
instead be able to expand in Madrid
through its merger. And as for smaller air-
lines like British Midlands, Lobbenberg
points out: “The prime value of that busi-
ness is in its slot portfolio. If you created
another runway you’d ruin that value.”
UBS analysts are similarly hopefully for the
industry, recommending a “buy” on
almost every major European carrier –
except easyJet. With the firm still
embroiled in a row over its brand and
punctuality failings with easyGroup owner
Sir Stelios, its outlook remains highly
uncertain.
And over the long-term, the same is true
of BAA. Although it still has growth poten-
tial on the horizon in the form of terminal
improvements, it is unclear how much fur-
ther the company can expand without a
third runway, having been forced to sell off
other major assets like Gatwick and
Stansted to rival Global Infrastructure
Partners (GIP).
But while CFD traders should stand to
make solid gains in the European airline
space, the strong recovery this year will not
necessarily follow through to 2011 as
growth slows further. After a long trade
over the next quarter, it might then be
time to sell.
Food, further consolidation in the consumer
sector may well follow. Current IG Markets
price on Unilever is £18.38-£18.39.
One popular pairs trade that looks attrac-
tive is British American Tobacco (BAT) and
Imperial Tobacco. The spread, which has
traded around £1.12 for most of the year,
and as low as £1.01 in January, has popped
out to £1.24 over the last few months. This
would normally be a signal to sell BAT and
buy Imperial, looking for the spread to con-
tract. But fundamentals show that Imperial
is not performing as well as its peer and BAT
is more in favour, offering better opportuni-
ties for growth. It also pays a higher divi-
dend. Spread Co offer BAT at 2397.7p –
2402.3p and Imperial Tobacco 1928.6p –
1933.4p.
After a well-defended $1.35 barrier
option was finally taken out on Monday
morning in euro-dollar, the pair did not
accelerate higher but instead saw more sell-
ing. The pair only reached a high of $1.3505
before falling away to $1.3450. $1.3515
looks like it’s going to be a major point of
resistance since it marks the 50 per cent
retracement of the big $1.5145-$1.1875
move. The word was that hedge funds were
sellers as soon as the pair came near this
level yesterday morning. Look to sell euro-
dollar around the $1.3510 level but keep
stops relatively tight. Spread Co offer a
spread on euro-dollar of $1.3476–$1.3478.
Juliet Samuel
 Lifestyle
26
Picture: Micha Theiner/ CITY A.M.
The man making MINI
cooler – and smaller
As MINI launches its
first scooter concept,
Zoe Strimpel catches
up with BMW’S
man behind it all
N
O car captured Anglo cool like the
British Motor Corporation’s Mini of
the 1960s, the Mods’ car of choice.
Bought by BMW in 1994 (as part of
Rover), Mini became MINI in 2000, but
remains irresistibly hip; the ride of choice
for young British urbanites whose
European equivalents would drive Fiats
around Rome and Milan; or VWs around
Berlin and Munich. To celebrate the recent
launch of the MINI Countryman, VIPs
were invited to a field in Docklands for a
Champagne BBQ and a performance by
rapper Timbaland. Clearly, this is a very
cool lifestyle brand, not just a car.
Last week, just ahead of the Paris Motor
Show, MINI threw yet another glitzy bash,
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this time in Soho, to announce its new
scooter concept. Witness the birth of three
magnificent, globular scooters in bright
colours, one of which is overtly inspired by
the mods of the 1960s (see right).
Given the tremendous pitch of activity
swirling around MINI just now, it seemed a
good time to meet the gatekeeper of its
style: Adrian Van Hooydonk, the Dutch-
born chief designer of BMW group.
I meet him folded into a booth at MINI’s
Park Lane showroom during his visit to
London to launch the scooters. Tall, ele-
gant, and soft-spoken, you wouldn’t think
this was one of the world’s greatest
manipulators of steel. Yet when he talks
about design, the clear-sightedness, pre-
cision and passion that led him to become
chief of design at BMW become clear.
But first, what’s a man like this – used
to copious space for complex dials,
leather and bamboo – doing designing
scooters?
“As a designer, it’s very interesting,
as there’s no predecessor to a MINI
scooter,” says Van Hooydonk. “And
two-wheel transport is getting
another look, as functional rather
than just leisure objects.” (Indeed –
Above: Adrian Van
Hooydonk, chief of
design at BMW; a
classic Mini, and
below, the Mod E-
Concept scooter.
MEN’S GROOMING | AUTUMN SCENTS
Timothy Barber picks the key
new fragrances for classy gents
BURBERRY BRIT
LIMITED EDITION
£44 (100ml)
Notes: bay leaf, cedar, pine
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Daimler has just brought out a Smart scoot-
er, at exactly the same time as MINI).
“In Munich where I live, I started to see a
lot of people reconditioning old scooters
and I could see the idea from the 1960s
reforming. Now, with traffic the way it is,
two-wheelers are looking like the way to get
you where you need to go faster. And the
idea of an electric scooter with zero emis-
sions became obvious.” But obvious for
MINI? “No. Because we’ve never done one.
But the brand is for young people in an
urban environment and the scooter makes
sense.”
How does Van Hooydonk reconcile the
Germanic ownership of MINI with its
innate Britishness? “It’s an international
brand now; that’s the way it goes,” he
says, with just a hint of
resignation. “Everyone
knows in their heart
that MINI is British;
there is so much
heritage. But like
with fashion, we
are giving it a
new spin; in the
same way that
Burberry rein-
vented itself on a
global stage.
British culture is
