CREDIT rating agency Moodys

last night reiterated the UKs

triple-A credit rating but
warned it would reassess it
again early next year in the
light of the slowing economy.
In its annual credit report on
the UK, Moodys said the
economic recovery was likely to
take longer than forecast as
both the private and public
sectors try to reduce their debt.
It warned the UKs most
significant policy challenge was
balancing the need to cut the
deficit against the need for
economic stimulus.
It said it expected the
upcoming Autumn statement
on 5 December to clarify how
the government plans to
manage this balancing act,
enabling it to better reassess
the UKs rating in early 2013.
L
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Norton Rose
joins forces
with US firm
CITY law firm Norton Rose is
merging with US firm Fulbright &
Jaworski to create a new global player
with revenues close to $2bn, it
announced yesterday.
The new firm will be known as
Norton Rose Fulbright, and be
counted among the worlds top 10
law firms by both headcount and
revenues. The two firms have had a
so called best friends alliance for
around 10 years, and together should
bring in revenues close to $1.9bn,
with a combined headcount of 3,800
lawyers across 55 offices.
Speaking from New York, Norton
Rose chief executive Peter Martyr
who will be global CEO of the
enlarged firm said the tie-up had
been under discussion for a while.
You cant be a global law firm
without a real US presence, he told
City A.M. Fulbright is a great fit in
terms of both business and cultural
compatibility.
Norton Rose partners voted on the
tie-up at the firms annual meeting
in Toronto earlier this month, with
the Fulbright partnership giving the
deal the nod at a vote in Houston last
week. Fulbrights chair elect Kenneth
Stewart will lead the US
operations, and join
the firms executive
committee.
This is good news
for London too, said
Martyr. Were
plugging into a
bigger network
that will give
the office
access to new
international
work.
Sir Mervyn King was forced to slash his rosy economic growth forecasts yesterday
THE BANK of England slashed growth
forecasts again yesterday, predicting
the economy will now not recover to
its pre-recession levels until 2015.
And inflation will be higher than
expected, eating away at wages and
keeping household finances under
pressure.
Governor Sir Mervyn King did not
rule out any further money printing
in future, but did warn that the only
real chance the economy has of return-
ing to strong growth is by boosting
exports which is unlikely to happen
when the global economy is so weak.
GDP growth hit one per cent in the
third quarter, according to official esti-
mates, but Sir Mervyn expects this
boost to disappear by the end of the
year.
If the unfavourable world environ-
ment persists and there is little sign
of any change to the underlying prob-
lems in the Eurozone it may be
unreasonable to expect anything other
than a slow and protracted recovery,
he said, predicting the economy will
continue to zigzag as it has all year.
The forecasts also show the Bank
expects inflation to stay above the two
per cent target for the next 18 months.
However a major report from central
banking heavyweight David Stockton
this month revealed the Banks mod-
els consistently underestimate price
rises and Sir Mervyn yesterday
revealed he has not yet taken action to
improve the forecasts, meaning even
these slashed forecasts may again be
www.cityam.com FREE
too upbeat.
The growth forecasts for 2013 still
seem pretty optimistic, said
Berenberg Banks Robert Wood.
The Bank of Englands central fore-
cast appears to be around 1.75 per cent
on the year in 2013 we expect 1.1 per
cent.
The economy needs the boost, but
with inflation heading up to three per
cent in the next few months a move by
the Bank in the near term is unlikely.
Meanwhile Sir Mervyn was forced to
deny he had bailed out chancellor
George Osborne by agreeing to trans-
fer 35bn to government coffers last
Friday.
The profits of the quantitative easing
programme are being given to the
state, just ahead of the Autumn
Statement when Osborne had been
expected to admit he had failed to
meet his borrowing targets.
Although he is likely to give most of
the cash back in the long run, it will
give his numbers a useful boost next
month.
But Sir Mervyn denied any political
motivation or interference, and said
that the transfers simply count as
another 35bn of QE and so he will
print less money in any future round
of monetary easing than he would
have done without the transfer.
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Follow me on Twitter: @allisterheath
Southern Europe strikes
as Greek GDP plummets
THE EUROZONE was hit by a swathe
of strikes yesterday, as unions
protested austerity policies.
Protesters took to the streets and
clashed with police, bringing educa-
tion, industry and transport to a
grinding halt in a wide arc across
Spain, Portugal, Italy, Greece and
even France and Belgium.
The strikes came as official data
showed Greece heading into its
sixth year of recession with a 7.2 per
cent fall in GDP in the year to the
third quarter even deeper than
the fall recorded in the last quarter.
And economists predicted that
tough austerity policies could keep
short-term growth depressed well
into 2013. The recession will con-
tinue to deepen until the first half
of 2013, predicted Xenophon
Damalas at Greek bank Marfin
Egnatia, due to the implementa-
tion of all the cuts.
And Damalas said that things
would have been even worse with-
out the boost from tourism.
Greeces slide even further into
depression spooked investors, many
of whom fled to German bonds,
driving two-year bonds into nega-
tive yields. Eurozone stalwart
Germany shifted 4.3bn of the new
two-year securities, as investors wor-
ried about the risks of other
Tensions ignited into protests across Italy, Spain, Greece, France and even Belgium
2
NEWS
THE FEDERAL Reserve may replace
its so called Operation Twist with
further conventional quantitative
easing at the start of next year, its
latest minutes suggested last night.
Operation Twist has involved the
Fed selling its short-term securities
and using the proceeds to buy
longer-term debt, in a bid to
stimulate growth by weighing
down even more on long-term
borrowing costs.
Yet the Fed has recently
appeared to regain an appetite for
expanding its balance sheet, and
minutes of its October meeting
show that more could be to come.
A number of participants
indicated that additional asset
purchases would likely be
appropriate next year after the
conclusion of the maturity
extension programme in order to
achieve a substantial improvement
in the labour market, it said.
The recent re-election of
President Barack Obama has
boosted the chance of Fed boss Ben
Bernanke staying in his post until
January 2014.
Bernanke has led the Fed in its
mass asset-buying programme,
with some commentators
suggesting that he could have been
forced out of the job had Obamas
opponent, Mitt Romney, won the
battle for the White House.
US Fed minutes
hint at further
stimulus in 2013
BY JULIAN HARRIS
BY BEN SOUTHWOOD
To contact the newsdesk email news@cityam.com
T
HERE are three figures you need
to take away from yesterdays
slurry of economic news. First,
around 945.3m hours were
worked in the UK economy between
July and September, up 2.6 per cent
year on year and the highest since
April 2008. Second, total pay rises in
the public sector were 2.2 per cent
year on year, against 1.7 per cent in
the private sector. Public sector pay
freeze what pay freeze? Third,
Greeces economy is now 7.2 per cent
smaller than it was in the third
quarter of last year; the Eurozone
crisis is getting worse, not better.
Lets take these three in turn. The
total number of hours worked in the
economy is the purest measure of
employment. It adjusts for the huge
rise in part-time work since the reces-
sion. It suggests a strong recovery in
the labour market, despite official
EDITORS
LETTER
ALLISTER HEATH
Three important trends affecting Britains economic recovery
THURSDAY 15 NOVEMBER 2012
GDP numbers that suggest no real
increase in output during the same
period. So either the statistics are
wrong, or output per hour worked is
continuing to collapse, partly as a
result of problems in high productivi-
ty sectors such as the North Sea oil
and the crisis in the City, where many
high-end jobs have been lost.
The more usual (but unadjusted for
part-timers) figures were also good:
unemployment is down 110,000 on
the year; employment is up a cool
513,000 year on year. The employment
rate for those aged from 16 to 64 was
71.2 per cent, up 1.0 per cent on a year
earlier. Given the bloodbath in the
public sector, where jobs are being
cut, that is a very strong performance
by the private sector on any measure,
despite a rise in the claimant count.
What is much more shocking is that
George Osborne may be cutting state
jobs but has no control over public
sector pay. Over the past two years,
private sector pay is up 3.8 per cent;
public sector pay is up 4.3 per cent.
The chancellors supposedly crucial
pay freeze has been blatantly ignored,
partly because many pay hikes have
been camouflaged as promotions. A
small part of this may be accounted
for by a reclassification of some work-
ers but clearly, spending is not being
cut by as much as hoped.
Despite that, however, real pay is
seen in 1930s-America, propped up
only by handouts. Third quarter GDP
in Portugal collapsed by 0.8 per cent.
Worst of all, the crisis is now spread-
ing to the centre of the Eurozone,
with overall industrial production for
the region slumping by 2.5 per cent
month on month in September.
It is bizarre, therefore, that world
opinion has become more positive in
recent months towards the Eurozone.
The reality is that a new, even deeper
crisis is brewing and that even the
supposedly stronger members are
beginning to be dragged down by the
periphery. Despite employment
growth, life is tough for millions of
people in the UK. But we should at
least count ourselves lucky we did not
join the single currency.
falling in both public and private sec-
tors because hikes are not as large as
inflation. The real pay cuts are not as
large as Osborne would have hoped
for in public sector, and are greater
than he thought they would be in the
private sector.
But there is a silver lining to
depressed real wages. Private sector
jobs are like everything else: if it costs
less to hire somebody, the demand
will go up, which helps to explain ris-
ing private sector employment.
People are also more willing to take
temporary jobs 40 per cent of those
in such jobs took them because they
couldnt find permanent work, the
highest since 1997.
It could be worse: Greek GDP is col-
lapsing at an accelerating rate; next
year will probably be the sixth year of
recession for that country. Greece is
genuinely in a recession of the sort
Eurozone members.
Its a combination of worries about
the Eurozone economy plus ongoing
fiscal concerns in Greece keeping the
short end of the German curve under-
pinned, said Nick Stamenkovic at
strategist RIA Capital Markets.
Despite the strikes, Italy also had a
bond field day, selling 3.5bn worth
of three-year notes at the lowest rate
seen in close to two years.
But data across Europe only served
to highlight the deepening difficul-
ties the currency bloc is faced with.
Industrial production plunged 2.5 per
cent in just a month, data from
Eurostat revealed, although recent
rises mean it is down by slightly less
on last years output.
And last night European Central
Bank policymaker Jrg Asmussen
defended the Banks bond-buying
scheme, which has yet to be imple-
mented, saying the risks associated
with a worsening debt crisis outweigh
the dangers of stepping in.
He said high risk premia could
impact monetary policy and endan-
ger price stability even more than cre-
ating new money.
Q
What is this new
arrangement?
A
The Bank of
England has
printed 375bn to buy
government bonds (quantitative
easing or QE). These bonds pay
interest to the Bank. As the Treasury
indemnifies the Bank against losses
on QE, it also claims the profits. It
will take 35bn over the coming
months. This will be done quarterly
from now on.
Q
Is this normal?
A
It has never been done before in
the UK, and has led to speculation
the government is being bailed out
of a tight spot by the Bank. But the
US and Japan do the same.
Q
Is this a bailout for the government?
A
The government was expected to
admit to missing its deficit targets
in just a few weeks time. But the
governor claims there is nothing
untoward about this timing. If the
QE facility loses money in future, as
is likely, the Treasury will bail out
the Bank, reversing this transfer.
Q
Is this another round of QE?
A
It cuts public borrowing, and so
gilts in circulation, by 35bn, so
yes even though the MPC did not
vote for it. Sir Mervyn says he will
reduce future QE to compensate.
Q
A
and
Why has UKs QE
scheme changed?
Nine bidders for Parlophone records
Warner Music and a joint venture led by
industry impresario Simon Fuller are
among nine groups to have registered
interest in buying Parlophone from
Universal Music Group. The label, home to
Kylie Minogue and the Pet Shop Boys, is
being sold to satisfy regulators concerns
about Universals 1.2bn takeover of EMI.
US clarifies key anti-bribery law
US authorities have formally defined key
elements of a foreign bribery law in an
unusual move to help companies avoid
violations. Under the guidance, paying for
a foreign government officials taxi fare
does not constitute a bribe, while a paid
trip to Italy for eight Iraqi government
officials that consisted primarily of
sightseeing and included $1,000 in
pocket money for each official would
be deemed improper.
Santander boss calls for bank union
Emilio Botn, chairman of banking giant
Santander, has made an impassioned plea
for Europe to adopt a so-called union of
its eurozone banks as an essential route
out of the regions crisis.
Beckwith back with Soho scheme
Peter Beckwith, the veteran developer,
has sealed a deal to redevelop one of the
shabbier areas of Soho. Westminster City
Council has appointed his firm as its
preferred partner on a 25m scheme to
spruce up Berwick Street Market.
Elephant & Castle investor sought
The owner of Europes first covered retail
precinct launched a search for a venture
partner to revive it. St Modwen is looking
for an investor willing to back the
redevelopment of Elephant & Castle
shopping centre.
YouView could have to change name
Lord Alan Sugars online television service,
YouView, has already taken years longer
than expected to launch. And now, just as
it was finally getting off the ground, it
could be forced to change its name
following a dispute over the trademark
YourView owned by another company.
RBS could quit independent Scotland
Royal Bank of Scotlands chairman has
suggested the lender could consider
moving from its Edinburgh headquarters if
Scottish independence brought extra
difficulties.
Sandy may cost insurers $25bn
Hurricane Sandy may cost the insurance
industry up to $25bn, according to a new
estimate that provides the largest
potential price tag for the storm so far.
Disaster modelling company Risk
Management Solutions told clients total
insured losses could hit $20bn-25bn.
Russia expands treason law
A new law took effect in Russia expanding
the definition of treason so broadly that
critics say it could be used to call anyone
who bucks the government a traitor.
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
EMPLOYMENT continued to climb
in the third quarter, official
statistics showed yesterday, and
though the rate of growth was
down, employment remained more
than a half a million up on the
year.
There were 100,000 more people
with work in the three months to
September, compared to the
previous three months, the Office
for National Statistics (ONS) said
yesterday, bringing employment to
another all-time high.
Details in the data highlighted
this optimistic picture. Total weekly
hours worked climbed 1.1 per cent
to 945.3m, and average weekly
hours worked edged up from 31.7 to
32. Eleven thousand fewer were
part-time because they couldnt
find a full-time job. Unemployment
fell 49,000 into the quarter, coming
entirely from 16-24 year olds. But
this figure was marred by the
21,000 jump in unemployment
lasting more than 24 months,
Employment up
100,000 in the
third quarter
BY BEN SOUTHWOOD
bringing the total up 4.9 per cent to
443,000.
But the growth in jobs was
drastically down compared to
previous months of above-200,000
expansion, and ONS statisticians
told City A.M. the figures were
compatible with shrinking
employment in September.
And October saw a 10,100 boost in
the claimant count, the biggest rise
in 13 months, and the second rise in
a row since the end of the Olympics,
before which the claimant count
fell for six consecutive months.
The data also showed that despite
much-heralded public sector pay
freezes, state-employed workers
were still seeing pay rises.
Pay in September was on average
488 per week 21 more than
private sector workers, and 2.2 per
cent more than a year earlier. But
the ONS told City A.M. that
somewhere between 0.6 and 0.8
percentage points of this rise was
down to moving poorly-paid further
education workers over to the
private sector.
Star Londoners make partner
in Goldman promotion round
SEVENTY Goldman staff were
promoted to partner yesterday,
and will take on the prestigious
title and a share of the banks
profits in the new year.
The round was smaller than the
110 seen in the last round in 2010
as the bank downsizes. Twenty of
the new partners are from
Europe, Middle East and Africa
(EMEA), 40 from the Americas and
nine from Asia-Pacific.
Three of the most high profile
BY TIM WALLACE London-based staff to make the
jump are dealmaker Anthony
Gutman, economist Huw Pill and
market analyst Francesco
Garzarelli.
Gutman is joint head of the
banks UK investment banking
arm, alongside Mark Sorrell who
made partner in the last round
two years ago.
He is well known for his
involvement in high profile deals
including TNK-BPs sale to Rosneft,
Betfairs float and Pret A Mangers
acquisition.
Meanwhile the banks chief
executive Lloyd Blankfein called
for businesses and rich individuals
to pay more in tax to avoid the
fiscal cliff which threatens to
derail the US economys recovery,
with profound effects on the rest
of the world.
I believe that tax increases,
especially for the wealthiest, are
appropriate, but only if they are
joined by serious cuts in
discretionary spending and
entitlements, he wrote in the
Wall Street Journal. Partners: Dealmaker Anthony Gutman, economist Huw Pill and analyst Francesco Garzarelli
THURSDAY 15 NOVEMBER 2012
3
NEWS
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EMPLOYMENT GREW AND UNEMPLOYMENT DIPPED
UNEMPLOYMENT
DOWN 49,000
TO HIT 2.5m
EMPLOYMENT
UP 100,000
TO HIT 29.58m
BOTH FIGURES COMPARE JUL-SEP WITH APR-JUN
QUARTERLY CHANGE IN EMPLOYMENT TOTAL
JUL - SEP
2007
JUL - SEP
2008
JUL - SEP
2009
JUL - SEP
2010
JUL - SEP
2011
JUL - SEP
2012
300
200
100
-100
-200
-300
Thousands
0
UK banks have been told by
regulators to ensure employee
bonuses are kept down to reflect the
industrys recent mis-selling and
rate-fixing scandals, a source
confirmed last night.
