ESCAPE

THE CITY

BUSINESS WITH PERSONALITY www.sandals.co.uk

Issue 1,323 Wednesday 16 February 2011 www.cityam.com FREE

FACEBOOK FESSES UP
Social network launches phone with HTC
TELECOMS
▲

BY STEVE DINNEEN
HTC, the Taiwanese mobile phone
giant, yesterday unveiled two
Facebook-branded phones, as first
revealed in City A.M. last month.
Dan Rose, head of business develop-
ment at the social network, had
denied our story, telling a press con-
ference the following day there
were no branded handsets in the
pipeline.
However, the two new devices –
which made their debut at the
Mobile World Conference in
Barcelona yesterday – are both
clearly branded with Facebook’s
famous “F” logo.
The ChaCha and Salsa (pictured
right) also have a discreet Facebook Left, how we broke the story
button and software that integrates
the phone with the social network ilar phones from a range of
site. manufacturers this year, as
FREE

Both devices will use data from LITY

A L EA
ITH PE
S L the social network targets
RSONA
Facebook, such as status updates, ESS Wwww.cityam.com
ARSEN Y DATE mobile users.
BUSIN
IL
TO UNVIELE WEMSBSELE RLING
11
uary 20
and apply it to the phone’s contacts Wednesd
E TC
ay 26 Jan
: H CURE CA
NNER L BERTH P30 Mobile is an increasingly
Issue 1,3
08

and incoming calls. The phones will
run the latest version of Google’s
Android operating system.
Henri Moissinac, Facebook’s head of
mobile business, yesterday revealed
the two companies had been work-
ing on the handsets together “for
several years”, even though the firm
initially scotched our report.
Yesterday, a source close to
Facebook defended the firm’s
denial, insisting Rose’s comments
were taken out of context.
The source said: “I think this still
C LU SIV K MOB
EX T FACEBOO T MONTH P7
F IR S H NEX
O LAUNC
DEVICE T
NG: I WA
c o m e s
down to the definition of what was first ever handsets
meant by ‘Facebook branded’ – Dan to display the famous Facebook “F”
was indicating that the phone was logo on their casing.
not part of the Facebook brand.” Facebook yesterday said customers
Yet the ChaCha and Salsa are the could expect to see “dozens” of sim-
GU
P FINA
CU
important driver of traffic
to Facebook, which says 250m
S
users a month access the social net-
work on mobile devices.
HTC also makes the Google Nexus S,
the Google-branded phone that was
also first revealed in City A.M. in
October last year. MORE: P11

Agius: 50p tax makes it harder to keep talent in London

▲

BANKING
BY JULIET SAMUEL
THE 50p top tax rate makes it harder
to retain talent in London, Barclays
chairman Marcus Agius told City
A.M. yesterday.
He also said the bank’s “regretted
losses” – staff that it has lost despite
efforts to prevent them leaving –
have risen, adding: “Competition for
talent is fierce.”
UK banks face a particularly diffi-
cult struggle to keep the best staff as
a high-tax environment in Britain
comes on top of the barrage of EU
bonus regulations introduced in
January.
At the bank’s results presentation
yesterday, chief executive Bob
Diamond said that he welcomed the
government’s commitment to “a
level playing field” in regulatory
terms.
But he admitted that the field was
not level on pay regulation. “It’s dif-
ficult to manage, but if you have
enough rules like that, it can put
you at a competitive disadvantage,”
he said, adding that the US has yet to
unveil its own pay rules. showing yesterday gaining 3.9 per
Barclays yesterday confirmed that cent to close at 325.6p, after the bank
it is to pay a portion of bonuses in revealed a 32 per cent rise in pre-tax
contingent convertible bonds (co- profit for 2010 to £6.1bn. A final divi-
cos) that will turn into equity if the dend of 2.5p was proposed making
bank’s capital ratio falls too low. 5.5p for the year. Other banks were
Overall pay was down seven per also buoyed by its results: RBS rose
cent, and 12 per cent at Barclays two per cent to 45.2p and Lloyds rose
Capital, the investment bank. 1.9 per cent to 66.9p.
Barclays’ shares made a strong FOCUS ON BARCLAYS RESULTS: P7

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 2 News
Spiralling prices are hurting the UK
EDITOR’S LETTER
ALLISTER HEATH
TAKE your pick. Is inflation four per
cent a year, as the official, consumer
price index measure suggests, or 5.1
per cent, as the older, broader retail
price index would have you believe?
My own favourite measure of how the
cost of living is going up is the tax and
price index, which has surged a crip-
pling 5.5 per cent; it adds changes to
direct taxes such as income tax and
national insurance to the mix.
Wealth is being eroded by stealth: if
you were to keep £100 in cash under
your pillow, it would be worth just
£69.31 in today’s money in five years’
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WHAT THE OTHER PAPERS SAY THIS MORNING
JERSEY AND ISLE OF MAN OFFER TAX
SOP TO BRUSSELS
Jersey and the Isle of Man have
announced changes to their corpo-
rate tax regimes in an effort to neu-
tralise criticism from Brussels. Both
crown dependencies said they were
withdrawing laws that aim to stop
local shareholders from avoiding per-
sonal income tax by rolling up
income in companies subject to a
zero per cent corporate tax rate.
HIGH-FLYERS TO ESCAPE MIGRATION
CAP
High-flyers earning more than
£150,000 a year will be exempt from
the yearly cap on economic migra-
tion, ministers will announce today.
The move comes in response to fears
that the limit would hinder the City’s
ability to hire global talent. The con-
cession will be welcomed by business
leaders, who have warned that the
time if prices continue to go up at cur-
rent rates. After ten years, thanks to
the power of compounding, inflation
would have slashed the value of your
£100 to a pathetic £29.19: sterling’s
purchasing power would have been
cut by over 70 per cent.
But all of these figures are just for a
hypothetical average person. Many
readers of this newspaper will be fac-
ing even bigger knocks to their take-
home pay, especially if they commute
or are being hammered by tax hikes.
For some, cuts to real incomes of six,
seven or even 10 per cent will not be
out of the question, assuming
unchanged pre-tax income and pat-
terns of consumption. With compensa-
tion creeping up by just 2.1 per cent on
average, real, post-inflation and post-
tax pay is being slashed by at least 2.4
per cent.
Either pay deals will remain sub-
dued, reflecting the current tough cli-
mate – or salaries will surge, triggering
an inflationary spiral as firms put up
prices in a desperate bid to recoup
Inflation hits
27-month high
UK ECONOMY
▲
BY JULIAN HARRIS
INFLATION reached its highest rate
since November 2008 last month, as
escalating price pressures and tax
hikes continue to hammer house-
holds suffering from sluggish wage
growth and rising unemployment.
While inflation on the consumer
price index (CPI) climbed 0.3 per cent
to four per cent, the tax and price
index (TPI) – which includes the effect
of income taxes – surged to 5.5 per
cent, the Office for National Statistics
(ONS) said yesterday.
The TPI surpassed five per cent in
April last year as tax hikes kicked in,
and is now on the up again. Prior to
2010, TPI had not hit five per cent
since July 1991.
The impending rise in national
insurance will place more cost pres-
limit on work permits threatens to
damage trading partnerships.
CYPRUS COURT LIFTS INJUNCTION ON
RUSSIAN TYCOON
A Cyprus court has lifted an injunc-
tion freezing a large part of Suleiman
Kerimov’s business empire, including
the Russian tycoon’s 25 per cent stake
in Uralkali, which is part of a planned
merger to create the world’s biggest
potash producer by output.
EDF PROFITS DIVE AFTER PROVISIONS
EDF hopes to reassure investors on its
development plans this spring, after
the French state-controlled utility
group saw net annual profits fall 74
per cent on the back of €2.9bn
(£1.8bn) in provisions to cover risks in
its international businesses. Senior
executives said management would
meet in the spring to consider the
group’s future investment priorities
as the group faces up to duller
prospects in the US and Italian mar-
kets.
costs. The only good news is that
falling wages will help unemployed
workers to start finding work again.
In his letter to the chancellor,
Mervyn King warns that even on the
consumer price index inflation could
soon hit five per cent; even more
depressingly, he argues that it could be
“two to three years” before inflation
returns to target. It is an astonishing
loss of control. His argument that
“attempting to bring inflation back to
the target quickly risks generating
undesirable volatility in output” won’t
stop rates from going up – a hike of
0.75 percentage points this year now
looks like the most likely outcome.
The Bank’s mandate is to keep con-
sumer price inflation at two per cent,
though a deviation of one per cent
either side is permitted – regardless of
whether the surge in prices is caused
by imported commodities, bad luck or
(in theory) sunspots. The government
may of course be secretly happy that
the Bank is failing to meet its target:
higher inflation means faster real
sure on TPI, researchers at the ONS
said.
The retail price index (RPI) – which
also includes mortgage payments –
also rose by 0.3 per cent, to hit 5.1 per
cent.
The rise marked 14 consecutive
months of CPI inflation being more
than one per cent over the Bank of
England’s target rate of two per cent
CPI “at all times”.
And it was the first time in the his-
tory of the records that month-on-
month inflation rose from December
to January, the ONS said. Usually
prices drop in January, due to high
street sales.
Obliged to write another letter of
explanation to chancellor George
Osborne, Bank governor Mervyn King
blamed Britain’s lingering inflation
on VAT increases, global commodity
prices and a weak pound.
CAIRN CHIEF WARNS TIME IS
RUNNING OUT ON INDIAN OILFIELD
DEAL
Cairn Energy’s chief executive has
flown to Delhi to try to salvage a $9.6
bn deal to sell its stake in India’s
largest onshore oilfield. Sir Bill
Gammell’s arrival coincided with a
fresh delay in securing government
approval for the deal. The Oil Minister
S. Jaipal Reddy said yesterday the
Cabinet would not make a decision
on the sale of up to 60 per cent of
Cairn India for two to three weeks.
ORDERING A PIZZA FROM THE MIDDLE
OF A MOTORWAY
Hungry motorists will soon be able to
phone ahead to the next motorway
service station to order a Pepperoni
Passion or a Hawaiian thin crust after
Domino’s Pizza signed a deal with
Moto Hospitality to open takeaways
on up to 43 sites.
term cuts to public sector spending
and wages, facilitating fiscal consolida-
tion while allowing the Treasury to
spend more in cash terms. While
painful at first, it could actually reduce
the perceived impact of the cuts.
But one of the great lessons of eco-
nomic history is that when it comes to
inflation, trying to con the public,
companies and the foreign investors
who finance the UK’s massive budget
deficit never works for very long.
People are not that stupid. The govern-
ment has two options: it could scrap or
suspend its inflation target and humil-
iatingly admit that the UK – unlike
every other developed country except
Greece – has given up on price stability.
A less disastrous idea would be for
David Cameron or George Osborne to
go on the record backing a more vigor-
ous anti-inflation policy – and make it
clear that they support higher interest
rates. The current timidity isn’t help-
ing anyone.
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Excluding these effects, inflation
would “probably” be below two per
cent, King said.
Core inflation – which ignores
energy, food, alcohol and tobacco
costs – rose to three per cent in
January, closing in on the record high
of 3.1 per cent seen last June.
Meanwhile, CPIY, which excludes
direct taxes like VAT, jumped to 2.4
per cent. In two months CPIY has
increased by 0.8 per cent. Some econ-
omists argue the CPIY should be even
higher, as it assumes a stronger pass
WIKILEAKS: BHP BILLITON CHIEF
MARIUS KLOPPERS OFFERED
INTELLIGENCE ON CHINA TO US
The head of mining giant BHP Billiton
offered to share intelligence about
China with US authorities, according
to Wikileaks cables seen by the
Sydney Morning Herald. The revela-
tions came as BHP, the world's largest
mining company, prepared to unveil
record interim results. Marius
Kloppers, BHP’s chief executive, said
he would exchange information with
US diplomats in 2009, as he detailed
the high level of surveillance that
Chinese authorities had on his compa-
ny. China is BHP’s largest customer.
APPLE’S CHILD LABOUR ISSUES GET
WORSE
Apple, the technology giant, has
admitted child labour is a growing
problem at factories making its com-
puters, iPods and mobile phones.
CITYA.M. 16 FEBRUARY 2011
Farepak bosses
could be barred
from City jobs
▲
ENFORCEMENT
EXECUTIVES of the ill-fated savings
club Farepak could be banned from
serving as company directors after
the government’s Insolvency Service
applied to the courts to disqualify
them.
Nine directors including former
CBI president Sir Clive Thompson and
outgoing Blacks Leisure chief execu-
tive Neil Gillis could face a ban of up
to 15 years if the High Court deems
them unfit to manage a company.
Thompson was chairman of
Farepak’s parent company European
Home Retail when it collapsed in
October 2006 after several profit
warnings, while Gillis was a non-exec-
utive director.
Farepak customers saw around
£38m of their savings wiped out after
the firm failed to ringfence the cash.
through of
VAT than may be happening.
“There is a great deal of uncertain-
ty about the medium-term outlook
for inflation,” King admitted, reveal-
ing “real differences of view within
the committee”.
“The Bank will be to continue to
blame ‘temporary’ factors,” said Neil
Prothero of the Economist
Intelligence Unit, “but with inflation
having exceeded three per cent in 24
of the past 34 months, the credibility
of this argument is wearing thin.”
JUDGE SAYS BARCLAYS
“MANIPULATED” DEL MONTE SALE
A Delaware judge issued a scathing
decision that criticised Barclays
Capital’s role as the lead adviser to
Del Monte Foods in the food maker’s
proposed $4bn sale to private-equity
firms. J. Travis Laster, a judge in
Delaware Chancery Court, said the
Barclays unit failed to disclose
“behind-the-scenes efforts” to put Del
Monte in play or to tell the San
Francisco company about the bank’s
goal to provide financing to Del
Monte buyers Kohlberg Kravis Roberts
& Co., Vestar Capital Partners and
Centerview Capital.
J&J RECALLS 70,000 SYRINGES
Johnson & Johnson has recalled
about 70,000 syringes of antipsychot-
ic Invega, an injectable formulation,
after discovering cracks in the
syringes.
CITYA.M. 16 FEBRUARY 2011 News 3

Frankfurt and Nasdaq loses

CFO as bourses
NYSE agree to seek takeovers

merger deal
FINANCIAL MARKETS

▲
NASDAQ, the world’s second largest
stock exchange, has lost its chief
financial officer amid talk it could
become the latest bourse to merge in
a flurry of activity worldwide.
Adena Friedman, who will leave
Deutsche Boerse chief executive Reto the company effective 4 March, is
▲

FINANCIAL MARKETS
BY RICHARD PARTINGTON
DEUTSCHE BOERSE and the New York
Stock Exchange (NYSE) have agreed
plans to create the world’s largest
financial exchange group.
The combined company will have
2010 net revenues of $5.4bn (£3.3bn)
Francioni, who will become chairman
of the combined group, said: “We feel
supported by the politicians and also
the regulatory body in going ahead.
Analysts broadly welcomed the deal,
although also raised concerns over reg-
ulator approval.
David Buik, analyst at BGC Partners,
departing to join private equity firm
Reto Francioni (left) and Duncan Neiderauer will become chairman and chief executive Carlyle Group in a similar role.
respectively of the new combined group Picture: REUTERS The departure comes as Nasdaq
might need her dealmaking skills as
ANALYSIS l NYSE / Deutsche Boerse merger exchange rivals pair up in a merger
Top 5 most active stocks on NYSE last year
frenzy.
2010 The exchange’s senior vice presi-
revenue dent Ronald Hassen will serve as

