STEVE JOBS:
A LIFE AT
APPLE’S CORE
PAGES 24-25
Issue 1,484 Friday 7 October 2011
EXCLUSIVE: MOODY’S SLASHES RATINGS OF UK BANKS Moody’s has decided to reduce the
▲
BANKING
BY DAVID HELLIER
THE FRAGILE UK banking sector will
be further knocked today by a worse
than expected downgrade by
Moody’s, the credit rating agency.
EASY MONEY
l Bank stuns markets
with £75bn more QE
Bank of England governor Sir Mervyn King, European Central Bank president Jean-Claude Trichet and UK chancellor George Osborne are increasing money supply in a bid to restore economic growth
▲
UK ECONOMY
BY TIM WALLACE, DAVID CROW
AND JULIAN HARRIS
SIR Mervyn King, the Bank of
England governor, stunned markets
by turning Britain’s electronic print-
ing presses back on yesterday, as he
announced a second round of quan-
titative easing (QE) worth £75bn.
Sir Mervyn said last night: “This is
the most serious financial crisis at
least since the 1930s, if not ever...The
world has changed,” as he launched
the latest round of stimulus.
An extra £75bn of assets will be
purchased with newly created
money over the next four months,
starting with £1.7bn on Monday. The
Bank will buy gilts with residual
maturities of over three years.
Loosening monetary policy is nec-
FTSE 100 ▲5,291.26 +189.09 DOW ▲11,123.33 +183.38 NASDAQ ▲2,506.82 +46.31 £/$ 1.54 unc £/¤ ▼1.15 -0.01 ¤/$ ▲1.34 +0.01
BUSINESS WITH PERSONALITY
ratings of 14 UK banks and building
societies by up to three notches, to
reflect the removal of implicit govern-
ment support in the event of possible
failure.
The markets have been anticipat-
l ECB to boost liquidity l Osborne poised to give
with €40bn bond buy-up credit to private firms
essary because “the impact of the
rest of the world on the UK does
threaten our recovery”, Sir Mervyn
said. “We have taken pre-emptive
action to try to prevent the slow-
down from becoming too serious.”
He particularly pointed to the
weak Eurozone economy as a factor
dragging down UK growth.
The Bank’s monetary policy com-
mittee has conceded that inflation is
too high, but adopted the inflation-
ary policy nonetheless as it believes
prices are increasing due to “tempo-
rary” factors such as the “increase in
VAT in January and the impact of
higher energy and import prices”.
Sterling fell sharply on the
announcement, worrying some ana-
lysts. “With no obvious shortage of
money in the economy, ‘excess’ liq-
uidity created by QE2 should support
www.cityam.com
ing a downgrade but most expected a
two-notch deduction.
The more severe downgrade means
that the ratings of around four of the
UK’s building societies will now be
down to junk status. That could leave
them facing higher borrowing costs
asset prices and push down the
exchange rate,” said Henderson’s
Simon Ward. “A lower exchange rate
would damage growth prospects by
boosting import prices and sustain-
ing a high-inflation squeeze on hard-
pressed consumers.”
However, chancellor George
Osborne agreed with the MPC that
further QE would help to keep infla-
tion on target in the medium term.
“The evidence shows that QE will
help keep interest rates down and
boost demand and that will be a help
for British families,” he said.
Osborne said he was exploring
“further policy options” to improve
the “flow of credit to some parts of
the real economy”, in reference to
the so-called “credit easing” scheme
announced at the Conservative party
conference earlier this week.
at a time when trading conditions are
already difficult.
Some of the firms have been given
a notch upwards because of a
reassessment of their own risk and
liquidity profile. This means that
those institutions will only suffer a
City A.M. understands the Treasury
is drawing up plans to extend the
scheme from small and medium-
sized enterprises to larger firms and
even banks. It will sell tens of billions
of pounds worth of new gilts and use
the proceeds to buy commercial
paper.
As yields are already far lower than
in March 2009 when QE was first
launched, economists warned that
very large amounts of asset purchas-
es may be needed to have a signifi-
cant impact. Citi’s Michael Saunders
put the figure at £500bn.
The MPC also voted to hold inter-
est rates at 0.5 per cent for the 31st
consecutive month.
Central banks throughout the
West appear poised for a period of
stimulus. The European Central
Bank yesterday announced a new
FREE
two-notch downgrade, in line with
market expectations.
The news will be a further blow to
the sector, with fears growing that
government-backed RBS might need
another recapitalisation.
Moody’s declined to comment.
Pictures: Reuters
covered-bond purchase programme
that will see it loan €40bn (£34.5bn)
over the next year from November.
Eurozone interest rates were held
steady despite inflationary pressures.
Extra liquidity should help trou-
bled Eurozone banks pay their bills –
such as Dexia, which passed the
stress tests earlier this year but has
had to be propped up by the French
and Belgian governments because it
has lost investors’ confidence.
Across the pond, the doves on Ben
Bernanke’s Federal Reserve appear to
be in the ascendancy, despite opposi-
tion to more stimulus from three
hawks. “We believe that the Fed will
also launch QE3 within the next six
months,” commented Ignis Asset
Management’s chief economist
Stuart Thomson yesterday.
ALLISTER HEATH: P2, MORE: P2-3
Certified Distribution
01/08/11 till 28/08/11 is 92,745
 2 News
Why Mervyn King
is wrong about QE
EDITOR’S LETTER
ALLISTER HEATH
IT was strange for Mervyn King to
claim yesterday that the financial cri-
sis may yet turn out to be worse than
the Great Depression. The world faces
monumental challenges. But the mass
unemployment, protectionism and
rise of fascism of the 1930s has so far
been avoided and many emerging
markets are still buoyant. Over-using
apocalyptic language isn’t the clever-
est thing a central banker can do. But
King’s real mistake was to back anoth-
er £75bn in quantitative easing (QE).
The rationale for QE is that it
increases the money supply (new liq-
uidity is created by the Bank, in return
for it buying gilts) that can be spent on
goods, services, and assets. In an econ-
omy with spare capacity, this boosts
demand and output (otherwise, it just
boosts prices). It also increases asset
prices and collateral values. It cuts
yields on government bonds, and
reduces the risk-free rate of borrowing,
helping corporate and individual bor-
rowing and equity valuations.
Supporters of QE argue that it is nec-
essary because there is insufficient
money in the economy to support sus-
tainable growth – and that without it
inflation would soon fall below target.
They rightly remind us that a collapse
in the money supply in the US in the
1930s turned a recession into a depres-
sion. Sometimes, QE is indeed vital.
But what are the facts today? The
money supply rose only 2.2 per cent in
the year to August, with a 2.3 per cent
annualised increase over the last three
months. This was below the rate of
inflation, which means that real
money balances fell. This was also well
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News Editor David Crow
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Business Features Editor Marc Sidwell
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below historical growth rates – it rose
by 6.3 per cent a year between 1998
and 2003, when consumer inflation
was much lower than it is today.
But as Simon Ward of Henderson –
somebody who should be appointed to
the MPC at the earliest possible oppor-
tunity – points out, it is not just the
amount of money that matters – the
rate at which it circulates from person
to person matters just as much.
Economists call this velocity – and it
has shot up since early 2009, as testi-
fied by the fact that nominal GDP (as
opposed to real GDP) is growing quick-
ly as a result of elevated inflation.
Interest rates are so low that nobody
wants to keep hold of cash for long.
Equally crucially, the official figures
underplay liquidity by excluding
money substitutes such as foreign cur-
rency deposits, Treasury bills, National
Savings instruments and repos by the
Debt Management Office. A broad liq-
uidity measure devised by Henderson
incorporating these rose 4.5 per cent
in the year to August, up from 0.9 per
cent a year ago.
This kills off the case for QE – espe-
cially in the context of high consumer
price inflation, which loves nothing
more than excessive money to embed
itself. Yesterday’s QE is equivalent to an
extra 3.7 per cent on broad liquidity.
The Bank has massively underestimat-
ed inflation over the past two years so
its present warnings of looming defla-
tion should be ignored, especially
given that there is far less spare capac-
ity in the economy than it thinks.
Commodity prices are falling – but it
would be astonishing were the Bank to
meet its target in 2012. More QE will
also mean renewed downward pres-
sure on the pound, boosting import
prices even further (they are still going
up from the previous devaluation).
The effect on the money supply this
time (and hence inflation) will be
greater than earlier rounds because
UK Plc is in better shape: last time’s
effort was partly cancelled out by capi-
tal-raising and loan pay-downs. Given
that the £200bn of QE to date has
boosted prices by 0.75-1.5 per cent,
according to the Bank, this isn’t good
for savers, for whom yesterday’s news
is tantamount to a declaration of war.
Given that inflation is the biggest drag
on demand in the UK at present, as a
result of falling real wages and wealth,
QE right now makes no sense at all.
Further purchases of gilts will make
them even more expensive (prices will
rise and yields fall further to even
more ridiculous levels), fuelling a
crazed and ultimately doomed bubble.
Lower yields will add to pension fund
deficits and make annuities even more
expensive. It will mean that the state-
owned Bank of England will own a
third of the stock of the state’s debt.
This is a huge political economy issue.
The government is lending money to
itself in a deeply unhealthy merry-go-
round; it no longer really has a budget
constraint. What next? Will the Bank
eventually cancel the gilts it owns,
thus permanently monetising much
of the national debt? These hugely sen-
sitive issues must be debated urgently.
The biggest mistake is that the
authorities believe they have the
power to engineer perpetual growth
by creating ever more money whenev-
er activity grinds to halt. This is ridicu-
lously hubristic. Sometimes weak
growth just can’t be avoided. It is a
shame we live in a society so arrogant
that it cannot ever admit this.
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
KING TURNS ON THE ELECTRONIC PRINTING
BANK ANNOUNCES £75BN MORE QUANTITATIVE EASING
“Clearly the impact
of the rest of the
world on the UK
does threaten our
recovery. That is
why we took action
today to try to head
that off.”
SIR MERVYN KING
TOTAL QE:
£275bn
“The evidence
shows it will keep
interest rates down
and boost demand
and that will be a
help for British
families.”
GEORGE OSBORNE
Sentance: inflation may
soar as MPC loses focus
▲
UK ECONOMY
BY TIM WALLACE
“THE EUROPEAN Central Bank (ECB)
has delivered price stability. That is
good for the economy and good for
jobs,” boasted outgoing ECB boss Jean-
Claude Trichet yesterday.
The same cannot be said in the UK,
where CPI inflation hit 4.5 per cent in
August and is expected to rise to more
than five per cent in late November.
Yesterday’s announcement of fur-
ther quantitative easing (QE) prompt-
ed anti-inflation protests (pictured
right) outside the Bank of England.
Former monetary policy committee
member Andrew Sentance is also con-
cerned. “This is a risky move which
can only be justified on the basis of the
MPC’s forecasts – which have signifi-
cantly under-predicted inflation in the
A GUIDE TO QUANTITATIVE EASING
Q. WHAT DID QE DO LAST TIME?
A. The Bank of England says the
£200bn of QE between March
2009 and January 2010 boosted the
economy by between 1.5 and two per
cent – but it also raised CPI inflation
by between 0.75 and 1.5 per cent.
Q. WILL IT WORK NOW?
A. It works primarily by increasing
the amount of cash in corporate
bank accounts – firms sell gilts and
receive newly created cash in return,
which boosts their liquidity and
their propensity to spend and invest
the money.
-4.49%
▼
QE 1:
£200bn
MARCH 2009
Anti-inflation protestors Pic: REUTERS
past,” he told City A.M.
“In the current circumstances, QE
will do little for growth and may fuel
inflation by pushing down the pound.
It reinforces the widespread view that
the MPC has lost its focus on price sta-
bility and the inflation target.”
However, the Bank claims inflation
Q. WHO DOES THAT HELP?
A. In theory, this boosts much of
the economy by increasing total
demand for goods, services and
assets. It also helps borrowers by cut-
ting gilt yields.
Q. HOW DOES IT HIT PENSIONERS? Q. WHAT DOES IT DO TO OTHER
A. A.
ASSET CLASSES?
Pensioners buy an annuity pay-
ing a fixed income. That means
they are hit by high inflation. In
fact, anyone living off savings – or
people without pay rises keeping up
with inflation– will have their
spending power cut if QE fuels more
inflation.
CITYA.M. 7 OCTOBER 2011
QE 2:
£75bn
OCTOBER 2011
will fall sharply in the first half of 2012
and governor Sir Mervyn King said this
is why an inflationary policy like QE2
can be implemented.
“In order to keep inflation on track
to meet the target over the medium
term, the MPC judged it was necessary
to inject further monetary stimulus
into the economy,” Sir Mervyn said.
Consumers’ expectations point in a
very different direction, however.
The most recent survey from the
Bank, taken in August, showed infla-
tion expectations of 4.2 per cent over
the next 12 months. In five years’ time,
respondents expected inflation to
stand at 3.5 per cent.
However, the MPC dismissed these
concerns, claiming in last month’s
minutes that expectations follow actu-
al inflation and so will drop if infla-
tion falls in 2012.
Q&A
Q. WHAT ABOUT
THE GOVERN-
MENT?
A. George Osborne will benefit
from even lower rates of interest
on government borrowing. That is
particularly important right now
because the deficit is so huge.
Gold may rise as investors try to
protect their cash from infla-
tion. Also, the falling pound will
make commodities sold in dollars
more expensive to UK buyers.
Liquidity tends to spill over into all
asset classes.
 CITYA.M. 7 OCTOBER 2011 News 3

PRESS QE2 sees stocks

surge as pound
Trichet bows out with
STERLING PLUNGES
AGAINST DOLLAR...
... AND THE EURO
drops sharply support plan for banks
ANALYSIS l GBP/USD ANALYSIS l GBP/EUR
1.5439 EUROZONE ECONOMY tion across the Eurozone at around

