Geek Speak:
INSIDE THE
CULT OF
GOOGLE p23
Issue 1,327 Tuesday 22 February 2011
LIBYA IN REVOLT
■ Oil climbs above $107
a barrel after production
hit by Gaddafi chaos
ANALYSIS l Brent crude futures
106
USD
100
94
88
Dec 2011 4 Feb
WORLD
▲
BY STEVE DINNEEN
LIBYA teetered close to all-out civil
war last night as Colonel
Muammar Gaddafi appeared to be
losing his grip on power.
Gaddafi and his family, who
have ruled with an iron fist for 41
years, vowed to fight “until the last
bullet” yesterday, despite protest-
ers taking control of the country’s
major cities.
In an appearance on state TV,
aimed at scotching rumours that
he had fled the country, Gadaffi
asserted: “I am in Tripoli and not
in Venezuela.”
FTSE 100 ▼ 6,014.80 -68.19
BUSINESS WITH PERSONALITY
■ Gold jumps to over
$1,400 an ounce for first
time in nearly 7 weeks
ANALYSIS l Gold futures
1,440
USD
1,400
1,360
1,320
Dec 2011
Foreign minister William Hague
had said he had seen information
suggesting Gaddafi was on his way
to Caracas, reports dismissed by
Gadaffi as “malicious rumours”
spread by “hating channels”.
Protests initially centred in
Benghazi, the second city, and other
eastern cities, swept across Libya.
The burning shell of the “Hall of the
People” parliament building in the
centre of the capital Tripoli became
one of the defining images of the
clashes.
Gaddafi yesterday ordered jets to
bomb his cache of weapons and
planes to stop them being reclaimed
by the opposition, with civilians
DOW CLOSED NASDAQ CLOSED
www.cityam.com
■ Silver hits 31-year high
as it breaks through the
$33 a troy ounce barrier
ANALYSIS l Silver futures
34
USD
32
30
28
Feb
among the scores of casualties.
An army unit in Benghazi, is
said to have switched sides and
helped fight off Gaddafi support-
ers, who appear to have retreated
from the region.
Members of Libya’s mission to
the United Nations made a sting-
ing attack on Gaddafi, branding
him a genocidal war criminal.
Senior politicians, sensing a
sea-change, also jumped ship,
with both public security minis-
ter Abdul Fattah Younis al-Obeid
and justice minister, Mustapha
Abdeljalil renouncing their
leader.
In a dramatic sign of Gaddafi’s
£/$ 1.62 unc
Residents stand on a
tank holding a pre-
Gaddafi era national
flag inside a security
forces compound in
Benghazi, Libya yes-
terday. Picture: AP
Dec 2011 Feb
weakening grip on his own military,
two Libyan pilots used their jets to
defect to Malta, where they have
claimed asylum.
David Cameron, who became the
first world leader to visit Egypt since
Hosni Mubarak was ousted, branded
the Libyan response to protests
“completely appalling and unaccept-
able”. He said: “Libya is using the
most vicious forms of repression
against people who want to see their
country make progress.” The incred-
ible scenes sent investors running
for cover, with gold prices rocketing
and the price of oil rising to more
than $107. ALLISTER HEATH: P2;
MIDDLE EAST UNREST: P12-P13
£/¤ 1.19 unc ¤/$ 1.37 unc
FREE
BP leads
exodus of
companies
▲
LIBYA
BY RICHARD PARTINGTON
OIL-GIANTS BP and Shell yester-
day evacuated staff from Libya, as
pro-democracy riots descended
into chaos last night.
The London-based oil majors,
as well as several other energy
firms operating in the oil-rich
north-African nation, are work-
ing to remove staff from danger.
Dutch energy giant Shell,
German oil provider Kassel and
Wintershall – the oil unit of
chemical group Basf – also said
they were pulling staff from the
country.
BP, which has a $900m
(£556m) programme in the
region, said it had suspended
preparations for drilling in Libya
as a result of the violence, but
denied reports it would perma-
nently end operations there.
A spokesman for the company
said around 40 employees and
their families had been flown
out of Tripoli. “The remainder of
the companies employees in
Libya will leave the country in
due course and in accordance
with enforced curfew,” he said.
PM defends
defence trade
visit to region
▲
POLITICS
BY RICHARD PARTINGTON
DAVID CAMERON has defended
his trip to the Middle East with
eight leading British defence
firms, as pro-democracy protests
sweep the region.
Opponents criticised the tim-
ing of the Prime Minister’s trade
delegation, which includes the
chief executive of BAE Systems
Ian King, as military dictators
across the region attempt to sup-
press a wave of protest.
However, Cameron said it was
“very much in Britain’s interests”
to continue to promote defence
relationships with countries in
the region.
He added: “The idea that
Britain should not have defence
relationships with some of these
countries I don’t understand. It is
quite right that we do.”
Certified Distribution
29/11/10 till 02/01/11 is 98,444
 2 News
Arab states must copy Asian tigers
EDITOR’S LETTER
ALLISTER HEATH
VILE, despicable, inhumane: such
words only barely begin to describe
Muammar Gaddafi’s savagery as he
desperately clings to power, battling a
rising tide of popular revulsion. Like
all fascists, human life is worthless to
him. It is, of course, too soon to tell
what will happen in Libya and what
sort of regime, liberal or theocratic,
will eventually emerge; the same is
true of Egypt and Tunisia.
But the fundamental reason why
there is such desperation in much of
the Middle East and North Africa is
that the region – unlike emerging
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WHAT THE OTHER PAPERS SAY THIS MORNING
MOD TO SHAME LAX CONTRACTORS
Liam Fox is to name and shame
defence companies that fail to deliver
military projects to the government
on time, in a radical attempt to re-
establish control over the depart-
ment’s heavily overspent
procurement budget. As the defence
secretary wrestles with the conse-
quences of slack spending on equip-
ment programmes over many years,
he will announce on Tuesday a raft of
measures aimed at bringing order to
the Ministry of Defence finances.
HEDGE FUNDS SWEEP FOR BUGS
Hedge fund managers are hiring
security firms to sweep their offices
and homes for listening devices, secu-
rity experts say, in reaction to the US
government’s insider trading investi-
gations. Federal prosecutors in New
York have filed criminal charges
against more than 40 individuals.
Asia – still lacks the capitalist institu-
tions that fuel prosperity. Without
dramatic economic reforms, extrem-
ists will gain ground. Decades of mis-
management, stupidity, ignorance
and corruption have left a legacy of
unemployment, poverty and hopeless-
ness; oil money has been skimmed off
by a selfish elite that specialises in cor-
poratism and nepotism and benefits
from state-chartered monopolies and
restraints to trade.
Scandalously, the fabled oil wealth
of the Arab countries has had little
effect on the incomes of ordinary folk
(Abu Dhabi and Dubai are exceptions).
For nearly two and half decades after
1980, the region witnessed hardly any
growth in living standards. Real GDP
per capita in the Arab countries grew
by 6.4 per cent over the entire 24 year
period from 1980 to 2004 (less than 0.5
per cent annually), according to the
United Nations. The situation has
improved a little since but insuffi-
ciently to dent unemployment. After
growing by just 3.4 per cent a year
U-turn over
bonus taxes
TAXATION
▲
BY RICHARD PARTINGTON
THE GOVERNMENT has retreated
from plans to tax deferred bank
bonuses.
New rules would have forced
bankers to pay tax when a reward
package was agreed, rather than
when they cashed in on their bonus.
Yet HMRC last night confirmed the
measure, drawn up for chancellor
George Osborne’s budget, will be
scrapped.
Companies had warned that staff
could have been forced to pay tax
even if they never ultimately receive
the bonus, as many schemes are
agreed subject to performance condi-
tions.
However the so-called ‘disguised
remuneration’ measures will no
longer be included in the Finance
PM SCRAPS PUBLIC SERVICE QUOTAS
David Cameron has scrapped the idea
of a fixed proportion of public servic-
es having to be delivered by the pri-
vate and voluntary sectors, even as he
underlined his determination to end
the public sector “monopoly” of pro-
vision. In an article in the Daily
Telegraph on Monday, the prime min-
ister promised that a forthcoming
public services white paper would
“create a new presumption . . . that
public services should be open to a
range of providers competing to offer
a better service”.
CREDIT SUISSE BANKER ARRESTED
A Credit Suisse banker has been arrest-
ed in connection with a long-running
US tax evasion investigation and could
be one of several individuals likely to
face charges this week as prosecutors
turn their focus from institutions to
bankers and wealthy clients, said peo-
ple familiar with the matter. Christos
Bagios was arrested about two weeks
upon entering the US.
between 1992 and 2001, the Middle
East and North Africa’s GDP started to
accelerate from 2003 to 2007, when it
underwent a mini-boom and expand-
ed by between 7.5 and 8.7 per cent a
year. But the crisis took its toll in 2007-
09 – and though higher oil prices
fuelled a strong expansion in 2010 and
2011, only statisticians have noticed.
A fifth of Arabs still make under $2
a day. In some places, youth unem-
ployment is over 40 per cent; the UN
estimates another 51m jobs are need-
ed by 2020 as a result of demograph-
ics. Youthful populations and no jobs:
no wonder a spike in food prices has
had such an explosive effect on the
politics of the region, including in
Libya, plagued for so many decades by
Gaddafi’s economically illiterate
brand of national socialism.
Apart from the likes of Dubai, oil
remains far too important.
Worryingly, industrial production’s
share of GDP has remained constant
for the past few decades; in countries
such as China, by contrast, it has
Bill – the legislation used to enact the
budget.
City firms welcomed last night’s
change.
Tax partner at law firm CMS
Cameron McKenna Nicholas Stretch
said: “These arrangements have not
been the basis for tax deferral and so
should not have been caught in the
first place, but there was a genuine
fear that the legislation did catch
them.”
He added: “Everyone is grateful
that the revenue has listened to prac-
titioners and that innocent arrange-
ments are no longer caught by policy
developments designed to target anti-
avoidance activity.”
HMRC had looked to crack down
on staff rewards that didn’t immedi-
ately incur tax, such as long-term
loans paid through offshore trusts
and deferred bonus payments.
CALLS UPPED FOR PORTUGAL BAILOUT
Fears that Portugal will need a
European rescue intensified after the
ECB re-activated its government
bond-buying programme last week.
The bank settled €711 million of gov-
ernment bond purchases, ending a
pause in the scheme, which aims to
contain public borrowing costs in the
euro area periphery.
IRISH LEADER LOOKS TO GERMANY
The man destined to be the next
leader of Ireland is counting on
friends in high places to help his
country out of its worst economic cri-
sis since independence 90 years ago.
Enda Kenny, the veteran Fine Gael
leader, mentions his friendship with
Angela Merkel, the German
Chancellor, at every opportunity in
the hope that she will help lower the
punishing interest payments on
Ireland’s €85 billion (£72 bn) bailout.
surged. Arab states account for 20 per
cent of world fuel and mining exports,
but only one per cent of exports of
manufactured goods. In some Gulf
countries, oil money has been used to
buy off large chunks of the public,
with the creation of massive middle
class welfare and client states; in oth-
ers, while living standards have
improved, progress has come too lit-
tle, too late. The creation of sovereign
wealth funds has ensured oil money is
no longer being entirely squandered,
as has some infrastructure spending,
but this hasn’t been enough.
It is not, of course, just about eco-
nomics. But unless new regimes in
Egypt, Libya, Tunisia and elsewhere
introduce real market and tax
reforms, proper property rights and
sound money, and embrace free trade,
there is no hope for the region. It must
emulate the emerging nations of Asia
and Latin America, or remain forever
mired in despair and decline.
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
BHP chief executive Marius Kloppers has cut a deal at last
BHP in $5bn US gas deal
MINING
▲
BY KATIE HOPE
BHP BILLITON yesterday agreed to
buy US shale gas assets from
Chesapeake Energy Corporation for
$4.75bn cash, in its first acquisition
since a series of failed major deals.
BHP said the deal, expected to close
in the first half of the year, would
give it the second largest position in
one of the largest gas fields in the
world and increase its oil and gas
reserves by 45 per cent.
LARGE LENDERS NOT ALWAYS THE BEST
Britain’s biggest lenders do not neces-
sarily offer the cheapest home loans,
new research discloses. They occupy
three quarters of the market, but only
provide 145 - the equivalent of 29 per
cent – of the top 500 mortgages,
according to personal finance website
Moneyfacts. It said ‘biggest isn’t
always the best’ as in many cases the
most competitive mortgage deals are
not being offered by the largest mort-
gage lenders.
CALLS FOR BLACK MONEY AMNESTY
Srichand Hinduja, one of the UK’s
most influential international busi-
ness figures, has called on the Indian
government to offer an amnesty to
Indians holding an estimated one tril-
lion dollars in “black money” in off-
shore bank accounts. His proposal was
made in a letter to India’s finance
minister, Pranab Mukherjee.
CITYA.M. 22 FEBRUARY 2011
NEWS | IN BRIEF
Singapore looks for boost in China
Singapore’s state investment company
Temasek Holdings has appointed a new
head for its China operation, as it moves
to boost its presence in the country.
Ding Wei, an investment-banking chief
at Chinese lender China International
Capital, will help Temasek to become a
“long term active” investor in successful
firms in the country. He said: “[Temasek]
has a significant China portfolio and I
look forward to growing it further.”
US bank could face law suit
Letters have been sent to executives at
the failed Washington Mutual Bank
warning of legal actions and potential
damages of over $1bn (£616.3m). The
letters, sent by the Federal Deposit
Insurance Corporation, are intended to
encourage the executives to reach a
settlement under directors’ and offi-
cers’ liability insurance. They are seen
as a precursor to a potential lawsuit,
which could be brought within the next
30 days, according to reports.
Washington Mutual collapsed in
September 2008. Its assets were sold
to JP Morgan by the FDIC acting as
receiver for $1.8bn.
Picture: Reuters
The natural gas properties are
located in the Fayetteville shale, a nat-
ural gas field in central Arkansas.
BHP aims to triple daily production as
the field is developed.
BHP chief executive Marius
Kloppers, who last week said the firm
would only buy tier 1 assets, said the
deal was “consistent with its strategy”.
BHP’s move to acquire Chesapeake
Energy’s assets comes just three
months after the Anglo-Australian
company dropped its hostile bid to
acquire Canada’s Potash Corp.
MERKEL PLAYS DOWN HAMBURG LOSS
German Chancellor Angela Merkel's
conservatives, who suffered a sting-
ing electoral defeat in Hamburg on
Sunday, face a year of regional elec-
tions that could shift the balance of
political power in the European
Union's most influential country.
EU TO VOTE ON ADMITTING GM FOOD
After years of political wrangling by
European Union policy makers, rising
food prices may be putting genetical-
ly modified, or GM, food on the
menu. Officials are set to vote
Tuesday on whether to allow trace
amounts of unauthorized GM materi-
al in animal-feed imports, a move
campaigners say could herald a shift
in the bloc's attitude to biotechnology
and would mark a victory for the GM
lobby, which has been pushing for a
relaxation in the EU's zero-tolerance
rules on imports for years.
CITYA.M. 22 FEBRUARY 2011 News 3

Elisabeth Murdoch sells TV

production firm to her father

▲
MEDIA
BY RICHARD PARTINGTON
THE DAUGHTER of media mogul
Rupert Murdoch has agreed to sell the
television production company she
founded to her father for £415m.
Elisabeth Murdoch will sell Shine
Group, which makes programmes
such as MasterChef and the Wright
Stuff, to News Corp.
Elisabeth Murdoch has sold her TV production company to her father. She stands to pocket £200m from
the deal, as well as gain a place on the
News Corp board.
In 2001, Murdoch quit the family
business, leaving her post as head of
content at satellite broadcaster BSkyB.
She set up Shine, which she will still
hold a 53 per cent stake in, as an inde-
pendent television production house
away from her father’s business.
BSkyB holds 13 per cent of Shine’s
shares, Sony Entertainment holds 20
per cent, with the rest divided among
management.
Continuing in her role as chairman
and chief executive of Shine, she will
report to News Corp chief operating
officer Chase Carey and not her broth-
er James – the head of the company’s
European division.
She said: “News Corp is the partner
that enables us to maintain our aspira-
tion to be best in class across all our
sectors, and prepares and equips us for
future growth.” DIARY: P8

Spotify stake
values firm
at over $1bn
microblogging site.
▲

TECHNOLOGY
BY STEVE DINNEEN
DIGITAL Sky Technologies (DST) is
understood to be close to finalising a
$100m (£61.7m) investment in Spotify
that would value the music stream-
ing site at $1bn.
DST already owns a stake of up to
10 per cent in Facebook and invested
in the $180m fund-raising for
Farmville-maker Zynga.
If DST went ahead with the move,
which was reported in TechCrunch, it
would mean that the company would
have stakes in nearly all of the well-
known pre-float tech firms that
investors are chasing.
The Russian firm grabbed head-
lines after it added $50m to its invest-
ment in Facebook as part of Goldman
Sachs’ $2bn funding round for the
social networking site.
The Spotify investment once again
raised fears of a second dotcom bub-
ble, with Google and Facebook both
understood to be in talks to buy
Twitter for up to $10bn (£6.23bn).
The Silicon Valley giants are said to
be in “very speculative” negotiations
to take control of the hugely popular
In its recent financing round,
Twitter was valued at $3.7bn, after
selling $200m worth of shares.
LinkedIn, the professional network-
ing site, is expected to reach a valua-
tion of around $2bn after filing plans
for an IPO.
And Facebook has been valued at a
staggering $50bn after Goldman
placed a number of its privately held
shares. Facebook brought in revenues
of around $2bn last year.
Facebook shares are now said to be
selling for over $55 on trading sites
for high net worth investors such as
SharesPost.com, which would value
the company at $124bn.
Deal website Groupon rejected a
$6bn bid from Google last year.
DST and Spotify both declined to
comment.
Sweden-based Spotify, which will
soon announce a deal with music
giant EMI to stream its music, counts
Hong Kong billionaire Li Ka-Shing
among its investors.
The service offers online access to
millions of music tracks, which con-
sumers can also buy. It has over 10m
users in Europe.