Letters sent last month by the
Financial Services Authority to all
bank chief executives also told the
institutions they should set an
example and claw back past
bonuses awarded to employees who
were involved in scandals such as
the abuse of the benchmark Libor
interest rate.
The FSA declined to comment.
Banks told to
cut bonuses
BY JAMES WATERSON
PRUDENTIAL chief executive Tidjane
Thiam yesterday said the firm would
keep the option of breaking up the
group on the table after its Asian and
US divisions posted solid gains for
the third quarter.
Thiam, who has previously hinted
he wanted optionality over the
four separate divisions of the group,
said he would keep the door open for
a possible break up of the business to
get the best value for each bit.
If a business can survive on its
own, then it becomes an option to
separate it from the group, he said
yesterday. Now, I have to say in the
same breath that it doesnt mean
that we aim to sell any part of the
group.
We just want to create that option,
because we think that as the market
gives us visibility and transparency
on the group and how the profits and
cash are generated, it will put a high-
er value on each of the businesses.
Prudential split
option remains
after profit rise
BY MICHAEL BOW
The business is currently made up of
Asian, American, and a British life
insurance company and a British
fund manager M&G.
Yesterday it posted a 15 per cent
increase in new business profits in
Asia and a ten per cent increase in its
US business.
If the Asian business were separated
and sold at market value analysts
have said Prudential should be target-
ting 1,355p a share. Yesterday its
shares closed at 871p a share.
Russian billionaire snaps
up top investment bank
DEALMAKER Stephen Jennings,
who helped lead the privatisation
boom of post-Communist Russia,
yesterday left the country behind
after selling his investment bank
Renaissance Capital to billionaire
Mikhail Prokhorov.
New Zealander Jennings, who
founded the bank in 1995,
yesterday sold his remaining 50
per cent stake to Prokhorovs
Onexim Group, who already owned
the other half of the company.
Prokhorov is best known for
owning the Brooklyn Nets
BY MICHAEL BOW
basketball team, alongside hip hop
mogul Jay-Z. He has been tagged as
Russias seventh wealthiest
individual with a fortune estimated
to be $13bn.
Onexim also bought 89 per cent
of Renaissance Credit, the banks
sister company, which makes
consumer loans in Russia. The
amount paid for the bank was not
undisclosed.
Jennings will continue to run a
far smaller Renaissance Group and
will instead focus on its asset
management operation while
seeking development opportunities
in Africa.
MUSIC streaming service Spotify has been valued at $3bn (1.9bn) after completing a
new round of funding yesterday. The loss-making Swedish company, led by 29-year-old
Daniel Ek (pictured), raised $100m from a group of investors including Goldman Sachs
and Coca-Cola. The firm charges 9.99/month for unlimited access to millions of tracks.
SPOTIFY VALUED AT $3BN
Prudential PLC
14Nov 8Nov 9Nov 12Nov 13Nov
840
850
860
870
880 p
871.00
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SANTANDER is set to be the first
bank to add a new industry stamp
of approval to a securitisation, as
the sector hopes to improve the
image of financial instruments
tarnished in the financial crisis.
Securitisations see portfolios of
loans in Santanders case, car
loans sliced up and sold to
investors.
The failure of supposedly safe
securitisations based on US sub-
Santander spearheads drive
to rehabilitate securitisations
BY TIM WALLACE
prime mortgages hit the
reputation of the instruments so
banks now receive less money
than they would expect for high
quality securitisations.
A new Prime Collateralised
Securities (PCS) label has been
designed by bodies including the
Association for Financial Markets
in Europe (AFME) to reassure
investors of the quality of the
asset, in the hope that demand
will jump and banks will no longer
lose out.
BOTTOMLINE: Page 13
L L
THURSDAY 15 NOVEMBER 2012
4
NEWS
cityam.com
BARCLAYS groundbreaking new
contingent convertible bonds
cocos received an enthusiastic wle-
come from investors, in a very posi-
tive sign for the market as banks will
have to increase issuance of the
instruments.
The bank is raising $3bn (1.89bn)
in the 10-year instruments, with a
face yield of 7.625 per cent. But with
the final book reaching over $17bn
by last night, the pricing should
come in favourably for Barclays.
Cocos differ from usual bonds as
they give the bank a boost when it
gets into trouble.
In this instance, if Barclays com-
mon equity core tier one capital falls
below seven per cent, the bondhold-
ers lose their investment to the
bank, shoring up its financial posi-
tion when it needs help most.
The hope is, this should never hap-
pen when the CRD4 capital rules
come in, probably by the middle of
next year, Barclays will have to have
capital of above nine per cent, two
hundred basis points above the trig-
ger point.
Analysts expect Barclays will have
capital of above 12 per cent on this
measure by the end of next year.
Cocos are gogo
as buyers flood
Barclays issue
BY TIM WALLACE
Still, the added risk means
investors demand a higher rate of
interest than for more senior debt,
on which they are less likely to lose
out. As banks have to increase their
proportion of loss absorbing debt,
this case is testing the waters for the
industry.
It is only the 10th coco ever issued
by a bank, and the third largest in
the instruments short history.
According to Dealogic figures, only
Lloyds $11.5bn coco in 2009 and
Credit Suisses $6bn issuance in 2011
are larger.
Deutsche Bank, Credit Suisse,
Morgan Stanley, Barclays and Citi all
ran the book, drumming up demand
for the loans in a global roadshow
series.
THE jury in the London trial of
former UBS trader Kweku Adoboli,
who is blamed for a loss of $2.3bn,
retired yesterday to consider its
verdicts.
Adoboli, 32, denies two charges
of fraud by abuse of position and
four charges of false accounting,
covering the period from October
2008 to his arrest on 15 September
2011. His trial started on 10
September this year. There was no
way of knowing how long the jury
BY CITY A.M. REPORTER
would take to reach verdicts on all
six counts.
There are 11 jurors in the case,
meaning that if they cannot reach
a unanimous verdict
on one or more
counts, a 10-1
majority decision
would be acceptable.
Adoboli is
accused of
carrying out
unheeded
trades far
in excess of
his authorised risk limits,
concealing his true risk exposure
by booking fictitious hedging
trades, and concealing some of his
profits so that he could plough
them back into the official
accounts when it suited him.
In order to convict him of the
false accounting charges, the
jurors have to be sure that he
intended to make a personal gain
for himself.
Barclays PLC
14Nov 8Nov 9Nov 12Nov 13Nov
260
280
300
320
240
340 p
237.65
14Nov
Kweku Adoboli denies
all charges
FIRMS and equality groups yesterday
welcomed the European
Commissions decision to water
down its quotas plan, saying the
voluntary approach was working.
The European Commission (EC)
decided to scrap its original plan to
impose 40 per cent quotas on firms,
replacing it with a 40 per cent target.
The EC will require member states to
penalise firms that both fail to meet
the objective, if they also fail to
favour equally qualified women.
These proposals are not a quota as
such, explained Clodagh Hayes at
Linklaters, Companies who dont
meet the target just need to ensure
their recruitment processes are
Firms hail new watered down
approach to EU board quotas
BY BEN SOUTHWOOD
transparent and give preference to
equally qualified female candidates.
Helena Morrissey, founder of the
30% Club, which aims to bring more
women onto corporate boards, hailed
the decision, pointing out that UK
firms were rapidly adding qualified
women to non-executive roles
already, under the voluntary
approach. There has been a decisive
shift in the pace of change towards
better gender balance in Britains
boardrooms, Morrissey said. In the
past six months, 30 out of 62 FTSE100
non-executive directorships have
gone to women, a pace of change
that surely cannot be bettered if you
believe in appointment by merit.
THE managing director of retail chain
John Lewis last night called on the gov-
ernment to examine the way foreign
multinationals pay tax in the UK.
Andy Street said the Treasury
needs to do more to prevent the likes
of online retailer Amazon
destroying the UK tax base and
potentially putting British
companies out of business.
Street said international firms
operating in Britain but based in
low-tax countries posed a threat to
the long-term future of British
John Lewis boss urges action
on foreign firm tax payments
BY KATIE HOPE
companies.
You have got less money to invest
if you are giving 27 per cent of your
profits to the exchequer than if you
are domiciled in a tax haven, he told
Sky News. So they will out-invest
and ultimately out-trade us and that
means there will not be the tax base
in the UK. So I do think it is an issue
that needs to be examined.
Street was echoing concerns raised
by MPs on Monday who criticised
Amazon, Google and Starbucks
executives for not paying more tax in
Britain.
THURSDAY 15 NOVEMBER 2012
5
NEWS
cityam.com
Jury retires to consider verdict
in trial of ex-UBS trader Adoboli
FORUM: Page 23
L L
BLAME for the collapse of derivatives
broker MF Global lies with former
chief executive Jon Corzine,
according to a US congress
investigation released today.
It concludes poor management
decisions were to blame for the
October 2011 failure of the firm,
which left $1.6bn (1bn) of
customer funds missing. MF Global
collapsed after disclosing it had
made large bets on European
sovereign debt.
The report says Corzine, a former
co-chair of Goldman Sachs and
sometime US senator, was guilty of
a dereliction of his duty.
CEO blamed
for MF Global
BY JAMES WATERSON
J SAINSBURY boss Justin King said
the supermarkets Nectar data and
coupon-at-till scheme would give it
the edge over rivals ahead of another
competitive christmas, as it reported
a rise in half-year profit.
Britains third largest supermarket
beat forecasts with a five per cent
rise in first-half profit to 373m, driv-
en by convenience store growth and
a 20 per cent uplift in online sales.
Like-for-like sales rose 1.7 per cent
and total sales were up 4.1 per cent,
thanks to its Brand Match campaign
and Nectar card data that allows it to
print targeted coupons, helping to
lure shoppers under pressure from
higher living cost.
The supermarkets performance
puts pressure on rivals Morrisons,
which reported a 2.1 per cent drop in
like-for-like sales last week and Tesco,
which is attempting to turn around
its UK business after a profit warning
earlier this year.
The latest industry data shows
Sainsbury wins
shoppers over
with coupons
BY KASMIRA JEFFORD
Sainsburys marketshare now at 16.7
per cent of the grocery market, its
highest in almost 10 years.
Commenting on next months
Autumn Statement, King reiterated
he would like to see the government
reduce the barriers to employment.
It is up to the government to
decide the best way to achieve it, but
one option could be a national insur-
ance holiday on new jobs for 12
months, he said.
Last month, King criticised chan-
cellor George Osbornes plan to allow
employees to swap workplace rights
for shares in their firms.
Glencore and Xstrata deal
edges closer to approval
THE 56bn mega-merger between
Glencore and Xstrata is edging clos-
er to reality, after shareholders look
set to give it the go-ahead.
Qatar Holding, Xstratas second-
largest shareholder, was last night
reported to be on the verge of
approving the bid from Glencore,
although Qatar itself refused to
comment.
The reports came as investment
bank Macquarie also said it
expected Xstrata shareholders to
approve the deal.
Analysts at the bank said that
the merged firm would present
BY CATHY ADAMS
investors with an even more
compelling opportunity to play the
next leg of the commodity cycle.
Additionally, Macquarie said the
merger will strengthen Glencores
balance sheet, so that by the end of
2014, the merged firm would have
$18bn (11.3bn) of cash to fund
future M&A activity.
Trust in management and
patience may be required, but
Glencore can drive a multiple re-
rating through its merger with
Xstrata, the note concluded.
Xstrata shareholders are due to
vote on the deal which offers 3.05
Glencore shares for each Xstrata
share on 20 November.
FACEBOOK shares closed up 12.6 per cent yesterday, stunning Wall Street, as hundreds
of employees were able to sell their stock for the first time. The latest in a series of share
lockup periods expired flooding the market with 800m shares owned by staff and
early investors. But the $22.36 closing price was still well below Mays $38 IPO price.
FACEBOOK SHARES STAGE SHOCK RALLY
J Sainsbury PLC
14Nov 8Nov 9Nov 12Nov 13Nov
347.5
350.0
352.5
355.0
340.0
342.5
345.0
357.5 p
338.80
14Nov
MANCHESTER United last night
announced record revenues,
allowing the football club to pay
down some of the debt that has
bedeviled it since 2005.
The team play away at Norwich
City this weekend but yesterdays
trading update was issued in the
very different world of Wall Street,
following the clubs August IPO on
the New York Stock Exchange.
Total revenue grew from 73.8m
Man United nets record income
after growing sponsorship cash
BY JAMES WATERSON to 76.3m in the three months to
30 September, boosted by a 32 per
cent lift in sponsorship income.
But a relative lack of televised
games during the period meant
broadcasting revenue slipped.
United have been lumbered with
substantial debts since the Glazer
family bought the club in a
leveraged takeover seven years
ago. Yesterdays announcement
revealed that gross debt has now
dropped to 359.7m, down almost
a fifth on last year.
THURSDAY 15 NOVEMBER 2012
6
NEWS
cityam.com
AG BARR, the Scottish Irn Bru-maker,
and rival Britvic yesterday revealed the
terms of an all-share merger that will
create one of Europes largest soft
drinks companies with more than
1.5bn of annual sales.
The new company will be called Barr
Britvic Soft Drinks and will be run by
AG Barrs chief executive Roger White,
while Britvic finance director John
Gibney will take the role of finance
director for the new company.
Paul Moody, who has led Britvic for
eight years, said he will step down after
the merger, which is due to be complet-
ed early next year.
The deal will see the Robinsons
squash-maker owning a 63 per cent
stake in the new firm while family-
owned AG Barr will hold the remaining
AG Barr agrees
to 1.4bn tie-up
with rival Britvic
BY KASMIRA JEFFORD
stake. Barr Britvic will be registered at
AG Barrs headquarters in Lanarkshire
but run through Britvics offices in
Hemel Hempstead.
The merger will amount to 40m of
revenue and cost savings over the next
three years, although this will come at
the expense of between 315 to 500 jobs
taken out of its 4,000 work force.
Britvic PLC
14Nov 8Nov 9Nov 12Nov 13Nov
370
375
380
385
365
390 p
387.00
14Nov
THURSDAY 15 NOVEMBER 2012
7
NEWS
cityam.com
NEW8 FROM THE
CTY OF LONDON
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News, info and offers at www.cityofIondon.gov.uk/eshot
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BRITVIC AND AG BARR MERGER
BARR BRITVIC
MANAGEMENT TEAM
DEPUTY CHAIRMAN
Ronnie Hanna
(Chairman of AG Barr)
CHAIRMAN
Gerald Corbett
(Chairman of Britvic)
FINANCE CHIEF
John Gibney
(CFO of Britvic)
CHIEF EXECUTIVE
Roger White
(CEO of AG Barr)
making Christmas more comfortable
DOZENS of Barclays staff could be
drawn into the Libor-fixing row, as
their names are likely to be
published as part of the legal battle
with Guardian Care Homes (GCH).
GCH claims it was mis-sold an
interest rate swap product, and
that by fiddling its Libor
submission Barclays unfairly
BY TIM WALLACE
influenced the interest rate on
which the product was based.
Barclays disagrees, arguing that
GCH is a sophisticated investor and
that its punishments for Libor-
manipulation largely related to US
dollar Libor, not the sterling Libor
which GCHs product was based on.
In case management hearings
GCH secured access to up to 1.2m
emails Barclays uncovered in its
internal investigations.
And of the 208 names on those
emails, the judge said 42 staff now
have 14 days to argue their case to
remain anonymous, or their names
could come out in the trial.
However the staff may not have
been directly involved in rate
fiddling, but simply mentioned in
relevant emails and now risk
being linked to the scandal anyway.
MATHS graduates confused bank
bosses with extremely technical and
detailed risk analysis, leading to a
misunderstanding of banks
positions and contributing to the
financial crisis, the Parliamentary
Commission on Banking Standards
heard yesterday.
There was a feeling that we
understood risk, but it was an
illusion created by an influx of
people with different skill sets
maths and physics graduates who
fell on the data like a pack of dogs on
a dead cow, said Andrew Hilton
from the Centre for the Study of
Financial Innovation.
But the models they made were too
simple and did not manage risk well,
partly leading to the crisis, he said.
Maths graduates blamed for
poor loan risk management
BY TIM WALLACE
THURSDAY 15 NOVEMBER 2012
9
NEWS
cityam.com
Mark Kleinman is City editor of Sky
News. Twitter: @MarkKleinmanSky
B
RAVERY is not a quality
conventionally attributed to the
bosses of business lobbying
groups but step forward, John
Cridland. The CBI director-generals
decision to lob a grenade into the row
over payment protection insurance
(PPI) mis-selling is in danger of
splitting his bodys membership.
Cridlands argument that there
should be a time limit on compensa-
tion claims plants his feet firmly in the
banking industrys camp a potential-
ly discomfiting position for the head of
an organisation whose industrial
members demand studious objectivity
when their interests and those of
financiers collide.