$17.8tr
(millions) €4,054
and will hold joint headquarters in said: “There are bound to be antitrust interim chief financial officer until a
New York and Frankfurt. laws… But once the dust has settled $5,391 replacement is found.
Despite being billed as a merger, the when people look at the value of the domestic market Meanwhile, the Chicago Mercantile
transaction will see the German deal and what it means for everybody, capitalisation of Exchange played down speculation it
exchange emerge as the dominant the deal makes an enormous amount listed issuers was poised to launch a counter bid for
partner, holding 60 per cent of the of sense.” LSE MERGER: P22-23 the New York Stock Exchange, in a
combined group. development that could have thrown
Shareholders in NYSE would hold 40 €2,258 €2,166 a cross-border deal with Deutsche
ANALYSIS l Deutsche Boerse $3,004 $2,880
per cent. €1,888 Boerse into doubt.
62 €
The newly combined firm, which 60.23 $2,511 The bourse said: “We remain com-
has yet to be named, will be led by cur- 15 Feb mitted to creating shareholder value.”
58 €1,178 €1,144
rent NYSE head Duncan Neiderauer as
chief executive, whilst the majority of $1,567 $1,522 40 Adena Friedman has left
54 NYSE
the board will be ran by German execu- % her post as Nasdaq chief
tives. 60 financial officer, as the
50
The deal could cause concern for reg- Deutsche bourse faces merger talk,
ulators on both sides of the Atlantic, Boerse
46
yet the heads of the two bourses say NYSE/ CME Deutsche NYSE LSE / TMX NASDAQ
to join Carlyle Group.
they believe the deal will be passed. Deutsche Boerse Group Boerse
15 Nov 3 Dec 23 Dec 14 Jan 3 Feb
 4 News
Sanofi gets
ready to bid
for Genzyme
PHARMACEUTICALS
▲
BY MARION DAKERS
DRUGMAKER Sanofi-Aventis is ready
to announce its $19.2bn-plus
(£12.4bn) takeover bid for US biotech
firm Genzyme, sources with knowl-
edge of the talks said yesterday, bring-
ing nine months of wrangling to a
close.
The two companies have agreed in
principle to the improved offer, which
could be announced to the markets
as early as this morning.
The bid is said to include $74 per
share in cash plus a contingent value
right (CVR) that will vary depending
on the results of Genzyme’s experi-
mental drug Lemtrada.
Sanofi has included the CVR ele-
ment to help resolve a long-running
argument with Genzyme over the
potential value of its new multiple
sclerosis drug, which the French firm
said could be worth $3.5bn a year.
Sanofi’s previous offer of $69 a
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share, first put forward in July,
expired yesterday after several exten-
sions.
The deal would be the second-
biggest in biotech history and gives
Sanofi a foothold in the growing mar-
ket to treat rare diseases.
It will also help Sanofi compensate
for declining revenue from drugs that
have lost, or are set to lose, patent pro-
tection.
The EU gave the green light to a
takeover in January, saying the hostile
takeover would not reduce competi-
tion in Europe.
Officials at Sanofi were not imme-
diately available for comment, while
a spokesman for Massachusetts-based
Genzyme said he could not confirm
that an agreement had been reached
last night.
Sanofi sought advice during negoti-
ations from JP Morgan, Evercore
Partners and Morgan Stanley, with
Genzyme turning to Credit Suisse
and Goldman Sachs.
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CITYA.M. 16 FEBRUARY 2011
Profit soars
at Marsh &
McLennan
▲
INSURANCE
BY ALISON LOCK
SHARES in giant insurance broker
Marsh & McLennan jumped to their
highest in a year yesterday after its
fourth-quarter and full-year results.
Strong new business growth
pushed the world’s second-biggest
Dell chief executive and chairman Michael Dell saw earnings rise Picture: Reuters insurance broker to an $855m
(£533m) profit in 2010, up from
Dell boosted by upgrades
$227m in 2009 when it bore restruc-
turing and settlement charges.
The broker, which owns manage-
ment consultancy Oliver Wyman,
reinsurance broker Guy Carpenter
and consultancy Mercer, saw fourth-
quarter profit hit $203m or $0.37 per
▲
TECHNOLOGY average forecast – was sustainable share – up from $23m or $0.04 in the
given a big boost from the falling same period the previous year.
COMPUTER-MAKER Dell’s quarterly prices of memory chips and other pro- Full-year earnings per share rose to
earnings and margins blew past Wall duction costs. $1.55 from $0.42 in 2009.
Street’s expectations last night as com- The firm reported a net profit of It generated six per cent organic
ponent costs fell and businesses $927m (£574.6m), or 48 cents a share, revenue growth in the quarter – high-
replaced their older IT systems, pro- in the three months to the end of er than its key rivals Aon on three per
pelling its shares six per cent higher. January, up from $334m a year ago. cent and Willis on four per cent.
Dell’s forecast for a five to nine per Revenue climbed 5.3 per cent to Analysts applauded the news and
cent rise in current fiscal-year revenue $15.69bn. its shares rose more than five per cent
also surpassed US forecasts. Dell is currently pushing to diversify on the news to $30.83.
However, some analysts questioned its revenue base and move away from Revenues grew to $2.8bn in the
whether its gross margin of 21.5 per low-margin PCs in favour of data stor- fourth-quarter and $10.6bn over the
cent – about 15 per cent above the age and mobile devices. year.
NEWS | IN BRIEF
Lloyd’s insurer Jubilee reviews growth options
Lloyd’s of London insurer Jubilee Group became the focus of
M&A speculation yesterday after admitting it had appoint-
ed Jardine Lloyd Thompson Advisory to review its business.
A Jubilee spokesman said JLT was “looking at a number of
options to facilitate future growth.” He would not comment
on speculation that a number of firms, including independ-
ent insurer Canopius, had approached JLT about acquiring
privately-owned Jubilee . “We have a very strong Lloyd’s
platform and remain committed to strengthening and
developing the business,” he said.
CIT Group struggles with soaring costs
US business lender CIT Group said yesterday a fall in inter-
est income and higher expenses hits its fourth-quarter prof-
it. CIT, which emerged from bankruptcy in December 2009
after a $2.3bn government bailout, said margins had wors-
ened and costs had risen nine per cent despite paying off
some of its costly debt pile. Net income stood at $74.8m,
from £
345 down 35 per cent on the previous quarter. CIT restated its
profits for the start of 2010 after finding accounting errors.
from £
379
from £
407
from £
443 SEE PAGES 22-23
from £
504 FOR THE THIRD INSTALMENT
from £
532 OF OUR GLOBAL
EXCHANGES SERIES.
Return fares, incl taxes
This week:
Toronto Stock Exchange
with expert commentary
on the LSE's new partner
from Paul Inkster of
Barclays Stockbrokers.
CITYA.M. 16 FEBRUARY 2011
BHP Billiton
to hand $10bn
to investors
▲
MINING
BY MARION DAKERS
MINING giant BHP Billiton revealed
last night that it almost doubled its
half-year profit last year thanks to
booming iron ore and copper prices,
and offered shareholders an olive
branch in the form of a $10bn (£6.2bn)
buyback during this year.
The Anglo-Australian miner
announced in Melbourne that attrib-
utable profit jumped 71.5 per cent to a
record $10.5bn for the July to
December period, beating forecasts of
$10.3bn.
Revenue rose 39 per cent to
$34.17bn, while dividend payments
were raised 9.5 per cent to 46 cents a
share - slightly below analyst forecasts.
BHP said it would consider both on
and off-market execution of its $10bn
share buyback, which is on top of an
earlier $13bn buyback scheme that
was restarted last November.
Chief executive Marius Kloppers had
come under pressure from some
investors to return more cash, after
overseeing three failed attempts by
BHP to expand through mergers and
acquisitions in recent years.
A merger with Rio Tinto was shelved
in 2008, while a $116bn iron ore merg-
er between the firms in Australia was
cancelled in 2010.
BHP booked a $314m cost in its
results for its $39bn failed bid for
Potash, which was abandoned in
September after the Canadian govern-
ment blocked the cross-border
takeover.
The FTSE 100-listed firm said it was
cautiously optimistic about the eco-
nomic outlook, with cost pressures
outweighed by continued strong
demand for commodities.
FAST FACTS | BHP BILLITON
● BHP Billiton is the world’s biggest mining
company, formed from a merger in 2001.
● Its record profits follow a trend for com-
modities firms, which have benefitted from high
demand in growing economies like China.
Benoit Testard (inset) is set to be named as chief executive of United Biscuits Picture: Reuters
United Biscuits picks boss
▲
CONSUMER
FOOD manufacturer United Biscuits
is set to name Benoit Testard (above)
as its new chief executive as part of a
management reshuffle, and could
make an announcement as early as
today.
The company behind brands such as
Hula Hoops, Jaffa Cakes and Penguin
will promote Testard from his current
role as managing director of UK opera-
tions, Sky News reported last night.
Frenchman Testard joined the firm in
1999 as managing director of the
French business. David Fish, the
firm’s executive chairman, is expected
to move into a non-executive role.
United Biscuits, the leading manu-
facturer of biscuits in the UK, was
subject to a takeover approach by
Chinese food group Bright Food,
which fell through in November.
United Biscuits is owned by private
equity firms PAI Partners and
Blackstone.
News 5
CBRE snaps up
ING property
arm for $1.1bn
PROPERTY
▲
CB RICHARD ELLIS looks set to
become the world’s largest real estate
investment manager (REIM) after it
yesterday announced its plan to buy
ING’s European and Asian property
businesses for $1.1bn (£681m).
New York-listed CBRE said yester-
day that the cash purchase will
improve its foothold in Europe and
create a firm with $97.4bn of assets
under management.
The enlarged CBRE will overtake
ING as the world’s biggest property
investor by assets, and is poised to
replace AXA as the largest in Europe.
“With these transactions we con-
tinue to deliver on our strategic
objectives of reducing exposure to
real estate, simplifying our company
and further strengthening our capi-
tal base,” said ING chief Jan
Hommen.
The sell-off will also help ING pay
down €5bn (£4.2bn) of state aid fol-
lowing a government bailout in 2008.
The $1.1bn deal to buy the REIM
and some of ING’s equity interest in
the funds is expected to close in the
second half of 2011, and will be fund-
ed by CBRE’s cash pile as well as
undrawn credit facilities.
Bank of America Merrill Lynch
advised CBRE, while Morgan Stanley
advised ING.
CITYA.M. 16 FEBRUARY 2011
Pressure on Bob to deliver a miracle Pay down at Barclays
despite rise in earnings
C
HIEF executive Bob Diamond’s
grand promise of a six per cent
rise in returns in three years
was greeted with incredulity in
some circles yesterday.
Evolution Securities’ Arturo de
Frias decried the promise, saying:
“We find all this way too bullish, and
very difficult to believe... We don’t
believe in ‘miracles.’”
The plans rely on a decreasing cost
of equity to 11.5 per cent, from 12.5
per cent currently, which could raise
eyebrows in an increasingly harsh
regulatory environment.
Diamond certainly has his work
Diamond: low
returns will
be banished
BANKING
▲
BY JULIET SAMUEL
BARCLAYS chief executive Bob
Diamond promised rigorous action to
bring up the bank’s returns at its full-
year results presentation yesterday,
saying that “there are no sacred cows”
in his cost-cutting.
Diamond was keen to address the
bank’s “unacceptable” return on equi-
ty of 7.2 per cent in 2010, announcing a
target of 13 per cent by 2013.
With the bank’s cost of capital cur-
rently running at 12.5 per cent, he said
that £1bn of savings would be required
over the next three years to bring
returns above costs.
The savings could come in part from
shutting down or selling off “under-
performing” businesses, although
Diamond did not detail which units
could be for the chop.
Overall, the bank’s results beat
expectations, with pre-tax profit for
the group hitting £6.1bn, up 32 per
cent on last year and above a consen-
sus view of £5.7bn. Most of the earn-
cut out. The bank’s exposure to
Spanish property, for example, is wor-
rying: it took Barclays Corporate
down to a full-year loss of £613m,
with more turmoil in store for
Spanish banks.
But Diamond is fighting to con-
vince investors with a promise to cut
costs by £1bn by 2013. Following the
morning’s announcement that the
bank plans to sell off its Russian oper-
ations, he then unveiled a chart,
revealing that 35 per cent of the
group’s equity is returning less than
its cost of capital (see chart, bottom
right).
ings came from BarCap, which gener-
ated pre-tax profits of £4.8bn.
The group was hit hard by the ongo-
ing property crisis in Spain, however.
Barclays Corporate recorded a £631m
loss on the back of troubles in the
Spanish construction and real estate
sectors.
“We’re clearly not earning the
returns that are acceptable,” said
Diamond of the bank’s Spanish divi-
sion, promising action by its new CEO.
The group’s gross new lending was
up by £35bn, plus £7.5bn through the
acquisition of Standard Life Bank.
ANALYSIS l Barclays
325.58
320 p 15 Feb
300
280
260
3 Dec 23 Dec 12 Jan 1 Feb
Analysts’ curiosity was piqued:
they wanted to know where along
the line each unit lay and what fate –
whether a sell-off or cost-cutting –
awaits those in the red region.
Diamond wouldn’t be drawn on
details, but investors would be foolish
to underestimate him. “Banks will be
in mid-single digit returns unless
they take action,” he emphasised yes-
terday. He is well aware of the magni-
tude of the task.
BOTTOMLINE
Analysis by Juliet Samuel
Group
pre-tax profit:
£6.1bn
ANALYSIS l Return on equity versus cost of capital for Barclays units
Business with less than 11.5%
Return on equity (Cost of Capital)
35% of Group Equity
Focus on Barclays 7
blamed the rise on the payment of
▲
BANKING
deferred bonuses, which are listed as
BARCLAYS’ results revealed yesterday costs during the year in which they
that pay declined seven per cent in vest.
2010, falling by more at its investment He also confirmed plans to pay out a
banking division Barclays Capital, by significant proportion of bonuses in
12 per cent. contingent convertible bonds (or
Overall, however, the bank’s com- “cocos”) that turn into shares if the
pensation ratio of pay to revenues was bank’s capital ratio falls too low.
up to 43 per cent, with average pay ris-
ing nearly £30,000 to £229,000.
Overall, the bank spent £2.6bn on
bonuses at BarCap and £3.4bn on
Chief executive Bob Diamond bonuses overall in 2010.
HOW DO YOU RATE
BarCap
pre-tax profit:
BARCLAYS
Interviews by Katie Hope
RESULTS?
DAVID BUIK | BGC PARTNERS
£4.8bn
“ The profits were
quite a bit better than
expected. The pre-tax prof-
it was £6.07bn against
expectations of £5.7bn. The
net for year was £3.56bn
against £3.2bn. Tier one
”
capital came in at a pleas-
ing 10.8 per cent up
from 10 per cent.
Barclays
Corporate:
RICHARD HUNTER | HARGREAVES LANSDOWN
“
£613m Barclays has
opened the bank report-
ing season in some style,
loss exceeding analyst esti-
mates despite a challeng-
ing 2010. In all, the
results are representative
”
of something of a return
to normality.
ARTURO DE FRIAS | EVOLUTION
“
Business with greater than 11.5%
Return on equity (Cost of Capital) Bob Diamond’s per-
formance today was
extremely polished. But
11.5% Barclays’ 2011 net asset
value, excluding the pension
deficit, is 330p. The stock is
”
at the top of the trading
65% of Group Equity range and we would
‘sell’ on strength.
 8 News
Co-operative supermarket campaign a winner
BRANDINDEX
STEPHAN SHAKESPEARE
O
N this page we often assess the
impact that crisis or events
have on brands but BrandIndex
is more generally used for meas-
uring the success or otherwise of
advertising with the daily tracking
allowing us to study the initial
impact and also the wear-out rate.
One of the more interesting cam-
paigns this year has been the Co-oper-
ative supermarkets “good food within
easy reach” advertising.
SUPERMARKET BUZZ SCORE RISING
The campaign launched on 3 January
with the supermarket’s buzz score
standing at +2, placing it 14th of the
25 supermarkets measured and five
points below the sector average. By
January 21st that score had risen to
+22, well above the sector average in
5th place.
Since then the momentum has
generally been maintained with the
Co-operative still at +20 on 7 February.
Although it has started to decline
over the last week it still remains 7th
overall and seven points above the
sector average.
GENERAL INCREASE IN PERCEPTION
The campaign has not only created
good buzz for the Co-operative, it has
also led to a general increase in per-
ception across all measures. At the
start of the year the index score was -
2 (9 points below the sector average).
By 21 January it was up to +26 with a
mid-20s score maintained ever since.
It now stands at +23, 15 points above
the sector average in 7th place overall
and only just trailing the country’s
biggest supermarket, Tesco.
The Co-operative wanted to assert
their position in the food market as a
values-led, locally minded alternative
to the big four supermarkets.
Six weeks in, perceptions have
moved from being in line with Lidl
ANALYSIS l Co-op vs Supermarkets Buzz
25.0
20.0
15.0
The Co-operative
10.0 Supermarkets Sector
5.0
0.0
3 Jan 11 Jan 19 Jan 27 Jan 4 Feb 12 Feb
World Bank chief Robert Zoellick says global food prices have hit dangerous levels Picture: Reuters
World Bank in
food warning
▲
WORLD ECONOMY
BY KATIE HOPE
WORLD Bank chief Robert Zoellick yes-
terday said global food prices have
reached “dangerous levels,” and
warned that their impact could com-
plicate fragile political and social con-
ditions in the Middle East and Central
Asia.
World Bank data released yesterday
showed higher food prices -- mainly for
wheat, maize, sugars and edible oils –
have pushed 44m more people in
developing countries into extreme
poverty since June 2010.
“There is no room for complacency,”
Zoellick warned. “Global food prices
are now at dangerous levels and it is
also clear that recent food price rises
are causing pain and suffering for
poor people around the globe.”
Zoellick said although higher food
prices were not the main cause lead-
ing to recent protests in Egypt and
Yields fall in Spanish and Greek
auctions amid cautious optimism
▲
ECONOMICS
BORROWING costs for Spain and
Greece fell yesterday at treasury bill
sales, a sign of cautious optimism
that Europe will eventually deal with
its debt crisis despite policymakers’
slow progress towards new measures.
The yield on Spain’s 12 and 18-
month bills fell as much as 50 basis
points compared to auctions in
January, a mark of broadly better
CITYA.M. 16 FEBRUARY 2011
and Booths to being in the same
range as Tesco and Morrisons and all
the indications are of a successful
campaign.
Stephan Shakespeare is chief executive of
YouGov
ANALYSIS l Co-op vs Tesco vs
35.0 Supermarkets Index
30.0
25.0
30.0 Tesco
Supermarkets Sector
15.0
The Co-operative
10.0
5.0
0.0
-5.0
3 Jan 11 Jan 19 Jan 27 Jan 4 Feb 12 Feb
Tunisia, it was an aggravating factor
and could become worse.
He warned that a sharp rise in food
prices across Central Asia could also
have social and political implications
for that region.
The World Bank report comes days
before a meeting of the Group of 20
major economies in France where
higher food prices and the reasons for
those upward spikes will be discussed.
Zoellick also said he was concerned
that as countries such as Egypt,
Tunisia and Jordan address causes of
their social upheaval, higher food
prices may add to “the fragility that is
always there any time you have revolu-
tions and transitions.”
The World Bank chief said the inter-
national community needed to be
aware of such risks and should not
exacerbate problems by imposing poli-
cies, such as export bans or price fix-
ing, that would push global food
prices even higher.
market sentiment. The Treasury sold
€6.2bn of 12- and 18-month T-bills, the
high end of its targeted range.
The 13-week Greek bill yield fell to
3.85 per cent but the premium
demanded by investors on secondary
markets to hold Greek over German
debt widened to 860 basis points, 26
basis points on the day, as uncertain-
ty continued to plague the southern
Eurozone economies struggling most
with high debt.
 We’ll tell you
where to stick
your bonus!
Right here!
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their first sporting chance. Just £1,500 puts a new one on the road.
£40,000 pays for a specially adapted minibus to get them to their next match.
We’ll even stick your name on the back to say ‘thank you’.
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 The Capitalist
10 CITYA.M. 16 FEBRUARY 2011
EDITED BY
ELIZABETH FOURNIER
GOT A STORY? EMAIL
thecapitalist@cityam.com

