BUSINESS WITH PERSONALITY

Issue 1,374 Wednesday 4 May 2011 www.cityam.com FREE

Tensions over referendum hit

fever pitch after Huhne attack ALLISTER
HEATH:
▲

POLITICS

BY DAVID CROW
SIMMERING coalition tensions over
tomorrow’s referendum on AV reached
An ally of Osborne’s said: “The
chancellor was rising above it all
in a statesmanlike way.” Another
added: “The same can’t be said of
Huhne.”
WHY YOU
talise on growing dissatisfaction
among grassroots Liberal Democrats
to launch a leadership challenge
against Nick Clegg.
A senior Lib Dem said:

boiling point yesterday, after Chris
Huhne launched an extraordinary
attack against the Prime Minister and
chancellor during a cabinet meeting.
SHOULD
But a Lib Dem source “There’s a general view
said: “There is a body of that Chris is on manoeu-
Lib Dems that feel the No vres.”
campaign has been out of Yesterday, Ladbrokes

VOTE NO
In heated exchanges, the climate order. cut the odds of a Liberal
change secretary challenged David “He brought it up Democrat cabinet
Cameron and George Osborne to “disas- during a conversation minister resigning
sociate” themselves from the No cam- about party business within 24 hours of the
paign, which he claims is “trashing” the and was right to do so.” referendum from 3/1 to

Liberal Democrats.
Osborne hit back at Huhne, likening
him to Jeremy Paxman and insisting
that a cabinet meeting was an inappro-
priate forum for such a discussion.
TOMORROW P2
There was growing 2/1.
speculation in Westminster Last night, a ComRes poll
last night that Huhne could put the No campaign on 66
resign from the cabinet if the per cent against 34 per cent
No campaign wins, and capi- for the Yes campaign.

GLENCORE IN
FLOAT PRICE
CLIMBDOWN Bin Laden was unarmed
CAPITAL MARKETS in the first place.” funds and a pre-arranged group of
Fresh details are emerging of the terrorist leader’s last moments Picture: REUTERS
▲

BY DAVID HELLIER There will be an official announce- cornerstone investors will subscribe
ment of a price range today. for about 30 per cent of the shares

when shot by US troops

ADVISERS to Glencore are set to price
the shares in the group’s flotation at
the bottom of the expected range.
As the banks working on the deal
gauged investor support for what is
the London market’s biggest ever
Advisers say that fund managers
who had heard the Glencore story
were generally supportive. They espe-
cially warmed to chief executive Ivan
Glasenberg’s pledge that he wouldn’t
be selling any shares while he worked
on offer in the newly-floated group.
But despite blue-chip cornerstone
investors including Fidelity, Capital
Group and BlackRock, there has
been scepticism from some fund
managers about the market in gen-
▲

flotation, it became clear last night
that the shares will be priced at a
range that will value Glencore at
nearer to $45bn (£27bn) than the
$83bn or more that some bank advis-
ers had estimated. That includes up
to $12bn the firm is aiming to raise in
new money with its London-Hong
Kong listing.
Some analysts suggested that
bankers on the deal could have
allowed the valuation to become
hyped as a negotiating tactic.
Olivetree Securities’ Christian
Georges said: “What they’ve been
doing quite clearly now is pushing up
the target price so that once they take
out 10 per cent for good measure,
they still have the price they wanted
FTSE 100 ▲6,082.88 +12.98 DOW ▲12,807.51 +0.15
for the group.
The announcement this morning
and the accompanying share prospec-
tus is likely to confirm that
Glasenberg is a billionaire through
his shares in the commodities trader.
The float has attracted interest
from several sovereign funds, with
Abu Dhabi set to become the biggest
non-employee stakeholder after the
IPO. It is likely that sovereign wealth
Ivan Glasenberg’s pledge
not to sell a single share
in the company has
impressed many of the
fund managers
NASDAQ ▼2,841.62 -22.46
eral, about the riskiness of some of
Glencore’s earnings and about the
longer-term prospects for the group.
Peter Davey, head of mining and
metals research at Standard Bank,
one of the few independent analysts
not working for a bank engaged in
the deal, said: “Few of the assets
that Glencore owns are world class
and a large component of its rev-
enues come from low margin trad-
ing income.
“But the biggest
problem is that the market is not all
that convinced that the miners are
going to the moon at the moment.
So people are wondering why they
need to chuck more money at the
sector.”
£/$ 1.65 ▼-0.02 £/¤ 1.11 ▼-0.01 ¤/$ 1.48 unc
WORLD
BY RICHARD PARTINGTON
THE WHITE House last night revealed
fresh details of Osama bin Laden’s
death, shifting the official story on
the mission to kill the world’s most
wanted man.
US officials now say the Al-Qaeda
leader was not armed when he was
shot dead by special forces, although
maintained he “did resist” during the
40-minute raid on his compound in
Abbottabad, Pakistan.
It emerged that he was shot in the
head and chest and that his wife was
taken alive, dispelling speculation he
used her as a human shield.
She did, however, suffer a leg
wound, after rushing towards the US
navy SEAL team storming the third
floor bedroom where bin Laden was
holed up.
The White House’s official
spokesman Jay Carney added that a
“volatile firefight” had taken place.
Officials also attempted to dispel
growing speculation over the evi-
dence of bin Laden’s death. They
claimed official photographs of bin
Laden’s corpse do exist, yet would not
immediately be released.
“It is fair to say it is a gruesome pho-
tograph… it could be inflammatory,”
said Carney.
However, CIA chief Leon Panetta
said the photographs would “ulti-
mately” be released. CITY VIEWS: P2
Certified Distribution
28/02/11 - 03/04/11 is 105,180
 2 News CITYA.M. 4 MAY 2011

Britain must vote No to AV tomorrow NEWS | IN BRIEF

EDITOR’S LETTER
ALLISTER HEATH
FIRST it was wedding bells that
drowned out campaigning for tomor-
row’s referendum – and then it was
Osama bin Laden’s death. But the vote
on whether to change our voting sys-
tem is nevertheless a hugely important
moment for Britain’s democracy. We
urge all of you who care about the way
we are governed to take part, to cast
your vote – and to vote No.
The version of the Alternative Vote
(AV) system on offer would make coali-
tion governments more likely, would
incentivise MPs to move to the centre
(as they pander for second and third
preferences) and would increase the
power of insiders and of the political
establishment. It would do all of this
without making MPs work any harder
or the system any fairer: AV is entirely
different from a proportional repre-
sentation (PR) scheme of the sort long
advocated by many reformers. In fact,
AV would have produced even more
disproportionate results in three out
of the past four general elections, mag-
nifying defeats and exaggerating victo-
ries. Because some voters would back
just one candidate while others would
indicate several preferences, some peo-
ple would have a greater voice than
others, a deeply disturbing prospect.
Most important of all, while an AV sys-
tem ought not in theory to be too com-
plex to understand, in practice it
would baffle millions of voters – and
even many so-called experts don’t fully
understand it.
The sorry truth about AV is that
even its supposed supporters don’t
really want it. Nick Clegg used to call it
a “miserable little compromise” and
Chris Huhne once likened it to “an ill-
fitting corset attempting to squeeze all
the diverse strands of opinion in our
society into an inappropriate and
deeply uncomfortable shape.” The
1998 Commission on Voting Reform
chaired by Roy Jenkins, another Lib
Dem, rightly argued that AV would be
“unacceptably unfair”, “less propor-
tional” and “disturbingly unpre-
dictable”. This is one reason why only
three countries – Fiji, Australia, and
Papua New Guinea – use AV for their
national parliament – and no national
legislature uses the “optional prefer-
ence” version proposed in the UK.
This is not to say the current elec-
toral system is perfect. There is a strong
case for radical constitutional reform.
We should stop the ridiculous system
whereby Scottish, Welsh and Northern
Irish MPs vote on English issues, while
English MPs have no say on most
Scottish, Welsh and Northern Irish
policies. England needs to have the
same rights as the other UK nations.
We need to rethink local government:
the system is broken, partly because
councils don’t have to raise locally all
the cash they spend. Rather than wast-
ing time and money arguing about
whether to introduce a voting system
nobody really wants, we should be
debating what our relationship with
Brussels should be. Another interest-
ing reform would be to introduce a
right of recall for MPs – if enough vot-
ers sign a petition, a by-election would
be held. There is also a strong case for
bottom-up referenda, also triggered by
petitions. There could be lots of useful
changes – but adopting an eccentric
voting system that even its supporters
hate is not the way to go, especially at a
time when the nation faces far more
important economic challenges.
Polls suggest that the No side is in
the lead but mass apathy means that
there is a real risk of the Yes camp win-
ning on a derisory turnout. So please
make use of your democratic rights
tomorrow – and vote No.
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Keydata escapes criminal charges
Criminal charges will not be brought
against anyone involved in the collapse
of Keydata, the financial services firm
that collapsed earlier this year, accord-
ing to the Serious Fraud Office. The SFO
said there was “insufficient evidence” for
a prosecution. An ongoing Financial
Services Authority (FSA) probe into the
firm’s failure could however land execu-
tives with heavy fines and a ban from
working in the sector. The firm’s
founder, Stewart Ford, has denied any
wrongdoing.
BP agrees to pay $25m charge
BP has agreed to pay a $25m (£15m)
civil penalty plus interest to settle a fed-
eral investigation into a pipeline oil spill
on Alaska’s North Slope in 2006. The oil
spill in Alaska is one of several environ-
mental and safety problems that has
beset BP in the United States in recent
years, including a deadly explosion at an
oil refinery in Texas that killed 15 work-
ers and most recently last year’s historic
oil spill in the Gulf of Mexico. The penal-
ty is the result of BP violating US envi-
ronmental laws when it spilled crude oil
in waters on the North Slope.

CITY VIEWS: DO YOU FEEL SAFER SINCE OSAMA BIN

7th Floor, Centurion House,
24 Monument Street, London, EC3R 8AJ
Tel: 020 7015 1200 Fax: 020 7283 5334
Centrica plea LADEN’S DEATH?
LUCA TONDINI | RV LTD
Interviews by Marion Dakers

over gas tax

Email: news@cityam.com www.cityam.com
Editorial “I think that if we keep up the existing anti-ter-
Editor Allister Heath rorism measures, London won’t be any more at
Deputy Editor David Hellier
News Editor David Crow risk than before. We should concentrate more on
Night Editor Katie Hope what’s happening to Pakistan and Libya.”
Business Features Editor Marc Sidwell
POLITICS Simplification, described the surprise
▲

Lifestyle Editor Zoe Strimpel

Sports Editor Frank Dalleres BY DAVID CROW AND DAVID HELLIER raid on North Sea oil and gas firms as
a “rabbit punch” – an illegal boxing
SHANE ALDONS | LIBERTY SYNDICATES
Art Director Craig Gaymer
Pictures Alice Hepple CENTRICA was yesterday hopeful that blow – that was “precipitate and unex-
Commercial the chancellor would reconsider plans
to raid the profits of North Sea gas
pected”. Whiting said he was speak-
ing as a director of the Chartered
“I don’t think it will make much difference. I think
Sales Director Jeremy Slattery people might be a bit more aware and vigilant, but the
Commercial Director Harry Owen firms, after his own tax tsar hit out at Institute of Taxation and not in an
Head of Distribution Nick Owen the proposals. official capacity. level of danger in London probably hasn’t changed. I
A source close to the British Gas But despite Centrica’s optimism, a
owner said they were pleased that Treasury aide said there was “no way” don’t feel any more or less safe.”
Distribution helpline such a “senior voice” had “questioned Osborne would rework the proposals.
If you have any comments about the distribution
of City A.M. Please ring 0207 015 1230, or email whether this is the right way for- Representatives of the oil and gas
distribution@cityam.com ward”. industry will today make their case
They added there had been “much against the North Sea tax raid at the JOSEPH BRINER | ADVANTAGE PROFESSIONAL
Editorial Statement interaction” with the Treasury about Commons energy select committee.
This newspaper adheres to the system of the possibility of reviewing the pro-
self-regulation overseen by the Press Complaints posal. Representatives of the “It will take a long time to make a lasting differ-
Commission. The PCC takes complaints about the
editorial content of publications under the Editor’s
Centrica argues that oil and gas oil and gas industry ence, either for the better or worse, around the
should not be treated in the same way,
Code of Practice, a copy of which can be found at
www.pcc.org.uk since gas is sold at approximately half will today make their world. There might be a backlash, but there’s
Printed by Newsfax International,
the price of oil. case against Osborne’s no way of knowing either what’s planned or
Beam Reach 5 Business Park, Earlier this week, John Whiting, the North Sea raid how we are preventing it.”
Marsh Way, Rainham, Essex, RM13 8RS head of George Osborne’s Office of Tax

WHAT THE OTHER PAPERS SAY THIS MORNING

BUSINESSES FEAR £90BN HIT IN
COSTS BOOMERANG
The UK’s main quoted companies fear
that £90bn of annual costs will return
to their books as they recover, wash-
ing away savings made during the
recession and squeezing profit mar-
gins, according to a survey by a lead-
ing accountancy firm. Businesses
believe that 95 per cent of costs they
cut in the downturn, many done as a
quick fix, will return in a “cost
boomerang” over the next few years,
the research covering more than a
third of FTSE 350 companies found.
CABLE CRITICISES RBS OVER REPORT
ON COLLAPSE
Vince Cable has attacked Royal Bank
of Scotland for putting up “obstacles”
to prevent the publication of a long-
awaited report into the collapse of
the bank, amid concern legal battles
could delay its release indefinitely.
KKR AND TPG LOOK TO MOVE INTO
BRAZIL
US-based private equity groups
Kohlberg Kravis Roberts and TPG are
looking to set up offices in Brazil as
the industry increasingly seeks to tap
emerging markets for growth. KKR
and TPG are hunting for a senior fig-
ure to lead their offices in Brazil, who
will then recruit start-up teams of
five to six staff, people in the industry
said.
RUSSIAN LENDERS FAIL STRESS TEST
Nearly a third of Russia’s banks are ill-
prepared for a repeat of the global
financial crisis, according to a stress
test of the industry by its central
bank. Few domestic lenders went
bankrupt during the crisis, thanks to
nearly $40bn in state support.
However, more than 300 of Russia’s
900-plus banks would see their capi-
tal requirement fall below the 10 per
cent minimum if they found them-
selves in a similar downturn.
NINE OUT OF TEN POST OFFICES WILL
CLOSE
Unions have clashed over how badly
the nation’s post offices may be
affected by the forthcoming privatisa-
tion of Royal Mail. Mail workers have
warned that the Postal Services Bill,
which is expected to move to royal
assent this summer, could lead to
more than 90 per cent of the network
closing.
CITIGROUP SET TO AUCTION EMI AS
EARLY AS NEXT MONTH
Citigroup has asked the EMI boss
Roger Faxon to set up a data room for
potential buyers of the music busi-
ness as quickly as possible. The bank,
which seized control of EMI from its
private equity owner Guy Hands in
February, has decided to sell the com-
pany as a whole rather than split its
music publishing section from its
recording division.
EBOOK SALES SOAR, BUT PRINT IS
STILL POPULAR
Sales of digital books are soaring in
the UK, according to figures from The
Publishers Association. In 2010, sales
of ebooks and audio book downloads
in the "general titles" category, which
includes novels and consumer titles,
rose from £4m to £16m. The
Publishers Association, the trade body
representing most of the UK publish-
ing industry, said that the digital mar-
ket is now six per cent of combined
physical and digital sales.
RUSSIAN INVESTIGATOR TARGETS
SENIOR HERMITAGE EXECUTIVE
A Russian investigator will today ask a
Moscow court to issue an arrest war-
rant for Ivan Cherkasov, a senior exec-
utive at UK-based investment fund
Hermitage, escalating a stand-off
between the company and a group of
policemen it has branded corrupt.
MEXICO COURT DEALS CARLOS SLIM A
SETBACK ON PHONE FEES
Mexico’s Supreme Court dealt Carlos
Slim, the world’s richest man, a
major setback yesterday, ruling that
his Mexican cellphone company can’t
continue to block competitors by
using court injunctions to ignore the
rulings of the country’s telephone
regulator.
PANEL RULES AGAINST AIG IN
LIFE-INSURANCE DISPUTE
An arbitration panel in April ordered
a unit of American International
Group to pay $86.7m to a US-based
subsidiary of a Belgian bank. The pay-
out was tied to a dispute over insur-
ance on loans that were made to an
investor who purchased older peo-
ple’s life-insurance policies. The
award shows AIG’s big role in the “life
settlements” market, where life-
insurance policies are traded.
CITYA.M. 4 MAY 2011 News 3

Portugal secures bailout deal

for €78bn from IMF and EU

▲
EUROZONE
BY RICHARD PARTINGTON
PORTUGAL last night struck a deal for
an international bailout worth €78bn
(£70bn) to ease its debt burden for a
three-year period.
The country’s caretaker prime min-
ister Jose Socrates said he had “got a
good deal” in a televised address.
Few details of the loan were given
Portugal’s caretaker prime minister Jose Socrates has agreed to a €78bn bailout. last night, after almost a month of
wrangling with the European Central
Bank, the European Commission and
the International Monetary Fund
(IMF).
The interest rate Portugal pays on
the loan is due to be set by EU minis-
ters on 16 May. Socrates said Portugal
would be given more time to reach its
budget deficit targets than had been
previously expected.
Lisbon will now seek to cut its
deficit to 5.9 per cent of GDP this year.
It had aimed to reduce its debt moun-
tain to 4.6 per cent of GDP. Portugal’s
main opposition parties have to
endorse the deal ahead of a general
election on 5 June, although are
expected to agree to the terms of the
rescue package.
Portugal is the third Eurozone
member to seek a bailout, behind
Greece and Ireland after the govern-
ment failed to get its austerity plans
passed through parliament.