Goldman may Fund managers

buy back stock sweep for bugs
▲

BANKING HEDGE FUNDS

GOLDMAN Sachs investors may be in
line for a capital return as it uses
excess profits, analysts said yesterday.
The cash-rich US investment bank
already has enough capital to meet its
2013 Basel III threshold as well as buy
back $5bn (£3.08bn) in preferred
stock held by Warren Buffett’s
Berkshire Hathaway fund.
Goldman should have close to $7bn
of free capital left afterwards,
Nomura analysts said.
“Management should be able to
effectively manage the firm’s capital
base,” they said. “Share repurchases
are likely.”
HEDGE fund managers have turned
to private security firms to shore up
their offices and homes amid fears
bugs could have revealed insider-trad-
ing practices, according to reports.
The development comes after fed-
eral prosecutors in New York filed
criminal charges against more than
40 traders over alleged shared infor-
mation about company information.
Many firms have sought peace of
mind by having their offices swept for
listening devices as the government
cracks down. The government is
focusing on insider trading allegedly
done using ‘expert networks’.
 Advertisement

HOW TO LE VEL A PL AYING FIELD

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SMARTER SMALL BUSINESSES solved by planning the
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But it’s not just about scale. UPS gives small THE NEW LOGISTICS

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LOGISTICS FOR ALL
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Copyright © 2011 United Parcel Service of America, Inc.

CITYA.M. 22 FEBRUARY 2011 News 5

Apple shareholders will call

for clear plan to succeed Jobs
row after one US report suggested from the firm he co-founded in 1976,

▲
TECHNOLOGY
BY STEVE DINNEEN
APPLE will face a grilling from share-
holders over who will eventually
replace Steve Jobs after speculation
over the talismanic boss’ health has
hit new highs.
Shareholders from the influential
Central Laborers’ Pension Fund will
raise the question at the Cupertino-
Apple is facing pressure to name a successor to Steve Jobs Picture: REUTERS based firm’s annual meeting tomor-
Jobs has just six weeks to live.
Apple has frequently batted away
calls to lay out a succession plan,
claiming it would put rivals at an
advantage by allowing them to
“recruit high-value executives away
from Apple”.
The Central Laborers’ Pension Fund
has pushed for similar measures at
HP and Intel.
The Apple boss last month
announced a third leave of absence
with chief operating officer Tim Cook
deputising in his absence.
It is unclear whether Jobs will per-
sonally attend tomorrow’s meeting.
He was absent from the Macworld
conference two years ago after under-
going a liver transplant.
Jobs has previously battled a rare
form of pancreatic cancer, for which
he had a tumour successfully
removed in 2004.
Apple declined to comment.

EU rules may
be death of
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A.M. this could have a detrimental
▲

TELECOMS
BY STEVE DINNEEN
SMARTPHONES with no up-front
payment could become a thing of
the past, with the EU poised to ban
contracts that tie users in for long
periods.
The number of people locked into
two or three year contracts has rock-
eted as retailers try to claw back
money spent on subsidising high-end
handsets.
According to a new survey by
uSwitch, 73 per cent of people are
impact on consumers and hit the UK
hardest.
He said: “Across European markets
there are different levels of handset
subsidies. The UK is used to them in a
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though someone has thought ‘The UK
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tracts, compared to just 12 per cent
on 12-month deals. Six years ago 88
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month contracts.
New EU legislation will outlaw
deals lasting for more than 24
months and force retailers to offer 12-
month options.
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 6 News
Spain’s cajas
hold £84bn
in bad assets
▲
BANKING
BY RICHARD PARTINGTON
SPAINISH savings banks are holding
around €100bn (£84.3bn) “potentially
problematic” real estate assets, accord-
ing to the country’s central bank.
The figure, which for the first time
puts a material sum on the extent of
the holdings by the unlisted regional
banks, known as cajas, is as high as
€217bn in total.
Governor of the Bank of Spain
Miguel Ángel Fernández Ordóñez yes-
terday said the exposure did not endan-
ger the country’s financial sector as a
whole.
The Spanish government last week
▲
approved laws requiring unlisted
regional banks to boost their capital
reserves.
The law, which the cajas must show
they have plans to conform to by
September, will require listed banks to
hold core capital levels of eight per cent
and non-listed lenders to hold ten per
cent.
Fernández Ordóñez added that the
plan was “absolutely necessary.”
Spain’s central bank will publish an
estimate of the financing needs for
each caja next month.
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Bundesbank governor Axel Weber says ECB doves marginalised his views
Weber fires parting shot
EUROZONE CRISIS
BY JULIET SAMUEL
OUSTED ECB president candidate and
Bundesbank chief Axel Weber said yes-
terday that the Eurozone is only a
quarter of the way through its debt cri-
sis and fired a parting shot at the ECB,
saying its bond purchasing pro-
gramme is a “short-term” and a “coun-
terproductive” solution.
Telling an audience in Dusseldorf
that indebted Eurozone states must
focus on fiscal discipline, Weber said:
“Compared to a marathon, the prob-
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lematic countries have managed
maybe the first 10 or 15km. The most
painful part is still to come.”
He recommended that they intro-
duce constitutional caps on govern-
ment debt, as Germany did in 2009.
Weber also reiterated his disap-
proval of the ECB’s policy of interven-
ing in sovereign debt markets, a stance
he says forced him out of the race for
the ECB presidency.
He said that although markets were
at times “prone to exaggeration”, it
was wrong to blame them for the sov-
ereign crises rippling through Europe.
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ECB bought
24pc of bonds
at Lisbon sale
EUROZONE CRISIS
BY JULIET SAMUEL
THE European Central Bank (ECB) was
forced to restart its special bond pur-
chasing programme at an auction of
Portuguese debt two weeks ago, fig-
ures out yesterday revealed.
It bought €711m (£559m) worth of
debt in an effort to bring down yields
during Portugal’s last €3bn sale on 10
February, during which the sover-
eign’s 10-year debt costs spiked to all-
time Eurozone high of 7.6 per cent
before dramatically retreating on what
many assumed was ECB intervention.
The figures out yesterday confirm
that the bank waded into the market:
estimates had ranged as high as €2bn,
but the €711m figure still means the
ECB bought 24 per cent of the day’s
issuance.
New Edge bond strategist Bill Blain
told City A.M.: “Every time Portugal has
to do a bond issue, the ECB has to buy
a shed-load of bonds.”
@
@
@
www.cityam.com
CITYA.M. 22 FEBRUARY 2011
Vliet expects next week’s figures to
show continued intervention to stem
the rise of Portuguese yields.
The ECB does not buy bonds directly
on the primary market during its
interventions, however, but purchases
at market prices on the secondary
market to bring yields down.
Meanwhile, Portuguese finance
minister Fernando Teixeira dos Santos
said yesterday that the country did not
see the need for an international
bailout, and preferred to procure
funds from the market. Portugal has
already procured two-thirds of total
funds needed for bond redemptions in
April and June, he told Japan’s Nikkei
newspaper.
The total
€77bn
value of ECB
bond
purchases to
date
Cocos held
up by lack
of ratings
▲
REGULATION
BY JULIET SAMUEL
REGULATORY uncertainty and reluc-
tant ratings agencies are holding up
the development of a multi-billion
pound market in contingent convert-
ible bonds (cocos).
The UK is ahead of many other
nations due to the FSA having
approved Lloyds’ cocos issuance in
2009, but banks are still waiting for a
signal from the EU.
“Regulatory certainty is what’s
needed – Switzerland has got that cer-
tainty,” says Bank of America/Merrill
Lynch’s Daniel Bell.
Credit Suisse recently issued
£5.1bn’s worth of cocos, which are
bonds that turn into equity if a bank’s
capital ratio falls too low, following
approval from Swiss authorities and a
Basel III clarification in January.
But many are still waiting for a
move by ratings agencies: some
investors have mandates that lock
them out of investing in instruments
that do not have at least two ratings.
Fitch is currently the only major
agency to rate cocos, with both S&P
and Moody’s having so far refused.
Moody’s reasons that the potential
for regulatory discretion makes it
hard to determine the likelihood of
losses, but S&P is in the midst of a
consultation with investors on
whether and how to rate cocos, sug-
gesting that it could change its policy
later this year. And if S&P does change
its mind, Moody’s might soon follow.
“If it is the only ratings agency not rat-
ing them, it would be surprising,”
says Bell.
 The Capitalist
8 CITYA.M. 22 FEBRUARY 2011
EDITED BY
JULIET SAMUEL
GOT A STORY? EMAIL
thecapitalist@cityam.com

IT’S HAPPY Elisabeth

FAMILIES
AS LIZ GOES
IN-HOUSE
BEFORE heading out to lunch yesterday,
Elisabeth Murdoch, or “Liz”, fired off a
quick, “confidential” email to her several
hundred employees at Shine Group, the
media group snapped up by News Corp.
Luckily, it was quickly forwarded on to
The Capitalist.
“I did want to take a minute to thank
you all for your patience while I have had
to be uncharacteristically, if necessarily,
discreet about our conversations with
News,” Elisabeth wrote graciously,
expressing what was surely an unneces-
sary regret for having such cosy private
chats with her brother and dad over at
News Corp.
“While we will officially have a bigger
home, Shine will continue to operate as
we do now,” she adds breezily.
Considerate of her to reassure the troops,
but surely it is Elisabeth herself who will
have to adjust to the strange sense of deja
vu involved in moving back in-house into
a bigger home with the family?
The deal, she says, “provides an enor-
mous canvas for our talent and will con-
tinue to challenge us to be our best
selves”. It’s certainly a more cheery por-
trait of Rupert Murdoch’s imposing style
Elisabeth Murdoch said Shine will continue to operate “as we do now”
than has at times appeared in print.
Family first, after all.
TOWER RECORDS
Do you ever tire of hitting elevator but-
tons? Ever wonder what you’re missing in
the drafty stairwells of these steel and
glass monoliths of the City?
Perhaps not, but those who skip this
last chance to sign up for Tower 42’s “ver-
tical rush” will certainly miss out on a
flurry of stairwell action next week as
hundreds of keen beans race up the build-
ing’s 920 steps to raise money for Shelter.
“Participants of all fitness levels are
invited,” says the charity, though that
might be small comfort as you’re gasping
Murdoch
says that
moving back
in-house with
her brother
will give
Shine “a
there’s another, lazier option: sponsoring
bigger home”. a vertical plunge of rather larger propor-
tions.
Deloitte partner and vice-chair Ellie
Patsalos (pictured above) and Kenneth
Green Associates managing director Linda
Taylor have opted to make leaps of faith in
Picture: PA aid of Breakthrough Breastcancer’s
“Booby Birds” fundraising, wherein ten
up the tenth floor on the heels of that ladies in shocking pink jumpsuits go sky-
spritely bloke from HR. diving to raise cash for the cause.
Athletes from seven countries will be Taylor, in particular, is going up
leading the race, which is the London leg against a morbid fear of heights for the
of “the vertical world circuit”, a big deal event, which should surely help to loosen
apparently in the “tower-running world”, the purse strings before the June jump.
where runners compete to set new
records for various lengthy buildings.
The New York leg takes place up the
102-storey Empire State Building, which
GUILDHALL ROCKS
And finally, as The Capitalist reported
means Londons’ runners can at least be before Christmas, Guildhall will host
glad we don’t make ’em half as tall over the first rock concert in its 600-year his-
here. tory this year, and it’s happening
tonight. Bryan Adams is set to play a
gig that aims to raise £200,000 for
BOOBY TRAP Coram, the UK’s first kids’ charity. It
If churning up a few dozen floors in might, however, be a bit late to blag
aid of charity isn’t your cup of tea, tickets.

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CITYA.M. 22 FEBRUARY 2011 News 9

Bid activity driven by exchanges consolidation

INSIDE TRACK
DAVID HELLIER
IT’S been a good few days for some of
the world’s investment banks, with
merger mania hitting the stock
exchanges, the final consummation of
the drugs merger between Sanofi-
Aventis and US biotech firm Genzyme
and then yesterday’s £1.3bn spirits bid
from the drinks group Diageo.
It’s not quite an unrestrained
takeover environment but it certainly
feels like things are picking up for
those making a living out of M&A.
In Sanofi’s agreed $20.1bn merger
with Genzyme there was massive
relief since it took nine months to
close the deal. After last year’s abortive
megadeals by Prudential for AIA and
BHP for Potash, there is always going
to be nervousness that a deal such as
Genzyme might hit the buffers. Credit
Suisse, in particular, the bank that led
the Prudential’s quest for AIA, must
have been pleased to get a result as one
of Genzyme’s bankers – fees for the
Sanofi Genzyme transaction are esti-
mated at around $125m.
On the exchanges front, one mys-
tery was cleared up last week when JP
Morgan was selected to advise
Deutsche Boerse in its bid for NYSE
Euronext.
Many had wondered why JP Morgan,
as joint broker for the LSE, had not
been included on its deal to buy
Canada’s TMX. The Deutsche Boerse
appointment provides the answer
since JP Morgan would have been
unable to work for both clients in such
closely related deals.
There is no such clear reason as to
why LSE chief executive Xavier Rolet
omitted Nomura from his team of
advisers. The Japanese bank was joint
broker along with JP Morgan but
found itself on the sidelines when it
came to selecting a team.
Nomura sources say the relation-
ship between the two organisations
remains strong and point out that
under William Vereker the investment
banking team is building up clients
and mandates.
Others worry about a steady trickle
of departures from the team, with
some following Christian Meissner to
rivals Bank of America Merrill Lynch.
Barclays Capital, which did feature
on the LSE’s list of advisers, is also the
adviser of choice for Justice, a cash
shell IPO, and the proposed deal
between BATS and Chi-x is being
advised by two specialist players in the
industry, Lexicon Partners and Beech
Hill Securities. UBS and HSBC are
Diageo’s advisers on the Turkish deal.
As the deals begin to proliferate,
they leave fees and hope for more
deals, in their wake.