BANKERS
SWAP CITY
FOR DIY AND
CAMPFIRES
NEVER let it be said that the City is averse
to getting a little dirt under its fingernails.
On 12-13 March members of the banking
community will be doing just that at
Havens Hospices annual “I’m a banker…get
me outta here!” event to raise money for
the organisation’s hospices in Essex.
Over the weekend, teams from Daiwa,
Deutsche Bank, Lloyds, Nomura, ICAP, RBS
and many more will be mucking in to help
out with painting, decorating and garden-
ing at the hospice sites.
Most challenging of all perhaps, the
teams will also be camping together
overnight in a huge marquee, which
means they’ll have to wake themselves up
for the second day of work without
Blackberry alarms and Nespresso
machines to help.
The scheme is the brainchild of
Deutsche Bank employee Roberto de
Cristofano, whose daughter has been using
the Children’s Hospice for several years.
While there may not be witchety grubs
on the menu or Gillian McKeith as a camp-
mate to contend with, for some City execu-
tives a night in the wilds of
Southend-on-Sea might be just about as
much as they can take.
“Perhaps it
won’t be long
before the
most image-
conscious
executives
turn up at
their AGM on
two wheels”
A SALUTE TO THE CITY
The culmination of weeks of hard work
and plenty of culinary expertise has def-
initely paid off – The Capitalist can reveal
that last week’s Square Mile Salute
raised a grand total of £240,000 – a fan-
Company bosses are ditching their luxury cars to avoid appearing “flashy” to clients tastic result for the three charities it sup-
ports.
avoid alienating his contacts – a drop Their tongues and purse strings loos-
THE ROAD TO SUCCESS in the ocean at just £16,000. ened by the five course banquet, diners
It looks like it might be time to dig out that The survey conveniently landed in pledged huge amounts during the
Jaguar-branded dust sheet and hang up The Capitalist’s inbox around the evening’s auction, with all proceeds
your driving gloves – a new survey has same time as a piece on the economy of going to support Help for Heroes, The
found that five per cent of company direc- running a scooter to combat increasing Royal British Legion and ABF The
tors now keep a second “run-about” car just transport and insurance costs. Long Soldiers’ Charity in their drive to build
for visiting clients, to avoid perceptions the preserve of suburbanites with a and run centres for wounded troops on
that they’re doing a little too well during intense hatred of traffic jams and a their return from active duty.
these austere times. love for mod fashion, perhaps this The Square Mile Salute has been
One director surveyed by car leasing means it won’t be long before the pioneered by City businessman Ray
firm CentralContracts.com was dismayed most image-conscious of executives Steadman of Chamberlain’s
when he started losing business after arriv- are turning up at their AGM on two Restaurant Leadenhall Market, along
ing at meetings in his brand new V8 Range wheels. with Gordon Hogg of Finclass and
Rover (circa £60,000). A second-hand Vespa will set Philip Corrick of The Royal Automobile
But rather than updating his sales patter you back around £500 – surely not Club. City A.M. was delighted to be
or negotiating prices, it was straight back enough to offend even the most involved, and is looking forward to next
to the forecourt for a Nissan Qasqai to frugal of customers. year’s banquet already!

:LQGRZVŠ/LIHZLWKRXW:DOOVŒ7RVKLEDUHFRPPHQGV:LQGRZV

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CITYA.M. 16 FEBRUARY 2011 Mobile world congress 11

THE TOP STORIES FROM THE WORLD'S BIGGEST MOBILE PHONE SHOW

Vodafone in swipe at Apple

to censure Apple, which dominates subscription revenue.
▲

TELECOMS
BY STEVE DINNEEN
VODAFONE chief executive Vittorio
Colao made a veiled attack on Apple
yesterday as he called for greater open-
ness in the mobile industry.
He said he was concerned about
firms creating so-called “walled gar-
dens” around content, stressing “the
importance of avoiding dominance in
any step in the value chain”.
Sources close to Vodafone con-
firmed the comments were intended
the mobile phone app industry.
The side-swipe came as Apple
announced it will cream off 30 per
cent of any subscriptions sold
through the app store.
That means the likes of Rupert
Murdoch’s News Corp – which sells
iPad subscriptions to the Times
through the app store – will have to
give almost a third of the virtual
“cover price” to Apple.
Until now, publishers and other
developers could keep 100 per cent of
Colao went on to praise Google for
creating another major player in the
mobile sphere with its Android oper-
ating system, saying it is important to
maintain competition.
Addressing Vodafone’s ongoing tax
woes in India, Colao called the treat-
ment of his firm “erratic” and “not
healthy”.
He claimed the authorities were
making a “misguided” attempt to tax
his firm, which he said has invested
heavily in the Indian economy. Vittorio Colao said no firm should have “dominance in any step of the value chain”

Google lost
to Microsoft
in Nokia race
2011

MOBILE branch to network operators, who say

WORLD
CONGRESS
BY STEVE DINNEEN IN BARCELONA
GOOGLE chief executive Eric Schmidt
has revealed his firm was in
“advanced” talks to provide its
Android operating system for Nokia
handsets before the Finnish handset
maker signed an agreement with
Microsoft.
Schmidt said Google “would have
loved it if they had chosen us over the
other guys. We certainly tried.”
Nokia instead chose to work with
Microsoft, and will use its Windows
Phone 7 platform on its handsets
from later this year.
Android is the fastest growing
mobile platform, overtaking Nokia’s
soon-to-be retired Symbian, with
3,000 activations every day.
Schmidt used his Mobile World
Congress Keynote to offer an olive
companies like Google put pressure
on their networks through services
such as YouTube without paying for
the burden.
He acknowledged that the invest-
ment cost to operators is “very high”,
with demand for network space grow-
ing faster than wireless capacity.
He said Google is looking at shar-
ing search revenue on mobile devices
but added that governments should
play a part in better managing
mobile spectrum.
Schmidt also did not rule out a sen-
sational $10bn (£6.23bn) bid for
microblogging site Twitter.
Google chief executive
Eric Schmidt says the
surge in smartphones
will mean exponential
growth in advertising

NEW PRODUCT LAUNCHES

HTC FLYER
Just when it looked like Steve
Jobs had killed the stylus, HTC
has boldly brought it back
with its new tablet. While day-
to-day navigation on the seven
inch Android device is still
done with your fingers, you
can write and draw on to the
Flyer with a stylus. It looks
slick and smacks of quality, but
expect to pay high-end rates.