always reinventing
itself; picture the old red phone booth next
to the skyscraper. MINI now appeals to
those who like heritage and those who
don’t.”
Scooters aside, what does the future hold
in automotive luxury, from a BMW perspec-
tive? “Sustainability is going to be a large
part of the premium market in future. To
own a premium vehicle, it will have to have
green credentials.” There is a lot of effort
going into this – and a good few car con-
cepts floating about, with longer range
hybrid and electric motors.
As for appearance, we can expect cars to
reflect this greener incarnation, with aero-
dynamic, lighter looks. “Imagine a look
where body panels seem to float instead of
being connected. Typically you hide aerody-
namics, but now they will become a natu-
ral part of the design.”
BMW’s watchword is mod-
ern luxury – a concept
Hooydonk likes to express
with sustainable materials
such as bamboo, and by mov-
ing away from the tradition-
al leather, wood and chrome
towards warmer colours,
cloth instead of leather (such
as in the 5-Series GT), and
wood cut in a different way.
His own white Z4 sports brown
leather and aluminium dash.
“In the future, luxury is going to be
defined by simplicity. Almost a kind of
zen style.” So long as elegant crea-
tures like Hooydonk are in charge,
we have plenty to look forward to.
MINI’s E-Concept scooters will be on show at the
Paris Auto Show, 2-17 October.
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CITYA.M. 28 SEPTEMBER 2010
FIT IN
THE CITY
BY LAURA WILLIAMS
FITNESS & DIET EXPERT
How to get
perfect pecs
N
O matter that the beach season is
drawing to a close – give your chest
some TLC this autumn. Here’s how.
TRAIN CONSISTENTLY: Your chest muscles
are a big muscle group that need to be trained
regularly and effectively in order for you to see
results. You must adhere to your routine come
rain or shine if you’re going to get buff quick.
PICK YOUR EXERCISES CAREFULLY: You can’t
afford to have favourites when it comes to
training the chest – mix up a flat bench press
with an incline bench press, and include cable
crossovers, flies and pullovers for a really com-
prehensive routine.
EAT WELL: You need to ensure that your diet
has the right balance of protein, carbs and fats
so that you supply your muscles with the very
best fuel. Eating well also helps to keep body
fat levels down so that the fruits of your
labour become visible. Make sure your carbs
are the good quality sort – that is, anything
brown goes (brown bread, brown rice, whole-
wheat pasta, and so on). Make sure you
always train with sufficient fuel in the tank
and refuel as soon as you’ve finished your
workout.
GO LOW REP, HIGH WEIGHT: If you’re starting
out, you don’t want to be pulling a muscle lift-
ing the heaviest weight you can – think about
sets of 8-12 reps, and make sure you’re failing
by the end of the set. As you progress, though,
up the weight and reduce the number of reps
you’re doing (think 6-12 reps: 6 min; 12 max).
PERFORM MOVEMENTS SLOWLY: Using speed
for momentum is cheating if you’re doing
straight sets (i.e. if you’re not deliberately
doing sets where you’re using speed as an
added stimulus). Maintaining a smooth, con-
trolled movement especially during the eccen-
tric phase (the “easy” part of the exercise
when the muscle’s lengthening) ensures that
your muscles are being loaded in the correct
way. www.laurawilliamsonline.co.uk
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 CITYA.M. 28 SEPTEMBER 2010
The Square Mile’s retail revolution
Picture: Micha Theiner/CITY A..M.
One New Change will
shake up the City,
says Timothy Barber
I
N the thrust and frenzy of City life, it’s
crucial to have somewhere you can
take yourself for a bit of quiet repose, if
only while you wolf down a sandwich
at lunchtime. Problem is, such spaces are
rather thin on the ground in the Square
Mile – but in a month’s time, one of the
best escapist spaces for City workers will be
opening eight floors off the ground.
The roof terrace of One New Change, the
RESTAURANT REVIEW
Marylebone
gets Euro-chic
Café Luc
50 Marylebone High Street, W1U 5HN
FOOD hhhhi
SERVICE hhhii
ATMOSPHERE hhhii
Cost per person without wine: £36
Y
OU might assume – I think I did –
that Marylebone High Street is hard-
ly in need of another place mixing
dining and café culture. But the
crowd packed into the recently opened,
Belgian-owned Café Luc last Tuesday
evening suggested otherwise – and after
eating there I’m inclined to agree with
them. Café Luc can sit happily alongside
FOOD & BOOZE NEWS
ZOE STRIMPEL
WINE MATCHING AT CINNAMON CLUB
Love fine Indian food but not sure how to pair
it with wine? Fear not: one of London’s finest
Asian restaurants is putting on a five course
banquet with wines matched – somewhat
unusually – from the Australia’s oldest family-
owned winery Yalumba. Exciting pairings will
include tandoori king prawn with mace and
cardamom paired with an Eden Valley riesling,
and pan-seared turbot in tomato and lemon
sauce paired with a 2008 Viognier. 8 Oct, £90
new shopping centre on Cheapside that
opens one month from today, is really
rather more than a terrace – it’s an expanse
of over 10,000 sq. feet that anyone will be
able to visit. Next door is St Paul’s cathe-
dral, and the view of this iconic landmark
is quite stupendous, its great neoclassical
dome looming across the way, while the
vista beyond stretches from the fast-rising
Shard by London Bridge to the London Eye,
taking in Tate Modern along the way.
It’s not as if the City is without great
views, but unless you’re being wined and
dined at Tower 42, or are lucky enough to
work in the Lloyds building or the Gherkin,
accessing them isn’t easy. “The whole point
of this space is that it’s not a chief execu-
