Manganese Bronze has failed to steer itself away from administration

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BUSINESS WITH PERSONALITY
ICONIC London black cab maker
Manganese Bronze yesterday gave
up its fight for survival and called
in the administrators, after failing
to strike a deal with its Chinese
partners to keep the cash-strapped
business alive.
The Coventry-based company,
which makes the cabs through its
subsidiary the London Taxi
Company, intends to appoint PwC
in the next few days after a week of
negotiations with Chinese firm
Geely Corporation to bail out the
company ended in failure.
Manganese, which is listed on
the Alternative Investment Market
and globally known for its
distinctive black London carriages,
suspended its shares on 12 October
after recalling 400 of its TX4 taxis
due to a defect in the steering box.
Administrators will now seek to
sell the firm and there are
multiple scenarios, including a
sale to private equity, thought to
be on the table.
The Manganese board met
yesterday morning to approve the
decision. Court papers were lodged
after the meeting to seek to take
the business into administration.
The firm said in a statement that
it remains hopeful that the
fundamental strengths of the
company, the TX4 model and its
global reputation will provide the
platform for a successful business
in the future.
Geely, which owns 20 per cent of
the firm, offered to stump up the
cash to keep the business going
after its management flew in to
Britain to strike a deal with the
firm. However, it is understood the
board of directors did not want to
accept the stringent conditions
attached to the deal.
There is currently a temporary
shutdown at its Holyhead Road
factory site in Coventry with
workers on its production line put
on a weeks annual leave. The cab
maker ran into difficulties after
identifying a problem with a
steering box it introduced from a
new supplier in February. The TX4
was introduced by the firm in
2006.
www.cityam.com FREE
BY MICHAEL BOW
FTSE 100 M5,882.91 -13.24 DOW 13,345.89 +2.38 NASDAQ 3,016.96 +11.34 /$ 1.60 unc / 1.23 unc /$ 1.31 +0.01
ISSUE 1,744 TUESDAY 23 OCTOBER 2012
See Page 25
BOTTOM LINE: Page 6