HP TOUCHPAD
HP's first foray into the tablet
market is a solid enough effort.
Size-wise the TouchPad comes
in almost exactly between the
Galaxy Tab and the iPad - its
two toughest competitors. It is
the first tablet to run WebOS,
albeit a customised version of
the software, and multi-tasking
is brought to the forefront. It's
an attractive enough device but
no iPad beater.
 12 News
Broker team
buys its way
out of Brewin
FINANCIAL SERVICES
▲
BY RICHARD PARTINGTON
THE CORPORATE advisory and
broking team of financial services
group Brewin Dolphin has bought its
way out of the company to set up a
new firm.
The asset manager agreed to sell
the unit, which sees the departure of
55 professionals, in a deal worth £5m.
The team has now established a
joint venture with the financiers that
backed the buyout, N+1 – a Spanish
financial adviser and asset manage-
ment group.
The deal will also free Brewin
Dolphin from its regulatory capital
requirements, as it moves to become
a pure investment manager.
Following the transaction, N+1 will
hold a 51 per cent stake in the new
company, whilst the team will hold
35 per cent. Brewin Dolphin will
Lloyds closes 13-man equities business
▲
BANKING
GOVERNMENT-backed bank Lloyds
has closed the equities division of its
investment-banking arm in a shift
back to its core banking services.
The equity markets division, a
minor part of Lloyds Bank Corporate
Markets, which raises debt and equity
finance for mid-sized companies, had
worked on share issues such as initial
public offerings for clients.
The bank said the unit’s closure on
Friday was a “strategic decision” to
refocus on its debt service provision.
But the unit, with just 13 employ-
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The very best grass fed Aberdeenshire beef dry aged for flavour by Aubrey Allen served with béarnaise sauce, chips, watercress and tomato
7 Great British cheeses &1963 Croft port £15
retain a 14 per cent interest in the
company.
The deal is still subject to regulato-
ry approval from the Financial
Services Authority.
The new business, to be called N+1
Brewin, will be led by Graeme
Summers as managing partner.
Summers, who joined Brewin
Dolphin in 1990, formerly headed up
the firm’s corporate advisory and
broking division.
He said: “It’s exciting times for the
team. Brewin Dolphin has been a very
good home for us for the past 20
years. There’s been a natural parting
of ways, moving of the businesses in
different directions
“We’ll be moving towards a part-
nership with a highly successful
international partner that has very
complimentary skill sets to what
from the outset we were trying to
achieve in this process.”
ees after five years in business, lacked
market share and had little new work
coming in.
“Our equity markets business is
modest with a small market represen-
tation,” said a spokesperson. “As part
of our ongoing plans to simplify our
business model, we have decided to
withdraw from the equity market.”
“We are making every effort to
offer redeployment opportunities to
affected employees,” he added.
Joe Dickerson, a banking analyst of
Banco Espirito Santo, said the equi-
ties unit was “very much a non-core
business”.
Please mention City A.M. to take advantage of this offer
Boisdale of Bishopsgate,
Swedeland Court, 202 Bishopsgate, London, EC2M 4NR
020 7283 1763
www.boisdale.co.uk
Graeme Summers will lead the new N+1 Brewin partnership.
EDWARD WILLIAMS
WEST HILL
CORPORATE
FINANCE
BREWIN Dolphin was advised by
Edward Williams of West Hill
Corporate Finance, a corporate
finance advisory business focused on
clients in the financial services and
funds sectors.
Previously, Williams advised on
the £113m sale of Lloyds vehicle
Cathedral Capital, as well as a pri-
vate capital raising for specialist
motor insurer Verex. He also worked
on a £105m AIM capital raising for
the Macau Property Opportunity
Lloyds Bank Corporate Markets
employs more than 5,000 staff across
areas including acquisition finance
and lending to private equity. It made
a loss of £1.09bn in the six months to
the end of June 2010, up from a
£7.73bn loss in 2009.
Lloyds has faced political pressure
to distance itself from riskier invest-
ment banking work and return to
extending lending and risk manage-
ment services to UK corporates since
the fallout from the financial crisis.
In November 2009, the heads of
three private stockbrokers wrote to
then City minister Lord Myners to com-
Fund.
Prior to joining West Hill, Williams
was a managing director in HSBC’s
Financial Institutions team. He has
15 years corporate finance experi-
ence and is a graduate of King’s
College, London, where he read Law.
West Hill’s Andrew Galloway also
advised on the deal.
Galloway, the former head of
financial institutions at HSBC’s
investment bank set up West Hill
with other bankers in 2003.
He has over 25 years’ corporate
finance experience from mergers
and aquisitions to equity and debt
financing.
Galloway led the formation of
HSBC Investment Bank’s Financial
Institutions team which was the
bank’s largest revenue contributor
for a number of years.
plain that taxpayer-backed banks were
putting pressure on their debt service
clients to use their broking services as
part of their loan agreements.
ANALYSIS l Lloyds
70 p 67.09
15 Feb
66
62
58
15 Nov 3 Dec 23 Dec 17 Jan 4 Feb
CITYA.M. 16 FEBRUARY 2011
NEWS | IN BRIEF
Spain’s Catalunya Caixa reforms
Spanish savings bank Catalunya Caixa
said late yesterday it has decided to
restructure its banking activities to
shore up its solvency and comply with
Spanish and international rules.
Catalunya Caixa, the group created by
the merger of three savings banks from
the Spanish region of Catalonia, said in a
statement its board has agreed to cre-
ate a new retail bank which can obtain
funding from public and private
investors.
LSE close hit by trading glitch
The London Stock Exchange failed to
stop trading yesterday as scheduled –
one day after completing a major sys-
tem upgrade – causing confusion among
traders, who blamed a technical prob-
lem. The LSE, which ends normal trading
at 16.30 GMT before starting its closing
auction, conceded on its website that
normal trading did not cease until 42
seconds after the official close at 16.30.
The LSE, which said all trades would
remain valid, said it was investigating
the problem.
Fiat to invest €500m in Italy
Fiat SpA will invest around €500m
(£418.2m) to relaunch its niche car pro-
ducing plant known as ex-Bertone, as
the Italian carmaker moves to boost
productivity at its Italian operations.
In a statement yesterday, Fiat said it
will produce a new Maserati model at
the site for sale on foreign markets.
British Land net
asset value up
in third quarter
▲
PROPERTY
REAL-ESTATE company British Land
yesterday posted 25 per cent growth in
third-quarter net asset value (NAV),
and said that it is investing in the
south-east of England with the pur-
chase of a shopping centre in
Barnstaple, Devon, for £30m at a net
yield of eight per cent.
British Land – whose portfolio is
dominated by prime retail and
offices – said third-quarter NAV per
share was 548p, up 25 per cent year-
on-year. Its portfolio value was £9.3bn
at 31 December 2010, up 13.1 per cent.
CITYA.M. 16 FEBRUARY 2011
IHG raises its T
dividend as
hotels boom
▲
HOTELS
BY HARRY BANKS
INTERCONTINENTAL Hotels, the
world’s biggest hotelier, showed con-
fidence in economic recovery by lift-
ing its final dividend for the first
time in three years and set a target
for opening more hotels.
The British group, home to the
InterContinental, Crowne Plaza and
Holiday Inn brands, met forecasts
with a 22 per cent rise in 2010 profit,
driven by demand from Asia, busi-
ness travellers and a revamp of its
Holiday Inn chain.
“Across the business and across the
world we are seeing some solid
growth,” finance director Richard
Solomons said, adding an economic
recovery that had started in Asia was
now looking “very broad based”.
InterContinental, with over 4,500
hotels in more than 100 countries,
said it would grow its estate by 3-5
per cent a year from 2012, revamp its
Crowne Plaza chain and also sell its
flagship InterContinental New York
Barclay hotel.
Its upbeat tone chimed with recent
comment from rivals, including US
groups Marriott on Monday and
Starwood earlier this month.
Meanwhile, InterContinental said
yesterday that it will launch a new
upper mid-scale hotel brand in
China by the end of the year, as part
of plans to more than double the
size of its operations in emerging
markets.
The group estimates that China
will overtake the United States as the
world's biggest hotel market by 2025.
ANALYSIS l InterContinental Hotels
1,400 p 1,361.00
15 Feb
1,300
1,200
1,100
15 Nov 3 Dec 23 Dec 17 Jan 4 Feb
HE RETURN of the business traveller – as
played by George Clooney (right) in Up in the
Air – helped InterContinental Hotels boost
annual profits, chief executive Andy
Cosslett told City A.M. yesterday. Its
upscale brands, which are popular with
corporate clients, staged the biggest
recovery, with revenues
InterContinental and Crowne Plaza up
10.5 per cent and 16.7 per cent respec-
tively.
Cosslett says demand from finan-
at
cial services firms has staged a
remarkable recovery, which is good
news for IHG because they often
spend more on rooms and services.
“Financial services went to ground
for obvious reasons during the reces-
sion, but it’s all come back. These
clients like top hotels, and they like
luxury suites,” says Cosslett.
Revenues at IHG’s Groups &
Meetings arm – which hosts confer-
ences and events – are around 17
per cent higher than they were last
year. And 27 per cent of bookings
were made through its global-
ly negotiated account, which
deals directly with big corpo-
rates.
“Everyone is obsessed with
government austerity,
but the truth is the
corporate world
dealt with this
much earlier.
Everyone was tak-
ing out costs in
2008-2009. Now
firms are doing
what they’re sup-
posed to – meet-
ing people and
growing their top
line,” says Cosslett.
By David Crow
News 13
Land Rover
sales boost
Tata Motors
AUTOMOTIVE
▲
DEMAND for luxury four-by-four cars
is booming, according to sales figures
from Jaguar Land Rover parent Tata
Motors published yesterday.
Global sales at Land Rover, where
top-notch Range Rover models retail
for up to £86,000, jumped 30 per cent
in January compared with January
2009, to 17,321 cars.
Jaguar sales climbed more slowly,
rising three per cent in January to
3,056 worldwide, resulting in an over-
all 25 per cent hike in luxury brand
car sales year-on-year.
The growth far outstripped Tata
Motors’ overall global car sales, which
rose 16 per cent to 98,998 in January.
Sales of passenger vehicles rose 17
per cent to 53,183 cars.
The figures follow Tata Motors’
third-quarter results last Friday that
showed 22 per cent revenue growth
and a 58 per cent jump in operating
profit in the three months to
December 31, compared with the
same quarter in 2009.
Jaguar Land Rover “continued to
show strong profitability”, the compa-
ny said in the results statement, mak-
ing £275m profit after tax as the
market improved and customers
snapped up its new designs.” Tata
Motors is India’s biggest carmaker with
$20bn (£12.5bn) revenues in 2009.
 14 Economics
German snow
dampens GDP
for Eurozone
EUROZONE ECONOMY
▲
BY JULIAN HARRIS
GROWTH in the Eurozone was more
sluggish than expected in the final
three months of last year, reaching just
0.3 per cent, official data showed yes-
terday.
The euro fell in early trading, drop-
ping close to $1.346 (£0.84), as Germany
reported fourth quarter growth of 0.4
per cent, below expectations. However,
the currency recovered against the dol-
lar as the day progressed.
Germany’s disappointing result was
blamed partly on adverse weather con-
ditions, mirroring the situation in the
UK from earlier in the month, where
snow was blamed for an estimated half
percentage point drop in GDP at the
end of 2010.
“There is really only one important
reason why growth slowed: the winter
weather,” commented Andreas Rees,
an economist at Unicredit. “There is no
reason for concern. This is not the
beginning of the end of the recovery,
just a pause.”
German confidence for the near
future remains strong, according to
the Zew index, released yesterday.
A positive balance of 15.7 per cent of
surveyed investors expect conditions to
improve over the coming six months.
And the Zew’s measure of current
conditions rose above expectations to
85.2 from 82.8, hitting its highest level
since July 2007.
The French economy expanded by
0.3 per cent over the same period – half
the rate expected by economists.
Strong exporting economies led the
way for the Eurozone, with growth of
0.6 per cent in Austria and Holland.
However, Mediterranean and periph-
eral economies continue to drag on the
17 country area.
Spain (0.2 per cent) and Italy (0.06
per cent) recorded weak growth, while
the economy contracted in troubled
Portugal (-0.3 per cent) and Greece (-1.4
per cent).
House prices rise on the FSB pushes
month yet slump expected for NI break
to boost jobs
▲
HOUSING
BY JULIAN HARRIS
HOUSE prices rose by 0.5 per cent in
December compared with November,
the Department for Communities and
Local Government (DCLG) said yester-
day.
However, over the whole of the
fourth quarter of 2010, prices fell by
0.4 per cent, compared to the previous
three months.
VAT hike and inflation see
consumer morale tumble
▲
UK ECONOMY
BY JULIAN HARRIS
CONSUMER confidence fell to just six
points above its all time low, accord-
ing to a Nationwide index released
today.
After rising to 54 in December, the
index dropped to 47 last month,
weighed down by a collapse in spend-
ing confidence that was mainly
caused by the VAT rise and inflation,
“The DCLG provides lagging evi-
dence on house prices as the office cal-
culates its index at the time when
mortgages are completed,” said
Howard Archer of IHS Global Insight.
While the department showed a 3.8
per cent annualised rise in prices, this
was down from November’s rise of
four per cent. “House prices will grad-
ually trend down in 2011 after losing
ground in the latter months of 2010,”
Archer said.
Nationwide said.
The survey’s spending index plum-
meted by 20 points, to its lowest level
(70) since November 2008.
Meanwhile the expectations index,
which measures confidence over the
next six months, dropped by 10
points.
“Less than one in five consumers
believe things will improve over the
next six months,” said Nationwide’s
chief economist Robert Gardner.
NEWS | IN BRIEF
Weather and inflation hits US
A wave of data releases delivered bad
news overall for the US economy yester-
day. Homebuilder sentiment stagnated in
February, a survey revealed. The index,
which requires a score of 50 to reflect
more builders viewing sales conditions as
good than poor, stayed stuck on 16 for
the fourth month in a row. Retail sales,
meanwhile, increased less than expected
in January – up 0.3 per cent – official
data showed. Snowstorms were partly
blamed for the slowdown. Global price
pressures were reflected in a 1.5 per cent
rise in import prices, nearly double the
rate expected by economists. Yet there
was good news for US manufacturing as
the Empire State index rose to 15.43 in
February from 11.92 in January.
CITY VIEWS: IS INFLATION HITTING THE BANK
OF ENGLAND’S CREDIBILITY? IN ASSOCIATION WITH
Save or Borrow peer to peer at RateSetter.com
www.RateSetter.com Customer Phoneline: 08442490115
GRANT CLEMENCE| QBE INSURANCE
“No, changing interest rates wouldn’t have
any impact. It’s driven by commodity prices.”
JAMES COOPER| LONDON METAL EXCHANGE
“Yes, they’ve set these targets but aren’t
being seen to do anything about it.”
JOHN FILTNESS | RFIB
“They are doing their best to control it.
Interest rates need to be low for now.”
CITYA.M. 16 FEBRUARY 2011
▲
UK ECONOMY
BY JULIAN HARRIS
JOB creation must be encouraged by
a wider “holiday” from national
insurance contributions, the
Federation of Small Businesses (FSB)
said yesterday.
The coalition government has
pledged a “national insurance holi-
day” for start up businesses that take
on up to five staff.
But the tax break should be
extended to existing firms with up to
four members of staff that take on
up to three more, the FSB said.
Almost half – 44 per cent – of small
firms would take on additional staff
if the government cut national insur-
ance, an FSB survey revealed.
Amid rising unemployment, the
government should consider that
small companies are more likely
than big firms to take on people that
have been unemployed in the past 12
months, it said.
“The government is looking to the
private sector to lead the recovery,
but without the right measures in
place, small firms are left without
the tools they need for the job at
hand,” said the FSB’s John Walker.
British productivity on the rise
Productivity in the UK rose by 40 per
cent between 1991 and 2007, the fastest
of all G7 countries, the Office for National
Statistics said yesterday. However, the
measure (GDP per worker) fell during the
recent recession era (2007-2009). In
terms of GDP per hour worked, the UK
remains below Germany, France and the
US, but above Japan and similar to
Canada and Italy. The US continues to
lead the way in both measures of produc-
tivity, while Germany has the second
highest GDP per hour out of the G7.
Steady price inflation for Spain
Spanish consumer price inflation was
level in January, sticking at December’s
annualised rate of three per cent.
CITYA.M. 16 FEBRUARY 2011
Danone warns of price rise
▲
CONSUMER
BY HARRY BANKS
FRENCH food group Danone is plan-
ning to raise some of its prices this
year as well as making productivity
gains to help combat an expected rise
of up to nine per cent rise in raw
material costs, it said yesterday.
The world’s largest yoghurt maker
with brands like Actimel and Activia,
forecast the price of milk, its biggest
raw material cost, will rise five to
eight per cent but looked for a small
rise in 2011 operating margin, helped
by cost cutting in Russia.
The Paris-based group said it
Morrisons in
£70m deal to
join web war
▲
RETAIL
BY JOHN DUNNE
WM MORRISON yesterday announced
that it had finally taken the plunge
into online retail, splashing out £70m
on baby goods firm Kiddicare.
The supermarket giant has so far
resisted the move to the web while
rivals like Sainsbury’s, Tesco and Asda
see online sales as vital to their finan-
cial health.
But the purchase of Kiddicare will
give Morrisons a foothold in the non-
food retail market. The UK’s fourth
largest supermarket chain has identi-
fied that as an area ripe for growth.
The retailer had been tipped to
approach online delivery firm Ocado
over a possible tie-up, but that
prospect has been dismissed for the
time being.
Scott and Elaine Weavers-Wright
run the family-owned Kiddicare busi-
ness, which had a turnover in 2010 of
£37.5m and has grown by 75 per cent
in the past three years.
It owns a store in Peterborough,
where it has 160,000 sq ft of ware-
house, retail and office space.
Morrisons chief executive Dalton
Philips said: “This acquisition brings
not only a respected, successful and
Domino’s drops its Britain’s Got Talent A&B given a lift as gold
sponsorship as it reports a profit rise pulls in more customers
▲
CONSUMER
BY JOHN DUNNE
DOMINOS Pizza has seen its profit
surge by 27 per cent – but sales start-
ed to slow in January.
The company, which operates the
British and Irish franchises of the
global delivery brand, said sales
growth at shops open more than a
year slowed to 4.7 per cent in the first
seven weeks of 2011 compared with
an 11.9 per cent increase throughout
2010.
expects six to eight per cent growth
in underlying sales this year, after a
6.9 per cent rise in the fourth quarter
of 2010 and in the full-year, despite
higher milk costs and tough econom-
ic conditions, especially in southern
Europe, like Spain.
Danone’s operating profit margin
was unchanged last year at 15.2 per
cent and it sees a small rise to 15.4 per
cent in 2011.
The shares closed 3.3 per cent high-
er after the announcement at €45.42,
reflecting the group’s confidence in
coping with cost increases and set-
ting 2011 sales and margin targets
higher than analysts expected.
fast-growing specialist retailer into
the Morrisons group but also a
robust, scalable and highly advanced
technology platform around which
we can begin to build our e-com-
merce offer.”
Morrisons plans to launch new
products from the company’s online
platform from next year, while
Kiddicare will continue operating as
Kiddicare.com.
RBS analyst Justin Scarborough
said: “This transaction, while small in
size, should highlight the pace of
change within the group. The oppor-
tunity to leverage the Kiddicare range
across Morrisons’ 12m weekly shop-
pers is clear, in our view, as is the
future opportunity for the group to
widen its online non-food offer.”
ANALYSIS l Morrison
280
p 280.00
15 Feb
270
260
15 Nov 3 Dec 23 Dec 17 Jan 4 Feb
Meanwhile finance director Lee
Ginsberg said its sponsorship of
Britain’s Got Talent was set to end
after it failed to agree terms with
broadcaster ITV over extending the
deal.
“It’s fair to say we won’t be sponsor-
ing that going forward. ITV was look-
ing for an outrageous amount to
renew that,” he said. Domino’s said
the current sales performance came
against a “backdrop of exceptional
comparatives from the same period
in 2010 and the current difficult eco-
Consumer News 15
Premier Foods cuts debt
Chairman and chief executive
and aims to boost brands
Franck Riboud anticipated no major
change in consumer spending in
industrialised and emerging The firm, which also makes Mr
▲
CONSUMER
economies, but saw growth in Russia Kipling cakes, Loyd Grossman sauces
after sealing a merger with Unimilk PREMIER Foods, Britain’s largest food and Hartley’s jam, said group sales
late last year to make it the country’s producer, posted a 0.6 per cent rise in fell 3.5 per cent to £2.57bn, reflecting
leading provider for milk products. full-year trading profit and said its lower non branded sales.
“We will aim to outperform our debt following two recent disposals Premier Foods’ key priorities are to
competitors in organic sales growth, would fall to under £1bn. grow its branded business and reduce
margins and cash generation,” he The maker of Branston Pickle, Bisto its debt. Net debt was down £103m to
said in a statement. gravy and Hovis bread, said yesterday £1.26bn at the year end and will be
Finance director Pierre-Andre that it made a trading profit of under £900m after it offloaded its
Terisse told a conference call: “We are £311m in the year to 31 December. meat-free and canned grocery divi-
looking at raw material cost increases That compares with analysts’ con- sions. Shares in the company have
of six to nine per cent including five sensus forecasts of £303m according gone up 20 per cent in the last three
to eight per cent in milk.” to analysts, and £309m made in 2009. months.
Family makes fortune Web from 1998 -
£500m sales last year
look like child’s play Web from 2000 -
£500m sales last year
Web from 1996 -
sales growing at 20
owned by the Wrights, a lot of that per cent a year with
▲
PROFILE
growth has required the informa-
BY JOHN DUNNE tion technology expertise of IT con- 120,000 orders a
THE family behind Kiddicare will sultant Scott Weavers-Wright, who week on average
share a £70m pot between them is now a partner in Kiddicare.
after their fast expanding business He launched the company on the Web from 1999 -
caught the eye of supermarket world wide web in 1999, ahead of £413m sales last year
giant Wm Morrison. many other retailers.
Family-run Kiddicare The website now accounts for
was founded in 1974 80 per cent of its business and Web from 2000 -
by Neville and has 40,000 customers a does not release
Marilyn Wright, and month. online sales figures
is now run by their He said yesterday: “Elaine
daughter, Elaine and I are extremely excited Source: The supermarkets' annual figures
Weavers-Wright and about partnering with
her husband Scott. Morrisons to accelerate the
Kiddicare origi- pace of future growth at kid- ROTHSCHILD
nally traded as dicare.com and look forward
Rainbow, a supplier to working with the Morrisons
of baby products, pros- team to develop their online
pered from its begin- offer.
nings, due to a policy of There are fantastic
keeping prices low by synergies between
paying suppliers early the two busi-
and triggering dis- nesses and
counts that it our plat- ROTHSCHILD was adviser to Wm
passed on to cus- form will Morrison on the deal. The bank has
tomers. allow both kept under wraps the finer details
Rebranded in brands to of the negotiations which see the
the Eighties, e n j o y supermarket giant join the move to
the business future suc- online trading, albeit after the other
has grown cess and to major chains took the plunge.
from first-year continue The price of £70m has been seen as
turnover of to deliver at the upper end by analysts but
just £10,000. an unri- Kiddicare’s rapid expansion gave it
However, valled cus- valuable bargaining clout.
while the t o m e r Rothschild advised on the disposal
firm is still experience.” of Pets at Home to Kohlberg Kravis
Roberts last year. It also advised on
a £311m placing and rights issue for
SCOTT WEAVERS-WRIGHT electricals giant DSG International.
nomic climate”. Panmure analyst due to the cost of opening new shops.
▲
RETAIL
Simon French said: “It is the weakest Chief executive Barry Stevenson
number we can recall over the last PAWNBROKER Albemarle & Bond said said: “We are expanding the core
five and a half years. Comparatives yesterday that heavy advertising by business and exploring new opportu-
will only get harder over the rest of websites that buy gold from con- nities including adding at least 25
the first half as sumers by post has boosted business. full line stores per annum, opening
the football World Cup had a very Revenues at its gold-buying arm flexible gold buying pop-up shops,
positive impact on the second quarter were up 22 per cent in the six months developing new routes to market, tri-
last year.” to the end of December. alling new unsecured lending prod-
The company delivered on average The firm said that that was being ucts, introducing new marketing and
a million pizzas a week to households boosted by online advertising in the branding strategies, and further
in Britain and Ireland in 2010. industry. incentivisation of our highly trained
The company has seen rapid sales But A&B’s pre-tax profits slipped staff to deliver outstanding levels of
increases through its iPhone app. one per cent to £10.7m in the period service.”
 16 News
Micro Focus sees sales stall
▲
TECHNOLOGY
BY HARRY BANKS
BRITISH IT firm Micro Focus
International lost some large deals in
the US in its third quarter and said it
would not be able to make up the
shortfall, sending its shares plunging.
The group said US government
departments and major corporations
on the east coast had scrapped deals to
update applications running on main-
frame computers.
“We found Federal to be very hard
going, principally around the budget
debates which are going on,” chief
executive Nigel Clifford said in a call
Yell warns its
annual profit
will fall short
▲
MEDIA
BY ROGER BAIRD
SHARES in Yellow Pages publisher Yell
tumbled yesterday after the directory
business said its full-year earnings
will miss market forecasts.
The firm said its pre-tax profits fell
to £38.6m in the nine months to the
end of December, from £75.1m in the
same period a year ago, as it blamed
sliding revenues from its core printed
directories.
Group revenue was down 11.8 per
cent to £1.35bn, with the company
adding that “the current financial
year is now expected to be slightly
below the current range of market
expectations”.
The stock closed 16 per cent down
at 8.85p.
Yell, which also runs units in the
US, Latin America and Spain, has
been hit by the decline of its printed
directory business as customers
switch to digital media. Sales from its
printed directories, which account
for almost 70 per cent of revenues,
fell to £936.6m in the nine-month
”
period from £1.13bn last year.
The company also labours under a
£2.8bn debt pile, which it raised after
a number of overseas acquisitions
Deregulation threatens EDF forecasts Trading on course at UK’s
as profits rise on increased capacity Pennon despite weather
▲
ENERGY
BY HARRY BANKS
FRENCH power company EDF posted
higher annual profits yesterday but
disappointed investors with a profit
forecast for this year that could prove
over-optimistic due to de-regulation
of the French market.
The former French monopoly is
being forced to sell up to a quarter of
its domestic nuclear output to com-
petitors to help open up markets.
Traders said EDF’s 2011 profit target
with analysts yesterday.
Some modernisation and upgrade
projects for major US financial institu-
tions had also fallen victim to changed
spending priorities, he added. The
warning sent shares in the company,
which also has a software testing busi-
ness, down as much as 38 per cent to a
two-year low of 246p in morning trad-
ing, before recovering slightly to close
at 291p.
Micro Focus, which supports applica-
tions for Tesco and Boeing, downgrad-
ed its full-year forecasts after the
third-quarter miss, with revenue for
the year to the end of April now expect-
ed in the range $432m-442m and core
during the last decade.
Standard & Poor’s recently down-
graded Yell’s credit rating to “junk”
status – below investment grade –
and revised its outlook from stable to
negative. The rating agency added
Yell was unlikely to meet its guidance
on earnings, debt and banking
covenant headroom in 2011-12.
The firm’s new chief executive
Mike Pocock, who took over in
January, told investors last month he
wants to boost its online sales as
quickly as possible. He plans to
update the market on the conclu-
sions of his business review in June.
In a bright spot for the firm, sales at
its digital media division rose 10 per
cent on a constant currency basis to
£342.2m over the last nine months.
ANALYSIS l Yell
15 p
8.85
13 15 Feb
11
9
15 Nov 3 Dec 23 Dec 17 Jan 4 Feb
was based on a maximum price of €42
(£35) per megawatt hour (MWh) that
the government could set for nuclear
power production, which EDF will
have to sell as part of a liberalisation
law.
EDF posted a 4.4 per cent rise in
2010 earnings before interest, tax,
depreciation and amortisation and
forecast a rise of between four and six
per cent this year.
The utility group said core earn-
ings came in at €16.62bn last year –
up from €15.93bn in 2009 and the
CITYA.M. 16 FEBRUARY 2011
Entertainment One soars
earnings of between $159-$167, before
on Peppa Pig success
a $14m-18m restructuring charge. The
firm also warned in December it
MEDIA
▲
expected a flat second-half. distribution of film
and television con-
ANALYSIS l Micro Focus International Plc ENTERTAINMENT One said tent said Peppa Pig
440 p 291.00 yesterday it expected full- licensing activity
15 Feb year results to beat market had a robust
estimates after its British Christmas with sales
400 animated television of more than £200m.
series, Peppa Pig (right), The firm said Peppa Pig
360
racked up strong retail was the highest selling
sales in 2010. pre-school toy licence in
The entertainment com- the UK last month, a posi-
320 pany that specialises in tion previously held by
the acquisition, Thomas the Tank
15 Nov 3 Dec 23 Dec 17 Jan 4 Feb production and Engine.
NEWS | IN BRIEF
Exxon Mobil boosts reserves
Exxon Mobil Corp said its oil and gas
reserve additions last year were double
its production, marking the biggest jump
in more than a decade, with gains
fuelled partly by the oil company’s pur-
chase of XTO Energy. Exxon, the world’s
largest publicly traded company, said it
increased its proved reserves by 3.5bn
Yell chief executive Mike Pocock will update the market about his plans this summer
ANALYST VIEWS: WHAT ARE THE PROBLEMS
oil equivalent barrels, or 209 per cent of
its production, bringing its reserve base
to 24.8bn oil equivalent barrels. Big oil
companies have struggled to gain access
to new supplies as countries with vast
reserves like Venezuela have handed
those over to state-run firms.
YELL FACES THIS YEAR? Interviews by Roger Baird
DTZ books record transactions
DTZ Investment Management complet-
ed a total of £700m of transactions in
LORNA TILBIAN | NUMIS 2010 – a record for the fund manager in
“
its 40-year history. This was achieved
following a particularly strong final
We are downgrading our full-year 2011 and 2012 quarter, with £130m of transactions
forecasts. We expect further investment in digital and completing in December. DTZ IM has
”
believe the group would use any cyclical upswing in the actively invested in the UK for a number
of pension fund clients looking to
share price to launch a needed second rights issue. increase their property weightings.
Notable deals during the course of the
year included the purchase of the £95m
PAUL GOODEN | RBS Cobalt portfolio from Wellcome Trust,
“
an off-market £30m acquisition on
Jermyn Street, SW1, the closing of a
The problem management has is that print still £30m industrial portfolio acquisition
accounts for 69 per cent of group revenue and is in free fall. shortly before Christmas.
”
Digital products are under-invested and there is limited room
to invest given Yell is close to banking covenants. Philogen pulls Milan float
Swiss-Italian biotech group Philogen has
pulled its plans to list on the Milan stock
exchange after Bayer ended a partner-
SAM HART | CHARLES STANLEY ship it had with the group. The initial
“
public offering would have been Europe’s
first biotech listing this year and was an
It is hard to see the profits the firm is making at its indication appetite for the sector was
online business offsetting the large falls in sales that come warming up again. Philogen focuses on
from its printed unit that is in terminal decline. Investors are treatments for disorders related to the
growth of new blood vessels which can
right to be worried about its balance sheet. play a role in illnesses such as cancer and
rheumatoid arthritis.
€16.45bn average forecast. pipes, this would not materially
▲
UTILITIES
Sales rose 10.2 per cent to €65.17bn impact results.
in 2010, boosted by higher availability BRITISH water and waste company The weather also hurt operations at
of EDF’s nuclear and hydro power Pennon said the severe winter weath- its waste management unit, Viridor,
capacity in France. This was despite an er hurt operations at both of its units, but the company expects the unit to
environment EDF described as diffi- though said trading since October had report a higher pre-tax profit for 2010.
cult, with electricity and gas demand been in line with its expectations. Analysts currently expect the
still not back to pre-crisis levels. Net Britain was hit by an unusually company to report a full-year pre-
profit fell to €1bn, and EDF’s debt fell hard winter, with one of the coldest tax profit of £175.9m, on revenue of
to €34.4bn by 31 December, from Decembers on record. £1.11bn.
€42.5bn at the end of 2009. It is expect- Pennon – which supplies customers Pennon’s statement follows bullish
ed to fall again to €27.1bn once the in Devon and Cornwall via South announcements by Britain’s largest
sale of a 45 per cent stake in Energie West Water – yesterday said while the listed water utility, United Utilities,
Baden-Wuerttemberg is effective. cold weather led to a surge in burst and Northumbrian Water Group.
CITYA.M. 16 FEBRUARY 2011 News 17

