BUSINESS WITH PERSONALITY
HEAVYWEIGHT HARRISON
Issue 1,259 Tuesday 9 November 2010
GAFFE SEES BOSS
OF BABCOCK QUIT
DEFENCE
▲
BY MATTHEW WEST
THE deputy chairman of defence con-
tractor Babcock International was
forced to resign in embarrassing cir-
cumstances yesterday after he called
the Royal Navy’s procurement of two
aircraft carriers the company is build-
ing a “disaster”.
Former trade minister Lord
Hesketh, who has been deputy chair-
man of Babcock since 1996, was
reported as saying the Navy’s two new
aircraft carriers would make it a
“laughing stock” and blamed “vested
interests” at lead defence contractor
BAE Systems for pushing up the price
of the £5.2bn programme.
“We are paying twice as much as
we should to get half the capability,”
he said. Lord Hesketh added the con-
tract was a “Looney Tunes” operation
that was “about to turn into a classic
British disaster”.
Babcock, which is part of the con-
sortium building the two £3bn carri-
ers, immediately distanced itself from
Lord Hesketh’s comments, issuing a
statement at the start of trading on
the London stock exchange describ-
ing the comments as “personal”
adding that they “do not in any
respect reflect the views of the com-
pany”.
However, the statement did little to
calm investors with Babcock’s share
price falling 5.5p to close at 571.5p. By
FTSE 100 ▼ 5,849.96 -25.39 DOW ▼ 11,406.84 -37.24
SET FOR FIGHT OF HIS LIFE
EXCLUSIVE INTERVIEW P33
Lord Hesketh said that Britain’s aircraft carriers were a “Looney Tunes disaster” in the making
mid-afternoon Babcock had issued a
statement to the stock market saying
Lord Hesketh had resigned from the
board with immediate effect.
Babcock chairman Mike Turner,
who was a combative BAE chief exec-
utive for six years until 2008, said:
“Lord Hesketh has been a long-stand-
ing and valued member of the
Babcock board, and over this period
has made a significant contribution
to the development of the group. We
NASDAQ ▲ 2,580.05 +1.07
GARTMORE
www.cityam.com
TIME LINE | BABCOCK
● 8/11/2010 - 07.30am
Lord Hesketh’s comments
about the aircraft carriers
are published.
● 8/11/2010 - 08.00am
Babcock issues statement
distancing itself from Lord
Hesketh’s comments.
● 8/11/2010 - 09.00am
Babcock shares edge down
5.5p to 571.5p.
● 8/11/2010 - 02.11pm
Babcock issues statement
that Lord Hesketh has
resigned from the board
with immediate effect.
Picture: REX
thank him for his contribution and ANALYSIS l Babcock
wish him well.” 600 p
Under last month’s strategic defence 571.50
review, the UK’s fleet of Harrier jump 8 Nov
jets will be decommissioned next year. 560
As a result one aircraft carrier current-
ly being built by Babcock will never
carry fighter jets and will only be oper- 520
ational for three years. The other air-
craft carrier will only become fully
operational in 2020, when it receives a
fleet of fighter jets from BAE. 9 Aug 8 Sep 7 Oct 5 Nov
£/$ 1.61 unc £/¤ ▲ 1.16 +0.01 ¤/$ ▼ 1.39 -0.01
UP FOR SALE
STAR FUND
MANAGER ROGER
GUY QUITS P5
FREE
BP didn’t
cut corners
on safety
▲
ENERGY
BY MATTHEW WEST
THE US commission investigating the
largest oil spill in American history
said yesterday its preliminary investi-
gation had found no evidence to sup-
port the accusation that it happened
because BP and its partners cut costs
to save money.
The White House commission
instead blamed the oil spill on a series
of misjudgments by employees work-
ing on-site.
“To date we have not seen a single
instance where a human being made
a conscious decision to favor dollars
over safety,” the commission’s chief
counsel Fred Bartlit said blowing
apart accusations that had been lev-
elled at BP during the summer.
In fact, the commission panel
agreed with around 90 per cent of the
findings of BP’s own internal investi-
gation of the accident released earlier
this year.
BP’s report laid much of the blame
for the accident on its drilling part-
ners, Transocean.
Bartlit said BP’s well design was not
inherently faulty, although it did
have some impact on the drilling pro-
ject’s operations.
But the panel’s investigators con-
cluded BP took unnecessary risks as it
tried to temporarily abandon the
Macondo well, a finding BP disputed.
Over the summer several US politi-
cians accused BP and other compa-
nies involved in drilling the well of
sacrificing safety for financial gain,
an accusation BP has always denied.
Certified Distribution
30/08/10 – 03/10/10 is 110,015
 2 News
Stupid policies have destroyed Eire
EDITOR’S LETTER
ALLISTER HEATH
IT is starting to look truly grim for
Ireland, which is moving ever closer
to the abyss. An article yesterday by
Morgan Kelly, a professor of econom-
ics at University College, Dublin,
added fuel to the fire. By next year
Ireland will have run out of cash,
Kelly claimed, and the terms of a for-
mal bailout will have to be agreed.
This view – that Ireland is already
insolvent – is fast gaining converts; no
wonder Germany is so keen to intro-
duce European treaty changes to safe-
guard its taxpayers.
It is hard to be optimistic. Nominal
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Editorial
Editor Allister Heath
Deputy Editor David Hellier
News Editor Ben Griffiths
Night Editor Katie Hope
Associate Editor David Crow
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Lifestyle Editor Zoe Strimpel
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WHAT THE OTHER PAPERS SAY THIS MORNING
MERKEL WARNS ON PROTECTIONISM
The greatest danger facing the global
economy is a return to trade protec-
tionism, Angela Merkel, German
chancellor, has warned ahead of this
week’s meeting of global leaders in
Seoul. In an interview with the FT
Merkel suggested that China must be
persuaded with “facts and bench-
marks” to set a “fair exchange rate”
for the renminbi, rather than be
attacked for its currency policy.
JAPAN’S SKYMARK TO BUY A380 JETS
Airbus’s battle to break into Japan
gained a big lift on Monday when
Skymark, a budget airline based in
Haneda, said it planned to buy four of
the European manufacturer’s A380
superjumbos, with an option for two
more. The order, worth about $2bn at
list prices, is the biggest long-haul
passenger aircraft deal Airbus has
made in years in Japan, where its US
(or cash) GDP is down by about a fifth
since the peak; part of this is due to a
large slump in real output and partly
to a nasty bout of deflation (prices fell
an astonishing 6.6 per cent in the year
to October 2009, though they have
risen since). The debt burden, for the
state as well as individuals, therefore
automatically shot up. Even though
wages have declined (increasing debt
to earnings ratios), the number of
employees has collapsed nearly 13 per
cent. In the UK, that would be akin to
the workforce having fallen by 3.8m,
a depression-style outcome.
Ireland’s first error was to join the
euro; its second was to guarantee all
bank creditors. These two errors have
destroyed the country. Joining the
euro led to an immediate halving in
interest rates and a surge in growth
and inflation – had Ireland retained
an independent monetary policy, its
currency would have soared and it
would have jacked up interest rates.
Plenty of countries have suffered a
property bust – only some have been
Fears see Irish
bond sell-off
EU ECONOMY
▲
BY MATTHEW WEST
IRELAND came under renewed pres-
sure yesterday as investors remained
wary of buying Irish assets after
Germany stood firm on its call for
bondholders to bear a share of the
cost should Dublin need a bailout.
The premium investors demanded
to hold Irish debt over benchmark
German bunds hit new highs extend-
ing a month-long climb that has seen
Irish borrowing costs repeatedly
break records with the yield on Irish
10-year bonds hitting eight per cent
for the first time yesterday.
European Union (EU) economics
commissioner Olli Rehn moved to
reassure investors during a two-day
visit to Ireland saying he had not dis-
cussed any need for an EU bailout,
adding he believed market confi-
rival Boeing has long had a strangle-
hold on the marke
GREEKS RELIEVED AS THREAT OF SNAP
POLL FADES
Greece’s business community
expressed relief after George
Papandreou, the prime minister,
withdrew his threat to call a snap
election in spite of falling support for
his socialist party in local elections.
Mr Papandreou instead interpreted
Sunday’s poll results as a vote of con-
fidence in his harsh austerity policies.
INVESTORS SEEK TRANSPARENCY IN
HEDGE FUNDS
Transparency is the leading concern
investors share about the publicity-
shy $1,800bn global hedge fund
industry, followed by fees and man-
agers’ pay, a report shows. Just half of
the investors polled thought pay
structures in hedge funds were
aligned with the best interests of the
fund, compared with 94 per cent of
managers, the survey shows.
bankrupted as a result. Not all were
euro members, of course, but those
peripheral economies that did join
are all now in terminal crisis.
Andrew Lilico of Policy Exchange,
one of London’s most interesting
economists, has been arguing for
years that Ireland’s dalliance with the
euro would end in disaster. He wrote
an eerily accurate piece in 2001 in the
European Journal. Even though it was
running a budget surplus at the time,
Ireland was forced to hike taxes in a
vain bid to calm down its overheating
economy; it could no longer use mon-
etary policy. After that, the die was
set: encouraged by ultra-low
European interest rates, the banks
lent (recycling vast foreign capital
inflows), house prices boomed, the
construction industry surged and for-
eign workers moved in (reversing
Ireland’s history of net emigration).
Nervousness eventually crept in,
prior to the US sub-prime crisis.
House prices slowed at a time when
oil prices were still rising and the
dence would be restored once the
country published its four-year plan
to cut debt.
“Ireland has not requested the acti-
vation of any European financial
backstops, we have not discussed this
matter this evening. We have dis-
cussed the four-year fiscal plan and
the next year’s budget,” Rehn told a
news conference
The Irish emergency budget will be
published on 7 December with a pre-
Budget report due this week pushed
back to later this month by Irish
finance minister Brian Lenihan.
Finance minister Brian
Lenihan said the
market would have to
wait a little longer for
the pre-Budget report.
BANKERS WARN CLAMPDOWN
THREATENS CITY EXODUS
The clampdown on bonuses and
tougher regulation in Western
nations could trigger a shift in invest-
ment banking activity away from the
City of London and towards Asia, the
chairman of Royal Bank of Scotland
has warned. Speaking during a trip
with George Osborne to Beijing, Sir
Philip Hampton said that a number
of factors were likely to propel whole-
sale banking business east.
DE LA RUE PREPARES TO CUT STAFF AS
CUSTOMERS STAY AWAY
De La Rue is set to cut dozens of jobs
as it is forced to pulp tonnes of high-
quality paper for which it cannot find
a buyer. The troubled banknote pub-
lisher has not received a single order
for almost two months after it called
in the Serious Fraud Office and
accused managers of falsifying tests.
Irish recession commenced. The
European Central Bank – preoccupied
with the rest of the Eurozone – hiked
rates, Irish house prices crashed, cred-
it inflows reversed and banks started
to go sour. Eventually, the rest of the
world entered recession.
The crisis turned into a catastrophe
on 29 September 2008, Lilico argues.
That was when Ireland rendered itself
insolvent, in a ridiculous attempt to
bluff markets, by providing a blanket
guarantee to all bank creditors (not
just depositors). The aim was to
attract capital from the UK but the
guarantee was unaffordable, given
the banks’ vast liabilities; Ireland’s
refusal to allow bondholders to lose
money forced a succession of
bailouts. Ireland thus became a fully-
owned subsidiary of an ECB/German
Treasury joint venture, its independ-
ence a sham. If German taxpayers or
the Irish public ever tire of this
arrangement, bankruptcy will be
inevitable. What a nightmare.
allister.heath@cityam.com
Larry Ellison claims SAP owes Oracle $4bn for software theft
Oracle doubles SAP loss
TECHNOLOGY
▲
BY MATTHEW WEST
ORACLE’s chief executive Larry
Ellison claimed in court yesterday
that SAP’s theft of its software cost
his company $4bn (£2.4bn), doubling
his previous estimate.
But Ellison failed to bring written
evidence to support his testimony.
SAP lawyers immediately chal-
lenged Ellison to back up the new fig-
ure, but Ellison said he could not cite
documentation proving his compa-
IMMIGRATION CAP HURTS GROWING
COMPANIES
Fast-growing small businesses remain
handicapped by the temporary cap on
hiring migrants from non-EU compa-
nies despite a series of changes to the
scheme. The Government has
responded to business criticism of the
cap last week by confirming that
“intra-company transfers” within
international companies would not
count.
GUNMEN ATTACK AFREN OIL RIG OFF
NIGERIA
Gunmen have attacked an oil-rig off
the coast of Nigeria belonging to
Afren, the London-listed oil explo-
ration company. Five crew members
were kidnapped and a further two
injured in the incident Afren’s shares
fell amid concerns the attack, would
shatter an amnesty brokered last year
by the country’s president.
CITYA.M. 9 NOVEMBER 2010
NEWS | IN BRIEF
Ex-Lloyds boss is UK ambassador
Former Lloyds chairman Sir Victor
Blank – who oversaw the bank’s trou-
bled merger with HBOS – is to be made
a UK business ambassador. Sir Victor is
among 32 people due to be appointed,
including Jimmy Choo co-founder
Tamara Mellon and former Hong Kong
governor Chris Patten. Business ambas-
sadors are unpaid – and use their con-
tacts and experience to promote the UK
in overseas markets. Prime Minister
David Cameron will confirm the roles as
he arrives in China today. POLITICS: P22
Morgan Stanley sues Peak Ridge
Morgan Stanley yesterday sued Peak
Ridge Capital Group's commodities
hedge fund, alleging that the fund failed
to cover more than $40m in losses
stemming from bad bets on natural gas.
Morgan Stanley contends it suffered the
losses in connection with the Peak Ridge
Commodities Volatility Master Fund,
after Peak Ridge failed to maintain
proper margin requirements and went
into default. The lawsuit, filed in the US,
said Morgan Stanley had tripled the
margin requirements for Peak Ridge
over just 10 months.
Picture: REUTERS
ny’s claim of the cost of lost business.
German-based SAP has said it owes
Oracle only tens of millions of dollars.
Ellison also failed to back up his
claim that Hewlett-Packard’s new
chief executive, Leo Apotheker, knew
of the theft while he was in charge of
SAP and did nothing about it until
Oracle sued. The two software compa-
nies, which together dominate the
business software market, are in
court to determine the amount of
damages for the software theft which
SAP has already accepted liability for.
HONDA LOOKS TO GRASS TO RESOLVE
ITS POWER NEEDS
Honda Motor Co. believes a fast-grow-
ing African grass may be the solution
for fueling an as-yet-unbuilt power
station at its car factory near
Swindon. The plan to use miscant-
hus, a low-maintenance grass which
is already burned alongside coal in
some UK power stations, is driven by
environmental concerns as well as
uncertainty over UK power supplies.
EU TO FINE AIRLINES FOR CARGO
CARTEL
The European Commission is likely to
fine more than 10 airlines on
Tuesday, over an alleged global cartel
in air-freight transport that has
dragged on for years. The commission
could fine the airlines hundreds of
millions of euros for colluding in set-
ting surcharges, mainly a fuel sur-
charge, for their cargo operations
CITYA.M. 9 NOVEMBER 2010
BUSH TELLS IT HIS WAY
Retail sales
failed to pick “BE SIMPLER THAN
WHAT COULD
up in October
▲
RETAIL
BY MATTHEW WEST
RETAIL sales failed to revive in
October as weak consumer confi-
dence in the lead up to the compre-
hensive spending review undermined
growth the British Retail Consortium
(BRC) will say today.
The latest figures show total retail
sales grew by 2.4 per cent year-on-year
in October but this compared to
growth of 5.9 per cent for the same
period the year before.
The three-month average sales fig-
ure remained unchanged with food
sales growth at four per cent for the
year and non-food sales growth at 1.4
per cent.
The BRC says its consumer confi-
dence survey showed 84 per cent of
consumers think the economy is still
in recession, while 26 per cent say
they have no spare cash.
It will say growth in food sales last
month was the result of rising com-
modity prices and a modest increase
in overall sales. Meanwhile, continu-
ing higher inflation meant the mod-
est rise in non-food sales in the
month was a real-terms decrease.
Tesco plans big Ambac files for
move into Asia bankruptcy
▲
RETAIL
TESCO is poised to make a $1bn
swoop on Carrefour’s supermarket
networks in Malaysia, Singapore and
Thailand after the French group’s
decision to withdraw from South-East
Asia. Carrefour’s planned exit —
reportedly to pursue areas where it
has market leadership — has drawn a
flock of potential buyers as the
process enters the second round of
bidding. Although local bidders are
expected to emerge in all three coun-
tries, Tesco has emerged as probably
the strongest likely bidder. Tesco is
thought to be planning offers for all
three of the store portfolios.
News 3
FORMER US
AOL moves closer
to a bid for Yahoo
President George
W. Bush claimed
that information
obtained from ter-
rorist suspects
through “water-
boarding” prevent-
ed terrorist attacks Armstrong is believed to be keen on a
▲
TECHNOLOGY
on London and BY MATTHEW WEST deal believing he can do a better job
saved British lives. of running a combined company.
His memoirs are AMERICA Online (AOL) has appointed Last month City A.M. reported that
released today in Bank of America Merrill Lynch to Yahoo was on alert for a possible
the US. review its strategic options including £13bn take over approach from AOL
a potential takeover of its biggest rival and had retained the services of
Picture: Yahoo. Goldman Sachs to advise it as bid
REUTERS Any merger talks between the two speculation increased.
companies are thought to be at a very Yahoo became a potential target
early stage and still may not happen. after lacklustre sales revealed it had
However, AOL’s chief executive Tim lost more ground to Google.
SPREADS?
”
Clothing sales saw a decline for the
first time in almost a year, while
footwear sales slowed sharply after a
good previous month.
Homeware sales remained tough
with consumers looking for deals,
especially for larger purchases while
uncertainty over job cuts and income
prospects ensured many gave priority
NOTHING.
to essential or replacement items
over one of luxuries. Non-store sales,
including internet, phone and mail
order sales slowed by seven per cent,
down to 12.8 per cent in October from
19.1 per cent in September.
Stephen Robertson, director gener-
al of the BRC, said: “Tough trading
conditions are unlikely to change in
the coming months. Retailers will be
hoping those concerns are at least
put on hold for Christmas.”
Helen Dickinson, head of retail at
KPMG, said the slight increase on
September’s figures reflected increas-
es in shop prices rather than higher
sales.
“Most retailers are not expecting a
record-breaking Christmas this year
but will be hoping that demand picks
up a bit over the coming weeks,” she
said.
INSURANCE
US bond insurer Ambac Financial
Group filed for Chapter 11 bankrupt-
cy yesterday citing liabilities of
$1.68bn (£1.04bn). Its shares plum-
meted in after-hours trading to $0.20
down from $0.52 at their close on the
Wall Street. Ambac failed after chas-
ing higher profits by insuring riskier
debt. The move backfired when the
housing market crashed and credit
markets tightened. Ambac said it was
unable to raise capital and failed to
reach an agreement with senior
bondholders that would have allowed
it to restructure through a prepack-
aged bankruptcy deal.
 Your nearest tax haven
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Extra Urban 51.4-57.6 (5.5-4.9), Combined 41.5-47.9 (6.8-5.9). The official CO2 range is 159-139g/km. *The VAT equivalent reduction is
calculated on the basic price of the car prior to adding VAT and delivery charges. The VAT equivalent reduction is not available on vehicle options or accessories. This offer applies to new vehicles ordered and registered by
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CITYA.M. 9 NOVEMBER 2010 News 5

Rolls-Royce plays down fears

over Airbus as finally speaks
which saw its Trent 1000 engine A380s, which have been grounded

▲
TRANSPORT
BY MATTHEW WEST
ROLLS-Royce said yesterday it had
made progress in discovering the
fault that caused one of its engines to
fail on a Qantas flight from
Singapore to Sydney last week, saying
that the failure was specific to its
Trent 900 engine.
Rolls added a separate incident at
its test centre in Derby during August
explode was unconnected. The com-
pany’s first statement since last week
when a Qantas A380 superjumbo was
forced to make an emergency landing
in Singapore saw the shares bounce,
closing 2.4 per cent higher at 605p.
Earlier yesterday Qantas’ chief exec-
utive, Alan Joyce, said the airline’s
own investigation had discovered oil
leaks on three of the Trent 900
engines among its fleet of six Airbus
since last week.
A source close to Rolls said the firm
had brought together experts from
around the world to try to under-
stand what had caused the incident.
“The focus has been to understand
the cause and the appropriate actions
to take and the company has been
getting on with that by working with
its customers and the authorities,”
the source added. COMMENT: P20

Gartmore has put itself up for sale after the resignation of star fund manager Roger Guy