ALLISTER HEATH: Page 4

Certified Distribution
27/08/12 til 30/09/12 is 128,785
End of the road for
London cab maker
BRITISH oil giant BP yesterday agreed
to sell out of its Russian joint venture
in a deal that will net the firm just
over $12bn (7.5bn) and a seat at the
table of Russias newest superpower.
After weeks of negotiations, BP yes-
terday announced it will sell its 50 per
cent stake in TNK-BP to state-con-
trolled oil firm Rosneft for $12.3bn in
cash plus an 18.5 per cent stake, a
combined value estimated at $27bn.
Once the deal is completed, BPs
existing 1.25 per cent stake means it
will hold 19.75 per cent of Rosneft
which with TNK-BP on board will
become the worlds largest listed ener-
gy company. BP will also gain two
seats on Rosnefts nine-strong board,
and become the firms second largest
shareholder after the Russian state.
BP plans to use $4.8bn of the cash
proceeds to buy a further 5.66 per
cent of Rosneft from the Russian gov-
ernment.
In a separate deal also struck yester-
day, Rosneft confirmed it would also
buy out the other half of TNK-BP
controlled by four Russian oligarchs
operating as AAR paying $28bn for
the remaining 50 per cent.
With TNK-BP on board, Rosneft will
pump more oil and gas than US ener-
gy firm Exxon Mobil, while the share
deal with BP will give the UK firm an
all-important fresh start in Russia, the
worlds biggest oil-producing area.
BP chief executive Bob Dudley
hailed the tie-up, saying his firm is
strengthening its position in the
worlds most prolific oil and gas
regions.
BP intends to be a long term
investor in Rosneft an investment
which I believe will deliver value for
our shareholders over the next
decade and beyond, he said.
The oil major added that it support-
ed Rosneft in its plans to acquire
additional equity stakes from other
shareholders in TNK-BP.
The Kremlin still has to give the nod
to BP acquiring the extra stake in
Rosneft, but Rosneft said it expects
the sale to complete next year.
Igor Sechin, president and chair-
man of Rosneft, welcomed BPs invest-
ment in the company. The
state-owned firm is already in talks
with banks over how to fund the cash
buyout of TNK-BP, and it said yester-
day it will use a combination of cash
resources and new borrowings.
Neil Shah at Edison Investment
Research, called the deal a game
changer. We would like to see BP
move from retrenchment to expan-
sion, as it would demonstrate confi-
dence is returning. Consolidation in
the oil sector is far from over, he said.
BY CATHY ADAMS
BP BANKS ON
ROSNEFT WITH
$27BN TIE-UP
THE BOTTLE OPENER
NEIL BENNETTS BRILLIANT NEW WINE COLUMN
Igor Sechin
Bob Dudley
A TIE-UP TO CREATE A SUPER MAJOR
BP ROSNEFT
AAR
50% stake
in TNK-BP
$12.3bn +
18.5% stake +
two board
seats
50% stake
in TNK-BP
$28bn
ARMSTRONG
GETS LIFE BAN
See Page 27
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
High-frequency trading (HFT) tech-
nology does not heighten market
volatility or open the door to
increased market abuse, according
to a government report out today.
The technique which now
accounts for a third of all UK equity
trading uses algorithms to make
large numbers of trades and
enables investors to profit from
split-second moves in share prices.
Opponents say it can result in wild
swings in share prices and destroys
the relationship between investors
and companies.
However Sir John Beddington, the
governments chief scientific advis-
er, concluded that HFT has
improved liquidity in equity mar-
kets, reduced transaction costs for
all investors, and led to more effi-
cient pricing.
Despite this he said that policy
makers are justified in being con-
cerned about HFTs ability to intro-
duce instability for short periods of
time, such as the 2010 Flash Crash
when the Dow Jones fell 600 points
in minutes.
Todays report calls on European
regulators to take swift evidence-
based action, in addition to using
new software-based methods that
will allow greater surveillance of
markets by regulators.
BAE shareholders say chair must go
A group of BAE Systems shareholders has
demanded the resignation of chairman
Dick Olver, saying sweeping changes are
needed at the UK defence group
following the collapse of its proposed
merger with EADS two weeks ago. In a
letter to the board, which has been seen
by the Financial Times, the shareholders
called for both Olver and Sir Peter Mason,
BAEs senior independent director, to
stand down due to the significant
damage caused by the botched 34bn
deal.
Low rates blamed for risk-taking
Persistent low interest rates are creating
potentially big risks for the UK insurers as
they seek investment returns high enough
to meet commitments to policyholders,
the FSA has warned.
WPP research unit settles claim
An internet research group, Compete,
which is owned by advertising
conglomerate WPP, has settled US
Federal Trade Commission charges that it
violated federal law and deceived
consumers with the use of its online-
tracking software.
Walbrook bets on Irelands bad bank
An investment fund run by former
Barclays bankers has taken a 17 per cent
stake in the holding company of the
Republic of Irelands bad bank, the
National Asset Management Agency.
Germany braces for downturn
The German economy is heading for a
sharp slowdown and may even contract at
the end of the year as a global slump
compounds the Eurozone crisis, the
Bundesbank warned yesterday.
Government to agree plea bargains
The government is to give the green light
to the introduction of plea bargains in the
prosecution of complex financial crime
with an announcement expected as early
as this morning.
Japan to join currency wars
Japan is poised to join the worlds
currency wars as it battles crashing
exports, recession and a suffocatingly-
strong yen. The countrys exports plunged
10.3 per cent in September from a year ago.
EU rejects call to monitor car imports
European Union authorities yesterday
refused Frances request to monitor car
imports from South Korea, rejecting
arguments that a new trade deal with
South Korea has fuelled a surge of
imports that has dealt another blow to
Frances ailing car industry.
Kingfisher offers overdue salaries
Kingfisher Airlines tried to woo striking
employees back to work, offering three
months of overdue salaries before mid-
November.
THE BBC yesterday came under
further pressure to address
allegations its bosses covered up
sexual abuse claims levelled at the
late Jimmy Savile, with Prime
Minister David Cameron saying it
had serious questions to answer.
Cameron waded into the row as
the editor of the BBCs Newsnight
current affairs show, Peter Rippon,
stepped aside after admitting he
had given an inaccurate account
of why the BBC axed its own
expose of the alleged abuse of
underage girls by Savile.
These are serious questions.
They need to be answered,"
Cameron said of the cover-up
claims.
New BBC chief George Entwistle
is also facing calls to explain what
happened. The media organisation
is conducting two independent
reviews: one looking at BBC star
Saviles actions and the
other into why
Newsnights report
was dropped.
The scandal has also
added to debate over
whether the BBC
should get
licence fee cash.
Cameron calls
for BBC to fix
row over Savile
Sir John Beddington was commissioned to look into the effects of high-frequency trades
4
NEWS
BY JENNY FORSYTH
BY JAMES WATERSON
To contact the newsdesk email news@cityam.com
O
NCE again, the political
establishment is debating
Europe, and what Britains
place in it should be. To me,
the answer is straightforward: Europe
will become increasingly irrelevant to
the global economy as the century
progresses, a tragic development
which will see one of the worlds
great civilisations increasingly
marginalised culturally and
geopolitically. Those who still believe
Britains future lies with the
European Union are out of date; our
future is global or it is nothing.
Europes slow decline will have
downsides, not least the possibility
that liberal democracy will lose
ground but that doesnt make it any
less inevitable.
Take the forecasts by Karen Ward
and Frederic Neumann, economists at
HSBC. A consumer revolution is loom-
EDITORS
LETTER
ALLISTER HEATH
Europe will become ever less relevant as century progresses
TUESDAY 23 OCTOBER 2012
ing, driven by an unprecedented
expansion of the global middle class.
Almost 3bn people more than 40
per cent of today's population will
join the middle classes by 2050.
Virtually all of these people will live
in emerging markets, where a much
smaller share of the family budget
will be taken up with necessities and
a greater proportion allocated to dis-
cretionary purchases. This will open
up almost unimaginably large mar-
kets to successful entrepreneurs.
In fact, emerging market consump-
tion could make up almost two-thirds
of global consumption in 2050, com-
pared to one-third today. My take
from this report is that there is a sim-
ple lesson here for UK firms: follow
the money. Forget about the decaying
Eurozone. This is also true of City
firms, including banks, fund man-
agers, insurers and accountants:
emerging markets consume 18 per
cent of global consumer-facing finan-
cial services today; this will rise to
over 50 per cent by 2050.
HSBC focuses on 17 of the emerging
markets it expects will belong to the
worlds top 30 economies in 2050. By
then, Chinese workers will have
enjoyed a seven-fold rise in income
from around $2,500 to $18,000; with a
population of 1.4bn, that will be a
massive market. If anything, this
could be an under-estimate; the fore-
BLACK CABS MUST PAY THEIR WAY
IT is always sad news when an iconic
company goes into administration,
and especially so when that firm is
Manganese Bronze Holdings, maker
of Londons Black Cab. But we should
remember that companies are not
fossils. They are living organisms.
They must not be molly-coddled by
taxpayers or preserved in aspic but
forced to compete, innovate and
change. Traditions only survive if they
remain relevant and financially
viable. For the sake of Londons
image, we must all hope that some-
body will buy Manganese as a going
concern, shake up its management
practices and improve quality control
and once again make a commercial
success of its wonderful taxis.
casters assume that average incomes
in China will be one third of
Americas. Indias population of 1.6bn
in 2050 will have an income more
than six times todays. The
Philippines, with a population in
2050 twice the size of either Germany
or the UK, will have enjoyed a nine-
fold rise in income. Peru will be the
star performer from Latin America.
Other emerging countries HSBC
believes will do well include, among
others, the Philippines, Malaysia,
Russia, Indonesia, Turkey, Thailand,
Colombia and just one European
country, Poland.
The future lies everywhere but the
old continent. Whether one likes this
or not, it is time to adapt and that
means jettisoning old alliances and
failing European bureaucratic struc-
tures and embarking on a new, ruth-
lessly global trading adventure.
Sir John Beddington said: There has
been a relative lack of evidence and
analysis to inform new regulations
designed to increase market competi-
tion and protect consumers, and so
this report provides clear advice on
what regulatory measures might be
most effective in addressing those
concerns in the shorter term, while
preserving the benefits that this tech-
nology may bring.
Lord Myners, the former City minis-
ter, last night told City A.M. that mis-
firing algorithms should be a serious
concern for market watchdogs.
HFT, which effectively involves
ownership of shares for a microsec-
ond, is prone to technological risk.
Regulators dont have the compe-
tence in house to keep up the speed
with the pace of technological
change. My concern has always been
whether the system is safe in the
event of tech failure, he said.
In a recent high-profile case, Wall
Street broker Knight Capital lost
$460m (286m) in August after prob-
lems with its software led it to inad-
vertently purchase billions of dollars
of shares.
Peter Rippon has
stepped aside
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
IN BRIEF
Moodys cuts Spanish regions
nMoodys last night cut the debt
ratings of five Spanish regions, after
maintaining its rating on the country
at one level above junk last week.
Andalucia, Extremadura, Castilla-La
Mancha, Catalunya and Murcia have
seen their ratings lowered by one or
two notches thanks to very limited
cash reserves and their significant
reliance on short-term credit lines to
fund their operating needs, Moodys
said in a statement.
FSA relaxes Solvency II timetable
nBritish regulators have given
insurers more time to get ready for
Europes strict new Solvency II capital
regime, anticipating that fights over
the final shape of the rules could delay
their introduction by two years. The
head of the FSAs insurance unit Julian
Adamssaid firms will have until the
end of 2015, rather than 2013 as
planned, to develop models to
calculate their Solvency II capital
requirements.
Hague calls for re-think on EU
nWilliam Hague will today claim that
the British public have never been less
enthusiastic about the European Union.
People feel that the EU is a one way
process, a great machine that sucks up
decision-making from national
parliaments, Hague will say in Berlin.
That needs to change. He will restate
the governments commitment to
remaining within the EU, but at the
same time indicate a desire to claw
back sovereignty.
High-frequency trading
does not boost volatility
THE PHONE hacking scandal that
brought down the News of the
World threatened to pull in Mirror
Group Newspapers yesterday, after
four individuals reportedly issued
High Court claims against the firm.
Former England football manager
Sven-Gran Eriksson and three
others have filed claims alleging
phone hacking at The Daily Mirror
during Piers Morgans time as editor.
Coronation Street actress Shobna
Gulati, former Blackburn Rovers
captain Garry Flitcroft and Abbie
Gibson, a former nanny for David
and Victoria Beckham are reported
as the other three claimants.
But Trinity Mirror told City A.M. it
didnt know about any of these
claims. We have no comment, we
are unaware action has been taken
at the High Court, the firm said.
The group parent company for The
Daily Mirror, The People, and
hundreds of regional publications
has consistently said its journalists
work within the criminal law and
the Press Complaints Commission
code of conduct.
Piers Morgan told the Leveson
inquiry that he had no knowledge of
phone hacking during his nine-year
stint as editor of The Daily Mirror.
In a separate development, new
Trinity Mirror boss Simon Fox
rejigged the firms top team
yesterday.
Daily Mirror hit
by four phone
hacking claims
BY BEN SOUTHWOOD
PRIVATE equity group Permira has
splashed out $1.6bn (1bn) on buy-
ing US-listed genealogy website
operator Ancestry.com.
The firm will take Ancestry pri-
vate at $32 per share, a 10 per cent
premium to Fridays closing price.
Ancestrys chief executive Tim
Sullivan and chief financial officer
Howard Hochhauser will keep
most of their shares in the firm
after the deal.
Spectrum Equity, which has
pledged to vote its 30 per cent
shareholding in favour of the buy-
out, will also remain an
investor, Permira said.
Ancestry.com has 2m
subscribers using some
10bn digitised family
history records. The 15-
year-old business was
put up for sale in June
after losing a TV sponsor-
ship deal in the States.
We look forward to
bringing Permiras
technology and
Permira to be
new parent of
Ancestry.com
BY HARRY BANKS
media experience to bear in sup-
porting Tim, Howard and the rest
of the talented team at
Ancestry.com and its mission of
helping everyone discover, preserve
and share their family history, said
Permira partner Brian Ruder.
Barclays, Credit Suisse Securities,
Deutsche Bank, Morgan Stanley
and RBC Capital Markets have
agreed to provide financing of up
to $1.02bn for the takeover,
Ancestry.com said.
The deal is Europe-based
Permiras fourth in the United
States in 12 months.
It previously acquired technology-
based student assessment firm
Renaissance Learning, automated
material handling solutions
provider Intelligrated, and soft-
ware maker Genesys.
Ancestry.com will remain head-
quartered in Provo, Utah, with a
continued large presence in San
Francisco, Dublin and London.
Chief exec Tim Sullivan will
cash in some of his shares
YAHOOS quarterly earnings came
in well above expectations
yesterday, in the first set of results
since ex-Google executive Marissa
Mayer took the helm at the
troubled technology firm in July.
Yahoo posted net income of
$177m (111m) in the third
quarter, excluding a $2.8bn one-off
gain from the sale of half its stake
in Chinese e-commerce group
Alibaba. This is up one per cent on
last year.
This rise was driven by a two per
cent increase in net revenues,
which rose from $1.07bn in the
Yahoo beats expectations in
first results of Mayer regime
BY BEN SOUTHWOOD third quarter of 2011 to $1.09bn in
the same period this year.
The results pleased investors,
who drove the share price up
around three per cent to $16.23
last night in after-hours trading.
And the results also satisfied the
new boss, the firms fifth within
four years. Yahoo had a solid
third quarter, said Mayer, who
went on to promise a drive
focusing on quality in order to
create value for advertisers,
partners and shareholders.
Analysts expect Mayers strategy
will be centred on technology, and
away from the media focus seen in
the past.
TUESDAY 23 OCTOBER 2012
5
NEWS
cityam.com
Former Google executive Marissa Mayer is hoping to revive struggling Yahoos fortunes
THE BANK of England will appoint a
chief operating officer for the first
time next year, it announced yester-
day, in order to ease the strain on Sir
Mervyn Kings successor as governor
when the Bank assumes its broad-
ened role in the financial sector.
The new executive will run the
Bank on a day-to-day basis, the
announcement said, giving the gov-
ernor and deputy governors more
time to focus on their policy
responsibilities.
These duties are set to grow to
include most financial regula-
tion if the governments
Financial Services Bill, cur-
rently being debated in par-
liament, is passed.
The new day-to-day boss
will be appointed once
chancellor George
Osborne announces
his pick for
K i n g s
r e p l a c e -
ment as
governor,
Bank plans to
hire operating
officer in 2013
BY BEN SOUTHWOOD
the Bank says. It added that the
appointment would take place in
close consultation with the prospec-
tive governor.
The announcement came in tan-
dem with the news that Bank
finance director Warwick Jones will
stand down in June next year, in line
with his long-standing intention to
leave the Bank at the same time as
governor Sir Mervyn King.