More predictably, the British Bankers
Association has been lobbying regula-
tors for the same outcome, with little
success so far. Now, Antnio Horta-
Osrio, Lloyds Banking Group chief
executive, has waded into the row too.
Having set aside more than 5bn for
INSIDE
TRACK
MARK KLEINMAN
Banks and a brave industry boss square up to claims firms
PPI compensation, the bank wrote last
month to the Financial Ombudsman
Service (FOS) urging for an overhaul of
the charging structure for claims: each
bogus or duplicate application should
be paid for by the claims management
companies (CMCs) responsible for sub-
mitting them. The case is a logical one.
For the CMCs, each submission repre-
sents a no-lose gamble.
I understand that the FOS responded
to Lloyds plea earlier this week, but
has remained unpersuaded. People
familiar with its reply said it agreed
that CMCs required tougher regula-
tion but pointed out that that was a
matter for parliament and that it had
no legal power to charge ambulance-
chasers. Thats a problem for Horta-
Osrio, but its also an issue for the
wider economy: every 100m of fraud-
ulent PPI claims could otherwise sup-
port 1bn of bank lending.
That leaves CMCs as the only real
winners from this debacle. Right now,
a more appropriate definition of their
name might be Creaming Money
(from) Consumers.
BANKING WAR GAMES
Inclement weather has dealt New
Yorkers a raw deal recently, so for the
roughly 175 financiers at the
Arrowwood Hotel in Westchester last
week, the Hurricane Sandy-hit
backdrop was fitting.
Bankers, lawyers and regulators were
there to contend with an equally por-
tentous storm: a bank collapse orches-
trated within the new Dodd-Frank Act.
banking reforms, an event to road-test
the ringfencing structure being taken
through parliament should be held at
the earliest opportunity.
SCICLUNA TO JOIN RSA
In the insurance industry, revenge is a
dish best served lukewarm.
Last year, Lloyds Banking Group
poached finance director George
Culmer from RSA Group. That journey
will be reversed next week when RSA
lands Martin Scicluna, a former
Deloitte partner, as its next chairman.
It means yet another boardroom
headache for a state-backed bank. I
understand that by dint of its insur-
ance operations, Scicluna will be
obliged to step down as a non-execu-
tive director and chair of Lloyds audit
committee. It will not be an easy job to
fill.
Organised by The Clearing House, a
US-based banking association and pay-
ments processor owned by commer-
cial lenders, the war-game included
heavy City representation. Among the
participants were John Whittaker, a
senior risk executive at Barclays, and
Thomas Huertas, a former FSA official
now at Ernst & Young.
The participants objective, accord-
ing to people involved, was to act out
the safe wind-up of a global systemical-
ly-important bank (G-SIB) headquar-
tered in the US and which owned a
UK-based broker-dealer.
The results, which are expected to be
disclosed this week, provided encour-
agement to regulators if not to the
bank shareholders and creditors who
suffered vast losses: the conclusion
was that a G-SIB failure would be possi-
ble using recovery and resolution
plans overseen by the ominously-
named Orderly Liquidation Authority.
Given British taxpayers interest in
Barclays set to reveal 42 Libor names as legal
row over care homes derivative gets personal
ICAP boss Michael Spencer yesterday
warned markets were facing their
toughest period for 36 years after the
interdealer broker issued a stark
profit warning due to falling trading
volumes.
The company, which was relegated
from the FTSE 100 in September after
six years on the index, saw pre-tax
profits slump by a quarter and rev-
enues drop 14 per cent in six months
as it gave an insight into the parlous
state of the broking environment
yesterday.
Spencer said: This has been one of
the toughest periods in my 36 year
career in the wholesale financial
markets.
Trading volumes this year have
fallen significantly across nearly all
asset classes and geographies
whether equities, futures, FX (foreign
exchange), commodities, fixed
income and also OTC (over the
counter).
The firm warned pre-tax profits for
the full year would come in at closer
Icap warns of
toughest time
in over 36 years
BY MICHAEL BOW
to 300m, around ten per cent lower
than some analyst estimates.
Spencer told reporters on a confer-
ence call the firm had been cutting
staff as part of an overall 60m cost
cutting exercise set to finish in March
2013.
He said: Roughly nine per cent of
staff have left the firm, five per cent
have come in but we are not planning
any more cost cuts.
He added bonuses at the business
would fall 14 per cent across the
board, in line with the drop in rev-
enue. The dividend was up 0.6p.
ISRAEL launched a major offensive against Palestinian militants in
Gaza yesterday, killing the military commander of Hamas in an air
strike and threatening an invasion of the enclave. The operation,
dubbed Pillar of Defence by the Israeli military, followed five days
of Palestinian rocket attacks and Israeli strikes at militant targets.
TENSIONS ESCALATE IN GAZA
ICAP PLC
14Nov 8Nov 9Nov 12Nov 13Nov
290
300
310
320
280
330 p
281.40
14Nov
Given the continued low interest rate environment and structural uncer-
tainties, related to impact of central clearing on over the counter derivatives
volumes, competitive threats from futures exchanges, there may be a
downside pressure on consensus full year 2014 estimates as well.
ANALYST VIEWS

Recovery will come at some point and now investors are being paid to
wait. With the price to earnings below the expected dividend yield we believe it
is too late to sell ICAP even though we struggle to see where the next bit
of good news will come from.

Full-year guidance seems to reect a mix of the rst half year, some
one-off impacts such as Hurricane Sandy, and the company taking a miserable
view on the rst quarter of next year. Management is assuming that it is
no better than the rst quarter of last year, which was dull.

ICAP IS SUFFERING AT THE

MOMENT BUT WHAT IS THE
OUTLOOK? By Michael Bow
HALEY TAMCITI

JAMES HAMILTON NUMIS

PHILIP MIDDLETON BANK OF AMERICA

NEIL Woodford, one of the worlds
most successful investors, yesterday
publicly welcomed the collapse of
BAE Systems merger with EADS for
the first time.
Woodford, who runs money at
retail fund manager Invesco
Perpetual and first warned against
the merger in October, said the
aerospace defence firm would
remain just as good an investment
on its own now the deal was off.
In an outlook statement for
Edinburgh Investment Trust, a FTSE
listed fund run by Woodford, he
said: The deal did not look
Woodford welcomes BAE-EADS
deal collapse as boost for fund
BY MICHAEL BOW
particularly beneficial to
shareholders.
Woodford said BAE, which is 4.4
per cent of the funds portfolio,
would be a valuable future
contributor for the fund on its
own.
Results from the fund showed
Woodford beat the market again,
posting a net asset value increase for
of 3.4 per cent compared to a 1.9 per
cent rise in the FTSE All Share index.
Woodford said he had shied away
from mining stocks but given
stronger weighting to the
pharmaceutical and tobacco sectors
and bought into support firm
Capita to deliver the results.
THURSDAY 15 NOVEMBER 2012
11
NEWS
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Left to right: Creativity Software chief executive Richard Lee and Creative Software
employee Deepti Bharti meet Her Majesty The Queen at the Enterprise Awards
12
cityam.com
www.cityam/appeal
#cityamappeal
THURSDAY 15 NOVEMBER 2012
cityam.com/the-capitalist EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
THECAPITALIST
ENTREPRENEURIAL awards season
is upon us again.
At the Queens Awards for
Enterprise at Buckingham Palace
earlier this week, The Queen and
the Duke of Edinburgh congratulat-
ed representatives of the 209 win-
ners in the palaces ballroom.
The awards, which have been oper-
ating in various forms since 1966,
this year had 862 entrants from all
over the country a statistic which
will no doubt please business secre-
tary Vince Cable who attended the
reception, as well as anyone inter-
Queen salutes Enterprise Award
winners at Buckingham Palace
ested in our entrepreneurial future.
Also in attendance at the palatial
celebrations were Stuart Popham,
who is vice chairman of EMEA at
Citi, and business minister Michael
Fallon.
Award winner Victoria Ford, of
City legal consultants Jomati, had a
little giggle with the Queen.
Ford said: She asked what we had
done with our Queens award. I told
her that we have framed our certifi-
cate. We have displayed the glass
bowl too but are too scared to go
anywhere near it.
MORE entrepreneurial talent was
being celebrated over on Park Lane
on Tuesday evening, at the 2012
National Business Awards.
The 11th annual ceremony at the
Grosvenor hotel was opened with a
video message from Prime Minister
David Cameron, and followed by a
speech from Danny Alexander, chief
secretary to the Treasury.
Motivational speaking, not
that it was need-
ed, came
f r o m
Ol ympi c
medallist
J e s s i c a
E n n i s .
Awards host
J e f f
R a nd a l l
admitted
Entrepreneurial
awards aplenty
he found himself far more excited at
the prospect of talking to golden girl
Ennis than his usual Sky News
interviewees.
Phil Smith, chief executive of Cisco
won the biggie of the night the
Leader of the Year Award, while Kate
Swann, chief executive of WH Smith
received the award for a Decade of
Excellence in Business.
Other winners were Shutl for
Start-Up of the Year, Newton
Europe for Business Enabler of
the Year, Marks & Spencer for
Sustainability, law firm,
Eversheds for Leadership
Diversity and Intertek which
bagged the FTSE 100 Business
of the Year trophy.
Left to right: Coutts chief executive Michael Morley, vice president of Intertek Aston Swift
and Kate Swann, chief executive of WH Smith and winner of the Decade of Excellence award
Left to right: Sir Roger Carr, chairman of Centrica; John Heaps, chairman of
Eversheds; Dame Helen Alexander, chairman of UBM and Jeff Randall from Sky News
Phil Smith, winner and
chief executive of Cisco
I donated, its tough building a business.
Particularly without education. Opportunity
International add much value in Africa
@funtionalmove
Ive donated to the #cityamappeal
because an opportunity for one will lead to
opportunities for many.
@UOldfield
I have donated this year to the
#cityamappeal as Aid has a better effect as
a handup not a handout
@porkchopdavies
Donate online at www.cityam.com/appeal or
by text to CITY13 and amount (5 or 10 only)
to 70070 or by phone to: 01865 725 304
Asian ambition risks a
Prudential departure
P
RUDENTIAL boss Tidjane
Thiam failed in his bid for
AIGs Asian insurance arm AIA
in 2010, but yesterdays third
quarter numbers show the insurer
has not turned its back on Asias
opportunities.
Far from it, with the Asian part of
the business showing 828m new
business profit in the year to date,
as against 683m for the US and
227m for the UK. Sales also grew
fastest and brought in most
revenue in Asia over the year to
date: 1.328bn, up 16 per cent year
on year. Increasingly, with the
benefit of hindsight, it seems the
City was wrong to block Thiams
AIA deal.
Prudentials acquisition of
Thanachart Life in Thailand,
announced at the start of the
month, is also a small indication of
its commitment to growth in the
region, even though, at $590m
(372m), it is a minnow next to the
leviathan $35.5bn plan for AIA.
Even without the assistance of a
mega-merger, Thiams approach
looks like a smart strategic call. It
gives exposure to economies like
Indonesia and Malaysia, which are
not only fast-growing but also
currently have low insurance
penetration. That means Prudential
can make the most of expanding
into virgin territory rather than
simply fighting for market share as
in Europe or the US.
An Asian focus, together with the
looming impact in Europe of
Solvency II regulation, makes the
case for Prudentials relocation
from London to a base such as Hong
Kong stronger by the day. While
Thiam had appeared to blow cooler
on any move of late, yesterday he
said that contingency planning for
a move would continue until there
was clarity on Europes new rules.
Lets hope the regulators clear this
up. The firm and his visionary
leadership would be badly missed.
SAINSBURY DELIVERS
Strong online growth of over 20 per
cent helped send Sainsbury to the
head of the queue with its latest set of
figures. General merchandise and
clothing grew three times faster than
food, as the supermarket continued to
extend its reach beyond groceries.
Even with a small jump in market
share from 16.6 per cent to 16.7 per
cent, Sainsbury remains well behind
market leader Tesco, which has 30.5
per cent of the UK market. Yet in
tough conditions Sainsbury is
performing impressively, thanks to a
clear strategy, well-executed.
Christmas may have come early for
Sainsbury, however. Forget peace and
goodwill to all and think brutal price
competition. Only yesterday,
Morrison unveiled a 10 per cent
disloyalty discount card designed to
tempt yuletide shoppers away from
rival stores. If such tactics multiply
and press down on margins, the end
of the year will be more bleak
midwinter than season to be jolly.
IN BRIEF
Starbucks snaps up Teavana
n Starbucks plans to acquire tea store
operator Teavana Holdings for $620m
(391m) in cash, furthering its push
beyond its flagship coffee business.
Starbucks, the worlds largest coffee shop
operator, said it will pay $15.50 per share
in cash for Teavana, a 54 per cent
premium to the firms closing price on the
New York Stock Exchange on Tuesday.
Finsbury Food invests in cake
n Cake and bread maker Finsbury Food
said yesterday it would use 3.9m raised
via a placing of around 10.4m new shares
at 38p each to invest in its cake business.
It said it would invest the money in new
machinery, thus reducing the cost of
manufacturing. It forecasts annual
savings of around 2m as a result of the
improved efficiency.
BOTTOM
LINE
MARC SIDWELL
13
NEWS
cityam.com
The new jobs website for London professionals
CITYAMCAREERS.com
ENERGY giant SSE talked down its
surging adjusted profits and
increased dividend yesterday, point-
ing to volatility during the year.
Adjusted profit before tax, which
strips out exceptional items, rose
38.3 per cent to 397.5m for the six
months to September. But SSE
made a statutory pre-tax loss of
26.8m, up from a 81.3m loss a
year ago.
Chief executive Ian Marchant
said: In headlines that seems very
encouraging, indeed almost too
good. In fact in some respects it is
too good because the half-year prof-
its in our business swing around an
awful lot more.
Chairman Lord Smith of Kelvin
SSE hits back after its
adjusted earnings rise
BY MARION DAKERS
also defended the profit and divi-
dend policy, saying it enabled the
firm to employ people, pay tax,
provide services that customers
need, make investments that keep
the lights on and create jobs.
The FTSE 100-listed firm raised its
interim dividend five per cent to
25.2p per share, in line with its
pledge to increase shareholder pay-
outs above the rate of inflation.
The firms retail division posted
an adjusted operating profit of
75.7m, up from a loss of 101.4m
a year ago. Marchant said this
equates to 20p per customer
account per week.
The firm last month raised its
average customer bill by nine per
cent, following four of the big six
energy providers in hiking prices.
The wholesale divisions operating
profits have fallen 44.5 per cent to
123.2m, which SSE blamed on falling
wholesale prices, particularly in gas.
Alastair Phillips-Davies, deputy chief
executive, said: We remain confident
that our activities in these markets are
fair and legitimate.
Fitness First has undergone a wide restructuring under its new US owners, cutting its portfolio of stores and wiping out debt
cityam.com
14
NEWS
SMALL scale asset manager
Liontrust yesterday continued its
march forward after it moved into
the third consecutive year of
customers giving it more money to
manage.
The fund manager, which is half
owned by several asset managers
including Schroders and
Henderson, posted its ninth
consecutive quarter of inflows as it
announced its interim results
yesterday.
The surge has helped the firm
march up the ladder of fund
managers by assets under
management, propelling it closer
to the top third of biggest
managers from its former position
as a mid market manager.
The firm, which relies on retail
investors for three quarters of its
business, added 189m of new
money for the half year up until
the end of September. This was
more than the 59m added in the
same period last year.
The rise took its assets under
management up 55 per cent in just
six months to 2.36bn at the end of
Liontrust sinks its teeth into
market to attract more money
BY MICHAEL BOW
September, led largely by its
takeover of rival Walker Crips Asset
Management in April adding
581m.
Chief executive John Ions said:
While there has been much focus
recently on the cost of fund
management, we continue to
believe that investors will be
prepared to pay for active managers
who can deliver outperformance
and in our case this has been
achieved across our fund
management teams.
The firm grew revenues by 59 per
cent, which grew profit before tax
from 22,000 to 900,000.
Like most retail asset managers,
the company has invested
substantially in brand awareness.
Analysts estimate the group spends
around 1.5m a year, which works
out as a third of its total non-wage
costs of 4.4m.
Chairman Adrian Collins said the
firm would dedicate a great deal
of our sales activity to growing
the Walker Crips Asset
Management team as it integrates
the firm.
We have received very positive
feedback from the market, he said.
FITNESS FIRST, the embattled
health club chain, has slumped to a
672m loss after painful
restructuring earlier this year that
saw it narrowly miss going into
administration.
Club closures and one-off
accounting charges have dragged
the group to a pre-tax loss of
671.5m in the year to 31 October
from an 82.9m loss last year.
Revenue increased by 3.4 per cent
to 608.3m, despite the number of
BY KASMIRA JEFFORD
clubs dropping from 429 to 417.
The debt-laden group was
rescued by US hedge funds
Marathon and Oaktree Capital in
February, which agreed to wipe out
600m of debt in return for a 75
per cent equity stake.