Murdoch in F1
bid talks with
Ferrari backer
ed F1’s place on free-to-air TV, a state
▲

BUSINESS OF SPORT
BY STEVE DINNEEN
NEWS Corp has confirmed it is in
talks to launch an audacious bid to
take control of Formula One racing.
The firm said it is working on a bid
with Italian investment firm Exor,
which has a 30.5 per cent stake in
Ferrari owner Fiat SpA.
A joint statement by the two said:
“Exor and News Corp confirm that
they are in the early stages of explor-
ing the possibility of creating a con-
sortium with a view to formulating a
long term plan for the development
of Formula One in the interests of the
participants and the fans.”
As a competing firm, any involve-
ment in a bid by a Ferrari’ sharehold-
er would be controversial and likely
face a competition probe.
News Corp boss Rupert Murdoch is
also understood to be in talks with
Mexican telecoms tycoon Carlos Slim
to launch a multi-billion bid for one
of the most prized assets in sport.
However, F1 chief executive Bernie
Ecclestone has claimed Murdoch
would not be allowed to bid for the
sport as it would prevent a fair sale of
TV rights. Ecclestone has also defend-
of affairs that would come under
grave threat if pay-TV boss Murdoch
got his hands on it.
Private equity firm CVC, which
snapped up F1 in 2006 for $1.8bn
(£1.1bn), confirmed last night it has
received a “friendly” and “very pre-
liminary” approach from an Exor,
News Corp group about its interest in
buying Formula One.
CVC “recognizes the quality of Exor
and News Corporation as potential
investors, but any investment in
Formula 1 will require CVC’s agree-
ment and will need to demonstrate
that it is in the interest of the sport
and its stakeholders, taken as a
whole,” it said in a statement.
CVC is understood to be happy to
hang onto its asset but city sources
told City A.M. it would be tempted if a
Murdoch coalition bid a suitably high
figure.
Mexican telecoms
billionaire Carlos Slim
is understood to be in
talks with Murdoch
over a joint bid.

US sues Deutsche Bank for more

than $1bn for mortgage fraud
MortgageIT unit misled the Federal
▲

BANKING
BY RICHARD PARTINGTON
GERMAN lender Deutsche Bank is to
be sued by the United States for more
than $1bn (£605m) over alleged mort-
gage fraud.
The Frankfurt-based bank is
accused of “years of reckless lending
practices” by the US Justice
Department. It is also accused of
defrauding the federal government
by repeatedly lying to obtain insur-
ance guarantees on mortgage debt.
According to the lawsuit, filed in
New York, Deutsche Bank and its
Housing Administration into believ-
ing their mortgages qualified for fed-
eral insurance, knowing they could
make “substantial profits” when the
loans were later sold.
In fact, the government said, the
loan quality was so poor that nearly
one in three mortgages defaulted, a
percentage elevated by Deutsche
Bank’s “dysfunctional” quality con-
trol.
Deutsche Bank said the claims
were “unreasonable and unfair”, and
said it would defend against the
action vigorously.
 CITYA.M. 4 MAY 2011
ANALYSIS | JAPANESE FIRMS COUNT COST OF CORPORATE DISASTERS
Potential cost:
$32bn
Toyota
The car manufacturer had an annus
horribilis last year, announcing it would
have to recall millions of its cars over
safety fears. Analysts say the recall
could cost it up to $2bn in lost output
and sales. The damage to the reputa-
tion of the world’s largest carmaker
could have an even higher value.
Potential cost:
$425bn
(at least)
Sony hackers
hit 25m more
▲
TECHNOLOGY
BY STEVE DINNEEN
MISERY was heaped on embattled
Sony yesterday when it was revealed a
further 25m customers could have
had their personal information stolen
by hackers.
Last week it was forced to admit
78m members of its PlayStation
Network have been targeted by hack-
ers, with a limited number of credit
card and bank details amongst the
information accessed.
The latest breach is at the Sony
Online Entertainment division of the
company, which is separate from the
PlayStation Network.
It is understood both divisions were
targeted as part of the same sustained
attack but that Sony was unaware of
this until yesterday.
Sony was forced to shut down the
division in yet another blow to its
sales. The PlayStation Network had
Banks face further restrictions
in war to retain talented staff
▲
REMUNERATION
BY JULIET SAMUEL
GUIDELINES on implementing the
EU’s new bonus regulations will
deprive banks of a major way of retain-
ing their most talented staff, experts
have said.
In detailed guidance issued last
week, the Financial Services Authority
(FSA) gold-plated EU regulations on
bonuses so as to effectively rule out
News 5
Sony
News that an additional 25m people
HSBC to sell off $30bn of
assets in strategic overhaul
could have had their details stolen is a
disaster in terms of damage limitation.
One firm says the cost of cyber attacks
averages $318 a user – in this case
$32bn. It is likely costs will tail off as
numbers get into millions but this is
still a vast clean-up operation.
menting what Gulliver has called “a by selling off retail assets in the US.
▲
EXCLUSIVE
BY JULIET SAMUEL very disciplined approach to alloca- Top of the list could be “the outsized
tion of capital” so as to meet the US credit card business and a scaling
Potential cost: HSBC is set to announce some $30bn bank’s 12-15 per cent returns target. back of HSBC’s US branch presence”.
(£18.2bn) in asset sales as part of chief Investec analyst Gareth Hunt says The remaining $5bn could come
$2bn executive Stuart Gulliver’s strategic
rebalancing of the bank.
that sales must form part of any strate-
gic shift: “They need to sell in order to
from selling HSBC’s 16 per cent stake
in Ping An, a Chinese insurer, says
Insiders have confirmed the $30bn buy,” he said. Chandra-Rajan. However, some think
figure to City A.M., which was estimat- Details of the sales are not yet this unlikely, given the further growth
ed by Barclays Capital analyst Rohith known, but BarCap’s Chandra-Rajan potential of the Chinese market.
Chandra-Rajan in a note to investors. estimates that the lion’s share of the Other assets for the chop could
The sales will form part of imple- capital – some $25bn – will be raised include some of the bank’s IT hubs.
TEPCO
Japanese nuclear plant TEPCO suffered
irreparable damage to both its balance
sheet and reputation after the deadly
earthquake. The cost to replace each of
its four reactors is estimated at around
$100bn each and it will have to pay in
the region of $25bn in compensation to
residents of the surrounding area.
still not been reinstated yesterday.
Sony had begun a clean-up opera-
tion that involved giving users free
access to its premium content and pay-
ing credit card renewal fees in affected
areas but the latest revelation is likely
to dump it back to square one.
Users were warned of a possible
attack on 27 April – a week after Sony
first detected a problem. Sony says it
has now put in place measures to pre-
vent another cyber-attack.
ANALYSIS l Sony (Japan)
3,000
¥
2,800 2,316.00
3 May
2,600
2,400
7 Feb 28 Feb 18 Mar 7 Apr 28 Apr
retention bonuses to existing staff.
PricewaterhouseCooper’s Jon Terry
said: “It’s likely the latest announce-
ments will spell the end of guarantees
for existing employees, which had
been an important tool for firms to
retain talent.”
The news follows revelations by City
A.M. earlier this year that both Barclays
and RBS are fighting a rise in “regret-
ted losses” – the loss of talented staff
despite efforts to keep them.
 6 News
Japan launch
boosts shares
in Man Group
▲
HEDGE FUNDS
BY RICHARD PARTINGTON
SHARES in Man Group, Europe’s
largest listed hedge fund, leapt yester-
day after it revealed it had raised a
bumper $1.5bn (£910m) from
Japanese investors for a new fund.
The Nomura Global Trend open-
ended fund, which tracks Man
Group’s AHL managed futures strate-
gy, is the firm’s biggest product
launch since the financial crisis.
Japanese bank Nomura marketed
the fund to its private-banking clients
on behalf of Man Group.
Man Group will invest the fund in a
mixture of assets via three currency
baskets, one of which includes the
Chinese Yuan.
The investment powerhouse
pressed ahead with the launch of the
computer-driven fund after initially
stalling as a result of Japan’s massive
quake and tsunami in March.
About 15 per cent of Man Group’s
assets are based in Japan, and shares
in the firm were hit hard following
CITYA.M. 4 MAY 2011
the disaster.
The hedge fund manager struggled
in the wake of the financial crisis, but Man Group, headed by Peter Clarke, gets around 15 per cent of assets from Japan
last quarter Man Group showed it was
winning back clients after two years
of heavy outflows.
Meanwhile, the sponsor of the liter-
ary world’s Booker Prize also
Stanley Fink’s Japanese legacy still paying off
announced it had completed its deal
to buy New York-based fund manager THERE have been relatively few also a vote of confidence in quant forged by former chief Stanley Fink;
Ore Hill. The purchase bolsters its US good news stories about quant funds, which use computer algo- Japanese funds account for 15 per
operations, giving it a stronger pres- funds recently, and even fewer rithms to make investment deci- cent of its assets. Fink outlined his
ence in the American credit markets. about Japan. That’s why the barn- sions. Just over a year ago, these reasons for pushing into Japan back
Man Group shares closed up three storming launch of a Japanese fund funds had been all but written off by in 2006, just before he quit as chief
per cent at 258p per unit. that tracks Man Group’s AHL man- some commentators after several executive: “We work with a Japanese
aged futures strategy comes as such incurred huge losses. In 2009, AHL – bank that has $1,000bn of its cus-
ANALYSIS l Man Group a surprise. Analysts had expected which then accounted for around tomers’ money sitting there earning
the Nomura Global Trend fund, half of Man Group’s assets – lost 0.25 per cent. If we could manage
320 p
which was marketed to the $1.2bn or 17 per cent; performance just five per cent of that we’d double
Japanese bank’s investors in the has been better since then, if some- the size of the business,” he said.
300 258.00 aftermath of the earthquake, to what volatile, but the fund has With Japanese interest rates now at
3 May attract $500m – just one third of struggled to shake off the shadow virtually zero, it’s a rationale that
280
the $1.5bn total. cast by that annus horribilis. still holds true.
That Japanese clients were willing Man Group has always had a good
260
to invest in Man Group’s flagship reputation in Japan, thanks to
240 product will come as a welcome
boost for the fund manager, but it is
strong partnerships with Nomura
and Mitsubishi Bank, which were
BOTTOMLINE
7 Feb 25 Feb 17 Mar 6 Apr 28 Apr
Analysis by David Crow
CITYA.M. 4 MAY 2011 News 7

F&C boosted by inflows as

Bramson meets shareholders
the board in February, Edward boosting assets by 0.3 per cent but

▲
FUNDS
BY ELIZABETH FOURNIER Bramson said his review of the com- missing analysts’ predictions of an
pany’s operations was ongoing. increase to £108.1bn.
THE new chairman of F&C Asset Analysts have deemed the out- F&C said that weaker fixed income
Management faced investors for the come of the review an integral factor markets had offset positive currency
first time yesterday, as the fund in the fund’s long-term value, movements and higher equity mar-
F&C’s new chair manager reported an increase in though the jump in inflows will be kets to keep asset growth subdued in
Edward Bramson assets under management to seen as an initial vote of confidence the first-quarter.
was elected in £106.1bn. in Bramson’s first months of leader- “Overall the business continues to
February after a At the first annual general meet- ship. trade in line with management’s
boardroom coup. ing since activist investor group The fund reported inflows of expectations,” said Alain Grisay, F&C
Sherborne Investors took control of £195m for the last three months, chief executive.

New markets
push up profit Why we make our business
at Aberdeen contracts flexible
▲

ASSET MANAGEMENT emerging markets and Asia Pacific

BY MARION DAKERS
EMERGING market growth has pro-
pelled pre-tax profits at Aberdeen
Asset Management to £109.1m in the
last six months, doubling the gains of
the same time last year.
Funds under management rose six
per cent over the six months to the
end of March to £181.2bn, and are 1.4
per cent ahead of this time a year ago.
The firm said outflows from more
traditional fixed income funds have
seen a “dramatic slowdown”, with
funds before they become too large to
manage in their current state.
Revenues rose 30.9 per cent to
£385.9m for the half-year.
Performance fees more than dou-
bled to £19.1m, while recurring man-
agement fees rose 28 per cent to
£366.5m. The group now has a £13.5m
cash pile, compared with £7.7m net
debt last year, which the firm plans to
return to shareholders through an
ongoing buyback and a 19 per cent div-
idend hike to 3.8p per share.
Staff

£600m leaving the investment catego- ANALYSIS l Aberdeen Asset Management

ry during the half-year compared with
230 p
£2bn at the end of 2010. 230.00
“[W]e are seeing encouraging inter- 3 May
est in emerging market and Asian 220
local currency debt, both of which we
believe will provide considerable
opportunity for new business wins 210
over the next few years,” said chair-
man Roger Cornick. 200
The company is actually looking to
slow the rate of investment in its 7 Feb 25 Feb 17 Mar 6 Apr 28 Apr

ANALYST VIEWS: WHAT DO YOU MAKE OF Jan Feb Mar Apr May Jun Jul Aug

ABERDEEN’S RESULTS? By Marion Dakers

NICOLAS BURGESS | RBS

“ Aberdeen’s results beat our forecasts by seven per cent, driven by bet-
ter-than-expected performance fees and in-line management fees. Revenue mar-

”
gins, operating margins and cash flow all showed improvement. We see Aberdeen Your business can change size quickly. So we change with you.
as a key pick and likely to outperform both the market and its peer group. We’re flexible because you need to be.

DAVID MCCANN | NUMIS SECURITIES

“ With the company having now largely cleaned up its balance sheet, main-
tained good discipline on costs helping to improve the operating margin, largely

”
stemmed the fixed income outflows and having won substantial high value net busi-
ness in equities, we expect to upgrade our annualised earnings forecasts. 0800 781 1328
Visit o2.co.uk/yourbusiness
STUART DUNCAN | PEEL HUNT or text FLEX to 61002

“ The results were well ahead of expectations. Key metrics all moved in
the right direction, operating margins particularly impressing at over 38 per cent.