Jones said his time at the Bank was
fascinating and rewarding...if a lit-
tle more exciting than I anticipated
when I joined in 2006, and governor
King praised his outstanding
contribution to the Bank.
The Bank said the new
chief operating officer,
once appointed, would in
turn lead the search for
Joness replacement as
finance director, after
recruiter Odgers Berndtson
complete the first phase of
the recruitment process.
A whole host of investment banks have
been involved with the sale of BPs stake in
TNK-BP. Bank of America Merrill Lynch is the
principal adviser to Rosneft, with Craig
Kennedy, vice chairman of global energy
and power at BAML, acting at the lead on the
deal. He has been involved with the Russian
energy sector for 20 years. Notable transac-
tions he has worked on include the strategic
partnership of Rosneft and Exxon, Ruspetros
IPO, KNOCs hostile offer for Dana and
Alliance Oils joint venture with Repsol.
Kennedy is working alongside Anya Weaving,
director in M&A responsible for oil and gas at
BAML, and Dmitri Veremeev, Moscow-based
director focusing on the oil and gas sector.
Citigroup was also involved on Rosnefts side,
and Cleary Gottlieb Steen & Hamilton acted
as the Russian rms legal adviser. On BPs
side, Morgan Stanley was principal nancial
adviser on the transaction, alongside
Goldman Sachs, Lambert Energy Advisory
and Moscow-based Renaissance Capital. UBS
acted as nancial adviser and corporate bro-
ker, with vice chairman Hew Glyn Davies and
Anna Richardson Brown, executive director in
the investment banking division, acting as
leads on the transaction. Linklaters acted as
the main legal advisors on the deal, led by
partners Stephen Grifn, Michael Bennett and
Jeremy Parr.
ADVISERS BPS TIE-UP WITH ROSNEFT
CRAIG KENNEDY
BANK OF AMERICA
MERRILL LYNCH
Bank finance director
Warwick Jones will leave
TUESDAY 23 OCTOBER 2012
6
NEWS
cityam.com
J
UST over four years ago, Bob
Dudley left Russia in something
of a hurry. Then boss of the firms
TNK-BP tie-up with AAR the
consortium of oligarchs who
yesterday agreed to sell out to
Rosneft Dudley spent the next five
months attempting to run the joint
venture from a secret location, as the
relationship with the oligarchs soured
and he feared his Russian visa could
expire and not be renewed.
After yesterdays deal with state oil
firm Rosneft, Dudley now chief exec-
utive of the whole of BP can return to
Russia with his head held high.
Since being drafted in to supervise
the firms response to the Deepwater
Horizon disaster in April 2010 and
then succeeding Tony Hayward as CEO
in October that year, Dudleys tenure
at the top of BP has so far been dogged
by the fallout from the Gulf spill and
an ongoing tussle with AAR.
Hell be hoping that yesterdays deal
a whopping $17.1bn in cash plus
12.84 per cent of the Russian state oil
giant and more to come will draw a
line under the conflict of the past, and
so far the signs look good.
The combined total value of $28bn is
one heck of a return on BPs initial
$8bn investment in TNK-BP back in
2003, with dividends from the joint
venture paying out $1.8bn in 2010 and
$3.7bn last year. Itll provide a boost to
the oil majors balance sheet and
reduce the firms debt ratio below its
target rate of 10-20 per cent, according
to Killik & Co. For a company still fac-
ing undetermined liabilities in the
Gulf of Mexico its a welcome boost,
especially to investors hungry for an
increased dividend.
The deal is also a good physical fit.
The Russians need BPs advanced
exploration technology to tap their
vast Arctic fields, and, unlike the US
politicians who were quick to distance
themselves from British Petroleum
in the wake of the Gulf spill, Putin has
adopted a more sympathetic stance,
spreading the blame among subcon-
tractors including several US firms.
But lets not forget that Dudley has
tried to jump into bed with Rosneft
before back in 2011, only to have AAR
promptly roll over and shove him out
the other side by blocking the deal just
two months later. Canaccord also rais-
es concerns about possible dilution of
earnings, estimating a hit of 6-7 per
cent for 2013-15.
There are already more layers to BPs
Russian relationship than youd find
in the most complex set of Russian
dolls. Though with Putin on board
Dudley stands no chance of being the
biggest doll in the nest, investors will
be hoping that this time hes nearer
the top of the hierarchy.
ELIZABETH FOURNIER
BOTTOM
LINE
Dudley gets back his seat at the table
RUSSIAN telecoms firm MegaFon yes-
terday postponed its London-Moscow
listing, striking another blow to hopes
that a flood of firms from the country
could kick-start the sluggish initial
public offering market in the City.
The group hopes to raise $2bn
(1.25bn) from the sale of up to 20 per
cent of its stock, listing global deposi-
tory receipts (GDRs) in London and
shares in Moscow.
But MegaFons acquisition of 50 per
cent of handset retailer Euroset last
week has put a spanner in the works,
as the firm now has to re-work the
information it gives to investors.
On top of that pres-
sure, regulations
mean it has to
allow shares to
trade for a mini-
mum period
before its next
financial state-
ment in this case,
M e g a F o n s
up c o m-
ing
MegaFon holds
back its London
market listing
BY TIM WALLACE third quarter results. It now hopes to
hold investor roadshows shortly after.
The delay comes days after Goldman
Sachs dropped off the syndication,
prompting worries about corporate
governance at the firm. But invest-
ment giants Citi, Morgan Stanley and
Credit Suisse remain involved, as well
as lawyers Freshfields. And it is under-
stood MegaFon will publish its gover-
nance checks when it next goes to
investors.
The firms also insisted its postpone-
ment bears no relation to the collapse
of fellow Russian Promsvyazbanks
IPO, which failed to attract enough
investors to get the float away.
Investor engagement in the investor
education process has been exception-
ally strong and the company is looking
forward to commencing its roadshow
in due course, the firm said yesterday.
The Promsvyazbank flop dampened
market sentiment which had previ-
ously been boosted by the successful
Sberbank float. But MegaFon is confi-
dent of a strong float in the weeks
after its results.
ADOBOLI TRIAL CONTINUES
ACCUSED UBS fraudster Kweku Adoboli was not challenged when he told a colleague that he
had made a cosmetic adjustment to the accounts, a London court heard yesterday. Former
back office contractor Johannes Zuidmeer also said he allowed the trader to hold back from
entering a $1bn loss into the accounts, accepting his explanation that it was a booking error.
Adoboli, 32, denies two counts of fraud and two of false accounting. The trial continues.
Alisher Usmanov is a
major shareholder
Cameron said the single
market must be protected
DAVID Cameron yesterday
promised to fight for the Citys
interests when Eurozone leaders
debate the format of a
forthcoming banking union.
Last weeks European Council
meeting saw an agreement to
form a central body that aims to
speed up economic integration
and will exert control over 6,000
individual banks.
But the exact format of the
organisation has yet to be decided
and the Prime Minister has
pledged that the interests of the
City will be the focus of his
negotiating strategy.
I am very conscious of the fact,
sitting round that table, that I am
responsible for 40 per cent of the
European Unions financial services
industry, he told MPs yesterday.
Cameron also promised to
fight any attempt to raise
the EU budget by more
than the rate of inflation:
I do not believe that
German voters want that
any more than British
voters, and that is why our
governments have led the
argument in Europe
for fiscal
restraint.
We are a
David Cameron pledges to fight for the City in
European Union battle over bank regulations
BY JAMES WATERSON
trading nation, we need not only
those markets to be open but also a
say on how those markets operate,
he added.
Meanwhile the Prime Minister
will today host a roundtable
meeting with some of the UKs
largest companies in an
attempt to promote supply
chain credit. The policy aims
to boost smaller firms by
allowing them to access cheap
borrowing if they can provide
proof that they have received
an order from a larger firm.
THE INITIAL public offering (IPO)
market is in such a poor state
because sellers demand
unrealistically high prices,
brokerage Numis said yesterday.
Executives believe sellers will
maximise the value of their stakes
if they offer at a low price initially,
allowing the market to build and
raise the price in subsequent sales.
IPOs can allow a firms founder
to exit, and small sell-downs create
Lack of IPOs blamed on sellers
demanding excessive prices
BY TIM WALLACE
support in the market and foster a
good quality investor base, said
research head Will Wallis. But if
firms look for the top price right
away, they can see stock slump and
harm their chance of getting a
good price in future.
The brokerage called for firms to
use fewer bookrunners, arguing
the greater the number of banks
involved, the higher the price is
pushed by competing advisers and
the greater the chance of a flop
when the stock comes to market.
TUESDAY 23 OCTOBER 2012
7
NEWS
cityam.com
BRUSSELS will push ahead with plans
to form a pan-European agency to
shore up or wind down troubled
banks as soon as a banking union is
introduced next year, commissioner
Michel Barnier said yesterday.
His statement came as Ireland was
confirmed as a special case in being
eligible for an earlier retroactive
recapitalisation of its banks.
President Francois Hollande met
with Irish Prime Minister Enda
Kenny yesterday, and echoed
German Chancellor Angela
Merkels weekend comments
which appeared to pave the
way for aid to Irish lenders.
The Irish specificity is that
for several months there
had already been a
recapitalisation of
banks via the
budget which
w o r s e n e d
Irelands debt and
Brussels plans
bank resolution
agency for 2013
BY JULIAN HARRIS
forced it to impose a tough plan, he
said. I said Ireland was a special case
and should be treated as such.
Asked if recapitalisation could be
back-dated, the French leader respond-
ed: Yes, recapitalisation already took
place through their own funds so the
Euro Group will take that into
account.
Earlier in the day Barnier, who is in
charge of financial regulation, con-
firmed EU leaders aim to agree a deal
for a new banking union by the end of
this year. Barnier added that the next
stage will be forming a body to sup-
port or close in an orderly manner
struggling lenders.
The second stage is a proposal in
2013 for a European resolution
agency, he said, adding this would
have broad powers to shut bust
banks, protecting taxpayers,
and work closely with
national authorities.
Eurozone government debt still
growing despite lower deficits
LEVELS of government debt across
the Eurozone climbed to another
record high last year, according to
data published by Brussels
statistics office yesterday.
While the size of deficits
shrank, most governments still
continued to load billions onto
their debt piles.
Debt climbed to 87.3 per cent of
GDP across the euro area, up from
85.4 per cent in 2010, and 70.2 per
cent back in 2008.
The size of Eurozone states
BY JULIAN HARRIS
deficits eased slightly to a
collective level of 4.1 per cent of
GDP, from 6.2 per cent in 2010 yet
this still meant an extra 390.7bn
(318.8bn) government debt.
Across the wider European
Union area, only six states saw
their level of debt as a percentage
of GDP fall from 2010 to 2011,
while 21 saw it worsen.
Despite chancellor George
Osborne pledging a slowdown in
government spending, the UKs
deficit remained one of the largest
in Europe.
Only Ireland (13.4 per cent of
GDP), Greece and Spain (both 9.4
per cent of GDP) recorded a larger
annual deficit that the UK (7.8 per
cent of GDP).
Back in the Eurozone,
powerhouse economy Germany,
slashed its budget deficit to 0.8 per
cent of GDP in 2011 from 4.1 per
cent in 2010 and its debt fell to 80.5
per cent of GDP from 82.5 per cent.
And EU members Sweden,
Hungary and Estonia managed to
buck the trend and record budget
surpluses in 2011, despite the
ongoing economic slump across
most of the continent.
IN BRIEF
Monster shares hit by lawsuit
n Monster Beverage shares fell 14 per
cent yesterday after news that it is
being sued by the family of a 14-year-
old girl who died after drinking two
cans of its Monster Energy drink. US-
listed Monster said it does not believe
its drinks are in any way responsible
for the girls death last December.
Siemens turns away from solar
n German engineering group Siemens
is pulling the plug on its loss-making
solar energy business and is already
talking to potential buyers as it tries to
close the profitability gap with its
peers. Demand for solar power has
been hurt by top consumer Europe
cutting back subsidies for green energy
and the Eurozone debt crisis crippling
the finances of sunny countries such as
Greece and Spain.
Electrolux is dour about demand
n Swedish home appliances maker
Electrolux sees market demand staying
weak in Europe and will push ahead
with cost and production cuts in the
region. The firm reported a six per cent
rise in sales for the third quarter and
operating profit rose by a third to
SKr1.46bn (138m), though in Europe
sales slipped four per cent in a year.
Barnier expects a banking
union to be agreed this year
TUESDAY 23 OCTOBER 2012
8
NEWS
cityam.com
GOVERNMENT DEBT IS STILL GROWING ACROSS EUROPE
EUROZONE IRELAND NETHERLANDS GREECE ITALY PORTUGAL FRANCE UK GERMANY SPAIN
*Latest gures for 2011, fromEurostat
120.7%
170.6%
87.3%
108.1%
106.4%
86%
85%
80.5%
69.3%
65.5%
4.1%
decit
9.4%
decit
3.9%
decit
4.4%
decit
13.4%
decit
5.2%
decit
7.8%
decit
0.8%
decit
9.4%
decit 4.5%
decit
Total debt as %of GDP
Annual decit as %of GDP
Visit
Were an FSA regulated Forex broker with a
head office here in London.
We provide MT4, one of the leading trading
platforms. But, we also provide a dedicated
Client Services team, fluent in our platforms
as well as 14 languages. Which is sensible, as
we look after traders in 128 countries around
the world.
Forex, spread bets and CFDs are high risk
and losses can exceed your initial deposit.
language
your
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We
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THE UK arm of Swedish group
Handelsbanken recorded a large
jump in consumer and business
lending in the year to the third
quarter, according to its results
published yesterday, as well as a
rise in deposits.
Personal lending hit 2.6bn in
the three months to September,
up 29 per cent on the year.
And lending to businesses
jumped 24 per cent to 7.3bn,
taking total lending up 25 per
cent on the year.
Deposits increased 53 per cent
over the period to 3bn.
The increase drove UK operating
profits up 87 per cent to 72.2m in
the year to date, compared with
the same period of 2011.
Meanwhile the bank has
continued to expand, opening an
average of one new branch every
ten days through the recession.
That leaves it with 124 branches
in the UK open and a further 13
planned.
Overall the group recorded a
nine per cent rise in operating
profits over the year to date,
coming in at SEK13.5bn (1.28bn),
compared with SEK12.43bn a year
ago. Earnings per share rose seven
per cent.
Operating profits in the third
quarter were one per cent higher
than a year ago.
Swedish bank
sees strong UK
loan growth
BY TIM WALLACE
FINANCIAL regulators are failing to
promote competition in the banking
sector and perpetuating the too big
to fail problem, a small bank
claimed yesterday, by favouring big
lenders under new capital require-
ments.
Paul Lynam, chief executive of
Secure Trust Bank, pointed to Sir
John Vickers proposals allowing a
large bank to risk-weight mortgages
at five per cent when determining
capital. A smaller firm would have to
hold 35 per cent which Lynam said
is a barrier to growth.
If challenger banks cannot com-
pete on a like-for-like basis, the capital
requirement methodology forces
them to operate in niches and they
can never grow to the scale to take
market share from big banks, Lynam
said. And that is compounded by big
banks being allowed to buy chal-
lenger banks for example, Barclays
buying some of INGs business.
The Financial Services Authoritys
Andrew Bailey acknowledged the
problem exists, but argued he is try-
ing to address it. Twenty-five years
Small lenders
fear new rules
only aid giants
BY TIM WALLACE
ago in a no-failure regime, the proba-
bility of small banks failing was
assessed to be higher than for large
banks, and therefore they were asked
to hold more capital, Bailey said at an
event to discuss planned rules for the
new Financial Conduct Authority.
But now we are asking large banks
to hold more, because they cause
more damage when they fail. And in a
world where we can be more confi-
dent about resolution and for small
banks, we are moving rapidly towards
that we can take a different view of
the relationship between small and
large banks.
But Lynam still fears his bank is
unfairly hit by the rules.
I was encouraged by Andrew
Baileys answer, but the question is
how quickly that happens, he told
City A.M. All the time the big banks
have this unfair advantage, it limits
the chance for small banks to give cus-
tomers more choice, as well as to eat
away at the too big to fail problem.
Elsewhere at the event, regulators
said the forward-looking, judgement-
based approach to regulation should
fit in well with similar plans being
proposed in the EU and the US.
Erkki Liikanen said the range of banking structures across the EU is a challenge for reforms
EU BANK regulator Erkki Liikanen
yesterday defended his ring fencing
plans against claims that such a
structure is impractical, telling a
committee of MPs and peers that
the universal banking model has
served Europe well in the past,
when run in a prudent way.
US regulator Paul Volcker last
week told the Parliamentary
Commission on Banking Standards
that ring fences can be permeable
over time as staff move between
the retail and investment arms.
Liikanen rejects Volcker claims
that ring fence will not work
BY TIM WALLACE
But Liikanen hit back, arguing
that his plans for European banks
should make them as safe as the
two entities Volcker favours.
If we decide the guaranteed
deposits cannot be used for
proprietary trading and market
making, and they must be properly
capitalised I think we have
reasonable separation.
But he admitted the governance
aspects of his reforms had not yet
been thought through, and could
not explain how the group board
could influence an independent
investment banking board.
TUESDAY 23 OCTOBER 2012
10
NEWS
cityam.com
A