CITY MOVES | WHO’S SWITCHING JOBS Edited by Marion Dakers in association with

Barclays
Sally Bott has joined the bank as group human
resources director and member of the execu-
tive committee. Bott will start her role in April,
replacing Cathy Turner. She joins from BP,
where she was HR director, and has also
recently served as a non-exec board member
at UBS. Before this, she was managing direc-
tor and head of HR at Marsh & McLennan. This
will be Bott’s second stint at Barclays, having
worked there in HR from 1997 to 2000.
chief executive of the insurer’s commer-
AXA cial lines business, including its distribu-
Amanda Blanc yesterday started as tion arm Bluefin Insurance Services.
She will report to group chief executive
Paul Evans and will become a member
of the AXA UK board – the first woman
to do so.
Blanc won the title of City Woman of
the Year in 2008. She comes to AXA
from Towergate Partnership, where she
was most recently deputy group chief
executive officer having joined in 2006.
She has also held senior positions at
Commercial Union, AXA and Groupama.
Lloyds Bank Corporate Markets
Four new hires were announced yester-
day, as part of the banking division’s
push for new and existing clients this
year.
Alex Wilson has been appointed
managing director and head of banks
for northern Europe, after more than
ten years in client-facing roles in the
business. Wilson will be responsible for
Sofia Larsen and Anders Jensen, who
have taken newly-created roles as rela-
tionship managers in the global finan-
cial institutions team, and Philippe
Wenden who will work with French
bank clients.
Larsen, originally from Sweden, has
spent ten years covering financial firms
at WestLB, HSBC and most recently
NAB. Anders has been with Lloyds
since October, and has previously cov-
ered German-speaking firms for BNP
Paribas Fortis and Saxo Bank. Wenden
also joins from BNP Paribas.
Lester Aldridge
The law firm has hired Allan Reason as
a partner in its London dispute resolu-
tion team. Reason has experience of
disputes in banking, commercial and
property sectors, and has advised high
net worth individuals on contentious
matters. He has worked on both litiga-
tion and alternative dispute resolution,
with experience of the London Court of
International Arbitration.

To appear in CITYMOVES please email your career

SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT +44 (0)20 7557 7245
updates and pictures to citymoves@cityam.com morganmckinley.com

BEST OF THE BROKERS To appear in Best of the Brokers email your research to notes@cityam.com

ANALYSIS l Centrica ANALYSIS l Rightmove ANALYSIS l Ashtead Group 181.70

339.00 908.17
345
p 15 Feb 950
p 15 Feb 190 p 15 Feb
335 170
850
325
150
315 750
130

15Nov 3 Dec 23 Dec 17 Jan 4 Feb 15Nov 3 Dec 23 Dec 17 Jan 4 Feb 15Nov 3 Dec 23 Dec 17 Jan 4 Feb

CENTRICA RIGHTMOVE ASHTEAD

JP Morgan Cazenove rates the utility “overweight” with a target price of
390p. The broker thinks an ongoing Ofgem supply review is unlikely to
lead to a Competition Commission referral, and that the market has not
priced in a formal investigation. JPM expects to see a carbon tax of £1 per
tonne in the next government budget in March, with Centrica benefitting
from a low carbon fleet.
Investec rates the estate agent “hold” with a target price of 656p. The
broker expects signs of strong earnings momentum when the firm reports
its full-year results on 25 February, with the share price further supported
by an ongoing share buyback. However, the broker views shares as fully-
valued at present, and will review its rating and target price ahead of the
results.
UBS rates the equipment rental group “buy” and has raised its target price
40 per cent to 265p. The broker expects the rental industry to exceed its
earlier sales records even if the construction sector does not return to its
historical peak, and that Ashtead’s fleet utilisation makes it well-placed to
benefit. UBS adds that the ongoing rates rise in rentals has another 18 to
24 months left to run, further supporting share price gains.

Commodities dent FTSE 100 US markets slip

despite strong banking stocks after retail data
price pressures excluding food were thought. tion either way,” she said.

THELONDON their strongest in at least a decade

and will force the central bank to
InterContinental Hotels, the
world’s biggest hotelier, met full- THENEW YORK The Dow Jones industrial average
lost 41.55 points, or 0.34 per cent, at

REPORT
keep tightening policy.
Anglo American was among the
hardest-hit miners, down 3.8 per
cent after a Citigroup downgrade to
REPORT
year expectations, but fell two per 12,226.64. The Standard & Poor’s 500
cent. Analysts said IHG’s shares look Index fell 4.31 points, or 0.32 per cent,
fully valued. to 1,328.01. The Nasdaq Composite
Satellite operator Inmarsat shed Index slipped 12.83 points, or 0.46 per

B M
RITAIN’S s top share index
closed lower yesterday as
strength in banking stocks,
inspired by forecast-busting
results from Barclays, was out-
weighed by a broad retreat in the
mining sector on commodity price
wobbles.
The FTSE 100 index closed down
23.01 points, or 0.4 per cent, at
6,037.08.
The FTSE 250, FTSE 350 and AIM
100 all finished slightly down.
Barclays was the standout blue-
chip riser, closing up 5.8 per cent. It
touched a five-month high after
posting a 32 per cent rise in 2010
earnings, thanks to a strong end to
the year at investment bank Barclays
Capital.
Peers Lloyds Banking Group and
Royal Bank of Scotland, set to unveil
full-year results next week, rose 1.8
per cent and 2.2 per cent respective-
ly.
But miners, strong risers in the
last two sessions, went into reverse
as copper fell from record highs on
concern that further monetary tight-
ening in China may affect base met-
als demand.
Chinese inflation hit a lower-than-
forecast 4.9 per cent in January, but
“hold”, the broker citing valuation
grounds and lack of near-term cata-
lysts.
Antofagasta also tumbled 3.9 per
cent, while Fresnillo and Rio Tinto
each shed 2.8 per cent.
ARM Holdings was the heaviest
blue-chip casualty. It retreated 4.4
per cent, after strong gains in the
previous session spurred by bullish
comment from Goldman Sachs. Its
shares are still up nearly 49 per cent
this year.
Midcap Imagination Technologies
advanced 15.9 per cent after its new
graphics processor was picked by
STMicroelectronics over ARM’s rival
technology.
Analysts said that worries about
interest-rate rises were souring
investor sentiment.
“I think there’s ... fear potentially
about interest rates, not just in the
UK but one or two other countries
too, given that inflation is clearly a
bit more of a threat than it once
was,” Peter Dixon, economist at
Commerzbank, said.
Inflation in Britain rose to double
the Bank of England’s two per cent
target in January, prompting BoE
governor Mervyn King to acknowl-
edge rates may rise quicker than
2.8 per cent, with traders citing a
downgrade in rating by Morgan
Stanley. Supermarkets group Wm
Morrison firmed up 1.8 per cent
after buying online baby products
retailer Kiddicare for £70m in a first
step to building a business selling
non-food goods over the internet.
“The story of the trading day has
been one of a battle between banks
and miners. We have also seen a gen-
eral trend whereby UK investors are
taking their lead from US markets,”
Joshua Raymond, market strategist
at City Index, said. US blue-chips
were 0.3 per cent weaker by
London’s close, as a smaller-than-
expected rise in retail sales raised
doubts about a rebound in
consumer spending.
ANALYSIS l FTSE 6,037.08
6,100
5,900
5,700
5,500
15 Nov 3 Nov 23 Dec 17 Jan
ARKET breadth weakened
and a prominent investor
retreated from bullish posi-
tions as a vulnerable US stock
market slipped off 2-1/2-year highs
yesterday.
Energy and basic materials stocks
led the slide in the S&P 500’s worst
day since 28 January, and billionaire
investor Ken Fisher said he is “more
neutral on stocks than I’ve been in
years”.
Volume remained light with 7.1bn
shares changing hands on the com-
bined New York Stock Exchange,
NYSE Amex and Nasdaq, below last
year’s estimated daily average of
8.47bn.
US retail sales data cast doubts on a
rebound in consumer spending, a
vital part of the economic recovery,
and import prices jumped, while a
15 Feb gauge of manufacturing in New York
State climbed to its highest in eight
months.
The S&P retail index closed flat
after being down earlier in the day.
“More and more companies are
worried about the price of input,”
said Kim Caughey Forrest, of Fort Pitt
Capital Group in Pittsburgh.
“There’s a lot of conflicting data.
4 Feb Low volume means there’s no convic-
cent, at 2,804.35.
Shares of JDS Uniphase dropped
10.2 per cent to $25.05 after
brokerage Bernstein cut its rating on
the stock to “market-perform” from
“outperform”. An index of chipmak-
ers’ shares was down 1.1 per cent.
The S&P energy sector carried most
of the day’s losses, falling 1.1 per cent.
Brent crude oil fell more than 1 per
cent on the US retail sales data and as
China continued to struggle to keep
inflation at bay.
Exxon Mobil was down 2.3 per cent
to $82.97, following a 2.5 per cent
gain on Monday.
The S&P 500 has nearly doubled
from lows hit in March 2009, but
waning volume suggests investors are
having a harder time finding value.
The spread between daily winners
and losers has been narrowing for
months, suggesting more of the mar-
ket’s gains are coming from fewer
stocks – generally a sign of a weaken-
ing market. Yesterday, declining
stocks outnumbered advancing ones
on the NYSE and the Nasdaq by a
ratio of about 8 to 5.
Shares of NYSE Euronext fell 3.4
per cent at $38.12 after it agreed to be
acquired by Deutsche Boerse to create
the largest exchange operator.
 City Focus
18 CITYA.M. 16 FEBRUARY 2011

| Accounting

Get talent: how CFOs can make

the most of the people they hire
A new report looks
at the importance
of finance business
partners, and how
to grow their skills