tives’ playground, it’s for everyone,” says
Tintin, Johnny Halliday, statues of mic-
turating babies and waffles on the list of
Belgium’s cultural accomplishments. In
fact it beats those easily (apart from Tintin,
but that might just be me).
It’s been launched by Julie van Oostend
and her dad Luc (he’s the man behind Le
Pain Quotidien) – the family also has a
fashionable brasserie in Ghent. Actually
Café Luc is not particularly Belgian in style
– there isn’t a waffle to be seen on the
menu – so much as broadly continental.
Well, French anyway. It’s tres chic in the tra-
ditional style of a grand brasserie – creamy
pistachio tones, shaded lamps on the walls
and cosy leather banquettes with long, low
mirrors running above them. There’s a
copper-topped bar, above which hangs an
abundance of yellow, blown-glass bulbs
that seem both old-world and smartly
including all wines. Booking is essential. To
reserve your place, call The Cinnamon Club
on 020 7222 2555.
FIRST EVER FINE WINE FAIR
The first ever Fine Wine fair will be held
in Chelsea early next month, featuring
the finest exhibitors from the new
and old worlds. Little Beauty is an
independent and boutique vineyard
in the elemental Waihopai Valley, in
Lifestyle 27
dash to the West End becomes a thing of
the past.”
It’ll also mean there’s a reason to visit
the City at the weekend, since the shops
and restaurants – including that dramatic
roof terrace, which has a restaurant and
café attached – will be open seven days a
week. The developers are also hoping that
Gordon Ramsays’ café (a twist on his Plane
Food venture at Heathrow’s Terminal 5) or
Jamie Oliver’s barbecue-inspired restau-
rant, Barbecoa, will provide an extra draw.
The building itself is a rather sci-fi affair
– all thrusting angles and shady glass,
apparently inspired by the design for a
Stealth bomber – by French architect Jean
Nouvel, who was behind this summer’s
beautiful red pavilion at the Serpentine
Gallery. Bold and modern it may be, but
not in such a way that it detracts from St
Paul’s across the road – in fact, all its walk-
ways and angles point towards the cathe-
dral, and that roof terrace offers a vital new
way to enjoy the City’s greatest landmark.
Opens 27 Oct. www.onenewchange.com
David Atcherly Symes, retail manager for
property developer Land Securities, which ONE NEW CHANGE | SHOPS AND RESTAURANTS
has built One New Change.
Atcherly Symes has been responsible for
bringing in the retailers – including Hugo Fashion includes: Gifts and services includes:
Boss, Topshop, Karen Millen, Banana Hugo Boss Foyles
Republic and H&M, as well as restaurants Super Dry Oliver Bonas
that include outlets from Gordon Ramsay H&M Hotel Chocolat
and Jamie Oliver – who will be making One Karen Millen Dermalogica
New Change the Westfield of the City. He Next Daniel Hersheson
points out that while the Square Mile is far Links
from the bland, office-only district it used Swarovski Food and drink includes:
to be, it can still be a difficult place to Banana Republic Gordon Ramsay new restaurant
engage in full-on retail therapy. “There are Kurt Geiger Barbecoa from Jamie Oliver
great shops in the City, but they can be Swatch M&S Simply Food
rather disparate, and this brings a large LK Bennett Caffe Concerto
number of mid-range shops together,” he Fraser Hart Bea’s of Bloomsbury
says. “It should mean that that lunchtime
BY TIMOTHY BARBER
modern, which is the general idea. ingly right, and good value at £13.20.
I went for dinner, but being a brasserie
Café Luc is open from breakfast, when you
can get a full English or go continental.
There’s also a lengthy brunch menu,
including most of the breakfast
options as well as more fulsome
There are some much pricier options –
Dover sole will set you back £28, a red mul-
let fillet £19.50 and a fillet of Scottish beef
£27 – but Café Luc doesn’t seem bad value.
At £12.50, my dining partner’s moules
marinieres were another option for
offerings like steak tartare, salads
and risotto right up to lemon sole, fil-
let of red mullet or chicken supreme.
The variety of beguiling dishes on
offer – come lunchtime, add onglet
steak with shallots, moules marinieres,
duck confit and braised lamb to the list – is
those fancying an evening that’s
lighter on the wallet, and there was
no scrimping on portions. A tower-
ing pile of gleaming grey shells
arrived, cooked properly in white wine
with shallots and parsley, and accompa-
nied by a no-less-towering pile of crisp-as-
impressive, assuming they can all be you-like frites. Perfect stuff.
turned out with the same level of skill and Score one more foodie hit for
care. Marylebone High Street, then.
Those qualities were noticeably present
in the dinner I was served. I started out
with brown shrimp croquettes – a couple
of crusty croquettes filled with luscious
prawn meat in a sweet, oozy sauce. I could
have eaten these all night, frankly, but that
would have denied me the pleasure of
Carbonnades Flamandes a la Duvel – beef
stew in Belgian Duvel beer. This was terrif-
ic – large, meltingly soft chunks of beef
swimming in a thick, velvety gravy. Big,
bold, rustic food that would be easy to get
wrong – how often does one order casse-
role and stew dishes at such places, only to
be served meat that’s leathery
and tough? – but was satisfy-
Marlborough, New Zealand, while
Bouvey-Ladubet, based in St Florent,
is the second oldest producer of
sparkling wine in Saumur. The Bordeaux
Wine Council will also be in situ. In addi-
tion to the opportunity to try hundreds of
wines, there will be gourmet Spanish hams,
luxurious Italian chocolates and more fine
food. Fair from 15-17 Oct, tickets priced from
£20. At the Old Town Hall, Kings Road,
Chelsea. To book, go to www.finewinefair.org.
 28 Lifestyle | TV& Games CITYA.M. 28 SEPTEMBER 2010