Gartmore on Exchange Traded Funds

the block as
star resigns
while Aberdeen boss Martin Gilbert is
▲

FUND MANAGEMENT
BY VICTORIA BATES
GARTMORE yesterday said its star
manager Roger Guy had resigned and
the firm put itself up for sale, firing
the starting gun for rivals to cut a
deal before heavy outflows damage
the group irrevocably.
Goldman Sachs has been appoint-
ed to examine the options for the
firm, which chief executive Jeffrey
Meyer said would include “the possi-
bility of a sale or merger”.
But the departure of Guy could
potentially prove catastrophic, since
his team manages 17 per cent of the
firm’s £20.1bn assets under manage-
ment and has generated almost half
of performance fees in recent years.
Initial soundings signalled a lack-
lustre attitude to a deal among the
most obvious potential acquirers.
Henderson may run the rule over
Gartmore, though chief executive
Andrew Formica has indicated he is
keener on making an overseas pur-
chase after buying New Star. A
Schroders deal is unlikely given
Gartmore’s damaged brand name,
TODD LELAND,
GOLDMAN SACHS
CO-HEAD OF
FINANCIAL
INSTITUTIONS
GROUP IN EUROPE
WHEN times are tough, it’s best to call
in the big guns – a mantra Gartmore’s
chief executive Jeffrey Meyer has cer-
tainly taken to heart when it comes to
putting the group on the block.
Goldman Sachs is the bank which
has been drafted in to look at
Gartmore’s options, with its team led
by veteran banker Todd Leland.
Leland previously worked for
Goldman in the US for many years,
advising on hefty deals such as
Wachovia’s $6.9bn acquisition of AG
known to be averse to the idea of
making an acquisition.
Ex-private equity owner Hellman &
LOW
Friedman, which still holds a sizeable CO
stake, was also mentioned as a possi- ST
ble contender, as were overseas buy-
ers such as Bank of New York Mellon.
Gartmore said it will now imple-
ment a strict cost-cutting drive and
issue new equity representing 15 per
cent of its existing share capital, in
order to retain and incentivise staff.
Guy’s responsibilities will pass to
John Bennett, combining the firm’s
European large cap and all-cap teams
High quality at a
into a single European equities team.
The firm’s woes were compounded
by the further resignations of chief
surprisingly low price
investment officer Dominic Rossi,
poached by rival Fidelity, and senior
portfolio manager Darrell O’Dea.
The news comes after Gartmore was
rocked earlier this year by the exit of
star manager Guillaume Rambourg
amid investigations into his conduct.
Gartmore’s shares lost 15 per cent
yesterday to close at 107p, having
already lost over half their value since If you take a look at our Exchange Traded Funds, you’d be surprised at how
the company floated late last year.
competitive they are on price. But it isn’t just about price. We aim to deliver a very
high level of quality. Perhaps now is the time to take a fresh look at your ETF provider.
Edwards, before moving to the UK a
few years ago. Choose with confidence, choose ETFs from HSBC.
His initiation into the corporate
finance world in the UK came almost Remember, investment values can fall as well as rise due to stockmarket and currency
immediately, when he was one of the exchange rate movements. Investors may not get back the amount originally invested.
team of Goldman heavy-hitters
appointed by the Treasury to sort out
the headache of Northern Rock in late
2007 and early 2008. He also worked
on HSBC’s mammoth £12.5bn rights
issue last year.
Joining him on the Gartmore team
is Goldman executive director John
Brennan, who worked for Investec on
its acquisition of the outstanding HSBC ETFs plc is an investment company with variable capital and segregated liability between sub-funds, incorporated in Ireland as a
shares in Rensburg Sheppards earlier public limited company, and is authorised by the Financial Regulator. Investors and potential investors should read the full Prospectus, and
relevant Simplified Prospectus and Supplement for a full list of risk warnings prior to making a decision to invest. These can be obtained
this year. free of charge from HSBC Global Asset Management (UK) Limited, 8 Canada Square, London, E14 5HQ, UK. UK based investors in
Brennan was also on the Goldman HSBC ETFs plc are advised that they may not be afforded some of the protections conveyed by the Financial Services and Markets
team which advised Irish Nationwide Act (2000). Approved for issue in the United Kingdom by HSBC Global Asset Management (UK) Limited. Authorised and regulated by
during its merger talks with fellow the Financial Services Authority. © HSBC Global Asset Management (UK) Limited 2010. All rights reserved. 19222/1010 FP10-1627
Irish building society EBS at the turn
of this year.
CITYA.M. 9 NOVEMBER 2010
Commerzbank
misses target
as losses leap
▲
BANKING
BY STEVE DINNEEN
GERMANY’S second-biggest lender
Commerzbank missed forecasts for
third-quarter profit yesterday as losses
on commercial mortgages and the
costs of integrating Dresdner Bank off-
set strong corporate lending.
Third-quarter net profit of €113m
(£97.5m) was below the €164m average
estimate in a analyst’s poll, though
Germany’s economic rebound turned
it round from a loss of more than €1bn
a year ago.
Banks around the world have post-
ed mixed third-quarter results, with
large profits at JP Morgan and
Goldman Sachs contrasting with
losses at Deutsche Bank and Bank of
America.
Commerzbank saw a more benign
risk environment than a year ago,
leading to lower loan-loss provisions.
Germany has emerged from its
deepest post-war recession and is stag-
ing in a strong export-fuelled recovery,
which analysts say remains on track
despite a slump in September industry
orders.
“We continue to see Commerzbank
as the restructuring story in the
European banking market which
Positives among rubble
AFTER losing more than €1bn in
the third quarter last year,
Commerzbank has limped back
into the black this time around,
posting net profit of €113m – well
below most analysts estimates.
But despite disappointing expec-
tations, there are positives among
the rubble. Commerzbank avoided
posting another loss – as in the case
of rival Deutsche Bank. But more
importantly, it is in a good position
moving forward as the German
economy continues to gain pace.
Much of Commerzbank’s prob-
lems stemmed from losses on com-
mercial mortgages. These losses
should ease as fewer clients run into
News 7
Allen & Overy sees revenues
rise as Asian business grows
contributed to revenue of £526m up of its major competitors.
▲
LEGAL
BY MATTHEW WEST from £511m a year earlier. “This means we are perfectly posi-
“Our strategy of investing in new tioned to take advantage of the shift
CITY law firm Allen & Overy (A&O) markets has helped deliver steady in the balance of international trade
Commerzbank CEO said yesterday its sales increased growth, which reflects the diversified and capital flows from the west to the
Martin Blessing three per cent in the six months to 31 nature of our business,” said A&O’s east,” Dejonghe added.
revealed it is still October with over half of its turnover managing partner Wim Dejonghe. A&O has posted revenues of
incurring costs as it generated outside of the UK. Dejonghe said the firm’s new £1.05bn for the full 2009-10 financial
tries to integrate The Magic Circle firm said it saw offices in Australia, Indonesia and year – a drop of four per cent.
rival Dresdner Bank strong performances across its Asia- Qatar were showing positive early The firm attributed the fall in sales
Picture: REUTERS Pacific region. progress, adding the law firm now to the continued upheaval in the
Moscow and New York offices all had the largest global network of any global economy.
Downbeat corn report
puts commodities in
a) Sigh, and expect coleslaw with
your six piece chicken combo
from now on.
should benefit most from the recovery
of the German economy,” said Equinet
analyst Philipp Haessler, who has an the spotlight. Do you: b) Go long on wheat and
“accumulate” rating on the stock. follow the trend.
Commerzbank capitalised on
strong business in the third quarter at
its Mittelstandsbank unit, which focus-
es on lending to medium-sized
German companies. Yet the lender
provided a 2010 outlook below market
expectations, saying it expects net
profit of at least €1bn, against the aver-
age analyst estimate of €1.3bn.
“The outlook for 2010 is rather dis-
appointing in our view,” said DZ Bank
analyst Matthias Duerr. “Compared
with a net profit after nine months of
€1.17bn, this could suggest a loss in the
fourth quarter in our view, which
clearly would be disappointing.”
ANALYSIS l Commerzbank
7.20 €
6.50
8 Nov
6.80
6.40
6.00
16 Aug 6 Sep 27 Sep 18 Oct
financial difficulties.
It’s troublesome integration of
loss-making Dresdner Bank last year
has also put pressure on income,
with operating profit at the unit
dropping 40 per cent in the quarter. Spread betting and CFD trading carry a high level of risk to your capital and
you can lose more than your initial deposit. These trading products may not
This should ease in the coming be suitable for all investors so seek independent advice if necessary. Nothing
months. in this advert should be construed as investment advice.
With the bank’s stock down more
than four per cent this may seem a
good time to buy but, with specula-
tion mounting that it may post a
fourth-quarter loss, it may fall fur-
ther before it mounts a recovery. Capital Spreads is a trading name of London Capital Group Ltd, which is authorised and regulated by the Financial Services Authority and a
member of the London Stock Exchange. Registered address: 12 Appold St, London, EC2A 2AW. Registered number: 3218125.
BOTTOMLINE
Analysis by Steve Dinneen
 8 News
Woodside put
in play as Shell
sells big stake
▲
ENERGY
BY HARRY BANKS
ROYAL Dutch Shell yesterday said it
planned to sell almost a third of its 34
per cent stake in Woodside Petroleum
for $3.3bn (£2bn), prompting predic-
tions Australia’s largest oil and gas
firm could become a bid target.
The Anglo-Dutch oil major said it
would retain a 24.27 per cent stake in
Woodside for at least a year, except in
the case of a takeover bid for
Woodside, or that Shell decided to sell
a large chunk to a strategic buyer.
A source familiar with the matter
said the 10 per cent stake being sold on
was being marketed to institutions in
Australia and internationally. Shell
said investment bank UBS had under-
written the sale at A$42.23 a share.
Shell, which tried to take over
Woodside in 2000 but which was
blocked by the Australian government,
said its development of a large portfo-
lio of interests in Australia showed it
no longer needed to use Woodside as a
vehicle for investment there.
“We will increasingly focus our
investment in Australia through direct
interests in assets and joint ventures,
rather than indirect stakes,” chief exec-
utive Peter Voser said.
The deal takes Shell closer to its goal
of raising $7-8bn by the end of 2011, as
it seeks to reduce debt incurred to pay
for heavy investments in recent years.
“This disposal programme is seen as
a way of upgrading the portfolio and
repairing the balance sheet,” Peter
Hitchens, analyst at Panmure Gordon
said in a note to clients.
Investment banks said last week
Woodside was being eyed as a poten-
tial takeover target with its long-serv-
ing chief executive, Don Voelte, due to
step down in the second half of 2011,
potentially leaving the company
exposed to predators.
Woodside shares rose last week on
speculation Australia and London-list-
ed miner BHP Billiton may take a look
if its $39bn bid for Canada’s Potash col-
lapsed. BHP, which looked at merging
with Woodside in 2001, declined com-
ment on a possible bid yesterday.
CITYA.M. 9 NOVEMBER 2010
Statoil confirms
North Sea field
now on stream
ENERGY
▲
THE North Sea Gjoea field has come
on stream, opening the way for more
oil and gas activities in the northern
part of the Norwegian North Sea, ener-
gy company Statoil said yesterday.
The Gjoea field, which holds recov-
erable reserves of 40bn cubic metres
of gas and 82m barrels of oil and con-
densate, is expected to become a cen-
tre to which other smaller, satellite
fields could be tied.
Oil and gas discoveries off Norway
are generally smaller than in past
decades, increasing the need for fields
to be tied-in to others. The oil output of
the world’s fifth-largest exporter
peaked in 2001, It exported 2.13m of
barrels of oil per day in 2009, down 31
per cent from its peak as many oil-
fields mature. “We envisage that [the]
facilities can make this field a hub for
ANALYSIS l Shell developments in this area,” said
2,200
Oeystein Michelsen, Statoil’s head of
p 2058.50 exploration and production in
8 Nov Norway.
2,000 Gjoea, which is expected to produce
oil and gas for at least 15 years, is com-
1,800
ing on stream just as gas demand in
Europe enters its peak winter period.
In October, British energy network
9 Aug 8 Sep 7 Oct 5 Nov
operator National Grid increased its
UK winter gas supply forecast from
Norway because of the approaching
Shell boss Peter Voser is looking to make direct investments in Australia Picture: REUTERS start-up of the Gjoea field.
 The Capitalist
10 CITYA.M. 9 NOVEMBER 2010
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com

CURSE OF “It wasn’t all

THE AWARD
STRIKES
DOWN ROK
HERE’S truly a shining example of that
well-known Achilles heel among company
directors – the curse of the award.
Garvis Snook, the chief executive of
building maintenance firm Rok, yesterday
shocked investors by placing the firm sud-
denly into administration – but it wasn’t
all that long ago that he was hopping up
to collect gleaming gongs for his work at
the company on almost a monthly basis.
Three years ago, Snook won the chief
executive of the year category at the
Quoted Company Awards, after which the
company proudly boasted on its website
that “at the time [Snook] joined, the share
price was 72p. The night he collected the
award it was £9.18”. (Which baffles The
Capitalist a little, since a quick look at the
interactive graphs on that same company
website shows that the highest point the
stock price reached – in 2007 – only just
touched £2.50. Either way, its last close
was 18.5p.)
Not long after, Snook was back on the
podium at the 2008 Ernst & Young UK
Entrepreneur of the Year awards, scoop-
ing the top spot in the real estate and
property services category.
“As a forward-thinking company we
Garvis Snook, above, has now put Rok into administration
have adjusted our focus to reflect the
changing market, which has created sus-
tainable business for the 21st century,” he
said.
“The recent launch of our new business
stream, Rok Plumbing Heating and
Electrical, is indicative of this approach…”
That’s the same plumbing and heating
division, of course, which recently
sparked a profit warning because of “seri-
ous failings in financial controls” – the
only inkling investors had of anything
going wrong at the firm.
LIKE FATHER, LIKE SON
Quote of the week, courtesy of Labour
party leader Ed Miliband, who yesterday
that long ago
that Rok’s
Garvis Snook
was hopping
up to collect
gleaming
gongs for his
work”
became a father for the second time.
“He is absolutely gorgeous,” Red Ed
gushed to reporters outside the hospital.
“He looks a bit like me…”
WINTER SUN
Here’s a reason to be cheerful about the
situation in the Middle East – apparently,
things in Iraq have improved to such an
extent that tourism there is booming.
Never one to pass up such an opportuni-
ty, the insurance industry is hot on the
heels of that little nugget. In pops an
email from AAIB Insurance Brokers, tout-
ing its latest product – comprehensive
travel insurance to Iraq from anywhere in
the world, including the usual personal
accident, emergency medical and lost bag-
gage cover, as well as evacuation and repa-
triation expenses… and “essential war and
terrorism provision”.
Pack your bags, folks.
CITY GOES POPPY MAD
Not long to go now until Remembrance
Day, and an inspirational tale from Aon
Insurance’s Ben Hancock, who’s responsi-
ble for getting City workers to dig deeper
than ever before into their pockets for the
cause.
Hancock left the army five years ago to
join the City and, since then, has
brought along his “old muckers”
from the Forces for one day a year
to help sell poppies in the area. Last
year set a record of £60,000 in a day – but
last Thursday, you, dear readers, positively
excelled yourselves. Hancock tells me he
was “blown away” by the generosity
shown, smashing his target to raise
£212,000 in a single day.
City A.M. proudly displays a poppy on its
front page, and urges you to keep buying!
CITYA.M. 9 NOVEMBER 2010 News 11

COSTAIN SLASHES PENSION DEFICIT

Bovis maintains house sales
but says market is still tough
above 2009 levels, when Bovis sold to expand its operations and we

▲
PROPERTY
BY MARION DAKERS
HOUSEBUILDER Bovis said yesterday
its sales rate rose 14 per cent in the
last four months compared to a year
ago, and that it expects to see further
growth at the start of 2011.
The group has sold 1,900 homes in
the year so far, around 1,600 of which
were private homes and the rest
social housing. Total sales are slightly
1,800 homes.
However, a reduced number of
newly built sites meant Bovis’ sales
per site rose 14 per cent to 0.42 homes
per week in the period.
Chief executive David Ritchie said
during a conference call that the aver-
age sale price of £160,000 was ahead
of Bovis’ forecasts.
“Market conditions remain chal-
lenging, but the group is well placed
believe the medium term prospects
for the group are strong,” Ritchie
added. The group held £14m in cash
at the end of October, thanks to
around £106m of land cash payments
throughout 2010.
Bovis swung back into profit dur-
ing the first half of the year after sales
were badly hit during the recession.
Bovis’ shares closed 1.1 per cent
higher at 354p yesterday.

CONSTRUCTION and engineering group Costain was boosted yesterday after slashing its
pension deficit by £22m after transferring its interest in six PFI investments into its pen-
sion scheme. Chief executive Andrew Wyllie (above) said the valuation realised on the
investments was higher than expected.

Rok calls in
administrator
of wrongdoing.
▲

PROPERTY
BY MARION DAKERS
SOCIAL housing company Rok stunned
investors yesterday by filing for admin-
istration less than two months after
management declared its confidence
in the business.
The Essex-based firm, which
employs 3,800 people, released a terse
statement to the stock market yester-
day and PricewaterhouseCooper were
later appointed as administrator.
The firm issued a profit warning in
August, but had recently signed con-
tracts with Tesco and Unilever.
Rok said in September that it “con-
tinues to have confidence that the
Company will meet market expecta-
tions” after investigating accounting
problems in its plumbing division that
cleared finance director Ashley Martin
Mike Jervis, Rok’s administrator, told
City A.M.: “We have got people at all the
sites of the business and have been in
communication with all employees.”
Jervis added that there has been a lot
of interest from “large players, many of
whom are competitors” in buying up
the viable parts of Rok.
Mears chairman Bob Holt, who
bought up contracts from collapsed
rival Connaught in September, told City
A.M.: “We are definitely interested in
any social housing business. We have
spoken with PwC.”
Social housing peer Kinetics also
expressed an interest, but chief execu-
tive Chris Cheshire warned: “The dan-
ger with Rok is that they have been
under-bidding for contracts for some
time. Some contracts might not be
worth buying once we’ve taken a look.”

MIKE JERVIS He is also well known for helping to

PWC
MIKE Jervis, Rob Hunt, Robert Lewis
and Jeremy Webb have been appoint-
ed as joint administrators for Rok. The
quartet from PricewaterhouseCooper
has a long collective history of wind-
ing up fallen giants in the City and
across the pond.
Jervis has spent the past two years
working on the unwinding of the
Lehman Brothers business alongside
Tony Lomas, Steven Pearson and Dan
Schwarzmann, which is expected to
take at least a decade to untangle.
sort out Enron’s UK affairs when it
went under in 2001.
He has spent around 20 years at
PwC, with a break in the late 1990s
for a stint at Grant Thornton, and is a
fixture in the business recovery team
in London.
If dealing with the mess left by
successive financial crises wasn’t
enough, Jervis also spends time
coaching and watching football and
rugby with his four sons.
Rob Hunt heads PwC’s business
recovery team in Birmingham, and
was recently kept busy acting as liq-
uidator for budget holiday chain
Goldtrail alongside Jeremy Webb.
Robert Lewis’ latest work includes
helping to wind up MHL Realisations
earlier this year and workwear group
Alexandra in 2008.
 12 Insurance News
Hiscox warns
on impact of
mild storms
▲
INSURANCE
BY JULIET SAMUEL
BERMUDA-based insurer Hiscox saw
premiums remain largely flat in its
third quarter trading update but
warned that pricing pressure later
this year will come to bear, particu-
larly in the US.
The firm yesterday blamed a lack
of severe summer hurricanes for the
likelihood of hot competition during
the January policy renewal period.
In years with a large number of
hurricanes, less well-financed insur-
ers are driven out of the market due
to pay-outs to policyholders, but in
milder years they remain capitalised
and compete on pricing.
Overall, written premiums shrank
very slightly by 0.6 per cent to
£1.2bn, with Hiscox London seeing
the largest drop: premiums fell 13.9
per cent to £495.8m.
Third-quarter investment returns
were strong at 3.2 per cent, with
Hiscox citing the prospect of low
interest rates into next year as driv-
ing up corporate bonds and equities.
However, the firm plans to reduce its
exposure to non-government debt
and is monitoring its government
bonds closely.
Analysts reacted largely positively:
Numis’ Nick Johnson maintains a
“hold” rating but suggests that
Hiscox’s current share price around
350p could be a good buying oppor-
tunity. And finnCap’s Charles Coyne
recommends a “buy”, saying that
the firm is successfully reducing its
concentration in more difficult
areas such as US property.
Sales for the first nine months of
2010 were £1.2bn, broadly
unchanged on the period last year,
the company said.
FAST FACTS | HISCOX
● Hiscox provides home insurance for 40,000
UK homes and other insurance for over 100,000
small and medium-sized UK businesses.
● Originally based at Lloyds, it has grown into a
FTSE 250 firm with a presence in 13 countries.
CITYA.M. 9 NOVEMBER 2010
Lancashire to
Hiscox chief execu-
tive Bronek
Masojada has seen
flat premiums
growth during the
third quarter. return £213m
in dividends
INSURANCE
▲
INSURER Lancashire yesterday blew
ANALYST VIEWS: IS HISCOX A GOOD BUY GIVEN expectations out of the water with
its third-quarter pre-tax profit of
ITS THIRD- QUARTER STATEMENT? Interviews by Juliet Samuel $107.6m (£67m) versus a consensus
forecast of $82m.
On the back of its success it has
JOY FERNEYHOUGH | EXECUTION NOBLE
decided to return £213m to investors
“
in a special 86p per share dividend,
making it the first major non-life
Hiscox has already stated it intends to reduce capac- insurance firm in London this year
to return capital to shareholders.
ity next year in order to be disciplined on price and with the Most insurance companies have
”
high net worth business continuing to thrive we continue to instead been sitting on growing piles
believe its stock remains the cleanest ‘buy’ story. of cash as they mull their spending
options. But in addition to issuing
the dividend, Lancashire says it has
CHARLES COYNE | FINNCAP been buying back shares. Its stock
“
has risen 23 per cent since 1 June.
The insurance industry is in a peri-
An investment return of 3.2 per cent may not look od of intense competition due to a
build-up of capital sparking aggres-
spectacular but it is acceptable in the insurance segment sive pricing pressure.
”
where returns are de minimis [minimal] in the bond market. However, Lancashire’s third-quar-
Hiscox may cash in its chips here. ter gross written premiums growth
also confounded expectations, com-
ing in at $135m against $129m con-
NICK JOHNSON | NUMIS sensus. This was, however, a decline
“
on last year of 2.8 per cent.
Investment returns were two per
The shares have recently slipped back towards the cent versus 1.6 per cent last year. The
bottom of the 12-month trading range and now trade at a firm has also named its new chief
financial officer as Elaine Whelan.
”
price-to-net-asset ratio of 1.13 times. We see this as good Lancashire shares closed up 1.4 per
value for a high-quality name such as Hiscox. cent at 586p.
 ”With Zurich’s help we’ve
prevented over 24,000 lost
work days. Because, like us,
they believe one injured
colleague is one too many.”
Robert Milligan, TRW Automotive,
Director of Risk Management

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 14 Consumer News
Asos eyes international
sales to fuel new growth
▲
RETAIL
BY JOHN DUNNE
ONLINE retailer Asos is pinning its
hopes on overseas expansion as it
announced a 59 per cent surge in
profit yesterday.
The company’s profit boost repre-
sented a £7m rise in the six months
to September.
Asos, which offers cut price fash-
ions aimed at 18-34 year-olds, saw a 50
per cent rise in retail sales to £131m
over the period.
Chief executive Nick Robertson
told City A.M. the company was seeing
a massive rise in international sale,
with Australia and Germany among
the big climbers.
He said: “Everybody around the
world loves the variety offered by
Oxford Street. That’s what we are
offering via the web. Although we are
obviously interested in increasing
sales in the UK, we recognise that our
growth is being driven overseas.”
CITYA.M. 9 NOVEMBER 2010
International retail sales soared
from £22.3m to £49m in the period.
They now represent 37 per cent of
total retail sales.
That rose from 25 per cent for the
same period last year. Asos has
launched French and German lan-
guage websites, which followed a US
site launch in September.
Robertson added: “We have had a
very busy period and we are on target
for the year. We are re-investing a lot
to continue our progress.”
Nick Robertson is increasingly steering Asos towards overseas markets. Picture: PA
.com
CITYA.M. 9 NOVEMBER 2010 Consumer News 15

AURORA SALES LIFTED BY NEW STORES

Threshers fails in sell-off as
creditors left high and dry
The other 1,000 were returned to total of £41m when it collapsed.