▲
▲
6 Oct
UK ECONOMY
BY JULIAN HARRIS three per cent. “Inflation has
1.158 MARKETS were rocked yesterday after remained elevated,” he admitted yes-
1.545 1.1479 the Bank of England announced its JEAN-CLAUDE Trichet signed off as terday, but said that he expects price
6 Oct
even higher than expected extension president of the European Central pressures to ease after a few months.
1.540 1.154 of its quantitative easing. Bank (ECB) yesterday, sticking to his The French 68 year old’s legacy is
Stocks soared in afternoon trading, guns over interest rates yet pledging likely to depend on the outcome of
1.535
the FTSE closing a whopping 3.7 per to pump funds into the banks. the ECB’s controversial bond-buying
1.150 cent higher on the day, at 5291.26. Trichet’s press conference was far programme – and whether the euro
1.530
Yields on government debt initially calmer than last month’s, when he survives long-term without a major
plummeted on the news of the Bank’s railed against criticism and demand- depression. Two German officials --
00:00 06:00 12:00 18:00 00:00 06:00 12:00 18:00
extra £75bn of asset purchases. Yields ed that “congratulations” be extend- Axel Weber and Juergen Stark -- quit
on 10-year notes fell off a cliff, drop- ed to the ECB for delivering price the ECB this year in protest at the
ping from over 2.35 per cent to under stability. “We try to be up to our plan.
2.23 per cent in minutes of trading. responsibilities and they are very Trichet will
Yet gilts slipped and yields recovered heavy responsibilities, very heavy,” be replaced
GILT YIELDS TUMBLE FTSE 100 JUMPS in later trading, as a rosier economic
outlook saw investors move to riskier
he said at the time.
But yesterday Trichet (right) struck
by Italian
central
BEFORE RECOVERING asset classes.
Sterling dropped like a stone after
a conciliatory tone, reflecting on his
eight years in charge. “For more than
banker and
economist
the Bank’s announcement, falling four years now, we have been experi- M a r i o
ANALYSIS l UK 10 year gilt yield ANALYSIS l FTSE 100 from over $1.55 to $1.53, touching its encing turbulent waters, storms, Draghi.
lowest rate against the dollar for over a unexpected hurricanes,” he said,
%
2.39 p year. Yet it recovered to end over $1.54. praising the importance of the
2.2200 6 Oct 5,291 5,291.26 The Bank of England confirmed media during times of crisis.
6 Oct that it would start with the first gilt Interest rates will be kept at 1.5 per
2.2000
purchases of its new round of quanti- cent, Trichet said, defying calls from
2.1800 tative easing next week, buying £1.7bn the ECB’s doves to ease policy in light
5,207 worth on Monday, Tuesday and of the ongoing Eurozone debt crisis.
2.1600
Wednesday. Yet the outgoing president threw
2.1400 Monday will focus on three to 10 another lifeline to struggling
2.1200 year gilts, Tuesday on those 25 years European banks through the pur-
5,123 and longer and Wednesday on 10-25 chase of covered bonds and with a
08:00 10:08 12:17 14:26 16:35
year gilts. The Bank said it would not renewed offer of longer-term loans
9:00 11:00 13:00 15:00
buy any of the eight per cent 2021 gilt, to ward off a new credit crunch.
the 3.75 per cent 2021 gilt or 4.25 per Trichet leaves the ECB with infla- JEAN-CLAUDE TRICHET
cent 2039 gilt.
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 4 News
Dexia shares
suspended as
bailout looms
▲
BANKING
BY PETER EDWARDS
SHARES in Dexia were suspended yes-
terday as Belgium prepared to nation-
alise its arm of the ailing bank.
The stock plunged 17 per cent to
€0.85 as tempers frayed between
France and Belgium over how to
divide the bill for its latest rescue.
Didier Reynders, the Belgian
finance minister, said his nation did
not want to bear the full cost of sav-
ing, and possibly nationalising,
Dexia’s Belgian banking arm as well
as supporting a “bad bank” of assets
left over from the Dexia Group’s past
business.
“We do not wish to end up holding
the whole of Dexia Group. We need a
solution that means we are not just
financing the Belgian bank. We also
need to finance the past. And we do
not want to do that alone.”
France did not respond but sources
close to the negotiations said the two
nations might settle for a 50-50 split
to cover the bad bank assets.
Dexia said it has begun talks with Customers at troubled bank Dexia
an international investor about sell-
ing its Luxembourg arm, and Qatar is
rumoured to be interested in a deal WHAT THE OTHER PAPERS SAY THIS MORNING
priced at €900m. The bank’s board
will vote on the break-up plans in
Paris tomorrow.
Dexia, which passed European
Banking Authority stress tests this WHITEHALL FEARS NEW BAILOUT FOR
summer, was previously bailed out RBS
with €6.4bn from the governments of Nervousness is growing in Whitehall
Belgium, France and Luxembourg that the government might have to
three years ago. inject further capital into Royal Bank
of Scotland as part of a European
ANALYSIS l Dexia SA effort to recapitalise the continent’s
€
banking system. RBS received the
biggest bail-out of the 2008 crisis
1.40 0.85
6 Oct GOULD LEADS RACE TO BECOME BG
1.20
CHAIRMAN
Andrew Gould, the well-respected for-
mer chief executive of oilfield servic-
1.00 es group Schlumberger, has emerged
as the leading candidate to take over
as the next chairman of oil and gas
30 Sept 3 Oct 4 Oct 5 Oct 6 Oct firm BG Group.
Picture: Getty
LONE STAR IS FOUND GUILTY OF STOCK
FRAUD IN BANK DEAL
A Texan private equity fund was fined
more than £13 million and its former
boss in South Korea jailed for three
years after being found guilty of share
price manipulation in Seoul yester-
day.
WALL STREET PROTESTS SPREAD
ACROSS THE US
Demonstrations against wealth
inequality took place across the US
yesterday, giving fresh impetus to
growing anger against the power of
financial corporations. allies took
place in Washington DC, Boston and
New Jersey.
CITYA.M. 7 OCTOBER 2011
FSA checks up
on RBS’s bad
property book
REGULATION
▲
THE City watchdog is examining
Royal Bank of Scotland’s portfolio of
troubled commercial property loans,
as the Eurozone debt crisis causes
fresh volatility in property prices,
industry sources said yesterday.
The Financial Services Authority
wrote to Derek Sach, head of RBS’s
Global Restructuring Group, last
week after sending its officers to quiz
staff and monitor the business.
One source familiar with the situa-
tion said the FSA wanted to under-
stand state-owned RBS’s exposure to
real estate through GRG, an intensive
care section for distressed businesses
that holds about £40bn of troubled
commercial property loans, and
through its West Register unit.
“A letter was sent last week,” the
source said. “The FSA wants to know
what happens if commercial real
estate completely drops, what the risk
position is.”
A second source said the FSA want-
ed to understand how and why some
commercial property assets were
moved into GRG and West Register
while others were not.
RBS set up West Register in the
1990s to take on properties from dis-
tressed lending situations to avoid
selling them in the open market at
knockdown prices.
CITYA.M. 7 OCTOBER 2011
Europe mulls
plan for more
stress tests
▲
REGULATION
BY ALISON LOCK
EUROPE’S banking watchdog refused
to rule out a new stress test of the
region’s banks yesterday, but played
down expectations that it would act
quickly to resolve fears over their
risky sovereign debt levels.
The European Banking Authority
said it had not announced any new
bank stress test. It would not confirm
or deny whether it would begin a new
test to investigate the vulnerability of
banks’ Eurozone bond holdings.
A spokeswoman said the EBA was
“reviewing banks’ capital positions”
and had “the support of the
European Systemic Risk Board”.
But she said it had no new figures
on banks’ sovereign debt holdings
other than those it published in July,
with the results of its previous and
now discredited test of their strength.
The EBA also emphasised that its
two-day meeting that ended yesterday
was routine and nothing to do with
the crisis in Franco-Belgian bank
Dexia, which is collapsing under the
weight of its peripheral Eurozone
bond holdings.
“The board of supervisors meeting
is an ordinary and scheduled meeting
where different items are on the
agenda, including, of course, discus-
sions on the current situation,” the
spokeswoman said.
“We are aware of the political dis-
cussions going on but as EBA, we are
a technical body and we are not tak-
ing a position at political level.”
The EBA has faced widespread crit-
icism over the past week after it rated
Dexia 11 out of 90 European banks on
the strength of its finances in July’s
stress test results.
But the tests did not look at the
effect of a massive slump in the value
of banks’ sovereign debt holdings,
which is what has brought Dexia to
its knees.
It has been locked out of the daily
market for inter-bank loans to bal-
ance its books because of concerns
that its €3.4bn (£2.2bn) pile of Greek
debt is now worthless.
LCH.Clearnet chief executive Ian Axe will allow investors to use gold as collateral
LCH.Clearnet to take gold
as collateral for trades
▲
CAPITAL MARKETS
BY ALISON LOCK
CLEARING house LCH.Clearnet yester-
day added gold to the list of assets
investors can post as collateral against
trades in light of the meteoric rise in
demand for the safe haven metal.
LCH will accept gold in 400 troy
ounce gold bars from the end of
October as it joins a group of highly
liquid and high-grade assets such as
AAA-rated bonds considered easy to
sell quickly when needed.
LCH’s move acknowledges the soar-
ing popularity of gold as a high quali-
ty asset, as well as the sheer amount
of the metal being held by investors in
portfolios at present.
“Gold is ideal; as an asset it typically
performs well in times of financial
stress, remains liquid and has a well
established pricing mechanism,” said
director David Farrar.
LCH said it had the backing of the
World Gold Council, which is lobby-
ing the Basel III council to let banks
include gold in their Tier 1 assets.
News 5
France said to
have a plot to
shore up banks
BANKING
▲
FRANCE’S government plans to take
stakes in its biggest banks if they suffer
huge losses from falls in the value of
their sovereign debt holdings, a French
newspaper reported yesterday.
Le Figaro newspaper said the gov-
ernment agency that manages state
shareholdings had been working for a
few days on how it would act if it had
to move to bolster one or more banks.
The French government has repeat-
edly denied that it has agreed a back-
room deal with banks such as BNP
Paribas, Société Générale and Crédit
Agricole to guarantee their health in
the event of a massive write-off in the
value of their Eurozone bond piles.
The paper quoted a source close to
the matter saying the plans had
involved a scenario where intervention
was limited to two or three banks,
unlike a broader support plan drawn
up in 2008 in the last financial crisis.
In September the government said
no such plan existed, and commenta-
tors have argued that state support for
the banking sector would leave France
at risk of losing its AAA credit rating.
But some City traders have privately
voiced their belief that French bank
chief executives have been so publicly
confident of avoiding losses from their
sovereign debt holdings that there
must be some government guarantee.
CITYA.M. 7 OCTOBER 2011
UBS sheds 13
jobs by axing
trading desk
▲
BANKING
BY HARRIET DENNYS AND PETER EDWARDS
UBS INVESTMENT Bank has axed its
entire macro directional trading
team, with the loss of 13 jobs.
David Tait, managing director and
global head of macro directional trad-
ing, resigned last Friday after UBS
announced the closure of his trading
team the previous day.
Tait is currently on gardening leave
before taking up a new role at a rival
investment bank.
The remaining 12 traders in Tait’s
team are expected to secure new jobs
at hedge funds, after being
approached by a number of firms to
move either individually or as a group.
Sources close to UBS said it had
already decided to cut 1,600 jobs in its
investment banking arm worldwide,
as part of a wider drive to cut costs by
£1.5bn by the end of 2013.
But another source maintained the
closure of the macro-directional trad-
ing division was a result of the alleged
£1.5bn fraud by Kweku Adoboli, as the
Swiss bank moves to de-risk its invest-
ment banking business.
The source told City A.M.: “UBS has
withdrawn from all types of direction-
al risk-taking as a consequence of
Kweku Adoboli. The core of the UBS
business is wealth management, and
from a reputational point of view, UBS
Investment Bank has not done itself
any favours.”
Yesterday Mike Stewart, who has
replaced Francois Gouws and Yassine
Bouhara after they quit as co-heads of
global equities over the “rogue” trade,
told staff he is under “no illusion”
about the challenges faced by the
bank and the rest of the industry.
His comments came 24 hours after
acting chief executive Sergio Ermotti
admitted UBS had seen signs of sus-
pect trades. He said “risk and opera-
tional systems did detect
unauthorised or unexplained activity
but this was not sufficiently investi-
gated, nor was appropriate action
taken.”
News 7
Sony set to buy
NO ALL-CLEAR FOR SOROS ON INSIDER TRADE
Ericsson out of
mobile venture
TECHNOLOGY
▲
SHARES in telecoms group Ericsson
jumped almost six per cent yesterday
after reports claimed that Japanese
technology group Sony was close to
buying it out of their mobile phone
handset joint venture.
Sony is keen to take control of the
business to combine Sony Ericsson’s
mobile phone technology with its
own tablet computer and PSP gaming
handset operations
The news, reported in the Wall
Street Journal, highlights how impor-
tant the multi-platform smartphone
has become to consumers.
Both firms had agreed to review
the 50-50 joint venture after ten years.
That deadline comes up this month
and both sides have been talking for
weeks about whether to extend it,
according to sources.
Both sides declined to comment on
the reported talks. “We have a long-
term commitment to our joint ven-
tures,” an Ericsson spokesman said.
Analysts say Sony needs to assert
control over Sony Ericsson if the ven-
ture is to recoup market share in the
cut-throat world of smartphones.
VETERAN financier George Soros failed to convince the European Court of Human The venture thrived with its
Rights to overturn his 1988 conviction for insider trading on French bank Société Walkman music phones and
Générale yesterday. The court said that Soros, who made $2.2m (£1.4m) on SocGen shares Cybershot camera phones, but has
after being told privately that a group of bidders was trying to buy the bank, should lost market share to rivals such as
have known he was risking insider trading. He has vowed to appeal. Picture: REUTERS Apple.
CITYA.M. 7 OCTOBER 2011 News 9

BBC TO QUIT ICONIC WHITE CITY CAMPUS AND CUT 2,000 JOBS
THE BBC will quit its
Profits up at Hays
despite City freeze
west-end White City
campus and become
“significantly smaller”
in response to deep
spending cuts imposed
on the publicly funded
broadcaster. It set out
the changes in the UK and Ireland.

▲
RECRUITMENT
response to a 20 per BY ELIZABETH FOURNIER
cent cut to its annual
£3.5bn budget PROFITS at British recruitment compa-
imposed by the govern- ny Hays grew by 15 per cent in the first
ment a year ago. quarter, despite a poor performance by
Around 2,000 jobs will its UK operations.
be shed as part of the The rise in net fee income was driv-
change. en by strong growth overseas – particu-
larly in Asia Pacific and continental
Picture: PA Europe – which was enough to offset a
four per cent drop in revenues from
The company blamed a sharp
decline in public sector markets for
the UK slump, as well as “difficult mar-
ket conditions in our banking and
City-related businesses”.
Hays is the latest recruiter to high-
light sluggish hiring in the City. In
August, Michael Page chief executive
Steve Ingham said that growth from
the banking sector was slowing in a
“challenging” UK market.

Mouchel boss
resigns after
profit error
casts from £14.3m to as low as £5m fol-
▲

SUPPORT SERVICES
BY KASMIRA JEFFORD
SHARES in the support services group
Mouchel plunged more than 33 per
cent yesterday after chief executive
Richard Cuthbert resigned as the firm
revealed that a costly “actuarial error”
would hit annual profits.
The maintenance and infrastruc-
ture firm said that a one-off gain
announced in June – which it said
would help offset contract cancella-
tions – will be £4.3m lower than
expected.
In a further setback, Mouchel said
its new finance director Rod Harris
had reviewed the group’s other con-
tracts and has decided to increase pro-
visions by a further £4.3m to cover
risks to its contracts – a move it also
took last year.
Mouchel, which earlier this year
rejected a 164p a share takeover offer
from rival Costain and a 135p per
share bid from Interserve, saw shares
fall as low as 15.5p in early morning
trading before closing down 33.87 per
cent at 20.5p.
Analysts said the firm was likely to
lower their adjusted pre-tax profit fore-
lowing the announcement.
Christopher Bamberry, an analyst at
Peel Hunt, warned that the shortfall in
profits makes it highly probably that it
will breach its interest covenants.
“With a probable covenant breach
and an over-leveraged balance sheet, it
is hard to see how a rights issue can be
avoided,” he said.
Mouchel said that Cuthbert had ten-
dered his resignation with immediate
effect and that he would work with
the group for a short period to ensure
an orderly handover.
Chairman Bo Lerenius will lead the
company until a new chief executive
has been appointed.
ANALYSIS l Mouchel
p 20.50
35 6 Oct
25
30 Sept 3 Oct 4 Oct 5 Oct 6 Oct

Blackstone arm Del Monte and

buys loans firm BarCap settle
▲

FINANCIAL SERVICES ENFORCEMENT

GSO Capital Partners, the global cred-
it platform of US private equity giant
Blackstone, has bought European
leveraged loan manager
Harbourmaster Capital for an undis-
closed sum.
Harbourmaster manages and advis-
es on €8bn (£6.96bn) of assets, lifting
GSO’s loan platform to €11.5bn of
assets under management.
The deal will help GSO to achieve
its sought-after European growth and
to create a balance with the US opera-
tions. Europe will now contribute
between 40 and 45 per cent of GSO’s
leverage loan platform.
DEL Monte and its financial adviser
Barclays Capital yesterday agreed to
pay $89.4m (£57.9m) to settle a law-
suit that claimed they had not acted
in investors’ best interests in the food
company’s $4bn buy-out last year.
Investors claimed that Barclays,
which advised Del Monte on its sale to
a private equity group led by KKR, had
a conflict of interest because it also
arranged financing for the buyers.
The two parties will share the bur-
den of the settlement, with BarCap
paying $23.7m upfront to Del Monte
shareholders and ceding $21m of
advisory fees.
 The Capitalist
10
BANKING’S
TOP TEAMS
SEEK NEW
PASTURES
THE EXODUS of senior banking talent
continues – and with it, some interesting
tales emerge.
Take Merrill Lynch’s broking star
Simon Fraser, who has informed his
clients Man, Meggitt and Capital One
Shopping Centres he is leaving them at
the end of the year for pastures new.
Quite literally, in this case, as Fraser
owns an estate in Suffolk and is abandon-
ing the City for a life as a farmer.
Meanwhile, you may know David Tait,
who resigned from UBS Investment Bank
last Friday after his trading team was
axed, as the global head of macro direc-
tional trading at the Swiss bank.
Or perhaps you will recognise him as
the lunatic who has scaled Everest four
times, “dancing with death” on the
Khumbu icefall on his most recent
ascent in May. “It was an ordeal from
start to finish,” said Tait at the time.
Although it’s arguably nothing com-
pared to working 14-hour days to help the
UBS bottom line for the last two years,
only to see a rogue trader “throw a span-
ner in the works”. “People feel the rug has
been pulled out from under their feet,”
said one battle-scarred UBS mole.
UBS banker and Everest mountaineer David Tait is moving on to his next career peak
GOING WITH A BANG
CALLING anyone who can remember the
City before the Big Bang. On 26 October,
Brian Winterflood of Winterflood
Securities (right), Alan Yarrow from The
Securities Institute and the London Stock
Exchange are holding a twenty-fifth
anniversary reunion for anyone who
worked on the LSE floor before 1985.
The youngest person expected at the
Drapers Hall party will be 45, and the old-
est would have been 101 – except Jimmy
Herbert, who started his stockbroking
career as an office boy in 1929, unfortu-
nately died two weeks ago. “We hoped to
have him as the guest of honour,” said
organiser Simon Cowan of Redmayne
EDITED BY
HARRIET DENNYS
Got A Story? Email
thecapitalist@cityam.com
Follow The Capitalist
on Twitter: @citycapitalist
Bentley, who used the Big Bang to launch
the first interdealer broker First Equity.
Tickets for the charity event are on sale
for £100 – for cocktails, “light music” and
“very nice gifts” from the LSE, RSVP to
Yasmin Kazi on 0207 696 5471.
PINK LADIES
THEY weren’t pushed – they jumped. Out
of a plane, at 12,000 feet, in aid of
Breakthrough Breast Cancer.
Step forward Deloitte partner Ellie
Patsalos and Linda Taylor, the managing
director of beauty distributor Kenneth
Green Associates, who were part of a
team of seven pink ladies (pictured top
right) who raised £165,000 by complet-
CITYA.M. 7 OCTOBER 2011
ing the tandem sky dive.
Meanwhile, Kreab Gavin Anderson asso-
ciate Natalie Biasin did an all-nighter last
Saturday by taking part in the Shine noc-
turnal marathon with four colleagues.
Help them beat their target of raising
£3,000 for Cancer Research UK by visit-
ing http://www.justgiving.com/Kreab-
Gavin-Anderson2
CHAMPAGNE FOR LIFE
HURRY while stocks last: hedge fund god-
father Lord Stanley Fink and his business
partner David Johnstone are offering all
the women in the City free champagne
through their Free Holdings venture.
Anyone who signs up for a
Champagne for Life card before
Sunday will receive a free case of
Laurent Perrier with their lifelong
membership that ensures a glass of
champagne on the house every time
members visit one of London’s 50 affiliat-
ed venues. The catch? A one-off fee of £500.
See http://champagneforlife.com/joinus
CITYA.M. 7 OCTOBER 2011 News 11

NO SLY PRACTICES AT MIRROR, SAYS BAILEY

Axis-Shield bows to new
bid from US peer Alere
the board in July, closed up four per mend that shareholders accept the

▲
PHARMA
BY HARRY BANKS
MEDICAL diagnostics firm Axis-
Shield said it had agreed to be bought
by larger peer Alere after the US com-
pany modestly sweetened its offer to
£235m, ending a three-month battle
for the maker of Afinion devices.
Axis-Shield’s shares, which have
gained about 34 per cent in value
since Alere first pitched the offer to
cent at 468p yesterday on the London
Stock Exchange.
“Capitulation seems to be the order
of the day...We believe, under more
settled circumstances, the board may
have considered to take a more robust
position. The move from 460 pence to
470 pence is not much more than a
token gesture,” analyst Mike Mitchell
at Seymour Pierce said.
Axis-Shield said it would recom-
470-p per share bid, which is about
two per cent higher than Alere’s orig-
inal offer and four per cent higher
than Axis-Shield’s Wednesday close.
Dundee, Scotland-based Axis-
Shield, which still considers the offer
to be undervalued, said it expected
Alere’s revised 50 per cent acceptance
condition to be met against a
“volatile economic and market
backdrop”.

A probe of the Trinity Mirror newsrooms ordered by chief executive Sly Bailey has con-
cluded there is no evidence of widespread phone hacking at the company, recommending
only small tweaks to the firm’s practices. The results of the probe come amid fresh allega-
tions that the firm’s People title routinely hacked into voicemails, made by a former jour-
nalist at the newspaper. Picture: REX
 12 News CITYA.M. 7 OCTOBER 2011

Arbuthnot to
Brewin sees float its Secure
assets grow Trust Bank arm

amid turmoil
BANKING

▲
ARBUTHNOT Banking is to float its
Secure Trust Bank division on
London’s junior Aim stock market, as
part of plans to develop its business
and compete with the UK’s major
lenders.
▲

WEALTH MANAGEMENT rate advisory and broking division, Arbuthnot expects Secure Trust
BY PETER EDWARDS announced in May, is likely to be Bank’s flotation to take place by the
completed by the end of this year. end of the month. It will place new
STOCKBROKER Brewin Dolphin grew The division has continued to trade and existing shares in Secure Trust
its assets in the year to the end of profitably, before taking into Part of the Arbuthnot group sponsors The Historic Grand Prix Cars Association Bank on to the market, with
September as investor patterns accounts costs relating to the sale, it Arbuthnot keeping a majority stake in
changed amid market fears. added. MEET THE ADVISERS the company.
Funds under management grew Shares in Brewin, which last year Secure Trust Bank had first-half pre-
3.4 per cent as investors poured was rumoured to be a takeover target tax profits of £5m and net lending of
money into Brewin’s discretionary for India’s billionaire Hinduja broth- £542m, and helped the Manchester- £5.7m per month on average for the
range of products, ahead of tougher ers, closed up 2.99 per cent at 117.2p. LAWRENCE based Davenham Group in its pur- first half of this year.
market conditions in the fourth David McCann at Numis rated GUTHRIE suit of commercial leasing and hire “The challenges, distractions and
quarter. Brewin a “hold” and said he would purchase company Manor Credit. legacy issues faced by the large UK
Brewin now runs £24bn on behalf rather own other sector stocks, such HAWKPOINT Also on the Hawkpoint team is banks and the consumer credit sector
of private investors, charities and as Aberdeen Asset Management. PARTNERS Sunil Duggal, who helped software provide Secure Trust Bank with a sig-
pension funds, up from £23.2bn a group 1st - The Exchange with the nificant opportunity, as a well-capi-
year ago. ANALYSIS l Brewin Dolphin sale of a majority stake to Lloyds talised deposit funded bank, to grow
Discretionary funds under man- HAWKPOINT Partners is advising Development Capital. within its chosen markets,” Arbuthnot
p
agement rose 11.4 per cent after Arbuthnot on the Secure Trust Bank Earlier this year Hawkpoint was chairman and chief executive Henry
clients added £1.3bn of net inflows
121 117.20 flotation process, fielding a team led the lead corporate adviser to Saint Angest said in a statement yesterday.
6 Oct
during the year, outweighing nega- 119 by Lawrence Guthrie, managing George Participations (SGP) on its Secure Trust Bank chief executive
tive market movements and small director in its financial services potential bid for DTZ, and helped Paul Lynam said the company could
outflows from its advisory funds, the 117 team. Fairfield Energy, a North Sea oil move into spaces in the market as
manager said in a statement. Guthrie has previously advised exploration company, with a failed major banks cut costs and scale back
The group added: “The fourth 115 extended warranties specialist bid to launch an initial public offer- business plans.
quarter has seen difficult market Domestic and General Group on its ing on the London Stock Exchange The Arbuthnot Banking Group also
conditions.” sale to Advent International for last year. incudes Arbuthnot Securities and
Brewin said a deal to sell its corpo- 30 Sept 3 Oct 4 Oct 5 Oct 6 Oct Arbuthnot Latham private banking.

