www.cityindex.co.
uk
Issue 1,239 Wednesday 13 October 2010
THIRD BIDDER IN
LIVERPOOL FIGHT
SPORT BUSINESS
▲
BY FRANK DALLERES
AMERICAN hedge fund Mill Financial
has emerged as a third bidder for
Liverpool FC as the High Court pre-
pares to rule on the bitter war over
the football club’s ownership this
morning.
Mill Financial’s offer includes the
promise to repay the £200m owed by
Liverpool owners Tom Hicks and
George Gillett to the Royal Bank of
Scotland, the court heard yesterday.
Unlike rival bidders New England
Sports Ventures (NESV) and Asian bil-
lionaire Peter Lim, however, Mill
Financial has pledged to invest an
additional £100m for building a new
stadium, lawyers for Hicks and Gillett
said.
Paul Girolami QC, for Hicks and
Gillett, added that he understood the
hedge fund remained interested in
buying the club, and questioned why
its bid had been rejected by the
Liverpool board.
The development came as
Singaporean former stockbroker Lim
announced he had made an
increased offer of £320m, having seen
his initial bid rejected by chairman
Martin Broughton and the board,
who struck a deal with NESV.
Both Mill Financial and Lim will be
eagerly awaiting the judgement from
Mr Justice Floyd at 10.30am, in which
he will decide whether Liverpool’s
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A judgement on Liverpool’s ownership will be made in court this morning
board had the right to agree a £300m Gillett win the case, brought by RBS
sale to NESV last week against the not Liverpool, they will be entitled to
wishes of Hicks and Gillett. His ver- change the composition of the board,
dict follows almost five hours of legal as they have tried to do, and consider
arguments played out in a fraught, other bids. That would then force RBS
historic hearing inside Court 16 of to decide if it is ready to call in its
the Royal Courts of Justice yesterday. loan, which has a deadline of Friday,
If Mr Floyd rules against Americans and put the owners into administra-
Hicks and Gillett, who have become tion, which could incur the club a
hate figures among the fans, then nine-point penalty from the Premier
Liverpool’s legal team are confident League.
the sale will proceed. But if Hicks and Arguing that a victory for RBS, and
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by extension the Liverpool board,
might deprive Hicks and Gillett of a
better offer, Mr Girolami QC said that
the board had not given due consider-
ation to bids other than NESV’s.
In response, Liverpool’s legal team
said that both Mill Financial’s offer
and Lim’s initial bid had both been
“significantly” lower than the terms
offered by NESV, owners of baseball’s
Boston Red Sox.
JUDGEMENT DAY: SPORT P27
£/¤ 1.14 unc €/$ 1.39 unc
INTERVIEW
WE TALK TO
EMERGING
MARKETS GURU
MARK MOBIUS
P19
FREE
Fed hints at
more QE in
near future
▲
US ECONOMY
BY MARION DAKERS
AMERICA’S Federal Reserve is consid-
ering a new round of quantitative eas-
ing (QE) “before long”, according to
the minutes of the panel’s most
recent meeting, released yesterday.
The minutes said “many” Fed offi-
cials thought a second round of mon-
etary easing might be needed to
kickstart America’s flagging recovery,
in the strongest signal yet that they
are beginning to near an agreement.
Analysts said the Fed could start
buying up government bonds by the
time of the panel’s next meeting in
November if the economy needs extra
support.
The minutes of the Fed’s meeting
on 21 September said “many” panel
members thought “it would be appro-
priate to provide additional monetary
policy accommodation”.
The panel of banking governors
lowered its growth forecasts for the
third meeting in a row, on the back of
rising unemployment and a strug-
gling housing market. It said that
while it was “unlikely that the econo-
my would re-enter a recession”, some
of the panel was concerned that signs
of economic growth “could be slow
for some time”, leaving “the economy
exposed to potential negative shocks”.
“We believe the FOMC will under-
take further monetary policy accom-
modation during its November
meeting,” said IHS Global Insight
economist Gregory Daco. “The ques-
tion is no longer if and when but how
and how much?” MORE: P2
FOREX: P20
Certified Distribution
02/08/10 – 29/08/10 is 93,782
 2 News
Don’t rejoice too soon about US QE2
EDITOR’S LETTER
ALLISTER HEATH
IT now looks as if the US will embark
on another round of quantitative eas-
ing (QE), sooner rather than later. Last
night’s minutes could hardly have
been any clearer. While an important
minority of Fed decision-makers
remains opposed, or (sensibly) wants
to wait for additional information,
“many participants” think that unless
growth accelerates, unemployment
fall or inflation increases, it would be
appropriate to provide additional
monetary stimulus.
There is a great danger here. QE
should only be used to prevent a col-
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WHAT THE OTHER PAPERS SAY THIS MORNING
NIGERIA APPROVES $2.5BN BID FOR
NITEL
Nigeria has approved a controversial
$2.5bn offer for the country’s main
fixed-line telecoms group, but has
demanded that the winning consor-
tium come up with a $750m down-
payment to secure the sale. The
approval follows years of ill-fated
efforts to sell off Nitel, which has
withered since liberalisation a decade
ago enabled MTN and Zain to make
the nation one of the world’s fastest-
growing telecoms markets.
VIMPELCOM TO FOCUS ON CUTTING
DEBT
Vimpelcom’s immediate priority will
be to cut its large debt load rather
than to increase its dividend, follow-
ing a deal that could make it the
world’s fifth-largest mobile phone
operator. Alexander Izosimov told the
Financial Times that Vimpelcom’s
lapse in the money supply and the
economy, of the kind which turned a
recession into a depression during the
1930s. Yet the US is not in recession
and is probably set to grow by 1.5-2 per
cent over the next few quarters. Bad,
yes; but not catastrophic and natural
given that the private sector is delever-
aging and capital is being reallocated
from bubble-time investments to
more appropriate uses
QE’s aim should not be to “create”
yet more unsustainable “growth”, or
to boost employment, and especially
not just before a key mid-term elec-
tion. Constant small-scale interven-
tions would soon lose their utility; a
muddled, half-hearted attempt at QE2
born out of internal compromises
would help nobody. The markets were
being far too short-sighted when they
rejoiced yesterday.
SAVERS’ WOES
It is a terrible time to be a saver, espe-
cially here in Britain. Low interest
rates, higher tax and rampant infla-
Further Fed easing is likely
GLOBAL ECONOMY
▲
BY MARION DAKERS
THE MINUTES of the Federal Reserve’s
latest meeting released yesterday
showed growing tension between
members, as the panel edged towards
further quantitative easing to help
rouse the American economy.
The panel of banking governors
took more than five hours to reach an
agreement on 21 September – around
twice as long as meetings earlier in the
year.
Many of the panel felt the need to
act “before long” if the economy fails
to improve, but members argued over
a number of options to stimulate the
economy, from simply publishing the
Fed’s targets for inflation rates
through to buying billions of dollars of
long-term Treasury bonds.
Long-term dissenter Thomas Hoenig
was the only governor to vote against
the whole of the Fed’s decision to hold
interest rates at the historic low of zero
to 0.25 per cent.
Hoenig expanded on his position in
a speech yesterday, saying that the Fed
dividend was likely to be flat over the
next two years but held out the
prospect of the pay-out rising from
2013.
JAPAN’S DENA SNAPS UP US RIVAL
A two-year-old San Francisco gaming
start-up that raised $40m in funding
has been sold for up to 10 times that
amount to Japanese social gaming
company DeNA. The acquisition of
ngmoco for up to $400m is another
example of the dealmaking taking
place in mobile and social gaming.
ASIAN CITRUS MOVES INTO JUICE
MARKET
Asian Citrus, the Chinese orange
plantation group, is moving into the
fruit juice market with its first major
acquisition since floating on Aim in
2005. The company, which took a sec-
ondary listing in Hong Kong last
November, is paying HK$2bn (£165m)
for a 93 per cent holding in Behai
Perfuming Garden Juice, the biggest
tropical fruit juice producer in China.
tion are wiping out those with the for-
titude and self-control to put some of
their income aside for a rainy day.
Given how desperately the British
banking system needs greater funds,
as it seeks to wean itself from the
money markets, and the looming
retirement crisis, this has all the signs
of a disaster in the making.
Inflation figures out yesterday
showed that the consumer price
index, the government’s favourite
measure of inflation, remained at 3.1
per cent. The retail price index
remained extremely high at 4.6 per
cent. Even assuming that the CPI is
the best measure, just to maintain the
purchasing power of their savings, a
basic rate taxpayer needs to find a sav-
ings account paying 3.88 per cent per
annum, while a higher rate taxpayer
at 40 per cent needs to find an
account paying 5.17 per cent. Only 55
accounts are available to 40 per cent
band taxpayers, all of which bar two
are ISAs, according to MoneyFacts.
It’s pretty hopeless for 50 per cent
needs to be mindful of the wider
effects of its decisions on the currency
markets. “As desperate as I am to see
unemployment drop down, I don’t
want to take short-term measures that
I don’t think in the long run will solve
that problem,” he told the National
Association of Business Economics.
Many bystanders said that QE2 was
SECRET FIREFIGHTING FORCE STANDS
BY AS UNION VOTES ON STRIKE
A secret strike-breaking firefighting
force has been assembled to provide
cover in London if 5,500 members of
the Fire Brigades Union go on strike
in the capital. The result of a ballot of
FBU members in London will be
announced tomorrow, with an
increasing likelihood that they will
vote for a strike.
WARNING ISSUED OVER VALUE OF
ROYAL MAIL
A privatised postal service could be
worth just £700m excluding debt
when the effects of falling mail vol-
umes, the threat of industrial action
and a failure to modernise are taken
into account, the first independent
valuation has warned in an in-depth
analysis that could scupper the gov-
ernment’s plans to privatise Royal
Mail.
taxpayers, needless to say, who have
zero incentive to save in cash-style
instruments, even though rates have
started to rise slowly in recent weeks.
Savers hardest hit by the rise in infla-
tion are those who rely on their sav-
ings to supplement their income,
many of whom are pensioners. The
ultra-low, zero or even negative cash
savings rate – and the growing worries
about equity and credit markets – is
one reason why so many people are
repaying their mortgages as fast as
they can. The Bank of England report-
ed that there was a net housing equity
injection of £6.2bn in the second quar-
ter. This was up from £5.3bn in the
first quarter, was the largest net injec-
tion of equity since the first quarter of
2009, and the ninth successive quar-
terly net injection of housing equity.
The political and media discourse is
fixated on the benefits of low interest
rates and the need to make credit eas-
ier. But those who provide the funds
to allow the lending are getting a truly
raw deal. allister.heath@cityam.com
inevitable after the minutes were pub-
lished yesterday, but were unsure of
how far the stimulus will go.
“The Fed is moving closer to another
round of quantitative easing but also
wants to weigh the benefits and risks,
and also, importantly, find a way to
communicate its intentions to the
market,” said Michael Sheldon, chief
HEWLETT PACKARD DENIES HIRING
OVERSEAS STAFF IN BRITAIN
Hewlett Packard (HP) has been
accused of sending foreign staff from
overseas offices to Britain to carry out
the tasks of redundant workers.The
computer giant announced on
Monday that it would cut a further
1,300 staff in Britain, as part of sweep-
ing redundancies taking place world-
wide. However, Unite the union has
alleged HP could be abusing migrant
worker law by using the intra-compa-
ny transfer (ICT) system.
PIZZA EXPRESS TEACHING STAFF TO
FLIRT WITH CUSTOMERS
Pizza Express is teaching its staff how
to flirt with customers in an attempt
to relax them, it has emerged. The
family-friendly restaurant has recruit-
ed classically trained actor Karl James
to teach flirting and the art of chit-
chat to staff.
CITYA.M. 13 OCTOBER 2010
NEWS | IN BRIEF
BHP and Rio go to EU for tie-up
BHP Billiton and Rio Tinto will meet EU
antitrust regulators by the end of this
month to help the European Commission
decide whether to clear their proposed
joint venture, sources said yesterday.
The Commission is examining the min-
ers’ planned $116bn (£73.54bn) iron ore
production joint venture in western
Australia to determine whether it is
anti-competitive. Rio Tinto, the world's
second-largest iron ore producer, and
BHP, the third-largest, have said that
retaining separate marketing operations
under the joint venture should ease reg-
ulatory concerns. Steelmakers oppose
the deal.
OBR set to move from Treasury
The Office for Budget Responsibility is
to move out of the Treasury to stress its
independence, chancellor George
Osborne said. The chancellor has also
named his preferred candidates for the
committee, to sit alongside OBR chair-
man Robert Chote. They are Stephen
Nickell, a former member of the Bank of
England monetary policy committee,
and Graham Parker, who was a member
of the OBR in its interim phase.
Federal Reserve
chairman Ben
Bernanke has
hinted at QE
Picture:
REUTERS
financial market strategist at RDM
Financial. “The Fed has almost boxed
themselves into a corner in the sense
that the market expects some type of
activity.”
The tilt towards intervening in the
economy is mirrored in the UK’s mon-
etary policy committee, where some
members are gunning for more QE.
TRAVEL SITE OPODO DRAWS INTEREST
The sale of European online travel
agency Opodo by Amadeus IT
Holding attracted the interest of
potential suitors including Internet
search giant Google, online travel
company Expedia. and private-equity
firms Permira and Axa Private Equity,
according to people familiar with the
situation. The sale of the U.K.-based
seller of plane tickets and hotel book-
ing services is expected to fetch
between €400m (£352m) and €500m,
they said.
PLANS GROW FOR EUROPEAN AUDIT
COP
The European Union begins consulta-
tions this week on proposals to regu-
late audit firms that could lead to
their oversight by a pan-European
market supervisor. The consultation
is being launched today by the
European Commission.
CITYA.M. 13 OCTOBER 2010 News 3

Confidence fell in September Switch to CPI measure

UK ECONOMY spending took a sizeable knock last The expectations index fell by 12
set to reduce benefits
▲

BY JESSICA MEAD month, with the spending index at points during September to 73 and
its lowest since November 2008 at the reversed the previous increase in sen- higher.

FEARS among consumers of immi-
nent government measures to slash
public spending have intensified,
prompting confidence to plummet
last month and wiping out the gain
seen in August, the Nationwide
September survey will say today.
The headline confidence index
slumped nine points to 53, its weak-
est in more than a year and well
below its long-term average of 83.
More worryingly, confidence in
height of the financial crisis.
Martin Gahbauer, chief economist
at Nationwide, said: “It would seem
that the pessimistic sentiments of a
few months ago have been renewed
and this has perhaps been driven by a
realisation of the true impact of the
cuts announced in the emergency
Budget. The government’s impending
spending review is likely to have a
strong influence on consumer confi-
dence in the coming weeks.”
timent. This index has now fallen by
47 points since February.
Gahbauer said it would need a sig-
nificant shift in sentiment to reverse
this downward trend.
However, consumers expressed a
guarded optimism towards the hous-
ing market in September, with a very
marginal improvement in sentiment.
They now expect the value of their
home to increase by 0.1 per cent over
the next six months.
▲
ECONOMICS
MILLIONS of pensioners will feel the
pinch from April, when the govern-
ment switches the measure used to
shield them from rising prices.
The changes, which will also affect
the unemployed and other benefit
claimants, will see payments rise in
line with inflation as measured by the
consumer price index (CPI), as opposed
to the retail price index (RPI) or Rossi
Index, which are historically much
Yesterday’s inflation figures put the
CPI at 3.1 per cent in September, com-
pared to 4.6 per cent for the RPI and
4.8 per cent for the Rossi Index.
September’s inflation figures are
used to calculate benefit rises next
April. Jobseeker’s allowance will now
rise by £2.05 in April, to £67.50, instead
of the £3.15 it would have done under
the Rossi Index, which was used to cal-
culate means-tested benefits before
the switch. ECONOMICS: P16

Wall Street
Rights issue JOHNSON VS OSBORNE: ROUND 1

pay to reach a
on the cards record high

for StanChart

▲
REMUNERATION
WALL Street pay is expected to reach a
record high this year, for the second
year running.
The 35 top public securities and
investment-services firms expect to
pay staff $144bn (£90.4bn) in compen-
BANKING Standard Chartered would similarly sation and benefits in fiscal 2010, up
▲

BY MARION DAKERS
ALL EYES will be on Standard
Chartered today following sugges-
tions that the Asia-focused bank is
ready to launch a rights issue to raise
up to £7bn so it complies with new
capital rules.
Standard Chartered had a core tier
one capital ratio of nine per cent at
the end of June, which is within the
new Basel III capital requirements of
between seven and nine per cent.
However, a tough application of the
new rules, which will be fully in force
by 2019, could see the bank’s capital
judged differently and its cash buffer
deemed below the threshold.
Standard Chartered would become
the second European bank to raise
cash following the Basel III agree-
ment last month. Deutsche Bank
announced a €10bn (£8.8bn) rights
issue in September to bolster its core
capital holding and fund its acquisi-
tion of Deutsche Postbank.
It was unclear last night whether
use a slice of the funds it raises to
extend its reach, though speculation
has been rife in recent weeks that the
bank itself is vulnerable to takeover
attempts.
The bank earns four-fifths of its
profit in Asia, making it a potential
platform for expansion into the con-
tinent for acquisitive rivals.
London shares in StanChart gained
38.5p to close at £19.09 in heavy trad-
ing yesterday following talk of JP
Morgan’s interest in buying a stake.
Analysts suggested that Standard
Chartered could deploy a “fat man
strategy” by bulking up its own assets
to make itself unattractive to a bidder.
The Financial Times reports today
that the bank’s planned rights issue
could raise between £5bn and £7bn.
Standard Chartered already has a
market capitalisation of £39bn, and
profit in the six months to July of
nearly £2bn.
A spokesperson for Standard
Chartered declined to comment last
night.
four per cent from the $139bn paid
out in 2009, a new Wall Street Journal
study has found.
Of the firms surveyed, 26 anticipate
compensation will rise this year.
The companies, which include
investment banks, hedge funds,
banks and securities exchanges,
expect to pay about 32.1 per cent of
revenues to employees.
This is the same level as 2009, but
lower than the 33.9 per cent of rev-
enue paid out in 2008 and 36 per cent
of revenue paid out in 2007.
However pay increases appear like-
ly to outstrip growth in revenue,
which is forecast to rise three per cent
from $433bn to $448bn.
Though profits are recovering, the
$61.3bn total anticipated profit in the
firms surveyed is still about 20 per
cent lower than the $82bn generated
NEW shadow chancellor Alan Johnson laughed off his poor knowledge of economics in in 2006.
his first exchange with George Osborne at Treasury Questions yesterday. While Osborne The survey projects Goldman
quipped that he hoped Johnson spends longer as shadow chancellor than he did, Johnson Sachs’ payout will lift 3.7 per cent
attacked Osborne’s Budget proposals for public spending cuts as “entirely wrong” and from $16.2bn to $16.8bn, despite a
claimed the deficit was “unavoidable to avoid financial meltdown”. forecasted 13.5 per cent revenue drop.