NEWS | IN BRIEF
Close buys Zurich deposit book
Financial group Close Brothers is buying
a £300m deposit book from Zurich
Financial's Dunbar Bank unit, helping
improve Close Brothers' short-term fund-
ing needs. Close Brothers said it was pay-
ing a premium of £1.5m for the assets. It
added that the acquisition would have a
neutral effect on its earnings for 2011
but would have a small, positive impact
on 2012 earnings.
Commerzbank hangs on to CEO
Commerzbank will extend the contract
of Martin Blessing as chief executive, it
is understood. The supervisory board of
Germany's second-biggest lender is said
to have arranged a meeting to discuss
the contract today. A spokesman for the
bank declined comment. Blessing, 47,
became chief executive in May 2008
and his contract was to expire in CREATE MORE VALUE
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 10 News
Network Rail boss David Higgins wants to decentralise the business
Hammerson
plans more
acquisitions
▲
PROPERTY
BY MARION DAKERS
REAL ESTATE owner Hammerson sur-
prised the market with a 17.6 per cent
rise in net asset value yesterday, lifted
by a spike in its UK properties’ values.
The retail-focused firm’s portfolio
in the UK and France rose in value to
£5.3bn in 2010, helping to lift net
asset value per share to 495p.
The company reported a pre-tax
profit of £620.2m for the year, follow-
ing a £453m loss in 2009.
Hammerson has also lowered its
debt gearing from 67 per cent to 52
per cent, and owed £1.8bn by the end
of the year with £1bn of headroom
from cash, liquidity and undrawn
facilities.
The company said disposals in 2010
helped raised £555m, of which £219m
was invested in acquisitions.
Chief executive David Atkins told
City A.M. the firm will continue to
acquire new properties in 2011. “This
last year we have invested in every
part of the portfolio and I see this con-
tinuing,” he said.
“In the short-term, London is very
strong in terms of growth but as we
have proven out in the regions, even
in a pretty challenging retail environ-
ment our share can grow.”
It proposed a full-year dividend of
15.95p a share, up 3.2 per cent on last
year. Hammerson shares closed up 1.7
per cent at 455.2p.
ANALYSIS l Hammerson 455.20
450 p 21 Feb
430
410
390
22 Nov 10 Dec 4 Jan 24 Jan 11 Feb
ANALYST VIEWS: HOW GOOD WERE HAMMERSON’S RESULTS?
HARM MEIJER
JP MORGAN CAZENOVE
“ “
Hammerson’s full-year results
were better than expected, a similar trend
seen with peers, as assets with quality
income continue to surprise to the upside, in
line with one of our main investment
themes. We remain ‘overweight’, given
” ”
the continued strong demand for prime
assets and its modest loan to value
ratio of 32 per cent.
CITYA.M. 22 FEBRUARY 2011
Network Rail plots revamp
ing over three weeks ago. Network Rail’s internal shift comes
▲
TRANSPORT
But the Department for Transport weeks before Sir Roy McNulty is due
BY MARION DAKERS said yesterday it would continue to to report to the government on the
NETWORK Rail formally announced look at all options for Network Rail, future of the not-for-profit firm,
plans to split into nine separate divi- including allowing train companies which currently runs UK train tracks,
sions yesterday in a bid to reduce to take over rail maintenance. the signalling system and 18 stations.
costs and fend off calls for an even “It highlights the need for much Network Rail also said yesterday
more dramatic overhaul. closer working between Network Rail that it will plead guilty to breaching
The devolution of power to region- and train operators to reduce costs regulations that led to the Potters Bar
al managers is one of chief executive and provide efficiency,” said a DfT train crash, which killed seven people
Picture: PA David Higgins’ first moves since tak- spokesperson yesterday. in 2002.
Lloyds must
pay £500m
in refunds
▲
BANKING
BY HARRY BANKS
BRITISH bank Lloyds will take a £500m
provision after reaching a deal with
the Financial Services Authority which
will see it give partial refunds to
300,000 mortgage customers.
Lloyds, the UK’s biggest retail bank,
said it had reached a voluntary agree-
ment with the FSA over initiating a
customer review and contact pro-
gramme with regard to concerns over
some of its retail mortgage contracts.
Lloyds added that the agreement
with the FSA related to mortgage cus-
tomers of its Halifax unit, where the
wording in certain mortgage offer
documents had the potential to cause
confusion.
Lloyds’ Halifax division said it
would write to around 600,000 cus-
tomers from April onwards to clear
up the confusion and would make
goodwill payments to around 300,000
of those customers.
Lloyds acquired the Halifax busi-
ness following its purchase of rival
HBOS during the height of the credit
crisis in 2008.
The HBOS takeover, which was bro-
kered by the then Labour govern-
ment, saddled Lloyds with billions of
pounds of losses and led the British
government to step in and bail it out
with taxpayers’ money.
As a result of the bailout, the
British government ended up with a
stake of around 41 per cent in Lloyds.
Lloyds shares closed down 2.05 per
cent yesterday at 67.88, making it one
of the biggest fallers on the London
Stock Exchange.
Acas call CityJet
to strike talks
▲
By Marion Dakers AVIATION
ACAS has called on airline CityJet to
TINA COOK MATTHEW CHURSTAIN turn up for talks with union bosses in
order to avoid further strikes at
CHARLES STANLEY PEEL HUNT London City Airport.
“
The industrial dispute service is
mediating talks between the GMB
While earnings were largely in It was better than expected. union and Aviation Resources, an
line, the positive share price reaction is driv- There is still a little bit of concern over the agency which employs staff on behalf
en by the rise in net asset value, which was rents of their City assets, but that is likely to of the airline.
well ahead of expectations. The company resolve itself in the growth and the Staff are threatening to strike over
recognises ongoing pressure on retailers shortage of space over the next few years. pay and employment conditions.
in challenging economic conditions, Hammerson has also got a number of CityJet is needed at the talks as it
”
but its prime portfolio, diverse tenant development assets, and is set for more must sanction any increase Aviation
base and geographic spread leaves it Resources could make.
positive news if it can get pre-lets for Further talks are scheduled for next
well placed. those properties. month.
CITYA.M. 22 FEBRUARY 2011
Manufacturing activity is growing across the single currency area
Large firms
plan on jobs
expansion
▲
EMPLOYMENT
BY JULIAN HARRIS
BIG companies are more likely to offer
new job opportunities than their
smaller counterparts, according to
research by Barclays Corporate,
released yesterday.
Firms with turnover in excess of
£500m were the most positive, with
85 per cent looking to create new full
time positions this year.
However, less than half (41 per cent)
of businesses with income under £5m
expect to provide new jobs – and
many of these will only be part time.
Many companies insist that sales
must grow before they can create new
employment opportunities, the sur-
vey of 500 executives found.
Around three quarters of executives
put sales growth before job creation –
compared to before the recession,
when only half (52 per cent) consid-
ered sales growth more important.
New job creation is dependent on
sales increasing first, 78 per cent of
respondents said.
“Job creation is vital for a sustain-
able economic recovery, and while
these survey results are encouraging,
they also highlight that many busi-
nesses remain risk adverse when it
comes to creating new positions in
order to drive growth,” said Barclays
Corporate’s Kevin Wall.
More than eight of out ten (82 per
cent) new jobs will be at junior, mid-
dle management or skilled labour, the
survey said.
Meanwhile, the City is seeing a
strong return to confidence, yet wor-
ries persists over increased regulation
and taxes, according to a small survey
by consultants Smith and Williamson,
also released yesterday.
Four out of five respondents expect
business prospects to improve or sta-
bilise -- yet two thirds believe regula-
tion will restrict their businesses, its
survey found.
Quarter of London opposes migrant cap
▲
MIGRATION
BY JULIAN HARRIS
LONDONERS are more likely to
oppose the Conservatives’ proposed
cap on immigration than people in
other parts of the UK, a poll by Ipsos
MORI has revealed.
Almost one in four (23 per cent)
Londoners oppose the policy – where-
as across Britain as a whole, just 15
per cent are against the cap on migra-
Picture: REX
tion from outside the European
Union.
Around one in eight (12 per cent)
respondents in the capital “strongly
oppose” the cap, although the same
number “strongly supports” the
measure.
Over half (58 per cent) Londoners
say immigration is good for the econ-
omy, while seventeen per cent dis-
agree.
“The diversity of London as a whole
Euro factory prices soar
▲
EUROZONE ECONOMY
BY JULIAN HARRIS
INFLATION across the Eurozone accel-
erated at a record pace this month,
Markit’s latest purchasing managers’
index (PMI) revealed yesterday.
Inflation was driven particularly by
the manufacturing sector, from which
output prices hit a series record high.
Activity in the factory industry grew
tends to makes people more comfort-
able with living with people from a
wide range of background,” said Ipsos
MORI chief executive Ben Page.
The capital nurtures more positive
attitudes to migration, agreed econo-
mist Philippe Legrain.
“This is even reflected by its mayor
Boris Johnson, who has called for an
immigration amnesty and is out of
line with UK-wide Conservative views
on migration,” Legrain said.
at its fastest rate since June 2000,
reaching 59 in the index.
And the whole of the private sector
performed well across the single cur-
rency area, reaching a headline output
score of 58.4, the highest in four-and-a-
half years. All PMI scores above 50 indi-
cate growth.
“The data reinforces expectations of
a first European Central Bank rate
hike in the second half of this year,”
NEWS | IN BRIEF
Households downbeat on economy
One in four Brits think their jobs are less
secure than a month ago, while a majority
expect prices to rise in the next year as
inflation bites, a YouGov poll revealed yes-
terday. In a gloomy report, the survey
found that over half of respondents expect
their financial situation to worsen in the
next year. “Consumer spending behaviour
in the past 12 months has shown where
our priorities lie,” said YouGov’s Mike
Nardis. “Staying in and staying in touch are
valued and worth our hard earned cash,
but going out is off the menu,” he said.
Economics 11
commented ING’s Martin van Vliet.
Consumer price inflation in the Euro
area hit 2.4 per cent last month.
The manufacturing resurgence is
being boosted by exports, Markit
revealed. New factory orders matched
last March’s ten-year high, with
exports showing the largest monthly
increase since April 2000.
Even peripheral states saw stronger
manufacturing exports, Markit said.
Morale hits
record high
in Germany
▲
EUROZONE ECONOMY
BY JULIAN HARRIS
GERMAN business confidence sur-
prised observers by rising to another
record high in February, the well
regarded Ifo index showed yesterday.
The measure of business climate in
the Eurozone powerhouse upticked
to 111.2, from 110.3 last month. It
marked the ninth straight month of
private sector pick up, and bodes well
for German GDP.
“After its winter dip, the German
economy should return to above-
trend speed very soon,” said ING’s
Carsten Brzeski. “The economy will
continue to fly high this year. Due to
the well-balanced export mix, foreign
trade will remain an important
growth driver.”
Manufacturing was the strongest
sector according to the Ifo survey, mir-
roring results from Markit’s purchas-
ing managers’ index (PMI), also
released yesterday.
Factory sector PMI struck a record
high of 62.6 in February, according to
the mid-month “flash” estimate.
And the whole German private sec-
tor scored its highest rate of growth
for over four-and-a-half years, reach-
ing 61.5. PMI scores over 50 indicate
economic expansion.
“Today’s results confirm our view
that German real GDP growth should
account for at least one per cent quar-
ter on quarter for the first three
months of 2011,” Frank Engels of
Barclays Capital.
Meanwhile, French PMI also rose,
to a six month high of 59.5. However,
the rise was driven by an increase in
service sector activity, with jumped
over the 60 mark (from 57.8), a seven
month high.
“The two biggest economies of the
Eurozone, accounting for around half
of overall euro area GDP, are going
strong,” said Ken Wattret of BNP
Paribas.
Bank’s Weale calls for rise in rates
Bank of England rate setter Martin Weale
yesterday emphasised the need for higher
interest rates to contain inflation expecta-
tions. A modest rise will "protect us from
a squeeze later on,” Weale said.
Thailand bounces back from dip
Thailand’s economy rebounded in the final
three months of the year, following a con-
traction in the third quarter of 2010, offi-
cial data showed yesterday. GDP rose 1.2
per cent on the previous quarter. Growth
for 2010 as a whole came in at 7.8 per
cent, the fastest gain in 15 years. The
news increased expectations that
Thailand’s interest rates will rise further.
 12 Focus on Middle East turmoil
Shares take
fright over
Libya turmoil
▲
WORLD
BY STEVE DINNEEN
THE FTSE 100 closed at a two-week
low yesterday after another day of
chaos in Libya sent investors running
for cover.
The blue-chip index shed 1.1 per cent
to close at 6,014.8 as fears over energy
supplies sapped investor’s appetite for
risk. Shares of blue-chip firms across
Europe felt the bite, with banks and
miners taking the biggest hit.
Educational publisher Pearson,
whose fifth biggest shareholder is the
Libyan Investment Authority, lost
2.46 per cent.
Lloyds Banking Group and Royal
Bank of Scotland, which are set to
report results later this week, shed
four per cent and 3.9 per cent respec-
tively.
The FTSE 100 volatility index, a
barometer of investor anxiety,
jumped a staggering 17 per cent.
UniCredit was among the biggest
losers in Europe, falling 5.75 per cent
thanks to Libya’s central bank and
sovereign wealth fund owning a com-
bined 7.5 per cent of the Italian bank.
Other Italian firms with exposure
to Libya, including Finmeccanica, UBI
Banca and Intesa SanPaolo, also took
big hits.
Shares in Italy’s biggest multina-
tional, the oil firm Eni, were down 5.1
per cent, while the country’s blue-
chip FTSE MIB index ended down 3.6
per cent, wiping €14bn off its market
capitalisation in its worst session for
eight months.
Austria’s largest industrial, the oil
firm OMV, was down 4.2 per cent.
OMV, along with other foreign oil
firms operating in Libya, including
Statoil, BP and Total, said they have
evacuated all non essential staff.
Oil production was ceased by
Statoil but Total and Eni said their
operations had not been hit. BP,
which struck a £900m deal with
Gaddafi in 2007 but only has
exploratory operations in Libya, said
it has stopped drilling. MARKETS: P18
MOROCCO
● Sporadic outbursts of violence broke out yes-
terday after mass protests over the weekend.
● Thousands of protesters took to the streets
in Morocco on Sunday demanding King
TUNISIA
Mohammed give up some of his powers.
Morocco
ALGERIA
● Around 5,000 students took to the streets of
Algiers, in the face of a public ban.
● They are protesting about new laws that
dilute their academic qualifications, as well as
more general discontent with the government.
Discontent spreads
in Arab world
What happened where
CITYA.M. 22 FEBRUARY 2011
● Washington has offered Tunisia help in
shoring up security following its revolution.
● Elections to replace Ben Ali are expected by
LIBYA
● A second fierce night of violence in Tripoli as
protesters are met with heavy arms fire.
● Reports suggest that much of the country
has slipped from Gaddafi’s grip, as Libya’s
July or August. But new protests have erupted
in recent days against the interim government. deputy envoy to the UN calls on him to quit.
Tunisia
Egypt
Algeria
Libya
EGYPT
● David Cameron made the first visit to
Egypt by a foreign leader since the
overthrow of Hosni Mubarak.
● Egypt's public prosecutor moved to
freeze the foreign assets of Hosni
Mubarak, the first sign that the deposed
president would be held to account by
new rulers.
 CITYA.M. 22 FEBRUARY 2011 Focus on Middle East turmoil 13

KUWAIT
● More than 1,000 protesters clashed with
security forces in the province of Al-Jahra over
IRAN
● Security forces hit out at protesters in Tehran
as thousands of officers attempted to drown
Oil, gold and silver surge
on Middle East unrest
the weekend. the unrest.
● 120 demonstrators were arrested and 30 ● The streets were said to be quiet last night
required medical treatment. with no reported deaths.