D
a
i
m
l
e
r

B
r
a
n
d
Ocial government fuel consumption in MPG (litres per 100km) for the new M-Class Special Edition: Urban: 34.4 - 38.7 (8.2 - 7.3), Extra Urban: 42.2 - 50.4 (6.7 - 5.6), Combined: 39.2 - 44.8
(7.2 - 6.3). CO2 Emissions 194-158 g/km. Model featured is a ML 250 BlueTEC Special Edition at 44,870 on-the-road including optional Intelligent Light System at 1,630.00. (OTR price Inc. VAT, delivery, 12 months Road Fund Licence, number plates, rst registration fee and fuel).
*Finance oer based on an ML 250 BlueTEC Special Edition on a Mercedes-Benz Agility Agreement, on 10,000 miles per annum. Excess mileage charges may apply. Payable if you exercise the option to purchase the car. Includes optional purchase payment, purchase activation fee and Retailer deposit contribution.
Orders/credit approvals on selected M-Class models between 1 October and 31 December 2012, registered by 31 March 2013. Guarantees and indemnities may be required. Oers cannot be used in conjunction with any other oer. Some combinations of features/options may not be available. Please contact Retailer
for availability. Terms and conditions apply. Credit provided subject to status by Mercedes-Benz Financial Services UK Limited, MK15 8BA. Prices correct at time of going to print 10/12.
Representative Example: ML 250 BlueTEC Special Edition
The new M-Class.
Introducing the Special Edition.
From just 469
*
a month, you can enjoy standard features including
19" alloy wheels, Mirror Package, aluminium running boards, chrome
underguards and LED daytime running lights. In the M-Class Special
Edition, you can go anywhere, and go there in style.
Visit mercedes-benz.co.uk/offers
36 Monthly
payments of*

469.00
Customer
deposit
7,374.77
On-the-road
price
43,240.00
Retailer deposit
contribution
1,500.00
Duration of
agreement
36 months
Optional
purchase
payment

20,975.00
Amount of
credit
34,365.23
Total amount
payable

47,008.77
Acceptance
fee
180.00
Purchase
activation fee

95.00
Fixed
interest rate
4.16%
Representative
APR
4.6%
tially driven by increased expectations
of further policy measures by central
banks and latterly following policy
announcements, said the report.
In addition to the monetary policy
committees (MPC) decision on 5 July to
purchase additional assets financed by
the creation of central bank reserves,
these announcements included the
launch of the Funding for Lending
Scheme by the Bank and HM
Treasury, the European Central
Banks outright monetary trans-
actions and further asset pur-
chases by the US Federal
Reserve.
It pointed to a narrowing of
corporate bond
spreads, which
remain below the lev-
els seen at the height
of the financial cri-
sis in 2008.
QUANTITATIVE easing (QE) boosted
market confidence again in the third
quarter, the Bank of England said in a
report published yesterday.
And the policy of printing money to
buy government bonds is still having
the desired effect of pushing down
corporate borrowing costs,
despite fears that QE is gradual-
ly becoming less effective over
time.
The Bank said the combined
action of several central bank
had a particularly strong impact.
Financial market senti-
ment reportedly
improved over the
review period, ini-
Latest round of
money printing
cut credit costs
BY TIM WALLACE
Bank governor Sir
Mervyn King
TUESDAY 23 OCTOBER 2012
11
NEWS
cityam.com
Pension funds look at ranking
fund managers on activism
BRITAINS pension funds are
weighing up plans to rank fund
managers based on their efforts
to improve performance at the
companies they back, in the
latest sign of institutional
investors flexing their muscles.
Umbrella body The National
Association of Pension Funds is
leading a campaign to develop a
framework that would rate
fund managers according to
their work towards, for
example, improving governance
at companies.
Pension funds own billions of
pounds of assets which they
outsource to fund managers,
which manage them on their
behalf. The framework is based
on the 2020 Stewardship report
by a group of six institutional
investors including some of
Britains largest pension
schemes such as the Universities
Superannuation Scheme and
Railpen.
Talks with the NAPF, whose
members represent some
800bn in assets, revolve around
a matrix system, grading asset
managers based on how much
or how little they do on the
governance front.
The NAPF yesterday said there
were no definite plans for a
shake-up: We believe it is
important that pension funds
hold their managers to account
for their stewardship
responsibilities and are looking
at a number of ways in which
we can assist our members in
that regard, said a
spokesperson for the
organisation.
BY HARRY BANKS
SVG Capital, the listed private equity
giant, yesterday said it has shrunk
its exposure to Permiras portfolio of
companies as it set its sights on
investing in less mature assets.
The FTSE 250 firm said it will sell
its stake in Permiras pan-European
buyout fund Permira III for 90.2m
but will keep a 50 per cent interest
in Iglo group, the frozen food
business which owns Birds Eye.
The firm said proceeds of the
sale will be used to pay off debt and
complete a 170m return of capital
through buy backs and a tender
offer.
The proposal will also be backed
by the partial realisation of the
firms investment in Galaxy
Entertainment, which sold out in
September for 70.8m.
In a third quarter trading
statement yesterday, the company
reported a decline in quarterly net
asset value by 4.4 per cent to
361.8p, after shares in Hugo Boss,
its largest single holding, fell 12 per
cent in the period.
On an annual basis the fund
BY MICHAEL BOW
increased its value by 7.3 per cent.
Between July and September the
firm also continued its on-going
capital return programme by giving
back 9m to shareholders through
share buy backs.
It takes the total amount of
capital returns to shareholders
since December 2011 to 93.5m, or
55 per cent of SVG Capitals 170m
commitment to shareholders which
it is hoping to make by December
2013.
SVG and Permira previously
signed a formal agreement to make
SVG Capital a major investor in
Permiras new funds.
Ryanairs Michael OLeary is trying to buy Aer Lingus
TUESDAY 23 OCTOBER 2012
12
NEWS
cityam.com
ERIK Anderson has left Canaccord
Genuity as its head of corporate
broking.
Anderson left the firm for the last
time a few days ago. He joined Collins
Stewart, which was then taken over
by Canaccord, from Investec.
Erik has decided to leave the firm
and to pursue other interests, an
internal memo informed colleagues.
Erik has been a key figure in the
integration of Canaccord and Collins
Stewart and we thank him for his
contribution.
His departure is the third senior
departure from the Collins Stewart
side of the business in recent weeks,
with Mark Brown quitting as chief
Canaccord Genuity has lost its
head of broking Erik Anderson
BY DAVID HELLIER
executive and Mark Dickenson, co-head
of corporate broking, also leaving last
month.
There have been big job cuts at the
firm since Canaccord Genuitys
London operations merged with
Collins Stewart and Hawkpoint.
Recently, Alexis de Rosnay, a former
Lehman and Lazard corporate finan-
cier, was hired as the groups London
chief executive. De Rosnay has prom-
ised to restructure the business along
the lines of cross-selling platforms.
We need to have a winning culture
and an intensity and we need to put
the client first, he told City A.M. hours
after his appointment last month.
Sometimes when an integration
happens you can become a bit inward
focused.
IRISH low-cost airline Ryanair has
offered concessions to European
Union antitrust regulators in a
bid to secure regulatory
clearance to acquire local rival
Aer Lingus.
Ryanair, whose most recent bid
for Aer Lingus in June valued the
firm at 694m (566m), hopes to
convince the European
Commission that a takeover
would not restrict competition
on routes out of Ireland.
The European Commission did
not detail Ryanairs offer, which
was submitted last Wednesday.
The EU executive has set a 6
Ryanair hopes to woo EU with
compromise on Aer Lingus bid
BY CITY A.M. REPORTER
February deadline for its decision
on the deal, having stood in the
way of earlier advances from
Ryanair.
Earlier this month, Ryanair
said Europes biggest budget
airline would scrap some of both
its and Aer Linguss routes from
Ireland, and may set up a
Brussels base for Aer Lingus as
part of a package of concessions.
He said British Airways, Citijet
and Virgin Atlantic Airways, had
expressed interest in taking over
some of the routes.
Ryanairs bid has currently
lapsed, but the firm has pledged
to renew its advances if Europe
gives its blessing.
SVG Capital PLC
22Oct 16Oct 17Oct 18Oct 19Oct
268
269
270
271
272
273 p
270.21
22Oct
SVG Capital to
refocus on new
investments
OLAF Swantee, the chief executive of
Orange and T-Mobile owner EE, per-
sonally intervened to convince Apple
and other smartphone manufactur-
ers to make their devices run on EEs
new high speed 4G network,
Swantee claimed yesterday.
The new EE service, the details of
which were announced today,
will be the first 4G net-
work in the UK, and the
only one to work with the
iPhone 5.
Speaking to City A.M.
ahead of the announce-
ment, Swantee said he
had spent months con-
vincing manufacturers to
design phones that would
be compatible with EEs spe-
cial 1800 MHz frequency.
Swantee said: We start-
ed talking to Samsung,
Apple [and others] over
a year ago. We showed
them this. We said:
EE chief made
Apple change
iPhone 5 for 4G
BY JAMES TITCOMB
Are you going to be supportive and if
not, well use someone else.
There were no plans for any of them
to bring an 1800 MHz device to the
UK.
O2 and Vodafone will not be able to
launch 4G until next June after Ofcom
auctions off bands of pre-approved 800
MHz spectrum, and that particular
frequency will not work with the in-
demand iPhone 5.
EEs self-branded 4G network
which will run alongside the
Orange and T-Mobile brands
launches next Tuesday. 4G tariffs
will start at 36 a month for
unlimited texts and calls, rising
up to 56 for higher mobile data
allowances. The price point is on
average 5 a month higher than
similar allowances on slower 3G
networks. EE is also selling
superfast home broadband
for the first time.
CAN LONDON COMPETE WITH SILICON
VALLEY? Interviews by James Waterson
Not really. The concentration is too much on
mobile app developers rather than Silicon
Valley, where there is a history of edgling technologies
being developed from the ground up.
These views are those of the individuals above andnot necessarily those of their company
BEN RIGBY
IT CONSULTANT