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 4 News
Cable U-Turn
over uni fees
POLITICS
▲
BY DAVID CROW
VINCE Cable, the business secretary,
yesterday completed a remarkable
volte-face on university tuition fees and
threw his weight behind Lord Browne’s
report, which has recommended a
massive rise in student contributions.
Cable also dropped his long-time
support for a graduate tax, insisting
that it was simply “not feasible” given
the parlous state of the country’s pub-
lic finances.
In the run up to the general elec-
tion, the Liberal Democrats made
much of the fact they were the only
major political party to oppose any rise
in tuition fees. “We will resist, vote
against, campaign against, a rise in
tuition fees,” Lib Dem leader Nick
Clegg said at the time.
But yesterday Cable insisted the
Browne report was “on the right
lines”. Browne, a former chief execu-
tive of BP, has recommended that the
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£3,290 cap on tuition fees should be
lifted, effectively allowing universities
to charge as much as they like.
However a tapered levy on universi-
ties that charge more than £6,000 is
expected to stop fees spiralling out of
control. If a university charges £12,000
instead of £11,000, it would only keep
£250 of the extra revenue, whereas
moving from £6,000 to £7,000 would
net the institution an extra £600.
Proceeds for the levy are expected to
help the government underwrite the
cost of much higher student loans.
But there is likely to be dissent with-
in the Lib Dem ranks. Deputy leader
Simon Hughes, a standard bearer for
disaffected MPs, yesterday said the
report would “not be the last word on
policy for funding higher education”.
“All the Liberal Democrat MPs are
very conscious of the positions we have
taken on higher education and the
policies we campaigned for at the last
election,” he said in a thinly-veiled
warning to the party’s leaders.
 Terms of the offer have not been
 
  


 


   
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Business secretary Vince Cable (l) has backed Lord Browne’s recommendations
Lions Gate eyes a
merger with MGM
MEDIA
▲
BY MARION DAKERS
AMERICAN film studio Lions Gate
Entertainment proposed a merger
with troubled rival Metro Goldwyn
Mayer (MGM) yesterday, in a move to
end months of tussling over the own-
ership of both firms.
Lions Gate’s biggest shareholder,
corporate activist Carl Icahn, gave
the merger offer his blessing yester-
day, saying in a statement that such
a deal would “enhance value for all
constituencies”.
Icahn also holds $500m (£316.5m)
of MGM’s debt, and has spent the
last year bidding to take over Lions
Gate.
disclosed, but reports last night said
MGM’s creditors would own 55 per
Intel offers upbeat sales
forecast for fourth quarter
TECHNOLOGY
▲
BY HARRY BANKS
INTEL forecast strong fourth-quarter
sales and margins as resilient
demand from emerging markets and
corporations offset weak consumer
spending, raising hopes that the
technology sector could end 2010 on
a strong note.
Intel’s forecast for a better-than-
expected December quarter gross
margin of around 67 per cent
affirmed hopes that higher-end
spending on servers or data centres
may help offset the loss of computer
CITYA.M. 13 OCTOBER 2010
Russian rail
group plans
London IPO
▲
TRANSPORT
BY EMMA SADOWSKI
RUSSIAN transport group
TransContainer is poised to launch
an initial public offering (IPO) in
Moscow and London, in a bid to raise
as much as $500m (£317m).
TransContainer, a subsidiary of the
state-owned Russian Railways group,
will float 35 per cent of its equity, or
4,863,170 shares.
Last week, Russian Prime Minister
Vladmir Putin signed an order per-
mitting the container transportation
company to list its shares.
TransContainer’s board is to vote on
the IPO later this week.
TransContainer will have a dual
London and Moscow listing, as Russia
begins its biggest privatisation pro-
gramme since the 1990s.
JP Morgan, Morgan Stanley and
Troika Dialog acted as joint global
coordinators and joint bookrunners.
VTB FLOAT: P12
cent of the combined company.
Icahn said in a regulatory filing he
preferred Lions Gate’s offer to an ear-
lier deal offered by Spyglass
Entertainment.
MGM, home to the James Bond
films and a new remake of The
Hobbit, asked its creditors last week
to accept a pre-packaged bankruptcy
plan in which Spyglass would take
95 per cent of MGM’s shares in
exchange for more than $4bn of its
liabilities.
Creditors have until 22 October to
agree to this arrangement, the same
days that Icahn’s latest bid to take
over Lions Gate expires.
Lions Gate said yesterday’s offer
“follow[ed] detailed discussions”
with Icahn, suggesting it has set
aside its differences with Icahn in
pursuit of MGM.
sales to a booming tablet segment.
The world’s largest chipmaker fore-
cast revenue of $11bn (£7bn) to
$11.8bn in the final three months of
2010, in line with analysts’ expecta-
tions of $11.32bn.
Its third-quarter net profit was
$2.96bn, or 52 cents a share, versus
$1.86bn in the year-ago quarter. That
was higher than the 50 cents per
share expected by analysts. Revenue
in the quarter ended 25 September
was $11.1bn – slightly above the
$10.99bn expected.
Intel shares rose one per cent in
after-hours trading.
CITYA.M. 13 OCTOBER 2010 News 5

OPEC raises oil

Former BP chief
executive Tony
Hayward was elect-
ed to the board of
TNK-BP Holding

demand forecast
last month

Picture: GETTY

that the world needs an extra 1.1m

▲
ENERGY
BY MARION DAKERS
OIL cartel OPEC said the world will
need 100,000 barrels of oil a day more
than previously forecast this year,
thanks to a stronger than expected
global economy supported by govern-
ment stimuli.
The group, which represents 12 oil-
rich countries in the Middle East,
Africa and South America, predicted
barrels of oil per day this year during
a meeting in Vienna yesterday.
However the cartel said demand
growth was likely to tail off towards
the end of the year, and that usage in
2011 will grow by 1m barrels of oil a
day as expected.
The group stood by its $70 - $80 per
barrel price target for the year. North
Sea crude futures fell 47 cents to
$83.25 a barrel after the meeting.

BP venture to
pay highest
ever dividend
Denis Borisov, an oil analyst at the
▲

ENERGY
BY MARION DAKERS
TNK-BP HOLDING, the publicly traded
part of BP’s joint venture in Russia,
said yesterday it has recommended a
record-high interim dividend of
124bn roubles (£2.6bn).
Russia’s third-biggest oil company,
which elected former BP chief execu-
tive Tony Hayward to its board last
month, has recommended the pay-
out in what several analysts said is a
move to feed cash back to parent com-
pany BP.
Meanwhile, BP finalised its $3.25bn
(£2.1bn) deal with American oil
group Apache to sell its natural gas
assets in Western Canada. The oil
major is attempting to raise up to
$30bn to cover costs stemming from
the Deepwater Horizon oil spill in
April.
TNK-BP’s 8.04 roubles per share pay-
ment could provide other sharehold-
ers with funds to buy BP’s assets,
helping it raise further cash.
“Basically, the main shareholders are
receiving cash that they can then use
to buy assets from the parent compa-
ny, and BP is in need of high dividend
payouts now more than ever,” said
Bank of Moscow.
TNK-BP, half-owned by four Russia-
connected billionaires, has its eye on
BP assets in Vietnam, Venezuela and
Algeria.
Earlier this month, BP’s new chief
executive Robert Dudley said it may
sell its main Vietnam assets, worth
around $1bn, to TNK-BP without
inviting other parties to bid.
Analysts also said TNK-BP’s large
dividends will help one of its share-
holders, the oligarch Mikhail
Fridman’s Alfa Group, pay down debt
related to its main assets, Russian
telecoms operator Vimpelcom and
the retailer X5. “It is possible that Alfa
needs the money to pay debt secured
against a range of its assets,” said
Evgeny Golosnoi, an oil analyst at
Troika Dialog.
TNK-BP shareholders must approve
the 8.77 per cent dividend hike at a
meeting on 18 November.
TNK-BP declined to comment on
the reason behind the rise in the pro-
posed dividend payments this year.
London-listed shares of BP fell 0.74
per cent to 429.15p yesterday, faring
slightly worse than the FTSE 100
index, which fell 0.19 per cent.

US lifts its ban on Gulf drilling

early but toughens up regulation
inspections as part of the new rules.
▲

ENERGY
THE AMERICAN government lifted its
ban on deepwater drilling yesterday,
weeks ahead of its 30 November dead-
line.
The Obama administration said
drilling can resume once companies
comply with new drilling rules and
show they have adequate blow-out
containment resources. The ban was
put in place after the Deepwater
Horizon disaster in April, which
killed 11 workers and resulted in
America’s biggest ever oil spill.
There is still uncertainty about
exactly when drilling will resume, as
wells need to pass independent
“There is a difference between lift-
ing the moratorium and securing the
drilling permits needed to return to
work,” said oil company Shell, which
operates the Perdido well in the Gulf
of Mexico. “It’s imperative to ensure
agencies have the capacity to process
the back log of drilling permits in a
timely manner and consistent with
the new safety rules.”
KBC Advanced Technologies con-
sultant Mark Routt said: “That uncer-
tainty itself can lead to rigs moving
away or companies pursuing opportu-
nities elsewhere. We continue to have
a cloud over what’s going to happen
here.”
 6 News
Pfizer buys
King to beef
up portfolio
▲
PHARMACEUTICALS
BY ALISON DEELEY
PFIZER is to buy drug manufacturer
King Pharmaceuticals for $3.6bn
(£2.26m) to strengthen its portfolio
before key patents on drugs such as
its flagship cholesterol-reducer
Lipitor expire next year.
The world’s biggest pharmaceuti-
cal company will pay $14.25 (£8.95)
per share for King from existing cash,
a 40 per cent premium on King’s clos-
ing share price on Monday.
Pfizer expects the deal to add about
two cents to adjusted earnings per
share in 2011 and 2012 and about
three to four cents from 2013 to 2015.
It has also reaffirmed its earnings
forecast for 2012, when patents will
have expired.
Analysts said Pfizer is paying a rela-
tively high premium but cost savings
from absorbing King may be higher
than announced.
Pfizer expects to make savings of
over $200m, half of which should be
realised in the first year, but some
believe it could be as high as $500m.
The deal follows last year’s $67bn
acquisition of Wyeth and is a move to
address the huge anticipated revenue
loss as Lipitor, the world’s biggest-sell-
ing prescription drug, starts to com-
pete with generic alternatives from
June 2011.
Lipitor is expected to generate over
$11bn revenues this year.
The acquisition will give Pfizer a
bigger share in the large and growing
prescription pain relief market,
where King is a leader.
King recently launched Embeda,
the first approved opiate-based pain
reliever resistant to narcotic abuse,
but generic competition to its drugs
has hit profits.
FAST FACTS | PFIZER
● Deal brings bigger market share in pain relief.
● Pfizer expects to make $200m cost savings
realised over three years.
● King Pharmaceuticals made $150.6m pre-tax
profits on $1.8bn sales last year.
Brunswick’s chairman Alan Parker has been overseeing some huge M&A deals
PR giant Brunswick tops
table of M&A advisers
COMMUNICATIONS
▲
BY MATTHEW WEST
BRUNSWICK has kept its position at
the top of the global M&A league
tables for public relations firms.
The PR giant advised on 131 deals
worth a total of $224bn (£142bn) in
the first three quarters of the year,
according to data from
Mergermarket.
That gave it a clear lead of $82bn
over its nearest rival Joele-Frank
Wilkinson Brimmer Katcher, which
advised on 62 deals worth $142bn.
But Financial Dynamics advised on
25 more deals than Brunswick, tak-
ing it to the top of the global league
tables by volume, with 156 deals
worth $111bn. Finsbury advised on 64
deals worth $85bn.
Global M&A activity stood at
$1,422.9bn for the first three quarters
of 2010, according to the report, up
25 per cent from the same period in
2009.
CITYA.M. 13 OCTOBER 2010
Small-caps and
mid-caps see
deals return
WORLD ECONOMY
▲
MERGER and acquisition (M&A) deals
in the small and mid-cap markets saw
significant positive growth during
the first nine months of the year,
according to Reuters data published
yesterday.
It said mid-cap M&A deals worth up
to $500m totalled $489.9bn
(£309.6bn) in the first nine months of
2010 – a 35.5 per cent increase on last
year.
Meanwhile, small-cap M&A deals
valued up to $50m totalled $93.3bn in
the first nine months of 2010 – a 21
per cent increase on last year.
Estimated global fees from com-
pleted mid-market M&A activity
reached $11.7bn for the first three
quarters while global fees from com-
pleted small cap activity stood at
$4.8bn for the same period.
The Americas led the mid-cap mar-
ket, with $184.3bn of announced
deals, or 37.6 per cent market share –
an increase of 4.5 per cent.
Europe, the Middle East and Asia
(EMEA) led the market in terms of the
number of deals announced, with
over 10,500 deals in the first half of
the year.
The Asia-Pacific region led the
small-cap market, with $37.6bn of
announced deals or 40.3 per cent
market share.
CITYA.M. 13 OCTOBER 2010 News 7

Business failures in London

fall by 16 per cent, says report
However, this is still well above pre- downward trend in failures has been

▲
UK ECONOMY
BY STEVE DINNEEN
BUSINESS failures in London fell by
16 per cent in the third quarter of
2101 compared to a year earlier,
according to a new report.
The Equifax Business Failures
Report found failures across the
country fell by 13.4 per cent year-on-
year, with the number of failures for
the quarter standing at 6,646.
recession levels of around 5,000 per
quarter. The drop compared to the
second quarter is 7.4 per cent.
The best performing region was
Scotland, which saw a 33 per cent
drop year-on-year.
An Equifax spokesman said:
“Businesses across the UK should be
buoyed by our report and the steady
fall in insolvencies in London echoes
the trend across the UK. Overall, the
sustained quarter-on-quarter through
the year.
“Whilst our latest analysis of the
business failures data is encouraging
and shows that all sorts of organisa-
tions are taking steps to tackle late
payments and bad debts, there is
still a long way to go and businesses
need to continue protecting them-
selves from the tough trading condi-
tions.

David Childs and Stuart Popham saw their share of profits rise Picture: REUTERS

Partner profit
rises at Magic
Circle law firm
Headcount across the firm’s entire
▲

LEGAL
BY EMMA SADOWSKI
Profits per equity partner (PEP) at
“Magic Circle” law firm Clifford
Chance rose to £933,000 last year,
according to the firm’s accounts,
after the firm cut more than 40 top
end partners.
The amount of profits divided by
the number of partners soared by 25
per cent from the previous year,
when PEP came to £733,000, but the
number of partners sharing the pro-
ceeds fell.
In 2009, Clifford Chance had an
average of 413 partners in the top
rung of its partnership, but that fig-
ure fell to 372 after it conducted a
£53m restructuring of its business.
A spokesperson from the firm said
that a 10 per cent reduction in costs
and a 13 per cent rise in its overall
profits contributed to the increased
PEP.
partnership decreased from 637 to
562 after the huge overhaul. Overall
staff numbers – which include non-
partners – fell by more than 800 to
6,309 through the year.
The redundancies meant Clifford
Chance spent £536m on staffing
costs in 2010, a fall of £41m on the
£577m it paid in 2010.
Revenue for the year fell by five per
cent to £1.19bn, putting it roughly in
line with rival Allen & Overy, which
saw its revenues fall by four per cent
to £1.09bn.
Asia remained Clifford Chance’s
strongest region, after turnover
increased by 20 per cent to £125m.
The firm’s Americas practice saw a
slight dip in turnover to £140m,
compared to £143m a year earlier.
But Clifford Chance’s UK and Gulf
business took the biggest hit, with
revenue streams falling by £44m dur-
ing the year to £456m.

US White & Case continues to

expand its presence in the City
sent continued investment in its City
▲

LEGAL
WALL STREET law firm White & Case
has promoted 35 lawyers into its part-
nership, with seven in London reach-
ing the top.
The promotions, which take effect
from the start of next year, will see the
firm welcome seven London counsel
and associates into its partnership.
White & Case, which is based in
New York, said the promotions repre-
office. The firm has already hired four
new partners this year and trans-
ferred one partner from New York to
London.
A further 16 lawyers in Europe, the
Middle East and Africa have been pro-
moted.
“Our new partners are all outstand-
ing lawyers, with diverse experience
and expertise,” said White & Case
chairman Hugh Verrier.
 8 News CITYA.M. 13 OCTOBER 2010

Invista to sell assets after

losing biggest client Lloyds
Group, which took over HBOS’s enue generated from the HBOS con-
▲

BANKING
BY MATTHEW WEST
INVISTA Real Estate is to be effectively
wound up following the end of a
major contract with Lloyds Banking
Group, it admitted yesterday.
The company had been managing
assets of £2.4bn on behalf of HBOS
since it demerged from the bank in
2006 and listed on the Alternative
Investment Market.
But on Monday Lloyds Banking
majority stake in Invista when it
acquired the bank two years ago,
exercised an annual get out clause on
the asset management contracts it
had inherited as part of the deal.
Invista said the loss of Lloyds as a
client amounted to nearly half of its
total assets under management
(AUM), currently around £5.4bn,
being wiped out.
In a statement to the stock market
yesterday it said that without the rev-
tracts, the interests of both clients
and shareholders would be best
served by a sale of its remaining
assets
“With the benefit of the HBOS
funds, we had a size and critical mass
that enabled us to have a balance
sheet which didn’t look terribly big.
Without the HBOS funds, the assets
on the balance sheet look significant
in size,” Invistar chief executive
Duncan Owen said. Invista chief executive, Duncan Owen, said the loss of HBOS would lead to asset sales

Time to offload
Lloyds to save
the City’s skin
to be the Chancellor that oversees the
demise of London as a financial servic-
es capital, but if that’s the price of res-

£5
cuing the economy, then so be it.
Politically, he has no choice.
Boris Johnson has urged banks to
pre-empt the public mood by giving
massive donations to charities, mak-
GUEST COMMENT ing it easier for him to defend them.
Marcus Agius, the chairman of
ANTHONY BROWNE Barclays, and Richard Lambert, the
director-general of the CBI, have both

P
OLITICS can be so unpredictable urged banks to restrain themselves to
that a week seems a long time, drain the poison from public debate.

SPECIAL but there is one prediction that

can be made with certainty: a car
We clearly need a new settlement
between politicians and bankers,

OCTOBER
crash between bankers and politicians allowing them to leave in peace again.
Moules Marinière and just in time for Christmas. The fall out But that depends on the banks, who

OFFER
could be so severe that it could lead to
the demise of London as a financial
French fries for only £5.00* services capital.
Next month, after the
Comprehensive Spending Review,
much of Britain will be reeling as the
fiscal axes falls: public workers, hit by
Chamberlain’s celebrates the arrival a pay freeze and pension clampdown,
of Autumn with the launch of our will be hoping just to keep their jobs.
Quangos will be culled by the dozen.
new Basement Bar menu. Whole government programmes
closed down. Those on benefits wor-
ried sick. Unions on the war path, stir-
Relax in the perfect City basement hideaway and enjoy a ring up fury at the government.
drink or meal – assured that we will deliver the same high And in the middle of all this will
standard of food you would expect from Chamberlain’s. come the Christmas bonus season,
with bankers – widely blamed for all
Our new menu consists of tasty, wholesome bar meals the problems in the first place, and
including our Moules Marinière and French fries – half price bailed out at taxpayers’ expense –
for a limited time because once you’ve tasted what we’ve awarding themselves riches that oth-
ers can barely dream of. We will cer-
got to offer, we’re sure you’ll want to come back. tainly not all be in this together.
There is only one political response
to this, and it is as certain as night fol-
lows day: the government, to satisfy
HOW TO FIND US the public baying for blood, will
have been in deep discussion, but
without a hint of agreement. Banking
is so competitive that it’s easier to herd
cats than get them to act together.
There is also a streak of crisis denial
in the City, with bankers, arguing they
deserve the bonuses, planning to cock
a snook at the ungrateful public. But
whether the bonuses are right or
wrong is immaterial – this is raw poli-
tics, where public mood trumps fine
arguments. The bankers are acting like
a motorist protesting their innocence
to a road rage driver with a large base-
ball bat. Banks should pick battles
they can win, and it is in their long
term interest they don’t pick this one.
What is needed is large public ges-
tures – Barclays sponsoring the
Mayor’s bike hire scheme has done
more for its image than any announce-
ment. We need high profile bonus
kings to put the long term interest of
the industry first, and defer their
rewards.
The Chancellor too can do some-