The debt-for-equity swap left the
private equity backers BC Partners,
which bought the chain in 2005,
with a small shareholding.
Fitness First is now going
through a company voluntary
arrangement (CVA), with its
creditors, mainly landlords, who
agreed to renegotiate rents on 79
gyms to help pay down debt. It is
selling 68 gyms as a result.
Chief executive Andy Cosslett
said: It is no secret that 2011 was a
difficult year for Fitness First as it
struggled under an impossible
burden of debt.
During this most difficult time
the business still managed to grow
the top-line and made over
100m...this shows the potential
that Fitness First has as a brand
now that our troubles are behind
us.
Fitness First results show no gain without pain
SSE PLC
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MATCHES WINS 20M TO FUND GROWTH
MATCHES, the fashion chain, has received 20m of funding from private equity
firms Scottish Equity Partners and Highland Europe to drive its online growth.
The firm, which was founded in Wimbledon in 1990 by Ruth and Tom Chapman,
launched online six years ago and sells over 250 luxury brands to 120 countries.
THURSDAY 15 NOVEMBER 2012
15
NEWS
cityam.com
MWB, the hotel operator, is said
to have lined up accountants
firm Deloitte as potential
administrators as it struggles to
deal with a financing crisis.
The owner of the Malmaison
hotel chain and Hotel du Vin is
locked in battle with MWB
Business Exchange, its 75 per
cent owned subsidiary, over the
repayments of millions of
pounds worth of loans.
The dispute centred on an 8m
loan owed to Business Exchange
by MWB and 4.8m of
contractual payments that
Business Exchange was due to
make to MWB in six monthly
instalments from September
2012.
MWB two weeks ago ordered
that its shares and loan stock be
suspended from trading on the
London stock exchange after
Business exchange said it
planned to offset its 4.8m
liability against the 8m loan.
It is now reported that the
group has lined up Deloitte to
find a solution for the group.
MWB lines up
administrator
BY KASMIRA JEFFORD
Credit Suisse and J.P. Morgan Cazenove
acted as joint bookrunners on the share
placing while Lazard is a long-standing
nancial adviser to the property group.
The Credit Suisse team was led by UK
chief executive James Leigh-Pemberton,
who worked on Great Portlands 175m
fundraising in 2009. Leigh-Pemberton is
the son of former Bank of England gover-
nor Robin Leigh-Pemberton. He rst
joined Credit Suisse First Boston in 1994
after 15 years at S.G. Warburg Securities.
In 2009, he acted as main adviser to the
government on the banking bailout and
its aftermath. Stephane Gruffat, manag-
ing director of European equity syndicate
and Tom Edwards-Moss, a director at the
bank investment banking division worked
alongside him on yesterdays placing. J.P.
Morgans team included Jonathan Wilcox,
head of UK equity capital markets.
ADVISERS
JAMES LEIGH-
PEMBERTON
CREDIT SUISSE
Great Portland Estates PLC
14Nov 8Nov 9Nov 12Nov 13Nov
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460
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470
475 p
458.00
14Nov
BARRATT Developments yesterday
said it was on track for higher profits
this financial year as its focus on
higher-margin sites, rather than
volumes, pays off in a tough market.
The UKs largest housebuilder said
market conditions had remained
stable since July, but it highlighted
that recent government schemes
aimed at easing mortgage lending
had yet to filter through to help the
countrys housing market gain
traction.
In a trading statement covering
the first 18 weeks of the year, the
group said weekly net private
reservations per site averaged 0.54,
marginally up from 0.53 a year ago,
while the cancellation rate inched
up to 16 per cent from 15.5 per cent.
Forward sales rose 21.1 per cent to
768.5m while the governments
NewBuy scheme now made up nine
per cent of private reservations.
Barratt eyes
higher profits
BY A CITY A.M. REPORTER
Great Portland raises 140m for
shopping spree in the West End
GREAT PORTLAND Estates yesterday
announced it had raised 140.6m
from a placing of shares that will
help fuel another shopping spree in
Londons West End.
The London-focused developer,
which already owns swathes of West
End property, said it plans to use the
proceeds to buy unloved assets, let
on cheap rents which it can
refurbish and boost the rental
income from.
Chief executive Toby Courtauld
said demand for property in Central
London outweighed supply by more
than four times, driven by overseas
buyers flocking into the capital.
Since the summer, we have
identified an increasing number of
interesting acquisition
opportunities, predominantly liquid
BY KASMIRA JEFFORD
lot-size, complex properties let off
low rents in the West End and which
are difficult to debt finance,
Courtauld said.
We expect to identify further
such opportunities in the coming
months, he added. The group
estimates that the number of
buildings up for sale in the West End
has doubled since May to 2.6bn.
The company, which now has
400m to spend on acquisitions, said
it is in detailed talks to buy three
properties with a value of about
110m, of which two are in the West
End and the third in central London.
It also has another three in the
pipeline.
News of the share placing came as
the company announced a robust set
of half-year results, with its net asset
value increasing by 5.2 per cent to
424p a share in the period to 30
September. Rental value grew by two
per cent, driven by a 2.4 per cent
growth in West End offices and a 2.7
per cent rise in West End retail.
Courtauld said: Although the rate
of leasing was below the long run
average around the time of the
Olympics, we are witnessing a solid
pick-up in demand from prospective
occupiers.
IAN Ferguson, the managing director of the
UK investment arm of Bank of America
Merrill Lynch, was the head adviser to BT on
its 64m agreement to buy Tikit.
Prior to working at Bank of America,
Ferguson was a senior managing director at
Evercore Partners for several years, joining
the company ve years ago as it set up its
European business. Ferguson made a return
of sorts to Bank of America Merrill Lynch in
March after having worked for Merrill Lynch
as managing director and European head of
defence and aerospace before he joined
Evercore. Ferguson previously advised avia-
tion giant EADS on its collapsed mega-
merger with BAE Systems. The 30bn deal
was called off last month after failing to win
German government backing. He had previ-
ously worked on EADSs buyout of BAEs
Airbus stake. Ferguson, who joined Bank of
America Merrill Lynch in March, also advised
Martin Sorrells advertising giant WPP as it
recently redomiciled to the UK after moving
to Ireland partly thanks to its favourable
corporation tax situation. Ferguson worked
with Paul Bundred, the banks director of
UK investment banking, and Ken McLaren,
the managing director of EMEA mergers
and acquisitions, on the deal.
Tikit was advised by Investec on the deal
that values the company at 18 per cent
above Tuesdays closing share price.
Investecs director of investment banking
for technology, media and telecoms Andrew
Pinder was Tikits lead adviser on the deal,
working with associate Junya Iwamoto and
broker Carlton Nelson. Pinder has a strong
technology background having previously
worked at Soundview Technology Group
and Dresdner Kleinwort Benson.
Alex Croell
ADVISERS
IAN FERGUSON
BANK OF AMERICA
MERILL LYNCH
WH Smith PLC
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Carphone Warehouse Group PLC
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BT Group PLC
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14Nov
THURSDAY 15 NOVEMBER 2012
17
NEWS
cityam.com
WHSMITH insisted yesterday that it
would continue to grow profitably
despite marking the start of its
financial year with a three per cent
drop in total sales.
The high street retailer saw like-
for-like sales, which strip out the
effect of new store openings, fall
four per cent in the 10 week period
from 1 September 2012 to 10
November 2012, compared to the
same period last year.
WHSmith Travel, the division
that runs the groups newsagents
in airports, stations and bus depots,
continued to outperform with flat
total sales compared to a five per
cent drop in total sales at its high
street stores.
Like-for-like sales were down four
per cent in the travel division and
five per cent on the high street.
Nonetheless, WHSmith said it
had managed to increase its gross
margins, and that its store opening
plan was going according to plan.
WHSmith on
track despite
drop in sales
BY KATIE HOPE
It also said its share buyback plan
was on track, with 6m of the 50m
total it pledged to return in August
so far returned to shareholders.
Whilst the current climate
continues to be challenging, we
remain a resilient business and are
well positioned for continued
profitable growth, it said.
Panmure Gordon analyst Philip
Dorgan maintained his hold
rating on WHSmith, noting that
profits are driven by gross margin
gains and cost control, rather than
sales growth.
BT buys legal tech firm Tikit in
biggest acquisition for years
BT yesterday announced its biggest
acquisition in more than four years,
agreeing to buy legal IT services
firm Tikit for 64.2m in cash.
The deal, made through the
telecoms giants retail division, will
allow BT to sell its own IT
communications services to Tikits
clients, which include more than 90
of the UKs top 100 law firms.
Tikit said it would recommend
the offer to shareholders, who will
receive an 18 per cent premium on
the companys share price before
the deal was announced, and 29 per
cent up on the six-month average.
BY JAMES TITCOMB
The joint statement from BT and
Tikit yesterday sent the IT firms
shares up 16.5 per cent.
BTs head of retail Gavin Patterson
said: Tikit represents a highly
complementary fit with BT Retails
existing IT strategy and strengthens
our position in the provision of ICT
services to legal firms in the UK.
The Offer will enable us to
combine Tikits expertise, portfolio,
relationships and deep
understanding of the legal sector
with BT Retails scale and breadth of
products.
Tikit will now hold a general
meeting, with the deal expected to
be completed by 18 January.
The move is a rare acquisition for
BT, which has not made a purchase
of this size since it bought
conferencing specialists Wire One
Holdings in May 2008.
Carphone Warehouse prospects
brighten as it considers buyout
SHARES in Carphone Warehouse hit
their highest level since January
yesterday as the mobile phone
retailer said it may raise dividends
next year, thanks to a sunnier
outlook for handset sales.
The companys chief executive
Roger Taylor also said that
Carphone Warehouse could buy
Best Buys stake in the two firms
joint venture if a takeover plan for
the US retailer succeeds. Best Buy
founder Richard Schulze is trying
to push through a deal to take Best
Buy private, and the terms of the
CPW Europe joint venture would
BY JAMES TITCOMB
allow Carphone Warehouse to take
Best Buys 50 per cent stake at a
discount. CPW Europe is the
companys key retail business,
spanning 2,400 stores in the UK and
mainland Europe.
Shareholders would expect us to
explore [the purchase], so we would,
chief executive Roger Taylor said.
Shares in the company rose more
than eight per cent yesterday, as
Carphone Warehouse said pre-tax
profit rose 30 per cent to 8.6m in
the first half of the financial year,
much higher than analyst forecasts.
The other significant part of
Carphone Warehouse, beyond its
retail operation, is its 46 per cent
stake in Virgin Mobile France,
which saw relatively flat trading.
The company said it expects
better trading this Christmas,
thanks to lower smartphone prices.
SET-TOP TV box maker Pace
upgraded its sales forecast
yesterday, saying it expects
revenue to be flat this year, having
previously predicted a decline on
2011.
The company said partnerships
with US TV networks had boosted
sales since July, and that the
company expects to make up the
$181m (114m) in lost revenue
from the first half.
However, shares in the company
fell yesterday as analysts warned
that the uptick in sales would
come as a cost to margins.
Despite the increasing mix
towards newer products, gross
margins continue to trend
US contracts drive TV box maker
Pace to recovery in second half
BY JAMES TITCOMB
downwards, Nick James at Numis
Securities said, reiterating a sell
rating on the stock.
Pace put the anticipated growth
in the second half down to strong
demand for set-top boxes sold by
US pay-TV providers Comcast and
DIRECTV. The pay-TV market
continues to show resilience
despite the uncertain economic
conditions, the company said.
It added that it had finally
recovered from the issues
surrounding hard drive shortages
that had forced former chief
executive Neil Gaydon into
stepping down last year.
The company said the hard drive
disruption had not had any impact
on revenues in the second half of
the year to date.
IN BRIEF
Centaur hit by advertising trends
nBusiness publishing group Centaur
saw sales fall by more than expected
when acquisitions were stripped out,
the firm said yesterday, putting the
slump down to market weakness
affecting advertising revenues.
Centaur, which publishes business
magazines Marketing Week and The
Lawyer, and runs business data and
exhibitions divisions, said underlying
sales fell four per cent year-on-year in
the four-month period to November.
Interserve close to 100m deal
nConstruction firm Interserve is top
in the running for a deal worth 100m
to provide repairs and maintenance
services to properties across East
London and Essex. Interserve is
preferred bidder for the deal with East
Thames Group which runs over seven
years. The contract also has the
potential to be extended for a further
eight years. Interserve said the deal
would expand its residential
maintenance portfolio.
London top spot for start-ups
nLondon is the top spot for
entrepreneurs in the UK, according to
the latest data from Companies
House. The capital accounts for more
than three quarters of the total firms
started up in the year to 31 October.
In total 359,640 of the 481,195 total
new businesses registered were based
in London. The release of the figures,
coincided with yesterday being
marked as National Start-Up Day in
a bid to encourage entrepreneurship.
SAMSUNG MAINTAINS LEAD IN SMARTPHONE RACE
PHONE SALES BY
MANUFACTURER
Samsung 23%,
Nokia 19%,
Apple 6%,
ZTE 4%,
LG 3%,
Huawei 3%,
RIM 2%,
others 40%
Data released yesterday from Gartner showed that Samsung retained its position
as the world's bestselling phone company in the third quarter of 2012. Meanwhile,
as smartphones spread in developing countries, Google's Android software
featured in 74 per cent of smartphones sold, up from 53 per cent last year.
Third-quarter
phone sales
were
428m
3.1% down
on last year
Smartphones
made up
40%
of sales,
up from 26%
last year.
SMARTPHONE SALES
BY SOFTWARE*
Android 72%,
iOS 14%,
RIM 5%,
Bada 3%,
Symbian 3%
Microsoft 2%
*does not include non-smartphone sales
Source: Gartner
IN BRIEF
Banco Popular rights issue debuts
nSpains Banco Popular received
orders for 11 per cent of a 2.5bn
(2bn) rights issue on its first day, the
bank said yesterday. The rights issue
was an attempt by the bank to avoid
seeking state aid after an independent
audit of Spanish banks found it
needed an extra 3.2bn to weather a
serious economic downturn. The
banks shares rose three per cent
yesterday, not counting the
subscription rights.
Hangar8 shares take off
nPrivate aircraft operator Hangar8
was the biggest riser on the
Alternative Investment Market
yesterday, as its shares soared 25 per
cent following a strong trading
update. The firm said it had enjoyed
a very strong start to the year as
profits quadrupled in the quarter to
461,000. Hangar8, which listed in
2010, said full year profits for 2013 are
now expected to be materially above
expectations.
BHP Billiton to up iron ore output
nBHP Billiton expects to expand its
iron ore capacity by nearly a fifth just
by working its mines, rail lines and
port harder as it looks to control costs
in a softer iron ore market, the global
miners iron ore chief said yesterday.
Caught out by escalating costs, a slide
in iron ore prices and a strong
Australian dollar, BHP shelved plans in
August to build a $20bn iron ore
harbour in Australia that would have
doubled its iron ore capacity.
Colin Matthews hopes for
a bigger Heathrow
THURSDAY 15 NOVEMBER 2012
18
NEWS
cityam.com
HEATHROW has used new research to
lobby the government to consider a
single hub airport as the answer to the
UKs air capacity shortfall.
The airport commissioned a report
by Frontier Economics that claims a
lack of capacity is already costing
the UK up to 14bn a year in lost
trade, potentially rising to
28bn a year by 2030.
This includes potential growing
trade with a string of emerg-
ing powerhouses such
as Guangzhou in
China, which has
connections to
other European
hubs but is not
served by
Heathrow.
The report warns
that the UK has no
divine right to
have a major hub,
with passengers from
Asia equally happy
Heathrow says
hub is the only
way to growth
BY MARION DAKERS
changing planes at Amsterdam or
Dubai on their way to the Americas.
The airport also rubbished the idea
of having two hub airports in the
south east, arguing that it would take
passengers almost two hours to trans-
fer between Heathrow and Gatwick.
The new work we are publishing
today shows that only a single hub
airport can meet the UKs connec-
tivity needs and the choice is
therefore between adding capaci-
ty at Heathrow or replacing it with
a new UK hub airport, said
Heathrow boss Colin Matthews.
The Davies Commission,
which the government has
tasked with examining the
options for UKs capacity
crunch, is looking at several
ideas including a new
Thames Estuary hub or an
enlarged regional airport
such as Birmingham.
City figures say homophobia is
still a problem at London firms
GAY employees at City firms still
have to deal with homophobia in
the workplace, according to
leading executives.
A new advocacy group named
Out In The City has been
launched to combat the problem,
with a range of successful gay
businesspeople saying prejudice
is still a problem.
Lord Browne, who was forced
to resign as boss of BP after lying
in court to hide his sexuality,
said executives must take the
lead on the issue.
I wish I had been brave
BY CITY A.M. REPORTER
enough to come out right at the
beginning of my tenure as CEO of
BP, he said at the launch.
I regret it to this day. The tone
from the top is the number one
thing.