▲
RETAIL
BY JOHN DUNNE
FEWER than a third of Threshers
stores have reopened as off-licences
after the chain folded last year,
administrators revealed yesterday.
Only 400 of the firm’s 1,400 stores
were sold, with most being bought by
small off-licence chains, said account-
ancy firm KPMG which is still work-
ing on the administration.
landlords.
Off-licences have been weakened by
competition from supermarkets who,
because of their buying power, can
afford to cut alcohol prices.
First Quench Retailing, which
owned the Threshers, Wine Rack,
Victoria Wine, Bottoms Up and
Haddows fascia, went into adminis-
tration with the loss of 6,300 jobs.
Diageo, one of the creditors, lost a
Some of First Quench’s brand
names will trade on.
The Threshers, Bottoms Up, The
Local and Victoria Wine brands were
sold to a small property and discount
stores business, SEP Properties, in the
West Midlands.
While The Wine Rack name was
bought by London-based Venus Wine
and Spirits and its shops still trade on
high streets in the South East.

FASHION company Aurora, which includes in its stable Coast, Karen Millen and
Warehouse, yesterday announced a five per cent increase in sales for the first half of the
year to 31 July. Global retail sales hit £362m, while online sales soared by 34 per cent.
A total of 37 new shops were opened over the period. Picture: Micha Theiner/City A.M.

Chinese fuel
shops boost
said: “There are 50m Chinese shop-
▲

RETAIL
BY JOHN DUNNE
LONDON saw a 167 per cent increase
in Chinese shoppers in October, com-
pared to the same month last year.
The rise has been fuelled by shop-
pers snapping up designer goods and
a Chinese holiday which saw more
holidaymakers than ever from the
country.
As well as the rise in customers the
average spend was up 37 per cent,
according to the figures from finan-
cial services company Global Blue.
Harrods and Selfridges are among
the most popular shopping venues
for the Chinese shoppers, the poll
revealed.
Meanwhile Hermès, Chanel,
Cartier, and Louis Vuitton are the
brands which are flying off the
shelves.
Nigel Dasler, vice president of
financial services firm Global Blue,
pers travelling outside China now
and this is set to double by 2020 to
100m as air capacity grows and visa
restrictions potentially relax.
“Retailers the world over are begin-
ning to realise the growing value of
the brand-conscious Chinese traveller
and are engaging new and innovative
ways to reach out to them.”
Harrods said it was providing spe-
cial services for Chinese tourist
groups hitting the shop.
A spokesman said: “We are also
continually tailoring our service
offering by working closely with
Chinese tour operators to accommo-
date pre-booked groups, as well as by
providing bespoke services.”
Meanwhile, in a separate report
business advisory firm Deloitte pre-
dicted that the value of retail spend-
ing in the UK will increase by one per
cent year-on-year this Christmas, to
just over £37bn.

John Lewis to launch its xmas

ad campaign with the X Factor
the perfect gift and features a range
▲

RETAIL
JOHN Lewis will launch its Christmas
TV advertising campaign on
Saturday during an ad break on the X
Factor.
The new campaign – which will be
set to a cover of Elton John’s “Your
Song” – was created by advertising
agency Adam & Eve.
The 60-second advertisement
focuses on the care needed to find
of products including kitchen sets
and toys and wrapping them attrac-
tively.
John Lewis marketing manager
Craig Inglis said: “Last year we
focused on the joy of receiving pres-
ents so this year we felt it was impor-
tant to show the emotions we all
experience at Christmas when choos-
ing and giving gifts to others in this
campaign.”
 16 News
Gala Coral changes board
as new chief is appointed
▲
LEISURE
BY HARRY BANKS
CASINO group Gala Coral yesterday
announced the appointment of for-
mer Marks & Spencer director Carl
Leaver as its new chief executive, to
replace interim CEO and chairman
Neil Goulden, who is leaving the com-
pany.
Leaver was the high street retailer’s
Rob Templeman (left) and Carl Leaver are taking over at the top of Gala Coral director of international, home and
direct businesses until 2009, having
previously worked for De Vere and
Whitbread. The appointment came as
Goulden also stepped aside as chair-
man. He is being replaced by retail
veteran Rob Templeman, the
Debenhams chief executive who was
previously at Halfords and Homebase.
In a note to clients, Seymour Pierce
said: “Given recent speculation that
he was leaving Debenhams, the fact
that this is a non-executive role may
reassure and confirm Mr
Templeman’s commitment to
Debenhams.
The appointments will bring some
much needed stability to Gala Coral
after a period which has also includ-
ed a financial restructuring. The com-
pany was acquired in January by a
consortium of private equity groups
including Apollo, Cerberus, Park
Square and York Capital
Management, which finished restruc-
turing its £2.5bn debt during the
summer – including a £200m cash
injection from its new owners.
Goulden took over the reins as
CITYA.M. 9 NOVEMBER 2010
interim chief executive abruptly in
July when Dominic Harrison
announced was leaving the group
after six years to “seek new career
opportunities”. Leaver’s arrival
means all three of the UK’s leading
bookmakers – Gala Coral, Ladbrokes
and William Hill – have changed
chief executive in the past two years.
Goulden, who is being retained by
the company in a consultancy role for
the next three years, said: “I feel the
time is now right to step down from
the group. Having successfully led the
group through its recent financial
restructuring and helped to recruit a
top-notch Chairman and CEO to work
alongside our CFO, Gary Hughes, I
know that I am leaving the company
in good shape and in very capable
hands.
“I have been with Gala Coral for 10
years and have seen it grow from
being Britain’s number two bingo
operator into Britain’s number one
gambling company, with 10 per cent
of the UK market and over 3.5m
active customers.”
CITYA.M. 9 NOVEMBER 2010 News 17

Gold powers to all-time high

as Zoellick calls for new system
buy $600bn worth of Treasuries to the euro, the yen, the pound and

▲
COMMODITIES
BY HARRY BANKS
GOLD powered to an all-time high
above $1,400 (£868) an ounce yester-
day, despite a bounce in the dollar, as
investors sought an inflation hedge
from the Federal Reserve’s massive
bond-buying programme.
Gold has risen almost six per cent
since just before the Federal Reserve
detailed its plans last Wednesday to
revive the economy.
Underlying support helped lift the
metal after comments from World
Bank president Robert Zoellick in the
Financial Times calling for leading
economies to consider readopting a
modified global gold standard to
guide currency movements, although
most analysts deemed it unrealistic.
Zoellick called for a system that “is
likely to need to involve the dollar,
(yuan) that moves towards interna-
tionalisation and then an open capi-
tal account.”
“Gold could potentially play a
small role in the overall framework,
but I don’t think we are in a position
to go back to a gold standard,” said
commodities strategist Nic Brown of
Natixis. Analysts also said that the
gold market is too small to absorb
such demand.

First-time buyers are being tempted back into the housing market Picture: PA

New buyers
gain in slump
per cent more surveyors reported a fall
▲

PROPERTY
BY RICHARD PARTINGTON
A SLOWDOWN in the housing mar-
ket could tempt first-time buyers to
take their first step onto the property
ladder over the coming year, new
research has shown.
Around 26 per cent of people who
intend to buy a home will be doing so
for the first time, up from a low of 22
per cent in July, according to property
website Rightmove.
Confidence amongst first-time buy-
ers is returning to the housing mar-
ket as the prospect of lower house
prices encourages would be home-
owners to purchase a property.
A third of buyers now expect the cost
of property to be lower in 12 months’
time than it is now, up from only a
fifth during the previous quarter.
The Royal Institute of Chartered
Surveyors (Rics) confirmed a downward
trend in the housing market today, as 49
in house prices in October, down from
36 per cent in September, the worst fig-
ure since April 2009.
The organisation also said new
buyer enquiries had dropped for the
fifth consecutive month, and blamed
a continued lack of mortgage finance
and a generally cautious attitude
from purchasers.
Rightmove director Miles Shipside
said: “Lower property prices might
well strike fear into the hearts of
property-owners, but it will be music
to the ears of those eager to take their
first step onto the property ladder.
“Recovery will be quicker if more
sellers are willing to negotiate on
price and in doing so make it easier
for those purchasing for the first
time. Everyone with an active involve-
ment in the housing market should
be doing their bit to welcome back
first-time buyers with both open
arms and open wallets”.