BASEMENT BAR
launch a massive punitive clamp
23-25 down on financial services.
Leadenhall The Chancellor, George Osborne,
Market, can see the car crash clearly ahead, but
EC3V 1LR believes there is little he can do. He has
*Offer valid until 29th October 2010. Subject to availability. Maximum group 6 people. already threatened a new bonus tax,
while Treasury officials are bracing
themselves for prolonged crisis man-
agement. Already many of the banks
To find out more please call Chamberlain’s restaurant on 020 7648 8690 are rewriting their long term business
or visit www.chamberlainsoflondon.com plans to move future activity away
from London, and this will only accel-
Planning a Festive Party? Our Basement Bar is also available for private hire erate. Osborne – who understands the
importance of banking – doesn’t want
thing – he should start selling the
public shares in the banks. The
Treasury stake in Lloyds bank, worth
about £21bn, is now greater than the
bailout, meaning that the Chancellor
can reassure the public they have
made money on the whole debacle
(the share in RBS is not quite there yet).
In the US, selling bank shares to repay
the public dramatically altered the
politics of banking. It is time to start
doing the same here.
Anthony Browne is policy director for the
Mayor of London, Boris Johnson.
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 The Capitalist
10
BARCAP VICE-CHAIR TO BACK CITY
WOMEN IN PLURAL DIRECTOR ROLE
BARCLAYS Capital vice-chairman Gay
Huey Evans has long been a trailblazer
for women in the Square Mile, but
she’ll be even more influential in her
advocacy for greater female participa-
tion at the top echelons of the City in
her new role as a “plural” board direc-
tor.
Huey Evans left BarCap yesterday
after a long and distinguished career
in banking, spending time at Bankers
Trust, the FSA and Citi before joining
Barclays in 2008.
Having taken a role as a director on
the board of the London Stock
Exchange earlier this year, she is now
looking to take up more board posi-
tions. Plans for one financial services
company directorship are already in
full swing, awaiting the approval of
the FSA, and she’ll also be looking to
expand her remit into other sectors –
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com
including media and pharma.
“It was time for a change, but I’m
definitely not the type to stay home
and play tennis – I’ve got far more
energy than that,” the glamorous 56-
year-old tells The Capitalist with a
chuckle, before launching into an
excited précis of her plans to inspire
women in the upper echelons of the
companies in which she will work.
“I feel strongly and passionately
Gay Huey Evans will be a “plural” board director
about this, and always have done,”
Huey Evans says. “Women are great
assets for any company, but they have
different skills and mindsets to men.
The old adage that men are from
Mars and women are from Venus still
stands – and it’s crucial to understand
that for there to be true equality at
any company…” Hear, hear.
FAMOUS FACES
In the wake of “Wall Street 2: Money
Never Sleeps”, another movie
spawned by the financial crisis is due
to start production shortly – and final-
ly, all of the heros and villains of the
piece have been cast.
Spot the difference: Bernanke and Giamatti
William Hurt had already been cast
to play US Treasury secretary Henry
Paulson in the silver screen adapta-
tion of Andrew Ross Sorkin’s book
Too Big to Fail. He’ll now be joined by
a roster of look-a-like stars – including
Saving Private Ryan and The
Illusionist actor Paul Giamatti as Fed
chairman Ben Bernanke; Tony
Shalhoub, star of TV series
Monk (and the voice of Luigi
in cartoon flick “Cars”) as
Morgan Stanley boss John
Mack; and James Woods,
star of Once Upon a Time in
America, as Lehman
Brothers chief Dick Fuld.
Poor Warren Buffett, who
also features in the movie,
got a bit of a raw deal, though.
Playing Buffett is Ed Asner –
who’s best known for playing
Santa Claus in no fewer than four
different movies, including “Elf”.
Something for the Sage of Omaha to
consider in the future, perhaps?
LABOUR OF LOVE
A welcome show of support for the
City from quite the unlikeliest of cor-
ners. Yesterday, Labour MP Gareth
Thomas – the shadow higher educa-
tion and science minister – stood up
in the Commons to argue for
London’s financial sector and
its contribution to the UK
economy. In something of a
CITYA.M. 13 OCTOBER 2010
Picture: Micha Theiner/ CITY A.M.
shock move, Thomas dismissed
relentless banker-bashing as “a specta-
tor sport” and called for the UK to “re-
embrace the City”.
“There are a whole series of chal-
lenges facing the City, such as the
amount of trade that has developed
in other international financial cen-
tres,” he told City A.M. “Policy makers
need to work with the City to main-
tain its Premier League status. We are
one of the top four and we want to
stay that way. The City is a very impor-
tant source of tax revenue; it would
be foolish not recognise that.”
As part of his conviction, Thomas
has mooted the idea of a Royal
Commission on the future of London,
considering the economic, environ-
mental and populations the city will
face in the future – a proposal which
has the backing of even less likely
Labour figures, such as ultra-left-
winger John McDonnell and MPs
Heidi Alexander and Stephen Timms,
the former financial secretary to
Alistair Darling’s Treasury.
It’s not clear if the Commission’s
backers would go as far as to support
all of Thomas’ feelings about the City,
but it’s certainly a start.
LOYALTY CARD
Software group Autonomy saw its
shares tank again yesterday, with a
downgrade note from Deutsche Bank
analyst Marc Geall compounding its
woes after a profit warning last week.
Geall said Autonomy had neglected
the need to pre-emptively invest in
order to deliver sustained growth,
and would now have to
either “reset its margin or
make a transformational
acquisition that carries
additional risk” in order to
mitigate its mistake.
It’s potent stuff, particu-
larly coming from a man
who left Autonomy for
Deutsche only months ago.
Geall was head of corporate
strategy and IR at the group,
before he resigned his day-to-
day responsibilities in April
and left to join Deutsche in June.
FINE WINE
Finally, an opportunity for wine-
lovers of the City to pursue their pas-
sion while doing their bit for a good
cause. As part of the Fine Wine Fair
this weekend, the event organisers
are holding an online auction on
Friday with all the profits from the
deluxe and hard-to-find wines going
straight to the Help for Heroes mili-
tary charity. Get your fix at
bidfor wine.co.uk/help-
forheroes.
CITYA.M. 13 OCTOBER 2010 News 11

Irish drinks
Punch plans a
Ian Dyson has
launched a review
of the business
after Punch
Taverns’ profits
slipped. firm uncorks
review as its healthy profit

▲
earnings sink
FOOD AND DRINK
IRISH drinks firm C&C Group is hop-
ing to make fresh acquisitions after

HOW DO YOU RATE THE RESULTS? Interviews by Philip Waller

posting higher first-half operating
profit and the first rise in UK sales of
Magners cider since 2007.
C&C, which acquired Gaymers
LEISURE “Whilst we remain committed to PAUL HICKMAN | KBC PEEL HUNT cider and Scotland’s most popular
▲

BY PHILIP WALLER
DRINKERS staying at home, higher
taxes and the smoking ban in pubs
hit profits at Punch Taverns, prompt-
“
the future of the British pub, we lager, Tennent’s, in separate deals in
believe fundamental change in con- the last 14 months, said its strong bal-
sumer habits will result in some pubs They set the scene for a clearer identification of equi- ance sheet would help it to pursue
not surviving,” the group said. further deals.
Chief executive Ian Dyson said he
ty value in the managed pubs and group cash, while the neces- Although the Irish and UK markets

ing Britain’s biggest pub group to yes-
terday announce an overhaul of the
business.
Punch said pre-tax profits in the 52
weeks to 21 August slipped to £131m
had launched a review of the business
“with a view to exploring options to
create value for our shareholders”,
although he did not give further
details. “While we have been encour-
”
sary restructuring of securitisations around tenanted pubs remained “unpredictable and chal-
may take its course without prejudice to the equity. lenging”, it said it was well-placed,
with Magners continuing its recovery
in the UK and enjoying encouraging
SIMON FRENCH | PANMURE GORDON export growth.

from £160m a year ago as spending
cuts and tax rises reduced consumer
confidence and sales, although trad-
ing improved in the final quarter of
last year and the first few weeks of this
aged by more recent trends in both
the leased and managed businesses,
the economic environment is very dif-
ficult and there remains room for
improvement across all aspects of our
“
The group, which also owns
Bulmers, Blackthorn and Addlestones
Current trading is better than expected with improved ciders, had net cash of €20.8m
(£18.3m) at the end of August, having
trading delivered in the final quarter of 2010 continuing into sold its spirits and liqueurs business

year.
The group blamed the fall on people
staying away from pubs due to the
recession, the smoking ban and what
it described as counter-productive tax
business,” Dyson said.
Punch has more than 6,700 man-
aged, leased and tenanted pubs, with
the managed pubs including brands
such as Chef & Brewer and Fair and
”
the early weeks of 2011. We remain positive on Punch given in April for €300m.
the potential to generate significant shareholder value. “We’re very well positioned to capi-
talise on any opportunities that pres-
ent themselves over the next 12 to 18
HUGH-GUY LORRIMAN | SEYMOUR PIERCE months,” strategy director Kenny

and duty increases.
Punch, which said the sales dip had
particularly hit its smaller drink-led
pubs, said it planned to review the
future of up to 1,300 of its under-per-
Square.
Punch has been selling under-per-
forming pubs and buying back bonds
to reduce its debt, which stands at
£3.1bn and resulted largely from the
“
Neison said.
“It may well be there are distressed
We remain sceptical on the break-up story. Results asset sales to come out in the next
and forecasting for Punch Taverns will remain volatile while couple of years.”
However, chief executive John

”
forming pubs, leaving it with 4,700 £2.7bn acquisition of rival Spirit the business continues to go through a period of change and Dunsmore said the group’s priority
core pubs. Group in 2007. upheaval. Questions over the business model remain. was to integrate the businesses
recently purchased.

CITY VIEWS: ARE YOU AND YOUR FRIENDS GOING TO THE PUB LESS? Interviews by Emma Sadowski

DUNCAN MILLER | DEWEY & LEBOEUF PAUL WATSON | WILLIS GABRIEL BASSAS | ABOVENET COMMUNICATIONS

“I hardly go to the pub during “I don’t particularly go to “The economic times don’t
the week and my friends are the pub after work during determine how much I go.
going less now because they the week days anyway but My friends are there every
have families. But on the week- I do think people go as day and when I do go I am
end, I do go to the pub much as they used to. I more extreme in the
quite a bit.” usually go on the way I enjoy
weekend.” myself.”
 12 News
Russia hoping
to sell stake in
VTB for $3bn
▲
BANKING
THE Russian government hopes to
sell a 10 per cent stake in VTB, the
country’s second biggest lender, for at
least $3bn (£1.9bn) in late 2010 or
early 2011, first deputy Prime
Minister Igor Shuvalov said yesterday.
The sale is set to kick-off Russia’s
biggest privatisation campaign since
the 1990s, with the government hop-
ing to raise a total of some $50bn.
“Assuming the circumstances are
fortuitous and the market does not
suffer sharp volatility ... we can sell
the (VTB) shares by the end of the year
or at the start of 2011,” Shuvalov said.
“If we are now talking about 10 per
cent of VTB, then it is at least $3bn.”
A source said last month the
Kremlin had backed talks with US pri-
vate equity group TPG for the stake,
but VTB chief Andrei Kostin said no
investor had been finally decided.
Among other companies up for sale
in coming years is VTB’s bigger rival
Sberbank, which is around 60 per
cent state owned.
BUY ONE GET ONE FREE
▲
SPECIAL offers made up 37 per cent of goods by volume sold in supermarkets in
September, according to research by Nielsen. The record high beats last year’s Christmas
rush, when 34.5 per cent of goods were bought through special offers. Turnover at super-
markets grew 5.1 per cent in the quarter to 2 October. Picture: Micha Theiner/City A.M.
Ocado to build new
£210m warehouse
CONSUMER
▲
BY STEVE DINNEEN
OCADO yesterday announced it
will build its second warehouse in
North Warwickshire at a total
cost of £210m.
The firm says the new distribu-
tion hub for its online grocery
delivery business will be opera-
tional by 2012.
Ocado says the facility, which
will create up to 2,000 jobs in the
area, will allow it to expand its
geographic coverage and increase
order capacity.
It will have capacity for 120,000
orders per week initially, rising to
180,000 a week.
It paid £17.74m to acquire the
35 acre site on a 999 year lease.
The firm will fund the new cen-
Stock is still risky despite its cut price
OCADO will hope the start of
work on its new warehouse (or
Customer Fulfilment Centre to
use its irritating official title) will
begin a new chapter after a torrid
few months for its share price.
Since its climbdown on the
massively optimistic flotation
price range of 200-275p (it even-
tually achieved just 180p), its
stock has steadily trickled to its
current 128.4p – not a far cry
from the 120p mark some ana-
lysts said it was worth pre-float.
The new warehouse will even-
tually be able to process 180,000
orders a week, allowing Ocado to
aggressively expand in the
Midlands and beyond: it says the
Waitrose director:
sales growth will
continue for years
CONSUMER
BY HARRY BANKS
UPMARKET grocer Waitrose expects
annual sales to rise by a double-
digit percentage for years to come,
despite a tough economic backdrop,
driven by new store openings, its
managing director said yesterday.
Mark Price, speaking at the annu-
al conference of grocery industry
body the Institute of Grocery
Distribution, said conditions for
consumers were likely to be tough
for the next year or two as the gov-
ernment hikes taxes and cuts
spending to rein in its borrowings.
But he did not expect the British
economy to fall back into recession
and thought the brunt of consumer
cutbacks would be focused on non-
food products.
There would be “pretty regular,
tre, which will complement its
existing warehouse in Hatfield,
through money raised in its disap-
pointing stock market flotation
earlier this year.
Ocado was forced to slash its
price at the eleventh hour from
the original price range of 200p-
275p to just 180p a share. Things
have gone from bad to worse for
the firm since the flotation, with
shares now trading at around the
128p mark.
Analysts at Shore Capital warned
the new warehouse could be bad
news for investors. Clive Black said:
“This development extends the
time period for when Ocado will
make meaningful profits for
investors, given the carrying cost
and the sub-optimal performance
until it is filled and fully opera-
new warehouse will increase its
reach in the UK from 66 to 85 per
cent of households.
However, its goal of finally
turning a profit after more than
10 years could come under pres-
sure from the new plant running
at two thirds of capacity for an
unspecified time after opening.
The thinking behind opening
the second warehouse as far north
as Warwickshire, rather than con-
solidating its position in the south,
has been questioned, but the extra
reach it provides could make this a
gamble worth taking.
More problematic could be
the firm’s profile as a provider of
luxury food – an area which its
CITYA.M. 13 OCTOBER 2010
solid growth” for the grocery indus-
try, he said, adding: “I don’t think
we will see a double dip.”
Price said Waitrose, part of
employee-owned retailer John
Lewis, had ruled out big acquisi-
tions and was focusing instead on
expansion plans which include
opening around 10 to 15 supermar-
kets and 30 convenience stores a
year.
He added that the grocer will con-
tinue to focus on internet shopping,
and that he believes this sector has
potential for more growth.
Waitrose last month launched an
advertising campaign promising to
beat rival Tesco’s prices on over
1,000 branded products. The grocer,
which publishes weekly sales fig-
ures was 9.4 per cent up on last year
in the week to 8 October with
turnover of £92.87m.
tional.
“For us this remains an
unproven financial experiment...
Accordingly, despite a very disap-
pointing share price performance,
with even greater relative pain,
there could be substantially more
capital depreciation yet.”
ANALYSIS
p l Ocado
170
128.40
12 Oct
160
150
140
130
12 Jul 30 Jul 19 Aug 9 Sep 29 Sep
customers may feel the need to
cut back on after government
austerity measures really start to
bite later this year.
Ocado was buoyed by a 30 per
cent jump in sales in the last
quarter, but its average order size
falling more than £1 to £113.59
should be seen as a warning.
The market was unmoved by
the announcement yesterday,
with Ocado’s stock closing mar-
ginally lower. We agree: at 128p
Ocado looks risky. A wait and see
approach is advised.
BOTTOMLINE
Analysis by Steve Dinneen
CITYA.M. 13 OCTOBER 2010
Rate rise risk to UK says Miles
▲
UK ECONOMY
BY MATTHEW WEST
A SENIOR member of the Monetary
Policy Committee (MPC) warned yes-
terday the UK economy faced a real
danger from the Bank of England
tightening monetary policy too early.
During a speech in Dublin David
Miles said the MPC faced a risk of
“tightening monetary policy too
soon” adding the UK economy faced
an uncertain future.
He said the economy was far from
UK trade gap
narrows but
imports fall
▲
UK ECONOMY
BY MATTHEW WEST
THE UK’s trade deficit narrowed
slightly, official figures showed yes-
terday, but imports fell by twice as
much as export, suggesting a soften-
ing of domestic demand.
The trade deficit fell to £4.6bn in
August, falling back from a five-year
high of £5bn in July.
While there was an improvement
in the UK’s net trade position – the
deficit narrowed to £8.2bn in August
compared with £8.7bn in July –
exports fell by £0.4bn and imports fell
by double that at £0.8bn. The volume
of imports was 1.5 per cent lower
than a month ago.
The UK’s trade deficit with EU
countries narrowed to £3.5bn in
August, compared with a deficit of
Outlook for housing market uncertain House prices rose 8.3%
as remortgaging falls to ten-year low year-on-year in August
▲
PROPERTY
THE days of excessive mortgage lend-
ing seen prior to the credit crunch
will not return, the Council of
Mortgage Lender’s (CML) director-gen-
eral, Michael Coogan said yesterday,
as its latest figures showed remort-
gage activity had fallen to its lowest
level in over a decade.
August saw 25,000 remortgages
E X TR ARM
E
H LF TNEES
A
M AT I
28
E D 2 7 , THURCT
W AT 30 O
& S 0P M
2.3
0844 826 8000 • WickedTheMusical.co.uk •
displaying the typical features of “a
strong cyclical upswing,” such as a
rapid growth in lending and in the
money supply, wages pressure or
business or household confidence.
While his comments do not go as
far as suggesting Miles is in favour of
the Bank restarting quantitative eas-
ing (QE), they do put him at odds
with fellow MPC member, Andrew
Sentance, who is known to favour
tighter fiscal policy having voted for
an increase in the Bank rate consis-
tently in recent months.
£4bn in July. Exports rose by £0.1bn
but again imports fell by £0.3bn.
The deficit with non-EU countries
was £4.7bn in August, unchanged
from July. Exports and imports both
fell by £0.5bn compared with the pre-
vious month, the ONS said.
Howard Archer, chief European
and UK economist at IHS Global
Insight, said signs of net trade “riding
to the rescue of the UK economy
remain conspicuous by their
absence”.
Meanwhile David Kern, chief econ-
omist at the British Chambers of
Commerce, said the fall in imports
was a serious concern.
He added: “With the forthcoming
spending cuts set to dampen domes-
tic demand, the UK economy risks
declines without significant growth
in our net exports.”
advanced by lenders, accounting for
25 per cent of all loans made in
August. The number of loans was
down 13 per cent on the previous
month and 19 per cent lower than a
year ago.
The total number of mortgages fell
eight per cent in August to 51,600. Of
those around a third were loans to
first time buyers, a decline of five per
cent from July most likely the result
Speculation the Bank may restart
QE has been growing in recent weeks
with MPC member Andrew Posen
calling for the policy recently, warn-
ing the UK faces a lost decade similar
to Japan in the 1990s if it does not.
Miles said inflation could also
remain above target for several years.
He said “UK inflation now sits
uncomfortably above the target. But I
believe that this tells us rather little
about the cyclical position of the
economy or where inflation will be in
future.”
CONTRIBUTORS TO CHANGE IN ANNUAL CPI
Food & non-alcoholic beverages Alcohol & tobacco
0.11
Housing & household services Furniture & household goods
0.02
Transport Communication
-0.36
Education Restaurants & hotels
0.02
of tighter lending criteria and higher
deposit requirements, which remain
on average above 20 per cent.
The comprehensive spending
review would further dampen con-
sumers’ appetite to borrow this year,
said Coogan.
He added he expected lending to
slow significantly towards the end of
the year while the outlook for 2011
was “uncertain”.
WickedLondon • APOLLO VICTORIA THEATRE • SW1V 1LG
Foreign investors take up
a quarter of Greek T-bills
▲
WORLD ECONOMY
FOREIGN investors bought about 27
per cent of Greece’s issue of six-
month T-bills auctioned yesterday,
said the head of the country’s debt
agency.
“Foreign take up was constant at
about 27 per cent,” PDMA chief Petros
Christodoulou said.
Greece sold €1.17bn (£1.03bn) of six-
Clothing & footwear
0.02 0.17
Health
0.01
Recreation & culture
-0.03 -0.04
Miscellaneous goods & services
0.03 0.01
Source: ONS
PROPERTY
HOUSE prices grew 8.3 per cent year-
on-year in August, slightly down on
July’s figure of 8.4 per cent, official
figures showed yesterday.
Property prices rose 0.7 per cent in
August, helping the annual rate of
growth recover some ground after
July’s 0.3 per cent fall.
The Department of Communities
Economics 13
month T-bills at an average yield of
4.54 per cent, down from 4.82 per
cent in a previous 14 September sale.
Germany yesterday opposed
extending Greece’s repayment period
for its bailout loans and the European
Union’s executive played down the
prospects of doing so after the
International Monetary Fund (IMF)
suggested it was possible to stretch
the deadline.
CPI inflation
holds steady
in September
▲
UK ECONOMY
CONSUMER Price Index (CPI) infla-
0 tion remained at 3.1 per cent in
September, unchanged from August
official figures released yesterday
showed, continuing the trend of
above target inflation.
Meanwhile, Retail Price Index (RPI)
inflation was 4.6 per cent, down from
4.7 per cent in August but above ana-
lysts expectations of 4.4 per cent.
The Office for National Statistics
(ONS) said there were both significant
upward and downward pressures on
the CPI inflation rate between August
and September.
Airfares have seen the most dra-
matic fall dropping 27.8 per cent this
year. Fuel prices fell by 0.8 per cent in
September but were still 2.3 per cent
higher than a year ago.
Clothing and footwear prices rose
by a record 6.4 per cent for the year to
September while food prices also
increased by 0.3 per cent.
The September CPI figures will be
closely watched by benefit claimants
as they will determine the rise in all
payments, save pensions, next April.
and Local Government said the aver-
age UK house price now stood at
£213,116.
But it also showed house price
inflation had eased by more than
half from 1.7 per cent in the second
quarter to 0.8 per cent in the third
quarter.
The figures showed the average
price paid by first time buyers
increased by 8.2 per cent in the year.
 14 News
IASB hires new Dutch chair
FINANCIAL SERVICES
▲
BY EMMA SADOWSKI
SIR DAVID Tweedie, chairman of the
International Accounting Standards
Board (IASB) is set to retire next year,
with Hans Hoogervorst appointed to
take over the top post.
Tweedie will retire officially at the
end of June 2011 after 10 years in the
role.
During that time, Tweedie estab-
lished the International Financial
Reporting Standards (IFRS), which are
currently used by more than 100
countries.
Hoogervorst will join the IASB from
the Netherlands Authority for the
Financial Markets, the Dutch securi-
ties watchdog, where he is currently
chairman.
He will relinquish that title once he
moves to IASB.
Hoogervorst will also step down
from his role as chairman of the
Technical Committee of the
International Organisation of
Securities Commission and co-chair
of the Financial Crisis Advisory
Group.
The IASB also announced the
appointment of vice-chairman Ian
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Makintosh yesterday. He will replace
Tom Jones, who retired last June.
Makintosh, who is currently chair
of the UK Accounting Standards
Board, will move into his new post in
at the same time as Hoogervorst.
European finance commissioner
Michel Barnier said: “The
Commission welcomes the appoint-
ment of Hans Hoogervorst as future
chairman of the IASB. Hans’ back-
ground and experience as a minister
and supervisor make him well suited
to the job, giving him a good under-
standing for the broader internation-
al context in which the IASB
operates.”
The appointments were made by
the trustees of the IFRS after almost a
year long search.
IFRS trustees sought nominations
from more than 500 organisations
and considered more than 300 candi-
dates.
They narrowed the list down to 45
people from across 20 countries, but
later unanimously approved
Hoogervorst and Makintosh at their
annual meeting in Seoul.
Tweedie said: “I am delighted that
the trustees have chosen Hans, sup-
ported by Ian, to lead the IASB.”
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mba@westminster.ac.uk
Tube bosses sit down with
unions to avert more strikes
TRANSPORT
▲
BY EMMA SADOWSKI
LONDON Underground (LU) bosses
went back to the drawing board
with trade unions RMT and the
Transport Salaried Staffs’
Association (TSSA) yesterday in a
bid to avert two more looming
strikes and put an end to the long
running dispute over staffing lev-
els.
The three parties met at concilia-
tion service Acas yesterday after-
noon to try and hash out a deal
that could see the unions call off a
set of 24-hour strikes scheduled for
2 and 28 November.
RMT and TSSA, which represent
more than 10,000 Tube staff, are at
odds with LU over plans to axe up
to 800 station jobs, a move they say
will cause safety threats to workers
Boost for Bank of Ireland as analyst
tells its investors to buy its stock
▲
BANKING
SPOTTING a potential gold nugget
in the mist of the rubble, Collins
Stewart has poked its head above
the parapet and put a “buy” recom-
mendation on an Irish bank.
It recommended Bank of Ireland
through its Quest analysis vehicle,
saying it will benefit from the
retreat of foreign banks from the
market and is the strongest
remaining player.
Analyst Gary McCarthy said: “We
have been negative on the Irish
banks for a very long time, but it’s
Hans
Hoogervorst will
become the next
IASB chairman
Picture: REUTERS
and commuters.
LU argued that the cuts are nec-
essary as some stations sell fewer
than 10 tickets an hour due to the
Oyster programme. The transport
group also said the staffing
changes will be delivered “without
any impact on the Tube’s high safe-
ty standard” and with a guarantee
of no compulsory redundancies.
“London Underground needs to
change, and we look forward to
being able to explain how we
intend to do that with no compul-
sory redundancies and with no
RMT boss Bob
Crow has accused
the mayor of failing
to get a grip on the
transport system.
time to be brave. Unpalatable as it
may be, it is time to put money to
work in this sector even if it feels
like the monkeys have inherited
the earth. Alone it stands.”
Meanwhile, Irish finance minis-
ter Brian Lenihan said Ireland
would back talks between its
Finance minister
Brian Lenihan says
Ireland will back
talks between banks
and bond holders
CITYA.M. 13 OCTOBER 2010
SIR DAVID
TWEEDIE
OUTGOING IASB
CHAIRMAN
SIR David Tweedie is known for
transforming the accountancy world.
During his 10-year tenure with the
International Accounting Standards
Board (IASB), he succeeded in
establishing the International
Financial Reporting Standards
(IFRS), which is now used as the
financial reporting standard in 100
countries.
Tweedie, who was appointed as
chairman of the IASB in January
2001, will retire at the end of June
next year after 32 years in the
accountancy profession.
He cut his teeth in 1978 at the
Institute of Chartered Accountants
of Scotland.
In 1990 he took over as the first
ever full-time chairman of the
Accounting Standards board, which
launched the same year. He was
tasked with the responsibility of pro-
ducing the UK’s accounting stan-
dards.
Tweedie is known to some as the
“godfather” of accounting for what
he’s contributed to both the profes-
sion and the regulatory landscape.
impact on our high safety stan-
dards. All of our stations with a
ticket office will continue to have
one,” said LU’s chief operating offi-
cer Howard Collins.
Services on the Tube have
already been impacted by two
strike periods since September
causing heavy disruptions across
the entire Underground network.
Transport for London (TfL) said it
operated roughly 40 per cent of
train services during the last strike
on 4 October at the same time it
issued 100 extra buses and
increased its Thames riverboat
capacity.
RMT general secretary Bob Crow
said: “The mayor is presiding over a
crisis on the tube and has chosen to
attack his own staff rather than
getting a grip on a transport sys-
tem in meltdown on his watch.”
nationalised banks and bond hold-
ers on a possible renegotiation of
their senior debt.
He reiterated he was opposed to a
default on senior debt but his com-
ments on a possible voluntary rene-
gotiation with investors chime with
a similar suggestion from Ireland’s
financial regulator last week.
Irish voters are angry at the
€50bn (£43.6bn) bill they look set to
foot to purge Irish banks of soured
property loans. However, making
bond holders swallow some of the
cost would undermine confidence
in Ireland and its banks.
CITYA.M. 13 OCTOBER 2010
Emerging markets to
buoy Pernod Ricard
While drinkers remain cautious, the French spirits
giant has reason to be cheerful
L
OOK to the top of any global blue-
chip company these days and
you’re likely to find an account-
ant playing a key strategic role
and not simply doing the books.
Gilles Bogaert, managing director
of finance at Pernod Ricard, is no
exception. Having originally joined
the French drinks giant in 1995 as an
internal auditor, Bogaert is now one of
three managing directors who report
to group chief executive Pierre
Pringuet. After working across the
organisation with spells in Central
and South America, as well as heading
audit and business development at the
holding company, Bogaert was later
appointed chairman and chief execu-
tive of Pernod Ricard in Brasil before
taking up his current role last year.
It is this experience and apprecia-
tion of emerging markets that leaves
Bogaert particularly well placed to
help deliver Pernod Ricard’s strategy.
The message from the world’s joint
leader in wines and spirits is that
organic growth remains the priority,
with emerging markets a key driver.
WORDS BY BEN GRIFFITHS
This follows a period of acquisitions
which culminated in the €5.6bn
(£4.91bn) purchase of Swedish group
V&S – including the flagship Absolut
vodka brand – in July 2008. Bogaert
insists Pernod Ricard is not looking for
any more acquisitions in the immedi-
ate future. “We believe we have the
right portfolio and are in all the key
markets,” he says. The drinks cabinet
also includes Ricard pastis, Chivas
Regal and Glenlivet Scotch whiskies as
well as Jameson’s Irish Whiskey,
Martell cognac and Beefeater gin.
These brands have helped boost
profits in Asia and other emerging
markets, with China, India, Vietnam,
Africa and the Middle East seeing big
uplifts in sales. Emerging markets
now represent a third of group sales.
This expansion has helped offset flat
sales in the US, Bogaert explains,
where the trading environment
remains tough despite signs of life dur-
ing the second half. Closer to home,
confidence is returning after a solid
six months and European sales trends
are improving, with France and
News 15
Germany seeing profits increase while
Spain, UK and Ireland are flagging.
Group sales slipped two per cent to
€7.08bn in the last financial year, with
profit from recurring operations down
three per cent to €1.79bn. However,
organic sales grew two per cent, and
profits from organic growth were up
four per cent in the same period.
Premiumisation – selling more pre-
mium products at higher prices –
remains a key strategy for the big
drinks companies. This has seen
Pernod Ricard invest its biggest adver-
tising spend yet into Absolut. Pernod
Ricard is sticking to this strategy
despite increased worries about how
austerity cuts will hit consumer senti-
ment around the world. The group’s
top 14 brands have been growing twice
as rapidly as the other brands in its
portfolio, Bogaert argues. Nine ANALYSIS l Pernod Ricard
66
€ 63.08
enjoyed positive organic growth. 12 Oct
Looking ahead the company contin-
ues to pay down its debts and grow 64
profitability. “The best way to improve
profitability is to grow the top line,” 62
Bogaert says. “We want to do it with
premium brands and to do so we have 60
the right investment behind the right
brands in the right geographies. We 58
believe we have made a good compro- 21 Jul 10 Aug 30 Aug 17 Sep 7 Oct
mise between building long-term
value and short-term profitability.” Gilles Bogaert was appointed managing director finance in July 2009
 16 News CITYA.M. 13 OCTOBER 2010