”
Aberdeen is benefiting from a changing business mix driving higher revenue mar-
Subject to eligibility. Terms apply, see o2.co.uk/terms
gins, operational gearing and improving cash generation.
 8 News CITYA.M. 4 MAY 2011

Treasury closes
Investors call in on deal with
Swiss on tax
for disclosure TAXATION

▲
on junk bonds How would independence in
Scotland affect the UK economy?
BRITAIN yesterday was in the closing
stages of a deal with Switzerland to
tax undeclared assets in a deal that
will bag £3bn for the government by
2015.
Britons with funds in Swiss bank
accounts will be forced to pay tax on
▲

CAPITAL MARKETS
BY ELIZABETH FOURNIER
INVESTORS in Europe’s booming high-
yield market are demanding more
transparency and disclosure of terms
from issuers and underwriting banks,
threatening a corporate funding mar-
ket that was worth more than €60bn
(£54bn) last year.
In a letter to the major banks that
underwrite high-yield bonds, a group
of the 30 biggest European investors in
the class have called for issuers to dis-
close details of private funding agree-
ments to the markets.
The letter, obtained by legal publica-
tion IFLR, claims that practices in the
mushrooming European market have
developed without enough input from
the buyside, and that “some of the
basic premises that have underpinned
senior secured bond issuance to date
need to be revisited”.
The group also wants voting rights
on enforcement to be standardised,
with an even split between senior
A Daimler Brand
secured bondholders, and lenders
under the senior facilities agreement.
European high-yield is having a
bumper 2011, with issuance to date
already at €34bn according to figures
from Dealogic – more than half the
€62.6bn sold over the whole of 2010.
So-called junk bonds are becoming
an increasingly popular means of fund-
ing debt refinancing and acquisitions,
as banks focus on their own capital
raisings and loans remain elusive.
March alone saw a record €7.2bn
sold into Europe, including German
firm Kabel’s sale of a €3.2bn bond to
fund its buyout of Liberty Global.
A similar drive for transparency was
launched in 2002, when a smaller
group of investors demanded changes
to the practice of structurally subordi-
nating bond investors to bank lenders.
But threats from investors may hold
more weight this time. Not only have
protestors tripled, but high-yield bonds
in 2002 totalled just €6.2bn – less than
a tenth of the amount that could be at
stake this time round.
THE latest Voice of the City panel is
now online. To participate go to
www.cityam.com/panel and answer
the questions below. Results will be
published in next Monday’s paper.
1) Do you see the following as likely
consequences of the death of Osama
bin Laden?
• Traders will be more likely to make
risky investments
• Oil prices will begin to stabilise
• Barack Obama’s political position will
be strengthened significantly
• The threat of revenge attacks on
Western targets will increase security
risks for a time
2) Polling ahead of the Scottish elec-
PoliticsHome.com
In association with
PoliticsHome.com
tions points to a pro-independence
majority in the Scottish Parliament,
which would be able to hold a referen-
dum on leaving the UK. Would you view
Scottish independence as good or bad
for the rest of the British economy?
3) A year since its founding, the coali-
tion government appears divided on
key policy areas. Do you think it’s time
for David Cameron to pull the plug on
the coalition?
Participants could be in with the
chance of winning a free luxury week-
end to Paris. In September, we’ll put
panellists who have responded to at
least 80 per cent of surveys into a prize
draw. Full Ts&Cs available on request.
Apply to join today at
www.cityam.com/panel
new deposits, as well as a one-off ret-
rospective levy.
A withholding tax rate of 50 per
cent would apply to income from
Swiss bank accounts held by British
taxpayers, swelling the Treasury’s
coffers in time for the May 2015 gen-
eral election.
The deal could force individuals
who hide money to move cash away
from Switzerland to alternative loca-
tions, including Singapore, Hong
Kong and the US.
Yet tax havens worldwide are com-
ing under pressure from govern-
ments strapped for cash in the wake
of the financial crash and the global
sovereign debt crisis.
Swiss authorities are said to have
been in talks with the Treasury since
last October, although no deal has
yet been signed.
“Constructive discussions are cur-
rently ongoing, but substantive
issues remain and no agreement has
been reached,”
spokesman said.
a Treasury

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CITYA.M. 4 MAY 2011 News 9

Compass continues £140m acquisition

HOW COMPASS HAS BEEN SPENDING ITS CASH
Target Date Country

rs
esu

spree with more European buyouts PR 3 May Sweden

BG

11 April India

ML
P-I 6 April UK
▲

M&A
BY KASMIRA JEFFORD
CATERING firm Compass Group yes-
terday announced the latest in a
string of acquisitions of small food
services businesses as part of its
£140m overseas expansion plan.
The firm said it will buy BGP
Resurs, based in northern Sweden,
for SEK16m (£1.6m). BGP posted rev-
enues of 26.5m SEK in 2010.
“The acquisition of BGP provides
a valuable platform from which to
grow our food service business in
the north of Sweden,” said
Compass.
Compass Nederland has also
been given the go-ahead to buy
Elior, a French caterering business
based in Holland, for an undis-
closed sum.
The global catering company
has bought eight small to medium-
sized businesses so far this year
in countries including Germany, US PP
and India.
In its interim statement last 22 March Netherlands
month, Compass said it has put
aside around £140m for acquisi-
tions in the first half of the year,
with more projects in the pipeline. GP RESURS 8 March US
Compass MD Ian Sarson has been
on the acquisition trail since 11 January Sweden
taking the role last year

Nasdaq takes
bid for NYSE The 160 hours our business
advisers spend training
to investors
analyst at Raymond James.
▲

EXCHANGE MERGERS 28 hours

BY HARRY BANKS
NASDAQ OMX and Intercontinental
Exchange (ICE) are planning to take
their takeover bid for NYSE Euronext
straight to the Big Board’s sharehold-
ers, as they ramp up attempts to cor-
ner the company into talks.
Nasdaq and ICE have said they will
launch a tender offer for NYSE’s shares
later this month. It comes after NYSE’s
board twice rejected the $11bn
(£6.7bn) unsolicited offer in favour of
its $10.2bn deal with Deutsche Boerse.
Nasdaq and ICE’s move to go hostile
could force NYSE to the negotiating
table or to fight back with defensive
measures if shareholders step up pres-
sure. It could also pressure Deutsche
Boerse into sweetening its deal.
But it is unlikely to be the last word
in what is likely to be a lengthy
takeover battle.
NYSE could still sit tight. The gap
between Nasdaq-ICE and Deutsche
Boerse bids – a key shareholder con-
cern – has narrowed to eight per cent
from nearly 20 per cent recently,
thanks in part to a weaker US dollar.
The Nasdaq-ICE exchange offer also
has conditions that could yet derail it.
“We believe the laundry list of con-
ditions attached to the offer virtually
guarantee that it will never be execut-
ed,” said Patrick O’Shaughnessy, an
“The conditions to the tender offer of technical stuff
essentially state that Nasdaq/ICE’s pro-
posal must first be approved by the
NYSE board, so this offer does not 20 hours
seem to be hostile at all.” learning how to treat
Shareholders of the New York Stock customers really, really well
Exchange parent have nonetheless
urged it to at least talk to Nasdaq and 30 hours
ICE about their deal. on how to speed things
“I am bothered that NYSE has avoid- through the system
ed any conversation with Nasdaq. I feel
as if they are biased to the Deutsche
offer even though economically it’s
not equal,” said Keith Wirtz, invest- 4 hours
ment chief at Fifth Third Asset of well-earned coffee breaks
Management, which holds more than
100,000 shares of NYSE Euronext. 35 hours
“The proposals on the table are not on the nuts and bolts of
likely to be the last,” Wirtz said. “I real- all our products
ly think the German company is going
to be forced to react to the actions of
Nasdaq.” 25 hours
understanding which tariffs
ANALYSIS l NYSE Euronext
are best for your business
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sues five of its banks for $2.2bn