Buyers require £100,000 salary

to land a home in the capital
Belinda Porich, head of the
▲

PROPERTY
PROSPECTIVE homeowners require a
salary of almost £100,000 to buy the
average priced home in London, a sur-
vey by the National Housing
Federation finds.
Even if buyers opt for one of the
cheapest 25 per cent of properties,
they would still need to earn more
than £50,000, almost double the aver-
age income in the capital.
Federation’s London region, said: “The
report shows that buying a house is
not a realistic prospect for the vast
majority of Londoners.”
She added: “This is especially bad
news for London’s ordinary hard-
working families. Many of them are
already fearful of having to leave
their homes next year due to the gov-
ernment’s planned housing benefit
caps and cuts.”
CITYA.M. 9 NOVEMBER 2010
Caledon shares soar on sale
▲
MINING
BY HARRY BANKS
CALEDON Resources has agreed in
principle to be bought by a subsidiary
of Chinese investment group
Guangdong Rising Assets
Management (GRAM), sending the
coking coal producer’s London-listed
shares to their highest level in more
than two years.
The possible offer, which is subject
to certain conditions including the
recommendation of Caledon’s board
and Chinese regulatory approvals,
would be for 112p per share in cash –
a 33 per cent premium to Caledon’s
Sky hits 10m
subscribers
While it may have hit the magic number, how
much further can it grow?, asks Steve Dinneen
BSKYB issued a statement of intent to
potential bidder News Corp yesterday
when it announced it has broken
through the 10m subscribers barrier.
With Sky’s board said to be deter-
mined to play hardball with Rupert
Murdoch’s News Corp, its swelling sub-
scriber base will prove a powerful bar-
gaining tool.
But analysts are already questioning
how far Sky can continue to grow,
with the firm already claiming to have
a penetration of 36 per cent of UK
households.
Sky’s customer growth rate in the
last quarter dropped back to 2006 lev-
els after a surge in demand created by
its HD offerings pushed it to record lev-
els last year.
Sky chief executive Jeremy Darroch
claims the firm now has “more ways
to grow than ever”, pointing to innova-
tions such as 3D TV. But demand for
this technology has been patchy (Sky
has not yet released any figures) and
its long-term success is far from guar-
anteed, especially while it still requires
special glasses.
Moreover, Sky could soon face the
biggest challenge to its dominance
since Freeview brought multi-channel
TV into almost every home in the
country, with no monthly charge,
back in 2002. YouView, the BBC backed
Headhunter acquires rival to capitalise Banks recruit compliance
on high growth in clean-tech industry staff to avoid punishment
▲
DEALS
BY RICHARD PARTINGTON
HEADHUNTER Kinsey Allen
International has acquired rival
recruiter Ruston Wheb.
The global financial recruitment
specialists secured the deal for an
unspecified amount, and will use
niche environmental recruiter
Ruston’s expertise to grow in the
clean technology (clean-tech) sector.
Part of the Wheb group of compa-
nies founded by financier Ben
Friday price that values the firm at
£251.6m.
Shares closed up 16.7 per cent at
98p, the second-biggest percentage
gain on the London Stock Exchange
yesterday.
State-owned GRAM, which is the
second largest shareholder of China
Telecom, expects to be in a position to
satisfy or waive these pre-conditions
by the end of December.
Caledon said it received an unso-
licited offer at 68p per share in July,
but rejected it as significantly under-
valuing the company. The offer came
just weeks after Caledon’s largest
shareholder and ex-suitor Polo
venture, looks set to launch its online
TV platform in the second quarter
next year, allowing customers to
stream HD TV from the internet.
Without another “game changing”
innovation like HD, it seems inevitable
Sky’s growth rate will drop.
Enders analyst Toby Syfret sees the
broadcast giant continuing to add sub-
scribers until it hits a glass ceiling of
between 11 and 11.5m.
He told City A.M.: “A slowdown is
inevitable but I don’t think there is
anyone who can touch Sky at the
moment. It is still growing and will
continue to do so for the time being,
unlike satellite TV in other markets,
including Sky’s Italian venture.”
He added: “But it will gradually
decline. As its scale increases it is more
affected by churn [customers leaving
for other providers] and its 3D technol-
ogy is as yet unproven.”
But Sky has other ideas. It believes
the Pay TV market has the potential to
expand from the current 50 per cent of
households to closer to 80 per cent – the
level seen in the US. It also points to its
broadband offering – the fastest grow-
ing in the UK, which has the potential
to pull in more customers.
Adding to a subscriber base of 10m
is a tall order. If anyone can do it, it is
Sky.
Goldsmith, brother of Conservative
MP Zac Goldsmith, Ruston started
trading in 2000 and grew to become
one of the most successful clean tech-
nology executive recruitment firms,
having completed more than 300
board level appointments since its
inception.
Kinsey Allen prizes the strength of
the environmental sector, and estab-
lished a clean technology division in
August this year in order to capitalise
on high-growth prospects.
Ruston will incorporate Kinsey
Resources ended talks.
Caledon directors are supportive of
the possible acquisition, the company
said in a statement.
A NALYSIS l Caledon 98.00
100 p
8 Nov
80
60
40
18 Aug 8 Sep 28 Sep 18 Oct 5 Nov
Sky’s revolution continues
TIME LINE | THE RISE AND RISE OF SKY
● 1989
News Corp launches Sky in the UK.
● 1990
Sky merges with BCB to form BSkyB. It
launches its first pay-as-you-go service.
Large debt pushes News Corp close to
bankruptcy, before lender Citibank steps in.
● 1991
Sky Sports launches its first channe.
● 1992
Sky signs £304m deal for exclusively live
coverage of the new FA Premier League.
● 1994
Around 17 per cent of BSkyB is floated
on the UK and US stock exchanges.
● 1995
Allen’s cleantech division to create
one specialist environmental execu-
tive search firm, led by Ruston’s Ian
Jenkins under the Ruston Wheb
banner.
Ken Brotherston, Kinsey Allen chief
executive, said: “Clean technology is
the most exciting sector in the global
economy, in money terms invested
and in its importance and interest
from private equity funds and govern-
ments investing in the area. It’s only
going to grow in the future so it’s
hard not to be excited about it.”
RICHARD
HORROCKS-TAYLOR
RBC
RICHARD Horrocks-Taylor, Martin
Eales and Stephen McPherson are
advising Caledon on the takeover, hav-
ing worked with the firm during
doomed talks with Polo in June.
Horrocks-Taylor, a chartered
accountant, has worked at RBC since
2006. He spent eight years working
on deals in the mining and metal sec-
tor in London and South Africa for
JPMorgan, before becoming managing
director of Hatch, an employee-owned
corporate finance firm. He holds an
ANALYSIS l BSkyB 728.00
720 p 8 Nov
710
700
690
18 Aug 8 Sep 28 Sep 18 Oct
Picture: Micha Theiner/City A.M.
BSkyB enters the FTSE 100 index.
● 1998
Sky Digital launches the UK’s first digital
TV service, with over 140 channels.
● 2003
Sky passes the milestone of seven million
customers in the UK.
● 2006
Sky launches its broadband service.
● 2008
Sky passes nine million customers.
● June 2010
News Corp bids for 61 per cent of Sky it
doesn’t already own. Bid is rejected.
● November 2010
Sky reaches 10m customers.
▲
REGULATION
BANKS are boosting the number of
compliance staff they take on in
order to steer clear of aggressive fines
from the Financial Services Authority,
a recruiting firm has said.
More than 700 of the 5,231 City jobs
created in October were in regulatory-
compliance, according to leading
financial recruiter Astbury Marsden.
“We are being told by clients that a
lot of these new jobs are being creat-
ed because the FSA is still taking such
News 19
MA in politics, philosophy and eco-
nomics from Oxford University.
Martin Eales joined RBC in 2006
from Collins Stewart, though he has
been advising Aim and main market
companies on takeovers and listings
since 1998. He became corporate
finance director at Westhouse
Securities in 2004, after helping
transform the business from its previ-
ous guise as Brown, Shipley & Co.
Eales acted as joint broker for
Resolution during its rights issue in
August, and advises several natural
resource players including Petra
Diamonds and Pan African Resources.
Stephen McPherson worked in
Canada before moving to RBC’s
London office in 2009. His recent
work includes advising Black Marlin
Energy when it was taken over by
Afren in October.
FSA to rule
on mobile
call tapping
▲
REGULATION
BY STEVE DINNEEN
THE Financial Services Authority
(FSA) is poised to announce tough
new rules that will force firms to tap
the mobile phones of traders.
It means traders will be subject to
strict guidelines about mobile phone
use. All calls on work mobiles will be
tapped and personal mobiles will be
banned from the trading floor. The
FSA estimates around 16,000 mobile
phones could fall under the new
rules.
The new rules would bring mobile
phones into line with fixed line calls,
which are already recorded.
Text messages and instant messag-
ing, including Bloomberg terminal
messages, are also expected to be
included.
It is understood firms will be given
a period of around a year to fall into
line with the new regulations.
Charles Rich of call management
firm CTI Group said the changes will
benefit the industry. He said: “The
FSA’s mobile call recording regula-
tions will protect financial institu-
tions from rogue trader activity. By
adhering to the rules and deploying a
robust call recording solution, liabili-
ty for any fraudulent activity will be
attributed to the individual and not
the firm they represent.”
Network providers such as
Vodafone already offer facilities for
recording mobile conversations.
an aggressive line on fining organisa-
tions that they perceive have gaps in
their systems and controls,” Mark
Cameron, the company’s chief operat-
ing officer said. The FSA handed
down a record £33.1m of fines in the
year to 31 March 2010, up 21 per cent
on the previous year’s record-break-
ing £27.3m.
Cameron said: “If you asked our
clients they would say they already
have too many staff paid too much to
check boxes but the regulatory bur-
den just keeps getting heavier.”
 20 News
Rolls-Royce is so reluctant to put its case ...
CITY COMMENT
JONATHAN HEMUS
S
canning articles from CityA.M.,
the FT, the Wall Street Journal,
BBC.co.uk and The Guardian
written on 5 November about
the emergency landing of the Qantas
... And how BP and Toyota miscommunicated their crises
WITH 11 men dead, a monumental
environmental disaster, and the most
powerful man in the world on your
back, it is hard to imagine how poor
communications could have made
Chrysler sees
a strong 2010
▲
AUTOMOTIVE
BY HARRY BANKS
CHRYSLER forecast an operating prof-
it this year, thanks to cost cuts, but
chief executive Sergio Marchionne
said the automaker had to “fight
harder” to revive its image and seize
market share.
Chrysler projected a $700m
(£434.2m) operating profit for 2010
after stripping out financing costs
tied to its government-funded bank-
ruptcy. It previously projected it
would break even or earn $200m on
that basis.
Chrysler also pinned its 2010 rev-
enue forecast at around $42bn, in the
middle of its earlier range of $40bn to
$45bn.
The automaker has said it plans a
public offering of shares in the sec-
ond half of 2010. Chrysler’s larger
rival, General Motors, is slated to go
public later this month.
Chrysler was on the brink of liqui-
dation in 2009 before a US govern-
ment-funded bankruptcy slashed its
Inmarsat in high orbit as revenues soar
18.4pc in strong third-quarter trading
▲
TECHNOLOGY
BY HARRY BANKS
SATELLITE operator Inmarsat beat
expectations with an 18.4 per cent
rise in third quarter earnings, helped
by growth in aeronautical and leas-
ing services and by an improvement
in maritime, its largest sector.
The company, which provides voice
and data services to shipping, aircraft
and remote locations worldwide,
reported earnings before interest, tax,
depreciation and amortisation (EBIT-
Airbus 380, I read quotes from the fol-
lowing:
- Qantas
- Assorted passengers
- The Australian Transport Safety
Bureau
- An analyst with BGC Partners
- A supplier to Rolls Royce
- An analyst from Agency Partners
- A professor at Cass Business School
- The head of research at HB Markets
Each of these disparate commenta-
tors gives their view of the incident
with many speculating on the cause
and providing insight into its implica-
tions for the engine manufacturer.
No Rolls Royce spokesperson is
such a situation worse, writes
Jonathan Hemus. But BP managed it.
With a spoof twitter feed satirising
the crisis, the real BP took more than
a week to issue its first tweet. Then
operating costs and gave majority
ownership to a union-affiliated trust
fund and management control to Fiat
SpA. The company is introducing 16
new or updated models, including
the Fiat 500 subcompact. US dealer
inventory is expected to rise in the
fourth quarter to support the sales of
the new products.
Chief executive Sergio Marchionne
said he was encouraged by trends
heading into 2011, but said the
automaker still had much to prove on
its path to recovery.
“We got a bloody nose on the way
into the recession and I’m not sure
we got it all back on the way out,”
Marchionne said during a call with
analysts. “So we need to fight harder.”
The automaker reported a net loss
of $84m, compared with a net loss of
$172m in the second quarter.
Excluding $308m in interest on loans
and other expenses, the company
posted an operating profit of $239m,
its third consecutive profit on that
basis. Revenue rose to $11.02bn from
$10.5bn in the second quarter.
DA) of $189.5m (£1.17m) on group rev-
enue of $308.8m.
Revenue, excluding a contribution
from its Stratos broadband business,
was $201.2m, up 13.9 percent.
Chief executive Andrew Sukawaty
said yesterday that the result kept the
group on track for a good result for
the year.
The number of the group’s termi-
nals on ships rose 5.8 per cent, and it
said it was adding maritime broad-
band services at the rate of more than
2,000 a quarter.
quoted directly in any of them.
Instead the BBC says that the com-
pany is “checking all the 380s in serv-
ice”, CityA.M. says that the company is
working with investigators, the FT
reports that Rolls Royce “has no
immediate comment” and instead
quotes a “source close to the compa-
ny” who says “Rolls Royce has been
informed and will investigate as
quickly as it can”.
Click on to Rolls Royce’s website
and you find a clinical 129 word state-
ment which also fails to shed any fur-
ther light on the situation. Is this
really the best way to protect a global
reputation which is under serious
chief executive Tony Hayward waded
in with his gaffe about wanting his
life back and the rest his history.
When the car giant Toyota was hit
by its sticking accelerator problems, it
An expanded agreement with AP
Moller Maersk, the world’s largest
container-shipping line, would con-
tribute before the end of the year, he
said.
Its aeronautic services recorded the
strongest growth, up 38 per cent,
with the vast majority still coming
from its traditional government and
large business jet customers,
Sukawaty said. Emirates Airline,
however, uses Inmarsat’s network to
provide services on its flights,
Sukawaty said.
attack (and a share price which is
down around 10 per cent in two
days)?
Surely not. Whilst Rolls Royce – the
organisation most directly affected by
last week’s incident – has sat tight-
lipped on the sidelines, pretty much
everyone else has filled the informa-
tion vacuum with their views, most
of them unhelpful to Rolls.
Contrast this with Qantas whose
chief executive Alan Joyce began com-
municating almost immediately and
taking decisive action by grounding
the A380s pending an investigation.
His words and actions will, I believe,
protect Qantas from any reputational
seemed slow to react, mirroring the
actions of other corporations which
have gone into denial when unpleas-
ant news surfaces; indeed Toyota’s
behaviour epitomised a Japanese say-
SEC to clamp down on high frequency
trades in bid to stabilise overall market
▲
FINANCIAL SERVICES
BY HARRY BANKS
The US Securities and Exchange
Commission (SEC) will take further
steps to make markets more stable
and trustworthy following the May
“flash crash,” and is zeroing in on
lightning fast computer trading codes
that “go crazy,” the agency’s head said
yesterday.
The SEC, the top US securities regu-
lator, must address the use of algo-
rithms, the computer codes that
power high-frequency trading and
disrupt the marketplace, SEC chair-
CITYA.M. 9 NOVEMBER 2010
damage – he may even succeed in
enhancing the airline’s long term
reputation.
Meanwhile, the Rolls Royce com-
munication strategy of non-engage-
ment – with no director available to
take questions or to explain things
from the company’s point of view –
leaves its reputation bobbing along
on an ocean of uncertainty driven by
the unpredictable currents of events
and third party comment. It’s not a
strategy that I would recommend.
Jonathan Hemus is a director of Insignia
Communications and this article appears
on the marketing industry web-site
drum.co.uk
ing that goes: “If it stinks, then put a
lid on it.”
Toyota allowed a crisis to emerge
and then responded too slowly to
effectively manage it.
Chrsyler chief exec-
utive Sergio
Marchionne said
the firm had to
“fight harder” to
revive its image
and seize market
share.
Picture: REUTERS
man Mary Schapiro told the
Securities Industry and Financial
Markets Association annual confer-
ence yesterday.
“We hope this will lead to a more
stable marketplace,” she said.
The SEC has been under pressure to
bolster the integrity of the markets
after the 6 May “flash crash” caused
stocks to plunge wildly, wiping out $1
trillion in market capital, and then
recovered in mere minutes.
The SEC has already rolled out a
programme aimed at protecting
companies’ stocks if they are drop-
ping uncontrollably.
CITYA.M. 9 NOVEMBER 2010
FSA examines
base metals
ETP complaint
▲
FINANCIAL MARKETS
BY HARRY BANKS
CITY watchdog the Financial Services
Authority (FSA) yesterday said it has
received a complaint about plans to
launch base metal exchange traded
products (ETP).
“Because it [the complaint] has just
recently been sent, we have to look at
issues that have been raised,” the FSA
said. “We are not a price regulator.
Generally what we would look at is
the potential for market abuse or dis-
tortion of price and consumer protec-
tion.”
Providers that in recent weeks have
announced plans to launch ETPs
include UK-based ETF Securities and
US investment bank JP Morgan.
ETF Securities said in early October
it will introduce physical ETPs for cop-
per, aluminium, zinc, lead, tin, nickel
and a basket of the six major base
metals. However, it has no date, as yet,
for the launch.
JPMorgan Commodity ETF Services
registered to launch an ETP for cop-
News 21
Adidas sets out
ambitious target
to overtake Nike
CONSUMER GOODS
▲
GERMAN sporting goods company
Adidas aims to grow sales to €17bn
(£14.6bn) by 2015 as it strives to over-
take market leader Nike.
“Our aspirations are to outperform
total market growth... to outgrow our
per in a filing with US regulator the major competitor and have the bot-
Securities and Exchange Commission tom line grow faster than the top
late last month. line,” chief executive Herbert Hainer
For a factbox on recent copper said yesterday in a presentation to
ETPs, see Traders said that an ETP analysts at the company’s headquar-
could suck down London Metal ters in Herzogenaurach, Germany.
Exchange (LME) inventories that are Last week, Adidas reported strong
already constrained by declining ore third-quarter results, lifted by US and
grades and demand that is steadily eastern European growth, and said it
improving since the global economic expected 2010 sales to grow by 8 eight
crisis. per cent at constant currency rates
“People are saying they have or are from €10.4bn in 2009. Nike recorded
going to complain to the LME and the sales of $19bn in its year to May 2010.
FSA. The argument is that they will Adidas, the world number two, said
distort the market and tie up the its key growth markets would be
stocks,” a metals trader said. “My reac- North America, Greater China,
tion is; how could the market be any Russia/CIS, Latin America, Japan,
more distorted and non-related to the Britain and India.
real world than it already is?” Under the new strategic plan,
named “Route 2015”, Adidas is target-
FAST FACTS | ETP ing a compound annual earnings
growth rate of 15 per cent, faster than
● Exchange traded products are funds or con- sales growth, and an operating mar-
tracts traded on stock exchanges which track gin of 11 per cent by 2015 at the latest.
the performance of the underlying security. Hainer said its Adidas and Reebok
● The value of ETP assets under management brands would account for more than
reached $1 trillion globally last December. 90 per cent of the planned 45-50 per
Adidas chief executive Herbert Hainer has Nike in his sights Picture: GETTY cent increase in sales.
 22 Politics
Four-year government plans miss the target
CITY COMMENT
MARC SIDWELL
T
HEY are calling it a revolution.
David Cameron and Nick Clegg
have announced a rejection of
Labour’s target culture, offer-
ing instead four-year departmental
business plans, opened up for public
scrutiny and updated by regular
Cameron sets
out long-term
ministry plan
▲
POLITICS
BY JULIET SAMUEL
PRIME Minister David Cameron has
launched the coalition’s departmental
business plans for the next five years,
claiming they will “turn government
on its head” and contribute to a “radi-
cal redistribution of power”.
The four-year business plans pro-
duced by each department detail what
its priorities and timetable for action
will be between now and 2015. For
example on reforming pensions tax
relief, HM Treasury’s plan labels the
task as “started” with a completion
date of April 2011. It also details what
the important publication “mile-
stones” will be, including consulta-
tions, reviews and bills.
Cameron says: “These business
plans bring in a new system of demo-
cratic accountability.” The idea behind
them is to set out the specific meas-
ures that will be used to implement
the coalition agreement.
The plans, drawn up in line with
guidance from the Cabinet office,
were launched at an event with
Deputy Prime Minister Nick Clegg and
CITY VIEWS: SHOULD PEOPLE ON UNEMPLOYMENT BENEFITS BE FORCED TO DO VOLUNTEER WORK?
BARRY KEANE | EQUUS
”It’s a fantastic idea. If people aren’t willing
to contribute something voluntarily when
they are on benefits, I see nothing wrong
with a reduction in benefits.
That is, providing it doesn’t
eat into their time that
needs to be spent on look-
ing for a job.”
progress reports. The ministerial
statement claims this will “change
the nature of government”, but this
does not look like the accountability
revolution Britain needs.
Labour’s love of targets certainly
needed reassessment. Too often
these micro-managed numbers
brought in distortions and unintend-
ed consequences as they drove man-
agers to please ministers rather than
to improve service. The Francis report
published earlier this year on the
Mid-Staffordshire NHS Foundation
Trust identified “target-driven priori-
ties” as a significant factor in the
trust’s poor standards of care.
There are other positive aspects to
the reforms. The coalition pro-
civil service chief Gus O’Donnell.
Cameron said: “The target culture
pressured people to go for short-term
wins at the expense of long-term
improvements.”
The plans are meant to replace sta-
tistical targets with overall priorities
and updates to let the public know if
deadlines are missed or policy
changes. They have been published on
a new section of the Downing Street
website that enables browsers to view
updates and leave comments.
But the detail given varies. While
some clauses lay out specific policy
changes or reviews that have been set
up, others state merely that there will
be “ongoing reforms”. They are to be
updated on a monthly basis as depart-
ments progress with the coalition
reforms.
Each department was required to
list its top priorities in order to draw
up the plans. The Treasury lists deficit
reduction, rebalancing the economy
and revising the UK’s regulatory
framework as its main responsibilities,
while it says it will cut down on dupli-
cation of other government work.
DUNCAN CRAIG | FREELANCE
INSURANCE PROJECTS MANAGER
“I think it’s a good idea to encourage people
to go back to work. Though I do think there’s
a danger of people being effectively used as
slave labour, which
is hardly the kind
of motivation
people need to re-
enter the job mar-
ket. It also risks
making the job
market even
harder if
free labour
is available.
gramme for government promised to
create a new “right to data” for
British citizens, and the greater
openness at the heart of the new
business plans reflects that determi-
nation. The Institute of Directors has
already been able to examine the
HMRC’s business plan and point out
both its strengths, such as including
real-time PAYE information, and crit-
ical failures, such as allocating
£900m to increase tax revenues
before the plan on how to do so has
been written.
However, while David Cameron
rejoiced in this new “democratic
accountability”, saying “reform will
be driven not by the short-term polit-
ical calculations of the government,
Largest ever UK visit arrives in China
▲
POLITICS
BUSINESS secretary Vince Cable and
Chancellor George Osborne have
arrived in China in the UK’s biggest
ever delegation to the world’s largest
emerging economy.
The aim is to conduct talks fur-
thering trade between the UK and
China and includes 50 businesspeo-
ple as well as five cabinet ministers.
Yesterday, Cable’s department
MAXINE INGRIM | HARRISONS
“People should contribute to society, even if
they don’t want to work. It would create
opportunities for peo-
ple who haven’t
worked for a long
time. The only
exception should be
people who
genuinely aren’t
able to work.”
CITYA.M. 9 NOVEMBER 2010
but by the consistent, long-term pres- Indeed, the reforms shift power away
sure of what people want and choose from the highly visible select com-
in their public services”, there is a mittees of the legislature into the dis-
danger that public pressure will creet prerogative of the executive.
focus on a few causes célèbres at the Secretaries of state will report to the
expense of a coherent strategy. This prime minister over unmet targets in
also bedevilled Labour’s targets, with their business plans. Douglas
fears over MRSA leading to the Carswell MP, co-author of The Plan, a
rushed introduction of a target, manifesto for greater accountability
despite MRSA accounting for only in British politics, said the announce-
two per cent of healthcare-acquired ment failed to make Whitehall
infections in the NHS. answerable to parliament.
The real problem is that these The Plan argues for open primaries
reforms fall between two stools: to better represent citizens’ views in
promising neither the immediate parliament and elected chairmen of
accountability to customers of pri- select committees with greater pow-
vately-run competitive services nor ers. A four-year plan with an open
the carefully-considered judgement comments thread is a poor substitute
of a representative parliament. for real democratic accountability.
Chancellor George
Osborne arrived in
China to meet busi-
ness leaders and
discuss internation-
ally sensitive trade
issues ahead of the
G20 summit in
Seoul this week. He
met with Yi Gang,
vice-president of
People’s Bank of
China (pictured) yes-
terday.
Picture: REUTERS
claimed that British firms had It is not clear if the agreements
already struck over £20m’s worth of had anything to do with Cable’s
business deals with Chinese organi- visit, but the government is hoping
sations. that, in total, deals worth £1.7bn will
The deals include a £4m agree- be struck in the coming days.
ment between architecture firm Osborne will also talk over the UK
Benoy and Chinese clients, a £2m and China’s positions on controver-
agreement under which Clyde sial issues to be discussed at the G20
Blowers will supply coal injection summit in Seoul, such as national
technology to Yima Coal Industry current account surpluses and cur-
Group and a £1m deal for Eco-Solids rency devaluations. He will then
to process sewage into fertiliser. meet business leaders in Hong Kong.
Interviews by Marion Dakers
SWAMINATHAN MAHALINGAM
LLOYDS BANKING GROUP
“It’s a good idea but so many companies are
cutting jobs, and people are losing their jobs
for so many
different rea-
sons, that people
must be given
suitable volun-
tary work. It
could help
people to gain
more skills and
experience if it’s
done right.”
CITYA.M. 9 NOVEMBER 2010 News 23

Royal Mail gets green light

for stamps to rise from April
service provider chooses to take full The state-owned operator has been

▲
POSTAL SERVICES
BY RICHARD PARTINGTON
ROYAL MAIL has been given the go-
ahead to hike stamp prices under
lighter-touch regulation announced
by the postal regulator.
Sanofi chief executive Chris Postcomm will allow the operator
Viehbacher said the board to increase prices on stamped mail by
should not stand in the way up to 10 per cent from next April,
of shareholder choice which could see the price of a first
class stamp rise by 5p to 46p if the
advantage of the allowance.
The changes also give Royal Mail
more freedom in markets where com-
petition has been growing, including
bulk mail, where the company has
lost significant volumes to competi-
tors.
Royal Mail could generate £380m a
year under the changes, allowing it to
stem falling profits ahead of a pro-
posed sell-off.
slated for privatisation by the govern-
ment, which is looking for private
investors to buy as much as 90 per
cent of the company, retaining 10 per
cent for an employee share scheme.
Potential investors will however be
required to take on Royal Mail’s
£10bn pension deficit, though today’s
change could enable the operator to
better its financial position ahead of a
sale.

Sanofi insists
investors will
decide on bid
to three possible courses of action for
▲

PHARMACEUTICALS
BY HARRY BANKS
FRENCH drugmaker Sanofi-Aventis
said it had called on bid target
Genzyme bosses not to use defensive
tactics to block a takeover of the US
biotech but to let shareholders decide
on its $18.5bn (£11.4bn) offer.
Sanofi chief executive Chris
Viehbacher said in a letter to Genzyme
boss Henri Termeer published yester-
day that the board should not stand in
the way of shareholder choice if it was
not prepared to enter direct talks with
the French group.
“You have publicly disclosed that
Genzyme’s board has authorised man-
agement and the company’s advisors
to ‘probe and evaluate alternatives’ for
Genzyme and its assets, including con-
tacting third parties,” Viehbacher said.
“We were encouraged to hear this, but
to date, we have not been contacted or
included in this process.”
Viehbacher said certain comments
made by Genzyme management
seemed to be inconsistent with its pub-
licly stated aim of maximising share-
holder returns and listening to
shareholders.
Sanofi said the comments referred
Genzyme: extending the terms of
some of its directors, using
Massachusetts anti-takeover statutes to
block a deal or adopting a “poison pill”
to stop Sanofi taking control.
“We believe it would be inappropri-
ate for the board to take these defen-
sive actions,” Viehbacher said. “If we
are unable to have a direct dialogue
with you, in all fairness you should
allow your shareholders the opportu-
nity to decide for themselves whether
or not to accept our proposal.” Sanofi
has stuck to its bid for Genzyme after
the US company held a series of meet-
ings to demonstrate it was worth more
than the $69 per share Sanofi has
offered citing $3bn sales of its MS drug.
ANALYSIS l Sanofi-Aventis
52 $ 51.03
51
8 Nov
49
47
45
18 Aug 8 Sep 28 Sep 18 Oct

BAE Systems’ sale of aerospace

unit attracts General Electric bid
of about $190m (£118m), putting the
▲

AVIATION
AN AUCTION for BAE Systems aero-
space unit has advanced to the sec-
ond round and attracted bids from
heavyweights including General
Electric, Eaton and Honeywell
International.
The companies are among a hand-
ful of suitors that put in a second
round of bids for BAE’s platform solu-
tions business by the deadline of 29
October, after the initial round in
mid-September and management
presentations in following weeks.
The unit could go for more than 10
times its earnings before interest,
taxes, depreciation and amortisation
price tag at the higher end of the
$1.6bn to $2bn range earlier expected
by bankers and analysts.
BAE, Europe’s largest defence con-
tractor, has also received bids from
several private equity firms, the
sources said, underscoring robust
buyer interest at a time when air traf-
fic is picking up after a deep slump
lasting years.
Smaller strategic bidders have
shown interest in parts of the busi-
ness; but BAE intends to sell the unit
in its entirety.
BAE has hired JPMorgan Chase &
Co to sell the platform solutions busi-
ness.
 24 News CITYA.M. 9 NOVEMBER 2010

McDonald’s US unit weakens Nokia back in driving seat

Capital. The US market, which 2010 and three per cent in 2011.
as takes over at Symbian
▲

CONSUMER
accounts for about 35 per cent of October sales at restaurants open at
BY HARRY BANKS McDonald’s revenue, got some help in least 13 months were up 5.8 per cent
MCDONALD’S yesterday reported a October from the Monopoly game pro- in Europe, which accounts for just to use for free on an open-source

weaker-than-expected rise in October
sales at US established restaurants as
high unemployment keeps plaguing
the world’s largest hamburger chain’s
key domestic market.
October sales at restaurants open at
least 13 months were up 5.6 per cent
in the US but missed some analysts’
estimates.
Despite the macroeconomic weak-
ness that has dented overall demand,
the company has been taking US mar-
ket share from rivals like number two
hamburger chain Burger King, which
is now private after its sale to 3G
motion and popularity of core menu
items.
Overall, McDonald’s reported a bet-
ter-than-expected 6.5 per cent rise in
global October sales at established
restaurants, as its low-price Dollar
Menu and restaurant renovations
helped draw in more customers.
“McDonald’s continues to have solid
traffic drivers and pricing power that
can drive same-store sales... even if the
consumer recovery remains sluggish,”
Jefferies and Co analyst Andy Barish
said. Barish sees same-store sales of five
to six per cent in the fourth quarter of
above 40 per cent of revenue, and up
5.3 per cent in the Asia-Pacific, Middle
East and Africa region (APMEA).
Results for both Europe and APMEA
topped analysts’ expectations.
The company cited healthy demand
in France, the UK and Russia for the
strong performance in Europe, while
sales growth in Japan, China and
Australia boosted the Asia/Pacific,
Middle East and Africa unit.
Systemwide sales, which includes
those at restaurants operated by the
company as well as franchisees, rose
7.4 per cent for the month.
▲
TECHNOLOGY
NOKIA has taken back full control of
the Symbian operating system, retak-
ing management of a key asset which
it had given to the open source com-
munity to run only a few years ago.
Nokia said yesterday it would take
care of Symbian platform develop-
ment from April 2011 onwards, while
the cross-industry Symbian
Foundation will in the future take
care of only licensing of the software.
Nokia bought out other sharehold-
ers in Symbian in 2008 and opened
the software for any manufacturers
basis. But it failed to win wide adop-
tion and this year Samsung
Electronics and Sony Ericsson aban-
doned it in favor of Google’s Android.
“As other licensees have abandoned
Symbian, Nokia had little option but
to take full control,” said Ben Wood,
head of research at CCS Insight.
The Finnish handset maker has
remained the key contributor to the
development of the software and has
created some 95 per cent of sales vol-
umes of Symbian phones. Symbian
leads the mobile market with a 37 per
cent share in the third quarter.