Ultimate to snap up Ashley ANTONIO BOSSI

ARBUTHNOT
SECURITIES
tant director, then as vice president.
He was educated in Italy at
Politecnico di Milano.
Bossi has also advised on share
placements by Vane Minerals and
Xcite Energy this month.
tion closes, estimates the deal will WH Ireland’s forecast of £350,000. Last month he landed the role as
▲

FINANCIAL SERVICES
BY STEVE DINNEEN
ULTIMATE Finance Group will snap up
Ashley Commercial Finance in an
audacious £4.75m reverse takeover.
The group will pay £3.7m in cash
and £1.05m in shares.
Almost £2m of the funds were
raised by a share placing, which was
buoyed by the firm’s strong recent per-
formance.
Ultimate, which will have a market
cap of almost £8m after the transac-
help it to save £400,000 a year as well
as boosting earnings potential from
the first year.
Shares in Ultimate, an Aim-listed
provider of financial services to small
businesses, soared last month after it
reported a 196 per cent increase in full-
year pre-tax profit.
The firm, which provides compa-
nies with an alternative to bank over-
drafts, made a pretax profit of
£406,000 compared with £137,000 the
previous year. That beat house broker
Clive Garston, chairman of Ultimate
said: “We believe we will continue to
see growth in demand for our services
as banks restrict the overdraft facilities
available to SMEs.”
Analysts at WH Ireland said of the
takeover: “Ashley is a highly comple-
mentary acquisition for Ultimate.
Given the level of synergies, plus
Ashley’s additional access to funding
as part of the larger entity, we expect
the deal to be earnings enhancing
from year one.”
Arbuthnot Securities acted as nomi-
nated adviser and joint broker on the
reverse takeover. Heading up the team
was corporate finance director
Antonio Bossi.
Before joining Arbuthnot in 2002
Bossi worked for ABN Amro
Wholesale Banking for a year. From
1995 to 2001 he worked for Baring
Brothers International, first as assis-
advisor to fast growing Aim listed
international investment company
Brainspark. Other clients include
Midas Capital, Proton Power Systems
and Viridas.
Also working on the deal for
Arbuthnot was Paul Gillam, who is on
the corporate finance team. He previ-
ously worked as an analyst for UBS
Investment Bank for two years.
Davies Arnold Cooper acted as legal
advisor on the deal.

Petronas set BEST OF THE BROKERS

ANALYSIS l easyJet
460 p
444.10
12 Oct
EASYJET
EasyJet’s new brand licence is positive for
shareholders, believes Citigroup, which
NEWS | IN BRIEF
Network Rail appoints Shell man
Network Rail has appointed Malcolm
Brinded, executive director of Royal

to test market
440
gives the stock a “buy” rating. The broker Dutch Shell’s upstream international
420 business, to its board as a non-executive
says the agreement ends the legal dispute
director. Brinded joined Network Rail’s
400 between easyJet and easyGroup, addresses board yesterday but will have to be offi-
380 the governance issues and the ancillary cially approved by the rail group’s mem-
activities are no longer confined to 25 per bers through an election at the 2011

with $4bn IPO

360
cent of revenue, all positive for investors. annual general meeting. The news fol-
12 Jul 30 Jul 19 Aug 9 Sep 29 Sep
lows the appointment of Network Rail’s
incoming chief executive, David Higgins.
ANALYSIS l AXA AXA
15 € Nomura estimates that AXA can pay its FSA bans three mortgage brokers
13.34 insurance interest rate guarantees without The Financial Services Authority (FSA)
14.5 12 Oct has banned and fined three mortgage
insurance business AIA in a deal worth 14 incurring losses if rates remain low. The brokers in Sheffield and Manchester for
▲

CHEMICALS broker maintains a “buy” rating for AXA

BY HARRY BANKS
PETRONAS Chemicals is looking to
raise as much as $4bn (£2.5bn) in a
Malaysian initial public offering,
exceeding earlier estimates of over
$2bn as it hopes to tap on strong glob-
al investor demand for Asian stocks.
Asian capital markets are seeing a
flurry of multi-billion deals, helped by
a flood of liquidity, low interest rates
and strong economic growth.
The IPO for Petronas Chemicals,
owned by Malaysian state oil giant
Petronas, could become the largest
share offering in the country, exceed-
ing Maxis’s $3.3bn listing last year.
It follows Singapore wealth fund
GIC's logistic unit’s $3bn IPO and may
overlap with American International
Group’s planned listing of its Asian life
over $15bn.
“This is a big surprise and it comes
at a time when there is heated interest
for oil and gas stocks,” said Danny
Wong, chief executive of Acera Capital,
which manages about 400m Malaysia
ringgit (£81.6m) in funds. “Even
though foreign investors are not very
big on Malaysia, this IPO could spark
more interest and even then I foresee a
lot of local institutional players going
for this latest proxy of Petronas.”
Petronas Chemicals – which manu-
factures olefins and polyolefins, fertil-
izers, industrial and speciality
chemicals – will begin “pre-market-
ing” its IPO today with formal investor
roadshows slated to begin on 27
October.
The deal is expected to be priced on
12 November.
13.5 committing fraudulent activity. On top
and highlights the existence of €9.7bn of of the ban, the financial watchdog fined
13
surplus policyholder capital in AXA's capi- Mark Bates and Alan Hill of Pace
12.5
tal structure, which could be used to Financial Management £414,683.
12 Meanwhile, Waqarul Hassan Shah of KS
absorb losses caused by low interest rates. Financial Services in Manchester was
12 Jul 30 Jul 19 Aug 8 Sep 28 Sep also banned by the FSA for “knowingly
ANALYSIS l Petrofac PETROFAC submitting false income figures”.
1,411.00 Goldman Sachs maintains its 12-month
1,450 p 12 Oct
sum-of-the-parts-based price target of
Accountants in demand
It’s a good time to be a newly-qualified
1,400
1812p for Petrofac and rates the stock accountant, with organisations seeking
1,350 “neutral”. The broker says the key down- to drive change creating more posts.
side risks include a lower crude price and According to recruiter Robert Walters,
1,300 financial accountants, credit control and
any execution problems in the delivery of billing specialists and assistant manage-
1,250 large contracts. Upside risks include fur- ment accountants were all in demand
ther significant contract awards. during the third quarter. Investment
12 Jul 30 Jul 19 Aug 9 Sep 29 Sep banks are keen to find accountants with
To appear in Best of the Brokers email your research to notes@cityam.com technical knowledge, while demand for
director level professionals was also high.

Caparo Energy raises £50.2m to fund Standard Life Investments

wind farms on first day of Aim dealings wins mandate from UBS
market value of about £188.2m. The 2,000 megawatts by 2017. $8bn of assets under management
▲

MEDIA FUND MANAGEMENT

WIND power investment company
Caparo Energy yesterday raised
£50.2m to finance wind farms in
India with a successful listing on
London’s junior stock market.
Caparo placed 43,636,000 new
shares on the Alternative Investment
Market (AIM), representing 26.7 per
cent of its share capital and giving it a
shares ended the day at 117.5p.
Strand Hanson acted as nominated
adviser on the listing and Mirabaud
Securities was the group’s broker.
The Guernsey-based company
hopes to buy and develop a portfolio
of wind farms able to produce up to
5,000 megawatts of power. It plans to
develop farms able to generate 3,000
megawatts by 2016 and a further
Caparo has struck a deal with wind
turbine generator maker Suzlon
Energy for the first phase and is in
advanced talks to acquire land and
turbines for phase two.
The Indian government plans to
double the country’s power genera-
tion to 342 gigawatts and to more
than treble its clean energy genera-
tion to 54 gigawatts by 2017.
UBS has hired Standard Life
Investments to manage quarter of one
of its funds worth $116.5m (£73.8m).
Standard Life said UBS Pace Select
Advisors Trust had picked it to run 25
per cent of its UBS Pace Alternative
Strategies Investments fund. The
Global Absolute Return Strategies
(GARS) portfolio, which has more than
and more than 260 institutional
clients, will manage the fund.
Managing director of UBS Global
Asset Management Americas, Mabel
Lung, said: “We believe we have fur-
ther enhanced the potential of the
Pace Alternative Strategies fund to gen-
erate investment returns more inde-
pendent of the equity and fixed
income markets.”
CITYA.M. 13 OCTOBER 2010 News 17

Drivers face record rise in premiums NEWS | IN BRIEF

figure for the three cheapest car
insurance quotes now stands at
£2,457, with men aged 17-22 suffering
a 47 per cent hike in just one year.
The AA findings follow a recent
YouGov SixthSense market report on
motor insurance. The report shows
that premium rises are coming off
the back of a recessionary period
BRANDINDEX where many consumers were forced
STEPHAN SHAKESPEARE to change their policy for both cover
and cost related reasons. Fifty-seven
per cent of car insurance holders who
insurance policy cancellations record-
ed in the survey were carried out
without the policyholder having
another policy lined up; suggesting
the importance of lifestage and
lifestyle changes, the abandonment
of car ownership and the possibility
of driving without insurance.
The report also suggests that pre-
mium increases could be attributed
to profligate strategies adopted by
insurance companies in recent years.
It argues that during this period
would appear to have come back to
bite insurers and consumers alike.
However, insurers point to the ris-
ing cost of car repairs at a rate of
between 7-10 per cent per year as one
of the factors driving up premium
rates. Moreover, the number and
value of personal injury claims being
made following car accidents has
been rising, despite an overall drop in
accident numbers. Insurers argue
they have to build reserves in order to
deal with the proliferation and inflat-
Google in wind farm venture
Google has thrown its financial clout
behind an ambitious $5bn (£3.16bn)
proposed electric transmission line
intended to spark investment in new
wind farms off the heavily populated US
East Coast. The move, which comes at a
time when about a dozen wind projects
have been proposed off the eastern
United States but none have been built,
marks the internet search giant's latest
move away from its core business, join-
ing investments in solar energy and a
plan to develop a car that will drive
itself. Japan's Marubeni Corp and New

T
HIS week the AA recorded the
highest rise in car insurance
premiums since it began report-
ing market data. The average
say they cancelled a policy in the past, insurers often underwrote premiums ed cost of injury claims, thereby York investment firm Good Energies are
say they did so during the recession. in order to expand market share and necessitating higher premium rates. joining in financing the planned 350-mile
In addition, the graph shows that policy volume at the expense of prof- Stephan Shakespeare is founder and underwater electric cable, which will be
61 per cent of comprehensive motor it – an unsustainable gambit that chief executive of YouGov. led by Trans-Elect.