Brent futures, which have climbed six days of gains, its longest winning

▲
COMMODITIES
BY STEVE DINNEEN more than $10 this year, jumped streak since August.
$3.23 a barrel or 3.2 per cent, to hit Other precious metals also rallied,
BRENT crude oil prices surged to $105.06 – their highest point since with silver touching its highest level
more than $105 a barrel for the first September 2008. in 31 years and palladium hitting a
time since 2008 yesterday on worries Gold prices rose above $1,400 an 10-year peak. Silver outperformed
that spiralling violence in Libya could ounce for the first time in nearly gold, with the number of silver
disrupt oil exports. seven weeks as demand for the pre- ounces needed to buy an ounce of
Iran Fears also mounted that protests cious metal boomed as a haven from gold dropping to around 42, a near
could spill into other oil-producing risk. US gold futures for April delivery 13-year low. Silver hit a high of $33.76
BAHRAIN countries, with Iran the next big rose $18.90 an ounce to $1,407.50. before falling back to $33.70 an ounce
Kuwait question mark. Bullion has risen 3.5 per cent over in later trading.
● Standard and Poor's lowered its long- and
short-term sovereign credit ratings for Bahrain
over concerns the political unrest of the past week
will persist.
Bahrain ● Bahrain Grand Prix organisers cancelled the 13
March opening race of the Formula One season.
Oman

Yemen
OMAN
● Mostly-peaceful protesters are demanding
political reforms and better pay.
● People gathered in Ruwi, a commercial dis-
trict in the capital, after daily prayers and
chanted "we want democracy".

YEMEN
● Shots were fired at a demonstration in the capital Sanaa on
the ninth consecutive day of unrest.
● Thousands are demanding the departure of President Ali
Abdullah Saleh, who has called for dialogue. But the coalition of
main opposition parties said there could be no dialogue with
"bullets and sticks and thuggery".
 14 News CITYA.M. 22 FEBRUARY 2011

BP inks $7bn Indian

deal with Reliance
ent on the exploration’s success. Reliance’s exploration spaces con-

▲
ENERGY
BY MARION DAKERS
BP has lined up one of the biggest-
ever foreign direct investments in
India after agreeing to pay Reliance
Industries $7.2bn (£4.4bn) to jointly
explore deepwater oil and gas
deposits in the country.
The long-term deal with Reliance,
which could see BP pour $20bn into
the project, was sealed at Downing
Street yesterday.
BP will take a 30 per cent stake in
Reliance’s oil and gas production
contracts and set up a joint venture
for selling gas in India, the firms
said, with further payments depend-
The agreement is BP’s second
cross-border exploration deal in as
many months.
BP is set to enter arbitration with
its partners in TNK-BP next month
over its £10bn share swap with
Russia’s Rosneft.
“It’s kind of similar to the Russian
deal – it’s getting access to longer
term positions which could be mate-
rial,” said Oswald Clint from Sanford
Bernstein. “But we’ve got a key risk
here. The gas price is regulated, it’s
not rising as quickly as people
expected.”
BP chief executive Bob Dudley
told reporters yesterday that
tain gas reserves of up to 15 trillion
cubic feet, adding: “The whole
world’s looking for gas, particularly
in Asia... we believe it is going to be a
very, very valuable fuel.”
Reliance’s tie-in with BP is still
subject to Indian regulatory
approval, which has proved a stick-
ing point for other energy investors
in the country including Cairn and
Vedanta.
Reliance Industries, which runs
the world’s biggest refining com-
plex, is controlled by Mukesh
Ambani, an Indian tycoon listed last
year as the world’s fourth-richest
man by Forbes magazine.

Australian cyclone NEWS | IN BRIEF

Rockhopper drills at Sea Lion

hits Rio production

Falklands oil explorer Rockhopper has
started drilling its first appraisal well in
the Sea Lion oil and gas deposit, the
Aim-listed firm said yesterday. Drilling
operations are expected to take approxi-
mately 38 days and a further announce-
ment will be made once drilling is
the situation but did not report any completed. Rockhopper abandoned a
▲

MINING
BY MARION DAKERS
GLOBAL miner Rio Tinto said yester-
day it expects cyclones affecting its
coastal operations in Western
Australia’s Pilbara region to affect
shipped tonnage figures for the first
quarter of this year.
Rio Tinto said it had maintained
operations at 14 mines in the region
but Cyclone Carlos has caused fre-
quent interruptions at its Dampier
and Cape Lambert operations.
A loaded train partially derailed at
Daimper last Thursday, hampering
transport until the rail is repaired
later this week, Rio said.
The firm added that it has brought
forward scheduled maintenance
work to get rail and shipping opera-
tions up to full speed once the weath-
er improves.
BHP Billiton, which has seven
mines nearby, said it was monitoring
disruption.
Rio Tinto plans to spend more
than $7bn (£4.3bn) on expanding
iron ore operations in the Pilbara
region over the next five years.
In a separate announcement,
Australian mining explorer Extract
Resources said it was in talks with
Rio to jointly develop its Husab
Uranium project in Nambia and the
neighbouring Rossing Uranium
mine.
Extract said it was also holding
talks with Kalahari Minerals to
explore other options.
Meanwhile, Rio’s chief executive of
diamonds and minerals Harry
Kenyon-Slaney made more than
£250,000 last week by selling shares
awarded for performance and long
service, the firm disclosed yesterday.
Rio Tinto’s London-listed shares
closed down 1.94 per cent yesterday
at £43.11.
nearby exploration well earlier this
month after deciding that using the oil
deposits would be uncommercial.
Petra upbeat on diamond sales
Petra Diamonds said it was positive for its
full-year due to strong demand for rough
diamonds as it posted in-line $24.5m
(£15.1m) profits for the six months to the
end of December yesterday. The Aim-list-
ed company said the diamond market
continued to strengthen in 2011 and that
it saw the average underlying price for its
rough diamonds rising six to eight per
cent at an auction this month.
AMEC buys Qedi oil services
Engineering group AMEC has taken over
Aberdeen-based oil and gas services
firm Qedi, it announced yesterday, in a
deal worth £33m over two years. Qedi
provides project delivery services to oil
firms in the UK, Gulf of Mexico, the
Rio Tinto chief Tom Albanese expects Cyclone Carlos to lower production Picture: GETTY Middle East and Australia.
CITYA.M. 22 FEBRUARY 2011 News 15

Shell sells $1bn African

(Left to right)
Chancellor George
Osborne, Reliance
chairman Mukesh
Ambani, BP chief
Robert Dudley and

business to JV partners
BP chairman Carl-
Henric Svanberg
during the signing
ceremony yesterday

Picture: GETTY

The deal will be phased in during of the firm’s refining capacity,

▲
ENERGY
BY MARION DAKERS
ROYAL Dutch Shell has agreed to sell
three quarters of its stake in its
African refining and distribution
business to its joint venture partners
for $1bn (£616m) as part of its efforts
to dispose of non-core assets, the oil
major said yesterday.
Shell said remaining owners Vitol
Group and Helios Investment
Partners, which have upped their
stake from 50 to 80 per cent by snap-
ping up Shell’s holding, would con-
tinue to sell Shell products in 14
African countries including Egypt,
Tunisia and Uganda.
2011 and into the first half of 2012,
with Shell retaining a 20 per cent
interest in the new joint venture
structure.
“This is a good deal for our cus-
tomers as well as for Shell,” said Shell
downstream director Mark Williams.
“We will significantly reduce our cap-
ital exposure in line with our strate-
gy to concentrate our global
downstream footprint, and continue
to provide the high quality Shell
products that our African customers
have come to trust and rely on over
many decades.”
Shell sold $7bn of non-core assets
during 2011 that took out 12 per cent
according to its last results state-
ment.
Shell is still in talks with
Australian oil and gas producer
Woodside about what it plans to do
with its remaining 24 per cent stake,
Woodside’s chief executive Don
Voelte said yesterday.
Woodside was caught off-guard
last November when Shell sold off
one-third of its stake in the company.
“The chairman and I are working
very constructively and professional-
ly with them,” Voelte told analysts
and reporters yesterday, playing
down talk of bad relations between
the two companies.

AssetCo searches
for short-term cash
needed £8.5m of extra capital to Wrack wrote to the London Fire
▲

SUPPORT SERVICES
BY MARION DAKERS
OURSOURCING group AssetCo is
planning an emergency £8m share
sale this week after delays to its refi-
nancing put further strain on cash
flow.
But the Aim-listed firm’s shares
closed up 4.2 per cent after a late-
afternoon announcement of a
£120m contract to provide fire
fighting equipment and training to
the United Arab Emirates.
The firm, which provides equip-
ment to the London Fire Brigade,
was forced to announce details of
the lucrative deal to the market
after it was leaked at a Middle
Eastern trade show.
AssetCo called off takeover talks
two weeks ago to focus on its cash
problems and said yesterday it
bridge a temporary funding gap. Commissioner to argue that
Geoff Allum, an analyst at AssetCo cannot guarantee a service-
AssetCo’s broker Arden Partners, able fleet.
told City A.M.: “We’re feeling fairly AssetCo’s Aim-listed shares
confident that this situation will be tanked 25 per cent after the news
resolved in a positive way. of the share sale, but closed up 4.2
“It’s very unfortunate that this per cent at 25p following the UAE
company that has very high visibili- announcement around half an
ty on its contracts has this short- hour before the market closed.
term funding issue, but I am sure
we will manage it.” ANALYSIS l AssetCo
Northland Capital analyst Andy 70 p 25.00
Hanson said: “While the financing 21 Feb
issues could be resolved shortly, the
longer term reputational impacts
could last some time and under- 50
mine the progress of the business.”
The Fire Brigades Union (FBU)
said in a letter printed yesterday it 30
continues to have concerns over
AssetCo’s performance.
FBU general secretary Mike 22 Nov 10 Dec 4 Jan 24 Jan 11 Feb
 16 News CITYA.M. 22 FEBRUARY 2011

London Capital delays results Juicy profit margins at Devro as

world demand for meat heats up
spot foreign exchange trading fund, have to put aside “materially less”
▲

FINANCIAL SERVICES
which collapsed in 2009. than the total figure and said it has ufacturing.

BY ALISON LOCK
SPREAD-betting firm London Capital
Group (LCG) yesterday delayed its full-
year results release, which was due
today, while it finalises the amount it
sets aside to pay claims from errors in
a fund traded on its platform.
The company, which trades as
Capital Spreads, is in discussions with
the Financial Ombudsman Service
(FOS) over repaying customers money
lost due to commission errors in a
Last week the Ombudsman ruled it
should repay £100,000 to a customer
who had invested in foreign exchange
funds traded on LCG’s system.
The fund, which had more than
115 investors, lost £7.7m in total and
if the other investors claim, LCG may
be liable to pay the whole sum. LCG
has said it will challenge this assess-
ment and says it believes its actions
did not cause the loss.
LCG said yesterday it expects to
the cash reserves to pay any charges.
“LCG is currently studying the
findings of the adjudicator...to ascer-
tain an appropriate provision to make
for any potential liability arising from
the FOS’s assessment,” it said. “It has
become necessary to delay the release
of the Company’s 2010 results for a
short time until the level of provision
is determined.”
LCG said it expects to release its
results before the end of March.
▲
MANUFACTURING
SAUSAGE-skin manufacturer Devro
reported bumper results yesterday as
it said an ever-richer world popula-
tion is opting to eat more meat.
Devro’s profit before tax and excep-
tional items grew 44 per cent in 2010
to £36.3m, up from £25.1m in 2009,
while revenue grew 7.5 per cent to
£237m. Its success was driven by an
11 per cent jump in sales of its edible
collagen products, used in food man-
Profit margins also improved to
16.1 per cent in the year from 12.4 per
cent in 2009, as it raised its prices.
Devro reduced its China sales
because it could sell them at a higher
price elsewhere – but it is moving one
of its directors to Hong Kong to for-
malise a strategy for south east Asia.
“Demand for collagen casings is
growing rapidly in China, and we are
looking carefully at strategic ways to
approach that market,” it said.

CSR snaps up JAGUAR LAND ROVER IN CHINA TALKS NEWS | IN BRIEF

Japanese deal for ProStrakan
Japanese group Kyowa Hakko Kirin has
agreed to buy Scottish drug firm

Zoran in deal ProStrakan Group for £292m, marking a

further expansion by Japan’s drug indus-
try into foreign markets. The Japanese
group will pay 130p a share in cash, a 41
per cent premium to ProStrakan’s share
price on 12 November, the last business

worth £420m day before the start of the current offer

period, the companies said yesterday.

Oxford St property swap for GPE

Property firm Great Portland Estates
(GPE) has swapped one of its properties
on London’s Oxford Street for two oth-
1.85 CSR shares for each Zoran share, ers. The company has swapped its free-
▲

TECHNOLOGY
BY HARRY BANKS
BRITISH chipmaker CSR has agreed to
buy US-listed Zoran Corporation in an
all-share deal to add imaging and
video to its wi-fi, bluetooth and GPS
location technologies.
CSR’s chief executive Joep van
Beurden said the $679m (£420m) deal
would enable CSR to target the grow-
ing number of devices that combine
imaging and video with wireless and
location services.
The combined group, whose cus-
tomers include Sony and Samsung,
will work to optimise their technolo-
gies before creating single chips with
multiple services in about 18 to 24
months, he said.
Shareholders in Zoran, which also
has operations in Israel, will receive
implying a 40 per cent premium to hold interest in 79/89 Oxford Street with
Zoran’s closing price on Friday. a private investor in return for a new
Zoran had $260m of cash, CSR said, 250-year leasehold interest at both
of which it would return up to $240m 79/89 Oxford Street and the adjoining
to shareholders in a share buyback. property, 73/77 Oxford Street. The
Van Beurden said the combined acquired properties are located adjacent
group had pro-forma revenue of to the Dean Street Crossrail station that
about $1.25bn. is currently being built.
ANALYSIS l CSR 392.00 Alibaba executives step down
460 p 21 Feb Alibaba.com has replaced its chief execu-
tive and chief operating officer after a
420 noticeable increase in fraudulent transac-
tions at the Chinese e-commerce firm’s
website. Chief executive David Wei Zhe
380
and Lee Shi-huei Elvis have resigned. The
company said that Lee and Wei were not
340 TATA Motors’ Jaguar and Land Rover unit is in talks with top Chinese sport utility vehicle involved in any of the claims, and had
maker Great Wall Motor about a potential China tie-up. Jaguar and Land Rover are among made good faith efforts to address the
a very few top-line global brands that do not have manufacturing arrangements in China, problem, but were resigning to take
22 Nov 10 Dec 4 Jan 24 Jan 11 Feb where BMW, Audi and others have already racked up stellar sales. responsibility for a “systemic breakdown.”

Merck KGaA receives a boost from China Everbright headed

displays for tablets and smartphones for $7bn HK share sale
Analysts on average had expected an ing up with Merck’s PS-VA technology. ratio announced last week.
▲

PHARMA FINANCIAL SERVICES

MERCK KGaA has raised the prospect
of faster operating profit growth than
analysts expected, defying concerns
about competition for its cutting-edge
liquid crystals for flat-panel display.
The German chemical and pharma-
ceutical firm yesterday predicted a 35
to 45 per cent increase in operating
profit for 2011.
increase of about 20 per cent to €1.4bn
(£1.18bn), seeing only modest growth
from Merck’s bestselling drugs Rebif
and Erbitux.
Analysts had feared that Merck’s
highly profitable liquid-crystals busi-
ness, the world’s largest maker of the
key chemicals for flat-panel displays,
could soon face keener competition
from its Japanese rivals who are catch-
But the unit posted earnings before
interest and tax of 54 per cent of sales
in the fourth quarter, above the 50 per
cent predicted by analysts. Profits were
boosted by demand for tablet comput-
ers, smartphones and 3D TVs, for
which PV-SA crystals are particularly
well suited. Merck’s dividend proposal
of €1.25 per share, however, fell short of
the €1.32 the market had factored in.
CHINA Everbright Bank may raise
around $7bn (£4.3bn) through a share
sale in Hong Kong just six months
after its Shanghai initial public offer-
ing (IPO), leading the way for more
fundraising by smaller banks.
Chinese banks face a tough time as
Beijing aggressively tightens liquidity,
with a rise in the reserve requirement
Those measures and the possible
slowdown in China’s economy could
encourage banks to consider raising
more money from capital markets.
Everbright Bank had already
expressed its intention to sell H-shares,
but the plan announced yesterday
caught analysts by surprise, coming
only six months after the Chinese
lender’s $3bn IPO in Shanghai.