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CITYA.M. 7 OCTOBER 2011 News 13

Private equity house Endless

leads turnaround at Vasanta
cent from £2.8m in 2009, according similar to that of 2010.

Grisay: set to retire next year
▲
PRIVATE EQUITY
BY PETER EDWARDS
VASANTA, the office supplies busi-
ness propped up by private equity in
the aftermath of the financial crisis,
has narrowed its annual losses.
The firm, which survived in July
2009 after Endless injected £30m of
new equity alongside the company’s
bank group, reported an operating
loss of £1m for 2010, down 64 per
Bramson: new role of executive chairman
to accounts published this week.
Turnover fell 12 per cent to £385m
as it chose to stop working on less
profitable accounts.
Garry Wilson, partner in turn-
around specialist Endless, told City
A.M. he has focused on cash flow but
Vasanta was now increasing prof-
itability after cutting its less lucrative
accounts.
He expects turnover this year to be
Two years ago Vasanta’s debt was
cut, and private equity house Electra
wrote off its investment and walked
away from the business.
Wilson also said there are still
opportunities for Endless to make
acquisitions this year as more of
Britain’s highly leveraged buyouts get
into trouble. The fund has £40m to
£50m available to spend in the final
quarter of the year.

Cuts loom at
F&C as Grisay
steps down
▲

FUND MANAGEMENT Bramson, whose Sherborne

BY PETER EDWARDS
ACTIVIST investor Edward Bramson is
expected to slash costs at F&C Asset
Management after the departure of
the chief executive, his rival, cement-
ed his control of the group.
Bramson, who won a bitter board-
room battle to lead the board of F&C
in February, was yesterday named
executive chairman after chief execu-
tive Alain Grisay decided to retire, a
decision blamed by analysts on con-
flicts between the two.
F&C said Bramson has taken inter-
im control with “immediate effect”.
Grisay, 58, who had sold his shares in
the fund, will gradually relinquish
his responsibilities before stepping
down from the board at the annual
general meeting in May. He will
remain available as an advisor until
the end of September.
David McCann at Numis said the
decision was unsurprising given the
“historical difference of opinion”
between the executives.
According to Alan MacDougall,
managing director of shareholder
group Pirc, the reshuffle “raises more
questions than it answers.”
Investors has a stake in F&C of nearly
20 per cent, ousted chairman Nick
MacAndrew and veteran director
Brian Larcombe in February and won
places on the board for himself,
Sherborne chairman Ian Brindle and
independent Derham O’Neill.
He is now leading a review of F&C,
driven by Sherborne’s strategy of
turning around underperforming
companies. The Foreign & Colonial
Investment Trust from which F&C is
founded is the oldest in the world but
it has disappointed investors in
recent years. Sources said, however,
that there had been no bust-up
between the two men and they would
spend 15 months working together
before Grisay’s departure.
ANALYSIS l F&C Asset Management
p
65.00 60.15
6 Oct
60.00
30 Sept 3 Oct 4 Oct 5 Oct 6 Oct

TIME LINE | TEN MONTHS OF BOARDROOM STRIFE AT F&C

16 December 2010 bought 2.65m F&C shares since mid-March,
Sherborne launches bid to remove Nick giving it a stake of nearly 20 per cent
MacAndrew from the board
15 June 2011
25 January 2011 F&C says Grisay has sold 500,000 shares
Alain Grisay tells Sherborne that signs of worth £381,750
clients returning shows its strategy is
working 3 August 2011
F&C beats analysts’ expectations when it
3 February 2011 says assets under management have risen to
MacAndrew is ousted as F&C chairman at a £108bn in the first-half, up 13.3 per cent
shareholder meeting and replaced by New from June 2010
York-based Bramson
6 October 2011
16 March 2011 Grisay announces he will retire as chief exec-
Grisay sells one million F&C shares utive the following May

4 April 2011 25 October 2011

It emerges that Edward Bramson’s F&C board due to publish results of its
Guernsey-domiciled Sherborne Investors has strategic review
 14 News
Slow start to
third quarter
for services
▲
UK ECONOMY
BY HARRY BANKS
SERVICE sector output edged higher in
July, marking a tepid start to the third
quarter, official data showed yesterday.
Small rises were recorded in busi-
ness services, finance and government
activity.
The Office for National Statistics
(ONS) said service sector output rose by
0.2 per cent in July after a 0.3 per cent
contraction in June. Annualised, out-
put was 1.3 per cent higher.
The economy as a whole grew by
just 0.1 per cent in the three months
to June -- largely due to the weakest
service sector growth since the end of
2010, ONS data has showed.
Yesterday’s figures gave only limited
hope of a pick-up. Output in the three
months to July grew by 0.9 per cent, its
biggest increase since November 2007,
but that was due to a rebound in May
from the slide in output caused by the
previous month’s royal wedding.
July’s reliance on government
spending to drive growth may also be
a concern, given the determination of
the coalition to slash the country’s
hefty budget deficit.
Separately, the ONS also reported
that productivity across all sectors of
the economy flatlined in the second
quarter, repeating the first quarter’s
unchanged reading.
This pushed the annual rate of
growth in output per worker into neg-
ative territory -- down 0.2 per cent on
the year -- for the first time since the
third quarter of 2009. ONS data
released last month showed that
Britain’s productivity had already fall-
en well below the average for the G7
group of advanced economies in 2010.
The slowdown in productivity
growth was driven by a 0.5 per cent
quarter-on-quarter fall in the produc-
tivity of the industrial production sec-
tor, which includes the North Sea oil
and gas industry, where output has
recently been suffering.
Unit labour costs remained in
check, however, up just 0.3 per cent on
the quarter after a 0.4 per cent rise in
the first quarter of the year.
Private car registrations were down 9.3 per cent last month
Falling car registrations
offset by high fleet sales
INDUSTRY
▲
BY JULIAN HARRIS
NEW private car registrations plum-
meted by 9.3 per cent in September,
compared to the same time last year.
“The outlook for car manufactur-
ers looks increasingly worrying with
the economy struggling markedly,
and consumer and business confi-
dence low,” commented economist
Howard Archer of IHS Global Insight.
Overall, however, the figures
Picture: REX
exceeded expectations, with a surge
in sales of fleets of cars. Total car sales
were down just 0.8 per cent, propped
up by high fleet sales.
Sales volumes from January to
September are five per cent down on
the same time last year, the Society of
Motor Manufacturers and Traders
(SMMT) revealed. Yet the fall in the
third quarter slowed to 0.7 per cent,
helped by strong figures in August.
The SMMT expects 1.92m new car
sales throughout this year.
CITYA.M. 7 OCTOBER 2011
NEWS | IN BRIEF
German industrial orders drop
German industrial orders fell unexpect-
edly in August on a decline in domestic
demand, data from the economy min-
istry showed yesterday, adding to signs
of a slowdown in Europe’s largest econo-
my. Seasonally- and price-adjusted order
intake sank 1.4 per cent on the month,
driven by a 3.2 per cent drop in domestic
orders. The mid-range forecast in a
Reuters poll of 41 economists was for an
increase of 0.3 per cent. The ministry
revised July's figure up slightly to a 2.6
per cent drop, having originally reported
a 2.8 per cent fall.
Dutch inflation climbs again
Stubborn inflation in the Netherlands
rose again last month, according to fig-
ures released yesterday. The country’s
consumer price index increased to 2.7
per cent annualised, above expectations.
The rate of CPI inflation had held at 2.6
per cent in August.
Franc cap sees SNB reserves rise
Foreign exchange reserves held by the
Swiss National Bank rose by 29bn Swiss
francs (£20.4bn) in September, the
month it began defending a currency
cap on the soaring franc, though it said
money market injections accounted for
most of the rise. Reserves rose to
282.35bn Swiss francs, according to the
SNB figures released yesterday. The
data sent the franc sharply lower as
markets responded to signs the bank's
action in the currency market to cool the
safe-haven currency had been relatively
light, though one analyst suggested
heavier interventions might be needed if
the economic backdrop worsened. The
SNB set a cap of 1.20 Swiss francs per
euro on the currency on 6 September.
CITYA.M. 7 OCTOBER 2011 News 15

Fixed mortgages sink to their

cheapest rates for 45 months

▲
ECONOMICS
BY JULIAN HARRIS
MORTGAGE rates on high loan-to-
value deals have sunk to their lowest
point since January 2008.
Loans worth 90 per cent of the
value of the acquired property are
available at an average of 5.39 per
cent on a fixed two year rate, the web-
site Moneyfacts has claimed.
The Halifax index suggested that the pace of decline eased slightly last month REUTERS The average rate has tumbled from
6.05 per cent on the same deal six
months ago, as global economic woes
appear to have stamped out any
chance of the Bank of England raising
interest rates in the near term.
A five year mortgage of 90 per cent
loan-to-value can be obtained at an
average rate of 5.87 per cent, the data
also showed – a whole percentage
point lower than the typical interest
rate six months earlier.
“The availability of higher loan-to-
value mortgage products has
increased over the past couple of
years,” said Louise Holmes of
Moneyfacts.
“Lenders have begun to launch
more competitive products to borrow-
ers who during the height of the cred-
it crisis had pretty much given up on
the prospect of owning their own
property,” she added, warning that
rates would likely rise at the first sign
of a higher Bank rate.

House prices
decline again
in September
combined with low interest rates
▲

PROPERTY
BY TIM WALLACE
VOLATILITY continued in the hous-
ing market, with September’s price
falls reversing gains seen in June
and July, the Halifax index revealed
yesterday.
Prices are down 0.5 per cent com-
pared with August and 2.3 per cent
over the last 12 months, the season-
ally adjusted figures show.
The rate of decline has slowed
from its peak of 4.6 per cent in the
year to May.
However, prices did increase by
0.1 per cent over the third quarter,
and the annual pace of decline is at
its lowest since December 2010.
The average price of a UK house
sold in September stood at £161,132,
down from £162,307 in the same
month last year.
The study said mortgage pay-
ments account for 26 per cent of a
new borrower’s disposable income,
down from 48 per cent in mid-2007.
In terms of sale volumes, around
70,000 were sold last month, in line
with the average for 2011.
Halifax believes that gradual
employment growth over the year
have supported the market – but
that negative factors are also weigh-
ing on house prices.
“Greater uncertainty about eco-
nomic and personal financial cir-
cumstances, together with pressure
on householders’ finances from
weak earnings growth, higher infla-
tion and increases in taxes, are like-
ly to be constraining housing
demand,” explained Halifax econo-
mist Martin Ellis.
“We expect little change to this
situation over the remainder of
2011.”
However, estate agents believe
there is more reason for some opti-
mism.
“Halifax’s figures point to a rather
gloomy outlook for the national
housing market in September, but
there are certainly signs of life,” said
Peter Rollings from estate agent
Marsh and Parsons.
“Mortgage lending has picked-up
in recent months, and the current
price war between lenders is mak-
ing mortgages increasingly afford-
able. Lending has never been
cheaper for those who have already
saved up for their deposits.”

ANALYSIS l House price/Earnings ratio

6.0
*Ratio of the Halifax standardised
average price of All Houses to
5.5
national average earnings for
full-time male employees

5.0
Halifax UK house price index
- price/earnings ratio*
4.5

4.0
Average

3.5

Source: Thomson Reuters Datastream

3.0
1985 1990 1995 2000 2005 2010
 16 News CITYA.M. 7 OCTOBER 2011

ANALYST VIEWS: IS HALFORDS ON THE RIGHT PATH? By John Dunne

NICK BUBB KEITH BOWMAN

“ “
ARDEN PARTNERS HARGREAVES LANSDOWN
It is disappointing to see profits In all, a drive to offer consumers more
under-shooting at the Autocentre business, but value-orientated car maintenance provides
we are holding our full-year group profit before potential, its spare parts business is still con-
tax forecast at £99m, after a solid quarter two sidered defensive, whilst exposure to low cost
in the core business. Having expected to have transport (bicycles) and holiday (camping)
to downgrade again, we are relieved by today's options is seen as catering for embattled con-

” ”
news and so, despite the rather bleak outlook sumers. Bolstered by the group’s ongoing share
for consumer spending, we are upgrad- buy-back scheme, market consensus
ing from Neutral to Add. opinion currently denotes a hold.

MATTHEW MCEACHRAN | SINGER CAPITAL MARKETS

“ They are part way through a £75m buyback programme. We continue to believe that Halfords remains a fun-

”
damentally sound business with domestic growth opportunities, however the key catalyst in our mind will be in relation
to strengthening the operational management team and improving the customer experience.

Halfords chief executive David Wild hopes bike sales can offset a fall in car spending

Halfords hit
by soaring
price of fuel
motorists and people are looking to
▲

RETAIL
BY JOHN DUNNE
A SURGE in petrol prices has further
dented sales at Halfords as cash-
strapped drivers are forced off the
road.
The retailer said like-for-like sales
fell 2.8 per cent in the 13 weeks to 30
September, compounding a 1.1 per
cent drop in the previous three
months.
Sales of car maintenance products
were down 3.3 per cent.
However, this drop was partly off-
set by a 5.7 per cent rise in bike sales
as people took up cycling to work,
while the recent success of British
cyclists such as Mark Cavendish
helped boost premium racing bikes.
The retailer has warned that gross
margins will be down by one percent-
age point this year following a series
of promotions aimed at triggering a
rise in sales.
Half-year profits will be between
£53m and £55m, down from £68.7m
last year, the company said.
Chief executive David Wild said:
“The cost of motoring is a burden on
save money by driving less or defer-
ring services.”
Halfords said its Autocentres car
mechanic business saw like-for-like
sales growth of 2.7 per cent with
strong demand for servicing and
tyres. But it said first half operating
profits at the business, which it
bought from Nationwide Autocentres
last year, will be lower than in 2010.
There has been a five per cent drop
in petrol sales volumes in the UK in
the half year, according to AA figures
out this week.
But shares in Halfords closed more
than eight per cent up yesterday.
ANALYSIS l Halfords 303.00
6 Oct
305 p
295
285
30 Sept 3 Oct 4 Oct 5 Oct 6 Oct

NEWS | IN BRIEF
ICG attracts €1.1bn to new fund
Buyout funder Intermediate Capital
Group yesterday said it has raised €1.1bn
at the first closing of its new Europe
fund, well on the way to its €2bn target.
Around €500m came from the firm’s
investment company. ICG said in a trad-
ing update that its mezzanine funds are
performing well compared with private
equity funds, and that its investment
portfolio is holding up amid the market
turbulence. The firm’s shares closed up
almost eight per cent at 214p.
TNT Express warns on profits
Dutch freight and delivery firm TNT
Express issued a profit warning yester-
day as the global economic slowdown led
more customers to snub air transport in
favour of cheaper shipping. TNT Express,
which listed in May after it split from
Dutch mail group PostNL, cut its 2011
outlook and said it saw revenue pressure
in Europe, the Middle East and Africa in
the third quarter.
Ferrexpo pellet production rises
Ukrainian iron ore producer Ferrexpo said
total production of pellets in the third-
quarter was slightly higher than last
year, helping send the firm’s shares up 10
per cent. Total pellet output rose about
1.5 per cent to 2.33m tonnes in the third
quarter, the company said yesterday.
CITYA.M. 7 OCTOBER 2011 News 17

Greggs is on Legal market overhaul starts

a roll as sales as Tesco law comes into force
grow again
investment, and to be owned by non- and provide opportunities for

▲
LEGAL SERVICES
BY ELIZABETH FOURNIER
SUPERMARKETS, banks and other
high street stores are now able to
offer legal services to their customers,
after a new law to liberalise the UK’s
legal sector came into force yesterday.
The Legal Services Act, dubbed the
▲
lawyers.
“This is a landmark day for the UK
legal industry,” said justice minister
Jonathan Djanogly.
“Our legal services are already
rated among the best in the world,
used by millions of people around the
globe as well as in the UK, and these
growth.”
Leicester-based Premier Property
Lawyers became the first ABS in the
UK yesterday, after it was granted a
licence by the Council of Licensed
Conveyancers.
And Oxford’s Everyman Legal will
be the first solicitor to try to access

RETAIL
BY JOHN DUNNE
HIGH street baker Greggs yesterday
reported a rise in sales growth in the
third quarter despite the squeeze on
consumer spending.
Like-for-like sales rose 0.8 per cent
in the 13 weeks to 1 October, the com-
pany said in an interim management
statement.
That compares with a rise of 0.4 per
cent in the first half to 2 July, and a
company forecast of “marginally posi-
tive” like-for-like sales growth for the
full year.
Greggs, which sells bread, sand-
wiches, savouries and cakes to over
6m customers a week from 1,540
shops, said it had continued to see
good growth in breakfast sales.
Greggs is launching frozen sausage
rolls in more than 700 Iceland stores
at £1.50 for a pack of four.
Chief executive Ken McMeikan
said: “We have always felt there were
more opportunities for us in the take-
home market.
“We tested the frozen sausage rolls
in 10 Iceland stores for three months.
“It was important to make sure Tesco law, introduces the idea of alter- changes will set them up to move to the UK stock markets, announcing
there was no cannibalisation of sales native business structures (ABS), new heights. They will enable firms yesterday plans to float on small com-
from our own nearby outlets.” which allow law firms to seek outside to set up multi-disciplinary practices panies index Sharemark next year.
The other big success has been
“Superstar Doughnuts”, 1.4m of
which have been purchased in the
five weeks since they were launched.
Greggs also said it had recorded the
biggest takings for a store opening
when the baker opened the doors of
its Westfield Stratford City shop in
east London last month.
McMeikan said he was very pleased
by the rise “given the tough trading
conditions”. He added that most raw
material prices, notably flour, had
stabilised recently, but sugar has gone
up sharply.
ANALYSIS l Greggs
483.20
p 6 Oct
485
475
465
30 Sept 3 Oct 4 Oct 5 Oct 6 Oct

Cranswick is boosted by
shoppers’ switch to pork
that the growing popularity of pork
▲

CONSUMER
SAUSAGE specialist Cranswick has
seen an increase in pork sales as con-
sumers switch to cheaper meats.
The group, which issued a profits
warning in July, said the versatility
and relatively low price of pork are
key to this positive trend. It added
products has been a contributory fac-
tor to a recent increase in sales at
Cranswick.
Underlying sales volumes in the
first quarter covering April, May and
June grew by three per cent and rose
by seven per cent in July, August and
September.

TED BAKER BUCKS HIGH STREET GLOOM

British designer clothing
brand Ted Baker yesterday
posted strong first-half
results led by growth in its
overseas and online busi-
nesses, and raised its inter-
im dividend 13.5 per cent.
The fashion retailer, which
began as a menswear
brand in Glasgow in 1987,
said for the 28 weeks to 13
August, pre-tax profits rose
to £8.5m from £7.5m last
year. Revenue grew 17 per
cent to £102.8m.
The company said it
remained cautious on the
second half considering
economic headwinds hit-
ting the retail sector.