Were a way off Silicon Valley in terms of num-

bers but weve got the brainpower and the
type of people that could help create that. We need as
many good ideas and new routes to market as we can get.
GUY EMMERSON
BADENOCH & CLARK
I dont see any reason why not. London is the
key business centre in the UK. I dont know
whether [Silicon Valley] is just a big hype or actually is
the place to be I think Id stay here.
BOB GEORGE
INTESA SANPAOLO

CITYVIEWS
O2 Arena owner AEG is launching a ticketing service to bypass the likes of Ticketmaster and
sell direct to fans. It said the AXS service would put an end to inflated fees and website
crashes. Until now, purchasing tickets has often been a frustrating and time-consuming
process, AEG said. Upcoming O2 shows include The Rolling Stones (pictured).
O2 ARENA LAUNCHES TICKETING SCHEME
Olaf Swantee has a six-
month headstart on rivals
TUESDAY 23 OCTOBER 2012
13
NEWS
cityam.com


Imaging firm OMG shares leap
on rising technology demand
INCREASED demand for complex
video-capture technology in
Hollywood and on spy planes has
led imaging technology company
Oxford Metrics Group (OMG) to beat
expectations this year.
The firms trading update
yesterday sent shares in the Aim-
listed company up 24 per cent, to
levels not seen since 2008. The
company runs a number of
separate imaging business: Vicon,
a motion capture service for
movies and video games; Yotta,
BY JAMES TITCOMB
which analyses road surfaces; 2d3,
video-scanning software for use on
military planes; and the new OMG
Life consumer electronics arm.
Chief executive Nick Bolton put
this years success down to better
performance in Vicons Hollywood
studio and more interest in the 2d3
software as demand for
increasingly sophisticated military
intelligence systems grows.
His firm is also gearing up for a
push into consumer technology
with the launch of Autographer a
wearable camera that
automatically takes pictures
throughout the day. The initial
response has been tremendous,
Bolton said.
Omg PLC
22Oct 16Oct 17Oct 18Oct 19Oct
27
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p 30.35
22Oct
FIVE sparring solicitors from DLA
Piper, Clyde & Co and SJ Berwin have
clubbed together tocompete against
each other in a black tie boxing bash
at St Pauls though the tuxes will be
worn by spectators, rather than our
jousting lawyers.
The reason for the fisticuffs isnt to
vent anger but to raise money for the
renovation of Buhinga School in
Uganda. The Capitalist hears the con-
cept of a charity boxing match was
conceived on Rios beaches, when two
of the future fighters were surround-
ed by muscle bound men and left con-
templating their inadequacies.
Matt Totman, an associate at Baker
& McKenzie, and Imran Syed, a lawyer
at DLA Piper, then went to Uganda
where they found visiting the school a
worthwhile motivation to turn up to
work every day freshfrom the set of
Fight Club. At Buhinga it was the kids
who schooled the lawyers. But even
being greeted by a group of over-
enthusiastic 10-year olds and receiv-
ing a bloody nose for their trouble
hasnt dampened spirits.
Five months, two broken noses and
multiple black eyes later they are now
Gloves on: City lawyers
slug it out in the ring
just one month away from getting in
the ring. The Capitalist has its blood
money on Ed the Executioner Eccles,
a litigation associate at Clyde & Co.
Eccles not only has previous charity
boxing form, but is also a handy 6ft4
tall and weighs in at over 90 kgs.
Boxing for Buhinga takes place at the
Grange St Pauls Hotel on Saturday 24
November. Tickets andfurtherdetails
are available at
www.universalchance.org
WATERSTONES in Leadenhall
Market is becoming a popular City
hangout. For evidence look no
further than the photograph
above. The Capitalist reported a
couple of weeks ago that City
A.Ms Sam Torrance was spotted
scribbling away there; now ex-
corporate financier Tony Drury
has done the same, signing copies
of his second novel The Deal while
chums guzzled refreshments. The
book tells the story of a financier
falling in love with a woman who
wont go to bed with him unless
he raises 2m for her brother's
publishing company. Coincidentally
Drury helped raise the capital to
fund Quercus, the publisher of the
Stieg Larsson Millennium trilogy
though in this case, art didnt
imitate life.
TUESDAY 23 OCTOBER 2012
To register go to
Our knowledge on MT4 isnt.
For the first time ever, were opening our doors to host
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Left to right: Bill Gore, partner of Manfield Partners; Tim Lyle, chief executive of City &
Merchant stockbrokers and David Scott, chief executive of Alexander David Securities
14
cityam.com
cityam.com/the-capitalist
THECAPITALIST
IF your appetite for financial
literature hasn't been satisfied by
Drury, why not order the new tome
from ex-Goldmanite and muppet-
botherer Greg Smith? The ex-banker,
for whom earning $500k and living in
Belsize Park wasnt enough, sent a
rather bitter open letter of resignation
to the New York Times in March. How
much insight his book gives into the
machinery of GS is debatable, but
Smiths musings are suitable for
entertainment purposes (though The
Capitalist could do without his
anecdote about spotting Lloyd
Blankfein naked in the gym, thanks).
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
Matt Totman, associate lawyer at Baker & McKenzie, visits Buhinga School in Uganda
No shortage of bedtime financial reading
IN BRIEF
Rolls-Royce signs hovercraft deal
nRolls-Royce yesterday announced it
had won a contract to power a future
fleet of US Navy hovercrafts. The
British firm will work with Textron
Marine & Land Systems in a scheme
that could produce up to 73 new
generation craft. Each hovercraft will
use a Rolls-Royce MT7 gas turbine,
derived from the AE1107 engine, and
the company will also design and
manufacture the air intake and
exhaust systems for the hovercraft.
Leni soars after Trinidad buy
nShares in Leni Gas & Oil rose by more
than 30 per cent yesterday after the
London-listed exploration firm said it
had completed the acquisition of the
Goudron oil field in Trinidad. The field is
believed to contain up to 7.2m barrels of
oil reserves, and the company expects to
see revenues from the fields production
coming through immediately. Leni
recently announced a workover
programme of five wells and that will be
extended to at least 30 wells.
G4S wins Oslo airport contract
nG4S, the worlds biggest security
group, said yesterday it had won a
250m contract with Oslo airport to
provide services from cargo checks to
gates and ground security. G4S said
the contract would run for six years at
the Norwegian airport, which handles
21.1m passengers annually. The deal
comes days after G4S won a 40m
contract in Brazil to lay fibre-optic
cable as part of a national broadband
programme.
PHILIPS boss Frans van Houtens
comprehensive cost-saving plan is
paying off, the Dutch company
revealed yesterday, as it revealed that
profits more than doubled in the
three months to October.
Van Houten has overseen thou-
sands of job cuts and ditched Philips
loss-making TV business since he
took over the ailing firm 18 months
ago. Yesterdays results beat expecta-
tions for the third quarter in a row,
sending the Amsterdam-listed firms
shares up almost five per cent.
Improvements in our operational
excellence and agility are position-
ing the company for better perform-
ance in the coming years, van
Houten said. However, he did warn of
strong economic headwinds on a
global scale.
Much of the boost in profits from
74m (60m) in the same period last
year to 169m was down to the dis-
posal of the TV business, which had
booked a 54m loss last year.
The strong performance was not all
down to cutting costs, however. Sales
Philips revival
continues as it
doubles profit
BY JAMES TITCOMB hit 6.1bn, a 14 per cent rise, or five
per cent when the effects of currency
changes were stripped out.
Growth was most impressive in
Philips healthcare division, which
saw an 18 per cent rise in turnover,
while even the struggling consumer
lifestyle division improved as sales of
items such as electric toothbrushes
offset falls in its consumer electron-
ics ranges.
Much of the growth was put down
to stronger turnover in emerging
markets. While Western European
sales were flat, new markets rose 18
per cent, and now make up more
than a third of total revenue.
The deal team that brought Symphony
Holdings International to market was led by
Panmure Gordons Dominic Morley, manag-
ing director in corporate nance at the rm.
Morley led the corporate nance team along
with Andrew Potts, director of corporate
nance, Charles Leigh-Pemberton, who is
an associate director of corporate broking,
and Tom Nicholson, who also works in cor-
porate broking.
Morley is a 17 year veteran at Panmure
Gordon, having joined the brokerage rm
back in 1995.
Morley also led another large placing this
year, when he assisted Mood Media in the
placing of 31.8m common shares to raise
73.5m for the rms acquisition of DMX
group.
Yesterdays deal, which saw Symphony
offer 166.7m shares, was led by Panmure,
who acted as sole underwriter, bookrunner
and broker.
It is the second placing this month for the
brokerage house, which acted as joint bro-
ker on a placing to raise 8m earlier in
October for Aim-listed company Earthport,
which provides cross border payment sys-
tems.
Charles Leigh-Pemberton worked on the
fundraising of Revolymer this year.
The rm, which makes environmentally
friendly chewing gum, made its full debut
on Aim in July after sealing 25m in
fundraising. Potts, who worked on the
Symphony deal alongside Morley, is a for-
mer employee of Ernst & Young.
ADVISERS PANMURE GORDON
DOMINIC MORLEY
PANMURE GORDON
Higher costs force sausage skin
maker Devro to warn on profits
SAUSAGE skin maker Devro
yesterday sounded a profit warning
as a result of adverse currency
swings and higher costs.
The British firm said in an
interim management statement
that sales volumes continued to
grow in Japan, Europe and the
Americas, and overall market
demand had remained strong since
1 July.
However, it added that raw
material prices had risen, and this
was expected to continue into 2013,
leading to its full-year operating
profits being below original
BY CATHY ADAMS expectations, although they would
be ahead of last year.
Devro added that it would invest
around 35m to increase capacity
and productivity at its
manufacturing sites including
locations in Scotland, Australia, the
US and the Czech Republic over
the next two years.
The FTSE 250 firm said it was
looking forward to a strong end to
the year, and the board remained
confident in the continuing
growth of the business.
Chief executive Peter Page said
yesterday: Our business is well
positioned for the future, with good
demand from a global customer
base, an experienced management
team, and a proven product
portfolio.
Its shares closed down 3.54 per
cent yesterday.
Devro PLC
22Oct 16Oct 17Oct 18Oct 19Oct
310
320
330
340
350 p 325.59
22Oct
Symphony adds to acquisition
war chest with London placing
SYMPHONY International Holdings,
the Asian orientated investment
company listed in London, yesterday
said it is well on the way to raise
$100m (62.5m) in London through
a share placing.
The company, which makes
investments in burgeoning Asian
consumer businesses, announced its
rights issue on 4 October.
Yesterday it said it had received
acceptances for 99.9m shares in its
fully underwritten rights issue at
BY MICHAEL BOW
0.481 for 1 rights issue at $0.60
around 60 per cent of the total on
offer, reflecting the tough
fundraising environment. Panmure
Gordon will endeavour to procure
subscribers for the balance, the
firm said in a statement.
Symphony said it intended to use
the cash to make further
investments in the healthcare,
hospitality and lifestyle sector.
It is currently reviewing 15
potential investments in the sector,
which have a value of $1.28bn.
Fundraising has had a torrid time
in recent months with investors
heistant of investing in equities and
volumes at very low levels.
Symphony International Holdings Ltd
22Oct 16Oct 17Oct 18Oct 19Oct
0.60
0.61
0.62
0.63
0.64
0.65 $
0.62
22Oct
Koninklijke Philips Electronics NV
22Oct 16Oct 17Oct 18Oct 19Oct
19.00
18.75
19.25
19.50
19.75
20.00
20.25 20.10
22Oct
We continue to believe Devros medium to long term growth dynamics
remain intact, with structural growth potential underpinned by very healthy
margins, a strong balance sheet, robust cash generation, an international
capability and continuing investment in new manufacturing capability.
ANALYST VIEWS

The top line of the update is good, but it has a sting in the tail in terms
of prot expectations. Higher input costs, adverse foreign exchange and tempo-
rary commissioning issues with new lines will prompt modest market
downgrades. This could present a buying opportunity at lower levels.