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CITYA.M. 22 FEBRUARY 2011
Ocado hit by boss share sale
▲
RETAIL
BY JOHN DUNNE
OCADO shares took a tumble yester-
day after chief executive Tim Steiner
sold £5m worth of Ocado stock.
Steiner’s move – plus the
announcement that Waitrose was
planning to revamp its own online
delivery service – saw the stock close
down 7.75 per cent at 239p.
Waitrose, which has a ten-year con-
tract with Ocado to supply the online
retailer with goods, said it would be
targeting customers inside the M25;
Ocado’s home turf.
The John Lewis pension fund last
Diageo buys
Turkish firm
in £1.3bn deal
▲
CONSUMER
BY JOHN DUNNE
DIAGEO, the world’s biggest spirits
maker, yesterday confirmed a deal to
buy the Turkish spirits group Mey
Içki for £1.3bn, in its latest move to
attract middle class drinkers in
emerging markets.
The London-based maker of
Johnnie Walker whisky and Smirnoff
vodka is buying Turkey’s biggest spir-
its company from investment firms
TPG Capital LP and Actera.
The agreement is expected to be
completed in the second half of 2011.
It is the clear market leader in raki,
the biggest spirits category in Turkey,
and has a leading position in vodka,
while it also has an extensive nation-
wide sales and distribution network.
It had net annual sales of £300m in
2010 and earnings before interest and
tax (EBIT) of £120m, and will be earn-
ings accretive for Diageo in the first
full year of acquisition by around one
per cent.
The group said the deal will allow
it to accelerate the growth of its inter-
national spirits brands in Turkey
through Mey Içki’s distribution net-
work and customer relationships.
Diageo chief executive Paul Walsh
JJB seals £31.5m lifeline as share sale Ryanair to put targeted
saves it from administration nightmare ads on boarding cards
▲
RETAIL
BY HARRY BANKS
SPORTSWEAR retailer JJB Sports has
raised £31.5m in a share sale which
has bought it time to try to reverse its
fortunes.
The firm, in which America’s rich-
est man Bill Gates holds a stake of
about 5.5 per cent, said yesterday the
cash was raised in a firm placing and
an open offer of 630m shares at five
pence each.
Of the 315m shares in the open
week sold its stake in Ocado, also
adding to the company’s woes.
Meanwhile, a potentially lucrative
tie-up with Morrisons to deliver its
groceries seems to be off the agenda.
Ocado’s float last year saw the price
slashed before going to market but
since early wobbles the shares had
gone from strength to strength.
Steiner sold two million shares at
254p, something he always intended
to do post float, according to the com-
pany.
Ocado sceptic Clive Black at Shore
Capital said: “We continue to believe
that many folk believe Ocado is a divi-
sion of Waitrose and when the light
said: “Turkey is an attractive, growing
market for Diageo with strong GDP
growth.
“The acquisition of Mey Içki trans-
forms our existing position in this
fast growing spirits market.
“This investment represents the
continuation of our strategy to
increase Diageo’s presence in those
emerging markets, such as China and
Vietnam, which have a rapidly grow-
ing middle class.”
Earlier this month Diageo said it
was relying for growth on emerging
markets where middle class drinkers
were starting to get a taste for alco-
hol, particularly premium brands.
Sales in Western Europe have been
hit by the economic downturn, it
said.
ANALYSIS l Diageo 1,200.00
1260 p 21 Feb
1220
1180
1140
22 Nov 10 Dec 4 Jan 24 Jan 11 Feb
offer, acceptances of just 3.7 per cent
were received, with the balance of
96.3 per cent allocated to sharehold-
ers which backed JJB’s firm placing,
including its two largest investors
Harris Associates and Crystal Amber.
The capital raising was backed by
JJB’s shareholders last week.
JJB has said it requires a larger cap-
ital raising, in addition to the £31.5m,
along with creditor and investor sup-
port for a second company voluntary
arrangement (CVA) in as many years if
it is to avoid going into administra-
bulb comes on that a), it is not, that
b), it is a competitor and that
Waitrose is providing online direct,
then our aforementioned fears about
competition may come to the fore.”
However, an Ocado adviser said:
“There is room for everyone in the
market”, adding that the Waitrose
move was not a worry.
Ocado chief executive
Tim Steiner has sold £5m
in shares in the grocery
delivery retailer, which
went public recently
Diageo chief Paul Walsh is looking to emerging markets
NATALIE
BLYTH
HSBC
NATALIE Blyth was the HSBC banker
fronting the bank’s advisory team on
the deal. Working out of London her
and her team helped to nail down the
details and bring a swift conclusion to
the negotiations, leading to yesterday’s
announcement.
A team from UBS also worked on
the purchase of the Turkish business,
seen as a “good fit” for Diageo in its
tion. The firm is also in takeover talks
with thriving rival JD Sports Fashion.
ANALYSIS l JJB Sports
65 p er Ink to create customised ads on
31.50
55
21 Feb
45
22 Nov 10 Dec 4 Jan 24 Jan 11 Feb
Consumer News
Carlsberg takes hit from
Russian tax payments
▲
CONSUMER
DANISH brewer Carlsberg blamed a
sharp drop in fourth-quarter profit
on an excise duty rise in its biggest
market Russia and falling Eastern
European sales.
The world’s fourth biggest brewer
said yesterday that organic operating
profit growth declined significantly
in its key Eastern European market,
although it was strong in Northern
and Western Europe and Asia in the
fourth-quarter.
Picture: BLOOMBERG
move to grow in emerging markets.
The private equity owners of Mey
Içki, TPG Capital LP and Actera made
it known that the business could be
put up for sale around three months
ago. It is understood that the negotia-
tions went smoothly and were con-
cluded relatively quickly.
HSBC has advised on some major
deals recently, including the sale of
Gatwick for BAA.
HSBC hired Blyth from Deutsche
Bank as part of a push to strengthen
its UK and cross-border advisory busi-
ness for its European clients in the
consumer sector. She was formerly a
managing director in Deutsche Bank’s
global consumer group and head of its
European consumer team.
▲
CONSUMER
RYANAIR is teaming up with publish-
home-printed boarding passes, which
target fliers based on their travelling
routes.
The budget’s in-flight magazine
publisher, is developing a system that
will customise advertising for trav-
ellers, according to their route and
demographic data.
The ads will be printed on Ryanair
boarding cards and will target desti-
17
Despite the drop, Carlsberg’s B
shares rose by 0.8 per cent to close at
566 kroner following the below-fore-
cast figures.
Beer volumes in Eastern Europe
declined organically by nine per cent,
mainly driven by destocking in the
first quarter of 2010, and significant
price increases in Russia following a
200 per cent excise duty increase
from 1 January, 2010. That had led
distributors to build stocks at the end
of 2009, ahead of the duty increase,
the company said.
Mey Içki buyout
is a taste of
things to come
RAKI, the aniseed-flavoured
drink that Mey Içki specialises in,
is a popular Turkish aperitif.
Shareholders in Diageo will hope
the deal whets Paul Walsh’s
appetite for similar deals, which
will allow the company to move
into emerging markets for alco-
hol.
Turkey is a good place to start.
Mey Içki has the market for Raki,
Turkey’s most popular drink,
sewn up. It has an 80 per cent
share of Raki sales, equivalent to
20 per cent of the total alcoholic
beverage market.
However, Walsh is not paying
9.9 times 2010 earnings for Raki
alone. Instead he wants to use
Mey Içki’s huge distribution net-
work to capitalise on growing
demand for premium western
spirits. With a network of 650
sales staff that cover 80 per cent
of outlets, Mey Içki can help
boost Diageo’s relatively modest
sales in the region (around
£20m).
Still, Diageo will need to
expand more quickly into emerg-
ing markets if it is to stave off
stagnating sales in mature mar-
kets. North America and Europe
still account for 80 per cent of
operating profit. An aperitif is all
well and good: now Walsh needs
to tuck in.
BOTTOMLINE
Analysis by David Crow
nation and departure points.
A Ryanair spokesperson said:
“Passengers are required to reference
their boarding cards on a number of
occasions during a trip, providing
repeat exposure for advertisers.”
The revenue from the ads will be
used to keep Ryanair airfares low, the
company added.
Ryanair makes around a fifth of its
revenue from ancillary operations.
It is understood the ads will be
more expensive than web based
advertising.
 18 News CITYA.M. 22 FEBRUARY 2011

CITY MOVES | WHO’S SWITCHING JOBS Edited by Juliet Samuel in association with

Chalsys Capital Partners
Chalsys Capital Partners has appointed
General Sir Mike Jackson as a special adviser,
effective immediately. Jackson will provide
specialist advice on renewable energy invest-
ments at the investment firm focused on clean
tech, green infrastructure and natural
resources. Jackson served as the UK’s chief of
the general staff 2003-2006 after 45 years in
the British army. He is also adviser to PA
Consulting and a non-executive director of
ForceSelect.
to its hospitality and leisure team from
Barclays Corporate Barclays infrastructure and structured
The bank has moved Philip Richardson product finance team. Richardson has
more than 20 years’ experience in
banking.
He was in charge of Barclays’ health-
care strategy in infrastructure and will
now jointly lead the hospitality and
leisure team alongside Mike Saul.
Mercer
Dean Cheeseman has been appointed
as equity portfolio manager in Mercer’s
investment management business.
Based in London, he will be in charge of
discretionary manager selection for
equity mandates and will oversee more
than $2bn of client assets.
Cheeseman has 15 years’ experience
in manager selection, having previously
been head of fund of funds at Foreign
& Colonial, where he was in charge of
$1.5bn of retail assets.
He has also worked as head of devel-
oped markets at Forsyth Partners and
was an associate divisional director at
Morgan Stanley Quilter.
Merrill Lynch
Merrill Lynch Wealth Management has
appointed Alf Monsen as a financial
adviser focusing on Norwegian ultra
high net worth individuals and family
offices, based in the London office.
He will report to Adam Horowitz and
will work closely with Steen Foldberg.
Previously, he worked at ABN Amro.
PensionsFirst
The pensions risk management firm
has hired three new assistant vice
presidents: Matthew Furniss and
Robert Heathcoat, who both join from
Punter Southall, and Chris Hoffman,
who joins from the Pension Protection
Fund.
Furniss will work in the client solu-
tions group, helping clients to manage
their pension risk. Hoffman and
Heathcoat will be working in the firm’s
professional services team.

To appear in CITYMOVES please email your career

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

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

ANALYSIS l Aviva 462.20 ANALYSIS l Smith & Nephew 729.00 ANALYSIS l AstraZeneca
480 21 Feb 750 21 Feb 3,200
p p p 3,026.50
21 Feb
440 700
3,100
650
400
3,000
600
360

22 Nov 10 Dec 4 Jan 24 Jan 11 Feb 22 Nov 10 Dec 4 Jan 24 Jan 11 Feb 22 Nov 10 Dec 4 Jan 24 Jan 11 Feb

AVIVA SMITH & NEPHEW ASTRAZENECA

JP Morgan Cazenove (JPM) rates the insurer “overweight” with a 524p
target price. The broker expects continued momentum when the firm
reports its full-year earnings on 3 March and hopes Aviva will focus on
highlighting its upside risks to investors. JPM expects a 23 per cent earn-
ings rise in 2010, with a six per cent dividend hike to 25.4p. However, it
has downgraded its operating profit forecast by 2.5 per cent to £2.494bn.
Goldman Sachs rates the medical firm “buy” and has lifted its target price
by 10p to 865p. The broker has raised its earnings estimates by one to
two per cent after signs of market share gains in hip and knee replace-
ments. Goldman believes Smith & Nephew has better exposure to the
under-65s patient population than its rivals and expects above-market
growth in trauma.
Evolution Securities rates the pharma group “sell” and has dropped its tar-
get price by 200p to £26.50 after removing US sales of blood-thinning
drug Brilinta from its forecasts ahead of what it believes is a likely setback
for regulatory approval. Evo thinks the roadblock for Brilinta is especially
important for AZ, which has the most to lose from its looming patent
expiries than any other European large cap pharma stocks.

FTSE falls to two-week low as Europe suffers in

chaos in Libya unsettles traders Middle East unrest
Wall Street for Presidents Day has not But Henk Potts, equity strategist at ish ECB comments, Tammo Greetfeld,

THELONDON helped matters. Although US index

futures are still trading, it is always
Barclays Wealth, was upbeat on equi-
ties on a long-term view: “Investors THEEUROPEAN UniCredit strategist, said.
Brent crude’s surge to a 2 1/2-year

REPORT
difficult to get a feel for how senti-
ment will really be when New York
reopens,” said David Jones, chief mar-
ket strategist at IG Index.
REPORT
should be trying to detach them- high on the Libya tensions under-
selves from what still remains an pinned the share retreat, with Italian
unsettled macro environment oil and gas group ENI and Austrian
because the corporate picture still refiner OMV, among others, hit by

T
HE top share index fell yester- Banks, which added 2.3 per cent looks very bright indeed,” he said. their ties to the country.