JAMIE LYON
HEAD OF EMPLOYER SERVICES, ACCA

C
hief Financial Officers (CFO) all over
the world are facing a challenge –
maximising the value that finance
teams bring to the business.
People – and not numbers – are the
sum of an organisation, and in a new
report with KPMG, ACCA (the Association
of Certified Chartered Accountants),
looks at how finance departments can
raise their game and add value to their
organisation.
The report, “Maximising people power:
effective talent management in finance”,
focuses on the people side of the finance
function, but it also has significance for
people in other departments within
organisations too; the recommendations
and case studies in the report could easily
be applied to marketing, human
resources or strategy departments in busi-
nesses who face similar talent challenges.
Integrated talent management sits at
the heart of organisational success.
Essentially, businesses need to have the
appropriate professionals with the right
skills and competencies available at the
right place and time.
line by negating or reducing staff replace- Talent is always finance academies to provide structured who are then taught the necessary
UNDERSTANDING TALENT ment costs. Above all, it helps to cultivate in need of good and consistent training. finance fundamentals. This would weak-
ACCA commenced its review of talent the skills that finance professionals need management en the influence that finance has in the
management in 2010 by asking CFOs to improve the performance of their THE SECRETIVE WORLD OF organisation, and arguably the quality of
around the world their opinions about organisations and drive long-term sus- Picture: Rex THE FINANCE BUSINESS PARTNER service that FBPs could provide: some of
the issue. We found that only 20 per cent tainable value. The report also looks at the role of the the strengths of qualified finance profes-
of organisations had a talent manage- By maintaining a motivated pool of finance business partner (FBP) as part of sionals – the ability to interpret numbers
ment strategy that fully integrated talent finance professionals, CFOs can meet the the talent mix – and their part in the quickly and apply highly rigorous analy-
identification, development, deployment various challenges they face with confi- finance business partnering model. sis – would be lost.
and retention activity across finance dence. It means they can minimise their The FBP is a highly commercial But the challenge for CFOs and for
teams. own costs as well as the costs to their accountant, who applies his or her core their FBPs is to counter the effects of the
It’s clear that the economic slowdown organisations, generate maximum value technical knowledge to business issues recent economic downturn, which has
has frustrated talent management in a period of slow economic growth and and focuses the much needed finance frustrated many talent management
efforts, as our initial report also found position their companies so they can take lens on organisational decision making. efforts.
strong support for the concept that talent opportunities that arise as economic con- As KPMG says in the report, finance The report leaves no doubt that devel-
management programmes play an impor- ditions improve. business partnering is a crucial role – it oping talent is a vital issue for all finance
tant role in keeping finance staff engaged But what do great talent practices look supports the whole business to raise stan- leaders. It is one that must be addressed if
and motivated. like, and what do under-pressure CFOs dards, takes a forward-looking approach finance functions are to fulfill their
This dichotomy is a concern and it can- need to consider? The report offers eight and has a strong commercial view. The potential and provide the necessary sup-
not continue. The next decade presents recommendations from taking the time FBP is usually free from the distractions port their organisations need to thrive in
an enormous opportunity for the finance to define talent to identifying the key of core finance work, which enables her this increasingly complex and challeng-
function to make a difference to every skills and behaviours that finance profes- or him to offer this critical level of sup- ing world.
organisation’s success – whether a small sionals must have to deliver the organisa- port. There are tremendous opportunities
business or a large listed company. tional strategy. CFOs looking to introduce a partnering ahead. ACCA and KPMG’s experience tells
The canny CFO needs to take a holistic Part of this strategy is to ensure that model need to be able to provide FBPs us that those organisations that put tal-
view to talent management. Good talent the finance function offers comprehen- capable of meeting the demands and ent at the heart of their finance function
management strategies go beyond sive learning – leading organisations offer expectations of the business operations and who create great finance functions
engagement and motivation. Once imple- a comprehensive range of learning and they support, who can inspire trust and gain a competitive advantage. And in
mented, effective talent management can development activities, which can be respect. If they don’t, they may find the these still challenging times, there can
ensure better succession planning, which selected to suit the needs of the individ- FBP role being passed to individuals from only be a clear bottom-line benefit in
can have a positive effect on the bottom ual. Organisations are increasingly using a commercial, non-financial background, doing this.
CITYA.M. 16 FEBRUARY 2011 Wealth Management 19

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 20 Investment | Foreign Exchange
WEBER'S EXIT
WEIGHS ON
THE EURO
BORIS SCHLOSSBERG
A
DIRECTOR OF CURRENCY RESEARCH, GFT
XEL Weber’s unexpected resignation from the
Bundesbank last week has created a growing
sense of unease amongst European investors.
Weber, an unrepentant hawk who could ruffle
feathers, was considered to be the leading candidate
to succeed European Central Bank (ECB) president
Jean Claude Trichet. Trichet’s eight-year term will
expire this October.
In a recent Der Spiegel interview Weber hinted at
the reasons for his exit. He feared that the credibility
of the ECB presidency would be damaged if the
incumbent was consistently outvoted by the rest of
the board. Weber has been a vocal opponent of the
central bank’s bond-purchase program that has pro-
vided lifelines for European banks and governments
trying to shore up their balance sheets.
Regardless of the reasons, Weber's exit has creat-
ed serious problems for the Eurozone’s fiscal and
monetary officials. Germany is the primary source of
capital for the region’s rescue schemes and many
market observers believe that it will not be nearly as
amenable to additional capital infusions without a
German leadership role at the ECB.
There is good reason to believe that the euroscep-
tics may be right. For the Eurozone to survive the
upcoming challenges of refinancing periphery sover-
eign debt, Berlin and Frankfurt will need to closely
coordinate their fiscal and monetary policies. A
German at the head of the ECB could prove to be a
strong goodwill ambassador to German taxpayers
who will shoulder most of the burden.
Love him or hate him, Trichet has been an
extremely effective spokesman for the euro, creating
tremendous credibility for the single currency over
the past decade. Weber was the only other member
of the ECB council that carried the same respect in
the market.
Angela Merkel will announce a replacement for
Weber at the Bundesbank within a few days, but the
broader issue of who will lead the ECB remains an
open question and could weigh on euro-dollar for the
foreseeable future. Currency traders are notoriously
uncomfortable with political uncertainty and the
current predicament could push euro-dollar towards
the $1.3000 level if no viable candidate emerges
soon.
WAITING BY THE PHONE.
LOSING SLEEP.
CANCELLING DATES.
You could say our GFT customer service reps are a bit obsessed.
That’s why they’re always available to answer your questions—even if you need to ask them at 3 AM.
What else would you expect from a world-class spread bet dealer?
When trading CFDs, spot forex, or spread bets, you can lose more than your initial deposit.
Visit gftuk.com to open an account and put them to the test.
Forex traders
should tread
carefully to
avoid mistakes
Donata Huggins finds
out what FX expert
Kathy Lien thinks are
the most common
errors when investing
in foreign currency
S
OMETIMES it can feel like foreign
exchange trading is a game of
luck, and indeed sometimes the
movements mapped on the charts
are just plain unpredictable. But fear
not, there are strategies that traders can
adopt to minimise their losses and max-
imise their gains.
Here we have highlighted three major
mistakes that the currency expert Kathy
Lien says are some of the most common.
So sit up and pay attention, Lien has near
super-human credentials: she graduated
from university at 18 – when most peo-
ple leave secondary school – and has
worked some of the world’s biggest for-
eign exchange companies including
DailyFX and GFT.
1
BOREDOM TRADING
Traders love the adrenaline rush they get
from taking a position on forex. It does-
n’t matter how long they’ve been doing
it for, they will always get a buzz. You
must be careful with this though: if
you’re feeling bored or angry, don’t turn
to trading to pick you up.
CITYA.M. 16 FEBRUARY 2011
Lien says: “Professional traders wait
for a currency pair to set up according to
their plan and do not create a plan based
upon the desire to trade.”
2
HIGHLY CORRELATED TRADES
Many traders fail to realise that some
currencies always move in tandem. For
example, the Australian dollar tends to
move with the New Zealand dollar and
vice versa. Many traders see Aussie dol-
lar-dollar and New Zealand dollar-dollar
rallying at the same and naively go long
on both.
Lien says: “The trader is basically dou-
bling up on the same position. This
redundant exposure could be intention-
al, but for most new traders it probably
isn’t, which can be a big mistake because
if one comes crashing down, there is a
good chance the other will follow.” The
reason, she explains, is the US dollar:
“On most days, the US dollar will be
either up against all of the major curren-
cies or down.”
3
ing your eyes, hoping that the fire will
BEING A POSSUM put itself out, is not the right decision. If
If you’ve ever had a losing trade and it is a small fire, it is smarter to put it out
decided to turn off your computer or before it even comes close to burning
walk away in the hope that if you stop down your house; if it is a large one, it is
watching it, somehow it will turn better to abandon your home and call in
around and become profitable -- think the fire-fighters. In trading, if the reason
again. for the trade is no longer valid, then get
Lien brands this as “possum trading.” out before the losses grow.”
Crossing your fingers and leaving it Based on Kathy Lien’s The Little Book of
alone, she explains, hardly ever works: Currency Trading, How to Make Big Profits in
“Trading is a game of survival and clos- the World of Forex published by Wiley.
SPREAD BETS | CFDs | FOREX
free phone 0800 358 0864
gftuk.com
GFT Global Markets UK Ltd. is authorised
and regulated by the Financial Services
Authority. CD03UK.142.020411.
CITYA.M. 16 FEBRUARY 2011 Investment | Foreign Exchange 21

THE

Uncertainty hinders TIPSTER

euro performance T
The euro has begun to recover but sails of any positive news that may come
from Spain as a result of tomorrow’s bond
Eurozone instability worries are set auction. Spain will hope to replicate Italy’s
strong sale of government bonds, where
to continue, says Craig Drake they sold close to the maximum intended
amount of 5 and 30 year government
bonds earlier in the week. Italy’s sale of a
total of €5.1bn worth of bonds suggests a
PRESSURE
CONTINUES
ON LIRA
HE Turkish Lira has been coming under
some additional pressure of late as a
result of investor concern over the wider
region, but the unwinding of dollar-lira
has been ongoing for several months now. The
central bank has been cutting interest rates as
it tackles a growing trade deficit but inflation-
ary pressures also need to be reined in.
Consensus seems to be that a hawkish mood
will once again prevail so the pace of the sell-
off may soon abate. The current IG Index

D
ISAPPOINTING US retail sales figures
announced yesterday lunchtime
failed to produce the increased
yields on US Treasuries anticipated
by traders, with the news allowing the euro
to reach an early afternoon high of $1.3551.
Combined with strong euro demand from
Asia and the Middle East, the common cur-
rency stabilised itself against the dollar, ris-
ing 0.14 per cent over the day. However, it is
not expected that the currency will gain
any real traction against a background of
uncertainty surrounding the future of
Germany’s largest lending bank and with
Portuguese bond yields staying above the 7
per cent mark.
Eleventh-hour discussions will continue
today regarding the restructuring of
Germany’s WestLB bank. The plans must be
presented today in order to meet European
Commission deadlines which were put in
place as a condition for EU approval of state
aid granted in the financial crisis. The last-
ditch talks follow a failure of the German
steering committee to reach an agreement
on the future of the lender during discus-
sions on Sunday. This was the first time
that the financial watchdog BaFin was pres-
ent and it was rumoured that it was opposi-
tion put up by German savings banks that
was the main roadblock to an agreement
on a rescue.
The prospect of a break-up of the part
state-owned bank with €220bn worth of
assets will likely take the wind out of the
return of investors’ confidence in Italy and
southern Europe. This is tempered by news
that Portuguese 10 year bond yields are at
7.37 per cent, while short of the 7.64 per
cent reached last week, will continue to
sound alarm bells for many.
According to Angus Campbell, head of
sales at London Capital Group, the sover-
eign debt crisis is still the single biggest
issue for Europe, with Eurozone peripheral
debt concerning investors. He adds that
people are looking to the European Central
Bank to provide stability to the debt-riddled
Eurozone. “Markets are looking for evi-
dence that the bailout fund will step in,” he
says, “with Portuguese bond yields still way
above 7 per cent, the consensus seems to be
that Portugal will be the next country to
seek a rescue package.” In short, it is likely
that any meaningful gains will be sand-
bagged by uncertainty over Europe’s con-
tinuing debt plight and the role that the
European bailout fund will take in the
coming months.
price on dollar-lira is TL1.5935-TL1.5955
Today's Bank of England inflation report is
likely to see further sterling volatility after
yesterday's 4 per cent CPI figures. Particular
attention will be paid to whether Mervyn
King downgrades the UK growth forecasts in
the face of the prospect of higher inflation.
CMC Markets spread on sterling-dollar is
$1.61253 to $1.61278
Euro-dollar has been suffering from some
weakness since hitting a high of around
$1.3860 at the beginning for February, but a
recent bounce back above $1.3500 might
have given the euro renewed impetus to head
back upwards. Capital Spreads quotes
$1.3524 to $1.3525 for euro-dollar.
Event risk was evident for Swedish krona
traders as the Riksbank resumed its series of
rate increases yesterday. The central bank
raised interest rates by 25bp as expected. In
addition to the announcement, the Riksbank
published an updated Monetary Policy
Report.
The report hints that policy expectations
have changed (so market participants should
expect more hikes over the next 12-18
months). Krona strength against the dollar
was pronounced following the decision. Given
the strong fundamentals in Sweden and more
broadly in Scandinavia, the interest rate in
Sweden is likely to rise to 2.5-3.0 per cent
before the end of 2011 and up to 4.75 per
cent in 2012. Alpari UK are currently offering
dollar-krona at 6.4445kr-6.4520kr.
Craig Drake

FOREX ANALYST PICKS

FOREX STRATEGIST FOREX STRATEGIST FOREX STRATEGIST
DAVID RODRÍGUEZ JOHN KICKLIGHTER JOEL KRUGER

My pick: Sell rallies and stay short euro-dollar My pick: Short Aussie-dollar and long dollar-Swiss franc My pick: Buy dollar-Canadian dollar at Ca$0.9800
Expertise: System trading Expertise: Fundamental and technical analysis with risk management Expertise: Technical analysis
Average time frame of trades: 2-10 weeks Average time frame of trades: 1 day-1 week Average time frame of trades: 1 week-6 months

The euro-dollar has made a significant turn, and it’s one that I’ve
long been waiting for. Our contrarian sentiment indicator shows
that the crowds are at their least bearish on euro-dollar, giving the
signal that we should be going short. My near-term target is a break
of $1.3400 and possible test of the $1.3200 level. But I do think the
general trend favors a fresh test of $1.3000 in the coming weeks.
My dollar-yen long from last week had to take early profit while euro-New
Zealand dollar never triggered. This week, I’m seeing remarkable potential
with the dollar. A risk reversal on Australian dollar-dollar is overdue, and
I’ll look for a short below $0.9900 with an initial 150 point first target
and stop. Dollar-Swiss franc is risk neutral; but it has its own breakout
opportunity above SFr.9775 with a 100-point buffer on each side.
Daily studies are starting to look a little stretched, and this in conjunc-
tion with longer-term cyclical studies which warn of a major base,
leave us looking for opportunities to buy rather then selling into the
downtrend. The Ca$0.9800 figure seems to be offering itself as a for-
midable support zone and ultimately, only a weekly close back below
Ca$0.9800 would delay outlook and give reason for pause.

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 22 Wealth Management
O Canada –
the LSE’s new
ally brings a
TRADE IN...
jolt of energy
MAJOR TORONTO STOCK EXCHANGE LISTINGS
The Toronto Stock Exchange will soon
join London and the resources giant is a
respected partner, writes Jessica Bown
E
ven if you knew little about the
Toronto Stock Exchange before
last week, the announcement
of a planned merger between
the London Stock Exchange Group
● BARRICK GOLD (LSE) and TMX Group, which runs
Barrick Gold Corporation is a gold industry leader, with 25 the Toronto exchange, is almost cer-
operating mines and a pipeline of large, long-life projects tain to change that.
If approved by shareholders and
located across five continents, in addition to large land posi- competition regulators, the all-share
tions on some of the most prolific mineral districts. The com- merger of the two exchanges will cre-
pany has reserves of 139.8m ounces of gold as well as 6.1bn ate the largest market in the world
pounds of copper reserves and 1.06bn ounces of contained by number of listings, with particu-
silver within gold reserves as at 31 December 2009. lar importance for the natural
resources, mining and energy sec-
tors.
● ENCANA The merger being recommended
Encana is a leader in natural gas production, focused on the by the boards of both LSE and TMX
successful exploration and development of unconventional will create a combined transatlantic
natural gas, which it argues is an abundant, affordable and group, currently dubbed LSE-TMX,
clean source of energy for generations to come. The company which will be jointly headquartered
in London and Toronto.
has more than 5,000 employees and contractors worldwide. The group created by the merger
will be listed on both exchanges, and
will, the two claim, be a more diversi-
● SHOPPERS DRUG MART fied business with more than 6,700
With fiscal 2009 sales of approximately Ca$10bn, Shoppers listed companies with an aggregate
Drug Mart is the leading Canadian provider of pharmacy
products and services. Founded in 1962, the company has
grown to a network of more than 1,181 Shoppers Drug
Mart/Pharmaprix stores across the country. The Company
also licenses or owns more than 58 medical clinic pharmacies
operating under the name Shoppers Simply Pharmacy.
Toronto has more than ore
...OF THE GLOBE Small caps are another TSX
strength, writes Jessica Bown
24/7 online equities trading
C
13 international markets learly, the planned merger of
the Toronto and London stock
21 exchanges exchanges makes the main
Canadian exchange of great
interest to UK investors. That is partic-
Investing without advice is not for
ularly true for those interested in nat-
everyone; if you are unsure you
ural resources, mining, energy and
should seek independent advice.
clean technology stocks.
Shares can fall in value and you
Energy and natural resources giants
may get back less than you
such as Suncor Energy and Canadian
invested. Overseas
Natural Resources are already listed in
investments may be
Toronto, and the merged group will
affected by currency
undoubtedly be the top listings venue
fluctuations which
in the world for companies in these
might reduce their
sectors.
value in sterling.
Investors in resource stocks, espe-
cially, can therefore expect a com-
bined TMX/LSE to attract the traders
and analysts with the greatest expert-
ise in that specialised realm.
And the transaction prices available
This is an advertisement. Barclays Stockbrokers is the Group name for the
businesses of: Barclays Stockbrokers Limited, a member of the London Stock
should be more attractive than those
Exchange and PLUS. Registered No. 1986161. Registered VAT No. 243 8522 62; available on other exchanges around
Barclays Sharedealing, Registered No. 2092410 Registered VAT No. 243 8522 62; the world as a result.
market capitalisation of approxi-
mately £3.7 trillion (Ca$5.8 trillion).
Chris Gibson-Smith, chairman of
LSE, said: “Building on our own
shared long histories of excellence in
capital markets, financial strength
and cultures of internationally
respected governance, I believe that
together we will be able to offer
shareholders and customers a busi-
ness significantly greater than the
sum of our parts.”
The consolidation comes in the
wake of US and EU competition regu-
lation brought in over the past three
years to put an end to national stock
exchanges’ monopolistic positions.
In Europe, the EU Markets in
Financial Instruments Directive
(MiFID) allowed multilateral alterna-
tive venues to set up cheaply and eas-
ily, while the US National Market
System regulation forced exchanges
to pass equity trades through the
cheapest provider.
The boom in trading venues has
put market share and pricing under
Energy, mining and natural
resources will be just one strength of
the LSE/TMX Group, though.
The resulting exchange group is
also expected to be the world leader
for both international listings from
emerging and growth markets and
small to medium-sized companies,
known as SMEs – with approximately
3,600 combined AIM and TSX Venture
Exchange listings providing deep
expertise in supporting small cap and
early stage companies.
Xavier Rolet, CEO of LSE, said: “This
is an incredibly exciting merger with
considerable growth opportunities.
TORONTO STOCK EXCHANGE, YEAR-TO-DATE STATISTICS
2011 2010 % Change
Volume 10,272,787,459 8,760,933, 904 +17.3
Value $133,631,919,750 $101,818,878,331 +31.2
Transactions 17,167,229 14,018,142 +22.5
Daily averages
Volume 513.6m 438m +17.3
Value $6,681.6 m $5,090.9m +31.2
Transactions 858,361 700,907 +22.5
CITYA.M. 16 FEBRUARY 2011
intense pressure by dramatically
fragmenting where equities are trad-
ed.
“The LSE/TMX deal is merging two
companies that have been badly
affected in their domestic markets
by such competitive pressures,” said
Alasdair Haynes, chief executive of
Chi-X Europe.
The fact that TMX is being treated
as an equal of the mighty London
Stock Exchange in the terms of this
deal shows just how far the Toronto
We are creating the world's largest list-
ings venue for the commodities, ener-
gy and natural resources sectors, as
well as the premium market for small,
mid-size and growth companies.”
The LSE’s £4.3bn merger with TMX
is expected to generate cost savings of
£35m in the first year and £100m over
five years – 8 per cent of its combined
cost base.
However, some Canadian politi-
cians have opposed the LSE/TMX
match on concerns that the stock
exchange is a strategic national asset.
“A Canadian loss of control over its
own capital markets alone makes this
deal dead on arrival,” said one
Canadian columnist, David Olive.
Others have suggested such a giant
merger could breach competition
laws, either through size or their dom-
inant position in key markets.
Still, if successful, the joining up of
the two exchanges will also result in
“safer” access to non-energy Canadian
blue chip stocks such as Shoppers
Drug Mart, Canadian Tire Corp. and
Sun Life Assurance for UK investors as
shares traded on the new exchange
will almost certainly come under the
supervision of the FSA.
CITYA.M. 16 FEBRUARY 2011 Global Exchanges: Toronto 23