Picture: GETTY IMAGES

 18 News
EasyJet looks
to open new
French bases
▲
TRANSPORT
BY KASMIRA JEFFORD
LOW-COST carrier easyJet has unveiled
plans to open two new bases in France
next year, stepping up the competition
with the nation’s flagship carrier Air
France-KLM.
EasyJet announced yesterday it will
add two Airbus 319 aircraft in Nice
and Toulouse airports, bringing the
airline’s number of French bases to
five – with the other three being
Charles de Gaulle and Orly airports in
Paris and Lyon.
The move comes just months after
Air France announced it would
“launch the offensive” against budget
airlines and operate a regional low-
cost model to claw back 4m customers.
The French airline opened a base in
Marseille earlier this month and plans
to offer flights from other cities
including Nice and Toulouse, but is
still in negotiations with the unions.
EasyJet grew its capacity in France
by 22 per cent last year compared to
wider market growth of one per cent,
according to its annual report. The air-
line added that it had taken advantage
of Air France cutting its capacity on
routes such as Madrid and Barcelona.
“France is a strategic market for
easyJet, where the airline – already the
country’s second largest – clearly has
room to grow,” Catherine Lynn,
easyJet’s customer and revenue direc-
tor, said in a statement.
EasyJet’s passenger numbers rose
8.5 per cent in September compared to
last year, it also said yesterday. Its load
factor rose 0.3 percentage points to
89.6 per cent.
ANALYSIS l Easyjet
p 347.00
350 6 Oct
340
30 Sept 3 Oct 4 Oct 5 Oct 6 Oct
Qantas boss Alan Joyce has bought more than 100 new planes
Qantas signs deal for 110
more A320 Airbus planes
TRANSPORT
▲
BY HARRY BANKS
AUSTRALIAN airline Qantas said
yesterday that it had finalised an
order for 110 single-aisle Airbus
planes following a commitment for
the aircraft signed in August.
The carrier announced a firm
order for 78 of Airbus’ next genera-
tion A320neo jets, along with 32
A320 planes, adding that it will
decide on which engine to use with
Picture: REUTERS
the planes at a later date.
Airbus has sold fewer planes than
Boeing in September but main-
tained a strong advantage over its
US rival in the first nine months of
the year after setting the pace in
the market for narrowbody jets
The European planemaker said it
sold 23 aircraft last month, bring-
ing its order total for the year to
1,179 passenger jets. Net orders,
adjusted for cancellations, stood at
1,038.
CITYA.M. 7 OCTOBER 2011
US airlines set
to lose over EU
carbon cap plan
TRANSPORT
▲
A SCHEME that would force all foreign
airlines to pay for their greenhouse gas
emissions “is compatible with interna-
tional law”, an adviser to the bloc’s top
court has said, in response to a chal-
lenge by North American airlines.
The opinion, issued yesterday by the
advocate general at the European
Court of Justice in Luxembourg, marks
a preliminary victory for the EU in its
attempts to extend its cap-and-trade
programme beyond its borders from
January.
The opinion by Juliane Kokott will
come as a blow to the United
Continental and American Airlines,
who have brought a case against an EU
plan to make any carriers taking-off or
landing in the 27-member bloc pay for
their emissions.
Though the court will not rule until
next year, it follows the advocate-gen-
eral’s opinion in most cases.
Expressing disappointment, the
International Air Transport
Association (IATA), the industry body,
said that the opinion “does not mark
the end of the case”.
“Rather than risking a further esca-
lation of tensions amongst states, I
encourage Europe to support a success-
ful, global and effective solution,” said
Tony Tyler, director general of the
IATA.
 20 News
Exillon finds
extra oil in
West Siberia
▲
ENERGY
BY HARRY BANKS
OIL producer Exillon Energy said it
found oil at a Russian well, and
would connect it to the existing
production facilities following test-
ing.
The London-listed company said
it found 15.5 metres of net oil pay –
referring to the zone of a reservoir
that contains economically pro-
ducible oil – at its EWS I-43 well in
the south-eastern part of the East
EWS I field in West Siberia.
“The well flowed water-free oil
naturally to the surface with a flow
rate of 595 barrels per day,” the
company with assets in two oil-rich
regions of northern Russia, Timan-
Pechora and West Siberia, said in a
statement.
Last month, the company found
7.3 metres of effective net oil pay at
its EWS I-44 well in the same
region.
The firm has drilled 15 wells in
the region this year, and is building
a connection to the Transneft
pipeline, a state-owned project that
sends oil from Siberia to the Baltics.
The firm said in August that its
drilling efforts are well-funded,
with a cash pile of $152.7m (£99m)
following a new share issue in
April.
Exillon shares, which have lost
more than half their value over the
last three months, shot up more
than 22 per cent yesterday to 234p
on the London Stock Exchange,
valuing the firm at around
£308.8m.
ANALYSIS l Exillon Energy
240
p 1,200
234.10
220
6 Oct
200
30 Sept 3 Oct 4 Oct 5 Oct 6 Oct
CITYA.M. 7 OCTOBER 2011
BEST OF THE BROKERS
ANALYSIS l Pernod Ricard
€ 62.09
PERNOD RICARD
JP Morgan rates the drinks giant as “over-
weight” with a target price of €71, ahead of
Aminex slumps
as well is shut
70 6 Oct a first quarter sales report on 20 October. ENERGY
▲
68 The broker forecasts sales of €1.95bn versus
66 SHARES in oil and gas explorer
a company consensus of €1.91bn, and organic Aminex plummeted more than 40
64
sales growth of 5.6 per cent for 2012 against per cent yesterday after the company
62
a consensus of 6.1 per cent. Sales are expect-
said it had suspended work on its
60
ed to be more muted in the Americas and exploration well off the coast of
58 Tanzania.
Europe, with lower gross margin expansion
The company blamed “extreme
Aug Sept Oct seen as a result. drilling conditions” due to obstruc-
tions at the base of the well bore for
ANALYSIS l The Swatch Group SWATCH the problems.
Morgan Stanley rates the watch group as Despite the hold up, Aminex said
CHF
“underweight” with a target price of the Nyuni prospect was still one of its
326.40 CHF342, and says the stock’s risk-reward is “prime exploration targets”.
425
6 Oct
turning less favourable given the risks of
400
the wholesale channel, and deteriorating
375
350
325
mid-tier luxury demand. The broker
assumes sales within Swatch’s watch and
jewellery division will fall seven per cent in
EnCore heralds
300
Aug Sept Oct
2012, but says the stock remains inexpen-
sive compared to its sector peers.
successful year
ENERGY
▲
ANALYSIS l Rightmove PLC RIGHTMOVE
Goldman Sachs downgrades the estate
1,214.00 ENCORE Oil, which was sold at a 55
p 6 Oct agent and developer to “neutral” from
1,300 per cent premium yesterday to
1,250
“buy” following the stock’s recent outper- Premier Oil, said its last trading year
formance, and sees better opportunities had been “successful and satisfying”.
elsewhere in the sector. The broker expects During the year, EnCore completed
1,150 two exploration wells in the Catcher
1,100
average revenue per advertiser to reach oil discovery area, and expanded its
1,050
£440 for 2011, and £500 in 2012. It fore- presence in the North Sea.
1,000
casts underlying operating margins to EnCore posted a loss of £2.5m, com-
progress to 70.3 per cent in 2011 and 71.6 pared to a profit of £11.4m in the prior
Aug Sept Oct per cent in 2012. year, which was largely due to sale of
the Breagh gas asset. Without that
To appear in Best of the Brokers email your research to notes@cityam.com sale, EnCore lost £11.5m in the year to
June 2010.
CITYA.M. 7 OCTOBER 2011 News 21

HSBC in talks with Citic fails to impress as its

Oman International shares float in Hong Kong
▲

BANKING
BY ELIZABETH FOURNIER
BRITISH bank HSBC Holdings and
Oman International Bank are in dis-
cussions for a potential merger of
HSBC’s Oman operations with the
Gulf lender, OIB said in a statement
yesterday.
“These discussions are ongoing
and no decision has been made as to
whether to recommend proceeding
with any transaction,” OIB said in a
bourse statement.
HSBC, which has operated in
Oman since 1948, has five retail
branches in the sultanate.
The head of its securities business
was quoted by Omani media this
week as saying the British lender
had a long-term commitment to
Oman and the Middle East. Shares
in HSBC closed up 5.1 per cent yes-
terday.
▲
FINANCIAL SERVICES
BY HARRY BANKS
CITIC Securities, China’s largest list-
ed brokerage, made a weak debut in
Hong Kong yesterday, underscoring
poor appetite for new share sales in
the face of global market volatility.
Its stock fell as much as 10.5 per
cent before closing unchanged,
while the broader Hong Kong index
ended up nearly six per cent.
The disappointing start for Citic including Haitong Securities, New
Securities, which raised a less-than- China Life and China Guangfa
expected $1.7bn (£1.1bn) in its first Bank.
listing outside the mainland, could “It’s a very difficult time for any
dash the hopes of other Chinese IPO because market sentiment is so
firms planning to raise funds in weak right now,” said Patrick Yiu, a
Hong Kong, the world’s biggest IPO director at CASH Asset
market for the past two years. Management. “Investors want to
The offering is the first of nearly look for stocks now with a track
$35bn in share sales in Hong Kong record with very low valuations.
and China still planned in the com- They don’t have the appetite for
ing months by financial companies, new stocks.”

London 2012
IMAGE OF THE WEEK

ARCHERY TEST EVENT | LORD’S CRICKET GROUND

GB archer Amy Oliver joined the welcome photographs from all

world’s best archers this week for
the London Archery Classic at Lord’s.
Between now and the start of the
2012 Games, City A.M. is publishing
its Olympic Image of the Week. We
sources – sponsors, athletes, local
businesses, commuters and local res-
idents. Please email us at
pictures@cityam.com with
IOW2012 in the subject line. Full
details: cityam.com/london-2012.

NEWS | IN BRIEF
Rusal completes debt refinancing Eni upbeat over Libyan plants
UC Rusal said yesterday it had finished
refinancing its $11.4bn (£7.4bn) debt
portfolio, finally freeing it from restric-
tions on investments and dividend pay-
ments imposed by a restructuring deal.
The firm, Russia's most indebted at the
time of the 2008 credit crunch, said it
had used a recently agreed new loan to
pay off $4.34bn still owed to foreign
creditors under its landmark restructur-
ing deal with over 70 lenders. The repay-
ment was made with a $4.75bn
syndicated loan arranged with a pool of
13 banks. The terms of the restructuring
imposed limits on Rusal's management
of financial resources.
Italian oil firm Eni said yesterday its oil
and natural gas plants in Libya are not
damaged and it expects to have produc- 0845 200 8003
tion levels there back to pre-conflict lev-
els in about a year. “We are working honda.co.uk
closely with NOC and will be back to
pre-crisis levels in 12 months,” Eni chief
executive Paolo Scaroni said on a confer-
ence call with analysts. Scaroni said pro-
duction at the group's Abu Attifel field in
Libya has now reached 70,000 barrels
per day – a level close to that seen
before the civil war. In September Eni
said it had restarted production at Abu FIND YOUR
Attifel at around 32,000 barrels of oil LOCAL DEALER
per day.
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 As part of our You are the
Big Picture campaign, we’re
not only giving people
like Laura the chance to see
their picture projected live
on to London’s National Theatre,
we’re also giving them the opportunity
to tell the world what matters to them.

In return, we’ll donate £2 to

Save the Children projects helping street
children in India.

Upload your photo at

facebook.com/Aviva

Laura Seddon, Coventry

CITYA.M. 7 OCTOBER 2011 News 23

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

Signia Wealth
Shalini Khemka has been appointed as
a managing director to develop the
wealth manager’s private equity arm
and expand the business overseas.
Khemka will continue as CEO and
director of The London Entrepreneurial
Exchange, which she co-founded in
2010 while working as an investment
banker at LDC, the private equity arm
of Lloyds Banking Group. Prior to join-
ing LDC, Khemka led a team in the
international trade finance business of
Lloyds Banking Group.
Kames Capital
Jonathan Taylor has been appointed to
the new role of business development
and consultant relations manager
within the institutional sales team.
Taylor joins from Tokio Marine Asset
Management, where he was vice presi-
dent in the London office.
McQueen
The specialist corporate finance advis-
er has made four new hires. Garyth
Stone and Patrick Mewton join the
food and drink team from Rabobank,
Ashish Burman joins the retail team
from Mezzanine Capital, and independ-
ent consultant John Richards has been
appointed as a retail consultant.
RBC Wealth Management
RBC Wealth Management has estab-
lished a new London-based Eastern
European desk by appointing Justyna
Jackholt as a director. Jackholt joins
from Clariden Leu, where she was a
vice president in the London office.
PwC
Richard Abadie has been appointed as
global leader of PwC’s capital projects
& infrastructure practice. Abadie, a
partner based in the firm’s London
office, succeeds Carter Pate, who has
recently retired from the firm.
Jupiter
Robert Mumby, a financial manager at
Jupiter, will take over as manager of the
Jupiter international financials fund
from Philip Gibbs on 31 October. Guy de
Blonay becomes deputy manager of the
Jupiter international financials fund and
the global financials fund, and Robert
Mumby becomes deputy manager of
the Jupiter financial opportunities fund.

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FTSE lurches up on
economic optimism
THELONDON
metals as investors took heart from
US data that hinted at an improve-
ment in the labour market.

REPORT Antofagasta and ENRC, up 10.2 per

cent and 9.7 per cent respectively,
were the top performers in a sector
which has lost almost a third of its

B
RITAIN’S top shares advanced
yesterday as sentiment was lift-
ed by hopes policymakers will
take the necessary measures to
stabilise stressed European banks and
by the Bank of England’s decision to
launch a second round of quantita-
tive easing.
“Central banks have come to the
party and said ‘look, we’re really con-
cerned about growth; we’re going to
take steps to boost the economy, or
support the banking system,” said
Michael Hewson, analyst at CMC
Markets.
“I think that tells investors that
there is some sort of consensus form-
ing,” he said.
Financials were among the top
gainers. Prudential lurched almost 12
per cent to the top of the FTSE 100
leader board, while Standard
Chartered and Lloyds Banking Group
value in 2011.
Industrials IMI and Weir Group,
sensitive to the economic cycle,
enjoyed respective gains of 11.5 per-
cent and 6.6 percent.
Elsewhere, brewer SABMiller
jumped seven per cent, in volumes
more than four and a half times its
90-day daily average, on Brazilian
press reports that Anheuser-Busch
InBev is set to make an $80bn move
on the brewer.
On the downside, Man Group
slipped 1.2 per cent, topping the blue-
chip fallers’ list, in the wake of the
hedge fund manager’s recent disap-
pointing trading update.
ANALYSIS l FTSE
6,200
5291.26
5,800 6 Oct

Discoveries
enjoyed near nine per cent gains.
The FTSE 100 closed up 189.09 5,400
points, or 3.7 per cent, at 5,291.26,
eradicating losses sustained in the 5,000
first two trading days this week.
Miners gained in tandem with base 11 Jul 29 Jul 18 Aug 8 Sep 28 Sep
A product of Lufthansa.

Europe lifts Wall St

for a third session
said it was ready to buy bonds to pro-

THENEW
vide longer-term cheap money for
European lenders in need of funding.
The S&P Financial Sector gained 3.2

YORKREPORT per cent and has risen 8.8 per cent in

the past three days, though it remains
one of the weakest sectors this year.
Over 100 fascinating
destinations in Europe
The Dow Jones industrial average
are just waiting to

U
S stocks rose for a third day in a
row yesterday as developing
Eurozone plans to backstop
European banks gave investors
hope the threat of a financial crisis
was waning.
Bank shares led gains on Wall Street
as the EU planned to recapitalise
banks and the European Central Bank
rose 1.68 per cent to 11,123.33. The
S&P 500 gained 1.83 per cent to be explored.
1,164.97. The Nasdaq Composite
gained 1.88 per cent, to 2,506.82.
“We’re popping back up again,
based on the idea they [European offi-
cials] will reach an agreement and res-
cue us,” said Doug Roberts of Channel * Fare applies to one-way flights to selected destinations in Germany and Italy; seat availability is limited and subject to change.
For other European destinations, please check the respective fares and conditions.
Capital Research.
 24 Focus on Steve Jobs CITYA.M. 7 OCTOBER 2011

ANALYSIS l Apple inc

380

360
FORCED OUT OF APPLE
340 After a tussle Jobs is turfed
out of the company, with
320 John Sculley now in charge

300

280
APPLE BUYS NeXT
260 Jobs returns to the Cupertino fold after his firm is
bought by Apple.
240

220

200
JOBS BUYS PIXAR
He snaps up the com-
180
puter animation com-
pany from George
160 Lucas for $10m

140

PIXAR IPO
120
Following the roaring AMELIO IS OUSTED BY
APPLE GOES PUBLIC success of Toy Story,
100 Jobs takes the firm he co- JOBS
Pixar raises $140m Jobs becomes the boss
founded public. Its shares in a stock market
rise by a third during their again after Gil Amelio pre-
80 JOBS FOUNDS flotation sides over a period of bad
first day trading
NeXT results and is pushed aside
60 He starts rival com- FIRST NeXT
puter firm, which The first computer
40 will design the designed by Jobs’ new
basis for Apple’s OS company is launched
20

0
1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 200

Steve Jobs, 1955-2011 and Pixar, he helped to shape the way tion soon made Apple a commercial
▲

TECHNOLOGY
BY STEVE DINNEEN
THE Apple.com homepage, one of the
most valuable pieces of virtual real
estate in the world, yesterday featured
just one black and white photograph,
alongside the words: “Steve Jobs 1955-
2011”.
The death of the iconic leader of the
world’s biggest technology company
was met with an outpouring of grief
usually reserved for musicians and
world leaders. Chief executives, devot-
ed fans and US President Barack
Obama were among those to pay their
respects after his tragic death at the
age of just 56. iPhones showing his pic-
ture were left alongside the more tra-
ditional flowers and candles outside
Apple Stores across the world.
Jobs’ impact on technology, and its
impact on him, is unique to his gener-
ation. He grew up as the personal com-
puter market was becoming a reality
for Americans. Through Apple, NeXT
we think about and interact with tech-
nology. He worked on the first wave of
consumer operating systems and had
a ringside seat as the internet evolved
from a lab to become the dominant
form of mass communication. Apple
was a part of Steve Jobs as much as
Steve Jobs was a part of Apple.
He grew up in Cupertino, where he
would later base his world-conquering
Apple empire, with his adopted par-
ents (he never met his biological father
and was estranged from his biological
mother). He met Apple co-founder
Steve Wozniak while working at HP,
going on to build their first computer
in his parents’ garage using money
from the sale of Wozniak’s van.
Jobs was a hard task master – he
demanded the same perfection in oth-
ers as he aimed for himself. Those who
have worked for him often describe
the experience as an emotional roller-
coaster, with the lows coming in equal
measure to the highs. Jobs’ determina-
success – its IPO created more
overnight millionaires than any other
before it. But just five years after going
public, Jobs was forced out after a spat
with the chief executive he had per-
sonally wooed from Pepsico.
Jobs’ achievements during his 12
year absence – during which Apple
veered close to bankruptcy – are as
astonishing as his accomplishments
with the company. NeXT, the comput-
ing firm he founded, shaped the mod-
ern user interface. Pixar, which netted
him the majority of his fortune,
changed the direction of cinema. The
story after he rejoined Apple is the
stuff of modern legend – iMac, iPod,
iPhone, iPad – culminating in Apple
becoming – briefly– the biggest firm in
the world. Through an uncanny knack
of understanding what people want
before they knew they wanted it, Jobs
transformed not only computing but
music, film and publishing. Jobs’
death is a huge loss – not only to Apple.

Apple stock avoids the A talismanic leader who leaves the world a richer place
IT'S OFTEN said that Steve Jobs didn’t a decade later, he sold it to Disney for n’t come first. The explosion in

feared lurch downward

give a fig about maximising share-
holder value. Considering how good
he was at it, it scarcely matters.
When he rejoined Apple in 1997, its
stock was worth $5-a-share while its
times knocking billions from its mar- market cap – mostly accounted for
▲
$7.4bn, giving shareholders a premi-
um of 171.2 per cent. Since then,
Disney’s stock has continued to rise
while rivals flounder, in large part
due to the success of the Pixar fran-
chise.
mobile data would have had been
much less seismic. Vodafone would-
n’t have booked £1.4bn of data rev-
enues in 2011; and total data
revenues would not be forecast to
rise to a staggering $440bn by 2015.