day as tensions in oil producer
Libya sent crude prices sharply
higher and jolted investors out
of riskier assets such as banks and
miners.
The FTSE 100 index ended down
68.19 points, or 1.1 per cent, at
6,014.80, its lowest close since 4
February. It pulled back sharply after
a break through the 6,100 level to hit
a fresh 2011 intra-day peak of 6,105.77.
Volumes were light, however. The
benchmark traded 71 per cent of its
30-day average, with the US market
closed yesterday for the Presidents
Day holiday.
“There’s a feeling of risk aversion in
today’s trade. We’ve got a spike in oil
and the gold price is heading higher
as well. Oil prices, if they continue to
rally, are going to have a negative
effect on equities,” Angus Campbell,
head of sales at Capital Spreads, said.
“Investors have definitely been in a
‘risk off’ mood today. Gold has been
one of the most in favour markets,
leaving aside the obvious surge in the
price of oil. So far, the FTSE 100 index
has only been knocked back towards
last week’s lows, so it would be over-
doing it to suggest a panic by
investors. However, the closure of
last week after solid results in the sec-
tor including from Barclays, were the
standout fallers. UK banks have risen
more than seven per cent since the
start of the year.
Lloyds Banking Group and Royal
Bank of Scotland, set to report results
later in the week, shed 4 per cent and
3.9 per cent respectively.
Miners also fell as investors’ risk
appetite faded and after Beijing on
Friday had raised banks’ required
reserves by 50-basis points.
RANDGOLD SHINES
The FTSE 100 volatility index, a
barometer of investor anxiety, rose 17
per cent yesterday. The higher the
index, the lower investors’ appetite
for risky assets such as stocks.
Libyan leader Muammar Gaddafi’s
four-decade-old rule appeared in
increasing jeopardy as anti-govern-
ment protests reached the capital for
the first time, leaving dozens dead at
the hands of the security forces.
Precious metal miners Randgold
Resources and Fresnillo, rose 4 and
2.9 per cent respectively as spreading
unrest in the Middle East boosted the
gold price and burnished the metal’s
appeal as a safe haven.
Energy stocks fell, with the sector
showing signs of fatigue after strong
recent gains.
BP, down 0.3 per cent, said it had
suspended preparations for drilling
in Libya, but a spokesman added it
was years away from production
there.
BP also lined up one of the biggest
foreign direct investments in India to
date with a $7.2bn tie-up with the
country’s Reliance Industries to
explore for deepwater oil and gas.
Invensys climbed 3.7 per cent after
the Observer newspaper reported on
Sunday the British engineering firm
was being eyed as a potential takeover
target by several international rivals,
citing “city sources”.
ANALYSIS l FTSE 6,014.80
6100 p 21 Feb
5900
5700
5500
22 Nov 10 Dec 4 Jan 24 Jan
E
UROPEAN shares fell sharply yes-
terday after unrest in Libya
fuelled concern over energy sup-
plies and sapped investor risk
appetite, with Italian stocks among
the hardest hit.
A rise in the level of violence
between protestors and the govern-
ment of autocratic Libyan leader
Muammar Gaddafi over the weekend
prompted a broad-based share pull-
back across the region, although vol-
umes were light due to a US holiday.
Fresh warnings on inflation from
various European Central Bank policy-
makers added to the bearish tone,
after Eurozone private sector activity
and German sentiment data pointed
to a robust recovery but with pricing
pressures.
The FTSEurofirst 300 index of lead-
ing European shares ended down 1.3
percent at 1,171.11 points, after closing
Friday down 0.01 percent, but remains
up 4.4 percent on the year. Traded vol-
umes were 88 per cent of the 30-day
average.
The “elevated optimism that has
built up over the last few weeks” had
finally pulled back on the “trigger” of
rising tensions in Libya and elsewhere
11 Feb in the Middle East, as well as the hawk-
OMV fell 4.2 per cent on concern its
supply of oil could be affected, while
ENI, which has extensive interests in
the country and has pledged to invest
$25bn there, fell around 5.1 percent.
Italian stocks exposed to Libya were
among the top fallers across Europe,
with lenders UniCredit, UBI Banca and
Intesa SanPaolo, and industrials such
as Finmeccanica down between 2.5 per
cent and 5.8 per cent.
The country’s blue-chip FTSE MIB
index ended down 3.6 per cent, wiping
€14bn euros off its market capitalisa-
tion in what was its worst session for
eight months. While Italian banking
stocks were among the biggest fallers,
other peripheral Eurozone lenders
were also under pressure in a 2.7 per
cent weaker STOXX Europe 600 Banks
index, ahead of the publication of the
methodology for the European bank
stress test next week. Across Europe,
meanwhile, Britain's FTSE 100 closed
down 1.1 per cent, Germany’s DAX
ended down 1.4 per cent and France’s
CAC-40 closed 1.4 per cent lower.
Not every stock was hurt by the
Libya news, with gold and silver stocks
benefitting from a safe haven run-up
in the precious metals, led by a 4 per
cent gain for Randgold Resources.
 Wealth Management | Contracts for Difference
IRELAND’S
ELECTION MAY
ROCK MARKET
DAVID MORRISON
CFD MARKET STRATEGIST, GFT
N
EWS of the civil unrest across north Africa, the
Middle East and central Asia has rightly dominated
the headlines this month. However, despite
yesterday’s FTSE fall, equity investors have mostly
brushed aside any concerns they may have and continue to
buy dips whenever they occur. But it could be that political
events closer to home eventually lead to a reassessment of
stock market risk
Ireland’s general election takes place this Friday, and the
chances are that a new government will soon be at logger-
heads with the European Union leadership. If Fine Gael
(with or without Labour) succeeds in ousting the deeply
unpopular Fianna Fail, they will work to adjust the terms of
the €85bn EU/IMF rescue package. They will want to
remove the government pension fund from the deal, pay a
lower interest rate on the bailout funds and make senior
bank bondholders take haircuts. At the same time, they will
fight to maintain the country’s attractive corporate tax
rate.
This will add to the pressure on German Chancellor
Angela Merkel. Recent polls show that the majority of
Germans oppose further bailouts of weaker Eurozone mem-
bers. These findings were borne out over the weekend when
her Christian Democratic Union party lost control of
Hamburg in the first of seven state elections this year. With
Bundesbank president Axel Weber no longer a candidate
for heading up the European Central Bank (ECB), and other
EU leaders rounding on Germany and France at the recent
summit, Merkel is looking increasingly embattled.
Last week, there was an unprecedented jump in borrow-
ing from the ECB’s Marginal Lending Facility (MLF). From
€1.2bn at the beginning of the week, borrowing shot up to
€15.8bn on Wednesday, and €16bn the following day. The
MLF charges banks 1.75 per cent to borrow overnight, com-
pared to the ECB base rate of 1 per cent. Anglo Irish Bank
and the Irish Nationwide Building Society tapped the facili-
ty.
There are a number of theories circulating to explain why
these banks would want or need to move to an expensive
overnight borrowing facility from the ECB’s Main
Refinancing Operation (MRO). Some are benign and others
not so. So traders need to keep a close eye on the euro over
the coming days, with any weakness in the single currency
serving as a red flag for equities.
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19
Soft commodity traders
could be hung out to dry
But until then they
should be hoarding
rather than blessing
their cotton socks,
says Donata Huggins
G
ROUPS of older ladies like to coo
over small children’s cotton socks,
otherwise this soft commodity
didn’t use to cause too big a stir.
That is until now: in the last month the
price has broken from a three-decade
range, rocketing to $2 a pound – that is a
40 per cent increase since January. This has
got clothing retailers everywhere debating
whether they should absorb the price or
pass it on to the customer. They – like con-
tracts for difference traders – are desperate
to know how much longer this historic
price climb can last.
The chart below shows the extent of the
rally. Even the most hardened traders are
surprised. David Jones of IG Index says: “It
is something of a runaway trend at the
moment. The price looks overextended –
but you could have said that at any point
over the last few weeks, so it might just Socking the facts to speculators Picture: GETTY
keep going up.”
Michael Hewson of CMC Markets shares markets have consistently declined in these dramatic markets.
some of Jones’s thoughts: “The bad value with only the occasional spectacular Consider the last tremendous rally in
harvest, the inflationary effects of quanti- bull market followed by an enormous cotton in the 1860s. This was caused
tative easing, and a little bit of speculator crash. He warns that only highly-skilled because America (one of the biggest pro-
action have pushed the cotton price sky- traders can pick the top and bottom of ducers at the time) banned exports during
high. Much like it has across the majority its civil war, creating a worldwide cotton
of commodities.” ANALYSIS l The cotton price since 1968 famine. This sent prices soaring until other
200 USD cents/ lb
areas of the world began producing their
THE CLIMB IN CONTEXT own cotton. This caused the price to dive
Dylan Grice of Societe Generale thinks the back into the gradually-declining range
150
climb should be put into context. He says: that it has maintained until now.
“Commodity bull markets have been Bold and skilful traders might like to
much like England football managers: 100 chase the price climb and attempt to pick
they promised much, burned brightly for a a top. But if they miss it they could find
while, but ultimately crashed, breaking themselves the market equivalent of a
50
the hearts of those who believed in them long-suffering English football fan. A tragic
most.” fact, especially when you realise that only
He refers traders to the trends in com- 0 Source: tradingeconomics.com footballers can afford cotton socks in the
modity prices since 1800s: the majority of Jan 76 Jan 84 Jan 92 Jan 00 Jan 08 meantime.
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gftuk.com
EDUCATION GFT Global Markets UK Ltd. is autho-
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Services Authority. CD03UK.141.012711.
 20 Wealth Management | Contracts for Difference
Don’t let your
CFD provider
take you for an
expensive ride
Check the record of
your broker and
watch out for fees,
writes Craig Drake
T
HE tail end of last week saw reports
that the Financial Ombudsman
Service (FOS) had upheld a barrage of
complaints surrounding transaction
charges on Contracts for Difference (CFD).
With this in mind, what should you look
out for and what should you do to keep
your CFD earnings intact?
Martyn Jones of the Financial
Ombudsman Service stated that the FOS
had upheld the majority of the complaints
filed in recent months. This was usually in
cases where consumers were not made
aware by their advisers of the inherent risk
involved in CFDs or in the case where the
FOS had come to the conclusion that there
was very little chance of investors making
any kind of return from the service due to
the rapid incurring of fees
Anybody who embarks on a venture into
spread betting or contracts for difference
will be hit with the usual disclaimer that
“spread betting and CFD trading carry a
high level of risk to your capital and you
can lose more than your initial deposit”.
That said, though a big loss on a CFD posi-
tion may sting, it is one thing to see your
investment wiped out by a gamble gone
wrong, and quite another seeing your hard
earned cash wiped out by charges racking
up faster than a banker’s expense account
in Spearmint Rhino.
The complaints in question relate to dis-
cretionary or advisory CFD providers, not
execution-only services, and so it is impor-
tant to differentiate between the various
providers of CFDs. The most straightfor-
ward of those offering CFD brokering are
those who offer an execution-only service.
That is, you open an account, make your
margin payment and take your position. A
par for the course figure would be a 0.1 to
THE
TIPSTER
SILVER SET
TO SURGE
S
ILVER surged to a 30-year high on
Monday as Libyan unrest sent com-
modity prices soaring. Add this to the
market’s talk of huge demand for
immediate delivery of silver (the rumour on
Friday was that the COMEX exchange was
short large amounts of silver for March deliv-
ery). This talk of a squeeze added more than
10 per cent to the price in just three trading
days. Spread Co offers a spread on Spot
Silver of $33.46-$33.49.
Energy company Centrica is posting fig-
ures on Thursday, where profits are expected
to be 29 per cent higher. The hike in figures
CITYA.M. 22 FEBRUARY 2011
0.2 per cent commission on transactions,
and a daily funding rate of one-month
LIBOR +/- 2.5 per cent
On the other side of the fence are discre-
tionary or advisory CFD service, and it is
with these that there is a real opportunity
for fees to spiral out of control. In this
instance, you place your money in the
hand of a service that manages your con-
tract transactions on your behalf. The com-
plaints uphelf by the FOS have stemmed
from the break-neck speed at which these
services have torn through margin pay-
ments, that is, the minimum deposit you
are required to make by your CFD provider
so you can open your CFD trade.
In relation to the dismal performance of
many of the advisers under scrutiny, Tony
Cross of IG Index clarified that “the prob-
lem seems to revolve around the fact that
the ‘brokers’ who were managing funds for
other people took a cut of each commission
charged. By churning trades repeatedly,
the brokers kept getting x per cent of the
total commission charged. Naturally if you
turn positions all the time in a market
that's not moving you're not going to have
any capital gain but your account value
will be diminished.”
If you are going to go down the path of
an advisory CFD brokerage service rather
than striking out on your own, and given Don’t let charges rack best way to avoid the interest charges is to Above all, you should read what the
that you are being charged what is quite a up like an unlicensed increase your margin deposit from the bare warning says on the tin. CFDs do pose a risk
premium for the management of your taxi meter minimum required of 10 per cent up to 80 for the investor, but if you do your home-
investment, it pays to be cautious as to or 90 per cent. Should you have an initial work and take an active role in the man-
your choice of financial soothsayer. Picture: GETTY margin covering the entirety of the deal, agement of your investments you can take
Speaking to a former CFD trader, he you should be able to completely negate advantage of what can be a useful financial
advised that beyond the reading of the the financing charge. instrument without being stung.
small print for charges that one is liable to
incur, it is also important to do your home- CFD DOS AND DON’TS
work on the quality of the advisory service
offered by the broker. The fallout of 2007- ● DO BE AWARE OF ACCOUNT spreads and increase your potential ● DON’T PUT ALL OF YOUR EGGS
2008 showed just how many poor advisers CLASSIFICATION profitability. IN ONE BASKET
had been able to survive up until then The way your account is classified You should utilise CFDs in conjunc-
without too much scrutiny. When doing
your research, is he an experienced broker makes a difference to how you can ● DON’T OVER-LEVERAGE tion with your overall portfolio, not
with a proven track record or getting his trade. Although your broker may Although your broker may push you as a substitute. CFDs can be used to
tips from a man at the bar in the pub? prefer that you have an “intermedi- to over-leverage, stand your ground. hedge a long term investment. For
Furthermore, you should negotiate with ate” account, indicating a high Although leverage can increase your instance, should a stock rise on the
your broker as there is often leeway in the degree of knowledge and experi- potential for profit making, it can back of a recent factor, you can capi-
commissions and charges depending on ence, most should push for a private also leave you exposed to the talise on this and reap a profit with-
the size and frequency of your trades. The account. This will give you the best inverse. out ditching the underlying stock.
has been put down to extremely cold winters
and tighter household incomes hiking the
There was a rumour
that there was huge
price of customers’ heating bills. Looking at
the technicals, the relative strength index is
demand for silver on
Friday
above 70, suggesting a possible lasting
uptrend, and for as long as 334p remains the Picture: AP
support level, there could be further upside.
Capital CFDs quotes 348.8p-349.3p.
Shares in bookmaker William Hill continue
to climb, despite the increase in the horse
racing levy announced last week. They hit
197.1p on Monday. There is strong resistance
between 198p-202p so this might be a good
level to close any long bets or even take a
speculative short. Spread Co offers a spread
on William Hill of 196.6p-197.1p
Crude oil prices are spiralling amid the
growing uncertainty in the Middle East, with
prices lining up a challenge on the big
$100/barrel level yet again for US crude.
Concerns that oil output from Libya will be bullish forecasts for crude may have been dis- continue the gains of the last three months.
disrupted are very much at the front of missed and on demand alone their predic- It is set to announce preliminary results
everyone’s mind, but arguably any uncertain- tions look rather overdone. The IG Markets today. The CMC Markets spread is 395.88p-
ty in Saudi Arabia would prove the most sig- price on US Light Crude is $93.18-$93.24. 396.82p.
nificant tipping point. Some of the more Power company Drax will be looking to Donata Huggins
 Take a position from any position.
Our new iPhone app lets you trade on the move with full access
to live prices, Reuters news and charts. So wherever you find
inspiration, you can trade immediately. It’s another reason why
we’re the UK’s Number One CFD provider.*
CFD trading may result in losses that exceed your initial deposit.
To download, search for IG Markets in the App Store.

*Investment Trends 2010 UK Spread Betting/CFD report. Apple, the Apple logo, iPod, iPod touch, and iTunes are trademarks of Apple Inc., registered in the U.S. and other countries.
iPhone is a trademark of Apple Inc. App Store is a service mark of Apple Inc.
 22 Wealth Management CITYA.M. 22 FEBRUARY 2011

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 Lifestyle PORSCHE 911 23
CARRERA GTS
IN MOTORING
TOMORROW

FOUR PLAY:
the mercury
Another one bites the... pub
Claude Bosi, of Michelin-starred Hibiscus,
rises too high has opened a “pub”, says Timothy Barber

The Fox & Grapes further inside a nook round a corner, with
four tables, which is the place to head for
9 Camp Road, Wibkedon Common, a bit of intimacy. Being charged £2.50 for
SW19 4UN. Tel: 020 8619 1300 bread and butter – admittedly bread rolls
that are tasty and served warm – is a bit
FOOD hhhhi off in my book, but for 50p less there’s the
SERVICE hhhhi aforementioned scratchings. These are
ATMOSPHERE hhhii light, crisp, and with a faint salt-n-vinegar
quality that makes them exceedingly
Cost per person without wine: £28 moreish.
The kitchen is run by Bosi’s former sous
chef at Hibiscus, Patrick Leano, who

G
ORDON Ramsay did it, Heston’s
CITY DAD done it, Marco Pierre White did it
first, the chaps at the Ledbury have
done it and won an extra Michelin
star in the process. These days, it seems,
any top chef worth his or her stars needs a
gastropub for a side-project, as if to prove
earned his stripes under Eric Chavot in
the glory days of the Capital. His menu is
rather lovely – Anglo-French peasant food
like Irish eel with ham hock and apple
jelly, pork belly with cassoulet, and ox
tripe gratin with spuds (no thanks).
The least pubby dish is a starter of snail

R
OOM 400. I smile. I have to admire
Sandy’s fastidiousness. He wants
this deal brought in at 400 basis
points over Libor. My room reserva-
tion is his idea of a gentle reminder. 450
would have been a threat and anything on
the fifth floor and I’d be on the phone to a
decent headhunter.
I insert the electronic key, turn the han-
dle and enter the room. The lights fade up.
Everything’s in its familiar place. It feels
like I’ve stayed here before. Maybe I have.
I’ve got just two messages of signifi-
cance. Sandy wants me to call before the
client dinner. And Maria wants me to call
as soon as possible.
I know what Sandy’s up to and I’ll need
my wits about me. I know he knows what
my bonus is. And he knows I know. I also
know he won’t tell me on the phone and
will delight in stringing me along. 400k?
that they can appreciate mashed potato as
much as the next man.
Two-starred Hibiscus chef patron
Claude Bosi’s move into such humble ter-
ritory, sits on a little lane on Wimbledon
Common. The mash here comes with a
Cumberland sausage, like every pub in the
country. It also has chips that are just
about worth a visit alone – ideal outer
crunch, insides practically a puree, and
perhaps the most perfectly seasoned frites
I’ve encountered.
Before that, there’s pork scratchings –
and before those there’s the pub itself, a
picturesque mock-Tudor job with those
must-have hanging baskets and a spacious
interior.
There’s a cosier section past the bar, and
and mushroom lasagne, though it looked
pretty peasanty – a saucer-sized circle of
pasta bathing in a grey sauce, with mush-
rooms and snails beneath. It was lovely
though, a drizzling of parsley sauce and
tiny bacon lardons adding some finesse. I
took my mother for dinner and – as mums
inevitably do – she chose the salad, an
attractive beetroot, endive, blood orange
and goat cheese number that lacked a bit The Fox & Grapes is garlic sauce oozed out satisfyingly.
of dressing. not exactly like a reg- Puds were a sweet and friendly treacle
My main was silver mullet served with ular pub, but that’s and pecan tart and a dark chocolate tart
cooked apple segments and a cider sauce – not to say it’s bad. that was sinfully good. Let’s not kid our-
it was fine. Mum chose chicken kiev and it selves that this is much of a pub – the
was out of this world. A log-shaped breast main drinking area is crammed with
wrapped in crisp, gently-singed bread- tables. But it’s a good place for a relaxed
crumbs, resting on creamed leaks. The meal, and at £13.50 for most main cours-
chicken was gloriously tender, and the es, a relatively affordable one.