Toronto’s stock
exchange dominates
the financial district
from the Exchange
Tower

...MORE CORNERS...

TORONTO STOCK EXCHANGE: FACTS AND FIGURES

● LOCATION
Toronto, Canada.
The Toronto Stock Exchange moved to its current location
in the Exchange Tower at 130 King Street West in 1983.
● OPENING AND
CLOSING TIMES
Opens: 9.30am
Closes: 4pm Monday to Friday
NB: There is also an extended session on the Toronto Stock
Exchange for participating organisations from 4.15pm to
5pm each trading day. Days on which the exchange is
closed include New Year's Day, Good Friday and Canada
ANALYSIS l The S&P/TSX composite index over the past year exchange has come in 160 years. time was just Ca$5, trading hours Day, which falls on 1 July this year. The US companies
14,000 The Toronto Stock Exchange was were limited to half an hour a day listed on the exchange are also affected by US holidays
no more than a glint in the eye of and the number of stocks that could such as Martin Luther King, Jr. Day on 17 January and
13,500 Canadian investors when a group of be traded was only 18. Independence Day on 4 July.
Toronto businessmen met on 26 July However, by 1936, the Toronto
13,000
1852 with the intention of forming exchange had become the third ● CURRENCY
12,500
an “Association of Brokers”. largest in North America. Canadian dollar
No records of the group remain, And now it is set to become part of
12,000 but nine years later – on 25 October the largest exchange group in the ● NUMBER OF
1861 – a resolution was passed at the world by number of total listings,
11,500 City’s Masonic Hall and the Toronto incorporating some 20 trading mar- LISTINGS
Stock Exchange was born. ket and platforms across North 1,498 (November 2010)
11,000 The cost of membership at that America and Europe.
10 Nov 10 Mar 10 Jul 10 Sep 10 Nov 11 Jan ● VOLUME
10,272,787,459 (January 2011)
● MARKET
CANADA’S STRONG ECONOMY OPENS CAPITALISATION
Ca$2,105,570,021,017 (November 2010)

ITSELF UP TO FOREIGN INVESTMENT

interest amongst investors week after it was announced that
continues to grow. PetroChina, China’s largest oil and
Canada has become a more gas producer, had paid $5.4bn for a
attractive proposition for 50 per cent stake in Encana-owned
foreign investors since its shale gas deposits. Search online for Barclays Stockbrokers
relatively strong performance This is just one example of the
during the credit crisis. way in which Canada is International Trader
PAUL INKSTER Although the region still
felt the effects of the global
increasingly on the
international
HEAD OF PRODUCT, crisis, it has since been widely investor’s radar. If you want to deal
BARCLAYS STOCKBROKERS acknowledged that In fact, a large portion
Canada emerged in of the Canadian on the world stage,

L
ast week, the London Stock a stronger economy is now open Barclays Stockbrokers
Exchange struck a deal with TMX position than at to foreign investment,
Group, the operator of the Toronto the start of the something that has International Trader
Stock Exchange. recession, not always been true.
The deal looks likely to reduce costs particularly in the Statistics Canada notes that will take you
for users, offer greater levels of banking and the Canadian economy has further.
liquidity and provide broader access to financial sectors. undergone economic cycles that have
mining and natural resources stocks. Major multinational changed the country’s ability to
For investors, this is particularly companies are also improving attract foreign investment. Currently,
attractive at a time when commodity Canada’s investment 22 per cent of business assets are
prices are front page news and prospects for retail owned by foreign investors and
exploration activity continues to thrive investors and putting their they receive 30 per cent of the
worldwide. money where their mouth is. For profits.
Barclays Bank Trust Company Limited, Registered No. 920880. Registered
Mining and energy companies example, the Canadian natural gas For international investors, VAT No. 243 8522 62. All companies are registered in England and the
account for 34 per cent of the LSE’s producer Encana (listed on the Toronto things in Canada are registered address is: 1 Churchill Place, London E14 5HP. All companies are
FTSE 100 index at the moment and Stock Exchange), made the news last looking up. authorised and regulated by the Financial Services Authority.
 Lifestyle
24 CITYA.M. 16 FEBRUARY 2011

| Motors WORDS BY
RYAN BORROFF

There is one tors the car’s location and sends help in

the event of an accident and it’s clear that
problem with technology has been a key focus for this
car. By using its parking sensor system the
this model car can even measure the amount of gap
there is available in a parking space.
and it is its Add in a competitive price and all of
this ought to mean that the Citroën C4 e-
six-speed HDi would come highly recommended.
But there is one problem with this partic-
automated ular model and that is its six-speed EGS
automated manual transmission system.
manual What is an automated manual transmis-
sion system? Well, think of it as a manual
transmission car with none of the tactile advantages of
a clutch and few of the advantages of an
system automatic. In practice, in automatic
mode, the car shifts gear with such a sig-
nificant lag as to become frustrating.
No doubt this system is important in
contributing to the car’s fuel economy.
But the effect is the car feels slower than it
should. With some practice – at easing the
accelerator pedal in and out as if still

Intelligent but boring

using a clutch – things improve some-
what. In manual mode, shifting feels eas-
ier and the lag can be reduced by use of
the paddle shifters behind the steering
wheel.
But at the end of the day I’d rather
have an auto gearbox or a clutch. You

A
CCORDING to Citroën, cars can be Looks-wise, the car’s face is pleasing to store four 500ml bottles would have to be a very unadventurous
stationary for as much as 30 per enough with Citroën’s strong chevron of water and cool them driver to not lament the slow lack of
cent of the journey time during identity worked into the grille with hawk- too thanks to the inte- progress of the gear changes. It isn’t a
commuting – unless you’re on the like headlamps adding a determined grated AC. deal breaker if you are happy to just poo-
M25, of course. rather than an aggressive look. Alloy There are some tle about. But fun it isn’t.
This is why stop/start technology is a wheels too enhance what is otherwise a thoughtful touches
major feature on the carmaker’s new eco very conservative-looking car. Which that allow you to per-
version of its C4 model – it stops the makes the interior all the more surprising sonalise the car: you THE FACTS:
engine in traffic and restarts it again in a and delightful. The design and build qual- can set the colour of CITROËN C4 E-HDI
fraction of a second, as soon as your foot ity of the interior is an obvious step up for the dashboard’s instru-
returns to the accelerator pedal. Citroën. The cabin really is an unusually mentation display to a PRICE: £21,095
Boasting clever innovations like this, nice place to spend some time. The styling blue/white or white ambi- 0-60MPH: 11.2secs
that save fuel and reduce emissions, the of the interior looks much more creative ence and you can choose TOP SPEED: 118mph
new C4 is the model Citroën seems to be and innovative and feels younger than the which “polyphonic” sound
most excited about, and with good reason. exterior of the car suggests. The soft-touch alert you want to hear when you Part of the CO2 G/KM: 114g/km
The figures are certainly fairly impres- dash has lots of chrome trim around the indicate. Add to all this a blind spot moni- dash of the new C4. MPG COMBINED: 64.2mpg
sive. The C4 e-HDi can return as much as dials and vents and on the steering wheel toring system which indicates in the side
57.6mpg in urban traffic (64.2mpg com- and doors. mirrors when a car or cyclist is to the side THE VERDICT:
bined) while pumping out just 114g/km of More interesting perhaps is that the of you, a cornering light function which
CO2. Its e-HDi technology – which gear selector handle has been reduced in sees the fog lamp on either side of the car
DESIGN hhhii
includes regenerative braking – can size in order to generate more storage illuminate the road automatically to
PERFORMANCE hhhii
improve fuel efficiency by up to 15 per- space in the centre console. In this case a improve visibility while cornering, and an
PRACTICALITY hhhii
cent while driving in the city. sliding lid reveals a cubby bigger enough emergency assistance system that moni-
VALUE FOR MONEY hhhii

CAR TALK BY RYAN BORROFF

Autobiography Ultimate Edition
The most luxurious Range Rover ever is to debut at the Geneva
Motor Show next month. The Autobiography Ultimate Edition has an
interior hand-finished in Kalahari wood, leather and aluminium, a
yacht-inspired teak load floor and a cabin which includes a rear con-
sole with a machined aluminium laptop table, drinks chiller, and two
Apple iPads. You also get two special exterior paint colours and
unique 20" multi-spoke diamond-turned alloys. You won’t be sur-
prised to know that it’s expensive…at around £130k.
Esflow electric sports car
This is Nissan’s latest concept to be introduced at Geneva called the
Esflow electric sports car. The rear-wheel drive two-seater incorpo-
rates parts from Nissan’s forthcoming electric LEAF production vehi-
cle and undoubtedly looks like a futuristic 370Z. The car is driven by
two electric motors – one each at each rear wheel – and its 0-
62mph time is projected to be under five seconds and range around
150 miles. The real question is: could Nissan have an electric Z-car in
its future?
Captur – no, it’s not a space ship
What does a crossover between a two-seater coupe, convertible,
city car and an off-roader look like? According to Renault it could
look like this; its latest concept called Captur. The car suggests the
future look of the next generation of Renault cars and is the second
of six “human life cycle” concepts from Renault. The concept –
which will also launch in Geneva – features large 22-inch alloy
wheels, scissor doors, bright orange paintwork and a flowing, mus-
cular form.

6/..IURP…

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CITYA.M. 16 FEBRUARY 2011 Lifestyle | TV& Games 25

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
6pm BBC News 6pm Eggheads 6pm London Tonight 6pm The Simpsons 6pm Home and Away
6.30pm BBC London News 6.30pm One Man 6.30pm ITV News 6.30pm Hollyoaks 6.25pm OK! TV
7pm The One Show and His Campervan 7pm Emmerdale: 7pm Channel 4 News 7pm Five News at 7
7.30pm Rip Off Britain: 7pm Top Gear: 7.30pm CHOICE UEFA 7.55pm 4thought.tv 7.30pm CHOICE Starlight: For
BBC News The presenters shop for Champions League Live: Arsenal 8pm Beauty and the Beast: the Children: Five News Update
8pm Waterloo Road second-hand convertibles. v Barcelona (Kick-off 7.45pm). Ugly Face of Prejudice 8pm Cowboy Builders:
9pm CHOICE MasterChef 8pm Madagascar: Presented by Adrian Chiles, 9pm The Elephant: A family from south London
10pm BBC News The wildlife of the island’s with commentary by Clive Life after Death receives help; Five News at 9
10.25pm Regional News eastern mountains. Tyldesley and Andy Townsend. 10.35pm Big Fat 9pm NCIS
10.35pm The National Lottery 9pm A History of Ancient 10pm ITV News at Ten Gypsy Weddings 10pm Law & Order:
Wednesday Night Draws Britain 10.30pm London News 11.40pm Shameless Criminal Intent MASTERCHEF
10.45pm Film 2011 with Claudia 10pm Have I Got Old 10.35pm UEFA Champions 12.45am Music on 4: Sounds from 10.55pm Law & Order: BBC1, 9.00PM
Winkleman: National Lottery News for You League: Extra Time the Cities 1.10am Music on 4: The Hopefuls from around the nation arrive
Update 11.30pm FILM The Royal Album Chart Show Spotlight Special Victims Unit
Tenenbaums 2001; Weatherview
10.30pm Newsnight: Weather 11.35pm Police, Camera, 1.25am Animal Madhouse 11.55pm Poker: in London for the auditions that could
1.15am Sign Zone: Country Tracks 11.20pm Mad Men Action! 2.20am Food: What Goes in Your 12.55am SuperCasino grant them a once-in-a-lifetime oppor-
2.10am Sign Zone: Natural World 12.10am The Chinese 12.30am The Zone; Basket? 3.15am Hill Street Blues 4.05am The FBI Files tunity to join the culinary contest.
Special: Miracle in the Marshes of Are Coming ITV News Headlines 4.05am Brothers & Sisters 4.55am Animal Rescue Squad
Iraq 3.10am Sign Zone: Save My 1.10am BBC News 4am-6am 2.30am FILM The River 1984. 4.50am Wogan’s Perfect Recall 5.10am Wildlife SOS 5.35am-
Holiday 3.55am-6am BBC News BBC Learning Zone 4.30am-5.30am ITV Nightscreen 5.15am-6am Countdown 6am House Doctor

SKY SPORTS 1 7.30pm Kings of the Snow 8pm ESPN Press Pass 5am-6am 2.15am Alan Carr: Chatty Man DISCOVERY HOME &
SATELLITE & CABLE

7pm Sky Sports News at Seven
7.30pm Total Rugby 8pm Boots
’n’ All 9pm European Tour
Weekly 9.30pm Inside the PGA
Tour 10pm You’re on Sky Sports!
11.30pm Football’s Greatest
12am UEFA Champions League
Highlights 1am FIFA Futbol
Mundial 1.30am Total Rugby
2am Football’s Greatest
2.30am FIFA Futbol Mundial
3am UEFA Champions League
Highlights 4am Football’s
Greatest 4.30am-6am
You’re on Sky Sports!
SKY SPORTS 2
7pm Live UEFA Champions
League 10.15pm Boots ’n’ All
11.15pm Cricket World Cup
1.15am Cage Fighter 1.45am
Watersports World 2.45am
Boots ’n’ All 3.45am-4.15am
Total Rugby
SKY SPORTS 3
7pm FIFA Futbol Mundial
Trans World Sport 9pm Cricket
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10.30pm Ladies European Tour
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Tour 1am European Tour Weekly
1.30am Ladies European Tour
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BRITISH EUROSPORT
6.15pm PGA Tour Golf 7.10pm
Golf Club 7.15pm Sailing 7.45pm
Yacht Club 7.50pm Wednesday
Selection 8pm Live Snooker: The
Welsh Open 10pm Alpine Skiing
11.30pm-12.15am Cycling
ESPN
5.30pm Live Serie A 7.30pm
Snowboard FIS World Cup
Magazine 8pm World Rally
Championship 9.30pm Baseball
Tonight 10pm Premier League
World 10.30pm FA Cup Preview
11pm Bundesliga 12.45am ESPN
Press Pass 1.15am ESPN Kicks:
Extra 1.30am NBA Tonight 2am
Live NBA Basketball 4.30am
World Series of Poker Europe
SKY LIVING
7pm Ghost Whisperer 8pm Four
Weddings US 9pm Bones 10pm
Grey’s Anatomy 11pm Criminal
Minds 12am CSI: Crime Scene
Investigation 2.40am Charmed
4.20am Four Weddings US
5.10am-6am Maury
BBC THREE
7pm Don’t Tell the Bride 8pm
The World’s Strictest Parents
9pm How Drugs Work 10pm
FILM Air Force One 1997.
11.55pm Family Guy 12.40am
Being Human 1.40am American
Dad! 3.50am The World’s
Strictest Parents 4.50am-
5.20am The Lock Up
E4
7pm Hollyoaks 7.30pm Friends
9pm FILM The Butterfly Effect
2003. 11.10pm Alan Carr:
Chatty Man 12.15am Scrubs
1.15am Rude Tube: Epic Fails
3.10am Dirty Sexy Money
3.55am Young, Sexy and Soapy HEALTH
7pm A Baby Story 8pm How
4.40am Style Her Famous 5am-
6am Switched Clean Is Your House? 9pm
Mystery ER 10pm Hospital
HISTORY Sydney 11pm The Trauma Team UEFA CHAMPIONS LEAGUE LIVE
7pm Heir Hunters 8pm Ax Men 12am Mystery ER 1am Hospital ITV1, 7.30PM
10pm IRT Deadliest Roads Sydney 2am The Trauma Team
Arsenal v Barcelona (Kick-off 7.45pm).
11pm Ax Men 1am IRT 3am How Clean Is Your House?
Deadliest Roads 2am Cities of 4am Bringing Home Baby 5am- Coverage of this evening’s last-16 first-
leg clash at the Emirates Stadium.
the Underworld 3am Mega 6am A Baby Story
Disasters 4am UFO Files 5am- Presented by Adrian Chiles.
6am Ancient Discoveries SKY1
8pm Dream Lives for Sale: A
DISCOVERY family keen to build a new life in
8pm How Do They Do It? Lanzarote. 9pm Louie Spence’s
8.30pm How It’s Made 9pm Showbusiness: Andrew Stone
The Turin Shroud: The New sells merchandise on a market
Evidence 10pm Croc Man 11pm stall. 10pm Mad Dogs 11pm
Swords: Life on the Line: The Big Inside: Surviving Prison 12am
Eye survives the storm. 12am 99 Most Bizarre 1am Invasion
Bear Grylls: Born Survivor 1am of the Bodyscratchers 1.50am
Deadliest Catch 2am Future Inside Britain’s Worst STARLIGHT: FOR THE CHILDREN
Weapons 3am Hitler’s Sleepwalker 2.40am So You CHANNEL5, 7.30PM
Henchmen 3.50am The First Think You’re Safe? 3.30am To celebrate 25 years of the Starlight
World War 4.40am Treasure Threshold 4.20am Don’t Forget Children’s Foundation, famous faces,
Quest 5.30am-6am How Does the Lyrics 5.10am-6am Sell Me beginning with Holly Willoughby, help
That Work? the Answer sick children realise their dreams.