company into bankruptcy.
▲

FINANCIAL SERVICES
THE trustee for home loan provider
Thornburg Mortgage is suing Goldman
Sachs, Barclays and other banks for a
total of $2.2bn (£1.3bn), blaming them
for the company’s bankruptcy.
The trustee filed four separate law-
suits, one of which blames a “collusive
scheme” by units of JPMorgan Chase,
Citigroup, Royal Bank of Scotland,
Credit Suisse and UBS for driving the
Maryland lawyer Joel Sher has 0800 781 1328
accused the banks of acting together
to use a series of unjustified margin Visit o2.co.uk/yourbusiness
calls to extend their control over or text ADVISER to 61002
Thornburg, once a leading provider of
“jumbo” home loans.
Citigroup said the lawsuit was with-
out merit. Credit Suisse and UBS
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RBS did not immediately return a call You can call our business advisers free from O2 mobiles during opening hours. Terms apply to all our packages, see o2.co.uk
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 The Capitalist
10
IT’S BACK: APPRENTICE
RETURNS WITH FRESH
BAIT FOR LORD SUGAR
THE STAKES are higher than ever on
series seven of The Apprentice with
more pressure, more risk and even
more difficult challenges for the 16
hard-nosed contestants.
Gripping viewing – but no-one will
be watching the opening episode of
this year’s series (next Tuesday) with
more interest than the employees of
Scottish & Southern Energy in
Reading. They’ll be following the for-
tunes of their former colleague
Edward Hunter, who quit his job as
an accountant at the energy firm to
become a contestant on the show.
You see, even though Hunter
trained at one of the Big Four audi-
tors, being an accountant isn’t really
what he wants to do in life.
Given a sneak preview of the open-
ing episode, The Capitalist was wincing
as he told judges Lord Sugar, PR
impresario Nick Hewer and Karren
Brady, vice-chairman of West Ham
FC: “I’m the wheeler dealer who acci-
dentally became a finance profession-
al and wants to get out.”
Fighting talk. But isn’t that just the
sort of swaggering bravado that got
Stuart “The Brand” Baggs into trouble
last year? (“I’m not a one-trick pony,
I’m not a 10-trick pony, I’m a whole
field of ponies – and they’re literally
all running towards this job.”)
And talking of pony, Hunter’s up
against the likes of 28-year-old estate
agent manager Alex Britez Cabral,
who believes that “if you are success-
ful, you are unpopular, so unpopular-
ity is a good thing.”
As you’d expect, the thrusting line-
up also includes some impressive
titles like “business psychologist”,
and “skincare entrepreneur”.
Which makes The Capitalist wonder
what the collective noun would be
for such a group of go-getters?
Suggestions by email please.
The line-up for this
year’s Apprentice,
Edward
pictured back row,
fifth from right
The Queen and I:
professional Royal
lookalike Jeannette
Charles and
Michael
Winterflood
EDITED BY CITYA.M. 4 MAY 2011
HARRIET DENNYS
Got A Story? Email
thecapitalist@cityam.com
Follow The Capitalist
on Twitter: @citycapitalist
Hunter
SMALL IS BEAUTIFUL
IN A NEW twist from previous series
of The Apprentice, this year’s winner
will enter into a 50/50 “uncivil part-
nership” with Lord Sugar, who will
invest £250,000 of his own money
into their business idea.
The investment is the same sum of
money Sugar used to start his first
company in 1967, adjusted for infla-
tion; he wants to prove to the public it
is still possible to start a business
from scratch as a way of ending the
“moaning culture”. “All the doom
and gloom has nothing to do with the
banks,” he said. “You have to help
yourself. It is as simple as that.”
Reminding his audience that “I’m
from Hackney, not Eton,” Sugar
added: “I’m not interested in high-
brow economic garbage. I am interest- Free at last: Alastair Cook at the Guildhall
ed in people going out and starting a
business from nothing and making a
pile of money. It is the small compa-
nies, the one-man bands of this world
COOK BOWLED OVER
THE PREVIOUS Lord Mayor Nick
that are the backbone of this country, Anstee was so impressed by the
not the likes of BP and M&S.” “courage and good grace” exhibited
by cricketer Alastair Cook in this win-
ter’s victorious Ashes tour, he and
ROYAL ENGAGEMENT alderman Gordon Haines nominated
AS SOON as Winterflood Securities the batsman for the Freedom of the
heard the news of the Royal engage- City of London.
ment, the original theme for its Cook, who was “honoured” to fol-
Christmas party – traditionally held low in the footsteps of England play-
in April – was pushed back to next ers Andrew Strauss and Michael
year in favour of hiring a troupe of Vaughan, received the award at a
butlers to entertain their 1,000 guests. cricket-themed lunch at the Guildhall
Even though the Winterflood yesterday. But don’t expect to see
hosts didn’t dress up for its Right Cook driving a flock of sheep over
Royal Knees Up – except for a distin- London Bridge – that particular privi-
guishing rose buttonhole – The lege associated with the Freedom has,
Capitalist hears their behaviour sadly, been phased out.
was suitably regal, with life
president Brian Winterflood
insisting guests call him
“His Royal Bri-ness”
LAST RESPECTS
THE FAMILY of Richard Crossley, the
for the evening. Merchant Securities chartist who
Professional died at home in London on 12 April,
lookalike has confirmed the funeral will take
Jeannette place on Thursday 12 May at 10am at
Charles made Christ Church Spitalfields on
a convincing Commercial Street. There will be
Queen for the drinks afterwards to celebrate
n i g h t , Richard’s life at Sweet Basil
although Restaurant on Brushfield Street.
guests were No flowers by request, but dona-
less impressed tions may be made in memory of
by “Prince Richard to the Multiple Sclerosis
Charles”. “Some Society c/o Janet Burrow, Dale Edge,
people thought Back Lane, Whittingham, Preston,
he looked like Lancashire, PR3 2FH.
Gary Lineker,” For further details, please contact
said a mole. John Coulson on 0207 375 9030.
CITYA.M. 4 MAY 2011
Economic optimism highest since last August
BRANDINDEX
STEPHAN SHAKESPEARE
T
HE latest Bloomberg/YouGov
Household Economic Activity
Tracker (HEAT) results released
today show that optimism
about the economy is at its highest
level since August 2010, recovering
Oz entrepreneur sells
start-up to WorldPay
M&A
▲
BY KASMIRA JEFFORD
LONDON-based entrepreneur Phil
McGriskin (pictured) is set to sell
his internet payment business
Envoy Services to WorldPay, the
global payments provider, in a deal
believed to be worth £70m, just five
years after launching it.
Australian Phil McGriskin, 37, a
surfing fanatic who moved to
London in 1996, set up Envoy
Services in 2006 with just £750,000
after quitting his career in the city.
He has attracted several wealthy
angel investors including
Sportingbet founder Mark
Blandford, who owns 11 per cent of
Envoy.
The acquisition by WorldPay is
timely, coming just as the new
limit for entrepreneurs’ relief on
Capital Gains Tax was introduced
last month.
In his March budget, chancel-
lor George Osborne announced
the doubling of the lifetime
limit on “entrepreneurs’ relief”
from £5m to £10m from April.
Envoy’s management team
could benefit from tax sav-
ings of £1.8m each on up to
£10m of gains with
McGriskin, who owns a
majority stake in the busi-
ness, potentially netting
over £35m from the deal
before tax.
WorldPay was itself
bought six months ago by
private equity firms Advent
International and Bain PHILLIP MCGRISKIN
MEET THE ADVISERS
HEDLEY GOLDBERG
ROTHSCHILD
ROTHSCHILD is advising Envoy
Services on the offer from WorldPay,
with Hedley Goldberg, managing
director heading the team.
Goldberg has led the Rothschild
team advising Royal Bank of
Scotland on the £925m sale of the
Priory Group to Advent and advised
News 11
from an all-time low of -36 in March having taken place in the last few tainly rosier than March with much frame to see that there is still a long
(positive minus negative) to stand at - days we can hypothesise that the feel room remaining for improvement. way to go before we reach the levels
24 in April. This improvement is like- good factor generated has built on The graph of optimism over the last achieved in late 2009 (when even
ly to have been driven by three main the improved economic conditions year shows that we are in as strong a then sentiment was negative).
factors: More positive economic news; helping to engender a mood of position as we have been for a while Stephan Shakespeare is chief executive of
for example 10 per cent people fewer greater optimism in the country; it but we only need to extend the time YouGov.
people now expect unemployment to will be important to see that opti-
rise a lot (23 per cent in April, 33 per mism maintained into May and ANALYSIS l Household Economic ANALYSIS l Household Economic
cent in March). beyond. Confidence 2010 Confidence since 2009
Encouraging signs at the coal face
of the British economy; 23 per cent of
It isn’t all good news however with
inflationary expectations still
-5
Household
-5
Household
people saw business activity pick-up extremely high; 80 per cent expect -15 Economic Confidence -15 Economic
at their place of work last month prices to rise over the next year, 31 per Confidence
compared to 18 per cent who saw it cent expect them to rise significantly. -25 -25
decline and worker’s expectations for These fears impact behaviour with 52
their business to improve over the per cent of Brits being more price-sen- -35 -35
next 12 months went from +8 to +13. sitive than they were a year ago.
The royal wedding; with fieldwork Despite that the general picture is cer- Mar 10 Apr 10 Oct 10 Jan 11 Apr 11 Feb 09 Aug 09 Feb 10 Aug 10 Mar 11
Capital from The Royal Bank of
Scotland Group.
Envoy has appointed Rothschild
(see below) and Ashurst, the law
firm, as advisers whilst FT Advisors
and Weil, Gotshal & Manges are
advising WorldPay.
McGriskin said: “We are delight-
ed to be joining
the WorldPay
team and see
a unique
window of
opportunity
to create a
truly differ-
entiated,
market-
leading
proposition
for global
merchants.”
Bridgepoint Capital on its £424m
bid for Care UK.
Goldberg joined Rothschild in
2001 from Baring Brothers where he
worked for three years on their M&A
team. At Baring Brothers, he advised
on Millennium & Copthorne Hotels
acquisition of Regal Hotels in the US.
Before Baring Brothers, Goldberg
worked as a corporate lawyer at
Simmons & Simmons.
Law firm Ashurst is also advising
Envoy Services. WorldPay is being
advised by Udayan Goyal, managing
director at FT Advisors and by law
firm Weil Gotshal and Manges.
CITYA.M. 4 MAY 2011
Delays hit new insurer rules
▲
INSURANCE
BY JULIET SAMUEL
TIME is running out for the imple-
mentation of Solvency II, the new
regulatory capital regime for insur-
ance companies, according to
accounting firm KPMG.
The European Insurance and
Occupational Pensions Authority
(EIOPA) is required to supply propos-
als for the technical details of the
regime by the end of this year, but
has been repeatedly pushing back
Fall in sales at
Pfizer as drug
patents loom
▲
PHARMA
BY HARRY BANKS
US PHARMA giant Pfizer yesterday
reported lower-than-expected quarter-
ly revenue on a decline in sales of its
prescription drugs, exposing the risks
the company faces if it were to it divest
its better performing animal health,
consumer products and nutritional
products units.
Sales of Pfizer’s core business of pre-
scription drugs fell two per cent to
$14.2bn (£8.6bn). Cholesterol fighter
Lipitor, the company’s biggest product,
led the downturn. Its revenue tumbled
13 per cent to $2.39bn due to generic
competition in overseas markets.
The world’s largest drugmaker,
whose shares fell 1.8 per cent in pre-
market trading, said it earned
$2.22bn, or 28 cents per share, in the
first-quarter. That compared with
$2.03bn, or 25 cents per share, in the
year-earlier period, when Pfizer took
charges related to its late 2009 pur-
chase of rival US drugmaker Wyeth.
Excluding special items, including
its Capsugel business that is being sold
and is now considered to be a discon-
tinued operation, Pfizer earned 60
cents per share. Analysts on average
expected 59 cents per share.
Global company revenue of $16.5bn
was a bit lower than the year-earlier
quarter and slightly trailed Wall Street
expectations of $16.63bn.
the deadline by which it has to sub-
mit the draft details, with the latest
suggested dates now in 2016.
Insurers are required to begin
complying with the new regime in
2013, but KPMG insurance director
Janine Hawes says there are now real
fears that the details of the scheme
will not be decided until late 2012,
leaving little time for the industry to
adapt.
“This is not what was expected at
the start of the Solvency II journey,
when the insurance industry was led
Revenue would have fallen two per-
centage points if not for the weaker
dollar, which boosts the value of over-
seas sales, and for new products
obtained in Pfizer’s recent purchase of
specialty drugmaker King
Pharmaceuticals.
Investors fear Pfizer, which has
bought three of the largest US drug-
makers over the past decade, will be
too big to post strong profit growth
once Lipitor faces cheaper US generics
in November, and more than half a
dozen other drugs lose US patent pro-
tection in the next few years.
Pfizer said it aims in the second half
of the year to complete an assessment
of what businesses it may sell.
Sales of animal-health products
jumped 16 per cent to $982m in the
quarter, while sales of consumer
healthcare products rose 12 per cent to
$745m. Nutritional product sales rose
three per cent to $470m.
ANALYSIS l Pfizer
21
$ 20.47
3 May
20.5
20
19.5
19
18.5
7 Feb 28 Feb 18 Mar 7 Apr 28 Apr
to believe that it would have a year to
comply after all the requirements
were known,” she said.
The matter is complicated by addi-
tional delays from the European
Commission, which needs to publish
its own drafts before EIOPA can hold
a public consultation on its propos-
als.
Hawes added: “Whilst it is true
that insurers know the general direc-
tion of the rules, in terms of the
final detail much of the industry is
being kept in the dark.”
Hannover Re has cut its profit outlook after a series of catastrophes
Catastrophes put a dent
in Hannover Re’s forecast
INSURANCE
▲
BY MARION DAKERS
REINSURANCE giant Hannover Re yes-
terday slashed its profit outlook for
the year after a glut of expensive
claims linked to the recent earth-
quakes in Japan and New Zealand.
The downbeat news, largely expect-
ed by the market, saw the firm cut its
net profit forecast from €650m to
€500m (£585m to £450m) for the year,
providing losses from the ongoing US
hurricane season stay below €410m.
Net income for the three months to
the end of March was €52.3m, a third
of the level seen this time last year.
Chief executive Ulrich Wallin told
shareholders he expects to see strong
TUESDAY 14TH JUNE TO SATURDAY 18TH JUNE 2011
300 YEARS OF THE WORLD’S
MOST FAMOUS RACECOURSE
Hospitality packages from £245 per person
hospitality@ascot.co.uk
Photography: Simon Procter
Experian pays $416m for
the majority of Computec
▲
MINING
EXPERIAN, the Dublin-based credit
information group, has agreed to buy
a controlling stake in Computec, a
leading Columbian credit services
company, in an all cash deal valued at
approximately $416m (£252m).
Experian said yesterday morning
that the acquisition will further
strengthen its Latin American pres-
Picture: REUTERS
premiums this year, particularly in
new markets, and that high demand
for pensions in the UK would also bol-
ster future results.
Group premiums are expected to
rise by seven to eight per cent this
year, Wallin added, compared to an
earlier forecast of five per cent
growth.
The firm has seen €509m of claims
linked to the five biggest natural
catastrophes so far this year – the
Australian floods and cyclone, frosts
in Mexico, as well as the Japan and
New Zealand quake.
The firm’s €24.8bn assets under
management are helping to recoup
the losses, generating €222.7m of
income during the quarter.
0870 727 4321
Attire: Vivienne Westwood
News 13
ence and build on its strong market
position in Brazil.
In the half year to 30 September
2010, revenues from Experian’s Latin
American division totalled $350m, up
from $255m a year earlier.
Computec, a publicly listed compa-
ny on the Colombian stock exchange,
runs the most extensive database in
Colombia providing fraud prevention
services and credit reports.
NEWS | IN BRIEF
Kalahari bid suffers setback
AIM-listed uranium miner Kalahari
Minerals has given Chinese suitor CGNPC-
URC more time to prepare its takeover
offer after the original deadline passed
yesterday. CGNPC-URC wants to lower its
indicative bid from 290p to 270p per
share after the Japanese nuclear crisis
threw the uranium industry into doubt.
But the Takeover Panel says the bid can-
not be cut without warning. Both firms
plan to appeal before the new bid deadline
of 17 June.
BHP Brazil plan gets green light
BHP Billiton and its partner Vale has given
its blessing to a $3.5bn (£2.1bn) expansion
project for its Samarco mining project in
Brazil. The firms plan to expand iron ore
pellet production capacity by 8.3m tonnes
to 30.5m tonnes a year, with first produc-
tion expected in 2014.
Lamprell wins upgrade work
Oil and gas engineering group Lamprell
has signed new contracts worth $57m
(£34.5m) for refurbishment projects in the
United Arab Emirates, the company
announced yesterday. Lamprell will
upgrade oil rigs owned and operated by
Millenium Offshore Services, giving the
firm a boost after a sluggish second half
of 2010.
Churchill brings in new investors
Churchill Mining was one of the top per-
formers on AIM yesterday after announc-
ing a £7.7m share placing with Indonesian
investors. Rachmat Gobel and Fara Luwai
will own 16.5 per cent of the company
between them, and will be entitled to
appoint two board members. Churchill
shares closed up 32.5 per cent at 50p.
Rio moves to delist Riversdale
Rio Tinto has won control of the board at
Riversdale Mining, paving the way for
plans to delist the firm. Rio owns more
than 73 per cent of Riversdale shares, and
has given remaining shareholders until
Friday at 7pm Sydney time to accept its
offer, after extending the bid by another
week.
ascot.co.uk
Millinery: Stephen Jones
 14 News
Pressure on
revenues for
Orange owner
▲
TELECOMS
BY STEVE DINNEEN
ORANGE owner France Telecom yester-
day said intense competition in its
home market had deflated its first-
quarter revenues.
It reported sales of €11.3bn (£10.1bn),
roughly in line with expectations, and
overall earnings of €3.7bn.
France Telecom lost out on new
broadband additions as firms scrabble
to attract customers in a fiercely com-
petitive market, ultimately claiming
just 20 per cent of the total.
It was also hit by a hike in VAT for
telecoms services and the political
upheaval in North Africa.
The group was rocked last week
when an employee immolated himself
in a company car park in Bordeaux,
bringing back memories of the spate
of suicides at the telecoms giant
between 2008 and 2010. More than 20
workers for the company, which is 27
per cent owned by the state, commit-
ted suicide last year, with union lead-
ers alleging that working conditions
had played a part.
France Telecom’s UK business
Everything Everywhere – a joint ven-
ture with Deutsche Telekom combin-
ing their Orange and T-Mobile units –
reported slow growth last week.
The key service revenue figure,
which excludes handset sales, grew
just 0.4 per cent to £1.6bn in the first-
quarter. Analysts expect O2 and
Vodafone to post around six per cent
and 6.3 per cent respectively.
Total revenues were down 1.7 per
cent. In the previous quarter total rev-
enue dropped 1.2 per cent.
ANALYSIS l France Telecom
17 € Ofcom will come forward with a reg-
15.77
3 May
16
15
7 Feb 25 Feb 17 Mar 6 Apr 28 Apr
Ofcom boss Ed Richards expects to have to intervene in BT’s pricing
Ofcom may set price BT
charges for infrastructure
TELECOMS
▲
BY STEVE DINNEEN
OFCOM chief executive Ed Richards
says he may be forced to set the price
BT can charge rivals to access parts of
its infrastructure.
The move could have far-reaching
implications for the rollout of broad-
band to rural areas. Richards said he
would prefer a “commercial” solution
between BT and rivals such as Virgin
Media for access to its ducts and poles
Picture: PA
but added this looks “unlikely”.
If no agreement is reached by June,
ulated price structure.
Japanese IT infrastructure giant
Fujitsu says it hopes to roll out super-
fast internet to 5m rural homes but
has said BT must lower its access
prices to make the project viable.
A BT spokesman said: “We are work-
ing closely with both Ofcom and
industry to ensure the prices reflect
the true costs.”
CITYA.M. 4 MAY 2011
NEWS | IN BRIEF
Google’s Korea office raided
Google’s Seoul office was raided yester-
day on suspicion its mobile advertising
unit AdMob had illegally collected loca-
tion data without consent, South Korean
police said. It is the latest setback to the
search firm’s Korean operations. The
probe into suspected collection of data on
where a user is located without consent
highlights growing concerns about possi-
ble misuse of private information as the
use of mobile devices such as smart-
phones and tablets increases.
RenRen aims for bumper IPO
China’s biggest social network RenRen is
seeking a valuation of of more than two
times that of Facebook in its US IPO. It
hopes to raise up to $743.4m (£449.8m) –
an eye-watering 67-times its 2010 rev-
enues. Last week, Renren raised the expect-
ed price range of its IPO by 30 percent.
Demand for the stock is expected to be
robust as the company taps investor inter-
est in China and social media. It also revised
down the number of monthly unique log-in
users it said it had in December. China is
one of only a handful of countries where
Facebook is not number one.
Car sales drive up Infineon figures
German chipmaker Infineon yesterday
celebrated the sale of its mobile proces-
sor business to Intel after bumper sales in
its core car-chip market buoyed its fig-
ures. Infineon, which produces chips for
two thirds of the world’s cars, received a
welcome boost as the automotive indus-
try bounced back strongly.
In the first three months of 2011,
Infineon’s second-quarter, operating prof-
it was €202m (£181m), up 14 per cent
compared with the previous quarter.
Sales were up eight per cent.
CITYA.M. 4 MAY 2011
Thorntons’ sales melt away
▲
RETAIL
BY JOHN DUNNE
THORNTONS yesterday issued a profit
warning after blaming the hot weath-
er over Easter for disappointing sales.
The chocolatier reported a 22.8 per
cent drop in like-for-like sales com-
pared with the same week last year.
It now expects pre-tax profits for
the year to 25 June to be £3m-£4.5m,
down from the £6.1m it reported last
year.
Like-for-like sales in Thorntons’
own stores fell 12.6 per cent over the
16 weeks to the end of April, com-
pared with the same period a year
Metro losses
narrow after
cost cutting
▲
RETAIL
BY JOHN DUNNE
RETAIL giant Metro yesterday posted a
smaller than expected first-quarter
loss after closing stores to slash costs.
The net loss narrowed to €3m
(£2.6m), compared with €16m in the
same period last year.
Metro, which runs cash and carries,
hypermarkets, electricals and depart-
ment stores, said first-quarter sales
were flat at €15.52bn. The world’s
fourth largest retailer, with over 2,100
stores in 33 countries, reiterated that
it expects 2011 sales to rise over four
per cent and earnings to climb about
10 per cent.
But the company admitted that this
depended on a “further improvement
of the overall economic situation and
the possibility to compensate price
increases on the procurement side”.
Since the first-quarter of 2010, the
German-owned retailer has closed or
sold 26 unprofitable domestic Real
supermarkets, Kaufhof department
stores and Cash & Carry wholesale out-
lets and disposed of its Moroccan
wholesale unit. Metro said sales fell
2.6 per cent in Germany, which
accounts for almost 40 per cent of the
total, and were down 1.9 per cent in
William Hill to buy Brandywine as it Pierre Cardin reveals he
accelerates expansion into US market is open to offers for firm
▲
LEISURE
BY JOHN DUNNE
WILLIAM Hill, Britain’s biggest book-
maker, is to buy American company
Brandywine Bookmaking as part of
its plans to establish a leading posi-
tion in the US sports betting market.
The company said it had agreed to
buy privately-held Brandywine
Booking for $14.25m (£8.57m) in cash
and would also provide a multi-mil-
lion pound convertible loan as part of
the takeover.
ago. Overall group sales – which
include commercial sales, franchise
stores and the Thorntons Direct deliv-
ery business – fell 0.7 per cent.
However, it saw an increase of 25.1
per cent in sales of its products
through supermarkets.
Thorntons chief executive
Jonathan Hart said: “The past quarter
has been extremely challenging, par-
ticularly in our own stores and for
franchisees, and we foresee this weak-
ness on the high street. We took steps
to ensure that our ice cream was
available in more stores than last year
ahead of the Easter trading period.
However, these significant additional
other western European markets. In
contrast, sales climbed 2.5 per cent in
eastern Europe, and were up strongly
in Asia and Africa.
Chief executive Eckhard Cordes
said: “Consumer sentiment in a large
part of our portfolio is still fairly weak.
Even German consumer confidence
has weakened, resulting in a more
volatile environment.”
RBS analyst Justin Scarborough, not-
ing first-quarter earnings only
accounted for about five per cent of
the full-year total, said a big fall in
“other losses” underscored a disap-
pointing performance.
The group said in March the
Japanese earthquake and unrest in the
Arab world could put economic recov-
ery at risk, knocking its shares.
ANALYSIS l Metro AG
40
€
36 31.43
3 May
32
28
7 Feb 25 Feb 17 Mar 6 Apr 28 Apr
Brandywine operates in Nevada
and Delaware and had revenues of
$7.7m in 2010.
The Brandywine deal comes nearly
a month after William Hill made its
first move into the US sports betting
market by buying the American
Wagering (AWI) and Cal Neva busi-
nesses for a total of $39m.
William Hill added that it expected
the impact of its American acquisi-
tions to marginally enhance its earn-
ings.
“Brandywine is a good strategic fit
sales were insufficient to offset the
impact of the weather.”
In February, Thorntons reported a
fall in half-year profits.
ANALYSIS l Thorntons
105
p
70.00
95
3 May
85
75
65
7 Feb
25 Feb 17 Mar 6 Apr 28 Apr
Car dealer Lookers rejects bid...
M&A
▲
BY JOHN DUNNE
CAR dealership Lookers yesterday
rejected an initial “speculative” bid
by an investment company led by
veteran investor Jack Petchey, but a
new offer could be in the pipeline.
Petchey’s Trefick yesterday con-
firmed its interest in a takeover, and
revealed that it was behind last
week’s rejected bid.
Brett Palos, Sir Philip Green’s
... as veteran investor Petchey
goes on new acquisition drive
JACK Petchey OBE is leading a team
potentially interested in moving for
car dealership Lookers.
A genuine “rags to riches” busi-
nessman, Petchey rose from office
boy at 14-years-old to a motor trade
and property tycoon.
The philanthropist, now 85, set
up the Petchey Group after the
Second World War, growing the
business from a single mini-cab to
control of a fleet of cars and car
showrooms and then on to holiday
properties abroad.
He has an office in East London
where he deals in share trading and
has become one of the City’s most
active and successful private deal-
ers. His investment vehicle for the
potential Lookers move is Trefick.
The East Londoner set up the Jack
Petchey Foundation in 1999 to help
for AWI’s and Cal Neva’s sportsbook
operations and will give William Hill
a leading position in the US land-
based sports betting market,”
William Hill chief executive Ralph
Topping said in a statement.
“This acquisition offers not only a
well regarded management team and
Nevada operation but also an exclu-
sive land-based sports betting rela-
tionship with the Delaware State
government,” he added.
Brandywine runs 16 sports books,
employing 90 people.
Consumer News 15
Estimated pre-tax
profits for the year
to 25 June
£3m-
22.8%
drop in like-for- £4.5m
like sales for
Easter week Like-for-like sales
in Thorntons'
own stores fell
12.6%
over the 16
weeks to the end
of April
Thorntons has made its ice-cream available in more stores
stepson, and Moor Park, a private at Nomura’s private equity division
equity property advisory firm, are in London.
part of Petchey’s group. Trefick said in a statement: “The
They are now pursuing a parties have requested access to cer-
potential £260m-plus bid for tain information in order to
Lookers. Trefick Group already owns confirm the cash offer, but the
17 per cent of Lookers. board of Lookers has, to date,
Trefick called on Lookers to open declined to provide this.”
its books to the bidders so that they Last Wednesday Lookers said its
could confirm their all-cash board had rebuffed a “highly specu-
approach. Moor Park’s three part- lative” approach for the company
ners are Gary Wilder, Shemeel Khan from an unnamed suitor, pushing
and Jagdeep Kapoor, who all worked shares up more than ten per cent.
young people in London. He has
donated more than £65m to
schools, clubs and projects.
Petchey is a serial stake builder
in property and car companies. He
previously invested in and then
exited from Reg Vardy, the car
dealership group, in 2007, at a
profit.
He has written a book, 50/50
Man, about his business acu-
men. He talks about giving
his children 50 per cent
towards something they
wanted to buy but they
would have to make up
the difference, summing
up his belief in self help.
Petchey is also a former
chairman of Watford FC,
finally selling his stake to
Elton John.
JACK PETCHEY
ed his house in 1950, and was known
▲
RETAIL
for his avant-garde style.
FASHION designer Pierre Cardin has The business entered Asia in the
said that he is open to offers for the 1950s, set up in Japan in 1957, and
business with a price tag of $1.5bn then in China in 1979. Cardin was
(£897m). one of the pioneers of brand licensing
His fashion house was one of the and the name is now carried on hun-
first to expand in Asia, leading the dreds of products. He said his valua-
way for other retailers. The designer, tion was based on a multiple of €10m
aged 88, told the Wall Street Journal: (£9m) per product per country,
“I know I won’t be here in a few years “which is nothing at all”, he said.
and the business needs to continue.” “One thousand products, 100 coun-
“I want to sell it now,” said Cardin, tries, that’s how it calculates. It’s
who does not have an heir. He found- nothing,” he added.
 16 Economics
UK’s factory growth
loses momentum...
▲
UK ECONOMY
BY JULIAN HARRIS
STERLING dropped sharply yesterday
as figures showed a marked slowdown
in the UK’s manufacturing boom.
The pound sank more than a per-
centage point to $1.647 in the morn-
ing session after a purchasing
managers’ index unexpectedly
dropped to a seven-month low of 54.6.
The PMI has dropped over seven
points since January’s record high of
61.7, the steepest fall over such a peri-
od for two and a half years. Figures
over 50 indicate economic growth.
“The report further diminishes the
likelihood of a rate hike this week,
with November looking the most like-
ly point for policy tightening,”
...but the high street Inflation growing in the
sees sales rebound OECD as food prices bite
▲
UK ECONOMY
BY JULIAN HARRIS
RETAIL sales sprang back last month
after exceptionally gloomy results in
March, the Confederation for British
Industry (CBI) said yesterday.
A positive balance of 21 per cent of
retailers reported a rise in sales in the
first two weeks of April. In March a
negative balance, reflecting falling
sales, was recorded for the first time
in nine months.
Despite the bounce-back, sales on
British high streets remain sluggish,
with the CBI survey expecting no fur-
ther growth in sales this month.
“For the third month in a row,
NEWS | IN BRIEF
Fathom: Spain could be next to go India tightens monetary stance
Spain is “on a knife edge” as the next
country facing possible default on its
government debts, Fathom Consulting
will warn today. It says the UK is
“not far behind it,” despite the coalition’s
austerity plans. A stuttering, weak
recession is “the best the UK can hope
for,” Fathom argues, “given the scale
of government and consumer debt that
was accumulated over the preceding
decade.”
Rate of sickness leave still falling
Workers are taking fewer days of
sickness leave, a survey revealed
yesterday. The average employee took
five days sickness leave in 2010 com-
pared to 6.7 days in 2007, the EEF and
Westfield Health 2011 survey showed.
An all time high of 45 per cent of
employees took no days off through sick-
ness last year.
Rates kept on hold in Australia
Australia’s central bank kept its rates
steady at 4.75 per cent yesterday,
despite risks that it will have to move
later in the year to restrain inflation amid
a massive trade and mining boom.
responded ING’s James Knightley.
However, British factories have still
recorded growth for 21 straight
months, with April’s expansion
remaining above average levels.
“The overall PMI index is slightly
above the average of 53.6 during 1994
to 1996,” noted Citigroup’s Michael
Saunders, “and that was a period of
fiscal tightening and low pound,
which saw solid and well-balanced
GDP growth led by business invest-
ment plus exports.”
Manufacturing exports accelerated
in April, up by around half a percent-
age point to touch 58.
The global recovery and a weak
pound were cited as ongoing forces
behind resurgent exports, with
strengthening demand from “BRICS”
retailers considered sales to be unsea-
sonably poor, stocks are running
quite high, and orders with suppliers
are expected to fall,” said the CBI’s
chief economist Ian McCafferty.
A negative balance of -23 per cent
of retailers showed that sales for the
time of year were poor in April, close
to March’s low of -24 per cent. This
element of the survey had not been
lower since August 2009.
“Admittedly, the later fall of Easter
this year makes it hard to take the
survey entirely at face value,” said
Vicky Redwood of Capital Economics.
“But overall it looks like consumers
are still reining in their spending in
the face of the tight squeeze on their
India’s central bank raised key interest
rates for the ninth time since March
2010 yesterday, by a sharper-than-
expected 0.5 per cent. The repo rate, at
which it lends to banks, rose to 7.25 per
cent, and the reverse repo rate was hiked
to 6.25 per cent. India’s headline inflation
rose to nine per cent on an annual basis
in March.
Ireland gets boost from industry
The pace of growth in Irish
manufacturing activity rose slightly in
April to its second highest level in 11
years, the NCB Purchasing Managers’
Index revealed yesterday. Irish factory
PMI rose to 56.0 in April from 55.7 in
March, staying above the 50 mark sepa-
rating growth from contraction for the
seventh month.
Swedes wary of rising wages
More interest rate hikes could be on the
cards in Sweden, after the minutes of the
latest Riksbank meeting revealed fears
over upside pressures to inflation. The
current rate path signals three further
increases in rates this year.
nations Russia and China, as well as
the US and Europe.
Foreign markets are helping to off-
set weak domestic consumer demand,
with new orders nearing stagnation
at 51.51, down from 54.95 in March
and a massive drop from 65.23 in
January’s PMI survey.
Backlogs of work also shrank, for
the third straight month. Backlogs fell
more sharply in April (44.85) than in
March (48.61).
Inflationary pressures remain a
problem despite the input costs index
slowing to 76.3, from 81.2 in March
and January’s all time high of 84.
Output costs slowed to 64.2 yet “this
is still the third highest index reading
since the series began in 1999,”
Knightley noted.
real incomes.”
The underlying trend of sales,
shown by the survey’s three month
average, has taken a downward turn.
In the three months to January a pos-
itive balance of 45 per cent of respon-
dents reported growth in sales,
compared to a positive balance of 14
per cent in the latest survey.
The balance could fall to just six
per cent next month if expectations
are realised, the CBI said.
Retailers reported no change in
orders placed with suppliers, com-
pared to a year ago. Overall orders are
expected to decline next month by a
negative balance of around minus
four per cent, the CBI explained.
Manufacturing rise
boosts US outlook
US ECONOMY
▲
AMERICAN factory orders surged in
March, posting a fifth straight
monthly increase that showed a
healthy manufacturing sector well
placed to support economic recovery.
On a strong day for US data, vehi-
cle manufacturers also lined up to
announce largely positive sales
results. General Motors, the biggest
US car seller, went first, announcing
a 26 per cent uptick in sales for April.
The boost was largely driven by
sales of new fuel-efficient compact
cars, GM revealed. Some analysts
argued that higher petrol prices were
triggering demand for efficient cars,
with more sales ahead this summer.
“I believe there is a call to action,”
Pipas said of consumer purchases
this spring. “Summer is the driving
season, and I’m going to pull the trig-
Food prices are rising strongly in many OECD countries
▲
WORLD ECONOMY
FOOD prices are posing greater infla-
tionary pressures throughout the
developed world, the Organisation for
Economic Co-operation (OECD)
revealed yesterday.
And food inflation in UK shops was
up to 4.7 per cent last month, accord-
ing to a separate survey conducted by
the British Retail Consortium (BRC).
Overall shop price inflation edged
up to 2.5 per cent, from 2.4 per cent
the previous month.
“Rising food inflation outweighed
slowing non-food inflation,” the BRC’s
Stephen Robertson explained.
Consumer prices were up 2.7 per
cent in the year to March throughout
ger,” he said of consumers.
Earlier in the day the Commerce
Department had announced a three
per cent spike in new orders for all
manufactured goods. New orders
totalled $463bn (£280.8bn) in March,
well above Wall Street economists’
forecasts for a 1.9 per cent pickup.
In addition, February orders that
had been reported as dropping by 0.1
per cent were sharply revised to
instead show a 0.7 per cent increase.
A cheaper US dollar has helped
export industries and there are signs
that producers are boosting invest-
ment in plants and equipment to
benefit from it.
On Monday, the Institute for
Supply Management said its gauge of
factory activity eased to 60.4 in April
from 61.2 in March -- still a brisk level
since any reading over 50 shows busi-
ness is expanding.
CITYA.M. 4 MAY 2011
Picture: GETTY
member states of OECD, it announced
yesterday -- up from a rate of 2.4 per
cent the previous month.
Food prices continued to grow
across national borders, the OECD
revealed, up 3.2 per cent in its member
countries for March.
The UK still has the highest con-
sumer price inflation in the G7,
despite a slowdown in its annualised
rate in March.
In the UK, inflation came in at four
per cent in March, compared to 3.3 per
cent in Canada, 2.7 per cent in the US
and two per cent in France.
Industrial producer prices, mean-
while, were up by an annualised 6.7
per cent in the Eurozone in March, the
Eurostat office said yesterday.
Households face
worst squeeze
since the 1870s
UK ECONOMY
BRITISH households are facing the
biggest cash squeeze since the 1870s,
a report by Deloitte out today claims.
Disposable income is set to fall by
about two per cent this year, or the
equivalent of about £780 per house-
hold, the report claims.
The drop is driven by rising infla-
tion, which could rise above five per
cent this year, causing real earnings
to fall for the fourth successive year
in a row.
“Pay growth is unlikely to catch up
with inflation any time soon... It will
take until 2015 or so for incomes to
get back to their 2009 peak,” said eco-
nomic adviser to Deloitte Roger
Bootle.
“This year will see falling real earn-
ings, falling real house prices and ris-
ing unemployment,” he added.
CITYA.M. 4 MAY 2011 News 17