Prepare to join the Stepford cult of Android

No. I take a shower and consider my tactics.
I call. No answer. It’s 6 o’clock in London.
I’m certain he’s still in the office. And a
step ahead of me it seems. I draft a casual
text message. Something about 425 basis

points. And then save it. Maybe I’ll send it
later.
I call Maria. The phone rings. I turn on
the television and hit the mute button.
“Hello.”
“Maria, it’s…” I forget whether I’m David
or Mr Cashman to her. “It’s Noel’s father
here.”
“Ah, Mr David, your wife is not home
and I can’t get her on the telephone. I need
to let you know. To let one of you know.
Noel, he’s very hot.”
“Hot? Where’s…”
“Hot. Temperature. 40 degrees.”
M
WC is a phone show that
inspires the kind of rabid,
frothing fanaticism usually
reserved for Star Trek con-
ventions.
Ramping it up to fever pitch this
year was Google, which littered
almost every stall with bowls full of
pin badges promoting its mobile
operating system.
There were 86 different varia-
tions (Androids with rocket packs,
Androids walking a dog, Androids
playing instruments) and as the
Googlers churned out smoothies
named after the various iterations
of the Android operating system
(gingerbread, cupcake, honeycomb);
a veritable chain gang of grinning
Umpa-Lumpas.
As the clock neared the hour
GEEK
mark, they all began to dance,
limbs flailing, fixed smiles almost
SPEAK
tearing through their faces. One by
one, they fired themselves down
the slide, landing next to another
@steve_dinneen
model Android, like disciples hurling
themselves at the feet of Jesus. A

LOSING YOUR HAIR?

“40 degrees? Where the hell…” Wait, I
tell myself. If Maria senses matrimonial
discord she might quit. She’s temperamen-
tal and hasn’t forgiven me for her inade-
quate Christmas bonus.
“40 degrees” I repeat. “That’s, that is hot.
How is he? When did…”
“He wants to speak to you.” Silence. 40
degrees. Is that hot I ask myself? How hot is
that?
“Hello? Noel? Maria?”
“Daddy, I love you.”
“Noel, darling, I love you too. Mummy
will be home soon… Noel?”
“Mr David.”
“Ah, Maria.”
“It’s ok. I can wait until your wife comes
home.”
“Yes. Thank you.” I slump onto the bed.
Wrung out. On television there is political
unrest across the Middle East.
conference drew to a close, frenzied
geeks darted from one stand to the
next, desperate to collect them all.
To complete the set, of course,
they had to visit the Google stall –
and it wasn't difficult to spot.
Huge snot-green Androids
perched on pedestals, displaying the
latest Google-powered handsets.
On the walls, mobile phones slid
past as if on a production line.
There was a robot the size of a
room. There was even a SLIDE. It
was the geek equivalent of Willy
Wonka's chocolate factory.
Everywhere you turned young,
attractive people with Stepford
smiles – the Googlers – wore
Android T-shirts and the kind of
nervous, exaggerated grins you'd
expect to see on someone who
knows that somewhere nearby a
fat man squeezed himself down,
presumably convinced Google
would make him thin. I expected to
see a blind man searching for his
sight fly down next. The geeks ral- At The Wimpole Clinic, one
lied around as the Googlers handed of the leading hair transplant
out limited edition scale models of centres in Europe, Dr. Michael
the Android. May F.R.C.S. has pioneered a
Apple is often likened to a cult – permanent solution to male
its followers flocking to the sheer pattern baldness using
white and aluminium of its stores, advanced follicular unit
hanging on the every word of its hair transplant techniques.
messianic leader Steve Jobs. For your FREE consultation
But Google was promoting a dif- with Dr May call today on:
ferent sort of religion, a technologi-
cal evangelism. And as it continues
020 7935 1861
w w w.wimpolec linic.c om
its inexorable rise, soon we’ll all be
members of the church.
As the show drew to a close, a
geek spotted me with the two
THE WIMPOLE CLINIC
badges I had collected. He shot me Hannah House, 1 1-16 Manc hester Stre et, London W1U 4DJ
a look of pity one would give a

I hear Noel’s four tiny words, “Daddy, I
love you.” Life is tough sometimes but I
don’t know how else to live. Continued
next week.
IT CAN BE RESTORED!
gun is trained directly at their recently trampled puppy, reached
crotch, the trigger ready to be into his pocket and handed me a
pulled at the first facial slip. More badge. Creepy? Not at all.
 24 Lifestyle | Restaurant Review
Brewing up a storm
Zoe Strimpel meets
two coffee evangelists
dedicated to shaking
up the bean scene
L
IKE so many people, I take my food
and wine seriously. I won’t drink
unnaturally pink California zinfan-
dels and I turn my nose up at Jacob’s
Creek. Wine-tasting courses and many
meals in good restaurants have left their
imprint. I care about quality – I’m a snob,
and I’m not afraid to show it.
Why then is my appreciation of coffee
limited to high street chains and my
demands satisfied by a bitter Starbucks
concoctions of milk and over-cooked cof-
fee?
I’ve had flickers of coffee awakening
before – who hasn’t basked in the wonder-
ful aroma of an after-dinner espresso at a
good restaurant? But nothing has ever
stuck and the next day, there I am back in
the Starbucks queue.
It wasn’t until I went to meet Rob
Robinson and Fabio Ferreira, in charge of
coffee at the wonderful Notes and Music
coffee shop and music store next to the
ENO, that my awakening finally took hold.
Robinson, who studied politics and eco-
nomics at Oxford before setting up a coffee
stand in St James’s Park and Ferreira, who
was born into a coffee family in Brazil and
ran a coffee shop in Sao Paulo, are on a
mission. Thanks to their efforts, Notes and
Music is one of a growing number of inde-
pendent cafes that are taking their brews
very seriously indeed. As seriously as the
new breed of biodynamic wine bars are
taking theirs. Or more. “There is a growing
community of coffee nuts in London now.
It’s happened with wine, and now coffee’s
moment has arrived,” says Robinson. “It’s
such a rich area – you can never stop learn-
ing about coffee.”
As you walk into Notes, light and airy
but with a bohemian intensity (operas play
on a TV screen between shelves of music),
the first thing you see is the La Marzocco
Strada coffee machine – hand-crafted in
OUT OF OFFICE: GAUCHO POLO
ZOE STRIMPEL on the sporting event of the week
I
F the prospect of the finest horses
and horsemen going head to head in
a series of exciting polo matches
sounds like a scorching way to spend
an evning, look no further than the
Gaucho Polo at the 02 Centre this
Thursday.
Matches will include EFG’s England v
Camino Real’s Argentina for the ultimate
grudge match between two iconic polo
nations. There will also be the super-excit-
ing Ambassadors Cup between South
Africa and City A.M.-sponsored
Scotland, plus the exciting Varsity
match between Oxford and
Cambridge and also a special
celebrity match to raise funds
for charity.
The night promises to be a
fine example of arena polo.
Played on a reduced size pitch
and with only three players
per side rather than the usual
four, arena polo gives rise to a
fast-paced and exciting game
that is easier to follow than the
traditional format.
Arena polo is also ideal for those
looking to get in on the action more
intensely: the compact indoor pitch and
intimate atmsophere guarantee this.
First up is the Oxford v Cambridge
match at 5pm. At 6:15pm, Scotland and
Coffee nuts Rob Florence. This machine is for espresso:
Robinson and Fabio nine bars of pressure are standard, but the
Ferreira at the Brew Strada allows baristas to tweak the pres-
Bar at Notes and sure at which the water is forced through
Music in Covent the puck of coffee.
Garden.
THE BEAUTY OF FILTER
Picture: But the big thing at Notes – and the focus
Micha Theiner of Ferreira and Robinson’s fervour – is the
/City A.M. Brew Bar. The Brew Bar is all about filter
coffee – which, according to aficionados, is
Nacho Figueras, star South Africa go head to head. The culmi-
of the Argentine team. nation of the evening is the Trophy game
He is also the face of at 8pm, between EFG’s England and their
Ralph Lauren’s Black old adversary Camino Real’s Argentina.
Label. This is the big one to watch and features
polo’s biggest stars including Nacho
Figueras, known as the Brad Pitt of the
sport.
Prize giving will take place at 8.45pm.
But between games there will be a host of
great entertainment, including a short
but highly entertaining celebrity polo
match at 7.30pm. Mike Bushell, BBC
News Presenter, Liz Mclarnon of the
Atomic Kittens and Kenny Logan,
of Scottish Rugby International,
will participate. Spectators will
also have the chance to have a
go at playing polo themselves.
We recommend going all
out. There are still tickets
available for the Club Gaucho
Experience (£195 per person).
This includes champagne
reception at 2pm at Gaucho,
five course lunch with matching
wines, VIP seats in the arena,
access to the VIP champagne lounge
and complimentary access to the polo
afterparty. www.o2polo.com. For general
admission, call Ticketmaster on 0844 248 5022.
To book the Experience package, email lulie.mur-
ray@gauchorestaurants.com.
where good coffee really shines (rather
than espresso). “People started talking
about filter coffee three years ago,” says
Robinson. “But last year, Square Mile roast-
ery opened up a pop-up filter coffee bar for
three months and it was incredibly suc-
cessful. There was no sugar or milk and
cups of it cost between £2-£4. We thought,
if they can do it, so can we.”
I’ve now had two carafes of filter coffee
from the brew bar (it’s served, at around
£5 a pop, in an elegant glass jug) and was
startled by the shades of taste and smell
both times. The technique brings out lay-
ers of acid, fruits, nuts, tobacco, chocolate
– all the things one normally associates
with wine.
Here’s how it works. The brew bar regu-
larly rotates a menu of filter coffees. Each
week, three different single-origin coffees
are chosen from roasteries across the UK.
Each coffee is matched with the brewing
method deemed best for bringing out its
flavour. Each morning, the barista tastes
the three coffees so the grinder settings
can be adjusted for the best flavours.
As the coffees age over the course of the
week the optimum grind alters slightly,
as dosage, water volume and pouring
times are kept constant. The baristas use
a refractometer, which works by forcing
light through a sample of the brew to
measure the total dissolved solids (TDS)
of coffee in the water – simply put, how
much coffee is suspended in the water.
Then they use an iPad app to translate
the reading from the refractometer into
a measure of how well extracted the cof-
fee is.
As for the brewing itself, the options
are paper filter, cloth filter (allows the
coffee oils to pass into the cup) or the
centuries-old syphon process, which uses
a vacuum to suck the coffee through at
the right temperature.
I tried cloth and syphon and both
resulted in the smoothest, fruitiest brew
I’ve ever tried. Wine, move over. Coffee
truly is the next connoisseur’s drink of
choice.
Notes and Music, 31 St Martin’s Lane, WC2N
4ER. Tel: 020 7240 0424.
CITYA.M. 22 FEBRUARY 2011
Cocktails in
the capital
get still better
Tim Badham
Going
Out
T
HE bar scene in London has been on the
up of late and two very different new
offerings are continuing the trend. The
London Cocktail Club had decamped
and moved to Goodge Street (and it has
indeed travelled well). This modern take on an
old fashioned gin palace is tucked away down
an iron staircase with just a hanging sign to
mark the spot. Entering the bar you know
you’re in a haven of cool and kitch but it’s the
welcoming staff that make the difference with
most being top-rate mixologists too. With the
emphasis on making you feel like a local, the
noble aim is that you’ll become one. With that
in mind, the top notch cocktails are very rea-
sonably priced, from “contemporaries” like
Porn Star martini to “gastro mixology” such as
the Squid Ink Sour. The neighbourhood Mad
Men are already making it their home.
Fun British pick-n-mix canapés with a dis-
tinct French twist are no more than you
would expect from founders JJ Goodman and
James Hopkins, who won Raymond Blanc’s
“The Restaurant”, especially as the man him-
self is also involved with the venture. The
decor is a funky mish mash of classical
Victorian with quirky touches and there is a
definite speakeasy vibe.
But the biggest launch of this celebrity-
tastic few weeks (Baftas, Brits, Elle Style and
Fashion week) is the much anticipated W
Hotel (pictured below). This global phenome-
na has spawned a wyld child. Launched with
Harvey Weinstein’s BAFTA after-party, Wyld
takes glitterati to a new level with the
biggest mirror-ball you are ever likely to see
in the centre of this seductive first floor night
club concept. The luxurious ruby glow beck-
ons you in only if you are on the right list,
ensuring the intimate space should remain a
place see and be seen. And be seen you can
too, by the Leicester Square throng below.
But don’t worry, with a Wardour Street
entrance you can avoid the crowd. In true W
style they’ve cherry picked the best staff
from across town and just to make sure
they’ve enlisted the Ignite group of Boujis
fame too. This is a slick operation. The bar’s
specialty is rare, vintage tequilas and the sig-
nature Wyld Shot should sustain the rock ‘n’
roll decadence until dawn. If you don’t quite
make the cut, the W Lounge next door has
style and views enough to spare. Tim Badham
is the founder of Innerplace, London’s leading
providers of VIP entertainment, including film
premieres, fashion shows, launch parties and
members club access. www.innerplace.co.uk
CITYA.M. 22 FEBRUARY 2011 Lifestyle | TV& Games 25

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
7pm The One Show
7.30pm EastEnders: BBC News
8pm Holby City: Sahira is
forced to question her loyalties.
9pm CHOICE Silk
10pm BBC News
10.25pm Regional News
10.35pm Who Do
You Think You Are?
11.20pm FILM 25th Hour:
Drama, starring Edward Norton
2002; Weatherview
1.30am Sign Zone: See Hear 2am
Sign Zone: Human Planet 3am Sign
Zone: The Bear Family and Me 4am
Sign Zone: Save My Holiday
4.45am-6am BBC News
6pm Eggheads
6.30pm My Life in Books
7pm CHOICE Too Fast to Be a
Woman? The Story of Caster
Semenya: The debate that
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7.50pm Coast
8pm A Farmer’s Life for
Me: The six remaining couples
sell seasonal produce at a
farmers’ market.
9pm Natural World
10pm ICC Cricket
World Cup Highlights
10.30pm Newsnight: Weather
11.20pm Mad Men:
12.10am BBC News
4am-6am BBC Learning Zone
6pm London Tonight 6pm The Simpsons 6pm Home and Away
6.30pm ITV News 6.30pm Hollyoaks 6.25pm OK! TV
7pm Emmerdale 7pm Channel 4 News 7pm Five News at 7
7.30pm Grimefighters 7.55pm 4thought.tv 7.30pm Extraordinary Dogs:
8pm Lion Country 8pm Gok’s Clothes Roadshow Five News Update
9pm Taggart: Newly promoted 9pm CHOICE Heston’s 8pm Stansted: The Inside
DI Reid leads the investigation Mission Impossible Story: A suspicious individual is
into a busker’s murder. 10pm Shameless spotted at the edge of the
Last in the series. 11.05pm The Big C airfield; Five News at 9
10pm ITV News at Ten 11.45pm Music on 4: 9pm CSI: Crime Scene
10.30pm London News Countdown to the NME Investigation SILK
10.35pm FILM Demolition Awards 2011 10pm CSI: Miami BBC1, 9PM
Man: Sci-fi comedy 12.15am UK & Ireland Poker Tour: New series. Legal drama following the
Action from London. 1.15am Bull 10.55pm CSI: NY
thriller, starring Sylvester 11.55pm Law & Order lives of two barristers on the front line
Run 1.40am FIS World
Stallone. 1993. Snowboarding Championships 12.50am SuperCasino of the judicial system. Starring Maxine
12.40am The Zone; 2.10am Athletics 3.30am KOTV 4.05am Divine Designs 4.30am Peake and Rupert Penry-Jones.
ITV News Headlines Boxing Weekly 4am Basketball Great Scientists 4.55am Animal
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Copyright Puzzle Press Ltd, www.puzzlepress.co.uk