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

QUICK CROSSWORD
    

SUDOKU KAKURO
12 30 13 3 7 38 7
9 6 9
35 8  
45
Place the numbers from 1 to 9 in each empty cell so that each
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 29 10
16 6
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 11 13 10
  
above or to the left of it. 5
You can only use the digits 1-9 21 6
  and you must not use the
13 22 34 4
11 10    
same digit twice in a block. 17
    The same digit may occur 15 19
13 28
   more than once in a row or
column, but it must be in a
7
5 22
14
23
12
  
8 26
    separate block.
13 9
45
 11 12 24
 

    ACROSS DOWN
1 Gives temporarily (5) 1 In the area (5)
  
    WORDWHEEL I J
4 Lacking cash (5)
7 Basic unit of currency
2 Scottish port (3)
3 Retail establishment
Using only the letters in the Wordwheel, you have in Nicaragua (7) (5)
  ten minutes to find as many words as possible,
U E 8 Devon river (3) 4 Skin covering the
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters I 9 Wood-turning tool (5)
top of the head (5)

LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
T F 11 Tartan (5)
5 On the whole (7)
6 Pace (5)
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
D S 12 Cringe (5)
10 Period of
14 Soothing ointment (5)
QUICK CROSSWORD 2 1 4 7 9 8
occupancy (7)

C O V E N M A C H O
7 6 2 8 9 5 1 4 3 SUDOKU         
16 Delivery vehicle (3)
12 Vacillate (5)
3 1 3 1 2          17 Highly-prized edible
A M A L W
9 5 9 8 6 4 13 Sing the praises of (5)
L A M P L U P I N E          subterranean
9 6 8 7 4 5 8
L A T O M H D
         fungus (7) 14 Small army unit (5)
E D G Y S T A G E 3 1 4 3 9 8
        
R M
C A M
H
E O
U G
M A L E
1
8
4
7
5 4
7
2 3 1
1 2 1
WORDWHEEL         
19 Imperial (5) 15 Lament for the
dead (5)
D O U P O N N
6 8 9 9 8 The nine-letter word was          20 Giddy (5)
O D I O U S C O O T
L S E H L 5 4 1 2 8 6 9 7 3          18 Felt cap of
L I N E R N A N C Y 9 7 2 1 7 3
OUTLASTED          Morocco (3)
 Sport
26
FOOTBALL ROUND-UP
Chelsea can still win
league, insists Cech
CHELSEA goalkeeper Petr Cech is
refusing to give up on the Premier
League title despite Monday’s goal-
less draw with Fulham.
The stalemate left the Blues out of
the Champions League places in fifth
and 12 points off leaders Manchester
United.
Cech said: “Obviously, we are quite
far now because they won their
games and we dropped points but
there is still a way to go and we will
fight to the end.”
Mancini rages after
City held in Greece
MANCHESTER CITY manager Roberto
Mancini criticised £27m January sign-
ing Edin Dzeko after being held to a
0-0 draw in their Europa League clash
at Aris Salonika.
Dzeko has scored just once in six
games, prompting Mancini to com-
pare his teething problems to those
being experienced by Chelsea record
signing Fernando Torres. “I expect
more from him,” he said. “He has the
same problems as Torres at Chelsea.”
Newcastle put their
Best foot forward
NEWCASTLE registered their first vic-
tory of the post-Andy Carroll era as
goals from Peter Lovenkrands and
Leon Best ensured a comfortable 2-0
Premier League success against
Birmingham at St. Andrew’s.
Lovenkrands opened the scoring
after four minutes and then Best
struck early in the second period to
wrap up the points for the Magpies.
Olympic chiefs: We will
cope with ticket demand
▲
OLYMPICS
BY JAMES GOLDMAN
LONDON 2012 organisers are confi-
dent they are equipped to cope with
the increased demand for Olympic
tickets following the release of the
key dates for next year’s Games.
Tickets do not go on sale for anoth-
er month, but organisers advised that
there is no advantage in rushing to
register interest via the 2012 ticketing
website. A London 2012 spokesperson
said: “We are confident we have the
systems in place to cope with an
increase in interest and demand for
tickets. There is no rush for people
wishing to register with us, it’s not a
first come, first served system.
“We believe there are enough
options in terms of ticket prices to
ensure everyone gets to see some of
the action and we’re confident that
the venues will be full even for the
more obscure events.”
Crouch is Spurs’
San Siro hero
England striker pounces to put Harry Redknapp’s
men within touching distance of the last eight on a
night of high drama and high emotion in Milan
AC MILAN
TOTTENHAM
▲
FOOTBALL
BY JAMES GOLDMAN
TOTTENHAM manager Harry
Redknapp has implored Uefa to
review Mathieu Flamini’s horror
tackle on Vedran Corluka following
the latest installment of his side’s
Champions League fairytale.
Peter Crouch’s 80th minute strike
gave Tottenham a fully deserved first
leg win, but Flamini’s two-footed
assault on the Croatia defender,
allied to the disgraceful antics of
Gennaro Gattuso threatened to over-
shadow a momentous victory.
Despite Redknapp’s desire to see
him punished Flamini is likely to
avoid retrospective action, but Uefa
are sure to take a dim view of
Gattuso’s behaviour.
The 32-year-old shoved Spurs’ assis-
tant boss Joe Jordan following a tack-
le from Steven Pienaar and then
LONDON 2012 | THE KEY DATES AND TICKETING INFORMATION
PRICE GUIDE
The London Organising Committee
(LOCOG) have made innovative attempts
to ensure the general public aren’t priced
out of attending the headline events.
Tickets costing £2012 for the opening
ceremony, £725 for the 100m final
may appeal only to those with the
largest budgets, however. For
those with smaller wallets,
tickets for the heats of
major athletic events cost
just £20 and conces-
sions tickets are avail-
able. A “pay your
age” scheme will
also allow children
under 16 to pay
between £1 and
£16 depending
CITYA.M. 15 FEBRUARY 2011
headbutted the former Scotland
0 international after the final whistle.
“The tackle from Flamini was a
horrendous tackle,” Redknapp said.
1 “It was a sending off. He was two or
three feet off the floor with two feet.
It was a leg-breaking tackle.
“I’d like them (Uefa) to have a look
at that tackle. How he doesn’t give
him a red card, I don’t know.”
Gattuso, Milan’s long-serving
aggravator in chief, failed in his
attempts to rile Spurs, whose control
on events had been almost total.
Heurelho Gomes was pressed into
action on only two occasions, before
Crouch slotted home after Aaron
Lennon had run half the length of
the pitch to set him up. Crouch has scored four goals
in seven Champions League
Frustrated, beaten and suspended
from the second leg, Gattuso then
turned his attentions to Jordan, a for-
games this season
mer Milan centre forward himself, Picture: ACTION IMAGES
and completely lost the plot.
“Gattuso had a flair-up with Joe
Jordan. I don’t know why. He obvious- into meltdown following Chelsea’s should never have done what I did.
ly hasn’t done his homework. He controversial exit from the 2009 There is no justification,” he said.
could have picked a fight with some- Champions League semi-final against “I’m not going to say what was said,
one other than Joe,” said Redknapp. Barcelona, and Gattuso could well that’s between us, we were speaking
Didier Drogba was suspended for face a similar sentence.“Jordan was on English. Do I expect a ban? I’ll accept
four European matches after he went at me for the whole second half, but I whatever I get.”
Contador tested pos-
itive for clenbuterol
Picture: REUTERS
on their age and over 60s will pay £60. Contador is free to ride again
KEY DATES FOR BRITISH HOPES
3-4 Aug: Rebecca Adlington will be hop- after doping ban is overturned
ing to replicate her Beijing double
4-5 Aug: World Heptathlon champi-
ation had handed out the ban.
▲
CYCLING
on Jessica Ennis and 400m gold “First of all, I’m relieved and obvi-
medallist from Beijing Christine
BY JAMES GOLDMAN
ously very happy about this ruling,”
Ohuruogu will be aiming for gold SPANISH superstar Alberto Contador said Contador.
in their respective track expressed his relief after winning his “It has been some very stressful
events, as will Usain Bolt appeal against a provisional one-year months for me, but throughout the
doping ban. case I have been totally available for
(left) in the 100m final
7 Aug: Beth Tweddle will The three-time Tour de France win- all inquiries in relation to my case,
ner tested positive for the banned and all the way through I have spo-
be competing in the substance clenbuterol during last ken in accordance with the truth.”
gymnastics at the O2 year’s race in July. The sport’s governing body, the
Arena But the 28-year-old maintained his UCI, and the World Anti-Doping
11 Aug: World innocence, insisting contaminated Agency have the right to challenge
Champion Tom Daley meat was responsible for a failed test, the decision, but Contador’s lawyer,
will be diving for gold and was cleared yesterday just three Andy Ramos, said he did not believe
weeks after the Spanish cycling feder- there were any grounds to appeal.
 CITYA.M. 15 FEBRUARY 2011
FLASHPOINTS | MILAN LOSE THE PLOT
After being played off the park in the first
half, Milan, and in particular Mathieu
Flamini and Gennaro Gattuso, opted to
get physical in their attempts to unsettle
Spurs. It wasn’t pretty, it wasn’t clever.
56 mins: Flamini, a veteran of a few spiky
north London derbies, launches into a
two-footed horror tackle on Vedran
Corluka. Somehow he avoids a red card.
71 mins: Having already riled Peter Crouch,
Gattuso shoves Spurs’ assistant coach Joe
Jordan, no shrinking violet himself back in
the day, in the face. Tempers boil over.
Full time: Gattuso, by now suspended
from the second leg , walks over to the
Spurs bench, shakes hands with Harry
Rekdnapp and headbutts Jordan.
SPORT | IN BRIEF
Newbury results due tomorrow
HORSE RACING: Officials expect the
results of post-mortem examinations
into the two horses who died following
an incident in the parade ring at
Newbury to be available no later than
tomorrow. Paul Struthers, head of com-
munications for the BHA, said: “Post-
mortem analysis of a horse and
associated samples takes a certain
amount of time and this work is pro-
ceeding as a matter of urgency.”
Athletics won’t fill Olympic venue
ATHLETICS: UK Athletics has admitted
it will be almost impossible to fill the
Olympic Stadium when it stages meet-
ings following the Olympics. The main
event, the London Diamond League
Grand Prix, attracts a 17,000 capacity
crowd to Crystal Palace where it is cur-
rently held. “Some events will attract a
significant paying public, others a much
smaller paying public,” said Ed Warner,
chairman of UK Athletics.
Park injury blow for United
FOOTBALL: Manchester United mid-
fielder Ji-Sung Park has been ruled out
for a month after suffering a hamstring
injury in training. Park has only recently
returned to United after spending a
month away with South Korea at the
Asian Cup.
Arsenal put faith in Van Persie
Gunners boss Wenger
praises in-form striker
as world’s most feared
team roll into London
ARSENAL
BARCELONA
▲
FOOTBALL
BY FRANK DALLERES
ARSENAL manager Arsene Wenger
has hailed Robin van Persie’s siz-
zling form and backed the
Dutchman to deliver as the Gunners
prepare for a Champions League
rematch with their conquerors of
last season, Barcelona.
Van Persie has hit a purple patch
since returning from injury, scoring
10 goals in his last eight games, and
is poised to lead the line for the
north Londoners tonight. The for-
mer Feyenoord striker’s lethal touch
has coincided with an upturn in the
club’s performances, with seven
wins and a draw from their last
eight fixtures leading them to the
Carling Cup final and keeping them
in the Premier League title race.
“I’m very happy because I’ve
always been a fan of Robin’s. I
bought him at a time when not
many people were convinced,” said
Wenger. “Since Robin has been fit
not only has he never disappointed
me, I’ve always been very happy to
have him here because he’s
absolutely a world-class player.”
Wenger insists his team will not
Walcott threat is key for Gunners
TALKING TACTICS
TREVOR STEVEN
ARSENAL’S focus tonight ought to
be two-fold: maximise the threat of
Theo Walcott and try to neutralise
Barcelona by ensuring the team
Results
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email sport@cityam.com
27
KNOW YOUR ENEMY: BARCELONA
FORM MANAGER HOW THEY LINE UP
Barca are five points clear in the Only in his third season as a coach
Primera Liga and have suffered just
one defeat in their last 35 matches.
but Pep Guardiola, 40, has already
torn up the record books with tro- Valdes
Smash goals aplenty, with 18 and phy after trophy. Widely coveted
just one conceded in last six games. but just signed a new contract.
DANGER MEN
Pique Abidal
Alves Maxwell
Busquets
Xavi Iniesta
Messi Pedro
Villa
Perhaps the best midfielder in the world, Xavi Andres Iniesta now rivals Xavi for plaudits but
is Barca’s heartbeat. His neat, quick and dead- works seamlessly alongside him, unpicking
ly passing game exemplifies their approach. defences and making timely darts forward
Guardiola has an almost full-strength
squad to choose from for the trip to the
Emirates Stadium, with defender Carles
Puyol the biggest absentee. His place is
likely to be taken by French veteran Eric
Abidal, with Maxwell at left-back,
although Gabriel Milito is another option
at centre-back, with Abidal on the left.
Crucially, an attack that averages more
The biggest jewel in Barcelona’s extravagantly Summer signing David Villa spearheads the than three goals per league game is
adorned crown, Lionel Messi shows no signs of attack, and the summer signing from Valencia unaffected, with Pedro set to return
slowing, with 40 goals in 29 games this term. has settled quickly, netting 19 in 28 games. after being rested at the weekend.
be intimidated by universally feared teams with such consistent focus the super-favourites but the only
Barca, despite being torn asunder every day to improve,” added the way to do it is to knock them out.”
and dumped out of the competition Frenchman, who has Samir Nasri Defender Johan Djourou does not
by four-goal Lionel Messi at Camp back from a hamstring injury. fear facing Messi, despite his virtu-
Nou just 10 months ago. “We want to show how good we oso display last year. “You have to be
“We are a stronger team now are. We have practiced. We’re deter- excited not scared,” he said. “It is
because this team has attitude, mined, focused and we want to win true Messi is good one versus one
focus and I have not seen many this competition. We know we face but we can be hard to beat.”
unit stays as compact as possible. can play balls inside of the full-back.
Walcott is a wild card as no-one Meanwhile, it is vital Arsenal
else on either side has such extraor- move around the pitch as a unit,
dinary pace, as he has shown repeat- ensuring team-mates are always on
edly this season, and did when these hand to receive a pass and help close
two sides met last season. down space. Barcelona are brilliant
He tends to hug the right flank at this; they always have at least two
but is particularly dangerous when passes on at any time, and hardly
he drifts in and along the back four, ever have to resort to a long ball.
before darting behind the centre-
backs onto a through-ball from Cesc
Arsenal cannot afford to leave
space in front of their defence, where
Abidal Maxwell
Walcott
Fabregas or Jack Wilshere (right). Barca are most dangerous. So if they
Walcott is also dangerous when lose possession in the final third the
he stays on the outside, and is per- defence have to push up and occupy
fectly capable of getting past that space. If they lose the ball in the Fabregas
Maxwell down the wing if Arsenal middle everyone must drop back.
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