Ashley Steel, vice chair of
professional services firm KPMG,
told the BBC that in her early
years at the firm she did not feel
able to tell colleagues about her
sexuality: You werent certain
what it meant. There was a lot of
homophobic conversations going
on and you just didnt want to
out yourself in that kind of
environment.
You didnt know whether that
would harm your career. Why
should who you sleep with have
any impact whatsoever on your
career or your career prospects?
she explained.
Out In The City is based on a
similar group in New York that
sought to shake-up the
traditional world of Wall Street
by campaigning against old
prejudices.
One survey presented at the
launch showed that just one
third of KPMG workers were
willing to discuss their sexuality
on an internal survey, even
though the results were
confidential and anonymous.
Olympics and US elections push
video search engine Blinkx up
EXCITEMENT over the US elections
and the Olympics propelled video-
search engine Blinkx to an 84 per
cent rise in half-year revenues, the
company said yesterday.
Blinkx, which searches content
from websites such as YouTube,
beat City forecasts and its own
predictions to report turnover of
$82m (51.6m) in the six months to
October, up from $44.6m a year
ago. Pre-tax profit rose 67 per cent
to $2.5m.
During the period, we benefited
from increased advertising spend
allocated to specific events the
BY JAMES TITCOMB
summer Olympics and the US
presidential elections, chief
executive S. Brian Mukherjee said.
These one-time events provided us
with a better-than-expected boost to
revenues during the traditionally
slower summer months.
As traffic to Blinkxs website
improved over the summer, it
managed to sign up high-profile ad
clients including Google, Microsoft
and Gillette.
And despite the one-off nature of
the boosts it received in the period,
Blinkx said it was seeing powerful
secular trends that proved
promising, such as the worldwide
growth of high-speed internet
connections and smartphone sales.
Shares in Blinkx, which had
jumped 25 per cent last month
when the firm flagged the boost
from the Olympics and election,
rose another three per cent
yesterday.
Citi analyst Thomas Singlehurst
said the statement proved that
Blinkx was in rude health, and
added that it gives comfort in the
secular drivers of growth for online
video advertising and therefore the
market as a whole.
As comfort in Blinkxs ability to
meet forecasts goes up, we think
there is scope for a significant
rerating of the shares, he said.
FASTJET, the low cost African
airline that counts aviation
entrepreneur Sir Stelios Haji-
Ioannou and Lonrho among its
backers, yesterday sold its first
tickets as it tries to introduce
budget air travel to the continent.
The firm will offer $20
domestic flights in Tanzania, with
the routes officially opening at
the end of the month.
The launch comes just six
months after the airline was
founded, when listed investment
vehicle Rubicon took over
Stelios-backed Fastjet starts
low-cost flights in Tanzania
BY MARION DAKERS regional carrier Fly540.
Fly540, previously owned by
African conglomerate Lonrho,
remains the brand for flights in
Kenya, Ghana, Angola, Sierra
Leone and Cote dIvoire.
Our first three Airbus A319s
will be arriving in Tanzania
shortly and we are very much
looking forward to providing
reliable airline services to an
international standard for the
people of Africa, said executive
chairman David Lenigas.
Shares in Aim-listed Fastjet
closed down 1.4 per cent at 3.43p
yesterday.
Fastjet was set up by a cash shell backed by EasyGroup boss Sir Stelios Haji-Ioannou
PRICE comparison website
Moneysupermarket.com said
yesterday that it had not seen any
meaningful impact from Google
encroaching on its business with
the search giants launch of rival
offerings.
The company, which compares
prices on savings, loans and other
financial instruments, said group
revenues had risen around 11 per
cent year-on-year in the third
quarter of the year, which was in
line with expectations. Profits
were up around 12 per cent.
The firm has recently boosted
its bottom line with the
acquisition of personal finance
website MoneySavingExpert.
Google competition does not
worry Moneysupermarket.com
BY JAMES TITCOMB
Moneysupermarket.com was
subjected to analyst downgrades
earlier in the year as Google
started offering price comparison
services integrated into its search.
However, this does not seem to
have affected the companys
performance, with visits to its
website rising 15 per cent on last
year, and seeing improved trading
in each of its departments.
Were continuing to invest in
our digital marketing skills and in
technology to keep us at the
forefront of price comparison in
the years ahead, chief executive
Peter Plumb said, adding that
revenues were up 20 per cent since
late September, when Martin
Lewiss MoneySavingExpert was
integrated into the company.
RYANAIR remains confident of
securing European Union
approval of its bid to take over
Irish rival Aer Lingus, despite
receiving a statement of
objections from its competition
watchdog, the budget airline said
yesterday.
Ryanair said the European
Commission submitted its
objections on Tuesday, but it has
not made them public.
The airline still has the
opportunity to make more
concessions before a final
commission decision that is due
early next year.
Ryanair... remains confident
that its offer for Aer Lingus will
Ryanair is confident on Lingus
bid despite objections from EU
BY CITY A.M. REPORTER receive competition clearance
following any fair assessment by
the commission, the airline said
in a statement.
The issuing of a statement of
objections is a standard
procedural step, Ryanair said.
It said it expected the
Commission to market test its
package of competition
remedies.
Ryanair, which already owns 30
per cent of Aer Lingus, had an
initial bid turned down by the
European Commission on
competition grounds in 2007 and
dropped a second offer in 2009.
Analysts and investors view its
latest 700m bid as a long shot
reflected in Aer Linguss shares
trading well below the bid price.
IN BRIEF
Dartys revenues lose their spark
nElectrical goods retailer Darty,
formerly known as Kesa, yesterday
reported a 2.2 per cent fall in revenue
for the six months through October
and said business conditions would
likely remain challenging. Darty had to
pay a 50m dowry to a private equity
firm last year to take its loss-making
UK business Comet off its hands. In
London its shares ended down six per
cent at 43.28p.
Thumbs up for AZ diabetes drug
nAnglo-Swedish pharma giant
AstraZeneca (AZ) said yesterday,
alongside Bristol-Myers Squibb, that
Brussels regulators have approved a
new treatment, Forxiga, for type 2
diabetes. The news is a boost for the
struggling firm after it was dealt a
blow by the federal patent court in
Germany on Tuesday. The court ruled
that a key patent on the anti-psychotic
drug Seroquel XR was invalid.
AngloGold mine resumes output
nOperations have resumed at
AngloGold Ashantis Mponeng mine in
South Africa, following the suspension
of operations last week after miners
staged a sit-in. Talks between regional
management and unions were
successful, AngloGold said, and all
parties have now agreed principles for
safe working conditions. AngloGold
said yesterday it can focus on ramping
up production at its operations.
EXPLORER Tullow yesterday hailed
its financial and operational per-
formance in the second half of the
year as strong, as it ramped up
operations at the Jubilee field in
Ghana.
Production capacity at the field of
which Tullow owns 35.48 per cent
is expected to exceed 90,000 barrels
of oil per day by the end of the year.
The FTSE 100 explorer said yester-
day it remained on track to meet
average net production of 80,000 to
84,000 barrels of oil equivalent a day
for the full year.
Earlier this month, Tullow said it
had struck oil at the second well it
had drilled in northern Kenya, and
yesterday confirmed that drilling
results from its assets in Kenya and
Ethiopia were expected before the
end of the year.
Drilling results are also expected in
the coming weeks from a well off the
coast of French Guiana.
Growing production and cashflow
Tullow on track
as it ramps up
Ghana output
BY CATHY ADAMS
from the Jubilee field continues to
strengthen Tullow's financial base, as
we look forward to further signifi-
cant exploration and development
programmes in 2013, the FTSE 100
explorer said in a statement yester-
day.
Shares in the company have more
than tripled in value over the last five
years since exploration success in
Ghana and Uganda, where the com-
pany is working on a huge new oil
project.
Tullow Oil shares closed down one
per cent at 1,371p yesterday.
Centamin posts record quarter
earnings amid Egypt legal fight
EGYPTIAN gold miner Centamin
yesterday posted record earnings
over the three months to
September, up 43 per cent quarter
on quarter, as its court battle over
the right to mine at its flagship
asset Sukari showed no sign of
weighing on its results.
Earlier this month, Centamin
said it would appeal an Egyptian
court ruling that said its right to
operate Sukari was invalid. The
appeal date is yet to be set.
The miner said yesterday that its
expansion plan at Sukari had been
pushed back due to issues with
BY CATHY ADAMS
contractors and equipment. The
bulk of commission activities will
start in the second quarter,
although Centamin stressed that it
was not expected to impact on
production guidance.
Once the expansion is completed,
it will double capacity at Sukari
from 5m tonnes a year to 10m
tonnes.
Gold production over the quarter
sank 20 per cent year on year to
60,922 ounces. Junior stockmarket-
listed Centamin was hit by a six-day
strike earlier this year, which
weighed on output.
Centamin added that it was on
track to meet full-year guidance of
250,000 ounces of gold.
Kate Craig, analyst at Liberum
Capital, said that the delay to
expansion plans shouldnt
overshadow todays solid results.
Strong oil and gas activity lifts
AMEC amid mining slowdown
OIL engineer AMEC yesterday
reported trading in-line with
expectations, just two days after
fellow energy services provider Cape
issued a profit warning.
Strong oil and gas activity in the
North Sea, Gulf of Mexico and west
Africa boosted AMEC in the year to
date, although mining activity
slowed. The oil and gas division
accounts for about 30 per cent of
AMECs business.
The oil and gas infrastructure
firm said it remained on track to
deliver double-digit underlying
revenue growth for the full year,
BY CATHY ADAMS
and growth is expected to continue
into 2013.
Chief executive Samir Brikho said
yesterday that demand for AMECs
services remained good, despite the
ongoing economic uncertainty.
As at 31 October, the order book
stood at 3.6bn, up slightly from
3.3bn last October. Since June,
AMEC has won contracts in the
North Sea, Kuwait and Slovakia.
Net cash for the group dropped to
124m from 430m last year, after
acquisition-related outflows, as the
company completed two
acquisitions in the first half of 2012.
Kevin Lapwood, industrial goods
and services research analyst at
Seymour Pierce, said AMEC
continued to benefit from strong
growth in Brazil, and being BPs
global engineering partner in the
North Sea and the Middle East.
Amec PLC
14Nov 8Nov 9Nov 12Nov 13Nov
1,050
1,060
1,070
1,080
1,030
1,040
1,020
1,090 p
1,056.00
14Nov
Tullow Oil PLC
14Nov 8Nov 9Nov 12Nov 13Nov
1,380
1,390
1,400
1,410
1,370
1,420 p
1,371.00
14Nov
Centamin PLC
14Nov 8Nov 9Nov 12Nov 13Nov
73
74
75
76
72
71
77 p
70.50
14Nov
TOYOTA admitted yesterday that it
will recall 2.77m vehicles
worldwide, including some of its
popular Prius hybrid cars, for
steering and water pump
problems in the carmakers
second multimillion-vehicle recall
in a little over a month.
The defects, which Toyota said
had caused no accidents and could
each be fixed in an hour or so,
could cost hundreds of millions of
dollars to repair, according
Deutsche Securities autos analyst
Kurt Sanger.
Toyota to recall millions of cars
after discovering new defects
BY CITY A.M. REPORTER Sanger said the extent of the
recall suggested a more aggressive
stance by the company to address
defects after its recall crisis a few
years ago. They seem to continue
to be obsessively monitoring these
things and looking for potential
problems before they arise.
Toyota is recalling 2.76m
vehicles worldwide to fix a
steering component that could be
damaged by wear and tear, and
630,000 gasoline-electric hybrid
vehicles to replace water pumps,
company spokesman Joichi
Tachikawa said. Many vehicles are
targeted by both recalls.
THURSDAY 15 NOVEMBER 2012
19
NEWS
cityam.com
The car giant was forced to take back vehicles in 2009 and 2011 due to serious faults
GERMAN power group RWE said
its outlook for the year is rosier
after losses from its energy
trading unit were less than
thought.
The owner of Npower said it had
halved the loss at its trading and
midstream unit to 403m (324m)
for the first nine months of the
year.
The group has made progress
with renegotiating wholesale
contracts, limiting the losses, it
said.
The firm sold seven per cent less
electricity at 208.3bn kilowatt
hours of electricity in the nine
months, while gas sales dropped 11
per cent to 203.6bn kilowatt hours.
RWE starts to stem wholesale
losses and cut back expenses
BY MARION DAKERS
But the group said operating
profits rose eight per cent to
4.6bn, as cost burdens linked to
an exit from nuclear power in
Germany last year flattered to
comparative figures.
Our performance over the first
three quarters of the current
financial year has been quite
good, said chief executive Peter
Terium.
RWE has cut its capital
expenditure by 1bn in the first
nine months of 2012, while the
recent sale of assets, including its
stake in British nuclear joint
venture Horizon, has gained
momentum.
RWE is now slightly more
confident than it was in August of
this year, it said yesterday.
DEBT-LADEN Russian steelmaker
Evraz yesterday asked the holders
of a $750m (428m) bond maturing
in 2015 to approve the removal of
a covenant, sending its shares
tumbling.
The company is seeking
approval by way of an
extraordinary resolution of the
holders of the notes to remove a
covenant requiring the company
to maintain the net leverage ratio
at or below a specified level, it
said yesterday.
The FTSE 100 steelmaker, part-
owned by Chelsea football club
owner Roman Abramovich, said it
wanted to align the covenants
under this issue with those of its
Evraz falls as it seeks to make
changes to its bond covenants
BY CATHY ADAMS other bonds.
Evraz, which earlier this year
reported a net debt of $6.07bn as
of 30 June, down from $6.44bn at
the end of 2011, said in June that it
had agreed amendments to its
$950m syndicated structured
credit facility, which was due to
mature in 2015.
Russian steelmakers, who
invested heavily in production
before the 2008 recession, had to
borrow cash to support their
operations, after economic
slowdown crippled steel markets.
Last month, Evraz posted a three
per cent drop in steel production
over the third quarter.
Evraz shares closed 7.01 per cent
down at 217.4p, as investors
reacted negatively to the news.
THURSDAY 15 NOVEMBER 2012
20
Fiscal cliff fears
hurt Wall St as
talks continue
U
S stocks fell one per cent
yesterday as investors worried
over US budget negotiations
and a flare-up of violence in
the Middle East.
Investors are grappling with the
impact of the US fiscal cliff, a series
of mandated tax hikes and spending
cuts that start to take effect early next
year.
US President Barack Obama pushed
for his proposal to have the wealthy
pay more in taxes as a way to tame the
federal deficit, taking a hard line in his
opening bid before he begins talks
with US law makers later in the week.
I think we will have a last-minute
cliffhanger solution, said Michael
Cheah, portfolio manager at
SunAmerica Asset Management in
Jersey City, New Jersey, about a deal to
avoid the so-called cliff. In the mean-
time, the market is going to get
punched every day.
The Dow Jones industrial average fell
125.64 points, or 0.98 per cent, to
12,630.54. The S&P 500 Index dropped
11.83 points, or 0.86 per cent, to
1,362.70. The Nasdaq Composite Index
dropped 22.43 points, or 0.78 per cent,
to 2,861.46.
Wall Street had opened higher after
Dow component Cisco Systems report-
ed first-quarter earnings and revenue
late Tuesday that beat expectations,
driving its shares up 4.8 per cent to
$17.66.
But the positive momentum was
short-lived. European equities fell and
the benchmark FTSEurofirst-300 lost
one per cent as Greeces unresolved cri-
sis raised questions about the regions
potential for economic growth, while
anti-austerity strikes added to concerns.
U
K shares fell yesterday, testing a
two-month low but failing to
break a main support level as
growth fears in Europe led stocks
that are vulnerable to a downturn in
economic activity lower.
The FTSE 100 index was down 1.1 per
cent at 5,722.01 points at the close, hav-
ing gained 0.3 per cent in the previous
session after a late rally when the US
market opened.
Although US stocks opened higher
again, it was not enough to lift UK
shares as investors focused squarely on
Europe.
The rally late in the day yesterday was
only to do with the US rallying. We
started off better today on Ciscos num-
bers but that was not good enough to
hold it, said Andy Ash, head of sales at
Monument Securities.
Theres a lack of good news, and I
think peoples attention is focusing on
Europe, whereas previously theyd been
concentrating on the fiscal cliff and the
US election, and theyre suddenly realis-
ing nothing has been sorted out here at
all. I think it is Europe which is begin-
ning to rattle people again.
The energy and materials sectors com-
bined to knock more than 30 points off
the FTSE 100.
Evraz was the biggest faller, losing
seven per cent, followed by another
resources company, Eurasian, which
lost 5.1 per cent.
Eurasian is the worst performing FTSE
100 stock this year, down around 57 per
cent, Thomson Reuters data showed,
with its latest results pointing to
pressure from weaker markets and
rising costs.
Bullish US fails to prop up the FTSE
as Eurozone fear weighs on stocks
BESTof theBROKERS
Vodafone Group PLC
p 170
168
166
164
160
162
158
14Nov 8Nov 9Nov 12Nov 13Nov
160.90
14 Nov
VODAFONE
Morgan Stanley has an
overweight rating and
a 210p target price on
the telecoms giant.