BBC1 BBC2 ITV1 CHANNEL4 CH FIVE TV PICK

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6pm BBC News
6.30pm BBC London News
7pm The One Show
7.30pm EastEnders; BBC News
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10.25pm Regional News
10.35pm My Story
11.05pm Inside Sport
11.35pm FILM The Greatest
Game Ever Played;
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1.35am Sign Zone: See Hear
2.05am Sign Zone: Digging for
Britain 3.05am Sign Zone: Natural
World 4.05am Britain’s Empty
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6pm Eggheads
6.30pm Climbing Great
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7pm The Classroom
Experiment: Part two of two.
Dylan Wiliam tries to get the
pupils to act more responsibly.
8pm MasterChef: The
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9pm CHOICE Whites
9.30pm Harry & Paul
10pm Later Live – with Jools
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10.30pm Newsnight: Weather
11.20pm Today at Conference
11.50pm Highgrove: Alan
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12.50am BBC News
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6.30pm ITV News 6.30pm Hollyoaks 6.25pm Live from Studio Five
7pm Emmerdale 7pm Channel 4 News 7pm Five News at 7
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12.25am The Zone; ITV News 3.25am The Grid 3.55am World 12.50am SuperCasino Scientology, and its more closely
Headlines Sport 4.20am GT Academy 4.05am Police Interceptors 4.55am guarded secrets.
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the Interruption 10.30pm NBA
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COFFEE BREAK
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk

QUICK CROSSWORD
    

SUDOKU KAKURO
10 15 29 9 28 7
11 5
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K G 9 Words used to refer 5 Captives (9)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters E to people, places
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6 Begrudge (6)

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letters can only be used once in every word. There
A N 10 Capital of Egypt (5)
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SOLUTIONS
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W N 12 Singer who had a
11 Clinging plant (3)
hit with Shout (4)
QUICK CROSSWORD 8 3 1 3 6 2 1 13 Pleasantly
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optimistic (6)
4 1 2 9 1 8          16 Be similar in end sound,
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 Sport “SOCIAL NETWORKING CAN 29
GET ONESELF INTO TROUBLE”
COLIN MONTGOMERIE EXPLAINS
WHY RYDER CUP STARS ARE BANNED
FROM USING TWITTER: PAGE 30

AN UNKNOWN
Morgan has four
one-day centuries
and a Test ton to
his name in a little
over a year.
Picture: PA

QUANTITY TO
WORLD STAR
IN 12 MONTHS
New batting sensation at Middlesex, left-hander Morgan, in
his own unique, outlandish style, bat-
Eoin Morgan tells Jon ted his way through the ranks for
Ireland, making his one-day debut in
2006 and becoming the first
Couch how he’s ready to Irishman ever to score a first-class
double century with an unbeaten
fulfil his childhood dream 209 against the United Arab Emirates.
But he never gave up on his dream
of playing in the Ashes of pulling on an England shirt and,
after a taste playing for the Lions
against South Africa, Irish team boss

A
S the children of the Catholic
University School in Dublin
picked up their sticks for their
bi-weekly hurling lesson,
there was one lad standing in line
looking slightly lost.
It was the class of 1998 when pro-
fessional cricket in Ireland was light
years away. But Eoin Morgan was a
young man with a dream and he was-
n’t going to give it up without a fight.
“Playing cricket was all I ever want-
ed to do,” he recalled, “but it wasn’t
an easy ride, it wasn’t played regular-
ly enough in Ireland.
“Whereas now there are 10 to 12
full-time cricketers in Ireland, in those
days there were none. Opportunities
were few and far between.”
Morgan’s dream took him to
Dulwich College in south-east
London where he learned the fine art
of the game – and realised his dream
of playing Test cricket for England.
“I remember watching the Ashes as
a young lad and thinking ‘that’s
where I want to be’,” he added. “Not
one particular moment springs to
mind, but I remember England’s
great battles with Australia and the
West Indies. I was hooked.”
While serving his apprenticeship
Roy Torrens, finally gave him the
green light to chase his dream and
join up with the 2009 ICC World
Twenty squad – and a chance to play
against his old Irish team-mates.
Now, with four one-day centuries
to his name in a little over a year,
Moggie, as he is affectionately
known, has risen from international
unknown to one of the most exciting
young stars of world cricket.
Indeed, earlier this year he earned
top pick status in the Indian Premier
League auction, eventually being
bought by the Royal Challengers
Bangalore for $220,000.
“It’s been a hell of a year,” Morgan
explained, “I really am living the
dream. “First, establishing myself for Collingwood to make his Test debut finally fulfilling the dream. uations in different arenas and I
England, and then playing in such a against Bangladesh at Lord’s, and And despite his somewhat believe I can play that natural game
successful side, winning the retained his place in the side for the unorthodox approach to Test cricket, in a Test match in the same way.
Twenty20 World Cup and moving up subsequent Test series against Morgan believes he can prove a big “Just being talked about in the
to second in the world, it’s just got Pakistan, scoring his maiden Test cen- hit Down Under and help England same breath as a Ashes series is a
better and better. I have to pinch tury at Trent Bridge, thus announc- retain the Ashes urn for the first time huge privilege for me. Playing in
myself at times.” ing himself on the Test arena. in a quarter of a century. Australia this winter gives it even
But while Morgan’s flamboyance “Walking out for England in a Test “There has been talk about my more impetus, and although it will
with the bat has lent itself perfectly match was a very proud moment in style not being suited to Test cricket, be the ultimate test of our ability and
to the limited-overs game, Morgan my life,” Morgan added. “To debut at and everyone is entitled to their character, I believe we can win it.”
has also proved to selectors he has the such a young age, I didn’t expect it.” views, but I don’t think I have a style,” l Eoin Morgan was talking to City AM
nous to adapt to the five-day format Unsurprisingly, Morgan’s reward he added. “Sure, I have a natural at Stoke Park to launch the partnership
as well. was to be named in England’s 16-man game, everyone does, but I enjoy the between NatWest Black Card and the
In May, he took over from Paul squad to tour Australia last week – challenge of adapting to different sit- England cricket team.