TECHNOLOGY
APPLE stock resisted the expected
downward lurch in the wake of Steve
Jobs’ death, falling only slightly yes-
terday. It closed at $377.37 after ini-
tially surging above $380 a share –
still below its September high of $423.
Steve Jobs’ long battle with pancre-
atic cancer rocked Apple’s share price
on several occasions, with rumours of
a deterioration in his health some-
ket cap. Yesterday’s share perform-
ance has been seen as a vote of
confidence in new chief executive
Tim Cook, with the market appearing
to show faith in the newly formed
Apple board.
Apple has now regained almost all
of its losses after what was seen as a
disappointing launch of its latest
iPhone, the 4S. It was launched just a
day before Jobs, aged 56, passed away.
by cash and other tangibles – was a
whisker under $5bn. Now worth
almost $350bn, it jockeys for the
position of the world’s biggest com-
pany. Since 1997, Jobs has increased
the value of the company by almost
7,000 per cent.
Then there was Pixar, the anima-
tion studio that listed in 1995 at $22-
a-share, valuing it at $2.7bn. Just over
Even when Jobs wasn’t directly
involved, he was helping to make
other people millionaires. Without
the iPhone, the smartphone revolu-
tion would have been much less
transformational. Samsung might
be suing Apple over patent disputes,
but there is no way it would have
sold 19m smartphone handsets in
the second quarter if the iPhone had-
Then there are the scores of “App
Store millionaires”, making their for-
tune by selling games and apps to
Apple customers. Everyone agrees
that Jobs made the world a richer
place – in more ways that one.
BOTTOMLINE
Analysis by David Crow
 CITYA.M. 7 OCTOBER 2011 Focus on Steve Jobs 25

QUITS TOP JOB “Steve, thank you for being a

MAKES HIS FORTUNE
Disney buys Pixar for $7.4bn, making
Jobs the biggest Disney shareholder and
providing a vast portion of his wealth
He steps down as chief
“The world has lost a visionary. “The world rarely sees someone
There may be no greater tribute who has had the profound mentor and a friend. Thanks for
executive after admit-
ting he could no longer to Steve's success than the fact impact Steve has had, the showing that what you build
MADE PERMA- “meet my duties”. He that much of the world learned effects of which will be felt for can change the world. I will
NENT BOSS had taken more time off of his passing on a device he many generations to come.” miss you.” Facebook’s Mark
Jobs officially earlier this year invented.” Barack Obama Microsoft founder Bill Gates Zuckerberg
back in charge
after the “inter-
im” is finally “He was dubbed a megaloma- “No words can express our sad- “Today, we lost one of the most
dropped from his HEALTH niac, but Steve Jobs often gam- ness at Steve's death or our influential thinkers, creators and
title. He had SCARE HITS bled on young, largely gratitude for the opportunity to entrepreneurs of all time. Steve
taken to calling SHARES inexperienced talent to take work with him. We will honour Jobs was simply the greatest
himself iChief Cancer Apple forward; that such faith his memory by dedicating our- boss of his generation.” News
rumours was spot on.” James Dyson selves to his work.” Tim Cook Corp boss Rupert Murdoch
spook
investors.
Bloomberg
publish his “Tonight our City – which has “I am very, very sad to hear the “Steve Jobs changed the world.
obituary by always had such respect for news about Steve. He was a I knew him a little and admired
mistake JOBS DIES creative genius – joins with peo- great man with incredible him entirely. Love to Apple and
Tributes flood in ple around the planet in remem- achievements and amazing bril- his family.”
from all over the bering a great man.” New York liance.” Entertainer and presenter
world for the Mayor Michael Bloomberg Google boss Larry Page Stephen Fry
technology icon

CITY VIEWS: CAN APPLE EVER REPLACE STEVE JOBS? Interviews by Phoebe Torrance

CANCER BATTLE CLIVE GILBERT | INCEPTA PAUL SMITH | LLOYDS

Jobs is forced to LEAVE OF
take time off to bat- ABSENCE
Jobs takes time “You never know if Apple will find “Jobs was a part of a team, nothing
tle pancreatic can- another great innovator like Steve lasts forever and you can’t expect
cer, sparking years off, later admit-
of speculation over ting to having Jobs. Who at Apple could fill his Apple to not replace his expertise.
his health undergone a liver shoes? I think everyone should watch Apple is such a world-wide success
transplant the share price.” that it would be near impossible for
it not to survive.”

DAVID PEARSON | HELIX UK

“The brand is bigger than the individual. The products which Apple has
02 2003 2004 2005 2006 2007 2008 2009 2010 2011 created are market leaders. I think Apple will definitely survive.”
 Wealth Management | Markets
27

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 The Forum
28
In a chaotic world, business
needs competent generals.
A military expert weighs in
V
INCE Cable is not known for his mili-
tary commentary. So when he recent-
ly declared that the economy more
closely resembled warfare than any
other human condition, he caught the head-
lines; I believe he also got it dead right. Why
are we surprised by the analogy? Business
and warfare are fundamentally forms of
adversarial engagement, where competing
parties seek marginal advantage in the mar-
ketplace or on the battlefield.
Thankfully, nobody gets killed in
business; a state monopoly on violence
remains the defining characteristic of
the military instrument within
democracies. But when your third
quarter numbers are soft and those
phone calls from the boss on how can
he help you become more successful
get increasingly insistent, it doesn’t
always feel like that. And business is
an unremitting 24 x 7 x 365 affair. No
matter how demanding the contact
battle, most soldiers spend more time
training and preparing for war than
they do conducting it.
Both disciplines are about the cre-
ation of highly defined, high per-
forming teams: brand or regiment.
Both face a sentient opponent – the
competition or the enemy – and any
complacent assumption that the oppo-
nent is less smart, tough or determined
than the home team is likely to lead
to failure. Both business and military
life are defined by a patchwork of
alliances and adversarial relationships;
the more complex and insidious twen-
ty-first century conflict becomes, the clos-
er this resemblance will be.
But perhaps there is a single defining con-
cept that draws the two together more than
any other, and it is what I can best describe as
the phenomenon of strategic shock. A strate-
SIR ROB FRY gic shock is an event that makes us think dif-
ferently about our lives or the way we
cityam.com/forum
conduct business. By definition, it is unfore-
seen and unpredictable; its effects are ubiqui-
tous and indiscriminate and have the
capacity to change personal, corporate or
institutional assumptions; it’s what war feels
like. The first decade of the 21st century con-
tained two clear examples: the events of 9/11
completely altered the global security land-
scape, while the financial crisis changed
assumptions around business practice, the
role of the state and international economic
co-operation.
But the alarming thing about the world
right now is that 2011 has already produced
the Arab Spring and the euro crisis, while an
Iranian bomb, Chinese mercantilism and the
US deficit are waiting in the wings. So, as the
incidence of strategic shock increases, maybe
Cable’s easy headline was even more
prophetic than it first appeared or he ever
intended.
In its pure form, war implies the implaca-
ble clash of competing wills in an environ-
ment where the conventions, structures and
established routines of peacetime are lost
and replaced by chaotic violence. Is that
where we are now? No, it’s worse than that.
Competing wills are always biddable at some
stage, but what we seem to face now is not an
enemy looking, at some point, to negotiate
but an arbitrary destiny which has none of
the calculus of strategic advantage.
The world we face now has all the confu-
sion of warfare, but, for now, none of the
bloodshed (literal at least, metaphorical
bloodshed stains most boardrooms and
chanceries). The trick will be to keep it that
way as Greek mobs howl for justice, the
British dispossessed contemplate the next
round of recreational larceny and China
looks to contest US naval hegemony in the
western Pacific.
So, a parlous situation, and, if we pursue
the warfare theme, what do the generals
intend and what strategies will they employ?
This is the point at which a military frame of
CITYA.M. 7 OCTOBER 2011
reference begins to become unstuck. Most
militaries maintain encyclopaedic contin-
gency plans and constantly rehearse respons-
es to unpredictable events, but the
politicians holding the fate of the euro or the
US federal deficit in their hands conspicu-
ously lack coherent plans or even the intel-
lectual techniques to address the problems
they face.
All this begins to look like the worst of all
possible worlds: a state of war but with no
competent generals to take charge. But that
may change soon. Afghanistan is now the
USA’s longest-ever campaign, and hundreds
of thousands of young Americans have been
engaged in the wars of the twenty-first centu-
ry. The numbers from the roll call of
European nations is smaller, but still repre-
sents a phenomenon that has not existed on
this continent for 60 years – a generation of
future leaders in public and business life
who have experienced “the disciplines of the
wars”. For men and women whose formative
experiences have been forged in the crucible
of combat, this will carry an indelible mark
into their future careers, and the sooner the
better.
It was a good line, minister, but truer than
you thought.
A former general, Sir Robert Fry KCB, CBE is an
experienced leader, soldier and businessman. With
over 30 years spent on military operations from
Ulster to Kosovo, the Gulf, Iraq and Afghanistan, he
is now executive chairman of global business consul-
tancy McKinney Rogers where he advises the chief
executives of Fortune 500 companies.
Strategic shock is what war
feels like. Two examples are
9/11 and the financial crisis.
 The Forum
CITYA.M. 7 OCTOBER 2011 29
In association with
Email: theforum@cityam.com
Twitter: @cityamforum

RAPID RESPONSES
Inflexible traders
As your Q&A on Monday said,
the London transport system is
going to struggle to cope during
the Olympics and most business-
es are going to look at ways for
employees to work remotely. But
City traders are one of those
increasingly rare professional
groups whose remote working
practices are restricted. One of
the key reasons for this is the
regulation that requires all their
voice conversations to be
recorded. This technology is
Decoding the protests
occupying Wall Street
BY MARC SIDWELL
automatically implemented on
the trading floor, and although it
is now possible for traders to
trade securely and remotely, this
equipment remains unproven
compared to the remote work-
ing technology used by regular
office workers. Hopefully the
Olympics will be the catalyst for
financial institutions to test the
latest technology and extend
flexible working even to traders.
Kevin Acott
European MD of IPC Systems
Speak your mind
The great green
The Forum is open for you to
take part. Got a sharp comment
on one of today’s columns or
rapid response topics? Do you
have another subject relating to
roadblock in the
path of recovery
business and the economy you
want to share your opinion on?
We want to hear your views.
Readers are invited to comment
on the web: cityam.com/forum;
by email: theforum@cityam.com;
and on Twitter: @cityamforum.
The best responses will be
reprinted in The Forum. A radical agenda
on emissions is a
threat to Britain’s
fragile economy
D
AVID Cameron wants the coalition to be
the “greenest government ever”. But it
is doubtful this aim is compatible with
strong growth and economic recovery.

A
MERICA’S left
may finally have
found its answer
to the Tea Party.
Over the last four
weeks, the Occupy Wall
Street (OWS) move-
ment has gone from a
local curiosity to a
national phenomenon,
with copycat protests in
several cities across the US, including Washington
DC. In a sure sign that it is being taken more serious-
ly, this week OWS has found both Hollywood celebri-
ties and big labour unions trying to shelter under its
anti-corporatist banner. Its moment in the spotlight
may soon pass, but then, people said the same thing
of the Tea Party, mocking and marginalising its
members until their persistence and anti-tax integri-
ty made grudging acceptance the only option.
Many commentators are now writing off these
protestors for their lack of a clear vision of reform.
No doubt there is little original or penetrating
analysis in some of their anti-capitalist placards –
or in the idea that an America without Wall Street
would be a better place.
But they also have a point.
Like the Tea Party, this is a modern, decen-
tralised, social-media-empowered campaign. While
started by the Canadian pressure group AdBusters,
it has taken on a life of its own. It survives and
thrives, at least for the moment, because it crys-
tallises a widely-shared disquiet. Its headless net-
work varies in the conclusions it draws from that
feeling, giving the impression that it lacks a clear
platform. But in its collective heart is a visceral dis-
gust at the intimate dealings between a wealthy
political class in Washington and a wealthy class of
financiers in Wall Street, while the American econ-
omy flounders. AdBusters state that their central
demand is to “separate money from politics”.
This movement is based on folk economics, not
statistical depth, but Main Street America is hurt-
ing, and its power brokers are neither hurting nor,
as unemployment hovers around 9 per cent, do
they seem to be helping much either. The protes-
tors are right to criticise the corporatist tilt of the
Obama administration, which has not only strong
Wall Street ties, but has turned GM into
Government Motors and has used its bully pulpit to
back flawed green energy projects like Solyndra
with American taxpayers’ money.
But they risk drawing the wrong conclusions.
While OWS is the self-styled resistance against a
world where big politics and big business live in one
another’s pockets, many of its largely leftist follow-
ers are marching to demand that government
should be doing more for them instead. But it is
exactly such demands that gave government the
power that made it a prey to corporate capture.
The answer to big politics is not to change the
interest group it favours – big business or the
unions, corporatism is a drag on innovation and a
barrier to those without the right connections. Its
regulatory distortions create the kind of dangers
that the financial crisis made evident, with ratings
agencies an uncontested oligopoly and huge finan-
cial firms aware that if their decisions were wrong,
they would not have to bear the consequences.
The only answer to big government and its cul-
ture of cronyism is small government and a culture
of personal responsibility. If the protestors could
recognise this, and make common cause with the
Tea Party, together they might stand a chance of
restoring not only the American economy, but the
American Dream, too.
Marc Sidwell is the Business Features Editor of
City A.M.
New Labour’s climate change targets were
very ambitious but the coalition has now gone
even further. The government has committed
to targets that imply in just twenty years’ time
nearly all the UK’s electricity will have to be
generated by renewables or nuclear power.
There will also be a radical change in trans-
port – a major reduction in mobility and per-
haps a shift to electric vehicles. The housing
sector will be transformed, with new homes
required to be ultra energy efficient and
extensive subsidies deployed to insulate exist-
ing homes. Nearly every economic sector will
be subject to even more stringent environ-
mental regulations, and more activities will
be covered by the EU’s Emissions Trading
Scheme – effectively an extra tax on business.
The costs involved are staggering. Over the
next decade alone, the government estimates
that £200bn of capital investment will be
required to replace fossil-fuel power stations
with renewable and nuclear plants. And this
figure assumes the mammoth cost overruns
that have plagued previous big infrastructure
projects will somehow be avoided. Upgrading
the national grid to recharge millions of elec-
tric-car batteries could cost a further £100bn.
Energy markets are being manipulated to
fund green investment. According to govern-
ment estimates, electricity prices will be
inflated by 26 per cent in 2015 as a result of
these policies with gas up by 10 per cent.
Consumers will be paying an estimated £11bn
a year extra.
Energy-intensive manufacturing industries
will suffer most. More production will migrate
to China and India – one reason the govern-
ment’s policies are unlikely to have a signifi-
cant impact on climate change.
RICHARD
WELLINGS
A range of anti-growth transport policies
form another key element of the govern-
ment’s green agenda. The government is
favouring rail over air and road, despite the
former requiring taxpayer subsidies of £5bn a
year. If the coalition decides to support the
High Speed 2 rail scheme, supposedly a green
alternative to air and road travel, it will end up
costing taxpayers an estimated £34bn on top.
Most worrying of all is the likely effect on
private investment. Spending hundreds of bil-
lions on “green” infrastructure will crowd out
investment in wealth-creating enterprises.
Resources that would otherwise be used by
businesses to improve productivity and satisfy
consumer demand will be diverted to schemes
that actually reduce economic efficiency and
require ongoing subsidies.
British business is facing a green roadblock.
Economic growth will be significantly lower
as a result, and it will be far harder to reduce
government borrowing. More moderate
approaches to climate change are possible,
given recent improvements in technology. By
adopting a radical green agenda, the coalition
risks suffocating growth at a time when a
strong recovery is desperately needed.
Dr Richard Wellings is deputy editorial director at
the Institute of Economic Affairs. www.iea.org.uk.
 Living
30
Investments that
are as safe as houses
Property is still attracting attention in these
tough economic times, writes Stephanie Broll
T
UMULTUOUS financial markets have not
turned off the property investor. Indeed,
the luxury London and world cities mar-
kets are booming.
Catherine Cockcroft of estate agent Aylesford
says: “Investing in bricks and mortar has proved
to be a reliable asset because stocks and shares
are extremely unsteady, interest on savings is
nominal and a reasonable pension is looking
unlikely in years to come.”
No wonder then that the Property Investor
Show – the annual gathering for property
investors and landlords – is back in town next
week. And we are promised that this year it’s
going to be bigger than ever. It will even be sport-
ing an Indian pavilion, where developers and
agents from mainstream Goa to niche markets
such as Gurgoan will be out in force, ready and
willing to give comment and advice on the mar-
ket.
There will also be Sipp Zone, dealing with
property for self-invested personal pensions,
LE
N S
O IO
SA
style
W UD
NO ST
Sales Centre at 193 Bow Common Lane - Open daily
Mon - Sat 10am-6pm (calls answered until 10pm) • Sun 11am-5pm
Call: 0800 883 8321
www.bowtrinity.co.uk
Photograph of typical Telford Homes kitchen interior. *Price correct at time of going to press.
CITYA.M. 7 OCTOBER 2011
| Property Investor Show
catering to investors after strong but reliable
returns. Cockcroft says that renting can deliver a
gross yield of around 3.5 per cent: “Much health-
ier than the typical interest rates offered by
banks.”
STUDENT ACCOMMODATION
There will be a focus on student accommodation
too. Dave Burgess, who is marketing his firm the
Hotel Investment Company at the show, says he’s
going to be there because the student accommo-
dation market shows no sign of declining and
many investors haven’t realised this yet. “In fact,
the provision of accommodation is likely to
increasingly be the preserve of the private sector
since universities will be concentrating their
resources on their core business – the provision
of good quality teaching and research.”
The Property Investor Show & OPP Live 2011 show
will take place in the ExCel centre, London on 13-15
October 2011. To find out more visit: www.propertyin-
vestor.co.uk/london. The Property Investor Show is in town next week Picture: Alamy
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32 Living | Focus On CITYA.M. 7 OCTOBER 2011

BUY
STANMORE, HA7 BY DONATA HUGGINS
Q&A
Ed Mead
DIRECTOR OF
ESTATE AGENT
DOUGLAS & GORDON

I’m struggling to sell my flat

Q. and was wondering whether

you would recommend letting
it out and using the income to rent
or buy something else?
CASTLE KEEP PENTHOUSE BENTLEY PRIORY Given the difficulty everyone is
Price: £999,995
Castle Keep Penthouse is a duplex apartment over two floors and a roof terrace. It has
high ceilings, an elegant dining room with a marble fireplace, three double bedrooms all
en suite, a luxury bespoke oak-finished kitchen, guest cloakroom and laundry room.
Price: £2m
This striking duplex apartment enjoys views over the grade II-listed Italian garden
terrace at the former RAF Bentley Priory. The property has a large period balcony and
A. having getting a mortgage at the
moment, the rental market is
increasingly busy. Indeed, I’m amazed
two contemporary roof terraces. It has three bedrooms across three floors. Contact: that several commentators have now
Contact: Savills on 01923 824 225 or go to www.savills.co.uk City & Country Group on 01279 817882 or go to www.cityandcountry.co.uk stopped giving average sales values and
have started giving rental figures instead.
NEED TO KNOW | AREA INSIGHT The average is around £710 per calendar
STANMORE month at the moment. So renting your
PLACE COMMUTING: Stanmore sits at the EDUCATION: North London Collegiate property out may be an attractive option.
Price: £365,000 But being a landlord is not necessarily all
northern terminus point of the Jubliee School for girls is very close to it’s cracked up to be. Some parts of the
A first-floor, two-bed- line. It takes 50mins to reach both Stanmore. It scores highly every year
room apartment is country can command returns on capital
available in Albert Canary Wharf and the City from and has been named Independent of 10 per cent, but in London it can be
Court, Stanmore Place. there. Secondary School of the Year twice. less than half that.
Remember you will end up paying
It has two bathrooms income tax on the rent and up to 15 per
and is 63.6 square STANFORD | PRICES cent on management fees. This is clearly
metres in total. The not an investment strategy that adds up
development has a Detached Semi-Detached Terraced Flats
unless you intend to downsize. In fact, it’s
large lake and land- a mistake many potential buy-to-let
scaped gardens. Stanmore £857,349 £356,380 £323,758 £263,918 investors make.
Contact: Knight Frank Most professional investors look for
on 020 7681 5499 or London £791,353 £430,258 £448,423 £340,317 long-term capital growth using their
go to www.knight- rental income to keep the property in
frank.co.uk Source: Savills good condition.