While first half figures
were disappointing, the
broker wants to see
more progress in Europe.
DASHBOARD CITY
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
FTSE
8Nov 9Nov 12Nov 13Nov 14Nov
5,825
5,800
5,775
5,750
5,725
5,722.01
14 Nov
Standard Chartered PLC
p 1,470
1,460
1,450
1,440
1,430
14Nov 8Nov 9Nov 12Nov 13Nov
1,444.00
14 Nov
STANDARD
CHARTERED
Investec rates the bank
buy with a target of
18. The broker points
out that StanChart is one
of just two UK banks
expecting to grow
revenues this year.
M&C Saatchi PLC
p
195.0
192.5
190.0
187.5
185.0
182.5
14Nov 8Nov 9Nov 12Nov 13Nov
180.00
14 Nov
M&C SAATCHI
Charles Stanley has cut
its rating from buy to
reduce and has a
target of 160p. The
broker recommends
taking profits amid signs
of a sector slowdown
affecting the firms
growth.
CFA Society of the UK
Richard Dunbar has been
appointed chairman of the
investment membership society.
He is currently an investment
director at Scottish Widows
Investment Partnership, where he
has worked since 2000. Dunbar
has also held senior roles at
Blairlogie Capital Management.
Puma Investments
David Kaye has been appointed chief executive of Puma
Investments, a division of Shore Capital. He joined the group
in 2006 and has served as commercial director and general
counsel for the firm. Haye was most recently chief executive
of Shore Capitals asset management division.
Dechert
The law firm has appointed Patrick Goebel as a partner in its
financial services and investment management group. He
joins from Allen & Overy. Goebel advises on all types of
retail and private Luxembourg investment vehicles, and was
also previously head of fund engineering at Banque
Generale du Luxembourg.
Darwin Property Investment Management
The investment firm has announced two new appointments.
Roger Vail joins as property adviser. He was most recently a
national director at Jones Lang LaSalle, and was also
previously a partner at King Sturge. Mike Lockhurst joins as
client relations manager. He was previously sales manager
at Darwin Investment Managers.
Intech
The investment management firm has appointed Jonathan
P Hanke as associate director of research. He was previously
an assistant professor at the University of Georgia, and has
also held academic roles at Duke University and Princeton.
Towry
The advisory business has appointed Pete Cormack as a
wealth adviser. He joins from RBS, where he was a senior
financial planning manager. Cormack is a former
professional footballer.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
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A
LMOST every politician I
meet asks me one question.
Often with a hint of
menace, they demand:
why are banks refusing to
lend to small businesses? They say
their postbags are full of
complaints from small to medium-
sized enterprises (SMEs) that banks
are refusing to approve or renew
loans or overdrafts. In reply, banks
point out that they make money by
lending, and insist it is a demand
issue that fewer SMEs are coming
to borrow
But this drives politicians to fury:
if SMEs didnt want to borrow, they
wouldnt be complaining about the
banks. From enterprise guarantees
to the Funding for Lending scheme,
T
HIS weeks barrage of
economic figures confirmed a
gloomy picture for Britain. The
Bank of Englands inflation
report suggests sluggish
growth into next year just 1 per cent
in 2013. Jobs figures show high
(though falling) unemployment still
at 7.8 per cent of the workforce. And
Tuesdays rise in inflation confirmed
a squeeze on living standards.
But what lessons can we take from
the past? During the 1930s, economic
policy was failing, GDP was falling and
unemployment soared. John Maynard
Keynes reinvented economics, and
explained how deficit financing could
be used to help restore the economy.
His General Theory of Employment,
Interest and Money revolutionised eco-
nomic thinking and transformed poli-
cy.
During the 1970s, the problem was
inflation. Milton Friedman challenged
economic orthodoxies by arguing that
governments should be determined to
reduce it, even at the cost of lost out-
put and a rise in long term unemploy-
ment. Despite this, the cost was less
cityam.com/forum
Better forecasts will
allow the government
to fine-tune its deficit
reduction strategy
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

22
THURSDAY 15 NOVEMBER 2012
DOUGLAS MCWILLIAMS
The Bank of England needs a new
method for predicting UK growth
than many had feared.
But can we reinvent economic theo-
ry again like Friedman and Keynes
to help Britain cope with its current
economic problems?
We shouldnt be overambitious. As
the West loses its monopoly over the
production of sophisticated products,
growth in Western living standards
will fade at best, and theres a real risk
that they will fall. If someone opens a
shop next door to you and sells the
same things more cheaply, you have to
assume that you will not be as well off
as you were before.
Worldwide shortages of primary
products will also create inflation,
even as labour costs fall. Total world
growth will be constrained by rises in
the costs of commodities and energy.
We therefore need a different theory
of economic growth to take account of
these factors. We need to look at how
inflation and the balance of payments
interact to constrain growth. This new
theory shows significantly for
Britain that growth does not auto-
matically bounce back to some tradi-
tional rate after an economic
perturbation.
The Centre for Economics and
Business Research has used this theo-
ry for some years, and we believe it
explains why we have been the best in
the UK at forecasting GDP. Both the
Office for Budget Responsibility and
the Bank of England could improve
their forecasting if they adopted our
new theory and our approach.
More important than getting the
forecasts right, however, is how
improved forecasting could improve
government economic policymaking.
The government needs a better under-
standing of what drives and what con-
strains economic growth. Taking this
new theory into account, the govern-
ment could fine-tune its deficit reduc-
tion strategy and make it less painful
and more successful.
First, it should stop using tax rises to
reduce the deficit. The rise in VAT and
the potential future rise in fuel duties
are a shot in the foot.
Second, it should be honest with the
public about how public spending has
spiralled out of control. Public spend-
ing should be reduced, not because of
the deficit, but because it has risen
beyond the point when it yields signif-
icant benefits. It now results in seri-
ously damaging rates of taxation. We
need a plan to reduce public spending
over at least ten years.
Third, with a credible plan to reduce
spending, there would be some scope
for tax cuts, even at the expense of a
temporarily higher deficit.
Finally, the government should give
up on dodgy accounting tricks to
reduce the deficit. No one is fooled. If
the economic situation can stand a
higher deficit temporarily, it should
say so directly. The markets will show
some tolerance, provided it is clear
that wasteful public spending is under
control.
This approach wont bring back the
world of the late 1990s, when we had
rapid growth and rising living stan-
dards. But there is no trick available
that could do this. What it could do is
edge GDP growth up a bit, however,
and help accelerate the welcome fall
in unemployment.
The chancellors hand contains no
aces and few face cards. But there is
still scope to do better and this new
approach shows how.
Douglas McWilliamss third lecture as
Gresham professor of commerce, given with
Charles Davis and Oliver Hogan, will be held
in the Chartered Accountants Hall,
Moorgate Place, at 6.30pm tonight. Professor
McWilliams is also chief executive of the
Centre for Economics and Business Research.
making banks lend to businesses is
a priority for the government. So
what is really going on?
Whichever way you look at the
issue, there has indisputably been
a decline in demand for finance
among SMEs. Over the past year,
the number wanting loans or
overdrafts has dropped by about a
fifth. The trend is similar in the
number of SMEs that actually
apply for these products. Approval
rates have stayed roughly stable,
but fewer applications inevitably
means lower lending.
But why do fewer SMEs want to
borrow? Surveys suggest one main
reason: lack of confidence in the
economy (followed distantly by lack
of confidence that they would get
the loan). Like big companies and
households, when small businesses
are worried about the future, they
dont take out new loans. They pay
off old ones and build up savings.
The entire SME sector has become a
massive net depositor, with its
surplus over borrowing rising from
8bn to 21bn over the past year
a massive cash stockpile.
But that doesnt explain
complaints from SMEs. It also
doesnt explain why the 40 per cent
of SMEs who exercise their right to
appeal, after being turned down,
get the decision reversed.
One reason is that, before the
crisis, a less risky economy
encouraged a lot of lending to
small businesses. SMEs were
sometimes given overdraft
facilities almost as big as their
entire annual turnover, when best
practice says that it should be no
more than 10 per cent. Banks are
also under immense pressure from
regulators to reduce high-risk
lending, and many SMEs are
finding the adjustment
understandably difficult. Too often
banks failed to sensitively
communicate the new situation to
their customers, took away
experienced relationship
managers, and used blunt decision-
making processes. This is
something they now recognise, and
are working hard to change.
But is the lack of lending to SMEs
undermining the economy? Over
the past year, just 1.5 per cent of all
SMEs had a loan rejected. Whatever
problems the other 98.5 per cent
had, it wasnt caused by a lack of
lending.
If an SME wants finance, it
should apply. It might get the
answer it wants.
Anthony Browne is chief executive of
the British Bankers Association.
ANTHONY BROWNE
The real reason small businesses arent borrowing more from their banks
MORNING UPDATE
A.M.
23
THURSDAY 15 NOVEMBER 2012
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
Trust issues
[Re: Scandals have made the UK a
dangerously low-trust society, yesterday]
This article properly reflects how much of a
problem a lack of trust is for society, and not
just in the UK. The starting point of trust for
many of the sectors mentioned was already
very low. The question is, how low does it
have to get before it can get better?
Stephen Rosling
The internet must play a role in this matter. It
is awash with comments that are critical of
leaders at all levels of society. Many changes
that are proposed are viewed as wrong or
self-serving, making leadership much more
difficult. The pendulum has swung too far
towards lack of trust.
Paul Sloane
[Re: What brands can learn from Obamas
databased win, yesterday]
The Obama presidential campaign
highlighted the critical role of good quality
data in smart campaigning. A word of
caution, however. Innovative research and
data analytics offer endless opportunities.
But the rise of micro-targeting and the
data revolution which has made it possible
also creates challenges, not least the need to
ensure that data is handled ethically and
that the right questions are asked. Market
researchers and users of market research
have a responsibility to society to ensure
this happens. We have a powerful tool at our
disposal, we should deploy it wisely.
Jane Frost CBE, chief executive, Market
Research Society
E
U COMMISSIONER Viviane
Reding has returned to her
proposal for the boards of
European companies to be at
least 40 per cent female. Her
suggestions may have been watered
down 40 per cent is now a target,
not a quota but the initiative still
fails to address the real problem.
In the UK, enhancing board room
diversity is not the big challenge.
Over 40 per cent of the appoint-
ments to FTSE 100 boards in the
past year were already women, and
they now account for 17 per cent of
non-executive directors. The real
shortfall lies in the proportion of
women on executive committees. It
is now barely into double figures.
This figure points to a broader
issue. Companies wont address gen-
der imbalance by changing their
non-executive directors. Instead,
attention needs to be refocused on
how to accelerate female progress
through the executive ranks.
We recently published a research
study that explored this issue. In
lower and middle management, 38
per cent of roles are filled by
women. But in the same companies,
the figure shrinks to 11 per cent on
the executive committee.
This doesnt represent a glass ceil-
ing, however. Its more of a slip-
pery ladder. Women do not rise to
a certain point and then get stuck.
Instead, female attrition is higher at
each step of the pipeline.
There are two main causes. Firstly,
there are issues of supply, with
many women deciding that work-
ing norms are incompatible with
other demands. They therefore
choose to step off the corporate
treadmill to pursue alternative
options.
Secondly, there are issues of
demand, whereby women
encounter unconscious bias in eval-
TOP TWEETS
Inflation always rises faster than the Bank of
England expected. Its one of the credit
crunch rules of thumb.
@notayesmansecon
More quantitive easing is expected from the
Bank of England. Triple dip recession? Its a
gloomy forecast.
@johnburrows91
Business will not accept the argument that
there is nothing the government can do to
boost growth.
@britishchambers
Did Mervyn King just say Office of National
Statistics methods for calculating inflation
are obsolete? He should look closer to home.
@Josh_CityIndex
Is Sir Mervyn King too optimistic about the
outlook for inflation in the medium term?
YES
The Monetary Policy Committees (MPC) projection that
growth will pick up towards 2 per cent in the medium term
seems reasonable, assuming that there are no severe shocks
from the Eurozone. But as the recovery becomes more sustained,
its view that inflation will fall back to less than 2 per cent by the
end of 2014 could prove to be optimistic. This will be especially
true if wage growth also picks up from its recent subdued levels,
and workers seek to make up for the past squeeze on their real
incomes. Additionally, a resumption of stronger growth in China
and other emerging markets in 2013-14 could lead to further
hikes in global commodity prices. If growth recovers, while
inflation remains above target for longer than the MPC expects,
there could be a strong case by the end of next year for interest
rates to begin to rise.
John Hawksworth is chief economist at PwC.
John Hawksworth
NO
Victoria Redwood
The rise in near-term inflation is primarily due to temporary
factors, such as rising tuition fees and utility prices. The effect of
these short-term forces should fade after a year or so. In the
medium term, inflation is likely to come under downward
pressure from the weakness in activity and the spare capacity
that currently exists in Britains economy. Further, average
earnings growth is just 2 per cent and, with the labour market
tentatively weakening, it is likely to stay low. The recent
appreciation of sterling will also add to the deflationary pressure
by pushing down import prices. Indeed, without further stimulus
from the Bank of England, inflation is likely to undershoot its
target going further ahead. We expect the Bank of England to
initiate another 50bn of quantitative easing in February, and
possibly more thereafter.
Victoria Redwood is chief UK economist at Capital Economics.
RAPIDresponses
We dont need an
EU target to place
women on boards
uation processes or challenges in
acquiring the experience necessary
for senior roles.
So even if quotas arent the
answer, there are reasons to imple-
ment corporate changes to support
the rise of female executives.
Success requires three elements.
Firstly, those at the top of large
companies must visibly champion
the benefits of more diverse senior
teams. Secondly, companies need to
create opportunities that give
women the best possible chance to
flourish. This could mean, for
example, competing aggressively
for the best mid-career female tal-
ent or openly advertising the suc-
cess of high-achieving women.
Lastly, women who do succeed
should seek to become active role
models for the next generation; and
companies should work to address
any unconscious issues that hold
women back.
Getting more women into senior
executive roles is not a question of
meeting targets to assuage diversity
critics. It is about enhancing the
quality of management teams in
major corporations. If companies
are to achieve the best, they have to
recruit and retain the best.
Louise Vttrup and Michael Reyner are
partners at MWM Consulting. Cracking
the Code: Getting More Women Into
Senior Executive Roles can be found at:
www.mwmconsulting.com/Executive-
Search-Cracking-The-Code.html
LOUISE VOTTRUP &
MICHAEL REYNER
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THURSDAY 15 NOVEMBER 2012
cityam.com
24
LIFE&STYLETECHNOLOGY
Face off: battle of the racing giants
We put this years biggest racing games through their paces and find both are rollicking good fun
Y
ou know that feeling when
you simply must watch the
video of a man leaping
towards a frozen pool the
one where the ice doesnt break, and
the man crashes onto the ice and its
funny because the man hurts
himself but you cant because
youre in the middle of a shop and
the cashier says he cant get
YouTube on the cash register and he
ends up calling security because you
refuse to leave?
Well, that problem has finally
been solved the advent of 4G
means you can stream HD video
anywhere (well, OK, in certain areas
in major cities). You probably
already know this EE has adverts
for its new network everywhere. You
cant move for them. Ive seen them
of London is probably about half of
the time it is blisteringly quick.
Watching iPlayer on the go, for
instance, is seamless, with virtually
no buffering at all. The fastest
speed I recorded was about
20Mb/sec, which is roughly twice as
quick as my copper-wire home
broadband when its running at
full pelt.
Move out of zone one, though,
and you will start to struggle to
connect to 4G. Another drawback
is that it doesnt tend to work very
well indoors (which is apparently
due to the frequency of the waves
being less able to pass through
walls but may as well be because it
is the will of a malevolent,
omnipotent salmon for all the good
it will do you).
This makes you miss the 4G
speeds even more: like youve been
allowed a look through the window
into connectivity heaven, where
web pages load in a second and app
download times are almost non
existant, only to have it slammed
on your fingers. In fairness, the
network is still young and coverage
will get better over time. If youre a
heavy mobile internet user
someone who, like me, cant find
their way out of their flat without
resorting to Maps then upgrading
to 4G will make your life
(marginally) better. The question is:
are the few seconds you will save
here and there worth the extra 10
a month? Or, to put it another way:
how much do you need to watch
that video?
Main: Forza Horizon has a slightly
rougher-feel than previous iterations.
Inset: Need For Speed Most Wanted is
as madcap as ever
HORIZON IS the fifth title under the
Forza name a series of elite racing
simulators Microsoft set up in 2005 to
give the Xbox a rival to the
PlayStations Gran Turismo. Until now,
Forza has seen huge success, both crit-
ically and commercially, so it would be
foolish to make too many changes,
right?
Well, Microsoft disagrees. Keen
players will notice that Horizon is the
first Forza not to feature Motorsport
in the games title, a point that illus-
trates the direction it takes.