Alexander David bid PRIVATE JET PROFITS TAKE OFF

for Hoodless caves in

that Hoodless has failed to agree a parties.
▲

FINANCIAL SERVICES
BY VICTORIA BATES
TAKEOVER talks between small-cap
brokers Alexander David and
Hoodless Brennan have collapsed,
the two firms said yesterday.
Shares in Alexander David, led by
chairman Michael Hicks and chief
executive David Scott, have been sus-
pended on Aim since 6 August, when
it informed the market that it was
mulling an acquisition of Hoodless.
But sources close to the discussions
said yesterday that after lengthy
deliberation, Alexander David had
decided against proceeding, with
matters not helped by concerns over
the current tough environment for
the small cap broking market.
The news marks the second time
takeover of its business in just five
months. Back in May, rival Astaire
was forced to shelve its plans for a
£3.6m acquisition of Hoodless after
discovering a £1.4m black hole on the
balance sheet of its own retail stock-
broking subsidiary, Rowan
Dartington.
Hoodless is keen to continue in its
pursuit of a deal and is thought to
have already received preliminary
expressions of interest from different
Alexander David is led
by chief executive
David Scott, formerly
director of corporate
broking at ING Barings
It is just one of a number of small-
cap broking players sniffing around
consolidation deals as the numerous
smaller firms in the sector struggle to
cope with ever-declining levels of
business from more cost-conscious
growth companies in the wake of the
financial crisis.
Last month, larger rival Evolution
Group expressed a possible interest in
acquiring Panmure Gordon, though
it stressed that no formal discussions
had taken place and that an offer
may not be forthcoming.
Panmure Gordon, for its part,
appeared resistant to the idea of a PRIVATE aircraft broker Air Partner has posted before tax profits of £3.5m for the year
deal, insisting it has a strong foot- ending 30 July 2010, putting the figure ahead of market expectations of £3m. The group,
print, significant growth potential said it is fully committed to its broking business, which has remained profitable through
and a clear strategy “as an independ- the recession. Air Partner said that it has completely closed its Private Jet Operating
ent entity”. Company, which posted £4.4m in losses for the year. Picture: GETTY

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

Virgin Atlantic
The airline has appointed its chief financial offi-
cer Julie Southern as chief commercial officer,
a newly-created board position.
Southern will now take responsibility for all
aspects of growing the airline. She originally
joined Virgin Atlantic a decade ago from
Porsche Cars Great Britain, where she was
group finance director.
Current finance director Tim Livett has been
promoted to the chief financial officer role.
Jefferies head of European telecommunications
The investment bank has hired Michael investment banking, based in the firm’s
Herbst as a managing director and London office.
Herbst has over 14 years of experi-
ence in the sector and joins from UBS,
where he spent 11 years, most recently
as a managing director in the invest-
ment banking team, focused on cover-
age of the European telecoms and
media sectors. He also previously
worked at Dresdner Kleinwort Benson.
Sovereign Capital
The private equity group has appointed
Luke Kingston, Jonathan Marlow,
Jonathan Kay and Ross Coull to its deal
team, and Elizabeth Buckle as market-
ing and communications manager.
Kingston joins from Ernst & Young,
while Marlow was previously at
Barclays Ventures, Kay at Lloyds and
Coull at Booz & Company. Buckle
moves over from Impetus Trust.
BNY Mellon
The bank’s alternative investment serv-
ices (AIS) division, a hedge fund service
provider with over $350bn in assets
under administration, has named
Marina Lewin as head of global sales
and Steve Farlese as head of global
service delivery.
Both will be based in New York.
Lewin joined BNY Mellon in 2000, hav-
ing previously held senior roles at JP
Morgan and Deutsche Bank, while
Farlese has been at the firm for 15
years, formerly responsible for manag-
ing unit investment trust services and
exchange traded funds.
Link Financial Group
The European receivables management
company has appointed Lindsay Town
as a non-executive director.
Town previously held senior positions
at Lloyds Leasing and
PricewaterhouseCoopers, prior to join-
ing Halifax to lead the asset finance
business. He later held a divisional
board level role within the combined
HBOS group, before retiring in April
2009 to set up a specialist asset
finance consulting business.

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
 Markets&Investment
18 CITYA.M. 13 OCTOBER 2010

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
3i . . . . . . . . . . . . . . . . . . . . . . . .294.70 +0.70 310.00 246.90 Compass . . . . . . . . . . . . . . . . . .525.00 +7.00 574.50 382.00 Jupiter Fnd Mgmt . . . . . . . . . . . .256.30 –2.30 264.00 180.00 Sage . . . . . . . . . . . . . . . . . . . . . .271.60 +1.90 286.80 208.20
3i Infrastructure . . . . . . . . . . . . . 114.00 +0.20 115.00 97.00 Cookson . . . . . . . . . . . . . . . . . . .558.00 –4.00 616.00 347.60 Kazakhmys . . . . . . . . . . . . . . . .1375.00 –31.00 1634.00 955.50 Sainsbury(J) . . . . . . . . . . . . . . . .389.40 –0.50 397.00 307.60
A.B. Foods . . . . . . . . . . . . . . . .1048.00 +6.00 1096.00 790.00 Croda Intl . . . . . . . . . . . . . . . . .1497.00 — 1540.00 692.00 Kesa Electricals . . . . . . . . . . . . .150.90 +0.90 162.00 98.45 Schroders . . . . . . . . . . . . . . . . .1479.00 –9.00 1493.00 1056.00
Aberdeen Asset Man . . . . . . . . . .169.80 –0.90 172.20 111.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .522.00 –1.00 539.00 381.00 .LQJÀVKHU . . . . . . . . . . . . . . . . . .231.70* –1.50 255.00 196.50 Schroders N/V. . . . . . . . . . . . . . 1185.00 –5.00 1192.00 864.00
Admiral. . . . . . . . . . . . . . . . . . .1608.00* –16.00 1695.00 1003.00 Dana Petroleum . . . . . . . . . . . .1799.00 –2.00 1817.00 968.50 Ladbrokes . . . . . . . . . . . . . . . . .136.60* –4.50 164.60 114.60 Scot. & Sthrn Energy. . . . . . . . . 1136.00 –1.00 1206.00 1006.00
Aegis . . . . . . . . . . . . . . . . . . . . .126.30 +0.60 137.30 103.10 Davis Service . . . . . . . . . . . . . . .413.10* +1.00 442.30 356.00 Lamprell . . . . . . . . . . . . . . . . . . .356.10* +11.10 372.30 157.30
Afren . . . . . . . . . . . . . . . . . . . . . 117.70 –0.70 119.10 76.50 Debenhams . . . . . . . . . . . . . . . . .70.65 +1.70 90.00 51.95 Lancashire Hldgs . . . . . . . . . . . .570.00* –3.50 579.50 416.70 Scottish Mortgage. . . . . . . . . . . .644.00 –5.50 656.00 475.00
African Barr Gold . . . . . . . . . . . .609.00 –3.50 685.00 520.50 Derwent London . . . . . . . . . . . .1565.00* –15.00 1633.00 1174.00 Land Securities . . . . . . . . . . . . . .672.50* –1.50 743.50 543.00 SEGRO . . . . . . . . . . . . . . . . . . . .292.00 +1.40 389.90 244.00
Aggreko . . . . . . . . . . . . . . . . . .1607.00* +6.00 1639.00 719.00 Dexion Absolute . . . . . . . . . . . . .138.80 –0.50 148.00 131.20 Legal & General . . . . . . . . . . . . .103.30 –0.40 106.60 69.05 Serco . . . . . . . . . . . . . . . . . . . . .614.00* +3.50 656.50 491.20
Alliance Trust . . . . . . . . . . . . . . .342.40* –1.60 352.70 292.80 Diageo . . . . . . . . . . . . . . . . . . . 1124.00* +11.00 1176.00 930.50 Lloyds Banking Gp . . . . . . . . . . . .72.65 –1.15 79.15 45.30 Severn Trent . . . . . . . . . . . . . . .1345.00 +13.00 1404.00 939.50
AMEC . . . . . . . . . . . . . . . . . . . . .995.00 –1.50 1024.00 728.00 Dimension Data . . . . . . . . . . . . . 119.70 –0.10 125.50 68.75 Logica . . . . . . . . . . . . . . . . . . . .130.10* –0.60 149.10 100.80 Shaftesbury . . . . . . . . . . . . . . . .453.10 –2.70 462.30 348.00
Amlin . . . . . . . . . . . . . . . . . . . . .405.00 –1.50 437.60 350.80 Dixons Retail . . . . . . . . . . . . . . . .27.30 –0.20 39.75 23.07 London Stk Exchange . . . . . . . . .681.00 –0.50 949.50 540.50 Shire. . . . . . . . . . . . . . . . . . . . .1448.00 +11.00 1532.00 999.00
Anglo American . . . . . . . . . . . .2736.50 +4.00 3015.50 2144.00 Domino’s Pizza . . . . . . . . . . . . . .459.80 –8.10 484.70 278.20 Lonmin . . . . . . . . . . . . . . . . . . .1770.00 –38.00 2198.00 1344.00 Smith & Nephew . . . . . . . . . . . . .569.00 –3.50 700.50 525.50
Antofagasta . . . . . . . . . . . . . . .1249.00 –19.00 1344.00 755.50 Drax . . . . . . . . . . . . . . . . . . . . . .378.30* –7.60 479.30 321.50 Man . . . . . . . . . . . . . . . . . . . . . .256.80 –0.20 373.60 199.60 Smith(Ds) . . . . . . . . . . . . . . . . . .161.70 –0.80 164.50 103.00
Aquarius Platinum . . . . . . . . . . .364.10 –12.90 490.00 211.50 Dunelm . . . . . . . . . . . . . . . . . . . .448.80 +8.70 449.90 312.20 Marks & Spencer. . . . . . . . . . . . .409.40 +3.70 415.00 321.90 Smiths . . . . . . . . . . . . . . . . . . .1260.00 +5.00 1280.00 885.00
ARM Holdings . . . . . . . . . . . . . . .375.70 –5.50 419.50 143.00 Easyjet . . . . . . . . . . . . . . . . . . . .444.90 –9.40 499.90 339.80 Meggitt . . . . . . . . . . . . . . . . . . . .309.00 +4.20 331.00 229.80 SOCO Intl . . . . . . . . . . . . . . . . . .369.40 –85.30 510.00 348.80
Ashmore . . . . . . . . . . . . . . . . . . .356.20 –4.40 361.10 215.00 Edinburgh Inv Tst . . . . . . . . . . . .429.00 –0.20 436.00 338.00 Melrose . . . . . . . . . . . . . . . . . . .292.10 +1.20 294.00 160.00 Spectris . . . . . . . . . . . . . . . . . . 1105.00 — 1125.00 653.00
Astrazeneca . . . . . . . . . . . . . . .3320.50 +26.00 3389.50 2668.00 Electrocomponents . . . . . . . . . . .243.00 –1.80 251.00 144.80 Mercantile IT . . . . . . . . . . . . . . . .975.00* +1.50 1002.00 822.50
Atkins(Ws) . . . . . . . . . . . . . . . . .765.00 –2.00 801.00 532.50 EnQuest . . . . . . . . . . . . . . . . . . .131.00 +3.10 132.50 87.35 Michael Page Intl. . . . . . . . . . . . .482.80 +2.50 483.30 316.70 Spirax-Sarco Eng . . . . . . . . . . .1819.00 — 1859.00 1060.00
Autonomy Corp . . . . . . . . . . . .1444.00 –41.00 2012.00 1278.00 Essar Energy . . . . . . . . . . . . . . .499.10 +15.70 510.00 358.50 Micro Focus . . . . . . . . . . . . . . . .386.00 +14.80 550.00 272.20 Spirent Comms . . . . . . . . . . . . . .143.00 –1.40 146.30 86.50
Aveva . . . . . . . . . . . . . . . . . . . .1401.00 +10.00 1504.00 856.50 Eurasian Nat Res . . . . . . . . . . . .914.00 –12.00 1276.00 801.00 Millen & Copthorne . . . . . . . . . . .539.50 +1.00 547.00 321.40 Sports Direct Intl . . . . . . . . . . . . .146.90 +2.60 148.00 89.85
Aviva . . . . . . . . . . . . . . . . . . . . .395.00* –4.50 473.50 290.20 Euromoney Inst Inv . . . . . . . . . . .605.00 +7.00 630.00 371.80 Misys . . . . . . . . . . . . . . . . . . . . .289.40 –0.80 298.00 196.60 SSL Intl . . . . . . . . . . . . . . . . . . . 1157.00 — 1190.00 616.00
Babcock International . . . . . . . . .580.00 +3.00 660.50 489.00 Experian . . . . . . . . . . . . . . . . . . .680.50 –4.00 698.50 527.00 Mitchells & Butlers . . . . . . . . . . .301.10 –0.50 343.90 228.30 St James’s Place . . . . . . . . . . . . .275.30 –1.00 298.00 203.40
BAE Systems . . . . . . . . . . . . . . .355.00 –0.80 389.90 288.10 Ferrexpo . . . . . . . . . . . . . . . . . . .337.20 +3.20 396.20 140.70 MITIE . . . . . . . . . . . . . . . . . . . . .193.90 –0.80 257.00 187.60 Stagecoach. . . . . . . . . . . . . . . . .182.50 –1.00 204.90 137.00
Balfour Beatty . . . . . . . . . . . . . . .263.60* –0.60 304.80 228.60 FirstGroup . . . . . . . . . . . . . . . . .369.70 –3.00 428.40 331.20 Mondi . . . . . . . . . . . . . . . . . . . . .538.50 –2.50 545.50 304.70 Standard Chartered . . . . . . . . . .1908.50 +38.50 1946.00 1366.50
Barclays . . . . . . . . . . . . . . . . . . .294.75 –3.55 394.25 253.40 Foreign & Col Inv Tst. . . . . . . . . .292.10 +0.50 297.20 248.70 Monks Inv Tst . . . . . . . . . . . . . . .327.90 –1.00 329.20 265.00 Standard Life . . . . . . . . . . . . . . .231.00* –1.20 237.00 170.00
Barratt Development . . . . . . . . . . .90.80 –2.65 172.50 89.10 Fresnillo . . . . . . . . . . . . . . . . . .1241.00 –1.00 1333.00 647.00 Morrison Wm . . . . . . . . . . . . . . .296.90* –4.20 307.10 255.00 SuperGrp . . . . . . . . . . . . . . . . . 1118.00 +28.00 1312.00 499.00
BBA Aviation . . . . . . . . . . . . . . .191.40* –3.10 220.00 145.90 G4S . . . . . . . . . . . . . . . . . . . . . .256.60* +2.70 285.70 228.40 Murray Intl Tst . . . . . . . . . . . . . . .914.00 –0.50 922.00 720.00 TalkTalk . . . . . . . . . . . . . . . . . . .138.10 –3.40 153.80 106.60
Bellway. . . . . . . . . . . . . . . . . . . .579.50 –13.50 842.50 510.00 Genesis Emerging Mkts Fd . . . . .521.00 –2.50 527.00 370.00 National Express. . . . . . . . . . . . .233.70 –0.30 258.60 155.86 Talvivaara Mining . . . . . . . . . . . .524.00 –8.50 547.50 341.40
Berkeley . . . . . . . . . . . . . . . . . . .825.50 –11.00 949.50 735.00 GKN . . . . . . . . . . . . . . . . . . . . . .176.90 +0.40 178.30 100.40 National Grid . . . . . . . . . . . . . . .572.50 +2.50 607.65 474.80 Tate & Lyle . . . . . . . . . . . . . . . . .489.10 –3.70 509.00 388.00
BG . . . . . . . . . . . . . . . . . . . . . . 1144.00 –13.00 1248.00 966.90 GlaxoSmithKline . . . . . . . . . . . .1306.00 +7.50 1347.00 1088.00 Next . . . . . . . . . . . . . . . . . . . . .2219.00 –12.00 2360.00 1733.00
BHP Billiton . . . . . . . . . . . . . . .2127.50 –21.50 2346.00 1618.50 Great Portland Estates . . . . . . . .352.30 –1.50 368.60 236.60 Northumbrian Water . . . . . . . . . .336.90 +2.40 353.00 225.20 Taylor Wimpey . . . . . . . . . . . . . . .26.18 –0.50 46.34 24.29
BlackRock Mining . . . . . . . . . . . .659.00 –5.50 672.50 475.00 Greene King . . . . . . . . . . . . . . . .421.60 +0.30 484.00 372.50 Ocado Grp . . . . . . . . . . . . . . . . .128.40 –0.50 169.00 127.00 Telecity . . . . . . . . . . . . . . . . . . . .500.00 –4.00 546.00 323.50
BlueBay . . . . . . . . . . . . . . . . . . .352.50 –1.20 393.00 251.00 Halfords . . . . . . . . . . . . . . . . . . .400.00 +2.00 562.50 370.10 Old Mutual . . . . . . . . . . . . . . . . .142.30 –0.10 143.70 95.30 Templeton Emrg Mkts . . . . . . . . .640.50 –0.50 648.00 455.00
Bluecrest Allblue GBP . . . . . . . . .169.70 +0.20 170.00 150.10 Halma . . . . . . . . . . . . . . . . . . . . .332.30 –5.70 340.60 218.40 Partygaming . . . . . . . . . . . . . . . .285.20 +1.20 339.70 205.80 Tesco . . . . . . . . . . . . . . . . . . . . .437.10 –2.55 454.90 368.40
Booker . . . . . . . . . . . . . . . . . . . . .49.79 –0.56 51.60 37.50 Hammerson . . . . . . . . . . . . . . . .415.20 +0.50 460.30 332.20 Pearson . . . . . . . . . . . . . . . . . .1005.00 +5.00 1069.00 784.00 Thomas Cook . . . . . . . . . . . . . . .190.10 +0.50 277.20 167.50
BP . . . . . . . . . . . . . . . . . . . . . . .429.15 –3.20 658.20 296.00 Hargreaves Lansdown . . . . . . . .450.00 +2.50 478.00 259.40 Pennon . . . . . . . . . . . . . . . . . . . .599.50 +12.50 616.50 440.40 Travis Perkins . . . . . . . . . . . . . . .845.00 –9.50 915.00 647.50
Brit Insurance . . . . . . . . . . . . . .1025.00 –8.00 1045.00 709.00 Hays . . . . . . . . . . . . . . . . . . . . . .121.20 –0.20 121.80 82.50 Persimmon . . . . . . . . . . . . . . . . .369.40 –8.80 520.00 335.90 TUI Travel . . . . . . . . . . . . . . . . . .224.20 +0.90 313.90 189.20
British Airways . . . . . . . . . . . . . .270.80 +2.40 272.40 172.40 Henderson . . . . . . . . . . . . . . . . .130.60 –2.60 157.80 112.10 Petrofac . . . . . . . . . . . . . . . . . .1414.00* –14.00 1446.00 900.00 Tullett Prebon . . . . . . . . . . . . . . .410.10 –3.70 436.20 261.20
British Amer. Tob . . . . . . . . . . . 2411.00 +22.50 2439.00 1832.00 Heritage Oil. . . . . . . . . . . . . . . . .345.30 –6.90 585.00 295.90 Petropavlovsk . . . . . . . . . . . . . . .999.00* –0.50 1370.00 834.00 Tullow Oil . . . . . . . . . . . . . . . . .1285.00* –15.00 1375.00 979.50
British Empire Tst . . . . . . . . . . . .484.00 +0.40 485.50 338.50 Hikma Pharma . . . . . . . . . . . . . .720.50* +5.50 813.00 452.20 Phoenix Group . . . . . . . . . . . . . .666.00* –11.00 775.00 550.50 UK Commercial Prop. . . . . . . . . . .77.80 –0.70 84.90 71.00
British Land . . . . . . . . . . . . . . . .491.60* +2.10 515.00 416.00 Hiscox . . . . . . . . . . . . . . . . . . . .347.30 –1.80 371.60 299.60 Premier Farnell . . . . . . . . . . . . . .280.00* –1.10 283.80 140.60 Ultra Electronics . . . . . . . . . . . .1764.00 +17.00 1774.00 1198.00
Britvic. . . . . . . . . . . . . . . . . . . . .459.30 +1.80 518.00 341.50 Hochschild Mining . . . . . . . . . . .473.10 +8.10 497.80 220.00 Premier Oil . . . . . . . . . . . . . . . .1664.00 –42.00 1717.00 984.00 Unilever . . . . . . . . . . . . . . . . . .1798.00 +4.00 2024.00 1662.00
Brown(N.) . . . . . . . . . . . . . . . . . .253.00 +10.20 284.30 204.80 Home Retail . . . . . . . . . . . . . . . .215.00 –0.50 326.30 201.70 Provident Financial . . . . . . . . . . .818.00 –9.50 986.00 795.00
BSkyB . . . . . . . . . . . . . . . . . . . .706.00 –3.00 732.00 521.00 Homeserve . . . . . . . . . . . . . . . . .465.00 –1.00 502.00 422.00 Prudential . . . . . . . . . . . . . . . . . .618.50 –10.00 665.00 475.70 United Utilities . . . . . . . . . . . . . .586.50 –0.50 620.00 429.00
BT . . . . . . . . . . . . . . . . . . . . . . .142.90 –4.00 153.00 108.40 HSBC Hldgs . . . . . . . . . . . . . . . .663.20 +1.30 766.80 595.20 PZ Cussons . . . . . . . . . . . . . . . .378.00 –1.00 383.00 231.70 Utd Business Media . . . . . . . . . .614.00* –3.50 656.50 408.30
Bunzl . . . . . . . . . . . . . . . . . . . . .767.00 +3.50 784.50 614.00 Hunting . . . . . . . . . . . . . . . . . . .628.50 –11.50 661.00 429.10 Qinetiq . . . . . . . . . . . . . . . . . . . .109.00 –0.20 179.10 103.50 Vedanta Resources . . . . . . . . . .2216.00 +1.00 2967.00 1795.00
Burberry . . . . . . . . . . . . . . . . . .1039.00 +1.00 1065.00 513.00 ICAP . . . . . . . . . . . . . . . . . . . . . .457.60 –4.00 478.30 291.70 Randgold Resources. . . . . . . . .6435.00 –20.00 6755.00 3930.00 Victrex . . . . . . . . . . . . . . . . . . .1300.00 –2.00 1347.00 726.50
Cable & Wire Comms . . . . . . . . . .55.25 –1.05 150.00 53.00 IG . . . . . . . . . . . . . . . . . . . . . . . .546.00* +4.50 548.50 291.00 Reckitt Benckiser . . . . . . . . . . .3436.00 +33.00 3667.00 2971.00 Vodafone . . . . . . . . . . . . . . . . . .162.10 –0.45 164.95 126.50
Cable & Wire Wwide . . . . . . . . . . .73.65 –2.15 94.80 60.05 Imagination Tech Gp . . . . . . . . . .412.00 –1.00 415.90 188.10 Reed Elsevier . . . . . . . . . . . . . . .549.50 –0.50 566.00 454.60 Weir . . . . . . . . . . . . . . . . . . . . .1563.00* –17.00 1614.00 639.00
Cairn Energy. . . . . . . . . . . . . . . .429.30 –11.90 497.60 306.80 IMI . . . . . . . . . . . . . . . . . . . . . . .810.50* –3.00 819.00 410.00 Regus . . . . . . . . . . . . . . . . . . . . . .85.00 –0.50 125.50 64.05 Wellstream Hldgs . . . . . . . . . . . .755.00* –5.00 810.00 429.70
Caledonia Invs . . . . . . . . . . . . .1690.00 –2.00 1759.00 1496.00 Imperial Tobacco. . . . . . . . . . . .1918.00 +13.00 2159.00 1728.00 Renishaw . . . . . . . . . . . . . . . . .1084.00* –4.00 1098.00 479.00 WH Smith . . . . . . . . . . . . . . . . . .454.90 –8.70 551.00 392.20
Capita . . . . . . . . . . . . . . . . . . . . .787.00* –3.00 829.50 693.00 Inchcape. . . . . . . . . . . . . . . . . . .329.30 +3.00 347.00 235.00 Rentokil Initial . . . . . . . . . . . . . . .100.80 –0.20 140.20 91.15 Whitbread . . . . . . . . . . . . . . . . .1674.00 –10.00 1697.00 1215.00
Capital & Counties . . . . . . . . . . .140.70* +3.70 140.70 99.60 Informa . . . . . . . . . . . . . . . . . . . .423.00 –2.50 439.40 263.30 Resolution . . . . . . . . . . . . . . . . .248.20 — 264.80 220.10 William Hill . . . . . . . . . . . . . . . . .166.90 –4.60 217.80 160.50
Capital Shopping Centres . . . . . .385.00* –1.40 533.50 300.10 Inmarsat . . . . . . . . . . . . . . . . . . .634.50* –9.50 831.00 528.50 Rexam . . . . . . . . . . . . . . . . . . . .320.50 +3.30 348.80 271.40 Witan Inv Tst . . . . . . . . . . . . . . . .473.80 –2.20 487.00 396.30
Carillion . . . . . . . . . . . . . . . . . . .329.70* +1.70 361.90 272.00 Intercontl Hotels . . . . . . . . . . . . 1158.00 –1.00 1244.00 762.50 Rightmove . . . . . . . . . . . . . . . . .760.00 +2.00 796.50 456.90
Carnival . . . . . . . . . . . . . . . . . .2605.00 +13.00 2937.00 1876.00 Intermediate Capital . . . . . . . . . .315.70 +1.20 316.20 233.50 Rio Tinto . . . . . . . . . . . . . . . . . .3862.00 –30.50 4104.00 2631.00 Wolseley . . . . . . . . . . . . . . . . . .1557.00 –8.00 1742.00 1155.00
Catlin . . . . . . . . . . . . . . . . . . . . .332.20 –2.60 394.60 303.20 Intertek . . . . . . . . . . . . . . . . . . .1856.00 +12.00 1863.00 1136.00 RIT Capital Partners . . . . . . . . . 1147.00 +3.00 1215.00 940.00 Wood Group (John). . . . . . . . . . .440.60 –9.30 450.90 279.60
Centamin Egypt . . . . . . . . . . . . .171.80 –0.20 194.40 103.50 Intl Personal Fin . . . . . . . . . . . . .289.30 +1.00 291.90 181.40 Rolls Royce . . . . . . . . . . . . . . . .606.50 +4.00 631.50 434.50 WPP . . . . . . . . . . . . . . . . . . . . . .705.00* +3.00 744.00 528.00
Centrica . . . . . . . . . . . . . . . . . . .330.00* –1.10 347.00 236.30 Intl Power . . . . . . . . . . . . . . . . . .402.00* –0.50 407.70 248.20 Rotork . . . . . . . . . . . . . . . . . . .1838.00 +19.00 1873.00 1101.00 Xstrata . . . . . . . . . . . . . . . . . . .1245.00 –33.50 1344.50 832.50
Charter Intl . . . . . . . . . . . . . . . . .750.00 –4.50 855.50 563.50 Invensys . . . . . . . . . . . . . . . . . . .305.90 –2.20 350.30 224.90 Royal Bank Of Scot . . . . . . . . . . . .47.60 +0.10 58.95 28.25 LONDON TOP 250 BY MARKET CAPITALISATION
Chemring . . . . . . . . . . . . . . . . .3008.00 –28.00 3711.00 2551.00 Investec . . . . . . . . . . . . . . . . . . .508.50 –4.00 565.00 411.50 Royal Dutch Shell A . . . . . . . . .1959.00 –13.00 2068.50 1621.00
Close Bros . . . . . . . . . . . . . . . . .753.50* +3.50 803.50 657.00 ITV . . . . . . . . . . . . . . . . . . . . . . . .63.70 –0.25 71.75 41.04 Royal Dutch Shell B . . . . . . . . .1913.00 –4.00 1997.50 1550.00 * Ex-Dividend † Suspended
Cobham . . . . . . . . . . . . . . . . . . .230.50 –0.50 278.60 205.50 Jardine Lloyd Thompson. . . . . . .566.00 –13.50 604.50 420.70 RSA Insurance . . . . . . . . . . . . . .133.20* –0.90 142.00 114.10
COLT Group . . . . . . . . . . . . . . . . 119.00 –0.10 144.20 107.70 Johnson Matthey . . . . . . . . . . .1814.00 –18.00 1844.00 1356.00 SABMiller . . . . . . . . . . . . . . . . .2040.00 +19.50 2090.00 1571.00 www.interactivedata.com