CITY MOVES | WHO’S SWITCHING JOBS Edited by Harriet Dennys

Ashcourt Rowan
Ashcourt Rowan, the wealth management
division of Syndicate Asset Management, has
appointed Paul Miles as director of intermedi-
ary services. Miles joins Ashcourt Rowan
from discretionary fund management plat-
form Parmenion, where he was sales director
for the last three years. Miles will report to
Christopher Jeffreys, Syndicate’s director of
asset management, who has been appointed
as a director of Ashcourt Rowan.
Simmons & Simmons Dickinson, who is retiring. Passmore
The law firm has appointed Colin became a partner in 1990 and is cur-
Passmore as its new senior director, fol- rently head of litigation in London.
lowing a vote by the company’s part-
nership. Passmore will take up the role Noble Group
on 1 August, succeeding David The commodities supply chain has
appointed Li Rongrong, the former
chairman of the Assets Supervision and
Administration Commission of the
State Council of the People’s Republic
of China, as non-executive director.
Previously, he served as chairman of the
State Economic and Trade Commission
of the People’s Republic of China.
O Twelve
The Guernsey-based investment com-
pany has appointed Mark Donnor and
Benjamin Warner as non-executive
directors. Donnor serves as managing
principal of Westbrook, and Warner is
managing director of Europlan Group.
Planet Payment
The multicurrency payment and data
processor has appointed Shane Kim as
a non-executive director. Kim is a man-
aging member of Camden Partners, a
private equity firm specialising in busi-
ness services, healthcare and education.
Barclays Wealth
The wealth manager has appointed
Christian Kwek as managing director in
its ultra high net worth team. Kwek
previously spent eight years at BNP
Paribas, most recently as head of the
Equity Derivatives Group in London.
Artemis
Simon Edelsten and Alex Illingworth
have joined the independent wealth
manager as fund managers in the glob-
al equities team, where they will begin
building a global stock-picking franchise
for institutional and retail clients.
Edelsten previously worked for Taube
Hodson Stonex and Illingworth joins
from Insight Investment.
Jones Day
The law firm has appointed Corinne
Ball, the lawyer best-known for steer-
ing Chrysler through its 42-day bank-
ruptcy, to lead the firm’s restructuring
and distress M&A efforts in Europe.
Devro
The manufacturer has appointed Paul
Withers as a non-executive director
with immediate effect. Withers is cur-
rently a non-executive director of both
Premier Farnell and Hyder Consulting.

To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com

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

ANALYSIS l BskyB ANALYSIS l The Restaurant Group ANALYSIS l Lavendon

325.80
860 p 847.00 340 p 3 May 108 p
3 May
104
320
820 96.00
3 May
100
300
780
96

280

92
740 7 Feb 25 Feb 17 Mar 6 Apr 28 Apr
7 Feb 25 Feb 17 Mar 6 Apr 28 Apr 7 Feb 25 Feb 17 Mar 6 Apr 28 Apr

BSKYB THE RESTAURANT GROUP LAVENDON

Credit Suisse rates the media group “neutral” and has raised its target price
to 870p, based on the price it believes News Corp might have to pay to secure
a takeover recommendation from the board. A News Corp offer for BSkyB
could come within days, the broker thinks. Credit Suisse has calculated its
new target based on a 20 per cent probability of News Corp walking away, in
which case it foresees a drop in the share price to 685p.
Numis has cut its stance on the leisure group from “buy” to “hold” with a tar-
get price of 360p. The broker expects like-for-like sales to be 0.8 per cent
ahead of forecasts when the firm updates on 11 May, alongside its annual
general meeting, and thinks 20 per cent earnings growth is possible this year
barring any weather disruptions. Numis also expects net debt to be halved to
around £24m this year.
Peel Hunt has started covering the construction equipment firm with a “hold”
rating and a target price of 100p. The broker thinks long-term gains are possi-
ble, and that a recent 115p per share takeover bid suggests potential value as
the construction sector recovers. However, Peel Hunt thinks market fragility
and an ageing fleet, along with the rejected bid price, put a short-term ceiling
on the shares.

Drugmaker deals buoy FTSE US stocks slide as

despite dragging miner shares investors cash in
unveiled a $6.8bn deal on Monday to dipped 0.9 per cent. “We've had a great earnings season,

THE LONDON buy US Cephalon.

AstraZeneca was among the top
FTSE 100 risers, up 2.4 per cent, recov-
ITV which relies on advertising
from the retailers, fell 2.2 per cent.
Smiths was the biggest laggard, off
NEW YORK but above that there’s not much on
the horizon to further gains in
stocks,” Jankovskis said.
REPORT ering its poise after a 3.5-per cent
drop on Thursday when it reported
first-quarter results, with Citigroup
5.7 per cent, after the technology
firm said the head of its detection
unit would step down immediately,
REPORT Chinese Internet stocks fell, with
search engine Baidu down 5.2 per
cent to $139.84 in heavy volume

D
RUGMAKERS helped Britain’s saying the numbers are “not as bad as as trading at the airport security busi- ahead of the initial public offering of