Horizon is less a driving simulator,
more of an arcade game, taking cues
from those racing machines you
used to play at the bowling alley
while waiting for a lane to open.
Forza veterans will recognise that the
physics engine, extensive vehicle cat-
alogue, and near-infinite car tweak-
ing remain from older versions, but
much else has been thrown out and
rebuilt.
For a start, the contests are not run
on polished race tracks, but on
makeshift street circuits around
Colorado. And rather than selecting
levels from a menu screen, you roam
around an open plan map, free to
join races, compete in spontaneous
duels with fellow drivers, and admire
the (magnificently rendered) scenery.
Beyond winning races, you are
encouraged to pull off stunts to boost
your crucial popularity rating, and
along with the pounding dance
music that accompanies the game,
this aspect in particular reinforces
the idea that Horizon is more main-
stream than previous Forzas.
That said, dont be fooled into think-
ing Horizon is anything less than a
seriously intense challenge. Remove
the training wheels racing line guid-
ance, steering assistance - and it is as
tough as any previous version.
At its heart, Forza Horizon is still
an adrenaline-fuelled speed fest and
it maintains the series position as
the best racing experience the Xbox
360 has to offer.
NEED FOR Speed Most Wanted is the
19th title in the series and, for high-
speed racing aficionados, it doesnt
disappoint.
It also features enough glossy visu-
als and gameplay variety to keep
even the most ardent racing sceptic
entertained. The name of the game
aside from racking up experience
points to unlock increasingly power-
ful cars is cruising around the
mythical city of Fairhaven, outrun-
ning the rozzers and driving some
pimping cars. It is this free-roaming
element thats most satisfying part of
Most Wanted: being able to drive
around the city without actually
competing in every race gives the
whole thing a GTA IV vibe you
almost forget theres not a single
AK47 in sight.
It is also a great way for car freaks
to get their fix, with the games
bread and butter involving perfect-
ing the frankly insane drifting tech-
niques, racing down the freeway at
180mph and breaking your high-
speed record by being clocked on a
speed camera. And, really, how can
you not love a game that encourages
you to smash through an advertising
billboard at 150mph with a SWAT
team on your tail?
GAMES
FORZA HORIZON
Xbox 360 | By James Titcomb
hhhhh
GAMES
NEED FOR SPEED MOST WANTED
Xbox 360, PS3, PC | By David Talkar
hhhhi
GEEK
SPEAK
@STEVE_DINNEEN
n 4G EE is currently available in London,
Manchester, Birmingham, Bristol, Cardiff,
Edinburgh, Glasgow, Leeds, Liverpool,
Sheffield and Southampton.
n When you are not in a 4G area your
phone will resort to 3G or 2G.
n EEs 4G price is 36 with 500Mb data
and 56 with 8Gb of data (both 24
months with unlimited texts and calls).
n4G networks are, in theory, capable of
speeds of up to 1GB/sec but dont get
your hopes up yet we only hit around
20Mb/sec (still enough to play video
without waiting all day for it to buffer).
n Nationwide 4G on multiple networks
will be available next summer.
NEED TO KNOW
so many times that those twin
yellow circles are now burned into
my retina, leaving the faint shadow
of the EE logo hovering over
everything I look at.
Anyway, Ive been testing its new
4G network on the iPhone 5 and
its rather good.
When you have a 4G signal
which, outdoors, in the very centre
Is EE 4G really OMG? We get stuck in with the new LTE network
THURSDAY 15 NOVEMBER 2012
26
cityam.com
LIFE&STYLE ING Discerning Eye2012
T
he annual ING Discerning
Eye exhibition,
showcasing the work of
unknown artists
alongside more established
names, opens to the public
today at The Mall Galleries in
London. Nearly 200 selected
artists will display their
artworks at this year's
exhibition, which attracted
more than 2,000 submissions.
This years selector panel includes English abstract
expressionist Albert Irvin, and 2006 Charles Wollaston
Award winner Chantal Joffe. The two collectors who
have chosen artworks are Doris Lockhart, creator of
ART
Above: Flotilla by David Douglas, 300
Above: Entertaining types II
by Alan Kitching, 600;
Right: Oasis by Belinda
Bailey, 575
Above: Listening to Ry Cooper by Clyde Hopkins, 1,100;
Below: Portrait of my mother as a young woman by Brian Innes, 650
Above: Viola by Tim Garwood, 825; Below: Lewisham Girl by Simeon
Banner, 500 and Woman in a coat by Daryll Joffe, 160
THURSDAY 15 NOVEMBER 2012
27 LIFE&STYLE ING Discerning Eye2012
SOUL
the Saatchi Collection, and Gerald Walker, chief
executive of ING Commercial Banking UK,
Ireland and Middle East. Finally, critics Charles
Darwent of The Independent on Sunday and Skye
Sherwin from The Guardian have picked out
their favourites as well.
The six join an illustrious list of selectors
from previous shows, which includes HRH The
Prince of Wales, Sarah Armstrong-Jones, Sir
Jonathan Miller, Joan Bakewell CBE and Griff
Rhys Jones.
With more submissions from the public than
ever before, the ING Discerning Eye exhibition
continues to demonstrate its relevance and
popularity among Britains artists, says Walker.
The exhibition fires the imagination and
creativity of artists and visitors alike, making art
accessible to all and offering artists a prestigious
platform to showcase their work.
The show enjoys an excellent reputation among
art lovers and collectors for its unique and highly
personal approach to exhibiting the works, which
include paintings and prints, drawing, photography
and sculpture.
The 21st Annual ING Discerning Eye Exhibition
2012 will run in the Mall Galleries, London SW1,
from 15-25 November 2012. Admission is free, 10am
5pm daily.
Follow ING Discerning Eye on Twitter:
@INGDiscEye and join the Facebook group: ING
Discerning Eye
Above left: The green robe by Anita Klein, 850; Above right: Evia by Emma Davis, 350
Above: Flying colours by Betty Earle, 185
Above: Alba in front of a church by Jasper Joffe, 1,500
Above: Mark and Engels by Alex Dewart, 450
28
TV & GAMES
cityam.com
T
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BBC1
SKY SPORTS 1
7pmLive Darts 11pmRingside
12amThe Rugby Club 1amThe
Footballers Football Show
2.30amRingside 3.25amPremier
League World 3.55am-6amLive
Test Cricket
SKY SPORTS 2
7pmRingside: Profile of Mike
Tyson. 8pmTest Cricket: India v
England. 10pmThe Footballers
Football Show11.30pmPremier
League World 12amNFL: Total
Access 1amLive NFL 4.30am
Sky Sports Classics 5am-6am
Live European Tour Golf
SKY SPORTS 3
6.30pmRacemax 7.30pmLive
Premier League Snooker 11pm
WWE: Late Night Raw1am
WWE: NXT 2am-6amDarts
BRITISH EUROSPORT
8pmMotoGP 9.30pm
International Football
10.30pmFootball: Brazilmania
10.45pmWorld Cup World Tour
11.30pm-12.30amPoker
ESPN
7pmESPN FC Press Pass 7.30pm
Live FA Cup Football 10pmESPN
Exclusive Interviews 10.30pm
ESPN Kicks: MLS 11pmESPN FC
Press Pass 11.30pmUFC: The
Ultimate Fighter 12.30amUFC
154 Countdown Show1am
International Football 4.15am
French Ligue 1 Preview4.45am
Goal! Bundesliga Preview5.15am
FIBA Basketball 5.45am-6am
ESPN Kicks: Extra
SKY LIVING
7pmCriminal Minds 8pm
Americas Next Top Model 9pm
Tourettes on the Job 10pm
Criminal Minds 11pmBones
12amSun, Sea and A&E 1am
Greys Anatomy 1.50am
Supernatural 2.40amMedium
3.30amBones 4.20amNothing
to Declare 5.10am-6amPassport
Patrol
BBC THREE
7pmTop Gear 8pmThe Premier
Leagues Most Amazing Moments
9pmRussell Howards Good News
9.30pmImpractical Jokers 10pm
Superstorm USA: Caught On
Camera 11pmEastEnders
11.30pmFamily Guy 12.15am
Russell Howards Good News
12.45amImpractical Jokers
1.15amSome Girls 1.45am
Unzipped 2.30am-3.30amThe
Premier Leagues Most Amazing
Moments
E4
7pmHollyoaks 7.30pmHow I
Met Your Mother 8pmThe Big
Bang Theory 8.30pm2 Broke
Girls 9pmRude Tube: All Things
Weird and Wonderful 10pm
FILMEnd of Days 1999. 12.25am
The Big Bang Theory 1.25amThe
Work Experience 1.55amHow I
Met Your Mother 2.20amScrubs
2.45amDesperate Housewives
3.30am90210 4.10amBeing
Erica 4.55am-6amOne Tree Hill
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 8pmMankind: The Story of
All of Us 9pmIce Road Truckers
10pmStorage Wars 10.30pm
Storage Wars: Texas 11pm
Storage Wars 11.30pmPawn
Stars 12amIce Road Truckers
1amStorage Wars 1.30am
Storage Wars: Texas 2am
American Pickers 3amAx Men
4amSwamp People 5amPawn
Stars 5.30am-6amAmerican
Restoration
DISCOVERY
7pmOne Car Too Far 8pmGold
Rush 9pmBattle Castle with Dan
Snow10pmHow We Invented
The World 11pmWheeler Dealers
12amBattle Castle with Dan
Snow1amHow We Invented The
World 2amAmerican Guns 3am
Battle Castle with Dan Snow
3.50amHow We Invented The
World 4.40amDiscovery Atlas:
South Africa Revealed
5.30am-6amMeerkat Manor
DISCOVERY HOME &
HEALTH
7pmDr Oz 8pmParalysed and
Pregnant with Twins 9pmMy
Strange Addiction 10pm
Embarrassing Bodies 11pm
Hoarding: Buried Alive 12amMy
Strange Addiction 1amWanted
Down Under 2amEmbarrassing
Bodies 3amHoarding: Buried
Alive 4amA Baby Story
5am-6amBirth Days
SKY1
8pmThe Middle 8.30pmModern
Family 9pmSpy 9.30pmTrollied
10pmA League of Their Own
11pmRoad Wars 4.20am-6am
Stargate SG-1
BBC2 ITV1 CHANNEL4 CHANNEL5
S
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&
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6pmBBC News
6.30pmBBC London News
7pmThe One Show
7.30pmEastEnders: BBC News
8pmYoung Apprentice
9pmHunted
10pmBBC News
10.25pmRegional News
10.35pmQuestion Time
11.35pmThis Week
12.25amEastEnders
1.50amHoliday Weatherview
1.55amSign Zone: Badgers:
Dodging the Bullet? Panorama
2.25amCountryfile 3.20am
Antiques to the Rescue: Narrated
by Samantha Bond. 4.20am-6am
BBC News
6pmEggheads
6.30pmStrictly Come Dancing
It Takes Two
7pmCelebrity Antiques Road
Trip: With Sheila Hancock and
Sandi Toksvig.
8pmMasterChef: The
Professionals
9pmGreat Continental
Railway Journeys
10pmCHOICE Hebburn
10.30pmNewsnight: Weather
11.20pmDara O Briains
Science Club
12.20amThe Culture Show
12.50am BBC News
4am-6amBBC Learning Zone
6pmLondon Tonight
6.30pmITV News
7pmCHOICE Emmerdale
8pmCoronation Street
8.30pmIm a Celebrity Get
Me Out of Here!
10pmITV News at Ten
10.30pmLondon News
10.35pmCorfu: A Tale of Two
Islands
11.05pmThe Jonathan Ross
Show
12.05amJackpot247; ITV
News Headlines
3amITV Nightscreen
4.35am-5.30amThe Jeremy Kyle
Show
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
8pmKirsties Vintage Home
9pmCHOICE Everyday
10.50pm 999: Whats Your
Emergency?
11.50pm Random Acts:
11.55pmEmbarrassing Fat Bodies
12.55amFreaky Sleepers 1.50am
The Forgotten Gunners of WW1: A
Time Team Special 2.45am
Unreported World 3.10amChinese
Murder Mystery: Channel 4
Dispatches Special 4.05amDeal or
No Deal 5amCountdown
5.45am-6.10amMake Do & Mend
6pmHome and Away
6.30pm5 News at 6.30
7pmRolfs Animal Clinic: Rob
Pettit operates on a dog that
has been run over; 5 News
Update
8pmWW1s Tunnels of Death:
The Big Dig: 5 News at 9
9pmHatfields & McCoys:
10pmFILMValkyrie: Fact-
based thriller, starring Tom
Cruise. 2008.
12.25amSuperCasino
4amHouseBusters 4.25amHouse
Doctor 4.45amMichaelas Wild
Challenge 5.10amWildlife SOS
5.35am-6amWildlife SOS
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5 6
7
8 9 10
11 12
13 14 15
16
17
18 19 20
21 22 23
24
25 26
12 11 15
45
23 7
10 22
29
45
37
10 11
24 20
45
6 21 3
12
4
18
23
38
20
17
16
34
12
6
19
14
9
35
5
15
7
39
22
9
6
16
ACROSS
1 Russian prison
camp (5)
4 In addition (4)
7 Garlic mayonnaise (5)
8 Units (1/6 inch) used
in printing (3)
10 Graven image (4)
11 Form of the Hebrew
name of God used
in the Bible (6)
13 Frighten greatly (7)
16 Book of maps (5)
17 Marine plant (7)
18 Dark grey cloud (6)
21 Norse god of
mischief (4)
23 Mischievous
little fairy (3)
24 T S ___, British
poet and Nobel
prize winner (5)
25 Scottish island (4)
26 Mistake (5)
DOWN
1 Lady Jane ___, queen
for nine days (4)
2 Growing luxuriously (4)
3 Newspaper or
ofcial journal (7)
4 Tool used for
bending wire (6)
5 Saucepan cover (3)
6 Aunt ___, game
played by throwing
sticks at a doll (5)
9 Indian corn (5)
12 Mythological beauty,
___ of Troy (5)
14 Exude (7)
15 Public meeting for
open discussion (5)
16 For a short time (6)
17 Grain stores (5)
19 Stand to support
a cofn (4)
20 Box lightly (4)
22 Lock opener (3)
G
U
I
C
T A
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P
N

4


4
4

4
M A G I C U R O B
U A M P L E I
S E E M S S C R
T S T R E M O L O
E N T R E A T N
R I B C G
M M I D W I F E
B R A V A D O L N
I B R G U E S T
D L O C U M L
S E E H A R G U E
1 5 3 9 7 1 2
2 6 8 1 7 5 3 4 9
5 8 9 6 1 2 3
2 1 3 1 2 4
7 1 5 8 7 4 6 9
8 6 3 2 9 6 7 8
5 4 1 3 6 2 5 7
9 8 7 8 1 9
3 2 1 4 2 6 1
9 5 4 3 7 1 6 8 2
7 2 8 9 4 9 8
4
4
4
4
4
4
4
4
4
The nine-letter word was
HARVESTED
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S
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&
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
THURSDAY 15 NOVEMBER 2012
HEBBURN
BBC2, 10PM
Jack spends his first day as editor of
the Hebburn Advertiser and Vicki has
her heart broken when Gervaise
announces he has big plans.
EMMERDALE
ITV1, 7PM
Debbie visits Chas in prison, Val gives
Kerry a less than glowing reference
and Gennie tells Nikhil she is capable
of looking after their daughter.
EVERYDAY
CHANNEL4, 9PM
Michael Winterbottoms drama about
a woman taking her young children to
visit their father in prison over a
period of five years. John Simm stars.
TVPICK
INDIA captain Mahendra Singh
Dhoni insists he never doubted
firebrand England batsman Kevin
Pietersen would be part of the squad
for the Test series that starts today in
Ahmedabad.
Pietersen was dropped in the
summer after a breakdown in
relations with England chiefs and
only recalled after apologising for
sending text messages disparaging
team-mates to opponents.
But he is poised to line up for the
tourists this morning and resume
his friendly rivalry with recalled
India all-rounder Yuvraj Singh,
whose spin bowling he famously
once derided as pie-chucking.
I never doubted he would be part
of the squad, said Dhoni. Hes a
great batsman, an aggressive
batsman who loves to play his shots.
Well enjoy the contest between him
and the pie-chucker.
While opposite number Alastair
Cook has sought to ramp up the
pressure on the home side, Dhoni is
relishing the chance to avenge his
sides 4-0 whitewash in England last
year on more familiar pitches.
Whichever country you are from,
60 or 70 per cent of your cricket will
be played at home, so youre
supposed to be good there, he
added. When you go to a different
part of the world, its a fresh
challenge for you. When we go to a
different place, its the same for us. I
think it will be the same for the
English side here.
Fast-bowler Ishant Sharma, who
has a virus, is Indias only absentee
for the first match at the Sardar
Patel Stadium.
Conditions will
suit us, Dhoni
warns England
Cook mind games add spice to India series
IN BRIEF
London bids for Paralympic event
n GENERAL: London has submitted a
bid to host the 2017 Paralympic World
Championships. It came as UK Sport
announced plans to bring more than 70
major sporting events to Britain to
support athletes before the 2016
Olympic Games in Rio and build on the
popularity of London 2012.