Demand in the third quarter has continued to be strong across devel-

oped and emerging markets, which is encouraging as new capacity comes on-
stream. However, there have been continued headwinds, and we reduce
our full-year numbers by three per cent.

IS DEVROS PROFIT
WARNING MORE THAN
JUST A BLIP FOR THE FIRM? Interviews by Cathy Adams
DARREN SHIRLEY SHORE CAPITAL

CHARLES PICK NUMIS SECURITIES

NICOLA MALLARD INVESTEC

FIDESSA, the London-listed
company that makes trading
systems for brokers, yesterday
warned there would be no revenue
growth at the firm this year due to
a squeeze on software spending by
brokerage customers.
The FTSE 250-listed firm said its
customer base was being hit by
lagging equity volumes, leading to
a drop in demand for its
traditional software products and
cutting short revenue growth,
expected to be around 274m for
2012.
It added that a focus on its
Fidessa profits to flatline after
brokers dip in equity volumes
BY MICHAEL BOW
derivatives business, which is
expected to grow but currently
accounts for just two per cent of
revenues, would also lead to lower
margins, as it pours money into
developing new products.
Analysts at Numis cut profit
forecasts by two per cent on the
news. Jefferies cut pre-tax profit
forecasts by 3.2 per cent to 42.1m.
Chief executive Chris Aspinwall
told City A.M.: Were not thinking
its likely anything will change in
the immediate future.
Its tied to macroeconomic
conditions. For things to change,
we need the equity market to stop
contracting and stabilise.
TUESDAY 23 OCTOBER 2012
15
NEWS
cityam.com
Fidessa boss Chris Aspinwall said revenues had dropped due to falling equity volumes
IN BRIEF
US Congress ponders slower cuts
nSome politicians in the US Congress
are considering replacing across-the-
board $109bn (68bn) spending cuts
with targeted savings of just $55bn,
according to aides familiar with the
discussions. The move would be part
of a bid to help avoid a so-called fiscal
cliff, whereby sudden consolidation
could harm Americas economic
recovery. The automatic spending cuts
were mandated by Congress as part of
a deal to raise the debt ceiling for
federal borrowing last year.
Global gloom predicted to roll on
nThe world is set to suffer another
year of sluggish growth, according to
Capital Economics latest economic
outlook, released yesterday. The worst
of the Eurozone crisis is yet to come,
Capital said, with its economy set to
shrink by 2.5 per cent next year and a
further one per cent in 2014. Japan is
heading for further contraction this
year, it added. In the UK, growth will
stay sluggish, Capital predicts, stating
that quantitative easing is no
panacea to the economic slump.
House prices declined since July
nHouse prices have fallen this month
compared to their value three months
ago, the property website Zoopla said
yesterday. Its data shows prices rising
by a sub-inflation level of 1.5 per cent
compared to October 2011, and lower
compared to July 2012. Nationwide,
the market has been relatively flat,
said Zooplas Lawrence Hall, adding:
London continues to pull away from
the rest of the market and has
experienced strong growth again over
the past year.
THE FINANCIAL crisis has knocked 10
per cent off the average wealth of
Britons aged 50 and over, according
to figures released this morning by
the Institute for Fiscal Studies (IFS).
People in the 50-plus age bracket
are 60,000 worse off, on average, as
a result of the crisis, with wealthier
individuals hit the hardest.
The mean loss among the least
wealthy fifth was 4.6 per cent of total
gross wealth or 9,400, increasing to
12.9 per cent or 162,000 among
the richest fifth, the IFS said.
The wealthiest quintile saw over
half the hit come from a dip in funds
exposed to stock markets, while just
under half came from drops in the
value of property.
The losses occurred despite accu-
mulated rights to defined benefit
pensions being insulated from these
shocks, commented IFS economist
Rowena Crawford.
Future generations of private sec-
tor employees will be much less able
to benefit from this protection and
are likely to be more exposed to asset
Financial crisis
sees over 50s
lose thousands
BY JULIAN HARRIS price shocks.
Yet Britons approaching retirement
are reasonably well prepared, accord-
ing to a separate study also released
by the IFS this morning.
A large majority of people aged
between 50 and the state pension age
will be able to rake in post-retirement
income at a level that equates to 80
per cent or more of their current
working income, the IFS said.
This includes private savings,
expected inheritances, pension credit
and the return that owner-occupiers
get from living in their homes, as
well as state and private pensions.
Yet across the working population
as a whole, over half (52 per cent) of
British employees are worried about
their funds for retirement, according
to a survey released by consultants
Towers Watson today.
And nearly half (47 per cent) now
expect to retire later than they had
originally planned.
Meanwhile the Chartered Institute
of Personnel and Development (CIPD)
said that increasing pensions costs
has moved into the top 10 of employ-
ers concerns.
Tech firms overtake financials
in the City office rental market
LANDLORDS in the Square Mile
have seen a surge in demand from
tech firms since the start of the year,
with office take-up increasing by 39
per cent, according to estate agents
Knight Frank.
Technology, media and telecoms
(TMT) firms acquired 931,000
square feet of offices in the first
nine months of 2012, compared
with 670,000 sq ft during the same
period last year.
This compares with just 620,000
sq ft taken up by the financial
sector so far this year, down from
680,000 sq ft in 2011.
TMT now accounts for around 25
BY KASMIRA JEFFORD
per cent of leasing activity in the
City, up from 10 per cent at the start
of the crisis in 2007.
Major deals this year include
Skype taking 89,000 sq ft at 2
Waterhouse Square in Holborn and
Oracle acquiring 22,000 sq ft at 1
South Place in Moorgate.
James Roberts, head of
commercial research at Knight
Frank said: this is part of a global
phenomenon, as we are seeing
rising TMT demand being reported
in Chicago, New York, Dublin, and
Berlin, as well as London.
The City of London is emerging
as a focus point as it has the
transport, telecommunications, and
power infrastructure to support this
growing sector.
Bradley Baker, head of central
London tenant representation said:
Value for money is pushing them
towards the City where rents are
lower compared to the West End,
and activity is no longer restricted
to the Northern City districts of
Shoreditch and Farringdon, with
older City core offices now of
interest.
Research from BNP Paribas
released earlier this month
estimated that TMT sector demand
for London office space will reach
4.65m sq ft by the end of 2014
equivalent to eight Shards, and half
of the total average take up in
London per year.
WEAK demand in Europe has
contributed to a severe weakening
of Japans level of exports, official
data revealed yesterday.
Shipments to the European
Union dropped a staggering 21.1
per cent as the continents debt
crisis remains entrenched.
Overall, Japans exports tumbled
by 10.3 per cent in the year to
September, their sharpest decline
since the aftermath of last years
earthquake.
On a seasonally-adjusted basis,
exports actually increased for the
first time since April, albeit by only
Japanese exports plummet, hit
by euro crisis and Chinese rift
BY CITY A.M. REPORTER
0.9 per cent month on month,
noted Capital Economics.
Weakness in the global
economy is the main headwind to
exports, but Japans ongoing
dispute with China over the
Senkaku/Diaoyu islands is
providing an additional drag.
Automobile exports to China
plunged 44.5 per cent year on year
in September.
Adding to the gloom, the Bank of
Japan cut its economic assessment
for eight out of nine regions in the
country, as growth paused due to
the global economic slowdown.
The Bank could announce more
monetary easing next week.
TUESDAY 23 OCTOBER 2012
16
NEWS
cityam.com
Shipments fell at the fastest rate since the earthquake and tsunami of 2011
TELFORD HOMES, the London-
focused residential developer,
yesterday said demand from UK
and overseas buyers means it will
report a better-than-expected rise
in first half profits.
The east London housebuilder
said the Olympics had helped to
boost Londons profile, attracting
overseas investors as well as owner-
occupiers to its schemes.
Foreign investors buying up
property to rent have helped to
stimulate the market in the
absence of mortgage financing and
the lack of supply of new homes
for domestic home-buyers, the
company said in a trading update.
The strength of London as a
global city, its international appeal,
Overseas demand boosts east
London housebuilder Telford
BY KASMIRA JEFFORD
transport connections and a
shortage of new homes make the
groups area of operation
particularly attractive, especially
on the back of a very successful
Olympic Games, Telford said.
It now expects to deliver a
significant increase in half year
profits with a total of 252 sales
completed double the 125
achieved in the same period last
year.
The group added that profit in
for the full year to March 2013
would be in line with expectations
while profit for the 2013-14 fiscal
year was anticipated to beat City
forecasts, having already pre-sold
more than half its homes for the
period.
Shares rose six per cent to 145p
yesterday.
US corporate results round-up
THE worlds largest tractor and excavator
manufacturer Caterpillar slashed its full-
year profit forecast yesterday, saying
dealers were pulling back on orders
because of the sluggish economy. It now
expects revenues of $66bn (41.2bn),
down from $68bn to $70bn predicted
earlier. Third quarter profit was $1.7bn,
compared to $1.14bn reported last year.
Revenue rose five per cent to $16.45bn.
Caterpillar says sales growth is crawling
HASBRO topped Wall Street profit
expectations yesterday as better inventory
management and cost controls helped
offset weak sales at the second-largest US
toymaker. Hasbro said it expects revenue
and earnings per share to increase for
the full-year, excluding the impact of
foreign exchange. Net profit in the third
quarter fell to $164.9m (103m) from
$171m a year ago.
Hasbros tight rein on costs helps to beat forecasts
CHIPMAKER Texas Instruments posted
a profit increase for the third quarter,
despite a drop in sales. The company,
which has also forecast a weak fourth
quarter, saw profit of $784m (490m),
up from $601m a year ago.
Meanwhile revenue declined to
$3.39bn from $3.47bn last year. The
firm said it expects revenue of $2.83bn
to $3.07bn this quarter.
Texas Instruments profits up despite revenue dip
FREEPORT-McMoRan Copper & Gold
yesterday reported a 22 per cent slide in
third quarter profit, based on lower
production and sales. The company
earned $824m (515m), compared with
$1.05bn a year ago, with those
earnings boosted by a one-off gain.
Revenue fell 15 per cent to $4.4bn from
$5.2bn. Gold production fell 47 per
cent, with sales down by half.
Freeport falls on production slump
TUESDAY 23 OCTOBER 2012
18
US flat as macro
fears offset by
strong earnings
T
HE Dow industrials and the
S&P 500 ended flat yesterday
after a late-day bounce, as
worries about slower global
growth hitting corporate sales were
offset by earnings that beat
expectations.
Technology shares led the days
gains and pushed the Nasdaq up 0.4
per cent, as shares of Apple jumped
four per cent to $634.03. Apple is
scheduled to report results tomorrow.
Heavy equipment maker Caterpillar
became the latest to exceed expecta-
tions on the bottom line but fall short
of revenue forecasts on the top line.
The stock fell early, but ended up 1.5
per cent at $85.08.
Earnings have generally been beat-
ing lowered expectations, but rev-
enues are weak and profit warnings
remain frequent.
Of the 123 S&P 500 companies that
have reported results so far, 60.2 per
cent have topped analysts expecta-
tions for earnings, but 61 per cent
have missed revenue forecasts, accord-
ing to Thomson Reuters data. Third-
quarter earnings are expected to fall
2.4 per cent from a year ago.
The Dow Jones industrial average
rose 2.38 points, or 0.02 per cent, to
close at 13,345.89. The Standard &
Poors 500 Index inched up just 0.63
of a point, or 0.04 per cent, to
1,433.82. The Nasdaq Composite Index
rose 11.33 points, or 0.38 per cent, to
close at 3,016.96.
After the bell, shares of Yahoo
gained 4.2 per cent to $16.43 after the
Internet companys quarterly earn-
ings beat expectations. Shares of
Texas Instruments dipped 0.04 per-
cent to $27.78 after the bell.
The US chipmaker posted a decline
in revenue and forecast more weak-
ness.
B
RITAINS top share index lost
ground yesterday, extending
declines on concerns about
upcoming third quarter earnings.
Drugmakers dipped, with Shire down
1.8 per cent and AstraZeneca off 0.5 per
cent. The firms kick off the heavyweight
sectors results season tomorrow.
According to Thomson Reuters Starmine
data, of the eight per cent of European
companies that have reported results so
far, nearly half have missed forecasts.
TR Starmine analysts have estimated
year-on-year third-quarter earnings growth
at 7.6 per cent in Europe, while the average
for companies that have already reported
is a 4.2 per cent drop.
At the close, the FTSE 100 was down 17.82
points, or 0.3 per cent, at 5,882.91 points,
having shed 0.4 per cent on Friday to snap
a four-session winning streak.
UK blue chips tracked weakness in their
US peers, with the Dow Jones off 0.3 per
cent by Londons close, having dropped
sharply on Friday, also pressured by earn-
ings concerns.
Among the US fallers, mining company
Freeport-McMoRan lost 0.9 per cent after
its third-quarter profit fell sharply, missing
Wall Street estimates.
UK-listed miners, however, featured on
the FTSE leaderboard, steadying after falls
on Friday, with traders citing support from
positive European strategy comments
from Morgan Stanley. The banks strate-
gists switched their preference to miners
from chemicals in European materials.
Gold miner Randgold Resources was the
top blue chip gainer, up 2.7 per cent on a
firmer gold price.
FTSE loses ground as investors fear
weak third quarter earnings data
BESTof theBROKERS
Go-Ahead Group PLC
16Oct 17Oct 18Oct 19Oct 22Oct
p
1,300
1,280
1,320
1,340
1,360
1,380
1,400 1,374.00
22 Oct
GO-AHEAD
Shore Capital has
upgraded the transport
group from sell to
hold after an investor
day where the firm laid
out plans to target 100m
in profit from its UK bus
business by 2015-16.
DASHBOARD CITY
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
FTSE
16Oct 17Oct 18Oct 19Oct 22Oct
5,940
5,920
5,900
5,880
5,860
5,840
5,820
5,882.91
22Oct
Aggreko PLC
16Oct 17Oct 18Oct 19Oct 22Oct
p
2,100
2,150
2,200
2,250
2,300
2,350
2,073.00
22 Oct
AGGREKO
Following last weeks
profit warning, Panmure
Gordon has downgraded
2012 and 2013 forecasts,
but kept its hold rating
on the temporary power
supplier, with a lower
target price of 2159p.
Royal Bank of Scotland Group PLC
16Oct 17Oct 18Oct 19Oct 22Oct
p 290
285
280
275
270
281.50
22 Oct
RBS
Investec has
downgraded the bank
from hold to sell
with a target price of
255p, saying last weeks
reaction to RBS exiting
the asset protection
scheme was overdone.
Baird
Jonathan Bourn has been
appointed managing director in
Bairds European investment
banking team. He was previously
a partner at AAC Capital. Bourn
has also held roles in Credit Suisse
First Bostons acquisition and
leveraged finance group.
Allianz Global Corporate and Specialty
The insurance firm has appointed Elke Vagenende as head
of product development, financial lines for the UK. She most
recently worked as a senior underwriter at Liberty Mutual.
Vagenende has 15 years experience in risk management.
Morgan Lewis
Nick Thomas has been appointed partner in the law firms
labour and employment practice. He was most recently a
partner at Pinsent Masons, and has particular experience
advising on contentious and transactional matters.
Orange Business Services Trading Solutions
The division of the telecoms group has announced the
expansion of its UK team. Nigel Warner joins as UK
managing director from IPC. He has also held roles at Cisco,
BT and Cable and Wireless. Brad Gorton joins as UK sales
director from Speakerbus, where he was head of sales for
Europe, Middle East and Africa.
Hedgestart
The investment consulting firm has appointed Laurence
Parry as a partner in its private client tax practice. He was
most recently a specialist anti-avoidance adviser for HM
Revenues & Customs. Parry has also held senior roles at
Ernst & Young and KPMG.
Electra Partners
Ian Wood has been appointed investment manager at the
asset management firm. He joins from GCP Capital, where
he was involved in acquisitions. Wood has also held roles at
Siverfleet Capital.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
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W
HEN academics extol
free wheeling research,
they risk being accused of
an ivory tower arrogance
that disregards their
obligations to the public. But they
should strongly counter such
allegations.
Choices of research project are
anything but frivolous: what is at
stake is a big chunk of our lives, and
our professional reputation. The
traditional compact which attracts
academic specialists to our
universities is that, in return for
their teaching, they can devote part
of their time to research in fields of
their own choice, and have
reasonable prospects of the
necessary support. This has
manifestly paid off in places like
T
HE campaign to reawaken the
London tech initial public
offering (IPO) market has
kicked off. Recent
announcements from
Downing Street and the London
Stock Exchange should result in
some small but important regulatory
changes. They are important steps
towards making London a major hub
for tech IPOs.
But regulation is not the only barri-
er to a robust and vibrant IPO market.
A number of other parts of the ecosys-
tem need to simultaneously evolve,
not least investor confidence. The
common view is that Europes public
markets are not ready for internation-
al tech companies. However, blow
away the myths and institutional
investors will see that early-stage tech
is nothing to be wary of. Indeed, the
space is a rare ray of light in an other-
wise gloomy economy.
So what are the myths? One com-
mon concern is the issue of gover-
nance structures and procedures. But
those tech companies that are backed
by venture capital firms have strong
cityam.com/forum
A 10 per cent float
feels less like selling
out and more like
another funding round
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