SPORT | IN BRIEF
Henson set for comeback Ecclestone issues cancel
in Barbarians invitational threat over Korean GP
Chisora lined up for title shot
BOXING: Londoner Derek Chisora could
be in line for a shot at Wladimir
Klitschko’s three world titles.
Chisora, 26, apparently impressed the
Klitschko camp when he added the
Commonwealth title to his British belt and win back his place in the nation- have a 90-day check before a race and
▲

RUGBY UNION FORMULA ONE

with a stoppage over Sam Sexton last
weekend.
An initial offer is being considered by
promoter Frank Warren, although
Chisora has only had 14 career fights.
Saeed quits in Pakistan fall-out
CRICKET: Yawar Saeed’s resignation as
Pakistan tour manager was accepted
last night by Cricket Board chiefs.
Saeed, 75, asked PCB chief Ijaz Butt
is he could be relieved of his duties in the
wake of the side’s troubled tour of
England.
“The chairman has accepted, and the
board will announce a new manager in
due course.”
WALES centre Gavin Henson is set to
make his first competitive appear-
ance for 18 months after accepting an
invitation to represent the
Barbarians.
Henson, who is currently in self-
imposed exile from the game, will
make his comeback as part of the
Barbarians side to face South Africa at
Twickenham in December.
The 28-year-old has been on unpaid
leave from his club Ospreys after
becoming disillusioned with the
game, following a spell out with an
ankle injury. But earlier this month
he revealed that he wanted to return
al team for the Six Nations and next
year’s World Cup.
A full comeback will have to wait
until he has fulfilled his commit-
ments to the television programme
Strictly Come Dancing but Barbarians
contracts manager Mike Burton
insists he will be physically ready.
“Obviously our invitation to Gavin
will attract a lot of attention,” he said.
“He has other commitments outside
rugby and he is conscious of the need
for match fitness in order to do him-
self and the club justice.”
Henson’s Ospreys colleague Mike
Phillips and Australia’s Matt Giteau
and Rocky Elsom are also in the squad.
NEXT month’s Korean Grand Prix
could be cancelled over safety fears,
Formula One chief Bernie Ecclestone
has warned.
Eccletone says the delayed comple-
tion of the Yeongam circuit has pre-
vented F1 officials from inspecting
the venue, which will host the 24
October race.
Korean race organisers insist all
work will be completed on time, but
say they have heeded Eccelstone’s
warning and will speed up prepara-
tions.
“It’s not good. It should have been
inspected six weeks ago. We normally
now we are sort of putting this off,”
said Ecclestone. “What we’ve done is
quite dangerous. It’s a question of do
we cancel the race or not? They say
everything will be OK – we have to
hope they’re right.”
The Korean International Circuit
had been due for inspection on 21
September, but will instead be
assessed on 11 October by Charlie
Whiting, race director of motor-
sport’s governing body the FIA.
Kim Jae-Ho, spokesman for Korea
Auto Valley Operation, said: “We will
rush to complete work and FIA offi-
cials will see a complete circuit when
they conduct a final inspection.”
 30 Sport CITYA.M. 28 SEPTEMBER 2010

Results
Crawley Town
BLUE SQUARE BET PREMIER
York..................................(0) 0 Darlington.........................(0) 0
P W D L F A GD Pts
11 7 2 2 16 8 8 23
Donald has vindicated Monty’s faith
Mansfield 11 7 1 3 23 9 14 22
AFC Wimbledon 11 7 1 3 19 12 7 22 Colin Montgomerie’s biggest dilem- East Lake over the weekend. that this was a round designed to
Fleetwood Town 11 6 3 2 18 11 7 21
Newport County 11 5 5 1 15 9 6 20 ma in selecting his 12-man team for Yes, of course, he would have been silence the critics, he would’ve been
Darlington 12 4 7 1 15 9 6 19 Celtic Manor was who to pick from delighted to see Donald end on a high delighted to arrive in Wales yesterday
Tamworth 11 5 4 2 19 17 2 19 Donald, Paul Casey and Justin Rose. ahead of Ryder Cup week, but even if with confidence fully restored.
Luton 11 5 3 3 18 12 6 18
Wrexham 11 4 5 2 18 14 4 17 Omitting the world’s No7 player in Casey had improved on his fourth Read Sam’s Ryder Cup memories
York 12 4 5 3 15 13 2 17 Casey was a brave decision indeed, but place in Atlanta, it wouldn’t have in our 8-page pull-out on Thursday.
Kiddermnstr 11 4 4 3 18 18 0 16 Donald showed just what he’s about mattered a jot to him. His team is
Grimsby 11 4 3 4 12 13 -1 15
Gateshead 11 4 3 4 9 13 -4 15 by taking Jim Furyk all the way in the picked, so it’s irrelevant. Monty’s FED-EX CUP STANDINGS
Rushden 11 4 2 5 12 12 0 14 ON THE GREENS WITH Tour Championship to miss out of the focus has to be solely on his 12 players
Eastbourne B 11 4 2 5 24 25 -1 14 richest prize in golf by a single shot. and his preparation for the week. 1 Jim Furyk (USA) * 2,980pts
Cambridge
Barrow
11 3 4 4 13 8
11 3 4 4 14 13 1 13
5 13 SAM TORRANCE Furyk survived a nervous finale Another player who took a timely 2 Matt Kuchar (USA) * 2,728
Southport 11 3 3 5 10 12 -2 12 and held his nerve to claim a £7m confidence boost was Padraig 3 Luke Donald (Eng) * 2,700

L
Kettering 11 2 4 5 10 15 -5 10 UKE DONALD got his big chance jackpot by winning both the Tour Harrington, who finished with a final 4 Charley Hoffman (USA) 2,500
Hayes & Yeading 11 3 1 7 13 24 -11 10 to vindicate his place on the Championship and FedEx Cup. round 64 in the Vivendi Cup.
Forest Green 11 2 3 6 12 20 -8 9 5 Dustin Johnson (USA) * 2,493
Bath City 11 1 5 5 12 20 -8 8 European Ryder Cup team at the To be honest, though, I really don’t Padraig’s form has been questioned
Histon 11 2 2 7 10 22 -12 8 weekend – and he took it with think Monty would have paid too in the run up to Celtic Manor, but 6 Paul Casey (Eng) 2,250
Altrincham 11 1 2 8 8 24 -16 5 both hands. much attention to the goings-on at while I don’t think for one minute * = Playing in Ryder Cup
RACING
BATH
2.00 1 Whodathought (R L Moore) 7-2 Fav 2 Zakon (E