Hatton: Im ready for comeback
n BOXING: Britains Ricky Hatton
insists he is in perfect shape for his first
fight for more than three years later this
month. Hatton, who faces Vyacheslav
Senchenko on 24 November in
Manchester, said: Its been a long time
since Ive felt like this.
Scots sneak past Luxembourg
n FOOTBALL: Blackburn striker Jordan
Rhodes scored twice as Scotland only
narrowly beat Luxembourg 2-1 in last
nights friendly. Northern Ireland
needed a last-minute equaliser from
David Healy to snatch a 1-1 draw at
home to Azerbaijan in their 2014 World
Cup qualifier. Pressure increased on
Republic of Ireland boss Giovanni
Trapattoni as they lost 1-0 at home to
Greece in a friendly.
FRANKEL STUD FEE SET AT 125,000
UNBEATEN racehorse Frankels
owners will charge a stud fee of
125,000 per time when he
begins breeding duties next
year. The four-year-old, who
won his 14th and final race in the
Champions Stakes at Ascot last
month before retiring, will breed
on a no-foal, no-fee basis. Philip
Mitchell, manager of Prince
Khalid Abdullahs Juddmonte
Farms, said: The fee for Frankel
reflects his merits as being
perhaps the greatest racehorse
we have ever witnessed.
THREE men have been charged with
fraud after a probe into claims
people working for Tottenham spied
on officials during their failed bid
for the Olympic Stadium.
Police investigated after
allegations from West Ham and the
Olympic Park Legacy Company, the
body formerly in charge of deciding
the stadiums destiny.
The trio have been charged with
Three charged with fraud after
probe into Spurs spying claims
illegally obtaining information
about the stadium bidding process
and are due to appear in court on 28
November.
The men were named as Howard
Hill, 58 of Stockport, Richard Forrest,
30, from Crawley and Lee Stewart,
39, of Esher.
Hill is a former employee of
accountants PKF, who were engaged
by Tottenham during the bidding
process. The Premier League club has
denied any wrongdoing.
BY FRANK DALLERES
BY FRANK DALLERES
ENGLAND captain Alastair Cook has
urged his team to capitalise on the
weight of expectation burdening the
hosts as he attempts to mastermind
a first Test series win in India for 27
years today.
Cook could hardly have wished for
a more challenging start to his
tenure as permanent skipper, while
the task has been complicated
further by seamer Steven Finns
absence through injury.
But the 27-year-old Essex opener
insisted yesterday that the tourists
could turn their underdog status to
their advantage when the first of
four Tests begins in Ahmedabad.
Theres a lot of pressure,
especially here in India, on the home
team. But one thing they seem to
have done over the years is cope with
that. They have an excellent home
record. So history says they can deal
with pressure, said Cook.
Our job is to put them under
some pressure. We are ready thats
part of the reason we came out for
three-and-a-half weeks, to be ready.
The proof of the pudding will be
over these next four Test matches.
Cook assumed the reigns
following the retirement of Andrew
Strauss in the summer, after
England lost their No1 Test ranking
to South Africa in a turbulent home
series defeat. His prolific run-making
has long made him a key figure in
the team, but Cook acknowledges
his long-anticipated ascent to
captain has affected both his
mindset and dressing-room
dynamics.
Im just going to try to do the
best job I can, for however long Im
lucky enough to do it. You cant
change who you are, the type of
bloke you are, and youve got to be
authentic to who you are, he added.
It clearly does change things in
the dressing room. When youre in a
position of responsibility you think
about things in a different way and
have different things on your
agenda. But I hope I dont change.
The loss of Finn is tempered by the
return of Stuart Broad from a heel
injury, while batsman Kevin
Pietersen is set to play his first Test
since his infamous row with
England chiefs over text messages.
Yorkshires Tim Bresnan is
expected to take Finns place in a
three-man seam attack with James
Anderson and Broad, while Graeme
Swann leads spin-bowling duties
with occasional help from all-
rounder Samit Patel.
Test debutant Nick Compton looks
to have won the tussle with fellow
international newcomer Joe Root to
take over Strausss batting duties
and open with Cook, having
impressed in the second and third
warm-up matches.
BY FRANK DALLERES
SPORT
29
THURSDAY 15 NOVEMBER 2012
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MANAGER Roy Hodgson hailed four-
goal Zlatan Ibrahimovics 30-yard
overhead kick as really extraordi-
nary after the Sweden captain sin-
gle-handedly dismantled England in
last nights friendly in Stockholm.
Ibrahimovic overshadowed Steven
Gerrards 100th England cap with a
swaggering display of virtuoso bril-
liance, summed up by an instinctive
91st-minute goal that sparked debate
over the best of all time.
Two goals in three first-half min-
utes from debutant Steven Caulker
and striker Danny Welbeck had
given England the lead after
Ibrahimovics opener, but the quick-
silver forward replied with three
more of increasing wonder in the
final 13 minutes.
Amid the one-man show Hodgson
was encouraged by his six debutants,
of whom 17-year-old Raheem Sterling
shone brightest, but there was a cata-
logue of worrying errors from the
usually reliable Joe Hart.
Theres no doubt the fourth goal
was something really extraordinary
and of course that put the tin lid on
the game, said Hodgson.
But of course it was the second
and third goals that cost us a victory
here, but I must say for 70 minutes of
the game I thought we were playing
very well and deserved to be leading.
I was quite anxious to look at a few
players in this game and maybe the
changes at the end and the second
goal gave them more initiative and
we ended up losing, but there were a
lot of positives to take from it.
Hodgson handed debuts to
Tottenham defender Caulker,
Everton midfielder Leon Osman and
Liverpool winger Sterling, and
Osman and Sterling worried the
Swedish defence in the early skir-
mishes, while Chelsea defender Gary
Ibrahimovic schools
Cahill was inches away from prod-
ding in Gerrards free-kick before
Ibrahimovic took centre stage.
The Paris Saint-Germain star, who
had belittled Englands technique
prior to the game, opened the scoring
after 20 minutes when he escaped
Caulkers lax marking to prod high
past Hart at the second attempt.
Caulkers uncertain international
baptism continued when the 20-year-
old botched an ill-advised Cruyff turn
under pressure from Ibrahimovic,
sparking a Sweden attack and an
unpunished calamity from Hart.
England discovered their verve sud-
denly in the 35th minute, winger
Ashley Young beating his man down
the left and whipping an inviting
cross for arriving Manchester United
colleague Welbeck to despatch.
Within 180 seconds the visitors
were in front, Caulker atoning for his
generosity to Ibrahimovic by stealing
in among three napping Swedish
defenders to jab home Gerrards pin-
point free kick from the right.
They might have scored again after
half-time, Welbeck failing to connect
with a header from a Leighton Baines
cross and Gerrard peppering Andreas
Isakssons goal with speculative
drives of varying accuracy.
But 13 minutes from the end
Ibrahimovic resumed his starring
role, eluding Ryan Shawcross to take
Anders Svenssons chipped pass on
his chest and slam a ferocious volley
that Hart could only help in.
The 31-year-old completed his hat-
trick on 84 minutes, becoming the
first man to do so against England
since Marco van Basten in 1988, with
a majestic low free kick from 35 yards
that Hart still should have reached.
Like the showman he is,
Ibrahimovic saved the best for last,
though again Hart was again culpa-
ble, the goalkeepers needless and
weak clearing header setting up the
Swedish captain for a 30-yard over-
head kick of balletic poise, breathtak-
ing audacity and flawless execution.
FA hits back at claims of institutional racism
Ibrahimovic scored the first hat-trick
against England since Marco van Basten at
the 1988 European Championship
Bernstein called the comments ill-informed
Callow England downed by Zlatans four
goals including a 30-yard overhead kick
THURSDAY 15 NOVEMBER 2012
30
SPORT
cityam.com/sport
ENGLAND football chiefs reacted
angrily last night after being termed
institutionally racist by the
Society of Black Lawyers, calling the
accusation ill-informed and
unhelpful.
Football Association chairman
David Bernstein responded to
criticism that the governing body
should have reported to police
Chelseas complaints that referee
Mark Clattenburg racially abused
their player John Obi Mikel.
These ill-informed and unhelpful
remarks are at odds with the
progressive and responsible
approach being followed by the
game with the support of
government to deal with these
serious issues, said Bernstein. The
FA will continue working to
strengthen processes to eradicate all
forms of discrimination in football.
Society of Black Lawyers chair
Peter Herbert, who reported the
Clattenburg allegations to police
only for them to drop the probe on
Tuesday, earlier said the FA had a
history of under-reporting race
hate. He added: We would call it
institutionally racist. Herbert
accused Chelsea and the FA, which is
set to finish its own Clattenburg
probe this week, of having a cosy
agreement not to involve police.
Clarke Carlisle, chairman of
players union the PFA, defended
Chelsea and the FA. He said: We
have to have faith Chelsea have
reported the incidents in good faith
and that the FA will deal with it
accordingly, and report it to the
police if necessary.
BY FRANK DALLERES
@cityam_sport
Steven
Caulker
The 20-year-old was caught out
for Ibrahimovics opening goal,
despite a decent block, and looked
cagey in the opening stages.
However he redeemed himself by
cleverly adjusting his run to score
Englands first. The Tottenham
defender struggled to keep the
brilliant Ibrahimovic marked but became more assured
alongside Gary Cahill as the match progressed.
7
SWEDEN ....................................4
ENGLAND...................................2
BY FRANK DALLERES
INTERNATIONAL FRIENDLY
HOW NEW BOYS RATED
ENGLAND
Leon
Osman
Tested Andreas Isaksson early on
with a long drive but failed to
impose himself in a quiet first half.
The midfielder later on managed
to transfer his Everton formto the
international stage by getting into
useful positions and troubling the
Sweden defence. Almost tapped in
a Leighton Baines cross and forced Isaksson into a near
post save after a clever turn past his marker.
7
Raheem
Sterling
Having impressed for Liverpool so
far this season, the winger was
tightly marked all night but was
still able to provide decent distri-
bution and proved eager for time
on the ball. His stunning through-
ball enabled Ashley Young to set
up the first England goal. The 17-
year-old was lively, creating several promising openings
near Swedens penalty area, which justified his call up.
8
Carl
Jenkinson
The Arsenal right-back had little
time to impress on debut. Two
years ago the 20-year-old was
playing for Conference side
Eastbourne Borough and complet-
ed his meteoric rise up to interna-
tional football with a trouble free
20 minute cameo. He made a cou-
ple of no-nonsense clearances but could not help pre-
vent England falling further behind.
5
Ryan
Shawcross
He only had 20 minutes to impress
but was slightly at fault for
Swedens second, not tracking the
movement of Ibrahimovic and
allowing the in-formstriker time
to pick out his volley. The Stoke
centre-back was unfortunate
when Harts error created the
chance for Ibrahimovic to score his stunning fourth goal
and had little time to make amends.
5
Wilfried
Zaha
The much talked about Crystal
Palace forward came on just as
England went 3-2 down but still
had 10 minutes to display a fewof
his tricks. Illustrated he has the
confidence and skill to thrive in
international football, taking on a
couple of opponents to cross in
stoppage time, but his cut back wasnt found by a col-
league. Looked keen and pressed the opposition well.
6
BY ALEX SHARP
31
THE OPTIONS
nUefa-style financial fair play rules
that would limit clubs allowable
losses and ultimately require them to
break even. Arsenal and Manchester
United support this route
nIncrease in wage bills capped at 10
per cent. Suggested by Sunderland
nOwners asked to underwrite all
contracts for their duration. Current
rules demand evidence of being able
to meet obligations for one year only
nNo regulation; clubs sink or swim
on their own management. Tottenham
and Newcastle thought to be in favour
Lion cubs
WALES captain Sam Warburton
has been dropped to the bench for
the Test against Samoa in Cardiff
tomorrow.
Warburton, who led Wales to a
Six Nations Grand Slam this year,
has admitted struggling to find his
top form in a Cardiff Blues side
who have lost five of their Pro12
matches this season.
Interim coach Rob Howley has
made eight changes to the side
beaten 12-26 by Argentina on
Saturday.
Justin Tipuric is set to replace
Warburton at open-side flanker,
with blindside Ryan Jones taking
on the armband to surpass Ieuan
Evanss record of 28 matches as
Wales captain.
Wales must win tomorrow to
avoid a fifth successive defeat
under Howley, who is filling in
while Warren Gatland fulfils his
duties as British and Irish Lions
head coach.
Theres a lot of pressure, especially here in
India, on the home team. Our jobs to put
them under pressure

cityam.com
THURSDAY 15 NOVEMBER 2012
BY ALEX SHARP
Grand Slam winner Warburton
dropped by struggling Wales
A WAGE cap in the Premier
League could move closer to
reality today when club chiefs
meet in London to firm up plans
to prevent an estimated 5bn
television revenue windfall going
straight into players pockets.
Other proposals up for
discussion include adopting so-
called financial fair play measures
similar to those introduced by
European bosses, and demanding
owners underwrite any contract
for its duration in order to stop
them leaving clubs with huge
liabilities.
Broad consensus among top-
flight clubs has emerged that a
form of regulation could not only
encourage teams to be run
more sustainably but also
arrest spiralling wage
costs.
Significant
differences of opinion
still exist as to which
plans, if any, should be
adopted, however, and it is
considered highly
unlikely that a
final decision
to implement
one of them
will be made
today.
Rule
changes
require the approval of 14 of
Englands 20 elite clubs, and it is
expected that the meeting will see
one or more proposals approved
for fine-tuning with a view to a
possible definitive vote in
February.
It comes amid continent-wide
moves to impose restrictions on
clubs spending, with European
governing body Uefa limiting
losses teams can make with a view
to a break-even rule, and
Championship sides adopting
similar measures.
The Premier Leagues lack of
regulation continues to make it
attractive to rich investors keen to
bankroll a club to success.
However, only five top flight
teams made a profit, with the
division making a combined
361m loss despite record 2.3bn
revenues, in 2010-11, the most
recent season for which complete
data exists.
Around 70 per cent of the
clubs combined income some
1.6bn went on wages, which
have historically rocketed as the
league has derived
increasingly lucrative
broadcast deals from
the domestic and
foreign markets.
Television
BY FRANK DALLERES
Wage cap on agenda as
clubs look to regulation
SPOTLIGHT ON
financial fair play in
FOOTBALL
Arsenals Ivan Gazidis
supports regulation
AUSTRALIA have suffered a blow
ahead of Saturdays Test against
England after forward Rob Simmons
was handed an eight-week ban for a
dangerous tackle during last weeks
defeat in France.
Simmons came on as a substitute
during the Wallabies humiliating
33-6 loss in Paris and was reported to
the International Rugby Board [IRB]
for a tip tackle on France forward
Yannick Nyanga.
IRB judicial officer Robert
Williams, who heard Simmonss case
in London yesterday, added two
weeks aggravation to the usual 12
weeks for a high-end scale sanction,
but warranted six weeks mitigation
based on the forwards previous
disciplinary record, which means
the 23-year-old misses the Test
against England on Saturday as well
as clashes with Italy and Wales.
The Wallabies will be desperate to
respond from their embarrassment
in Paris at Twickenham but the ban
means Nathan Sharpe and Sitaleki
Timani are their only specialist
second-row forwards fit to play at
Twickenham. Blindside flanker Dave
Dennis is expected to replace
Simmons at lock with Kane Douglas
also out with a knee injury.
England head coach Stuart
Lancaster will name his starting 15
to face the Wallabies today.
Aussies facing
injury crisis for
Twickenham
BY ALEX SHARP
The three-time Champion Jockey faces an inquiry next week over the failed test
THREE-TIME Champion Jockey
Frankie Dettoris failed drug test at
a meeting in France earlier this
year was not for a performance
enhancing substance, his solicitor
said yesterday.
Dettori, the biggest name in flat
racing over the last 20 years, faces
an inquiry next week over the
positive test at a Longchamp
meeting in September.
Dettoris positive test was not
for a performance enhancer
There are a large variety of
substances banned by France
Galop, said solicitor Christopher
Stewart-Moore. Were not going to
say which substance he has tested
positive for as that would be in
breach of their rules, but its not a
performance-enhancing drug.
Dettori faces an uncertain
future, having opted to pursue a
freelance career after ending his
18-year association with
thoroughbred stable Godolphin.
BY FRANK DALLERES
contracts set to kick in next season
mean broadcast revenue is
expected to top 5bn for the 2013-
2016 period. Clubs received 1.2bn
in total broadcast payments
during 2010-11.
Arsenal and Manchester United
are believed to want similar rules
to Uefas, which they are required
to abide by anyway or face bans
from European competition such
as the Champions League.
Sunderland are thought to have
advanced the idea of capping
annual wage increases at 10 per
cent, while Tottenham and
Newcastle are understood to
oppose any form of regulation,
having managed costs effectively
by themselves.
England cricket captain Cook: Page 29