top share index rise modestly
yesterday, buoyed by deal activi-
ty in the United States, as
traders mooted the possibility that a
recent equity rally may falter.
Miners hampered the FTSE 100’s
progress though, hurt by easing met-
als prices on renewed fears about
demand, with Rio Tinto off 1.6 per
cent on talk that the miner was lin-
ing up a bid to buy US aluminium
producer Alcoa.
Neither Rio Tinto nor Alcoa would
comment on the rumours.
The UK blue-chip index ended
12.98 points, or 0.2 per cent, firmer at
6,082.88. The index has risen nearly
3.8 per cent since its April lows.
“The recent rally appears to be run-
ning out of steam around this year’s
highs at 6,105,” Michael Hewson, mar-
ket analyst at CMC Markets, said.
“Until such time as we see a close
above this resistance area, the FTSE
will remain susceptible to pull backs
towards the 5,800 area,” he said.
Drugmakers were boosted after
Israel-based Teva Pharmaceuticals
(the) market implies”.
Observers said that investor confi-
dence, recently aided by solid corpo-
rate earnings from both sides of the
Atlantic, may be sapped by macroeco-
nomic fears in the near term,
although any weakness could be
seized upon as a buying opportunity.
“A number of macro factors could
trigger investors to try and book prof-
its; oil price, concern about inflation,
worries about overheating in emerg-
ing markets, the US debt position,”
Henk Potts, market strategist at
Barclays Wealth, said.
“(However), long term, the outlook
remains very strong (and) equity mar-
kets remain our preferred asset class,”
he added, seeing the best prospects in
cyclical stocks, with industrials and
technology his top picks.
Weakness was seen on the high
street, as data from the
Confederation of British Industry
highlighted the grim outlook facing
retailers. Next, scheduled to issue a
trading update on Wednesday, fell 0.7
per cent, while Marks & Spencer
ness fell short of the board’s expecta-
tions.
Man Group, meanwhile, topped
the blue-chip leader board, up 3.3 per
cent, as the hedge fund unveiled a
$1.5bn fund in Japan, its biggest prod-
uct launch since the financial crisis.
In Europe, the FTSEurofirst 300
index closed 0.5 per cent lower at
1,150.81 points, ending a two-week
rally during which it gained about 4
per cent. Miner Xstrata fell 2.4 per
cent while oil major Total shed 0.7
per cent, as commodity prices retreat-
ed on renewed worries over demand.
ANALYSIS l FTSE 6,082.88
6,100 3 May
6,000
5,900
5,800
5,700
5,600
5,500
7 Feb 25 Feb 17 Mar 6 Apr
U
S stocks fell yesterday as
investors questioned the sus-
tainability of the rally in light
of fresh worries about earnings
growth in the coming quarters.
Investors targeted recent top per-
formers, particularly energy shares,
which were also hit by a fall in oil
prices. The S&P energy index dropped
2.4 per cent, while oil futures lost
more than 2 per cent.
The Nasdaq was pressured by losses
in Sears Holding after it said it will
lose money in the first quarter.
Cognizant Technology Solutions was
another drag, falling on heavy vol-
ume as investors focused on its slow-
ing growth rate.
“There is concern the market is a
little overheated and some people are
using the opportunity to take some
profits,” said Peter Jankovskis, co-chief
investment officer at OakBrook
Investments in Lisle, Illinois.
The S&P 500 fell for a second day
after hitting its highest level in nearly
three years on Friday at the end of a
28 Apr two-week rally.
Chinese social networking site
Renren.
Investor interest in the smaller
Facebook competitor was clear last
week as Renren raised the expected
price range of its IPO 30 per cent to
$14 from $12 per share.
Online media company SINA Corp
dropped 9.5 per cent to $122.22.
The Dow Jones industrial average
edged up 0.15 points to 12,807.51. The
Standard & Poor’s 500 fell 4.60 points,
or 0.34 per cent, to 1,356.62. The
Nasdaq Composite Index lost 22.46
points, or 0.78 per cent, to 2,841.62.
Alcoa shares rose 2.6 per cent to
$17.67 on market talk that Rio Tinto
was lining up a bid to buy the US alu-
minum company. But sources said
two banks rumored to be financing
the deal were not involved.
Sears's estimate of a quarterly loss
late on Monday sent its shares down
9.9 per cent to $75.88. Cognizant
dropped 5.7 per cent to $77.52 on its
highest volume since 4 August 2009,
as investors focused on its slowing
growth rate.
 18
Wealth Management Foreign Exchange
DOLLAR’S FATE
IN THE HANDS
OF MR TRICHET
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT
A
T THE start of this week’s trade in the cur-
rency market, the much beleaguered dollar
received an unexpected lift when President
Obama announced that a top notch team of
Navy Seals was able to find and kill Osama bin
Laden. However by the North American open, most
of the patriotic sentiment had faded and the buck
resumed its downward trend as both euro and
Aussie hit fresh year-to-date highs against the unit.
Despite the boost from geo-political events, the
trade in the dollar continues to be driven almost
exclusively by economic factors. Last week, Ben
Bernanke confirmed that the Federal Reserve will
remain stationary at least until the end of 2011,
leaving the buck vulnerable to further selling on
carry trade flows as interest rate differentials
between US and the Eurozone continue to widen.
That’s why any recovery in the dollar will not be
driven by US policy manoeuvres, but rather by
actions of the monetary authorities on the other
side of the Atlantic. Therefore this Thursday’s
European Central Bank (ECB) meeting at 12:30pm
could prove pivotal to the near term direction of
euro-dollar. With the currency market primed for
further rate increases, any suggestion by ECB chief
Jean Claude Trichet that the European authorities
may not hike rates for at least a few more months
could trigger a profit taking rally in the pair.
Although European monetary policy makers
continue to be concerned about inflation, they are
also wary of driving euro-dollar higher, fearing that
above the $1.5000 level it could hurt exporters in
the region. Furthermore, if oil prices, which are the
primary catalyst behind rising price levels, begin to
stabilise around the $110/bbl level, the ECB may
feel less need to be vigilant.
On Monday, European Central Bank vice presi-
dent Vitor Constancio may have tried to telegraph
the policymakers’ intentions by stating that, “we
have not decided to rush into a series of further
increases.” If Jean Claude Trichet echoes that sen-
timent, euro-dollar could correct towards the
$1.4500 level over the next several weeks.
In the long run
the Aussie is a
wager against
entrepreneurs
Technological innovation and setbacks in China
would see a flight from Aussie, says Philip Salter
O
N 2 May, the Australian dollar
climbed to a high of $1.1011, not
reached since its 1983 float. Despite
a small retreat, this upward trend is
largely expected to resume on the back of
continued demand for commodities and a
hawkish Reserve Bank of Australia (RBA).
Yet over the long-term, trouble in China
and technological innovation could
reverse rising commodity prices and with
it the Aussie dollar.
This week the RBA decided to keep rates
at 4.75 per cent, despite a prior unantici-
pated jump in CPI inflation of 1.6 per cent
to 3.3 per cent in the first quarter of 2011.
But markets are anticipating a rate rise in
the coming months, as the RBA’s post-
meeting statement talked tough on infla-
tion. Michael Blythe, chief economist at
the Commonwealth Bank of Australia
believes “the door to another rate rise is
opening.” He predicts it will happen in
August, although suggests that it could
come even earlier.
The critical factor in the rising
Australian dollar is demand for commodi-
ties, because so much of its economy is
reliant upon mining exports. “As com-
modity prices have increased, the
Australian economy has boomed and
along with it the currency,” says Angus
Campbell of London Capital Group.
Richard Driver of Caxton FX says: “With an
economy heavily geared towards raw
CITYA.M. 4 MAY 2011
|
materials, the Aussie dollar has been a
major beneficiary of the soaring commod-
ity prices. China’s economic strength in
particular is ensuring demand for
Australian exports despite these high
prices.”
Alistair Cotton of Currencies Direct
thinks that “the terms of trade for com-
modity producers will continue to
improve as prices keep rising, and that
means the Aussie may still have signifi-
cant room for improvement against the
pound and dollar over the coming years.”
According to Campbell, “there are expec-
tations for further increases for the Aussie
dollar with some calling for Australian
dollar-dollar to go as high as $1.2400, so
another 14 per cent higher than where we
are now.” However, Driver says that
although “it is difficult to see any signifi-
cant reversal of the Aussie’s strength in Jeremy Grantham of Grantham, Mayo,
the short-term, when the liquidity provid- Van Otterloo (GMO) in his latest quarterly
ed by the US quantitative easing (QE) pro- letter “Time to Wake Up: Days of
gramme dries up in June as is expected, Abundant Resources and Falling Prices
then the Aussie may cease to benefit from Are Over Forever” argues that “statistical-
the current generous dollar inflows.” ly, most commodities are now so far away
Despite the end of QE2, a number of from their former downward trend that it
authoritative investors believe that high makes it very probable that the old trend
commodity prices are here to stay. The has changed – that there is in fact a para-
much admired investor Jim Rogers, who digm shift – perhaps the most important
amongst other things foresaw the com- economic event since the industrial revo-
modity price inflation well before it took lution.” Rogers and Grantham both think
off, believes that commodities still have that high commodity prices are based on
some way to go. Also, the much respected the fundamentals of limited supply and
CITYA.M. 4 MAY 2011
increasing demand.
However, whether the Chinese
authorities, which still centrally
plan the coordination of vast
swathes of economic activity, will
spot, let alone pop, bubbles prior to
their formation is highly question-
able. If the country manages to avoid
epic malinvestment and its atten-
dant crashes even the most
Keynesian of economics textbooks
will need to be revised. More impor-
tantly, as the famous example of the
environmentalist doomsayer Paul
THE TIPSTER
DOVISH MPC
FLAPS BUYERS
OF STERLING
T
HURSDAY’S Bank of England meet-
ing is likely to see the Monetary
Policy Committee leave interest
rates unchanged, especially in light
of yesterday’s April Manufacturing PMI
data, which came in below expectations.
This has reinforced concerns about the
growth potential for the second quarter.
This will in turn limit the upside in any
sterling strength, especially now that
euro-sterling has broken above its October
2010 highs at £0.8940. CMC Markets
offers a spread on euro-sterling of
£0.89695-£0.89713.
The weaker than expected UK PMI
Manufacturing figures – coming in at
54.6 versus the 57 expected – also accel-
erated sterling-dollar losses early yester-
day morning. The pair fell a total of 176
pips to a low of $1.6466, so it is now
shaping up like it has put in a firm double
19
A flagging Chinese ANALYSIS l The rise of Aussie dollar
economy would hit
1.10
the Australian dollar $
Picture: Reuters 1.00
0.90
0.80
0.70
Sep 09 Jan 10 May 10 Sep 10 Jan 11 May 11
F
Forex
orex & CFD T
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rading. Worldwide.
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Ehrlich – who lost a wager with
Julian Simon that copper, chromi-
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technological innovation can throw
a spanner in the predictions of
Malthusian catastrophes.
If Rogers and Grantham turn out
to be right, rising commodities and
an Aussie dollar are here to stay.
However, a stumble in China or the
innovation of entrepreneurs could
bring down the price of commodi-
ties and with it the Aussie dollar.
top around the $1.6738 area. Should
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Markets have been jittery in the
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 20 Wealth Management | Foreign Exchange CITYA.M. 4 MAY 2011

Protests, earthquakes, wars and

bailouts. But no love for the dollar
Though we have
IG INDEX FOREX.COM there are issues. Firstly, there is
had a year of ups DAVID
long-term debt and the Fed happy
to pay the price of a weaker dollar KATHLEEN only a certain amount of gold
available. The yellow metal is
and downs, there JONES if it keeps the economic recovery
going. For the foreseeable future
BROOKS already trading at elevated lev-
els, so going forward investors
is no obvious safe Arguably the
US dollar has
the haven “currencies” are likely
to remain the likes of gold and sil-
A safe haven
currency
may be put off from flooding
into gold with prices so high.
haven any more, lost its safe
haven label for
ver. Although the pedants can
debate whether these qualify as
needs to be
politically and
Added to this, gold is traded on
an exchange, FX is not.
writes Craig Drake the vast
majority of
actual currency, the liquidity and
availability of these markets put
economically
stable, neither
As we have seen with silver
recently, exchanges can change
this decade – the one time we them firmly in the forex camp for of which margin rules without giving any
saw investors falling over them- me – although the volatility is not spring to mind when you talk notice, which can disrupt price

T
HROUGHOUT 2011, we have selves to buy the dollar was in the something that everyone can about the US dollar. However, action. This is not exactly the
had sustained periods of uncer- epicentre of the financial melt- stomach. we wouldn’t write off the dollar type of risk you want in a “safe
tainty in the money markets. down in the second half of 2008 – The Swiss franc still has its place as a safe haven just yet as haven” asset. This leaves the
In the past, uncertainty and the rest of the time plenty of and continues to make somewhat other havens have their own Swissie – our favourite safe
turmoil have given rise to rallies for other currencies have looked far more sedate progress to all-time issues to deal with. The yen has haven. Politically it is stable
the greenback as a result of investor more attractive. highs against the dollar than the been rising on the back of risk and after getting its fingers
flight into the safety and liquidity of It is still the case today of course likes of silver and gold. In the long aversion fuelled by the death of burnt in 2009 and 2010 the
this safe haven currency. – it would be something of a con- term you should never rule out a Osama bin Laden, yet Japan is risk of the Swiss central bank
Continued turmoil in the Middle trarian play at the moment to recovery for the greenback, but hardly a haven of political or intervening to push down
East, concerns over the ongoing view the dollar as a safe shelter the short and medium term sug- economic stability at the the value of the Swissie
European sovereign debt crisis and with Standard & Poor’s firing gests there are plenty of more moment. Even when we talk seems remote for the
fears that rising commodity prices warning shots concerning US secure destinations for cash. about gold as a safe haven time being.
could put the brakes on the global
economic recovery have given forex
traders sleepless nights. But where it
would usually be bought up faster CAPITAL low interest rates, which have ALPARI UK leaves the currency a little vulnerable.
than drinks on an expense account, lead to serial devaluation of its The yen remains very near the top of
the dollar has found itself being left SPREADS currency. JAMES the safe haven list; however, the
out in the cold while other currencies
receive a warm reception from
ANGUS But as the dollar continues to
decline and its status as the
HUGHES financial and political implications of
the earthquake and nuclear disasters
investors. CAMPBELL world’s reserve currency is called Safe haven cur- will leave many questioning its safe
So which is the new safe currency? Even though into question, there are other cur- rencies have haven potential. Despite the prob-
Has the dollar simply seen a short the dollar has rencies and asset classes that long been those lems, these currencies are all still
term fall from grace or is this a long seen consider- investors are buying as an alter- that many will seen as safe havens and are joined by
term effect? Has the Swiss franc able weakness native to the greenback. Gold of flock to when the going gets tough the commodity based currencies.
knocked the dollar off its perch or in the last few years it should not course has seen tremendous and I don’t think that will change. These could well be a much safer bet,
have the traditional haven currencies be underestimated as a safe strength in the face of the dollar’s However, what might change is as the movement of the currency is
been usurped completely in favour of haven asset. During the height of decline, but at some point this which currencies traders will be not only based on the overall
gold and silver? These two commodi- the banking crisis in 2008 bubble will burst. Other curren- flocking to. I do think the dollar will strength of the economy. The
ties have seen constant strong growth investors flooded back into the cies such as the Swiss franc are remain as a haven, but will share this Australian dollar is one that contin-
this year, particularly when political dollar as they pulled out of riskier attractive due to its historical safe status with a few others. However, ues its strength due to its commodity
turmoil or natural disasters have hit assets and even today when haven attributes and relatively all of the major currencies have their dependence. Of course we also can-
hardest, but have these rises run their there’s a whiff of bad news geopo- high yield compared to other cur- problems. The dollar is already strug- not overlook the Chinese yuan, many
course, or can they rise still further? litically or fundamentally with the rencies. gling amid its rather lacklustre eco- people’s tip to overtake the US as the
For an answer, we’ve asked a selec- financial markets, the dollar usu- For now there is no real alterna- nomic recovery, but due to its power world’s major currency. All in all, safe
tion of currency experts for their ally benefits. The main reason for tive, so the dollar will remain the and stable government will always havens are here to stay and, with the
opinions on how the land lies for its weakness is the continual world’s reserve currency for some remain top of the list. The Swiss current global stories resulting in the
haven currencies, and where they quantitative easing and money time to come, but its crown as the franc has its own problems. Despite risk-on/risk-off trade changing regu-
expect the top destinations for those printing that the US have been king of safe havens is being chal- not being part of the euro its expo- larly, these currencies as well as the
seeking shelter from the storm will be undertaking, on top of the record lenged day by day. sure to European banking stocks gold price will benefit.
this year.

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CITYA.M. 4 MAY 2011 Wealth Management | Foreign Exchange 21

A Conservative
win is good for
Canada’s dollar
The Canadian dollar, nicknamed the Loonie,
is set to build from a strong base following
Stephen Harper’s victory, writes Craig Drake

T
HE Canadian dollar climbed yester-
day as Canada’s Conservative party
won an outright majority in the gen-
eral election. Since 2006, Prime
Minister Stephen Harper has led two
minority Conservative governments, but
yesterday’s victory brings him a majority
mandate.
Michael Gregory, senior economist for
the Bank of Montreal, is buoyant about the
result: “This is certainly a Canadian dollar
friendly result. The Conservative govern-
ment has followed plans that are very
favourable to foreign investors by cutting
spending in a policy of deficit reduction as
well as implementing low corporate taxes.”
Alongside the gains for the Conservative
party, the left wing National Democratic
Party (NDP) also had its best ever election
results, taking more than 100 seats. It man-
aged this rise by snatching seats previously
held by the Bloc Quebecois separatist party
that has had a political stronghold in the
Francophone Quebec province for more
than two decades.
The hit taken by the separatist party,
which saw its seats reduced to the point
that it is no longer recognised as an official
political party in the Canadian Parliament,
is seen as another positive result by
Michael Gregory: “On the fringes, the Bloc
Quebecois getting trounced reduced a risk
of Quebec sovereignty, which is always an
issue hovering around elections. For them
to be squeezed so much offers more stabil-
ity.”
After the rally by the Canadian dollar
yesterday, it is expected that the Loonie
will continue to see gains. Markets had
seen heavy selling of the Canadian dollar,
fearful of the prospect of an unstable
minority government led by a left-wing
party. But the victory for Stephen Harper’s
party, one committed to deficit reduction “They are deemed to be the favoured rallies has been the winning strategy for The image of a loon
through a tight hold on public spending, is party for the markets and it is expected the last two weeks. I expect that the dollar- on the Canadian $1
seen as a good result for the Canadian that the Canadian dollar will continue to Canadian dollar will continue to trade on coin gives it its
economy. benefit as a result,” says Richard Wiltshire, the soft side, but with a bit more caution nickname
chief foreign exchange dealer for ETX than usual as the market worries about a Picture: GETTY
ANALYSIS l Dollar-Canadian dollar Capital. He says the Canadian dollar has possible pull back.”
Ca$ strengthened against the dollar over the With the weak UK PMI data that came in
0.965
last few weeks. But as the Loonie nickname yesterday, traders should also keep their
suggests, trading the Canadian dollar is eyes on the sterling-Canadian dollar pair-
0.960 not for the faint hearted and there have ing, as there could be opportunity for
been some nasty spikes along the way, short selling of this pair in the coming
0.955 most notably on 18 April when a lot of peo- days.
ple were caught short. Canada emerged from the recession in
0.950 In the short term, how should investors one of the strongest positions of the G7. If
profit from the Canadian dollar’s antici- it can continue to rein in its public spend-
pated direction? According to Richard ing, then in the long term things look rosy
2011 11 Apr 18 Apr 25 Apr 2 May Wilshire: “Selling dollar-Canadian dollar for the Canadian economy.