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At the close, the FTSE 100 index SSelected
elec ted Austin
Austin Reed
Reed branded
branded merchandise
merchandise only.
only. *Cheapest
*Cheapest item
item half
half price.
price. Offers
Of fers online
online may
may vary.
var y. with cheap cash “before long” to fur-
was down 10.81points, or 0.2 per cent, ther boost growth.
at 5,661.59, having earlier touched its The minutes from the Fed’s 21
lowest level in a week below the 5,600 September meeting served as another
level. The Fed said after its 21 September Crude prices slipped for a second Chartered, up 2.1 per cent, as traders strong signal for a stock market that
Miners Xstrata, Kazakhmys, and meeting it was prepared to provide day on yesterday as Saudi Arabia sig- cited talk that JPMorgan was interest- has surged for weeks on rising hopes
Lonmin were among the top blue more support for the economy but nalled OPEC would maintain current ed in making a takeover approach. for more Fed action. The S&P 500
chip fallers, down 2.1 to 2.6 per cent, expressed concern about low infla- production levels at the group’s meet- index is up 11.5 per cent since the
as metal prices eased with a strength- tion. ing and as the dollar rallied. ANALYSIS l FTSE start of September.
ening dollar on short-covering as US blue chips were 0.2 per cent Oil majors BP and Royal Dutch
5661.59 Shares of drilling contractors rose
5,700 12 Oct
investors awaited likely indications lower ahead of the Federal Open Shell both shed 0.7 per cent. after the Obama administration lifted
there will be fresh quantatitive easing Market Committee (FOMC) minutes Oil exploration stocks were dealt a its ban on deepwater drilling seven
from the US Federal Reserve. release, also impacted by China’s lat- sobering blow as mid cap Soco 5,500 weeks ahead of schedule.
“The market remains nervous as est bid to cool down the world’s sec- International plunged 18.8 per cent The Dow Jones industrial average
likely quantitative easings, while pro- ond biggest economy. on news it would abandon its 5,300
gained 10.06 points, or 0.09 percent,
viding a positive boost, will reinforce The Chinese government raised Vietnamese appraisal well. to 11,020.40. The Standard & Poor’s
worries over the global recovery, rais- bank reserve requirements by 50 Blue chip Cairn Energy lost 2.7 per 500 Index rose 4.45 points, or 0.38 per
ing demand concerns for commodi- basis points, the fourth hike this year, cent. 5,100 cent, to 1,169.77. The Nasdaq
ties,” said Mic Mills, head of electronic due to excessive lending, an official Banks were among the top blue Composite Index added 15.59 points,
trading at ETX Capital. Chinese newspaper reported. chips gainers led by Standard 12 Jul 30 Jul 19 Aug 9 Sep 29 Sep or 0.65 per cent, to 2,417.92.
CITYA.M. 13 OCTOBER 2010
From Japan to
Oman: the life
of Mark Mobius
The emerging market
guru tells Jessica Mead
of time on the road
E
MERGING markets may be the most
popular investment flavour of the
past decade but Franklin
Templeton’s charismatic and distinc-
tive guru Mark Mobius can safely lay claim
to having been one of the first to spot the
opportunities these countries offered.
Countries like Hong Kong and Japan
were deemed emerging markets when
Mobius started looking at them more
than 30 years ago and the rapid pace of
development since then has surprised
him: “Not in my wildest dreams did I
think the globe would be what it is today.”
In 1987, when Mobius joined Templeton,
there were just three emerging markets:
Hong Kong, Singapore and the Philippines.
Today, he is executive chairman of the
Templeton Emerging Markets team, which
has around 60 people based in 17 different
countries across the world and manages
£18.8bn in assets. Consequently, Mobius
and his team – which he says is like a fami-
ly – are always travelling to different coun-
tries. A self-confessed nomad, the
73-year-old spends more than 300 days on
the road each year and reckons he has
clocked up over 30m miles of flight time.
When we speak by telephone, he is back
at base in Singapore for a few days.
However, he had just returned from
Turkey – where Templeton has had a pres-
ence for some time and which Mobius sees
as a valuable investment opportunity –
and was heading off to Malaysia and then
China within days. With his team, he tries
to conduct as many site visits as possible
because he feels that being on the ground
is the best way to get under the skin of a
company and a country. While he can use
the company’s private jet if he is pressed
for time, he prefers to travel by commercial
jet partly to get a more realistic feel but
also for a spot of airport shopping.
Mobius’s time on the road is unlikely to
be reduced; the emergence of frontier mar-
kets such as Kazakhstan, Nigeria and
Kenya as an investment destination is put-
ting new countries and companies on the
map. Unsurprisingly for a seasoned emerg-
ing market investor, Mobius is not fazed
by the challenges that these countries cre-
ate. “There’s always a way into these coun-
tries; I love going into some of the more
difficult ones,” he says. But that doesn’t
FUND MANAGEMENT NEWS
BY JESSICA MEAD
HEARTHSTONE TO LAUNCH PROPERTY FUND
Hearthstone Investments yesterday
announced that it would launch a residential
property fund in the first quarter of 2011 and
has hired David Gibbins as fund manager. The
fund will be ungeared and it will seek to track
the performance of the UK residential proper-
ty market as well as provide a modest income
return. Ungeared returns from residential
property have averaged around 16 per cent a
year since 1970. Gibbins was previously resi-
dential fund manager for Goodman Property
Investors before joining Hearthstone and also
has had experience at Morley Fund
Management and estate agent Cluttons.
Investment | Fund Management 19
mean it is easy. The lack of liquidity in
some of these markets requires investors
to be very patient and not put too much in
at once. Mobius also admits that a lot of
these countries are not used to just giving
information so you have to get them to
become more forthcoming.
He recalls an episode when he was first
investing in Russia. He and a translator
rang a company with a list of questions
about the business. But the head of this
company said: “Before you ask me any
questions, I want to ask you one question:
is the destruction of the Russian economy
by you capitalists on schedule?” To which
the translator replied: “It’s not on sched-
ule, it’s ahead of schedule.”
Although the Asian financial crisis was
tough for Mobius, he still commands a
strong following in the investment world
– he even has his own manga-style biogra- Executive chairman of
phy. He feels that emerging markets are in Templeton Asset
a strong economic position right now but Management Mark
rejects any notion that they are decou- Mobius is not fazed by
pling from the weaker West: “Decoupling frontier markets
does not happen in this day and age –
what happens in the US will be felt in Picture:
Nigeria so you have to be ready for any- Micha Theiner
thing.” /City A.M.
Plenty of emerging markets have been
keeping their currencies cheap to remain
competitive with each other, and China in
particular. “It is a good thing that the
Brazilians have called attention to this – it
will lead to more cooperation between
countries,” he says but adds that China
has started to move towards revaluation.
“We are going to have the situation
where the renminbi will become a world
trade currency like the dollar is today. To
get there, the Chinese will have to change
policies and become more open,” he says.
If they are going to become a greater
world power, they will have to project
their currency power to the rest of the
world – and then they’ll have all the prob-
lems that the US has now,” he adds with a
laugh.
CV | MARK MOBIUS
Education: PhD in Economics and likes listening to all sorts of music
Political Science from MIT. and going to concerts. He’s also into
his fitness and still cycles and goes to
Lives: He grew up in New York but is the gym despite being in his seven-
now based in Singapore. ties.
Family: Not married – “If I had been, Books: “I’ve just finished Germania
I’d probably be divorced by now by Simon Winder, which was inter-
because of all the travelling I do.” esting because I’m part German.”
Michael Lewis’ The Big Short and
Interests: Besides travelling, Mobius Dracula have also been recent reads.
F&C UNVEILS NEW EUROPEAN INCOME FUND
F&C Investments has launched a new pan-
European fund for investors seeking income
and capital growth. The Sicav-structured F&C
European Growth & Income is domiciled in
Luxembourg and will be managed by Paras
Anand. The yield on the current portfolio is
estimated to be approximately 3.7 per cent
compared with a benchmark yield of 3.2 per
cent while dividends will be distributed quar-
terly. Stock selection will be based on funda-
mental company analysis and it is currently
overweight financials. The fund has both a
euro and a sterling share class and it was
launched with client seeding of some £60m.
 20 Markets & Investment | Foreign Exchange
DOLLAR DROP
COULD WELL
BE OVERDONE
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT
O
VER the past month euro-dollar has been
in a near-vertical uptrend, rising more
than 1,000 points in just 22 trading days.
But now that the pair has reached the
psychologically important 1.4000 level, it may
be due for a pause as positioning becomes
grossly overstretched. The reasons for dollar
weakness are well known. The Fed’s open call for
more QE has dominated trade in the currency
markets for over a month. With most other G10
central banks talking about tightening or main-
taining policy, the Fed’s insistence on printing
more money has turned the greenback into per-
sona non grata. The buck hit all time lows
against the Aussie and the Swissie. The euro
rose more than 10 per cent because it benefits
from being the dollar’s only liquid alternative.
However, the anti-dollar rally may have run
its course for now. The latest positioning data
revealed that speculators increased their bets
against the greenback by more than $30bn –
the largest jump since 2008. Speculators were
long 48,243 contracts of euros – their biggest
position since October 2009. Last year, the
euro-dollar peaked within two months of
reaching such extreme positioning. While posi-
tioning is rarely a good predictor of long-term
price action, extremes often lead to at least a
temporary correction. With euro-dollar having
rallied relentlessly for more than a month, some
sort of pause may be due, especially if the mar-
ket begins to question the scope of QE.
At present, traders have priced in $1 trillion
of additional QE from the Fed. However, if the
actual size is more modest, the dollar could
rally on the classic “buy the rumour, sell the
news” dynamic. Although yesterday's FOMC
minutes revealed that there is consensus within
the Fed for more QE, they also revealed a dis-
agreement as to its magnitude. If US data
begins to show even a mild improvement, euro-
dollar could correct to $1.3750 to work off its
overbought condition.
Boris Schlossberg and Kathy Lien are direc-
tors of currency research at GFT. Read com-
mentary at www.GFTUK.com/commentary or
e-mail borisandkathy@gftuk.com.
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AND NEITHER ARE WE.
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CITYA.M. 13 OCTOBER 2010
Looming currency war
threatens world trade
Contest of the uglies
is turning nasty,
writes Juliet Samuel
A
FTER the crash in 1929, nations
retreated inside protectionist walls.
In 2009, they managed to refrain
from the same action – but they
may yet succumb to another ’30s blight on
world trade: currency wars.
A currency war consists of states pursu-
ing competitive devaluations in an attempt
to increase the attractiveness of one’s
exports. But the perverse effect of an all-out
forex war is actually to make all interna-
tional goods less attractive, because busi-
nesses never know what rate they will have
to pay or be paid for imports or exports.
“War” was declared by Brazilian finance
minister Guido Mantega a fortnight ago
and since then there has been little cause
for cheer. Aside from a 21 per cent increase
in Brazilian Central Bank intervention last
month (see chart), we have seen promise of
further intervention in Japan, a tax on for-
eign bond purchases in Thailand and David
Cameron declaring that he’s a “monetary
activism” kind of guy. Most worrying of all,
just a couple of days after Mantega’s com-
ments the US Congress voted through the
US Currency Reform for Fair Trade Act: the
act promises reprisal in the form of good
old-fashioned tariffs should China fail to let Dragging a currency
the yuan appreciate. So perhaps the ’30s down will leave
aren’t as faraway as we think. everyone in the mud
The recent unusual volatility in Picture: PA
exchange rates has already prompted busi-
nesses to hedge their risk, but now many
are considering more extreme measures.
Investec Capital Markets’ Lee McDarby says skirmishes kick off into an all-out war. As The truth is, however, that if the curren-
that some UK wine importers affected by BNP Paribas’ Ian Stannard says: “It’s hard cy war escalates, all bets are off.
recent euro strength are looking into more for them to point the finger at anyone else
complex products that enable them to ben- as a currency manipulator when they’re ANALYSIS l Brazilian Central Bank Intervention
efit from growing volatility. Investec ana- about to flood the market with dollars.” 12 US$bn
lysts are considering revising their So what to do if the Fed does bite the bul- BCB monthly intervention (LHS) 2.25
Dollar-Brazilian real (RHS)
forecasts: “Euro-dollar is capable of moving let? The problem with currency war is that
Intervention floor 2.15
over $1.40 and sterling-euro could tip back it’s unpredictable – that’s why it is so dam- 9
into €1.13-€1.12,” says McDarby. aging to world trade. But in the near-term, 2.05
Now that the weekend’s IMF currency most analysts are not anticipating any fur- 6 1.95
negotiations have failed, the key dates are ther dip in the greenback in November 1.85
2-3 November, when the Federal Open unless the scale of the QE announced takes
Market Committee next meets (the dollar the market by surprise. Either way the dol- 3 1.75
fell on the release of doveish minutes last lar is likely to remain volatile, which makes 1.65
night). Its decision – to QE or not to QE – gold a safe bet in the short-term if the Fed Source: SG Cross Asset Research
-3 1.55
could well determine whether the forex does go ahead with stimulus. Jun 09 Oct 09 Feb 10 Jun 10 Oct 10
Get started at
gftuk.com.
CITYA.M. 13 OCTOBER 2010 Investment | Foreign Exchange 21