QUICK CROSSWORD
   

SUDOKU KAKURO
14 25 6 35 9 29 12 
20 17 10
8  
22 8
Place the numbers from 1 to 9 in each empty cell so that each 17    
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 11 18
12 15
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 6 21
 
above or to the left of it. 34
You can only use the digits 1-9 23 12
  and you must not use the
10 39 13
10 18    
same digit twice in a block. 16
     The same digit may occur 11 24  
28 13 16
  more than once in a row or
column, but it must be in a
29
17
10

15 30
   separate block.
4 11 
5 37
  16 3 7


   ACROSS DOWN
1 Cursory (6) 1 Monument built to
 
     WORDWHEEL S D
6
7
Public speaker (6)
Cloud bearing rain (6)
honour soldiers (8)
2 Final
aggregate (3,5)
Using only the letters in the Wordwheel, you have 9 Goddess of
  ten minutes to find as many words as possible,
N C retribution (7) 3 Misplace (4)
13 4 Gateaux (5)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters N Implements used in the
practice of a vocation (5) 5 Motion picture (5)

LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
A R 14
15
Daisy-like flower (5)
Clear (5)
8 Not famous or
acclaimed (6)
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
T E 18 Force (5) 10 Dock (6)
19 Non-metallic element (7) 11 State of inactivity
QUICK CROSSWORD 8 5 8 3 4 8 5 following an
B R I S K S H A R D
6 3 2 4 1 2 7 1 SUDOKU         
21 Ancient country and
place of pilgrimage in
interruption (8)
9 3 4 8 7 9 6
A W I C K N U          south-west Asia on the 12 Country formerly
C L E A N L I N E S S 6 1 1 2 9 5
9 7 8 2 2 1 3 6
         Mediterranean (6) known as
K M I M K
         Ceylon (3,5)
S O D I U M P O N Y 8 4 6 6 8 9
        
22 Point in the sky directly
A
F I V E
A
C
N
A R E E R
5 2 3
1
1 9 3 4
2 9 8 1
8
7
WORDWHEEL          above the observer (6) 16 Crippled (5)
17 Order of Greek
A I T U A          23 Swelling from excessive
C O N T A I N M E N T
9 7 5 4 8 1 5 The nine-letter words were architecture (5)
E C S C A B E 8 5 9 5 1 3 2 4          accumulation of fluid (6)
T H I N K Y A W N S 3 1 2 7 9 6 5
EVAPORITE and OPERATIVE          20 Reverberate (4)
 26 Sport
FOOTBALL ROUND-UP
Four-match ban for
Milan skipper Gattuso
AC MILAN captain Gennaro Gattuso
has been banned for an additional
four matches by Uefa for his headbutt
on Tottenham coach Joe Jordan dur-
ing last week’s Champions League
defeat at the San Siro.
Meanwhile, Spurs have suffered a
blow ahead of tonight’s Premier
League trip to Blackpool after for-
ward Rafael van der Vaart was ruled
out with a calf injury. The Dutch star
is expected to be out for 10 days.
Gareth Bale is also unavailable but
Spurs boss Harry Redknapp is confi-
dent the Welsh winger will be fit for
the return leg against Milan in a fort-
night’s time.
Plymouth handed a
10 point deduction
LEAGUE ONE strugglers Plymouth
Argyle have incurred a 10 point
deduction after they issued a ‘Notice
of Intention’ to appoint an adminis-
trator.
The move leaves Argyle, who have
been the subject of three winding-up
petitions from HM Revenue &
Customs this season, bottom of
League One five points adrift of
Dagenham & Redbridge in 23rd posi-
tion.
The Devon club’s next tax bill, due
today, is estimated to be £300,000.
We can still
make history,
says Ancelotti
FC COPENHAGEN
CHELSEA
▲
FOOTBALL
BY JAMES GOLDMAN
CHELSEA manager Carlo Ancelotti
has defiantly claimed this could yet
turn out to be the best season in the
club’s history.
The Blues renew their assault on
the Champions League in
Copenhagen tonight with Ancelotti
hoping that a positive result will ease
the mounting pressure on his shoul-
ders.
Chelsea’s domestic objective is now
restricted to securing fourth place fol-
lowing Saturday’s FA Cup defeat
against Everton, but Ancelotti is con-
fident entry to Europe’s premier com-
petition can be cemented by winning
the trophy at Wembley in May.
Ancelotti was in a similar predica-
CITYA.M. 22 FEBRUARY 2011
ment four years ago when, as manag-
er of AC Milan, he won the
Champions League after narrowly
clinching fourth place in Serie A.
“The season is not finished,” said
Ancelotti. “A lot of times, I’ve been
able to manage this moment.
“I want to remind you in 2007 it
was the same situation and the
Italian journalists know this.
“Maybe it could be the best season
that we can ever have a memory of.
Maybe it could be the worst. I don’t
know. But wait, wait. Chelsea has not
died. It’s still alive.”
The Champions League has eluded
and frustrated the club’s owner
Roman Abramovich since he bought
the Blues in 2003 and Ancelotti, like
his boss, holds the competition in
high esteem.
“The Champions League is the Ancelotti won the
most important competition. We’re Champions League in
involved this season more compared 2007 with AC Milan
with the other competitions,” he said.
“To be under pressure, this means Picture: PA
to be focused and try to do our best in
this competition, to try to win.”
CITYA.M. 22 FEBRUARY 2011 Sport 27

KNOW YOUR ENEMY:

FC COPENHAGEN Haskell eyes battle Results
FOOTBALL
=FFK98CC

after war of words

FORM
Top of the league by 19 points and
the first Danish side to reach the
Champions League last 16, but are
ring-rusty as haven’t played a com-
petitive match for 11 weeks.
MANAGER
A former Wimbledon midfielder
and soon-to-be Norway boss, Stale
Solbakken is just 42 but has already
won the Danish league four times.
DANGER MEN
Brazilian striker Cesar Santin forms a handy
partnership with Dame N’Doye and has hit 13
goals in 16 league games, and six in his last six
Chelsea old boy Jesper Gronkjaer still poses a
threat with his trickery and crosses down the
left flank – and incredibly is still only 33
RBS
6 NATIONS
BY FRANK DALLERES
ENGLAND flanker James Haskell has
hit back at France coach Marc
Lievremont’s jibes, insisting they will
not back down when Les Bleus visit
Twickenham for a colossal RBS 6
Nations contest on Saturday.
Lievremont lit the touchpaper
ahead of a match already being
billed as a championship decider by
saying all the other five countries
in the competition were
united in their hatred of
the English.
The comments are
sure to add further
spice to an already
combustible occasion,
and Haskell, who
knows all about the
French from playing
his club rugby at
Stade Francais, is
expecting a no-holds-
barred encounter.
“A French team com-
ing to Twickenham to
right a few wrongs will be a
very emotional occasion.
But what you can’t do is back off,
they’re going to be up in your face,
it’s going to be a fantastic battle and
something we’ll thrive on,” said
Haskell.
“If you allow them to keep their
heads up and play and get that emo-
tional side, that a lot of French sides
have, up then it’s very difficult to
play. What you’ve got to do is get in
there straight from the start and
make sure that you make the day as
difficult as possible and then
you can start imposing your
own game.”
England boss Martin Johnson
has recalled captain Lewis
Moody to the squad to
face France after he
returned from a knee
injury in Bath’s win
over Northampton at
the weekend.
Harlequins forward
Chris Robshaw and
London Irish prop
Alex Corbisiero have
been called up but
Leicester star Tom
Croft misses out,
while Wasps’
flanker Joe Worsley
is unavailable due
to injury.
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email sport@cityam.com

Dutch star Kervezee eager

to catch England’s attention
last term and is hoping to use this
▲

CRICKET
BY JAMES GOLDMAN
HOLLAND batsman Alexei Kervezee
hopes to inspire his country to a
famous World Cup victory over
England today and in the
process enhance his dream
of ultimately represent-
ing the Three Lions.
The 21-year-old (inset),
who has already been
compared to Graeme
Hick, and not just
because of his
Worcestershire ties,
becomes eligible to repre-
sent England later this year.
The South African-born right-
hander amassed 1,190 runs at 44.07
for his county in the second division
tournament as a springboard to
greater things.
He said: “I qualify for England in
November, I think. Going on a tour
next winter – be it the full side
or the Lions – is an achiev-
able ambition.
“I’ve wanted to play
for England since the
very beginning, so if I
can build on last sea-
son, hopefully I can
catch the eye of the
selectors.
“The game against
England, there can’t be
any better way of catching
the eye of the selectors than by
doing well against them. This is a
massive opportunity for us all.”

SPORT | IN BRIEF
Australia start defence with a win
CRICKET: Australia began their defence
of the World Cup with a commanding 91-
run win over Zimbabwe in Ahmedabad.
Zimbabwe’s spinners restricted their
opponents to 262-6, Shane Watson top-
scoring with 72 from 92 balls. Michael
Clarke added an unbeaten 58 before
Australia’s bowlers settled the game
with Mitchell Johnson taking 4-19.
Afridi signs for Hampshire
CRICKET: Hampshire have signed
Pakistan’s Shahid Afridi for their Friends
Provident t20 campaign. The skipper of
the Pakistan limited overs side becomes
Hampshire’s second overseas signing fol-
lowing the capture of South Africa spin-
ner Imran Tahir. “I hope very much to
play a big part in the club’s success in
2011,” said the 30-year-old.
Bowe and Trimble back for Ireland
RUGBY UNION: Tommy Bowe and
Andrew Trimble are among eight addi-
tions to the Ireland 22 which lost to
France for Sunday’s Six Nations game
against Scotland at Murrayfield. Lions
star Bowe has recovered from a knee
injury but flanker Stephen Ferris will miss
out. Scotland, meanwhile, have suffered
a treble injury blow with centre Joe
Ansbro, full-back Hugo Southwell and his
back-up, Rory Lamont, all ruled out.
 Sport
28
BAHRAIN
GP AXED
l First race of season off as Gulf state pulls out
l Safety fears amid political protests in Bahrain
▲
FORMULA ONE
BY FRANK DALLERES
PLANS for the 2011 season have
been plunged into chaos after
Bahrain pulled out of staging the
curtain-raising grand prix less than
three weeks before the race.
The Gulf kingdom’s crown prince
informed Formula One chief Bernie
Ecclestone of his decision yesterday
afternoon, bringing to an end days
of speculation following civil unrest
that last week claimed six lives.
Bahrain had been due to stage
the race on 13 March; instead the
new season will begin with the
Australian Grand Prix in Melbourne
on 27 March. A rescheduled date in
Bahrain later this year has not been
ruled out but remained mired in
uncertainty last night.
“At the present time the coun-
try’s entire attention is focused on
building a new national dialogue
for Bahrain,” said Crown Prince
Salman bin Hamad Al Khalifa.
“We felt it was important for the
country to focus on immediate
issues of national interest and leave
the hosting of Bahrain’s Formula
One race to a later date.”
Bahrain has been an annual stop
Hitzlsperger had missed the whole season
with a groin injury Picture: GETTY
on the F1 tour since 2004 and the
sport’s commercial rights-holder
Bernie Ecclestone hinted it would
return.
“It is sad that Bahrain has had to
withdraw from the race. We wish
the whole nation well as they begin
to heal their country,” he said. “The
hospitality and warmth of the peo-
ple of Bahrain is a hallmark of the
race there, as anyone who has been
at a Bahrain Grand Prix will testify.
We look forward to being back in
Bahrain soon.”
Motorsport’s governing body the
FIA welcomed the decision and lent
weight to predictions that Bahrain
will be incorporated into the season
at a later date by calling the move a
“postponement”, rather than a can-
cellation. Teams were set to ship
their cars to Bahrain this week for
the final pre-season testing session,
but that will take place in Barcelona
instead, where teams have been test-
ing over the weekend.
Red Bull driver Mark Webber,
who will instead start the season on
home soil, said: “It would have been
nice to go to Bahrain, but we have to
wait a bit longer to have our first
race and that just happens to be my
home race.”
Der Hammer finally announces himself
at Upton Park as Burnley are thrashed
WEST HAM 5 Burnely, with Hitzlsperger opening
BURNLEY 1 The former Aston Villa midfielder
▲
FOOTBALL
BY JAMES GOLDMAN
WEST HAM manager Avram Grant
believes the return to fitness of
Thomas Hitzlsperger could be the
turning point in the club’s season.
The Premier League strugglers
cruised into the last eight of the FA
“THIS COULD STILL BE CHELSEA’S
GREATEST SEASON OF ALL TIME”
ANCELOTTI HOPING FOR EURO
SALVATION IN DENMARK: P26
Bahrain has been a
fixture on the F1 cal-
endar since 2004
Picture: PA
Cup following an easy win over
the scoring via a trademark thunder-
bolt on his debut for the club.
represented the Hammers’ headline
summer signing when he arrived
from Lazio, but a groin injury kept
him on the sidelines until last night.
“It’s very important that he is back,
he can score from everywhere, he is
an important player to us and we
were waiting for him,” said Grant.
Hitzlsperger, making his first
appearance in English football for
nearly six years, added: “It all came
together on this special day for me. I
thought the fans must have forgotten
about me but no they didn’t, they
were fantastic.”
The 28-year-old struck the only goal
of an evenly contested first-half from
25-yards in the 23rd minute, and the
game was effectively over when
Carlton Cole struck twice in two min-
utes just after the break.
Winston Reid powered home the
fourth with his head, and although
Jay Rodriguez plundered a comical
consolation, West Ham had the final
say of the night when Freddie Sears
pounced for a well taken fifth.
CITYA.M. 22 FEBRUARY 2011
NEED TO KNOW
| BAHRAIN Q&A
Q. WHY HAS THE
BAHRAIN GRAND
PRIX BEEN CALLED OFF AT SUCH
SHORT NOTICE?
A. Organisers were forced to act
amid growing fears for the
safety of the event, caused by polit-
ical uncertainty in the country.
Protesters, six of whom were killed
last week, are unhappy at the
monarchy’s grip on power and had
threatened to target the grand prix
on 13 March.
Q. COULD THE RACE BE MOVED
TO ANOTHER COUNTRY?
A. No, as there isn’t enough time
to organise the logistics of
such a huge event at short notice.
Instead the season will begin two
weeks later than planned in
Australia.
Q. WILL THE BAHRAIN RACE BE
RESCHEDULED?
A. It is not known at this stage,
but tellingly it has not been
ruled out. Bahrain is still a popular
race on the calendar but much will
depend on how political matters
unfold.
Meanwhile, club captain Matthew
Upson denied reports he will be out
for the rest of the season with an
Achilles injury and hopes to be back
in training by the end of this week.
SIXTH ROUND DRAW | FA CUP
Stoke City v West Ham
Man City or Aston Villa v Everton or Reading
Birmingham v Bolton
Manchester United v Leyton Orient or Arsenal
Ties to be played on 12 and 13 March