Exports give BEST OF THE BROKERS

ANALYSIS l JD Wetherspoon
460 p 406.00
8 Nov
ANALYSIS l Lancashire 586.00
590 p 8 Nov
ANALYSIS l Randall and Quilter
96 p

German GDP 440

420
570

550

530
94

92
91.00
8 Nov

growth hope
400

9 Aug 27 Aug 17 Sep 7 Oct 27 Oct 9 Aug 27 Aug 17 Sep 7 Oct 27 Oct 9 Aug 27 Aug 17 Sep 7 Oct 27 Oct

JD WETHERSPOON LANCASHIRE RANDALL & QUILTER

UBS rates the pub chain a “buy” but has Shore Capital rates the insurer a “buy” Numis rates the insurance firm a “buy”
reduced its target price to 500p from with a target price of 580p. Shore notes with a target price of 140p. The broker
▲

WORLD ECONOMY
BY HARRY BANKS
GERMAN exports soared in
September while industrial output
faltered, indicating Europe’s largest
economy will post solid if unspectac-
ular third quarter growth later this
week as the recovery eases.
Exports grew twice as fast as
expected in September, up 3.0 per
cent on the month when seasonally
0.70 per cent. By contrast, the
German economy expanded at 2.2
per cent quarter-on-quarter in the
second quarter of the year, its fastest
rate in reunified Germany.
The strength of the euro and a
stuttering outlook for some of its
global trading partners are likely to
weigh on demand for German manu-
facturing goods, and data already
points to a slowdown in the industri-
525p. The broker points to a one-off
increase in spending on staff and repairs
that are depressing margins, but adds that
earlier opening hours will increase group
margins above the firm’s historic 10 per
cent trend as soon as 2012.
underwriting and capital discipline in the sees the firm’s recent agreement with the
firm’s recent quarterly results, with a Lloyd’s market to form a syndicate next
robust balance sheet and debt gearing of year as a positive step, which will diversify
just over eight per cent. The broker adds the company. The broker believes the deal
that the firm’s special dividend alone repre- could support a higher price to earnings
sents a 15 per cent yield. ratio, which now stands at 8.7 times.
To appear in Best of the Brokers email your research to notes@cityam.com

ArcelorMittal bids for Canadian miner

adjusted, and the trade surplus
reached its widest in nearly two years
at €15.6bn, data from the Federal
Statistics Office showed yesterday.
“Demand side data for the quarter
suggests we have a broad-based con-
tinuation of the upswing,” said
al sector that has powered the recov-
ery.
Output fell by 0.8 per cent on the
month in seasonally adjusted terms,
the Economy Ministry said, missing
the median forecast for a 0.5-per cent
increase in a Reuters poll and send- Baffinland has been looking for BHP Billiton move to quarterly from
▲

UniCredit’s Alexander Koch. “Of
course, we are seeing quite a deceler-
ation compared to the previous quar-
ter, but with expectations for
quarterly third quarter growth of
around 0.75 per cent, this is still a
rather respectable growth rate for
the German economy.”
GDP data is due on 12 November.
The median estimate in a Reuters
poll of 40 economists is for growth of
ing the euro to the day’s low against
the dollar.
The decline was the greatest since
October 2009. Yet analysts said the
fall in industrial output was unlikely
to change their third quarter GDP
estimates given the strong export
data and solid long-term averages for
output data.
Output rose 1.2 per cent on a
rolling two-month basis.
RESOURCES
ARCELORMITTAL, the world’s largest
steelmaker, offered C$433m (£267m)
for Canadian miner Baffinland Iron
Mines yesterday, in a further move to
raise self-sufficiency.
Baffinland said its board had
approved the offer, which values the
company at C$1.10 a share, a premium
of 16 per cent over the stock’s closing
share price on Friday.
partners for its C$4bn Mary River proj-
ect for about two years. The project has
reserves of about 365m tons of ore
grading an average of 65 per cent iron,
and about 500m tons of ore resources.
Baffinland urged its shareholders to
tender their shares. ArcelorMittal has
been seeking to expand its own pro-
duction of and long-term contracts for
iron ore and coal, particularly as
major suppliers Vale, Rio Tinto and
annual contracts and pump up prices.
The agreement marks a further
push by steel majors into Canadian
iron ore exploration after India’s Tata
Steel increased its investment in New
Millenium Capital Corp in June..
Baffinland’s largest shareholder,
Resource Capital Funds, which owns
about 23 per cent, and board members
have agreed to tender all their com-
mon shares and warrants.

CITY MOVES | WHO’S SWITCHING JOBS Edited by Victoria Bates in association with

Deloitte
The accountancy firm has poached the
Financial Services Authority’s (FSA) David
Strachan to co-head its centre for regulatory
strategy, effective from April 2011.
Strachan is currently director of financial
stability at the FSA, working on the regulator’s
division into the Prudential Regulatory
Authority and the Consumer Protection and
Markets Authority. Prior to his 12 years at the
FSA, he was at the Bank of England.
Williams de Broë as an investment director and a mem-
Dougal Fraser is to join the investment ber of the executive committee.
manager, part of the Evolution Group, Fraser has over 23 years of experi-
ence managing private client assets,
most recently gleaned at BNP Paribas
Wealth Management, where he has
been an investment director and mem-
ber of the management committee
since 2005.
Berwin Leighton Paisner
The law firm has appointed real estate
disputes expert Michael Metliss as a
partner in its London team.
Metliss was previously head of the
real estate disputes group at SJ
Berwin, advising commercial property
institutions on contentious issues and
formal court proceedings. He is a ten-
ant insolvency specialist.
JM Finn
The privately-owned investment man-
agement group has hired Andrew
Cumming and Michael Barlow as senior
investment managers.
Both move over from BNP Paribas
Private Investment Management, hav-
ing been part of a Fortis Private
Investment Management team which
joined BNP Paribas in May 2009.
Aston Martin
The luxury carmaker has appointed
Hanno Kirner as its new chief financial
officer.
Kirner, 39, will be based in the UK
and report directly to Dr Ulrich Bez, the
company’s chief executive.
He joins from Rolls-Royce, where he
has been director for finance and IT for
the past five years, and has also previ-
ously held a number of senior roles with
the BMW Group.
T. Rowe Price
The investment manager has hired
Andrew Skeat as a vice president and
client service executive, covering insti-
tutional clients in the UK and Ireland.
Skeat joins from Capital
International and, prior to that, was a
client servicing team leader at Schroder
Investment Management.

To appear in CITYMOVES please email your career

SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT +44 (0)20 7557 7245
updates and pictures to citymoves@cityam.com morganmckinley.com
 Investment
CITYA.M. 9 NOVEMBER 2010
DON’T BET ON
THE FED’S QE2
SHELL GAME
DAVID MORRISON
CFD MARKET STRATEGIST, GFT
W
E’VE just seen an incredibly signifi-
cant week for the financial markets.
Following the US mid-terms, the
Republicans have control of the
House of Representatives and have cut the
Democrats’ Senate majority. While the new
Congress won’t be in place until January, the
Republican gains will influence the debate over
the Bush tax cuts; the markets are pricing in a
partial extension. Before that, the current poli-
cymakers have to decide whether to extend the
emergency unemployment compensation
(EUC) – a temporary measure set to expire this
month. If it does expire, then 2m Americans
lose their benefits from the end of November.
The FOMC’s announcement of further QE
had a sharp and violent effect on asset prices
as the dollar plunged. Adding a fresh $600bn
to the reinvestment of maturing mortgage-
backed securities (MBS) gives a monthly injec-
tion of around $100bn until the end of June.
Once these electronic ledger entries hit the
trading accounts of the primary dealers, they
will be leveraged up and hosed at anything
with a half-decent yield. With the Fed’s stimu-
lus leaking into emerging markets, those coun-
tries with trade surpluses are seeing their
currencies soar, which undermines their com-
petitiveness. Understandably, the Fed came
under fire from China, Germany and Brazil.
In an article for the Washington Post, Fed
chairman Ben Bernanke wrote that rising
equity prices are part of a virtuous circle that
boosts wealth and confidence, leading to
increased spending and economic expansion.
So, QE gives the illusion that all is well because
stock prices are rising. They certainly are in
dollar terms, but not when valued in gold, the
world’s true store of value, and the ultimate
medium of exchange. Consequently, there are
an increasing number of investors who feel the
Fed is playing nothing more than a shell game
with counterfeit money.
25
| Contracts for Difference
Providers should bring
a platform for change
Tough competition
will brings benefits
for the CFD trader,
says Donata Huggins
W
ITH spreads pulled as tight as a
drum and trading platforms
becoming ever more sophisti-
cated, it is clear that competi-
tion between contracts for difference
(CFD) providers is heating up. A price war
has been waged over the last year – much
to the trader’s benefit. WorldSpreads
even daringly began to offer zero point
spreads on certain markets earlier this
year. But with Saxo Bank’s retail client
CFD trading platform launching tomor-
row, it could be a fair guess to say that
next year’s battle will be fought on tech-
nological advancement. Again, fantastic Watch out: the plat-
news for traders who can sit back and forms are changing
wait to enjoy the improvements. There is
much to look forward to. Here are five Picture: Micha
predictions: Theiner/City A.M.
1. MORE LEVEL TWO DATA
LMAX has tipped us off on this trend. Its In the meantime, Saxo Bank platform from LMAX, Saxo Bank and City Index
peer-to-peer exchange launched two users can smugly use the new material to decisions to give their clients optional
weeks ago gives traders full access to the silence accountant friends who claim stop loss accounts, leaving traders with
order book, providing real volumes num- that day-traders “just don’t pay attention more control of how to manage their
bers. LMAX’s chief executive Robin to the fundamentals.” risk (and reduce fees).
Osmond claims they have set the bar for Josh Raymond of City Index explains
industry transparency with this one. 3. THE ANDROID PHONE APPLICATION that this gives clients greater access to
Long-awaited by android users who kick markets: “When we had limited risk
2. PROFIT AND LOSS REPORTS themselves for not buying a BlackBerry accounts, we could only really offer limit-
Saxo Bank’s unique selling point tomor- or iPhone, which already have trading ed-risk account users access to around 30-
row will be offering detailed profit and platform applications. Providers such as 40 per cent of our 13,000 markets. We
loss accounts for stocks trading on its IG Markets have made it a priority with wanted to allow traders of all different
platform. This will include cash flow plans in the pipeline for launching one quantities access to the same range of
statements, research, balance sheets and in 2011. markets.”
most significantly future estimates on
the likelihood of a company’s success. 4. FEWER GUARANTEED STOP LOSS ORDERS 5. FASTER TRADE EXECUTION
Chances are that much like the inter- AND LIMITED RISK ACCOUNTS Considering that CMC Markets’ recent
active charting and technical analysis Radically, it looks like mandatory guar- platform relaunch promised fewer re-
tools that took off across the provider anteed stop loss and limited risk quotes and IG Markets already claims to
platforms a few years ago, company data accounts could be edging their way out, offer execution in the millisecond, faster
will be available across all platforms in a or could at least be offered with a greater trades could be achieved sooner than we
few years. degree of flexibility. The trend stems expect.
 26 Investment | Contracts for Difference CITYA.M. 9 NOVEMBER 2010

Stay bold and

hold your gold:
the peak is yet
to be reached
The gold rally must According to Ash, seasonal demand from
Chinese and Indian households should
eventually come to continue to push up prices, with Chinese
demand in particular likely to last. China
deregulated its internal gold market in
an end, just not yet, 2002 and 2005, and Chinese consumers
have proven to have a voracious appetite
says Daniel Knowles for the precious metal. Ash says that
Chinese investors will “keep hoovering the
stuff up”, pushing prices up further.

I
n 1931, as Great Britain crashed off
the international gold standard, John
Maynard Keynes was joyous. “There
are few Englishmen who do not
rejoice at the breaking of our gold fetters”,
he wrote. Yesterday, Robert Zoellick, the
head of the World Bank, an organisation
that Keynes founded, seemed to be asking
for the fetters back. He said that “markets
are using gold as an alternative monetary
asset” and that the metal should be con-
sidered as part of global financial reform.
But while gold is very popular at the
moment, its inherent value is largely
mythical. Can the high price last?
Certainly gold has got a lot more expen-
sive recently. After two decades of stagna-
tion, the gold price started increasing at
the start of the century. And when many
asset prices fell in the recession, gold just
kept going. Yesterday, pushed up by strong
Indian demand during the Diwali festival,
the spot price of gold passed both the
$1,400 and the €1,000 level, both records.
In real terms, the gold price is still consid-
erably lower than it was at the height of
the 1980 bubble, and so many think that
there is space for further climbs.
Adrian Ash, a researcher at
BullionVault, is unsurprisingly bullish.
ANALYSIS l The real and nominal price of gold since 1960
2,400 $
2,000
1,600
1,200
800
400
1960 1970 1980
Moreover, relatively few large investors
have invested much in gold so far, mean-
ing that demand could still grow an awful
lot. As Ash puts it: “Investors are far more
exposed to stories about gold than they
are to actual gold”. If more start to see
gold as an essential part of a portfolio,
then that would push up prices too.
Contracts for difference (CFD) traders
might want to be bullish then.
INFLATION HEDGE
But they also need to be careful. Paul
Duncombe, Head of Multi-Asset
Investment Solutions at Schroders, thinks
that the gold price mostly reflects uncer-
tainty, with quantitative easing in the US
and global currency wars in particular
unsettling many investors.
According to Duncombe, “people who
worry buy gold – and at present many peo-
ple are worried”. Traditionally, gold has
been seen as a hedge mostly against infla-
tion, but recently it has been used more as
a particularly secure store of value at a
time when global interest rates are effec-
tively negative.
That means that if the global economy
begins to pick up, and in particular if
interest rates start to rise again, then
Gold in nominal dollars
Gold in 2009 dollars, inflation
adjusted by Consumer Price Index
Source: realterm.de.
1990 2000
gold may see a fairly dramatic fall in Robert Zoellick wants returns, the appeal of holding a useless
price, as investors unwind their gold a debate about the metal instead of profitable investments
holdings and move to assets that gener- gold standard will be a lot smaller. In the meantime,
ate a return. The gold price has been however, traders should profit while they
increasing rapidly for a decade now, Picture: GETTY can. In the long run, after all, we’re all
mostly thanks to very low interest rates. dead.
If expectations of the next decade
change, then that could well reverse.
As investors who lost out in 1980 well Champion Trader -
know, the correction would probably be
sharp and brutal. Duncombe points out, Day 1 l Week 2
however, that very few people are expect-
ing a change in economic conditions any New week and a new prize with £1,000 available this week for
time soon. Merrill Lynch doesn’t expect the biggest account increase. £9,000 prize pot still up for grabs
the gold price to fall below $1,400 until at until the conclusion.
least 2013, and only then to around
$1,290. CFD traders should have plenty of User Name Account Value % Difference
time to make a profit then.
Despite Robert Zoellick’s comments, it 1 fivericket £94,675.19 847
is exceptionally unlikely that the world
will ever return to anything resembling 2 urosbric3 £78,606.50 686
the gold standard. As the economic his-
torian Barry Eichengreen has argued, 3 TheMysteryTrader £67,974.46 580
the interwar gold standard failed
because it was impossible to force sur-
4 rhona45 £44,053.87 341
plus countries to adjust their real 5 Gekko1981 £42,777.00 328
exchange rates, and so the burden fell
onto deficit countries, like Britain, who 6 alonsove £42,142.97 321
had to deflate.
7 TheWozman £39,864.39 299
When the system began to fall apart,
countries that adopted loose monetary
policy did much better than countries 8 hchahal £33,654.00 237
that held onto gold, and we should 9 mareinvest £28,525.97 185
expect the same to happen now. The
expansion of credit should eventually 10 singhtrader £27,075.63 171
lead to growth, though it may not be par-
2010 ticularly balanced. When growth To register and the full standings, visit www.intertrader.com/champion

quotes a price of €1.1590-€1.1594 for
THE TIPSTER sterling-euro.
Walt Disney last week announced that it
BOE INFLATION had found a partner for its first theme park
REPORT KEY FOR in mainland China located near Shanghai.
The news helped lift the company’s stock
FOREX TRADERS and with question marks still hanging over
the scope for economic recovery and con-
ON WEDNESDAY sumer confidence in the US, there’s nothing
Mickey Mouse about pushing for further
development in emerging markets.
Media (UBM) has successfully completed
its transformation into a largely events-ori-
ented, B2B business with comfortable and
resilient operating margins, combined with
a sound financial situation, according to
analysts at Alphavalue.
Since last July, the UBM share price
appears to have bounced a lot, gaining 19
per cent over the last three months and 45
per cent year-to-date. Although it appears
fully valued against peers at current prices,
closer for the yellow metal. Equally, silver
could well hit $33 an ounce. The CMC
Markets’ spread for gold is $1,399.50-
$1,399.90 while it offers silver at $27.26-
$27.29.
Evolution Securities is still extremely posi-
tive about the outlook for London-listed bank
Standard Chartered, which it has had as its
core buy since July 2009. Standard
Chartered has performed well throughout
the rights issue, touching an all-time high of

T
HE Bank of England’s quarterly
Inflation Report should provide some
excitement for the currency markets
this week. All market participants will
be eagerly awaiting what the report has to
say about growth prospects in the UK
and whether further quantitative easing
remains a real possibility. Capital CFDs
However, Disney is due to report its fourth
quarter earnings on Thursday and any lack-
lustre tone about demand in its home mar-
ket could see the shine taken off recent
gains. The current IG Markets price for
Disney is $37.16-$37.24.
With only 7 per cent of its profits derived
from magazine publishing, United Business
its discounted cash flow offers a clear
upside at 844p in spite of cautious Ebitda
margin expectations. Spreadex offers
674.8p-678.7p.
With gold and silver continuing to surge
ahead after last week’s stimulus package
from the Fed, the likelihood of $1,500 an
ounce by the end of this year draws ever
1,975p last week. But with £3bn more capi-
tal following the rights issue, the bank will
now have fewer constraints to growth in
emerging markets. This should push the con-
sensus up in the future despite the stock
trading near record highs. Spreadex quotes
1,932p-1,936.50p.
Jessica Mead
We search 7 different venues
to find you the best price.
Our Smart Order Routing technology instantly
sources the best prices in the market. This gives
access to greater liquidity and tighter spreads.
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report 2009.
 Markets&Investment
28 CITYA.M. 9 NOVEMBER 2010