Ryder Cup
Ahern) 4-1 3 Holy Mackerel (S Hitchcott) 7-1
2.30 1 Amistress (Catherine Gannon) 8-1 2 Barista (S
Hitchcott) 13-2 3 Papas Fritas (E Creighton) 11-1
3.00 1 Lutine Charlie (Matthew Cosham) 9-4 Fav 2 Hierarch
(Ryan Powell) 11-1 3 Collect Art (Lucy Barry) 20-1
3.30 1 Marhaba Malyoon (William Buick) 7-1 2 Ullswater (J
Fanning) 6-1 3 El Mansour (E Ahern) 6-4 Fav
4.00 1 Dolphina (E Ahern) 9-2 2 Mascarene (R L Moore) 11-

stars banned
8 Fav 3 Fascination (Adam Beschizza) 4-1
4.30 1 Saborido (R L Moore) 5-1 2 Viviani (Liam Jones) 6-1 3
Ultimate Quest (S Sanders) 6-4 Fav
FFOS LAS
2.20 1 Yellow Dandy (Andrea Atzeni) 7-1 2 Supercharged (R
Hughes) 2-5 Fav 3 Forty Proof (S W Kelly) 12-1
2.50 1 Magic Jack (R Hughes) 8-13 Fav 2 Nadinska (Luke

from Twitter
Morris) 11-1 3 Meia Noite (T P Queally) 5-2
3.20 1 Earlsmedic (W A Carson) 7-2 Fav 2 First In Command
(Andrea Atzeni) 7-1 3 Bateleur (Luke Morris) 9-1
3.50 1 Warlu Way (T P Queally) 4-1 2 Countess Comet (Jim
Crowley) 5-1 3 Rock The Stars (R Hughes) 2-1 Fav
4.20 1 Rugell (Luke Morris) 8-1 2 Plato (T P Queally) 5-2 Fav
3 Dazinski (Ashley Morgan) 18-1
4.50 1 Milnagavie (Charles Eddery) 5-2 2 Lucky Breeze
(Harry Bentley) 7-1 3 Cornish Beau (Ashley Morgan) 2-1 Fav
KEMPTON
▲

2.10 1 Chilledtothebone (K Fallon) 4-1 2 Soviet Spring (L GOLF week, but a week today I am sure
Keniry) 9-4 Fav 3 Neytiri (N Mackay) 10-1 BY FRANK DALLERES tweeting will be all over the place.”
2.40 1 Tamareen (R Hills) 7-1 2 Sceal Nua (P Dobbs) 2-1 Jt Montgomerie said: “We feel that
Fav 3 Bearheart (S Drowne) 20-1
3.10 1 Spensley (K Fallon) 15-2 2 Dynamic Drive (A Kirby) IT is an edict that could easily have tweeting and Facebook and all of
14-1 3 Aphrodisia (John Fahy) 8-1 been issued in less than 140 charac- these social sites… can get oneself
3.40 1 Dubai Crest (N Callan) 8-1 2 Isobar (K Fallon) 6-4 Fav ters. Players from both teams at the into trouble. We are in the same boat.
3 Akhmatova (S Drowne) 8-1 Ryder Cup have been banned from I think it’s important we focus on the
4.10 1 Mac’s Power (P Cosgrave) 5-1 2 Arteus (T P O’shea)
33-1 3 Five Star Junior (K Fallon) 11-1 using micro-blogging site Twitter job in hand this week.
4.40 1 Hidden Glory (J Rogers) 8-1 2 Anacopa (Ahmed until after the competition finishes “We are here to try regain the tro-
Ajtebi) 10-1 3 Abhar (Kieren Fox) 6-1 on Sunday. phy that Corey has brought back for
European captain Colin us. We have to focus on that job, and
TODAY’S DIARY Montgomerie said he wanted to avoid as Corey rightly says, on Monday 4
(7.45pm unless stated) his team “getting into trouble”, while October, yes, you will find the team
UEFA Champions Lge
Group E his United States counterpart Corey probably on social network sites, but
Basle v Bayern Munich ............................................................................................ Pavin, himself a Twitter regular, not until then.” Montgomerie said
Roma v CFR Cluj-Napoca ........................................................................................ added that it could prove a distrac- Several high-profile sportsmen and he wanted to avoid
Group F tion. women have found themselves in hot his players “getting
Chelsea v Marseille .................................................................................................... Both sides have avid tweeters in water after posting unguarded com- into trouble”.
Spartak Moscow v MSK Zilina (5.30)................................................................
Group G their ranks, with Europe’s Ian Poulter ments on Twitter. Picture: ACTION
Ajax v AC Milan .......................................................................................................... and Rory McIlroy and Americans Cricketer Kevin Pietersen was fined IMAGES
Auxerre v Real Madrid.............................................................................................. Stewart Cink and Bubba Watson by England chiefs after revealing he
Group H among the most frequent users of the had been dropped, while footballer
Braga v Shakhtar Donetsk ...................................................................................... social networking site. Darren Bent upset Tottenham chiefs
Partizan Belgrade v Arsenal ..................................................................................
npower Football League Championship “The team has come to a consen- after venting his frustration at the RYDER CUP | WHO TWEETS?
Burnley v Hull................................................................................................................ sus not to do it,” said Pavin. “It can be protracted nature of his move to
Cardiff v Crystal Palace............................................................................................ a little bit distracting sometimes, Sunderland. EUROPE @F_Molinari UNITED STATES @stewartcink
Coventry v Doncaster................................................................................................ and I think it is important to focus Australian swimmer Stephanie
Derby v Middlesbrough ............................................................................................ @IanJamesPoulter @RC_CAPTAIN_2010 @ZachJohnsonPGA
Leeds v Preston............................................................................................................ on the Ryder Cup and playing in the Rice lost a sponsorship deal and had @Graeme_McDowell @RickieFowlerPGA @HunterMahan
Norwich v Leicester .................................................................................................. matches. to apologise after making an anti-gay @McIlroyRory
We’ve decided to not tweet this remark. @bubbawatson
Nottm Forest v Sheff Utd ........................................................................................
Portsmouth v Bristol City........................................................................................
QPR v Millwall (8pm) ................................................................................................
Reading v Ipswich (8pm) ........................................................................................
Team England
Tragic Newton was helping
Scunthorpe v Barnsley..............................................................................................
Watford v Swansea....................................................................................................
npower Football League One
Bournemouth v Exeter..............................................................................................
Brighton v Brentford..................................................................................................
Bristol Rovers v Tranmere ......................................................................................
move into village
drug probe at time of death after assurances
Charlton v Milton Keynes Dons ............................................................................
Colchester v Dag & Red............................................................................................
Hartlepool v Carlisle ..................................................................................................
Leyton Orient v Walsall ............................................................................................
Peterborough v Notts County................................................................................
Rochdale v Huddersfield ..........................................................................................
Sheff Wed v Oldham.................................................................................................. COMMONWEALTH GAMES
▲