FOREX ANALYST PICKS

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

My pick: Long euro-sterling, short euro-Canadian dollar
Expertise: Fundamental and Technical Analysis with Risk Management
Average time frame of trades: 1 day to 1 week
My long dollar-yen position from ¥82.50 tripped its stop with a close
below ¥80 with the dollar’s pervasive sell off. In the meantime, with
the forthcoming ECB and BoE rate decisions, I’m looking specifically
at euro-sterling as a reaction for the greater of the two disappoint-
ments. I think a close above £1.8950 would offer the clearest move.
An alternative euro view rests with the potential euro-Canadian dol-
lar break below pivot resistance at Ca$1.40.
My pick: Long dollar-yen (pending)
Expertise: Global Macro
Average time frame of trades: 1 week to 6 months
Dollar-yen has settled above support at ¥80.93 – the 50 per cent Fibonacci
retracement of the rally from the 17 March low – after a botched attempt
to mount a rally last week. I am treating the pullback from early April as a
buying opportunity, expecting dollar-yen to rise along with US Treasury
yields as the Fed allows QE2 to expire in June against a backdrop of
increasing fiscal stress in the States. No entry point has materialised as yet
and I will continue to monitor prices for viable opportunities to get long.
My pick: Buy dollar-Swiss franc at SFr0.8700; stop below SFr0.8500
Expertise: Technical Analysis
Average time frame of trades: 1 week to 6 weeks
The latest break to fresh record lows below SFr0.8700 threatens our
longer-term recovery outlook. Still, we do not see setbacks extending
much further and continue to favor the formation of a material base over
the coming weeks for an eventual break back above parity. Look for the
market to hold above SFr0.8600 on a daily close basis, while a daily close
back above SFr0.8700 will relieve immediate downside pressures and
accelerate gains. Only a weekly close below SFr0.8500 delays outlook.
 22 Wealth Management | Markets CITYA.M. 4 MAY 2011

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 Lifestyle
23

| Motors WORDS BY
RYAN BORROFF

When Volvo flirts with sexy

You can never be completely safe and completely sexy. But the V60 gives it a pretty good whack

B
IG, boxy, boring was the image of
past Volvos, particularly Volvo
estates. Known for protecting pas-
sengers above all else, they were
solid and reliable and were a safe, if
unexciting, option for car buyers.
But thanks to a fundamental rethink
about how Volvo’s look and drive, Volvo
cars have been evolving from a simple,
practical choice to something more.
Much more.
Take this, the V60 D3 R-Design. It’s a
sports wagon according to Volvo, or an
estate car to the rest of us, which means
on paper it should be as uninspiring as a
car can get. Yet take a look at it. Does
that look like a Volvo to you?
This new V60 is a bit of a looker then.
It has a wedge-like front end with an
unusual rear-sloping roofline that gives
the car a determined look. Its five-spoke
wheels add to a great looking car that
looks more like a long coupé (hence the
Sport Wagon moniker) than a conven-
tional estate. As any car designer will tell
you, styling an estate is tricky, which is
why so few of them look enticing. I
mean seriously, try and name three
attractive estate cars. Now try and think
of one you aspire to own.
Volvo is aiming to steal some sales
from the Audi Avants and BMW
Tourings of this world. But to do that it lane departure warning system, a blind but then the V60 is aimed at drivers that
has to be better than it has been. So how spot information system (BLIS) system want a sportier car rather than the most
does it fare? and a pedestrian detection system that practical load lugger. Which really does
Very well, actually. We found the car will totally stop the car to avoid a pedes- confirm that with the V60, Volvo is tar-
to be a lovely companion. Our 2.0-litre, trian impact if it senses that you are geting an entirely new type of buyer to
163PS, five- cylinder diesel engine with going to fail to do so. It uses a mixture of the brand.
its 6-speed manual gearbox was far more radar, laser and camera technology – I live in North London, which is the
refined than we were expecting and and presumably a pretty quick micro- home of the Volvo estate and it’s certain-
with a 0-62mph acceleration time processor – to recognise a human being ly likely to do very well amongst right-on
of 8.9 seconds if felt plenty quick above 80cm tall. Impressive stuff. Islington types dragging kids and dogs
enough too. As Volvo has done Inside, the cabin is trimmed in in their retro trainers and gilets.
a great deal of work creating leather, as is the three-spoke steering Whether the V60 will take sales from
a chassis that it claims is its wheel and gear knob. The seats are BMW and Audi in other parts of the city
most dynamic yet, the ride particularly notable. Not only are remains to be seen.
and handling was surpris- they a very cool design, they some-
ingly good too. This car how manage to do that miraculous
has a lowered, stiffer and thing so rare in the automobile – THE FACTS:
sportier chassis. At times be supportive in the corners and VOLVO V60 R-DESIGN
it feels a little too firm comfortable on the motorway. The
perhaps but I find this dash gets special blue R-Design dials
preferable to not being which I really liked. There’s also a Price: £33,435
firm enough. Thanks to clever shelf which pulls down in the 0-62mph: 8.9 secs
some clever traction control centre of the rear seat that includes a Top speed: 137mph
technology – in the bends the tray and cupholders which would be CO2 g/km: 144g/km
car’s inner wheel is braked, useful for kids and adults alike.
transferring more power to the So what’s not to like? Well, the naviga- MPG Combined: 51.4 mpg
outer wheel, reducing understeer – the tion system was a bit of a shocker, or THE VERDICT:
V60 felt tight in the corners too. maybe it just had a bad day, but trying
The result of all of Volvo’s hard work is to route me south across Hampstead DESIGN hhhhi
that the car felt both safe and fun and Heath to get to Milton Keynes when I PERFORMANCE hhhhi
that’s before you even factor in some was already north of it was certainly a PRACTICALITY hhhhi
impressive safety technology. There’s a low point. The boot too is not the biggest VALUE FOR MONEY hhhhi

CAR TALK BY RYAN BORROFF

SPECIAL EDITION CATERHAM SEVENS
British sportscar company Caterham Cars has been bought by
Formula One outfit Team Lotus and to celebrate, the company is
building a limited run of just 50 Team Lotus Special Edition Sevens.
For an additional £3,000, Seven buyers can buy a car painted in the
famous green and yellow colours of Lotus and supplied with Team
Lotus additions. The Caterham Seven became famous through the
1960s cult TV show The Prisoner.
RAMPED UP 911 GT3 RS
If the performance of the 911 GT3 RS isn’t quite enough for you, you
can now specify a ramped up version. The 911 GT3 4.0 has the 500hp
naturally-aspirated 4.0-litre flat six engine from the 911 GT3 RSR
racer squeezed into it instead of the regular 3.8-litre unit. The result is
a 911 than can sprint to 62 mph from a standing start in 3.9 seconds
and on to 124mph in under 12 seconds. Only 600 will be built at a
price of £128,466.
JAGUAR PARADE TO LONDON MOTOREXPO
More than 50 examples of the iconic Jaguar E-Type will join a parade
through London on 6 June. The cars will travel on a 10-mile route
through The Mall, Whitehall, Trafalgar Square and the Tower of
London en route to Motorexpo, London’s free-to-visit motor show
which takes place from 6-12 June. It’s the biggest London show to
date, with cars from 250 different makers, including BMW, Volvo and
Audi. www.motorexpo.com
 24 Lifestyle | TV& Games CITYA.M. 4 MAY 2011

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL

6pm BBC News
6.30pm BBC London News
7pm The One Show
7.30pm CHOICE Waterloo
Road; BBC News
8.30pm Life of Riley
9pm Council Houses – Cheats
and Victims: Panorama
10pm BBC News
10.25pm Regional News
10.35pm The National Lottery
Wednesday Night Draws 10.45pm
Would I Lie to You? 11.15pm FILM
Invincible: 2006; National Lottery
Update 12.55am Sign Zone: See
Hear 1.25am Watchdog 2.25am
Country Tracks 3.25am Antiques
Roadshow 4.25am-6am BBC News
6pm Eggheads
6.30pm Great British Menu
7pm Escape to the Country: A
couple hoping to relocate to a
cottage in east Devon.
8pm Two Greedy Italians
9pm Children’s Craniofacial
Surgery
10pm Never Mind the
Buzzcocks
10.30pm Newsnight; Weather
11.20pm Stewart Lee’s
Comedy Vehicle
11.50pm The Quite
Remarkable David Coleman
12.50am BBC News
4am-6am BBC Learning Zone
6pm London Tonight 6pm The Simpsons 6.30pm 6pm Home and Away
6.30pm ITV News Hollyoaks 7pm Channel 4 News 6.25pm OK! TV
7pm Emmerdale 7.55pm 4thought.tv 8pm Vacation,
7pm 5 News at 7
Vacation, Vacation 8.30pm
7.30pm CHOICE UEFA 7.30pm Zoo Days; 5 News
Superscrimpers: Waste Not Want
Champions League Live: Not 9pm Boudica’s Lost Tribe: A Update
Manchester United v Schalke Time Team Special 10pm Desperate 8pm Essex Jungle; 5 News at 9
04 (Kick-off 7.45pm). Housewives 11.05pm The Big C 9pm CHOICE NCIS
10pm ITV News at Ten 11.40pm Music on 4: Being N-Dubz 10pm Law & Order: Criminal
10.30pm London News in America and Beyond 12.10am Intent
10.35pm UEFA Champions The Album Chart Show Introduces: WATERLOO ROAD
10.55pm Law & Order: Special
League: Extra Time: The semi- Hurts 12.25am Abbey Road Debuts BBC1, 7.30PM
12.45am The Album Chart Show Victims Unit New series. Karen Fisher has an
final second-leg encounters. 11.55pm Poker: Aussie Millions
Spotlight 1am Mercury Prize eventful first day back when new site
11.35pm Long Lost Family Sessions 1.15am Wakestock 12.50am SuperCasino manager Rob discovers an abandoned
12.35am The Zone; ITV News Festival 1.40am FILM Six Degrees 4.05am Meals in Moments 4.10am baby on the premises.
Headlines of Separation: 1993. 3.30am Ugly Brian Sewell’s Grand Tour 4.55am
2.35am Kojak 5am-5.30am ITV Betty 4.15am Hill Street Blues County Secrets 5.10am Wildlife
Nightscreen 5.10am-5.55am Countdown SOS 5.35am-6am House Doctor

SKY SPORTS 1 8pm Watersports World 9pm 3am ESPN Press Pass: Football- E4 Complete History 4.40am How
SATELLITE & CABLE

1pm Live Masters Tennis: The
third day of the Madrid Masters.
8pm Boots ‘n’ All: Super League
review. 9pm Revista De La Liga
10pm You’re on Sky Sports!
11.30pm Football’s Greatest 12am
UEFA Champions League
Highlights 1am Revista De La Liga
2am Boots ‘n’ All 3am UEFA
Champions League Highlights
4am FIFA Futbol Mundial
4.30am Football’s Greatest
5am-6am Boots ‘n’ All
SKY SPORTS 2
7pm FIFA Futbol Mundial 7.30pm
Live Greyhound Racing 10pm
Boots ‘n’ All 11pm Total Rugby
11.30pm Inside the PGA Tour
12am European Tour Weekly
12.30am Asian Tour Golf Show
1am-2am Trans World Sport
SKY SPORTS 3
7pm European Tour Weekly
7.30pm Total Rugby
Ironman Triathlon 10.30pm Trans
World Sport 11.30pm Cage
Fighter 12am Poker 1am
Watersports World 2am-3.30am
Ironman Triathlon
BRITISH EUROSPORT
6.50pm Show Jumping 7.50pm
Equestrian 8.50pm Riders Club
8.55pm PGA Tour Golf 9.55pm
European Tour Golf 10.25pm
Ladies European Tour Golf
10.35pm Golf Club 10.40pm
Yacht Club 11pm Eurosport for
the Planet 11.30pm Olympic
Magazine 12am-12.30am WATTS
ESPN
5.30pm Live Scottish Premier
League Football 8.15pm ESPN
Kicks: Extra 8.30pm DTM Review
Show 9.30pm Formula 3
Euroseries Review 10.30pm
VW Scirocco Cup 11.30pm
Premier League World 12am
Live Major League Baseball
related debate. 3.30am Planet
Speed 4am WRC Rally World
5am-6am AFL Review Show
SKY LIVING
7pm CSI: Crime Scene
Investigation 8pm How to Hold
onto a Prince 9pm Bones 10pm
Grey’s Anatomy 11pm Criminal
Minds 12am CSI: Crime Scene
Investigation 1.50am Ghost
Whisperer 2.40am Charmed
4.20am Nothing to Declare
5.10am-6am Maury
BBC THREE
7pm Top Gear 8pm Misbehaving
Mums-to-Be 9pm Don’t Tell the
Bride: Live 10pm Russell Howard’s
Good News 10.30pm FILM The
Pacifier 2005. 12am Family Guy
12.45am Don’t Tell the Bride: Live
1.45am American Dad! 3.55am
Russell Howard’s Good News
4.25am-5.25am Misbehaving
Mums-to-Be
7pm Hollyoaks 7.30pm Friends
9pm FILM The League of
Extraordinary Gentlemen 2003.
11.10pm My Name Is Earl
12.05am Glory Daze 1am The
Event 1.50am Ugly Betty 2.35am
The Event 3.20am Heartland 4am
The Class 4.25am-6am Switched
HISTORY
7pm America: The Story of the US
8pm Ax Men 10pm Swamp
People 11pm Ax Men 1am Swamp
People 2am Deep Sea Salvage
3am America: The Story of the US
4am The Universe 5am-6am Ice
Road Truckers
DISCOVERY
8pm How It’s Made 9pm Britain’s
Toughest Cops 10pm I Almost
Got Away with It 11pm Behind
Bars 12am Bear Grylls 1am
Deadliest Catch 2am Future
Weapons 3am Hitler’s Generals
3.50am World War Two: The
the Universe Works 5.30am-6am
Destroyed in Seconds
DISCOVERY HOME &
HEALTH
UEFA CHAMPIONS LEAGUE LIVE
7pm Bringing Home Baby 8pm 18
Kids and Counting 9pm Diagnosis
ITV, 7.30PM
Manchester United v Schalke 04 (Kick-
X 10pm Hospital Sydney 11pm
off 7.45pm). Adrian Chiles presents live
Trauma Team 12am Diagnosis X
1am Hospital Sydney 2am Trauma
coverage from the semi-final second-
Team 3am 18 Kids and Counting leg encounter at Old Trafford.
4am Deliver Me 5am-6am
Bringing Home Baby
SKY1
8pm Emergency with Angela
Griffin 9pm Brit Cops: Zero
Tolerance 10pm Fringe 11pm
Martina Cole’s The Runaway
12am Ross Kemp in Search of
Pirates 1.40am UK Border Force NCIS
2.30am Cold Case 3.15am A CHANNEL5, 9PM
Town Called Eureka 4am So You The agents team up with the Coast
Think You’re Safe? 4.50am Zoo Guard to investigate the apparent
Vet at Large 5.15am-6am Don’t murder of a Navy diver who was
Forget the Lyrics US trying to recover a sunken treasure.