20
TUESDAY 23 OCTOBER 2012
ROBIN KLEIN
Why investors should take a stake
in high-growth UK tech companies
governance built in from their first
investment, which is typically a
Series-A funding round. Formal
board meetings are held, usually
monthly. Compensation and audit
committees are commonly set up
and meet at least annually. Key deci-
sions will normally need investor
director or shareholder approval. The
governance rules are set out in the
companys articles and shareholders
agreement. By the time the typical
fast growth technology company is
ready to come to the market, gover-
nance will have been refined and
tightened. Good governance is in
their DNA.
Then there is the worry that early-
stage tech companies will have domi-
nant shareholders, directors or
founders running the company. In
fact, tech companies seeking IPO will
typically not have any controlling
shareholder. All preference shares
would be converted to common
stock. The founders will generally
own less than 50 per cent and there
will be at least two venture capital-
ists, often four or more. The company
will typically have little or no debt.
Venture-backed companies are, by
nature, equity funded. The distinc-
tion between this and the typical pri-
vate equity backed company could
not be clearer.
With the founders, perhaps a bigger
challenge is their ability to adapt to
life running a public company. But
even though this will be an entirely
new experience for many of them,
being accountable to a board or
shareholders will not. To get to this
stage founders, chief executives and
chief financial officers will have had
to have raised multiple rounds of
finance, involving many detailed pre-
sentations to investment committees.
They will have been required to take
investors through detailed accounts,
budgets and three to five year plans.
Some are worried that flotation is
designed to allow founders and other
shareholders a quick exit. But the
main reason we have pushed for the
minimum float rule to be reduced
from 25 per cent to 10 per cent is to
align founders longer-term interests
with incoming investors in terms of
flotation price. A 25 per cent dilution
is a large one for a founder to take,
especially for one whose business is
growing at more than 50 per cent per
annum. But a 10 per cent float feels
less like selling out and more like
another funding round on the road
to building a large successful compa-
ny.
Over the past few years, some of the
most successful exits by European
companies including MySQL, Skype,
Playfish, Lovefilm, Net-a-Porter,
Last.fm and PanGenetics have been
trade sales, while only a few such as
Genmab, Betfair, Asos and Addex
have gone public. This begs the ques-
tion: are there enough suitable tech
IPO candidates in Europe?
In short, yes. Last year the 100
fastest growing private tech compa-
nies had an average growth of 81 per
cent with total revenues of 2.8bn.
These companies already employ
11,000 people (adding 7,500 annually)
and 75 per cent of them had operat-
ing profits as well as rapid growth. Of
these, 40 are backed by venture capi-
talists or private equity firms, and 51
per cent are still majority owned by
their founders. Following the
Facebook debacle, the US tech IPO
market is now heating up once again.
Isnt it time Europe took its first steps
and followed suit?
Robin Klein is partner at Index Ventures.
Harvard, Berkeley, and Stanford
each an immense asset to the US. We
must not jeopardise our local
counterparts of these great
institutions by putting this compact
under threat in the UK.
The best university departments
foster such an atmosphere: I am
lucky to have spent many years in
one, in Cambridge. But coffee-time
conversations are increasingly about
grants, the Research Excellence
Framework, job security, and
suchlike. Prospects of breakthroughs
will plummet if such concerns prey
unduly on the minds of even the
very best young researchers.
The winners of the 2010 Nobel
Physics Prize, Andrei Geim and
Kostya Novoselov, are important
exemplars. Working at Manchester
University, they discovered that
carbon atoms can form a lattice just
one atom thick a new material,
graphene, with extraordinary
strength and electrical properties,
and the potential to trigger a
transformative technology. Their
clinching experiment involved a
piece of Sellotape.
It was archetype small science.
But it needed intellectual freedom,
time and the supportive
environment that their university
provided. These two men also
exemplified the mobility of
academics. They were both Russians
who came to this country via the
Netherlands in the 1990s. Today,
visa restrictions might have
discouraged them. We must nurture
such people, in an environment
where they feel free to take
intellectual risks, and ensure that
they continue to perceive the UK as a
place where the best cutting-edge
research can be done.
Two of the most valuable pieces of
intellectual property to come from
Oxford did not come from scientists
or engineers but from professors of
renaissance literature and of Anglo
Saxon. I refer of course to C.S. Lewis
and J.R.R. Tolkien whose works
now, decades later, earn billions for
the so-called creative industries.
These two distinguished scholars
both, in style and attitudes,
archetype old-style Oxford dons
would feel disaffected aliens in
todays world of line management
and the audit culture. Their values
were the traditional ones:
commitment to an institution, to
scholarship, and to learning for its
own sake.
Lord Rees is the Astronomer Royal, a
fellow of Trinity College and emeritus
professor of cosmology and astrophysics at
the University of Cambridge. He is the
author of University Diversity: Freedom,
Excellence and Funding for a Global
Future, published by the think tank
Politeia.
MARTIN REES
We must stand up for academic freedom against government restrictions
MORNING UPDATE
A.M.
21
TUESDAY 23 OCTOBER 2012
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
Female disclosure
[Re: Is the coalition right to force firms to
disclose the number of senior women they
employ?, Friday]
Im not in favour of quotas, but there are
many eminently capable women who are
failing to make it to the top of their chosen
professions. We know that greater gender
parity at board level is good for business, so
its right to encourage change. By insisting
on transparency in employment figures we
may help to do this. This would not be akin
to positive discrimination but would provide
a useful service to any ambitious woman.
Disclosure of the number of senior female
employees would alert women to those
companies that are willing and able to
recognise their talents.
FionaSevers, director at LexingtonGray
PPI scams
[Re: Googles awful day reminds us its
becoming less special, Friday]
The payment protection insurance (PPI)
scandal has clearly damaged the broader
financial services industry. And while I agree
that some ambulance chasing firms are
seeking to captalise on this damage, they
still play an important role in our market
economy. In the end, the better banks
those that have put their customers at the
heart of their business, and those which
have the right processes and systems in
place to rise above the whole PPI mess
will emerge stronger. The rest will be rightly
damaged, with shareholders bearing the
cost. This is how an effective market should
deal with misselling scandals.
Dimitrios Melidonis
L
AST night, Barack Obama and
Mitt Romney met for the
third and final US
presidential debate before
Novembers elections. The
latest polls suggest the race is a lot
closer than many expected not
least because Romney was judged to
have won the first debate in Denver.
Research on the psychology of elec-
tions underlines the importance
both of winning debates and of
being perceived as the favourite.
There is a bandwagon effect unde-
cided voters gravitate towards the
leading candidate. This is social
influence and its not unlike how we
find jokes funnier when we hear
other people laughing.
When faced with a complex judge-
ment, it makes sense that we take
into account other peoples views.
But we also consider the source of
information. To some extent, we dis-
count information if we perceive
bias. This makes us less vulnerable to
political spin.
But spin is not the only form of
social influence were subjected to.
Other forms are more subtle, and
potentially harder to resist. A good
example is the worm the squig-
gly line that accompanies televised
debates. Its meant to represent the
views of undecided voters, moving
up when a candidate says some-
thing they endorse, and down when
he or she says something they dont
like.
The worm featured during ITVs
coverage of the leaders debates dur-
ing the last UK election. Its attracted
controversy in Australia and New
Zealand, with some candidates argu-
ing that the worm was rigged
against them. Even without deliber-
ate bias its unlikely that the worm
accurately represents the views of
undecided voters, since its based on
such a small sample (just 20 people
TOP TWEETS
The governments EU statement: We give a
green light to banking union in return for
nothing. Who negotiated this awful deal?
@DouglasCarswell
Why does David Cameron think an inflation-
capped rise in the EU budget is fine when
everyone else is cutting spending?
@Democracy_movement
David Cameron is saying the right things
about prison reform, but I have a lack of faith
in his ability to carry it out.
@CptBiggles266
The Bank of England has created a problem
due to the sheer size of quantitative easing. I
see no alternative to letting the gilts mature.
@PXFinance
As David Cameron outlines new justice plans,
is he right to criticise current prison policies?
YES
If the Prime Minister wants prisons to work, the first question to ask
is whether the right people are being sent there in the first place.
The Ministry of Justice faces 6 per cent cuts year on year. And the
agency running prisons and probation is forecast to spend 32m
more than its budget for 2012-13 due to the lack of progress in
reducing prison numbers. Almost two thirds of those serving
sentences of a year or less go on to be reconvicted within two years
of release. Worse still, each spell in prison makes reoffending more
likely. By contrast, the reoffending rate for much cheaper
community orders is only 37 per cent. A truly tough and intelligent
approach to reforming justice policies would be to reduce prison
numbers and focus on effective community interventions, with a
better use of scarce resources within prison walls.
Andrew Neilson is director of campaigns at the Howard League
for Penal Reform.
Andrew Neilson
NO
David Green
David Cameron said that prevention is the cheapest and most
effective way to deal with crime. Everything else is simply
picking up the pieces of failure. But prison is a highly effective
method of crime prevention and is not just a method of punishing
law breakers. By locking up repeat offenders, prison does far
more to reduce crime than any number of rehabilitation schemes,
with or without payment by results. Crime fell by 6 per cent in the
12 months to the end of June 2012 compared with the previous
year. And the prison population at the end of June 2012 was
86,352, compared with 85,266 twelve months earlier. Keeping
over 1,000 repeat offenders locked up for a year goes a long way
to explaining the fall in crime. Former justice minister Ken Clarke
talked about rehabilitation, but fortunately the judges did their
duty and locked up more offenders.
David Green is chief executive of Civitas.
RAPIDresponses
A worm could turn
the close fight for
the US presidency
in the case of ITVs worm.)
In a paper published last year, my
colleague and I reported evidence
that the worm influences viewers.
We asked 150 people to watch the
live broadcast of the final UK elec-
tion debate a version that included
the worm and then answer a few
questions. Unknown to the partici-
pants, the worm they saw was
manipulated by us. One group saw a
worm biased in favour of Gordon
Brown, while for another group it
favoured Nick Clegg. Although the
debate was identical, the group that
saw a worm favouring Gordon
Brown thought he won the debate,
while the group that saw the worm
favouring Nick Clegg overwhelming-
ly thought he was the winner.More
worryingly, we saw a similar effect
when we asked about their choice of
preferred Prime Minister. If people
voted immediately after the debate,
our manipulation could have had a
significant effect.
As the US prepares to choose its
next President, its concerning that
CNN is continuing with the experi-
ment of the worm. Millions of voters
are watching debate coverage, and
are thus exposed to social influence
processes that we know can be very
powerful. If the election result turns
out to be as close as polls suggest, it
will be difficult to rule out the possi-
bility that the deciding vote was cast
by the worm.
Colin Davis is professor of cognitive sci-
ence at Royal Holloway, University of
London.
COLIN DAVIS
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TUESDAY 23 OCTOBER 2012
22
cityam.com
A
TRAIT common among
successful traders is a thirst
for knowledge. More
knowledge means more
trading ideas, according to Lex van
Dam, who (in)famously handed
eight trading novices $1m
(500,000 at the time) of his own
cash to trade the markets at the
end of 2009.
With training from van Dam, the
group outperformed professionals
during one of the most turbulent
trading periods in history. I want-
ed to de-mystify the City, he says,
and show that ordinary people
can trade as well as professionals.
Van Dam is an intriguing charac-
ter. Formerly of Goldman Sachs,
the 44-year-old Frieslander has
nearly two decades experience
trading at the top level including
on Goldmans proprietary desk
and at major hedge funds. Yet he
doesnt fit into the clichd mould
of a fund manager and, from his
demeanour, you wouldnt think
that he manages $500m (310m)
for his clients.
We meet to talk about his trading
academy and his book How to
Make Money Trading. Although
unimaginatively named, the ideas
are valuable to experienced traders
and newbies. They will not teach
you how to make money quickly,
van Dam asserts, nor do they pre-
scribe a list of rules to be followed
blindly. Instead the concepts teach
you about how to think about
financial markets.
Van Dam says that there are no
shortcuts to becoming a top trader,
and feels that he is still learning. It
takes a lifetime to learn to trade.
The strength of his approach
comes from an emphasis on gener-
ating your own trading ideas and
managing your psychology. Dont
listen to rumours or follow others;
trust yourself, he says.
Van Dams book is worth a read
for the first chapter alone, which
Top trader who wants
to help the underdog
Lex van Dam knows what its like to cope with painful losses
Lex van Dam talks
about his book with
Yogesh Chandarana
TRADING MANAGEMENT WEALTH
THE TIPSTER
The darling of the high street
T
HE rocket that has gone off
beneath Debenhamss
share price shows little sign of
running out of fuel. Having
breezed past a 2009 high
around 100p per share, it now sits at
levels not seen since late 2007.
Overseas expansion and a store
revamp have helped drive sales
growth, providing a welcome change
from the doom that pervades most of
the UKs high street. Full year numbers
this week will hopefully confirm the
improvement, with a suitably
optimistic outlook. IG quotes 111-112p
for Debenhams.
Vodafone appears to be another
company on the rise. It has recently
benefited from a ruling that allows
operators to roll out 4G services
earlier than initially expected. As
consumers switch from traditional
handsets to smart phones, the
company is set to capitalise.
Vodafones 45 per cent stake in
Verizon has also paid dividends.
Spread Co quotes 176.80-177.10p for
Vodafone.
Sports Direct has been the darling
of the stock market this year, seeing
its share price rise almost 100 per cent
from just over 200p to over 400p in
2012 alone.No matter what the
situation in the broader economy, we
are still a sports-loving nation, as
proven by this years Olympics.
Wednesdays trading statement might
bring more good news for investors.
Capital Spreads quotes 411.8-413.7p
for Sports Direct.
ARM Holdingss numbers are due
today, amid expectations of strong
licensing growth. Consensus revenue
is at 140m, with earnings per share at
3.6p. Importantly, Microsofts
Windows 8 is due out on 28 October,
paving the way for ARM chips to be
installed in tablets that use the new
operating system. ETX Capital quotes
590.03- 591.47p for ARM Holdings.
TOM WELSH
when he was short Nasdaq futures
and Alan Greenspan, the Fed chair-
man at the time, slashed interest
rates unexpectedly, sending mar-
kets surging. He cant remember
his best trade: Its my job to do
good trades, so I dont think about
them. I just think about the mis-
takes and try to learn from them.
Van Dam tells us what it takes to
be a top trader. You need to be
mentally tough, he says sternly.
You need to keep bouncing back,
disappointment after disappoint-
ment, and you have to be able to
cope with pain. To van Dam, a top
trader is someone who is street
smart: Id have someone who is
street smart over someone who is
book smart, any day.
Why would someone want to
help others to trade better? I
always support the underdog, he
says. In these times, no one is
going to take care of you. People
need to take care of themselves.
Van Dams wisdom could enable
traders whether novice or more
experienced to do exactly that.
gives a scathing assessment of the
mechanics of the financial system.
But it isnt merely a biting polemic:
it will help the uninformed to
understand what they are up
against. He encourages us to be
sceptical. I ask whether we should
be sceptical of him. Yes, he says
firmly, be sceptical of everything,
including so-called experts. So I
ask whether he is an expert: I
understand the game, the rules,
and I want to share that.
One difference between van Dam
and the self-styled investment
gurus is his honesty. I struggle
with trading too, and feel the same
pain as retail traders. Even as you
become more experienced, you
still wake up in the night with
worry and feel suicidal thinking
about trades. He says that his life
is probably not that different
from an average trader, although
most average traders do not aver-
age over 10 per cent annual
returns.
I ask van Dam about his worst
trade. He vividly recalls an occasion
fx360.com
A ROMNEY VICTORY COULD
HEIGHTEN CHINA TENSIONS
Dollar-yuan, 2008-2012
2008 2009 2010 2011 2012
7.40
7.20
7.00
6.80
6.60
6.40
6.20
6.00
Yuan
twitter.com/fx360 facebook.com/fx360
The contents of this column are provided for general information purposes only. One should consider the appropriateness
of the information in light of their own objectives, financial situation or needs before trading. CD11UK.074.010612
NEAL GILBERT
SENIOR MARKET STRATEGIST, GFT
W
ITH the US presidential
election looming, the subject
of employment and the
health of Americas economy
has predictably been high on
the agenda. With the countrys
manufacturing base suffering, there is a
swathe of US voters looking for someone
to blame for the unsettling situation.
The Republican challenger Mitt Romney
has pointed the finger squarely at the
weakness of the Chinese currency during
his campaign. His rhetoric has even
attracted the attention of Chinas Foreign
Ministry, leading one official to deny
claims that Beijing is manipulating its
currency. This same official pointed out
that Beijing is voluntarily and gradually
reforming Chinas exchange rate regime.
In fact, the Chinese yuan, adjusted for
inflation, has increased 11 per cent against
the US dollar since June 2010. To some
extent, China has begun to let its currency
float, against a backdrop of pressure from
the US and other world leaders.
If Romneys eventual goal is to give
China the symbolic branding of a
currency manipulator, then everything
is going to plan so far. Americans who
were previously uninterested in the
subject are certainly familiar with it now.
However Romney may end up going
further than simply making a symbolic
gesture. He indicated that, as President,
he would be able to enact tariffs whenever
he believed that a country was unfairly
taking advantage of US manufacturers.
This is tantamount to threatening a
trade war with China. Knowing the
checkered history and unintended
consequences of trade wars in the past, is
it really a good idea to start one with
Americas second largest trade partner?
The issue is that the wheels have already
been set in motion earlier this month,
the US Senate passed a bill that would
levy tariffs on nations with undervalued
currencies. This has seized the attention of
China.
In response to the passage of the bill
through the upper house, Chinas vice
foreign minister Cui Tiankai said that
should the proposed legislation be made
into law, the result would be a trade war
and that would be a lose-lose situation for
both sides. Whats more, House speaker
John Boehner added: I think its pretty
dangerous to be moving legislation
through the United States Congress that
would force another country to deal with
the value of its currency.
However, its worth bearing in mind that,
for the bill to become law, it needs to pass
through both the Senate and the House of
Representatives. The President himself
also retains an ultimate right of veto. But
if we do see a victory for Romney next
month, the likely route is already well
mapped out.
Fortunately were past the days when
nations fired cannons at each other to
settle trade wars. Trade disputes are now
resolved in much more civil terms at the
World Trade Organisation. Often this can
see both sides of the dispute saving face
by coming to a mutual agreement, thus
allowing each country to claim victory. In
light of this, its difficult to think Romneys
plans are entirely without merit. They at
least take this long-running debate to the
next level. After all, a dispute can never be
resolved until it becomes an issue.
Nevertheless, voters should never forget
the fluid and interconnected nature of a
globalised economy.
You can now trade the Chinese renminbi
with GFT Markets against both the US
dollar and the Japanese yen. Join GFT
Markets analysts from the US, Australia
and UK for a special live webinar on
Thursday evening, discussing the global
implications of the forthcoming
Presidential elections. Visit
www.gftuk.com for more details.
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Past election statistics can be a red herring, writes Craig Drake
Election cycle theory is interesting, if not always useful
the tip of the iceberg. For example, sta-
tistically, when a Republican is run-
ning against an incumbent Democrat,
stocks have a tendency to show positive
returns regardless of who wins the elec-
tion. But the problem with all of these
stats is that they are derived from a
very small sample. Over the last centu-
ry, we have only seen 27 US presidential
elections and since 1948 there have
only been 15 different terms.
THE HERE AND NOW
Election statistics may be interesting,
but basing your trading strategies on
them is risky. However, that is not to