GET ADVICE
CURRENT MORTGAGE DEALS BY DONATA HUGGINS Source: MoneySupermarket.com Get some advice on what your property
would let for. Talk to three agents and
get a good spread of values. Also, check
Lender Fixed/Flexible Rate Until APR Maximum Loan what they think the occupancy will be in
(per cent) (per cent) to Value (per cent) order to minimise void periods. If they
say there is demand in the area, ask to
see proof. Also, ask to see details of simi-
Santander Flexible 1.95 2 years 4 60 larly let properties – don’t take any fluff
answers.
Skipton BS Flexible 1.98 2 years 4.8 60 Do your research in the area before
Chelsea BS Flexible 1.99 December 2013 5.3 70 you try to find a tenant. The rental busi-
ness tends move quickly. It should be
First Direct Flexible 1.99 2 years 3.6 65 possible to find someone who will be
happy to rent your property over the long
Yorkshire BS Flexible 2.29 November 2014 4.4 75 term, often for years, meaning that hope-
fully you might then be able to sell your
Leeds BS Fixed 1.99 December 2013 5.5 75 property at a better time, and possibly
for more money.
Santander Fixed 2.35 December 2013 4.1 60 But I would be wary of clocking up
more debt on a second mortgage. That is,
Chelsea BS Fixed 2.39 December 2013 5.4 70 of course, if you can get one at the
moment.
ING Direct Fixed 2.69 November 2014 3.5 60

/cqlondon
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*Price correct at time of going to press. Photographs depict Vellum exterior and show apartment interiors. †Times are approximate and are courtesy of www.tfl.gov.uk.
 Business Features
34 CITYA.M. 7 OCTOBER 2011

| Insight

T
HEY gathered around the trading
screen in Execution. One of the
quants vacated his desk to give
them a better view.
“So, this is VIXAL-4 in operation,” said
Hoffman. He stood back to let the
investors get closer to the terminal. He
decided not to sit: that would have let
them see the wound on his scalp. “The
algorithm selects the trades. They’re on
the left of the screen in the pending
orders file. On the right are the executed
orders.” He moved a little nearer so that
he could read the figures. “Here, for
instance,” he began, “we have…” He
paused, surprised by the size of the
trade; for a moment he thought the dec-
imal point was in the wrong place. “Here
you see we have one and a half million
options to sell Accenture at fifty-two dol-
lars a share.”
“Whoa,” said Easterbrook. “That’s a
heck of a bet on the short side. Do you
guys know something about Accenture
we don’t?”
“Fiscal Q2 profits down three per
cent,” rattled off Klein from memory, Robert Harris presents
“earnings sixty cents a share: not great a terrifying view of
but I don’t get the logic of that position.” technological advances
Quarry said, “well, there must be Picture: GETTY
some logic to it, otherwise VIXAL would-
n’t have taken the options. Why don’t

The Fear Index: The day has

you show them another trade, Alex?”
Hoffman changed the screen. “Okay.
Here – you see? – here’s another short
we’ve just put on this morning: twelve
and a half million options to sell Vista
Airways at seven euros twenty-eight a

come to make a real killing...

share.”
Vista Airways was a low-cost, high-vol-
ume European airline, which none of
those present would have dreamed of
being seen dead on.
“Twelve and a half million?” repeated
Easterbrook. “That must be a heck of a
chunk of the market. Your machine has
got some balls, I’ll give it that.”
An extract from the new Robert Harris book sees technology turn on its creator
“Really, Bill,” said Quarry, “is it that
risky? All airline stocks are fragile these
days. I’m perfectly easy with that posi- nine per cent. They’ve just taken delivery said Klein, “because they had Q1 growth smelled like a dry-cleaning store;
tion.” But he sounded defensive, and of a new fleet of aircraft. I don’t get the up from seven-forty million to nine-oh- Hoffman had to turn away. “Procter and
Hoffman guessed that he must have sense of that position, either.” nine, with a cash dividend of twenty-five Gamble, six million short at sixty-two…
noticed that the European markets were “Wynn Resorts,” said Hoffmann, read- cents a share, and they’ve got this great Exelon, three million short at forty-one-
up; if a technical recovery spread across ing off the next screen. “A million-two new resort in Macau that’s literally a fifty... plus all the options… Jesus,
the Atlantic, they might be caught up by short at one hundred and twenty-four.” licence to print money – it turned over Hoffmann – is an asteroid about to hit
a rising tide and end up having to sell He frowned, puzzled. These enormous twenty billion in table games in Q1 the earth, or what?”
the options at a loss. bets on the down side were unlike alone. May I?” Without waiting for per-
Klein said, “Vista Airways had twelve VIXAL’s normal complex pattern of mission, he leaned past Hoffmann, Reprinted with permission. The Fear Index
per cent passenger growth in the final hedged trades. Now available in all seized the mouse and started clicking by Robert Harris is published by Hutchinson,
quarter and a revised profits forecast up “Well that one truly is amazing to me,” good book shops through the recent trades. His suit £18.99.

... but our writer disagrees. Algos mean no harm

T
HE avarice and greed of traders
leading themselves and others to
ruin. The creation of powerful com-
puter-driven algo systems that
nobody understands. Another creation by
grasping bankers trying to churn and
burn viable publicly listed businesses as
fast as they can. Whipping up uncontrol-
lable market volatility. Exacerbating terri-
fying sounding “flash crashes.” All
happening in the blink of an eye.
So far, all very H.G. Wells. And all great
fodder for a blockbusting sci-fi novel by
Robert Harris.
The only problem is that it’s pretty wide
of the mark.
As horses speeding from the port to the
market with news of a trading ship’s for-
tunes gave way to signal lanterns, which
gave way to telegrams and telephones,
which in turn gave way to fibre optic
cables able to carry information around
the globe in milliseconds, technology has
come in for criticism.
When a system of lanterns was set up in
the 1840s, allowing a message to be trans-
mitted from New York to the Philadelphia
stock exchange in less than 30 minutes,
Abraham Lincoln warned that these dan-
gerous advances would lead to increased
market volatility.
And now that trades are measured in
microseconds, rather than in minutes, it
is high-frequency trading (HFT) that has
drawn the ire of many.
FACT CHECKING
But does any of this criticism hold water?
We decided to ask Fred Ponzo, managing
partner of GreySpark Partners. Fred (right)
works closely with banks, exchanges,
clearing members and hedge funds to
resolve issues they may have with their
execution, risk management or trading
functions. He therefore keeps close to all
major regulatory and industry changes
and developments, and an ear to the
ground on what’s going on in the domes-
tic and international financial markets.
“It is impossible to sustain a market
making activity on a larger number of
products and with tight spreads without
HFT,” says Ponzo. “The simple fact is that
if HFT wasn’t useful, then it would have
disappeared years ago.”
The technological advances that we
have seen in the trading sphere have
of course been driven by the profit
motive, but if it wasn’t for this one-
upmanship, we’d still be living in caves,
trying to kill each other with pointy
sticks. Algorithmic trading – trying to
make profits from discrepancies between
two prices, or between a derivative and
underlying asset, actually aids markets.
And this effect is multiplied by electronic
trading: “The key part of HFT is arbitrage,”
says Ponzo. “Arbitrage removes discrepan-
cy across asset prices and acts as a regula-
tor.”
FLASH CRASH FEAR
But what about the issue of flash
crashes? Huge amounts wiped off a
share’s value, only to bounce back
in the space of seconds. “We actu-
ally see fewer flash crashes than
we did 10 years ago. In the past
they were caused by human
beings panicking – crashes were
much bigger and took longer to
recover.”
According to Ponzo, electronic
trading, rather than acting as a
detriment to market behaviour
actually improves market condi-
tions: “Because computers are
making the decisions, it erodes a lot of the
mania.”
Part of the reason why the new
advances in technology provide such fuel
for scare-mongering and for sci-fi novels is
that they are such an unknown to the
man in the street. Most people can under-
stand that there are people who make a
living because they can buy and sell
shares more successfully than they can.
They may not be completely enamoured
with this, but as anybody can buy and sell
shares through their friendly local stock-
broker, it is something they can relate to.
Ultra low-latency high frequency trad-
ing of the same instruments is something
different altogether.
But as Ponzo puts it: “People have a fear
of high speed trading because it’s a bit like
the leap from horse carriages to trains.
Going from horses to trains was a leap in
technology – but though people fell off
horses all the time, when you have a train
crash, though it happens less frequently it
is more spectacular because of the speed.”
But that is no reason to ban trains – or
HFT.
Craig Drake
craig.drake@cityam.com
 Lifestyle OUR GUIDE TO LONDON 35
COCKTAIL WEEK
IN MONDAY’S LIFESTYLE

HOW TO GET
The brand new DRESSED Q&A

Fass of fashion Clare Rous &

Kara Iland
FOUNDERS OF ROUS
ILAND MEMBERS’
BOUTIQUE

Michael Fassbender is bringing old-school

Q.
Fashion pages are full of jump-
suits, I'd really love to wear one
glamour to our screens. Helena Lee finds out but I don't think I can pull it off
especially as I’m 5”3 and size 12.

how to get the British look of this rising star

A.
Just like dresses, there is a jump-
suit for every shape and person-
ality. They've been around long
enough to have proven they are more

G
ENTLEMAN, take note. You might
not know of Michael Fassbender, but
you will: the Fass-fest will start soon.
The chiselled Brit has crept onto the
big screen as Magneto in X-Men First Class,
the cravatted Mr Rochester in Jane Eyre,
and a sex addict in Shame opposite Carey
Mulligan, a performance which earned
him the best actor prize at Venice film festi-
val. Oh, and he’s analysing dreams as Carl
Jung in a Dangerous Method and will be
Ridley Scott’s robot in the upcoming alien-
esque Prometheus. He’s certainly been pro-
ductive.
Ladies love him, and men want to be
him. Why? “Fassbender is like Al Pacino,”
says Robert Johnston, associate editor at
GQ. “He has that old school movie star
touch. He doesn’t take any risks with his
style and he’s right not to.”
E. Tautz designer Patrick Grant agrees:
“Fassbender wears a suit with a certain
nonchalance. He’s a great advert for dress-
ing well in a modern way.” than a flash in fashion history. So now is
Heralding the return of the gentleman the time to invest in yours.
with a three-piece suit, Fassbender brings The classic full length jumpsuit does
an edge to the classic glamour of a suit. “He require a bit of height so if you're short
hits the look absolutely on the button,” says in stature you will need a big pair of
Johnston. “And three-piece suits have really heels. Work it that way for a cocktail
come back; they’re very practical as we party.
come into winter.” For the more curvaceous avoid the
Take his appearance at the X-Men pre- relaxed jersey styles and go for a tai-
miere in May. He wore an unusual light lored, structured piece. It will not only
grey double-breasted three-piece suit (pic- flatter but look much smarter.
tured right) with a two-button cuff and If you are tall but still worry that the
casually left the button of his waistcoat all in one is too strong a
undone. statement, try a two tone
“He’s simply taken an English tailoring jumpsuit. Like a two tone
staple, and translated it into a fashion dress the jumpsuit will
piece,” says Johnston. seem like separates at
And who knows, follow the Fass, and you first glance and break up
may end up with more than you thought. the look for a more
“He looks perfect boyfriend material,” subtle silhouette.
says Johnston, “because there’s a certain Go for a linen
vanity in the way he dresses. He knows he trouser with silk
looks good.” top for pure
elegance.
For the
petite, try a
culotte short
shape jumpsuit.
This will serve as a
dress alternative and
GET THE LOOK | FASSBENDER STYLE can be worn with
tights in the winter
and remain a playful
A light grey suit as above would be great at a wedding, but for the day option for summer
look, invest in a heavier fabric in a charcoal grey. GQ’s Robert Johnston with sandals. A French
suggests pairing the suit with a crisp white shirt and if wearing one, a navy number is the per-
fect trans-seasonal
block-coloured tie. Of course you can get your suit tailored on Savile Row – choice.
somewhere such as Patrick Grant’s Norton & Sons (pictured left) would be Choose the top shape
just-so for that bespoke suit, but think Armani and Reiss as well. Pair with that works best for your
body type – spaghetti
classic aviators like Ray Ban to complete the moviestar look. straps to break up broad
shoulders, asymmetric
one-shouldered can con-
ceal a large bust and hal-
“Fassbender is like Al Pacino. He has that old ter-neck shows off a good
back. For the corporate, a
school movie star touch. He doesn’t take any collared neckline is a more
empowering alternative.
risks with his style, and he’s right not to.” www.rousiland.com

OTHER FASHION NEWS

BY HELENA LEE

MILAN FASHION WEEK KATE MOSS LAUNCHES SHE’S GOT IT: FLORENCE
CLASH WITH LONDON JEWELLERY LINE AT PARIS OPENS CHANEL SHOW
Tensions rise as Milan has FASHION WEEK Flame-haired Venus,
announced that its fashion Kate Moss dazzled the fash- Florence Welch from
week next September will ion pack with her new jew- English band Florence and
overlap with London and ellery designs for the Machine, emerged from
New York’s. In spite of an LMVH-owed Fred. She dis- a shell to perform at the
agreement made in 2008 played her multitasking Chanel show on Tuesday.
that events at New York, abilities in not only launch- Karl Lagerfeld went on to
London, Milan and Paris ing the jewellery line at unveil his ocean-themed
should be scheduled the Ritz, but also by mak- collection at the Ready to
sequentially, editors and ing a rare appearance on Wear Spring/Summer 2012
buyers may be forced to the catwalk for her friend show at the Grand Palais.
choose one city over anoth- Marc Jacobs at Louis Also in attendance on the
er. The question is, which Vuitton. The 22 styles will front row was a glitzy mix
front rows will La Wintour, be available from of Uma Thurman, photog-
the grande dame of fash- Knightsbridge’s Harrods, rapher Mario Testino and
ion, choose if the dispute is and prices range from €350 die-hard Chanel fan Alexa
not resolved? to €35,000. Chung.
 36 Lifestyle | Reviews CITYA.M. 7 OCTOBER 2011

Allen is better than ever
with this nostalgic romp
Owen Wilson glows
as a Jazz Age
dreamer in Paris,
says Zoe Strimpel
Film
MIDNIGHT IN PARIS
Cert: 12A
hhhhh
WOODY ALLEN has been famously up and
down in his noughties film-making
career. Everyone loved to hate Match Point
and Scoop (I rather liked them – ok,
maybe not Scoop); but then, Vicky
Cristina Barcelona was a triumph. I also
liked Belinda and Belinda, but others
loathed it.
Midnight in Paris is a joy – whether
you’re a fan of the old, old Allen or just
someone who likes a good rom-com. Well,
this is better than a good rom-com; it’s
interesting and textured and odd, as you
might expect.
Owen Wilson charms as the slightly
dreamy Gil, visiting Paris with his
straightforwardly commercial, money-
loving fiancée Inez, played with perfect
shiny awfulness by Rachel McAdams. Gil
writes shallow Hollywood scripts by day,
but dreams of writing novels in a garret
(in Paris), whose Jazz Age literary tradi-
tion he particularly loves. His fiancée does
not share the latter part of his dream.
There’s a scene near the beginning – with
that wonderful Allen mixture of cheese,
kitsch and irony – where the couple stand
on a bridge in the Tuileries together (pic-
tured) and Wilson asks if Inez could ever
imagine living in Paris. She says, without
a hint of softness, no.
One night, after dinner with her equal-
ly shiny, stiff parents, Wilson is invited to
step into a black car. Beckoned by its bon
vivant occupants who are smoking and
drinking champagne, he can’t resist. But
what’s this? Suddenly he’s drinking with
Hemingway, Fitzgerald, and Gertrude
FRIEZE ART FAIR | HELENA LEE
Stein. As well as falling in love with the
1920s, he falls in love with a beautiful
woman, an ex-lover of Picasso’s, played by
Marillon Cotillard.
Night after night he gets back in the
car, the gap in heart and mind widening
daily between his formal reality (fiancée,
Louis Vuitton, dinners, being snapped at),
and this dreamy paradise of Paris past.
This is one of the most interesting and
pleasant romantic comedies in recent
years and shows that Allen has suddenly
sweetened with age.
JOHNNY ENGLISH REBORN
Cert: PG
hhhii
ROWAN ATKSINSON led the first Johnny
English, made in 2003, into juicy box
office territory with his Mr Bean-style
parody of James Bond (the film was actu-
ally scripted by Bond film writers Neal
Purvis and Robert Wade).
Now back in all his ill-fated, inelegant
sub-glory, Johnny English is recalled
from hiding in disgrace after a mission
in Mozambique five years ago. Leaving
the Tibetan monastery where he is in
martial arts training (great for danger-
ous ops), he is brought back to MI7’s
(yes, 7) HQ in London. English finds him-
self embarking on another mission, this
Michelin
verdict in
but lacks
sparkle
O
N Twitter, food-lovers were counting
down the minutes to the Great
Britain & Ireland Guide, and though
there were grumbles that there was
very little change in the restaurants award-
ed two and three stars, the Bib Gourmand
category, which indicates “good food at
moderate prices” most reflected the change
in London restaurants over the last two
years.
Recognition of London’s increasing fond-
ness for casual restaurants is evidenced by
the awarding of the Bib Gourmand to the
darlings of the food scene: Russell Norman’s
Polpo and da Polpo, Koya, the Opera Tavern
(part of the Salt Yard group), cult favourite
Sushi Say, Bermondsey Street’s José, and
Brawn, which joins its sister Terroirs.
Heston Blumenthal’s Dinner and the
Scandinavian North Road in
Farringdon have gained
one star as has Jason
Atherton’s critically
acclaimed Pollen
Street Social. Bray’s Fat
Duck and Waterside
Inn retain their three
star status as does
London’s Gordon
Ramsay and Alain
Top: Owen Wilson and time in Hong Kong, where he must stop Ducasse at The
Rachel McAdams in a group of international assassins before Dorchester.
Mdnight in Paris. they kill a world leader and – naturally – Helena Lee
Above: Rowan cause global meltdown. His new boss at
Atkinson in Johnny MI7 is played by Gillian Anderson;
English Reborn. Rosamund Pike, a former Bond Girl,
stars too.
ARTS ROUNDUP
Chaos arises after a meeting in a
Kowloon tenement, when English and a
cronie rendez-vous with a rogue CIA
agent, who reveals he’s part of an
alliance called Vortex, which possesses a
chemical weapon, control over which is
sought by an MI7 mole. Needless to say,
English doesn’t handle the case smooth-
ly. Taking more from recent Bond films
(of the Pierce Brosnan era particularly)
than the first one did, this should have
you smiling sporadically (or guffawing,
depending on your sensibilities). Of
course, the sheer stupidity of the whole
thing will be more of an irritation than
a virtue to some. DRIVING MISS DAISY
Wyndham’s Theatre
Play of the oscar-winning film with Vanessa
13-16 OCTOBER Redgrave and American actor James Earl
Jones as her chauffeur.