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
3i . . . . . . . . . . . . . . . . . . . . . . . .317.00 +0.10 319.20 246.90 COLT Group . . . . . . . . . . . . . . . .121.50 — 144.20 107.70 Jupiter Fnd Mgmt . . . . . . . . . . . .299.80 –6.20 310.00 180.00 Sainsbury(J) . . . . . . . . . . . . . . . .381.20 –2.90 397.00 307.60
3i Infrastructure . . . . . . . . . . . . . 113.70 +0.10 115.00 97.00 Compass . . . . . . . . . . . . . . . . . .537.00 +13.50 574.50 399.30 Kazakhmys . . . . . . . . . . . . . . . .1507.00 +10.00 1634.00 955.50 Schroders . . . . . . . . . . . . . . . . .1580.00 –22.00 1605.00 1091.00
A.B. Foods . . . . . . . . . . . . . . . .1073.00 +2.00 1096.00 790.00 Cookson . . . . . . . . . . . . . . . . . . .561.00 –3.00 616.00 364.00 Kesa Electricals . . . . . . . . . . . . .157.50 –0.90 172.40 98.45 Schroders N/V. . . . . . . . . . . . . .1252.00 –18.00 1276.00 894.00
Aberdeen Asset Man . . . . . . . . . .187.50 –2.50 191.60 111.00 Croda Intl . . . . . . . . . . . . . . . . .1500.00 +41.00 1540.00 735.00 .LQJÀVKHU . . . . . . . . . . . . . . . . . .239.30* –1.40 255.00 196.50 Scot. & Sthrn Energy. . . . . . . . . 1122.00 –18.00 1206.00 1006.00
Admiral. . . . . . . . . . . . . . . . . . .1680.00 –13.00 1721.00 1003.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .565.50 –1.50 572.00 401.70 Ladbrokes . . . . . . . . . . . . . . . . .136.10* +0.40 164.60 114.60 Scottish Mortgage. . . . . . . . . . . .683.00 +9.00 683.50 475.00
Aegis . . . . . . . . . . . . . . . . . . . . .128.00 –0.60 137.30 103.10 Davis Service . . . . . . . . . . . . . . .416.60 –5.30 442.30 356.00 Lamprell . . . . . . . . . . . . . . . . . . .388.00 +4.00 393.30 157.30
Afren . . . . . . . . . . . . . . . . . . . . .123.70 –7.20 135.90 77.00 Debenhams . . . . . . . . . . . . . . . . .74.15 –0.80 90.00 51.95 Lancashire Hldgs . . . . . . . . . . . .586.00 +8.00 587.50 416.70 SEGRO . . . . . . . . . . . . . . . . . . . .302.50 –1.20 389.30 244.00
African Barr Gold . . . . . . . . . . . .538.50 –10.50 685.00 520.50 Derwent London . . . . . . . . . . . .1525.00* –8.00 1633.00 1183.00 Land Securities . . . . . . . . . . . . . .693.00 +2.00 743.50 543.00 Serco . . . . . . . . . . . . . . . . . . . . .560.00 –13.00 656.50 491.20
Aggreko . . . . . . . . . . . . . . . . . .1609.00 +9.00 1698.00 727.50 Dexion Absolute . . . . . . . . . . . . .138.10 +0.80 148.00 131.20 Legal & General . . . . . . . . . . . . .103.20 –0.10 107.50 69.05 Severn Trent . . . . . . . . . . . . . . .1419.00 –18.00 1450.00 941.50
Alliance Trust . . . . . . . . . . . . . . .356.80 +1.00 357.00 292.80 Diageo . . . . . . . . . . . . . . . . . . . 1158.00 –3.00 1240.00 988.00 Lloyds Banking Gp . . . . . . . . . . . .68.63 –1.18 79.15 45.30 Shaftesbury . . . . . . . . . . . . . . . .443.20 –1.80 465.00 348.00
AMEC . . . . . . . . . . . . . . . . . . . . 1134.00 +10.00 1144.00 728.00 Dixons Retail . . . . . . . . . . . . . . . .26.84 –0.16 39.75 23.07 Logica . . . . . . . . . . . . . . . . . . . .129.90 –0.40 149.10 100.80 Shire. . . . . . . . . . . . . . . . . . . . .1497.00 –11.00 1532.00 1071.00
Amlin . . . . . . . . . . . . . . . . . . . . .400.10 –3.70 437.60 357.30 Domino’s Pizza . . . . . . . . . . . . . .518.50 +1.50 518.50 278.20 London Stk Exchange . . . . . . . . .748.50 –2.00 938.50 540.50 Smith & Nephew . . . . . . . . . . . . .587.00 –0.50 700.50 528.50
Anglo American . . . . . . . . . . . .2955.50 –73.50 3038.50 2210.00 Drax . . . . . . . . . . . . . . . . . . . . . .374.20 –2.90 478.00 321.50 Lonmin . . . . . . . . . . . . . . . . . . .1869.00 +3.00 2198.00 1344.00 Smith(Ds) . . . . . . . . . . . . . . . . . .180.30 –1.80 185.90 103.00
Antofagasta . . . . . . . . . . . . . . .1428.00 –3.00 1440.00 755.50 Dunelm . . . . . . . . . . . . . . . . . . . .505.00 +7.50 515.00 319.40 Man . . . . . . . . . . . . . . . . . . . . . .293.10 +3.10 373.60 199.60 Smiths . . . . . . . . . . . . . . . . . . .1223.00* –10.00 1297.00 920.00
Aquarius Platinum . . . . . . . . . . .393.20 –1.70 490.00 211.50 Easyjet . . . . . . . . . . . . . . . . . . . .469.70 –2.80 499.90 339.80 Marks & Spencer. . . . . . . . . . . . .413.20 +4.90 431.40 321.90 SOCO Intl . . . . . . . . . . . . . . . . . .316.00 –7.00 510.00 287.40
ARM Holdings . . . . . . . . . . . . . . .351.00 +1.30 419.50 149.60 Edinburgh Inv Tst . . . . . . . . . . . .461.00 –3.20 466.80 343.50 Meggitt . . . . . . . . . . . . . . . . . . . .328.90 +0.80 336.70 234.50 Spectris . . . . . . . . . . . . . . . . . . 1122.00* — 1146.00 653.00
Ashmore . . . . . . . . . . . . . . . . . . .379.80* –1.20 400.50 215.00 Electrocomponents . . . . . . . . . . .256.50 –2.50 261.50 155.00 Melrose . . . . . . . . . . . . . . . . . . .297.40 –3.00 303.10 160.00 Spirax-Sarco Eng . . . . . . . . . . .1805.00* –40.00 1888.00 1060.00
Astrazeneca . . . . . . . . . . . . . . .3077.00 –14.50 3389.50 2670.00 EnQuest . . . . . . . . . . . . . . . . . . .133.40 –4.10 138.50 87.35 Mercantile IT . . . . . . . . . . . . . . .1015.00 +2.00 1016.00 822.50
Atkins(Ws) . . . . . . . . . . . . . . . . .762.50 –8.50 801.00 539.00 Essar Energy . . . . . . . . . . . . . . .547.00 +2.50 566.50 358.50 Michael Page Intl. . . . . . . . . . . . .501.50 — 504.00 326.00 Spirent Comms . . . . . . . . . . . . . .154.70 –1.30 158.30 90.35
Autonomy Corp . . . . . . . . . . . .1429.00 — 2012.00 1319.00 Eurasian Nat Res . . . . . . . . . . . .986.00 –5.50 1276.00 801.00 Micro Focus . . . . . . . . . . . . . . . .365.00 –4.90 550.00 272.20 Sports Direct Intl . . . . . . . . . . . . .130.60 +0.10 154.30 89.85
Aveva . . . . . . . . . . . . . . . . . . . .1527.00 –21.00 1572.00 893.00 Euromoney Inst Inv . . . . . . . . . . .650.00 — 660.00 373.00 Millen & Copthorne . . . . . . . . . . .559.50 –3.50 585.00 329.20 SSL Intl . . . . . . . . . . . . . . . . . . . 1163.00 +1.00 1190.00 627.00
Aviva . . . . . . . . . . . . . . . . . . . . .418.80* +0.40 428.70 290.20 Experian . . . . . . . . . . . . . . . . . . .737.00 –0.50 763.50 559.00 Misys . . . . . . . . . . . . . . . . . . . . .297.00 +1.30 298.50 196.60 St James’s Place . . . . . . . . . . . . .263.10 +0.20 298.00 203.40
Babcock International . . . . . . . . .571.50 –5.50 660.50 489.00 Ferrexpo . . . . . . . . . . . . . . . . . . .364.90 +4.00 396.20 156.10 Mitchells & Butlers . . . . . . . . . . .347.80 –0.20 350.60 241.30 Stagecoach. . . . . . . . . . . . . . . . .222.00 –2.00 226.10 138.40
BAE Systems . . . . . . . . . . . . . . .342.00* +0.10 389.90 288.10 FirstGroup . . . . . . . . . . . . . . . . .406.60 +0.30 428.40 331.20 MITIE . . . . . . . . . . . . . . . . . . . . .201.30 –6.90 248.60 187.60 Standard Chartered . . . . . . . . . .1934.00 –16.00 1975.00 1316.50
Balfour Beatty . . . . . . . . . . . . . . .279.70* –2.80 304.80 228.60 Foreign & Col Inv Tst. . . . . . . . . .298.10 +0.60 299.60 250.00 Mondi . . . . . . . . . . . . . . . . . . . . .510.00 –6.00 562.00 304.70 Standard Life . . . . . . . . . . . . . . .232.40* –1.50 238.00 170.00
Barclays . . . . . . . . . . . . . . . . . . .285.65 –4.20 394.25 253.40 Fresnillo . . . . . . . . . . . . . . . . . .1410.00 –3.00 1436.00 647.00 Monks Inv Tst . . . . . . . . . . . . . . .347.10 –0.50 349.20 265.00 SuperGrp . . . . . . . . . . . . . . . . .1236.00 –24.00 1312.00 499.00
Barratt Development . . . . . . . . . . .83.50 –1.25 149.90 75.50 G4S . . . . . . . . . . . . . . . . . . . . . .258.90 +0.80 285.70 238.70 Morrison Wm . . . . . . . . . . . . . . .275.10* –2.00 307.10 255.00 SVG Capital . . . . . . . . . . . . . . . .223.00 +2.90 225.00 118.30
BBA Aviation . . . . . . . . . . . . . . .207.60 +1.50 220.00 145.90 Genesis Emerging Mkts Fd . . . . .540.00 +4.50 540.50 379.00 Murray Intl Tst . . . . . . . . . . . . . . .928.00* +7.00 938.50 720.00 TalkTalk . . . . . . . . . . . . . . . . . . .133.30 –1.20 153.80 106.60
Bellway. . . . . . . . . . . . . . . . . . . .557.50 +7.00 838.00 510.00 GKN . . . . . . . . . . . . . . . . . . . . . .175.60 –1.80 188.40 100.40 National Express. . . . . . . . . . . . .256.60 –0.70 261.30 155.86 Talvivaara Mining . . . . . . . . . . . .556.00 –25.00 597.00 341.40
Berkeley . . . . . . . . . . . . . . . . . . .835.00 –6.00 917.50 735.00 GlaxoSmithKline . . . . . . . . . . . .1254.00* –8.00 1347.00 1088.00 National Grid . . . . . . . . . . . . . . .584.00 –6.50 607.65 474.80 Tate & Lyle . . . . . . . . . . . . . . . . .530.00 +1.00 534.50 388.00
BG . . . . . . . . . . . . . . . . . . . . . .1278.50 –14.00 1302.50 966.90 Great Portland Estates . . . . . . . .348.50 –0.60 368.60 253.70 Next . . . . . . . . . . . . . . . . . . . . .2134.00 –2.00 2361.00 1816.00
BHP Billiton . . . . . . . . . . . . . . .2430.50 –19.50 2466.00 1661.50 Greene King . . . . . . . . . . . . . . . .436.00 –1.60 484.00 372.50 Northumbrian Water . . . . . . . . . .352.00 –6.80 364.00 230.50 Taylor Wimpey . . . . . . . . . . . . . . .25.11 –0.98 46.34 22.12
BlackRock Mining . . . . . . . . . . . .719.50 +2.00 722.50 490.00 Halfords . . . . . . . . . . . . . . . . . . .427.00 –3.00 562.50 370.10 Ocado Grp . . . . . . . . . . . . . . . . .140.10 –1.90 169.00 120.90 Telecity . . . . . . . . . . . . . . . . . . . .463.80 –13.40 546.00 323.50
BlueBay . . . . . . . . . . . . . . . . . . .481.40* –0.20 495.00 251.00 Halma . . . . . . . . . . . . . . . . . . . . .332.70 –9.10 345.50 221.80 Old Mutual . . . . . . . . . . . . . . . . .132.30* –0.60 146.90 95.30 Templeton Emrg Mkts . . . . . . . . .674.50 +6.50 676.00 469.90
Bluecrest Allblue GBP . . . . . . . . .172.50 — 174.00 151.00 Hammerson . . . . . . . . . . . . . . . .426.90 –7.50 460.30 332.20 Partygaming . . . . . . . . . . . . . . . .230.80 –0.20 339.70 205.80 Tesco . . . . . . . . . . . . . . . . . . . . .416.40* –3.25 454.90 368.40
Booker . . . . . . . . . . . . . . . . . . . . .55.50* –0.25 56.00 37.50 Hargreaves Lansdown . . . . . . . .484.40 –5.40 492.00 259.40 Pearson . . . . . . . . . . . . . . . . . . .972.50 +0.50 1069.00 812.00 Thomas Cook . . . . . . . . . . . . . . .183.20 +1.00 277.20 167.50
BP . . . . . . . . . . . . . . . . . . . . . . .444.00 –2.35 658.20 296.00 Hays . . . . . . . . . . . . . . . . . . . . . . 116.00* –0.30 125.30 82.50 Pennon . . . . . . . . . . . . . . . . . . . .629.00 –10.00 644.00 441.00 Travis Perkins . . . . . . . . . . . . . . .880.50* +11.50 915.00 647.50
Brit Insurance . . . . . . . . . . . . . .1043.00 — 1052.00 709.00 Henderson . . . . . . . . . . . . . . . . .136.20 –1.00 157.80 112.10 Persimmon . . . . . . . . . . . . . . . . .363.20* +2.30 520.00 335.90 TUI Travel . . . . . . . . . . . . . . . . . .208.30 –1.90 313.90 189.20
British Airways . . . . . . . . . . . . . .279.30 –2.30 290.00 180.20 Heritage Oil. . . . . . . . . . . . . . . . .350.00 –11.00 585.00 295.90 Petrofac . . . . . . . . . . . . . . . . . .1523.00 –9.00 1538.00 900.00 Tullett Prebon . . . . . . . . . . . . . . .397.00* –4.50 427.00 261.20
British Amer. Tob . . . . . . . . . . .2448.00 +0.50 2490.50 1832.00 Hikma Pharma . . . . . . . . . . . . . .790.50 –2.50 813.00 452.20 Petropavlovsk . . . . . . . . . . . . . . .948.00 +4.50 1370.00 834.00 Tullow Oil . . . . . . . . . . . . . . . . .1226.00 –25.00 1375.00 979.50
British Empire Tst . . . . . . . . . . . .495.00 +0.60 495.20 338.50 Hiscox . . . . . . . . . . . . . . . . . . . .355.50 –0.80 371.60 299.60 Phoenix Group . . . . . . . . . . . . . .681.00 –4.00 775.00 550.50 UK Commercial Prop. . . . . . . . . . .80.10 –0.40 84.90 71.00
British Land . . . . . . . . . . . . . . . .513.00* –5.00 525.00 416.00 Hochschild Mining . . . . . . . . . . .545.50 — 556.50 220.00 Premier Farnell . . . . . . . . . . . . . .289.00 +3.00 290.00 144.40 Ultra Electronics . . . . . . . . . . . .1771.00 +12.00 1903.00 1198.00
Britvic. . . . . . . . . . . . . . . . . . . . .476.30 –5.30 518.00 347.00 Home Retail . . . . . . . . . . . . . . . .210.30 –0.30 326.30 201.70 Premier Oil . . . . . . . . . . . . . . . .1751.00 –14.00 1780.00 984.00 Unilever . . . . . . . . . . . . . . . . . .1901.00 –12.00 2024.00 1662.00
Brown(N.) . . . . . . . . . . . . . . . . . .291.70 –3.30 308.00 204.80 Homeserve . . . . . . . . . . . . . . . . .435.00 +1.30 502.00 422.00 Provident Financial . . . . . . . . . . .731.00* –9.00 983.50 730.50
BSkyB . . . . . . . . . . . . . . . . . . . .728.00* +8.00 737.00 521.00 HSBC Hldgs . . . . . . . . . . . . . . . .689.10 +6.10 766.80 595.20 Prudential . . . . . . . . . . . . . . . . . .642.50 –5.50 665.00 475.70 United Utilities . . . . . . . . . . . . . .618.00 –10.00 632.00 439.30
BT . . . . . . . . . . . . . . . . . . . . . . .158.60 –3.20 165.50 108.40 Hunting . . . . . . . . . . . . . . . . . . .647.00* –5.50 661.00 429.10 PZ Cussons . . . . . . . . . . . . . . . .394.00 –2.00 406.80 231.70 Utd Business Media . . . . . . . . . .676.50 –0.50 692.00 408.30
BTG . . . . . . . . . . . . . . . . . . . . . .261.30 –1.70 270.80 150.00 ICAP . . . . . . . . . . . . . . . . . . . . . .481.60 –3.90 489.30 291.70 Randgold Resources. . . . . . . . .5990.00 +50.00 6755.00 4126.00 Vedanta Resources . . . . . . . . . .2350.00 +31.00 2967.00 1795.00
Bunzl . . . . . . . . . . . . . . . . . . . . .731.00 +1.00 784.50 614.00 IG . . . . . . . . . . . . . . . . . . . . . . . .533.50 –4.00 560.00 309.50 Reckitt Benckiser . . . . . . . . . . .3579.00 –19.00 3667.00 2990.00 Victrex . . . . . . . . . . . . . . . . . . .1266.00 +1.00 1355.00 753.00
Burberry . . . . . . . . . . . . . . . . . .1035.00 –4.00 1065.00 555.50 Imagination Tech Gp . . . . . . . . . .405.00 –1.20 445.00 200.00 Reed Elsevier . . . . . . . . . . . . . . .536.00 +10.00 566.00 454.60 Vodafone . . . . . . . . . . . . . . . . . .175.00 +1.10 175.00 126.50
Cable & Wire Comms . . . . . . . . . .50.50 +0.82 150.00 46.51 IMI . . . . . . . . . . . . . . . . . . . . . . .839.00 +3.50 841.00 448.30 Regus . . . . . . . . . . . . . . . . . . . . . .84.25 –0.95 125.50 64.05 Weir . . . . . . . . . . . . . . . . . . . . .1693.00* +25.00 1705.00 660.00
Cable & Wire Wwide . . . . . . . . . . .70.40 +0.85 94.80 60.05 Imperial Tobacco. . . . . . . . . . . .2054.00 –15.00 2159.00 1728.00 Renishaw . . . . . . . . . . . . . . . . .1203.00 +9.00 1250.00 479.00 Wellstream Hldgs . . . . . . . . . . . .750.00 –20.00 810.00 429.70
Cairn Energy. . . . . . . . . . . . . . . .383.00 –2.50 497.60 306.80 Inchcape. . . . . . . . . . . . . . . . . . .341.90 –2.60 358.00 235.00 Rentokil Initial . . . . . . . . . . . . . . . .94.45 –0.05 140.20 89.70 WH Smith . . . . . . . . . . . . . . . . . .476.40 –2.00 551.00 392.20
Caledonia Invs . . . . . . . . . . . . .1814.00 –2.00 1833.00 1496.00 Informa . . . . . . . . . . . . . . . . . . . .435.20 –7.00 450.50 263.30 Resolution . . . . . . . . . . . . . . . . .247.80 –4.80 280.50 220.10 Whitbread . . . . . . . . . . . . . . . . .1789.00* — 1798.00 1215.00
Capita . . . . . . . . . . . . . . . . . . . . .732.50 –7.50 829.50 693.00 Inmarsat . . . . . . . . . . . . . . . . . . .695.00 +20.00 831.00 583.00 Rexam . . . . . . . . . . . . . . . . . . . .318.10 –0.40 348.80 271.40 William Hill . . . . . . . . . . . . . . . . .165.70* –1.10 217.80 158.00
Capital & Counties . . . . . . . . . . .152.90 –4.00 159.00 99.60 Intercontl Hotels . . . . . . . . . . . .1202.00 –9.00 1244.00 803.00 Rightmove . . . . . . . . . . . . . . . . .794.50* +3.00 830.00 456.90 Witan Inv Tst . . . . . . . . . . . . . . . .487.60 +1.70 492.00 397.30
Capital Shopping Centres . . . . . .388.40 –2.40 523.50 300.10 Intermediate Capital . . . . . . . . . .340.00 +2.30 341.10 233.50 Rio Tinto . . . . . . . . . . . . . . . . . .4331.00 –15.00 4400.00 2751.00
Carillion . . . . . . . . . . . . . . . . . . .353.50* –2.80 361.90 272.00 Intertek . . . . . . . . . . . . . . . . . . .1928.00* +7.00 1939.00 1136.00 RIT Capital Partners . . . . . . . . . 1141.00 –7.00 1215.00 940.00 Wolseley . . . . . . . . . . . . . . . . . .1792.00 +8.00 1807.00 1155.00
Carnival . . . . . . . . . . . . . . . . . .2751.00 –23.00 2937.00 1950.00 Intl Personal Fin . . . . . . . . . . . . .332.10 +2.20 340.90 181.40 Rolls Royce . . . . . . . . . . . . . . . .607.00* +16.00 661.50 460.90 Wood Group (John). . . . . . . . . . .466.30 –3.60 473.10 279.60
Catlin . . . . . . . . . . . . . . . . . . . . .365.50 +2.50 394.60 303.20 Intl Power . . . . . . . . . . . . . . . . . .429.40 +2.50 433.50 256.20 Rotork . . . . . . . . . . . . . . . . . . .1774.00 +1.00 1906.00 1101.00 WPP . . . . . . . . . . . . . . . . . . . . . .748.50* –6.50 758.50 561.00
Centamin Egypt . . . . . . . . . . . . .185.00 +5.50 194.40 103.50 Invensys . . . . . . . . . . . . . . . . . . .320.30 +6.80 350.30 224.90 Royal Bank Of Scot . . . . . . . . . . . .43.64 –1.36 58.95 28.25 Xstrata . . . . . . . . . . . . . . . . . . .1365.00 –20.00 1417.00 832.50
Centrica . . . . . . . . . . . . . . . . . . .333.80* –1.90 347.00 239.70 Investec . . . . . . . . . . . . . . . . . . .508.00 –7.00 565.00 411.50 Royal Dutch Shell A . . . . . . . . .2058.50* –25.50 2106.50 1621.00 LONDON TOP 250 BY MARKET CAPITALISATION
Charter Intl . . . . . . . . . . . . . . . . .710.00 –2.50 855.50 563.50 ITV . . . . . . . . . . . . . . . . . . . . . . . .71.45 +0.50 72.50 46.77 Royal Dutch Shell B . . . . . . . . .2026.00* –18.00 2071.00 1550.00
Chemring . . . . . . . . . . . . . . . . .2870.00 –5.00 3711.00 2551.00 Jardine Lloyd Thompson. . . . . . .586.00 –5.50 604.50 420.70 RSA Insurance . . . . . . . . . . . . . .131.50* –0.20 137.40 114.10 * Ex-Dividend † Suspended
Close Bros . . . . . . . . . . . . . . . . .820.00* +10.00 834.00 657.00 Johnson Matthey . . . . . . . . . . .1962.00 +6.00 1999.00 1435.00 SABMiller . . . . . . . . . . . . . . . . .2024.00 –7.00 2103.00 1631.00
Cobham . . . . . . . . . . . . . . . . . . .209.40* +4.60 278.60 199.20 JPMorgan Emerg Mkts . . . . . . . .614.00 +0.50 618.00 448.00 Sage . . . . . . . . . . . . . . . . . . . . . .269.80 +2.10 286.80 208.20 www.interactivedata.com

Drop in mining stocks takes a toll on the Wall Street falls as banks
FTSE but Rolls-Royce begins to recover and strong dollar weigh
Poor’s 500 Index was down 2.60

THELONDON to boosting growth.