THE
Asia may rise TIPSTER
EURO KEEPS
ITS BULLISH
but be careful DIRECTION

W
hile resistance has remained at
$1.4000 for euro-dollar, the level

of the dragon was breached this week. The rate

dropped off slightly while investors
waited for an announcement from the Federal
Open Markets Committee with regards to an
extension of quantitative easing (QE). But
regardless the overall bullish trend remains
strong. Cantor Index offers a daily spread of
Capital control is more likely when you need $1.3803.4–$1.3804.4.
Singapore is looking increasingly well
to be as cheap as China, says Donata Huggins placed to avoid the threat of a double dip
recession. Intra-Asia trade continues to grow,
so even if the US should stumble again, a

T
HE THAI government attempted to
pull on the reins of its rapidly appre-
ciating currency yesterday. This
should be a warning sign for traders
putting their cash into emerging market
currencies. Capital controls are one of the
few weapons available to governments who
need to keep their currency weak to com-
pete with China in the export market.
When money is flowing out of the dollar,
the rapid appreciation of emerging market
currencies is certainly tempting. Indeed the
Thai baht has gained 2.9 per cent against
the dollar since August this year.
But this flood of action is making the
Asian authorities nervous. It is no secret
that the Chinese are determined to keep
their currency weak. The trouble is that
export-led growth is equally important to
the rest of developing Asia.
This is exacerbated by the fact that China
pulls out all the stops to maintain its cur-
rency position. A point proved on the week-
end when China reacted to tensions at the
IMF meeting by raising reserve require-
ments for six large commercial banks in an
effort to drain cash from the economy.
China’s weak yuan will eventually
prompt other Asian countries to act. The
battle for cheap exports is fierce and vital
for countries such as Thailand. It is easy to
connect China’s action on the weekend to
Thailand’s yesterday, which could mark the
onset of further action across developing
Asia to keep currencies in check. The chart
below demonstrates quite how quickly the
baht has appreciated against the yuan.
Societe Generale’s head of foreign
exchange Kit Juckes warns that this could
be exceptionally bad news for the trader: “It
would be foolish to put money into one of
these currencies without a very detailed
understanding of the country involved.”
Likewise, Neil Mellor of the Bank of New
York Mellon warns: “Never forget that if
things go wrong, the shallower the market
the greater the risk that you might not be
able to sell if things take a turn for the
worse.”
Even when intervention is in line with
market expectations traders can still be at
risk. Yesterday’s experience with the Thai
baht is a fine example: the dollar still weak-
ened falling from 30.05 to 29.99 Thai baht
despite the fact the announcement was
expected by the market.
This reaction is typical of the market,
Mellor explains: “In that immediate uncer-
tainty after an announcement, even longer
term traders sometimes just sell or liqui-
date their position to minimise damage.
Just in case.”
Traders should be warned that a curren-
cy devaluing “race to the bottom” is a glob-
al problem. The battle to stay cheap will be
waged across the Far East and this is likely
degree of protection is on hand. This has seen
investors increasingly shifting into the
Singapore dollar since the start of the year.
There did appear to be some technical resist-
ance in dollar-Singapore dollar, pushing the
pair below the psychological SG$1.3000 level.
But as we have seen before, a change in the
fundamentals may be all that it takes for
more strength to emerge. The current IG
Index price on dollar-Singapore dollar is
SG$1.3074-SG$1.3082.
The 100-day moving average on euro-
Swiss franc capped the sharp spike on euro
to be done using capital controls. Unless Currency devaluation strength last week at SFr1.3490. From here, it
you have an expert understanding of the can be fierce failed dramatically and the break below
country involved, approach with caution as SFr1.3360-70 suggests more downside weak-
illiquid markets can expose you to the risk Picture: ALAMY ness is on the cards. ETX Capital is quoting
of being unable to get out. SFr1.3285-SFr1.3288 for the rolling daily con-
tract.
ANALYSIS l The performance of the Thai baht against the Chinese yuan over the last year After a failed ‘death cross’ signal last week
Yuan (50-day moving average crossing the 200-day
0.224 moving average) and a failed attempt at a run
at parity (a low of Ca$1.0062), Dollar-
0.220
Canadian dollar has been attempting to
recover. But rallies have been capped by the
0.216
hourly 200-moving average, currently around
Ca$1.0180. If it can break through the
0.212
Ca$1.020 level it should jump to the
0.208
Ca$1.0350 area in the short term. Look to
close longs and go short again at this level.
0.204 Spread Co offers a spread on dollar-Canadian
dollar of Ca$1.0129–Ca$1.0133.
Nov 09 Jan 10 Mar 10 May 10 Jul 10 Sep 10 Donata Huggins

FOREX ANALYST PICKS

FOREX STRATEGIST FOREX STRATEGIST FOREX STRATEGIST
JOEL KRUGER JOHN KICKLIGHTER ILYA SPIVAK

My pick: Buy dollar-Swiss franc at SFr0.9705
Expertise: Classic technical analysis
Average time frame of trades: 1 week-6 months
Our buy order from last week never triggered and we will once again
look to take a shot. Setbacks have finally stalled out after posting fresh
record lows in the SFr0.9500s. Short-term and medium-term studies are
certainly looking quite stretched while longer-term cyclical studies warn
of a major bottom. This sets up the potential for a bullish reversal, with a
break back above SFr0.9700 to confirm bias and likely accelerate gains.
Place a stop at SFr0.9440 and target SFr1.0500.
My pick: Long sterling-dollar above $1.60 and short euro-dollar below $1.36
Expertise: Fundamental and technical analysis with risk management
Average time frame of trades: 1 day-1 week
I’m keeping my pending euro-dollar short setup open; but I have moved
my entry close level to a move below $1.38. To play the alternative sce-
nario (a dollar breakdown), I like the potential with sterling-dollar moving
about its 61.8 per cent Fibonacci retracement level and a double top at
$1.60. If there is a close above this level, I’ll set my stop approximately
150 points lower and set my first target equal. The second objective will
be significantly higher.
My pick: Short euro-dollar pending the market
Expertise: Global macro, classic technical analysis
Average time frame of trades: 1 week-6 months
Euro-dollar is showing signs of reversal below the $1.40. Prices are
breaking lower from a rising channel that had contained them since
early September after hawkish comments from Federal Reserve vice
chair Janet Yellen weighed on expectations of renewed QE. Negative
relative strength index (RSI) divergence bolsters the case for a move
lower. I look for confirmation on a daily close below $1.3800 to go
short, targeting the support at August’s swing high at just above $1.33.
 City Focus
22 CITYA.M. 13 OCTOBER 2010

| Accounting

Hitting all keys at once hides the tune

The requirement for
too much detail in
narrative reporting is
counter-productive,
writes Andrew Leck

E
RIC Morecambe famously played all
the right notes, but not necessarily in
the right order. Narrative reporting –
the non-financial context provided
alongside financial information in a firm’s
annual report – is likewise playing all the
right notes, but the result is just as incoher-
ent: it is playing all its notes at the same
time. This, at least, is the judgement of over
200 chief financial officers (CFO) inter-
viewed by the Association of Chartered
Certified Accountants (ACCA) and Deloitte
for a new study on the direction of narra-
tive reporting.
Increasing regulatory complexity, confu-
sion as to what audience the reporting
serves and excessive detail have all com-
bined to create a culture that turns narra-
tive reporting into a deafening cacophony
of noise for anyone trying to read an annu-
al report. Information overload is seriously
hampering its usefulness, claim the CFOs,
leading to a “more trees than wood” sce-
nario.
This is disappointing, because narrative
reporting has an important role to play in
annual reports. Unlike the numbers, the
narrative section of the annual report is a
company’s opportunity to tell its own story
in its own words. They provide a sense of
the company in a way that a balance sheet
just can’t. Prose can convey a company’s
values; its operating environment; corpo-
rate governance structure; and strategic
direction, amongst other things.
While the narrative report is not neces-
sarily used by the highest-level investors –
who are more likely to interrogate the man-
agement themselves – it is incredibly valu-
able to a whole host of other stakeholders,
whether they are prospective shareholders,
employees or customers. A good narrative
report will contain information that
should affect investment decisions.
OVERBEARING REGULATION
So what’s the problem? As with any infor-
mation that can be of use for the general
public or shareholders, there is a valid case
for some form of regulation, even if only to
ensure that the information is truthful and
to provide a framework for comparison
between reports. But the government must
be careful to maintain a useful balance
between regulation and discretion.
Unfortunately, something has gone
wrong with the balance. The ACCA/Deloitte
research asked CFOs to identify a key audi-
ence for disclosures in a narrative report:
88 per cent said “shareholders” while the
figure for “regulators” was 67 per cent.
However, when asked what the key drivers
for preparing a report were, 83 per cent
said “regulation” compared to 82 per cent
identifying “shareholders’ needs”.
So, while narrative reports are still seen
predominantly as a tool for shareholders,
it’s the needs of regulators that are taking
precedence in their preparation.
Were the regulation more flexible and
balanced, then meeting both the needs of
regulators and shareholders wouldn’t be so
difficult. However, the regulation is having
some unintended consequences. 71 per
cent of the CFOs in the study consider the
critical challenge in producing a report to
be the number of requirements that are
placed on its authors, alongside the cost
and time involved in producing the report.
Significant amounts of time and effort can
be spent working on sections of a report to
meet regulatory requirements that serve
little use to anyone, either by flooding a
user with impenetrable detail or, at the
other end of the scale, providing nothing
more than anodyne, regulator-approved
corporate-speak.
BOX-TICKING
The resulting compliance culture leads to
reports that ‘tick boxes’ but do not actually
make any worthwhile contribution to the
overall value of corporate reporting. Box-
ticking reports strip out all that is useful
from the narrative section; reports can
become interchangeable between compa-
nies, telling their users nothing new.
The problems here, particularly regard-
ing the growing length of reports, are com-
pounded by the fact that shareholders and
regulators want different information
from the same source. The CFOs in the
study viewed the most important disclo-
sures to include an explanation of financial
results, risks and an outline of future plans
(see box for detail).
But while all nine of the regulatory juris-
dictions looked at by the report (including
the US, the UK, Australia, and China) asked
for an explanation of the financial results
and position, the only other information
that they all asked for were remuneration
reports and a statement of compliance
with corporate governance codes, both
seen as of “high importance” to sharehold-
ers by less than half of CFOs. But if the reg-
ulation is not there to protect shareholders,
what is its aim?
MORE FLEXIBILITY
Writers of narrative reports are feeling
It’s fine to hit all the under pressure to be all things to all peo-
right notes, but not all ple. Faced with different demands, they are
at once throwing more and more information at
the problem. While the information might
Picture: GETTY not be false, there is too much of it, which
obscures the genuinely useful information.
Financial statements themselves should
essentially be aimed at providers of capital.
Only if there is narrative information that
is material and relevant to the understand-
ing of the accounts, should it be included.
The opportunity for more flexibility is
also high on the list of desired changes
amongst CFOs. Looking to the future, 65
per cent of interviewees said that they
would like a reporting environment with
more discretion and less regulation.
Beyond that, 58 per cent cited the inclusion
of external auditor opinion, 57 per cent
favoured an emphasis on forward-looking
information and 51 per cent wanted
ANALYSIS l As a chief financial officer/financial director dealing with narrative disclosures,
19
16 % More regulation, less discretion
65
SURVEY | ACCA/DELOITTE
200 CFOs were asked what the five
most important disclosures are for
shareholders in an annual report
l 87 per cent: an explanation of finan-
cial results and the financial position
l 67 per cent: identifying the most
important risks and their management
l 64 per cent: an outline of future plans
and prospects
l 60 per cent: a description of the busi-
ness model
l 58 per cent: a description of key per-
formance indicators
International Accounting Standards Board
(IASB) guidance.
Those looking for guidance from the
IASB are in luck: the organisation is cur-
rently working on a framework project for
management commentary, which is look-
ing at defining the boundaries of financial
reporting.
It would be fair to say that a narrow defi-
nition is something that the IASB should
consider. Today’s annual reports simply
have too many audiences. Almost all the
right notes are being hit information-wise,
but this is creating a deafening wall of
noise for readers. A regulatory refocusing
on greater clarity, simplicity and discretion
would be welcomed by CFOs, not least
because they believe it would benefit the
stakeholders whom the reports are meant
to serve.
Andrew Leck is head of ACCA UK.
are you looking for....?
More discretion, less regulation
Neither more nor less regulation
or discretion
Source: ACCA/ Deloitte
CITYA.M. 13 OCTOBER 2010 City Focus | Law 23

The grass is not

always greener
for shareholders
in low-tax states
action against directors on the part of the
company. Though seldom used, these pro-
vide shareholders with a measure of protec-
tion when required.
Wolseley’s chosen mode of exit (using a
company incorporated in Jersey but resi-
dent in Switzerland for tax purposes) pre-
serves key shareholder protections, but in
other cases many of these protections can-
RICHARD BROWN not be taken for granted, even for non-UK
companies listed in London. Governance
protections are increasingly converging,

R
ELOCATING overseas is becoming a
fashion. This week it was reported
that online bookmaker Betfair is con-
sidering a move after a row over tax.
It follows building services firm Wolseley’s
recent announcement that its base will
move to Switzerland for tax reasons.
Wolseley’s decision was welcomed by
analysts and shareholders who saw a com-
pany seeking to manage its tax burden and
apparently saving £23m. When a company
redomiciles, it is often for tax reasons and
sometimes to align the nationality of its
headquarters with that of its business.
However, if more companies follow
Wolseley’s lead and depart the UK, are they
leaving behind more than high tax rates? Is
a move always in the interests of sharehold-
ers? Are there more than financial consid-
erations at play?
Let’s examine some of the positives
about being a UK registered company. The
UK legal framework determines the duties
of directors and puts in place important
restrictions such as the ability of directors
to receive loans from the company or to
make political donations. It is also the
source of those shareholders’ remedies of
last resort: power to remove directors,
power to requisition shareholder resolu-
tions and the power to mount a derivative
with non-UK companies listed in London
now expected to comply or explain against
the UK Corporate Governance Code. But
certain key protections simply do not apply
to many overseas companies even though
they are London listed.
Similarly, the Takeover Code provides sig-
nificant protection for shareholders in UK
companies. The Code stipulates that all
shareholders must be treated equally; it
regulates when and what information com-
panies must and cannot release publicly in
relation to a potential bid and sets timeta-
bles for certain aspects of the bid. Does the
new domicile of the company afford such
protection? Could there be a scenario
where the company became the subject of
a hostile takeover bid and shareholders Will it live up to incorporated in jurisdictions which do not the associated infrastructure, but it may be
were simply left in the dark? expectations? offer the same protections as the UK may a satisfactory compromise should the
With the success of the company in be at a disadvantage if the relevant law falls allure of the tax benefits outweigh these
mind, the board must consider whether Picture: GETTY short of the UK regime. Such companies other factors.
foreign jurisdictions offer shareholders may attempt to replicate UK safeguards in With many companies considering mov-
anything other than just a sunny tax their constitutional documents. For exam- ing overseas, shareholders should think
haven. Shareholders must consider which ple, a number of offshore companies have seriously about the protection the UK
protections come with the law of the com- been known to replicate the Takeover affords them. There are real advantages in
pany’s country of incorporation, or not as Code’s key minority shareholder protec- being a UK registered company and not all
the case may be. As a Jersey incorporated tions in their articles of association as a foreign jurisdictions have equal protection.
company, Wolseley’s shareholders are still safety blanket for shareholders. This is not Shareholders should ensure the baby is not
afforded protection under the Takeover a perfect solution as shareholders do not being thrown out with the bath water.
Code and will enjoy the best of both worlds. have the benefit of the Takeover Panel Richard Brown is a partner at Hogan Lovells and
By contrast, shareholders of companies standing behind the protections and all of leads the firm's equity capital markets practice.

Patents the smart option in mobile skirmishes

rapidly and in expanding markets a
fight for dominance is almost
inevitable. The market has not yet set-
tled into the international standards
and patent pools which have governed
so-called “dumb” mobile phone tech-
nology.
In that industry, mobile technology
patents have been pooled and licensed
ADRIAN SAMUELS en bloc for an agreed royalty in order to
restrict the royalties that manufacturers
would have to pay if they had to license
months, a skilled patent attorney will
make sure that the patent will be far
more wide-ranging than a single prod-
uct. For example, a patent can actually
protect the basic technical concept
which is used in a whole string of future
products.
It may be several years since Apple
first launched its iPhone but the multi-
touch technology this introduced will
still be used for some time yet. Similarly,
Dyson patented the vortex system for its
these cases will settle before the phones
in our pockets start to lose features.
What is harder to predict is who will be
the winners in this industry.
Technology we are now seeing being
launched in smartphones has been in
development for some years, and manu-
facturers will have known for some
time what direction their competitors
are going in. Patent applications are
published 18 months after they have
been filed, so that everybody can read

I
N the past few days Motorola has competitors’ technology individually. vacuum cleaners many years ago but about the inventions and plan their
announced that it is suing Apple For smartphone technology this is not was still litigating the patent at the end own development and patent strategies
under several of its smartphone yet widely the case. of its 20-year life. Patents have power. accordingly.
patents. Normally, a clash of such From a legal point of view it raises Also, patents can be used as a weapon. Still, all we know is that hidden tech-
technology titans might raise eyebrows, questions of whether the patent system Having a portfolio of patents means that nological gems are out there, which will
but not in this market, and not now. In actually works for fast-moving indus- if somebody threatens to sue over an evolve into the apps and programmes
recent months there has been a spate of tries like the smartphone one. When infringement, a firm can retaliate by that consumers decide they can’t live
patent lawsuits between the big players, you consider that it typically takes three threatening to withdraw some of its without. These will have been patented
which was kicked off a year ago when to five years or more for a patent to be own patented products in a way that years ago, alongside hundreds that will
Nokia sued Apple. Since then, Apple has granted, some argue that the technolo- will damage the litigious firm. The end prove to be commercial dead-ends. And
sued Nokia and HTC, Kodak has sued gy will be obsolete long before it is result is that the smartphone firms the firms who patented the winners are
RIM and Apple, and Microsoft has sued patented. So are they obsolete? often decide that peaceful co-existence unlikely to regret it.
Motorola to name but a few. Not at all. Although a patent may is better than a war that may end up Adrian Samuels is a partner in the Electronics,
In some ways this is not surprising. originate from innovation in a device with its own product being withdrawn. IT & Communications Group at Dehns, a
The smartphone market is exploding which has a life-cycle measured in The likelihood, then, is that most of Patent and Trade Mark Attorney.
 Lifestyle
24 CITYA.M. 13 OCTOBER 2010

| Motors WORDS BY
RYAN BORROFF

Eco-dazzle at Paris Motor Show

Range Rover, Lotus design direction for Renault under new

design boss Laurens van den Acker and for
and Renault were many people it vied with Jaguar’s concept
for car of the show.
among this year’s Jaguar C-X75 concept, an outrageous
780hp electric supercar – powered by gas
turbines as well as electric motors to ensure
show-stoppers a top speed of 330kph and a 0-62mph time
of 3.4 seconds – was controversial. Pundits
disagreed on whether this should be the
1+1 tandem-seater – like a motorcycle – and
will be marketed as a secondary car for
Left: Lamborghini
Sesto; from top right:
Audi’s latest e-Tron Spyder concept was
shown alongside a Quattro concept which
urbanites to whiz about the city in. Expect it
to do well in France if they can get the price
Jaguar C-X75; Lotus
Elise; Range Rover
was less successful. With its curved
windscreen this Audi convertible looks
right.
Peugeot’s nifty little HR1 concept SUV
Evoque. straight out of the Blade Runner movie.
Audi claims the diesel-electric hybrid can
gives a hint at the future 208 model. It’s a accelerate from 0-62mph in around 4.4 sec-
good looking car with a striking A-pillar onds, achieve fuel economy of 128mpg,
and a high stance. It’s super eco too; emissions of just 59g/km of CO2 and has a
Peugeot has taken a tiny 1.2 litre, three- range of more than 621 miles.