The art bonanza of the

FAUST
Royal Opera House
Last chance to see Gounod’s version of the
classic tale of hubris and overreaching. Ends

year to roll into town

10 October.

WHAT?
Frieze Art Fair is an annual London event
in Regent’s Park that features acclaimed
international art from over 170 contempo-
rary galleries. Talks, tours and films will
be given in addition to the 1,000 works
presented, so there should be something
for everyone. Expect dynamic work from
emerging creative hotspots South
America and Asia.
WHO?
Anyone can go, although it’s best to buy
advance tickets, which are cheaper.
THE SCULPTURE PARK
The English Gardens of Regent’s Park will
host international sculptures from
acclaimed artists such as Tom Friedman
and Kiki Smith. The park is a short walk
from the fair and is free to the public.
ANYTHING NEW?
Highly anticipated is the Frieze project
with Anahita Razmi, the recipient of this
year’s Emdash Award, which aims to sup-
port emerging talent. The work that will
be unveiled draws attention to Tehran’s
skyline, and how it was recently used by
protestors after the Iranian presidential
election.
ALTERNATIVE ART FAIR?
Prop the Ruinart bar with a glass of
Champagne at the Pavilion of Art and
Design London in Berkeley Square, which
showcases everything from modern art,
design to jewellery from 1860 onwards.
AND?
If you’re peckish, head down to the Cox,
Cookies and Cake shop in Soho. Designer
Patrick Cox has teamed up with contem-
porary art luminaries to create limited
Frieze has become an edition art cakes to raise money for
iconic part of the Amnesty International during the Frieze
London social and art Fair. Go for Gary Hume’s “Begging for it”
scene. cupcake.
THE FUTURE?
Next year will see a collaboration of the
Frieze art fair with new fair Frieze
Masters, which aims to celebrate art right
up until the turn of the millennium.
Advance tickets: £20, £15 concessions, or £40 for
the whole weekend. For full ticket information,
visit www.friezeartfair.com.
WAR HORSE
New London Theatre
The epic play charting the relationship
between a young man and his horse in
World War I has moved to the West End.
DEATH AND THE MAIDEN
Harold Pinter Theatre
BAFTA award-winning Thandie Newton
makes her stage debut as a former political
prisoner in Ariel Dorfman’s play.
BACKBEAT
Duke of York Theatre
Stage adaptation of the 1994 film of the
story behind the formation of the Beatles,
and their journey from Liverpool to
Hamburg.
THE VEIL
Lyttelton Theatre
Tony award-winning Conor McPherson’s
new play set in 19th century Ireland.
CITYA.M. 7 OCTOBER 2011 Lifestyle | TV& Games 37

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

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

QUICK CROSSWORD
    

SUDOKU KAKURO
35 12 19 41 16 16 
18 7
27 28   
11 30
Place the numbers from 1 to 9 in each empty cell so that each 10 
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 45
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 23 3 12
  
above or to the left of it. 42 4
You can only use the digits 1-9 14 37 
   and you must not use the
6
9 7    
same digit twice in a block. 30 15 10 34 14
  The same digit may occur 38 16 
13
  more than once in a row or
column, but it must be in a
11
19
5
18
9
  
45
 separate block. 
29 10
   6 24
 

  ACROSS DOWN
1 Missives used as birthday 1 Position of
  
   WORDWHEEL A R
or Christmas greetings (5)
4 Chair used as a carriage (5)
7 Yellow-coloured explosive
professor (5)
2 Harass with
persistent
Using only the letters in the Wordwheel, you have compound (inits) (3) ridicule (3)
    ten minutes to find as many words as possible,
N U 8 Primitive plant forms (5) 3 Medical instrument
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters A 10 Add together (3)
11 Agitate (4)
for listening to
sounds (11)

LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
P T 12 Mr Richardson, knighted
actor (1902-1983) (5)
4 Narrator (11)
5 Talk about in
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
L I 14 ___ faithfully, letter
ending (5)
detail (7)
6 Makes impervious
QUICK CROSSWORD 6 8 8 9 7 2 1
15 Available (3) to feeling (5)

B E A M U N L I K E
2 9 8 6 7 1 4 5 3 SUDOKU         
16 Boasts (5)
17 Follow as a result (5)
9 Snake (3)
13 Apprentice (7)
1 2 5 4 2 1 3
R O A F E          20 US lyricist, ___ Porter (4) 16 Fake (5)
U N D O O U T C R Y 9 6 8 2 6 8
        
N D E A 6 9 2 6 1 3 4 5 21 Pistol, for example (3) 18 So-named before
        
E A S Y S T R E E T 3 2 5 1 7 6 8 9 22 Depart (5) marriage (3)
WORDWHEEL
        
I R K O A I R 1 6 8 4 9 2 1 7 24 Edgar Allan ___, US 19 Lament for
M I S F O R T U N E         
2 5 6 8 4 9 writer and poet (3) the dead (5)
H O E N         
P O I N T S M I N E
8 9 4 7 6 7 1 The nine-letter word was 25 Heave (5) 23 Beast of burden (3)
3 4 7 1 6 9 8 5 2         
L P E P G
POSTULATE         
26 Hazardous (5)
B E A U T Y T Y P E 9 7 2 3 1 9 8
 Punter
38
RACING TRADER BILL ESDAILE, OUR RACING TRADER, WITH HIS BEST BETS OF THE WEEKEND
Ashbrittle looks massive at 33/1
to land Cesarewitch for Beckett
N
EWMARKET stages its ‘Future
Champions Day’ tomorrow with
four Group races for two-year-olds
featuring both the Dewhurst and
the Middle Park Stakes.
The latter is first up at 2.35pm over six
furlongs and my eye was immediately
drawn to French raider FAMILY ONE at a
general 7/2. He’ll be making his seventh
start of the campaign tomorrow, but
brings arguably the best form to the table
and hasn’t finished out of the first two in
any of those races.
Our selection finished second to
Dabirism in the Prix Morny last time and
that colt produced a scintillating turn of
foot to win again on Arc day last Sunday.
Family One was a clear second to him in
the Morny with the likes of Sofast and
Frederick Engels behind him and a repro-
duction of that run would make him
hard to beat.
There has been lots of money all week
for Richard Hannon’s Bronterre in the
Dewhurst (3.10pm) and he is now
Ladbrokes’ 3/1 co-favourite with Roger
Varian’s Ektihaam and Aidan O’Brien’s
POWER having been available at twice
those odds earlier in the week. He was
mightily impressive when winning a Listed
contest at Goodwood last time, but needs
to step up again to take a hand here. I’d
rather stick with the Ballydoyle Coventry
Stakes winner, who has the best form in
the book, but Ektihaam is a danger.
Finding the winner of tomorrow’s big
betting race, the Betfred Cesarewitch, is
no easy task – only two winning
favourites in the last 18 years is plenty
proof of that.
Nicky Henderson’s Royal Ascot winner
Veiled heads most lists at around 10/1, but
he races off a 7lb higher mark and I just
have the feeling he was allowed to slip the
field in the Ascot Stakes. Cosimo De
Medici was only raised 4lb for last
month’s trial win over course and dis-
tance, but that didn’t look the strongest
| Racing
of renewals and he now holds no secrets
from the handicapper.
Sir Mark Prescott seems to target this
race every season with an unexposed type
and Tuscan Gold flies the flag for the sta-
ble tomorrow. He may well be a lot better
than his mark of 86, but, perhaps surpris-
ingly, his trainer has never won this race
and this fellow is still pretty short at 9/1
with Ladbrokes.
Buy Back Bob appears to be a typical
Tony Martin plot and may well start con-
siderably shorter than the 16/1 generally
available. The four-year-old has had one
run over hurdles and a spin on the flat
over a mile, but you can be sure this race
has been the plan all along. There may be
a nice back-to-lay trading opportunity
with Betdaq, but on the balance of his
form he has a mountain to climb.
With a field of 30 plus runners it’s sen-
sible to throw more than one dart at the
board and my first fancy for the race is
Ralph Beckett’s unexposed ASHBRITTLE.
The four-year-old son of Rainbow Quest
will be having only his ninth career start,
but I’m pretty sure we haven’t seen the
best of him yet and he may be well treat-
ed off a mark of 90.
He seemed to relish the step up in trip
to 15 furlongs when winning at
Doncaster on his final start last season
and blatently blew up on his reappear-
ance at Haydock back in May. He was beat-
en out of sight when enduring a
nightmare passage in the Ascot Stakes
behind Veiled, but was drastically eased
when his chance had gone.
His latest eye-catching run behind
Bauer over an inadequate 14 furlongs at
Haydock would have put him spot on for
this and at 33/1 with Ladbrokes, he looks
an outstanding each-way bet.
Connections reach for the headgear again
(he was successful the only previous time
the visor was applied) and this will help
him travel, concentrate and quicken up at
the business end. Stall 26 isn’t ideal, but
DON’T MISS
THE BEST
HORSES. JOCKEYS. RACING
CITYA.M. 7 OCTOBER 2011
he has been held up in the past and we’ll
have to hope the gaps appear for Jim
Crowley at the right time.
My second fancy is David Pipe’s
BEYOND who bolted up on his first run on
turf on the flat at Sandown in July. He is
potentially a lot better than he has
showed so far and the stable know how to
ready one for this (David’s father Martin
won it twice). He is another who looks
potentially over-priced at 12/1 with
Ladbrokes, especially from a decent draw
in stall three.
Looking elsewhere on the card and I’m
prepared to give John Gosden’s
MAQAASID another chance in the open-
ing Challenge Stakes over seven furlongs.
She hated Goodwood last time and is
reportedly in good heart after a break.
She looks decent each-way value at
around the 7/1 mark.
There’s just a week to go until the cli-
max of the QIPCO British Champions
Series at Ascot and Sir Henry Cecil cur-
rently tops the Trainers League Table
with six wins, three seconds and a third.
He already seems to have one hand on the
trophy as Frankel, Twice Over and Midday
are all set to feature next weekend.
As for the battle to be top jockey, Tom
Queally currently sits at the top with five
winners and three seconds. Frankie
Dettori is within touching distance,
though, and you can read all his thoughts
about his Champions Day rides in next
Friday’s Punter.
You can follow me on Twitter
@BillEsdaile.
POINTERS...
MAQAASID e/w 2.05pm Newmarket (Sat)
FAMILY ONE 2.35pm Newmarket (Sat)
POWER 3.10pm Newmarket (Sat)
ASHBRITTLE e/w 3.50pm Newmarket (Sat)
BEYOND e/w 3.50pm Newmarket (Sat)
ASCOT RACECOURSE
SATURDAY 15TH OCTOBER 2011
QIPCO BRITISH CHAMPIONS DAY
TICKETS FROM £26
FINE DINING PACKAGES FROM £265PP
GROUP AND ADVANCE BOOKING
DISCOUNTS AVAILABLE. BOOK NOW AT
WWW.BRITISHCHAMPIONSSERIES.COM
OR CALL 0870 727 1234
 Punter
CITYA.M. 7 OCTOBER 2011 39

| Sport

SPORT TRADER DAVID WILD AND BEN CLEMINSON BRING YOU THIS
WEEKEND’S BEST RUGBY AND FOOTBALL BETS

Positive England selection

to beat beleaguered Bleus started in the number 12 jersey for
England since February 2010, in a 30-17
ENGLAND victory over Wales at Twickenham. It is
certainly a big call in a must-win match
FRANCE against fierce opposition, but like the
England coach himself, I would argue
that it is not the greatest of gambles.
TOMORROW – 8.30AM ITV1 Flood has played outside Jonny
Wilkinson 15 times previously for
down and win quicker ball. It’s a task
that England’s forwards should be up
to given that Les Bleus have been
uncharacteristically ineffective up front
so far in the tournament.
Neither side has lit up the World Cup
so far, but as England showed when
they progressed to the final four years
ago, solidarity and determination is
the knockout stages three times since
1991 and should be expected to make it
four in six World Cups. The winning
margins were nine, 17 and five points,
so back England to overcome their four
point handicap at evens with Paddy
Power.
All the signals point to a low-scoring
game and a sell of total match points at

W
HICH France will turn up?
It’s a question asked often,
particularly ahead of the bit-
ter and sometimes brutal
contests tagged ‘Le Crunch’. But in light
of Martin Johnson’s selection, perhaps
the outcome this time rests more on
how England will perform and
whether the gamble of starting Toby
Flood at inside centre will pay off.
This will be the first time Flood has
England, and not only will this offer an
additional exciting distribution option,
it is also likely to relieve some of the
pressure from Wilkinson, just as Mike
Catt did when playing at 12 in the 2003
World Cup.
But for all the analysis of England’s
backline, this match will be won and
lost in the pack. The inclusion of Tom
Palmer and Nick Easter looks positive
in aiming to dominate at the break-
more vital than form in the knockout
stages. In this respect, the Red Rose are
in a much better position than the
mutinous French. Their woeful defeat
to Tonga has only served to fuel the
infighting and it’s difficult to see how
Marc Lievremont can exploit internal
frustrations to get the best from his
players, or even if they will listen to him
at all.
The Red Rose have beaten France in
38 with Sporting Index. In the last six
head-to-heads, only once has the score
surpassed that mark and the highest
aggregate in the four World Cup meet-
ings is 31. England have conceded just
one try in the 2011 tournament so far.
POINTERS...
England (-4) at evens with Paddy Power
Sell points at 38 with Sporting Index

QUARTER-FINALS
FROM 6AM TOMORROW – ITV1
ASIDE from ensuring a northern
versus southern hemisphere final,
Australia’s qualification into the
unexpected side of the draw has
thrown up two mouthwatering
last-eight fixtures, and more than
enough reason to set the alarm for
6am on Saturday and Sunday.
Ireland take on Wales in the
weekend’s first match in what
promises to be an absolute thriller.
The Boys in Green did not experi-
ence the best of build ups, but the
dramatic 15-6 win over the
Wallabies has seemingly changed
their mindset. However, this should
not overshadow Wales’ impressive
form. They were unlucky to lose to
South Africa by a single point and
then continued by racking up a
total of 147 against Namibia and
Fiji. For every talented player in
Ireland’s line-up, Wales have a man
to match; Luke Charteris is every
bit as dangerous a line-out threat as
Paul O’Connell and crucially,
Wales’ Lions prop duo of Gethin
Jenkins and Adam Jones are back to
their best. Declan Kidney’s men are
installed as 5/6 favourites, but I
fancy Wales at 11/8 with Paddy
Power.
The early fixture on Sunday also
threatens to be a classic as the
Wallabies take on the Webb Ellis
Cup holders South Africa. The
Springboks have been dealt a huge
blow now that Bakkies Botha is
added to the injury list alongside
Francois Steyn and this surely tips
the balance in Australia’s favour.
The Wallabies looked good in the
early period against Russia and if
they get their noses in front I can
see them pushing on to win this
comfortably. It is worth buying
their points supremacy at 1.5 with
Sporting Index.
Although we have seen it before,
there is unlikely to be an upset
where the tournament hosts New
Zealand are concerned this week-
end. However, the 28 point start
offered to Argentina in Ladbrokes’
handicap market is generous. If the
All Blacks have a weakness it is in
the scrum and the physicality of
the Argentinean forwards will test
them. Colin Slade is a capable sub-
stitute for the injured Daniel
Carter at fly-half, but the Pumas
will go all out to limit service to
him. Back Argentina to get within
the handicap at 10/11 with
Ladbrokes.
POINTERS...
Wales to beat Ireland at 11/8 with Paddy Power
Buy Australia’s supremacy at 1.5 with Sporting
Index
Argentina to beat New Zealand (+28) at 10/11
with Ladbrokes
MONTENEGRO
ENGLAND
TODAY - 8.00PM SKY SPORTS 1
ENGLAND are in a dominant position
in Group G and know that a point
against Montenegro tonight will be
enough to see them through to next
summer’s European Championship
finals. It’s been a solid qualifying cam-
paign by Fabio Capello’s side and the
manager will want them to go
through it unbeaten.
Montenegro are no pushovers, as
demonstrated by the goalless draw
between the sides at Wembley just
under a year ago. They are England’s
closest pursuers and know that they
have to win tonight, as well as in
Switzerland next week, to stand any
chance of qualifying automatically.
I’m pretty sure, however, that they
will settle for second-place and if they
get a point, they’ll know that their des-
tiny is in their own hands when they
go to Basle next Tuesday. Switzerland
sit three points behind them in the
table and have a tricky trip to the
Millennium Stadium tonight.
Montenegro have won two and
drawn one of their three home quali-
fiers and there have only been four
goals scored in those games. England
have won all three of their away games
so far, but I reckon they’d be happy
with a point and I’d suggest backing
the draw at 5/2 with Ladbrokes.
We’ve seen that Montenegro
haven’t been involved in many high
scoring games and I wouldn’t be at all
surprised to see a repeat of last
October’s goalless draw. No goalscorer
is available at 8/1 with Ladbrokes and
I’d also advise spread bettors to sell
total goals at 2.3 with Sporting Index.
POINTERS...
Draw at 5/2 with Ladbrokes
No goalscorer at 8/1 with Ladbrokes
Sell total goals at 2.3 with Sporting Index
 40 Sport CITYA.M. 7 OCTOBER 2011

SPORT | IN BRIEF

Hamilton protests his innocence

Financial Fair Play not fair, says Gazidis
FORMULA ONE: Britain’s under-fire
Lewis Hamilton has defended his driving whole. “I don’t like the term very important we keep an eye on clubs that are, at the moment, strug-

▲
style this season which has drawn signif- BUSINESS OF SPORT Financial Fair Play. It lends itself to them. They should not be set in gling to attract investment.
icant criticism from his peers. The BY FRANK DALLERES being attacked because people say it’s stone, they must evolve and develop “There are many clubs in this coun-
McLaren star has been in trouble for a not fair,” Gazidis said at the Leaders as the game evolves.” try that have enormous potential
spate of incidents, including a clash with ARSENAL chief executive Ivan Gazidis in Football conference in London yes- Stoke chairman and Bet365 tycoon that could be unlocked. But is it
Ferrari’s Felipe Massa at the last race in insists so-called Financial Fair Play terday. Peter Coates joined those questioning going to be done in a year by buying
Singapore. “I’m not doing anything rules are not fair at all but does “None of the systems that you whether FFP will prevent smaller players? No. There has to be a longer-
wrong. I’m trying my best to avoid those believe they will make the Premier might create are fair and none of teams challenging the elite, saying: term plan.
things but I’ve been in awkward posi- League a more open competition. them are going to be. We’re not on a “The downside is that it reinforces “I don’t agree it locks in the hierar-
tions this year,” said Hamilton ahead of Gazidis firmly supports European level playing field now and we won’t the people at the top.” chy; I think what we have now is
Sunday’s Japanese Grand Prix, which governing body Uefa’s drive to make be if FFP is implemented either. To But far from tightening the elite’s more predictable. No club wants a
could see Sebastian Vettel clinch back- all clubs live within their means, me it’s not about fairness or level stranglehold, Gazidis believes the system that locks in the current hier-
to-back world titles should the German which came into effect this year. playing field. benefits FFP affords to a vast swathe archy forever. If you’re at the top it’s
claim just a solitary point from the race. However he concedes the regulato- “None of the systems that may be of clubs will create a more competi- not healthy.
“I’m trying my hardest. I’m still here, ry system will not create a level play- established for the future of football tive environment. “I don’t believe it’s healthy in Spain
still fighting, and I’m not giving up.” ing field, arguing it will instead is going to be perfect. They all have He added: “I think it will attract to have Barcelona and Real Madrid
improve the health of football as a drawbacks and loopholes. I think it’s strong, very capable ownership into locked into the top two positions.”
Akmal brothers named in court
CRICKET: Three more Pakistan players
have been named in court in connection
with alleged spot-fixing offences at the
fourth Test against England last sum-
mer. It has been alleged that Umar
Akmal, his brother Kamran and Wahab
Riaz would follow instructions from the
agent Mazhar Majeed, who has been
Merritt case
charged with accepting corrupt pay-
ments. The names were aired on the
second day of the trial involving Salman
Butt and Mohammad Asif.