Swindon v Plymouth..................................................................................................
Yeovil v Southampton................................................................................................ his ban the former Wakefield, had been assisting UK Anti-Doping in THE first batch of Team England ath-
▲

RUGBY LEAGUE
npower Football League Two Bradford, Wigan and Leeds player had its enquiries into the use and supply letes moved into the much-maligned
Cheltenham v Oxford Utd ........................................................................................ BY FRANK DALLERES
Crewe v Macclesfield ................................................................................................ been aiding UK Anti-Doping in their of performance-enhancing drugs, spe- Commonwealth Games village in
Gillingham v Southend.............................................................................................. TERRY NEWTON, the former Great efforts to investigate the trade in per- cific details about which are strictly Delhi yesterday after getting the all-
Hereford v Stevenage................................................................................................ Britain hooker who committed sui- formance-enhancing substances. confidential.” clear from bosses.
Lincoln City v Burton Albion .................................................................................. cide at the weekend, had been help- “On behalf of UK Anti-Doping, our Newton is said to have become Some competitors, including triple-
Morecambe v Bury .................................................................................................... ing anti-doping chiefs track down sympathies go out to the family and depressed since having his contract jumper Phillips Idowu have already
Northampton v Chesterfield ..................................................................................
Port Vale v Shrewsbury............................................................................................ suppliers of illegal substances. friends of Terry Newton at this diffi- cancelled by Wakefield, but the pulled out of the Games after the
Rotherham v Bradford .............................................................................................. Newton, who died aged 31 and is cult time,” said UKAD chief executive Rugby Football League yesterday accommodation was described as
Stockport v Accrington Stanley .......................................................................... thought to have been found hanged Andy Parkinson. “While the circum- moved to deflect suggestions that “uninhabitable” and “unsafe”.
Torquay v Aldershot .................................................................................................. at his home near Wigan on Sunday, stances of our relationship with Mr they had neglected Newton since his The 48 members of the hockey,
Wycombe v Barnet ....................................................................................................
was banned from the sport in Newton were hardly ideal, we had enforced exit from the game. lawn bowls and shooting squads were
February after testing positive for respect for his openness and willing- “People in rugby league stayed given the all-clear to move in yester-
SPORTS EDITOR JON COUCH human growth hormone. ness to share his story to help his close to him. He was not left high and day and will be joined today by 36
email sport@cityam.com And it emerged yesterday that since sport. In recent months Mr Newton dry,” said spokesman John Ledger. other team-mates.
CITYA.M. 28 SEPTEMBER 2010
Wenger: We’ll bounce back from Baggies defeat
PARTIZAN BELGRADE
ARSENAL
▲
CHAMPIONS LEAGUE
BY JON COUCH
ARSENE WENGER insists his Arsenal
side can recover from their Premier
League hangover and continue their
charge in Europe tonight.
The Gunners suffered their first
defeat of the season on Saturday
Ancelotti plays down Blues slump
CHELSEA
MARSEILLE
▲
CHAMPIONS LEAGUE
BY FRANK DALLERES
CHELSEA manager Carlo Ancelotti
insists he has not demanded a reac-
tion from his team despite seeing
their air of invincibility corroded by
back-to-back defeats.
Enforced absences have also hit
Ancelotti’s preparations, with mid-
fielder Frank Lampard among a num-
ber of injured players and striker
Didier Drogba suspended for the visit
of his former club Marseille.
“I don’t ask them to have a reac-
tion. We just have to play our foot-
ball,” said Ancelotti yesterday. “We
have to pay attention and get the
points from this game. I don’t need to
see a reaction from my players; they
will have a good game because it is an
important game for us to arrive at the
top of the group. It is just for this.”
Lampard’s recovery from a hernia
operation has been put back again,
meaning he will now not return until
after next month’s international
break. Captain John Terry is set to
start, but Salomon Kalou and Yossi
Benayoun are also sidelined, leaving
Ancelotti to choose between young-
sters Daniel Sturridge and Gael
Kakuta to join Nicolas Anelka and
Injured Rooney sidelined
for United’s trip to Valencia
▲
CHAMPIONS LEAGUE
BY FRANK DALLERES
TROUBLED Manchester United striker
Wayne Rooney has been ruled out of
tomorrow’s Champions League trip to
Valencia with an ankle injury.
Rooney aggravated the niggling
problem during Sunday’s 2-2 Premier
League draw at Bolton, a match in
which he was substituted after little
more than hour.
United manager Sir Alex Ferguson
told club officials yesterday that
Rooney would not be fit to travel to