Commodity-linked assets traded
lower as an unwinding of dollar short
titative easing programme.
On the second tier, Irish Life &
Permanent tumbled 17 per cent after
THENEW YORK points, or 0.21 per cent, at 1,223.25.
The Nasdaq Composite Index was up
1.07 points, or 0.04 per cent, at

REPORT positions that began after solid US

jobs data on Friday gathered pace.
Xstrata and Anglo American, down
KBW downgraded its rating on the
bancassurer on growing concerns
over the deteriorating economic envi-
REPORT 2,580.05.
The dollar rose 0.7 per cent against
major currencies on renewed worries
1.4 per cent and 2.4 per cent respec- ronment in Ireland. about budget problems in Ireland
In association with tively, were also hit by uncertainty Sticking with mid-caps, Gartmore In association with and other debt-weakened euro zone
over a strike by workers at the world’s slid 15 per cent after star manager members.
third biggest copper mine. Roger Guy became the latest key fig- Gains in technology stocks, includ-
African Barrick Gold shed 1.9 per ure to leave the fund manager, ing Apple, up 0.5 per cent to $318.80,
cent after Goldman Sachs cut rating prompting Numis to place its rating kept the Nasdaq near break-even.

B W
RITAIN’S top shares fell yester- and earnings estimates. under review. Serco fell 2.3 per cent as ALL Street retreated from a Material stocks outperformed the
day as mining and energy Energy stocks declined in tandem S&P Equity Research began its cover- two-year high yesterday, broader market, and gold miners rose
stocks tracked lower commodi- with a fall in the crude oil price. age of the outsourcing firm with a weighed down by financial as the precious metal powered to an
ty prices, while financials eased Tullow Oil dropped two per cent as “sell” rating. On the upside, satellite stocks and a stronger dollar. all-time high above $1,400 an ounce.
on Basel III and sovereign debt con- Goldman Sachs cut its rating to “neu- operator Inmarsat rose three per cent The broad S&P 500 has risen five Shares of coal producers rose on
cerns. tral” from “buy”. after beating third-quarter earnings straight weeks, supported by the strong global demand for steel-mak-
Rolls-Royce rose 2.7 per cent after Scottish & Southern Energy fell 1.6 expectations. Federal Reserve's plan to buy $600bn ing coal and renewed talk of mergers
the engine manufacturer announced per cent after Nomura cut its rating Invensys gained 2.2 per cent as of treasuries to lower interest rates in the sector.
progress in understanding the cause on the utility to “reduce” from “neu- Credit Suisse joined a crop of brokers and reinvigorate a sluggish economy. Shares of Alpha Natural Resources
of the failure of a Trent 900-powered tral”. who have recently raised their target With those gains, traders said most rallied 8.6 per cent to $48.26, while
A380 Qantas flight on 4 November, Financials were struggling with prices on the engineering group. S&P sectors were susceptible to a Arch Coal gained 4.6 per cent to
adding the incident was specific to traders citing criticism over the Basel decline. $29.61. Consol Energy rose 3.6 per
that type of engine. III agreement, ahead of the G20 sum- ANALYSIS l FTSE Financial stocks the top gainers in cent to $40.71.
The incident has rattled a global mit in Seoul on11-12 November and 5,849.96 recent sessions, fell 0.8 per cent fol- Volume was light, with about
aviation industry recovering from resurgent Eurozone sovereign debt 6,000 8 Nov lowing a 6.9 per cent weekly advance. 7.07bn shares traded on the New York
heavy losses during the downturn, woes weighing on stocks. Declines in bank shares could go Stock Exchange, the American Stock
and has been damaging for Rolls- Banks were lower, led by Royal 5,800 beyond profit-taking from last week's Exchange and Nasdaq, below the year-
Royce, its shares having dropped near- Bank of Scotland which shed 3 per 5,600
gains. to-date daily average of 8.73bn.
ly 10 per cent. cent. The Fed’s pledge to keep interest About 16 stocks fell for every 13
The FTSE 100 closed down 25.39 Investors will watch for the Bank of 5,400 rates near record lows was viewed as that rose on the New York Stock
points, or 0.4 per cent, at 5,849.96. It England quarterly inflation report on hurting bank profits. Exchange.
5,200
hit a 29-month closing high on Friday Wednesday and governor Mervyn The Dow Jones industrial average Meanwhile, on the Nasdaq, about
after investors cheered the US Federal King's news conference for any indica- 5,000 was down 37.24 points, or 0.33 per 13 stocks fell for every 12 that
Reserve's commitment on Wednesday tion on the central bank's own quan- 9 Aug 27 sep 17 Sep 7 Oct 27 Oct cent, at 11,406.84. The Standard & advanced.
CITYA.M. 9 NOVEMBER 2010 In association with 29

Quantitative easing risks stoking a

bubble in emerging market equities
The Fed has cheered up investors
but such optimism may evaporate
very quickly, writes Jessica Mead

E
XPECTATIONS of another round of Is the sky the limit for
quantitative easing in the US had the share prices of
been riding high for several months emerging equities?
and last week Helicopter Ben gave the Picture: GETTY
markets exactly what they had been clam-
ouring for. Investors across the world wild-
ly applauded the Federal Reserve’s decision
last week to pump $600bn into the US
economy and needed little excuse to keep
the switch firmly flicked to risk-on and
continue the party. Since then, stock mar-
kets climbed to the heady levels last seen
in the summer of 2008 while Brent crude
oil rose to more than $88 a barrel, its high-
est since early May.
The Fed might be keeping investors
upbeat but not everybody was so enthusi-
astic about more quantitative easing.
Although emerging market policymakers
have softened their stance ahead of this
week’s G20 meeting in Seoul, they initially
slammed the Fed’s actions. Even Germany
has gone as far as labelling QE2 irresponsi-
ble.
But the sceptical permabears are also
growling a note of caution, arguing that
further quantitative easing is more likely
to boost emerging market equities –
already at 30-month highs – and commod-
ity prices rather than stimulate the
American economy.
The International Monetary Fund’s (IMF)
chief economist Olivier Blanchard argued
at the end of last week that the second
round of QE will intensify flows into
emerging markets by reducing the carry
trade risk. Gluskin Sheff’s permabear
David Rosenberg agrees: “The flip side of
the decline in the dollar is that global cap-
ital flows to emerging markets are surging
and this has taken the Thai baht to a 13-
year high.” Rosenberg points out that the
inverse correlation between the dollar and
emerging market equities is very strong, at
90 per cent in the past six months and 92 current Fed-inspired, indiscriminate buy- on the way up and underperforming on ANALYSIS l Inflows pouring into Asia are on a par with the mid-1990s
per cent over the past two months. With ing of emerging market equities and the the way down. 7
QE expected to put more downward pres- liquidity-fuelled equity bubbles in the mid- He adds: “The simple fact is that if, as I Asia net capital inflows (% of GDP)
6
sure on the dollar, further upside ought to 1990s and in 2008. expect, QE2 fails and fiscal tightening Asia (ex Japan & China) net capital inflows (% of GDP)
be expected for emerging market equities While bubbly markets are perhaps a nat- sends the fragile western economies back 5
at least in the near-term. ural consequence of the divergent growth into recession, we will see the unfolding 4
Investors expecting another a leg higher paths of the advanced and emerging liquidity-driven emerging market and 3
in emerging market indices and commodi- economies, QE2 is artificially giving them commodity bubble burst just as violently 2
ties should be careful, however. For a start, a helping hand. India is trading at an aver- as it did in the second half of 2008.”
policymakers are looking increasingly age price-to-earnings (p/e) ratio of 19 times, While QE2 continues to convince 1
keen on pursuing capital controls as a while China is at 15 times and Brazil 13 investors, emerging market equities will 0
means of stemming inflows and dampen- times. remain well supported. But as we saw in -1
ing inflationary pressures. Such policies Societe Generale’s Albert Edwards says: both the mid-90s and in the more recent -2
would limit any increase in equity prices. “Despite all this liquidity pouring into financial crisis, investor optimism is all too
-3 Source: Societe Generale
Furthermore, unfavourable compar- emerging market equities, they are just quick to evaporate. Investors should con-
isons are already being drawn between the another high beta trade, outperforming sider themselves warned. 1995 1997 1999 2001 2003 2005 2007 2009

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 Lifestyle
30
Luxe lotions for winter skin
Combat facial dryness with some rich products, says Zoe Strimpel
1 2
The gel
Skinceutical’s trusted workhorse, the
Hydrating B5 gel, is enriched with vitamin B5
to help tissue repair and contains hyaluronic
acid, the body’s natural hydrator, to bind mois-
ture to the skin. £56, www.skinceuticals.co.uk
3 4
The creme
A super-soother from Caudalie Paris, this
masque creme moisturises the driest skin,
relieves tightness and reduces redness.
Contains sweet lime, vetiver and more.
£21.50, www.spacenk.co.uk
5 6
The mask
Any product from New York super-facialist Ling
should be embraced. The Ginseng Therapy
Moisture Mask contains aloe vera to soothe, colla-
gen to firm, ginseng to tone and glycogen to stimu-
late cell growth. £40, www.beautyworkswest.com
7 8
The exfoliator
Sjal’s sumptuous Pearl Enzyme mask uses crushed pearls,
amber beads, mushroom, sugar cane, maple extract, and fruit
acids along with blue sapphire, diamond, ruby and amethyst to
illuminate your skin. £135, www.beautyworkswest.com
| Beauty
The scrub
Spiezia’s organic rose and chamomile face
scrub is gentle and great for cleansing
every skin type. Jojoba, coconut and sesame
oils are deeply moisturising, while chamomile and calendula
soothe newly exposed skin cells. £19.10, www.glowgetter.co.uk
The elixir
Designed for fragile, post-trauma skin on the face
and body, Creme de la Mer’s Concentrate soothes
the appearance of redness and irritation, using a
special “miracle broth” – a combination of marine
and plant extracts. £266, www.harrods.com
The night cream
Cult Hungarian skin care brand
Omorovicza’s Rejuvenating Night Cream
is rich but silky, containing hazelnut peptides to firm
and lift and plum almond and vitamin A-rich carrot oils to
soothe and plump. £94, www.liberty.co.uk
The hydrator
Beloved facialist Sarah Chapman’s Intense
Hydrating Booster is a moisture flood for stressed,
parched, dehydrated and unbalanced skin.
Hyaluronic acid, rosewater and moisture magnets all
help plump skin. £56, www.spacenk.co.uk
OUT OF OFFICE
ZOE STRIMPEL
CANARY WHARF ICE RINK OPENS
Opening on Saturday, skaters will have
720 metres of rink at their disposal,
and a bar for a rinkside dram. Those
who want to stay firmly inside can
watch the world skate by from a
viewing gallery. Canada Square
Park, E14; £12 per hour.
www.canarywharficerink.com.
EVOLVING ENGLISH AT BL
The roots of Old English, slang dictionaries,
medieval manuscripts, advertisements and
newspapers from around the world come
together alongside everyday texts. Follow the
social, cultural and historical influences on
the English language and see how it’s still
evolving today. Fascinating stuff. 12 Nov-3
April at the British Library, 96 Euston Rd,
NW1. Free.
CITYA.M. 9 NOVEMBER 2010
FIT IN
THE CITY
BY LAURA WILLIAMS
FITNESS & DIET EXPERT
No pain, no
gain: how to
tone your abs
S
PANX pants for men controversially
launched a couple of weeks ago, but if
you’re not a guy who’s content pouring his
tum into body-shaping undies, we can help
you get a good stomach for real: here are the five
most effective abs exercises out there.
SWISS BALL CRUNCHES: Sit atop the ball
and slowly roll forward until your lower back is
supported by the curve of the ball. Your shoul-
ders, hips and knees should all be in alignment.
Fold your arms behind your head. Slowly curl
your trunk off the ball (visualise pulling the bot-
tom of your ribcage down towards your hips),
stopping when your head and shoulders are 45°
from the rest of your body. Then lower back
down until your shoulders are once again in line
with your knees. Do at least two sets of 20
crunches.
NAVY SEALS FLUTTER KICKS: From a
seated position, bring your legs off the floor and
extend them out in front of you at a 45° angle
from the floor. Extend your arms out in front of
you in line with your shoulders. Take care not to
let your body collapse – you should be forming a
V shape between stomach and thighs. Keeping
your stomach tightly pulled in, scissor your feet
together by crossing them over at the ankle. Try
for 30 scissors, relax down and repeat.
THE NO-CRUNCH CRUNCH: From a stand-
ing position, place your fingers on your hip bones
and trace them inward. Then, breathing deeply,
imagine that you’re wearing a belt or a tight pair
of trousers, and pull your tummy button back
towards your spine. Don’t hold your breath and
hunch your shoulders – just pull in that lower
part of your tum. Hold this pulling-in for 10 sec-
onds, relax and repeat. Do 5-10 of these at a
time.
THE PLANK: Lie face down on the floor rest-
ing on your forearms. Slowly push off the floor
rising up onto your toes and resting on your
elbows. Make sure that your back remains flat,
in a straight line from head to heels, and con-
tract your abdominals to prevent your bottom
from sticking up in the air. Hold for a count of
10, relax down and repeat. Build up to holding
position for 30 seconds, then one minute.
SWISS BALL SCISSORS:
Lie on your back with the ball
clamped between your feet and
legs extended up in the air.
Keeping your legs and ball level
with your hips, slowly lower
the ball down to one side
and as you get close to
the floor, rotating your
hips so that the ball twists
in the air. Then pull the ball
back up to your starting
Above: skate among position and repeat on
the towers of financial the other side. Do 12
commerce at the ice reps, rest, and repeat.
rink at Canary Wharf. www.laurawilliams
onlinecom;
laura@lauraw-
illiamsonline.com.
CITYA.M. 9 NOVEMBER 2010
Eat beef, drink cocktails and be merry
The Covent Garden
outpost of a famous
steakhouse delivers
juicy meat and good
drink at the right price
Hawksmoor Seven Dials
11 Langley St, WC2H 9JG
Tel: 020 7856 2154
FOOD ihhhh
SERVICE ihhhh
ATMOSPHERE ihhhh
Cost per person without wine: £35
H
AWKSMOOR Seven Dials could so
easily be just another unmemorable
new opening. It’s got the parquet
flooring, the dark wooden tables,
the exposed brick and the big industrial
beams. Tick, tick, tick, tick.
But it’s not just another unmemorable
opening. The meal I had there on Saturday
is one I will remember for a good long
while.
And if it looks like it’s in an old brewery,
that’s because it is – the old Watney-
Combe brewery to be precise. So its beams
and bricks are unavoidable, though they
do give it a bit of a tired faux-industrial aes-
thetic.
But owners Will Beckett and Huw Gott
really know how to do cool – friendly cool,
as in the type that makes you want to
come back for the good service, good food,
top drinks and gratifying value. They’ve
created a cult following at the original and
beloved Hawksmoor near Old Street
thanks to top beef and groovy cocktails.
And their other Shoreditch venture, Green
and Red, was a supremely popular venue
serving Mexican food and drink – they’ve
now closed it down to focus on the
Hawksmoors. Years back they started (and
sold) the Red Church, a tiny bar off Bethnal
Green Road that serves tasty cocktails and
now attracts an enthusiastic, dedicated
late-night throng.
Clearly, cocktails are integral to Beckett
and Gott’s vision of dining. And what a
welcome vision it is. The bar list is a huge
and diverting mixture of tipples, crammed
with the zany, the historical, the subtle
and the pretty. There are juleps, punches
and fizzes. All of them ooze class – you
won’t find anything sickly sweet rammed
into a giant mass-produced martini glass
here. For a start, all the glasses are delicate
and beautifully shaped – we had two differ-
ent types of bulbous martini glass (more
like champagne bowls) and a more upright
crystal chalice, all in one sitting.
Charming. Inside them were a Perfect Lady
THREE OTHER FIRST-RATE STEAKHOUSES
ZOE STRIMPEL
GOODMAN – MAYFAIR AND CITY
With a cultish following at its Mayfair restaurant, only the
best cuts of beef need apply at this Russian-owned New
York-style steakhouse. Beef is aged in a room on-site and
served in a multitude of cuts, all cooked on a charcoal grill.
A stylish, atmospheric interior and good drinks have
cemented its success – both joints are always full. For
addresses, see www.goodmanrestaurants.com.
WORDS BY
ZOE STRIMPEL
(gin with peach brandy, lemon juice and Hawksmoor Seven
egg white; we ordered it twice each it was Dials is in an old
so good), a tobacco old fashioned (with brewery.
tobacco bitters and bourbon) and a
Hawksmoor Fizz (gin, lemon, cream, fruit
syrup, orange flower water and egg white).
And so to dinner. Oh boy. Meat, glorious
meat, is the serious business here. The beef
is from Longhorn cattle reared by the folks
behind the famous Ginger Pig butchery
and steaks are dry-aged for minimum of 35
days. To kick off the meat feast, we dove
into the starter list, greedily opting for
three dishes when one would have done.
We had the famous Tamworth belly ribs –
four great slabs of melting pork marinated
in something more subtle and natural-tast-
ing than BBQ sauce; bone marrow and
slow cooked onions which came out in
three enormous bones crammed with
gratinated onions and the trembly mar-
row fat which, when rubbed on the accom-
panying thick-cut, smoky farmhouse toast,
was simple heaven (and a steal at 5.50), and
finally, corned beef and bacon.
We were full, in honesty. But the main
event was to come. For my friend: a piece of
HIGH TIMBER
Unlike most steakhouses opening these days, City A.M.’s
local favourite is light and airy, with great views of the
Thames and Tate Modern. The steaks come oozing and
juicy on wooden boards, ornamented with roasted vine
tomatoes, onion rings and mushrooms. Best of all,
Neleen Strauss, the sommelier and co-owner, keeps
40,000 bottles in the cellar. 8 High Timber St, EC4V.
Lifestyle | Restaurants
bone-in sirloin literally bigger than her
head at 600 grams, served with beef drip-
ping chips and stilton hollondaise. The
steak was a glorious hunk of drippingly
pink, charcoaly flesh – with none of that
obnoxious chewiness that comes from
poorly integrated fat and bad cuts. I’m not
sure I’ve tasted anything better – even in
the US.
Hawksmoor Spitalfields is famous for its
burgers. And word had already reached me
of a kimchi burger at Seven Dials – kimchi
is a spicy Korean-style of cabbage – so I
ordered it off the bar menu. It was deli-
cious and unusual – after all, have you ever
had an aromatic, Asian-tasting, stirfry-
loaded cheeseburger? Nor had I.
I finished off dinner with a very nice
chocolate pudding – it came in a large
ramekin and made Gu puddings seem
ungenerous and a bit crap by comparison.
For those that want to continue the burger-
’n’-fries, Americana pattern, there are mini
Sundaes – we tried the Cornflake one (you
can have sticky toffee, chocolate and vanil-
la), and jolly nice it was too, if you fancy
simple pleasures.
REDHOOK
From the same people as Milk & Honey, this is a bit of a
cool-by-numbers sort of place, serving surf ‘n’ turf –
meaning steak and seafood – alongside good cocktails.
Don’t go for mind-blowing food – although we did have
some incredible tea-smoked scallops – but rather for the
convivial package. Sit at the bar first and enjoy the
spherical ice cubes. 89 Turnmill Street, EC1M.
31
Come to Hawksmoor Seven Dials ambi-
tiously hungry and deeply thirsty. You
won’t want to leave and when you do,
you’ll begin thinking about when you can
come back.
FOOD & BOOZE
NEWS
ZOE STRIMPEL
NOMA’S RENEE REDZEPI EVENT ON FRIDAY
Denmark’s answer to Heston Blumenthal will
be in town on Friday evening for a one-off event
to promote his new book: Noma: Time and
Place in Nordic cuisine. Redzepi (below) is
famous for his creative use of ingredients and
arrangements on the plate, recreating scenes in
nature in an ingenious way. Don’t miss this
chance to hear him discuss that process. 12
Nov, 6:30pm. Freemasons’ Hall, 60 Great Queen
Street, WC2. For tickets, call Seetickets on
0844 209 7351.
DANISH FOOD COMES TO CLERKENWELL
Clerkenwell continues to attract interesting
new dining options. The latest is from another
Dane – Christoffer Hruskova – who is following
off success of his excellent Fig in Islington.
Expect the likes of reindeer rolled in burnt hay
with salt-baked beetroot and smoked bone
marrow, and glazed veal sweetbread with pick-
led green elderberries. The design is minimalist
and the prices very reason-
able: £20 for three cours-
es. Opens Monday. 69-73
St John Street, EC1M.
SPARKLING SAKE
Zuma and Roka (Canary
Wharf) will for the
first time stock
sparkling sake:
Dattsai Sparkling
Junmai Daiginjo,
from a small
boutique brew-
ery in Japan.
Worth remembering
next time you order.
 32 Lifestyle | TV& Games CITYA.M. 9 NOVEMBER 2010