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

QUICK CROSSWORD
    

SUDOKU KAKURO
12 26 38 9 39 17 20 
11 6 23
6  
20 10
Place the numbers from 1 to 9 in each empty cell so that each 3 
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 20 11
4 35
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 45
  
above or to the left of it.
You can only use the digits 1-9 7 13 14 
  and you must not use the
21 23
16  
same digit twice in a block. 18 33 34 5
  The same digit may occur 16 16 13 
17 22
 
  more than once in a row or
column, but it must be in a
45
  
29 22
    separate block.
10 8
7 15
 14 13 14
 

    ACROSS DOWN
1 Group of warships (5) 2 Hawaiian wreath (3)
   
   WORDWHEEL T D
4 Popular game played
with pieces of
stiffened paper (5)
3 One who leaves a
country to settle
in another (7)
Using only the letters in the Wordwheel, you have 8 Nocturnal flightless bird 5 Meat cake (7)
  ten minutes to find as many words as possible,
E S of New Zealand (4) 6 Small shelter with an
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters A 9 Communion (6)
10 Large African
open front to protect
a guardsman (6,3)
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
N I antelope (3)
11 Room access (4)
7 Piece of equipment
used to catch small
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
Y C 13 Berth (4) rodents (9)
14 Replenishment (7) 8 “Handle with ___”, treat
QUICK CROSSWORD 9 5 7 3 1 8 1 15 Slow pace of running (4) with extreme care (3,6)
R E B U S R O O S T
6 1 9 8 2 5 4 7 3 SUDOKU          16 Culinary plant (4) 12 Greek mythological
3 7 6 1 4 2 5 musician, the husband
A O O E F H          17 British dominion
P E T U N I A T O Y 3 2 9 4 1 4 2 of Eurydice (7)
7 5 9
         over India (3)
8 6 5 6 8
I G L E M
         18 Capital of Austria (6) 13 Chinese tile game (3-4)
D A M E S M I N C E 4 9 5 3
20 Nevertheless (3)
WORDWHEEL 19 Variety of agate (4)
P B R U         
5 4 3 1 2 7 8 9
U T U B E H E L P S         
N M X O H
9 7 6 8 9 9 7 21 Japanese dish (5)
        
C U B T R A C H E A
8 2 9 4 7 5 6 The nine-letter word was 22 Semi-precious
A E R R I F 5 9 1 4 3 8 2 7 6         
P A R K A D E P O T 1 6 2 1 3 2 1
MENDICANT         
stone with streaked
colouring (5)
Sport
Work to do if
England are to
maintain their
upward curve
CRICKET COMMENT
ANDY LLOYD
NDY FLOWER’S decision to extend
A his contract with the England
and Wales Cricket board has
been rightly celebrated by those
with an interest in the national side.
The former Zimbabwe batsman
has transformed England’s fortunes
on the back of his dedication, thor-
oughness of preparation and man
management skills.
Ever the perfectionist, however,
Flower will appreciate England’s lack-
luster World Cup showing means he
must address the deficiencies in the
one-day set up if his side are to be con-
sidered a credible challenge to the
subcontinents’ supremacy. In my
opinion there are three areas he must
address as a matter of urgency.
COLLINGWOOD’S REPLACEMENT
For so long the Durham all-rounder
has been a vital cog in England’s
wheel, but Old Father Time caught
up with him this winter and Flower
faces a tough decision as to who he
picks as his successor. Eoin Morgan is
the obvious choice but his decision to
play in the IPL may affect his chances
Frankel to miss
Derby but Cecil
still favourite
▲
HORSE RACING
WORLD DOMINATION has been
installed as the new favourite for the
Investec Derby after trainer Henry
Cecil revealed much-fancied Frankel
will not run.
Cecil is reluctant to step up 2000
Guineas winner Frankel to a mile and
a half next month at Epsom, leaving
his stablemate to take top billing.
“I think the Derby would not be
doing the right thing,” said Cecil, who
added Frankel may run at Royal Ascot
later in June. “I’d want to give him a
race before Epsom over a bit further
but I can’t do that.”
of being selected for the first Test
against Sri Lanka when you consider
Ravi Bopara has attempted to catch
the eyes of the selectors by scoring
runs for Essex.
COACHING SET-UP
England’s backroom staff didn’t get
the acclaim they deserved for the role
they played in retaining the Ashes.
The work undertaken by fielding
coach Richard Halsall has trans-
formed England’s performance in
that aspect of the game. After the
2005 Ashes series, bowling coach Troy
Cooley, who worked successfully with
Steve Harmison, was poached by
Australia and England’s attack was
never the same. Personal ambition
might make it tough, but Flower
must retain Halsall and current bowl-
ing coach David Saker if England are
to maintain their progression.
ONE-DAY CAPTAINCY
It would be churlish to say Flower
needs to rip it up and start again but
he faces a delicate balancing act in
respect that he needs to plan for the
future but with both World Cup final-
ists touring this summer, selecting a
brand new side is a recipe for disaster.
Andrew Strauss is likely to stay on as
skipper for now, but it would be an
idea for Flower to groom his succes-
sor. Ian Bell would make a fantastic
limited overs leader and an elevation
to one-day vice skipper would send
out the signal that he is looking to
the future, while maintaining the
nucleus of England’s relatively suc-
cessful recent past.
Melbourne Rebel Cipriani
hit with one-game ban
▲
RUGBY UNION
BY JAMES GOLDMAN
ENGLAND outcast Danny Cipriani
has accepted his punishment of a
one-match ban for breaking a cur-
few imposed by his Melbourne
Rebels team-mates.
Cipriani, 23, who won the last of
his seven international caps three
years ago, and scrum-half Richard
Kingi defied an agreement to avoid a
late night after Saturday’s 28-9
defeat by the New South Wales
Waratahs.
“We have taken this action due to
a breach of team protocol,” said club
captain Tim Davidson. “We are very
ROONEY HAMSTRUNG FOR
SCHALKE SEMI-FINAL
FERGIE TO ROTATE WITH
CHELSEA IN MIND: P26
Flower has overseen England’s rise to third in the Test rankings
protective of our standards and we
are disappointed that these players
have put themselves before the
team.”
Chief executive officer Ross
Oakley added: “Both players defied a
team directive to abstain from stay-
ing out late on Saturday night, given
the six-day break ahead of our next
game. The club supports the deci-
sion of our Player Standards Group.”
It is not the first off-field indiscre-
tion to have undermined Cipriani’s
attempts to regain his England berth
since his move to the Super 15 fran-
chise. Back in February he was fined
by the Rebels for an incident in a
nightclub.
SPORT | IN BRIEF
Radcliffe calls off comeback race Stevenson wins world title
ATHLETICS: Paula Radcliffe has been
forced to abandon her comeback race
due to a throat infection. Radcliffe who
has been out of action for 18 months,
was due to race on 15 May.
Results
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25
Flower signs
new deal and
sets lofty goals
▲
CRICKET
ENGLAND coach Andy Flower insists
he can take the team to new heights
after resisting overtures from India to
extend his contract with the England
and Wales Cricket Board.
Flower has worked wonders in his
two years as team director, winning
two Ashes series and the Twenty20
World Cup and hoisting England
from sixth to third in the world Test
rankings.
That improvement did not go
unnoticed in India, who were keen to
poach Flower before settling for one
of his predecessors as England coach,
Duncan Fletcher, instead last month.
But South Africa-born former
Zimbabwe captain Flower shunned
interest from the subcontinent in
favour of reaffirming his commit-
ment to the ECB, and believes his cur-
rent team can overhaul India as the
world’s No1 side.
“I am delighted to have been given
the opportunity to build on the con-
siderable progress we have made to
date as a squad and remain fully com-
mitted to developing the side and
ensuring we are in a position to
realise our objective of becoming the
No1 side in the world.
“I firmly believe we have the talent
amongst the playing squad and man-
agement team to help us realise our
ambitions.”
Flower took over, initially as stand-
in, with England in disarray following
the departures of warring coach Peter
Moores and captain Kevin Pietersen.
Months later he helped recover the
Ashes and retained them last winter
during a hugely successful trip to
Australia.
“Regaining the Ashes in 2009 and
retaining them last winter and the
2010 World Twenty20 title are obvi-
ous highlights, but there is still plenty
more we want to achieve in the
longer term,” Flower added.
The ECB’s Hugh Morris, managing
director of England Cricket, said
Flower had made “a huge impact”,
adding: “I have no doubt that under
Andy’s direction we will continue to
Picture: GETTY see England improve.”
TAEKWONDO: Britain’s Sarah Stevenson
has won her third Taekwondo World
Championship title by beating China’s
Guo Yunfei in the -67kg category in
Gyeongju, South Korea.
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email sport@cityam.com
 26 Sport
Argentine Faurlin Pic: ACTION IMAGES
Clubs could
sue over FA
QPR ruling
FOOTBALL
▲
QPR’S Championship rivals could sue
for millions of pounds if the west
London outfit escape a points deduc-
tion over the signing of Alejandro
Faurlin, a leading sports lawyer has
warned.
A Football Association hearing into
seven charges levelled at QPR and
Faurlin over the Argentinian mid-
fielder’s signing in 2009 got under-
way yesterday at Wembley, with a
decision due by Friday.
QPR fear they could be stripped of
points if found guilty, jeopardising
the promotion they thought they had
guaranteed with victory over Watford
on Saturday.
Andrew Nixon, of Thomas Eggar,
believes clubs who miss out on pro-
motion, which is estimated to be
worth around £90m, will consider
legal action if Rangers are found
guilty but keep enough points for
automatic promotion. Sheffield
United got £20m in compensation
from West Ham after ineligible player
Carlos Tevez kept the Hammers up in
2007 at the Blades’ expense.
“Such a scenario cannot be ruled
out on this occasion,” said Nixon.
“And should QPR escape a deduction
then clubs who may have failed to
reach the play-offs as a result will
obviously wish to consider their posi-
tion, particularly in view of the huge
financial windfall involved.”
Ferguson is tar-
geting his third
Champions
League success
Picture: GETTY
FERGIE’S GAMBLE
United boss ready to rotate his squad with Sunday’s
title showdown against Chelsea on the horizon
MANCHESTER UTD
SCHALKE
Man Utd lead 2-0 from first leg
▲
FOOTBALL
BY JAMES GOLDMAN
MANCHESTER UNITED manager Sir
Alex Ferguson admits Sunday’s
Premier League title decider against
Chelsea has forced him to gamble
with his team selection ahead of
tonight’s Champions League semi-
final second leg against Schalke.
United hold a commanding 2-0
advantage and have one foot in the
Wembley final following their domi-
nant display in Gelsenkirchen last
week, but after seeing their lead at
the top of the Premier League cut to
three points last weekend, Ferguson
will rest key individuals this evening,
including Wayne Rooney, with a nod
to Sunday’s Old Trafford summit
meeting.
Chelsea virtually wrapped up the
title last season with a 2-1 victory
over a Manchester United side dis-
tracted by a European quarter-final
against Bayern Munich and
Ferguson is determined not to let
history repeat itself.
“If you look at our experience of
last year, the team were very tired
against Chelsea in that next game
after losing in Munich,” he said.
“All four semi-finalists lost this
weekend too and there are certain
statistics that tell you the European
games do take it out of you.
“That has to have a bearing on my
team selection. We have two massive
games. Both as important as the
other.
“Chelsea is massive, so I have to
pick the right team on tonight to
ensure I have the same kind of fresh-
ness I need for Sunday’s match.
“Hopefully I will have the nucleus
of a team that is still good enough to
win the match.”
It is likely that United would’ve
have been without Rooney anyway,
the England striker reported for
training yesterday with a tight ham-
string, while Fabio is likely to be
replaced by his brother Rafael, but
Ferguson confirmed Darren Fletcher
will play some part having recovered
CITYA.M. 4 MAY 2011
from the virus which has side-
lined him for the best part of
two months.
Ferguson stands on the brink
of etching his name even further
into United folklore with a 19th
league title and third Champions
League crown up for grabs, and he
advised the club’s fans to savour
the moment.
“It is always dangerous in
football to assume you have
cracked it; that you have
found a sliver bullet or dis-
covered some secret formula
for success,” said Ferguson.
“We live in exciting times for
Manchester United and while I want
both players and supporters to enjoy
every minute of it, we must take
nothing for granted.”
 CITYA.M. 4 MAY 2011
FORM GUIDE| BIG MATCH POINTERS
l Man Utd last tasted defeat at home
more than a year ago. They lost 2-1 to
Chelsea on 3 April 2010, goals from Joe
Cole and Didier Drogba effectively taking
the Premier League title back to
Stamford Bridge.
l United’s last home defeat by more
than a single goal was the infamous 4-1
hammering by arch rivals Liverpool back
on Saturday 14 March 2009.
l United’s last home defeat in Europe
came way back in 2005, when Hernan
Crespo gave AC Milan a 2-0 aggregate
win, knocking United out in the second
round of the competition.
l United have never lost a European
Cup home game by more than one goal,
but the last time they conceded two was
in bowing out to another German side,
Bayern Munich, last season.
l Schalke have lost just once in 10
European games – last week against
United. Their unbeaten nine-game run
was a club record, and included 10 goals
in their last three games before the
United defeat. They’ll need their shooting
boots on again tonight, but Schalke can
take some hope from their 5-2 thumping
of last year’s champions Inter Milan at
the San Siro in the last round.
l Schalke’s away form has been mixed
this season. They have only lost once on
the road in Europe, against Lyon back in
September, but in the Bundesliga they
have lost eight and drawn four of their 16
away games.
l Striker Klaas-Jan Huntelaar (left) has
returned from a three-month absence
with a knee injury and is available to play
tonight. Huntelaar, who injured himself
in training in February, has scored
10 goals in 30
appearances
for the
German side
this season.
l Schalke are aiming to become the
fourth German side to reach a
Champions League final after Borussia
Dortmund, Bayer Leverkusen and
Bayern Munich.
Pearce defends Wilshere Under-21 call
▲
FOOTBALL
BY FRANK DALLERES
ENGLAND Under-21 coach Stuart
Pearce has risked the wrath of
Arsenal and Liverpool by picking
youngsters Jack Wilshere and Andy
Carroll for this summer’s European
Championship.
Gunners midfielder Wilshere
(right) and Reds striker Carroll are
regulars in the senior squad but still
young enough to play for the Under-
21s, and Pearce wants his strongest
side available for the finals in
Denmark next month.
That is likely to upset Arsenal man-
ager Arsene Wenger, who wants
Wilshere, 19, to have a rest this sum-
mer having played 46 times already
in a breakthrough season.
But Pearce said: “I’ve spoken with
the players and the important thing
is obviously the players. I’ll be speak-
Guardiola relieved he’s finally free
to focus on Barca’s Wembley date
BARCELONA 1
REAL MADRID 1
Barcelona win 3-1 on aggregate
▲
FOOTBALL
BY JAMES GOLDMAN
BARCELONA manager Pep Guardiola
admitted he’s glad to see the back of
the four-game marathon with Real
Madrid after his side booked their
place in the Champions League final
later this month.
Leading 2-0 following last week’s
highly controversial first leg at the
Bernabeu, Barca killed off any hope
of a Madrid comeback when Pedro
struck in the 54th minute having
been released by Andres Iniesta’s
defence splitting pass.
Real’s Brazil full-back Marcelo, who
had been at the centre of a pre-match
race storm, levelled matters on the
night 10 minutes later, but Barca held
onto their advantage with the mini-
mum of fuss allowing Guardiola the
opportunity to reflect on another
notable achievement.
He said: “I don’t have time for talk-
ing about Madrid or referees any
more. It has been a tough 20 days and
we have played the richest team in
the world many times.
“The referee may have had an
influence but we were very good in
the second match. Let the people
judge the decision of the referee, but
now let us enjoy this day.
“Football is coming home so it is an
honour to play at Wembley. We won
our first Champions League in 1992
at the old Wembley and we are ever
so proud for our club and players.”
The result may have been different
had Gonzalo Higuain’s strike not
been controversially disallowed three
minutes before Pedro increased
Barcelona’s aggregate lead.
Referee Frank De Bleeckere had
already blown for a free-kick when
Javier Mascherano, the covering
defender, had been accidentally
clipped by Cristiano Ronaldo before
Higuain located the back of Victor
Valdes’ net. And Real’s former
ing to any relevant managers
that I deem necessary.
“I think I will have a conver-
sation with Arsene with
respect to [Jack Wilshere] and
outline my viewpoint on
that.
“But I think the most
important thing is
England go with a
very strong side and a
strong squad and
hopefully that stands
the players in good
stead in the future when
they step on the pitch for
the senior team.”
Wilshere’s club col-
league Kieran Gibbs is
another senior star in
Pearce’s provisional 40-
man party, but his inclu-
sion is not as
controversial as injuries
Pedro’s goal put Barcelona 3-0 ahead on aggregate
Liverpool midfielder Xabi Alonso felt
the performance of the referees cost
his side a place in the Wembley final
over the course of both legs. He said:
“When we scored the first goal it
would have been totally different and
we feel so many bad decisions have
been made against us and we are not
happy about that.
“We think we did a good job but
decisions went against us, we really
have severely limited his partic-
ipation this term.
Liverpool boss
Dalglish is thought to be less
Kenny
concerned by
involvement with the
Carroll’s
Under-21s, but is likely to
harbour some concerns
about the
record £35m signing
club’s
going into his first
full season at Anfield
with little rest.
Manchester United,
Sunderland
Manchester City may
and
also have objections over
the call-ups of striker
Danny Welbeck, mid-
fielder Jordan
Henderson and defender
Micah Richards, who
have all been capped at
senior level.
Picture: PA
feel that way. It would have changed
everything, our position would have
been much stronger and after that it
was much more difficult.”
Real Madrid assistant coach Aitor
Karanka also claimed the perform-
ance of the officials proved his side
had no chance of making it through
to the Wembley showpiece.
“(Jose) Mourinho was right,”
Karanka said. “He said that it would
Arsenal fan anger
at 6.5% price hike
ARSENAL have been criticised by fans’
groups after hiking ticket prices by 6.5
per cent for next season.
The Gunners have not won a trophy
since 2005 and already boast some of
the costliest tickets in the Premier
League, before the planned increase.
A spokesman for the Arsenal
Supporters Trust (AST) said: “The AST
is very disappointed that Arsenal have
rejected fans’ call for ticket prices to
be frozen. This decision will price loyal
fans out of the Emirates.”
It cam came after the club agreed a
multi-million partnership with Indesit.
Sport 27
KEY MOMENTS |
54 mins: Having kept Barca at bay almost on
his own, Real Madrid goalkeeper Iker Casillas
was finally beaten when Andres Iniesta’s eye
of the needle pass was controlled and dis-
patched clinically by Pedro.
64 mins: Real were given an unlikely lifeline
when Xabi Alonso slipped in Angel Di Maria.
The Argentine’s shot hit the post but he col-
lected the rebound and squared for Marcelo
who swept home from close range
90 mins: Eric Abidal made his first appear-
ance since an operation on a tumour in his
liver two months ago. The France defender
came on as a last minute substitute and was
at the centre of the post match celebrations.
be impossible for us to go through
after the first leg. Tonight proved that
it was impossible and 100 million
people saw it – there is nothing more
to add.
“Of the four games we have played
against Barcelona, we have drawn
two and won another. We can be
proud of how we have done, what we
have achieved and we fought right up
until the very end.”
SPORT
FLOWER
POWER
Andy Lloyd’s verdict
on the challenges
that lie ahead for
England
head coach
Page 25