Spain. However, the club has not
revealed how long his recovery is
expected to take, raising the possibili-
when they went down to a shock 3-2
home defeat by West Brom.
Wenger offered no excuses, instead
lambasting his side’s abject display
and promising an inquest.
Now, he is backing the Gunners to
bounce back in the Champions
League at Partizan Belgrade tonight –
and add to their 6-0 opening game
mauling of Braga a fortnight ago.
“The disappointment was very
deep, but we can learn from what has
happened to us,” Wenger said.
“We realise that we need to be
focused in every single game, pro-
duce performances in every single
Florent Malouda in an attacking tri-
dent.
“I think I have a lot of options,”
Ancelotti added. “We have to consider
Daniel Sturridge and Gael Kakuta. It
is normal during a season to have two
or three injuries – this is not a prob-
lem. We have a good mix in the squad
with young players that are improv-
ty he could miss Saturday’s visit to
Sunderland and England’s Euro 2012
qualifier against Montenegro on 12
October.
Rooney, so often United’s match-
winner last season, has been a shad-
ow of his usual self during the
current campaign. He has not scored
a United goal in open play and
Ferguson admits the 24-year-old has
been adversely affected by tabloid
scrutiny following stories about his
private life.
United jet off to Valencia in search
of their first Group C victory with
their away form showing signs of
frailty. They are yet to win on the road
in three attempts in the Premier
game and that is what I believe we
have learnt from Saturday.
“I believe in the intelligence of my
group players and I have no doubt in
their talents. We will be highly
motivated and will try to
redress what was not
right on Saturday.”
Wenger is also
backing under-
study Lukasz
Fabianski to take his
first-team chance with
both hands in Belgrade.
The Pole will take the
goalkeeper’s gloves
ing and players with experience.”
It is not the ideal selection scenario
for Ancelotti as he looks to engineer a
return to form following the mid-
week Carling Cup exit to Newcastle
and Saturday’s defeat to Premier
League title rivals Manchester City.
But the Italian said he had been
mollified by Arsenal’s surprise week-
League, and had to twice come from
behind to take a point from Bolton.
They have conceded seven times in
those three games, and captain
Nemanja Vidic admits they must
tighten up at the back as they prepare
to face the leaders of the Spanish top
flight.
“It is a big concern that we are con-
ceding so many away goals,” said the
centre-back. “We have to stop doing it.
We cannot let it happen again. Over
the last few years we haven’t given
that many goals away or even allowed
them so many chances. Before we
have always looked strong, so this is
not what we are used to. We have to
play much better in our away games.”
Sport | Football 31
from Manuel Almunia, who was show how good he is.”
heavily criticised for a num- Partizan lost their opener 1-0 to
ber of errors against the Shakhtar Donestk, but Wenger
Baggies. The Spaniard has an warned: “They are intelligent, with a
ankle injury. good technique and if you give them
“For Fabianski, it is another room they are always dangerous.”
big chance,” Wenger added.
“But you want a goalkeeper GROUP H
or any player to grab the TEAM PLD W D L F A PTS
chance when you get it.
“As a manager you can Arsenal 1 1 0 0 6 0 3
give a chance to a player
who is good enough and I S Donetsk 1 1 0 0 1 0 3
believe in his talent. He Partizan 1 0 0 1 0 1 0
gets another opportunity to
show how good he is. I want him to Braga 1 0 0 1 0 6 0
Boss Carlo Ancelotti
talks to captain John
Terry as his side pre-
pare for tonight’s
clash with Marseille.
Picture: GETTY
end defeat at home to West Brom.
“I was surprised by the result of
GROUP F
TEAM PLD W D L F A PTS
Arsenal,” he said. “I said before
Saturday that it would be very diffi- Chelsea 1 1 0 0 4 1 3
cult to be unbeaten during the sea- Sp Moscow 1 1 0 0 1 0 3
son. So we are not so upset to lose our
unbeaten record, but we have to look Marseille 1 0 0 1 0 1 0
forward. It will not be the last time MSK Zilina 1 0 0 1 1 4 0
we lose a game.”
Lay-off for Gallas adds to
Spurs’ defensive woes
CHAMPIONS LEAGUE tre back so right-back Vedran Corluka
▲
will again be drafted in as cover.
TOTTENHAM’S defensive crisis grew Redknapp was hoping captain
deeper yesterday after William Gallas Ledley King would be fit to face FC
was ruled out for three weeks with an Twente, but he hasn’t trained for
abductor muscle injury. nine days and is still suffering the
The French defender, who joined affects of his on-going knee problems.
Spurs on a free transfer last month Of King’s recovery, Redknapp said:
following his release from rivals “It’s a blow. When you don’t train,
Arsenal, missed Saturday’s 1-0 defeat you pick up different injuries.
at West Ham after suffering the “If I went for a run tonight, I’d pull
injury in training on Friday. up with a calf problem because I
Further tests revealed Gallas’ don’t train regularly. Ledley doesn’t
injury is worse than first thought and train and he picks up little injuries.”
means boss Harry Redknapp is now Spurs are also without Michael
without no fewer than four central Dawson, out with an ankle injury,
defenders for the visit of Dutch side while Younes Kaboul has calf trouble.
FC Twente tomorrow night. Indeed, Redknapp can’t even turn
Indeed, as it stands, Sebastien to 18-year-old Steven Caulker, who yes-
Bassong is his only, fit recognised cen- terday joined Bristol City on loan.
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