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
7pm The One Show
7.30pm EastEnders: BBC News
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EastEnders 3.35am The Bionic Vet
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7pm Sky Sports News at Seven
7.30pm Soccer Special
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Strongest Man 8.30pm Boxing
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Rallying 11.30pm-12.30am
New York Marathon
ESPN
7pm ESPN Serie A Kicks
7.15pm Live Rugby Union
9.45pm ESPN Kicks: FA Cup
10pm Eredivisie Review Show
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Review 11.30pm ESPN Serie A
Kicks 11.45pm ESPN Game of
the Week 12.15am ESPN Kicks:
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Hockey 3am Press Pass 2010
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Show 4.45am-5am ESPN Serie
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7pm CSI: Miami 8pm America’s
Next Top Model 9pm Four
Weddings 10pm Teens That Tie
the Knot 11pm Criminal Minds
1am CSI: Crime Scene
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Children in Need: 50 Greatest
Moments 9pm Mad About the
House 10pm EastEnders
10.30pm Lip Service 11.30pm
Family Guy 12.15am Mad About
the House 1.15am Lip Service
2.15am Children in Need: 50
Greatest Moments 3.15am Total
Wipeout 4.15am-5.15am Are
You Fitter Than a Pensioner?
E4
7pm Hollyoaks 7.30pm Friends
9pm The Event 10pm FILM
1.05am The Event 1.55am Life That Shook the World 5.30am-
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QUICK CROSSWORD
   

SUDOKU KAKURO
10 17 6 24 12 21 41 9  
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T R 16 Boy child (3)
11 Ray of natural light (7)

QUICK CROSSWORD 2 3 1 9 7 8 17 Amy Winehouse

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 Sport
Europe’s finest have never been so dominant
T
GOLF COMMENT
SAM TORRANCE
Audley’s sure
his blueprint
for success is
ready to pay
British gold medallist has one last crack at the
heavyweight title but he’s not ready to alter his
style to fulfill his lifetime goal, by James Goldman
A
FTER an hour in the company
of Audley Harrison two things
become abundantly clear: This
is a man who settles for noth-
ing other than perfection and if eat-
ing were an Olympic sport, Harrison
would be in with a chance of adding
to the heavyweight gold he won in
Sydney a decade ago.
Halfway through a mid-afternoon
snack of roast chicken and boiled
rice, a portion so large that it would
put most people’s Christmas din-
ners to shame, Harrison calls for
the attention of the barmaid.
“Excuse me lovely,” he says
with typical politeness. “I
ordered half a cranberry
juice and half an orange
juice. This has way too
much orange in it for
me. Can I have another
one, please? Exactly
half and half, thank
you.”
On Saturday night
Harrison will go toe-to-toe
with fellow Brit David Haye
(right), almost unnaturally
confident he is finally
about to fulfill his ambi-
tion of becoming heavy-
weight champion of the
world.
Anyone with even the flim-
siest knowledge of Harrison’s
career would be aware the
story so far has been anything
but straightforward and could
mistake confidence for delu-
sion.
After winning the Olympics
and becoming a household
name at 29, Harrison’s career
HIS might just be the greatest
year ever for European golf. The
Ryder Cup team retained their
crown magnificently while the
players have gone from strength to
strength, as the weekend showed.
Francesco Molinari, part of that tri-
umphant dozen at Celtic Manor, con-
tinued his ascent with a thrilling
victory at the HSBC Champions in
Shanghai. The Italian beat Lee
Westwood by one shot after the pair
almost immediately began to head in
the opposite direction. A lucrative
contract with the BBC was consigned
to the dustbin after the corporation
opted to remove boxing from its
schedule permanently and Harrison
was forced to sign with promoter
Frank Warren.
It was hardly a match made in
heave – Harrison claimed “I never
ever wanted to sign with Warren” –
and the 39-year-old’s career reached
its nadir in December 2008 when
he was defeated by Belfast taxi
driver Martin Rogan.
A surprising upturn in fortunes
coincided with his victory in last
year’s Prizefighter series, a
one-night knockout tourna-
ment normally the reserve
of journeymen sluggers
hoping for a once in a life-
time pay cheque, rather
than a launchpad for
those with designs on
world domination.
If Harrison’s victo-
ry there showcased
the natural talent he
has never been accused of
lacking, his knockout victory
over Michael Sprott last April
finally suggested he had dis-
covered the fight and desire
to fulfill his lofty goals.
Behind on all three score-
cards, Harrison found some-
thing from nowhere in the
final round to send Sprott
hurtling towards the canvas.
With one punch, he was up
and running again.
To have engineered an
opportunity against Haye,
YOUNGS DRAWING STRENGTH
FROM DEFEAT TO ALL BLACKS
PERFORMANCE SHOWED ENGLAND CAN
TAKE ON BEST, SAYS SCRUM-HALF: P35
turned it into a straight duel.
Molinari had to summon his very
best to see off Westwood.
Incredibly it was only Molinari’s
second win on the European Tour, his
previous success coming four years
ago in his native country. It just goes
to show what a boost he has had from
being part of that Ryder Cup win, and
the same goes for his team-mates. In
the five tournaments since, three of
the titles have gone to members of his
having hit rock bottom, represents a
remarkable achievement in itself, but
Harrison being Harrison, he is not
about to heed advice from elsewhere,
or adopt a different approach. Just
like the way he prefers his non-alco-
holic refreshments, it’s his way or no
way at all.
“I have no doubt my way will work
out in the end,” said Harrison, who
had by now moved onto tea and bis-
cuits. “I’m like John Wooden the
UCLA basketball coach. He was the
greatest of all time and recently
passed away. For 10 years he didn’t
win a thing, then bang, he won it all.
“All great achievements take time
and you have to have a plan. People
like Wooden and Arsene Wenger are
very intelligent guys. They might take
some stick for doing things their way,
but ultimately they have this inner
belief that it will turn out right in the
end. I believe it will for me too.
“Having been down there, it will
mean more to do it my way. He who
has his own pathway needs no map. I
don’t need anyone else’s map.
“My life is no accident. I don’t need
to listen to anyone else. OK it’s taken
me longer to get here than I wanted
to. I admit it wasn’t smart, the time-
frame I set.
team. As well as Molinari, Graeme
McDowell and Martin Kaymer have
both enjoyed further victories.
Take a look at the current world
rankings and the picture looks even
rosier. Westwood is top of the pile,
having marked his first week at No1
in fine style. Molinari is up to 14 and
will surely break into the top 10 soon.
The upper echelons are already burst-
ing with European talent. Six of the
top 10 are from this continent, while
“It took me longer to learn how to
fight than I imagined. I nearly fell out
of the game and it took a lot of
strength to get back where I am and
now as a result of these knocks I
know I am the complete fighter. That
isn’t where David Haye is. I am ready
for this moment more so than he is.”
Cocky, brash and handsome, Haye
has the capacity to light up a flagging
heavyweight division. But Harrison
sees nothing special, nothing original
intheBermondseyboxer’spersonality
or style. Indeed, Harrison, quite the
man about town in his younger days,
sees a lot of himself in Haye at that age.
“I helped create him and that’s
why I’m going to destroy him,” he
said. “He can’t see the comparisons. I
see how he goes out of control and
I’m going to be doing him a favour.
I’m going to be beating him up with
love and compassion because it’s
going to be good for him in the long
run.
“Some people told me, my spies, he
was in Vegas for the Marquez fight in
July walking round in red leather
cowboy boots and a red jacket,
screaming trying to get attention.
People looking thinking ‘who is this
idiot’. It’s desperate.
“Back in the day I had a red tailor-
33
there are also more Europeans than
Americans in the top 20 and the top
30. That is why I think this is such a
great time for our players.
My weekend also included some
highlights, but it was ultimately very
disappointing to finish tied for third
at the OKI Castellon Senior Tour
Championship in Spain. I had a very
bad bogey on the 17th when I was
tired, but Mike Cunning had a great
final round and deserved to win.
Audley Harrison
fights David Haye
in Manchester on
Saturday for the
WBA heavyweight
title.
Picture:
Micha Theiner
/City A.M.
made suit that I used to walk around
in. All the moves I used to do he’s
doing. I see how I must’ve looked
back then. But I think I must’ve car-
ried it off better. I’m smoother.”
Unlike the contender, however,
Haye has the belts and titles to back-
up his alleged arrogance. As Harrison
has proved already this year, it only
takes one punch to change all that.
“David is going to need his family
around after I’ve finished with him.
I’m sending him to a dark place,” said
Harrison, who is perhaps ready to
take his place in the limelight again.
THE A-FORCE | HIGHS & LOWS
l Born 26 October 1971 in London
l Becomes British Amateur super
heavyweight champion in 1997
l Wins gold at the 1998
Commonwealth games
l Wins the Olympic heavyweight
title in 2000 and turns professional
l Harrison’s lucrative contract with
the BBC is terminated in 2004
l Loses to Michael Sprout in 2007
and to Martin Rogan a year later
l Wins 2009 Prizefighter series
l In April he avenges Sprott defeat
 34 Sport CITYA.M. 9 NOVEMBER 2010

Results
CRICKET
FIRST TEST MATCH
India v New Zealand
Redknapp:
Tottenham
AHMEDABAD: India drew with New Zealand
INDIA: First Innings 487 (Sehwag 173, Dravid 104, Singh 69, Vettori
4-118)
NEW ZEALAND: First Innings 459 (Williamson 131, Ryder 103,
McCullum 65, Taylor 56, Ojha 4-107)
INDIA: Second Innings
(Overnight 82-6)
V Laxman lbw Vettori..................................................................................91
H Singh c Watling b Taylor......................................................................115

victims of our
Z Khan lbw Vettori ..........................................................................................0
P Ojha not out....................................................................................................9
S Sreesanth c Hopkins b Taylor ................................................................4
B10 nb1 ....................................................................................................11
Total (102.4 overs) ........................................................................ 266
Fall: 0, 1, 2, 15, 15, 65, 228, 228, 260.
Bowling: Martin 27-8-63-5, Vettori 38-8-81-2, Patel 23-1-72-
0, Williamson 4-0-18-0, Taylor 4.4-2-4-2, McCullum 6-1-18-0.

own success
NEW ZEALAND: Second Inns
T McIntosh lbw Khan ....................................................................................0
B McCullum not out ......................................................................................11
B Watling not out ............................................................................................2
B4 w5 ........................................................................................................9
Total (1 wkt., 10 overs) ..................................................................22
Fall: 4.
Bowling: Khan 4-2-7-1, Sreesanth 1-0-4-0, Ojha 3-2-1-0, Raina
1-0-1-0, Dhoni 1-0-5-0.
Umpires: S Davis & H Dharmasena.
Torres or key players there, they’re a
▲

FIFTH ONE DAY INTERNATIONAL

FOOTBALL
Pakistan v South Africa BY FRANK DALLERES different team. Every team is the
DUBAI: South Africa beat Pakistan by 57 runs same, and we’ve had our share recent-
SOUTH AFRICA TOTTENHAM manager Harry ly. One or two vital players, when they
H Amla c Akhtar b Afridi ..........................................................................62 Redknapp says his side have become come back, you get stronger again;
G Smith c Afridi b Akhtar..........................................................................14
J Kallis c Riaz b Afridi ................................................................................83 victims of their own domestic and that’s how it works.”
A de Villiers c Khan b Hafeez....................................................................61 European success as he prepares to Playmaker Rafael van der Vaart
J Duminy not out ..........................................................................................59 pick from an injury-ravaged squad for (below) is perhaps Redknapp’s great-
C Ingram run out ..............................................................................................1
J Botha not out ..............................................................................................28 tonight’s visit of Sunderland. est concern, the Dutchman having
B1 lb3 w5..................................................................................................9 Spurs made the continent’s super- limped out of the Inter victory after
Total (5 wkts., 50 overs) ..............................................................317 powers sit up and take notice last continuing his magnificent form
Fall: 37, 98, 219, 227, 228. week when they steamrolled with the opening goal. Spurs will
Bowling: Akhtar 7-0-77-1, Razzaq 3-0-18-0, Rehman 10-0-33-
0, Afridi 10-0-59-2, Hafeez 10-0-47-1, Riaz 8-0-64-0, Khan 2-0- Champions League holders Inter make a late check on his hamstring
15-0. Milan 3-1 at White Hart Lane, winger injury before deciding whether to
PAKISTAN Gareth Bale shredding the Italians. play him in this evening’s Premier
S Hasan c Morkel b Kallis..........................................................................39
M Hafeez c Kallis b Botha..........................................................................59 But their midweek exertions League contest. “He wants to see how
Y Khan c de Villiers b Kallis ........................................................................3 appeared to have taken their toll on he feels this morning but I still think
M Yousuf c de Villiers b Kallis ....................................................................3 Saturday when they were he’d be doubtful,” Redknapp added.
F Alam c de Villiers b Steyn ........................................................................1 brought back down to “You can’t take a chance and he tears
U Akmal c Smith b Steyn ..........................................................................60
S Afridi st de Villiers b Peterson............................................................24 earth, just four days after it and he’s out for six weeks or some-
A Razzaq c Botha b Tsotsobe ..................................................................39 their European heroics, thing.”
W Riaz c Morkel b Peterson........................................................................9 with a humbling 4-2 defeat Midfielder Tom Huddlestone
A Rehman not out............................................................................................9
S Akhtar b Peterson........................................................................................1 at Bolton. is available after the
W13 ..........................................................................................................13 And Redknapp insists Football Association
Total (44.5 overs) ..........................................................................260 juggling the demands decided not to take
Fall: 82, 90, 96, 101, 119, 166, 226, 245, 252. of the Champions further action over
Bowling: Steyn 8-0-47-2, Tsotsobe 9-0-47-1, Morkel 7-0-45-0,
Kallis 5-0-30-3, Botha 7-0-49-1, Peterson 8.5-0-42-3. League with a highly allegations he
Umpires: D Harper & N Ghauri. competitive Premier stamped on
League season has left Bolton’s Johan
TODAY’S DIARY his players even more Elmander.
(Football 7.45pm unless stated) susceptible to injury. Referee Chris Foy
Barclays Premier League
Stoke v Birmingham ..................................................................................................
Tottenham v Sunderland (8pm)............................................................................
npower Football League Championship
“When you’re playing
Saturday-midweek-Saturday-mid-
week in the Champions League
confirmed he saw
the incident, leaving the FA
with little option.
Crazy Bale offer might tempt Spurs
Burnley v Doncaster .................................................................................................. and Europe, it takes a toll,” he Sunderland arrive in
Crystal Palace v Watford (8pm) .......................................................................... said. “It takes a toll in terms of north London just one spot GARETH BALE has not been affected by rumours of a record-breaking
Ipswich v Derby ..........................................................................................................
Leeds v Hull.................................................................................................................... picking up the injuries. When behind seventh-placed move to Barcelona, insists Harry Redknapp. The Tottenham winger alerted
Millwall v Norwich...................................................................................................... you lose three or four players, it Tottenham. They are level Europe’s top clubs with two mesmerising displays against Inter Milan, but
Nottm Forest v Coventry.......................................................................................... is very difficult; it’s hard to be as on points but, perhaps the Tottenham manager said: “Nothing would turn his head because he is
Portsmouth v QPR ...................................................................................................... good as you are when everybody’s unsurprisingly for a team such a level-headed, down-to-earth kid it wouldn’t change him at all.”
Preston v Barnsley......................................................................................................
Scunthorpe v Middlesbrough ................................................................................ fit. with only two scorers in On whether he would cash in on Bale, (right) Redknapp added: “If someone
“You look at Chelsea without all competitions this season, comes in and offers something crazy you never know do you? But he is cer-
[Frank] Lampard, [Michael] Essien, behind on goal difference. tainly not a player we want to sell.” Meanwhile, former Juventus official
[Didier] Drogba; suddenly they’re a Victory would lift Redknapp’s Roberto Bettega yesterday said he had tried to sign Bale for the Italian club
SPORTS EDITOR FRANK DALLERES different team. When Liverpool don’t men to fifth, within touch- last year, adding he found Spurs receptive to a deal.
email sport@cityam.com have [Steven] Gerrard or [Fernando] ing distance of the top four.
CITYA.M. 9 NOVEMBER 2010
Redknapp is nursing an
injury-ravaged squad.
Picture: GETTY
SPORT | IN BRIEF
Gunners appeal Koscielny red
FOOTBALL: Arsenal have appealed
against the sending off of defender
Laurent Koscielny in Sunday’s 1-0 defeat
to Newcastle. The Gunners are arguing
that Koscielny was wrongfully dismissed
for denying a clear goalscoring opportu-
nity. The move risks the Football
Association deeming the appeal frivo-
lous and extending it from one match to
two.
Gutsy display gives England
belief, says scrum-half Youngs
▲
RUGBY UNION
BY FRANK DALLERES
ENGLAND scrum-half Ben Youngs has
told his colleagues that their per-
formance against New Zealand
proves they are capable of beating
Australia on Saturday.
Martin Johnson’s men won wide-
spread praise for recovering from a
terrible start to force the All Blacks to
scrap for their 26-16 victory in a hard-
fought climax.
Youngs insists he and his team-
mates missed a chance to score a
huge win but believes their fightback
has cemented belief they can register
a first victory of the autumn against
INJURED INJURED
Jamie O’Hara Jermain Defoe
DOUBTFUL DOUBTFUL
William Gallas Robbie Keane
INJURED INJURED
Ledley King
INJURED
Aaron Lennon
INJURED
Jonathan Michael Dawson
Woodgate
Pakistan keeper in death threat
CRICKET: Pakistan wicketkeeper
Zulqarnain Haider surfaced in London
last night having fled his team’s Dubai
camp after receiving death threats.
Haider’s brother said the player was
threatened because of his key role in
helping Pakistan beat South Africa in
Friday’s fourth one-day international. In
his absence Pakistan yesterday lost the
fifth ODI and consequently the series.
Australia this weekend.
“Every person in this squad
believed we could win that game and
I hope that showed. It was an oppor-
tunity missed,” said the Leicester
youngster, who scored a try when
England won in Australia in June.
“It was very hard to take.
Everyone’s head was down in the
dressing room afterwards and you
could hear a pin drop.
“We could have won that game
because we put them under some
real pressure. I can think of a couple
of good opportunities that we missed
off the top of my head, which was
frustrating.
“But it is encouraging that we cre-
John Terry was disappointed with Chelsea’s application against Liverpool on Sunday.
Terry’s plotting a Chelsea
backlash against Fulham
▲
FOOTBALL
BY JAMES GOLDMAN
CHELSEA captain John Terry hopes
tomorrow’s west London derby
against Fulham will provide the per-
fect platform for his side to bounce
back from Sunday’s defeat at Anfield.
Terry has ordered his troops to
remember exactly what made them
champions last season, especially as
the chance to reopen a five-point gap
may present itself with nearest rivals
Manchester United making the short
trip across town to Eastlands.
He said: “Liverpool is a loss we have
to move on from and bounce back.
I’m thankful we had a five-point cush-
ion going in but it would have been
nice to keep that.
“Unfortunately we lost three points
with Manchester United winning so
▲
ated chances and we need to keep
believing in ourselves because that
was a missed chance.”
Johnson, meanwhile, has fresh
fears over the fitness of captain Lewis
Moody, who suffered a blow to the
head in a clash with New Zealand’s
Keven Mealamu, as he prepares to
name his team today.
Uncapped Northampton flanker
Tom Wood was last night called up to
the squad as cover for Moody, who
has played just twice since sustaining
permanent sight damage last month
in an eye socket injury.
Mealamu has been cited for the
incident but denies deliberately head-
butting Moody.
late on at the weekend.
“But we go again tomorrow against
Fulham at Stamford Bridge which is
the only good thing. The games come
thick and fast now and we have to
pick ourselves up quickly.
“It will be tough against Fulham,
who proved very hard to beat last
year, but we have to pick up three
points now.”
Chelsea failed to com-
pete in central midfield
at Anfield where the
absences of Frank
Lampard (right) and
Michael Essien were
keenly felt in the 2-0
reverse.
Lampard is unlikely to
return against Fulham, but
is hoping to be involved
against Sunderland on
Swann takes heart from
Warne’s pre-Ashes praise
CRICKET
ENGLAND’S talismanic off-spinner
Graeme Swann admits to being flat-
tered by the praise heaped on him by
legendary Aussie bowler Shane Warne.
Swann has taken 113 wickets since
bursting onto the Test scene and is
now rated the second best bowler in
world cricket – with only South
Africa’s Dale Steyn above him in the
pecking order.
Many observers, Warne included,
believe Swann’s performance with
the ball will determine the outcome
of the upcoming Ashes series.
Swann, 31, is delighted with the
compliments but regrets he’ll never
get the chance to show Warne first
hand how much he’s improved since
Sport 35
picture: ACTION IMAGES
Sunday, while Ghana international
Essien is likely to start against the
Cottagers.
But Terry insists Chelsea can’t
use injuries as an excuse for
their defeat at Anfield.
He said: “We can’t look at
the people missing, we will
always have players missing. We
have a good enough squad to
deal with that.
“I don’t think we take
things for granted at this
club but maybe this was
the kick up the back-
side we all needed.
“We have another
gear to find and we
are still top of the
Premier League so we should
be encouraged but we can’t
forget what has got us there.”
they last met on the field of play.
“I was rubbish when I played
against him five years ago,” Swann
said. “I was just dwindling away in
county cricket. I wasn’t good enough
to perform at Test level.
“It’s good he remembers me in the
first place because I didn’t really give
him any reason to, and he recognises
I’ve been bowling well recently.
“It’s very nice when people say that
[I hold the key], especially the best
bowler in the world ever.”
Swann, who took five wickets in
England’s first warm-up match
against Western Australia, and the
rest of the touring party now head to
Adelaide where they will face a South
Australia side in a three-day game
which starts on Thursday.
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