say that you should discount the elec-
tions from your market view. With the
polls being so close, there could be
some volatility injected into the mar-
kets in the run up and possibly follow-
ing the elections, purely due to the
build up of uncertainty surrounding
the outcome, says Angus Campbell,
head of market analysis for Capital
Spreads.
FALLING OFF THE CLIFF
The markets response to either candi-
date will be heavily influenced by the
victors response to the so-called fiscal
cliff at the end of 2012, when the
Budget Control Act of 2011 is scheduled
My pick: Long euro-dollar and New Zealand dollar-dollar
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few days
Two weeks ago I explained that I had taken a new long New
Zealand dollar-dollar position at $0.8175. Alongside stimulus
measures expected from China as its new leadership comes
into play, and expectations of a positive market reaction from
a potential Spanish bailout request, I have been gearing up
for a dollar sell off. Although the most recent Eurozone
summit did not produce a Spanish bailout request, its pretty
clear that it will come very soon. I remain bullish on risk.
ANALYST PICKS
The markets are still a swing voter
D
OES the stock market vote
Republican or Democrat?
The US presidential elections
are now only two weeks
away. And as with any major event,
there is no shortage of people who
think that it will have an effect on
the markets one way or another
usually in line with their own
political bent.
Traditionally, the markets were
seen as registered Republicans. The
GOPs deregulation, pro-business
and anti-tax rhetoric seemed much
more in line with the interests of
the financial world than the
Democrats tax-and-spend policies.
But statistics show that the mar-
kets are soft Democrat voters.
Recent research by Pedro Santa-
Clara and Rossen Valkanov has
studied average excess return of a
basket of indices above the return
of the three-month Treasury note.
When a Republican President held
office, the value-weighted return
delivered nearly a 2 per cent premi-
um over the three-month Treasury.
When a Democrat held office, the
premium was nearly 11 per cent.
And when it comes to election-
cycle theory, this research from
Santa-Clara and Valkanov is only
STRATEGIST
ILYA SPIVAK
My pick: Stay long dollar-yen
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
I entered long dollar-yen at 78.67 last week, as prices corrected
lower after taking out major technical resistance marked by the
tops of a triangle consolidation chart pattern. The pair has since
moved aggressively higher, as disappointing economic data
feeds expectations that the Bank of Japan will expand stimulus
measures at this months policy meeting. Prices are now testing
above my initial target at 79.53 and I will continue to hold long,
aiming for 80.39.
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Short euro-dollar, long sterling-yen, stay long dollar-yen
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
Only one of my three setups from last week triggered (long
dollar-yen above 79) and it doesnt surprise me. There is a
lot of potential in these markets, but we need a strong drive
to set this potential off. Meanwhile, careful range trades are
best. I have another set of high potential, but volatility-
dependent setups going forward: short euro-dollar below
$1.2850 support, and long sterling-yen breaking its long-
term wedge top at 128.50.
TUESDAY 23 OCTOBER 2012
MANAGEMENT WEALTH
cityam.com
to come into effect. The act kicks in
at midnight on 31 December. It
brings in a raft of measures, includ-
ing the end of the Bush-era tax cuts,
the end of some business tax breaks,
the end of last years temporary pay-
roll tax cuts and the beginning of
the taxes to finance President
Obamas health care laws. The fear is
that the US Treasury will struggle to
handle the 3.5 per cent drag on GDP
that the perfect storm of measures is
predicted to create.
Nancy Curtin, chief investment
officer at Close Brothers, is firmly in
the Romney camp over the response
to Americas fiscal conundrum: A
Romney win would be a clear boon
for markets: immediate tax cuts for
corporates, no increase in capital
gain and estate taxes (likely to create
year end selling distortions) and a
supply-side business friendly
approach. Curtin adds: The world
needs confidence and Romney is
best able to deliver that immediate
sugar high to investors.
Whether you agree with Curtin or
not, markets can still be seen as a
floating voter, looking for clear com-
munication from either candidate
and a credible plan to get America
back to work.
TRADING
24
CURRENCY STRATEGIST
CHRIS VECCHIO
Prepared food
need not give
you nightmares
LIFE&STYLE
TUESDAY 23 OCTOBER 2012
25
cityam.com
FOOD & DRINK
Take advantage of this years hard crop and invest in vintage wine
RESTAURANT
BEARD TO TAIL
77 Curtain Road, London, EC2A 3BS
Tel: 020 7739 4781
FOOD hhhhh
SERVICE hhhhi
ATMOSPHERE hhhii
Cost for two people with wine: 100
THE BOTTLE
OPENER
NEIL BENNETT
AMUSE
BOUCHE
BRUCE WILSON
T
HINKING what to have for
dinner tonight? How about
some corned beef, pickled
herring or brawn (jellied
pigs head) with fermented
vegetables in salt? Im sure these
arent top of your wish list they
may even bring back nightmares
of bad school dinners but it
could be worth giving some of
those old recipes another chance.
Our culinary history has a long
tradition of preserving foods in
time of plenty be it by making
jams and chutneys out of the
abundant fruits of late summer or
pickling and curing meat and fish
to guarantee a good source of
protein throughout the whole
year. Not only did this make a lot
of economic sense, it also
produced some of our most
delicious British dishes strokes
of genius inspired by necessity.
The concept of using every part
of the animal has been
championed by some of this
countrys top chefs, but its
becoming more widely accessible
across the board. There will
always be a special place in our
hearts (and stomachs) for a good
fillet steak or roast rack of lamb,
but there is still room for corned
beef and pickled cabbage so long
as it is well prepared. Forget
getting it out of a can. Think back
to the way people originally made
preserves for long sea voyages,
packing meat in large salt crystals
called corns. Made
properly, it can be
absolutely
incredible.
Potted shrimps,
salt beef,
kippers,
salted cod,
smoked
mackerel,
dried
sausages,
black
pudding
the list of old-
fashioned but delicious
ways to eat preserved meat and
fish goes on. On the fruit and
vegetable front, things like pickled
gherkins make a great
accompaniment but even if thats
not for you, bottled fruit in
alcohol (like damsons in gin or
raspberries in vodka) is another
good way to enjoy British produce
all year round.
Recently, restaurants have put a
lot of emphasis on eating
seasonally and locally, and I agree
that this is important, but we can
still have variety on our menus
and be innovative in what we
serve. Preserving food changes its
character and makes for some
really exciting dishes. Its time to
revisit some of our traditions.
Try some on Bruces menu, visit
paternosterchophouse.co.uk.
Head chef, Paternoster Chop House
A
NY day now, in some
corner of a vineyard in
South West France,
the last grape of the
2012 harvest will be picked
and put into a basket and
then, the serious business
of making the Bordeaux
vintage will begin.
Right now, the whole
wine world is waiting
in bated breath to
find out about this
years vintage
because, for a long
time, no one was
quite sure whether
there was ever going
to be one. Bordeaux
suffered the same tor-
rential rain that
Britain did in March
and April, which dis-
rupted the vines
flowering some-
thing which wasnt
helped by a brutally
hot summer and a
drought that scorched
the vines, followed by
even more rain. Its
been very stressful this year for
sure, Jean-Charles Cazes, of
Chteau Lynch-Bages in Pauillac,
told me. We have had to stay on
top of the vineyards all the
time. The harvest, he says, was
saved by a good September when
there was the right mixture of
sun and rain that finally
enabled the grapes to ripen. To
say that the regions winemak-
ers have battled the elements to
protect their crop, then, would
be quite the understatement.
So what does this mean for the
wine buyer, particularly if, like
me, you buy a few cases En
Primeur each year and then wait
patiently to drink it? Good news by
the sounds of it. The grapes are in
and there will be a vintage. Not the
finest or a lot of it, mind you, but
it will definitely be there and
might offer some bargains for the
savvy wine buyer when the time
comes.
Leading merchants are expecting
prices to come down. The formula
is simple. The vintage needs a rea-
son for people to buy it and the
only one we can think of is a low
price, says Giles Cooper of
Bordeaux Index. The trade feels
that prices in 2011 were too high
and as result, a significant portion
of the vintage remains unsold.
2012s offering, then, will need to
be priced to go.
We still have a while to see just
how affordable this years vintage
will be, since we wont begin to get
a feel for it until next year, but the
prospect of decent, affordable
claret is exciting enough for those
of us who have seen our favourite
bottles spiraling out of our budg-
ets in recent years.
THREE TO FOLLOW
One for the weekend
Berrys Extra Ordinary Claret, 13.65
This has always been one of my
favourites and is reputedly made by
the Cazes family. A classy claret at a
very decent price.
One to impress the neighbours
Segla 2006, Margaux, 23
Segla is the second wine of Chteau
Rauzan Segla. It drinks vey nicely now
and will keep well for a few years.
One to tuck away
Chteau Cantemerle 2010, 245 per case in
bond or 321.37 duty paid
It is now clear that the 2011 and 2012
are ordinary vintages so it is well
worth looking back at the great 2010
vintage and seeing what you can pick
up there. This is a beautifully elegant
wine, arguably one of the finest the
chteau has ever made and will keep
for 10 or 15 years.
Hard-to-beat meat at Beard ToTail
The menu on offer is a carnivores dream, says Cathy Adams
I
M ONE of of those awful meat
eaters that should really be a
vegetarian but in actual fact,
loves poor-quality canned meat
and a post-pub kebab too much to
ever give up eating flesh. I find
meat, in its most obvious form,
quite repugnant, so will only settle
for a dish where the meat is half-
hidden and can easily be forgotten
(think bolognese or a lasagne).
Visiting EC2s shiny new meat-
focused restaurant, Beard to Tail,
then, took some guts. The sell-out
pop-up has finally put its feet down
permanently on Curtain Road,
owed, in part, to the recent trend of
one-ingredient restaurants being
the capitals destination du jour.
Dreamed up by the luminaries
behind Callooh Callay (the quintes-
sential Shoreditch cocktail bar that
serves drinks in gramophones),
Beard to Tail leaves you in no doubt
that its focus is purely carnivorous.
Even the dcor manages to sit com-
fortably somewhere between indus-
trial minimalism and a poshed-up
shed.
Beard to Tail serves, in various
guises, meat from the beard to the
tail of an animal (not the actual
beard, it should be pointed out,
although one colleague assumed
that it would taste a bit like a hairy
pork scratching). Its the type of
place where you meet the pig and
read its entire medical history.
The meat on the menu, hailing
from Sutton Bank on the North
Yorkshire Moors, is divided crudely
into pig and cow, allowing din-
ers to point monosyllabically at
options on the menu before slump-
ing back into their seats.
Starters range from bourbon BBQ
ribs and stuffed pig trotters, to mus-
sels and black pudding salad. We
plumped for the steak tartar, which,
as a dish, never ceases to amaze me
just how impressive a plate of raw
mince can be. The elegant Beard to
Tail tartar, minced with Kentucky
rye, whiskey, pepper and four corni-
chons, didnt disappoint.
Assured that the pork was the star
of the show the burgers are good,
but why would you come here for a
burger, smiled the waitress, eyeing
up a pair of mugs willing to spend
30 on a main course we went for
the roast pork rumpy pumpy,
worth ordering just for the name
alone; that, and because shared food
is apparently on trend too.
A mere half an hour later, the
rumpy pumpy arrives. The size of a
small piglet, it was all fat, tender
slabs of pork smothered in crackling
and with a pleasingly fatty rind. It
was clichd melt-in-the-mouth-type
stuff. More compellingly, the sheer
size of the rumpy pumpy meant
both myself and my friend took
home a slab each, which my scav-
enging boyfriend ate on its own for
breakfast the next day.
Unable to think for ourselves, my
companion and I shared a dessert
a gargantuan sundae made of a sick-
ening mix of cream, marshmallow,
ice cream and Jack Daniels served
up in the whiskey bottles carcass.
That creamwas like fluff, is as
much as my companion could utter,
dreamily swiping at the last glob of
ice cream dripping from the bottle.
Meat sweats are inevitable at this
place but are totally worth it and
easily washed down with a whiskey
cocktail.
Holla at you meat lovers and get
down there before the entire
Shoreditch trend-brigade arrive. You
wont be disappointed.
Salt beef bagel
with pickled
gherkins
Left: A bottle of Chteau
Lynch-Bages, Grand Cru
Class Pauillac (2004)
Left: The much-
loved rumpy
pumpy in all its
glory. Below: The
restaurants Andy
Warhol cocktail
served in a tin
bottleopener@cityam.com
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Fill the grid so that each
block adds up to the total
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Place the numbers from 1 to 9 in each empty cell so that
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Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5 6
7 8 9
10 11
12 13 14
15 16
17 18 19
20 21 22
23 24
25 26
18 3
34 22
11 22
14 10
45
4 14 15
45
10 5
27 8
24 33
3 16
7
12
17
21
19
12
16
6
17
45 10
24
23
45
15
13
8
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15
6
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ACROSS
1 Nautical unit of
depth (5)
4 Retire from military
service (5)
7 Rocky and steep (6)
9 Showy and festive
party (4)
10 Marine mammal (4)
12 Hair on a lions neck (4)
13 Hunts for (5)
15 Fetched (3)
17 Yawns wide (5)
19 Corpse (4)
21 In the centre of (4)
23 Australian term for a
young kangaroo (4)
24 Deep ditch (6)
25 Cowboy contest (5)
26 Harvest (5)
DOWN
1 Silvery metal (6)
2 Plant with waxy,
brightly coloured
owers (7)
3 Optical organs (4)
5 Bird of prey (5)
6 Birds bill (4)
8 Down payment (7)
11 Painting,
sculpture, etc (3)
14 Capital of
Cameroon (7)
15 Precious or semi-
precious stone (3)
16 Large snake (6)
18 Recipient of
money (5)
20 Partly open (4)
22 Pull, haul (4)
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T R A M P S P E L L
W C E A I
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L O C I T Y K
F O R C E S R A S P
T O H U I
H E A L R A S C A L
Q L E A D H S
N U D E G O V E R N
A G P A E
U L C E R T U T O R
1 2 4 9 7 6 4
5 6 9 3 4 2 8 7 1
8 5 1 5 2 3
8 5 2 1 4 6 5
9 8 6 4 7 7 4 1
6 2 3 1 7 9 8 4
7 4 2 3 6 4 1 2
3 1 8 2 9 9 3
8 7 5 9 8 1
9 6 4 7 8 5 2 1 3
2 1 3 1 6 9 8
4
4
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The nine-letter word was
CAVERNOUS
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rocker Alice Cooper.
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ITV1, 7.30PM
Manchester United v SC Braga (Kick-
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ROLFS ANIMAL CLINIC
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Documentary following the work of
staff at the University of Liverpools
School of Veterinary Science campus
at Leahurst in Cheshire.
TVPICK
26
TV & GAMES
cityam.com
TUESDAY 23 OCTOBER 2012
27
CHELSEA manager Roberto Di
Matteo has insisted that a lack of
recognition for the clubs success
since his appointment is not a
concern because it is the players
and not he who deserve the credit.
Since succeeding Andre Villas-
Boas in March, Di Matteo has led
Chelsea to a first Champions
League title and an FA Cup victory
and has this season taken them to
the top of the Premier League. It is
largely in an uncharacteristically
impressive style that Chelsea have
competed this term but the Italian
is unconvinced about the merits
of any particular attention and
instead continues to focus on
their play.
It doesnt matter at all, said Di
Matteo ahead of tonights
Champions League Group E fixture
away to Shakhtar Donetsk. Im
just happy to be leading this group
and working with these players and
working for the club that I have in
my heart.
The players deserve all this
credit because its been extremely
difficult last season and also this
season evolving our system of play
and integrating new players and so
on. Im just here to help and do my
job as good as I can and hopefully
that will carry on for a long time
for us.
Chelsea captain John Terry will
tonight be asked to wear an anti-
racism armband if he is selected to
lead his team out in Ukraine. The
defender accepted a four-match
ban from the Football Association
for racially abusing Queens Park
Rangers Anton Ferdinand but
remains available for European
competition and is consequently
likely to start.
Shakhtar coach Mircea Lucescu
has warned Chelsea to expect a
more difficult challenge than that
encountered in Saturdays 4-2 win
over Tottenham, however. Our
teams level is higher, he said.
THE PRESIDENT of cyclings world
governing body the UCI, Pat
McQuaid, has rejected calls to resign
over the Lance Armstrong scandal
and vehemently denied suggestions
that a six-figure payment made by
the disgraced rider to the UCI consti-
tuted hush money.
McQuaid confirmed yesterday that
the UCI would ratify the US Anti-
Doping Agencys (USADA) demand
that Armstrong be stripped of his
seven Tour de France titles and
banned for life following the most
serious doping allegations in the
sports history.
Questions have been raised over
Armstrongs donations of $100,000
(62,000) in 2002, which came short-
ly after the UCI had summoned the
American to explain a suspect sam-
ple collected during the 2001 Tour of
Switzerland.
But McQuaid said: Its certainly
not a resignation issue. It would
be better if we hadnt done it, and
if we were to do it in the future, we
would do it in a different way.
There is no connection
between the donation given
to the UCI and a test being
covered up because there
was no test covered up.
Dont try to make the con-
nection between the suspi-
cious test and the donation.
There were no positive
tests from him.
Cycling chief: I
wont quit over
Armstrong era
McQuaid, who took over the presi-
dency in 2005, the year of
Armstrongs last Tour title, acknowl-
edged cycling was in the midst of the
biggest crisis of its chequered histo-
ry but insisted he would remain in
place to help it begin anew.
Cycling has come a long way, he
added. I have no intention of resign-
ing as president of the UCI.
What I will say is Im sorry we
couldnt catch every damn one of
them red-handed and throw them
out of the sport.
On another chastening day for
Armstrong, who denies doping but is
not contesting USADAs claims,
American insurance company SCA
Promotions demanded the repay-
ment of $7.5m (4.7m) in bonuses,
interest and fees while sunglasses
maker Oakley became the last of his
sponsors to dump the Texan.
British cyclist David Millar, a
reformed doper who now sits on the
World Anti-Doping Agencys athletes
commission, called on the UCI to take
greater blame for presiding over a
tainted era.
They denied there was a prob-
lem and even now they are deny-
ing they had knowledge of it,
said Millar.
The buck has to stop some-
where and I think the UCI
have to assume that responsi-
bility.
IN BRIEF
Freedman in talks with Bolton
n FOOTBALL: Crystal Palace manager
Dougie Freedman has been given
permission to speak to Bolton about
their managerial vacancy. Fulham,
however, have rejected an approach
from Blackburn to speak to assistant
Billy McKinlay about the managing job
they hoped to offer Tim Sherwood.
Barker hopeful over ring return
n BOXING: Darren Barker against Kerry
Hope, Lee Purdy against Carson Jones,
and Gavin Rees are all scheduled to
fight on December 8 at Olympia in
London, and British and Commonwealth
heavyweight champion David Price is to
defend his titles against Matt Skelton at
Aintree on 30 November.
Titles stripped but McQuaid denies cash
from disgraced cyclist was hush money
ENGLISH crickets governing body
the ECB has begun its search for a
new lead sponsor after confirming
that Brit Insurance will end its long
association with the sport in 2014.
Brits logo has appeared on the
England teams shirts since 2010
as part of a deal thought to be
worth up to 18m, a period in
which the senior side have
enjoyed huge success.
The company, which previously
sponsored Surrey from 2004 to
2010, has put its decision down to
structural and strategic changes.
The deal, which expires in April
2014, could be terminated early if
all parties agree.
England chiefs
seek sponsor
after Brit exits
MANCHESTER United defender Rio
Ferdinand is tonight to be rested in
their Champions League Group H
fixture at home to Braga even
though any potential issues with
manager Sir Alex Ferguson have
been resolved.
The United manager had labelled
the defenders decision to not wear
anti-racism campaigners Kick It
Outs T-shirt before Saturdays 4-2
victory over Stoke as embarrassing
but he has since dismissed any
suggestion of a fall out between
the two and insists that his only
advice to Ferdinand is to save
any future protests to the
footballing authorities.
Ive spoken to Rio. There is no
issue. There was a communication
problem but it has been resolved,
Ferguson advises rested Rio
to save protests for the FA
said Ferguson, who will also rest
Patrice Evra but could recall Tom
Cleverley, Shinji Kagawa and Ryan
Giggs. My advice to him is that I
always feel a union is stronger than
an individual. Its important he airs
his grievances to the right people, to
the PFA or the FA. There are no
lingering problems we move on.
With Nemanja Vidic, Phil Jones
and Chris Smalling all injured,
Ferdinands central defensive
replacement is likely to be Michael
Carrick or Scott Wooton and Jonny
Evans will continue to start.
The former England international
could regardless be given his chance
to speak, however, after anti-racism
organisation Show Racism the Red
Card declared their interest in
calling a summit meeting to give
those players who refused to wear T-
shirts an opportunity to speak.
Kevin has since apologised to
me and I respect that. I think he
was sincere Andrew Strauss on Kevin Pietersen

SPORT
cityam.com/sport
TUESDAY 23 OCTOBER 2012
BY DECLAN WARRINGTON
BY FRANK DALLERES
BY FRANK DALLERES
BY DECLAN WARRINGTON
Armstrong has been stripped
of his seven Tours de France
@cityam_sport
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Pat McQuaid denied a link between a suspicious test and donations totalling $125,000
Di Matteo not
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Chelsea cheers
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