T
WO key trends revealed themselves
at this year’s Paris Motor Show. First,
while the carmakers have showed
eco concepts for years, this year was
the first Paris Show where so many produc-
tion versions of hybrid and electric cars
were launched. Second, the sports and
supercar brands proved that they too have a
place in this emerging sustainable land-
scape. So, after a difficult few years for the
global car market, this year’s Paris Show
demonstrated that things are looking up
for the car industry and the environment
too. Here’s what we liked best.
Renault showed its sensational DeZir con-
cept, a red love-inspired super EV concept
with alternate gullwing doors and a luxuri-
ous quilted interior. It showed a whole new
way that future Jaguars should look. But
there was no doubt that there hasn’t been
so much excitement and so much opti-
mism at Jaguar, and around Jaguar, for
years.
QUANTITY – AND QUALITY
At Land Rover, the new “baby” Range Rover
Evoque proved a stunner with the most
curves we’ve ever seen on a product from
the company. Most astonishing of all for the
British 4x4 brand, the car will be available
as a two wheel drive version too. It’s the first
time ever that Land Rover has sold a car
without 4WD.
At Renault, the quirky Twizy city EV has
made it into production, one of the first of
Renault’s new electric range to do so. It’s a
cylinder petrol engine, turbo-charged it and
connected it to its Hybrid4 system so that it
can produce 150bhp yet still return a mas-
sive 81mpg whilst producing only a minis-
cule 80g/km CO2.
Lamborghini’s Sesto Elemento concept
may not have been utterly convincing yet it
is proof that Lamborghini is serious about
using carbon fibre to lose weight from its
supercars and that it too will have a more
eco caring future.
Porsche proved that it can still squeeze
more models out of its range and what a car
this was. Shown in a fantastic shade of blue,
this latest Speedster – the fourth in history –
is inspired by the legendary 356, boasts
408hp and can do zero to 62mph in just 4.4
seconds. And only 356 of them will be built.
Is it a car or a van? Maybe even Nissan
doesn’t know, but its Townpod concept
certainly turned heads. A quirky and
functional EV – based on its LEAF car – is
pure white, stylish, perfect for town and a
car for Apple enthusiasts.
But the biggest story of the show had to
be at Lotus. The Norfolk-based company
debuted five cars at the Paris Show, which is
a massive show of intent about how it wants
to grow its business. The cars were divisive.
Considered by many to be too
radial a departure for Lotus in design terms,
many questioned how on earth the
company would be able to introduce so
many cars so quickly. It’s clear that Porsche,
even Aston Martin, are templates that Lotus
wants to follow.

CAR TALK BY RYAN BORROFF

ASTON’S NEW CITY CAR
Aston Martin's “premium, bespoke commuter car” and its most con-
troversial car ever, the Cygnet luxury city car, is to go into produc-
tion in 2011 at the company’s Gaydon headquarters. Targeted at
Aston owners who only drive their sports cars at the weekend,
Aston Martin hopes it will keep Aston owners driving their cars all
week.
MAZDA SHAPES UP WITH EFFICIENCY FLANKS
This is Mazda’s new Mazda5, a car that has won a host of awards
for reliability and safety in the past. The compact MPV has all-new
wave form ridges on its flanks and is part of the firm’s latest flow
design language. The flanks do more than just distinguishing the car:
they reduce drag and improve fuel efficiency too. Certainly one of
Mazda’s best cars to date.
SAY HELLO TO VW’S NEW SUPERSTAR
This is VW’s new-look Phaeton. The car comes with four-wheel
drive, laminated glass, adjustable air suspension and one of the most
advanced air conditioning systems in the world, all as standard. The
new Phaeton also has Google maps software built-in, the first time
in a production car. Prices start at £46,195 for the 3.0-litre V6 TDI
240 PS engine.
CITYA.M. 13 OCTOBER 2010 Lifestyle | TV& Games 25

BBC1 BBC2 ITV1 CHANNEL4 CH FIVE TV PICK

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

QUICK CROSSWORD
      

SUDOKU KAKURO
27 14 14 10 10 22 16 
9 8 9

17 19 13
Place the numbers from 1 to 9 in each empty cell so that each 31 42 
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 6 17
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from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 14 28
  
above or to the left of it. 5 22
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    and you must not use the
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same digit twice in a block.
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12 29 11
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column, but it must be in a
30 16
 
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9 4 12 
11 12 6
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    ACROSS DOWN
1 Appear 1 Astronomical unit

   WORDWHEEL O A
suddenly (3,2)
4 Play characterised
by broad satire (5)
of distance (6)
2 Payment for insurance (7)
3 Tubes (5)
Using only the letters in the Wordwheel, you have 9 Horse colouring (4) 5 Creative person (6)
    ten minutes to find as many words as possible,
M N 10 Planned in 6 Decompose (3)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters S advance (7)
11 Battleground of
7 Form of address for
Roman emperors (6)

LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
P K World War I (5)
12 Afternoon nap (6)
8 Conclusion (3)
13 ___ Lavender, Private Frank
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
E S 15 Association (4)
18 Ms Amos,
Pike in Dad’s Army (3)
14 Leaves dried and prepared
QUICK CROSSWORD 8 9 5 9 8 6
songstress whose for smoking (7)

& 8 6 7 2 ' , $ 1
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 Sport
26 CITYA.M. 13 OCTOBER 2010

Results
EUROPEAN CH’SHIP QUALIFYING GROUP A
Azerbaijan....................(1) 1 Turkey ..................................(0) 0
Belgium ..........................(1) 4 Austria.................................(2) 4
Kazakhstan.................(0) 0 Germany.............................(0) 3
GROUP B
Armenia.........................(3) 4 Andorra ..............................(0) 0
England lose winning habit
FYR Macedonia........(0) 0 Russia....................................(1) 1
Slovakia .........................(1) 1 Rep of Ireland .................(1) 1
Durica 36 St. Ledger 16
Wayne Rooney had

P W D L F A GD Pts
Att: 10,892 ENGLAND 0 two good chances
but could not score.
Russia 4 3 0 1 6 3 3 9
Rep of Ireland 4 2 1 1 7 5 2 7
Armenia
Slovakia
4 2 1 1 9
4 2 1 1 4
4
4
5
0
7
7
MONTENEGRO 0 Picture: PA

FYR Macedonia 4 1 1 2 4 4 0 4
Andorra 4 0 0 4 1 11 -10 0
▲

FOOTBALL
GROUP C
Estonia ...........................(0) 0 Slovenia..............................(0) 1 BY FRANK DALLERES
Faroe Islands.............(0) 1 Northern Ireland .........(0) 1
Holst 60 Lafferty 76
ENGLAND head coach Fabio Capello
Att: 1,921 defended his team after they were
Italy.................................(A) A Serbia...................................(A) A held to a goalless draw at Wembley by
Abandoned due to crowd trouble. Montenegro, a side ranked one place
P W D L F A GD Pts below Burkina Faso.
Italy 3 2 1 0 7 1 6 7
Slovenia 4 2 1 1 7 3 4 7 Capello’s outfit failed to breach
Estonia 4 2 0 2 6 5 1 6 Montenegro’s stubborn rearguard,
Northern Ireland 3 1 2 0 2 1 1 5 which is yet to concede a goal in four
Serbia 3 1 1 1 5 4 1 4 Euro 2012 qualifiers, striker Wayne
Faroe Islands 5 0 1 4 3 16 -13 1
Rooney failing to convert two good
GROUP D
Belarus............................(1) 2 Albania ................................(0) 0
chances.
France..............................(1) 2 Luxembourg ....................(0) 0 And Montenegro – which has a
Benzema 23, Gourcuff 76 Att: 24,000 population of 672,000 – might even
GROUP E have snatched a shock win when
Finland............................(0) 1 Hungary..............................(0) 2 Milan Jovanovic’s long-range effort
Holland...........................(2) 4 Sweden ...............................(0) 1 beat Joe Hart but rattled against the
Huntelaar 4, 55 Granqvist 69
Afellay 37, 58 Att: 40,000
crossbar late in the game. The draw
San Marino .................(0) 0 Moldova...............................(1) 2 ended England’s 100 per cent record
GROUP F and leaves them second in Group G,
Greece.............................(1) 2 Israel ....................................(0) 1 three points behind Montenegro,
Latvia ..............................(0) 1 Georgia................................(0) 1
GROUP G
who have played one game more.
Capello said: “I am a fighter. It is GROUP G
England..........................(0) 0 Montenegro.....................(0) 0 one game. We have to fight again. I TEAM PLD W D L F A PTS
Att: 73,451 think we are a good team. The goal-
Switzerland................(2) 4 Wales.....................................(1) 1 Montenegro 4 3 1 0 3 0 10
Stocker 8, 89, Streller 21 Bale 13 keeper was the best player for England 3 2 1 0 7 1 7
Inler 82 (pen) Att: 38,500 Montenegro. This is football.
P W D L F A GD Pts “You have to respect little coun- Switzerland 3 1 0 2 5 5 3
Montenegro 4 3 1 0 3 0 3 10 tries. They have good players. At this Bulgaria 3 1 0 2 1 5 3
England 3 2 1 0 7 1 6 7
Switzerland 3 1 0 2 5 5 0 3 moment they are psychologically at a Wales 3 0 0 3 1 6 0
Bulgaria 3 1 0 2 1 5 -4 3 high point having won three games.
Wales 3 0 0 3 1 6 -5 0 “They were compact. The quality
GROUP H
Denmark.......................(0) 2 Cyprus..................................(0) 0
Iceland............................(1) 1 Portugal..............................(2) 3
was good. Against Algeria [at this
year’s World Cup] we didn’t create a
lot of chances. Tonight we did create
Brave Scotland
GROUP I
Liechtenstein ............(0) 0 Czech Republic...............(2) 2
Scotland........................(0) 2 Spain......................................(1) 3
chances.”
Montenegro are perhaps better
beaten by Spain
Naismith 58, Pique 66 (og) Villa 44 (pen), Iniesta 55 than their global standing suggests,
Att: 51,322 Llorente 79 but Capello still found himself bat-
P W D L F A GD Pts ting away familiar questions about SCOTLAND came from two down but
Spain 3 3 0 0 10 3 7 9
Czech Republic 3 2 0 1 3 1 2 6
his future. Asked if he now ques- could not deny world champions
Scotland 4 1 1 2 4 5 -1 4 tioned his decision to stay on after a Spain a 3-2 win in their Euro 2012
Lithuania 3 1 1 1 2 3 -1 4 disappointing World Cup, he said: qualifier at Hampden. Fernando
Liechtenstein 3 0 0 3 1 8 -7 0 “Absolutely no. This is my job. It is one Lllorente got the winner after Steven
EUROPEAN UNDER-21 CHAMPIONSHIP game. When we finish the qualifica- Naismith and a Gerard Pique own goal
PLAY-OFF SECOND LEG tion it will have told you something cancelled out David Villa and Andres
Romani................... (0) 0 England...................... (0) 0 about that.” took much of the credit, pouncing at before the Liverpool forward almost Iniesta strikes. Wales, Group G rivals
Att: 6,247
Agg: 1-2.
Bolton striker Kevin Davies, 33, the feet of Rooney after a Gerrard profited at the other hand when his to England, were thrashed 4-1 in
came off the bench to win his first through-ball and then later denying dipping shot hit the bar. Switzerland. Robbie Keane missed a
cap, but could not extend England’s both players with a smart double Gareth Barry had a chance to penalty as the Republic of Ireland
SPORTS EDITOR FRANK DALLERES run of 11 consecutive home victories. save. England appealed for a penalty snatch a late winner but again drew 1-1 in Slovakia.
email sport@cityam.com Visiting goalkeeper Mladen Bozovic when Jovanovic appeared to handle Bozovic denied England.

Daley makes a splash again as teenage Double joy for England’s

dive star rediscovers his golden touch 4x100m sprint teams
Daley, now 16. one more title to get before the end of Lewis-Francis added: “Two years of
▲

COMMONWEALTH GAMES COMMONWEALTH GAMES

“We were only training
TEENAGE diving sensation Tom Daley 10 days at the European
toasted a return to form after he and Championships before I
partner Max Brick won gold for tore my tricep and we had
England in the 10m synchro at the 10 days before we came
Commonwealth Games. here so it’s only been 20
Daley has struggled with new rou- days of training since Rome
tines, adapting to growth and serious and we’ve come away with a
injury since becoming a world cham- Commonwealth gold medal.”
pion at the age of 14 in July last year. With a world title in the
But he and Brick never looked back 10m platform already under
after taking the lead in the second his belt, and now
round, beating Australia into second Commonwealth glory also
place while Canada took the bronze. on his CV, the Plymouth
“It has been a difficult year since youngster is in no doubt
Rome with injury, growing and learn- which medal he wants to
ing new dives. It has been tough,” said claim next. “I’ve just got
my career and that is the Olympic
gold,” added Daley, left, who will be
one of Britain’s best medal hopes at
London 2012.
“That is the aim I’ve got to get
before I retire. I hope to try and
do as many Olympics as I can
before my body falls apart and
I’d love to keep going until I
get that gold medal.”
Daley and Brick racked up
439.65 points in front of
British Olympic chief Seb
Coe, 15.84 points better
than Australia’s accom-
plished pair Matthew
Mitcham and Ethan Warren.
ENGLAND’S men and women com-
pleted a sprint relay double in Delhi
last night as Londoner Leon Baptiste
claimed his second gold of the
Commonwealth Games.
Baptiste, who won the 200m title
on Sunday, helped the men’s 4x100m
team outstrip Jamaica, who took sil-
ver, and bronze medallists India.
Mark Lewis-Francis, fresh from his
silver in the 100m last week, ran a
blistering anchor leg to earn glory for
the quartet, which also included
Marlon Devonish and Ryan Scott.
Baptiste said it had been “an awe-
some championships for me” while
hard work getting back on the track
and I’m over the moon right now.”
Abi Oyepitan, the 200m silver
medallist, added gold to her collec-
tion by helping England’s women
take the 4x100m crown.
Oyepitan, Katharine Endacott,
Montell Douglas and Laura Turner
comfortably beat Ghana into second
while India again took bronze.
Endacott was promoted to silver
medallist in the individual 100m yes-
terday after Nigeria’s Osayemi
Oludamola was disqualified for a pos-
itive drugs test. Oludamola’s team-
mate Samuel Okon, a 110m hurdler,
was expelled for the same substance.
CITYA.M. 13 OCTOBER 2010 Sport | Football 27

JUDGEMENT DAY Liverpool owners

Liverpool chairman
Martin Broughton is
hopeful a win for RBS will
trigger the club’s sale.
Picture: REUTERS
▲
Hicks and Gillett
“breathtakingly
arrogant” in bid to
prevent club’s sale
EMBATTLED Liverpool owners Tom
Hicks and George Gillet were accused
of “breathtaking arrogance” yester-
day in court for “a calculated breach
of contract” designed to delay the
club’s sale.
Richard Snowden QC, for Royal
Bank of Scotland, argued that the
American pair tried to sack board
members and replace them without
the necessary authority, in order to
block a sale to New England Sports
Ventures. That, said RBS, was a
breach of their corporate governance.
But Hicks and Gillett’s legal team
countered by insisting they only did
so after the board had broken the
same rules themselves, by secretly
lining up the NESV deal. RBS were
tacitly involved, Paul Girolami QC
said, and could therefore not accuse
Hicks and Gillett of the same.
Top barrister Lord Grabiner QC, for
Liverpool, dismissed suggestions of

LIVERPOOL BID BATTLE
BY FRANK DALLERES
LIVERPOOL fans, players and direc-
tors are on tenterhooks this morning
as they await a momentous and
potentially historic High Court judge-
ment that has huge ramifications for
the club’s future.
At 10:30am the judge, Mr Justice
Floyd, is due to deliver his verdict on
the civil war that has engulfed
Anfield and now threatens to see one
of the biggest names in world foot-
ball suffer the humiliation of admin-
istration.
He was yesterday asked by Royal
Bank of Scotland to issue a mandato-
ry injunction preventing Liverpool’s
owners Tom Hicks and George Gillett
from sacking members of the board
and replacing them, as they have
sought to do.
Hicks and Gillett, in turn, entered
a counter-application that Liverpool’s
board be prevented from pushing
ahead with their plans to sell the
club to New England Sports Ventures,
owners of baseball’s Boston Red Sox.
Liverpool board members, led by
chairman Martin Broughton, are
hopeful that victory for RBS, which is
owed more than £200m by Hicks and
Gillett, will allow the £300m sale
agreement already in place with
NESV to be rubber-stamped without
delay.
The club have also taken legal
action to seek a declaratory judge-
ment from the courts that affirms
the board’s right to sell to whoever it
deems the right bidder, despite Hicks
and Gillett’s reluctance. But if RBS
win today then Liverpool’s QC Lord
Grabiner said it was “likely it won’t
be necessary to complete our claim”
in order to push through the sale.
However, in a sign that this saga
may yet contain a few more twists,
Mr Justice Floyd warned: “The
mandatory injunction isn’t quite
going to give you what you need.”
That view was in light of the contract
between Liverpool’s board and NESV
containing a get-out clause for either
party if the club do not make every
attempt to get that declaratory judge-
ment by 1 November.
Liverpool’s legal team countered
that the contract did not necessarily
demand the declaratory judgment be
obtained; merely that both parties
had the right to walk away if it was
not. Assuming the club and NESV
still want the sale, that would prove
no obstacle.
If it all seems mind-bendingly com-
plicated, then one thing is clear:
Hicks and Gillett are not letting the
club be sold without a fight, despite
their debts to RBS being due for pay-
ment by Friday and their own accept-
ance that a sale is now inevitable.
Paul Girolami QC insisted they
were not seeking to put “a spanner in
the works” by opposing the sale to
NESV, just trying to ensure they got
the best deal. With two other bids on
the table, from Asian billionaire Peter
Lim and American hedge fund Mill
Financial, they believe they are being
sold short, he said.
Hicks and Gillett asked that the
trial be postponed until next week, in
order for minutes of board meetings
to be submitted and key figures ques-
tioned, but Mr Justice Floyd proceed-
ed with almost five hours of
arguments. Mr Girolami also argued
that there was “no reason” to rush
matters, as the contract between
Liverpool and NESV locks in both par-
ties until 1 November, and RBS would
be unlikely to exercise the adminis-
tration option while a deal hung in
the balance.
secrecy, saying chairman Martin
Broughton had emailed Hicks on 3
October to inform him he expected a
formal bid from NESV and requesting
a board meeting on 5 October to dis-
cuss the offer.
Hicks tried to delay the meeting for
a week, knowing the bid would expire
on 5 October, Mr Grabiner added, and
then carried out the disputed recon-
stitution of the board. He refused to
take part in the board meeting by
conference call on 5 October, which
set the wheels in motion to accept
NESV’s bid, but Mr Grabiner said a
representative of Gillett did sit in on
the call, scotching suggestions the
owners had been kept in the dark.
Mr Girolami had earlier questioned
the validity of the board’s agreement
with NESV because Hicks and Gillett
“had no idea” what happened in that
meeting last week.

Fresh twist as billionaire Lim attempts LIVERPOOL’S SUITORS: HOW BIDDERS COMPARE
BIDDER New England Sports Ventures Peter Lim (Meriton) Mill Financial
to gazump NESV with £320m offer FAMOUS FOR Owners of baseball’s Stockbroking success American hedge fund
Boston Red Sox and has made him a billion technically already controls
fronted by former futures and, awkwardly, owns 50 per cent of Liverpool as
▲

LIVERPOOL BID BATTLE £300m sale to NESV ratified.

ASIAN billionaire Peter Lim
relaunched his bid to buy Liverpool
yesterday by making a second,
improved offer of £320m for the
Premier League club.
The bid is bigger than that of New
England Sports Ventures, who have
signed a deal with Liverpool’s board,
pending legal challenges.
Lim’s proposal also comes with an
extra £40m transfer fund for manag-
er Roy Hodgson to spend on players –
a move sure to please fans. But his bid
will only have a chance of succeeding
if Liverpool lose their battle in the
High Court this morning to have the
“If the board accepts this offer, the trader John Henry, who is a chain of Manchester it is a major creditor of Reds
monies are available immediately estimated to be worth United-themed bars co-owner George Gillett,
thereby removing the threat of
administration,” Lim said in a state- around £380m across Asia who has defaulted
ment released as the court hearing
began. “I am committed to rebuild SIZE OF BID £300m, including full £320m, including full Not known, but said to
the club so that it can soon regain its repayment of owners’ RBS loan repayment include paying off RBS debt
position at the pinnacle of English £200m RBS loan
and European football.”
OTHER PROMISES No debt placed on club £40m transfer kitty Extra £100m for stadium
Lim’s latest bid is £20m
higher than that of NESV
CHANCES Very strong. If High Court Would be favourite Outsiders at this stage
and also comes with an rules in favour of RBS if NESV deal folds, but but there could be
extra £40m for transfers, today, NESV’s bid will be remains frozen out several twists left in
the former broker said hard to stop for time being this tale yet
 EUR/USD
1 pip,1% deposit
and no re-quotes.

ì 7LJKWVSUHDGVDQGORZGHSRVLWUDWHVRQFXUUHQF\SDLUV
ì (8586'86'-3<IURPSLS*%386'IURPSLSV
ì :RUOGOHDGHUVLQILQDQFLDOVSUHDGEHWWLQJIRU\HDUV

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