Murray advances in Japan

is athletics’
TENNIS: Britain’s Andy Murray has
moved into the quarter-finals of the
Japan Open with a 6-1, 6-2 victory over
American Alex Bogomolov Jr. Defending
champion Rafael Nadal beat Milos
Raonic 7-5, 6-3.
Bosman rule
▲

OLYMPICS But BOA chairman Lord Moynihan

BY FRANK DALLERES AND JAMES GOLDMAN defended the “tough but fair” ban,
Results BRITISH Olympic chiefs have warned
they will not drop their controversial
arguing that its inclusion of an
appeal system, unlike the IOC, ren-
dered it subtly different in law.
=FFK98CC lifetime ban for drug cheats despite “Fundamentally, the BOA by-law
<LIFG<8ELE;<I$)(:?8DG@FEJ?@G
the threat posed by a landmark addresses eligibility and is not a sanc-
HL8C@=P@E>>IFLG<@>?K European legal case that experts have tion,” he added. The BOA have writ-
@Z\cXe[L)(%%%%%%%%%%%'  ' <e^cXe[L)(%%%%%%%%%%%%%% )  * likened to the Bosman ruling. ten to the IOC seeking urgent
8kk1)#,00 FocX[\$:_XdY\icX`e()#(,#,' The Court of Arbitration for Sport clarification but said in a statement
>FC= (CAS) yesterday ruled in favour of that their strict regulations had the
98EB@8D8;I@;D8JK<IJ8cZXcX[\?\eXi\j Ç(jki[ American 400m runner LaShawn support of more than 90 per cent of
c\X[\ij>9@i\cXe[lec\jjjkXk\[ 1-+ÇIDZ>fnXe2 Merritt, who argued that an British athletes and Wada.
-,Ç9Ild]fi[8ljkiXc`X 2C>X^c`@kXcp 2>=[\q$:XjkXef
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Jn\[\e 2<;\CXI`mXJgX`e 2K>fpX8i^\ek`eX 29 2012 was illegal. University, believes the CAS verdict
;i\[^\% Merritt bulldozed the IOC rule that against the IOC could be as far-reach-
K<EE@J bars from the next Games an athlete ing as football’s paradigm-changing
8KGI8BLK<EA8G8EFG<EK<EE@J:?8DG@FEJ?@GJ who has received a doping suspen- Bosman ruling, which granted play-
Kfbpf#AXgXe ÇIe[)1) 8DliiXp>Yi Yk89f^fdfcfm
Ai%LJ8 -$(-$)% sion of more than six months by ers freedom of movement when their
arguing it exceeded the two-year ban contracts expire.
decreed by the World Anti-Doping “There is some chance that the
KF;8PËJ;@8IP Authority (Wada). BOA by-law might survive but it’s a
=ffkYXcc.%+,gdlec\jjjkXk\[
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8q\iYX`aXem8ljki`X,gd %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% challenges to the BOA’s by-law, which “In many respects this verdict is
9\c^`ldmBXqXb_jkXe%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% bans for life from the Olympics any not dissimilar to the Bosman case.
Klib\pm>\idXep.%*' %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% athlete found to have doped and also Fundamentally it shows the IOC is
>iflg9 goes beyond Wada’s stipulations. subject to challenge. It was pretty
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8id\e`Xm=PIDXZ\[fe`X+gd %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
JcfmXb`XmIljj`X.%(, %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% cyclist David Millar are among those landmark case. It’s potentially embar- banned for two
>iflg: British competitors who could seek rassing for the BOA and you might years in 2003
Efik_\ie@i\cXe[m<jkfe`X%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% to follow Merritt and have their life- wonder if they have dug their heels
J\iY`Xm@kXcp%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% time bans overturned. Both were last in too long and missed the opportu- Picture: ACTION
>iflg; night considering their options. nity to back down earlier.” IMAGES
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Buck: Chelsea fans dead Capello successor can be

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against move are wrong foreign, says Robertson
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▲

FOOTBALL
▲

>iflg@ FOOTBALL want to agree to a sale that would could learn from the England cricket
:q\Z_I\glYc`ZmJgX`e%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% remove a major hurdle to the club team, who have enjoyed huge success
>FC= CHELSEA chairman Bruce Buck has leaving its home of 106 years. SPORTS Minister Hugh Robertson has under the guidance of Zimbabwe-
LJG>8KFLI1=IPJ%:FDFG<E:fi[\MXcc\>fc]:clY#JXe responded to criticism from the Buck said: “We do not expect every urged the Football Association to born head coach Andy Flower.
DXik`e#:Xc`]fie`X#Le`k\[JkXk\j % club’s fans over its plans to buy the fan or pitch owner to say yes from day reconsider their decision to restrict “It should be the best person avail-
98EB@8D8;I@;D8JK<IJ<c<eZ`e>fc]?fk\c#8cZXcX[\ freehold to Stamford Bridge, insisting one. There will be some who disagree the search for the next England man- able,” Robertson told the Leaders in
?\eXi\j#JgX`e %
those who blindly oppose moving to a with this. There is a small group who ager to only English candidates. Football conference in London yester-
IL>9PLE@FE new stadium are wrong. want to stay at Stamford Bridge not Appetite for a home-grown candi- day. “It would be nice to have an
I89F;@I<:KGIF().%', 1>cXj^fnmE\ngfik$>n\ek
;Ë^fej.%*' #JZXic\kjm<[`eYli^_#Lcjk\im9\e\kkfe Some shareholders in the support- matter what. I understand that but I date is high within the FA as they con- English manager but what football
Ki\m`jf% er-led group Chelsea Pitch Owners think they’re wrong.” sider who should replace Fabio fans want is to win tournaments.
K?<:?8DG@FEJ?@G.%+, 19i`jkfcmEfkk`e^_Xd% (CPO) have accused the Blues of trying CPO members will vote on the Capello after next summer’s Look at the England cricket team:
to rush through a deal to buy back offer, which equates to money back European Championships. they’re top of the world and no-one
email sport@cityam.com the freehold. Others simply do not plus ticket incentives, this month. But Robertson believes football cares Andy Flower is Zimbabwean.”
CITYA.M. 7 OCTOBER 2011
Balancing act reaps Tindall injury may
prove a blessing in
rewards for Gatland disguise for England
▲
RUGBY UNION
BY JAMES GOLDMAN
HEAD coach Warren Gatland
believes his side’s perfect blend of
youth and experience will propel
Wales to their best ever World Cup
finish.
Wales have made it to the semi-
final stage only once previously back
in 1987 when the competition, the
first ever World Cup, was also held in
New Zealand.
An Ireland side, who have already
lowered the colours of Australia in
this tournament, stand in the way of
Wales equalling their previous best,
and Gatland could hardly be accused
of being conservative in his selection
with such a big prize on offer.
Eight of the Kiwi’s matchday 22 for
the quarter-final showdown are aged
23 or under with the likes of James
Hook, Lee Byrne, Stephen Jones and
Ryan Jones missing out.
“The nice thing is I feel we have a
balance we haven’t had before,” said
Gatland. “We’ve got players who can
get us across the gain line.
“We’ve got pace out wide, we’ve
got pretty special youngsters, we’ve
got loose forwards that can carry,
loose forwards that can compete on
the ball, a couple of big second-rows
and a more experienced front-row as
well.
“We feel the balance of this team is
the best we have ever had. What has
been great is some of the older play-
ers know they’ve got youngsters on
their heels that are really biting at
their ankles. That has brought the
best out of some of our older, more
experienced players.
“It’s a great position to be in to be
having to make hard calls about who
you leave out.”
Flanker Dan Lydiate’s return from
an ankle ligament injury means
Gatland can reunite an outstanding
back-row of Lydiate, skipper Sam
Warburton and No8 Toby Faletau.
“What has been great about this
World Cup is that we’ve got a lot of
youngsters with no fear factor,”
Gatland added. “They have got no
history as well.”
STRANGE FEELING | Earls has premonition
▲
RUGBY UNION
BY FRANK DALLERES
IRELAND winger Keith Earls has
revealed he has “a strange feeling”
that they will beat Wales on Sunday
and go all the way to the World Cup
final.
Not for Earls the sportsman’s cliche
of taking each game as it comes; the
24-year-old has already visualised
Irish glory and has dared to admit it.
“I have this strange feeling inside
me where it feels like everything is
Earls says he has
imagined Ireland
in the final
Picture: ACTION
IMAGES
going right,” said the Munster and
Lions star.
“Everything went right in the
group and everyone is so happy. I
keep imagining ourselves in the final.
I’m concentrating on playing Wales,
but it is a strange feeling I have.”
Hooker Rory Best was yesterday
named in Ireland’s team despite
ongoing concern over a shoulder
injury. Ronan O’Gara and Conor
Murray retain the half-back partner-
ship, with Jonathan Sexton and Eoin
Reddan on the bench.
Sport 41
takes the responsibility in the goal-
kicking department. Wilkinson’s
pedigree and track record would nor-
mally see him pull rank over the
young pretender, but he has been
uncharacteristically wayward so far
and really struggled with the new
ball.
If it’s the case, I’m a fan of the sug-
RUGBY WORLD CUP COMMENT gestion that the two will stage a
KYRAN BRACKEN behind closed doors penalty shoot-out
to determine who gets the nod.
I think anything that adds a bit of
M
IKE TINDALL has been a fan- variety to the training methods will
tastic servant to English rugby benefit the guys and I doubt it will
but I’d venture to say the dead unduly affect or undermine whoever
leg which has ruled him out comes off second best.
of tomorrow’s World Cup quarter- Whoever gets the vote, it’s vital
final against France may just have they’re on target, however, particular-
made life easier for manager Martin ly early on against a France side who
Johnson. could wilt if they are put under pres-
England have been nowhere near as sure from the off. They really are in a
poor in this tournament as has been state of disarray and I’d pin the
documented, but certainly they’ve yet responsibility for that on their coach
to hit the heights of the Six Nations Marc Lievremont.
and the inclusion of Toby Flood next He’s really undermined the players
to Jonny Wilkinson, at the expense of through the press and he doesn’t
vice-captain Tindall, offers significant seem to have any consistency in terms
hope that we’ll see the Red Rose open of selection. It’s a complete mess and
up against Les Bleus. the fact a team packed with so many
I’m genuinely excited by the poten- potential match-winners could per-
tial a Wilkinson-Flood axis form so poorly against Tonga reflects
provides, even if it’s a com- more on the inadequacies of the
bination that might not coach than the players.
have taken to the field That said, playing France always
had Tindall been fit. represents one of the hardest fixtures
When Flood came on in international rugby because you
against Scotland last week simply don’t know what you’re going
he really added width to be lining up against. Normally
to England’s play you can prepare in a struc-
and his presence tured way and analyse the
will benefit the other teams’ strengths and
likes of Chris weaknesses, but that’s not
Ashton, while the case with France and
Wilkinson’s certainly the team
defensive they’ll put out in
prowess – I’d Auckland.
expect him to World Cup winner Kyran
line-up at centre Bracken (@kyranbracken)
when France was speaking courtesy of
have the ball – GamePlan Solutions: man-
should never be aging high profile and popu-
underestimated. lar sport stars; speakers, leaders,
It will be inter- motivators and ambassadors
esting to see who www.gameplansolutions.co.uk
 Sport
42
THE BREAKDOWN |
WORLD CUP BRIEFS
MCCAW FIGHTING FIT
NEW ZEALAND have confirmed cap-
tain Richie McCaw will play through
the pain barrier against Argentina on
Sunday. McCaw was forced to pull
out of the final pool game against
Canada as a precaution due to a long-
standing foot injury. However, the tal-
ismanic flanker will return to the All
Blacks line-up for the quarter-final
showdown. “He’s great,” said All
Blacks assistant coach Steve Hansen.
“He’s going to play on Sunday. We’re
down to the business end and whilst
we’re still in the tournament he’ll be
available. We’re just going to have to
make sure we do what we’ve done
with him all year and what he’s done
at the Crusaders and manage it.”
BOTHA BLOW FOR HABANA
Bakkies Botha could have played his
last game for South Africa after
injury ended his World Cup. Botha
(inset) had missed the
encounters with
Wales and
Samoa but
he had
hoped to
return to
action
against
Australia in
Sunday’s last
eight showdown.
Wing Bryan Habana, passed fit to
play, admitted the mood in the world
champions’ camp was subdued upon
hearing the news of Botha’s demise.
“Bakkies had a talk to the team this
morning and it did get a little bit emo-
tional,” Habana said. “Yes, it was a bit
sombre in the team room. It’s tough
on the team.”
FRANCE TARGET WILKINSON
JONNY WILKINSON will be targeted
by France in tomorrow’s quarter-final
at Eden Park. Wilkinson has been
named at fly-half by Martin Johnson
for the last eight clash, despite a
series of unconvincing displays in the
tournament thus far. And France
flanker Julien Bonnaire believes Les
Bleus can take advantage of Toulon
playmaker Wilkinson's selection. He
said: “He, as well as the others, is not
as good under pressure. It’s down to
us to show more aggressiveness so
that he doesn’t put his team forward.”
Wilkinson and
Flood selection
not a gamble,
says Johnson
ENGLAND
FRANCE
▲
RUGBY UNION
BY JAMES GOLDMAN
ENGLAND manager Martin Johnson
has denied gambling with England’s
World Cup future by persevering
with an out of sorts Jonny Wilkinson
and shunting Toby Flood to inside
centre for tomorrow’s crunch quar-
ter-final against France.
Johnson, ahead of the biggest game
of his managerial career, has taken
the bold decision to promote
Leicester No10 Flood in the absence of
the injured Mike Tindall, rather than
opt for the safety first route of recall-
ing natural centre Shontayne Hape.
That also means a reprieve for
World Cup winner Wilkinson, whose
place-kicking against Scotland and
Argentina was some way short of the
near flawless level England have
come to rely on.
Despite opting to field such an
unexperienced and experimental
combination in a match of such mag-
nitude, not to mention one that
could determine his own future,
Johnson insisted he had faith in his
selection
“It’s not a gamble,” he insisted.
“You always put a lot of thought into
your selections, no more so than
when you’re in a World Cup quarter-
final. It’s one of the options we’ve got.
“I think Mike and Manu Tuilagi
have played well together. If we had to
play Shontayne; there’s always an
argument to play him.
“It does give us some different
things that we can do on the field
when we play those guys [Flood and
Wilkinson].”
England are not the only ones who
have attempted to spice things up,
with France coach Marc Lievremont
persisting with Morgan Parra at fly-
half, and Wilkinson believes having
an extra playmaker in the ranks will
help expose Le Bleus’ makeshift No10.
“Having Toby there is hugely reas-
suring, less in terms of having a
[goal‐kicking] safety net than know-
ing there is always going to be some-
one there making decisions,”
admitted Wilkinson.
“If I’m at the bottom of a ruck
there’s going to be someone else
thinking as a 10. When two of us are
there you’ve got one guy scanning
the field and the other guy looking
for the ball. Communication between
us is going to be important.”
With France having been humiliat-
ed by Tonga last week Johnson, mean-
while, admits it’s vital England roll
up their sleeves and impose them-
selves on confidence starved oppo-
nents right from the first whistle.
“There’s no one more frustrated
than us about not imposing ourselves Wilkinson and
early on,” said Johnson. “We haven’t Flood played togeth-
decided those halves. As [backs coach] er at Newcastle
Brian Smith says. We’ve been taking
it rather than giving it.” Picture: GETTY
 43
TINDALL’S INJURY MAY PROVE
TO BE BLESSING IN DISGUISE
WORLD CUP WINNER KYRAN
BRACKEN’S BIG GAME VERDICT: P41

ENGLAND V FRANCE | MATCH FACTS

Rooney backed for Montenegro
mission despite off-field drama
Venue: Eden Park, Auckland
Date: Tomorrow
Time: 8:30am BST
TV: Live on ITV1

ENGLAND
15. B Foden (Northampton Saints)
14. C Ashton (Northampton Saints)
13. M Tuilagi (Leicester Tigers) MONTENEGRO
12. T Flood (Leicester Tigers)
11. M Cueto (Sale Sharks)
10. J Wilkinson (Toulon) ENGLAND
9. B Youngs (Leicester Tigers)
1. M Stevens (Saracens)

▲
2. S Thompson (London Wasps) FOOTBALL
3. D Cole (Leicester Tigers) BY FRANK DALLERES
4. L Deacon (Leicester Tigers)
5. T Palmer (Stade Francais) MANAGER Fabio Capello insists the
6. T Croft (Leicester Tigers) arrest of Wayne Rooney’s father in
7. L Moody (Bath Rugby, capt) connection with an alleged betting
8. N Easter (Harlequins) scam will not distract his talisman
from shooting England into Euro
Replacements: D Hartley (Northampton 2012 tonight.
Saints), A Corbisiero (London Irish), C Rooney is expected to start in
Lawes (Northampton Saints), S Shaw Montenegro, where a draw will be
(Unattached), J Haskell (Ricoh Black enough to confirm England’s place at
Rams), R Wigglesworth (Saracens), M the top of Group G and book their
Banahan (Bath Rugby) spot at next summer’s finals in
Poland and Ukraine.
FRANCE “I spoke with Wayne. I found him
15. M Medard relaxed and calm. There is no prob-
14. V Clerc lem for the game against
13. A Rougerie Montenegro,” Capello said yesterday.
12. M Mermoz “He is sure a solution will be found to
11. A Palisson this personal problem in a very short
10. M Parra space of time.”
9. D Yachvili Captain John Terry, himself no
1. JB Poux stranger to playing in the midst of off-
2. W Servat field controversy, backed Rooney to
3. N Mas brush the episode aside and maintain
4. P Pape his superb early-season form in
5. L Nallet Podgorica.
6. T Dusautoir (capt) “It is important for him to go out
7. J Bonnaire there and play his football, which he
8. I Harinordoquy loves doing,” said Terry. “He will
always be fully focused on the pitch.
Replacements: D Szarzewski, F That is all that matters to us. When
Barcella, J Pierre, L Picamoles, F Trinh- you are on the pitch or training pitch,
Duc, D Marty, C Heymans you can switch off from anything in Rooney scored in
life. Tomorrow’s game is the most last month’s win
WORLD CUP FORM important thing. We all realise that.” in Bulgaria
Argentina 9-13 ENGLAND Capello is keen to cement qualifica-
ENGLAND 41-10 Georgia tion with a win, but said he was still Picture: ACTION
ENGLAND 67-3 Romania to decide who would partner Rooney IMAGES
ENGLAND 16-12 Scotland in attack. Manchester United young-
ster Danny Welbeck, Liverpool’s Andy less of the team’s success at the tour- to drink with my friends, the players
FRANCE 47-21 Japan Carroll, Fulham’s Bobby Zamora and nament. “Yes, I am leaving. and all who work with me.”
Canada 19-46 FRANCE Aston Villa’s Darren Bent are all in Absolutely,” he said. “The solution for Rooney’s father, also called Wayne,
New Zealand 37-17 FRANCE the frame. the next England manager is in the last night denied involvement in a
FRANCE 14-19 Tonga The Italian was more certain of his hands of the Football Association betting scam after being one of nine
intentions post-2012, confirming that chairman. I hope I can help England people arrested and then bailed until
he would be leaving his role regard- to play in the Euros. Then I will want January by Merseyside Police.

Carter injury is World Cup leveller cent of your squad out injured. That tallies
with our situation at present.
You need luck to ensure your team is at its
peak for big games – but there are ways of
being luckier. Although it’s impossible to
legislate for contact injuries, the club’s med-
ical team try to manage the workload to
ensure non-contact injuries such as strains
and muscle pulls are kept to a minimum.
RUGBY UNION COMMENT The other method is to plan effectively. It
SIMON AMOR is important there is enough depth in your
squad. If you are reliant on one or two super-
practising place-kicking, which will be frus-
trating for the coaching staff who will
undoubtedly be asking: could we have done
anything to prevent it? TACKLING YOUR FINANCES
HEAD ON!
His loss to New Zealand and the tourna-
ment cannot be overestimated and the other
seven nations in the quarter-finals will all
feel they have got a better chance of lifting
the cup now that he is out.
The England-France game will be especial-
ly interesting this weekend. Although much
has been made of how poor the French have

T
OMORROW sees London Scottish take
on last season’s relegated Premiership
side Leeds Carnegie at the Athletic
Ground. It’ll be interesting to pit our-
selves against a team that was playing top
level rugby last season.
This will be our fifth game of the
Championship season, which, when you
include pre-season and cup matches, means
that we have played 10 first XV games so far.
It’s only natural, then, that teams are start-
ing to pick up injuries by this time of year.
A general rule of thumb is that, at most
stages of a season, you’ll have roughly 20 per
stars it’s vital to manage them so they are fit
at the critical parts of the season, but also
have enough game time so they are in form.
A great example of this is how New
Zealand respond to Dan Carter’s injury at
the World Cup. He’s absolutely critical to
them – because he is such a great player but
also as the All Blacks haven’t found an effec-
tive replacement for him yet.
In a country as rugby obsessed as New
Zealand there will probably be a public
inquest into the nature of Dan’s injury, espe-
cially considering it occurred during train-
ing. He tore the left adductor muscle while
been, they are a team that, if everything
clicks, can beat anybody on their day. Much
will depend on how eccentric their team
selection is but I think England are slight
favourites. It is definitely game on!
Simon Amor is Head Coach at London Scottish.
Their next game is against Leeds Carnegie tomor-
row at 3pm, Richmond Athletic Ground.
www.welbeckgroup.co.uk
Email: marketing@welbeckgroup.co.uk
Speak to one of our expert advisers
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